2012-6-28
2012-6-29
2012-6-30
27˚ 33˚
27˚ 34˚
25˚ 30˚
Long to rain over us –
Year I - Number 64 Thursday June 28, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00
govt handouts for years www.macaubusinessdaily.com
Out with the old: urban revamp rules eased Three draft bills on urban planning, heritage and the regeneration of old neighbourhoods are coming up for discussion. Legislator José Chui Sai Peng says the package could bring about a revolution for the rundown districts of Macau peninsula. But urban regeneration will always be a difficult process, the head of the Macau Urban Planning Institute warned, due to the taunting task of getting the agreement from all owners to move ahead. The proposed laws would lower that threshold to 80 percent of owners and give a bigger role to the business sector, something welcomed by property agents. They stressed many residents do not have the money to redevelop property even if they want to. The alternative would be to let market forces determine the future of old neighbourhoods, which would condemn lowvalue property to crumble slowly, Mr Chui said in an interview with Business Daily. Pages 4 & 5
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ash handouts for the city’s residents are likely to continue for some years says an academic. But he thinks the government should find more forward-thinking ways of calming discontent and developing the community. “The handout has lost its effectiveness after 2009 with more people going to the streets again with new requests like the democratisation of the political system,” says Bruce Kwong Kam Kwan public administration professor at the University of Macau. He expects Chief Executive Fernando Chui Sai On will continue the annual payments policy – first introduced in 2008 after May Day street protests by the unemployed in 2006 and 2007 that turned violent – at least until the end of his first term that expires in December 2014. Mr Kwong says there are uncertainties hanging over the city, including a slowdown of gambling revenue growth, the
leadership transition in Beijing and the European financial crisis. And he points out once you start such payouts, it’s difficult to turn off the tap without provoking howls of protest. “The termination of such policy will lead to discontent from the public because they have become over-reliant on the cash handout,” said Mr Kwong. “The government would not dare to make such a bold move without thinking carefully.” Mr Chui tried last year to reduce the per capita subsidy. He was forced to climb down when neighbouring Hong Kong decided it too was going to give a handout that year, but at a more generous rate. This year the Macau payment has been set at 7,000 patacas (US$875) for residents and 4,200 patacas for non-residents. More on page 2
HANG SENG INDEX
Minimum wage can boost competitiveness
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A minimum wage set at an optimum level for all sectors can boost the competitiveness of small, open, economies such as Macau says Eden Yu Siu Hung. But a salary set too high could lead to distortions like unemployment, though that can be avoided by lowering corporate taxes, said the professor from City University of Hong Kong.
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Labour force shrinking fast
Shell company: MPEL in talks on Manila
About 2,600 residents left the job market in the last two months, as the percentage of people working in Macau dropped to a one-year low. In May the real estate and business sectors were worst hit. Non-residents are picking up the growing slack in hotels, casinos and the construction industry.
A devoutly Catholic ChineseFilipino family is in discussion with Macau casino joint venture Melco Crown Entertainment about the latter taking over a gaming project in Manila. The Sy family has reportedly had second thoughts about close involvement in a casino business and is now looking for someone else to lease the shell, fit the interior and run it.
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June 27
HSI - Movers Name
%Day
CHINA RES POWER
4.87
CHINA RES LAND
4.85
BELLE INTERNATIO
4.51
CHINA OVERSEAS
4.30
TENCENT HOLDINGS
3.20
SWIRE PACIFIC-A
-0.22
ESPRIT HLDGS
-0.50
WANT WANT CHINA
-0.66
HENGAN INTL
-1.36
PETROCHINA CO-H
-2.00
Source: Bloomberg
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business daily June 28, 2012
macau
Cash handouts to stay – for now Authorities should find other ways to ease social discontent, says academic Tony Lai
tony.lai@macaubusinessdaily.com
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uthorities will probably continue their one-time cash handout policy for a few more years, academic Bruce Kwong Kam Kwan said yesterday, while noting that the government should find other measures to lower public dissatisfaction. The professor of public administration at the University of Macau told Business Daily he did not expect Chief Executive Fernando Chui Sai On to end the policy during his first term. In supported his view by citing several uncertainties clouding the city, including the slowdown in gambling revenue growth, the leadership transition in Beijing and the European financial crisis. Mr Kwong said on the sidelines of a seminar Mr Chui would consider ending this policy in the second year of his second term, assuming he was re-elected in 2014. “But the termination of such a policy will lead to discontent from the public because they have become over-reliant on the cash handout,” said Mr Kwong. “The government would not dare to
make such a bold move without thinking carefully.” The cash handout was first introduced in 2008 as a one-time policy, which authorities said at the time was aimed at sharing the economic benefits of the city with the public. “The government has not admitted it but the handout was used as a means to ease tension and crisis in the society at that time,” the academic said. The scheme has continued for five years. This year, each resident and non-permanent resident will have received 7,000 patacas (US$875) and 4,200 patacas, respectively.
Last year, the government tried to reduce the amounts to 4,000 patacas for permanent residents and to 2,400 patacas for nonpermanent residents. It eventually gave up and launched a second cash handout. Mr Kwong said the central government was also highly concerned with social tensions in the city and Macau authorities had to react quickly “to show Beijing they have done their job”. The May 1 rallies in 2006 and 2007 attracted big crowds in protest against social inequality, corruption and illegal workers. The strike in 2007 even turned
violent with a police officer firing gunshots. “The handout has lost its effectiveness after 2009, with more people going to the streets again with new requests like the democratisation of the political system,” said the professor. “The government was definitely not expecting it.” He suggested the government could, instead of a cash handout, put the money into other policies in response to the community’s requests. It could offer tax benefits to workers and corporations and lower the importation prices of food and goods to curb inflation, said Mr Kwong. The professor presented his study on the cash handout policies of Macau and Hong Kong to an academic conference at the University of Macau. Scholars from Greater China and Singapore, among other regions, came to the city to discuss the enhancement of public governance.
Minimum wage guarantee ideal for Macau, says scholar Right basic wage, reduction in corporate taxes, benefit small economies Tony Lai
tony.lai@macaubusinessdaily.com
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guaranteed minimum wage can boost competitiveness in small, open economies such as Macau and Hong Kong, says Eden Yu Siu Hung, an economics professor at the City University of Hong Kong. Mr Yiu argued in a public seminar at the University of Macau yesterday that the right base level of pay would secure the future of unskilled workers and ensure equitable public welfare. He conceded on the sidelines, however, his research was based on theoretical models and more study was required to establish the optimum range for minimum salary in Macau. If base salaries were set above an appropriate range, it would lead to distortions such as unemployment, which might be remedied by lowering corporate taxes. The academic presented a paper on the relationship between minimum wage and capital taxes. The introduction of such measures could “help maintain social harmony” and “pacify the unskilled
Lower corporate taxes would help small and medium enterprises absorb any hit from the introduction of a minimum wage, an economist says.
labour force”. Currently, there is no citywide minimum wage in Macau. Only the security and cleaning staff outsourced by the government have a minimum hourly salary of 23 patacas (US$2.90), or 184 patacas a day and 4,784 patacas a month. The University of Macau has been
commissioned to study a possible statutory minimum wage for all cleaning and security staff but research is yet to begin. The Macau Federation of Trade Unions believes the study may take one to two years. The university will submit the results in different phases and the first
deadline is to come. Lewis Tam Hon Keung, assistant professor of finance at the University of Macau, told Business Daily the reduction of corporate tax – currently ranging from 9 to 12 percent -might not be effective in Macau, which already has one of the lowest corporate rates in Asia. The rate is 16.5 percent in Hong Kong, 17 percent in Singapore and greater than 20 percent in South Korea. The introduction of a minimum wage has to be accompanied by other policies to cool inflation and property prices, he said. “The lowest salary in casinos is already much higher than 23 patacas [per hour],” said Mr Tam. “A minimum wage would hit the small and medium enterprises hardest, adding to increasing rents and costs.” He said some struggling small and medium enterprises would not survive the introduction of a minimum wage. Employers’ associations have used a similar argument.
June 28, 2012 business daily | 3
MACAU
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Building up - construction labour pool
Workforce shrinks to 12-month low Pool of resident workers contracts at a time when job vacancies remain high Vítor Quintã
vitorquinta@macaubusinessdaily.com
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he number of people in the workforce dropped for the third consecutive month last month to a new, one-year low. The labour force participation rate fell by 0.5 of a percentage point to 71.9 percent last month but was shy of the historic 73.3-percent participation rate registered last October, according to information released by the Statistics and Census Service yesterday. The number of people employed dropped to 337,000 after 1,100 people lost their jobs. Real estate and business activities recorded the biggest job losses. The number of hotel and casino workers increased, mainly due to the opening of Sands Cotai Central resort in April. The hotel-casino resort opened with an initial 1,800 rooms and 340 live gaming tables.
The hotel sector could easily employ more workers. Even after a hiring spree that saw the number of employees surge by 9.3 percent in six months, the industry reported 2,450 vacancies at the end of March. The construction industry also employed more workers last month, not only because of the launch of work on the second phase of Galaxy Macau and Wynn’s Cotai resort, but also because of construction on the Light Rapid Transit rail network. May’s number of jobless was steady at 6,900 people, with the unemployment rate unchanged at a historic low of 2 percent. Only 7.9 percent of the jobless were youngsters searching for their first job, down by 4.2 percentage points. The underemployment rate —
2,600 residents left the jobs market in April and May
percentage of people working in jobs below their qualifications or who can only find part-time work — was stable at 0.8 percent. The unemployment rate stood still because a further 1,000 people left the job market last
month, after the labour force dropped by 1,600 in April. These 2,600 people are Macau residents who have most likely retired or left the territory altogether. The shrinking of the labour force has continued for two consecutive months, the first time since early 2010. The workforce now stands at 344,000 people. An International Labour Organisation report from January warns that an ageing population will force a slowdown in labour force growth and East Asia will be worst affected. Macau has a young demographic profile, mostly thanks to an influx of non-resident workers. Imported labour has soared for the past 12 months and in May the total workforce topped 100,000 for the first time since September 2008.
Reolian in the red for MOP58.5m New bus operator says salaries were 90 percent higher than forecast
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us operator Reolian incurred a 58.5-million-pataca (US$7.3 million) loss in its first five months of operation due to unexpected, high operating costs. High inflation and extra labour costs were named as mainly responsible for last year’s losses. The company experienced a 90 percent increase in overall salary payout to bus drivers as a 20 percent rise in fuel prices, according to a press release. Based on the company’s financial report, salary costs alone stood at 63.2 million patacas, erasing most of last year’s revenue of 65.4 million patacas. Costlier fuel added another 26.6
million patacas, taking the company’s bottom line into the negative. The company says the loss was bigger than it had forecast before commencing the concession contract last August. Reolian said the loss was reasonable in comparison to the company’s total investment of 200 million patacas and it was normal for a public transport operator to experience financial losses in their first year of operation. The company also said postponing the new bus concession contracts took another 8 million patacas off its profit. X.C.
