Macau Business Daily, June 17, 2013 by Business Daily

Chow wants 350 new tables, outside table cap

avid Chow’s Macau Legend Development Ltd has applied to the government for 350 extra gaming tables before the end of 2016. If approved, the table allocation would not be part of the Macau market’s current table cap regime, the firm said yesterday. The cap allows for three percent compound annual growth from 2013 from a starting point of 5,500 tables. The gaming services company and hotel owner is planning a share flotation in Hong Kong with a listing on June 27. It hopes to raise HK$4.40 billion (US$567 million) net. It added the risk of the government capping chip issuance to control the whole market was “very hypothetical”. More on page 5

Year II

Number 306

Monday June 17, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

Carson Yeung trial: Greek Mythology’s SJM staff to give accounts still evidence ‘unavailable’ Page 4

New special economic zone on Macau’s doorstep

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www.macaubusinessdaily.com

South Korean package tourists are flooding in

Hang Seng Index

South Korea has become Macau’s third-biggest source of package tourists, surpassing Hong Kong, due to more direct flights and promotion. The Statistics and Census Service announced on Friday that 35,300 South Korean package tourists visited in April, 51.9 percent more than a year before. “…this trend is likely to continue,” said Andy Wu Keng Kuong, president of the Macau Travel Industry Council. Page 2

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Govt ‘actively’ monitoring waste tender legal battle

June 14

The Environmental Protection Bureau tells Business Daily it will act “in accordance with laws” in response to a legal move by a losing bidder for the city’s solid waste management tender. Urbaser SA is challenging the contract awarded to Macau Waste Systems Co Ltd (CSR). Madrid-based Urbaser is seeking a court injunction here to suspend the granting of the contract. Page 3

Housing cost among city’s gravest problems: academic

HSI - Movers Name

%Day

CHINA RES POWER

4.54

HENGAN INTL

4.50

WHARF HLDG

4.05

HANG LUNG PROPER

3.70

WANT WANT CHINA

2.85

CATHAY PAC AIR

-0.59

CHINA CONST BA-H

-1.08

COSCO PAC LTD

-1.14

CITIC PACIFIC

-1.42

CHINA SHENHUA-H

-2.10

Source: Bloomberg

Inflation is probably the chief challenge for Macau, says economist José Luís de Sales Marques. He told Business Daily in an interview that a hike in real estate prices was one of the main drivers of inflation; and the measures the government had taken to counter this had not worked. He added the persistence of monopolies and oligopolies for certain imports worsened inflationary problems. Pages 6 & 7

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June 17, 2013

Macau

S. Korean package tourists flooding in The number of package tourists rebounds strongly in April from an unexpected fall Stephanie Lai

sw.lai@macaubusinessdaily.com

outh Korea has become Macau’s third-biggest source of package tourists, surpassing Hong Kong, owing to more direct flights and promotion. The Statistics and Census Service announced on Friday that 35,300 South Korean package tourists visited in April, 51.9 percent more than a year before. “South Korea has, indeed, gradually become one of the top three visitor sources for Macau, and this trend is likely to continue,” said Andy Wu Keng Kuong, president of the Macau Travel Industry Council. “That mainly has to do with heightened tourism promotion activities following more frequent flights between Macau and that country,” Mr Wu told Business Daily. In the past year Air Busan has begun flying between Macau and Busan, South Korea’s secondbiggest city. The operator of Macau International Airport said in March that South Korean low-cost carrier Jin Air was planning to introduce a fifth weekly flight between Macau and Seoul in the second half of this year. Since October the Macau Government Tourist Office has

organised three series of promotional events in South Korea. The result is that the number of South Korean package tourists in the first four months of this year rose to 156,800, or 30 percent more than in the equivalent period of last year. South Korea therefore replaced Hong Kong as Macau’s third-biggest source of package tourists. The number of package tourists from Hong Kong continues to shrink, falling below 32,700 in April, 21.6 percent fewer than a year earlier.

On the rebound The mainland Chinese province of Guangdong remained the biggest source of package tourists in April, and Taiwan the second-biggest. Despite the outbreak of H7N9 bird flu in the mainland, the number of mainland package tourists rose by 18.7 percent to 583,000. Package tourists from the mainland “will remain the major driver of the overall tourist figure in the near future”, said Mr Wu. “As there is no opening for more provinces or cities to implement the individual visa scheme, I would expect that individual tourists

Letter to the Editor

from the mainland will register single-digit growth in the coming months,” he said. Some mainlanders are allowed visas to travel to Macau as individuals rather than as members of tour groups, which travel on collective visas. The total number of package tourists in April rose by 10.2 percent to nearly 767,000, rebounding from an unexpected fall of 2 percent in March. The decline in March was the first since April 2011. In the first four months the total number of package tourists rose to over 3 million, or 11.4 percent more than in the equivalent period of last year. The number of visitors that stayed at least one night rose by 16.1 percent to over 3.4 million. But the average rate of hotel occupancy fell by 3 percentage points to 79.9 percent.

Not yet an outrage In April, over 897,000 visitors stayed in hotels or guesthouses, but the average rate of hotel occupancy fell to 80.5 percent, 1.5 percentage points less than a year earlier. Mr Wu described the fall in hotel occupancy rates as slight. “It is mainly due to more hotel rooms being available, as the city had only around 25,000 rooms last year,” he said. The Sands Cotai Central casino

resort’s third hotel tower, the Sheraton’s Earth Tower, opened in January, adding 2,067 rooms to the market. By the end of April Macau had 99 hotels or guesthouses, together containing 28,111 rooms, 16 percent more than a year earlier. Asked what effect the rise in hotel room rates was having, Mr Wu said it was not harming occupancy rates or the duration of the average guest’s stay. “Even in the international chains in the city, the rate is only around 1,100 patacas [US$137] to 2,200 patacas per night, which is not outrageously high,” he said. The average hotel guest stayed 1.3 days in April, 0.1 days less than a year earlier. Mr Wu expects the average the length of stay to increase appreciably only towards 2016. He said the Hong Kong-ZhuhaiMacau Bridge and more new resorts were due to be open by then, making it more convenient for visitors to stay longer. The director of the Macau Government Tourist Office, Helena de Senna Fernandes, said the government’s target is to “gradually extend” the length of visitors’ stay from 1.3 days “to 1.5 days and then two days”. Speaking to reporters on the sidelines of an event yesterday, Ms Senna Fernandes pledged to strengthen promotions in South Korea, Taiwan and Europe this year.

Dear Sir, Reference is made to an article signed by Mr. Paulo Azevedo and published on 3 June 2013 in the second page of the Macau Business Daily and in the website of the same publication, under the heading “Free advice”. Please be advised that the following statements made in the said article are manifestly false and misleading. Sands China Ltd categorically denies and rejects that it: • Acted in a manner which displayed “arrogance towards the city (Macau) that saved it after the 2008 financial crisis”. • Acted arrogantly and adopted business practices which “raised eyebrows” in Macau. • Acted in a manner such that it is “again showing that Macau is nothing but a pawn in its (Sands China Ltd) quest for revenue and market share”. • Acted in a manner such that it “fails to stick to its word with business partners”. • Acted in a manner such that is “starts wars every time it is frustrated in achieving its goals”. • Acted in a manner which results in “payments to certain interested protectors that have particular agendas” and; • Acted in a manner which is inconsistent with or contrary to the principals of “good governance”. The Company unequivocally states that there is no evidence whatsoever that it has conducted itself and its business activities in the manner stated or implied in the said article. The statements referred to above are factually unsupportable, offensive and detrimental to the good name and reputation of Sands China Ltd, its Macau subsidiaries, directors and employees. Having regard to the above, Sands China Ltd requests that Macau Business Daily publishes within seven (7) days of the date of this letter an appropriately worded article which unambiguously withdraws each and every offensive statement made in the article published on June 3, 2013. Should the Macau Business Daily fail to publish an appropriate withdraw article as sought in this letter, the Company shall seek such redress as it deems appropriate, pursuant to the law of Macau. Your sincerely, David Fleming Company Secretary

Note This letter is a proof that Sands China Ltd does not need me to harm what should be its good name. It is also important to state that an opinion article is not a journalistic piece. They were my views expressed in the said opinion column. There is one more thing that I believe is important to highlight: the company has been throwing out of the window the opportunity to have a long lasting presence here. Instead, with all the cases related to its different litigations, it has been harming internationally the good name of Macau. Paulo A. Azevedo

Tourists made shorter visits in April, and the hotels were less full

June April 17, 19, 2013 2013

Macau

Govt ‘actively’ monitoring waste tender legal battle

editorial

A word to the wise

A losing bidder seeking injunction to suspend granting of contract Tony Lai

tony.lai@macaubusinessdaily.com

Waste row – CSR denies it was specially favoured (Photo: Manuel Cardoso)

he Environmental Protection Bureau tells Business Daily it will act “in accordance with laws” in response to a legal move by a losing bidder for the city’s solid waste management tender. Urbaser SA is challenging the contract awarded to Macau Waste Systems Co Ltd (CSR). Madridbased Urbaser is seeking a court injunction here to suspend the granting of the contract. This newspaper has seen the injunction papers. They say Urbaser will appeal to overturn the Chief Executive’s decision approving the deal. But until that appeal process is concluded, “which will, most probably, take several months or even years” according the injunction, the contract itself should be suspended to avoid any “harm to public interest”. The bureau confirmed in a written reply to Business Daily that the government “has been recently notified” by the Court of Second Instance of a request to suspend the award process. In April Chief Executive Fernando Chui Sai On approved the granting of the contract for CSR – the incumbent operator and a joint venture between Hong Kong’s Swire SITA Waste Services Ltd and Macau’s H. Nolasco Group – after it won a tender in March. It would allow CSR to continue its service for 10 more years. The bureau said in the reply it “will plead in accordance with laws and actively follow up the related matter”. The reply did not clarify

what the ‘pleading’ would say. The administration also didn’t say whether Urbaser’s request for an injunction would have an impact on the start of the new contract, due to begin in November. CSR’s original contract was supposed to end in September 2011 but has been extended on three occasions creating a new expiry date of October 31 this year. The government said the most recent extension was because the tendering process – the process now complained of by Urbaser – was taking longer than expected. The Spanish company suggested in its injunction that CSR’s contract should be extended until the judges reach a decision on the appeal. The injunction said that “the law and the terms of the contract required the contract to be awarded to Urbaser”. Urbaser added that if the new contract award were not suspended then it would mean “CSR implementing its operation system and methodology and being paid,” and this would “harm the public interest”.

Ensure services Urbaser offered no justifications for that viewpoint in the documents seen by this newspaper. But they might be revealed during the appeal. CSR declined to comment. It said in an e-mail to Business Daily it was “inappropriate to discuss the matter in

the media, as this could be understood as an attempt to somehow interfere with the judgment of the court”. The bureau told us: “The SAR government is committed to ensure the normal operations and stability of the cleaning and waste collection services in Macau, as well as ensuring the cleaning services being unaffected.” CSR won the contract in March with a bid of 2.07 billion patacas (US$258.8 million), the lowest among five offered. Urbaser’s price was 2.39 billion patacas. The bureau said in April CSR “scored the highest in the overall assessment, particularly in the areas like employee protection and environmental protection”. Documents seen by Business Daily said CSR had a total score of 80.90 percent while the Spanish company’s proposal was placed at second with 79.44 percent. But the tender rules – unlike tenders for other big government contracts – lacked anti-graft criteria. In a written inquiry to the Legislative Assembly, legislator José Pereira Coutinho accused the government of favouring CSR. Several CSR directors were sentenced for corruption as part of the scandal surrounding Ao Man Long, a former Secretary for Transport and Public Works. The government and CSR deny any favouritism was involved in the latest tendering process. With T.A./S.L.

oughly one and a half years ago the head of the judiciary criticised administrative decisions, urging the government to improve its efficiency and decision-making. “With many administrative decisions, courts are unable to confirm these decisions simply because there are procedural errors and omissions, or flaws resulting from lack of knowledge of the law and regulations,” the President of the Court of Final Appeal Sam Hou Fai said in a speech in October 2011. Our chief justice also slammed the way government contracts are put out to tender: “It turns out that in many cases tenders for service contracts are invited only when the previous contract is about to expire. Once a suit against a particular administrative decision is accepted, even if the Court of Second Instance or the Court of Final Appeal speeds up the process, … they will not be able to respond in good time to the needs of society,” Judge Sam complained. He went on to suggest that the government should increase efficiency to prevent these situations and to improve decision-making, in order to “avoid falling into passivity because of legal actions”. Usually, a word to the wise is enough. But this seems not to be the case in Macau. The number of suits against government departments has kept rising, and several decisions related to big infrastructure projects have been questioned in court. We have seen cases about the Light Rapid Transit elevated railway reaching the courts, so delaying the project. In another case, the operator of the sewage treatment plant in Areia Preta ran the plant for more than a year without being paid because of several lawsuits pursued by other companies that had bid for the contract. The latest case was brought to public attention last week by this newspaper. One of the companies in the running for the city’s solid waste management contract has sought a court injunction to prevent the contract from being awarded to Macau Waste Systems Co Ltd (CSR). The litigant objects to CSR being awarded the contract and intends to pursue its case in court. Instances have been reported of department heads saying they want things done their way, and that if any company has a different view, it should take its case to court. These examples show how little consideration some government departments have for Judge Sam’s words and why mistakes are made over and over again. Maybe this is why a court used such strong language in its judgement in the case that pitted Macau Cable TV Ltd against the government and the public antenna companies. The court said it had reservations about how the government had acted and that it was a “completely absurd” to condone an illegal action “just because a significant part of the population receives a benefit from it”. Regrettably, it is lack of consideration not just for Judge Sam’s words but also for the public interest that often leads to delays and budget overruns. It is time to wake up to the fact that public tenders should never be tainted by suspicion, and that the courts should be the last resort. Maybe the government should take the hint and assess the performance of some of its underachievers.

