Macau Business Daily, June 21, 2013 by Business Daily

MOP 6.00

April 19, 2013

Year II

Number 310 Friday June 21, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

Coloane towers decision to ‘abide by laws’: govt Page 5

Minimum wage law But only for cleaners, security staff

Angela Leong ticket aims for two assembly seats Page 6

Paradise closes patents deal with chairman Chun Page 7 I SSN 2226-8294

minimum wage proposal for all the city’s security and cleaning staff will be out for public consultation by September, Secretary for Economy and Finance Francis Tam Pak Yuen said yesterday. But there’s no firm date currently for when it might actually be introduced. The city’s other low-paid workers will not be included. Currently only government-outsourced cleaning and security staff are entitled to a minimum wage. It was raised to 26 patacas (US$3.25) per hour this month. Mr Tam said he would begin drafting a law proposal next month. Public consultation and analysis of responses will be assessed during the second half of this year.

Hang Seng Index 20670

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June 20

Export prospects up as orders rebound

HSI - Movers Name

About 40 percent of manufacturers have an optimistic outlook about exports, though they are worried over rises in the cost of raw materials, a new survey has found. The Economic Services survey said the percentage of exporters with confidence about the future of their business rose to 40.2 percent in the first quarter of 2013 from 36.9 percent in the previous quarter. Page 2

‘Court proved my innocence’: Florinda Chan

%Day

CHINA MERCHANT

0.42

TINGYI HLDG CO

-0.40

HONG KONG EXCHNG

-0.82

LENOVO GROUP LTD

-1.38

CHINA MOBILE

-1.44

KUNLUN ENERGY CO

-4.41

CNOOC LTD

-4.41

CHINA CONST BA-H

-5.16

CHINA OVERSEAS

-6.18

CHINA RES LAND

-6.89

Source: Bloomberg

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Secretary of Administration and Justice Florinda Chan yesterday declared her innocence in what the Commission Against Corruption called a “tailor-made” perpetual lease of 10 burial plots to her legal adviser. The Court of Final Appeal said on Tuesday there was insufficient evidence to press charges of forgery, disobedience and abuse of power against the secretary for stalling an official investigation on the lease. Page 3

Macau has blind eye on labour trafficking: report The Macau authorities are still struggling to tackle crossborder labour trafficking, the U.S. State Department’s ‘Trafficking in Persons Report 2013’ said. The few cases identified last year were treated as disgruntled workers not victims, and simply repatriated, the report released on Wednesday U.S. time says. Eighteen mainland Chinese disputing their work conditions had their cases dealt with under “worker protection laws,” the U.S. department wrote. Page 7

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June 21, 2013

Macau

Rebound in orders cheers exporters Confidence among exporters of manufactured goods improves, even though costs are rising Vítor Quintã

vitorquinta@macaubusinessdaily.com

bout 40 percent of manufacturers are optimistic about exports, although they are worried by rises in the costs of raw materials, the results of a Macau Economic Services survey indicate. The survey found that in the first quarter of this year 40.2 percent of exporters had confidence about the future of their business. In the fourth quarter of last year the proportion was 36.9 percent. However, it found that only 39.5 percent of all companies believed exports would increase slightly in the following six months, 2.9 percentage points fewer than three months earlier. And 31.6 percent of exporters expected a decline in business, 1.7 percentage points more than before. Even so, in reporting the results of the survey on Wednesday, Macau Economic Services concluded: “These data reflect companies’ greater confidence in future exports.” On average, exporters had orders for the following 2.75 months in the

Half of all exporters are worried by the shortage and rising cost of labour

first quarter, having had orders for the following 2.57 months three months earlier. The struggling textiles and clothing industry had orders for the following 3 months, more than any other industry.

The increase in export orders was due mainly to a recovery in demand from mainland China, the United States, the European Union and Southeast Asia. But not all companies felt any improvement.

Over one-third of exporters said softer demand was the main hindrance to their business. More than one-half said that having too few orders was a problem. About 61 percent of manufacturers were worried that rises in prices of raw materials would become more troublesome. Almost one-half of exporters were worried that they would have to increase the pay of their employees, and 58 percent said they struggled with a lack of labour. The number of workers employed by the companies surveyed was 3.5 percent higher in the first quarter than three months before. The average monthly pay of fulltime employees in manufacturing was 7,890 patacas (US$988) at the end of March. The median salary in all occupations was 11,000 patacas. Manufacturing output has been rising since 2009, having declined in the preceding six years as the textiles industry contracted after quotas for international trade in textiles were abolished.

Online gambling ‘won’t be legalised soon’ in Asia: Adelson But LVS boss fights tough rearguard action in Forbes article against U.S. Internet based betting Michael Grimes

michael.grimes@macaubusinessdaily.com

nline gambling “won’t be legalised soon, if ever” in most Asian markets, says Sheldon Adelson, chairman of Las Vegas Sands Corp, in an opinion article for Forbes magazine.

Online gambling ‘fool’s gold’, says Sheldon Adelson

Mr Adelson, who’s also chairman of Sands China Ltd, a Macau casino operator 70 percent owned by LVS, spends most of the article attacking the creeping growth – on an intrastate basis – of online gambling in the United States. He describes it as “fool’s gold” and “a societal train wreck waiting to happen”. He also advances some familiar arguments by the antis – including the difficulty of age verification and the privacy of the behaviour compared to casino gambling. But the LVS boss insists he’s not engaged in special pleading on behalf of the land-based gambling sector. “…our popular brands – like The Venetian – we would be very effective competitors in this market place. Having started more than 50 different successful businesses over the course of my nearly seven decades-long business career, I’m not afraid of competing with anyone,” states Mr Adelson. Land-based gaming operations in Macau supplied 53 percent of LVS’s US$3.79 billion (30.28 billion patacas) global adjusted property earnings before interest, taxation, depreciation and amortisation last year, according to a Hong Kong

filing by Sands China. Mr Adelson said in his Forbes article, referring also to the company’s concrete-and-glass Singapore operation at Marina Bay Sands: “…almost all our casino profits come from Asia, where online gambling doesn’t exist and won’t be legalised soon, if ever.” Online gambling – particularly on sports – is in fact rife in Asian markets, but much of it is not government-licensed on either an intra national or cross border basis. A basic problem in policing unauthorised sports betting in the Greater China market – including Hong Kong and Macau as well as the mainland – seems to be that the authorities decline to respond to market demand and authorise the form of sports betting that Chinese consumers love the most. This is ‘in-running’ betting while matches are in progress.

Limited offer Macauslot – Sociedade de Lotarias e Apostas Mútuas de Macau Lda – a monopoly founded by Stanley Ho Hung Sun, is the only company legally authorised in Macau to operate an online portal for betting on football and basketball.

But it isn’t allowed to operate on Macau casino floors, and the website is only for bets made within Macau. In addition, Macauslot does not accept ‘in running’ bets. As a result of that, and its inability to take cross-border bets, its turnover and profits are paltry compared to the cross-border unlicensed operations. Macauslot made only 55 million patacas (US$6.9 million) on 448 million patacas turnover in 2011 – the most recent figures available – a fall of 14.6 percent year-on-year. By contrast a single unlicensed online bookmaker taking ‘inrunning’ bets on the mainland and allegedly involved in running illegal websites in Macau was said to have made a profit of 11 million yuan (US$1.8 million) on one percent of players’ losses plus commission in fewer than 12 months up to the time of his arrest last year. Earlier this month Global Times, a newspaper affiliated to China’s state-backed People’s Daily newspaper, reported that eight illegal “Macau-based gambling websites” – including an operation by the arrested bookmaker – had received 80 billion yuan (US$13 billion) in soccer bets from mainland bettors over an undefined period to July 2012.

June April 21, 19, 2013 2013

Macau

Govt to seek opinion on wider minimum wage in September But the government has yet to set any schedule for the introduction of a universal minimum wage Stephanie Lai

sw.lai@macaubusinessdaily.com

Francis Tam says the government is proposing a minimum wage of between 23 patacas and 30 patacas per hour for cleaners and security guards

he government will begin soliciting opinion on a minimum wage for all cleaners and security guards by September, Secretary for the Economy and Finance Francis Tam Pak Yuen has said. At present only employees of the government’s security and cleaning contractors are entitled to the minimum wage. Th e g o v er n m en t r a i s e d t h e minimum wage to 26 patacas (US$3.25) per hour this month. Mr Tam, speaking after a meeting of the Standing Committee for the Coordination of Social Affairs yesterday, said that he would begin next month drafting a bill to extend entitlement to a minimum wage to all cleaners and security guards, so the bill could go through the legislative

‘Court proved my innocence’: Florinda Chan Justice secretary breaks silence on cemetery case in public Stephanie Lai

sw.lai@macaubusinessdaily.com

n an ad-hoc press conference yesterday, Secretary of Administration and Justice Florinda Chan declared her innocence in what the Commission Against Corruption called a “tailormade” perpetual lease of 10 burial plots including to her legal adviser. Ms Chan said her innocence was “proven by Commission Against Corruption, Public Prosecutions Office and Court of Final Appeal’s ruling”. In a pre-trial ruling, the Court of Final Appeal said on Tuesday there was insufficient evidence to press charges of forgery, disobedience and abuse of power against the secretary for stalling an official investigation on the lease of the burial plots. “Regrettably there’s still an individual that tried to ignore the fact [of the court’s ruling] and press unreasonable accusations against me,” declared Ms Chan yesterday. “For that it not only hurts my personal reputation, but the image of the MSAR administration as well,” she continued, “I’ll reserve the legal right to pursue the case.” Ms Chan didn’t mention the person by name, but it was understood to be a reference to Paulina Alves dos Santos. She petitioned the court to have Ms Chan charged over the cemetery case. The Court of Final Appeal said there was no right of appeal on its

process in the second half of this year. He said the government was now proposing that the minimum wage should be between 23 patacas and 30 patacas per hour, having previously proposed that it should be between 23 patacas and 28 patacas per hour. “The proposed range of the minimum wage was agreed after discussion with representatives of employers and workers on the committee,” Mr Tam said. “In arriving at that adjusted range, we also considered research data, the employers’ ability to pay the workers, and the business environment at large.” Research by the University of Macau indicates that average hourly pay, minus bonuses and subsidies, was 20.89 patacas for security staff and 33.73 patacas for cleaning staff at the end of last year. The research indicates that, on average, security staff worked 289.63 hours per month and cleaning staff worked 238.06 hours per month. Mr Tam said the government had neither proposed a universal minimum wage nor set any schedule for introducing one. “It is hard for us to set a rigid rule to link the factors that should be included in setting a minimum wage,” he said. “We would like to first listen to the opinions of the employers and the workers alike on how to set a minimum wage, and then we will try to see how to balance their suggestions.”

Public Prosecutions Office is treating [handling] the case, I had to abide by the judicial confidentiality.” The secretary also told that she felt “distressed” by the trial that Civic and Municipal Affairs Bureau’s president and vice-president, Raymond Tam Vai Man and Lei Wai Nong, are facing at the Court of First Instance on charges of disobedience for stalling investigation on the cemetery case. “I have confidence in Macau’s judicial system,” Ms Chan said, “And now it’s not appropriate for me to comment on the case.” The Court of Final Appeal’s judgement says there is no written evidence that Ms Chan asked for the original documents containing the leases of the burial plots, and that Mr Tam testified that he did not give them to her.

Long time row

ruling. But Ms Santos declared to media on Tuesday that she had the right to appeal. “I feel threatened by what I heard from the mouth of secretary Florinda Chan (…),” Ms Santos told TDM yesterday. “I will also reserve the

right to consider legal actions.” Secretary Chan said the cemetery case was a legal one, not a “political issue”. “I was indeed baffled by not being able to respond to the case in the past,” she said, “But as the

Ms Santos herself had applied in 2009 for a perpetual lease burial plot for a deceased younger brother, a long-time civil servant. The court papers said the then chief executive Edmund Ho Hau Wah repeatedly rejected the request. “Our regulation of the granting of [a burial] plot is similar to Hong Kong, [in] that it was applicable to civil servants’ line-of-duty death,” said Ms Chan yesterday. “According to the regulation that is in effect since 2004, only four such applications got approved,” she continued, “The brother of the assistant [party] to the case [Ms Santos] did not fulfil the respective criteria.” “But I absolutely understand and respect her [Ms Alves’] decision if she did not agree with the disapproval of the burial plot granting to her younger brother,” said Ms Chan. “As proven by the Commission Against Corruption’s investigation, I did not interfere in approving or disapproving the application,” she stressed, “There’s no criminal element involved.”

