Macau Business Daily, June 18, 2012 by Business Daily

Interview City to be top class – with good education planning

Year I - Number 56 Monday June 18, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

A University of Macau academic praises the government’s commitment to 15 years of education for every permanent resident child in the territory. But Teresa Vong Sou Kuan, director of the Educational Research Centre, says there’s no quality assurance. She adds youngsters ‘abandoned’ by the system can exhibit low selfesteem and behavioural problems. Pages 4 & 5

MPEL seeks ‘US$800m’ bond: sources

Page 3

NAPE residents’ court threat over LRT Page 6

Opening gambit Taiwan firm wins right to hear LVS case in Macau A

suit filed in Macau by a former business partner of Las Vegas Sands – accusing the gaming operator of breaching a contract signed in October 2001 to make a joint bid for a gaming licence – will proceed, after a court in the United States rejected an anti-suit injunction. Sands wanted to force Asian American Entertainment to drop the suit asking for three billion patacas (US$375 million) in compensation. But judges stressed “federal courts are generally

reluctant to inject themselves in the proceedings of the courts of other sovereign nations”. “This power is exercised with extreme caution and should be ‘used sparingly’”, Judge James Mahan wrote. He stressed that the company’s claims were never actually litigated and the court “never reached the underlying substance of plaintiff’s complaint”. Had a final judgment been issued, the Nevada courts might no longer have any jurisdiction over this issue, Judge Mahan added. More on page 3

‘Spy’ cams in police posts: to protect them from public Page 8

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HANG SENG INDEX

Cabbies fail to hail flag fare rise

19300

19220

he taxi flag fall price in the city will rise from 13 patacas to 15 patacas next month; an increase of 15 percent and more than double the 6.76 percent rise in the consumer price index for April. But the move is described by the industry as too little too late. And the price for every 230 metres travelled remains frozen at 1.50 patacas.

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June 15

Mainland adds gloss to cosmetic chain’s earnings

a Sa International Holdings reported a 35.4 percent year-on-year rise in net profit for the 12 months to March. The cosmetics chain saw a 99.8 percent increase in China sales, although most of its revenue was supported by sales in the group’s core markets. Sales in Hong Kong and in Macau – where the Hong Kong-listed firm has seven branches – increased 29.8 percent to HK$5.092 billion (US$656.2 million), mainly driven by mainland tourists’ spending. Page 7

ICBC Macau to ‘grow rapidly’

itch Ratings has given local banking company Industrial and Commercial Bank of China (Macau) Limited an A rating – the third-highest investment-grade category, with a stable outlook. Fitch said the unit “will continue to grow rapidly,” mostly thanks to lending linked to mainland China. About 15 percent of ICBC Macau’s assets at end2011 were China-related exposures, up from 9 percent the previous year. Page 8

HSI - Movers Name

%Day

ESPRIT HLDGS

9.86

WANT WANT CHINA

5.45

BOC HONG KONG HO

4.95

HUTCHISON WHAMPO

3.87

CNOOC LTD

3.83

CHINA COAL ENE-H

0.29

CHINA MERCHANT

0.23

WHARF HLDG

0.00

NEW WORLD DEV

-0.45

SANDS CHINA LTD

-1.96

Source: Bloomberg

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business daily June 18, 2012

macau

Fare rise insufficient gripes taxi industry Taxi fares will rise by at least 2.00 patacas next month, an increase that drivers and cab operators say does not cover higher costs Tony Lai

Photo by Manuel Cardoso

tony.lai@macaubusinessdaily.com

Fares are set to rise next month, a year since taxi drivers asked for an increase

n increase of 2.00 patacas (US$0.25) in the taxi flagfall next month is not enough to offset rising running costs, drivers and cab companies say. New fares proposed by the Traffic Affairs Bureau will see the cost of the first 1,600 metres of any journey jump by 2.00 patacas to 15.00 patacas. The rate of 1.50 patacas for every 230 metres after that is unchanged.

The bureau said the increase took into account the increasing operating costs faced by drivers and the community’s ability to afford the fare rise. Vang Iek Radio-Taxi Co Ltd manager Mário Ferreira Sin told Business Daily that the increase was “quite low and not enough”. His company operates the city’s yellow cabs. “We talked with the government

business as usual

Homegrown hypocrisy

Paulo A. Azevedo pazevedo@macaubusiness.com

t is common practice to point the finger at gaming operators and say they should, basically, pay for everything in Macau. As if they do not pay enough already. Apparently, because gaming operators make a profit, they should hire every incompetent worker available, just as they should support every association, every lunch, every show, every business. What about other companies? What, exactly, is their responsibility to this city? Or are casinos the only companies making money? Surely they do, and plenty, but are there no other profitable businesses? When the government liberalised gambling, some operators made mistakes. They were trying to find their own way and work out their next steps. They were understandably cautious. Now, with a few exceptions, most have

displayed their commitment to the city. They support charities, donate to universities, host glamorous dinners to help the environment, sponsor sporting events, and bring in artists to complement existing music and arts festivals. I am yet to see too many property developers be so generous – and they reap incredible profits. It is the same with the banks, besides the usual suspects such as Banco Nacional Ultramarino S.A. and Bank of China Ltd. The most proactive companies in bettering the life of the city tend to have some foreign investors. The majority of homegrown companies apparently believe they have a single responsibility: make money. By keeping their hands firmly in their pockets they preserve the status quo. They should be ashamed.

about the rise last year but they were stalling for a year to approve this hike,” said Mr Sin. “The new scheme can just cover the operational costs.” The additional income would not be enough to cover expenses when business was quiet, particularly during weekdays, Mr Sin said. The rate after flag-fall could still be adjusted. Macau Taxi Driver Mutual Association chairman Tony Kwok told the Chinese-language Macau Daily News that the industry had adopted a wait-and-see attitude to the fare increase, and would request another increase if fuel prices jumped again. Mr Sin said a surge in the price of diesel fuel had increased the financial pressure on cab drivers. “Though the price has recently gone down, there are still far more rises than decreases that impose pressure on the drivers,” he said. Shell says the price of regular diesel has been HK$11.46 a litre since June 10, almost HK$1.00 less than February’s price of HK$12.26 a litre. The Traffic Affairs Bureau expects draft regulations for taxi operations, which are meant to improve services, to reach the Legislative Assembly this year. The new bylaw would allow the government to suspend or rescind the professional licences of cab drivers if too many customers complain about them. Mr Sin welcomes the draft regulations, saying only a few drivers give bad service. “I am more concerned about the government’s enforcement, about whether they really carry out what is stated in the regulation,” he said. The government says 1,559 complaints about the quality of taxi services were lodged last year. These complaints led to fines for 63 drivers and 109 warnings.

Blackout hits Hutchison mobile data service Hutchison – Telefone (Macau) Lda said subscribers were unable to access mobile Internet data services between 4am on Friday and midnight Saturday. Subscribers could make phone calls and send text messages but web-based apps, mobile Internet services and picture messaging were unavailable. The company blamed its firewall for the service disruption. About 200 Hutchison customers have filed complaints. Hutchison operations manager Windus Lam told TDM News that the company did not plan to compensate affected customers. He said the company’s priority was to submit a detailed report of the incident to the Bureau of Telecommunications Regulation. A preliminary report had already been sent. The incident underlines the business sector’s concern over the stability of Macau’s mobile telecommunications infrastructure. The city’s biggest telecommunications provider, Companhia de Telecomunicações de Macau S.A.R.L, suffered two blackouts in three months earlier this year.

InBrief

Yacht club contractor claims MOP18 mln The contractor hired to build a new clubhouse for the Macau Yacht Club says it is owed 18 million patacas (US$2.25 million). Yang Kwong Constructions (Macau) contractor Ng Kin Wai told the Portugueselanguage newspaper Hoje Macau that construction began last year but work was suspended two months later, when Yang Kwong was dismissed.

CTM pays fine for service breakdown Companhia de Telecomunicações de Macau S.A.R.L has paid the 800,000 patacas (US$100,000) it was fined for a six-hour breakdown of its network on February 6, the Bureau of Telecommunications Regulation has confirmed. The Portuguese-language newspaper Tribuna de Macau reported that CTM had until the end of this month to appeal the fine, but had decided not to do so. The bureau is also considering a second report from CTM on the May 11 interruption to its services.

June 18, 2012 business daily | 3

MACAU

Nevada court refuses to ‘intrude’ in Sands case

editorial

Tired formulae

Nevada judge says Asian American can go ahead with US$375-million lawsuit against Sands in Macau Vítor Quintã

vitorquinta@macaubusinessdaily.com

Las Vegas Sands has about one month to respond to Asian American’s lawsuit

United States court has rejected a motion from casino operator Las Vegas Sands Corp. to force a former business partner to drop a lawsuit filed here, stressing it may be seen as an “intrusion” in the city’s legal system. Asian American Entertainment Corp. accused Sands of breaching a contract signed in October 2001 to make a joint bid for a gaming licence. It sued for 3 billion patacas (US$375 million) in

compensation in January. The breach was seen in a rival bid that Sands filed with a unit of Galaxy Entertainment Group Ltd in 2002. Sands filed a motion seeking an injunction against Asian American on April 20. The company hoped to force Asian American to withdraw the Macau lawsuit before it must respond. Asian American is controlled by Taiwanese businessman Marshall Hao Shi Sheng.

Even though Sands sought an injunction that would bind Asian American, not the courts here, the Nevada court stressed that “federal courts are generally reluctant to inject themselves in the proceedings of the courts of other sovereign nations”. “This power is exercised with extreme caution and should be ‘used sparingly’,” judge James Mahan wrote. Sands claimed Asian American had “filed essentially the same complaint against the same defendants”. Asian American filed a suit in a Nevada federal court in 2007. It was dismissed in April 2010 because Asian American had failed to retain lawyers. But Mr Mahan agreed that Asian American’s claims had “never been actually litigated”. “This court’s order was not an order on the merits. The court never reached the underlying substance of plaintiff’s complaint,” the judge wrote. “This court does not find that its procedural dismissal dictates that a foreign suit be precluded.” In its response to Sands’ motion, Asian American claimed that courts in Nevada no longer had jurisdiction. “The court is inclined to follow such an approach, had a final judgment been issued,” Mr Mahan wrote. This is the third time Sands has been sued over the bidding process for gaming licences. The first was dropped after Sands settled and the second is awaiting retrial in Nevada.

MPEL seeks US$800m in bonds plus US$1.4b loan Total debt package would exceed stated price of Studio City Associate Editor

asino operator Melco Crown Entertainment Ltd (MPEL) is seeking to raise around US$800 million via bond issuance for Macau project capital according to Bloomberg, citing “two people familiar with the matter”. This would be in addition to the US$1.4 billion in bank loans reportedly sought for the company’s Studio City scheme in Macau. It would take the total debt package up to US$2.2 billion. That’s more than the cost of the Studio City scheme, which the company priced in its first quarter earnings call at US$1.9 billion. It bought a controlling 60 percent stake for US$360 million in the project from some previous shareholders last summer. It raises the possibility that with the surplus US$300 million cash from a new round of debt raising based on the Studio City story, MPEL may seek to restructure some of its existing debt

at a price more advantageous to its shareholders. While some equity analysts based in New York have grown skittish about Macau gaming stocks in past few weeks, it appears banks and other lending institutions are still upbeat about Macau. Last week Bloomberg said Wynn Macau had attracted nearly twice as much money in loan commitments from banks as the US$1.5 billion it originally sought for its Wynn Cotai project.