Inflation and labour costs have been blamed for the loss by bus operator Reolian
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business daily June 28, 2012
macau Corporate
Citi names Larsen for global retail role
Citigroup Inc has named Jonathan Larsen as global head of its retail bank, filling the position for the first time with an Asia-based banker. Mr Larsen, a 25year industry veteran, will be based in Hong Kong and will continue to serve as head of Asia Consumer Banking, according to an internal memo. Citigroup has a far-reaching investment banking operation in Asia, although its consumer business in the region is a massive driver of revenue for the New Yorkbased bank. In the first quarter, Citi’s Asia profit rose 18 percent to US$1.1 billion (8.79 billion patacas) comprising 37 percent of Citi’s global net income. Within Asia, Citi’s consumer business produces about half of the region’s annual profit figure. Citi has about 700 branches in Asia, with US$200 billion in assets under management.
CTM unveils cloud services Companhia de Telecomunicações de Macau has unveiled its cloud-based services for business – the ‘Cloud Infrastructure Service’ and ‘Business Talk’ unified communication service. The ‘Cloud Infrastructure Service’ enables enterprise customers to manage their IT network, storage and computing resources in a virtual environment. ‘Business Talk’ enables telephone calls to be made and received on multiple devices including desk phones, smartphones and computers.
Planet Payment eyes Macau market
Planet Payment has entered an agreement to provide its ‘Pay In Your Currency Service’ to Citibank’s merchant partners in Hong Kong and Macau. The service enables customers to pay in their home currency at the point of sale and shows them the amount of transaction in both their home and local currencies. “The adoption of Planet Payment’s multi-currency processing services has increased significantly over recent years as more merchants around the world view our services as powerful tools to help improve sales and customer satisfaction,” said Planet Payment’s general manager for Greater China, Raymond Chuan Fong Tang.
Fuji to supply door systems for LRT Fuji Electric Co. Ltd, announced that it has received orders from Mitsubishi Heavy Industries Ltd, for electrical door systems for the Macau Light Rapid Transit (LRT) system. Over a period of about one year, beginning from the autumn 2012, Fuji Electric plans to deliver a total of 440 door systems for a driverless and rubber-tired automated people mover for Macau LRT. The first phase of the light rail network will have 21 stations. The network will connect major entry and exit points in the Macau peninsula and on Taipa with residential and tourist areas. Operations are scheduled to commence in 2015.
The promise of new neighb Revolutionary legislation could breathe new life into the city’s rundown neighbourhoods, says Chui Sai Peng Xi Chen xi@macaubusinessdaily.com
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evamping Macau’s old neighbourhoods is difficult but will be far easier when three bills controlling urban environment become law, legislator José Chui Sai Peng told Business Daily. The three proposed laws will dictate the regeneration of old neighbourhoods, heritage and urban planning. The bill to assist in improving older neighbourhoods was submitted to the Legislative Assembly in February last year. Mr Chui said it was still being deliberated at committee level. “How it turns out in the end we don’t know yet,” he said. “Not every old neighbourhood is considered a regeneration area. It has to be declared (so) by the government and no one knows yet how many areas (will be included),” he said. Mr Chui, who also leads City Planning and Engineering Consultancy Ltd, said the draft law was stringent and would only apply to classified areas, which could be large or small. “Buildings that are inside the boundary will enjoy a certain legal status, so that the redevelopment will coincide with the desires of the people,” he said. The bill seeks to introduce a two-round process that involves the government, the residents and businesses. The government will first decide on a regeneration area. For the regeneration process to start, 80 percent of the
residents must be in favour. After obtaining an initial approval, the government will ask residents to come up with a regeneration plan. If they do not succeed, the government will open a public tender to get the business sector involved, depending on the price they are willing to pay, so current owners are guaranteed a minimum price. In the second round, 70 percent of the residents have to agree on a negotiated price, failing which the regeneration process will be scrapped. “This is a very pro-resident legislation. We are trying to
make regeneration a social process. It is a social demand that buildings are kept in shape and are used properly,” Mr Chui said. “If we leave everything to nature, it will be determined by market forces. If the building has no value, it will not be redeveloped. If it is too difficult to be developed, it will not be done either. Residents who live there will suffer because of neglect. People will just move out and you will have a lot of empty buildings and that will create trouble.” According to last year’s census, about 13 percent of the territory’s households live in buildings that were built before 1980. A further 26.7 percent live in those constructed during the 1980s.
No quick fix
KEY POINTS Heritage law may include more historical or cultural sites Urban regeneration law still being discussed Draft urban planning bill ready by year-end No clashes between urban regeneration, heritage laws
Mr Chui does not think revamping old neighbourhoods will be easy. “No one knows what would happen,” he said. “From all the experience internationally, there is no such thing as fast regeneration. All of them take years. It is not a quick fix,” Mr Chui pointed out. One major obstacle is the daunting task of getting all owners to agree to the regeneration process. “For owners actively involved in the buildings, what is difficult is that there are buildings that were bought by the grandfather, and it is left in the hands of their sons or grandchildren,” he said. Within the existing scheme of things, an old building can
June 28, 2012 business daily | 5
Photo by Manuel cardoso
MACAU be regenerated through the efforts of its own residents or through an outside developer. An outside developer needs to obtain the agreement of all the owners — compared to the assent of 70 percent the bill proposes — besides dealing with the potential issue of multiple ownership. Property agents say the change in law would be welcome, as many residents do not have the financial resources to redevelop their property, even if they so desire.
Specific targets The bill on heritage protection, which seeks to upgrade the laws passed in
New lease of life for Macau’s urban areas
bourhoods
From all the experience internationally, there is no such thing as fast regeneration. All of them take years. It is not a quick fix José Chui Sai Peng, head of the Macau Urban Planning Institute
1984 and 1992, is expected to go through its initial reading at the Legislative Assembly soon. “It hasn’t been fully tabled in the legislation, but it has already been submitted for consideration,” Mr Chui said. “It will be passed sometime, in some form.” Previous media reports stated that newly listed buildings of historical or cultural interest would not be part of the draft law due to a lack of consensus. “The new heritage law might suggest more, but at the moment there are only 128 buildings that are classified as heritage.” He urged people to differentiate between heritage and old buildings. “Not all old buildings are heritage,” he said. “In heritage law, we are only talking about a tiny group of buildings that are of significance.” A building is normally considered old if it is over 30 to 40 years. “Among those old buildings, because of the architectural significance, because of the owner, or because of certain events that happened there, we will consider (some) building(s) as heritage,” Mr Chui said. “Certain buildings can be protected but most buildings will not be. There is also no such thing as ‘you have to reconstruct every old building’.”
Bigger picture The third piece of legislation concerns the overall urban planning process to match the expansion of the city’s boundary. Five new urban areas, totalling 361.65 hectares, will be added to the territory by 2017 through land reclamation projects.
The draft urban planning law, aimed at overseeing the whole process and integrating the new areas with the existing ones, has just finished its second stage of public consultation this month. The draft law is supposed to reach the legislature end of the year, Mr Chui said, once specific plans have been decided in the third stage of public consultation. The three laws are different processes and do not contradict each another.
Not all old buildings are heritage. In heritage law, we are only talking about a tiny group of buildings that are of significance
The old neighbourhood law is added to the heritage law and it will only make the area surrounding the heritage better. Macau had a longer and much better tradition than many other jurisdictions in the protection of historical buildings, stated Mr Chui. Even with heritage buildings, society should try to “find adaptive reuse of heritage and not just make Macau a living museum,” he said. “Buildings have to meet today’s social needs.”
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business daily June 28, 2012
macau
MPEL in talks on fitting InBrief and operating Manila casino Profits on the up at Macau Insurance
Macau Insurance Co Ltd posted a profit of 17.1 million patacas (US$2.1 million) last year, a 10.4-percent increase yearon-year. The annual report, published in yesterday’s Official Gazette, shows net premiums reached 222.1 million patacas, which the company said was due to “good performance by investments and the launch of several infrastructure projects”. The firm is controlled by Dah Sing Financial Holdings Ltd.
Scheme’s Catholic developers want to arms-length gaming ops Associate Editor
Reserve dividends grow to MOP315m Returns from the fiscal reserve system have grown ten-fold in two months, statistics from yesterday’s Official Gazette say. Between February and the end of April, the reserve’s dividend grew from 31.6 million patacas to 315.2 million patacas. The members of two independent bodies to oversee the reserve were appointed two weeks ago.
Artist’s impression of Belle Grande Manila Bay
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Leaks, profit down at water utility The Macao Water Supply Co Ltd announced a fall in profit of 5.4 percent last year. The utility said profit fell to 56 million patacas because of “price rises in raw materials and electricity, adjustment to the cost of human resources and water conservation in households, resulting in lower profit margins”. Leakage from the system’s network fell from 12.5 percent to 8.8 percent. The company is controlled by Sino-French Holdings (Hong Kong) Ltd.
U.S. tourism arrivals back into top 10 The United States is back on the city’s top-ten visitor markets after a three year absence, says the Macau Government Tourist Office. In the first five months of this year, nearly 77,800 American visitors arrived in the city, up by 2.7 percent year-on-year. The United States overtook Indonesia to return to the top 10 tourist source market.
acau casino joint venture partners Lawrence Ho Yau Lung and James Packer are in talks about taking over a casino project in the Philippines from a devout Catholic ChineseFilipino family, Business Daily has been told. Hong Kong- and New York-listed Melco Crown Entertainment, cochaired by Mr Ho and Mr Packer, is speaking to SM Investments Corp, one of the Philippines’ biggest conglomerates, about involvement in the Belle Grande Manila Bay casino scheme in Manila. Sources say SM has already spent around US$100 million on the shell of what has been previously described as a US$1 billion project with a possible opening in 2013. Now SM is looking for outside partners to lease, fit out and operate the building. That’s not because SM can’t find the money, but because the family running the firm can’t agree on getting directly involved in the casino industry, said two sources.
Management contract Asia Pacific Gaming Consultancy (Macau) Ltd currently has an agreement with AB Leisure, a subsidiary of Manila-listed Leisure & Resorts World, to assist in the management of Belle Grande.
Cora Guidote, senior vice president of SM Investments, told Agence France Presse that talks were being held with MPEL, though added: “Nothing is final.” But Melco International Development, one of the MPEL partners, told Business Daily in an e-mailed statement that it did not comment on “market speculation”. Reports of MPEL being involved in a Philippines casino project weren’t enough to prevent its Hong Kong stock falling for a second day. MPEL was down 1.36 percent yesterday to HK$29.00, following the 2.5 percent fall recorded on Tuesday on market jitters over reports in the Chineselanguage Macau press that new restrictions had been imposed on visas to Macau by mainland China officials. Yesterday Melco International made modest gains in Hong Kong, up 0.16 percent to HK$6.14.
