Macau Business Daily, June 28, 2013 by Business Daily

Friday June 28, 2013

Year II

Bus firm sues govt over subsidy delays

Number 315

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

I SSN 2226-8294

Hang Seng Index

ublic bus operator Reolian Public Transport Co. yesterday asked the Macau courts to order implementation of subsidy hikes announced by the government last year. “Reolian was left without any other alternative but to initiate judicial proceedings,” the company said. “After numerous letters sent, meetings and discussions with the Macau government during the past year,” the operator has yet to be awarded more money for its services it added. Business Daily asked the cabinet of Secretary for Transport and Public Works Lau Si Io to comment but received no reply before press time. In June 2012 the government approved a 23.3 percent increase in subsidies to three operators. More on page 3

20700

20640

20580

20520

20460

20400

www.macaubusinessdaily.com

June 27

Exporters are Kingston Financial letting CEPA perks scores HK$523.9 go begging mln gaming rev

Higher costs trim profit on Luk Fook sales gain

HSI - Movers Name

%Day

CHINA RES POWER

6.25

CHINA RES LAND

5.11

BELLE INTERNATIO

4.62

KUNLUN ENERGY CO

3.53

TENCENT HOLDINGS

2.55

HK-Zhuhai-Macau bridge could boost airfreight

CITIC PACIFIC

-1.08

BANK OF COMMUN-H

-1.34

HONG KONG EXCHNG

-1.72

Macau International Airport could be more competitive against its regional airfreight rivals after the completion of the Hong Kong-ZhuhaiMacau Bridge, suggests a logistics executive. “Macau airport has the conditions to compete with the Hong Kong airport” as long as the supporting facilities of the bridge are well planned, said Mike Lam In Wai of the government-sponsored Committee for the Development of the Logistics Industry yesterday.

CHINA COAL ENE-H

-3.58

CHINA SHENHUA-H

-8.41

Page 6

Page 2

Page 7

Source: Bloomberg

Brought to you by

Page 2

Moody’s keeps ‘Aa3’ rating for city’s long-term debt

New record low for jobless rate in March-May

Macau still only scores an Aa3 rating for long-term sovereign debt risk – three notches below the top grade – in a new report by Moody’s Investors Service. It cites Macau’s dependence on the casino sector and increasing exposure to mainland China’s economy and politics as reasons for some caution. In May, market competitor Fitch Ratings maintained Macau’s long-term rating at ‘AA-’, citing similar reasons.

The recent creation of 2,000 new jobs meant the unemployment rate dropped to 1.8 percent last month, the lowest ever, official data show. The jobless rate is the third lowest in the world, overtaking Singapore. The rate for March to May fell by 0.1 percentage points from the previous period, the Statistics and Census Service said. This figure is the lowest since the service began collecting data in 1992.

Page 4

Page 5

2013-06-28

2013-06-29

2013-06-30

28˚ 32˚

28˚ 33˚

28˚ 34˚

June 28, 2013

Macau

HK-Zhuhai-Macau bridge could boost airfreight City will compete over cargo with Hong Kong airport after 2016, says logistics executive Tony Lai

tony.lai@macaubusinessdaily.com

Mr Lam believes there is not much that could be done to boost the freight business before the completion of the bridge, slated for end-2016. “So I think we should focus on long-term measures like the establishment of the logistics facility on the artificial island of the bridge and its supporting facilities,” he said. That’s a reference to a Macau government plan to set up such a facility at the bridge landing point in the city. There could also be better coordination between the airport and customs, the executive added.

Long-haul flights

acau International Airport could be more competitive against its regional airfreight rivals after the completion of the Hong Kong-Zhuhai-Macau Bridge, suggests a logistics executive. “It is now not so convenient to use ship freighters” – running at lower frequency than land transportation – to carry goods in the region, said Mike Lam In Wai, a member of the government-sponsored Committee for the Development of the Logistics Industry. “The Macau airport has the conditions to compete with the

Hong Kong airport” as long as the supporting facilities of the bridge are well planned, Mr Lam told Business Daily on the sidelines of a Guangdong-Macau logistics meeting yesterday. The airport here charges 1.15 patacas (US$0.14) a kilogramme to handle cargo; lower than HK$1.71 (US$0.22) per kilogramme in Hong Kong, said Mr Lam, general manager of TransAsia Airways Macau. “It is also easier to get slot times for landings here with lower costs,” he said. “If Macau can attract a part

of Hong Kong airport’s freight [business] here, the [air freight] volume will increase by several times,” he added. Official data show air cargo volume decreased by 7.4 percent year-on-year to just over 8,200 tonnes in the first four months of this year. In the first five months Hong Kong International Airport handled more than 1.6 million tonnes. The city’s cargo volume has been plunging since the launch of direct flights between Taiwan and mainland China in 2008.

Air cargo volume has fallen since Taiwan-mainland direct fights launched in 2008

“We hope the government can let the industry co-invest in the facilities on the artificial island or offer some benefits so that the industry can maintain positive prospects,” said the expert. He said “it is not easy” for logistics companies to keep running amid surging costs and lack of facilities. Cui Guang, director of logistics and general aviation development at Macau International Airport Co Ltd, said in the meeting the industry here faces challenges, as there are no long-haul direct flights. The airport company proposed in a press statement last month the government should set up a fund to subsidise long-haul flights. But Mr Lam thinks it was “not realistic to launch some crosscontinental flights in these one or two years,” before the Hong KongZhuhai-Macau Bridge is ready. “If the government can support one route, can it support a second? If there are only a few routes here, will this be really helpful to Macau?” he asked. Mr Lam also suggested a connection between the airport and the Hong Kong-Zhuhai-Macau Bridge, either by bridge or an undersea tunnel. This could minimise clearance procedures for airfreight originated from mainland China or Hong Kong, he added. The Board of Airline Representatives in Macau yesterday signed a cooperation agreement with the administration of Guangzhou’s Nansha district. Mr Lam, the board’s secretarygeneral, said the deal would offer direct land transportation to carry goods from and to the district via Macau’s airport. The airlines will receive around 75 percent of the handling fees on goods to and from Nansha, he said.

Exporters let CEPA perks go begging Macau businesses fail to save as much in tariffs because they fail to export as much Tony Lai

tony.lai@macaubusinessdaily.com

acau exporters took less advantage of exemptions from mainland Chinese import tariffs granted under the Closer Economic Partnership Arrangement (CEPA) in the first quarter of this year, official data show. Ministry of Commerce figures published this week show the value of the mainland’s tariff-free imports from Macau was US$3.52 million (28.16 million patacas) in the first quarter, 17.6 percent less than a year earlier. CEPA saved Macau businesses

2.07 million yuan (2.68 million patacas) in mainland import tariffs in the first quarter, 37.1 percent less than a year earlier. The falls occurred even though the number of kinds of goods that are exempt from mainland import tariffs has increased to 1,283 this year. CEPA came into effect in 2004. Its purpose is to help companies here forge links with the mainland for trade in goods and services, and to facilitate cross-border investment. The first-quarter falls were due

to fewer goods made in Macau being exported to the mainland. Macau’s re-exports – goods shipped in only to be shipped out – are not exempt from mainland import tariffs. Macau’s domestic exports were worth 458.7 million patacas (US$57.3 million) in the first quarter, 20 percent less than a year earlier, according to the Statistics and Census Service. Its re-exports rose by 34 percent to 1.88 billion patacas. Only about 8.6 percent of Macau’s

326.9 million patacas worth of exports to the mainland or were exempt from import tariffs. Ministry of Commerce figures show that 28 Macau banks were doing business in yuan by the end of March, eight more than a year earlier. However, yuan deposits in Macau banks amounted to only 44.75 billion yuan, 7.8 percent less. Almost 900 Macau private-sector businesses were operating in the mainland at the end of December, 11.3 percent more than a year earlier.

June April 28, 19, 2013 2013

Macau

Reolian sues govt over subsidy hike Public bus operator says it grew tired of waiting to receive more money Vítor Quintã

vitorquinta@macaubusinessdaily.com

ublic bus operator Reolian Public Transport Co has yesterday asked the Macau courts to order the government to fulfil the subsidy hike it announced last year. “Reolian was left without any other alternative but to initiate judicial proceedings,” the company said in a press statement. “After numerous letters sent, meetings and discussions with the Macau government during the past year,” the operator has yet to be awarded more money for its services. In June 2012 the government approved a 23.3 percent increase in the subsidy its pays the three public bus operators. However the hike was quickly suspended amid public outcry over service quality. That increase “is a contractual calculation made to compensate operator costs inflation,” Reolian said. It was “mainly due to the pay rise granted to the employees of Reolian”. The government finalised the increase in April – but only for Transportes Urbanos de Macau

SARL (Transmac) and Sociedade de Transportes Colectivos de Macau SARL (TCM). Reolian says it grew tired of “patiently waiting for payment” and now hopes “the financial entitlements on the fee revision and other claims shall be recognised by the Macau courts”. The company says it is already owed 36.6 million patacas (US$4.6 million) for the period between July 2012 and April this year. Even this amount would not be enough to turn the business around, Reolian general manager Cédric Rigaud told Business Daily in an interview last month.

‘Great disappointment’ The operator made a loss of about 58 million patacas last year and it is losing “more than 4 million [patacas] every month,” Mr Rigaud said in the interview. Reolian pledged however to continue to provide public bus services “in the interest of the public and of its employees”. The company says it “has yet to

receive any proactive support from Macau SAR government until today”. Business Daily has learned that Reolian has filed an urgent injunction with the Administrative Court to force the government to make those payments. “This decision is made with great disappointment and regret,” the operator says. Reolian says it tried “to accommodate DSAT’s [Transport Bureau] requests – even those in excess of contract requirements – and to settle all differences and disputes”. The authorities will now have just seven days to respond to the application. Business Daily asked the cabinet of Secretary for Transport and Public Works Lau Si Io for a comment but received no reply before going to press. Reolian did hint that it could be persuaded to drop the court proceedings. The company says it “hopes Macau SAR government to scientifically and rationally consider and review the service contract terms (…), ensuring Reolian’s entitlements”.

That would be “a positive and responsible decision in conformity of the business environment, public interest and the spirit of the rule of law in Macau,” the operator added. Reolian is a joint venture formed in 2009 by Macau’s HN Group Ltd and France’s Veolia Transport RATP.

Reolian was left without any other alternative but to initiate judicial proceedings Reolian Public Transport statement

Investment in pipe network pushes natural gas distributor into the red But Nam Kwong Natural Gas is set make money from selling gas on Hengqin and Coloane this year

am Kwong Natural Gas Co Ltd made a loss of 11.8 million patacas (US$1.47 million) last year as it invested heavily

in its natural gas distribution network without making any sales. Nam Kwong Natural Gas’s financial report for last year, published

Construction work cost Nam Kwong over 125.3 million patacas last year

in Wednesday’s Official Gazette, gave no comparative figure for 2011. The government awarded the company a 25-year concession to distribute natural gas here in July. “The construction of the natural gas distribution network is still currently at an early stage,” Nam Kwong Natural Gas chairman Choi Kin says in the report. The construction work cost the company over 125.3 million patacas last year. Nam Kwong Natural Gas is set to begin making money from distributing natural gas this year. The company began supplying gas to the public housing in Seac Pai Van on Coloane at the end of March. And Nam Kwong Natural Gas’s executive deputy general manager, Tang Zhaohui, said last week that its pipe network was due to reach the

University of Macau’s new campus on Hengqin Island by September. The concession contract says the company has until 2015 to complete its network on Taipa and Coloane. Mr Tang said it was still in talks with the government about how to lay its pipes on the peninsula. “For the first 10 to 15 years of the contract term, we hope to provide 87 million to 90 million cubic metres of natural gas to households annually via 70 kilometres of pipelines throughout Macau,” he said. Nam Kwong Natural Gas charges between 5.86 patacas and 6.40 patacas per cubic metre of natural gas, depending on who consumes it and how much they consume. Nam Kwong Natural Gas, founded in 2008, is a subsidiary of stateowned Nam Kwong (Group) Co Ltd. T.L.

