Macau Business Daily, June 7, 2013 by Business Daily

New Euro trade chamber launch today The Macau European Chamber of Commerce launches today, to give European companies “a bigger voice on common interests” in the city, one of the founders said. Individual national trade chambers pursue currently most lobbying and trade links. The idea of a co-ordinated European approach to business here comes at a time of a threatened trade war between China and the European Union. China has responded to EU import tariffs on Chinese-made solar panel technology with an anti dumping investigation on European wine imports. Page 3

Stop public antennas, court orders govt

Friday June 7, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

Page 6

Junket investor backs high stakes poker tournament Page 7

Disputes arise over new pre-sales law Page 16

I SSN 2226-8294

Year II

Number 300

he government has 90 days to stop public antenna companies from illegally relaying cable television signal, the Court of Second Instance decided yesterday. The court sided with Macau Cable TV Ltd and also ordered six public antenna companies to cease their activities. Public antenna firms control 70 percent of the city’s market for television signals, Macau Cable complained in previous court filings. So unless householders install their own private antenna to pick up the free-to-air channels, most homes face a TV blackout or will be forced to subscribe to Macau Cable, which has a monopoly for cable television services issued in 1999 and expiring next year. More on page 5

www.macaubusinessdaily.com

Civic affairs officials face disciplinary probe

Hang Seng Index 21940

21914

21888

21862

21836

21810

June 6

HSI - Movers

Shun Tak buys stake in HK budget airline

Name

Shun Tak Holdings Ltd, led by Pansy Ho Chiu King, bought a stake in low-fare carrier Jetstar Hong Kong. The airline said the alliance would help it challenge Hong Kong’s dominant carrier Cathay Pacific Airways Ltd, controlled by Swire Pacific Ltd. Shun Tak has purchased a 33.3 percent stake in Jetstar Hong Kong from Qantas Airways Ltd and China Eastern Airlines Corp for US$66 million (527.7 million patacas). Qantas and China Eastern will continue to hold 33.3 percent each. Page 2

%Day

CHEUNG KONG

LI & FUNG LTD

TENCENT HOLDINGS

-0.07

HENGAN INTL

-0.19

TINGYI HLDG CO

-0.25

CHINA OVERSEAS

-2.84

LENOVO GROUP LTD

-2.88

HANG LUNG PROPER

-3.10

HENDERSON LAND D

-3.54

CATHAY PAC AIR

-3.80

Source: Bloomberg

Brought to you by

Independent bus watchdog ‘under consideration’ The government will consider legislators’ suggestion of an independent body to oversee the operational records of the three local bus companies. It’s also been proposed such a watchdog would monitor how the Transport Bureau itself inspects the industry. A value-for-money audit released by the Commission of Audit on May 27 noted problems with the bureau’s oversight of bus runs and payment data from the bus companies. Page 2

U.S. Treasury ponders Delta Asia sanctions extension The United States is mulling whether to extend sanctions imposed in 2007 on Macau’s Delta Asia Bank Ltd over alleged ties to North Korean money laundering. The U.S. Department of the Treasury is requesting comments on a “proposed renewal without change” of the measures. Stanley Au Chong Kit, Delta Asia chairman, told Business Daily he was “optimistic” the sanctions would be lifted. Page 4

2013-06-07

2013-06-08

2013-06-09

26˚ 32˚

26˚ 30˚

June 7, 2013

Macau

Shun Tak buys stake in HK budget airline Renewed hopes in Jetstar Hong Kong’s quest for an operating licence Vítor Quintã

vitorquinta@macaubusinessdaily.com

hun Tak Holdings Ltd, the conglomerate led by Pansy Ho Chiu King, bought a stake in low-fare carrier Jetstar Hong Kong, which may help pave the way for an operating licence. The company bought a 33.3 percent stake from Qantas Airways Ltd and China Eastern Airlines Corp for US$66 million (527.7 million patacas). Qantas and China Eastern will hold 33.3 percent each, Shun Tak told the Hong Kong Stock Exchange yesterday. The deal will “greatly facilitate” Jetstar Hong Kong’s bid for an operating licence needed to challenge Cathay Pacific Airways Ltd, said Jetstar Hong Kong chief executive Edward Lau Chung Wai. “The low cost carrier market in Hong Kong has significant existing potential and room for growth,” Shun Tak said in a statement. It could “stimulate new demand for the leisure traveling market which in turn will enhance inflow of visitors to the Pearl River Delta region (including Macau),” the company said. Mr Lau estimated Jetstar would bring a further 5 million tourists to Hong Kong each year. The carrier “is expected to create synergies with the company’s hospitality businesses,” Shun Tak said.

Ms Ho, managing director of Shun Tak, said yesterday she believes the investment in Jetstar would bring the group “considerable returns”. Failure to get the permit from authorities has delayed the venture’s operations. The introduction of Shun Tak as a new shareholder will provide “excellent leveraging opportunities” to Jetstar Hong Kong, China Eastern said in a statement to Hong Kong stock exchange filing yesterday.

China focus The deal comes two days after the Hong Kong government said it would not process any applications to start airlines in the city pending the completion of a review of its criteria for designating local carriers. Jetstar Hong Kong is aware of the review and is having a “positive and ongoing dialogue with the regulator,” it said on Wednesday. “Given their experience in the transportation business, I think [Shun Tak] should have some clout in getting the licence approval” for Jetstar Hong Kong, Maybank Kim Eng analyst Jeremy Tan told AFP. The carrier will focus on flying to secondary Chinese cities and will buy or lease about 18 aircraft within three years, Qantas chief executive officer Alan Joyce has said.

Jetstar Hong Kong will buy or lease about 18 aircraft within three ears

It will offer 50 percent lower airfares on average than those by full-service carriers, Mr Lau said. The budget airline aims to have its first flights by the end of this year with two Airbus SAS A320s, China Eastern vice chairman Ma Xulun said in March. This is not the first time Shun Tak has invested in a low cost carrier. It

also invested in one of the three subconcessions issued in 2006 by Air Macau Co Ltd, for a Macau-based budget airline. Macau Asia Express, a joint venture between Air Macau, China National Aviation Co Ltd and Shun Tak Holdings Ltd failed to get off the ground. With Stephanie Lai and agencies

Regulator rejects New body mulled HK$1.3 mln slot claim to oversee bus data Michael Grimes

Stephanie Lai

michael.grimes@macaubusinessdaily.com

mainland-born Hong Kong woman who said she was owed HK$1,334,564 (US$171,916) from a slot machine at Sands Macao had her claim rejected by the local regulator, the Gaming Inspection and Coordination Bureau, yesterday. Kao Tak Mui told DICJ that on April 29 this year she had HK$1,003 in credits on the slot machine – Pharaoh’s Dream – and after two spins won a ‘mystery jackpot’ prize of HK$31,000. She continued playing and over the following 22 minutes the machine paid out a further 42 jackpots, each of HK$31,000, casino surveillance and the machine’s records showed. But the bureau said it was “statistically impossible” to generate that level of winnings on that particular game. The regulator said in an online statement: “…our conclusion is that the winning generated from the slot machine was statistically impossible. The incident could

sw.lai@macaubusinessdaily.com

only be explained as faults with the machine’s operation.” The regulator added: “DICJ will confirm [with] both the player and Venetian Macau, SA of the refusal of paying the premiums and accumulated credits of the slot machine. Both parties will also be informed to settle the compensation matter in accordance with the provisions of the Civil Code.” After over two hours of conciliation talks yesterday evening involving Ms Kao, the casino operator Venetian Macau SA and the regulator, she accepted an undisclosed amount of compensation for “emotional distress” reported TDM. Venetian Macau SA said in a statement: “…it is clear that the machine malfunctioned, according to the final report issued by the Macau Gaming Inspection and Coordination Bureau today,” adding “Sands has reached an accommodation acceptable to the patron”. With Stephanie Lai

he government will consider having an independent body to oversee the operation records of the three local bus companies as well as the Transport Bureau’s inspection data, said legislator Kwan Tsui Hang, head of the assembly’s monitoring committee for Land Affairs and Public Concessions. Ms Kwan was speaking after a meeting with Secretary for Transport and Public Works Lau Si Io. “We suggest that audit professionals should be part of this body,” she said, quoting Mr Lau as saying that he would consider the proposal. A value-for-money report released by the Commission of Audit on May 27 said the Transport Bureau has not been doing a satisfactory job in monitoring bus runs, the payment to the government of collected bus fares and the quality of emission standards.

Under the new bus system, the three bus operators collect bus fares and hand them to the government. In return, the government pays them between 9.6 patacas (US$1.20) and 25 patacas per kilometre for each bus run, which is effectively a public subsidy on how much it costs in resources and labour to make those journeys. The audit report claimed that in some routes there were not enough bus runs during peak periods but a lot more than required during offpeak hours. The commission has also noted instances where an operator was still able to get government’s pay though its bus had no electronic payment data record to prove the bus run took place. Last week, Transport Bureau’s director Wong Wan told that a review on the service contract terms with the bus operators, in particular over bus runs requirements, was imminent.

June 7, 2013

Macau

EU Chamber of Commerce to speak with single voice European companies compete internationally, but will cooperate in Macau Vítor Quintã

vitorquinta@macaubusinessdaily.com

he Macau European Chamber of Commerce will be established today to give European companies “a bigger voice on common interests”, according to one of the founding members, Filipe Cunha Santos. Mr Santos, who is the head of the Portuguese Chinese Chamber of Commerce and Industry’s Macau delegation, told Business Daily that the new chamber would be part of the consortium that would revive the European Union Business Information Programme (EUBIP). He believes the new chamber will give European companies “more visibility” and do “a little bit of lobbying” on their behalf. “European countries compete internationally in many sectors, like fashion, electronics and automobiles. We are a bit fragmented,” he said. But Mr Santos said these divisions could be overcome. “We have many common interests and, united, we have a bigger voice.” One purpose of the new chamber was to “earn more support from the government”, he said. He said the chamber aimed to bring down some of the barriers that hampered foreign companies here. Mr Santos said protection of intellectual property rights here “has improved a lot in the last few years” because of the government’s “significant action” against counterfeiters, but that Macau “could still do a much better job”. The main problem “in the mind of any investor” contemplating the market here was the labour shortage, he said. “I know of a few other foreign companies that are considering investing in other regions instead of Macau,” he said. Mr Santos said the shortage of qualified information technology staff was a particular problem for many companies.

Non-resident graduates welcome The Portuguese Chinese Chamber of Commerce and Industry’s Macau delegation is “very much in favour” of the government’s proposal to allow students from elsewhere studying at universities in Macau to work here after graduating, says the head of the delegation, Filipe Cunha Santos. Mr Santos told Business Daily that the other five chambers of commerce that are setting up the Macau European Chamber of Commerce today were also in favour. “It makes a lot of sense,” he said. He said his delegation did not see any better solution to the labour shortage, which would only get worse when a series of large casino resorts began opening in Cotai in 2015. “These students know Macau, they know the economy and many are sorry to leave.” The Macao-Japan Chamber of Commerce expressed support for the proposal earlier this month, saying that letting non-resident graduates work here could help foreign investors recruit more qualified personnel.

The latest Macau IT Skill Set Demand Survey found that about 40 percent of corporations and public institutions had difficulty in recruiting qualified IT workers last year. The labour shortage harmed mainly small and medium e n t e r p r i s e s , “because the big companies can afford to pay better”, Mr Santos said. “We suffer a lot with high wages and staff turnover.” Annual rates of employee turnover in the fourth quarter of last year ranged from 3.8 percent in the gaming and wholesaling industries to 19.9

KEY POINTS European companies seek ‘more visibility’ EUBIP business scheme set to resume IPR protection has ‘improved a lot’ Labour shortage the main problem for investors

percent in the transport industry, official data show. “We need more people to fill the 40,000 jobs that will be created in Cotai,” Mr Santos said. He said the process of getting government approval to import labour, especially qualified labour, should be faster. “It takes months to get approval to hire non-resident workers, even from Hong Kong or mainland China.”

