Macau Business Daily, Jun 29th by Business Daily

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Get IT sorted – digital expo backers

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Broken Tooth – ‘Give me a break’ Page 7

Year I - Number 65 Friday June 29, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

Luk-y streak for HK jeweller

www.macaubusinessdaily.com

Housing

Key policy is a muddle say critics T

he city is adopting the wrong policies in its efforts to provide homes for lowerincome people claims a lobby group. It’s offering too many ‘social houses’ – government-provided apartments rented to those at the bottom on the income ladder – and too few ‘affordable homes’ – governmentbuilt properties available for purchase by the territory’s ‘sandwich class’ – those in the middle who

may not be able to afford private sector real estate but do have some purchasing power. “Families in economic difficulties only account for a small part of Macau society, while households with a certain purchasing power but who cannot afford private flats are undoubtedly the majority,” said Lei Kuok Keong, vice president of New Macau Association.

But Jeff Wong Chi Wai, the head of residential property at Jones Lang LaSalle Macau, told Business Daily: “It is not the government’s responsibility to make every citizen able to buy houses.” The real estate agent said many buyers simply wished they could afford a higher price point. “The houses are just not what they wanted – either the flats are a bit small and old,

or they cannot afford the new ones,” stated Mr Wong. The New Macau Association urges the government to reserve vacant sites repossessed from developers for public homes – particularly the La Scala plot seized after a court found the land had been acquired in a return for a bribe to now-jailed former Transport and Public works secretary Ao Man Long. More on pages 2 & 3

HANG SENG INDEX

Waterleau boss won’t meet his Waterloo

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The city’s public prosecutor is seeking jail time for the head of Belgian wastewater service company Waterleau NV Group over his firm’s alleged bribery of Ao Man Long. The company still holds a legal contract for a water treatment plant at Taipa. The man in question, Luc Vriens denies wrongdoing and isn’t anxious to come back and face the music. The next trial related to Mr Ao’s corruption case will start in mid-September.

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Macau ‘backsliding’ on Portuguese’ residency rights

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June 28

HSI - Movers

The city is breaching its legal and moral obligations to Portuguese nationals agreed under Macau’s post handover Basic Law and other applicable legislation by changing the way professionals from that country can apply for residency it’s claimed. It could slow the approval process from weeks to months by shifting it from the immigration service to Macau Trade and Investment Promotion Institute.

Name

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Dropped call: govt dodges decision on CTM rival An important plank in Macau’s system of service monopolies will be allowed to continue for the time being. Long-awaited competition for CTM on landline telecommunications has again been delayed – despite the rival bidder MTEL having completed a technical assessment by the government and the company promising to invest one billion patacas (US$125 million) and create 1,000 jobs. Page 4

%Day

HENGAN INTL

2.27

CNOOC LTD

1.92

COSCO PAC LTD

0.91

CHINA RES LAND

0.77

SANDS CHINA LTD

0.43

BOC HONG KONG HO

-2.11

HONG KONG EXCHNG

-2.11

CHINA OVERSEAS

-2.23

TENCENT HOLDINGS

-2.84

CHINA COAL ENE-H

-2.87

Source: Bloomberg

2012-6-28

2012-6-29

2012-6-30

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27˚ 34˚

25˚ 30˚

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business daily June 29, 2012

macau

Housing policy divorced from InBrief reality, pan-democrats argue New Macau Association slams the government for treating subsidised housing for sale as a supplement to public housing for rent Tony Lai

tony.lai@macaubusinessdaily.com

Task force on food inflation A new task force with Economic Services Bureau, Civic and Municipal Affair Bureau and Consumer Council representatives will try to tackle rising food prices. A government press statement stressed that even though food inflation in mainland China and yuan appreciation both slowed down, food prices in Macau are still rising. The task force will probe “potential illicit practices,” “irregular weight standards, market monopoly” and “unreasonable price fixing”.

Electricity subsidy tweak demanded Legislator Au Kam San has asked the government to consider adjusting the electricity subsidy policy. His plea is that if a household cannot use up its monthly subsidy of 180 patacas (US$22.5), it should be allowed to use the money left over another month, ideally in the summer, when the widespread use of air conditioning pushes up consumption.

Govt urged to take back plot The government should take back the plot granted to the Macau Yacht Club if the club remains bent on building a residential tower, legislator Paul Chan Wai Chi was quoted as saying by the Portuguese-language newspaper Hoje Macau. If the land concession lacked “strict enforcement”, it could open the doors to further cases in which the benefits of land grants ended up in the hands of developers, he said.

Bureau bats for green vehicles The Environmental Protection Bureau is considering importing environmentfriendly vehicles and is drafting measures for the introduction and promotion of such vehicles. In a related development, the Transport Bureau aims to test drive an electric bus at the end of this year or at the beginning of next. The environment bureau said so in response to questions from legislator Melinda Chan Mei Yi.

Hengqin civic body mooted University of Macau professor Liu Bolong has called for a committee made up of Hong Kong and Macau figures to discuss the development of Hengqin Island before intergovernment discussions take place. He said many issues required research and collaboration by civic groups as well as governments. An independent civic committee could better reflect the demands of the people, the Chinese-language Macau Daily News quoted Mr Liu as saying.

he New Macau Association has urged the government to change the policy that gives priority to public housing for rent over subsidised housing for sale. It has also asked the government to ensure a regular supply of public housing and invite new applications to live in it. But a section of the real estate industry says the government must not be required to provide houses for everyone. New Macau Association vicepresident Lei Kuok Keong told a press conference yesterday that the government had neglected its responsibility to provide flats for sale in the public housing plan for 2011 to 2020. “Families in economic difficulties only account for a small part of Macau society, while households with a certain purchasing power but cannot afford private flats are undoubtedly the majority,” he said. “This is certainly a big issue in Macau,” real estate expert Rose Lai said, as in “any well-developed cities with high growth rate” like Hong Kong, Tokyo, London. “That is why the rental markets in these cities are also big”. But the territory’s rental market “is pretty much formed by expatriates. The concept of households owning their own housing is still very strong,” the finance professor at University of Macau said. Mr Lei said there had always been

higher demand to buy public housing than rent it. For example, he said, the government had built over 24,000 flats for sale but only 8,000 flats for rent. “So the policy of social housing supplemented by affordable housing is obviously a wrong policy, detached from reality,” he said. In a written enquiry this month, legislator Ho Ion Sang criticised the public housing strategy for lacking a plan for flats for sale, thus ignoring the housing needs of the sandwich class, or middle-income and young residents.

Financial distress Jeff Wong Chi Wai, head of residential property at Jones Lang LaSalle Macau, said he “100 percent agrees” that poor people make up only a small proportion of the city’s population, with unemployment low and economic development going full steam ahead. Mr Wong said some residents were actually able to afford prices in the private market. “The houses are just not what they wanted. Either the flats are a bit small and old, or they cannot afford the new ones,” Mr Wong said. He said he understood the desire to buy better housing once quality of life had improved. “But it is not the government’s responsibility to make every citizen

be able to buy houses,” he said. “The effectiveness of the public housing policy depends on what the government wants to do.” Housing Bureau director Tam Kuong Man told the media last month that the policy prioritising public housing for rent meant the government would first help families in financial distress. “An ideal situation is to firstly satisfy all households who need social housing. People who have basic purchasing power can afford to wait by currently having a smaller unit, or by renting,” Ms Lai said. The ratio of flats for rent to flats for sale is 10 to 9 in the scheme for 19,000 new public housing units. Mr Wong said there were more flats for sale than the industry and the public had originally expected. He said this showed that the government had understood public demand. The pan-democrats also criticised the government for lacking medium-term goals to coping with the number of applicants for public housing, which has been piling up since the bureau stopped taking applications for housing for sale in 2005 and for housing for rent in 2009.

Flexible cap Mr Lei urged the government to ensure a regular supply of housing for sale and begin accepting

Vriens defendant in Ao-related trial The final trial arising from the Ao Man Long corruption saga will start on September 17, with eight defendants Vítor Quintã

vitorquinta@macaubusinessdaily.com

Hong Kong tycoons Joseph Lau Luen Hung (left) and Steven Lo Kit Sing (centre) will face trial, along with Waterleau chief executive Luc Vriens

uc Vriens, the head of the Waterleau NV group, Belgian wastewater plant operator, has been officially named as one of eight defendants in the final trial arising from the web of corruption woven by Ao Man Long when he was a government secretary. The written judgement in the last of Mr Ao’s own trials, read last month in the Court of Final Appeal, said Mr Vriens paid a bribe of almost HK$7 million (US$900,000) to get contracts for the wastewater treatment plants on Coloane and in the Zhuhai-Macau Cross-Border Industrial Park. This month, Mr Vriens said he would

not come to Macau. “It’s definitely a risk I will not take,” he told the Belgian newsletter Incidences. Mr Vriens denied all accusations that he had bribed the Ao and instead blamed a man he described as his agent in Macau, Pedro Chiang, who was sentenced in absentia last year to six years and 10 months in prison in a related case. According to the Portugueselanguage newspaper Tribuna de Macau, the first hearing of the next corruption and money-laundering case has been set for September 17 in the Lower Court. The case files say two Hong Kong

businessmen, Joseph Lau Luen Hung and Steven Lo Kit Sing, have also been charged, and that both will be represented by lawyer Leonel Alves. Mr Lau and Mr Lo are accused with giving Mr Ao a HK$20 million bribe to secure the concession of a plot near the airport where the upmarket residential complex called La Scala was being built. This month the government said it was initiating the procedures to take back the land, and gave Hong Kong developer Chinese Estates Holdings 15 days to submit a written reply. Another accused is Chan Ying Lun, a Hong Kong executive of a subsidiary of a mainland Chinese construction company. Mr Chan is charged with paying Ao a bribe of 4 million patacas to get a contract worth 136.7 million patacas to put up a building in the Zhuhai-Macau Cross-Border Industrial Park. The other four defendants have yet to be identified.

June 29, 2012 business daily | 3

MACAU

Families in economic difficulties only account for a small part of Macau society, while households with a certain purchasing power but cannot afford private flats are undoubtedly the majority Lei Kuok Keong, New Macau Association vice-president Residents looking for public housing flats prefer to buy them instead of renting, says the New Macau Association

applications again. According to a new law, a single individual with a monthly income lower than 17,000 patacas (US$2,125) or a two-member household collectively earning less than 34,018 patacas can apply to buy a flat. Mr Wong of Jones Lang LaSalle is of the view that the government does not have to set a fixed maximum income cap. It can connect the cap with some economic index such as the city’s median income or gross domestic product. “It has more flexibility and the

cap can be adjusted in accordance with the changes in the market,” said Mr Wong. “But the wider public has to come to a consensus [on] which index the cap is linked to.” “Some people think that raising the cap would attract more people who don’t actually need the housing to apply,” Ms Lai said. The expert believes a thorough study should be launched after the existing waiting lists are done with. “It takes time, but also minimizes waste and controversy.” Legislator Au Kam San, a member of the New Macau Association, said

the present housing policy would not achieve its aim of helping improve the public’s quality of life. He said the standard of public housing was far below that of private housing, turning the buyers of public housing into “secondclass residents”. Some residents on the waiting list to buy a flat told the news media after visiting sample flats this month that they were too cramped. The New Macau Association urged the government to reserve for public housing the sites it has taken back from developers, particularly the plot where the

upmarket residential complex called La Scala was being built. Mr Lei said a fund for public housing should be set up quickly and that the takings from the sale of the Taipa subsidised housing complex, amounting to over 800 million patacas, should be included in the fund. The public housing plan for 2011 to 2020 proposes the creation of a development fund, but only to maintain and manage existing developments. The Housing Bureau is soliciting public opinion until July 1 on public housing strategy.