June 21, 2013

Macau

Rents, slow demand bite into Oriental Watch profit

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HOSPITALITY

Net income from sales in Macau and mainland down by 73 percent

Slow integration Because there are so many of them, mainland Chinese visitors set the patterns and trends for visitors of all kinds, including package tourists. In April we had 10.2 percent more package tourists than a year earlier and 35.7 percent more than two years earlier. Package tourists from the mainland were behind the growth. In April we had 18.7 percent more than a year earlier and 37.8 percent more than two years earlier. Most came only to Macau. So the plots in the chart of the numbers of all package tourists, of package tourists from the mainland and of package tourists whose tours brought them only to Macau are similar in every respect.

Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

Chinese slowdown hits luxury sales (Photo: Manuel Cardoso)

Package tourists whose tours took them somewhere else as well as Macau are a tiny minority, even though the number of such tourists is rising faster than the average. For all the talk about integrating Macau with its surrounding region for the purposes of tourism, in the past six months fewer than 7.5 percent of package tourists were on tours that took them here and to at least one place in the mainland. Between 12 percent and 14 percent of package tourists were on tours that took them here and to at least one other place outside the mainland. However, these percentages probably include a high proportion of package tourists from the mainland on tours of both Macau and Hong Kong, for whom there are no specific figures. So the percentages are unlikely to indicate growing integration of Macau with its surrounding region for the purposes of tourism. J.I.D.

19.1 %

Proportion of April’s package tourists on tours that took them beyond Macau

riental Watch Holdings Ltd, the watch retailer established by chairman Yeung Ming Biu, said full-year profit dropped by 0.9 percent to HK$162 million (US$ 20.8 million) in the 12 months ended March 31. The company had a profit of HK$164 million in 2012. Oriental Watch sells several renowned brands in Greater China, including Swiss brands like Rolex, Tudor, Piaget and Omega. The group operates 107 stores, including two outlets in Macau. The stock jumped 3.18 percent yesterday to close at HK$2.6 in Hong Kong trading. Turnover for the year declined 5.2 percent to HK$3.7 billion, which led to a gross revenue drop of 15.4 percent to HK$700 million, the company said in a filing to the Hong Kong Stock Exchange late on Thursday. Sales in Macau and mainland China dropped by 11.9 percent from a year earlier to HK$1.18 billion. Profit for this segment tumbled by 73 percent to HK$24.8 million, from HK$91.9 million in 2012. Excluding the one-off share option expense of HK$94 million and the net gain of HK$76 million from the disposal of property, plant and equipment this year, “the adjusted net profit decrease for our

core business would have been 66.5 percent,” it said. The watch retailer management attributed the decline in profit to the lack of price hikes by suppliers and to a slowdown in mainland China’s sales performance.

Fewer watches High rental costs also hit the retailer’s profit. The rental expense increased by approximately 35.7 percent in the year ended March 31, it said in the filing. But the company says that was mainly caused by the lease renewal of three existing stores in Hong Kong. “…this spike is almost entirely related to these one-off events and our rental expense is better controlled than our peers,” it added. Th e eco n o m i c s l o w d o w n i n Greater China has rippled through the global retail industry. “A volatile global economic backdrop and the Chinese government’s crackdown on ostentation and luxury gifting has cooled consumption considerably during the year as mainland consumers curb their spending on extravagant items,” Oriental Watch said. Economic growth in the mainland dropped to 7.7 percent in the first

quarter trailing the fourth-quarter expansion of 7.9 percent. Sales of luxury items have been hit by President Xi Jinping’s crackdown on Chinese government extravagance. Yet, the company says retail sales in Macau and Hong Kong have picked up from the second half of the fiscal year, “with the regions’ same-store sales registering consecutive positive growth since February”. Oriental Watch says sales outlook remains positive. “Our stores have already witnessed a gradual increase in mainland tourist foot traffic and a pick-up in sales for high-ticket watch items,” it said. The board declared a final dividend of HK$0.05 per share.

HK$162 mln

Oriental Watch’s net profit in the 12 months to March 31

June 21, 2013

Macau

Coloane towers’ decision to ‘abide by laws’: govt Legislators split on whether new developments should be frozen until urban plans are enforced Tony Lai

tony.lai@macaubusinessdaily.com

he government repeatedly pledged to strictly follow existing laws when reviewing any developments, during yesterday’s five-hour debate in the Legislative Assembly. The assembly members, however, were split on whether the government should go even further. Legislators and government officials met for a debate proposed by Ng Kuok Cheong and Paul Chan Wai Chi, amid the controversy surrounding a high-rise housing project which many fear may destroy the Coloane environment. Mr Chan urged the government to “suspend the review of any big-scale developments that contradict the reservation of green ecological areas” before the implementation of future urban plans. The assembly is set to approve the city’s first urban planning law by August but it may take the government several years to enforce any urban plans.

“There is no legal justification [for us] to suspend reviewing the projects based on the present laws,” Secretary for Transport and Public Works Lau Si Io said. Many legislators in the business and legal sectors agreed. Government-appointed legislator and legal expert Tong Io Cheng said, “I am really worried… how can the legislators encourage the government to implement measures outside of the legal framework?” Lawyer Leonel Alves said: “The government should not be deterred [due to] facing pressures. The one with the loudest voice is not the one in right.” Businessmen like Chan Chak Mo and Tsui Wai Kwan also warned the suggestion would shrink supply in the housing market and scare away outside investments. Wong Chan Tong, head of Mr Lau’s cabinet, stressed that there are mechanisms in force to assess and tackle the environmental impact of

development projects. The official, however, did not elaborate further. Lao Iong, head of the Land, Public Works and Transport Bureau’s urban planning department, admitted “there is no complete plan for Coloane”. Jaime Carion, bureau director, also said they would consult various public bodies on proposed projects when necessary, before approving architectural plans and issuing construction permits. But he did not confirm whether the opinions from other public bodies are legally binding. “That is the problem,” said Kwan Tsui Hang, referring to the controversial Coloane project controlled by Hotel Fortuna owner Sio Tak Hong. The developer is allowed to build 100-metre-high towers with a gross floor area eight-times bigger than the 56,500-square-metre site. Ms Kwan alleged Mr Carion’s bureau published documents in 2009

stating that developments in that area should not be higher than 8.9 metres. “What laws is the government basing [its decisions] on?” she asked. Ms Kwan stressed that other controversial projects in Taipa’s hills and near the airport “were all approved in accordance with the current laws”. With the debate running out of time, secretary Mr Lau replied: “If we are talking about extreme environmental protection, there should be no development.” The official stressed they are also striving to complete a legal framework for environmental impact assessment.

The Legislative Assembly discussed Coloane’s future development yesterday

June 21, 2013 April 19, 2013

Macau Business-matching planned for tourism forum

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Macau is considering whether to set up business-matching sessions to connect Portuguese and Chinese travel firms during the second edition of the Global Tourism Economy Forum, the director of the Macau Government Tourist Office, Maria Helena de Senna Fernandes, said quoted by news agency Presstur. The sessions could be held on July 17, right before the start of the two-day forum, along with other activities, she said. Ms Fernandes was recently in Portugal as part of a delegation that included businessmen from Guangdong province.

Financial Monitor Hungry mouths Macau is extremely dependent on the outside world for food. No farms here supply the market. Even our seafood catches are declining as the number of active fishing boats decreases. Without surprise, if we pick the figures for external trade in the first four months of the year, seafood aside, we have no exports at all. And even the seafood that we exported was only re-exported. Our exports of seafood amounted to just 2 percent of our imports of seafood. The chart shows the tonnages of meat, seafood, vegetables, fruit and cereals we imported in the first four months of this year.

Leong pledges to make gaming voice heard The SJM executive director is aiming for two seats at the Legislative Assembly Tony Lai

tony.lai@macaubusinessdaily.com

Our main imports of food by weight were vegetables and fruit. We imported about 240 tonnes of them per day, on average. Animal protein comes in 150 tonnes daily on meat and seafood products. Add an average of 80 tonnes per day of cereals, and we get a total of 470 tonnes of food per day. In terms of import costs the ranking is reversed. Our main imports of food by value were meat and seafood, which are generally much more expensive than fruit and vegetables. The daily tab in imports of animal products is three to four times bigger than the amount of fruit, vegetables and cereals we imported. The average import cost per kilogram of vegetables and fruit was 3.90 patacas (US$0.49) and 6.70 patacas, respectively. The average import cost of cereals was about 5.40 patacas per kilogram. The equivalent figure for meat was 20.40 patacas and for seafood was 40.80 patacas. Altogether, the cost of these imports in the first four months was 694 million patacas. J.I.D. The content of this column is the work of Business Daily’s journalists.

153.9 ton Average amount vegetables imported per day, January-April

egislative Assembly candidate Angela Leong On Kei is confident that her ticket in September’s elections will secure two seats so that the gaming industry will have a greater voice in the assembly. Ms Leong is an executive director of SJM Holdings Ltd, and the second of the eight candidates on the ticket she leads is an executive of a rival gaming company. “My manifesto will be basically the same as previously. We will be particularly concerned about gaming workers, hoping to create a district for them,” she told reporters yesterday, when she registered her ticket’s candidacies. The second candidate on her ticket is Kent Wong Seng Hong, a senior adviser to Melco Crown Entertainment Ltd. Ms Leong said: “We have great confidence that we can have two, including Wong Seng Hong, entering the Legislative Assembly.” Mr Wong was also the second candidate on her ticket in the elections in 2009. He said: “There were 12 seats last time and I ranked 13th. This time there are two more seats, so I am very confident.” SJM chief executive Ambrose So Shu Fai said it was important to give the gaming industry a voice in the assembly. “The economy of Macau is based on casino operations and the industry is branching out to diversify into some non-gaming elements,” Mr So said. “It is very relevant to have representatives from the industry – not only one, but maybe a few.” Ms Leong said the assembly could help the gaming industry diversify. Ms Leong also reiterated her

The electoral ticket led by Angela Leong registered their candidacies yesterday

support for a complete ban on smoking in casinos. “I hope Macau will become a smoke-free city,” she said. Ms Leong gave no details. She said her manifesto would be released soon. The smoking areas in most of SJM’s 20 gaming venues failed the first around of air quality tests in March. The government could fine the company, reduce the size of its smoking areas or abolish them altogether. Since January smoking in any gaming venue has been allowed only in designated areas covering no more than one-half of its floor space. The smoking ban is due to be reviewed in 2015. Ms Leong said the candidates on her ticket were concerned about

disadvantaged people, transport, housing and the accountability of senior government officials. She said she did not mind being stereotyped as a gaming executive candidate. All but two of the candidates on Ms Leong’s ticket are in the gaming industry. The exceptions are two new candidates: Ng Sut I, a physician, and Szeto Tie Fung, president of the Macau Adult Deaf Special Education Association. Ms Leong said her ticket would abide strictly by the rules for campaigning. By yesterday, 18 tickets had registered their candidacies. Only 16 tickets contested the elections in 2009.

June April 21, 19, 2013 2013

Macau

Paradise completes patents deal with chairman Jay Chun swapping intellectual property rights for near 69 percent stake Michael Grimes

michael.grimes@macaubusinessdaily.com

lectronic gaming equipment supplier Paradise Entertainment Ltd, said yesterday it has completed the acquisition of patents previously held by the firm’s chairman Jay Chun. The deal is being funded by the shareholders of the Hong Kong-listed business. In a filing on May 8, the company said a key reason for the transaction was that since 2005 Mr Chun had “devoted his own financial resources and manpower” to developing a particular product called the “Single Game System”, but that “with limited financial resources for the research and development of the Single Game System, the company had no capacity to develop other computerised game systems…” ‘Single Game System’ refers to a Paradise product whereby many betting terminals can be linked to a single dealer table. It allows many more people to bet on a table game result than is possible with a traditional table.

