Macau Business Daily, Jun 14th 2012 by Business Daily

Year I - Number 54 Thursday June 14, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

Land lovers rock boat in Yacht Club vote

Experts to watch over fiscal reserve

Pages 4

Travel rules to Philippines eased

Page 6

The company is also in negotiations with the government to purchase new buses without paying import duties, an advantage enjoyed by the other two operators, TCM and Transmac. Reolian’s balance sheet hasn’t been helped by a number of public relations disasters. In January the government said that of 83 accidents recorded by public bus firms, Reolian was responsible for 50 of them – a 60 percent tally. Mr Rigaud stresses however that driver standards are rapidly improving. In May the firm was hit with a 50,000 patacas fine by the government for not keeping to bus schedules last year. It says it will appeal against this decision as it’s concerned it may become unfairly scapegoated.

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Loss-making Reolian asks govt to up bus support T

en months into its seven-year, 1.6 billion-patacas (US$200 million) government contract, Macau bus operator Reolian is still making losses it says. The basic problem explains the Franco-Macau joint venture is that since the deal was announced last August, wage costs for drivers have escalated dramatically in Macau’s laboursqueezed market. It wants to revise the terms of the contract so that the government pays more per kilometre travelled by Reolian buses. The administration sets fixed bus fares in the territory and in turn distributes the revenues it collects to the city’s three public bus operators. “Salaries increased 35 percent in the industry in the last year and we have experienced a 90 percent rise in compensation payouts if we include bonuses,” Cédric Rigaud, general manager of Reolian, told Business Daily yesterday.

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HANG SENG INDEX 19030

LRT tender row sore point for govt

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he supervisory company chosen to ensure 489 million patacas (US$61.2 million) of public money is efficiently spent by builders on the Taipa central section of the city’s light rapid transit system has itself been appointed without recourse to the government’s tendering process. Sources told Business Daily the government’s decision to scrap an invitation tender round because of high bids and then grant a 37.5-million-pataca supervision role to PAL Asiaconsult Ltd was “ill-conceived”. Pages 4 & 5

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June 13

HSI - Movers

Genting-Crown Macau tie speculated

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alaysia’s Genting is being linked in the Australian media to a possible partnership with Crown Ltd in Macau. Crown has 33 percent of Macau casino operation MPEL alongside Melco International Development. Neither Genting nor Crown is commenting on the reports. But were Genting or any other outside casino firm to apply to join forces with an existing Macau concessionaire it would take the city into uncharted regulatory territory. Page 7

%Day

CHINA LIFE INS-H

3.65

CHINA RES ENTERP

3.55

CHINA SHENHUA-H

3.28

PING AN INSURA-H

2.62

SANDS CHINA LTD

2.50

CHINA MERCHANT

-1.11

HENDERSON LAND D

-1.94

WHARF HLDG

-1.99

BELLE INTERNATIO

-3.29

ESPRIT HLDGS

-21.81

Source: Bloomberg

Air Macau pondered pulling Viva Macau plug sooner

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The city’s monopoly carrier Air Macau discussed terminating a sub-concession to Viva Macau before the budget airline was eventually grounded in March 2010, a court heard yesterday. Viva Macau hadn’t paid a US$3 million (24 million patacas) sub-concession fee it was claimed. But a former Viva Macau manager said Macau Government Tourist Office planned to spend 5.4 million patacas on marketing with the airline only three days before its grounding. Page 2

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business daily June 14, 2012

macau

Viva Macau downed InBrief by own ‘failures’: Air Macau Air Macau considered revoking Viva Macau’s sub-concession before March 2010 grounding Tony Lai

tony.lai@macaubusinessdaily.com

Ad company posts profits JCDecaux Macau, a joint venture between France’s JCDecaux and Macau’s H.Nolasco group, reported a profit of 3.1 million patacas in 2011, a 43.5 percent year-on-year rise. The company has had a presence in the territory for over 10 years, having been granted a 20-year street furniture advertising concession in 2001 and a 15-year airport advertising concession in 2003. Recently the company also added bus body spots to its portfolio.

Energy efficiency improved in Macau Last year the energy efficiency of the territory’s shops, restaurants, hotels and offices was higher than in 2009, but energy consumption per capita increased among households, according to a study released yesterday by the energy regulator. The study carried out by the Macau University of Science and Technology shows that stores improved their energy efficiency by 41.6 percent, followed by a 22 percent increase in restaurants.

he board of directors from Air Macau had discussed the possibility of terminating a sub-concession to Viva Macau before March 2010 a court heard yesterday. A letter sent from the government to Air Macau that month merely backed that original viewpoint, staff from the city’s flag carrier said in court yesterday. Before making a move, Air Macau had to know “the government’s stance”, Kong Pou Chu, the company’s secretary, said at the Court of Second Instance during the final hearing of a case pitting Viva Macau against Lau Si Io, Secretary for Transport and Public Works. Ms Kong said Viva Macau “had not fulfilled its duty as a subconcessionaire”, since the company had not submitted the required documents, including financial and operation reports, to Air Macau, as well as paying the sub-concession fee worth about US$3 million (24 million patacas), including interest. Viva Macau’s sub-concession with Air Macau was revoked on the weekend of March 26-28, 2010, after repeated flight cancellation left thousands of people stranded. The carrier was allegedly unable to settle its jet fuel bills with supplier Nam Kwong Oil, a claim it still denies saying Nam Kwong is not even a creditor. Anabela Maria da Rosa, vice general manager of Air Macau, said, “The most important reason for my company to end the contract is that

the scandal in the airport seriously affected public interest.” Ms Kong also said the letter received from the government on March 28 only gave Air Macau “support instead of instructions”. “When [Air Macau] received this letter, we considered it as a green light from the government to our decision,” said Ms Kong. The Civil Aviation Authority wrote to Air Macau on March 28, 2010, saying that Mr Lau had advised the company to end its sub-concession contract with Viva Macau. Then later Air Macau wrote to the carrier saying it had to terminate the contract due to pressure. The carrier took its plight to court last year, claiming that it was an illegal administrative act issued by Mr Lau.

Approval from board Ms Kong interpreted “the instructions” stated in the letter to Viva Macau as coming from Air Macau’s board of directors in Beijing and Macau. She said former Air Macau chairman Zhao Xiaohang and current chairman Zheng Yan were busy with phone calls that Sunday talking with different directors to get their approval on terminating the deal with Viva Macau. Mr Zhao then instructed her to write the letter after they had come up with a consensus, said the company secretary. But she does

3G transition smooth: CTM Over 5,000 elderly people have already moved to the 3G mobile service network, telecommunications provider CTM said yesterday. In a press release, the company said it had organised “over a hundred” briefing session for more than 10,000 senior citizens. In addition CTM has set up dedicated hotline and service counter for “smooth transition” from the 2G network, which will be shut down next month.

New standards for air quality Starting July 2, the territory will have stricter standards for measuring air quality, the Meteorological and Geophysical Bureau announced yesterday. The standards will follow the guidelines of the World Health Organization, including data for fine particles under 2.5 micrometres. In addition Macau will raise its standards for the concentration of gases such as sulphur dioxide and nitrogen dioxide and likely join the Pearl River Delta air-quality monitoring network.

Viva Macau was close to losing its sub-concession even earlier for failing to pay its sub-concession fee, Air Macau staff said

not rule out whether there had been dialogue between the chairman and the government about the decision. While Air Macau said the grounded airline did not fulfil its responsibility, Viva Macau staff, however, said both carriers had a “good relationship”. Glady Tong, former marketing manager of Viva Macau, said both companies had a beneficial relationship as they run different routes, adding that Viva Macau had even promoted some routes of Air Macau on its official website. Viva’s former ground operation director, Sharon Chia, also said last month in court the two airlines had a “mutually beneficial” relationship in general terms. Viva Macau’s lawyer, Henrique Saldanha, also disclosed a letter dated December 2009 from the aviation regulator, acknowledging the grounded airline’s contribution to the local aviation industry. Ms Tong said she did not remember such letter but was not surprised, as Viva Macau had a good relationship with the government and was helping to promote the city in other destinations. She said the company always worked closely with the Macau Government Tourist Office to promote the city. The executive noted that the office had even decided on March 25, 2010 – a day before the final weekend – to pay the airline about 5.4 million patacas for a promotional campaign.

June 14, 2012 business daily | 3

MACAU

In the red, Reolian looks to recoup Reolian is running at a loss 10 months after its buses joined the public transport fleet; it wants more government money to make up the shortfall Xi Chen

Photo by Manuel Cardoso

xi@macaubusinessdaily.com

us operator Reolian ended last year in the red and is incurring more losses this year. It has gone to the government, asking to raise the charge per mile. The administration fixes bus fares and distributes the revenue to bus operators, based on a pre-agreed charge per mile. “We offer a price that is attractive so we operate on a very thin margin,” Reolian general manager Cédric Rigaud told Business Daily. He said margins were hurt by high labour costs. “Salaries increased 35 percent in the industry last year, and we have experienced a 90-percent rise in compensation payouts, if we include bonuses,” he said. The average salary for a Reolian driver is between 15,000 patacas (US$1,880) to 20,000 patacas a month, says Mr Rigaud. Yet the company is enduring a 20 percent employee turnover rate — far above the 12-percent average across all industries in Macau. The company is also in talks with the government to waive import duties on new bus purchases, an advantage enjoyed by the city’s other two bus operators, TCM and Transmac. Previously, Reolian paid import duties on buses purchased from Yutong

Drivers work overtime and they were under the stress of working on a new job for a new company

Group, though the taxes were refunded nine months later by the government. Mr Rigaud said the company also intended to appeal against a 50,000-pataca fine imposed by the government a month ago for not keeping up with bus schedules last year. He believes the fine damages the company’s reputation. “If we don’t appeal, more penalties might come,” he said.

Difficult start He admitted the bus operator had a difficult time when it launched. There was a very short window of time to prepare and the company had trouble hiring drivers. “Not only bus companies, small transport companies were also in need of drivers,” he said. The company started

Cédric Rigaud

operations last August with 250 drivers – 150 short of its target. “School opens in September and there was a lot of pressure to see if Reolian could perform,” he said. “Because of the market, we raised salaries by 30 percent and gave incentives to senior drivers to attract new employees.” The move caused tension among the bus operators. Transmac and TCM were supposed to support Reolian but withdrew their support after Reolian raised its salaries and recruited some of their employees. “By last August, half of our drivers had no previous experience in driving buses,” Mr Rigaud said. The company had to recruit

If we don’t appeal [against a government fine] more penalties might come

many from outside the public transportation system. He believes the lack of qualified drivers and difficult road conditions contributed to Reolian having more road accidents than other operators.

“Drivers work overtime and they were under the stress of working on a new job for a new company,” he said. However, compared to last year, he said the number of accidents had fallen by half and the company was putting a lot of effort in reviewing all accidents and training its drivers. Reports of accidents, a few of them fatal, has dogged the bus operator since it took to the road. There were also complaints that of some of its buses were inaccessible to people with disabilities. The company said it was looking at the suggestions and was currently trying out design changes to buses on the H1 line, which serves public hospital Conde São Januário. Mr Rigaud said the biggest difficulty for the company at the moment was the negative publicity it was receiving. However, he added, matters were improving by the day. Reolian is a joint venture between French-based RATP-Veolia and H. Nolasco. RATP-Veolia holds the majority stake. RATP-Veolia is involved in all aspects of transportation in Asia – from urban rail, to buses and trams. The group is looking to expand in the metro and tram businesses, Mr Rigaud said.

