P5
Year I - Number 63 Wednesday June 27, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00
Four Seasons out of Sands Beijing deal
P8 Political reform discussed at NPC
P10 China backtracks on local bonds
Macauslot monopoly to at least 2015
Visa, UnionPay fears pummel casino stocks Gambling stocks fell as much as 5.8 percent in Hong Kong trading yesterday as anonymously-sourced reports warned China could be restricting visas and UnionPay imposing card transactions limits. However, industry experts and Guangdong provincial authorities say there are no orders to tighten visa issuance. In addition, an analyst said UnionPay caps have been in place for over a year. Page 2
UK envoy’s Olympian test ends Andrew Seaton, the United Kingdom’s senior representative in Hong Kong and Macau since 2008, is returning to Britain in September. At a farewell lunch by the British Business Association of Macao, the Consul-General spoke to Business Daily about business in China, the perils of bribery and his (non-gambling) memories of Macau. “It will not gladden the hearts of the casino owners for them to know I don’t frequent casinos,” he joked. Page 4
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acauslot can keep its local monopoly in instant lottery, soccer and basketball betting until at least 2015, Macau’s gaming regulator has confirmed to Business Daily. It will be a blow to foreign sports betting companies that have sought either to participate in the non-casino sports betting market in the city or expressed interest in running sports books in Macau casinos. Macauslot generated gross revenues of 659.36 million patacas (US$82.5 million) in 2011. Officially-licensed mutual betting and lotteries in Macau – including Macauslot – are currently run by companies and individuals linked to former casino monopolist Stanley Ho Hung Sun. Rival casino operators and outside sports betting companies think the sports gambling sector could be worth much more if new products and a different approach to marketing were used. They argue Macauslot’s betting shops and website are not currently as professionally marketed or attractive as those even of Hong Kong’s sports betting monopolist the Hong Kong Jockey Club. But Macau’s regulator the Gaming Inspection and Coordination Bureau said in a statement to this newspaper yesterday: “In the application for renewal, [Macau] SLOT made a detailed proposal for optimising and upgrading the existing infrastructure and enhancing its current operating environment.”
The number of non-resident workers climbed above 100,000 last month, for the first time in over three years, thanks to a hiring wave on hotels, restaurants and the construction sector. But keeping the current policy and Macau’s tight labour market could be a step backwards and threaten the city’s “flexibility and competitiveness,” experts warned. Pages 6 & 7
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HANG SENG INDEX 19000
18950
More on page 3
18900
18850
Parking slots cost lots
June 26
HSI - Movers
W Calls for change to non-resident policy
www.macaubusinessdaily.com
Name
%Day
ithin an hour of becoming available, some parking spaces are being rented out, as demand visibly outstrips supply. The monthly rent is around 1,200 patacas (US$150) and a parking space is usually rented out within a week. The Chinese-language Macau Daily News quoted an estate agent in the NAPE district as saying there were about two or three inquiries a week to rent parking spaces, while only about three to five spaces became available each month. He said the average price of a parking slot in NAPE has increased by over 7 percent in the past month to 750,000 patacas. Centaline estate agent Simon Zhou told Business Daily that the most expensive parking spaces are in the Avenida Horta e Costa area and the Nam Van district, as they are densely populated. Average rents in these areas are around 2,500 patacas a month and a parking space can cost between 1.5 million patacas and 1.6 million patacas to buy. Mr Zhou said the demand for parking slots depended on the characteristics of each area, such as how much traffic it has and the availability of public parking, so it was hard to gauge the average. Spaces in Taipa are slightly cheaper than those on the peninsula, selling for around 600,000 patacas to 700,000 patacas, especially since the opening of the underground car park in Taipa Central Park, which has 1,300 parking slots. The city had over 90,100 licensed light motor vehicles last month, compared with fewer than 80,800 at the beginning of 2010, an increase of 11.5 percent.
2012-6-27
2012-6-28
2012-6-29
X. C.
27˚ 30˚
27˚ 33˚
27˚ 33˚
BELLE INTERNATIO
5.08
COSCO PAC LTD
3.31
BANK EAST ASIA
2.90
CHINA OVERSEAS
2.38
CHINA MERCHANT
2.28
CHINA RES ENTERP
-0.90
HANG LUNG PROPER
-1.17
TENCENT HOLDINGS
-1.26
CHINA RES POWER
-1.34
SANDS CHINA LTD
-5.81
Source: Bloomberg
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business daily June 27, 2012
macau
Casino stocks slide on visa concerns But analysts say there is no need for alarm Tiago Azevedo
tiago.azevedo@macaubusinessdaily.com
Shares of Sands China Ltd declined 5.8 percent to close at HK$22.7
M
acau gambling stocks listed in Hong Kong were down yesterday on anonymously-sourced reports of China restricting Macau visas and of UnionPay imposing limits on card transactions. The Chinese-language Macao Daily News on Saturday reported that the number of visas under the mainland’s Individual Visitation Scheme could be reduced, along with a cut in the overseas spending limit on UnionPay credit cards used by many Chinese to withdraw cash in Macau. Shares of Sands China slid 5.8 percent to a more than 5-month low to close at HK$22.7, while Wynn Macau fell 2.8 percent, underperforming a mostly flat benchmark Hang Seng Index. Galaxy Entertainment Group Ltd dropped 5.7 percent to HK$18.12 at close. Industry experts, however, said they were not aware of any visa restrictions, recalling there had been no official announcement. The unsourced report did not give a reason for the potential tightening. “I’ve talked to a lot of operators and nobody has been able to verify the information regarding the visa restriction and the UnionPay limit going down,” Grant Govertsen, a Macau-based analyst at Union Gaming Group, told Business Daily. “Investors are very skittish and with any negative data point they will press the button to sell their stocks.” Guangdong provincial authorities told Business Daily they have received no instructions from the central government to tighten visa issuance. Prior to the global financial crisis in September 2008, mainland authorities introduced visa
restrictions to cool a gambling market that at the time was growing 31 percent year-on-year. “We checked Chinese embassy five minutes ago and there has been no change in any kind of visa requirement for going to Macau from Beijing or other cities,” Praveen Choudhary, from Morgan Stanley, wrote yesterday. “We have heard about visa restriction every three months for the last two years and it has been wrong every time.” The concern may be linked to visitation levels in May, which was much weaker than expected, dropping 6 percent year-on-year. “China visitation [in May] was down 4 percent year-on-year and HK was down 12 percent year-on-year. However, visitors from China through Individual Visitation Scheme was down only 1 percent,” Mr Choudhary said. “Group traveller have been growing faster than Individual Visitation Scheme and thus many could conclude that IVS scheme is tighter,” he said. “But its not a fact, its an inference. And one needs to make a differentiation.” In the first five months of the year, 6.9 million mainland tourists visited Macau, up 9.8 percent from a year earlier, official data show. And even though visitation numbers were down last month, they are expected to pick up this month. “Casino operators have said visitation is up in June and that’s good news,” Mr Govertsen said.
Union fears Fears of limits on some mainland credit cards could also hurt casino revenue. But analysts played down concerns on the UnionPay caps.
In fact, the limits mentioned by the report have been in place for more than a year. “If you withdraw money from ATM, the limit is RMB10,000 per day per card. If you are shopping,
the limit is RMB1,000,000 – it indeed used to be RMB5,000,000, but the limit was reduced since 2011 April 1st,” said Morgan Stanley’s Mr Choudhary, citing an Union pay representative. While the limit only applies for areas outside Hong Kong, including Macau, people are still able to spend over the limit if they have more than one credit card. “If you have more than one card (can be with one bank), you can shop RMB1mn from each card, that’s why the limit does not matter that much. Most rich people have 10 cards plus,” Mr Choudhary wrote. “Currently, mass revenue per visitor is around US$435 (or MOP$3,500). I don’t think RMB 1mn limit can be a problem for long, long time. VIP customers play on credit,” he added. Macau casino gambling revenue rose 7.3 percent in May, the slowest pace since July 2009. Gross gaming revenue for the six casino operators rose last month to 26.1 billion patacas (US$3.3 billion) from 24.3 billion patacas a year earlier, according to the Gaming Inspection and Coordination Bureau. Nevertheless, casino stocks were hurt by the report (see page 13). MGM China Holdings Ltd slumped 4.8 percent, SJM Holdings Ltd, founded by billionaire Stanley Ho Hung Sun, dropped 1.9 percent, Melco Crown Entertainment Ltd dropped 2.5 percent in Hong Kong trading to close at HK$29.4.
business as usual
Grantai nightmare Paulo A. Azevedo pazevedo@macaubusiness.com
T
hat massive wall called One Grantai remains empty, without an occupancy permit that allows the people that bought those very expensive apartments to move in. Don’t mind my personal taste. I find it ugly and too big, destroying the once lovely Big Taipa Hill. But, of course, the presence of official architectural rules, taste and sometimes common sense are almost never a factor when doing business in Macau. What I find intriguing is the time it takes before a buyer may move into his property. The Land, Public Works and Transport Bureau told Business Daily that the developer had revised the architectural plans many times and that in the end the project “did not qualify for building inspection”. On the other hand, representatives of Macau’s developers say the government is too slow in approving new housing projects. Maybe both are right and both are guilty. Maybe it’s because the system was never transparent enough to start with and some people in between stand to gain on the ugly sidelines of the business – maybe. Or maybe it’s just the fact that Macau has too many grey areas and should be stricter about rules and regulations, with stiff penalties imposed on those that change over and over again and do not do what is promised. Frankly, I couldn’t care less. I just think of those people that invested millions of patacas – excuse me, Hong Kong dollars, because the Macau pataca seems to embarrass businesses here – and still can’t move in two years after the building was completed. That should now be the priority of both the government and developer. In case they are still missing the big picture here, neither is doing it right. And there should be stiff and swift penalties for doing it wrong. Yeah, right, dream on.
June 27, 2012 business daily | 3
MACAU
Airline sued over Stanley Ho loan
Soccer and basketball gambling monopoly keeps exclusivity to 2015: DICJ Associate Editor
Photo by Manuel Cardoso
InBrief
All bets back on for Macauslot
Hong Kong Express Airways is being sued over a HK$120 million (US$15.5 million) loan that gaming tycoon Stanley Ho Hung Sun made to the airline in 2006 as a shareholder. Chan Ung Iok, sister of Mr Ho’s third wife, says the magnate assigned HK$9.8 million of the loan to her but that the airline has failed to repay the debt since last year, the South China Morning Post reported.
China Star to buy Lan Kwai Fong Hong Kong company China Star Entertainment has reached a deal to take full control of Macau hotel Lan Kwai Fong, the cinema company has announced. The firm will buy a 49 percent stake from company director Charles Heung Wah Kueng for HK$618 million (US$79.7 million). China Star is also an investor in a VIP gaming room in the Grand Lisboa casino.
As you were – Macauslot keeps its soccer and basketball bet monopoly to at least 2015
M Black & Veatch wins Hengqin plant deal
Black & Veatch of the United States has been selected to put up a combinedcycle power plant on Hengqin Island, the company announced last week. The gas-fired plant will have the capacity to produce about 1,000 megawatts of electricity. Commissioned by Harbin Electric, the plant will be owned and operated by China Power Investment Group, one of the largest mainland state-owned electricity producers.
