Macau Business Daily, June 3, 2013 by Business Daily

Cooperate to create – faculty dean

MOP 6.00

April 19, 2013

Number 296

Monday June 3, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

Macau must strike up partnerships with outside communities, especially in the Pearl River Delta, to develop creative industries. So says Álvaro Barbosa, the dean of the creative industries faculty of the University of Saint Joseph. Mr Barbosa told Business Daily in an interview that the city by itself could not build a cluster of creative industries big enough to be self-sustaining. Pages 6 & 7

Home sales, prices fall slightly in April T

he average price of housing and the number of homes sold fell a little month-onmonth in April, official data show. The average cost per square metre of residential space fell to 85,465 patacas (US$10,686) in April,

three percent down on March. Estate agents told Business Daily the price fall in April was due to buyers being deterred by a government warning, issued in the middle of the month, to be wary of buying unfinished flats until

the restrictions took effect, and by unfavourable economic data from the mainland. But agents say average prices market wide are likely to be pushed up in coming months by new luxury projects. More on page 3

G u a n g d o n g re l a x e s Macau visas: reports

www.macaubusinessdaily.com

Year II

From this past weekend onwards, registered Guangdong residents can make a single application under the mainland’s Individual Visit Scheme visa programme for trips to both Hong Kong and Macau, said state media outlet China News Service, quoting Shenzhen border customs officials. A condition is that at least two months must have passed since the applicant last got a visa for Macau, Guangdong’s Chinese-language media additionally reported. Page 2

I SSN 2226-8294

Hang Seng Index 22590

22528

22466

22404

22342

Re-exports on track for historic high

22280

May 31

HSI - Movers

Macau is increasingly playing the role of a trade middleman, not producer, official data show, as reexports grew almost a third in the first four months of 2013. Re-exports – goods shipped in only to be shipped out, with no value added to them here – rose 31 percent year-on-year to 2.43 billion patacas (US$303.9 million). According to official data, re-exports are growing the fastest since records started in 1998.

Name

Page 5

Low double-digit growth here to stay

%Day

SANDS CHINA

4.04

LENOVO GROUP LTD

3.50

COSCO PAC LTD

2.33

CHINA RES LAND

1.27

SWIRE PACIFIC-A

1.18

TINGYI HLDG CO

-2.54

CHINA LIFE INS-H

-2.67

POWER ASSETS HOL

-3.05

MTR CORP

-3.15

WANT WANT CHINA

-3.37

Source: Bloomberg

Modest double-digit economic growth was achieved in the first quarter of the year and the rate is likely to keep stable for the rest of 2013, says an economist. Gross domestic product was 10.8 percent bigger in the first three months of this year than a year earlier, official data show. It was the fastest annual rate of economic growth for four quarters. Page 4

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June 3, 2013

Macau

Guangdong relaxes Macau visas scheme: reports Independent travellers can again make single application for trips to Macau and Hong Kong Stephanie Lai

sw.lai@macaubusinessdaily.com

rom this past weekend onwards, registered Guangdong residents can make a single application under the mainland’s Individual Visit

Scheme visa programme for trips to both Hong Kong and Macau, said state media outlet China News Service, quoting Shenzhen border customs officials. A condition is

Mass tourism – boosted by changes to visa scheme?

business as usual

that at least two months must have passed since the applicant last got a visa for Macau, Guangdong’s Chinese-language media additionally reported. A dual visit system under IVS was last in place in 2008. At issue now is whether such a policy tweak will have a significant impact on visitor numbers to Macau. Many mass-market visitors are already visiting Hong Kong and Macau via escorted tours, meaning IVS permits are not needed. Business Daily reported in February that package tour visitor numbers to Macau rose 21 percent to 9.1 million arrivals last year according to the Statistics and Census Service. When the mainland’s IVS joint application process was originally suspended in 2008, the aim of the Guangdong and central governments appeared to be essentially one of social protection according to industry sources at the time; i.e., to control the numbers of mass market visitors into Macau and to mitigate the risk of social harm caused by lower income mass market visitors spending too much on gambling.

Now the issue may be more about the mainland supporting the local economy in Macau at a time of slowing growth in visitor arrivals and a slowing in the Chinese economy. Macau’s April visitor numbers grew by a modest 0.7 percent yearon-year to 2.4 million. Of those, 64 percent were from the mainland, and 42 percent of all the mainland visitors were from neighbouring Guangdong. In the first four months of this year the number of visitors from Hong Kong fell by 4.7 percent from a year earlier and the number from Taiwan fell by 4.6 percent, said the statistics bureau. Union Gaming Research Macau said in a note on the revised IVS policy: “While it is unlikely this new rule will cause a notable increase in the frequency of Guangdong[ers’] visits, we believe this represents a positive sign that the Chinese government does not have any intention to restrict the current IVS policy, but, rather to make it more convenient for its residents to come to Hong Kong and Macau.” Macau Travel Industry Council president Andy Wu Keng Kuong said: “The individual travellers may not be the highest per capita spenders, but they are definitely the frequent shopping crowd to Macau.” Speaking to Hong Kong media after a shareholders’ meeting on Friday, SJM Holdings Ltd’s chief executive Ambrose So Shu Fai said any relaxation of the IVS policy “would benefit Macau’s gaming industry”. He added reports that mainland officials were having their spending on gifts and entertainments more closely scrutinised had not had “any obvious impact” on Macau. With Michael Grimes

SJM upping minimum bets Operator could be interested in Taiwan casino, says Ambrose So Stephanie Lai

sw.lai@macaubusinessdaily.com

Free advice Paulo A. Azevedo pazevedo@macaubusinessdaily.com

as Vegas Sands Corp had a change of heart about Macau some years ago, and decided to let its business here follow a different path. Its decision was a good one, after its bad start and the arrogance the company showed towards the city that saved it after the 2008 financial crisis, which bit into its profits. Unfortunately, the arrogance and the business practices that had always raised eyebrows here seem to have returned. Las Vegas Sands Corp subsidiary Sands China Ltd is again showing that Macau is nothing but a pawn in its quest for revenue and market share. And this tends to jeopardise the work that its corporate communications department has been doing to smooth ruffled feathers here. By failing to stick to its word with business partners and starting wars every time it is frustrated in achieving its goals, Sands China and its parent company will only find it more difficult to find and keep partners here, no matter how much it pays certain interested protectors that have particular agendas. Sands China must resume practising good governance, otherwise more and more people will be willing to lend an ear to those in the government that are beginning to whisper suggestions that the company’s gaming licence should be reviewed in 2022.

ver 10 percent of SJM Holdings Ltd’s mass-market tables have seen their minimum bet amounts raised since the beginning of 2013, chief executive Ambrose So Shu Fai said. The minimum stake is adjusted regularly between high and low seasons, he told media on Friday after an SJM shareholders meeting. Mr So says the group would focus on increasing its mass-market tables and raising revenue at the most profitable casinos, including the company’s flagship property Grand Lisboa. Macau’s gaming industry has felt little impact from mainland C h i n a ’ s cu r b s o n ex t r a v a g a n t spending by government officials, the executive said. In fact, he added, casinos will benefit as Guangdong residents are again able to get permits to visit Hong Kong and Macau in the same trip, starting from this past weekend. The executive said SJM has no

plans to follow the example of Galaxy Entertainment Group Ltd – which is close to buying Grand Waldo – and purchase its own satellite casinos. The revamp of Jai Alai will be completed by the first quarter next year, he said. SJM hopes the property will then achieve a synergy effect with the adjacent Oceanus casino. Mr So admitted the group could be interested in expanding its gaming business to Taiwan’s Matsu island. But he stressed further research was needed on the island. On the contrary, SJM has no plans to enter the Philippines’ gaming market, he noted. The company is working on a new project for its first resort in Cotai with Angela Leong On Kei, an SJM executive director who has government approval for an adjacent piece of land for a theme-park. SJM wants to finalise the collaboration with Ms Leong in the second half of the year, Mr So said. With Bloomberg News

June 3, 2013

Macau editorial

Better no new laws than bad ones

Michael Grimes

michael.grimes@macaubusinessdaily.com

M Sales of unfinished flats in Areia Preta and on Coloane buoyed up housing prices in April (Photo: Manuel Cardoso)

Home sales, prices fall slightly in April Prospective homebuyers hesitate after the government advises them to be wary Stephanie Lai

sw.lai@macaubusinessdaily.com

he price of housing and the number of homes sold fell a little in April, official data show, after the government issued a warning about buying unfinished flats. The Financial Services Bureau announced that the average price per square metre of residential space fell to 85,465 patacas (US$10,686) in April, 3 percent less than in March. The number of homes sold fell by 6 percent to 1,477. The average price per square metre of housing in March, 88,097 patacas, was the highest ever because would-be homeowners rushed to buy unfinished flats in upmarket developments before legislation restricting sales of unfinished flats came into force. Estate agents told Business Daily that the price fall in April was due to buyers being deterred by a government warning, issued in the middle of the month, to be wary of buying unfinished flats until the restrictions took effect, and by unfavourable economic data. The managing director of Midland Realty (Macau) Ltd, Ronald Cheung Yat Fai, said it usually took two weeks to complete a sale. “The April data basically reflect deals that were struck since late March, a time when market sentiment began to be affected by very quiet home transactions in Hong Kong after a series of property curbing measures,” Mr Cheung said. He said conjecture that interest rates would rise in the United States and therefore in Macau, too, had further eroded demand. Interest rates here follow those in the United States because the pataca is indirectly pegged to the U.S. dollar. “Buyers also had more bargaining power during April, when purchasing unfinished flats, as the agents were in

a rush to sell them off quick before the new pre-sales law came into force,” Mr Cheung said. Midland Realty and HKP Estate Agency (Macau) Ltd said the lull in sales caused by the government’s warning about buying unfinished flats had lasted only a week or so. Sales of unfinished flats in Areia Preta and on Coloane buoyed up prices in April, just as they did in March.

MOP106,202 Price per square metre of housing in Conselheiro Ferreira de Almeida

About 45 percent of the 1,200 or more flats sold on the peninsula are in the high-end Pearl Horizon project in Areia Preta. Of the 38 flats sold on Coloane, 34 are in the high-end One Oasis project. The average price per square metre of housing on Coloane fell by 14 percent to 96,539 patacas. HKP district sales director Marco Wong Kwok Ki forecast: “The sales volume in May will be pretty similar or encounter a further drop from April, while the price may also slide

by a further 3 to 5 percent.” Mr Wong said the number of unfinished flats in the pipeline had been depleted, leaving fewer to be bought. “The agents will also want to get rid of these flats soon, before the new law takes effect,” he said.