Big part The Macau European Chamber of Commerce will bring together the Portuguese Chinese Chamber of Commerce and Industry Macau delegation, the France Macau Business Association, the British Business Association of Macau, the German Macau Business Association, the Macau-Romania Chamber of Commerce and the Irish Chamber of Commerce of Macau. Each will have two representatives on the board of the new chamber. The new chamber would be willing to help European companies that had no representative here, he said. Mr Santos said the Spanish Chamber of Commerce in Hong Kong and the Italian Chamber of Commerce in Hong Kong and Macau had been in touch with a view to cooperating with the new chamber.

The Macau European Chamber of Commerce will be a part of the consortium that will revive the EUBIP, which is meant to improve the European Union’s business ties with Macau and Hong Kong. The other members of the consortium will be the Macau Trade and Investment Promotion Institute, the Institute of European Studies of Macau and the European Chamber of Commerce in Hong Kong. The EUBIP began in 2009 with a budget of 750,000 euros (7.9 million patacas) and ended last year. Mr Santos said it would resume with a budget of 400,000 euros for arranging events in both cities over the next 30 months. He said it would help make European companies more conspicuous. The vice-president of European Chamber of Commerce in Hong Kong, Jens-Erik Olsen, said in October that the EUBIP was “a big part of how we became as visible as we are today”. The head of the Office of the European Union to Hong Kong and Macau, Vincent Piket, said in January: “We hope during the course of this year to launch another project, much in the spirit of EUBIP, to continue the work of strengthening business information and representation.” Mr Piket said the budget for the new project would be “a little bit smaller”.

June 7, 2013

Macau

U.S. ponders Delta Asia sanctions extension

Brought to you by

HOSPITALITY

Owner believes bank will be allowed to return to international markets

Unclear figures There are two somewhat opposing trends in the recent development of the meetings, incentives, conventions and exhibitions industry, or MICE. On one side, we have seen a decrease in the number of events; on the other, a significant growth in the average number of people taking part. But that growth has been irregular and prone to quarterly fluctuations from quarter to quarter. The government’s data does little to explain that variability. One explanation may lie in the comparative size of exhibitions held here. We are talking here, as a rule, about few events with much bigger audiences, when compared to other types of events surveyed. A single, successful event can sway the overall attendance figures. Also, big events are more likely in some areas than others. But an analysis of the participants and the topics of the events they attended does help much.

Vítor Quintã

vitorquinta@macaubusinessdaily.com

he United States authorities are considering whether to extend the sanctions imposed in 2007 on Macau’s Delta Asia Bank Ltd over alleged ties to North Korean money laundering. According to a notice posted on Wednesday, the United States Department of the Treasury is requesting comments on a “proposed renewal without change” of the measures. The department’s Financial Crimes Enforcement Network is calling on “businesses and certain not-for-profit institutions” to send comments within the next two months. “This is good news. It looks like they are in the process of removing the sanctions,” Stanley Au Chong Kit, Delta Asia chairman, told Business Daily yesterday.

The prominent Macau businessman is “optimistic” on the outcome of the procedures. “They have to review it [the sanctions]. We have never been involved in any money laundering,” he said. The diplomatic relations between the United States and North Korea are currently very tense. But Mr Au believes it will not have an impact on the decision. “We terminated all our relations with North Korean entities back in 2005. And the Macau government found nothing wrong with us,” he stressed. A leaked U.S. diplomatic cable dated March 2008 and published on the WikiLeaks website quotes the chairman of the Monetary Authority of Macau, Anselmo Teng Lin Seng, as saying the authority’s monitoring of Delta Asia “had shown no evidence

The classification system used by the Statistics and Census Service is broad and, intriguingly, does not include a discrete category for the city’s main economic activity, gambling. The great variability found in the average number of participants by type of event persists when we break down the figures according to the topic. The figures, however, suggest clearly two groups. One includes topics associated with relatively small events, typically less than 400 participants on average. Remarkably, tourism is among them. More popular topics include culture, finance and technology, which display distinctly higher participation figures and neatly rising trends. The data may suggest some “specialisation” is under way. But the analysis is limited by the short time span for which figures are available, and the lack of further details on the participants.

of money laundering”. Asked if Delta Asia would send a comment to the Department of the Treasury, the chairman said: “It would not be useful”. The bank has already filed a challenge against the department’s 2007 decision to designate it as a “financial institution of primary money laundering concern,” he confirmed. The complaint was filed in a United States District Court for the District of Columbia in March, Mr Au revealed. Jones Day, a law firm based in Washington, has confirmed it is representing Delta Asia in this challenge. Mr Au told Business Daily in a March interview it would deliver “a new petition to the U.S. Department of the Treasury about lifting the sanctions”. The United States accused Delta Asia of laundering money for the North Korean government in 2005. About US$25 million (200 million patacas) in funds kept in the bank were frozen at the time. The money was unfrozen two years later. But the bank is still banned from doing business with U.S. financial institutions, which in effect prevents it from dealing in foreign currency. If the sanctions are withdrawn, “we can resume our normal business with American banks, we can establish overseas correspondents,” Mr Au said.

This is good news. It looks like they are in the process of removing the sanctions

J.I.D.

Stanley Au Chong Kit, chairman, Delta Asia Bank

231

Average participants in tourism-related MICE events last year

Delta Asia has challenged U.S. sanctions in a Washington court

June 7, 2013

Macau

Stop public antennas, court orders govt No appeal possible from final decision backing Macau Cable TV Vítor Quintã

vitorquinta@macaubusinessdaily.com

he government has 90 days to stop public antenna companies from illegally relaying cable television signal, the Court of Second Instance decided. In a judgement yesterday, the court sided with Macau Cable TV Ltd and also ordered six public antenna companies to cease their activities. Public antenna firms control 70 percent of the city’s market for television signals, Macau Cable complained in previous court filings. So unless householders install their own private antenna to pick up the free-to-air channels, most homes face a TV blackout or will be forced to subscribe to Macau Cable, which has a monopoly for cable television services issued in 1999 and expiring next year. Yesterday’s decision was final, with no possible appeal, which means that Lawrence Tou Veng Keong, Telecommunications Regulation Bureau director, is required to enforce it. “This judgement is a reason for great satisfaction for Macau Cable but also for the whole community,” the company’s lawyer told Business Daily. Jorge Menezes said the judges expressed “courage” in

“unequivocally condemning an illegality that seemed to go on forever,” even though “public opinion used to be favourable to public antenna companies”. If these companies were still operating in 90 days, Macau Cable would have to go back to court to ask the police to enforce the judgement. But in that scenario Mr Tou could also face criminal charges for court disobedience, a legal expert told Business Daily. Macau Cable “hopes the government will enforce the judgement within the stated time frame and puts an end to the illegal relaying of cable television,” Mr Menezes said. The judges overturned a decision from the Court of First Instance, which had rejected Macau Cable’s request. A ban on public antennas would prevent “the majority” of the Macau inhabitants from having access to information broadcast on television, something they have “enjoyed for decades,” the lower court said. The Court of Second Instance disagreed, stressing that many of the channels relayed are not focused on information. “To condone a criminal action

(…) just because a significant part of the population receives a benefit from it” is “completely absurd,” the judges wrote. The court decision strongly criticised the telecommunications regulator. “It is very comfortable and much nicer for this body to defend the thousands of people that could be affected” by the end of the public antennas, the judgement says. But it was the bureau that created this situation “by granting an exclusive [concession for Macau Cable] without protecting the different interests,” the court said. The court found it “strange” that the government “granted the exclusive concession, particularly without a public tender, (…) allowing for charges

MIN

that not all [people] can afford”. The judgement also found “strange” that Mr Tou claimed in court that the public antennas’ activities were “legal”. Several public officials and bodies previously “took a clear stand condemning” the public antennas, yet “there seems to be no courage to end this situation,” the judges wrote. Even though the judges stressed they have no business with politics, they admitted to being worried about “the consequences of a decision that would paralyse the relaying of television signals”. They stressed there are ways to reduce any negative impacts, namely by renegotiating Cable TV’s contract, lowering the prices or fully liberalising the market.

TO THE MAJ OR 201 BUS 3 Bu INES reco sine S AW g s s n ition Awa size ARD rds s an prog S IN o d fro ope f r THE a t m h n to e m f REG Y ear orga all in all se or pro ION i s c f n ! perm isation dividua tors. P ession Macau a a ’ l s s l s r s a t t p n a icip hat a r n ent or a n e d d m a bus com basis carry ine tion in busine ier o . pan y, o You ca n their sses, or the aw ss of al r no n a l a Nom min either ctivitie other r rds is inat s in elev a n t o e m ions you M a rsel inate a acau nt ope We f, or o n n un invi you individ n a r co til J te y mpa ual une ou t ny. , 20 ob

ATIO

NO WO

PEN

e pa

th, 2

013

rt o

For

f it!

mor e

info w or c .awa rmation r o inqu ntact u dsmac , please iries au.c s v @aw om isit our w ard sma

cau

BRONZE SPONSOR

ORGANISED BY

MEDIA PARTNERS

EXCLUSIVE AGENCY AND PARTNER

EXCLUSIVE OOH MEDIA PARTNER

.com

ebs

ite a t

June 7, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Marginal changes The growth in exports of services slowed abruptly in the four quarters ended March 31. Meanwhile, the total value of exports of goods has grown for the last six quarters, reversing the previous downward trend. In five of those six quarters, the growth rate of exports of goods was higher than that of services and, in most of the quarters, by a wide margin. It suggests the decline in the share of goods in total exports seems to have stopped. Last year that share rose to 3.1 percent. It was 2.7 percent one year earlier. The figures for the first quarter show the share stands at just less than 3.2 percent, which suggests a continuation of the upward trend. But these results must be put in perspective, as the growth in the exports of goods is coming from a very low level.

As the graph shows, the value of goods exported is dwarfed by exports of services. Services represent the biggest expenditure contributing to gross domestic product and it is the main contributor to growth. Its volume is typically at least double that of all imports and, in the last three years, about 30 times bigger than exports of goods. In absolute terms, the increase of services exports was more than 10 times bigger than the increase in exports of goods last year, even though the growth rate of the latter was double that of services exports. Inevitably, the growth of net exports and its contribution to economic growth depend almost exclusively on the performance of exports of services. That is unlikely to change any time soon. J.I.D. The content of this column is the work of Business Daily’s journalists.

96.7%

The proportion of services as a share of exports in the first quarter

IACM top officials face administrative raps The officials accused of stalling the burial plots lease probe may be suspended Stephanie Lai

sw.lai@macaubusinessdaily.com

he government may suspend two senior officials if they are found to have hindered the investigation of a suspicious lease of burial plots, Chief Executive Fernando Chui Sai On said yesterday. Mr Chui said the Public Prosecutions Office had informed him that it had charged the head of the of the Civic and Municipal Affairs Bureau (IACM), Raymond Tam Vai Man, and Mr Tam’s deputy, Lei Wai Long, with trying to stall the investigation of the perpetual lease of burial plots to a legal adviser of Secretary for Administration and Justice Florinda Chan. Mr Chui told reporters on the sidelines of an infrastructure investment meeting that administrative action against Mr Tam and Mr Lei had already begun. “I have already signed the documents to get the inquiry started,” Mr Chui said. He said any decision to suspend the two officials would depend on the findings of the administrative inquiry. The Public Prosecutions Office announced in a written statement that an examining magistrate had charged Mr Tam and Mr Lei with malfeasance. It said the head of the bureau’s environment and licensing department, Fong Vai Seng, and another official, Siu Kok Kun, had been charged with the same offence. The four are accused of having taken too long to hand over to the Public Prosecutions Office documents related to the lease of the cemetery plots. The Court of First Instance will try them. If convicted, they face up to five years in prison. Prosecutors began investigating the lease of the burial plots in 2010. The Public Prosecutions Office said that it had asked Mr Tam several times to hand over original documents related to the lease.

public interest, but the legal rights of the stakeholders in the case, including the prosecutor”. Mr Tam was charged on Tuesday. He immediately resigned from the election commission for the Legislative Assembly, for what he called “personal reasons”. Mr Chui declined to comment on the case of the lease of the burial plots, on the grounds that it was still the subject of legal proceedings. He also declined to speculate on what the personal reasons for Mr Tam’s resignation might be. “I hope that the legislative election this year will start in a fair and just manner, unaffected by any individual’s resignation,” Mr Chui said. Legislative Assembly member José Pereira Coutinho called for the immediate preventive suspension of Mr Tam.

