1
Year II
Number 298
Wednesday June 5, 2013
Editor-in-chief Tiago Azevedo
Deputy editor-in-chief
Vitor Quintã
MOP 6.00
April 19, 2013
Brazil eyes China link for football, martial arts
Page 5
Life policies boost insurance business T
he insurance sector registered premiums of 5.39 billion patacas (US$674.1 million) in 2012 – the highest figure since the Monetary Authority of Macau began releasing data in 2001. Important growth drivers were more people seeking life policies and commercial cover written for major construction projects. Year-on-year growth in premiums reached 23.8
percent said the financial regulator. Life cover usually accounted for 70 percent of total premiums, said Chris Ma Chuk Ho, chief executive of the Macau branch of American International Assurance Co (Bermuda) Ltd. There are still no official government data available on insurance profits last year. In 2011 the sector saw its profit fall by 41.7 percent.
Hiring non-resident graduates ‘no help’ to SMEs
Page 6
www.macaubusinessdaily.com
More on page 3
Airport recovers fromTaiwan flights blow Macau International Airport has recovered from the dramatic reduction in passengers five years ago when Taiwanmainland China direct flights fully resumed after a six-decade freeze. Macau had benefited from the earlier political chill as a passenger transit point in each direction. Now the number of commercial flights at the airport has reached levels last seen in July 2008, shortly before the ban was lifted. Page 2
I SSN 2226-8294
Hang Seng Index 22330
22302
22274
22246
Bureau director resigns from electoral body
22218
22190
Raymond Tam Vai Man, Civic and Municipal Affairs Bureau (IACM) president, resigned yesterday from the electoral committee for the Legislative Assembly, the Government Spokesperson Office announced. Bureau vice-president Lo Veng Tak will replace Mr Tam, the office said in a statement. Chief Executive Fernando Chui Sai On accepted Mr Tam’s resignation which was due to “personal reasons”, the statement added.
June 4
HSI - Movers Name
%Day
LENOVO GROUP LTD
3.32
WHARF HLDG
3.05
CATHAY PAC AIR
2.61
Sands ‘under the market’ on mass table yields
CITIC PACIFIC
1.82
TINGYI HLDG CO
1.49
CHINA MOBILE
-0.09
CHINA OVERSEAS
-0.91
WANT WANT CHINA
-1.76
Sands China Ltd is underperforming the market by “15 to 20 percent” on mass market table yields in Macau said Rob Goldstein, president of global gaming operations for parent company Las Vegas Sands Corp, at a conference in the United States. Macau casino operators are currently in a race to capture business in the so-called ‘premium mass’ segment – one based on cash bets rather than credit.
CHINA RES POWER
-2.56
HENGAN INTL
-3.48
Page 3
Page 4
Source: Bloomberg
Brought to you by
2013-06-05
2013-06-06
2013-06-07
27˚ 32˚
26˚ 31˚
26˚ 31˚
2
June 5, 2013
Macau Macau investor buys San Jose building James Tang, a Macau-based investor, has bought a historic building in the American city of San Jose, the Silicon Valley Business Journal reported. Mr Tang bought the former bank headquarters from an affiliate of Pacific States Industries Inc., a holding company that runs a lumber business, public records show. The transaction price of the 70,000-square-foot (6,503 square metres) building was not disclosed. Erected in 1910, the building was one of the first steel-framed office towers in the State of California. Mr Tang already owns another building in San Jose, public records show.
Airport recovers from Taiwan flights blow
14,321
More flights to mainland China and Thailand take up the slack
Take-offs and landings in Macau in the first four months
Vítor Quintã
vitorquinta@macaubusinessdaily.com
M
acau International Airport seems to have recovered fully from the blow that direct flights across the Taiwan Strait dealt it. The number of commercial flights at the airport has climbed back to about what it was in July 2008, the Statistics and Census Service
announced last week. Over 3,670 flights took off or landed here in April, 23.8 percent more than a year earlier. Regular direct flights between Taiwan and mainland China began in July 2008. They made it unnecessary for travellers between Taiwan and the
The growth was driven mainly by 8.8 percent more flights to the mainland and 30.3 percent more flights to Thailand. Flag carrier Air Macau Co Ltd began new services to the mainland cities of Shenyang, Wenzhou and Jinjiang in the first four months. Of the flights using the airport, 5,320 or 37.1 percent were to or from the mainland. In contrast, the direct flights were allowed between Taiwan and the mainland continue to hit the air cargo business hard. A two-year-old slump in air cargo traffic persisted in April, the airport handling only 2,222 tonnes of freight, 7.9 percent less than a year earlier. In the first four months the airport handled 8,206 tonnes of freight, 7.4 percent less than a year earlier. The fall was due mainly to less freight going to or coming from Taiwan. The airport handled 3,455 tonnes of Taiwan cargo in the first four months, 38 percent less than a year earlier. In 2005 the airport handled 227,233 tonnes of cargo, but since then it has handled less and less each year, except in 2010. The amount of Taiwan cargo the airport handled was shrinking even before direct flights across the Taiwan Strait began. But the contraction became more pronounced after direct flights began.
mainland to use Macau or Hong Kong as a staging post. So the number of flights between Macau and Taiwan fell from almost 1,000 per month to fewer than 430. In the first four months of this year 14,321 flights took off or landed here, 21.3 percent more than in the equivalent period of last year.
Photo by Manuel Cardoso
Air Macau began three new services to mainland China in the first four months of this year
Candlelight vigils mark Tiananmen Over a hundred people joined a candlelight vigil held in Senado Square last night to mark the 24th anniversary of the bloody crackdown in Tiananmen Square. The event was organised by the Macau Democratic Development Joint Committee, an association with ties to the New Macau Association. The committee also set up a display of pictures at the Senado Square and information about the 1989 crackdown in Tiananmen. In Hong Kong about 150,000 people were expected at a similar candlelight vigil held in the city’s Victoria Park. The vigils mark the June 4, 1989, military intervention in Beijing that ended weeks of nationwide democracy protests, with at least hundreds of people killed. The Chinese Communist Party branded the movement a “counter-revolutionary rebellion”, and each year Beijing pushes to prevent commemorations.
3
June 5, 2013
Macau
Life policies boost insurance business Construction of Cotai resorts set to drive growth in non-life insurance this year Vítor Quintã
vitorquinta@macaubusinessdaily.com
T
he city’s insurers had their hands full last year, as more people signed up for life policies and several major construction projects ramped up. The insurance sector registered premiums of 5.39 billion patacas (US$674.1 million) in 2012, up by 23.8 percent, the Monetary Authority of Macau announced recently. Gross premiums have more than doubled since 2006 and have hit the highest figure since the financial regulator began releasing data in 2001. “It definitely was a good year,” said Chris Ma Chuk Ho, chief executive officer of the Macau branch of American International Assurance Co (Bermuda) Ltd. “The market was positive, the economy was good. Most of the market players did well last year,” the executive told Business Daily. But he refrained from calling it the best-ever year for insurers: “I would think 2012’s profit was better than 2011. But we can do even better”. There are still no official government data available on insurance profits last year. In 2011 the sector saw its profit fall by 41.7 percent to 206.1 million patacas. Most of the business growth came from the life insurance sector, which “is much bigger,” than other sectors Mr Ma stressed. He said life cover usually accounted for 70 percent of total premiums paid. Life premiums rose by 19.1 percent to 3.74 billion patacas last year, while claims increased at a slower rate – 16.5 percent – to 1.33 billion patacas.
Construction coverage “There were more people signing up for life insurance,” said the AIA Macau executive. “People are becoming more aware of the need to secure protection for themselves and their families.” One factor driving life policies is the growing number of home mortgages as “banks normally recommend credit life insurance for home buyers,” Mr Ma admitted. Macau banks approved new residential mortgage loans worth 20.47 billion patacas last year, up from 15 billion patacas in 2011, official data show. “It is one factor but I would not say it is a significant one,” Mr Ma said. The non-life insurance sector remains much smaller but it grew faster last year. Non-life premiums increased by 35.9 percent to 1.65 billion patacas while claims rose by a quarter to 506.3 million patacas. AIA Macau only provides life insurance but Mr Ma said: “I could speculate the growth [in non-life policies] comes from the large number of ongoing construction works”. Last year the government pushed forward with several major construction projects, including the Light Rapid Transit railways system and the Seac Pai Van public housing complex. In addition Las Vegas Sands Corp opened its Sands Cotai Central resort and several rival gaming operators also began foundation works for projects in the area. The construction of more Cotai integrated resorts “will be a driver
AIA Macau wants to hire a further 360 insurance agents (Photo: Manuel Cardoso)
for the non-life sector this year as well,” Mr Ma said.
Labour shortage Prospects are also good for the life business, the executive added. “There are more people living in Macau now, more people needing life insurance coverage,” he explained. There were 586,300 people living in the territory by the end of last quarter, up by 23,400 from a year earlier, official data show. “So far, the past five months have been positive overall for the whole sector,” Mr Ma said. “I’m optimistic we will continue to see growth.” The biggest challenge the sector is facing is a shortage in skilled workers, the AIA Macau boss said. In a case decided last year, AIA Macau accused some of its former agents and rival AXA China Region Insurance Company (Bermuda) Ltd of attempting to headhunt AIA agents. Mr Ma says agent poaching “happened in the past” but it has not occurred recently. “Some companies were looking for quick wins. That can’t last for long, you need a lot of resources to do that,” he said. AIA Macau, the city’s biggest insurance company by market share, had about 1,000 agents at the end of last year. In December Mr Ma said the firm was seeking to hire a further 360.
The past five months have been positive overall for the whole sector Chris Ma Chuk Ho, chief executive, AIA Macau
“We are on target but we have to put in a lot more resources,” the executive said, without disclosing how many agents AIA Macau has hired. He stressed, however: “every single agent we recruit is fresh to the industry. We are looking for university graduates with at least one year of work experience.”
MOP1.65 billion Non-life insurance premiums in 2012
Raymond Tam resigns from electoral body Stephanie Lai
sw.lai@macaubusinessdaily.com
R
aymond Tam Vai Man, Civic and Municipal Affairs Bureau (IACM) president, resigned yesterday from the electoral committee for the Legislative Assembly, the Government Spokesperson Office announced. Bureau vice-president Lo Veng Tak will replace Mr Tam, the office said in a statement. Chief Executive Fernando Chui Sai On accepted Mr Tam’s resignation, which was due to “personal reasons”, the statement adds. Mr Tam yesterday refused to elaborate on these reasons behind his resignation. “I have thought much about it and received the understanding from my superiors,” he said. “But I think I will continue at my position in IACM and to work with my team in coordination with the electoral committee, so that the election works can go smoothly,” he added. Mr Tam was reportedly one of the bureau’s “senior officials” charged in a case linked to the perpetual lease
Raymond Tam alleged ‘personal reasons’ to quit electoral committee
of cemetery plots to a legal advisor of Secretary for Administration and Justice, Florinda Chan. Four people are accused of having taken too long to deliver documents related to the case to the Public Prosecutions Office, according to a Court of Second Instance judgement. In a verdict made on May 31 but only released yesterday, the judges rejected an appeal filed by three of the four suspects against the Examining Magistracy’s decision to move the case forward after the pre-trial phase.
