New air link gives Korea opportunities Air Busan is giving Korean visitors reasons to linger longer here with direct flights between the country’s second city and Macau, starting on July 19. Around 400,000 Koreans visited Macau last year, but nearly half stayed for fewer than 24 hours, preferring to spend the rest of their trip in Hong Kong or the mainland.
Year I - Number 62 Tuesday June 26, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00
Pages 2 & 3
Battle flag hoisted over Yacht Club land
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Environment
Change afoot in water use W
ith thousands of new hotel rooms built since 2002 and the city’s population growing by 29 percent in that time, water consumption in Macau has been rising just like in other parts of China. The challenge of local H2O conservation hit home in the past few years when the citizenry and hotel guests found their be-
loved ‘cha’ tasted salty. That happened after the downstream flow of the Pearl River – from where much local drinking water is drawn – became so weak during dry spells that salt tides from the sea rushed up the river course. Now the Macau Productivity and Technology Transfer Centre says the concept of a water footprint can help
individuals and companies think more carefully about how they use this most precious of resources. “It is a new concept globally, and we are trying to introduce it to Macau, from a management perspective, to enterprises,” says the Centre’s Helena Lei. A water footprint is the volume of fresh water that an enterprise uses directly
Economy, not policy, slowing VIP growth Page 7
and indirectly in making a product, and is akin to a carbon footprint measuring use of fossil fuels. In 2011 the city’s rate of water consumption increased by 1.1 percent year-on-year to 212,602 cubic metres per day. But the business sector’s water consumption grew much faster, by 10.3 percent.
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More on page 3
HANG SENG INDEX
No control over Hengqin funding
19090
19040
Macau has spent four billion patacas (US$500 million) in Hengqin Island projects without a detailed execution and budget plan, complains legislator Ng Kuok Cheong. He also said there is no budget for the new Taipa ferry terminal and the Areia Preta treatment plant. In the end, 25 out of the 44 biggest projects in the 2012 public investment plan exceed their initial budgets.
18990
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June 25
Catering Expo comes to dine
HSI - Movers Name
The China Catering Expo will be held in Macau for the first time in September and, if all goes well, it could become a regular event in the future. The organisers praise the city’s long history of Western and Eastern culinary fusion but warn about the lack of manpower, competition from fast-food chains and the gradual disappearance of traditional restaurants. Page 6
Local bank hit by Portugal fears
%Day
HANG LUNG PROPER
2.20
CHINA RES POWER
1.90
CHINA MOBILE
1.17
POWER ASSETS HOL
1.16
BOC HONG KONG HO
0.86
NEW WORLD DEV
-2.34
ALUMINUM CORP-H
-2.44
WANT WANT CHINA
-2.56
CHINA MERCHANT
-2.67
CHINA COAL ENE-H
-2.79
Source: Bloomberg
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Moody’s has classified deposits at the Macau branch of Banco Comercial Português (BCP) within the ‘junk’ investment spectrum, due to the woes of the parent – Portugal’s biggest private lender. The agency equated the ratings of the two companies, adding a negative outlook. Moody’s added that an upgrade of BCP Macau “is unlikely in the short to medium term given the current negative outlook”.
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business daily June 26, 2012
macau
Air Busan plan more than just the ticket Regional carrier offering Koreans more reasons to linger longer in Macau Associate Editor
KEY POINTS Air Busan to launch direct service from Korea’s 2nd city to Macau on July 19 Passengers have option of round trip including Hong Kong thanks to carrier’s complementary BusanHong Kong-Busan service 390,000 Koreans visited Macau last year; 48pct stayed less than a day In 2011 only 51,000 Koreans travelled direct by air to Macau
giving residents of the Republic of Korea’s second city Busan, the chance to fly direct to or from Macau on one leg of their MacauHong Kong trip. Air Busan launches its inaugural flight from Busan direct to Macau on July 19, and the following day starts its direct service in the other direction. The service from Busan will be on Thursday nights and Sunday nights, arriving shortly after midnight local time. The return leg from Macau will be a night flight early on Mondays and Fridays, arriving in the Korean city at 6.10am local time the same day. The Macau link will complement an Air Busan service between Busan and Hong Kong departing on Mondays, Wednesdays and Fridays, and the inbound service from Hong Kong on Tuesdays, Thursdays and Saturdays.
New approach The Republic of Korea’s capital Seoul already has a direct link to Macau operated by Air Macau and budget airline Jin Air, and Busan is already linked to Hong Kong via several other airlines. But no one has so far linked Korea’s second city, on the southeastern side of the Korean peninsula – and its population of 3.6 million – with a direct flight to and from Macau. “We call this round trip product MaHong or HongMa when it’s marketed to Korean travel agents,” says Kyeng Dae Kang, general manager for the Hong Kong branch of the airline. “Around 390,000 Korean people visited Macau in 2011. But when you look at the statistics, you see they are arriving by ferry,” he explains. “That means most of them are flying to Hong Kong first. Only 51,000 arrive in Macau by air.
So there are more than six times as many coming to Macau by sea. We want to attract some of those ferry users to make one leg of their journey direct by air to or from Macau. We’re not thinking only of people travelling from Busan to Macau. If we were only running Busan to Macau I don’t think it would work,” states Mr Kang. “We’ve combined it with Hong Kong to make a round trip of Busan, Macau, Hong Kong,” he adds. Official figures quoted by Air Busan show that last year 48 percent of Korean visitors to Macau left the same day. The airline hopes to change that by making round trips more balanced. “We want to make it into a fourday package if possible; two days in Macau and two days in Hong Kong,” says Mr Kang. That would be twice as long as the current average stay of visitors to Macau. The average stay is kept low by the high and increasing number of visitors from Hong Kong and Guangdong who come over as day trippers. The average length of stay for May was 1.0 days according to
official data despite the massive hotel building programme that has been undertaken since 2002.
Bullish outlook The Macau government data don’t give a breakdown on where in Korea the visitors hail. But Mr Kang thinks that as his compatriots learn his company’s new service is available then the route will take off. “We are advertising the Hong Kong-Macau route already in Korea and we started preselling tickets for the Macau route on Friday,” states Mr Kang. “We are offering very special fares for the beginning of the service.” The carrier, which is five percent owned by the Busan city government, is also keen to raise international awareness about its home city. “When passengers purchase our ticket either through a travel agency or through the Internet, they will get a Busan guide book free. Busan has countryside very close to the city. And the Hyundae beach in the city is quite famous all over Korea. Photo by Manuel Cardoso
A
round half of the nearly 400,000 Korean visitors to Macau in 2011 were day trippers according to the city’s Statistics and Census Service. But that’s not because Koreans enjoy spending eight hours out of 24 stuck at airports or on flights. It’s because many of them make Macau a side trip during a visit to Hong Kong. Air Busan, a Korean airline 46 percent owned by the country’s Asiana Airlines, has decided to take advantage of the day trip reality of the Macau tourism business by
Kyeng Dae Kang, General Manager, Hong Kong Branch, Air Busan
June 26, 2012 business daily | 3
MACAU
Water-saving idea afoot Enterprises can use the water footprint concept to manage consumption but conservation facing drought
Xi Chen
xi@macaubusinessdaily.com
T
Thirsty work All of the fresh water Macau uses from day to day comes from mainland China. The city’s two reservoirs are for emergencies only, and contain enough for only about nine days, according to the Maritime Administration. The volume of water stored in the Outer Harbour Reservoir and the Seac
for improvement, Mr Wang said. “The territory needs to have a integrated facility to recycle and reuse water resources,” he said. The government is now carrying out a water conservation scheme led by the Maritime Administration. Ten casino resorts and hotels are taking part in the first phase of the scheme, which is meant to reduce their water consumption, and 20 more are expected to take part in the second phase. According to the environmental engineer, smaller enterprises, such as three-star hotels, have neither the capacity nor the space to set up a facility to recycle and reuse water, even if they have the will to do so. Moreover, he said the government should promote water conservation Photo by Manuel Cardoso
Cleared for take-off – Air Busan starts inward flights to Macau on July 19, with outward services beginning the following day
he water footprint concept is being introduced to help enterprises reduce costs and preserve the environment. A water footprint is the volume of fresh water that an enterprise uses directly and indirectly in making a product, and is akin to a carbon footprint. A senior manager at the Macau Productivity and Technology Transfer Centre, Helena Lei, told Business Daily that the concept could be used to limit pollution and conserve natural resources. “It is a new concept globally, and we are trying to introduce it to Macau, from a management perspective, to
500,000 patacas. The fund aims at subsiding the acquisition of ‘green’ technology, products and plants by local companies and associations, however water conservation-related technology and products are not yet included in the fund’s subsidies, Mr Wang bemoaned.
During the summer season it is very hot. We also have casinos over there that are open to foreigners and to Koreans resident overseas.” Air Busan opened a representative office in Macau yesterday. The opportunity for the Busan-Macau route arose after a civil aviation agreement last year. “There has been a liberalisation of the air routes from Macau to Busan. Last year in October there was an aviation conference and now there’s an open sky policy,” says Mr Kang.
Strong brand Air Busan started business in 2007 and last July passed the five million passengers mark. It is already strong in the Korean domestic market, serving Seoul, the island of Jeju and Gimpo, as well as regional routes to Japan, Qingdao in China, Cebu in the Philippines and Taipei in Taiwan. The airline currently operates eight leased aircraft and plans to take another one into service before the end of this year. All the maintenance work on the aircraft is done by Asiana. “Asiana has very strong maintenance skills,” says Mr Kang. Air Busan says it chose late night departure and arrival times at the Macau end of the operation in order to minimise turnaround times and keep the aircraft in the air as much as possible. “An aircraft that spends too much time on the ground is not good for the airline, because of the fixed costs such as insurance and leasing of the aircraft and the salaries of the staff,” says Mr Kang. He adds that in Macau the airline will pay lower airport fees for landing and taking off in the early hours of the day, although there are no discounts at Hong Kong International Airport for latenight flying.