Respected name Belle Corp. the developer of Belle Grande is an entity controlled by companies belonging to SM Investments. The latter – which has property development and retailing in its large portfolio of Philippines activities – is controlled in turn by Philippine billionaire Henry Sy Junior and his family. Mr Sy’s mother Felicidad Tan Sy, the
matriarch of the family, is known to be a devout Catholic and is reported to have influenced company policy in the past. Its chain of SM Cinemas does not show films classified under Philippines rules as R-18 or For Adults Only. The family’s patriarch, Henry Sy Senior, 87, went from running a shoe store that he started in 1948 in Manila to become the Philippines’ richest man. “The family has decided just to complete the shell of the resort and then invite other people to lease the building, fit it out and operate it,” stated one source. That person estimated the bill for fitting out the interior of Belle Resort – which is designed to have 800 hotel rooms and a casino – could come to US$650 million. The figure was corroborated by a second source. Belle Grande is one of several privately funded and -operated casino resorts being constructed in the Manila Bay area as part of a scheme called Entertainment City; under an agreement with the country’s state owned operatorcum-regulator the Philippine Amusement and Gaming Corporation. PAGCOR has also granted licences for Manila casinos to Bloomberry Resorts Corp., and a venture backed by Japanese gaming equipment supplier Kazuo Okada.
Weather Beijing 25/21o C Changchun 30/20o C
Harbin 34/21o C
Xian 29/22o C Shanghai 28/23o C Chengdu 26/21o C Kunming 25/18o C Haikou 34/27o C Sanya 31/26o C
Guangzhou 34/26o C
MACAU (25 June-30 June) Day
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Shenzhen 34/25o C
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Photo by Manuel Cardoso
MACAU
Chow Tai Fook to expand business Says profit rose to HK$6.34 billion for the year ended March
Almost half of Chow Tai Fook’s revenue in Macau and Hong Kong was settled through China UnionPay or in yuan
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how Tai Fook Jewellery Group Ltd said profit jumped 79 percent last fiscal year as it expanded and benefited from higher luxury spending in China. The Hong Kong-based chain,
which owns several stores in Macau, said net income rose to HK$6.34 billion (US$817 million) for the 12 months ended March 31, according to a Hong Kong stock exchange filing on Tuesday. Revenue jumped 61 percent to
iTunes Store opens to Macau
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acau consumers will finally be able to buy and download millions of songs and movies, after Apple launched its iTunes Store in 12 Asian markets yesterday. The move by California-based Apple, which has sold more than 16 billion songs worldwide on the platform, opens it up further to growing Asian economies where its devices have proved massively popular. The iTunes Store is now open to consumers with credit cards issued in Macau but also in Brunei, Cambodia, Hong Kong, Laos, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Sri Lanka and Vietnam. It was already available in Japan, Australia and New Zealand. Customers will now be able to choose from more than 28 million songs, including hits by Asian stars,
as well as rent or buy movies from studios such as 20th Century Fox, Paramount, Universal, Disney and Warner Brothers. Until now Macau users of Apple’s iPhones and iPads were unable to buy songs and movies online unless they had gift cards issued in countries such as the United States and Britain. Neha Dharia, a Mumbai-based analyst with business research firm Ovum, said several criteria including support for intellectual property rights are considered by Apple before opening up the iTunes Store to any market. “These include the adoption of Apple devices, consumer preferences for digital distribution of content, ability to forge partnerships for procuring local content and, of course, levels of piracy and the measures to combat it,” the analyst told AFP.
HK$56.6 billion. Chow Tai Fook plans to double sales in three years by opening new outlets, chairman Henry Cheng said at a press conference in Hong Kong yesterday. China’s growing middle class is
helping to bolster revenue despite weaker economic expansion in the world’s second biggest economy, Mr Cheng said. Same-store sales at outlets open more than a year grew 40 percent. “Retail sentiment has weakened in recent months as consumers became more prudent because of economic uncertainty,” Mr Cheng said. “That’s reflected in lower spending per customer per transaction, but as the size of China’s middle class is growing, this helps to boost total sales.” The increasing number of mainland tourists in Macau and Hong Kong and the rise in their per capita disposable income has pushed sales up. About 48 percent of Chow Tai Fook’s revenue in both cities was settled through China UnionPay or in yuan, the company said in the statement. The world’s biggest listed jewellery retailer raised about HK$15.8 billion in a public offering last December and joins companies including Burberry Group Plc and Prada SpA in betting on China’s demand for luxury goods. Chow Tai Fook had 1,627 outlets as of the end of March, it said on Tuesday, compared with 1,358 a year earlier. The company expects to have 2,000 stores by 2014, managing director Kent Wong said. The company expects capital expenditure of HK$800 million to HK$1 billion in the fiscal year ending March 2013, with as much as HK$400 million to be spent on adding at least 200 new stores in the period. Bloomberg
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business daily June 28, 2012
MACAU
Local debt sales reach record Trial sales of local governments’ bonds shelved
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hina’s restrictions on lending to regional governments are pushing their investment companies to sell a record amount of bonds this year, taking advantage of borrowing costs at 19-month lows. Premier Wen Jiabao is giving the corporate bond market a leading role in restructuring 10.7 trillion yuan (US$1.35 billion) of regional debt and has shelved plans for local authorities to sell securities directly. Authorities want to avoid loan defaults at state-owned banks that would threaten economic growth and social stability, according to Moody’s Investors Service. “The central government is concerned that the local governments will continue to increase their debt and it could become a problem like the European debt crisis,” said Ivan Chung, an analyst at Moody’s in Hong Kong. “The government probably thinks that municipal debt is not a good solution to handle this problem,” whereas it is tolerating sales by financing vehicles to help them avoid default, Mr Chung said.
Measures to avoid loan defaults at state banks
Wen opens credit Migrant workers line to Latin America riot in Guangdong China proposes US$10 billion for infrastructure
Simmering tensions erupt about perceived discrimination
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Due credit - China opens purse for infrastructure
C
hinese Premier Wen Jiabao wrapped up a tour of resource-rich Latin America on Tuesday by offering US$10 billion in credit for infrastructure projects and calling for a joint push to combat protectionism. Mr Wen proposed a free-trade deal with the Mercosur bloc and signed a series of investment accords during the trip to the region, a key source of agricultural and mineral commodities and a growing market for Chinese exports. “The Chinese government ... will continue to offer economic assistance to countries in the region that are interested,” Mr Wen told the U.N. regional economic body ECLAC in Chile. He said China’s Development Bank would implement a US$10 billion credit program for infrastructure projects. He also said China would create a US$5 billion fund for cooperation between China and Latin America and the Caribbean. “We have to combat trade
protectionism, broaden the mutual openness of our markets, optimize the trade structure and diversify cooperation in terms of customs and quality control,” Mr Wen said. He added that China aims to nearly double trade with Latin America in five years to over US$400 billion. Last year, 8.9 percent of all regional exports were destined for Chinese shores and 13.8 percent of imports were made in China, as trade between the Asian giant and Latin America and the Caribbean surged nearly 30 percent in the 2005 to 2011 period, according to ECLAC data. “China wants to have more balanced trade with Latin America ... we hope that in the future we can import more types of products, including value-added products,” Mr. Wen said. The head of ECLAC, Alicia Barcena, welcomed Mr Wen’s words to improve trade ties and diversify away from commodities-based exports. Reuters
undreds of Chinese migrant workers rioted and clashed with police this week in a fresh outbreak of social unrest in the economic powerhouse of Guangdong. In recent years, perceived discrimination and abuse by authorities have triggered strikes, clashes and riots. The latest clashes took place in Shaxi township near the city of Zhongshan and involving about 300 migrants who hurled rocks after a fight between a 15-year-old migrant and a student. Security personnel intervened and beat the young migrant, infuriating a group of relatives and others migrants who rioted, the Global Times newspaper reported. About 30 people were injured and the rioters - mostly from Sichuan province in the southwest - smashed and overturned at least two public security vehicles, the Hong Kongbased Information Center for Human Rights and Democracy said. Last June, thousands of migrant
Perceived discrimination, a source of unrest
workers, also largely from Sichuan, rioted and clashed with police in the Guangdong city of Zengcheng, torching cars and ransacking government buildings, over the rough treatment of a pregnant street hawker. Guangdong’s ambitious party secretary Wang Yang, who will likely be elevated to China’s elite politburo standing committee in a leadership transition this year, has acknowledged a need to mitigate simmering social unrest by stressing a more equitable and balanced “Happy Guangdong” mode of development. The number of “mass incidents”, as such outbreaks of unrest are known, recorded by the government grew from 8,700 in 1993 to about 90,000 in 2010, according to several government-backed studies. Some estimates are higher. The government has not released official data on such incidents in recent years. Reuters
June 28, 2012 business daily | 9
GREATER CHINA Notes sold by regional-finance companies accounted for 24 percent of total debt-financing this year through May, including commercial papers, corporate bonds and enterprise debt, according to a June 15 report by Nomura Holdings Inc. That exceeds the 15 percent share they held in 2011, it said. China will support regional governments by selling 250 billion yuan of notes on their behalf this year, up 25 percent from 2011, to help build low-income housing and publicwelfare projects, according to the 2012 budget presented by the Finance Ministry to the National People’s Congress on March 5. The country has scrapped plans to allow local governments to sell bonds directly after a trial program last November. A draft revision to the budget law that would have allowed regional authorities to sell the securities within an approved quota was removed in the second reading of the bill, the official Xinhua News Agency reported Tuesday. The central government will continue to sell notes on their behalf, it said. The shelving of the pilot program
on direct offerings of provincialgovernment notes “is a good move as it is intended to prevent the size of debt from growing out of control and burdening the economy,” said Liu Fangzheng, a Shenzhenbased fixed-income analyst at Penghua Fund Management Co., which oversees US$16.5 billion of assets. “Companies backed by local governments have lots of hidden and unhidden ways of raising debt and they will continue to sell bonds.” The trial had allowed the cities of Shanghai and Shenzhen, as well as the provinces of Zhejiang and Guangdong, to sell bonds directly for the first time. Regional-authority funding vehicles had accumulated 10.7 trillion yuan of debt by 2010 of which 70 percent will come due in 2015, the National Audit Office said in June 2011. The pilot program enabled cities to cut borrowing costs. The higher yields on so-called LGFV bonds reflect uncertainty that the central government will bail them out in case of distress, Moody’s Chung said. “Municipal and central governments have no legal obligations in LGFV debts,” he said. Bloomberg
China growth expected over 7.5 pct, pressures remain
C
hina’s annual economic growth could exceed 7.5 percent in the first half of 2012 but the economy still faces growing downward pressure, a senior official with the industry ministry said in remarks published on Wednesday. Analysts forecast in a Reuters poll in May that China would deliver second-quarter economic growth of 7.9 percent from a year earlier, with full-year growth of 8.2 percent, which would be the lowest since 1999. The pace of growth for the first half would be in line with the official target for 2012 but the government
should move quickly to prevent growth from slowing further, Zhu Hongren, chief engineer at the Ministry of Industry and Information, was quoted by the Jinan Times, as saying. “In general, China’s current economy situation is stable and the growth rate is within the government’s target set earlier this year.” China has yet to experience a sudden economic slump similar to the once in 2008/09, when millions of migrant workers lost their jobs, but companies faced increasing difficulties due to weak demand and overcapacity, he added. Reuters
No second-half rally for mainland stocks, top fund manager says C hina’s economy will probably stay in the “doldrums” in coming months, preventing a second-half rally for the nation’s equities, according to the country’s best-performing fund manager. The government will do just enough to prevent the world’s second-biggest economy from slowing further instead of taking more aggressive measures to boost growth, Yu Guang of Invesco Great Wall Fund Management Co. in Shenzhen, said in an e-mailed interview on June 21. Property, auto and household-appliance stocks may outperform even as the overall market stalls, said Yu, whose Core Competitiveness Fund has returned 25 percent this year, ranking it first among 714 Chinabased mutual funds, according to data compiled by Bloomberg as of June 25.