Since 2009 an updated version has been marketed in Macau and beyond under the branding of LT Game. Between 2008 and 2010, group turnover from share of net win generated by the Single Game System and its successor nearly doubled to HK$89 million (US$11.5 million) said the May filing. Before the deal announced yesterday, Mr Chun controlled 9.2 percent of Paradise. After the transaction – involving unspecified promissory notes and 600 million shares in Paradise at an exercise price of HK$1 per share – Mr Chun now controls 68.7 percent of Paradise, according to a filing with the Hong Kong Stock Exchange. Paradise said on May 8 the deal would involve HK$60 million in c as h , H K$2 0 0 m i ll i o n i n a promissory note, and HK$480 million in shares. The earlier filing on May 8 also said the intellectual property in the deal is for “five approved patents and six patents applications pending

Macau turning blind eye on labour trafficking: report Better protection for victims needed, says the U.S. State Department Vítor Quintã

vitorquinta@macaubusinessdaily.com

he Macau authorities are still struggling to tackle labour trafficking and help the victims, the U.S. State Department’s ‘Trafficking in Persons Report 2013’ said. The few labour trafficking cases identified last year were treated as worker disputes and the victims were simply sent packing, the report released on Wednesday U.S. time says. There were cases of labour trafficking involving 18 mainland Chinese who were disputing their work conditions but they were prosecuted “under worker protection laws,” the U.S. department wrote. The authorities repatriated the mainland victims “without offering them victim services,” it added. Macau has a policy offering victims legal alternatives to repatriation. But “no trafficking victims received such immigration relief after legal proceedings; trafficking victims were repatriated without an option to stay,” the report says. The U.S. State Department advised Macau to “inspect for evidence of forced labour and appropriately prosecute cases as labour trafficking offences”. The report does praise the city’s decision to eliminate “a requirement that foreign workers who are fired

or quit a job wait six months before obtaining a new position”. The U.S. State Department said “this waiting period previously made migrants vulnerable to forced labour”. However, the information is not correct. The rule was never eliminated, although it underwent some minor changes, enacted last April. The territory has increased its efforts against sex trafficking, namely by hiring five more prosecutors and training more prosecutors and judges, the report says. There were “tangible results,” the U.S. State Department wrote, with more investigations launched and nine offenders convicted in one case of forced prostitution. In that same case 17 women “were not protected as victims” because the court ruled they had voluntarily associated with the defendants. Cooperation with mainland China and Hong Kong improved but the government from another unnamed “trafficking source country reported a lack of cooperation,” the document adds. In addition, there were no investigations or prosecutions over child sex tourism, even though “at least” one suspected case of child prostitution in an American-owned casino has been reported.

approval in the U.S. in relation to a betting terminal system, which are beneficially owned by and stand or are proceeding in the name of the vendor”. In the May filing Paradise stated that an objective of the deal was to promote sales in the United States. Since 2009, LT Game Ltd has been in legal dispute with U.S.based Shuffle Master Inc. – now known as SHFL entertainment Inc. – and its units, and with other equipment manufacturers, over “a terminal and gaming system” it says is covered by Macau registered Invention Patent l/380. That litigation is ongoing. But LT Game said in a statement to Business Daily on May 16 that it has “always been open to discuss the terms and condition under which any entity whatsoever may import, manufacture, offer, display, store, use, sell or distribute in Macau material and equipment that uses the invention protected…”

Jay Chun

June 21, 2013 April 19, 2013

Greater China

Factory activity slows further Manufacturing contraction deepens amid cash pinch

hina’s factory activity weakened to a nine-month low in June as demand faltered, a preliminary survey showed, heightening the risk of a sharper second quarter slowdown and increasing the heat on the central bank to loosen policy. The preliminary reading of 48.3 for a Purchasing Managers’ Index released yesterday by HSBC Holdings Plc and Markit Economics compares with the 49.1 median estimate in a Bloomberg News survey of 15 economists. May’s final reading of 49.2 was the first below 50 since October, indicating contraction. As the economy shows signs of faltering, a squeeze in Chinese money markets over the past two weeks has sharply tightened monetary conditions, adding to the pressure on the People’s Bank of China to take steps to ease policy. “Headline activity indicators such as industrial production and fixed asset investment are weak but are not collapsing, while labour market conditions remain tight,” said Zhang Zhiwei, economist at Nomura Securities International in Hong Kong. “We believe the government is committed to tolerating short-term pain to achieve its policy objectives – containing financial risks and secure sustainable growth in the long term.” Nomura sees a 30 percent chance that growth in the second half of this year could be below 7 percent. Manufacturing weakness, along with the money-market cash crunch,

will further test how far Premier Li Keqiang is willing to go in sacrificing short-term expansion for moresustainable long-term growth. After record credit in the first four months of the year failed to stoke growth, China’s State Council said last night that the financial system needs to do a better job of supporting the economy. “If market rates remain at such high levels, the only scenario for the Chinese economy is a hard landing,” said Xu Gao, chief economist with Everbright Securities Co in Beijing. “That possibility is growing now – it seems the leadership is deliberately taking a wait-and-see stance to see how low China growth can be.”

weighed down by deteriorating external demand, moderating domestic demand and rising destocking pressures,” said Qu Hongbin, chief China economist at HSBC. “Beijing prefers to use reforms rather than stimulus to sustain growth. While reforms can boost long-term growth prospects, they will have a limited impact in the short-term. As such we expect slightly weaker growth in Q2.” Many analysts have cut their forecasts for 2013 growth, with Barclays Plc seeing growth of 7.4 percent from 7.9 percent, and HSBC 7.4 percent from 8.2 percent in 2013 and 2014 at 7.4 percent from 8.4 percent.

There are a growing number of voices expecting policy action by the central bank, particularly as monetary conditions tighten. Interbank funding costs surged again yesterday, with the two shortest-term rates hitting record highs. “We expect the People’s Bank of China to ease monetary conditions shortly,” said Dariusz Kowalczyk, senior economist/strategist for Asia ex-Japan at Credit Agricole CIB, in a note. “We see either an RRR [reserve ratio requirement] cut or large-scale liquidity-boosting open market operations.” But the central bank, which last cut rates in July 2012, is facing a

Falling orders In the PMI survey a sub-index measuring overall new orders dropped to 47.1 in June, the lowest reading in 10 months, suggesting demand is weakening both at home and abroad. New export orders also weakened further in June, pointing to persistent global headwinds as the U.S. recovery remains patchy, while Europe’s economy remains shackled by the debt crisis. An employment sub-index also eased in June – broadly in line with signs of softening demand for migrant workers in Chinese cities – even though the overall job market is holding up as the government tries to improve social safety nets. “Manufacturing sectors are

KEY POINTS PMI AT 9-MONTH LOW AS NEW ORDERS DROP ADDS TO MARKETS NERVES POST FED DECISION EYES ON CENTRAL BANK ACTION PROPERTY BUBBLE MAY RULE OUT RATE CUT

Manufacturing – shrinking at a faster pace this month

Shijiazhuang to restrict Royal Caribbean eyes wealthy C number of vehicles

Awareness of cruising is still low in the mainla

ne of China’s most polluted cities has proposed to limit vehicle ownership through a lottery, becoming the latest locality to do so in the world’s largest auto market as air quality and traffic congestion worsen. Shijiazhuang, the capital of steel-producing Hebei province surrounding Beijing, will restrict the number of new vehicles to 100,000 this year and limit households to owning two cars, according to a Shijiazhuang Daily report posted on the local government’s website. That quota will be cut to 90,000 in 2015, with a lottery being used to determine who can buy cars, the report said. The proposals are at a preliminary stage and require hearings to be held before taking effect, an official at the city government’s news office said by telephone. He declined to give his name. China has vowed to step up efforts to curb emissions after air pollution and worsening congestion sparked public anger. Shijiazhuang, which ranks among the worst in air quality according to the environment ministry, joins Beijing, Shanghai, Guangzhou and Guiyang in imposing vehicle quotas, even as cities compete for new plants built by automakers

from General Motors Co to Volkswagen AG. “In the mid to longer term, there is higher likelihood we’ll see more and more cities imposing registration limitations,” said Klaus Paur, Shanghai-based global head of automotive coverage at researcher Ipsos. “The auto industry contributes a lot to development so there’s a trade-off to be made by each government, saying how much do I want my city to develop.” The measures proposed by Shijiazhuang are part of the municipal government’s plan to cut levels of PM2.5 air particulates – the smallest and most harmful to human health – by 15 percent through the end of 2015. Other provisions include restricting the hours that heavy vehicles can enter city limits, imposing alternate-day use for passenger cars from next year, and requiring new autos to meet stricter emission standards. China’s Ministry of Environmental Protection published a list of the 10 cities with the worst air pollution last month, with six of them located in Hebei province, including Shijiazhuang. That was unchanged from the list for the first quarter. Bloomberg News

Asia accounts for only 6 to 7 percent of the world’s total cruises

oyal Caribbean Cruises Ltd expects Asia’s leisure-sailing market to repeat the U.S. growth rate over the last three decades as the Chinese become richer. “The number of Asians cruising today is very similar to the number of Americans who were cruising in 1980s,” said Adam M. Goldstein, president and CEO of Royal Caribbean International line, the largest brand at the world’s secondbiggest cruise line. “While the markets are not the same, we think that China has terrific potential to grow,” he said in an interview from

Hong Kong. The global cruise market is estimated to grow 4.5 percent this year to US$36.2 billion, according to industry data and analysis provider Cruise Market Watch. Asians now take about 1.5 million cruises a year, similar to the 1.4 million in U.S. some 30 years ago, Mr Goldstein said. The number of U.S. voyagers has grown to about 12 million, and Asia accounts for only 6 to 7 percent of the world’s total cruises, he said. Awareness of cruising is still low in China, Mr Goldstein said. The Miamibased company said last week that

June 21, April 19, 2013 2013

Greater China dilemma as it balances the need to support the economy while dealing with property prices rising their fastest pace this year in May and looking increasingly like a bubble. In addition, the chances of fresh stimulus appear slim given that China’s new leaders have adopted a greater tolerance for a slowing economy as they focus on economic reforms. Government economists have told Reuters that the new leadership of President Xi Jinping and Premier Li Keqiang would tolerate quarterly growth slipping as far as 7 percent year-on-year before looking to jumpstart the economy. Reuters/Bloomberg News

Chinese tourists

Beijing to boost credit for strategic industries Government says financial system must serve economy

hina’s Cabinet said the nation’s financial system must better support economic growth and restructuring, after a surge in credit failed to ignite growth and interbank borrowing costs jumped to the highest since 2006. Authorities will boost credit support for industries the government has defined as strategic and those that are labour-intensive, the State Council said in Beijing yesterday after a meeting led by Premier Li Keqiang. The nation must also more firmly guard against financial risks, it said. The seven-day repurchase rate, a gauge of interbank funding availability, rose to the highest since at least 2006 yesterday as slowing economic growth, a crackdown on illegal capital inflows and efforts to rein in shadow banking contributed to increased borrowing costs. China’s central bank has refrained from using reverse-repurchase agreements to inject funds into the interbank market since February 7. The State Council “dashed hopes for any immediate rescue efforts by the central bank to ease the credit crunch,” such as reserve-ratio or interest-rate cuts, Tang Jianwei, a Shanghai-based economist at Bank of Communications Co, said yesterday. “Between stabilising economic growth and adjusting the growth model, China’s top policy makers have clearly made the decision to focus on the latter.” The State Council meeting discussed how the financial industry can support a restructuring of China’s economy, according to the statement. Chinese leaders have sought to reduce

the nation’s reliance on investment and exports for economic growth and to increase the role of domestic consumption.