enterprises,” she said. The centre is trying to help companies take a systematic approach to measuring water use, by offering training and devising software for calculating consumption. Ms Lei said on the sidelines of a seminar on the water footprint concept that schools, hotels and public buildings would probably be the first institutions to use it. Measuring its water footprint can help an enterprise reduce its costs. An enterprise can also have its water footprint verified by a credible observer and advertise it, appealing to environmentconscious consumers. The government is currently charging enterprises for their water usage on a progressive basis but Wang Zhishi, professor from the Faculty of Science and Engineering at the University of Macau, suggests the government to further provide tax benefits to enterprises that implement water recycling measures. The territory has created a 200-million patacas (US$25 million) Environmental Protection and Energy Conservation Fund last year, where an applicant can obtain a grant of up to 80 percent of the total cost, to a maximum of
Pai Van Reservoir dropped by more than two-thirds last year because there was less rain than usual. Given the increasing demand for water and heavy dependency on mainland, recycling and reuse of water is very important to the territory and there is still plenty room
‘The territory needs to have a integrated facility to recycle and reuse water resources Wang Zhishi, University of Macau professor
but it cannot force the practice upon enterprises. What the government can do instead is to learn from other countries with advanced systems such as Japan to build an integrated facility to recycle and redistribute water resources across the territory, Mr Wang said. The city’s rate of water consumption increased by 1.1 percent to 212,602 cubic metres per day last year. But the business sector’s water consumption grew much faster, by 10.3 percent. A U.S. diplomatic dispatch sent in January 2010 quoted Macau officials as saying that the government began taking water conservation measures in response to criticism by officials across the border in the city of Zhuhai, where Macau’s fresh water comes from, and to “perceptions of waste”, according to the whistle-blowing website WikiLeaks. Macau put 450 million yuan (565 million patacas) toward the construction of a big reservoir in Zhuhai three years ago, in exchange for a maximum of 40 percent of its water. The government also signed in November 2009 an agreement with
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business daily June 26, 2012
macau Photo by Manuel Cardoso
Hengqin dubbed a money pit Legislator Ng Kuok Cheong tells government to get grip on purse strings Tony Lai
tony.lai@macaubusinessdaily.com
T
he government has spent nearly 4 billion patacas (US$500 million) in the last two years on projects on Hengqin Island without a budget for such projects, a member of the Legislative Assembly, Ng Kuok Cheong, has said. In a written enquiry last week, Mr Ng urged the government to reveal clearly to the public its budgets for projects and supervise the spending, as costs often went far beyond initial estimates. Mr Ng, a member of the New Macau Association, said the joint Guangdong-Macau projects on Hengqin were not the only ones for which the government had reserved public money yet failed to disclose the budgets. He also criticised the government for failing to disclose the budgets for the new ferry terminal on Taipa and the Areia Preta sewage treatment plant. Mr Ng said spending on 25 out of the 44 projects worth at least 40 million patacas in the Public Investment Plan for 2012 exceeded the initial budgets. The projects include the Seac Pai Van public housing complex and work on preserving the city’s cultural heritage. The Financial Services Bureau says the public investment budget is 20.2 billion patacas this year and was 11.7 billion patacas last year. Mr Ng said the Legislative Assembly should have a way of overseeing spending on important projects to prevent overspending. At present the assembly has the right to approve the annual budget before the start of the fiscal year and review the report budget at the end.
The Audit Commission criticised the Transportation Infrastructure Office last year for the surging cost of the first phase of the Light Rapid Transit elevated railway, which the office could not keep track of. The initial budget was slightly under 4.2 billion patacas in 2007 but the infrastructure office said last year it had risen to 11 billion patacas. Member Au Kam San told the Legislative Assembly last November that he would not be surprised if spending on the first phase, due for completion in 2015, exceeded 20 billion patacas. The budget for the new University of Macau campus on Hengqin, which is due for completion this year, was increased last year to 9.8 billion patacas from 6.5 billion patacas. Mr Ng urged the government to make its spending more open to the scrutiny of the public and the assembly.
MOP4 billion Invested in Hengqin Island in the last two years
The government has reserved money for cooperation with Guangdong on Hengqin Island but how much isn’t clear
Members consider suing Yacht Club Board re-elected but courts may decide on controversial land deal Vítor Quintã
vitorquinta@macaubusinessdaily.com
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group of members of the Macau Yacht Club is preparing to sue the board, headed by Vicente O Man Seng, over a controversial deal to provide land for a 45-storey residential building. “The members are currently in the phase of evidence-gathering,” club member Jorge Fão, a former member of the Legislative Assembly, told Business Daily. He said the next step would be to sue the board and a lodge a criminal complaint with the Public Prosecutions Office, “if we come up with enough evidence”. Mr Fão accused the board of putting the members in “a misleading situation” over the construction of the club’s clubhouse on a plot surrounding the Lam Mau Marina, work on which has been frozen since last year. He was speaking after a tense club general meeting on Sunday, at which the board was re-elected with a new two-year mandate. Unlike in the 2010 elections, when the opposition lost by just five votes, this time there was no alternative set of candidates. Mr Fão said the opposition had no access to an up-to-date list of associates, including those who had not paid their dues and those suspended in 2010. Thus, it decided not to present a list of candidates. Four members were not allowed into Sunday’s meeting. Mr Fão said members supporting the board had shown up with many powers of attorney. “They did everything they could to hold on to power,” he said. Most of the opposition members left the meeting before the election. The meeting approved the club’s accounts, which show the board has
frozen a bank guarantee of up to 10 million patacas (US$1.25 million) given to the former developer of the clubhouse plot, Realgain.
New deal The board said last week it had cancelled its contract with Realgain, because the British Virgin Islands company had been unable to build the clubhouse on time, and had already signed a similar contract with another company. Mr Fão said the board had done this without telling the members or even the head of the supervisory board, lawyer Rui Cunha. The deal with Realgain was that the company would finance the construction of the clubhouse and in return, the club would ask the government to allow the construction of a 45-storey residential building on the remaining land. But work on the clubhouse stopped because contractor Yang Kwong Constructions said it was owed 18 million patacas (US$2.25 million). The deadline for the construction of the clubhouse has passed and the club is now waiting to see if it will get an extension from the Land, Public Works and Transport Bureau. “They continue trying to push through this scheme, which for any sensible investor would be nothing short of a shot in the dark,” Mr Fão said. “I don’t believe there could be such a generous investor, willing to finance a clubhouse for nothing.” The Land, Public Works and Transport Bureau has repeatedly said that it will “not accept any request to use part of the land to build a residential building”. Even if the government changed its mind, “any request for the construction of a residential tower could only take place in three or even four years,” Mr Fão said.
June 26, 2012 business daily | 5
MACAU
Portugal woes weigh down BCP’s rating Moody’s rates BCP Macau’s deposits as junk as Portugal’s economic woes hamper its parent company Vítor Quintã
vitorquinta@macaubusinessdaily.com
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redit rating agency Moody’s Investors Service has put the deposits of the Macau branch of Banco Comercial Português (BCP) in the junk investment spectrum, owing to the woes of the Portuguese bank. In a note released last week, Moody’s assigned a Ba3/Not Prime rating to BCP Macau’s long-term and short-term deposits, suggesting that the bank is not considered investment grade but is still at the more stable end of the junk spectrum. Moody’s gave a lower rating – B3, signifying a high risk of default – to notes issued under a 25 billion euro (US$31.3 billion) medium-term programme undertaken by the Portuguese bank, which could be issued with the guarantee of BCP’s Macau branch.
Moody’s has aligned the ratings of the Macau branch with those of parent company BCP
Moody’s has aligned the ratings of the Macau branch with those of BCP, including the negative outlook, and warned
that a downgrade of BCP’s senior unsecured ratings would have a knock-on effect on its branch here. Moody’s said that, con-
versely, any upgrade of BCP Macau’s rating could be prompted only by an upgrade of the Portuguese bank’s debt ratings, “which
is unlikely in the short to medium term, given the current negative outlook”. Another credit rating agency, Canada’s DBRS, assigned a BBB rating with a negative outlook to BCP Macau’s long-term instruments last week. But DBRS also warned that a downgrade of BCP would affect its Macau branch. Moody’s downgraded BCP in March because of “further deterioration of the bank’s domestic asset quality and profitability, given the country’s poor economic outlook”. Portugal was the third euro zone country to seek a rescue package, after Greece and Ireland, and received a 78 billion euro bailout from the European Union and the International Monetary Fund last year. BCP, which had already been operating here through an offshore subsidiary, was granted a licence in 2010 to operate as a retail bank focusing on the corporate market. BCP Macau posted a profit of 67 million patacas (US$8.4 million) for 2011, João José Pãosinho, the bank’s managing director, told Rádio Macau in March. He forecast a profit of between 60 million patacas and 65 million patacas for 2012.
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business daily June 26, 2012
macau
China Catering Expo may InBrief make its home in Macau Event comes to Macau in September if successful, it could become a regular event Hotel room rates up in May Average room rates in Macau hotels rose by 3.9 percent year-on-year last month to 1,336 patacas (US$167), a growth below inflation, which remained unchanged at 6.76 percent. But prices rose much faster (19.4 percent) in four-star hotels to 733 patacas, according to data released by the Macau Hotel Association. However, four-star rooms were still cheaper than three-star rooms, whose price increased 7.7 percent to 909 patacas.
Fewer openings for mainland internships The number of six-month internship positions in mainland China has dropped from 163 to just 70 this year, authorities revealed yesterday. The programme launched by the Labour Affairs Bureau three years ago has provided internships to 141 graduates and cost the government 5.2 million patacas (US$650,600), the head of the bureau’s Vocational Training Department, Hung Ling Biu, told Chinese-language Rádio Macau.
Mortgage loans up New approvals for residential mortgage loans rose 2.5 percent month-to-month in April to 2.8 billion patacas (US$350 million), of which 91.7 percent were extended to residents. According to data released by the Monetary Authority of Macau, commercial real estate loans dropped by 59.5 percent to 1.5 billion patacas. It was the first time the financial regulator released mortgage loan statistics on a monthly basis.
After being held in Chengdu and Xi’an, the China Catering Expo will be held in Macau for the first time
Xi Chen
xi@macaubusinessdaily.com
T
he third China Catering Expo will be held at the Venetian Macao from September 21 to 23 and, if the event is a hit, it may become a permanent fixture in the city’s calendar. “The central government supports Macau as the world centre of tourism and leisure. Macau is a meeting place for Western and Eastern food. The exhibition facility is perfect for large-size events,” expo coordinator Todd Cai told Business Daily. “That is why the Catering Expo is coming to Macau,” he said. “If it is successful, it will be located in Macau in the future.” This will be the first time Macau has hosted the event, the two previous expos having been held in the mainland Chinese cities of Chengdu and Xi’an. “With the booming tourism and gaming, the catering industry in Macau will expand in the near future. More and more cuisines from the rest of the world will be popular here, making the city international,” Mr Cai said. Looking at the city’s catering
industry, Mr Cai said its strength lay in a long history of Western and Eastern culinary fusion. But there are sour notes. He said the lack of manpower, competition from fast-food chains and the gradual disappearance of traditional restaurants were drawbacks.
