Macau Business Daily, 6 July, 2012

Year I - Number 70 Friday July 6, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

Lau grilled over La Scala deal

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he secretary for Transport and Public Works said he could not have slowed down or suspended the March 2011 approval of extra land for corruptionlinked residential project La Scala because “the decision will then not be made in accordance with the law”.

In a Legislative Assembly session where he was the target of heavy criticism, Lau Si Io denied he has neglected his duties. “It is not appropriate in my position to judge whether the project is legal before a court verdict,” he said.

More on page 5 www.macaubusinessdaily.com

Magic bullet train – rich cargo or more day trips?

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he long awaited ‘missing link’ – the high-speed railway connecting Zhuhai and Macau with the rest of the mainland’s intercity train network could be ready before the end of this year. But Macau’s Light Rapid Transit system – first proposed as long ago as 2002 – won’t be there to meet it. A number of experts

think it’s an opportunity that was badly botched.

Some commentators see the highspeed link that will whisk Chinese tourists from Guangzhou to Zhuhai – a distance of 160 kilometres (99 miles) – in as little as 40 minutes, as a ‘magic bullet’ that will bring in new, well-heeled tourists from outside Guangdong look-

ing for more than just heavy-duty gambling or a one-yuan tour with compulsory shopping. Others say existing pressures – lack of visafree travel for People’s Republic residents; long lines at immigration crossing points and Macau’s limited space, won’t be magicked away, even with the new 24-hour crossing point planned for near

Canal Dos Patos.

And in an ironic twist, Macau – already notorious for being predominantly a day trip market – could become even more so with the new rail link. “Maybe people can depart from Guangzhou in the morning and take the afternoon train back,” says Davis Fong Ka Chio of the University of Macau.

More on pages 2 & 3

Speculation, demand split housing market

HANG SENG INDEX 19850

Macau has an overheating luxury property market driven by speculation from outside buyers. But it also has a mid-range market fuelled by real demand from residents, economist Ricardo Chi Sen Siu said at the fourth Global Chinese Real Estate Congress yesterday. However, he said that contrary to the early 90s, today there is no property bubble.

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Get Nice gets rid of Grand Waldo

July 5

HSI - Movers

The major shareholder of Grand Waldo is close to selling its 65 percent stake in the Cotai hotel-casino to “a member of an international group engaged in the operation of a number of hotels, casinos and other entertainment facilities”. The deal is valued at US$500 million (4 billion patacas) and should be closed within the next 90 days. But the Macau government must first approve the deal.

Name

Page 6

MPEL to run Manila casino Macau casino operator Melco Crown Entertainment Ltd is to invest up to US$580 million (4.63 billion patacas) on a US$1 billion Philippines gaming resort in a deal with property and leisure firm Belle Corp. according to a filing with the Hong Kong Stock Exchange. It’s one of several privately funded and -operated casino resorts being constructed in the Manila Bay area.

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%Day

BANK EAST ASIA

2.87

CHINA UNICOM HON

2.73

CHINA LIFE INS-H

2.66

HENDERSON LAND D

2.62

CATHAY PAC AIR

2.54

CHINA RES POWER

-0.51

ESPRIT HLDGS

-0.59

BANK OF CHINA-H

-1.02

CHINA MERCHANT

-1.23

SANDS CHINA LTD

-2.26

Source: Bloomberg

2012-7-06

2012-7-07

2012-7-08

25˚ 29˚

26˚ 31˚

26˚ 32˚

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business daily July 6, 2012

macau

Middle-income track to Macau In a later stage, Xiawan Station, in Hengqin, will be designed to connect with the LRT system in Macau

Middle-class tourists from all over mainland China are expected to flock to the city once the Gongbei station for the Guangzhou-Zhuhai Intercity Railway is open. These new visitors will be looking for much more than just gaming, experts say

However, he feels it is too early to predict how significant the impact will be.

Shorter stays Luciana Leitão leitao.luciana@macaubusiness.com

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he Gongbei station of the Guangzhou-Zhuhai Intercity Railway, scheduled to be in operation later this year, will bring more visitors to Macau, and a very different type.

The station platform is almost ready.

Soon it will be time to construct the station building. Covering an area of 70,000 square metres, it is scheduled to be completed in three months.

The intercity railway is to have 17 stations on its main line, but the Gongbei, Qianshan, Tangjiawan and Mingzhu stations have yet to open.

Reports say they should be ready by the end of this year or beginning of 2013.

Oscar Ho Man Cheng, expert

on business development at the Institute for Tourism Studies, believes the Gongbei station will have a positive impact.

“Currently, the station in the outer area of Zhuhai, in terms of bus and taxis connecting back to the border, is not convenient at all,” he says.

Many tour operators will probably make use of the mass transit system to bring in tourists from middle or eastern parts of China.

“This will bring down the cost of the tour, as the cost of the train ticket [will be] lower than the air fare,” Mr Ho says.

And a new kind of tourist, probably ones with quick access to the railway, will come to Macau.

An Associate professor of business economics at the University of Macau, Ricardo Siu Chi Sen, expects the railway to increase traffic between Macau and Guangdong and boost “the future growth of the gaming industry”.

At the same time, it could also result in more non-gaming tourists coming to the city.

People from other parts of China, like Hunan or even Beijing, may also come, says Carlos Siu Lam, associate professor at the Gaming Teaching and Research Centre of the Macau Polytechnic Institute.

“I was told there is some kind of infrastructure going there so people can take this lightweight system or underground train and travel all the way down,” he says.

The director of the Institute for the

Study of Commercial Gaming at the University of Macau, Davis Fong Ka Chio, is sure it will shorten the journey time from Guangzhou to an average of 40 minutes.

“Some of the tourists may take the train rather than buses or private car,” he says.

It will also reduce the duration of stay in the territory.

“Maybe people can depart from Guangzhou in the morning and take the afternoon train back,” he says.

17

Stations are planned for the railway from Guangzhou South to Zhuhai Station, near Gongbei

The burden of infrastructure

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f the forecasts are right, the Guangzhou-Zhuhai Intercity Railway will bring greater numbers of tourists to Macau – far more than the 28 million arrivals last year.

Analysts agree the city needs better infrastructure to welcome the expected influx.

Oscar Ho Man Cheng is an expert on business development at the Institute for Tourism Studies. He says the Border Gate is a bottleneck.

Politicians from Macau and Guangdong signed an agreement last month for a new border crossing, which will help cut waiting times for mainland visitors.

The new crossing will be built on land currently the location of the South Guangdong Wholesale Market and a section of the Canal Dos Patos.

“Hopefully the capacity [of the Border Gate] will increase significantly to cope with this demand,” Mr Ho says.

But that alone will is not enough. A series of developments is needed to meet the expected demand.

“Once tourists pass through the Border Gate, we will need to have transportation to bring them to the major hotels and tourist attractions,” he says.

The current system relies on casino vehicles and public buses, which Mr Ho says is inadequate, and may only be overcome when the Light Rapid Transit (LRT) system reaches the city’s northern extremes.

In a later stage, Guangdong’s railway will extend to Zhuhai Airport – from Gongbei via Wanzai, Xiawan, Lianhua, Hengqin, Sanzao and possibly Hezhou South. Xiawan Station, in

Hengqin, will be designed to connect with the LRT system in Macau.

Mr Ho says even though there are more hotel rooms, public transportation throughout the city remains an issue.

Two looming economic events may offer some relief. He says the mainland’s economic “slowdown” and any impact from the euro zone crisis will dampen demand for tourism development.

Whatever the future, Macau needs to take “proactive measures” in the coming year to ensure its infrastructure matches Zhuhai’s, says Ricardo Siu Chi Sen, associate professor of business economics at the University of Macau.

He says he doubts that Macau’s public transport grid will be ready to handle the additional visitors at any time

Hopefully the capacity [of the Border Gate] will increase significantly to cope with this demand Oscar Ho Man Cheng, Institute for Tourism Studies

July 6, 2012 business daily | 3

MACAU 152 km Planned railway length from Guangzhou South to Zhuhai Airport

use of technology to streamline its operations to improve its efficiency,” he suggests.

In the first case, Macau may need to consider freezing the number at the current level.

If it is the latter, he says Macau can increase its number of tourists “bit by bit, regardless of the great population of mainland China”.

On the other hand, Mr Fong believes many of the people usually coming to Macau do not leave their resorts.

Thus they not pose a real problem of overload in the city.

“The number of tourists that move around is not that big.”

Welcome mat out for a different kind of mainland tourists

“Some can make it to Guangzhou by dinner time.”

Non-gaming attraction Some think differently.

Economist Henry Lei does not believe the railway will give a significant boost to the tourism sector.

Considering the transportation system in the Pearl River Delta region is already “very well developed” and there are buses from Guangzhou to Zhuhai every 15 minutes, Mr Lei thinks of the railway only as an alternative means of transport.

Analysts are not really sure of the type of activities that will interest the new kind of tourists.

Mr Ho, for instance, believes Macau’s attraction point will be the same as before: gaming and entertainment.

Ricardo Siu, on the other hand, says non-gaming tourists will also come to the territory.

Carlos Siu predicts the tourists coming in will be middle-income, and willing to try their luck on the casino floor and to do some shopping and sightseeing. Instead of the present tourists, who are wellheeled and look for very expensive things, the new ones will perhaps have different expectations.

“They might want something of quality at an affordable price.”

He believes the mass market will grow within the gaming industry, even though Macau needs to develop more entertainment facilities to draw them in.

Mr Fong is sure that people coming here by train will necessarily be different from the ones already

in the next two years. The light rail network will be the centrepiece of the city’s transport network once it is completed in 2015.

Need for diversification The city will also need to offer additional tourism facilities to entertain middle-class visitors.

Carlos Siu Lam is an associate professor at the Macau Polytechnic Institute’s Gaming Teaching and Research Centre. He wants the city to build a more diverse tourism offering.

More than 60 percent of hotel rooms are five-star rated, but middle-income travellers will need two, three and four-star accommodation.

The tourism strategy until now has been to attract VIP gamblers with luxury brands. Until recently, there

coming by bus or private car.

They will probably be young, because young people are used to taking trains, especially those living in Guangzhou, he says. Of course, this supposes that there will be no visa restrictions in Macau.

Superior air This new market segment will probably benefit small and medium enterprises more.

Mr Fong believes they will come to the territory looking also for nongaming components.

Overall, he says Macau will have more customers coming from the Pearl River Delta region, though the railways might not be the best mode

The new kind of tourist it could bring would almost certainly be of the working, middle class demographic Jonathan Galaviz, managing director of Galaviz & Co LLC

has been little work done to attract tourists on a tighter budget.

“We don’t have many facilities [for this group],” he says. “Most of them are families and we don’t have enough recreation and entertainment for the family groups.”

There is going to be a need for new entertainment, closer to their budget, says the director of the Institute for the Study of Commercial Gaming at the University of Macau, Davis Fong Ka Chio.

“We should encourage the operators as well as [the] non-gaming sector to think about the young people coming here for entertainment, shopping, eating, and create products for them.”

Once the railway system is complete, economist Henry Lei believes social infrastructure will become a major constraint on the development of the

for those coming from afar.

“This railway is not high speed, so it is not good for long-distance transportation,” Mr Fong says. He finds the speed and convenience of air travel superior.

The managing director and chief economist of Galaviz & Co LLC, Jonathan Galaviz, says: “The new kind of tourist it could bring would almost certainly be of the working, middle class demographic.”

While the increase in inbound tourism remains to be seen, Mr Carlos Siu believes it should be controlled.

“It would be more pragmatic to conduct some scientific studies to see whether Macau is overloaded or whether Macau can take in more tourists by making greater

We may need to consider how to extend the trip of these tourists as well as increase their nongaming expenditure in the territory Henry Lei, expert of Economics at the University of Macau

tourism industry.

Facilities beyond the casinos are needed to attract families and meet the needs of expatriate workers. Casinos and resorts, he says, will eventually no longer fill visitor’s needs.

Short-handed Macau has the physical capacity to handle more tourists, but in terms of labour it is more doubtful, Mr Galaviz feels.

“At some point the government will have to entertain the idea of allowing more mainland Chinese labour to work in Macau to serve the greater China tourist flow.”

Mr Lei is of the opinion that Macau is focusing too much on the tourism industry.

This, he says, results in a problem for the economy, and diversification is needed.

He believes the tourism sector is not ready to continue receiving an increasing number of tourists, since this may reduce the service quality.

Apart from labour, there are land limitations, too.

“We may need to consider how to extend the trip of these tourists as well as increase their non-gaming expenditure in the territory,” he says.

Nevertheless, he does not feel the railway will increase the tourist inflow and burden the infrastructure.

