Macau Business Daily, June 20, 2013 by Business Daily

City’s mainland investments grow

Year II

Number 309 Thursday June 20, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

acau investors rushed to high-return mainland Chinese securities last year as more yuan-denominated opportunities

arose. The purchase of long-term debt from Chinese state-backed companies is a growing portion of the city’s mainland investments. That’s linked largely to the launch of the government’s fiscal reserve, the Monetary Authority of Macau announced yesterday. Mainland securities accounted for 35.4 percent of the market value of all investments outside the territory made by Macau residents, says the 2012 Coordinated Portfolio Investment Survey. Investment in Chinese securities reached 92.7 billion patacas (US$11.6 billion) in 2012, up more than 60 percent on 2011. More on page 3

Land, urban planning laws postponed to March

Galaxy ‘not focused’ on overseas expansion: Lui

Macau competitiveness ranking up: think tank

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Natural gas pipes come to Taipa Hang Seng Index

Macau’s only natural gas distributor has already started laying natural gas pipelines in Taipa, taking advantage of the Light Rapid Transit railway construction works. Nam Kwong Natural Gas Company Ltd executive deputy-general manager Tang Zhaohui said the laying of pipelines is taking place at the railway site near Jockey Club. The pipeline network on Taipa and Coloane should be finished within three years.

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‘More details’ needed on 100m Coloane towers

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June 19

The government is reviewing a plan to build several high-rise apartment blocks of up to 100 metres each, in Coloane, the city’s ‘green lung’. Land, Public Works and Transport Bureau director Jaime Carion said so yesterday. The site’s controller – Hotel Fortuna owner Sio Tak Hong – stated in March: “We have the absolute right to develop the plot and we are determined to carry on with it.” A public debate will be held today in the assembly.

HSI - Movers Name

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Vague labour policy harms creative trades

%Day

CATHAY PAC AIR

0.74

CLP HLDGS LTD

0.55

LI & FUNG LTD

0.54

WHARF HLDG

0.43

GALAXY ENTERTAIN

0.11

NEW WORLD DEV

-2.63

SINO LAND CO

-2.86

COSCO PAC LTD

-2.86

CHINA RES LAND

-3.26

CHINA COAL ENE-H

-3.42

Source: Bloomberg

New small businesses urgently need greater transparency in the city’s labour policy in order to flourish, according to recent start-up Oulala Flower Co Ltd. Representatives from the floral design company made the comments on the sidelines of a seminar held by the France Macau Business Association yesterday. Oulala’s Carole Delavelle said clarity on labour policy would be more effective than subsidies via cheap loans. Page 7

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June 20, 2013

Macau

Natural gas pipes come to Taipa Distribution to Seac Pai Van started in March, will reach Hengqin campus by September Stephanie Lai

sw.lai@macaubusinessdaily.com

acau’s only natural gas distributor has already started laying natural gas pipelines in Taipa, taking advantage of the Light Rapid Transit construction works. Nam Kwong Natural Gas Company Ltd executive deputygeneral manager Tang Zhaohui said the laying of pipelines is taking place at the railway site near Jockey Club. The pipeline network on Taipa and Coloane should be finished within three years, the head of the Office for the Development of the Energy Sector, Arnaldo Santos, said in November. Mr Tang added that the company has almost finished laying the two natural gas pipelines to the University of Macau’s Hengqin campus. They should be ready by September, when the school is set to open, the executive added. The distribution of natural gas to the Seac Pai Van public housing complex in Coloane began at the end of March. Mr Tang told media Nam Kwong is still in talks with the government over the natural gas network for the Macau peninsula. “We are still planning how we can lay the pipelines across the

water [between Macau and Taipa], or whether it is possible to link the pipelines with Gongbei [in Zhuhai],” said Mr Tang. He added that new areas of land reclamation would have natural gas pipelines from the outset. “For the first 10 to 15 years of the contract terms, we hope to provide 87 million to 90 million cubic metres of natural gas to households annually via 70-kilometre-long pipelines throughout Macau,” the executive explained.

Nam Kwong officially opened first operations centre for natural gas distribution

Sinosky plan Nam Kwong has set a budget of at least 1 billion patacas (US$125 million) to lay the major natural gas pipelines throughout Macau within the coming five to 10 years, he said. The company, which is part of the state-owned mainland enterprise Nam Kwong (Group) Co Ltd, officially opened its first operations centre for natural gas distribution in Cotai yesterday. It is near to the facilities of Sinosky Energy (Holdings) Co Ltd, a joint venture between Macau Natural Gas Co Ltd and China Petroleum & Chemical Corp (Sinopec).

Sinosky Energy – the city’s sole natural gas supplier – has repeatedly asked the government to raise the price it can charge under its 15-year concession contract. Currently it is only allowed to charge 2.74 patacas per cubic metre, less than what it pays wholesale to Nam Kwong. The present import price was 4.60 patacas (US$0.58) per cubic metre, the company said in its 2012 annual report. Sinosky Energy reported a loss of 28.63 million patacas last year, bringing its accumulated losses since

it began importing gas in 2008 to 119.5 million patacas. “First Sinosky has to deliver to us a long-term plan on how to ensure a safe and reliable natural gas [supply] to the city; then we will study their proposal” on a price hike, Mr Santos told media yesterday. The official further stressed that he was optimistic that the price of natural gas would remain “competitive” in the local energy market. The retail price of natural gas was set at 5.86 patacas to 6.40 patacas per cubic metre.

No internal probe on Florinda Chan Chief executive noted an internal probe on Chan’s civil servant conduct is not needed Stephanie Lai

sw.lai@macaubusinessdaily.com

he government will not probe the behaviour of Secretary for Administration and Justice Florinda Chan over the perpetual lease of burial plots, Chief Executive Fernando Chui Sai On said yesterday. On Tuesday the Court of Final Appeal ruled there was “insufficient evidence” to charge the secretary for stalling a criminal investigation over a plot leased to one of Ms Chan’s legal advisers. “As you have seen in the Court of Final Appeal’s ruling, Ms Chan has not abused [her] power, forged documents or committed the crime of disobedience,” said Mr Chui. “And for that the MSAR government will respect and obey the court’s decision,” he added. “I will look further into the decision but as I understood we will not have an investigation,” Mr Chui told media. Speaking to media on the sidelines of a public event, the chief executive refused to comment on the impact of the cemetery case on his

administration’s credibility. Last week the Court of First Instance charged Raymond Tam Vai Man and Lei Wai Nong, the president and vice-president of the Civic and Municipal Affairs Bureau, with disobedience for delaying delivery of the documents related to the cemetery case to prosecutors. Mr Tam and Mr Lei are suspended for 90 days starting Tuesday after a government probe concluded they had “violated civil servants’ discipline”. However, the authorities did not disclose whether the suspension was connected to the ongoing court case. The government, however, said the disciplinary procedures will be independent from the Court of First Instance’s trial. “If the court eventually proves that Raymond Tam is innocent, but our administrative probe finds out that he has taken action against the civil servants’ code [of conduct], he will be penalised by the administration,” spokesperson Alexis Tam said last Monday.

June April 20, 19, 2013 2013

Macau

Investors head across border in hunt for higher returns Government survey finds investors are putting away more money than ever before and prefer long-term debt Vítor Quintã

vitorquinta@macaubusinessdaily.com

acau investors rushed to higher-return mainland securities last year as more yuan-denominated opportunities cropped up, an expert told Business Daily yesterday. And long-term debt took a greater share of the total, thanks to the launch of the government’s fiscal reserve, the Monetary Authority of Macau announced yesterday. Mainland securities accounted for 35.4 percent of the market value of all investments made by Macau residents outside the city, according to the 2012 Coordinated Portfolio Investment Survey. The amount invested in mainland securities reached 92.7 billion patacas (US$11.6 billion) by the end of last year, up by more than 60 percent over the previous year. “There was a great pick-up in renminbi investment,” Thomas L.K. Vong, from the Monetary Authority’s Research and Statistics Department, told Business Daily. Thanks to the central government’s measures to turn yuan into an international currency, “there are now many more investment opportunities in renminbi than before,” Mr Vong said. Macau investors are also taking a change on the yuan further appreciating, the researcher said. The mainland currency strengthened 1.7 percent against the pataca last year. In 2010, at about the same time as China became the world’s second biggest economy, mainland securities overtook Hong Kong securities for the first time as the preferred destination for Macau investment.

Mainland provinces to decide on Macau-funded clinics

acau companies will be allowed to set up whollyowned hospitals or clinics in mainland Chinese without having to get approval from China’s health regulator. Provincial-level health authorities will have the authority to approve the setting up of hospitals solely funded by Hong Kong, Macau and Taiwan investors, the National Health and Family Planning Commission announced yesterday. Moreover, outside medical groups seeking to conduct short-term medical treatments in the mainland will only need approval from municipalitylevel government agencies, instead of from the commission, it added.

Macau residents invested more in mainland China securities than in Hong Kong ones last year

But the following year mainland securities fell back to second spot behind Hong Kong was viewed as a safer destination for investors.

Europe surprise The survey said Hong Kong securities saw their share fall from 37.8 percent to 32.5 percent. The value of those holdings grew by almost one-third to 85.1 billion patacas. Overseas investment by Macau

Service providers based here were first allowed to open up clinics in Guangdong in May 2010. But by December 2011 only one Macau wholly-owned clinic had opened doors in the province, Fong Chio Man, from the Guangdong Provincial Health Department, said at the time. The State Council, or China’s cabinet, recently approved the commission’s new institutional structure and duties, state news agency Xinhua reported. The move is part of Beijing’s cabinet reshuffle plan announced in March, during the National People’s Congress, amid a pledge to crack down on safety violations and better protect consumers. The food and drug regulator was elevated to a ministry-level body with broader powers to oversee the safety and effectiveness of food and drugs produced, distributed and consumed in China. The country has recently faced safety scares ranging from tainted milk to fake medicines and chicken meat with excessive levels of antibiotics. V.Q.

residents has been setting new records every year since the global financial crisis. At the end of last year, it amounted to 261.8 billion patacas, up by more than half from a year before. And most markets benefited from Macau’s appetite for equities, including recession-hit Europe. Despite the sovereign debt crises the amount invested in European securities surged by almost a third to 37.3 billion patacas. Mr Vong admitted the increase was unexpected: “Normally we would see a reduction in the market share; that would reflect the market sentiment.” The monetary authority report linked this “consistent growth” to “some European countries’ status as popular jurisdictions for incorporation of multinational enterprises and investment funds”. Low-tax Luxembourg took the biggest share among all European countries, with its market value rising by 26.5 percent year-on-year to 8.5 billion patacas. On the other hand, investment in the United Kingdom stood at 8.3 billion patacas at the end of last year, sliding 7.1 percent from a year earlier. Portugal and Spain securities also saw investment drop by 17 percent and 22.4 percent respectively.

Long-term reserve The launch of the government’s fiscal reserve in February last year boosted investment in long-term debt securities. The amount invested in long-term debt more than doubled to 117.5 billion patacas. As a result, long-term debt accounted for 44.9 percent of external portfolio investment by residents, 12.8 percentage points more than a year before. “We have a huge reserve, which is mainly invested on a long-term

basis,” Mr Vong stressed. “We don’t take too much risk in our investment.” Macau’s fiscal reserve contained 100.24 billion patacas in December. Most of the long-term debt investment went, for the first time since the Monetary Authority of Macau survey’s inception in 2001, towards securities issued by entities in the mainland. Investment in Chinese longterm debt soared almost eight-fold to 59.4 billion patacas to secure a 50.5-percent share. Investment in securities issued by entities in Hong Kong rose just 24.6 percent. Meanwhile investment in equities – including mutual funds and investment trust units – reached 133 billion patacas, up by a quarter from 2011. But its market share fell from almost two-thirds to 50.8 percent. Investment in short-term debt securities grew by 44.9 percent to 12.3 billion patacas. Most of this figure (76.5 percent) was held in mainland bonds, as banks, Macau’s biggest investors in short-term debt, went back to the market in the hunt for public bonds.