A mouthful of events Covering 35,000 square metres, the exhibition area will have 1,500 booths for exhibitors from the mainland, Macau, Hong Kong, Japan, South Korea, Portugal, Spain, France and other countries. The expo aims to showcase various aspects of the food industry, including branded food and beverages, wining and dining, international cuisine, catering equipment and supplies, catering design and decoration, and stylish snacks. There will also be a food festival with over 400 kinds of food. The expo will include forums, seminars and business-matching activities. The organisers have invited nearly 1,000 senior executives, heads of purchasing departments, executive chefs, restaurant and hotel managers,
and representatives of large commercial real estate projects, among other people. The Catering Expo takes place against the backdrop of fast growth in the food industry in the mainland. The deputy director of the Ministry of Commerce’s Circulation Industry Promotion Centre, Zhou Qiang, said last week: “China’s urbanisation has driven the Chinese catering to a new development period, keeping a stable and rapid growth for 20 consecutive years. “The average annual growth during the 12th Five-Year Plan period is expected to be 16 percent.” Zhou said in a speech in Hong Kong that there were over 20,000 enterprises and 2 million workers in the mainland food industry. It said its revenue was expected to be 14 trillion yuan (17.6 trillion patacas) in the 12th Five-Year Plan period from 2011 to 2016, 90 percent more than in the preceding five years. The Ministry of Commerce’s Circulation Industry Promotion Centre and Macau’s Economic Services Bureau will organise the event, with help from the Macau Convention and Exhibition Association.
Weather Beijing 22/27o C Changchun 28/20o C
Harbin 30/20o C
Xian 26/22o C Shanghai 26/22o C Chengdu 26/20o C Kunming 24/18o C Haikou 34/27o C Sanya 31/25o C
Guangzhou 32/26o C
MACAU (25 June-30 June) Day
Temperature
Humidity
06/25
27/32o C
60/95 %
06/26
27/30o C
60/90 %
06/27
27/33o C
55/90 %
06/28
27/33o C
55/90 %
06/29
27/33o C
55/90 %
06/30
27/32o C
60/95 %
Shenzhen 32/26o C
ASIA (today)
Hong Kong 32/26o C
Manila
TOKYO
Jakarta
31/25o C
33/26o C
23/16o C
33/23o C
Macau 30/27o C
Bangkok
SEOUL
K. lumpur
39/26o C
SINGAPORE
29/15o C
33/23o C
taipei
33/26o C
June 26, 2012 business daily | 7
MACAU
Economics, not China rules, reason for softening of VIP market High rollers have more options than mass players for gambling in Macau Associate Editor
to-date the mass-market gambling market has been growing at 36 percent year-on-year, while the VIP market expansion has slowed to 17 percent year-on-year according to a note last week from CLSA AsiaPacific Markets. The newspaper quoted a figure of four visits per year having been reduced to three visits. Other sources have suggested to Business Daily however that six visits per year has recently been the maximum. There’s no written policy publicly available on the matter.
UnionPay curbs
Batted back – reports of curbs on visas and card payments for mainlanders
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report in the local Chineselanguage media linking the slowdown of Macau’s VIP gambling market with an unannounced tightening of rules on Individual Visit Scheme visas has been played down by industry sources. Macao Daily News reported on Saturday – citing an unidentified source
– that the authorities in mainland China are now taking “three to four weeks” longer to “review” citizens’ visa applications for Macau. This, the newspaper suggested, had the effect of reducing the number of times per year Chinese people can visit Macau and could affect the amount gambled by VIPs. Year-
Macao Daily News also suggested China UnionPay, an association for China’s banking card industry founded in 2002 under the auspices of the People’s Bank of China – the country’s central bank – had reduced the “maximum limit” for cross-border use of UnionPay cards in Macau from 10 million yuan (US$1.57 million) to one million yuan. The report didn’t specify whether that was per transaction or per day. No comment was available from China UnionPay prior to press time.
But industry sources told Business Daily that there is no connection between the buying and selling of watches in Macau’s many pawn shops – the traditional way for mass-market players to get crossborder funds to fuel their gambling, and where UnionPay signs are prominently displayed – and the rolling seen in the VIP junkets. They added that visa tightening is more likely to affect the massmarket than the VIP sector. “I think the reason for the softening of VIP – and it hasn’t contracted – is that things are still uncertain in Europe; there’s a lack of jobs growth in the US; and there are some question marks about China,“ said one source. “People are being a little more cautious in spending. That includes junkets spending when it comes to providing players with credit.” Another source added: “If VIP players want to come to Macau then a tightening on the IVS scheme won’t stop them. There are ways of getting hold of visas for foreign business trips that basically allow a side trip to go gambling in Macau.”
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business daily June 26, 2012
Greater China
London Metal Exchange bid hurts Hong Kong bourse HKEx’s bid most expensive exchange acquisition Jonathan Burgos and Eleni Himaras
H
ong Kong Exchanges & Clearing Ltd’s pursuit of the London Metal Exchange is transforming the Asian bourse into the industry’s worst performer. Hong Kong Exchanges’ US$2.2 billion bid for the LME this month valued the world’s largest trading venue for industrial metals at 181 times earnings, making it the most expensive bourse acquisition exceeding US$1 billion on record, according to data compiled by Bloomberg. With the Asian company’s stock tumbling since the first report of its interest in the LME, it has now retreated 33 percent in the past year, the biggest decline among the world’s 20 largest exchanges, the data show. While the merger will give Hong Kong Exchanges control of about 80 percent of global trade in industrial-metal futures as it grapples with falling profits and a slump in initial public offerings, the New York Stock Exchange’s head said the price would have been too rich for the biggest U.S. bourse operator. An increase in trading by Chinese companies on the LME is vital to justify the deal, making the
takeover’s success dependent on China’s regulators who have so far resisted granting the LME access to the mainland to protect its rival in Shanghai, according to Core Pacific-Yamaichi International (H.K.) Ltd. “In the short-term, this acquisition will be a huge burden,” Michiya Tomita, a Hong Kong-based fund manager at Mitsubishi UFJ Asset Management Co., said. “The valuation they’re buying LME for is expensive. This investment could pay off eventually if they are able to boost China’s trading volumes on LME, but that’s not easy to achieve given current regulatory restrictions.”
Benchmark prices Hong Kong Exchanges, formed a decade ago through the combination of the city’s equity and derivatives markets, has focused on stocks, options and futures on equity indexes and interest rates. The 135-year-old LME, which reported record volume of US$15.4 trillion last year, sets global benchmark prices for metals including copper, aluminium and nickel, of which
China consumes more than any other nation. Trading volume on the LME grew about 58 percent between 2007 and 2011, according to data from the exchange. UBS AG analyst Stephen Andrews forecasts trading will increase to 261 million lots by 2015, from about 147 million lots in 2011, according to a June 18 note. “This deal is about growth over not just one or two years, but over the longer term,” James Fok, chief of staff to Hong Kong Exchanges’ chief executive Charles Li, said. “As a standalone business, LME has quite an attractive growth rate. On top of that, what we’re able to help plug it into are areas of growth that it’s not capturing today – in particular China – that are able to boost that growth quite substantially.” “From our point of view we think the valuation stacks up very well,” he said. Hong Kong Exchanges said on June 15 it had agreed to pay 1.39 billion pounds (US$2.2 billion) for LME, or 181 times the London-based company’s 2011 earnings of 7.68 million pounds, according to data compiled by Bloomberg. The company, which had US$5.7
Esprit’s targets still in place: CEO Retailer to keep transformation plan; shares tumbled 25 pct since June 12 Vinicy Chan
E
sprit Holdings Ltd’s chief executive Ronald Van der Vis pledged to stay in the post for as long as a year after resigning this month and said the apparel maker is meeting turnaround projections. The 44-year-old Dutchman is also open to remaining on the board in the future and will “ensure a smooth transition,” he said in an interview. Esprit isn’t in acquisition talks and has no accounting problems, he said. Esprit’s shares have tumbled 25 percent since the June 12 resignation of Mr Van der Vis and the departure of chairman HansJoachim Koerber the next day, as investors grew concerned that
the exits were indicative of bigger problems. Mr Van der Vis said he had “no idea” Mr Koerber would quit soon after his own resignation was made public. The chief executive officer, at the helm since 2009, last year laid out a turnaround plan to rejuvenate the clothing company that he said had “lost its soul” and is struggling to recover from a three-year profit decline. Under Mr Van der Vis, Esprit is redoing existing stores and adding new ones in China in order to stem the exodus of customers to rivals including Hennes & Mauritz AB and Inditex SA. “I’ll be available as long as the
‘First leg of transformation on track,’ CEO Ronald Van der Vis
board wants me, as long as the shareholders want me,” said Mr Van der Vis. “The first leg of the transformation plan was very well on track,” he said, adding the board still backs the plan. But his departure has raised concerns that the company may falter in efforts to continue that growth. “I am not convinced by the
China healthcare market to hit US$500 bln Beijing wants 20 percent of its hospital beds privately owned by 2015
C
hina, where 260 million people suffer from cancer, diabetes and other diseases, is in a hurry to bolster its medical services. Investors seem to be ready to help. The latest is Carlyle Group LP-backed Concord Medical Services Holdings Ltd, which last week completed a deal for a 52 percent stake in Chang’an Hospital, a 1,000-bed facility at the eastern end of the Silk Road. The acquisition comes three months after China announced it wants 20
percent of its hospital beds privately owned by 2015. Other investors in China include Kuala Lumpur-based IHH Healthcare Bhd, Asia’s biggest hospital operator, which plans to build a hospital in Shanghai, to add to seven clinics it owns in Shanghai and one in Chengdu. The push for private hospitals in China is part of a broader drive to improve care in a country where 95 percent of people had health insurance as of 2011. China’s medical services market
is growing 18 percent annually and projected to reach 3.16 trillion yuan (US$500 billion) in 2015, accountancy firm Deloitte China said. “China’s gross domestic product has grown by leaps and bounds, but the quality of medical care has lagged far behind,” said David Chow, chairman of Harvest Medical Investment and Operation Group, a Taiwanese private equity firm that’s planning to buy stakes in mainland hospitals this year. “The potential for China’s hospitals to
billion in cash and short-term investments at the end of March, is borrowing 1.1 billion pounds for the purchase and plans to sell stock or bonds to refinance the loans.