Nor does he believe it will cause a rapid increase in prices.

The director of Macau Government Tourist Office said in a note to Business Daily that the intercity railway would help connect cities in the Pearl River Delta, including Macau, to the provincial capital and make it a regional hub.

João Manuel Costa Antunes estimates that the travel time from Guangzhou to the Gongbei checkpoint will be shortened to less than one hour.

The Macau Government Tourism Office made no comment on the quality of the city’s infrastructure or government plans to upgrade it.

We should encourage the operators as well as [the] non-gaming sector to think about the young people coming here for entertainment, shopping, eating, and create products for them Davis Fong Ka Chio, Institute for the Study of Commercial Gaming

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business daily July 6, 2012

macau

High-end housing bubble inflates

Brought to you by

HOSPITALITY

An academic says the city has two distinct housing markets: one is overheating, while the other is just hot Xi Chen

xi@macaubusinessdaily.com

Tourism triple play The growth in the supply of hotel rooms has created a significant increase in the number of hotel guests. Most guests are Asians.

The average home price rose to 53,083 patacas a square metre in May, higher than before measures to cool the market were introduced last year

For the past four consecutive years, Asian hotel guests have represented around 95 percent of all guests. During that period their numbers increased by one-third to almost 8.3 million. That represents a rate of growth which is slightly higher than for all visitors, indicating that the share of visitors from Asia is increasing. There is a similar evolution in the source countries. The five top contributors of hotel guest have seen their combined share rise from 88.1 percent in 2008 to 90.2 percent last year. There are two trends here. There is an increasing share of Asian guests staying at the city’s hotels and an increasing concentration of arrivals from the leading source markets.

The mainland is the leading provider of hotel guests and within the top five markets, it is the market that is increasing most quickly – about 55 percent in four years. It also contributes a rising share of guests. Between 2008 and last year, it rose by almost 7 percentage points to 63 percent of all Asian guests. Second place is occupied

by Hong Kong arrivals, with the figures showing an almost imperceptible rise in the number of guests. There is a surprise in third.

Macau residents stay at hotels here more than either visitors from Taiwan or Japan, and their numbers seem to be rising. It can probably be said that expression “internal tourism” has never meant such short trips – in some cases, just across the street.

J.I.D.

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he market for high-end housing is overheating but there is not much of a bubble in the market for mid-range housing, according to professor Ricardo Siu Chi Sen, a property specialist in the University of Macau’s Faculty of Business Administration.

Mr Siu told the Global Chinese Real Estate Congress here yesterday that the market for high-end housing, which attracts international buyers and is mainly driven by speculation, is distinct from the market for midrange housing, which is driven by demand for housing.

Mr Siu said that for a long time foreigners were not interested buying residential property here because the city was small. In the early 1990s, a wave of hot money flowed in, doubling or tripling prices and inflating a bubble.

After 1995, as the mainland took measures to cool its overheating economy, the bubble burst and the city was left with 40,000 empty flats, he said.

Housing prices began another spurt of growth in 2006 and in the past six years they have quadrupled, on average.

Mr Siu believes that unlike in the early 1990s, when there were no real economic fundamentals inflating the bubble, the housing market today is well supported by the economy.

“We need to differentiate between irrational bubble and rational bubble,” he said.

Nothing special He said that as a method of curbing speculation, the special stamp duty served to dispel a herd mentality among buyers but had disadvantages.

“The total transaction volume is reduced so that people can arrive at a reasonable price,” he said.

The special stamp duty, imposed last summer, is a levy of 20 percent on the sale of residential property

if the property is sold within one year of it being purchased new. The levy is 10 percent if the property is sold within two years of it being purchased new.

The special stamp duty reduced the number of sales but the average price of housing still rose to above 50,000 patacas a square metre in the first five months of

this year – more than the average price before the advent of the special stamp duty.

Estate agents complained that the levy constricted supply and led to increases in prices.

But Mr Siu believes that the sale of only a few expensive homes pushed up the average price, and that more time is need to assess the effect of special stamp duty.

A special stamp duty has been introduced in the past two years in some neighbouring places, such as Hong Kong, Singapore and Taiwan.

Three prices

Greying of city a chance for developers The demand for quality private housing for the elderly is waiting to be satisfied, the head of the Hong Kong Housing Society, Wong Kit Loong, has said.

Mr Wong told the Global Chinese Real Estate Congress, taking place at the University of Macau, that the elderly might need either subsidised or private institutional care and either subsidised or private housing.

He said quality housing for the elderly had great market potential in ageing societies such as Macau’s and Hong Kong’s. Housing for the elderly should be built to suit the practical and social needs of the aged, he added.

Mr Wong said two pilot programmes by the not-for-profit Hong Kong Housing Society to provide housing for the elderly had supplied 576 homes.

He said that all these homes had been allocated, leaving 350 applicants in the queue.

In Hong Kong, the proportion of the population over the age of 65 is 13.5 percent.

In Macau it is 7.3 percent.

Another 11.7 percent of the population here are between the ages of 55 and 64.

X.C.

Hong Kong, where the average price of housing had grown by 50 percent since the beginning of 2009, introduced its special stamp duty in 2010. The levy varies, depending on the price of the property and how soon it is sold.

Professor Eddie Hui Chi Man of the at the Hong Kong Polytechnic University’s Department of Building and Real Estate said Hong Kong had bubbles in its residential and office property markets alike.

Members of an expert panel at the Global Chinese Real Estate Congress said that having a bubble and having it burst were different things, and that a property market could adjust without crashing.

They also said there were various ways to definite a bubble, depending on what the price of property is supposed to reflect.

Professor Chang Chin Oh of the National Cheng Chi University’s Department of Land Economics said there were three ways to look at the price of property to see if a bubble was forming.

He said the price could reflect the value of the land plus the redevelopment option; reflect the income from the property plus its investment value; or be a proxy for the balance of supply and demand plus market expectations.

July 6, 2012 business daily | 5

MACAU

Photo by Manuel Cardoso

To stop La Scala grant would break law: secretary

‘I don’t represent Lau’, Alves says Legal services stopped by ‘mutual agreement’

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Secretary Lau Si Io (left) has defended the government’s grant of extra land for La Scala

Everything about the decision to grant additional land for La Scala was in accordance with the law, Lau says Tony Lai

tony.lai@macaubusinessdaily.com

S

ecretary for Transport and Public Works Lau Si Io has denied he neglected his duty in approving extra land for an upmarket housing project involved in a corruption scandal.

“Negligence? We were only acting in compliance with the current administrative procedures to approve the deal,” Mr Lau told the Legislative Assembly yesterday.

Mr Lau granted more plots to the developer of La Scala in March last year, even though the project was caught up in the corruption case against former government secretary Ao Man Long.

Mr Lau’s staff received an anonymous letter in 2009 questioning the legal status of the land plots where the construction of La Scala was planned.

The office then asked the Commission Against Corruption twice for any information and the

commission told them that the plots were under investigation in December 2009.

Legislators criticised the government yesterday, stressing that it had not needed to approve the grant so quickly when there had been doubts about the legal status of the plots.

“The government should not approve such a deal when the situation was unclear,” said legislator Paul Chan Wai Chi. Fellow legislator José Pereira Coutinho said: “I don’t understand why the government reacted so quickly to this deal, but it takes them, like, 10 years to approve other projects.”

The government had spent nearly four years consulting its various departments and professionals before reaching a decision last year, said Mr Lau. “We cannot quicken or slow down the approval of the deal for any reason,” he said. “If we did so, the decision will then not be made in accordance with the law.”

He added: “It is not appropriate in my

position to judge whether the project is legal before a court verdict.”

Mr Chan and another pandemocrat, Au Kam San, asked why the government had not followed up the Commission Against Corruption’s reply, and Mr Lau said such an enquiry would not have made any legal difference.

Mr Au said that Mr Lau’s staff should have asked the Public Prosecutions Office for information, but Mr Lau said he thought it had been “appropriate” to ask the commission in this case.

The government announced last month that it would start the process of revoking the first grant of land for La Scala, approved in 2006.

Mr Coutinho urged Mr Lau to ask Chief Executive Fernando Chui Sai On to set up an independent committee to investigate the issue. Mr Lau did not reply to this suggestion.

The assembly turned down a proposal last month by Mr Chan and fellow-legislator Ng Kuok Cheong for a public hearing on the grant of extra land.

awyer Leonel Alves said neither he nor his office would represent Joseph Lau Luen Hung or his company, Chinese Estate Holdings Ltd, at trial. A legislator and member of the Executive Council, the government’s advisory body, Mr Alves issued a statement yesterday to clarify his position.

A second prominent Hong Kong businessman facing charges for bribery and money laundering, Stephen Lo Kit Sing, is not a client of Mr Alves firm.

The two businessmen were named as defendants in the case where they allegedly bribed former secretary Ao Man Long for securing the land where the luxury residential project La Scala is being built.

“I’ve represented Mr Lau since 2008, having meanwhile stopped by mutual agreement,” Mr Alves said in the statement.

The lawyer said he had dropped the case the moment “the process entered a stage that required another type of intervention and availability”.

Mr Alves attended some of the sessions of Ao’s latest trial, which ended on May 31.

He was seen at the Court of Final Appeal taking notes during these sessions and speaking with Mr Lo on the sidelines.

Mr Alves said his ties to the case were a few pending details. Mr Lau is currently represented by another firm, he added.

The trial is scheduled to begin at the Lower Court on September 17.

T.A.

Still no date for affordable reopening The government is yet to give a deadline to re-open applications for affordable housing despite legislators’ requests

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uthorities will strive to re-open applications for social housing in 2013, Lau Si Io said, but they are yet to provide a similar timetable and details for affordable homes.

“Both types of homes are public houses in the government’s view,” said the secretary for Transport and Public Works at the Legislative Assembly meeting yesterday. “But our policy is to give priority to social homes before considering the arrangement of affordable houses.”

He added they could only have a clear grasp of public demand for houses after analysing the sales of public homes, this year or early next year.

Mr Lau faced pressure from legislators to reopen applications for affordable flats, as well to make promises over future supply.

“Authorities say they can only have a better plan for affordable homes when they understand the demand,” legislator Kwan Tsui Hang said. “The demand can easily be seen if they restart the application process.”

Her fellow legislator José Pereira Coutinho shares similar thoughts, saying: “There is no use for the government to plan by itself without seeing clearly what the public wants.”

“I don’t see any use in accepting applications without any ongoing project at hand,” said Mr

Lau, adding the administration has a system for handling housing projects.

Legislators also slammed the government for neglecting the demand for affordable homes.

Ho Ion Sang said the current ratio of affordable and social homes in the market is 7 to 3, showing society’s need for more affordable flats. Pan-democrat Ng Kuok Cheong even questioned whether the government would adjust its policy in prioritising the social flats after a public consultation.

But Mr Lau did not answer directly, only saying the government would analyse the opinions collected in the two-month consultation that ended on Sunday.

The secretary said land resources in the city are scarce but most of the plots regained from illegal occupation – about 190,000 square metres since 2009 – are not suitable for residential development.

But he promised the first phase of the post-19,000 public housing scheme, providing over 6,000 flats, will be out for public tender and construction no later than next year.

“Comparing to other regions, the quality of public homes may not be better but it won’t be worse,” said the secretary, faced with claims that the flats are too small and cramped.

T.L.

The government has yet to set a date to resume applications for affordable houses

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business daily July 6, 2012

macau

Major shareholder to sell Grand Waldo stake

Brought to you by

Credit where it’s due The amount of credit obtained by companies can indicate the vitality of the sector they operate in.

In dying sectors credit will dwindle, as a rule. As companies disappear, production declines and creditors’ goodwill diminishes.

The history of credit to some select sectors contains surprises that challenge conventional wisdom.

The reality is a bit more complicated than this summary implies.

Credit to the private sector, by type of activity 103 mop

10000000

10 000 000

1000000

1 000 000

100 000

10000

10 000

1000

1 000

Agriculture and Fisheries Mining Industries

03/2012

/2 6/2008 00

3/ 3/2008 20

0 6 8 9/ 8 2 9/2008 00 12 8 /2 12/2008 0 3/ 08 20 0 3/2009 6/ 9 20 0 6/2009 9/ 9 20 0 9/2009 12 9 /2 00 3/ 9 12/2009 20 1 6/ 0 3/2010 20 10 9 /2 6/2010 01 12 0 /2 9/2010 0 03 10 /2 12/2010 0 06 11 / 20 03/2011 09 11 /2 0 06/2011 12 11 /2 01 09/2011 03 1 /2 01 12/2011 2

100000

Manufacturing Industries

Agriculture and Fisheries Mining Industries

The chart plots credit to three sectors in the economy and uses a logarithmic scale.