Macau visitors to HK increase The number of Macau visitors to Hong Kong grew by 6.2 percent yearon-year last month to almost 64,900, according to data released by the Hong Kong Tourism Board. In the first five months of 2012 almost 323,000 Macau residents visited Hong Kong, 1 percent more than a year before.
acauslot will be allowed to keep its local monopoly in instant lottery, soccer and basketball betting until at least 2015, Business Daily has learned. It will be a blow to a raft of foreign sports betting companies that have sought either to participate in the non-casino sports betting market in the city or to run sports books in Macau casinos. Only last week, Howard Lutnick, chief executive officer of Cantor Fitzgerald LP – which runs sports betting in several Las Vegas casinos – told Bloomberg it was seeking to expand to Macau. “We’re in the process of getting licensed in Macau,” Mr Lutnick said. But industry insiders told Business Daily that without an end to Macauslot’s exclusive local right to conduct betting on soccer – that online gaming consultants say is by far the most popular sports betting category in gross revenue terms in Greater China and East Asia – it would be very hard to make a commercial case – never mind a legal case – for any other sportsbook activities in Macau casinos.
Raining cash
BOC Macau joins East Hope loan Bank of China (Macau), together with Cathay United Bank, Deutsche Bank and Wing Lung Bank, has joined the general syndication of East Hope (Sanmenxia) Aluminium Co Ltd’s US$140 million (1.1 billion pataca) three-year term loan, IFR Asia reported. East Hope (Sanmenxia) Aluminium is a subsidiary of East Hope Group Co Ltd. It was founded in 2003 and is based in Henan province.
Macauslot generated gross revenues of 659.36 million patacas (US$82.5 million) in 2011 – more than half of all revenues from non-casino gaming in Macau that year. All officially-licensed mutual betting and lotteries in Macau – including Macauslot – are currently run by companies and individuals linked to former casino monopolist Stanley Ho Hung Sun. Rival casino operators and outside sports betting companies are frustrated because they think the sports gambling sector could be worth much more if new products and a different approach to marketing were used. But Macau doesn’t need the money. Gross revenues from casino gambling reached 268 billion patacas (US$33.5 billion) last year, with nearly 40 percent of that going to
the government in tax. There’s little incentive from a public financing point of view therefore for the authorities to change the status quo. But several lawyers spoken to by Business Daily – ones that have no commercial interest in seeing an end to Macauslot’s exclusivity – believe its continuation is hard to defend in legal and business terms. “Macau’s casino monopoly ended many years ago. This sports betting monopoly should end too. I can see no grounds for allowing it to continue,” one said, requesting not to be identified by name.
Urgent action But Jorge Godinho, associate professor in the Faculty of Law at the University of Macau, said on his blog Macau Gaming Law yesterday: “I am on the record as saying that it is time to end this monopoly and introduce competition in sports betting.” A third lawyer said that there may be grounds for would-be market competitors to mount a legal challenge to the continuation of Macauslot’s monopoly, though the person conceded that in Macau companies can win a legal battle and still lose the war by alienating the government. Mr Godinho said on his blog: “A delegation of powers from the Chief Executive to Secretary [for Economy and Finance] Francis Tam was published today in the Boletim Oficial [official gazette]. This is usually the first step for the extension of the concession. The delegation states that the sports betting concession to Macauslot is to be renewed for three more years, until June 5, 2015.” “The legal language used this year is exactly the same as in previous years, and it is neutral as to the exact terms of the renewal aside from the time of the extension,” he wrote. “Specifically, the delegation of powers published today mentions an ‘amendment’ to the contract, like in previous years. It does not
determine whether the extension will be under an ‘exclusive’, the legal term used in Macau to denote a monopoly.”
Official reaction But in a statement issued to Business Daily yesterday after the gazette announcement, Macau’s gaming regulator the Gaming Inspection and Coordination Bureau said: “Despite the contract period, no amendment is being introduced in the renewed contract between RAEM [the Macau government] and SLOT (Sociedade de Lotarias e Apostas Mútuas de Macau, Ltd).” The gaming regulator “is still in the process of studying the feasibility of enhancing the current operational module of Sports Lottery in Macau”. Meanwhile, it added, “The current module will remain, at least, within the contract period.” In the application for renewal, “SLOT made a detailed proposal for optimising and upgrading the existing infrastructure and enhancing its current operating environment,” the bureau said. “After detailed study, the gaming regulator agreed that the new contract period will be an optimal period for such an enhancement and also allow the government sufficient time to better study all the possible impacts arising from any changes to the Sports Lottery operations,” it added. But another source with knowledge of the situation told Business Daily that Macauslot had asked for a ten-year extension of its concession. “The election for the next Macau chief executive is in December 2014. So by extending Macauslot’s concession until June 2015 that means the matter is effectively now closed as far as the current administration is concerned. Any opening of the sports betting market will be a matter for the next chief executive to consider,” stated the source. with Tiago Azevedo
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business daily June 27, 2012
macau Photo by Manuel Cardoso
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HOSPITALITY Here today, gone tomorrow Government statistics usually make a distinction between two kinds of visitors: those that stay overnight and those that come and go on the same day. The daytrippers, who include transit passengers, stay on average, a very short time. This makes the average length of stay of all day-trippers short. The data for May are typical. The average length of stay of all day-trippers was two-tenths of a day. That is less than five hours. The average length of stay varied little, no matter where the visitors came from. But there were notable differences among visitors that stayed overnight. On average, they stayed for about 1.8 days last month. But where they came from made a difference. 4
Andrew Seaton, British Consul-General in Hong Kong
Agent of change Britain’s departing top local diplomat urges rejection of graft culture
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Associate Editor 2
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Not surprisingly, visitors from Hong Kong stayed the shortest time: 1.3 days, on average. But others lingered only marginally longer. Thais stayed 1.4 days, Japanese 1.5 days and Malaysians 1.5 days. Those that stayed longest were the Portuguese, who stayed for 3.8 days – although in May last year they stayed for 5.1 days. Filipinos and Vietnamese also liked to stick around. One surprising feature of May was that the average length of stay decreased considerably across the board from a year before.
The only exceptions were Singaporeans, who stayed one-tenth of a day longer than in May last year. Overall, there was a decrease of three-tenths of a day in the time visitors that stayed overnight spent here. The average stays of Filipinos and Indonesians in May were more than three days shorter than a year before. J.I.D.
ndrew Seaton, the United Kingdom’s senior representative in Hong Kong and Macau since April 2008, is returning to Britain in September. In modern diplomatic circles a fourand-half-year posting is considered an exceptional achievement. At a farewell lunch by the British Business Association of Macao, the Consul-General spoke to Business Daily about business in China, the perils of bribery and his memories of Macau. European Business in China’s Business Confidence Survey found a third of respondents were considering moving out of China completely to other Asian locations. They cited rising labour costs and what they felt were often arbitrary and unfair rules. Do you think diplomats and governments from overseas might be slightly behind the curve when they advocate more businesses moving to China? I wouldn’t say we’re behind the curve, but any company coming to do business in China for the first time – if they don’t know the market; whether they’re coming from Europe or wherever – really need to do their homework. The opportunities are there; there’s no doubt about that. However, it’s a very competitive market and you need to make sure that the good or the service that you’re offering has got some sort of competitive edge. But it [China] is also a market that is not yet fully opened up – though it’s much more open than it was. There are regulatory and other issues that can make it challenging for foreign companies.
Some companies may conclude they’re better off pursuing business elsewhere. For small- and mediumsized companies coming out of the U.K. and Europe, market access is not that straightforward. They often need help. And that’s where I think working with partners in Macau or Hong Kong and making use of the experience that companies in those places have got, helps foreign businesses through that [entry] process and can be very useful. It cannot be the answer for everybody. It depends what area of business you are in, what sector, and what part of China you are interested in [for business]. At the moment there are a lot of U.S. companies doing business in the Macau casino sector. Several of them have been the subjects of U.S. regulatory investigations after allegations of corruption stemming from other litigation. Macau and mainland China don’t have the best reputation globally when it comes to transparency. What advice do you give to firms about doing business in this part of the world? It’s a factor that sadly applies in a number of markets, not just in this region, but also around the world. From the U.K.’s perspective the very very clear advice is ‘Do not get involved’. We just passed in 2010 some of the most stringent anti-bribery legislation that applies anywhere. That’s to try and absolutely emphasise that corruption is no part of good business practice, and that British companies that get involved in that may face sanctions. In any case it is just not the right way to do business.
Companies tell me privately that they get asked for money or favours when doing business in China. There seems to be a disconnect with what governments and diplomats have to say publicly and what happens in business on the ground. What other countries’ companies may do is not my concern. It just cannot be part of good business practice to engage in this. It [change] is a slow process, but the more that companies become known for not engaging in it [bribery] the better it is for their long-term business reputation. If there is a problem like that [in a community or country] by taking part all you are doing is perpetuating the problem. You’re making it more difficult for yourself and more difficult for other companies. I appreciate it’s an easy thing to say – for me to sit there as an official and say this – but I firmly believe the only answer is that you do not get involved in that. You promote yourself on the basis of your goods, your services, what you have to offer, and that has to be the only sustainable, longterm way of growing a business. On a more upbeat note, what are your favourite memories of Macau? I have always found Macau a very very friendly and welcoming place. I have enjoyed coming here with my family at weekends and walking around in the Macau back streets, experiencing some of that atmosphere and discovering all the interesting small shops. It will not gladden the hearts of the casino owners for them to know I don’t frequent casinos.
June 27, 2012 business daily | 5
MACAU
Alves denies any deal on Four Seasons flats The sale of the Four Seasons hotel as residences was not part of a deal proposed to Las Vegas Sands, says a legal adviser to the company Vítor Quintã
vitorquinta@macaubusinessdaily.com
I
Lawyer Leonel Alves says Las Vegas Sands refused to pay a US$300 million commission for an out-of-court settlement of a dispute with a former business partner
t was a Beijing businessman, not a central government official, that proposed to Las Vegas Sands Corp an agreement to help the company’s business in Macau, Las Vegas Sands legal adviser and Legislative Assembly member Leonel Alves has said. Mr Alves said in a letter to the Portuguese-language newspaper Ponto Final that the proposal was for an out-of-court settlement of a long-running dispute between Las Vegas Sands and its former business partner, Asian American Entertainment of Taiwan, and not to sell the Four Seasons hotel in Macau as residences. The Wall Street Journal three weeks ago quoted a 2009 e-mail in which Mr Alves indicates that he was approached by “someone high-ranking in Beijing” asking for US$300 million (2.4 billion patacas). “I have a client of my law firm who said he was well positioned to secure an out-of-court agreement between Sands and another business group about a very old dispute that is still
ongoing in court,” Mr Alves said. The client “is from the business sector, not a politician,” Mr Alves said. “He suggested a transaction and that he would like to ask for a commission on it, something absolutely normal between businessmen and usually arranged by lawyers.” Mr Alves said the request for a US$300 million commission was not accepted and so “the deal was not made”. Mr Alves said the email quoted by the Wall Street Journal “also mentioned the Four Seasons issue” but that this issue was not part of the deal proposed. “[The Wall Street Journal] mixed things up, interpreting them out of context and drawing inadequate conclusions,” he said. Las Vegas Sands is still looking for a way to sell the Four Seasons hotel, valued at US$1.4 billion, as residences. This requires government approval as the area is intended only for casino and hotel use. Asian American, controlled by Taiwan businessman Marshall Mao Shi Heng, sued Las Vegas Sands in January, accusing it of improperly ending a 2001 agreement to make a joint bid for a Macau casino licence.
