Macau Business daily, June 1st, 2012 by Business Daily

Year I - Number 45 Friday June 1, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

Cowboy developer law passes 1st stage

Trade growth slows in April

Graff delays US$1b HK share sale

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Illustration by Rui Rasquinho

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Three strikes & out S

for Ao Man Long

ix years after he was first arrested, the third and final trial of Ao Man Long is over, with the ex-secretary for Transport and Public Works sentenced to a further six months in prison. The former official was found guilty of all nine charges of corruption and money laundering and will spend a total of 29 years behind bars, which could go up by an extra six months if he fails to pay a fine of 240,000 patacas (US$30,000). The Court of Final Appeal verdict was particularly scathing of a land concession

deal granted on Mr Ao’s watch – a plot where the La Scala housing scheme is presently being built. The government has pledged to “strictly enforce the court decision”; which could mean taking back the land from the developer. The current secretary for Transport and Public Works, Lau Si Io was dragged into the controversy. He was forced to deny suggestions he failed to ensure the La Scala land deal was ‘clean’ before making an extra land grant to the project in March 2011.

Mr Lau’s cabinet officials claimed they asked the graft watchdog about the project but received a notice that “did not include information on any criminal case”. Yet the Commission Against Corruption says its notice “explicitly stated that the plots were involved in an ongoing investigation”. The verdict also names a fourth person, the chief executive officer of Waterleau NV Group, Luc Vriens, as having bribed Mr Ao.

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HANG SENG INDEX

Govt left holding CAM baby The government may be forced to pay an extra 228.3 million patacas (US$28.5 million) toward the bailout for Macau International Airport’s operating company after the minority shareholders missed a deadline on Wednesday for recapitalising the troubled business. Only the Macau SAR which has a 55.24 percent stake in Macau International Airport Co Ltd – known as CAM – and Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau SA (STDM) with

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33.03 percent have so far come forward to pay their share of the 1.947 billion patacas needed. The remaining 11.73 percent of shares are held by a number of mainland Chinese and Macau companies and institutions, including businessman Ng Fok (about two percent) and STDM founder Mr Ho (one percent). A new deadline of June 11 has now been set for the government to decide if it wants to inject more capital.

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HSI - Movers Name

Macau’s casino trade show ‘should stay’

Waste contract tender ‘soon’ – official

Despite fears ongoing patent disputes could cause future disruption at Global Gaming Expo Asia, there seems little appetite for moving it away from Macau – a market worth 11.43 billion patacas (US$1.43 billion) in gross slot revenue last year. A straw poll by Business Daily of casino equipment suppliers got a lukewarm response to the idea of shifting the show to Singapore or elsewhere in Asia.

Macau’s waste management contract will be put out to international competitive tender “soon’ a government spokesman told Business Daily. That’s despite the fact the city’s existing contract with Macau Waste Systems Co (CSR) was renewed on Monday for a further year. Environmental Protection Bureau head Cheong Soi Kei said last year the new contract would be stricter.

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%Day

CHINA CONST BA-H

2.48

CHINA RES POWER

2.33

CITIC PACIFIC

1.87

BANK OF CHINA-H

1.70

IND & COMM BK-H

-2.74

CHINA UNICOM HON

-1.75

CHINA SHENHUA-H

-3.87

CHINA OVERSEAS

-4.25

BOC HONG KONG HO

-5.32

LI & FUNG LTD

-5.94

Source: Bloomberg

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business daily June 1, 2012

macau

Ao Man Long gets six more months Former government secretary Ao Man Long has had his day in court, and will get to spend more time behind bars Vítor Quintã

vitorquinta@macaubusinessdaily.com

KEY POINTS Ao is convicted of six counts of passive corruption and three of money laundering Term in prison extended to 29 years Must pay a fine of 240,000 patacas or stay in prison for an extra six months Ao Man Long arrives for the final hearing in his third trial

he Court of Final Appeal sentenced former secretary for transport and public works Ao Man Long to six months in prison yesterday for passive corruption and money laundering. Mr Ao had already been imprisoned for other crimes, and the latest sentence will run consecutively, meaning he will spend a total of 29 years behind bars. The court ordered Mr Ao to pay a fine of 240,000 patacas (US$30,000) or spend an extra six months in prison. Mr Ao told the court his financial situation was bad and that he had

no money to pay the fines the courts had previously imposed. The Commission Against Corruption announced in September 2009 that it had recovered over HK$350 million in bribe money from accounts that Mr Ao held in Hong Kong banks. The latest conviction entails the forfeiture by Mr Ao of 31.9 million patacas and his 20 percent stake in Waterleau Macau Ltda. In what was his third trial since he was first arrested in 2006, Mr Ao faced six charges of passive corruption and three of money laundering.

The judges found him guilty of all counts. Presiding judge Sam Hou Fai said Mr Ao “requested benefits in return for actions he should not have undertaken as a public official” and “breached the duties his position entailed”. The judgement says various companies “obviously” got public contracts at the Zhuhai-Macau Cross-Border Industrial Park and the Coloane waste water treatment plant, and the grant of the land where the La Scala housing development is being built only after Mr Ao’s “interference”.

Govt may take back La Scala plot With the La Scala plot firmly linked to corruption, the government promises to reflect on whether it should be taken back

he government has pledged to “strictly enforce the court decision” that links the concession of the La Scala plot to an act of corruption, increasing the possibility of it taking back the land from the developer. The staff of the secretary for transport and public works said in a written statement that they will “conduct an in-depth analysis of the verdict” delivered by the Court of Final Appeal yesterday. They promised to “follow-up and handle the case according to

legally established criteria” and release “any related information in due time”. Speaking to journalists yesterday, the secretary for transport and public works, Lau Si Io, warned that to review the concession would “take some time”. He said this month that 16 deals called into question by Ao Man Long’s first two graft trials had been revoked. One of those deals, a land swap with businessman Pedro Chiang, was revoked before Mr Chiang was

sentenced for corruption. Mr Lau’s staff also denied that he had lied to the Legislative Assembly about trying to find out whether the La Scala plot was associated with any corruption cases before granting the housing project extra land in March 2011. They said Moon Ocean, a subsidiary of Chinese Estates Holdings, had asked for a revision of the contract in April 2007. A public hearing on the revision, which nearly doubled the project’s construction area, was

It says Mr Ao rigged public tenders and broke the law in directly granting contracts, thus “damaging the public interest” in return for “extremely large amounts of money”. Judge Sam said Mr Ao had used tortuous means to try to launder the money, but that in the end he had involuntarily helped the judges when he had “recorded everything in great detail” in his notebooks. The court rejected Mr Ao’s “farfetched thesis” that the money transferred to bank accounts he controlled was payment for consultancy services, pointing out

held in June 2009. The government later heard “rumours” that the original concession of 2006 “might have involved criminal actions” and it received an anonymous letter saying so in late July 2009. Mr Lau’s staff said they had written to the Commission Against Corruption asking it for further information “after a few months”. They received a notice from the commission in December 2009 “which did not include information on any criminal case”. “The Administration could not suspend or reject the concessionaire’s request simply based on an anonymous letter or rumours.” But the watchdog has refuted this claim, saying it sent a notice on November 30, 2009, “explicitly stating that the plots were involved in an ongoing investigation”. On July 2011 the commission opened

June 1, 2012 business daily | 3

Court accuses Waterleau CEO

the lack of evidence of such services. Judge Sam emphasised the “predatory and insatiable nature” of Mr Ao, who had neither confessed to any of the 90 charges he had faced in his three trials “nor displayed any regret over his actions”. The impact of the former official’s behaviour “was and remains heavy on the image of the main public officials,” the verdict says. The huge amount of money forfeited by Mr Ao and “whose source was not identified … indicates that the defendant committed many more corruption crimes than those” who were already tried, the sentence adds.

a probe into the tender procedures and obtained documents from the Macau International Airport that are still being analysed.

Legal criticism The decision to uphold the tender that granted the La Scala plot to Moon Ocean had been legally wrong, said presiding judge Sam Hou Fai, who was particularly critical of the government officials involved. The tender was close to being cancelled because all three invited contestants filed joint bids, which the tender programme did not permit. But the tender moved on, with legal adviser António Baguinho invoking the ’procedural efficiency principle’. “This principle could not have been applied in any way,” Judge Sam said. The tender adjudication could only

he chief executive of Waterleau NV Group, Luc Vriens, was accused of bribing Ao Man Long to get contracts for the wastewater treatment plants at Coloane and the Zhuhai-Macau Cross-Border Industrial Park. The judgement in Mr Ao’s third trial on charges of corruption and money laundering, read out in the Court of Final Appeal yesterday, says Mr Vriens paid a bribe of about HK$7 million (US$900,000). Business Daily’s attempts to get a comment from the Belgian company drew no response. The judgement also named two Hong Kong businessmen, Joseph Lau Luen Hung and Steven Lo Kit Sing, and Chan Ying Lun, a Hong Kong executive of China Overseas Civil Engineering Ltd, a subsidiary of China Civil Engineering Construction Co Ltd. The three have already been accused in a case involving Mr Ao, a former secretary for transport and public works, that will be tried in a lower court. The four businessmen were named as witnesses in the appellate court but only Mr Lo showed up. He said the HK$20 million bribe was an advance payment requested by the head of contractor San Meng Fai, Ho Meng Fai, who was sentenced for corruption in a related case and remains at large. But the judgement rejects this and says the money was transferred in October 2006 to Ecoline, an offshore company Mr Ao controlled, when the tender process for the plot where La Scala is being built was being concluded. “San Meng Fai only began working for [La Scala developer] Chinese Estates (Holdings) in 2006 and received the money according to the evolution of the works on site,” presiding judge Sam Hou Fai said. V.Q.

Trade growth slows again in April The expansion of external trade slowed in April for the second consecutive month, with imports still growing faster than exports Vítor Quintã

vitorquinta@macaubusinessdaily.com

xternal trade increased in April but the pace of growth dropped for the second month in a row as textiles exports and imports of tobacco and food tumbled year-on-year. The value of trade was 6.4 billion patacas (US$800 million) in April, up by 19 percent year-on-year, having grown by 25 percent yearon-year in March. The main reason was a slowdown in imports, growth in which slowed from 26.2 percent to 20.5 percent in April. They were worth 5.8 billion patacas. Tobacco imports fell by 33.9 percent to 39.9 million patacas after the government banned smoking indoors and raised the tax on cigarettes. Imports of food and drink fell by 1.4 percent in April to 680.5 million patacas. Exports did not help, either. At 642.7 million patacas, their growth slowed from 15.8 percent to 12.6 percent in April. Re-exports, which rose by 15.2 percent, extended their lead over domestic exports, which rose by 7.1 percent. Nonetheless, for the first time in

four years, outbound shipments increased for the third consecutive month. Hong Kong is still the city’s main market, taking 259.7 million patacas worth, but the biggest growth came in exports to Italy, which increased more than tenfold. The once dominant textiles and garment manufacturing industry continues to fade and its exports fell by more than a quarter to just 87.7 million patacas. On the other hand, exports of machinery more than doubled yearon-year to 121.1 million patacas. With imports growing faster than exports, the trade deficit amounted to 5.14 billion patacas, the highest figure for any April. The deficit for the first four months of this year reached 20.5 billion patacas. Mainland China strengthened its position as the city’s main supplier, being the source of imports worth 1.9 billion patacas, up by 29.3 percent, followed by the European Union, which shipped 1.3 billion worth of goods. Imports from Hong Kong dropped by 7.2 percent to 567.6 million patacas.

MOP20.5 billion

MOP642.7 million

Trade deficit from January to April

Value of exports in April

be enforced “if it followed the path that ‘good law’ would impose”. The judge said the tender procedures had been rigged and the legal rules applied had been “subverted”. In a court hearing last month, Infrastructure Development Bureau official André Sales Ritchie said the decision to uphold the tender had been “an immediate call” by the evaluation committee alone. But the judgement rejected this claims and stated that “it was only due to the intervention of [Mr] Ao” that Moon Ocean won the plot and that the decision to invoke the ‘procedural efficiency principle’ was also the result of “the influence of the defendant”. The verdict also states that Jones Lang La Salle, who filed a bid on behalf of Moon Ocean, had access to information that allowed it to start preparing its bid “several months” before its rivals. V.Q.

