Year I - Number 47 - Tuesday June 5, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00
Antenna firms drop encrypted channels
Hengqin ‘needs coordination’
Macau remembers Tiananmen
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Four Seasons Apartments
Govt’s ‘no Cotai homes’ policy falling flat T
he government may be bowing to the inevitable if it allows Las Vegas Sands Corp to sell apartments at Four Seasons on Cotai – as part of a settlement in an unconnected lawsuit – sources have told Business Daily. The authorities had no legal grounds under the terms of LVS’s Four Seasons’ land concession to prevent such sales they suggest. Rather, the roadblock was a political one, they add. The city didn’t want to set a precedent that land it had offered cheaply to casino operators – to encourage
them to take the commercial risk of building integrated resorts in a previously untried China market – could also be sold on for additional profit as residential development long after the gaming resort business case was proven. The government was – say the sources – taken by surprise when LVS used its land concession agreement for an apartment hotel at Four Seasons and stretched it to include flat sales – as the company was commercially and legally entitled to try and do. The sources say it’s an interesting
example of Macau’s traditional handshake deal culture bumping up against the ‘fine print’ contractual approach in other places. And it leaves the government with a new political problem. If LVS is allowed to sell apartments on Cotai, it will be difficult to stop other casino operators from doing so – unless the government relies on appealing to their goodwill. It could also lead to local non-gaming companies arguing they too should be given the right to land on Cotai in order to build apartments.
The Legislative Assembly will vote today on the two bills to reform the political system, after a standing committee discussed them for fewer than three hours. Unlike conventional bills, they must receive the approval of at least twothirds of all members, which means 20 votes, if they are to be passed. The three New Macau Association legislators – Au Kam San, Paul Chan Wai Chi and Ng Kuok Cheong – have promised to vote against the government proposals for reform, as has a fourth legislator, José Pereira Coutinho, the president of the Macau Civil Servants’ Association. The New Macau Association has said it intends to unfurl giant banners at the Rua do Campo pedestrian overpass, the Iao Hon garden and near the assembly building to demonstrate its opposition to the government proposals for reform. The bills are likely to be passed, however, and then sent to Chief Executive Fernando Chui Sai On for his assent. After that they would be sent to the Standing Committee of the National People’s Congress for final approval. The government is proposing to add two directly elected and two indirectly elected seats to the assembly, and to increase the number of members of the committee that elects the chief executive to 400 from 300. V.Q.
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HANG SENG INDEX
More affordable flats than expected
Political reform vote today
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Housing Bureau director Tam Kuong Man yesterday revealed that the government’s 19,000-apartments programme for modest-income families would have a ratio of about 10 social flats to nine affordable ones. He expects the supply to be enough for the 14,500 households on the waiting lists. Meanwhile applicants will start choosing their homes at the Seac Pai Van public housing project on June 12.
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More room to grow for budget hotels
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HSI - Movers
A new two-star hotel opened during the weekend, while another one added a further 24 rooms, but budget hotels still account for just 1,400 rooms, far from the 14,000 available in five-star hotels. Despite good performance, budget hotels face strong competition from larger businesses and the challenges of rising rents, government bureaucracy and labour shortages.
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La Scala back and soon: legislators
%Day
POWER ASSETS HOL
0.55
BANK EAST ASIA
-0.19
WANT WANT CHINA
-0.22
HONG KG CHINA GS
-0.22
CLP HLDGS LTD
0.60
HONG KONG EXCHNG
-4.78
CHINA COAL ENE-H
-4.84
CHINA LIFE INS-H
-4.91
PING AN INSURA-H
-5.49
CHINA UNICOM HON
-5.64
Source: Bloomberg
The government should take back all plots given to the developer of La Scala as soon as possible, a few legislators say, due to its links to the corruption scandal involving former secretary Ao Man Long. But a proposal by the pan-democrat legislators to have a Legislative Assembly probe last year’s land grant earned a much cooler response.
