‘Unscientific’ expo budget slammed The Commission of Audit has accused the Macau delegation office at the 2010 Shanghai World Expo of ‘unscientific’ budgeting for the event. The office used an expo in Lisbon in Portugal 12 years earlier as the starting point, failed to provide receipts for all spending and failed to cancel its local bank account on time afterwards. Page 16
Investors find safe harbour in HK securities H
ong Kongers come to Macau to gamble and Macau folk turn to Hong Kong to play it safe with their money. That’s the conclusion of the latest survey of residents’ investment habits. After a brief flirtation with higher-return mainland Chinese securities, Macau investors rushed back to safer Hong Kong securities last year, says the 2011 Coordinated Portfolio Investment Survey. The Monetary Authority of Macau and the Statistics and Census Service conduct it jointly. A safe investment bet for Macau people means not just Hong Kong-listed securities, but securities held by Hong Kong incorporated or domiciled firms. In the equities market accounting scandals have hit ‘H shares’ – those traded in Hong Kong but where the issuing firm is incorporated on the mainland – as
well as ‘A shares’ of mainland companies listed in Shanghai or Shenzhen. The total invested by Macau residents in Hong Kong securities of all types reached 63.9 billion patacas (US$8 billion) by the end of last year, up by more than 1.5 times over the previous year. More than 87 percent of that was in equities. Hong Kong securities accounted for 37.9 percent of the market value of all investments by Macau residents outside the territory – the highest value since the survey’s inception in 2001. Mainland securities fell back to second spot but still saw their market value grow by more than a third to 35.5 billion patacas. Their share of investment increased slightly from 20.7 percent to 21 percent.
I SSN 2226-8294
HANG SENG INDEX 19600
19550
More on pages 2 & 3
Singleton flats unsold – as legislators feared
19500
July 30
Claims the government has built too many affordable flats for single people and not enough for families appear to have been vindicated. It has halted the sale of more than 1,500 one-bedroom apartments in the Seac Pai Van complex citing poor demand. More than 5,750 applicants are on the waiting list for affordable homes, but fewer than 330 households applied for single-bedroom units. Page 3
Thinking drinking – wine futures Europe may be up to its eyes in debt, but there’s a future in fine wine investment. So claims Kenneth Wine Cellar, a subsidiary of local construction and interior design company Capital Strategic Investment Group. It enables investors to purchase wine futures – while a vintage is still in the barrel – from selected vineyards, using Bank of China Macau branch financing.
HSI - Movers Name
%Day
SILICONWARE PREC
6.86
MEDIATEK INC
2.92
YULON MOTOR CO
2.02
CHINATRUST FINAN
2.00
NAN YA PLASTICS
2.00
CHIMEI INNOLUX C
-1.65
AU OPTRONICS COR
-1.65
ACER INC
-1.71
HTC CORP
-1.90
CATCHER TECH
-4.31
Source: Bloomberg
Page 4
Budget hotels well starred Only six percent of Macau’s 24,117 registered hotel rooms are two-star or guesthouse accommodation. But during tougher economic times demand is on the rise says Macau Cheng Lio Group Co. Ltd. It’s opening its second low-cost property – this time in Taipa, before year-end. The group launched a 10 million patacas (US$1.25 million) 40-room two-star hotel near Na Tcha Temple last November in a joint venture.
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News where it matters
Page 5 www.macaubusinessdaily.com
Year I - Number 87 Tuesday July 31, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00
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business daily July 31, 2012
macau
Investors grow shy of risk but equities still beat debt Risk plays were out last year, with the outlook for the mainland economy uncertain Vítor Quintã
vitorquinta@macaubusinessdaily.com
A
fter a brief flirtation with higher-return mainland securities, Macau investors rushed back to safer Hong Kong securities last year. Money flowed back into equities as the return on long-term debt was hit by low interest rates. Hong Kong securities accounted for 37.9 percent of the market value of all investments abroad by Macau residents, according to the Monetary Authority of Macau’s 2011 Coordinated Portfolio Investment Survey. It was highest share for equities since the survey’s inception in 2001. The amount invested in Hong Kong securities reached 63.9 billion patacas (US$8 billion) by the end of last year, over 1.5 times more than a year before. More than 87 percent was invested in equities. Mainland securities first overtook Hong Kong securities as the favourite of Macau investors in 2010, about the time the mainland became the world’s second-biggest economy. They fell back into second place last year but their market value still grew by more than one-third to 35.5 billion patacas. Their share of all investment from Macau increased to 21 percent from 20.7 percent. A bank executive, who asked not to be identified, told Business Daily that the shift was probably due to “tactical allocation” to reduce
investment risk. William Cheung Ming Yan, a professor in the University of Macau’s Faculty of Business Administration, said: “It is more about risk management.” Mr Cheung, an expert in trading behaviour, told Business Daily: “We used to look at China securities as offering very high growth but also higher risk.” He said that even when the mainland economy had been booming, Macau investors were more willing to invest in red chips – stocks of state-run mainland companies incorporated abroad and listed in Hong Kong – than in A-shares traded at the mainland’s stock exchanges.
records every year since the global financial crisis. At the end of last year it amounted to 168.7 billion patacas, almost one-third more than a year before. “With global interest rates staying at historically low levels in 2011, Macau residents had a stronger preference for equity securities to debt securities,” the survey says. The amount invested in equities – including mutual funds and investment trust units – reached 107.1 billion, up by half from a year before. Equities accounted for 63.5 percent of external portfolio investment,
7.5 percentage points more than a year before. “Bonds currently have miserable yields, except for countries like Greece or Portugal or Spain, whose debt entails high risk,” the bank executive said. He said investors had fled to the property or stock markets. Thomas L.K. Vong of the Monetary Authority’s research and statistics department told Business Daily that a high rate of economic growth last year meant residents had more money to play with. He said they were “seeking to find better investment alternatives, to
Miserable yields Mr Cheung said since the mainland’s economy had slowed, Macau investors preferred Hong Kong equities – “relatively safer stocks”. The survey, conducted jointly by the Monetary Authority of Macau and the Statistics and Census Service, collects information about investment by Macau residents in securities issued by unrelated nonresident entities. The survey defines a resident as any individual, the government and other legal entities but excludes the managers of the region’s foreign exchange reserves. Investment by residents has set new
40 35 30 25 20 15 10 5 0
2010
2011
Source: Monetary Authority of Macau
business as usual
Flying blind Paulo A. Azevedo pazevedo@macaubusinessdaily.com
T
he Civil Aviation Authority of Macau says publicly what it cannot surely believe internally when it tells us the monopoly granted to Air Macau until 2020 does not prevent new carriers from setting up fresh routes. Everyone knows the monopoly is a major obstacle, at least to the extent of what might otherwise be achieved. Even Air Macau knows it. They have recently gone to greater efforts to maintain control of Macau’s skies. The Asia Pacific Tourism Association knows that an open skies policy will attract new airlines and routes, and assist Macau’s development. Secretary for Economy and Finance Francis Tam Pak Yuen is aware the monopoly holds the city back. He has said as much previously. But, against all odds, even Mr Tam now seems to favour waiting until 2020. Anyone with any common sense realises the monopoly is working against the territory’s wider interests. So, how come no one has shown enough political courage to do something about it? Welcome to Macau, the land where bizarre policy does not need facts or evidence to become reality.
There are not enough takers for the 1,544 one-bedroom flats in the Ip Heng development
July 31, 2012 business daily | 3
MACAU They are willing to invest in stocks and take risks, but with bonds, you are basically lending money to another person or to a company. I guess that does not create a strong enough incentive William Cheung, University of Macau’s Faculty of Business Administration
Macau Residents’ Portfolio Investment Distribution by Type 100
75
New records have been set for overseas investments by residents every year since the global financial crisis
maximise their return”. But not all markets benefited from Macau’s appetite for equities. Among the biggest losers were European stock markets. “The sovereign debt crises in Europe continued to exert negative impacts
KEY POINTS Hong Kong securities are the favourite bet Appetite for mainland securities grows slowly Yuan’s climb gives mainland bills a boost
Photo by Manuel Cardoso
Taste for bonds soured by low interest rates
on the investment sentiment in European securities,” the survey report says.
Feeble incentive The amount invested in European securities fell by 13.8 percent and accounted for just 16.8 percent of residents’ investment abroad, 9 percentage points less than a year before. “There has been a massive capital flight from Europe back to Asia and Macau is, of course, no exception,” the bank executive said. Investment by Macau residents in long-term debt rose by 4.2 percent to 53.9 billion patacas, but accounted for only one-third of all their investment abroad, a lower proportion than a year before. The survey report says “extremely low” interest rates were a deterrent but Mr Cheung believes investors here are “not big fans of
bonds” anyway. “They are willing to invest in stocks and take risks, but with bonds, you are basically lending money to another person or to a company. I guess that does not create a strong enough incentive,” he said. “The property market has been offering a much better return.” The average price of residential space here rose by 21 percent last year to 45,027 patacas per square metre. Investment in short-term debt rebounded to reach 7.8 billion patacas, 76.1 percent more than a year before. Of this sum, 78.6 percent was invested in mainland government bills. The banks are Macau’s biggest investors in short-term debt. After reducing their holdings in 2010 because of strong demand for loans here, the banks went back on the hunt for mainland government bills.
Govt halts sale of one-bedroom flats Weak demand delays sale of smaller units in Seac Pai Van Tony Lai tony.lai@macaubusinessdaily.com
S
ales of 609 affordable homes in the Seac Pai Van public housing complex will begin next month but the government has postponed the sale of more than 1,500 one-bedroom flats because of weak demand. “There is enough public housing on sale right now to meet the demand for one-bedroom units,” Housing Bureau director Tam Kuong Man told a news conference yesterday. More than 5,750 households were on the waiting list for subsidised housing yesterday but fewer than 330 had applied for one-bedroom flats. The Ip Heng development in Seac Pai Van has 1,544 onebedroom flats.
Another building there still has 372 one-bedroom flats for sale, so the government has postponed the sale of one-bedroom flats, which it calls T1 units until later this year. “We will have a clearer idea about sales in the fourth quarter this year,” said Mr Tam. “We will then announce the future arrangement for the T1 units.” Mr Tam declined to say whether the government would entertain further applications for subsidised housing next year or instead let out one-bedroom flats that cannot find buyers. Associations and members of the Legislative Assembly have harshly criticised the Housing Bureau
50
25
2010
2011
0
Equity securities (including mutual funds and investment trust units) Short-term debt securities Long-term debt securities Source: Monetary Authority of Macau
“As part of Beijing’s push to internationalise the yuan, it launched short-term debt securities at very attractive yields,” the bank executive said. Mr Vong said: “The return is not as high as for European bonds, which are definitely riskier but it is higher than for US dollar bonds”. Mr Cheung said there was little risk of default and that the constant appreciation of the yuan made investing in mainland government bills attractive.
for the over-abundance of onebedroom dwellings in Seac Pai Van. Mr Tam said the sale of the twobedroom and three-bedroom flats in the Ip Heng development would begin next month. They will be put up for sale at an average price of 927 patacas (US$115.9) per square foot of floor area. A two-bedroom flat will cost between 696,500 patacas and 904,200 patacas and a three-bedroom flat between 924,800 patacas and 1.18 million patacas. The price per square foot is the lowest in any of the city’s subsidised housing developments. The price per square foot was 1,137 patacas in the Koi Nga development in Seac Pai Van, 1,184 patacas in the TN27 development and 1,256 patacas in the Alameda da Tranquilidade development. Mr Tam said the prices were based in part on the purchasing power of the applicants and the situation of the flats. The Ip Heng development will have 2,153 subsidised flats in 10 towers, social facilities and more than 900 parking spaces. Would-be buyers can visit the show flat at Ilha Verde from August 14 and will be able to choose a flat as soon as August 21.