Photo by Manuel Cardoso

MACAU

Macau imports grew 20.5 percent in April, down from 26.2 percent a year earlier

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business daily June 1, 2012

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HOSPITALITY Labour shortage, continued The hospitality sector is one of the cornerstones of the local economy. Besides the revenue it generates, directly and indirectly, it has the additional characteristic of being a labour-intensive activity. Its contribution for employment, relevant in all ranges of worker’s qualifications, cannot be over-emphasised. At the end March, it represented just over a quarter of the total employment in the region. The Statistical and Census Department has just published its bi-annual survey on the labour needs of the sector. It has been a sector subject to chronic shortage of labour. The latest data, although less dramatic than in previous survey, confirm that fact. In the first quarter, the number of vacancies amounted to nine percent of the sectors’ workforce. The shortage was particularly acute in the restaurants and similar activities, where that figure reached over 15 percent of the corresponding workforce.

Govt to take CAM off the ropes, raise stake The indifference of other shareholders may compel the government to increase its stake in the airport company Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

Minor private shareholders have shown no interest in acquiring CAM’s new shares

Compared with half year before, there was an improvement. But the absolute number of ‘missing’ workers is bigger than it was one year ago, in the homologous period. And that touches activities, restaurants and hotels. The additional worrying, bearing in mind the political framework, is caused by the knowledge that this shortage is unlikely to be overcome without significant inflows of non-resident workers – even though this is a sector that can accommodate a significant number of workers with low qualifications.

The pie shows that almost a third of the required workers can be considered unskilled. They require no specific qualifications or a primary education at most, and will include mainly cleaning and maintenance jobs. Less than 10 percent will require higher education. A big difficulty in hiring more locally may be related to the language skills. The openings require fluency in Mandarin or English, in 60 and 42 percent of the cases, respectively. J.I.D.

he lack of response from minor private shareholders is likely to force the government to raise its stake in Macau International Airport Co Ltd (CAM). By May 30, the deadline for subscribing to the new shares, only the government and Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau SA (STDM) had joined the effort to inject almost 2 billion patacas in capital. CAM is the public concessionaire of Macau International Airport. “[The] MSAR [government] has already subscribed 55.24 percent and STDM 33.03 percent of the 1.947 billion patacas (US$244 million) new capital,” a CAM spokesperson told Business Daily. None of the other private stakeholders has taken up the offer of shares, CAM confirmed in an e-mailed statement. The remaining shares are held by a number of mainland Chinese and Macau businesses and institutions, including businessman Ng Fok (about 2 percent) and STDM founder Mr Ho (1 percent). Matters will now move to a second stage where the government will decide on whether it will subscribe to the remaining 11.73 percent. The Civil Aviation Authority said last month the government would acquire 67 percent of the shares if the other shareholders failed to acquire them. “The new deadline for the second

stock before approving the 2 billion pataca injection. Since the minor stakeholders have shown no interest in putting more money into the airport company, the government is likely to increase its stake in CAM by acquiring the remaining 11.73 percent of issued shares. This will increase the government stake to about 60 percent from 55.24 percent. The move was recently criticised by legislator Chan Meng Kam, who said CAM would have debts “of close to 2 billion patacas” even after the capital injection. “The development of Macau’s airport has been limited by the company’s debts,” Mr Chan wrote in an enquiry to the government this week. The legislator said the airport’s development plan could face “a slow death” if the company continued to post losses due to the decrease in the number of passengers and cargo since 2008.

Deadline looms

11.73%

The proportion of the new shares being issued by CAM that had not been subscribed to by May 30

subscription will be June 11, 2012, for the MSAR to decide whether to subscribe to the remaining new shares,” the airport company said. The aviation regulator was not immediately available for comment.

Raising stake The decision to issue non-voting, redeemable preference shares was made in mid-May to cover CAM’s short-term cash needs. After losses in 2011, the company’s net equity fell to about 3 billion patacas. Cumulative losses had eaten up 1 billion patacas of the company’s initial capital. In a meeting last month, shareholders decided to reduce the

But the company insists the move will help it move forward with its development plans. “CAM is now in the process of capital increase and debt repayment, in the hope [of reducing] the historical burden, so as to move forward with ease,” the company’s spokesperson said. The cash proceeds from the share issue “will be used to repay bank loans deriving from the financing needs of the airport infrastructure in its early stage of construction,” CAM said in mid-May. The company has to repay this month the syndicated loan of 2 billion patacas that it got in 1994 for the construction of the airport. “Since then, CAM has not had the capability to repay the loans. The deadline of the repayment is June 2012,” the aviation authority said last month. The government is a guarantor to the loan. The company has never managed to generate enough funds to pay it back. The financial difficulties of the company have been apparent for several years and its performance has been marred by dubious management decisions. Big investments in new facilities like new hangars for cargo when traffic was already declining, and the disposal of assets such as the large strip of land next to the airport have not helped shore up the fortunes of the company.

June 1, 2012 business daily | 5

MACAU

Lukewarm support for G2E Asia city switch But casino suppliers fear trend in generic patents Associate Editor

straw poll by Business Daily of casino equipment suppliers that exhibited at this year’s Global Gaming Expo Asia got a mixed response to the idea of moving next year’s show to Singapore or another destination in Asia. The very idea of moving Asia’s biggest trade show for slot machines, electronic table games and game management systems away from the world’s single biggest jurisdiction by gross gambling revenue would have seemed unthinkable just a fortnight ago. The reason it has become an active topic of discussion within the industry is that a running patent dispute between a Macau and a U.S.-based company that flared up during G2E Asia 2012 is threatening to turn into a bigger problem. That’s whether Macau should be an open market for casino equipment and services, or whether it should be a more limited market with preference given to local suppliers. There’s already disquiet among casino equipment suppliers that Macau seems willing to register patents for intellectual property that would be considered generic in many other markets. Some industry sources consider the ‘Trojan horse’ in this process is LT Game’s multi-game patent for Macau. It was at the centre of drama on the floor of G2E Asia for the third year running. The specifics of the dispute concern U.S.-based Shuffle Master’s Rapid electronic multi-game product. LT Game claims it has a Macau patent for multi-game products. Shuffle Master disputes LT Game’s patent and says it has already won several court cases in Macau to that effect.

Generic product Several companies have told Business Daily privately that they consider the multi-game concept as generic and therefore not capable of being granted a patent in most jurisdictions. They worry that if the principle of generic patents is allowed to persist in Macau it could lead to further registrations by local firms that could in effect strangle the international trade in casino equipment within the Macau trade show and possibly in the Macau casino market. Herman Van Lishout, international sales manager of DLV, a Latviabased slot machine manufacturer that attends G2E Asia, wrote an open letter to Brett DeWeese, director, international sales at Reed Exhibitions, after this year’s event raising the generic patent point. “What if some company in Macau makes a patent on slots with multi-game? Then we cannot show our products at all,” said Mr Van Lishout in his message. There’s a lot at stake as Macau’s slots and electronic gaming market – although under five percent of total revenue – was worth 11.43 billion patacas (US$1.43 billion) in gross revenue last year. In a further twist this week, Macau’s customs service sent a report to the Public Prosecutor’s office accusing Shuffle Master of “disobeying” an order to keep the

G2E Asia – going nowhere venue-wise

Rapid product covered during the event. Shuffle Master says it had a Macau court order allowing it to show the product. And the LT Game-Shuffle Master spat has spread. Alfastreet Gaming Instruments of Slovenia – a maker of multi-game and multi-terminal electronic gaming tables – pulled its own multi-game product from this year’s show after being warned by LT Game it could otherwise face legal action. Alfastreet now says it may boycott the show next year and instead use the 100,000 euros it says it spends on attending, by going to see its Asian customers individually. Some manufacturers fear if a few more ‘marquee’ names in the supplier world decided to pull out of the Macau show, it could have a domino effect and leave the show without the necessary pulling power to bring in casino managers from across the region.

Marquee names As one industry source reiterated to Business Daily this week: “Smaller suppliers live on the crumbs left by the big companies. If a few of the big companies decided not to show their products in Macau it would be a disaster.” “There’s no question that if every year we come here and there’s going to be this kind of confusion, then we could move the show ,” Frank Fahrenkopf, president and CEO of the American Gaming Association, one of the organisers of G2E Asia told Business Daily last week. AGA’s co-organiser Reed Exhibitions says it is currently preparing a letter to the Macau authorities about the patent row. But despite the discontent bubbling beneath the surface in the supplier industry, there seems to be only modest enthusiasm for moving the

show away from Macau. One supplier told us: “Moving the show doesn’t address the issue of how to keep Macau as an open market for casino equipment. It doesn’t address the issue of the equipment market becoming politicised in the same way that the casino approvals already are. If anything moving the show would probably make it

KEY POINTS Industry lukewarm on moving G2E Asia from Macau Fears of trend in generic Macau patents Supplier sends open letter to Reed Exhibitions citing concerns Reed still drafting letter to Macau authorities on LT Game dispute

harder for international suppliers to sell in Macau.” “Singapore is a 5,000-machine market not yet in its replacement cycle, shared between two casinos and with no indication that any more casino licences will be issued. Macau is currently a 16,000-machine market with at least three new properties opening on Cotai in the next three years. It

simply doesn’t make sense to move G2E Asia to Singapore,” another supplier said.

Early years Another contributor added: “Back in 2005 when the Macau show was at Macau Tower and run by Ross Ferrar of the Australasian Gaming Machine Manufacturers’ Association, there was a plan to move the show around Asia each year. The first of those new venues was going to be the Philippines. But people in the industry said: ‘That’s crazy; Macau is just about to explode [as a slot market].’ So they kept it in Macau. Then in 2006 AGMMA sold the Asian Gaming Expo to the American Gaming Association and Reed Exhibitions and it’s been in Macau ever since as G2E Asia.” But one large supplier told Business Daily: “I wouldn’t be sorry to see the show move to Singapore or elsewhere. The visitor numbers on the exhibition floor at G2E Asia this year were well down on previous years. And not many operators came to look at the products.” A further contributor said: “Part of the problem is that very few products get their global launch during G2E Asia. That means there isn’t as much incentive for the local slot managers to come and look at the products.” But yet another source spoken to by Business Daily said changes in the business dynamics of the Asian slot and electronic gaming table markets had made G2E Asia less relevant than previously. “Most slot manufacturers are now offering Asian casino operators free trials in order to get on the floor. That means the operators are spoilt for choice regarding product. It’s not so important for them to come down to the show and study the product.”

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business daily June 1, 2012

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Flow-through area The publication on Wednesday of the figures for gross domestic product in the first quarter included a somewhat surprising result: the apparent recovery in goods exports, which rose by about 20 percent year-on-year. Could it be the case that the manufacturing sector, which has heard its death predicted so many times, is making a comeback? Yesterday’s publication of the figures for external trade in goods helps us to delve a bit deeper, with the help of the data for another month, April.

Exports of goods January to April , 106 mop

Open global tender rules for Macau’s solid waste management contract are almost ready as CSR gets a year’s extension

2000 1750 1500 1250 1000 750 500

2010

2011

2012

250 0

Re-exports

Exports, select sectors January to April , 106 mop

800 700 600 500 400 300 200 100

Telecom& Sound eqt.

Elect. Machines &Tools

The solid waste management contract has been extended for a year but an international tender is coming, the authorities pledge

Domestic

The publication on Wednesday of the figures for gross domestic product in the first quarter included a somewhat surprising result: the apparent recovery in goods exports, which rose by about 20 percent year-on-year. Could it be the case that the manufacturing sector, which has heard its death predicted so many times, is making a comeback? Yesterday’s publication of the figures for external trade in goods helps us to delve a bit deeper, with the help of the data for another month, April.