More forceful The financial system must “support economic transformation and upgrading in a more forceful way, serve real economic development in a better way, promote domestic demand in a more targeted way and prevent financial risks in a more concrete way,” the State Council said. China must push forward interestrate liberalisation, encourage corporate overseas investment, boost bond issuance and support those seeking to buy their first homes, according to the statement. Bank lending for projects in industries with overcapacity must be banned, the State Council said. “Beijing’s new approach is to focus on reform, rather than stimulus,” said Qu Hongbin, HSBC Holdings Plc’s Hong Kong-based chief China economist. “In the last three months, we have seen enough evidence that the current generation of leadership is really determined to push forward reform.” China must also uphold prudent monetary policy and “use it well,” and keep a reasonable scale of monetary aggregates, the State Council said. The government’s broadest measure of credit rose 58 percent to a record 6.16 trillion yuan (US$1 trillion) in the first quarter, when gross domestic product gained 7.7 percent, compared with 8.1 percent a year earlier. Bloomberg News

and, says CEO China will overtake the U.K. in two to three years as its largest market after the U.S as demand from the Chinese middle class rises. The number of Chinese passengers at Royal Caribbean quadrupled to 100,000 last year from 25,000 in 2012 and is expected to double to 200,000 this year, Mr Goldstein said. The company, which has focused on destinations within Asia for Chinese customers, will eventually seek to take them farther away to places such as Europe, he said.

Bloomberg News

China’s stocks fell to the lowest level in six months after benchmark money-market rates climbed to a record and a private report showed manufacturing shrank at a faster pace this month. Ping An Bank Co and China Minsheng Banking Corp dropped more than 4 percent as the repurchase rate, a measure of interbank funding availability, jumped to the highest level since at least 2006. Poly Real Estate Group Co dragged property developers to the biggest loss among industry groups. Metal and energy companies slumped on concern about the economy, with Jiangxi Copper Co sliding to the lowest level since March 2009 and Yanzhou Coal Mining Co plunging 7 percent. The Shanghai Composite Index lost 2.8 percent to 2,084.02 at the close. The CSI 300 Index dropped 3.3 percent to 2,321.47. The Hang Seng China Enterprises Index fell 3.2 percent. Hong Kong shares also tumbled to their lowest in nine months yesterday. The Hang Seng Index ended down 2.9 percent at 20,382.9 points, its lowest close since September 13. Turnover in Hong Kong spiked to the highest in a week.

Sinopec sweetens stock offers China Petroleum & Chemical Corp, also known as Sinopec, plans to offer investors more of its domestic shares in Sinopec Shanghai Petrochemical Co in exchange for the right to make all of the unit’s stock tradable. Holders of Sinopec Shanghai A shares will receive five shares for every 10 held, compared with the 4.5 shares proposed previously, according to a filing by Shanghai-listed in Sinopec Shanghai yesterday. Separately, Sinopec and Citic Ltd will give retail investors in Sinopec Yizheng Chemical Fibre Co five shares for every 10 held, compared with the 4.5 shares proposed previously, to make all shares tradable, according to an exchange statement. The two Sinopec units will also propose stock option incentive plans within 12 months of their non-tradable shares becoming tradable, according to the statements. The controlling holders pledged not to sell the newly unlocked shares for 12 months, the companies said. Shares of Sinopec Shanghai and Yizheng Chemical are expected to resume trading in Shanghai today, according to the filings. They have been suspended since May 30.

Zijin eyes Barrick Australia mines

Little awareness “In China, there is extremely little awareness of cruise products or cruise brands,” Mr Goldstein said. It is vital to build a better distribution network in the country with travel agents savvy about cruising, he added. Royal Caribbean already has home ports in the Chinese cities of Shanghai and Tianjin, as well as Singapore, and it plans to set up one in Hong Kong later this year. Hong Kong opened its second cruise terminal on June 12, joining Singapore in expanding facilities to capture the growing cruise market in Asia. Passengers are expected to rise 3.3 percent from a year earlier to 20.9 million this year, with Asia accounting for 6.5 percent of the traffic.

Chinese stocks fall to 6-month low

Between stabilising economic growth and adjusting the growth model, China’s top policy makers have clearly made the decision to focus on the latter Tang Jianwei, economist, Bank of Communications

Zijin Mining Group Co, China’s biggest gold miner by market value, is considering a bid for the Australian assets of Barrick Gold Corp, said Lan Fusheng, vice chairman in charge of overseas investment. “The recent slump in gold prices made it an excellent opportunity for Zijin to go out and invest overseas,” Mr Lan said yesterday in a interview at a conference in Zhaoyuan, China. “We are looking at a number of projects now, including the three Australian projects that Barrick has put up for sale.” Gold slumped 20 percent this year, tumbling into a bear market in April, and is headed for its first annual decline since 2000. Zijin bought Norton Gold Fields Ltd last year to add assets in Australia, after saying in 2011 it aimed to spend as much as 10 billion yuan (US$1.6 billion) a year on acquisitions and expanding mines. “The slump in gold prices this year caught everybody by surprise,” Mr Lan said. “There was similar opportunity in 2009 when valuations of overseas gold assets dropped sharply but unfortunately we weren’t able to seize it.”

10 10

June 21, 2013 April 19, 2013

Asia New Zealand growth slows in Q1 New Zealand’s economic growth slowed more than economists forecast last quarter as the nation’s worst drought in 30 years curbed farm output, while construction and manufacturing expanded. Gross domestic product rose 0.3 percent in the three months ended March 31 from the previous quarter, when it expanded 1.5 percent, Statistics New Zealand said. The economy expanded 2.4 percent in the first quarter from the year-earlier period, the report showed. Growth is predicted to accelerate later this year, which is expected to prompt the Reserve Bank to start raising interest rates.

Bond market in Asia in danger of selloff rout Investors scramble to sell assets as Asia shows growing appetite for debt Saikat Chatterjee and Umesh Desai

fforts to make the global financial system safer could be making Asia more – not less – vulnerable to any credit market shocks, leaving bond traders worried that a sharp selloff since late May could turn into a rout. Low global interest rates have made it easier than ever to sell new bonds denominated in dollars, euros or yen, resulting in a boom in issuance that has made Asia and its companies ever more dependent on debt. But the market for trading those bonds is slowly drying up, leaving it susceptible to a sharper selloff if holders of these so-called G3 bonds decide it is time to head for the exit. “The issue is that if any of them choose to sell their holdings, the market may not have the capacity to absorb these flows. If we reach a stage like that then liquidity could dry up very quickly and that can have a spiralling effect,” said Dhimant Shah, a fund manager at Mackenzie Investments in Singapore. Bond markets in Asia have generally trended higher since the Lehman crisis during the global financial crisis in 2008, partly aided by the flood of cash from Western central banks aimed at reviving their economies. By one measure, a JP Morgan basket of credit, the debt market hit its highest level in May

since the global financial crisis. In the last month though, bonds have stumbled on jitters over when the U.S. Federal Reserve will start to unwind its stimulus programme. Yields, which move inversely to prices, on the debt tracked by the JP Morgan basket have jumped in the past month more than 60 basis points, largely in the past two weeks. The yield on Indonesian government bonds due in 2020 have risen even faster, nearly 100 basis points in the past month. Asia’s low market liquidity could create a more explosive selloff in which a lack of trading creates a price vacuum, leading to sharper price declines as investors scramble to sell assets for cash, a scenario similar to the dark days of the Lehman crisis. “I don’t recall in recent memory bonds falling so quickly without a tail-risk event as they did in the last month,” said Richard Cohen, head of credit trading in the Asia Pacific for Credit Suisse Group AG. Tail-risk refers to a sudden event that has a major impact on financial markets.

Powerful factors Unlike equity and currency markets, there is no central repository for information on bond volumes. But dealers said volumes have fallen

Indonesia to raise fuel prices on Saturday

ndonesia will carry out a big increase in fuel prices tomorrow, settling months of agonising over the politically divisive issue that was damaging confidence in Southeast Asia’s biggest economy and sapping the state’s finances. Fuel subsidies, which the government argues largely benefit the rich, cost around US$20 billion last year and have been pushing the former OPEC member’s current account deeper into deficit as oil imports rise to meet the insatiable demand for cheap fuel. “The fuel hike will be announced on Friday at midnight and effective after it is announced,”

Industry Minister M.S. Hidayat told reporters yesterday. Even after the increases – expected to be 44 percent for petrol and 22 percent for diesel – Indonesia will still have some of the cheapest prices in the region. The move follows approval by parliament this week of measures to give cash handouts to the poor for the next four months to shield them from the higher cost of fuel and the impact that will have on prices in general. President Susilo Bambang Yudhoyono had insisted on aid for the poor before he would sign off on higher fuel prices. Still, thousands held protests around the country this

Asia more vulnerable to credit market shocks

sharply as the market has sold off, although more generally liquidity has also been sliding in the past year as the result of some powerful factors. Regulations under new Basel III capital requirements and the DoddFrank legislation in the United States are forcing Western banks to cut global operations, trim, or even eliminate their own bond trading operations and to cut Asian bond portfolios to reduce risk.

week to demonstrate against the fuel price rises. Finance minister Chatib Basri told MPs in the week that the budget deficit could reach 4 percent of GDP if fuel subsidies were not cut. With the revised 2013 budget, the fiscal deficit will be 2.38 percent of gross domestic product, “which is quite healthy,” Mr Basri said. He added that the fuel-price increase would strengthen the rupiah and the trade balance as oil imports fall. The nation will meet its budget assumption of the rupiah averaging 9,600 per dollar this year, Mr Basri said. The currency will have to be about 4.6 percent stronger than the current level on average for the rest of the year to meet the estimate. Central bank governor Agus Martowardojo said month-on-month inflation would shoot up 2 percent this month as a result of costlier fuel but that the impact would be neutral by September or October. Reuters/Bloomberg News

For example, fund manager Shah, 41, left J.P. Morgan Chase & Co in Singapore as head of proprietary trading last year, one of many traders who left banks as the stricter capital requirements made it tougher for them to conduct proprietary trading. At the same time, Asian banks have not developed the expertise or the risk-appetite to fill the void. In addition, the same low interest rates that make it easy to sell new

Sony plays for time on spinoff proposal S

ony Corp shareholders pressed its chief executive yesterday for a response to a proposal by hedge fund Third Point to spin off its profitable entertainment business, aiming to invigorate its struggling electronics business. Sony CEO Kazuo Hirai told an annual shareholders’ meeting that the company would carefully consider the proposal by Daniel Loeb, the billionaire hedge fund manager of Third Point and Sony’s top shareholder. Mr Loeb wants Sony to spin off as

11 11

June April 21, 19, 2013 2013

Asia Abe eyes talks with China Japan’s Prime Minister Shinzo Abe sought to repair some of the damage a row over disputed islands has done to its relationship with China. Speaking at a City of London event, Mr Abe held out the offer to restart talks with Beijing. “What is important is to continue dialogue with China even if there may be some event once in a while,” Mr Abe said. “Backed up by force there seems to be some provocative action triggered by China… But the door to dialogue is open, and with President Xi Jinping I am fully prepared to resume the dialogue.”

bonds are making older bonds more attractive to hold rather than trade. The result is a diminishing amount of secondary trading in Asian bonds. The combination of factors makes it more difficult for sellers, said Hong Kong-based Fredric Teng, a partner at hedge fund Oracle Capital Limited. “It’s a bit like Tom trying to get out using Jerry’s pet flap. If investors cannot get out we could have crazy knee jerk price actions,” Mr Teng said. Such a squeeze could have far reaching consequences in Asia given its growing appetite for debt. The region’s debt-to-GDP ratio rose to 155 percent in mid-2012 from 133 percent in 2008, data from McKinsey Global Institute, a unit of consulting firm McKinsey & Co, shows. It is also higher than 1997, when several economies in Asia buckled as capital fled the region. The selloff is the first sign that a bull run in bonds of more than four years may be coming to an end as investors anticipate the U.S. Fed easing back on its stimulus pedal. That risk means investors are wary of some areas of the market. Reuters

