Macau Business Daily, July 31, 2012

‘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.

4 |

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.

6 |

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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75/95 %

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

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K. lumpur

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32/25o C

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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.

8 |

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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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.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

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

16 |

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

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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

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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