KEY POINTS More money going into yuan assets New record for investment overseas European recession does not scare investors Fiscal reserve boost long-term debt outlay

June 20, 2013

Macau

Coloane developer asked by govt for more details The government is reviewing a plan to build high-rise luxury flats in city’s ‘green lung’ Tony Lai tony.lai@macaubusinessdaily.com

had “a much wider reach”. The development site is controlled by Capital Estate Ltd chairman and Hotel Fortuna owner Sio Tak Hong. There has been a public outcry about the projected 100-metre height of the towers and the impact the building could have on the environment. The assembly is today planning to debate development in Coloane. The high-rise project will also be discussed. The debate was requested by two New Macau Association members of the Legislative Assembly in the wake of the controversy the project has caused.

First phase

The project led by Sio Tak Hong meets the requirements for the area, says Jaime Carion

he developer of a proposed high-rise housing project in Coloane has to satisfy the doubts of four government departments before construction can move forward. Land, Public Works and Transport Bureau director Jaime Carion told reporters yesterday it was “still reviewing” the plan submitted by Hong Kong’s Win Loyal Development Ltd in February.

“But we still do not have any final decision because other public bodies have requested more information to better analyse [the project],” he said on the sidelines of a Legislative Assembly committee meeting. “We are going to send an official letter to the developer asking it to submit more information and files based on the requests from other government departments.” The bureau has previously asked

opinions from the Environmental Protection Bureau, the Civic and Municipal Affairs Bureau, the Cultural Affairs Bureau and the Transport Bureau, which handles the development of the city’s road network and traffic. Environmental Protection Bureau director Cheong Sio Kei said earlier this month the project’s environmental impact assessment was not good enough and should have

Win Loyal’s development includes 100-metre-high towers with a gross floor area eight-times bigger than the 56,500-square-metre site – the maximum allowed in the street alignment map, Mr Carion said. He declined to say if the government would approve the plan as it is. The bureau had to listen to the opinions of other public bodies but the plan “meets the street alignment map after an initial analysis”, he said. The government-issued street alignment map determines the construction area, height and storey limit, access, urban constraints and public equipment of a project to be built. Mr Sio said in March they would build several residential tower blocks, each 20 to 30 storeys high, containing about 2,000 upmarket flats on the site. “We have the absolute right to develop the plot and we are determined to carry on with it,” he said in March. There have been concerns that building works going on in the area were linked to the housing development. But Mr Carion said yesterday that construction was linked to the renovation of an existing public rehabilitation centre for patients with infectious diseases. It will not rise above the limit of 90 metres above sea level. Mr Carion said the Win Loyal project was only “at the first stage”. If the architectural project was approved, the developer had to submit a construction plan before any work begins. Asked if the development might have to meet the urban planning law, which is likely to be approved soon, Mr Carion said: “I do not want to comment at this moment as we still need to attend the assembly debate tomorrow [today].”

Changed land law delayed until March

he land law revision will come into force later than planned, so that it takes effect at the same time as the urban planning law. Ms Kwan Tsui Hang, the president of the Legislative Assembly’s first standing committee, said the law was tentatively scheduled to come into effect “on March 1 next year”. But she said any debate would be concluded in this legislative term, ending in August. “We have made this adjustment because, from the government’s perspective, they do not want the land law to come into force before the urban planning law,” she said after an assembly session yesterday. The land law revision includes

dozens of updates and amendments to the existing law. The review began in 2008 and it was hoped that the bill would become law this year. The government wants both bills to come into force on the same day so there “is a period of time” for the two laws to “fit together” after being approved by legislators, Ms Kwan said. The assembly aims to rush through both bills by the middle of August. She said any grant of land for development would have to meet the terms set in both bills. Yesterday’s meeting added two new provisions to the land law bill. The provisions require the

Land law revisions mean the government must follow up on how land is being used

government reviews the use of land that has already been leased and to ensure the stability of land grants made before this revision. Ms Kwan’s committee is scheduled to meet the assembly’s second

standing committee tomorrow. Talks with the committee in charge of the urban planning law will centre on compensation provisions for land owners. T.L.

June 20, 2013

Macau

Galaxy ‘not focused’ on overseas expansion: Lui Casino firm confident Macau’s ‘miracle’ performance of past ten years will continue Michael Grimes

michael.grimes@macaubusinessdaily.com

asino developer Galaxy Entertainment Group Ltd is not focused on overseas expansion because it is so bullish about Macau, said the firm’s vice chairman Francis Lui Yiu Tung in an interview with Reuters. “What we have seen in Macau in the last ten years has been a miracle … certainly I think this is just the beginning,” stated Mr Lui. Earlier this month it was confirmed Galaxy is to buy Grand Waldo – a Cotai casino hotel operating on a Galaxy gaming licence – for HK$3.25 billion (US$419 million). The property sits next door to Galaxy’s flagship Galaxy Macau resort. The Reuters report referred to Grand Waldo being ‘revamped’. Some analysts have told Business Daily privately the true value of Grand Waldo is as a land bank to add to the contiguous 440,248 square metres (4.7 million sq. feet) of land Galaxy

Miracle workers – crowds at Galaxy Macau

already controls on Cotai through a combination of a direct government land concession and a land swap deal with Hong Kong developer Kerry Properties Ltd. Th e co m p a n y co n fi r m ed to

Computer crime cases up by half C ases under investigation involving computer crime have risen by 55 percent year-on-year in the first five months of 2013 said the Public Prosecutions Office. A press statement yesterday said the office opened 78 cases during the period. “…one involves the usage of computer facilities to carry out cheats in several casinos and there are 17 suspects in total waiting for trial,

which is rare over the years [in terms of the scale],” the statement said. But the office did not reveal further details of this case. It blamed the surge in computer crimes on “the rapid development of technology” and “the rising prevalence of computers and [the] Internet”. The prosecutions office called for better definition of computers and better definition of investigation procedures under existing laws, in order to help it tackle the problem.

Adelson may be called pre-trial in Jacobs lawsuit L

awyers for former Sands China Ltd chief executive Steve Jacobs are to call Las Vegas Sands Corp chairman Sheldon Adelson to testify in a pre-trial hearing, reports the Las Vegas Review-Journal. The newspaper says that a week long process is due to start on July 16 in Clark County District Court, Las Vegas. It will decide where Mr Jacobs’ wrongful termination lawsuit – stemming from his July 2010 dismissal as head of LVS’s Macau operations –

Sheldon Adelson, left, and Steve Jacobs

should be heard. Mr Jacobs is said to want the trial proper to stay in Nevada. Attorneys for the casino operator and developer say jurisdiction belongs on Chinese soil, on the basis that Sands China Ltd oversees Macau operations and is listed in Hong Kong. District Judge Elizabeth Gonzalez will adjudicate on the matter, the paper said. The Nevada Supreme Court ruled that jurisdiction must be decided before a full trial can go ahead.

Business Daily that Grand Waldo currently has a gross floor area of 1.5 million square feet (139,354 sq. ms). The Reuters interview with Mr Lui also indirectly quoted him saying the firm was looking at projects such

as ‘sports stadiums, golf [courses] and a marina’ on the mainland’s Hengqin Island next door to Macau – to complement Galaxy’s gaming operation in Macau. A yacht marina aimed at bringing in wealthy visitors to Macau was also mentioned this week in Macau Legend Development Ltd’s plans for the redevelopment of Fisherman’s Wharf on Macau peninsula. Hengqin is 100 square kilometres in area – three times the size of Macau – and part of Zhuhai prefecture on the mainland. Although gaming is not allowed there, it is only 200 metres away from Cotai via the Lotus Bridge border crossing. Hengqin also has special economic zone status from the central government, and the potential to be a major feeder area of new customers to Macau’s casino resorts. Galaxy has previously confirmed that it is seeking to acquire land on Hengqin. Multiple non-gaming resorts are being planned for the island. One, Chimelong, could eventually have capacity for 10 million visitors per year – equivalent to nearly a third of Macau’s 2012 tally of 28 million visitors. Reuters reported Mr Lui saying the development of Hengqin Island over the next few years would be a “game changer” for Macau. In May, at the Global Gaming Expo Asia 2013 conference in Macau, Robert Drake, the firm’s chief financial officer, said: “…we believe what we can develop on Hengqin Island will be very complementary – whether it’s a golf club, a golf resort, golf course or other amenities that are complementary to what we do here [in Macau].”

June 20, 2013 April 19, 2013

Macau

Macau’s competitiveness ranking improves City in 13th place in Greater China but only half the marks of Guangdong at the top Tony Lai

tony.lai@macaubusinessdaily.com

acau Special Administrative Region has become more competitive among its provincial peers in the Greater China region this year, according to a survey by a Hong Kong-based

think tank. Overall, Macau rose to 13th spot from 16th last year in the study by the China Institute of City Competitiveness. The city was ranked second for trustworthy

government after falling out of the top 10 in that category last year. The reason it slipped out in 2012 was the third trial for corruption of former Secretary for Transport and Public Works Ao Man Long.

Macau – not so attractive to investors

It remains to be seen whether the 90-day suspensions from office handed down on Tuesday to public servants Raymond Tam Vai Man and Lei Wai Nong of the Civic and Municipal Affairs Bureau – in connection with the suspicious lease of ten burial plots – will affect Macau’s 2014 ‘trustworthiness’ ranking. This year Macau fell out of the institute’s top ten when ranked by the effectiveness of its government and by the city’s appeal to investors. The study also indicates Macau has the potential to improve its competitiveness ranking in coming years. Macau was identified in the report as the 10th wealthiest city in Greater China, thanks to “the entertainment industry”. Macau scored 15,364 points this year for overall competitiveness judged by factors including growth potential, livability, innovation,

economic and social development, and culture. But the mark was only half the 30,900 points achieved by Guangdong province – the top placed jurisdiction. The National Bureau of Statistics ranked Guangdong first last year among the mainland’s 31 administrative divisions when judged by gross domestic product. On a GDP per head basis, Tianjin – with a much smaller population – came first said the bureau. The institute’s rankings cover 34 administrative divisions including the SARs and Taiwan, and have been compiled for the past 12 years. The body is made up of scholars from the Greater China region. A competitiveness study released last month by the Chinese Academy of Social Sciences suggests Macau’s competitiveness rose by three places to 10th among all Chinese cities.

Chow Tai Fook jumps on outlook Jeweller sees ‘gradual signs’ of recovery, says chairman

how Tai Fook Jewellery Group Ltd, the world’s largest listed jewellery chain, rose the most in more than seven months in Hong Kong trading after saying it sees signs of improving demand. Chow Tai Fook jumped as much as 5.7 percent to HK$9.15 (US$1.18) before closing at HK$8.86, up 2.3 percent. Shares of the company have lost 28 percent this year. The jeweller sees “gradual signs” of recovery even as the macro-

economic environment remains uncertain, it said in a statement after the market’s close on Tuesday. The world’s largest listed jewellery chain reported a 13 percent decline in profit for the 12 months ended in March. Revenue rose just 1.5 percent to HK$57.4 billion (US$7.4 billion). “Consumers were more cautious in spending in view of the unfavourable economic environment,” the company said. Mainland visitors to Macau and Hong Kong are also being more cautious and shifting their views to cheaper jewellery, Chow Tai Fook said. Macau, Hong Kong and other Asian markets accounted for almost half of the group’s total revenue, amounting to HK$27.1 billion, up by 10.5 percent year-on-year. Chow Tai Fook expects sales to climb in the “double digits” this fiscal year, chairman Henry Cheng said on a video conference, beating the 1.5 percent growth in the 12 months ended March 31. “We expect first quarter to be very strong given a spike in sales following the drop in gold prices in April,” Aaron Fischer, a Hong Kong-based analyst at CLSA AsiaPacific Markets, wrote in a research note yesterday. The brokerage raised its rating on the stock to buy from outperform, and has a 12-month price estimate of HK$10.80. Retail sales of gold across China