Transportation eqt.

Waste tender to open ‘soon’

Farmaceuticals

2011

Non-metalic works

2012

Of the categories of exports that are growing, the five biggest are shown in the table. They account for just under half of total exports. In 2011 they accounted for less than 30 percent. And they do not include the fastest-growing but smaller categories of exports: electric motors and generators, which increased 866fold, and rubber, which increased 137-fold. Altogether, exports in the five categories shown here doubled from one year to the other. The goods in these categories are not the traditional exports for Macau. But they do not really indicate a renewal of the city’s manufacturing base. They do suggest, however, that the city’s usefulness as an entrepot is undiminished. J.I.D.

Vítor Quintã

vitorquinta@macaubusinessdaily.com

n international public tender for the solid waste management concession will be launched soon, the Environmental Protection Bureau told Business Daily, even though the contract with Macau Waste Systems Co (CSR) has been renewed for one more year. The bureau said in March the drafting of documents for the tender was in a preliminary phase. “[We] must be more cautious in analysing the existing contractual provisions and planning for each detail of the service,” it said. Work on these details is “almost finished” now and bids will be invited “soon”. However, no schedule for the tender, originally scheduled for March, has been announced. “The [solid waste management] service has a positive impact on the city’s image,” the bureau said. “Therefore, we pay great importance to the provisions of the new tender, assuring improvement in hygiene and garbage disposal service.” The requirements of the new tender are being tweaked after the authorities “gathered opinions and professional suggestions” in a series of consultations. The government extended the original contract with CSR until the end of March 2013, the bureau confirmed.

A chief executive’s dispatch published in the Official Gazette on May 28 said the contract for the collection and disposal of solid waste was worth 138 million patacas (US$17.3 million). The government had extended in September 2011 the 80.6 million pataca contract with the company until March 2012 and pledged to launch a public tender open to outside bidders.

Recycling focus Environmental Protection Bureau head Cheong Soi Kei said last September the new contract would be stricter, especially on selective collection of recyclable materials. The bureau reiterates now that “reducing source waste, recycling resources” will be the new target for waste management in the future.

The government extended the original contract with CSR until the end of March 2013 CSR collects all recyclable waste except glass thrice week on vehicles bought for the specific purpose, the Civic and Municipal Affairs Bureau said.

The company even picks up sorted waste from some of the 214 sorting sites daily. The waste is taken to Ilha Verde, where the sorting is doublechecked, and then compressed into one-cubic-metre blocks. These blocks are then taken to Coloane’s deep-water harbour in Ka Hó and shipped to mainland China. The amount of recyclable waste sent across the border increased by 56 percent last year, yet amounted to just 535 tonnes. In 2011, CSR collected about 264,000 tones of solid waste from households and businesses. The bureau played down the figures and said it had been promoting recycling and had organised waste recycling projects with other bureaus: the domestic waste recycling project had been jointly organised with the Housing Bureau. Recyclable waste containers have been installed at the Border Gate customs post. Another project has been looking at improving the disposal of “food scraps”, the bureau said. CSR is a joint venture of Hong Kong’s Swire SITA Waste Services Ltd and Macau company H. Nolasco. Company director Frederico Marques Nolasco da Silva and two former directors of Macau Waste Systems have been imprisoned for bribing Ao Man Long, the secretary for transport and public works at the time, to secure contracts. with Kristy Chan

Weather Beijing 28/17o C Changchun 26/13o C

Harbin 26/14o C

Xian 19/12o C Shanghai 24/18o C Chengdu 24/16o C Kunming 23/17o C Haikou 30/24o C Sanya 32/26o C

Guangzhou 32/24o C

MACAU (28 May-02 June) Day

Temperature

Humidity

05/28

24/27o C

80/95 %

05/29

24/27o C

80/95 %

05/30

24/28o C

75/90 %

05/31

23/30o C

65/95 %

06/01

24/31o C

65/90 %

06/02

24/31o C

65/90 %

Shenzhen 30/23o C

ASIA (today)

Hong Kong 28/24o C

Manila

TOKYO

Jakarta

34/26o C

31/24o C

23/17o C

32/25o C

Macau 29/24o C

Bangkok

SEOUL

K. lumpur

34/27 C o

SINGAPORE

28/18 C o

33/25 C o

taipei

29/22o C

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MACAU

Top mainland banker nabbed for gambling client’s money A senior executive of Agricultural Bank of China is alleged to have been involved in illegal gambling in Macau

top banker at one of the mainland’s four main statecontrolled banks has been detained for allegedly gambling with a client’s money in Macau casinos. Yang Kun, executive vice-president of Agricultural Bank of China Ltd, was detained by the Communist Party’s internal anti-corruption arm earlier this week, according to the South China Morning Post. The Central Commission for Discipline Inspection launched the probe after receiving complaints over illegal gaming activities in Macau. A source told the Hong Kong newspaper that Mr Yang visited the city several times with a group of business friends and lost large sums of money in casinos. Another source said the investigation found that Mr Yang allegedly misused money from a bank client’s account to finance his gaming spree. A 2009 study based on official Chinese media reports found that 57 percent

Yang Kun was detained in Beijing some days ago

of Chinese high-stakes gamblers in Macau were either government officials or senior managers in staterun companies. On average, these officials and managers each lost US$3.3 million (26.4 million patacas) – nearly all of it public money. The Macau authorities were not available for comment. There is no information yet on how much money the executive allegedly misused but a source said: “It must be a big case, involving big money, given the high level of Yang’s position and the quick action taken by the government.” The executive’s detention was first reported on Wednesday by Caixin. com. The mainland financial news website said Mr Yang was banned from travelling abroad about three weeks ago and was detained last week. In a filing with the Hong Kong stock exchange late on Wednesday, Agricultural Bank of China said: “Mr Yang is currently assisting relevant mainland authorities in connection with certain investigations.” The company has a stock market value of US$137 billion and reported a first-quarter net profit of 43.45 billion yuan (US$6.8 billion). “The bank’s business, operations and financial status have not been affected,” the bank said. It pledged to keep an eye on the case. “The bank will follow the development of this incident and will make further announcement as and when

Green is the way to go Companies will benefit from mainland spending on protecting the environment Kristy Chan

kristyc@macaubusinessdaily.com

here is huge potential for buildings to cut down on operating and maintenance costs by implementing green strategies, according to a French engineering company exploring the Greater China market. Even with growth in the mainland Chinese economy set to slow this year to about 8.2 percent, Terao Green building engineering company sees “great potential” in the mainland market, on the back of a huge stimulus for more environment-friendly buildings. Much of the central government’s investment is dedicated to green projects. Beijing’s 12th Five-Year Plan, unveiled by the State Council, earmarks about 3.4 trillion yuan (4.15 trillion patacas) for environment protection. About 1.5 trillion yuan is to be spent on pollution reduction from 2011 to 2015. Investment in green buildings will be encouraged. “Investors are interested after the central government’s decision in the 12th Five-Year Plan,” Terao

Green civil engineer Valentin Grimaud told Business Daily. Mr Grimaud, who attended the France-Macau Business Association (FMBA) meeting yesterday, said the trend was not exclusive to the mainland: green solutions were finding increased favour in Greater China and other parts of the world. Companies and mainland local authorities would be mainly responsible for the investment, while the central government would give support where needed, the State Council said in its blueprint for pollution reduction. Terao offers consulting services that comply with the mainland’s national standards. It also does integrated design and indoor air quality auditing and finds ways to save energy. The company has expanded to cover hotels, offices, factories and municipal buildings in Beijing and Shanghai. Mr Grimaud forecasts an investment “explosion” in green technologies and solutions, as the mainland authorities work on improving living standards.

appropriate,” it said. Agricultural Bank of China’s Hong Kong-listed stock closed slightly higher yesterday at HK$3.14, after falling by 4 percent the day before. This is the most conspicuous case since state-owned banks first went public in 2005 and it comes just days after the Communist Party promised to boost measures to make sure government officials did not flee the country or transfer money abroad. The Central Disciplinary Inspection Commission will set up a “flight-

prevention coordinating mechanism” for every province and enhance “passport management” measures, according to a statement posted on the party website on May 24 that cited Gan Yisheng, vice-secretary of the commission. The government has “prevented a batch of officials from fleeing the country” through a foreign travel-registration system and supervision of crossborder fund transfers, according to the statement, which did not furnish details. V.Q.

8 |

business daily June 1, 2012

macau

Unfinished flats bill passes first reading Draft law on sales of unfinished flats wins legislator support after heated debate

Implementation worries Other legislators are also concerned about the manpower needed to

Photo by Manuel Cardoso

egislators are worried about the enforcement of the future law on unfinished flats but the draft bill still passed first reading yesterday. 25 out of 26 legislators gave the green light to the proposal while José Pereira Coutinho abstained from voting. Mr Pereira Coutinho said the government did not consult the Consumer Councils before coming up with the provisions. The new law restricts developers from selling uncompleted flats unless they have met certain conditions, including finishing the foundations and basement. But the legislator believes these criteria seem arbitrary. “Why not require 70 or 80 percent of the building completed before it can be sold?” he asked. If the conditions as currently defined are met, the developer will be allowed to sell after obtaining a sales permit from the Land, Public Works and Transport Bureau. However, Ung Choi Kun, a legislator and president of the Association of Property Agents and Realty Developers of Macau, stressed that the law has no clear timeframe for the permit to be issued. If the sale happens before the permit is issued, the developer will be fined and the contract will be invalid.

A draft bill being discussed at the legislature could for the first time introduce rules on unfinished flats

enforce the law, as more civil servants will be required if the new system is to be enforced. “The original intention is good but the actual outcome might be bad as it requires a lot of cooperation from so many different parties,” Mr Ung suggested. The secretary for Transport and Public Works, Lau Si Io, replied that the bureau would have “to balance the interests of all concerned parties”.

The draft law aims to better protect consumers from buying from financially troubled or misleading property developers. If passed, it will provide a comprehensive regulatory framework on new property transactions; something Macau currently lacks. The bill also proposes a mandatory registration system. Under it, a sale must be registered within 30 days of the deed or else three times the amount of the processing fees will

have to be paid. If the buyer doesn’t honour the payment side of the contract, the developer can resort to legal means to cancel the title. Property agents will also be regulated under the new framework. The law will require them to prepare a document that specifies the property under negotiation, its price, any discounts applicable; as well as the commission rates. X.C.

Political reform vote next week The Legislative Assembly could approve the political reform bill on June 5 or 6

he Legislative Assembly is likely vote on the government-backed political reforms next week, after the assembly’s second standing committee finished discussing them yesterday. “Overall it was a smooth process except for an individual opposing voice,” committee president Chan Chak Mo told journalists after the closed-door meeting. It was confirmed later to the news media that the only opposition was from pan-democrat legislator Ng Kuok Cheong, who questioned the integrity of the public consultation process. The pan-democrat tried to have his opposition recorded in the report but the other members of the committee rejected this. Legislators will have a final

vote on the reforms in early June, perhaps on June 5 or 6, according to Mr Chan. The vote will be scheduled by the assembly president, Lau Cheok Va. If the reforms are approved by two-thirds of the 29 legislators, they will be sent to Chief Executive Fernando Chui Sai On for approval. In the last step, Mr Chui will present the reforms to the next bimonthly meeting of the National People’s Congress Standing Committee for a final decision. The reforms, once approved, will add two directly elected and two indirectly elected seats to the assembly and expand the committee that elects the chief executive to 400 members from 300. The committee report stresses that the final decision on changing the composition of the electoral committee and the assembly lies with Beijing. The government does not have the right to change the political system on its own or without following the Basic Law as interpreted by the National People’s Congress, the report says. X.C.