June 28, 2013

Macau

Moody’s keeps ‘Aa3’ long-term rating on Macau

Brought to you by

HOSPITALITY

Cites exposure to mainland economy as constraint on debt score, despite city’s bulging public finances

A second home The Statistics and Census Service started providing monthly data for the country of origin for hotel guests in 2011. This analysis uses quarterly data that smoothes out seasonal variations which are not relevant for the purpose of the comments below. It is clear that most guests come from Asia. In the nine quarters for which data is available, Asian hotel guests made up about 96 percent of all guests, with almost all figures falling within a 1 percent band around that value. Also, the great importance of mainland visitors seems to be increasing over time. These patterns basically mirror the data for all tourist arrivals to Macau, whether they stay at a hotel or not.

Comparing the share of guests from the mainland in the first quarter of this year with the same value of the two previous years, there has been a steady increase of about 2 percentage points each year. The next most important source of guests, Hong Kong, displays a more complex pattern. The city’s proximity and ease of access seem to be associated with greater variability. The figures for the last few quarters are well below a peak that was reached in the third quarter of 2011. The third most important contributor to hotel stays is Macau residents. Their contribution hovers at about 6 percent of total guests from 2011 to this year. The number of Macau residents that stay at hotels is often almost twice the number from Taiwan and has always outstripped the combined figure for Japanese and South Korean guests. The most recent data for April do not suggest any significant change in these trends. J.I.D.

1,680 guests Average number of Macau residents staying at a local hotel each day in April

Michael Grimes

michael.grimes@macaubusinessdaily.com

n April Macau’s fiscal reserve contained 165.68 billion patacas (US$20.7 billion) official data released earlier this month showed. The income from gaming tax last year was 129.50 billion patacas. It seems highly unlikely that in the near-to medium-term the city’s government will need to go to the financial markets to borrow money. But Macau still only scores an Aa3 rating for long-term sovereign debt risk – three notches below the top grade – in a new report by Moody’s Investors Service. The ratings agency cites Macau’s dependence on the casino sector as a reason for some caution and for maintaining Macau’s rating at that level. It states: “…Macau’s economy remains vulnerable to external shocks in the form of fewer tourists visiting the country [sic] as well as competition in the gaming sector from other Asian destinations.” The rating agency adds it expects Macau’s gross domestic product growth – averaging 14 percent over the past ten years – to “moderate

to single-digit figures in the coming years, supported by investments geared to the gaming sector”. It adds, however, that Macau is the only one out of the 119 jurisdictions it rates for sovereign debt that carries no actual public debt. Moody’s states: “The SAR’s current account surplus has averaged 31 percent of GDP since 2002. It reached 46 percent of GDP in 2011 as service receipts from the tourism sector continued to rise.” But Moody’s cautions: “…the SAR faces event risks that constrain the

rating. First, as a region of China, Macau is exposed to events in the mainland – China’s rating is also Aa3. Second, a major downturn in the gaming industry constitutes another risk, as the great majority of government revenue comes from that industry.” In May, market competitor Fitch Ratings maintained Macau’s longterm rating at ‘AA-’, three notches below its top level. It noted a stable outlook, but cited “heavy reliance” on casino-related activities and a growing exposure to mainland China’s economy as “vulnerabilities”.

Pearl Horizon developer confident over property Head of Polytec Asset says home pre-sale law ‘beneficial’ in the long-run Stephanie Lai sw.lai@macaubusinessdaily.com

s long as construction costs “do not spin out of control all of a sudden”, Macau’s property sales will continue to generate considerable profits, said Kowloon Development Company Ltd. Or Wai Sheun, chairman of the Hong Kong-listed developer, said sales from property projects in Macau generated over HK$10 billion (US$1.29 billion) for the company last year. Quoted by Hong Kong media after the firm’s annual general meeting on Wednesday, he expressed confidence that the sales figure would hit a similar figure this year.

Polytec Asset Holdings Ltd, a subsidiary of Kowloon Development, has property development and investment businesses in Macau since 2004. Polytec Asset has two ongoing projects in the Areia Preta district, branded as Pearl Horizon. The residential projects are slated to be ready by late 2015 or early 2016. The firm, which is also led by Mr Or, has a 50-percent stake in Macau Square, an office building in downtown Macau peninsula. The company’s property revenue in Macau is largely derived from sales of unfinished flats, which are

subjected to the home pre-sales law starting this month. Mr Or said he was supportive of the new law and described it as “beneficial” to the property market in the long-run. Fok Kiu – Properties Investment Ltd, a Macau-registered indirect subsidiary of Polytec Asset, received approval on Wednesday to build six towers of 49 storeys in Areia Preta. The project will have 1,818 units, according to the Land, Public Works and Transport Bureau website. The developer had already sold 260 flats at the end of April.

June 28, 2013

Macau

New record low for jobless rate Macau leaves Singapore behind in world’s lowest-unemployment regions Vítor Quintã

vitorquinta@macaubusinessdaily.com

he creation of 2,000 new jobs meant the unemployment rate dropped to 1.8 percent last month, the lowest ever, official data show. The jobless rate is the thirdlowest in the world, having overtaken Singapore. The unemployment rate for March-May fell by 0.1 percentage points from the previous period, the Statistics and Census Service announced yesterday. This figure is the lowest since the service began collecting data on unemployment in 1992. Data compiled by the International Labour Organisation indicate that Macau has the thirdlowest unemployment rate in the world, above only Qatar’s 0.4 percent and Thailand’s 0.9 percent. Singapore used to share the third position with Macau but the state-city has seen its unemployment rate rise to 1.9 percent last month. The city has technically had full employment since January 2012, according to the Monetary

Restaurants hired a further 900 workers last month alone

Authority of Macau. “The employment situation in Macau continued to be encouraging,” the Statistics and Census Service wrote in its report. The drop in unemployment in the

March-May period was due to the creation of 2,000 new jobs, mainly in restaurants. Restaurants hired 900 workers last month alone, taking its total to 25,900. This hiring spree is not

Give reclaimed land proper transport links, govt urged Academics also advise the government to give some thought to pedestrians in planning the urban area Stephanie Lai

sw.lai@macaubusinessdaily.com

The government intends to make Reclamation Zone B a waterfront promenade (Photo: Manuel Cardoso)

roper transport connections between the city and land soon to be reclaimed from the sea are essential, academics say. The government has begun a 20-year programme to reclaim 356 hectares of land from the sea in five areas off the east and south of the peninsula and off the north of Taipa. The head of the University of Saint Joseph’s architecture programme, Thomas Daniell, told Business Daily on the sidelines of the International

Convention of Asia Scholars here yesterday that the reclamation plan was “intelligently conceived”. But Mr Daniell said the government should ensure the reclamations were properly connected to the transport network. “Macau is so tiny that there aren’t really any problems, except more connections,” he said. “The better the connections are, the more synergy it creates between the different neighbourhoods.”

Mr Daniell said the government should show pedestrians some consideration. “In Macau, certain areas are very walkable, but the connection is very poor,” he said. “It’s very hard to find a bridge, a tunnel or an overpass to get you from one district to the other.” He added: “Once these things are in place, you should have a system that is organic enough to absorb future changes in terms of the balance of the population, and so on.”

surprising given that at the end of March this sector reported 2,107 job vacancies. There were also more workers joining the construction industry while casinos lost 300 employees. In the end, the number of people employed here rose to 360,700, the most ever. The number of jobless was 6,400 last month, the lowest in almost 15 years. But this was only 600 fewer than in April because 1,300 people joined the labour market. In addition Macau businesses hired a further 3,000 non-resident workers last month, bringing the total to 118,600. That means the number of resident workers fell in May. Imported labour now accounts for just short of a third (32.9 percent) of the city’s workforce, the highest ever figure. The underemployment rate – the percentage of people working in jobs they are overqualified for, or who work only part-time and want fulltime work – was unchanged at just 0.8 percent.

A professor of architecture at the National University of Singapore, Chen Yu, said the rapid surge in the number of cars on the road in Macau had hampered the smooth flow of public transport and pedestrian traffic.

Beautiful vision Ms Chen said transport connections within the urban area needed improvement. “The Nam Van area, including Avenida da Praia Grande, makes for a good walking space and leisure area,” she said. “But the connection is weak. It is not quite easy to catch public transport to travel from the historical quarter to new districts like ZAPE.” The government is planning to make Reclamation Zone B, off the south of the peninsula, a waterfront promenade stretching all the way from the Science Centre to the Macau Tower. Ms Chen has done research into the urban planning of the Nam Van area in the past three years. She says the government should strictly obey the future urban planning regulations. Macau’s first urban planning bill is going through the Legislative Assembly. The bill is due to be passed by August and become law by next March. “Zoning is actually not new to Macau, and there was once a beautiful vision laid out by the Portuguese administration to build more schools and auditoriums in the Praia Grande district,” Ms Chen said. “They were supposed to be located at where the Grand Lisboa now is. But then casinos came, and there were many competing interests that drove away this vision,” she said. “The fundamental issue lies in how the government respects its planning and how its authority is exercised to carry out a good vision,” she said. “Praia Grande was indeed an example of succumbing to too much economic pressure.”

June 28, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Cost of basics The annual inflation rate stood at 4.84 percent in May, compared with the same month last year. Calculating the Consumer Price Index is a complex procedure that produces, hopefully, a decent estimate of the changes in the average consumers’ purchasing power. However, the prices of the products and services included in the basket of goods used to track inflation change in different ways and no two consumers spend money the same way. Just two categories of expenses contributed more than 90 percent to inflation in May: food and non-alcoholic beverages, and housing and fuels. The pie chart below shows the relative contribution of the main sources of price rises. But this analysis omits fuels because the most important changes were occurring in the housing sector.

Rental costs include both rent paid for private and social housing properties, and imputed rent for owner-occupied housing. Almost half of May’s overall price increases can be attributed to a rise in housing costs. Rentals were responsible for 47.1 percent of the value of the rate of inflation. However, the figure for rent effectively paid stands at just 8.1 percent, which seems at odds with the general perception of the market. The other biggest contributor to inflation was food and beverages, responsible for 43.7 percent of the price increases. The main culprit is meals taken outside the home, which contributed 31 percent to May’s inflation. All other goods and services together contributed less than 10 percent towards inflation. J.I.D. The content of this column is the work of Business Daily’s journalists.

90.8%

The contribution of meals and lodging costs to inflation in May

Kingston Financial reports HK$523.9 mln gaming revenue Its two Macau casino hotels recently refurbished, says annual results statement Michael Grimes

michael.grimes@macaubusinessdaily

ingston Financial Group Ltd recorded gaming revenue of HK$523.9 million (US$67.5 million) from its two Macau casino properties in financial year ended March 31. Casino revenue including food and beverage operations accounted for 71 percent of group hotel and gaming business turnover in the period. The group, led by Pollyanna Chu Yuet Wah, acquired control of Casa Real Hotel and Grandview Hotel – properties operating gaming under a licence from Sociedade de Jogos de Macau SA – in 2005. Direct year-on-year comparisons with 2012’s performance are not given. The financial year-end of the Hong Kong-listed group was recently changed from December 31 to conform to the financial year-end of a subsidiary – Kingston Capital Asia Ltd, said a regulatory filing yesterday. But the group added it generated HK$613.7 million from gaming revenues in the 15 months to March 31, 2012. According to yesterday’s filing the group has a total of 61 live dealer mass-market tables across its two properties, 11 VIP tables in two selfmanaged VIP rooms and a total of 255 slot machines and 140 live dealer electronic baccarat machines in its two electronic gaming halls. “The live baccarat machines at Casa Real newly opened in October 2012 brought additional crowd[s] to the property, achieving synergy with the slot machines business as well,” said the company in its results filing. It added: “The newly renovated guest rooms have proved to be in popular demand and the group will continue to invest in this area to pave the way for revenue enhancement. The group will also further strengthen its relationship with travel agencies and offer packages and joint promotions with business partners so as to broaden the scope of customers of the two hotels.” The group’s core activities are financial services and securities investment. It recorded total revenues of HK$1.38 billion to the year ended March 31, and profit attributable to shareholders of HK$537.9 million According to the 2013 ‘The World’s Billionaires’ list compiled by Forbes magazine, Ms Chu, chief executive of the group, is ranked 1,342 among the world’s rich, with a net worth of US$1 billion.