The amounts of credit reflect the relative importance of each industry group.

Macau has a tiny primary sector, confined to some fishing. The amount of mining and quarrying is negligible, and seems to be contracting fast.

Lending for agriculture and fisheries was not only sustained after the financial crisis but it rose noticeably last year. The amount of credit funding its operation is more than six times bigger at the end of the four-year period of this analysis than at the beginning.

Credit offered to manufacturing is on a different scale.

The data indicate a sharp contraction early in this analysis, followed by an unsteady recovery.

Among the most dynamic industries as measured by the credit they obtain are leather goods and artificial flowers.

The leather goods business explodes in the second half of 2010 and early last year. In those nine months the amount of credit increased fivefold and the amount rose more than sevenfold over the period of the analysis.

Credit was negligible until early 2009 – below 1 million patacas.

By the end of the period, total credit to the leather goods industry had risen to 470 million patacas.

Get Nice in deal to sell Grand Waldo for US$500m Vítor Quintã

vitorquinta@macaubusinessdaily.com

Just two months after ending a deal to open Macau’s first outlet mall Get Nice Holdings Ltd is close to selling its controlling share in Cotai casino Grand Waldo Hotel.

In a filing to the Hong Kong Stock Exchange yesterday, the company announced it had signed a letter of intent to sell the property to an undisclosed “independent third party”.

Get Nice said the purchaser was “a member of an international group engaged in the operation of a number of hotels, casinos and other entertainment facilities”.

The deal was not binding but Get Nice has agreed to “not directly or indirectly negotiate” with any other party during the following 90 days.

If the deal goes through, Get Nice will receive US$500 million (4 billion patacas) for its stake in the casino.

Get Nice owns 65 percent of

Get Nice will receive about 4 billion patacas for its stake in Grand Waldo hotel-casino

the Grand Waldo through two subsidiaries, Great China Co Ltd and Grand Waldo Entertainment Ltd. GW Entertainment handles the marketing and administration of business promotion of the casino, which operates under the gambling concession controlled by Galaxy Entertainment Group Ltd. It is unclear who owns the remaining shares. At the end of last year, a Hong Kong logistics company Daido Group Ltd had a 5 percent share and in 2006 Galaxy owned a

further 6 percent.

The deal will first have to be approved by the Macau government, according to the 2004 land concession, which reveals that at the time current legislator Vitor Cheung Lup Kwan was the general manager of Great China.

Grand Waldo posted losses of HK$356.5 million (US$46 million) for the year ended 31 March, Get Nice announced last week, mainly due to a HK$145-million drop in the property’s valuation.

Manufacturing Industries

J.I.D.

Govt slammed over bus hike

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here was a worrying lack of transparency in the way the government decided to increase the amount it pays the bus operators for their services, the pandemocrats said yesterday.

New Macau Association president Jason Chao Teng Hei said the three bus operators had requested an increase in April but that the government had not mentioned the matter until it announced an increase last week.

“Meanwhile the public remained in the dark,” Mr Chao said, after delivering a petition to the Transport Bureau questioning the increase of 23 percent in the rate per kilometre that the government pays the operators to run the buses.

The increase will not mean any rise in bus fares but Mr Chao said the government’s lack of transparency had led many people to believe otherwise.

The Transport Bureau said on Monday that it had had no intention

of “hiding” the negotiations with the bus operators.

It said it would publicise any future requests for increases in the rate.

Mr Chao said the process of adjusting the rate was “ridiculous”.

The government sets the bus fares which the operators turn over to the government in exchange for an agreed sum for each kilometre of bus route they serve.

Mr Chao said the New Macau Association was not against the increase itself but the formula used to calculate it, which takes into account fuel prices, inflation and the average salaries of employees of the bus operators.

He said the formula should also take into account the quality of service and number of accidents buses have.

The Transport Bureau has said it demanded that bus operators improve the frequency and safety of their services and employ better

equipment and staff.

The pan-democrat petition also calls for the government to reveal the contents of its contracts with the bus operators: Sociedade de Transportes Colectivos de Macau (TCM), Transportes Urbanos de Macau SARL (Transmac) and Reolian Public Transport Co Ltd. Mr Chao said the government had so far declined to do so, to “cover up collusion between businessmen and the authorities”.

Legislator Kwan Tsui Hang said on the sidelines of yesterday’s Legislative Assembly session that a committee would have a meeting with Secretary for Transport and Public Works Lau Si Io this month over the issue.

She and pan-democrat legislator Ng Kuok Cheong hope authorities will suspend the increase until the public has a clear grasp of the situation.

V.Q.

Weather Beijing 29/22o C 32/22 Changchun 28/17o C 30/19

Harbin 28/18o C 31/20

Xian 32/23o C 34/23 Shanghai 38/28o C 37/29 Chengdu 30/21o C 31/22 Kunming 23/17o C 24/17 Haikou 32/26o C 32/25 Sanya 30/25o C 30/26

Guangzhou 33/24o C 32/25

MACAU (2 July-7 July) Day

Temperature

Humidity

07/2

26/31o C

60/90 %

07/3

27/32o C

55/90 %

07/4

26/33o C

55/90 %

07/5

26/30o C

55/90 %

07/6

25/29o C 25/30

55/90 %

07/7

26/31o C

60/95 %

Shenzhen 33/26o C 32/26

ASIA (today)

Hong Kong 33/26o C 32/26

Manila

TOKYO

Jakarta

31/25o C

31/26o C 31/25

27/22o C 30/22

33/24o C 32/23

Macau 30/26o C 29/25

Bangkok

SEOUL

K. lumpur

38/25o C 38/26

SINGAPORE

26/20o C 24/21

32/23o C 33/22

taipei

34/27o C

July 6, 2012 business daily | 7

MACAU

MPEL to run Manila casino Macau casino operator investing up to US$580 million on Philippines resort Vítor Quintã

vitorquinta@macaubusinessdaily.com

MPEL, co-chaired by Lawrence Ho, expects ‘strong returns on capital’ from the company’s expansion into Philippines

M

acau casino operator Melco Crown Entertainment Ltd has signed a memorandum of agreement with Philippine property and leisure firm Belle Corp to develop a US$1 billion (eight billion patacas) casino-hotel for Manila in the Philippines.

Belle, partly owned by the Philippines’ wealthiest man Henry Sy, and MPEL plan to develop and operate Belle’s integrated resort complex at Aseana Boulevard, Parañaque, Belle owner SM Investments said in an e-mailed statement to Reuters.

The deal is legally binding but the companies will enter into definitive agreements within the next two months over an area the Philippines hopes will become Manila’s version of the Las Vegas Strip, the statement said.

Macau gaming entrepreneur Lawrence Ho Yau Lung and Australian businessman James Packer run MPEL, which will operate the future casino.

MPEL, which developed and runs City of Dreams on Cotai and Altira in Macau will invest up to US$580 million via a company called

MPEL Projects Ltd; including about US$320 million from a loan facility, MPEL said in a filing to the Hong Kong stock exchange yesterday. MPEL Projects is to form a consortium with SM Group, Belle Corporation and Premium Leisure and Amusement, Inc. for the project. Under the terms of the provisional licence, the Philippine Amusement and Gaming Corporation (PAGCOR) requires the consortium to make a minimum investment of US$650 million at the start of commercial operations and a total of US$1 billion for the entire project. Sources told Business Daily last week that the bill for fitting out the interior of the resort – which is designed to have 800 hotel rooms and a casino – could come to US$650 million.

MPEL said in a statement last night: “MPEL Projects’ total investment over the course of the scheme is expected to be no more than US$580 million, contributed by a combination of cash, cash flow and debt financing. It is expected that a loan facility of approximately US$320 million may be made

available to MPEL Projects to part finance the project.”

But the deal will be cancelled if the casino-hotel fails to be classified as a tourism economic zone by the Philippines government and to get a casino gambling licence.

If that were to happen, Belle will “fully reimburse” MPEL of “all reasonable costs and expenses” from the project, stated the filing.

“The expansion into new jurisdictions where the company

expects strong returns on capital will further diversify the company’s exposure in Asia,” MPEL wrote in its filing. The firm also praised Belle’s “significant development, tourism, gaming and leisure experience” as a “key element” for the success of the Manila project.

The project is one of several privately funded and operated casino resorts being constructed in the Manila Bay area as part of a PAGCOR initiative called Entertainment City.

Portugal’s foreign minister arriving for trade mission The promotion of Portuguese exports is the aim of the foreign minister, Paulo Portas, and his business delegation

P

ortuguese Minister of Foreign Affairs Paulo Portas will be in Macau tomorrow on a visit intended to promote Portuguese exports.

His visit follows a week-long trip to the mainland.

Mr Portas will first have lunch with Fernando Chui Sai On at the chief executive’s official residence, Santa Sancha.

Afterwards Mr Portas will attend a seminar on Portuguese exports at the Macau Tower, along with the head of Portugal’s investment promotion agency, Pedro Reis.

Also attending the seminar will be Pansy Ho Chiu King, a businesswoman; Rita Santos, an official of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking

Countries; and António Mexia, the president of Portuguese energy supplier EDP, a shareholder in Companhia de Electricidade de Macau SA. Later Mr Portas and Portugal’s secretary of state for tourism, Cecília Meireles, will attend the signing of a cooperation agreement by the Macau Travel Agency Association and the Portuguese Association of Travel and Tourism Agencies.

Mr Portas will visit the Macau Portuguese School on Sunday. The Portuguese education ministry is a shareholder in the foundation that runs the school.

Mr Portas is visiting about a month after Portugal’s investment promotion agency held a seminar on investment and cooperation opportunities there.

Portuguese foreign minister Paulo Portas will wrap up his trip to China in Macau

8 |

business daily July 6, 2012

GREATER CHINA

Outlook sunnier than official stats s Private poll suggests gloomy mainland official data lagging more upbeat market reality Kevin Hamlin

C

hina’s official statistics may be lagging behind independent data suggesting a pickup in the world’s secondbiggest economy last quarter, according to a new private survey modelled on the U.S. Federal Reserve’s Beige Book.

The China Beige Book, through interviews of about 2,000 company executives and bankers, found retail sales and manufacturing strengthened while property sales increased and shortages of unskilled labour failed to abate. CBB International LLC, the New York-based researcher that conducted the survey, provided a summary of the results to Bloomberg News via e-mail.

The report said four of every five retailers see higher sales in six months,

a bigger proportion than in the first quarter, contrasting with government data showing the weakest non-holiday sales growth since 2006 in May. Bankers foresee growing availability of loans and 46 percent of companies intend to borrow, “suggesting a fairly stable rise in credit demand.”

“These findings diverge considerably from the current ‘gloom and doom’ narratives,” CBB President Leland R. Miller and Craig Charney, director of research and polling, said in a statement to Bloomberg. The official statistics probably lag CBB’s data by one to three months and may reflect a pickup by “mid- to late summer,” they said.

The survey suggests China’s measures to reverse the deepest slowdown since 2008 may be boosting growth even as Europe’s sovereign debt crisis crimps exports.

Authorities lowered interest rates last month for the first time in more than three years and have cut reserve requirements for banks three times since November while speeding approvals for investment projects.

Growth evident “The economy as a whole is now strengthening modestly” and credit

is “fairly loose,” Miller said in an e-mailed response to questions.

“Quarter-on-quarter growth was particularly evident by June in consumer spending and real estate, while agriculture and mining also showed improvement.”

The MSCI Asia Pacific Index of stocks fell 0.4 percent as of 1:18 p.m. in Tokyo.

CBB said its findings are based on interviews with 1,783 company managers, face-to-face interviews with 138 senior corporate executives and telephone interviews with 160 bank loan officers and branch managers. The survey was conducted from May 14 to June 8.

Fed’s methodology The survey uses methodology adapted from the Fed’s Beige Book survey, according to CBB. The central bank is not involved in the China survey, CBB said. The U.S. Beige Book is published eight times a year, or two weeks before each meeting of Fed policy makers, giving anecdotal data to inform interest-rate decisions.

CBB provided Bloomberg with a full copy of the inaugural firstquarter report running 58 pages.

It contains chapters on each region

with anecdotes from companies it didn’t identify.

Examples included a toilet maker countering labour shortages by moving to northern Guangdong province and hiring local workers at higher wages instead of migrants from inland provinces. The president of a food-store chain said banks were very strict in examining and verifying loans, according to the report.

The China Beige Book’s second quarterly survey showed property agents reporting higher secondquarter revenue doubled to almost 60 percent, manufacturers recording rising sales increased three percentage points to 63 percent and retailers with increased sales climbed five percentage points to 68 percent.