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business daily July 31, 2012
Photo by Manuel Cardoso
macau
Liquid assets, easy drinking Cellar opens plans for Macau people looking for an alternative investment Kenneth’s Wine Cellar has as many as 60,000 bottles of wine in storage, including some rare vintages
Xi Chen
xi@macaubusinessdaily.com
L
ocal Investors have been able to keep their assets in a highly liquid form since May – wine. Kenneth Wine Cellar, a subsidiary of construction and interior design company Capital Strategic Investment Group, has a product that allows investors to purchase wine futures with the Macau branch of the Bank of China Ltd financing up to half of the investment for up to three years. The minimum contract is about 200,000 patacas (US$25,000), so the initial outlay could be as little as 100,000 patacas with bank finance, Kenneth Wine Cellar operation director Simon Poon told Business Daily. “We already have a couple of dozen clients who have showed an interest and we are hoping to see about 50 million patacas in total investment
during the first year,” Mr Poon said. Buying wine futures, or “en primeur”, allows potential buyers to purchase wine cheaper than retail prices before the wine is bottled. Vineyards usually offer a discounted en primeur price to wine dealers or select clients to secure finance to produce the wine. Typically it takes about two years from vintage through to cellaring, before going on sale. “There is usually a price discount of up to 50 percent between the en primeur price and the market price,” Mr Poon said. Investors can buy wine contracts either as an investment or to enjoy a quality wine, he said.
Future in wine Kenneth’s also allows investors to sell their wines to the company at the original value of the contract up to three months after delivery, if the contract is clear of any bank loans. The cellar can also sell wines on a client’s behalf if they wish to cash in.
Clients may also opt to invest in wine already cellared by the company. Kenneth’s currently has between 50,000 and 60,000 bottles of wine in storage, with an estimated total value of about 50 million patacas. “Ninety percent of our wines come from France and Australia, with the majority coming from France. Among the French wines, about 50 percent are Bordeaux,” he said.
We are hoping to see about 50 million patacas in total investment during the first year Simon Poon, director at Kenneth Wine Cellar
Responsible gambling must focus on people, not casinos Self-exclusion best to fight problem gambling but industry shouldn’t wash its hands of issue: scholar Daniel do Rosário newsdesk@macaubusinessdaily.com
R
esponsible gambling ultimately relies on individuals, not government rules, a visiting scholar said yesterday. But to tackle the issue is also in the interest of the industry’s reputation, he added. Robert Ladouceur, professor at the School of Psychology at Laval University in Québec, Canada – and a leader in the field of problem-gambling research – is in Macau to hold lectures on best practices for responsible gambling programmes. When asked what he thought about the proposal to raise the minimum age of casino employees and gamblers in Macau to 21, Mr Ladouceur compared the situation with speeding while driving. “If there’s no police or radar check, you and I, we will speed. If a measure or a law is passed, it has to be enforced,” he told Business Daily. Very different individuals become problem gamblers, and, as such, “there is no one
programme that will fit them all,” the scholar warned. What he advocates instead is a varied approach, including ‘awareness weeks’, counselling services, and ‘self-exclusion’. Self-exclusion is central to Mr Ladouceur’s approach. He argues people forced out of casinos would always find a way to continue gambling. Mr Ladouceur claims self-exclusion “...works in about 25 to 30 percent of the people,” adding “that brings us to a very important philosophical aspect: the ultimate decision about whether to gamble or not to gamble belongs to the individual.” He stressed: “But that doesn’t mean that the industry has no responsibility.” Gambling operators must “inform the patrons about the probability of winning,” have a “structured programme” increasing the awareness over the negative consequences of pathological gambling and have programmes such as selfexclusion in place, the Canadian said. During the seminar, Mr Ladouceur said casinos could provide benefits to individuals and the community. However, he stressed that responsible gambling requires that “the total benefits of gambling must exceed the total social costs”.
The cellar is also the sole distributor for some French and Australian vineyards in which Capital Strategic Investment Group made investments. Launched as a hobby, the cellar now also runs a wine club with about 300 members. The company is planning to open another branch of Kenneth Wine Cellar in the mainland and is considering the possibility of distributing a spirits brand, Mr Poon said. Wine consumption has boomed in the mainland and its first wine investment fund, the Dinghong Fund, was given the green light last August, the Financial Times reported. The fund plans to raise 1 billion yuan (1.25 billion patacas) and will invest in wines form Bordeaux and Burgundy. The Liv-ex Fine Wine 100 index, a benchmark for fine wines, has increased by 11 percent in the last five years, compared to a 16-percent drop in Hong Kong’s benchmark Hang Seng Index.
‘Misstatement’ fear in Amax report Auditors have again refused to vouch for a financial report by Macau gaming investment company Amax Holdings Ltd. The latest document is the full annual report for the fiscal year ended March 2012 filed yesterday with the Hong Kong Stock Exchange. Accountancy firm Baker Tilly Hong Kong lists a raft of dubious or unverified transactions that it says makes it impossible to be sure Amax is acting ethically. “…we were not able to satisfy ourselves as to whether the net assets (as restated) of the Group and the Company as at 1 April 2011 were free from material misstatement,” said the auditor. One of the Amax deals questioned by the auditor effectively drained Amax of HK$2.06 billion (US$265 million). According to the annual report, the amount represents combined losses on loans made by an Amax subsidiary to another company, AMA International, an aggregator of junkets. AMA used the money to provide gambling credit to agents and their players with the lure of 1.35 percent commission on the subsequent rolling chip play going to the agents. In setting up this arrangement, Amax rapidly expanded the share of VIP revenue held by Crown Macau (now Altira Macau) when it was struggling for business after opening in May 2007. The annual report reiterates that Ng Man Sun is a 24 percent shareholder in Amax. Mr Ng – also known as Ng Wai or Kai Sze Wai – is a Macau junket operator of three decades’ standing who was hospitalised in June after being attacked by six men. A.E.
July 31, 2012 business daily | 5
MACAU
Low-cost hotels conjure up enterprising visions Cheng Lio to have greater presence in low-cost hotel market Tony Lai
tony.lai@macaubusinessdaily.com
M
acau Cheng Lio Group Co Ltd has one low-cost hotel already and expects to open one new one on Taipa this year and more next year. Cheng Lio general manager Chan Lai Wa told Business Daily that after 20 years in the tourism industry the company had got into the low-cost hotel market in November by opening a 40-room, two-star hotel, a joint venture with Fok Weng International Hotel Co, in the city’s historic centre. The Chan Heng Inn, near Na Tcha Temple, cost more than 10 million patacas (US$1.25 million) to establish. Its rooms cost from 550 patacas to 600 patacas a night. “The hotel has been doing well,” Ms Chan said. The room occupancy rate averages 90 percent. Most guests are mainland tourists and the rest come from elsewhere in Asia. The hotel is another option for tourists looking for low-cost accommodation in preference to one of the city’s five-star hotels. Official data show that in May the
The Chan Heng Inn, the group’s first budget hotel, cost more than 10 million patacas
city had nearly 1,400 rooms in twostar hotels and guesthouses, with the occupancy rates ranging from 61.1 percent to 74.9 percent. The director of the Macau Government Tourist Office, João Manuel Costa Antunes, told reporters last week that the government would license new low-cost hotels, adding about 300 rooms. In view of the success of its first hotel, Cheng Lio is aiming for a greater market presence. Ms Chan said her company expected its new two-star hotel on Taipa,
with about 40 rooms, to open as soon as the end of this year. She said Cheng Lio, in cooperation with other companies, would add “a few hotels of similar scale” next year. She declined to give details. The government wants lowcost hotels to play a part in the development of the tourism industry. Chief Executive Fernando Chui Sai On said last week that the government wanted more low-cost hotels built near the new border crossing in Ilha Verde. Ms Chan hopes the government
will provide hotel developers with cheaper land and help them lower construction costs. She expects investors in the hospitality industry to prefer low-cost hotels to five-star hotels because it is “easier and quicker to break even”. Timberider Resort Management, a company with a foot each side of the border, opened last month a new two-star hotel near San Ma Lo called Ole Tai Sam Un. It has also added more rooms to its Ole London Hotel.
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business daily July 31, 2012
macau
War then peace: Crown, Echo mull VIP gaming ties Australian casino firms bolster high roller business against Asian competition
Crown Melbourne (left) and The Star (right) in Sydney – possible cooperation on VIP gambling
Associate Editor
T
wo Australian casino operators – one a partner in a Macau joint venture and the otheran active recruiter of Macau high roller players for its own tables – are now interested in working together. The reason for the proposed partnership is to build up jointly their VIP player business according to the Australian Financial Review. Crown Ltd is a long standing specialist in high rollers – many from East Asia and Southeast Asia – at its Crown Melbourne property in the state of Victoria. Echo Entertainment Group owns and operates The Star gaming resort – formerly known as Star City – Sydney’s only casino. Echo was spun off in June 2011 from the horse race betting and slot parlour operator Tabcorp Holdings Ltd. The Review, quoting people with knowledge of the matter, suggested the tie up between Echo and Crown would be essentially a defensive move to keep high roller business
in Australia, rather than seeing it exported to places such as Macau or Singapore.
Cold and hot Crown and Echo had been in open warfare over what Echo regarded as a hostile takeover strategy by Crown. In May Crown applied to the regulatory authorities in New South Wales and Queensland – the Australian states where Echo has casinos – to increase its stake in Echo beyond 10 percent. Shortly before, Crown had been lobbying the NSW government to be allowed to challenge Echo’s monopoly in Sydney. Some industry sources regarded that as a tactic to apply pressure on the government in neighbouring Victoria. Crown had also been lobbying there for lower state tax rates on casino gambling. The suggestion from industry insiders to Business Daily was that if the company didn’t get its way it would threaten to move some of its gambling customers out of Victoria, thus depriving the state of muchneeded tax revenue. Echo has its own reasons for
seeking peace with Crown and reestablishing confidence among its investors. In March this year it had to write down US$29.9 million (238.8 million patacas) following the collapse of VIP junket operator SilkStar Global Marketing Ltd – a business that had been supplying The Star with some Asian high rollers. Echo was also forced into a A$454 million (3.79 billion patacas) capital raising exercise last month to strengthen its balance sheet in response to investor discontent.
Wining and dining That month Echo executives flew to Macau to host a promotional dinner at MGM Macau. The list of 400 guests included Macau junket operators and their high roller players. The guests were shown a video about The Star and given a short presentation about the property. Echo told Macau industry insiders at that time that it was not a direct recruiting event for Asian VIP gamblers but part of a campaign – assisted by Tourism Australia – to raise the profile in Asia of Sydney and of The Star resort.