No dilution MPEL said in its first quarter earnings conference call that it had “no plans” to raise fresh equity in Hong Kong or New York in order to restart the Studio City project. That was understood by analysts to mean MPEL would not seek to dilute its existing shareholders. Those stockholders have seen rival Macau operators issue

share dividends recently. Unlike shares, bonds allow companies to raise capital without giving ownership of the business to outsiders. Bonds can be secured against not only physical assets such as real estate, but also against invisibles such as cash flow or receivables. Bond issuances – with the accompanying regular payment of interest to the investors – can however increase pressure on companies to pay dividends to existing equity holders. On June 6 International Financing Review Asia reported that a US$1.4 billion loan to back Studio City was taking shape with eight banks likely to be in the arranger group. MPEL also said in its Q1 earnings call that Studio City would take 36 months to complete, stating the company hoped for a construction permit from the government ‘near the end of first half 2012’. with Bloomberg

Editor-in-Chief

wo-and-a-half years after Fernando Chui Sai On took office as chief executive, there have been no major breaks from the core policies laid out by his predecessor, Edmund Ho Hau Wah. The major projects that Mr Chui’s government is carrying out were thought of or launched by Edmund Ho. Even the recent statement that Macau needs a theme park was an idea discussed while Mr Chui was the secretary for Culture and Social Affairs under Mr Ho’s tenure. But this comes as no surprise, since the top officials from Mr Ho’s leadership remain in place. And to keep promises made in the past, decisions seem to be taken without weighing the pros and cons. Most people are still waiting for a credible explanation for the construction of public housing in Seac Pai Van – far from the workplace for most people. The nearest station for the light rapid transit system will be more than a kilometre away from this spot where 8,649 homes are being built for low-income families. The current government’s priorities for the LRT seem clear. The first phase will cover most areas in Cotai, and reach every casino, but the poor souls in the public housing complex will have to make alternative and presumably slower travel arrangements.

Macau citizens are entitled to demand more from the government, and the administration should roll out more long-term policies instead of trying to solve problems with one-off measures A leadership with stale ideas has meant that some of Macau’s major headaches – rising housing prices and poor transportation – remain unsolved. Officials, unfortunately, continue to push the same tired formulae introduced years ago, which fail to meet the required solutions. With a government lacking the imagination to innovate, the city is left in an odd situation, especially bearing in mind the world financial situation. Countries around the world face huge budget cuts and the outlook is gloomy. Even the Chinese mainland’s economy is decelerating. China’s growth slowed to 8.1 percent in the first three months of the year, the lowest since the first quarter of 2009. The situation here is quite different. In contrast to most countries and regions, the Macau government is sitting on a huge pile of money but does not know how to spend it. Macau’s gross domestic product grew by more than 18 percent in the first three months of this year. In the first five months of 2012 the government’s budget surplus reached 35.2 billion patacas (US$4.4 billion). It is adding an average of 231.6 million patacas to its surplus every day and is already close to the target it set for the whole year – 36 billion patacas. The problem, however, is that Macau is still lacking a proper system to invest its surpluses. Macau citizens are entitled to demand more from the government, and the administration should roll out more long-term policies instead of trying to solve problems with one-off measures. While there are problems that need urgent solution, they must not prevent us from looking beyond the short term. Talking about a new phase of development – with Hengqin Island on the horizon – this should be a period of reflection about the SAR’s standing and to come up with more forward-looking plans.

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business daily June 18, 2012

macau

Education’s ‘cruel reality’ The quality of the city’s education reflects the quality of its human resources, according to Teresa Vong Sou Kuan, director of the Educational Research Centre of the University of Macau. Ms Vong bemoans the “cruel” reality of education in Macau and urges better government planning of the development of education. For education below the tertiary level, she urges the government to identify problems and set priorities according to need. For higher education, it should start with a comprehensive population study before drawing up a development plan, Ms Vong says. Luciana Leitão

Leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

What are the main problems of Macau’s education sector? After some years of implementation of free education and with continued support from the government, we now need to look not at the quantity, but at the quality of the education sector. This is a very important indicator to show how competitive Macau is in the Asian region, in the Greater China region or even in the world. Particularly, when we talk about Macau, it is actually positioned as a world travel centre, so the quality of education may somehow project and reflect how competitive Macau is. My greatest concern is about the quality and the competitiveness of

Macau in the coming future and for the coming moment. When you talk about competitiveness, are you referring to human resources qualifications? There are at least two ways of thinking about competitiveness. The first one is the quality of human resources, particularly resident people. Legislators ask why the international corporations reserve all the top rank positions for foreigners. Why not for the local people? Frankly speaking, the local people are not well prepared for those positions. This shows we need to improve somehow the qualifications of the local

people to fit in those high positions. But when we talk about competitiveness of the local people, I’m also asking: Are we preparing local people to work – for instance in China or elsewhere, in the U.S. or the U.K.? How well are the local citizens equipped to contribute to the local society as well as to the global economy? This is a very significant indicator to show the quality of the education of people. Does this lack of competitiveness result from a poor education system or is it the other way around? It’s the chicken or egg riddle. Which

But when we talk about competitiveness of the local people, I’m also asking: Are we preparing local people to work – for instance in China or elsewhere, in the U.S. or the U.K.?

comes first? It is difficult to say. At this point, whether the human resources are not competitive or the quality of the education system is not competitive with the nearby regions, we need to take a step forward. In the past few years, Macau has joined PISA [Programme for International Student Assessment], and they have a test to evaluate how well do people perform after 15 years of free education. This is one of the indicators to show the quality of our education system. But when we talk about 15 years of investment, we need to acknowledge is the quality is not good enough. Macau is a very small place and we all talk about relations. It is very difficult to say, ‘We’re not good, please make some improvements.’ This is one of the constraints to slow down the improvement of our quality. All we need is to face the reality, which is cruel, and to take some concrete measures to improve the quality. For instance, the last round of PISA was about reading literacy and many countries put the reading literacy as a significant projector for the future development of the society. If the region or country has a large number of illiterate people, it means that people can’t move to other places or they can’t even secure a job. So, it will also [cause] the unemployment rate in the coming years to rise and [affect] job opportunities. After the 2009 PISA, the result was not very good, particularly in reading literacy. I can say, for instance, Hong Kong performed very well, but, nine years ago, Hong Kong did not perform as well. The Hong Kong government put great effort to enhance reading. If 15-year-old students did not have a very good performance in reading, it has a very negative impact on the future development. How can young people pursue studies in Macau or abroad if they can’t even read? Reading affects every sector inside the education system.

Priority-setting needed Reading literacy should be the government priority in the education sector? It should be one of the priorities, at least. Of course it is inter-related. When we talk about trying to improve reading literacy, it is normally in the form of curriculum, formal or informal. Actually, curriculum is the interface bridging education and the school systems. The curriculum issue is very problematic in Macau, because we don’t have a standardised one. Even in the coming future, I can’t foresee there [being] a standardised official curriculum implemented in every school. Recently the government has published a kind of subject attainment goals. The government actually encourages the schools to follow these guidelines in order to achieve a more or less standard [level]. But according to Basic Law the schools have a lot of freedom – for instance, to design the pedagogy and the teaching material. It is not compulsory for all the schools, so the quality is not guaranteed at the end. The problem left here is how to assure the quality of education, without any very strict measures. Up to now, how do you assess Macau’s experience in imple-

June 18, 2012 business daily | 5

MACAU menting a 15-year free education policy? Now it becomes the universal right of children to have 15 years of education. It is a very important issue, and many other regions really appreciate that our government is so [kind] to offer this, but there is no quality assurance. My suggestion is that the government should really look at priorities. Every year, they sponsor a number of schools to organise their own development plans. Those very prestigious schools can choose good students. These good students will stay in these good schools. It’s called the one dragon, because it has kindergarten, primary and secondary. However, the students for the small schools are normally the ones the big schools left out. When we look at the abandoned students, we can identify different kinds of problems, such as low selfesteem, academically low achievement and behaviour problems.

Macau is a very small place and we all talk about relations. It is very difficult to say, ‘We’re not good, please make some improvements

Yet they receive, let’s say, 15,000 patacas for students in big schools and 15,000 patacas for students in small schools. Is it an issue of equality? I think they [small schools] need more. The government should have an education philosophy, in which they try to foresee the future. They should try to identify the problems and set different priorities [according to need]. Looking at the basic, secondary and tertiary levels of education in Macau, what are the main problems in each level? For the non-tertiary education, the quality is always an issue. When we talk about quality, we normally look at how well do the students perform after school and how well do the students prepare for their own career. When we look at these two, it possibly reflects on the curriculum. If the teachers are not well prepared for that, the curriculum delivery will possibly have some problems, which will affect the students’ performance. Comparatively speaking, the investment of the government in higher education is lower than non-tertiary. The mission of higher education and non-tertiary education is totally different, so non-tertiary education is the basic training of the citizens, whereas the higher education is an investment.

More than buildings Is it a question of investing more in higher education or better managing the invested money? If the investment is managed well,

that is another issue. I think higher education in Macau is expanding, particularly when you look at the University of Macau. But it is only on the infrastructure side. The movement to Hengqin Island is for the infrastructure. At this point, the tertiary education consumes a large amount of money, but this is not investment. Of course, the infrastructure will facilitate the future development of the University of Macau, but so far I don’t see a very coherent higher education policy. As far as I know, Mr Sou [Chio Fai, head of the Tertiary Education Services Office] mentioned the higher education law is going to be discussed and approved this year. Institutes, universities are all regulated by law. It means the development of higher education institutes is sometimes limited by the government regulations. For instance, we’ve been discussing for years in the University of Macau whether we can offer some kind of professional degrees which do not require a very in-depth investigation research project. But degrees are all under government regulations, so we can’t move on. The higher education development is a bit [laid] back, when compared with the non-tertiary education system. For higher education, we need some kind of policy. For instance, in the non-tertiary sector we talk about a 10-year plan, but there is nothing in the higher education sector. Some researchers suggest having more international students in local universities is a good measure to improve the overall quality. Do you agree? Yes, but why would international students choose this institute, university instead of others? Compared to those universities in Hong Kong, English as a second language is very important, but how many years would it take the University of Macau to compete with the University of Hong Kong? Our strength is our traditions and our good practice. A Portuguese studies centre would be a starting point to attract people, not only from Portuguese-speaking countries, but people who are interested in studying Portuguese. Then we would have the first step to attract international students. In other areas, perhaps we can set up attractive scholarships. Is this current higher education system leading students abroad to pursue their studies? If those middle-class families can afford [it], they will possibly encourage their children to study abroad. As far as I know, [students from] quite a number of international schools, will study in the United States, the UK, Australia and New Zealand. Even most of the English-speaking students will pursue their studies outside Macau, particularly in English-speaking countries.

Thinking ahead Do the current criteria for approval of higher education courses match the future development of Macau? The emerging courses are possibly based on the current needs, but can we foresee our future needs? Maybe in a few years’ time, if the economic situation is not booming, possibly there will be job redundancy and the unemployment rate will come [into play]. So how well can they fit other jobs?

We need to think about a higher education policy. But before proposing a higher education policy, we need a very comprehensive population policy. In Macau, we don’t have medical schools. Is it possible for a population of half a million to support the establishment of a medical school? With only half a million population, it is very difficult to support a medical school, unless this medical school is going to serve other regions. We try to calculate how many peo-

How can young people pursue studies in Macau or abroad if they can’t even read? Reading affects every sector inside the education system

ple can support the establishment of certain kind of courses. If not, we need to adopt another mentality, to think of integration and to make use of resources nearby. I don’t think we need to have everything inside Macau, but we can make use of the good practice of nearby regions, like the medical schools in Hong Kong. These are very famous medical schools, but I don’t see how our students can be admitted there, comparatively speaking. In the first place, the medical schools are fully government-supported in Hong Kong. In the 2006 by-census, one of the conclusions was that the rate of local population in the higher

education was inferior to other places with such high income, because of the gambling sector. What can be done? This is a very complicated issue. It also means that when the government decided to open up the gaming industry, it did not have a very detailed plan. It simply implied that there was a very big demand of human resources. Even a number of teachers moved to casinos because they would get better payment. After graduation from secondary school, people can easily get a job and they want fast money. Of course, there are also misinterpretations of lifelong learning: ‘I can gain the money and I can study later.’ When we look at these issues, most of the young graduates prefer to work, because jobs are available everywhere. But elsewhere in the world, when the unemployment rate is high, more people will go to higher education, because they think this is a significant point to add value to their CV. Whereas in Macau, when human resources is still very tight, in the near future, you can encourage people to leave their job and continue their studies. How can we improve the quality of human resources, when they are doing the job already? Is it possible for the enterprises to create some kind of space for the people who are taking their jobs in the enterprises and providing them with conditions to upgrade their qualifications in order to do the work better and also to bring more revenues to their own enterprise? The government should negotiate with enterprises. Also, it should plan in advance – that is, for those who are preparing the leave secondary education, how well do we prepare them to continue their studies, instead of taking up jobs?