Higher revenue Retailers expect spending to strengthen further and 71 percent of manufacturers foresee higher revenue in six months, the survey said, indicating a reduced need for further stimulus measures.

Higher spending may help vendors including Chow Tai Fook Jewellery Group Ltd of Hong Kong, which said on June 27 that profit jumped

Bank lending rules to be relaxed Watchdog hints 75 pct loan-to-deposit rule likely loosened Langi Chiang and Nick Edwards

C

hina will scrap its 75 percent loan-todeposit ratio limit for bank lending and adopt flexible monitoring of individual banks by regulators, domestic media reported yesterday, in a move that would unleash more loans to support the slowing economy.

“There is an initial consensus that the compulsory rule of 75 percent loanto-deposit ratio will be eliminated as an indicator of liquidity risks, but the China Banking Regulatory Commission will keep it in its daily monitoring of banks’ performance,” the Economic Information Daily paraphrased a source close to the CBRC, China’s banking watchdog, as saying. The newspaper is run by China’s official Xinhua news agency.

Market talk of an imminent change to the loan-todeposit ratio (LDR) has swirled for months as volatility in new lending and deposit growth has surged, making it harder to assess the trajectory of credit creation in the world’s second biggest economy.

Regulators have routinely said they are examining the causes of volatility in the pace of new lending, but deny they plan to relax LDR rules. CBRC vice chairman, Wang Zhaoxing, last did so in mid-May. The LDR is designed to tie lending closely to the level of

deposits, providing a stable source of capital for credit creation and reducing bank exposure to short-term funding and leverage risks.

Cap fits Too tight a cap constrains the ability of banks to lend, a particular problem in China where new lending is directed at Beijing’s behest as a key component of monetary policy operations and a crucial barometer of economic activity.

75%

Current ratio of loansto-deposits required of Chinese banks

“China’s current loan-todeposit ratio is already higher than mid-2009. The ratio has crimped bank lending and forced banks to raise deposit rates while

the rising capital cost will hinder any cut in lending rates,” the newspaper cited Lu Zhengwei, chief economist of China’s midsized Industrial Bank.

Although the legal ceiling for LDR is 75 percent, China’s big four state banks all operate with lower ratios.

The newspaper said the CBRC earlier this year raised the ratio for the Industrial and Commercial Bank of China , the world’s largest bank in terms of market cap, to 63 percent from 62 percent previously.

The ratio for China Construction Bank was raised to 70 percent, and that for Agricultural Bank of China was lowered to 57 percent. The regulator kept it unchanged for Bank of China , the smallest among the big four.

Domestic media reported earlier this week that the big four banks, which typically account for 30 percent to 40 percent of total lending, extended less than 200 billion (US$31.7 billion) yuan in new loans last month.

That implies total new yuan lending might be smaller in June than May’s 793 billion yuan, leaving Beijing at risk of undershooting its target for money supply growth - effectively tightening credit conditions even as the government loosens monetary and fiscal policy to underpin economic growth.

The People’s Bank of China is scheduled to announce money and credit data for June from July 10 onwards.

Reuters

Imports from Australia at record level A

ustralia enjoyed a 14 percent jump in merchandise exports to China, its single biggest market. The unadjusted figure of A$7.3 billion (US$7.5 billion) handily beat the previous record set in October last year, despite a slowdown in the mainland economy.

It meant Australia reported a smaller than expected trade deficit for May. Government figures out yesterday showed a deficit on goods and services of A$285 million in May, well below forecasts of A$500 million. April’s shortfall was also revised down to just A$26 million, from an initial A$203 million.

For the whole 11 months to May, exports to China were up 19 percent to A$69.6 billion, earning Australia a whopping trade surplus of almost A$30 billion.

“There had been worries that a slowdown in China

had hit exports in the first quarter, but now there’s clear signs that exports of bulk commodities are picking up again,” said Brian Redican, a senior economist at Macquarie.

“That suggests it was problems on the supply side and not with demand,” he added. “So these are another set of supportive numbers. There’s some light amid the clouds.”

Exports of metals and iron ore picked up further, with shipments of iron ore fines to China up 17 percent. Iron ore and coal exports had disappointed over the first quarter due to bad weather and supply bottlenecks.

Miners are still betting heavily that demand from urbanisation in China and India will grow for decades to come, and are pouring massive amounts of money into mines and liquefied natural gas.

Reuters

July 6, 2012 business daily | 9

GREATER CHINA

suggest: survey

InBrief Misread policy fuelled home prices

KEY POINTS China’s official economic statistics may be lagging independent data Private survey suggests retail, manufacturing strengthened in Q2

Positive front – Chinese consumer sales stronger than official data indicate

79 percent last fiscal year.

The data contrast with another private survey watched by investors, the manufacturing purchasing managers’ index released monthly

by HSBC Holdings Plc and Markit Economics. That gauge fell in June to the lowest level since November, showing a contraction for an eighth straight month. The survey covers executives at more than 400 companies.

Some parts of the economy may have slowed further in June, based on preliminary results of analyst surveys by Bloomberg News.

Growth in exports may have fallen to 10.5 percent in June from a year earlier compared with 15.3 percent in May, while expansion in retail sales weakened by 0.3 of a percentage point to 13.5 percent, according to median estimates.

Poll of 1,783 company managers, 138 senior corporate executives and 160 bank loan officers and branch managers CBB International LLC study based on U.S. Federal Reserve’s ‘ Beige Book’

China’s home price increase was the result of a “misinterpretation” of the nation’s economic policies, a government think tank researcher wrote yesterday. China’s new home prices rose for the first time in 10 months as the government eased its monetary policies to bolster the economy, SouFun Holdings Ltd, the nation’s biggest real estate website owner, said this week. The country has helped ease funding by lenders and vowed to support first-time home buyers.

The central bank cut the benchmark one-year lending rate last month for the first time since 2008, after imposing curbs in the past two years that included higher mortgage rates and down payments.

Sportswear group ousts chief executive China’s best known local sportswear group Li Ning Co Ltd – grappling with a slowdown that has halved its share price in recent months – replaced its chief executive yesterday and said it will focus more on its business in China. The company said founder and Olympic gymnast Li Ning and executive vice-chairman Kim Jin-Goon, who is a managing director at U.S. private equity fund TPG Capital that invested in the retailer this year, will lead the firm during the search for a new CEO after the departure of Zhang Zhiyong.

Bloomberg

Hong Kong PMI contracts for second month Index stood at 49.8 in June, better than in May but still shrinking

T

he HSBC Hong Kong Purchasing Managers’ Index for June showed a contraction for the second consecutive month – apparently in response to a drop in new business from China.

The Index was 49.8 for June, compared to 49.4 for May and 50.3 for April. A survey reading above 50 indicates expansion. A figure below 50 denotes contraction.

Hong Kong private sector output declined for the second straight month in June. Approximately 13 percent of surveyed firms reported a reduction in activity since May due to demand weakness as global business conditions deteriorated.

The volume of new orders received by private sector companies increased in June, with a number of monitored companies commenting on recent product launches.

However, new business from mainland China declined for the third consecutive month and at

the sharpest rate since last November.

Job losses in Hong Kong’s private sector were reported for the second consecutive month. The latest reduction in staff headcount was modest, although the rate of decline eased from that registered in May. Continuing the trend that has been registered in each month since July 2009, input costs faced by private sector companies rose further in June, putting further pressure on profit margins.

“Hong Kong’s business activities continue to hold up significantly better than it did during the last downturn of 2008-2009,” said Donna Kwok, HSBC Greater China Economist in Hong Kong.

United Kingdom-based Markit Group Ltd collects data for the Hong Kong PMI and the report is sponsored by HSBC. Reuters

Mainland stockpiling rare earths: report China has started stockpiling rare earth minerals – using some of the nation’s surplus cash to pay for them – a state-backed newspaper said yesterday. The minerals will be used as strategic reserves, the China Securities Journal said, but did not explain exactly when the initiative was launched. The country produces more than 90 percent of the world’s rare earths. They are used in high-tech equipment ranging from iPods to missiles. China has set production caps and export quotas on the metals.

Coastal fleet seeks new horizons

Several firms reported a reduction in activity

China’s huge fleet of coastal ships, usually confined to plying the Chinese seaboard, has sailed out of the shadows to seek international business in yet another sign that China’s economy is slowing. The fleet, previously unnoticed by the global market, is suffering from a slowdown in China’s coastal trade amid weaker domestic demand from utilities and steel mills and a growing glut in Chinese coal and iron ore stockpiles. Some ships have been lying idle at Chinese ports said a source at one of the country’s big five coastal shippers.

10 |

business daily July 6, 2012

ASIA

Tokyo approves Japan nuclear exchanges merger crisis ‘man-made’ Once completed, it will create Asia’s largest stock exchange

Disaster ‘could and should have been prevented’ – panel

Kana Nishizawa and Toshiro Hasegawa

T

he Fukushima nuclear disaster was the result of a mix of “man-made” factors including regulators who failed to provide adequate prevention and a government lacking commitment to protect the public, said a report from an independent parliamentary investigation.

The accident “cannot be regarded as a natural disaster,” the panel’s chairman, Tokyo University professor emeritus Kiyoshi Kurokawa, wrote in the report.

The bid values the Osaka bourse at US$1.6 billion

J

apanese regulators approved a merger between the nation’s two biggest stock exchanges, paving the way for the first tieup of major bourses after US$32 billion of global deals failed since last February.

The merger is not expected to “substantially restrain” competition, the Japan Fair Trade Commission said in a statement yesterday. Tokyo Stock Exchange Group Inc. will proceed with its 480,000 yen-per-share takeover of Osaka Securities Exchange Co., aimed at completing the tie-up on January 1, the bourses said.

Osaka Securities rose 1.1 percent to 459,500 yen on the bourse’s Jasdaq market yesterday, its highest since April 20. The Nikkei 225 Stock Average fell 0.3 percent.

“The approval was almost unconditional,” said Koya Uemura, a lawyer in Tokyo at Anderson Mori & Tomotsune.

In giving the green light, the regulator said that the exchanges

Considering the international competition in the industry, it was appropriate for the regulator to approve this Sadakazu Osaki, Nomura Research Institute Ltd

had proposed sufficient steps to ensure competition in futures’ trading. Osaka now handles all domestic trading of futures on the Nikkei 22 Stock Average, while Topix Index futures are traded in Tokyo. Once the two bourses are combined, there will only be one domestic venue for trading Japanese stock index futures.

The JFTC said it was satisfied with the bourses plan to extend trading hours for Topix futures on London’s NYSE Liffe during Japan market hours and reduced licence fees. The TSE announced the hours changes on July 2.

‘Appropriate’ move Yesterday’s decision came six months after the regulator started its review on January 4. The commission last year streamlined rules to increase transparency, speed decision-making, and clarify merger and acquisition guidelines.

It emphasised that a geographical market can be defined as worldwide or regional, not just Japanese, in judging whether a company would have a monopoly.

“Considering the international competition in the industry, it was appropriate for the regulator to approve this,” said Sadakazu Osaki, head of research at Nomura Research Institute Ltd in Tokyo.

TSE’s bid, which values the Osaka bourse at 129.6 billion yen (US$1.6 billion), would create the world’s third-largest exchange based on turnover, according to data compiled by Deutsche Bank AG. Global regulators scuttled US$32 billion in exchange takeovers since Singapore Exchange Ltd made a bid for ASX Ltd in October 2010, according to data compiled by Bloomberg. The deal fell through amid calls from the Australian public to maintain domestic control of stock trading.

Hong Kong Exchanges & Clearing Ltd, Asia’s largest bourse by market value, last month announced a US$2.2 billion bid for the London Metal Exchange and is waiting on LME shareholders and U.K. regulators for approval.

Bloomberg

“It was a profoundly manmade disaster – that could and should have been foreseen and prevented.

And its effects could have been mitigated by a more effective human response.”

The report, released in Tokyo yesterday, also said the investigation can’t rule out the earthquake on March 11 last year caused damage to Tokyo Electric Power Co.’s Dai-Ichi No. 1 reactor and safety equipment.

This is a departure from other reports that concluded the reactors withstood the earthquake only to be disabled when the ensuing tsunami hit the plant.

This finding may have implications for all of Japan’s nuclear plant operators, which

It is very hard to understand how the cabinet decision [to create a new nuclear regulatory agency] has been made Kiyoshi Kurokawa, the parliamentary panel’s chairman

Philippines credit rating upgraded to a 9-year high One step away from becoming an investment grade economy

T

he Philippines’ debt rating was raised to the highest level since 2003 by Standard & Poor’s, taking President Benigno Aquino nearer his goal of attaining investment grade and spurring gains in bonds and the peso.

