Macau Business Daily, June 11th 2012 by Business Daily

Year I - Number 51 Monday June 11, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

Junk the junkets: Prof I. Nelson Rose interview Page 4 & 5

Fitch gives BBB- rating to Wynn Cotai loan

Pages 2 & 3

My conscience clear: Alves Beijing bung CLAIM ‘nonsense’

awyer Leonel Alves – who it’s been suggested relayed a message from a Beijing official who was soliciting a US$300 million (2.4 billion patacas) payment from Las Vegas Sands Corp. in return for helping with LVS’ Macau business – told Business Daily his “conscience is clear”. The unnamed Beijing contact had allegedly offered in late 2009 to mediate on behalf of LVS in several disputes: namely the blocked sale by the Macau government of apartments at LVS’s Four Seasons property, which could net the company up

to US$1 billion; and a lawsuit by Taiwanese businessman Marshall Hao, a former partner who accused LVS of improperly terminating a 2001 agreement to make a joint bid for a Macau casino licence Mr Alves, an outside legal adviser to Sands China Ltd and a member of Macau’s Executive Council, said a story on Friday in the Wall Street Journal quoting from an e-mail mentioning the US$300 million figure “is a complete nonsense”. He added: “The report is not accurate and [the information] is taken out of context.” The lawyer neither confirmed

nor denied having sent e-mails quoted by the WSJ in its story, but claimed the report “has other motivations”. LVS had said in a statement on Friday: “At no time has there ever been any suggestion that the company made any improper payments or received any improper benefits.” The story hinges on an e-mail allegedly from Mr Alves to Steve Jacobs, a former president and CEO of LVS’s Hong Kong-listed unit Sands China that is said to mention the US$300 million payment. Pages 2 & 3

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HANG SENG INDEX

Public flat boost won’t hurt private sellers New public housing units due onto the market by the end of the year may affect sales in the lowto medium private homes segment say real estate experts. But they expect prices in the premium part of the market to hold up well. More than 19,000 public flats will hit the market this year – 10,064 for rent and 9,196 for sale at subsidised prices.

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HSI - Movers Name

Banker bet: locals’ MOP470bn ICBC deal boosts Air Macau credit opps savings The city’s civil aviation flag carrier

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Macau banks continue to set new records for both deposits and loans but their loan-to-deposit ratio remains healthier than in other developed jurisdictions, official data show. Total deposits with the local banking sector rose 2.4 percent in April to a highest ever 470 billion patacas (US$58.8 billion), mainly due to a 2 percent growth in resident deposits, which reached 309.7 billion patacas.

Traffic safety centre gets the bird

Air Macau Co Ltd has signed a strategic deal with Industrial and Commercial Bank of China Ltd. It will give the airline better access to credit markets and aircraft leasing facilities. The agreement also provides for co-branded credit cards, e-business support and account settlement services. The chairman of the bank’s Macau branch said it opened a “new chapter” in cooperation with the local aviation industry. Page 9

%Day

CHINA RES POWER

3.10

BELLE INTERNATIO

3.02

CHINA OVERSEAS

2.49

CHINA RES LAND

2.05

CHINA SHENHUA-H

2.02

BANK OF CHINA-H

-3.16

SANDS CHINA LTD

-3.27

CHINA CONST BA-H

-4.00

BANK OF COMMUN-H

-4.69

IND & COMM BK-H

-4.91

Source: Bloomberg

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business daily June 11, 2012

macau

Beijing bung story ‘nonsense’ – Leonel Alves Lawyer was named as messenger when official asked US$300 million of LVS

Leonel Alves – ‘conscience clear’ over his conduct

awyer Leonel Alves – who it’s been suggested relayed a message from a Beijing official who was soliciting a US$300 million (2.4 billion patacas) payment from Las Vegas Sands Corp. in return for helping with LVS’s Macau business – told Business Daily his “conscience is clear”. Mr Alves, an outside legal adviser to Sands China Ltd and a member of Macau’s Executive

Council, said a story on Friday in the Wall Street Journal quoting from a 2009 e-mail mentioning the US$300 million figure “is a complete nonsense”. He added: “The report is not accurate and [the information] is taken out of context.” The lawyer neither confirmed nor denied having sent e-mails quoted by the WSJ in its story, but claimed the report “has other motivations”.

“It intends to harm my client, and myself,” he stated, without explaining further. “I made statements to the relevant entities and the issue was clarified. My conscience is clear, “ said Mr Alves. Ron Reese, vice president of communications for LVS, could not be reached at the weekend. But the company had said in a statement on Friday: “At no time has there ever been any suggestion

that the company made any improper payments or received any improper benefits.”

Four Seasons It was claimed in the WSJ article that the unnamed Beijing contact had offered to mediate in several disputes: namely the blocked sale by the Macau government of apartments at LVS’s Four Seasons property, which could net the

Wynn loan backed in face of slowdown Fitch offers BBB-minus rating on Wynn’s loan to build US$4 billion Cotai resort but cuts estimates for gaming revenue growth Vítor Quintã

vitorquinta@macaubusinessdaily.com

itch Ratings has assigned a BBB-minus rating to the proposed US$1.5-billion (12 billion patacas) credit facility for Wynn Resorts (Macau) S.A., even though the agency has cut its forecast for gaming growth. Friday’s announcement by Fitch covers a US$1 billion revolver and a US$500-million term loan, both maturing in 2018. Wynn Macau plans to use the money to fund the development of its US$4-billion Cotai project and to refinance US$440 million

outstanding on the company’s existing credit facility. “Wynn Macau maintains significant financial flexibility and has the ability to largely fund the project with internally generated funds,” Fitch said. The credit ratings agency also said the operating subsidiary of Hong Kong-listed Wynn Macau Ltd had a total debt about 4.2 times bigger than its yearly operational profit. “A solid figure,” Fitch adds. The new credit facility would allow Wynn Macau to continue paying

dividends. Analysts also affirmed Wynn Resorts Ltd’s debt rating of BB, placing the US$5.3 billion debt of the Las Vegas-based company at the high end of the Fitch speculative grade scale. The rating outlook remained stable, after being lowered from positive in February because of the legal dispute between Wynn chairman Steve Wynn and Japanese businessman Kazuo Okada. Potential fallout from the dispute is one reason why Fitch says an

upgrade of Wynn’s rating is unlikely in the near-term. The increased budget of the Cotai project, which was originally set at about US$3 billion, is another reason, the agency said.

More caution There are several issues that could place negative pressure on the operator’s rating, including “a significant economic dislocation in China caused by a real estate correction and/or credit market

June 11, 2012 business daily | 3

MACAU Steve Jacobs, a former president and CEO of LVS’s Hong Konglisted unit Sands China in late 2009 – including one said to mention the US$300 million payment. WSJ says it has ‘reviewed’ the e-mails.

Computer forensics

company up to US$1 billion; and a lawsuit by Taiwanese businessman Marshall Hao, a former partner who accused LVS of improperly terminating a 2001 agreement to make a joint bid for a Macau casino license and was claiming tens of millions of dollars in compensation. The suit, originally filed in the U.S. was refiled in Macau, where it is still pending. The WSJ story hinges on several e-mails allegedly from Mr Alves to

Business Daily asked a Hong Kongbased expert in computer forensics how internal company investigators or external regulators or law enforcement would prove the authenticity of an e-mail in such a case. The person, who has more than two decades of experience in the field, told us: “If you have enough intelligence on the company or individual and you wanted to spoof [fake] an e-mail address or account it is possible. If you were to gain access ethically or unethically to the e-mail sender’s computer, account and/or network, you could recreate, override or use the email account and assume the sender’s profile. Or if you know enough about a company’s IT setup and architecture, you could fake an individual’s e-mail address if you have the right tools.” The person added: “To eliminate these possibilities you ideally need to go back to the technical point-of-origin source of the e-mail as quickly as possible. This prompt response is required to minimise the likelihood of the e-mail being deleted or overwritten, and to increase the level of confidence in maintaining the chain of evidence custody. So where someone says an e-mail was sent at a certain time and date, a qualified computer forensic examiner would need to be given access to that originating computer. As the forensic examiner, we would then take a forensic image of that computer. That means taking a bit stream copy – a forensically sound copy – of the laptop or desktop that the e-mail was sent from. Ideally you also need to obtain forensic images of the computer or computers the message was allegedly sent to.” Business Daily understands that attempts to obtain “forensically sound” copies of e-mail correspondence between Mr Alves and LVS have already been made by LVS. That happened at or around the time of March 2011, when U.S.based LVS announced in a regulatory filing that the U.S. Securities and Exchange Commission and the U.S. Justice Department were investigating whether the firm had violated the U.S. Foreign Corrupt Practices Act. Those inquiries stemmed from allegations made in Mr Jacobs’ ‘wrongful termination’ suit in Nevada relating to his July 2010 dismissal from Sands China.

A US$1.5-billion credit facility will help Wynn Macau fund its US$4 billion Cotai project

disruptions”. In March, Fitch’s sovereign team revised its growth forecast for China to 8 percent, down from 8.2 percent. The slowdown in the mainland justifies the “more cautious view” of analysts on Macau’s gaming

growth. Fitch has also cut its forecast for gaming revenue growth to 15 percent, after the sector recorded its lowest revenue growth since 2009 in May. The agency had forecast 20 percent growth in December.

Regulator unaware of Beijing graft inquiry Probe into Ag Bank executive’s losses at city’s casinos run independently of Macau regulator

acau’s top gaming regulator says his department is not involved in any special investigation of the city’s casinos. According to regional media quoting unofficial sources last week, Macau gambling losses incurred by a highflying mainland bank boss prompted a special anti-graft team from Beijing to look afresh at the issue of gambling by ‘politically-exposed persons’. The Central Commission for Discipline Inspection is investigating Yang Kun, an executive vice-president of the Agricultural Bank of China, for allegedly gambling illegally in Macau and misusing bank capital, the South China Morning Post reported last week. The head of Macau’s Gaming Inspection and Coordination Bureau, Manuel Joaquim das Neves, says he is unaware of any probe into the city’s casinos by Beijing’s top anti-corruption watchdog. “We didn’t get any request to cooperate,” Mr Neves told Portuguese-language newspaper Ponto Final. The regulator was also quoted as saying it was not up to authorities here to control these types of probes. A spokesman for the Secretary of Security Cheong Kuoc Vá told Business Daily the bureau had no comment. The Financial Intelligence Office, Macau’s anti-money laundering watchdog, said it could not comment because it had a strict policy of secrecy on all internal matters. The South China Morning Post reported that Beijing’s anti-graft team was in the middle of an inquiry into Mr Yang’s role in the bank’s provision of a loan to businessman Wang Yaohui. The 10year loan was worth about 3 billion yuan (3.69 billion patacas). Beijing is said to be probing both men’s gambling activities in Macau. “There are already some clues as to how much money they lost in Macau, but, of course, the government needs evidence, so that it can put a specific number on this,” the paper quoted one sources as saying. The two men are suspected of losing several hundred million yuan during their trips to the casinos. The casinos were not named. Mr Neves told Ponto Final this type of inquiry was uncommon. “It’s not because one case is reported, and this one is not officially confirmed, that people can talk about a money laundering phenomenon in the [city’s] casinos,” he told the newspaper.