It is time to wake up to the fact that public tenders should never be tainted by suspicion, and that the courts should be the last resort

June 17, 2013

Macau Brought to you by

HOSPITALITY Package tourists linger Day-trippers outnumbered overnight visitors in the first quarter – as they had done in every quarter for the past two years, except in the third quarter of last year. In the third quarter of last year the number of visitors that stayed at least one night slightly exceeded the number of day-trippers. The preponderance of day-trippers has decreased. They made up almost 54 percent of all visitors in 2011 but under 52 percent last year. This decrease was due to the combination of an increase of just over 5 percent in the number of overnighters and a decrease of just under 4 percent in the number of day-trippers. Package tours seem to have played a part in this.

Prosecutors claim SJM paid HK$62.45 million during late 2004 and early 2005 to Carson Yeung

SJM staff to testify in money laundering trial Hong Kong court rules Brimingham owner Carson Yeung has a case to answer Vítor Quintã

vitorquinta@macaubusinessdaily.com

The plot for the number of package tourists has a stronger correlation with the number of overnight visitors than with the number of day-trippers. Comparison of the rates of growth in the numbers of first-quarter visitors of each kind since last year and 2011 show that package tourists are the fastest-growing kind of visitor. The growth in the number of package tourists seems to be pulling up the number of overnighters. The number of package tourists was the equivalent of just over one-half of the number of overnighters two years ago, but was the equivalent of over two-thirds of the number of overnighters in the past three quarters. J.I.D.

2,297,333

Package tourists, Q1

staff member from Macau gaming operator SJM will testify at the trial of businessman Carson Yeung Ka Sing for money laundering, Hong Kong media reported. Mr Yeung’s lawyer, Graham Harris, said in court on Thursday an SJM employee would be one of at least six defence witnesses taking the stand. Last month the prosecution said SJM paid a total HK$62.45 million (US$8.04 million) over two months during late 2004 and early 2005 to Mr Yeung. The money was deposited in 14 cheques to Mr Yeung account at Wing Lung Bank Ltd, said the evidence of Johnny Kwan Sui Lun, a police financial investigator. The prosecution also said the former hairdresser made a payment to gaming operator SJM in early 2005. During a court hearing, it was said that a cashier’s order of HK$35 million was made payable to SJM from a bank account controlled by

Mr Yeung in January 2005. Business Daily asked Hong Kong-listed SJM Holdings Ltd for a comment but received no reply before press time. When asked about the trial last month, SJM’s chief executive Ambrose So Shu Fai said: “As the case is now undergoing judicial procedures, it is not appropriate [for SJM] to make any comment.” Mr Yeung has pleaded not guilty to five charges of money laundering over around HK$720 million passed through accounts connected to the 53-year-old businessman. On Thursday, after listening to all the prosecution witnesses, a Hong Kong judge ruled that Mr Yeung has a case to answer. “This means the court has merely ruled that the prosecution had established a prima facie [preliminary] case against Mr Yeung for the charges he faces,” said Birmingham International Holdings Ltd. Mr Yeung is chairman of the Hong Kong-listed company, which

controls English football club Birmingham City. “It would now be for the defendant to mount his defence case,” Birmingham added, in a filing released on Friday. Mr Yeung bought the club in 2009 via a share issue underwritten by Kingston Securities Ltd, a unit of Hong Kong-listed Kingston Financial Group Ltd. Kingston Financial Group is controlled by Pollyanna Chu Yuet Wah. Ms Chu’s father, Lee Sui Fok (also known as Lee Wai Man), is an operator of VIP rooms in SJMlicensed casinos. Kingston Financial Group bought Casa Real casino hotel in Macau in 2005. The property operates under the gaming licence of Sociedade de Jogos de Macau SA, a company founded by Stanley Ho Hung Sun and now controlled by SJM Holdings Ltd. Kingston also runs the SJMlicensed Grandview Hotel and its casino in Taipa.

June 17, 2013

Macau

Chow asks for 350 new tables New tables – supplied before end-2016 – would be ‘outside current table cap’, says Macau Legend Michael Grimes

michael.grimes@macaubusinessdaily.com

IPO pressing ahead despite global volatility

Rendering of redeveloped Fisherman’s Wharf

acau Legend Development Ltd has applied to the Macau government for 350 extra gaming tables. If approved – the table allocation would not be part of the Macau market’s current table cap regime, the firm said yesterday. The cap allows for three percent compound annual growth from 2013 from a starting point of 5,500 tables. The gaming services company and hotel owner is planning a share

Market chip cap risk ‘very hypothetical’ A director of Macau Legend Development Ltd said yesterday he thought the risk of the government capping chip issuance to control Macau casino market revenue growth was “very hypothetical”. Sheldon Trainor, executive director, said: “As you know, in Hong Kong, the SFC [Securities & Futures Commission] in 2013 increased the responsibility of the sponsors to fully disclose – in the risk factors in IPOs – all risks, whether tangible or hypothetical. My view is that this is a very hypothetical risk. “But because the provision is in the concession agreement that SJM has, our lawyers added three sentences to the industry risk factors. So I think from our perspective this is not a current risk, this is not a new risk, and this is certainly and most importantly, not a risk specific to Macau Legend Development.” The local regulator, the Gaming Inspection and Coordination Bureau, said in an e-mailed response to a Business Daily: “Casino chips audit is one of the regular and important audits performed by the DICJ throughout the year as the government has to ensure that the gaming concessionaires is [are] able to have enough cash to redeem the chips in circulation. Likewise, it is also our regular procedures that prior approval must be obtained from the DICJ if any of the gaming concessionaires wish to issue new chip sets for the casino use.” M.G.

flotation in Hong Kong with a listing on June 27 it hopes will be worth up to HK$4.40 billion (US$567 million) net of arrangers’ fees. Macau Legend is selling the IPO on the promise of investor exposure to the city’s booming casino and tourism market. It plans to spend 85 percent of the IPO proceeds on redeveloping its waterside property Macau Fisherman’s Wharf – including three new hotels to be built there between now and the third quarter of 2016. They are: The Prague Harbor View Hotel, a four-star property due ready by the fourth quarter 2014; The Palace Hotel, a five-star ‘medieval Persian-themed’ venue to open in the third quarter of 2015, and The Legendale Hotel Macau, a five-star ‘neo-Renaissance style’ property targeted for completion in third quarter 2016. The latter will have 117 gaming tables, says the prospectus. Fisherman’s Wharf already has one gaming venue – Babylon Casino – with 23 mass tables and an undisclosed number of VIP tables, and one hotel, The Rocks, with 72 rooms. Under the Fisherman’s Wharf redevelopment, the site’s total area will expand by nearly a fifth, from 109,495 square metres (1.18 million sq. feet) to 133,038 sq. ms. The redevelopment would take the firm’s total hotel capacity in the city to 1,783 rooms. There will also be a family attraction referred to as a ‘dinosaur park’. Macau Legend – co-chaired by former Macau legislator David Chow Kam Fai – currently also operates the 123-table Pharaoh’s Palace Casino inside its 439-room The Landmark Macau hotel. Both Babylon and Pharaoh’s Palace are operated under a so-called ‘service agreement’ with Sociedade de Jogos de Macau SA, the Macau concessionaire that supplies it with tables.

Comfort letter Macau Legend says in its prospectus it applied to the local regulator the Gaming Inspection and Coordination Bureau (DICJ) on October 8, 2012 – in consultation with SJM – to increase Macau Legend’s table allotment

from 146 tables to 500. The firm says in the document: “… DICJ advised us and SJM in writing on 7 December 2012 that the measures taken by the Macau government to limit the number of gaming tables in September 2011 [sic] will not be an obstacle to the request…for operating up to 500 tables in total.” Speaking via live video link from New York City in the United States yesterday, Mr Chow told Macau’s media: “We are in three stages. So every year when we do something, we will be supported by some numbers of the tables. This was given to us specially in a cover letter from the government.” Carl Tong Ka Wing, the firm’s other co-chairman who is also in New York marketing the IPO, added: “Currently we have 150 tables. And what we are saying is that we have applied to the government – the DICJ – to increase the number of tables to 500. And we have a comfort letter that confirms – and the specific wording that is used is actually disclosed on page seven of the prospectus.” He added: “It’s not a secret, that letter is disclosed to the [Hong Kong] stock exchange. And our tables are outside the current table cap of three percent per year for the next ten years.” The Macau Legend tables would represent an addition of 6.4 percent to the city’s 5,485-table inventory declared by DICJ as of December 3, 2012. It’s understood they would

…our tables are outside the current table cap of three percent per year for the next ten years Carl Tong, co-chairman, Macau Legend Development

Macau Legend Development Ltd said in a term sheet last week it hoped to raise as much as HK$6.11 billion gross from the IPO due to launch on the Hong Kong bourse on June 27. Yesterday a figure of HK$4.40 billion net was mentioned by David Chow Kam Fai as the target. Property company Hopewell Hong Kong Properties Ltd said last week it would not go ahead with its own US$780 million IPO in Hong Kong because of “a significant deterioration in market sentiment”. But Macau Legend stated yesterday it had no plans to postpone its flotation. Sheldon Trainor, executive director of Macau Legend said yesterday: “For the IPO we’re continuing on the road in New York this week, with the transaction on Thursday, despite the [global] market volatility.” M.G.

enter the market in stages. It’s not clear whether – despite reportedly being outside the table cap – the additional Macau Legend tables would be included in calculating the compounded growth rate of three percent per annum for the market as a whole. Macau Legend’s IPO prospectus acknowledges it’s not certain the government will approve the extra tables. But Mr Chow said yesterday the tables and new hotels would help to redress the balance of power between Macau peninsula – where SJM has most of its gaming operations – and Cotai, where SJM will not have a presence until 2016 at the earliest.

Power balance Mr Chow said: “The Macau peninsula, I think, is very important because many people now feel that all the developments go to Cotai. Being a Macau businessman, I feel that the economy of the Macau peninsula has to continue its development so our company uses Fisherman’s Wharf incorporated with other infrastructure [to do so]. It can save the time and land resources of the Macau SAR government… to set up a new attraction to continue the economic development of the peninsula.” He also said the government “has been supporting” the company and the construction works of the new hotels have already started. A video presentation prior to the press conference referred to Macau Legend as “run by a well-connected local management team”. The video voiceover stated that the company was “recently notified” by the Land, Public Works and Transport Bureau that the construction licence and work permits have been approved for the Prague Harbor View Hotel. It added: “…work on this project has now commenced.”