In a petition delivered to the Chief Executive’s office yesterday, Mr Pereira Coutinho said Mr Tam should resign or at least be suspended. “A great risk was taken in nominating Mr Tam to the Electoral Commission, which was done at a time when his credibility was already being questioned,” Mr Coutinho told Business Daily. “Every official should receive the same treatment. Just as the former Financial Affairs Bureau head was suspended, Mr Tam should be no exception to this rule,” he said. The government suspended Orieta Lau Ioc Ip from her post as head of the Financial Affairs Bureau in 2010, after the Commission of Audit alleged that she had misused more than 3.4 million patacas (US$425,314) which, it said, had been overspent on meetings of the Commission for Evaluation of Motor Vehicles.

Great risk It said Mr Tam and the other three suspects had “intentionally” delayed handing over the documents. It added that in doing so the suspects had hindered the investigation and “hurt not only the

The Chief Executive says administrative action against two officials has begun

June 2013 April 7, 19, 2013

Macau

Junket investor sponsors high stakes poker Younger generation of VIP baccarat crowd learned poker overseas, says GuangDong Group Michael Grimes

michael.grimes@macaubusinessdaily.com

poker tournament that costs HK$1 million (US$129,000) to buy in already looks like an elite event. When you add to the mix a few poker world champions and some of Macau’s high stakes baccarat players pitting themselves against the poker elite, it’s a casino marketing person’s dream. GuangDong Group Ltd, an investor in Macau VIP gambling rooms, is sponsoring the GuangDong Ltd Asia Millions tournament – known as GDAM. It runs until the end of today at Melco Crown Entertainment Ltd’s City of Dreams resort on Cotai. The event is hosted by PokerStars at its room on the main floor of the venue, known as ‘PokerStars LIVE at the City of Dreams’. Winnie Wong, chief executive of GuangDong Group, explained to Business Daily why a firm chiefly involved in high stakes baccarat is hosting a poker event. “We believe that poker is on the rise in China. It really has big potential, not only in terms of gaming, but in terms of giving GuangDong Group international exposure. It is something that will really help our brand,” she said. “The company is really committed to helping to grow the poker business and to run international events regularly.” The tournament has received worldwide exposure; with www. pokerstars.tv streaming games live on the Internet. Winfred Yu, business director, poker, for Macau Laxino, a company that runs the Poker King poker room at Galaxy Entertainment Group’s StarWorld Hotel & Casino, told Business Daily last year that the interest in high stakes poker in

Winnie Wong, CEO of GuangDong Group Ltd

Macau started among junket agents whiling away time while their VIP clients played baccarat upstairs.

Generational change But Winnie Wong of GuangDong Group says there’s also a generational aspect to poker’s growth in China. “More and more especially of the younger generation of existing VIP customers and also non-customers – who have studied overseas and may have a business background in China – have been exposed to poker,” she stated. “Many who love poker don’t see it as a form of gambling. It’s more like a sport to them. We have some people that come to Macau primarily to play VIP baccarat and then play some poker, and people that come just to play poker,” she added.

Danny McDonagh, PokerStars’ director of live poker operations for Asia-Pacific said: “We’ve got Guangdong Group members matching against the best poker players in the world.” The starting line up included world champions Greg Merson and Jonathan Duhamel, and elite players Erik Seidel, Betrand Grospellier and Gus Hansen. A high stakes tournament sponsored by junket investor Neptune Group Ltd last year generated a prize pool of HK$180 million (US$23.2 million) – one of the biggest high stakes events outside the market-leading World Series of Poker. The eventual first prizewinner Stanley Choi took away HK$50 million of that, propelling him at that time into the top ten of single prize payouts in poker history.

LVS approves US$2 bln share buyback scheme

as Vegas Sands Corp has approved a multi-year programme to repurchase up to US$2billion (16 billion patacas) of its stock. The news was given in a press release on Wednesday United States time. It’s said to be part of a drive to increase the firm’s shareholder returns. In 2012 LVS directors authorised a recurring dividend of US$1.00 per share per year. The recurring dividend was increased by 40 percent to US$1.40 per share in 2013. In addition the company paid a special dividend of US$2.75 per share in December 2012. Sheldon Adelson, chairman and chief executive of LVS said in a statement: “We believe the implementation of our share repurchase programme, together with our previously established recurring dividend program, will allow us to maximise returns to shareholders in the years ahead.” The company added it expected to operate the repurchase policy as opportunities arose. “It is gratifying that the company’s businesses and cash flows have grown to a level that enabled the company to return nearly US$3.1 billion of capital to shareholders in 2012, while retaining ample liquidity to pursue future growth opportunities,” added Mr Adelson. The company is continuing to pursue casino licences in Japan and Spain, he said. Continued negotiations with the Spanish government will depend on whether a smoking ban will be lifted and whether online gaming is allowed to continue in the country. At the close of New York trading on Wednesday LVS had a market capitalisation of approximately US$47.31 billion according to Bloomberg. The stock was down 1.9 percent at the end of Nasdaq trading at US$57.35. It has risen 38.48 percent in the past 12 months.

For your events, we will always invite excellence, professionalism, quality and surprise, because we know that the most important thing your guests will take away is the memory of you and your brand.

You will remember.

To do this, you can count on our team to provide solutions that go beyond your expectations, and always focus on your marketing needs. @ : signature@macaubusiness.com tel : +853 2833 1258

welcome

M.G.

excellence

June 7, 2013 April 19, 2013

Greater China

China faces property bubble risks: Vanke New home prices jumped 6.9 percent in May

hina Vanke Co Ltd chairman Wang Shi said the country’s property market faces the risk of a “bubble,” reiterating concerns the nation’s biggest developer by sales raised three months ago. The bubble isn’t “light,” Mr Wang said at a conference in Shanghai yesterday. “If the bubble lasted, it will be dangerous.” Home prices have been increasing even as the government in March stepped up a three-year campaign to cool the market, which has included

You can’t generalise for the Chinese market. Then of course, if the bubbles are not controlled, the result will be catastrophic Wang Shi, chairman, China Vanke Co

raising down-payment and mortgage requirements, imposing a property tax for the first time in Shanghai and Chongqing, and enacting purchase restrictions in about 40 cities. New home prices jumped 6.9 percent in May, the most since they reversed declines in December, SouFun Holdings Ltd, the country’s biggest real estate website owner, said. Mr Wang said in a March CBS Corp. broadcast of the 60 Minutes news programme that the housing bubble could spell “disaster” for China’s real estate market and that debt held by developers is a serious problem. He said yesterday he disagreed with the news programme’s conclusion that the bubble will burst immediately, as the housing market in the country is very diverse. He referred to “ghost towns” where homes are built and left unoccupied, while as much as 60 percent of other housing projects in other cities are snapped up the first day they’re put up for sale.

Can’t generalise “You can’t generalise for the Chinese market,” he said. “Then of course, if the bubbles are not controlled, the result will be catastrophic.” The average price in China’s 10 biggest cities, including Beijing and Shanghai, jumped 9.7 percent

‘Ghost towns’ – thousands of homes built and left unoccupied

from a year earlier to 17,202 yuan (US$2,805) per square meter last month, up 1.1 percent from April, SouFun said. The government called for higher down payments and interest rates for second-home mortgages in cities with “excessively fast” price gains and ordered stricter enforcement of taxes, in the latest measures announced at the beginning of March. The “long-term dynamics” of China will create “enormous opportunities” in the country’s real estate market, said Rob Speyer, president and co-chief executive of Tishman Speyer Properties LP, the owner of New York’s Rockefeller Center, in an interview in Shanghai yesterday. The closely held New York-based developer is a long-term investor in China, Mr Speyer said. Tishman has developments in four Chinese

cities: Shanghai, nearby Suzhou, the western city of Chengdu and Tianjin in the north. Vanke began to expand overseas this year as Chinese developers take advantage of demand for real estate around the world from Chinese nationals and as prices at home soar. Vanke signed a deal with Tishman in February to develop two residential towers in San Francisco. Ground breaking of the project will be on June 26, Mr Speyer said yesterday. In April, it entered a venture with Singapore’s Keppel Land Ltd to buy 30 percent in a Keppel unit.

Investing abroad “There are three reasons why we invest abroad: first, we go out to industrial developed countries to learn and prepare for China’s city transformation,” Mr Wang said

DBS sees HK yuan deposit rate gaining As companies seek to borrow more of the currency

ong Kong’s yuan deposit interest rate may rise “moderately” this year as companies look for more loans, according to DBS Group Holdings Ltd, Southeast Asia’s largest bank. Retail customers seeking to diversify their savings can get total returns on yuan deposits, including currency appreciation, as high as 5 percent, Vivian Chan, executive director for deposits and secured lending for consumer banking at DBS in Hong Kong, said in a telephone interview. As China seeks a broader international role for its currency, Hong Kong has the largest offshore yuan savings pool, ahead of Singapore and Taiwan. Competition for deposits has cooled from last year, as central bank policies of quantitative easing in major economies such as the U.S. and Japan created abundant funding in Asia while lending demand weakened. “Some banks may raise their yuan savings rate in the second half if they get more yuan

loans to extend,” Ms Chan said. “Two percent to 3 percent is a reasonable range.” DBS last week offered as much as 2.88 percent on a three-month, 300,000-yuan (US$49,000) deposit, using a Groupon-style promotion that offered higher rates as more people signed up. Wing Lung Bank Ltd, a unit of China Merchants Bank Co., increased its three-month deposit rate for 100,000-yuan deposits to 2.6 percent from 2.55 percent effective this week. The city’s yuan deposits jumped 15 percent to a record 677.2 billion yuan in April, while lending almost tripled to 86 billion yuan in February from the end of 2011, official data show. Loans may exceed 100 billion yuan this year, Citigroup Inc. estimates. Total deposits in the city rose 9.4 percent from a year earlier to HK$8.47 trillion (US$1.1 trillion) as of the end of April, data from the Hong Kong Monetary Authority showed. Bloomberg News/Reuters

Yuan lending almost tripled in February from the end of 2011

June 2013 April 7, 19, 2013

Greater China

Mainland gold imports from HK slump in April

yesterday. “Secondly, we would like to balance our investment. Thirdly, we follow our customers: as Chinese buyers go to the U.S., so do we.” Vanke has 98 percent of its investments in China and planned to have 20 percent internationally, Mr Wang said without giving a timeframe. The developer has carved out a market niche for itself by focusing on smaller homes that appeal to the mass market, helping boost its sales. Property sales at the company rose 14.5 percent to 14.2 billion yuan (US$2.3 billion) in May from the previous month, the company said in a statement on Tuesday. The reason Vanke has managed to do well even as the government has implemented curbs is because it targets “the real demand,” Mr Wang said.

hina’s gold imports from Hong Kong slumped in April from a record as banks failed to get quotas fast enough to meet surging demand from mainland buyers keen to purchase bullion as prices fell into a bear market. Mainland buyers purchased 126,135 kilograms, including scrap, compared with 223,519 kilograms in March, according to Hong Kong government data yesterday. Net imports, after deducting flows from China into Hong Kong, were 75,891 kilograms, from 130,038 kilograms a month earlier, according to Bloomberg calculations. Gold slid into a bear market in April and had its biggest drop in 33 years in the two days through April 15 on concern that the U.S. Federal Reserve may rein in stimulus that helped bullion cap a 12-year bull run in 2012 and as investors dumped holdings in exchange-traded products backed by the metal. Quotas were in short supply after imports reached a record in March. Only qualified banks that secure quotas from the Chinese central bank can import gold to the mainland. “Some qualified banks used up their gold import quota in the first three months and weren’t able to get the paperwork done fast enough to bring in bullion in April,” said Tian Rui, vice president of the precious metals division at INTL FCStone Trading Co. “We might see higher imports in May because demand

surged after the rout.” Bullion of 99.99 percent purity on the Shanghai Gold Exchange dropped 7.4 percent in April, and was at 278.55 yuan a gram (US$1,414 an ounce). China’s purchases in April were 22 percent higher than the 103,644.5 kilograms in the same month last year, according to the data from the Hong Kong Census and Statistics Department. Mainland China doesn’t publish such data. Exports of gold to Hong Kong from China were 50,244 kilograms in April, according to a separate Statistics Department statement, down from 93,481 kilograms in March, and compared with 37,316 kilograms in April 2012. The premium gold buyers in China pay to take immediate delivery of bullion jumped four-fold as consumers swarmed jewellery shops after prices plunged by the most in three decades. Still, gold demand in China, the world’s largest consumer after India, may slow after surging in April, said Zhang Bingnan, secretary-general of the China Gold Association. “The kind of frenzied buying in late April and early May won’t be repeated,” Mr Zhang said, adding that some of the jewellery demand earmarked for festivals or weddings later this year may have been brought forward to April and May after prices fell. Bloomberg News

Bloomberg News

Ministry to auction bonds for local govts China’s finance ministry said yesterday it will auction a total of 42.2 billion yuan (US$6.9 billion) on behalf of four local governments, the first time it will do so this year. The finance ministry said in March that it would raise the quota for direct issuance of local government bonds this year to 350 billion yuan. On June 14, the ministry will issue 21 billion yuan in three-year bonds and an additional 21.2 billion yuan in five-year bonds, it said in an announcement on the website of China’s major bond clearinghouse.