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business daily June 27, 2012
macau Brought to you by
Increase in non-residents prompts calls for re-think
Mortgage loans pick up The Monetary Authority has just published the April data for mortgages. These data were previously published quarterly but are now published monthly, and the data for the first quarter have been broken down into their monthly components. In the charts below, the figures for each quarter of years gone by have been converted into the corresponding monthly average, allowing us to make somewhat more meaningful comparisons with the more recent figures. So, looking back at new mortgage lending, what can we see?
With non-residents accounting for onethird of the supply in a tight job market, it is time for labour policy to change, experts say Tony Lai
tony.lai@macaubusinessdaily.com
T New loans to residents rose steadily from early 2009 to the middle of 2010. From then until the middle of 2011 the amounts oscillated, but the general trend was still upwards. In the second quarter of 2011 new mortgage lending reached a peak, the amount being five times what it was at the beginning of the period represented here. This suggests many purchases of homes anticipated new regulations then in the pipeline. From then on, the drop was abrupt. In six months the amount fell by almost two-thirds, after the new regulations restricted new lending and imposed the Special Stamp Duty. The beginning of this year saw a recovery, with a doubling in the first two months. The March and April figures suggest stabilisation. The changes had no discernible effect on new lending to non-residents, which was flat throughout.
The cumulative amount of mortgage lending to non-residents flattened out in the last part of 2011. Until then the rising trend was mostly continuous, without big hiccups. The first months of this year saw the cumulative amount picking up again. J.I.D.
he number of non-resident workers surpassed 100,000 last month for the first time in over three years, driven up by a hiring wave by hotels, restaurants and building contractors. Imported labour now accounts for almost 30 percent of the workforce, but the labour market has become even tighter in the past few months. Experts told Business Daily that it is time for government policy on non-residents to change. The government seems to be gradually loosening restrictions on imported labour. A further 1,400 non-resident workers were hired in May, more than the 840 authorised by the Human Resources Office in April. Of the newly imported employees, 983 came from mainland China, 219 from Vietnam and 218 from the Philippines. With restaurants facing an acute shortage of workers, it is small wonder the hotel and restaurant sector hired the greatest number of imported workers – 526. More than one in 10 restaurant jobs were unfilled in March, with close to 3,400 vacancies. The construction industry took on 405 imported workers as it began work on the second phase of the Galaxy Macau and the Wynn Cotai resort. The number of imported workers is still below the peak of 104,300 in September 2008 but, if the pace of increase is maintained, it is likely to hit that mark in the next few months.
Competitive loss Larry So Man Yum, a professor at the Macau Polytechnic Institute’s school of public administration, said he expected non-residents to
number 120,000 to 130,000 in the near future, but that he could not see how the labour force could grow bigger than that. “The need for imported labour is temporary, mostly related to local construction work,” he said. “Such population is fluctuating and seasonal, depending on the market demand.” Mr So said Macau had to rely on imported workers as there were not enough residents to support the city’s development. Davis Fong Ka Chio, vice-director of the Macau Development Strategy Research Centre, believes keeping the present policy could be a step backward. “Tight human resources have been a long-time problem in Macau and the government should consider other measures to tackle the problem, beside importation of workers,” he said. The city would lose its “flexibility and competitiveness” if the labour shortage went on for too long, Mr Fong said. He suggested it was time for the government to consider increasing
the population in the medium to long term.
Hidden conflicts Legislator Kwan Tsui Hang disagrees, arguing that even though Macau has to rely on imported labour in the short run, non-residents were meant only to complement resident workers. “The government also has to ensure the employment opportunities of the residents and their salary will not be affected,” Ms Kwan said. But she pointed out that the government had to protect the rights and benefits of imported workers, and said the government had not done enough. Mr So went further, calling the government incompetent. “They are invisible to the government in the literal sense,” he said. He said foreign workers did not know much about labour law because of the language barrier and faced challenges in their lives outside their workplace. “[The government] has approved their entry to Macau but it then
Weather Beijing 27/22o C Changchun 28/19o C
Harbin 31/18o C
Xian 28/20o C Shanghai 27/24o C Chengdu 27/21o C Kunming 24/17o C Haikou 32/24o C Sanya 32/28o C
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June 27, 2012 business daily | 7
MACAU joke the local transportation system is overburdened partly because of imported workers,” said Mr So.
Locked out
100,922 non-residents were working in Macau at end-May
leaves them alone without any support,” he said. Ms Kwan and Mr So both think there are conflicts between imported
workers and residents owing to cultural differences which the government needs to help bridge. “For instance, I heard some residents
Ms Kwan said the government should set up places for nonresidents to go while they were not working, to integrate them with the community here. The government could grant subsidies to associations to help workers deal with their day-to-day challenges, Mr So said. He feels this would better than direct help from the government, because spending public money on nonresidents would cause controversy. Ms Kwan calls for better enforcement of the labour law to protect the rights of all workers, residents and non-residents like. But the experts do not think it is feasible to have a voice for imported labour in the Standing Committee for Coordination of Social Affairs. The committee comprises representatives of the government, employers and employees, and it talks about labour topics such as a minimum wage. “I don’t think it is appropriate to have a representative from the imported workers in the committee as the meetings are about the local policies,” said Ms Kwan. She said it would be difficult to find a person or association to represent all foreign workers. Mr Fong believes it is unnecessary to have a voice for imported labour in the committee as it does not include representatives of all industries. Mr So said it would be illegal for a non-resident to join the committee. with V.Q.
Tight human resources have been a long-time problem in Macau and the government should consider other measures Davis Fong Ka Chio, gaming management professor
I don’t think it is appropriate to have a representative from imported workers in the Committee [for Coordination of Social Affairs] Kwan Tsui Hang, Macau Federation of Trade Unions
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business daily June 27, 2012
MACAU
City wants foreign schools An academic wants the education market opened to foreign institutions to make the best use of subsidies Xi Chen
xi@macaubusinessdaily.com
Meeting in Beijing – NPC members discussing Macau’s political reform
NPC set to say yes to electoral reform
T
he National People’s Congress (NPC) has started discussing Macau’s political reform bills and a deputy from Macau expects them to get the assent of the majority. The Chinese-language Macau Daily News said the 27th regular meeting of mainland China’s legislature had begun in Beijing on Monday and would continue until Saturday. The bills on adding seats to the Legislative Assembly and the committee that elects the chief executive are at the top of the agenda. They will be discussed before being put to the vote on Saturday. One of 12 Macau deputies in the NPC, Yao Hao Ming, said he thought most deputies would approve
T
the reforms, which represented “mainstream public opinion” and were backed by over two-thirds of the city’s legislators. The two bills seek to add two directly elected and two indirectly elected seats to the assembly and increase the number of members of the committee that elects the chief executive to 400 from 300. Though the NPC’S vote is the final step in the reform process, Mr Yao expects the controversy that the changes have stirred up to persist. Mr Yao, the head of the Macau General Union of Neighbourhood Associations, said he hoped the government would listen to opinions from all sides. T.L.
he government’s continuing education development programme, which started last year, is an apparent underachiever and an academic has called for adjustments. The Chinese-language Macau Daily News quoted Macau Polytechnic Institute professor Chan Chi Fong as saying the government needed to change direction. According to government estimates, 80 percent of eligible residents have yet to use the 5,000-pataca (US$625) subsidy, resulting in 2 billion patacas of unused capital. Mr Chan believes the continuing education development programme lacks clear direction and is incompatible with people’s needs. He says the government should open up the education market for foreign institutions to come in and offer more high-quality and specialised courses. He thinks that, given that the city’s goal is to become a world-class tourism and leisure destination, more talent will be needed for
the development of the Meetings, Incentives, Conventions and Exhibitions (MICE) industry and creative industries. He suggested that the government should look at Hong Kong’s continuing education fund as an example and focus on industries such as finance, commercial services, logistics, tourism and design to bridge the talent gap. Residents can use the subsidy to pay for courses or exams run by an institution of education outside Macau – but only if they are unavailable here. Residents must pay the fees first, then ask for reimbursement from the Education and Youth Affairs Bureau. The government began the continuing education development programme last summer. Residents aged 15 or above can apply to the bureau to have their course or examination costs covered. Each eligible applicant can receive a subsidy of up to 5,000 patacas until December 2013.
About 80 percent of eligible residents have yet to use the 5,000-pataca subsidy
Greener delta envisaged
T
he authorities in Macau, Hong Kong and Guangdong should jointly plan ferry services in the Pearl River Delta region to promote sea travel, a report suggests. The report, entitled “Regional Cooperation Plan on Building a Quality Living Area” also says a greener transport system, with engines powered by cleaner energy and with lower emissions, is crucial for improving the quality of the air and water. The plan covers cooperation on the promotion of environmental protection, low-carbon development, cultural and social integration, and
land planning. The report, released by the three governments on Monday, says the authorities should encourage enterprises to adopt low-carbon and greener practices with loans and other incentives. It proposes that governments support renewable energy industries, with a view to changing the structure of the regional economy to give services and technology a greater role. The report calls for people in more places in Guangdong to be allowed to avail of a “one visa, many trips” arrangement for visitors to Macau. T.L.
June 27, 2012 business daily | 9
GREATER CHINA
InBrief Beijing sees June trade improving Expects to meet 2012 exports target Sotheby’s to enter property market Sotheby’s International Realty Affiliates LLC, the real estate unit of the auction house, plans to start business in China’s luxury property market by the first half of next year to tap the country’s growing wealth. The company will focus on the first-tier cities such as Beijing and Shanghai, chief executive Michael Good said. “We’ve had a lot of global growth, but we’ve been very careful with China, because China is such an important emerging economy,” Mr Good said. “We think it’s very, very important to be measured in our approach and make sure that we better understand the real estate players and the nature of the business in this country.” Sotheby’s real estate unit has affiliates in 45 countries and regions, including Japan, Hong Kong, Taiwan, Thailand and Vietnam in Asia.
Beijing rejects EU accusations China rejected European Union accusations that two top Chinese telecom equipment makers accept illegal government subsidies to undercut prices. Huawei Technologies Co and ZTE Corp, the world’s second- and fifth-biggest makers of telecom equipment respectively, have been gaining market share from European rivals. In May, EU diplomats said the trade bloc would like to take action against Huawei and ZTE. “We think such accusations are groundless and unreasonable,” Shen Danyang, a spokesman for China’s commerce ministry, said yesterday. “Huawei and ZTE operate under a completely free market environment. Their products gain global competitiveness via the companies’ active R&D efforts,” he said.
China needs ‘structural change’ Hong Kong property tycoon Ronnie Chan said China’s economy needs “structural change” to encourage consumer spending and help the nation weather the global economic slowdown. “Structurally, China’s economy must change and it’s changing,” Chan, chairman of Hang Lung Properties Ltd, said in an interview with Bloomberg Television on Monday. “Personal consumption is one area that’s increasing, so in the coming five to 10 years that will be one of the main games.” The economy “is slowing because China is so integrated with the world,” Mr Chan said. “Europe is not doing well and America is doing okay. As a result, it’s inevitable that China will slow down.”