4
June 5, 2013
Macau Sands China ‘under the market’ on mass table yields: Goldstein
Brought to you by
HOSPITALITY
Opening of new premium mass area at Sands Cotai Central will address ‘lag’, says executive
Lost in the crowd The number of meetings, incentives, conventions and exhibitions (MICE) held here has been falling since late 2010. However, the number of people taking part in these events has displayed a more complex behaviour, both in terms of their total and average figures. The values show very wide oscillations over time and within each category – and they are somewhat surprising. So, for clarity, the table uses a logarithmic scale to represent them. Many more people take part in exhibitions and, to a lesser extent, in conventions than in the other sorts of MICE events. Last year between 85 percent and 95 percent of people that took part in MICE events attended exhibitions. The figures do not divide up people taking part in MICE events according to the purpose of their attendance, so we cannot distinguish, the organisers from professional participants and general public.
Michael Grimes
michael.grimes@macaubusinessdaily.com
40000
Sands Cotai Central – still catching up 4000
S
400
40
Leaving aside the obvious seasonality displayed by the data, the average number of participants in the various types of events shows wide variability over time. The figures for average attendance at exhibitions imply that 580,000 people took part in exhibitions in the third quarter of last year and 680,000 did so in the fourth quarter. These are very high figures, but quarter-on-quarter significant changes are frequent and, for average figures, surprisingly big. For instance, an average of about 6,200 people took part in exhibitions in the first quarter of 2010, but an average of about 33,100 did so in the third quarter of that year. There are similarly wide variations, in proportion, in average attendance at other sorts of MICE events. The figures may be just the reflection of a very unpredictable activity. But a review of how the figures are collected and totted up would be welcome to allay concerns of biased or double counting methods. A breakdown of the types of participants for, at least, a set of major events would also help the interpretation of the data. J.I.D.
13,428
Average attendance at 13 exhibitions
ands China Ltd is underperforming the market by “15 to 20 percent” on mass market table yields in Macau said Rob Goldstein, executive vice president and president of global gaming operations for Sands’ parent company Las Vegas Sands Corp, at a conference in the United States. Casino operators in Macau are currently in a race to capture business in the so-called ‘premium mass’ segment – one based on cash bets rather than credit, and yielding EBITDA (earnings before interest, taxation, depreciation and amortisation) margins of around 40 percent – around four times those of the traditional VIP junket business. Mr Goldstein explained the main reason for Sands China playing catch up is that the firm’s most recent Cotai venue – the US$4.2 billion (33.6 billion patacas) Sands Cotai Central, which had a first phase opening in April 2012 and a second phase launch in September – is still something of a “laggard” on gaming performance. He was addressing delegates at the Sanford C. Bernstein TwentyNinth Annual Strategic Decisions Conference 2013 in New York City. “We’re very focused on our mass and premium mass table yields. We’re under the market by about 15 to 20 percent,” he stated. “Our yield per table is up at market level at US$12,000 per table [per day] at The Venetian [Macao] with 400-plus tables. We exceed the market at the Four Seasons [Macao] with only 42 tables. “We expect to get more premium tables for the Four Seasons. Even the Sands [Macao] downtown is
approaching US$10,000 per table. We think that can grow. We don’t know if we can get to US$12,000, but we think it might,” Mr Goldstein said. He added: “Our laggard clearly is SCC which has only been open about a year.” He didn’t specify current mass table yields for the property. But Mr Goldstein said firm measures were being taken to correct Sands Cotai Central’s relative underperformance – although part of the remedy won’t be operational until the third quarter of 2014 according to one of his bosses. It’s the creation of a new premium table gaming area at Sands Cotai Central – as first reported by Business Daily on May 3. “It’s about 80,000 square feet [7,400 sq metres] of very luxurious space like we did in The Venetian [Macao] with the Ruby [and] Diamond [members] room, which yields more than US$20,000 per table and over US$300 million in [annual revenue] contributions,” he
Our laggard clearly is SCC which has only been open about a year Rob Goldstein, executive vice president, Las Vegas Sands
told conference delegates. LVS president Michael Leven said at the Goldman Sachs Lodging, Gaming, Restaurant and Leisure Conference on Monday U.S. time, also in New York, that US$100 million was being invested in this new premium area near to Holiday Inn and Conrad Macao at Sands Cotai Central. It would “produce 80 more tables at the premium mass level and open some time in the third quarter of [20]14,” he stated.
Closing gap Mr Goldstein told the earlier conference: “We’re highly confident that our weakness today, which is the SCC – and the performance relative to the rest of the portfolio – will get much closer and we can get to market performance [levels]” He added: “We’re also confident that the market is growing. And with 1,000-plus mass tables we can be the major participant.” Asked whether he expected to see a speeding in growth for the VIP segment across the Macau market, Mr Goldstein stressed the firm’s executives were “agnostic” as to what segment of the Macau gambling market they worked with, and were focused on table yields. “The problem for the junket business is the yield per table,” he stated. “The mass is so staggering. Take our Four Seasons – US$14,000 to US$15,000 [yield] tables with margin of 40 plus percent. It’s very tough for any junket to produce those kinds of numbers – even a US$40,000 [yield per day] table with margins of 10-12 percent.”
5
June 5, 2013
Macau Corporate
Brazilian footballers eye coaching here An investment firm sees potential in Macau for football and mixed martial arts Stephanie Lai
sw.lai@macaubusinessdaily.com
B
Macau Cable TV, JCDecaux join Business Awards of Macau Macau Cable TV and JCDecaux – the latter a worldwide leader in outdoor advertising – are to be media partners for the first ever Business Awards of Macau. The awards ceremony – due to take place in September – will recognise some of the most successful companies, institutions and individuals in the city’s business sector. Macau Cable TV will provide televised coverage of the event. It will also run a promotional video for the awards on MCTV’s channels one and two several times per day during the nomination campaign. JCDecaux is the exclusive outdoor advertising partner of the event, providing coverage including posters at selected high profile spots around Macau (pictured). The new partners join the existing media supporters, Portuguese-language newspapers Ponto Final and Tribuna de Macau, and English-language Business Daily newspaper and Macau Business magazine, and Chinese-language Business Intelligence magazine. The closing date for award nominations is June 20. The nominee list will then be passed to a panel of independent judges who will select the finalists in the nine award categories.
razilian football clubs São Paulo and Corinthians are interested in opening football academies for youngsters in Macau, with a view to moving into the mainland Chinese market, according to Fernando Brankovic Gazotti, the commercial manager of Brazilian investment firm Novos Negócios. Mr Gazotti said yesterday he also believed mixed martial arts could be a winner here. He and representatives of other businesses in Portuguese-speaking countries – and their governments – are in Macau for a 14-day seminar on tourism. Mr Gazotti said Novos Negócios saw big opportunities in tourism in Macau. “The city can act as a bridge for us to get into China,” he said. “The clubs, São Paulo and Corinthians, are interested in going to China,” he said. “Each of them also wants to open a football academy in Macau, which could encourage further exchanges between the city and Brazil.” Mr Gazotti said his firm had yet to start talks about the project with anybody here. The president of the Macau Football Veterans Association, Francisco Manhão, said the city would welcome the Brazilian clubs. Mr Manhão said Macau had enough football pitches for football academies. “We have no problem in helping them communicate with the mainland if they have the intention of expanding there,” he said.
“The mainland football market is large and maturing. The two Brazilian clubs ought to reinforce the marketing of their own brands to get there.” In 2011 it was reported that European football clubs AC Milan and Sporting Club de Portugal were considering opening football academies in Macau. Mr Gazotti said football academies were a profitable business in themselves, and could open the door to other ventures. Novos Negócios also wishes to gauge the interest in Macau in more mixed martial arts events. Mixed martial arts is a popular sport in Brazil. “Mixed martial arts is another thing we are doing research on in China,” said Mr Gazotti. “We would like to see what the Chinese people’s response is towards this type of sport.” Combat sports are not new in Macau. Since 2011, the Legend Fighting Championship of Hong Kong and the City of Dreams casino resort have jointly put on several mixed martial arts fights here. The Venetian Macao casino resort will hold its second boxing event in the Cotai Arena in November, with world championship record-breaker Manny Pacquiao of the Philippines topping the card. Indoor sports events in casinos “are exactly what we are after in the city”, said Mr Gazotti. “We will try to see what we can do about mixed martial arts events in Macau.”
Macau has been holding mixed martial arts events since 2011
66
June 5, 2013 April 19, 2013
Macau Studio City on track: Sterne Agee
Brought to you by
Melco Crown Entertainment Ltd’s Studio City project is on track to open in mid-2015 and on budget, United States-based brokerage firm Sterne Agee said in a note to investors. Studio City’s major advantage is its location, next to the Lotus Bridge entry point from Hengqin Island, analyst David Bain wrote. Henqin’s visitation goal is around 20 million per year, he stressed. Mr Bain also said City of Dreams’ profit margins should continue to rise as mass market growth further outpaces VIP, and as Melco Crown doubles down on premium mass gaming tables.
Financial Monitor Slow change The analysis of the city’s gross domestic product focuses often on its most dynamic and important component, exports of services. The overall performance of the economy is heavily dependent on its behaviour. For the past few quarters, however, services exports have been growing more slowly than before. Two other components of gross domestic product, consumption and investment, have been growing at faster rates than before.
Non-resident graduates no use to SMEs – Kwan The trade unionist disputes that a government proposal to ease the labour shortage has the support of the public Vítor Quintã
vitorquinta@macaubusinessdaily.com
A
Private consumption has two main components, household consumption and institutional consumption. Let’s leave the latter aside, as the first represents almost the totality of private consumption. The rise in household incomes and growth in the population have boosted private consumption. But more often than not in the past few years, private consumption has grown more slowly than GDP in general. And its share has declined – in recent quarters that share has stabilised around 20 percent of the GDP. There is no sign of a possible turnaround that might make it a significant driver of growth. Public expenditure is also unlikely to become a more important driver of growth. The expenditure on civil service pay – usually its biggest expense – and acquisition of goods and services has been rising, but only slowly. Total public expenditure never reached 10 percent of GDP in the period observed. Only big changes in government policy would make public expenditure a more important driver of growth. Finally, investment is subject to major swings, mainly associated with construction cycles, while equipment acquisitions are just a small part of the total. These figures suggest that none of these other components of GDP – which together make up just over one-third of the total – can offset appreciably the slowing of growth in services exports. J.I.D. The content of this column is the work of Business Daily’s journalists.