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business daily June 18, 2012

macau Brought to you by

HOSPITALITY Residents’ travel Much attention is reserved for the flow of visitors into Macau. Far less attention, if any, is paid to the visits Macau’s residents make overseas. Those flows can tell us something about the evolution of the economy and the preferences of its residents. Exact numbers may be more difficult to trace than for visitor inflows, as some residents may be use suppliers or facilities obtained from outside Macau’s economy. So figures provided by travel agencies must be interpreted with care, although they may reveal trends. The data for April has recently been published. Almost 90,000 residents used a travel agency to make their arrangements, a significant figure in a city with a population of about 500,000. About two-thirds were independent travellers. The remainder, about 31,000, joined tour groups.

Main destinations (APR-12) 20000

15000

10000

5000

2011 Guangdong

2012 Rest of China

Hong Kong

Taiwan

Of the tourists travelling overseas on organised tours, more than 80 percent headed to the mainland – the majority to Guangdong. In April, this province was the destination for 57 percent of all travellers and represented almost 70 percent of all tourists who crossed the border to the mainland. When compared to April last year, there is an increase in the number of tourists heading for other mainland destinations. Compared to mainland destinations, tourist numbers to Hong Kong and Taiwan are far smaller.

Travel to the Rest of the World 3500 3000 2500 2000 1500 1000 500 SE Asia

East Asia

Europe

Other

As for visits to the rest of the world, East Asia and Southeast Asia are the two leading destinations. Europe and the remainder of the world represent a small slice of travel packages. The data suggest a change of emphasis in the importance of the two broad Asian destinations. The number of people heading to Southeast Asia has seen a substantial decrease, and there has been a sharp rise in travel to South Korea and Japan. J.I.D.

LRT’s NAPE route row may end up in court The government cuts height of light railway through NAPE district; residents want route away from their homes Tony Lai

tony.lai@macaubusinessdaily.com

he government will reduce the height of the Light Rapid Transit elevated railway in the NAPE district but will not change its route, despite opposition from residents. The neighbourhood association has responded by saying it may sue the government once bids to build the section are invited. The deputy coordinator of the Transportation Infrastructure Office, André Ritchie, told a press conference on Friday that the railway in NAPE would be lowered so that it would not block the views from residential buildings. He said the line would be 13.6 metres above the ground – instead of 15.5 metres above the ground – on Rua de Londres and Rua do Porto, but the route would not change. “The current proposal can be regarded as the final proposal and there will only be some minor adjustments,” Mr Ritchie said. NAPE residents are against the route, claiming their privacy and day-to-

day lives will be affected. They want the railway moved to the coast. NAPE residents formed the Macau Community Development Association, and its president, Chen Lien Chin, told TDM News that the association cannot accept the government’s newest proposal because it changed only the height of the line. Mr Chen said he would sue the government as soon as it invited bids for the construction of the NAPE section of the network.

Mind the gap Mr Ritchie said the results of public consultations in 2007 indicated that the best option was the current route. He said the government would keep “an open attitude” to other opinions and “respect residents’ decision if they go to court”. “The current proposal is the outcome of meeting the residents and listening to their opinions

many times.” The first phase of the light rail network is expected to open by 2015. It will have 21 stations, 10 of them on the peninsula. Construction has begun on Taipa and in Cotai, but not on the peninsula. Mr Ritchie hopes that construction there can begin this year, but he would not comment on whether a lawsuit would delay the work. The current plan for the NAPE stretch is to have three stations at Praça do Lótus, Parque Dr Carlos D’Assumpção and Jardim das Artes. The Parque Dr Carlos D’Assumpção station is designed to be friendly to the environment. It will use solar and wind energy, and collect rainwater. Mr Ritchie said the station’s green design would help ease public worry that the railway would ruin the environment in the area. The government would engage an internationally recognised independent party to review the railway’s fire protection and ventilation systems.

Weather Beijing 36/23o C Changchun 27/17o C

Harbin 25/16o C

Xian 32/20o C Shanghai 25/21o C Chengdu 28/21o C Kunming 25/17o C Haikou 32/25o C Sanya 31/25o C

Guangzhou 30/25o C

MACAU (18 June-23 June) Day

Temperature

Humidity

06/18

24/29o C

70/95 %

06/19

25/30o C

70/95 %

06/20

26/30o C

75/95 %

06/21

26/30o C

75/95 %

06/22

26/30o C

70/95 %

06/23

26/31o C

65/90 %

Shenzhen 32/26o C

ASIA (today)

Hong Kong 30/26o C

Manila

TOKYO

Jakarta

29/25o C

31/26o C

26/20o C

32/25o C

Macau 29/24o C

Bangkok

SEOUL

K. lumpur

31/27o C

SINGAPORE

32/23o C

34/26o C

taipei

31/25o C

June 18, 2012 business daily | 7

MACAU

Mainland tourists boost Sa Sa sales Cosmetics retailer Sa Sa’s annual net profit jumps by 35 percent Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

osmetics retailer Sa Sa International Holdings Ltd says the global economic slowdown will dampen growth in its sales but has vowed to continue expanding. “The group expects that the next fiscal year will be challenging and that the current market conditions may compromise our growth rate, which is expected to slow down as compared to the previous year,” Sa Sa told the Hong Kong Stock Exchange on Friday. “The group will maintain a sustained pace of network expansion.” The company’s network expanded to 249 shops from 205 in the financial year ended March. There were seven Sa Sa stores in Macau on March 31. The company reported a rise of 35.4 percent in annual net profit in the past financial year. Net profit climbed to HK$689.7 million (US$88.8 million) from HK$509.3 million in 2010. Basic earnings per share rose to 24.6 HK cents from 18.2 HK cents. Turnover rose by 30.7 percent to HK$6.41 billion, driven by sales in core markets. In Hong Kong and Macau, sales increased by 29.8 percent to

HK$5.09 billion. “This performance was largely driven by mainland tourists’ spending,” the company said. Mainland tourists accounted for 64 percent of Sa Sa’s sales here and in Hong Kong. Mainland sales rose by 99.8 percent to HK$290.7 million but the company recorded a loss of HK$38 million there, its third loss in three years. Sa Sa chief financial officer Guy

Look told a press conference on Friday the company intended to expand its mainland network by 51 percent to 71 shops. Growth had slowed towards the end of last year and in the first quarter of this year. “This was largely the result of the euro zone sovereign debt crisis and faltering demand in the advanced economies, as well as liquidity controls in mainland China,” it said. Simon Kwok Siu Ming, Sa Sa’s

Mainland tourists accounted for 64 percent of Sa Sa’s sales here and in Hong Kong

chairman and chief executive, said: “We will expand our network very cautiously this year due to the current economy.” Mr Kwok said higher rents in Hong Kong and Macau were a concern. He said the company had closed 11 shops in Hong Kong and Macau in the past financial year because of an “unreasonable increase in rent”. Sa Sa stock rose by 2.19 percent on Friday to close at HK$4.20.

8 |

business daily June 18, 2012

macau Brought to you by

Non-residents’ financial power Macau’s economic development has brought many expatriate workers and companies to the city. The volume of deposits in the banking system controlled by non-residents has increased significantly since 2004. Those deposits are either from income earned here or external inflows for investments. Since 2004, deposits held by overseas interests have increased eight-fold. The chart below shows they jumped from 15.9 billion patacas in 2004 to 127.6 billion patacas earlier this year. The chart omits notice deposits and residual types of deposits classified under the heading “Other” in the government’s statistics. Both these classes of deposits are comparatively insignificant and irrelevant for this analysis.

NONRESIDENT DEPOSITS 106 MOP 150000 120000 90000 60000 30000

nJu 04 l Ja -04 nJu 05 l Ja -05 nJu 06 l Ja -06 nJu 07 l Ja -07 nJu 08 l Ja -08 nJu 09 l Ja -09 nJu 10 l Ja -10 nJu 11 l Ja -11 n12

Time

Savings

Demand

The graph shows different phases in the growth of deposits. The most extraordinary increase, in relative terms, took place between May and August 2005, when the amount held by overseas interests more than doubled. That period was followed by a phase of steady but more moderate growth until the middle of 2008. A short contraction and two years of choppy growth followed. By the end of 2010, growth had stabilised and since the beginning of this year, it has starting to accelerate.

Non resident deposits shares, per currency

Fitch sees rapid growth for ICBC Ratings agency reaffirmed ICBC Macau’s A rating

ndustrial and Commercial Bank of China (Macau) Ltd “will continue to grow rapidly,” mostly thanks to lending linked to the mainland, Fitch Ratings says in its most recent report. The ratings agency reaffirmed ICBC Macau’s A rating, the third-highest investment-grade category, with a stable outlook. Fitch expects that the majority of the bank’s new referred lending “will remain China-related and benefit from a guarantee” from parent company Industrial & Commercial Bank of China Ltd.

others (75%)

Unsurprisingly, the greatest share of these deposits is held in foreign currencies. In April, deposits held in patacas represented about 2.5 percent of all deposits held by overseas companies and individuals. Holdings in the local currency were concentrated in demand and savings accounts, where they represented 11 percent and 8.2 percent, respectively. In the other categories, they were negligible or non-existent. Slightly less than one-quarter of deposits were held in Hong Kong dollars. That currency dominates notice deposits, about 78 percent, but this is a small category overall, representing less than 0.1 percent of deposits. Time deposits are dominated by other currencies which reach a share in excess of 80 percent. J.I.D.

V.Q.

Two months after the video surveillance law came into effect, the first cameras may be installed in facilities used by the security forces tony.lai@macaubusinessdaily.com

HKD (23%)

assets in the banking system at the end of last year. Fitch said the mainland parent bank was committed to supporting ICBC Macau with both liquidity and capital to accommodate the bank’s “growth ambitions”. The ratings firm stressed ICBC Macau’s “strategic importance” and “strong and increasing integration” with its mainland parent. The parent company holds 2 billion patacas (US$250 million) of subordinated notes issued by ICBC Macau.

Police want first CCTV cameras Tony Lai

MoP (2%)

“Such business referrals from the parent will continue to outpace onshore (Hong Kong and Macau) loan growth as was the case in 2010-2011,” the report said. About 15 percent of ICBC Macau’s assets at the end of last year were mainland-related exposures, up from 9 percent in 2010. They were mainly corporate loans, guaranteed by the bank, and corporate bonds issued by statedowned enterprises. ICBC Macau is the second-largest bank here, with 16 branches controlling about 14 percent of

he security forces have asked the chief executive to install closed-circuit television cameras in and around police stations as a priority to ensure their safety, according to the deputy coordinator of the Office for Personal Data Protection, Ken Yang Chong Wei. Mr Yang said on Friday his office would advise Chief Executive Fernando Chui Sai On about the proposal under the government’s video surveillance law. The Unitary Police Service told the Chinese-language Macau Daily that the first 219 cameras were ear-marked for border crossings, but that they were still considering exactly where. They said the details would be announced soon, when the government invited bids for the supply of the cameras. The video surveillance law came into effect in April and allows cameras to

be installed for maintaining security and fighting crime. The law permits cameras to be installed in three phases: first at border crossings, then in old districts with high crime rates and finally to monitor road traffic.