Jewellery plans to add 200 outlets this year

tripled April 15-16 as the metal fell, according to the China Gold Association. Chow Tai Fook outlets had to be restocked over the period because of increased demand, according to the company. The jeweller’s nine factories produced about 1.2 million pieces of pure gold products in April, double the monthly average of 600,000, it said. About 57 percent of the company’s revenue came from gold products in the year ended March 31, according to data compiled by Bloomberg. The company said sales rose 1.5 percent to HK$57.4 billion, coming

under pressure from “declining confidence of domestic consumers,” and slower economic growth. “It’s not unrealistic to expect our compound annual sales growth to be more than 20 percent for the next three years,” Mr Cheng said on the video conference from Beijing. “We’ve seen signs of a recovery and we’ll have a lower base year.” The jeweller plans to add 200 outlets this year, managing director Kent Wong said at a briefing in Hong Kong. It aims to have 2,000 stores by the end of 2014, an increase from 1,731 outlets as of March 31. T.A. with Bloomberg News

June April 20, 19, 2013 2013

Macau

Vague labour policy harms creative trades

some more flexibility in the system.” On Tuesday, Macau Economic Services director Sou Tim Peng said applications for interest-free loans aimed at young entrepreneurs could open as soon as next month. The scheme provides successful applicants a loan of up to 300,000 patacas (US$37,500) to start their first business. The scheme is open to permanent residents aged between 21 and 44 who have their business plan approved by an evaluation committee. “It’s very good, I mean, that Macau has the chance to give money to people who want to build something,” said Ms Gandilhon. “In France, the problem is that people haven’t got any money to start something, though they have ideas. “In Macau, it’s the flip-flop opposite. If there was a better labour policy, it could work for people coming from other countries and bringing new skills here. “And then the government’s monetary assistance could be used more efficiently.” Oulala’s owners have faced unexplained delays of up to six months when trying to renew their temporary residency permits. “When you bring your heart and all your energy to a company or a long-term project here, it’s always hard to feel that you are a foreigner to the place,” said Ms Gandilhon. “And you always have this feeling that next year your residency permit could be cancelled and you may have to leave Macau within 10 days. That’s really frustrating and stressful.”

Government should be more flexible in admitting overseas skilled workers so businesses can blossom, says florist Stephanie Lai

sw.lai@macaubusinessdaily.com

Oulala opened in 2010 and would like to expand but finding the right staff is proving difficult

tart-up companies urgently need greater transparency in official labour policy, according to Oulala Flower Co Ltd.

Spokespeople from the floral design company made the comments on the sidelines of a seminar held by the France Macau Business

Association yesterday. Designer Carole Delavelle said any clarity on the policy for importing workers would be far more effective in encouraging young businesses than giving money in the form of cheap loans. Oulala set up in Macau in 2010 with the aim of providing flowers for events, at a time when most of the city’s florists were focused on bouquets for private occasions. The company has been forced to work around a shortage of skilled labour and high staff turnover since it opened its doors. Ms Delavelle said the company has two resident workers helping run its daily operations. But creative director Aurélie Gandilhon said the ideal situation would be to hire two more employees with Chinese language skills to help with marketing. “I understand that we have to hire locals,” said Ms Gandilhon. “But after a certain point we will need

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June 20, 2013 April 19, 2013

Greater China Xi pledges party cleanup Chinese President Xi Jinping pledged a “thorough cleanup” of the ruling Communist Party as part of a yearlong campaign aimed at ridding its ranks of formalism, bureaucracy and extravagance. The campaign will focus on party agencies and officials at or above the county level, who will be required to reflect on their own behaviour and correct any misconduct, the official Xinhua News Agency reported, citing Mr Xi’s remarks at a conference on Tuesday. The Communist Party can only be stable when it has “a single mind” and shares the joys and woes of the people, he was quoted as saying at the meeting, also attended by the other six members of the Politburo Standing Committee, China’s top decision-making body. “Winning or losing public support is an issue that concerns the CPC’s survival or extinction,” Mr Xi was quoted as saying. Since becoming head of the Communist Party in November and President in March, Mr Xi has vowed to combat official corruption and cut lavish spending by officials and state-owned companies.

PBOC sacrifices growth as bank curbs invert swaps China’s interest-rate traders are the most pessimistic on economic growth in 21 months, as Fitch Ratings says policy makers are focused on fixing the nation’s banks to avert an industry crisis. “The PBOC is doing the opposite of what the banks were hoping it would do,” said Ju Wang, a senior strategist at HSBC Holdings Plc in Hong Kong. “It is focusing on cleaning up the banks’ balance sheets and the financial system in spite of the liquidity squeeze.” An inverted swap curve is a further sign of waning confidence about the prospects for the world’s second-largest economy, after Goldman Sachs Group Inc., Morgan Stanley and UBS AG cut their 2013 growth forecasts. A report on Tuesday showed property prices are defying government lending curbs and Fitch said the cash shortage reflects a crackdown on shadow banking that will slow expansion. “We are going to have banking sector problems,” Charlene Chu, Fitch’s head of China financial institutions, said in a Bloomberg Television interview. “Those can manifest either in a crisis or they can manifest in slow growth.” PBOC Governor Zhou Xiaochuan said in April that the nation needs to “sacrifice short-term growth” to make reforms in the economy.

HK expands rate-rigging probe Monetary authority scans ‘millions of messages’

ong Kong’s central bank extended its investigation of possible misconduct in setting the city’s benchmark interest rates to HSBC Holdings Plc and other lenders after crackdowns by the U.S., U.K., Japan and Singapore. The Hong Kong Monetary Authority’s probe, which started with UBS AG in December and has since been widened to “a number” of banks, is continuing, the central bank said in an e-mailed statement. HKMA said it asked London-based HSBC, whose shares are listed in Hong Kong, to “promptly implement” remedial measures required by Singapore’s central bank last week following a similar probe in the city-state. The review of banks setting the Hong Kong Interbank Offered Rate and other benchmarks comes amid increased global scrutiny of data submitted for key rates. Singapore last week censured 20 banks for trying to rig its rates and ordered them to set aside as much as S$12 billion ($9.5 billion) pending improvements in their controls. The U.K.’s regulator began looking into the currency market after Bloomberg News reported that traders had manipulated rates. “HSBC is the largest bank in Hong Kong and the largest participant in the interbank activity, that’s why HKMA names HSBC, but that doesn’t mean it has a lot of problems,” said Steven Chan, a Hong Kong-based analyst at Citic Securities International Co.

“HKMA perceives themselves as the most prudent supervisor in the world, so they have to do something.”

‘Millions of messages’ The HKMA’s investigation has included “millions of communication messages records” so far, according to the statement, which signalled that the probe may take a year because of the number of documents being reviewed. The regulator said in December it will also consider whether any potential misconduct may have had a material impact on the rate. About HK$1.9 billion (US$245 million) of new mortgage loans approved in April were pegged to Hibor, as the Hong Kong interbank offered rate is known, or 11.8 percent of the total, according to data posted on the HKMA website. A year earlier, HK$1.2 billion, or 4.9 percent of new home loans, were tied to Hibor, the data show. Adam Harper, a spokesman for HSBC in Hong Kong, declined to comment on the HKMA statement. Europe’s largest bank, which was founded in Hong Kong and Shanghai in 1865, was required by British regulators to move its headquarters to London from Hong Kong in 1992 following its Midland Bank Plc purchase as part of a push westward. Shares of HSBC rose 2.1 percent in London trading on Tuesday. The stock fell 0.48 percent to HK$83.65 in Hong Kong yesterday, paring its

gains over the past year to 25 percent. The regulator said it began its probe into Zurich-based UBS after overseas regulators alerted the HKMA about potential rate manipulation. Preliminary information provided by one foreign regulator indicated that employees were responsible for the potential misconduct, rather than the bank’s systems, HKMA deputy chief executive Arthur Yuen said in December. Hibor is based on an average of 14 quotes submitted by 20 banks including BOC Hong Kong Holdings Ltd, HSBC and Standard Chartered Plc, according to the

KEY POINTS Millions of documents being reviewed HSBC asked to implement remedial measures Lender is the largest participant in interbank activity HK$1.9 bln of new mortgage loans in April pegged to Hibor

Wanda to buy U.K. yacht maker and hotel Billionaire invests US$1.6 billion in London land and boats

Mengniu surges to 5-year high China Mengniu Dairy Co Ltd soared to the highest level in more than five years in Hong Kong trading after the country’s largest dairy producer offered HK$12.5 billion (US$1.6 billion) to buy a local infant-formula maker. Mengniu rose as much as 6.89 percent to close at HK$28.70, the highest close since January 2008. Yashili International Holdings Ltd, the acquisition target, gained 3 percent while the city’s benchmark Hang Seng Index fell 1.13 percent. The two companies resumed trading yesterday after the shares were halted since June 13. Mengniu agreed to buy 75 percent of Yashili from chairman Zhang Lidian’s family and Carlyle Group, it said in a statement on Tuesday. It will also offer to buy the rest of the company for HK$3.50 a share in cash, or about 5 percent more than Yashili’s June 13 closing price. Yashili should lift Mengniu’s 2014 earnings per share by 7 percent to 17 percent as it will help “rapid expansion into the fast-growing milk powder segment,” Kevin Yin, a Credit Suisse analyst, said in a note to clients yesterday. He maintains an outperform, or buy, rating on Mengniu.

Sunseeker sold about 190 boats in Asia in the past decade

alian Wanda Group, the Chinese developer controlled by billionaire Wang Jianlin, is investing 1 billion pounds (US$1.6 billion) in a British yachtmaker and a London site to build Western Europe’s tallest residential tower. Wanda will spend 700 million pounds on a 62-story luxury hotel and apartment building on the land on the South Banks of the Thames. It

also agreed to pay 320 million pounds to buy 92 percent of Sunseeker International Ltd whose yachts have been featured in James Bond movies, it said in a statement yesterday. “The bigger Chinese developers need to develop overseas markets as their domestic expansion is limited by the property curbs” on residential homes, said Zuo Hongying, a Shanghai-based analyst at AJ

Securities Co. “And they’re fairly cash-rich.” London has emerged as a haven for foreign wealth, with the pound’s decline attracting investors from Malaysia to Russia to developments like Battersea Power Station, where about half of the project’s apartments have been sold in overseas markets. Chinese developers, including China Vanke Co, are also expanding

June April 20, 19, 2013 2013

Greater China IPO resumption only after rules take effect Regulator seeking public feedback until tomorrow, says official

HSBC added to HKMA’s investigation

Hong Kong Association of Banks’ website. The three highest and three lowest submissions are excluded from the average. In February, Hong Kong’s central bank moved administration of interbank lending rates in the city

to the Treasury Markets Association from the banks’ lobbying group. Other measures included a decision to review the list of reference banks that submit Hibor rates every year, instead of every two years.

overseas to take advantage of demand for real estate abroad from increasingly rich nationals. Wanda will erect the tallest residential building in Western Europe, at 205 meters (673 feet), on the site upstream from the Houses of Parliament, Stephen Vernon, executive chairman of Green Properties, the seller of the site, said in an interview yesterday. It is in one of the clusters where tall buildings can be constructed in the city in an area called Nine Elms, he said. Western Europe’s tallest residential tower is the 190-meter HSB Turning Torso in Malmo, Sweden, according to the Skyscraper Centre website of the Council of Tall Buildings and Urban Habitat.

Wanda decided to buy Sunseeker because it is building three yacht clubs in China and each needs at least 10 yachts, Mr Wang said. Sunseeker sold about 190 boats in Asia, excluding Australia, in the past decade, with more than 60 percent of the purchases coming from China including Hong Kong, Gordon Hui, chairman of Sunseeker Asia said in an interview this month. A lowest-priced Portofino 40 cruiser costs about five million yuan (US$815,000) and the most expensive model costs as much as 230 million yuan, Mr Hui said. Wanda, which last year bought U.S. cinema chain AMC Entertainment Holdings Inc. for US$2.6 billion, is among Chinese companies seeking acquisitions overseas to gain foreign expertise, brands and technology.