Occasional driver The new law came into force on Saturday. It obliges the developer to finish the foundations of a housing development and register the project before selling the flats in it. There were local exceptions to the general falls in April in the average price of housing and the number of homes sold. The number of homes sold and the average prices paid for them rose in most parts of the peninsula, in the urban centre of Taipa and in Old Taipa Village, according to Friday’s data. The most expensive flats were those with 27 to 36 square metres of floor space in newly built low-rise blocks near Avenida Horta e Costa in the city centre and in Old Taipa Village. Almost half of the 60 homes sold in the Conselheiro Ferreira de Almeida area were in this category. They cost 106,202 patacas per square metre in April, 56 percent more than in March. Mr Wong said that while small, high-end flats were in demand now, demand for them in the next year or two might not have so great an effect on prices generally. “I would call them an occasional price driver, because their sales volume is very small,” he said. “Prices in the property market will still continue to be pushed up by the luxury high-end projects like Paragon in NAPE or Taipa’s Nova Park,” he said.

emo to the Legislative Assembly: please stop passing new laws and bylaws for the sake of it. Memo to government departments: please start enforcing at least some of the laws and rules for which you have departmental responsibility and do so impartially. Second memo to the assembly: If you must pass a new law, get the drafting right. Week after week we hear stories of how poor drafting of rules or weak oversight by government departments on this issue or that project frustrates the original intentions of legislators in creating a fairer and more accountable society. Just last week we had one obvious example. On Tuesday, Business Daily reported on the new law regulating sales of unfinished homes. It’s now illegal for developers to take buyer deposits unless foundations have been completed and a temporary registration of the property has been filed with the government. That’s a commendable objective. But on the drafting issue, what’s the point passing a law to guard the front door, only to leave the back door gaping open? We reported that the new pre-sales law does nothing to regulate the marketing of unfinished homes. What’s to stop the aggressive advertising – off-plan – of unfinished properties by agents or other middlemen, and what’s to stop them then asking for a ‘pre-contract fee’ paid by a would-be buyer and held in escrow prior to completion? If the builder doesn’t honour promises on property specifications or goes bust at least the agent is easy to trace. But it doesn’t mean it will be any easier to get your money back when there’s no proper collateral (built property) in the deal. Under such a scenario, the original purpose of the pre-sales law has been completely subverted, and yet no law has been broken. We shouldn’t blame the home sales sector if that happens. It’s the job of businesspeople everywhere to push their business model as close to the bounds of legality as possible. That’s the duty they have to their business and their investors. It’s equally the duty of legislators to enforce their will and the true purpose of their legislation onto a sometimes-unwilling business community in the name of a more equitable society. If you put a lamb (a weak law) in the same cage as a lion (strong-minded businesspeople), don’t blame the lion for eating it. The Legal Affairs Bureau director André Cheong Weng Chon said in effect, ‘We would have liked to pass a better law, but we just didn’t have enough time’. My answer to this is simple: better no new law than a bad one patchily or poorly enforced. Laws only have meaning if the majority of citizens feel there’s a likelihood they will be policed and enforced, and that policing and enforcement will be applied not on the basis of who you are, but on what you’ve done.

If you put a lamb (a weak law) in the same cage as a lion (strong-minded businesspeople), don’t blame the lion for eating it

June 3, 2013

Macau

Low double-digit growth here to stay: academic

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HOSPITALITY

Spending on gambling and tourism to help propel economic growth but at slower rates, says Henry Lei

Going downhill Data on the meetings, incentives, conventions and exhibitions (MICE) industry for the first quarter of this year show the number of MICE events is still declining. Macau held 230 events in the first quarter, 100 fewer than in the first quarter of 2010. The size of MICE events, their purposes and the resources required to hold them vary enormously. Meetings tend to be more numerous than the other kinds of events, and tend to be attended by fewer people. The proportion of MICE events that are meetings has been increasing. In the past two years about 85 percent of the events here were meetings. Meetings are either government meetings, association meetings or company meetings.

Since the first quarter of 2010, company meetings have outnumbered government meetings and association meetings combined, except in the second quarter of that year. The preponderance of company meetings has been increasing. In the first quarter of this year only one-quarter of all meetings were government meetings or association meetings. Although the number of company meetings goes up and down with the seasons, the trend has been almost level. This suggests that company meetings fit into routine that is independent of what the government does to promote more such meetings. Despite such promotion, even the number of government meetings has been falling. Only about half as many government meetings have taken place recently as a couple of years earlier.

Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

low double-digit economic growth was expected in the first quarter of the year and the rate is likely to keep stable for the rest of 2013. Gross domestic product was 10.8 percent bigger in the first three monts of this year than a year earlier, official data show. It was the fastest annual rate of economic growth for four quarters. Economic growth was driven by an annual rise of 8.5 percent in exports of services, notably gaming services, the Statistics and Census Service announced on Thursday. Henry Lei Chun Kwok, an economics professor at the University of Macau, says the GDP growth rate “was in fact expected given the economic adjustments and transformation (or slow down) in [mainland] China and the larger GDP base” here. China’s GDP isn’t living up to expectations this year. In April, Beijing announced that the economy grew by 7.7 percent in the first quarter, below the 8 percent predicted by most economists, and even slower than the 7.8 percent growth registered for all of last year. As many uncertainties, both in the mainland and abroad, still persist, they make the overall situation quite complicated, said Mr Lei. “It may be hard to make any precise speculation

The strong public expenditure may bring up the GDP growth by a few percentage [points] but can hardly replace the service exports as the dominant force behind the city’s economic growth Henry Lei Chun Kwok, economics professor, University of Macau

may bring up the GDP growth by a few percentage [points] but can hardly replace the service exports as the dominant force behind the city’s economic growth,” he added. Macau’s GDP growth slowed to 9.9 percent last year, its lowest growth rate since 2009.

SJM money was gambling winnings: Carson Yeung

J.I.D.

69.1 %

Proportion of Q1 MICE events that were company meetings

on the [economic] performance of the territory,” he said in an e-mail reply to Business Daily. The growth rate, however, will remain within the expectations, he added. “Given the current record of the gaming sector performance and the public investment made in infrastructure projects, it is expected that the GDP can have a chance to grow at a low double-digit pace,” said Mr Lei. Government capital spending on big infrastructure projects also helped boost economic growth in the three months ended March 31. Construction of the University of Macau’s campus on Hengqin Island, the Light Rapid Transit elevated railway and public housing were “in full swing” in the first quarter, the Statistics and Census Service said. Government spending on construction rose by 40.4 percent and government spending on capital equipment rose by 71.5 percent. Private spending on construction rose by 24.2 percent as work on several casino resorts in Cotai gathered momentum. But despite the fact that the government invested a lot in infrastructure projects, “its weight is small relative to the value added generated by the gaming and tourist sectors,” said Mr Lei. “The strong public expenditure

Carson Yeung

ong Kong prosecutors rejected claims by Carson Yeung Ka Sing’s defence that the payment of HK$72.45 million (US$9.33 million) by casino operator SJM was gambling winnings. Mr Yeung was not in Macau when he asked SJM to deposit 14 cash cheques into his bank accounts, prosecution accounting expert Roderick Sutton said in a court hearing late last week. The businessman’s defence argued that those funds were related to gambling, Hong Kong media reported.

Defence expert Ian Robinson showed in court copies of five cheques for a total sum of HK$1.96 million drawn from Wynn International Marketing Ltd to Mr Yeung in 2008. Mr Robinson also displayed two capital receipts for HK$15 million issued by two casino VIP clubs in relation to Mr Yeung’s investment in the clubs. Mr Yeung, the controlling shareholder of English football club Birmingham City, has pleaded not guilty to five moneylaundering charges. V.Q.

June 3, 2013

Macau Sands China declares dividend for 2012 Sands China Ltd declared a final dividend of 66 Hong Kong cents per share for the year ended December 31, 2012. Around 70 percent of the dividend will go to stockholders of the parent company Las Vegas Sands Corp. Mr Adelson and his wife Miriam hold around 437 million shares of LVS, or 52 percent of the parent firm’s stock, according to an April filing. At Friday’s annual general meeting of Sands China, attended by Mr Adelson, it was also decided to amend the name of the firm to include Chinese characters next to the Roman alphabet version.

Re-exports on pace for historic high Sales of luxury goods have doubled in the first four months Vítor Quintã

vitorquinta@macaubusinessdaily.com

acau is increasingly playing the role of a trade middleman, not producer, official data show, as re-exports grew almost a third in the first four months of 2013. Re-exports – goods shipped in only to be shipped out, with no value added to them here – rose 31 percent year-on-year to 2.43 billion patacas (US$303.9 million). According to official data, reexports are growing the fastest since the Statistics and Census Service began releasing trade data in 1998. If the growth pace remains unchanged, then 2013 could close with re-exports of 7.69 billion patacas, eclipsing the current record of 6.9 billion patacas set in 2007. The re-exports boom was mainly due to sales of luxury goods, such as jewellery, clocks and watches, but also of electronic components. Sales of clocks and watches have more than doubled year-on-year in the January-April period, reaching 218.7 million patacas. Hong Kong was the main market. Re-exports of jewellery were also close to a two-fold growth, led by sales

of diamonds and diamond jewellery, which increased five-times year-onyear in April alone. Meanwhile re-exports of electronic components rose 77 percent to 278.5 million patacas in the first four months of 2013 from the same period a year earlier.

Growing imports The city’s overall exports reached 3.06 billion patacas in the four months ended April 30, the best start to a year since 2008. But they increased by just 17 percent as they were dragged down by the ongoing slump in ‘made in Macau’ goods. Domestic exports decreased by 17 percent year-on-year to just 633 million patacas, mostly due to a 20 percent cut in textile and garment sales. On the other hand, Macau continues to splurge on imports, which rose by 12 percent to 25.56 billion patacas, on pace for a new record high. Almost all of that growth was felt in consumer goods, namely in gold jewellery and watches aimed at feeding the city’s booming retail sector.

Macau’s re-exports are growing the fastest since 1998, official data show

Imports of gold jewellery rose by 18 percent to 2.57 billion patacas while purchases of watches grew by more a quarter to 1.9 billion patacas. As a result the territory’s trade

deficit continues to widen to 22.49 billion patacas in just four months – almost as much as in the whole of 2007. The last time Macau had a trade surplus was in 1998.

Melco asked to run casino in US$1 bln Barcelona resort HK-listed firm confirms to Business Daily it’s in talks with Spanish investors Michael Grimes

michael.grimes@macaubusinessdaily.com

elco International Development Ltd – a partner in Macau casino developer Melco Crown Entertainment Ltd (MCE) – has been invited to take part in a US$1 billion (eight billion patacas) gaming and leisure project in Barcelona, Spain. Melco confirmed last night it had been asked to operate a casino at ‘Barcelona World’ – also known BCN World – planned for the Catalan capital. The project is being organised via a vehicle called Veremonte. Hong Kong-listed Melco said in its statement to Business Daily: “ Melco International Development Limited is happy to be invited by Veremonte to take part in the Barcelona World project as casino operator. In the

coming months, we shall continue to work with Veremonte on the definitive casino management agreement and shall make announcement when the agreement is signed.” The news comes only three and a half months after Las Vegas Sands Corp, MCE’s market rival in Macau, said that Alcorcón – a largely commercial district to the southwest of Madrid, the Spanish capital – was its preferred site for a US$9 billion European gaming and leisure resort. At one point Barcelona had been mentioned as a possible destination for LVS. At a Barcelona press conference, it was said that Melco Group – led by Lawrence Ho Yau Lung – would have two local partners, Meliá hotel

group and a firm called Value Retail. BCN World would start with a single resort called Barcelona Dream and occupying 300,000 square metres (3.2 million sq. feet), with 1,100 hotel beds, a casino and a theatre, it was suggested during the press event. It will take two years to build and could be operational by 2016 according to the conference, which was attended by Catalonia’s minister of economy and knowledge, Andreu Mas-Colell. It was said the cost of the first phase – expressed in local currency as 766 million euros – would be split equally between bank debt and equity. It wasn’t said in what proportion the debt-equity deal would be shared by the partners.

Tie up? Lawrence Ho of Melco Group said to be talking to Catalonia’s Andreu Mas-Colell, bottom, about Barcelona investment

According to the announcement, the long-term aim is to have six resorts in total – in likelihood with other investors participating – with six different categories of hotels, a total of 12,000 rooms, six casinos and shopping areas with up to 450 brands.

June 3, 2013 April 19, 2013

Macau

Creativity a joint effort

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Financial Monitor Unusual pattern The gross domestic product figures for the first quarter of this year will probably soothe worries about a relative stagnation of the economy. The annual rate of growth in GDP for the first quarter was 10.8 percent in real terms. This is certainly much less than the similar figure last year, when it stood at 18.5 percent. But is also neatly above the last three quarters, even clearly above the third and fourth quarters, which is unusual. The other unusual thing about these figures is that the main drivers, in relative terms, where not exports of services. Growth in services exports has been uncommonly slow in the past four quarters but, more than that, they have been quite below the average, which is very uncommon.