Speak no evil Academics and professionals at a seminar on Friday said the use of CCTV cameras was inevitable, but should be constrained by appropriate regulation. A legal adviser to the Legislative Assembly, Luís Pessanha, said video surveillance “happens all over the world, not only in Macau, so what we have to do is tackle the reality”. Mr Pessanha said people recorded by the cameras should know that they had the right to ask the government to erase footage of themselves. He said it was important to “find a balance between public interest and protection of individual privacy” and to “avoid the abuse of power and technology”. The law says data collected by

cameras can be kept for only 60 days, if they are not to be used as evidence in the prosecution of criminals. A legal adviser to Portugal’s Data Protection Authority, Sónia Pereira, demanded a balance between security and privacy. “Authorities should list out clearly what crimes they are fighting by putting cameras in the region,” she said. The law also allows the government to make audio recordings, but only in high-risk circumstances such as those created by natural disasters or threats to national security. An academic at the University of Lisbon, José Pinheiro, said audio recording should be allowed only in areas with high crime rates. He said tough measures should be taken to prevent individuals with access to the information from abusing it. Only those members of the security forces with special clearance can have access to the information, but legislators Paul Chan Wai Chi and Mak Soi Kun have expressed concern about their competence to handle the information.

June 18, 2012 business daily | 9

GREATER CHINA

China poised for growth rebound Full-year growth ‘should be able to hold up above 8 percent’ may deepen to 7 percent to 7.5 percent in the three months through June. Credit Suisse Group AG has reduced China’s growth estimate for this year to 7.7 percent, which would be the slowest pace in 13 years, on weakness in exports, investment and corporate profits. Deutsche Bank AG lowered its forecast to 7.9 percent. The predictions compare with a 9.2 percent expansion last year.

Slowdown fears

Government efforts to bolster growth include incentive programmes to boost home-appliance sales

hina’s economy will bottom out this quarter and rebound in the following three months as government measures to stabilise a slowdown take effect, according to an academic adviser to the central bank. “The second quarter should be the lowest point” this year, Chen Yulu said in an interview at a forum in Beijing on Saturday. Full-year growth “should be able to hold up above 8 percent,” he said.

Policy makers in the world’s secondbiggest economy are shoring up the nation’s expansion as Europe’s deepening debt crisis curtails exports and foreign investment, and property curbs at home damp demand for steel, cement and household goods. Government efforts to bolster growth span cuts in interest rates and bank reserve requirements, faster approval for investment projects and incentive programmes to boost home-

Global yuan push faces challenges Could be convertible on the capital account by 2020 – adviser

hina’s efforts to make the yuan a global currency may be hampered by the lack of an independent monetary policy, fragile domestic financial markets and an “unbalanced” economy, a report edited by an adviser to the mainland’s central bank warned. “In the process of yuan internationalisation, it will be hard to gain the confidence of the international community in the value of the yuan if monetary policy lacks sufficient independence,” according to the report from the International Monetary Institute of Renmin University in Beijing. Chen Yulu, the editor-in-chief of the report, is an academic adviser to the People’s Bank of China and president of the university. China has been promoting wider use of the yuan in international investment and trade settlement to reduce the U.S. dollar’s global dominance and curb its own reliance on the currency of the world’s biggest economy. China controls the value of the yuan and restricts flows of capital in and out of the country for investment purposes, limits the U.S. says must be lifted before the currency can be part of the International Monetary Fund’s currency basket. The yuan jumped the most in eight weeks last Thursday as the central

bank strengthened its reference rate, helping fend off criticism of China’s currency policy in the runup to the G-20 meeting. The yuan, which rose 4.7 percent against the U.S. dollar last year, has dropped 1.1 percent this year. The U.S. contends China is keeping its currency artificially weak to boost exports. China’s central bank isn’t independent, with financial decisions such as changes in the exchange rate and interest rates made by leaders of the ruling Communist Party. The nation’s “excessively rigid” exchange-rate system “casts doubt on” the independence of the central bank, according to yesterday’s report from the institute. Policy makers should make the system “more open and transparent” by designing a mechanism where the yuan is valued against a basket of currencies “as soon as possible,” according to the report. China may make the yuan convertible on the capital account by 2020, the institute estimates, basing the projection on the experiences of Japan, Germany and other advanced economies in opening their capital accounts. The yuan could become an international reserve currency within 20 to 30 years, it says.

appliance sales. The slowdown in growth has exceeded expectations, Mr Chen said at the forum at Renmin University. Mr Chen, who is president of the university, sits on the monetary policy committee of the People’s Bank of China. China’s economic expansion slid to 8.1 percent in the first three months of the year from a year earlier, the fifth quarterly deceleration. Bank of America Corp. estimates the decline

China could let the yuan decline against the U.S. dollar to avoid further slowdown pressure in a scenario where the sovereign debt crisis in Europe led to a “sharp” fall in the euro, Robert Mundell, a Nobel Prize-winning economist credited as the intellectual father of the euro, said at the forum. A drop in the euro to below US$1.18 would be “a good time with the Chinese government to let its currency depreciate, go down against the dollar, because if the dollar is going up rapidly and if China goes up with it, it would bring a new kind of slowdown to China,” said Mr Mundell, a professor at Columbia University. PBOC adviser Mr Chen said Europe has the capacity to solve its problems. The European Union could issue euro bonds to resolve Greece’s fiscal woes and China could help out by buying some of those bonds, he said, without elaborating. Bloomberg

10 |

business daily June 18, 2012

Greater China

Esprit CEO rebuffs takeover talks

InBrief Taiwan delays gains tax decision

Executive exits won’t alter the company’s transformation

Taiwan’s parliament will delay a decision on a capital-gains tax proposal until late October at the earliest as lawmakers and the cabinet debate a plan that aims to close the gap between rich and poor on the island. The government and ruling Kuomintang have been at odds over a tax on securities transactions, with Christina Liu resigning as finance minister on May 29 after KMT legislators came up with an alternative plan to her flat tax for all investors.

Railway ministry may lose powers The Hong Kong-based fashion group has been trying to boost revenue from China

sprit Holdings Ltd said it won’t change a strategy intended to boost the fashion brand’s revenue, even after both the chairman and chief executive officer resigned. The stock, which plunged 32 percent on Wednesday and Thursday on news of the resignations, climbed 9.9 percent to HK$10.14 at the close of Hong Kong trading on Friday. CEO Ronald Van der Vis said on a conference call that he’ll remain at his post for 12 more months as his resignation is purely for family reasons and not because of any dispute with the board. No strategic changes are planned to Esprit’s transformation programme, though some “adjustments” are possible, Mr Van der Vis said on the call. “The stock will likely experience some more volatility in the near term,” said Mohan Singh, a Hong Kong based analyst at CITIC Securities International. “The abrupt resignation of two key people has created uncertainty and it may take some time for the company to reassure investors that everything is on track, especially given

the current unstable economic environment.”

Stock upgrade CLSA Asia-Pacific Markets upgraded Esprit to “buy” from “underperform” in a note dated June 14, citing the stock’s decline on the resignations. The analysts still cut their share price estimate to HK$11.60 from HK$13.90. “Regardless of explanations, the departure of the CFO, CEO and chairman in a relatively short space of time provides investors with some degree of concern,” the analysts said. The 44-year-old CEO has been trying to boost revenue from China and improve the Hong Kong-based retail chain’s clothing designs as Hennes & Mauritz AB and Inditex SA’s Zara lure customers away. In an investor presentation last year, the company said it planned to spend more than HK$18 billion (US$2.4 billion) over four years on efforts to revive its brands through more marketing and a bigger Chinese presence. Hans-Joachim Koerber resigned as chairman June 13, a day after the

retailer said Mr Van der Vis was stepping down. Their exits are the latest hurdle for the casual-clothing retailer, which in September reported a 98 percent plunge in fiscal-year profit. Mr Van der Vis said the reorganisation’s execution is “on track.” The stock plunged 73 percent last year. The company hasn’t received acquisition proposals and isn’t holding takeover talks, he said. Vice Chairman Paul Cheng, 74, declined to step in as chairman because of his age, and his nomination of Raymond Or for the position was accepted unanimously by the board, Mr Van der Vis said. The resignations of the CEO and the chairman aren’t connected, he said. The CEO is leaving as the company has started showing some improvement in same-store sales. The retailer said in May that revenue at outlets open more than a year increased 0.5 percent in the three months ended March after dropping 4.6 percent in the six months to December 31. Bloomberg

China’s Ministry of Railways may lose control of investment, construction and railway operations as part of a “long-awaited reform” to split its regulatory and operational roles, the Economic Observer said on its website. The ministry will establish and inject assets into three new companies, the paper said, citing officials at government agencies and state-owned companies which it didn’t identify. Oversight of those companies will be transferred to the State-Owned Assets Supervision and Administration Commission, the paper said.

Beijing increases Treasury holdings China, the largest foreign U.S. creditor, boosted its holdings of U.S. government securities in April for the first time in three months as concern increased that Europe’s financial crisis was worsening. Chinese holding rose 0.1 percent to US$1.1455 trillion, U.S. Treasury Department data released on Friday showed. For the year, China’s holdings have declined 0.6 percent. China’s holdings of short-term Treasury bills declined 5.1 percent in April to US$3.7 billion from US$3.9 billion the month before.

HTC boosts patent bank Chief executive dismissed concerns over disputes

he head of Taiwanese smartphone maker HTC Corp, embroiled in patent battles with Apple Inc and others, said his company had completed the purchase of U.S. graphics chipmaker S3 Graphics, arming itself with more than 200 patents. Patent spats with Apple forced HTC to delay the launch of one of its flagship devices in the United States, once its biggest market, and modify others to comply with a ruling by the International Trade Commission (ITC). Apple has since filed at least two other complaints, including one last week alleging HTC was still infringing the patent and demanding emergency action against 29 of its devices. But HTC chief executive Peter Chou dismissed concerns that such disputes

have any long-term impact on the company, arguing that investors and analysts misunderstood the situation. “Patent lawsuits haven’t caused any actual damage to HTC,” he said in an interview. “Only the Street is worried for us, we’re not worried ourselves. We hope the disputes will get more reasonable in the future.” Last Wednesday, HTC warned of lower revenues for the current quarter, citing lower-than-anticipated sales to Europe and delayed product sales in the United States. HTC shares have slumped 72 percent in the past 14 months, and last week touched their lowest in more than 26 months. The company’s market value has dropped to below US$10 billion. Mr Chou said the S3 purchase was now complete and was part of a

strategy, with HTC considering similar investments. “HTC as a company needs to invest in patents, so this is a very good deal. Many companies spend a lot of money to buy patents. We’ll stay open-minded for future similar purchases. If there’s something right and there’s a good opportunity then we’ll consider it.” He did, however, acknowledge that as a smaller player HTC was facing an uneven playing field dominated by bigger players with deeper pockets. “We think this is not healthy to the industry, this is not good for innovation and this is not fair to smaller companies. If it’s not going to stop, small companies will never be able to compete with big companies. So this has to be rationalised.” Reuters

Citic Heavy launches IPO in Shanghai Citic Heavy Industries Co, China’s fourth-biggest maker of heavy machinery, will launch a 4.13 billion yuan (US$648.85 million) initial public offering on the Shanghai Stock Exchange this month, according to a prospectus published late on Friday on the exchange’s website. CITIC Heavy had originally planned to raise 6 billion yuan but decided to slash its fundraising target by 31 percent after taking into account current market conditions. It won approval for the IPO at the end of March. The issue’s road show is scheduled to begin tomorrow and price by June 27.