Huishang Bank planning HK IPO Huishang Bank Corp, a lender in China’s eastern Anhui province, is preparing for an initial public offering that could raise about US$1 billion, according to two people with knowledge of the matter. Huishang, based in Hefei city, invited investment banks to pitch for advisory roles on the offering, the people said. The share sale may start next year, they said. Companies have raised US$4.6 billion from IPOs in Hong Kong this year, more than triple the amount for the same period of 2012.

Export growth seen halved in fake-data crackdown The crackdown on fake export invoices used to disguise money flows is probably cutting the mainland’s trade figures, revealing subdued global demand that will weigh on economic growth. Outbound shipments may have grown 7.1 percent in May from a year earlier, less than half the previous month’s reported 14.7 percent, based on the median estimate of 34 economists ahead of data due on Sunday. Import growth probably slowed to 6.9 percent from April’s 16.8 percent, a Bloomberg News survey showed.

Chalco cutting aluminium capacity

U.S. Senators warn of currency ‘manipulation’ A bipartisan group of senators on Wednesday U.S. time introduced legislation to give the United States new tools to fight currency manipulation, an effort aimed mainly at China, just days before President Barack Obama and Chinese President Xi Jinping will meet for an informal retreat. The bill is similar to legislation the House of Representatives and the Senate passed separately in 2010 and 2011, but which failed to win final congressional approval. The new effort comes despite a recent rise in the Chinese currency to the highest level since 2005. “The single biggest step we could take today to create jobs in American manufacturing is to tackle China’s currency manipulation,” Senator Charles Schumer, a New York Democrat, said in statement. “That’s why we’re making a renewed, bipartisan push to get this bill passed and on the President’s desk, and send a strong message to the Chinese government that the rigged game must come to an end,” Mr Schumer said.

Consumers rushed to buy as prices plunged by the most in three decades

Beijing raises cab fares B

eijing will raise taxi fares for the first time since 2006 to boost driver incomes after customer complaints that it’s becoming increasingly difficult to hail a cab in China’s capital city. Starting from June 10, the base fare will be increased 30 percent to 13 yuan (US$2.12) for the first 3 kilometres (1.86 miles), the Beijing Municipal Commission of Development and Reform said in a statement posted on its website. Each additional kilometre will cost 2.3 yuan, up from 2 yuan currently, according to the statement. Beijing, which has been voted as having the world’s worst commute, is raising taxi fares to entice cab

drivers to brave the morning and evening rush hours, when demand by the city’s 20.7 million residents is highest and traffic jams are at their most severe. “Beijing traffic jams are really bad, so we spend a lot of time on the road but our passenger turnover is much lower,” said Chen Baiwen, a 42-year-old taxi driver in Beijing. “I’ll sometimes meet up with friends somewhere or if it’s evening I’ll go home for dinner” during rush hour. Even after the fare increase, it remains cheaper to hail a cab in China than many other countries. Costs start at the equivalent of US$7 in Tokyo, US$3.30 in London and US$3 in Washington. Beijing’s cab drivers earned an average 53,892 yuan in income last year, lower than the city average of 56,061 yuan, even though cabbies usually work longer hours at about 10 hours a day, according to the local government. Bloomberg News

Chalco, China’s top producer of aluminium, joined other companies in cutting capacity to help trim a market surplus after it suffered losses due to weak prices. The Aluminum Corp of China Ltd said in a statement it would temporarily close 380,000 tonnes of annual capacity due to market conditions. The shutdown represents 9 percent of its annual output of primary aluminium products of 4.22 million tonnes last year, according to the firm’s annual report on its website.

Shanghai expects to trial yuan convertibility Shanghai expects to gain approval soon to open a free trade zone that will test yuan convertibility and crossborder capital flows, the official Shanghai Securities News reported yesterday. Shanghai officials have been lobbying China’s State Council for permission to open their own zone to experiment with capital account liberalisation and yuan convertibility, concerned that the city could be left behind as rival financial centres move to develop cross-border yuan financial services.

10 10

June 7, 2013 April 19, 2013

Asia Suu Kyi wants to run for president Myanmar opposition leader Aung San Suu Kyi yesterday declared her intention to run for the presidency as she sets her sights on elections due to be held in 2015. Addressing world leaders and heads of business at a major forum in the capital Naypyidaw, the Nobel Peace laureate called for the amendment of the military-drafted constitution which prevents her from leading the country. “I want to run for president and I’m quite frank about it,” the veteran democracy activist told delegates at the World Economic Forum on East Asia. “If I pretended that I didn’t want to be president I wouldn’t be honest,” she added. A major hurdle to her presidential ambitions is the current constitution, which blocks anyone whose spouses or children are overseas citizens from leading the country. Ms Suu Kyi’s two sons with her late husband Michael Aris are British and the clause is widely believed to be targeted at the Nobel laureate.

Australian regulator blocks Heinz infant food deal Australia’s competition regulator has blocked an attempted takeover of Rafferty’s Garden, an organic baby food supplier, by U.S.-based food giant H.J. Heinz Co on concerns that the deal would have reduced competition significantly. The Australian Competition and Consumer Commission said the proposed deal would have removed a strong opponent for Heinz, itself the subject of a US$23.2 billion takeover bid from Warren Buffett’s Berkshire Hathaway Inc. and Brazilian financier Jorge Paulo Lemann’s private equity firm 3G Capital. “The proposed acquisition would combine the two largest suppliers of wet and dry infant food in Australia, resulting in highly concentrated markets where barriers to entry and expansion are high,” Australian Competition and Consumer Commission chairman Rod Sims said in a statement. By blocking the deal, the regulator has served up a setback for Anacacia Capital, the company’s private equity owner, which invested in fast-growing Rafferty’s in 2010 through a management buyout.

Two Koreas ‘agree Kaesong talks’ Officials appear set to hold talks weeks after operations were suspended there

orth and South Korea agreed to hold official negotiations on reopening a jointly run industrial park, in what will be the two sides’ first government-level dialogue since the complex was shut in April. South Korea accepted the offer of talks that also include discussions on re-opening North Korea’s Mount Geumgang luxury resort, which was closed in 2008 after soldiers killed a South Korean guest. Reuniting families on both sides of the border can be discussed as well, the North’s official Korean Central News Agency said. “We hope this can be an opportunity to build trust between the North and the South,” South Korea’s Unification Ministry said in a text message, adding that the time and agenda for the talks will be announced later. The South made a similar proposal in April that was rejected. The offer is the biggest concession from Kim Jong-un’s regime since its rocket launch in December and nuclear test in February set off a succession of United Nations sanctions and threats of nuclear war. The closing of the Kaeseong

industrial park deprived the impoverished state of a source of much-needed hard currency. “North Korea has made this conciliatory gesture earlier than expected, and it seems that they are more desperate to boost the economy than anticipated,” said Jo Dong-ho, North Korean Studies professor at Ewha Womans University. China, North Korea’s biggest ally and benefactor, has pushed the totalitarian state to resume nuclear disarmament negotiations, leaving Mr Kim’s regime “no choice but to cooperate with the South to get the economy going,” Mr Jo said.

‘Responsible member’ In a speech yesterday, South Korean President Park Geun-hye called on the Mr Kim regime to abandon its isolationist path, work to build trust with the South and become a “responsible member” of the international community. North Korea characterised its overture as a “bold decision and sincere proposal,” KCNA said, quoting an unidentified spokesman for the Committee for the Peaceful Reunification of Korea.

The agreement came a day before Chinese President Xi Jinping meets President Barack Obama in California, the first such summit since Mr Xi took office in March. Mr Obama has urged China to use its influence and push North Korea to abandon its atomic weapons development, and Mr Xi last month told an envoy of Mr Kim’s to return to the negotiating table. The envoy, Choe Ryong Hae, told Chinese president on May 24

India raises duty on gold imports Government hikes tax to curb record deficit, demand

I Air New Zealand boosts stake in Virgin Australia Air New Zealand Ltd said yesterday it had boosted its stake in Virgin Australia to 23 percent and was considering buying more, but denied any plans to seize control of the discount carrier. The airline said it had purchased an additional three percent and informed Australian regulators it wanted to buy another three percent, which would take its total stake to 26 percent. “The additional interest affirms Air New Zealand’s strong belief and confidence in Virgin Australia and the strategy it is pursuing under the leadership of [Virgin chief] John Borghetti and his team,” it said in a statement. “Air New Zealand is not seeking a position on the board of Virgin Australia nor does it have the intention of obtaining control of Virgin Australia.” The Auckland-based flag carrier has a longstanding alliance with Virgin Australia to cooperate on trans-Tasman routes, where Australia’s Qantas Airways Ltd is their main rival. It said Australia’s competition watchdog had told it that public hearings would be held into the airline’s plans to increase its Virgin Australia shareholding. Virgin Group chief Richard Branson last month said he would be open to the possibility of selling his remaining stake in Virgin Australia.

ndia, the world’s largest gold buyer, increased a tax on bullion imports to curb a record current-account deficit at a time when the World Gold Council predicts an all-time high quarterly demand for the metal. The duty will rise to 8 percent from 6 percent, effective immediately, Revenue Secretary Sumit Bose said in a telephone interview yesterday in New Delhi. Before the move, India had tripled the tax since January last year. Gold imports may fall as much as 20 percent this year, the All India Gems & Jewellery Trade Federation said. The levy on platinum imports was also increased to 8 percent from 6 percent. Gold’s slump to a two-year low in April boosted demand for jewellery from Asia. Yesterday’s step is the latest by India to curb the appetite for the metal among the nation’s 1.2 billion population, for uses ranging from wedding jewellery to a hedge against consumer-price inflation. Such demand contributed to a US$32.6 billion current-account gap in the last quarter of 2012, equivalent to a record 6.7 percent of gross domestic product. “Physical demand at these sort of price levels is still very strong and the Indian government wants to curb imports,” Robin Bhar, an analyst at Societe Generale SA in London, said. “It will have an impact on demand because already we’re seeing a whole raft of restrictions announced.”