19.6 %
Household consumption as proportion of Q1 GDP
llowing students from elsewhere studying at universities in Macau to work here after graduating would not help small and medium enterprises get the workers they need, the vicepresident of the Macau Federation of Trade Unions, Kwan Tsui Hang, has said. Ms Kwan is also a Legislative Assembly member, and she tabled last week a motion calling for a debate in the assembly on a government proposal to let nonresident graduates work here. No date has been set for a vote on her motion. Chief Executive Fernando Chui Sai On mooted the idea of allowing non-resident graduates to work here in April. Mr Chui called for public debate on whether the city needs to “absorb qualified talent from elsewhere”. He told the Legislative Assembly that new casino resorts in Cotai “will need a large number of employees, which will further restrict the number of workers available for SMEs”. Allowing non-resident graduates to work here “will not be able at all to help the small and medium enterprises that need human resources”, Ms Kwan’s motion says. It would also “have an impact” on the present arrangements for importing labour and for immigration, the motion says. Ms Kwan disputes assertions that there is a public consensus that it is necessary to let non-resident graduates work here to make up for the scarcity of suitable workers. The head of the government’s Policy Research Office, Lao Pun Lap, said two weeks ago that “quite a few associations and academics”
the government had consulted had suggested letting non-resident graduates work here. Ms Kwan’s motion says there is strong public opposition. “Quite a few youngsters, grassroots workers and parents of students have demonstrated against this idea,” it says. “It has great relevance to future human resources, to labour and
employment policy and even to demographic policy,” it says. Mr Lao said allowing non-resident graduates to work here was one of several proposals for improving the labour import arrangements that the Policy Research Office would consider. He said his think-tank would consult the public about the contents of a demographic policy document it would release later this year.
Kwan Tsui Hang is calling for a debate in the Legislative Assembly (Photo: Manuel Cardoso)
June 2013 April 5, 19, 2013
77
88
June 5, 2013 April 19, 2013
Greater China 269 companies to pull IPOs Fujian Guizhentang Pharmaceutical Co., a Chinese maker of bear-bile products, withdrew its application for an initial public offering as regulators increased scrutiny of companies seeking listings. Guizhentang was among 269 companies to pull their applications this year, the China Securities Regulatory Commission said in statements on its website, without giving a reason for the withdrawals. Initial public offerings in China have been suspended since October as investor appetite for new stock waned amid equity-market declines that dragged the benchmark Shanghai Composite index to near four-year lows.
Xi pledges US$3 bln to Caribbean countries Chinese funds to provide welcome relief to island nations
C
hina’s President Xi Jinping promised more than US$3 billion in loans to 10 Caribbean nations and Costa Rica, Trinidad & Tobago’s prime minister said, ahead of a summit in California with U.S. President Barack Obama. Mr Xi pledged about US$296 million in loans to help Costa Rica expand a key highway as part of 13 accords signed with President Laura Chinchilla. After meeting with leaders from 10 Caribbean nations in Trinidad on Sunday,
he promised about US$3 billion in loans, Prime Minister Kamla PersadBissessar said. Further details weren’t disclosed, government spokesman Dennis McComie said in an interview. There was no immediate confirmation of the plans from the Chinese government. Mr Xi arrived in Trinidad on May 31, three days after a visit to the island by U.S. Vice President Joe Biden, who was on a regional tour of his own that underscored the competition for influence in Latin America
by the world’s two biggest economies. He departed Costa Rica for Mexico yesterday and will meet Mr Obama in California on Friday. The Caribbean loans may provide some welcome relief to island nations, most of whom have seen growth slow and debt levels jump as a result of increased spending and lower tourism receipts during the global economic slump. Among the island economies, only the Bahamas is forecast to grow more than 1.5 percent this year compared with 4 percent for
Volvo to boost sales with new plant Chinese-owned Swedish automaker Volvo Car Corp expects to be selling 200,000 cars a year in China by 2018, a senior executive said, two years ahead of its latest target. The sales target is part of Volvo’s plans announced two years ago following its acquisition by Zhejiang Geely Holding Group Co. A new Volvo plant in the southwestern city of Chengdu is “more or less completed,” said Volvo spokesman Per-Ake Froberg. Full production should begin in the fourth quarter and the plant will be able to produce 125,000 cars a year.
Xi Jinping arrived in Trinidad & Tobago on Friday
Latin America, according to Moody’s Investors Service.
Mexico visit In Mexico yesterday, Mr Xi met with President Enrique Pena Nieto about one month after Mr Obama visited the country. China surpassed Mexico in terms of its market share in the U.S. after joining the World Trade Organization in 2001, accounting for 19 percent of goods sold last year, up from 8 percent in 2000, according to the U.S. Commerce Department. That compares with Mexico’s 12 percent share, barely changed from 2000. Today, the Chinese president meets with business leaders over lunch. During his visit to Trinidad, the largest supplier of energy in the Caribbean, Mr Xi announced that China will provide funding and workers to help build a children’s hospital on the island. Ms Persad-Bissessar welcomed the Chinese support, saying the project was “very close to my heart”. She also pledged to visit China later this year and open Trinidad’s first Embassy in Beijing 39 years after the two countries established diplomatic ties. Bloomberg News
Beijing tightens grip on home prices City caps prices to control resurgent demand
B Lenovo in talks on smartphone venture China’s Lenovo Group Ltd said yesterday it was in preliminary talks with an unidentified party on a potential smartphone business joint venture. It gave no further details. Japanese media have reported that Lenovo would set up a joint venture with Japan’s NEC Corp to focus on smartphone manufacturing and distribution. NEC was in talks with Lenovo early this year on the sale of its mobile unit, said a source familiar with the discussions.
eijing, which already has mainland’s strictest real estate curbs, is being forced to take additional steps to contain surging home prices as demands for record-high down payments fail to deter buyers. The city has enforced citywide price caps since March by withholding pre-sale permits for any new project asking selling prices authorities deem too high, according to developer Sunac China Holdings Ltd and realtor Centaline Group. Local officials will need further tightening as they struggle to meet this year’s target of keeping prices unchanged from last year, said Bacic & 5i5j Group, the city’s second-biggest property broker. The failure of official curbs to stem price increases in the nation’s capital highlights the government’s struggle to keep housing affordable as urbanisation sends waves of rural workers
into China’s largest cities. New-home prices in Beijing rose by 3.1 percent in April from the previous month, the biggest gain among the nation’s four so-called first-tier cities, and climbed by the most after Guangzhou in May, according to SouFun Holdings Ltd. They rose in each of the first five months of this year. “As the Chinese capital, and a city widely watched for the direction of property curbs, Beijing is under a lot of pressure to tighten further as it’s still leading price increases,” said Luo Yu, a Shanghai-based analyst at CEBM Group, an advisory company that covers industries including property. “More cities may follow suit with price caps.”
Rejecting proposals As the nation’s economic growth moderates, the possibility of monetary tightening or a nationwide
property tax – dubbed by Societe Generale SA “nuclear weapons” – diminishes, leaving local authorities little choice but to tighten short-term price restrictions amid a worsening supply shortage. “If tightening in the property market is too stringent, it would impact growth,” Citigroup Inc. analysts, led by Oscar Choi, wrote in a May 6 report. China’s economic expansion slowed unexpectedly in the first quarter as gains in factory output and consumption weakened. New-home price gains in April, the biggest since they reversed declines in November, came even after Beijing on April 8 raised the minimum down-payment on second-home mortgages to a record 70 percent and banned single-person households from buying more than one residence. Beijing, the nation’s thirdmost populous city, is the only city that enforces price
caps in earnest, according to Bacic & 5i5j. Guangzhou and Shenzhen in the southern province of Guangdong are rejecting pre-sale permits for some projects seen as too expensive, CEBM’s Mr Luo said. Beijing introduced the toughest curbs among the 35 provincial-level cities that responded with pricecontrol targets, becoming the only region to raise the minimum down-payment on second homes from 60 percent and to enforce a 20 percent capital-gains tax on existing homes, according to Centaline Property Agency Ltd, China’s biggest property agency. Still, new-home prices in the city of 19.6 million, jumped 10.3 percent in April from a year earlier, the biggest rise after Guangzhou and Shenzhen, the National Bureau of Statistics said last month. Prices of existing homes jumped 10.9 percent, the most since they reversed declines in December, and
99
June 2013 April 5, 19, 2013
Greater China Solar trade dispute touches ‘major interests’
analysis
Premier Li urges agreement through bilateral talks
China PMIs show new reality of cyclical growth
Clyde Russell Reuters market analyst
T
The EU intends to impose duties on China’s solar panels
C
hina’s premier told a top European Union official that the trade dispute over Chinese solar panel exports touches China’s “major economic interests” and could influence broader ChineseEU relations if not properly resolved. In a phone call with European Commission President José Manuel Barroso late on Monday, Chinese Premier Li Keqiang said that China is closely following the dispute, the official Xinhua news agency reported yesterday. China resolutely opposes
trade protectionism and the abuse of trade relief measures and will uphold China’s interests, the report quoted Mr Li as saying. He expressed hope that the dispute could be resolved through bilateral talks. The European Commission, the EU’s executive, accuses China of flooding Europe with cheap solar panels sold at below the cost of production, and intends to impose duties. That has prompted energetic lobbying from Beijing against the move and divisions have emerged in Europe on the issue,
foreshadowing a bruising internal battle over how to respond to China’s trade practices. A majority of European countries, led by Germany and Britain, oppose EU Trade Commissioner Karel De Gucht’s plans to levy tariffs of 47 percent on solar panel imports from China, according to a survey by Reuters. Mr Li previously criticised EU trade measures on solar and telecom equipment last month, saying that punitive duties would “harm others without benefiting oneself”. Reuters
RMB 27,349
Average new home price per square metre in Beijing last month
the greatest gain among all the 70 cities tracked by the government.
Mature markets “Unlike mature foreign markets, the main determining factor in China’s real estate market is not interest rates, but expectations on the market going forward,” said Liu Yuan, Shanghai-based director of Centaline’s research centre. “The previous rounds of property curbs since 2005 have made it clear to the average homebuyers that simply increasing transaction costs
won’t change the upward trend in home prices.” Local governments’ measures are “much milder than expected,” and their price-control targets, mostly linked to the growth in disposable incomes, still allow price gains of as much as 15 percent, according to Citigroup. In the secondary market, surging demand for homes that qualify for exemption from the capitalgains tax has pushed their prices up by more than the new levy would cost in some regions, according to CEBM. Only about 30 percent of demand now comes from second-home buyers,
limiting the impact of the higher down payments, according to Centaline. Underlying homebuyers’ expectations for higher prices is a persistent supply shortage that Bacic & 5i5j called the “root cause” for April’s price increases in the city. The number of new homes available for sale fell by 21,406 units this year as new supply in the five months ended May 31 accounted for only 42 percent of total sales over the period, suggesting a “severe supply shortage,” Bacic & 515j said in a report. Bloomberg News
he HSBC Holdings Plc and official purchasing managers’ indexes may look like they are telling different stories about China’s economic health, but in reality they are confirming what is largely already known. Both show that the economy is struggling for growth momentum, even if the official index is still positive and the HSBC measure has slipped into negative territory. There is no real conflict as the HSBC measure captures more of the smallto medium-sized businesses and the government’s index is concentrated on large state-owned enterprises. Given the fragility of the economies in Europe and the muted recovery in the United States, it’s no surprise that the HSBC index fell in May for the first month in seven to below the 50-level that separates expansion from contraction. Smaller manufacturers are more exposed to exports than their larger counterparts, which are more dependent on domestic industries such as construction and infrastructure. Nonetheless, the question should be what is the likely response from the new leadership in Beijing to the loss of growth momentum? The answer is likely not as much stimulus or monetary easing as many investors would want. Chinese authorities don’t want to spark a new round of debt-fuelled property speculation, rather they want to concentrate on structural changes to shift to a consumer-led economy on a slower, but more sustainable, growth trajectory. It will likely take evidence of a more serious slowing of the economy to prompt a loosening of the monetary and fiscal taps, and that means for now China’s commodity demand will be more or less reliant on the current economic situation. Iron ore, for instance, is caught between the expectation of slowing growth in demand for steel and the reality that steel output is still continuing apace despite the deteriorating conditions. Against that backdrop, the Asian spot iron ore price fell to US$110.40 a tonne on May 31, the lowest this year and 30 percent below its 2013 peak, reached in February. Steel output in China, however, has remained above 2 million tonnes a day since February 11, despite warnings of over-production.