China’s economy grew 8.1 percent in the first quarter, the slowest pace in almost three years, as slowing global growth dragged on the nation’s exports. The Shanghai Composite Index has fallen 6.3 percent in June, poised to be Asia’s worst-performing benchmark index for the month, as a manufacturing slump and concern Europe’s debt crisis is curbing exports overshadowed the first cut in interest rates since 2008. The tumble in stocks pared the Shanghai gauge’s gain in 2012 to 1 percent. “Stocks will be range-bound in the second half of the year,” Mr Yu said, declining to give equity-index forecasts or name any stock picks. “China’s economy will remain in the doldrums for a while, in line with the trend of the global economy. It’s difficult to see either a big decline or a big rally.”
China’s smaller banks not allowed listing C hina’s small and mediumsized banks, including city commercial banks, are not allowed to list on the mainland yet because regulators are still studying the risks and merits of such IPO requests, the state-backed China Securities Journal reported. The comment, attributed to an official from the China Securities Regulatory Commission (CSRC), made clear for the first time that the government will, for the moment, decline all requests by smaller banks to list. But city commercial banks are still allowed to list in Hong Kong, as Bank of Shanghai is preparing to do. An earlier newspaper report said the CSRC is reluctant to approve applications by smaller banks because a wave of bank IPOs may further dampen investor confidence in an already sluggish
A-shares market. The regulator could also be worried about the risks of city commercial banks expanding their businesses beyond their regions, as these banks are criticised by some analysts for outright bankrolling of local governments, which are not always credit worthy. Many of the country’s 185 city and rural commercial banks are in desperate need of capital to fend off rising competition from rivals and meet tougher capital requirement rules. Chinese regulators have not approved any mainland IPO plans by smaller banks since 2007, when Bank of Ningbo, Bank of Beijing and Bank of Nanjing were listed, seen partly due to worries that a wave of new IPO shares may hurt the stock markets in Shenzhen and Shanghai. Reuters
Small- and medium-sized banks need more capital
Bloomberg
10 |
business daily June 28, 2012
asia
Power shortages, a hefty price for South Korea Could cut gross domestic product by US$10 billion Sangim Han
H
yundai Motor Co. and Posco will reduce production of cars and steel in South Korea for several weeks in August to help ease power shortages that threaten to reduce US$10 billion of business in Asia’s fourth-largest economy. The nation’s largest automaker and steel-mill operator will carry out maintenance on their factories earlier than scheduled after the government imposed powersaving measures to avoid sporadic blackouts. Otherwise, office workers and homeowners would have to shut off air conditioners amid the summer heat. South Korean service industries including department stores, hotels and large office buildings have been ordered to keep air conditioners above 26 degrees. Starting July 1, stores that keep entrance doors open while air conditioners are running inside will be fined 3 million won for wasting power, the Ministry of Knowledge Economy said in a May 16 statement. No fines were stipulated for factories. “The red lights are flashing on concern about power supply,” said Choi Do Young, research fellow at Korea Energy Economics Institute, a state-run power policy adviser. “The government is desperate to rein in power demand this summer to avoid rolling blackouts.” From Texas to India, power markets that failed to build enough generation capacity are risking
blackouts and economic losses during the hottest months this year. South Korea’s Ministry of Knowledge Economy estimates uncontrolled power-supply reductions could cut gross domestic product by 11.6 trillion won (US$10 billion), equivalent to 1.1 percent of the value of goods and services produced in the country last year. “The government’s estimate looks conservative,” said Lee Sang Kwon, an economist at Shinhan Investment Corp. in Seoul. “Manufacturers of steel and petrochemicals would be among the worst affected.”
Demand miscalculated South Korea is vulnerable to rolling blackouts for the second time in less than a year as the government miscalculated demand when planning power plants in the last decade. Some projects were either cancelled or
US$38 billion
May need to be spent to add generation capacity by 2024
delayed because South Korea – like China, India and Indonesia – caps electricity prices, leaving its main utility cash strapped. Power producers may need to spend an estimated 44 trillion won (US$38 billion) to add 42,326 megawatts of generation capacity by 2024, a 56 percent increase from 2010, to meet a 3.1 percent annual rise in demand, according to the government’s latest bi-annual energy planning data released in December 2010. Electricity consumption in South Korea rose 56 percent in the nine years ended 2010, according to government data. To spread out power demand this summer the government has given 219.1 billion won in incentives so far this year to companies that readjusted working hours and cut power use. Posco and Hyundai Motor have brought forward maintenance schedules to August, officials at the two companies said. Oil refiners including SK Innovation Co. and petrochemical maker LG Chem Ltd., which run plants round the clock, plan to operate their own power generators at maximum during peak demand hours.
Consumption surge The power shortage debate in South Korea is now spreading to the need to change the way electricity is priced.
Government controls keep electricity prices lower than the cost of fuels used to generate the power, hence Korea Electric Power Corp., the country’s monopoly distributor, posted 8 trillion won of losses in the past four years. “No politicians wanted to speak out in support of a power price increase even after we had a rolling blackout last year,” Yun Won Cheol, a professor at Hanyang University in Seoul, said at a conference. “The tightening supply is forcing the government to face this problem, and raising electricity prices is the key to attracting more investment in power generation.” Power demand during the summer may reach a high of 77,000 megawatts in the third or fourth week of August
Nomura CEO grilled over insider probe Watanabe makes public apology; both CEO and chairman re-elected
N
omura Holdings Inc. chief executive Kenichi Watanabe broke his silence on a government crackdown on insider trading, delivering his first personal apology over the company’s role in the probe. “It has been found that confidential information in three insider trading cases was leaked from Nomura,” Mr Watanabe said in his first public appearance since the first insider trading case was announced in late March. “We have caused worry and trouble, and for that I would like to humbly apologise.” Japan’s biggest brokerage will make sincere efforts to restore confidence, Mr Watanabe told shareholders at an annual meeting in Tokyo yesterday. Nomura spokesperson Keiko Sugai confirmed the remarks. Mr Watanabe, 59, is under pressure to explain how employees leaked information ahead of share sales managed by Nomura in 2010 that third parties used for trading. Regulators have also investigated firms including Sumitomo Mitsui Financial Group Inc.’s brokerage unit and JPMorgan Chase & Co. in an effort to restore confidence in Japan’s capital markets. The CEO yesterday declined to comment on the leaks, saying the
company’s response depends on the outcome of an internal investigation, according to shareholders. Nomura has employed a group of outside lawyers to conduct its re-
view, which it plans to complete by the end of the month. Some 1,852 shareholders attended the meeting, according to Ms Sugai. As well as the insider trading issue,
Kenichi Watanabe vowed to restore confidence in Japan’s biggest brokerage
investors demanded an explanation for deteriorating profit, falling shares and dividend cuts. Shareholders yesterday approved the reappointment of execu-
June 28, 2012 business daily | 11
asia
Housing stocks lead Nikkei up Real estate companies likely to profit before the sales tax increase
J
Seoul – Red lights are flashing on concern about power supply
while state-run Korea Electric could have a maximum supply of 78,500 megawatt, according to the Ministry of Knowledge Economy. South Korea sounded a power demand alert on June 7, the first since September 15 when the country imposed nationwide rolling blackouts after reserve power capacity fell below the safe threshold as temperatures soared. “Consumption patterns in June showed extra power reserves were shallower than expected even before the summer peak season has started,” said Lee Won Hee, a senior researcher at Samsung Economic Research Institute in Seoul. “A sense of crisis is spreading within the government.”
KEY POINTS Power shortages costing US$10 billion a year Government’s estimate seen as conservative – economist Companies readjusting working hours and cutting power use
apan’s Nikkei average broke a three-session losing run yesterday, as investors snapped up construction and real estate shares on expectations they will benefit from a surge in housing demand ahead of a sales tax increase in 2014. The construction and real estate sectors were also likely to be more insulated from further fallout from the euro zone sovereign debt crisis, market participants said. Overall gains were capped by companies, including Canon Inc, Honda Motor Co Ltd and Bridgestone Corp, trading ex-dividend, meaning buyers of the stock from Wednesday onwards will not be entitled to receive dividends. The Nikkei closed 0.8 percent higher at 8,730.49, breaching above 8,714.78, the 23.6 percent retracement of its fall from March 27 to June 4, but below its five-day moving average at 8,750.30. The construction sector was the best sectorial performer, up 2.9 percent followed by the real estate subindex, rising 2.8 percent. “There are many uncertain conditions outside Japan. The market is focused on the EU summit on Thursday and Friday. Therefore, investors’ attention is on internal consumption sectors,” said Takashi Hiroki, chief strategist at Monex Inc.