Changes to residency bids to hit law firms Immigration Services has stopped handling the residency applications of Portuguese nationals, a move that raises legal doubts and will impact law firms Vítor Quintã vitorquinta@macaubusinessdaily.com

he administration has changed the way it handles residency applications from Portuguese qualified workers and law firms are likely to be the worst hit, businessmen told Business Daily. Applications earlier handled by the Immigration Services have been directed since June 11 to the Macau Trade and Investment Promotion Institute (IPIM), the staff of Secretary for Security Cheong Kuok Va confirmed. “This is only an internal adjustment to speed up the process,” one member of staff said. “It [the institute] is better equipped, with qualified staff, to carry out technical evaluation of the applications in time,” the spokesperson added. Though the Immigration Services were much faster in deciding residency applications, an institute spokesperson said: “If candidates fill in all required conditions, IPIM

will grant a temporary permission that lasts for six months. “Usually, the process takes six to nine months. To speed up the process, the alternative would be to apply for a work permit and only then ask for a Macau identity card.” Jorge Neto Valente, president of the Macau Lawyers Association, said the new instructions are not legal or even justified. “The number of Portuguese nationals asking for residence is negligible,” he told Portuguese-language TDM. While IPIM could have better means to assess these applications, “it has a bad reputation in terms of efficiency,” Mr Neto Valente said. A legal expert, who asked to remain unnamed, told Business Daily that the by-law setting different rules for Portuguese nationals had not been revoked or replaced, which meant that any refusal by the Immigration Services to handle residency applications could be

considered illegal. Furthermore, to transfer the applications to IPIM would be “to subvert” the by-law and the intention of the legislator, he said. “Obviously, there will be an impact for all businesses that import Portuguese professionals,” said Carlos Duque Simões, managing partner at DSL Lawyers. Jiji Tu, managing director of MSS Recruitment, said the language barrier prevented Portuguese from entering to many sectors. “This new rule might impact some law firms,” she said. “There is a significant number of new lawyers moving to Macau to work every year, up to 50 or 60 a year,” Mr Simões said. In other areas, restrictions on outside labour “made it very difficult to import any foreign professionals”, including Portuguese nationals, the managing director of engineering consultancy Consulasia, Hélder

Santos, said. “The protection of local labour led to high labour costs for the business community. Salaries increased over 20 percent in our company, while revenue didn’t see the same increase,” he bemoaned. “Local engineers have little incentive or motivation to work harder as it is too easy for them to find another job”. Consulasia is part of Portugal’s Consulgal group. “It is difficult to ask the group to deploy specialists to Macau to develop new businesses because of the labour restrictions,” Mr Santos said. The changes “will just mean more bureaucracy”, said Mr Simões, but he does not expect them to stop Portuguese nationals from coming over. “Economic prospects in Portugal are not very good, so it is worthwhile to face the bureaucracy and wait to get the visa.” with Xi Chen

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business daily June 29, 2012

macau Brought to you by

HOSPITALITY Points of entry Macau has several points of entry for visitors. In some ways each is associated with certain kinds of visitors. That is especially true of the two main ones, the Outer Harbor and Gongbei. The Outer Harbour is the main conduit for Hong Kong residents, many of them day-trippers, and for foreigners that use Hong Kong airport. Gongbei is the main gateway for visitors from mainland China. Together they handed for 75 percent of all arrivals in the first quarter of this year, 51 percent entering through Gongbei and 24 percent through the Outer Harbor.

8000 7000 6000 5000 4000 3000 2000 1000 0 Air

Gongbei

Taipa

Outer

No decision yet on MTEL landline bid It’s three months since a proposal to end CTM’s fixed line telecoms monopoly Vítor Quintã

vitorquinta@macaubusinessdaily.com

he long-awaited competition for CTM on landline telecommunications will have to wait, with the government still deciding whether to accept the only proposal for an alternative network. In December the Telecommunications Regulation Bureau director Lawrence Tou Veng Keong said the goal was to issue two other licences during the first half of this year following a tendering process. But locally incorporated Companhia de Telecomunicações de MTEL, Ltda was the only bidder, even though the bureau said at least six firms had shown interest. MTEL representative Michael Choi told media the company would set up a joint venture with Chinese telecommunication equipment and network solutions provider ZTE Corp. and invest up to one billion

patacas (US$125 million), creating as many as 1,000 jobs. Yet with only one day left in the first half of 2012, the bureau has told Business Daily it is still a long way off issuing a licence, though it added “the evaluation of MTEL’s proposal has been completed”. Asked when a final result would be announced, a bureau spokesperson merely said: “once any decision is made, the result will be announced to the public in due course”. According to the tender regulation, the bureau still has three more months to make a decision and the territory’s Chief Executive Fernando Chui Sai On can extend this deadline by four months. If MTEL receives a licence, it will have a year-and-a-half to begin operations. During that period the new operator will have to build its own landline

Total

The ferry terminal in Taipa handled few arrivals in the first half of 2008 but subsequently become the third main entry point, overtaking the airport. It now handles twice the number of arrivals that the airport handles. The remaining entry points together handle just over 12 percent of all arrivals. The heliport is the least used gateway, welcoming under 0.1 percent of all arrivals, having handled fewer and fewer since the last quarter of 2009. The changes in the number of arrivals through the various points of entry tell us something about the forces that determine the volume of visitors.

Telecoms regulator, headed by Lawrence Tou, is yet to reach a decision

It is clear that the 2008 global financial crisis had an effect. The first half of 2009 saw a contraction across the board. By the third quarter the recovery was well underway and the border crossings register growth from a year before. Some of those growth rates are impressive. Arrivals by sea rose by 35 percent and arrivals by land by 20 percent in the second quarter of 2010. Afterwards the rate of growth slows in general, and the number of arrivals by air began to contract. The rates of growth did not, in general, match those in the previous expansion, and seem to have slowed in the past two quarters. J.I.D.

network, covering at least 30 percent of the territory.

3G transition If all deadlines are met – which hasn’t happened in many public tenders launched by the government lately – then the telecommunications market would only have competition in September 2014. In 2011 alone, tenders for the Light Rapid Transit system, the operation of the Macau peninsula wastewater treatment plant and the new public bus system have suffered delays. In addition, the three mobile telecommunications providers have had their licences revised to delay the transition from a 2G to a 3G mobile network, the bureau confirmed. Those changes were published on June 26 in the Official Gazette. They include provisions that will allow SmartTone, Hutchison and CTM to continue providing 2G services to local users until December 31, 2012. In addition, they ensure that visitors using inbound roaming telecommunications can continue using the 2G network “until the expiry of the licence,” in 2015, the bureau explained. “The reasons for these changes are to minimise public concern and inconvenience, as well as to give more transition time for the remaining 30,000 2G users to move to 3G services,” it added. The Commission Against Corruption – which also acts as public ombudsman – has strongly criticised the government’s decision to terminate 2G services to local users only. The commission said it “breaches Macau residents’ basic rights” that should allow them to “receive and enjoy any service without being discriminated against”.

Jockey Club halves loss, extends losses

he Macau Jockey Club reduced operating costs last year but the company controlled by Sociedade de Turismo e Diversões de Macau SA failed to end a run of losses that stretch back to 2005. Macau Horse Racing Co Ltd more than halved its losses last year, to 17.8 million patacas (US$2.2 million) from 36.3 million patacas in 2010, according to the annual report published in

Wednesday’s Official Gazette. The Jockey Club enjoys the monopoly on horse racing until 2015. It was last in the black in 2004, when its operating profit was 52.9 million patacas. The company has accumulated losses of more than 3.7 billion patacas, a figure greater than its registered capital of 3 billion patacas. The business generated 440

million patacas in revenue last year, up slightly from 439 million patacas in 2010, according to data from the Gaming Inspection and Coordination Bureau. Despite the losses, the supervisory board recommended a commendation to the club’s management board which is led by Angela Leong On Kei. V.Q.

June 29, 2012 business daily | 5

Photo by Manuel Cardoso

MACAU

Macao Dragon staff to be paid

Luk Fook revenue jumps Jewellery retailer posted spectacular growth in revenue in Macau and remains optimistic about its operations here Vítor Quintã

vitorquinta@macaubusinessdaily.com

uk Fook Holdings (International) Ltd saw its business growth in Macau accelerate in the last two quarters, the jewellery retailer told the Hong Kong stock market yesterday. The company announced that its earnings here registered “spectacular growth” of 75.8 percent in the year ended March 31, reaching HK$1.34 billion

(US$172.4 million). The numbers show Luk Fook’s revenue growth picked up steam from October. From April to September last year, its shops here made revenue 57 percent greater than a year before. However, the retailer saw its earnings rise more slowly than in the preceding fiscal year, when they registered a jump of 88 percent. Despite the fast growth, Macau still accounts for just 11.3 percent of the company’s total revenue. Globally, Luk Fook’s interim net profit jumped by almost 53.6 percent to HK$1.35 billion.

The company nonetheless remains “optimistic” about its operations here, speaking of “stronger and continuously improving tourism performance”. The company has six shops here, including two outlets that opened in April. The effect of the new outlets on sales will be reflected in next year’s report. In the first quarter of this year Macau’s retailing sector sold 4 billion patacas worth of watches, clocks and jewellery, 43 percent more than a year before, and the city imported 2.4 billion patacas worth of jewellery.

The former staff of ferry operator Macao Dragon, who filed for bankruptcy in September, will receive about HK$7.4 million (US$953,800) in unpaid wages, a Hong Kong judge ordered on Wednesday. The money came from the HK$160 million sales of two catamarans to a mainland operator that planned to operate them in Hainan province, South China Morning Post reported, quoting a Hong Kong shipbroker. The 70 former workers, including ferry captains, onboard maintenance staff and cabin attendants, should get their wages “in a month or two,” Ting Kam Yuen, head of the Hong Kong branch of the International Transport Workers Federation, said. The ships were seized by a law firm acting on behalf of the Macau branch of the Bank of China in relation to unpaid loans of HK$160 million. But the bank and other creditors will have to share the remainder of the sale proceeds.

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business daily June 29, 2012

macau Brought to you by

IT market still in its infancy - president of the Electronic Media Industry Association, Henry Ng

New businesses

Photo by Manuel Cardoso

The evolution on the economy has naturally attracted, and is still attracting, new business ventures. The last few years, even in the wake of difficult international conditions, have seen a steady stream of new firms. On average, every month has given birth to almost 740 companies. The international crisis has, nonetheless, taken its toll.