‘Limited relevance’ The member-owned LME’s previous profits are “of limited relevance” because the bourse kept fees low for
continuity of the transformation plan,” Gabriel Chan, a Hong Kongbased analyst at Credit Suisse Group said. “The new CEO may have his or her own ideas which are different from the plan and half of the board members that actually backed the plan are gone.” The company said it planned to spend more than HK$18 billion (US$2.3 billion) over four years on efforts to revive its brand through more marketing and a bigger Chinese presence. The company said the transformation would aim to increase sales at a compound annual growth rate of 8 percent to 10 percent over four years and save HK$1 billion per annum at the end of the turnaround period. Those targets are still in place, Mr Van der Vis said. “In terms of sourcing, we’re ahead of schedule,” he said. “We are confident that we’ll be delivering the HK$1 billion annual savings after completion of the transformation plan.” Bloomberg
improve is massive, both in the overall number of beds and the fees charged for each bed.” As of last year, China had 3.7 million hospital beds, up 54 percent from 2005. Besides an increase in the proportion of beds run by private operators – it was 12 percent last year – the government wants at least one or two hospitals in each of its 2,853 counties by the end of 2015, according to an outline of the country’s health-care policies. Annual revenue from private hospitals in China may reach 2.4 trillion yuan (US$377 billion) by 2015, said Yvonne Wu, national life science and health care industry leader at Deloitte China in Shanghai. Bloomberg
June 26, 2012 business daily | 9
GREATER CHINA Tapping China Hong Kong plans to increase the London exchange’s revenue in part by tapping the large potential base of customers in China, which accounts for about 40 percent of consumption of commodities globally and only as much as 25 percent of trading on the LME, the company said. To increase trading by Chinese firms, the LME will need permission to register warehouses in mainland China, according to Timothy Li, a Hong Kongbased senior analyst for Core-Pacific Yamaichi. That may not be forthcoming with Chinese regulators interested in protecting the Shanghai Futures Exchange from competition, he said.
The company’s stock has now retreated 33 percent
the benefit of its shareholders, Hong Kong Exchanges said in a June 15 statement. Had a fee increase scheduled for next month taken place before 2011, profits would have tripled to 23.8 million pounds last year, it said. With that level of earnings, the takeover would value LME at 58 times profit.
“The earnings don’t justify the price,” Thomas Monaco, an analyst at Mizuho Securities Asia Ltd in Hong Kong, said. “I don’t see it being positive for earnings, which is essentially what the stock trades off of. I think they’ve bitten off much more than they can chew.” Taking into account the agreement
by Hong Kong Exchanges not to raise fees on the LME until 2015, Mr Monaco estimated in a June 18 note that the bourse will have to double the LME’s profits in order to avoid cutting its dividend or selling new shares to finance the deal. “This was a value-destructive deal and the company should not
US$2.2 billion
Hong Kong Exchanges’ bid for the London Metal Exchange
be doing something like this,” Mr Monaco said. With the announcement of the LME acquisition sending Hong Kong Exchanges to the largest drop in the city’s benchmark Hang Seng Index on June 18, the bourse has now tumbled 33 percent in the past year. The deal price means that Hong Kong Exchanges will have to boost LME’s revenue to at least 400 million pounds, from 61 million pounds in 2011, if it is to meet its own goal of a 10 percent to 15 percent return on investment for the acquisition in five years, UBS’s Mr Andrews said. The purchase is unlikely to make more than a “midsingle digit” return on investment in the next three to five years, according to a June 18 note from Andrews, who factored in the cost of financing and U.K. taxes. Bloomberg
10 |
business daily June 26, 2012
asia
India struggling over much-needed economic reforms Slow economy, stalled politics, fiscal strains and no consensus
F
ears of a rating downgrade and the possible fallout from a euro zone meltdown have forced a sense of urgency on India’s beleaguered government, re-igniting hopes for stalled economic reforms. Both Fitch and Standard & Poor’s (S&P) have cut their credit outlook for India to negative from stable, citing its slowing economy, policy inaction and worsening fiscal situation. S&P has also warned of a sovereign credit rating downgrade if the situation remained unchanged. Following are some of the big ticket reforms that India has been struggling to implement for want of political consensus.
and-pop stores, causing massive unemployment and social unrest. Although Singh has long been promising to revisit the decision, a worsening economic situation and changed political equations may finally allow him to act on that promise after the July 19 presidential election.
US$17 billion
extra borrowings needed to meet unexpected deficit rise
Foreign investment in supermarkets After years of deliberation, Prime Minister Manmohan Singh finally proposed late last year to open up India’s US$450 billion supermarket sector for foreign investment. But he had to backtrack a few days later as a political backlash over the issue put his government in danger. Opening up the sector is expected to modernise an archaic supply chain, which will help resolve the problem of high food inflation. But critics say it would wipe out indigenous mom-
Government officials say opening up the retail sector would help boost capital inflows, which will help strengthen the rupee and bolster investor confidence in the economy. The government is hoping the socialist Samajwadi Party (SP) will help implement this controversial reform, just as the latter bailed it out on the presidential election. Late last year, the SP strongly
opposed the decision to allow 51 percent foreign direct investment in multi-brand retail, but its leaders now say they would not let the government fall over the issue.
hike prices of subsidised fuels since mid-2011. But mounting concerns over public finances are expected to force the government to raise at least diesel prices after July 19.
Fuel subsidy reform Every year, the Indian government pays huge compensation to staterun oil companies for selling diesel, kerosene and cooking gas below market price. This acts as a drag on public finances and ends up widening the fiscal gap. But the subsidies are intended to benefit the poor and any tinkering with them has the potential of raising a political storm and endangering the government. New Delhi had to pay about US$12 billion to oil firms in fiscal 2011/12 (April-March) to cover their losses, which widened its fiscal gap to 5.8 percent of GDP from the planned 4.6 percent. India had to raise an extra US$17 billion from market borrowings to meet the overall deficit. Economists say a lower deficit and lower government borrowing are preconditions for reviving private investment that has been anemic since the 2008 financial crisis. Fears of a political backlash have not allowed the government to
US$2.5 billion
airlines losses in the last fiscal year FDI in civil aviation The proposal to allow foreign airlines buy stakes in local carriers is expected to help address their financial woes. Indian airlines were laden with US$20 billion in debt and
Sony, Panasonic to cooperate on OLED televisions Japanese rivals to counter fierce Korean competition
R
ival Japanese television makers Sony Corp and Panasonic Corp said yesterday they will cooperate to make OLED (organic light emitting diode) sets as they battle Korean rivals Samsung Electronics and LG Electronics for pole position in the next-generation TV market. The race to garner a lead in OLED, widely touted as the successor to liquid-crystal displays, will depend on which company is able to mass produce screens at a price that will attract consumers to the new technology. Sony and Panasonic said in a statement they will develop technologies to fabricate the screens and aim to establish a massproduction process in 2013. Both Samsung and LG Electronics have displayed 55-inch OLED prototypes, with the sets expected to go on sale this year at a rumored price tag of as much as US$10,000, or about four times the cost of an equivalent LCD model. An executive at LG Display, a flat-
screen maker 38 percent owned by LG Electronics, told Reuters earlier an internal study indicated consumers would start buying OLED TVs once the price falls to 1.3 to 1.4 times that of an LCD set. Hammered by their Korean competitors in LCD TVs, Sony and Panasonic stand a better chance of competing in the next generation market by combining their OLED technologies and development budgets. Losses on TVs at Sony have mounted to around US$12 billion in the past decade. Sony pioneered OLED technology, which boast sharper images and do not need backlighting, selling the world’s first OLED TV in 2007. It halted production of the US$2,000 screens three years later amid the post-Lehman global downturn. Sony still makes OLED screens costing as much as US$26,000 for high-end customers. Panasonic plans to invest about 30 billion yen (US$373 million) for a test production line of OLED panels. Reuters
Toyota to supply hybrid technology to BMW
T
oyota Motor Corp plans to supply hybrid technology to BMW AG, deepening a partnership that began with a deal last December on diesel engines and electric car batteries, the Nikkei business daily reported on Monday. This month, BMW’s joint venture to make hybrid car components with French auto maker PSA Peugeot Citroen was thrown into doubt by the prospect of deepening ties between PSA and its European rival Opel, a division of General Motors . Akio Toyoda, president of Toyota, and Norbert Reithofer, chief executive of BMW, plan to hold a news conference in Germany this week to announce the new project,
the paper said without citing sources. Toyota was not immediately available for comment. In December, the German premium car maker agreed to supply diesel engines to Toyota from 2014 in Europe and collaborate on lithiumion battery research for electric cars. Global automakers face ballooning research and development costs to meet tougher emissions and fueleconomy standards around the world. This has accelerated cooperation deals among car makers, including Toyota and BMW’s main rivals, Nissan Motor Co and Daimler AG, along with Nissan’s French partner, Renault SA. Reuters
June 26, 2012 business daily | 11
asia
Policy changes stalled, economic takeoff delayed
probably lost US$2.5 billion in the fiscal year that ended in March, according to Centre for Asia Pacific Aviation, a consultancy. Although the civil aviation industry has been lobbying hard for permitting foreign investment, opposition by the Trinamool Congress, a key government ally, has forced the government to put it on the backburner.
Insurance and pension sectors India has plans to permit 26 percent FDI in the pension sector and raise the investment limit in the insurance sector to 49 percent from 26 percent. However, political opposition has
forced the government to defer the proposals as enacting them requires legislative approval. The ruling coalition does not enjoy the required majority in the upper house of parliament to pass the proposals.
governments, which fear revenue losses once the GST comes into effect. Enacting GST requires an amendment to the constitution, which needs approval by two-thirds of federal lawmakers and needs to
be passed by at least half of 28 state legislatures. The ruling Congress Party-led coalition needs the opposition Bharatiya Janata Party’s support for these numbers. Reuters
Goods and services tax (GST) The proposed reform intends to transform India into a single fiscal union, helping cut business costs and boost government revenue. A nationwide GST is estimated to add between 0.9-1.7 percentage points to India’s GDP. However the proposal, first mooted in 2007, is facing opposition from state
Golf International 2012 Corporate Social Responsibility is part of our companies genetic code. And yours? Business Citizenship at its best. Follow their example.
Yahoo Japan shares fall on e-mail privacy inquiry
Y
ahoo Japan Corp. fell the most in three weeks in Tokyo trading as the government said it will question the company about plans to display advertisements based on the contents of users’ e-mail messages. Japan’s largest Internet company by market value fell 1.5 percent, the biggest decline since June 1, to 24,870 yen at the close on the Tokyo Stock Exchange. The benchmark Nikkei 225 Stock Average fell 0.7 percent. Yahoo Japan will start using a program in August that automatically detects key words in e-mails, said Asuka Isayama, a spokeswoman for the Tokyo-based web-portal operator. The Ministry of Internal Affairs and Communications plans to ask Yahoo Japan about the service, said Noriyuki Morisato, a deputy director at the telecommunications consumer policy division, confirming an earlier report by the Yomiuri newspaper. “We’ve been notifying users of our plan to introduce the service since the end of May, and we will also offer an option to opt out,” Yahoo Japan’s Mr Isayama said. “So we don’t think there’s a problem.” Mr Morisato declined to comment on whether the service violates privacy laws.