Cyclical growth It’s clear something will have to give. So far the iron ore price has borne the brunt of the slow demand, but at some point steel production will have to be curtailed to bring supply more in line with market fundamentals. For copper, the rise in the official PMI to 50.8 in May from 50.6 in April sparked a small rally, with Shanghai Futures Exchange frontmonth contracts gaining 0.3 percent to 52,920 yuan (US$9,774) a tonne in late trade on Monday. Prices have recovered from around
49,000 yuan a tonne in late April, partly because of a threat to supply from the closure of Freeport McMoRan Copper and Gold Inc.’s giant Indonesian mine and partly because Chinese demand is likely to grow, even if at a slower pace than in prior years. In oil, Brent crude dropped below US$100 a barrel for the first time in a month on Monday despite ongoing tensions in the Middle East over the Syrian conflict. The Chinese PMIs would have done little to convince the market that stronger demand is around the corner, and on current evidence it may be difficult for China to achieve the 397,000 barrels per day increase in 2013 demand forecast by the International Energy Agency. The end of refinery maintenance and seasonal summer demand may see higher crude imports from this month on, but those expecting a return to double-digit growth in Chinese oil demand will have to settle for numbers less than 5 percent.
Perhaps the real message from the ‘PMIs is that… from now on China is going to behave more like a supercharged Western economy
In April, China’s implied oil demand rose 3.2 percent from a year ago to about 9.6 million barrels per day, the lowest in eight months. Perhaps the real message from the PMIs, and other Chinese economic and trade data, is that the halcyon days of rapid growth are over and from now on China is going to behave more like a super-charged Western economy. This means it will still have faster economic growth on average than the developed world, but it will be more cyclical, just like in the industrialised countries. Reuters
10 10
June 5, 2013 April 19, 2013
Asia
S. Korea worries over rising risks Officials vow to respond to external uncertainties
S
outh Korea’s two top economic policymakers yesterday vowed to respond to increasing external uncertainties, citing risk factors such as the weak yen and the possibility of the U.S. tapering back its stimulus. “The government and the Bank of Korea agreed to actively respond in the process of international discussion in regard to the adverse effects from the quantitative easing and other issues,” the finance ministry and the central bank said in a joint statement issued at the end of their meeting. The statement didn’t elaborate on the specific policy measures the government and BOK intend to take to cushion the local economy. Finance Minister Hyun Oh-seok and Bank of Korea Governor Kim
Dai-Ichi to buy 40 pct of Indonesia’s Panin Life Japan life insurers attracted to SE Asia growth prospects
D
ai-ichi Life Insurance Co Ltd said yesterday that it had agreed to buy a 40 percent stake in Panin Life of Indonesia for US$337 million, extending its expansion into Southeast Asia’s biggest economy as it hunts for growth overseas. The deal comes as Japanese life insurers actively seek acquisition opportunities in Southeast Asia, attracted to the region’s low insurance penetration and emerging middle class. Dai-ichi, one of Japan’s top four life insurers, said last month that it was ready to spend 300 billion yen (US$3 billion) on M&A deals globally in the next two years. Dai-ichi earmarked US$3 bln for M&A deals globally
Choong-soo held their first meeting since Mr Hyun took office early this year as the first finance minister of President Park Geun-hye’s government. There was no word in the statement on interest rate policy which comes under the purview of the central bank’s independent board but has frequently been a target of government pressure. Since Ms Park’s inauguration in late February, government and ruling party officials publicly demanded the central bank cut interest rates. The Bank of Korea lowered the policy rate at its May 9 meeting to help accentuate the impact of the government’s stimulus efforts. Data in April showed Asia’s fourth-largest economy grew a seasonally adjusted 0.9 percent from a weak fourth quarter of 2012. But compared with a year earlier, it grew just 1.5 percent, a pace unchanged from the fourth quarter, which was a three-year low. South Korea, whose export industries compete with their counterparts in Japan in key markets, has said the yen’s slide globally since late last year was a key risk to its trade-reliant economy. The yen is now 21 percent cheaper against the won from eight months ago, giving Japanese exporters a big pricing advantage over their South Korean rivals. Reuters
Shares of Panin Life’s parent PT Panin Financial rose as much as 9.3 percent after the announcement of the deal. “The investment in Panin Life is based on the company’s [Dai-ichi’s] core growth strategy to enhance overseas life insurance operations in the Asia-Pacific region, following its existing businesses in Vietnam, India, Thailand and Australia,” Dai-ichi said in a statement. “The company will seek to further enhance its overseas life insurance business going forward,” Dai-ichi said. Dai-ichi is also among the companies that placed a bid for a controlling stake in the life insurance unit of Malaysian lender AMMB Holdings Bhd, a source with direct knowledge of the matter told Reuters last month. Dai-ichi also said it plans to enter a long-term exclusive bancassurance agreement with Panin Bank, subject to authorities’ approval. Bancassurance is an arrangement in which a bank and an insurance firm tie up so that the insurer can sell its products to the bank’s customers. Under the terms of the agreement, the Japanese insurer will hold a 5 percent stake in Panin Life by acquiring newly issued shares. It will also buy 36.8 percent of the shares in a holding company that will own the rest of Panin Life. The acquisition totals 3.3 trillion rupiah (US$336.5 million). Reuters
Surfwear group saw its shares fall amid uncertainty over its future
Billabong tumbles as takeover talks collapse Company loses half of market value as it issues third profit warning
B
illabong International Ltd, the 40-year-old Australian surfwear company that has breached debtpayment terms, lost about half of its stock market value after takeover talks with two suitors ended. Sycamore Partners Management and Altamont Capital Partners, which had been in separate talks to buy Billabong, are now in refinancing and asset-sale discussions with the Gold Coast, Australia-based retailer, it said in a statement yesterday. Billabong, whose market value reached A$3.84 billion (US$3.74 billion) in May 2007, fell 49 percent in Sydney trading. After raising capital, selling assets and rejecting at least two takeover bids in less than two years, the retailer yesterday cut its earnings forecast again and said it may sell Canadian retail chain West 49 to repay debt. “Raising capital is going to be difficult,” Nick Berry, an analyst at Nomura Holdings Inc., said. “The fact that they are flagging asset sales shows the difficulty they are under.” Earnings before interest, taxes, depreciation and amortisation for the 12 months ending June 30 will now range from A$67 million to A$74 million after Australian trading missed expectations and Europe remained “weak,” the company said yesterday. That compared with a previous forecast of A$74 million to A$81 million. Billabong fell to as low as 19 cents and traded down 49 percent at 23 cents at the close, cutting its capitalisation to A$110.2 million. Exclusive talks over a 60 cents-ashare offer from a group including Sycamore and Paul Naude, the company’s Americas director, ended May 8. The company had entered separate takeover discussions with Altamont in January.
cut consumer spending. Billabong and Mr Merchant, still the largest shareholder, rebuffed a takeover approach from TPG Capital worth almost A$842 million last year. TPG and another bidder later made lower offers but walked away after viewing Billabong’s accounts. There’s no guarantee the refinancing talks will succeed and the company said it will “aggressively” cut costs across the group while the discussions continue. “The refinancing is intended to provide the company with a comprehensive solution and an appropriate capital structure,” said Billabong chairman Ian Pollard. “It’s our intention to conclude these discussions as soon as practically possible.” Billabong said in February the company will post 80 percent of its assets and 85 percent of its earnings as security to its lenders after writedowns put it in breach of terms on its debt. A strong Australian dollar that cuts the value of overseas sales and slowing consumer spending at home have combined to depress Billabong revenue. The company has shut stores, fired employees, and breached terms on its debt as local sales and a weak European economy weighed on earnings. “It was a great company that didn’t realize how fast it had to diversify,” Evan Lucas, a markets strategist at IG Markets Ltd, a provider of trading services in Melbourne, said. “They are going to really have to shed off assets irrespective of the price they are going to get.” Reuters
Board shorts Billabong was founded by Gordon Merchant in 1973 when he started cutting board shorts in his kitchen and selling them to Gold Coast surf shops, according to the company’s website. As the sport gained popularity, Billabong’s sales and earnings soared. Its fortunes turned as major stores introduced their own surf brands and the financial crisis
49 %
Shares fell as Billabong cuts forecasts again
11 11
June 2013 April 5, 19, 2013
Asia
Abe eyes corporate tax cut in growth plan
yen has risen against the dollar after hitting a four-and-a-half year low.
‘Overall framework’
Government may lower taxes in special economic zones
J
apanese Prime Minister Shinzo Abe still seeks to cut corporate taxes as part of a strategy to reverse two decades of economic
stagnation, efforts that will take time to implement and bring results, a top adviser said. “It’s true corporate taxes are
high, so lowering them to encourage domestic investment is one of the foundations of our government’s economic policy,” Deputy Chief Cabinet Secretary Hiroshige Seko said in an interview yesterday. “It’s difficult to put together a prescription in five months for something that Japan hasn’t been able to do for 20 years and say now everything’s all right.” The government is considering Economy Minister Akira Amari’s suggestion to lower taxes in special economic zones that would be created in urban areas such as Tokyo and Osaka, Mr Seko said. Japan’s corporate tax rate is about 37 percent, the second-highest among countries in the Organisation for Economic Cooperation and Development. “It’s a question of whether to prioritise the special economic zones, or whether to discuss lowering the overall levels,” Mr Seko said. Mr Abe’s growth strategy is the “third arrow” of an economic revival plan that seeks to build on his fiscal and monetary stimulus. While investors initially greeted the first two prongs of the policy with enthusiasm, stocks have fallen after the biggest rally in 25 years, and the
NO
MIN
Bloomberg News
TO THE MAJ OR 201 BUS 3 INES prog Busine S AW sect ram for ss Awa ARD rds ors. p r o of t S IN bus fess Par h i
Shinzo Abe will today outline plans to boost growth
ATIO
NS
NO WO
PEN
t n i e THE acti esses, icipatio onals a Year i REG vitie n in nd b sM or o ION a s an i ndiv in Mac ther rel the awa usiness cau’s p ! evan r idua com au o rds o e is op f all si mier r l or t org n pan a ze ec a co p y. e mpa erman anisatio n to al s and f ognitio ent l r n ny, Nom n om i n s div th b or n omi asis. Yo at carry iduals all Jun ination an nate u o e 20 s you can eit n their d th, 2 open u h r s e elf, ntil 013 or y r nomi We nate our invit e
Myanmar flaunts reforms at World Economic Forum M
yanmar’s efforts to catch up with the world around it after half a century of military rule is being put to the test this week as a summit of government and business leaders fills hotels and stretches phone networks. Myanmar hosts the three-day World Economic Forum on East Asia starting today, with heads of state and executives from companies including General Electric Co., Coca-Cola Co. and WPP Plc attending. Delegates may struggle to communicate over phone networks that have yet to be expanded and will have difficulty finding businesses that accept credit cards. Many hotels are still cash-only, with some only recently accepting Visa and MasterCard payments, including the Parkroyal Yangon. President Thein Sein has allowed more political freedom and loosened economic controls since coming to power two years ago, prompting nations to ease sanctions and attracting companies such as Ford Motor Co., MasterCard Inc. and Unilever NV. The country needs to spend US$320 billion by 2030 to achieve economic growth of 8 percent a year, according to a report by McKinsey Global Institute released last week.