Luxury hotels The number of millionaires in China has climbed 4 percent from 12 months earlier to 2.8 million, according to the Hurun Research Institute’s findings this year. “Chinese consumption, particularly high-end consumption is booming,” Mr Wang told reporters in Beijing. Five of six private jets at a General Dynamics Corp Gulfstream factory in the U.S., where Wanda bought a plane last year, were earmarked for China, he added. Wanda plans to expand its investment in the U.K. and build luxury hotels in eight to 10 cities globally, Mr Wang said. The company may announce more overseas investments next year, and investors will have a chance to buy Wanda shares in future, he said, without giving a time period for an initial public offering of the closely held company.

Bloomberg News

The bigger Chinese developers need to develop overseas markets as their domestic expansion is limited by the property curbs Zuo Hongying, AJ Securities Co

hina will allow initial public offerings only after new rules aimed at boosting protection for investors go into effect, a China Securities Regulatory Commission official with knowledge of the matter said. Companies that have already been cleared by the regulator in a listing hearing will be allowed to proceed with their share sales if they fulfil the new requirements, said the official, who asked not to be identified because he wasn’t authorised to speak publicly about the matter. The regulator is seeking public feedback on the proposed rules until tomorrow. Chairman Xiao Gang, who took the helm at the regulator in March, is extending predecessor Guo Shuqing’s measures to combat fraud in capital markets by cracking down on brokerages that fail to properly review clients’ filings. The CSRC has also been auditing offer documents since December after initially stopping IPO approvals in October as the benchmark stock index fell more than 5 percent in the first nine months of 2012. “The resumption of the IPO market will definitely be positive to brokerages,” said Niu Bokun, an analyst at Hua Chuang Securities Co in Beijing. “Revenue from underwriting business has dropped sharply since the IPO suspension.” The number of Chinese companies seeking to sell shares in IPOs had climbed to more than 800 in December, according to data from the CSRC. About 80 of those companies had cleared the listing hearing as of June 7, according to the regulator. The CSRC will probably resume approving IPOs at the end of July, Reuters reported on Tuesday, citing

unidentified people present at an industry meeting with the regulator.

Sale restrictions The securities regulator plans to restrict companies and their major stakeholders from selling stock below the initial public offering price for two years after the lock-up period ends, according to the proposed rules posted on the CSRC’s website earlier this month. Issuers may be required to prepare and disclose plans to stabilise share prices that fall below the net asset values within five years of their trading debut, the draft requirements show. IPO underwriters may also face greater scrutiny under the proposal. If a company reports a net loss or a profit drop of more than 50 percent in the same year as its IPO, the securities regulator will stop reviewing any applications submitted by the investment bank that advised it for an unspecified period of time, according to the draft rules. “The new rules focus more on letting market forces play a bigger role in improving the quality of company disclosures,” said Ms Niu. The securities watchdog has stepped up enforcement of regulations since Mr Xiao took office in March by rebuking or punishing at least three brokerages for inadequate due diligence on IPOs. It fined Ping An Securities Co and barred the firm from underwriting operations for three months, while Minsheng Securities Co was given a warning and fined. Nanjing Securities Co was censured, and bankers at all three firms were barred from the securities industry for life last month.

800

Number of Chinese companies seeking to sell shares as of December

Bloomberg News

10 10

June 20, 2013 April 19, 2013

Asia Genting lifts stake in Echo Malaysian gambling giant Genting Bhd has increased its stake in Australia’s Echo Entertainment Group, just weeks after rival casino company Crown Ltd sold its 10 percent stake in Echo. Genting raised its stake in Echo to 6.6 percent from 5.22 percent via its Genting Hong Kong Ltd unit, according to a regulatory filing. Financial details were not disclosed. The increase comes as Crown and Echo wage an increasingly acrimonious war to gain a lock in Sydney on gambling tourists from mainland China. Echo, which holds the sole licence to operate a casino in the harbourside city until 2019, is lobbying for an extension of that exclusivity and an expansion of its Star Casino in an attempt to block Crown’s plans for a high-roller gambling suite. Crown’s proposed VIP facility is part of a A$1 billion (US$957.35 million) six-star hotel and residential development on Sydney’s waterfront that majority owner, billionaire James Packer, has said will bring “thousands more Chinese tourists to Sydney that otherwise wouldn’t visit”. Crown and Echo must submit proposals by June 21 and the government will approve only one, meaning either Crown builds a second casino or Echo remains the sole gambling operator.

Singapore concerned over air pollution Singapore expressed “concerns” to Indonesia after forest fires in the Indonesian island of Sumatra enshrouded parts of Malaysia and the city-state, causing its worst smog in 16 years. Singapore’s Foreign Affairs and Law Minister K. Shanmugam emphasised the urgency of the situation and the country’s commitment to help fight the fires in Sumatra. Singapore’s pollution index reached 155 on June 17, the worst level since 1997 when it reached 226, according to the Straits Times. The two ministers asked the Indonesian government to share the names of the errant companies involved in “illegal burning, though primary responsibility to take legal and enforcement actions against these companies lies with Indonesia as they have clearly violated Indonesian laws within Indonesian jurisdiction,” the Singapore government said. The fires hit a peak in 1997, when haze cost the economies of Indonesia, Malaysia and Singapore an estimated US$3.5 billion, based on figures published in a report by the Center for International Forestry Research in Bogor, Indonesia showed. The current smog could hurt the city-state’s services industry, according to Wai Ho Leong, an economist at Barclays Plc in Singapore.

Indonesia fund sees opportunity in stock slump PT Jamsostek, Indonesia’s biggest pension fund, said the nation’s benchmark stock index will extend losses, giving the manager an opportunity to boost equity holdings amid optimism about the country’s economic growth. There will be short-term volatility and further declines in the Jakarta Composite Index, which lost as much as 12 percent after reaching a record on May 20, before the market resumes its climb, Jamsostek director Elvyn Masassya said. Foreign investors sold a net US$2 billion of Indonesian equities since last month’s peak, wiping out almost US$40 billion of the stock market’s value. Jamsostek, which manages 144.2 trillion rupiah (US$14.6 billion), has been buying shares over the past three weeks and increased the proportion of funds invested in equities to 19 percent from 18 percent at the end of May, according to Mr Masassya. “The turbulence will still be there because some stocks are not cheap enough,” Mr Masassya said. The Jakarta index “will stabilise” when it trades at 12 times to 13 times estimated earnings, he said. The gauge was valued at 14 times profit at the end of trading yesterday.

Dish decides against raising Sprint offer Door open for SoftBank to proceed with deal

ish Network Corp won’t make a new offer for Sprint Nextel Corp by the mobile-phone carrier’s deadline, leaving SoftBank Corp as the main contender to acquire the wireless company. Sprint’s actions “have made it impracticable for Dish to submit a revised offer by the June 18th deadline,” Dish said in a statement. “We will consider our options with respect to Sprint” while focusing on a separate offer for Clearwire Corp, Dish said. Dish said it would abandon the offer even though it “continues to see strategic value in a merger with Sprint”. The company said it would consider its options with respect to Sprint without providing further details. While missing the deadline would make it more complicated for Dish to make a new offer, in theory Sprint would have to consider any new offers it gets ahead of a June 25 shareholder vote on the SoftBank deal. The Dish decision was the latest turn in a takeover battle that started on April 15 when Dish, led by its chairman and founder, Charlie Ergen, offered to buy Sprint for US$25.5 billion in a challenge to SoftBank.

Known for his aggressive tactics in deal-making, Mr Ergen is looking to expand into the wireless market as Dish’s traditional pay-TV business has been maturing. SoftBank is controlled by billionaire founder Masayoshi Son, who is known as a risk-taker despite his country’s normally cautious corporate culture. If SoftBank succeeds in buying Sprint, it would rank as the largest overseas acquisition by a Japanese company. After Sprint shareholders said

US$21.6 bln SoftBank will pay for a 78-pct stake in Sprint

they preferred Dish’s offer, SoftBank was forced to raise its bid for Sprint on June 10 to US$21.6 billion from its previous offer of US$20.1 billion. The revised deal would give SoftBank 78 percent ownership of Sprint compared with a 70 percent stake under its earlier offer.

Shareholder vote Sprint accepted the latest SoftBank offer as it provides shareholders with more cash than the previous agreement. Sprint shareholders are due to vote on Sprint’s agreement with SoftBank at a June 25 meeting. While SoftBank’s latest offer is an improvement for shareholders, it provides US$3 billion less direct capital investment in Sprint itself than the previous offer. New Street analyst Jonathan Chaplin said in a research note on Tuesday that he believes SoftBank will make large capital investments in Sprint after the deal is done. Paulson & Co, Sprint’s secondbiggest shareholder, has already said it would vote for the latest SoftBank deal but other Sprint shareholders have said they wanted to hear Mr Ergen’s response before making a

Investors keep faith with Asia growth Business sentiment rises but global growth risk remains Miyoung Kim

sia’s top companies have become more optimistic about their business outlook with the retail and shipping industries rebounding sharply in the second quarter of 2013, the latest Thomson Reuters/INSEAD Asia Business

Sentiment Survey shows. The Thomson Reuters/INSEAD Asia Business Sentiment Index climbed six points to 71 in June, its highest level in five quarters and the third consecutive quarterly rise. A reading above 50 indicates a

generally positive outlook. Global economic uncertainty remains the biggest business risk across most countries and sectors, but 44 percent of the 91 companies that participated in the poll are now positive about their outlook, up from 30 percent in the prior quarter. Corporate sentiment in China, the world’s second-largest economy, remained unchanged at its record low of 50 as companies worried about rising costs and global economic uncertainty. “If you go back a year ago, there is a lot of concern about the global economy – a hard landing in China, a collapse in Europe, and double dip in the U.S. Some of those fears are still around, but they have certainly faded over the course of last year,” said Shane Oliver, chief economist at AMP Capital Investors in Sydney. “So whilst companies in Asia still worry about China, it’s about whether the growth is 7.5 percent or 7.8. Some of the more extreme fears that were seen a year ago continue to fade, showing a gradual pick-up in company optimism.”

Japan rising India business sentiment at three-year low

Corporate sentiment in Japan showed solid improvement with the

11 11

June April 20, 19, 2013 2013

Asia

Philippine stocks cheapest since 2011 Money managers switching out of bonds to buy equities

Sprint shareholders to vote on June 25

decision on the latest bid. SoftBank shares rose 4.20 percent in Tokyo to 5,460 yen (US$57.5) following the announcement. Along with shareholder support, SoftBank still also needs approval for the deal from the U.S. telecommunications regulator, the Federal Communications Commission. The Japanese mobile operator still expects to be able to close its deal with Sprint in early July, a SoftBank representative said. Sprint declined to comment on the Dish statement. Dish said that it was unable to meet Sprint’s deadline because of changes the wireless company made in its agreement with SoftBank, such

as higher break-up fees that raised the hurdles for a Dish deal. But even if SoftBank wins the Sprint deal, its battle with Ergen is not over as Dish is also fighting with Sprint to buy out the minority shareholders of Clearwire, which is already majority owned by Sprint. The board of Clearwire – a small wireless provider with a vast trove of valuable wireless airwaves that both SoftBank and Dish want – last week recommended that its shareholders vote against Sprint’s US$3.40 per share offer at a June 24 meeting and instead urged them to accept Dish’s tender offer to buy Clearwire shares for US$4.40 each.

index rising to the highest level in three years as aggressive monetary stimulus starts to revive its economy. Of the 19 Japanese respondents, which included Daiichi Sankyo Co Ltd, Toshiba Corp, Hitachi Ltd and Sharp Corp, five were positive on their outlook and 14 were neutral. In the previous survey, only one out of 22 participants was positive. Australia and Indonesia saw big improvements in their outlook and were among the most optimistic economies in Asia. Australia continued to improve in the second quarter, driving the country’s sentiment index to its highest level since the first quarter 2012, although more participants were worried about the global economy. “From a general point of view, it has a lot to do with the currency, interest rates going down, and the offshore news has been better,” said Stephen Walters, chief economist at JP Morgan in Sydney. “Of the three the currency is probably the main one. When the

currency was over parity, it was quite painful for a lot of firms. So it follows when the currency is below parity they will feel a little bit less under pressure.” On the downside, business sentiment in India fell to its weakest level in more than three years, weighed down by worries about rising costs, while Thailand’s sentiment index dropped to an all-time low of 42 from 60.