June 18, 2012 business daily | 11

asia

Stocks gain on stimulus bets New steps to fuel growth offset Europe concern

sian stocks rose, with the regional benchmark index recording its biggest weekly gain in almost five months, on optimism that central banks from China to the U.S. will take new steps to fuel growth tempered concerns Europe’s debt crisis will worsen. Li & Fung Ltd, a supplier of toys and clothes to Wal-Mart Stores Inc., jumped 5.9 percent last week in Hong Kong. Komatsu Ltd, a Japanese construction machinery maker that gets 14 percent of its revenue from China, gained 2.3 percent in Tokyo. DeNA Co., Japan’s biggest socialgaming operator, surged 23 percent on a plan to buy back as much as 10 percent of its stock. The MSCI Asia Pacific Index rose 2.4 percent to 114.16 last week, the most in almost five months. The gauge has dropped more than 11 percent from its peak this year on February 29 amid concern growth is slowing in China and the U.S. and as European policy makers failed to stem concern about the debt crisis. “There’s quite a high chance that the U.S. may do more easing,” said Terrace Chum, a Hong-Kong based fund manager at Manulife Asset Management. “People are expecting an interest-rate cut in China. There is expectation that Greece may not part from the European Union. But all these could turn around very quickly.” Gains in stocks were limited on concern about Europe’s debt crisis.

Spanish bond yields surged the most in four months as the government sought a bailout of 100 billion euros (US$125 billion) for its banks. The nation’s credit rating was cut three steps to Baa3 by Moody’s Investors Service, which cited Spain’s increased debt burden, weakening economy and limited access to capital markets.

Stimulus hopes Companies linked to the U.S. advanced after data last Thursday showed more Americans applied for jobless benefits and consumer prices dropped by the most in three years, giving the Federal Reserve room to spur growth. A policy-setting meeting is scheduled for this week. Li & Fung rallied 5.9 percent to HK$15.20 last week. Honda Motor Co., a Japanese carmaker that gets more than 40 percent of its sales in North America, gained 1.7 percent to 2,533 yen in Tokyo. The Shanghai Composite Index increased 1.1 percent last week, after data showed China’s consumer prices increased the least in two years in May and industrial output and retail sales trailed estimates, adding pressure for more stimulus after the first interest-rate cut in three years. Komatsu climbed 2.3 percent to 1,885 yen last week. Sino-Ocean Land Holdings Ltd., a real estate developer in China, surged 16

percent to HK$3.75. DeNA soared 23 percent to 1,993 yen last week after saying it will spend as much as 20 billion yen (US$254 million) buying back up to 10 percent of its stock. Gree Inc., DeNA’s closest domestic rival, also gained on hopes it may follow DeNA in buying back shares, said Mitsuo Shimizu, an analyst at Iwai Cosmo Securities Co. in Tokyo. Gree jumped 25 percent to 1,710 yen last week. The two stocks were the biggest gainers on the MSCI Asia Pacific Index’s 1,005 companies last week. Japan’s Nikkei 225 Stock Average climbed 1.3 percent last week, while South Korea’s Kospi Index rose 1.2 percent. Australia’s S&P/ASX 200 slid 0.2 percent. Energy companies gained the most among the regional equity gauge’s 10 industry groups as crude oil for July delivery rose on OPEC’s call for members to cut production in excess of quotas. The Organization of Petroleum Exporting Countries needs to reduce output by 1.6 million barrels a day to comply with its targeted ceiling, Secretary General Abdalla El-Badri said. PetroChina Co., the mainland’s largest oil company, advanced 4 percent to HK$10.52 last week in Hong Kong. SK Innovation Co., South Korea’s largest refiner, soared 11 percent to 149,000 won in Seoul. Bloomberg

Gree jumped 25 percent last week and was the biggest gainer on the MSCI Asia Pacific Index’s 1,005 companies

Japan PM orders reactor restart Prime Minister Yoshihiko Noda ended Japan’s month-long freeze on nuclear power, approving a reactor restart that may undermine his political support. Two reactors at Kansai Electric Power Co.’s Ohi nuclear plant can be operated safely, Mr Noda declared after meeting with three Cabinet ministers who share approval authority. The utility, which serves the US$1 trillion economy of Japan’s second-biggest urban region, said it would immediately begin work to start one reactor. Japan is reopening nuclear plants that provided about 30 percent of its energy before being idled after the March 2011 meltdowns at Tokyo Electric Power Co.’s Fukushima station. The decision followed by one day a deal with opposition parties to abandon some campaign pledges in return for agreement to double the nation’s consumption tax. Majorities in public opinion polls oppose both the restarts and the tax increase. Mr Noda “could end up like all his predecessors in the dustbin of history very quickly,” said Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University’s Tokyo campus. “The dustbin is waiting for him.” Seventy-one percent of respondents to a Mainichi newspaper poll published on June 4 objected to a speedy restart of the reactors in Ohi. In a separate poll released June 5 by the Pew Research Centre, 70 percent of Japanese said the country should reduce its reliance on nuclear energy and 52 percent feared they or their families may have been exposed to radiation. “We will increase our efforts to restore the public’s trust over nuclear safety regulation and atomic energy administration,” Mr Noda said. The prime minister is “under intense political pressure from the banks and the utilities” who want reactors restarted, said Andrew DeWit, a professor at Tokyo’s Rikkyo University who focuses on energy policy. “They want to get those income streams back in operation.” Once the world’s biggest nuclear power generator after the U.S. and France, Japan shut its last operating reactor on May 5. Kansai Electric said it aims to restart the Ohi No. 3 reactor in early July, and the No. 4 unit as early as mid-July. Reuters/Bloomberg

Emerging markets a safe bet: Schroders Fundamentals seen as ‘very positive’ for Asian economies Swati Pandey and Abhishek Vishnoi

hina, Thailand and South Korea may offer the best returns among emerging markets due to cheaper valuations and stronger fiscal positions, but India is expensive and riskier, said Allan Conway, head of global emerging market equities at Schroder Investment Management Ltd. Indian equities are trading at about 30 percent premium to emerging markets, Mr Conway estimated, and the country faces a number of

economic and fiscal risks. Schroders is staying defensive, on guard over fallout from what Mr Conway calls the “old, tired economies.” “While you need to be ahead of the curve, you don’t want to be standing in front of a running train,” said Mr Conway, who has been with Schroders since 2004 after previously heading global emerging markets for West LB Asset Management. Schroders, which has US$21 billion invested in emerging market equities, says markets are expecting an orderly Greek default with firewalls, and sees only a 10 percent probability of a break up of the currency block. Still, the eurozone uncertainty is masking what would be attractive investment opportunities in emerging markets, Mr Conway said. “Fundamentals across the world for emerging is very, very positive:

Good economic growth, strong fiscal, strong current account, high reserves, undervalued currencies, no stresses in the financial sector like you have in the developed world and valuations are very, very cheap,” he said. “So, I’d say to you today, 40-50 percent returns in the next 12 months if the world consisted of only emerging countries. Unfortunately the world doesn’t.” Emerging equities have underperformed developed markets this year. The MSCI emerging index is down 0.3 percent compared with a nearly 1 percent rise in the MSCI world equity index. Schroders estimates the 12-month price-to-earnings ratio for emerging markets stands at an average of 9.2-9.3 times, with South Korea at about 8.3-8.4 times and China at 10 times.

By contrast, India, in which Schroders has invested US$1 billion, is trading at 12.2 times, he estimated. “The macro position for China and Korea is infinitely better than India. It does have inflation issues, it still has record fiscal position and has one of the highest interest rates in emerging markets. And, in addition, valuations are expensive.” India’s growth slumped to a nineyear low of 5.3 percent in the first quarter of calendar 2012 and industrial output this week showed growth was flat in April. But Mr Conway saw pockets of opportunities in domestic-focused companies such as consumer durables in India. “Medium- to long-term you have to be extremely positive. The issue is India should be stronger but it needs the right management,” he said. Reuters

