Macau Business Daily, June 25, 2012

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Macau Foundation tightens grant rules

P8/9 Beijing retains cap on local govt debt

Year I - Number 61 Monday June 25, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

Visitor arrivals flop in worst result since ‘09

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Data watchdog ‘must have’ independence P

rivacy and data protection in Macau are given a pass by Graham Greenleaf, a law expert from the University of South Wales in Australia in an exclusive interview with Business Daily.

He says the city’s data protection law is one of the most comprehensive in Asia and the city occupies the middle ground when it comes to enforcement.

There is a pass too for the data protection watchdog. The Macau Office for Personal Data Protection, he says, has on available evidence a “record [that] appears quite reasonable”.

A major matter of concern, however, is the bureau’s lack of independence, which he says is not guaranteed under the current arrangement. That the bureau is not yet an independent authority cannot be justified.

Mr Greenleaf reserves his most damning criticism for the government’s new video surveillance legislation. He says it is “indiscriminate in what it captures” and there are serious risks of improper use when it comes to handling the “collection of excessive personal information”.

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More on pages 4 & 5

HANG SENG INDEX

Chui ‘accepts’ actions in Sands’ Beijing bung

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Legislator Leonel Alves is told by Chief Executive Fernando Chui Sai On that his explanations regarding the alleged requests for bribes from Beijing politicians were “acceptable”.

Mr Alves has maintained he is free of any wrongdoing in relaying a message from a Beijing official who was soliciting a bribe in return for helping Sands China’s Macau business.

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June 22

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Assembly rejects any open La Scala inquiry

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A proposal by the Legislative Assembly’s pan-democrat legislators to hold a public hearing into the government’s handling of the La Scala land deal has been rejected. Friday’s vote was far from a knockout win for the government however, with seven legislators voting in favour of a hearing and another three abstaining.

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Inflation outstrips subsistence index

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CHINA COAL ENE-H

-3.44

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SANDS CHINA LTD

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Source: Bloomberg

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The government will raise the minimum subsistence index by 5 percent next month – the second rise this year. The increase to offset the impact of inflation on society’s most disadvantaged groups “will definitely help”, says the head of Caritas Macau, Paul Pun. He says what the government needs most is a long-term plan to tackle soaring food costs.

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Assembly rejects La Scala hearing Debate swirls as legislators vote down a move to launch a public hearing into the La Scala land deals Xi Chen

xi@macaubusinessdaily.com

Seven legislators voted in favour of a public hearing into the La Scala land deal, with three others abstaining

A

proposal by legislators Paul Chan Wai Chi and Ng Kuok Cheong to hold a public hearing on the handling of the La Scala land deal has been rejected by the Legislative Assembly.

Unlike earlier motions filed by members of the New Macau Association, Friday’s vote was far

from a blowout for the government and its supporters, with 16 of the 26 legislators present rejecting a proposed hearing.

Aside from the pan-democrat trio of Mr Chan, Mr Ng and Au Kam Sam, legislators Fong Chi Keong, Kwan Tsui Hang, José Pereira Coutinho and Lee Chong Cheng

business as usual

The ugly duckling Paulo A. Azevedo pazevedo@macaubusiness.com

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apital expenditure has been the ugly duckling of the Macau Special Administrative Region government since the beginning.

It is the one factor that has the longest lasting effect on the city’s development by creating a more efficient and productive economy, and the one that the government has neglected without any explanation.

No matter how many times the media or legislators – those that are less focused on their corporate tasks – ask, it seems to remain taboo.

I understand that a government, by nature, should be conservative in the way it approaches its reserves. It should cautiously underestimate revenue and overestimate spending. But what has happened, especially since the “gaming boom”, is ridiculous.

The public coffers end each year in an incredible surplus and the government will not spend even one-quarter of its annual budget.

Checking the numbers, if I am not mistaken, by the time you read this column,

the government should have reached the surplus that it had planned to have in reserve by the end of the year.

If the trend continues throughout the remainder of the year, the government will have more than 86 billion patacas in reserve by the end of this year – more than double the amount it had budgeted for.

How is that possible? Simple.

The government continues to be excessively conservative and lacks the ability to invest prudently in what the city most needs: a path to re-think the city, to plan it according to future needs.

Some economists consider the annual government budget nothing more than a “useless public exercise” that is removed from reality. There are no changes and no explanations from the Secretary for Economy and Finance Francis Tam Pak Yuen.

We know that big projects are coming our way, including the Hong Kong-Zhuhai-Macau Bridge, the Light Rapid Transit and more money has been invested in public housing.

We must do so much more because the needs keep piling up and yet the projects – and the way of thinking – remain lost in the past.

voted in favour of a public hearing.

Legislators Ung Choi Kun, Chan Meng Kam and Lam Heong Sang abstained from voting.

The proposal was aimed at questioning the Land, Public Works and Transport Bureau and its chief, Mr Lau Si Io, over the approval of an additional land grant to the developers of the La Scala housing estate last year, even as the Commission Against Corruption was investigating the role that jailed civil servant Ao Man Long may have played in the deal.

An advisor from Mr Lau’s cabinet said in the assembly last month that the office had asked relevant departments if the plots concerned were involved in a criminal case, but had not received a response.

The pan-democrats accused Mr Lau of lying when the commission later clarified it had told the bureau the La Scala deal was under investigation and the Public Prosecution Office said it had received no inquiries.

Judicial secrecy The contentious question was whether having a public hearing violated the principle of judicial secrecy, given that the deal is currently being investigated.

Last July, the anti-graft watchdog opened a probe into the March 2011 tender and obtained documents from the Macau International Airport that are still being analysed.

Legislators Tsui Wai Kwan and Vong Hin Fai rejected the proposal for a public inquiry.

“The case is still ongoing, so this is not a suitable time to have a public hearing. However, there might be a need for a public hearing after the case is closed,” legislator Melinda Chan Mei Yi said. She added that she was open to a public hearing later.

Legislator Gabriel Tong Io Cheng said it would be dangerous if a government procedure were to be

halted just because someone had reported it to the Commission Against Corruption.

The pan-democrats expressed disappointment at the outcome. It is the 10th public hearing that the assembly had rejected a motion for a public hearing.

In this legislative session, the pan-democrats have filed several motions to hold hearings on a range of controversial issues, including the circumstances surrounding the land grant to Galaxy Entertainment Group Ltd in Cotai, the demolition of shacks in Ilha Verde and the role of the Secretary for Administration and Justice, Florinda Chan, in approving the building of a cemetery propose by relatives of one of her legal advisers.

The government announced last week that Chief Executive Fernando Chui Sai On had launched efforts to take back five plots of land that were originally granted in 2006. Chinese Estates Holdings, La Scala’s developer, may still appeal the government’s decision.

Last month, Ao was convicted in his third trial for corruption and money laundering. The verdict said the former secretary received a bribe to ensure the plots would go to a subsidiary of Chinese Estates.

Also on Friday, the Legislative Assembly approved an increase in benefits for police officers from next month. The move will cost the government 40 million patacas (US$5 million).

The government will pay a further 340 million patacas in compensation to Judiciary Police criminal investigators, the Executive Council said.

All 24 legislators that attended the meeting gave an initial green light to the controversial Penal Procedural Code revision, though some lawyers have spoken against allowing the Public Prosecution the power to apply all restrictive measures, except for pre-trial detention.

June 25, 2012 business daily | 3

MACAU

InBrief

Property fund reshuffles loans Macau Property Opportunities Fund Ltd has agreed to two new loan facilities, worth US$32 million (255 million patacas), that will allow the property fund run by Sniper Capital Ltd to restructure the loans taken out to finance One Central Residences and luxury housing Green House. The company hopes to free-up funds while it negotiates land deals worth about US$500 million.

Sports-betting site blocked A Macau-based sports-betting website has been blocked by Malaysian authorities, cutting the outflow of an estimated RM16 million (US$5 million) in betting on the Euro 2012 football championships, Bernama news agency reported. A police officer said the success of operation “Ops Soga” had led to the arrest of 37 men.

Analyst backs casino stocks The head of PIMCO’s corporate bond portfolio management group, Mark Kiesel, said he saw a lot of investment opportunities in Macau’s gaming industry. At a Morningstar Investment Conference he said Macau’s casino stocks were a good bet for either equity or bond investments. “The government charges 39 percent taxes and these companies are still earning returns on capital above 20 percent,” Mr Kiesel said.

Inflation zeroes out second rise in handout The government will raise the minimum subsistence index again next month but some residents still fall through the cracks Tony Lai

tony.lai@macaubusinessdaily.com

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he government will raise the minimum subsistence index next month to help residents in financial distress – the second increase this year.

The head of a church-based charity organisation believes some residents will be left without help.

Chief Executive Fernando Chui Sai On told the media on Saturday the index – and the related subsidies and allowances – would be increased from next month to help disadvantaged groups, struggling to meet rising costs.

The index for a single resident will rise by 5 percent to 3,360 patacas (US$420), while a two-member household will receive more than 6,200 patacas. Families with eight members or above will get a further 700 patacas, up to a total of 15,800 patacas.

The index establishes the income ceiling for minimum living standards and allows residents beneath the threshold to apply for government allowances.

Caritas Macau secretary-general Paul Pun told Business Daily the changes “will definitely help residents with low income amid the upsurge in food prices”.

The consumer price index last month was about 6.8 percent higher than

the same time last year but inflation was unchanged from April. Food prices rose for the fourth consecutive month to 9.9 percent.

“Though the [index] rise is only 5 percent this time, it is the second adjustment this year, which brings the increase of the whole year to about 12 percent,” Mr Pun said.

“It is appropriate for the current inflation rate.”

The minimum subsistence index went up by about 7.5 percent in January, with single residents receiving 3,200 patacas, instead of 3,000 patacas. The Social Welfare Bureau announced last year that the index would be revised every January and July.

one strategy to help residents but the government must clamp down on inflation and stabilise prices, particularly the cost of daily necessities such as rice and cooking oil.

Mr Chui said authorities would establish measures in the near future to ease inflation. He added economic development and rising domestic demand would keep the rate of inflation remain high this year.

The government would try to establish new food supplies from the mainland and Southeast Asia, stabilise supplies of rice and battle rising rents, Mr Chui said. Rents increased by 11.3 percent between May 2010 and last month.

Missing out Mr Pun said the adjustment would mean more people could benefit from government subsidies and apply for food bank assistance.

More than 5,000 households received minimum subsistence allowances from the government last year, the Portuguese-language news agency Lusa reported.

However Mr Pun said part of the population would ineligible or unwilling to apply for allowances.

“A lot of pressure has been imposed upon their daily life by rising prices but I don’t see how the government has any plan right now to tackle the situation,” he said.

He said the subsistence index was

A lot of pressure has been imposed upon their daily life by rising prices but I don’t see how the government has any plan right now to tackle the situation Paul Pun, Caritas Macau secretary-general

Tourist numbers see biggest drop since 2009

Cantor Fitzgerald Visitor arrivals from the mainland fell to 1.3 million last month eyes Macau licence Cantor Fitzgerald LP is seeking a sports-betting licence in Macau, chief executive Howard Lutnick said. “We’re in the process of getting licenced in Macau,” he told Bloomberg Television. “When you have these big casinos as your partners, it makes it much more easy.” Macau Slot holds a monopoly on football and basketball betting. Without permission to determine odds, none of the casino concessionaires or any foreign sports-betting company has set up sports betting operations.