In late 2010 Echo struck a shortlived deal with Hong Kong-listed Macau junket investor Neptune Group Ltd for an exchange of VIP players. The thinking was that many Chinese high stakes gamblers have business or family interests in Australia and would be interested in playing at Sydney’s only casino during their trip. It was also thought there were ethnic Chinese and other Asians resident in Australia with business ventures in Greater China that were interested in playing in Macau. Sources in Macau suggest the tie up wasn’t a good business for either side. Crown is the junior partner to Hong Kong-listed Melco International Development in the Macau gaming concessionaire Melco Crown Entertainment. MPEL is the developer and operator of Altira Macau and City of Dreams on Cotai. In June last year MPEL took 60 percent ownership of the stalled Studio City project on Cotai. Construction work there is expected to recommence soon although a government gazetting for the scheme last week still made no mention of a casino on the site.
Weather Beijing 25/22o C Changchun 22/16o C
Harbin 22/16o C
Xian 35/25o C Shanghai 35/28o C Chengdu 29/24o C Kunming 26/18o C Haikou 33/25o C Sanya 29/24o C
Guangzhou 36/24o C
MACAU (30 July-4 August) Day
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07/31
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40/85 %
08/01
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40/85 %
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08/03
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Shenzhen 31/26o C
ASIA (today)
Hong Kong 31/26o C
Manila
TOKYO
Jakarta
28/25o C
33/25o C
33/27o C
33/23o C
Macau 33/26o C
Bangkok
SEOUL
K. lumpur
33/25o C
SINGAPORE
32/25o C
33/24o C
taipei
28/26o C
July 31, 2012 business daily | 7
Photo by Manuel Cardoso
MACAU Court rules govt right to recover graft-tainted lot
Building’s owner hopes to profit from renovating the homes in the Areia Preta flats
Flats in Yue Hwa building on sale to landlords
F
lats in the Yue Hwa building in Areia Preta have gone on sale after an identified investor here bought it from Hong Kong’s Hutchison Whampoa Ltd for 230 million patacas (US$28.8 million) three months ago. The Chinese-language Macao Daily News quoted estate agents as saying the flats were being sold for 3,600 patacas (US$450) per square foot. The newspaper said space was being offered to buyers able to take an entire floor, with a view to letting the flats. The building has 120 flats with an average size of 800 square feet. A typical flat would cost a minimum of 2.8 million patacas.
The building used to be a residence for casino employees but the new owner is now renovating it. No date has been set for offering flats in the building for sale to the general public. However an estate agent told Business Daily that sales to the general public would likely begin soon. Estate agents say the supply of second-hand housing in Areia Preta has increased recently. However, the number of second-hand homes sold would probably be 5 percent to 10 percent lower next month than this month, as many people holiday through the month of August. X.C.
The government was right to revoke the grant of a plot of land caught up in the web of corruption woven by former government official Ao Man Long, the Court of Final Appeal ruled. The land occupied by the former leather factory on Rua dos Pescadores was granted to developer Companhia de Investimento e Desenvolvimento Predial Trust Art. The court said in a written judgement that the government had no choice but to take back the land after it was proved in court that businessmen Pedro Chiang and Miguel Wu Ka I had bribed Mr Ao to grant the land to the developer. The judges overturned the finding of a lower court that the government should have given the developer a hearing so it could tell its side of the story. Their judgement says the developer should, indeed, have been given a hearing, but that this was not enough to reverse the “inevitable” decision to revoke the grant. Mr Chiang fled Macau in 2007 and was tried for bribery in his absence. Because he has never been informed officially of the court’s verdict of guilty, his conviction is not final. The Court of Final Appeal said that it was “entirely irrelevant” whether Mr Chiang’s conviction was final because it had been proved in court during his trial that the plot had been granted as a result of an act of corruption. V.Q.
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business daily July 31, 2012
Greater china
SEC freezes trader assets in probe into Nexen deal Shares of Rongsheng Heavy tumble in Hong Kong
T
he U.S. Securities and Exchange Commission obtained a court order to freeze assets of traders who allegedly reaped more than US$13 million by trading illegally ahead of Cnooc Ltd’s announcement that it would buy Nexen Inc. Hong Kong-based Well Advantage Ltd, controlled by Zhang Zhi Rong, and other unidentified traders stockpiled shares of Nexen based on confidential information about the deal, the SEC said in a July 27 statement announcing a complaint filed at federal court in Manhattan. The court order froze about US$38 million in assets, the SEC said. Nexen’s stock rose more than 50 percent on July 23 after Cnooc, China’s largest offshore oil and gas explorer, said it would pay US$15.1 billion in cash to acquire the Calgary-based company. Well Advantage’s owner Mr Zhang, a billionaire, is the controlling shareholder of China Rongsheng Heavy Industries Group Holdings Ltd, a Hong Kong-based company that engages in significant business activities with Cnooc, the SEC said. “This may be the tip of an iceberg suggesting that the government in China has to be more careful about their business and business partners,” said Joseph Fan, co-director of the Institute of Economics and Finance at
the Chinese University of Hong Kong. Many individuals doing business with state-owned enterprises are well connected and there are complicated relationships and transactions between them, Mr Fan said.
Rongsheng ties Mr Zhang, 43, is the chairman and founder of China Rongsheng Heavy Industries, a Chinese shipbuilder, and developer Glorious Property Holdings Ltd. China Rongsheng Heavy Industries said in a statement yesterday that Mr Zhang doesn’t have any executive role, and business operations won’t be affected. The shipbuilder won an order from state-owned Cnooc to build a deepwater pipe-laying vessel in 2007 and Cnooc was one of the cornerstone investors in its initial public offering in Hong Kong in November 2010. Shares of Rongsheng Heavy fell 16.4 percent yesterday to close at HK$1.17, its lowest level since its listing, after saying earlier in the day its first-half profit will drop significantly on a decline in orders and prices. The stock has slumped 85 percent since its Hong Kong stock sale. “Given news that the SEC has
ordered a freeze on accounts allegedly related to Rongsheng Chairman Zhang Zhi Rong, we believe our recent upgrade to ‘hold’ for Rongsheng, based on Rongsheng hitting crisis level valuations half that of peers, now appears to have been too early,” Religare Capital Markets’ analyst Vincent Fernando wrote in a note to clients yesterday. He downgraded the stock to a sell. Mr Zhang was listed as China’s 38th richest person with a fortune of US$2.9 billion in the 2010 Hurun Report, which tracks the country’s wealthy. Glorious Property also said yesterday its normal business operations won’t be affected. Its shares plunged by 10.6 percent, the most since its listing in October 2009, to close at HK$1.18 in Hong Kong. Hong Kong’s Securities and Futures Commission and Cnooc declined to comment on the case. Unknown traders used accounts at Singapore-based Phillip Securities Pte and Citibank N.A. in Singapore to trade illegally in the shares of Nexen, according to the SEC’s complaint.
Rongsheng Heavy won an order from Cnooc to build
Nexen’s options Almost all of the purchases of Nexen stock occurred during the seven
Hong Kong stocks gain despite profit gloom HSI up 1.6 percent, but stiff chart resistance looms
H
ong Kong shares rose for a third-straight day yesterday. Talk of more easing from the United States and eurozone broadly supported markets, as the Hang Seng Index rose 1.6 percent to 19,585.4, outperforming Asian peers. The gains came despite 17 companies listed in the territory, most of them Chinese, issuing profit warnings after markets closed on Friday. “Obviously 17 is a lot of profit warnings for a single day, but I think it just goes to show you how much the Chinese economy has decelerated,” said Jackson Wong, Tanrich Securities’ vice-president for equity sales Mainland Chinese markets declined, with large caps relative outperformers after the Shanghai Stock Exchange said it was proposing to speed up and simplify delisting rules to deter speculators.
The large cap-focused CSI300 Index of the top Shanghai and Shenzhen listings slipped 0.6 percent on the day, dipping into the red for the year. The Shanghai Composite Index lost 0.9 percent, closing at the lowest since March 3, 2009. The Hang Seng scaled a chart gap formed between the July 20 low at 19,511.9 and the July 23 high at 19,259.4. But, given the gloom ahead of the impending earnings season, it appeared difficult for the index to overcome resistance seen at around 19,651, its 200-day moving average and a technical level it has struggled to finish above since mid-May. Other than a slew of earnings later this week, investors would also eye China’s official PMI report tomorrow for signs whether the slowdown in the world’s secondlargest economy is over the worst. Reuters
Stocks gain despite 17 companies issued profit warnings on Friday
Paul Chan joins HK government Paul Chan Mo Po was appointed secretary for Development of the Hong Kong government. He replaces Mak Chai Kwong, who resigned on July 12 amid suspicions of abusing a civil service rent-reimbursement system.
Mr Chan, 57, has just finished his term at the Legislative Council. Before serving as a legislator, he was president of the Hong Kong Institute of Certified Public Accountants. Hong Kong Chief Executive Leung Chun
Ying said yesterday in a statement that Mr Chan was “devoted to serving the public and has been involved in various public duties for many years” and he was pleased to have Mr Chan join his political team.
July 31, 2012 business daily | 9
greater china
Hang Seng bank’s first half profit jumps Stephanie Tong
H
ang Seng Bank Ltd, the Hong Kong lender controlled by HSBC Holdings Plc, posted a 14 percent jump in first-half profit as lending income grew. Net income rose to HK$9.3 billion (US$1.2 billion), or HK$4.87 a share, from HK$8.16 billion, or HK$4.27, a year earlier, the bank said in a filing to the Hong Kong stock exchange yesterday. That beat the HK$8.26 billion average estimate of seven analysts surveyed by Bloomberg News. Hang Seng, led by chief executive Rose Lee, is benefiting from China’s policy of encouraging use of the yuan outside the country, as transactions between China and Hong Kong spur demand for loans and investment products
d a deepwater pipe-laying vessel in 2007
trading days before the acquisition was announced, and the accounts used for the transactions had little or no history of buying Nexen shares. “Well Advantage and these other traders engaged in an all-toofamiliar pattern of misusing inside information to place extremely timely trades and profit handsomely from their illegal acts,” Sanjay Wadhwa, deputy head of the SEC’s market abuse enforcement
unit, said in a statement. Data compiled by Bloomberg showed trading in bullish Nexen options reached the highest level since 2008 before Cnooc announced it would buy the energy company. A total of 47,302 calls traded on the company’s U.S. shares last week, with bullish contracts reaching 24,554 on July 20, the most since March 2008. Bloomberg
Beijing speeds up opening of capital markets Grants US$1.2 billion in foreign investment quotas in July
C
hina’s foreign exchange regulator granted US$1.2 billion in combined quotas to six overseas institutional investors so far in July as the country speeds up opening of its capital markets. The State Administration of Foreign Exchange (SAFE) gave US$100 million each in fresh quota to five institutions including William Blair & Company LLC., Templeton Investment Counsel, LLC and Manulife Asset Management (Hong Kong) Ltd under the Qualified Foreign Institutional Investor (QFII) scheme. China’s financial markets are largely shut off to investors from abroad and the country’s currency is not fully convertible. Under the QFII scheme, an investor is granted a licence and an investment quota by the regulator. The regulator gave US$700 million in fresh quota to the Hong Kong Monetary Authority, bringing the de facto central bank’s total investment quota to US$1 billion. China has been stepping up efforts to expand the QFII programme, which it launched in 2003 to allow foreign investors to buy Chinese securities, as part of a
broader reform of the country’s financial markets. China’s securities regulator published new QFII rules on Friday that lowered the threshold for QFII applicants and broadened foreign investors’ investment scope. The rules were in line with draft regulations published in June. Earlier this year, the government raised the total maximum QFII quota by US$50 billion to US$80 billion. China has so far granted QFII licences to 172 foreign investors and 149 of them had obtained combined quotas of US$28.53 billion from the country’s foreign exchange regulator as of July 20. Reuters
denominated in the currency. Hang Seng Bank started offering the world’s first yuan-denominated gold exchanged-traded fund in February, the month Mr Lee was appointed. The second-largest Hong Kongbased lender rose 0.7 percent to HK$107.60 at the 4 pm close of Hong Kong trading, before the earnings were announced. The stock has declined 12 percent over the past year, compared with a 13 percent drop in the Hang Seng Index. Net interest income rose 8.5 percent to HK$8.29 billion while net fee income, derived largely from credit cards, stockbroking services and selling mutual funds, fell 5 percent to HK$2.41 billion.