The second half of 2008 saw the figure drop considerably – from 825 in the second quarter to 547 in the fourth. These numbers are well below the average for the period. From the comparatively low figures in late 2008 and early 2009, the number of new firms has been increasing steadily. The average for the last four quarters is well above the average for the period, by about 20 percent. The new companies stretch across the gamut of economic activities, even manufacturing. Manufacturing, as is well known, has been contracting rapidly here and, not surprisingly, hardly 1 percent of new companies are manufacturers. But it is worth noting that every single quarter saw the creation of a handful of new companies.

Upcoming expo to explore IT opportunities An immature IT market means business for those that can position themselves correctly Xi Chen

xi@macaubusinessdaily.com

T As befits the nature of the economy, the main sectors for new companies are trade, construction, financial and business services, and real estate. New trade or construction companies made up about two-thirds of the total. Together, those four main sectors accounted for almost 85 percent of all businesses created. The other sectors are more heterogeneous and their figures harder to interpret. New companies in the education, health, and social and personal services sectors together accounted for close to 10 percent of the total. This is about three times the figure for new companies in the hotels and restaurants sector, another field associated with the evolution of the economy. But the figure for new companies in the hotels and restaurants sector probably underestimates their contribution to the economy and reflects instead the structure of the sector, which has fewer and fewer small, independent businesses J.I.D.

he digital media and communications market is less developed here than in other cities, which means new business opportunities as the city grows, the organisers of the forthcoming digital media forum say. The president of the Electronic Media Industry Association, Henry Ng, said market positioning was crucial for the information technology and media industry and that companies here could learn from experiences in Hong Kong and Singapore to see what is lacking. “If companies in this industry only target the locals, our market is very small. However, Macau is aiming to be a world tourism centre and millions of visitors come here every year. The opportunity for this sector of the market is huge,” Mr Ng said. He pointed out a few examples of potential business opportunities such as digital travel guides, digital restaurant guides and

e-payment services. Lack of IT professionals could be an obstacle for the industry, Mr Ng said. However, he feels that talent will follow as the market develops. This, the second annual forum will bring together academics, company executives and industry specialists from mainland China, Hong Kong, Macau and Taiwan. The focus will be on cloud computing and how it can be implemented to improve business processes and day-to-day lives. “We don’t want to make the discussion too theoretical, so all topics will be closely linked to our daily life, focusing on technology application and problem solving,” Mr Ng said. He said cloud computing, still at an early stage of development, was akin to using a large server where users could store their software or applications. The chairman of the Electronic Media Industry Association’s council, Francis Wong, said: “This can simplify the work process and make [the] user interface much friendlier when different

technologies can be accessed from one place.” With 15 expert speakers and more than 100 industry representatives from Guangdong alone, the forum is meant to inculcate greater awareness in the government, the industry and the public about how the new technology can best be applied. Mr Ng said one big area of where cloud computing could be used was healthcare, as the city improved its health services. The forum will be part of the third Communic Macau Expo, taking place at the Fisherman’s Wharf this weekend. The expo organisers expect to attract around 450,000 visitors. Exhibitors from Australia, Japan, South Korea, India, Bangladesh, Sri Lanka, Malaysia and Indonesia will all take part in the event, along with those from Greater China. The expo is organised by the High Technology Industry Chamber, the Computer Chamber and the E-commerce Association, while the forum is organised by the Electronic Media Industry Association and the expo team.

Weather Beijing 27/20o C Changchun 25/20o C

Harbin 28/22o C

Xian 26/21o C Shanghai 33/24o C Chengdu 28/21o C Kunming 26/17o C Haikou 33/26o C Sanya 30/27o C

Guangzhou 35/25o C

MACAU (25 June-30 June) Day

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Shenzhen 33/25o C

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taipei

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June 29, 2012 business daily | 7

MACAU

Court rejects triad leader’s parole appeal But ‘Broken Tooth’ Koi will be released from jail in December Photo by Manuel Cardoso

Tony Lai

tony.lai@macaubusinessdaily.com

he Court of Second Instance said former triad leader Wan Kuok Koi had already served a disputed nine-month sentence in 2000 – a term that prolonged his existing jail stretch to December. The 14-K gang leader, best known as ‘Broken Tooth’ Koi – and his legal team – believe he should already be free to walk the streets. He was originally committed to prison at the turn of the millennium for 13 years and 10 months for money laundering, loan sharking and being a triad gang member and leader. The term was due to end on March 31, 2012, but the prison authorities told media in February that Mr Wan’s term would be extended until December due to another ninemonth sentence left over from 1999. The gang leader appealed to the court in May after his parole was rejected, claiming his jail term was wrongfully calculated. He said the nine-month jail term should have been served simultaneously and not consecutively. The nine-month sentence in 1999 was for violating a ban on casino entry in 1989, when he ruled over the city’s VIP gaming areas. But the verdict was suspended for two

years and it was not mentioned during his 2000 trial, according to legal experts. The appeal verdict released on June 28 said the applicant had already served his nine-month stretch for casino entry by April 1, 2000. The court document also confirms the jail term for ‘Broken Tooth’ will come to an end on December 2, 2012. The three judges ruled that Mr Wan should have appealed to the court about the miscalculation of

his sentence within 10 days of the original decision. Furthermore, they added it is not possible to file a joint appeal over the parole and the miscalculation. The judges denied Mr Wan’s fifth parole request, stressing the “negative impact” his crimes had brought to society. The applicant also “had not carried out any acts of great merit during his imprisonment to dilute that negative impact”, said the verdict.

Any person can apply for parole when two-thirds of his jail term have been completed, but it is “not automatically granted” to anyone, it added. ‘Broken Tooth’ Koi completed twothirds of his sentence in 2008 and applied for parole multiple times. He was arrested in 1998 under suspicion of being behind an alleged bomb attack against the then director of Judiciary Police, António Marques Baptista.

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business daily June 29, 2012

GREATER CHINA

Leung to face tough challenges InBrief John Tsang remains as HK financial secretary; Carrie Lam as chief secretary

June official PMI on down trend An official survey of China’s factories likely showed activity fell to sevenmonth lows in June, compounding market concerns that the world’s second-largest economy is stuck in a deeper and longer downturn than previously expected. The median forecast of economists polled by Reuters indicated that China’s official purchasing managers’ index (PMI) would slip to 49.8 in June, down from 50.4 in May and the lowest since November’s reading of 49. A PMI reading below 50 suggests factory activity contracted, while a number above 50 points to an expansion in business.

Sany Heavy may postpone HK listing China’s Sany Heavy Industry will postpone its planned Hong Kong listing if market conditions remain weak, the president of its parent company said yesterday. “If the market is not good, we will continue to delay the IPO,” Tang Xiuguo, Sany Group’s president, told reporters. Thomson Reuters publication IFR reported in May that Sany had filed for a US$2 billion Hong Kong listing, which was 40 percent lower than the US$3.3 billion the construction machinery maker intended to raise last year. Mr Tang said the Hong Kong offering would be equivalent to 10 percent of its enlarged capital.

Soho China to buy back shares Chinese property developer Soho China Ltd said in a filing with the Hong Kong stock exchange yesterday that it plans to buy back up to US$200 million worth of shares. The Beijingbased company, which focuses on commercial development in the Chinese capital and Shanghai, said it felt its shares were undervalued given the strength of its balance sheet. Unlike residential developers in China, they have seen little run-up so far this year, given the company’s focus on office and retail space. The stock has gained just 0.4 percent over the last three months, and has fallen 14.5 percent in the last year.

Emerging markets boost Lenovo sales Lenovo Group Ltd said its sales to first-time buyers in emerging markets including Brazil and India will drive growth that’s faster than the industry average. “We believe that we will grow at a significant premium to market, as we have done before,” Milko Van Duijl, Lenovo’s president for the Asia-Pacific and Latin America, said yesterday. Lenovo got 16 percent of its US$21.6 billion in total sales from emerging markets last year, 42 percent from mature markets including the U.S. and Europe and 42 percent from China, according to data compiled by Bloomberg.

eung Chun Ying, the property surveyor who was a surprise choice to be Hong Kong’s new leader, takes office on Sunday facing immediate demands to narrow a record wealth gap and come up with plans for universal suffrage. Mr Leung, 57, has pledged to raise the income of the poorest and boost Hong Kong’s housing supply. City officials said this month that its wealth gap, the biggest in Asia, widened to the worst since records started being kept in 1971. Hong Kong’s Gini coefficient, which measures income inequality, has gained from 0.43 in 1971 to 0.537 in 2011, according to government statistics. A reading of zero means income equality and one complete inequality. The average gross household income of the poorest 10 percent of Hong Kong’s population fell to HK$2,170 (US$280) in 2011 from HK$2,590 in 2001, according to a June 18 report from the Census and Statistics Department. The comparable income for the richest 10 percent advanced to HK$137,480 a month from HK$122,740. Public discontent in Hong Kong may draw up to 100,000 protesters at the start of Mr Leung’s term to push the government to address rising living costs and hold China to its promise to allow direct leadership elections in Hong Kong by 2017. The upcoming chief executive will need to address that pressure from below while meeting China’s demand for stability as

it goes through its own once-adecade leadership transition later this year. “He’s going to make a number of changes in livelihood issues,” said Martin Lee, the founding chairman of Hong Kong’s Democratic Party, which is questioning the legitimacy of Mr Leung’s election victory. “He will do it right away because he wants to endear himself to the Hong Kong people. These are the things that would make Hong Kong people less afraid of Communist rule.” The Democratic Party’s challenge to Mr Leung poses his first real crisis. Party Chairman Albert Ho said in an interview on Wednesday that Mr Leung misled the public about illegal structures built at his home, and is seeking to overturn the vote.

Leung disappointed Mr Leung, who founded his own property assessing company, said on June 25 he was “disappointed in himself” over the structures, which include a metal gate and a basement, and didn’t know they were illegal. The latest allegations may make it more difficult for Mr Leung to restore the public’s trust in the city’s leadership after his predecessor, Donald Tsang, acknowledged taking trips on yachts and planes owned by billionaire businessmen. He must also win over tycoons including Li Ka-shing, Asia’s richest man and founder of Cheung Kong Holdings

Ltd, who had supported a rival for the chief executive position. “He certainly has fences to mend on the business side, and he has to appeal to the public,” said Michael DeGolyer, a professor of political science at the Hong Kong Baptist University. “We may see a stronger attempt to get business and the public on the same side in terms of, for example, better integrating our economy with the rest of China.”