Incoming e-mails from senders not using Yahoo would also be subject to scanning, Mr Isayama said. The company’s e-mail service has about 15 million users in Japan, she said. “There won’t be any impact on Yahoo’s earnings” from a potential government probe, said Eiji Maeda, a senior analyst at SMBC Nikko Securities Inc. in Tokyo. “Still, the market is taking the news as negative.” Softbank Corp., Japan’s thirdbiggest mobile-phone company, owns about 42 percent of Yahoo Japan, while Yahoo! Inc. owns about 35 percent, according to data compiled by Bloomberg. Bloomberg
Yahoo Japan (4689 JP) share price JPY 25500
25000
24500
24000
25-Jun
23500
This place can be yours
This place can be yours
12 |
business daily June 26, 2012
MARKETS Hang SENG INDEX NAME
NAME
PRICE
Day %
VOLUME
25.5
-1.353965
15014772
CHINA UNICOM HON
3.2
-2.439024
10804480
CITIC PACIFIC
BANK OF CHINA-H
2.87
-1.034483
182133586
BANK OF COMMUN-H
4.97
-1.584158
11395907
BANK EAST ASIA
25.9
0
1202684
11.82
-2.152318
AIA GROUP LTD ALUMINUM CORP-H
BELLE INTERNATIO
NAME
PRICE
Day %
56.65
1.160714
11.52
-1.030928
3184796
SANDS CHINA LTD
2191497
24.1
-2.231237
13386614
SINO LAND CO
11.06
0.1811594
2907000
SUN HUNG KAI PRO
89.45
0.2802691
1772396
SWIRE PACIFIC-A
87.75
0
909050
TENCENT HOLDINGS
221.4
-0.6283662
2612734
19.02
-0.9375
2540633
9.12
-2.564103
11373274
41.15
-0.9626955
4029817
POWER ASSETS HOL
64.65
0.3103181
1271910
-0.6954103
55309093
COSCO PAC LTD
9.37
-2.192067
2493993
19244745
ESPRIT HLDGS
9.88
-2.178218
12035853
HANG LUNG PROPER
25.55
2.2
5546762
TINGYI HLDG CO
103
0
1197170
WANT WANT CHINA
40.65
0.1231527
2136780
WHARF HLDG
73.9
-0.1351351
2104632
HONG KG CHINA GS
16.42
0.3667482
2956366
HONG KONG EXCHNG
108.6 -0.09199632
6017165
23.55
0.856531
10800996
-1.444623
2510999
HANG SENG BK
CHEUNG KONG
90.85
-0.5473454
3063965
HENDERSON LAND D
6.28
-2.786378
38218097
HENGAN INTL
5.14
-1.532567
162400218
CHINA LIFE INS-H
18.74
-1.160338
22037671
CHINA MERCHANT
21.9
-2.666667
2848300
82.15
1.169951
16130511
HUTCHISON WHAMPO
16.8
0.2386635
23956752
IND & COMM BK-H
CHINA MOBILE
28644921
14.28
12.28
CHINA OVERSEAS
VOLUME
-1.853759
CNOOC LTD
BOC HONG KONG HO
CHINA CONST BA-H
Day %
9.53
CLP HLDGS LTD
CATHAY PAC AIR CHINA COAL ENE-H
PRICE
HSBC HLDGS PLC
67.8
0.5189029
19175943
64.45
-1.452599
5999321
4.23
-1.856148
249757677
MOVERS
13
33
VOLUME
3 19490
INDEX 18897.45
CHINA PETROLEU-H
6.75
-2.315485
69865721
LI & FUNG LTD
14.42
-0.4143646
10923843
HIGH
19480.71
CHINA RES ENTERP
22.25
-1.111111
2278272
MTR CORP
25.55
0.1960784
1232122
LOW
18897.45
CHINA RES LAND
14.84
-0.8948845
9775026
NEW WORLD DEV
8.78
-2.335929
10335796
CHINA RES POWER
14.98
1.904762
5113819
52W (H) 22835.03
PETROCHINA CO-H
10.06
-1.178782
43328833
CHINA SHENHUA-H
25.65
-1.724138
13563681
PING AN INSURA-H
58.7
-1.427372
5520832
(L) 16170.35
18890
21-Jun
25-Jun
Hang SENG CHINA ENTErPRISE INDEX PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
2.95
-1.666667
66905333
CHINA PACIFIC-H
23.9
0.4201681
4341004
AIR CHINA LTD-H
4.7
1.952278
14022290
CHINA PETROLEU-H
6.75
-2.315485
ALUMINUM CORP-H
3.2
-2.439024
10804480
CHINA RAIL CN-H
6.27
ANHUI CONCH-H
21.4
-2.947846
13051925
CHINA RAIL GR-H
BANK OF CHINA-H
2.87
-1.034483
182133586
CHINA SHENHUA-H
BANK OF COMMUN-H
4.97
-1.584158
11395907
CHINA TELECOM-H
BYD CO LTD-H
14.4
-4.38247
2629952
DONGFENG MOTOR-H
CHINA CITIC BK-H
3.84
-1.030928
15484522
GUANGZHOU AUTO-H
6.53
-1.804511
4202416
CHINA COAL ENE-H
6.28
-2.786378
38218097
HUANENG POWER-H
5.62
2.181818
22699981
CHINA COM CONS-H
6.59
-1.1994
16613060
IND & COMM BK-H
4.23
-1.856148
249757677
CHINA CONST BA-H
5.14
-1.532567
162400218
JIANGXI COPPER-H
16.56
-2.816901
8051467
NAME
NAME
PRICE
DAY %
VOLUME
YANZHOU COAL-H
12.1
0
12044871
69865721
ZIJIN MINING-H
2.57
-0.7722008
25625808
-1.569859
10963114
ZOOMLION HEAVY-H
9.98
-1.188119
14534854
3.1
-3.125
11173746
ZTE CORP-H
14.72
0.2724796
4288418
25.65
-1.724138
13563681
3.29
-2.373887
56026933
12.26
-2.252217
9542873
3.43
-2.832861
7858766
PETROCHINA CO-H
10.06
-1.178782
43328833
18.74
-1.160338
22037671
PICC PROPERTY &
8.66
-2.587177
11345001
CHINA LONGYUAN-H
5.03
-1.757812
6331534
PING AN INSURA-H
58.7
-1.427372
5520832
CHINA MERCH BK-H
14.04
-1.542777
11563561
SHANDONG WEIG-H
8.42
-2.771363
10892629
CHINA COSCO HO-H CHINA LIFE INS-H
CHINA MINSHENG-H
6.9
-0.5763689
16404784
SINOPHARM-H
19.98
1.52439
2162308
CHINA NATL BDG-H
8.77
-1.349831
29218399
TSINGTAO BREW-H
45.3
-0.9836066
1955256
10.44
-2.247191
4583301
WEICHAI POWER-H
31.55
-0.4731861
1158399
CHINA OILFIELD-H
NAME
MOVERS
5
34
1 9820
INDEX 9364.03 HIGH
9817.44
LOW
9361.94
52W (H) 12902.97 9360
(L) 8058.58 21-Jun
25-Jun
Shanghai Shenzhen CSI 300 NAME
NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.54
0
52361850
DATANG INTL PO-A
AIR CHINA LTD-A
6.02
-1.311475
12525106
DONGFANG ELECT-A
ALUMINUM CORP-A
6.41
-2.137405
8240650
14.94
-5.082592
30534745
ANHUI CONCH-A
EVERBRIG SEC -A GD MIDEA HOLDING
PRICE
DAY %
VOLUME
5.8
0.3460208
7132613
SHANDONG GOLD-MI
19.84
-3.68932
7986378
12.3
-4.354588
11
NAME
PRICE
DAY %
VOLUME
33.38
-3.302433
11192172
SHANG PUDONG-A
8.35
-1.066351
52706596
15704825
SHANGHAI ELECT-A
5
-1.574803
6441177
-3.339192
26401998
SHANXI LU'AN -A
20.45
-6.321576
18549462
BANK OF BEIJIN-A
9.47
-0.4206099
15083848
GD POWER DEVEL-A
2.71
0
37046206
SHANXI XINGHUA-A
36.22
-0.7671233
1807512
BANK OF CHINA-A
2.83
-0.3521127
13845254
GF SECURITIES-A
28.45
-5.166667
9045342
SHANXI XISHAN-A
14.95
-4.289373
17760521
BANK OF COMMUN-A
4.51
0
48711175
GREE ELECTRIC
21.25
-2.028585
11706167
SHENZ DVLP BK-A
14.77
-0.8724832
16435834
BAOSHAN IRON & S
4.39
-0.4535147
14531341
GUANGHUI ENERG-A
12.9
-7.194245
45403520
SHENZEN OVERSE-A
6.29
-4.69697
39594750
BYD CO LTD -A
21.8
-4.049296
1964795
HAITONG SECURI-A
9.26
-4.536082
98859867
SINOVEL WIND-A
15.42
-2.528445
2241547
CHINA CITIC BK-A
3.98
-0.7481297
12073195
HANGZHOU HIKVI-A
25.93
-0.4606526
2422437
SUNING APPLIAN-A
8.31
-2.693208
45345509
CHINA CNR CORP-A
4.05
-1.699029
26601128
HEBEI IRON-A
2.79
-1.760563
15763408
TSINGTAO BREW-A
37.93
-2.242268
2805401
CHINA COAL ENE-A
7.96
-2.926829
11583235
HENAN SHUAN-A
61.7
-2.063492
1729419
WEICHAI POWER-A
30.1
-2.903226
3230409
CHINA CONST BA-A
4.22
-1.482433
20792840
HUATAI SECURIT-A
10.03
-2.998066
24014262
WULIANGYE YIBIN
32.02
-1.020093
11243289
CHINA COSCO HO-A
4.71
-0.8421053
7280197
HUAXIA BANK CO
9.28
-0.8547009
16491032
XCMG CONSTRUCT-A
13.9
-1.905434
6013422
CHINA CSSC HOL-A
22.51
0.222618
7243240
IND & COMM BK-A
3.94
0.7672634
49675545
XIAMEN TUNGSTEN
43.19
-7.038313
11201888 23678281
CHINA EAST AIR-A
4.12
0
16570482
INDUSTRIAL BAN-A
12.8
0.2349256
40772707
YANGQUAN COAL -A
15.07
-7.71586
CHINA EVERBRIG-A
2.81
-0.3546099
28521359
INNER MONG BAO-A
42.7
-3.437359
40341480
YANTAI CHANGYU-A
70.58
-0.3107345
584316
CHINA LIFE INS-A
17.14
-2.558272
8916411
INNER MONG YIL-A
20.68
-1.052632
22767661
YANTAI WANHUA-A
13.83
-4.554865
11733878
CHINA MERCH BK-A
10.99
0.8256881
54425437
INNER MONGOLIA-A
5.09
-8.122744
100861450
YANZHOU COAL-A
20.72
0
5179615
CHINA MERCHANT-A
11.56
-2.033898
11321364
JIANGSU HENGRU-A
27.76
0.325262
2790535
YUNNAN BAIYAO-A
56.2
0
2087216
CHINA MERCHANT-A
23.41
-5.794769
12814354
JIANGSU YANGHE-A
135.7
-0.3744218
1617186
ZHONGJIN GOLD
22.18
-4.231434
10592388
CHINA MINSHENG-A
6.26
0.3205128
145128284
JIANGXI COPPER-A
23.52
-3.921569
8505633
ZIJIN MINING-A
3.89
-2.506266
45353212
12.6
-4.036558
6009096
ZOOMLION HEAVY-A
10.2
-1.734104
31012322
15
-6.774394
26140406
14.45
-3.409091
12667266
CHINA NATIONAL-A
6
-3.069467
13073738
JINDUICHENG -A JIZHONG ENERGY-A
CHINA OILFIELD-A
15.27
-6.319018
9951203
CHINA PACIFIC-A
20.79
-2.34852
14938574
KANGMEI PHARMA-A
14.25
2.813853
26629434 1843405
CHINA PETROLEU-A
6.37
-0.46875
26247104
KWEICHOW MOUTA-A
237.6
-0.9091667
CHINA RAILWAY-A
4.43
-3.485839
17651180
LUZHOU LAOJIAO-A
40.6
0.2221674
5308254
2.47
-0.8032129
21149469 10694515
CHINA RAILWAY-A
2.59
-1.520913
18680807
METALLURGICAL-A
CHINA SHENHUA-A
22.61
-3.293413
18302023