I don’t recall in recent memory bonds falling so quickly without a tailrisk event as they did in the last month Richard Cohen, Credit Suisse

much as one-fifth of the electronics empire’s profitable entertainment unit and use the proceeds to strengthen its hardware division. At yesterday’s meeting, attended by thousands of shareholders, Mr Hirai said it was important for Sony’s board to thoroughly and carefully consider the proposal and to seek outside input, without rushing for the sake of reaching a decision quickly. “Our entertainment division will remain an important part of Sony’s business,” Mr Hirai said. Even before the board elected yesterday considers Mr Loeb’s proposal for an entertainment IPO, investors seem to agree those assets are undervalued. “The board will continue to discuss Third Point’s proposals and we will reach an appropriate decision,” Mr Hirai said. “I understand this to be a very important proposal that involves what Sony is now and what Sony will be in the future.” Reuters

Japan Inc. sits on Italy-sized cash pile Managers await growth plan before deciding on investments Toru Fujioka and Mio Coxon

apanese companies stockpile of cash reached a record in the first quarter as they poured investment abroad, underscoring Prime Minister Shinzo Abe’s challenge to boost the nation’s investment and wages. Private companies’ cash and deposits rose 5.8 percent from a year before, to 225 trillion yen (US$2.4 trillion) – an amount in excess of the size of Italy’s economy or the liquid assets held by American firms, Bank of Japan data showed in Tokyo. Businesses held 55 trillion yen in direct investment abroad. The report underscores the appetite for manufacturers to ramp up operations in faster-growing economies as they await evidence for Mr Abe’s growth agenda opening new opportunities at home. Without a revamp of corporate governance practices that forces Japan Inc. to deploy its cash pile, it will be tough for the prime minister to transform the economy, economist Masaaki Kanno said. “This is a very big problem in Japan’s economic system,” said Kanno, chief Japan economist at JPMorgan Chase & Co in Tokyo and a former BOJ official. “The problem is lack of corporate governance – the role of shareholders should be to urge managers to use cash more profitably.” Mr Abe plans to roll out legislation to reduce corporate regulation later this year, after next month’s election for the upper house of parliament. Meantime, he and his Cabinet have set targets for increased investment at home and urged businesses to

boost wages as they enjoy a bump in profits from a falling yen.

No guarantee The prime minister’s growth plan offers no guarantee of revitalising Japan, Moody’s Investors Service said in a credit outlook report yesterday. “The outline lacks steps to significantly increase corporate investment in the domestic economy,” analysts David Erickson and Tom Byrne wrote. A government report on Wednesday showed Japan’s exports rose more than forecast in May as a weaker yen boosted the value of overseas sales, even as the volume of goods shipped abroad declined. The BOJ’s release, known as the flow of funds report, added to evidence of increase in profits. The cash and deposit holdings of Japan’s non-financial companies reached a record in the Januaryto-March period, according to BOJ figures dating back to 1979. The US$2.4 trillion equivalent compares with the US$1.8 trillion in liquid assets – such as cash, deposits and money-market fund shares – held by nonfinancial U.S. firms, according to Federal Reserve data. “Excess net private savings to a large extent reflect the malaise that Japan has been in – of deflation and low growth,” said Paul Sheard, chief global economist at ratings company Standard & Poor’s. “The corporate sector is not going to take that money and suddenly start investing, start increasing wages or hiring more workers if it doesn’t see a more

optimistic future.” Among the 198 non-financial companies on the Nikkei 225 Stock Average, 42 have more cash than debt, according to data compiled by Bloomberg. The BOJ’s efforts to end 15 years of sustained deflation will help encourage companies to deploy their cash, according to Finance Minister Taro Aso. “They are hoarding cash because of deflation,” Mr Aso said in parliament. “Deflation makes the value of money higher if you just keep it. But inflation won’t allow that to happen and it will be an impetus” to spend, he said.

Growing economy Japan’s gross domestic product jumped at an annualised 4.1 percent pace last quarter, propelled by consumer spending and exports while business investment declined. The flow of funds report showed households had a financial deficit of 12.1 trillion yen in the period, the biggest since January-to-March 2009, reflecting that shoppers opened their wallets wider. Japanese typically see a net outflow of funds in the first and third quarters of the calendar year, with inflows in the second and fourth periods, when bonuses are paid. Mr Abe’s 10.3 trillion yen fiscal package enacted earlier this year, and BOJ Governor Haruhiko Kuroda’s April commitment to double the monetary base, helped strengthen consumer confidence to its highest level since 2007 in May. Bloomberg News