Tsang to continue The chief executive elected retained John Tsang as financial secretary in his government, as he seeks to ensure a stable transition amid global economic uncertainty. Carrie Lam, currently in charge of land policy, will be promoted to chief secretary, the second-highest position in the city’s government, Xinhua News Agency reported yesterday. Anthony Cheung, a government adviser who chairs a committee on subsidised homes, will take over housing policy, according to the report. John Tsang, 61, a bureaucrat for 30 years who took over as financial secretary in 2007, presided over an 80 percent increase in home prices during his term. He introduced a special 15 percent tax on property transactions in November 2010 to curb speculation. Hong Kong’s property prices rose this month to the highest level since the previous peak in 1997, according to data compiled by the Centaline Property Agency. Ms Lam, 55, will become the second

Local govt finances ‘unsustainable’: top auditor China has more than 1,600 county-level governments

he finances of China’s countylevel governments are unstable and unsustainable as the majority of their fiscal income comes from sources other than taxation, the nation’s top auditor said. About 60 percent of revenue raised last year by 54 counties investigated by the National Audit Office wasn’t derived from taxes, Liu Jiayi, the head of the agency, told a meeting of the legislature yesterday, according to a transcript of his speech on the audit office’s website. Total fiscal revenue at those counties rose 17 percent to 112 billion yuan (US$17.6 billion) last year, Mr Liu said. China shelved a plan earlier this week to allow local governments to sell bonds directly amid concern that the companies they set up to borrow money will default on some loans. Debt racked up by local governments and their entities stood at about 10.7 trillion yuan at the end of 2010, with 17 percent maturing this year and 11 percent next year,

according to an audit office report released last year. “The proportion of non-tax income in fiscal revenue is relatively high at county-level governments, pointing to relatively poor stability and sustainability,” Mr Liu said, without specifying the other sources of revenue. Non-tax revenue includes administrative fees, fines, lottery income, foreign aid and income from “the use of state-owned resources,” according to information on the Ministry of Finance website. Central government subsidies to county and township authorities last year were more than three times the level of 2005, Mr Liu said. At the same time, local governments are facing larger expenditure pressure, with mandatory growth targets for spending on areas including education, agriculture and science and technology, he said. China has more than 1,600 countylevel governments, according to the Ministry of Civil Affairs.

US$17.6 billion County-level governments’ total fiscal revenue in 2011 The central government should distribute more tax revenue to local authorities to help them meet rising city construction and public welfare costs, lawmakers said yesterday, according to a report in yesterday’s China Daily. Local governments have been forced to turn to non-tax income such as land sales and to increase debt

June 29, 2012 business daily | 9

GREATER CHINA

John Tsang will keep his post as Financial Secretary

Carrie Lam was promoted to Hong Kong’s Chief Secretary

Anthony Cheung will take over housing policy Leung Chun Ying takes office in Hong Kong on Sunday amid growing public discontent

woman to hold the city’s second most senior political appointment after Anson Chan, who was chief secretary before and after the handover from Britain in 1997. She is at present in charge of the city’s land policy and allowed the demolition of historic architecture in the city’s prime waterfront location to make way for reclamation in 2007. Mr Cheung, 59, will be in charge of implementing Leung’s campaign platform to increase land supply, build more public accommodation

and help middle-class families buy properties. Chinese President Hu Jintao will visit Hong Kong for the swearingin ceremony, and may announce measures boosting the city’s economy. Hong Kong may cut its 1 percent-to-3 percent growth forecast for the year should the euro-zone economy deteriorate, John Tsang said June 4. China will seek to strengthen ties with Hong Kong by promoting tie-ups between the two financial markets and increasing

cooperation in investments overseas and infrastructure, the Xinhua News Agency said yesterday, citing a statement from the State Council. The visit will be a stark contrast to Hu’s trip in 2007 to preside over Tsang’s swearing in, when

because of the imbalance in tax revenue and spending obligations with the central government, Jia Kang, director of the finance ministry’s Institute of Fiscal Science, was cited by the paper as saying. In a separate investigation, the audit office found some ministries misstated revenue or violated fiscal regulations, Mr Liu said.

The Ministry of Finance underreported 1.92 billion yuan of revenue in its budget implementation report to the legislature last year, he said. The National Development and Reform Commission ordered investments of 46.8 billion yuan last year in a manner that failed to strictly follow procedures, Mr Liu said. Bloomberg

Bloomberg

Golf International 2012 Corporate Social Responsibility is part of our companies genetic code. And yours? Business Citizenship at its best. Follow their example.

This place can be yours

Debt racked up by local governments, mostly for public constructions, stood at about 10.7 trillion yuan at the end of 2010

the city was on the way to 6.4 percent economic growth and the benchmark Hang Seng Index would rise 39 percent for the year. The index is up 4 percent so far in 2012.

This place can be yours

10 |

business daily June 29, 2012

asia

Fukushima firm vows restart of another damaged nuke plant Kashiwazaki Kariwa wrecked in 2007 earthquake Tsuyoshi Inajima and Yuji Okada

okyo Electric Power Co., owner of the crippled Fukushima reactors, is committed to restarting another nuclear plant next year that is the world’s largest and itself was damaged in a 2007 earthquake. Bringing the Kashiwazaki Kariwa power station online, even though it sets up the state-controlled utility for further conflicts with a nuclearweary public, is part of “Plan A,” president Naomi Hirose, 59, said in an interview. The plan refers to a 10-year business reconstruction that handed control of the power company known as Tepco to Japan’s government. “We have no choice right now but to do our best to carry out Plan A,” Mr Hirose said on June 18. “We don’t have a Plan B.”

Atomic lite Tepco’s decision runs counter to polls showing the majority of Japanese want lighter reliance on atomic power after meltdowns at its Fukushima Dai-Ichi reactors last year. The radiation release and cost to the public of as much as US$138 billion sparked anti-

nuclear sentiment across the world. Germany decided to shut all its plants, Italy scrapped a plan to build reactors, and China, with the largest atomic-building program, imposed a temporary halt on approving projects while it reviewed safety. In Japan, all 50 reactors, including the seven at Kashiwazaki Kariwa, have been required to pass so-called stress tests introduced to improve safety after the Fukushima disaster. Only two near the western city of Osaka have won permission to resume operations, leaving 48 offline. “Tepco’s plan is only wishful thinking” because no more reactors are likely to be approved this year, said Tomoko Murakami, a Tokyobased nuclear analyst at the Institute of Energy Economics, Japan. “Without the restart, there is not much hope to revive the company.”

Price increase Restarting the Kashiwazaki Kariwa nuclear plant and raising power prices are the key planks of the plan that includes a 1 trillion yen (US$12.6 billion) bailout. Delaying the restart or power price increases by more than a year may force the government to increase the bailout, Hirofumi Kawachi, a Tokyobased analyst at Mizuho Investors Securities Co. “We have to steadily carry out the first steps of the business plan,” said Mr Hirose, who was officially approved yesterday as the utility’s new president by shareholders and the board of directors.

Those first steps are unlikely to be as steady as Mr Hirose hopes for. Hirohiko Izumida, governor of Niigata prefecture, where the Kashiwazaki Kariwa plant is located, has said the Fukushima nuclear accident should be fully investigated before approving the restart of the world’s biggest atomic station. Tepco said restarting one of the reactors at Kashiwazaki Kariwa will save it about 78 billion yen a year.

Public objections Seventy-one percent of respondents to a Mainichi newspaper poll published on June 4 objected to a speedy restart of Kansai Electric Power Co.’s reactors at Ohi. The restart was approved on June 18. In a separate poll released June 5 by the Pew Research Center, 70 percent of Japanese said the country should reduce its reliance on atomic energy and 52 percent feared they or their families might have been exposed to radiation. “It is, and should be, possible for electricity utilities not to rely on nuclear power in the long term, 30 or 40 years later,” Kazuhiko Shimokobe, Tepco’s new chairman, told reporters in Tokyo yesterday. “But it’s difficult to think of Tepco and other utilities without nuclear power in the time span of five or 10 years while maintaining stable electricity supply.”

Abandoning nuclear Shareholders of Japan’s utilities including Tepco and Kansai Electric

rejected proposals to abandon or reduce their dependence on nuclear power generation at annual general

Malaysia palm oil co launches world’s 2nd biggest IPO Share price performance ‘not surprise’ – fund manager Yantoultra Ngui and Niluksi Koswanage

alaysian palm oil firm Felda Global surged 20 percent in its trading debut on Thursday, as investors cheered on the world’s second largest IPO

after Facebook’s botched float and the company pledged stronger profits in the coming months. The firm raised US$3.1 billion in Asia’s biggest initial public offering of this year, running against the global gloom in IPO markets and giving the government a political dividend ahead of what is likely to

be a closely fought election. Hundreds of thousands of plantation farmers and family members will reap a windfall through IPO-related handouts and discounted shares, helping Prime Minister Najib Razak ahead of the election he must call by next March. The strong debut beat market expectations of a first day pop of 10 percent and brushed aside, for now, a widely flagged 36 percent drop in Felda Global’s first-quarter profit to 223.2 million ringgit (US$70 million) that unnerved some investors. “The successful listing of Felda today signifies the endurance of our local stock exchange and proves the IPO market in Malaysia is powerful,” said Ahmad Maslan, a government minister in charge of Felda Global’s parent – the Federal Land Development Authority.

Trading up

Rich harvest – Malaysian palm oil industry

Felda Global shares traded as high as 5.46 ringgit, a 0.91 ringgit, or 20 percent, premium to the IPO reference price of 4.55 ringgit. The counter ended the day at 5.30 ringgit per share. “It’s not a surprise really,” Abdul

Jalil Abdul Rasheed, who helps manage US$3 billion as chief executive officer at Kuala Lumpurbased Aberdeen Islamic Asset Management told Reuters. “It’s a large index stock so most fund houses are investors because if they don’t, it affects their fund performance by not holding it,” he added. Meanwhile, Felda Global executives said second-quarter profits would be better – as long as crude palm oil prices stay around 3,000 ringgit – as the firm had factored the bulk of its fertiliser costs in the January to March 2012 period. Palm oil prices, which have more than tripled over the past decade, have held above 3,000 ringgit for much of 2012 on robust Asian food demand. That has helped Felda join investor watch lists of plantation firms dominated by Singapore’s Wilmar and Malaysia’s Sime Darby. On the downside, the burden of replanting ageing oil palms on the estates Felda manages – a key reason for its lower profits – may leave Felda Global with less to invest in its expansion plans from Southeast Asia to Africa. Reuters

June 29, 2012 business daily | 11

asia percent from July 1, the Nikkei newspaper reported on June 21. To gain public support, the turnaround plan calls for cutting costs by 3.65 trillion yen over 10 years. Tepco also pledged to reduce fuel costs as Japan increasingly relies on thermal power generation with reactors offline. “As we want to buy fuels at a low price even more than our customers do, every measure to lower our fuel costs should be taken. Shale gas is one possibility,” Mr Hirose said. “But shale gas won’t solve everything.” Efforts to join Japanese companies in buying natural gas assets overseas, including shale gas in the U.S. and Canada, may be hindered by a lack of funds, Mr Hirose said. Tepco’s bailout included a 1 trillion yen loan. Bloomberg

KEY POINTS Kashiwazaki Kariwa nuclear power station, Niigata Prefecture, is world’s biggest Damaged in 2007 earthquake Owned by Tokyo Electric Power Co., operator of Fukushima reactors crippled in 2011 earthquake Kashiwazaki Kariwa nuclear power plant in western Japan

meetings held across Japan yesterday. Nuclear power provided about 30 percent of Japan’s electricity prior to

the Fukushima disaster. The utility may be forced to scale down and delay power rate

increases due to criticism by a government panel assessing Tepco’s request to raise tariffs by 10.28

48 of 50 Japanese reactors currently offline

S. Korea cuts growth forecast

Thai output exceeds expectations

South Korea cut its growth estimate for this year and announced 8.5 trillion won (US$7.4 billion) of spending to support the economy as officials predict a protracted European debt crisis. Gross domestic product may expand 3.3 percent this year, less than a December estimate of 3.7 percent, the Finance Ministry said yesterday in a biannual economic review. Inflation may be 2.8 percent rather than an earlier prediction of 3.2 percent, according to the ministry. The central bank had already pared its estimate for the nation’s growth to 3.5 percent from 3.7 percent. The spending, including assistance for small businesses and low-income earners, is within this year’s budget,

Recovery quickens as effect of 2011 floods recedes

said Choi Sang Mok, a directorgeneral at the ministry in Gwacheon. The government also announced incentives to attract foreign-currency deposits to banks, a buffer against volatility in capital flows. “South Korea’s growth momentum is weak, but it is faring well given deteriorating external conditions,” Mr Choi said. Europe’s crisis “will continue for a long time,” he added. Depositors outside South Korea will be exempt from interest income tax on foreign-currency savings at the nation’s banks, the ministry said. Banks will pay reduced levies on their foreign-currency borrowings if they attract more foreign- currency deposits, it said.