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ourist arrivals suffered their biggest fall of the past three years in May, with about 2.2 million visitors entering Macau – a year-on-year decrease of 6.5 percent.

However, the number of tourist arrivals for the first five months of the year reached 11.5 million, a 3.7 percent increase over the same period last year. The apparently contradictory data was boosted by Macau’s record arrivals figure for April.

Official statistics show last month’s decline came from significant falls in major markets. There was a onequarter decrease in visitors from Taiwan and an 11.8 percent drop in visitor numbers from Hong Kong to about 540,000 arrivals.

The number of visitors from the city’s biggest tourism source market, the mainland, decreased by 4.2 percent

to 1.3 million, with significantly fewer arrivals from Guangdong and Fujian provinces. Tourists arrivals under the individual visit scheme also fell by 0.9 percent to about 526,000.

Visitors also spent less time in Macau in May, with the average length of stay falling by 0.1 days to about one day. Overnight visitors stayed for an average of 1.8 days, down from 2.1 days at the same time last year.

Same-day visitors accounted for about 53 percent of all tourists.

Last month’s statistics showed increases in arrivals from Japan, a 17.6-percent increase to about 33,700 tourists; and the Americas, a 5.7-percent increase to about 27,000.

T.L.

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business daily June 25, 2012

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HOSPITALITY Regional visitors Macau’s tourism sector’s heavy reliance on visitor arrivals from the mainland may be intensifying, the data for last month suggests. The number of visitors last month was 2.15 million, a decrease of 6.5 percent compared to same time last year.

Arrivals from the major markets have, in general, decreased in comparison to the same time last year but the decrease was less pronounced in the number of arrivals from the mainland. The share of mainland visitors rose by more than three percentage points to more than 60 percent.

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Data privacy verdict: could do better Legislation about data protection is influenced mostly

by European principles. But the authority that enforces data protection, the Office for Personal Data Protection, created in 2007, is still part of the government, contrary to what is supposed.

Graham Greenleaf, an Australian specialist in Asian data protection and privacy laws, says this is one of the biggest weaknesses of the system, even though enforcement up to now has been “quite reasonable”.

In an exclusive interview with Business Daily, Mr Greenleaf also advises on the risks involved in the video surveillance the government wants to set up.

Luciana Leitão

leitao.luciana@macaubusiness.com

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Visitors from Hong Kong and Taiwan, the second and third most important source markets, decreased in absolute and relative terms. In the case of Hong Kong, they went down by almost 3 percentage points to about 25 percent; in the case of Taiwan, they decreased by almost one percentage point to just 3.6 percent. Visitors from the rest of the world stayed at almost the same level.

With so much talk about the diversification of visitors, it is especially important to look to Macau’s Asian neighbours. They are most likely to provide the biggest number of arrivals. Any interpretation of the trends in this analysis must be cautious. The figures are, in general, small and therefore susceptible to significant relative changes that may not mean much.

Even South Korea, the closest to Taiwan terms of visitors, accounts for just some 30,000 visitors in the period. Most other source markets showed a decidedly negative variation, led by Singapore and New Zealand, with decreases of 24.7 percent and 13.6 percent, respectively. Japan is the biggest of the improving markets, with an increase of 17.6 percent, followed by the Philippines with 13.2 percent. But there is nothing in here that can compensate for declines in arrivals the major source markets.

J.I.D.

How does EU influence manifest itself in the Macau Personal Data Protection Act? Of all the data protection acts across Asia, the Macau legislation is the most directly and strongly influenced one by the European Union data protection directive.

It’s very closely based on the Portuguese legislation.

That is quite apparent when you read some of the reports of complaints by the Office for Personal Data Protection. Their reasoning is very much on terms with the sort of terminology that would be used in Europe, about proportionality and legitimate processing, and concepts like that. It’s a very European style of legislation, and that makes it interesting.

Are such principles enforced?

You have to put a question like that in perspective with other data protection authorities in the AsiaPacific region. There are not many of them that can be said to have actively enforced every single principle in their legislation or have had cases come to them that allowed them to do that.

The record of the Macau Office for Personal Data Protection – at least in publishing data of the complaints –is, sort of, fairly consistent with what you’d expect to come out of the act, and there are a reasonable number of reported cases.

No data protection authority that I can think of is universally regarded as strongly enforcing its legislation, but the Macau Office for Personal Data Protection’s record appears to be quite reasonable, in comparison with many of the others, perhaps with the exception of New Zealand, which has the strongest enforcement record in the Asia-Pacific region or, in some cases, South Korea.

The act certainly gives it a wide range of enforcement measures, unlike the Hong Kong Office of the Privacy Commissioner for Personal Data, which has very few powers.

The Macau Office benefits from

The other significant one was the finding against the Public Security Police. It was really quite strong to find that they were collecting information in a way that didn’t have a legitimate justification, because they would inevitably collect information not relevant to traffic infringements. They have not been reluctant to take on some parts of the Macau government.

I haven’t seen any report of complaints on major private sector issues. A lot of them seem to be in relation to quite small businesses in Macau and relatively small dayto-day infringements to privacy: wrongly sending customers’ bills to another customer or disclosing information about debtors in ways that should have not been disclosed: good things to be protected, but not really great big issues.

The bureau’s head, Chan Hoi Fan, says there has been an increase in the number of complaints. What does this mean?

I don’t know just how much the increase has been, because there haven’t been enough annual reports yet to really map those figures across. I think they aren’t reporting quite as much detail as is necessary to really figure that out.

On the other hand, what they do report is as good as most other offices in the Asia-Pacific region.

Based on the available evidence on reported cases, [Macau is] probably doing better than Australia, not as good as New Zealand, better than the Japanese and not as good as the Koreans

having a wide range of powers, probably like the Portuguese authority has. Some of the complaints that it has published indicate it is willing to use those powers. It did find Google in breach of its legislation with Street View. It gave it a very small fine that would hardly even count as a mosquito bite for Google. Nevertheless, the finding was that Google was not allowed to do what it was doing in the streets of Macau, and that’s the important part.

How would you rank Macau’s privacy protection situation within the Asia-Pacific region?

Comfortably in the middle. Based on the available evidence on reported cases, [Macau is] probably doing better than Australia, not as good as New Zealand, better than the Japanese and not as good as the Koreans.

I find it difficult to make comparisons with Hong Kong, because the Hong Kong Office of the Privacy Commissioner for Personal Data has the great disadvantage of not having reasonable powers to enforce the act. It does quite a big job for someone who doesn’t really have any powers, so it’s a bit difficult to compare. The Macau legislation is in many ways better than Hong Kong’s.

The Office for Personal Data Protection was supposed to be an independent authority, but it still isn’t. Does this affect its powers?

That is one of the main criticisms [that] should be made, not to the office, but to the Macau government.

It has been five years now and I have not heard any plausible explanation of why the legislation to create an independent office has not been finalised. I understand it’s common practice in Macau for an agency to start its functions as a project – as they call it – and for the implementing legislation for its

June 25, 2012 business daily | 5

MACAU

administrative body to come later, but five years is too long. And while I haven’t seen any evidence that the Macau Office for Personal Data Protection does not act independently, it’s nevertheless part of the international standards that are generally accepted for proper data protection legislation, that there should be an independent data protection authority.

The Hong Kong Office of the Privacy Commissioner for Personal Data does have those legislative guarantees of independence, and it certainly would be an improvement to the Macau office if it did have, particularly when there are contentious legislative issues concerning state surveillance such as the current

An E-legal eagle Graham Greenleaf is a professor of law and information systems at the University of New South Wales in Sydney. He specialises in the relationship between information technology and law. His current research focuses on Asian data protection and privacy laws, public rights in copyright, and the globalisation of free internet access to legal information.

A co-founder and codirector of the Australasian Legal Information Institute, he received the 2007 Dieter Meurer Prize for Legal Informatics at the University of Saarbrucken.

debates over the CCTV legislation in Macau. That is the sort of situation in which you want to know that there is an independent data protection authority capable of making independent statements or statements independent from the government. There is no formal guarantee of that in Macau at present. It would be a major improvement.

They do have the necessary powers to enforce their authority. The act gives them that, and they are capable of enforcing all the powers created by the act. Those powers are quite strong. Of course, that does not have any effect when what you’re talking about is proposals for new legislation to change the situation. Their powers are not relevant there. They can’t use those powers to stop the legislature from doing something.

It’s their independence that’s important in that situation, coupled with an ability to speak independently as to what their views are on the implications to legislation for privacy. Legislation that gave the Macau office strong independence would include an ability to state its opinion about the effect of proposed legislation on privacy.

You’ve characterised Macau’s Personal Data Protection Act has having one of the most comprehensive enforcement pyramids of the Asia-Pacific region.

What do you mean?

Macau has a very wide range of different enforcement mechanisms it can use, depending on the seriousness of the complaint it is dealing with, all the way up to criminal prosecution, and less significant than that, it’s the administrative fine. Macau can also award compensation to individuals who have been damaged. The Macau Office for Personal Data has powers that many other data protection authorities don’t have and, very often, data protection authorities only have one or two of those powers and not the full set.

That’s why I was impressed with the Macau office, particularly in contrast with Hong Kong, where the commissioner is handicapped by not having a wide range of sanctions. But, of course, having powers is not the same as using them

well, and so far there’s been enough evidence of the Macau office using really serious sanctions in really serious situations, but whether they will live up to the promise of their legislation, that remains to be seen.

One of the big issues at the moment, related to privacy issues in Macau, is the CCTV legislation that has recently been approved. What are the main problems a video surveillance scheme may pose?

One of the problems, as the Office for Data Protection pointed out, is that when it looked at those mobile surveillance cameras that the police

of no further use for law enforcement or whatever other justification?

Video surveillance involves a very high level of privacy risks because of the collection of excessive personal information.

You have to be sure, when it is being carried out, of all the other privacy protectors: like access to the information by the person concerned, that [there are] really strong rules against disclosure to anybody else, rapid rules for destruction of information and that there are security provisions in place.

If all of those things are not very

It has been five years now and I have not heard any plausible explanation of why the legislation to create an independent office has not been finalised was proposing to use, it’s very easy for video surveillance to collect all sorts of personal information that has nothing to do with the justification for which the cameras are supposedly being introduced. Cameras don’t say to themselves: ‘Oh, that’s not a traffic offence I’m looking at; therefore, I won’t take any photos.’

They will still take the photos, no matter what.

All sorts of personal and intimate behaviour can be captured that has absolutely no justification to be collected, except for the fact that video surveillance is indiscriminate in what it captures. That’s the start of the bubble. The problem is: All sorts of things that shouldn’t have been collected in the first place are being collected, or all sorts of things beyond any further legitimate use are being collected.

How do you know that they are being stored securely and disposed of quickly and effectively, when it’s realised that what is being collected is

clearly in place and being policed and enforced, the information shouldn’t be collected in the first place. There are risks.

What kind of mechanisms should be put in place to ensure these are not used for the wrong purposes?

You can have an independent privacy impact assessment, independent of the people who are promoting the scheme beforehand, to satisfy people that what is being proposed is first justified in terms of the risks the society is trying to prevent.