In contrast, consumer expenditure, investment and exports of goods all have been growing at about the average rate or even faster. But it is difficult to see there a common thread. After years of decline, exports of goods have now been growing for six quarters in a row. But much of that growth just reflects the fact that the region is increasingly used as a re-exporting base. Investment is the most volatile of the expenditure components of GDP. Growth rates vary wildly in association with the cycles of investment in casinos and the ongoing big public infrastructure projects. Private consumption is also rising, as might be expected, due to a growing population and higher average income. But, most often than not, it will trail, and will seldom veer above, the average growth. Public expenditure counts for little in terms of growth. Even with lower growth rates, the fact is that services exports are still the most stable and biggest contributor to growth in absolute terms. J.I.D. The content of this column is the work of Business Daily’s journalists.

8.5 %

Year-on-year growth in Q1 services exports

Macau must strike up partnerships with the outside world, especially in the Pearl River Delta, to develop creative industries here, says the dean of the creative industries faculty of the University of Saint Joseph (USJ), Álvaro Barbosa. Mr Barbosa told Business Daily in an interview that on its own Macau could not build a cluster of creative industries big enough to be self-sustaining. He thinks the government should be more flexible in allowing imports of labour, as transfers of knowledge are important for creative industries. He says the choice of which sorts of creative industries should be nurtured is a step forward. But he says some that were omitted from the list should be included, such as the gastronomy, architecture and heritage industries. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

Creative industries are still at an early stage in Macau. Why are we so far behind some of our neighbours? I don’t really think we’re so far behind in terms of the development that is being done, for the simple reason that this is a global phenomenon. The fact that this situation has already occurred in other cities in Asia creates a context where development is much faster than it would be if we were really at an early stage, like 10 or 15 years ago in Europe or Australia. Even though there is not yet clear development in this area in Macau, the small steps that have been taken are very significant and they will produce effects very fast and very effectively in the coming years.

What kind of small steps have been taken? The government clearly defined a series of sub-sectors that are considered essential for creative industries in Macau. I wouldn’t say they are exactly right or that they are comprehensive. I certainly think there were certain topics left out in the mapping of the sectors, but the fact that this already exists and that there is funding for these areas is a development. It was done in Macau in two or three years. And that is very fast development. Which sub-sectors were left out? I had a student – when I was still in Portugal before coming to Macau – that did a master’s thesis

that was a comparative mapping of the creative industries here in Macau, comparing it to the north of Portugal, where this cluster has also been developing very recently and very fast and – I believe – in an effective way. According to the survey that he did in Macau, some of the areas that people consider to be of the highest relevance are clearly in line with the areas named by the government. They are looking into design and fashion design, animation and comics – I’m not sure what this means; some clarification is needed – the performing arts, music, the visual arts, publishing. He found, for instance, that

June 2013 April 3, 19, 2013

Macau gastronomy would be a main area to invest in in Macau and that cultural heritage and architecture are not really defined as a central cluster. Yet they should be, because they are among the main things that Macau has to offer that do not exist in any other place in China. People tend to think that film or the audiovisual industry would be very relevant in Macau, and it’s being supported as a central area in terms of funding. The reason for that is their association with the entertainment industry. You look around and all you see is video panels that have content that is either outsourced to outside companies or developed in-house. But most of the time it is not really of good quality, so there seems to be a good opportunity there. In a way, it’s not really an area that is being addressed properly. I think education should be a main focus, especially when it comes to government funding and support.

I don’t think we should look at creative industries as an alternative to the main leading businesses in Macau. I think it is complementary to this activity

is now providing funding for these areas. The main problem is that it is too focused on cultural industries. It is leaving out areas – for instance, design – that are in between traditional cultural fine arts and ordinary industrial products. There’s something to be done there, but the steps that were taken were actually relevant and important to Macau. It is the time to see how people will take advantage of the infrastructure that is now in place. Is it just about handing out money? There is often a misconception about how much the state should fund creative industries. I think it should fund them. Everything that is related to creativity has a very specific aspect that ordinary industries don’t have. It needs a really long incubation period. When you are talking about letting people try to experiment with their creative ideas, and actually pay for that, for some reason that is not really well accepted these days. You need to get funding. That can come from the state or private corporations. How can we make the people that live here find ways to organise themselves and take advantage of the optimal environment to develop these industries? This is the big issue, and that’s why I think it’s so important to invest in education.

Is the government being realistic when it keeps pointing to creative industries as an alternative to gaming? I don’t think we should look at creative industries as an alternative to the main leading businesses in Macau. I think it is complementary to this activity, in the sense that it is very promising. If you try to make it an alternative you will never be satisfied with whatever results you are going to achieve. I don’t think, to be honest, that in such a small region like Macau there will ever be an alternative to the gaming industry. The revenue from this industry is way above anything else that can be generated by any other industry in such a small environment. The idea is not so much to create an alternative, but a complementary sector linked to this industry, but that will diversify its scope.

Which of the sub-sectors mapped by the government are more developed in Macau? For sure, there is a lot of cultural activity in terms of the performing arts. I think it is reasonably developed for the size of the place. It will be interesting to focus on fashion design: it is the only industry that still exists in Macau. For some of these areas, like fashion design, architecture and heritage, there should be huge development, because they are supported by tourism. In some countries, gastronomy is considered as one of the main industries. There’s something to it in Macau, for sure. In some countries the relationship between creative industries and sport is very strong. The U.K. is the biggest example. It is very clear Macau is already a venue for big sports events. Audiovisual is essential here. We must have the ability to produce high-level audiovisual content and there should be big investment here. At USJ we have the faculty of creative industries and we’re trying to focus on some of the areas we think are important in higher education. At this point, we have design, architecture, communications and visual media, and multimedia as well.

The government set up a committee three years ago but only now have they mapped the sub-sectors. Did it take too long? The history of the creative industries is very recent, but it was a bottom-up development. It arose from the fact that some areas were becoming economically relevant but were not a traditional industry. They were associated with selling know-how that we now call intellectual property. The fact is that it was not very fast. It took some time. It is important that at this point the main strategic directions that the government would like to follow are well defined. Of course, there are other things that could be done. Maybe this process could have been faster, but it is now reaching somewhere and the system is in place. The Cultural Institute

Some analysts believe creative industries need a Pearl River Delta approach, instead of just a focus on Macau. Do you agree? One of the well-known strategies for the development of creative industries – and this is what most European countries have been trying to follow – is the development of a cluster. A cluster is what Michael Porter defined as a set of commercial and industrial organisations that not only work in the same location but that work together in providing services to each other, so that in the end this group becomes a self-contained system that is able to provide services that cannot be done as efficiently anywhere else. This cluster policy has been pursued in many countries. This is what happens in the U.K. and also in Australia.

The problem here is, if you consider only Macau, you won’t have enough stakeholders to create a big or relevant enough cluster. There will be some areas where we can be good and we can provide interesting products and services, but then you will need to have partners in Zhuhai, Hong Kong or in this region to provide a better service.

For some of these areas, like fashion design, architecture and heritage, there should be huge development, because they are supported by tourism

MIN

So if you really want to consider a cluster policy for creative industries, it is clear to me that Macau by itself will not be enough. On the other hand, other areas in this region also need Macau. This is something the government should be doing: to promote liaison with other authorities that are also developing creative industries in the region and trying to design a common strategy where Macau becomes a relevant stakeholder. The government has been concerned with putting its own house in order, but now what needs to be done is to look outside. Promoting creative industries might need some outside expertise and transfer of knowledge. Is it possible to think of promoting this sector without easing the policy on imported labour? No, I don’t think so. Actually, this is the one thing in which I’m clearly not in agreement with the local strategy. I don’t think that protecting the jobs of local citizens the way it’s being done is protecting them at all. On the contrary, I really believe there should be incentives to get foreign people to come and work in Macau, together with the locals. There should also be incentives for locals to work abroad. I’m not necessarily talking about the Western world only, but people from Asia as well, coming from Japan, Taiwan and Philippines. There should be a policy to promote and encourage highly qualified foreign people from anywhere in the world to work in Macau, and the other way round.

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June 3, 2013 April 19, 2013

Greater China Taiwan to push for banks merger Taiwan’s government will renew a push for consolidation of major state-linked banks to streamline an overcrowded financial sector and it is considering allowing companies to issue Taiwan dollar and yuan dual-currency shares, Schive Chi, a minister without portfolio, said. The cabinet would push ahead to consolidate Bank of Taiwan, Land Bank of Taiwan, and Export-Import Bank of the Republic of China, in a new effort after reform stalled in 2007, he told Reuters. Mr Chi said Taiwan’s financial sector was over-crowded and the government would speed up regulatory easing to encourage industry integration.

China boosted by manufacturing growth Economy still on course to record slower growth this year

hina’s manufacturing unexpectedly accelerated in May, indicating that a slowdown in economic growth in the first quarter may be stabilising. The Purchasing Managers’ Index rose to 50.8 from 50.6 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing on Saturday. Investors will get a fuller picture of the Chinese economy today when the official services PMI is released along with the final HSBC Holdings Plc survey that focuses on smaller private sector firms in the country. The official PMI indicated activity in China’s vast manufacturing sector picked up slightly in May. The reading was stronger than market expectations of 50.1 in a Reuters poll. A reading above 50 indicates expanding activity while a reading below that level points to a contraction. “The slight pick-up in May PMI reinforces signs of stabilising of the economy,” Zhang Liqun, an economist at the Development Research Centre, a top government think tank in Beijing, said in an emailed statement accompanying the index. China’s annual economic growth slowed to 7.7 percent in the first quarter from 7.9 percent in the previous quarter, despite a credit boom fuelled by the thriving shadow financing. A sub-index measuring new orders inched up to 51.8 in May from 51.7 in April, indicating stronger demand for Chinese goods. A sub-index of new export orders also edged up to 49.4 from 48.6. “Given the mixed signals, I’d wait for the full set of activity data such as industrial production and electricity production to judge the momentum of the economy,” said Zhang Zhiwei, chief China economist at Nomura Holdings

KEY POINTS Manufacturing tops estimates in May Official PMI a sign growth is stabilising Analyst warns against uncertainties in economic growth

The manufacturing sector saw a slight rebound in May

Inc. in Hong Kong. “The rise of the official PMI further reduces the chance for monetary policy easing.”