Exports in May rose more than 15 percent from a year earlier
C
hina’s exports growth in June is matching the pace seen in May and will pick up in coming months, the commerce ministry said yesterday as it predicted the country can meet its full-year target of boosting exports by 10 percent. Anecdotal evidence suggested export and import growth in June had sustained the buoyancy seen in May, when shipments were more than double market forecasts, said Shen Danyang, a spokesman at the ministry. “China’s exports and imports are still growing within our expected range, and they are improving,” Mr Shen told reporters, adding that China may take measures to support the logistics industry as a way to boost consumption. He didn’t elaborate. “From what we know from some companies and some regions, [trade] growth in June is still pretty good, and has kept the pace seen in May,” he said. “Although the trend of recovery is not yet clear, we see some desirable signs.” Exports in May surged past market expectations to rise more than 15 percent from a year earlier, a sharp pick up from April’s surprisingly weak growth of just 5 percent. Imports also trounced forecasts to climb nearly 13 percent, compared with April’s 0.3 percent gain as copper and crude oil shipments jumped. “The economy will continue to face strong headwinds from the softness in both external and domestic demand,” said Andrew Polk, an economist in Beijing for the New York-based Conference Board, a research agency. The value of both exports and imports hit record highs in May. Despite the pick up in May, China’s export growth this year is running at half the pace of last year, hurt by Europe’s debt crisis and anaemic U.S. demand. This had led investors to fret that the world’s secondbiggest economy is losing steam faster than previously thought. Indeed, several analysts have
said the pick-up in Chinese trade is unlikely to hold up. They say China’s trade growth has been extremely volatile this year. The bounce in May could have resulted from the month having more work days this year than in 2011.
The economy will continue to face strong headwinds from the softness in both external and domestic demand Andrew Polk, economist at research agency Conference Board
In the HSBC survey, some 71 percent of exporters, importers and traders indicated that they expect trade volumes to be unchanged or increase in the next six months. The bank cited a survey of 5,800 enterprises in 20 countries from April 10 to June 1.
comments earlier this month from Commerce Minister Chen Deming, who said the trade situation was “grim”. “If lucky, we will be able to keep annual growth of around 10 percent,” the official Xinhua news agency paraphrased Mr Chen as saying on June 11. The Chinese government is sensitive to plummeting trade as the export sector is China’s largest employer, and a sharp downturn could throw millions of workers out of jobs and heighten the risk of social unrest. Having an unhappy populace is especially bad for Beijing this year as it is preparing for a once-adecade leadership transition that has already been rocked by its biggest political scandal in over two decades. Beijing has carried out a number of measures to support growth, including the central bank’s decision on June 7 to cut interest rates for the first time since the global financial crisis. Chinese media has reported for several months that China plans a boost for the logistics industry, which includes businesses ranging from transportation to supermarkets. The Commerce Ministry issued detailed guidelines last week to encourage private investment in the sector. Reuters/Bloomberg
Further weakness Other indicators also suggests further weakness. The HSBC flash purchasing managers index released last week suggested China’s factory sector shrank for the eighth straight month in June as export order sentiment hit its lowest level in three years. Analysts, who already believe China could log its slackest pace of economic growth in 13 years this year at 8.2 percent, think things could worsen with growth even missing Beijing’s 7.5 percent target. Mr Shen’s remarks contrasted with
KEY POINTS Exports, imports growth to improve – trade official Trade to achieve 2012 target, official says Market concerned about faster-thanexpected slowdown
10 |
business daily June 27, 2012
greater china
Local bonds scrapped amid default risk China’s new budget law will not include a provision to ease restrictions on bond issuance by local governments
C
hina has shelved plans to allow local governments to sell bonds directly after a trial program last November, days after increasing scrutiny of default risks at regional investment companies. The country’s top legislative body removed a provision that would have allowed local governments to issue bonds directly under a quota system from the latest amendment to China’s budget law, Xinhua news agency reported. “The central government now is quite concerned about the debt at the local government level,” said Ivan Chung, an analyst at Moody’s Investors Service in Hong Kong. “They worry that if they give the green light now, probably the local governments have less incentive to deal with their debt problems, because they understand they are allowed to refinance.” A 1994 ban on regions issuing notes directly led to the creation of over 10,000
local-government financing vehicles, which increased borrowing as part of stimulus spending designed to cushion the economy during the global financial crisis. As of the end of 2010 they had debts of 10.7 trillion yuan (US$1.7 trillion), 27 percent of China’s gross domestic product, according to a June 2011 official audit. China’s National Development and Reform Commission, the nation’s economic planning agency, told regional authorities to set up risk monitoring and forecasting mechanisms for debt maturing in 2012 and 2013, two people with direct knowledge of the matter said last week, who asked not to be identified because they weren’t authorized to speak to media. The orders were issued because the risk of defaults is increasing as the bond market expands, they said. “The central government is backtracking as it is worried that it will aggravate the debt
problem,” said Rees Kam, a strategist at SJS Markets Ltd., a Hong Kong-based financial services company that specializes in fixedincome securities. “The banking system already has a potential problem of local- government debt turning sour. They don’t want to worsen the situation because, at the end of the day, the central government needs to pay the bill.” China started a trial program last November to allow Shanghai and Shenzhen, as well as the provinces of Zhejiang and Guangdong to sell bonds directly for the first time in an attempt to start a municipal bond market and increase transparency. Reuters/Bloomberg
The explosion of local-government financing vehicles has raised concern that many localities will be unable to repay debts
China, Mercosur seek trade boost
C
hina and South America’s Mercosur trade bloc will work toward an agreement that would help boost trade and cushion their economies from the European debt crisis. The bloc led by Brazil and Argentina plans to sign an accord at its next meeting, Brazil’s President Dilma Rousseff said yesterday in a videoconference with Chinese Premier Wen Jiabao, Argentina’s President Cristina Fernandez de Kirchner and Uruguay’s President Jose Mujica. “It’s very important that countries such as those from the Mercosur and China strengthen ties in a context of an international crisis that seems will last for a long time,” Ms Rousseff said. “It’s a strategy to avoid the crisis from contaminating our markets and causing unwanted consequences in jobs, income and economic growth.” China seeks to double trade volume with the region by 2016, Mr Wen said after signing bilateral trade and investment agreements with Ms
Fernandez in Buenos Aires. In a speech, Mr Wen said the two countries aim to consolidate their ties, which last year generated US$15 billion in trade, to better face global economic challenges. “Emerging markets are facing a great test to continue growing,” Ms Fernandez said at the same event, referring to the European debt crisis. “Argentina and China have committed to promoting demand and put in place all the necessary measures so that growth doesn’t stop.” A roughly US$2 billion low-interest loan package will finance the modernization of the Belgrano Cargas railway, a 1,500-km (930 miles) route that stretches into important soygrowing regions in the north of the country, the Economy Ministry said. China is the largest buyer of Argentine farm goods and its second-biggest trade partner. The South American country is also seeking approval to start exporting corn to China. Reuters/Bloomberg
Premier Wen, on an official visit to Argentina, signed a series of accords after meeting President Cristina Fernandez
June 27, 2012 business daily | 11
asia
Japan parliament passes sales tax bill Ruling party faces split; Noda could lose majority if 54 or more dissenters defect
P
rime Minister Yoshihiko Noda’s bill to double Japan’s five percent sales tax passed the lower house of parliament after months of wrangling, intensifying a ruling party split that could threaten its majority. The legislation now moves to the opposition-controlled upper house, where passage is likely thanks to backing by the main opposition Liberal Democratic Party and New Komeito party. Mr Noda has vowed to stake his political career on boosting the levy to rein in record debt and soaring welfare costs. Former ruling Democratic Party of Japan leader Ichiro Ozawa and his followers voted against the bill, then signalled he may leave the DPJ and form a new party. Mr Noda’s defiance of Mr Ozawa and this month’s decision to take the publicly unpopular step of restarting two atomic reactors shut down after last year’s nuclear disaster may boost his leadership credentials, analysts including Jun Okumura said. “As a prime minister you want to get things done and Mr Noda is getting things done,” said Mr Okumura, a senior adviser for the Eurasia Group consulting firm in Tokyo and a former trade ministry
official. “He’s done a pretty good job of setting priorities and sticking to them. The next question is will Mr Ozawa stay in the party or bolt, but many in the DPJ will be happy to see him leave.” Under the bill, the consumption tax will rise to 8 percent in April 2014 and to 10 percent in October 2015. The measure passed by a vote of 363-96, with 57 DPJ lawmakers opposing it.
‘First step’ “We have taken a big first step toward reform, both for the sake of present-day Japanese and for future generations,” Mr Noda said at a press conference, adding that the party rebellion was “unfortunate.” Those who voted no will be dealt with “strictly according to party rules,” he said. DPJ opponents of the bill argued it breaches the platform on which the party took power in 2009 after the LDP’s half-century of rule, and may discourage consumers from spending and thus fail in its aim of boosting tax revenue. Mr Ozawa told reporters that he will make “a final effort” to work within the DPJ.
PM Noda’s bill was passed but break-up threatens Democrats after 57 MPs vote against
“I believe we are very close to a general election, so we can’t waste time,” he said at a press conference. “I will make every effort, but in any case will have to decide what to do in the near future.” Should more than 50 lawmakers leave to form a new party, Mr Noda’s majority in the lower house would be in danger. The prime minister delayed the vote to allow party leaders time to try to bring anti-tax lawmakers
on board. Parliament extended the current session to September 8 to allow time to push the bill through the upper house. The International Monetary Fund and the Organization for Economic Cooperation and Development have both urged Japan to be more aggressive in tackling a debt that the OECD predicts will reach 223 percent of gross domestic product next year.
Genting seeks to raise stake in Echo
Genting Singapore owns Resorts World at Sentosa, the world’s third-most expensive casino complex
Aims to raise stake beyond 10 percent – regulator
M
alaysian gaming group Genting Group has applied to raise its stake in casino operator Echo Entertainment, potentially pitting it in a US$3
billion-plus takeover battle against Australian billionaire James Packer. Genting, Southeast Asia’s largest gaming group, has applied to increase its stake in Echo above the 10 percent threshold for a single shareholder, the New South Wales Independent Liquor and Gaming Authority said yesterday. That puts it on par with Mr Packer who is seeking to gain
control of Echo, which owns Sydney’s only casino as well as casinos in Queensland state. Packer is hoping to attract more Asian high-rollers to Sydney and Genting may want to set up its own VIP room there. “Genting has been seeking expansion opportunities both in Asia and the USA and this evolution into Australia is not surprising at all,” said Jonathan Galaviz of U.S.-based economics consultancy Galaviz & Co. “Genting, through its affiliated entries, has a tremendous amount of cash to deploy into the sector globally,” he added. Under Echo’s constitution, no single party can hold more than 10 percent without regulatory approval. Gaining the approval of the New South Wales state authority may take several months. Analysts have said Genting probably wants to keep its options open on Echo and may not be considering a full bid.