Secondly, all privacy protection measures that are justified, given the risks involved, include penalties and enforcement measures and independent enforcement of those rules that make it quite clear that it is not worth the risk by anyone else to break the rules. That’s difficult to do, but that’s really what we have to try and do.

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business daily June 25, 2012

macau

Alves’ role in Sands case ‘acceptable’

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Food for thought The city does not produce, barring a few exceptions, any of the food it consumes.

Almost all food is imported. The mainland is Macau’s main supplier, especially of fresh produce. In the top categories of trade statistics for food, it appears among the top three importers. In several categories – live animals, meat, fish and sugar, for example – it is at the top spot. We are using, as a sample for analysis, the cumulative figures for the first four months of the current year. What do they show?

Chief Executive Chui Sai On says he accepts the legislator’s explanations over newspaper’s bribery report

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The mainland represents about 40 percent of imports of meat, dairy products and eggs.

The share jumps to 70 percent when we talk of vegetables and fruit. In most cases, the market share is at least double that of the next closest supplier. What happens in mainland markets is bound to have an impact on Macau. The average price of imports, simply calculated by dividing their total value by their physical amount measured in tonnes, can give us an indication of price evolution of those imports.

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Compared with the consumer price indices for the same categories of goods, it appears that the relationship between import prices and internal prices is more complex than the usual explanations for domestic inflation would lead you to guess. Compared with the same period last year, domestic prices are rising noticeably faster than the prices of imports. And in one case — dairy and eggs — a 43 percent drop in the cost of imports is matched by an increase in local prices of about 9 percent.

J.I.D.

Legislator Leonel Alves claims his professional and political career are ‘completely clean’

Xi Chen

xi@macaubusinessdaily.com

The actions of legislator Leonel Alves in allegedly fielding requests for bribes request from Beijing have been found “acceptable” by Chief Executive Fernando Chui Sai On. “As the chief executive and as the person in charge of the Executive Council, I accept his explanation,” public broadcaster TDM quoted Mr Chui as saying on Saturday.

“From my point of view, I find it acceptable and fully understand it.” He did not elaborate.

Mr Alves said on Friday that he had reported the matter to the chief executive and nothing had changed with regard to his position as legislator.

He spoke to the media after being accused by fellow legislator José Pereira Coutinho of being involved in an alleged cash-forfavours deal. Mr Coutinho said Mr Alves, in his role as Sands China Ltd legal adviser, had handled requests for money from a highranking Beijing official.

Mr Coutinho asked the government and the Commission Against

Corruption to investigate the matter.

Mr Alves claimed his professional and political career were “completely clean” and raised questions over the motivation behind the accusations raised

by Mr Coutinho and in a threeweek-old report in the Wall Street Journal.

The newspaper quoted a 2009 email which indicated Mr Alves was approached by “someone highranking in Beijing” to pay US$300 million (2.4 billion patacas) to help settle a lawsuit with Asian American Entertainment Corp Ltd and gain approval to sell units at the Four Seasons apartment complex in Cotai.

Taiwanese businessman Marshall Mao Shi Heng controls Asian American. Asian American is a former business partner that filed a lawsuit in January that accused Sands of improperly terminating a 2001 agreement to make a joint bid for a casino licence.

Las Vegas Sands is said to be still looking for a way to sell the

Four Seasons complex, valued at US$1.4 billion, as residential apartments. The move requires government approval because the land was designated for casinos and hotels.

Mr Alves said it would be difficult to sue the Wall Street Journal but would think about it. He told Business Daily a fortnight ago that the claims were “complete nonsense”.

“The report is not accurate and taken out of context,” he said.

The parent of Sand China, Las Vegas Sands Corp, is currently under investigation by the United States Securities and Exchange Commission, after the former head of Sands China, Steve Jacobs, alleged he was told to spy on government officials in Macau.

The company is being probed under the Foreign Corrupt Practices Act, which prohibits United States companies and their intermediaries from making improper payments to foreign officials to win or retain business.

Weather Beijing 28/20o C Changchun 31/20o C

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MACAU Photo by Kakazi Chan

Wynn suit against Okada to state court

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Tighter audit controls for foundation grants Criticism by Audit Commission forces changes to Macau Foundation’s supervision of hand-outs Vítor Quintã

vitorquinta@macaubusinessdaily.com

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he Macau Foundation has pledged to introduce a new, more stringent regime to better oversee the use of its subsidies and warned that groups failing to use all of a grant would have to return the remaining funds.

In a report released by the Audit Commission on Thursday, the foundation was found to have inadequate controls over its grants

to associations – a breach of its internal rules.

The foundation responded to the criticism by saying it had hired an “internationally renowned” audit firm. The consultants had drafted audit criteria for a new supervision regime but there was no timeline for the introduction of the changes.

The foundation said it would also insist that all unused grants to individuals or entities made since January last year were repaid.

The commission’s report also mentions five cases in which

associations failed to declare money received from other institutions. One association said it had asked for 30,000 patacas (US$3,750) but eventually received 6.8 million patacas.

The foundation said it had monitored similar cases and “when granting a subsidy to the same applicant the following year … it will pay special attention [to whether] the subsidy was used for the original purposes and if there were instances of extravagance or waste”.

he Nevada state court will hear Wynn Resorts Ltd’s breach of fiduciary duty lawsuit against Japanese billionaire Kazuo Okada, in the latest move in the stand-off between Mr Okada and Wynn chairman Steve Wynn.

The company persuaded a United States judge on Thursday that it is the Nevada court that should hear the case against the company’s former vice-chairman and the one-time biggest shareholder in Wynn Resorts. The company is trying to remove Mr Okada from the board of directors.

In March, Mr Okada had the case moved to federal court, arguing that the underlying issue was whether he had violated United States law by allegedly making improper payments to foreign officials.

“The mere presence of a federal question does not require federal jurisdiction,” judge Larry Hicks said in his ruling.

Mr Okada’s spokesman, Steve Getzug, said the ruling addressed “only the question of where the case should be heard” and not the merits of the case.

Wynn Resorts spokesman Mike Weaver said the company was pleased the judge agreed that the state court was the appropriate forum to hear the case.

8 |

business daily June 25, 2012

Greater China

Beijing to keep limit on local govt debt Bad debts rose for a second straight quarter

C

hina’s banking regulator proposed keeping a cap on local government loans to curtail defaults while encouraging funding for railways, roads and affordable homes, a person with direct knowledge of the matter said.

The China Banking Regulatory Commission suggested limiting loans to local government financing vehicles to levels reached at the end

and banks’ earnings growth slowed in the three months to March 31, as steps to curb inflation pushed up funding costs and drove down property prices.

The CBRC’s proposal, which includes about 10 points and was submitted to the State Council at the end of May, encourages banks to boost lending for “key” construction projects, toll roads, agriculture,

property prices damped domestic demand. That led the central bank to cut interest rates on June 7 for the first time since 2008, and the government delayed more stringent bank capital rules for one year to help bolster credit growth.

Premier Wen on May 20 called for “putting stabilising growth in a more important position.”

The change of rhetoric spurred

on June 11.

The local governments, prohibited from directly taking bank loans, had set up more than 6,000 financing companies to raise funds for projects such as stadiums, roads and bridges, the National Audit Office said in a report last year.

Their bank borrowings totalled 9 trillion yuan as of December 31, with about one-third coming due in

of 2011, according to a person with knowledge of the matter who asked not to be named because the proposal is confidential. The watchdog made the recommendation in a report sent to the cabinet after Premier Wen Jiabao’s call last month for the government to focus on growth, the person said.

China is introducing stimulus measures to arrest a slowdown in the world’s second-biggest economy while enforcing risk controls. Bad debts rose for a second straight quarter for the first time since 2005

export financing, consumer credit and small businesses, the person said. The regulator didn’t specify targets, the person said.

A Beijing-based press officer for the CBRC declined to comment.

speculation about a government stimulus similar to the 4 trillionyuan (US$628 billion) programme unleashed during the 2008 credit crunch, which prompted a surge in local government borrowing and spurred concern that defaults would rise.

China’s new lending in May exceeded analysts’ estimates, aiding Mr Wen’s efforts to reverse a slowdown in the country’s economic growth. Local-currency loans were 793.2 billion yuan, the People’s Bank of China said on its website

the next three years, a person with knowledge of the matter said in March, citing CBRC data.

China’s top economic planning agency ordered local governments to examine the ability of companies to repay bonds maturing in 2012 and 2013, two people with direct knowledge of the matter had said earlier this week.

Faltering economy China’s economy expanded 8.1 percent in the first quarter, the slowest pace in almost three years, as Europe’s debt crisis crimped exports and policy makers’ measures to cool consumer and

Cash flows While CBRC’s new rules would cap total lending levels, banks would

Evergrande denies short-seller’s report‎ Property developer mulls legal defence against fraud accusations‎

E

Evergrande lost about US$1 billion in market value on news of the Citron Research accusations

vergrande Real Estate, China’s No.2 property developer by sales, said on Friday it may take legal action against a short seller that accused it of fraud, bribery and financial irregularity, and may buy back some of its shares.

Evergrande, which has China’s largest land bank at 137 million square metres, said allegations

by Citron Research that it bribed government officials to buy land were “malicious slander”. In a statement, it said it “has never been and will not be engaging in any bribery act in order to obtain benefits.”

About US$1 billion was wiped off Evergrande’s market value on Thursday on news of the Citron Research accusations – which Evergrande dismissed as “totally

untrue”. After falling 11.4 percent on Thursday, Evergrande shares slid as much as 5.5 percent early on Friday. By mid-afternoon, the stock was down 1 percent, slightly outperforming the Hang Seng Index.

Analysts have said the bribery allegations may be hard to shake off as Evergrande purchases much of its land through private deals rather than at auction.

Debt concerns The company faces an overhang on its shares caused by doubts over its high levels of debt. It may buy back shares, chief executive Xia Haijun told investors on Friday on a conference call organised by Credit Suisse, according to a participant on the call. Mr Xia did not give details of

June 25, 2012 business daily | 9

GREATER CHINA be allowed to refinance loans to the local government financing vehicles for completed projects that aren’t generating income if estimated future cash flows can cover payments, the person said.

The amount for such refinancing may not exceed the value of the original loan, the person said.

“This is a prudent risk-management measure,” Stanley Li, a Hong Kong-based analyst at Mirae Asset Securities (HK) Ltd, said yesterday. “LGFV loans can still be risky. People still remember the side effects of the previous stimulus package. CBRC will continue to request banks to be disciplined in lending unless the economy turns really bad.”

Banks may also be allowed to revise repayment arrangements for the financing vehicles if the loans mature before the projects are completed, the person said.

Last year, the CBRC hadn’t yet formulated refinancing rules and was urging banks to not roll over any such loans, the person said.

Banks can exceed a debtconcentration rule in lending to railway projects this year if their risk controls permit, the person said, without elaborating.

The most recent proposal also aims to encourage lenders to prioritise mortgages for buyers of affordable housing and smaller, lower-priced homes, the person said.

Bloomberg

KEY POINTS Proposal encourages banks to boost lending for ‘key’ construction projects Aims to prioritise mortgages for buyers of affordable housing and smaller, lowerpriced homes Local governments had set up more than 6,000 financing companies

when the company might buy shares, or how much, the source added.