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macau
Public housing rent-sale ratio 10:9 Photo by Manuel Cardoso
The Housing Bureau director has confirmed that there will be 10 homes in public housing for rent for every nine for sale Tony Lai
tony.lai@macaubusinessdaily.com
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here will be slightly more homes for rent than for sale among the 19,000 flats the government is building, by a ratio of 10 to nine, Housing Bureau director Tam Kuong Man told reporters yesterday. Mr Tam said there would be 10,064 homes for rent and 9,196 for sale at subsidised prices. He said 19,260 homes should be ready this year. He said that in deciding on this ratio the government had considered “the social-economic development and the actual condition” of the city, and the need to ensure that low-income families had priority. He is confident that public housing supply will meet demand because on May 15 there were 7,406 applicants on the waiting list for subsidised housing and 7,057 applicants on the waiting
list for housing to rent. Most housing for rent will be on the peninsula, in Ilha Verde, Fai Chi Kei, Mong Há and Toi San. But one block of 4,672 homes in Seac Pai Van, on Coloane, will be for rent. Subsidised homes will be more widely distributed in Ilha Verde, the northern district, Taipa and Seac Pai Van. Mr Tam said 3,843 public housing flats had been completed and that the remaining flats would be finished this year. He said the government had enough land to build about 6,300 more homes and that bids for the construction of 3,850 could be invited this year. Mr Tam was speaking during a visit to the Seac Pai Van site, where 8,649 flats are being built, 3,977 of them for sale. The three Seac Pai Van blocks
10,064 Public housing homes to rent
9,196 Public housing homes to buy
will have over 5,200 flats with one bedroom, about 2,700 with two and some 600 with three. Mr Tam said one block consisting of eight buildings was almost finished, with just some interior work still going on, and that applicants could start choosing their homes there on June 12. He expects most of the construction of another block to be completed in July and hopes it will be ready for applicants to move in the first quarter of next year. Mr Tam said the government had reserved space for a bus stop near the new housing complex and that the Transport Bureau would introduce bus services to the peninsula and Taipa. The development will include community facilities such as a school, a market, shops, a health centre and accommodation for the elderly.
New Macau wants e-Research probe Pan-democrats urge an investigation of high-priced surveys that a company was commissioned to conduct without a public tender Cherry Lee
ceci-lqq@macaubusinessdaily.com
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he New Macau Association called yesterday for the Audit Commission to look into why e-Research & Solutions was commissioned to conduct several expensive surveys. “Most projects are granted to e-Research & Solutions without a public tender,” said Jason Chao, president of the New Macau Association. “Even though there was a public tender for [surveys conducted for] the revision of the press law and the Audiovisual Broadcasting Act, in the end the highest bid was selected instead of the lowest bid,” Mr Chao said. The Government Information Bureau spent over 3.5 million patacas (US$444,000) on opinion polls on amendments to the two laws. Mr Chao said the dean of the
Hong Kong Baptist University’s School of Communication, Zhao Xinshu, who had been involved in the polls, had resigned amid rumours of political pressure on him. But even after Mr Zhao’s resignation, “the company was still directly granted several research projects by the government,” Mr Chao said. He said the New Macau Association had spent only HK$700,000 (US$90,207), on an opinion survey conducted by the University of Hong Kong’s public opinion programme in April. E-Research & Solutions is known to have been awarded two public contracts this year, one by TDM and the other by the Social Affairs Bureau, but Mr Chao suspects that more contracts are being “secretly granted” to the company.
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MACAU
Photo by Manuel Cardoso
Sands ‘always had’ right to apartment sales on Cotai
Government roadblock political, not legal – sources Associate Editor
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as Vegas Sands Corp’s land concession for Four Seasons has since October 2008 given it the right to sell apartments there, sources have told Business Daily. The objection to flat sales has been political not legal they say. The Macau government was – they say – taken by surprise when LVS took its land concession agreement for an apartment hotel on the site and stretched it to include flat sales. Sources say it’s an interesting example of Macau’s traditional handshake deal culture bumping up against the ‘fine print’ contractual approach of Western business. And it leaves the government with a political problem. Land that was offered to casino companies cheaply to allow them to take the commercial risk of building integrated resorts in a previously untried Chinese market could now make them much more money than the government ever envisaged. And if LVS can do that, it will be hard to stop other casino operators from following suit. The right to sell apartments at the Four Seasons on Cotai is likely to be worth between US$600 million and US$1 billion net to Las Vegas Sands Corp. according to a number of estimates. That amount is arrived at after deducting construction and pre-opening costs for the Four Seasons apartment tower of US$115 million – a figure mentioned in LVS’s annual report for 2010. A spokesman for Venetian Macau Ltd, a local unit of the company, declined to comment on Business Daily’s story yesterday that LVS would be allowed to sell
residential units in the Four Seasons in return for giving up a lawsuit against the government. Sands China Ltd, a Hong Konglisted unit of LVS, said on Friday that two of its subsidiaries had withdrawn a court appeal against the Macau government’s December 2010 decision to “not approve” LVS’s land concession for Parcels 7 and 8 on Cotai. Sources told Business Daily that in return for dropping the case, SCL was being given an extension on its completion timetable for Cotai Parcel 3 and the right to sell apartments at Four Seasons Macao – something the company has coveted ever since the rest of the Four Seasons development was completed in October 2008.
Land concession In October 2008 the Macau government amended LVS’s Cotai land concession to separate the retail and hotel portions of the Four Seasons Macao parcel and allowed the company to subdivide the parcel into four separate components, consisting of retail, hotel-casino, Four Seasons Apartments and parking areas, the company said in its 2011 annual report. In return it paid an additional land premium equivalent to US$17.8 million it added in the filing. That’s a modest amount compared to the revenue LVS can expect to generate from the property in the lifetime of the casino concession. In 2011 the Four Seasons Macao property on its own generated casino revenues of US$583.5 million according to the annual report. The roadblock to LVS being able to sell apartments at the Four Seasons has been political not legal, an industry source told Business Daily.