Mr Packer’s company, Crown, applied to increase its stake beyond 10 percent on February 24. He has built stakes in casinos in Macau, Australia, London and Las Vegas. A public comment period ended in late May and the state authority has not said when a decision will be made. Genting Group, controlled by its chairman, Lim Kok Thay, has built a war chest of S$3.9 billion (US$3 billion), leading to speculation it may be preparing for an acquisition. Genting has built its stake in Echo through its units in Singapore and Hong Kong. Genting Hong Kong owns Star Cruises and holds a stake in Philippine casino, Resorts World Manila. Echo shares fell 0.2 percent in a broader market that was down 0.4 percent. Genting Group shares fell 1 percent in Kuala Lumpur, while Genting Singapore shares were 0.4 percent lower. Reuters
Indian govt efforts seen falling short Mukherjee exits raising debt cap with quota unsold
I
ndian Finance Minister Pranab Mukherjee’s final attempt to buoy the rupee will fall short, judging by last week’s failed auction of permits to buy the nation’s bonds. Mr Mukherjee, who resigned yesterday before running for president, raised the foreign investment cap on government bonds by US$5 billion to US$20 billion. Global investors bid for 81 billion rupees (US$1.4 billion) of quotas to buy notes of infrastructure companies at a sale last week, 18 percent less than targeted, three people familiar with the matter said. International
funds have only bought US$30.2 billion of the government’s previous US$60 billion limit on holdings of corporate and sovereign notes. The lack of investor interest is thwarting efforts by Prime Minister Manmohan Singh to double investment to US$1 trillion over a five-year period to improve the quality of infrastructure. The bestrated companies in Asia’s thirdbiggest economy pay 9.35 percent to borrow funds for a decade, almost twice what the rate is in China. “All international investors are waiting for a signal that the rupee isn’t going to fall further,” S.K.
Maheshwari, the Mumbai-based managing director and chief executive of L&T Infrastructure Finance Co., said. “It would be naive to think that infrastructure bonds will be fully subscribed at this moment.” Sovereign wealth funds, insurance and pension funds will now be able to buy government bonds, the Reserve Bank of India said in a statement on Monday. The central bank also cut the lock-in period for infrastructure notes to one year from 36 months. The rupee lost 0.1 percent to 57.0663 per dollar yesterday. The currency has slumped 10.7 percent
this quarter, the worst performance among Asia’s 11 most-traded currencies and more than twice the 4.2 percent drop in Malaysia’s ringgit, the second- biggest loser. “The measures announced will have a limited impact in spurring the rupee and attracting large-scale funds into India,” Killol Pandya, the Mumbai-based head of fixedincome investment at the local unit of Daiwa Asset Management Co., said. “The steps fall short of what the market was expecting. The rupee may decline further and touch 58 in the near term.” Bloomberg
12 |
business daily June 27, 2012
MARKETS Hang SENG INDEX NAME
NAME
PRICE
Day %
VOLUME
25.75
0.9803922
18498865
ALUMINUM CORP-H
3.23
0.9375
6105950
BANK OF CHINA-H
2.86
-0.3484321
246875218
5
0.6036217
15956340
BANK EAST ASIA
26.65
2.895753
2265178
BELLE INTERNATIO
12.42
5.076142
19010492
ESPRIT HLDGS
23.7
0.6369427
11566355
HANG LUNG PROPER
CATHAY PAC AIR
12.26
-0.1628664
2590580
CHEUNG KONG
AIA GROUP LTD
BANK OF COMMUN-H
BOC HONG KONG HO
CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD
PRICE
Day %
VOLUME
9.61
0.8394544
31683477
11.54
0.1736111
3401812
SANDS CHINA LTD SINO LAND CO
11.26
1.808318
4114071
SUN HUNG KAI PRO
89.55
0.1117943
3169965
64.9
0.3866976
2138092
0.5602241
60504339
9.68
3.308431
6930642
SWIRE PACIFIC-A
10.02
1.417004
7150906
TENCENT HOLDINGS
25.25
-1.174168
4734385
HANG SENG BK
103.8
0.776699
756455
HENDERSON LAND D
40.65
0
2580239
HENGAN INTL
73.55
-0.473613
3336199
HONG KG CHINA GS
16.38
-0.2436054
6479429
HONG KONG EXCHNG
109.1
0.4604052
3862125
HSBC HLDGS PLC
68.2
0.5899705
14740719
COSCO PAC LTD
90.95
0.1100715
2598170
6.27
-0.1592357
28207728
CHINA CONST BA-H
5.15
0.1945525
174273305
CHINA LIFE INS-H
19.1
1.921025
27896394
CHINA MERCHANT
22.4
2.283105
3872625
82.85
0.8520998
15012732
HUTCHISON WHAMPO
65.4
1.474011
4773416
17.2
2.380952
23039277
IND & COMM BK-H
4.21
-0.4728132
290321503
LI & FUNG LTD
CHINA MOBILE
PRICE
Day %
57.15
0.8826125
2601806
22.7
-5.809129
43954094
POWER ASSETS HOL
14.36
CNOOC LTD
CHINA COAL ENE-H
CHINA OVERSEAS
NAME
VOLUME
89.1
1.538462
1565036
218.6
-1.264679
3830490
TINGYI HLDG CO
19.2
0.9463722
3743726
WANT WANT CHINA
9.12
0
14586259
WHARF HLDG
41.4
0.6075334
3892760
MOVERS
33
13
3 19100
INDEX 18981.84
CHINA PETROLEU-H
6.79
0.5925926
53804499
14.38
-0.2773925
15098799
HIGH
19083.08
CHINA RES ENTERP
22.05
-0.8988764
2131019
MTR CORP
25.7
0.5870841
1000561
LOW
18850.47
CHINA RES LAND
14.84
0
7279220
NEW WORLD DEV
8.91
1.480638
9266044
CHINA RES POWER
14.78
-1.335113
6387157
52W (H) 22835.03
PETROCHINA CO-H
9.99
-0.695825
85708884
CHINA SHENHUA-H
26.2
2.14425
13385728
PING AN INSURA-H
59.95
2.129472
7538165
(L) 16170.35
18850
22-Jun
26-Jun
Hang SENG CHINA ENTErPRISE INDEX NAME
PRICE
DAY %
VOLUME
23.85
-0.209205
6423000
CHINA PETROLEU-H
6.79
0.5925926
53804499
6105950
CHINA RAIL CN-H
6.37
1.594896
-0.9345794
8942200
CHINA RAIL GR-H
3.25
2.86
-0.3484321
246875218
CHINA SHENHUA-H
26.2
CHINA TELECOM-H
PRICE
DAY %
VOLUME
AGRICULTURAL-H
2.97
0.6779661
63743920
AIR CHINA LTD-H
4.65
-1.06383
9057000
ALUMINUM CORP-H
3.23
0.9375
ANHUI CONCH-H
21.2
BANK OF CHINA-H
NAME CHINA PACIFIC-H
PRICE
DAY %
VOLUME
11.92
-1.487603
27517384
ZIJIN MINING-H
2.57
0
11524000
18217900
ZOOMLION HEAVY-H
9.93
-0.501002
14886568
4.83871
18080889
ZTE CORP-H
14.6
-0.8152174
3900282
2.14425
13385728
5
0.6036217
15956340
3.34
1.519757
35228077
14.62
1.527778
1394500
DONGFENG MOTOR-H
11.96
-2.446982
15209381
CHINA CITIC BK-H
3.84
0
21464384
GUANGZHOU AUTO-H
6.54
0.1531394
2629584
CHINA COAL ENE-H
6.27
-0.1592357
28207728
HUANENG POWER-H
5.7
1.423488
27218347
CHINA COM CONS-H
6.59
0
12361491
IND & COMM BK-H
4.21
-0.4728132
290321503
BANK OF COMMUN-H BYD CO LTD-H
CHINA CONST BA-H
5.15
0.1945525
174273305
JIANGXI COPPER-H
16.58
0.1207729
10109953
CHINA COSCO HO-H
3.45
0.5830904
5850721
PETROCHINA CO-H
9.99
-0.695825
85708884
CHINA LIFE INS-H
19.1
1.921025
27896394
PICC PROPERTY &
8.87
2.424942
8655200
CHINA LONGYUAN-H
4.97
-1.192843
10956240
PING AN INSURA-H
59.95
2.129472
7538165
CHINA MERCH BK-H
14.16
0.8547009
10544397
SHANDONG WEIG-H
8.63
2.494062
5262500
CHINA MINSHENG-H
6.84
-0.8695652
21598800
SINOPHARM-H
20.05
0.3503504
4013890
CHINA NATL BDG-H
8.73
-0.4561003
25469100
TSINGTAO BREW-H
44.65
-1.434879
1975460
10.68
2.298851
6478000
WEICHAI POWER-H
32.2
2.060222
2190783
CHINA OILFIELD-H
NAME YANZHOU COAL-H
MOVERS
22
15
3 9570
INDEX 9398.29 HIGH
9569.16
LOW
9330.28
52W (H) 12902.97 9330
(L) 8058.58 22-Jun
26-Jun
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.55
0.3937008
35417862
DATANG INTL PO-A
5.65
-2.586207
3168654
SANY HEAVY INDUS
13.82
0
21391398
AIR CHINA LTD-A
6.02
0
12525106
DONGFANG ELECT-A
19.7
-0.7056452
5282374
SHANDONG GOLD-MI
33.9
1.557819
6980747
ALUMINUM CORP-A
6.39
-0.3120125
6462456
EVERBRIG SEC -A
12.56
2.113821
10245797
SHANG PUDONG-A
8.06
0.1242236
39982538
14.92
-0.1338688
16148811
GD MIDEA HOLDING
11.01
0.09090909
14084301
SHANGHAI ELECT-A
4.87
-2.6
8831592
1.055966
15345020
GD POWER DEVEL-A
2.69
-0.7380074
38595719
SHANXI LU'AN -A
20.5
0.2444988
13702399
NAME
ANHUI CONCH-A
NAME
NAME
BANK OF BEIJIN-A
9.57
BANK OF CHINA-A
2.83
0
15609027
GEMDALE CORP-A
6.58
2.973396
51807326
SHANXI XINGHUA-A
35.67
-1.518498
2528560
BANK OF COMMUN-A
4.53
0.443459
42975759
GF SECURITIES-A
29.01
1.968366
6102435
SHANXI XISHAN-A
15.33
2.541806
15342771
BAOSHAN IRON & S
4.39
0
9976218
GREE ELECTRIC
21.18
-0.3294118
10676921
SHENZ DVLP BK-A
14.9
0.8801625
13492363
13
0.7751938
17049866
SHENZEN OVERSE-A
6.43
2.225755
41394966
SINOVEL WIND-A
7.5
-0.464499
1146352
0.2406739
21678473 1762456
BYD CO LTD -A
21.6
-0.9174312
1795751
GUANGHUI ENERG-A
CHINA CITIC BK-A
3.99
0.2512563
16378793
HAITONG SECURI-A
9.4
1.511879
43781190
CHINA CNR CORP-A
4.03
-0.4938272
18677545
HANGZHOU HIKVI-A
25.7
-0.8870035
2738343
SUNING APPLIAN-A
8.33
CHINA COAL ENE-A
7.91
-0.6281407
7183541
HEBEI IRON-A
2.79
0
15029570
TSINGTAO BREW-A
36.95
-2.583707
CHINA CONST BA-A
4.21
-0.2369668
16923793
HENAN SHUAN-A
61.9
0.3241491
1116159
WEICHAI POWER-A
30.12
0.06644518
3133160
CHINA COSCO HO-A
4.71
0
6442904
HUATAI SECURIT-A
10.22
1.894317
16738143
WULIANGYE YIBIN
31.86