No stimulus Saddled with excess capacity, China’s factories are struggling against weak demand, as Beijing’s campaign against extravagance among state officials takes a toll on domestic consumption. A flash private PMI survey released last week by HSBC and Markit Economics showed China’s manufacturing sector shrank for the first time in seven months in May as new orders fell, an unexpectedly poor outcome that caused a rout in global financial markets. The official PMI, which focuses

on big and state-owned firms, has been generally rosier than the private survey, which targets small and private companies. The International Monetary Fund last week cut its 2013 economic growth estimate for China to 7.75 percent from 8 percent, while the OECD slashed its 2013 growth forecast to 7.8 percent from a previous forecast of 8.5 percent. Many private economists have lowered their estimates following soft factory output and investment performance data for April and weak factory activity in May. The economy’s lack of vigour could make it difficult for the government to meet its 7.5 percent growth target for this year, analysts said. Chinese leaders are reluctant to

Foxconn International forecasts first-half profit F

oxconn International Holdings Ltd, a contract maker of phones for Nokia Oyj and BlackBerry, said it may post a profit in the first half and is stepping up transactions with its parent. Results for the six months ending June 30 will be better than the US$224.1 million net loss a year earlier, the Langfang, China-based company said in a Hong Kong stock exchange filing. Foxconn

International also said it’s in talks to enter a “new category” of dealings with controlling shareholder Hon Hai Precision Industry Co Ltd. It didn’t provide further details. Foxconn released the statement after its shares rose 18 percent to HK$4.41 at the close in Hong Kong on Friday, their highest level in 13 months. The gain was the biggest in more than six months. The shares, and the city’s benchmark Hang Seng

Index, had slipped less than 1 percent this year through May 30. Increased business with Taipeibased Hon Hai, the world’s largest contract maker of electronics and the indirect owner of 68.2 percent of the company’s shares, may help boost revenue at Foxconn International. It has reported net losses in five of

roll out fresh stimulus steps to support the economy, as they fear increased state spending could lead to a further acceleration of credit expansion and fuel a property bubble. Premier Li Keqiang said last month that China has limited room to use government spending and policy stimulus to boost its economy, though Beijing has been pushing structural reforms in put the economy on a sounder footing. There will be no “incremental stimulus by the new government which understands the slowing potential growth and wishes to focus more on structural reforms,” Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong, said in a research note yesterday. Reuters

the last six halves, according to data compiled by Bloomberg. The forecast improvement in its first-half results is “primarily attributable to improvement in the group’s yield and operation efficiency, as well as control of the group’s cost of sales and general and administrative expenses and optimisation of its research and development resources,” Foxconn said. In addition to a possible new category of transactions with Hon Hai, Foxconn International is also in talks to revise annual limits on existing connected dealings with the parent, according to the filing. Some of the arrangements may require approval by the company’s independent shareholders, Foxconn said. Bloomberg News

June 2013 April 3, 19, 2013

Greater China Beijing vows to ensure baby milk safety China will take measures to ensure the safety of baby milk products and help boost consumer confidence in domestic brands, the government said. The government will draft policies to support mergers and acquisitions among formula producers and hasten the industry’s modernisation, the State Council said in a statement after a meeting. Officials will tighten supervision of baby milk and start a campaign to shut down unqualified suppliers and producers, according to the statement. Authorities will also enhance oversight of imported formula, the government said, without elaborating.

Urbanisation plan hits roadblock over spending fears Premier said to have rejected new draft proposal Kevin Yao

Li Keqiang – the driving force behind urbanisation

hina’s plan to spend US$6.5 trillion on urbanisation to bolster the economy is running into snags, sources close to the government said, as top leaders fear another spending binge could push up local debt levels and inflate a property bubble. Premier Li Keqiang has rejected an urbanisation proposal drafted by the National Development and Reform Commission (NDRC), seeking changes to put more emphasis on economic reform, according to the sources, who are familiar with the matter. Many local authorities have already lobbied to get funding for projects, ringing alarm bells among top leaders in Beijing. State-owned China Development Bank recently pledged to lend 150 billion yuan (US$24.47 billion) to southeastern Fujian province to support its urbanisation and channel

30 billion yuan into urban projects in central Anhui province, according to Chinese media. “The urbanisation plan could be delayed. Top leaders have seen potential risks if the programme cannot be kept on the right path,” said an economist at a top think-tank which advises the cabinet. “The leadership aims to jumpstart reforms, but local governments see this in a different perspective – they view this as the last opportunity to boost investment,” said the economist who requested anonymity due to the sensitivity of the issue. China plans to spend some 40 trillion yuan (US$6.5 trillion) to bring 400 million people to its cities over the next decade as leaders try to sustain economic growth. Mr Li has turned more cautious following warnings from leading academics over the risks, said the

think-tank sources who are involved in the policy discussions. The NDRC is racing against the clock to amend the long-term plan in a bid to publish it by the end of June.

Stimulus hangover Beijing is still nursing a hangover from its 4 trillion yuan stimulus package launched in 2008 to counter the global financial crisis, which left local governments under a mountain of debt and sent house prices rocketing. To fund the urbanisation plan, local governments would issue longterm bonds to finance spending on roads, housing and social safety nets, Reuters reported in March, quoting sources with ties to the leadership. But a fiscal overhaul is needed because local governments don’t have steady tax revenues to back the issuance of bonds. Under China’s

tax structure, in place since 1994, the central government gets most receipts while local governments do the spending, forcing them to rely on land sales for survival. To support the process, Beijing needed to overhaul its land and tax codes as well as free up the rigid residency registration, or “hukou”, system to give migrant workers access to education, health and other services where they work, experts have said. Mr Li wanted more detail on these sorts of reforms in the plan, the sources said. “The focus of the urbanisation drive should be land and hukou reforms. It’s doomed if China continues to rely on local government spending to support urbanisation,” said Yi Xianrong, senior economist at the Chinese Academy of Social Sciences (CASS), a leading government think-tank in Beijing. Ratings agency Fitch estimates local government debt at 13 trillion yuan, or a quarter of GDP. Government data puts the number at 10.7 trillion yuan. The government hopes 60 percent of China’s population of almost 1.4 billion will be urban residents by 2020. China’s official urbanisation rate is near 53 percent, but the real level is only around 35 percent as millions of migrant workers have been artificially included in the urban population, sparking criticism of “fake urbanisation”. “I don’t expect any policy breakthroughs this year as government departments still have different views,” said Xiang Songzuo, chief economist at the Agricultural Bank of China Ltd. “I feel that the top leadership may not have a clear idea on how to proceed with the urbanisation strategy,” said Mr Xiang, who has been advising the government on urbanisation issues. Reuters

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June 3, 2013

Asia

Echo to invest A$1 bln to keep Sydney monopoly

said. “This is really an investment in Echo’s future. It should be only one casino and one city.” Melbourne-based Crown is seeking backing from the NSW government for a gaming resort targeting highrollers at a development called Barangaroo, across Sydney Harbour from Echo’s The Star complex. Redmond didn’t provide details of his proposal in the interview on Channel Nine. Shares of Brisbane-based Echo plunged 12 percent, the most on record, on May 24 after Crown sold its 10 percent stake in the rival. Crown said it wanted to end speculation over its intentions after analysts at brokerages including Nomura Holdings Inc. said the holding may lead to a takeover offer. That slump helped extend Echo’s decline this year to 14 percent, cutting the company’s market value to A$2.44 billion. Crown has climbed 20 percent, swelling its market capitalisation to A$9.36 billion.

Operator to take on Packer with new casino investment Angus Whitley

Previous investments

Echo spent A$870 million renovating The Star

cho Entertainment Ltd plans to invest at least A$1 billion (US$960 million) to fend off Australian billionaire James Packer’s attempts to break the company’s Sydney casino monopoly. The operator of the city’s Star

casino and Crown Ltd, the gaming company controlled by Mr Packer, have prepared rival proposals for developments on the shores of Sydney’s harbour, with the New South Wales state government saying it will approve only one project.

Echo’s plan requires investment of more than A$1 billion, chief executive John Redmond said in a TV interview yesterday on Channel Nine’s “Financial Review Sunday”. “I have nothing against Crown or nothing against James Packer,” he

Echo has already spent A$870 million on a multi-year renovation at The Star aimed at drawing more high-stakes gamblers. The company has yet to deliver the 14 percent targeted return from that investment, according to “Financial Review Sunday”. “Although the return may not have been reached as quick as some were hoping, it is something that’s a realistic and achievable number, if not this year then next,” Mr Redmond said in the interview. Echo’s gaming licence for The Star runs until 2093, with a guarantee it will be Sydney’s only casino until 2019. The long-term viability of the Star would be put at risk if its monopoly ends, Mr Redmond said in April. The Barangaroo project won’t be completed until 2018, Credit Suisse AG has said. Bloomberg News

South Korean exports peak to new high May exports growth at 4-month high despite yen pressures

outh Korean exports grew in May at the fastest annual rate in four months, government data showed, suggesting that the effects of the sharply depreciating yen has yet to stunt the recovery for Asia’s fourth-largest economy. Overseas shipments last month rose 3.2 percent from a year earlier US$48.37 billion, the strongest growth seen since a 10.9 percent rise in January and accelerating from a 0.4 percent rise in April. The median forecast from a Reuters survey of 16 analysts tipped a 0.3 percent on-year exports growth for May, with forecasts ranging from a 2.7 percent drop to a 5.0 percent rise. Imports for May fell by 4.8 percent from a year earlier to US$42.34 billion, weaker than a 2.0 percent fall tipped by the Reuters survey, translating to a trade surplus of US$6.03 billion. South Korea’s trade data is watched closely around the world because the country is the first major exporting economy to publish its monthly figures. South Korea is home to some of the world’s biggest manufacturers of cars, ships and smartphones. The data appears to support recent comments from local

Policy makers have stepped up efforts to boost the economy

policymakers who say that the yen’s depreciation stemming from Japan’s massive money-printing campaign to beat deflation has yet to seriously undermine South Korea’s growth momentum. Data from the trade ministry showed that South Korean shipments to the United States rose by 21.6 percent from a year earlier during May, while shipments to China rose

by 16.6 percent. Shipments to the crisis-hit European Union fell by 14.6 percent in annual terms last month, however, while shipments to Japan also fell by 11.7 percent due to the effects of the weaker yen. “The impact of a falling yen doesn’t seem to have bitten the entire economy but this is clearly a major risk, along with a slow global economic recovery,” said Park Sang Hyun, a Seoul-based economist at Hi Investment and Securities Co. “The Bank of Korea will keep interest rates low and may cut again if the yen sees further sharp declines.” Separate data released last week showed that South Korea’s industrial output grew by a seasonally adjusted 0.8 percent in April from March, marking the first pickup in four months. But policymakers have also warned that the effects of the depreciating yen will have a delayed effect on local exporters, suggesting that headwinds could grow stronger in the coming months. The won is up by nearly 9 percent against the yen so far this year despite being down by more than 5 percent against the dollar. Reuters

Govt to probe chaebol executives South Korea’s financial regulator said it will start a probe into possible illicit fund transfers after a media group reported it uncovered hundreds of people who opened paper companies in offshore havens. “We will investigate every one of them,” Lee Gyeong-su, an official at the Financial Supervisory Service’s foreign exchange team, said. “When doing capital transactions, they’re required to report to the authorities prior to the trades, so now we are investigating whether they violated the law.” President Park Geun-hye’s government has pledged to crack down on tax evasion to fund her pledges to boost welfare spending. The Korea Center for Investigative Journalism said that it found 245 South Koreans established paper companies in tax havens including the British Virgin Islands and Cook Islands from 1995 through 2009. Among those that have been identified are executives of Samsung Group, Hanjin Shipping Co. and a former executive at Daewoo International Corp.