The company expects revenue growth at Wynn Macau to reflect the market average, namely due to “some cannibalisation expected from the opening of (Sands) Cotai Central”. Analysts also fear Beijing might enforce stricter restrictions on entry visas or take other measures to slow growth. The remark comes after a top Agricultural Bank of China executive was detained for allegedly gambling with clients’ money in Macau casinos. Fitch believes the medium-term future for the gaming industry is rosy, owing to “an attractive supply/demand outlook over the next few years, and high barriers to entry in the market”. The government will remain focused on “careful management of supply”, which the company says is positive for gaming operators’ profitability, generating free cash flow and credit quality.

editorial

Prometheus chained Associate Editor

ost companies in China have three sets of accounts: a real one for internal use, one for the tax bureau and one for the CEO’s wife (and, in some cases, a fourth for his mistress). That’s the view of Junheng Li, a citizen of the People’s Republic of China writing in this newspaper on Friday. Ms Li should know. As a senior equity analyst she spends her professional life identifying and steering clear of toxic Chinese assets. Against this background, and the rampant corruption in China that is acknowledged publicly by the country’s own political leadership, it’s a wonder that there isn’t an allegation every week that someone somewhere has solicited a major foreign company operating in China to pay a bribe to make something happen or not happen. In March 2011 the American computer firm IBM agreed to pay US$10 million to settle a civil suit filed by the U.S. Securities and Exchange Commission under that country’s Foreign Corrupt Practices Act. Under the deal, IBM did not admit wrongdoing. It had been alleged that the company’s Asian subsidiaries violated the Act with a wide-ranging scheme to bribe South Korean and Chinese officials for most of the 2000s.

Greasing wheels The unpalatable truth is that in most parts of the world bribery is the norm, not the exception. Some even argue that it has its own strange form of ethics. There’s a grim joke among the real estate development and construction community in Macau that when now-jailed Ao Man Long was secretary for public works and transport, things got done. People knew who to go to and things were made to happen they say. Now the department has been cleaned up, nothing gets done, they joke. Foreign businesspeople working over the border in Guangdong province make a similar complaint. They say in the old days you knew which officials to befriend and entertain in order to get a permit here or a speeding of some paperwork there. They add that since Zhu Xiaodan was elected governor of Guangdong in January, the anti-corruption drive has been ramped up dramatically. Now, senior officials spend only a short time in a particular post. That may be good for cutting back graft, but makes it devilish difficult to cut through China’s heroic levels of red tape they complain. The fatal flaw in these arguments is that under a favours-for-sale system only those with deep pockets get any satisfaction, and then only in order to line their and their government contacts’ pockets even further. But Macau wasn’t built (or re-built) in a day. It’s going to take time to change habits not of a lifetime but of many lifetimes. It’s clear that whatever the merits or demerits of recent allegations, change is in the air.

The unpalatable truth is that in most parts of the world bribery is the norm, not the exception. Some even argue that it has its own strange form of ethics

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business daily June 11, 2012

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Get rid of the junkets American gaming law expert Nelson Rose wants to rid Macau of junkets. In an exclusive interview with Business Daily, he says they create dangerous ties with unlicensed industry players, creating a weak point in gaming laws. The government’s management of land for casino developments is another concern. Lenders want to know that buildings will stay open and not revert to the government, he says. “Within the next year or two, the government has to make it very clear what everybody knows, which is the concessions will continue.” Luciana Leitão

newsdesk@macaubusinesdaily.com

Photos by Manuel Cardoso

What’s the future of gaming in Macau? Macau is becoming a mature jurisdiction. It’s funny to say this, considering it’s one of the oldest jurisdictions in the world, but the current system is getting mature. The trend is definitely up. I went to the official government site and there are 24 million visitors a year, but the majority is from the mainland, the majority are daytrippers, and the majority of each of these comes from Guangdong. There is just a tremendous opportunity of growth, like Shanghai and the rest of southeast China when the high-speed rail goes all the way through, and potentially Beijing. I’ve been a little bit pessimistic, but that number 24 million really impressed me. The infrastructure problem seems to be getting better. A few years ago we spent an hour to find a parking spot to go to a restaurant. It seems they’re getting better control over that. I’ve always thought, at some point, you simply can’t handle the number of people, but it looks like they’re working on that. I’m a professor at law, my speciality is gambling law, so I look at the regulatory system and it’s better. But I don’t think there is any way to really control all the potential problems with junkets. The only thing you can do is to get rid of them. Singapore has shown you really

don’t need them, but there is a reason for them existing. Gambling debts are not collectable in China, promotion of gambling is a crime, so they’re not even allowed to advertise casinos, the Chinese don’t like banks and they like cash and social networking. They trust the agents and subagents, and the casinos have the advantage of saying, ‘We don’t necessarily know who the high rollers are.’ They really need to make gambling debts legally enforceable and to allow the casinos to be their own junkets. Are junkets the Achilles heel of the Macau gambling system? Yes. The two weakest points are the whole junkets and currency transaction. If someone wants to borrow money for gambling, they should be able to do so and the casino should be able to collect it, rather than having to use these subterfuges. You need to make it easier for mainlanders to get money out of the country and gambling debts collectable. The weakest point of Macau gambling system is the junkets and related to that is revenue sharing. Any one of those six operators can have an unlimited number of casinos and they can enter an unlimited number of revenue sharing agreements with people who are not licensed. It’s got the potential for real

problems and clearly there has got to be violations of the law, starting with China’s law that says they can’t take more than a very limited amount of currency across the border. Would it be possible to eliminate junkets? Singapore showed it was possible. The problem is that it is so well established now and there are those restrictions on the mainland, how would you do it? There are a couple of ways it could come crashing down: if there were horrible scandals that led the Nevada operators not to be involved in Macau anymore, or if there were horrible enough scandals that the people of Macau would say, ‘This is no good.’ The most likely, and I don’t think it is very likely, would be if there were scandals where the central

The weakest point of Macau gambling system is the junkets and related to that is revenue sharing

Government would say it would close the border or it would say: ‘We’re going back to these restrictions, you can visit once a year.’ If China legalises gambling debts, would junkets no longer have a reason to exist? You not only have to legalise gambling debts, but allow the money to go to Macau. If they did both of those, the major reasons for the junkets to exist would be gone. There still would be the fact that the mainlanders like cash and they trust local people, and it gives them some anonymity. But none of those are good enough reasons to have them. Remember how bad things were in Macau in the 1980s and 1990s and the reputation it had, so just because the system has been around doesn’t mean it should continue. Regulators are constantly making it a little harder and they are tightening the screws to protect the operators and the public.

No pressure CasinoLeaks-Macau was created with the goal of exposing how American operators are allegedly bending US regulations, through the connections with junkets. What’s your take? I think it is exactly what it seems to be. It is sponsored by a union, and the unions and Sheldon Adelson have had a nasty war for decades. Any opportunity either side has to bad mouth the other, they usually do. I don’t think it’s China bashing. If you’re going to bash China, you bash China. You don’t bash Macau. People in the United States don’t think of Macau as China. And there’s enough going on in China they would have plenty to do. I think it is ‘Mr Adelson bashing’. And it’s not really leaks. They knew WikiLeaks is such a good name, and they’re taking publicly available information and using it for their agenda, which they absolutely have the right to do. If Las Vegas Sands changed and became pro-union, I think all of

June 11, 2012 business daily | 5

MACAU the sudden CasinoLeaks would disappear, because the point is to constantly be attacking Sheldon Adelson and Las Vegas Sands. Will they have any impact on the activities of American operators? No. What will happen is, unless there is a scandal and there is really something there, in terms of the typical fight of a union and a casino, they both bad mouth each other in the press for years, and then the company goes out of business, signs the agreement, and all is forgotten. If they can raise enough of a stink to move public opinion but, more importantly, the opinion of regulators, something could happen. But if you look at where the casinos are licensed in the US, I don’t see it happening. MGM is the best example. All the information about the relationship between Stanley Ho and his daughter Pansy Ho and the US$90 million gift was known to the Nevada regulators and they said ‘fine’. In New Jersey, they said: ‘We don’t think anyone gets US$90 million without strings.’ So, MGM had to choose between New Jersey and China. MGM said China. Nevada knows every single thing CasinoLeaks is bringing up, and they’ve already issued the licences. I don’t see it as having any impact other than interesting news reading.

Renewal woes Granting land to operators seems to take much more time than what the companies would like. Is it incoherent that the government promises the land but then takes time to approve it? I think you had separate forces all coinciding. The main one was the economy. Las Vegas Sands had lost lots seven and eight, and clearly they wanted that land. At one point, they filled a form with the US Securities and Exchange Commission saying they could go bankrupt. That’s how bad things were going in the United States. So, if the economy is

in horrible recession and money is tight, you can’t build. Then, completely separate from that, you’ve got the Macau land problem, which was that people were getting land and not using it. And the Macau government said, ‘If you’re not going to use it, you’ll lose it.’ So, there’s that issue. At some point what is going to happen is the deadline on the concessions are going to start to be a factor, fairly soon. How do you raise the money to build a US$2 billion casino? Normally, you issue bonds and get loans. The lender wants to know that that building is not opening up and the next year reverts to the government of Macau, so within the next year or two, the government has to make it very clear what everybody knows, which is the concessions will continue. There’s the question on whether will they issue more, they’ll probably reserve that and say, ‘We don’t know that yet,’ but the reality is they are not going to. There’s no reason to, really, because you have an unlimited number of casinos. Then they also have to say what they’re going to want and they’re going to want something. At the very least, what they are going to want is that there is compliance with the promises that, for example, these are truly integrated resorts with other forms of entertainment. They’ll ask for financial guarantees to make sure that happens. With so many disputes coming up involving American operators here, such as the

Regulators are constantly making it a little harder and they are tightening the screws to protect the operators and the public

court case between Steve Jacobs and Sheldon Adelson, does the regulator have cause for concern? In the American legal system, lawsuits are very common. And the lawsuits we’re seeing in Macau are for the most part pretty typical of the suits that the Americans see whenever there is a successful venture. So, if a company like Las Vegas Sands is making billions of dollars in revenues, people from the casinos in Macau come out of the woodwork claiming that they were the ones responsible for the success and they should get a share. This suit by (Steve) Jacobs is also very typical. When a top executive gets fired he often will sue for wrongful termination. They don’t normally just sue for breach of contract. They put in a suit you have to show the company that fired you did all these horrible things alleged. What happens was he did, in fact, allege all these horrible things, which means the government will have to investigate. It doesn’t necessarily mean he’s going to succeed because the biggest problem for bringing lawsuits like this is that they have the burden of proof. If the judge or jury doesn’t know whom to believe, the person brining in the lawsuit loses and, statistically, claims like this do not usually succeed, and almost never evolve into criminal charges. I don’t see this as being a sensitive time and most of the lawsuits are typical. They sound really horrible for people who are not used to the litigiousness of American society, but for American lawyers or people who have looked at any big businesses in the US, that’s the typical type of lawsuits.

although temporary, impact. The impact is strongest if there is a competitor casino to go to that doesn’t have the smoking ban. On the other hand, it does look like the negative impact is temporary. Let’s say you’re just across the border in the mainland, well it’s quite a trip to go somewhere else. After a while — it may take three years — whatever negative impact, it had would probably recover. It will be temporary, but fairly significant when it first hits. At the very least, not only are you going to have people who might go elsewhere, you are also going to have people who are gambling and when they take a break to smoke, they decide to go home, instead of going back to the casino.