June 1, 2012 business daily | 9

GREATER CHINA

Graff pulls Hong Kong IPO Europe’s debt turmoil drives first-time stock sales to the lowest level since the collapse of Lehman Brothers Holdings Inc

ondon luxury jeweller Graff Diamonds has pulled its planned US$1 billion Hong Kong initial public offering, the fourth major IPO to be called off in Asia this week, as tumbling stock markets threaten to claim yet more casualties in the region. Graff had been due to price its IPO today, putting it on the verge of becoming Asia’s biggest completed flotation so far this year, but investors baulked at the issue amid market-wide fears over the euro zone crisis and China’s economic slowdown. Graff was offering as many as 311.2 million shares at HK$25 (US$3.22) to HK$37 apiece, according to a sales prospectus. “Consistently declining stock markets proved to be a significant barrier to executing the transaction at this time,” Graff said in a statement. Graff was due to list next week. Graff directly owns 18 stores globally and plans to open five others in Hong Kong, Shanghai, Macau, Hangzhou and Tokyo this year, chief executive Francois Graff told reporters on May 28. He also had plans to open more stores in Asia in 2013, including a second one in Macau. “The company is committed to growing its business and will continue to do so irrespective of today’s [yesterday’s] announcement,” Graff Diamonds said in the statement. A slump in Asian equities in the past week has already derailed three major IPOs which were aiming to raise a collective amount of up to US$1.37 billion: two in Hong Kong and one in Singapore. Deal volumes in Hong Kong, Asia’s IPO capital, have dived more than 80 percent in 2012 through midMay, compared with the same 2011 period. In the wider Asia-Pacific, overall volumes for share issues, including secondary offers, are down by a fifth.

Greece fears Graff, which had planned to raise capital to help build a bigger Asian business centring on China, pulled its IPO as European and

US$1 billion Graff Diamonds had planned to raise in Hong Kong

U.S. markets tumbled more than 1 percent on Wednesday on fears over the eurozone. Demand for new equity also collapsed as world stock markets lost about US$3.9 trillion since the start of May, pulled down by speculation that Greece may exit from the euro. Investors have become more skittish about valuations as Facebook Inc. tumbled 26 percent from its IPO price. “The global IPO markets are dead until European Union issues abate, worldwide economic indicators improve and the overall stock market regains some footing,” said Jim Krapfel, an IPO analyst at Morningstar Inc. in Chicago. “No company wants to go public at a time when investors are applying the brakes.” IPOs have raised $58.9 billion globally since January, according to data compiled by Bloomberg, the slowest start to a year since 2009, when equity capital markets were reeling from the collapse of Lehman Brothers Holdings Inc. The markets slump could also pressure deals already on the road, such as an offer worth up to US$3 billion by motor racing business Formula One in Singapore. Despite expectations the company will price the deal next month, Formula One’s chairman, Peter Brabeck, said last week no decision had been made whether to proceed with the IPO.

for the offering. Stocks in the luxury goods sector have been hit particularly hard. On Wednesday alone, the Hang Seng closed 1.9 percent lower, making listed firms a cheaper option for investors than those looking to go public, analysts and investors say. “We decided at the end of the day that it would be better to wait for a better time,” said a person involved in the Graff IPO, who was not authorised to speak publicly on the matter. On Wednesday, copper producer China Nonferrous Mining Corp pulled its planned Hong Kong initial public offering of up to US$313 million, again citing worsening market conditions. That followed automobile dealer China Yongda Automobiles Services, which scrapped its US$434 million offering on Monday. In Singapore, Ascendas Hospitality Trust called off its IPO worth up to S$800 million (US$621 million) on Tuesday. Graff Diamonds was founded in 1960 by Briton Laurence Graff. Born to Jewish immigrant parents in London, he has always kept control of the firm, attracting wealthy and celebrity clients such as the sultan of Brunei, Oprah Winfrey and Imelda Marcos. Reuters/Bloomberg

Diamonds unappealing The mother of Asian IPOs is still to be formally launched: an offer worth up to US$3 billion in Malaysia’s Felda Global Ventures Holdings Bhd, the world’s thirdlargest palm plantation operator. It is preparing for a market debut at end-June. Some analysts and fund managers had already begun questioning Graff’s valuation before Wednesday’s global market selloff, citing a slowdown in luxury spending in China. Hong Kong’s benchmark Hang Seng index has plunged 9 percent since May 7, when Graff executives, its bankers and advisers began meeting institutional investors and fund managers to gauge demand

KEY POINTS Fourth major Asian IPO to be scrapped this week Company vows to go ahead with Asian expansion Investors fret over Europe debt concerns, slower China growth Graff decision casts doubt on Formula One, other upcoming IPOs

InBrief

Hong Kong stocks trending down Hong Kong stocks dropped, with the Hang Seng Index posting its biggest monthly decline in eight months, as concern grew about Greece’s future in the euro and U.S. home sales slid. The Hang Seng Index slipped 0.3 percent to 18,629.52 at the close, paring losses of as much as 1.7 percent. The Shanghai Composite Index also closed down 0.5 percent at 2,372.2 points. “Investors are beholden to uncertainties around Europe,” said Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management Asia Ltd. “People are probably getting more worried about Spain rather than Greece.”

Beijing approves nuclear safety plan China has approved a five-year nuclear safety plan after last year’s Fukushima disaster in Japan spurred the government to suspend new power plants. The quality of the country’s nuclear plants is “under control” and they meet national and International Atomic Energy Agency standards, a statement posted on the central government website said, citing a meeting held by the State Council. The statement didn’t mention when China will resume approval of new nuclear power plants.

United Energy seeks loan for wind project Chinese oil and gas company United Energy Group Ltd said yesterday that it could tap a US$5 billion credit facility with state-owned China Development Bank Corp to fund a wind farm in Pakistan and has been approached by mainland companies looking to coinvest in the project. The company was also considering selling shares or issuing bonds to fund the proposed US$3 billion project, which was at a preliminary stage, and investment would take place over a number of years, a company spokeswoman said.

China says Annan plan needs time China yesterday said a resolution of the Syria conflict needed more time. Beijing’s call came as UN chief Ban Ki-moon warned yesterday of a “catastrophic civil war” in Syria after the massacre of more than 100 civilians in the town of Houla sparked global horror and outrage. “The situation in Syria currently is very complex and grave,” foreign ministry spokesman Liu Weimin told journalists. “Due to the extreme complexity of the Syrian issue, it will take time to reach a resolution ... we should not lose our confidence and patience and we should not easily admit failure. We must be supportive of Annan’s mediation efforts.”

10 |

business daily June 1, 2012

ASIA

India’s economy gets a beating Worries mount as reforms are delayed and scope for intervention is limited

ndia’s annual economic growth slumped in the first quarter to a nine-year low of 5.3 percent. The manufacturing sector shrank slightly and the fall in the rupee to a record low both suggest the economy remains under. Yesterday’s figures mark a dramatic slide in fortunes for a country that was growing in the years before the global financial crisis at more than 9 percent, with ambitions to challenge China as the world’s top emerging economy. Foreign investors are now wary after a series of government flipflops on economic reform and tax, heavy government spending on subsidies and a fiscal budget deficit that is threatening the country’s investment-grade credit rating. “This is definitely a very important signal for the government - this is a make or break situation for India and the government has to step on the panic button,” said Rupa Rege Nitsure,

chief economist at Bank of Baroda in Mumbai. “If the government doesn’t step in now, India’s sovereign ratings may be jeopardised.” The 5.3 percent growth rate was much lower than expected and was even below the lowest forecast in a Reuters poll that had produced a median of 6.1 percent from predictions ranging between 5.5 percent and 7.3 percent. Quarterly expansion was last lower in the January-March quarter of 2003 at 3.6 percent, Thomson Reuters data showed. The data showed that the manufacturing sector shrank 0.3 percent in the quarter compared with a year earlier. The farm sector grew just 1.7 percent. Gross domestic product rose 6.5 percent in the fiscal year to the end of March 2012, the lowest growth rate since 4.0 percent in 2002/03 and a sharp slowdown from the

KEY POINTS 6.5 percent growth in 2011/12 Manufacturing shrinks by 0.3 pct y-o-y Rupee at record low Stocks, bond yields fall

previous year’s 8.4 percent. “The data highlights the unusual degree of weakening of the country’s economy, likely driven by poor investment and widening trade gap,” said Dariusz Kowalczyk, an economist at Credit Agricole CIB in Hong Kong. “The data also poses a dilemma for policymakers, as they have no fiscal room to stimulate growth, while monetary easing scope is very narrow, at least for now, due to rebounding and high inflation.” The yield on India’s benchmark 10-year government bonds was down 13 basis points on Thursday. India’s main stock index extended its declines after the data to 1.3 percent on the day. Anubhuti Sahay, an economist at Standard Chartered Bank in Mumbai, said the data was “shocking”. “A rate cut is a given now,” Mr Sahay said.

Indian dream loosing steam, government in a policy bind

Asian currencies weakening Uncertainty in Europe leading investors to look for safe-havens

A Capital is moving away from riskier assets

sian currencies had the biggest monthly loss since September as China’s economy slowed and a banking crisis in Spain curbed appetite for emerging-market assets. The Bloomberg-JPMorgan Asia Dollar Index lost 2.7 percent since April 30 as global funds pulled US$7.8 billion from South Korean, Taiwanese and Indonesian stocks, exchange data show. India’s rupee led losses, reaching a record low

yesterday, as the economy posted the smallest gain in nine years. Indonesia’s rupiah fell to the weakest level since November 2009 while China’s yuan and Malaysia’s ringgit both touched their lowest levels this year. “The Europe problem is not going away anytime soon given the extent of demand for safe-haven assets,” said Roy Teo, a currency strategist in Singapore at ABN Amro Private Bank. “There’s

June 1, 2012 business daily | 11

asia Standard & Poor’s cut India’s credit rating outlook in April to negative from stable, worried by India’s fiscal and current account deficits. The decision jeopardises India’s long-term rating of BBB minus, the lowest investment grade rating. The impact of the eurozone debt crisis, a lack of economic reforms and high interest rates dragged on India’s growth throughout last year. The rupee fell on Thursday to a record low beyond 56.50 per dollar. Its slide of 14 percent from its 2012 high adds to inflation concerns in the country and raises its import bill, putting pressure on the trade and current accounts. That leaves policymakers in a bind. The government ran a fiscal deficit in the year to March 2012 of 5.9 percent of GDP so has little room to stimulate the economy. The central bank will be wary that reducing rates could fuel inflation, which is already uncomfortably above 7 percent. The government is trying to push through the biggest increase in petrol prices on record to reduce its subsidy bill, sparking popular anger and plans for nationwide strikes. Reuters

Cash windfall for about one million beneficiaries

Indonesia C.Bank rolls out new rules

Cash windfall for about one million beneficiaries Giant palm oil company to be floated this year, with an eye on coming elections

added pressure for policy reaction given the market capitulation.” The rupee fell this month in Mumbai and touched an alltime low of 56.3875 on May 24, according to data compiled by Bloomberg. The ringgit declined 4.6 percent to 3.1725 and the won fell 4.3 percent to 1,180.33. The rupiah fell 2.2 percent to 9,400 after reaching as low as 9.643 yesterday. Global stocks slumped yesterday after Italy failed to meet its maximum target at a debt sale, costs to protect Spanish government bonds with default swaps climbed to an all-time high and a Greek poll showed support for anti-austerity parties before an election on June 17. Bloomberg

InBrief

alaysian Prime Minister Najib Razak unveiled yesterday the US$3.3 billion listing of palm oil giant Felda Global, paving the way for Asia’s largest initial public offering so far this year. That could also lift his chances of winning a national election. The 58-year-old leader released the prospectus for the IPO of Felda Global Ventures Holdings (FGVH) at an event in the capital Kuala Lumpur that was as much political theatre as a financial announcement. The listing is expected to raise 10.5 billion ringgit (US$3.3 billion) based on the price for retail investors of 4.55 ringgit per share, giving it a market capitalisation of more than 16 billion ringgit (US$5.1 billion). “The reason for the listing is to create wealth for Malaysians,” Mr Najib said in a speech. “There is no other way to create wealth in such a fast pace than listing.” The world’s largest IPO this year after Facebook has already attracted a strong cast of cornerstone investors including French agribusiness giant Louis Dreyfus, Fidelity Investments and Middle Eastern sovereign fund Qatar Holding LLC. That partly reflects strong investor interest in Southeast Asia, which has seen a burst of IPOs since the start of the year despite the protracted eurozone debt crisis, the debacle over Facebook’s market debut and shaky IPO markets elsewhere in Asia. The strong support from cornerstones, which are taking up about two-thirds of the IPO shares, and from Malaysian states in which the plantations are located, means the deal is unlikely to suffer the same fate as the social networking giant or the flurry of Hong Kong share sales that have been shelved recently.