June 3, 2013

Asia

India’s economic growth at slowest rate in a decade Growth holds below 5 pct as policy logjam hurts economy Kartik Goyal

56.505 per dollar, the weakest level since June last year

Interest rates

Decline blamed on manufacturing and services sectors slowdown

ndia’s economy expanded less than 5 percent for a second straight quarter as Prime Minister Manmohan Singh struggled to revive investment, adding pressure for further government policy changes to spur growth. Gross domestic product rose 4.8 percent in January to March from a year earlier, up from a revised 4.7 percent the previous quarter, the Central Statistical Office said in New Delhi. GDP climbed a decade-low 5 percent in the 12 months ended March, below the 10-year average of about 8 percent. Mr Singh’s eight-month push to boost the economy has in recent weeks floundered as protests over

alleged graft in government disrupted parliament, impeding bills seeking to lure foreign capital, simplify taxes and provide more land for industry. At the same time, a record currentaccount deficit is constraining Indian monetary easing as the global recovery falters. “Growth is weak and I am sceptical about a sharp bounce-back anytime soon,” said Radhika Rao, an economist at DBS Bank Ltd in Singapore. “The Reserve Bank of India will be cautious about retail inflation and the high currentaccount deficit.” The S&P BSE Sensex index tumbled 2.3 percent, the most in 14 months. The rupee fell 0.2 percent to

The Reserve Bank will probably cut interest rates at most by 25 basis points in the rest of 2013 as the current-account gap weighs on the rupee, UBS AG said last week. The shortfall reached 6.7 percent of GDP in October to December. The rupee is down about 4.8 percent this month, the most among 11 Asian currencies tracked by Bloomberg, threatening to stoke price pressures. Wholesale prices rose 4.89 percent in April from a year earlier, a 41-month low, while the consumer-

KEY POINTS GDP grew at slowest pace in a decade Economy grew by 5 pct over the year India had an annual growth of 9 pct until two years ago FDI slid about 21 pct to US$36.9 bln

inflation index climbed 9.39 percent. Reserve Bank Governor Duvvuri Subbarao reduced interest rates in January, March and May by a combined 75 basis points to 7.25 percent as the government pared the budget deficit to tackle inflation. He signalled after the May 3 cut that the nation has almost no space left to ease further. Finance Minister Palaniappan Chidambaram said after the report that he’s confident India can expand 6 percent or more in 2013-2014. The budget gap last fiscal year was 4.9 percent of GDP, he said in New Delhi, narrower than a February estimate of 5.2 percent. India’s expansion last quarter trailed neighbours from China to Indonesia and the Philippines, while exceeding more subdued performance in advanced economies such as Europe and the U.S. The government’s record is set to be tested in elections due by May 2014. Policy changes will slow after September this year as the vote nears, according to Nomura Holdings Inc. Agricultural output rose 1.4 percent in the three months through March from a year earlier, the data showed. Manufacturing expanded 2.6 percent, while construction gained 4.4 percent. Mining fell 3.1 percent. Capital-goods output, an indicator of spending on factories and machinery, fell for nine of the 12 months through March. Foreign direct investment slid about 21 percent to US$36.9 billion last fiscal year compared with 2011-2012, government data show. The current-account gap was US$32.6 billion in the quarter ended December 31, on gold and oil imports and subdued exports. The Reserve Bank has said the imbalance is the biggest risk to the US$1.9 trillion economy. Mr Subbarao said on May 4 that any unwinding of “extraordinary quantitative easing” in advanced nations may affect the capital flows needed to finance it. Bloomberg News

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Apple hikes prices in Japan as yen flags Joins other foreign brands in raising prices this year

pple Inc. raised prices of iPads and iPods in Japan, becoming the highestprofile brand to join a growing list of foreign firms asking Japanese consumers to pay more as a weakening yen squeezes profit. Some U.S. companies have inoculated themselves at least

temporarily against the yen’s fall through financial hedging instruments, while others are charging customers more. The yen has fallen more than 20 percent against the U.S. dollar since mid-November when thenopposition leader Shinzo Abe, who is now prime minister, prescribed a dose of radical monetary easing to reverse years of sliding consumer prices as part of a deflation-fighting policy, dubbed “Abenomics”. The Bank of Japan, under a new Abebacked governor, in April promised to inject US$1.4 trillion into the economy in less than two years to achieve 2 percent inflation in roughly two years. Price rises are rare in Japan, which has suffered 15 years of low-grade deflation. A few other foreign brands have also raised prices on products, providing an early sign of inflation for Mr Abe and an indication that these companies feel consumer demand is strong enough to

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withstand the increases. Still, price rises would have to spread much more widely, especially to lower-end discretionary goods, to show that Mr Abe’s aggressive policies are helping reinvigorate the economy. Apple, one of the most visible foreign companies in Japan, raised the price of iPads by up to 13,000 yen (US$130) at its local stores. The 64-gigabyte iPad will now cost 69,800 yen, up from 58,800 yen a day ago, an Apple store employee said. The 128-gigabyte model will cost 79,800 yen compared with 66,800 yen. Apple also upped prices of its iPod music players by as much as 6,000 yen and its iPad Mini by 8,000 yen. Mobile phone network operators SoftBank Corp and KDDI Corp, which offer iPhones and iPads at their stores, said they had not yet decided on whether to ask customers to pay more. By raising prices in response to a weakening yen, Apple joins Tiffany &

Co, which on April 10 raised its prices. Tiffany said last week that it has seen no slowdown in sales since the price hike. Upscale handbag maker Coach Inc. told investors in April that it used hedging strategies to shield itself from currency fluctuations for the next three quarters. Delta Air Lines Inc. said in an interview that hedging has meant the currency impact is “minimal”. Motorcycle maker HarleyDavidson Inc. told Reuters in April that the yen’s decline would hit its bottom line, but that it makes it a point to avoid raising prices when the Japanese currency slides. More recently, German appliance maker Miele raised prices of some products, such as its dishwashers, because of the weaker yen. Volkswagen AG, the biggest foreign car company in Japan, this month also increased the recommended prices of 14 car models by an average of 1.5 percent. Reuters