Philippine stocks, the peso and government bonds gained yesterday. The Philippine Stock Exchange Index advanced 0.3 percent to a record close of 5,369.98

in Manila, extending this year’s gain to 23 percent. The peso climbed 0.4 percent to 41.68 per dollar, near a four-year high of 41.60.

The nation’s long-term foreign currency-denominated debt was raised one level to BB+ from BB, S&P said in a statement Wednesday. That’s one step below investment grade and on a par with neighbouring Indonesia. The outlook on the rating is stable.

“The foreign currency rating upgrade reflects our assessment of gradually easing fiscal vulnerability,” Agost Benard, a Singapore-based analyst at Standard & Poor’s, said in the statement. “The rating action also

Temasek seeks to invest more Portfolio grows but profit declines Saeed Azhar

S

ingapore state investor Temasek Holdings, whose portfolio swelled to a record in the last fiscal year, is looking to acquire assets in Europe and plough more money into energy and commodities after doubling its exposure to the sector.

Sovereign wealth funds such as China Investment Corp. are struggling to deliver decent shareholder returns at a time when the European crisis and an anaemic U.S. economy are depressing capital markets from Brazil to Hong Kong.

The size of Temasek’s portfolio grew around 2.6 percent in the year ended March to S$198 billion (US$156.37 billion), the company said in its latest report released yesterday.

But net profit in the last fiscal year fell 15.4 percent to Sg$11 billion. Net profit fell because of

July 6, 2012 business daily | 11

asia lost a combined 1.6 trillion yen (US$20 billion) in the year ended March, if it leads to tougher earthquake-resistance standards.

“Power utilities, as listed companies, would find it difficult to justify maintaining nuclear power generation if they cannot recover additional costs to raise quake-resistant levels,” Hirofumi Kawachi, a utilities analyst at Mizuho Investors Securities Co., said on Wednesday.

The six-month independent investigation, the first of its kind with wide-ranging subpoena powers in Japan’s constitutional

Dai-Ichi nuclear station from last year’s March 11 quake. They concluded the plant was swamped by a 13-meter tsunami that followed the quake, knocking out backup power generation and causing the meltdown of three reactors.

Radiation fallout from the reactors forced the evacuation of about 160,000 people and left land in the area uninhabitable for decades.

Government clash

history, held public hearings with former Prime Minister Naoto Kan and Tokyo Electric Power Co.’s expresident Masataka Shimizu, who gave conflicting accounts of the disaster response.

Three other investigations led by the government, the utility and a private foundation said in earlier reports that they found no evidence of major damage to reactor buildings and equipment at the Fukushima

The independent commission has 10 members, including its chairman Mr Kurokawa. The group comprises a seismologist and a former nuclear engineer who have warned of safety risks at atomic plants and have criticised the government’s nuclear energy policy.

Mitsuhiko Tanaka, a former nuclear equipment engineer at a unit of Hitachi Ltd and a member of the commission, and Hiroaki Koide, an assistant professor at Kyoto University’s Research Reactor Institute, are among those who have said the quake may have caused more damage to the Fukushima plant than so far reported.

The commission’s report also said the Fukushima situation was worsened by government mismanagement, while adding that the utility known as Tepco can’t use the government as a scapegoat as its own information disclosure through the disaster was lacking.

Japan’s parliament in December appointed Mr Kurokawa, a doctor of medicine, to head the investigative panel.

Mr Kurokawa clashed with the government when Prime Minister Yoshihiko Noda and his cabinet approved a bill on January 31 to create a new nuclear regulatory agency.

“It is very hard to understand how the cabinet decision has been

reflects the country’s strengthening external position, with remittances and an expanding service export sector continuing to drive currentaccount surpluses.”

Emerging nations from Brazil to Indonesia have won creditrating upgrades in the past year as governments contained budget deficits. A higher assessment for the Philippines could help Mr Aquino as he moves to boost spending to a record this year and seeks US$16 billion of investment in roads, bridges and airports to shield the economy from Europe’s sovereign-debt crisis.

The yield on the 5.875 percent peso bonds due March 2032 fell seven basis points to 5.78 percent, the lowest since March 16, according to Tradition Financial Services.

The rate fell by the most in more than a month.

S&P’s recognition of the nation’s strong external position, growth prospects and improving fiscal sector

adds fundamental support to the market, Bangko Sentral ng Pilipinas Governor Amando Tetangco said after the ratings action.

Moody’s Investors Service boosted its outlook on the Philippines to positive in May, citing improving debt levels. Fitch Ratings raised the country’s debt to one step below investment grade in June 2011.

S&P’s move is “very positive because it promotes the country’s macroeconomic and fiscal context,” said Fitz Aclan, from Manila-based BDO Unibank Inc. “There could be some upward movement for our sovereign bonds, even our local bonds.

This will also be positive for equities.”

The government has stepped up efforts to catch tax evaders and smugglers, and has drawn up bills aimed at increasing revenue to narrow the fiscal deficit.

“We expect further rating improvements will likely be driven by either our appraisal of improving

US$20 billion Japan’s nuclear plant operators losses in the year ended March

The Fukushima Dai-Ichi nuclear plant was badly damaged after the earthquake and tsunami struck

made” before the panel finishes its investigation, Mr Kurokawa said in the statement. One of the panel’s missions is to make recommendations including the re-examination of Japan’s nuclear policy and administrative organisations to prevent a future nuclear accident, he said.

After amending the bill on the new regulator to give it more independence, the parliament passed the legislation on June 20.

The new watchdog to be established as early as September, will replace the Nuclear Industrial Safety Agency and the Nuclear Safety Commission, two regulatory bodies

criticised for their poor handling of the Fukushima disaster.

But the report said regulators should “go through an essential transformation process” to ensure nuclear safety in Japan. “Japan’s regulators need to shed the insular attitude of ignoring international safety standards and transform themselves into a globally trusted entity,” it said.

“It is ethically and politically difficult for lawmakers to completely ignore the panel’s recommendations” on how the new regulatory agency should work, Mr Kawachi at Mizuho said.

AFP/Bloomberg

President Benigno Aquino plans to narrow the budget shortfall to 2 percent of GDP by 2013

political and institutional factors or by evidence of a sustainable structural revenue improvement,” S&P said. “Conversely, we may lower the ratings if the government’s commitment to fiscal consolidation weakens, resulting in rising debt, or if the external liquidity position

deteriorates significantly.”

The US$200 billion economy grew 6.4 percent in the first quarter, the fastest pace since 2010. Mr Aquino is aiming for an expansion of as much as 8 percent annually to cut poverty.

In the 12 months ended March, Temasek invested S$2 billion in U.S. shale company FTS International and S$1.3 billion in fertiliser firm Mosaic Co. The firm also bought convertible shares of Chesapeake Energy, whose stock tumbled more than 30 percent in the last financial year.

“We will continue to look for opportunities in energy and resources,” Chia Song Hwee, Temasek’s head of strategy, told a media briefing.

Mr Chia said there was significant contagion risk from Europe

as the eurozone debt crisis heads towards its fourth year.

But he said this would create opportunities for investment in companies in the region that have exposure to Asia.

The sovereign investor said 72 percent of its portfolio was in Asia as of end-March, compared with 77 percent at the end of the previous financial year.

During the financial year 2011/12, Temasek’s exposure to Europe and North America increased to 11 percent from 8 percent previously.

Bloomberg

in Europe a tougher business environment for firms such as Singapore Airlines and Neptune Orient Lines, in which the sovereign investor holds stakes. MSCI’s broadest index of Asia-Pacific shares outside Japan declined 10.4 percent in the year ended March.

Temasek, headed by Ho Ching, the wife of Singapore’s prime minister, said in the report that resources and energy accounted for 6 percent of its portfolio as of the end of March, up from 3 percent at the end of the previous financial year.

KEY POINTS Temasek’s portfolio at record S$198 bln vs. S$193 bln Energy and resources accounted for 6 pct vs 3 pct Says contagion risk from Europe significant, but sees business opportunities

