Macau Business Daily, June 14, 2013 by Business Daily

IPO prospectus warns of chip cap risk in Macau T

here is a risk the Macau government might move to control the growth of the city’s casino market by capping the total number of chips issuable or in circulation, says the prospectus for a Macau gaming service provider’s initial public offering. Macau Legend Ltd is targeting a HK$6.11 billion flotation in Hong Kong. Share trading is due to start on June 27. The prospectus, seen by Business Daily, states: “The chips used in the casinos are supplied by SJM. If the Macau government caps the total number of chips issuable or in circulation, SJM may not be able or willing to supply the casinos with an adequate number of chips, which could adversely impact our gaming services business.”

No housing tax relief for non-residents

Page 2

‘Rubbish’ returns on higher rev for CSR Page 2

TurboJET remains in red claims ferry op

Page 7

I SSN 2226-8294

Hang Seng Index 21080

More on page 3

21000

Year II

Number 305

Friday June 14, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

20920

20840

20760

Feeble returns behind cab licence surrender

20680

June 13

www.macaubusinessdaily.com

Some bidders for taxi licences have surrendered the permits they won because they expect lower returns on their investment. That happened in part because speculators drove up prices during the bidding process, some owner-drivers told Business Daily yesterday. The Transport Bureau told Business Daily last week that winning bidders had given up nine of the 200 new taxi licences awarded last year. Page 4

Revenue split ‘more transparent’: Macao Water

HSI - Movers Name

%Day

HANG LUNG PROPER

1.38

CHEUNG KONG

0.98

LI & FUNG LTD

0.72

SINO LAND CO

0.57

POWER ASSETS HOL

0.30

LENOVO GROUP LTD

-3.90

CHINA RES POWER

-4.54

CHINA COAL ENE-H

-4.56

ESPRIT HLDGS

-4.79

CHINA CONST BA-H

-8.60

Source: Bloomberg

Starting today, Macao Water Supply Co Ltd can keep a bigger share of the money it generates via the billing of customers. A revision of the concession contract published in yesterday’s Official Gazette also introduces new benchmarks to determine the extent of any possible future hike in the utility’s share of revenue. The government “could also take into consideration” the public’s satisfaction with Macao Water’s service.

Brought to you by

Page 5

Edmund Ho ‘corruption’ on LVS licence: Chao Jason Chao, a pan-democrat frequently in the news pursuing civil liberties causes in Macau, yesterday alleged “corruption” by former Macau chief executive Edmund Ho Hau Wah in the way a gaming licence was granted to Las Vegas Sands Corp. Mr Chao delivered a letter on behalf of a civic group called Macau Conscience to the Public Prosecutions Office at midday yesterday. Page 6

2013-06-14

2013-06-15

2013-06-16

23˚ 27˚

24˚ 28˚

June 14, 2013

Macau Housing Bureau expands over bigger workload The Housing Bureau will have one more deputy director and two new departments starting July 1, Executive Council spokesperson Leong Heng Teng said yesterday. The bureau will increase its staff by 70 percent up to 225 to cope with an “increasing workload,” he said. One of the new departments will oversee the enforcement of the law on estate agents, while the other will conduct research on public housing policy. An expanded structure is needed to tackle “growing difficulties” in managing over 45,000 public housing units, with 7,371 more in the pipeline, Mr Leong explained.

No housing tax relief for non-residents Measure aimed at deterring speculators, lowering home prices Vítor Quintã

vitorquinta@macaubusinessdaily.com

Residential owners have to pay a tax of 6 to 10 percent of a unit’s value

on-resident investors or companies will not be eligible for a deduction from last year’s housing tax, the Financial Services Bureau confirmed yesterday. The housing tax relief was first introduced for 2007 and the measure will continue this year. Macau residents can benefit from a 3,500-pataca (US$438) deduction on their housing tax. Yesterday’s statement means that non-residents will have to shoulder the full amount of the housing tax. The deduction will also be out of reach for Macau-registered companies or individual businessmen. Secretary Transport and Public Works Lau Si Io announced this measure in October 2012.

It was included in a batch of measures aimed at curbing “excessive speculation” – said Wong Chan Tong, head of Mr Lau’s cabinet – and reining in property prices. Home prices reached an average of 88,097 patacas (US$11,012) per square metre in March, the highest ever in Macau. The authorities blamed developers for rushing to sell unfinished units – sometimes even before the project was officially approved – before the city’s first-ever law on pre-sales came into effect on June 1. Residential owners have to pay a tax of 10 percent of a unit’s value, if it is leased. This figure drops to 6 percent if the home is not leased. The housing tax for the last year must be paid within this month. The housing tax was lowered in 2010, with the government aiming to make the rental market more attractive for landlords. At the time secretary Lau said it could encourage them to lease the many apartment units that remained vacant. The rental property tax fell from 16 to 10 percent while the residential property tax dropped from 10 to 6 percent. At the time Executive Council spokesperson Leong Heng Teng said there were 189,000 units paying the residential property tax in 2010 and just 32,000 paying the rental one.

Trash collector less profitable CSR’s profit fell last year even though its revenue was record-breaking Vítor Quintã

vitorquinta@macaubusinessdaily.com

he annual profit of the city’s only rubbish collector fell in the last full year of its current solid waste management contract, even though its revenue was higher than ever. Macau Waste Systems Co Ltd’s (CSR’s) annual report, published in yesterday’s Official Gazette, says its revenue rose to 191.2 million patacas (US$23.9 million) last year, 9.1 percent more than in 2011. “We are happy with the continuing good performance displayed by the company during the year,” CSR chairman Mark Rudolf Christiaan Venhoek says in the report. Mr Venhoek says the company undertook “several cost-saving and efficiency-improvement programmes” last year. But CSR’s net profit fell by 2 percent to 39.2 million patacas, meaning its profit margin contracted to 20.5 percent – the narrowest for five years – from 22.8 percent. “Despite adverse economic conditions, both locally and internationally, the company

maintained profitable operations,” Mr Venhoek says. He says CSR maintained “a high distribution of dividends”. The shareholders have received dividends for last year amounting to 20 million patacas, or 10.5 percent of revenue – the same amount they received for 2011. CSR is a joint venture by Hong Kong’s Swire SITA Waste Services Ltd and Macau’s HN Group Ltd. CSR has been collecting and disposing of Macau’s rubbish since 1997. Its concession, first signed in 2006 and subsequently extended three times, has been worth 1.4 billion patacas to the company. The latest extension, worth over 77 million patacas, will run until the end of October. The Environmental Protection Bureau announced last month that CSR had won the contract to collect the city’s rubbish for the next 10 years. The public tender for the contract was controversial. CSR’s bid was 2.1 billion patacas,

CSR has been collecting and disposing of Macau’s rubbish since 1997

the lowest made by the five contestants. The Environmental Protection Bureau said CSR had scored “the highest in the overall assessment, particularly in areas like employee protection and environmental protection”. One of the losing bidders, Urbaser SA, has sought a court injunction to

prevent the contract from going to CSR while it prepares a case against Chief Executive Fernando Chui Sai On’s decision. Urbaser SA says in a court document that awarding the contract to CSR would be “illegal and invalid”, without giving details.

June April 14, 19, 2013 2013

Macau

IPO prospectus warns of chip cap risk in Macau Controlling supply of casino currency would be alternative way of cooling market Michael Grimes

michael.grimes@macaubusinessdaily.com

a casino project, not as a ‘gaming service provider’ which is how Macau Legend is defined.” But Ben Lee of IGamiX Management & Consulting Ltd, told Business Daily: “We have been alerting our clients to signals that have been and are being sent to the junket operators via various channels regarding possible market cooling measures. To see it in print in an IPO prospectus finally solidifies that risk.” “If the possibility of chip control is true, we see it likely then to be aimed at the VIP segment in the form of restrictions on the amount of rolling chips that will be permitted,” he added. “The beauty of this idea is it will give the authorities an effective tool that directly controls the amount of gaming revenue that can be generated at any given point in time. On the other hand, by doing so, it will most likely drive an even greater volume of business under the table into side betting than is already the case.” Business Daily attempted to contact Manuel Joaquim das Neves, director of the local regulator, the Gaming Inspection and Coordination Bureau, for clarification on the chip cap issue, but was unable to reach him prior to deadline.

Official oversight Macau Legend’s local legal advisor listed in its prospectus is Jorge Neto Valente. Mr Valente is a former managing director of casino developer Venetian Macau Ltd. Since February 2010 he has been group advisor for rival developer Galaxy Entertainment Group Ltd, and managing director for Galaxy Casino SA, the entity that holds Galaxy’s gaming concession. Attempts to contact Mr Neto Valente by telephone were also unsuccessful.

here is a risk the Macau government might move to control the growth of the city’s casino market by capping the total number of chips issuable or in circulation, says the prospectus for a Macau gaming service provider’s initial public offering. Macau’s gaming revenue grew 560 percent between 2005 and the end of 2012, when the city generated 304.14 billion patacas (US$38 billion). The year 2006 was the first time the full effects of market liberalisation via a six-operator oligopoly and the surges of visitors linked to the mainland’s Individual Visit Scheme were felt. That has brought with it challenges including oversight of who’s coming to gamble, from where they got their money, and whether they can afford to lose it. Given the propensity of Chinese consumers to enjoy casino gambling, both the mainland authorities and those in Macau have already taken a series of measures to monitor and control the Macau market. In the local government’s case that’s included a threatened cap on the commission payable to VIP junket operators that traditionally bring in high roller players, and an actual cap on the numbers of live dealer tables in the market. So far the latter measure seems only to have pushed up minimum bets as a growing number of players compete for access to a limited amount of table inventory. Business Daily has seen the nearly 480-page document for Macau Legend Ltd’s targeted HK$6.11 billion IPO. Share trading is due to start on June 27. Macau Legend already controls Macau Fisherman’s Wharf – next to Macau’s Outer Harbour – and the site’s accompanying Babylon Casino. It also controls The Landmark

Macau hotel and its Pharaoh’s Palace Casino. Those gaming operations are under a service agreement with Sociedade de Jogos de Macau SA, the gaming concessionaire entity controlled by Hong Kong-listed SJM Holdings Ltd and founded by the city’s former gaming monopolist Stanley Ho Hung Sun. Macau Legend is seeking – via the IPO – to expand its Macau gaming portfolio. It lists the possibility of capping chip issuance in the ‘risk factors’ section of the prospectus. The document states: “The chips used in the casinos are supplied by SJM. If the Macau government caps the total number of chips issuable or in circulation, SJM may not be able or willing to supply the casinos with an adequate number of chips, which could adversely impact our gaming services business.”

KEY POINTS Macau Legend prospectus warns market risk of chip cap A chip cap would slow gaming market: analyst Warning only issued as Macau Legend not chip issuer: 2nd analyst Government ‘taken steps’ to monitor VIP gaming: prospectus

The English translation of SJM’s concession contract with the Macau government explicitly mentions the possibility of capping chip issuance. Chapter 22, Clause 92, line 2 states: “The quantity issued and in circulation of casino chips shall be subject to the approval of the government.”