Nomura said housing and real estate companies were likely to profit from a surge in housing demand before the sales tax increase, which was passed in the parliament’s lower house on Tuesday. “We expect to see housing starts gradually increase after the consumption tax hike bill is passed and peak in fall 2013,” Nomura said in a report. “Within the sector, we think the stocks most likely to attract attention are makers of built-toorder prefabricated housing, which do not have much inventory risk, and companies selling existing condominiums,” it said. Sekisui House Ltd, Daito Trust Construction Co Ltd, Misawa Homes Co Ltd, Tokyu Livable Inc and Sumitomo Real Estate Sales Co were up between 2.5 and 6.8 percent. The broader Topix advanced 0.9 percent to 745.48. Trading volume on the index was relatively light, at 82 percent of its daily average for the past 90 days. The benchmark Nikkei has risen 6 percent since hitting a six-month low on June 4, but is still down 13.4 percent in the quarter, on track for its worst quarterly performance in two years on concern over the deepening euro zone debt crisis and slowing global growth. Reuters
Bloomberg
tives including Mr Watanabe, Ms Sugai said. Shares of Nomura rose 2.2 percent to 281 yen at the close in Tokyo, paring losses over the past year to 27 percent. They tumbled to 224 yen on November 24, 2011, the lowest in at least 37 years. Nomura cut its full-year dividend to 6 yen from 8 yen after posting earnings that fell 60 percent to 11.6 billion yen (US$146 million)
in the year ended March. Nomura apologised in a statement on June 8 for its employees’ roles in leaking information before share sales by Inpex Corp., Mizuho Financial Group Inc. and Tokyo Electric Power Co. in 2010. It was the third time Nomura employees were found to have facilitated insider trading since Mr Watanabe became CEO in 2008. Reuters/Bloomberg
Companies trading ex-dividend capped overall gains
Vietnam urges Cnooc to scrap bid
in incidents at sea as the countries vie for oil, gas and fish in one of the world’s busiest sea corridors. Exxon Mobil Corp., Talisman Energy Inc. and Forum Energy Plc are among companies that have
V
ietnam called on Cnooc Ltd, China’s largest offshore oil explorer, to cancel an invitation for foreign oil and gas companies to explore nine blocks in disputed waters of the South China Sea. Cnooc’s move to put the blocks out for bid is an illegal act that “seriously violated” Vietnam’s sovereign rights, Ministry of Foreign Affairs spokesman Luong Thanh Nghi said in comments posted on the ministry’s website yesterday. Cnooc should “immediately cancel” the bidding invitation, he said. China’s move may lead to more tension with Vietnam and the Philippines following an increase
Cnooc Ltd launched an invitation for oil and gas companies to explore nine blocks in disputed waters
signed deals to explore disputed parts of the sea. The area “lies entirely within Vietnam’s 200-nautical mile exclusive economic zone and continental shelf,” Luong Thanh Nghi said. “This is absolutely not a disputed area.” State-owned Cnooc deployed China’s first deep-water drilling rig last month near disputed islands to assert Beijing’s territorial claims. The company said the blocks, covering an area of 160,124 square kilometres, are available for exploration and development cooperation with foreign companies this year, according to a June 23 statement. China’s oil exploration in the South China Sea is “normal corporate activity” and complies with international law, Foreign Ministry spokesman Hong Lei told a regular briefing in Beijing yesterday. Bloomberg
12 |
business daily June 28, 2012
MARKETS Hang SENG INDEX NAME
PRICE
Day %
VOLUME
9.59
-0.2081165
24845090
CITIC PACIFIC
11.52
-0.1733102
2491500
SANDS CHINA LTD
CLP HLDGS LTD
65.25
0.5392912
1435942
SINO LAND CO
CNOOC LTD
14.62
1.810585
59272325
COSCO PAC LTD
9.88
2.066116
21439263
ESPRIT HLDGS
9.97
PRICE
Day %
VOLUME
AIA GROUP LTD
25.9
0.5825243
16375533
ALUMINUM CORP-H
3.26
0.9287926
8851795
BANK OF CHINA-H
2.89
1.048951
259164600
BANK OF COMMUN-H
5.08
1.6
24249152
BANK EAST ASIA
27.05
1.500938
1665336
BELLE INTERNATIO
12.98
4.508857
NAME CHINA UNICOM HON
NAME
PRICE
Day %
57.85
1.224847
2861148
23.1
1.762115
25737354
POWER ASSETS HOL
VOLUME
11.36
0.8880995
5412364
SUN HUNG KAI PRO
90.3
0.8375209
4028919
4161045
SWIRE PACIFIC-A
88.9
-0.2244669
980800
-0.499002
4929364
TENCENT HOLDINGS
225.6
3.202196
3380248
BOC HONG KONG HO
23.75
0.2109705
14327282
HANG LUNG PROPER
25.85
2.376238
4772090
TINGYI HLDG CO
19.6
2.083333
4588500
CATHAY PAC AIR
12.32
0.4893964
2044256
HANG SENG BK
105.5
1.637765
1018454
WANT WANT CHINA
9.06
-0.6578947
13222788
CHEUNG KONG
93.2
2.473887
3788933
HENDERSON LAND D
WHARF HLDG
41.9
1.207729
3717221
CHINA COAL ENE-H
6.27
0
18719999
CHINA CONST BA-H
5.23
1.553398
240125421
CHINA LIFE INS-H
19.5
2.094241
27271334
CHINA MERCHANT
22.95
2.455357
2706368
CHINA MOBILE
83.75
1.086301
CHINA OVERSEAS
17.94
4.302326
CHINA PETROLEU-H
6.8
CHINA RES ENTERP
22.4
HENGAN INTL
2.337023
2007493
-1.359619
4337106
MOVERS
40
16.5
0.7326007
6376024
109.2
0.09165903
4245657
HSBC HLDGS PLC
68.4
0.2932551
12794227
16075634
HUTCHISON WHAMPO
66.1
1.070336
6153759
44628473
IND & COMM BK-H
4.25
0.9501188
271214927
0.1472754
61609282
LI & FUNG LTD
14.46
0.5563282
9962109
HIGH
19209.53
1.587302
3061241
26.1
1.55642
1600035
LOW
18850.47
15.56
4.851752
10894000
NEW WORLD DEV
9
1.010101
9607242
CHINA RES POWER
15.5
4.871448
8561958
52W (H) 22835.03
PETROCHINA CO-H
9.79
-2.002002
126074043
CHINA SHENHUA-H
26.15
-0.1908397
11614757
(L) 16170.35
PING AN INSURA-H
60.95
1.668057
7174048
CHINA RES LAND
HONG KG CHINA GS
41.6 72.55
HONG KONG EXCHNG
MTR CORP
8
1 19210
INDEX 19176.95
18850
25-Jun
27-Jun
Hang SENG CHINA ENTErPRISE INDEX NAME
NAME
PRICE
DAY %
VOLUME
24.3
1.886792
5879000
6.8
0.1472754
CHINA RAIL CN-H
6.38
CHINA RAIL GR-H
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.02
1.683502
96667492
AIR CHINA LTD-H
4.53
0.2117243
8322000
CHINA PETROLEU-H
ALUMINUM CORP-H
3.26
0.9287926
8851795
ANHUI CONCH-H
21.15
-0.2358491
8967500
BANK OF CHINA-H
2.89
1.048951
259164600
CHINA SHENHUA-H
BANK OF COMMUN-H
5.08
1.6
24249152
CHINA TELECOM-H
BYD CO LTD-H
14.8
1.23119
1147704
DONGFENG MOTOR-H
CHINA CITIC BK-H
3.86
0.5208333
24276205
GUANGZHOU AUTO-H
6.64
1.529052
3934180
CHINA COAL ENE-H
6.27
0
18719999
HUANENG POWER-H
5.72
0.3508772
19544850
CHINA COM CONS-H
6.78
2.883156
11608253
IND & COMM BK-H
4.25
0.9501188
271214927
CHINA CONST BA-H
5.23
1.553398
240125421
JIANGXI COPPER-H
16.64
0.3618818
7356842
CHINA COSCO HO-H
3.44
-0.2898551
9569350
PETROCHINA CO-H
9.79
-2.002002
126074043
CHINA LIFE INS-H
19.5
2.094241
27271334
PICC PROPERTY &
8.8
-0.789177
9638800
CHINA LONGYUAN-H
4.95
-0.4024145
5628107
PING AN INSURA-H
60.95
1.668057
7174048
CHINA MERCH BK-H
14.22
0.4237288
16031652
SHANDONG WEIG-H
8.7
0.811124
6808000
CHINA PACIFIC-H
PRICE
DAY %
VOLUME
YANZHOU COAL-H
11.8
-1.006711
19456000
61609282
ZIJIN MINING-H
2.55
-0.7782101
14343203
0.1569859
16182500
ZOOMLION HEAVY-H
9.88
-0.5035247
13671080
3.28
0.9230769
14380855
ZTE CORP-H
14.7
0.6849315
1467548
26.15
-0.1908397
11614757
3.38
1.197605
39620800
12.08
1.003344
18919812
CHINA MINSHENG-H
6.86
0.2923977
31404880
SINOPHARM-H
20.8
3.740648
CHINA NATL BDG-H
8.72
-0.1145475
23137000
TSINGTAO BREW-H
44.65
0
0
10.86
1.685393
6958000
WEICHAI POWER-H
32.05
-0.4658385
899300
CHINA OILFIELD-H
4360546
NAME
MOVERS
26
12
2 9530
INDEX 9461.22 HIGH
9523.27
LOW
9330.28
52W (H) 12902.97 (L) 8058.58
9330
25-Jun
27-Jun
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.56
0.3921569
37428907
DATANG INTL PO-A
5.67
0.3539823
4208925
SANY HEAVY INDUS
13.74
-0.5788712
17083212
AIR CHINA LTD-A
6
-0.3322259
18109210
DONGFANG ELECT-A
19.44
-1.319797
6910990
SHANDONG GOLD-MI
33.54
-1.061947
6425605
ALUMINUM CORP-A
6.27
-1.877934
6827104
EVERBRIG SEC -A
12.48
-0.6369427
6295874
SHANG PUDONG-A
8.05
-0.1240695
26966055
ANHUI CONCH-A
14.8
-0.8042895
12691816
GD MIDEA HOLDING
11
-0.09082652
13637286
SHANGHAI ELECT-A
17329275
GD POWER DEVEL-A
2.72
1.115242
42591084
SHANXI LU'AN -A SHANXI XINGHUA-A
NAME
BANK OF BEIJIN-A
9.59
BANK OF CHINA-A
2.82
-0.3533569
14175246
GEMDALE CORP-A
4.5
-0.6622517
34444785
GF SECURITIES-A
4.36
-0.6833713
15610859
GREE ELECTRIC
BANK OF COMMUN-A BAOSHAN IRON & S BYD CO LTD -A
0.2089864
NAME
21.43
-0.787037
1321974
GUANGHUI ENERG-A
NAME
4.83
-0.8213552
9209675
20.52
0.09756098
12114221
6.6
0.3039514
38705347
36.2
1.485842
1907375
28.65
-1.240951
4192416
SHANXI XISHAN-A
15.24
-0.5870841
12632835
14.86
-0.2684564
8177633
6.42
-0.155521
45185057 33736751
20.6
-2.738432
16187835
SHENZ DVLP BK-A
13.29
2.230769
19242606
SHENZEN OVERSE-A
CHINA CITIC BK-A
3.97
-0.5012531
13674108
HAITONG SECURI-A
9.37
-0.3191489
33482240
SUNING APPLIAN-A
8.33
0
CHINA CNR CORP-A
4.03
0
12153145
HANGZHOU HIKVI-A
27.09
5.40856
5151279
TSINGTAO BREW-A
36.95
0
1762456
CHINA COAL ENE-A
7.87
-0.505689
6072269
2.78
-0.3584229
12874906
WEICHAI POWER-A
29.99
-0.4316069
3020414
CHINA CONST BA-A
4.21
0
17752114
HENAN SHUAN-A
63.08