Reuters

12 |

business daily July 6, 2012

MARKETS Hang SENG INDEX NAME

PRICE

Day %

VOLUME

27.15

0

16351359

ALUMINUM CORP-H

3.35

0.6006006

4579718

BANK OF CHINA-H

2.91

-1.020408

298456186

BANK OF COMMUN-H

5.24

0.9633911

11626145

BANK EAST ASIA

28.7

2.867384

2223470

13.82

0.2902758

23.6 12.92

AIA GROUP LTD

BELLE INTERNATIO BOC HONG KONG HO CATHAY PAC AIR

38699593

NAME

CITIC PACIFIC

12.08

0.3322259

2611328

SANDS CHINA LTD SINO LAND CO SUN HUNG KAI PRO

PRICE

Day %

58.6

0

1460367

23.75

-2.263374

10312271

12.6

0.8

7222860

94.3

1.452394

5895299

92.2

0.4357298

906318 1519638

POWER ASSETS HOL

VOLUME

1.279157

2849067

15.7

0.3836317

24795188

COSCO PAC LTD

10.38

1.764706

2934000

SWIRE PACIFIC-A

7471182

ESPRIT HLDGS

10.04

-0.5940594

5911777

TENCENT HOLDINGS

236.4

1.112062

0.6396588

6648715

HANG LUNG PROPER

27.95

1.821494

4397199

TINGYI HLDG CO

20.35

0.4938272

3389006

2.539683

4551862

HANG SENG BK

106.8

0.2816901

1284587

WANT WANT CHINA

9.88

1.960784

13446500

HENDERSON LAND D

45.05

2.61959

4658088

WHARF HLDG

44.8

2.517162

5195553

77

0.7194245

2031100

1.424212

6309719

6.93

-0.2877698

39921255

CHINA CONST BA-H

5.29

-0.1886792

134199788

CHINA LIFE INS-H

21.2

2.663438

37338531

24

-1.234568

1540113

85.8 -0.05824112 18.24

VOLUME

2.729045

67.3

99.7

CHINA OVERSEAS

Day %

10.54

CNOOC LTD

CHINA COAL ENE-H

CHINA MOBILE

PRICE

CHINA UNICOM HON CLP HLDGS LTD

CHEUNG KONG

CHINA MERCHANT

NAME

11967748

1.333333

13160211

CHINA PETROLEU-H

6.73

0.4477612

86567634

CHINA RES ENTERP

23.35

-0.2136752

1852174

CHINA RES LAND

16.22

-0.4907975

11828772

CHINA RES POWER

15.7

-0.5069708

3692936

CHINA SHENHUA-H

29.05

0.3454231

20736187

HENGAN INTL HONG KG CHINA GS

17.12

0.9433962

9954220

HONG KONG EXCHNG

110.1

-0.1813237

2525375

HSBC HLDGS PLC

68.95

0.5102041

9944714

HUTCHISON WHAMPO

70.55 -0.07082153

IND & COMM BK-H LI & FUNG LTD MTR CORP

8485732

4.29

0.2336449

279345376

15.06

-0.132626

8406740

26.65

-0.1872659

924738

MOVERS

33

14

2 19850

INDEX 19809.13 HIGH

19847.64

LOW

19604.51

NEW WORLD DEV

9.76

1.244813

14547949

52W (H) 22835.03

PETROCHINA CO-H

9.93

0.8121827

69048190

(L) 16170.35

PING AN INSURA-H

62.35

1.299756

5069623

19600

03 -Jun

05-Jul

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

25.45

0

5101272

CHINA PETROLEU-H

6.73

0.4477612

86567634

4579718

CHINA RAIL CN-H

6.37

-1.393189

-1.877934

14621933

CHINA RAIL GR-H

3.21

2.91

-1.020408

298456186

CHINA SHENHUA-H CHINA TELECOM-H

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.19

-0.3125

67708236

AIR CHINA LTD-H

4.63

-1.068376

7675732

ALUMINUM CORP-H

3.35

0.6006006

ANHUI CONCH-H

20.9

BANK OF CHINA-H

NAME CHINA PACIFIC-H

PRICE

DAY %

VOLUME

12.04

-2.113821

27790328

ZIJIN MINING-H

2.73

1.486989

16913224

4901778

ZOOMLION HEAVY-H

9.31

-3.222453

28696370

-1.533742

7815535

ZTE CORP-H

15.08

-0.2645503

6249702

29.05

0.3454231

20736187

5.24

0.9633911

11626145

3.56

0.2816901

26388497

14.76

2.216066

1821981

DONGFENG MOTOR-H

11.18

-2.61324

26883596

CHINA CITIC BK-H

4.05

0.7462687

27083981

GUANGZHOU AUTO-H

6.34

-0.1574803

2095333

CHINA COAL ENE-H

6.93

-0.2877698

39921255

HUANENG POWER-H

5.44

-3.030303

37517837

CHINA COM CONS-H

6.75

-1.889535

9999641

IND & COMM BK-H

4.29

0.2336449

279345376

CHINA CONST BA-H

5.29

-0.1886792

134199788

JIANGXI COPPER-H

18.04

0.3337041

8642655

CHINA COSCO HO-H

3.73

0.5390836

13747565

PETROCHINA CO-H

9.93

0.8121827

69048190

CHINA LIFE INS-H

21.2

2.663438

37338531

PICC PROPERTY &

9.02

-0.2212389

10841484

CHINA LONGYUAN-H

5.19

1.565558

5737032

PING AN INSURA-H

62.35

1.299756

5069623

CHINA MERCH BK-H

14.9

1.222826

20372724

SHANDONG WEIG-H

8.77

2.453271

7688890

BANK OF COMMUN-H BYD CO LTD-H

CHINA MINSHENG-H

7.27

0

29188220

SINOPHARM-H

20.5

-1.913876

CHINA NATL BDG-H

8.27

-1.781473

39706414

TSINGTAO BREW-H

46

0.4366812

472381

11.84

1.893287

6481625

WEICHAI POWER-H

29

-3.654485

4054620

CHINA OILFIELD-H

2720852

NAME YANZHOU COAL-H

MOVERS

20

18

2 9770

INDEX 9702.91 HIGH

9769.69

LOW

9598.11

52W (H) 12902.97 (L) 8058.58

9590

03-Jun

05-Jul

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.57

0

35687036

DAQIN RAILWAY -A

6.83

-2.288984

36074208

QINGHAI SALT-A

33.34

-4.579279

10642232

AIR CHINA LTD-A

6.11

-1.926164

14457836

DATANG INTL PO-A

5.46

-2.5

4399366

SAIC MOTOR-A

12.87

0.2336449

14646847

ALUMINUM CORP-A

6.19

-1.118211

6742020

DONGFANG ELECT-A

17.08

-3.393665

11304979

SANY HEAVY INDUS

12.72

-1.011673

21633007

ANHUI CONCH-A

14.24

-3.718729

25305960

EVERBRIG SEC -A

12.44

-3.341103

11829189

SHANDONG GOLD-MI

33.02

-1.403404

4697326

BANK OF BEIJIN-A

9.79

0.1022495

21415364

GD MIDEA HOLDING

10.96

-1.792115

11182510

SHANG PUDONG-A

8.07

-0.6157635

33635896

BANK OF CHINA-A

2.82

0

8837979

GD POWER DEVEL-A

2.62

0

16028790

SHANGHAI ELECT-A

4.59

-1.713062

6690396

4.5

-0.2217295

25375687

GEMDALE CORP-A

6.56

-0.7564297

53389627

SHANXI LU'AN -A

20.87

-1.4171

8473381

BANK OF NINGBO-A

10.2

-0.4878049

22463702

GF SECURITIES-A

13.83

-5.532787

10308336

SHANXI XINGHUA-A

39.34

-1.65

3097584

BAOSHAN IRON & S

4.24

-1.395349

18500402

GREE ELECTRIC

21.5

0.4672897

9540440

SHANXI XISHAN-A

15.26

-3.049555

9968364

19.12

0.2096436

3214084

GUANGHUI ENERG-A

13.21

-3.717201

18716048

SHENZ DVLP BK-A

15.19

-0.5890052

10289670

NAME

BANK OF COMMUN-A

BYD CO LTD -A

NAME

NAME

CHINA CITIC BK-A

4.02

-0.4950495

10457736

GUIZHOU PANJIA-A

27.86

-0.8893632

4712714

SHENZEN OVERSE-A

6.78

0.1477105

43083960

CHINA CNR CORP-A

3.74

-2.094241

31197653

HAITONG SECURI-A

9.12

-4.201681

51916344

SUNING APPLIAN-A

8.29

-3.154206

37285547

CHINA COAL ENE-A

7.62

-1.804124

8297025

HANGZHOU HIKVI-A

26.98

0

2136291

TSINGTAO BREW-A

38.73

0.07751938

1719412

CHINA CONST BA-A

4.19

-0.2380952

11064244

2.66

-1.845018

19643129

WEICHAI POWER-A

27.5

-2.826855

5203477

CHINA COSCO HO-A

4.7

-1.467505

5693777

HENAN SHUAN-A

60.31

-1.260642

947889

WULIANGYE YIBIN

32.53

-1.870287

15172521

HEBEI IRON-A

CHINA CSSC HOL-A

23.01

-1.666667

4907549

HONG YUAN SEC-A

15.87

-5.083732

11652427

XIAMEN TUNGSTEN

43.33

-3.689709

6249954

CHINA EAST AIR-A

4.16

-0.7159905

13344158

HUATAI SECURIT-A

9.72

-6.538462

26188303

YANGQUAN COAL -A

15.15

-1.687216

9040721

CHINA EVERBRIG-A

2.83

-0.7017544

31399643

HUAXIA BANK CO

9.41

-1.155462

15767157

YANTAI CHANGYU-A

66.69

-1.433639

882587

3.95

0.2538071

20601672

YANZHOU COAL-A

18.92

-2.474227

2774251 1532534

CHINA LIFE INS-A

18.88

1.833873

16965539

IND & COMM BK-A

CHINA MERCH BK-A

10.85

-0.7319305

29503142

INDUSTRIAL BAN-A

13.01

-0.9893455

34470410

YUNNAN BAIYAO-A

57.95

0.6425842

CHINA MERCHANT-A

11.05

-4.741379

19911391

INNER MONG BAO-A

39.39

-3.099631

33414116

ZHONGJIN GOLD

21.55

-1.372998

5583568

CHINA MERCHANT-A

25.04

-1.027668

6086820

INNER MONG YIL-A

20.46

-0.7759457

13551689

ZIJIN MINING-A

3.88

-0.7672634

28857803

CHINA MINSHENG-A

6.08

-0.3278689

50020783

INNER MONGOLIA-A

4.63

-3.941909

35181234

ZOOMLION HEAVY-A

9.24

-2.634352

42537645

28.52

2.039356

2226732

14.02

-1.337087

13508260

141.18

0.7349269

1499063

CHINA OILFIELD-A

17.03

-1.674365

6189803

JIANGSU HENGRU-A

CHINA PACIFIC-A

22.43

1.493213

18803116

JIANGSU YANGHE-A

CHINA PETROLEU-A

6.11

-2.396166

29824824

JIANGXI COPPER-A

23.77

-1.246365

4289306

CHINA RAILWAY-A

4.48

-1.321586

12466168

JINDUICHENG -A

12.74

-1.086957

3896983

CHINA RAILWAY-A

2.56

-1.158301

13600093

JIZHONG ENERGY-A

15.23

-2.683706

10480699

CHINA SHENHUA-A

22.19

-0.8932559

11490484

KANGMEI PHARMA-A

15.32

0.4590164

13899785

CHINA SHIPBUIL-A

4.89

-2.7833

18955936

KWEICHOW MOUTA-A

251.66

-1.179205

2274937

42.4

-1.829127

4649800

CHINA SOUTHERN-A

4.67

-1.268499

16314051

LUZHOU LAOJIAO-A

CHINA STATE -A

3.36

0.5988024

34767649

METALLURGICAL-A

2.44

-1.214575

15823594

2.53

-0.7843137

ZTE CORP-A

MOVERS

38

252

10 2490

INDEX 2430.37

CHINA UNITED-A

3.79

-1.302083

46147795

NINGBO PORT CO-A

10360943

HIGH

2488.93

CHINA VANKE CO-A

9.29

3.452116

71648882

PANGANG GROUP -A

6.44

-4.309064

39871984

LOW

2421.51

CHINA YANGTZE-A

6.67

-0.1497006

15087060

PETROCHINA CO-A

9.09

0.2205072

12630266

CHONGQING WATE-A

5.95

1.018676

9236227

PING AN INSURA-A

45.35

0.4429679

14864410

CITIC SECURITI-A

12.18

-2.715655

41910871

POLY REAL ESTA-A

12.21

1.834862

44046360

CSR CORP LTD -A

4.3

-1.826484

34931772

QINGDAO HAIER-A

11.33

-4.307432

6491855

52W (H) 3140.102 (L) 2254.567

2420

03 -Jul

05-Jul

FTSE TAIWAN 50 INDEX NAME

PRICE DAY %

Volume

PRICE DAY %

Volume

ACER INC

30.6 -0.6493506

10906513

FORMOSA PLASTIC

80.4 -0.8631319

9158447

TAIWAN MOBILE CO

21471186

FOXCONN TECHNOLO

112 -0.4444444

6296139

TPK HOLDING CO L

ADVANCED SEMICON

25.15

-2.140078

NAME

NAME

PRICE DAY %

Volume

100

0

4179340

354.5

-2.475928

4810403

81 -0.2463054

26956444

ASIA CEMENT CORP

37.4 -0.3994674

3359062

FUBON FINANCIAL

30.75 -0.8064516

10130515

TSMC

ASUSTEK COMPUTER

280

0.9009009

2166979

HON HAI PRECISIO

91.4 -0.6521739

17616369

UNI-PRESIDENT

49.25

1.441813

7649589

12.05 -0.8230453

29298536

HOTAI MOTOR CO

206

4.040404

1226298

UNITED MICROELEC

13.15 -0.3787879

35985371

339.5

AU OPTRONICS COR CATCHER TECH

202.5

-1.219512

8206869

CATHAY FINANCIAL

29.45 -0.3384095

10558144

HTC CORP HUA NAN FINANCIA

-4.901961

34160242

16.5 -0.3021148

4232945

YUANTA FINANCIAL YULON MOTOR CO

CHANG HWA BANK

16

0

9129874

LARGAN PRECISION

602

-0.660066

1060054

CHENG SHIN RUBBE

76.5

0

3211217

LITE-ON TECHNOLO

38.35

0.9210526

2384657

CHIMEI INNOLUX C

12.4

-0.8

15252015

MEDIATEK INC

CHINA DEVELOPMEN

7.12

0.140647

20524986

MEGA FINANCIAL H

28 -0.1782531

11383743

NAN YA PLASTICS

CHINA STEEL CORP

274 -0.1821494 22.95

33286227

55.5 -0.5376344

5453048

CHINATRUST FINAN

17.5

-1.129944

27689810

PRESIDENT CHAIN

158 -0.6289308

95.1

0.1052632

7787896

QUANTA COMPUTER

81.9

0.244798

COMPAL ELECTRON

28

0.1788909

4678301

SILICONWARE PREC

33.25

0.1506024

4461675

DELTA ELECT INC

93

3.104213

9809095

SINOPAC FINANCIA

11.6

-1.694915

10470092

32.45 -0.1538462

3160431

SYNNEX TECH INTL

72.8

1.111111

1719411

4864422

TAIWAN CEMENT

35.9 -0.8287293

7902914

FAR EASTONE TELE

66.1

1.380368

FIRST FINANCIAL

17.6

0.5714286

7106698

TAIWAN COOPERATI

FORMOSA CHEM & F

75.3

-1.181102

6831973

TAIWAN FERTILIZE

81 -0.8567931

653337

FORMOSA PETROCHE

TAIWAN GLASS IND

17.75

749621 7753707

0.2824859

2328117

69 -0.5763689

1888468

28.35

5

37.5

0.536193

9643251

14

0

16421943

52.7

0

4250189

4123500

0.4376368

CHUNGHWA TELECOM

FAR EASTERN NEW

WISTRON CORP

8354469

MOVERS

16

29

5 5130

INDEX 5063.55 HIGH

5129.21

LOW

5052.8

52W (H) 6026.51 (L) 4643.05

5050

03-Jul

05-Jul

July 6, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GAlAXy ENtErtAINMENt

MElco croWN ENtErtAINMENt

MGM cHINA HolDINGS 29.1

19.0

11.5

18.9

11.4 28.9

18.8

11.3

18.7

Max 19

Average 18.798

Min 18.66

11.2

18.6

last 18.9

Max 29

SANDS cHINA ltD

Average 28.941

Min 28.8

28.7

last 28.8

Max 11.48

SJM HolDINGS ltD

Average 11.225

Min 11.14

last 11.26

11.1

WyNN MAcAu ltD

24.4 24.2

14.60

17.4

14.55

17.2

14.50

17

24.0 23.8

Average 23.929

Max 24.3

Min 23.65

last 23.75

23.6

14.45 Max 14.56

Average 14.506

Min 14.48

Commodities ENERGY

NAME

PRICE

WTI CRUDE FUTURE Aug12

87.85

0.216746521

-11.39687342

111.3799973

77.27999878

BRENT CRUDE FUTR Aug12

101.15

1.383181317

-3.950242142

124.6999969

88.48999786

GASOLINE RBOB FUT Aug12

DAY %

YTD %

(H) 52W

273.37

0.39663594

1.737997767

326.7099857

243.0099964

881.5

1.292731974

-1.946607341

1046.5

801

NATURAL GAS FUTR Aug12

2.916

0.586409107

-10.98901099

4.921000004

2.174999952

276.6

0.271886895

-2.732355734

332.949996

250.8399963

Gold Spot $/Oz

1616.68

0.0334

3.3082

1921.18

1510.25

Silver Spot $/Oz

28.2163

0.2733

1.3699

44.2175

26.085

Platinum Spot $/Oz

1484.15

0.0809

6.4288

1915.75

1339.25

Palladium Spot $/Oz

596.74

-0.4155

-8.6855

848.37

537.54 1832.25

LME ALUMINUM 3MO ($)