Market impact Business Daily asked analysts what effect capping the number of chips issued could have on the Macau market. Gary Pinge, head of consumer and gaming research, Asia, for Macquarie Securities Group told us: “Money supply and velocity of money are essentially the two drivers to gaming growth. Capping the money supply – in casino terms that means the chips – or putting a restriction on the money supply growth rate in Macau, will obviously have an impact on gaming growth.” But another analyst told us: “I think this is in there because Macau Legend is operating on a service agreement with SJM. It’s SJM – not Macau Legend – that controls the issuance of the chips. I don’t see actual market risk in this statement.” While it’s common for listing documents to outline for prospective investors a wide range of market risks – as part of the due diligence process – Business Daily has not previously seen a reference to a potential cap on casino currency. The possibility was not mentioned in the ‘risks’ section in the IPO prospectus issued by Paul Y. Engineering Group Ltd in January when it sought to raise funds for Casino Louis XIII. The second analyst told us: “Paul Y. is different because their listing was for the acquisition of land for

The quantity issued and in circulation of casino chips shall be subject to the approval of the government Concession contract for SJM

Macau Legend’s prospectus additionally states: “In response to incidents of Chinese government officials accumulating large gambling debts in Macau and signals from the Chinese government to increase scrutiny over the illegal flow of money out of China, the Macau government has taken steps to further monitor VIP gaming in Macau. The DICJ may now increase scrutiny over or approve additional instructions on VIP gaming, which could deter current and potential VIP players from patronising casinos in Macau…” “Now it’s written down in Macau Legend’s prospectus I think it’s hard for anyone to suggest there aren’t special anti-corruption measures in China and Macau that might impact the Macau gaming market,” said another industry source spoken to by Business Daily. “When you add in the explicit warning about capping chip issuance, it’s a reason for investors to have some caution about the direction of the Macau market,” the person added.

June 14, 2013

Macau

Feeble returns behind cab licence surrender

Brought to you by

HOSPITALITY

The rules for bidding for taxi licences are too loose, opening the door to speculators, says a drivers association

Where’s the waiter gone?

Stephanie Lai

sw.lai@macaubusinessdaily.com

Restaurants and retailing are industries that often give young people their first jobs. Restaurants are also important employers of older and less skilled workers, as many jobs in the industry require few qualifications. Restaurants are also labour intensive. So the industry gives indications about how employment has changed. The Statistics and Census Service surveys the restaurant industry in the first and third quarters of each year, and the results of its latest survey show how the industry soaks up labour.

Over 2,000 bids were made for 200 new taxi licences in April last year (Photo: Manuel Cardoso)

For the past two years the number of restaurant employees has risen continuously – by 5,200, or 28 percent. The number of vacancies spiked early last year, but these extra vacancies were all filled during the year. By the end of the first quarter of this year the restaurant industry had just under 2,100 vacancies, 3.5 percent fewer than two years earlier. This number accounts for almost 40 percent of the number of jobs created in the past two years, suggesting that a tight supply of labour may be hampering the growth of the industry. Pay has generally followed consumer price inflation, rising by 10.2 percent in the past two years to 8,090 patacas (US$1,011) per month. This figure means the purchasing power of the average salary in the restaurant industry has decreased slightly. J.I.D.

24,020

Restaurant industry workforce on March 31

ome bidders for taxi licences have surrendered the licences they won because they expect lower returns on their investment, speculators having driven up prices. The Transport Bureau told Business Daily last week that winning bidders had given up nine of the 200 new taxi licences awarded last year. This comes as no surprise to the Macau Taxi Driver Mutual Association and the General Association of Macau Taxi Owners, which had predicted that 10 to 20 licences would be surrendered. Macau Taxi Driver Mutual Association president Tony Kuok Leong Son told Business Daily that during last year’s tendering some car owners had paired up with relatives or friends to make “high-low” bids. “A pair will, for instance, make a 1.1 million pataca [US$137,550] bid and a cheaper, 1 million pataca bid. If the cheaper bid is enough to win a taxi licence, the higher bid will be retracted,” Mr Kuok said. “That is probably what happened with some of the nine relinquished licences,” he said. The vice-president of the General Association of Macau Taxi Owners, Ben Leng Sai Vai, believes the licences were given up because of the unfavourable returns on investment now expected. “For those that made high bids, say the ones from 800,000 patacas to 1 million patacas, the returns are not as favourable as

the owners had wished,” Mr Leng told Business Daily. He said the return on investment from the new licences would be lower than from older licences because the new ones were valid for only eight years. Many older licences are perpetual.

Cost burden Newly licensed taxis must also meet the Euro IV emission standards, entailing higher maintenance costs, Mr Leng said. “For the new green taxis, monthly maintenance costs are at least 3,000 patacas, and you have to do a thorough service of the mechanical parts every one or two years, which can cost 30,000 to 40,000 patacas,” he said. Some bidders had not expected such high maintenance costs, so they eventually surrendered their licences, he said. Mr Kuok said that while a cab driver paid around 20,000 patacas per month to rent a licensed taxi, he could earn a net profit of up to 15,000 patacas per month, owing to plenty of custom from tourists. But he said that the rules of last year’s public tender might have increased costs for drivers. “As the deposit was only 20,000 patacas, anyone could make a bid, including some car owners that bid highly unrealistic sums,” he said. “Eventually, when the bid is

won, the owners seek high rents, and that means drivers must bear a bigger burden of operating costs,” Mr Kuok said. “Higher rents could lead to more irregular practices among taxi drivers, such as those that go only to casinos and hotels, in order to recoup the rent quickly.” He said the deposit required of bidders should have been higher – at least 100,000 patacas. And he said bidding for taxi licences should be restricted to drivers. Of the 2,000 and more bids made for the 200 taxi licences offered in April last year, the highest was over 1.1 million patacas and the lowest was over 830,000 patacas.

Higher rents could lead to more irregular practices among taxi drivers Tony Kuok Leong Son, Macao Taxi Driver Mutual Association president

June 14, 2013

Macau

New hike method ‘more transparent’: Macao Water Water supplier to get more money for its services, starting today Vítor Quintã

vitorquinta@macaubusinessdaily.com

tarting today, Macao Water Supply Co Ltd will get to keep a bigger share of the money it earns for providing the city with water. A revision of the concession contract published in yesterday’s Official Gazette also introduces new factors to determine the extent of any possible hike. The contract says the government “could also take into consideration” the public’s satisfaction with Macao Water’s service quality and whether or not the company has cooperated with public water policies. “People expect more transparency on the monitoring of the government, as a regulator,” Macao Water deputy general manager Oscar Chu Wai Man said. “We think it [the mechanism] is quite fair,” he told Business Daily. Maritime Administration director Susana Wong Soi Man said last month they would continue to instruct a third-party institution to carry out surveys on residents’ satisfaction with the water supply service.

A survey carried out last year shows the public satisfaction with the water supplier reached a level of 70 out of 100 points, she said. “We are confident we can fulfil those requirements,” Mr Chu said. “We assess our customers’ satisfaction and I can tell you we are still Macau people’s preferred [public] utility,” he added. Under the water supply current system, Macao Water transfers most of the money it gets from customers to the government. It keeps enough money to pay for the raw water it buys from mainland China plus 4.39 patacas per cubic metre of water it supplies to customers here. That figure is now raised to 4.65 patacas, an increase of 5.92 percent. The hike is far smaller than the 26.2 percent the supplier asked for in May 2012. “We asked for this increase because we have not raised this amount since 1997,” Mr Chu said. Today’s increase will have no impact on the price consumers

pay for water. “But even when a new tariff was introduced two years ago there was not much of an impact to households,”

the Macao Water executive said. “Water expenditure has never been a big issue. Water is affordable here,” he added. Another factor introduced in the mechanism is the supplier’s water loss rate, which refers to the water that has been lost before reaching consumers. Mr Chu downplayed the impact of this factor, stressing that standards for a water loss ratio are already set in government water conservation guidelines. The new mechanism will “strengthen supervision” and “encourage” Macao water to “continue to improve its service quality, ensuring public interest,” the Maritime Administration said in a statement.

Macao Water’s service hike will not impact the price of water for consumers (Photo: Manuel Cardoso)

June 14, 2013 April 19, 2013

Macau Chao claims ‘corruption’ by Edmund Ho over LVS licence

Brought to you by

Financial Monitor Activist writes to Macau‘s Public Prosecutions Office urging inquiry, following Nevada hearing on casino licence process New breeds of exports Macau’s traditional manufacturing industries have declined immensely in the course of the past eight years. Textiles, a leading industry at the start of the century, has almost vanished. Textiles made up less than 10 percent of exports in the first four months of this year. Other exports have grown in importance, some of them as the number of tourists has grown – jewellery and watches being the most obvious example. Growth in the importance of other exports is more probably due to logistical convenience, an example being machinery and electrical equipment, which is hardly produced here at all. Comparisons of the values of four sorts of exports in the first four months of each year from 2010 to this year show how their importance has changed.

Exports of machinery and of tobacco and drink have grown considerably in the past couple of years. The value of exports of machinery has more than doubled since 2010, as has the value of exports of tobacco and drink. The increase in machinery exports is almost totally due to re-exports, which account for 90 percent of the total. Tobacco products make up most exports of tobacco and drink. But the analysis is hampered by statistical secrecy rules, as the details about the tobacco activities cannot be published. Of the four sorts of exports, jewellery was the biggest in 2010, but the value of jewellery exports then fell steeply. It then increased by about 150 percent from 2011 to 2013, but today is still less three-quarters of what it was in 2010. J.I.D. The content of this column is the work of Business Daily’s journalists.

167 %

Rise in machinery exports in the first four months from the equivalent period of 2010

Staff Reporter

newsdesk@macaubusinessdaily.com

ason Chao Teng Hei, a pandemocrat frequently in the news pursuing civil liberties causes in Macau, yesterday alleged “corruption” by former Macau chief executive Edmund Ho Hau Wah in the way a gaming licence was granted to Las Vegas Sands Corp. Mr Chao – a member of the New Macau Association – delivered a letter on behalf of a civic group called Macau Conscience to the Public Prosecutions Office at midday yesterday. It requests an investigation into the process that led to the 2002 licensing of LVS as a casino operator here. The activist told Business Daily by telephone that his move was sparked by the recent court case in Nevada involving Hong Kong businessman Richard Suen and his firm Round Square Co. On May 14 Mr Suen was awarded US$70 million (560 million patacas) by a Nevada state court jury. It decided he had been instrumental in securing a Macau gaming permit for LVS by organising meetings in 2001 between the firm’s executives and high-ranking officials in Beijing. The trial judge added US$31.6 million in interest to the award. Mr Chao told Business Daily: “As the latest trial of Richard Suen and [Las Vegas] Sands reveals, the process of granting a gaming licence to the gaming company [LVS] is not rightful because it had to go through all these middleman deals with Chinese leaders in Beijing.” He added: “But Macau should have the sole say in the whole matter of granting the licence.” Mr Chao continued: “As a former top official deciding the approval of the gaming licence, Edmund Ho has allowed that unjust procedure to happen, which is both corruption and abuse of power as we see it. “That’s why we decided to deliver a complaint letter about it to the Public Prosecutions Office, just as what we did with the cemetery case linked to Secretary of Administration and Justice Florinda Chan,” stated the civil activist.

‘Zero’ influence No comment regarding Mr Chao’s action was available from LVS at the time Business Daily went to press. But Sheldon Adelson, chairman of the

Jason Chao – at forefront of activist campaigns

casino firm, said in his trial evidence Mr Suen had “zero” influence on the licensing decision because it was put out to tender. “If it’s going to be open to anybody, there’s nothing you can do for me that I can compensate you for,” the LVS chairman stated. According to people with knowledge of the matter spoken to

by this newspaper, and documentary evidence reviewed by us, it was the Macau government that went to lengths to keep LVS in the 2001 bidding process. That was the case even after LVS indicated a possible tie up with a Taiwan company – an arrangement that was considered politically impossible on this side of the Taiwan Strait.