KEY POINTS Sentiment index grows to 71 in Q2 Global economy remains biggest concern ‘Extreme fears’ beginning to fade: economist

Reuters

Rosy property Broken down by sector, most industries showed steady growth, with property turning in its highest reading in more than two years. Sentiment in food, drugs and the resources industries fell. Sentiment among shipping firms turned sharply upbeat, helping the sector register the best showing since the first quarter of 2012. “Perhaps optimism is creeping back simply because we’re tired of being pessimistic,” said Tim Huxley, chief executive of Wah Kwong Maritime Transport Holdings Ltd in Hong Kong. “Seriously, we are seeing a degree of optimism as there is a belief that the industry is working through its self-inflicted over-supply issues and that there might be some balance in 2014. It could prove to be a false dawn if there is too much ordering of new ships though.” Retail sentiment climbed the most after shipping to 69 from 50, while the technology industry’s recovery gained momentum, climbing to its highest level in more than a year. Confidence among food and beverage companies fell to 75 from the previous survey’s record high of 88, as currency volatility and rising costs posed risks. Reuters

hilippine stocks are proving too cheap to pass up for two of the nation’s biggest money managers after falling the most since 2011, as companies post record profits and economic growth outpaces the world. The equity market was among the hardest hit in Asia as global shares lost US$2.4 trillion since Federal Reserve chairman Ben S. Bernanke said on May 22 that the central bank could consider paring stimulus should the employment outlook show sustainable improvement. The Philippine Stock Exchange Index has dropped 12 percent from a May 15 record and now has an earnings yield of 5.2 percent, versus the 3.4 percent average on the nation’s debt. The last time the gap was this wide, in September 2011, the index rose 31 percent in six months. BDO Unibank Inc. and Metropolitan Bank & Trust Co say they’re switching out of bonds to buy equities. The economy expanded at a faster-than-estimated 7.8 percent pace in the first quarter, more than China’s 7.7 percent, and analysts increased profit forecasts for companies in the benchmark index to a record. While foreigner investors sold US$267 million of Philippine stocks this month and exports fell in April, BDO says the gauge will jump as much as 23 percent by next year. “This correction has opened a very good opportunity,” said Marvin Fausto, who oversees about US$20 billion as the Manila-based

chief investment officer at BDO, the country’s biggest money manager. “The idea is to keep buying on this weakness.”

Top funds The PSE index in Manila will rally to as high as 8,000 next year, Mr Fausto, who helps run this year’s second- and third-best performing Philippine stock funds, said. The US$186 million BDO Institutional Equity Fund and the US$267 million BDO Equity Fund both returned about 14 percent since the end of December. That compares with an average gain of 6.7 percent for 32 Philippine equity funds tracked by Bloomberg. Metropolitan Bank, the thirdbiggest Philippine money manager, has been buying shares of lenders during the retreat and has overweight positions on property and consumer stocks, Allan Yu, a Manila-based vice president, said. The Philippine economy probably will grow 7 percent this year, compared with a previous estimate of 5.7 percent, Michael Spencer, chief Asia economist at Deutsche Bank AG in Hong Kong, wrote in a report this week. “The fundamentals haven’t changed,” said Mr Yu, who estimates the PSE index will climb about 21 percent during the next 12 months. “The economy is still on a strong growth trajectory.” Bloomberg News

Analysis

Topix’s plunge may pave way to renewed rally

apan’s biggest equity rally in a quarter century may scale new heights after rebounding from a three-week, US$400 billion drop, according to Kenji Abe, chief Japan equity strategist at Citigroup Global Markets. The Topix index’s 15 percent decline since reaching a near five-year high on May 22 mirrors similar declines in 2003 and 2004, Mr Abe said. The earlier drops in Japan’s broadest share gauge also occurred when the economy was showing signs of recovery, with the index then trading within a range before ascending to new highs, he said. The recent rout left the gauge trading at 13.76 times forecast earnings per share as of yesterday, down from 16.63 last month. The index traded at a multiple of 20 in October 2003 and 25 in May 2004. Even with the correction, the Topix rallied 50 percent through Tuesday from November 14 on optimism Prime Minister Shinzo Abe’s push for record stimulus would spur economic growth and end decades of deflation. “Taking into account that the current environment surrounding Japan’s markets is better in terms of valuations and boldness of monetary policy, the period when markets trade in a range will be much shorter,” Citigroup’s Mr Abe said. “The markets will gradually turn to rise around the second half of July when earnings season starts.” On November 19, 2003, the Topix capped a 14 percent correction and rallied 28 percent over the next five months, according to Bloomberg data. On May 17, 2004, the measure completed a 13 percent correction and traded in a 149-point range for nearly a year before breaking out and gaining 60 percent through April 7, 2006. The Topix will rise to 1,300 at year-end and 1,320 by the close of March 2014, Citigroup’s Mr Abe projected, adding that financials and auto manufacturers are attractive sectors. Nomura Holdings Inc., Japan’s biggest brokerage, projected the gauge will rise to 1,500 by the end of December. Earnings for Topix companies will jump 53 percent this fiscal year to 78.85 yen a share, according to analyst estimates. Bloomberg News