-0.4996877
12782262
CHINA CSSC HOL-A
22.23
-1.243892
4866475
HUAXIA BANK CO
9.4
1.293103
27810659
XIAMEN TUNGSTEN
43.36
0.3936096
7589484
CHINA EAST AIR-A
4.16
0.9708738
16132897
IND & COMM BK-A
3.93
-0.2538071
21537164
YANGQUAN COAL -A
15.23
1.061712
13991560
2.82
0.3558719
20924448
INDUSTRIAL BAN-A
12.81
0.078125
27079872
YANTAI CHANGYU-A
70.52
-0.08500992
535015
CHINA LIFE INS-A
17.55
2.392065
12279233
INNER MONG BAO-A
41.58
-2.622951
47731519
YANTAI WANHUA-A
13.8
-0.2169197
8098149
CHINA MERCH BK-A
10.99
0
44724939
INNER MONG YIL-A
20.7
0.0967118
14004969
YANZHOU COAL-A
19.61
-5.357143
5744360
CHINA MERCHANT-A
11.7
1.211073
15371098
INNER MONGOLIA-A
5.12
0.589391
70183838
YUNNAN BAIYAO-A
56.28
0.1423488
3065596
CHINA MERCHANT-A
24.47
4.527979
12965360
JIANGSU HENGRU-A
27.77
0.03602305
2619689
ZHONGJIN GOLD
22.18
0
10592388
CHINA MINSHENG-A
5.97
0.1677852
69251467
JIANGSU YANGHE-A
131.2
-3.316139
3066886
ZIJIN MINING-A
3.9
0.2570694
43808121
10063924
JIANGXI COPPER-A
23.58
0.255102
5274491
ZOOMLION HEAVY-A
10.01
-1.862745
25987168
12.67
0.5555556
3294920
ZTE CORP-A
14.61
1.107266
13447796
15.22
1.466667
13659672
CHINA EVERBRIG-A
CHINA NATIONAL-A
6.11
1.833333
CHINA OILFIELD-A
15.35
0.5239031
5949087
JINDUICHENG -A
CHINA PACIFIC-A
20.91
0.5772006
8263415
JIZHONG ENERGY-A
CHINA PETROLEU-A
6.34
-0.4709576
25301713
KANGMEI PHARMA-A
14.1
-1.052632
13850363
CHINA RAILWAY-A
4.43
0
20916159
KWEICHOW MOUTA-A
237.85
0.1052189
2612247
40.37
-0.5665025
4813621
CHINA RAILWAY-A
2.59
0
18680807
LUZHOU LAOJIAO-A
CHINA SHENHUA-A
22.45
-0.7076515
12074490
METALLURGICAL-A
2.49
0.8097166
19269735
CHINA SHIPBUIL-A
5.22
-0.5714286
13048908
NARI TECHNOLOG-A
18.78
-0.1594896
5408502
NINGBO PORT CO-A
2.53
0.3968254
7833576 38577961
CHINA SOUTHERN-A
4.62
-0.6451613
22878891
CHINA STATE -A
3.33
-0.2994012
43702847
PANGANG GROUP -A
6.56
-0.9063444
9.04
-0.4405286
MOVERS
151
3.8
0
45099938
8687178
HIGH
2547.05
CHINA VANKE CO-A
8.95
2.285714
64364527
PING AN INSURA-A
43.97
0.9875976
21178917
LOW
2438.29
CHINA YANGTZE-A
6.75
-0.147929
10413901
POLY REAL ESTA-A
11.24
2.74223
51872677
CITIC SECURITI-A
12.35
0.3249391
50803938
QINGDAO HAIER-A
11.83
-0.1687764
6635987
CSR CORP LTD -A
4.7
0.4273504
10411612
QINGHAI SALT-A
33.15
2.695167
10764374
7.14
-0.2793296
25864994
SAIC MOTOR-A
14.1
-0.8438819
12251887
PRICE DAY %
Volume
PRICE DAY %
Volume
DAQIN RAILWAY -A
24 2550
INDEX 2454.915
PETROCHINA CO-A
CHINA UNITED-A
125
52W (H) 3140.102 (L) 2254.567
2430
21-Jun
26-Jun
FTSE TAIWAN 50 INDEX NAME
NAME
ACER INC
30.5
-4.6875
27888270
FORMOSA PLASTIC
ADVANCED SEMICON
24.8
-1.195219
30374976
FOXCONN TECHNOLO
ASIA CEMENT CORP
36.7
0.4103967
2452230
FUBON FINANCIAL
ASUSTEK COMPUTER
PRICE DAY %
Volume
0.5291005
4919382
TAIWAN MOBILE CO
94.5
0.6389776
104
-2.803738
9068851
TPK HOLDING CO L
468
1.73913
2999011
29 -0.3436426
6580121
TSMC
78.7
-1.130653
36903395
86 -0.5780347
23422396
3986489
HON HAI PRECISIO
45.6
0.9966777
5187708
-1.271186
24622749
HOTAI MOTOR CO
191.5
-2.046036
1017666
UNITED MICROELEC
12.25
0
21544296
CATCHER TECH
192
-2.538071
11352065
HTC CORP
367.5
-2.906209
9878415
WISTRON CORP
36.85
-1.073826
6728246
CATHAY FINANCIAL
28.7 -0.5199307
6221927
HUA NAN FINANCIA
16.1
0.625
4531886
YUANTA FINANCIAL
13.15
0.3816794
7076264
0.660066
4557627
LARGAN PRECISION
581
-3.005008
1611225
YULON MOTOR CO
51.8 -0.9560229
4701367
CHENG SHIN RUBBE
72.9 -0.6811989
5627658
LITE-ON TECHNOLO
36.95
0.9562842
2099301
CHIMEI INNOLUX C
12.1
-2.811245
13940570
MEDIATEK INC
274.5
-2.139037
14266572
CHINA DEVELOPMEN
6.93
0.2894356
20284861
MEGA FINANCIAL H
21 -0.2375297
13629689
CHINA STEEL CORP
27.65
0.1811594
10246650
NAN YA PLASTICS
52.9
0.1893939
3590000
CHINATRUST FINAN
16.65 -0.8928571
16099603
PRESIDENT CHAIN
157
1.948052
1196807
78 -0.6369427
9287907
CHANG HWA BANK
CHUNGHWA TELECOM COMPAL ELECTRON
15.25
92
0.877193
8192011
QUANTA COMPUTER
26.85 -0.1858736
13363833
SILICONWARE PREC
DELTA ELECT INC
86.5
0.5813953
11049240
SINOPAC FINANCIA
FAR EASTERN NEW
30.6
0.8237232
4141801
SYNNEX TECH INTL
71.5
-1.37931
2859021
FAR EASTONE TELE
65.4
1.395349
9233307
TAIWAN CEMENT
34.65
1.167883
6303302
FIRST FINANCIAL
0.3278689
4426688
10.65 -0.4672897
30.6
10673853
16.95
0.8928571
6214256
TAIWAN COOPERATI
17.1
0.2932551
3076899
FORMOSA CHEM & F
75.5
0.2656042
3333805
TAIWAN FERTILIZE
67.9
0.443787
1665656
FORMOSA PETROCHE
79.8
1.915709
2186914
TAIWAN GLASS IND
24
0.2087683
2316386
UNI-PRESIDENT
5713400
11.65
AU OPTRONICS COR
275 -0.1814882
NAME
76
MOVERS
25
24
1 4970
INDEX 4889.71 HIGH
4964.5
LOW
4879.88
52W (H) 6026.51 (L) 4643.05
4870
22-Jun
26-Jun
June 27, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GAlAXy ENtErtAINMENt
MElCo CroWN ENtErtAINMENt
MGM CHINA HolDINGS
18.7 18.5
Average 18.195
Min 17.94
last 18.12
Average 22.795
29.4
17.9
29.2
Max 30.15
Average 29.45
Min 29.3
Min 22.7
last 22.7
23.3
13.8
23.1
13.7
22.9
13.6
22.7
11.8 11.7 11.6 Max 12.16
Average 11.643
Min 11.54
last 11.54
Average 13.66
17.2
17
Min 13.56
16.8
last 13.88
Max 17.4
Average 17.006
last 17.14
Min 16.88
CURRENCY EXCHANGE RATES 79.28
0.08837268
-20.04034291
111.3799973
77.55999756
BRENT CRUDE FUTR Aug12
91.71
0.76915732
-12.91425316
124.6999969
88.48999786
GASOLINE RBOB FUT Jul12
265.73
0.434651145
-2.114414116
332.1799994
246.4999914
GAS OIL FUT (ICE) Aug12
814.75
1.463262765
-9.371523915
1046.5
801
2.701
0.259836674
-16.71292014
4.890000343
2.095999956
HEATING OIL FUTR Jul12
DAY %
YTD %
(H) 52W
255.13
0.504234784
-10.25081788
331.9299936
250.999999
1585.31
1.0621
1.3036
1921.18
1478.78
Silver Spot $/Oz
27.415
2.5289
-1.5089
44.2175
26.085
Platinum Spot $/Oz
1439.9
0.3659
3.2556
1915.75
1339.25
Palladium Spot $/Oz
602.98
-0.7767
-7.7307
848.37
537.54 1852
LME ALUMINUM 3MO ($) LME COPPER 3MO ($) 3MO ($)
LME NICKEL 3MO ($)
1865
0.161117078
-7.673267327
2675.25
7335.5
0.348837209
-3.480263158
9905
6635
1805
0.277777778
-2.16802168
2539.5
1718.5
16420
-0.935143288
-12.23944415
25195
15980
15.005
0.435073628
-0.166333999
18
13.95499992
602.25
1.388888889
2.729211087
673.5
499
WHEAT FUTURE(CBT) Sep12
727.5
-1.821862348
3.669397934
853.5
606.75
SOYBEAN FUTURE Nov12
1421.5
-0.280603297
18.04027403
1438.75
1115.75
COFFEE 'C' FUTURE Sep12
159.35
0.377952756
-31.97438634
288.8500061
SUGAR #11 (WORLD) Oct12
19.95
0.100351229
-12.61498029
COTTON NO.2 FUTR Dec12
69.81
-0.34261242
-20.52595628
AGRICULTURE ROUGH RICE (CBOT) Sep12 Dec12
PRICE
(L) 52W
Gold Spot $/Oz
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 %
1.0053 1.5643 0.9608 1.2501 79.34 7.9922 7.7594 6.3627 56.985 31.81 1.28 29.963 42.495 9508 79.758 1.20103 0.79915 7.962 9.9891 99.18 1.03
YTD %
0.5602 0.6434 0.1145 0.1282 0.605 0.0025 0 0.0094 0.0526 0.2201 0.2734 0.0133 0.36 0.0105 0.0502 -0.0133 0.5118 -0.1068 -0.1231 0.4739 0
(H) 52W
-1.5281 0.6434 -2.3626 -3.5491 -3.0628 0.0926 0.1031 -1.064 -6.879 -0.8174 1.2969 1.0546 3.1651 -4.6172 -1.6625 1.3122 4.2846 2.1628 3.633 0.484 0.0097
(L) 52W
1.1081 1.6618 0.9772 1.4578 84.18 8.0449 7.8113 6.4756 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
2.67
0.3759398
21.36363
3.25
1.88
1886348
150.0999908
CROWN LTD
8.58
0.5861665
6.056858
9.29
7.45
1672095
26.03999901
19.23999977
AMAX HOLDINGS LT
0.076
-1.298701
-12.64368
0.119
0.06
2778000
102.25
64.61000061
BOC HONG KONG HO
23.7
0.6369427
28.80435
24.45
14.24
11566355
CENTURY LEGEND
0.25
5.932203
8.69565
0.4
0.204
40000
CHEUK NANG HLDGS
2.96
0
5.714288
4.36
2.3
0
CHINA OVERSEAS
17.2
2.380952
32.51156
18.48
9.99
23039277
World Stock MarketS - Indices
NAME
PRICE
DAY % YTD %
VOLUME CRNCY
CHINESE ESTATES
8.98
0.2232143
-28.16
13.68
8.3
1000
CHOW TAI FOOK JE
9.22
-1.914894
-33.76437
15.16
8.55
6138384
EMPEROR ENTERTAI
1.33
-0.7462687
19.81982
2.04
0.97
1870000
FUTURE BRIGHT
0.94
0
123.8095
1.09
0.3
1662000
GALAXY ENTERTAIN
18.12
-5.723205
27.24719
24.95
8.69
46580456 756455
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
12502.66
-1.092654
2.333531
13338.66016
10404.49
NASDAQ COMPOSITE INDEX
US
2836.16
-1.945084
8.867436
3134.17
2298.89
HANG SENG BK
103.8
0.776699
12.64243
125
84.4
FTSE 100 INDEX
GB
5453.12
0.0453157
-2.138437
6084.08
4791.01
HOPEWELL HLDGS
20.1
-1.95122
1.208456
24.903
18.56
501515
DAX INDEX
GE
6134.93
0.04141941
4.010953
7523.53
4965.8
HSBC HLDGS PLC
68.2
0.5899705
15.59322
78.85
56
14740719
NIKKEI 225
JN
8663.99
-0.8086213
2.467558
10255.15
8135.79
HANG SENG INDEX
HK
18981.84
0.4465682
2.969717
22835.03
16170.35
CSI 300 INDEX
CH
2454.915
-0.06525497
4.654097
3140.102
2254.567
TAIWAN TAIEX INDEX
TA
7137.93
-0.3969926
0.9311277
8842.17
HUTCHISON TELE H
3.58
1.129944
19.73244
3.71
2.35
2886000
LUK FOOK HLDGS I
15.44
-0.5154639
-43.02583
46.15
14.7
3092000
MELCO INTL DEVEL
6.13
-1.129032
6.239168
10.76
4.3
3780000