Evergrande’s debt is 1.5 times its equity, according to Thomson Reuters Starmine data – double the industry average – and three times that of China Overseas Land, the biggest mainland developer by market value.

“The balance sheet is shot to bits, it seems to be extremely recklessly run,” said Gillem Tulloch, whose company Forensic Asia provides independent research to institutional investors. Mr Tulloch said he was concerned about Evergrande’s borrowing and low levels of cash, issues he noted were industry-wide.

Chinese developers raise high levels of cash by selling properties while they are being built, but many divert the cash into land banking rather than keeping it on their balance sheet.

“It’s symptomatic of the property sector in China,” Mr Tulloch said.

“They shouldn’t be the most leveraged property companies in Asia. They should be the least leveraged.”

In its statement, Evergrande said it had 28.2 billion yuan (US$4.43 billion) in cash and cash equivalents at the end of last year. It has denied using accounting trickery to cover up its alleged insolvency, and noted auditor PricewaterhouseCoopers

Hong Kong maid to appeal to top court To decide if immigration rules are consistent with the Basic Law

Hong Kong had about 300,000 domestic helpers in last year

A

Philippine woman whose application for permanent residence in Hong Kong was rejected on the basis that she is a foreign domestic helper will appeal to the city’s highest court.

Judges Andrew Cheung, Frank Stock and Robert Tang of Hong Kong’s Court of Appeal gave Evangeline Banao Vallejos, a maid who has lived and worked in the city since 1986, permission to appeal a March ruling.

Hong Kong’s Court of Final Appeal will decide whether an immigration rule excluding foreign domestic helpers from becoming eligible for permanent residence is constitutional under the city’s Basic Law. The government argues the imported workers live in the special administrative region under restrictions that make them a separate group. Ms Vallejos’ lawyers say the maids aren’t different from other kinds of workers and should have the same rights.

Judge Cheung said yesterday that the question to be decided is if the immigration law is inconsistent with the Basic Law. Hong Kong’s government, faced with calls to limit the strain signed off on its accounts. It has also said it doesn’t plan to revise its forecast for annual sales of 80 billion yuan.

In defence Evergrande also defended its highprofile chairman Hui Ka Yan, who owns 63 percent of the company.

Citron claimed Mr Hui had poured at least 16.2 billion yuan (US$2.6 billion) into pet projects that are “comically off-strategy and frighteningly expensive for Evergrande’s shareholders.”

Mr Hui sponsors Guangzhou Evergrande, a high-spending Chinese Super League soccer team, which last month hired former Italy national coach Marcello Lippi as its manager. He also sponsors a volleyball team. Evergrande said the claims were “without basis”, noting the firm’s net investment in soccer was 80 million yuan, with less than 70 million yuan spent on volleyball and “cultural industries”.

Evergrande said it was putting together a defence team that may take legal action against Citron Research, which is run by Andrew Left from his Beverley Hills, California home.

Reuters

on public resources, fought a September ruling that would have allowed a potential 117,000 people, or one-third of the city’s foreign maids according to government figures cited in court, to apply to live in former British colony without a visa, take up any jobs, and vote.

Under the immigration department’s domestic helper importation programme, the foreign worker must live with their employer and be paid a minimum wage of HK$3,740 (US$482) a month.

“Their stays in Hong Kong are

highly regulated so as to ensure that they are here to fulfil the special, limited purpose for which they have been allowed to come here in the first place, and no more,” Justice Cheung wrote in his March judgment that overturned the September ruling by a lower court.

In 2004, maids contributed HK$13.8 billion to the economy, or one percent of Hong Kong’s output, according to a report by the Asian Migrant Centre, a nongovernmental organisation.

Bloomberg

10 |

business daily June 25, 2012

asia

India readies measures to curb rupee’s slide May implement deposit programme to lure foreign currency Rajhkumar K. Shaaw

I

ndia plans to unveil steps to support the rupee after its slump to a record low against the dollar threatened to intensify price pressures and increase the cost for companies of repaying foreign debt.

The government and central bank will unveil the measures today, Finance Minister Pranab Mukherjee told reporters in Kolkata over the weekend. The ruling Congress party’s nominee for president, Mr Mukherjee told the Press Trust of India he will resign from his current post tomorrow. A group of federal and state legislators elects the next president on July 19.

Asia’s worst-performing currency the past year, down 21 percent, the rupee has contributed to an inflation rate that the central bank deemed last week too high to allow an interest-rate cut.

Chakravarthy Rangarajan, the prime minister’s top economic adviser and a potential finance minister candidate, said last month one option was a deposit programme to lure foreign currency from overseas Indian residents.

“The situation is quite worrisome,” Dharmakirti Joshi, Mumbai-based chief economist at Crisil Ltd, the local unit of Standard & Poor’s, said in an interview. “You have to increase the supply of dollars. A lot of foreigncurrency convertible bonds and other payments are due and it does create stress on those who have borrowed abroad.”

Indian companies face a record US$5.3 billion of maturing foreign-currency debt this year, data compiled by Bloomberg show. At the sovereign level, Fitch Ratings cut its outlook for India’s grade to negative

on June 18, joining S&P in signalling the country is at risk of losing its investmentgrade status.

Rupee’s slide The rupee reached an all-time low on Friday of 57.3275 per dollar. While most emerging market currencies have retreated in recent months as Europe’s crisis prompted investors to flee riskier assets, the rupee has underperformed as India’s government failed to rein in its fiscal

US$5.3 billion Indian companies’ maturing foreigncurrency debt this year

deficit and as its economic reform agenda stalled. The currency slumped 2.9 percent last week, its biggest loss since September.

Mr Joshi said that besides the deposit programme, relaxing limits on foreign investment could be considered to halt the rupee’s slide. A variety of dollardenominated products, including bonds, could be looked at, HSBC Holdings Plc analysts said in a research note last Friday.

“This would only slow rupee weakness and not change the overall direction of a weaker rupee,” HSBC Asian currency research analysts led by Paul Mackel in Hong Kong wrote in the note. “For the rupee to strengthen more meaningfully and sustainably against the dollar, the government needs to do more than short-term patch work. It needs to undergo the necessary struc-

tural reforms.”

Prime Minister Manmohan Singh’s administration has seen its agenda stymied by opposition from its own coalition allies, and last year suspended a plan to allow Wal-Mart Stores Inc. and other foreign companies to buy majority stakes in Indian multi-brand retailers. An anti-corruption bill and proposals to allow foreign direct investment in pensions have also been shelved.

The approaching personnel shift in India’s leadership offers an opportunity to reinvigorate the government’s agenda. A successor for Mr Mukherjee has yet to be named.

IKEA coming Even with the foreigninvestment measure stalled, India did get a commitment from IKEA, the Swedish retailer known for its self-

Stocks rise as Greece fears ease But more than US$5 trillion has been erased from global equities since March

M

ost Asian stocks rose last week after a victory by probailout parties in Greece eased prospects the country will leave the euro, overshadowing concern that the global economy is slowing after reports signalled slower manufacturing in the U.S. and China.

The MSCI Asia Pacific Index ended the week little changed at 114.14, as more than two stocks rose for every one that fell. More than US$5 trillion has been erased from global equities since March amid slowing economic growth in the U.S. and China, and a spreading European debt crisis that pushed Spain’s borrowing costs to a record.

The Greek election result brought a “short-term sigh of relief,” said Belinda Allen, senior investment analyst at Colonial First State Global Asset Management in Sydney. “It removes the tail risk event that we were concerned about in terms of Greece leaving the European Union immediately. We all know there’s still a long and hard road ahead for Greece and the problems of Europe aren’t solved by this election.”

Japan’s Nikkei 225 Stock Average gained 2.7 percent last week as the yen weakened against the dollar, boosting the value of earnings for exporters when repatriated. The yen fell 2.2 percent, the biggest weekly decline since February for Japan’s currency. The Topix Index climbed 3.4 percent.

Canon, Honda Sony advanced 13 percent to 1,163 yen on reports it is close to sealing

Sony, Panasonic to announce tie-up

Sony Corp. advanced 13 percent to 1,163 yen last week

alliances with Panasonic Corp. and Olympus Corp. amid speculation further gains by the yen will be limited (see box).

Canon Inc., Japan’s No.1 camera maker, added 1.7 percent to 3,250 yen. Honda Motor Co., the country’s second-largest carmaker by market value, rose 6 percent to 2,686 yen.

Australia’s S&P/ASX 200 Index lost 0.2 percent last week and South Korea’s Kospi slid 0.6 percent.

Greek’s Prime Minister Antonis Samaras held his first Cabinet meeting June 20 after his New Democracy party won Greece’s general election on June 17 on pledges to renegotiate parts of a 130 billion-euro (US$163 billion) second bailout from the European Union and International Monetary Fund while keeping Greece in the euro.

Hong Kong’s Hang Seng Index slid 1.2 percent last week as a survey by

HSBC Holdings Plc and Markit Economics showed China’s manufacturing may shrink for an eighth month.

‘Getting worse’ In the U.S., the Fed cut its estimates for growth and said it sees little progress on unemployment during the rest of the year.

“Things are still getting worse,” said Peter Elston, Singapore-based head of Asia-Pacific strategy at Aberdeen Asset Management Plc. “When you have an essentially weak private sector, you’re relying on the government to step in and support things. You’re seeing a gradual weakening of the ability of governments to step in.”

The MSCI Asia-Pacific slumped more than 11 percent from its peak on February 29 through June 22, dragging shares on the index to 1.23 times book value. That compares

Sony Corp. and Panasonic Corp., Japan’s biggest makers of TVs, may announce an agreement this week to cooperate in making sets that use new organic light-emitting diode displays, company officials said last Friday. The companies may issue a statement before their shareholder meetings on Wednesday, the officials said, asking not to be identified because the plan is private.

The partnership would be the first between the main TV operations at the two companies, which are losing money as the strengthened yen erodes overseas earnings and as competition from South Korea’s Samsung Electronics Co. and LG Electronics Inc. intensifies. The Nikkei newspaper also on Friday reported Sony may invest about 50 billion yen (US$624 million) to get a stake of about 10 percent in Olympus Corp.

The companies aim to reach an agreement by the end of next month, the Nikkei added. Panasonic, which had also made a tie-up proposal to Olympus, withdrew the offer, the report said.

with 2.1 times for the S&P 500 and 1.35 times for the Stoxx 600, according to data compiled by Bloomberg.

A number below one means companies can be bought for less than value of their assets.

Bloomberg

June 25, 2012 business daily | 11

asia

assembled furniture, last week. The company will raise existing sourcing for their global operation from India significantly, according to an e-mailed statement from India’s commerce ministry. It plans to set up 25 stores and may

invest 600 million euros (US$754 million), the ministry said.

The rupee’s slump has contributed to inflation because India buys 80 percent of its oil from overseas and pays for supplies in dollars. Ev-

ery one-rupee drop in the domestic currency against the dollar boosts annual revenue losses for the three governmentowned refiners by 80 billion rupees (US$1.4 billion), the oil ministry said in November.

The Reserve Bank of India on November 17 increased the caps on overseas investors’ holdings of India’s local-currency government debt and corporate bonds

by US$5 billion each to boost inflows and arrest the currency’s decline.

The central bank has asked oil refiners to obtain 50 percent of their dollar requirements from a single state-owned bank, Oil Secretary G.C. Chaturvedi told reporters in New Delhi last Friday.