US$899 million Possible revenue from the sale apartment space at the Four Seasons, according to Union Gaming Research
“Technically speaking, Venetian doesn’t need to go to the government and obtain an approval to do this [apartment sales], because they won’t be changing the land concession. That already foresees an apartment hotel on that parcel,” the source said. “Where the government can stop things – and what they have been doing, is in preventing the transfer of the apartment hotel to a different legal entity – i.e. a company in which shares to right of use can be sold – the kind of cooperative system used for some property sales in New York City.” The source added: “Apartment sales on Cotai is a political issue for two reasons. One was because of the price of the land. It was really cheap land for casino, hotel, entertainment and retail use only – it was never foreseen as being for residential use. The second reason was that the government knew that a lot of local developers would love to sell apartments on Cotai. So you couldn’t give that right to the
foreign [casino] companies that were already benefiting from the land concession at such a low price, without risking having all the local developers coming to the government and saying ‘Give us that right too’. A deal for Sands to sell apartments at Four Seasons will open up that door and create a huge political debate. Local developers will say ‘I also want to sell apartments there’.”
Stretched concept So if the government knew all that, why did it agree to amend the land concession for Four Seasons Macao to include apartments? “That’s because the government thought it was agreeing to a ‘real’ apartment hotel where all the property is only rented out, without any title being sold on,” added another person. “What LVS did was take that concept and stretch it as far as they could – which they have the legal and commercial right to try to do.” LVS said in a 10-K filing to the U.S. Securities and Exchange Commission in December 2010 that it intended to market “one million square feet of Four Seasons-serviced and -branded luxury apart-hotel units and common areas”. Vector Strategy Group said in an April 2010 report on LVS that the space could net between US$600 million to US$1 billion in sales. Union Gaming Research and banking giant Citi both estimated in separate reports a saleable area of 780,000 sq. ft. Union Gaming said in a note yesterday that if LVS were able to sell apartment space at the Four Seasons it would in likelihood produce net revenue of up to US$899 million.
Losing start in Sands’ Hang Seng launch
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ands China Ltd’s first day on the Hang Seng Index was a bumpy ride – in a southerly direction. Sands China dropped 4.8 percent to HK$25.05 at the close of Hong Kong trading. But it wasn’t alone. There was a general decline in Hong Kong-traded casino stocks amid concern slowing economic growth in China could hurt revenue growth in Macau’s gambling hub. Galaxy Entertainment Group Ltd slid 3.1 percent and Wynn Macau Ltd lost 4.2 percent.
The benchmark Hang Seng Index declined 2 percent. “The gaming sector is attractive in the longer term, but we are waiting for a better entry point,” said Gabriel Chan, a Hong Kongbased analyst at Credit Suisse Group AG. MGM China Holdings Ltd fell 5.3 percent to HK$11.10, SJM Holdings Ltd dropped 4.5 percent and Melco Crown Entertainment Ltd slumped 6.1 percent at the close of Hong Kong trading.
Sands China Ltd (1928 HK), share price
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macau Clarification ‘Govt may take back La Scala plot’ In Friday’s edition, we published an article titled ‘Govt may take back La Scala plot’, which said legal adviser António Baguinho invoked the ’procedural efficiency principle’ that was later used to uphold the tender granting the La Scala plot to Moon Ocean, one of the cases involved in the third trial of former secretary Ao Man Long. However, Mr Baguinho was not a legal adviser for the evaluation committee nor did he issue any legal opinion on the La Scala deal. Mr Baguinho was mentioned in an earlier court hearing on April 18 by the former Infrastructure Development Bureau official André Sales Ritchie, as being their external legal advisor. The same witness also said that the decision to uphold the tender had been “an immediate call” by the evaluation committee. During the delivery of the judgment at the Court of Final Appeal, which took place on Thursday, the committee’s decision to uphold the tender was criticised by presiding judge Sam Hou Fai, who said it was the result of “the influence” of disgraced former secretary.
InBrief
More Hengqin coordination advised The development of Hengqin needs Macau, Hong Kong and Guangdong to get their acts together, a report says Tony Lai
tony.lai@macaubusinessdaily.com
Hengqin Island and the two other Guangdong economic new areas should boost their support for the development of Macau, a report recommends
T Airfreight hits record low Airfreight coming into the territory through the Macau International airport dropped by 42 percent yearon-year to 509 tonnes last April, the lowest number since the Statistics and Census Services began collecting data, in 2000. Incoming airfreight had already dropped 27.7 percent last year. Outgoing airfreight also dropped by 28.3 percent year-on-year to 1,536 tonnes in April, while transit airfreight decreased 15.2 percent to just 368 tonnes.
