Macau Business Daily, 27 June, 2012

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

M

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.

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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.

6 |

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

Guangzhou 33/26o C

MACAU (25 June-30 June) Day

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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

8 |

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

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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

E

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

E

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

16 |

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

E

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

F

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