Casa Real Hotel and its casino

Kingston Securities Ltd – a unit of the group – underwrote the 81.5 million pounds (998.5 million patacas) purchase in October 2009 of Birmingham City Football Club, by Hong Kong and Macau businessman Carson Yeung Ka Sing. At the time the professional soccer outfit played in the English Premier League.

Mr Yeung is currently on trial in Hong Kong on money laundering charges. Business Daily makes no suggestion that Ms Chu, Kingston Financial, Kingston Securities or any of that group’s companies are in any way implicated in Mr Yeung’s money laundering case.

Melco Crown adds hotel rooms at Belle Grande

planned, and will open in a single phase, suggesting investors are looking to shorten the payback cycle and maximise returns on capital for the US$1 billion (7.9 billion patacas) project. “We are opening the entire facility in one go,” said Clarence Chung Yuk Man, chairman of Melco Crown (Philippines) on the sidelines of the firm’s stockholders’ meeting. The scheme – a venture with Belle Corp – is to open in mid-2014 according to local filings. This week Melco Crown (Philippines) said it had subscribed to 40 million more common shares in its wholly owned subsidiary MCE Holdings (Philippines) Corp, bringing its total investment in MCE to 9.5 billion pesos (US$219.2 million).

elco Crown (Philippines) Resorts Corp – a unit of Macau casino operator Melco Crown Entertainment – is to increase by nearly one-fifth the number of hotel rooms at its Manila casino joint venture. Philippines media reports say Belle Grande Manila Bay will now have 950 rooms, rather than the 800 originally

June April 28, 19, 2013 2013

Macau Vitasoy Macau sales rebound After a slower start, food and beverage producer Vitasoy International Holdings Ltd saw its business here improve in the second half of the financial year ended March 31. Macau delivered “an outstanding growth of 12 percent,” the company told the Hong Kong Stock Exchange in a filing yesterday. This figure is an improvement from the 7-percent sales growth during the first half. But it is lower than the 15-percent recorded in Macau during the previous year. The producer said sales growth in Hong Kong and Macau outperformed the beverage industry average. Vitasoy’s revenue in the two cities rose 7.4 percent year-on-year to HK$1.9 billion (US$242 million). Profits increased much slower, up by 1 percent, to HK$320 million. Hong Kong and Macau account for 44.2 percent of Vitasoy’s sales. The company posted overall revenue of HK$4.1 billion, up by 9 percent year-on-year. Profits rose by 8 percent to HK$303 million. V.Q.

Higher rents erode profit on Luk Fook sales boom The jewellery retailer’s three new stores here add to its revenue, but also to its costs Vítor Quintã

vitorquinta@macaubusinessdaily.com

ong Kong jewellery retailer Luk Fook Holdings (International) Ltd’s sales in Macau grew by almost one-third in the financial year ended March 31. But the company’s profit fell as it had to pay more rent for its older shops and spend money on opening new ones. Luk Fook told the Hong Kong Stock Exchange yesterday that its sales in Macau had increased by 30.9 percent to HK$1.75 billion (US$225.7 million) – an increase the company described as “spectacular”. It said the rising tide of mainland Chinese visitors to Macau meant sales here had “generated substantial profit contributions for the group”. Official data show 16.9 million mainlanders visited last year, 4.6 percent more than a year before. Sales here accounted for 13 percent of Luk Fook’s total revenue, which increased by 12.6 percent to HK$13.4 billion. The company decided to ride the tide of mainland visitors by opening

Luk Fook’s largest flagship shop anywhere opened in Circle Square this month (Photo: Manuel Cardoso)

three new shops in Macau in the past financial year, bringing the number of outlets it has here to nine. It said the new shops and a “disproportionate increase in rental expenses arising from surging rental increment in Hong Kong and Macau” meant higher costs. The result was that Luk Fook’s operating profit decreased by 4.3 percent to HK$1.5 billion and its profit margin narrowed to 11.4 percent from 13.4 percent. Like its rival, Chow Tai Fook Jewellery Group Ltd, the company said a slump in the international

price gold in the middle of April had boosted demand for gold products in general and gold items for weddings in particular. “In April and May 2013, despite the decrease in gross margin, the increase in sales volume has led to a sizable gross profit growth in gold products,” Luk Fook said. The company’s largest flagship shop anywhere opened in Circle Square this month, downtown Macau. “The group aims to open more stores in casinos and resorts to efficiently reach our target customers,” it said.

June 28, 2013 April 19, 2013

Greater China Beijing slaps tax on EU chemical The Chinese government announced yesterday it would impose anti-dumping tariffs on a chemical imported from the European Union, the latest twist in a series of bitter trade disputes between the two economic giants. The Chinese government from Friday will collect punitive taxes of up to 36.9 percent from the EU on toluidine, an agent used to produce dyes, medicines, pesticides and other products, the commerce ministry said. The tax will be collected for five years, the ministry said in a statement. “The product under investigation was dumped and China’s toluidine industry suffered material injury,” the statement said.

Fitch joins others in cutting China forecast Jump in interbank rates likely to be a drag on economy

itch Ratings yesterday cut its forecast on China’s 2013 economic growth to 7.5 percent from its previous projection of 8 percent in March. The new forecast put the rating agency’s outlook on China more in line with the consensus, and also matches the Chinese government’s own target for the year.

KEY POINTS Fitch says 2013 growth to average 7-7.5 pct Tighter liquidity ‘to pose further headwind for economy’ Stocks drag benchmark index down for seventh day

“Fitch views growth averaging 7 percent to 7.5 percent as likely to be consistent both with labour market stability and a gradual unwinding of the imbalances that have built up in the economy and therefore tolerable for the authorities,” the rating agency said in its Global Economic Outlook report released yesterday. The reduction in the forecast for the full-year comes after the release of data showing gross domestic product grew 7.7 percent in the first quarter from a year earlier, down from 7.9 percent in the last three months of 2012. The Chinese economy recorded a growth of 7.8 percent for 2012 as a whole. In the report, Fitch highlights that incremental growth generated from credit has weakened. “This may reflect a drag on activity from weakened corporate balance sheets and overcapacity in some sectors,” it said. “The spike in interbank rates in June 2013 driven by tighter liquidity suggests tighter monetary conditions are likely to pose a further headwind

Squeeze halts US$7 bln sales Chinese domestic debt sales dropped 42 percent so far in June

he equivalent of about US$7 billion in yuan bond sales have been postponed during China’s two-week cash crunch and treasurers say they remain cautious despite central bank reassurances the squeeze is temporary. Domestic debt sales dropped 42 percent so far in June to 179.4 billion yuan (US$29.2 billion), poised for the worst month since January 2012, according to data compiled by Bloomberg. At least 22 companies including China Development Bank Corp cancelled or delayed sales. The yield on one-year AAA rated corporate debt surged 124 basis points this month, the most in Chinabond data going back to 2006, to 5.183 percent yesterday. China’s unexpected clampdown on excessive short-term borrowing sent the overnight repurchase rate to a record 13.91 percent last week, forcing policy makers to inject fresh funds to stem the turmoil. Companies from Baoshan Iron & Steel Co Ltd to Aluminium

Corporation of China Ltd say they are reviewing financing options, amid concern the cash crunch could worsen a slowdown in the world’s secondbiggest economy. “The corporate bond market is essentially shut,” said Michael Shaoul, the chairman of Marketfield Asset Management LLC in New York. “The corporate bond market and the banking system and the housing market, that’s really where the stakes are high in China and when a central bank starts to address excess credit creation, it’s always the sectors which have done the best which suffer the most.” Chalco, as China’s biggest aluminium maker is known, may “moderately increase dollar financing to help lower costs” and explore equity financing options, the company said in an e-mailed response to questions. It also reiterated plans to sell US$1 billion of perpetual notes overseas, a move approved by the company’s board in May. Baoshan chief financial officer

for the economy at least in the second and third quarters of 2013,” the rating agency said.

Weak data Chinese stocks fell yesterday, dragging the benchmark index down for a seventh day, amid concern that this month’s jump in funding costs will curb economic growth. The Shanghai Composite Index slipped 0.1 percent to 1,950.01 at the close. The CSI 300 Index lost 0.4 percent to 2,160.74. “The cash crunch has eased a bit but its impact on the real economy has yet to be known,” said Wei Wei, an analyst at West China Securities Co Ltd in Shanghai. “Investors are cautious at this stage.” According to Fitch, higherfrequency data suggest the economy has weakened further in the second quarter as the HSBC manufacturing PMI fell to 49.2 in May, down from a year-to-date average 50.8. Fifty divides expansion from contraction

Zhu Kebing said that while finances hadn’t been “infected” so far, “with the credit tightening and uncertainties on monetary policies, we will adjust our financing methods accordingly.” Higher yuan interest rates may also prompt the Chinese steelmaker to boost U.S. dollardenominated loans, Mr Zhu said. “In the second half, bond sales have to resume as it’s a temporary setback,” said Zhang Zhiming, head of China research at HSBC Holdings Plc in Hong Kong. “Bond sales were the main growth engine for China’s credit expansion. If growth doesn’t resume, the real economy will get hit. The PBOC statement that the credit crunch is seasonal and will go away means they will probably do whatever restores liquidity and corporate issuance.” Bloomberg News

US$29.2 bln

Value of domestic debt sales in June

Chinese stocks fell for seventh day

compared with the month before. “Lacklustre manufacturing PMIs are reflected in weak industrial fixedasset investment – up 17.8 percent year-on-year in the five months to May 2013, the weakest reading since the data begin in 2004,” it added. While exports were up 13.5 percent in the five months to May from a year earlier, import growth was more stable at 8.2 percent. “This may suggest net trade is subtracting from growth,” Fitch said.

China out of 10 biggest stocks C

hinese companies have dropped out of the ranks of the world’s 10 biggest stocks by market value for the first time since 2006 amid a cash crunch, slower growth and the biggest U.S. stock rally in a decade. PetroChina Co Ltd, the state oil producer that was the world’s sixth-biggest company in May, lost US$35 billion in market value this month to US$214 billion, dropping to 12th, according to data compiled by Bloomberg based on closing

June April 28, 19, 2013 2013

Greater China ZTE targets European retailers ZTE Corp plans to sell more smartphones directly through retailers in Europe to improve its brand awareness, the company’s head of mobile phones said. “Right now it’s the operators in Europe who choose our brand,” He Shiyou said. “In the coming three years we’ll make a transition from focusing on operators to focusing on the open market.” ZTE wants to boost the proportion of smartphones sold through noncarrier partners globally to 40 percent over the next three years, from 10 percent now, he said. ZTE is doubling its marketing budget this year and is opening up new sales channels.