Against the tide There is also significant political capital invested in the sale, which is set to deliver a windfall totaling more than US$500 million to tens of thousands of farmers in what is likely to be an election year. Malaysia’s equity market is dominated by local investors and a large domestic pension fund system that partially insulates IPOs from

global volatility. “So far, there has not been a single major IPO being pulled in Malaysia last year and this year,” said Alan Tan, fund manager for Asian equities at Lion Global Investors in Singapore. “Felda is also government-owned, so the chance of it being successfully listed is quite high.” Still, Felda’s is being launched amid a slump in global stocks, increased concerns over Europe’s debt troubles and worries about slower growth in China. Four major IPOs in Asia Pacific worth nearly US$2.5 billion have already been pulled this week, underscoring weak demand for new listings. London luxury jeweller Graff Diamonds is the latest company to pull its planned US$1 billion Hong Kong offering, the fourth major IPO to be called off in Asia in a week as stock markets slide.

Looking farther afield Felda Global aims to become a major new player in global commodities and plans to use the IPO proceeds to expand into Southeast Asia and Africa. The government’s Federal Land Development Authority (FELDA), the parent firm of FGVH, manages more than 880,000 hectares (2.2 million acres) of plantation. That puts it among the world’s largest producers of the palm oil that is used in everyday products from soap to cooking oil and which has tripled in price in the past decade. The listing of FGVH clubs together refineries, plantation management companies and logistics firms as Malaysia looks to build an agribusiness to rival Singapore’s Wilmar International . For the about 1 million FELDA farmers and family members, or settlers as they are known, the IPO is the latest step in a remarkable transformation over a few decades from landless poor to landholders and now shareholders in a global conglomerate. Najib’s father, former Prime Minister Abdul Razak, started FELDA in the 1950s, handing out land to Malays to fight poverty and giving them a crucial role in making Malaysia the world’s second-largest palm oil producer. Reuters

Indonesia’s central bank said it plans to cap single ownership in the country’s banks at 40 percent for new investment, a rule that would scupper a US$7.3 billion bid by Singapore’s DBS Group Holdings for Bank Danamon. The proposal appeared to be aimed at stopping a DBS bid that has drawn nationalist opposition from local bankers and lawmakers. Halim Alamsyah, the central bank deputy governor responsible for banking supervision, said the proposal would allow individuals or families to only own up to 30 percent of local lenders, while financial institutions would be able to own up to a maximum of 40 percent.

Sri Lanka’s May inflation accelerates Sri Lankan inflation accelerated to a ninemonth high in May, fanned by currency weakness that makes imports costlier. Consumer prices in the capital, Colombo, increased 7 percent from a year earlier after gaining 6.1 percent in April, the Department of Census and Statistics said on its website yesterday. Sri Lanka kept interest rates unchanged this month after two increases in 2012 as part of an economic policy overhaul that seeks to damp import demand, narrow the trade gap and protect foreign reserves.

Losses at crisis-hit Kingfisher triple Kingfisher Airlines Ltd, struggling with a cash shortage, plunged in Mumbai trading after the carriers posted a wider fourth-quarter loss. Billionaire Vijay Mallyacontrolled Kingfisher declined 5 percent to 10.50 rupees in Mumbai, its lowest close since listing in 2006. Kingfisher posted a 11.5 billion-rupees (US$204 million) loss in the quarter, compared with a 3.56 billion rupees loss a year earlier. It also said the aviation industry is faced with an “unprecedented, tough operating environment.”

Thai AirAsia parent posts ‘impressive’ debut Asia Aviation Pcl, the parent of Thai AirAsia Co., rose on its first day of trading in Bangkok following a 4.49 billion baht (US$141 million) initial public offering on the outlook for budget travel. The company climbed as much as 8.1 percent to 4 baht from an IPO price of 3.70 baht. Its trading volume was about 839 million shares, the highest on the Stock Exchange of Thailand. The benchmark SET Index lost 0.7 percent. Thai AirAsia Co., 51 percent owned by Asia Aviation, plans to double its fleet to 48 planes over the next five years as rising wages spur demand for leisure travel.