Bloomberg

Seven considers rival bid Vietnam’s inflation eases for Consolidated Media to lowest since 2009 Could set up battle with News Corp’s Australian arm

Consumer prices were up 6.9 percent year-on-year

A

V

ustralian media conglomerate Seven Group may bid to gain control of Consolidated Media Holdings, the nation’s competition regulator said, taking on Rupert Murdoch’s News Corp in a battle for coveted pay-TV assets.

News Corp’s Australian unit News Ltd had on Wednesday made a US$2 billion takeover offer for CMH, which owns 25 percent of pay-TV business Foxtel and 50 percent of content provider Fox Sports.

Seven Group Holdings, controlled by billionaire Kerry Stokes, holds a 24 percent stake in CMH, while fellow billionaire James Packer owns 50.1 percent.

Mr Packer is looking to opt out of media in favour of his casino interests and has said he would accept News Ltd’s bid in the absence of a higher offer. Mr Packer has built stakes in casinos in Macau, Australia, London and Las Vegas.

The Australian Competition and Consumer Commission said in a statement on Friday that Seven had said it was actively considering acquiring further shares in CMH, asking the commission to review a proposal to buy all CMH shares it does not currently own.

Seven was not immediately available for comment.

Seven said on Wednesday it was considering its options after News Ltd’s A$3.50 a share bid, pitched at a 14 percent premium to CMH’s

Kerry Stokes’ Seven Group owns 24 percent of Consolidated Media

last traded price but below its peak of A$4.75 in late 2007.

Richard Colquhoun, a portfolio manager at Antares Capital, questioned whether Seven would have the financial firepower to take on News Corp. “Kerry versus News Corp? I’d call that mischief,” he said.

Antares has shares in News Corp.

For News Corp, which has also announced sweeping cost and job cuts in Australia, a successful bid would double its stake in Australia’s dominant pay-TV business Foxtel to 50 percent and give it 100 percent of Fox Sports.

Reuters

ietnam’s inflation slowed for a 10th month to the lowest level in more than two years, leaving room for further interest-rate cuts to support growth.

Consumer prices climbed 6.9 percent in June from a year earlier, the General Statistics Office said in Hanoi yesterday, the lowest since December 2009 and down from 8.34 percent in May. The pace of price gains has eased as slowing economic growth crimped consumption and concerns over the health of Vietnam’s banking industry led to a contraction in outstanding loans through April.

Gross domestic product expanded the least since 2009 last quarter, and the central bank has reduced borrowing costs for four straight months to shield against a faltering global recovery.

“Decelerated global commodity prices, especially food, and lowerthan-expected domestic demand growth” are helping lower the inflation rate, Hai Pham, a Singapore-based analyst at Australia & New Zealand Banking Group Ltd, wrote in a note this month. ANZ said it has revised its year-end inflation forecast for Vietnam to almost 7 percent from 9 percent to 10 percent previously.

The finance ministry last Thursday said it had cut gasoline, diesel and kerosene prices after global costs

fell. The government is targeting inflation of 7 percent to 8 percent this year, and a 6 percent expansion in GDP, deputy Prime Minister Nguyen Xuan Phuc said earlier this month. On Thursday, Vu Viet Ngoan, chairman of the National Financial Supervisory Commission, said annual inflation may slow to 5 percent to 6 percent by year-end.

Prices in June fell 0.26 percent from the previous month, the Statistics Office said. Food costs rose 6.3 percent from a year earlier and slipped 0.23 percent from the previous month.

Vietnam should prioritise containing inflation even if it means accepting “somewhat slower growth” in the short term, the International Monetary Fund said this month.

Reuters

Food costs rose 6.3 percent from a year earlier

12 |

business daily June 25, 2012

MARKETS Hang SENG INDEX NAME AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H