HK must heed risks as mainland credit tightens Exposure to mainland risks grows as banks have closer ties to state-run lenders

Fitch said that for 2014, it sees China’s GDP also rising 7.5 percent, before slowing to 7 percent growth in 2015. Goldman Sachs Group Inc., HSBC Holdings Plc, Bank of AmericaMerrill Lynch and Crédit Agricole SA have all recently cut their growth projections for China, with Credit Suisse Group AG saying the Chinese economy might slow to 6 percent expansion in the year ahead. T.A. with Bloomberg News

prices on Wednesday. Industrial and Commercial Bank of China Ltd fell four places to 13th after losing US$28 billion. All of the 10 largest stocks are from the U.S. after Johnson & Johnson, the top maker of health-care products, and Wells Fargo & Co overtook the Chinese firms. Chinese shares are underperforming U.S. equities by the most since 1998 as the American housing and jobs markets improve. Stocks in the world’s secondlargest economy, which climbed 345 percent over the past decade and accounted for half of the world’s top 10 in 2007, are falling as the country struggles to develop a consumer market while the government tries to clamp down on a credit boom amid concern that bad loans and bank failures will deepen the slowdown. “Investors are looking at the U.S. because there are actually signs of growth, versus China where it’s exactly the opposite,” Wayne Lin, a money manager at Baltimore-based Legg Mason Inc., which oversees about US$654 billion in assets, said yesterday. “What you see is really the growth expectations flipping.” PetroChina, the most valuable company in the world as recently as March 2010, has lost 28 percent this year in Hong Kong trading, wiping out US$51 billion in value. The company posted an 8 percent decline in firstquarter earnings, its fourth straight drop, as demand fell for oil products. ICBC, the biggest Chinese lender, has tumbled 14 percent this month. Bloomberg News

he liquidity crunch in China’s financial system last week spooked global markets and led to a downgrade in the outlook of Hong Kong banks that has raised alarm bells about contagion. The widespread panic from the dizzying spike in onshore interbank rates offers a valuable lesson in risk management for the gatekeepers of Hong Kong’s growing yuan markets as the territory’s banks have deep ties to state-run mainland banks. China’s central bank has balked at injecting funds into the money markets as it cracked down on funds flowing into the country’s vast informal loans market known as “shadow banking”. While offshore markets saw only moderate volatility from the credit squeeze and plunging stock prices, the spillover effects are hard to ignore even for the most ardent supporters of China’s yuan internationalisation project. “As the cross border channels strengthen between the onshore and the offshore markets, it is not going to be easy for Hong Kong’s regulators to avert a contagion effect and they need to be prepared to stem any impact,” said Becky Liu, a strategist

at Standard Chartered Bank. The shortage of funds in China has spilled over into Hong Kong, pushing up the cost of funds in the growing offshore yuan market amid speculation that subsidiaries of Chinese banks were remitting money to the mainland. Moody’s Investors Service downgraded this week the outlook for Hong Kong’s banking system to negative from stable, citing concerns over persistent negative real interest rates and banks’ growing exposure to the mainland. The clearing bank for yuanrelated transactions in Hong Kong and Taiwan had to raise yuan interest rates this week to attract more yuan deposits. Some Chinese banks reportedly jacked up deposit rates for short-dated yuan funds, and the Chinese government narrowly sold out a jumbo bond sale on Wednesday.

Allay fears Indeed, Fitch Ratings said this week that sustained stress in the Chinese interbank market would raise counterparty risks for Hong Kong banks’ exposure to mainland banks arising mainly from interbank

placements and from guarantees on trade finance. One way to prepare for any funding crisis is to let Hong Kong banks have unlimited use of shortterm yuan funds via a 400 billion yuan (US$65.07 billion) swap line the Hong Kong Monetary Authority has with the People’s Bank of China. While on paper, the swap line is in place to avoid any short-term funding mismatches arising mainly due to trade, the HKMA can soothe concerns by making it clear that banks in the city can tap this funding channel to get emergency yuan funds. Analysts have also warned Hong Kong banks against exploiting opportunities to expand lending to Chinese companies as their mainland counterparts struggle for funds, as it could have an adverse impact on their asset quality. “Hong Kong banks have substantially increased their mainland China exposures to 16.5 percent of consolidated total assets at end-2012, up from 9.8 percent at end-2009,” said Sonny Hsu, vice president and senior analyst at the Financial Institutions Group at Moodys’ Investor Services. Reuters

StanChart to build HK as metals centre S

tandard Chartered Plc, which derived more than 60 percent of 2012 revenue from the AsiaPacific region, moved its global head of metals trading to Hong Kong from London and plans to build up its presence there. Jeremy East, who’s traded in the U.K. capital for about three decades, transferred this month, and he will expand the metals desk in Hong Kong to be half the size of the London team in two years from about a quarter at present, according to an interview. Mr East declined to give numbers. The London-based bank may expand into gold storage in Hong Kong and its unit started physicalmetals trade in Shanghai this month, he said yesterday. Hong Kong Exchanges & Clearing Ltd bought the London Metal Exchange for US$2.2 billion in December, and plans to introduce raw-material contracts in the region

StanChart may expand into gold storage in Hong Kong

as part of its growth strategy. China’s commodity-derivatives trade led the expansion of global volumes in 2012, according to data from the Paris-based World Federation of Exchanges. China is the world’s largest user of base metals and biggest gold producer. “Last year, with the LME purchase by HKEx and the fact that volume of copper on the Shanghai Futures Exchange was sometimes larger than the LME, the structure of the market is changing,” said Mr East, who joined Standard Chartered in 2006. “We have a big team in London but I can see the growth here.”

Standard Chartered, a clearing member at the LME, the largest base-metals market, can from this week issue LME contracts out of Hong Kong, on top of London, Mr East said. The unit in Shanghai has started trade on a trial basis and will extend into farm products, such as soybeans, later, he added. A gold vault in Asia, possibly Hong Kong, would help to ensure the bank can provide faster supply to clients, Mr East said. Price declines this year helped to attract physical demand from small-scale investors, especially in China, he added. Bloomberg News

10 10

June 28, 2013 April 19, 2013

Asia Japan institutions cut shares to record low Japan’s biggest quarterly rally in 25 years did little to entice institutional investors, whose stock holdings fell to the lowest proportion of overall holdings ever in March. The country’s insurers, lenders and trust banks pared their Japanese shares to 28 percent of total market value, the lowest ever, as of March 31, according to Japan Exchange Group Inc. Holdings have fallen from a peak of 44.1 percent in 1988. Fukoku Mutual Life Insurance Co and Sompo Japan Nipponkoa Asset Management Co are betting Prime Minister Shinzo Abe’s policies will fail to defeat deflation or restore sustainable growth. The Bank of Japan is doubling the monetary base and Mr Abe has pledged public spending, tax reform and freer markets to kick-start the economy and encourage investment after 15 years of deflation made it profitable to hoard cash. Institutions have been net sellers of shares every week since mid-November, unloading 6.2 trillion yen (US$63.4 billion) through June 14, according to data compiled by Bloomberg. “Almost no Japanese investors believe the real economy will get that much better,” said Ichiro Yamada from Fukoku Mutual Life in Tokyo.

RBNZ warns against higher rates New Zealand’s central bank said it isn’t appropriate to raise interest rates at the moment and it is “seriously considering” using other tools to curb a housing-market boom. “We at the Reserve Bank see the current overheated housing market as a real threat to future financial stability,” deputy governor Grant Spencer said in a speech yesterday. “Higher interest rates are not the right policy response at this time” and the central bank “is therefore seriously considering the use of macroprudential policy,” he said. The RBNZ is reluctant to raise its Official Cash Rate from a record-low 2.5 percent because that could boost a currency it has described as overvalued. Since peaking at above 86 U.S. cents on April 11, the New Zealand dollar has dropped more than 10 percent against the greenback amid signs of an improving U.S. economy and after limited intervention by the central bank. Policy makers are “well aware that any official cash rate increases at this time would likely put unwanted pressure on the exchange rate,” Mr Spencer said.

Honda jets to reach market next year Honda Motor Co, preparing to enter the market for business jets, said it’s won two-to-three years of orders for what it calls “flying sports cars” and signalled the business will turn profitable before the end of the decade. The aviation business is on track to turn profitable five years after it begins delivering planes as soon as next year, Michimasa Fujino, president of Honda Aircraft, said in an interview. Though he declined to specify the number of orders received so far, Mr Fujino said sales of the US$4.5 million jet plane may reach 80 units to 90 units annually in a few years. “We want to evoke new demand to make the pie bigger for all,” said Mr Fujino. “As the pie becomes bigger, we’ll all be motivated to sharpen our competitiveness, which will in turn attract more new demand.” While the U.S. currently accounts for most of the demand for business jets, Mr Fujino said Brazil and India are among markets that offer the most growth potential. Deliveries of the Honda jets, originally planned to begin this year, have been delayed because the company’s waiting approval from the U.S. Federal Aviation Administration, he added. Bloomberg News

Kevin Rudd formed a new government yesterday

Australia’s Rudd may lift business confidence New PM wins enough support to avoid snap election

evin Rudd’s victory as leader of Australia’s governing Labor Party may boost consumer and company confidence before an election that could be held as early as August, according to investors, economists and business leaders. Mr Rudd, 55, prevailed on Wednesday over Julia Gillard, 51, in a 57-45 vote among Labor lawmakers that underscored the party’s split between the man who swept Labor to power in 2007 and the woman who ousted him in 2010. He was sworn in yesterday as prime minister. Mr Rudd’s first task will be a major cabinet reshuffle after a string of senior ministers loyal to Ms Gillard resigned from the cabinet, including former deputy prime minister and treasurer Wayne Swan, Trade Minister Craig Emerson and Climate Change Minister Greg Combet. Immigration Minister Chris Bowen was sworn in as Treasurer and Transport Minister Anthony

Albanese was sworn in as deputy leader yesterday. The former diplomat, who says he has learned from his first tenure as prime minister, yesterday pledged to work closely with business as he faces an election with a weakening economic outlook that’s prompted the central bank to cut interest rates to a record low. Business groups and economists called on Mr Rudd to bring forward a scheduled September 14 election to boost business and consumer sentiment. “We’d call for an election as soon as possible because business confidence is low and to fix that we need to get this election done,” Business Council of Australia President Tony Shepherd said in a telephone interview. He was backed by Australia & New Zealand Banking Group Ltd economist Ivan Colhoun, who wrote in a report: “The main issue for markets is what the events of today mean for the timing of the election. An earlier election may lift business

S. Korea raises 2013 growth outlook Government lowers inflation forecast, says recovery intact

outh Korea yesterday raised its growth forecast for the year, reflecting confidence that the trade-dependent economy will continue recovering despite broader concerns about the U.S. Federal Reserve’s plans to trim its stimulus in coming months. The finance ministry now expects this year’s gross domestic product growth at 2.7 percent from 2.3 percent forecast in March, factoring in the government’s fiscal stimulus and the Bank of Korea’s rate cut in May. It sees growth accelerating to 4 percent next year on expectations of a continued global recovery.

“Quarterly growth should accelerate to 1 percent [in seasonally adjusted terms] or higher sometime in the second half,” said Choi Sang-mok, director general of economic policy at the Ministry of Strategy and Finance, at an embargoed briefing on Monday. The improved outlook reflects cautious optimism among local policymakers that growth in Asia’s fourth-largest economy will continue to accelerate in the coming months, albeit at a moderate pace. Bank of Korea governor Kim Choong-soo said earlier this month that South Korea’s gross domestic product will grow by a seasonally

and consumer confidence, which appears to have been weighed down by political uncertainty.”

‘Tough decisions’ Australian business sector also called on Mr Rudd to abandon laws which strengthen trade union access to the workplace and which tighten rules for temporary skilled immigration. “Our tolerance factor with instability in the leadership of Australia’s government is at breaking point, matched only by a swathe of anti-business policies which have brought business frustration to boiling point,” said Australian Chamber of Commerce and Industry chief executive Peter Anderson. “The economic challenges facing Australia, especially our declining competitiveness, high cost structure and low confidence, are serious.” The Australian dollar rose 0.5 percent to 93.23 U.S. cents

adjusted 0.8 percent in the second quarter in sequential terms, matching the rate of growth seen in the first quarter. He said at the time that annual GDP growth could exceed 3 percent if the economy maintains its current pace. Though a median forecast from a Reuters survey of economists tips this month’s exports to fall by an annual 2.1 percent, the decline is due to fewer working days compared with a year earlier and the country’s overseas shipments are seen gradually improving in the second half. The finance ministry revised down its inflation forecast for the year to 1.7 percent from 2.3 percent previously, further below the Bank of Korea’s target band of between 2.5 percent and 3.5 percent. But it sees inflation accelerating to 2.8 percent next year, in line with improving growth.