12 |

business daily June 18, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

Day %

VOLUME

CHINA UNICOM HON

10.96

1.67

43113210

PRICE

Day %

POWER ASSETS HOL

55.95

0.99

CITIC PACIFIC

11.14

0.91

2737201

3833167

SANDS CHINA LTD

24.95

-1.96

67493732

CLP HLDGS LTD

63.95

CNOOC LTD

15.20

1.19

3012162

SINO LAND CO

11.08

1.47

12876447

3.83

77496347

SUN HUNG KAI PRO

90.20

1.35

5309279

9.94

2.26

5064731

SWIRE PACIFIC-A

88.35

2.20

1457091

ESPRIT HLDGS

10.14

9.86

83031814

TENCENT HOLDINGS

230.20

2.31

2659488

HANG LUNG PROPER

25.45

0.99

12389507

TINGYI HLDG CO

19.06

1.71

5036100

103.70

1.07

1606635

WANT WANT CHINA

9.67

5.45

16821928

HENDERSON LAND D

41.05

2.24

4515149

WHARF HLDG

41.95

0.00

7855388

HENGAN INTL

78.60

0.51

1937320

PRICE

Day %

VOLUME

26.00

0.58

25583907

ALUMINUM CORP-H

3.25

1.88

8292600

BANK OF CHINA-H

2.87

2.50

519893230

BANK OF COMMUN-H

5.18

3.60

30210563

BANK EAST ASIA

26.05

2.76

2616085

BELLE INTERNATIO

12.26

2.17

16938977

BOC HONG KONG HO

23.30

4.95

30611983

CATHAY PAC AIR

12.10

1.68

5636948

HANG SENG BK

CHEUNG KONG

92.30

3.13

7316718

6.85

0.29

30561043

AIA GROUP LTD

CHINA COAL ENE-H CHINA CONST BA-H

5.28

2.72

719988376

CHINA LIFE INS-H

19.28

2.12

36578953

CHINA MERCHANT

22.15

0.23

4147870

CHINA MOBILE

80.00

1.91

CHINA OVERSEAS

17.72

2.90

CHINA PETROLEU-H

7.07

2.32

134210387

CHINA RES ENTERP

23.10

1.76

4572541

CHINA RES LAND

15.72

1.81

9662511

CHINA RES POWER

14.46

0.42

CHINA SHENHUA-H

27.45

3.20

COSCO PAC LTD

HONG KG CHINA GS

NAME

MOVERS

16.56

1.72

11828812

112.40

2.65

3072683

HSBC HLDGS PLC

66.80

2.38

21033570

19595869

HUTCHISON WHAMPO

65.80

3.87

8343226

24474360

IND & COMM BK-H

4.44

3.26

531811293

LI & FUNG LTD

15.20

2.56

13364786

HIGH

19236.47

MTR CORP

25.25

1.41

1694955

LOW

18808.4

NEW WORLD DEV

8.92

-0.45

20523708

6248000

52W (H) 22835.03

PETROCHINA CO-H

10.52

2.33

76634083

21145124

PING AN INSURA-H

61.00

1.67

12180933

(L) 16170.35

HONG KONG EXCHNG

VOLUME

1 19250

INDEX N/A

18800

13-Jun

15-Jun

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

24.80

1.02

9303408

CHINA PETROLEU-H

7.07

2.32

134210387

8292600

CHINA RAIL CN-H

6.07

2.71

18459500

1.12

9870484

CHINA RAIL GR-H

3.11

3.67

23603894

2.50

519893230

CHINA SHENHUA-H

27.45

3.20

21145124

CHINA TELECOM-H

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.04

4.11

184560100

AIR CHINA LTD-H

4.50

1.12

19844335

ALUMINUM CORP-H

3.25

1.88

ANHUI CONCH-H

22.60

BANK OF CHINA-H

2.87

NAME CHINA PACIFIC-H

5.18

3.60

30210563

3.60

1.69

82372833

15.02

-0.13

6269340

DONGFENG MOTOR-H

13.16

2.49

10676083

CHINA CITIC BK-H

4.09

4.87

67145731

GUANGZHOU AUTO-H

6.83

2.86

5811162

CHINA COAL ENE-H

6.85

0.29

30561043

HUANENG POWER-H

5.41

-1.10

36627150

CHINA COM CONS-H

6.77

-0.44

21368495

IND & COMM BK-H

4.44

3.26

531811293

CHINA CONST BA-H

5.28

2.72

719988376

JIANGXI COPPER-H

17.08

2.28

11451020

CHINA COSCO HO-H

3.68

1.38

13664500

PETROCHINA CO-H

10.52

2.33

76634083

19.28

2.12

36578953

PICC PROPERTY &

9.22

2.90

16153577

CHINA LONGYUAN-H

5.25

3.35

6168733

PING AN INSURA-H

61.00

1.67

12180933

CHINA MERCH BK-H

14.76

2.36

15354425

SHANDONG WEIG-H

8.10

3.32

3442972

BANK OF COMMUN-H BYD CO LTD-H

CHINA LIFE INS-H

NAME

PRICE

DAY %

VOLUME

12.80

1.27

19268539

2.82

3.68

41263918

ZOOMLION HEAVY-H

10.52

4.78

16382682

ZTE CORP-H

15.04

-3.34

9134413

YANZHOU COAL-H ZIJIN MINING-H

MOVERS

0 9800

INDEX N/A HIGH

9750.14

LOW

9458.36

CHINA MINSHENG-H

7.34

3.09

34293558

SINOPHARM-H

19.82

4.32

14499219

52W (H) 12902.97

CHINA NATL BDG-H

9.17

1.10

23528083

TSINGTAO BREW-H

50.10

-1.57

1372600

(L) 8058.58

11.46

2.50

5252297

WEICHAI POWER-H

33.10

2.00

1815742

CHINA OILFIELD-H

9400

13-Jun

15-Jun

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

DONGFANG ELECT-A

21.33

0.47

5457007

SANY HEAVY INDUS

14.60

-1.35

23901287

7276674

EVERBRIG SEC -A

13.88

-1.00

9735758

SHANDONG GOLD-MI

35.98

-0.58

11315810

0.45

6954594

GD MIDEA HOLDING

12.48

0.97

19735916

SHANG PUDONG-A

8.47

2.42

134216053

0.69

14996337

GD POWER DEVEL-A

2.74

0.37

77872490

SHANGHAI ELECT-A

5.10

-0.39

10432734

7.02

-2.77

64914889

SHANXI LU'AN -A

23.09

-3.27

11528087

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.65

1.15

92104704

AIR CHINA LTD-A

6.05

-0.66

ALUMINUM CORP-A

6.68 15.98

ANHUI CONCH-A

NAME

BANK OF BEIJIN-A

9.60

2.89

31964903

GEMDALE CORP-A

BANK OF CHINA-A

2.85

0.71

13263684

GF SECURITIES-A

31.63

-0.06

7257779

SHANXI XINGHUA-A

38.16

-0.93

3159246

BANK OF COMMUN-A

4.53

1.80

43734483

GREE ELECTRIC

21.87

1.48

7108554

SHANXI XISHAN-A

16.14

0.31

17559961

BAOSHAN IRON & S

4.43

1.14

18406852

GUANGHUI ENERG-A

14.89

-1.52

32039534

SHENZ DVLP BK-A

15.16

3.55

42295157

29.09

1.68

6280458

6.48

-2.85

42941963

15.32

0.52

989484

8.80

-0.11

29230563 5169261

23.13

-0.90

2429730

GUIZHOU PANJIA-A

CHINA CITIC BK-A

4.07

2.78

43592100

HAITONG SECURI-A

10.22

-0.87

53800140

CHINA CNR CORP-A

4.14

0.73

24370138

HANGZHOU HIKVI-A

25.98

-1.70

3677162

SUNING APPLIAN-A

BYD CO LTD -A

HEBEI IRON-A

SHENZEN OVERSE-A SINOVEL WIND-A

CHINA COAL ENE-A

8.34

0.72

8788399

2.90

0.69

16732026

TSINGTAO BREW-A

40.23

0.70

CHINA CONST BA-A

4.48

1.36

23683751

HENAN SHUAN-A

61.41

-1.98

2694858

WEICHAI POWER-A

31.75

-0.38

3471612

CHINA COSCO HO-A

4.83

0.42

5317769

HUATAI SECURIT-A

11.46

-0.35

16047375

WULIANGYE YIBIN

33.02

0.24

17368722

CHINA CSSC HOL-A

23.26

0.22

5199053

HUAXIA BANK CO

9.50

3.60

69985470

XIAMEN TUNGSTEN

49.10

1.72

7775560

CHINA EAST AIR-A

4.03

-0.49

10740920

IND & COMM BK-A

3.98

0.76

47850212

YANGQUAN COAL -A

17.08

0.59

12807078

2.84

2.90

43729088

INDUSTRIAL BAN-A

12.95

4.10

110094569

YANTAI CHANGYU-A

94.00

0.00

961425

CHINA LIFE INS-A

18.05

1.35

16189559

INNER MONG BAO-A

44.46

-0.43

77548889

YANTAI WANHUA-A

14.83

-0.87

9488617

CHINA MERCH BK-A

11.05

1.75

50297608

INNER MONG YIL-A

21.85

-10.01

8819800

YANZHOU COAL-A

21.72

0.79

3712909

CHINA MERCHANT-A

12.73

-0.93

18809104

INNER MONGOLIA-A

6.03

-1.79

65572055

YUNNAN BAIYAO-A

57.62

-0.21

2679697

CHINA MERCHANT-A

24.97

-3.85

12592447

JIANGSU HENGRU-A

28.53

-0.52

2414438

ZHONGJIN GOLD

23.80

0.34

7562579

CHINA MINSHENG-A

6.01

0.00

80871167

JIANGSU YANGHE-A

CHINA EVERBRIG-A

CHINA OILFIELD-A

16.93

1.38

3639189

138.33

-1.23

1480800

ZIJIN MINING-A

4.08

0.25

35977337

JIANGXI COPPER-A

24.97

1.18

6698664

ZOOMLION HEAVY-A

10.52

-2.23

59216592

13.54

-0.22

7525460

ZTE CORP-A

14.69

-0.54

26334441

17.19

0.00

15176752 22738457

22.15

-0.27

16948350

JINDUICHENG -A

CHINA PETROLEU-A

6.49

1.25

31092262

JIZHONG ENERGY-A

CHINA RAILWAY-A

4.59

2.68

15233211

KANGMEI PHARMA-A

14.08

2.10

CHINA RAILWAY-A

2.64

0.76

57379836

KWEICHOW MOUTA-A

243.38

-0.49

1985984

41.05

-0.70

5494932 10028219

CHINA PACIFIC-A

CHINA SHENHUA-A

23.81

1.36

13237929

LUZHOU LAOJIAO-A

CHINA SHIPBUIL-A

5.54

-1.07

57439841

METALLURGICAL-A

2.57

0.00

CHINA SOUTHERN-A

4.64

-0.22

13430020

NARI TECHNOLOG-A

19.75

0.77

9847119

2.57

0.78

7653314

CHINA STATE -A

3.38

0.00

56877205

NINGBO PORT CO-A

CHINA UNITED-A

3.98

1.02

37279601

PANGANG GROUP -A

7.24

0.56

35235358

9.21

0.33

MOVERS

159

126

15 2590

INDEX N/A

CHINA VANKE CO-A

9.11

-1.83

73916531

PETROCHINA CO-A

14483914

HIGH

2582.66

CHINA YANGTZE-A

7.02

1.45

26391274

PING AN INSURA-A

46.06

2.06

39323991

LOW

2542.56

CITIC SECURITI-A

13.46

0.82

43959972

POLY REAL ESTA-A

14.37

-2.31

55618162

CSR CORP LTD -A

4.76

0.63

14070139

QINGDAO HAIER-A

12.12

0.00

7093899

DAQIN RAILWAY -A

7.34

0.41

25204237

QINGHAI SALT-A

30.35

-1.46

5989320

DATANG INTL PO-A

5.85

3.54

14186654

SAIC MOTOR-A

14.99

-0.66

8423110

PRICE DAY %

Volume

PRICE DAY %

Volume

52W (H) 3140.102 (L) 2254.567

2540

13-Jun

15-Jun

FTSE TAIWAN 50 INDEX NAME

NAME

ACER INC

30.90

0.00

27393042

FORMOSA PLASTIC

ADVANCED SEMICON

25.65

0.98

16860303

FOXCONN TECHNOLO

ASIA CEMENT CORP

36.40

0.14

5135791

FUBON FINANCIAL

ASUSTEK COMPUTER

289.00

-0.52

4293920

AU OPTRONICS COR

11.95

0.84

37654397

CATCHER TECH

NAME

PRICE DAY %

78.80

6.92

17587237

TAIWAN MOBILE CO

108.00

2.37

17729131

TPK HOLDING CO L

28.90

0.35

30337840

HON HAI PRECISIO

84.50

2.92

31351827

HOTAI MOTOR CO

197.00

2.60

762124

Volume

92.30

-1.39

454.50

3.89

8703539 6174318

TSMC

78.10

-1.39

83871246

UNI-PRESIDENT

46.90

0.00

8899489

UNITED MICROELEC

12.25

0.82

60028495

193.00

2.39

12943813

HTC CORP

369.00

2.07

12069759

WISTRON CORP

38.00

1.74

7740064

CATHAY FINANCIAL

29.40

1.55

15726818

HUA NAN FINANCIA

16.40

0.92

7129924

YUANTA FINANCIAL

13.50

3.45

29051847

CHANG HWA BANK

15.70

1.95

12503589

LARGAN PRECISION

576.00

2.86

1786372

YULON MOTOR CO

52.50

1.16

5337909

CHENG SHIN RUBBE

72.90

1.67

5182475

LITE-ON TECHNOLO

37.05

1.51

4787269

CHIMEI INNOLUX C

11.95

0.42

29160411

MEDIATEK INC

265.00

1.53

9917486

7.00

-0.28

80775560

MEGA FINANCIAL H

21.30

-0.47

33756497

CHINA STEEL CORP

28.35

0.00

45925880

NAN YA PLASTICS

57.60

4.16

29815592

CHINATRUST FINAN

17.00

3.03

43641104

PRESIDENT CHAIN

153.50

0.66

1170256

CHUNGHWA TELECOM

90.10

-0.22

9410210

QUANTA COMPUTER

79.90

1.01

12356312

COMPAL ELECTRON

27.80

1.46

20997992

SILICONWARE PREC

29.45

0.00

8246301

DELTA ELECT INC

89.40

1.59

7537800

SINOPAC FINANCIA

11.15

2.29

16993099

FAR EASTERN NEW

29.35

2.09

22294289

SYNNEX TECH INTL

70.90

1.58

2556505

FAR EASTONE TELE

63.40

-1.40

18302547

TAIWAN CEMENT

34.60

1.76

7309918

FIRST FINANCIAL

17.20

1.47

11080803

TAIWAN COOPERATI

17.50

1.16

5258030

FORMOSA CHEM & F

78.70

6.93

17029051

TAIWAN FERTILIZE

66.30

0.91

2601733

FORMOSA PETROCHE

79.50

0.63

2388219

TAIWAN GLASS IND

24.40

0.41

13904679

CHINA DEVELOPMEN

MOVERS

4 4930

INDEX N/A HIGH

4928.23

LOW

4846.57

52W (H) 6065.73 4840

(L) 4643.05 13-Jun

15-Jun

June 18, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) gaLaXy eNTeRTaINMeNT

MeLCo CRowN eNTeRTaINMeNT

MgM CHINa HoLDINgS

19.20

12.00

30.4

19.04

11.92

18.88

11.84

30.3

18.72

11.76

18.56 Max 19.08

average 18.72

Min 18.44

18.40

Last 18.46

SaNDS CHINa LTD

Max 25.35

average 24.83

11.68 Max 30.30

average 30.30

Min 30.30

Min 24.30

Last 11.98

wyNN MaCaU LTD

25.16

14.1

17.84

24.92

14.0

17.68

24.68

13.9

17.52

24.44

13.8

17.36

13.7 Max 14.16

average 13.83

WTI CRUDE FUTURE Jul12

84.03

0.14

-15.45

111.49

77.40

BRENT CRUDE FUTR Aug12

97.61

0.45

-7.31

124.70

95.21

GASOLINE RBOB FUT Jul12

270.17

0.95

-0.48

332.18

246.50

GAS OIL FUT (ICE) Jul12

851.50

0.80

-5.34

1045.75

810.00

2.47

-1.12

-23.93

4.94

2.10

HEATING OIL FUTR Jul12 Gold Spot $/Oz Silver Spot $/Oz

DAY %

YTD %

(H) 52W

Min 13.72

Last 13.98

17.20 Max 17.98

average 17.56

264.65

0.71

-6.90

331.93

256.31

1627.10

0.45

3.97

1921.18

1478.78

28.69

-0.76

3.08

44.22

26.09

1484.06

0.18

6.42

1915.75

1339.25

Palladium Spot $/Oz

627.50

1.02

-3.98

848.37

537.54

LME ALUMINUM 3MO ($)