June 3, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

34.55

0.2902758

32386771

CHINA UNICOM HON

ALUMINUM CORP-H

3.16

0.3174603

17296688

CITIC PACIFIC

BANK OF CHINA-H

3.68

-1.075269

448064789

BANK OF COMMUN-H

5.95

-0.9983361

30977598

BANK EAST ASIA

30.4

0.4958678

3500148

11.98

-0.4983389

25.9

AIA GROUP LTD

BELLE INTERNATIO BOC HONG KONG HO

NAME

PRICE

DAY %

VOLUME

10.66

-1.113173

30619084

NAME POWER ASSETS HOL

9.19

-1.816239

17645531

SANDS CHINA LTD

PRICE

DAY %

68.35

-3.049645

VOLUME 8371369

41.2

4.040404

20546298

CLP HLDGS LTD

65.55

-2.091113

8675542

SINO LAND CO

11.58

-1.362862

15016753

CNOOC LTD

13.72

-0.2906977

65446070

SUN HUNG KAI PRO

103.2

7063842

COSCO PAC LTD

11.4

2.333932

10167982

SWIRE PACIFIC-A

98.7

1.178883

3401334

21021608

ESPRIT HLDGS

11.9

6576289

TENCENT HOLDINGS

307.8

3939544

-1.893939

21005313

HANG LUNG PROPER

27.3

-1.798561

7118361

TINGYI HLDG CO

19.98

-2.536585

7090874

11.48

-3.367003

16153140

69.1

-1.073729

7899796

CATHAY PAC AIR

14.48

0.1383126

4163418

HANG SENG BK

125

-1.107595

2534200

WANT WANT CHINA

CHEUNG KONG

109.8

-0.1818182

6114446

HENDERSON LAND D

54.7

-0.8159565

4681665

WHARF HLDG

CHINA COAL ENE-H

5.06

-1.55642

30261934

HENGAN INTL

86.1 -0.05803831

2760561

CHINA CONST BA-H

6.3

-0.7874016

292809631

HONG KG CHINA GS

12106823

130.8

0.07651109

3547505

HSBC HLDGS PLC

86.1

0.05810575

9744520

HONG KONG EXCHNG

CHINA LIFE INS-H

20.05

-2.669903

45048692

CHINA MERCHANT

25.8

-0.7692308

4493307

CHINA MOBILE

82.45

-0.3022975

20664933

HUTCHISON WHAMPO

82.7

-0.6606607

6370698

CHINA OVERSEAS

23.15

0.8714597

28956959

IND & COMM BK-H

5.47

1.109057

737934867

10.84

-0.7326007

19073188

CHINA PETROLEU-H

8.02

-1.474201

131394133

CHINA RES ENTERP

25.35

-0.9765625

3931572

MTR CORP

30.7

-3.154574

5162780

CHINA RES LAND

23.85

1.273885

14553516

NEW WORLD DEV

12.4

-0.3215434

22721671

CHINA RES POWER

20.45

-2.15311

16801978

PETROCHINA CO-H

9.04

-2.164502

131552554

CHINA SHENHUA-H

25.45

-0.5859375

19833483

PING AN INSURA-H

57.8

-0.6872852

11859108

PRICE

DAY %

VOLUME

26.25

-0.9433962

10587130

LI & FUNG LTD

MOVERS

4 22850

INDEX 22392.16 HIGH

22847.96

LOW

22291.17

52W (H) 23944.74 (L) 18056.4

22290

29-May

31-May

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.64

-0.2739726

114346628

AIR CHINA LTD-H

6.42

-1.078582

16788736

CHINA PETROLEU-H

8.02

-1.474201

131394133

ALUMINUM CORP-H

3.16

0.3174603

17296688

CHINA RAIL CN-H

7.72

0.7832898

8873408

ANHUI CONCH-H

25.35

-0.7827789

9886059

CHINA RAIL GR-H

4.05

0.2475248

23113173

BANK OF CHINA-H

3.68

-1.075269

448064789

CHINA SHENHUA-H

25.45

-0.5859375

19833483

CHINA TELECOM-H

NAME CHINA PACIFIC-H

5.95

-0.9983361

30977598

3.72

-1.846966

75784179

34.15

-2.008608

2920794

DONGFENG MOTOR-H

12.24

-1.130856

11705629

CHINA CITIC BK-H

4.19

63134289

GUANGZHOU AUTO-H

8.28

-1.779359

14799353

CHINA COAL ENE-H

5.06

-1.55642

30261934

HUANENG POWER-H

7.98

-3.389831

24424027

CHINA COM CONS-H

7.3

24616902

IND & COMM BK-H

5.47

1.109057

737934867

CHINA CONST BA-H

6.3

-0.7874016

292809631

JIANGXI COPPER-H

15.1

-0.3957784

12276312

CHINA COSCO HO-H

3.35

-0.887574

9304604

PETROCHINA CO-H

9.04

-2.164502

131552554

BANK OF COMMUN-H BYD CO LTD-H

20.05

-2.669903

45048692

PICC PROPERTY &

9.17

0.3282276

29471424

CHINA LONGYUAN-H

7.75

-2.022756

16526965

PING AN INSURA-H

57.8

-0.6872852

11859108

CHINA MERCH BK-H

15.68

0.1277139

18923709

SHANDONG WEIG-H

9.71

18.2704

27767251

CHINA MINSHENG-H

9.51

-1.348548

63036997

SINOPHARM-H

CHINA NATL BDG-H

8.28

34451287

TSINGTAO BREW-H

16.42

-2.725118

6672746

WEICHAI POWER-H

CHINA LIFE INS-H

CHINA OILFIELD-H

-2.552204

7567774

54.05

-1.727273

3857629

28.7

-1.204819

NAME

PRICE

DAY %

VOLUME

YANZHOU COAL-H

7.96

-1.118012

13449356

ZIJIN MINING-H

2.16

1.408451

51673200

ZOOMLION HEAVY-H

7.49

-0.9259259

13073193

12.58

-1.410658

3814984

ZTE CORP-H

MOVERS

4 10890

INDEX 10599.21 HIGH

10881.47

LOW

10558.66

52W (H) 12354.22 10550

(L) 8987.76 29-May

2541761

31-May

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.73

83002608

CHONGQING CHAN-A

10.38

-3.977798

50289519

PING AN INSURA-A

39.61

-0.9254627

18514341

AIR CHINA LTD-A

5.31

-2.747253

16510349

CHONGQING WATE-A

6.58

0.152207

11391841

POLY REAL ESTA-A

12.47

-2.805924

41776910

ALUMINUM CORP-A

4.11

-0.9638554

13697233

CITIC SECURITI-A

12.99

-1.665405

80206571

QINGDAO HAIER-A

12.68

-0.7047768

9610405

ANHUI CONCH-A

16.9

-0.9378664

20059448

CSR CORP LTD -A

4.4

-0.6772009

27673841

QINGHAI SALT-A

23.47

-0.5929691

4435464

AVIC AIRCRAFT-A

11.67

-2.097315

23990080

DAQIN RAILWAY -A

7.07

-0.9803922

23857655

SAIC MOTOR-A

15.63

-0.6988564

41741060 28037309

NAME

BANK OF BEIJIN-A

9.1

-0.1097695

25180858

DATANG INTL PO-A

4.83

-1.629328

7552292

9.24

0.4347826

BANK OF CHINA-A

2.95

-0.3378378

17194939

EVERBRIG SEC -A

14.31

-2.187286

19706824

SHANG PHARM -A

12.79

1.588562

24744869

BANK OF COMMUN-A

4.71

-0.6329114

44121727

GD MIDEA HOLDI-A

13.88

-0.8571429

16753353

SHANG PUDONG-A

10.47

-0.6641366

101875600

SANY HEAVY INDUS

BAOSHAN IRON & S

4.79

-0.8281573

16711466

GD POWER DEVEL-A

2.66

-1.845018

52898009

SHANGHAI ELECT-A

3.89

-0.7653061

4415755

BEIJING TONGRE-A

23.58

-1.954262

10402378

GEMDALE CORP-A

7.75

-3.125

43985384

SHANXI LU'AN -A

16.36

-1.028433

12957844

BYD CO LTD -A

35.29

-3.972789

10442135

GF SECURITIES-A

14.14

-0.8415147

21587216

SHANXI XISHAN-A

10.5

-1.408451

13097421

CHINA AVIC ELE-A

25.81

-5.837286

10556061

GREE ELECTRIC

26.81

-0.2604167

8269817

SHENZEN OVERSE-A

6.43

-1.832061

36250547

CHINA CITIC BK-A

4.36

-0.456621

16493369

GUANGHUI ENERG-A

20.99

2.741067

26204489

SUNING COMMERC-A

6.26

0.16

62714176

CHINA CNR CORP-A

4.67

-0.6382979

30779334

HAINAN AIRLINE-A

5.05

-1.559454

20034905

TASLY PHARMAC-A

42.4

-0.04714757

4367249

7012524

HAITONG SECURI-A

12.11

-1.223491

98509600

TSINGTAO BREW-A

38.91

-2.014606

1100788 14884535

CHINA COAL ENE-A

6.57

-0.4545455

CHINA CONST BA-A

4.8

-0.4149378

12255629

HANGZHOU HIKVI-A

37.51

0.8062349

5503017

WANHUA CHEMIC-A

17.61

-2.220988

CHINA COSCO HO-A

3.44

-0.5780347

12585537

HENAN SHUAN-A

41.03

-4.269715

14320991

WEICHAI POWER-A

23.04

-1.915709

8476343

CHINA EAST AIR-A

3.06

-0.9708738

11579274

HONG YUAN SEC-A

24.11

-2.349129

19341114

WULIANGYE YIBIN

23.75

-1.041667

13901107

CHINA EVERBRIG-A

3.13

-0.6349206

52177864

HUATAI SECURIT-A

10.47

-2.149533

44325600

YANZHOU COAL-A

14.47

-0.6863418

4650671

10.69

-0.6505576

21616442

YUNNAN BAIYAO-A

0.02222716

1126261

4.18

-0.4761905

26410450

ZHONGJIN GOLD

12.31

-0.8856683

21251264

12.8

4.404568

23472999

HUAXIA BANK CO

CHINA LIFE INS-A

16.64

-0.5973716

11042931

IND & COMM BK-A

CHINA MERCH BK-A

13.58

45658535

INDUSTRIAL BAN-A

18.54

-0.6963042

57716289

ZIJIN MINING-A

3.08

-0.6451613

45947648

CHINA MERCHANT-A

13.18

-2.080238

27542094

INNER MONG BAO-A

27.69

-0.9656652

21733224

ZOOMLION HEAVY-A

7.06

-0.2824859

42963071

CHINA MERCHANT-A

28.6

-5.517014

12199352

INNER MONG YIL-A

27.94

-2.307692

9581379

12.63

3.355155

55549678

CHINA MINSHENG-A

10.46

-0.4757374

149615875

INNER MONGOLIA-A

4.81

-1.028807

34819475

CHINA NATIONAL-A

11.78

-1.587302

26290197

JIANGSU HENGRU-A

31.34

2.284595

10925035

CHINA OILFIELD-A

16.63

-1.772002

4157801

JIANGSU YANGHE-A

64.84

-0.4910988

3408115

CHINA PACIFIC-A

18.61

-1.377848

17310293

JIANGXI COPPER-A

-0.8030231

7142845

10.73

-0.371402

7512132

CHINA INTL MAR-A

CHINA PETROLEU-A

6.74

-0.1481481

22114974

JINDUICHENG -A

CHINA RAILWAY-A

5.13

-1.912046

18573384

KANGMEI PHARMA-A

18.58

-2.773417

22920338

CHINA RAILWAY-A

2.85

-1.384083

22946587

KWEICHOW MOUTA-A

197.1

-1.573034

2459056

CHINA SHENHUA-A

20.48

-0.9192066

14293943

LUZHOU LAOJIAO-A

26.46

-1.599107

7294998

59982923

METALLURGICAL-A

2.04

25915891

23.54

1.334481

16593910

CHINA SHIPBUIL-A

4.52

CHINA SOUTHERN-A

3.48

-1.136364

23914524

NARI TECHNOLOG-A

CHINA STATE -A

3.77

-1.308901

88783852

NINGBO PORT CO-A

2.44

-0.4081633

12949695

3.76

-1.827676

84097382

OFFSHORE OIL-A

8.02

-1.595092

40403178

11.98

-2.680747

61379359

PETROCHINA CO-A

8.52

-0.234192

10124959

-0.3952569

7764481

PING AN BANK-A

20.99

-0.990566

36186204

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

69.5 -0.7142857

10067060

CHINA UNITED-A CHINA VANKE CO-A CHINA YANGTZE-A

7.56

ZTE CORP-A

MOVERS

250

8 2660

INDEX 2606.426 HIGH

2657.76

LOW

2606.43

52W (H) 2791.303 (L) 2102.135

2600

29-May

31-May

FTSE Taiwan 50 Index NAME ACER INC

24.2

-1.022495

11884611

FORMOSA PLASTIC

ADVANCED SEMICON

25.8

0.9784736

13837123

FOXCONN TECHNOLO

ASIA CEMENT CORP

37.05 -0.5369128

3771472

FUBON FINANCIAL

ASUSTEK COMPUTER

330.5

-4.202899

6400034

HON HAI PRECISIO

AU OPTRONICS COR

13.8

1.470588

99634258

HOTAI MOTOR CO

347.5

CATCHER TECH

169

NAME

PRICE DAY %

TAIWAN MOBILE CO

Volume

109.5

597

1.530612

3648996

109.5 -0.4545455

37205933

6164808

39.7 -0.9975062

28149480

TSMC

76.7 -0.6476684

58211523

UNI-PRESIDENT

59.2

0.3389831

9606252

UNITED MICROELEC

13.2

-2.222222

61123148

6.923077

793188

TPK HOLDING CO L

10797108

1.123596

2.424242

17578903

HTC CORP

276.5

-1.25

7768301

WISTRON CORP

30.8 -0.9646302

13710407

CATHAY FINANCIAL

39 -0.7633588

23130476

HUA NAN FINANCIA

17.55

1.445087

24212863

YUANTA FINANCIAL

16.6

2.153846

57722954

CHANG HWA BANK

0.8902077

10542780

LARGAN PRECISION

973 -0.9164969

1671843

YULON MOTOR CO

-1.574803

6673296

CHENG SHIN RUBBE

89.7

-1.967213

35042660

LITE-ON TECHNOLO

CHIMEI INNOLUX C

20.2

49866295

CHINA DEVELOPMEN

8.88

2.540416

143062390

CHINA STEEL CORP

25.45

CHINATRUST FINAN

19.15

CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC FAR EASTERN NEW FAR EASTONE TELE FIRST FINANCIAL

47.85

0.4197272

10154987

MEDIATEK INC

372

2.904564

9909940

MEGA FINANCIAL H

24.1

1.687764

52906629

23294803

NAN YA PLASTICS

61.2

-1.449275

14358482

1.591512

54352299

PRESIDENT CHAIN

185

0.5434783

973346

95.5 -0.1046025

10054141

QUANTA COMPUTER

64.8

0.1545595

8348026

18.45

-2.122016

26239376

SILICONWARE PREC

35.05 -0.9887006

144

2.12766

7317028

SINOPAC FINANCIA

14.75

1.724138

18748925

31.95

0.6299213

5017295

SYNNEX TECH INTL

42.05 -0.3554502

4706801

71.5 -0.6944444

12512655

TAIWAN CEMENT

39.45

1.806452

14588634

TAIWAN COOPERATI

MOVERS

2 5790

INDEX 5709.89

9759238

18.15

0.5540166

17639835

17.35

1.461988

29260617

FORMOSA CHEM & F

70.6

-1.120448

7571047

TAIWAN FERTILIZE

78.1

2.898551

4832953

FORMOSA PETROCHE

78.1 -0.6361323

5457089

TAIWAN GLASS IND

29.2

1.213172

798900

HIGH

5782.98

LOW

5693.76

52W (H) 5896.71 5690

(L) 4719.96 29-May

31-May

June 3, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 61.6

41.2

20.9

61.4

41.0

20.8 61.2

40.8

Max 40.6

average 40.887

Max 41.35

average 40.947

Min 40.6

40.6

Last 40.6

Min 40.25

Last 41.2

Max 61.45

average 61.039

PRICE

average 20.745

Min 20.6

Last 20.75

41.1

21.3

23.3

40.8

21.2

23.2

40.5

21.1

23.1

40.2

Max 21.4

average 21.291

DAY %

YTD %

(H) 52W

Min 21.05

Last 21.2

(L) 52W

-1.751949578

-1.846318036

100.4000015

81.5

BRENT CRUDE FUTR Jul13

100.39

-1.761424797

-6.535704311

115.9300003

96.04000092

GASOLINE RBOB FUT Jul13

275.49

-1.866562177

-2.439974502

318.0399895

235.0999832

GAS OIL FUT (ICE) Jul13

845.5

-1.600232761

-7.113430376

987.5

814

NATURAL GAS FUTR Jul13

3.984

-0.969425802

11.84727681

4.499000072

3.256000042

278.14

-2.20800225

-7.339174468

322.0499992

259.5000029

HEATING OIL FUTR Jul13 Gold Spot $/Oz

1387.8

-1.0079

-16.6216

1796.08

1322.06

Silver Spot $/Oz

22.2725

-1.9696

-26.0296

35.365

20.3395

Platinum Spot $/Oz

21.0

COUNTRY MAJOR

ASIA PACIFIC

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

1457.95

-0.3179

-3.94

1742.8

1374.55

Palladium Spot $/Oz

749.7

-0.4554

7.152

786.5

553.75

LME ALUMINUM 3MO ($)

1906

-0.052438385

-8.055957549

2200.199951

1809

LME COPPER 3MO ($)

7309

-0.109334427

-7.842642794

8422

6762.25

LME ZINC

1927

0.626631854

-7.355769231

2230

1745

14825

0.168918919

-13.10082063

18920

14561

15.295

0.857237059

-2.858050175

17.07500076

14.79500103

567.25

0.799644602

-5.418924552

665

512

705.5

0.966010733

-11.11811024

900

664.75

1510

0.952699315

8.224332557

1605.75

1225

127.05

0.953516091

-15.04513541

202.1999969

125.0499954

NAME

16.52000046

ARISTOCRAT LEISU

69.94999695

CROWN LTD

3MO ($)