NARI TECHNOLOG-A
18.81
-3.883495
CHINA SHIPBUIL-A
5.25
-0.7561437
19264922
NINGBO PORT CO-A
2.52
-0.7874016
9395486
PANGANG GROUP -A
6.62
-9.315068
60156162
ZTE CORP-A
MOVERS
25
261
14 2570
INDEX 2456.518
CHINA SOUTHERN-A
4.65
-1.273885
16361741
CHINA STATE -A
3.34
-1.474926
60200187
PETROCHINA CO-A
9.08
-0.4385965
8862791
43.54
-2.747375
18909716
HIGH
2566.22
LOW
2456.14
3.8
-1.041667
44869684
PING AN INSURA-A
CHINA VANKE CO-A
8.75
-3.100775
71557112
POLY REAL ESTA-A
10.94
-4.869565
50054437
CHINA YANGTZE-A
6.76
-0.5882353
11363729
QINGDAO HAIER-A
11.85
-1.741294
5198575
CITIC SECURITI-A
12.31
-2.687747
86304684
QINGHAI SALT-A
32.28
1.222954
13448619
CSR CORP LTD -A
4.68
-1.886792
13567494
SAIC MOTOR-A
14.22
-1.112656
10750632
DAQIN RAILWAY -A
7.16
-1.241379
34743450
SANY HEAVY INDUS
13.82
-1.073729
21391398
NAME
PRICE DAY %
Volume
PRICE DAY %
Volume
ACER INC
32 -0.9287926
11996718
FORMOSA PLASTIC
75.6
-2.199224
6779625
-1.953125
22105373
FOXCONN TECHNOLO
107
-3.603604
10783207
ASIA CEMENT CORP
36.55 -0.5442177
2380287
FUBON FINANCIAL
29.1 -0.6825939
8484292
ASUSTEK COMPUTER
275.5
-2.131439
5962137
HON HAI PRECISIO
86.5 -0.1154734
21805334
11.8 -0.8403361
19247030
HOTAI MOTOR CO
195.5
-2.25
889588
HTC CORP
378.5
-1.943005
12067114
16 -0.3115265
7981280
YUANTA FINANCIAL YULON MOTOR CO
52.3 -0.7590133
2339976
CHINA UNITED-A
52W (H) 3140.102 (L)2254.567
2450
20-Jun
25-Jun
FTSE TAIWAN 50 INDEX
ADVANCED SEMICON
AU OPTRONICS COR CATCHER TECH
25.1
197
NAME
-1.253133
8248060
CATHAY FINANCIAL
28.85 -0.5172414
10520920
HUA NAN FINANCIA
CHANG HWA BANK
15.15 -0.9803922
7414446
LARGAN PRECISION
599
-2.124183
1393740
CHENG SHIN RUBBE
73.4
-1.078167
5650730
LITE-ON TECHNOLO
36.6
-1.347709
2285852
CHIMEI INNOLUX C
12.45
1.219512
22278834
MEDIATEK INC
280.5
2.372263
19081438
CHINA DEVELOPMEN
6.91 -0.8608321
25166205
MEGA FINANCIAL H
21.05
-1.173709
24996431
CHINA STEEL CORP
27.6 -0.5405405
14464564
NAN YA PLASTICS
52.8
-4
5821214
CHINATRUST FINAN
16.8
-1.466276
22735380
PRESIDENT CHAIN
154 -0.6451613
CHUNGHWA TELECOM
91.2
-0.109529
5511292
QUANTA COMPUTER
78.5
COMPAL ELECTRON
26.9
-2.536232
12937503
SILICONWARE PREC
30.5
0.660066
3721722
86 -0.2320186
6389750
SINOPAC FINANCIA
10.7
-1.382488
10333465
72.5 -0.2751032
2946006
DELTA ELECT INC
0
743978 9408425
FAR EASTERN NEW
30.35
0.1650165
4400641
SYNNEX TECH INTL
FAR EASTONE TELE
64.5
-0.462963
7357860
TAIWAN CEMENT
34.25
-1.011561
4165091
FIRST FINANCIAL
16.8 -0.2967359
8620256
TAIWAN COOPERATI
17.05 -0.5830904
5629418
FORMOSA CHEM & F
75.3
-2.33463
4153325
TAIWAN FERTILIZE
67.6 -0.4418262
1884815
FORMOSA PETROCHE
78.3
-1.509434
2333266
TAIWAN GLASS IND
23.95
-1.844262
2997644
NAME
PRICE DAY %
Volume
TAIWAN MOBILE CO
93.9
0.6430868
TPK HOLDING CO L
460
-2.953586
2497147 2944516
TSMC
79.6 -0.6242197
39518634
UNI-PRESIDENT
45.15
-1.741023
8901357
UNITED MICROELEC
12.25
-2
17111128
WISTRON CORP
37.25
0
4551003
13.1 -0.7575758
11201090
MOVERS
6
42
2 5030
INDEX 4909.4 HIGH
5027.12
LOW
4907.11
52W (H) 6026.51 (L) 4643.05
4900
21-Jun
25-Jun
June 26, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) galaXy eNtertaiNMeNt
Max 19.58
average 19.42
Melco crowN eNtertaiNMeNt
Min 19.22
last 19.58
19.6
30.4
12.15
19.5
30.3
12.10
19.4
30.2
12.05
19.3
30.1
12.00
19.2
SaNdS cHiNa ltd
average 24.26
24.7
Max 30.3
average 30.20
Min 30.1
Min 24
Max 12.14
14.30
24.6
14.25
24.4
14.20
24.2
14.15
Min 11.96
last 12.12
average 14.15
14.28
PRICE
WTI CRUDE FUTURE Aug12
79.07
-0.865082857
-20.25214322
111.3799973
77.55999756
BRENT CRUDE FUTR Aug12
90.06
-1.011211255
-14.48105593
124.6999969
88.48999786
GASOLINE RBOB FUT Jul12
258.63
0.638157127
-4.729804398
332.1799994
246.4999914
GAS OIL FUT (ICE) Aug12
802.75
-0.557448126
-10.70634038
1046.5
801
2.698
2.780952381
-16.80542707
4.890000343
2.095999956
HEATING OIL FUTR Jul12
DAY %
YTD %
(H) 52W
18
17.8
Min 14.12
17.6
last 14.16
Max 18.16
average 17.87
251.49
-0.741997869
-11.53129067
331.9299936
250.999999
1568.95
-0.2213
0.2582
1921.18
1478.78
Silver Spot $/Oz
26.7638
-0.5618
-3.8484
44.2175
26.085
Platinum Spot $/Oz
1434.75
-0.1343
2.8863
1915.75
1339.25
Palladium Spot $/Oz
609.13
0.2683
-6.7896
848.37
537.54
LME ALUMINUM 3MO ($)
1862
-0.427807487
-7.821782178
2675.25
1854
LME COPPER 3MO ($)
7310
-0.422285792
-3.815789474
9905
6635
LME ZINC
1800
-1.315789474
-2.43902439
2539.5
1718.5
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep12 Dec12
16575
0.759878419
-11.41101015
25195
15980
14.865
0.950764007
-1.097804391
18
13.95499992
579.25
4.557761733
-1.194029851
673.5
499
WHEAT FUTURE(CBT) Sep12
PRICE
(L) 52W
Gold Spot $/Oz
last 17.72
Min 17.64
MAJORS
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
DAY %
1.0011 1.5557 0.9619 1.2484 79.83 7.9927 7.7596 6.3633 56.8475 31.85 1.2821 29.967 42.648 9509 79.909 1.20083 0.8025 7.9535 9.9792 99.66 1.03
YTD %
-0.5266 -0.1989 -0.6861 -0.6842 0.7516 0.0163 0.0077 0.0141 0.5409 -0.1256 -0.4056 -0.0834 -0.3541 -0.1577 1.3015 0.0117 0.496 0.3269 0.5271 1.4449 0
(H) 52W
-1.9395 0.0901 -2.4743 -3.6803 -3.6578 0.0863 0.1005 -1.0733 -6.6538 -0.9419 1.131 1.0411 2.795 -4.6272 -1.8484 1.3291 3.8492 2.272 3.7358 0 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
2.66
-3.971119
20.90909
3.25
1.88
4054249
150.0999908
CROWN LTD
8.53
1.306413
5.438811
9.29
7.45
1279539
711
3.418181818
1.318133238
853.5
606.75
SOYBEAN FUTURE Nov12
1422.75
3.435114504
18.14407307
1425.25
1115.75
COFFEE 'C' FUTURE Sep12
154.25
-1.05837075
-34.15154749
288.8500061
NAME
PRICE
DAY % YTD %
VOLUME CRNCY
SUGAR #11 (WORLD) Oct12
19.99
1.215189873
-12.43977223
26.03999901
19.23999977
AMAX HOLDINGS LT
0.077
-1.282051
-11.49425
0.119
0.06
1187000
COTTON NO.2 FUTR Dec12
69.36
0.347222222
-21.03825137
102.25
64.61000061
BOC HONG KONG HO
23.55
0.856531
27.98913
24.45
14.24
10800996
CENTURY LEGEND
World Stock MarketS - Indices NAME
0.236
0
2.608694
0.4
0.204
0
CHEUK NANG HLDGS
2.96
0
5.714288
4.36
2.3
0
CHINA OVERSEAS
16.8
0.2386635
29.4299
18.48
9.99
23956752
CHINESE ESTATES
8.96
-0.1114827
-28.32
13.68
8.3
120500
CHOW TAI FOOK JE
9.4
-3.092784
-32.47126
15.16
8.55
3904400
EMPEROR ENTERTAI
1.34
0
20.72072
2.04
0.97
1015000
FUTURE BRIGHT
0.94
6.818182
123.8095
1.09
0.3
6330000
19.22
-1.536885
34.97191
24.95
8.69
9553709 1197170
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
103
0
11.77428
125
84.4
FTSE 100 INDEX
GB
5470.65
-0.7806025
-1.823847
6084.08
4791.01
HOPEWELL HLDGS
20.5
0.7371007
3.222555
24.903
18.56
475500
DAX INDEX
GE
6170.75
-1.476869
4.618239
7523.53
4965.8
HSBC HLDGS PLC
67.8
0.5189029
14.91525
78.85
56
19175943
NIKKEI 225
JN
8734.62
-0.7243404
3.302885
10255.15
8135.79
HANG SENG INDEX
HK
18897.45
-0.5142371
2.511928
22835.03
16170.35
CSI 300 INDEX
CH
2456.518
-2.21588
4.722434
3140.102
2254.567
TAIWAN TAIEX INDEX
TA
7166.38
-0.7708338
1.33341
8842.17
GALAXY ENTERTAIN
HUTCHISON TELE H
3.54
1.142857
18.39465
3.71
2.35
1585035
LUK FOOK HLDGS I
15.52
-1.272265
-42.73063
46.15
14.7
2044000
MELCO INTL DEVEL
6.2
0.1615509
7.45234
10.76
4.3
1811000
MGM CHINA HOLDIN
12.12
1.337793
26.35327
17.183
7.6
874400
6609.11
MIDLAND HOLDINGS
3.82
-1.546392
-3.390121
5.217
2.887
634000
NEPTUNE GROUP
0.097
5.434783
-12.61261
0.153
0.08
460000
NEW WORLD DEV
8.78
-2.335929
40.25559
11.279
6.13
10335796
SANDS CHINA LTD
24.1
-2.231237
9.794985
33.05
14.9
13386614
SHUN HO RESOURCE
1.15
0
15
1.32
0.82
0
0.7490637
5.113918
4.668
2.241
2121555 10956081
KOSPI INDEX
SK
1825.38
-1.191411
-0.01971723
2192.83
1644.11
S&P/ASX 200 INDEX
AU
4027.814
-0.5038522
-0.7086442
4657.4
3765.9
ID
3857.589
-0.8210261
0.9313774
4234.734
3217.951
FTSE Bursa Malaysia KLCI
MA
1603.12
0.003119015
4.729117
1611.5
1310.53
SHUN TAK HOLDING
2.69
NZX ALL INDEX
NZ
760.686
0.1996918
4.232073
806.015
700.441
SJM HOLDINGS LTD
14.16
-1.529903
13.22985
20.711
10.079
SMARTONE TELECOM
14.92
0.2688172
11.01191
18.5
9.8
757000
WYNN MACAU LTD
17.7
-1.775805
-9.230769
27.48
14.807
3922000
JAKARTA COMPOSITE INDEX
PHILIPPINES ALL SHARE IX
11.95
18.2
14.10
24
last 24.1
average 12.025