1933.00

-1.07

-4.31

2675.25

1925.25

LME COPPER 3MO ($)

7510.50

1.22

-1.18

9905.00

6635.00

LME ZINC

1904.00

0.63

3.20

2539.50

1718.50 15980.00

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul12 Dec12

PRICE

(L) 52W

Platinum Spot $/Oz

16850.00

1.29

-9.94

25195.00

13.92

-0.36

-9.43

19.38

13.73

506.00

-1.94

-13.69

673.50

499.00

WHEAT FUTURE(CBT) Dec12

651.25

-2.29

-9.55

888.50

629.50

SOYBEAN FUTURE Nov12

1314.00

0.40

9.11

1400.00

1115.75

COFFEE 'C' FUTURE Sep12

152.00

0.63

-35.11

288.85

150.70

SUGAR #11 (WORLD) Oct12

20.01

2.56

-12.35

26.04

19.24

COTTON NO.2 FUTR Dec12

71.02

0.59

-19.15

104.27

64.61

World Stock MarketS - Indices

Last 17.40

Min 17.28

MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

1.006 1.572 0.950 1.264 78.730 7.992 7.760 6.365 55.496 31.510 1.271 29.902 42.258 9398.000 79.343 1.201 0.805 8.039 10.084 99.490 1.030

YTD %

1.055 1.204 0.547 0.533 0.711 -0.013 -0.018 0.082 0.574 0.190 0.913 0.134 0.892 0.543 -0.562 -0.015 0.624 -0.365 -0.382 0.181 0.000

(H) 52W

-1.499 1.107 -1.263 -2.492 -2.312 0.091 0.098 -1.104 -4.381 0.127 2.030 1.261 3.744 -3.501 -1.148 1.314 3.587 1.186 2.662 0.171 0.010

(L) 52W

1.108 1.662 0.977 1.458 84.180 8.045 7.811 6.491 56.515 31.960 1.320 30.716 44.350 9662.000 88.637 1.247 0.908 9.417 11.682 117.740 1.031

0.939 1.524 0.707 1.229 75.350 7.982 7.753 6.277 43.855 29.630 1.199 28.661 41.879 8458.000 72.057 1.007 0.795 7.854 9.842 95.600 1.029

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

NAME

PRICE 2.89

DAY % YTD % -0.69

31.36

3.25

1.88

VOLUME CRNCY 4771510

CROWN LTD

8.65

0.82

6.92

9.29

7.45

4361153

AMAX HOLDINGS LT

0.08

-3.85

-13.79

0.12

0.06

6601000

BOC HONG KONG HO

23.30

4.95

26.63

24.45

14.24

30611983

CENTURY LEGEND

0.24

3.00

4.35

0.40

0.20

CHEUK NANG HLDGS

2.98

0.00

6.43

4.39

2.30

CHINA OVERSEAS

17.72

2.90

36.52

17.86

9.99

24474360

CHINESE ESTATES

8.99

0.11

-28.08

13.68

8.30

84000

CHOW TAI FOOK JE

9.01

-0.22

-35.27

15.16

8.55

5335800

EMPEROR ENTERTAI

1.17

0.00

5.41

2.04

0.97

1320000

FUTURE BRIGHT

0.82

0.00

95.24

1.09

0.30

714000

18.46

-1.91

29.63

24.95

8.69

19389568 1606635

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12767.17

0.91

4.50

13338.66

10404.49

NASDAQ COMPOSITE INDEX

2872.80

1.29

10.27

3134.17

2298.89

HANG SENG BK

103.70

1.07

12.53

125.00

84.40

FTSE 100 INDEX

5478.81

0.22

-1.68

6084.08

4791.01

HOPEWELL HLDGS

19.94

0.00

0.40

24.90

18.56

558113

DAX INDEX

6229.41

1.48

5.61

7523.53

4965.80

HSBC HLDGS PLC

66.80

2.38

13.22

78.85

56.00

21033570

NIKKEI 225

8569.32

0.01

1.35

10255.15

8135.79

HANG SENG INDEX

19233.94

2.26

4.34

22835.03

16170.35

CSI 300 INDEX

2568.05

0.30

9.48

3140.10

2254.57

TAIWAN TAIEX INDEX

7155.83

1.14

1.18

8842.17

6609.11

KOSPI INDEX

1858.16

-0.71

1.78

2192.83

1644.11

S&P/ASX 200 INDEX

4057.33

0.37

0.02

4657.40

3765.90

3818.11

0.70

-0.10

4234.73

3217.95

FTSE Bursa Malaysia KLCI

1579.23

0.53

3.17

1609.33

NZX ALL INDEX

770.27

0.86

5.55

806.02

JAKARTA COMPOSITE INDEX

PHILIPPINES ALL SHARE IX

11.60

18.00

PRICE

NAME

Min 11.62

14.2

24.20

Last 24.95

average 11.80

25.40

NAME

CORN FUTURE

Max 11.98

CURRENCY EXCHANGE RATES

NATURAL GAS FUTR Jul12

METALS

30.2

SJM HoLDINgS LTD

Commodities ENERGY

Last 30.30

3295.97

-1.19

8.24

3518.96

GALAXY ENTERTAIN

HUTCHISON TELE H

3.46

1.76

15.72

3.71

2.35

1320009

LUK FOOK HLDGS I

15.00

1.90

-44.65

46.15

14.70

3066002

MELCO INTL DEVEL

6.13

-0.16

6.24

10.76

4.30

5247780

MGM CHINA HOLDIN

11.98

1.87

24.89

17.18

7.60

3380872

MIDLAND HOLDINGS

3.88

1.31

-1.87

5.22

2.89

1588004

NEPTUNE GROUP

0.10

-0.99

-9.91

0.15

0.08

85000

NEW WORLD DEV

8.92

-0.45

42.49

11.39

6.13

20523708

SANDS CHINA LTD

67493732

24.95

-1.96

13.67

33.05

14.90

SHUN HO RESOURCE

1.13

0.00

13.00

1.32

0.82

1310.53

SHUN TAK HOLDING

2.73

-0.36

6.68

4.67

2.24

4926009

700.44

SJM HOLDINGS LTD

13.98

0.87

11.79

20.71

10.08

8413936

SMARTONE TELECOM

14.76

0.41

9.82

18.50

9.80

2276002

WYNN MACAU LTD

17.40

-5.74

-10.77

27.48

14.81

78600465

ASIA ENTERTAINME

4.03

-1.71

-31.46

10.87

3.66

38248

BALLY TECHNOLOGI

46.94

1.51

18.66

49.32

24.74

674557 6940

2695.06

HSBC Dragon 300 Index Singapor

523.13

-0.68

5.40

STOCK EXCH OF THAI INDEX

1165.73

1.10

13.69

1247.72

843.69

HO CHI MINH STOCK INDEX

433.09

1.84

23.19

492.44

332.28

BOC HONG KONG HO

2.97

6.07

23.90

3.15

1.81

Laos Composite Index

1016.59

0.13

13.02

1107.30

876.33

GALAXY ENTERTAIN

2.40

0.00

28.48

3.24

1.08

1400

INTL GAME TECH

14.88

-1.59

-13.49

19.15

13.12

8232319

JONES LANG LASAL

70.66

1.79

15.34

99.89

46.01

530425

LAS VEGAS SANDS

45.18

-1.12

5.73

62.09

36.08

7022263

MELCO CROWN-ADR

11.33

0.76

17.78

16.15

7.05

4471651

MGM CHINA HOLDIN

1.64

0.00

37.62

2.21

1.00

100

MGM RESORTS INTE

10.80

-2.70

3.55

16.05

7.40

13217159

SHUFFLE MASTER

444911

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

13.97

1.16

19.20

18.77

7.35

SJM HOLDINGS LTD

1.80

0.00

11.97

2.60

1.26

24900

WYNN RESORTS LTD

99.53

-0.96

-9.92

165.49

95.82

1832964

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business daily June 18, 2012

Opinion

Share the work Barry Eichengreen

Professor of Economics and Political Science at the University of California, Berkeley

he United States today is facing a crisis of long-term unemployment unlike anything it has seen since the 1930’s. Some 40 percent of the unemployed have been out of work for six months or more, which, as U.S. Federal Reserve Board Chairman Ben Bernanke noted in a recent speech, is far higher than in any other post-World War II recession. This crisis of long-term unemployment is having a profoundly damaging impact on the lives of those bearing the brunt of it. We know this thanks to a series of careful studies of the problem conducted in the depths of the 1930’s Great Depression. The most famous such study, of the long-term unemployed in New Haven, Connecticut, was conduct-

ed by E. Wight Bakke, a graduate student and subsequently a professor of economics at Yale University. Through participant interviews, personal observation, time diaries, and longitudinal studies, Bakke showed how extended spells of unemployment caused workers’ skills to deteriorate and made it difficult for them to acquire new ones. The longterm unemployed also experienced a variety of physical and psychological problems, among them demoralisation, apathy, and a sense of social isolation. For those unfortunate enough to experience it, long-term unemployment – now, as in the 1930’s – is a tragedy. And, for society as a whole, there is the danger that the productive capacity of a significant portion of the

labour force will be impaired. What is not well known, however, is that in the 1930’s, the United States, to a much greater extent than today, succeeded in mitigating these problems. Rather than resorting to extensive layoffs, firms had their employees work a partial week. The average workweek in manufacturing and mining fell from 45 hours in 1929 to 35 hours in 1932. We know this from a 1986 article by my Berkeley colleague James Powell and his co-author, none other than – wait for it – Ben Bernanke.

Work matters The 24 percent unemployment reached at the depths of the Great Depression was no picnic. But that rate would have been even

higher had average weekly hours for workers in manufacturing remained at 45. Cutting hours by 20 percent allowed millions of additional workers to stay on the job. They continued to earn an income. They continued to acquire skills. They had hope and the possibility of advancement. Why was there so much work-sharing in the 1930’s? One reason is that government pushed for it. In his memoirs, President Herbert Hoover estimated that as many as two million workers avoided unemployment as a result of his efforts to promote work-sharing. Second, legislation encouraged it. The industrial codes of the New Deal set ceilings on the workweek for specified industries and workers. The Fair Labor Standards

For those unfortunate enough to experience it, longterm unemployment is a tragedy. And, for society as a whole, there is the danger that the productive capacity of a significant portion of the labour force will be impaired

Act provided financial incentives by requiring overtime pay for employees working long hours. Third, there was no unemployment insurance to discourage it. An individual today, faced with the option of working 20 hours a week or drawing unemployment benefits, might be tempted by the latter. But, back in the 1930’s, before unemployment insurance, 20 hours was better than nothing. Of course, unemployment insurance replaces only a

fraction of most workers’ previous wages, which suggests that its effect in this regard is not very strong. But, even if unemployment insurance does not discourage work-sharing, it could be restructured to encourage it. Partial benefits could be paid to workers on short hours, rather than limiting payments to those who are fully unemployed. The programme would at least partly pay for itself, with additional payments to workers on short hours offset by lower unemployment (and thus lower payments to those who are completely without work).