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

WHEAT FUTURE(CBT) Jul13 SOYBEAN FUTURE Jul13 COFFEE 'C' FUTURE Jul13 SUGAR #11 (WORLD) Jul13

16.55

COTTON NO.2 FUTR Jul13

79.36

-0.600600601 -0.960938475

-16.16008105 3.239235072

23.05999947 94.19999695

World Stock Markets - Indices

Max 23.4

average 23.239

Min 23

Last 23.05

CROSSES

DAY %

YTD %

(H) 52W

(L) 52W

0.9571 1.5198 0.9551 1.2999 100.45 7.996 7.7626 6.1345 56.505 30.34 1.2643 29.94 42.265 9877 96.172 1.2414 0.85515 7.9973 10.3901 130.64 1.03

-0.623 0.2904 0.513 0.1155 0.9258 0.0075 0.0155 -0.0489 -0.2301 -0.4614 -0.0237 0.1536 0.0473 -0.6986 1.5306 0.406 0.1894 -0.4789 -0.0789 0.7655 0

-7.7761 -6.046 -4.1566 -1.4481 -14.2857 -0.1601 -0.1546 1.5665 -2.6723 0.791 -3.3932 -3.0294 -2.9812 -0.8505 -7.1175 -2.7324 -4.646 2.7534 1.3503 -13.0664 -0.0097

1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 57.3275 32 1.2948 30.203 43.54 9962 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.9528 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9329 75.241 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.35

3.080569

38.09523

4.49

2.29

VOLUME CRNCY 1436141

12.85

0.07788162

20.43111

13.75

8.06

1457665

AMAX HOLDINGS LT

0.89

-1.111111

-36.42857

1.72

0.75

1767900

BOC HONG KONG HO

25.9

-1.893939

7.468878

20.85

21005313

CENTURY LEGEND

0.31

16.98114

0.42

0.215

CHEUK NANG HLDGS

5.76

-3.839729

6.74

2.8

33000

CHINA OVERSEAS

23.15

0.8714597

0.2164486

25.6

15.223

28956959

CHINESE ESTATES

13.54

11.62943

14.12

7.901

521000

CHOW TAI FOOK JE

9.65

-0.8221994

-22.42765

13.4

8.4

4087060

EMPEROR ENTERTAI

2.71

2.651515

43.38624

2.88

1.12

4622130

FUTURE BRIGHT

2.65

-2.214022

118.6422

2.76

0.765

4232000

GALAXY ENTERTAIN

40.6

1.627034

33.77265

41.2

16.94

21443972

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

15115.57

-1.363565

15.34958

15542.4

12035.08984

NASDAQ COMPOSITE INDEX

3455.913

-1.013492

14.45264

3532.038

2726.68

FTSE 100 INDEX

6583.09

-1.110111

11.61922

6875.62

5229.76

HANG SENG BK

125

-1.107595

5.307501

132.8

99.2

2534200

DAX INDEX

8348.84

-0.611414

9.674356

8557.86

5914.43

HOPEWELL HLDGS

28.05

3.505535

-15.6391

35.3

19.069

3347871

8238.96

HSBC HLDGS PLC

86.1

0.05810575

5.904055

90.7

59.8

9744520

HUTCHISON TELE H

4.21

2.682927

18.25843

4.66

2.98

3762000

LUK FOOK HLDGS I

20.35

0.9925558

-16.59836

30.05

14.7

1174510

MELCO INTL DEVEL

17.08

-0.8130081

89.56714

18.18

5.12

8068000 5102861

13774.54

1.365145

32.50891

15942.6

HANG SENG INDEX

22392.16

-0.4098414

-1.16856

23944.74

18056.4

CSI 300 INDEX

2606.426

-1.058982

3.308589

2791.303

2102.135

TAIWAN TAIEX INDEX

8254.8

0.1396287

7.212154

8439.15

6857.35

MGM CHINA HOLDIN

20.75

0.973236

56.27025

20.85

9.509

KOSPI INDEX

2001.05

0.04749763

0.2002954

2042.48

1758.99

MIDLAND HOLDINGS

3.34

-0.5952381

-9.729731

3.25

1604120

S&P/ASX 200 INDEX

4926.569

-0.08341645

5.971642

5249.6

3985

NEPTUNE GROUP

0.192

4.918033

26.31579

0.226

0.084

149950000

5068.628

-1.189536

17.4194

5251.296

3635.283

NEW WORLD DEV

12.4

-0.3215434

3.161394

15.12

22721671

FTSE Bursa Malaysia KLCI

1769.22

-0.3211412

4.752658

1826.22

1554.51

SANDS CHINA LTD

41.2

4.040404

21.35493

43.7

20.65

20546298

SHUN HO RESOURCE

1.53

9.285716

1.67

1.03

NZX ALL INDEX

965.673

0.8740152

9.480155

998.487

755.149

SHUN TAK HOLDING

4.17

0.4819277

-0.4773283

4.65

2.56

4494000

PHILIPPINES ALL SHARE IX

4292.03

-0.1430838

16.03279

4571.4

3279.09

SJM HOLDINGS LTD

8098239

JAKARTA COMPOSITE INDEX

23.0

PRICE

DOW JONES INDUS. AVG

NIKKEI 225

20.6

23.4

91.97

NAME

Max 20.85

21.4

WTI CRUDE FUTURE Jul13

CORN FUTURE

60.8

Last 60.8

Currency Exchange Rates

NAME

METALS

Min 60.8

41.4

Commodities ENERGY

20.7

61.0

HSBC Dragon 300 Index Singapor

638.77

-0.21

2.85

STOCK EXCH OF THAI INDEX

1562.07

-1.217337

12.22331

1649.77

1099.15

HO CHI MINH STOCK INDEX

518.39

-0.5868252

25.29669

526.58

372.39

Laos Composite Index

1351.03

-0.5981636

11.21694

1455.82

980.83

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

21.2

-0.2352941

17.77778

22.7

12.34

SMARTONE TELECOM

13.56

-0.2941176

-3.693181

17.38

12.5

462591

WYNN MACAU LTD

23.05

-2.742616

10.02386

26.5

14.62

10501134

ASIA ENTERTAINME

4.25

1.190476

38.88889

5.18

2.4

945785

BALLY TECHNOLOGI

56.95

-0.297619

27.37643

57.49

41.74

658546 3500

BOC HONG KONG HO

3.29

-4.913295

7.166126

3.6

2.7

GALAXY ENTERTAIN

5.245

2.843137

32.11587

5.245

2.25

400

INTL GAME TECH

17.88

-1.812191

26.18207

18.81

10.92

3533574

JONES LANG LASAL

91.83

-0.08704167

9.399568

101.46

61.39

271023

LAS VEGAS SANDS

57.9

-1.430031

25.43328

60.54

32.6127

4097764 2521082

MELCO CROWN-ADR

23.78

1.667379

41.2114

25.15

9.13

MGM CHINA HOLDIN

2.71

1.119403

46.48648

2.71

1.36

600

MGM RESORTS INTE

15.17

-1.043705

30.32646

15.95

8.83

8627909

SHFL ENTERTAINME

17.256

1.505882

19.0069

17.5

11.75

671552

SJM HOLDINGS LTD

2.75

-1.079137

19.04762

2.99

1.65

1500

135.89

-1.614538

20.80185

144.99

84.4902

1072699

WYNN RESORTS LTD

AUD HKD

USD

June 3, 2013

Opinion

China’s flawed balance-of-payments position Yu Yongding Former president of the China Society of World Economics and director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences

he balance-ofpayments figures that China’s State Administration of Foreign Exchange (SAFE) released in April should have triggered serious concern, if not alarm. The data adjusted China’s investment-income deficit for 2011 from US$26.8 billion to US$85.3 billion – a massive revision that casts doubt on the reliability of China’s balance-of-payments statistics and exposes a flaw in the economy’s growth path. But few people seem to care. According to SAFE, as of February 2012, China had accumulated US$4.7 trillion in foreign assets through purchases of United States government securities and other investments, and more than US$2.9 trillion in foreign liabilities through foreign direct investment (FDI) and borrowing. This puts China’s net foreign assets at roughly US$1.8 trillion. But, despite China’s position as one of the world’s largest creditors, its net investment-income balance is deeply negative. In fact, China has run investment-account deficits for six of the last nine years, with preliminary statistics suggesting a deficit of US$57.4 billion in 2012.

Two factors explain this anomaly. The first is the high return on foreign investment in China. In 2008, U.S. corporations gained a 33 percent return on their investments in China, while other multinationals got a 22 percent return. By contrast, the return on U.S. government securities, which form the bulk of China’s foreign assets, was next to nothing. Second, China’s foreign assets are denominated almost exclusively in U.S. dollars, while its foreign liabilities are denominated mostly in renminbi. As a result, whenever the U.S. dollar declines, China’s net international-investment position (the difference between its external financial assets and liabilities) deteriorates – and so does its investment-income balance. China’s drive for renminbi internationalisation so far has made the balancesheet structure even more unfavourable.

Breaking the mould According to the economist Geoffrey Crowther, a country’s balance-of-payments position evolves in six stages, with the key variable being net assets – that is, the country’s

net international-investment position. In the first three stages, the country is a net borrower with a deficit on the investment-income account. As an “immature debtorborrower,” its trade balance and current account are also in deficit; as a “mature debtorborrower,” its trade balance enters surplus; and, as a “debtor-repayer,” its current account moves to surplus.

Without fundamental changes in its economic-growth pattern, it is difficult to imagine how China can become an immature creditor-lender and a mature creditorlender

In the later stages, the country becomes a net creditor, running an investment-income surplus. As an “immature creditor-lender,” the trade balance and current account are in surplus as well; as a “mature creditor-lender,” the trade balance returns to deficit; finally, as a “creditor-borrower,” the country’s current account swings into deficit. A country in the later stages of development can use investment income from its past accumulation of net foreign assets to compensate for the decline in citizens’ incomes due to ageing and other changes. China breaks Crowther’s mould. Given that it has been running an investmentincome deficit, a trade surplus, and current-account surplus, it seems that it should be classified as a “debtor-repayer.” But China is a net creditor. If China runs an investmentincome deficit with net assets of almost US$2 trillion, how will it make the transition to an investment-income surplus? China’s investment-income deficit will probably persist in the foreseeable future. Its stock of foreign capital will increase steadily as foreign firms invest and reinvest in China. FDI in the country will

continue to garner substantial returns, partly owing to localgovernment hospitality. Meanwhile, China’s outward FDI will continue to encounter challenges, as various shortand long-term factors – from weak international demand to an ageing population – cause its trade surplus to decline, diminishing its ability to export capital. China’s investment in U.S. government securities and other sovereign debt will continue to yield extremely low returns. In fact, this investment will never be repaid in full, so a large write-off is inevitable. The value of China’s assets as future claims on real resources has already been diluted by dollar depreciation, and calls in the U.S. for inflating away America’s debt burden portend a further decline. Moreover, while China may have profited from the rise in government-bond prices over the last few years, prices have been inflated artificially by expansionary monetary policy in advanced countries, which implies that the bubble could burst. Whether through inflation or collapsing government-bond prices, China will suffer significant capital losses on its foreign assets, further damaging its investment-income balance. Without fundamental changes in its economicgrowth pattern, it is difficult to imagine how China can become an immature creditor-lender and a mature creditor-lender. A more likely scenario is that China will continue to have a trade surplus (though much smaller) and an investmentincome deficit, mirrored by America’s trade deficit and investment-income surplus. If both countries have balanced current accounts, their balance-of-payments positions can be sustainable. In such a scenario, the U.S. exports to China what Ricardo Hausmann and Federico Sturzenegger have dubbed “dark matter” (unaccounted assets, such as knowledge, which US corporations export through their investments), while China exports consumer goods and services to the U.S. But would China be happy with this division of labour? China’s leaders should think hard about this question now – before it is too late to change the situation. © Project Syndicate

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

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June 3, 2013

Opinion

Abe’s economic revival wires smacks into Japan’s reality Business

Leading reports from Asia’s best business newspapers

Asahi Shimbun Japanese companies keen to break into the growing African market are buying local enterprises as a shortcut to overcoming differences in language, customs and business practices. In 2010, Nippon Telegraph and Telephone Corp acquired Dimension Data Holdings Plc, a major information technology company in South Africa. The government is encouraging more businesses to follow suit. “Investments in the growing African continent are investments in our own future,” Prime Minister Shinzo Abe told officials from foreign governments at a related meeting on Friday.