Record surplus The country’s current-account surplus rose to a record high in May, helped by robust exports, the Bank of Korea said yesterday, reinforcing

11 11

June April 28, 19, 2013 2013

Asia KEY POINTS Bowen appointed Treasurer, Albanese deputy PM Elections scheduled for Sept 14 may be moved Opposition pushing for early election Rudd victory may not be enough to reverse decline

in Sydney. Benchmark 10-year government bonds rose, sending the yield down four basis points to 3.80 percent, according to Bloomberg Bond Trader prices. Gross domestic product expanded 2.5 percent in the first quarter from a year earlier, the weakest reading since the second quarter of 2011, a Bureau of Statistics report showed June 5. “Looking at our global economic circumstances, we have tough decisions ahead on the future of our economy,” Mr Rudd told reporters. “There’s a big future for Australian manufacturing under this government. Business is a group that this government will work with very closely.” Mr Rudd may bring forward plans to link the nation’s carbon market with Europe’s, Daniel Rossetto, managing director of Climate Mundial, said by e-mail from London. T o n y Ab b o t t , l e a d e r o f t h e opposition Liberal-National coalition, may also abolish a fixedprice period for carbon market if he wins office at the election, Mr Rossetto said. “Rudd’s success in the caucus ballot puts to rest the leadership distraction which has added to the political uncertainty weighing on our community and economy,” Innes Wilcox, chief executive officer at Australian Industry Group, which represents more than 60,000 businesses, said in an e-mail. “Business will be deeply interested in his policy approaches ahead of the election.” Bloomberg News/Reuters

market views that the country’s fundamentals remain relatively sound despite a global slowdown. The current-account surplus, the broadest measure of South Korea’s trade with the rest of the world, totalled US$8.64 billion last month, the highest monthly amount on record. That compares with a surplus of US$3.93 billion in April and a surplus of US$3.57 billion in May last year. On a seasonally adjusted basis, the current-account surplus rose to US$7.82 billion from US$4.76 billion in the previous month. The current-account balance remained in the black for the 16th consecutive month for South Korea, which last posted a deficit in January 2012. Mr Choi told reporters that upside and downside risks to growth appear to be balanced, though the prospects of the Fed’s tapering of its quantitative easing programme and volatility of the Japanese yen pose risks. He said any unwinding of stimulus by the Fed would coincide with improving growth in the U.S.,

Vietnam economic growth quickens

India current-account gap narrows sharply I

ndia released figures showing a narrower-than-estimated currentaccount deficit a day earlier than expected, sparking a climb in the rupee from a record low. The shortfall was US$18.1 billion in January through March, compared with a revised US$31.9 billion in the previous quarter, the Reserve Bank of India said yesterday. The deficit last quarter was 3.6 percent of gross domestic product, from an unprecedented 6.7 percent of GDP in October to December. The central bank usually publishes the figures on the last working day of the quarter and the surprise release is probably aimed at calming nerves after the rupee sank to an all-time low on Wednesday, Yes Bank Ltd said. “I think there was a clear motivation on the part of the RBI to put the market at ease. It shows they were uncomfortable at the recent sell-off, and perhaps, this is the best way to combat that,” said Jyotinder Kaur, economist at HDFC Bank. The currency has tumbled as the prospect of reduced U.S. monetary stimulus exposes emerging nations from India to Brazil to the risk of capital outflows. “This is a brief reprieve,” said Shubhada Rao, chief economist at Yes Bank in Mumbai. “The deficit may widen again this quarter.” The rupee strengthened 0.3 percent to 60.56 per dollar in Mumbai, paring earlier gains. It is down 9.2 percent in 2013, the most after the yen in a basket of 11 Asian currencies tracked by Bloomberg. For the 12 months ended March, the deficit widened to US$87.8 billion, or 4.8 percent of GDP, from US$78.2 billion in 2011-2012, or 4.2 percent of GDP, yesterday’s statement showed.

Biggest risk The current account is the broadest measure of trade, tracking goods, services and investment income. The central bank estimates the sustainable level of the deficit at 2.5 percent of GDP and has said it’s the biggest risk to the economy. India has increased taxes on gold

imports twice this year to try and rein in the imbalance by deterring purchases of the metal. The nation is the world’s biggest consumer of bullion, for uses ranging from wedding jewellery to a store of value amid elevated consumer-price inflation. The higher levies are part of a policy push by Prime Minister Manmohan Singh’s government since September to revive an economy that expanded last fiscal year at the weakest pace in a decade. Export growth last quarter assisted efforts to pare the trade gap. Foreign direct investment in India fell the most in more than a decade in 2012-2013, increasing reliance on stock and bond inflows to fund the current-account shortfall. The government is considering easing restrictions on foreign direct investment in a range of industries to woo capital, according to Finance Minister Palaniappan Chidambaram. While net capital inflows moderated in January through March, they were “more than adequate” to finance the current-account gap, the Reserve Bank said yesterday. “We expect lower capital inflows to continue to pressurise the balance of payments,” said Sonal Varma, an economist at Nomura Holdings Inc. in Mumbai. Bloomberg News/Reuters

It shows they [the RBI] were uncomfortable at the recent sell-off, and perhaps, this is the best way to combat that Jyotinder Kaur, economist, HDFC Bank

ietnam’s economic growth accelerated in the second quarter after the central bank cut interest rates to revive lending to businesses and rising foreign investment boosted the nation’s exports. Gross domestic product grew 5 percent in the second quarter from a year earlier, according to figures released yesterday by the General Statistics Office in Hanoi. The economy expanded 4.9 percent in the first half from a year earlier, the data showed. Vietnam’s central bank has cut its refinancing rate eight times since the beginning of 2012 to spur lending, and the government is setting up an asset management company to clear bad debt. The legislature last week voted to lower the corporate income tax rate to help businesses, while disbursed foreign investment rose 5.6 percent in the first half of the year to US$5.7 billion, according to the Ministry of Planning & Investment. “This isn’t going to be a strong growth year, but the economy is stabilising,” said Gaurav Gupta, the Hanoi-based managing director at General Motors Co’s Vietnam unit, citing lower interest rates and inflation than in previous years. “This year should set the base for the government to take actions to drive growth faster in the future.” The dong has slipped about 0.4 percent this quarter, a smaller decline compared to other regional currencies including the Philippine peso and the Thai baht. The benchmark VN index has gained almost 16 percent this year. The economy expanded a revised 4.76 percent in the first quarter from a year earlier, and is set for a third straight year of sub-6 percent growth for the first time since 1988. The government targets 5.5 percent for this year after a 5.03 percent pace last year, the slowest since 1999. Vietnam’s GDP may rise 6 percent in 2014, according to a directive by Prime Minister Nguyen Tan Dung posted on the government website this week. It also urged implementing monetary policy with the aim of stabilising the currency in order to “efficiently” supply capital in the economy. AFP

US$8.64 bln South Korea’s current-account surplus in May

as opposed to previous shocks like the euro zone crisis. South Korean markets were hit hard following the Fed’s

announcement last week, in line with the rest of the region, but there are no signs of serious capital flight at present. Mr Choi reiterated that the

government currently plans no new measures to deal with capital flowrelated risks. Reuters