June 17, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Staging post Macau’s exports have been declining generally as a result of the progressive disappearance of traditional manufacturing here. Traditional manufacturing consisted mainly of the production of textiles and, in particular, clothing. The proportions of exports produced by the textiles and clothing industries have declined fast. In contrast, the amount of goods produced by some more novel industries and the proportions of all exports they account for have risen. The proportion of all exports accounted for by the machinery industry, which is not a traditional industry here, has increased. Broadly speaking, most machinery or equipment exported is classed either as mechanical equipment or electrical equipment (but not audiovisual or medical equipment). The chart shows the values of mechanical and electrical equipment shipped out of Macau in the first four months of this year. It distinguishes total exports, domestic exports, re-exports and goods in transit.

Exports of mechanical and electrical equipment made up one-quarter of all exports in the first four months. Electrical equipment made up about five-sixths of exports of mechanical and electrical equipment. No mechanical equipment was made here, all exports of such goods being re-exports. A small proportion of exports of electrical equipment had value added here. The value of re-exports was 27 times greater than the value of domestic exports. Much of the mechanical and electrical equipment that passed through Macau was goods in transit. The value of mechanical equipment in transit was 90 percent greater than the value of total exports. The value of electrical equipment in transit was about 6.5 percent less than the value of total exports. J.I.D. The content of this column is the work of Business Daily’s journalists.

96 %

Re-exports as proportion of all machinery exports

Choose housing projects wisely, economist says Inflation is probably the chief problem for Macau’s economy, according to economist José Luís de Sales Marques. Mr Sales Marques says high inflation is the result of the size of the economy, its dependence on external markets and the persistence of monopolies and oligopolies of certain imports. He told Business Daily in an interview that the rise in real estate prices was one of the main drivers of inflation, and that the measures the government had taken to counter this rise had not worked. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

What is your forecast for the economy this year? It will not be much different from 2012, when gross domestic product grew by 9.9 percent. Eventually, there may be a small increase this year. Do you expect inflation to keep rising? The consumer price index for the 12 months to April rose by 5.75 percent. Probably, the inflation rate will be around 6 percent, something like that, in a range of 5.5 percent to 6 percent. Inflation has become one of the major hurdles for Macau people and high inflation bites into people’s income, particularly people who are in need and who earn less. High inflation is actually one of the major problems of our economy, if not the major one. Does the government have the necessary tools to control it? It’s very difficult to control it, because part of Macau’s inflation is imported. Inflation has to do with the fact that the Macau economy is very open, and very sensitive to what comes from the outside. In this regard, we are influenced by the changing prices in the mainland market as well as other foreign markets, and also the exchange rate of the pataca, which is indirectly pegged to the U.S. dollar. So we are in a very vulnerable position in terms of inflation. However, if your market is working well and if there are no monopolies and things like that, then eventually there is a little bit more control over inflation. But I’m afraid that inflation will continue to be a major problem. Some people point accusing fingers at the monopolies here. Yes. Monopolies exist in economies that are small in size, and the

market is not big enough to attract several companies, so you need to solve the issue in a way that ensures the supply of some goods. However, the Macau market is beginning to grow, because it comprises not only Macau people, but also all the visitors. So the monopolistic system in Macau is part of the reason why our internal markets are not so efficient. In this regard, I think there should be a wider debate on how to reduce the weight of the monopolies and how to reduce their negative impact in terms of relative prices here. On the other hand, we also probably need to look at the problems of the supply of goods and services, particularly the goods that are in most demand like food, but also the real estate market. The real estate market is one of the major elements that contribute to very high inflation in Macau. The long-term solution – I don’t know if there is any short-term solution – but the long-term solution is always to improve the conditions for extra supply, so that it can eventually satisfy the increasing demand we have.

High inflation is actually one of the major problems of our economy, if not the major one

Considering it is one of the main burdens on households, should the government have a tighter grip on the real estate market? It seems that the policies that were devised to control the real estate market have not worked. We have to understand that the real estate market is not a domestic market, but an open market, open for investment. When there is a price hike at the top level of supply, that hike will induce a rise in prices all over the demand chain, so this is a problem. But how do we control that problem? For an open market like Macau, where there is free flow of investment – and I think we should keep it this way – it’s difficult to find a solution for that. This is a huge problem. There are some solutions that may eventually stop or somehow influence the rise in prices, but only in the short term. But investors from elsewhere, if they continue to drive demand here, looking at it as an investment opportunity, then it is very difficult to get any kind of control. Macau has a very limited supply of land, so eventually, in the medium term, the government should be more careful in approving projects that can be perceived as mostly for investment purposes and not responding to demand from Macau’s people. Even now, if you go around the city, when you look at these buildings at night time, the lights are not turned on, so it means nobody is living there. If nobody is living there, they are not fulfilling their function, which is to satisfy demand for their own home by higher-level management or people who have the capacity to invest huge amounts of money in real estate.

June April 17, 19, 2013 2013

Macau view that goes beyond the market of Macau and tries to reach the international market.

Should Macau control whom housing is sold to? I have a basic principle: I’m in favour of the free flow of investment and goods. To exercise control in terms of sales – the government already has some policies on that. Let’s wait a bit to see what happens. There should be some constraints and some attention paid, because the only thing the government has some say in is the use of land, since it does not have control over monetary policy, and fiscal burden is low. If the government decides there is enough of this kind of investment in Macau, then don’t approve more projects like these. How about the possibility of reserving land specifically for Macau residents? Would that work? It depends on what kind of projects you approve. If you say that land for Macau people is an exclusive luxury investment for Macau people, will that be justifiable when there is so much available? Above a certain level, the price is not set by Macau, but by the international market. This is another issue we need to look at: how the price is set. And we need to look at all these problems before making this kind of decision. The government must not reserve land for Macau people, because this is an ambiguous concept. It should, instead, reserve land to build affordable, well-situated housing for Macau residents. This housing should have strict quality control, environmentfriendly features and be sold or let at prices that are set not according to market forces, but as part of social urban policy aimed at simultaneously giving residents the right to live in a good environment, without impoverishing themselves, and the right to continue to rear their families in Macau, without having to move somewhere else. You say the problem with real estate is the lack of supply. Sands China Ltd has recently been granted approval to sell the right to reside in the Four Seasons apartment hotel. Will this have any impact on the broader real estate market? People expected that to happen, sooner or later. I don’t think it will really have an impact, because we are talking about high-end property. On the other hand, you

have some limitations in terms of ownership and it’s a different arrangement, so I don’t think it will have an impact in terms of prices. What really has an impact is that because of international and local demand, prices have been going up very quickly, and this has meant a huge burden on Macau’s people and somehow frustrated their expectations of owning a home. Looking at the local economy, there have been fears of a slowdown, considering its dependence on gaming. Shouldn’t we be closer to achieving diversification, so as to prevent a sharp drop in growth? Everything that goes up comes down. This is the reason why – although I agree with many economists that there doesn’t seem to be an immediate solution for diversification – we should not stop there. It means that there is a very big challenge in terms of finding some way of diversifying the economy, but we have to do it. Sooner or later we will feel the need for that. It’s better to do it while you are still not feeling the need, so you can choose and you can prepare yourself. As a long-time economist, I’m concerned about the wellbeing of the people and the distribution of welfare – that it doesn’t give me any kind of rest thinking we have 10 percent growth annually. Let’s take this opportunity to think about the future. We need to prepare for the times when gaming is not to growing as much as it has been. When we look at it, the sensitivity of Macau’s economy is great, because we depend on external markets. We are already seeing something happening. We are no more in that sea of tranquillity, so we need to prepare. The government can create the framework, but the entrepreneurs, the business community, are the people that will actually be the force for the diversification of the Macau economy. We cannot expect the government to be the driver of the diversification of the economy. The gaming business offers the opportunity to small and medium enterprises to go into some kind of businesses that are now needed, and through the gaming industry they can cut their teeth and strengthen their capacity, and if they are good enough to stand and

to be useful to the development of the economy, then they will be able to compete in the future in a different environment. If we gain the competitive edge, working within the gaming market, we would be able to go anywhere and be competitive. It has to be based on private initiative, competitive capabilities, and on a long-term

MIN

You say the government should create the conditions and the entrepreneurs should take their chances. Is it already happening? So far, there have not been too many of these cases. On one hand, we see there are entrepreneurs in Macau already doing it. Sometimes we don’t even know about them, since usually they are very low-profile. They exist because opportunities are here. I think that this is a good sign, a very positive sign. But we see the development of Macau as a platform between mainland China and Portuguesespeaking countries has been a process led much more by the government than by the private sector. However, these things take time. We should not be too pessimistic in looking at what is happening. If those opportunities are there, I’m sure that some companies will grab them to develop their business. For the time being, the dissemination of information is not that good. There are many opportunities, everything is done sometimes in a very official way, while I’m in favour of a much more business-type approach. The official events, they have their own role, and sometimes they open some doors, but let’s try to create opportunities for business people to meet other business people, and maybe then something might happen.

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June 17, 2013 April 19, 2013

Macau

Greek Mythology accounts still missing Relationship between Amax and the controlling shareholder of casino remains frosty Vítor Quintã

vitorquinta@macaubusinessdaily.com

IP gaming room investor Amax Holdings Ltd says it will post a loss for the financial year ended March 31 because it has been unable to get the results from Greek Mythology casino. In a filing sent to the Hong Kong Stock Exchange late last week, the company says the results of “an associate, which has significant impact on [the] 2013 annual results of the group, will be unavailable”. According to Amax’s previous annual report, the company has just one associate: Greek Mythology (Macau) Entertainment Group Corp Ltd, which operates the Greek Mythology Casino. The casino located in Taipa accounted for 97.5 percent of Amax’s revenue in the previous financial year. It was also the junket’s only profitable venture. The profit warning signed by chairman Ng Man Sun says “the new board has made its best efforts to communicate with the management of the associate in accessing the associate’s financial information”. “However, the communication progress has been unsatisfactory,” it adds. In September Mr Ng, a veteran junket room operator, was appointed executive director of Amax but relinquished his claim over Greek Mythology, putting an end to a dispute with his former partner Chan Mei Fun.

Everything from Dior to McDonald’s The changing face of city’s gaming industry As Judy Huang’s husband prepared to hit Macau’s gaming tables, the 33-year-old mother from mainland China was more drawn to the Venetian resort’s shopping plaza, home to a fake grand canal, crooning gondoliers and brands from McDonald’s to Dior. “The mall is important” for visitors with children, Ms Huang said while preparing to board a ferry to Macau from Hong Kong. “At least it will keep us entertained while we’re waiting for my husband.” Tourists such as the Huangs, seeking a mix of fast food, fashion and baccarat, are fuelling profits for the Venetian and other resorts owned by Sheldon Adelson’s Sands China Ltd – and helping the company woo players from local rival SJM Holdings Ltd. Family-friendly attractions have

“The previous management had not carried out any action to access the financial information of the associate,” the filing says. The relationship between Amax and Ms Chan, who now controls both Greek Mythology and its hosting venue, the New Century Hotel, seems to have hit a rough start. Amax says it “has taken continuous actions during the period from September 2012 to May 2013 in attempt to access the associate’s financial information”. Those actions included “sending several demand letters through the company’s management and lawyers in Hong Kong and Macau and requesting the associate’s financial information from the associate’s accountant”. Amax has now given up on getting Greek Mythology’s results and decided to move forward with

boosted the appeal of the U.S. billionaire’s casinos for middleclass Chinese, who have helped turn Macau into the world’s largest gambling hub, with US$38 billion (304.14 billion patacas) in revenue last year, more than six times the Las Vegas Strip. In the first quarter, Sands took the top spot in Macau’s mass-market casino business, overtaking SJM Holdings, whose founder, Stanley Ho Hung Sun, built Asia’s largest gambling empire by catering to high rollers. Sands’ mass gambling revenue in Macau jumped 63 percent to a record US$863 million for the quarter, while SJM’s rose five percent to about HK$6.22 billion (US$801 million), earnings statements show.