MGM CHINA HOLDIN
11.54
-4.785479
20.30666
17.183
7.6
4388802
6609.11
MIDLAND HOLDINGS
3.87
1.308901
-2.125593
5.217
2.887
337000
NEPTUNE GROUP
0.094
-3.092784
-15.31532
0.153
0.08
90000
NEW WORLD DEV
8.91
1.480638
42.33226
11.279
6.13
9266044
SANDS CHINA LTD
22.7
-5.809129
3.416853
33.05
14.9
43954094
SHUN HO RESOURCE
1.13
-1.73913
13
1.32
0.82
14000
KOSPI INDEX
SK
1817.81
-0.4147082
-0.4343407
2192.83
1644.11
S&P/ASX 200 INDEX
AU
4013.301
-0.3603195
-1.066409
4657.4
3765.9
ID
3881.401
0.6172767
1.554397
4234.734
3217.951
FTSE Bursa Malaysia KLCI
MA
1594.1
-0.5626528
4.139855
1611.5
1310.53
SHUN TAK HOLDING
2.58
-4.089219
0.8155791
4.668
2.241
7346150
NZX ALL INDEX
NZ
756.373
-0.5669882
3.641091
806.015
700.441
SJM HOLDINGS LTD
13.88
-1.977401
10.99084
20.711
10.079
15029501
SMARTONE TELECOM
15.14
1.474531
12.64881
18.5
9.8
1008619
17.2
-2.824859
-11.79487
27.48
14.807
15133404
ASIA ENTERTAINME
3.85
-4.228856
-34.52381
10.8692
3.66
100374
BALLY TECHNOLOGI
45.88
-1.333333
15.97573
49.32
24.74
428768 2700
JAKARTA COMPOSITE INDEX
PHILIPPINES ALL SHARE IX
11.5
17.4
13.5 Max 13.88
WTI CRUDE FUTURE Aug12
NAME
11.9
WyNN MACAU ltD 13.9
PRICE
CORN FUTURE
last 29.4
23.5
NAME
LME ZINC
12.0
SJM HolDINGS ltD
NATURAL GAS FUTR Jul12
METALS
12.1
29.6
Commodities ENERGY
30
18.1
SANDS CHINA ltD
Max 23.45
12.2
29.8
18.3
Max 18.66
30.2
PH
3411.45
0.2895696
12.03301
3518.96
2695.06
WYNN MACAU LTD
HSBC Dragon 300 Index Singapor
SI
530.9
-1.11
6.97
na
na
STOCK EXCH OF THAI INDEX
TH
1151.09
0.3189737
12.26642
1247.72
843.69
HO CHI MINH STOCK INDEX
VN
419.19
-1.162407
19.24051
492.44
332.28
BOC HONG KONG HO
2.95
0
23.06088
3.15
1.81
Laos Composite Index
LO
985.36
-2.554416
9.550171
1107.3
876.33
GALAXY ENTERTAIN
2.45
-3.921569
31.01604
3.24
1.08
2515
INTL GAME TECH
15.08
0
-12.32559
19.15
13.12
4526771
JONES LANG LASAL
67.46
-3.38012
10.1208
99.89
46.01
246553
LAS VEGAS SANDS
42.9
-3.940887
0.397848
62.09
36.08
8018218
MELCO CROWN-ADR
11.34
-4.060914
17.87942
16.15
7.05
7445919
MGM CHINA HOLDIN
1.55
0
30.06704
2.2131
1.0025
1000
MGM RESORTS INTE
10.49
-4.549591
0.5752607
16.05
7.4
9426636
SHUFFLE MASTER
13.18
-3.301541
12.45734
18.77
7.35
463243
1.83
0
13.83621
2.6037
1.2624
150
102.06
-1.219512
-7.629648
165.4931
95.82
1691470
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
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business daily June 27, 2012
Opinion
Turkey isn’t the right model for Egypt Marc Champion Timothy Lavin Bloomberg View editors
changed after the Cold War, but deep scepticism over U.S. motives lingers among Turks today, as it does in Egypt. As we have said before, the U.S. should strictly condition the US$1.3 billion in aid it gives to the Egyptian military based on its democratic record. Right now, that record is poor.
Military parallels
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ver since Egyptians occupied Cairo’s Tahrir Square to face down former President Hosni Mubarak last year, Western diplomats and analysts have hoped aloud that the most populous and politically important Arab nation might follow the “Turkish Model.” They were wrong then, but they may be right now. Sunday’s decision by Egypt’s election commission to acknowledge the results of the country’s first free presidential elections – a win for the Muslim Brotherhood’s Mohamed Mursi – was heartening. The alternative, a stolen election, would have been depressing and had unpredictable consequences. But the Egyptian military’s attempt to dismiss parliament and eviscerate the president’s office ahead of the vote is a clear sign of a stunted democratic system in the making – one that’s all too familiar to Turks. Until the last decade, civilian governments in Turkey operated within strict confines delineated by the military. Sometimes, as in 1971 and 1997, the generals forced
governments out with blunt or veiled threats. Sometimes, as in 1960 and 1980, they asserted themselves in an armed coup. On a daily basis, the courts and other state structures – some extra-legal – helped enforce the military’s will. Turks called this the “deep state,” a phrase meant to express the shal-
If [the military] carry through with the current move to stay in charge by gutting efforts to build up democratic institutions, they will only polarise the nation against them
low nature of the country’s democracy.
Wrong model This isn’t the Turkish model you usually hear about – one in which a predominantly Muslim nation is ruled by a civilian and moderately Islamist government committed to free-market democracy. Unfortunately, Egypt appears determined to follow the earlier version of the Turkish model. The relatively prosperous and democratic Turkey we know today is still very much evolving. It has existed only since about 2007, when the ruling Justice and Development Party, better known as AKP, took on the military over the right to elect former Islamist Abdullah Gul as president, and won. The government responded to its victory by effectively putting the armed forces on trial. Hundreds of officers, including dozens of generals, remain behind bars awaiting verdicts. The Turkish and Egyptian militaries have a lot in common. Both see themselves as defenders of the state from an Islamist takeover. Both built vast
economic empires at home: Turkey’s Oyak Group remains one of the country’s biggest conglomerates, funded by military pensions and making everything from Renault cars to cement. Both militaries enjoy, despite everything, deep wells of popular trust as effective institutions that in the relatively recent past carried out armed feats of national importance. The first lesson to draw in Egypt from the Turkish model is that a military that ran the nation for decades will have deep roots in the establishment and among significant parts of the population who are frightened of what Islamists may bring. It won’t give up easily. This is a process that will probably take years, and may involve a long period of cohabitation between rival centres of power. Second, the U.S. should recall that it was a key sponsor of the military in Turkey – a North Atlantic Treaty Organization member and an important Cold War ally – and was widely resented by Turks for supporting the generals through thick and thin. That
Finally, Egypt’s military can draw lessons of its own from the Turkish experience. Turkey’s military has felt lingering humiliation since 2007, when it warned in a statement about Gul’s election that it was ready “to protect the unchangeable characteristics of the Republic of Turkey” against threats “in the guise of religion,” but was unable or unwilling to follow through. The civilian authorities are now using the same politically charged judicial system against the military that the generals abused for so many years in suppressing real and imagined radical Islamists. The two countries’ situations are also different, of course. Unlike Turkey, Egypt isn’t trying to join the European Union and isn’t a member of institutions such as the Council of Europe. These were important tools the AKP used against the Turkish military. The Muslim Brotherhood is also more Islamist than the AKP, and Turkey’s gross domestic product per capita is more than twice that of Egypt. Still, Egypt’s generals should take note that it was a major geostrategic event – the end of the Cold War and the fall of communism – that weakened the support, domestic and international, of their Turkish counterparts. The Arab Spring could yet play a similar role in the Middle East. Unlike Egypt, Turkey had no revolution in which the armed forces intervened to protect ordinary protesters – an extraordinary opportunity for Egypt’s generals. If they carry through with the current move to stay in charge by gutting efforts to build up democratic institutions, they will only polarise the nation against them. The end result would likely be as in Turkey: humiliation and jail, with much suffering along the way. 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 27, 2012 business daily | 15
OPINION
An agenda for Europe’s wires weary magicians Business Leading reports from Asia’s best business newspapers
Yomiuri Shimbun Private-sector think tanks expect the Bank of Japan’s quarterly Tankan survey to show large manufacturers’ business confidence remains flat from the previous March report. The central bank will release the June Tankan on July 2. The average forecast for the report among 18 research institutes stands at minus 4 for the diffusion index for large manufacturers’ current business conditions. The index represents the percentage of companies experiencing good business conditions minus that of firms feeling the opposite.