12 |

business daily June 1, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

Day %

VOLUME

CHINA UNICOM HON

10.66

-1.753798

115315831

CITIC PACIFIC

11.96

1.873935

5417569

PRICE

Day %

VOLUME

AIA GROUP LTD

25.3

0.5964215

167639269

ALUMINUM CORP-H

3.36

-0.591716

15783176

BANK OF CHINA-H

2.99

1.70068

819228591

BANK OF COMMUN-H

5.04

-0.591716

34869491

CNOOC LTD

BANK EAST ASIA

25.95

-0.5747126

14194943

BELLE INTERNATIO

12.46

-2.044025

32864445

BOC HONG KONG HO

21.35

-2.919243

22474009

CATHAY PAC AIR

11.98

7044369

CHEUNG KONG

89.5

-0.7210205

4351370

HENDERSON LAND D

CHINA COAL ENE-H

7.19

-0.2773925

20803357

CHINA CONST BA-H

5.38

2.47619

1112518777

CHINA LIFE INS-H

18.22

-0.2190581

43697620

CHINA MERCHANT

23.55

-1.05042

4010249

CHINA MOBILE

CLP HLDGS LTD

NAME

PRICE

Day %

POWER ASSETS HOL

54.25

0.9302326

4266702

SINO LAND CO

10.72

0.3745318

12322500

63.2

0.2379064

11718051

SUN HUNG KAI PRO

87.9

0.3997716

11988583

14.04

-1.126761

73725176

SWIRE PACIFIC-A

83.7

-0.4164188

4734140

COSCO PAC LTD

9.52

0.7407407

9714445

TENCENT HOLDINGS

213.4

-0.9285051

3681138

ESPRIT HLDGS

12.5

0.3210273

7245950

TINGYI HLDG CO

18.42

0.7658643

18231619

HANG LUNG PROPER

24.75

21932343

8.89

-0.2244669

16214804

HANG SENG BK

100.3 -0.09960159

2287456

40.55

-0.3685504

6318266

39.1

-1.511335

HENGAN INTL

74.25

-0.2016129

4130066

HONG KG CHINA GS

18.22

12581757

WANT WANT CHINA WHARF HLDG

4448320

HONG KONG EXCHNG

109.6

-1.438849

4342523

HSBC HLDGS PLC

61.25

17172125

63.85

-1.844735

8002580

4.72

1.505376

1222550508

MOVERS

4 19100

INDEX 18629.52

78.5

-0.8212255

16806691

HUTCHISON WHAMPO

16.22

-4.250295

38618994

IND & COMM BK-H

CHINA PETROLEU-H

6.91

-1.985816

72577947

LI & FUNG LTD

14.24

-5.944518

23332874

CHINA RES ENTERP

24.55

0.2040816

5326407

MTR CORP

25.05

-0.7920792

3327434

CHINA RES LAND

14.64

-2.52996

16537991

NEW WORLD DEV

8.36

-0.9478673

15358072

52W (H) 23707.94

CHINA RES POWER

14.04

2.332362

17834024

PETROCHINA CO-H

9.82

-0.6072874

63696367

(L) 16170.35

CHINA SHENHUA-H

27.35

-0.41012

14319048

PING AN INSURA-H

57.15

-0.9532062

12215051

CHINA OVERSEAS

VOLUME

HIGH

19057.33

LOW

18420.4

29-May

31-May

18400

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

23.1

0.6535948

6766648

22885601

CHINA PETROLEU-H

6.91

-1.985816

72577947

ZIJIN MINING-H

15783176

CHINA RAIL CN-H

6.03

-1.791531

28074335

-0.8298755

11161858

CHINA RAIL GR-H

0.3344482

26511841

1.70068

819228591

CHINA SHENHUA-H

27.35

-0.410166

14319048

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.14

0.6410256

436819726

AIR CHINA LTD-H

4.74

-2.268041

ALUMINUM CORP-H

3.36

-0.591716

ANHUI CONCH-H

23.9

BANK OF CHINA-H

2.99

NAME

5.04

-0.591716

34869491

CHINA TELECOM-H

3.56

-1.928375

83751829

15.78

0.2541296

5238259

DONGFENG MOTOR-H

13.2

-4.347826

19194555

CHINA CITIC BK-H

4.02

45645404

GUANGZHOU AUTO-H

6.58

-1.791045

6605087

CHINA COAL ENE-H

7.19

-0.2773925

20803357

HUANENG POWER-H

4.93

4.008439

35547842

CHINA COM CONS-H

7.3

-2.536716

17752182

IND & COMM BK-H

4.72

1.505376

1222550508

CHINA CONST BA-H

5.38

2.47619

1112518777

JIANGXI COPPER-H

16.32

-2.508961

15955520

BANK OF COMMUN-H BYD CO LTD-H

3.72

-1.06383

11597788

PETROCHINA CO-H

9.82

-0.6072874

63696367

18.22

-0.2190581

43697620

PICC PROPERTY &

8.63

1.053864

22957126

CHINA LONGYUAN-H

4.75

-0.4192872

12591931

PING AN INSURA-H

57.15

-0.9532062

12215051

CHINA MERCH BK-H

14.98

0.9433962

15374521

SHANDONG WEIG-H

7.96

1.015228

4037414

CHINA COSCO HO-H CHINA LIFE INS-H

NAME

PRICE

DAY %

VOLUME

13.06

-1.508296

11719425

2.46

ZOOMLION HEAVY-H

11.38

-1.043478

13270073

ZTE CORP-H

15.38

0.2607562

4123738

YANZHOU COAL-H

MOVERS

INDEX 9686.03 HIGH

9858.19

LOW

9525.39

CHINA MINSHENG-H

7.41

0.4065041

29647198

SINOPHARM-H

17.58

-2.115813

4423242

52W (H) 13317.51

CHINA NATL BDG-H

9.42

-2.079002

51344740

TSINGTAO BREW-H

48.65

3.510638

2170528

(L) 8058.58

10.78

-0.3696858

11464080

WEICHAI POWER-H

34.25

0.7352941

2296725

CHINA OILFIELD-H

9900

29-May

31-May

9400

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.64

-1.858736

74093492

DAQIN RAILWAY -A

7.44

-0.2680965

33268988

SHANG PUDONG-A

8.77

-0.5668934

67011196

AIR CHINA LTD-A

6.25

0.3210273

17568446

DATANG INTL PO-A

5.05

0.3976143

5407485

SHANGHAI ELECT-A

5.77

0.1736111

7220952

ALUMINUM CORP-A

6.87

-0.8658009

10204164

DONGFANG ELECT-A

22.24

-0.3137606

7610177

SHANXI LU'AN -A

27.32

8379613

ANHUI CONCH-A

17.92

63490332

EVERBRIG SEC -A

14.49

-1.629328

10941787

SHANXI XINGHUA-A

75.23

2.089836

1524491

BANK OF BEIJIN-A

9.89

-1.395813

21301006

GD MIDEA HOLDING

12.63

-2.846154

56792212

SHANXI XISHAN-A

18.15

-1.035987

18511189

15.69

-0.06369427

15325128

6.18

0.6514658

49213762

15.88

-0.75

2118545

9.16

2.232143

66245225 2764671

NAME

BANK OF CHINA-A

3.03

10063249

GD POWER DEVEL-A

2.52

-0.7874016

27244735

SHENZ DVLP BK-A

BANK OF COMMUN-A

4.61

-1.284797

42389600

GF SECURITIES-A

32.6

1.462807

11723194

SHENZEN OVERSE-A

BAOSHAN IRON & S

4.84

-0.2061856

27801111

GREE ELECTRIC

22.8

2.013423

18773013

SINOVEL WIND-A

BBMG CORPORATI-A

8.32

-2.803738

25635387

GUIZHOU PANJIA-A

33.29

-2.489748

8284113

SUNING APPLIAN-A

BYD CO LTD -A

24.6

0.572363

4782266

HAITONG SECURI-A

10.45

-0.09560229

49429622

TSINGTAO BREW-A

37.59

0.400641

CHINA CITIC BK-A

4.24

-1.165501

15830735

HANGZHOU HIKVI-A

47.2

0.4469036

1433686

WEICHAI POWER-A

33.34

-1.331755

4863298

CHINA CNR CORP-A

4.38

-2.232143

44104560

HEBEI IRON-A

3.04

-1.298701

19343045

WULIANGYE YIBIN

32.25

-0.309119

20038496

CHINA COAL ENE-A

9.03

-1.419214

10573183

HENAN SHUAN-A

60.03

1.642398

3485107

XCMG CONSTRUCT-A

15.25

-0.974026

14298693

11.72

2.447552

35993103

XIAMEN TUNGSTEN

48.33

-1.064483

8386621

9.86

-1.10331

29058825

XINJIANG GUANG-A

15.77

4.923486

50979059 11062489

CHINA CONST BA-A

4.49

-0.2222222

26298641

HUATAI SECURIT-A

CHINA COSCO HO-A

5.07

-0.1968504

8699930

HUAXIA BANK CO

CHINA CSSC HOL-A

31.76

0.157679

5500461

IND & COMM BK-A

4.22

40954885

YANGQUAN COAL -A

19.13

-1.746276

CHINA EAST AIR-A

4.18

-0.4761905

11986747

INDUSTRIAL BAN-A

13.33

-0.8921933

34624107

YANTAI CHANGYU-A

93.99

-0.2229299

439278

CHINA EVERBRIG-A

2.88

-0.9287926

27780432

INNER MONG BAO-A

44.2

0.2040354

38424893

YANTAI WANHUA-A

15.11

2.789116

23722136

CHINA LIFE INS-A

17.41

-0.9106431

10411565

INNER MONG YIL-A

22.47

-0.8384819

9424741

YANZHOU COAL-A

22.76

-1.043478

3379293

CHINA MERCH BK-A

11.66

-1.018676

74554351

INNER MONGOLIA-A

6.33

-0.4716981

48980211

YUNNAN BAIYAO-A

50.98

-0.03921569

2340336

CHINA MERCHANT-A

13.65

-0.4376368

14922441

JIANGSU HENGRU-A

26.12

2.03125

2705704

ZHONGJIN GOLD

23.14

0.216544

8986032

CHINA MERCHANT-A

25.2

-1.176471

7894583

JIANGSU YANGHE-A

CHINA MINSHENG-A CHINA NATIONAL-A CHINA OILFIELD-A

6.37

-0.7788162

172

1.236021

1773206

ZIJIN MINING-A

4.11

41278337

63659215

JIANGXI COPPER-A

25.69

-1.344086

9480256

ZOOMLION HEAVY-A

10.85

-1.631913

62658073

JINDUICHENG -A

14.09

0.3561254

7699025

ZTE CORP-A

15.27

-0.1960784

23625244

20.41

-2.29775

9290604

6.8

2.255639

38590057

17.85

-1.162791

8167520

JIZHONG ENERGY-A KWEICHOW MOUTA-A

236.68

3.507391

3736705

LUZHOU LAOJIAO-A

39.55

0.5082592

10620097

39907722

METALLURGICAL-A

2.66

-0.7462687

15067168

25062809

NINGBO PORT CO-A

2.62

-1.503759

19006806

14327484

PANGANG GROUP -A

8.27

1.100244

57094226

9.45

-1.04712

21280279

CHINA PACIFIC-A

21.2

-1.257569

9275514

CHINA PETROLEU-A

6.68

-1.329394

27294237

CHINA RAILWAY-A

2.76

-1.779359

CHINA RAILWAY-A

4.48

-1.969365

CHINA SHENHUA-A

26.01

-1.589103

CHINA SHIPBUIL-A CHINA SOUTHERN-A

5.9

0.3401361

44978894

PETROCHINA CO-A

4.82

40789719

PING AN INSURA-A

41.89

-0.852071

17014739

13.64

-1.30246

MOVERS

105

172

23 2660

INDEX 2632.042

CHINA STATE -A

3.36

-1.176471

33288392

POLY REAL ESTA-A

31967148

HIGH

2655.22

CHINA UNITED-A

4.1

-0.243309

39815614

QINGDAO HAIER-A

12.19

0.4118616

16487961

LOW

2614.87

CHINA VANKE CO-A

9.25

-0.6444683

24631533

QINGHAI SALT-A

31.52

-1.345853

6755639

CHINA YANGTZE-A

6.9

1.321586

19762065

SAIC MOTOR-A

15.72

-0.2538071

13259900

CITIC SECURITI-A

13.77

-0.3617945

58930938

SANY HEAVY INDUS

14.94

-0.862641

29940392

CSR CORP LTD -A

4.93

-2.761341

41084365

SHANDONG GOLD-MI

34.31

-0.05825808

5735440

PRICE DAY %

Volume

PRICE DAY %

Volume

78.1 -0.2554278

13341299

TAIWAN MOBILE CO

94.5

1.286174

52W (H) 3140.10 (L) 2254.56

2600

29-May

31-May

FTSE TAIWAN 50 INDEX NAME

NAME

PRICE DAY %

Volume

ACER INC

30.55

-3.015873

19368092

FORMOSA PLASTIC

ADVANCED SEMICON

28.25

1.436266

47517663

FOXCONN TECHNOLO

107.5

1.415094

17498633

TPK HOLDING CO L

445

0.678733

9544247 6619691

ASIA CEMENT CORP

35.65

5977738

FUBON FINANCIAL

29.65

2.772964

50920977

TSMC

85.1

4.161567

82983423

ASUSTEK COMPUTER

299 -0.9933775

5007032

HON HAI PRECISIO

87.5

-1.574803

42470698

UNI-PRESIDENT

44.9

-2.497286

14594647

AU OPTRONICS COR

12.2

-2.788845

54457852

HOTAI MOTOR CO

195.5

3.166227

1427203

UNITED MICROELEC

13.1

-1.872659

42314730

CATCHER TECH

189.5

0.7978723

10669496

HTC CORP

430

1.415094

8780389

WISTRON CORP

37.9

-3.807107

13868027

CATHAY FINANCIAL

29.25

0.3430532

15580698

HUA NAN FINANCIA

16.4

3.797468

16361699

YUANTA FINANCIAL

13.15

-1.865672

32027994

CHANG HWA BANK

15.5

0.6493506

11637846

LARGAN PRECISION

564 -0.1769912

1758739

YULON MOTOR CO

51.7

0.3883495

8340720

72 -0.8264463

3656902

LITE-ON TECHNOLO

38.2

1.595745

12250051

264

-1.123596

11968446

20.75 -0.7177033

38319650

CHENG SHIN RUBBE CHIMEI INNOLUX C

12.55

-3.088803

38056483

CHINA DEVELOPMEN

7.5

5.189341

117769948

MEGA FINANCIAL H

CHINA STEEL CORP

28 -0.1782531

32225679

NAN YA PLASTICS

52.4

16.65 -0.2994012

157.5

1.941748

2502297

-1.763224

20791483

CHINATRUST FINAN

MEDIATEK INC

-1.318267

11743112

47624223

PRESIDENT CHAIN

CHUNGHWA TELECOM

90.2

0.2222222

14916151

QUANTA COMPUTER

COMPAL ELECTRON

30.8

-2.222222

12793229

SILICONWARE PREC

32.5

1.088647

15216989

DELTA ELECT INC

83.2 -0.4784689

12731200

SINOPAC FINANCIA

11.1

6.730769

45982978

FAR EASTERN NEW

30.2

-1.145663

13983601

SYNNEX TECH INTL

66.7

-1.038576

8597342

FAR EASTONE TELE

66.4

1.684533

10490136

TAIWAN CEMENT

33.75

-2.597403

18873137

FIRST FINANCIAL

17.45

3.254438

30603106

TAIWAN COOPERATI

17.6

1.440922

8187428

FORMOSA CHEM & F

1.542416

25161465

TAIWAN FERTILIZE

69.4

2115071

FORMOSA PETROCHE

81.5

-2.278177

3480255

27.95 -0.1785714

2199042

TAIWAN GLASS IND

MOVERS

2 5080

INDEX 5042.25 HIGH

5074.78

LOW

4916.06

52W (H) 6247.96 (L) 4643.05

4870

29-May

31-May

June 1, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) gALAXy enTerTAinMenT

Max 19.42

Average 18.88

MeLCo CroWn enTerTAinMenT

Min 18.62

19.6

32.20

12.70

19.4

32.14

12.62

19.2

32.08

12.54

19.0

32.02

12.46

18.8

31.96

12.38

18.6

Last 18.84

Max 32.15

sAnDs ChinA LTD

Max 27.00

Average 26.72

Average 32.06

Min 31.95

Min 26.40

31.90

Max 12.68

Last 26.50

Average 12.45

Min 12.34

Last 12.50

Wynn MACAu LTD

27.00

14.10

19.60

26.88

13.94

19.44

26.76

13.78

19.28

26.64

13.62

19.12

26.52

13.46

18.96

26.40

13.30 Max 14.00

Average 13.60

NAME

PRICE

WTI CRUDE FUTURE Jul12

88.21

0.444090184

-11.23968605

111.4899979

77.40000153

BRENT CRUDE FUTR Jul12

104.03

0.541219677

-1.514721197

125.6100006

94.34999847

GASOLINE RBOB FUT Jun12

DAY %

YTD %

(H) 52W

Min 13.38

18.80

Last 13.78

Max 19.44

Average 19.29

285.34

-0.167937863

4.100693178

336.8899822

245.539999

880.5

0.256191289

-2.112284603

1045.75

810

NATURAL GAS FUTR Jul12

2.393

-1.033912324

-26.21029911

5.130000114

2.095999956

Gold Spot $/Oz Silver Spot $/Oz Platinum Spot $/Oz Palladium Spot $/Oz LME ALUMINUM 3MO ($)

PRICE

(L) 52W

GAS OIL FUT (ICE) Jul12

Last 19.04

Min 18.88

274.86

0.321191328

-3.418953582

331.5699816

256.0600042

1570.48

1.4391

0.3559

1921.18

1478.78

28.195

2.2621

1.2933

44.2175

26.085

1413.75

0.4797

1.3804

1915.75

1339.25

609.6

2.2733

-6.7177

848.37

537.54 1955.75

MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

0.9755 1.5519 0.9671 1.2423 78.84 7.9967 7.7637 6.3685 55.79 31.83 1.284 29.838 43.415 9400 76.904 1.20149 0.80055 7.901 9.9343 97.94 1.03

YTD %

-0.0205 -0.3915 -0.0724 -0.0322 0.2917 -0.01 -0.0103 -0.1649 0.7932 0.0943 -0.109 -0.4256 0.2419 0.5638 0.3173 -0.0433 -0.3685 0.1557 0.0272 0.3267 0

(H) 52W

-4.4471 -0.1544 -2.9987 -4.1509 -2.448 0.0363 0.0477 -1.1541 -4.8844 -0.8797 0.9813 1.478 0.9789 -3.5213 1.9869 1.2734 4.1022 2.9515 4.2046 1.7562 0.0097