First-half profit increases as lending income grew
Bloomberg
10 |
business daily July 31, 2012
asia
Japan factory output dips in June Builds case for extra monetary Gazprom S’pore aims and fiscal measures to aid growth to double revenue The Singapore trading arm of Russia’s largest gas producer, Gazprom, expects to double its revenue by 2015 as it grows trade volume of liquefied natural gas (LNG) and non-gas liquids, while delaying expansion of its Asian crude business. The company could expand its trade of condensate and naphtha. “We’re going to concentrate on LNG and we see that as our big growth area and demand is very strong,” Arthur Tait, managing director of the Singapore trading unit, told Reuters. Gazprom Marketing & Trading Singapore has ordered two LNG tankers, which will boost its fleet size to five vessels in 2014, he said. Last year, the Singapore unit sold up to 2.5 million tonnes of LNG to Asia, of which 1 million came from its production in Sakhalin, while it supplied 450,000 tonnes to Asia. New regasification terminals proposed in southeast Asia could boost LNG demand, in addition to strong consumption from China, India and South Korea, Mr Tait said.
J
apan’s factory output unexpectedly dipped in June, down for a third straight month, adding to concerns that slackening global demand is taking its toll on the world’s third largest economy. The 0.1 percent drop in industrial output compared with economists’ median forecast of a 1.5 percent increase, providing a source of concern for policymakers anxious about a slowdown in China and other emerging market economies. Manufacturers surveyed by the
Yen gains
We will have to rely on the economic impact from reconstruction spending, because external demand is
Man jailed for Marina Bay scam A former video surveillance operator at Marina Bay Sands casino in Singapore has been jailed for three years for masterminding a scam that netted nearly S$150,000 (US$120,300). Ho Boon Keat, 29, was working in security at Las Vegas Sands’ resort in the Lion City when in July and August last year he and four accomplices put their plot into effect at the sic bo tables. In the scam, one of Mr Ho’s co-conspirators would claim – whenever another player threw a triple – that he had earlier placed a S$25 bet on that result. Under some sic bo rules gamblers can win up to 180 times their bet if all the dice display the same number. In the follow up inquiry to the disputed bet, the pit manager would call Mr Ho to check video footage for confirmation. Mr Ho would lie and say the bet had been properly placed.
government raised their forecasts for July to a 4.5 percent rise compared with the previous forecast of 2.4 percent, but saw production dropping off in August again with a 0.6 percent fall. “Earlier this year, manufacturers front loaded a lot of production due to disruptions from flooding in Thailand last year, but now output is slowing,” said Hiroaki Muto, Senior Economist at Sumitomo Mitsui Asset Management Co. “We will have to rely on the economic impact from reconstruction spending, because external demand is weak. Japan’s economy will continue to grow, but not at a fast pace.”
weak. Japan’s economy will continue to grow, but not at a fast pace Hiroaki Muto, Sumitomo Mitsui Asset Management Co.
Yesterday’s data and the trade ministry assessment that output has stagnated cast doubt about the Bank of Japan’s view that the economy was poised for moderate growth in the coming months, largely supported by domestic demand driven by rebuilding efforts from last year’s massive earthquake and tsunami. The signs of weakness kick off a week that UBS AG says will be among the year’s most important for financial markets, with the U.S. Federal Reserve and central banks in the U.K. and the euro region meeting to consider fresh stimulus efforts. “It’s increasingly likely that the
Fed and European Central Bank will ease further by September,” said Masamichi Adachi, a senior economist at JPMorgan Securities in Tokyo and a former central bank official. In Japan, the government may implement a supplementary budget by September, with the central bank expanding asset purchases, Mr Adachi said. Many analysts expect the bank to stand pat on monetary policy for the time being, barring a sudden yen spike which would hurt Japan’s export-reliant economy. “If the Federal Reserve announces fresh stimulus measures this week and pushes up the yen against the dollar, that could put market pressure on the Bank of Japan to act too this month. Otherwise, the BOJ
Power outage plunges Indian cities into darkness Grid collapse leaves 360 million people without energy
Hitachi results beat market consensus Hitachi Ltd, Japan’s largest industrial electronics maker, reported a better-thanexpected quarterly operating profit as strong sales in its power and automotive systems business offset the gloom in Europe and the slowdown in China. Hitachi reported an operating profit of 63.6 billion yen (US$808.85 million) in the April-to-June quarter, up from 52.4 billion yen in the same period last year when Japanese corporate earnings were battered by the March 11 earthquake and tsunami. The results topped the average forecast of 59.5 billion yen estimated by four analysts polled by Thomson Reuters I/B/E/S. Hitachi kept its annual forecast for a 480 billionyen operating profit for the year ending March 2013, below the average estimate of 500.6 billion yen in a poll of 22 analysts. The company plans to stop producing its own TV sets later this year after merging its operation with those of Sony Corp and Toshiba Corp last year.
Thousands of passengers were stranded with a few trains starting with long delays as they were moved with diesel engines
I
ndia’s worst power grid failure in a decade cut electricity supplies to nearly 360 million people in seven northern states yesterday, shutting transport networks, triggering commuter chaos and halting water supplies.
About 50 percent of the system had been restored and the remainder was to be resumed late yesterday, V.V. Sharma, a general manager with the systems operation unit of Power Grid Corp. of India, said. The company is analysing what
went wrong, Mr Sharma said. Businesses across much of Delhi, Haryana, Punjab, Himachal Pradesh, Uttar Pradesh, Jammu and Kashmir and Rajasthan states, had to turn to generators, while services on New Delhi’s metro and
July 31, 2012 business daily | 11
asia
Property loan quality sparks concern S.Korea central bank warns of weakening value
S
Production of cars to be exported fell again in June
is highly likely to stand pat,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
Flat trend Highlighting weakening overseas demand, trade data last week showed Japan’s exports logged the first annual decline in four months in June as Europe, China and other emerging markets slow. In Japan, the government downgraded its assessment of industrial production for the first time since September, saying output is in “a flat trend”. Production of cars for overseas fell in June, it said. Last week, government reports showed that consumer prices unexpectedly declined and retail sales rose less
Indian railways were suspended for several hours. Traffic signals failed, jamming roads. “This again highlights how poor infrastructure remains the biggest drag on the Indian economy,” said D.H. Pai Panandiker, president of RPG Foundation, an economic policy group based in New Delhi. “The power sector remains too overregulated. Unless private companies are allowed greater involvement, the problems are going to remain.” Prime Minister Manmohan Singh is seeking to secure US$400 billion of investment in the power sector in the next five years as he targets an additional 76,000 megawatts in generation by 2017. India has missed every annual target to add electricity- production capacity since 1951.
Transport chaos Power cuts are common across swathes of India, hurting industrial production, as the country battles an average 9 percent shortfall in meeting peak power demand, according to the Central Electricity Authority. The deficit shaves about 1.2 percentage points off annual growth in India’s US$1.8 billion economy, according to the government’s Planning Commission. A fault at a power station in the city of Agra caused the blackout across large parts of the country’s north at about 2.30 a.m. local time, P. Uma Shankar, the top bureaucrat in the power ministry, said in an interview. The outage doesn’t pose any security risk, and supply to
than economists forecast. Japan’s economy is expected to outperform most other developed nations this year with a boost from solid domestic demand, but analysts have slashed forecasts for factory output as the global slowdown becomes more pronounced. The world’s third largest economy is set to grow 2.2 percent in the year to next March, according to economists polled by Reuters, a little slower than the 2.3 percent growth seen in a similar survey in June. The BOJ set a 1 percent inflation target and eased policy via an increase in asset purchases in February, and followed up with more easing in April to show its resolve to beat deflation. Reuters/Bloomberg
the nation’s railway network has already been restored, he said. “This is a prime example of India’s infrastructure not being up to the mark,” said Mumbai-based Rohit Singh of IDBI Capital Markets Services Ltd. “India needs to get to the point where one failure to the grid doesn’t take down an entire region. That should be the goal.” About 150 trains were delayed in northern India, according to Neeraj Sharma, spokesman of the Northern Railways. New Delhi’s airport was operating on back-up power supplies, spokesman Kapil Sabharwal said, adding that no flight has been cancelled. The affected states are responsible for about 37 percent of the country’s peak electricity demand, according to the Central Electricity Authority. This is the country’s biggest power failure since January 2001 when the same northern grid collapsed leaving homes and businesses without electricity for 12 hours. The Confederation of Indian Industry, the country’s largest association of companies, estimated that blackout cost companies US$107.5 million. Power cuts lasting up to eight hours a day have recently sparked protests in industrial towns on the outskirts of the Indian capital. Sushil Kumar Shinde, India’s minister of power, said a panel led by the heads of the Central Electricity Authority, Power Grid Corp. and Power Operation System Co. Ltd would probe yesterday’s failure. Reuters/Bloomberg
outh Korea’s central bank warned yesterday of the weakening quality of loans backed by commercial real estate, calling for the relevant authorities to beef up supervision and pay closer attention to this issue. The delinquency ratio on commercial property-backed loans has risen to the highest in three years and auction prices of an increasing number of properties fall short of their outstanding loans, the Bank of Korea said in a report. It noted that commercial propertybacked loans have grown to a similar amount as home-backed loans and that a large part of loans were owed by the self-employed, who are more vulnerable to an economic downturn than big companies. The delinquency ratio on commercial property-backed loans stood at 1.44 percent at the end of May, the highest since 1.51 percent at the end of September 2009, it said, based on its analysis of data from six major banks. The Bank of Korea also said the ratio of loans for which auction prices of their collateralised commercial properties have fallen below the outstanding amount of loans reached 25 percent, far higher than 0.9 percent for homebacked loans. South Korea has recently adopted a series of administrative measures aimed at curbing household debt, much of them backed by homes, as highly leveraged households have emerged as one of the weakest links in Asia’s fourth-largest economy.
In South Korea, the Financial Services Commission and the Financial Supervisory Service have prime responsibility for supervising and regulating financial institutions while the central bank has limited say.