he governments of Macau, Hong Kong and Guangdong need a mechanism for coordinating better Hengqin Island’s development, an official report says. The China Urban Development Report 2011, released last week, also says the special administrative regions of Hong Kong and Macau should establish their own development zones on Hengqin in addition to projects such as the traditional Chinese medicine industrial park being co-developed by Guangdong and Macau. In the report, the China Asso-
KEY POINTS SARs, Guangdong lack consensus over Hengqin Mechanism needed for better coordination Hengqin and Nansha as free trade zones is final goal
Reolian in new bus accident A Reolian bus operator ran into the rear of a private van close to the interception of Rua São Lourenco and Rua de Inácio Baptista on Sunday. After the collision, the bus was bumped onto the pedestrian path and destroyed the roadside railings. No one was injured. Two other accidents involving Reolian occurred in January and February, the latter causing the death of an 80-year old man.
Guangdong economic new areas could compete among themselves Hengqin objectives too “lofty”
ciation of Mayors says there are problems in the administration of the economic new areas in Guangdong. The Chinese-language Macau Daily News quotes the report as saying it would be “innovative” to have the three governments co-develop the three economic new areas but that there is no consensus on sharing the benefits. The report says Guangdong’s economic new areas of Hengqin, Nansha and Qianhai should aim to become free trade zones, to facilitate the free flow of people, capital and information. The Guangdong and Macau governments agreed in July 2011 to develop jointly a cultural and creative industry zone and also a cruise ship port in the Nansha economic new area. The China Urban Development Report says the cooperation zones in Guangdong’s economic new areas should support the development of Macau and Hong Kong – in Macau’s case by helping to diversify the city’s economy and turning it into a global tourism hub.
Overlapping strategies Guangdong’s economic new areas signed last month an agreement to hold joint conferences three times a year to solve problems such as direct competition and overlapping development strategies. The Southern Metropolis Daily reported that the aim is to improve communication between Hengqin, Nansha and Qianhai officials on industrial strategies, planning, economic policies and social management. But Hong Kong’s South China Morning Post quoted academics as saying the agreement would not solve the problem of competition, because the development plans of
the economic new areas were too similar, with focuses on financial services and creative industries. “All three regard Hong Kong and Macau as strategic partners, and they all want to boost their financial industries,” said a Guangdong University of Foreign Studies professor, Zuo Liancun. A researcher at the Comprehensive Reform and Development Institute in Guangdong, Zhou Linsheng, said: “Both Nansha and Qianhai have applied to set up a commodities futures exchange, and all the three zones are considering developing their cultural and innovation industries.” Nansha’s application to set up mainland China’s fourth commodity futures exchange is still pending, but the China Securities Regulatory Commission said in April it was unlikely that the State Council would approve a new exchange any time soon. “Hengqin and Nansha should also slow down their pace and forget about their lofty ambitions,” Mr Zuo said. “It’s impossible for Hengqin to compete with Shenzhen and Dongguan in terms of GDP after lagging behind in manufacturing for three decades.” Mr Zhou said Nansha should take advantage of its position near the manufacturing hubs of Dongguan and Zhongshan to develop manufacturing. “Its deepwater port is also an advantage for manufacturing and shipping,” he said. The deputy head of the Nansha New Area administration, Huang Ka, said last month that the State Council was now analysing the development plan for Nansha drafted by the local governments. The China Daily quoted Mr Huang as saying: “We look forward to having it approved by the State Council later this year.”
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Antenna firms drop encrypted channels A dozen encrypted cable television channels disappear from television screens as the copyright law comes into force Vítor Quintã
vitorquinta@macaubusinessdaily.com
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ublic antenna companies have stopped carrying about a dozen encrypted sports and entertainment channels to comply with the copyright law that came into effect on June 1. Macau Cable TV has exclusive rights to carry copyright-protected channels, but public antenna companies account for over two-thirds of all cable television subscribers. One of the channels dropped is CCTV 5, a popular sports channel that is set to show the forthcoming European Football Championship. The antenna companies have also stopped carrying CCTV 3, CCTV 6, CCTV 8, China Movie Channel, Formosa Taiwan TV, China Television, ETTV’s movie channels, Videoland and Sanlih E-Television, according to the Portuguese-language newspaper Ponto Final.
One of the public antenna companies, Engenharia de Sistema Electrónico Tak Chou, told the newspaper it will try to get authorisation to carry some of these channels, arguing that its activities are “compatible” with the new copyright law. The act includes a provision that bans the unlocking of decoders for paid television programmes, which could have an effect on the longrunning legal dispute between Macau Cable TV and the public antenna companies. However, the authorities have said that any prosecution would have to begin with a complaint from an interested party, which in this case could be from the owners of the dropped channels, all of which come from mainland China or Taiwan. No complaint from the mainland or Taiwan against the public antenna companies been lodged, the Customs Service’s intellectual property rights department told the newspaper.