Michelin stars “Shopping malls are the biggest selling point to drive mass-market traffic,” said Grant Govertsen, an analyst at Union Gaming Group in Macau. “SJM is missing that essential piece.” Ninety-one year old Mr Ho held a Macau gambling monopoly for four decades until 2002, when the government issued licences to foreign players such as Sands and Wynn Resorts Ltd. Today, his flagship Grand Lisboa casino houses pricey Michelin star restaurants and has a performance line-up that includes the French cancan dance, but offers little shopping or family entertainment.

the publication of its annual results, which should happened “before the end of June”. The report “is expected to record a loss” as compared to a net profit of HK$161.1 million (US$20.8 million) in the previous period, the filing says. But the annual results will “not reflect the actual performances of the associate and the group,” Amax stressed. A similar situation happened last November when Amax presented its results for the six months ending September 30. At the time, Amax said Greek Mythology did not make available its financial information for the period under review. The group stated it owned 24.8 percent of Greek Mythology (Macau) Entertainment and that it was conducting negotiations with the company to solve this issue.

When Mr Ho’s monopoly began, Mao Zedong led China and Macau was a Portuguese administered territory. The city became a special administrative region of China in 1999, ending nearly 450 years of Portuguese governance. Mr Ho was initially reluctant to copy the Vegas-style glitz of his U.S. competitors. “Ignoring Macau’s special characteristics and duplicating a Las Vegas or an Atlantic City would not be a successful strategy,” the SJM founder and chairman said at a 2009 gaming expo. By contrast, retail stores from Zara to Tiffany line Sands’ resorts. Sands China has a total retail space of 1.49 million square feet, consisting of close to 600 shops, in Macau.

Cuiheng new target for Guangdong cooperation A

fter Hengqin Island and Nansha, the Cuiheng district of Zhongshan city will become another prime area for a free-trade initiative between Guangdong province and Macau. The revelation was made by Guangdong governor Zhu Xiaodan to media after a meeting with Macau top officials on Friday, which included Chief Executive Fernando Chui Sai On. The meeting concluded with the signing of a letter of intent to developing the Cuiheng district as a new marine tourism spot. The governor also noted that both parties are planning to extend the Guangzhou-Zhuhai Intercity Railway to the Zhuhai Airport via Hengqin Island. The construction could start before the end of the year, Mr Zhu said. In the meantime, the University of Macau’s new campus in Hengqin Island is expected to be put into use in September. The campus will accommodate about 10,000 students within three years, said Mr Chui after the joint work conference with the Guangdong provincial government. The contractor is currently inspecting the project and debugging the equipment in order to hand in the campus to Macau “smoothly”, Mr Zhu was quoted as saying by the official news agency Xinhua. The construction of the new campus started on December 20, 2009. Its area will be 20 times larger than the current campus in Taipa. S.L.

The mall business raked in annual revenue of US$239.1 million in 2012, an increase of 28 percent from a year earlier. SJM remains the largest Macau casino operator, running 20 of the city’s 35 gambling venues, versus Sands’ four. SJM also ranks first by revenue in Macau, with US$10.3 billion last year. Galaxy Entertainment Ltd was second at US$7.3 billion, and Sands China third with US$6.5 billion. Sands China has risen 16 percent in Hong Kong this year and trades at 20.5 times estimated 12-month earnings. SJM has gained 10 percent and is valued at 14.7 times forward profits. Bloomberg News

June April 17, 19, 2013 2013

Greater China

Beijing orders firms to curb pollution Government to aid solar firms by boosting demand and financing

hina’s cabinet approved new measures to combat air pollution, in the latest step by China’s new leadership to address the country’s enormous environmental problems, with pollution a key source of rising social discontent in China. Authorities will implement 10 steps to cut air pollution, including curbing dirty projects and making local governments more accountable for environmental management. The government plans to boost domestic demand for solar-generated electricity and provide easier financing to manufacturers as rising trade tensions slow exports. Grid companies should build networks that will be operational in sync with solar-generation projects and give priority access to their produced power, while lenders need to help panel makers raise capital, according to a statement after a State Council meeting chaired by Premier Li Keqiang. China’s solar-panel industry, which supplies more than half the world market, is unprofitable amid a global glut and slower economic growth that’s cut demand. The European Union this month imposed provisional tariffs of 11.8 percent on imports of solar panels from Chinese companies after an investigation found they were being sold in the 27-nation bloc at less than their production cost.

Pledge to support solar industry through ‘reformed methods’

“We must support the solar-panel industry overcoming difficulties and pursuing healthy development,” according to the statement from the State Council. “While solidifying c ompe ti ti v en es s i n th e g l o b a l market, we need to stimulate effective domestic demand for solar power and spur innovation and advancement,” it said.

Loan defaults The government will encourage mergers and acquisitions among solar

companies and curb blind expansion, the State Council said. LDK Solar Co Ltd, the world’s second-biggest wafer maker, said in April that it was seeking a new loan facility of about 2 billion yuan (US$326 million) from local banks. With debt of US$2.9 billion and eight straight quarterly losses, it failed to fully repay US$23.8 million in bonds due April 15. The biggest unit of Suntech Power Holdings Co Ltd went into bankruptcy in March after it defaulted on US$541 million of bonds. Suntech’s default sparked concern that other Chinese solar companies may have trouble repaying debt and will make financing “more difficult” for other producers, Xie Jian, chief operating officer of JA Solar Holdings Co Ltd, China’s largest solar-cell maker, said in an interview. The EU anti-dumping levy on Chinese solar panels is scheduled to

rise to 47.6 percent for about 130 producers and as high as 67.9 percent in August, should Chinese and EU officials fail to resolve the dispute. Mr Li said on Friday trade protectionism is a “blind alley” and called for cooperation and free trade to help bolster a global economic recovery, the official Xinhua News Agency said, citing comments he made at a meeting with Klaus Schwab, chairman of the World Economic Forum. In its statement, the State Council said it would take “tough measures for tough tasks” as it steps up efforts to curb air pollution. These include increasing levies on the discharge of pollutants, controlling high energyconsuming and polluting industries and improving control of airborne particles measuring less than 2.5 microns in diameter, known as PM2.5, that can pose health risks. Bloomberg News/Reuters

Govt buys financial, blue-chips shares in bid to boost market

eijing is increasing its equity stakes in two financial companies in a move to restore confidence in China’s stock market after the key index hit a six-month low last week. Central Huijin Investment Ltd, China’s main holding company for state-owned financial firms, bought shares of Everbright Bank Co Ltd and New China Life Insurance Co Ltd on the secondary market in Shanghai on Thursday and Friday, the two companies said in separate announcements. The shares were worth more than 100 million yuan (US$16.31 million) In addition, Central Huijin also purchased shares worth a combined 5.2 billion yuan in three exchangetraded funds (ETFs) that invest mainly in blue-chip stocks, multiple official media reported, citing unnamed market sources. Huijin purchased shares worth 0.05 percent of Everbright’s total equity on Friday, raising its stake in the bank to 48.42 percent, Everbright said in an disclosure on the Shanghai Stock Exchange website. Such a purchase would be worth around 66 million yuan based on Friday’s

closing price. Everbright’s Shanghai-listed A-shares gained 1.0 percent on Friday to close at 2.93 yuan per share but were still down from the 2.98 level where they closed on June 7. Huijin purchased shares worth 0.06 percent of New China Life, the insurer said on its website, raising Huijin’s total stake to 31.29 percent. The purchase would be worth around 44 million yuan based on Thursday’s closing price. Both firms said Huijin planned to gradually raise its stakes further over the next six months. China’s benchmark CSI300 index of the largest Shanghai-and Shenzhen-listed shares fell to its lowest point in 2013 on Thursday before recovering slightly on Friday. Central Huijin, a subsidiary of China’s sovereign wealth fund, China Investment Corp, regularly increases its stake in the banks it owns when share prices fall, in order to boost investor confidence. In October 2012, the firm invested a combined US$470 million in China’s four biggest banks when share prices were low. Reuters

10 10

June 17, 2013 April 19, 2013

Greater China

Debt sale fails for first time in 23 months Cash crunch curbing demand for bonds, analyst says

hina’s Finance Ministry failed to sell all of the debt offered at an auction for the first time in 23 months owing to a cash squeeze that threatens to exacerbate a slowdown in the world’s secondlargest economy. The ministry sold 9.53 billion yuan (US$1.55 billion) of 273-day bills, less than the 15 billion yuan target, according to Chinabond, the nation’s biggest bond-clearing house. Agricultural Development Bank of China Co Ltd raised 11.51 billion yuan in a sale of six-month bills last week, less than its 20 billion yuan goal. Banks are hoarding money to meet quarter-end capital requirements at the same time as capital inflows are easing amid a worsening economic outlook and speculation the Federal Reserve will rein in monetary stimulus. The seven-day repurchase rate, a gauge of interbank funding availability, has more than doubled in the past month and the Hang Seng China Enterprises Index of shares slid on Friday for a record 12th day in Hong Kong. “The cash crunch is curbing demand for bonds,” said Chen Ying, a fixed-income analyst at Sealand Securities Co Ltd in Shenzhen. “The crunch may persist if the central bank doesn’t come out to inject more capital into the financial system. If it lasts longer, it may affect issuance of both

government and corporate bonds.” The average yield at Friday’s bill sale was 3.76 percent, according to two traders who are required to bid at the auctions. That compares with a 3.14 percent rate on Thursday for similar-maturity existing securities, according to data compiled by Chinabond. The ministry’s last failed auction was a sale of 182-day bills in July 2011.

Outlook dims The cash shortage comes after China’s economic expansion held below 8 percent for the past four quarters, the first time that has happened in at least 20 years. Morgan Stanley, UBS AG and Royal Bank of Scotland Group Plc are among at least eight global banks and brokerages that cut 2013 growth estimates for the nation this week. The World Bank slashed its forecast to 7.7 percent from 8.4 percent, a June 12 report showed. The People’s Bank of China added a net 92 billion yuan to the financial system last week, down from 160 billion yuan in the five days through June 7, according to data compiled by Bloomberg. The monetary authority refrained on Friday from draining cash for the first time in three months as money markets reopened after a three-day holiday. The last time it

used reverse-repurchase agreements to inject funds was February 7. “If the central bank doesn’t conduct reverse-repurchase agreements or short-term liquidity operations to inject capital, cash supply will stay tight for the rest of the month,” said Cheng Qingsheng, a bond analyst at Evergrowing Bank Co. in Shanghai. Yuan positions at local lenders accumulated from sales of foreign exchange, an indication of capital flows into China, rose 66.86 billion yuan in May, the central bank reported on Friday. That is the smallest gain since November. The State Administration of Foreign Exchange last month stepped up scrutiny of flows to prevent speculative funds from entering the country disguised as trade payments. Cash is also flowing out of developing nations as investors bet the Fed will scale back quantitative easing, a policy that spurred demand for riskier assets. “We are still bearish on the liquidity outlook because banks will turn more cautious toward the end of June due to the need to fulfil loanto-deposit requirements and we will also head into another tax payment season in July,” said Pin Ru Tan, an interest-rate strategist at HSBC Securities Asia Ltd in Hong Kong. Bloomberg News

RMB15 bln

The Finance Ministry had planned to sell in the debt auction

Honda delays hybrid vehicle production

apan’s Honda Motor Co Ltd will delay the start of production of gasoline-electric hybrid cars in China in a bid to source cheaper parts, a company official said, in an apparent response to rival Toyota Motor Corp’s cost-saving measures.

Honda had intended to start local production of hybrid cars in China by as early as next year, but said now local production had been put back “to within three years” in order to source cheaper components from parts suppliers in China. “Affordability is critical,” said Natsuno Asanuma, the Honda spokeswoman in Beijing. Honda provided no further details about the type of components it wanted to source more cheaply, or on possible joint ventures with Chinese companies. China has been the world’s biggest auto market since 2009, but hybrid sales have been comparatively slow.