(L) 52W

1.1081 1.6618 0.972 1.4697 84.18 8.0449 7.8113 6.4909 56.515 31.96 1.3199 30.716 44.35 9662 88.637 1.24736 0.90835 9.514 11.7768 117.9 1.0311

0.9388 1.5235 0.7071 1.2358 75.35 7.9823 7.7529 6.2769 43.855 29.63 1.1992 28.599 41.879 8458 72.057 1.00749 0.79505 7.8658 9.8862 97.04 1.0288

2007

-0.495785821

-0.643564356

2695

LME COPPER 3MO ($)

7477.5

-2.509778357

-1.611842105

9905

6635

LME ZINC

1893.5

-1.122715405

2.628726287

2539.5

1718.5

16300

-1.510574018

-12.8808124

25195

16170

14.29

0.175254118

-7.026675342

19.375

14.07500076

561.25

0.312779267

-15.12287335

795

553.5

WHEAT FUTURE(CBT) Jul12

652.5

-0.191204589

-4.918032787

932

592.25

NAME

(H) 52W

(L) 52W

SOYBEAN FUTURE Jul12

1373.5

0.018204988

11.9396903

1512.5

1125.5

ARISTOCRAT LEISU

2.93

0.3424658

33.18182

3.25

1.88

1393943

COFFEE 'C' FUTURE Jul12

164.45

0.030413625

-29.17743325

290.75

162.3000031

CROWN LTD

8.48

-0.5861665

4.820764

9.29

7.45

2584620

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul12 CORN FUTURE

Jul12

MACAU RELATED STOCKS PRICE

DAY % YTD %

VOLUME CRNCY

SUGAR #11 (WORLD) Jul12

19.5

0.102669405

-13.56382979

27.02999878

19.3599987

AMAX HOLDINGS LT

0.08

2.564103

-8.045974

0.129

0.06

11158000

COTTON NO.2 FUTR Jul12

71.31

0.564095332

-21.90340598

117

70.37999725

BOC HONG KONG HO

21.35

-2.919243

16.03261

24.45

14.24

22474009

CENTURY LEGEND

0.233

1.304346

0.41

0.204

7.142859

4.79

2.3

371

CHINA OVERSEAS

16.22

-4.250295

24.96148

17.86

9.99

38618994

CHINESE ESTATES

-28

14.1

8.3

106500

8.98

-5.473684

-35.48851

15.16

8.92

13594200 340000

CHEUK NANG HLDGS

World Stock MarketS - Indices

CHOW TAI FOOK JE

NAME

1.2

0.8403361

8.108107

2.09

0.97

0.87

1.162791

107.1429

1.09

0.3

786000

GALAXY ENTERTAIN

18.84

-4.268293

32.30337

24.95

8.69

33547227

2298.89

HANG SENG BK

100.3

-0.09960159

8.844274

125

84.4

2287456

6084.08

4791.01

HOPEWELL HLDGS

20.2

-0.7371007

1.711981

24.903

18.56

2122543

7.0006

7523.53

4965.8

HSBC HLDGS PLC

61.25

3.813559

82.15

17172125

-1.047817

1.033439

10255.15

8135.79

18629.52

-0.3247688

1.058505

23707.94922

16170.35

2632.042

-0.386639

12.2051

3140.102

7301.5

0.5466964

3.244023

9089.47

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12419.86

-1.278388

1.65582

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2837.36

-1.171373

8.913507

3134.17

FTSE 100 INDEX

5346.17

0.9229265

-4.057762

DAX INDEX

6311.27

0.4851293

NIKKEI 225

8542.73

HANG SENG INDEX

CSI 300 INDEX TAIWAN TAIEX INDEX

EMPEROR ENTERTAI FUTURE BRIGHT

HUTCHISON TELE H

3.42

2.702703

14.38127

3.71

2.33

7876019

LUK FOOK HLDGS I

16.1

-4.733728

-40.59041

46.15

4123183

MELCO INTL DEVEL

6.49

-2.552553

12.47834

10.76

4.3

4153134

2254.567

MGM CHINA HOLDIN

12.5

-0.7936508

30.31484

17.183

7.6

53081266

6609.11

MIDLAND HOLDINGS

3.91

1.822917

-1.113972

5.363

2.887

3418007

NEPTUNE GROUP

0.102

-8.108109

0.157

0.08

185000

NEW WORLD DEV

8.36

-0.9478673

33.54632

12.381

6.13

15358072

SANDS CHINA LTD

26.5

-2.752294

20.72893

33.05

14.9

21476289

SHUN HO RESOURCE

1.18

1.32

0.82

-2.12766

7.849224

4.686

2.241

3897227 27656456

KOSPI INDEX

1843.47

-0.07534447

0.971112

2192.83

1644.11

S&P/ASX 200 INDEX

4076.258

-0.4389349

0.4855717

4724.8

3765.9

3832.824

-2.171869

0.2834132

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1580.67

0.3491687

3.2625

1609.33

1310.53

SHUN TAK HOLDING

2.76

NZX ALL INDEX

779.722

0.2026615

6.840459

806.015

700.441

SJM HOLDINGS LTD

13.78

-2.130682

10.1912

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3518.96

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HSBC Dragon 300 Index Singapor

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

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4.55

1.111111

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10.8692

3.66

194123

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49.32

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333006

2.87

19.72364

3.15

1.81

12150

2.49

-2.734375

33.15508

3.24

1.08

1000

13.85

-3.282123

-19.47675

19.15

13.38

2600569

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-2.828664

17.76037

99.89

46.01

308593

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47.58

-2.957373

11.35034

62.09

36.08

8881800

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12.12

-3.656598

25.98753

16.15

7.05

7263885

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-1.204819

37.61931

2.21314

1.00254

100

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-2.238138

4.697984

16.05

7.4

8415948 385801

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34.81228

18.77

7.35

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1.142857

10.10388

2.60368

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business daily June 1, 2012

Opinion Tales of India’s economy twistier than Kama Sutra Pankaj Mishra Bloomberg Columnist

n 2006, Foreign Affairs, among many other periodicals, proclaimed India to be “a roaring capitalist success story.” This story, we are now increasingly told, is over. The rate of growth in India’s gross domestic product has slowed to slightly more than 6 percent from the peak of about 10 percent that once excited fantasies of India overtaking China. The rupee is plunging. Standard & Poor’s downgraded India’s creditrating outlook to “negative” from “stable.” The next stage is “junk,” if it loses its BBB- grading. Corruption and India’s threat of retroactive taxes on companies, most notably the government’s attempt to recoup as much as US$3.72 billion from Vodafone Group Plc, the U.K.based telecommunications company, on its 2007 acquisition of an Indian company are scaring away foreign investors. India’s own captains of industry are looking for more opportunities abroad. Still, is it premature to bring down the curtains on the “India Growth Story”? To be sure, foreign investment in India sparked a retail credit boom – and visions of hundreds of millions of middle-class Indians achieving the purchasing power and consumption patterns of their European and American peers. Total GDP grew, even though employment had no corresponding increase, and a terrible agrarian crisis caused by high indebtedness, drought, failed crops and international competition – which compelled some 200,000 farmers to commit suicide – didn’t rapidly boost mass consumption.

Fragrant cliches The glossy services sector, such as information technology and back-office operations, boomed. The rise of financial services — and its accompanying foreign and local business media staffed with innumerable short-termist analysts and reflexive boosters — also helped make India appear to be “the story of unusual national advancement,” as Amartya Sen put it recently, making “an alleged reality out of what is at best a very partial story.” Some fragrant cliches came to be lavished on the chronicle of “India Rising.” This is how it went: Since its introduction in 1991, free-market capitalism has been liberating India from the darkness of “socialism” and a mindless regulatory regime (aka, the License-Permit Raj), sparking a consumption boom that is lifting hundreds of millions out of poverty and making India a superpower in our newly flattened world. This account of India’s past always mystified those who actually knew the country before and after 1991 — a place very far from socialism, as I have pointed out in a previous column, and even further from free-

No rags-to-riches

and resources under the auspices of free-market capitalism. Caught red-handed in many instances, the government froze, shamefully aware of betraying its left-wing rhetoric. Heavy electoral defeats – punishments by the poor for intolerably high inflation – have further impaired its policy-making mechanism, which was always prone to eccentric behaviour. Desperate to reassert their power, some bureaucrats and politicians have taken to prosecuting corporate offenders in the lucrative sectors – telecoms, coal, power and gas – that are most tainted by corruption scandals. Detailing the woes of India’s business barons, the newsmagazine India Today recently expressed shock at seeing high-profile businessman Mukesh Ambani being harassed by the government. “If that is the fate of Mukesh Ambani, India Inc. ought to be very scared,” the magazine said. So it should be after the easy run enjoyed in the previous decade by well-connected corporations. Could it be that, as the Financial Times wrote,

My experience was admittedly very narrow. But, magnified many times, this was also the “success story” of economic growth heavily dependent on easy access to and privatisation of national resources; information technology, which still employs only 2.5 million of a workforce of more than 400 million, played a tiny role. There are very few Indian rags-toriches stories. Many of the country’s long-established companies, often assisted by foreign partners, maintained their dominance with their unmatched ability to acquire mining leases, infrastructural contracts, property-development rights and mobile-phone spectrum. A series of scandals beginning with the Commonwealth Games fiasco in 2010 and peaking with a reportedly US$210 billion coalmining racket exposed the influence of business over politics and, more alarmingly, the media. The larcenies of “socialist” India suddenly seemed small-time compared with the massive plunder of public money

In the absence of industrialisation, adequate education and employment, and indeed plucky entrepreneurship, the main source of capital was land, almost invariably acquired illegally by a nexus of businessmen and politicians

market capitalism. For India in the previous decade witnessed what Raghuram Rajan, formerly the chief economist of the International Monetary Fund and now an adviser to Indian Prime Minister Manmohan Singh, calls “the Resource Raj.” This is a polite euphemism for crony capitalism, whereby, in the Financial Times’ gloss, “an alliance of wellconnected industrialists and public officials…carve up the permissions and licenses that have in the past underpinned India’s growth.” Looking around my own village in Himachal Pradesh, I could see that economic growth and the related change in consumption patterns were due mostly to real-estate speculation by the already rich and powerful. In the absence of industrialisation, adequate education and employment, and indeed plucky entrepreneurship, the main source of capital was land, almost invariably acquired illegally by a nexus of businessmen and politicians.

“India’s democracy is responding to the administrative inefficiency and impropriety of the old system, albeit slowly and imperfectly?” Will India’s oligarchs be reined in by politicians who draw votes by posing as protectors of the weak?

Falling behind Bangladesh We shall see. In the meantime, a politically shell-shocked government is unlikely to risk appearing too business-friendly. Faced with widening fiscal deficits and probably a balance-of-payments crisis, the government seems, as in the Vodafone case, to have resorted to shaking down foreign corporations. The government is clearly betting that as Western economies flounder, foreign corporations seeking a decent return have no option but to invest in India, agreeing to pay taxes that are, in the end, a small fraction of their revenue. It may be proved right: Ikea Group is again in play in India after the single-brand retail sector was opened to foreign companies. Vodafone shows no signs of pulling out. In any case, those who noticed how India, in the previous decade of record GDP growth, slipped behind Bangladesh in life expectancy, child survival, fertility and immunisation rates and allowed Nepal to catch up were never much swayed by the histrionic narrative of an inexorably rising country. One must remain wary of yet more giddy distortions of India’s multifaceted reality. As Robert Zoellick, the outgoing president of the World Bank, points out, India’s shrunken growth rate of less than 7 percent can only cause envy in European and American hearts. Incremental reforms in agriculture, education and public health will do more to shape India’s future than the moods and whims of foreign investors today. Certainly, the story of India must be wrested back from the cliche-mongers, who, having once circulated the most garish fantasies, seem now to be peddling melodramatic despair. Bloomberg View

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June 1, 2012 business daily | 15

OPINION

An Argentine guide wires to the Greek crisis Business

Leading reports from Asia’s best business newspapers

Jakarta Post Indonesia’s biggest telecommunication provider PT Telekomunikasi Indonesia (Telkom) has once again dabbled in the e-commerce payment gateway business through the launch of Finpay, an online shopping payment system run by subsidiary, PT Finnet Indonesia. Finnet focuses on providing electronic payment systems and has offered services such as online bill payments and interbank transactions before going for online shopping payment systems. The launch of comes three years after the introduction of Mojopia, a platform for online shopping, operated by Telkom subsidiary PT Metranet, which soon faltered.