Public antenna companies account for over two-thirds of all cable television subscribers
Photo by Manuel Cardoso
MACAU
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macau Corporate Social Responsibility
Golf budget gets Mcboost McDonald’s Macau gives generous support to the Special Olympics international golf tournament
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pecial Olympics Macau has received a cheque for 100,000 patacas (US$12,512) from McDonald’s Macau for the forthcoming international golf tournament organised by the Charity Association of Macau Business Readers. McDonald’s Macau mounted a fundraising campaign between April 11 and 15 to commemorate its 25th anniversary. Nearly 120,000 patacas were raised during the five-day campaign, in which one pataca from each McDonald’s Extra Value Breakfast or Extra Value Meal was set aside for charity. The fast-food restaurant chain went beyond the collections and announced a 200,000-pataca donation to be evenly shared by two beneficiaries: Tung Sin Tong and Special Olympics Macau. The cheque presentation ceremony was held at the McDonald’s restaurant in the Macau Science Centre. McDonald’s Macau owner and operator and McMac Co. Ltd chief executive John Ho, Tung Sin Tong president Hui Sai Yun, Macau Business SK Events Ltd managing
director Paulo A. Azevedo and Special Olympics Macau chief executive Siu Yu Hong attended. Tam Chan Kit and Lenlison Lo, representing the Special
John Ho and Tung Sin Tong president Hui Sai Yun
Olympics Macau golf team, and the management of McMac Co. Ltd were also present. Mr Ho handed the cheques to the president of Tung Sin Tong and
the representatives of Special Olympics Macau. He was accompanied by McDonald’s chief happiness Officer Ronald McDonald. McDonald’s Corp recently honoured Mr Ho with a Golden Arch Award at the 2012 McDonald’s Worldwide Convention in Orlando, Florida. The McDonald’s Golden Arch Award recognises the “best of the best” among owners and operators of McDonald’s restaurants the world over.
John Ho and Tam Chan Kit and Lenlison Lo from the Special Olympics Macau team
Weather Beijing 32/21o C Changchun 24/13o C
Harbin 25/13o C
Xian 30/18o C Shanghai 26/20o C Chengdu 26/18o C Kunming 27/18o C Haikou 32/25o C Sanya 32/27o C
Guangzhou 31/24o C
MACAU (04 June-09 June) Day
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Shenzhen 31/25o C
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Hong Kong 32/27o C
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Macau 30/25o C
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taipei
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MACAU Photo by Manuel Cardoso
inSight
A land of improved economic freedom Frederico Rato Senior Partner at Rato, Ling, Vong, Lei & Cortés - Advogados
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he Heritage Foundation has recently ranked Macau 19th worldwide and 6th in the Asia-Pacific region in terms of economic freedom. On the face of it, not bad. The result is marginally worse than last year and, in fact, the worst score for Macau since 2009, when the city was first included in the global study. The Joint Declaration of Beijing and Lisbon in March 1987 is a good foundation in political terms for the continuity of the system in Macau after 1999. Of equal importance is the harmonisation and interplay between the legal superstructure, represented by the Basic Law, and the existing legal system, duly refined and localised by the Portuguese administration in its last years of government, which has resulted in sustaining Macau as an economically open international space. Good illustrations of that are the Civil Code and the Commercial Code, the latter being a modern and consistent law thoroughly apt for the promotion and good development of economic freedom. Further, a favourable model for free economic activities has emerged from the flexible complementarities between the public legal system, which cares about the public interest; and the private legal structure, aimed at the interests of economic agents, companies and persons, and which includes in its scope free commercial interchange, economic growth, development, production of profits, benefits and investment, together with the legal free circulation of capital. Macau is actually ranked first in trade freedom, with a score of 90 out of 100, identical to Hong Kong. However, the legal environment could be improved, at least as far as the workforce is concerned. In fact, Macau scored 55 for labour freedom, when the world average is 61.4. Despite some progress introduced by the Labour Relations Law in 2008, manpower is the production factor least in line with the rules of the free market. In fact, the absence of legal and institutional trade unions, the right to go on strike and the absence of collective negotiation are negative facts that distort the free market and jeopardise the free economy. Some other legal measures should also be adopted and administrative decisions must be encouraged in regard to employment and training matters. The liberalisation of the gaming sector and the introduction of six big operators in the market have caused what I call the “sponge effect”. The workforce available Macau, be it non-qualified, semi-qualified, qualified or highly qualified, was sucked up by those operators and their casinos, hotels, deluxe commerce, adjacent businesses and tourist or para-tourist upstream and downstream activities. This process seems to be far from finished, as the expansion of those gaming operators continues. The other side of the sponge effect is the impoverishment of manpower in other sectors of economic activity, especially the small and medium units of commerce and services. Some of them face serious difficulties and are near foreclosure. In this context, a more liberal legal environment for the importation of skilled workers for Macau’s economic needs would be very welcome in the free market and economy. There should be more flexibility in the management of this issue, together with specifically targeted training for less-skilled workers. Finally, the Macau constitutional prerogative of judgment in last instance is also a source of comfort for free economy entrepreneurs. Efficiency and celerity in the judicial base — say, the first instance — should help a lot. It leads one to believe that once these two or three constraints are eased, Macau could reach the podium in the Economic Freedom score next year. Inshallah.