PRICE

Day %

VOLUME

25.85

-0.3853565

34509156

3.28

-1.501502

8239798

NAME

PRICE

Day %

VOLUME

9.71

-3.093812

33052627

CITIC PACIFIC

11.64

-1.689189

2651678

CLP HLDGS LTD

64.45

-0.3093581

1078269

CNOOC LTD

14.38

-4.00534

84605102

COSCO PAC LTD

9.58

-0.9307135

2328963

10.1

-2.509653

25

CHINA UNICOM HON

PRICE

Day %

56

-1.060071

1770565

SANDS CHINA LTD

24.65

-4.457364

23042517

SINO LAND CO

11.04

-0.8976661

3785811

89.2

-0.501952

3170082

SWIRE PACIFIC-A

87.75

-1.293588

1477444

6598956

TENCENT HOLDINGS

222.8

-2.622378

3467336

-0.990099

5978255

TINGYI HLDG CO

19.2

0

3660492

WANT WANT CHINA

9.36

-1.577287

6982190

41.55

-1.540284

4675763

2.9

-0.3436426

185328247

BANK OF COMMUN-H

5.05

-1.174168

14397679

BANK EAST ASIA

25.9

-1.333333

1624809

BELLE INTERNATIO

12.08

-0.330033

17768376

ESPRIT HLDGS

BOC HONG KONG HO

23.35

0

10760460

HANG LUNG PROPER

CATHAY PAC AIR

12.46

-0.1602564

2827990

HANG SENG BK

103

-0.5791506

499111

CHEUNG KONG

91.35

-1.243243

2227989

HENDERSON LAND D

40.6

-1.694915

1479785

6.46

-3.437967

27697836

74

-2.823375

2430264

HONG KG CHINA GS

16.36

-0.2439024

5072641

HONG KONG EXCHNG

108.7

0

2159827

HSBC HLDGS PLC

67.45

-1.172161

12998054

CHINA COAL ENE-H CHINA CONST BA-H

5.22

-1.323251

127253976

CHINA LIFE INS-H

18.96

-2.268041

26122982

CHINA MERCHANT

22.5

0.2227171

1129548

CHINA MOBILE

HENGAN INTL

81.2

-0.9756098

10257758

HUTCHISON WHAMPO

65.4

-0.8339651

3401027

16.76

0.9638554

35218880

IND & COMM BK-H

4.31

-1.146789

193715398

CHINA PETROLEU-H

6.91

-1.285714

40716235

LI & FUNG LTD

CHINA RES ENTERP

22.5

-1.315789

2000842

15.14

1.203209

CHINA RES POWER

14.7

CHINA SHENHUA-H

26.1

CHINA OVERSEAS

CHINA RES LAND

NAME POWER ASSETS HOL

SUN HUNG KAI PRO

WHARF HLDG

MOVERS

3

43

VOLUME

3 19560

INDEX 18995.13

14.48

-5.483029

18747658

HIGH

19556.11

MTR CORP

25.5

-0.7782101

1007174

LOW

18987

13275328

NEW WORLD DEV

8.99

-1.208791

11221474

-2.390438

4262376

52W (H) 22835.03

PETROCHINA CO-H

10.18

-2.676864

55433455

-2.247191

11728494

PING AN INSURA-H

59.55

-1.570248

6527804

(L) 16170.35

18980

20-Jun

22-Jun

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3

-1.315789

62656000

CHINA PACIFIC-H

23.8

-1.652893

4762200

AIR CHINA LTD-H

4.61

-0.6465517

10852000

CHINA PETROLEU-H

6.91

-1.285714

ALUMINUM CORP-H

3.28

-1.501502

8239798

CHINA RAIL CN-H

6.37

22.05

-2.433628

7685990

CHINA RAIL GR-H

2.9

-0.3436426

185328247

CHINA SHENHUA-H CHINA TELECOM-H

NAME

ANHUI CONCH-H BANK OF CHINA-H

NAME

PRICE

DAY %

VOLUME

YANZHOU COAL-H

12.1

-1.305057

19280982

40716235

ZIJIN MINING-H

2.59

-4.074074

40256000

-2

11732500

ZOOMLION HEAVY-H

10.1

-2.509653

11352700

3.2

-1.840491

14620400

ZTE CORP-H

14.68

-1.740295

2546053

26.1

-2.247191

11728494

5.05

-1.174168

14397679

3.37

-2.034884

40323791

15.06

-1.181102

1757125

DONGFENG MOTOR-H

12.74

-1.24031

9742654

CHINA CITIC BK-H

3.88

-1.522843

23022066

GUANGZHOU AUTO-H

6.65

-1.772526

1623407

CHINA COAL ENE-H

6.46

-3.437967

27697836

HUANENG POWER-H

5.5

-0.9009009

11056850

CHINA COM CONS-H

6.67

-1.331361

12856993

IND & COMM BK-H

4.31

-1.146789

193715398

CHINA CONST BA-H

5.22

-1.323251

127253976

JIANGXI COPPER-H

17.04

-1.956272

9359466

BANK OF COMMUN-H BYD CO LTD-H

3.53

-1.944444

6841955

PETROCHINA CO-H

10.18

-2.676864

55433455

18.96

-2.268041

26122982

PICC PROPERTY &

8.89

-0.4479283

8031000

CHINA LONGYUAN-H

5.12

-1.348748

2343000

PING AN INSURA-H

59.55

-1.570248

6527804

CHINA MERCH BK-H

14.26

-2.46238

15533095

SHANDONG WEIG-H

8.66

-1.925255

4021000

CHINA COSCO HO-H CHINA LIFE INS-H

NAME

MOVERS

0

0 9860

INDEX 9504.19 HIGH

9855.53

LOW

9494.14

CHINA MINSHENG-H

6.94

-2.52809

19067000

SINOPHARM-H

19.68

-3.054187

7225446

52W (H) 12902.97

CHINA NATL BDG-H

8.89

-0.8918618

25136200

TSINGTAO BREW-H

45.75

-0.974026

1806600

(L) 8058.58

10.68

-3.610108

6630195

WEICHAI POWER-H

31.7

-3.058104

1819769

CHINA OILFIELD-H

40

9490

20-Jun

22-Jun

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.54

-0.3921569

73693713

DATANG INTL PO-A

5.78

0.6968641

3804545

SANY HEAVY INDUS

13.97

-0.4985755

21416871

AIR CHINA LTD-A

6.1

-1.134522

14847536

DONGFANG ELECT-A

20.6

-3.693315

10095116

SHANDONG GOLD-MI

34.52

-3.278229

11072796

6.55

-1.946108

7473202

EVERBRIG SEC -A

12.86

-3.670412

16707247

SHANG PUDONG-A

8.44

-0.7058824

39423884

ANHUI CONCH-A

15.74

-1.809108

14467509

GD MIDEA HOLDING

11.38

0

23335964

SHANGHAI ELECT-A

5.08

-1.740812

6849015

BANK OF BEIJIN-A

9.51

-1.040583

11725140

GD POWER DEVEL-A

2.71

-0.3676471

36025816

SHANXI LU'AN -A

21.83

-3.832599

15456217

6.83

0.1466276

32465904

SHANXI XINGHUA-A

36.5

-2.144772

2309988

30

-4.701398

13560688

SHANXI XISHAN-A

15.62

-3.461063

17235993

SHENZ DVLP BK-A

14.9

-2.166776

14483296

6.6

0.1517451

18882689

15.82

-0.06317119

1739889

NAME ALUMINUM CORP-A

NAME

BANK OF CHINA-A

2.84

-0.3508772

9529988

GEMDALE CORP-A

BANK OF COMMUN-A

4.51

-0.4415011

33541945

GF SECURITIES-A

BAOSHAN IRON & S

4.41

-0.8988764

13561794

GREE ELECTRIC

NAME

21.69

0.649652

8760875

13.9

-3.872752

24166490

SHENZEN OVERSE-A SINOVEL WIND-A

22.72

-1.942167

1889003

GUANGHUI ENERG-A

CHINA CITIC BK-A

4.01

-1.231527

14032391

HAITONG SECURI-A

9.7

-3.769841

63366867

CHINA CNR CORP-A

4.12

-1.199041

26911783

HANGZHOU HIKVI-A

26.05

-0.3442999

2905015

SUNING APPLIAN-A

8.54

-2.28833

25324694

2.84

-1.730104

23693443

TSINGTAO BREW-A

38.8

-0.2570694

3144201

63

-0.5367856

1615595

WEICHAI POWER-A

31

-2.053712

3273358

BYD CO LTD -A

HEBEI IRON-A

CHINA COAL ENE-A

8.2

-1.085645

9177803

CHINA CONST BA-A

4.52

-0.2207506

34754477

HENAN SHUAN-A

CHINA COSCO HO-A

4.75

-2.263374

7908042

HUATAI SECURIT-A

10.34

-6.846847

37579893

WULIANGYE YIBIN

32.35

-1.820941

9482453

CHINA CSSC HOL-A

22.46

-2.347826

5371919

HUAXIA BANK CO

9.36

-1.473684

16810867

XIAMEN TUNGSTEN

46.46

0.1724881

8389554

CHINA EAST AIR-A

4.12

1.228501

21626162

IND & COMM BK-A

3.91

-0.7614213

28326219

YANGQUAN COAL -A

16.33

-4.83683

19005567

CHINA EVERBRIG-A

2.82

-0.7042254

21342508

INDUSTRIAL BAN-A

12.77

-1.54202

26401433

YANTAI CHANGYU-A

70.8

-1.07587

665756

17.59

-2.060134

11773782

INNER MONG BAO-A

44.22

0.5457026

35049470

YANTAI WANHUA-A

14.49

-1.895735

9045208 5179615

CHINA LIFE INS-A CHINA MERCH BK-A

10.9

-1.178604

23749957

INNER MONG YIL-A

20.9

-0.2386635

12347454

YANZHOU COAL-A

20.72

-3.358209

CHINA MERCHANT-A

11.8

-3.515944

22503079

INNER MONGOLIA-A

5.54

-2.807018

57030729

YUNNAN BAIYAO-A

56.2

-1.368901

1887570

CHINA MERCHANT-A

24.85

1.304525

8793911

JIANGSU HENGRU-A

27.67

-0.9663565

2312815

ZHONGJIN GOLD

23.16

-2.93378

13550186

CHINA MINSHENG-A

6.24

-0.4784689

66800802

JIANGSU YANGHE-A

CHINA NATIONAL-A

6.19

-1.118211

136.21

-1.993093

1773040

ZIJIN MINING-A

3.99

-1.724138

47041673

9487519

JIANGXI COPPER-A

24.48

-3.011094

9357056

ZOOMLION HEAVY-A

10.38

0.4840271

27851962

JINDUICHENG -A

13.13

-2.956393

6766250

ZTE CORP-A

14.96

-0.729927

12662043

16.09

-5.01771

21837622

CHINA OILFIELD-A

16.3

-3.948144

6014638

CHINA PACIFIC-A

21.64

-2.214189

15537675

JIZHONG ENERGY-A

CHINA PETROLEU-A

6.4

-0.621118

40471971

KANGMEI PHARMA-A

13.86

-0.9292352

13626682

CHINA RAILWAY-A

4.59

-0.2173913

22930008

KWEICHOW MOUTA-A

239.78

-1.551979

1703403

40.51

-1.912833

4346978

-1.968504

29774963

CHINA RAILWAY-A

2.63

-0.754717

19485605

LUZHOU LAOJIAO-A

CHINA SHENHUA-A

23.38

-2.257525

9632917

METALLURGICAL-A

2.49

CHINA SHIPBUIL-A

5.29

-1.672862

16518474

NARI TECHNOLOG-A

19.57

0

4122883

2.54

-1.167315

7062738

MOVERS

32

CHINA SOUTHERN-A

4.71

-0.2118644

27022600

CHINA STATE -A

3.39

0.8928571

67927454

PANGANG GROUP -A

7.3

0

23294285

9.12

-1.511879

11662165

HIGH

2577.36

LOW

2504.47

CHINA UNITED-A

3.84

-2.290076

61386792

CHINA VANKE CO-A

9.03

0

31852780

PING AN INSURA-A

44.77

-2.758471

27521340

CHINA YANGTZE-A

6.8

-0.4392387

15593599

POLY REAL ESTA-A

11.5

-0.3466205

43644380

CITIC SECURITI-A

12.65

-5.597015

121653850

QINGDAO HAIER-A

12.06

-0.08285004

8729642

CSR CORP LTD -A

4.77

-1.649485

13013051

QINGHAI SALT-A

32.05

1.778342

10235167

DAQIN RAILWAY -A

7.25

-1.494565

35041530

SAIC MOTOR-A

14.38

-1.506849

13852983

PRICE DAY %

Volume

PRICE DAY %

Volume

7 2580

INDEX 2512.185

NINGBO PORT CO-A PETROCHINA CO-A

261

52W (H) 3140.102 (L) 2254.567

2500

20-Jun

22-Jun

FTSE TAIWAN 50 INDEX NAME

NAME

NAME

PRICE DAY %

Volume

TAIWAN MOBILE CO

93.3 -0.2139037

4750749

TPK HOLDING CO L

474 -0.8368201

3434186

TSMC

80.1 -0.6203474

30185704

ACER INC

32.3

-1.071975

14426498

FORMOSA PLASTIC

77.3

-3.132832

7878869

ADVANCED SEMICON

25.6

-1.538462

19556167

FOXCONN TECHNOLO

111

1.369863

11865713

ASIA CEMENT CORP

36.75

-1.342282

2181377

FUBON FINANCIAL

29.3 -0.8460237

8691992

ASUSTEK COMPUTER

281.5

-4.576271

9294769

HON HAI PRECISIO

86.6

0.5807201

20071769

AU OPTRONICS COR

11.9

-1.244813

22150325

HOTAI MOTOR CO

200

0

434299

199.5 -0.7462687

386

1.578947

9527032

WISTRON CORP

16.05 -0.9259259

6186956

YUANTA FINANCIAL YULON MOTOR CO

CATCHER TECH

9352806

HTC CORP

CATHAY FINANCIAL

29

-1.360544

9141153

HUA NAN FINANCIA

CHANG HWA BANK

15.3

-1.923077

6839563

LARGAN PRECISION

612

1.157025

1435656

CHENG SHIN RUBBE

74.2

-1.329787

7498610

LITE-ON TECHNOLO

37.1

-1.851852

2089162

CHIMEI INNOLUX C

12.3 -0.8064516

15864615

MEDIATEK INC

274

1.107011

6137244

CHINA DEVELOPMEN

6.97 -0.8534851

27067403

MEGA FINANCIAL H

21.3

1.187648

25203626

CHINA STEEL CORP

27.75 -0.5376344

17442855

NAN YA PLASTICS

55

-1.960784

4503118

CHINATRUST FINAN

17.05

-2.011494

25656874

PRESIDENT CHAIN

155 -0.9584665

CHUNGHWA TELECOM

91.3

-0.436205

5516734

QUANTA COMPUTER

78.5

0.5121639

12566548

COMPAL ELECTRON

27.6

-2.473498

9101450

SILICONWARE PREC

30.3

-3.04

5968056

DELTA ELECT INC

86.2

-2.818489

9043963

SINOPAC FINANCIA

10.85 -0.4587156

9598407

FAR EASTERN NEW

30.3

-1.141925

4964226

SYNNEX TECH INTL

72.7 -0.8185539

2939972

FAR EASTONE TELE

64.8

1.25

7358905

TAIWAN CEMENT

34.6

-1.142857

3567534

17.15

FIRST FINANCIAL

758775

16.85

-1.173021

10397296

-1.719198

4318319

FORMOSA CHEM & F

77.1

-3.140704

4262591

TAIWAN FERTILIZE

67.9 -0.8759124

1047115

FORMOSA PETROCHE

79.5

-3.753027

2112473

TAIWAN GLASS IND

24.4

2968922

TAIWAN COOPERATI

-2.204409

UNI-PRESIDENT UNITED MICROELEC

MOVERS

10

39

45.95

-1.500536

5869749

12.5

-2.723735

26429980

37.25

-2.102497

13123612

13.2

-1.858736

13018415

52.7

0.1901141

4166249

1 5060

INDEX 4953.22 HIGH

5057.25

LOW

4937.98

52W (H) 6026.51 (L) 4643.05

4930

20-Jun

22-Jun

June 25, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GAlAXy ENtErtAINMENt

MElCo CroWN ENtErtAINMENt

MGM CHINA HolDINGS

19.9

31.4

19.8

31.2

19.7

31

Min 19.4

last 19.52

19.4

SANDS CHINA ltD

11.9

30.6

19.5 Average 19.70

12.0

30.8

19.6

Max 19.88

12.1

30.4 Max 31.25

Average 30.41

Min 30.25

30.2

last 30.3

Max 12.08

SjM HolDINGS ltD

Average 12.01

Min 11.86

last 11.96

WyNN MACAu ltD 14.6

25.2

18.6

14.5

18.4

14.4

25

14.3

18.2

14.2

24.8

18

14.1 Max 25.2

Average 24.95

Min 24.65

last 24.65

24.6

14.0 Max 14.54

Average 14.39

Min 14.08

Commodities ENERGY

NAME

PRICE

WTI CRUDE FUTURE Aug12

79.76

1.99488491

-19.55622794

111.3799973

77.55999756

BRENT CRUDE FUTR Aug12

90.98

1.961223804

-13.60744469

124.6999969

88.48999786

GASOLINE RBOB FUT Jul12

256.99

0.77644014

-5.333922717

332.1799994

246.4999914

GAS OIL FUT (ICE) Aug12

807.25

-1.132884262

-10.2057842

1046.5

802.5

2.625

1.665375678

-19.05642923

4.890000343

2.095999956

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

DAY %

YTD %

(H) 52W

253.37

0.332633746

-10.86994759

331.9299936

251.51999

1572.43

-1.6309

0.4805

1921.18

1478.78

26.915

-3.6341

-3.3052

44.2175

26.085

1436.68

-1.7319

3.0247

1915.75

1339.25

607.5

-1.5748

-7.039

848.37

537.54 1854

LME ALUMINUM 3MO ($)

1862

-0.427807487

-7.821782178

2675.25

7310

-0.422285792

-3.815789474

9905

6635

LME ZINC

1800

-1.315789474

-2.43902439

2539.5

1718.5

3MO ($)

LME NICKEL 3MO ($)