Confidence down Meanwhile, South Korean manufacturers’ confidence dropped to the lowest level in more than three years as Europe’s worsening fiscal crisis damped sentiment in a country where exports make up about half the economy. An index measuring expectations for August was at 70, the lowest level since May 2009, after dropping from a revised 81 in July, the Bank of Korea said in a statement yesterday. A measure of expectations at non-manufacturing companies also dropped to 69 from a revised 76. “The South Korean economy is muddling through uncertainty caused by the European debt crisis,” Oh Suk Tae, an economist at SC First Bank Korea Ltd in Seoul, said before the release. “The central bank indicated that it’s ready to act, but the market is expecting supplementary fiscal support only if the economy contracts significantly.” Asia’s fourth-largest economy grew at the slowest pace in almost three years last quarter, with HSBC Holdings Plc and Citigroup Inc. saying the Bank of Korea may cut rates again this year. Bloomberg
Fujitsu falls to 34-year low Tokyo-based company reported net loss of 23.8 billion yen in second quarter Naoko Fujimura
F
ujitsu Ltd, Japan’s biggest provider of computer services, fell to the lowest level in almost 34 years in Tokyo trading after posting a wider-than-estimated firstquarter loss. Fujitsu dropped 12 percent to close at 295 yen (US$3.7), the lowest level since September 1978, on the Tokyo Stock Exchange. Japan’s benchmark Nikkei 225 Stock Average rose 0.8 percent. The maker of the K super computer was hurt by falling overseas sales in its solutions business, which includes servers, because of a worsening economy in Europe and a slowdown in the U.S., Fujitsu said on July 27 after the market’s close. The Tokyo-based company also said it had an operating loss of 3.6 billion yen (US$46 million) in the devices business on reduced demand for its system chips used in televisions and servers. “There is a risk of worsening profitability from services,” Hideyuki Maekawa, a Tokyo-based analyst at Credit Suisse Group AG, said in a note to clients yesterday. “We are concerned about the
lack of transparency on how the company will reduce losses in its hardware business.” Fujitsu reported a net loss of 23.8 billion yen for the three months ended June 30. The company was expected to post a loss of 12.4 billion yen, according to the average of five analyst estimates compiled by Bloomberg. The company’s operating loss, or revenue minus the cost of goods sold and administrative expenses, totalled 25 billion yen, and sales fell 2.9 percent to 957.4 billion yen. Bloomberg
12 |
business daily July 31, 2012
MARKETS Hang SENG INDEX PRICE
Day %
VOLUME
PRICE
Day %
VOLUME
27.45
2.616822
32199679
CHINA UNICOM HON
11.72
1.913043
27709300
ALUMINUM CORP-H
3.14
1.618123
10321134
CITIC PACIFIC
11.02
0.7312614
2714108
BANK OF CHINA-H
2.92
0.3436426
236839816
5.1
2.204409
33618348
NAME AIA GROUP LTD
BANK OF COMMUN-H BANK EAST ASIA
27
1.886792
2232160
BELLE INTERNATIO
13.9
4.041916
21609330
BOC HONG KONG HO
23.7
0.6369427
CATHAY PAC AIR
12.98
0.7763975
CHEUNG KONG
102.3
1.791045
4824205
6.91
4.380665
40214357
CHINA COAL ENE-H CHINA CONST BA-H CHINA LIFE INS-H CHINA MERCHANT CHINA MOBILE
NAME
CLP HLDGS LTD
66.9
1.749049
3233927
CNOOC LTD
15.5
1.706037
41516905
SINO LAND CO
13.08
3.317536
7981906
SUN HUNG KAI PRO
96.25
1.262493
3783068 3790494
19.12
-1.443299
5018000
2204744
WANT WANT CHINA
9.36
1.079914
12066194
WHARF HLDG
44.55
3.484321
6840933
2100934
HANG SENG BK
107.6
0.6548176
1723450
22494425
TINGYI HLDG CO
2.504817
0.8403361
5.707763
9489380
26.6
24
23.15
2086905
HANG LUNG PROPER
23681979
2677364
SANDS CHINA LTD
2.538631
8233764
273309224
HENDERSON LAND D
44.15
1.261468
2626548
HENGAN INTL
73.05
0.4123711
2955500
HONG KG CHINA GS
17.76
0.7945516
5965618
HONG KONG EXCHNG
104.6
2.750491
5216156
HSBC HLDGS PLC
65.25
1.714731
21360037
SWIRE PACIFIC-A
MOVERS
45
3
1 19600
INDEX 19585.4
90
1.237345
16440182
HUTCHISON WHAMPO
69.5
1.311953
6236771
18.02
0.3340757
18377114
IND & COMM BK-H
4.32
1.886792
273180561
CHINA PETROLEU-H
6.95
2.205882
83953650
LI & FUNG LTD
15
1.626016
23024733
HIGH
19589.22
CHINA RES ENTERP
21.7
6.633907
6510692
MTR CORP
27
0.7462687
2237294
LOW
18813.71
CHINA RES LAND
15.34
-1.287001
9586300
NEW WORLD DEV
9.76
0.8264463
12452550
CHINA RES POWER
15.94
-1.116625
7089500
52W (H) 22808.33
PETROCHINA CO-H
9.55
0.5263158
64149301
CHINA SHENHUA-H
29.15
2.640845
20212584
PING AN INSURA-H
60.75
1.165695
8053936
(L) 16170.35
CHINA OVERSEAS
VOLUME
0.6113537
11727399
0
1.752922
92.9
6222828
3.622393
2.631579
Day %
60.95
230.4
2.495202
9.44
5.07
PRICE
POWER ASSETS HOL
TENCENT HOLDINGS
10.68
ESPRIT HLDGS
21.15
COSCO PAC LTD
NAME
18810
26-Jul
30-Jul
Hang SENG CHINA ENTErPRISE INDEX NAME
PRICE
DAY %
VOLUME
CHINA PACIFIC-H
24.9
0
12044260
YANZHOU COAL-H
11525000
CHINA PETROLEU-H
6.95
2.205882
83953650
ZIJIN MINING-H
10321134
CHINA RAIL CN-H
6.7
-0.7407407
13743770
ZOOMLION HEAVY-H
2.743142
11773258
CHINA RAIL GR-H
ZTE CORP-H
0.3436426
236839816
CHINA SHENHUA-H CHINA TELECOM-H
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.13
1.954397
130090770
AIR CHINA LTD-H
5.5
-0.3623188
ALUMINUM CORP-H
3.14
1.618123
ANHUI CONCH-H
20.6
BANK OF CHINA-H
2.92
NAME
3.33
-0.5970149
25741738
29.15
2.640845
20212584
5.1
2.204409
33618348
4.04
1.507538
44964442
13.08
0
1898151
DONGFENG MOTOR-H
10.54
4.356436
26116545
3.8
1.333333
28082046
GUANGZHOU AUTO-H
5.83
2.821869
7256639
CHINA COAL ENE-H
6.91
4.380665
40214357
HUANENG POWER-H
5.54
-1.77305
18068622
CHINA COM CONS-H
6.71
-1.612903
19357899
IND & COMM BK-H
4.32
1.886792
273180561
CHINA CONST BA-H
5.07
2.631579
273309224
JIANGXI COPPER-H
17.04
0.8284024
9241350
CHINA COSCO HO-H
3.17
-3.647416
25484625
PETROCHINA CO-H
9.55
0.5263158
64149301
PICC PROPERTY &
BANK OF COMMUN-H BYD CO LTD-H CHINA CITIC BK-H
21.15
0
23681979
8.57
-0.8101852
8831257
CHINA LONGYUAN-H
4.78
0.6315789
5405000
PING AN INSURA-H
60.75
1.165695
8053936
CHINA MERCH BK-H
14.12
1.436782
16842585
SHANDONG WEIG-H
8.44
-0.3541913
4276400
CHINA LIFE INS-H
CHINA MINSHENG-H
7.04
2.028986
20449075
SINOPHARM-H
22.1
5.741627
7464080
CHINA NATL BDG-H
7.47
1.219512
31181600
TSINGTAO BREW-H
45.15
2.497162
1252089
11.88
0.5076142
6292500
WEICHAI POWER-H
23.75
5.088496
5295682
CHINA OILFIELD-H
NAME
MOVERS
28
PRICE
DAY %
VOLUME
11.42
1.601423
28775329
2.44
1.244813
20994992
8.9
3.608847
39154367
10.26
-0.3883495
4307099
9
3 9560
INDEX 9523.43 HIGH
9559.67
LOW
9184.41
52W (H) 12639.66016 9180
(L) 8058.58 26-Jul
30-Jul
Shanghai Shenzhen CSI 300 NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.49
0.4032258
42110058
DAQIN RAILWAY -A
5.93
-0.3361345
28735593
AIR CHINA LTD-A
6.04
0.6666667
8082922
DATANG INTL PO-A
4.89
-0.407332
ALUMINUM CORP-A
5.97
-1.322314
7107748
DONGFANG ELECT-A
15.69
ANHUI CONCH-A
14.47
0.4861111
10006006
EVERBRIG SEC -A
13.45
BANK OF BEIJIN-A
7.48
0.9446694
14233090
GD MIDEA HOLDING
9.16
BANK OF CHINA-A
2.72
0
13770582
GD POWER DEVEL-A
2.63
4.3
1.895735
51901362
GF SECURITIES-A
13.6
10.1
0.7984032
26099701
GREE ELECTRIC
24449447
GUANGHUI ENERG-A
BANK OF COMMUN-A BANK OF NINGBO-A BAOSHAN IRON & S
4.22
1.199041
NAME
NAME
PRICE
DAY %
VOLUME
SAIC MOTOR-A
12.89
0.4676539
14760186
2656645
SANY HEAVY INDUS
11.97
2.39521
33688995
-1.9375
4935768
SHANDONG GOLD-MI
33.03
-1.078167
6226680
0
7842587
SHANG PHARM -A
10.68
-2.287283
10233988
-2.241195
15850956
SHANG PUDONG-A
7.56
0.9345794
62142486
-0.3787879
19717913
SHANGHAI ELECT-A
4.27
-0.2336449
4030234
-7.608696
29091096
SHANXI LU'AN -A
20.77
0.6786234
10732673
21.21
1.096282
5139883
SHANXI XINGHUA-A
35.01
1.773256
2180641
13.03
-0.9125475
9972249
SHANXI XISHAN-A
14.69
0.1363327
6143809
17.06
0.4711425
5566037
SHENZ DVLP BK-A
14.85
0.6779661
11842631
BYD CO LTD -A
14.2
-6.146728
13221165
GUIZHOU PANJIA-A
CHINA CITIC BK-A
3.86
0
13480680
HAITONG SECURI-A
9.38
-0.6355932
31941232
SHENZEN OVERSE-A
5.99
2.044293
22891371
CHINA CNR CORP-A
3.67
0.273224
19641381
HANGZHOU HIKVI-A
26.7
-3.956835
2395751
SUNING APPLIAN-A
6.35
0.1577287
44093542
CHINA COAL ENE-A
7.53
-0.5284016
6949498
HEBEI IRON-A
2.61
0.3846154
15861520
TSINGTAO BREW-A
35.91
-0.1112656
952124
CHINA CONST BA-A
3.93
0
16776405
61.35
0.08156607
1380297
WEICHAI POWER-A
22.99
-0.04347826
3960991
HENAN SHUAN-A
CHINA COSCO HO-A
4.2
-4.545455
17707870
HONG YUAN SEC-A
17.9
-1.756312
13352480
WULIANGYE YIBIN
35.93
1.211268
26654210
CHINA CSSC HOL-A
21.69
-1.498638
2844931
HUATAI SECURIT-A
9.3
-2.002107
13701219
YANGQUAN COAL -A
15.4
-0.5167959
12048145
CHINA EAST AIR-A
4.12
-0.4830918
4411096
HUAXIA BANK CO
8.52
0.7092199
24317381
YANTAI CHANGYU-A
61.6
-1.060071
580046
CHINA EVERBRIG-A
2.75
0.3649635