Legal curbs

There are suggestions the draft may include a ban on casino workers from entering casinos. How do you see it? I don’t see the connection between the two. I guess you can make the argument that one of the reasons for raising the age limit is that a larger percentage of young people become compulsive gamblers than older people. Probably it’s true that people who work in casinos are more likely to become compulsive gamblers than people who don’t, just like people who work as doctors or nurses are more likely to become addicted to prescription drugs, because they have access. Plus, there is the factor that dealers in casinos tend to think, after working in casinos, they are smarter than the average player. It’s not completely frivolous, but the difference is that with young people they are going to grow out of it and become, in general, less susceptible to becoming compulsive gamblers. We certainly think adult casino workers can make decisions for themselves. When this was tried in New Jersey it didn’t really work. Instead, business developers would take casino workers right after their shift, fly them to a casino, for example, in the Bahamas, three hours away, they would gamble all night and go back to work. I think probably there is not enough evidence that the average casino worker needs this type of protection from himself. The danger is that they can become compulsive gamblers and then also they might become susceptible to organised crime. Harrah’s, for instance, has a policy that none of their employees can gamble in any of their casinos – and I do think it is a good idea.

New laws relevant to the gaming industry have been rolled out and some others are yet to come. For instance, will the partial smoking ban that will be in force early next year have any impact on casino revenues? Yes. Everywhere where smoking bans have been imposed on casinos, it immediately had a fairly major,

U.S. legal eagle A recognised authority on national and international gaming law, including casinos, lotteries, racetracks, bingo and online gambling, Nelson Rose is a professor at Whittier Law School and visiting professor at the University of Macau. He created the first law school class on gaming law, and has taught the FBI and at universities in Nevada, Slovenia, France, Spain and the mainland. He is also the editor of the Law and Litigation section of the new iGaming Business North American. In his role as a consultant and expert witness, Mr Rose has worked for investment banks, law firms, corporations, all levels of government, and licenced operators, including online companies.

Another significant law is the draft that forbids people under 21 from working and entering casinos. Is this a positive measure? It’s probably a good idea, on both sides. We know that younger people are more likely to become compulsive gamblers than older people. They are more likely to have less control on their own impulses. And in terms of lifetime career, it is better normally to stay in school than it is to drop out and start working at 18. So, probably. These are very broad decisions for a society. There’s a reason society draws lines for ages. It is to protect children, minors and young individuals from themselves, from making the wrong decisions. Almost always the governments have the power to do this, but also whether it’s right or wrong it is really a decision of the society.

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business daily June 11, 2012

macau Brought to you by

HOSPITALITY Crunching events numbers One of the biggest bets the city has made was on the development of a MICE (meetings, incentive, conferences and exhibitions) industry. The development of the gaming sector was expected to bring big, multi-purpose facilities and offer new attractions that would, in turn, bring events to the casino-resorts. The results have been less than impressive, especially if we discount the meetings or events that, with or without supporting policies, would have happened anyway. A comparison of the most recent data from the first quarter of this year to the same time last year shows some slightly puzzling results and raises further questions.

Positive outlook for premium property Real estate agents and insiders are bullish, even though more than 19,000 public flats will hit the market this year Tony Lai

tony.lai@macaubusinessdaily.com

on the sale of flats priced higher than 11,285 yuan (US$1,770) per square metre.

Mixed view

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The overall picture shows a negligible decline in the number of events of 2 percent and a positive increase in the number of participants by 26 percent. The increased participation translates to about 33,000 people. Growth, however, is almost completely due to the increase in a single category: corporate meetings. The average number of participants at these events has increased from 97 to 235 per meeting. No distinction is made between domestic and non-domestic companies. This result is somewhat astonishing. It may be just a statistical fluke or the result of a change in data collection. It deserves a more thorough explanation. It is unclear why this category of events should grow so dramatically, given the murky, global economic outlook. Some companies participating in exhibitions were surveyed on their costs. The sample is small, just 11 companies, but the results should cause concern.

If we take them at face value, costs seem to be rising fast. Overall, those surveyed reported costs that were roughly double of the previous year. These increases will inevitably reduce the city’s competiveness as a MICE destination. J.I.D.

New public housing units due onto the market by the end of the year may affect sales, but expect prices to remain steady.

he large supply of new public housing due on the market this year will not have a significant overall impact on the city’s real estate sector, industry insiders say, but it could affect prices and demand in the low- to mediumpriced private homes segment. The government has promised to have 19,260 public flats ready by the end of the year. Housing Bureau director Tam Kuong Man said last week there would be 10,064 homes for rent and 9,196 for sale at subsidised prices. Some have already reached the market and the remainder are close to delivery, causing concern that property prices may be affected. It is a concern not shared by Gregory Ku, managing director at Jones Lang LaSalle, Macau. “There are two different markets for public houses and private flats, so I don’t see the public houses bringing big problems to the (private property) market,” Mr Ku told Business Daily. “It is difficult for the government to have measures to clamp down on the real estate market.” Mr Ku says the special stamp duty introduced by the government last year has had only a temporary

1,099

Residential units were completed last year

effect in cooling the market. “The market will remain unscathed unless there are restrictions on the sales of units like in mainland China,” he said. There are currently restrictions on buying homes in more than 40 mainland cities. For example, if buyers are not resident in Xianzhou, Zhuhai, just one new house is the maximum that can be bought. There are also curbs

Mr Ku’s confidence in the market comes from strong demand for flats in the low- to mid-price range. Supply is also limited. There has been an annual availability of only about 2,000 units in the past few years. Mr Ku said they sold quickly. Official data show 1,099 residential units were completed last year – down by 73 percent year-on-year – including 404 three-bedroom apartments and 318 two-bedroom units. The annual average of new flats coming onto the market between 2000 and last year was 1,874 units. Mr Ku expects foreign labour to fuel the property market. The latest statistics suggest about 100,000 workers might soon enter the workforce. He said they would keep the demand for flats high and keep prices steady in the rental market. New casino projects in Cotai, including Wynn Macau Ltd’s project and the expansion of Sands China Ltd’s properties, would bring more expatriates to the city, But Joey Lao Chi Ngai, chairman of the Macau Association of Economic Sciences, thinks public houses being offered later this year would leave a dent in the market. Demand for low and mid-priced flats will be hammered by the sale of affordable homes, he said. “Those new Cotai projects can only be ready in three to five years. No one knows what they will do to the market and what the global economic outlook will be by then,” said Mr Lao. Other segments of the market, including luxury residential flats, will remain largely unaffected, he said. While sales may take a slight hit, prices are expected to remain steady, he said. “The overall real estate market will stay on an upward trend,” Mr Lao said.

Weather Beijing 32/17o C Changchun 24/14o C

Harbin 25/14o C

Xian 30/14o C Shanghai 28/22o C Chengdu 30/21o C Kunming 26/17o C Haikou 35/27o C Sanya 33/27o C

Guangzhou 32/26o C

MACAU (11 June-16 June) Day

Temperature

Humidity

06/11

27/31o C

65/95 %

06/12

26/29o C

70/95 %

06/13

25/28o C

75/95 %

06/14

25/28o C

75/95 %

06/15

25/29o C

70/95 %

06/16

26/30o C

65/95 %

Shenzhen 34/26o C

ASIA (today)

Hong Kong 30/26o C

Manila

TOKYO

Jakarta

31/26o C

24/18o C

32/24o C

Macau 31/27o C

Bangkok

SEOUL

K. lumpur

33/27o C

SINGAPORE

28/21o C

35/27o C

taipei

36/27o C

8 |

business daily June 11, 2012

macau

Wetland’s fate decided by environmental review

Brought to you by

Labour pains The word “tight” describes the state of play in the labour market. As the economy has grown, it has become clear that the city’s labour force cannot sustain existing rates of growth. Macau does not have either the number of workers or, in many instances, the skills its growing number of companies and economic activities demand. The three-month average from February to April shows unemployment at about 2 percent and under-employment at 0.8 percent. An unemployment rate of 2 percent represents just 6,900 individuals. These values are low by historical standards..

The three-month averages are in line with the lowest monthly figures registered. Similar low levels of unemployment were being registered when the Statistics and Census Service started collecting employment data in 1992. The graphs show, rather neatly, the economic slowdown in the early years of this century and the relative cooling down after the financial crisis. For all practical purposes, full employment has been achieved. This tightness in the labour market has inevitably translated into upward pressure on wages. The second graph evaluates the transition in wages. The analysis compares industry sectors where the available series allow for a direct comparison and uses 2004 as a basis.

A third-party impact assessment will determine if the Taipa wetland will host the traffic centre Vítor Quintã

vitorquinta@macaubusinessdaily.com

he Taipa wetland may yet win a reprieve, with the government saying it will revisit its proposal to locate a traffic centre close to the bird sanctuary. Transport and Public Works secretary Lau Si Io said on Friday the government would commission an independent environmental impact assessment over the proposed relocation of the Traffic Information and Safety Centre. The government had proposed relocating the centre nearby Macau’s only remaining wetland area. It is a mating area for egrets. If the report concludes the move would have a significant negative impact, the centre will not be relocated to the area and authorities would look for an alternative site, he said. Mr Lau said Chief Executive Fernando Chui Sai On had already given “very clear indications” about the wetland. The Land, Public Works and Transport Bureau will follow those indications, with “a new study and in-depth analysis over the environmental impact” for which the Environmental Protection Bureau will commission “an independent third-party”. The results of the environmental assessment would be made public. Legislator and head of the Macau Construction Industry Environmental Protection Society, Mak Soi Kun, felt things should have been handled differently.

“It would have been easier for the government to communicate with citizens, to explain why they made such a decision, if they had collected the scientific data first,” he told public broadcaster TDM News.

Long-term protection Mr Lau’s pledge came three days after six environmental groups presented an online petition with 2,100 signatures that demanded the government drop its relocation plan. Mr Lau denied there had been any “contradiction” between public opinion and the government’s wishes. He said the government had already said the relocation should not affect the natural habitat of egrets. Joe Chan Chon Meng leads the Macau Environmental Student Union, one of the groups behind the petition. He welcomed the decision but said it should be “the first step” in safeguarding the wetland. Talking to TDM News, he called on the government to implement a long-term plan to protect the wetland. “We hope that they can set up a long-term, permanent ecological preservation area there by environmental law.” Mr Chan said a 19,245-squaremetre plot, covering the entire wetland area, was granted to a private developer, Chee Lee Investment Co. Ltd, in 1990.

More than 2,100 signatures opposing the relocation of a traffic centre to Taipa were collected by environmental groups.

The company paid a premium of 46.3 million patacas (US$5.8 million) for a 25-year concession but there is no information on the deadline for developing the plot. “They should clarify the issue, because there are still some questions puzzling our citizens,” Mr Chan said. He said most people he had spoken to did not want anything to be built there. The head of the Macau Ecological Society, Ho Wai Tin, said the environmental study should cover the whole wetland and “not just focus on the 10,000 square metres of reclaimed land”.

25000 20000 15000 10000 5000 0

Average wages in all sectors have increased. In comparative terms, the wages earned by workers in hotels and restaurants have increased faster than in any other industry. They have more than doubled in this period. Companies in manufacturing, a sector that has seen its relevance decline significantly, are paying higher wages. They have increased by about 76 percent, which is likely to increase problems of competitiveness in the sector. Wages in the gaming sector grew by more than 54 percent. Wages in the sector have always been comparatively higher. J.I.D.