1956

-1.311806256

-3.168316832

2675.25

LME COPPER 3MO ($)

7725

-1.20219977

1.644736842

9905

6635

LME ZINC

1898

-0.419727177

2.872628726

2539.5

1718.5

-9.513629075

3MO ($)

LME NICKEL 3MO ($)

16930

-2.082128398

25195

15980

15.005

2.213896458

18

13.95499992

674.5

2.859321388

676

499

WHEAT FUTURE(CBT) Sep12

799.25

3.462783172

853.5

606.75

SOYBEAN FUTURE Nov12

1474.75

2.555632823

1478

1115.75

180.6

0.08312552

-22.90288154

288.8500061

150.0999908

SUGAR #11 (WORLD) Oct12

22.3

1.455868972

-2.321506789

26.03999901

19.23999977

COTTON NO.2 FUTR Dec12

72.5

-0.137741047

-17.46357013

102.25

64.61000061

AGRICULTURE ROUGH RICE (CBOT) Sep12 Dec12

COFFEE 'C' FUTURE Sep12

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

last 17.08

Min 16.84

YTD %

0 -0.4091 -0.4994 -0.4618 0.1882 0.0013 -0.0026 -0.1322 -1.0351 -0.2536 -0.1027 -0.1205 0.0863 -0.1492 0.1967 -0.025 0.0511 0.3116 0.4747 0.6624 0

(H) 52W

0.6171 0.2316 -2.3931 -3.5414 -3.5006 0.1628 0.1728 -0.9597 -3.6321 0.0317 2.4171 1.3761 5.1319 -3.3259 -4.1982 1.2785 3.8466 2.1923 3.6786 0.0201 0.0097

(L) 52W

1.1081 1.6618 0.9772 1.4549 84.18 8.0449 7.8113 6.4747 57.3275 31.96 1.3199 30.716 44.35 9662 88.637 1.24736 0.90011 9.3616 11.6793 116.81 1.0311

0.9388 1.5235 0.7071 1.2288 75.35 7.9823 7.7526 6.2769 43.855 29.63 1.1992 28.726 41.575 8458 72.057 1.00749 0.79505 7.8544 9.8423 95.6 1.0288

(H) 52W

(L) 52W

ARISTOCRAT LEISU

NAME

PRICE 2.65

1.923077

20.45454

3.25

1.88

2006789

CROWN LTD

8.49

0.3546099

4.944374

9.29

7.45

836248

DAY % YTD %

VOLUME CRNCY

AMAX HOLDINGS LT

0.072

0

-17.24138

0.119

0.06

3397000

BOC HONG KONG HO

23.6

0.6396588

28.26087

24.45

14.24

6648715

0.241

0

4.782607

0.4

0.204

0

2.99

0.3355705

6.785716

4.3

2.3

0

18.24

1.333333

40.52389

18.48

9.99

13160211

CHINESE ESTATES

8.98

0.2232143

-28.16

13.68

8.3

48000

CHOW TAI FOOK JE

10.68

7.228916

-23.27586

15.16

8.55

19141800

EMPEROR ENTERTAI

1.45

4.316547

30.63063

1.95

0.97

1785200

FUTURE BRIGHT

0.96

0

128.5714

1.09

0.3

516000

GALAXY ENTERTAIN

18.9

-0.5263158

32.72472

24.95

8.69

5733000 1284587

CENTURY LEGEND CHINA OVERSEAS

World Stock MarketS - Indices

DAY %

1.0272 1.5579 0.9611 1.2502 79.7 7.9866 7.754 6.356 55.065 31.54 1.266 29.868 41.7 9381 81.869 1.20143 0.80252 7.9597 9.9847 99.64 1.03

MACAU RELATED STOCKS

CHEUK NANG HLDGS

NAME

Average 16.999

PRICE

(L) 52W

GAS OIL FUT (ICE) Aug12

CORN FUTURE

16.8 Max 17.28

CURRENCY EXCHANGE RATES

HEATING OIL FUTR Aug12 METALS

last 14.52

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

12943.82

0.5627209

5.944401

13338.66016

10404.49

10404.49

NASDAQ COMPOSITE INDEX

2976.08

0.8420218

14.23834

3134.17

2298.89

2298.89

HANG SENG BK

106.8

0.2816901

15.89799

124.9

84.4

FTSE 100 INDEX

5701.42

0.2981808

2.317546

6084.08

4791.01

4791.01

HOPEWELL HLDGS

22.45

-0.2222222

13.04129

24.903

18.56

937500

DAX INDEX

6603.57

0.590574

11.95622

7523.53

4965.8

4965.8

HSBC HLDGS PLC

68.95

0.5102041

16.86441

78.7

56

9944714

NIKKEI 225

9079.8

-0.2676795

7.385267

10255.15

8135.79

8135.79

2409000

19809.13

0.5042175

7.457476

22835.03

16170.35

16170.35

DOW JONES INDUS. AVG

HANG SENG INDEX

HUTCHISON TELE H

3.71

0

24.08027

3.74

2.41

LUK FOOK HLDGS I

17.78

5.707491

-34.39114

46.15

14.7

3515204

MELCO INTL DEVEL

5.95

-1.815182

3.119584

10.76

4.3

4417000

CSI 300 INDEX

2430.37

-1.401628

3.607736

3140.102

2254.567

2254.567

MGM CHINA HOLDIN

11.26

-1.916376

17.38761

17.183

7.6

3949877

TAIWAN TAIEX INDEX

7387.78

-0.4689738

4.464029

8842.17

6609.11

6609.11

MIDLAND HOLDINGS

3.95

-1.25

-0.1023499

5.217

2.887

856000

NEPTUNE GROUP

0.088

-1.123596

-20.72072

0.151

0.08

200000

NEW WORLD DEV

9.76

1.244813

55.91054

11.279

6.13

14547949

SANDS CHINA LTD

10312271

KOSPI INDEX

1875.49

0.05548294

2.724922

2192.83

1644.11

1644.11

2.776523

4657.4

3765.9

3765.9

S&P/ASX 200 INDEX

4169.192

JAKARTA COMPOSITE INDEX

4069.836

-0.1491934

6.484681

4234.734

3217.951

3217.951

1614.43

0.04213788

5.467984

1614.79

1310.53

777.41

0.1188687

6.523658

806.015

700.441

FTSE Bursa Malaysia KLCI NZX ALL INDEX PHILIPPINES ALL SHARE IX HSBC Dragon 300 Index Singapor STOCK EXCH OF THAI INDEX HO CHI MINH STOCK INDEX Laos Composite Index

3518.3

0.4410694

15.542

3525.66

2695.06

23.75

-2.263374

8.200452

33.05

14.9

SHUN HO RESOURCE

1.13

0

13

1.32

0.82

20000

1310.53

SHUN TAK HOLDING

2.72

-0.3663004

6.286192

4.668

2.241

1429501

700.441

SJM HOLDINGS LTD

14.52

-0.2747253

16.10858

20.711

10.079

2079913

SMARTONE TELECOM

14.92

-0.5333333

11.01191

18.5

9.8

1039500

WYNN MACAU LTD

17.06

-1.273148

-12.51282

27.48

14.807

8246136

2695.06

562.76

2.47

13.38

na

na

na

ASIA ENTERTAINME

4.09

-1.918465

-30.44218

10.8692

3.66

53882

1199.41

0.4404807

16.9791

1247.72

843.69

843.69

BALLY TECHNOLOGI

46.5

0.4536617

17.54297

49.32

24.74

268664

413.83

0.7547537

17.71583

492.44

332.28

332.28

BOC HONG KONG HO

3

0

25.14666

3.15

1.81

1500

1003.33

0

11.54804

1107.3

876.33

876.33

GALAXY ENTERTAIN

2.49

-0.4

33.15508

3.24

1.08

6000

16

2.367242

-6.976748

19.15

13.12

1881031

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

71.62

2.578058

16.91153

99.89

46.01

171070

LAS VEGAS SANDS

43.18

0.4887131

1.053125

62.09

36.08

2299940

MELCO CROWN-ADR

11.15

0.631769

15.90437

16.15

7.05

1816579

MGM CHINA HOLDIN

1.5

-3.225806

25.87132

2.2131

1.0025

100

MGM RESORTS INTE

11.13

0.7239819

6.711406

16.05

7.4

3241070

SHUFFLE MASTER

14.17

2.384393

20.90443

18.77

7.35

287549

1.83

1.666667

13.83621

2.6037

1.2624

150

101.55

-0.5873715

-8.091228

165.4931

95.82

1349508

SJM HOLDINGS LTD WYNN RESORTS LTD

AUD HKD

USD

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business daily July 6, 2012

Opinion

Europe’s abysmal crisis management Clive Crook

Bloomberg View columnist

I

don’t share financial markets’ enthusiasm for the European Union’s latest moves to stabilize the euro area, and I don’t expect the thrill to last long. Sure, last week’s summit made some progress: it wasn’t quite stasis as usual. Yet one thing hasn’t changed: EU governments keep making the same basic error.

Their signature mistake is to conflate three distinct tasks, each requiring action with different degrees of urgency. You know the saying, first things first?

I’m told it’s useful in emergencies. You know, before clearing wreckage from the highway, get the injured out of the cars, that sort of idea.

The pile-up in the euro area may be complicated, but the right sequence for dealing with it isn’t. First, stem the crisis of confidence that is pushing otherwise solvent governments into insolvency. Second, make repairs to the fiscal and financial system so the chances of another crisis are reduced.

Third, address the underlying causes of the euro area’s difficulties — namely, the single currency itself.

The EU leaders keep trying to link all three together, making it likely they will fail three times over.

Total commitment The key to Step 1 is scale of commitment. When confidence in a borrower collapses and the authorities want to convince markets that default won’t happen, they must quickly pledge to do whatever it takes. Unlimited backing is often cheapest in the end because it’s credible. Here, last week’s summit failed completely: it brought no new resources to the task.

Investors took heart when leaders said the European Stability Mechanism might intervene more flexibly to support Spanish and Italian bonds. The ESM can already do this, so it’s unclear what changed. Italy’s prime minister, Mario Monti, wanted the ESM to put an explicit ceiling on Italy’s borrowing costs, promising to intervene as necessary to stop a breach. That would have been new, but the idea was rejected.

Granted, in another way the summit was an advance, exacting a concession by Germany’s leader, Angela Merkel. Governments said the ESM could support troubled banks directly rather than by lending to governments, thereby lowering the debt burden of distressed sovereign borrowers. Markets rightly liked this idea.

Unfortunately, though, the promise depends on a deal to consolidate EU bank supervision. In itself, that’s also a good idea, but hammering out the details will take months.

Worst of all, the ESM was given no new money to carry out its extra duties. The ESM has just 500 billion euros (US$630 billion), much of it already allotted. A far larger sum, 2 trillion euros and up, would be needed to do what Monti wanted and back a commitment to cap interest rates for distressed

euro- area governments.

Ideally, the EU ought to pledge unlimited resources to the job. The European Central Bank can print as many euros as it needs.

Economists expect the bank to cut interest rates tomorrow, and with euroarea unemployment still ris-

They must stem this crisis.

The rest will be academic unless Europe’s leaders meet the immediate challenge

ing, it should. But Europe needs its central bank to do far more than that. The bank must stand behind an open-ended ESM or act as a lender of last resort in its own right.

Germany and some other northern European countries keep insisting that commitment is too dangerous. If the ECB were to lend without limit to Spain and Italy, why would their governments curb their borrowing now or in the future?

New rules Good question, but answering it is Step 2. If the ECB becomes a true lender of last resort, as bringing this emergency under control is going to require, new fiscal rules will be needed. Germany is right about this.