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business daily June 14, 2012

macau

Govt under fire for ‘ill-conceived’ bid process Critics question government decision to scrap tenders for work on city’s light rail network to deal directly with single company Tiago Azevedo

Photo by Geoff Leong

tiago.azevedo@macaubusinessdaily.com

government decision to grant a 37.5-million-pataca supervisory contract to a company – after scrapping tender bids – is under fire. Work on the Taipa central section of the city’s light rapid transit system began in February but the contract to oversee the work was granted only late last month, after a process that was “ill-conceived”, according to sources spoken to by Business Daily. The construction work, close to the Sai Van bridge in Taipa, was granted to Chon Tit (Macau) Investment and Development Co Ltd for 489 million patacas. At least six companies lodged tenders when the Transportation Infrastructure Office invited bids for the supervision consultancy in February, a source told Business Daily. The bids were deemed too high and the tender was cancelled by a Chief Executive dispatch dated April 27. Documents seen by this newspaper say the tender was cancelled “to protect the public interest and cautiously use public money, as the lowest bidding price in the written consultation has far exceeded the expected budget costs”. The confirmation to the bidding companies was sent in early May. On May 25, the 37.5-million-pataca contract was awarded to PAL Asiaconsult Ltd, an architecture and engineering consultancy that was established in Macau in 1978. It was one of the companies initially invited to bid. The government says it acted to protect the public interest because the costs were higher than expected. “Since the lowest bid of the invitation tender for the supervision consultant service was higher than the estimated cost and some of

MOP37.5 million Value of the contract to PAL Asiaconsult Ltd

PAL Asiaconsult Ltd is the only name missing from the construction site near the Sai Van bridge

Yacht club to thrash out divisive land deal Plan to build a 45-floor tower in Lam Mau will be the main issue at the Macau Yacht Club’s general meeting Vítor Quintã

vitorquinta@macaubusinessdaily.com

The Macau Yacht Club will hold elections in 11 days but the biggest issue at its general meeting will be a land deal tied to the construction of its clubhouse, where work has been at a standstill since last year. The club published public notice of its annual meeting yesterday. The meeting will also include a members’ review of the club’s accounts for the past two years. President of the Yacht Club General Assembly, José Celestino Silva Maneiras, spoke with Business Daily last week and admitted a delay in filing the accounts left the club “in an abnormal situation”. Yesterday, he said he now had all documents related to the club’s accounts, including an opinion from the supervisory board, but would not

go into the reasons behind the delay. He said the delay should be discussed with members at the June 24 meeting. Club treasurer Fernando Ó Man Kuok declined to comment on the delay. He told Business Daily that the board was considering if it would hold a press conference before the meeting. The conference would respond to accusations from a cross-section of members, including former legislator Jorge Fão, that have threatened to file a complaint with the Commission Against the Corruption. The lobby group say a contract to build a new clubhouse in exchange for land that would eventually be home to 45-storey residential tower leaves the club financially liable. Former Secretary for Transport and Public Works Ao Man Long granted

the club the land surrounding the Lam Mau Marina in 2000. He has since been jailed for corruption and money laundering. The club signed a deal with development company Realgain in 2007 to build the clubhouse. In return, the club’s leadership would ask the government for permission to build a residential tower and shopping complex. Just two years ago, the Land, Public Works and Transport Bureau said it would “not accept any request to use part of the land to build a residential building”. The construction of the clubhouse began last year but ground to a halt after a dispute between the British Virgin Islands-based Realgain and its contractor, Yang Kwong Constructions.

Workers on the site said the developer owed about 7 million patacas to Yang Kwong. Last week, Mr Maneiras said he was unaware of any debt. Mr Fão told Business Daily he was worried the club will have to foot the bill. Mr Ó says it is “only natural” that the opposition group will challenge for the club’s leadership. The group lost the 2010 elections by just five votes. He said members who have not paid their fees and those suspended in 2010 would not be allowed to vote. Mr Fão is unsure if an alternative ticket will run, stressing that many members have left the club “due to all the irregularities”. He also called on the government, particularly the Sports Development Board, to intervene in the club’s management.

June 14, 2012 business daily | 5

MACAU the submitted rates were higher than the market level, such tender process has been cancelled based on the considerations of public interest and [the] cautious use of public expenditure,” the Transportation Infrastructure Office’s spokesperson told Business Daily.

Rail network on time in Taipa

A rare move Sources involved in the process say the government should have consulted all the companies instead of negotiating directly with one. “There were similar cases in the past where the government cancelled invitation tenders, but they always approached the companies to give them all a chance to present a revised bid,” an unnamed source said. Another source, who was involved in the original tender and asked not to be identified for this report, said: “To cancel an invitation tender is not common, but it is more strange to then grant it directly to one of the companies.” The government claims it had to act swiftly. “There was an urgent need for the supervision service to be on board [at] the earliest possible,” the bureau’s spokesperson said. “If such supervision consultant service was to be re-launched by another invitation tender or open tender process, it would certainly take time and would delay the employment of such service which in turn may affect the overall C350 [Taipa central section] progress.” The bureau says it picked the best proposal. “PAL Asia has the relevant experience and has provided the lowest bid among the invited companies during the original invitation tender,” it said. “Under the conditions that all the requirements and terms remain unchanged, PAL Asia was then awarded for this service with a negotiated bid lower than its bid for the original invitation tender.”

Recurring doubts Awarding a tender directly to a company may be legally acceptable but it is a practice that has been harshly criticised by legislators, who urge the government to carry out public tenders to safeguard public interest.

Work on the 489-million-pataca Taipa central section of the light rail network began in February

There was an urgent need for the supervision service to be on board [at] the earliest possible Transportation Infrastructure Office

“This is very serious,” said legislator José Pereira Coutinho. “It is not acceptable that after so many doubts clouding the LRT project, this kind of problem keep occurring.” Mr Pereira Coutinho also condemns the direct granting of a public contract. “It makes no sense whatsoever to invite companies, cancel the tender and then give the contract to one specific company with whom you deal directly.” A person with knowledge of the deal said the right move would have been to invite new tenders and set ceilings for the bids. “It would be much fair to every company involved since the solution found was ill-conceived,” said the legal expert, who asked not to be named. “It would have shown a much more impartial approach from the government.”

Prosecutors admit crime rise, casinos linked Public Prosecutions Office says gaming industry is a source of corruption and higher crime rates Kelsey Wilhelm

kelsey.wilhelm@macaubusinessdaily.com

he growth of the city’s gaming industry is correlated to criminality, according to a press release issued by the Public Prosecutions Office on Tuesday. “The development of the gaming sector causes economic growth and, simultaneously, factors of instability, which leads to corruption,” it says. “The increase in criminality threatens citizens, their goods, and those of tourists.” Crime reports rose by 23 percent in the first quarter of this year, an increase of more than 600 cases compared to the same period last year. More than 3,500 cases were processed. There were just six cases of illegal gambling in the first quarter, a fall of 44 reports from the same time last year. Reports into “organised crime” increased three-fold and there were 15 more drug-related crime cases compared to the same time last year. The Public Prosecutions Office says the rise in crime rates constitutes “evidence of a trend for a complication of Macau’s public security” situation, with most crimes, especially theft, increasing since 2009. In the first quarter there were more than 1,000 cases of aggravated theft and 405 assault cases. Traffic violations have seen a “significant increase”, from 198 to 306, the statement said. The Commission Against Corruption also sent three cases to the Public Prosecutions Office in the first quarter.

It is a position shared by Mr Pereira Coutinho. “Only through a public tender or by negotiating with several companies would you be able to defend the public interest,” he said. The legislator said he was also concerned because there had been a lack of supervision since the construction began in February. “Who is assessing and overseeing the construction done so far?” The first phase of the light rail network will have 21 stations. The network will connect major entry and exit points in the Macau peninsula and on Taipa with residential and tourist areas. The estimated construction cost for the first phase was revised in June last year from 7.5 billion patacas to 11 billion patacas, including 5.74 billion patacas for construction work.

Work on the final section of the light rapid transit system in Taipa was officially launched yesterday. The segment connects the Cotai and Taipa terminal sections, the final two of the three sections planned for Taipa. The total cost for construction will come to about 1.5 billion patacas (US$187 million), according to official data. These two Taipa sections of the network serve the airport, Taipa Ferry Terminal, the University of Science and Technology and the Lotus Bridge border crossing. There are seven stations on 6.5 kilometres of rail in this section of the network. Transportation Infrastructure Office head Peter Lei Chan Tong said works would be managed to reduce the impact on road traffic. “All these sections will be ready by 2015,” Mr Lei told reporters at the launch.

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business daily June 14, 2012

macau

Oversight team named for fiscal reserve fund

Longer Philippines stays likely Manila wants tourists to linger longer

With members of two review teams in place, the management system for 99-billion-pataca fund is finally complete

Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

Vítor Quintã

T Photo by Manuel Cardoso

vitorquinta@macaubusinesdaily.com

Six experts have been named to help the Monetary Authority run the city’s newly-created fiscal reserve

our months after the creation of the city’s fiscal reserve, the two independent bodies in charge of overseeing it are up and running. The Monetary Authority of Macau has the responsibility of running the fund but the law also calls for the creation of an advisory committee to provide investment strategies and another body to monitor the reserve management. Economy and Finance secretary Francis Tam Pak Yuen heads the advisory committee and Monetary Authority president Anselmo Teng Lin Seng is the deputy director. Chief Executive Fernando Chui Sai On could have invited five experts and professionals from the areas of economy and finance to take part, along with the current Monetary Authority administrators. But the Official Gazette only

names three supervisors: the head of Wing Hang Bank Ltd, Lee Tak Lim; the dean of University of Macau’s Faculty of Business Administration, Jacky So Yuk Chow; and the president of Macau Insurers’ Association, Jiang Yidao. Despite the four-month delay, the financial regulators told Business Daily that “relevant investment strategies have been formulated on a regular basis” since the 99-billionpataca (US$12.4 billion) fund was set up last February. The director of the Financial Services Bureau, Vitória Alice Maria da Conceição, will head the monitoring body, along with the vice-president of the Macau Society of Registered Auditors, Iong Weng Ian, and civil servant Chan Chi Ieong. There was no mention of when the two committees would meet for the first time.

Hong Kong’s Financial Secretary John Tsang met with Mr Tam on Tuesday and urged Macau “to capitalise on the financial platform in Hong Kong to make long-term investment, so as to maintain and enhance the value of the fiscal reserve of Macau”. “The Macau side welcomed the proposal and indicated that they will actively consider the proposal,” Mr Tsang said. The Monetary Authority says it has already been using the Hong Kong financial markets to diversify its investment and that they will also “become an effective platform for the investment of the fiscal reserve”. The financial regulator is also discussing with China’s central bank the possibility of including yuan-denominated assets, including inter-bank bonds, in the fiscal reserve’s investment portfolio.

he Philippines has started “aggressively campaigning” to lure more holidaymakers to the archipelago and is close to approving an increase from 14 days to 30 days on permits for Macau and Hong Kong residents. After a one-third increase in tourist arrivals from the two territories for the period between October and March compared to the same time a year before, Manila has decided that a 14-day permit may not be long enough. The Philippines grants 148 countries and territories 21-day permits for tourism and business. There are plans to offer longer-stay visas. “It has not been approved yet,” Renato Villapando, consul-general of the Philippines in Macau, told Business Daily. “Officials from the department of tourism of the Philippines and a new tourism director based in Hong Kong are focusing on Hong Kong and Macau in their promotional activity.” With more direct flights from Hong Kong to diverse locations in the Philippines, coupled with the relaxation in visa duration, the country hopes to create more jobs, encouraging workers to remain in the country, rather than take up better paid jobs overseas. “We’re creating work opportunities,” Mr Villapando told the Portugueselanguage Tribuna de Macau. “But they’re not sufficient … and so people leave the country.” Just last week, budget carrier AirAsia’s Philippine unit said it had shelved plans for daily flights between Clark and Macau, amid a maritime dispute between Beijing and Manila over ownership of the Scarborough Shoal.