That could soon change, however, as Beijing is looking at boosting subsidies to increase sales of “newenergy” cars. The move comes as automakers gear up to try to kick-start sales of “conventional” hybrid cars in China in anticipation of policy changes aimed at boosting sales of hybrid vehicles. Under the current policy, China provides generous subsidies for private purchases of all-electric battery vehicles and heavily electrified “near all-electric” plug-in hybrids, but only limited support for the conventional gas-electric hybrids. Reuters

Hong Kong protest backs Snowden P

rotesters marched to Hong Kong’s government headquarters demanding their leaders protect Edward Snowden, the former National Security Agency contractor who fled to the city after exposing a U.S. surveillance programme. About 200 people, some carrying banners saying “Protect Free Speech” and chanting slogans such as “NSA has no say,” marched to the U.S. consulate in Hong Kong in the rain before making their way to the government building. Protesters blew whistles as a sign of solidarity with Mr Snowden. “We must not let anybody intervene, be it from Beijing or be it from Washington, because we have the rule of law,” Albert Ho, a legislator from Hong Kong’s Democratic Party, said to the protesting crowd. “Mr Snowden should be given the right under our law to stay in Hong Kong.” Mr Snowden’s flight to Hong Kong after he exposed the NSA programme may pose a challenge to Chief Executive Leung Chun Ying. China could refuse his extradition if it’s related to defence or foreign affairs. Mr Leung said on Saturday Hong Kong will handle Mr Snowden’s case according to the laws and procedures of the city “when the relevant mechanism is activated,” according to a statement on the government website. Hong Kong will “follow up on any incidents related to the privacy or other rights of the institutions or people in Hong Kong being violated”. The city’s legislature may also debate cybersecurity after Mr Snowden told the South China Morning Post the U.S. had been hacking Hong Kong and China since 2009. The ultimate decision over Mr Snowden’s fate may lie in Beijing. In editorials on Friday, China’s government-controlled media said the nation should seek more information from Mr Snowden and demand the U.S. explain itself over the surveillance programme he exposed. China is following developments in Snowden’s case, Foreign Ministry spokeswoman Hua Chunying said at a briefing in Beijing. She declined to comment when asked how China would respond to any U.S. extradition attempt. “What cyberspace needs is not war or hegemony, not irresponsible attacks, but regulation and cooperation,” Ms Hua said. She said China looks forward to more dialogue with the U.S. on cybersecurity. Bloomberg News

11 11

June April 17, 19, 2013 2013

Asia Stocks drop fifth week on stimulus concern Asian stocks outside Japan fell for a fifth week, the longest streak of losses in two years, amid concern central banks are losing an appetite for more stimulus. The Hang Seng China Enterprises Index fell for a record 12 straight days through June 14 amid concern that growth is slowing in the world’s No. 2 economy. The Hang Seng China Enterprises gauge fell 5.1 percent, taking the decline to 21 percent, and pushing the so-called H-shares into a bear market. Australia’s S&P/ASX 200 Index added 1.1 percent, while New Zealand’s NZX 50 Index lost 0.4 percent. South Korea’s Kospi Index slipped 3.9 percent and Taiwan’s Taiex index fell 2 percent. Singapore’s Straits Times Index lost 0.7 percent.

Toyota wins more time on US$1.1 bln pact

Singapore raps 20 banks for trying to rig rates Lenders to start basing benchmarks on traded prices Rachel Armstrong and Kevin Lim

ingapore’s central bank censured a record 20 banks after it found more than 100 traders in the city state tried to rig key borrowing and currency rates. The probe by the Monetary Authority of Singapore (MAS) marks the latest development in a global crackdown on rate-rigging and adds more banks, including ING Groep NV and Bank of America Corp, to the list of lenders involved. The watchdog said 133 traders had tried to inappropriately influence the rates. It did not fine the banks, but ordered them to set aside additional reserves for a year. The city state’s banking and market associations also unveiled reforms of how banks will set the benchmarks, including basing some of them on actual trades rather than estimates submitted by banks. Europe and the United States are also pushing for benchmark rates to be based on actual trades. Financial market reference rates are under intense scrutiny around the world following the discovery that

some had been rigged, most notably the Libor – London Interbank Offered Rate – benchmark for interest rates. Barclays Plc was the first bank to be fined for Libor manipulation, and U.S. and U.K. authorities have slapped fines of hundreds of millions of dollars on Royal Bank of Scotland Group Plc and UBS AG and are investigating more banks. The regulatory focus has now expanded to the foreign exchange market. Britain’s financial watchdog is looking into a report that traders manipulated benchmark foreign exchange rates. The Singapore watchdog ordered UBS, RBS and ING to set aside the most in additional reserves, with each having to post between S$1 billion (US$800 million) and S$1.2 billion extra with the central bank. The money will be returned if the banks take the required remedial action.

Review expanded The regulator said of the 133 traders found to have acted

Toyota Motor Corp and lawyers suing the company were given more time to win final approval of a US$1.1 billion settlement of claims that recalls related to unintended acceleration hurt the value of U.S. customers’ vehicles. U.S. District Judge James V. Selna, after a hearing in California, granted requests from attorneys for both sides to provide updated figures about how the money will be allocated to beneficiaries in the settlement. The judge scheduled a July 19 hearing for final approval. The company recalled more than 10 million vehicles for problems related to unintended acceleration in 2009 and 2010.

Jet Airways hires new chief executive Jet Airways (India) Ltd named Gary Kenneth Toomey as its chief executive to succeed Nikos Kardassis, who resigned less than two months after the carrier agreed to sell a stake to Etihad Airways PJSC. Mr Toomey, 58, previously was the CEO of Air New Zealand Ltd and Airlines of Papua New Guinea Ltd, Jet Airways said in a statement. The new CEO will face rising competition as AirAsia Bhd., the region’s biggest discount carrier, enters Indian market later this year.

Indonesia panel divided on fuel compensation Indonesia’s parliamentary budget commission failed to agree on whether to approve a government programme to compensate poor people for higher fuel prices, undermining President Susilo Bambang Yudhoyono’s efforts to cut energy subsidies. Three out of nine factions in the commission rejected either the compensation programme and or the government’s plan to increase subsidised fuel prices, chairman Ahmadi Noor Supit said. The matter will be brought to the parliament’s plenary session today, which will endorse the revised budget, Mr Supit said.

UBS among lenders that must set aside most in reserves

N. Korea proposes U.S. talks on peace treaty, denuclearisation

orth Korea proposed its first talks with the United States in more than a year to discuss nuclear disarmament and a peace treaty to formally end the Korean War, less than a week after it scrapped a meeting with the South. Any talks must have no pre-conditions, an unidentified spokesperson of North Korea’s National Defence Commission said in a statement carried by the official Korean

Central News Agency yesterday. North Korea confirmed its denuclearisation commitment on condition that it’s discussed as part of broader talks toward a “nuclear free world,” the commission headed by North Korean leader Kim Jong-un said. The U.S. is unlikely to agree to yesterday’s proposal after repeatedly demanding North Korea take steps toward disarmament as a condition for any dialogue. China, North Korea’s biggest benefactor, has also taken a tougher stance against Mr Kim’s regime after it tested an atomic weapon in February and threatened pre-emptive nuclear strikes in response to sanctions. “There is no sincerity in North Korea’s offer today for dialogue with U.S., nor do the Americans have any reason to accept the proposal when the North shows no change in its stance regarding its nuclear weapons

inappropriately, three quarters had either been fired or resigned. The remainder would be subject to disciplinary action, including forfeiting their bonuses. UBS said these were the actions of a few in the past. A UBS spokesman said it had significantly strengthened its internal procedures and controls. ING said it had taken disciplinary action against the small number of individuals involved. RBS said it would comply with any required remedial measures. Other banks censured included BNP Paribas SA, Bank of America, Oversea-Chinese Banking Corp Ltd, Barclays, Credit Suisse Group AG, DBS Group Holdings Ltd, Deutsche Bank AG and Standard Chartered Plc. “The punishment is not light. It is a good reminder to banks to keep their governance in order. The opportunity cost of not lending the money can be quite hefty,” said Roger Tan, CEO of SIAS Research, the equity research arm of the Securities Investors Association (Singapore). The Singapore regulator first ordered banks in the city-state to review benchmark borrowing rates nearly a year ago. That review was extended in September last year to foreign exchange benchmark rates used to price currency derivatives, particularly instruments known as non-deliverable forwards. Reuters reported in January how the banks’ investigations had found evidence that traders were manipulating rates in the offshore foreign exchange market. Singapore’s two main lending benchmarks, the Singapore Interbank Offered Rate (Sibor) and the Swap Offer Rate (SOR) are used to price mortgages and other types of loans. The Singapore Foreign Exchange Market Committee and the Association of Banks in Singapore announced that the U.S-dollar linked version of Sibor would be scrapped, with banks relying on U.S.-dollar Libor instead. Reuters

programme,” Park Young-ho, senior research fellow at the state-run Korea Institute for National Unification in Seoul, said. “Ultimately the offer is aimed to appease China, to show that the North is heeding Beijing’s calls for a return to dialogue.” North Korea’s June 6 suggestion to hold “high-level” talks with South Korea over reopening a joint factory park came one day before the U.S. President Barack Obama met his Chinese counterpart Xi Jinping in California. Pyongyang unilaterally scrapped plans for a meeting last week with South Korea, which would have been the first such inter-Korean dialogue in six years, after a dispute over who would lead the two delegations. Both sides had agreed to discuss reopening the jointly run Kaeseong industrial complex, shuttered since the North withdrew its workers in April. Bloomberg News