Jakarta Globe Indonesia’s central bank plans to intervene in the foreign exchange market to prevent the rupiah from weakening further against the dollar, as the national currency has been weakening in the past several days amid concerns the U.S. Federal Reserve is easing from its stimulus programme. “We will intervene when necessary and assure the supply of foreign exchange money [in the market],” said Agus Martowardojo, who completed his first week as central bank governor on Friday.

Korea Herald South Korea’s trade surplus surged to a nearly threeyear high in May, as an economic recovery of its two largest exporting partners fuelled brisk outbound shipments, the government said Saturday. South Korea chalked up a trade surplus of US$6.03 billion last month, compared with a surplus of US$2.39 billion a year earlier, according to the Ministry of Trade, Industry and Energy. Exports gained 3.2 percent on-year to US$48.37 billion, while imports fell 4.8 percent to US$42.34 billion over the cited period, the ministry said.

Inquirer Business Tycoon Henry Sy-led SM Investments Corp has obtained board approval to consolidate all property units into a single publicly listed entity under SM Prime Holdings Inc., potentially creating the country’s largest property company. The consolidation is intended to create an integrated real estate company, which will allow the merged entity to undertake larger scale projects with the participation of all of its business units.

William Pesek

Bloomberg View columnist

s the Bank of Japan creating the biggest pyramid scheme in history? In recent weeks Haruhiko Kuroda has been the toast of the financial world, winning plaudits from Nobel laureates Paul Krugman and Joseph Stiglitz. The move by the BOJ governor to end deflation with large bond purchases has been cheered by International Monetary Fund Managing Director Christine Lagarde, Asian Development Bank President Takehiko Nakao and the Japanese business establishment. Yet markets are raising troubling questions about Prime Minister Shinzo Abe’s revival plans – dubbed Abenomics – of which Kuroda’s bond-buying is a critical part. On Thursday, the Nikkei 225 Stock Average plunged more than 5 percent. The broader Topix lost 3.8 percent, after a 6.9 percent drop on May 23, its biggest one-day decline since the March 2011 tsunami and nuclear disaster. It’s now down 11 percent since May 22. That officially puts Japan in correction mode. What’s going on? Investors, who have driven the Nikkei up 30 percent since the beginning of the year, are unnerved by bond yields that continue to gyrate despite the huge purchases by the BOJ. Kuroda has tried to calm fears, insisting that he sees no signs of “excessively bullish expectations” in the stockmarket boom. But the markets are clearly reading his words as pro forma: What else is he going to say, that he suddenly has doubts about Abenomics?

Possible delays Some of the sell-off represents simple profittaking. Some reflects impatience. Investors no longer seem content to wait for Abe to reveal the most difficult part of his strategy – the politically controversial structural reforms that will be necessary to fully revive the Japanese economy. Although the prime minister had promised to lay out his plans next month, there has been talk that he might postpone the announcement until after July’s elections for the upper house of the legislature, which his Liberal Democratic Party is expected to win handily. Delay is no longer an option: Unless they see details soon, markets will probably remain volatile. More worrisome for Japan’s leaders, investors are also beginning to question the other pillars of Abenomics – Kuroda’s bondbuying, and a yen that has

dropped 20 percent in value since November. Abe’s plan was for BOJ largesse to lift equity prices, fuelling what surrogates call a “confidence effect” and spurring consumer spending. Yet the stock-market boom has largely been driven by overseas investors.

More worrisome for Japan’s leaders, investors are also beginning to question the other pillars of Abenomics – Kuroda’s bondbuying, and a yen that has dropped 20 percent in value since November

Too few Japanese own stocks, and for those who do, holdings tend to be too small to drive spending. About 40 percent of stocks are owned by the richest 20 percent of the population; two-thirds of stockholders are older than 60. Richard Katz, editor-in-chief of the New York-based Oriental Economist Report, is among those who think the recent boom has been speculative; it’s not as if Japanese companies have suddenly become more efficient or more responsive to shareholder gripes. “The alleged wealth effect from the

stock market rally is more of an advertising slogan from the PR firm of Abenomics’ happy talk than a serious economic analysis,” Katz says. The BOJ’s ultra-loose polices are also proving problematic. As investors consider the possibility of a reflated Japan, they are bidding up yields. Each surge is prompting the BOJ to come to the rescue with a few trillion dollars here and a few trillion there. As the frequency, speed and magnitude of these interventions grow, Kuroda is creating a pattern of moral hazard that the BOJ will be hard-pressed to break.

Fanciful notions How does Japan expect bondholders to sit by quietly if inflation increases to 2 percent, Kuroda’s declared target? Yes, the country’s financial system is unique, with more than 90 percent of government IOUs held domestically. But the idea that banks, companies, pension funds, universities, endowments, insurance companies, government-run institutions, the postal savings system and individuals (many

of whom are elderly and living on a fixed income) won’t sell is just fanciful. “If you believe Kuroda, why would you hold bonds, especially when you can sell near all-time price highs and yield lows?” says Sean Corrigan, the chief investment strategist at Diapason Commodities Management SA in Lausanne, Switzerland. Unless government tax revenue surges along with bond yields, Abe and Kuroda will have some explaining to do. The rest of Asia is beginning to worry that Japan won’t be able get enough new money into its bond market to support the irrational expectations of investors. Shin Je Yoon, chairman of South Korea’s Financial Services Commission, wants Seoul to prepare for the possible failure of Abenomics. That, according to the Maeil Business newspaper, includes bolstering Korea’s foreign exchange reserves. Japan’s stock market has been on a wild ride these last few months. It’s just beginning. Bloomberg View

June 3, 2013

Closing Andorra to introduce income tax

Apple in court to fight ebook conspiracy

Andorra is to introduce a tax on personal income for the first time as it faces pressure from its European neighbours to tackle tax evasion. Antoni Marti (pictured), the head of the Andorran government, told French President Francois Hollande that he will introduce a bill before June 30. The principality will “gradually meet international tax standards”, according to the office of the French president. There is currently no income tax applied to individuals or corporations. EU finance ministers have agreed to start talks with Andorra – along with Switzerland, Liechtenstein, Monaco, and San Marino – on swapping bank account information.

Apple Inc. goes on the defensive today with the start of a trial in which U.S. officials allege the company was the “ringmaster” of a conspiracy to raise prices of electronic books. The company is fighting solo against the U.S. Justice Department after five large publishers named in the lawsuit settled the charges, terminating their ebook agreements with Apple. U.S. antitrust watchdogs allege Apple orchestrated a collusive shakeup of the ebook business in 2010 that resulted in higher prices. Apple is expected to argue it boosted competition in a sector that had been dominated by Amazon and improved conditions for consumers.

Spain PM sees hope for unemployment

China Southern gets first Dreamliner C

Jobless figures due tomorrow will be ‘encouraging’, says Rajoy Clare Kane

to consider printing money for asset purchases to revive growth. In Spain, joblessness has grown for seven quarters in a row, leaving 6 million people out of work – more than the population of Denmark and including over half of under 25-year-olds. Economists say unemployment will rise further this year due to the prolonged contraction, which has depressed consumption and frozen hiring. Almost one-third of unemployed people have been out of work for more than two years, and two million Spanish households have no one earning a wage. Mr Rajoy said Spain had left the worst of its crisis behind and unemployment was slowing. He added the centre-right government hoped to lower taxes as soon as possible and would cut income tax by 2015. “It’s not right to feed people’s fears and be swept along by irrational thinking. We aren’t on the edge of a cliff, this isn’t the eve of the apocalypse. There’s some turbulence but we can bear it and overcome it successfully,” he said.

hina Southern Airlines Co Ltd, mainland’s biggest carrier by passengers, took delivery of its first Boeing Co. Dreamliner after a two-year struggle to use its Airbus SAS A380s on overseas flights from Beijing. The carrier, which has ordered 10 Dreamliners, will become the nation’s only operator of both Dreamliners and superjumbos. China Southern will fly the composite-plastic plane to Paris from its hub after three months of domestic flights, chief operating officer Zhang Zifang said last month. The decision to fly the Dreamliner from Guangzhou came after stalled talks with Air China Ltd to use the A380 superjumbos from its rival’s base in Beijing. “China Southern has the most high-profile aircraft now,” said Li Lei, a Beijing-based analyst at China Minzu Securities Co. “That doesn’t mean profits because its base is Guangzhou, not Beijing.” Boeing delivered the 787 to China Southern after flaws in the plane’s lithium-ion battery forced a three-month global grounding of the jet starting in January. Carriers worldwide resumed commercial flights with Boeing’s most advanced jet in a phased manner starting in April. Air China also has 15 787s on order, due to be delivered from the end of 2015 to mid-2018. Hainan Airlines Co, the nation’s fourth largest carrier, has ordered 10 Dreamliners. China Eastern in 2011 swapped orders for 24 of the model for smaller planes, citing late delivery and waning international travel demand at that time. China Southern has lost money flying the double-deckers because they have been mainly used on domestic routes from Guangzhou, a smaller city with less traffic compared with China’s capital, according to Mr Li. Neighbouring Guangzhou can’t command a premium unlike Beijing or Shanghai, he said. China Southern said in April it will fly the A380s from Guangzhou to Sydney later this year. The fuel-efficient 787 will help China Southern shore up profitability, said Will Horton, an analyst at CAPA. “Chinese carriers are generally unprofitable on long-haul routes, so using a 787 could enable China Southern to keep a route but have improved economics,” Mr Horton said.

Reuters

Bloomberg News

Mariano Rajoy says worst behind Spain

panish unemployment figures this week may strike a more encouraging note, Prime Minister Mariano Rajoy told an economic conference yesterday, holding out some hope for an economy deep in its second year of recession. Anger is high in Spain over the budget cuts and labour market changes that have left more than six million out of work, and a protest in Madrid on Saturday drew up to several thousand protestors, although that was fewer than similar events in the recent past. Unemployment in Spain, the euro zone’s fourth-biggest economy, jumped to a record 27.2 percent in April, adding to the European debate over whether to ditch policies focussed on austerity in favour of efforts to spur economic growth. “I’m not counting chickens here, however I recommend that you pay attention to unemployment and social security numbers on Tuesday the 4th… If the patterns we’ve seen are confirmed they will be clearly encouraging,” Mr Rajoy said. Tackling joblessness is a major challenge for the euro zone’s leaders. Germany’s Finance Minister warned

last week that failure to solve youth unemployment – around a quarter of young people in the bloc cannot find work – could tear Europe apart. While Spain and twice-bailedout Greece have fared worst, unemployment hit new highs in both France and Italy in April and 12.2 percent of the currency bloc’s workforce is jobless. Protests against the “troika” of international lenders that has rescued struggling states but demanded painful spending cuts and tax rises were planned in several countries on Saturday but drew muted turnouts compared to previous rallies.

Lower taxes Austerity imposed by the International Monetary Fund, European Central Bank and European Union is blamed at least in part for the pain felt by families who are deep in debt or have lost their homes after property bubbles burst. After cutting interest rates to record lows, the ECB is under pressure to do more to revive the euro zone’s sickly economy, with the OECD calling last week for the bank