Weather Beijing 26/16o C Changchun 21/15o C

Harbin 24/15o C

Xian 34/15o C Shanghai 31/23o C Chengdu 30/22o C Kunming 24/17o C Haikou 32/25o C Sanya 32/28o C

Guangzhou 31/25o 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 %

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25/29o C

70/95 %

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26/30o C

65/95 %

Shenzhen 30/25o C

ASIA (today)

Hong Kong 29/25o C

Manila

TOKYO

Jakarta

31/26o C

32/26o C

22/19o C

31/25o C

Macau 30/26o C

Bangkok

SEOUL

K. lumpur

34/28o C

SINGAPORE

29/18o C

34/25o C

taipei

32/23o C

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MACAU

Genting and Crown linked as possible Macau partners No precedent for outside casino firm joining a local concession in mid-term Associate Editor

Macau investments Genting has previously expressed interested in casino investments in Macau. In 2009 soon after the initial shock of the global financial crisis of late 2008, Genting took a 3.2 percent stake in the Macau and Las Vegas operator MGM MIRAGE (now MGM Resorts International) for US$100 million. Genting was at pains to point out the purchase related to a valuation opportunity presented by MGM MIRAGE’s then under-pressure shares. Speculation at the time suggested Genting harboured a strategic aim to become partners with an existing operator in Macau. This speculation was stoked by the fact Genting subsidiary Star Cruises (now Genting Hong Kong) had previously expressed interest in a partnership with Stanley Ho Hung Sun in a casino project in Macau. That idea faded after reports it might cause difficulties for the parent Genting in its relationship with Singapore’s Casino Regulatory

Photo by Manuel Cardoso

hen a casino group that recently amassed a US$3.1 billion ‘war chest’ for possible acquisitions is linked – even tentatively – with one half of a Macau gaming joint venture that plans to spend US$1.9 billion on a new resort over the next three years, many naturally assume it to be a marriage made in heaven. If it is, then the would-be bride and groom aren’t sharing the good news with outsiders. A suggestion this week in the Australian media is that Malaysia’s Genting Group may seek a partnership in Macau with Australia’s Crown Ltd. Crown is currently a 33 percent joint venture partner with Hong Kong-listed Melco International Development in Macau gaming operator Melco Crown Entertainment Ltd – a Nasdaq and Hong Kong-listed entity. International Financing Review Asia reported last week that MPEL was shopping around among banks in the region and possibly beyond for a US$1.4 billion syndicated bank loan to restart the Studio City project. MPEL was originally going to supply a Macau gaming licence and casino management for Studio City, with other investors being responsible for the construction. But when those investors became deadlocked over funding, MPEL – recognising that Studio City was an important part of its future Macau story in the eyes of analysts and investors – bought a controlling 60 percent stake in the development last summer for a total consideration of US$360 million. The aim is to complete it as quickly as possible. With chronic land shortages in Macau, the government has a land disposal policy best defined from the recipient’s perspective as ‘use it or lose it’. And as Studio City was already gazetted by the authorities as a major tourism scheme (though not yet technically as a casino resort) the emphasis was on ‘use’.

possible Macau tie up. But were it to happen it would take the Macau government into new regulatory territory said a person with knowledge of the process. “There’s no precedent in Macau for an outside casino operator to form a partnership with an existing operator part way through a concession period. There have been some significant acquisitions of interests in concessionaires, for example Permira’s acquisition of a substantial interest in Galaxy, but Permira is an investor [private equity firm] not an operator,” said the person. “I think the government would look at the Melco-PBL [now MPEL] sub-concession contract itself in the first instance to see if it would be possible.” But the person added that because MPEL’s Macau gaming licence is actually a sub-concession of Wynn Resorts Ltd’s Macau concession – sold to MPEL’s corporate predecessor Melco-PBL for US$900 million in March 2006 – it was written as a private contract between Wynn and Melco-PBL.

Private deal

Cash-rich Genting has been linked with Crown, a joint venture partner in Macau casino firm MPEL

KEY POINTS Malaysia’s Genting and Australia’s Crown Ltd linked as possible Macau partners No precedent for outside operator joining a Macau casino concession in mid-term Genting unit previously expressed interest in Macau casino partnership with Stanley Ho Hung Sun Macau govt declared in April 2008 no new concessions in lifetime of existing licences

Authority. Another group unit, Genting Singapore, operates the S$6.45 billion (US$5.04 billion) Resorts World Sentosa casino

resort, which opened in the Lion City in February 2010. Genting Hong Kong – a unit of Genting that operates the Star Cruises casino ships out of Hong Kong and is also a joint venture partner with a Philippines company in the Resorts World Manila casino resort – already operates a junket room branded as Crockfords at MGM Macau. Genting Group had originally expressed an interest in obtaining a Macau casino concession at the time of market liberalisation at the start of the previous decade, but later dropped out of the running.

Golf course Harrah’s – now Caesar’s Entertainment – is one of the big Las Vegas operators that decided against bidding for a Macau licence, but later appeared to regret the decision. In September 2007, Harrah’s acquired the 175-acre Macau Orient Golf Course on Cotai and rights to a land concession contract for US$577.7 million. There was speculation that Harrah’s wanted to parlay that into a casino resort. But in April 2008 Macau officials closed that door when they said no new licences would be approved during the lifetime of the existing six concessions. Neither Genting nor Crown Ltd is commenting on the reports of a

“The sub-concession is a private contract. It’s not a public contract, which is why it’s never been published. Because it’s private, it would depend on the assignment provisions in the contract,” said the person. Other important consideration would be the vehicle used by Genting to make any investment and the format of the investment; for example whether Genting would have capital expenditure obligations or whether it would be a passive equity partner. “If it was Genting Singapore being used for the Macau investment you would think there would be no issue. Genting Singapore is licensed as a casino operator in Singapore and regulated there,” said the person. “If Genting came in, what obligations would they undertake? Would they have an expenditure obligation, or would they just buy into the existing operation via a JV or partnershiptype deal?” the person added. “They could invest via a strategic holding in Crown; they could invest directly into MPEL; or they could establish some new kind of specialpurpose vehicle to do a joint venture with them. Tax efficiency and regulatory approval requirements are likely to determine what route is chosen,” suggested the source. Another source told Business Daily: “It’s been suggested in the Australian press that Crown giving Genting an investment opportunity in Macau could be a quid pro quo for Genting’s cooperation over Crown’s takeover target Echo Entertainment Group in Australia. Given that Crown’s Macau business offers the highest growth in its gaming portfolio, were Crown to dilute its Macau interest further, that would be a very high price to pay.”

8 |

business daily June 14, 2012

GREATER CHINA W.Bank open to issue more yuan bonds The World Bank may issue yuandenominated bonds in Hong Kong again when borrowing costs become more favourable, according to Michael Bennett, its head of derivatives and structured finance. International Finance Corp., a member of the World Bank Group, sold 150 million yuan (US$23.5 million) of fiveyear Dim Sum bonds with a 1.8 percent coupon in January 2011, according to data compiled by Bloomberg. The debt yielded 2.35 percent yesterday. The average yield on yuan bonds in Hong Kong climbed 50 basis points to 5.53 percent this quarter, according to an index by Bank of China Ltd. “In principle, we are very open to selling more Dim Sum,” Mr Bennett said in an interview in Hong Kong. “For us, because we are a U.S. dollar-based institution, our ability to issue in any currency is probably dependent on after-swap costs in U.S. dollars. The opportunity comes and goes based on that level.”

Inventories are pilling up and money being stashed

The capital of informal banking feeling the crisis Esprit slumps as CEO quits Hong Kong and China stocks closed higher yesterday in light trading with Chinese insurers leading gains although a slump in shares of European retailer Esprit limited the benchmark’s move higher. The Hang Seng index ended the day up 0.8 percent while the China Enterprises index of top locally listed mainland firms rose 1.5 percent. Esprit Holdings shares fell more than 21 percent, their sharpest drop in 14 years, after the resignation of the company’s chief executive which cast a cloud on the company’s restructuring plan. Shares of Esprit were actively traded among Hang Seng constituents despite being suspended after the midday break with more than six times the 30-day daily average volume changing hands in the morning session. Despite the losses, Esprit shares are still up 42.7 percent from their September 2011 lows and some brokerages including Credit Suisse warned investors against bargain hunting in the stock till there was more clarity on management. On the mainland, the Shanghai Composite rose 1.3 percent while the large-cap focused CSI300 was up 1.6 percent.

Wenzhou waiting for trial programme, while businesses go bust

enzhou’s more than 400,000 businesses make everything from shoes in dusty side streets to synthetic leather in dilapidated factories, much of it financed by unregulated lenders that spread during China’s record 2009-10 credit boom. The decline of socalled shadow banking in the city, triggered by Wen Jiabao’s move to rein in a national property bubble, has left Wenzhou bearing the brunt of the country’s economic slowdown. Wenzhou’s state-run loan service was set up to help small businesses after rising bankruptcies and suicides prompted Premier Wen to visit in October and pledge support. China’s plans for a more targeted stimulus than the 4 trillion yuan package unveiled in 2008 (US$586 billion at the time) mean Wenzhou may see little reprieve. Mr Wen’s administration in March picked the city, five hours by train south of Shanghai, for a trial program designed to boost capital for private companies, an effort that’s failed to quell locals’ gloom.

Slower economy eases power pressure

Inventory build-up

Coal stockpiles in China, the world’s biggest energy user, have climbed to a record and power shortages are less likely this summer on slowing economic growth and hydropower output gains, said an official with the National Development and Reform Commission. Coal inventories at the nation’s main power plants rose 48.3 percent from a year earlier to 93.1 million metric tons as of June 10, enough for 28 days of use, Lu Junling, a deputy inspector at the NDRC, said according to a transcript of a webcast yesterday. China’s peak power supply shortfall may be 18 gigawatts this summer, leaving a gap of 3 percent from the maximum load, said Mr Lu. The nation has experienced a power deficit every summer since 2002. Hydropower output in China in May increased 36 percent from last year.

In Wenzhou’s largest shoe market, 70-year-old Lin Yunlai agrees as he dozes in the booth he has run for two decades. “This is the worst year,” he said as he waited for customers to buy sneakers from his halfempty shelves. “This place used to be packed with buyers from around the country, now it’s full of unsold shoes.” Mr Lin plans to sell his remaining 1,000 pairs and shut the business. The 70,000 yuan revenue he expects to make this year won’t cover his 160,000 yuan rent. “I’m done with it,” he said. The first place to embrace private enterprise when China began opening in 1978, Wenzhou lured 2.8 million migrant workers over the decade following the

country’s entry into the World Trade Organisation in 2001. Seven out of 10 businesses in the city rely on exports, mostly in labour-intensive industries, leaving it vulnerable as Europe’s crisis crimps expansion.

Shadow banking Businesses are suffering because of weak demand, higher raw material costs and rising wages, as well as the break adown in the system of unregulated money lenders who fund much of China’s enterprise, said Zhou Dewen, head of the Wenzhou Small- and Medium-size Enterprise Association. “Wenzhou’s private lending system was built on trust, and now

400,000 firms based in Wenzhou, China’s SMEs capital

that trust is gone,” said Mr Zhou. He estimates there is about 1 trillion yuan of idle private capital in the city because “nobody is willing to lend to others”. As small businesses sought finance to expand, the city of 9 million became one of the nation’s biggest centres for shadow banks, unregulated lenders that demanded 21.6 percent on loans in April, compared with 7.6 percent from commercial banks, according to central bank figures. Wenzhou had the worst non-performing loan ratio among the 21 cities tracked by Shenzhen Development Bank Co. last quarter. About 60 business owners fled the city in

the first two months of the year to avoid paying their debts, China Business News reported. The exodus has continued, said Mr Zhou.