Deposits, loans still on the rise

acau banks continue to set new records for both deposits and loans, but their loan-to-deposit ratio remains healthier than some leading economies, official data shows. Total deposits rose 2.4 percent in April to a record 470 billion patacas (US$58.8 billion). The increase was largely due to a 2 percent growth in resident deposits, which reached 309.7 billion patacas. In addition, domestic loans to the private sector increased 1.3 percent from March, to a record 172.5 billion patacas. External loans grew at a slower 0.6 percent. With deposits growing faster than loans in April, the loan-to-deposit ratio fell by 1.1 percentage points

to 75.7 percent. This ratio is higher than the 75-percent ceiling set for all commercial banks in the mainland. It is lower than the 78 percent loan-to-deposit ratio in the United States banking system and the 110-percent ratio in the European Union, according to The Wall Street Journal. Europeans banks have had financial issues due to their high loan-to-deposit ratio, which in some cases exceeds 200 percent. If the ratio is too low, banks may not be earning as much as they could. In Macau, the ratio for residents’ was at a surprisingly low 50.9 percent in April, down by 0.9 points. V.Q.

June 11, 2012 business daily | 9

GREATER CHINA

he government will not rule out the possibility of pumping more money into Macau International Airport Co Ltd even though it is about to receive a 1.95-billion-pataca cash injection. The airport concessionaire issued 1.95 billion patacas of preferential shares last month. The proceeds will be used to pay back a 2-billion-pataca loan from 1994 which is due this month. The aviation authority confirmed to Business Daily last week that the government had subscribed to 66.97 percent of the non-voting, redeemable preferential shares, while Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau SA (STDM) would hold 33.03 percent. Minor private shareholders, accounting for 11.73 percent, showed no interest in the new shares. “The aim is to help it [CAM] to lessen its debts, improve its financial situation and operation for better preparation for the next phase of the airport development,” Macau Civil Aviation Authority president said Simon Chan Weng Hong. The airport operator recorded a loss of 15.3 million patacas last year, although an improvement from a deficit of 93.7 million patacas in 2010. Mr Chan was speaking on the sidelines of a public ceremony last Friday. The subscription process was almost complete, with only some administration and bank procedures remaining. The head of the aviation regulator has not ruled out future capital injections, saying it would “depend on the company’s situation and development, as well as the airport’s development”. Mr Chan said the airport development

All cashed up and ready to go The airport is billions better off but the regulator cannot rule out another capital injection Tony Lai

tony.lai@macaubusinessdaily.com

plan required adjustments and would not be ready this year, although the overall direction of the plan was in place. The government wants to expand the airport to cater for 15 million passengers a year by 2030. It can currently handle 6 million passengers a year.

Also on Friday, flag carrier Air Macau Co Ltd and Industrial and Commercial Bank of China Ltd signed a strategic cooperation agreement to strengthen financing cooperation. Besides co-branded credit cards, e-business support and account settlement services, the bank will also provide aircraft leasing facilities, and cash management and investment services to the airline. The chairman of the bank’s Macau branch, Zhu Xiao Ping, said both companies would “carry on the good relationship between their parent companies, and open a new chapter of win-win cooperation”. The move sees close cooperation between the airline and leading mainland corporations. Air China Ltd

Share capital to grow to HK$1.5 billion; proceeds will go towards new investment Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

it [CAM] to lessen its debts, improve its financial situation and operation for

Low-budget market

Shareholders approve Shun Tak capital boost

hareholders of property developer and ferry operator Shun Tak Holdings Ltd have approved the issue of an additional 2 billion shares at HK$0.25 each, the company said in a filing to the Hong Kong Stock exchange. The company’s share capital will grow by 50 percent to HK$1.5 billion (US$193 million) following a decision passed at the company’s annual general meeting last Wednesday. “The directors propose to increase the authorised share capital of the company from HK$1 billion, divided into 4 billion shares of HK$0.25 each, to HK$1.5 billion, divided into 6 billion shares of HK$0.25 each,” it said. “It will provide the company with greater flexibility to accommodate future expansion and growth.” Profit attributable to shareholders or net income fell 9.9 percent compared to 2010, according to the annual report. Shun Tak recorded a net income of HK$781 million last year. The conglomerate raised HK$1.6 billion from a rights offering in March, representing 37.5 percent of the company’s share capital. A stock exchange announcement said the proceeds would go towards “general working capital and for financing new investment opportunities”. Shun Tak has previously announced it would diversify into tourism in the mainland through a series of joint ventures. “We definitely are in

The aim is to help

talks and now looking very closely at some possibilities,” managing director Pansy Ho Chiu King said last month. Shun Tak has moved to strengthen the core of it operations. The Macau government has approved the HK$341-million purchase of a rival company, New World First Ferry (Macau). The deal included seven vessels. About 56 percent of last year’s revenue, HK$1.74 billion out of HK$3.09 billion, was generated by the TurboJet ferry and Sky Shuttle Helicopter operations. At Wednesday’s meeting, shareholders okayed the board’s move to buy back a maximum of 10 percent of shares and issue no more than 20 percent of new shares. The board said buying back shares would be beneficial to shareholders. “Trading conditions on the stock exchange have sometimes been volatile in recent years and, if there are occasions in future when depressed market conditions arise, repurchases of shares may support the share price and lead to an enhancement of the net assets value of the company and/ or its earnings per share,” it said. Five directors were re-elected, including Maisy Ho Chiu Ha. Both Ms Maisy Ho and Ms Pansy Ho are daughters of Shun Tak chairman Stanley Ho Hung Sun.

better preparation for the next phase of the airport development

Air Macau deal with ICBC - better credit acesss

already holds more than 80 percent of Air Macau’s shares and ICBC is one of the big four, state-owned banks. The carrier has gradually expanded its network in Taiwan and to other cities in North and Southeast Asia, Mr Zheng said. The airline has 280 flights scheduled each week to the mainland and Taiwan.

Simon Chan Weng Hong, president of the Civil Aviation Authority

Air Macau is increasingly facing more competition from other carriers. Mr Chan says competition will only increase as more low-cost airlines serve Macau as it strives to become a global tourism hub. There will soon be increased services flying from the airport to Bangkok, Thailand, and Busan, South Korea.

10 |

business daily June 11, 2012

GREATER CHINA

China amends patent law to make generic drugs China amends intellectual property laws so its drug firms can make generic drugs that are still under patent protection

he amended Chinese patent law allows Beijing to issue compulsory licenses to eligible companies to produce generic versions of patented drugs during state emergencies, or unusual circumstances, or in the interests of the public. The move will ring alarm bells for big pharmaceutical companies, since the country is a vital growth market at a time when sales in Western countries are flagging. The patent change comes within months of a similar move by India to effectively end the monopoly on an expensive cancer drug made by Bayer AG by issuing its first socalled “compulsory license”. For “reasons of public health”, eligible drug makers can also ask to export these medicines to other countries, including members of the World Trade Organisation. Compulsory licenses are available to nations to issue under WTO rules in certain cases where life-saving treatments are unaffordable. China had signaled interest in the idea from at least 2008-2009, when its State Intellectual Property Office invited foreign experts to Beijing to show Chinese officials how to

prepare the legal grounds for issuing compulsory licenses. Kajal Bhardwaj, a legal expert from India who is working on health, HIV and human rights trade laws, said China’s move was well within the limits of international trade agreements. China’s stable of generic drug makers has been producing the key ingredients - or active pharmaceutical ingredients (APIs) - in medicines for years, exporting them to foreign drug makers, which then sell the patented finished products back to China at prices which the average Chinese citizen often cannot afford. The government is known to be looking at Gilead Sciences Inc’s tenofovir, which is recommended by the World Health Organisation as part of a first-line cocktail treatment for AIDS patients, two sources with direct knowledge of the matter said. Gilead started share its intellectual property rights on its medicines in a patent pool with generic drug makers from many countries last July in return for a small royalty, however China was excluded, which meant it still had to pay high prices for tenofovir. Since the change in China’s patent

law, Gilead has offered certain concessions, including giving China a substantial donation of tenofovir if it continues to buy the same amount, said Paul Cawthorne, coordinator for Medecins Sans Frontieres’ Access Campaign in Asia. “This is all a negotiation game; this offer from Gilead came about once the news that the Chinese was considering issuing a CL came out. The end game is okay, you get a better deal or you use the CL, it’s a strategy that many countries use,”

he said. All eyes are now fixed on China to see how it battles it out with big foreign drug exporters in the generic drug market.

Reuters

China adjusts its fuel policies China increases stockpiles while cutting domestic fuel prices to stimulate the economy

China posts positive trade figures in May C Global economic conditions casting a shadow on expectations, as exports to EU drop

ccording to Chinese government data, China’s exports jumped 15.3 percent in May from a year earlier, while imports climbed 12.1 percent year on year. Exports totaled US$181.14 billion while imports were US$162.44 billion in May in china. The May trade surplus of US$18.7 billion was up slightly from $18.42 billion in April, and US$13 billion in May 2011. The new figures also represents an up of 4.9 percent in exports and 0.3 percent in imports from the previous month. The government also announced on Saturday that in May, growth in factory output edged up to 9.6 percent from April’s 9.3 percent, the lowest rate since the 2008 crisis. However the number was still well below last year’s levels. Growth in spending on factories and other fixed assets edged down. Beijing cut interest rates last week for the first time in nearly four years in a new effort to buoy growth that fell to a nearly three-year low of 8.1 percent in the first quarter. The country’s economy, the second biggest in the world after the United States, is forecast to grow by its slowest rate in a decade this year.

External trade slows down

Chinese leaders spent the last two years tightening lending and investment curbs to cool an overheated economy and inflation before the unexpectedly sharp drop in global demand last year prompted them to reverse course. Economic woes in Europe continue cast a shadow. Exports in the first five months of the year to the 27-nation European Union, China’s biggest trading partner, were down 0.8 percent compared to the same

period last year. Exports to debtplagued Italy dropped 25.1 percent. However strong exports to the United States have offset the outcome. Exports to the United States were up 14.4 percent in the first five months, compared to the same period a year ago. Overall trade has risen 7.7 percent this year but some analysts say China’s total trade for the full year might shrink. Last year trade grew by 22.5 percent compared to 2010.

hina, the world’s secondbiggest oil consumer, increased crude imports in May to a record high as refineries raised processing rates and oil prices declined. The country bought a net 25.3 million metric tons, or 5.98 million barrels a day, more than it exported last month, according to government data. The previous high was 5.87 million barrels a day in February. The jump in oil purchases helped spur a 12.7 percent gain for the nation’s imports last month, exceeding economists’ estimates. “International crude oil prices have been falling in the past two months, so more crude was probably shipped in to fill commercial and state emergency stockpiles” as prices could rise again, Gong Jinshuang, a Beijing-based senior engineer at China National Petroleum Corp., the nation’s biggest oil company said. At the same time, the government also cut fuel prices for the second time in a month in an effort to stimulate the economy. The fuel price cut will reduce retail costs of the mostly commonly used grade of gasoline by over 5 percent. Diesel prices will be cut by a similar amount, effective June 9. The cut is the steepest since the government’s current pricing system was introduced in December 2008. The government announced the fuel price cuts a day after it reduces interest rate for the first time in nearly four years. It has also promised to pump money into the economy with spending on low-cost housing, airports and other projects.