Chidambaram’s appeal Gold for immediate delivery dropped 0.7 percent to US$1,394.10

India is the world’s biggest consumer of gold

an ounce at in Mumbai, down 17 percent in dollar terms this year compared with an 11 percent drop in rupees. India’s gold imports will be 300 to 400 metric tons in the second quarter, almost half of total shipments for all of last year, the London-based World Gold Council said in a May 29 report. Inward shipments may decline by as much as 20 percent in 2013 after the increased levy, Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation, said. Gold imports aren’t sustainable and India must curtail them, Finance Minister Palaniappan Chidambaram said in a speech in Mumbai yesterday. He urged banks

to refrain from encouraging purchases of the metal and said the country’s overall economic situation isn’t very promising, with investment still weak. The government this week sold inflation-linked bonds for the first time in 15 years, to provide investors with an alternative to gold as a buffer against inflation. “The government is taking a hard line trying to curb the country’s appetite for gold,” UBS AG wrote in a report, before the announcement. “While this is unlikely to put an end to traditional gold buying in India, a more expensive gold price in rupee terms should have a negative impact on overall volumes.” Bloomberg News

11 11

June 2013 April 7, 19, 2013

Asia

Nikkei snaps back below 13,000

S. Korea’s top nuclear plant operator sacked

Main index falls 0.9 percent to two-month low

South Korea yesterday fired the head of the state-run company that oversees the country’s 23 nuclear reactors over a forged documentation scandal that has shut a host of those reactors down. Korea Hydro and Nuclear Power president Kim Kyun-seop was dismissed from his post for the scandal involving parts provided with fake safety certificates, the Ministry of Trade, Industry and Energy said in a statement. It added that An Seung-Kyoo, CEO of KEPCO Engineering and Construction, which is responsible for nuclear power plant design and technology, would also be sacked at a board meeting on today.

Kaesong is seen as a symbol of inter-Korean cooperation

his country wants to resolve its conflicts via talks. “The scheduled meeting of Obama and Xi Jinping is an important fact in understanding this gesture,” said Kim Yong-hyun, a Seoul-based professor of North Korean Studies at Dongguk University. “It once again shows that China is our key when it comes to North Korea strategies.” North Korea suspended operations indefinitely at the Kaeseong complex on April 8 at a time when it was

threatening pre-emptive nuclear strikes in response to U.S.-South Korea military drills. The complex employed more than 53,000 North Koreans working for 123 South Korean companies. Production has generated US$100 million in annual profits for North Korea and four times that for the South, according to Yang Moo-jin, a professor at the University of North Korean Studies in Seoul. AFP/Bloomberg News

apan’s Nikkei average ended below 13,000 for the first time in two months yesterday in choppy trade, extending its decline from a 5-1/2 year high hit last month to the verge of bear-market territory. Analysts said that the sour mood may persist for a while as the market is starting to price in fundamentals including corporate earnings after Prime Minister Shinzo Abe’s reflationary policy and the central bank’s aggressive monetary easing sparked the rally. The Nikkei dropped 0.9 percent to 12,904.02, its lowest close since April 5. Trading was volatile with the index rising as high as 13,238.53 earlier. Should the Nikkei fall to 12,754, or down 20 percent from the 5-1/2 year high reached on May 23, it will have entered a bear market. With the dollar trading below 100 yen, exporters took a hit. Toyota Motor Corp dropped 1.6 percent and was the second-most traded stock by turnover. Honda Motor Co shed 1.0 percent and Sony Corp shed 2.0 percent. The Topix fell 1.8 percent to 1,070.77 in moderate volume, with 4.37 billion shares changing hands, compared with last month’s daily average volume of 4.67 billion shares.

Moody’s says Thai rating not under threat Agency worried by reported high losses from rice scheme

hailand’s credit rating is not in danger of being downgraded because of its rice intervention scheme, rating agency Moody’s said yesterday, after it warned this week that losses from the scheme might threaten the goal of a balanced budget. “The rating is not under threat. If you look at the credit analysis that we published in late April, there are a lot of factors that support the rating at the current level of Baa1, and that’s also why we have a stable outlook,” Moody’s sovereign risk analyst Steffen Dyck told Reuters. Moody’s Baa1 rating is at the lower to medium end of the investment-grade scale. Mr Dyck described Thailand’s public finances as “comparatively strong” when set beside those of countries with a similar rating and said its economic growth outlook was “relatively robust”. The government has given very little information on the rice-buying programme since it started in October 2011 with the aim of helping poor farmers. On Wednesday, after the warning from Moody’s, Prime Minister Yingluck Shinawatra told her commerce minister to clarify the costs. In April, Moody’s said the outlook for Thailand’s Baa1 rating was stable, based on a “high degree of government financial strength” among other factors, although it

noted that “populist measures” were a risk to financial discipline. The government buys from farmers at prices that have made Thai rice uncompetitive on world markets, leading to growing stockpiles funded from the state budget and costing Thailand its spot as the world’s number one exporter. A newspaper report late last month put losses from the scheme in the 2011/12 harvest year at

200 billion baht (US$6.6 billion), prompting the warning from Moody’s, and a finance ministry official who has seen the figures told Reuters the losses continue to rise. “These recent losses, and any further losses from the unmodified rice-buying scheme, increase the difficulty of the government’s task of reaching its goal of a balanced budget by 2017, and are credit negative for the Thai sovereign,”

Government’s scheme has pushed up rice prices

“We are in the transition phase… The Nikkei has lost a substantial amount of points already, but a correction period will take longer,” said Masayuki Kubota, senior fund manager at Daiwa SB Investments. “It usually takes more than three months for the market to start pricing in companies’ fundamentals, and we are in the middle of the process.” The market has had a torrid time over the past two weeks, with trading characterised by violent price moves and huge drops, as investors were spooked by worries over slowing growth in China, and uncertainty over whether the U.S. Federal Reserve would roll back its stimulus this year. Analysts said that once U.S. jobs data is out today, the market will likely find a direction. Reuters

Moody’s said. Asked if the ratings agency had had any communication with the government since Monday, Mr Dyck said: “We tried to confirm these numbers with the government but weren’t able to do so.” Commerce Minister Boonsong Teriyapirom told Thai television yesterday that the 200 billion baht figure was incorrect. “I don’t know how it leaked out to the media, but what I can tell you now is that the data was wrong. The rice scheme did not cause that huge loss,” Mr Boonsong said. Officials from the ministries of commerce and finance were working on the figures now, he said. “I will hold a press conference and clarify everything to the media tomorrow.” Reuters