Mr Seko’s comment follows reports that the prime minister will delay implementing corporate tax cuts. The government has put off discussion of the move until fiscal 2015, the Nikkei newspaper said on May 29, without saying where it obtained the information. Mr Amari told reporters on May 21 that lowering corporate taxes may be difficult given Japan’s fiscal situation. Mr Seko sought to downplay expectations over a speech Mr Abe will give today outlining plans to boost growth in the world’s third-largest economy. The speech is the leader’s third on the topic in the past two months. “The prime minister will not reveal everything in his speech tomorrow,” Mr Seko said. “It will be the overall framework and direction. Don’t make the mistake of thinking tomorrow is the announcement.” Mr Abe took office in December vowing a three-pronged strategy of Bank of Japan policy easing, government spending and policies to improve investment, wages and consumer confidence. Central bank Governor Haruhiko Kuroda unveiled a plan in April to double the amount of money in the economy over two years by increasing bond purchases, sending the yen down and stocks soaring. Since touching a five-year high on May 22, Japan’s Topix index has fallen about 12 percent, while the yen has risen 3.3 percent against the dollar.
you to
“There is a gold rush” into Myanmar, said Maung Zarni, a visiting fellow at the Department of International Development at the London School of Economics. “This is one of the last few remaining places that has not has been penetrated, but the infrastructure is just not there.” Thein Sein signed a foreign investment bill in November to woo overseas companies into spending more. Modernisation plans include upgrading Myanmar’s financial system, building roads and airports, as well as giving the country’s 64 million people greater access to mobile phones. The economy may grow 6.75 percent this fiscal year, led by natural gas sales and investment, the International Monetary Fund said in a report last month. Myanmar’s gross domestic product could more than quadruple to US$200 billion with an 8 percent annual growth rate, according to McKinsey, almost double the pace from 1990 to 2010. That may help lure US$170 billion in capital inflows, with foreign direct investment accounting for US$100 billion, more than twice as much as it attracted in the previous two decades, it said. Bloomberg News
be p art o f
it!
For m plea ore in form se v ww w.aw isit our ation, or c ards webs o inqu ntact u macau ite at .com iries s @aw ards mac au.c om BRONZE SPONSOR
ORGANISED BY
MEDIA PARTNERS
EXCLUSIVE AGENCY AND PARTNER
EXCLUSIVE OOH MEDIA PARTNER
12
June 5, 2013
Markets Hang Seng Index NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
PRICE
DAY %
34.35
0
30049315
CHINA UNICOM HON
10.6
0.3787879
11713025
POWER ASSETS HOL
68.9
-0.3615329
2242798
ALUMINUM CORP-H
2.97
-2.302632
17798125
CITIC PACIFIC
8.94
1.822323
10977938
SANDS CHINA LTD
41.6
0.6045949
8416879
BANK OF CHINA-H
AIA GROUP LTD
65.5
-0.152439
3444800
13.78
0.2911208
40536174
COSCO PAC LTD
11.16
-0.7117438
5168036
SWIRE PACIFIC-A
ESPRIT HLDGS
11.9
-1.162791
7351577
7742569
HANG LUNG PROPER
27.5
-0.9009009
5575169
0.2717391
286803901
5.9
0
13024325
BANK EAST ASIA
30
-0.1663894
1661196
11.98
1.182432
11967835
25.5
0
BOC HONG KONG HO
CLP HLDGS LTD
NAME
CNOOC LTD
3.69
BANK OF COMMUN-H BELLE INTERNATIO
NAME
CATHAY PAC AIR
14.96
2.60631
5073375
HANG SENG BK
124.1
-0.0805153
900660
CHEUNG KONG
108.8
-0.2749771
7291681
HENDERSON LAND D
54.75 -0.09124088
4547076
CHINA COAL ENE-H
5.06
-0.1972387
22206680
HENGAN INTL
80.35
7529171
CHINA CONST BA-H
6.26
-0.1594896
303389311
-3.483483
HONG KG CHINA GS
22.25
1.136364
7713441
HONG KONG EXCHNG
129.4
-0.154321
2933480
86.5
0.7571345
12868988
CHINA LIFE INS-H
19.94
0.5040323
34924056
CHINA MERCHANT
25.05
-1.183432
1840577
CHINA MOBILE
80.55 -0.08930565
15218613
HUTCHISON WHAMPO
83.2
1.216545
6236920
CHINA OVERSEAS
22.75
-0.9146341
20916931
IND & COMM BK-H
5.38
-0.3703704
205698932
CHINA PETROLEU-H
7.98
0.2512563
43464615
LI & FUNG LTD
11.1
1.277372
21707072
CHINA RES ENTERP
25.6
0
2233074
30.5
-0.4893964
2651104
CHINA RES LAND
23.85
-0.4175365
10195927
NEW WORLD DEV
12.24
-0.1631321
16605922
CHINA RES POWER
19.78
-2.561576
10305457
PETROCHINA CO-H
9.07
0.7777778
70224786
CHINA SHENHUA-H
25.8
0.78125
15026496
PING AN INSURA-H
57.95
0.1728608
9084606
PRICE
DAY %
VOLUME
25.85
0.1679403
5980915
CHINA PETROLEU-H
7.98
0.2512563
HSBC HLDGS PLC
MTR CORP
VOLUME
SINO LAND CO
11.56
1.403509
4872650
SUN HUNG KAI PRO
101.5
-0.4901961
8039610
96.4
-0.6697579
1320296
TENCENT HOLDINGS
303.4
0.06596306
2929632
TINGYI HLDG CO
20.45
1.488834
5284189
WANT WANT CHINA
11.14
-1.763668
17835422
71
3.047896
4843562
WHARF HLDG
MOVERS
21
25
4 22590
INDEX 22285.52 HIGH
22582.55
LOW
22199.17
52W (H) 23944.74 22190
(L) 18056.4 31-May
4-June
Hang Seng China Enterprise Index NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.61
-0.2762431
95770651
AIR CHINA LTD-H
6.57
1.076923
5383906
ALUMINUM CORP-H
2.97
-2.302632
17798125
CHINA RAIL CN-H
7.47
ANHUI CONCH-H
25.05
0
6131635
CHINA RAIL GR-H
BANK OF CHINA-H
3.69
0.2717391
286803901
CHINA SHENHUA-H CHINA TELECOM-H
NAME CHINA PACIFIC-H
PRICE
DAY %
VOLUME
YANZHOU COAL-H
7.79
-1.517067
33238253
43464615
ZIJIN MINING-H
2.14
2.884615
50126858
-0.7968127
10177776
ZOOMLION HEAVY-H
6.9
-4.299584
19265150
3.92
-0.5076142
14923039
ZTE CORP-H
12.42
0
2648871
25.8
0.78125
15026496 62162774
5.9
0
13024325
3.72
1.22449
BYD CO LTD-H
33.1
0.4552352
2767082
DONGFENG MOTOR-H
12.28
1.993355
4500995
CHINA CITIC BK-H
4.15
0.4842615
18507426
GUANGZHOU AUTO-H
8.29
-0.8373206
10630860
CHINA COAL ENE-H
5.06
-0.1972387
22206680
HUANENG POWER-H
8.11
0.3712871
6955573
CHINA COM CONS-H
7.17
-1.239669
19742403
IND & COMM BK-H
5.38
-0.3703704
205698932
CHINA CONST BA-H
6.26
-0.1594896
303389311
JIANGXI COPPER-H
15.42
-0.1295337
7096306
CHINA COSCO HO-H
3.29
-1.497006
7199285
PETROCHINA CO-H
9.07
0.7777778
70224786
PICC PROPERTY &
BANK OF COMMUN-H
19.94
0.5040323
34924056
9.04
1.118568
14848271
CHINA LONGYUAN-H
7.87
-0.3797468
9387921
PING AN INSURA-H
57.95
0.1728608
9084606
CHINA MERCH BK-H
14.76
-0.5524083
28128190
SHANDONG WEIG-H
10.4
1.761252
13308371
CHINA MINSHENG-H
9.62
1.263158
15806514
SINOPHARM-H
20.85
0.4819277
2091868
CHINA NATL BDG-H
7.87
-2.839506
75597111
TSINGTAO BREW-H
54.3
0.5555556
614639
16.62
1.838235
3622216
WEICHAI POWER-H
28.4
1.792115
1240271
CHINA LIFE INS-H
CHINA OILFIELD-H
NAME
MOVERS
18
20
2 10700
INDEX 10537.49 HIGH
10691.46
LOW
10509.33
52W (H) 12354.22 10500
(L) 8987.76 31-May
4-June
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.73
-0.3649635
109128883
CHONGQING CHAN-A
10.21
0.1962709
29343762
PING AN INSURA-A
39.14
-1.236437
21193864
AIR CHINA LTD-A
5.31
0
9656927
CHONGQING WATE-A
6.71
2.286585
21704426
POLY REAL ESTA-A
12.18
-1.376518
55361161
ALUMINUM CORP-A
4.05
-1.459854
11315495
CITIC SECURITI-A
12.74
-1.924557
80106575
QINGDAO HAIER-A
12.49
-1.962323
17050281
ANHUI CONCH-A
16.61
-2.0059
22930860
CSR CORP LTD -A
4.28
-2.947846
30544587
QINGHAI SALT-A
22.5
-1.960784
5455141
AVIC AIRCRAFT-A
11.94
1.44435
49228205
DAQIN RAILWAY -A
6.99
-1.271186
37183724
SAIC MOTOR-A
15.3
-1.670951
29772343
NAME
NAME
NAME
BANK OF BEIJIN-A
9
-0.7717751
24980366
DATANG INTL PO-A
4.61
-2.536998
16174432
SANY HEAVY INDUS
9.16
-1.293103
18529397
BANK OF CHINA-A
2.95
-0.3378378
21173720
EVERBRIG SEC -A
13.63
-3.674912
23658771
SHANG PHARM -A
12.36
-3.134796
17160972
BANK OF COMMUN-A
4.69
-0.6355932
51176569
GD MIDEA HOLDI-A
14.06
-0.8462623
9285617
SHANG PUDONG-A
9.74
-1.01626
60164557
BANK OF NINGBO-A
10.48
-1.038716
9479744
GD POWER DEVEL-A
2.66
-0.7462687
37336507
SHANGHAI ELECT-A
3.81
-1.550388
3768311
BAOSHAN IRON & S
4.77
-0.8316008
13557601
GEMDALE CORP-A
7.66
-2.668361
43131142
SHANXI LU'AN -A
16.18
-2.822823
13128033
GF SECURITIES-A
13.69
-2.35378
25250187
SHANXI XISHAN-A
10.29
-2.279202
17601645
GREE ELECTRIC
26.04
-1.920904
14901681
SHENZEN OVERSE-A
6.38
-1.085271
41415348
GUANGHUI ENERG-A
20.72
0.5337215
19069072
SUNING COMMERC-A
6.13
-1.446945
43985500 7484980
BEIJING TONGRE-A
23.44
-1.13876
4774195
BYD CO LTD -A
34.01
-3.160592
10499824
CHINA AVIC ELE-A
25.51
-2.110514
8209245
CHINA CITIC BK-A
4.31
-1.146789
20484853
HAINAN AIRLINE-A
5.16
-0.1934236
23941080
TASLY PHARMAC-A
39.81
-4.164661
CHINA CNR CORP-A
4.46
-4.496788
64090552
HAITONG SECURI-A
11.7
-3.385632
124525799
TSINGTAO BREW-A
38.72
-0.2832861
1532720
CHINA COAL ENE-A
6.47
-1.671733
10531544
HANGZHOU HIKVI-A
36.25
-2.867095
6561093
WANHUA CHEMIC-A
16.99
-0.7593458
14904832
HENAN SHUAN-A
CHINA CONST BA-A
4.79
-0.4158004
27028848
41.38
0.7057678
6117997
WEICHAI POWER-A
22.52
-1.702313
6358407
CHINA COSCO HO-A
3.36
-2.040816
9293645
HONG YUAN SEC-A
24.4
-0.9338205
17340280
WULIANGYE YIBIN
23.46
-1.387137
18047515