COMPANIES ON THE NIKKEI 225 STOCK AVERAGE HAVE MORE CASH THAN DEBT

June 21, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

32.1

-2.134146

41591623

CHINA UNICOM HON

10.1

-2.509653

26476987

ALUMINUM CORP-H

2.47

-3.137255

35192654

CITIC PACIFIC

8.17

-2.969121

8688734

BANK OF CHINA-H

3.08

-2.839117

457810574

CLP HLDGS LTD

BANK OF COMMUN-H

5.32

-2.919708

41928555

27.55

-2.477876

4732344

10.4

-2.985075

36663129

ESPRIT HLDGS

BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO

24.05

-2.03666

17838701

CATHAY PAC AIR

13.46

-1.751825

4921992

CHEUNG KONG

102.1

-3.588291

9641685

4.35

-3.761062

45856738

CHINA COAL ENE-H CHINA CONST BA-H

5.15

-5.156538

633317082

CHINA LIFE INS-H

18.52

-2.114165

46785885

CHINA MERCHANT

23.7

0.4237288

3588930

CHINA MOBILE

75.05

-1.444517

CHINA OVERSEAS

19.14

-6.176471

5.37

-3.935599

132346903

CHINA PETROLEU-H CHINA RES ENTERP

NAME

PRICE

DAY %

66.5

-2.349486

4239625

SANDS CHINA LTD

38.85

-3.358209

11514530

SINO LAND CO

10.44

-4.044118

12567231

SUN HUNG KAI PRO

96.95

-2.807018

7996635

92.1

-2.642706

2702714 6211282

POWER ASSETS HOL

VOLUME

62.3

-2.351097

6320784

CNOOC LTD

-4.411765

99683745

COSCO PAC LTD

-1.768173

8760535

SWIRE PACIFIC-A

11.2

-2.439024

3572737

TENCENT HOLDINGS

290.2

-3.137517

HANG LUNG PROPER

26.85

-2.185792

14165735

TINGYI HLDG CO

19.82

-0.4020101

7674183

HANG SENG BK

115.3

-2.205259

2892775

WANT WANT CHINA

10.2

-1.544402

23648107

HENDERSON LAND D

45.25

-1.737242

5611311

WHARF HLDG

67.5

-2.877698

8134923

76.9

-1.72524

3008380

HONG KG CHINA GS

18.46

-1.70394

14124065

HONG KONG EXCHNG

HENGAN INTL

121.1

-0.8190008

5430623

HSBC HLDGS PLC

81.5

-2.686567

28533647

21343472

HUTCHISON WHAMPO

78.9

-3.190184

8509681

53908340

IND & COMM BK-H

4.57

-3.789474

458115445

-2.135231

20240766

28.05

-1.923077

4298592

LI & FUNG LTD

23.8

-2.459016

5475362

CHINA RES LAND

19.32

-6.891566

22690325

NEW WORLD DEV

10.7

-3.603604

19488226

CHINA RES POWER

17.46

-2.675585

5258003

PETROCHINA CO-H

8.22

-2.259215

105023716

CHINA SHENHUA-H

22.15

-3.695652

19392103

PING AN INSURA-H

53.6

-2.545455

20457974

PRICE

DAY %

VOLUME

24.55

-3.536346

12711204

5.37

-3.935599

132346903

MTR CORP

MOVERS

0 21230

INDEX 20382.87 HIGH

21225.88

LOW

20382.87

52W (H) 23944.74 (L) 18710.58984

20380

18-June

20-June

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.09

-2.889629

255893671

AIR CHINA LTD-H

5.41

-1.277372

12696000

CHINA PETROLEU-H

ALUMINUM CORP-H

NAME CHINA PACIFIC-H

2.47

-3.137255

35192654

CHINA RAIL CN-H

6.7

-3.735632

7468600

ANHUI CONCH-H

20.65

-2.823529

19112165

CHINA RAIL GR-H

3.56

-2.997275

18679000

BANK OF CHINA-H

3.08

-2.839117

457810574

CHINA SHENHUA-H

22.15

-3.695652

19392103

CHINA TELECOM-H

5.32

-2.919708

41928555

3.67

-1.078167

39582000

29.85

-9.270517

8734800

DONGFENG MOTOR-H

10.86

-3.380783

11503120

CHINA CITIC BK-H

3.68

-3.157895

60963800

GUANGZHOU AUTO-H

7.53

-0.3968254

11981181

CHINA COAL ENE-H

4.35

-3.761062

45856738

HUANENG POWER-H

7.17

-0.9668508

20254100

CHINA COM CONS-H

6.64

-1.62963

26782595

IND & COMM BK-H

4.57

-3.789474

458115445

CHINA CONST BA-H

5.15

-5.156538

633317082

JIANGXI COPPER-H

14.26

-3.256445

17082370

CHINA COSCO HO-H

3.36

0.9009009

12204500

PETROCHINA CO-H

8.22

-2.259215

105023716

BANK OF COMMUN-H BYD CO LTD-H

18.52

-2.114165

46785885

PICC PROPERTY &

8.65

-1.029748

15299676

CHINA LONGYUAN-H

7.95

-3.402187

15003000

PING AN INSURA-H

53.6

-2.545455

20457974

CHINA MERCH BK-H

13.28

-3.488372

24776569

SHANDONG WEIG-H

9.37

-2.089864

9926000

CHINA MINSHENG-H

8.02

-6.308411

129944183

SINOPHARM-H

19.94

-3.438257

5499400

CHINA NATL BDG-H

7.02

-1.955307

55076005

TSINGTAO BREW-H

54.75

933299

14.54

-2.546917

5723745

WEICHAI POWER-H

24.95

-1.964637

2127862

CHINA LIFE INS-H

CHINA OILFIELD-H

NAME

PRICE

DAY %

YANZHOU COAL-H

6.24

-3.10559

25374643

ZIJIN MINING-H

1.68

-1.754386

110197582

5.69

-2.516687

9156560

11.92

-2.454992

2395920

ZOOMLION HEAVY-H ZTE CORP-H

MOVERS

VOLUME

1 9740

INDEX 9265.3 HIGH

9733.54

LOW

9265.3

52W (H) 12354.22 9260

(L) 8987.76 18-June

20-June

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.6

-2.621723

117388580

AIR CHINA LTD-A

4.59

-3.368421

9750334

NAME

PRICE

DAY %

VOLUME

5.69

-4.208754

4730459

CITIC SECURITI-A

10.82

-2.959641

CHONGQING WATE-A

NAME

PRICE

DAY %

QINGDAO HAIER-A

11.55

-0.7731959

VOLUME 8756891

70913094

QINGHAI SALT-A

19.93

-3.859141

4801995

3.57

-5.30504

19346353

CSR CORP LTD -A

3.96

-1.980198

26655611

SAIC MOTOR-A

13.23

-4.545455

27515670

ANHUI CONCH-A

13.44

-4.950495

27073897

DAQIN RAILWAY -A

6.1

-2.086677

24323172

SANAN OPTOELEC-A

19.84

-2.169625

11572241

BANK OF BEIJIN-A

8.08

-3.694875

23079775

DATANG INTL PO-A

4.95

-0.6024096

13887933

SANY HEAVY INDUS

7.94

-2.096178

20058630

BANK OF CHINA-A

2.64

-2.222222

30774929

EVERBRIG SEC -A

11.66

-3.556658

22648881

SHANG PHARM -A

10.91

-3.961268

8643217

BANK OF COMMUN-A

4.29

-2.941176

70553698

GD MIDEA HOLDI-A

12.8

13015220

SHANG PUDONG-A

8.42

-5.286839

137571510

BAOSHAN IRON & S

4.17

-2.570093

11388964

GD POWER DEVEL-A

2.3

-2.12766

46989917

SHANGHAI ELECT-A

3.65

-1.351351

3235452

BEIJING TONGRE-A

22.75

-3.026428

4714295

GEMDALE CORP-A

6.54

-2.82318

39118846

SHANXI LU'AN -A

13.9

-4.794521

9688192

BYD CO LTD -A

31.84

-8.215624

13613410

GF SECURITIES-A

11.81

-3.037767

17224435

SHANXI XISHAN-A

9.29

-3.830228

9963323

CHINA AVIC ELE-A

24.42

-4.832424

5668553

GREE ELECTRIC

24.89

-2.353864

32321165

SHENZEN OVERSE-A

5.52

-4.166667

28769083

CHINA CITIC BK-A

3.76

-4.081633

20676275

GUANGHUI ENERG-A

20.01

-2.911208

12936798

SICHUAN KELUN-A

55.9

-1.947027

1498259

CHINA CNR CORP-A

4.14

-3.496503

27112433

HAITONG SECURI-A

10.39

-2.073516

80409270

SUNING COMMERC-A

5.37

-2.363636

26195937

CHINA COAL ENE-A

5.61

-5.714286

13782675

HANGZHOU HIKVI-A

37.11

-0.4827031

5439522

TASLY PHARMAC-A

39.29

-3.70098

4364042

CHINA CONST BA-A

4.51

-1.956522

37752661

HENAN SHUAN-A

40.64

-1.311316

5987514

TSINGTAO BREW-A

38.35

-0.6476684

2304457

CHINA COSCO HO-A

3.25

-2.402402

8700745

HONG YUAN SEC-A

9.98

-3.760849

31780724

WANHUA CHEMIC-A

15.62

-2.007528

9081739

CHINA EAST AIR-A

2.76

-3.496503

9916495

HUATAI SECURIT-A

8.67

-3.666667

23442301

WEICHAI POWER-A

19.5

-2.255639

6949227

CHINA EVERBRIG-A

2.89

-2.033898

89512401

HUAXIA BANK CO

9.52

-4.417671

25026768

WULIANGYE YIBIN

21.19

-2.664217

13742900

4.06

-2.168675

45461374

YANZHOU COAL-A

11.62

-7.04

7495842

YUNNAN BAIYAO-A

84.09

-3.222465

1701042

ZHONGJIN GOLD

10.32

-5.059798

17633262

ALUMINUM CORP-A

CHINA LIFE INS-A

14.52

-1.891892

9527039

IND & COMM BK-A

CHINA MERCH BK-A

11.47

-4.257095

63295614

INDUSTRIAL BAN-A

15.61

-3.760789

108146569

CHINA MERCHANT-A

10.95

-3.353928

21119927

INNER MONG BAO-A

24.71

-4.336043

20870138

CHINA MERCHANT-A

24.27

-2.686447

10885395

INNER MONG YIL-A

31.24

-0.3826531

24451897

ZIJIN MINING-A

2.73

-3.873239

48028971

4.34

-4.824561

24411121

ZOOMLION HEAVY-A

6.03

-4.133545

60185660

11.93

-5.091488

28653844

CHINA MINSHENG-A

9.29

-4.717949

152527260

INNER MONGOLIA-A

CHINA NATIONAL-A

9.97

-5.765595

49907549

JIANGSU HENGRU-A

27.97

-1.40994

4675372

CHINA OILFIELD-A

15.09

-2.833226

3297144

JIANGSU YANGHE-A

57.99

-1.293617

4065697

CHINA PACIFIC-A

17.77

-3.893997

7349196

9.14

-3.789474

5469323

17.04

-1.843318

15551215

JIANGXI COPPER-A

CHINA PETROLEU-A

4.5

-3.846154

38478375

JINDUICHENG -A

CHINA RAILWAY-A

4.45

-2.412281

10833434

KANGMEI PHARMA-A

18.33

-3.373748

27577404

CHINA RAILWAY-A

2.56

-2.290076

13303814

KWEICHOW MOUTA-A

191.74

-1.585998

2558681

CHINA RESOURCE-A

29.6

6437890

LUZHOU LAOJIAO-A

24.92

-1.773749

6561169

1.81

-2.688172

35378879 21584936

CHINA SHENHUA-A

18.1

-1.737242

9416207

METALLURGICAL-A

CHINA SHIPBUIL-A

4.52

59982923

NARI TECHNOLOG-A

14.58

-7.545973

2.17

-2.690583

9300139

CHINA SOUTHERN-A

3.15

-3.076923

17366595

NINGBO PORT CO-A

CHINA STATE -A

3.36

-4

86122448

OFFSHORE OIL-A

7.12

-2.73224

18683990

CHINA UNITED-A

3.4

-3.409091

66658198

PETROCHINA CO-A

8.01

-1.35468

17095255

9.92

-2.649657

80301176

PING AN BANK-A

11.18

-6.198217

90306654

36.38

-3.552492

29369460

CHINA VANKE CO-A CHINA YANGTZE-A

6.99

-0.8510638

19486910

PING AN INSURA-A

CHONGQING CHAN-A

8.99

-6.158664

29600623

POLY REAL ESTA-A

10.61

-3.016453

51696105

PRICE DAY %

VOLUME

NAME

PRICE DAY %

VOLUME

ZTE CORP-A

MOVERS

286

8 2430

INDEX 2321.466 HIGH

2423.69

LOW

2321.47

52W (H) 2791.303 (L) 2102.135

2320

18-June

20-June

FTSE Taiwan 50 Index NAME ACER INC

22.1

-1.777778

7214457

ADVANCED SEMICON

24.8

-1.587302

10883618

ASIA CEMENT CORP

35.8

-1.37741

ASUSTEK COMPUTER

297 -0.3355705

AU OPTRONICS COR

11.4

-6.17284

NAME

PRICE DAY %

FORMOSA PLASTIC

68.6

-1.436782

7815221

TAIWAN MOBILE CO

FOXCONN TECHNOLO

72.2

-2.695418

3601256

9306059

FUBON FINANCIAL

39.3 -0.7575758

3757092

HON HAI PRECISIO

70.7

138253125

HOTAI MOTOR CO

293

0.4464286

TPK HOLDING CO L

564

-1.913043

5922885

13214607

TSMC

104

-1.421801

29998376

-1.805556

43376821

UNI-PRESIDENT

-1.023891

5032981

-2.657807

628655

UNITED MICROELEC

-2.621723

72739412

CATCHER TECH

157.5

-2.173913

4322245

HTC CORP

250

-4.03071

17971443

CATHAY FINANCIAL

40.35

0.7490637

25337338

HUA NAN FINANCIA

16.5 -0.6024096

6732639

YUANTA FINANCIAL

CHANG HWA BANK

16.2 -0.6134969

12654252

LARGAN PRECISION

975

-1.115619

1881004

YULON MOTOR CO

CHENG SHIN RUBBE

92.5

-2.528978

7643352

LITE-ON TECHNOLO

48.85 -0.3061224

6165379

CHIMEI INNOLUX C

17.05

-6.830601

96936467

MEDIATEK INC

342.5

-2.560455

8113920

CHINA DEVELOPMEN

8.21

-2.145411

32597624

MEGA FINANCIAL H

22.7

0.2207506

18892100

CHINA STEEL CORP

23.9 -0.8298755

22487935

NAN YA PLASTICS

58.9

-2.644628

9308188

CHINATRUST FINAN

18.4

58702253

PRESIDENT CHAIN

185 -0.8042895

844209

CHUNGHWA TELECOM

95.3 -0.4179728

6397346

QUANTA COMPUTER

61.6 -0.4846527

5622870

COMPAL ELECTRON

16.8

-1.754386

12763040

SILICONWARE PREC

36.6

DELTA ELECT INC

134

-3.249097

4426955

SINOPAC FINANCIA

FAR EASTERN NEW

31 -0.6410256

4307445

SYNNEX TECH INTL

42.6

2.280912

15120967

FAR EASTONE TELE

3549010

TAIWAN CEMENT

37.3

-0.665779

10653560

16.55

-1.488095

9938726

73.9

-1.728723

1997978

27.25

-1.624549

1331954

FIRST FINANCIAL

-1.866667

-0.273224

17.45 -0.5698006

15836314

TAIWAN COOPERATI

FORMOSA CHEM & F

-2.578797

6085343

TAIWAN FERTILIZE

FORMOSA PETROCHE

73.1

-3.178808

2579667

TAIWAN GLASS IND

VOLUME

112.5

-1.347709

8646325

14.25 -0.6968641

13148544

WISTRON CORP

MOVERS

7044896

29.9

1.184433

12550274

15.15

-2.258065

18105174

-1.030928

2345793

0 5570

INDEX 5521.74 HIGH

5560.73

LOW

5428.74

52W (H) 5896.71 5420

(L) 4719.96 18-June

20-June

June 21, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 43.4 43.2

64.6

20.8

64.4

20.6

64.2

20.4

43.0 42.8

Max 43.35

Average 43.025

Min 42.75

Last 42.95

42.6

Max 64.55

Average 64.264

Min 64.05

64.0

Last 64.1

Max 20.8

Average 20.5

Min 20.25

Last 20.35

20.0

39.5

22.9 22.8

39.3

22.7

19.9

39.1

22.6

38.9

Max 39.45

Average 39.060

Min 38.8

Last 38.85

38.7

22.5 Max 20

Average 19.853

Commodities PRICE

WTI CRUDE FUTURE Jul13

96.31

DAY %

YTD %

(H) 52W

Last 19.86

(L) 52W

-1.964576547

2.785485592

100.4000015

81.5

BRENT CRUDE FUTR Aug13

104.3

-1.715039578

-2.404790867

115.1699982

91.76999664

GASOLINE RBOB FUT Jul13

284.55

-1.621490803

0.768468022

318.0399895

235.0999832

GAS OIL FUT (ICE) Aug13

884.5

-1.421008638

-2.695269527

983.5

816

NATURAL GAS FUTR Jul13

3.936

-0.681302044

10.49971926

4.499000072

3.329999924

292.41

-1.628259041

-2.585201719

322.0499992

259.5000029

NY Harb ULSD Fut Jul13 METALS

Min 19.8

Gold Spot $/Oz

1310.63

-4.1958

-21.2579

1796.08

1304.77

Silver Spot $/Oz

20.3058

-6.2023

-32.5613

35.365

20.0845

Platinum Spot $/Oz

1401.2

-2.6877

-7.6791

1742.8

1374.55

Palladium Spot $/Oz

682.17

-3.4574

-2.4998

786.5

553.75

1830

-0.597501358

-11.72214182

2200.199951

1809

LME COPPER 3MO ($)

6960

-0.642398287

-12.24309671

8422

6762.25

LME ZINC

1860

0.107642626

-10.57692308

2230

1745

14200

0.35335689

-16.76436108

18920

14037 14.60000038

LME ALUMINUM 3MO ($)

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep13

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

16.23

-0.824931256

5.35540409

16.47500038

561.5

-1.577563541

-6.377657357

665

512

WHEAT FUTURE(CBT) Sep13

702.25

-1.680084004

-12.98017348

905.75

673.75

SOYBEAN FUTURE Nov13

1296.75

-1.068090788

-0.460564191

1409.75

1186.5

122.8

-1.246481705

-19.44899967

203.8499908

122.1499939

NAME

16.47999954

ARISTOCRAT LEISU

72.62999725

CROWN LTD

CORN FUTURE

Dec13

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

17.05

COTTON NO.2 FUTR Dec13

Max 22.85

Average 22.737

Min 22.45

Last 22.75

85.75

-1.388085599

-15.00498504

-0.981524249

8.902717805

22.8599987 89.55999756

World Stock Markets - Indices COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

15112.19

-1.345064

15.32379

15542.4

12450.17

NASDAQ COMPOSITE INDEX

3443.201

-1.119442

14.03164

3532.038

2810.8

FTSE 100 INDEX

6225.3

-1.945558

5.552735

6875.62

5435.46

DAX INDEX

8023.32

-2.119779

5.398169

8557.86

6096.94

NIKKEI 225

13014.58

-1.741307

25.19822

15942.6

8328.019531

HANG SENG INDEX

20382.87

-2.878082

-10.03689

23944.74

18710.58984

CSI 300 INDEX

2321.466

-3.303072

-7.986115

2791.303

2102.135

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9193 1.5455 0.9342 1.3203 98.16 7.9885 7.7557 6.1286 59.755 31.09 1.2758 30.008 43.875 9984 90.235 1.2333 0.85431 8.0984 10.5466 129.59 1.03