June 20, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

32.8

-0.9063444

22386551

CHINA UNICOM HON

ALUMINUM CORP-H

2.55

-1.923077

23665877

BANK OF CHINA-H

3.17

-1.857585

284674500

BANK OF COMMUN-H

5.48

-1.792115

40696868

BANK EAST ASIA

28.25

3686291

BELLE INTERNATIO

10.72

-2.367942

BOC HONG KONG HO

24.55

CATHAY PAC AIR CHEUNG KONG

PRICE

DAY %

VOLUME

10.36

-2.448211

23417962

CITIC PACIFIC

8.42

-1.405152

5605536

CLP HLDGS LTD

63.8

0.5516154

4173444

SINO LAND CO

CNOOC LTD

13.6

-0.1468429

75001270

SUN HUNG KAI PRO

COSCO PAC LTD

10.18

-2.862595

10101204

SWIRE PACIFIC-A

35458213

ESPRIT HLDGS

11.48

0.1745201

3806334

TENCENT HOLDINGS

-1.405622

14297290

HANG LUNG PROPER

27.45

-0.1818182

8365164

TINGYI HLDG CO

13.7

0.7352941

3491708

HANG SENG BK

117.9

-0.5063291

1240781

WANT WANT CHINA WHARF HLDG

105.9

-2.396313

5877034

CHINA COAL ENE-H

4.52

-3.418803

55289256

CHINA CONST BA-H

5.43

-2.513465

347211608

CHINA LIFE INS-H

18.92

-1.25261

37184998

CHINA MERCHANT

23.6

-1.666667

3320425

CHINA MOBILE

NAME

HENDERSON LAND D

46.05

-1.497326

2927402

HENGAN INTL

78.25

-0.3184713

2295579

HONG KG CHINA GS

18.78

-1.572327

9050598

HONG KONG EXCHNG

122.1

-1.611604

3601891

HSBC HLDGS PLC

83.75

-0.3569304

16689646

76.15

-1.614987

25896661

HUTCHISON WHAMPO

81.5

0.06138735

5677355

CHINA OVERSEAS

20.4

-1.923077

19602122

IND & COMM BK-H

4.75

-1.452282

369558817

CHINA PETROLEU-H

5.59

-1.757469

108744052

11.24

0.5366726

24811642

CHINA RES ENTERP

24.4

3714211

MTR CORP

28.6

-2.054795

2571039

CHINA RES LAND

20.75

-3.263403

8729334

NEW WORLD DEV

11.1

-2.631579

16255260

CHINA RES POWER

17.94

-2.605863

11205756

PETROCHINA CO-H

8.41

-2.09546

101068553

CHINA SHENHUA-H

-2.335456

17272072

PING AN INSURA-H

-0.6323397

10192702

PRICE

DAY %

VOLUME

25.45

0.3944773

9083290

LI & FUNG LTD

NAME

PRICE

DAY %

POWER ASSETS HOL

68.1

-1.017442

2706775

SANDS CHINA LTD

40.2

-1.107011

9149977

10.88

-2.857143

6995927

99.75

-0.8449304

5317619

94.6

-0.8905186

1644144

299.6

-0.332668

4637856

19.9

-0.9950249

4920815

10.36

-0.9560229

23650378

69.5

0.433526

4474096

MOVERS

VOLUME

2 21270

INDEX 20986.89 HIGH

21265.53

LOW

20928.82

52W (H) 23944.74 (L) 18710.58984

20920

17-June

19-June

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.38

-1.457726

173554790

AIR CHINA LTD-H

5.48

-1.792115

21457652

CHINA PETROLEU-H

5.59

-1.757469

108744052

ALUMINUM CORP-H

2.55

-1.923077

23665877

CHINA RAIL CN-H

6.96

-1.276596

7362310

ANHUI CONCH-H

21.25

-3.189066

21972598

CHINA RAIL GR-H

3.67

-2.133333

13467701

BANK OF CHINA-H

3.17

-1.857585

284674500

CHINA SHENHUA-H

-2.335456

17272072

BANK OF COMMUN-H

5.48

-1.792115

40696868

CHINA TELECOM-H

3.71

-2.110818

43567297

BYD CO LTD-H

32.9

-0.1517451

2172458

DONGFENG MOTOR-H

11.24

-1.748252

7774412

3.8

-1.298701

28161893

GUANGZHOU AUTO-H

7.56

-2.952503

11580100

CHINA COAL ENE-H

4.52

-3.418803

55289256

HUANENG POWER-H

7.24

-0.2754821

30925352

CHINA COM CONS-H

6.75

-0.295421

12353885

IND & COMM BK-H

4.75

-1.452282

369558817

CHINA CONST BA-H

5.43

-2.513465

347211608

JIANGXI COPPER-H

14.74

-0.5398111

9129955

CHINA COSCO HO-H

3.33

-3.478261

20309787

PETROCHINA CO-H

8.41

-2.09546

101068553

8.74

-0.1142857

14460674

-0.6323397

10192702

9.57

-4.204204

7268484

CHINA CITIC BK-H

NAME CHINA PACIFIC-H

18.92

-1.25261

37184998

PICC PROPERTY &

CHINA LONGYUAN-H

8.23

3.39196

16170805

PING AN INSURA-H

CHINA MERCH BK-H

13.76

-1.149425

22811257

SHANDONG WEIG-H

CHINA MINSHENG-H

8.56

0.7047684

53608739

SINOPHARM-H

20.65

0.2427184

3405320

CHINA NATL BDG-H

7.16

-1.917808

40838120

TSINGTAO BREW-H

54.75

1.955307

1433248

14.92

-0.9296149

6952840

WEICHAI POWER-H

CHINA LIFE INS-H

CHINA OILFIELD-H

25.45

-1.547389

NAME

PRICE

DAY %

VOLUME

YANZHOU COAL-H

6.44

-2.12766

27274333

ZIJIN MINING-H

1.71

-2.840909

57358423

ZOOMLION HEAVY-H

6.09

-1.296596

10278755

12.22

-2.861685

2574040

ZTE CORP-H

MOVERS

1 9820

INDEX 9584.54 HIGH

9814.53

LOW

9543.13

52W (H) 12354.22 9540

(L) 8987.76 17-June

1421196

19-June

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.67

-0.7434944

57537475

CHONGQING CHAN-A

9.58

16596620

POLY REAL ESTA-A

10.94

-1.618705

47104584

AIR CHINA LTD-A

4.75

-1.247401

7435523

CHONGQING WATE-A

5.94

-1.818182

4899820

QINGDAO HAIER-A

11.64

7818088

ALUMINUM CORP-A

3.77

0.802139

18203212

CITIC SECURITI-A

11.15

-0.6238859

87749057

QINGHAI SALT-A

20.73

1.667484

6441111

ANHUI CONCH-A

14.14

0.7840342

25875066

CSR CORP LTD -A

4.04

-0.7371007

15570446

SAIC MOTOR-A

13.86

-2.2567

28118363

AVIC AIRCRAFT-A

10.62

-1.939058

13048054

DAQIN RAILWAY -A

6.23

0.8090615

20285869

SANAN OPTOELEC-A

20.28

0.1481481

13143549

4.98

-0.4

16100336

SANY HEAVY INDUS

8.11

-0.3685504

19157130

12.09

-4.275534

39554324

SHANG PHARM -A

11.36

-1.645022

8859546

13015220

SHANG PUDONG-A

8.89

-1.984564

53104791

NAME

BANK OF BEIJIN-A

8.39

-1.061321

15553825

DATANG INTL PO-A

BANK OF CHINA-A

2.7

-1.098901

24825153

EVERBRIG SEC -A

4.42

-0.896861

45965741

GD MIDEA HOLDI-A

12.8

-0.3891051

BANK OF COMMUN-A

NAME

BAOSHAN IRON & S

4.28

-1.154734

20950285

GD POWER DEVEL-A

2.35

-2.489627

65136603

SHANGHAI ELECT-A

3.7

-0.8042895

2661342

BEIJING TONGRE-A

23.46

0.4710921

4060894

GEMDALE CORP-A

6.73

31166913

SHANXI LU'AN -A

14.6

0.6202619

16118354

BYD CO LTD -A

34.69

-0.1439263

9147209

GF SECURITIES-A

12.18

-0.1639344

22886416

SHANXI XISHAN-A

9.66

0.3115265

11871303

CHINA AVIC ELE-A

25.66

4.734694

9151691

GREE ELECTRIC

25.49

0.7111814

23820684

SHENZEN OVERSE-A

5.76

-2.207131

28770716

CHINA CITIC BK-A

3.92

-1.754386

16784964

GUANGHUI ENERG-A

20.61

1.277641

17710685

SUNING COMMERC-A

5.5

-0.7220217

35114936

CHINA CNR CORP-A

4.29

17134966

HAITONG SECURI-A

10.61

-1.850139

90650246

TASLY PHARMAC-A

40.8

-0.3419638

3902290

CHINA COAL ENE-A

5.95

-1.815182

10971244

HANGZHOU HIKVI-A

37.29

-0.9561753

6694468

TSINGTAO BREW-A

38.6

2.796272

2227622 7752095

CHINA CONST BA-A

4.6

-1.075269

30351221

HENAN SHUAN-A

41.18

0.2922552

5495755

WANHUA CHEMIC-A

15.94

-1.786815

CHINA COSCO HO-A

3.33

0.6042296

12039006

HONG YUAN SEC-A

10.37

-4.511971

62165262

WEICHAI POWER-A

19.95

-0.9925558

5569979

CHINA EAST AIR-A

2.86

-1.038062

11354298

HUATAI SECURIT-A

-1.960784

32032581

WULIANGYE YIBIN

21.77

2.206573

20907322

CHINA EVERBRIG-A

2.95

-1.666667

59827764

HUAXIA BANK CO

9.96

-1.386139

13720982

YANZHOU COAL-A

12.5

1.05093

6654905

4.15

-0.2403846

28786560

YUNNAN BAIYAO-A

86.89

-0.02301231

826988

-2.524038

84271176

ZHONGJIN GOLD

10.87

-2.598566

14625978

14.8

-1.135605

8874010

IND & COMM BK-A

CHINA MERCH BK-A

11.98

-1.803279

39840016

INDUSTRIAL BAN-A

16.22

CHINA MERCHANT-A

11.33

-0.9615385

18239566

INNER MONG BAO-A

25.83

5.0427

41283211

ZIJIN MINING-A

2.84

-2.068966

36753360

CHINA MERCHANT-A

24.94

-1.305896

10134568

INNER MONG YIL-A

31.36

3.703704

28556256

ZOOMLION HEAVY-A

6.29

-2.782071

59149030

CHINA MINSHENG-A

9.75

-2.01005

102233480

INNER MONGOLIA-A

4.56

-0.6535948

49691663

ZTE CORP-A

12.57

-0.3961965

34083150

CHINA NATIONAL-A

10.58

-0.9363296

21785175

JIANGSU HENGRU-A

28.37

-1.629681

5298600

CHINA OILFIELD-A

15.53

-0.512492

2390172

JIANGSU YANGHE-A

58.75

4.574582

4342664

CHINA PACIFIC-A

17.36

-0.7432819

13091512

JIANGXI COPPER-A

18.49

-1.122995

8944561

4.68

-1.072849

32647331

JINDUICHENG -A

9.5

-0.5235602

4925923

18.97

-0.6806283

19070097

194.83

1.659275

2890918

CHINA LIFE INS-A

CHINA PETROLEU-A CHINA RAILWAY-A

4.56

-0.6535948

17517835

KANGMEI PHARMA-A

CHINA RAILWAY-A

2.62

-0.3802281

15966345

KWEICHOW MOUTA-A

CHINA RESOURCE-A

29.6

6437890

LUZHOU LAOJIAO-A

25.37

2.837454

9147225

CHINA SHENHUA-A

18.42

-1.286174

15676017

METALLURGICAL-A

1.86

-0.5347594

41319483

CHINA SHIPBUIL-A

4.52

59982923

NARI TECHNOLOG-A

15.77

-0.8176101

10911303

2.23

-1.458241

12180297

7.32

-2.269693

24338087

CHINA SOUTHERN-A CHINA STATE -A

3.25

-1.515152

12147616

NINGBO PORT CO-A

3.5

-1.685393

46711862

OFFSHORE OIL-A

3.52

-0.8450704

43564748

PETROCHINA CO-A

8.12

11764150

CHINA VANKE CO-A

10.19

-2.394636

96882103

PING AN BANK-A

19.24

-2.483528

36997753

CHINA YANGTZE-A

7.05

-1.260504

16907471

PING AN INSURA-A

37.72

-1.204819

39116502

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

CHINA UNITED-A

MOVERS

195

16 2430

INDEX 2400.765 HIGH

2423.69

LOW

2370.14

52W (H) 2791.303 (L) 2102.135

2360

17-June

19-June

FTSE Taiwan 50 Index NAME ACER INC

22.5

7801040

ADVANCED SEMICON

25.2 -0.3952569

12516451

ASIA CEMENT CORP

36.3 -0.5479452

ASUSTEK COMPUTER AU OPTRONICS COR CATCHER TECH

NAME

PRICE DAY %

69.6

0.8695652

6209996

TAIWAN MOBILE CO

112

FOXCONN TECHNOLO

74.2

0.5420054

2640646

TPK HOLDING CO L

575 -0.5190311

1732830

5748674

FUBON FINANCIAL

39.6 -0.5025126

10485509

TSMC

105.5 -0.9389671

22084611

-1.324503

4766210

HON HAI PRECISIO

0.6993007

33578236

UNI-PRESIDENT

12.15 -0.8163265

44114107

HOTAI MOTOR CO

301

0.3333333

590940

260.5

298

161 -0.9230769

4030185

5041205

58.6

7091763

UNITED MICROELEC

13.35

-1.476015

43184729

29.55 -0.6722689

16375696

-2.251407

8504647

WISTRON CORP

CATHAY FINANCIAL

40.05

0.8816121

30169980

HUA NAN FINANCIA

16.6 -0.8955224

6303027

YUANTA FINANCIAL

15.5

12670429

CHANG HWA BANK

16.3

9686273

LARGAN PRECISION

986

0.1015228

1300253

YULON MOTOR CO

48.5

2945089

CHENG SHIN RUBBE

94.9

1.172708

7620542

LITE-ON TECHNOLO

49 -0.4065041

2463026

CHIMEI INNOLUX C

18.3

-2.139037

32331487

MEDIATEK INC

351.5

-1.125176

5597092

CHINA DEVELOPMEN

8.39 -0.5924171

29282561

MEGA FINANCIAL H

22.65

18317670

CHINA STEEL CORP

24.1 -0.4132231

14599076

NAN YA PLASTICS

60.5

3.418803

12925490

PRESIDENT CHAIN

186.5

0.2688172

662891

61.9

2.31405

4660849

37.1

0.2702703

17548007

CHINATRUST FINAN CHUNGHWA TELECOM COMPAL ELECTRON

HTC CORP

Volume

FORMOSA PLASTIC

18.75

-0.530504

23586639

95.7

-0.3125

4732060

QUANTA COMPUTER

17.1

0.5882353

10513037

SILICONWARE PREC

138.5

4839835

SINOPAC FINANCIA

14.35 -0.6920415

FAR EASTERN NEW

31.2

2974142

SYNNEX TECH INTL

41.65

-3.587963

12539647

FAR EASTONE TELE

73.2 -0.4081633

4028535

TAIWAN CEMENT

37.55

8338361

DELTA ELECT INC

FIRST FINANCIAL

17.55 -0.5665722

7636417

9239188

TAIWAN COOPERATI

16.8 -0.2967359

6255354

FORMOSA CHEM & F

69.8

1.013025

4534688

TAIWAN FERTILIZE

75.2

0.2666667

1393281

FORMOSA PETROCHE

75.5 -0.6578947

1943916

TAIWAN GLASS IND

27.7

0.3623188

919101

MOVERS

10 5570

INDEX 5521.74 HIGH

5560.73

LOW

5497.06

52W (H) 5896.71 (L) 4719.96

5490

17-June

19-June

June 20, 2013

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

Max 44.8

average 43.75

Min 42.85

44.8

64.8

21.2

44.3

64.6

21.1

43.8

64.4

21.0

43.3

64.2

20.9

42.8

Last 44.05

Max 64.7

average 64.408

Min 64.05

Last 64.4

41.1

40.7

40.3

Max 40.95

average 40.416

Min 39.9

39.9

Last 40.2

Max 20.5

average 20.164

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Jul13

98.84

0.406349086

5.485592316

100.4000015

81.5

BRENT CRUDE FUTR Aug13

106.34

0.301829843

-0.495929634

115.1699982

91.76999664

GASOLINE RBOB FUT Jul13

289.2

0.437591165

2.415185211

318.0399895

235.0999832

899.75

0.755879059

-1.01760176

983.5

816

3.918

0.33290653

9.994385177

4.499000072

3.329999924

297.73

0.526724516

-0.812872705

322.0499992

259.5000029

GAS OIL FUT (ICE) Aug13 NATURAL GAS FUTR Jul13 NY Harb ULSD Fut Jul13 METALS

Gold Spot $/Oz

1368

-0.6399

-17.8112

1796.08

1322.06

Silver Spot $/Oz

21.65

-0.5855

-28.097

35.365

20.3395

Platinum Spot $/Oz

1440.93

0.625

-5.0614

1742.8

1374.55

Palladium Spot $/Oz

711.15

0.9826

1.6422

786.5

553.75

1841

-0.162689805

-11.19150989

2200.199951

1809

LME COPPER 3MO ($)

7005

-1.101228293

-11.67570294

8422

6762.25

LME ZINC

1858

-10.67307692

2230

1745

14150

-0.979706088

-17.05744431

18920

14037 14.79500103

LME ALUMINUM 3MO ($)

3MO ($)

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

Dec13

WHEAT FUTURE(CBT) Sep13 SOYBEAN FUTURE Nov13 COFFEE 'C' FUTURE Sep13 SUGAR #11 (WORLD) Oct13

16.235

-0.30703101

3.112099079

17.07500076

547.75

-0.499545867

-8.670279283

665

512

694.5

-0.035984167

-13.94052045

905.75

673.75

average 20.937

Min 20.8

Last 20.8

23.20

20.4

23.05

20.2

22.90

20.0

22.75

19.8

ASIA PACIFIC

CROSSES

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

Max 23.2

average 22.852

Min 22.6

Last 22.95

22.60

-0.997889081

1409.75

1186.5

0.08097166

-18.92423745

203.8499908

122.1499939

NAME

16.47999954

ARISTOCRAT LEISU

72.62999725

CROWN LTD

86.82

-0.527549824

-15.40378863

-0.572606505

10.26162052

22.8599987 89.55999756

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9505 1.5617 0.9202 1.3392 94.99 7.9885 7.7569 6.1273 58.8237 30.71 1.2574 29.847 43.145 10026 90.288 1.23233 0.85751 8.2093 10.6988 127.21 1.0299