June 17, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

33.05

0.7621951

30673897

2.6

-7.47331

149754522

CITIC PACIFIC

BANK OF CHINA-H

3.18

-0.3134796

422337891

CLP HLDGS LTD

BANK OF COMMUN-H

5.52

-0.3610108

25499562

0.3584229

3488983

11.42

1.601423

28573710

ESPRIT HLDGS HANG LUNG PROPER

AIA GROUP LTD ALUMINUM CORP-H

BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO

NAME CHINA UNICOM HON

CNOOC LTD COSCO PAC LTD

24.4

0.6185567

12500372

CATHAY PAC AIR

13.44

-0.591716

3819716

HANG SENG BK

CHEUNG KONG

HENDERSON LAND D

PRICE

DAY %

VOLUME

10.36

2.169625

28027880

8.36

-1.415094

7007342

DAY %

67.55

0.5208333

4415918

39.3

0.8985879

13060156

SINO LAND CO

10.72

0.9416196

7259456

SUN HUNG KAI PRO

97.25

0.8294453

8109605

90.6

0.9470752

2276917

300.8

1.007388

2963513

SANDS CHINA LTD

0.5586592

2970379

1.085271

71262437

10.4

-1.140684

7557981

11.34

1.978417

42080947

TENCENT HOLDINGS

SWIRE PACIFIC-A

VOLUME

26.6

3.703704

10917636

TINGYI HLDG CO

19.72

0.1015228

5530120

117.4

0.8591065

1484260

WANT WANT CHINA

10.82

2.851711

17867670

WHARF HLDG

68.05

4.051988

7455189

104.7

1.453488

8200532

4.61

0.2173913

42819900

CHINA CONST BA-H

5.47

-1.084991

455205146

CHINA LIFE INS-H

19.02

0.2107482

36047069

CHINA MERCHANT

23.9

0.6315789

3658671

CHINA MOBILE

75.85

-0.1973684

27841327

HUTCHISON WHAMPO

78.8

-0.2531646

6308142

CHINA OVERSEAS

20.75

1.219512

22082464

IND & COMM BK-H

5.07

-0.3929273

573410168

CHINA PETROLEU-H

5.48

-0.5444646

113097572

LI & FUNG LTD

11.22

18844309

CHINA RES ENTERP

24.4

-0.204499

4435657

MTR CORP

28.45

1.426025

3344569

CHINA RES LAND

21.1

10297126

NEW WORLD DEV

11.16

2.385321

28206922

CHINA RES POWER

18.9

4.535398

9003818

PETROCHINA CO-H

8.27

-0.4813478

99533681

CHINA SHENHUA-H

23.35

-2.096436

24781729

PING AN INSURA-H

-0.3623188

12427401

HONG KG CHINA GS

PRICE

POWER ASSETS HOL

13.04

CHINA COAL ENE-H

HENGAN INTL

NAME

0.896861

4345989

80.1

4.500978

2923635

18.56

1.642935

14295751

HONG KONG EXCHNG

123.9

0.6498781

3770566

HSBC HLDGS PLC

83.15

0.1204094

35283684

MOVERS

2 21610

INDEX 20969.14 HIGH

21609.36

LOW

20682.65

52W (H) 23944.74 (L) 18710.58984

20680

11-June

14-June

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.37

0.297619

118701360

AIR CHINA LTD-H

5.66

0.7117438

18411400

2.6

-7.47331

ANHUI CONCH-H

22.05

BANK OF CHINA-H

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

25.6

3.225806

21640960

CHINA PETROLEU-H

5.48

-0.5444646

113097572

149754522

CHINA RAIL CN-H

6.91

-0.5755396

8482000

-2

16790009

CHINA RAIL GR-H

3.71

0.5420054

15908403

3.18

-0.3134796

422337891

CHINA SHENHUA-H

23.35

-2.096436

24781729

BANK OF COMMUN-H

5.52

-0.3610108

25499562

CHINA TELECOM-H

3.76

3.296703

99815599

BYD CO LTD-H

31.5

5.175292

2909267

DONGFENG MOTOR-H

11.26

-0.3539823

13653428

CHINA CITIC BK-H

3.81

-0.5221932

38136865

GUANGZHOU AUTO-H

7.68

0.1303781

7577798

CHINA COAL ENE-H

4.61

0.2173913

42819900

HUANENG POWER-H

7.16

0.7032349

37564136

CHINA COM CONS-H

6.71

-1.323529

15928454

IND & COMM BK-H

5.07

-0.3929273

573410168

CHINA CONST BA-H

5.47

-1.084991

455205146

JIANGXI COPPER-H

15.3

1.190476

13063000

CHINA COSCO HO-H

3.08

-1.597444

5755307

PETROCHINA CO-H

8.27

-0.4813478

99533681

19.02

0.2107482

36047069

PICC PROPERTY &

8.77

1.036866

25885434

CHINA LONGYUAN-H

7.89

0.2541296

24540956

PING AN INSURA-H

-0.3623188

12427401

CHINA MERCH BK-H

13.8

-0.1447178

28096933

SHANDONG WEIG-H

10.1

0.3976143

12576441

CHINA MINSHENG-H

8.71

1.515152

49667407

SINOPHARM-H

20.7

2.729529

6002136

CHINA NATL BDG-H

7.37

-1.470588

37410306

TSINGTAO BREW-H

54.8

2.238806

1460826

CHINA OILFIELD-H

15.1

-1.436031

3924460

WEICHAI POWER-H

ALUMINUM CORP-H

CHINA LIFE INS-H

NAME

25.05

-2.906977

NAME

PRICE

DAY %

VOLUME

YANZHOU COAL-H

6.78

-0.4405286

22634791

ZIJIN MINING-H

1.81

-3.208556

31386726

ZOOMLION HEAVY-H

6.24

-0.7949126

7569500

12.38

2.82392

2559900

ZTE CORP-H

MOVERS

1 10090

INDEX 9667.42 HIGH

10081.35

LOW

9541.57

52W (H) 12354.22 9540

(L) 8987.76 11-June

3705081

14-June

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.71

0.7434944

127995524

CHONGQING CHAN-A

9.55

1.380042

32525936

POLY REAL ESTA-A

11.07

0.6363636

52911525

AIR CHINA LTD-A

4.88

9676599

CHONGQING WATE-A

5.95

0.5067568

8400616

QINGDAO HAIER-A

11.8

0.08481764

6395787

ALUMINUM CORP-A

3.77

-0.5277045

16298281

CITIC SECURITI-A

11.34

-0.08810573

90333990

QINGHAI SALT-A

20.5

0.04880429

6839689

ANHUI CONCH-A

14.46

-1.766304

34493657

CSR CORP LTD -A

4.01

0.5012531

23927375

SAIC MOTOR-A

14.63

1.105736

22814807

AVIC AIRCRAFT-A

10.62

-1.025163

20702181

DAQIN RAILWAY -A

6.33

-0.7836991

35931760

SANAN OPTOELEC-A

21.12

7.317073

27496018

BANK OF BEIJIN-A

8.44

-0.2364066

22199459

DATANG INTL PO-A

4.68

3.769401

9935114

SANY HEAVY INDUS

8.31

-0.3597122

27269422

BANK OF CHINA-A

2.9

0.6944444

33919372

EVERBRIG SEC -A

12.73

-0.1568627

22934674

SHANG PHARM -A

11.61

0.1725626

6526181

4.48

-0.6651885

66955737

GD MIDEA HOLDI-A

12.65

13832111

SHANG PUDONG-A

9.02

77530686

BAOSHAN IRON & S

4.55

0.4415011

17967373

GD POWER DEVEL-A

2.45

-1.209677

74166943

SHANGHAI ELECT-A

3.74

3822792

BEIJING TONGRE-A

22.88

4.379562

9050024

GEMDALE CORP-A

6.77

0.8941878

48739484

SHANXI LU'AN -A

14.73

-0.338295

11013230

GF SECURITIES-A

12.28

0.1631321

22884906

SHANXI XISHAN-A

9.58

-0.2083333

10348074

GREE ELECTRIC

24.65

0.1218522

13512893

SHENZEN OVERSE-A

5.96

1.016949

24523709

SUNING COMMERC-A

5.62

0.8976661

46515388

NAME

BANK OF COMMUN-A

BYD CO LTD -A

NAME

33.5

6.687898

11621038

CHINA AVIC ELE-A

23.78

5.128205

4866719

CHINA CITIC BK-A

3.95

0.2538071

15330338

GUANGHUI ENERG-A

19.75

0.4067107

12014993

CHINA CNR CORP-A

4.11

0.2439024

45040048

HAITONG SECURI-A

10.96

105155658

TASLY PHARMAC-A

40.31

1.947395

5702907

CHINA COAL ENE-A

6.11

-0.6504065

10232254

HANGZHOU HIKVI-A

38.88

4.769604

10732289

TSINGTAO BREW-A

38.12

1.275239

1748911

CHINA CONST BA-A

4.69

0.4282655

57356749

HENAN SHUAN-A

39.47

1.153255

4996275

WANHUA CHEMIC-A

16.19

0.0618047

7031236

CHINA COSCO HO-A

3.16

0.6369427

5453677

HONG YUAN SEC-A

22.95

4.318182

25906383

WEICHAI POWER-A

20.32

-1.835749

12673434

CHINA EAST AIR-A

2.93

0.3424658

8425214

HUATAI SECURIT-A

9.21

0.2176279

29395932

WULIANGYE YIBIN

21.48

13262108

CHINA EVERBRIG-A

2.93

1.034483

88579063

HUAXIA BANK CO

10.06

0.7007007

18984573

YANZHOU COAL-A

12.57

-1.33438

4966778

CHINA LIFE INS-A

15.08

-0.3963012

13521820

IND & COMM BK-A

4.16

0.4830918

67631529

YUNNAN BAIYAO-A

83.9

-0.344459

2513781

CHINA MERCH BK-A

12.21

-0.8928571

58036665

INDUSTRIAL BAN-A

16.48

0.1823708

66040679

ZHONGJIN GOLD

11.33

0.2654867

10092847

CHINA MERCHANT-A

11.6

1.133391

20998065

INNER MONG BAO-A

25.07

0.3602882

20446625

ZIJIN MINING-A

2.95

0.6825939

39117285

CHINA MERCHANT-A

25.34

0.3961965

11877578

INNER MONG YIL-A

27.77

14319950

ZOOMLION HEAVY-A

6.7

-0.4457652

42414263

CHINA MINSHENG-A

9.96

0.8097166

108141850

INNER MONGOLIA-A

4.5

4.651163

39388387

ZTE CORP-A

11.64

1.659389

24681041

CHINA NATIONAL-A

10.82

1.027077

33145519

JIANGSU HENGRU-A

28.69

3.387387

8884857

CHINA OILFIELD-A

15.32

2.474916

4017229

JIANGSU YANGHE-A

56.85

0.4416961

2448877

CHINA PACIFIC-A

17.4

0.8695652

16051638

JIANGXI COPPER-A

19.28

-0.2586653

8091356

CHINA PETROLEU-A

6.29

-1.564945

50033996

JINDUICHENG -A

9.68

0.6237006

4582707

18.41

3.776776

27830648

194.02

-0.3543732

3251867

CHINA RAILWAY-A

4.65

-0.4282655

20543970

KANGMEI PHARMA-A

CHINA RAILWAY-A

2.65

25648838

KWEICHOW MOUTA-A

CHINA RESOURCE-A

29.6

6437890

LUZHOU LAOJIAO-A

24.94

0.2814636

6371876

CHINA SHENHUA-A

19.13

-0.7780083

11974803

METALLURGICAL-A

1.89

26235489

CHINA SHIPBUIL-A

4.52

59982923

NARI TECHNOLOG-A

15.42

4.048583

16907815

NINGBO PORT CO-A

2.36

0.4255319

11672302

OFFSHORE OIL-A

7.43

0.541272

27427498

CHINA SOUTHERN-A

3.31

0.9146341

12367614

CHINA STATE -A

3.57

2.292264

113398476

3.57

0.8474576

44660751

PETROCHINA CO-A

8.13

0.2466091

19709786

CHINA VANKE CO-A

10.69

0.1874414

56813739

PING AN BANK-A

19.06

1.436935

32855336

CHINA YANGTZE-A

7.15

-0.27894

22014037

PING AN INSURA-A

36.86

1.013976

36941849

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

CHINA UNITED-A

MOVERS 203

14 2540

INDEX 2416.771 HIGH

2538.17

LOW

2384.03

52W (H) 2791.303 (L) 2102.135

2380

7-June

14-June

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

22.1

-1.777778

11016668

FORMOSA PLASTIC

24.35

-0.408998

11201612

FOXCONN TECHNOLO

36.3 -0.2747253

2304260

FUBON FINANCIAL

39.65

0.5069708

68.5

Volume

TAIWAN MOBILE CO

110

5.263158

75 -0.2659574

3684616

TPK HOLDING CO L

569

-1.215278

2951635

15764518

TSMC

106

1.435407

41207256

UNI-PRESIDENT

58.3

0.6908463

8248823

UNITED MICROELEC

13.1

57363680

292 -0.5110733

9599283

HON HAI PRECISIO

72.6

-1.089918

52408611

AU OPTRONICS COR

12.3 -0.8064516

64416047

HOTAI MOTOR CO

304

365148

9338338

1.923077

9194648

HTC CORP

260.5

-1.698113

11526413

30.05

-0.166113

9335915

CATHAY FINANCIAL

39.55 -0.2522068

25902235

HUA NAN FINANCIA

16.65 -0.5970149

4540777

YUANTA FINANCIAL

15.1

-1.30719

18856056

CHANG HWA BANK

16.3 -0.3058104

7360641

LARGAN PRECISION

979

2.944269

1718347

YULON MOTOR CO

48.3

3463000

CHENG SHIN RUBBE

91.4

0.3293085

5970224

LITE-ON TECHNOLO

48.5

-3.386454

5496555

CHIMEI INNOLUX C

18.7

1.355014

40525469

MEDIATEK INC

352