1.9063
1709937
WULIANGYE YIBIN
32
0.4394225
9195505
10.22
0
14399173
XCMG CONSTRUCT-A
14.04
0.5730659
5142886
HEBEI IRON-A
CHINA COSCO HO-A
4.66
-1.061571
7542835
HUATAI SECURIT-A
CHINA CSSC HOL-A
22.52
1.304543
6348993
HUAXIA BANK CO
9.38
-0.212766
15869322
XIAMEN TUNGSTEN
43.42
0.1383764
6789881
CHINA EAST AIR-A
4.16
0
24845268
IND & COMM BK-A
3.94
0.2544529
41504777
YANGQUAN COAL -A
15.17
-0.3939593
12771678
2.81
-0.3546099
18919342
INDUSTRIAL BAN-A
12.75
-0.4683841
20999997
YANTAI CHANGYU-A
70.9
0.5388542
866192
CHINA LIFE INS-A
17.61
0.3418803
7660349
INNER MONG BAO-A
40.15
-3.439153
42742820
YANTAI WANHUA-A
13.55
-1.811594
10551840
CHINA MERCH BK-A
10.89
-0.9099181
29439687
INNER MONG YIL-A
20.88
0.8695652
18563806
YANZHOU COAL-A
19.38
-1.172871
3266245
CHINA MERCHANT-A
11.53
-1.452991
14104151
INNER MONGOLIA-A
5.02
-1.953125
45928094
YUNNAN BAIYAO-A
56.86
1.030561
2801745
CHINA MERCHANT-A
24.8
1.34859
9366576
JIANGSU HENGRU-A
28.13
1.296363
2032300
ZHONGJIN GOLD
21.96
-0.9918846
10362510
CHINA MINSHENG-A
5.91
-1.005025
73217112
JIANGSU YANGHE-A
133.3
1.60061
2711290
ZIJIN MINING-A
3.87
-0.7692308
30097700
23.59
0.04240882
4930813
ZOOMLION HEAVY-A
10.01
0
23580925
12.56
-0.8681926
3334434
ZTE CORP-A
14.45
-1.09514
11429801
15.2
-0.131406
15617024
CHINA EVERBRIG-A
5.95
-2.618658
13841910
JIANGXI COPPER-A
CHINA OILFIELD-A
16.28
6.058632
23425632
JINDUICHENG -A
CHINA PACIFIC-A
20.96
0.23912
13451173
JIZHONG ENERGY-A
CHINA NATIONAL-A
CHINA PETROLEU-A
6.34
0
13950530
KANGMEI PHARMA-A
14.92
5.815603
31447782
CHINA RAILWAY-A
4.46
0.6772009
15034601
KWEICHOW MOUTA-A
241.9
1.702754
2325714
40.37
0
4813621
-0.4016064
15589099
CHINA RAILWAY-A
2.57
-0.7722008
27688849
LUZHOU LAOJIAO-A
CHINA SHENHUA-A
22.27
-0.8017817
8582691
METALLURGICAL-A
2.48
CHINA SHIPBUIL-A
5.25
0.5747126
28137616
NARI TECHNOLOG-A
18.69
-0.4792332
6974273
2.51
-0.7905138
10358996
CHINA SOUTHERN-A CHINA STATE -A
MOVERS
77
4.6
-0.4329004
14414599
3.34
0.3003003
31820008
PANGANG GROUP -A
6.41
-2.286585
28394773
9.03
-0.1106195
12032629
HIGH
2501.16
LOW
2438.29
CHINA UNITED-A
3.73
-1.842105
43161582
CHINA VANKE CO-A
8.95
0
49201046
PING AN INSURA-A
43.97
0
21178917
CHINA YANGTZE-A
6.75
0
8349193
POLY REAL ESTA-A
11.42
1.601423
36074510
CITIC SECURITI-A
12.38
0.242915
32495843
QINGDAO HAIER-A
11.49
-2.874049
11201622
CSR CORP LTD -A
4.67
-0.6382979
11796000
QINGHAI SALT-A
34
2.564103
15867191
DAQIN RAILWAY -A
7.13
-0.140056
22384360
SAIC MOTOR-A
14.2
0.7092199
8415584
NAME
PRICE DAY %
Volume
PRICE DAY %
Volume
ACER INC
30.4 -0.3278689
12701325
FORMOSA PLASTIC
ADVANCED SEMICON
24.3
-2.016129
44439179
ASIA CEMENT CORP
36.6 -0.2724796
24 2510
INDEX 2447.195
NINGBO PORT CO-A PETROCHINA CO-A
199
52W (H) 3140.102 (L) 2254.567
2430
25-Jun
27-Jun
FTSE TAIWAN 50 INDEX NAME
TAIWAN MOBILE CO
95.8
1.375661
FOXCONN TECHNOLO
104.5
0.4807692
5276828
TPK HOLDING CO L
475
1.495726
5132972
2241702
FUBON FINANCIAL
29.35
1.206897
10341676
TSMC
79.3
0.7623888
31929094
UNI-PRESIDENT
45.6
0
5995229
UNITED MICROELEC
12.2 -0.4081633
18505428
282
2.545455
3942061
HON HAI PRECISIO
86.5
0.5813953
17993646
11.9
2.145923
14857481
HOTAI MOTOR CO
192
0.2610966
332250
HTC CORP
196
2.083333
10973810
CATHAY FINANCIAL
28.75
0.174216
9179460
HUA NAN FINANCIA
CHANG HWA BANK
15.3
0.3278689
5975803
CHENG SHIN RUBBE
73.1
0.2743484
4324926
CHIMEI INNOLUX C
12.1
0
14544555
MEDIATEK INC
272 -0.9107468
CHINA DEVELOPMEN
6.95
0.2886003
23498769
MEGA FINANCIAL H
21.7
3.333333
37696631
CHINA STEEL CORP
27.95
1.084991
9583367
NAN YA PLASTICS
52.9
0
3614507
CHINATRUST FINAN
16.75
0.6006006
18470681
PRESIDENT CHAIN
93
1.086957
11447412
QUANTA COMPUTER
COMPAL ELECTRON DELTA ELECT INC FAR EASTERN NEW FAR EASTONE TELE FIRST FINANCIAL
Volume
4139712
AU OPTRONICS COR
CHUNGHWA TELECOM
PRICE DAY %
1.052632
ASUSTEK COMPUTER CATCHER TECH
NAME
76.8
5287606
376
2.312925
6497536
WISTRON CORP
36.65 -0.5427408
6522443
16.15
0.310559
4973231
YUANTA FINANCIAL
13.1 -0.3802281
13254953
LARGAN PRECISION
612
5.335628
2267274
YULON MOTOR CO
51.7 -0.1930502
3963038
LITE-ON TECHNOLO
36.95
0
1549045
156.5 -0.3184713 79
1.282051
30.5 -0.3267974
8124116
650987 9819107
27
0.5586592
9397371
SILICONWARE PREC
89.4
3.352601
10094812
SINOPAC FINANCIA
10.95
2.816901
12902115
30.85
0.8169935
7932846
SYNNEX TECH INTL
72
0.6993007
5157805
65.2 -0.3058104
5115184
TAIWAN CEMENT
34.9
0.7215007
4111222
17.05
0.5899705
9457959
TAIWAN COOPERATI
17.3
1.169591
2955672
76.2
0.9271523
2989530
TAIWAN FERTILIZE
67.6 -0.4418262
1142137
FORMOSA PETROCHE
79.5 -0.3759398
585540
24.35
1.458333
32
14
4 4940
INDEX 4925.24
2547480
FORMOSA CHEM & F
TAIWAN GLASS IND
MOVERS
2035877
HIGH
4934.33
LOW
4879.88
52W (H) 6026.51 (L) 4643.05
4870
25-Jun
27-Jun
June 28, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) galaXy entertainment
melco crown entertainment
mgm china holDingS 29.5
19
29.3
18.8
min 18.3
last 18.76
18.2
SanDS china ltD
average 23.281
max 23.6
max 29.4
average 28.92
min 28.55
min 22.8
last 23.1
14.2
23.4
14.1
23.2
14
23
13.9
22.8
average 11.685
min 11.6
last 11.68
average 14.05
17.8 17.7 17.6 17.5 17.4
min 13.88
17.3
last 14.06
max 17.88
average 17.67
last 17.58
min 17.3
CURRENCY EXCHANGE RATES
WTI CRUDE FUTURE Aug12
79.15
-0.264616935
-20.17145739
111.3799973
77.55999756
BRENT CRUDE FUTR Aug12
92.41
-0.655772952
-12.24954895
124.6999969
88.48999786
GAS OIL FUT (ICE) Aug12 NATURAL GAS FUTR Jul12 HEATING OIL FUTR Jul12
DAY %
YTD %
(H) 52W
263.9
-0.2306151
-2.788521752
332.1799994
246.4999914
818.75
0.645359557
-8.926585095
1046.5
801
2.815
1.734730755
-13.19765649
4.890000343
2.095999956
256.69
-0.372598486
-9.702043832
331.9299936
250.999999
1568.19
-1.0144
0.2096
1921.18
1478.78
Silver Spot $/Oz
26.875
-2.019
-3.4489
44.2175
26.085
Platinum Spot $/Oz
1412.4
-1.8928
1.2836
1915.75
1339.25
Palladium Spot $/Oz
583.4
-3.0543
-10.7269
848.37
537.54 1839
LME ALUMINUM 3MO ($)
1845
-1.072386059
-8.663366337
2675.25
LME COPPER 3MO ($)
7359
0.320359894
-3.171052632
9905
6635
LME ZINC
1776
-1.606648199
-3.739837398
2539.5
1718.5
3MO ($)
LME NICKEL 3MO ($)
16295
-0.761266748
-12.90753608
25195
15980
15.095
0.432468397
0.432468397
18
13.95499992
632.5
1.362179487
7.8891258
673.5
499
WHEAT FUTURE(CBT) Sep12
744
-0.401606426
6.020662629
853.5
606.75
SOYBEAN FUTURE Nov12
1423
0.689899169
18.16483288
1438.75
1115.75
COFFEE 'C' FUTURE Sep12
164
-1.055806938
-29.98932764
288.8500061
SUGAR #11 (WORLD) Oct12
20.32
0.444883836
-10.99430574
COTTON NO.2 FUTR Dec12
68.24
0.058651026
-22.3132969
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 %
1.0076 1.5633 0.961 1.2498 79.53 7.9918 7.759 6.3574 57.1488 31.88 1.2772 29.92 42.395 9490 80.13 1.20109 0.79953 7.9416 9.989 99.39 1.03
YTD %
0.2787 -0.032 0.052 0.056 -0.1635 0.005 0.0064 0.0834 -0.1991 -0.1882 0.2427 0.1437 0.2359 0.1897 -0.4405 -0.005 -0.0926 0.2569 -0.045 -0.2113 0
(H) 52W
-1.3028 0.579 -2.3829 -3.5723 -3.2944 0.0976 0.1083 -0.9815 -7.1459 -1.0351 1.5189 1.1999 3.4084 -4.4362 -2.1191 1.3071 4.235 2.4252 3.634 0.2717 0.0097
(L) 52W
1.1081 1.6618 0.9772 1.4578 84.18 8.0449 7.8113 6.4747 57.3275 31.96 1.3199 30.716 44.35 9662 88.637 1.24736 0.90835 9.4168 11.6817 117.74 1.0311
0.9388 1.5235 0.7071 1.2288 75.35 7.9823 7.7529 6.2769 43.855 29.63 1.1992 28.661 41.879 8458 72.057 1.00749 0.79505 7.8544 9.8423 95.6 1.0288
MACAU RELATED STOCKS (H) 52W
(L) 52W
ARISTOCRAT LEISU
NAME
PRICE 2.72
1.872659
23.63636
3.25
1.88
991605
150.0999908
CROWN LTD
8.58
0
6.056858
9.29
7.45
3954333
26.03999901
19.23999977
AMAX HOLDINGS LT
0.078
2.631579
-10.34483
0.119
0.06
18534000
102.25
64.61000061
BOC HONG KONG HO
23.75
0.2109705
29.07609
24.45
14.24
14327282
CENTURY LEGEND
0.246
-1.6
6.95652
0.4
0.204
1455000
2.96
0
5.714288
4.36
2.3
0
CHINA OVERSEAS
17.94
4.302326
38.21264
18.48
9.99
44628473
CHINESE ESTATES
8.96
-0.2227171
-28.32
13.68
8.3
25799
CHOW TAI FOOK JE
9.81
6.399132
-29.52586
15.16
8.55
14395802
EMPEROR ENTERTAI
1.37
3.007519
23.42342
2.04
0.97
1417110
FUTURE BRIGHT
0.93
-1.06383
121.4286
1.09
0.3
2655000
GALAXY ENTERTAIN
18.76
3.532009
31.74158
24.95
8.69
26922000
105.5
1.637765
14.48725
125
84.4
1018454
22
9.452736
10.77542
24.903
18.56
3517000
68.4
0.2932551
15.9322
78.85
56
12794227
HUTCHISON TELE H
3.62
1.117318
21.07023
3.71
2.35
1926000
LUK FOOK HLDGS I
16.42
6.34715
-39.40959
46.15
14.7
5190000
MELCO INTL DEVEL
6.14
0.1631321
6.412479
10.76
4.3
3772000
CHEUK NANG HLDGS
World Stock MarketS - Indices
DAY % YTD %
VOLUME CRNCY
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
NASDAQ COMPOSITE INDEX
US
12534.67
0.2560255
2.595529
13338.66016
10404.49
FTSE 100 INDEX
US
2854.06
0.6311351
9.554543
3134.17
2298.89
HANG SENG BK
DAX INDEX
GB
5470.36
0.4295974
-1.829053
6084.08
4791.01
HOPEWELL HLDGS
NIKKEI 225
GE
6146.49
0.1596952
4.206942
7523.53
4965.8
HSBC HLDGS PLC
HANG SENG INDEX
JN
8730.49
0.7675447
3.254042
10255.15
8135.79
CSI 300 INDEX
HK
19176.95
1.027877
4.028116
22835.03
16170.35
TAIWAN TAIEX INDEX
CH
2447.195
-0.3144712
4.324991
3140.102
2254.567
MGM CHINA HOLDIN
11.68
1.213172
21.76619
17.183
7.6
3170042
KOSPI INDEX
TA
7183.01
0.6315556
1.568558
8842.17
6609.11