June April 14, 19, 2013 2013

Macau

TurboJET remains in the red Operator blames inflation, fewer passengers and high fuel prices Vítor Quintã

vitorquinta@macaubusinessdaily.com

JCDecaux Macau posts record profit for 2012 Outdoor advertising company JCDecaux (Macau) Ltd made its biggest-ever profit last year. JCDecaux Macau’s annual report, published in yesterday’s Official Gazette, says the company made a profit of 5.5 million patacas (US$687,500) last year, 76 percent more than the 3.1 million patacas it made in 2011. Revenue increased thanks to “new advertising patrimony in Macau International Airport and a modest increase in receipts from the street furniture concession,” director Ashley Stewart told Business Daily. JCDecaux Macau has been in Macau since 2001, when the government granted it a 20-year concession to advertise on street furniture. It was granted the advertising concession for Macau International Airport in 2003, and its contract will last until 2018. JCDecaux Macau has also added spots on bus bodywork to its portfolio. The first year of operation of the Reolian bus advertising concession helped boost the firm’s revenue, Mr Stewart said. The company is a joint venture by France’s JCDecaux SA and Macau’s HN Group Ltd. It is the city’s biggest street furniture advertising business, with more than 300 advertising spots. JCDecaux Macau “is working currently on a new project, which should be able to be announced in the coming months, Mr Stewart said. JCDecaux Transport’s general manager for Hong Kong and Macau, Shirley Chan, said in a 2011 interview with our sister-publication, Macau Business magazine, that the group’s next venture in Macau might be advertising on the Light Rapid Transit railway. V.Q.

ar East Hidrofoil Co Ltda, the passenger ferry concessionaire that operates under TurboJET brand, remained in the red last year. The company’s annual report, published in yesterday’s Official Gazette, says losses were lower in 2012 than in the previous year. Far East Hidrofoil was awarded a passenger ferry concession in 2002. TurboJET Ltd, a unit of Hong Konglisted conglomerate Shun Tak Holdings Ltd, controls Far East Hidrofoil. In yesterday’s report the company did not disclose any concrete figures on revenue or loss. Shun Tak said in a March filing its transportation division posted HK$65 million (US$8.4 million) in operating profit, “which represents a 743 percent year-on-year improvement”. The group’s transportation division includes ferries and a 131-strong fleet of Macau and crossborder buses run by Shun Tak & CITS Coach (Macao) Ltd. The report signed by Pansy Ho Chiu King reveals there was “a slight decline” in the number of passengers taking ferry between Hong Kong and Macau. There were 112,691 ferry trips between Macau and Hong Kong in 2012, down by 7 percent year-on-

TurboJET saw ‘a slight decline’ in ferry passengers between Hong Kong and Macau

year, official government data show. There is no available statistics on ferry passengers. The other major ferry operation, Cotai Water Jet, carried 7.36 million passengers last year, up by 19.5 percent from 2011, Chu Kong Shipping Enterprises (Group) Co Ltd said earlier this year. Far East Hidrofoil said “soaring inflation and high fuel prices” were other factors pushing up operational costs in 2012. The government’s decision to

MIN

approve an average fare hike of 11 percent in July 2011 “helped to relieve part of the operational pressure,” the company said. The increase, “coupled with the company’s efforts to reduce its costs and improve efficiency,” made it possible to reduce losses, Ms Ho wrote. In September 2012 Shun Tak applied for an average hike of 13 percent, citing surging fuel costs, labour expenses, rentals and inflation. Last March the authorities approved an average increase of 6 percent.

TO THE MAJ OR 201 BUS 3 Bu INES reco sine S AW g s s n ition Awa size ARD rds s an prog S IN of t d fro ope r THE a m h n to e m f REG Y o ear r pro orga all in all se ION i s c f n e d M ! aca perm isation ividua tors. P ssion u’s p als a artic l s s a t n a h rem nd b ent or a at c n i p d a tion bus arry usin com basis ine ier in o e . pan y, o You ca n their sses, or the aw ss of al r no n a l a Nom min either ctivitie other r rds is inat s e ate ions you nomina in Mac levant rsel ope We f, or te an in au on a n un invi d you r co ividual t il Ju te y mpa ou t ne, ny. 2 o

ATIO

NO WO

PEN

be p

0th

art o

For

, 20

f it!

mor e

info w or c .awa rmation rdsm onta , inqu c aca please v iries t us u.co isit o @aw ur w m ard sma

cau

BRONZE SPONSOR

ORGANISED BY

MEDIA PARTNERS

EXCLUSIVE AGENCY AND PARTNER

EXCLUSIVE OOH MEDIA PARTNER

.com

ebs

ite a t

June 14, 2013 April 19, 2013

Greater China

World Bank cuts China growth forecast Rapid expansion was expected to moderate, says global lender

he World Bank has cut its growth forecast for China amid warnings of slower but more stable global growth over the coming months. In its twice-yearly Global Economic Prospects report, the bank warned that large developing economies, which have driven global growth in recent years, will not experience the same boom as they did before the global financial crisis and will have to focus on structural reforms to keep expanding. The bank now expects the Chinese economy to grow 7.7 percent in 2013,

down from its earlier projection of 8.4 percent. It also cut the forecast for global economic growth to 2.2 percent from 2.4 percent. Andrew Burns, the report’s lead author, said the global economy should be less volatile in the future, but growth should slow. “Growth is not slower because of inadequate demand but rather because, in our view, the very strong growth we saw in the pre-crisis period was due to that bubble phenomenon,” Mr Burns told reporters. “What we’re seeing now is more

in line with the underlying growth potential,” he said. “Therefore, this is a case of moving towards the new normal of the post crisis.” Part of that “new normal” will be slower growth rates in countries like Brazil, India, Russia and China, as commodities prices moderate and countries rebalance their economies, the World Bank said. The World Bank cut its outlook for developing countries, which last year grew at their slowest pace in a decade, to 5.1 percent, from 5.5 percent in the January forecast. The bank said growth in these countries

Analysts concerned whether Beijing can sustain high growth rate

should slowly pick up in the future, to 5.6 percent next year and 5.7 percent in 2015. Before the global financial crisis hit in 2008, developing countries as a whole were chalking up growth rates of around 7.5 percent, while China expanded at an annual rate of 10 percent.

Investment risk Evidence has mounted in recent weeks that China’s economic growth is fast losing momentum, and economists are abandoning their rosy recovery forecasts and bracing for what could be the country’s slowest growth rate in 23 years. Mr Burns said he was not worried about the slowdown, as it was long expected that China’s rapid expansion would moderate as its economy rebalanced away from investment-led growth to focus more on consumption. The bank said growth in China, the world’s second-largest economy, had slowed as policymakers look to rebalance its growth model. Over the past few decades China has relied heavily on exports and government-led investment to boost its economy. However, a slowdown in key markets such as the U.S. and Europe has seen a decline in demand for Chinese exports, prompting concerns whether China can sustain its high growth rate. There have been calls for China to take measures to boost domestic demand to offset the decline in exports and rebalance its economy. While Beijing has been keen to boost domestic consumption,

Property curbs here to stay: Leung ‘This is not the time to relent’, says HK Chief Executive

ong Kong, the world’s most expensive home market, will not ease its real estate curbs until there’s a steady supply of new properties as the government seeks to address concerns that it favours developers. Earlier actions have brought down prices and rents, and the government can do more if needed, Chief Executive Leung Chun Ying, 58, said in an interview in New York. An index of Hong Kong property stocks fell to the lowest in nine months. “There’s a voice out there in the Hong Kong community that the government should ease off,” the former property surveyor said yesterday. “This is not the time to relent.” Property transactions in Hong Kong have tapered off, hurting developers, since Mr Leung introduced his toughest measures yet in February by doubling a sales tax and extending curbs to commercial real estate. As Mr Leung completes his first year in office in July, he’s seeking to focus on the economy to bolster his popularity, which is near a record low. “Leung has been trying to strengthen his performance in social and public policies to win him more public support,” said Dixon Sing, an

Snowden case ‘according to law’

associate professor of social science at the Hong Kong University of Science & Technology. “Failing to get property prices under control will risk hurting Hong Kong’s competitiveness and Leung’s popularity.” Home prices have more than doubled to a record since the start of 2009, spurring protests as developers booked rising profits.

Transactions drop The Hang Seng Property Index, which tracks nine of the biggest developers listed in the city, fell as much as 0.53 percent yesterday, extending this year’s decline to 13 percent, compared with the 8.7 percent decline in the benchmark Hang Seng Index. Mr Leung in February doubled stamp duty taxes on all property transactions over HK$2 million, after imposing an extra tax on home purchases by companies and nonresidents in October. Since 2010, the government has charged an extra tax of up to 20 percent of the value of homes on buyers who resell them within three years and raised the minimum down-payment on mortgages for homes costing more than HK$7 million. Home transactions fell for a third

Leung Chun Ying, Hong Kong Chief Executive

consecutive month in May. They dropped to 3,286 in December, the lowest since November 2008. Prices have dropped 3 percent since a record high in March, according to an index compiled by Centaline Property Agency Ltd. “We’re delivering results,” Mr Leung said when asked about his performance. “We have made a very clear stance on the question of property prices. For the first time in a very long time, the allegations that there is somehow collusion between Hong Kong and the developer industry have gone away.” Bloomberg News

Hong Kong will deal with any U.S. extradition request for a former National Security Agency contractor who disclosed secret information, based on the city’s legal system, Chief Executive Leung Chun Ying said. “We can’t comment on individual cases,” Mr Leung said in a Bloomberg Television interview in New York. “We’ll handle the case according to our law.” As the U.S. Justice Department worked on possible charges, Edward Snowden, who disclosed details of U.S. surveillance programmes, vowed to fight extradition from Hong Kong, where he fled before revealing his identity. In an interview published yesterday by the South China Morning Post, he said he hadn’t committed any crime. “I’m neither traitor nor hero,” Mr Snowden said. “I am not here to hide from justice; I am here to reveal criminality.” Mr Snowden also said that, according to unverified documents seen by the SCMP, the NSA had been hacking computers in Hong Kong and on the mainland since 2009. None of the documents revealed any information about Chinese military systems, he said.

June April 14, 19, 2013 2013

Greater China analysts have said that the shift in its growth model may see China’s growth rate slow in the short-term. In a report released in December last year, the bank said that stimulus measures and approval of infrastructure projects would help boost China’s growth, and raised it forecast for 2013 to 8.4 percent from 8.1 percent. That was after Beijing had approved infrastructure projects worth more than US$150 billion. However, in its latest report, the bank raised concerns over China’s investment-led growth model. “The main risk related to China remains the possibility that high investment rates prove unsustainable, provoking a disorderly unwinding and sharp economic slowdown,” it warned. It further added that “should investments prove unprofitable, the servicing of existing loans could become problematic – potentially sparking a sharp uptick in nonperforming loans that could require state intervention”.

Chinese stocks hit 6-month low Hong Kong shares also end down as trading resumes

Data caution

Reuters

Growth is not slower because of inadequate demand but rather because, in our view, the very strong growth we saw in the pre-crisis period was due to that bubble phenomenon Andrew Burns, World Bank

hina’s stocks fell after a three-day holiday, dragging the benchmark index to a sixmonth low, as government reports showed industrial production and exports trailed economists’ estimates. SAIC Motor Corp led declines for automakers after growth in industrial output slowed to 9.2 percent last month from 9.3 percent in April. Baoshan Iron & Steel Co, the listed unit of China’s second-biggest steelmaker,

lost 2.8 percent after it cut product prices. Sany Heavy Industry Co, the biggest Chinese machinery maker, tumbled 5.7 percent. The Shanghai Composite Index dropped 2.8 percent to 2,148.36 at the close, the lowest level since December 13. The CSI 300 Index declined 3.4 percent to 2,399.94. Mainland markets were shut for the Dragon Boat holiday. Hong Kong shares closed at an

The data add pressure on President Xi Jinping and Premier Li Keqiang to shore up growth that unexpectedly slowed to a 7.7 percent rate in the first quarter. While the figures boost the case for easing monetary policy or increasing spending, the government’s room is limited by rising home prices and overcapacity in an economy where lenders’ bad loans have risen for six straight quarters. “The data has disappointed the market, so investors have become a little more cautious on China,” Robert Aspin, Standard Chartered Plc’s head of global equity investment strategy, said. “We are looking for a bit more clarity in terms of government policies.” The slowdown in China’s growth may extend into the third quarter, the China Securities Journal said yesterday. Uncertainties over investment growth will increase as urban development may be slower than expected, according to the newspaper. Reuters