Designing new rules and writing them into EU law will take time, however, and

time to contain this crisis is running out.

Merkel thinks that pressure, not time, is what’s needed.

Europe requires a recession, high unemployment and the threat of outright collapse to write effective new rules.

Otherwise, southern Europe will spend like there’s no tomorrow. Well, Spain ran a budget surplus before the crisis hit, and Italy curbed its deficit before the markets threatened imminent disaster. Anyway, if you are sure your partners are incompetent wastrels, why partner with them in the first place?

If Germany is right, how can closer political union — which Merkel says she wants — ever work?

First things first. Stabilize the EU economy now. Put the discussion of new fiscal rules — Step 2 — on a separate track. If Merkel’s fears come true and that effort gets nowhere, Germany and its friends can roll back the ECB’s new powers or rethink other aspects of EU integration.

All being well, that will leave Step 3: learning to live with the single currency. This is Europe’s hardest task, and the one that will take the longest.

A prosperous euro economy demands structural reform country by country, so that wage-setting arrangements don’t wreck competitiveness by driving labor costs apart. It demands a judicious measure of fiscal and hence political integration — quite distinct from the new rules in Step 2 to limit national deficits and debts — so that cyclical divergences call forth offsetting fiscal transfers. It demands far more intra-EU migration, one of the most potent remedies for structural unemployment.

Europe should have acted on this agenda before the euro was even created — the agenda that it subsequently neglected during the euro’s first decade. If the EU is to succeed and the single currency is to survive, Europe’s leaders will have to take up these ideas with vigor over the coming years.

First, though, they must stem this crisis. The rest will be academic unless Europe’s leaders meet the immediate challenge — and so far they show little sign of it.

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Newsdesk Vitor Quintã (Chief Reporter) Tony Lai, Xi Chen Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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July 6, 2012 business daily | 15

OPINION

A banking union baby step wires Business Leading reports from Asia’s best business newspapers

Taipei Times The Chinese Nationalist Party (KMT) on Wednesday dismissed calls from some of its members for President Ma Ying-jeou to step down as chairman amid the scandal surrounding former Executive Yuan secretary-general Lin Yi-shih. “It is necessary for the president to lead the party,” KMT Culture and Communication director Chuang Pochung was quoted as saying. Some KMT members have urged Mr Ma to step down as KMT chairman and focus on his presidential responsibilities after Mr Lin, one of his favoured officials, was detained for allegedly accepting a NT$63 million (US$2.11 million) bribe.

China Daily China’s social security funds are stable and operating safely, but a few problems remain, auditors said on Wednesday. The National Audit Office audited 18 types of social security funds, finding that total revenues increased to 2.84 trillion yuan (US$450.8 billion) last year, while expenditures went up to 2.11 trillion yuan. The social security system has seen improvements and provided stable expectations for consumers, the agency said. However, it did find problems concerning the weak implementation of insurance policies and the misuse of funds by a handful of people and organisations, it added.

Asahi Shimbun Japan’s Financial Services Agency on Wednesday ordered 12 leading securities companies to take a hard look at their business practices, saying companies have only themselves to blame for mounting distrust in the way they do business. The move comes after the insider trading scandals involving public stock offerings. The companies must determine whether confidential information is being handled appropriately and whether executives and employees are complying with rules and regulations.

The companies are also obliged to check whether walls to protect information are firmly in place.

Business Inquirer Standard & Poor’s (S&P) on Wednesday raised the Philippines’ credit rating by a notch, citing the government’s declining debt burden and other favourable developments on the economic front.

S&P, one of the major international credit rating firms, raised the country’s long-term foreign currency rating from BB to BB+, just one notch below investment grade. The rating agency assigned a “stable” outlook on the latest credit rating.

In a report released last night, S&P said its decision was based partly on the government’s improving debt profile.

Daniel Gros

Director of the Center for European Policy Studies

A

t the beginning of the financial crisis, it was said that banks were, in Charles Goodhart’s crisp phrase, “international in life, but national in death.” At the time (2008-2009), large international banks had to be rescued by their home countries’ governments when they ran into trouble. But the problem now in Europe is the opposite: banks are “national in life, but European in death”.

In Spain, for example, local savings banks (cajas) financed an outsize real-estate boom. As the boom turned to bust, the losses threatened to overwhelm the capacity of the Spanish state, and the problem became European, because it threatened the very survival of the euro.

The Spanish case is symptomatic of a larger problem.

National supervisors always tend to minimize problems at home. Their instinct (and their bureaucratic interest) is to defend their countries’ “national champion” bank(s) abroad.

But their resistance to recognizing problems at home runs even deeper. Until recently, the Spanish authorities maintained that the problems in their country’s real-estate sector were temporary. To acknowledge the truth would have meant admitting that for years they had overlooked the build-up of an unsustainable construction boom that now threatens to bankrupt the entire country.

In the case of Ireland, the situation was initially not much different. When problems started to surface, the finance minister at the time initially claimed that the country would carry out “the cheapest bank rescue ever.”

Given national supervisors’ predictable tendency not to recognize problems at home, it seemed natural that the cost of cleaning up insolvent banks should also be borne at the national level. It thus seemed to make sense that even in the eurozone, banking supervision remained largely national. The recently created European Banking Authority has only limited powers over national supervisors, whose daily work is guided mainly by national considerations.

But reality has shown that this approach is not tenable.

Problems might originate at the national level, but, owing to monetary union, they quickly threaten the stability of the entire eurozone banking system.

At their June summit, Europe’s leaders finally recognized the need to rectify this situation, transferring responsibility for banking supervision in the eurozone to the European Central Bank. Given that financial integration is particularly strong within the

That is often the way that European integration proceeds: an incomplete step in one area later requires further steps in related areas

monetary union, putting the ECB in charge was an obvious choice.

Disintegration unfolding Moreover, the ECB already bears de facto responsibility for the stability of the eurozone’s banking system. But, until now, it had to lend massive amounts to banks without being able to judge their soundness, because all of that information was in the hands of national authorities who guarded it jealously and typically denied problems until it was too late.

Putting the ECB in charge should also help to stop the creeping disintegration

process, which is not publicly visible, but is very real nonetheless. Just ask any of the large international banking groups headquartered in financially stressed eurozone countries.

Consider the case of a bank headquartered in Italy, but with an important subsidiary in Germany. The German operations naturally generate a surplus of funds (given that savings in Germany far exceed investment on average).

The parent bank would like to use these funds to reinforce the group’s liquidity. But the German supervisory authorities consider Italy at risk and thus oppose any transfer of funds there.

The supervisor of the home country (Italy) has the opposite interest. It would like to see the “internal capital market” operate as much as possible. Here, too, it makes sense to have the ECB in charge as a neutral arbiter with respect to these oppos-

ing interests.

But, while putting the ECB in charge of banking supervision solves one problem, it creates another: can national authorities still be held responsible for saving banks that they no longer supervise?

Economic (and political) logic requires that the eurozone will soon also need a common bank rescue fund. Officially, this has not yet been acknowledged. But that is often the way that European integration proceeds: an incomplete step in one area later requires further steps in related areas.

This incremental approach has worked well in the past; indeed, today’s European Union resulted from it. But a financial crisis does not give policymakers the time that they once had to explain to voters why one step required another. They will have to walk much more quickly to save the euro.

16 |

business daily July 6, 2012

CLOSING HK regulator criticises listing applications

China rates drops again

Many companies looking to list in Hong Kong are failing to provide meaningful disclosure, the Securities and Futures Commission said, underscoring the concerns that have pushed it to call for fines or jail time for bankers found to have misled investors on IPOs. In a market that has been the world’s biggest for listings in two of the past three years, only 14 out of 191 IPO applications in the year through March were deemed sufficiently satisfactory for the Securities and Futures Commission to accept without comment. Nine were so bad that it deferred comment altogether, it said.

China cut benchmark interest rates for the second time in a month and allowed banks to offer bigger discounts on their lending costs, stepping up efforts to promote economic expansion that may be weaker than anticipated. The one-year lending rate will fall by 31 basis points and the one-year deposit rate will drop by 25 basis points effective tomorrow, the People’s Bank of China said on its website yesterday. The central bank last cut interest rates on June 7. The central bank last cut interest rates on June 7.

Banks can offer loans of as much as 30 percent less than benchmark rates, the central bank said.

New Hong Kong Chief Executive election challenged in the courts Illegal home structures do not come cheap in HK

P

ro-democracy lawmakers yesterday filed legal challenges to the election of Hong Kong’s new leader less than a week after he took office amid the biggest demonstrations in the city in nearly a decade.

Organisers said 400,000 people took to the streets Sunday to protest against Leung Chun Ying’s leadership and Beijing’s interference in local affairs, hours after he was sworn in as chief executive before Chinese President Hu Jintao.

Democratic Party chairman Albert Ho said he filed two separate legal cases with the high court yesterday, seeking to oust Mr Leung on grounds that the leader allegedly made false statements during the election campaign.

“I just want to uphold the integrity of the system to make sure we have a fair election,” said Mr Ho, who contested against Mr Leung and another candidate in the leadership election in March but finished third.

“Our system is already less than democratic, it’s undemocratic, at least the minimum we want is that the process was held strictly in accordance with the laws,” the lawyer told AFP.

Democratic candidate, Albert Ho (centre), leads the charge

Mr Leung was picked by a 1,200-strong committee packed with pro-Beijing elites in March, in a process dubbed a “small circle” election, where the city’s seven million population does not get to choose its own leader by popular vote.

The legal challenges centre on Mr Leung’s pledge that his house had no illegal improvement works — a controversial issue in Hong Kong that saw support for his main rival Henry Tang dramatically plunge during the race after an illegal basement was found at his home.

But Mr Leung, a surveyor by profession, was forced to apologise last week after local media discovered his home in an upscale neighbourhood had six illegal structures. He quickly demolished them.

Citing local laws, Mr Ho claimed the new chief executive had engaged in “illegal conduct” by making a “false and misleading statement” and asked the court to declare that Mr Leung was not duly elected, according to a copy of the court filing given to AFP. Mr Ho is also seeking an injunction to stop Leung from acting in the office

to which he has been elected.

The court has yet to fix a date to hear both cases.

Maverick lawmaker Leung Kwok Hung filed a similar lawsuit on Wednesday to challenge the leader’s win.

The new 57-year-old leader had a rocky start after he was heckled by protesters and was bundled out of a community hall by police at a town hall-style meeting with locals on Monday, his first day in office.

Even before he began his term, Mr Leung had already attracted protests drawing thousands of people decrying Beijing interference in the leadership poll.

Mr Leung urged people to work with him as he vowed to tackle a widening gap between rich and poor, and soaring property costs which have made home ownership an impossible dream for many residents, especially younger people.

A poll released by the Chinese University of Hong Kong last week showed Mr Leung’s popularity rating falling to 51.5, down 4.2 points from a month ago, with nearly 40 percent of people saying they did not trust the government.

AFP

Moody’s lowers Barclays outlook Rating agency has cut the bank’s outlook from stable to negative

R

atings agency Moody’s changed its outlook for Barclays’s standalone bank financial strength rating to negative from stable, citing the resignations of senior executives including chief executive Bob Diamond in the wake of an interest rate-rigging scandal.

Moody’s said yesterday the downgrade reflected concerns that the departures and the consequent uncertainty surrounding the bank’s direction would be negative for bondholders.

The ratings agency said shareholder and political pressure on Barclays could lead to pressure on the bank to shift its business model away from investment banking and to reform perceived

failures in its business culture.

“Although this could have potentially positive implications over the longer term, the uncertainty surrounding such a change in direction is creditnegative in the short term,” Moody’s said in a statement.

Barclays announced Mr Diamond’s resignation on Tuesday and his departure was followed hours later by that of Chief Operating Officer Jerry del Missier. Chairman Marcus Agius has also announced his intention to leave once successors are found.

The move comes a day after exBarclays chief executive told MPs the rate fixing was “reprehensible”.

Mr Diamond said he had only

Moody’s said shareholders and politicians could push Barclays away from investment banking

learned the true extent of the scandal in the past month, and that he had felt “physically ill” when reading incriminating emails from traders that they had conspired to manipulate the Libor rate – the interest rate at which banks lend to one another and which is used to set lending rates across the economy.

One MP, however, called some of Mr Diamond’s evidence “implausible”.

Moody’s said Barclays could struggle to find a suitable candidate

to step into Mr Diamond’s shoes.

“The bank could be challenged to replace the three senior staff and in particular find a new CEO who not only has a sufficient understanding of the investment banking business to run Barclays, but also has the credibility and ability to swiftly address the weaknesses that the Libor incident revealed and stakeholders’ perceptions of the investment bank,” it said.

Reuters