Buyers’ market – S. Korea cuts growth outlook on European woes

Bloomberg

Thailand’s industrial output rose more than economists expected in May as supply constraints after last year’s floods eased, supporting the economic recovery. The industrial production index rose 5.53 percent from a year earlier after a revised 0.1 percent contraction in April, the Office of Industrial Economics said in Bangkok yesterday. The agency had earlier reported that industrial output increased 0.54 percent in April. Improving manufacturing and higher-than-estimated exports in May could indicate the recovery from the worst floods in almost 70 years is picking up pace. That outlook may be tempered by a growth slowdown in China and a deepening debt crisis in Europe, with the Thai central bank this month holding interest rates steady for a third time, saying risks to expansion outweighed inflationary pressure. “We will continue to see good growth in manufacturing and exports in the next few months as factories are catching up with pent-up demand after the floods,” Kampon Adireksombat, an economist at Tisco Securities Co. in Bangkok, said before the data release. “The spillover impact from the European

crisis may kick in later this year.” Exports rose 7.68 percent in May, boosted by higher auto and electronics demand, and Toyota Motor Thailand Co. said June 19 the nation’s vehicle sales more than doubled to a record in May on new models, tax incentives and a recovery in production. “The auto sector gave a big boost to overall manufacturing as companies sped up production of passenger cars and pick-ups to meet demand both for exports and the local market,” Sophon Pholprasit, the office’s director general, said at a briefing. “The electronics sector hasn’t fully recovered yet as many factories haven’t finished installing new machinery after the floods,” he said, adding that the slower recovery in electronics and harddisk drive output and Europe’s debt crisis may act as a drag on manufacturing growth. The office maintained a forecast for industrial production growth of as much as 7 percent this year, he said. The central bank this month cut its export growth forecast to about 8 percent from 9 percent, while maintaining its gross domestic product estimate at 6 percent. Bloomberg