HK banks to move operations: Swire CEO

Hopewell Hong Kong pulls US$780 mln IPO opewell Hong Kong Properties Ltd, the owner of buildings in the Wan Chai business area including Hopewell Centre, scrapped a US$780 million initial public offering in the city after stock markets tumbled. The company, a unit of Gordon Wu’s Hopewell Holdings, cited “significant deterioration in market sentiment” and “volatile market conditions” as reasons for pulling the IPO in a statement yesterday. Hopewell Hong Kong had planned to raise as much as US$780 million and start trading on June 19, according to its share-sale prospectus. Hopewell Hong Kong’s IPO is the biggest to be scrapped in the city since May last year, suggesting a rebound in first-time share sales is losing steam as stock markets across Asia decline. Hong Kong’s benchmark Hang Seng Index has lost 9.5 percent in the past month, curbing demand for new equity. Companies have raised US$5 billion through initial offers in Hong Kong this year, up from US$1.4 billion in the same period in 2012, according to data compiled by Bloomberg. The 20 companies that completed IPOs on Hong Kong’s bourse since January 1 are down on

eight-month low yesterday, as trading resumed following a one-day holiday. The Hang Seng Index ended down 2.2 percent at 20,887 points, its lowest close since October. The China Enterprises Index of the top Chinese listings in Hong Kong finished down 2.7 percent at its lowest since September. “May economic data were poor and it looks like the slowdown in China’s economic growth isn’t temporary and may trend down for a while,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “The downward pressure on the market will be big.” The Shanghai index has fallen 12 percent from this year’s high on February 6 on concern economic growth is slowing and amid speculation regulators will resume initial public offerings after halting them since October.

average 2.2 percent from their offer prices, the data show. China Harmony Auto Holding Ltd, which raised US$215 million in an IPO last week, fell 16.12 percent yesterday, marking the worst Hong Kong debut since February 2012. Sinopec Engineering (Group) Co, which raised US$1.8 billion last month in the biggest Hong Kong IPO this year, has fallen 2.9 percent from its offer price. BOC International Holdings Ltd, Credit Suisse Group AG, Citigroup Inc., HSBC Holdings Plc and Citigroup Inc. were managing the IPO for Hopewell Hong Kong. Philippine Casino operator Travellers International, which operates Resorts World Manila, started gauging investor demand for an IPO yesterday, according to a term sheet obtained by Bloomberg. The company, a venture of Alliance Global Group Inc. and Genting Hong Kong Ltd, is seeking as much as 34.8 billion pesos (US$806 million) from the offering in Manila, according to a regulatory filing last month. The Philippine Stock Exchange Index slumped 4.6 percent yesterday, the biggest loss since September 2011. Bloomberg News

anks in Hong Kong will start shifting front-office operations into the Island East district, with one company moving its trading floor there by early 2014, said Martin Cubbon, chief executive of Swire Properties Ltd. “It’s already started on a very small scale,” Mr Cubbon said in an interview at Swire’s Miami offices, without giving more details. “We’re now going to have traders there. The trading floor of a big bank will be there.” Swire, the biggest commercial landlord in the Island East district, may seek to spend as much as US$1.5 billion in the next seven years to renovate older industrial buildings into office space, Mr Cubbon said. The Hong Kongbased company has benefited from tenants seeking to relocate from the city’s central business district, where office rents are among the highest in the world, to other easily accessible neighbourhoods. “Banks want to expand at an affordable pace and that will compel them to go to places like Tai Koo place,” Mr Cubbon said, referring to a complex of 10 office towers in the Island East district. Swire Properties owns about 10.6

Martin Cubbon, Swire Properties CEO

million square feet (985,000 square metres) of prime office space and 2.4 million square feet of retail space in Hong Kong. It has about 6 million square feet of commercial real estate in mainland China, according to a March statement. Slower growth in China will have a limited impact on Hong Kong as investors and consumers seek out business, cultural and educational opportunities found in few other places in Asia, Mr Cubbon said. China’s economy is forecast to expand 7.8 percent this year, the same as last year and down from 9.3 percent in 2011, according to the median of 53 economist estimates compiled by Bloomberg. “There’s a slowdown in growth, not a contraction,” Mr Cubbon said. “I think people lose sight of that. It’s still growing reasonably well in Hong Kong. People will keep coming.” Swire Properties was spun off from Swire Pacific Ltd in January 2012. Swire Pacific, created as a trading company in London in 1816, also bottles Coca-Cola in China and supplies offshore oil rigs. Bloomberg News

10 10

June 14, 2013 April 19, 2013

Asia

Fitch returns India to ‘stable’ outlook Upgrade comes as rupee trades at record lows

itch Ratings returned India’s sovereign outlook back to “stable” from “negative” a year after its initial downgrade, surprising markets with a validation of the government’s efforts to contain the fiscal deficit and revive economic growth. The upgrade is likely to be a welcome relief to the government, coming during a period when the rupee had slumped to a record low, and be seen as a reward after months of efforts to cut spending, passing fiscal reforms, and wooing foreign investors. Analysts, however, were sceptical about the upgrade, reflecting their pessimism about economic growth prospects at a time when inflation, although easing, remains high while the current account deficit remains a thorn to policy makers. Prime Minister Manmohan Singh’s minority coalition also faces important state votes due before a national election next year, putting into doubt whether it can keep fiscal discipline and pass additional reforms in a gridlocked parliament. “Challenges remain on the macro economy front, with the weakening rupee and the uncontrollable current account deficit,” said Jagannadham Thunuguntla, equity head at SMC Global Securities in New Delhi. “There is still a long way to go for a rating upgrade.” The rupee extended gains on the news, ending up at 57.79/80, well above its record low of 58.98, also on Tuesday. The benchmark 10-year bond yield recovered from earlier falls, ending down 1 basis point at 7.29 percent. Government officials had

Bank of Korea holds policy rate steady T

he Bank of Korea left its interest rate unchanged after a surprise cut in May aimed at boosting an economy hit by a yen drop that gives Japanese companies an edge over Korean exporters. Governor Kim Choong-soo and his board kept the benchmark sevenday repurchase rate at 2.5 percent, the central bank said in a statement yesterday. “Today’s decision to hold rates was unanimous,” said Mr Kim. The central bank faces the task of supporting an economy burdened with rising household debt and a competitive challenge from Japan’s stimulus policies that have pushed the yen down about 17 percent against the won since the start of October. Mr Kim told reporters that heightened uncertainties surrounding a possible tapering-off of the U.S. central bank’s quantitative easing sooner than expected were a risk to the local economy. “The global economy is expected to post a modest recovery but

Rupee extends gains after outlook upgrade

lobbied Fitch hard after its outlook downgrade almost exactly a year ago. That action came after Standard & Poor’s first cut India’s outlook to “negative” in April, threatening to push the country into “junk” status.

Doubts persist The threat of downgrades had spurred India to unveil a slew of measures since September, including opening up the aviation and retail sectors to foreign investors in spite of strong political opposition.

the possibility of a tapering-off of the U.S.’ quantitative easing and the implementation of fiscal consolidation in major countries pose as downside risks,” he said. A surprise increase in May exports following the fastest pace of economic growth in a year in the first quarter pointed to resilience in Asia’s fourth-biggest economy. “Should the growth outlook deteriorate in the second half of 2013, especially in key export markets, pressures may build on the central bank to deliver further rate cuts to support growth,” said Ronald Man, a Hong Kong-based economist at HSBC Holdings Plc. For now, “there is ample liquidity in the system,” he said. The economy grew 0.8 percent in the first quarter from the previous three months as the government front-loaded spending after marking its slowest expansion last year since 2009. The unemployment rate un ex p ected l y r o s e to 3 . 2 percent in May from 3.1 percent in April, government data showed on Wednesday. Inflation fell to a 14year low of 1 percent in May, below the central bank’s target range of 2.5 percent to 3.5 percent. “The Monetary Policy Committee has not changed its view that the South Korean economy will show a negative output gap for the time being due to issues including slow global recovery,” said Mr Kim. Reuters

Finance Minister P. Chidambaram also vowed to contain the fiscal deficit at 4.8 percent of gross domestic product for the year ending in March by cutting spending and raising revenue. “The authorities were successful in containing the upward pressure on the central government budget deficit in the face of a weaker-than-expected economy,” Fitch said. “The authorities have also begun to address structural factors that have weakened the investment climate and growth prospects.”

The credit agency added inflation had shown “pronounced” signs of easing and forecast the economy would recover to growth of 5.7 percent of GDP in fiscal 2014 and 6.5 percent in fiscal 2015. In upgrading India, Fitch appeared more optimistic than many analysts, or rival Standard & Poor’s, which last month reaffirmed its “negative” outlook on India, warning of the need to follow through on reforms and the government’s high fiscal deficit and heavy borrowing. Analysts fear increased

Singapore mulls bank rebuke on rate rigging Regulator concerned benchmark rate vulnerable to manipulation

ingapore’s central bank plans to reprimand banks in the city-state as early as today following an 11-month review into how benchmark interest rates are set, five people with knowledge of the matter said. The Singapore Foreign Exchange Market Committee, which includes the Monetary Authority of Singapore and banks, plans to separately announce changes to the rate-setting process on the same day, two of the people said, asking not to be identified before the announcements are made. The review into possible manipulation of the Singapore interbank offered rate follows a global crackdown on rigging of benchmark borrowing costs by banks and brokers. Barclays Plc, UBS AG and Royal Bank of Scotland Group Plc were fined US$2.5 billion to settle claims with U.S. and U.K financial regulators. A British markets supervisor is considering opening a probe into

potential manipulation in currency markets, another person briefed on the matter said. “There is a sense that financial firms and markets have grown too big and fast, and have cut corners in virtually all countries,” Sandy Mehta, chief executive of investment advisory firm Value Investment Principals Ltd in Hong Kong, said. “Everyone’s image has been tarnished as regulators are struggling to keep up with markets.”

Submission panel Sibor, used to price debt ranging from commercial term-loans to home mortgages, is calculated on behalf of the Association of Banks in Singapore, based on submissions by banks including London-based Standard Chartered Plc, Singapore’s DBS Group Holdings Ltd and New York-based JPMorgan Chase & Co. Edinburgh-based RBS last year withdrew from the panel.

11 11

June April 14, 19, 2013 2013

Asia government spending on populist welfare programmes ahead of elections due by May 2014. India has also struggled to implement some of its reform measures, especially regarding the retail sector. “I do not think this changes anything at this juncture for the economy. Consumer inflation is still up, industrial production is low. RBI is likely to hold rates steady on June 17,” said Anjali Verma, economist at Phillip Capital in Mumbai. Fitch acknowledged challenges, noting a recovery would remain slow until a healthier investment climate is created, and warning the rupee drop would limit the scope for RBI rate cuts. Structural budget deficits and high public debt would also constrain India’s ratings, Fitch said. Reuters

Gold imports tumbling Gold imports by India, the world’s largest consumer, are plunging as an increase in tax and restrictions on financing shipments boost costs for jewellers, helping the nation contain a record current-account deficit. Shipments in June will decline as only orders placed before the curbs are being imported now, said Rajesh Mehta, chairman of Rajesh Exports Ltd. Overseas purchases tumbled to an average US$36 million a day in the 14 business days through June 7, compared with an average US$135 million a day through 13 days until May 20, Raghuram Rajan, chief economic adviser in the Finance Ministry, said in a statement on Tuesday.