wyNN Macau ltd
24.8
NAME
CORN FUTURE
30.0
CURRENCY EXCHANGE RATES
NATURAL GAS FUTR Jul12
METALS
last 30.15
SJM HoldiNgS ltd
Commodities ENERGY
MgM cHiNa HoldiNgS
PH
3401.6
0.7403897
11.70954
3518.96
2695.06
HSBC Dragon 300 Index Singapor
SI
536.86
-1.49
8.17
na
na
ASIA ENTERTAINME
4.02
0.2493766
-31.63265
10.8692
3.66
64937
STOCK EXCH OF THAI INDEX
TH
1147.43
-0.475319
11.90946
1247.72
843.69
BALLY TECHNOLOGI
46.5
0.129199
17.54297
49.32
24.74
474998
HO CHI MINH STOCK INDEX
VN
424.12
-0.7140015
20.64287
492.44
332.28
BOC HONG KONG HO
2.95
-1.666667
23.06088
3.15
1.81
2700
Laos Composite Index
LO
1011.19
0
12.4219
1107.3
876.33
GALAXY ENTERTAIN
2.55
0
36.36364
3.24
1.08
3865
INTL GAME TECH
15.08
1.072386
-12.32559
19.15
13.12
4036284
JONES LANG LASAL
69.82
-0.07156147
13.97323
99.89
46.01
733454
LAS VEGAS SANDS
44.66
-0.2011173
4.516734
62.09
36.08
6607590
MELCO CROWN-ADR
11.82
0.7672634
22.86902
16.15
7.05
2553407
MGM CHINA HOLDIN
1.55
0
30.06704
2.2131
1.0025
1000
MGM RESORTS INTE
10.99
0.1823154
5.369124
16.05
7.4
9109144
SHUFFLE MASTER
13.63
2.404207
16.29693
18.77
7.35
901468
1.83
1.104972
13.83621
2.6037
1.2624
150
103.32
1.244488
-6.489273
165.4931
95.82
2407146
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalization. All data supplied by Bloomberg unless otherwise indicated.
SJM HOLDINGS LTD WYNN RESORTS LTD
AUD HKD
USD
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ONE YEAR Suscription REGULAR 1,560 Mop 20% discount 1,150 Mop
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I wish to pay by Cheque or Direct Deposit Make payable to De Ficção-Projectos Multimedia Banco Comercial de Macau (BCM) Acct# 1099732111 Make payable to De Ficção-Projectos Multimedia Limitada Banco Nacional Ultramarino (BNU) Acct# 9008096687 Visa Master Card American Express Credit Card
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14 |
business daily June 26, 2012
Opinion
End the subsidies of fossil fuel Mary Duenwald Katy Roberts Bloomberg View Editors
T
here may be little reason to hope the Rio+20 meeting in Brazil this week will lead to major global action against climate change. World leaders have skipped it. The draft agreement the delegates from 190 countries have written is rightly criticized as weak. Yet it turns out that one specific climate challenge — how to eliminate subsidies for fossil fuels such as oil, gas and coal — is attracting extraordinary interest in Rio de Janeiro and might at least inspire countries to take small but significant steps toward reducing greenhouse-gas emissions. These rising subsidies cost the world US$409 billion in 2010, according to the International Energy Agency. If no efforts are made to curtail them, they could reach US$660 billion by 2020, 0.7 percent of global gross domestic product. What’s at least as bad is that the subsidies keep the price of fossil fuels below market rates — so low as to discourage measures to improve energy efficiency. Getting rid of them could lower total energy demand by 4.1 percent by 2020, the IEA estimates. Simply ending the subsidies would boost the price of power, however, and leaders naturally want to avoid a popular pushback, whether at the polls or in the streets, especially at a time of financial hardship. That is not the only option. Our corporate colleague Michael Liebreich, the chief executive of Bloomberg New Energy Finance, has devised a way to phase out fossil-fuel subsidies and, in the process, replace them with financial support for energy-efficiency efforts and renewable power. It’s a strategy that could work in countries large and small — without provoking backlash.
be directed to individual consumers, they could be spent on improvements such as insulation, efficient appliances and rooftop solar panels. Because the credits would not favor one kind of power over another, many renewables would be able, for the first time, to compete
Subsidies keep the price of fossil fuels below market rates — so low as to discourage measures to
Alternative approach Here’s how it would work: A government would continue providing its energy subsidies for three to 10 more years, but transform them into credits. The recipients would be free to spend these, at least in part, on renewable forms of energy. Where credits could
improve energy efficiency
strongly against fossil fuels. Wind energy, for instance, could, on a level playing field, cost as little as 6.5 cents per kilowatt-hour, BNEF estimates. That is about the same as power from new coal plants and, outside the U.S., cheaper than natural gas. Biomass, geothermal and hydro power can also be competitive with coal. And although solar power on a large scale remains relatively expensive, rooftop systems can provide cheaper-thanretail power in many markets. In the developing world, solar lanterns cost less to operate than kerosene ones. Governments could pay out these “sunset credits,” as Liebreich calls them, in various ways. Where subsidies have been provided to consumers, they could be replaced by rebates on energy bills or by monthly or quarterly vouchers, redeemable with retailers and installers of renewable power or equipment that improves efficiency. If consumers are made aware that the credits will eventually end, they will have the incentive to invest in
strategies that ultimately lower their household energy bills. Those retailers and installers who are paid with sunset credits would in turn surrender them to a redeeming agent — the government, perhaps, or a bank or other lending institution — to be reimbursed the market price for their products and services.
Sunset credits Where subsidies are traditionally given to providers such as electric utilities, those companies would receive the credits and could either pass them along to their customers to spend on efficiency, or invest them in renewable-energy generating capacity or in their own efficiency measures. In places where governments subsidize gasoline or diesel, credits could be spent on transportation alternatives. Delivered in the form of vouchers, debit cards or mobile-phone banking credits, they could be spent on public transportation fares, more fuel-efficient vehicles,
even bicycles. It’s easy to see, too, how sunset credits could attract investment in renewable power and in technologies that increase energy efficiency, as banks and other lenders provide upfront capital in return for the promise of credits down the line. The lenders could either redeem the credits or perhaps sell them to pension funds, life-insurance companies and other long-term asset holders, and a new credit market would be formed. Setting up such a system would take effort and money, it’s true. And it would certainly be complicated; mechanisms would be needed to protect against fraud, for example. But such investments are worthwhile if they enable governments to stop spending public money to make fossil fuels unnaturally cheap. The draft agreement for the Rio+20 meeting only vaguely commits countries to phasing out the subsidies. Sunset credits offer a way for them to make it happen. Bloomberg View
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June 26, 2012 business daily | 15
OPINION Business
wires Leading reports from Asia’s best business newspapers
Rio’s unsustainable nonsense Jagdish Bhagwati
Professor of Economics and Law at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations
The Korea Times The nation’s anti-trust watchdog has imposed a 1.5 billion won fine on Philips for banning domestic online shopping malls from offering discount prices, which it believes has prevented the Korea-Europe free trade agreement (FTA) effect from translating into consumer price reductions. The move was the first penalty of its kind against a European company. The Free Trade Commission (FTC) said Sunday the Dutch multinational electronics company set up a price floor that disallows stores to sell its products online more cheaply than fixed rates.