12 |

business daily June 29, 2012

MARKETS Hang SENG INDEX NAME

PRICE

Day %

VOLUME

25.55

-1.351351

16228802

ALUMINUM CORP-H

3.22

-1.226994

9757674

BANK OF CHINA-H

2.87

-0.6920415

207153122

-1.574803

21997797

BANK EAST ASIA

26.75

-1.109057

1539219

BELLE INTERNATIO

12.94

-0.3081664

BOC HONG KONG HO

23.25

CATHAY PAC AIR

AIA GROUP LTD

NAME CHINA UNICOM HON CITIC PACIFIC

PRICE

Day %

VOLUME

9.5

-0.9384776

14098962

11.5

-0.1736111

PRICE

Day %

POWER ASSETS HOL

57.5

-0.605013

1998632

5766796

SANDS CHINA LTD

23.2

0.4329004

19624118

SINO LAND CO

11.28

-0.7042254

4081969

90.1

-0.2214839

3443197

7021715

SWIRE PACIFIC-A

88.9

1634801

0.2006018

6376363

TENCENT HOLDINGS

219.2

-2.836879

4121135

-0.1934236

5793361

TINGYI HLDG CO

19.44

-0.8163265

3843405

HANG SENG BK

105.4 -0.09478673

1643576

WANT WANT CHINA

9.08

0.2207506

8182000

HENDERSON LAND D

41.55

-0.1201923

2585647

WHARF HLDG

41.45

-1.073986

4438692

74.2

2.274294

1701673

HONG KG CHINA GS

16.24

-1.575758

6414810

HONG KONG EXCHNG

106.9

-2.106227

4139899

HSBC HLDGS PLC

68.15

-0.3654971

20350490

-1.664145

4889407

4.18

-1.647059

371402984

-0.4597701

2368664

14.9

1.915185

99607177

COSCO PAC LTD

9.97

0.9109312

14654527

ESPRIT HLDGS

9.99

-2.105263

13900724

HANG LUNG PROPER

25.8

12.14

-1.461039

2707023

CHEUNG KONG

92.6

-0.6437768

3540334

CHINA COAL ENE-H

6.09

-2.870813

26352747

CHINA CONST BA-H

VOLUME

SUN HUNG KAI PRO

64.95

CNOOC LTD

BANK OF COMMUN-H

NAME

CLP HLDGS LTD

HENGAN INTL

MOVERS

5.15

-1.529637

239230232

CHINA LIFE INS-H

19.32

-0.9230769

43258247

CHINA MERCHANT

22.5

-1.960784

2417114

CHINA MOBILE

83.15

-0.7164179

15749647

HUTCHISON WHAMPO

CHINA OVERSEAS

17.54

-2.229654

40984152

IND & COMM BK-H LI & FUNG LTD

14.46

10749971

HIGH

19305.74

MTR CORP

26.15

0.1915709

2362524

LOW

18850.47

2 19310

INDEX 19025.27

CHINA PETROLEU-H

6.73

-1.029412

44931982

CHINA RES ENTERP

22.3

-0.4464286

2422359

CHINA RES LAND

15.68

0.7712082

15700903

NEW WORLD DEV

8.86

-1.555556

10615243

CHINA RES POWER

15.54

0.2580645

9503419

52W (H) 22835.03

PETROCHINA CO-H

9.72

-0.7150153

82417528

CHINA SHENHUA-H

26.2

0.1912046

12454177

PING AN INSURA-H

59.7

-2.050861

10164808

(L) 16170.35

18850

26-Jun

28-Jun

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

23.95

-1.440329

6024808

CHINA PETROLEU-H

6.73

-1.029412

44931982

9757674

CHINA RAIL CN-H

6.23

-2.351097

-2.600473

14405100

CHINA RAIL GR-H

3.13

2.87

-0.6920415

207153122

CHINA SHENHUA-H CHINA TELECOM-H

PRICE

DAY %

VOLUME

AGRICULTURAL-H

2.98

-1.324503

74276334

AIR CHINA LTD-H

4.48

-1.103753

9613353

ALUMINUM CORP-H

3.22

-1.226994

ANHUI CONCH-H

20.6

BANK OF CHINA-H

NAME CHINA PACIFIC-H

PRICE

DAY %

VOLUME

11.78

-0.1694915

21108269

ZIJIN MINING-H

2.53

-0.7843137

19069313

11299690

ZOOMLION HEAVY-H

9.73

-1.518219

10450343

-4.573171

15381924

ZTE CORP-H

14.74

0.2721088

2483413

26.2

0.1912046

12454177

-1.574803

21997797

3.31

-2.071006

41111612

14.56

-1.621622

1541084

DONGFENG MOTOR-H

11.92

-1.324503

11785587

CHINA CITIC BK-H

3.82

-1.036269

22622979

GUANGZHOU AUTO-H

6.5

-2.108434

5703944

CHINA COAL ENE-H

6.09

-2.870813

26352747

HUANENG POWER-H

5.68

-0.6993007

23276439

CHINA COM CONS-H

6.66

-1.769912

17861226

IND & COMM BK-H

4.18

-1.647059

371402984

CHINA CONST BA-H

5.15

-1.529637

239230232

JIANGXI COPPER-H

16.58

-0.3605769

7307496

BANK OF COMMUN-H BYD CO LTD-H

3.36

-2.325581

8035097

PETROCHINA CO-H

9.72

-0.7150153

82417528

19.32

-0.9230769

43258247

PICC PROPERTY &

8.58

-2.5

14141642

CHINA LONGYUAN-H

4.98

0.6060606

17103336

PING AN INSURA-H

59.7

-2.050861

10164808

CHINA MERCH BK-H

14.14

-0.5625879

14205020

SHANDONG WEIG-H

8.46

-2.758621

2582355

CHINA COSCO HO-H CHINA LIFE INS-H

NAME YANZHOU COAL-H

MOVERS

1 9530

INDEX 9336.38 HIGH

9523.27

LOW

9314.44

CHINA MINSHENG-H

6.76

-1.457726

16984699

SINOPHARM-H

20.1

-3.365385

2876548

52W (H)12902.97

CHINA NATL BDG-H

8.27

-5.16055

82941038

TSINGTAO BREW-H

44.65

(L) 8058.58

10.76

-0.9208103

2931348

WEICHAI POWER-H

30.1

-6.084243

3745253

CHINA OILFIELD-H

9310

26-Jun

28-Jun

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.55

-0.390625

36529432

DONGFANG ELECT-A

17.63

-9.3107

36028017

SANY HEAVY INDUS

13.69

-0.363901

12930983

AIR CHINA LTD-A

19462055

EVERBRIG SEC -A

12.47

-0.08012821

8480921

SHANDONG GOLD-MI

32.8

-2.206321

6612659

ALUMINUM CORP-A

6.17

-1.594896

10227101

GD MIDEA HOLDING

18132086

SHANG PUDONG-A

8.01

-0.4968944

28876449

ANHUI CONCH-A

14.6

-1.351351

16537848

GD POWER DEVEL-A

2.7

-0.7352941

28726121

SHANGHAI ELECT-A

6.54

-0.9090909

36554699

SHANXI LU'AN -A

28.7

0.1745201

4942841

SHANXI SECURIT-A

20.79

0.9223301

12758894

SHANXI XINGHUA-A

NAME

4.61

-4.554865

13684705

20.45

-0.3411306

7824043

#N/A N/A

36.22

0.05524862

1801198

BANK OF BEIJIN-A

9.65

0.6256517

18709992

GEMDALE CORP-A

BANK OF CHINA-A

2.81

-0.3546099

15642166

GF SECURITIES-A

4.5

34444785

GREE ELECTRIC

4.31

-1.146789

15975196

GUANGHUI ENERG-A

13.24

-0.3762227

15189907

SHANXI XISHAN-A

15.4

1.049869

12342862

2992535

GUIZHOU PANJIA-A

26.06

0.8904375

5464868

SHENZ DVLP BK-A

14.73

-0.8748318

10084717

BANK OF COMMUN-A BAOSHAN IRON & S BYD CO LTD -A

20.4

-4.806346

CHINA CITIC BK-A

3.94

-0.7556675

14104865

HAITONG SECURI-A

9.37

33482240

SHENZEN OVERSE-A

6.27

-2.336449

20999031

CHINA CNR CORP-A

3.99

-0.9925558

17614996

HANGZHOU HIKVI-A

26.93

-0.5906238

5732182

SUNING APPLIAN-A

8.28

-0.6002401

28472163

CHINA COAL ENE-A

7.7

-2.160102

11069895

HEBEI IRON-A

2.74

-1.438849

21204867

TSINGTAO BREW-A

36.95

1762456

CHINA CONST BA-A

4.17

-0.9501188

13264949

HENAN SHUAN-A

62.88

-0.3170577

1113144

WEICHAI POWER-A

29.69

-1.000333

3392134

CHINA COSCO HO-A

4.6

-1.287554

5593308

HUATAI SECURIT-A

10.09

-1.272016

14488397

WULIANGYE YIBIN

31.99

-0.03125

10627295 4206485

CHINA CSSC HOL-A

22.69

0.7548845

7608981

HUAXIA BANK CO

9.24

-1.492537

19615940

XCMG CONSTRUCT-A

14.02

-0.1424501

CHINA EAST AIR-A

4.16

24845268

IND & COMM BK-A

3.92

-0.5076142

31671773

XIAMEN TUNGSTEN

41.94

-3.408567

8581964

CHINA EVERBRIG-A

2.81

26269328

INDUSTRIAL BAN-A

12.65

-0.7843137

20242953

YANGQUAN COAL -A

15.02

-0.9887937

10087553

17.62

0.05678592

10470279

INNER MONG BAO-A

37.95

-5.479452

69883113

YANTAI CHANGYU-A

68.49

-3.399154

1104448

20.65

-1.101533

17648468

YANZHOU COAL-A

19.28

-0.5159959

2576276

4.8

-4.38247

64930795

YUNNAN BAIYAO-A

58.24

2.427014

3232645

CHINA LIFE INS-A CHINA MERCH BK-A

10.82

-0.6427916

33836490

INNER MONG YIL-A

CHINA MERCHANT-A

11.32

-1.821336

12833176

INNER MONGOLIA-A

CHINA MERCHANT-A

24.4

-1.612903

9057502

JIANGSU HENGRU-A

28.7

2.026306

3386317

ZHONGJIN GOLD

21.3

-3.005464

7726960

CHINA MINSHENG-A

5.87

-0.676819

62350791

JIANGSU YANGHE-A

133.71

0.3075769

1298109

ZIJIN MINING-A

3.83

-1.033592

22247056

15.92

-2.211302

11029690

JIANGXI COPPER-A

23.31

-1.186944

3768051

ZOOMLION HEAVY-A

10.03

0.1998002

20848770

12.46

-0.7961783

4035329

ZTE CORP-A

14.36

-0.6228374

10787269

0.3344482

9328640

CHINA OILFIELD-A

21.24

1.335878

13130137

JINDUICHENG -A

6.29

-0.7886435

12696778

JIZHONG ENERGY-A

CHINA RAILWAY-A

4.43

-0.6726457

7307536

KANGMEI PHARMA-A

15.35

2.882038

42252595

CHINA RAILWAY-A

2.51

-2.33463

27222716

KWEICHOW MOUTA-A

236.14

-2.381149

2221341

41.15

1.932128

8473170 14207448

CHINA PACIFIC-A CHINA PETROLEU-A

CHINA SHENHUA-A CHINA SHIPBUIL-A CHINA SOUTHERN-A

22.05

-0.9878761

8456564

LUZHOU LAOJIAO-A

5.2

-0.952381

18958889

METALLURGICAL-A

2.47

-0.4032258

4.51

-1.956522

16967569

NARI TECHNOLOG-A

18.5

-1.016586

5684566

2.48

-1.195219

12543753 30723930

CHINA STATE -A

3.32

-0.5988024

26452364

NINGBO PORT CO-A

CHINA UNITED-A

3.69

-1.072386

47801555

PANGANG GROUP -A

6.32

-1.404056

8.98

-0.5537099

MOVERS

230

19 2470

INDEX 2425.729

CHINA VANKE CO-A

8.85

-1.117318

33598538

PETROCHINA CO-A

9789922

HIGH

2466.89

CHINA YANGTZE-A

6.8

0.7407407

9292425

PING AN INSURA-A

44.65

1.546509

25344470

LOW

2425.73

CITIC SECURITI-A

12.06

-2.584814

53930628

POLY REAL ESTA-A

11.3

-1.050788

19205822

CSR CORP LTD -A

4.61

-1.284797

12707167

QINGDAO HAIER-A

11.51

0.1740644

6869921

DAQIN RAILWAY -A

7.04

-1.262272

29901998

QINGHAI SALT-A

34.15

0.4411765

13702100

DATANG INTL PO-A

5.67

5393595

SAIC MOTOR-A

14.1

-0.7042254

8969893

NAME

PRICE DAY %

Volume

PRICE DAY %

Volume

ACER INC

30.3 -0.3289474

11154894

FORMOSA PLASTIC

ADVANCED SEMICON

24.1 -0.8230453

44645030

52W (H) 3140.102 (L) 2254.567

2420

26-Jun

28-Jun

FTSE TAIWAN 50 INDEX

ASIA CEMENT CORP

NAME

77.5

TAIWAN MOBILE CO

FOXCONN TECHNOLO

103.5 -0.9569378

5363706

TPK HOLDING CO L

36.95

0.9562842

4447550

FUBON FINANCIAL

29.05

-1.022147

8305530

270

-4.255319

7729040

HON HAI PRECISIO

87.9

1.618497

30590292

AU OPTRONICS COR

11.8 -0.8403361

30129986

HOTAI MOTOR CO

187

-2.604167

857105

375 -0.2659574

0.4175365

7584879

364.5

3.698435

10835855

TSMC

79.9

0.7566204

33113977

UNI-PRESIDENT

45.5 -0.2192982

6579197

UNITED MICROELEC

12.1 -0.8196721

24578849

-1.020408

9173766

7060919

WISTRON CORP

-1.773533

12292948

28.65 -0.3478261

12182609

HUA NAN FINANCIA

16.05

-0.619195

5948282

YUANTA FINANCIAL

13.2

0.7633588

15213398

CHANG HWA BANK

15.25 -0.3267974

7165430

LARGAN PRECISION

605

-1.143791

1897162

YULON MOTOR CO

51.8

0.1934236

4447615

CHENG SHIN RUBBE

72.9 -0.2735978

4372065

LITE-ON TECHNOLO

35.85

-2.976996

4163101

CHIMEI INNOLUX C

12.3

1.652893

22317203

MEDIATEK INC

272

8801416

CHINA DEVELOPMEN

6.91 -0.5755396

18812890

MEGA FINANCIAL H

21.5

-0.921659

22374345

CHINA STEEL CORP

27.6

-1.252236

14820403

NAN YA PLASTICS

52.5 -0.7561437

6864196

CHINATRUST FINAN

16.6 -0.8955224

23919578

PRESIDENT CHAIN

156 -0.3194888

CHUNGHWA TELECOM

92.8 -0.2150538

8534621

QUANTA COMPUTER

910309 8671371

0.9259259

8633448

SILICONWARE PREC

30.5

5979083

DELTA ELECT INC

89 -0.4474273

7350858

SINOPAC FINANCIA

10.85

-0.913242

11361735

FAR EASTERN NEW

0.4862237

5488344

SYNNEX TECH INTL

72.1

0.1388889

3957913

64.6 -0.9202454

4930312

TAIWAN CEMENT

35.2

0.8595989

7589802

16.95 -0.5865103

11503784

FAR EASTONE TELE FIRST FINANCIAL FORMOSA CHEM & F FORMOSA PETROCHE

27.25

HTC CORP

Volume

96.2

CATHAY FINANCIAL

COMPAL ELECTRON

194

PRICE DAY %

6514553

ASUSTEK COMPUTER CATCHER TECH

NAME

0.9114583

TAIWAN COOPERATI

17.1

-1.156069

4126146

0.656168

4016200

TAIWAN FERTILIZE

67.4

-0.295858

1983764

79 -0.6289308

1798450

TAIWAN GLASS IND

24.5

0.6160164

2060834

76.7

MOVERS

3 4960

INDEX 4923.04 HIGH

4959.35

LOW

4879.88

52W (H) 6026.51 (L) 4643.05

4870

25-Jun

27-Jun

June 29, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT

Max 18.94

Average 18.650

MELco croWN ENTErTAINMENT

Min 18.44

19.0

32.2

18.9

31.6

18.8

18.7

30.4

18.6

29.8

18.5

29.2

18.4

Last 18.58

MGM cHINA HoLDINGS

SANDS cHINA LTD

Max 32.1

Average 29.383

Min 29

Last 32.1

23.5

Min 23.15

23.1

Last 23.2

Min 11.6

Last 11.66

Average 14.016

18.0

14.1

17.9 17.8

17.6

Min 13.88

17.5

Last 13.88

Max 17.94

Average 17.644

Last 17.56

Min 17.5

CURRENCY EXCHANGE RATES

NAME

PRICE

WTI CRUDE FUTURE Aug12

80.03

-0.224410921

-19.28391326

111.3799973

77.55999756

BRENT CRUDE FUTR Aug12

92.85

-0.695187166

-11.83173488

124.6999969

88.48999786

GASOLINE RBOB FUT Jul12

260.81

-0.469393986

-3.926769072

332.1799994

246.4999914

GAS OIL FUT (ICE) Aug12

820.75

-0.333940498

-8.704115684

1046.5

801

2.833

1.250893495

-13.52258852

4.921000004

2.174999952

NATURAL GAS FUTR Aug12 HEATING OIL FUTR Jul12

DAY %

YTD %

(H) 52W

257.76

-0.620734858

-9.325641116

331.9299936

250.999999

1569.18

0.1168

0.2729

1921.18

1478.78

Silver Spot $/Oz

26.8706

0.2679

-3.4647

44.2175

26.085

Platinum Spot $/Oz

1402.98

-0.6318

0.6081

1915.75

1339.25

Palladium Spot $/Oz

577.19

-0.8009

-11.6771

848.37

537.54 1670.75

LME ALUMINUM 3MO ($)

1871

1.409214092

-7.376237624

2675.25

LME COPPER 3MO ($)

7405

0.62508493

-2.565789474

9905

6635

LME ZINC

1756

-1.126126126

-4.823848238

2539.5

1718.5

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep12

16250

-0.276158331

-13.14804917

25195

15980

15.025

0.099933378

-0.0332668

13.95499992

643

1.579778831

9.680170576

673.5

499

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 %

1.0068 1.554 0.9659 1.2435 79.38 7.9912 7.7586 6.3574 56.98 31.93 1.2783 29.922 42.386 9494 79.922 1.201 0.80022 7.898 9.937 98.71 1.03

YTD %

-0.0397 -0.5122 -0.4659 -0.4722 0.3023 0.0075 0.0039 0 0.272 -0.1566 -0.0939 -0.0067 0.0212 -0.0421 0.3303 0.0075 -0.0462 0.552 0.4891 0.7699 0