-2.493075

6838985

CHINA DEVELOPMEN

8.35

-1.764706

37692844

MEGA FINANCIAL H

22.6 -0.4405286

15535717

CHINA STEEL CORP

24.25

15067007

NAN YA PLASTICS

58.5 -0.3407155

6329759

CHINATRUST FINAN

18.8

1.621622

30503464

PRESIDENT CHAIN

185

1.648352

1140972

CHUNGHWA TELECOM

94.6

0.1058201

8799931

QUANTA COMPUTER

2.521008

6092273

17 -0.8746356

18149582

SILICONWARE PREC

34.95 -0.4273504

10390060

COMPAL ELECTRON

159

PRICE DAY %

8318423

ASUSTEK COMPUTER CATCHER TECH

NAME

0.1461988

DELTA ELECT INC

133.5

-2.554745

8292235

SINOPAC FINANCIA

14.25

-1.384083

11809520

FAR EASTERN NEW

31.25

0.4823151

3355225

SYNNEX TECH INTL

43.5

0.5780347

8574226

FAR EASTONE TELE

72.5

1.256983

4151874

TAIWAN CEMENT

37.4

0.1338688

6859302

FIRST FINANCIAL

17.55

7026328

TAIWAN COOPERATI

16.7

7823968

FORMOSA CHEM & F

68.2

3540824

TAIWAN FERTILIZE

74.6

1771511

FORMOSA PETROCHE

1339621

TAIWAN GLASS IND

27.75

-1.069519

760086

WISTRON CORP

MOVERS

9 5670

INDEX 5495.07 HIGH

5663.51

LOW

5478.67

52W (H) 5896.71 5470

(L) 4719.96 11-June

14-June

June 17, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 42.2

61.9

41.8

61.7 19.8

41.4

61.5

41.0

average 40.8

Min 40.25

Last 41.8

40.2

19.6

61.3

40.6 Max 42.1

20.0

Max 61.9

average 61.287

Min 61.2

61.1

Last 61.9

39.5

20.0

39.3

19.9

Max 19.92

average 19.7

Min 19.44

Last 19.9

19.4

22.5 22.4 22.3

19.8

39.1

Max 39.45

average 39.133

Min 38.95

Last 39.3

38.9

Max 19.98

average 19.836

Commodities PRICE

WTI CRUDE FUTURE Jul13

97.85

BRENT CRUDE FUTR Aug13 GASOLINE RBOB FUT Jul13

DAY %

YTD %

(H) 52W

(L) 52W

1.199720881

4.429028815

100.4000015

81.5

105.93

0.93377799

-0.879573313

115.1699982

91.76999664

289.67

1.237199874

2.581627594

318.0399895

235.0999832

GAS OIL FUT (ICE) Aug13

897.5

2.075632641

-1.265126513

983.5

816

NATURAL GAS FUTR Jul13

3.733

-2.123754588

4.800673779

4.499000072

3.256000042

296.22

0.772240177

-1.315920978

322.0499992

259.5000029

NY Harb ULSD Fut Jul13 METALS

Last 19.88

Gold Spot $/Oz

1390.67

0.2227

-16.4492

1796.08

1322.06

Silver Spot $/Oz

22.09

1.0808

-26.6357

35.365

20.3395

COUNTRY MAJOR

ASIA PACIFIC

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

Platinum Spot $/Oz

1446.25

-0.9384

-4.7109

1742.8

1374.55

Palladium Spot $/Oz

731.45

-1.6776

4.5436

786.5

553.75

LME ALUMINUM 3MO ($)

1851

-0.323101777

-10.70911722

2200.199951

1809

LME COPPER 3MO ($)

7090

0.567375887

-10.60395915

8422

6762.25

LME ZINC

1860

1.086956522

-10.57692308

2230

1745

14325

1.884779516

-16.03165299

18920

14052

16.505

-0.362209478

4.826929184

17.07500076

14.79500103

533

-0.420364316

-11.12963735

665

512

WHEAT FUTURE(CBT) Sep13

688.75

-0.720720721

-14.65303594

905.75

673.75

SOYBEAN FUTURE Nov13

1298.25

-0.173010381

-0.345423143

1409.75

1177.5

123.8

-1.275917065

-18.7930469

203.8499908

122.7999954

NAME

16.47999954

ARISTOCRAT LEISU

72.62999725

CROWN LTD

3MO ($)

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

Dec13

COFFEE 'C' FUTURE Sep13 SUGAR #11 (WORLD) Oct13

17.09

COTTON NO.2 FUTR Dec13

89.44

3.387779794

-14.80558325

0.325283231

13.58902718

22.8599987 89.55999756

CROSSES

Max 22.5

average 22.277

Min 22.1

Last 22.3

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.957 1.5707 0.9211 1.3347 94.31 7.995 7.7612 6.1309 57.5287 30.57 1.2515 29.86 42.81 9875 90.038 1.22928 0.84972 8.1779 10.65 125.6 1.0303

-0.1148 0.2361 0 0.1426 0.0742 0.0425 0.049 0.0652 0.8019 0.6215 -0.0639 0.0971 0.5256 0.1013 0.4254 -0.1326 0.0977 0.1308 0.1033 0.1513 -0.0291

-7.7857 -2.8994 -0.6188 1.1903 -8.7053 -0.1476 -0.1366 1.6262 -4.4042 0.0327 -2.4051 -2.7696 -4.2163 -0.8304 -0.7897 -1.7734 -4.0366 0.4842 -1.123 -9.578 -0.0388

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 78.93 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.05

2.531646

28.57142

4.49

2.29

VOLUME CRNCY 2855524

12.39

2.227723

16.11996

13.75

8.28

1355026

AMAX HOLDINGS LT

1.03

-10.43478

-26.42857

1.72

0.75

4588375

BOC HONG KONG HO

24.4

0.6185567

1.244812

22.6

12500372

0.315

-4.545455

18.86793

0.42

0.216

64000

5.55

-7.345572

6.74

2.88

66000

CHINA OVERSEAS

20.75

1.219512

-10.17316

25.6

16.362

22082464

CHINESE ESTATES

13.32

1.215805

9.815653

14.12

8.012

580500

CHOW TAI FOOK JE

8.81

1.497696

-29.18006

13.4

8.4

7707600

EMPEROR ENTERTAI

2.81

3.690037

48.67725

3.05

1.16

1465000

FUTURE BRIGHT

2.39

2.136752

97.19047

2.76

0.805

6840000

GALAXY ENTERTAIN

41.8

4.761905

37.72652

42.4

16.98

84717186 1484260

CHEUK NANG HLDGS

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15070.18

-0.6978087

15.0032

15542.4

12450.17

NASDAQ COMPOSITE INDEX

3423.555

-0.6330244

13.381

3532.038

2810.8

FTSE 100 INDEX

6308.26

0.05757673

6.959358

6875.62

5435.46

HANG SENG BK

117.4

0.8591065

-1.095195

132.8

102.6

DAX INDEX

8127.96

0.4023277

6.772772

8557.86

6096.94

HOPEWELL HLDGS

26.05

4.408818

-21.65414

35.3

19.74

1702497

HSBC HLDGS PLC

83.15

0.1204094

2.275519

90.7

61.1

35283684

HUTCHISON TELE H

4.1

1.234568

15.16854

4.66

2.98

2466000

LUK FOOK HLDGS I

3.329506

-26.22951

30.05

15.12

1941176

MELCO INTL DEVEL

15.74

3.145478

74.69478

18.18

5.12

4419000 3315037

NIKKEI 225

12686.52

1.937586

22.04233

15942.6

8328.019531

HANG SENG INDEX

20969.14

0.3930667

-7.449289

23944.74

18710.58984

CSI 300 INDEX

2416.771

0.7014351

-4.208598

2791.303

2102.135

TAIWAN TAIEX INDEX

7937.74

-0.1750578

3.09423

8439.15

6922.73

MGM CHINA HOLDIN

19.9

3.108808

49.86882

21.6

9.509

KOSPI INDEX

1889.24

0.3457745

-5.398466

2042.48

1758.99

MIDLAND HOLDINGS

2.82

-3.424658

-23.78378

2.8

5038000

S&P/ASX 200 INDEX

4791.757

2.044334

3.071804

5249.6

3993.8

NEPTUNE GROUP

0.179

-2.717391

17.76316

0.23

0.084

34900000

4760.744

3.322313

10.28699

5251.296

3774.693

NEW WORLD DEV

11.16

2.385321

-7.154746

15.12

8.66

28206922

FTSE Bursa Malaysia KLCI

1762.19

1.108516

4.336421

1826.22

1574.15

SANDS CHINA LTD

39.3

0.8985879

15.75847

43.7

20.65

13060156

SHUN HO RESOURCE

1.5

7.142859

1.67

1.03

NZX ALL INDEX

945.398

0.3326032

7.181545

998.487

755.149

SHUN TAK HOLDING

3.8

1.333333

-9.307877

4.65

2.56

7242700

PHILIPPINES ALL SHARE IX

3897.76

1.639951

5.373915

4571.4

3295.86

SJM HOLDINGS LTD

19.88

1.428571

12.01478

22.382

12.995

7517598

SMARTONE TELECOM

13.24

0.6079027

-5.965909

17.38

12.5

1094000

WYNN MACAU LTD

22.3

0.2247191

6.44391

26.5

14.62

1788917

ASIA ENTERTAINME

3.75

-0.530504

33.22993

4.7647

2.2076

123601

56.75

-0.07043494

26.9291

57.49

41.74

184357 1969

JAKARTA COMPOSITE INDEX

22.1

Macau Related Stocks

CENTURY LEGEND

NAME

19.7

Currency Exchange Rates

NAME ENERGY

Min 19.74

22.2

HSBC Dragon 300 Index Singapor

604.02

-0.57

-2.75

STOCK EXCH OF THAI INDEX

1465.27

4.418252

5.26894

1649.77

1144.44

HO CHI MINH STOCK INDEX

509.03

-1.176493

23.03434

533.15

372.39

BALLY TECHNOLOGI

Laos Composite Index

1338.82

10.2118

1455.82

980.83

BOC HONG KONG HO

3.2

4.23453

3.6

2.85

GALAXY ENTERTAIN

5.42

4.03071

36.52393

5.43

2.25

100

INTL GAME TECH

17.25

-1.146132

21.73606

18.81

10.92

2450679

JONES LANG LASAL

88.43

-1.316817

5.349056

101.46

61.39

149732

LAS VEGAS SANDS

56.44

-0.2298038

22.27036

60.54

32.6127

3305106 2686182

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

MELCO CROWN-ADR

24.1

43.11164

25.15

9.13

MGM CHINA HOLDIN

2.52

36.21621

2.71

1.36

2550

MGM RESORTS INTE

14.75

-1.403743

26.71821

15.95

8.83

5750695

SHFL ENTERTAINME

17.95

0.3353829

23.7931

18.57

12.35

401328

SJM HOLDINGS LTD

2.53

-2.316602

11.08106

2.9481

1.7255

300

135.14

-1.010841

20.13513

144.99

84.4902

1027943

WYNN RESORTS LTD

AUD HKD

USD

14 14

June 17, 2013 April 19, 2013

Opinion

Lessons of a Greek tragedy

in an equitable way. With every vested interest fighting for itself, closed professions proved impossible to pry open. Doubting that there would be shared sacrifice, those same interest groups were unable to negotiate meaningful tax reform.

Barry Eichengreen

Professor of Economics and Political Science at the University of California, Berkeley

Right lessons

visit to Greece leaves many vivid impressions. There are, of course, the country’s rich history, abundance of archaeological sites, azure skies, and crystalline seas. But there is also the intense pressure under which Greek society is now functioning – and the extraordinary courage with which ordinary citizens are coping with economic disaster. Inevitably, a visit also leaves questions. In particular, what should policymakers have done differently in confronting the country’s financial crisis? The critical policy mistakes were those committed at the outset of the crisis. It was already clear in the first half of 2010, when Greece lost access to financial markets, that the public debt was unsustainable. The country’s sovereign debt should have been restructured without delay. Had Greece quickly written down its debt burden by twothirds, it would have been able to shed its crushing debt overhang. It could have used a portion of the interest savings to recapitalise the banks. It could have cut taxes, rather than raising them. It could have jumpstarted investment and gotten its economy moving again, if not in a matter of months, then, with

luck, in no more than a year. In its official post-mortem on the crisis, the International Monetary Fund now agrees that debt restructuring should have been undertaken earlier. But this was not its view at the time. Under the leadership of Dominique Strauss-Kahn, the Fund was in thrall to the French and German governments, which adamantly opposed debt relief.