June 7, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

32.9

-0.9036145

32056007

CHINA UNICOM HON

2.9

-1.694915

18890698

CITIC PACIFIC

BANK OF CHINA-H

3.65

-0.5449591

471398936

BANK OF COMMUN-H

5.84

-0.8488964

17769202

BANK EAST ASIA

28.6

-2.555366

4339413

BELLE INTERNATIO

11.58

-1.530612

BOC HONG KONG HO

25.05

CATHAY PAC AIR CHEUNG KONG CHINA COAL ENE-H CHINA CONST BA-H

AIA GROUP LTD ALUMINUM CORP-H

NAME

PRICE

DAY %

Volume

10.32

-2.641509

15240595

NAME

PRICE

DAY %

Volume

67.15

-0.7390983

8.86

-0.3374578

5433116

SANDS CHINA LTD

4373544

39.9

-0.3745318

CLP HLDGS LTD

64.05

-0.6206362

5031837

8841496

SINO LAND CO

11.32

-1.736111

8010132

SUN HUNG KAI PRO

99.95

-0.249501

6204962

92.5

-1.438466

1759119

POWER ASSETS HOL

CNOOC LTD

13.44

-2.325581

54187518

COSCO PAC LTD

10.98

-1.612903

6479251

SWIRE PACIFIC-A

19301917

ESPRIT HLDGS

11.66

-1.52027

6438329

TENCENT HOLDINGS

300.2

-0.0665779

3470003

-0.5952381

19645500

HANG LUNG PROPER

26.6

-3.096539

7824736

TINGYI HLDG CO

20.15

-0.2475248

3283806

14.16

-3.804348

6845000

HANG SENG BK

120.4

-1.714286

3312142

WANT WANT CHINA

11.08

-0.8944544

13546981

105.8

7104365

HENDERSON LAND D

46.3

-3.541667

8675737

WHARF HLDG

69.2

-1.424501

7926931

4.96

-1.39165

25785232

80.55

-0.1858736

2412466

6.15

-1.125402

245665249

21.6

-1.369863

23594968

HENGAN INTL HONG KG CHINA GS

CHINA LIFE INS-H

19.78

-1.001001

27507712

CHINA MERCHANT

24.9

-0.9940358

2766226

CHINA MOBILE

79.3

-1.24533

13352275

HUTCHISON WHAMPO

CHINA OVERSEAS

22.2

-2.844639

26567671

IND & COMM BK-H

HONG KONG EXCHNG

127.6

-1.23839

5022575

HSBC HLDGS PLC

85.45

-0.6395349

16105050

80.5

-1.16636

4256998

5.3

-1.119403

314630065

LI & FUNG LTD

11.04

17893459

CHINA PETROLEU-H

7.78

-1.39417

67312383

CHINA RES ENTERP

25.35

-0.5882353

2449526

MTR CORP

29.15

-2.508361

5149063

CHINA RES LAND

23.25

-1.898734

8489674

NEW WORLD DEV

11.88

-0.8347245

19056159

CHINA RES POWER

19.28

-1.330604

8347413

PETROCHINA CO-H

8.93

-0.7777778

50915106

CHINA SHENHUA-H

25.3

-1.747573

12779797

PING AN INSURA-H

57.15

-0.9532062

8494903

PRICE

DAY %

Volume

25.85

-0.7677543

6247430

MOVERS

2 22330

INDEX 21838.43 HIGH

22320.5

LOW

21814.65

52W (H) 23944.74 (L) 18320.60938

21810

4-June

6-June

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.54

-1.392758

94848972

CHINA PACIFIC-H

AIR CHINA LTD-H

6.11

-3.015873

14890000

CHINA PETROLEU-H

7.78

-1.39417

67312383

2.9

-1.694915

18890698

CHINA RAIL CN-H

7.28

-1.886792

8349500

ANHUI CONCH-H

24.4

-0.8130081

6384475

CHINA RAIL GR-H

3.8

-1.808786

10441000

BANK OF CHINA-H

3.65

-0.5449591

471398936

CHINA SHENHUA-H

25.3

-1.747573

12779797

BANK OF COMMUN-H

5.84

-0.8488964

17769202

CHINA TELECOM-H

3.7

46631612

BYD CO LTD-H

33.5

2.446483

4679900

DONGFENG MOTOR-H

11.7

-3.305785

12016725

CHINA CITIC BK-H

4.03

-1.707317

29197543

GUANGZHOU AUTO-H

7.99

-1.358025

9452752

CHINA COAL ENE-H

4.96

-1.39165

25785232

HUANENG POWER-H

8.2

1.99005

13746722

ALUMINUM CORP-H

CHINA COM CONS-H CHINA CONST BA-H

NAME

-2.912621

21253425

IND & COMM BK-H

5.3

-1.119403

314630065

6.15

-1.125402

245665249

JIANGXI COPPER-H

15.4

-1.534527

8427249

3.29

-0.9036145

5103500

PETROCHINA CO-H

8.93

-0.7777778

50915106

19.78

-1.001001

27507712

PICC PROPERTY &

9.04

-1.202186

12705025

CHINA LONGYUAN-H

8.17

0.8713758

14533479

PING AN INSURA-H

57.15

-0.9532062

8494903

CHINA MERCH BK-H

14.36

-2.312925

23494523

SHANDONG WEIG-H

10.3

1.196107

7931082

CHINA MINSHENG-H

9.06

-2.7897

72975781

SINOPHARM-H

-1.234568

25636000

TSINGTAO BREW-H

15.92

-1.166323

5971585

WEICHAI POWER-H

CHINA COSCO HO-H CHINA LIFE INS-H

CHINA NATL BDG-H CHINA OILFIELD-H

20.85

-0.7142857

2887659

54.5

0.1838235

769182

26.55

-3.278689

NAME

PRICE

DAY %

Volume

YANZHOU COAL-H

7.69

-0.5174644

14774509

ZIJIN MINING-H

2.09

-0.9478673

32783724

ZOOMLION HEAVY-H

6.72

28067136

12.26

-2.388535

2088428

ZTE CORP-H

MOVERS

2 10580

INDEX 10361.22 HIGH

10575.47

LOW

10339.88

52W (H) 12354.22 (L) 8987.76

10330

4-June

2829235

6-June

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

Volume

PRICE

DAY %

Volume

AGRICULTURAL-A

2.72

-0.729927

70882302

CHONGQING CHAN-A

10.3

-0.6750241

22634234

PING AN INSURA-A

38.63

-1.176772

17561769

AIR CHINA LTD-A

5.22

-0.9487666

7936807

CHONGQING WATE-A

6.31

-4.96988

13987461

POLY REAL ESTA-A

11.76

-3.209877

61738815

ALUMINUM CORP-A

3.99

-1.481481

8761189

CITIC SECURITI-A

12.72

-1.242236

60923993

QINGDAO HAIER-A

12.31

-0.5654281

9908333

ANHUI CONCH-A

16.28

-1.033435

13890920

CSR CORP LTD -A

4.23

-1.398601

17019331

QINGHAI SALT-A

22.44

0.04458315

5303939

AVIC AIRCRAFT-A

11.37

-2.151463

19546211

DAQIN RAILWAY -A

6.62

-0.1508296

16806956

SAIC MOTOR-A

15.26

-1.10175

21103395

4.62

-0.6451613

10479656

SANY HEAVY INDUS

9.04

-0.2207506

22405094

13.6

-1.306241

16329821

SHANG PHARM -A

12.13

-1.221498

11659633

NAME

BANK OF BEIJIN-A

8.76

-1.240135

27156808

DATANG INTL PO-A

BANK OF CHINA-A

2.93

-0.6779661

22383375

EVERBRIG SEC -A

BANK OF COMMUN-A

4.62

-1.070664

42585800

GD MIDEA HOLDI-A

13.11

-1.797753

19645687

SHANG PUDONG-A

9.45

-2.072539

72417597

BANK OF NINGBO-A

10.25

-1.252408

9387362

GD POWER DEVEL-A

2.64

-1.123596

23502732

SHANGHAI ELECT-A

3.99

-1.724138

10070535

BAOSHAN IRON & S

4.71

-1.05042

9123329

GEMDALE CORP-A

7.35

-4.421326

55969115

SHANXI LU'AN -A

15.96

-0.7462687

9894317

BEIJING TONGRE-A

23.16

-0.7712082

3718830

GF SECURITIES-A

13.41

-2.966715

24380319

SHANXI XISHAN-A

10.28

-0.09718173

9198846

33.4

0.5115859

10534985

GREE ELECTRIC

26.14

0.5384615

9118396

SHENZEN OVERSE-A

6.19

-2.978056

38017259

CHINA AVIC ELE-A

24.82

-0.3212851

3482575

GUANGHUI ENERG-A

19.97

-2.86965

19888329

SUNING COMMERC-A

6.07

-1.620746

27337234

CHINA CITIC BK-A

4.21

-1.635514

26177145

HAINAN AIRLINE-A

4.92

-2.766798

26719361

TASLY PHARMAC-A

38.89

-2.384538

5092675

CHINA CNR CORP-A

4.46

21726242

HAITONG SECURI-A

11.7

-0.8474576

83820590

TSINGTAO BREW-A

38.74

-0.2574665

1249285

CHINA COAL ENE-A

6.42

-0.310559

5200272

HANGZHOU HIKVI-A

37.55

-0.2125963

4983219

WANHUA CHEMIC-A

16.97

-2.077323

8924079

CHINA CONST BA-A

4.75

-0.6276151

15380835

HENAN SHUAN-A

40.95

-0.8234439

4731356

WEICHAI POWER-A

22.52

0.08888889

6011889

CHINA COSCO HO-A

3.31

-0.8982036

6503359

HONG YUAN SEC-A

24.86

0.2419355

25481385

WULIANGYE YIBIN

23.59

-0.5061156

18029170

CHINA EAST AIR-A

3.02

-0.330033

6444284

HUATAI SECURIT-A

10.15

-0.8789062

22308360

YANZHOU COAL-A

14.07

-0.565371

2933394

10.39

-1.888574

22532526

YUNNAN BAIYAO-A

86.88

0.3233256

1206136 12629951

BYD CO LTD -A

-1.380671

45158456

HUAXIA BANK CO

CHINA LIFE INS-A

16.21

-1.218769

12247039

IND & COMM BK-A

4.15

-1.425178

80415570

ZHONGJIN GOLD

11.8

-0.5059022

CHINA MERCH BK-A

13.18

-1.347305

67156041

INDUSTRIAL BAN-A

17.34

-3.020134

93373144

ZIJIN MINING-A

3.03

-0.9803922

23667452

CHINA MERCHANT-A

12.75

-1.544402

15609587

INNER MONG BAO-A

27.03

-0.8437271

16859706

ZOOMLION HEAVY-A

7.16

4.069767

114514673

CHINA MERCHANT-A

27.68

-4.716007

18215305

INNER MONG YIL-A

28.58

-0.03497726

12905123

ZTE CORP-A

12.51

-1.262826

26127435

-0.990099

136585291

INNER MONGOLIA-A

4.7

-1.467505

21974451

CHINA EVERBRIG-A

CHINA MINSHENG-A

CHINA NATIONAL-A

10.76

-1.73516

39285999

JIANGSU HENGRU-A

30.6

-1.734104

4317871

CHINA OILFIELD-A

15.96

-1.784615

4494282

JIANGSU YANGHE-A

63.98

0.5184603

3736059

CHINA PACIFIC-A

18.32

-0.596853

10421788

JIANGXI COPPER-A

20.56

-1.626794

7005812

19974731

JINDUICHENG -A

10.23

-2.011494

4870683

CHINA PETROLEU-A

6.71

CHINA RAILWAY-A

4.97

-0.4008016

10071515

KANGMEI PHARMA-A

18.2

-2.985075

19597807

CHINA RAILWAY-A

2.79

-0.3571429

16826140

KWEICHOW MOUTA-A

201.66

0.2435751

3387735

CHINA SHENHUA-A

20.36

5917491

LUZHOU LAOJIAO-A

25.57

-1.955521

7403857

59982923

METALLURGICAL-A

1.98

-1

38381964

16.39

2.073226

16274785

-0.8230453

8034107

CHINA SHIPBUIL-A

4.52

3.4

-0.8746356

12596577

NARI TECHNOLOG-A

3.67

-1.871658

61707111

NINGBO PORT CO-A

2.41

3.66

-0.8130081

51170032

OFFSHORE OIL-A

7.72

-1.278772

21830910

11.49

-2.874049

67642762

PETROCHINA CO-A

8.37

-0.1066961

9589137

-1.585205

15365246

PING AN BANK-A

20.13

-3.26766

43527000

NAME

PRICE DAY %

Volume

NAME

ACER INC

23.85 -0.8316008

7862891

CHINA SOUTHERN-A CHINA STATE -A CHINA UNITED-A CHINA VANKE CO-A CHINA YANGTZE-A

7.45

MOVERS

243

12 2610

INDEX 2527.845 HIGH

2600.5

LOW

2527.84

52W (H) 2791.303 (L) 2102.135

2520

4-June

6-June

FTSE Taiwan 50 Index PRICE DAY %

Volume

FORMOSA PLASTIC

69.4 -0.2873563

6308707

TAIWAN MOBILE CO

109

0.9259259

FOXCONN TECHNOLO

78.5

-1.875

5273646

TPK HOLDING CO L

589

-1.174497

2487684

39.5 -0.5037783

15515562

TSMC

107.5

-1.826484

31681239

UNI-PRESIDENT

ADVANCED SEMICON

24.3

-3.379722

29830614

ASIA CEMENT CORP

36.6

-1.612903

5459849

FUBON FINANCIAL

ASUSTEK COMPUTER

323 -0.7680492

3735238

HON HAI PRECISIO

-1.055409

54125001

AU OPTRONICS COR

12.8

1.185771

82555393

HOTAI MOTOR CO

324

-5.813953

659797

281

CATCHER TECH

NAME

PRICE DAY %

UNITED MICROELEC

Volume 4298363

57.5

7058017

13.45

-1.824818

68990220

159

0.6329114

10252273

HTC CORP

-1.403509

8862840

WISTRON CORP

30.3

-1.141925

9913362

CATHAY FINANCIAL

38.75

-1.399491

23098947

HUA NAN FINANCIA

17 -0.5847953

4885318

YUANTA FINANCIAL

15.6 -0.6369427

16646738

CHANG HWA BANK

16.65

-1.47929

7964284

LARGAN PRECISION

982 -0.9081736

1346385

YULON MOTOR CO

50.3

CHENG SHIN RUBBE

-0.780379

9445099

LITE-ON TECHNOLO

CHIMEI INNOLUX C

18.6

-2.105263

59231486

MEDIATEK INC

CHINA DEVELOPMEN

8.51 -0.9313155

29111615

MEGA FINANCIAL H

CHINA STEEL CORP

24.8

-1.39165

28902102

CHINATRUST FINAN

366.5

0.5486968

4607819

22.9

-1.293103

21143620

NAN YA PLASTICS

58.5

-1.680672

8783536

PRESIDENT CHAIN

18.25

-1.88172

35094940

181.5

-1.891892

1287905

CHUNGHWA TELECOM

94.5

7509085

QUANTA COMPUTER

60.7

-4.409449

11590815

COMPAL ELECTRON

18.1

-1.362398

19318134

SILICONWARE PREC

34.25

-1.862464

12432359

DELTA ELECT INC

139 -0.3584229

4177575

SINOPAC FINANCIA

14.4 -0.6896552

20756976

FAR EASTERN NEW

30.95

-1.433121

6458612

SYNNEX TECH INTL

43.3

-1.366743

10446441

FAR EASTONE TELE

71.6

0.280112

2362104

TAIWAN CEMENT

37.5 -0.2659574

5964152

FIRST FINANCIAL

17.7

-1.117318

11340344

FORMOSA CHEM & F

69.5

-1.697313

5414751

TAIWAN FERTILIZE

FORMOSA PETROCHE

77.7 -0.1285347

2040150

TAIWAN GLASS IND

TAIWAN COOPERATI

0.3992016

2556940

7500799

16.95

-1.166181

8294564

76.8

-0.130039

3525360

29.25

-1.182432

901687

MOVERS

3 5700

INDEX 5584.67 HIGH

5690.79

LOW

5578.17

52W (H) 5896.71 (L) 4719.96

5570

4-June

6-June

June 7, 2013

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

Max 40.3

average 39.791

Min 39.4

40.4

60.9

40.2

60.4

40.0

59.9

39.8

59.4

39.6

58.9

39.4

Last 39.6

Max 60.9

average 59.208

Min 58.4

58.4

Last 59.4

40.3

20.5

40.1

20.3

39.9

20.1

20.3 20.1 19.9 19.7 Max 20.25

average 19.726

Min 19.54

19.5

Last 19.6

22.4 22.3 22.2

Max 40.25

average 39.960

Min 39.7

39.7

Last 39.9

Max 20.45

average 20.271

Commodities PRICE

WTI CRUDE FUTURE Jul13

DAY %

YTD %

(H) 52W

(L) 52W

94.2

0.49071901

0.53361793

100.4000015

81.5

BRENT CRUDE FUTR Jul13

103.3

0.252329193

-3.826459361

115.9300003

96.04000092

GASOLINE RBOB FUT Jul13

283.29

0.350690755

0.322260783

318.0399895

235.0999832

GAS OIL FUT (ICE) Jul13

864

-0.661109514

-5.081021697

987.5

814

NATURAL GAS FUTR Jul13

3.99

-0.274931267

12.0157215

4.499000072

3.256000042

286.34

0.280170904

-4.607389146

322.0499992

259.5000029

NY Harb ULSD Fut Jul13 METALS

Last 20.15

Gold Spot $/Oz

1399.15

0.1977

-15.9397

1796.08

1322.06

Silver Spot $/Oz

22.45

0.2895

-25.4401

35.365

20.3395

Platinum Spot $/Oz

1506.9

0.8176

-0.7149

1742.8

1374.55

Palladium Spot $/Oz

753.38

0.1768

7.678

786.5

553.75

LME ALUMINUM 3MO ($)