(H) 52W

-1.3811 -0.0193 -2.8781 -4.0583 -3.1116 0.1051 0.1134 -0.9815 -6.8708 -1.1901 1.4316 1.1931 3.4304 -4.4765 -1.8643 1.3147 4.1451 2.9906 4.1763 0.9624 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

2.75

1.102941

3.25

1.88

1346719

150.0999908

CROWN LTD

8.48

-1.165501

4.820764

9.29

7.45

2327293

26.03999901

19.23999977

AMAX HOLDINGS LT

0.075

-3.846154

-13.7931

0.119

0.06

6366000

102.25

64.61000061

BOC HONG KONG HO

23.25

-2.105263

26.3587

24.45

14.24

13900724

CENTURY LEGEND

0.238

-3.252033

3.478259

0.4

0.204

48000

1.351351

7.142859

4.34

2.3

51000

CHINA OVERSEAS

17.54

-2.229654

35.13098

18.48

9.99

40984152

CHINESE ESTATES

8.98

0.2232143

-28.16

13.68

8.3

83610

CHOW TAI FOOK JE

9.57

-2.446483

-31.25

15.16

8.55

14729400

EMPEROR ENTERTAI

1.36

-0.729927

22.52252

2.04

0.97

1700000

FUTURE BRIGHT

0.95

2.150538

126.1905

1.09

0.3

3126000

GALAXY ENTERTAIN

18.58

-0.9594883

30.47753

24.95

8.69

12670902 1643576

WHEAT FUTURE(CBT) Sep12

750.75

-0.06655574

6.982543641

853.5

606.75

SOYBEAN FUTURE Nov12

1414.25

0.159348442

17.43823957

1439.75

1115.75

COFFEE 'C' FUTURE Sep12

163.4

-0.879587504

-30.24546425

288.8500061

SUGAR #11 (WORLD) Oct12

20.92

-0.143198091

-8.366184845

COTTON NO.2 FUTR Dec12

69.1

1.677457328

-21.33424408

NAME

PRICE

CHEUK NANG HLDGS

World Stock MarketS - Indices

DAY % YTD %

VOLUME CRNCY

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12627.01

0.7366768

3.351326

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2875.32

0.7449038

10.37062

3134.17

2298.89

HANG SENG BK

105.4

-0.09478673

14.37873

125

84.4

FTSE 100 INDEX

5467.46

-1.0221

-1.881094

6084.08

4791.01

HOPEWELL HLDGS

21.85

-0.6818182

10.02014

24.903

18.56

3257577

DAX INDEX

6119.58

-1.756465

3.75071

7523.53

4965.8

HSBC HLDGS PLC

68.15

-0.3654971

15.50847

78.85

20350490

NIKKEI 225

8874.11

1.645039

4.952613

10255.15

8135.79

HUTCHISON TELE H

3.57

-1.381215

19.39799

3.71

2.35

2774975

HANG SENG INDEX

19025.27

-0.7909496

3.205307

22835.03

16170.35

LUK FOOK HLDGS I

15.66

-4.628502

-42.21402

46.15

14.7

12183000

CSI 300 INDEX

2425.729

-0.8771675

3.409883

3140.102

2254.567

MGM CHINA HOLDIN

TAIWAN TAIEX INDEX

7169.61

-0.1865513

1.379082

8842.17

6609.11

MIDLAND HOLDINGS NEPTUNE GROUP NEW WORLD DEV

KOSPI INDEX

1819.18

0.08417462

-0.3593029

2192.83

1644.11

S&P/ASX 200 INDEX

4044.837

0.04113105

-0.2890042

4657.4

3765.9

3887.575

-1.20187

1.715938

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1594.24

-0.4775609

4.149002

1611.5

1310.53

NZX ALL INDEX

760.845

0.4144093

4.25386

806.015

700.441

JAKARTA COMPOSITE INDEX

11.60

14.2

13.8 Max 14.12

Commodities

NAME

Average 11.654

13.9

23.2

CORN FUTURE

Max 11.72

17.7

23.3

METALS

28.6

14.0

23.4

ENERGY

11.65

WyNN MAcAu LTD

23.6

Average 23.454

11.70

SJM HoLDINGS LTD 23.7

Max 23.65

11.75

MELCO INTL DEVEL

5.99

-2.442997

3.812825

10.76

4.3

1007000

11.66

-0.1712329

21.55769

17.183

7.6

1010942

3.79

-2.820513

-4.148837

5.217

2.887

1244000

0.091

-2.150538

-18.01802

0.151

0.08

590000

8.86

-1.555556

41.53354

11.279

6.13

10615243

SANDS CHINA LTD

23.2

0.4329004

5.694757

33.05

14.9

19624118

SHUN HO RESOURCE

1.13

1.32

0.82

SHUN TAK HOLDING

2.63

-1.498127

2.769369

4.668

2.241

1506318

SJM HOLDINGS LTD

13.88

-1.280228

10.99084

20.711

10.079

6074939

SMARTONE TELECOM

14.96

-2.094241

11.30953

18.5

9.8

1574500

WYNN MACAU LTD

17.56

-0.2272727

-9.948718

27.48

14.807

7238405

ASIA ENTERTAINME

3.84

-0.7751938

-34.69388

10.8692

3.66

11482

45.98

0.5027322

16.22851

49.32

24.74

275790 1500

PHILIPPINES ALL SHARE IX

3450.93

0.05392758

13.32954

3518.96

2695.06

HSBC Dragon 300 Index Singapor

538.1

1.51

8.42

STOCK EXCH OF THAI INDEX

1171.32

0.4579838

14.23946

1247.72

843.69

BALLY TECHNOLOGI

HO CHI MINH STOCK INDEX

418.16

0.02870539

18.94752

492.44

332.28

BOC HONG KONG HO

25.14666

3.15

1.81

Laos Composite Index

998.81

1.833141

11.04551

1107.3

876.33

GALAXY ENTERTAIN

2.3525

0.106383

25.80214

3.24

1.08

500

INTL GAME TECH

15.38

1.921803

-10.5814

19.15

13.12

3549612

JONES LANG LASAL

68.03

0.5765819

11.05126

99.89

46.01

483920

LAS VEGAS SANDS

42.87

-0.2791347

0.3276397

62.09

36.08

8341101

MELCO CROWN-ADR

11.29

2.636364

17.35967

16.15

7.05

3939570

MGM CHINA HOLDIN

1.55

30.06704

2.2131

1.0025

1000

MGM RESORTS INTE

10.63

0.4725898

1.917543

16.05

7.4

5631674

SHUFFLE MASTER

13.18

-1.1994

12.45734

18.77

7.35

1926413

1.8

-1.639344

11.97005

2.6037

1.2624

4600

102.4

0.3528028

-7.321928

165.4931

95.82

1850103

Shanghai Shenzhen Composite index is listing the biggest companies by market capitalization. All data supplied by Bloomberg unless otherwise indicated.

SJM HOLDINGS LTD WYNN RESORTS LTD

AUD HKD

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business daily June 29, 2012

Opinion

The great American mirage

Stephen S. Roach

Member of the faculty at Yale University and former Chairman of Morgan Stanley Asia

n September 1998, during the depths of the Asian financial crisis, Alan Greenspan, the United States Federal Reserve’s chairman at the time, had a simple message: the US is not an oasis of prosperity in an otherwise struggling world. Greenspan’s point is even closer to the mark today than it was back then. Yes, the US economy has been on a weak recovery trajectory over the past three years. But at least it’s a recovery, claim many – and therefore a source of ongoing resilience in an otherwise struggling developed world. Unlike the Great Recession of 2008-2009, today there is widespread hope that America has the capacity to stay the course and provide a backstop for the rest of the world in the midst of the euro crisis. Think again. Since the first quarter of 2009, when the US economy was bottoming out after its worst postwar recession, exports have accounted for fully 41 percent of the subsequent rebound. That’s right: with the American consumer on ice in the aftermath of the biggest consumption binge in history, the US economy has drawn its sustenance disproportionately from foreign markets. With those markets now in trouble, the US could be quick to follow. Three regions have collectively accounted for 83 percent of America’s export-led growth impetus over the past three years – Asia, Latin America, and Europe. Not surprisingly, Asia led the way, accounting for 33 percent of the total US export surge over the past three years. The biggest source of this increase came from the 15-percentage-point contribution of Greater China (the People’s Republic, Taiwan, and Hong Kong). Needless to say, China’s unfolding slowdown – even under the soft-landing scenario that I still believe is most credible – is taking a major toll on the largest source of America’s export revival. The remainder of the Asian-led US export impetus is spread out, led by South Korea, Japan, and Taiwan – all export-led economies themselves and all heavily dependent on a slowing China. Latin America provided the second-largest source of

America’s export resurgence, accounting for another 28% of the total gains in US foreign sales over the past three years. Brazil and Mexico collectively accounted for 19 percentage points of that increase. Growth in both economies is now slowing significantly, especially in Brazil. But, given the close linkages between Mexican production and US consumption (which is now sputtering again), any resilience in the Mexican economy could be short-lived. Finally, there is the sad case of Europe, which has ac-

Today’s global downturn can hardly be dismissed as unimportant for the US or anyone else. In an era of globalisation, there are no innocent bystanders

counted for 21 percent of the cumulative growth in US exports over the past three years. Here, the US Commerce Department statistics are not as helpful in pinpointing the source of the impetus, because only a partial country list is published. What we do know is that the United Kingdom, Germany, and France – the so-called core economies – collectively accounted for just 3.5 percent of total US export growth since early 2009, with the UK grabbing the bulk of that increase. That suggests that most of America’s European export gain was concentrated in the region’s so-called peripheral economies. And that is clearly a serious problem. Forecasts are always hazardous, but some “what-if” scenarios shed considerable light on what all of this means for the world’s largest economy. Since

the second quarter of 2009, US annualized real GDP growth has averaged 2.4 percent. With roughly 40 percent of that increase attributable to exports, that means the remainder of the economy has grown at an anemic 1.4 percent pace. Under a flat-line export scenario, with no rise in US exports, and if everything else remains the same (always a heroic assumption), overall real GDP growth would converge on that 1.4 percent bogey. That is a weak growth trajectory by any standard – likely to result in rising unemployment and further deterioration in consumer confidence. Alternatively, in a moderate export-downturn scenario, with real exports falling by 5 percent over a four-quarter period, real GDP growth could slip below the 1 percent “stall speed” threshold – leaving the US economy vulnerable to a

recessionary relapse. By way of reference, the assumption of a 5 percent export downturn pales in comparison with the precipitous 13.6 percent decline in real exports that occurred in 2008-2009. As such, this “what if” is a cautiously optimistic assessment of the downside risks stemming from weak external demand. All of this underscores one of the more obvious, yet overlooked, implications of an increasingly interdependent world: we are all in it together. The euro crisis is a serious shock, and is now producing ripple effects around the world. Europe is export-led China’s largest source of external demand; as China goes, so goes the rest of Chinacentric Asia; and, from there, the ripples reach the shores of an increasingly export-dependent US economy. As recent weakness in employment and

retail sales suggests, that may already be happening. Greenspan’s warning in 1998 came at a time when US exports accounted for only about 10.5 percent of GDP. Today, that share stands at a record-high 14 percent, as post-crisis America has made a big bet on an export-led revival. The current global slowdown is not on a par with what occurred in the late 1990’s or the more wrenching shocks of 3-4 years ago – at least not yet. But today’s global downturn can hardly be dismissed as unimportant for the US or anyone else. In an era of globalisation, there are no innocent bystanders. There are certainly no oases of prosperity in the face of yet another major shock in the global economy. America’s growth mirage is an important case in point. © Project Syndicate

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June 29, 2012 business daily | 15

OPINION

Will Angela Merkel save wires Europe’s banks? Business Leading reports from Asia’s best business newspapers

Mark Whitehouse Paula Dwyer Bloomberg View editors

Taipei Times Bank of China may offer yuan settlement services to Taiwanese firms with operations in China once Taipei and Beijing work out a mechanism, the lender’s president Li Lihui was quoted as saying on Wednesday. Bank of China was the first Chinese lender to set up a branch in Taiwan. “As a commercial bank, we hope the two sides can promptly set up a currency settlement mechanism,” Mr Li was quoted as saying. “We are the main [yuan] settlement bank in Hong Kong, Macau and Malaysia and we hope to extend the services to Taipei once regulatory barriers are removed,” he said.