-3.2112 -1.1765 -1.4023 -1.4113 -3.0257 0 0.0103 -0.0212 -1.7404 -1.1901 -1.5755 -0.5365 -1.6638 0.4207 0.2061 0.0203 0.2294 1.3694 1.4336 -1.6205 0

-11.4184 -4.4572 -2.0124 0.0986 -12.2861 -0.0663 -0.0658 1.6643 -7.9659 -1.6404 -4.264 -3.2491 -6.5413 -1.9131 -1.0063 -2.0936 -4.5522 1.4707 -0.1536 -12.3621 -0.0097

1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 59.9275 32 1.2847 30.203 43.875 10174 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.9164 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

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.2

3.448276

33.33333

4.49

2.29

2786066

12.3

-2.612827

15.27648

13.75

8.28

2435097

AMAX HOLDINGS LT

1.27

2.419355

-9.285713

1.72

0.75

3805875

BOC HONG KONG HO

24.05

-2.03666

-0.2074705

22.6

17838701

0.36

14.28571

35.84906

0.42

0.216

1968000

5.5

-8.180297

6.74

2.89

11026

CHINA OVERSEAS

19.14

-6.176471

-17.14286

25.6

16.362

53908340

CHINESE ESTATES

13.22

-1.047904

8.991211

14.12

8.012

666000

CHOW TAI FOOK JE

8.89

0.3386005

-28.53698

13.4

8.4

5551701

CHEUK NANG HLDGS

DOW JONES INDUS. AVG

EMPEROR ENTERTAI

VOLUME CRNCY

2.8

-2.777778

48.14815

3.07

1.27

950000

2.39

-4.016064

97.19047

2.76

0.805

2652000

GALAXY ENTERTAIN

42.95

-2.497162

41.51565

44.95

16.98

13669370

HANG SENG BK

115.3

-2.205259

-2.864361

132.8

102.6

2892775

HOPEWELL HLDGS

25.2

-2.514507

-24.21053

35.3

19.839

2307593

HSBC HLDGS PLC

81.5

-2.686567

0.2459987

90.7

61.1

28533647 2442800

FUTURE BRIGHT

HUTCHISON TELE H

4.15

-4.157044

16.57304

4.66

2.98

LUK FOOK HLDGS I

18.06

-3.731343

-25.98361

30.05

15.3

3191000

MELCO INTL DEVEL

16.2

-3.686088

79.80022

18.18

5.12

5270000 3112800

TAIWAN TAIEX INDEX

7898.91

-1.354749

2.589911

8439.15

6922.73

MGM CHINA HOLDIN

20.35

-2.163462

53.25781

21.6

9.509

KOSPI INDEX

1850.49

-2.002849

-7.338828

2042.48

1758.99

MIDLAND HOLDINGS

2.85

-2.061856

-22.97297

2.8

1918000

S&P/ASX 200 INDEX

4758.388

-2.118596

2.354037

5249.6

3993.8

0.178

-2.73224

17.10527

0.23

0.084

32340000

4628.68

-3.702699

7.227607

5251.296

3843.022

FTSE Bursa Malaysia KLCI

1763.29

-0.5409278

4.401557

1826.22

1590.67

NZX ALL INDEX

941.859

-0.8623738

6.780322

998.487

PHILIPPINES ALL SHARE IX

3919.65

-2.547661

5.965697

4571.4

JAKARTA COMPOSITE INDEX

22.4

Macau Related Stocks

CENTURY LEGEND

NAME

19.8

Currency Exchange Rates

NAME ENERGY

20.2

NEPTUNE GROUP NEW WORLD DEV

10.7

-3.603604

-10.9817

15.12

8.66

19488226

SANDS CHINA LTD

38.85

-3.358209

14.43299

43.7

20.65

11514530

SHUN HO RESOURCE

1.42

1.428573

1.67

1.03

755.149

SHUN TAK HOLDING

3.78

-1.305483

-9.785204

4.65

2.56

2774999

3355.21

SJM HOLDINGS LTD

19.86

-1.439206

11.90209

22.382

12.995

8704910

12.8

-1.990812

-9.090909

17.38

12.5

1537749

WYNN MACAU LTD

22.75

-0.8714597

8.591881

26.5

14.62

3812300

ASIA ENTERTAINME

3.5

-0.5681818

24.34793

4.7647

2.2076

339684

-0.6459497

27.28696

57.86

41.74

335045 15500

SMARTONE TELECOM

HSBC Dragon 300 Index Singapor

617.95

-0.14

-0.51

STOCK EXCH OF THAI INDEX

1400.97

-2.554775

0.649452

1649.77

1144.44

HO CHI MINH STOCK INDEX

499.51

-0.7668316

20.73333

533.15

372.39

BALLY TECHNOLOGI

56.91

LAOS COMPOSITE INDEX

1338.82

10.2118

1455.82

980.83

BOC HONG KONG HO

3.12

-3.703704

1.628667

3.6

2.85

GALAXY ENTERTAIN

5.7

0.5291005

43.57683

5.77

2.25

8900

INTL GAME TECH

16.96

-1.050175

19.68948

18.81

10.92

2198054

JONES LANG LASAL

90.56

-0.3630762

7.886583

101.46

61.39

510031

LAS VEGAS SANDS

56.48

-1.033818

22.35702

60.54

32.6127

3267452

MELCO CROWN-ADR

24.92

-0.8356546

47.981

25.2

9.13

1886221

MGM CHINA HOLDIN

2.71

46.48648

2.71

1.36

200

MGM RESORTS INTE

14.99

-0.7284768

28.78006

15.95

8.83

7135739

SHFL ENTERTAINME

18.27

0.2744237

18.57

12.35

213601

SJM HOLDINGS LTD

2.57

-3.383459

12.83728

2.9481

1.7255

2800

137.86

-1.03374

22.55312

144.99

84.4902

831849

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

WYNN RESORTS LTD

AUD HKD

USD

14 14

June 21, 2013 April 19, 2013

Opinion

Bernanke’s forward guidance is transparent as mud Clive Crook

Bloomberg View columnist

ederal Reserve chairman Ben S. Bernanke seemed a little nervous at Wednesday’s news conference. His recent comments about the future course of monetary policy had rattled investors and driven bond yields up, tightening financial conditions in a way the Fed didn’t want. Formally unperturbed, Bernanke said he was leaving policy unchanged – but in trying, yet again, to elucidate the Fed’s thinking, he tacitly admitted that something had gone wrong. Fortunately, the policy itself, I think, is basically good – but that’s despite, not because of, the ever-evolving formulas used to explain it. Growth in the U.S. is still sluggish, unemployment is still high and inflation is (a) running well below the Fed’s target and (b) falling. That suffices to justify interest rates at zero until further notice, together with additional large-scale asset purchases – which is what the Fed intends. There are dangers in this policy, to be sure. Quantitative easing is an experiment and involves risks. Bernanke summed these up drily in a recent speech: There’s the risk that long-term interest rates will remain low (leading investors to recklessly “reach for yield”) and the risk that they won’t (imposing losses on investors when rates rise and bond prices fall). The point is, in current circumstances, every course involves risk. Tightening monetary policy prematurely, as Bernanke has often explained, courts the greatest danger – that of bringing a hesitant recovery to a stop. On a balance of risks, aggressive monetary stimulus still makes sense.

Credibility gap Yet the past few weeks showed that the Fed has a serious credibility problem. The central bank’s formal statement this week failed to acknowledge this – it was essentially a reprint of the previous one – but Bernanke’s news conference showed that the Fed is concerned. Bernanke triggered the recent rise in long-term bond

Federal Reserve chairman Ben S. Bernanke

yields when he said last month that “in the next few meetings, we could take a step down in our pace of purchases”. You could argue that he was merely stating the obvious, but the markets took it as important new information. In itself, that needn’t have been troubling. The problem for the Fed is that investors didn’t interpret it as good news about the economy but as bad news about the Fed’s reliability. As the economy strengthens, you’d expect long-term interest rates to rise. But the recent rise in bond yields coincided with unexciting jobs data and very low inflation – inconsistent with the “strong economy” story. The implication is that investors thought the Fed was bringing forward its plans not just to taper QE but also, crucially, to start raising shortterm interest rates. Bernanke tried to address this confusion this week. He emphasised for the umpteenth time that the decision on tapering QE is separate from the decision on starting to raise short-term rates. All being well, tapering would probably start later this year, he said, with asset purchases continuing in 2014 until unemployment falls to 7 percent. Interest rates won’t rise,

the Fed has previously said, until unemployment has fallen to 6.5 percent. And, Bernanke added with fresh emphasis, perhaps not even then: These numbers are “thresholds” not “triggers”. So the Fed will merely start thinking about raising interest rates once unemployment falls to 6.5 percent, and might well choose not to act at that point. Oh, and it’s always possible, the chairman told another questioner, that the unemployment threshold for interest rates (and presumably therefore also for QE) will be revised – more likely down than up. Is that now clear?

Sudden stop In one way, the intention behind Bernanke’s latest elaborations is simple. He means to assure the markets that stimulus won’t be withdrawn abruptly or too soon. QE will be tapered as the labour market strengthens, but not stopped all of a sudden. Moreover, Bernanke repeats, a slower rate of QE is still stimulus – as is no QE at all, for that matter, so long as the Fed hangs on to its existing stock of assets. Raising short-term interest rates lies even further in the future. Perhaps that message,

Bernanke’s main point, got through: The Fed isn’t about to apply the brakes. But if you ask under precisely what circumstances the stimulus will eventually start to be withdrawn – which is what investors want to know, and is the message Bernanke keeps saying he means to impart with his commitment to “forward guidance” and transparency – the new refinements really don’t help. I sympathise. There are two underlying problems. One is the complexity of the situation the Fed needs to address. Consider just the labour market. You can measure its condition in many ways, and different indicators (narrow unemployment, broad

The problem for the Fed is that investors didn’t interpret it as good news about the economy but as bad news about the Fed’s reliability

unemployment, vacancies, hours worked, quits, hirings and so forth) will often give different readings. Central bankers don’t want to be tied to a simple formula when there are so many moving parts – they want to retain some discretion. Second, the Fed has many policy makers, not just one, and they often disagree. Forward guidance has to be vague enough to accommodate not just the complexity of future decisions in unknown circumstances but also the range of opinions on the Federal Open Market Committee. That vagueness, in turn, allows for bond-market glitches like the one of the past few weeks, as investors ask, “What on earth did the Fed mean by that?” To repeat, the policy is right, and that’s the main thing. But Bernanke’s commitment to transparency and forward guidance has made his job harder. If he wants discretion under fire and the luxury of vigorous internal dissent, he can’t expect forward guidance to work as he envisaged. That’s why we’ll be debating what he really meant until he gives his next speech – and that, if you’re wondering, is a threshold not a trigger. Bloomberg View

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 21, 19, 2013 2013

Opinion

Fixing the innovation WIRES supply chain BUSINESS

Leading reports from Asia’s best business newspapers

Asahi Shimbun Japan’s trade deficit rose nearly 10 percent in May to 993.9 billion yen (US$10.5 billion) as rising costs for imports due to the cheaper yen matched a rebound in exports, the Ministry of Finance reported. Exports rose 10.1 percent in May over a year earlier to 5.77 trillion yen while imports also surged 10 percent, to 6.76 trillion yen, the ministry said. Japan’s trade deficit in May 2012 was 907.93 billion yen. A weakening in the yen’s value has pushed up costs for imports of crude oil, natural gas and other commodities.

Jakarta Globe The proposed price increase for subsidised fuel will not impact the credit rating of state oil and gas company PT Pertamina, Fitch Ratings said. The price increase will also not affect Pertamina’s public service obligation or its linkages with the state, the rating agency said in a statement. Fitch estimates that the proposed price revisions can reduce the annualised state subsidy to Pertamina by about US$8 billion at current international oil prices.