1972

1.336073998

-4.872165943

2200.199951

1809

LME COPPER 3MO ($)

7455

-6.001765225

8422

6762.25

LME ZINC

1963

0.0509684

-5.625

2230

1745

15210

-0.588235294

-10.84407972

18920

14561 14.79500103

3MO ($)

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

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

15.845

0.411913815

0.635122261

17.07500076

541.5

-0.138312586

-9.712380158

665

512

WHEAT FUTURE(CBT) Jul13

701.5

-11.62204724

900

664.75

SOYBEAN FUTURE Jul13

1524.5

-0.489556136

9.263572836

1605.75

1258

COFFEE 'C' FUTURE Jul13

127.15

-0.235386426

-14.97826814

202.1999969

125.0499954

NAME

16.31999969

ARISTOCRAT LEISU

70.34999847

CROWN LTD

CORN FUTURE

Dec13

SUGAR #11 (WORLD) Jul13

16.39

COTTON NO.2 FUTR Jul13

83.11

0.061050061

-16.97061803

-0.490900383

8.117601145

23.05999947 94.19999695

World Stock Markets - Indices NAME

19.9

Max 22.3

average 22.164

Min 22.05

Last 22.2

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9486 1.5447 0.9409 1.3127 99.14 7.9944 7.762 6.136 56.875 30.6 1.2477 29.799 42.09 9898 94.034 1.23507 0.8498 8.0512 10.4947 130.14 1.0299

-0.7948 0.5664 0.6483 0.4899 0.464 -0.0175 -0.0193 -0.1385 -0.2484 -0.1961 0.0561 -0.0268 -0.2305 -1.0406 1.2729 0.1627 0.0847 -0.4832 -0.5117 -0.0307 0.0097

-8.5951 -4.5067 -2.7102 -0.4776 -13.1531 -0.1401 -0.1469 1.5417 -3.3055 -0.0654 -2.1079 -2.5706 -2.5778 -1.0608 -5.0056 -2.2339 -4.0457 2.0655 0.3402 -12.7324 0

1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 57.3275 32 1.2889 30.203 43.359 9982 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.9435 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9338 77.699 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.03

-1.466993

27.9365

4.49

2.29

VOLUME CRNCY 1680529

12.27

-0.2439024

14.99531

13.75

8.12

1548926

AMAX HOLDINGS LT

0.85

-1.162791

-39.28571

1.72

0.75

556850

BOC HONG KONG HO

25.05

-0.5952381

3.941907

21.3

19645500 48000

CENTURY LEGEND

0.31

16.98114

0.42

0.215

CHEUK NANG HLDGS

5.66

-1.22164

-5.509178

6.74

2.8

10000

CHINA OVERSEAS

22.2

-2.844639

-3.896105

25.6

15.343

26567671

CHINESE ESTATES

13.28

-0.8955224

9.485876

14.12

7.975

758500

CHOW TAI FOOK JE

9.02

-3.322615

-27.49196

13.4

8.4

8091400

EMPEROR ENTERTAI

2.95

4.609929

56.08466

2.96

1.14

2865000

FUTURE BRIGHT

2.47

-3.137255

103.791

2.76

0.785

3954000

GALAXY ENTERTAIN

39.6

-3.532278

30.47776

41.8

16.98

14488178 3312142

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14960.59

-1.429415

14.1669

15542.4

12125

NASDAQ COMPOSITE INDEX

3401.477

-1.27079

12.64983

3532.038

2796.23

FTSE 100 INDEX

6422.25

0.04579931

8.892113

6875.62

5260.19

HANG SENG BK

120.4

-1.714286

1.432185

132.8

99.5

DAX INDEX

8201.23

0.06161407

7.735288

8557.86

5996.410156

HOPEWELL HLDGS

26.55

-0.5617978

-20.15038

35.3

19.267

1483800

HSBC HLDGS PLC

85.45

-0.6395349

5.104547

90.7

16105050

HUTCHISON TELE H

4.02

-3.365385

12.92135

4.66

2.98

2954000

LUK FOOK HLDGS I

18.64

-1.583949

-23.60656

30.05

14.7

1099000

MELCO INTL DEVEL

15.7

-4.848485

74.25083

18.18

5.12

8510200

NIKKEI 225

12904.02

-0.8517181

24.13465

15942.6

8328.019531

HANG SENG INDEX

21838.43

-1.045845

-3.61254

23944.74

18320.60938

CSI 300 INDEX

2527.845

-1.276841

0.1939421

2791.303

2102.135

TAIWAN TAIEX INDEX

8096.14

-1.048288

5.151505

8439.15

6922.73

MGM CHINA HOLDIN

19.6

-3.209877

47.60949

20.9

9.509

3817429

KOSPI INDEX

1959.19

-1.523993

-1.895802

2042.48

1758.99

MIDLAND HOLDINGS

3.18

-14.05406

3.15

2082000

S&P/ASX 200 INDEX

4781.172

-1.117512

2.844119

5249.6

3993.8

NEPTUNE GROUP

0.203

-1.456311

33.55264

0.23

0.084

45760000

5001.221

-0.4060648

15.85786

5251.296

3734.721

NEW WORLD DEV

11.88

-0.8347245

-1.164729

15.12

8.22

19056159

FTSE Bursa Malaysia KLCI

1768.54

-0.3313759

4.7124

1826.22

1563.62

SANDS CHINA LTD

39.9

-0.3745318

17.52577

43.7

20.65

8841496

SHUN HO RESOURCE

1.52

8.57143

1.67

1.03

NZX ALL INDEX

952.917

-0.07686258

8.033986

998.487

755.149

SHUN TAK HOLDING

4.02

-2.898551

-4.057281

4.65

2.56

5438000

PHILIPPINES ALL SHARE IX

4099.61

0.7958714

10.83082

4571.4

3294.96

SJM HOLDINGS LTD

20.15

-0.2475248

13.53611

22.382

12.818

7161721

SMARTONE TELECOM

13.26

0.4545455

-5.823863

17.38

12.5

732000

22.2

-0.2247191

5.966583

26.5

14.62

3115774

JAKARTA COMPOSITE INDEX

22.0

Currency Exchange Rates

NAME ENERGY

Min 19.96

22.1

HSBC Dragon 300 Index Singapor

626.09

-1.11

0.81

STOCK EXCH OF THAI INDEX

1503.27

-1.273429

7.998963

1649.77

1110.24

HO CHI MINH STOCK INDEX

520.9

1.216384

25.90337

526.58

372.39

ASIA ENTERTAINME

4.07

-4.460094

33.00654

5.18

2.4

198065

BALLY TECHNOLOGI

56.21

-1.644794

25.72132

57.49

41.74

445596

Laos Composite Index

1338.82

10.2118

1455.82

980.83

BOC HONG KONG HO

3.27

-1.506024

6.51466

3.6

2.74

9101

GALAXY ENTERTAIN

5.2275

-3.194444

31.67506

5.4

2.25

13990 2696020

WYNN MACAU LTD

INTL GAME TECH

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

17.13

-2.170188

20.8892

18.81

10.92

JONES LANG LASAL

88.4

-2.395937

5.313316

101.46

61.39

213453

LAS VEGAS SANDS

57.35

-1.898734

24.24177

60.54

32.6127

8307513

MELCO CROWN-ADR

22.85

-3.136922

35.68883

25.15

9.13

4015848

MGM CHINA HOLDIN

2.55

-5.904059

37.83784

2.71

1.36

300

MGM RESORTS INTE

14.52

-3.26449

24.74226

15.95

8.83

12400038

SHFL ENTERTAINME

17.52

0.8635579

20.82759

18.57

12.35

1041008

SJM HOLDINGS LTD

2.55

-4.850746

11.95917

2.9481

1.6959

5350

133.78

-2.236188

18.92613

144.99

84.4902

1120682

WYNN RESORTS LTD

AUD HKD

USD

June 7, 2013

Opinion

Politics can’t handle the truth about austerity

with a debt that is 80 percent of GDP. Fiscal consolidation when the economy is strong is as important as fiscal stimulus when it’s weak: Without the first, you can’t count on the second.

Impossible coalitions Clive Crook

Bloomberg View columnist

hat we know, or think we know, about fiscal policy five years after the global recession started isn’t all that different from what we knew, or thought we knew, back in 2008. It boils down to two points. One, fiscal stimulus is essential when conventional monetary policy is powerless. Two, fiscal stimulus may be impossible even when it’s essential. Most economists agree that changes in interest rates are usually a better way to regulate demand than discretionary changes in taxes and public spending. But interest rates can’t fall to less than zero. When that limit is reached – as it was in this recession – fiscal policy must carry a bigger load. In economies with a lot of slack, fiscal multipliers (the change in output that follows from any change in the fiscal balance) are more powerful than usual. This recession, because of its unusual depth, has supplied new evidence to back up this rule, and the U.K.’s attempt to refute the logic with “expansionary austerity” is widely seen as a failure despite some recent tentative signs of recovery. Moreover, unconventional

monetary policy, the other alternative to changes in shortterm interest rates, can’t yet be called a success. Only when the Federal Reserve and other central banks end their vast asset-purchase programmes will it be possible to render a verdict on quantitative easing as a partial substitute for fiscal stimulus. So far, it looks as though it has helped. Let’s see how the exit goes before we declare it a triumph.

countries had brought their troubles on themselves, and shouldn’t look to their EU partners for help. The right answer is plain, and has been from the start: collective EU fiscal support with conditions. The union has made gestures in that direction, but the scale of the response so far has been pitiful.

Essential options To repeat, fiscal stimulus is essential when conventional monetary policy is powerless. But fiscal stimulus isn’t always an option. Governments can’t do it if investors are unwilling to buy their debt. Greece and other European Union economies discovered this in 2010. Theirs was hardly a new experience. Europe as a whole had, and still has, unexploited fiscal capacity. It chose not to use it for both good and bad reasons. The good reasons included the desire to force governments to reform their economies in ways they wouldn’t consider unless under pressure. The bad reasons included the idea that the worst-hit

It’s silly to ask whether high public debt causes lower growth or vice versa as though it must be one or the other. Almost certainly, both are true

What about the view that governments don’t need to worry about fiscal capacity if they borrow in their own currency? A country like Greece can find itself literally unable to service its debts. The U.S. or the U.K., which borrow in their own currencies, could never be forced into that corner. They can simply print the money if need be. Or so it’s argued. Countries that borrow in their own currency can, in fact, default. Put to one side the periodic threats from the U.S. Congress to repudiate debt as an act of policy. Beyond that, countries may resort to inflation as a way to lighten their debts, and investors are aware of the possibility. A surge in bond yields that would require sudden fiscal contraction is therefore possible even for a country like the U.S. A country that borrows in foreign currency has to keep debt at levels that cause investors no concern; for the others, that’s merely very desirable. Even for the U.S., heading into the next bad recession with a ratio of debt to gross domestic product of 40 percent would be a lot better than doing so

Another finding from the past five years: Building political coalitions around that simple precept – stimulus when necessary, consolidation when possible – has proved surprisingly hard. The right has mostly argued for austerity regardless. The left has mostly played down the need for fiscal control later, arguing that as growth resumes the problem will take care of itself. This is the context that made the findings of Carmen Reinhart and Kenneth Rogoff on debt and growth so controversial. Conservatives seized on their finding that high levels of debt are correlated with lower growth, calling it proof that austerity is needed now, which is a non sequitur. Keynesians seized on an error in one of the authors’ papers and on the fact that correlation isn’t causation to imply that austerity is always dumb, also a non sequitur. A recent open letter by Reinhart and Rogoff says all that needs to be said on their position and that of their critics. The point I’d stress is that, confounding the positions of the two warring camps, the link between debt and growth almost certainly runs in both directions. The link from low growth to a high debt-to-GDP ratio is clear and immediate: In a recession, dwindling tax revenue and higher automatic outlays increase debt, and slow growth holds back GDP. The link from high debt to low growth is a bit more complicated but still pretty obvious: Higher interest rates crowd out private investment while mounting payments for debt service squeeze public investment and push up tax rates. It’s silly to ask whether high public debt causes lower growth or vice versa as though it must be one or the other. Almost certainly, both are true. This reinforces the case for fiscal consolidation as the recovery strengthens – not just to restore fiscal room for manoeuvre but also to support longer-term growth. What’s needed is fiscal strength (as conservatives stress) and the willingness to use it boldly when necessary (as Keynesians stress). This simple proposition was true in 2008 and it’s still true. It should be uncontroversial, but it seems to be more than politics can handle. Bloomberg View

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

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

June 7, 2013

Opinion

What to do when the wires invisible hand stops working Business

Leading reports from Asia’s best business newspapers

Asahi Shimbun Prime Minister Shinzo Abe announced reforms meant to bring more women into the workforce, promote industrial innovation and coax cash-hoarding corporations into investing more. Mr Abe pledged on Wednesday to raise Japanese incomes by 3 percent a year to protect consumers’ purchasing power if the government meets its target of boosting inflation to 2 percent within two years. However, investors appeared unimpressed, with the benchmark Nikkei index down 1.1 percent after the speech.