MIDLAND HOLDINGS
3.9
0.7751938
-1.366877
5.217
2.887
1390000
NEPTUNE GROUP
0.093
-1.06383
-16.21622
0.153
0.08
0
NEW WORLD DEV
9
1.010101
43.76996
11.279
6.13
9607242
SANDS CHINA LTD
23.1
1.762115
5.239176
33.05
14.9
25737354
SHUN HO RESOURCE
1.13
0
13
1.32
0.82
0
SHUN TAK HOLDING
2.67
3.488372
4.332402
4.668
2.241
2613757 8562604
S&P/ASX 200 INDEX
SK
1817.65
-0.0088018
-0.4431061
2192.83
1644.11
JAKARTA COMPOSITE INDEX
AU
4043.174
0.7443499
-0.3299957
4657.4
3765.9
ID
3934.867
1.377492
2.953303
4234.734
3217.951
NZX ALL INDEX
MA
1601.89
0.488677
4.648765
1611.5
1310.53
PHILIPPINES ALL SHARE IX
NZ
757.705
0.1761036
3.823611
806.015
700.441
FTSE Bursa Malaysia KLCI
HSBC Dragon 300 Index Singapor
11.60
17.9
13.8 max 14.14
PRICE
NAME
max 11.78
wynn macau ltD
23.6
NAME
CORN FUTURE
28.5
last 29
SJm holDingS ltD
GASOLINE RBOB FUT Jul12
METALS
11.65
28.7
Commodities ENERGY
11.70
28.9
18.4
average 18.67
11.75
29.1
18.6
max 18.92
11.80
PH
3449.07
1.102757
13.26846
3518.96
2695.06
SJM HOLDINGS LTD
14.06
1.29683
12.43021
20.711
10.079
SMARTONE TELECOM
15.28
0.9247028
13.69048
18.5
9.8
1125027
17.6
2.325581
-9.74359
27.48
14.807
11032433
WYNN MACAU LTD
STOCK EXCH OF THAI INDEX
SI
530.07
-0.16
6.8
na
na
ASIA ENTERTAINME
3.87
0.5194805
-34.18367
10.8692
3.66
53219
HO CHI MINH STOCK INDEX
TH
1165.98
1.293557
13.71865
1247.72
843.69
BALLY TECHNOLOGI
45.75
-0.2833479
15.64711
49.32
24.74
378092
Laos Composite Index
VN
418.04
-0.2743386
18.91339
492.44
332.28
BOC HONG KONG HO
3
1.694915
25.14666
3.15
1.81
1500
Laos Composite Index
LO
980.83
-0.4597305
9.046538
1107.3
876.33
GALAXY ENTERTAIN
2.35
-4.081633
25.66845
3.24
1.08
1000
INTL GAME TECH
15.09
0.066313
-12.26745
19.15
13.12
3492452
JONES LANG LASAL
67.64
0.2668248
10.41463
99.89
46.01
467225
LAS VEGAS SANDS
42.99
0.2097902
0.6084729
62.09
36.08
7031117
MELCO CROWN-ADR
11
-2.998236
14.34512
16.15
7.05
11028347
MGM CHINA HOLDIN
1.55
0
30.06704
2.2131
1.0025
1000
MGM RESORTS INTE
10.58
0.85796
1.438156
16.05
7.4
7718031
SHUFFLE MASTER
13.34
1.213961
13.82252
18.77
7.35
454713
1.83
0
13.83621
2.6037
1.2624
150
102.04
-0.01959632
-7.647749
165.4931
95.82
2042143
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalization. All data supplied by Bloomberg unless otherwise indicated.
SJM HOLDINGS LTD WYNN RESORTS LTD
AUD HKD
USD
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ONE YEAR Suscription REGULAR 1,560 Mop 20% discount 1,150 Mop
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CVV2/CVC2
14 |
business daily June 28, 2012
Opinion
Moody’s notices that banks are risky, four years too late Mark Whitehouse David Shipley Bloomberg View editors
M
arkets don’t always reflect the truth, but this time they did. One day after Moody’s Investors Service cut the credit ratings of 15 major U.S. and European banks, and hours after front pages around the world proclaimed the downgrades to be Big News, the markets stopped, sighed, shrugged and moved on. In fact, they rallied, with stocks and bonds of U.S. banks jumping by more than 1 percent. The reaction is reminiscent of the events of last August, when the U.S. government’s borrowing costs fell after Standard & Poor’s stripped the country of its AAA credit rating.
If markets are recognising that credit ratings are old news – and possibly even conflicted, given that the raters are paid by the entities they rate – the development can only be seen as desirable
Once upon a time, the proclamations of credit-rating companies and the resulting market moves tended to go in the same direction. Back in 2005, downgrades of General Motors and Ford caused the companies’ bonds to drop and whipped up a tempest in financial markets. What gives? First, there’s the obvious. At least in the U.S., banks have generally been building up their capital and cash reserves and paring down their holdings of soured loans and securities. So the downgrades contrast with recent experience. Second, and more important, ratings are by their nature backward-looking. They fall
only after the problems of a borrower are obvious and demonstrable. So they should catch markets by surprise only if investors haven’t been doing their homework.
Too late Consider the rationale of Moody’s for its latest bank downgrades, which affected such big institutions as Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co., Goldman Sachs Group, Deutsche Bank AG and Barclays Plc. The rater’s analysts noted that the banks, all of which have big trading operations, “have significant exposure to the volatility and risk
of outsized losses inherent to capital markets activities” – meaning that a market crash could cause them to lose so much money they would be unable to pay their creditors. The observation isn’t wrong. It’s just more than four years too late. The financial crisis of 2008 was enough to alert investors to the risk: the cost of default insurance on Goldman Sachs, for example, more than doubled when Bear Stearns failed in March 2008, quadrupled when Lehman Brothers Holdings Inc. went bankrupt in September 2008, and remains more than six times its precrisis level. Moody’s downgraded Goldman by one
level in December 2008, and it took until now to do a second, two-level downgrade. The situation for all the other downgraded banks is similar. If markets are recognising that credit ratings are old news – and possibly even conflicted, given that the raters are paid by the entities they rate – the development can only be seen as desirable. We’ll all be better off if financial regulators (who allow the ratings to affect measures of bank capital), pension-fund managers (who use the ratings to define their funds’ investment strategies) and lawmakers do the same.
Obama was just blowing smoke, causing a gaffe. As president, Obama has made no moves to touch NAFTA, and he signed trade agreements with Colombia, Panama and South Korea. Obama is most likely just
grandstanding now, too. But it would be nice if he didn’t feel the need to pretend that there was something wrong with giving a job to someone in a developing country – and if voters didn’t agree with that sentiment.
Obama’s protectionism would be immoral if it weren’t fake Josh Barro Bloomberg View writer
P
resident Barack Obama gave a speech attacking Mitt Romney as an “outsourcing pioneer” and promoting his own plan to use corporate tax policy to favour companies that choose to locate operations in the United States instead of abroad. He said: Now, not only does Governor Romney disagree with this plan, [as] it was reported in The Washington Post that the companies his
firm owned were ‘pioneers’ in the outsourcing of American jobs to places like China and India. Pioneers! Tampa, we don’t need an outsourcing pioneer in the Oval Office. We need a president who will fight for American jobs and American manufacturing. And that’s what my plan will do. I am always struck by just how immoral this viewpoint is. International trade not only creates efficiencies and increases total global wealth. It is also gradually lifting the populations of China and India out of poverty.
But Obama insists that, in order to protect the interests of a subset of U.S. workers and businesses, we should take steps that increase consumer prices for everyone else in U.S., and make it harder for the Chinese and Indian masses to rise into the middle class. I suspect Obama understands this, and his attacks on outsourcing are purely cynical. During the 2008 campaign, when he was promising to “renegotiate NAFTA,” adviser Austan Goolsbee let slip to Canadian officials that
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June 28, 2012 business daily | 15
OPINION
Reinventing the European dream wires Business Leading reports from Asia’s best business newspapers
Anne-Marie Slaughter
China Daily China’s top lawmakers are proposing to place both privately raised money and the companies that manage such money under legal supervision, in a bid to curb illegal fundraising. In a threeday meeting that started in Beijing on Tuesday, the National People’s Congress is discussing a proposal to modify the Securities Investment Fund Law. The fund industry has developed quickly in the past decade. By the end of last year, 69 fund management companies had a total net asset value of 2.2 trillion yuan (US$345.7 billion), which was 8.5 times their value in 2003, according to the China Securities Regulatory Commission.
Korea Herald Iran may halt all South Korean imports in protest against Seoul’s decision to ban Iranian oil following European Union sanctions against the Middle East nation, Iran’s top envoy in South Korea warned. Iranian Ambassador Ahmad Masumifar also said that Seoul’s measure will provide “serious obstacles” to South Korean businesses’ exports to his country. The warning comes after South Korea decided to halt oil imports from Iran as the European Union’s sanctions on insurance for Iranian oil shipments are set to take effect from July 1. South Korea purchased 9.4 percent, or about 87 million barrels, of all its oil imports from Iran last year.