Korea Herald South Korea’s state sector saw its outstanding debt snowball to 915.6 trillion won (US$808.8 billion) in the first quarter of this year. That figure was about 91 percent higher than the 480.4 trillion won recorded in the first quarter of 2008 when former President Lee Myung-bak took office, according to data by the Bank of Korea. The increased debt will put the incumbent administration of President Park Geunhye to the test on financial soundness amid already high household debt compounded with extra spending.

Inquirer Business President Benigno Aquino said economic growth in the Philippines must be “inclusive”. “We can’t have a society where a few flourish, and the rest must make do with crumbs. We must have inclusive growth,” said Mr Aquino, citing the conditional cash transfer programme as one of the administration’s flagship projects that could allow the poor to benefit from a strong economy. Mr Aquino vowed to extend the interventions over the next three years to include mass housing, job creation, tourism and agriculture.

David Berry An inventor and entrepreneur, is a partner at the venture capital firm Flagship Ventures

s a graduate student at MIT, I had the opportunity to work with Professors Robert Langer and Ram Sasisekharan in an environment rife with innovative thinking. We asked what could be possible, and were driven to pursue revolutionary technologies that were widely considered impossible. This experience instilled in me a simple but powerful credo: think big. Innovation is difficult. If one is willing to traverse the boundary of the unknown, one should pursue the course that promises the greatest potential impact. In exploring a wide range of subjects – energy, agriculture, medicine, and more – one approach has, in my experience, emerged as the most effective: begin with the end in mind. By identifying the problems and envisioning the preferred solution, one can define the set of constraints into which technological innovation fits, and establish a clear, albeit often difficult, path to its realisation. A fundamental requirement of this approach is an open mind, unconstrained by the subject’s idiosyncratic dogma. Those who are immersed in a field have an established view of what is possible, based on some combination of previous successes, citation bias, current limits of knowledge, and truth – and it is often difficult to distinguish these sources. But the newcomer asking the most basic questions begins to notice logical inconsistencies, from which the real constraints on solutions and technological limits arise. Breakthroughs lie at the intersection of technological possibility and market pull. An understanding of these forces enables innovators to optimise the direction of invention. With well-defined constraints, a clear path for developing innovative technologies – one that accounts for both the known and the unknown – can be planned. This unconventional

approach has consistently produced ground-breaking technologies that, if successfully implemented, revolutionise a field. What might be more interesting, however, is the response that such progress often elicits: “This seems so obvious. Why hasn’t someone done it before?” Early in my career, this reaction troubled me; it made me wonder whether I had, in fact, overlooked something obvious. But, as my experience with entrepreneurial innovation has grown, I have realised that the response is rooted in the fact that most people are trapped in a specific doctrine, which obscures the innovative solutions that lie beyond its borders.

or develop future products and improve on their current products) tends to be characterised by inefficiency, ambiguity, and competition. And, in many cases, no supply chain is in place. Most pharmaceutical companies, for example, lack effective innovation supply chains. But only about 15 percent of the drugs that the U.S. Food and Drug Administration has approved recently were developed by the same company that markets and sells them, meaning that many major pharmaceutical companies depend on the innovation ecosystem to advance their products. Drug companies often lament that the firms from which they are sourcing innovations do not perform

Broken chain Companies exhibit similar behaviour when it comes to acquiring innovative technologies, adhering to ineffective, restrictive processes, despite an ostensibly obvious alternative: the efficient systems that manufacturers use to secure inputs for production. In order to establish a clear, low-risk path to producing their goods at a predictable (and profitable) cost, companies employ teams dedicated to securing the relevant supply chains, controlling inventory, managing the production process, and so on – from the point of origin to the point of consumption. In many cases, this involves maintaining relationships with a dedicated network of suppliers, with which producers share detailed product specifications. Doing so ensures that producers get exactly what they need, and that suppliers are able to deliver the correct inputs. The result is a well-defined, highly productive, and mutually beneficial working relationship. By contrast, the innovation supply chain (the process by which companies obtain and/

Breakthroughs lie at the intersection of technological possibility and market pull

clinical trials to their specifications, forcing them to repeat the work. Nevertheless, they are reticent about providing such specifications in advance – even when innovators request them – perhaps to protect their market position or internal efforts. Moreover, the same companies compete directly in the supply of innovative technologies. The result is a broken supply chain. Just as individual innovators must challenge conventional wisdom, companies must replace the established approach to the innovation supply chain with one that more closely resembles how they create and maintain a manufacturing supply chain. If market incumbents are willing to share “innovation specifications” (which should not be confused with innovation methods), they can develop an effective network of innovation suppliers, thereby increasing the reliability of the product-development engine. And, as with effective manufacturing supply chains, the supplier and the purchaser must build a reciprocal relationship, in which they do not compete with each other, practically or economically, in the specific activities that they are performing. An efficient supply chain can transform innovation on both the individual and industry levels. Indeed, a common approach – defining key market needs, coupling them with solution constraints, and pushing the boundaries of current thinking – applies to all kinds of innovation. With an innovation ecosystem organised along these lines, “obvious” advances could occur significantly faster. How obvious is that? © Project Syndicate

June 21, 2013

Closing India rupee falls to all-time low

Deal closer on EU long-term budget

The Indian rupee dipped to an all-time low against the U.S. dollar after the Federal Reserve signalled that it could start pulling back on its monetary stimulus later this year. The rupee sank 1.9 percent to 59.83 per dollar in Mumbai, the biggest drop since September 2011, according to data compiled by Bloomberg. It dropped to an unprecedented 59.9275 earlier, past the previous low of 58.9850 touched on June 11. The currency has plunged 9.2 percent this quarter, Asia’s worst performance. Analysts said the slide signalled India’s dependence on those foreign capital inflows.

EU ministers and European Parliament negotiators have made progress towards a deal on the EU’s longterm budget, but it is not yet clear if a majority of MEPs will back it. The budget ceiling for 2014-2020 was set at 960 billion euros (US$1.3 trillion). That total was agreed by EU leaders in February after the U.K. and some other countries demanded cuts. A parliamentary vote on the budget is scheduled for early July. If it is blocked, then spending on long-term EU research programmes and innovation, as well as on projects to tackle youth unemployment, will be delayed.

Japan mulls fiscal steps to counter tax hike

Asia joins sell-off after Fed comments Weak Chinese data dent sentiment further

sian stocks slumped the most in almost two years amid concerns a credit crunch in China is worsening and the Federal Reserve will reduce stimulus should the U.S. economy continue to the improve. The MSCI Asia Pacific Index dropped 4.2 percent to 127.52 in Tokyo, heading for its biggest loss since March 2011, as nine shares fell for each that rose. Hong Kong’s Hang Seng Index erased all gains since September 13, when the Fed pledged to keep buying assets until it saw “ongoing, sustained improvement” in the U.S. labour market. Chairman Ben S. Bernanke said yesterday the central bank may start tapering its stimulus effort this year if the economy achieves the sustainable growth the Fed has sought since the recession ended in 2009. Markets across the region tumbled, with declines deepening after China’s interbank interest rates climbed and a preliminary survey showed a slump in manufacturing. European stocks also joined the heavy sell-off seen across Asia yesterday that started overnight in the U.S. Equities were down heavily after the Fed set out its path to reduce gradually its US$85 billion monthly purchases, and possibly end the quantitative easing programme by mid-2014, when the unemployment rate is expected to be down to 7 percent. The Fed has also said that by the time the rate was below 6.5 percent, it expected to start lifting interest rates. “Many investors were hopeful that the party of cheap, easy money will go on for the next two years and here’s the Fed signalling the bar will close soon,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc., the biggest Philippine lender by assets. “A contraction in China is going to worsen the hangover.” Japan’s Topix index slipped 1.3 percent, while the Nikkei 225 Stock Average decreased

Ben Bernanke signals QE3 tapering may begin this year

1.7 percent. South Korea’s Kospi index declined 2 percent, while Taiwan’s Taiex index slid 1.4 percent. Australia’s S&P/ASX 200 Index dropped 2.1 percent and New Zealand’s NZX 50 Index lost 1.1 percent.

Regional rout Equity benchmark indexes in Colombo, Sri Lanka, and Karachi, Pakistan, were the only Asia-Pacific measures to advance yesterday. Jakarta’s Composite Index retreated 3.5 percent, Thailand’s SET Index slumped 2.5 percent and the S&P BSE India Index slid 2.5 percent. Industrial & Commercial Bank of China Ltd, Asia’s biggest lender by market value, dropped 3.8 percent in Hong Kong, pacing declines among Chinese lenders. Samsung Electronics Co, the world’s No. 1 smartphone maker, slipped 2.9 percent in Seoul. BHP Billiton Ltd, Australia’s top oil producer and the world’s biggest mining company, sank 2.6 percent as oil and metal futures decreased. China’s Shanghai Composite Index fell 2.8 percent as a survey from HSBC Holdings Plc and

Markit Economics added to signs of a deepening slowdown in the world’s second-largest economy. The Hang Seng China Enterprise Index, a gauge of mainland companies in the city, plunged 3.3 percent. The nation’s one-year interestrate swap, which is used to exchange fixed payments for the floating seven-day repurchase rate, surged as much as 58 basis points to 5.05 percent, the highest since Bloomberg started tracking th e d a ta i n Ma y 2 0 0 6 . T h e seven-day repurchase rate, which measures interbank funding availability, also climbed to a seven-year high. “There is a credit crunch in the near term,” said Ben Kwong, chief operating officer at Hong Kong-based KGI Asia Ltd. “It’s reflecting the government’s effort to clean up outstanding financial issues. The expectation of a China slowdown is already building up. Few people will be confident that the Chinese government will be able to maintain 7.5 percent growth this year unless it introduces some stimulative measures.”

Japan’s government is ready to provide extra spending if a sales-tax increase next year damps economic growth, a senior finance ministry official said. “Naturally, there will be a decline in economic growth” following the tax increase planned for April, Yuzuru Takeuchi, parliamentary secretary for finance and a lower house legislator, said in an interview. “We must take appropriate action to counter this” and it’s possible to provide more spending, possibly using extra tax collected this year, he said. Prime Minister Shinzo Abe is rolling out fiscal and monetary stimulus to help pull the economy out of a more than decade-long deflationary malaise. The government is grappling with supporting growth while trying to slow the increase in Japan’s debt burden, the developed world’s largest. “If the government doesn’t announce a further fiscal package, we’re likely to see some payback” in growth from the boost in 2013 from government spending, said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co. in Tokyo. The economy may shrink an annualised 3.9 percent in the second quarter of 2014 after the sales tax is raised to 8 percent from its current 5 percent, according to the median forecast of economists surveyed by Bloomberg News. The tax will be further increased to 10 percent in 2015. Tax revenues for the current fiscal year will probably exceed an initial estimate and the government can tap that resource for spending, said Mr Takeuchi, a lawmaker in the ruling coalition’s New Komeito party.

Bloomberg News

U.K. banks face US$41.9 bln shortfall Five U.K. banks must find 13.4 billion pounds (US$20.7 billion) to plug a 27.1 billion-pound capital shortfall by the end of the year, the Bank of England said. The five lenders, including Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, have already submitted plans to raise half the total, the London-based BOE said in a statement yesterday. Lloyds must plan to raise an extra 7 billion pounds, while RBS and Barclays need 3.2 billion pounds and 1.7 billion pounds of additional capital. Lenders must “hold capital resources equivalent to at least 7 percent of their risk weighted assets,” with those losses taken into account, the BOE said. The banks said they won’t need to sell shares to meet the capital standards. “The challenge for the banks is that they have got many projects going on in the capital space,” Kevin Burrowes, a partner at PricewaterhouseCoopers, said in an e-mailed statement. “Many of those projects compete and some are duplicative. Banks need to align their projects and look at their business as a whole rather than in parts to get to the right capital position.” The strength of Britain’s banking system is under scrutiny as the government considers selling its stake in Lloyds, which is 39 percent-owned by the state, and splitting up RBS. Chancellor of the Exchequer George Osborne said in a speech in London on Wednesday that the U.K. government would proceed only “if we get value for the taxpayer”.