Pilot programme The city was chosen by China’s cabinet in March for a trial program to broaden funding for private companies, including setting up the Wenzhou Private Lending Registration Service Centre that rejected Jiang’s application. The office was designed to help control shadow lending by matching individuals holding excess capital with small businesses in need of funds. “The Wenzhou reform is a worthwhile effort if it could succeed in overcoming longstanding obstacles for private capital to enter the statecontrolled financial sector,” said Fred Hu, founder of Primavera Capital Group and former chairman for Greater China at Goldman Sachs Group Inc. Since Wenzhou’s private lending service opened on April 26, 40 million yuan of deals have been done, one tenth of the amount of capital registered, said Chen Xijun, a director at the city’s Chamber of Commerce. Wenzhou’s growth moderated to a 5 percent pace last quarter, the weakest in at least four years. By comparison, Chongqing, where ousted party boss Bo Xilai championed state-led development, grew 14.4 percent, local government data show. With the divergence in the degree of economic weakening, there’s been little sign policy makers will embrace the type of credit surge that saw 17.5 trillion yuan in new loans in 2009-10. The State Council in a May statement omitted any reference to expanding credit, and state-run Xinhua News Agency reported on May 29 there was no plan to introduce measures on a 2008 scale. Bloomberg

June 14, 2012 business daily | 9

GREATER CHINA

Beijing sale may have breached UN sanctions Chinese trucks reportedly sold to North Korea can be used as missile launchers

hina shipped missile launch vehicles to North Korea last year in breach of UN resolutions, but was never rebuked because the U.S. did not want to embarrass Beijing, a Japanese newspaper said yesterday. The report, based on Japanese government sources, is the most strident of recent claims that China has been involved in helping to arm its wayward ally after earlier allegations Beijing supplied technology. Four giant trucks capable of transporting and launching ballistic missiles were exported by a Chinese firm last August, the leading newspaper Asahi Shimbun said. The vehicles were likely those on display at the huge military display in April marking the centenary of the birth of the state’s founder Kim Il Sung, the newspaper said. The sale of weapons systems to Pyongyang is banned under UN Security Council resolutions aimed at containing the hermit state’s nuclear ambitions. But at Washington’s urging, Tokyo and Seoul have avoided confronting Beijing in a bid to keep North Korea’s patron onside in the international effort to tamp down tensions on the peninsula, the paper reported. Japan, South Korea and the U.S. agreed the shipment was a violation of UN Security Council Resolution 1874, which bans the export of weapons to North Korea.

Big trucks not just for timber

Washington raised the issue with Beijing in April. Chinese officials acknowledged the export had taken place, but said the vehicles were for civilian purposes, including the transportation of timber. Chinese Foreign Ministry spokesman Liu Weimin said yesterday that the claim “is not in accordance with the facts,” adding that Chinese

companies didn’t export items “that are banned by relevant Security Council resolutions or Chinese laws and regulations”. Two months ago the United States said it believed China’s assurances that it was abiding by sanctions on North Korea after charges that Beijing supplied missile launcher technology. “China has

provided repeated assurances that it’s complying fully with both Resolution 1718 as well as 1874. We’re not presently aware of any UN probe into this matter,” State Department spokesman Mark Toner told reporters. “I think we take them at their word,” he said at the time. AFP/Bloomberg

HK official questions dissident presumed suicide Thousands marched calling for an investigation

People have been demanding a public investigation

ong Kong Food and Health Secretary York Chow said Tuesday the death of Chinese dissident Li Wangyang was suspicious, after thousands of protesters marched

through the Asian financial centre demanding justice. According to New York-based group Human Rights in China, two of Mr Li’s relatives found him last week strung up to a

windowsill by a bandage wrapped around his neck, with his feet on the ground. The nearly deaf and blind democracy activist was under round-the-clock police surveillance

at a hospital when he died, the group said. Mr Chow said he doubted the veteran of the 1989 Tiananmen democracy protests had hanged himself. “It would be hard for a severely disabled person to commit suicide, even if he wanted to,” Mr Chow told reporters. “Judging from the pictures, it doesn’t seem to be suicide... Knowing his personality, he wouldn’t commit suicide and not leave a suicide letter.” Mr Chow, who will be leaving office at the end of the month, called on Hong Kong’s leaders to express concern about Mr Li’s death to the mainland authorities. The dissident was jailed for more than 22 years after taking part in the Tiananmen democracy movement against China’s communist regime. He was sentenced to 13 years in prison for “counterrevolutionary” crimes including organising workers into an autonomous union. Thousands of people from China and around the world have signed an online petition calling on China to launch a public investigation into his death. Several thousand attended a protest march through Hong Kong on Sunday. A.F.P.

10 |

business daily June 14, 2012

asia

Temasek sees new deal openings Turmoil in Europe may create opportunities for investment Joyce Koh

emasek Holdings Pte said the turmoil in Europe may result in a market slump rivalling the 2008 global financial crisis, creating opportunities for the Singapore state-owned investment company to make deals. Temasek, which managed S$193 billion (US$150 billion) as of March 2011, may fund European companies expanding in growth markets like Asia and Latin America, or form ventures with firms seeking mergers or acquisitions, Chief Investment Officer Tan Chong Lee said in an interview. Temasek is prepared to make “sizable” deals topping S$1 billion, he said. The MSCI World Index slumped 9 percent in May, its worst monthly performance in two years, as Europe’s debt crisis intensified, the U.S. recovery showed signs of losing steam and growth slowed in China and India. “We do not discount the possibility that another severe round of major dislocation could actually result from the current European crisis,” said Mr Tan. “It’s hard to quantify or predict the magnitude of the potential correction, but one would imagine that there is no less reason why another major correction would not be as bad or worse than the global financial crisis that we saw back in 2008.” The European Union’s construct has created “inherent instability” in the system, which is unlikely to

improve until structural changes are made, Mr Tan said.

Investment proposals Temasek is assessing investment proposals in areas it wants to focus on, such as retail, luxury, technology, health care, biotechnology and insurance, he said. These also fit its aim to invest in markets with a rising middle-income population. “Global markets are going to see a lot of volatility,” said Catherine Yeung, Hong Kong-based investment director at Fidelity Investment Management Ltd. “It is important for investors to search for those growth opportunities and many of those growth opportunities lie in Asia Pacific.” Investments in Europe and North America make up 8 percent of Temasek’s assets, trailing assets in Singapore and other parts of the Asia-Pacific region. Past European investments that exceeded US$1 billion include its 2 percent stake in London-based Barclays Plc, which it has sold, and 18 percent of Standard Chartered Plc, making it the U.K. bank’s biggest shareholder.

‘Return requirements’ Temasek also holds 5.5 percent of Rio Tinto Group’s Ivanhoe Mines Ltd, according to a filing last week. The Singapore firm declined to say the amount paid for the stake in the Vancouver-based company, which

is worth C$433.9 million (US$422 million) as of Monday’s close. “In this environment, we’re seeing sizable opportunities come our way and we are carefully evaluating those opportunities,” said Mr Tan, who’s also considering smaller ventures. “We are currently net cash, which means that we have

KEY POINTS Company prepared to make deals topping S$1 billion May fund European companies expanding in growth markets like Asia Temasek’s assets reached S$193 billion at the end of March 2011 Assessing investment proposals in retail, luxury, technology, health care, biotechnology and insurance

the full flexibility to undertake significant transactions provided it meets our return requirements.” Temasek’s assets slumped 30 percent to S$130 billion in the year ended March 2009 amid the global financial crisis when it sold its stake in Bank of America Corp. at a loss. The company’s holdings rebounded to S$186 billion the following year, and reached S$193 billion at the end of March 2011, according to Temasek’s annual reports. Mr Tan said Temasek’s holdings in financial services companies, which

Singapore growth outlook raised Inflation may also be higher than expected

ingapore’s economy is likely to grow at a faster pace this year and inflation will probably be higher than what analysts were expecting three months ago, the central bank said in a survey released yesterday. Economists now expect the Southeast Asian city-state’s gross domestic product to expand 3.0 percent this year, up from the median estimate of 2.5 percent in the previous poll, the Monetary Authority of Singapore’s (MAS) latest quarterly Survey of

Economists expect the city-state’s GDP to expand 3.0 percent this year

Indonesia

Jakarta plans stimulus Indonesia will implement stimulus measures to boost consumption and infrastructure spending as a global slowdown limits exports. The government will tap last year’s 24-trillion rupiah (US$2.5 billion) budget surplus to fund building projects, and lift the tax-free annual income level to 24 million rupiah from 15.8 million rupiah, Bambang Brodjonegoro, head of fiscal policy at the Ministry of Finance, told reporters in Jakarta yesterday. Indonesia’s policy makers have signalled they are prepared to support the economy with monetary and fiscal stimulus as Europe’s protracted sovereign-debt crisis threatens global expansion and crimps demand for Asian exports. The economy may expand at the lower range of Bank Indonesia’s forecast of about 6.3 percent to 6.7 percent in 2012, Governor Darmin Nasution said this month. “During this time, exports aren’t the main driver to support our growth,” Mr Brodjonegoro said. “As exports have fallen, we’ll boost consumption and investment.”

Professional Forecasters shows. Economists predicted slower growth for the key manufacturing and financial services sectors but revised their outlook upwards for construction, accommodation and food services. As for inflation, forecasters polled by MAS now see the consumer price index rising 4.2 percent this year, within the government’s latest forecast and up from 3.5 percent in the previous survey. Singapore’s official forecast is for

Thailand

Thailand holds rates Thailand’s central bank kept its key interest rate unchanged for a third straight meeting amid rising risks from the European debt crisis and slowing growth in China. The Bank of Thailand held its benchmark one-day bond repurchase rate at 3 percent, it said in Bangkok yesterday. The monetary authority cut a combined 50 basis points in November and January to spur growth after last year’s floods. Thai exports unexpectedly declined in April while inflation is still at a “manageable level,” the central bank said last month, adding on May 30 that there is still room for monetary easing. “The Thai economy is not that weak as to require an immediate rate cut,” said Satoshi Ushijima, the Bangkokbased vice president of the treasury division at Mizuho Corporate Bank Ltd. “A cut is an option for them in the future if the situation deteriorates, and as inflation is not a major issue now.”

June 14, 2012 business daily | 11

asia Australian companies facing ‘test of adaptability’ Strong currency benefiting consumers, says RBA governor

Temasek is ‘carefully evaluating’ new business opportunities, says chief investment officer Tan Chong Lee

made up 36 percent of its assets as of March 2011, will continue to be an important part of its investments. “Banks are a very good proxy for riding on the growth of a particular economy or economies,” he said. “I don’t see us diminishing or reducing our exposure in the financial services space.” In China, Temasek sold US$2.48 billion of shares in Bank of China Ltd and China Construction Bank

Corp. in May, less than a month after paying US$2.3 billion for shares in Industrial & Commercial Bank of China Ltd. Temasek, which continues to hold more than US$17 billion in Chinese bank shares, said the recent sales were part of a “rebalancing” after the investment in ICBC. “We continue to believe in the longterm potential of China,” Mr Tan said.

growth of 1 to 3 percent this year, with inflation coming in at 3.5 to 4.5 percent. The government raised its inflation forecast from 2.5 to 3.5 percent in April. For 2013, the median forecast of economists was for GDP growth of 4.5 percent and headline inflation of 3.0 percent. Singapore, seen as a bellwether for the region as its trade is three times the size of its economy, had GDP growth of 4.9 percent last year, while inflation was 5.2 percent. As for the Singapore dollar, one of the world’s most actively traded currencies, forecasters now expect it to end this year at 1.243 to the U.S. dollar, compared with 1.230 in the previous survey. The MAS survey is carried out every quarter after the release of economic data for the preceding three-month period. The median forecasts in the

latest report were based on the estimates of 21 economists. Singapore said on Monday its nonoil domestic exports fell a seasonally adjusted 2.1 percent in May from a month earlier. The trade agency also revised April shipments sharply downwards as some firms amended declarations they made earlier. Credit Suisse economist Robert Prior-Wandesforde said the monthon-month fall in exports and the downward revision in April numbers suggest Singapore’s second-quarter economic growth numbers are likely to be “very weak”. Economists predicted Singapore’s non-oil domestic exports would expand by 5.6 percent this year, faster than the median estimate of 4.2 percent in the March survey.