Business Times AirAsia Bhd is confident of rapidly growing its operations in Japan via AirAsia Japan, although it faces competition from other low-cost carriers. AirAsia group chief executive officer Tony Fernandes said AirAsia has the advantage of networks as well as a fleet of 100 aircraft, making it easier for people to travel to various places and at an affordable price. This year marks the beginning of an era for budget air travel in Japan with the launch of three low cost airlines that includes Peach Aviation, JetStar Japan and AirAsia Japan.

Nikkei Volkswagen AG is looking to bring its first electric vehicles to the Japanese market as early as the middle of next year. The German auto giant had already announced plans to introduce the two EVs – the e-up! and the Golf EV – in Europe in mid2013. The company is gearing up to also launch the EVs in Japan shortly after they are rolled out in Europe. Both will be modified to make them compatible with Japan’s batterycharging system for EVs.

Andrés Velasco

Former finance minister of Chile and a visiting professor at Columbia University

olicymakers in Europe seem to be surprised at the ongoing bank run in Greece (and the nascent run in Spain). They should not be. Anyone familiar with emerging-market meltdowns knows that a financial crisis nearly always follows a fiscal crisis. Argentina’s default in 2001 is but one useful example. In the Argentine crisis, the economy contracted by 18 percent and unemployment soared to 22 percent of the labour force. Greece is already close to these levels. Argentina went through a complete and chaotic default on its public debt. In Greece, the “haircut” imposed on creditors so far has been managed by the European Union and the International Monetary Fund. But, with debt still unsustainable, the next round of Greek default could well make Argentina’s look positively Teutonic in its orderliness. In Argentina, the banking system came close to collapse, causing the government to ban bank withdrawals – introducing the so-called corralito, or bullpen, for deposits – and establishing capital controls. That could be the stage that Greece is entering now. So, if the precedent of the Argentine and other emerging-market crises is a useful guide, what could be in store for Greece next? To answer that question, it helps to recall the feedback loops that link fiscal and financial crises. Banks hold government and corporate loans as assets. Fiscal crisis and default reduce the value of the former, while the ensuing recession undermines the value of the latter. That is the link running from budget to bank problems. But there is a link going in the opposite direction as well: as banks deleverage to offset losses, they cut credit and the economy slows, causing gov-

ernment revenue to fall. If and when banks require a capital injection from public sources, the additional expenditure – which can be large – weakens public finances still further. These mutually reinforcing forces can work themselves out in a lengthy process of recession and deleveraging. Or they can prompt a sudden run on the banks, causing the financial system to implode. The outcome depends on confidence. Economists have long understood that, in the absence of a credible lender of last resort, banks are vulnerable to self-fulfilling confidence crises. That lender can be monetary or fiscal, and in Greece both types are in doubt.

Bank runs If Greece’s agreement with the EU and the IMF unravels, the European Central Bank will no longer accept Greek bonds as collateral. And the Greek state does not have the wherewithal to stand behind its banks. In these circumstances, it would be more surprising if depositors were not rushing to pull their funds out of Greek banks. The Argentine experience suggests that, after the run on bank deposits, the saga’s next instalment is monetary collapse. With revenues plummeting and credit cut off, the Argentine provinces had to resort to printing scrip to pay salaries and pensions. At one point, more than a dozen quasicurrencies were in circulation. What happens if Greece is cut off from EU and IMF credit? Optimists point out that the country is supposed to eliminate its primary deficit (the

Myanmar Times Japanese car companies have expressed interest in setting up factories in Myanmar, several car showroom owners said last week at car importing and production workshop in Yangon. “Importing used cars is not the right way for Japanese companies in the long term,” said U Htay Aung, chairman of Sakura Auto Auction Centre. “But if they buy from a car showroom, they have to wait for up to three weeks to get. Mitsubishi Heavy Industries (MHI) and Japan Heavy Industries Ltd are two of the companies interested in setting up in Myanmar.

budget balance minus interest payments) by 2013, which implies that it could pay its non debt-related bills with its own resources after a default. But that view overestimates the state’s capacity to collect revenues in the midst of a panic. With the economy in free fall and uncertainty pervasive, many households and firms simply stop paying taxes. So, even if the Greek government defaults on all of its debt, it might have no option but to print pieces of paper in order to meet its obligations. That would not constitute official abandonment of the euro, but, over time, the difference could become more formal than real. The

Mutually reinforcing forces can work themselves out in a lengthy process of recession and deleveraging. Or they can prompt a sudden run on the banks, causing the financial system to implode

newly i s sued scrip – call it the neodrachma – would be tradable and highly liquid. Even if it traded at a deep discount, as it surely would, sooner rather than later it would likely be used for settling all kinds of transactions.

Steep devaluation Here, the Argentine story suggests, the mechanism loops back to the banks: firms soon start complaining that their income is now denominated

in neo-drachmas while their loans remain in euros. They begin to demand loudly that the loans be neo-drachmatised (“pesified” in Argentine parlance). A parliament anxious for public approval is eager to meet these demands. But this only accelerates the run on the banks, as households and firms realise that no solid assets are backing their deposits. Paying public sector workers with depreciated neo-drachmas implies a cut in the real wages that they receive. The final step in the process comes with the neo-drachmatisation of private-sector wages. Firms again demand it, claiming that otherwise they cannot export. Unions initially oppose it, but eventually give in, spooked by the spectre of even greater unemployment. The promise of selective price controls sweetens the deal. How large will the devaluation of the neo-drachma be? In Argentina, the number of pesos needed to buy one dollar rose by more than 300 percent. Greece posted a current-account deficit of nearly 10 percent of GDP in 2011, despite the domestic depression. The real devaluation necessary to restore external balance will be enormous, perhaps larger than that in Argentina. Greece now has its third government in less than a year, and a fourth is not far off. Argentina ran through four presidents in less than two years, before the political and economic situation stabilised. Greece, too, will eventually stabilise. At this point, that is just about the only hopeful precedent that the Argentine story holds. © Project Syndicate

16 |

business daily June 1, 2012

CLOSING Eurozone set-up unsustainable: Draghi

U.S. GDP growth revised down

Europe’s leaders must clarify their vision for the euro quickly to dispel doubts about the currency’s future, ECB President Mario Draghi said yesterday, warning that the Central Bank could not fill the policy vacuum. Mr Draghi said the bloc should break away from the incremental approach that has failed to get ahead of the euro zone debt crisis for more than two years. In his sharpest criticism yet, Draghi urged they spell out detailed plans for the euro and fiscal cooperation, something he believes will require governments to surrender some of their sovereignty to succeed.

The U.S. economy grew at an annualised 1.9 percent in the first three months of 2012, less than the 2.2 percent first thought. The slower growth rate followed a modest downward revision in consumer spending. A rise in the growth in imports also accounted for the weaker outlook. The second official estimate of gross domestic product (GDP) from the Commerce Department also showed that after-tax corporate profits fell for the first time in three years. The department yesterday said that after-tax corporate profits fell by 4.1 percent, the biggest fall since the last three months of 2008.

Japan industrial output gains slow Manufacturers said they expect a decline in May Leika Kihara

apanese factory output rose in April at a slower pace than expected, in a discouraging sign that China’s slowing economy and Europe’s debt crisis will weigh on Japan’s fragile recovery. The data may keep the Bank of Japan under pressure to maintain its ultra-easy monetary policy to keep the economy on a recovery path after it returned to growth in the first quarter from a year-end lull. Still, the central bank is expected to avoid taking further easing measures for now unless market jitters over the euro zone’s woes trigger a spike in the safe-haven yen. The 0.2 percent increase in production was much slower than a 1.3 percent rise in March and less than the median estimate for a 0.5 percent gain, trade ministry data showed yesterday, as some manufacturers curbed production due to an increase in inventories. Manufacturers said they expect output to decline in May and rebound in June, but economists said the risks from Europe’s debt crisis and a rising yen are reason to be cautious about the pace of Japan’s recovery. “Growth was weaker than expected, reflecting sluggish demand for IT-

Output of cars rose 6.5 percent in April

related goods worldwide, particularly in China,” said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo. “The forecast for May is worrisome as that would mean production would fall to levels seen last summer, and the expected rebound in June is also weak. All of this stems from a poor export environment.” The dollar fell to a 3-1/2 month low of 78.86 yen yesterday as investors sought shelter from the euro-zone

storm in the safe-harbour yen, triggering a warning from Finance Minister Jun Azumi that he was closely watching markets for any excessive moves in the Japanese currency.

Demand waning

Manufacturers surveyed by the ministry expect output to fall 3.2 percent in May and then increase 2.4 percent in June, the data

showed. Japan’s economy is headed for a moderate recovery as rebuilding from a record earthquake in March 2011 gets into full swing, and government subsidies for lowemission vehicles support demand for automobiles. In a sign the recovery was broadening, wages rose for the third straight month in April and overtime pay, a barometer of strength in corporate activity, gained the most in more than a year. Slowing Asian demand for smartphones and game machines is starting to weigh on Japanese chip and electronic parts output, which fell 7.8 percent in April to mark the second straight month of declines, the data showed. Output of cars and other transport machinery rose 6.5 percent in April. But inventories of these goods also grew 11.7 percent, and manufacturers in the sector project output to slump 13.6 percent in May, a sign the stimulus-driven boom may have peaked. “For some models, automakers appear to have finished stocking up. Carmakers want to minimise the damage [from a slump in sales] after the subsidies expire,” said a trade ministry official who briefed reporters on the data.

HK’s elderly tycoons shape succession Francis Lui to take over Galaxy Entertainment Group

ong Kong’s powerful familyrun conglomerates are rushing to reassure investors of their succession plans, spurred by a scandal involving the city’s biggest property developer that has thrown the spotlight on plans to hand down businesses. Lui Chee-woo, the 82-yearold founder of developer K. Wah International Holdings and Galaxy Entertainment Group outlined yesterday how management of the two companies would pass to his children. Founder Lui said that while he was not retiring, he had divided his empire. “They are already in their positions,” a spokeswoman for K. Wah told Reuters yesterday. “He did not exactly use the word succession plan, but it does have similar meaning.” Eldest son Francis Lui will

take charge of Galaxy and run the Macau business, the spokeswoman said. The second son, Lawrence, will take care of the family’s business in the United States, while younger son Alexander Lui will take over the property business in Hong Kong, she said. Daughter Paddy Lui will run its hotel business in Hong Kong, while younger daughter Lui Wai-ling heads group administration. Three other Hong Kong firms with extensive property holdings – The Wharf (Holdings), Henderson Land Development and New World Development – also gave details of the roles younger family members would play. Some of Asia’s largest listed companies are family run, and succession plans are tightly held secrets, often only revealed through wills at the death of their founders.

The move to give details of the plans comes amid a high-profile corruption investigation involving Sun Hung Kai Properties, which has seen its shares plunge 22 percent since co-chairmen Thomas and Raymond Kwok were arrested in March. Institutional investors have pressed for details of the company’s succession plan and while Sun Hung Kai says it has one, it has not been announced. “It definitely shows that an unclear game plan for the future of a company creates a lot of problems,” said Nicole Wong, property analyst at brokerage CLSA Asia-Pacific Markets. “It’s shock therapy.” With many tycoons behind Hong Kong’s most powerful companies in their 80s, the issue of succession is at the forefront of investors’ minds. Reuters

Eldest son Francis Lui will run the Macau business as Lui Chee-woo outlines succession

Reuters