0.5395 -0.0128 -0.0326 0.0822 0.3685 0.0376 0.0155 0.0228 -0.087 0.4884 0.2624 0.1307 -0.0695 -1.1769 -0.1717 -0.1152 -0.0933 -0.0609 -0.0514 0.2909 0.0194

-8.412 -3.4557 -0.5216 1.5315 -9.3589 -0.0663 -0.0812 1.6859 -6.5088 -0.4233 -2.8631 -2.7272 -4.96 -2.324 -1.0644 -2.0165 -4.9084 0.0999 -1.574 -10.7224 0

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 79.316 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

Macau Related Stocks

123.6

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.06

-0.4901961

28.88888

4.49

2.29

VOLUME CRNCY 1375931

12.63

1.937046

18.36926

13.75

8.28

916488

AMAX HOLDINGS LT

1.24

13.76147

-11.42857

1.72

0.75

4686025

BOC HONG KONG HO

24.55

-1.405622

1.867218

22.6

14297290

CENTURY LEGEND

0.315

-1.5625

18.86793

0.42

0.216

416000

5.5

-0.9009009

-8.180297

6.74

2.88

1800

CHINA OVERSEAS

20.4

-1.923077

-11.68831

25.6

16.362

19602122

CHINESE ESTATES

13.36

-0.7429421

10.14543

14.12

8.012

378000

CHOW TAI FOOK JE

8.86

2.309469

-28.77813

13.4

8.4

17265261

EMPEROR ENTERTAI

2.88

-0.6896552

52.38095

3.07

1.17

1925000

FUTURE BRIGHT

2.49

1.632653

105.4411

2.76

0.805

1404000

GALAXY ENTERTAIN

44.05

0.1136364

45.14003

44.95

16.98

16032411 1240781

CHEUK NANG HLDGS

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15318.23

0.9116032

16.89612

15542.4

12450.17

NASDAQ COMPOSITE INDEX

3482.182

0.8705058

15.32261

3532.038

2810.8

FTSE 100 INDEX

6354.65

-0.3068616

7.745923

6875.62

5435.46

HANG SENG BK

117.9

-0.5063291

-0.6739654

132.8

102.6

DAX INDEX

8215.26

-0.1731573

7.919584

8557.86

6096.94

HOPEWELL HLDGS

25.85

-1.711027

-22.25564

35.3

19.74

2314845

HSBC HLDGS PLC

83.75

-0.3569304

3.013526

90.7

61.1

16689646

HUTCHISON TELE H

4.33

3.095238

21.62922

4.66

2.98

3702000

LUK FOOK HLDGS I

18.76

1.077586

-23.11475

30.05

15.16

3542000

MELCO INTL DEVEL

16.82

-0.942285

86.68146

18.18

5.12

3993000 3719247

NIKKEI 225

13245.22

1.829283

27.41694

15942.6

8328.019531

HANG SENG INDEX

20986.89

-1.125937

-7.370946

23944.74

18710.58984

CSI 300 INDEX

2400.765

-0.7433607

-4.843018

2791.303

2102.135

TAIWAN TAIEX INDEX

8007.39

-0.04531258

3.998833

8439.15

6922.73

MGM CHINA HOLDIN

20.8

-1.886792

56.6468

21.6

9.509

KOSPI INDEX

1888.31

-0.6476834

-5.445031

2042.48

1758.99

MIDLAND HOLDINGS

2.91

-1.020408

-21.35135

2.8

2273922

S&P/ASX 200 INDEX

4861.381

0.976892

4.569433

5249.6

3993.8

NEPTUNE GROUP

0.183

-3.174603

20.39474

0.23

0.084

34725000

4811.291

-0.6024437

11.45795

5251.296

3843.022

NEW WORLD DEV

11.1

-2.631579

-7.653914

15.12

8.66

16255260

FTSE Bursa Malaysia KLCI

1774.14

0.005073138

5.043966

1826.22

1581.27

SANDS CHINA LTD

40.2

-1.107011

18.40942

43.7

20.65

9149977

SHUN HO RESOURCE

1.42

1.428573

1.67

1.03

NZX ALL INDEX

950.052

-0.4340836

7.709177

998.487

755.149

SHUN TAK HOLDING

3.83

-1.033592

-8.591887

4.65

2.56

3986000

PHILIPPINES ALL SHARE IX

4022.12

-0.2306879

8.735926

4571.4

3346.27

SJM HOLDINGS LTD

20.15

-0.982801

13.53611

22.382

12.995

8017002

SMARTONE TELECOM

13.06

-1.508296

-7.244318

17.38

12.5

1220650

WYNN MACAU LTD

22.95

-0.6493506

9.546535

26.5

14.62

1723014

ASIA ENTERTAINME

3.52

-0.8450704

25.05849

4.7647

2.2076

107195

-0.03490401

28.11452

57.86

41.74

196299 12000

JAKARTA COMPOSITE INDEX

20.8

20.6

COUNTRY MAJOR

1289.75 16.97

COTTON NO.2 FUTR Dec13

NAME

Last 20.15

Max 21.2

Currency Exchange Rates

NAME ENERGY

Min 19.9

64.0

HSBC Dragon 300 Index Singapor

618.82

0.94

-0.37

STOCK EXCH OF THAI INDEX

1428.4

0.06865534

2.620101

1649.77

1144.44

HO CHI MINH STOCK INDEX

503.37

0.900016

21.6663

533.15

372.39

BALLY TECHNOLOGI

57.28

Laos Composite Index

1338.82

10.2118

1455.82

980.83

BOC HONG KONG HO

3.24

5.537462

3.6

2.85

GALAXY ENTERTAIN

5.67

4.805915

42.82116

5.72

2.25

27381

INTL GAME TECH

17.14

-1.380898

20.95977

18.81

10.92

2968931

JONES LANG LASAL

90.89

2.089183

8.27972

101.46

61.39

335424

LAS VEGAS SANDS

57.07

-0.07004027

23.63518

60.54

32.6127

3071814

MELCO CROWN-ADR

25.13

1.988636

49.22803

25.2

9.13

2654260

MGM CHINA HOLDIN

2.71

7.539683

46.48648

2.71

1.36

200

MGM RESORTS INTE

15.1

1.07095

29.72508

15.95

8.83

6469088

SHFL ENTERTAINME

18.22

1.391208

25.65517

18.57

12.35

281574

SJM HOLDINGS LTD

2.66

4.724409

16.78878

2.9481

1.7255

600

WYNN RESORTS LTD

139.3

0.657562

23.83323

144.99

84.4902

955035

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

AUD HKD

USD

14 14

June 20, 2013 April 19, 2013

Opinion

Trade deal could stick U.S. with EU’s bank bomb Simon Johnson

Professor at the MIT Sloan School of Management, as well as a senior fellow at the Peterson Institute for International Economics

ith grand rhetoric, Group of Eight leaders this week seized upon the prospect of a deal between the U.S. and Europe that would reduce or eliminate tariffs and other trade barriers. David Cameron, the U.K. prime minister, called it “the biggest bilateral trade deal in history” and “a once-in-ageneration prize” that “we are determined to seize”. But would the proposed trans-Atlantic trade agreement really be a prize, or would it more closely resemble a poisoned chalice for the U.S.? I think the latter is more likely. The European economy is a mess, with big unanswered questions about how sovereign debt will be handled and whether a strong fiscal union will be built in the euro-currency area. The periphery countries are struggling to recover, and even the two biggest economies, France and Germany, seem likely to show unimpressive growth in the near term. Italy will continue to have a great deal of public debt and very little growth for the foreseeable future. Keeping interest rates low rarely works as a strategy over the business cycle – unless you are prepared to accept substantial inflation. Does any of the Italian debt become a joint obligation of other euro-area members at some point? It is very hard to see through the murk. The biggest danger, however, is the European banking system.

leverage ratios, by looking at loss-absorbing equity capital compared with total assets, without any risk-weighting. This approach is appealing because risk weights have proved mistaken in every crisis, most recently in the fiscal dislocations of the euro area. Euro-area government debt is regarded by regulators as zero or very low risk weight. That assumption is dubious at best; future historians will probably view it as ludicrous. Comparing leverage ratios across different accounting regimes involves making assumptions. Cannon provides a consistent approach to banks’ exposure by including all overthe-counter derivatives. This is entirely reasonable because it implicitly assumes there is risk in gross derivative positions even when some bets are offset by so-called master netting agreements with counterparties.

that netting agreements never fail. The assertion was undermined by the fact that his company once held the view that U.S. housing prices never fall, that AAA-rated collateralised debt obligations are always a safe bet and that there is no default risk in euroarea sovereign debt. In addition, net exposures mask the risk of runs and potential insolvency; as my colleague John Parsons has explained, gross exposures can tell us a great deal about vulnerability and therefore systemic risk. Using the leverage ratio as defined under the international bank capital and liquidity rules known as Basel III, Cannon calculates that Goldman Sachs Group Inc. has equity worth 4.6 percent of total assets, while JPMorgan Chase & Co stands at 4.5 percent, and Morgan Stanley (with the most

leverage of the big eight U.S. banks) is at 3.8 percent. The slightly good news in recent months is that regulators, both at the Federal Deposit Insurance Corp and the Federal Reserve’s Board of Governors, have indicated that they would like to increase the amount of loss-absorbing equity at U.S. banks, as calculated on a leverage ratio basis. Sheila Bair, the former chairman of the FDIC, has long called for a leverage ratio of at least 8 percent for big U.S. banks. Whatever your view of the right level of loss-absorbing equity capital in the U.S., the European numbers are alarming. Deutsche Bank AG does worst, with a Basel III leverage ratio of 2 percent (up only slightly after recent capital raising), while Societe Generale SA is at 2.7 percent, and BNP Paribas is at 3.3 percent.

Barclays Plc is hardly better, with a leverage ratio of 2.9 percent, though Anat Admati and Martin Hellwig’s book, “The Bankers’ New Clothes,” which argues for higher equity requirements, has been well received in some official circles in the U.K. But the U.K.’s European partners reject the idea of higher levels, and the web of European treaty commitments makes any change difficult. To the French and German governments, very low levels of bank equity are a feature of their financial systems, not a bug. This, of course, is a recipe for distortions, instability and, most likely, repeated disaster. Should the U.S. be tied more closely to the European economy under such circumstances? The benefits seem dubious – trade analysis doesn’t include assessments of how further integration would increase U.S. volatility, or who bears the brunt of credit crunches when they occur. And it would be a very bad idea for the U.S.-Europe negotiations to include financial services in any significant form, as the industry is strongly requesting. The Europeans’ policy on financial regulation is a millstone. It shouldn’t also be tied around the neck of the U.S. economy. Bloomberg View

It would be a very bad idea for the U.S.-Europe negotiations to include financial services in any significant form…

Undercapitalised banks The U.S. financial system suffers from large banks operating globally that are funded with too little equity, relative to their debts (and relative to their balance sheets). The most complex U.S. financial institutions are undercapitalised, posing a significant macroeconomic risk as the credit cycle unfolds. Executives at these banks try to allay such concerns by pointing out that they have more capital than their European competitors. That is correct. In a recent report, Fred Cannon, the director of research at KBW Inc., compares the capital levels at large banks in the U.S. and Europe, with an emphasis on

Cannon will probably get a lot of pushback for his approach, because it has a significant impact on the size of U.S. banks’ balance sheets by making their total assets and liabilities larger and their equity levels smaller. But his calculation is a valid attempt to bridge the difference between the generally accepted accounting principles in use in the U.S. and the International Financial Reporting Standards practiced in Europe.