Korea Herald About 600 South Korean companies may face financial difficulties if Iran halts all Korean imports in protest of Seoul’s decision to ban Iranian oil following European Union sanctions, analysts said on Wednesday. The Iranian Embassy to Seoul has said the country may stop Korean imports if Seoul imposes the import ban on Iranian oil from July 1. More than 600 out of the 2,500 local firms see the dependency on Iran in their respective exports exceed 50 percent, according to the Ministry of Knowledge Economy.

Jakarta Globe Indonesia is projecting a 50 percent increase in its annual domestic airplane passengers by 2015, from the current figure of 60 million to 90 million. Emirsyah Satar, the president director of national flag carrier Garuda Indonesia, said the growth was in line with a moving global centre of gravity that was shifting to highgrowth Asia and the Pacific. “We really need help and support from airports to improve profitability,” he was quoted as saying. Mr Satar forecasts the number to reach 90 million by 2015, with international passengers accounting for another 30 million flyers.

Business Inquirer Banks in the Philippines and other emerging economies in Asia now have credit profiles as good as, if not superior to, those in the U.S. and Europe, according to Moody’s. “The ratings gap that had long separated banks in Asia from their Western peers has now essentially been closed because the credit quality of Asian banks throughout the financial crisis has resulted in a comparative improvement in their ratings,” JeanFrancois Tremblay, an associate managing director for Moody’s, said in a statement. Moody’s said Asian banks have shown resiliency and enjoy sufficient liquidity.

urope’s leaders have raised hopes that, in their current meeting in Brussels, they will agree on a banking union aimed at severing the link between the health of the euro area’s financial institutions and the solvency of its governments. The plan’s success or failure, as with so much else in the currency union today, will depend on one person: German Chancellor Angela Merkel. The euro area’s banking system has long suffered from a fundamental imbalance. Most countries have large banks whose failure would have repercussions for the entire currency union, yet the responsibility for overseeing the banks, guaranteeing their deposits and bailing them out falls on national governments. The burden can be unbearable given the size of banking assets in some countries — about two times gross domestic product in

No currency union can work unless its members agree to share the risks of financial and economic shocks. Refusing to do so is tantamount to rejecting the euro

Germany, and three times in France and Spain. The current crisis has made the pitfalls painfully evident. Spain’s borrowing costs are soaring, with the 10-year bond yield approaching 7 percent, as investors worry that the government can’t afford the 100 billion euros or more needed to shore up its banks. Depositors are fleeing Greece, Italy, Portugal and Spain amid concern that governments can’t or won’t guarantee repayment in euros. Regulators are afraid to run credible stress tests because it’s not clear how the capital needs they identify would be addressed.

Quid pro quo The solution — laid out this week in a proposal by European Union President Herman Van Rompuy — involves requiring euro-area members to give up some sovereignty in return for centralised support. A European entity, probably the European Central Bank, would take over the power to supervise all banks in the union, possibly with the help of national regulators. A separate entity would gain the authority to dismantle banks forcibly when they get into serious trouble. The quid pro quo would be a collective promise, backed by all euro-area governments, to insure deposits and recapitalise banks anywhere in the union. Speed is crucial. With each passing day, the paralysis of the euro area’s financial sector is taking a toll on Europe’s most vulnerable economies,

further worsening the plight of both the banks and the governments. At some point, high borrowing costs and shrinking output will render large governments such as Italy and Spain insolvent. If an agreement in principle on banking union could be reached quickly, Europe could move ahead with the kind of stress tests needed to draw a line under banks’ losses, recapitalise and move on. Problem is, Merkel agrees to only the supervisory part of the banking plan. She rejects any form of risk-sharing, be it collective euro-area backing for banks and their depositors, joint euro bonds, fiscal transfers or direct ECB debt purchases that would reduce the borrowing costs of struggling governments. “I’m concerned that once again the discussion will be far too much about all kinds of ideas for joint liability and far too little about improved

oversight,” she said at a conference this week. There are ways to mitigate Merkel’s concerns. Imposing losses on the creditors of troubled banks, making banks pay for deposit insurance and requiring national governments to contribute to any recapitalisations can all reduce perverse incentives and lessen the likelihood that euro-area members will have to pay for one another’s bailouts. We hope some compromise can be reached. Ultimately, the question of joint liability is a political one that goes far beyond banking. No currency union consisting of economies and cultures as different as, say, Germany and Spain can work unless its members agree to share the risks of financial and economic shocks. Refusing to do so is tantamount to rejecting the euro. So what will it be, Frau Merkel? © Project Syndicate

16 |

business daily June 28, 2012

CLOSING Petronas buys Canadian gas producer

Myanmar eyes new Yangon airport

Malaysian state oil company Petronas will buy joint venture partner Progress Energy Resources Corp for C$4.80 billion (US$4.67 billion) to gain full ownership of large swathes of natural gas fields in Canada. Petronas will pay C$20.45 per share, a premium of 77 percent to Progress Energy’s Wednesday close. Including debt, the transaction is valued at about C$5.5 billion, the companies said in a statement yesterday. Calgary-based Progress owns unconventional shale fields in northeast British Columbia and northwest Alberta. Petronas last year bought a stake in a shale gas field in Canada for US$1.1 billion from Progress Energy.

Myanmar is looking for investors to develop a second international airport for the commercial capital, Yangon, state media said yesterday. Yangon’s existing airport may soon be struggling to cope with an influx of tourists and business travellers as a 15-monthold government opens up the country to the outside world. “The Ministry of Transport would like to cooperate with local and foreign investors for the development of Hanthawady International Airport, and for upgrading and modernising some other domestic airports,” the Air Transport directorate said in an announcement. Hanthawady would be built on a disused airfield near Bago town, about 80 km north of Yangon.

China to make further steps to free financial sector Shenzhen to test yuan convertibility, exchanges to cooperate

hina took another step towards a more freely traded yuan yesterday, announcing plans for a test zone for the currency’s convertibility in Shenzhen, the same city that first tried out China’s broader economic reforms some 30 years ago. An experiment to boost two-way yuan flows between Hong Kong and a US$45 billion “mini-Hong Kong” economic zone planned just across the border will put in place another small but key mechanism to eventually open

up China’s tightly controlled capital account, economists involved in the plan said. The baby step marks further progress in China’s cautious but broad drive for financial reform, which aims to make the yuan freely convertible as early as 2015 and, further down the road, a global currency on par with the dollar. The Qianhai Economic Zone is still a barren stretch of reclaimed land not due for completion until 2020, but it adds to a growing list of

initiatives driven by Beijing’s stated goal of moving towards capital account convertibility. A news conference by China’s economic planning agency in Hong Kong on today is expected to give more details of the project. The plan would build on other efforts to increase yuan use overseas, including a trade settlement programme that has contributed to a thriving offshore yuan market in Hong Kong. By creating a specific corner of China buffered from the rest of the mainland to test out reforms, Beijing would be following a model it has used in the past, including the creation of Shenzhen as the country’s first special economic zone in 1980 to try out broader reforms that were later rolled out across the country.

Exchanges cooperation Hong Kong Exchanges Clearing Ltd, adding to this week’s announcements on closer Hong Kong ties with the mainland, said yesterday that it was forming a joint venture with the Shanghai and Shenzhen stock exchanges to develop financial products and services.

After almost a year of talks, the HKEx announced the collaboration with the Shanghai Stock Exchange and the Shenzhen Stock Exchange - just days after it made its first overseas move by agreeing to buy the London Metal Exchange for US$2.2 billion. The three Chinese exchanges began discussing closer ties at a time of feverish global stock market consolidation, though few of those deals managed to get past regulatory hurdles. One challenge global investors face when tracking Chinese markets is having to keep check on multiple benchmark indexes. The new venture plans to launch indexes that better represent the crossborder nature of the market and will be responsible for licensing indexlinked products such as ETFs. Despite rapid economic growth, Chinese stock exchanges have a long way to go before establishing a global presence. The total value of shares traded on the three stock exchanges last year was US$7.9 trillion, less than half the volume on the New York Stock Exchange, according to the World Federation of Exchanges. John Tseng, Financial Secretary of Hong Kong, told a briefing yesterday that the joint venture was “a new landmark in financial cooperation between mainland China and Hong Kong”. The venture partners will have equal shares in the company, each committing HK$100 million (US$12.9 million) as initial paidup capital. Reuters

European summit starting under the shadow of German stance Merke; under domestic pressure to stand firm

U leaders arrived for a Brussels summit yesterday more openly divided than at any time since the euro crisis began, with Germany’s Chancellor Angela Merkel showing no sign of relenting in her refusal to back other countries’ debts. Merkel is being urged at home to hang tough and reject all efforts to make Germany underwrite European partners’ borrowing or banks, while her European Union partners say that may be the only way to save the single currency. “Nein! No! Non!” shouted a headline splashed across the front page of the normally sober German business daily Handelsblatt, with a commentary by its editor-in-chief saying Ms Merkel must remain firm at the two-day summit. Spain and Italy, the latest euro zone countries in financial markets’ firing line, are pleading for emergency

action to bring down their spiralling borrowing costs before they are forced out of the bond market. They want the euro zone’s rescue funds or the European Central Bank to intervene fast. European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso proposed in a report creating a euro zone treasury to issue joint bonds in the medium-term, and establishing a banking union with central supervision, a joint deposit guarantee and a resolution fund. Merkel insists that fundamental reforms to give European Union authorities power to override national budget and economic policies must come before any further shared liability. Hans-Werner Sinn, head of the Ifo economic research institute and a leading Eurosceptic, said in a working

The Chancellor is still saying no!

paper: “Had we known 20 years ago what difficulties the euro zone would be mired in today, and what pressures we would face, Germany would never in its life have agreed to the euro, at least not with all those who are members today.”

The meeting is the 20th summit of leaders of the 27 EU states since the crisis erupted in early 2010, giving them a reputation for failing to match their talk with the sort of decisive action needed to resolve it. Reuters