Wall Street Journal The government of China’s central province of Henan has told banks to offer steep mortgage discounts to buyers of a first home in a move to boost the sagging property market. The move is a fresh sign that local governments around China, pinched by central government controls on the key property market, are looking for ways to ease the effects of such curbs as the nation’s economic growth slows. The provincial government said on its website that it directed banks to extend loans at rates of as much as 30 percent below the benchmark lending rate for first-home buyers.
Taipei Times Taiwan’s legislature will hold an extra legislative session from July 25 to 27 to discuss controversial issues, Legislative Speaker Wang Jin-pyng said. Mr Wang made the announcement following interparty negotiations on Tuesday in which all parties in the legislature agreed to hold a consultative meeting on July 24 to finalise the agenda of the three-day extra session. The extra session became necessary to pass amendments related to the Act Governing Food Sanitation and to impose a capital gains tax on securities transactions.
T
Professor of Politics and International Affairs at Princeton University
he euro crisis and Queen Elizabeth’s recent Jubilee seem to have nothing in common. In fact, together they impart an important lesson: the power of a positive narrative – and the impossibility of winning without one. Commenting on the Jubilee’s river pageant and horse parade, historian Simon Schama talked to the BBC about “little boats and big ideas.” The biggest idea was that Britain’s monarchy serves to connect the country’s past to its future in ways that transcend the pettiness and ugliness of quotidian politics. The heritage of kings and queens stretching back across more than a millennium – the enduring symbolism of crowns and coaches, and the literal embodiment of the English and now the British state – binds Britons together in a common journey. Cynics might call this the old bread-and-circuses routine. But the point is to fix eyes and hearts on a narrative of hope and purpose – to uplift, rather than distract, the public. Are Greeks, Spaniards, Portuguese, and other Europeans really supposed to embrace an austerity program imposed on them because prevailing wisdom in Germany and other northern countries considers them profligate and lazy? Those are fighting words, creating resentment and division just when unity and burden-sharing are most needed. Greece, in particular, now needs a way to connect its past with its future, but no monarch is forthcoming. And, as the cradle of the world’s first de-
mocracy, Greece needs other symbols of national renewal than sceptres and robes. It is through Homer that virtually all Western readers first encounter the Mediterranean world: its islands and shores and peoples knit together by diplomacy, trade, marriage, oil, wine, and long ships. Greece could once again be a pillar of such a world, using its current crisis to craft a new future.
Vision and politics That vision is more plausible than one might think. Naturalgas fields in the Eastern Mediterranean are estimated to hold up to 122 trillion cubic feet, enough to supply the entire world for a year. More gas and large oil fields lie off the Greek coast in the Aegean and Ionian Seas, enough to transform the finances of Greece and the entire region. Israel and Cyprus are planning joint exploration; Israel and Greece are discussing a pipeline; Turkey and Lebanon are prospecting; and Egypt is planning to license exploration. But politics, as always, intervenes. All countries involved have maritime disputes and political disagreements. The Turks are working with Northern Cyprus, whose independence only they recognise, and regularly make threatening noises about Israel’s drilling with the Greek Cypriot government of the Republic of Cyprus. The Greek Cypriots regularly hold the EU hostage over any dealings with Turkey, as has Greece. The Turks will not let Cypriot ships into their harbours
Europe’s leaders will not surmount this crisis by pounding their citizens with bleak demands for austerity. They must take concrete steps to create a vision of real rewards from a rejuvenated EU
and have not been on speaking terms with the Israelis since nine Turkish citizens were killed on a ship that sought to breach Israel’s blockade of Gaza. Lebanon and Israel do not have diplomatic relations. In short, the riches, jobs, and development that would flow to all countries in the region from responsible energy exploitation may well be blocked by the insistence of each on getting what it regards as its fair share and denying access to its enemies. The vision of a Mediterranean Energy Community thus seems destined to remain a pipedream. Yet July will bring the 60th anniversary of the ratification of the Treaty of Paris, which established the European Coal and Steel Community (ECSC) among France, Germany, Italy, Belgium, the Netherlands, and Luxembourg only six years after the end of World War II. During the previous 70 years, Germany and France had fought each other in three devastating wars, the last two of which ruined Europe’s economies and decimated its population.
Beyond austerity These countries’ mutual hatred and suspicion was no less bit-
ter and deep-seated than that afflicting the Eastern Mediterranean. Yet French Foreign Minister Robert Schuman, with the assistance of his counsellor Jean Monnet, announced a plan for the ECSC in 1950, only five years after German troops had left Paris, with the aim of making “war not only unthinkable but materially impossible.” Schuman proposed putting Franco-German coal and steel production under a common High Authority, thereby preventing the two sides from using the raw materials of war against each other, and powering a common industrial economy. The ECSC became the core of today’s European Union. The EU today is on the ropes, but only a few concrete steps by European leaders might open the door to similarly bold diplomacy that could restore EU and Mediterranean economies and transform the energy politics of Europe and Asia. If the European Parliament and the European Council were to take steps to make direct EU trade with northern Cyprus subject to qualified majority voting rather than consensus (and hence veto by Cyprus), the EU would be able to begin trading with northern Cyprus, and Turkey could begin trading with Cyprus as a whole. These steps could lead in turn to a Turkish, Cypriot, and Greek energy partnership that would provide positive incentives for Turkish-Israeli reconciliation. The Schuman Plan took two years to crystalize and a decade to implement. But it gave wartorn and desperately poor Europeans a positive vision of a new future, something that Greece and Cyprus, not to mention Middle Eastern and North African countries, desperately need. Europe’s leaders will not surmount this crisis by pounding their citizens with bleak demands for austerity. They must take concrete steps, with Greece as a full and equal partner, to create a vision of real rewards from a rejuvenated EU. The EU does not have a Queen Elizabeth. What it needs is another Schuman and Monnet. © Project Syndicate
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business daily June 28, 2012
CLOSING Merkel says ‘nein’ to eurobonds
Bank of China opens Taiwan branch
German Chancellor Angela Merkel said yesterday, one day before a crunch European Union summit, that there were no quick or easy solutions to end the euro zone’s debt crisis and leaders should avoid making rash promises they could not keep. Ms Merkel, addressing members of the lower house of parliament, also reiterated her view that mutualised debt, or eurobonds, would be the wrong policy to pursue and said Germany had finite resources. She said: “Guarantees and controls must go hand-in-hand. There can only be joint liabilities when sufficient controls have been put in place.”
The Bank of China became the first Chinese lender to open a branch in Taiwan yesterday in the latest sign of improving ties between Taipei and Beijing. The branch was opened at a ceremony in Taipei attended by Taiwanese politicians and bank staff. Li Lihui, governor of the bank, which is China’s third-largest lender by assets, called the opening a “milestone in the deepening of economic and financial cooperation between Taiwan and the mainland”. Bank of Communications, the fifth-largest in China, will soon follow suit, said an official from the island’s regulator, the financial supervisory commission.
Hong Kong gets an anniversary present New policy package will strengthen HK role in yuan trading
B
eijing will promote the further development of the offshore yuan market in Hong Kong as part of a new package of policies for the territory ahead the fifteenth anniversary of its return to China, the official Xinhua agency said on Wednesday. Beijing has been eager to use the financial centre as a testbed for major reforms, such as its growing push to internationalise the yuan currency. “On financial cooperation, the government will support the thirdparty to use Hong Kong as an avenue to settle trade and investment in renminbi (yuan) and further enrich the offshore renminbi products in Hong Kong,” the Xinhua report said, without giving further details. The move to expand offshore use of yuan will further secure Hong Kong’s place as a major international financial centre, said Andy Ji, currency strategist at Commonwealth Bank Of Australia in Singapore. London and other financial centres like Singapore are also vying for a share of the rapidly growing offshore yuan market. Though the yuan is still tightly controlled by Beijing, offshore yuan deposits at banks in Hong Kong had boomed in recent years as China slowly relaxed its grip on the currency, encouraging it to be used more often in settling international trade and for certain investments. Such deposits have declined steadily this year, however, as China’s
Let there be yuan!
economic growth has slowed and as the yuan’s appreciation against the U.S. dollar ground to a halt, sharply reducing its investment appeal.
Cross-border investment China also will promote the mutual listings of exchange-traded funds (ETFs) on Hong Kong and mainland stock exchanges, the Xinhua report said. Chinese investors can already buy overseas stocks and bonds by investing in funds available under the Qualified Domestic Institutional
Investor (QDII) scheme, but crossborder ETFs are expected to be easier to trade because they will be listed directly on Chinese bourses. China will also make it easier for Hong Kong’s long-term funds to invest in the mainland’s capital markets, the Xinhua report said. Such liberalization is part of a concerted effort by Beijing to attract more foreign capital into mainland equity and bond markets through the Qualified Foreign Institutional Investor (QFII) programme and its offshore-yuan denominated cousin, the Renminbi
Qualified Institutional Investor (RQFII) programme. Both programmes have seen their quotas increased and their allowable scope of investment widened this year. QFII regulations currently limits net foreign investment through the programme to US$80 billion, but only US$25.19 billion had been allotted as of April 16, according to the country’s foreign exchange regulator. The total RQFII quota stands at 80 billion yuan (US$12.57 billion). Reuters
Glencore’s Xstrata deal threatened by second largest shareholder Qatar wealth fund seeks higher offer
G
lencore International Plc’s 16 billion pound (US$25 billion) offer for the rest of Xstrata Plc is in doubt after the
Qatar wants to get more from the deal
target’s second-largest shareholder demanded the bid be increased by 16 percent. Qatar Holding LLC, which
built a 11 percent stake in Zug, Switzerland-based Xstrata since February at a cost of about US$4.3 billion, wants the agreed offer raised to 3.25 Glencore shares for each of Xstrata’s, compared with the current offer of 2.8 times, according to a statement yesterday. The move from Qatar’s sovereign wealth fund pressures Glencore to sweeten the bid or walk away as it takes those dissatisfied with the terms to about 14 percent of Xstrata shareholders. That’s close to the 16.48 percent threshold that has the power to block the offer because U.K. takeover rules prevent Glencore from voting its shares in Xstrata. “We now see an increase in the terms of the deal as a real possibility,” Bank of America Merrill Lynch analysts Jason Fairclough and Daniel Lian said today in a note to clients. “This could be a bit
too close to call and we think that Glencore will have to consider Qatar’s comments carefully.” “The shareholders obviously have sufficient size that Glencore and Xstrata will take notice,” said Tim Schroeders, a Melbourne-based fund manager at Pengana Capital Ltd., which oversees about US$1.1 billion of assets. “If you are going to create an attractive entity for investors globally to invest in postmerger, there’s a fair bit of work to do in the next couple of weeks.” Xstrata shareholders are scheduled to vote July 12 on the merger and proposed retention payments of as much as 172.8 million pounds to keep 73 Xstrata executives at the company. A decision going against either proposal would block the deal, which would create the world’s fourth-largest mining company. Bloomberg