June 28, 2013

Markets Hang Seng Index NAME AIA GROUP LTD ALUMINUM CORP-H

PRICE

DAY %

VOLUME

32.65

0.927357

36583075

CHINA UNICOM HON

2.4

1.694915

16539217

CITIC PACIFIC

NAME

PRICE

DAY %

VOLUME

10.06

-0.7889546

16753898

8.27

-1.076555

CLP HLDGS LTD

62.35

CNOOC LTD

12.78

BANK OF CHINA-H

3.13

408587527

BANK OF COMMUN-H

5.16

-1.338432

52397678

BANK EAST ASIA

27.6

0.1814882

2283662

10.88

4.615385

35641532

ESPRIT HLDGS

23.6

0.4255319

14814243

HANG LUNG PROPER

BELLE INTERNATIO BOC HONG KONG HO

COSCO PAC LTD

NAME

PRICE

DAY %

POWER ASSETS HOL

67.55

1.274363

2061071

4767109

SANDS CHINA LTD

36.15

0.2773925

15073151

0.4834811

2567039

SINO LAND CO

10.6

0.56926

5805896

2.076677

57392662

SUN HUNG KAI PRO

98.4

-0.3544304

6273148

9.93

1.741803

8937476

SWIRE PACIFIC-A

93.85

1.569264

1078774

11.48

0.1745201

4610950

TENCENT HOLDINGS

297.8

2.548209

5130046

26.6

0.1883239

14377827

19.9

1.220753

10244588

10.42

-0.1915709

19503980

64.5

-0.6928406

8219408

TINGYI HLDG CO

CATHAY PAC AIR

13.22

1.225115

4184756

HANG SENG BK

112.9

-0.8779631

2245012

WANT WANT CHINA

CHEUNG KONG

103.6

0.8763389

4280609

HENDERSON LAND D

46.3

4827320

WHARF HLDG

CHINA COAL ENE-H

4.04

-3.579952

55395022

HENGAN INTL

78.8

0.2544529

2266944

CHINA CONST BA-H

5.39

-0.3696858

361951211

HONG KG CHINA GS

19.1

1.921025

10493732

CHINA LIFE INS-H

17.96

-0.2222222

45377002

CHINA MERCHANT

23.2

2.428256

4636471

CHINA MOBILE

77.85

0.776699

CHINA OVERSEAS

19.46

2.098636

CHINA PETROLEU-H

5.34

1.908397

139052310

CHINA RES ENTERP

23.5

1.511879

3449270

28.1

0.8976661

2641321

CHINA RES LAND

20.35

5.113636

13950922

NEW WORLD DEV

10.42

-0.5725191

17809727

CHINA RES POWER

18.36

6.25

16364196

PETROCHINA CO-H

7.98

0.2512563

68641370

CHINA SHENHUA-H

20.15

-3.07331

33635536

PING AN INSURA-H

50.7

-0.8797654

15665035

114.5

-1.716738

7859527

HSBC HLDGS PLC

HONG KONG EXCHNG

80.5

16131244

21676314

HUTCHISON WHAMPO

80.8

0.7481297

8310866

39609429

IND & COMM BK-H

4.76

1.276596

679752014

10.58

0.9541985

29844883

LI & FUNG LTD MTR CORP

MOVERS

VOLUME

3 20690

INDEX 20440.08 HIGH

20681.18

LOW

19510.76

52W (H) 23944.74 (L) 18710.58984

19500

25-June

27-June

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.16

0.6369427

169505741

AIR CHINA LTD-H

5.4

2.857143

ALUMINUM CORP-H

2.4

ANHUI CONCH-H BANK OF CHINA-H

NAME

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

24.2

1.894737

25850909

18551600

CHINA PETROLEU-H

5.34

1.908397

139052310

1.694915

16539217

CHINA RAIL CN-H

6.48

0.3095975

20.6

0.243309

28654400

CHINA RAIL GR-H

3.47

3.13

408587527

CHINA SHENHUA-H

PRICE

DAY %

VOLUME

YANZHOU COAL-H

5.61

-5.076142

60837301

ZIJIN MINING-H

1.39

-2.797203

90720184

19942739

ZOOMLION HEAVY-H

5.36

-0.7407407

10720508

2.359882

24659000

ZTE CORP-H

12.56

0.8025682

4604494

20.15

-3.07331

33635536

CHINA TELECOM-H

5.16

-1.338432

52397678

3.7

0.2710027

53327450

25.45

-4.143126

6307062

DONGFENG MOTOR-H

10.26

-1.068068

16171651

3.5

-1.960784

45403672

GUANGZHOU AUTO-H

7.21

-0.2766252

13700751

CHINA COAL ENE-H

4.04

-3.579952

55395022

HUANENG POWER-H

7.66

6.536857

51496000

CHINA COM CONS-H

6.04

0.1658375

23248076

IND & COMM BK-H

4.76

1.276596

679752014

CHINA CONST BA-H

5.39

-0.3696858

361951211

JIANGXI COPPER-H

12.92

-1.52439

14761863

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

NAME

MOVERS

3.27

1.552795

12758000

PETROCHINA CO-H

7.98

0.2512563

68641370

-0.2222222

45377002

PICC PROPERTY &

8.57

0.1168224

12852891

CHINA LONGYUAN-H

8.01

7.085561

71923000

PING AN INSURA-H

50.7

-0.8797654

15665035

CHINA MERCH BK-H

12.9

-0.6163328

40916530

SHANDONG WEIG-H

8.53

-3.724605

12354000

CHINA MINSHENG-H

7.71

-2.405063

107474022

SINOPHARM-H

19.5

1.668405

4965814

52W (H) 12354.22

CHINA NATL BDG-H

6.92

-0.1443001

47519528

TSINGTAO BREW-H

53.4

2.10325

1291376

(L) 8640.85

14.72

4.992867

6887945

WEICHAI POWER-H

CHINA LIFE INS-H

CHINA OILFIELD-H

24.2

2 9180

INDEX 9158.61

17.96

CHINA COSCO HO-H

HIGH

9333.97

LOW

8692.95 8690

25-June

27-June

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

6.83

1.636905

22198461

QINGDAO HAIER-A

9.3

-2.002107

26736632

CITIC SECURITI-A

9.84

-1.501502

50231815

CSR CORP LTD -A

3.65

35430066

DAQIN RAILWAY -A

5.85

2.713178

52947765

DATANG INTL PO-A

5.17

0.2506266

122022544

EVERBRIG SEC -A

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.56

1.587302

189908200

AIR CHINA LTD-A

4.19

0.7211538

14964238

CHONGQING CHAN-A

ALUMINUM CORP-A

3.14

-0.3174603

23101317

ANHUI CONCH-A

12.96

2.047244

BANK OF BEIJIN-A

7.67

2.266667

BANK OF CHINA-A

2.65 4

BANK OF COMMUN-A

CHINA YANGTZE-A

NAME

PRICE

DAY %

VOLUME

10.75

-2.094718

13503776

QINGHAI SALT-A

16.7

0.05991612

6758452

89160931

SAIC MOTOR-A

13.12

-2.089552

23275990

-2.144772

31700293

SANAN OPTOELEC-A

19.86

-0.5508262

17324216

0.6884682

32975392

SANY HEAVY INDUS

7.45

-0.5340454

26305814

-0.7677543

28660351

SHANDONG DONG-A

38.96

1.352758

5468365

9.91

0.1010101

27719865

SHANG PHARM -A

10.62

0.7590133

11392346 125823284

3.92

45303235

GD MIDEA HOLDI-A

12.8

13015220

SHANG PUDONG-A

7.88

1.415701

BEIJING SL -A

58.64

0.06825939

4627172

GD POWER DEVEL-A

2.26

86676958

SHANGHAI ELECT-A

3.3

-2.077151

3806242

BEIJING TONGRE-A

21.73

0.2306273

8806678

GEMDALE CORP-A

6.43

2.88

50683653

SHANXI LU'AN -A

11.76

-2.406639

21740127

BYD CO LTD -A

29.57

-3.680782

10256919

GF SECURITIES-A

10.85

-2.340234

24487049

SHENZEN OVERSE-A

5.01

1.212121

38380347

CHINA AVIC ELE-A

21.01

-2.233597

6982091

GREE ELECTRIC

24.98

1.544715

22918154

SICHUAN KELUN-A

55.01

-1.750313

1097092

CHINA CITIC BK-A

3.57

27556966

GUANGHUI ENERG-A

12.9

1.574803

29638648

SUNING COMMERC-A

4.96

34706694

CHINA CNR CORP-A

3.89

-1.518987

39872353

HAITONG SECURI-A

9.02

-2.062975

111914641

TASLY PHARMAC-A

39.47

-0.3534461

6886999

35.83

-0.5274847

8334401

TSINGTAO BREW-A

36.58

0.4669047

2057855

38.02

-1.272397

4539218

WANHUA CHEMIC-A

15.84

-3.000612

15286721

BAOSHAN IRON & S

CHINA COAL ENE-A

4.85

-1.821862

17819842

HANGZHOU HIKVI-A

CHINA CONST BA-A

4.08

1.745636

48502448

HENAN SHUAN-A

CHINA COSCO HO-A

3.02

8686950

HONG YUAN SEC-A

8.16

-5.446118

62911801

WEICHAI POWER-A

17.73

9657923

CHINA EAST AIR-A

2.52

0.3984064

11026550

HUATAI SECURIT-A

7.78

-0.3841229

36848856

WULIANGYE YIBIN

19.56

-0.6602336

16556799

CHINA EVERBRIG-A

2.76

1.470588

108217166

HUAXIA BANK CO

8.66

0.9324009

31926081

YANZHOU COAL-A

9.39

-1.26183

11136732

3.81

1.871658

100605048

YUNNAN BAIYAO-A

85.16

0.1175641

1864081

-0.8528785

17510379

CHINA INTL MAR-A

10.07

3.707518

10955466

IND & COMM BK-A

CHINA LIFE INS-A

13.43

0.07451565

15050840

INDUSTRIAL BAN-A

14.13

1.581596

101519584

ZHONGJIN GOLD

9.3

CHINA MERCH BK-A

10.92

2.439024

72290048

INNER MONG BAO-A

20.84

-3.069767

30749282

ZIJIN MINING-A

2.39

55968623

CHINA MERCHANT-A

10.1

-0.4926108

29532886

INNER MONG YIL-A

31.55

-1.835719

16275584

ZOOMLION HEAVY-A

5.33

-0.3738318

98241314

CHINA MERCHANT-A

22.73

2.111411

16344483

INNER MONGOLIA-A

4.23

7.633588

94792691

ZTE CORP-A

12.74

-1.316809

57475011

CHINA MINSHENG-A

8.21

0.7361963

171402745

JIANGSU HENGRU-A

26.6

1.565483

6392238

-4.644182

4669296

15.7

-1.69067

11573763

CHINA NATIONAL-A

JIANGSU YANGHE-A

9.5

-1.960784

41894153

CHINA OILFIELD-A

14.01

-2.233077

4671759

CHINA PACIFIC-A

15.5

0.1939237

28878198

JINDUICHENG -A

7.9

-1.496259

5938442

19.51

-0.4591837

40246973

189.58

0.4557016

3413576

23.62

-0.3375527

9179588

JIANGXI COPPER-A

CHINA PETROLEU-A

4.11

0.2439024

48526420

KANGMEI PHARMA-A

CHINA RAILWAY-A

4.14

0.729927

27807178

KWEICHOW MOUTA-A

CHINA RAILWAY-A

2.42

1.25523

35450627

LUZHOU LAOJIAO-A

CHINA RESOURCE-A

29.6

6437890

METALLURGICAL-A

1.6

46808362

20538144

NARI TECHNOLOG-A

14.6

-4.450262

24189878

2.02

13878654

7.36

0.6839945

21566708

CHINA SHENHUA-A

16.67

-1.883461

CHINA SHIPBUIL-A

4.52

59982923

NINGBO PORT CO-A

CHINA SOUTHERN-A

2.78

29929178

PETROCHINA CO-A

CHINA STATE -A

3.17

2.258065

138406998

PING AN BANK-A

9.6

-1.639344

83586702

CHINA UNITED-A

3.1

0.6493506

126948551

PING AN INSURA-A

34.39

-0.3765933

33313687

1.112347

129277445

POLY REAL ESTA-A

9.33

0.2148228

86275198

PRICE DAY %

Volume

PRICE DAY %

VOLUME

CHINA VANKE CO-A

9.09

MOVERS 100

182

18 2200

INDEX 2160.735 HIGH

2197.12

LOW

2043.82

52W (H) 2791.303 (L) 2023.171

2040

25-June

27-June

FTSE Taiwan 50 Index NAME ACER INC

NAME

21.4

0.9433962

8623772

1.626016

23069046

ASIA CEMENT CORP

35.9

0.4195804

4672707

ASUSTEK COMPUTER

272.5

-5.381944

13040722

HON HAI PRECISIO

AU OPTRONICS COR

10.7

4.901961

128566841

HOTAI MOTOR CO

CATCHER TECH

154

0.9836066

6116862

240.5

CATHAY FINANCIAL

40.4

0.7481297

21181319

HUA NAN FINANCIA

CHANG HWA BANK

16.4

9338717

LARGAN PRECISION

932

CHENG SHIN RUBBE

91.1

2.359551

6653055

LITE-ON TECHNOLO

51.4

CHIMEI INNOLUX C

14.9

2.405498

116661807

MEDIATEK INC

CHINA DEVELOPMEN

8.28

0.9756098

34875924

MEGA FINANCIAL H

CHINA STEEL CORP

23.8

16398131

NAN YA PLASTICS

CHINATRUST FINAN

18.15

1.396648

25460063

95.9

0.6295908

11832548

16.6 -0.3003003

ADVANCED SEMICON

CHUNGHWA TELECOM COMPAL ELECTRON

VOLUME

2.034884

5431903

TAIWAN MOBILE CO

111

FOXCONN TECHNOLO

71.4

-1.108033

4133539

TPK HOLDING CO L

492

-1.402806

3212148

3.492885

25562219

TSMC

104.5

2.955665

45591476

55948537

UNI-PRESIDENT

322

6.976744

811633

-2.03666

8707062

WISTRON CORP

16.4 -0.6060606

5541510

YUANTA FINANCIAL

1.304348

1749986

YULON MOTOR CO

47.1

4.577823

10490685

328

11931134

22.4

1.357466

19396999

59.3

1.367521

6669701

PRESIDENT CHAIN

193

-1.025641

977791

QUANTA COMPUTER

64.3

2.063492

7945878

FUBON FINANCIAL

HTC CORP

17052218

SILICONWARE PREC

37.5

1.351351

22468553

2.264151

8212908

SINOPAC FINANCIA

13.9

1.459854

13958360

FAR EASTERN NEW

31.9

1.916933

4774081

SYNNEX TECH INTL

38.8

1.305483

8254547

FAR EASTONE TELE

76.6

0.3931848

10718196

TAIWAN CEMENT

35.5

2.011494

9861656

16.35

7764295

0.5665722

3935382

26.15 -0.3809524

1281714

FIRST FINANCIAL

PRICE DAY %

70.2

135.5

DELTA ELECT INC

NAME

FORMOSA PLASTIC

17.35

9414356

TAIWAN COOPERATI

FORMOSA CHEM & F

2.373887

3976450

TAIWAN FERTILIZE

FORMOSA PETROCHE

75.9

3.688525

2944056

TAIWAN GLASS IND

UNITED MICROELEC

MOVERS

58.4

10421163

14.45

6.642066

266860304

1.351351

8188001

15.6

3.311258

29512607

3.97351

3662232

8 5450

INDEX 5437.34 HIGH

5437.34

LOW

5274.82

5439637

52W (H) 5896.71 (L) 4719.96

5270

25-June

27-June

June 28, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 58.0

39.0

20.4

38.7

20.3 57.5

38.4

20.2

38.1

Max 38.7

Average 38.341

Max 37.15

Average 36.743

Min 38.05

37.8

Last 38.15

Min 36.15

Max 57.6

Average 57.562

PRICE

Min 20

Last 20.2

18.8

21.2

36.6

18.7

21.0

36.3

18.6

20.8

Max 18.88

Average 18.649

DAY %

YTD %

(H) 52W

Min 18.5

Last 18.5

(L) 52W

0.19895288

2.058447099

99.98000336

86.29000092

BRENT CRUDE FUTR Aug13

102.06

0.393468424

-4.500795359

115.1699982

96.70999908

GASOLINE RBOB FUT Jul13

273.46

0.146487951

-3.158863942

318.0399895

238.9999866

GAS OIL FUT (ICE) Aug13

869.25

1.075581395

-4.372937294

983.5

829.25

3.731

-0.160556596

3.927576602

4.525000095

3.354000092

286.44

0.353852083

-4.574074691

322.0499992

259.5000029

NATURAL GAS FUTR Aug13 NY Harb ULSD Fut Jul13 Gold Spot $/Oz

1238.2

0.7224

-25.6095

1796.08

1222.04

Silver Spot $/Oz

18.7655

0.703

-37.6769

35.365

18.4505

Platinum Spot $/Oz

1323.62

-0.1607

-12.7906

1742.8

1301.1

Palladium Spot $/Oz

643.8

-0.6819

-7.9839

786.5

553.75

LME ALUMINUM 3MO ($)