A more liberal legal environment for the importation of skilled workers for Macau’s economic needs would be very welcome in the free market and economy
with special thanks to Filipa Almeida Santos
A new budget hotel opened last weekend, but the number of two-star rooms in Macau is just one-tenth of the number of five-star rooms
Budget hotels seek room for expansion A stellar performance by budget hotels attracts new investment, but rising rents and the labour shortage are challenges
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imberider Resort Management opened a new twostar hotel, Ole Tai Sam Un, and added 24 rooms to the Ole London Hotel over the weekend. “The Ole London Hotel demonstrated the potentials of the market, which is why we opened the new hotel,” Ole Tai Sam Un general manager Jenny Zhu told Business Daily. Situated at the end of Rua Da Caldeira, close to the heart of the historical centre, the hotel has 40 rooms, 30 of which are single rooms with king-size beds and 10 double rooms. Despite being a twostar hotel, it is priced at around 800 patacas (US$100) to 900 patacas a night, much more than the average rate for twostar and three-star hotels. “We set the price range after market research. We are aiming for the younger individual tourists who are after quality and are interested in the culture and history of Macau,” Ms Zhu said. Data for April from the Macau Hotel Association show the average three-star hotel room cost nearly 1,000 patacas a night, 13 percent more than a year before. This rate of increase was the highest in any of the categories of hotel. However, the association did not have data on twostar hotels. One puzzle in the statistics is that the average price of a four-star hotel room, at 871 patacas a night, was lower than the average price of a three-star hotel room. “It is because many of the four-star hotels are very old and worn out,” Ms Zhu said. “They would need to temporarily terminate
their operations to renovate, which would not be good for business, so they just lower the price.” She also believes demand for luxury hotels has been met but that more budget hotels are needed.
No easy business However, she admits budget hotels face strong competition from larger hotels.
We are aiming for the younger individual tourists who are after quality and are interested in the culture and history of Macau Jenny Zhu, Ole Tai Sam Un general manager
“Big hotels can offer discounted prices at a bit over 1,000 patacas a night, which will push some guests to pay more for a nicer hotel,” she said. Budget hotels also faced more pressure in balancing
their revenues and costs, Ms Zhu said. As they operate on a lease and have fewer rooms than large hotels, rising rents hurt smaller hotels. She said it was also hard to obtain approvals from the government. It took the company three years before the new hotel could open for business, with most of that time spent waiting for the green light from the authorities. “Hiring good staff is also an issue,” Ms Zhu said. “There are simply not enough people to hire, not to mention quality ones.” The new hotel has fewer than 10 employees. Ole Tai Sam Un’s occupancy rate was between 10 percent and 20 percent on its first night. Ms Zhu is optimistic about the future, given the experience of its sister hotel, Ole London. The largest two-star hotel in the city, the Central Hotel Macau, with 150 rooms, has over 80 years of history and is in the middle of San Ma Lou. Once a landmark, it lost its lustre over the years, competing with large casino operators. The restaurants at the hotel have closed but it still boasts an average of 60 percent to 70 percent occupancy and is often fully booked at weekends, according to the reception staff. The rates are 319 patacas for a double room and 297 patacas for a single room. There are 95 hotels in the city, with almost 22,300 rooms. Only 1,400 rooms are in two-star hotels and guesthouses, while over 14,000 rooms are in fivestar hotels. X.C.
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GREATER CHINA China’s money rates rise
China’s money rates rose yesterday as banks and other institutions put money aside for a major bond auction due later, but dealers said funds remain ample. China Shipbuilding Industry is auctioning around 8.1 billion yuan (US$1.27 billion) in convertible bonds. Banks must place money in a special account in order to subscribe to IPOs or bond offerings. Banks will also put money aside for regular payments to meet their reserve requirement ratios (RRR) today. Banks must make regular payments on the 5th, 15th and 25th in order to meet the RRR, with the amount of the payment adjusted in line with their current volume of deposits. But dealers said the impact of RRR payments and the bond auction would be short-lived. “These are just temporary impacts. We do not feel money is actually tightening,” said a dealer at a city commercial bank in Shanghai.
Central Bank buying euro debt
China’s central bank chief said the country will continue to invest in eurozone government debt and other assets and urged the singlecurrency bloc to step up reforms to stem its debt crisis. Zhou Xiaochuan said in comments published yesterday by Chinese Business News that China will continue to buy eurozone government bonds, support International Monetary Fund engagement and invest in infrastructure and privatisation programmes. “Certainty, the pre-condition is that we can see reforms in theses countries and such investment can be recovered,” Mr Zhou was quoted as saying. But he said the central bank had no intention to rapidly increase the country’s foreign exchange reserves, already the world’s largest at US$3.3 trillion. In the interview, Mr Zhou also said the internationalisation of the yuan depends “ultimately” on the market. China will further develop and open its financial markets and broaden the scope for the yuan’s usage in the financial sector, Mr Zhou was cited as saying.