28301985
IND & COMM BK-A
3.71
-0.2688172
25031278
YANTAI WANHUA-A
13.08
0.9259259
3417931 2126386
18.39
-2.698413
12687203
INDUSTRIAL BAN-A
12.34
1.313629
54175593
YANZHOU COAL-A
18.67
-0.1070091
CHINA MERCH BK-A
9.81
0.6153846
41689292
INNER MONG BAO-A
37.02
-2.29612
23642143
YUNNAN BAIYAO-A
59.11
0.5272109
1302293
CHINA MERCHANT-A
10.92
-2.150538
7135537
INNER MONG YIL-A
19.37
0.466805
5991350
ZHONGJIN GOLD
21.23
-1.025641
6598921
CHINA MERCHANT-A
23.08
1.898455
5671845
INNER MONGOLIA-A
4.91
-3.913894
50088774
ZIJIN MINING-A
3.66
-2.139037
27133460
28.64
0
5727230
ZOOMLION HEAVY-A
9.59
2.129925
50499105
11.39
-0.7839721
6979463
CHINA LIFE INS-A
CHINA MINSHENG-A
5.9
0.8547009
79298293
JIANGSU HENGRU-A
CHINA NATIONAL-A
5.8
-2.521008
11632821
JIANGSU YANGHE-A
140.6
-1.609517
935692
CHINA OILFIELD-A
16.45
0.9202454
5935876
JIANGXI COPPER-A
20.59
-5.680257
13824253
CHINA PACIFIC-A
21.34
-3.526221
18994533
JINDUICHENG -A
12.09
-3.202562
3926376
6.1
-0.1636661
15394011
JIZHONG ENERGY-A
14.61
0.2057613
9464612
14.92
-0.466978
4939786
249.84
0.156344
1749531
CHINA PETROLEU-A CHINA RAILWAY-A
4.55
-2.985075
16261027
KANGMEI PHARMA-A
CHINA RAILWAY-A
2.51
-2.029664
21672538
KWEICHOW MOUTA-A
CHINA SHENHUA-A
21.98
1.243667
10712632
LUZHOU LAOJIAO-A
39.98
-0.2992519
4285830
2.29
-0.4347826
12057814
ZTE CORP-A
MOVERS
80
CHINA SHIPBUIL-A
4.68
-3.703704
25690096
CHINA SOUTHERN-A
4.27
-1.83908
17547604
NINGBO PORT CO-A
2.51
0.4
11492542
CHINA STATE -A
3.11
-0.955414
66679060
PANGANG GROUP -A
3.69
-1.336898
42038830
HIGH
2370.84
CHINA UNITED-A
3.65
-1.88172
47546288
PETROCHINA CO-A
8.85
-0.4499438
7585776
LOW
2335.79
9
0.2227171
22547620
PING AN INSURA-A
43.61
-1.977973
15935878
6.54
-0.1526718
7889037
POLY REAL ESTA-A
11
0.9174312
22825979
CITIC SECURITI-A
12.06
-1.228501
59209424
QINGDAO HAIER-A
10.85
-1.00365
3946816
CSR CORP LTD -A
4.18
-0.4761905
13788940
QINGHAI SALT-A
35.7
2
8683729
CHINA YANGTZE-A
12 2375
INDEX 2335.793
METALLURGICAL-A
CHINA VANKE CO-A
208
52W (H) 2995.974 (L) 2254.567
2335
26-Jul
30-Jul
FTSE TAIWAN 50 INDEX NAME ACER INC
PRICE DAY %
Volume
NAME
25.9
-1.70778
12939979
FORMOSA PLASTIC
ADVANCED SEMICON
23.05
1.096491
35358543
ASIA CEMENT CORP
37.45
1.766304
PRICE DAY % 81.4
FOXCONN TECHNOLO
105.5 -0.9389671
7732288
TPK HOLDING CO L
4560383
FUBON FINANCIAL
31.15 -0.1602564
16292351 28693135
279 -0.3571429
1949043
HON HAI PRECISIO
82.8 -0.8383234
8.92
-1.653804
73533000
HOTAI MOTOR CO
194
155.5
-4.307692
23070035
HTC CORP
29.1 -0.6825939
25851355
HUA NAN FINANCIA
CHANG HWA BANK
16.1
0
14457825
LARGAN PRECISION
CHENG SHIN RUBBE
78.5
-1.008827
5262651
LITE-ON TECHNOLO
0.5181347
352793
284.5
-1.896552
6408713
16.9
0.8955224
10649608
614
0.4909984
855560
37.65 -0.5284016
1800719
CHIMEI INNOLUX C
8.95
-1.648352
25524621
MEDIATEK INC
247
2.916667
11457412
CHINA DEVELOPMEN
6.98 -0.1430615
36086025
MEGA FINANCIAL H
23.7
1.282051
39249952
CHINA STEEL CORP
26.1
0.3846154
13968996
NAN YA PLASTICS
56.2
1.99637
4893543
CHINATRUST FINAN
17.85
2
44147012
PRESIDENT CHAIN
155 -0.9584665
1140759
CHUNGHWA TELECOM
88.4
0.3405221
7345452
QUANTA COMPUTER
76.1
1.466667
10073962
27.75
0.7259528
6646327
SILICONWARE PREC
31.95
6.856187
21688150
98.6
0
4077086
SINOPAC FINANCIA
12.55
0.8032129
64494673
FAR EASTERN NEW
32.85
1.545595
5391437
SYNNEX TECH INTL
65.7
1.860465
2893636
FAR EASTONE TELE
70.7
1.144492
5886502
TAIWAN CEMENT
35.1
0.7173601
7069089
COMPAL ELECTRON DELTA ELECT INC
FIRST FINANCIAL
PRICE DAY %
TAIWAN MOBILE CO
AU OPTRONICS COR CATCHER TECH
NAME
5750241
ASUSTEK COMPUTER
CATHAY FINANCIAL
Volume
0.618047
18.05
0.2777778
18087441
18.15
1.114206
11146602
FORMOSA CHEM & F
78.4
1.29199
3022934
TAIWAN FERTILIZE
69.7
1.014493
4872086
FORMOSA PETROCHE
84.9
0.7117438
1389683
TAIWAN GLASS IND
27.7
1.094891
1563329
TAIWAN COOPERATI
TSMC UNI-PRESIDENT
Volume
97.8
1.34715
331.5
1.531394
5004036 3152731
79 -0.3783102
37881522
50
1.522843
8885304
12.5
0.8064516
15134026
WISTRON CORP
32.15
0.1557632
7240361
YUANTA FINANCIAL
13.85
0.7272727
16425770
YULON MOTOR CO
50.6
2.016129
5402442
UNITED MICROELEC
MOVERS
33
15
2 4910
INDEX 4886.28 HIGH
4905.99
LOW
4741.66
52W (H) 5902.58 4740
(L) 4643.05 26-Jul
30-Jul
July 31, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) galaXy enTerTainMenT
Melco crown enTerTainMenT
MgM china holdings
19.0 18.9 18.8 18.7
Max 18.96
average 18.758
Min 18.66
last 18.94
18.6
sands china lTd
Max 26.6
average 26.216
Min 25
last 26.5
26.6 26.4 26.2 26.0 25.8 25.6 25.4 25.2 25.0
10.8 10.7 10.6 10.5 10.4 10.3 10.2 Max 10.76
sJM holdings lTd
average 10.518
Min 10.16
last 10.72
wynn Macau lTd 13.80
23.3
17.1 16.9
13.75
23.1
16.7
13.70 22.9
average 23.027
Max 23.25
Min 22.7
last 23.15
22.7
PRICE
average 13.708
DAY %
YTD %
(H) 52W
(L) 52W
WTI CRUDE FUTURE Sep12
90.14
0.011095085
-8.829776474
110.8699951
77.69999695
BRENT CRUDE FUTR Sep12
106.25
-0.206630976
1.267632482
124.1999969
88.90999603
GASOLINE RBOB FUT Aug12
290.4
0.560980677
8.075921102
326.7099857
243.0099964
GAS OIL FUT (ICE) Sep12
911.5
0.137324911
1.418636996
1046.5
798.5
NATURAL GAS FUTR Sep12
3.067
1.724709784
-6.579348157
4.64800024
2.221999884
287.81
-0.394531926
1.209691599
332.949996
250.8399963
Gold Spot $/Oz
HEATING OIL FUTR Aug12
1618.28
-0.3031
3.4104
1921.18
1522.75
Silver Spot $/Oz
27.6638
-0.3063
-0.6151
44.2175
26.085
Platinum Spot $/Oz
1407.5
-0.2268
0.9322
1915.75
1339.25
Palladium Spot $/Oz
574.75
-0.6911
-12.0505
848.37
537.54
LME ALUMINUM 3MO ($)
1895
0.905218317
-6.188118812
2666
1832.25
LME COPPER 3MO ($)
7565
1.271753681
-0.460526316
9905
6635
LME ZINC
1859
2.36784141
0.758807588
2523
1718.5
3MO ($)
LME NICKEL 3MO ($)
15880
0.031496063
-15.12560128
25195
15450
15.735
0.865384615
4.690618762
18
13.95499992
813.5
2.552789159
38.76332623
817.25
499
WHEAT FUTURE(CBT) Sep12
916.25
2.032293987
30.56644104
947.25
606.75
SOYBEAN FUTURE Nov12
1634.5
2.044638676
35.72763131
1691.5
1115.75
COFFEE 'C' FUTURE Sep12
174.7
0.575705239
-25.42155816
288.8500061
AGRICULTURE ROUGH RICE (CBOT) Sep12 CORN FUTURE
16.1
Min 13.6
15.9
last 13.7
Max 17.02
average 16.722
last 16.64
Min 16
CURRENCY EXCHANGE RATES
NAME
METALS
16.3
13.60
Commodities ENERGY
16.5
13.65
Max 13.76
Dec12
PRICE MAJORS
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
DAY %
1.0489 1.5703 0.9781 1.228 78.23 7.9878 7.7551 6.3795 55.4475 31.59 1.2469 30.054 41.864 9492 82.061 1.20112 0.78205 7.8242 9.8087 96.07 1.03
YTD %
0.4213 -0.2287 -0.2556 -0.2599 -0.1662 0.0288 0.0258 0.0188 -0.1915 -0.2216 0.3208 0.0566 0.2532 0.0211 -0.5959 -0.01 0.0128 0.0268 0.2742 0.0729 0
(H) 52W
2.7427 1.0294 -4.0896 -5.2542 -1.6873 0.1477 0.1586 -1.3246 -4.2969 -0.1266 3.9859 0.7487 4.72 -4.4564 -4.4223 1.3046 6.5648 3.9621 5.539 3.7369 0.0097
(L) 52W
1.1065 1.6618 0.9972 1.4549 84.18 8.0449 7.8113 6.4453 57.3275 32 1.3199 30.716 44.35 9662 88.637 1.24736 0.88861 9.2878 11.6793 114.18 1.0311
0.9388 1.5235 0.7071 1.2043 75.35 7.9823 7.7526 6.2769 44.0263 29.68 1.1999 28.773 41.57 8458 72.057 1.00749 0.77553 7.7018 9.6245 94.12 1.0288
MACAU RELATED STOCKS (H) 52W
(L) 52W
ARISTOCRAT LEISU
NAME
PRICE 2.39
DAY % YTD % -2.04918
8.636361
3.25
1.88
VOLUME CRNCY 1396781
150.0999908
CROWN LTD
8.47
0.5938242
4.697155
9.29
7.45
2448398
SUGAR #11 (WORLD) Oct12
22.64
0.53285968
-0.832238283
25.77999878
19.23999977
AMAX HOLDINGS LT
0.061
0
-29.88506
0.119
0.055
0
COTTON NO.2 FUTR Dec12
71.38
-0.097970609
-18.73861566
102.25
64.61000061
BOC HONG KONG HO
23.7
0.6369427
28.80435
24.45
14.24
8233764 0
CENTURY LEGEND
0.234
0
1.739129
0.35
0.204
3
0
7.142859
3.95
2.3
0
CHINA OVERSEAS
18.02
0.3340757
38.82897
19.16
9.99
18377114
CHINESE ESTATES
8.99
0.1113586
-28.08
13.68
8.3
148500
CHOW TAI FOOK JE
8.77
1.740139
-36.99713
15.16
8.4
4140200
EMPEROR ENTERTAI
1.39
1.459854
25.22522
1.83
0.97
560000
FUTURE BRIGHT
1.05
-0.9433962
150
1.1
0.3
1776000
CHEUK NANG HLDGS
World Stock MarketS - Indices NAME DOW JONES INDUS. AVG
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
13075.66
1.456634
7.023502
13338.66016
10404.49
10404.49
2958.09
2.241078
13.54779
3134.17
2298.89
2298.89
5653
0.4583088
1.448603
5989.07
4791.01
4791.01
DAX INDEX
6736.89
0.7099291
14.21652
7282.01
4965.8
4965.8
NIKKEI 225
8635.44
0.8031153
2.129904
10255.15
8135.79
8135.79
NASDAQ COMPOSITE INDEX FTSE 100 INDEX
HANG SENG INDEX
GALAXY ENTERTAIN
18.94
4.065934
33.00562
24.95
8.69
12844000
HANG SENG BK
107.6
0.6548176
16.76614
124.3
84.4
2204744
22
0.2277904
10.77542
24.903
18.56
878500
65.25
1.714731
10.59322
78.6
56
21360037
HUTCHISON TELE H
3.78
0.265252
26.4214
3.86
2.53
1053000
LUK FOOK HLDGS I
18.54
2.092511
-31.58672
46.15
14.7
2619000
MELCO INTL DEVEL
5.74
6.493506
-0.5199303
10.76
4.3
3474000
MGM CHINA HOLDIN
10.72
5.511811
11.75801
17.183
7.6
7583022