Bloomberg

Reuters

eserve Bank of Australia governor Glenn Stevens said the strength of the nation’s currency benefits consumers and probably will be sustained as a mining investment intensifies, forcing businesses to change to survive. “It’s a test of adaptability,” Mr Stevens told business, union and community leaders yesterday in the northern city of Brisbane. “While I’m very conscious that a number of sectors are really struggling with the exchange rate where it is, we shouldn’t wish too quickly for a low exchange rate.” Every time Australians put gasoline in their cars, buy consumer goods or travel overseas, they’re enjoying lower prices generated by the strong exchange rate, Mr Stevens told the forum. “There are big benefits to us as consumers from a high currency and that is part of the mechanism for spreading the gains of the resource boom,” he said. Prime Minister Julia Gillard’s

While I’m very

conscious that a number of sectors are really struggling with the exchange rate where it is, we shouldn’t wish too quickly for a low exchange rate Glenn Stevens, RBA governor

government is struggling to reconcile one of the developed world’s fastest-growing economies with public pessimism about their own prospects. A private report yesterday showed consumer confidence stagnated near the lowest level this year even after the RBA lowered borrowing costs by 75 basis

Philippines

Philippines urges new criteria Credit rating companies are failing to keep up with the bond market in recognising that the Philippines deserves to be classified as investment grade, Finance Secretary Cesar Purisima said. “They need to adjust their model to reflect the realities,” Purisima said in an interview at Bloomberg’s headquarters in New York on Tuesday. “My biggest frustration is really with those watching from the outside.” The Philippines is rated two steps below investment grade at Moody’s Investors Service and Standard & Poor’s, in line with Turkey and Jordan. The average yield on the Philippines’ foreign debt has declined 32 basis points, or 0.32 percentage point, this year to 4.13 percent, according to data compiled by JPMorgan Chase & Co. “On the implied ratings, we are between three to four notches underrated, which is the largest gap in the world,” said Mr Purisima. “What I am asking for is to reduce that gap.”

points at the past two meetings to 3.5 percent. There is “grumpiness, dissatisfaction” among households and a lower growth rate of consumer spending, Mr Stevens said. He said the economy is always a “patchwork quilt” that’s boosting the prospects of some and hurting others. The Australian dollar has soared about 75 percent in the past decade, reflecting surging demand from developing nations in Asia such as China for the nation’s iron ore and coal. It bought 99.43 U.S. cents as of 11:39 am in Sydney, little changed from Tuesday, when the currency climbed by 1 percent. “We think that a US$1 is high, but actually I can remember it being US$1.40 in my teen age,” the central bank governor said of the value of the local currency against the U.S dollar. “If you go way back, in the days when we were pegged to sterling, we were way higher than US$1, and there’s been a long downward trend at least until about 2000.”

On the basis of the inflation-adjusted, or “real exchange rate,” which Mr Stevens said provides a better gauge of Australia’s competitive position, the currency is “actually pretty high here,” he said. Confidence in Australia remains subdued even after the central bank lowered rates, the government announced cash handouts in May, the economy expanded twice as fast as forecast last quarter, and employment growth accelerated. Bloomberg

Malaysia

Felda IPO in hot demand‎ Malaysia’s Felda Global Ventures Holdings, the world’s third-largest palm oil company by acreage, was set to price its up to US$3.2 billion IPO late yesterday at the top of an indicative range, as strong demand from domestic investors helps it counter a recent global trend of failed listings. The world’s second-biggest initial public offering this year behind Facebook Inc’s US$16 billion offering will put Kuala Lumpur on par with Shenzhen as the main IPO destination in Asia Pacific, leaving behind Hong Kong which grossed the highest IPO proceeds in the world in both 2010 and 2011. Felda prices its offering as Malaysian stocks have underperformed peer markets in Southeast Asia. The benchmark index is up 3 percent this year, lagging Vietnam’s near-22 percent gain, the Philippines’ 16 percent rise and Thailand’s 13 percent increase. Yet two IPOs in Malaysia were among the top-10 best performing offerings in 2011.