16575

0.759878419

-11.41101015

25195

15980

14.725

0.959890298

-2.029274784

18

13.95499992

554

0.727272727

-5.501066098

673.5

499

WHEAT FUTURE(CBT) Sep12

687.5

1.326455416

-2.030637691

853.5

606.75

SOYBEAN FUTURE Nov12

1375.5

0.30993619

14.22046917

1400

1115.75

COFFEE 'C' FUTURE Sep12

155.9

-1.826196474

-33.44717182

288.8500061

SUGAR #11 (WORLD) Oct12

19.75

-5.002405002

-13.49102059

COTTON NO.2 FUTR Dec12

69.12

2.082410279

-21.31147541

AGRICULTURE ROUGH RICE (CBOT) Sep12

Average 18.16

Dec12

PRICE 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

last 18.2

Min 18.02

DAY %

1.0064 1.5588 0.9553 1.257 80.43 7.994 7.7602 6.3642 57.155 31.81 1.2769 29.942 42.497 9494 80.949 1.20097 0.80648 7.9795 10.0318 101.1 1.03

YTD %

-1.052 -0.745 -0.7851 -0.8049 -0.6341 -0.0213 -0.009 0.011 -1.4828 -0.3772 -0.4307 -0.2438 -0.2871 -0.1264 0.4089 0.0008 0.0484 0.9712 0.958 0.1583 0

(H) 52W

-1.4203 0.2895 -1.8005 -3.0167 -4.3765 0.0701 0.0928 -1.0873 -7.156 -0.8174 1.5428 1.1255 3.1602 -4.4765 -3.1094 1.3173 3.3367 1.9387 3.1918 -1.4243 0.0097

(L) 52W

1.1081 1.6618 0.9772 1.4578 84.18 8.0449 7.8113 6.4909 57.3275 31.96 1.3199 30.716 44.35 9662 88.637 1.24736 0.90835 9.4168 11.6817 117.74 1.0311

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

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

NAME

PRICE 2.77

-2.807018

25.90909

3.25

1.88

1854703

150.0999908

CROWN LTD

8.42

-1.405152

4.079108

9.29

7.45

1729035

26.03999901

19.23999977

AMAX HOLDINGS LT

0.078

0

-10.34483

0.119

0.06

13229500

102.25

64.61000061

BOC HONG KONG HO

23.35

0

26.90218

24.45

14.24

10760460

CENTURY LEGEND

0.236

0

2.608694

0.4

0.204

0

2.96

-1.333333

5.714288

4.36

2.3

11407 35218880

CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

Max 18.48

(L) 52W

LME COPPER 3MO ($)

CORN FUTURE

17.8

last 14.38

CURRENCY EXCHANGE RATES

NATURAL GAS FUTR Jul12

METALS

DAY % YTD %

VOLUME CRNCY

CHINA OVERSEAS

16.76

0.9638554

29.12173

18.48

9.99

CHINESE ESTATES

8.97

-0.2224694

-28.24

13.68

8.3

40500

CHOW TAI FOOK JE

9.7

-0.6147541

-30.31609

15.16

8.55

9242000

EMPEROR ENTERTAI

1.34

-1.470588

20.72072

2.04

0.97

1632071

FUTURE BRIGHT

0.88

0

109.5238

1.09

0.3

6990000

19.52

-2.302302

37.07865

24.95

8.69

17255452

103

-0.5791506

11.77428

125

84.4

499111

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

US

12640.78

0.5345339

3.464036

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

US

2892.42

1.165756

11.02701

3134.17

2298.89

HANG SENG BK

FTSE 100 INDEX

GB

5513.69

-0.9462198

-1.051452

6084.08

4791.01

HOPEWELL HLDGS

20.35

-0.7317073

2.467268

24.903

18.56

285045

DAX INDEX

GE

6263.25

-1.259315

6.186474

7523.53

4965.8

HSBC HLDGS PLC

67.45

-1.172161

14.32203

78.85

56

12998054

NIKKEI 225

JN

8798.35

-0.2914755

4.056603

10255.15

8135.79

4726754

HANG SENG INDEX

HK

18995.13

-1.401189

3.041816

22835.03

16170.35

CSI 300 INDEX

CH

2512.185

-1.583712

7.095542

3140.102

2254.567

TAIWAN TAIEX INDEX

TA

7222.05

-0.7830692

2.120589

8842.17

6609.11

KOSPI INDEX

SK

1847.39

-2.210518

1.185822

2192.83

1644.11

S&P/ASX 200 INDEX

AU

4048.211

-0.9628464

-0.2058298

4657.4

3765.9

ID

3889.523

-0.3143431

1.766906

4234.734

3217.951

FTSE Bursa Malaysia KLCI

MA

1603.07

0.1024085

4.725848

1609.33

1310.53

NZX ALL INDEX

NZ

759.17

-0.2354914

4.024346

806.015

700.441

JAKARTA COMPOSITE INDEX

PHILIPPINES ALL SHARE IX

11.8

PH

3376.6

-0.1283667

10.88853

3518.96

2695.06

GALAXY ENTERTAIN

HUTCHISON TELE H

3.5

1.744186

17.05686

3.71

2.35

LUK FOOK HLDGS I

15.72

-0.5063291

-41.99262

46.15

14.7

2283004

MELCO INTL DEVEL

6.19

-1.746032

7.27903

10.76

4.3

1109011

MGM CHINA HOLDIN

11.96

0.1675042

24.68524

17.183

7.6

910781

MIDLAND HOLDINGS

3.88

2.37467

-1.872688

5.217

2.887

966008

NEPTUNE GROUP

0.092

-6.122449

-17.11712

0.153

0.08

520000

NEW WORLD DEV

8.99

-1.208791

43.61022

11.279

6.13

11221474

SANDS CHINA LTD

23042517

24.65

-4.457364

12.30068

33.05

14.9

SHUN HO RESOURCE

1.15

0

15

1.32

0.82

0

SHUN TAK HOLDING

2.67

-1.838235

4.332402

4.668

2.241

2511032 5484818

SJM HOLDINGS LTD

14.38

-0.1388889

14.98907

20.711

10.079

SMARTONE TELECOM

14.88

0

10.71429

18.5

9.8

815505

WYNN MACAU LTD

18.02

-0.441989

-7.589744

27.48

14.807

6801375

HSBC Dragon 300 Index Singapor

SI

537.68

-1.34

8.33

na

na

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64937

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2700

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0

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1107.3

876.33

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3865

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6607590

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9109144

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16.29693

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901468

1.83

1.104972

13.83621

2.6037

1.2624

150

103.32

1.244488

-6.489273

165.4931

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business daily June 25, 2012

Opinion What’s so special about the Euro currency area?

Caroline Baum

N

Bloomberg View columnist

ow that the Greek election failed to solve anything, Europe is back to the same problems it faced before.

Not the ones predating Sunday’s election, which resulted in the formation of a coalition government of Greece’s proEurope parties. But the difficulties that existed before 11 sovereign nations scrapped their currencies and adopted the euro on January 1, 1999, with the goal of bringing peace and prosperity to the continent. The idea of one monetary policy for all was unworkable then, and it’s unworkable now, primarily because the countries never had a mechanism for dealing with a crisis.

I’ve lost count already of all the crises within a crisis since Greece first revealed the true state of its finances almost three years ago. All the summits, one-on-one meetings, academic research and unsolicited advice haven’t done anything to fix the underlying structural problem. Seventeen different countries with 17 sovereign governments, 17 unique cultures and at least 17 languages are ill-suited for a monetary union.

Robert Mundell, the father of the euro, clearly thought differently. He won the Nobel Prize in Economic Sciences

in 1999 for “his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas.”

Labour immobility Even by Mundell’s standards, the European Monetary Union looks suboptimal. Although the euro area can boast of a single currency, a single central bank committed to price stability (too committed, some say) and

All the summits, oneon-one meetings, academic research and unsolicited advice haven’t done anything to fix the underlying structural problem

free trade among its members, it lacks labour mobility, mechanisms for fiscal transfers in the case of shocks to individual countries, and a common federal fiscal policy.

With the minuses offsetting the plusses, one wonders why he was so keen on the idea. Mundell was traveling and didn’t respond to my email inquiry.

Even some randomly selected groupings produce a better fit than the countries using the euro, according to Michael Cembalest, chief investment officer at JPMorgan Chase Bank. There is far greater harmony among “the 12 countries on Earth located at the latitude of the 5th parallel (north)” and “the 13 countries on Earth whose names start with the letter ‘M,”’ he says in a recent report.

Given the dissimilarities, “Europeans suspended belief” to embark on a currency union, says Michael Bordo, a professor of economics at Rutgers University in New Brunswick, New Jersey. “They wanted to move to the free mobility of labour and goods, in which case they would not need fiscal federalism.” For example, if a shock to one country causes wages to fall, in theory workers move to higherwage countries while capital flows back to the low-wage

nation. “It’s an equilibrating mechanism,” Bordo says.

In the real world, German capital flowed south. The peripheral countries, blessed with unnaturally low interest rates, went on a borrowing and spending spree, which pushed up relative wages and prices and made them less competitive. The common currency prevented the necessary adjustment through devaluation. The common man didn’t want to leave his country of origin.

And the common burden fell on Germany.

German Chancellor Angela Merkel wants greater fiscal integration for the euro area.

If only everyone could be more like Germany, everything would be fine!

I can understand why Germany would like to dictate fiscal policy to profligate spenders, such as Greece. What about the obligations that go with it? A fiscal union would include a mechanism for fiscal transfers, such as those between the 50 U.S. states and Washington. For the foreseeable future, those transfers will be going from Germany to the peripheral countries.

Political ideal “It’s a temporal problem,” says Dino Kos, a managing

director at Hamiltonian Associates Ltd, an economic research and advisory firm in New York. “Germany is talking about what system to put in place for the long run, when the economy is in a steady state, countries are converged and markets are calm.”

Ah, now it makes sense, unless it’s all a game of chicken.

Solving the crisis is, well, a problem for the countries in crisis. Although 25 of the European Union’s 27 members (the U.K. and the Czech Republic were holdouts) signed a fiscal compact in January to enforce budget discipline, it will be years before the countries’ legislatures ratify it. So that’s a non-solution for the current debt, banking and economic mess.

And each “solution” – the 100 billion euros (US$127 billion) for Spain’s banks last week, a favorable Greek election outcome this week – produces shorter and shallower relief rallies in financial markets. In fact, European stock markets shot up at the start of trading on June 18, then immediately headed down.

If European nations weren’t willing to sacrifice sovereignty when the countries were more or less on an equal footing – having met the criteria outlined in the 1992 Maastricht Treaty on debt, deficits and inflation – it’s hard to see them taking the plunge now. Decisions made under duress tend to be short-term fixes, not long-term solutions. Which is why things will probably sputter along for a good while longer.

The real problem, of course, is that the euro area was always a political ideal designed to constrain Germany’s imperialist tendencies and prevent World War III. To a certain extent, the economic justifications were just that, nothing more.

Throw in the fact that Europeans don’t want to relinquish their sovereignty and become a United States of Europe, and it’s clear why Europe is in such a muddle.

How will it end? Badly – and unfortunately not anytime soon.

Bloomberg View

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

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June 25, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

Emerging markets’ Europe problem Dominique Moisi

Founder of the French Institute of International Affairs and a professor at Institute d’Etudes Politiques Paris

Yomiuri Shimbun The Japanese government maintained its basic economic assessment in a monthly report released Friday, citing the economy’s moderate recovery on the back of demand for rebuilding from the March 11, 2011, earthquake and tsunami. “The Japanese economy is on the way to recovery at a moderate pace partly due to reconstruction demand, although difficulties continue to prevail,” the June report said, after the assessment was revised up for the first time in nine months in May.

put it. But, when it comes to the European financial crisis, China’s behavior seems to be determined by purely shortterm tactical considerations, even as Chinese investments in Europe tripled in 2011. To buy half of the Piraeus harbor at a knockdown price may seem more advantageous than investing in the long-term consolidation of the Greek economy and its finances, but is that really the case?