Rising labour costs opening doors for industrial robots Chinese companies investing in automation, labour-intensive model wearing off
T
he giant orange robotic arms that swiftly weld together car frames at the Great Wall Motors factory in Baoding might seem like the perfect answer to China’s fast-rising labour costs – they don’t ask for a raise, get injured or go on strike. For Great Wall, a private sector Chinese car maker that employs 50,000 workers, the Swiss robots and other machinery that line its bright factory floor produce more than cost savings. The company hopes they will help it build cars good enough to compete with the global auto makers. “You don’t have to be an expert to see the [quality] gap between Chinese cars and those made by companies like Audi and Volkswagen,” said Li Shaohui, who oversees automatic control engineering for the company. “To beat those competitors we have no choice but to use a higher level of equipment and technology.” From car plants to microchip foundries, China’s industrial sector increasingly runs by machine. According to Nomura, 28 percent of factory machines in China use numerical controls – one measure of automation. That may be far lower than Japan’s 83 percent, but China is growing far faster than Japan did at a comparable stage of development, says Ge Wenjie, a machinery analyst with Nomura. One of the biggest could be Foxconn Technology Group, maker of products for tech giant Apple, which is talking of plans to put a million robots in its factories.
Up the value ladder The army of cheap labourers that made China a manufacturing powerhouse is neither as vast as once thought nor as cheap as it was. In response, manufacturers have been spending heavily on machines that will both make them more productive and let them churn out higher quality goods. That change will pose a growing challenge for U.S., European and Japanese industrial companies not used to competing with Chinese firms in the high-end segments of their markets. In other words, China may soon be known less for cheap Christmas toys and more for high-end medical equipment, luxury cars and jet engines. “You will see foreign players facing
more and more pressure from leading local manufacturers upgrading their products, their quality and their scale,” said Raymond Tsang, a China-based partner with consultancy Bain. Great Wall has seen some early success with it own efforts to take on the global brands. The company’s solidly built Haval SUV and cheerfully named Wingle pickup truck have gained a foothold in Australia, where they sell for about half the price of comparable Japanese models. Four of its models became the first Chinese cars to pass Europe’s safety and emissions requirements, though they aren’t yet on sale there.
Capital costs Automation doesn’t come cheap. A factory floor robot of the kind in Great Wall’s plant costs about 4 million Japanese yen (US$50,760) according to Mr Ge of Nomura, and a production line might easily have 100 of them. There is also the cost of downtime, when machines need to be maintained or adjusted to handle new products. For years, low wages meant automation was simply not worth the expense. A company didn’t need to buy a packaging machine when it was cheaper to hire a room full of workers to do the same thing. But steady cost rises are tilting the balance in favour of machines. Last year, urban labour costs in China increased 12.3 percent in inflation-adjusted terms for private companies, which face a worsening labour shortage. “Everyone is doing this because there’s tremendous competition in China and the cost of raw materials is going up and wages are going up,” said Andy Rothman, an economist with CLSA in Hong Kong. “So really, the only way that most companies can survive is to raise productivity and the best way to do that here is to add a little bit more equipment.” The demand for higher quality also weighs in favour of automation. An engine block built by a worker positioning the drill by hand won’t be as good – or sell for as much money – as one fashioned by machine. “The big driver [for automation] is quality and consistency, especially for high tech,” said Bain’s Tsang. “For Chinese players to compete globally, they have to reach certain standards and be certified by their
The big driver [for automation] is quality and consistency, especially for high tech. For Chinese players to compete globally, they have to reach certain standards and be certified by their customers – automation is necessary to improve the quality Raymond Tsang, Bain & Company
12.3 % urban labour costs rise in real terms in 2001
customers – automation is necessary to improve the quality.”