12 |

business daily June 14, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

Day %

VOLUME

CHINA UNICOM HON

11.04

2.222222

24280699

CITIC PACIFIC

11.14

2204643

63.6

0.2364066

1502661

14.72

1.37741

56070434

9.9

0.4056795

5836379

10.54

-21.81009

67723838

25.2

-0.591716

6084003

TINGYI HLDG CO

HANG SENG BK

103.2

1.674877

1460450

WANT WANT CHINA

HENDERSON LAND D

40.45

-0.2466091

3209515

WHARF HLDG

1.496422

1853231

HONG KG CHINA GS

16.14

-0.2472188

9367211

HONG KONG EXCHNG

110.8

-0.1801802

3500024

65.4

1.631702

18141614

64.25

-0.925212

7421904

4.31

1.173709

257084893

PRICE

Day %

VOLUME

25.95

24878087

3.25

0.931677

7832852

2.8

240079747

4.96

0.6085193

16197844

BANK EAST ASIA

25.75

1.778656

1429304

BELLE INTERNATIO

12.34

-3.291536

19285693

ESPRIT HLDGS

BOC HONG KONG HO

22.35

1.590909

11456400

HANG LUNG PROPER

CATHAY PAC AIR

12.22

-0.4885993

4302898

CHEUNG KONG

90.3 -0.05534034

2015007

CHINA COAL ENE-H

6.87

1.928783

25048563

AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H BANK OF COMMUN-H

CHINA CONST BA-H

CLP HLDGS LTD CNOOC LTD COSCO PAC LTD

HENGAN INTL

5.39

1.506591

277623381

CHINA LIFE INS-H

19.32

3.648069

57877119

CHINA MERCHANT

22.2

-1.113586

6039003

HSBC HLDGS PLC HUTCHISON WHAMPO

CHINA MOBILE

79.7

0.3778338

9149849

17.48

1.864802

27086205

CHINA PETROLEU-H

7.11

0.2820874

67489400

CHINA RES ENTERP

23.35

3.547672

4542479

15.7

0.2554278

14938928

CHINA RES POWER

14.46

0.4166667

CHINA SHENHUA-H

26.75

3.281853

CHINA OVERSEAS

CHINA RES LAND

IND & COMM BK-H

NAME

PRICE

Day %

VOLUME

55.65

-0.1793722

2841082

SANDS CHINA LTD

26.6

2.504817

5476979

SINO LAND CO

10.9

2.251407

7185743

SUN HUNG KAI PRO

89.2

-0.2237136

2231652

85.65

0.3514938

1291570

227

0.5314438

2214213

18.72

-0.952381

3160358

9.34

1.082251

6906733

41.95

-1.985981

6602571

POWER ASSETS HOL

SWIRE PACIFIC-A TENCENT HOLDINGS

MOVERS

3 19030

INDEX 19026.52

LI & FUNG LTD

15.24

1.464714

13164300

HIGH

19029.55

MTR CORP

24.95

0.4024145

1941536

LOW

18719.89

NEW WORLD DEV

8.93

0.9039548

10953887

6711231

52W (H) 22835.03

PETROCHINA CO-H

10.38

0.776699

32668949

17348452

PING AN INSURA-H

60.8

2.616034

13766973

(L) 16170.35

18710

11-Jun

13-Jun

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

24.95

4.831933

19189362

YANZHOU COAL-H

CHINA PETROLEU-H

7.11

0.2820874

67489400

7832852

CHINA RAIL CN-H

6.14

-1.602564

4.318182

13473094

CHINA RAIL GR-H

3.1

2.8

240079747

CHINA SHENHUA-H

26.75

CHINA TELECOM-H

PRICE

DAY %

VOLUME

AGRICULTURAL-H

2.91

-0.6825939

104643545

AIR CHINA LTD-H

4.71

-2.886598

35862324

ALUMINUM CORP-H

3.25

0.931677

22.95

ANHUI CONCH-H BANK OF CHINA-H

NAME CHINA PACIFIC-H

PRICE

DAY %

VOLUME

12.86

3.376206

21179730

ZIJIN MINING-H

2.74

0.3663004

23566459

16099012

ZOOMLION HEAVY-H

10.2

0.990099

12455354

0.3236246

18290202

ZTE CORP-H

15.3

4.365621

5421382

3.281853

17348452

4.96

0.6085193

16197844

3.57

1.709402

39091967

15.26

1.059603

2603848

DONGFENG MOTOR-H

13.14

0.6125574

22931318

CHINA CITIC BK-H

3.87

1.574803

38714336

GUANGZHOU AUTO-H

6.64

0.3021148

3274068

CHINA COAL ENE-H

6.87

1.928783

25048563

HUANENG POWER-H

5.39

0.3724395

33516088

CHINA COM CONS-H

6.87

-1.293103

18191752

IND & COMM BK-H

4.31

1.173709

257084893

CHINA CONST BA-H

5.39

1.506591

277623381

JIANGXI COPPER-H

16.88

0.5959476

6378823

CHINA COSCO HO-H

3.73

1.358696

22877849

PETROCHINA CO-H

10.38

0.776699

32668949

PICC PROPERTY &

BANK OF COMMUN-H BYD CO LTD-H

19.32

3.648069

57877119

9.2

3.139013

27935560

CHINA LONGYUAN-H

5.19

1.764706

7549868

PING AN INSURA-H

60.8

2.616034

13766973

CHINA MERCH BK-H

14.46

1.260504

15643606

SHANDONG WEIG-H

8.07

2.802548

4117318

CHINA LIFE INS-H

NAME

MOVERS

1 9660

INDEX 9658.47 HIGH

9658.47

LOW

9437.73

CHINA MINSHENG-H

7.33

-0.4076087

26073695

SINOPHARM-H

18.56

2.99667

8699182

52W (H) 12902.97

CHINA NATL BDG-H

9.33

1.74482

40289740

TSINGTAO BREW-H

51.1

1.691542

1135823

(L) 8058.58

11.36

2.712477

9496343

WEICHAI POWER-H

34.1

7.401575

5068939

CHINA OILFIELD-H

9430

11-Jun

13-Jun

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.62

0.3831418

76652213

DATANG INTL PO-A

5.78

7.835821

20332876

AIR CHINA LTD-A

6.15

1.317957

11898643

DONGFANG ELECT-A

21.45

1.179245

6151350

ALUMINUM CORP-A

6.68

0.6024096

8071924

EVERBRIG SEC -A

14.33

2.65043

ANHUI CONCH-A

16.46

2.045877

20587598

GD MIDEA HOLDING

12.35

BANK OF BEIJIN-A

9.43

0.855615

19197056

GD POWER DEVEL-A

BANK OF CHINA-A

2.86

0.1751313

22764092

GEMDALE CORP-A

BANK OF COMMUN-A

4.47

0.4494382

38412199

BAOSHAN IRON & S

4.44

0.2257336

31240461

22.57

0.9391771

0.7556675

NAME

BYD CO LTD -A CHINA CITIC BK-A

NAME

PRICE

DAY %

VOLUME

36.55

1.134477

11166826

SHANG PUDONG-A

8.29

82431224

12182959

SHANGHAI ELECT-A

5.22

0.967118

9447356

1.229508

26902263

SHANXI LU'AN -A

24.59

-0.3242805

11928108

2.66

3.90625

163285053

SHANXI XINGHUA-A

37.76

3.169399

4506873

7.26

-0.1375516

50763876

SHANXI XISHAN-A

16.37

0.1835985

24154935

GF SECURITIES-A

32.33

2.798092

10176177

SHENZ DVLP BK-A

14.84

2.133517

26011662

GREE ELECTRIC

21.95

1.105481

13792765

SHENZEN OVERSE-A

6.75

2.272727

49928948

1942696

GUANGHUI ENERG-A

15.53

2.373105

24376294

SINOVEL WIND-A

15.26

1.260783

892387

22915812

GUIZHOU PANJIA-A

30.65

-1.668271

8552080

8.93

1.592719

44297338

SHANDONG GOLD-MI

SUNING APPLIAN-A

CHINA CNR CORP-A

4.18

1.703163

40162531

HAITONG SECURI-A

10.52

1.44648

65075853

TSINGTAO BREW-A

40.5

3.158431

8757595

CHINA COAL ENE-A

8.37

-0.1193317

21269290

HANGZHOU HIKVI-A

26.41

2.962963

4316719

WEICHAI POWER-A

32.12

1.165354

4478221

CHINA CONST BA-A

4.44

0.4524887

15719340

HEBEI IRON-A

2.9

0.6944444

13440285

WULIANGYE YIBIN

32.36

1.953371

17127365

62.28

3.627288

3573525

XCMG CONSTRUCT-A

14.91

1.428571

8478561

CHINA COSCO HO-A

4.85

1.464435

5959104

HENAN SHUAN-A

CHINA CSSC HOL-A

23.54

-1.050862

7068319

HUATAI SECURIT-A

11.87

1.366354

22468680

XIAMEN TUNGSTEN

49.69

0.6074104

9194907

CHINA EAST AIR-A

4.11

1.481481

12386183

HUAXIA BANK CO

9.32

0.8658009

42790210

YANGQUAN COAL -A

17.35

0.872093

19051543

2.81

0.7168459

20226815

IND & COMM BK-A

4.2

0.7194245

73088970

YANTAI CHANGYU-A

1.668693

1541271

CHINA LIFE INS-A

17.88

7.194245

27895887

INDUSTRIAL BAN-A

12.61

0.6384677

53617740

YANTAI WANHUA-A

14.98

2.18281

14244976

CHINA MERCH BK-A

10.89

0.7400555

38013211

INNER MONG BAO-A

45.53

0.06593407

42613368

YANZHOU COAL-A

21.32

0.7561437

3093626

CHINA MERCHANT-A

12.99

5.097087

28940809

INNER MONG YIL-A

24.03

5.440983

24803966

YUNNAN BAIYAO-A

57.5

3.046595

3934181

CHINA MERCHANT-A

26.18

0.6923077

4823787

INNER MONGOLIA-A

6.19

1.47541

37962539

ZHONGJIN GOLD

23.83

1.663823

9475317

CHINA MINSHENG-A

6.1

1.160862

80242679

JIANGSU HENGRU-A

28.88

2.702703

3782671

ZIJIN MINING-A

4.09

0.4914005

30171417

CHINA NATIONAL-A

6.32

2.431118

16698895

JIANGSU YANGHE-A

138.1

2.303874

1489997

ZOOMLION HEAVY-A

11.04

1.284404

42099434

JIANGXI COPPER-A

24.88

1.426824

5507755

ZTE CORP-A

14.55

1.677149

17163634

JINDUICHENG -A

13.71

1.255539

5180719 20269318

CHINA EVERBRIG-A

CHINA OILFIELD-A

17.12

1.241869

4031141

CHINA PACIFIC-A

22.2

6.730769

37995932

CHINA PETROLEU-A

6.46

-0.308642

41933963

JIZHONG ENERGY-A

CHINA RAILWAY-A

4.56

2.242152

22629412

KWEICHOW MOUTA-A

17.7

-0.4499438

238.99

2.19799

2046347

40.79

2.590543

9491201

2.59

1.171875

12580270

CHINA RAILWAY-A

2.65

1.923077

26393859

LUZHOU LAOJIAO-A

CHINA SHENHUA-A

23.78

0.805426

12042311

METALLURGICAL-A

CHINA SHIPBUIL-A

5.55

2.398524

38006929

NINGBO PORT CO-A

2.54

1.195219

9164572

7.53

0.1329787

52861174

MOVERS

276

2 2590

INDEX 2580.636

CHINA SOUTHERN-A

4.68

0.862069

25789107

PANGANG GROUP -A

CHINA STATE -A

3.42

0.8849558

82023788

PETROCHINA CO-A

9.19

0.2181025

9609221

45.28

6.541176

54293614

HIGH

2580.64

LOW

2526.65

CHINA UNITED-A

3.97

0.2525253

48801252

PING AN INSURA-A

CHINA VANKE CO-A

9.27

0.5422993

66846679

POLY REAL ESTA-A

14.59

-0.2734108

40838060

CHINA YANGTZE-A

6.92

0.8746356

10664653

QINGDAO HAIER-A

11.99

2.129472

15023046

CITIC SECURITI-A

13.51

1.65538

90975183

QINGHAI SALT-A

31.04

3.466667

6585691

CSR CORP LTD -A

4.82

1.473684

25636615

SAIC MOTOR-A

14.93

1.911263

13781444

DAQIN RAILWAY -A

7.38

0.8196721

22074104

SANY HEAVY INDUS

14.92

1.4276

25292882

NAME

PRICE DAY %

Volume

PRICE DAY %

Volume

ACER INC

30.5 -0.6514658

9482145

75 -0.3984064

6818851

TAIWAN MOBILE CO

94.8

FOXCONN TECHNOLO

105 -0.4739336

5714851

TPK HOLDING CO L

437 -0.4555809

28.7 -0.5199307

9377615

TSMC

82 -0.6060606

20105474

52W (H) 3140.102 (L) 2254.567

2520

11-Jun

13-Jun

FTSE TAIWAN 50 INDEX

ADVANCED SEMICON

NAME FORMOSA PLASTIC

25.15

18101195

ASIA CEMENT CORP

36.4

2821091

FUBON FINANCIAL

ASUSTEK COMPUTER

292.5

1.036269

3693375

HON HAI PRECISIO

AU OPTRONICS COR

11.9

0.4219409

25222751

HOTAI MOTOR CO

CATCHER TECH

188.5

0.2659574

11333328

HTC CORP

CATHAY FINANCIAL

28.85

0.3478261

8029202

HUA NAN FINANCIA

CHANG HWA BANK

15.5

1.639344

8166527

LARGAN PRECISION

569 -0.1754386

CHENG SHIN RUBBE

71.8

0.9845288

2705375

LITE-ON TECHNOLO

36.6

0.2739726

CHIMEI INNOLUX C

11.8 -0.4219409

191.5

0.7556675

Volume 5631579 2853000 32284438

-1.280683

3404198

12.3

0.4081633

23788143

WISTRON CORP

37.95

0.9308511

4480130

YUANTA FINANCIAL

13.15 -0.3787879

11446468

1.449275

9580973

-0.308642

6123922

UNITED MICROELEC

790347

YULON MOTOR CO

51.6

0.1941748

8693283

2293273

258

1.176471

3530648

MEGA FINANCIAL H

21.65

2.122642

24572289

CHINA STEEL CORP

27.9 -0.3571429

12864857

NAN YA PLASTICS

53.9

1.125704

6459160

CHINATRUST FINAN

16.5 -0.9009009

24025247

PRESIDENT CHAIN

154

0.6535948

1117829

CHUNGHWA TELECOM

90.4 -0.1104972

4412841

QUANTA COMPUTER

79.6

-1.606922

5049736

COMPAL ELECTRON

27.5

-2.135231

18161332

SILICONWARE PREC

29.45

0.3407155

5880977

DELTA ELECT INC

89.5

4.678363

14053804

SINOPAC FINANCIA

11.05

0.913242

14303788

FAR EASTERN NEW

28.6

-1.549053

10808045

SYNNEX TECH INTL

69.8

0.867052

2748770

FAR EASTONE TELE

65.9

-1.1994

4351686

TAIWAN CEMENT

-1.162791

6984948

17.05

1.186944

8312730

TAIWAN COOPERATI

17.1 -0.5813953

4386167

74.2

-0.536193

4203099

TAIWAN FERTILIZE

66.4

-1.48368

2988804

79 -0.7537688

1306734

TAIWAN GLASS IND

24.3

-4.330709

6636054

FORMOSA PETROCHE

0.9584665

46.25

350

MEDIATEK INC

FORMOSA CHEM & F

UNI-PRESIDENT

16.15

34963347

FIRST FINANCIAL

527227

20900348

7.1

PRICE DAY %

0.2617801

0.2824859

CHINA DEVELOPMEN

NAME

MOVERS

2 4910

INDEX 4865.88 HIGH

4903.41

LOW

4830.7

52W (H) 6065.73 4830

(L) 4643.05 11-Jun

13-Jun

June 14, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 19.8 19.7

12.2

19.6

12.1

19.5

19.4

31.3

11.9

26.6

14.2

19.3

26.36

14.15

26.2

14.1

14.05

25.8

Commodities PRICE

DAY %

YTD %

(H) 52W

83.4

0.096015362

-16.0796941

111.4899979

77.40000153

BRENT CRUDE FUTR Jul12

97.45

0.319127033

-7.744012118

125.6100006

94.34999847

GASOLINE RBOB FUT Jul12

265.86

0.316957211

-2.066526688

332.1799994

246.4999914

GAS OIL FUT (ICE) Jul12

846.75

0.088652482

-5.864369094

1045.75

810

2.201

-1.388888889

-32.13074314

5.016000271

2.095999956

263.3

0.438680145

-7.376789672

331.9299936

256.3099861

Gold Spot $/Oz

HEATING OIL FUTR Jul12

1612.95

1.351

3.0698

1921.18

1478.78

Silver Spot $/Oz

28.9531

1.4919

4.0169

44.2175

26.085

1454

1.0951

4.2668

1915.75

1339.25

620.97

0.2066

-4.9778

848.37

537.54 1955.75

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

1968

-0.228136882

-2.574257426

2675.25

LME COPPER 3MO ($)

7395

-0.336927224

-2.697368421

9905

6635

LME ZINC

1880

-0.529100529

1.89701897

2539.5

1718.5

17175

-0.722543353

-8.204168894

25195

15980

14.16

0.425531915

-7.872478855

19.375

13.72500038

521

-0.28708134

-11.13006397

673.5

499

3MO ($)

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

Dec12

18.7

ASIA PACIFIC

CROSSES

DAY %

0.9983 1.5572 0.9575 1.2544 79.67 7.9906 7.7579 6.3689 55.595 31.57 1.279 29.955 42.64 9430 79.542 1.2011 0.80556 7.9765 10.0244 99.94 1.03

YTD %

0.7061 0.2898 0.3029 0.3119 -0.1506 0.0088 0.009 0.0251 0.3981 0.3484 0.3909 0.0434 0.7598 0.2015 -0.865 -0.015 -0.0211 -0.346 -0.2983 -0.4603 0