Double distrust

Taipei Times A Democratic Progressive Party (DPP) Taipei City councillor on yesterday lashed out at the city government for budgeting NT$2 billion (US$66.7 million) to build a swimming pool for the Summer Universiade in 2017. “The cost of a temporary pool is only about NT$50 million, and many countries are building such pools at existing stadiums for international games to save time and money,” DPP Taipei City Councillor Kao Chia-yu was quoted as saying. Taipei will budget a total of NT$42.5 billion to host the international sports event for university students.

Jakarta Globe Goldman Sachs Group forecasted Indonesia’s economy to pick up in 2013, after weathering a downturn in the global economy this year due to the sovereign debt crisis in the euro zone. The U.S. investment bank maintained its forecast for Indonesia’s growth this year at 5.4 percent, saying slow global growth would affect Indonesia’s trade performance. “Global economy will be in strengthening trajectory next year and Indonesia’s economy will also bounce back to 6.3 percent,” Mark Tan, from Goldman Sachs, was quoted as saying.

Business Inquirer The Philippines was upgraded from the “dark gray” list to the “gray” list of the intergovernmental Financial Action Task Force (FATF), in recognition for its efforts against money laundering and terrorist financing.

The FATF approved the upgrade after the country enacted two of three key pieces of legislation demanded by the Paris-based money-laundering watchdog.

Gray list means that a jurisdiction is making sufficient progress in the global campaign against money launderers and terrorists.

F

rom Hong Kong to São Paulo, and all points between, one word dominates all others among big investors: Greece. Will the Greeks remain in the eurozone? What will happen to the European Union and the global economy if they do not?

Until recently, Europe was a sort of mirror that confirmed for the major emerging economies the spectacular nature of their own success.

They could contrast their high growth rates with Europe’s high levels of debt. They could oppose their “positive energy” with the pessimism dominating European minds.

thing as a bloc of

plied by excessive weakness in Europe, which remains the world’s trade leader.

Moreover, Europe’s malaise threatens many of these countries’ political stability as well, given the close connection – especially in China – between the legitimacy of existing arrangements and the continuation of rapid economic growth.

If the crisis in Europe were to cause annual GDP growth to fall below 7 percent in China, 5 percent in India, and 3 percent in Brazil, these countries’ most vulnerable citizens would be hardest hit. They were never part of the “culture of hope,” based largely on material success, that played a key role in these countries’ success. If social inequalities were to reach new heights, their frustration and resentment could manifest itself fully.

emerging countries.

Mirror, mirror…

There is no such

They are not united by a common vision of their future, or by a common political ideal

They were only too willing to advise Europe to work harder and spend less, as legitimate pride mingled with an understandable desire to settle historical scores and attenuate their legacies of colonial submission and humiliation.

But, today, emerging countries are growing very concerned with what they rightly perceive as the serious risks to their own economies im-

In that case, Europe could suddenly become a very different mirror for emerging countries, revealing, if not accentuating, their own structural weaknesses. And that is why, just as Europe must save the Greek economy or Spain’s banks at all costs, emerging countries must do whatever they can to contribute to the rescue of the European economy. As Europe has learned, the longer one waits, the higher the cost – and the lower the chance of success.

Unfortunately, a group of countries that are united above all by a common denial of their global responsibilities is unlikely to reach such a conclusion. Indeed, most emerging countries would balk at the idea of coming to

Europe’s financial rescue for several reasons.

First, there is no such thing as a bloc of emerging countries. They are not united by a common vision of their future, or by a common political ideal, such as democracy in the Western world. Whatever the limits or contradictions of shared values, it would be naive to dismiss their importance. Europe and the United States will remain allies even if Barack Obama, like Nicolas Sarkozy in France, turns out to be a one-term president.

Second, emerging countries are more Europe’s rivals than its partners. They are united only by their shared suspicion of China. In such a context, a common longterm strategy is extremely difficult to conceive.

The Chinese may proclaim that they tend to think over a “longer” term than Americans, who think more “broadly,” and Europeans, who think more “deeply,” as a well-known Chinese international relations expert has

Third, emerging countries’ short-term opportunism is based on a double distrust: towards Europe, of course, but also, paradoxically, towards themselves. That is, they lack confidence in their ability to do their part to save the sick man of the global economy that Europe has become.

To be sure, this runs counter to the triumphalism emanating from Asia, in particular.

Kishore Mahbubani, a leading foreign-policy thinker from Singapore, recently proclaimed in Vienna, at a conference organised by my institute, that the next millennium would be Asian. And yet one senses among elites from emerging countries something akin to existential doubt, which the European crisis has served to reinforce.

This insecurity manifests itself in many ways: from the accumulation of liquid wealth as insurance against foreign and domestic uncertainties to the choice of many, if not most, to educate their children abroad.

In fact, the sick man – undeniably European, if not Western – could reveal himself to be more resilient, owing to the strength of his own natural defences: democracy and the rule of law. That is why the current European crisis may well prove to be a crucial test for emerging countries that are more dynamic than Europe economically, but ultimately more fragile politically. © Project Syndicate

16 |

business daily June 25, 2012

CLOSING Moody’s downgrades major banks

Ashraf elected new Pakistan PM

Credit ratings agency Moody’s has downgraded 15 global banks and financial institutions. Banks downgraded include Royal Bank of Scotland, Barclays and HSBC. Lloyds also had its rating cut in a separate announcement. In the U.S., Bank of America and Citigroup were among those marked down. Explaining the decision, Moody’s global banking managing director Greg Bauer highlighted the banks’ exposure to volatility in the world’s financial markets. The other institutions that have been downgraded are Goldman Sachs, Morgan Stanley, JP Morgan Chase, Credit Suisse, UBS, BNP Paribas, Credit Agricole, Societe Generale, Deutsche Bank and Royal Bank of Canada.

Pakistani lawmakers elected Raja Pervez Ashraf, a former minister, as successor to Prime Minister Yousuf Raza Gilani, who was ousted from his position by a Supreme Court ruling last week. Mr Ashraf, the candidate nominated by President Asif Ali Zardari’s ruling alliance, received votes by 211 members of the National Assembly.

Pakistan’s new leader, who will run the government and federal cabinet, will face the challenge of improving ties with the U.S. and tackling a record energy crisis. Pakistan Muslim LeagueNawaz, the main opposition, had nominated Mehtab Abbasi as its candidate for premier who got 89 votes.

Malaysia seeing Asian strength Asia is better prepared to face economic shocks after strengthening domestic demand and financial systems, Malaysia’ central bank said

A

sia is in a “better state of readiness” to face shocks as policies geared toward strengthening domestic demand anchor growth prospects, Malaysian central bank governor Zeti Akhtar Aziz said in a speech in Jakarta on Friday.

Her confidence echoes the sentiment of policy makers across the region, with China saying its economy is heading for a rebound this month and Indonesia saying this week that its banks are still growing amid Europe’s woes, underscoring domestic strength.

Malaysia’s economic expansion has stayed above 4 percent since it emerged from a recession in 2009, as rising public spending and a yearlong pause in interest-rate increases countered Europe’s debt crisis and a faltering U.S. recovery.

Ms Zeti, 64, who oversaw the country’s capital controls in response to the Asian crisis, has guided monetary policy in the Southeast Asian nation through regional health epidemics, natural disasters and the last global slump.

“Asia is consuming more and more,” Irvin Seah, an economist at DBS Group Holdings Ltd. in Singapore, said yesterday. “Its domestic demand is contributing to global growth and driving its own growth.”

Much of the region has grown through the persistent European sovereign-debt crisis, Japan’s tsunami and the disruption to manufacturing from Thailand’s floods last year, even as stocks and currencies slid in recent months on

Malaysian central bank governor Zeti Akhtar Aziz says Asia is now better prepared ‘to manage external vulnerabilities’

concern weakening global demand will hurt Asian exports.

Asian crisis Indonesia, which turned to the International Monetary Fund for a bailout and spent 450 trillion rupiah (US$47 billion) to rescue lenders during the Asian financial crisis, has seen growth exceed 6 percent since 2010. Lending growth in Southeast Asia’s biggest economy was an annual 28 percent pace in May, Bank Indonesia Deputy Governor Muliaman Hadad

said June 19.

China’s Commerce Minister Chen Deming said last week his nation’s economy is “turning for the better,” in June following government measures to support growth, adding to signals of confidence among officials that the slowdown is ebbing. The comments added to remarks by President Hu Jintao that China will “maintain steady and robust growth.”

Asia’s growth prospects are being supported by a shift from being a producer to consumer, with a middle class that is projected to

increase from 500 million to more than 3 billion by 2030, Ms Zeti said today.

“Distinct strategies have been implemented to strengthen further the macroeconomic fundamentals and financial system soundness in the region,” Ms Zeti said. “These stronger foundations of steady growth, low unemployment, relatively low inflation, and strong and more developed financial systems, have strengthened Asia’s resilience and its ability to manage external vulnerabilities.”

Bloomberg

Big four want to launch growth plan Euro’s heavyweights find little else to agree on

G

erman Chancellor Angela Merkel resisted pressure on Friday for common euro zone bonds or a more flexible use of Europe’s rescue funds but agreed with leaders of France, Italy and Spain on a 130 billion euros (US$156 billion) package to revive growth.

After four-way talks in Rome, Italian Prime Minister Mario Monti said the European Union should adopt pro-growth measures worth about 1 percent of the region’s gross domestic product at a crucial summit this week.

But the three others made no perceptible progress in pushing Ms Merkel, who leads Europe’s most powerful economy and the main contributor to its rescue funds, towards mutualising Europe’s debts

or using existing bailout resources more flexibly.

“Growth can only have solid roots if there is fiscal discipline, but fiscal discipline can be maintained only if there is growth and job creation,” Mr Monti told a joint news conference after talks that lasted just an hour and 40 minutes.

The measures, already in the works in Brussels, include increasing the European Investment Bank’s capital, redirecting unspent EU regional aid funds and launching project bonds to co-finance major public investment programmes. No new steps were announced on Friday.

The four leaders did agree to move ahead on creating a tax on financial transactions even though not all EU members will be on board. Merkel

made no mention, however, of any move towards mutualising past euro zone debt or new borrowing. French

Italian Prime Minister Mario Monti calls for more growth and job creation

President Francois Hollande voiced impatience with Berlin’s reluctance.

“I consider euro bonds to be an option ... but not in 10 years,” Mr Hollande said in a direct challenge to the Chancellor. “There can be no transfer of sovereignty if there is not an improvement in solidarity.”

The German position essentially amounts to the reverse. “Liability and control belong together,” Ms Merkel said.

The contrasting comments left much work for diplomats to produce a convincing blueprint for closer fiscal and banking union at a full EU summit next Thursday and Friday, which Mr Monti called a defining moment in the crisis. That plan is expected to include the first steps towards a banking union, starting by putting the European Central Bank in charge of supervising large cross-border euro zone banks.