Failure risk In a public discussion recently, a senior financialservices executive insisted

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 20, 19, 2013 2013

Opinion

Why companies wires shouldn’t write off India Business

Leading reports from Asia’s best business newspapers

Wall Street Journal

Ravi Venkatesan

Former chairman of Microsoft India and Cummins India

Bank of Thailand Governor Prasarn Trairatvorakul is warning about debt amid a slew of programmes to drive up consumer spending. Household borrowing rose to 78 percent of gross domestic product in 2012, Mr Trairatvorakul said, adding that a level of 80 percent might put the country’s financial stability at risk. At 8.82 trillion baht (US$286 billion), household debt in 2012 was up 88 percent from 2007, when it stood at 4.68 trillion baht, the data showed.

Taipei Times The Straits Exchange Foundation said the crossstrait agreement on service in trade, scheduled to be signed in Shanghai tomorrow, will create a win-win situation for Taiwan and China, dismissing concerns about its impact on local businesses. Foundation vice chairman Kao Koong-lian said 60 industries in Taiwan will be opened to Chinese investments, while China will open up more than 70 industries. The Taiwanese industries include the banking, wholesale and service sectors, while China will open up its transportation, finance, medical and travel industries, he said.

The Star Singapore’s worst air pollution in 16 years sparked diplomatic tension this week, as the city-state urged Indonesia to provide data on company names and concession maps to enable it to act against plantation firms that allow slash-and-burn farming. “We need to exert commercial pressure against companies causing the haze,” Singapore’s Environment and Water Resources Minister Vivian Balakrishnan said. Singapore’s pollutant standards index (PSI) rose to an unhealthy 155 on Monday.

China Daily The free trade talks involving China, Japan and South Korea must be accelerated to help ease political tensions and meet challenges from other FTAs, officials said on Tuesday. “Whatever the political relations, the FTA will go on as the three sides pursue win-winwin results and mutual economic benefits,” Shin Bong-kil, secretary-general of the Trilateral Cooperation Secretariat, said. Once established, the FTA will forge a common market of 1.5 billion people with a combined GDP of US$15 trillion to become the world’s third-largest regional market.

sked late last year about the market for Apple Inc. products in India, chief executive Tim Cook more or less wrote off the huge country. He blamed a “multilayer distribution structure” for making it too hard to reach consumers beyond elites in cities such as Mumbai and Bangalore. Apple would look elsewhere for growth: “In the intermediate term there will be larger opportunities outside there,” Cook said. Today, India – with a middle class the size of the U.S. population – accounts for less than 1 percent of Apple’s global sales. By contrast, Samsung Electronics Co Ltd saw plenty of opportunity in the subcontinent. The Korean company invested massively in its brand and distribution in India. Rather than waiting for the country to become rich enough to buy top-end smartphones such as the S4, Samsung developed and sold a range of devices at different price points, some as cheap as US$20. The company now dominates one of the fastestgrowing smartphone markets in the world, outpacing not just Apple but Nokia Oyj, BlackBerry and others. Apple’s stock, meanwhile, has swooned. I don’t mean to pick on Cook and Apple. Well-run and well-respected companies including Sony Corp, Toyota Motor Corp, Daimler AG and Caterpillar Inc. have similarly missed opportunities in India, writing it off as too poor, too corrupt, too hard. Always a difficult market, India has lately become even more challenging. Huge corruption scandals have virtually paralysed the Congress Party government. A sclerotic bureaucracy and judicial system, primitive infrastructure and a gutwrenching uncertainty around policies have killed any enthusiasm for investment.

Growth has slowed to less than 5 percent.

Moving on Before, companies that were daunted by India focused on China, instead. Now, with the Chinese economy also shifting into low gear, they are looking even further afield – to Africa, Indonesia, even Myanmar. In each place, they typically encounter an initial burst in sales and enthusiasm. When that fades, they look for the next hot emerging market. Companies that decide to pass on India, however, are making a big mistake. For one thing, they are leaving money on the table. Faced with the same chaotic environment as Apple, not just Samsung but companies such as Unilever NV, Schneider Electric SA, J.C. Bamford Excavators Ltd, Cummins Inc., Hyundai Motor Co and even McDonald’s Corp are thriving in India. The country now accounts for one third of JCB’s global sales and even more of its profit. Cummins derives 10 percent to 15 percent of its profit from the subcontinent. Secondly, chaos and corruption are hardly unique to India. They are a defining feature of most emerging markets, and companies that think they are going to have an easier ride elsewhere are in for a rude surprise. To succeed in any emerging market, companies have to develop resilience. They have to learn to thrive in chaos. Where better to do so than in India? The country has huge potential – it’s already one of the world’s top five economies in purchasing-parity terms – as well as good managerial and technical talent and reasonable institutions, which many smaller countries lack. The lessons learned here can be applied across the young, ambitious societies of the developing world. The first thing to learn is to take a long-term approach

to the market. Firms such as Samsung, Cummins and McDonald’s were willing to wait almost a decade to see a return on their investments in local supply chains, local innovation capability and deep distribution networks. At the same time, foreign brands must develop products that the local market wants and sell them at disruptive price points.

company CEOs. Others have different benchmarks: “When Indians stop pirating,” “when India has more efficient distribution,” “when more Indians start eating meat.” This approach is risky, not prudent. It will be a long time before India looks like a developed market or even a terribly welcoming place. It may even evolve in a fundamentally different direction: Indian consumers, for instance, are bypassing personal computers in favour of smartphones and the mobile Internet. They are leapfrogging from a no-PC world to a post-PC world. Where does that leave companies such as Microsoft Corp, Intel Corp, Dell Inc. or Hewlett-Packard Co? By the time companies turn their attention back to India, a competitor will probably have taken an unassailable lead. This is the position that automobile makers, including Toyota, Volkswagen AG and Nissan Motor Co are in; they are now locked in an expensive battle to claw back market share from Suzuki Motor Corp, Hyundai and Mahindra & Mahindra Ltd. This is what Caterpillar faces against the likes of JCB and Cummins, and it is what Procter & Gamble Co is up against in competing with Unilever. Companies shouldn’t be beguiled by the romance of the next hot market. To thrive in the 21st century, getting past India’s 19th-century problems is a critical first step. Bloomberg View

Frugal engineering Success in India helped Cummins develop expertise in frugal engineering, in managing joint ventures, and in creating a capable, low-cost supply chain. All those skills are now serving the company well globally. Companies such as Cummins, JCB and Samsung don’t wait for the market to resemble what they are familiar with; instead they adapt to the realities of the market. This is a critical point lost on multinationals that see India as simply one more sales outlet for their products. Those companies wait for policies, regulation, infrastructure or the consumer to evolve to fit their well-tested global models. “We’ll be back” is the common refrain. “We’ll be back when India respects patents,” say pharmaceutical-

Companies shouldn’t be beguiled by the romance of the next hot market. To thrive in the 21st century, getting past India’s 19thcentury problems is a critical first step

June 20, 2013

Closing Cambodia casino strikers dispersed

IMF warns Spain against slowing reforms

Striking workers at the NagaWorld casino resort in Phnom Penh, Cambodia, had their rally broken up by armed police and security guards, reports the Phnom Penh Post. A total of 19 workers and union representatives – including eleven women – were briefly detained. Labour rights groups called it “overkill”. Hundreds of casino workers, striking for a sixth day over wage demands, had assembled in front of their workplace on Tuesday morning, reported the newspaper. No comment was available from the Hong Kong-listed casino owner NagaCorp. Municipal police chief Choun Sovann said protesters had gone on strike without permission.

Spain’s biting recession may end soon but the outlook is tough and Madrid must do more to battle the unacceptably high unemployment rate, the IMF warned yesterday. The International Monetary Fund, in an annual review of the euro zone’s fourthlargest economy, said the contraction may be coming to an end. “While there are signs the economic contraction may end soon, the outlook remains difficult,” it said in the report. The IMF said it expected the Spanish economy to start to grow later this year and to pick up to a pace of one percent in the medium term, with only “limited” gains in employment.

Fuel price increase to strengthen rupiah Indonesia’s Basri expects trade balance to improve

ndonesia’s rupiah will strengthen as the trade balance improves after the government increases fuel prices this month, Finance Minister Chatib Basri said in an interview yesterday. The nation set its assumption for the rupiah’s average rate at 9,600 per dollar in its revised 2013 state budget, he said. That compares with an average of 9,721 so far this

year. The currency would need to trade at an average of 9,479 for the rest of the year to meet the budget estimate. “The reason why the government put the assumption as 9,600 is once we adjust the fuel price, there will be a significant amount of import decline, especially from oil,” Mr Basri. “This will improve the trade balance. Once we improve the trade balance then

the rupiah will be strengthening.” Indonesia has posted six straight current-account deficits and had a trade shortfall of US$1.6 billion in April, contributing to a 4.5 percent decline in the rupiah over the past 12 months, the worst performance after the yen and India’s rupee among Asia’s 11 most-traded currencies. The fuel price increase will curb the “major portion” of the nation’s

fuel consumption that is smuggled out of the country because of the disparity between domestic and overseas prices, Mr Basri said. “So if we lower this price disparity by adjusting the fuel price, then I believe that huge amounts of imports will decline,” he said. The current local price of 4,500 rupiah (US$0.45) a litre of gasoline compares with 9,800 rupiah a litre internationally, the minister said. The government plans to increase the gasoline price to 6,500 rupiah a litre and the diesel price to 5,500 rupiah a litre, he reiterated. Indonesia last increased fuel prices on May 24, 2008, after which the local rupiah gained 3 percent over the next 10 weeks. The nation also raised fuel prices twice in 2005. The rupiah will trade at 9,825 per dollar by the end of the year, according to the median estimate of 33 analysts surveyed by Bloomberg. “It is evident because this is not the first time the government adjusts the fuel price,” Mr Basri said. “So if you look at the empirical evidence in 2005 and 2008, after the government adjusted the fuel price, then the trade balance improved then the rupiah can strengthen.” The government’s plan to increase fuel prices is now “a matter of administrative work” and will be completed this month, he added. Bloomberg News

Capital controls hurting economy: Cyprus minister Lakkotrypis says restrictions must end for country to regain credibility

he euro area’s first restrictions on the movement of capital are doing more damage to Cyprus’s economy than a one-time levy on savings and must be lifted as soon as possible, the island’s Commerce, Tourism and Industry Minister George Lakkotrypis said. “We are now at a point where capital controls are hurting more than the haircut itself,” Mr Lakkotrypis said. “Small and medium-sized enterprises are closing one after the other and the longer we have controls, the longer we’ll have uncertainty.” Cyprus agreed on March 25 to a 10 billion-euro (US$13.4 billion) loan from the euro area and the International Monetary Fund in return for measures including a levy on savings of more than 100,000 euros at Bank of Cyprus Plc and the resolution of second-biggest lender

Cyprus Popular Bank Pcl. Those concessions were demanded by creditors in a bid to shrink the country’s banking industry and led to Cyprus imposing the first capital controls in the euro area. Limits to cash withdrawals and transfer of funds abroad are some of the restrictions in force since March 27 when Cyprus’s government imposed the restrictions to prevent savers from moving their funds out of the country’s banks. Banks reopened on March 28 under the regime after a bank closure of almost two weeks. Capital controls need to end so Cyprus can start “gaining back our credibility in the outside world while the recapitalisation of Bank of Cyprus must be completed as soon as possible,” Mr Lakkotrypis said. Total deposits in Cyprus’s banking system dropped 9.9 percent in April

Total deposits dropped in April to 57.4 billion euros

to 57.4 billion euros from 63.7 billion euros in March reflecting the “bailin” of Bank of Cyprus depositors with savings of more than 100,000 euros, the Central Bank of Cyprus said in May. Of those accounts, 37.5 percent were converted into equity while a further 22.5 percent are temporarily blocked to ensure Bank of Cyprus meets the terms of its recapitalisation. While Cyprus has lost its banking sector and credibility, the country hasn’t seen a mass exit of foreign firms as it’s still an attractive place to do business, Mr Lakkotrypis said.

“Many foreign investors are telling us: what’s done is done, there’s a haircut, we need to get it over and finished so we can see what we have and carry on operating,” he said. Cyprus will depend “heavily” over the next two to three years on tourism for its economy to return to growth, he added. The plan to open casinos as well as new marinas and golf courses will help make Cyprus a year-round tourism destination and will boost tourism numbers, he said. Bloomberg News