Mark Buchanan

Theoretical physicist and a Bloomberg View columnist

Korea Herald South Korea’s three investigative agencies on financial transactions and the central bank will collaborate on inquiries into alleged corporate tax evaders via investment in overseas tax havens. The move comes after a group of independent journalists revealed names of highprofile Korean businesspeople suspected of having run paper companies in offshore tax havens in an alleged move to evade taxes. The agencies have so far collected evidence related to possible tax evasion at two major family-run conglomerates, Hanwha Group and Hyosung Group.

Taipei Times Annual growth of Taiwan’s headline inflation rate last month fell to its lowest level in more than a year, mainly due to slowing growth in the food sector, the DirectorateGeneral of Budget, Accounting and Statistics said on Wednesday, adding that sluggish consumption was also a contributing factor. The consumer price index rose 0.74 percent last month compared with the same period last year and in contrast with the 1.04 percent posted in April, marking the lowest level of growth since February last year.

Times of India Indian companies are joining global firms as they rush to draw up investment plans in Myanmar, while the government is eyeing several opportunities ranging from special economic zones (SEZs) to banking ventures in the emerging economy. Telecom major Bharti Airtel has been shortlisted for submitting final bids for telecom licences in Myanmar that is planning to award two telecom licences soon.

conomists rave about the power of the market to deploy productive resources better than any central planner possibly could. A mysterious process, which Adam Smith called the “invisible hand,” guides countless individuals with conflicting aims to somehow coordinate into a remarkably effective economic organisation. Usually. But as the British economist John Maynard Keynes famously argued, markets can also fall into dysfunction. A crisis can set off a downward spiral: Spending declines, companies fail, people lose jobs, spending declines further. Much of the wonderful coordination disappears, as if the invisible hand were injured. None of this is controversial. But if you ask how best to cure an afflicted economy, you get vicious and sometimes hysterical argument, typically polarised along political lines. Should markets be left alone, because the invisible hand is self-healing and intervention can only make matters worse? Or does an economy, like a real living thing, sometimes need direct medical (or governmental) intervention? Resolving the debate is difficult, largely because we know surprisingly little about how the invisible hand actually achieves such precise economic coordination. Even more surprising, few economists over the past 30 years have been focusing on this area of ignorance.

Perfect rationality If that sounds hard to believe, consider the “stateof-the-art” mathematical models currently used by economists. They ditch all

the complexity of the real economy in favour of a peculiar scheme in which one ideal household and one ideal firm meet and optimise their behaviour with perfect rationality. Adam Smith would be mystified – I think even horrified. Such “rational expectations” models can be tweaked to back up just about any story you like, so it is little wonder that the vicious arguments over policy persist. Happily, there is hope. A few economists have been trying to go deeper by exploring the actual coordinating mechanisms of the invisible hand, how they emerge and also how they can break down. One notable example is

Recovery of an economy requires the timeconsuming rebirth of entire networks of firms

a line of research initiated about a decade ago by Robert Clower and Peter Howitt. They noted that useful economic coordination comes about over time as people interact, discovering where to find the goods they like as well as the companies they trust and find useful. Businesses get started after people learn about one another’s needs and wants. In other words, there’s a necessary and usually messy growth history behind the familiar structures – firms, shops, and other intermediaries – that provide the coordination for a functioning economy. To get a sense of how the process works, Clower and Howitt set up a computer simulation. They let lots of virtual people interact with one another, following fairly simple rules to trade among themselves while seeking their desired goods. People finding many potential trading partners for certain goods could choose to set up a specialist firm trading that good, profiting while also making it easier for others to find that good. Over time, a vast web of useful firms covering all goods emerged, without any central planning, to solve the coordination problem of getting goods to the people who wanted them. Something else happened, too: One of the goods in the economy came to be valued universally by all as a convenient medium of exchange. The market discovered money all on its own. Unlike traditional economic models, Clower and Howitt’s way of looking at an economy respects Adam Smith’s core heroic insight: that coordination emerges in a wholly natural way, from the interactions of ordinary people. It can also

offer insight into practical policy matters, including those that so interested Keynes. In recent work with Quamrul Ashraf and Boris Gershman, for example, Howitt finds an important effect of financial crisis that rational-expectations models miss: the hard-to-reverse failure of firms. The disappearance of firms destroys valuable coordinating infrastructure, making economic life more challenging for others. As other firms lose key sources of income, supplies and customers, they might also go bankrupt, furthering the destruction. Afterward, the recovery of an economy won’t be only a matter of restoring confidence, letting prices and wages adjust, or keeping interest rates low. Recovery of an economy requires the timeconsuming rebirth of entire networks of firms. Although the research doesn’t model that process explicitly, it’s pretty clear that government action could easily help, by providing individuals with unemployment benefits until they find a new job, or by intervening to keep crucial firms alive (remember the U.S. automaker bailouts of 2009). The work of Howitt and colleagues is only a beginning, but a huge step in the right direction. The unfortunate reality is that most economic theory today still rests on analyses of extremely intelligent people acting in unrealistic situations. We need to explore the way people of ordinary intelligence manage in the face of an incredibly complex world. Until we can really understand the coordination mechanisms that help us do it, policy making will remain a dark art. Bloomberg View

June 7, 2013

Closing EU tightens ban on shark finning

IMF admits mistakes on Greek bailout

The EU has agreed to tighten up an existing ban on “shark finning” – the practice of slicing off a shark’s fins at sea for sale. The ban for EU fishing crews has existed since 2003, but with special permits they were still allowed to remove the fins from shark carcasses. Ministers have now agreed with MEPs to eliminate that legal loophole. The Shark Trust campaign group says the EU exports 27 percent of the fins traded in Hong Kong. A statement from the EU Council said finning had contributed to a serious decline in shark populations.

The International Monetary Fund said that it lowered its normal standards for debt sustainability to bail out Greece and its projections for the Greek economy may have been overly optimistic. The IMF pledged about 30 billion euros (US$39 billion) to Greece at the time. The evaluation said the IMF’s assumptions for the Greek economy can “be criticised for being too optimistic”. The IMF described the programme as a “holding operation” that gave the euro area “time to build a firewall to protect other members and averted potentially severe effects on the global economy”.

Pre-sales law causing chaos, says agency The law on the sale of unfinished flats is depleting the supply, Ricacorp says Stephanie Lai

sw.lai@macaubusinessdaily.com

he law on the sale of unfinished flats, which came into force last Saturday, is already causing trouble in the housing market, Ricacorp (Macau) Properties Ltd says. The new law obliges a developer to finish the foundations of a housing block and register the project before being allowed to sell the flats in it. Ricacorp executive director Jane Liu Zee Ka says in a review of the property market that the completion of sales of unfinished flats agreed in the middle of May will have to wait for 30 days while the projects they are part of are registered. Ms Liu says the process of buying a home takes some time and that the new law has “brought some operational chaos” to purchases that straddle its coming into force. Even unfinished flats bought before the new law came into force cannot be sold until the projects they are part of are registered. “Some clients that struck deals in early May will have to wait until mid-June or even July to consolidate

Ricacorp expects the number of homes sold to fall steeply this month

the sales,” Ms Liu told Business Daily. She said her agency had recently been involved in disputes with clients that had not been fully aware of what the new law says. “The whole transaction process

was stretched, and it did bring a bit of insecurity to us trying to close the deal, as the price could be raised,” she said. “But so far we have managed to settle the disputes. None of them has

reached the courts.” Ms Liu said sales of unfinished flats had been the major driver of increases in housing prices this year. In the first quarter of this year 42 percent of the 3,583 homes sold were unfinished flats. The average price per square metre of housing of all sorts was 77,975 patacas (US$9,754), 20 percent more than in the fourth quarter of last year, but the average price per square metre of unfinished flats was 97,307 patacas, 15 percent more, official data show. Ms Liu says in her agency’s property review that a “critical fall” in the availability of unfinished flats is looming. She told Business Daily that developers had sold most of the stock of unfinished flats that they had had in hand. Most of these unfinished flats are in the Pearl Horizon project in Areia Preta. “Meanwhile re-sales of unfinished flats in high-end projects like One Penha Hill and Windsor Arch will get locked up, as they have not been registered yet, which will further deplete the available stock,” Ms Liu said. The number of homes sold in April was 1,477, or 6 percent fewer than in March, and the average price per square metre paid for them was 88,097 patacas, 3 percent less. “For May, I would think the transaction volume will further slide, by over 20 percent, and in June: a monthly 40 to 50 percent drop,” Ms Liu said. “The price will stay more or less at the same level, as the supply in the market is too limited,” she said.

EU proposals to take control of Libor Regulator maps out anti-rigging rules for inter-bank lending rate

uropean Union regulators published guidelines yesterday to stop banks rigging Libor and other market benchmarks in an interim measure before a more farreaching EU law comes in. The draft law, to be published in a few weeks, would propose shifting the supervision of Libor from London to Paris. Two British banks, Royal Bank of Scotland and Barclays Plc, and Swiss bank UBS AG, were fined a total of US$2.6 billion for rigging Libor, with other banks set to be punished for similar abuses. Libor – the London Interbank Offered Rate – is used as a basis for pricing financial products from home loans to credit cards worth over US$300 trillion globally.

“The final principles now give clarity to benchmark providers and users in the European Union about what is expected of them when engaged in this critical market activity,” said Steven Maijoor, chairman of the European Securities and Markets Authority (ESMA), the Paris-based pan-EU watchdog. The principles were drawn up with the European Banking Authority provide a framework for administrating, calculating, publishing and submitting quotes for compiling all benchmarks. Draft guidelines were published in January and yesterday’s final version also requires benchmark providers to have contingency plans if data for compiling the index dries up. Another new element is that data

used to compile a benchmark should represent the underlying asset, such as a commodity or interest rates and based on “observable transactions entered into at arm’s length.” This aims to try and satisfy regulators like Gary Gensler, head of the U.S. Commodity Futures Trading Commission, who wants Libor scrapped and replaced with a benchmark based on market transactions, a step other regulators say is not feasible in the short term. Libor is based on rates at which banks think they can borrow from each other but in the aftermath of the Lehman Brothers collapse in 2008, interbank lending froze but Libor rates were still published. Mr Maijoor said the immediate adoption of the principles will

help restore confidence in financial benchmarks and prepare the way for future legislative changes. EU financial services chief Michel Barnier will in coming weeks publish the draft law that will incorporate all the principles which were originally agreed at the global level. In an annex to the draft law, Mr Barnier will also set out a tougher regime for financial and commodities benchmarks. The draft law is expected to propose that ESMA directly regulates such benchmarks that are deemed to be of pan-EU critical importance to markets, with Libor and its continental equivalent Euribor almost certainly falling into this category. Reuters