1771

-0.728699552

-14.56825856

2200.199951

1762.5

LME COPPER 3MO ($)

6735

-0.883002208

-15.08006557

8422

6602

LME ZINC

1838

-0.568028131

-11.63461538

2230

1745

13605

-2.333094042

-20.25205158

18920

13525 14.60000038

3MO ($)

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

18.5

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

15.72

0.159286397

2.044790652

16.47500038

542.75

-0.229779412

-9.503959983

665

512

WHEAT FUTURE(CBT) Sep13

680.75

0.553914328

-15.64436183

905.75

673.75

SOYBEAN FUTURE Nov13

1279.5

0.274294671

-1.784686241

1409.75

1186.5

COFFEE 'C' FUTURE Sep13

119.05

0.506542845

-21.90882256

203.8499908

117.0999985

NAME

16.47999954

ARISTOCRAT LEISU

Dec13

SUGAR #11 (WORLD) Oct13

17.3

COTTON NO.2 FUTR Dec13

83.98

-0.173110214 0.334528076

-13.75872383 6.65481331

22.8599987 89.55999756

World Stock Markets - Indices COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14910.14

1.015087

13.7819

15542.4

12450.17

NASDAQ COMPOSITE INDEX

3376.224

0.8463843

11.81351

3532.038

2810.8

FTSE 100 INDEX

6182.45

0.2752422

4.8262

6875.62

5436.5

DAX INDEX

7930.51

-0.1319735

4.178972

8557.86

6096.94

Max 21.25

Average 21.054

Min 20.9

Last 20.95

20.6

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9309 1.5274 0.9437 1.3036 98.16 7.9902 7.7571 6.1489 60.295 31.13 1.2667 30.025 43.425 9925 91.367 1.2302 0.85346 8.0123 10.4151 127.95 1.03

0.4858 -0.5405 -0.2649 0.1229 -0.4584 -0.0025 0.018 -0.0211 0.7215 0.0964 0.7973 0.2698 0.0461 0.403 -0.9259 -0.3821 -0.6573 0.1972 -0.1095 -0.5705 -0.0097

-10.3006 -5.5762 -2.9988 -1.1676 -12.2861 -0.0876 -0.0838 1.3287 -8.7901 -1.7668 -3.5762 -3.3039 -5.5728 -1.33 -2.2328 -1.8469 -4.4572 2.5611 1.107 -11.2388 -0.0097

1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 60.765 32 1.2824 30.228 44.181 10174 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.9148 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 79.378 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

Macau Related Stocks

CROWN LTD

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.29

2.142857

36.19047

4.49

2.29

VOLUME CRNCY 1482145

12.28

2.333333

15.08903

13.75

8.28

2292123

AMAX HOLDINGS LT

1.17

-2.5

-16.42857

1.72

0.75

362375

BOC HONG KONG HO

23.6

0.4255319

-2.07469

22.6

14814243

CENTURY LEGEND

0.32

20.75472

0.42

0.22

CHEUK NANG HLDGS

5.45

3.612167

-9.015022

6.74

2.89

17067

CHINA OVERSEAS

19.46

2.098636

-15.75758

25.6

16.761

39609429

CHINESE ESTATES

13.64

1.337296

12.45387

14.12

8.031

68000

CHOW TAI FOOK JE

8.4

4.868914

-32.47588

13.4

7.44

10374764

EMPEROR ENTERTAI

2.73

3.018868

44.44445

3.07

1.34

1783250

FUTURE BRIGHT

2.22

-2.202643

83.16437

2.76

0.904

2286000

GALAXY ENTERTAIN

38.15

-0.9090909

25.70016

44.95

16.98

13406913

HANG SENG BK

2245012

112.9

-0.8779631

-4.886265

132.8

103.8

HOPEWELL HLDGS

25.4

0.9940358

-23.60902

35.3

19.938

2114200

HSBC HLDGS PLC

80.5

-0.9840136

90.7

61.1

16131244

NIKKEI 225

13213.55

2.957299

27.11228

15942.6

8328.019531

HANG SENG INDEX

20440.08

0.4991998

-9.784384

23944.74

18710.58984

CSI 300 INDEX

2160.735

-0.348753

-14.35686

2791.303

2023.171

TAIWAN TAIEX INDEX

7883.9

1.272994

2.394959

8439.15

6922.73

MGM CHINA HOLDIN

HUTCHISON TELE H

4.11

0.982801

15.44944

4.66

2.98

3020000

LUK FOOK HLDGS I

18.76

0.3208556

-23.11475

30.05

15.44

7259194

MELCO INTL DEVEL

14.24

-2.864939

58.04661

18.18

5.12

7508807

20.2

0.4975124

52.12815

21.6

9.509

3508117

KOSPI INDEX

1834.7

2.873644

-8.129496

2042.48

1758.99

MIDLAND HOLDINGS

2.88

-22.16216

2.77

2284000

S&P/ASX 200 INDEX

4811.281

1.681547

3.491768

5249.6

4013.1

NEPTUNE GROUP

0.17

1.796407

11.84211

0.23

0.084

33440000

4691.374

2.259201

8.679967

5251.296

3880.552

NEW WORLD DEV

10.42

-0.5725191

-13.31115

15.12

8.73

17809727

FTSE Bursa Malaysia KLCI

1753.11

0.7094602

3.798812

1826.22

1590.67

SANDS CHINA LTD

36.15

0.2773925

6.480115

43.7

20.65

15073151

SHUN HO RESOURCE

1.38

-1.42857

1.67

1.03

62000

NZX ALL INDEX

944.739

0.389342

7.106833

998.487

756.373

SHUN TAK HOLDING

3.69

1.09589

-11.93318

4.65

2.58

2382000

PHILIPPINES ALL SHARE IX

3877.61

3.136977

4.829173

4571.4

3410.76

7967414

JAKARTA COMPOSITE INDEX

20.0

36.9

95.69

NAME

Average 20.2

21.4

WTI CRUDE FUTURE Aug13

CORN FUTURE

Max 20.4

Currency Exchange Rates

NAME

METALS

57.0

Last 57.5

18.9

Commodities ENERGY

Min 57.5

37.2

36.0

Last 36.15

20.1

HSBC Dragon 300 Index Singapor

588.15

1.39

-5.3

STOCK EXCH OF THAI INDEX

1441.15

1.177354

3.536095

1649.77

1156.53

HO CHI MINH STOCK INDEX

482.95

1.989314

16.73072

533.15

372.39

Laos Composite Index

1455.82

980.83

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

18.5

0.3253796

4.239107

22.382

12.995

SMARTONE TELECOM

SJM HOLDINGS LTD

12.74

-9.517045

17.38

12.3

442200

WYNN MACAU LTD

20.95

26.5

14.62

7591589

ASIA ENTERTAINME

3.88

-3

37.84856

4.7647

2.2076

214944

BALLY TECHNOLOGI

55.08

0.4559548

23.19392

57.86

41.74

258460

BOC HONG KONG HO

3.01

-1.954395

3.6

2.85

1850

GALAXY ENTERTAIN

5.04

0.5586592

26.95214

5.77

2.25

7260

INTL GAME TECH

16.4

-0.06093845

15.73747

18.81

10.92

1950635

JONES LANG LASAL

89.2

1.640839

6.266378

101.46

61.39

263655

LAS VEGAS SANDS

51.38

1.321238

11.30849

60.54

32.6127

10964804 4774365

MELCO CROWN-ADR

22.4

33.01663

25.2

9.13

MGM CHINA HOLDIN

2.503

6.965812

35.2973

2.71

1.36

550

MGM RESORTS INTE

14.32

4.525547

23.02405

15.95

8.83

17106422

SHFL ENTERTAINME

17.37

19.7931

18.57

12.35

588353

SJM HOLDINGS LTD

2.42

3.862661

6.251448

2.9481

1.7255

10200

127.23

1.297771

13.10339

144.99

84.4902

1697256

WYNN RESORTS LTD

AUD HKD

USD

14 14

June 28, 2013 April 19, 2013

Opinion

Key to Japan’s recovery? Hire more non-Japanese workers Bloomberg Editors

Japan into a multicultural society. All have failed. On the other hand, as Jeff Kingston, head of the Asia programme at Temple University’s Japan campus, points out, simply fixing and expanding already existing programmes would quickly boost the number of foreigners in the country. Bureaucrats could raise the target numbers for skilled workers or for foreign students without prompting much of a backlash. The requirements for nurses could be simplified: In one study, almost all passed the exam when tested in English instead of Japanese. Abe’s government could also be doing more to reshape the debate around immigration. An influx of software entrepreneurs and trained nurses should be seen for what it is – part of the solution, not part of the problem. Leading Japanese businessmen now support the case for welcoming foreigners: With the country seized by the need to revive the economy, their backing should be featured prominently.

Positive lessons

hen the world’s oldest man died recently, no one was terribly surprised to learn that both he and the woman who assumed the title were Japanese. Whether because of good doctors, genetics or green tea, more and more Japanese are living longer and longer. Here’s the problem: Their offspring are having fewer and fewer kids. That’s skewing the age curve of the Japanese population. By 2050 almost 40 percent of the country will be 65 or older. Unless benefits are drastically cut – as toxic a proposal in Tokyo as in Vero Beach, Florida – that means a shrinking population of able workers will somehow have to support a growing pool of senior citizens. Japanese seem paralysed by this prospect. The most obvious remedy – to lift the barriers to immigration that have made Japan one of the most homogenous societies on earth – is dismissed as a political impossibility. Even the supposedly fearless prime

minister, Shinzo Abe, refuses to touch the issue. That’s one reason analysts remain sceptical of the structural reforms proposed as part of “Abenomics,” the prime minister’s plan to revive the Japanese economy, as detailed in the August edition of Bloomberg Markets magazine. Without new workers to keep the economy growing and to spur innovation and entrepreneurialism, Japan is hardly likely to rebound the way Abe and his fans are hoping. If Abe can’t win this fight – indeed, if he won’t even wage it – then his chances of overcoming other vested interests look dim, too.

Immigrant nation There is an obvious way for Abe to start talking about this issue now, regardless of next month’s upper-house elections to the Diet. Many Japanese don’t realise that in small but unmistakable ways, their country is already becoming a nation of immigrants.

In recent years the government has experimented with programmes designed to attract particularly desirable categories of migrants. A Canada-style points system targets highly skilled, high-

Without new workers to keep the economy growing and to spur innovation and entrepreneurialism, Japan is hardly likely to rebound the way Abe and his fans are hoping

income knowledge workers. Deals with Indonesia and the Philippines bring in nurses and aides for the elderly. For years now, Japanese universities have made a push to attract foreign students, especially from other parts of Asia. These programmes haven’t drawn more flak because, for the most part, they have struggled. Thus far only a few thousand foreigners have qualified for permanent residency under the points system. Meanwhile, only 47 out of 415 Indonesian and Filipino nurses managed last year to pass the test – in Japanese – required for their continued employment. Japan today counts a mere 2 million immigrants among its 127 million residents. That hardly presents an ethnic threat, much less demographic hope. Such stumbles suggest a way forward. Politicians – including members of Abe’s own Liberal Democratic Party – have repeatedly made grand proposals for transforming

In parts of Tokyo and elsewhere, local governments have come up with small, innovative programmes to better integrate newcomers. Abe’s administration should be studying these efforts and highlighting their successes. Although the government cannot prevent media hyperbole, the Justice Ministry could do much more with its crime statistics, which belie the common perception that immigrants are to blame for increases in petty crime and drug abuse. Over the years, a narrative has formed around the immigration issue in Japan, one that assumes any shift in the country’s racial makeup will spark the unravelling of its tightly knit society. In fact, the opposite is true: In depopulated parts of the countryside, for instance, Chinese and Korean brides have revived villages and kept their traditions alive. Sometimes the only way to save the old is to welcome the new. 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.