Jakarta Globe Indonesia’s aviation industry needs to start adjusting schedules now if the nation is indeed changing to one time zone, the Indonesian National Air Carriers Association (Inaca) said yesterday. Plans to unify the nation under a single clock need to be finalized before Indonesia’s air carriers change their schedules, Inaca Secretary General Tengku Burhanuddin said. The air industry has a lot of time-consuming work to do if Indonesia is going to switch to a single time zone.
Bangkok Post Thailand’s banking industry may shrink to as few as five lenders from 14 as competition and cost-cutting fuels consolidation, said Boontuck Wungcharoen, chief executive officer of TMB Bank Pcl (TMB). “Thailand has too many banks for the size of the market”. TMB is 26 per cent owned by the Ministry of Finance. Thailand nationalised more than half of its commercial banks during the 1997 Asian financial crisis, and has since sold controlling stakes in some lenders to help repay the cost of the bailouts.
The Economic Times Japanese carmakers Nissan and Toyota have started exporting midsized cars made in India, spearheading a strategic change that seeks to make the most of the country’s cost advantage and growing technical prowess. Volkswagen, Ford and Renault are expected to join them soon. French carmaker Renault plans to export to the UK about 25,000 units of its sports utility vehicle Duster over 12-18 months. The shipments may start in October. Similarly, Germany’s Volkswagen is keen on producing left-hand drive Vento sedans in India for markets in the West.
I
f George Orwell were alive today, he would be irritated, and then shocked, by the cynical way in which every lobby with an axe to grind and money to burn has hitched its wagon to the alluring phrase “sustainable development.” In fact, the United Nations’ Rio+20 Conference on Sustainable Development is about pet projects of all and sundry – many of them tangential to the major environmental issues, such as climate change, that were the principal legacy of the original Rio Earth Summit. Thus, the International Labor Organization and trade-union lobbies have managed to insert “Decent Jobs” into the seven priority areas at the Rio conference. I would love for everyone, everywhere, to have a decent job. But what does that have to do with either the environment or “sustainability?” No one should pretend that we can magically offer decent jobs to the huge numbers of impoverished but aspiring workers in the informal sector. Such jobs can only be created by adopting appropriate economic policies. Indeed, the really pressing task facing many developing economies is to pursue policies that promote economic opportunities by accelerating growth. The flavor of the week in Rio is “sustainability indexing” for corporations, by way of corporate social responsibility (CSR). Such indexing is being compared to accounting standards. But the latter are “technical” and gain from standardization; the former are not and must reflect variety instead. Corporations can, of course, be asked to conform to a “don’t” list – don’t dump mercury into rivers, don’t employ children for hazardous tasks, etc. But what they practice as “do’s” by way of altruism is surely a matter of what they consider virtuous to spend their money on.
No one should pretend that we can magically offer decent jobs to the huge numbers of impoverished but aspiring workers in the informal
Missing in action
sector. Such
While these are “sins of commission,” the “sins of omission” at Rio+20 are even more glaring. For a conference that is supposedly addressing “sustainability,” it is worth lamenting the absence of a heroic effort to agree on a successor treaty to the Kyoto Accord. If the cataclysmic scenarios implied by neglect of climate change are valid – and extreme estimates, it must be said, could backfire politically by looking implausible or, worse, by
jobs can only be created by adopting appropriate economic policies
Standard of virtue The notion that a self-appointed set of activists, in conjunction with some governments and international agencies, can determine what a corporation should do by way of CSR contradicts the liberal notion that we should ask for virtue to be pursued, but not in a particular way. At a time when the world is emphasizing the importance of diversity and tolerance, it is effrontery to suggest that corporations should standardize their notion of how they wish to promote good in the world. Even when the Rio+20 agenda includes something more properly “environmental” – say, the supply of wa-
into each house)? At what cost? These decisions have different implications for the availability of water, and they must compete, in any event, against other “rights” and resource uses. In the end, therefore, water availability cannot properly be called a “right.” Rather, it is a “priority,” and countries will inevitably differ in the sequence with which they pursue it relative to others.
ter – platitudes predominate. Thus, the availability of safe drinking water is now to be enshrined as a “right.” We have traditionally distinguished in human-rights conventions between (mandatory) civil and political rights, such as the right to habeas corpus, from (aspirational) economic rights, because the latter require resources. Blurring that distinction – thereby disregarding the problem of scarcity – is no solution. After all, “availability” can be interpreted according to many criteria and thus in myriad ways: How much water? At what distance from different households (or by pipe
producing a “Nero effect” (if Rome is burning, let’s party) – Rio+20’s lack of action should be regarded as an historic failure. But a matching omission is that prompted by our societies’ increasing political unsustainability, not because of the immediate financial problems like those afflicting Europe and threatening the world, but because the modern media have made visible to all the disparities in the fortunes of the rich and the poor. The rich should be urged not to flaunt their wealth: extravagance amid much poverty arouses wrath. The poor, meanwhile, need a fair shot at raising their incomes. That can only come through access to education and economic opportunity, both in poor and rich countries. “Less Excess and More Access”: only a policy mix based on this credo will guarantee that our societies remain viable and achieve genuine “sustainability.” © Project Syndicate
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business daily June 26, 2012
CLOSING Irish lawmaker queries bailout
Oil falls on European worries
Irish lawmaker Thomas Pringle said he will seek a court injunction this week stopping the government from ratifying the establishment of the euro-area’s permanent bailout fund. Pringle, who is challenging the constitutionality of the European Stability Mechanism Bill and the European Communities (Amendment) Bill 2012, will seek an injunction when both bills come before the upper house of parliament in Dublin. He said he would not seek an injunction until after the bills are passed by the Seanad, the upper house of the parliament.
Brent crude fell briefly below US$90 as trade moved to European trading hours yesterday, reversing the modest gains earlier in the day, with concerns about faltering global growth and Europe’s intractable debt crisis hitting investor confidence. The concerns over the euro zone economy, which could lower oil demand, overshadowed supply disruptions in the U.S. Gulf due to a storm and in strike-hit Norway. Oil is on track to post its biggest quarterly fall since the financial crisis in 2008, with ample supply from OPEC adding to the downward pressure on prices.
Major banks seeking non-resident yuan accounts Hong Kong looking for expansion of yuan operations as demand drops ahead of major dim sum bond sale
H
ong Kong’s biggest banks are calling for China to end a ban on non-residents buying yuan in the city as falling deposits limit demand for Dim Sum bonds before a record sale. The industry wants permission to open yuan accounts for all customers, not just permanent residents, and a higher daily limit on conversions, Ngan Kim-man, head of renminbi business strategy & planning at Hang Seng Bank Ltd., said in a June 21 interview. Hong Kong competes for investors with London and Singapore and a 1.1 percent slide in the yuan this year has damped appetite among locals, said Thomas Poon, head of business planning & strategy in the city at HSBC Holdings Plc. Reduced expectations for yuan gains caused a five-month drop in yuan savings, curbing demand before China’s Ministry of Finance sells 23 billion yuan (US$3.6 billion) of bonds this month. President Hu Jintao will visit Hong Kong June 29-July 1 to celebrate 15th anniversary of the city’s return to Chinese rule. “It’s a good time to allow more flexibility as people won’t rush to convert for appreciation speculation anymore,” said Nathan Chow, an economist in Hong Kong at DBS Group Holdings Ltd., Singapore’s largest bank. “Continuous declines in deposits will limit development of Hong Kong’s offshore yuan market.”
Yuan moving onto the world stage
Accounts denominated in yuan fell to 552 billion yuan in April, the lowest in 11 months, Hong Kong Monetary Authority data show. A report due June 29 will probably show savings fell again in May, according to Mr Poon. The HKMA started providing one-week yuan funds to local banks on request this month to increase supply of the currency.
Lobbying Effort The Hong Kong Association of Banks is lobbying authorities
to raise the 20,000 yuan daily conversion quota for permanent residents. Singapore, which has about 60 billion yuan of deposits according to its central bank, doesn’t restrict nonresidents from buying. While Hong Kong was selected as the nation’s major offshore yuan trading hub under the 12th five-year plan, its status is being challenged. U.K. Chancellor of the Exchequer George Osborne in January called on London to expand its yuan trading. The British
capital had 109 billion yuan of customer and interbank deposits and that is “growing strongly,” according to an April 18 report by research firm Bourse Consult. The exclusion of non-residents “is probably something we see an urgency to consider,” said HSBC’s Mr Poon. When it all started in 2004, Hong Kong was an ideal test lab for China to roll out renminbi personal business. But over time, the market has moved on and we haven’t.” Bloomberg
Emerging markets feeling pinch of slowing world economy BRICs biggest currency depreciation since 1998
T
he largest emerging markets, whose economies grew more than four-fold in the past decade, are making losers out of everyone from central bankers to Procter & Gamble Co. as their currencies post the biggest declines
since at least 1998. For the first time in 13 years, the real, ruble and rupee are weakening the most among developing-nation currencies, while the yuan has depreciated more than in any other period since its 1994 devaluation.
Crisis shows BRICs have not ‘decoupled’ yet
P&G, the world’s largest consumergoods maker, cut its profit forecast for the second time in two months last week in part because of currency losses. Investors are fleeing the four biggest emerging markets, known as the BRICs, after Brazil’s consumer default rate rose to the highest level since 2009, prices for Russian oil exports fell to an 18-month low, India’s budget deficit widened and Chinese home prices slumped. Investors are bracing for more losses as economic growth slows. A decade after Goldman Sachs Group Inc.’s Jim O’Neill coined the term BRIC, China has become the secondlargest economy while Brazil, India and Russia are among the 11 biggest worldwide. Their combined gross domestic product rose to US$13.3 trillion last year from US$2.8 trillion
in 2002 as their share of the global economy increased to 19 percent from 8 percent, according to IMF data. Together, they control US$4.4 trillion in foreign-exchange reserves, about 40 percent of the total. After spending most of last year introducing policies to weaken their currencies, emerging-market governments are now working to limit the slide amid capital outflows. India may become the first among the BRIC nations to lose its investmentgrade rating, Standard & Poor’s and Fitch Ratings said this month. Europe’s debt crisis weighs on emerging economies. “They will do poorly when the world is doing poorly,” Eric Fine, a money manager at Van Eck Global said in a phone interview from New York. “I don’t believe in decoupling.” Bloomberg