Flexible arrangements In fact, the US already has something along these lines: a programme known as Short-Time Compensation. Workers can collect unemployment benefits pro-rated according to their hours when their employer submits an approved worksharing plan, while the federal government compensates the states for a portion of the set-up costs. At last count, 24 states have begun adapting their unemploymentinsurance systems to take advantage of the measure. Unfortunately, the financial incentives that the federal government provides are mainly limited to helping the states to advertise and automate their programmes. And those programmes, in turn, are too modest, especially for senior workers with a reasonable expectation of remaining in a full-time job, to make work-sharing an attractive option Other countries have gone further. In Germany, for example, the federal government’s Kurzarbeit programme makes up a significant fraction of the difference when, owing to short hours, a worker’s earnings fall by more than 10 percent. The US federal government could emulate this example by compensating the states more generously for their Short-Term Compensation programmes. Its failure to do so not only inflicts avoidable pain and suffering on the unemployed, but also threatens to inflict long-term costs on American society. © Project Syndicate

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 18, 2012 business daily | 15

OPINION

The EU smiled while Spain’s wires banks cooked the books Business Leading reports from Asia’s best business newspapers

China Daily The energy and mining sectors will be the major focus of Chinese companies investing abroad through mergers and acquisitions, as the nation’s overseas direct investment continues to grow, said Li Tong, executive director of the China Enterprise Forum. “Private companies will play a bigger role in the M&A wave,” Mr Li was quoted as saying at the 2012 China Global Outbound Investment Summit. “Look at the structure of China’s energy consumption. About 70 percent of China’s energy comes from coal, 22 percent from crude oil and natural gas and 7 percent from hydroelectricity,” he added.

Korea Herald South Korea’s Financial Supervisory Service said it reprimanded numerous banks and punished 348 bank employees over the past two years. Major banks have been caught for misconduct such as failing to confirm real names in financial transactions or making borrowers purchase financial products to have their loan applications approved. The FSS issued institutional warnings to KB Kookmin Bank, Shinhan Bank, Hana Bank and HSBC Bank. If a bank receives three institutional warnings in three years, it can be subject to partial suspension of operations or shutdown of branches.

Asahi Shimbun Kansai Electric Power Co. said it is ready to restart two reactors at its Oi nuclear power plant in Fukui Prefecture in response to the government’s decision on Saturday to resume operations. Japanese Prime Minister Yoshihiko Noda had backed the restarts for some time. He announced the government’s decision at a meeting with key ministers, giving the go-ahead to the two reactors in western Japan. The decision could open the door to more restarts among Japan’s 50 nuclear power reactors.

Jonathan Weil

Bloomberg View columnist

nly a few years ago, Spain’s banks were seen in some policy-making circles as a model for the rest of the world. This may be hard to fathom now, considering that Spain is seeking US$125 billion to bail out its ailing lenders. But back in 2008 and early 2009, Spanish regulators were riding high after their country’s banks seemed to have dodged the financial crisis with minimal losses. A big reason for their success, the regulators said, was an accounting technique called dynamic provisioning. By this, they meant that Spain’s banks had set aside rainy-day loan-loss reserves on their books during boom years. The purpose, they said, was to build up a buffer in good times for use in bad times. This isn’t the way accounting standards usually work. Normally the rules say companies can record losses, or provisions, only when bad loans are specifically identified. Spanish regulators said they were trying to be countercyclical, so that any declines in lending and the broader economy would be less severe. What’s now obvious is that Spain’s banks weren’t reporting all of their losses when they should have, dynamically or otherwise. One of the catalysts for last weekend’s bailout request was the decision last month by the Bankia group, Spain’s third-largest lender, to restate its 2011 results to show a 3.3 billion-euro (US$4.2 billion) loss rather than a 40.9 million-euro profit. Looking back, we probably should have known Spain’s banks would end up this way, and that their reported financial results bore no relation to reality.

Jakarta Globe

Name calling

CIMB Group Holdings, Malaysia’s second-largest lender after Maybank, predicts that in three years, Indonesia’s contribution of profit before tax will beat Malaysia’s, its home base. CIMB also affirmed its plan for a dual listing on the Indonesia Stock Exchange, though currently it is only listed on Bursa Malaysia. “By 2015, Malaysia will be just under 40 percent, Indonesia will be just over 40 percent, that’s my expectation today,” CIMB Group chief executive Nazir Razak was quoted as saying.

Dynamic provisioning is a euphemism for an old balance- sheet trick called cookie-jar accounting. The point of the technique is to understate past profits and shift them into later periods, so that companies can mask volatility and bury future losses. Spain’s banks began using the method in 2000 because their regulator, the Bank of Spain, required them to. “Dynamic loan loss provisions can help deal with pro-cyclicality in banking,” Bank of Spain’s director of financial stability, Jesus Saurina, wrote in a July 2009 paper published by the World Bank. “Their anti-cyclical nature enhances the resilience of both individual banks and the banking system as a whole. While

The danger with the technique is it can make companies look healthy when they are actually quite ill, sometimes for years, until they finally deplete their excess reserves and crash

there is no guarantee that they will be enough to cope with all the credit losses of a downturn, dynamic provisions have proved useful in Spain during the current financial crisis.” The danger with the technique is it can make companies look healthy when they are actually quite ill, sometimes for years, until they finally deplete their excess reserves and crash. The practice also clashed with International Financial Reporting Standards, which Spain adopted several years ago along with the rest of Europe. European Union officials knew this and let Spain proceed with its own brand of accounting anyway. One of the more candid advocates of Spain’s approach was Charlie McCreevy, the EU’s commissioner for financial services from 2004 to 2010, who previously had been Ireland’s finance minister. During an April 2009 meeting of the monitoring board that oversees the International Accounting Standards Board’s trustees,

McCreevy said he knew Spain’s banks were violating the board’s rules. This was fine with him, he said. “They didn’t implement IFRS, and our regulations said from the 1st January 2005 all publicly listed companies had to implement IFRS,” McCreevy said, according to a transcript of the meeting on the monitoring board’s website. “The Spanish regulator did not do that, and he survived this. His banks have survived this crisis better than anybody else to date.”

Ignoring rules McCreevy, who at the time was the chief enforcer of EU laws affecting banking and markets, went on: “The rules did not allow the dynamic provisioning that the Spanish banks did, and the Spanish banking regulator insisted that they still have the dynamic provisioning. And they did so, but I strictly speaking should have taken action against them.” Why didn’t he take action? McCreevy said he was a fan of dynamic provisioning.

“Why am I like that? Well, I’m old enough to remember when I was a young student that in my country that I know best, banks weren’t allowed to publish their results in detail,” he said. “Why? Because we felt if everybody saw the reserves, etc., it would create maybe a run on the banks.” So to sum up this way of thinking: The best system is one that lets banks hide their financial condition from the public. Barring that, it’s perfectly acceptable for banks to violate accounting standards, if that’s what it takes to navigate a crisis. The proof is that Spain’s banks survived the financial meltdown of 2008 better than most others. Except now we know they didn’t. They merely postponed their reckoning, making it inevitably more expensive. Someday maybe the world’s leaders will learn that masking losses undermines investor confidence and makes crises worse. We can only hope they don’t manage to blow up the whole financial system first. Bloomberg View

16 |

business daily June 18, 2012

CLOSING Europe risks ‘Lehmans moment’

HK to buy London Metal Exchange

Outgoing World Bank president Robert Zoellick warned that Europe was facing a “Lehmans moment” and the collapse of the euro currency could trigger a global crisis, in an interview out yesterday. Mr Zoellick will warn the G20 summit that Europe risks sparking a financial meltdown that would have desperate consequences for developing countries, he told British newspaper The Observer. Mr Zoellick said developing nations needed to “avoid piling up short-term debts that can come due in volatile periods and look to the fundamentals of future growth -infrastructure and human capital.”

The Hong Kong stock exchange has struck a deal to buy the London Metal Exchange for £1.39 billion (US$2.15 billion). Hong Kong Exchanges and Clearing said buying the 135-year-old exchange would allow it to grow its business in Asia, and particularly in China. The LME is owned by its members, and the sale is conditional upon 75 percent of shareholders approving a deal. The LME board intends to “unanimously recommend” that shareholders approve the transaction at a meeting that would be convened before the end of July.

China offers credit to Taiwan companies Beijing has announced a batch of measures aimed at boosting investment and relations with Taiwan

hina pledged yesterday to offer up to 600 billion yuan (US$95 billion) in credit to Taiwanese companies on the mainland as it furthered its campaign for reunification. China will also increase access to mainland universities for Taiwanese teachers and students and allow direct cross-strait flights to three more mainland airports, Wang Yi, head of the cabinet-level Taiwan Affairs Office said. “In order to help Taiwanese enterprises develop, mainland banks... will offer a 600 billion yuan credit ceiling over the next three to four years,” Wang said in a speech at a forum in southeast China’s Xiamen city. The Industrial and Commercial Bank of China, Bank of China, China Construction Bank and China Development Bank will be authorised to make the loans, he said. Wang was speaking at the Straits Forum an annual meeting aimed at bolstering ties between China and Taiwan, which Beijing considers a rebel province awaiting reunification. The new moves were aimed at boosting trade and tourism between the two sides, Wang said. China will also extend the validity of mainland residential permits for Taiwanese from one year to two years, he said in the speech that was

posted on his office’s website. In addition Taiwanese professors will be given equal status to apply for work in mainland universities after receiving “educational permits”, he said, while Taiwanese students graduating from Chinese universities will be allowed to seek public sector jobs in China. Trade between China and Taiwan has boomed over the past two decades, increasing by 10 percent last year to $160 billion, according to China’s trade ministry. Ties improved markedly after Taiwan President Ma Ying-jeou of the China-friendly Kuomintang party took power in 2008 on a platform of promoting trade and reconciliation with the mainland. Taiwan has been a major investor in China in recent years, providing more than $100 billion in finance, according to some estimates, as well as offering crucial technological know-how. More than 550 flights between China and Taiwan take place a week to around 30 mainland airports, as tourism has boomed since direct air links were authorised in 2009. Taiwan and China are still technically at war and Beijing has refused to renounce the use of force against the island despite the fact it has governed itself for more than six decades. AFP

Wang Yi, director of the head of the cabinet-level Taiwan Affairs Office, announced a 600 billion yuan credit line for Taiwan companies

Okada court action dents Wynn Macau stock sale prospects U.S. asset manager plans to offer 55.5 million shares in Wynn’s Asian unit Associate Editor

plan by a U.S. asset manager to sell 55.5 million shares in Wynn’s Asian unit Wynn Macau Ltd received a setback on Friday when the unit’s stock fell 5.74 percent in Hong Kong trading that day. Wynn Macau shares closed at HK$17.40 (US$2.24) meaning the planned sale by Waddell & Reed Financial Inc. of Wynn Macau stock – originally at an indicative price range of HK$17.53-HK$17.90 per share according to a term sheet seen by Dow Jones Newswires – would actually represent a premium of 0.74 percent to 2.9 percent on the currently traded price. Waddell & Reed Financial had hoped to raise up to US$258 million from the sale of Wynn Macau and Sands China

Court action by Kazuo Okada has hit a sale of shares in Steve Wynn’s company Wynn Macau

shares according to the term sheet. The Wynn Macau share price fall appeared to be in response to news out of the U.S. on Thursday that former single biggest Wynn Resorts shareholder Kazuo Okada and his company Aruze USA were seeking an injunction in the U.S. District Court in Nevada for full reinstatement of his US$2.77 billion holding. The company unilaterally cancelled it in February in exchange for a promissory note at a US$800 million (30 percent) discount after Wynn Resorts alleged he was “unsuitable”. That finding followed an investigation by external sources – including former FBI director Louis Freeh – ordered by the Wynn board, into Mr Okada’s business

dealings in the Philippines. Mr Okada strongly denies the claim of “unsuitability”. According to a U.S. regulatory filing on April 30, Waddell & Reed Financial was on that date the biggest single shareholder in Wynn Resorts Ltd with 18 percent of the common stock. Waddell & Reed Financial is also planning to sell 41 million Sands China shares at an indicative price range of HK$24.18HK$24.68 each, the term sheet added. That represents a discount of one percent to three percent on the shares’ closing price on Friday of HK$24.95. The stock was down 1.96 percent on trading that day. with Dow Jones Newswires