4.1
-1.913876
3.691232
5.217
2.887
1589000
0.16
-4.761905
44.14414
0.205
0.08
22669000
HOPEWELL HLDGS HSBC HLDGS PLC
19585.4
1.610587
6.243818
22808.33
16170.35
16170.35
2335.793
-0.5668109
-0.4241291
2995.974
2254.567
2254.567
TAIWAN TAIEX INDEX
7158.88
0.4827012
1.227359
8771.64
6609.11
6609.11
MIDLAND HOLDINGS
KOSPI INDEX
1843.79
0.7998207
0.9886429
2173.28
1644.11
1644.11
NEPTUNE GROUP
4245.709
0.8537046
4.662778
4517.4
3765.9
3765.9
NEW WORLD DEV
9.76
0.8264463
55.91054
10.96
6.13
12452550
SANDS CHINA LTD
23.15
5.707763
5.466967
33.05
14.9
22494425
SHUN HO RESOURCE
1.13
0
13
1.32
0.82
22000
SHUN TAK HOLDING
2.69
1.12782
5.113918
4.624
2.241
2380540 7698783
CSI 300 INDEX
S&P/ASX 200 INDEX JAKARTA COMPOSITE INDEX
4099.121
0.3650398
7.250909
4234.734
3217.951
3217.951
FTSE Bursa Malaysia KLCI
1632.35
0.4560168
6.638662
1647.94
1310.53
1310.53
NZX ALL INDEX
783.942
0.4564443
7.418704
806.015
700.441
700.441
SJM HOLDINGS LTD
13.7
1.181684
9.551481
20.711
10.079
PHILIPPINES ALL SHARE IX
3491.84
0.8240695
14.67304
3527.48
2695.06
2695.06
SMARTONE TELECOM
16.58
-0.9557945
23.3631
18.5
9.8
2936208
580.02
-0.09
16.86
na
na
na
WYNN MACAU LTD
16.64
4.522613
-14.66667
27.385
14.62
15455580
1191.12
1.112894
16.17057
1247.72
843.69
843.69
ASIA ENTERTAINME
2.97
-5.414013
-49.4898
10.8692
2.84
181644
415
0.445348
18.04865
492.44
332.28
332.28
BALLY TECHNOLOGI
44.32
2.450301
12.03235
49.32
24.74
342538
BOC HONG KONG HO
3.05
0
27.23244
3.15
1.81
17000
1012.32
0.8960163
12.54753
1072.89
876.33
876.33
GALAXY ENTERTAIN
2.3
2.222222
22.99465
3.24
1.08
2320
11.35
1.885099
-34.01163
18.97
11.1
11651800
HSBC Dragon 300 Index Singapor STOCK EXCH OF THAI INDEX HO CHI MINH STOCK INDEX Laos Composite Index
10.1
INTL GAME TECH
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalization. All data supplied by Bloomberg unless otherwise indicated.
JONES LANG LASAL
67.76
2.620021
10.61052
87.52
46.01
529221
LAS VEGAS SANDS
36.765
0.9750069
-13.95975
62.09
34.72
17287469
MELCO CROWN-ADR
10.3
6.185567
7.068608
16.15
7.05
5888816
MGM CHINA HOLDIN
1.47
0
23.3539
2.2131
1.0025
500
MGM RESORTS INTE
9.44
2.386117
-9.491853
15.74
7.4
10916311 550525
SHUFFLE MASTER
15.09
0.9027081
28.75426
18.77
7.35
SJM HOLDINGS LTD
1.75
-1.685393
8.859767
2.6037
1.2624
1000
WYNN RESORTS LTD
94.61
1.621912
-14.37234
154.7051
90.108
2010430
AUD HKD
USD
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CVV2/CVC2
14 |
business daily July 31, 2012
Opinion Making the rich poorer doesn’t enrich the middle class Caroline Baum
H
Columnist for Bloomberg News
ere’s a question for you: Would you rather have more money, or keep your current income and see the rich become less wealthy? It’s not a trick question. Any member of the middle class would rather have more money. Income inequality may be a problem for society at large, but it isn’t a concern for those struggling to make ends meet. Give more to those with less, and they will be better off. Making the rich poorer does nothing for the middle class – it may even hurt – except assuage some jealousy for the next guy’s material success. Polling by the Pew Research Cen-
ter shows that people aren’t interested in taking money from the wealthy. They just want a chance to get rich themselves. So why does President Barack Obama conflate his stated goal of helping the middle class with the need to impose higher taxes on the rich? Maybe he thinks he can “spread the wealth around,” as he told Joe the Plumber during the 2008 presidential campaign? Alas, a “middle-class welfare state can’t be supported solely by taxes on the rich,” says Peter Sepp, executive vice president at the National Taxpayers Union in Washington. The president’s Buffett rule,
which would impose a minimum effective rate of 30 percent on those earning more than US$1 million a year, would generate no more than US$162 billion over 10 years, according to Congress’s Joint Committee on Taxation. That’s hardly enough to enrich the middle class, no less sustain existing entitlement programs. Besides, the committee’s estimates assume the rich blithely fork over the money rather than engage in tax-avoidance strategies.
Unequal burden
the rich, no country does it with quite the same aplomb as the U.S., according to Scott Hodge, president of the Tax Foundation in Washington. Using data from a 2008 study by the Organization for Economic Cooperation and Development, Hodge found that the U.S. placed third among the 24 developed countries in income inequality and first when it came to the tax burden borne by the rich. By Hodge’s calculation, the ratio of the share of taxes paid by the top 10 percent to the share of income earned was 1.35, the highest of the group. The rich, it seems, pull their weight and pay more than their fair share. If the middle class has a legitimate gripe, it should be with the rules department.
More importantly, Obama’s fairness argument doesn’t hold up under scrutiny: the rich already pay the lion’s share of taxes in the U.S. In 2009, the last year for which complete Internal Revenue Service data are available, the top Rich rule 20 percent of earners received 50 percent of pre-tax income and What rules do the rich manipulate paid almost 70 percent of federal that the middle class has neither the taxes, according to a study by time nor the resources to exploit? the Congressional Budget Office. Why, the U.S. tax code. That would (In the CBO study, federal taxes be a good place for the president include individual, corporate, to start if he wants to ensure that payroll and excise taxes.) Income everyone plays by the same rules. may be skewed, but the tax burden “Many clever tax-reduction is even more heavily weighted strategies are just not available to toward the rich. middle-class families,” Sepp of the These trends have been in place National Taxpayers Union says. for at least 30 years. In 1980, the The rich employ people to lobby top quintile paid 19 percent of Congress on behalf of their particular the federal personal income tax business or industry. They make compared with 36.7 percent in large campaign contributions to 2009. At the same time, the tax committee chairmen, who might burden of the bottom 50 percent fell be persuaded to craft a specific to 2.3 percent from 7 percent. And, tax break or vote in a certain way thanks to an array of tax credits, on a piece of legislation. And they the percentage of filers with no tax hire tax consultants and lawyers liability has crept up during the last to walk them through the maze of two decades to 42 percent in 2009. loopholes, shelters and strategies to Yet the president rarely misses an shift income and reduce the estateopportunity to rally the huddled tax burden on their heirs. masses with his fairness doctrine: Even then, some small and “I want an America where everyone medium-sized businesses are saying gets a fair shot, everyone does their thanks, but no thanks, to many fair share and everyone plays by the tax breaks as “too cumbersome or same set of rules.” too confusing” or more costly to The president would be better obtain than the benefit is worth, served if he focused on the “rules” according to a July 23 article in the Wall Street part. Tax experts have Journal. Of course, the already noconvoluted tion that miltax code has lionaires pay a spawned “a cotlower effective Making the rich tage industry of tax rate than tax-credit contheir secretar- poorer does nothing sultants,” the ies. (Warren article says. Buffett may, for the middle class – it Now there’s but it’s his something prerogative to may even hurt – except overpay his Obama can point to the next taxes to help assuage some jealousy the Treasury time he touts his job-creation reduce publicly for the next guy’s held debt.) record on the material success campaign trail. As for soaking
editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Newsdesk Vitor Quintã (Chief Reporter) Tony Lai, Xi Chen Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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July 31, 2012 business daily | 15
OPINION Business
wires Leading reports from Asia’s best business newspapers
Business Line The oil and gas exploration & production group of Reliance Industries is in a fix. Delays relating to uncertainty on government approvals for its premium East Coast block have made the company’s board put all future investments proposals on the back-burner. While the company has chalked out its next phase of capital investments in refining, petrochemicals, retail and broadband services, the exploration business is still in a limbo. This has led to speculation that the company may exit the business altogether.