Lenny Feder, group head of financial markets at London-based Standard Chartered and chairman of the SFEMC, didn’t return three calls to his mobile phone. John Lim, an external spokesman for the Association of Banks, declined to comment. The monetary authority isn’t planning to impose criminal sanctions on the banks or any employees, said two of the people. MAS will probably require some of the banks to set aside funds as a deposit with the central bank for a period of time and strengthen their internal controls, two people said. Singapore expanded its review i n Sept ember t o inc lude non deliverable forwards, a derivative used by traders to speculate on the movement of currencies that are subject to domestic restrictions. UBS, based in Zurich, and RBS suspended at least three traders in Singapore as part of probes into the manipulation of those rates, two people with knowledge of the matter said in October. Members of the currency traders’ committee met on January 22 to examine a proposal to end Singapore’s U.S. dollar-linked Sibor, a person with knowledge of the matter said in February. The central bank will probably announce changes to the benchmark rates and the process for setting them by the end of June, the person said at the time. Bloomberg News

Stronger yen hits Japanese shares hard Yen surges past 94 per dollar to two-month high

he yen surged, jumping to the strongest level in two months against the dollar, after government data showed Japanese investors were net sellers of overseas bonds and stocks for a fourth-straight week. The Nikkei was down 6.4 percent at 12,445.38 points after falling as low as 12,415.85. The Nikkei entered bear market territory for the second time in less than a week, having plunged more than 20 percent from a 5-1/2-year high hit on May 23. It had staged a shortlived rebound on Monday. The Topix dropped 4.8 percent to 1,044.17. Japan’s broadest equity measure has slumped 18 percent since May 22, when it closed at its highest level since August 2008. Japan’s Nikkei share average dived back into bear market territory yesterday, dipping to levels seen before the central bank’s sweeping monetary policy stimulus in early April, as the yen rebound sent shares of exporters tumbling. The greenback’s volatility against the Japanese currency climbed to the highest in more than two years before U.S. economic data that may provide more direction about when the Federal Reserve will begin to slow stimulus. The yen has now unwound all its losses since the Bank of Japan announced unprecedented monetary stimulus on April 4. “The market wants evidence of Japanese capital outflow and that evidence is just not there, in fact it’s the opposite,” said Greg Gibbs, a senior currency strategist at Royal

Nikkei slides more than 5.5 percent as sell-off picks up across Asia

Bank of Scotland Group Plc. “Global fund managers who got into short yen trades in the early part of the year are now sitting very nervously watching the volatility in global markets.” A short is a bet an asset’s price will fall. The yen surged 1.8 percent to 93.75 per dollar in Tokyo, the strongest since April 4. Its 4.2 percent, three-day advance is set to be the biggest since May 2010. The currency pair’s one-month implied volatility touched 17.9 percent, a level unseen since March 2011. The yen gained 1.1 percent to 126.63 per euro. The Dollar Index fell to the lowest in almost four months ahead of a

First Pacific may expand Meralco stake As San Miguel tries to sell shares to fund diversification

irst Pacific Co Ltd is considering expanding control of Manila Electric Co by buying San Miguel Corp’s stake in the Philippines’ largest power distributor, said chief executive Manuel V. Pangilinan. “We’re still thinking about it,” Mr Pangilinan said in an interview in Manila, when asked whether his group, controlled by billionaire Anthoni Salim, could buy the 32.8 percent stake that San Miguel is selling. “It actually depends on the price.” San Miguel president Ramon Ang said on June 11 that finding a buyer for the block he valued at US$3.5 billion may be difficult and that the company is willing to sell its 370 million shares in the utility, known as Meralco, in parts. By buying the stake, First Pacific would cement control of the utility, in which it already owns 48.3 percent through Beacon Electric Asset Holdings, according to data compiled by Bloomberg. “Buying more shares is indeed

Ramon Ang – trying to sell Meralco shares

Federal Open Market Committee meeting next week. The index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major trading partners, declined 0.3 percent to 80.707, after dropping to 80.651, the lowest since February 20. It has lost 0.9 percent in the previous three sessions. Japanese domestic money managers sold a net 386.9 billion yen (US$4.1 billion) of foreign debt and a net 221.8 billion yen of overseas equities in the week ended June 7, according to figures released by the Ministry of Finance in Tokyo yesterday. Reuters

ventures in Singapore and Nigeria. For San Miguel, selling the stake would allow it to profit from an investment at almost four times the purchase cost and help it fund its diversification away from the food and drinks business. Its Meralco stake is worth 127.3 billion pesos (US$2.9 billion), based on current prices. Most of San Miguel’s shares in Meralco were bought at 90 pesos apiece in 2008, or 26 percent of their current worth. “Many interested parties have inquired,” Mr Ang said in Manila after the company’s annual meeting. “Because of the size, the shares can’t be sold easily.” Recent declines in the Philippine stock market may pose another challenge to a sale. The Philippine Stock Exchange Index dropped as much as 4.4 percent and is headed for its lowest close since January 31. It has retreated more than 14 percent from a record close on May 15. Bloomberg News

very tempting for Pangilinan,” said Astro del Castillo, managing director at First Grade Holdings Inc. in Manila. “Meralco is value for money given the revenue it generates as a monopoly and the potential for growth and expansion.” Meralco distributes power to a quarter of the Philippine population in an area that accounts for half of its gross domestic product, according to its website. The company is expanding into power generation locally and has