June 11, 2012 business daily | 11

asia

Obama, Aquino call for freedom of navigation U.S. supports the Philippines in South China Sea dispute

he United States and the Philippines on Friday called for freedom of navigation in the tense South China Sea as the White House offered a robust show of support for President Benigno Aquino. President Barack Obama welcomed Mr Aquino to the White House in the latest highprofile gesture to put a focus on US ties to Asia, where a number of countries are embroiled in territorial conflicts with a rising China. Addressing reporters next to Aquino in the Oval Office, Mr Obama said the two leaders spoke about “trying to make sure that we have a strong set of international norms and rules governing maritime disputes in the region.” In a joint statement released afterward, the two leaders “underscored the importance of the principles of ensuring freedom of navigation, respect for international law and unimpeded lawful commerce.” Mr Aquino and Mr Obama called for diplomacy to resolve territorial disputes “without coercion or the use of force.” China claims virtually all of the South China Sea up to Southeast Asian nations’ shores and tensions have soared in recent years with both the Philippines and Vietnam. The Philippines and China recently pulled back vessels after a standoff over the Scarborough Shoal, which lies near the main Philippine island of Luzon.

Old allies meeting

Mr Aquino’s visit to the United States was closely watched in China, where some policymakers — suspect despite official US denials — that the United States is seeking to encircle the growing Asian power. Secretary of State Hillary Clinton, toasting earlier Friday at a

luncheon in his honor, credited Mr Aquino with defusing tensions over the rock formation. The United States and the Philippines signed agreements to step up cooperation on science and technology and to boost the number of Peace Corps volunteers in the former US colony.

But Mr Aquino’s visit was largely symbolic, with many US policymakers believing that the son of democracy heroine Corazon Aquino has revitalized an often overlooked relationship by tackling hard issues. Aquino recently won a major battle in his campaign against corruption with the sacking of the country’s top judge. Aquino has also agreed to let more US troops rotate — but not be based — in the Philippines despite the historical baggage. “I’ve always found President Aquino to be a thoughtful and very helpful partner,” Mr Obama said. “And I think that as a consequence of the meeting today in which we discussed not only military and economic issues, but also regional issues — for example, trying to make sure that we have a strong set of international norms and rules governing maritime disputes in the region — that I’m very confident that we’re going to see continued friendship and strong cooperation between our two countries,” he said. Mr Aquino said his meeting with Mr Obama has “deepened and strengthened a very long relationship we have, especially as we face the challenges that are before both our countries in the current situation.” Ms Clinton and Mr Obama both voiced support for efforts by the 10-member Association of Southeast Asian Nations to reach a code of conduct with China on managing disputes in the South China Sea. AFP

Genting moves into Packer territory Company takes a 4.9% stake in casino operator Echo

ingapore gaming operator Genting said on Friday it had taken a stake in Echo Entertainment, raising the prospect of a battle for control over the $3 billion Australian casino company with billionaire rival James Packer. Packer, who wants to use Echo’s licence to build a new casino

complex in Sydney to attract more Asian high-rollers, has been agitating for change at Echo after building a 10 percent stake in the company, and on Friday succeeded in ousting the company’s chairman. Analysts speculated that Genting, Southeast Asia’s largest gaming group, was preparing for an

acquisition, having built up a war chest of US$3.1 billion, and said Echo’s casinos were in cities where Genting had attempted to win licences in the past. A Genting spokeswoman declined to comment on whether the company was considering a takeover offer or to disclose its stake, but Genting

said in a statement the total value of its investment in publicly quoted securities was US$234 million. The Australian newspaper said earlier that Genting had built up a 4.9 percent stake in Echo, which runs Sydney’s Star casino and Jupiter’s on the Gold Coast of Australia. A full takeover would cost more than A$3 billion (US$2.96 billion) and both Packer and Genting would face tough regulatory scrutiny. Reuters

Apple settles out of court Case of ‘false advertising’ brought by Australian regulators ends with big fine

pple agreed Friday to a Aus$2.25 million (US$2.22 million) fine for misleading Australian customers about the local 4G capability of its next-generation iPad, in a case brought by regulators. The Australian Competition and Consumer Commission (ACCC) told the Federal Court that the US tech giant had agreed to the penalty for implying in advertising that the 4G function on its latest iPad worked in Australia. Apple offered in March to refund Australian customers who felt they had been misled by the “iPad with WiFi + 4G” promotion and publish a clarification about the popular tablet’s capabilities after the ACCC took it to court.

Though the iPad’s 4G function only works on networks in the United States and Canada it had been widely promoted as one of the tablet’s features globally, which the ACCC said amounted to false advertising. It is now advertised outside North America as “Wi-Fi + Cellular” with a clear caveat on its Australian site that “it is not compatible with current Australian 4G LTE and WiMax networks. “The matter was due to go to a full trial this week but ACCC lawyer Colin Golvan said Apple had agreed to pay the Aus$2.25 million fine and the commission’s legal costs as part of an out-of-court settlement. AFP