Korea Herald LG Electronics said Sunday that it will roll out its smartphone Optimus Vu in Japan on August 3, the first overseas launch for the flagship phone. The gadget, which features a 5-inch display, will be the third LTE handset to be unveiled in Japan. The Optimus Vu launching in Japan has been localised on various aspects. Considering that Japan is a nation of hot springs, its terminal that connects the charger is waterproof and capless, and it carries Sony’s FeliCa feature that enables smart e-money, credit card, transit tickets and couponing.
Is China losing the diplomatic plot? Kishore Mahbubani
Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore
I
n 2016, China’s share of the global economy will be larger than America’s in purchasing-price-parity terms. This is an earth-shaking development; in 1980, when the United States accounted for 25 percent of world output, China’s share of the global economy was only 2.2 percent. And yet, after 30 years of geopolitical competence, the Chinese seem to be on the verge of losing it just when they need it most. China’s leaders would be naïve and foolish to bank on their country’s peaceful and quiet rise to global preeminence. At some point, America will awaken from its geopolitical slumber; there are already signs that it has opened one eye. But China has begun to make serious mistakes. After Japan acceded to Chinese pressure and released a captured Chinese trawler in September 2010, China went overboard and demanded an apology from Japan, rattling the Japanese establishment. Similarly, after North Korean shells killed innocent South Korean civilians in November 2010, China remained essentially silent. In a carefully calibrated response, South Korea sent its ambassador to attend the Nobel Peace Prize ceremony for the imprisoned
may have lost 20 years of painstakingly accumulated goodwill, the result of efforts such as the ASEAN-China free-trade agreement, signed in November 2002. More importantly, China’s previous leaders had calculated that a strong and unified ASEAN provided a valuable buffer against any possible US containment strategy. Now, by dividing ASEAN, China has provided America with
Business World The Philippine arm of beverage giant PepsiCo, Inc., grew its January to June profits by 436.46 percent to P577.50 million (US$13.75) from just P107.65 million last year, a filing with the Philippine Stock Exchange showed. Net sales expanded by 15.27 percent to P9.74 billion versus P8.45 billion, year-on year. Sales costs, which include expenses for raw and packaging materials expenses, rose by 4.28 percent to P7.06 billion from P6.77 billion in the same period last year. At present, the firm has 11 plants in the Philippines and serves at least 440,000 outlets nationwide.
Bangkok Post A government panel will advise Airports of Thailand to waive most landing and parking fees to attract carriers at Suvarnabhumi airport during the wee hours of the morning. The panel, led by the Transport Ministry, agreed a 95 percent discount for landing and parking fees should be given for flights operating from 2-5am to encourage carriers to shift their time slots due to the thin traffic at that time. There are only 10-16 aircraft movements taking place during those three morning hours every day, and most involve cargo planes, officials said.
implied by inclusion of the map has not been lost on America, which is why the US, somewhat unusually, has made another effort to ratify the Law of the Sea Convention. Having tabled the nine-dotted line at the UN, China walked into a no-win situation, owing to the difficulty of defending the map under international law. Indeed, as the eminent historian Wang Gungwu has pointed out, the first maps to claim the South China Sea were Japanese, and were inherited by Nationalist China.
A line too far
China’s victory proved to be Pyrrhic. It won the battle of the communiqué, but it may have lost 20 years of painstakingly accumulated goodwill
Chinese human-rights activist Liu Xiaobo in December 2010. China has also ruffled many Indian feathers by arbitrarily denying visas to senior officials. Chinese Premier Wen Jiabao subsequently calmed the waters in meetings with Indian Prime Minister Manmohan Singh, but such unnecessary provocations left a residue of mistrust in India. But all of these mistakes pale in comparison with what China did to the Association of Southeast Asian Nations in July. For the first time in 45 years, the ASEAN Ministerial Meeting (AMM) failed to agree to a joint communiqué, ostensibly because ASEAN’s current chair, Cambodia, did not want the communiqué to refer to bilateral disputes in the South China Sea. But the whole world, including most ASEAN countries, perceived Cambodia’s stance as the result of enormous Chinese pressure.
Pyrrhic victory China’s victory proved to be Pyrrhic. It won the battle of the communiqué, but it
its best possible geopolitical opportunity in the region. If Deng Xiaoping were alive, he would be deeply concerned. It may be unfair to blame China’s leaders for the ASEAN debacle. More likely than not, over-zealous junior officials pushed a hard line on the South China Sea, whereas no Chinese leader, if given the choice, would have opted to wreck the AMM Communiqué. But the fact that it happened reveals the scope of China’s recent poor decision-making. The “nine-dotted line” that China has drawn over the South China Sea may prove to be nothing but a big geopolitical millstone around China’s neck. It was unwise to attach the map in a note verbale responding to a joint submission by Vietnam and Malaysia to the United Nations Commission on the Limits of the Continental Shelf in May 2009. This was the first time that China had included the map in an official communication to the UN, and it caused great concern among some ASEAN members. The geopolitical opportunity
Domestically, too, the ninedotted line may cause problems for the government by presenting critics with a useful weapon. Any hint of compromise will expose officials politically. In other words, a few rocks in the South China Sea have put China between a rock and a hard place. There is no doubt that China will have to find a way to compromise over the ninedotted line. In private, it has begun to do so. Even though the line covers the waters northeast of the Indonesianowned Natuna Islands, the Chinese government has given Indonesia categorical assurances that China does
not claim the Natuna Islands or their Exclusive Economic Zone. These private assurances calmed relations with Indonesia. So why not make similar overtures to other ASEAN states? The legacies of Deng and his predecessor, Mao Zedong, are very different. But the People’s Republic’s two most important leaders did agree in one area: both bent over backwards to make territorial concessions to resolve border disputes. This explains why China was so generous to Russia, for example, in its border settlements. Mao and Deng could do this because both provided China with strong leadership. The challenge for the world now is that China has become politically pluralistic: no leader is strong enough to make wise unilateral concessions. Nothing will happen in China until the leadership transition is completed in November. The new administration of Xi Jinping and Li Keqiang will need some time to settle in. But America is waking up. So, too, will the rest of the world in 2016. The big question then will be: is China as geopolitically competent as number one as it was when it was number two? © Project Syndicate
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business daily July 31, 2012
CLOSING Italy and Spain see concerns ease
U.K. sets out terms for Libor review
Investor concerns over Italy and Spain eased yesterday on hopes that the eurozone authorities would act to lower borrowing costs. Spain’s 10year borrowing costs dropped to 6.5 percent from last week’s record high of 7.5 percent, reflecting a slightly improvement in investor confidence. Italy paid a lower rate of interest at a bond auction to raise 5.48 billion euros (US$6.7 billion). Meanwhile, official data showed that Spain’s economy shrank 0.4 percent in the second quarter of the year. Nonetheless markets rose, boosted by continued speculation that action will be taken by eurozone authorities to cut borrowing costs for countries such as Spain and Italy.
U.K. Chancellor of the Exchequer George Osborne set out guidelines for a review aimed at preventing the manipulation of Libor, saying it should consider whether the benchmark should be based on actual traded rates rather than those banks choose to report. The report by Martin Wheatley of the Financial Services Authority will form the basis for amendments to legislation. The review will include establishing a structure for setting the rate and will determine sanctions for any form of abuse. It will consider the scope of powers civil and criminal authorities should have and whether other price-setting mechanisms in markets need to be policed.
Shanghai expo project not properly controlled Financial mismanagement in Macau delegation office at 2010 Shanghai World Expo – Audit Commission Xi Chen
xi@macaubusinessdaily.com
A
report released yesterday by the Commission of Audit revealed major weaknesses in the Macau World Expo Office’s budget management during the Shanghai World Expo in 2010. The office did not provide a scientific and complete budget projection prior to the project and it also failed to provide a summary of the overall financial expenditures afterwards, claims the report. According to the audit, the office only handed to the government one preliminary report, which estimated the territory’s expo project at 320 million patacas (US$40 million). For the 1998 Lisbon World Expo, Macau spent 8.78 percent of the government’s total trade and services expenditures that year. That figure was used as a starting point when planning the projected spend for the 2010 event. The result was a budget of 260 million patacas, which was then raised to 320 million patacas by averaging it with Hong Kong’s Shanghai expo budget of HK$380 million. The audit commission believes that the calculation was unscientific
as there was no direct relation in spending between the 1998 event in Portugal, and the Shanghai show.
Slipshod approach The 2010 budget also did not include the daily expenses of the office, which cover office equipment and staff salaries, as well as hotel and travel subsidies. After the project was concluded, the expo office submitted a summary of its activities in Shanghai, which revealed it had used nearly 224.9 million patacas in the construction and operation of the exhibition halls. However the report did not reflect the total spending of running the project nor did it cover all expense items, the audit claims. The report also said the office had at least four and half months to conduct ‘financial clearance’ work before it left Shanghai. Despite that, it did not cancel its bank account on time, which meant the financial services bureau had to take care of the remaining issues, leading to unnecessary additional procedures. The audit also discovered that there was a 34.4 million patacas discrepancy between the office’s durable and equipment spending and what it recorded as assets during
Down the rabbit hole – Macau’s World Expo budget management ‘unscientific’
the 2008-2011 periods. The Economic Services Bureau, in response, explained mainland China’s customs service required equipment value to be calculated net of depreciation. That led to the lower recorded numbers, stated the bureau.
Overall the Commission of Audit believes there was room for improvement in the performance of the office. The Economic Services Bureau agreed. The report has been sent to Chief Executive Fernando Chui Sai On and to the Legislative Assembly.
Shamed HSBC takes US$2 bln hit Bank set aside money to cover costs of regulatory fines and lawsuits
H
SBC Holdings Plc’s boss said yesterday revelations of lax anti-money laundering controls had been “shameful and embarrassing” for Europe’s biggest bank, and may force it to pay out well over US$2 billion for those flaws and in compensation for U.K. mis-selling. HSBC set aside US$700 million to cover fines and other costs for an anti-money laundering scandal, after a U.S. Senate report criticised it this month for letting clients shift funds from dangerous and secretive countries, notably Mexico. The ultimate cost could be “significantly higher”, the bank’s chief executive Stuart Gulliver said. “What happened in Mexico and the U.S. is shameful, it’s embarrassing, it’s very painful for all of us in the firm,” Mr Gulliver told reporters on a conference call. “We need to execute on the
compliance changes and then prove ourselves worthy and rebuild this over a number of years. There are no quick and easy fixes,” he said. The Senate report criticised a “pervasively polluted” culture at the bank and said HSBC’s Mexican operations had moved US$7 billion
into its U.S. operations between 2007 and 2008. The lender also made a US$1.3 billion provision in the first half to compensate British clients wrongly sold payment-protection insurance and derivatives, the bank said in a statement yesterday.
HSBC raised mis-selling and money laundering provisions
Both provisions ate into first-half underlying profits, which fell 3 percent from a year earlier to US$10.6 billion, excluding gains from assets sales and losses on the value of its own debt. Net income fell to US$8.44 billion from US$9.2 billion a year earlier. Total operating income rose 3.2 percent to US$43.7 billion. HSBC is also one of more than a dozen banks under scrutiny in a global interest rate-rigging scandal that has rocked the sector and further damaged the reputation of bankers following criticism of their culture and standards. Mr Gulliver said that as a contributor to Libor and its eurozone equivalent Euribor, HSBC was cooperating with regulators with their investigation. However, it was far too early to say what the outcome would be or to estimate the potential cost for the bank. Reuters