US$2.9 bln Estimated value of San Miguel’s stake in Meralco

June 14, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

32.8

-1.204819

46476621

CHINA UNICOM HON

ALUMINUM CORP-H

2.81

-1.403509

18264449

CITIC PACIFIC

BANK OF CHINA-H

3.19

-2.147239

647025260

BANK OF COMMUN-H

5.54

-1.77305

42179329

BANK EAST ASIA

27.9

-1.413428

6659639

11.24

-1.748252

28908830

BELLE INTERNATIO

NAME

PRICE

DAY %

VOLUME

10.14

-2.873563

36542754

POWER ASSETS HOL

8.48

-1.851852

13100050

62.65

-0.7131537

6267845

12.9

-2.420575

79288045

COSCO PAC LTD

10.52

-3.486239

14491599

ESPRIT HLDGS

11.12

-4.794521

13641417

CLP HLDGS LTD CNOOC LTD

NAME

PRICE

DAY %

67.2

0.2985075

5455219

SANDS CHINA LTD

38.95

-2.012579

15873494

SINO LAND CO

10.62

0.5681818

27465344

SUN HUNG KAI PRO

96.45

0.05186722

12059572

SWIRE PACIFIC-A

89.75

-1.751505

2629218

TENCENT HOLDINGS

297.8

-2.296588

6829854

BOC HONG KONG HO

24.25

-1.821862

22253490

HANG LUNG PROPER

25.65

1.383399

9821591

TINGYI HLDG CO

CATHAY PAC AIR

13.52

-2.170767

4994366

HANG SENG BK

116.4

-0.5128205

3722213

WANT WANT CHINA

CHEUNG KONG

HENDERSON LAND D

WHARF HLDG

103.2

0.9784736

9107836

CHINA COAL ENE-H

4.6

-4.564315

56013390

CHINA CONST BA-H

5.53

-3.165884

715758120

CHINA LIFE INS-H

18.98

-1.861427

56152698

CHINA MERCHANT

23.75

-2.663934

4513309

CHINA MOBILE

44.6

7119487

HENGAN INTL

76.65

-2.480916

3133869

HONG KG CHINA GS

18.26

-2.665245

18847981

HONG KONG EXCHNG

123.1

-1.441153

7818725

HSBC HLDGS PLC

83.05

-0.6578947

27710983

-3.24634

52075439

HUTCHISON WHAMPO

20.5

-3.529412

41283983

IND & COMM BK-H

CHINA PETROLEU-H

5.51

-2.650177

187441401

CHINA RES ENTERP

24.45

-3.550296

13176898

21.1

-2.314815

14932068

CHINA RES POWER

18.08

-2.217415

15859076

CHINA SHENHUA-H

23.85

-3.04878

30430227

CHINA OVERSEAS

CHINA RES LAND

MOVERS

VOLUME

19.7

0.3566341

5968552

10.52

-2.95203

20911899

65.4

-1.801802

11294736

1 21710

INDEX 20887.04

-1.064496

10888007

5.09

-1.547389

612574678

LI & FUNG LTD

11.22

0.7181329

30603814

MTR CORP

28.05

-0.8833922

5625414

NEW WORLD DEV

10.9

-0.3656307

35344247

52W (H) 23944.74

PETROCHINA CO-H

8.31

-3.819444

148473226

(L) 18708.26

PING AN INSURA-H

55.2

-2.12766

25574840

HIGH

21700.53

LOW

20682.65 20680

10-June

13-June

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.36

-2.608696

177028938

AIR CHINA LTD-H

5.62

-3.103448

ALUMINUM CORP-H

2.81

ANHUI CONCH-H BANK OF CHINA-H

NAME

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

24.8

-0.8

27339876

15262389

CHINA PETROLEU-H

5.51

-2.650177

187441401

-1.403509

18264449

CHINA RAIL CN-H

6.95

-2.250352

22.5

-1.531729

24616998

CHINA RAIL GR-H

3.69

3.19

-2.147239

647025260

CHINA SHENHUA-H

PRICE

DAY %

VOLUME

YANZHOU COAL-H

6.81

-4.546374

42145849

ZIJIN MINING-H

1.87

2.747253

49561106

13720026

ZOOMLION HEAVY-H

6.29

-1.872075

14198080

-1.6

23268000

ZTE CORP-H

12.04

-2.113821

2422456

23.85

-3.04878

30430227

5.54

-1.77305

42179329

CHINA TELECOM-H

3.64

-0.8174387

108004493

29.95

-4.617834

4103204

DONGFENG MOTOR-H

11.3

2.91439

14956668

3.83

-2.046036

78049082

GUANGZHOU AUTO-H

7.67

1.994681

14570570

CHINA COAL ENE-H

4.6

-4.564315

56013390

HUANENG POWER-H

7.11

-1.79558

66985110

CHINA COM CONS-H

6.8

-1.018923

31479224

IND & COMM BK-H

5.09

-1.547389

612574678

CHINA CONST BA-H

5.53

-3.165884

715758120

JIANGXI COPPER-H

15.12

-0.1321004

16105339

CHINA COSCO HO-H

3.13

-0.9493671

11194516

PETROCHINA CO-H

8.31

-3.819444

148473226

BANK OF COMMUN-H BYD CO LTD-H CHINA CITIC BK-H

18.98

-1.861427

56152698

PICC PROPERTY &

8.68

-0.2298851

23795732

CHINA LONGYUAN-H

7.87

-4.490291

28126430

PING AN INSURA-H

55.2

-2.12766

25574840

CHINA MERCH BK-H

13.82

-2.124646

37554178

SHANDONG WEIG-H

10.06

6.342495

10773805

CHINA MINSHENG-H

8.58

-3.050847

87633067

SINOPHARM-H

CHINA NATL BDG-H

7.48

-1.058201

55540479

TSINGTAO BREW-H

15.32

-1.28866

7508628

WEICHAI POWER-H

CHINA LIFE INS-H

CHINA OILFIELD-H

20.15

1.256281

6191423

53.6

-1.198157

1584382

25.8

1.176471

NAME

MOVERS

0 10230

INDEX 9688.3 HIGH

10227.57

LOW

9541.57

52W (H) 12354.22 9540

(L) 8987.76 10-June

3207988

13-June

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.69

-0.3703704

167106854

CHONGQING CHAN-A

9.42

-5.326633

34165252

POLY REAL ESTA-A

-4.513889

65614821

AIR CHINA LTD-A

4.88

-4.500978

15101735

CHONGQING WATE-A

5.92

-3.739837

10094835

QINGDAO HAIER-A

11.79

-1.668057

11273357

ALUMINUM CORP-A

3.79

-3.069054

15427400

CITIC SECURITI-A

11.35

-6.353135

140209019

QINGHAI SALT-A

20.49

-7.243096

9054277

ANHUI CONCH-A

14.72

-6.835443

42042635

CSR CORP LTD -A

3.99

-3.389831

37566374

SAIC MOTOR-A

14.47

-3.917663

37251165

AVIC AIRCRAFT-A

10.73

-5.711775

21284291

DAQIN RAILWAY -A

6.38

-3.333333

51827478

SANAN OPTOELEC-A

19.68

-4

19928709

4.51

-1.096491

8810777

SANY HEAVY INDUS

8.34

-5.656109

43932057

NAME

BANK OF BEIJIN-A

8.46

-2.309469

37376582

DATANG INTL PO-A

BANK OF CHINA-A

2.88

-1.030928

77290551

EVERBRIG SEC -A

12.75

-5.764967

25503501

SHANG PHARM -A

11.59

-3.012552

15225385

BANK OF COMMUN-A

4.51

-1.742919

103918653

GD MIDEA HOLDI-A

12.65

-3.213466

17124722

SHANG PUDONG-A

9.02

-3.529412

127820275

3.74

-4.347826

6477577

14.78

-4.768041

14800030

BAOSHAN IRON & S

4.53

-2.7897

26719115

GD POWER DEVEL-A

2.48

-4.615385

88114313

SHANGHAI ELECT-A

BEIJING TONGRE-A

21.92

-1.836095

9394609

GEMDALE CORP-A

6.71

-4.957507

69178740

SHANXI LU'AN -A

31.4

-4.559271

9674515

GF SECURITIES-A

12.26

-5.981595

32079955

SHANXI XISHAN-A

9.6

-5.04451

15259800

CHINA AVIC ELE-A

22.62

-5.316032

7085968

GREE ELECTRIC

24.62

-3.299293

22909192

SHENZEN OVERSE-A

5.9

-3.436989

35836178

CHINA CITIC BK-A

3.94

-3.902439

33781114

GUANGHUI ENERG-A

19.67

-1.846307

18822261

SUNING COMMERC-A

5.57

-3.633218

64104486

CHINA CNR CORP-A

4.1

-5.963303

44127085

HAITONG SECURI-A

10.96

-5.190311

136470596

TASLY PHARMAC-A

39.54

2.329193

7561369

CHINA COAL ENE-A

6.15

-2.689873

11258302

HANGZHOU HIKVI-A

37.11

0.5146262

4692807

TSINGTAO BREW-A

37.64

-1.671891

2192992

CHINA CONST BA-A

4.67

-1.476793

71041300

HENAN SHUAN-A

39.02

-2.425606

5522068

WANHUA CHEMIC-A

16.18

-3.91924

14529788

CHINA COSCO HO-A

3.14

-3.975535

12785785

HONG YUAN SEC-A

-1.654001

27733833

WEICHAI POWER-A

20.7

-5.263158

8156203

CHINA EAST AIR-A

2.92

-2.341137

16685319

HUATAI SECURIT-A

9.19

-6.22449

41692745

WULIANGYE YIBIN

21.48

-3.330333

19057619

CHINA EVERBRIG-A

2.9

-2.684564

101821368

HUAXIA BANK CO

9.99

-2.631579

27548549

YANZHOU COAL-A

12.74

-6.392359

5040372

4.14

-0.7194245

80299938

YUNNAN BAIYAO-A

84.19

0.2261905

2732176

BYD CO LTD -A

CHINA LIFE INS-A

15.14

-4.65995

16472200

IND & COMM BK-A

CHINA MERCH BK-A

12.32

-1.754386

81035312

INDUSTRIAL BAN-A

16.45

-3.462441

98643734

ZHONGJIN GOLD

11.3

-3.336185

13727881

CHINA MERCHANT-A

11.47

-6.060606

30852489

INNER MONG BAO-A

24.98

-5.735849

24202553

ZIJIN MINING-A

2.93

-2.980132

60074002

CHINA MERCHANT-A

25.24

-6.10119

15539410

INNER MONG YIL-A

27.77

14319950

ZOOMLION HEAVY-A

6.73

-4.809052

68276339

CHINA MINSHENG-A

9.88

-1.101101

189115768

INNER MONGOLIA-A

4.3

-5.701754

43947666

ZTE CORP-A

11.45

-5.293631

31033696

CHINA NATIONAL-A

10.71

2.488038

42345654

JIANGSU HENGRU-A

27.75

-0.6800286

6144356

JIANGSU YANGHE-A

CHINA OILFIELD-A

14.95

-3.423773

6218243

CHINA PACIFIC-A

17.25

-3.792526

27578713

6.39

-3.181818

45364687

JINDUICHENG -A

CHINA PETROLEU-A

JIANGXI COPPER-A

CHINA RAILWAY-A

4.67

-4.303279

25402878

KANGMEI PHARMA-A

CHINA RAILWAY-A

2.65

-3.284672

31828396

KWEICHOW MOUTA-A

56.6

-4.681711

3432127

19.33

-4.021847

12431488

9.62

-3.992016

6466599

17.74

-1.717452

20871455

194.71

-0.7897687

4499864

CHINA RESOURCE-A

29.6

6437890

LUZHOU LAOJIAO-A

24.87

-0.7185629

7636383

CHINA SHENHUA-A

19.28

-4.507182

20208441

METALLURGICAL-A

1.89

-3.076923

50863960

CHINA SHIPBUIL-A

4.52

59982923

NARI TECHNOLOG-A

14.82

-5.844981

21328473

NINGBO PORT CO-A

2.35

-1.67364

17073898

OFFSHORE OIL-A

7.39

-0.9383378

28298993

CHINA SOUTHERN-A

3.28

-2.670623

18226098

CHINA STATE -A

3.49

-3.59116

158618824

3.54

-1.666667

66317216

PETROCHINA CO-A

8.11

-2.05314

25365959

CHINA VANKE CO-A

10.67

-4.817128

86938921

PING AN BANK-A

18.79

-3.789042

38134259

CHINA YANGTZE-A

7.17

-2.713704

31098925

PING AN INSURA-A

36.49

-3.465608

69556313

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

CHINA UNITED-A

MOVERS

271

10 2560

INDEX 2399.937 HIGH

2555.52

LOW

2384.03

52W (H) 2791.303 (L) 2102.135

2380

6-June

13-June

FTSE Taiwan 50 Index NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP

NAME

PRICE DAY %

22.5

-2.386117

12958904

FORMOSA PLASTIC

68.4

-1.582734

12796547

24.45

-3.168317

16946137

FOXCONN TECHNOLO

75.2

-4.203822

8160399

36.4 -0.8174387

4751253

FUBON FINANCIAL

39.45

-1.498127

21125024

TSMC UNI-PRESIDENT UNITED MICROELEC

TAIWAN MOBILE CO

Volume

104.5

-5.429864

576

-1.030928

3268813

104.5

-3.240741

60344253

57.9

1.04712

10155803

13.1

-2.962963

82082405

WISTRON CORP

30.1

-1.472995

10627149

TPK HOLDING CO L

11807739

ASUSTEK COMPUTER

293.5

-6.528662

14045953

HON HAI PRECISIO

73.4

-2.133333

67581453

AU OPTRONICS COR

12.4

-3.501946

62895078

HOTAI MOTOR CO

304

-2.564103

589950

CATCHER TECH

156

0.3215434

10160381

HTC CORP

265

-2.394107

12288706

CATHAY FINANCIAL

39.65

-1.368159

36227343

HUA NAN FINANCIA

16.75

-1.470588

7630023

YUANTA FINANCIAL

15.3

-3.164557

30489165

CHANG HWA BANK

16.35

-1.506024

17143023

LARGAN PRECISION

951

-4.9

2466443

YULON MOTOR CO

48.3

-1.829268

6572924

CHENG SHIN RUBBE

91.1

-1.300108

5889886

LITE-ON TECHNOLO

50.2

0.1996008

7451336

CHIMEI INNOLUX C

18.45

-3.90625

57245860

MEDIATEK INC

361

-1.500682

5953001

8.5

-1.960784

53325972

MEGA FINANCIAL H

22.7

-2.155172

20739288

CHINA STEEL CORP

24.25

-1.821862

30659490

NAN YA PLASTICS

58.7

-2.81457

9787030

CHINATRUST FINAN

18.5

-1.856764

49217004

PRESIDENT CHAIN

182

-1.086957

1325685

94.5 -0.7352941

CHINA DEVELOPMEN

CHUNGHWA TELECOM

12075936

QUANTA COMPUTER

59.5

-2.936378

10248824

17.15

-2.556818

18765672

SILICONWARE PREC

35.1

-1.126761

18411525

DELTA ELECT INC

137

-4.861111

5958915

SINOPAC FINANCIA

14.45

-1.027397

11999370

FAR EASTERN NEW

31.1

-0.48

6544051

SYNNEX TECH INTL

43.25 -0.8027523

9967664

FAR EASTONE TELE

71.6 -0.5555556

4820573

TAIWAN CEMENT

37.35

-1.968504

12478768

COMPAL ELECTRON

FIRST FINANCIAL FORMOSA CHEM & F FORMOSA PETROCHE

17.55

-1.404494

11065663

TAIWAN COOPERATI

16.7

-1.474926

10741270

68.2

-3.943662

8356027

TAIWAN FERTILIZE

74.6

-2.356021

3091209

77 -0.2590674

2082465

TAIWAN GLASS IND

28.05

-2.094241

1008019

MOVERS

0 5680

INDEX 5487.75 HIGH

5679.81

LOW

5487.75

52W (H) 5896.71 5480

(L) 4719.96 10-June

13-June

June 14, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)

Max 40.7

average 39.891

Min 39.6

Last 39.9

40.8

61.8

19.7

40.5

61.6

19.5

40.2

61.4

19.3

39.9

61.2

19.1

39.6

Max 61.8

average 61.183

Min 61

22.7

PRICE

WTI CRUDE FUTURE Jul13

22.1 19.5

Max 19.78

average 19.614

DAY %

YTD %

(H) 52W

Min 19.5

Last 19.6

(L) 52W

95.23

-0.677930747

1.632870864

100.4000015

81.5

BRENT CRUDE FUTR Jul13

103

-0.473475698

-4.105762964

115.9300003

96.04000092

GASOLINE RBOB FUT Jul13

280.49

-0.185046795

-0.669310858

318.0399895

235.0999832

GAS OIL FUT (ICE) Jul13

866.75

-0.715922108

-4.778906894

987.5

814

3.752

-0.66190098

5.334081976

4.499000072

3.256000042

287.64

-0.649350649

-4.174301229

322.0499992

259.5000029

NATURAL GAS FUTR Jul13 NY Harb ULSD Fut Jul13

ASIA PACIFIC

AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP

1386.79

0.7007

-16.6823

1796.08

1322.06

Silver Spot $/Oz

21.8035

-0.0742

-27.5872

35.365

20.3395

Platinum Spot $/Oz

1465.05

-1.2969

-3.4722

1742.8

1374.55

Palladium Spot $/Oz

748.53

-0.6464

6.9848

786.5

553.75

LME ALUMINUM 3MO ($)

1864

-1.218865925

-10.08200675

2200.199951

1809

LME COPPER 3MO ($)

7120

0.778485492

-10.22569663

8422

6762.25

LME ZINC

1865

0.674763833

-10.33653846

2230

1745

14275

-1.78878569

-16.32473623

18920

14260

16.28

-0.030703101

3.397904097

17.07500076

14.79500103

537.5

-10.37932472

665

512

WHEAT FUTURE(CBT) Jul13

682.5

-0.073206442

-14.01574803

900

664.75

SOYBEAN FUTURE Nov13

1308.5

-0.437511889

0.441374017

1409.75

1177.5

COFFEE 'C' FUTURE Sep13

124.45

-18.3666776

203.8499908

122.7999954

NAME

16.51000023

ARISTOCRAT LEISU

72.62999725

CROWN LTD

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul13 Dec13

SUGAR #11 (WORLD) Oct13

16.57

COTTON NO.2 FUTR Dec13

87.05

-17.39780658

-1.158169638

10.55372111

22.8599987 89.19999695

World Stock Markets - Indices NAME

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14995.23

-0.8384462

14.43125

15542.4

12450.17

NASDAQ COMPOSITE INDEX

3400.43

-1.062541

12.61515

3532.038

2807.55

FTSE 100 INDEX

6223.76

-1.201533

5.526623

6875.62

5424.4

DAX INDEX

7987.21

-1.916429

4.923813

8557.86

6078.22

CROSSES

21.8 Max 23

average 22.179

Min 22.55

Last 22.25

21.5

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9487 1.5664 0.9196 1.3347 94.25 7.9973 7.7643 6.1349 58.2588 30.83 1.2539 29.889 43.035 9885 89.413 1.2273 0.85204 8.1886 10.6733 125.79 1.03