Expensive advertising for Apple

12 |

business daily June 11, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

Day %

VOLUME

25.55

-0.1953125

17493555

CHINA UNICOM HON

ALUMINUM CORP-H

3.12

0.9708738

15971066

CITIC PACIFIC

BANK OF CHINA-H

2.76

-3.157895

522558771

BANK OF COMMUN-H

4.88

-4.6875

64561846

BANK EAST ASIA

25.2

-2.702703

4199601

12.98

3.015873

26902700

AIA GROUP LTD

BELLE INTERNATIO

PRICE

Day %

VOLUME

10.38

0.5813953

28762605

2287270

CLP HLDGS LTD

62.85

-1.489028

3001814

CNOOC LTD

14.12

0.5698006

78171156

9.38

0.6437768

12.62

-0.4731861

COSCO PAC LTD ESPRIT HLDGS

NAME

PRICE

Day %

54.5

-0.5474453

2861883

SANDS CHINA LTD

25.15

-3.269231

13437092

SINO LAND CO

POWER ASSETS HOL

VOLUME

10.42

-1.325758

23282422

SUN HUNG KAI PRO

87.1

-1.526286

2892087

4555289

SWIRE PACIFIC-A

82.5

-1.197605

1348820

3098408

TENCENT HOLDINGS

220.6

0.5469462

2716353

BOC HONG KONG HO

21.65

-0.2304147

9541960

HANG LUNG PROPER

25.15

-0.5928854

8820791

TINGYI HLDG CO

18.7

-1.68244

3902000

CATHAY PAC AIR

12.16

2668053

HANG SENG BK

99.85

-0.7455268

1460894

WANT WANT CHINA

9.31

-0.1072961

13459348

CHEUNG KONG

88.05

-1.56512

3254210

HENDERSON LAND D

39.9

-0.7462687

3210387

WHARF HLDG

43.05

6.56

0.6134969

20736762

HENGAN INTL

74.5

0.269179

2330913

HONG KG CHINA GS

16.14

-2.300242

12462853

HONG KONG EXCHNG

106.2

-2.02952

4276253

-0.3164557

16305800

CHINA COAL ENE-H CHINA CONST BA-H

5.28

-4

562988627

CHINA LIFE INS-H

17.62

1.380898

43418749

CHINA MERCHANT

21.6

-0.2309469

4134720

HSBC HLDGS PLC

CHINA MOBILE

77.75

-1.01846

10631175

HUTCHISON WHAMPO

62.5

-1.806756

5854342

CHINA OVERSEAS

16.44

2.493766

34245418

IND & COMM BK-H

4.26

-4.910714

736779031

CHINA PETROLEU-H

7.07

0.7122507

54260598

LI & FUNG LTD

CHINA RES ENTERP

23.05

-1.072961

2894325

14.9

2.054795

CHINA RES POWER

14.64

CHINA SHENHUA-H

25.2

CHINA RES LAND

MOVERS

3 18840

INDEX 18502.34

14.36

-2.578019

11958808

HIGH

18839.62

MTR CORP

24.8

-0.2012072

2644538

LOW

18321.06

17619000

NEW WORLD DEV

8.49

0.1179245

7457035

3.098592

14346005

52W (H) 22835.03

PETROCHINA CO-H

10.12

0.7968127

74772576

2.024291

28710219

PING AN INSURA-H

57.05

1.966041

13836142

(L) 16170.35

18320

6-Jun

8-Jun

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

CHINA PACIFIC-H

22.6

2.727273

10245900

YANZHOU COAL-H

11738000

CHINA PETROLEU-H

7.07

0.7122507

54260598

ZIJIN MINING-H

0.9708738

15971066

CHINA RAIL CN-H

5.92

3.315881

18883000

21.75

-3.761062

15235986

CHINA RAIL GR-H

2.94

2.083333

30684608

BANK OF CHINA-H

2.76

-3.157895

522558771

CHINA SHENHUA-H

25.2

2.024291

28710219

BANK OF COMMUN-H

4.88

-4.6875

64561846

CHINA TELECOM-H

3.4

63227951

BYD CO LTD-H

15.2

-1.298701

1724500

DONGFENG MOTOR-H

13.14

0.4587156

18794605

CHINA CITIC BK-H

3.85

-4.466501

98684334

GUANGZHOU AUTO-H

6.53

0.4615385

4161592

CHINA COAL ENE-H

6.56

0.6134969

20736762

HUANENG POWER-H

5.4

3.646833

55816602

CHINA COM CONS-H

6.87

-3.239437

16830037

IND & COMM BK-H

4.26

-4.910714

736779031

CHINA CONST BA-H

5.28

-4

562988627

JIANGXI COPPER-H

16.22

1.248439

9975961

10.12

0.7968127

74772576

8.4

1.3269

27106131

57.05

1.966041

13836142

7.9

2.597403

5102000

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.04

-3.797468

373367295

AIR CHINA LTD-H

4.76

0.4219409

ALUMINUM CORP-H

3.12

ANHUI CONCH-H

NAME

3.45

-1.428571

9643500

PETROCHINA CO-H

17.62

1.380898

43418749

PICC PROPERTY &

CHINA LONGYUAN-H

5.16

3.822938

7955000

PING AN INSURA-H

CHINA MERCH BK-H

14.08

-3.825137

33308742

SHANDONG WEIG-H

CHINA COSCO HO-H CHINA LIFE INS-H

NAME

PRICE

DAY %

VOLUME

11.84

-0.5042017

16186400

2.66

-3.623188

48028922

ZOOMLION HEAVY-H

10.04

40261714

ZTE CORP-H

14.24

-0.4195804

2021216

MOVERS

2 9610

INDEX 9438.03 HIGH

9608.63

LOW

9346.21

CHINA MINSHENG-H

7.11

-3.001364

82378100

SINOPHARM-H

17.72

-1.773836

2356790

52W (H) 12902.97

CHINA NATL BDG-H

8.9

0.1124859

45838300

TSINGTAO BREW-H

49.7

-2.453386

2079026

(L) 8058.58

10.6

-2.033272

9076275

WEICHAI POWER-H

31.1

0.974026

2673150

CHINA OILFIELD-H

9340

6-Jun

8-Jun

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.63

36282797

DATANG INTL PO-A

5.32

7054559

SHANDONG GOLD-MI

AIR CHINA LTD-A

6.29

1.288245

22027373

DONGFANG ELECT-A

21.23

4817661

SHANG PUDONG-A

EVERBRIG SEC -A

NAME

PRICE

DAY %

-3.381643

VOLUME 23148241

8.34

-2.570093

140389731

6.57

-0.4545455

6971577

13.67

1.259259

11591644

SHANGHAI ELECT-A

5.27

-2.04461

5795124

ANHUI CONCH-A

16.12

-2.774427

44816999

GD MIDEA HOLDING

12.2

0.3289474

23132264

SHANXI LU'AN -A

23.92

-0.746888

10263297

BANK OF BEIJIN-A

9.33

-2.098636

33932066

GD POWER DEVEL-A

2.64

1.149425

85617023

SHANXI XINGHUA-A

75.11

0.4681648

1062091

BANK OF CHINA-A

-0.3322259

23486368

GEMDALE CORP-A

6.78

-1.021898

49972472

SHANXI XISHAN-A

16.36

-0.2439024

16049654

BANK OF COMMUN-A

4.5

-1.315789

56721433

GF SECURITIES-A

30.93

7615544

SHENZ DVLP BK-A

14.81

-2.629849

39755724

BAOSHAN IRON & S

4.8

22252549

GREE ELECTRIC

21.08

-1.495327

18150410

SHENZEN OVERSE-A

6.22

2.302632

54467805

22.81

1746744

GUANGHUI ENERG-A

15.18

1.879195

22518090

SINOVEL WIND-A

15.03

-0.1992032

745460

CHINA CITIC BK-A

3.99

-2.682927

41552265

GUIZHOU PANJIA-A

30.07

-1.377501

6343101

SUNING APPLIAN-A

8.52

-0.6993007

29158892

CHINA CNR CORP-A

4.09

-1.445783

35509883

HAITONG SECURI-A

10.18

0.3944773

53939417

TSINGTAO BREW-A

38.09

-1.295672

4081558

CHINA COAL ENE-A

8.42

-3.771429

10577317

HANGZHOU HIKVI-A

50.18

3.251029

2733783

WEICHAI POWER-A

31.84

-0.09413241

2391698

CHINA CONST BA-A

4.45

-0.8908686

61840452

HEBEI IRON-A

2.91

-0.6825939

16571263

WULIANGYE YIBIN

32.55

0.1846722

13551751

ALUMINUM CORP-A

BYD CO LTD -A

CHINA COSCO HO-A

4.69

-0.845666

7386155

HENAN SHUAN-A

59.98

-2.073469

1536558

XCMG CONSTRUCT-A

14.34

0.2797203

7251528

CHINA CSSC HOL-A

30.74

0.5561008

4074910

HUATAI SECURIT-A

11.26

1.350135

23638384

XIAMEN TUNGSTEN

46.5

-4.752151

18832781

CHINA EAST AIR-A

4.21

2.682927

28602259

HUAXIA BANK CO

9.38

-2.494802

42495315

YANGQUAN COAL -A

17.08

-0.6976744

13882907

CHINA EVERBRIG-A

2.8

-1.060071

35058005

IND & COMM BK-A

4.16

-0.7159905

73944245

YANTAI CHANGYU-A

89.98

-2.881813

2075083

CHINA LIFE INS-A

16.48

-1.080432

7360863

INDUSTRIAL BAN-A

12.61

-3.445636

92348974

YANTAI WANHUA-A

14.31

0.4210526

10078292

CHINA MERCH BK-A

10.92

-2.933333

106658264

INNER MONG BAO-A

44.9

-1.318681

46671011

YANZHOU COAL-A

21.02

-0.6616257

3393637

CHINA MERCHANT-A

12.71

0.3157064

11258621

INNER MONG YIL-A

22.54

-0.1329198

4276830

YUNNAN BAIYAO-A

54.7

2.242991

4146755

CHINA MERCHANT-A

-0.2792182

9366980

INNER MONGOLIA-A

6.15

-0.8064516

35564579

ZHONGJIN GOLD

23.13

-2.937474

18372666

CHINA MINSHENG-A

6.08

-3.645008

267299383

JIANGSU HENGRU-A

26.98

0.03707824

1769196

ZIJIN MINING-A

4.07

-1.690821

51331974

16188564

JIANGSU YANGHE-A

136

-1.946647

1183576

ZOOMLION HEAVY-A

10.7

1.134216

55063095

24.48

-0.9307972

8360066

ZTE CORP-A

14.37

0.2791347

14495100

13.4

0.2243829

5831880 18752956

CHINA NATIONAL-A

6.11

-0.1633987

JIANGXI COPPER-A

CHINA OILFIELD-A

16.71

4368731

CHINA PACIFIC-A

20.1

1.10664

23858004

CHINA PETROLEU-A

6.45

-0.462963

14081621

JIZHONG ENERGY-A

CHINA RAILWAY-A

4.38

1.154734

17932735

KWEICHOW MOUTA-A

JINDUICHENG -A

17.68

-0.6741573

238.98

0.4202034

1728624

39.7

0.1261034

5985816

2.56

0.3921569

11270268

CHINA RAILWAY-A

2.58

-1.901141

47627800

LUZHOU LAOJIAO-A

CHINA SHENHUA-A

24.89

0.2416432

15487157

METALLURGICAL-A

CHINA SHIPBUIL-A

5.44

-1.090909

22906803

NINGBO PORT CO-A

2.53

-1.171875

14692210

8.04

59829010

MOVERS

CHINA SOUTHERN-A

4.68

34457332

CHINA STATE -A

3.27

0.3067485

37331733

PETROCHINA CO-A

9.11

-0.2190581

14886786

41.1

0.04868549

26656238

HIGH

2579.43

LOW

2521.7

CHINA UNITED-A

3.91

-0.7614213

39959482

CHINA VANKE CO-A

8.92

-0.4464286

85305571

POLY REAL ESTA-A

13.63

-0.07331378

35001935

CHINA YANGTZE-A

6.79

8637705

QINGDAO HAIER-A

11.7

-1.349073

9939282

CITIC SECURITI-A

13.14

-0.07604563

54026611

QINGHAI SALT-A

29.89

-0.6316489

3802463

CSR CORP LTD -A

4.65

-2.515723

32638909

SAIC MOTOR-A

14.59

0.2749141

20805884

DAQIN RAILWAY -A

7.29

18946725

SANY HEAVY INDUS

14.3

0.7751938

29110626

PRICE DAY %

Volume

PRICE DAY %

Volume

18 2580

INDEX 2524.329

PANGANG GROUP -A PING AN INSURA-A

185

52W (H) 3140.102 (L) 2254.567

2520

5-Jun

7-Jun

FTSE TAIWAN 50 INDEX NAME

NAME

PRICE DAY %

Volume

29.6

-2.47117

17107683

FORMOSA PLASTIC

74.3

-2.875817

8047518

TAIWAN MOBILE CO

93.6 -0.8474576

4505877

ADVANCED SEMICON

26.05

0.3853565

11504065

FOXCONN TECHNOLO

102

0.4926108

6385753

TPK HOLDING CO L

450

1.010101

4396439

ASIA CEMENT CORP

35.95

3406739

FUBON FINANCIAL

28.6 -0.6944444

10515214

TSMC

77.9

-2.380952

34684916

UNI-PRESIDENT

46.4

3050189

0.8403361

18807399

ACER INC

ASUSTEK COMPUTER

NAME

287

-1.37457

3217186

HON HAI PRECISIO

81.7

-2.622169

31650945

11.25

-3.846154

45121311

HOTAI MOTOR CO

185.5

-1.329787

951374

CATCHER TECH

189

1.340483

8530200

HTC CORP

352

-6.878307

7732023

WISTRON CORP

37.1

-0.536193

6683486

CATHAY FINANCIAL

28.6 -0.8665511

4996927

HUA NAN FINANCIA

0.3134796

5168390

YUANTA FINANCIAL

0.3861004

8489206

CHANG HWA BANK

15.3

5206208

LARGAN PRECISION

561 -0.5319149

1148122

YULON MOTOR CO

4796351

CHENG SHIN RUBBE

71.5

0.4213483

1860746

LITE-ON TECHNOLO

CHIMEI INNOLUX C

11.4 -0.4366812

AU OPTRONICS COR

35.95

-1.909959

1645380

12023720

MEDIATEK INC

254

-2.495202

7138564

CHINA DEVELOPMEN

7.1

0.2824859

37802800

MEGA FINANCIAL H

20.8

1.463415

28575450

CHINA STEEL CORP

28 -0.5328597

11046616

NAN YA PLASTICS

51.4

-3.564728

7840947

PRESIDENT CHAIN

154.5

0.9803922

1973603

-2.284264

11450055

CHINATRUST FINAN

16.65

0.9090909

27917404

90.2

-0.660793

9613288

QUANTA COMPUTER

29.35

0.1706485

5827757

SILICONWARE PREC

29.1

-2.838063

10796472

82.5

-2.366864

10430628

SINOPAC FINANCIA

10.7

-1.382488

16265694

FAR EASTERN NEW

-2.684564

9135147

SYNNEX TECH INTL

67.2

0.4484305

1855744

FAR EASTONE TELE

66.4

0.1508296

2309775

TAIWAN CEMENT

34.5

6174288

CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC

FIRST FINANCIAL

16.75

-0.297619

9659081

TAIWAN COOPERATI

17.25 -0.2890173

4275783

FORMOSA CHEM & F

73.8

-1.992032

7280538

TAIWAN FERTILIZE

67.6 -0.5882353

1213879

FORMOSA PETROCHE

78.4

-3.209877

3173020

TAIWAN GLASS IND

26.6

2973997

-4.830054

UNITED MICROELEC

MOVERS

5 4900

INDEX 4801.17 HIGH

4896.13

LOW

4783.42

52W (H) 6208.01 (L) 4643.05

4780

5-Jun

7-Jun

June 11, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) galaXy eNTerTaINMeNT

MelCo CroWN eNTerTaINMeNT

MgM CHINa HolDINgs

18.8

12.1

30.9 30.7

18.6

12.0

30.5 18.4

Max 18.78

average 18.48

Min 18.24

last 18.46

18.2

saNDs CHINa lTD

Max 31

average 30.58

Min 30.1

last 30.4

average 13.81

Min 13.72

Commodities PRICE

DAY %

YTD %

(H) 52W

18.8 18.6 18.4 18.2

last 13.9

Max 19.32

average 18.73

84.1

-0.848856402

-15.37532703

111.4899979

77.40000153

BRENT CRUDE FUTR Jul12

99.47

-0.460322226

-5.831676607

125.6100006

94.34999847

GASOLINE RBOB FUT Jul12

268.52

0.00744879

-1.086676244

332.1799994

246.4999914

GAS OIL FUT (ICE) Jul12

841.5

-1.492537313

-6.448026681

1045.75

810

NATURAL GAS FUTR Jul12

2.299

1.099384345

-29.10884983

5.130000114

2.095999956

HEATING OIL FUTR Jul12

267.21

0.187469536

-6.001336757

331.9299936

256.3099861

Gold Spot $/Oz

1593.4

-1.4339

1.8206

1921.18

1478.78

Silver Spot $/Oz

28.4988

-2.668

2.3848

44.2175

26.085

1433

-1.7571

2.7608

1915.75

1339.25

613.85

-1.8468

-6.0673

848.37

537.54 1955.75

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

1985

-0.401404917

-1.732673267

2690

LME COPPER 3MO ($)

7295

-2.66844563

-4.013157895

9905

6635

LME ZINC

1868

-2.14772132

1.246612466

2539.5

1718.5

3MO ($)

LME NICKEL 3MO ($)