(H) 52W

-2.2137 0.1866 -2.0261 -3.2173 -3.4643 0.1126 0.1225 -1.1603 -4.5508 -0.0634 1.3761 1.0816 2.8143 -3.8282 -1.3955 1.3063 3.4547 1.9771 3.268 -0.2802 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

2.96

2.068966

34.54545

3.25

1.88

1093824

154.6000061

CROWN LTD

8.49

2.166065

4.944374

9.29

7.45

2577040

26.03999901

19.23999977

AMAX HOLDINGS LT

0.078

-10.34483

0.124

0.06

1360000

107

64.61000061

BOC HONG KONG HO

22.35

1.590909

21.46739

24.45

14.24

11456400

CENTURY LEGEND

0.232

0.8695634

0.405

0.204

2.98

6.428573

4.53

2.3

32000

CHINA OVERSEAS

17.48

1.864802

34.66873

17.86

9.99

27086205

CHINESE ESTATES

8.99

-28.08

13.68

8.3

538988

2.857143

-35.34483

15.16

8.55

8660000

EMPEROR ENTERTAI

1.18

1.724138

6.306305

2.04

0.97

1700000

FUTURE BRIGHT

0.82

95.2381

1.09

0.3

456000

GALAXY ENTERTAIN

19.7

0.7157464

38.3427

24.95

8.69

11476000 1460450

621.75

0.933441558

-9.398907104

881.75

592.25

1335

-0.149588631

10.85738011

1400

1115.75

155.25

-0.064370776

-33.72465315

288.8500061

SUGAR #11 (WORLD) Oct12

19.76

-1.101101101

-13.44721857

COTTON NO.2 FUTR Dec12

69.25

0.595583963

-21.16347905

COFFEE 'C' FUTURE Sep12

MAJORS

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

ARISTOCRAT LEISU

WHEAT FUTURE(CBT) Jul12 SOYBEAN FUTURE Nov12

NAME

PRICE

CHEUK NANG HLDGS

World Stock MarketS - Indices

CHOW TAI FOOK JE

NAME

18.9

PRICE

(L) 52W

WTI CRUDE FUTURE Jul12

NATURAL GAS FUTR Jul12

METALS

19.1

CURRENCY EXCHANGE RATES

NAME ENERGY

12.3

31.4

DAY % YTD %

VOLUME CRNCY

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12573.8

1.309862

2.915805

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2843.07

1.186591

9.132687

3134.17

2298.89

HANG SENG BK

103.2

1.674877

11.99132

125

84.4

FTSE 100 INDEX

5473.84

0.001826904

-1.766601

6084.08

4791.01

HOPEWELL HLDGS

19.9

-1.240695

0.2014068

24.903

18.56

407297

DAX INDEX

6142.17

-0.3095156

4.133696

7523.53

4965.8

HSBC HLDGS PLC

65.4

1.631702

10.84746

79.6

18141614

NIKKEI 225

8587.84

0.5988248

1.56694

10255.15

8135.79

HUTCHISON TELE H

3.4

-1.162791

13.71237

3.71

2.33

1940043

HANG SENG INDEX

19026.52

0.8157876

3.212088

22835.03

16170.35

LUK FOOK HLDGS I

15.2

-43.91144

46.15

14.82

2194009

MELCO INTL DEVEL

6.27

0.9661836

8.665512

10.76

4.3

1851025

CSI 300 INDEX

2580.636

1.592723

10.01364

3140.102

2254.567

MGM CHINA HOLDIN

12.18

1.5

26.97878

17.183

7.6

4180800

TAIWAN TAIEX INDEX

7088.83

0.2368469

0.2368468

8876.14

6609.11

MIDLAND HOLDINGS

3.91

1.558442

-1.113972

5.217

2.887

1172020

NEPTUNE GROUP

0.102

-8.108109

0.153

0.08

240000

NEW WORLD DEV

8.93

0.9039548

42.65175

11.389

6.13

10953887

SANDS CHINA LTD

26.6

2.504817

21.18451

33.05

14.9

5476979

SHUN HO RESOURCE

1.13

1.32

0.82

SHUN TAK HOLDING

2.82

0.7142857

10.19377

4.668

2.241

1055067 8925145

KOSPI INDEX

1859.32

0.2469349

1.839252

2192.83

1644.11

S&P/ASX 200 INDEX

4063.787

-0.2232818

0.1781451

4657.4

3765.9

3860.461

0.2046162

1.006517

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1576.23

0.01015183

2.972438

1609.33

1310.53

NZX ALL INDEX

756.258

-1.299634

3.625335

806.015

700.441

JAKARTA COMPOSITE INDEX

PHILIPPINES ALL SHARE IX

3381.09

0.2963424

11.03598

3518.96

2695.06

SJM HOLDINGS LTD

14.18

0.8534851

13.38978

20.711

10.079

SMARTONE TELECOM

14.76

9.821432

18.5

9.8

368310

WYNN MACAU LTD

19.02

1.277955

-2.461538

27.48

14.807

4708715

ASIA ENTERTAINME

4.1

-2.612827

-30.27211

10.8692

3.66

46223

BALLY TECHNOLOGI

46.19

1.561126

16.75935

49.32

24.74

362272 12000

HSBC Dragon 300 Index Singapor

525.76

0.03

5.93

STOCK EXCH OF THAI INDEX

1158.22

-0.4050115

12.96181

1247.72

843.69

HO CHI MINH STOCK INDEX

427.61

-0.1284567

21.63561

492.44

332.28

BOC HONG KONG HO

2.8

16.80355

3.15

1.81

Laos Composite Index

1006.77

11.93049

1113.06

876.33

GALAXY ENTERTAIN

2.5025

-0.9891197

33.82353

3.24

1.08

1500

INTL GAME TECH

13.53

1.121076

-21.33721

19.15

13.12

2837398

JONES LANG LASAL

70.46

2.756307

15.01796

99.89

46.01

263444

LAS VEGAS SANDS

45.72

1.645176

6.997427

62.09

36.08

8063982

MELCO CROWN-ADR

12.13

0.9991674

26.09148

16.15

7.05

5732763

MGM CHINA HOLDIN

1.64

37.61931

2.2131

1.0025

100

MGM RESORTS INTE

11.24

1.811594

7.766056

16.05

7.4

7467836

SHUFFLE MASTER

14.09

-0.983837

20.22184

18.77

7.35

424756

1.79

1.129944

11.34799

2.6037

1.2624

2000

101.47

1.949161

-8.163633

165.4931

95.82

2622173

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business daily June 14, 2012

Opinion Too much faith in markets denies us the good life (part II) Robert Skidelsky Edward Skidelsky

Emeritus professor at the University of Warwick

Lecturer at the University of Exeter

hat would an economic organization geared to realizing the basic goods for every citizen — economic and personal — look like? It would have to produce enough to satisfy everyone’s basic needs and reasonable standards of comfort. It would also have to reduce the amount of necessary work, freeing up time for leisure. Just as important, it would have to ensure a less unequal distribution of wealth and income, not just to diminish the incentive to work, but also to improve the social bases of health, personality, respect and friendship. How far should policy be pushed toward these aims? We favor a sort of non-coercive paternalism: encouraging or discouraging certain behaviors, without limiting individual freedoms. We must find ways to reduce the pressure to consume and hence, indirectly, the pressure to work. To begin, the aim of policy should be to maintain full employment, not full-time employment. Earning a living is an important means to the basic goods of respect and security. But it needn’t imply working eight hours a day, or five days a week, or 1800 hours a year, in a soul-destroying job. Our goal should be stable employment with fewer hours worked, but with more people employed.

Working Less The simplest approach would be a progressive reduction in work hours by limiting weekly hours and/or increasing vacation times. Such a framework would allow employers and employees to negotiate flexible retirement and work-sharing arrangements. There is no reason why a general reduction in working hours should bring about a drop in wages. The Dutch, for example, work shorter hours than the British but enjoy a higher average income per head

($48,000 as against $35,000) with a more equal distribution of wealth and income. Productivity may even go up as workers pack more punch into shorter hours. This seems to have happened in places where the experiment has been tried. Hardly any production was lost in the two months that Edward Heath put the U.K. on a three-day week in 1974, for instance. Moreover, there is plenty of evidence that people are willing to trade income for leisure if they are allowed to and if the fall in income is not too great. Despite their attractions, however, work-sharing schemes are not affordable to many lower-paid workers. It is in this context that the idea of a basic income — an income paid by the state, independent of any obligation to work, to each citizen — becomes appealing. Two major objections are raised against basic-income proposals: that they would provide a disincentive to work, and that society cannot afford them. Yet when the goal is not to maximize growth but to secure good

lives, the aim is precisely to reduce the incentive to work by making leisure more attractive. Furthermore, a rich society can increasingly afford to pay its citizens a basic income. An unconditional basic income, in the form of a single capital endowment or a guaranteed annual income,

would start to give all workers the same choice as to how much work to do, and under what conditions — a privilege now possessed only by the wealthy. In the future, education would be informed by the understanding that one’s job would represent a decreasing fraction of one’s waking hours. It would prepare people for a life of fulfillment outside the job market.

Consumption Tax

The greatest waste confronting us is not one of money but of human possibilities

The state can also help reduce the pressure to consume. The economist Robert Frank has suggested doing this via a consumption tax, patterned after a 1955 proposal by Nicholas Kaldor. All spending above $7,500 per person would be subjected to an escalating rate of tax. Such a tax would be redistributive, striking a blow at inequality; it would reduce the pressure to consume; and it would induce saving for retirement. It would also divert resources from conspicuous consumption to spending on behalf of soci-

ety as a whole — for such benefits as freedom from traffic congestion, time with family and friends, vacation time, better air quality, more urban parkland, cleaner drinking water, less violent crime and more medical research. The pressure to consume is inflamed by advertising, which today works mainly to make us want things we otherwise would not have thought of wanting. Advertising could be restricted, for example, by removing its tax deductibility. Companies would simply no longer be allowed to write it off as a business expense. These proposals are not free of problems. They are indications of direction, not blueprints for legislation. Whatever readers may think of them, they are at least an attempt to develop a collective vision of the good life. To instead simply blunder on without considering what wealth is for is an indulgence we can no longer afford. The greatest waste confronting us is not one of money but of human possibilities. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Chief REPORTER Vitor Quintã Newsdesk Cláudia Aranda, Kristy Chan, Kelsey Wilhelm, Cherry Lee, Terina Cao, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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June 14, 2012 business daily | 15

OPINION

The accidental empire wires Business Leading reports from Asia’s best business newspapers

George Soros

Chairman of Soros Fund Management and of the Open Society Institute

The Nation Zhang Dejin, chairman of Anhui HeLi, said yesterday that it planned to expand its business into Southeast Asia to reap benefits from the coming Asean Economic Community in 2015. The company will set up a forklift assembly plant that year, with total sales expected to reach 3,000 units. Anhui HeLi is the No 1 forklift maker in China and No 8 in the world. “We don’t want to miss this opportunity to use Thailand as our production base,” he said.

Korea JoongAng Daily The government will inject 373.7 billion won (US$318.8 million) into research and development this year to help the country expand its sustainable energy infrastructure. Funds will be used to build one million private homes that use solar and thermal energy by 2020 and to establish renewable fuel and portfolio standards. The R&D fund will be matched with money from the private sector and is expected to help push up exports by 8.61 trillion won and create 16,000 new jobs this year compared to 2011.

The Japan Times Sony Corp. will start taking orders this fall for a cell analysis instrument it has developed applying its Blu-ray disc technology. Cell Sorter SH800 can be used for research in such areas as cancer, immunology and induced pluripotent stem, or iPS, cells. The product is smaller and priced lower than conventional devices. The size of the device, which costs around ¥20 million (US$ 251000), has a width and depth of 55 cm and a height of 72 cm, similar to a compact refrigerator.