Taipei Times Bilateral trade between Taiwan and the European Union made a full recovery last year from the global economic downturn in 2008 and 2009, data from the European Economic and Trade Office showed on Monday. Trade between the two sides last year reached a 10-year high of 40.1 billion euros (US$50.05 billion), while the trade deficit for the EU shrank to a 10-year low of 7.7 billion euros, the report showed. Last year’s 3.1 percent growth in trade volume is a continuation of the recovery in 2010 after two years of decline in 2008 and 2009, the report said.
Bangkok Post Thai exports in May grew 7.7 percent year-on-year, helped by rising production. The solid growth has raised hopes for the momentum carrying on to the second half of the year. Deputy Commerce Minister Poom Sarapol was quoted as saying exports in May totalled US$20.93 billion thanks to the rise in electronic products and automobiles. They contracted 3.7 percent year-onyear in April. Latest export data have brightened up the government’s hope of achieving the 15 percent export growth target this year despite concerns about the impact of the euro-zone crisis on the Thai economy.
China Daily China’s Sichuan Hanlong (Group) Co Ltd announced on Monday that it has received approval from Australia’s Foreign Investment Review Board for a US$1.3 billion takeover of the iron ore company Sundance Resources, the latest overseas mining acquisition by China’s private sector. Hanlong Mining will buy all of Sundance’s shares at US$0.57 per share, said George Jones, chairman of Sundance. The acquisition is expected to be completed by November, according to a statement by Hanlong.
Jean Pisani-Ferry
Director of Bruegel, an international economics think tank and Professor of Economics at Université Paris-Dauphine
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urope’s leaders will meet again at the end of June. The question they must answer this time is not whether they can rescue this or that country, but whether they can rescue the eurozone – if not the European Union in its current form. To see why, just review the last 12 months. In July 2011, Europe’s leaders agreed on a (limited) restructuring of Greek debt, while at the same time making financial assistance nimbler and cheaper. A year later, Greece remains on knife-edge. Throughout last autumn, they agonised over the rise of Spanish and Italian bond rates, until finally the European Central Bank decided to administer pain relief in the form of large-scale liquidity provision to banks. But, despite the arrival of new, reform-minded governments in both Italy and Spain, the relief proved short-lived. Then, last December, they agreed on a new fiscal treaty, a more robust financial firewall, and new resources for the International Monetary Fund, so that it could intervene on a larger scale. But, by early spring, bond rates for Spain and Italy were again approaching unsustainable levels. Finally, earlier this month, they decided to devote €100 billion (US$125 billion) to help Spain clean up its ailing banks. The market’s reaction was to send Spanish government bond rates even higher.
Europeans have not remained inactive over the last year. But they have lost their touch. Like aging magicians, they still try tricks that used to impress, but that fail to deliver results
Lost touch Contrary to some perceptions, Europeans have not remained inactive over the last year. But they have lost their touch. Like aging magicians, they still try tricks that used to impress, but that fail to deliver results – or, worse, prove counterproductive. Meanwhile financial fragmentation within the eurozone continues; Spain, and to a lesser extent Italy, suffers a seemingly irresistible rise in borrowing costs; and political strains grow more visible. One summit will not result in decisions that take months to prepare. But Europe’s leaders nonetheless have a chance to impress and start turning the tide, provided that they are sufficiently bold, comprehensive, and forward-looking. Here is a five-point agenda. 1. Accept a limited renegotiation of the Greek program. The bomb has not been defused. While Greece was having two rounds of elections, its recession deepened and policy action stalled. The EU-IMF program is off track,
and more focus must be put on growth. The EU should streamline and front-load existing transfers to Greece, and it should help to trigger capital injection into state assets slated for privatisation. 2. Agree on a risk-sharing scheme for Spanish banks. To lend more to Spain’s government so that it can recapitalise the country’s banks adds to its debt burden and scares markets, which fear future debt restructuring. To use the partner countries’ taxpayers’ money to rescue Spanish banks is neither economically justified nor politically acceptable. Instead, Spain should incur the first losses, and the eurozone’s financial-rescue fund, the European Stability Mechanism, should shoulder an increasing amount of the risk above a certain threshold (say, 5-10 percent of GDP).
Policy gaps 3. Map a scheme for a banking union. A banking union – consisting of common deposit insurance, supervision,
and crisis resolution – would help to avoid the mutual contamination of banks and sovereigns, which is why the idea was endorsed at the recent G-20 summit in Mexico. But it is an ambitious endeavor that cannot be launched overnight. If Europe’s leaders want to show that they are seriously considering it, they should agree to launch concrete discussions on key parameters, giving their ministers a mandate to produce results by autumn. 4. Explore options for Eurobonds. Financial assistance can conceivably help Spain, but not Italy. If Italy’s situation worsened, debt mutualisation in one way or another would ultimately end up being the only alternative to large-scale default. But, while the European Commission has endorsed schemes for partial debt mutualisation, there has never been a serious discussion about their conditions and implications. Europe’s leaders cannot decide anything at this stage, but they should task a group of “wise men” (and women) to evaluate and report on options by summer’s end. 5. Create conditions for macroeconomic adjustment. Southern Europe needs to
deflate to restore competitiveness vis-à-vis northern Europe. Yet, in addition to being horribly painful, domestic deflation threatens the sustainability of public and private debt. With lower nominal income and the same level of debt, the threat of default necessarily increases. Northern Europe should temporarily accept somewhat higher inflation, provided price stability is maintained in the eurozone as a whole. Fortunately, German policymakers have indicated that they understand this logic. Leaders must now forge a consensus around it. Most importantly, the leaders should break the political deadlock. Germany does not want closer financial solidarity if not accompanied by political integration. France wants financial solidarity without closer political integration. Both camps have stuck to their positions for at least a quarter-century. It is time to bridge the gap between them. The perception that Europeans can agree on abstruse technicalities, but not on essentials, is a fundamental reason why the euro’s magicians are losing their touch. © Project Syndicate
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business daily June 27, 2012
CLOSING Italy paying higher rates
Farm Productivity Should Rise, OECD
Italy had to pay investors higher rates of return at a bond auction yesterday, reflecting increasing unease over risk of contagion and scepticism over whether the EU can stem the debt crisis. The government sold a total of 3.9 billion euros (US$4.86 billion) worth of bonds, including 2.99 billion euros in zero coupon notes due to mature in 2014 at a yield of 4.712 percent compared with 4.037 percent on May 28. It sold 626 million euros in Treasury inflation-indexed bonds set to expire in 2016 at a rate of 5.20 percent compared with 4.39 previously.
Increasing yields on farms in developing countries may help meet rising global demand for food in the next 10 years, said Wayne Jones of the Organization for Economic Cooperation and Development. Closing the “productivity gap” between farms in developing and developed countries by 20 percent in the next decade would increase world grain output by about 5 percent, Jones, the OECD’s division head for agri-food and trade markets, said today at an agriculture conference in London. Rising production would spur a 5 percent to 20 percent decline in prices, he said.
Roadmap for fiscal and bank union bumps on German reservations More focus on budget control, less on debt sharing demanded
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uropean proposals to reshape the crisis-struck euro area ran into immediate criticism from Germany for putting too much emphasis on debt sharing and too little on controlling national budgets. The 10-year roadmap, released today by four officials led by European Union President Herman Van Rompuy, centered on common banking supervision and deposit insurance and a “criteria-based and phased” move toward joint debt issuance. It also suggests that the EU could impose upper limits on annual budgets and debt levels of nations that use the euro. “Parts of it read like a wish list,” German Deputy Foreign Minister Michael Link told reporters in Luxembourg. The proposals lean “toward various models for mutualizing debt. What comes up short is improved controls,” he said. Germany’s instant opposition lessened the chances that a June 28-29 summit — the 19th since the debt crisis broke out in early 2010 — will point the way out of the turmoil that threatens to splinter the euro currency. Van Rompuy collaborated on the proposals with European Central Bank President Mario Draghi, European Commission President Jose Barroso and Luxembourg Prime Minister Jean-Claude Juncker, who manages meetings of euro finance ministers.
Banking supervision Banking supervision in the euro area could be entrusted to the ECB,
Sharing a laugh, guessing who’s in control
under a provision in the EU’s treaty that allows member nations to give the central bank more oversight of all financial institutions except insurance companies. The report envisions an EU-wide depositinsurance program, to “strengthen credibility” of existing national backstops, as well as financial sector- funded scheme for winding down banks. Broad deposit guarantees would require a “solid financial backstop,” the report said. Within the euro area, the 500-billion-euro (US$625 billion) European Stability Mechanism could stand behind deposit insurance guarantees and the resolution fund for shutting failing banks. Bundesbank President Jens Weidmann said the discussion about introducing a banking union in the euro area can’t
take place without it being part of the debate on fiscal union. “It makes little sense to single out the banking sector when talking about mutualization of debt, without taking the rest into account,” Weidmann, who also sits on the ECB’s Governing Council, said in Hamburg yesterday. “It’s important that a banking union doesn’t lead to euro bonds by the back door.”
Joint borrowing Van Rompuy’s report stopped short of proposing a binding calendar for a switch to joint borrowing, saying that any debtsharing system would have to go along with tighter management of national budgets.
“Steps toward the introduction of joint and several sovereign liabilities could be considered as long as a robust framework for budgetary discipline and competitiveness is in place to avoid moral hazard and foster responsibility and compliance,” according to the document. Shared bills and common paydown efforts are among the options for moving toward joint borrowing, the report said. Options include “the pooling of some short-term funding instruments on a limited and conditional basis, or the gradual rollover into a redemption fund,” the report said. Van Rompuy said this week’s summit needs to give the go-ahead to forge detailed proposals by December. Bloomberg
President Francois Hollande fulfills campaign pledge France to raise minimum wage by 2 pct from July
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Minimum wage getshave a 21 not euros boost Crisis shows BRICs ‘decoupled’ yet
rance’s minimum wage will be raised by 2 percent starting July 1 as President Francois Hollande fulfills a campaign pledge. Labor Minister Michel Sapin told a Paris press conference that 1.4 percentage points of the increase is to compensate for inflation, and 0.6 point to boost purchasing power. The increase is the first above the inflation rate since 2006 and will add about 21 euros (US$26.24) a month to the paycheck of a worker making the minimum wage, he said. Business leaders and opposition politicians have criticized the planned increase, saying it will hurt the competitiveness of French companies. “I understand the difficulty of people living on the minimum wage, but it is a serious economic mistake,” Bruno Le Maire, agriculture minister in former President Nicolas Sarkozy’s government, said in an interview on LCI television. Sapin said the “reasonable” increase would be compensated by other unspecified measures
to help small businesses, which employ about three-quarters of minimum-wage workers. France’s minimum wage is revalued every Jan. 1 using a formula based on inflation and purchasing power. It rose 0.03 euros to 9.22 euros an hour at the start of the year. Germany, the only European economy larger than France’s, and Italy, the euro region’s third-biggest economy, don’t have governmentmandated minimum wages, though some industries have pay floors agreed between unions and employers. The U.S. minimum wage is US$7.25 an hour, with states allowed to apply higher minimums. Britain’s is 6.08 pounds (US$9.50) for adults, with lower rates for workers under 21. About 11 percent of French employees are paid the minimum wage, state statistical institute Insee says, with the proportion rising to 25 percent for part-time workers. Bloomberg