16925

1.988550768

-9.540352753

25195

15980

14.05

-1.230228471

-8.588158751

19.375

13.72500038

598

0.673400673

-9.565217391

795

551

WHEAT FUTURE(CBT) Jul12

630.25

-1.791975068

-8.160291439

928

592.25

SOYBEAN FUTURE Nov12

1332.5

-0.652376514

10.64978202

1400

1115.75

COFFEE 'C' FUTURE Sep12

157.4

-0.631313131

-32.80683031

288.8500061

156.0999908

AGRICULTURE ROUGH RICE (CBOT) Jul12 Jul12

PRICE

(L) 52W

WTI CRUDE FUTURE Jul12

CORN FUTURE

last 18.2

Min 18.2

CURRENCY EXCHANGE RATES

NAME

METALS

19.2

13.7 Max 14.1

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 %

0.9916 1.5474 0.9596 1.2517 79.49 7.991 7.7585 6.3703 55.455 31.62 1.2832 29.963 43.34 9388 78.824 1.20138 0.80904 7.9409 9.9559 99.47 1.03

YTD %

-0.5117 -0.1549 -0.6044 -0.6114 -0.151 0.0013 -0.0013 -0.102 -0.9197 -0.2846 -0.491 -0.287 -0.3922 0.7563 0.3641 -0.0191 0.4524 0.6171 0.9612 0.4926 0

(H) 52W

-2.87 -0.4439 -2.2405 -3.4257 -3.2457 0.1076 0.1147 -1.182 -4.3098 -0.2214 1.0443 1.0546 1.1537 -3.398 -0.4973 1.2827 3.0097 2.4342 3.9785 0.191 0.0097

(L) 52W

1.1081 1.6618 0.9772 1.4578 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 9.4168 11.6817 117.74 1.0311

0.9388 1.5235 0.7071 1.2288 75.35 7.9823 7.7529 6.2769 43.855 29.63 1.1992 28.661 41.879 8458 72.057 1.00749 0.79505 7.8544 9.8423 95.6 1.0288

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

NAME

PRICE 2.87

DAY % YTD % 1.056338

30.45454

3.25

1.88

VOLUME CRNCY 2611511

CROWN LTD

8.13

-2.751196

0.4944357

9.29

7.45

4568449

SUGAR #11 (WORLD) Jul12

19.98

1.113360324

-11.43617021

27.02999878

18.8599987

AMAX HOLDINGS LT

0.079

-9.1954

0.124

0.06

6694500

COTTON NO.2 FUTR Dec12

69.88

-3.320420587

-20.44626594

107.1999969

64.61000061

BOC HONG KONG HO

21.65

-0.2304147

17.66305

24.45

14.24

9541960 0

CENTURY LEGEND

0.23

0.405

0.204

-1.315789

7.142859

4.74

2.3

CHINA OVERSEAS

16.44

2.493766

26.6564

17.86

9.99

34245418

CHINESE ESTATES

8.99

-0.1111111

-28.08

13.68

8.3

330000

CHOW TAI FOOK JE

8.98

-0.443459

-35.48851

15.16

8.55

1873250

EMPEROR ENTERTAI

1.15

-0.862069

3.603602

2.04

0.97

1340000

FUTURE BRIGHT

0.81

1.25

92.85715

1.09

0.3

822000

GALAXY ENTERTAIN

18.46

1.98895

29.63483

24.95

8.69

11727044 1460894

CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12554.2

0.748257

2.755383

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2858.42

0.967849

9.721898

3134.17

2298.89

HANG SENG BK

99.85

-0.7455268

8.35594

125

84.4

FTSE 100 INDEX

5435.08

-0.2333056

-2.462183

6084.08

4791.01

HOPEWELL HLDGS

20.05

1.365015

0.9566938

24.903

18.56

736084

DAX INDEX

6130.82

-0.2180911

3.941267

7523.53

4965.8

HSBC HLDGS PLC

-0.3164557

6.779661

79.6

16305800

NIKKEI 225

8459.26

-2.088725

0.04624476

10255.15

8135.79

HANG SENG INDEX

18502.34

-0.9420027

0.3686003

22835.03

16170.35

CSI 300 INDEX

2524.329

-0.7023488

7.613248

3140.102

2254.567

TAIWAN TAIEX INDEX

6999.65

-1.139216

-1.024171

9053.39

3.4

-0.2932551

13.71237

3.71

2.33

1893142

LUK FOOK HLDGS I

14.94

-2.607562

-44.87085

46.15

14.82

2369000

MELCO INTL DEVEL

6.23

1.136364

7.972271

10.76

4.3

2867404

MGM CHINA HOLDIN

11.92

1.016949

24.26824

17.183

7.6

4728400

6609.11

MIDLAND HOLDINGS

3.76

0.2666667

-4.907553

5.217

2.887

1348000

NEPTUNE GROUP

0.1

-0.990099

-9.909911

0.153

0.08

NEW WORLD DEV

8.49

0.1179245

35.623

11.591

6.13

7457035

SANDS CHINA LTD

13437092

KOSPI INDEX

1835.64

-0.6661436

0.5422472

2192.83

1644.11

S&P/ASX 200 INDEX

4063.695

-1.092229

0.1758761

4657.4

3765.9

3825.328

-0.3975425

0.08728269

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1570.62

-0.2977192

2.605947

1609.33

1310.53

NZX ALL INDEX

770.882

-0.5557347

5.629174

806.015

700.441

JAKARTA COMPOSITE INDEX

PHILIPPINES ALL SHARE IX

11.8

19.4

13.8

25.3 25.1

last 11.86

13.9

25.5

last 25.15

Min 11.8

14.0

25.7

Min 25.1

average 11.93

14.1

25.9

ENERGY

Max 12.08

WyNN MaCau lTD

26.1

average 25.59

30.1

sjM HolDINgs lTD 26.3

Max 26.3

11.9

30.3

-0.4180215

9.525986

3518.96

2695.06

HUTCHISON TELE H

25.15

-3.269231

14.57858

33.05

14.9

SHUN HO RESOURCE

1.18

1.32

0.82

SHUN TAK HOLDING

2.81

-0.3546099

9.803014

4.668

2.241

2239602 8157038

13.9

1.459854

11.15077

20.711

10.079

SMARTONE TELECOM

SJM HOLDINGS LTD

14.62

0.2743484

8.779765

18.5

9.8

367500

WYNN MACAU LTD

18.26

-4.096639

-6.358974

27.48

14.807

9517211

ASIA ENTERTAINME

4.12

-1.435407

-29.93197

10.8692

3.66

48801

BALLY TECHNOLOGI

46.24

1.248084

16.88574

49.32

24.74

271906

3335.11

HSBC Dragon 300 Index Singapor

523.05

0.19

5.38

STOCK EXCH OF THAI INDEX

1127.1

0.7661842

9.926661

1247.72

843.69

HO CHI MINH STOCK INDEX

432.9

-0.3475979

23.14038

492.44

332.28

BOC HONG KONG HO

2.74

14.30061

3.15

1.81

3100

Laos Composite Index

1015.25

0.1311741

12.87328

1113.06

876.33

GALAXY ENTERTAIN

2.43

29.94652

3.24

1.08

53500

INTL GAME TECH

13.84

-0.2881844

-19.53489

19.15

13.12

1892876

JONES LANG LASAL

70.63

0.6412083

15.29547

99.89

46.01

203072

LAS VEGAS SANDS

46.13

0.9630116

7.95694

62.09

36.08

9470508

MELCO CROWN-ADR

11.96

0.5042017

24.32433

16.15

7.05

3635778

MGM CHINA HOLDIN

1.64

37.61931

2.2131

1.0025

100

MGM RESORTS INTE

11.39

1.605709

9.204215

16.05

7.4

7875417

SHUFFLE MASTER

14.53

4.909747

23.97611

18.77

7.35

1004985

1.79

11.34799

2.6037

1.2624

338

104.21

1.529618

-5.68377

165.4931

95.82

1300668

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business daily June 11, 2012

Opinion

Smart taxes

Business

wires Leading reports from Asia’s best business newspapers

Hans Eichel Yannis Palaiokrassas

Former German finance minister

overnments throughout the European Union and around the world confront a seeming Catch-22: the millstone of national debt around their necks has required them to reduce deficits through spending cuts and tax increases. But these are impeding the consumer spending needed to boost economic activity and kick-start growth. As the debate shifts from austerity towards measures aimed at stimulating growth, smarter taxation will be essential to getting the balance right. When governments think about the difficult task of raising taxes, they usually think about income tax, business taxes, and valueadded tax (VAT). But there are other taxes that can raise significant amounts of revenue with a much less negative impact on the economy. These are the taxes that governments already levy on electricity and fossil fuels. Such taxes play a crucial role in cutting the carbon emissions that cause climate change. But recent research shows that they can also play a useful role in raising government revenue at little cost in terms of economic growth. Euro for euro, dollar for dollar, yen for yen: energy and carbon taxes have a lower negative impact on a nation’s economy, consumption, and

Former Greek finance minister and former European Commissioner for the Environment and Fisheries

jobs than income tax and VAT. For example, an increase in direct taxes, such as income tax, can reduce consumption by twice as much as energy and carbon taxes that raise the same amount of revenue. Maintaining consumption at as high a level as possible is vital to reviving economic activity, which means that freeing money for consumers

Finance ministers everywhere need to think more imaginatively about their fiscal options. Energy and carbon taxes can produce less economic pain and more gain than conventional taxes can

to spend is just as important. Energy and carbon taxes can raise revenue while leaving the economy in a stronger state to sustain a recovery. Conventional taxes raise revenue, but pose a much greater risk of depressing growth in the process. This is not the only reason why looking more closely at energy and carbon taxes makes sense. The current framework for energy taxation, particularly in Europe, is not sustainable. Tax rates on different fuels vary by more than 50 percent across the EU, causing major distortions in the single market. Creating a level playing field on energy taxation in the EU would harmonise economic incentives, eliminate gas-tank tourism by drivers crossing borders for lower prices, and improve the business climate in all of Europe’s economies.

Energy matters Rising energy bills, driven by the cost of fossil fuels, are a massive political issue in many countries in Europe and elsewhere, including the United States, where consumer energy prices have become a major issue in the run-up to this year’s presidential election. But, relative to other forms of taxation, energy taxation tends to benefit consumers overall. The gains from

avoiding the negative impact of conventional taxes work across the economy, particularly as the least welloff maintain a higher level of disposable household income. Most energy and carbon taxes are levied by national governments. But in Europe there is another option for raising revenues: the European Union Emission Trading Scheme (ETS). In terms of the effect on GDP and jobs, the cost of increasing revenue from this source would be as much as one-third less than that of raising the same amount via income taxes or VAT. Given Europe’s fiscal deficits and the economic impact of reducing them, that is a huge potential prize. But, first, the issues depressing the carbon price must be addressed. Taking the massive overallocation of carbon-emission permits out of the ETS will be vital. Finance ministers everywhere need to think more imaginatively about their fiscal options. Energy and carbon taxes can produce less economic pain and more gain than conventional taxes can. Europe needs fiscal consolidation, reductions in carbon emissions, and a strategy for economic growth. Greater reliance should be placed on energy taxes and an effective ETS to deliver all three. © Project Syndicate

Bangkok Post A Bangkok Criminal Court on Friday sentenced Rakesh Saxena, a former adviser to the Bangkok Bank of Commerce (BBC) that collapsed in 1995, heralding the 1997 “Tom Yum Kung” financial crisis, to 10 years in prison for embezzlement. After the BBC collapsed Saxena fled to Vancouver. He lost a 13-year fight against extradition and was deported back to Thailand in 2009. Collateral for the loans was appraised at about 100 times the market value.