Asian Age Indian jewelers, prompted by rising gold prices and cautious demand, are coming out with innovative ideas to sustain consumer. Cashing in on the typical Indian parents’ mentality of saving for their children, most leading firms such as Malabar Gold and Diamonds, Nathella Jewellery have unveiled their exclusive range of jewellery for kids and younger folks. India’s vast gold jewellery market suffered a 19 per cent drop in demand in the first quarter of the year, and investment demand tumbled 46 per cent, indicates the latest data from the World Gold Council.

t is now clear that the main cause of the euro crisis is the member states’ surrender of their right to print money to the European Central Bank. They did not understand just what that surrender entailed – and neither did the European authorities. When the euro was introduced, regulators allowed banks to buy unlimited amounts of government bonds without setting aside any equity capital, and the ECB discounted all eurozone government bonds on equal terms. Commercial banks found it advantageous to accumulate weaker countries’ bonds to earn a few extra basis points, which caused interest rates to converge across the eurozone. Germany, struggling with the burdens of reunification, undertook structural reforms and became more competitive. Other countries enjoyed housing and consumption booms on the back of cheap credit, making them less competitive. Then came the crash of 2008. Governments had to bail out their banks. Some of them found themselves in the position of a developing country that had become heavily indebted in a currency that it did not control. Reflecting the divergence in economic performance, Europe became divided into creditor and debtor countries. When financial markets discovered that supposedly riskless government bonds might be forced into default, they raised risk premiums dramatically. This rendered potentially insolvent commercial banks, whose balance sheets were loaded with such bonds, giving rise to Europe’s twin sovereign-debt and banking crisis.

to an uncontrollable meltdown. But, as the crisis has progressed, the financial system has become increasingly reordered along national lines. This trend has gathered momentum in recent months. The ECB’s long-term refinancing operation enabled Spanish and Italian banks to buy their own countries’ bonds and earn a large spread. Simultaneously, banks gave preference to shedding assets outside their national borders, and risk managers try to match assets and liabilities at home, rather than within the eurozone as a whole.

The current situation is due not to a deliberate plan, but to the lack of

Tragedy by omission

one. It is a tragedy

The eurozone needs a banking union: a European depositinsurance scheme in order to stem capital flight, a European source for financing bank recapitalization, and eurozone-wide supervision and regulation. The heavily indebted countries need relief on their financing costs. There are various ways to provide it, but they all require Germany’s active support. That is where the blockage is. German authorities are working feverishly to come up with a set of proposals in time for the European Union summit at the end of June, but all signs suggest that they will offer only the minimum on which

of policy errors

If this continued for a few years, a euro breakup would become possible without a meltdown, but it would leave the creditor countries with large claims against debtor countries, which would be difficult to collect. In addition to intergovernmental transfers and guarantees, the Bundesbank’s claims against

Dejá vu The eurozone is now replicating how the global financial system dealt with such crises in 1982 and again in 1997. In both cases, the international authorities inflicted hardship on the periphery in order to protect the center; now Germany is unknowingly playing the same role. The details differ, but the idea is the same: creditors are shifting the entire burden of adjustment onto debtors, while the “center” avoids its own responsibility for the imbalances. Interestingly, the terms “center” and “periphery” have crept into usage almost unnoticed. Yet, in the euro crisis, the center’s responsibility is even greater than it was in 1982 or 1997: it designed a flawed currency system and failed to correct the defects. In the 1980’s, Latin America suffered a lost decade; a similar fate now awaits Europe. At the onset of the crisis, a breakup of the euro was inconceivable: the assets and liabilities denominated in a common currency were so intermingled that a breakup would have led

integration. Public opinion, as expressed in recent election results, is increasingly opposed to austerity, and this trend is likely to continue until the policy is reversed. Something has to give. In my judgment, the authorities have a three-month window during which they could still correct their mistakes and reverse current trends. That would require some extraordinary policy measures to return conditions closer to normal, and they must conform to existing treaties, which could then be revised in a calmer atmosphere to prevent recurrence of imbalances. It is difficult, but not impossible, to identify some extraordinary measures that would meet these tough requirements. They would have to tackle the banking and the sovereign-debt problems simultaneously, without neglecting to reduce divergences in competitiveness.

the various parties can agree – implying, once again, only temporary relief. But we are at an inflection point. The Greek crisis is liable to come to a climax in the fall, even if the election produces a government that is willing to abide by Greece’s current agreement with its creditors. By that time, the German economy will also be weakening, so that Chancellor Angela Merkel will find it even more difficult than today to persuade the German public to accept additional European responsibilities. Barring an accident like the Lehman Brothers bankruptcy, Germany is likely to do enough to hold the euro together, but the EU will become something very different from the open society that once fired people’s imagination. The division between debtor and creditor countries will become permanent, with Germany dominating and the periphery becoming a depressed hinterland. This will inevitably arouse suspicion about Germany’s role in Europe – but any comparison with Germany’s past is quite inappropriate. The current situation is due not to a deliberate plan, but to the lack of one. It is a tragedy of policy errors. Germany is a well-functioning democracy with an overwhelming majority for an open society. When the German people become aware of the consequences – one hopes not too late – they will want to correct the defects in the euro’s design. It is clear what is needed: a European fiscal authority that is able and willing to reduce the debt burden of the periphery, as well as a banking union. Debt relief could take various forms other than Eurobonds, and would be conditional on debtors abiding by the fiscal compact. Withdrawing all or part of the relief in case of nonperformance would be a powerful protection against moral hazard. It is up to Germany to live up to the leadership responsibilities thrust upon it by its own success. © Project Syndicate

peripheral countries’ central banks within the Target2 clearing system totaled €644 billion (US$804 billion) on April 30, and the amount is growing exponentially, owing to capital flight.

Pressure builds up So the crisis keeps growing. Tensions in financial markets have hit new highs. Most telling is that Britain, which retained control of its currency, enjoys the lowest yields in its history, while the risk premium on Spanish bonds is at a new high. The real economy of the eurozone is declining, while Germany is booming. This means that the divergence is widening. The political and social dynamics are also working toward dis-

16 |

business daily June 14, 2012

CLOSING Chinese venture buys Saab

Property picks up The number of property purchases in some major Chinese cities has picked up, as regulators struggle to combat rumours that Beijing is preparing to loosen curbs on real estate investment to combat slowing economic growth. Property sales in cities including Hangzhou, Shenzhen and Nanjing have sped up in recent months, the official Shanghai Securities News reported. A survey released in early June by the China Real Estate Index System showed average home prices in 100 key Chinese cities fell in May. Chinese regulators continue to deny suggestions that a policy loosening is imminent, with the government concerned that any such move would re-inflate the property bubble.

A Chinese-Japanese investment group agreed to buy Saab Automobile and convert the bankrupt Swedish manufacturer into a maker of electric cars. The first vehicle under the plan will be based on Saab’s 9-3 car and will go on sale early in 2014, with China as the main market, purchaser National Electric Vehicle Sweden AB and the bankruptcy administrators for Trollhaettan-based Saab said yesterday in a joint statement. The parties agreed not to disclose the price of Saab’s sale. “We’re striving to be a world-leading company for electric cars,” Mattias Bergman, a spokesman for National Electric Vehicle Sweden, said at a press conference.

India dodges U.S. sanctions over Iran oil, China not yet Talks going on ahead of important Moscow meeting

he United States said it would exempt seven emerging economies including India from tough new sanctions after they cut back on oil from Iran, but the punishment still loomed for China. Secretary of State Hillary Clinton added India, Malaysia, South Africa, South Korea, Sri Lanka, Turkey and Taiwan to the list of those exempt from the sanctions. In March, she made exemptions for European Union nations and Japan. The decision was announced before Ms Clinton meets Indian officials for annual talks. The move resolves one of the biggest points of tension in years in the growing relationship between the world’s two largest democracies. Under a law approved last year that irritated some U.S. allies, the United States starting on June 28 will penalise foreign financial institutions over transactions with Iran’s central bank, which handles sales of the country’s key export. Ms Clinton said the seven economies exempted on Monday have all “significantly” reduced crude oil purchases from Iran. She cast the exemptions as proof of success in the U.S. campaign to put pressure on Iran’s clerical regime, which Israel and some Western officials fear is seeking a nuclear bomb. “By reducing Iran’s oil sales, we are sending a decisive message to Iran’s leaders: until they take concrete actions to satisfy the concerns of

Countries are trying to diversify oil supply sources away from Iran

the international community, they will continue to face increasing isolation and pressure,” she said in a statement. However, the United States did not announce an exemption for China – which is heavily dependent on oil from Iran and elsewhere to power its giant economy. Officials said that the United States remained in talks with Beijing. “We have informed our Chinese

colleagues fully about the scope and urgency” of the sanctions, a senior U.S. official told reporters on condition of anonymity. But the official said that China – one of six nations in talks with Iran that resume next week in Moscow – was a “very important partner” on the nuclear row. “We may have different perceptions of sanctions at different times, but one of the things that has been

very important is that China has agreed to this dual-track process of pressure as well as persuasion,” the official said. Chinese President Hu Jintao called on Friday on Iran to be “flexible and pragmatic” on its nuclear program. Some industry experts say that China, despite its public stance, has been quietly diversifying from Iranian oil. A number of countries were angered by the U.S. law, arguing that only the UN Security Council has the right to slap sanctions and that the reductions in oil would jeopardise an already shaky economic recovery. But Iran’s arch-rival Saudi Arabia has opened its spigots to make up for any shortfall from Tehran. To the surprise of some forecasters, oil prices have been declining despite the tensions surrounding Iran. The International Energy Agency estimated that Iran was not selling up to one-quarter of the 3.3 million barrels it produced each day in April. India has said that it will cut its purchases of Iranian oil by 11 percent. India has historically enjoyed warm relations with Iran but it tried to play down differences when Ms Clinton visited last month. “Iran has the ability to address these concerns by taking concrete steps during the next round of talks in Moscow. I urge its leaders to do so,” Ms Clinton said. AFP

Crisis likely to hit developing countries Report cautions about economic uncertainty

he World Bank yesterday warned developing countries to boost their defences against Europe’s debt crisis, predicting years of volatility in a flailing global economy. In its semiannual report on worldwide economic conditions, the World Bank forecast the global economy would have “weak growth” of 2.5 percent in 2012, while developing countries’ pace would slow to 5.3 percent, the most sluggish rate in the past 10 years. High-income countries should see a feeble 1.4 percent growth rate this year, burdened with a 0.3 percent contraction in the 17-nation eurozone as the bloc grapples with financial turmoil. “For all high-income countries,

not just Europe, it will take many years to undo the damage that was done in the global financial crisis in 2008 or, more accurately, to address the problems that were created in the boom period before the crisis,” said Hans Timmer, head of Development Prospects at the Washington-based bank. Developing countries have fewer means to weather shocks to their economies than they had in 2007, before the global financial crisis accelerated, the development lender said. “Another serious financial crisis is a possibility,” Mr Timmer said at a news briefing on the latest Global Economic Prospects report. The banks said that renewed uncertainty in the eurozone

had led to a sharp deterioration in financial conditions in May. That wiped out about seven percent of the value in stock markets in advanced and developing countries, hit commodity prices hard, and strengthened the dollar as investors sought a safe haven. Even so, conditions in most developing countries have not deteriorated as much as they did in the 2011 fourth quarter, the 188-nation anti-poverty lender said. Mr Timmer said 60 percent of developing countries are now “close to overheating” after expanding spending and investment that insulated them from the European and US downturns. Bloomberg

World bank sees potholes on the road to recovery