CHINA EAST AIR-A
3.05
-0.6514658
8658978
HUATAI SECURIT-A
10.14
-2.40616
47466417
YANZHOU COAL-A
14.14
-2.817869
4119230
10.7
-0.09337068
20813458
YUNNAN BAIYAO-A
87.38
-1.243219
1542366
3.12
-0.952381
52976920
HUAXIA BANK CO
CHINA LIFE INS-A
16.39
-0.7869249
10235763
IND & COMM BK-A
4.22
0.2375297
72423059
ZHONGJIN GOLD
12.02
-0.4966887
13410796
CHINA MERCH BK-A
13.75
-0.1452433
78089914
INDUSTRIAL BAN-A
18.36
-0.2715915
46205669
ZIJIN MINING-A
3.06
-0.9708738
37417025
CHINA MERCHANT-A
12.91
-2.19697
20169912
INNER MONG BAO-A
27.03
-1.923077
20491433
ZOOMLION HEAVY-A
6.97
-1.692525
49018850
CHINA MERCHANT-A
28.62
-1.071552
12069625
INNER MONG YIL-A
28.54
-0.5228303
12426805
ZTE CORP-A
12.3
-1.992032
25659270
CHINA MINSHENG-A
10.28
-0.9633911
93557230
INNER MONGOLIA-A
4.73
-1.25261
30724462
CHINA EVERBRIG-A
CHINA NATIONAL-A
11.1
-2.202643
39164516
JIANGSU HENGRU-A
30.64
-2.637432
7745974
CHINA OILFIELD-A
16.2
-3.283582
9393424
JIANGSU YANGHE-A
63.71
-2.390072
3510330
CHINA PACIFIC-A
18.49
-0.698174
13649019
JIANGXI COPPER-A
20.77
-1.095238
7163423
10.41
-2.71028
6860247
CHINA PETROLEU-A
6.73
-0.148368
26327245
JINDUICHENG -A
CHINA RAILWAY-A
5.01
-1.183432
22624895
KANGMEI PHARMA-A
18.78
-0.3713528
23353613
CHINA RAILWAY-A
2.82
-0.7042254
25058320
KWEICHOW MOUTA-A
201.7
-0.1880443
4235692
CHINA SHENHUA-A
20.27
-0.9286413
11134825
LUZHOU LAOJIAO-A
25.88
-1.746393
6711071
59982923
METALLURGICAL-A
2.01
-0.9852217
45669076
22.14
-2.979842
13737055
2.42
-1.22449
13981230
CHINA SHIPBUIL-A
4.52
0
CHINA SOUTHERN-A
3.44
-1.994302
18390286
NARI TECHNOLOG-A
CHINA STATE -A
3.73
-1.583113
105414647
NINGBO PORT CO-A
3.69
-2.122016
107207522
OFFSHORE OIL-A
7.8
-3.822441
54753669
CHINA VANKE CO-A
11.86
-1.166667
73788188
PETROCHINA CO-A
8.5
-0.3516999
15748588
CHINA YANGTZE-A
7.59
-0.6544503
12433680
PING AN BANK-A
21.13
1.052128
44215691
PRICE DAY %
Volume
NAME
PRICE DAY %
Volume
CHINA UNITED-A
MOVERS
30
263
7 2640
INDEX 2565.666 HIGH
2639.51
LOW
2558.7
52W (H) 2791.303 (L) 2102.135
2550
31-May
4-June
FTSE Taiwan 50 Index NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP
24.2
0.2070393
5972200
25.35 -0.9765625
19872038
37
0.135318
ASUSTEK COMPUTER
326.5
AU OPTRONICS COR
13.2
CATCHER TECH
161.5
CATHAY FINANCIAL CHANG HWA BANK CHENG SHIN RUBBE CHIMEI INNOLUX C
0.5755396
7257197
TAIWAN MOBILE CO
FOXCONN TECHNOLO
80.7
0.3731343
3045161
TPK HOLDING CO L
588 -0.6756757
39.45
0.6377551
12846957
TSMC
109
29483152
UNI-PRESIDENT
57.1 -0.6956522
UNITED MICROELEC
13.9
FUBON FINANCIAL
0.1533742
2666076
HON HAI PRECISIO
76.2 -0.3921569
-2.222222
86173801
HOTAI MOTOR CO
341
-1.823708
10806472
HTC CORP
38.25 -0.7782101
18569684
HUA NAN FINANCIA
16.8 -0.8849558
6012428
91.1
0.1098901
5391011
19.75
-1.985112
52178675
MEDIATEK INC
369
0.2717391
4983659
8.6
-1.489118
38092097
MEGA FINANCIAL H
23.4
-1.473684
17796284
CHINA STEEL CORP
25.2
0
15733720
NAN YA PLASTICS
60.3 -0.3305785
9732844
CHINATRUST FINAN
18.75
-0.530504
22218405
PRESIDENT CHAIN
183
0.5494505
768396
94.9 -0.1052632
7103889
QUANTA COMPUTER
65
1.72144
5354873
CHUNGHWA TELECOM COMPAL ELECTRON
107.5
-1.826484 1.395349
7033017 2215374 27476915 7529190
654011
287.5
-1.032702
11632645
WISTRON CORP
30.5 -0.4893964
17.25
0.5830904
4518052
YUANTA FINANCIAL
15.9
-1.242236
12314475
LARGAN PRECISION
990
3.232534
1535471
YULON MOTOR CO
50.6
0.5964215
1595158
LITE-ON TECHNOLO
49.2 -0.4048583
8860193
8416250
SILICONWARE PREC
34.8 -0.5714286
6842159
142.5
1.423488
3076188
SINOPAC FINANCIA
14.7
0.6849315
9158715
FAR EASTERN NEW
31.85
-0.312989
2624432
SYNNEX TECH INTL
42.6
2.035928
5451828
FAR EASTONE TELE
71.4
0.5633803
7085002
TAIWAN CEMENT
38.1
-0.78125
6235855
17.05 -0.2923977
5841626
17.85
0
7844988
TAIWAN COOPERATI
FORMOSA CHEM & F
70.8
0.4255319
3757382
TAIWAN FERTILIZE
FORMOSA PETROCHE
77.7
0.6476684
1394599
TAIWAN GLASS IND
77.5
-0.128866
4037783
29.35
-2.81457
922010
MOVERS
21
27
5752.89
LOW
5638.05
131356559 4726976
2 5760
INDEX 5666.22 HIGH
3.731343
Volume
-5.801105
DELTA ELECT INC
FIRST FINANCIAL
18.4 -0.2710027
PRICE DAY %
69.9
2961901
CHINA DEVELOPMEN
NAME
FORMOSA PLASTIC
52W (H) 5896.71 (L) 4719.96
5630
31-May
4-June
13
June 5, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
Max 41.75
average 41.389
Max 42
Min 41
average 41.595
Last 41.6
Min 41.35
Last 41.6
41.8
61.20
20.8
41.6
60.95
20.6
41.4
60.70
20.4
41.2
60.45
20.2
41.0
Max 61
average 60.729
21.40
41.9
21.15
41.7
20.90
41.5
20.65
41.3
Max 21.3
average 20.677
Min 20.45
Last 21.05
PRICE
WTI CRUDE FUTURE Jul13
DAY %
YTD %
(H) 52W
(L) 52W
93.09
-0.385232745
-0.651013874
100.4000015
81.5
BRENT CRUDE FUTR Jul13
101.9
-0.156770527
-5.129876175
115.9300003
96.04000092
GASOLINE RBOB FUT Jul13
278.95
0.157983555
-1.21467526
318.0399895
235.0999832
854.5
-0.058479532
-6.124691019
987.5
814
3.97
-0.526183914
11.45423919
4.499000072
3.256000042
283.28
-0.021175972
-5.626811473
322.0499992
259.5000029
GAS OIL FUT (ICE) Jul13 NATURAL GAS FUTR Jul13 NY Harb ULSD Fut Jul13 Gold Spot $/Oz
1406
0.8268
-15.5282
1796.08
1322.06
Silver Spot $/Oz
22.584
0.7068
-24.995
35.365
20.3395
COUNTRY MAJOR
ASIA PACIFIC
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
Platinum Spot $/Oz
1489.5
1.7223
-1.8613
1742.8
1374.55
Palladium Spot $/Oz
751.78
-0.2058
7.4493
786.5
553.75
LME ALUMINUM 3MO ($)
1925
0.996852046
-7.139411481
2200.199951
1809
LME COPPER 3MO ($)
7340
0.424134629
-7.451771529
8422
6762.25
LME ZINC
1951
1.245459263
-6.201923077
2230
1745
15185
2.428330523
-10.99062134
18920
14561
15.565
0.679172057
-1.14322007
17.07500076
14.79500103
551.25
-1.5625
-8.086702793
665
512
WHEAT FUTURE(CBT) Jul13
701.5
-1.02292769
-11.62204724
900
664.75
SOYBEAN FUTURE Jul13
1521.5
-0.717781403
9.048557606
1605.75
1225
COFFEE 'C' FUTURE Jul13
128.65
-0.271317829
-13.97525911
202.1999969
125.0499954
NAME
16.40999985
ARISTOCRAT LEISU
69.94999695
CROWN LTD
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul13 CORN FUTURE
Dec13
SUGAR #11 (WORLD) Jul13
16.46
COTTON NO.2 FUTR Jul13
83.39
0.182592818 1.250607091
-16.61600811 8.481852478
23.05999947 94.19999695
World Stock Markets - Indices NAME
20.40
Max 20.8
average 20.314
Min 20.1
Last 20.5
23.1
22.8
22.5
Max 23.05
average 22.637
Min 22.25
Last 22.8
COUNTRY
YTD %
(H) 52W
(L) 52W
0.0104 0.2229 0.8112 0.4687 0.0698 0 0.0142 0.0424 0.2118 0.0986 0.3989 0.1806 0.31 -0.6986 0.062 0.3384 -0.249 -0.3617 -0.4601 -0.3965 -0.0097
-6.9763 -5.502 -3.5609 -0.8719 -14.1575 -0.1601 -0.1533 1.6627 -2.9129 0.4929 -2.5453 -2.9029 -2.2177 -0.8505 -7.7458 -2.705 -4.6683 2.4907 0.7183 -13.3979 -0.0194
1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 57.3275 32 1.29 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 75.727 1.20054 0.77553 7.7018 9.6245 94.12 1.0289
Macau Related Stocks PRICE
DAY %
YTD %
(H) 52W
(L) 52W
4.14
0.9756098
31.42857
4.49
2.29
VOLUME CRNCY 3513274
12.59
-0.07936508
17.99438
13.75
8.06
928493
AMAX HOLDINGS LT
0.85
0
-39.28571
1.72
0.75
478875
BOC HONG KONG HO
25.5
0
5.809127
28
20.85
7742569
CENTURY LEGEND
0.31
1.639344
16.98114
0.42
0.215
296000
5.8
0.1727116
-3.17195
6.74
2.8
135795
CHINA OVERSEAS
22.75
-0.9146341
-1.515153
25.6
15.223
20916931
CHINESE ESTATES
13.6
-1.875902
12.12409
14.12
7.901
255508
CHOW TAI FOOK JE
9.33
-1.165254
-25
13.4
8.4
7500100
EMPEROR ENTERTAI
2.75
2.230483
45.50265
2.88
1.12
455000
FUTURE BRIGHT
2.45
-0.8097166
102.1409
2.76
0.765
2484000 8491392
CHEUK NANG HLDGS
DAY %
YTD %
(H) 52W
(L) 52W
-0.651013874
100.4000015
81.5
12035.08984
BRENT CRUDE FUTR Jul13
101.9
-5.129876175
115.9300003
96.04000092
2726.68
41.6
0.8484848
37.06754
41.8
16.94
GASOLINE RBOB FUT Jul13
278.95
-1.21467526
318.0399895
235.0999832
5229.76
HANG SENG BK
124.1
-0.0805153
4.549287
132.8
99.2
900660
854.5
-6.124691019
987.5
814
5914.43
HOPEWELL HLDGS
27.85
-0.7130125
-16.2406
35.3
19.069
1172932
3.97
11.45423919
4.499000072
3.256000042
8238.96
HSBC HLDGS PLC
86.5
0.7571345
6.39606
90.7
59.8
12868988
283.28
-5.626811473
322.0499992
259.5000029
18056.4
HUTCHISON TELE H
4.18
1.456311
17.41573
4.66
2.98
6218000
LUK FOOK HLDGS I
19
-3.455285
-22.13115
30.05
14.7
3736800
MELCO INTL DEVEL
16.84
-1.057579
86.90344
18.18
5.12
8223000 4214400
NY Harb ULSD Fut Jul13
PRICE
CROSSES
DAY %
0.9654 1.5286 0.9492 1.3075 100.3 7.996 7.7625 6.1287 56.645 30.43 1.2533 29.901 41.935 9877 96.827 1.24105 0.85535 8.0178 10.4553 131.14 1.0301
93.09
NATURAL GAS FUTR Jul13
GALAXY ENTERTAIN
Gold Spot $/Oz
1406
0.8268
-15.5282
1796.08
1322.06
2102.135
Silver Spot $/Oz
22.584
0.7068
-24.995
35.365
20.3395
6857.35
MGM CHINA HOLDIN
20.5
-1.442308
54.38747
20.9
9.509
Platinum Spot $/Oz
1489.5
1.7223
-1.8613
1742.8
1374.55
1758.99
MIDLAND HOLDINGS
3.29
-0.9036145
-11.08108
5
3.24
3246100
751.78
-0.2058
7.4493
786.5
553.75
3985
NEPTUNE GROUP
0.222
8.823529
46.05264
0.226
0.084
328863500
Palladium Spot $/Oz
NEW WORLD DEV
12.24
-0.1631321
1.830279
15.12
8.12
16605922