Shared sacrifice? The European Commission, for its part, has rejected the IMF’s mea culpa. Preoccupied by the state of the French and German banks, it continues to argue that delaying debt restructuring was the right thing to do. It has no regrets about throwing Greece to the wolves. Given this opposition, the Greek government would have had to move unilaterally. Hindsight suggests that the authorities should have done just that. Faced with foreign opposition, the government should have announced its decision to restructure as a fait accompli. Clearly, there would have been risks. The “troika” – the IMF, the European Commission,

and the European Central Bank – might have refused to provide an aid package, forcing Greece to compress imports even more sharply. The ECB might have cut off emergency liquidity assistance, forcing the government to impose capital controls and even consider abandoning the euro. But, by acting pre-emptively, Greek leaders could have shaped the dialogue. They could have said to their EU colleagues, “Look, we have no choice but

Past mistakes, committed not just by Greece, but also by its international partners, make a difficult short-term future unavoidable

to restructure what is clearly an unsustainable debt. But make no mistake: our preference is to remain in the euro zone. We are committed to reforms. Given this, don’t you agree that we are deserving of your support?” Making a compelling case would have required Greece to get serious about those reforms. The government could have started by bringing together employers and unions t o negotiate an equitable burdensharing agreement, including an across-the-board reduction in wages and pensions, thereby getting a jump on internal devaluation. This could then have been complemented by a simultaneous agreement to restructure private debts. With everyone accepting sacrifices, it might have been possible to reach an accord on liberalising closed professions and on comprehensive tax reform. But, instead of working together with its social partners, the government, heeding the troika’s advice, dismantled the country’s collective-bargaining system, leaving workers unrepresented. Greece thus lacked a mechanism to negotiate a social compact to cut wages, pensions, and other obligations

With the Greek government thus failing to push through structural reforms, it was unable to earn the trust of its creditors; and, sceptical that the government was committed to reform, the troika demanded a pound of flesh, in the form of front-loaded austerity, as the price of assistance. Those front-loaded tax increases and governmentspending cuts plunged the economy deeper into recession, making a farce of claims that the public debt was sustainable – and forcing the inevitable debt restructuring after two more agonising years. Greece is now seeking to make the best of a difficult situation. It is attempting to breathe life into the campaign for structural reform. It is lobbying the troika for further debt relief. But the damage will not be easily undone. Past mistakes, committed not just by Greece, but also by its international partners, make a difficult shortterm future unavoidable. It is important that other countries draw the right lessons. If they do, Greece’s brave, beleaguered citizens can at least take comfort in knowing that many people elsewhere will be spared the same unnecessary sacrifices. © Project Syndicate

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.

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15 15

June April 17, 19, 2013 2013

Opinion Business

wires

Copycat capitalists

Leading reports from Asia’s best business newspapers Alexander Friedman Global Chief Investment Officer for UBS Wealth Management

Korea Herald North Korea proposed high-level talks with the United States on Sunday, days after its planned talks with South Korea broke down over the level of their chief delegates. “[We] propose high-level talks between the North Korean and U.S. governments to ease tensions on the Korean Peninsula, and establish regional peace and security,” a spokesman of the North’s National Defence Commission said in an “important statement” carried by Pyongyang’s official Korean Central News Agency.

Jakarta Globe The Indonesian Stock Exchange (IDX) is considering raising the minimum amount of shares released during initial public offerings from 10 percent to 15-20 percent. Hoesen, the listing director at the IDX, said that the plan would seek to maintain market liquidity and expand domestic trade volume. Currently, 6.9 trillion rupiah (US$699 million) worth of transactions are conducted daily on the IDX, well above the 2013 target of 5.5 trillion rupiah set by the stock exchange.

China Daily China, the world’s biggest maker of solar panels, is to boost domestic demand for solar-generated electricity and provide easier financing to manufacturers as rising trade tensions slow exports. Grid companies should build networks that will be operational in sync with solar-generation projects and give priority access to their produced power, while lenders need to help panel makers raise capital, according to a statement after a State Council meeting. The government will encourage mergers and acquisitions among solar companies and curb blind expansion, the State Council said.

Times of India Sam Pitroda, adviser to India’s Prime Minister on public information infrastructure and innovations, expressed confidence that the country will regain the growth rate of 8 percent soon. “The Union government is doing its job. For the last ten years, we have been continuously clocking 8 percent growth. Though it has gone down this year, we’ll be able to catch up as soon as possible and achieve same growth rate,” Mr Pitroda said.

t is all too easy to envy China. At current growth rates, the Chinese economy will double in size in only nine years, raising an estimated 100 million people above the poverty line in the process. Compare this to the major economies of the Western world. The euro zone’s GDP remains mired below 2008 levels, and the United States last enjoyed Chinese-style growth back in 1984, when gasoline was US$1.10 a gallon and the first Apple Macintosh was rolling off the production line in California. Given the West’s anaemic performance in recent years, it is hardly surprising that envy of China’s economic dynamism has manifested itself in official policy. Recent examples range from direct market interventions (such as America’s effort to boost its automotive industry via the “cash for clunkers” programme), to the British government’s attempt to reflate the United Kingdom’s housing market by guaranteeing mortgages under its “Help to Buy” scheme. Even hitherto independent central banks have not escaped the creep toward state-sponsored capitalism. The U.S. Federal Reserve has been gently encouraged to buy 90 percent of annual net issuance of U.S. Treasury bills, effectively funding the U.S. fiscal deficit and ensuring, via the resulting negative real interest rates, that businesses and individuals wishing to save, rather than spend, will lose purchasing power by doing so. Ironically, Western countries are shifting to statism at the very moment that China appears to be heading in the opposite direction – witness its recent moves to liberalise its financial system. In just 10 years, the share of state-directed bank lending in China has fallen from 92 percent of new credit creation to less than half. But copycat capitalism is not without risk; indeed,

it is unlikely to end without someone getting scratched. The West’s efforts to emulate China are hindered by its inability to replicate the conditions of Chinese growth, such as labour mobilisation, and its unwillingness to pursue practices such as the onechild policy. Thus, the West’s forays into state capitalism are more likely to result in the misallocation of capital, more in the vein of China’s vastly oversupplied steel industry but without the stellar headline economic performance of the national economy.

Potential pitfalls Coming from the other direction, China’s crawl toward a more marketoriented brand of capitalism also has potential pitfalls. We need look no further than its recent problems with socalled wealth-management products (WMPs) for evidence that reform intentions without adequate regulatory institutions can cause problems.

China’s transformation from a state-directed to a market-driven economy may require the greatest amount of planning of all

WMPs were commonly marketed to individuals as alternatives to deposit accounts. But the funds contributed were then invested in riskier assets that included “trust loans” to companies such as property developers. The number of trust loans rose by 40 percent in 2012, which triggered serious concern among China’s authorities that WMPs could become the next financial “WMDs,” because banks had strong incentives to make uneconomic lending decisions. The subsequent statedirected WMP regulation put a brake on credit creation and

sent Chinese stock markets plunging. Ultimately, however, the measures should enable China’s shadow banking system to continue to grow at a more manageable pace and in a more sustainable way. There is a risk that the lack of growth in the West may make economic transformation in the direction of the Chinese model appear more urgent to its governments. But the Western economic model has brought about unprecedented standards of living. This achievement should not be dismissed because of one crisis, no matter how prolonged, and the economic model that produced today’s living standards should not be cast aside without careful consideration. By contrast, China’s rapid growth should not obscure its need for economic change. According to the International Monetary Fund, at some point between 2020 and 2025, China will pass what economists call the “Lewis Turning Point,” at which a country’s vast supply of low-cost workers is exhausted and factors such as labour mobilisation provide a diminishing contribution to growth. With smaller demographic and resource advantages in the coming years, the consequences of capital misallocation, unavoidable under a state-directed economic model, will come to the fore. As China’s recent experience with WMPs demonstrates, economic change can expose old problems and create new ones. Ironically, China’s transformation from a state-directed to a market-driven economy may require the greatest amount of planning of all. © Project Syndicate

June 17, 2013

Closing Rohani wins Iran presidency

U.S. budget cuts ‘ill-designed’: IMF

Hassan Rohani, who criticised government intervention in Iranian lives, won the nation’s presidency. Mr Rouhani has hailed his election as a “victory of moderation over extremism”. The reformist-backed cleric won just over 50 percent of the vote and so avoided the need for a run-off. Thousands of Iranians took to the streets of Tehran when the result was announced, shouting proreform slogans. The U.S. expressed concern at a “lack of transparency” and “censorship” but said it was ready to work with Tehran. Israel urged continued international pressure on Iran to curb its nuclear programme.

The International Monetary Fund has urged the U.S. to repeal the huge federal budget cuts introduced this year, denouncing them as “excessively rapid and ill-designed”. It said the deficit reduction programme would be a drag on growth this year. It forecast growth of 1.9 percent for 2013, but said it could be as much as 1.75 percentage points higher without the rapid tightening of fiscal policy. But the IMF added that the overall U.S. economy was improving. While the recovery had been “tepid”, it said the overall fundamentals had been gradually getting better.

Britain moves EU close to new rules on tax dodges for commodities trading ahead of summit Jail terms for insider trading one step closer

ritain turned up the pressure on other rich economies to clamp down on secretive money flows at a summit starting today by pressing its overseas tax havens into a transparency deal and announcing new disclosure rules for British firms. Prime Minister David Cameron wants to make progress on closing global tax loopholes when he hosts a two-day meeting of leaders of the Group of Eight economies in Northern Ireland. “It is important we are getting our house in order,” Mr Cameron said in a speech in London on Saturday after representatives of overseas tax havens linked to Britain agreed to sign up to an international transparency protocol. “It is a very positive step forward and it means that Britain’s voice in the G8 and the campaigning on this issue around the world for proper taxes, proper companies and proper laws … will be stronger.” Ten territories and self-governing regions will join the Multilateral Convention on Mutual Assistance in Tax Matters which has been agreed by more than 50 countries. They also pledged to produce plans on how to provide more information on the ownership of so-called shell companies. Those included in the agreement were Bermuda, British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man. The convention will help developing countries trying to trace money they suspect belongs in their state coffers, to request tax information from offshore centres. Also on Saturday, the British government said it will introduce new domestic rules to combat tax evasion and money laundering, by forcing shadowy “shell” companies to throw off their cloak of anonymity and reveal who really runs them. Under the new British rules, companies will be required to obtain and hold information on their ownership and control which will then be held in a central registry, available to police and revenue agencies. Global tax evasion could be costing more than US$3 trillion a year, according to researchers from Tax Justice Network while as much as US$32 trillion – twice the size of U.S. gross domestic product – could be hidden by individuals in tax havens. Reuters

Oil probe supports cause for tough abuse regime

uropean authorities are close to agreeing on the final draft of markets abuse rules that will make the standard commodities market practice of trading on inside information illegal. Commodities market players say the draft regulation, which will lay the ground work for jail terms for insider trading, could force them to reveal their trading strategies and undermine their businesses. For centuries, traders have made money from their knowledge of shortages and surpluses of physical commodities, which they say enables them to play a vital role in balancing global markets. “Applying insider trading to commodities is mad,” said Craig Pirrong, University of Houston academic and commodities expert. “It may make sense to prosecute the use of information illicitly obtained, [but] ‘better information’ does not mean ‘inside information’, and any attempt to apply insider trading concepts to commodities will sow confusion and wreak havoc.” Supporters of the regulation argue that some markets including European power markets have already successfully adapted to disclosure rules for insider trading, even though traders objected vociferously, and that other commodity markets will adapt too.

A source close to the negotiations in parliament said a provisional date for the final meeting on the beefed up draft has been set for Thursday to address issues such as administrative sanctions, the definition of inside information and the inclusion of spot commodity contracts in the regulation. If the draft is finalised this month before the end of the Irish presidency, the new rules are expected to become EU law by year-end and enter force at the end of 2015. While most of the new legal requirements will be known once the agreement is reached, the penalties for offences in different countries will become clear once governments have written criminal sanctions into their national legislation.

Oil probe The EU enquiry into Platts oil price assessments, which followed the scandal over fixing the Libor rate, have strengthened the case for strict rules, providing firepower to the European parliament, which advocates a tough regime as opposed to the more reticent Council of Ministers. Royal Dutch Shell Plc, BP Plc, Statoil ASA and Platts, the oil-price data collector owned by McGraw Hill Financial Inc., said they are being investigated after the

European Commission conducted raids in three countries to ferret out evidence of collusion. “The allegations that oil prices have been fixed by reporting agencies and oil companies alike clearly demonstrates the need for tough EU wide rules to tackle market abuse,” said Arlene McCarthy, member of the European parliament and coordinator of the reform. Robert Finney, a partner at law firm Holman Fenwick Willan, agreed that strict rules were likely. “The mere fact that the Commission decided to investigate [the oil market] will provide grist to the mill of those who want a strong regulation on market abuse,” he said. The Council of Ministers, who represent the EU member sates, are reluctant to see harmonised jail terms for market abuse across the bloc. The issue of penalties will fall under the revision of the Market Abuse Directive (MAD II), which sources say is so politically sensitive that it is not even being discussed at present. The full regime may be implemented when MAD II comes into effect sometime later than 2015 – welcome relief for those battling to see how, in practice, insider trading can be extended to commodity prices that are driven by global changes in supply and demand. Reuters