-0.5034 0.0192 0.8808 0.4894 2.5782 -0.0038 0.0116 -0.0228 -0.8047 0.3568 0.0479 -0.0803 -0.2788 -0.2428 3.0969 0.4025 -0.4589 -0.4421 -0.476 2.0749 -0.0097

-8.5855 -3.1652 -0.4567 1.1903 -8.6472 -0.1763 -0.1764 1.5599 -5.6022 -0.8109 -2.5919 -2.8639 -4.7171 -0.9307 -0.0962 -1.6149 -4.2979 0.3529 -1.3389 -9.7146 -0.0097

1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 58.985 32 1.2847 30.203 43.315 10174 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.9326 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9338 78.718 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

3.95

-1.496259

25.39682

4.49

2.29

VOLUME CRNCY 2227538

12.12

-2.572347

13.5895

13.75

8.26

2162693

AMAX HOLDINGS LT

1.15

-4.958678

-17.85714

1.72

0.75

4726200

BOC HONG KONG HO

24.25

-1.821862

0.622405

22.1

22253490 132000

CENTURY LEGEND

0.33

6.451613

24.52831

0.42

0.215

CHEUK NANG HLDGS

5.55

0.3616637

-7.345572

6.74

2.88

13000

CHINA OVERSEAS

20.5

-3.529412

-11.25541

25.6

16.362

41283983

CHINESE ESTATES

13.16

-1.937407

8.496546

14.12

7.975

907000

CHOW TAI FOOK JE

8.68

-2.799552

-30.22508

13.4

8.4

8360100

EMPEROR ENTERTAI

2.71

-3.558719

43.38624

3.05

1.15

1439692

FUTURE BRIGHT

2.34

-2.904564

93.06515

2.76

0.795

3408000

GALAXY ENTERTAIN

39.9

-4.086538

31.46623

42.4

16.98

21861351

HANG SENG BK

116.4

-0.5128205

-1.937655

132.8

101

3722213

HOPEWELL HLDGS

24.95

-0.3992016

-24.96241

35.3

19.523

2317396

HSBC HLDGS PLC

83.05

-0.6578947

2.152518

90.7

61.1

27710983

NIKKEI 225

12445.38

-6.350513

19.7226

15942.6

8328.019531

HANG SENG INDEX

20887.04

-2.18978

-7.811656

23944.74

18708.26

CSI 300 INDEX

2399.937

-3.390402

-4.875832

2791.303

2102.135

TAIWAN TAIEX INDEX

7951.66

-2.0267

3.27502

8439.15

6922.73

MGM CHINA HOLDIN

HUTCHISON TELE H

4.05

1.25

13.76405

4.66

2.98

5144373

LUK FOOK HLDGS I

17.42

-3.329634

-28.60656

30.05

14.7

2848491

MELCO INTL DEVEL

15.26

-3.661616

69.36737

18.18

5.12

6552568

19.3

-4.218362

45.35016

21.6

9.509

10684850

KOSPI INDEX

1882.73

-1.423104

-5.724447

2042.48

1758.99

MIDLAND HOLDINGS

S&P/ASX 200 INDEX

4695.76

-0.6073296

1.006885

5249.6

3993.8

NEPTUNE GROUP

4617.925

-1.702022

6.978448

5251.296

3774.693

FTSE Bursa Malaysia KLCI

1746.75

-1.598202

3.422248

1826.22

1570.94

NZX ALL INDEX

942.264

-0.9583953

6.826234

998.487

PHILIPPINES ALL SHARE IX

3834.87

-5.631307

3.673719

4571.4

JAKARTA COMPOSITE INDEX

19.4

COUNTRY MAJOR

Gold Spot $/Oz

CORN FUTURE

22.4

19.6

Currency Exchange Rates

NAME

METALS

18.9

19.7

Commodities ENERGY

Last 19.3

39.2

38.4

Last 38.95

Min 18.98

23.0

38.6 Min 38.5

average 19.203

19.8

38.8

average 38.847

Max 19.62

39.4

39.0

Max 39.3

61.0

Last 61.2

2.92

-3.311258

-21.08108

2.88

5436678

0.184

-6.122449

21.05264

0.23

0.084

46650000

NEW WORLD DEV

10.9

-0.3656307

-9.317807

15.12

8.66

35344247

SANDS CHINA LTD

38.95

-2.012579

14.72754

43.7

20.65

15873494

SHUN HO RESOURCE

1.5

7.142859

1.67

1.03

755.149

SHUN TAK HOLDING

3.75

-3.846154

-10.50119

4.65

2.56

17420995

3295.86

SJM HOLDINGS LTD

19.6

-1.901902

10.43711

22.382

12.995

14543733

SMARTONE TELECOM

13.16

-0.9036145

-6.53409

17.38

12.5

1771347

WYNN MACAU LTD

22.25

-1.766004

6.205247

26.5

14.62

4614026

ASIA ENTERTAINME

3.8

35.00632

4.7647

2.2076

93601

56.37

-0.2653928

26.07918

57.49

41.74

344481 1969

HSBC Dragon 300 Index Singapor

607.47

0.01

-2.19

STOCK EXCH OF THAI INDEX

1376.88

-3.947763

-1.081236

1649.77

1144.44

HO CHI MINH STOCK INDEX

515.09

-0.6078265

24.49907

533.15

372.39

BALLY TECHNOLOGI

Laos Composite Index

1338.82

10.2118

1455.82

980.83

BOC HONG KONG HO

3.2

-1.840491

4.23453

3.6

2.85

GALAXY ENTERTAIN

5.39

1.078293

35.76826

5.43

2.25

2550

INTL GAME TECH

17.27

-1.595442

21.8772

18.81

10.92

2135651

JONES LANG LASAL

87.23

-2.263305

3.919463

101.46

61.39

197485

LAS VEGAS SANDS

55.38

-1.353758

19.974

60.54

32.6127

4934708

MELCO CROWN-ADR

0.6289308

42.51781

25.15

9.13

3416962

MGM CHINA HOLDIN

2.57

38.91892

2.71

1.36

3000

MGM RESORTS INTE

14.76

-0.2028398

26.80412

15.95

8.83

8299083

SHFL ENTERTAINME

17.66

-1.943365

21.7931

18.57

12.35

129683

SJM HOLDINGS LTD

2.59

1.568627

13.71539

2.9481

1.7255

491

133.89

-0.6603354

19.02392

144.99

84.4902

907271

Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.

WYNN RESORTS LTD

AUD HKD

USD

14 14

June 14, 2013 April 19, 2013

Opinion

What Germany’s iron chancellor can show red China Pankaj Mishra

Author of ‘From the Ruins of Empire: The Revolt Against the West and the Remaking of Asia’ and a Bloomberg View columnist

ore than a century and a half after it was published, Alexis de Tocqueville’s “The Old Regime and the Revolution” has become an unlikely bestseller in China. Wang Qishan, China’s anticorruption czar, is reportedly among the senior leaders obsessed with what he sees as the book’s cautionary message: that increasing prosperity and piecemeal political reform didn’t protect France’s pre-revolutionary regime from violent overthrow. The mass energies unleashed by large-scale industrialisation and urbanisation have exposed China’s existing political institutions as weak and inadequate. In Wang’s reading of Tocqueville, Chinese leaders must prepare for more upheaval ahead. It is easy to see in Tocqueville’s subtle opinions, which can’t be pigeonholed in the contemporary way as “left-wing” or “right-wing,” what you want to see. John Stuart Mill claimed to be inspired by his writings. British conservatives in the 19th century also deployed his criticisms of American democracy to argue against the extension of adult franchise.

Unlikely gurus Understandably, Chinese leaders are eager to learn from European thinkers and Europe’s early and immense experience of socioeconomic change. Visiting India two weeks ago, Chinese Premier Li Keqiang quoted both Max Weber and Georg Hegel. But Tocqueville, an

aristocrat, seems an unlikely guru for Chinese leaders, even the “princelings” among them, who may find that 19thcentury German philosophers and economists offer more practical instruction than French or English ones. Germany under Otto von Bismarck came relatively late to industrialisation; its leaders were determined to avoid the traumas and upheavals of England and France. The country’s influential economists, mostly opposed to Adam Smith’s laissez-faire individualism, enshrined a major role for the state in running and regulating the modern economy; the state was also supposed to alleviate the class antagonisms and hardships that the great shift from agrarian to industrial societies made inevitable. Accordingly, Bismarck’s Germany pioneered social welfare guarantees of health insurance, disability and old age pensions; it was also ahead of European nations in enacting legislation aimed at protecting the labouring classes from exploitation and degraded working conditions. People in other late industrialising societies, including the U.S., took careful note. The American economy has gone through many refinements since the age of robber barons. We no longer remember well “the disordered, violent camping expedition that was the U.S.,” in its early phase of industrialisation in the late 19th century. It was the Germaneducated Americans who “brought back

an acute sense of a missing ‘social’ strand in American politics and a new sense, as unnerving as it was attractive, of the social possibilities of the state.”

Tender mercies The Japanese, as the historian Kenneth B. Pyle and others have shown, were even keener students of the German example. Kanai Noburo, Japan’s most influential economist for three decades, studied in Germany about the same time as many American proto-progressives and New Dealers. Traveling through England, he witnessed the very inadequate protection for the country’s poorest people; he became convinced that the state had a duty to intervene on their behalf. They couldn’t be left to the tender mercies of free marketeers (whose quasireligious faith in the invisible hand had condemned millions to death in unrelieved famines in British-ruled Ireland and India).

But Kanai, a strong critic of free-market individualism, was no socialist. On the contrary: His ideas were aimed at diminishing class antagonisms, averting violent revolution and maintaining the power of the Japanese bureaucratic state, which alone promised to guarantee national unity and strength. Having tasked an agrarian people to build an industrial society through quasitraditional notions of loyalty and obligation, Japanese leaders faced in the early 20th century fresh problems resulting from their success: widening disparities of income, class cleavages, and the loss of old values of family and community. Laissez-faire liberalism was no good to them; and it was also in retreat around the world. Fortunately, the Germans had proposed an attractive new identity for the technocratic state: one that, in the words of the German economist Gustav von Schmoller, “legislates above the egoistic class interests, administers with justice, protects the weak and elevates the lower classes.” That is the persona that the Chinese leadership now seeks for itself as it cracks down ostentatiously on corruption, and enacts progressive legislation aimed at the rural poor. This fresh search for an appealing self-image largely explains its broadening intellectual references, particularly the vogue for Tocqueville.

Ego boost

leaders navigating the global traffic of ideas will find more familiar landmarks in some late 19th century German and Japanese policies – those meant, as Weber wrote, “to unite socially a nation split apart by modern economic development”. It remains to be seen whether they – and the rest of us – will avoid the perils of yet another big and overly centralised state tasked with both economic growth and social cohesion. The young Max Weber, after all, was an ardent imperialist, convinced, like many of his German peers, that his country’s economic development depended on the acquisition of foreign territories and resources. Trying to sustain their power both domestically and internationally, Japanese groups controlling the state erected too many ideological defences against healthy dissent and debate, finally taking their country into an unwinnable war. In any case, Chinese leaders boning up on Bismarckian and Meiji conservatism or Tocqueville outline a piquant irony: that the Chinese revolution of 1949 – one of the pivotal events of the 20th century – has become a deeply conservative project, designed to forestall social fragmentation and unrest and perpetuate the Communist Party’s long monopoly over power. Bloomberg View

Reading Tocqueville can be good for the ego. Still, Chinese leaders navigating the global traffic of ideas will find more familiar landmarks in some late 19th century German and Japanese policies

Reading Tocqueville can be good for the ego. Still, Chinese

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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

15 15

June April 14, 19, 2013 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Korea Herald Hopes for cross-border reconciliation are quickly fading since the two Koreas scrapped their muchanticipated talks over lead negotiators in another sign of deep-rooted mistrust. The two-day meeting was called off late Tuesday by Pyongyang after insisting that Seoul send as the head of the delegation its unification minister, not vice unification minister as suggested. “It doesn’t make sense at all to reject dialogue by taking issue with the level of vice unification minister who can take care of, discuss and resolve inter-Korean issues,” ministry spokesman Kim Hyung-suk said.