SANDS CHINA LTD
41.6
0.6045949
22.53313
43.7
20.65
8416879
SHUN HO RESOURCE
1.52
-0.6535948
8.57143
1.67
1.03
0
755.149
SHUN TAK HOLDING
4.16
0.7263923
-0.7159918
4.65
2.56
1761754
3279.09
SJM HOLDINGS LTD
15165000
LME ALUMINUM 3MO ($)
1925
-7.139411481
2200.199951
1809
3635.283
LME COPPER 3MO ($)
7340
-7.451771529
8422
6762.25
1554.51
LME ZINC
1951
-6.201923077
2230
1745
15185
-10.99062134
18920
14561
3MO ($)
LME NICKEL 3MO ($) ROUGH RICE (CBOT) Jul13
15.565
CORN FUTURE
551.25
Dec13
22.2
PRICE
WTI CRUDE FUTURE Jul13
GAS OIL FUT (ICE) Jul13
20.0
Currency Exchange Rates
NAME
METALS
60.20
Last 60.9
42.1
Commodities ENERGY
Min 60.3
-1.5625
-1.14322007
17.07500076
14.79500103
NA
-8.086702793
665
512
1099.15
WHEAT FUTURE(CBT) Jul13
701.5
-11.62204724
900
664.75
372.39
SOYBEAN FUTURE Jul13
1521.5
9.048557606
1605.75
1225
980.83
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
21.05
-0.2369668
16.94444
22.7
12.34
SMARTONE TELECOM
13.3
0.1506024
-5.539772
17.38
12.5
579693
WYNN MACAU LTD
22.8
-0.4366812
8.830545
26.5
14.62
5601594
ASIA ENTERTAINME
4.2
-1.176471
37.2549
5.18
2.4
135699
BALLY TECHNOLOGI
57.03
0.1404741
27.55536
57.49
41.74
603773 3500
BOC HONG KONG HO
3.29
0
7.166126
3.6
2.7
GALAXY ENTERTAIN
5.322
1.468065
34.05541
5.34
2.25
950
INTL GAME TECH
17.46
-2.348993
23.21807
18.81
10.92
5540028
JONES LANG LASAL
90.81
-1.110748
8.184414
101.46
61.39
407222
LAS VEGAS SANDS
57.93
0.05181347
25.49827
60.54
32.6127
3846847
MELCO CROWN-ADR
23.43
-1.471825
39.13302
25.15
9.13
3633353
MGM CHINA HOLDIN
2.71
0
46.48648
2.71
1.36
600
MGM RESORTS INTE
15.19
0.1318392
30.49828
15.95
8.83
8000033
SHFL ENTERTAINME
17.47
1.240148
20.48276
17.74
11.75
651674
SJM HOLDINGS LTD
2.83
2.909091
22.51083
2.99
1.65
7255
WYNN RESORTS LTD
138.1
1.626315
22.76647
144.99
84.4902
1309193
AUD HKD
USD
14
June 5, 2013
Opinion
East Asia’s lessons for Africa Joseph E. Stiglitz
Nobel laureate in economics, is University Professor at Columbia University
fraction of it. This is especially significant, given that, over the last 30 years, Sub-Saharan Africa has suffered from deindustrialisation. Indeed, by the late 2000’s – owing partly to the structuraladjustment policies pushed
A manufacturing boom will not happen by itself. African governments must undertake industrial policies to help restructure their economies
O
n June 1-3, Japan hosted the fifth meeting of TICAD, the Tokyo International Cooperation on African Development. The meeting is a reminder that, while the rest of the world obsesses over Europe’s economic travails, America’s political paralysis, and the growth slowdown in China and other emerging markets, there remains a region – Sub-Saharan Africa – where poverty is almost the rule, not the exception. From 1990 to 2010, the number of people living in poverty (US$1.25 per day) across Sub-Saharan Africa rose from less than 300 million to nearly 425 million, while the number living on less than US$2 a day grew from about 390 million to almost 600 million. Still, the proportion of those living in poverty declined from 57 percent to 49 percent in this period. Developed countries have repeatedly broken their promises of aid or trade. Yet Japan, still suffering from two decades of economic malaise, has somehow managed to remain actively engaged – not because of its strategic
interests, but in order to meet a genuine moral imperative, namely that those who are better off should help those in need. Africa today presents a mixed picture. There are some notable successes – from 2007 to 2011, five of the world’s ten fastest-growing countries with a population of more than 10 million were in Africa. And their progress has not been based solely on natural resources. Among the best-performing countries have been Ethiopia, where GDP grew by roughly 10 percent annually in the five years ending in 2011, and Rwanda, Tanzania, and Uganda, where annual output has grown by more than 6 percent for a decade or more. But, while some sources indicate that there are now more middle-class families in Africa (defined as having annual incomes in excess of US$20,000) than in India, the continent also contains countries with the world’s highest levels of inequality.
Industrial policies Agriculture, on which so many of the poor depend,
has not been doing well. Yields per hectare have been stagnating. Only 4 percent of arable and permanent cropland is irrigated, compared to 39 percent in South Asia and 29 percent in East Asia. Fertilizer use in Africa amounts to just 13 kilograms per hectare, compared to 90 kilograms in South Asia and 190 kilograms in East Asia. Most disappointing, even countries that have put their macroeconomic house in order and have made progress in governance have found it difficult to attract investment outside of the natural-resource sector. Japan’s engagement is particularly important not only in terms of money and moral support, but also because Africa may learn something from East Asia’s development experience. This may be particularly relevant today, with China’s rising wages and appreciating exchange rate underscoring rapid change in global comparative and competitive advantage. Some manufacturing will move out of China, and Africa has a chance of capturing some
by the international financial institutions – manufacturing as a share of GDP in developing African economies was lower than it was in 1980. But a manufacturing boom will not happen by itself. African governments must undertake industrial policies to help restructure their economies. Such policies have been controversial. Some argue that government is not good at picking winners. Some argue that it makes no difference whether a country produces potato chips or computer chips. Both perspectives are misguided. The purpose of such policies is to address wellknown limitations in markets – for example, the important learning externalities, as skills
relevant to one industry benefit nearby industries.
Shaping the economy The goal of industrial policies is to identify these spillovers, and governments have done a very credible job in this respect. In the United States, the government promoted agriculture in the nineteenth century; supported the first telegraph line (between Baltimore and Washington, demonstrated in 1844) and the first transcontinental line, thereby launching the telecommunications revolution; and then nurtured the Internet revolution. Inevitably, government – through its infrastructure, laws and regulations (including taxation), and education system – shapes the economy. For example, American tax and bankruptcy laws, combined with deregulation policies, effectively encouraged the creation of a hypertrophied financial sector. With resources so scarce, developing countries cannot afford the luxury of such waste. They have to think carefully about the future direction of their economies – about their dynamic comparative advantages. The world’s most successful developing countries – those in East Asia – did just this, and among the lessons to be shared are those concerning how they conducted industrial policies at a time when their governments lacked the sophistication and depth of talent that they have today. Weaknesses in governance may affect the instruments of industrial policy, but not its use. Japan has other lessons to teach as well. Key elements of its development strategy – including its stress on education, equality, and land reform – are even more important today in Africa. The world has changed markedly since East Asia began its remarkable developmental transition more than a halfcentury ago; and differences in history, institutions, and circumstances mean that policies must be adapted to local conditions. But what is clear is that Japan and other East Asian countries followed a markedly different course from that recommended by the neo-liberal “Washington Consensus”. Their policies worked; all too often, those of the Washington Consensus failed miserably. African countries will benefit from reflecting on these successes and failures, and on what they mean for their own development strategies. © 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.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
15
June 5, 2013
Opinion
Slovenia shows why the EU wires shouldn’t discard austerity Business
Leading reports from Asia’s best business newspapers
Korea Herald South Korea’s finance minister stressed the need to boost job creation and encourage more women to join economic activities. “Globally, how to boost employment rates has posed a challenge [to policymakers], warranting attention,” Finance Minister Hyun Ohseok said. “It is critical to encourage more women to participate in economic activities.” The government wants to raise the country’s overall employment rate to 70 percent. It currently stands at 59.8 percent.