Straits Times The private resale market in Singapore has rebounded strongly and is on track to post its strongest showing in the past 12 months. This trend is in stark contrast to the start of the year when the resale market took a sharp dive in light of December’s cooling measures and January’s Chinese New Year festivities. The robust new sale market, the strongest in nearly three years, coupled with this resale market rebound has led to concerns that fresh cooling measures might be on the cards.

Korea Herald Hit by a prolonged slump in vehicle sales, Renault Samsung Motors seems to be staking all on its mass production of electric cars from early next year. The automaker showcased high-end technologies in its first electric car model ― the SM3 Z.E. ― during the 2012 Busan International Motor Show, which was held from May 24-June 3.The car will travel up to 160 kilometers on a 250 kilogram lithium-ion battery that can be replaced through a fully automated battery station in less than 90 seconds.

Business Line Domestic air fares in India have risen “significantly” between April and May this year as compared to the same period last year, mostly due to reduction in capacity by Kingfisher Airlines, uncertainty surrounding Air India and the peak holiday season. Civil Aviation Minister had recently asked the aviation regulator to analyse the current fares and see if airlines are over charging. The instructions came as the prevailing domestic airfares showed about 20—30 per cent hike due to the demand supply mismatch caused by reduction of capacity by Kingfisher.

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June 11, 2012 business daily | 15

OPINION

True capitalists are pro-market, not pro-business

Stephen L. Carter

Bloomberg View columnist; professor of law at Yale University

ince the failure of the effort to recall Wisconsin Governor Scott Walker, a curious meme has been slithering through the commentariat: Public-employee unions are down and out. They aren’t, of course. They remain as formidable as ever, and will spend the current election cycle doing what

they do, spending tens of millions of dollars to elect candidates who favour their interests. We might be better off if the unions had less political clout – as long as the pro-business groups that get up to the same mischief were less powerful, too. Or so argues Luigi Zingales, a regular contributor to

Bloomberg View and a professor at the University of Chicago Booth School of Business, whose new book, “A Capitalism for the People: Recapturing the Lost Genius of American Prosperity,” was recently excerpted in Bloomberg View. Despite the charmingly misleading title, the volume is not a paean to forced equalisation of income or the strict regulation of industry. Quite the contrary. Zingales, who seems to be something of a moderate libertarian, wants to rescue markets and competition from the forces that threaten them: overregulation on the left and, on the right, a pro-business (as opposed to pro-market) ideology.

Crony capitalism This last distinction is what makes his book so fascinating. The great threat to our economic future, in his telling, is crony capitalism, along with other forms of rent-seeking that have become ubiquitous in a complex regulated state. Although much of the argument might seem to be standard public-choice theory, Zingales provides an enormous service by laying out such persuasive evidence. Most of the book is devoted to setting forth an original, middle-ground programme for getting us out of our current economic mess by reducing the opportunities for rentseeking and increasing the opportunities for competition. No reader, including me, is likely to agree with everything Zingales says. But he provides a useful corrective to the sloganeering and cant that inform so much of our public debate about economic policy. Zingales considers the free market both a moral and economic imperative. He recognises the current tide of populist anger, reflected in different ways in both the Tea Party and Occupy movements – and that much of the anger is directed against capitalism in general and big business in particular. The real trouble, he contends, is the death of the Horatio Alger myth. People no longer believe that hard work and following the rules will get you ahead. The game, they believe, is fixed. Zingales thinks they’re right. Special interests – particularly big business and big labour – hold too much influence over the divvying up of resources that has become among the most important functions of government. His solution, however, is less regulation, not more. He prefers fewer and simpler rules, and a government that encourages entrepreneurship

without trying to become an entrepreneur. Predictably, Zingales scoffs at nearly all bailouts: “As with the punishment of children, the costs of financial distress have an important incentive effect.” Were policymakers right in thinking that without the 2008 bailout, the banking system would have collapsed? Zingales is sceptical. Government officials got their information from the very financial institutions they were charged with monitoring. Naturally, he writes, every call from Wall Street to Washington said, “Buy the toxic assets.” At the same time, he tells us that he has become a supporter (sort of) of the GlassSteagall Act, which separated commercial and investment banking and was repealed in 1999. In economic terms, he concedes, the costs probably outweighed the benefits. But the rule had a simplicity that even a “six-year-old can understand”: “Banks should not gamble with governmentinsured money.”

Simple rules Simple rules, he says, are better than complex ones, in part because they can actually be subjected to democratic debate, in part because it is harder “to hide the loopholes.” If the basic problem slowing us down is a government built around secret favours for special interests, then simpler rules will leave space for fewer favours. Then there is the matter of taxes. Zingales would tax capital gains at the applicable personal rate, and in return would slice the corporate income tax to avoid the problem of double taxation.

Zingales, who seems to be something of a moderate libertarian, wants to rescue markets and competition from the forces that threaten them: overregulation on the left and, on the right, a pro-business (as opposed to promarket) ideology

In this way, as any number of economists have pointed out, taxes would be assessed on the profits distributed to the actual owners of the corporation. But Zingales identifies a different advantage. It is much easier for corporations than for individuals – even very wealthy individuals – to lobby for special treatment in the tax code. If corporations aren’t being taxed, or are being taxed only a little, their incentives to seek rents through the tax code evaporate. He also sees the entire spectrum of deductions on individual returns as an instance of special interests grabbing federal subsidies. He would abolish all deductions while cutting all tax rates, a change that would (he and others insist) produce the same amount of revenue. Here I register a small but important point of disagreement. Tax simplification is indeed imperative, and doing away with deductions is an attractive idea. But I would preserve the special treatment for charitable donations. Everything else the government might choose to subsidise through the tax code – home buying, child care, and so on – it can support directly, with full transparency and opportunity for debate. The charitable world it cannot, both because the bureaucracy would lack the needed information and because government support would swiftly put an end to the diversity of civil society. I would turn the deduction into a refundable tax credit, to encourage giving even by those who are most poorly off, and to acknowledge formally that a dollar given to support the institutions of civil society is no less important than a dollar given to support the operation of the bureaucracy. At the same time, Zingales does see the tax code as a vehicle for certain incentives – not by creating a welter of deductions but by deciding what to tax. Consider his approach to campaign-finance reform. Rather than fussing around in arguments over who should be able to give how much to whom, Zingales would prefer a progressive tax on all campaign contributions, as well as all money spent on lobbying. If it costs me US$250 in taxes to make a US$1,000 contribution, I am going to think twice. The bigger the contribution, the bigger the tax bill. The genius of capitalism, he tells us, “is not private property, not the profit motive, but competition.” He sees competition as important in the public as well as the private realm – a proposition that I will take up in a future column. Bloomberg View

16 |

business daily June 11, 2012

CLOSING Iran feels sanctions pain as oil income slumps Summer sale on in global jet industry Iran’s state finances have come under unprecedented pressure and the resilience of ordinary people is being tested by soaring inflation as oil income plummets due to falling oil prices. Tough financial measures imposed by Washington and Brussels have made it ever more difficult to ship oil from Iran. Its oil output has sunk to the lowest in 20 years, cutting revenue that is vital to fund a sprawling state apparatus. Shipments are expected to drop further when a European Union embargo takes effect on July 1.

A summer battle for orders is underway in the global jet industry, which gathered in Beijing yesterday for the first of two crucial events in two months, pitting the world’s largest planemakers against each other in a race for deals worth US$50 billion (400 billion patacas) at catalogue prices. Boeing is expected to win the fiercely contested annual order race for the first time since 2006 as it catches up with a decision by Airbus to revamp medium-haul jets, resulting in big fuel savings for airlines.

Spain seeks EU’s fourth bailout Eurozone finance ministers agreed on Saturday to lend Spain up to 100 billion euros to shore up its teetering banks

Prime Minister Rajoy gets a baillout for Spain

pain became the fourth European Union (EU) member to seek a bailout since the start of the region’s debt crisis more than two years ago with a request for as much as 100 billion euros (US$125 billion) in loans to rescue its banking system. Economy Minister Luis De Guindos announced the aid request on Saturday and said the terms of the rescue loans are “very favourable”

compared with market rates. The loans will carry an interest rate of about 3 percent, El País reported yesterday. Also yesterday, Spanish Prime Minister Mariano Rajoy said his government will continue with its economic and financial reform program in the coming months. Without it, “last night would have been an intervention” instead of “the opening of a credit line,” Mr

Rajoy said. He said the bank aid would allow the nation to avoid a full bailout. The funds will be channelled through Spain’s bank rescue fund, and could add about 10 points to the country’s debt, which was 68.5 percent of gross domestic product last year. But Mr de Guindos said the loans would ease pressure on the Treasury. He also denied he had faced

pressure from European officials to seek the rescue. Spain wanted to “contribute as much as possible to restoring confidence in the single currency,” Mr de Guindos said. “The credibility of the euro won, yesterday [Saturday] the future won,” Mr Rajoy said. “The European Union won,” he said. Spain’s bank rescue fund will only inject the funds into lenders that need it – about 30 percent of the industry, said Mr de Guindos. Lenders receiving aid will be subject to conditions. The International Monetary Fund, which will have an advisory role in the rescue, praised the agreement. The government asked for aid beyond the 38 billion euros the fund estimated Spain’s banking sector required in order to supply an additional buffer, Mr Rajoy said. United States Treasury Secretary Timothy F. Geithner said the loans and the support from its European Union partners were “important for the health of Spain’s economy and as concrete steps on the path to financial union, which is vital to the resilience of the euro area.” Finland will demand collateral for their share of the loans if the funds come from the temporary European Financial Stability Facility, Finance Minister Jutta Urpilainen told reporters on Saturday. The loans would be senior to outstanding government debt, giving Spain’s European Union lenders protection at the expense of bondholders. Dutch Prime Minister Mark Rutte estimated the likelihood of a payback of bailout money at 95 to 100 percent. Bloomberg

US retail sales down over auto demand United States auto sales fell in May due to slowing employment while lower fuel prices help contain inflation

etail sales in the United States probably declined in May for the first time in a year as slower employment and subdued wage gains damped demand for automobiles, economists said before reports this week. The projected 0.2 percent decrease last month would follow a 0.1 percent gain in April that was the smallest this year, according to the median forecast of 62 economists surveyed by Bloomberg News ahead of Commerce Department figures due Wednesday. Limited payroll growth and unemployment exceeding 8 percent may make it tough for consumer spending to improve after a first-quarter pace that was the fastest in a year. At the same time, lower prices at the gasoline pump are providing relief for

Americans and also helping contain inflation, giving the Federal Reserve more room to stimulate the economy should Europe’s debt crisis worsen. “Retail sales will be quite soft,” said Jennifer Lee, a senior economist at BMO Capital Markets. “It is quite evident that the job market is slowing. The Fed is much more worried about the high level of unemployment than about inflation, which is likely to remain moderate.” Household purchases will grow at 2.3 percent annual rates in each of the final three quarters of 2012, according to the median forecast in a separate Bloomberg survey of economists taken from June 1 to June 5. Consumer spending, which accounts for about 70 percent of the economy, expanded at a 2.7 percent

In serach of buyers

pace last quarter. Cooling employment and a drop in stock prices since the end of April are also weighing on Americans’ confidence. A report to be released on Friday may show the Thomson Reuters/University of Michigan preliminary index of sentiment fell this month from the highest level since October

2007, economists projected. Cars and light trucks sold at a 13.7 million annual rate in May after April’s 14.4 million pace, Ward’s Automotive Group data showed. Retail sales excluding autos probably were little changed last month, according to the Bloomberg survey median. Bloomberg