Wall Street Journal A committee set up by the Securities and Exchange Board of India recommended the market regulator to simplify its rules for overseas funds that want to invest in the country. It also suggested allowing foreign venturecapital funds to invest in more sectors, SEBI said in a statement. Foreign venture funds are currently allowed to invest in only nine sectors including biotechnology, nanotechnology and information technology.

Jakarta Globe U.S. mining giant FreeportMcMoRan Copper & Gold issued a statement warning customers of stoppages at its Indonesian mine as the investigation into a tunnel collapse that left 28 dead continues. According to the company’s statement, the stoppage at its Papua mine resulted in an impact of 80 million pounds of copper and 80,000 ounces of gold to date. Freeport will continue to book a loss of 3 million pounds of copper and 3,000 ounces of gold a day until operations resume, the statement read.

Inquirer Business The Philippines must improve energy efficiency, widen access to electricity, and prioritise renewable energy supplies in order to sustain its growth path, according to the Asian Development Bank. Asian countries including the Philippines are seen to remain heavily dependent on energy imports especially oil “in the foreseeable future” or at least until 2035, the ADB said in a report. “In the Philippines, the contribution of [renewable energy] will shrink from 43 percent in 2010 to 14 percent in 2035, by which time proven indigenous gas and coal reserves will be depleted,” the ADB said.

Edward Snowden

Snowden is too hot for China to handle Adam Minter

Shanghai correspondent for the World View blog and a contributor to the Ticker

t goes without saying that China’s government welcomes the information that Edward Snowden has provided on the National Security Agency and its snooping infrastructure. But does China actually want Snowden to stay in Hong Kong indefinitely? The answer isn’t yet clear, but as Hong Kong’s sizable community of human-rights activists begin to rally around Snowden’s cause, one can imagine the government in Beijing is regretting that the whistleblower showed up at all. Of the many mysteries surrounding Snowden is why he decided to flee to Chinese territory. One of his stated reasons – that Hong Kong has “a spirited commitment to free speech” – is undeniably true. Yet when it comes to the subject most dear to Snowden’s heart, an encroaching surveillance state, Hong Kong falls short of the U.S. This is in large part due to a 2006 digital surveillance law approved by a legislative committee dominated by pro-Beijing lawmakers. Snowden’s view of Hong Kong often seems ill-informed about China’s encroaching influence on the city, as when he told Hong Kong’s South China Morning Post in an article published yesterday, “I have had many opportunities to flee HK, but I would rather stay and fight the United States government in the courts,

because I have faith in Hong Kong’s rule of law.” Even some Hong Kong rights activists seem bewildered by this viewpoint. Hong Kong Human Rights Monitor director Law Yuk Kai told the South China Morning Post that, “Snowden’s positive view of Hong Kong no longer matches the reality”. This is the sort of thing a former NSA contractor should know in passing, if not in detail.

Exit door So far, the Chinese government and the leading Communist Party newspapers that speak for

There are hints via pro-Beijing loyalists in Hong Kong that a strong preference exists for him to leave before his seemingly inevitable court case becomes a cause in the city

it have been silent on the Snowden case. In part, the reticence can be blamed on a three-day national holiday that began Monday. Yet there are hints via proBeijing loyalists in Hong Kong that a strong preference exists for him to leave before his seemingly inevitable court case becomes a cause in the city. On Monday, Regina Ip Lau Suk Yee, Hong Kong’s former chief security officer and a well-known Beijing loyalist, told Hong Kong’s Daily Standard that it was in Snowden’s “best interest to leave Hong Kong”. What’s becoming clear is that it’s in China’s best interest that Snowden leave Hong Kong – and soon. No doubt, on Monday there was no small amount of gloating in Beijing at

the thought of a former U.S. intelligence analyst contemplating asylum on Chinese territory. But that satisfaction likely gave way to a wary recognition that Snowden is an advocate for digital privacy and against the surveillance state. Whatever benefit he might serve as an intelligence asset, or as a source of national prestige, is outweighed by the prospect of the world’s most famous whistle-blower living out his days in Hong Kong with nothing better to do than turn his attention to the surveillance state across the border. For now, it’s Hong Kong’s activists who are turning their attention to Snowden. Tomorrow, 17 Hong Kong NGOs (and counting) will gather to rally in favour of Snowden, free speech and the defence of Hong Kong law. Obviously, without Snowden there would be no rally at all – a fact that’s likely not lost on Hong Kong’s Chinese overseers. In coming days, they may not push publicly to get him out of Hong Kong. But odds are they won’t stand in the way of his car if it sets out for the airport. Bloomberg View

June 14, 2013

Closing Myanmar readmitted to EU trade scheme

PokerStars chief pays US$50 mln to settle case

The European Union has readmitted Myanmar to a scheme allowing it to benefit from lower duties on exports, a further sign of the its rehabilitation following political reforms. Myanmar will return to the EU’s Generalised System of Preferences, having been forced out in 1997 due to systemic practices of forced labour, Ireland, which holds the rotating EU presidency, said in a statement. “Given the positive developments… it is important that the EU supports this by facilitating economic growth and development opportunities,” Richard Bruton, Irish minister for jobs, enterprise and innovation, said.

The chairman of PokerStars has agreed to pay US$50 million to resolve forfeiture demands by the U.S. government connected to a money laundering lawsuit the online gambling company settled last year. Mark Scheinberg, chairman of PokerStars, had continued to receive distributions for PokerStars that were subject to forfeiture, according to an order filed in U.S. District Court in New York. Mr Scheinberg, the order said. PokerStars said in a statement the “agreement is not in response to any action that had been brought against Mark and contains no admission of wrongdoing, culpability or guilt on his behalf”.

China local govt audit ‘credit negative’: Moody’s

Beijing to scrap iron ore import licensing system

Beijing facing higher risks from debt and credit expansion

hina’s government risks being forced to bail out some local authorities and take over their liabilities after a report from the nation’s audit office showed a jump in borrowings, Moody’s Investors Service said. The National Audit Office review indicates that total local government direct and guaranteed debt may have risen 13 percent to 12.1 trillion yuan (US$2 trillion) by end-2012 from end-2010, Moody’s said, citing its own calculations based on data in the report which showed a 13 percent increase in the debts of a sample 36 local authorities. Moody’s lowered its outlook for China’s sovereign credit rating to stable from positive in April, saying the nation has made less progress than anticipated in reducing risks from local-government debt and credit expansion. Earlier that same month, Fitch Ratings cut China’s long-term local-currency debt rating, citing increasing dangers to the country’s financial stability given the lack of transparency in local authorities’ borrowing. “Both the amount of debt among the sampled local governments and the limited scope of the report are

credit negative for China,” Moody’s said yesterday, referring to the National Audit Office report. “The amount of local government debt makes it more likely its burden will eventually fall upon the central government and the limited scope of the report makes the size of that potential burden uncertain.” The cost of insuring China’s sovereign debt for five years has increased 41.19 basis points this year. The credit-default swaps rose to a 10-month high of 107.5 on June 12, according to CMA, which compiles

RMB12.1 trln Local government direct and guaranteed debt

data in the privately negotiated market. The auditor’s report, released on its website on Monday, a public holiday in China, showed the debts of the local governments chosen for scrutiny rose to 3.85 trillion yuan in the two years through December 31. The 36 regions accounted for 32 percent of total local government debt at the end of 2010, the auditor said. The report follows the government’s first audit of local government debt released in June 2011. The investigation found liabilities of 10.7 trillion yuan at end-2010 after local authorities, barred from directly selling bonds or borrowing from banks to pay for projects including roads and bridges, set up more than 6,000 financing vehicles to raise money. “The pile up in debt is cutting down the effectiveness of economic policy and slowing down growth, reminiscent of ‘zombie companies’ in Japan in the 1990s,” Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd in Hong Kong, wrote in a note yesterday. While the risk of a broad-based default is still controllable, “policy makers will have to take swift action before the situation deteriorates,” he said.

China plans to scrap a decade-old iron ore import licensing system this year, an industry source with direct knowledge of the matter said, opening up an import market that takes twothirds of the world’s international iron ore trade. The move could also cut costs for domestic steel mills by eliminating licensed middlemen charging commissions for imports. It could also mark the end of years of efforts by China, alarmed by its growing dependence on imports and the dominant role played by the likes of Rio Tinto Plc and Vale SA, to wrest pricing power away from the big miners by strictly regulating trade. “China will open up its iron ore trade from the second half of the year,” said the source who declined to be named as he was not authorised to speak to the media. “Import qualification licences will no longer be required in order to make the industry more market-oriented and give steel mills more choices.” China imported a record 743 million tonnes of the commodity in 2012, up 8 percent from the prior year. Iron ore traders will only require the same routine licences issued to other importers – a more streamlined process – and will no longer need approval by government-backed industry bodies like the China Iron and Steel Association (CISA). The old licensing system was part of China’s efforts to make the iron ore industry speak with “one voice” when dealing with major foreign suppliers.

Indonesia surprises with rate hike

Philippines seeks coast guard charge

hilippine justice officials have recommended that charges be filed against coast guards who shot dead a Taiwanese fisherman in disputed waters. Justice Secretary Leila de Lima said the findings had been presented to President Benigno Aquino for review. The incident, which took place on May 9, sparked a serious diplomatic row between the two sides. The coast guard said it fired in self-defence – something disputed by the Taiwanese side. Fisherman Hung Shih-cheng, 65, was shot dead in waters which both sides say lie within their 200-nautical-mile from shore exclusive economic zone. The Philippines apologised for the incident, but Taiwan rejected the apology, saying it lacked sincerity.

“The NBI [National Bureau of Investigation] has recommended the filing of criminal and administrative charges against the Philippine coastguard personnel,” Ms De Lima told AFP. She said specific charges are yet to be disclosed pending a review from Mr Aquino’s office. Meanwhile, a Taiwanese official in the Philippines said they will wait

for the final report before issuing an official statement. Last month, the Philippines and Taiwan launched parallel investigations into the incident. Taiwan has also imposed a host of economic measures against the Philippines, including suspending visa processing for Filipino workers and cutting trade exchanges.

Taiwan and the Philippines launched parallel investigations

AFP

Indonesia became the first central bank in Asia to raise its policy interest rate since 2011, the strongest sign yet in regional emerging economies of the stress being wrought by the global markets rout. The Indonesian central bank’s move was unexpected but followed a flurry of measures this week, including a pledge to supply dollars and buy government bonds, to defend the rupiah currency after it stumbled to a four-year low beyond 10,000 per dollar. Indonesia raised its policy rate to 6.00 percent from 5.75 percent, the first increase since February 2011. On Tuesday it boosted its overnight deposit facility rate, paid out to banks that park overnight cash with the central bank, by 25 basis points to 4.25 percent. “We will supply dollars in large amounts to stabilise the rupiah,” deputy central bank governor Perry Warjiyo said on Wednesday, hours after the authority had also said it was ready to buy government bonds in the secondary market. Foreign investors own a third of outstanding government bonds. Indonesia has been an emerging-market favourite in recent years, securing an investment-grade credit rating and seeing its stock market reach record highs as recently as May. “I think they want to send a clear message to markets that they will act on rupiah weakness,” said Sean Yokota, head of Asia strategy at Scandinavian Bank SEB in Singapore. Reuters