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

15 15

June April 28, 19, 2013 2013

Opinion

Why markets aren’t wires getting the Fed’s message Business

Leading reports from Asia’s best business newspapers

Taipei Times Yuanta-Polaris Research Institute on Wednesday cut its forecast for Taiwan’s economic growth this year to 2.47 percent, from the 3.65 percent it forecast in March, citing weak economic momentum in the first half of this year. The institute forecast a 2.2 percent year-onyear economic expansion in the second quarter, followed by growth of 3.01 percent and 2.91 percent in the third quarter and fourth quarter respectively. “he chances of Taiwan’s economic growth maintaining 3 percent for the whole of this year are slim,” Yuanta-Polaris president Liang Kuo-yuan said.

Yomiuri Shimbun Although a bill to reduce the number of seats in Japan’s House of Representatives by five was enacted Monday, prospects for drastic electoral reform for the chamber remain uncertain. Even over the specific task of narrowing vote-value disparities, the ruling and opposition parties have found it difficult to coordinate their different views. New Komeito leader Natsuo Yamaguchi referred to the possibility of reviewing the current LDP-Komeito reform plan as discussions on drastic electoral reform have gone back and forth.

The Age Australia’s new Prime Minister Kevin Rudd has used his first address to Parliament to call on MPs to be a ‘’little kinder and gentler with each other’’. Hours after he was sworn by Governor-General Quentin Bryce, Mr Rudd used his first official comments as Prime Minister to acknowledge the contributions of former PM Julia Gillard and former treasurer Wayne Swan, while talking of the difficulties of political life. ‘’As we all know in this place, political life is a very hard life. A very hard life indeed…”

Wall Street Journal South Korean investments in overseas properties have surged this year, as state funds and financial firms hunt for higher yields. South Koreans purchased over US$5 billion of commercial property abroad in the first five months of the year, according to realestate consultant Jones Lang LaSalle. This compares with just US$500 million in the first half of 2012. “This allocation to commercial property over such a short period of time is unprecedented,” JLL said in a research report.

Justin Wolfers

Professor of public policy and economics at the University of Michigan and a Bloomberg View columnist

ry as he might, Federal Reserve chairman Ben S. Bernanke can’t seem to get the market to understand the central bank’s plans. The problem might be less his communication skills than what he’s trying to communicate. Since last week’s Fed meeting, at which Bernanke sought to clarify the central bank’s plans to decelerate the bond-buying programme known as quantitative easing, investors have acted as if he signalled a major pullback in stimulus. A simple analysis suggests the market has overreacted. The yield on the 10-year Treasury note, a standard measure of long-term interest rates, stood at about 2.6 percent on Monday, up 0.4 percentage point from where it was before last week’s Fed pronouncements. It’s worth comparing this with previous market responses to monetary stimulus. Drawing on a dozen careful academic studies of quantitative easing, Goldman Sachs Group Inc. economist Jan Hatzius has estimated that it takes about US$1 trillion in bond purchases to move long-term interest rates by 0.4 percentage point. In other words, the market’s recent reaction is roughly what would have occurred if the Fed had revealed a plan to cut back on quantitative easing by US$1 trillion. The Fed did no such thing. Bernanke said the central bank expects to start tapering its US$85 billion a month in bond purchases toward the end of this year, with an eye to ceasing them altogether by the middle of next year – assuming the unemployment rate has fallen to about 7 percent. At most, he moved the tapering schedule forward by three months compared with what the market anticipated. That amounts to just US$255 billion less quantitative easing.

confident to spend, invest and hire. Investors, though, perceived the tapering of quantitative easing as a sign that the Fed would also start raising short-term interest rates sooner than previously thought. Prices in futures markets currently suggest a high probability that the target rate will rise to 0.25 percent by May 2014. Before last week, the rate increase wasn’t expected until much later in the year. The market’s reaction means that the Fed’s extraordinary commitment to low interest rates in the future isn’t yielding the desired effect. Either investors don’t understand the Fed’s promise, or they fear that the Fed will renege as soon as the economic outlook improves. To see why investors aren’t convinced, consider the Fed’s tortured logic. Fed officials are saying that the U.S. economy has two drivers – one in charge of quantitative easing, the other in charge of interest rates. The former is ready to tap on the brake (or, in Bernanke’s preferred language, to ease off the gas), while the latter is on cruise control. By the Fed’s view,

Near zero So what spooked the market? The answer probably lies in the way the Fed has sought to distinguish its policy for quantitative easing from its policy for interest rates. When Bernanke set out the parameters for the former, he tried to emphasise that the latter had not changed. The Fed remained committed to keeping its short-term interest-rate target at or near zero until unemployment falls to 6.5 percent. The intended message: Interest rates will stay low until after the economy has recovered, so please feel

The market’s reaction means that the Fed’s extraordinary commitment to low interest rates in the future isn’t yielding the desired effect

we shouldn’t make inferences about one from the behaviour of the other. To complicate things further, Fed officials have set three separate destinations: a 7 percent unemployment rate, beyond which the central bank will cease new bond purchases; a 6.5 percent unemployment rate, below which it might start raising interest rates; and a longerterm target unemployment rate of 5 percent to 6 percent. In reality, both drivers are in the same car, facing the same weather conditions and getting their instructions from the same Fed officials. Markets recognise this and

have perceived a willingness to slow the car as a lack of commitment to stimulating economic growth. As we’ve learned, investors’ interpretations can have alltoo-real consequences. Central bankers are naturally conservative, so making a commitment to future policy feels somewhat radical. It’s also a strategy that can have a powerful effect if the public is convinced. My advice to Bernanke: Choose a single destination, turn on the cruise control, and make sure the markets know we have more than enough fuel to get there. Bloomberg View

16 16

June 28, 2013 April 19, 2013

Closing US$1 billion development fund launched

World Bank cuts coal-power financing

The US$1 billion (7.9 billion patacas) fund for financing the economic and social development programmes of Portuguese-speaking countries has officially been launched. The Macau Economic Services Bureau said in a statement that the fund will include US$125 million in its first phase. The Sino-Lusophone Countries Cooperation and Development Fund is managed by the China Development Bank Corp, in order to finance development projects in Portuguese-speaking countries. The fund was announced in 2010 by then Chinese Premier Wen Jiabao (pictured) during the high-level meeting here.

The World Bank plans to limit the financing it provides for coal-fired power plants to “rare circumstances” as part of the global financial body’s efforts to address the impact of climate change. “The World Bank Group will help clients identify alternatives to coal power as they make transitions toward sustainable energy,” the report said. The bank plans to cease providing financial support for new coal power generation projects, “except in rare circumstances where there are no feasible alternatives available to meet basic energy needs and other sources of financing are absent.”

EU reaches deal on failed banks Ministers agree rules to force losses on creditors

uropean Union finance chiefs struck an agreement on how to handle failing banks, a step they said would bolster investor confidence and help overcome the euro area financial crisis. In seven hours of emergency negotiations in Brussels, ministers settled on guidelines for assigning losses to private creditors and regulating public assistance. They also spelled out when governments can step in and established a role for

the European Stability Mechanism, the euro area’s 500 billion-euro (US$651 billion) firewall fund. “It to o k a l o n g ti m e a n d i t was arduous and it was intense,” German Finance Minister Wolfgang Schaeuble told reporters after the meeting. He said the deal is an “important step” toward making clear “that shareholders and creditors are liable first and foremost”. The deal came hours before EU government leaders meet to

take stock of the progress toward their 2012 pledge to break the cycle of contagion between banks and sovereign borrowers. The European Central Bank is due to oversee financial supervision in the euro zone next year, the first stage in a strategy combining new EU resolution procedures along with national backstops. Now that EU nations have agreed among themselves, they can start talks with the European Parliament on a final version of the bill. EU financial-services legislation must be agreed between nations and the assembly. The legislature’s text grants nations a clear right to nationalise failing banks, if the step is seen as essential to preserve financial stability.

Next step While nations endorsed the banking-union project in principle last year, Germany has indicated that it disagrees with the European Commission’s blueprint, warning that a strong central resolution authority, backed by a common bank fund, goes beyond what is possible under current treaties. The deal shows that none of the EU’s 27 members has abandoned the framework. French Finance Minister Pierre Moscovici said France got “what we wanted” by ensuring a role for the ESM. “It would not have been coherent on the one hand to put in place a direct mechanism for

Deal seen as an ‘important step’, said German Finance Minister Wolfgang Schaeuble

recapitalisation by the ESM and on the other to exclude the ESM from the game of flexibility,” he told reporters yesterday. To reach a deal, ministers had to decide when countries could declare that a financial-system threat is grave enough to trigger exceptions to the loss formula. The aim was to find a middle ground between nations such as France, the U.K. and Sweden, which stressed the need for regulators to be able to adapt their approach to events on the ground, and countries such as Germany, the Netherlands, and Finland, which wanted predictable rules. Swedish Finance Minister Anders Borg said the accord leaves open the path for nations to take stakes in their most important banks. Sweden also won other concessions that he said lay a foundation for talks with the European Parliament. “We have achieved a cornerstone from our starting point,” Mr Borg said yesterday. “There is a reasonable degree of flexibility when it comes to inject capital into banks.” Nations that had fought to limit flexibility, under concern that it would raise funding costs for banks whose nations can’t or won’t use bailouts, also endorsed the deal. “It’s a balanced compromise,” Danish Economy Minister Margrethe Vestager said. “The way that you earn flexibility, that road also goes through bail-in” which “sends a very sound and healthy signal that bail-in is the main rule.” Bloomberg News

Deal struck to finalise long-term EU budget Economic crisis forced the first spending cuts

uropean Union governments struck a deal with the head of the European Parliament yesterday to finalise the bloc’s longterm budget, ending months of doubt over nearly 1 trillion euros (US$1.3 trillion) in future funding. “I am delighted to announce that today we have a political agreement on the European Union’s future budget,” European Commission President José Manuel Barroso told reporters. EU leaders agreed a spending plan for 2014-2020 at a summit in February, including the first ever

real-terms fall in future spending limits. But ratification was blocked by the parliament, which must give its consent for any deal to enter force. The German socialist president of the European Parliament, Martin Schulz, said he would ask the assembly to approve the agreement in a vote next week. “This is not an easy compromise,” Mr Schulz, told reporters. “I must fight in the European Parliament for a majority, that’s for sure.” Under the deal, the figures agreed by leaders in February will remain unchanged. But the parliament won

concessions that will allow unspent money to be transferred from one year to the next, rather than returning to national budgets as at present. EU officials have said the change could allow spending to rise over the next seven-year period, despite the lower expenditure ceiling agreed by leaders, because actual spending will be closer to the upper limits than at present. If approved, the deal will unlock 960 billion euros in funding for the next seven years, funding everything from roads and bridges in poorer eastern European member states to

subsidies for farmers and fishermen in France and Spain. The sum will drop from 994 billion euros in the current budget cycle. The package also includes 6 billion euros for a new initiative to fight rising youth unemployment in Europe. “This is an important day for 500 million citizens. It is also an important day for the 26 million people who are unemployed in this union,” said Irish Prime Minister Enda Kenny, who represented EU governments in the negotiations. Reuters