Megan Greene
Bloomberg View columnist and chief economist at Maverick Intelligence
The Age Rio Tinto Plc is pursuing an initial public offering of its gem unit, the world’s largest supplier of natural coloured diamonds, after failing to find a buyer. Rio hired Morgan Stanley to oversee an IPO in London, a source said. The London-based company was still open to offers for the operations, the person said. Rio has been considering divesting the assets since March last year, saying they no longer fit with its strategy. The Rio unit might be worth about US$2.2 billion, Deutsche Bank said in recent report.
Economic Times Grant of new bank licences in India will remain subjective instead of being decided on pre-determined metrics as the Reserve Bank of India maintained its stance of not giving in to the wishes of prospective applicants to ease conditions. The regulator declined to say by when the next bank will be born. The central bank has also poured cold water on hopes of regulatory forbearance on liquidity requirements for finance firms such as IDFC, which are planning to convert into banks.
The Star More than two months after starting its operations, Malaysia’s Malindo Air is already eyeing markets abroad. After August, the hybrid airline will start operating flights to India and Singapore. It will fly to three destinations in India, including New Delhi, Trichy and Cochin, head of corporate sales Raja Sa’adi Raja Amrin said. The airline plants to add aircraft to its fleet by the end of the year. Malindo started operations in Malaysia on March 23.
G
ermany’s approach to repairing the euro area’s finances, by holding the feet of feckless governments to the fire and forcing them to make difficult adjustments, has lately fallen out of favour. The case of Slovenia, though, suggests the tough-love strategy might yet have some merit. Austerity has become a bad word in the euro area. It is blamed for an ever-worsening recession and, in some countries, a significant drop in living standards. When the European Union announced last week that it would give Slovenia and other euro-area countries more time to achieve deficit-reduction targets, analysts breathed a collective sigh of relief. The reprieve, which subverts agreements made back in 2011 to reaffirm the euro area’s commitment to fiscal responsibility, arguably illustrates the kind of flexibility that Europe’s leaders should embrace more broadly. In Slovenia, however, the relaxation could represent a huge missed opportunity – one that could make the difference between the tiny country being forced to ask for a bailout or not. Slovenia was among the first euro-area nations to run afoul of the macroeconomic imbalance procedure, a mechanism created in 2011 to monitor compliance with the currency union’s new rules. In April, the EU flagged the country’s high degree of corporate indebtedness. More than half of bank loans in Slovenia are to the nonfinancial corporate sector. Of these, more than 30 percent are non-performing.
Ambitious programme The Slovenian government responded with an ambitious
reform programme. Among other things, it pledged to inject 900 million euros (US$1.18 billion) of capital into its three largest banks, and to move soured assets from these lenders to a bad bank, the Bank Asset Management Company, starting in June. Slovenian Finance Minister Uros Cufer also agreed to bring in an external auditing company to conduct an assetquality review of the nation’s banks and to verify the size of the hole in this sector. To raise money for the bank recapitalisation, the Slovenian government announced it would sell 15 state-owned enterprises. This is even more ambitious than the Portuguese privatisation programme,
Europe’s leaders have good reason to shift… to a relaxation of targets. Slovenia, however, may prove that one-size-fits-all policies don’t work for everyone
widely considered to be the model for struggling euro-area governments. If the government actually follows through, the country can avoid a bailout. This statement represents a bit of a U-turn from my previous writing on Slovenia. The reason is that the country’s debt and deficit are still manageable. Even in the worstcase scenario, the cost of recapitalising the banks and funding the bad bank amounts to no more than about 10 percent of Slovenia’s gross domestic product. This would increase the government’s debt burden to about 75 percent of GDP, still less than that of most other euroarea governments, including Germany. That said, the trends in Slovenia are worrisome. Public debt has more than doubled from 22 percent of GDP in 2008 to almost 55 percent in 2012. This is partly because an economic slump, expected to continue for at least another year, has been eroding the denominator, GDP. The share of nonperforming corporate loans at
Slovenia’s three largest banks tripled from about 10 percent in 2009 to 30 percent in 2012. The banks’ distress will keep cutting into lending, pushing still more corporate borrowers to the brink. The Slovenian government has been masterful at delaying difficult reform, particularly in the banking sector. If there is no real pressure to finally clean up the banking sector and push through the sale of state assets, the flow dynamics may keep worsening public debt, government deficits and bad bank loans. Now that the EU has loosened fiscal targets, it’s hard to see where the pressure will come from. The government has raised enough money to cover its financing costs well into 2014, so rising borrowing costs are not an immediate concern. Europe’s leaders have good reason to shift from harsh conditionality and punishment for disobedient countries to a relaxation of targets. Slovenia, however, may prove that onesize-fits-all policies don’t work for everyone. Bloomberg View
16
June 5, 2013
Closing Spain’s jobless total falls in May
Greece must do more on taxes: Lagarde
The number of registered job seekers in Spain fell in May as more firms hired people on a temporary basis ahead of the peak summer season. Official statistics showed 4.89 million people were registered as jobless, the lowest level in six months. Including the impact of temporary holiday hiring, the number of registered job seekers fell by 98,265. “It’s the best data we’ve seen since the crisis began,” said Industry Minister Jose Manuel Soria. On a seasonallyadjusted basis, the number of jobless dropped by just 265 people compared with April. The ministry did not provide an estimate for the country’s unemployment rate.
Greece is broadly on track with its bailout programme but must do more to crack down on tax evasion and pursue reforms to attract foreign investors, International Monetary Fund chief Christine Lagarde said yesterday. Officials from the country’s international lenders returned to Athens to start another inspection. “There are some really positive developments but obviously more needs to be done,” she said. Ms Lagarde said Athens must improve tax revenue collection and liberalise entry into some professions to push the economy towards growth. Last week the IMF cleared the path to disburse a US$2.26 billion loan tranche.
Singapore sovereign stake in Melco Crown (Philippines)
S
António Mexia says the partnership ‘is working’
China Three Gorges to invest outside Portugal Three Gorges, EDP look at South America and Europe
C
hina Three Gorges Corp, the largest single shareholder of Portuguese utility Energias de Portugal SA (EDP), is ready to make a major investment outside Portugal in the coming days, EDP’s chief executive said yesterday. EDP CEO António Mexia said the investment was part of an agreement with China Three Gorges for the Chinese utility to invest 2 billion euros (US$2.6 billion) in EDP’s wind power farms by 2015. China Three Gorges’ acquisition of a 49 percent stake in the Portuguese unit of EDP’s wind energy arm EDP Renováveis (EDPR) for 359 million euros in December 2012 was the first operation under that agreement. “For the next investment, we will diversify geographies,” Mr Mexia told Reuters on the sidelines of the Eurelectric utilities conference, adding that China Three Gorges and EDP were looking at South America and Europe. The investment agreement was part of the Chinese utility’s acquisition of a 21 percent stake in EDP for 2.7 billion euros in December 2011. It gives China Three Gorges access to EDP’s global wind power assets and
allows EDP to reduce its debt. Mr Mexia said China Three Gorges could spend up to one billion euros before the end of 2013, including the first 359 million euro transaction in December 2012. “We want to show the market that the partnership is working. The first investment was in Portugal, the rest will probably be outside,” he said. Mr Mexia said a year into their alliance, there were no communication problems between EDP and its Chinese shareholder and that the two firms had similar investment goals.
Shared vision “We share a vision that renewables – water, wind and solar – will play a key role,” Mr Mexia said, adding that the two also have the same focus on new markets in South America, notably Brazil. After 2015, once EDP has reduced its gearing from four times net debt over core earnings to three times, the company would also start looking at opportunities in Africa, he said. China’s investments in Portugal are closely watched by all leading
utility players in Europe as they are the first Chinese investment in this sector. In February 2012, just months a fter th e C h i n a Th re e G o r g e s investment in EDP, State Grid Corp of China (SGCC) bought a 25 percent stake in Portugal’s power grid operator REN-Redes Energéticas Nacionais SA. On Monday, an SGCC official told Reuters China is ready to invest further in European utilities if it finds the right opportunity and is happy about its first investments in Portuguese utilities. SGCC, China’s dominant power grid distributor, said in November it planned to expand its overseas assets to US$30 billion-US$50 billion by 2020 from the current US$8 billion. Mr Mexia said SGCC would invest mainly in grids, not in the power generation end of the utilities business, and was mainly interested in acquiring the steady cash flows that the regulated grid business provides. He said that in Europe’s liberalised energy markets, where utilities are no longer allowed to own the power networks, China Grid could provide much-needed finance. Reuters
ingapore state investment unit Temasek Holdings (Private) Ltd has bought a 5.02 percent equity interest in Philippine listed casino company Melco Crown (Philippines) Resorts Corp. Temasek purchased 222.245 million shares on the open market as of May 28, 2013, the local Melco Crown unit told the Philippine Stock Exchange in a filing. Melco Crown (Philippines) is controlled by Melco Crown Entertainment Ltd, a Macau casino developer and operator. It is developing – in partnership with local property firm Belle Corp, controlled by FilipinoChinese investor Henry Sy – Belle Grande Manila Bay, one of four casino resorts planned for a land reclamation zone called Entertainment City. Belle Grande is scheduled to open in the second half of 2014. In April, Melco Crown (Philippines) raised US$325 million (2.60 billion patacas) net via a share flotation the parent’s co-chairman Lawrence Ho Yau Lung confirmed early last month. Temasek had S$198 billion (1.26 billion patacas) assets under management as at March 31 2012. M.G.
IMF cuts French growth forecast
T
he International Monetary Fund yesterday downgraded its forecast for the French economy in 2013 and 2014, adding that it would be “hard” to reverse the unemployment trend by the end of the year. The Washington-based organisation said France’s GDP would contract by 0.2 percent this year and grow by 0.8 percent in 2014, compared to previous predictions of a 0.1 percent contraction in 2013 and 0.9 percent growth next year. “Following two quarters of negative growth [last quarter of 2012 and first quarter of 2013], economic activity should begin to recover in the second half of 2013, driven by a gradual improvement in the external environment,” the IMF said. But it warned in its annual evaluation report that “significant rigidities hinder the economy’s capacity to grow and to create jobs.” Edward Gardner, the IMF’s mission chief for France, told reporters that “macroeconomic variables lead us to think unemployment will continue to rise and that it will be hard to reverse this rise by the end of the year.” AFP