New development model The government sees that too. It has made industrial upgrading one of the key priorities of its latest five year plan, alongside rebalancing
June 5, 2012 business daily | 9
GREATER CHINA HK stocks reaching new lows China and U.S. economic conditions weighing heavily on market expectations
H
Foxconn looking for 1 million robots
the economy toward greater domestic consumption. That has led Beijing to pour billions of dollars into strategic industries like clean energy and high-speed rail and to encourage imports of advanced machinery. Still, it will be years before the lonely, fully automated production lines of high-end Japanese manufacturers are common in China. Its workforce remains huge and, even with inflation, dramatically cheaper than Japan’s or Germany’s. “In China, we’ll see things become
much more automated than they are now, but I don’t think it will ever be like Japan. There are just too many people in China,” said Mr Ge. Among companies making the big shift to automation is Foxconn, whose chairman Terry Gou said last summer the firm would put up to 1 million robots in its massive Chinese factories over three years. In Foxconn’s case, the step follows not just rising labour costs but also a string of worker suicides and allegations of poor working conditions. Reuters
Everyone is doing this because there’s tremendous competition in China and the cost of raw materials is going up and wages are going up Andy Rothman, CLSA
Slowing economy, real estate to the rescue Government expected to ease property sale restrictions
C
hina may relax its property curbs to encourage end users to buy homes as the government seeks to support economic growth, according to Deutsche Bank AG. More “fine-tuning” by local governments of real-estate tightening measures is expected because of continued weakness in land sales and the resulting financial pressures, Tony Tsang and Jason Ching, Hong Kong-based analysts at Deutsche Bank, said in a note to clients. The central government’s tolerance of local authorities’ attempts to loosen property curbs is growing as home prices decline, according to CEBM Group Ltd., an investmentadvisory firm. Housing transactions in Beijing surged 30 percent in May from the previous month to 23,174 units, the highest since the Chinese capital imposed property controls in February last year, after banks low-
ered mortgage rates to support firsthome buyers, Centaline Property Agency Ltd. said in a June 1 report. “It looks like the Beijing market has broken away from the wait-and-see attitude,” the Deutsche Bank analysts wrote in the report, dated June 1, citing the rebound in sales. “We believe that the policy direction for both the China economy and property market is now quite clear - ‘loosening’ to support economic growth.”
Economic slowdown Premier Wen Jiabao called for “putting stabilising growth in a more important position” and didn’t mention concern about inflation in remarks published May 20 by the official Xinhua News Agency, spurring speculation the government will step up efforts to combat a slowdown in the world’s second-
largest economy. Shijiazhuang, the capital city of Hebei province neighbouring Beijing, is planning five loosening measures that include allowing families whose per-capita floor space is below 30.6 square meters (329 square feet) to buy a third home, Shanghai-based CEBM analyst Shi Qi wrote in an e-mailed report on June 1. The city’s attempt to relax property curbs shows local authorities’ revenues are under growing pressure from slowing growth, Shi wrote. The central government has kept home-purchase restrictions to curb speculation. Some homebuyers were convinced that the market had bottomed after about 40 cities adjusted local property restrictions to encourage spending, Centaline, China’s biggest real-estate brokerage, said in the report. Bloomberg
ong Kong stocks fell, with the benchmark index erasing this year’s gains, after disappointing reports on U.S. jobs and China’s service industry added to signs the world’s two largest economies are slowing. Techtronic Industries Co., a power-tools maker that relies on North America for almost three quarters of its sales, slumped 3 percent. China Unicom (Hong Kong) Ltd, the nation’s second- largest mobile phone company, tumbled 5.6 percent. Lonking Holdings Ltd, a machinery maker, retreated 10 percent after saying it expects a “substantial” drop in profit. The Hang Seng Index slid 2 percent to 18,185.59, falling to its lowest close since December 20. All but one stock fell in the 49-member gauge. The Hang Seng China Enterprises Index of mainland stocks dropped 2.6 percent to 9,375.33, sinking more than 20 percent from this year’s peak on February 29, a decline that traders consider a bear market. “Sentiment is extremely negative,” said Jackson Wong, vice president of Hong Kong-based Tanrich Securities Co. “I’m looking for some kind of resolution from big economies from the U.S., Euro or China but none has happened. No one wants to see a repeat of 2008 but if they don’t do anything soon it looks like we are going to repeat that.”
Hong Kong’s benchmark index fell last week for a fourth straight week, its longest losing streak since November, amid signs of an economic slowdown in China and a deepening debt crisis in Europe. The gauge has lost 1.4 percent this year. Shares on the Hang Seng Index traded at 9.5 times estimated earnings on average on June 1, compared with 12.2 times on the Standard & Poor’s 500 Index, and 9.8 times for the Stoxx Europe 600 Index.
‘Bad Data’ “The market has been pretty bad lately, especially with the bad data from the U.S.,” said Tanrich’s Mr Wong. “Accompanied with weak PMI numbers from Europe and China, the whole picture looks very bad for the world’s economy.” Sands China Ltd, the Asian unit of Sheldon Adelson’s Las Vegas company, slumped 4.8 percent to HK$25.05, amid concern slowing economic growth in China could hurt revenue growth in Macau’s gambling hub. “The decline in Macau’s gaming revenue growth as well as China’s sliding PMI all signal a slowdown in the economy,” said Gabriel Chan, a Hong Kong-based analyst at Credit Suisse Group AG. Bloomberg
10 |
business daily June 5, 2012
ASIA
Genting misses U.S. expansion plans
InBrief
Company projects rebuffed in NY, delayed in Miami
G
enting Malaysia Bhd. dropped the most in almost four months in Kuala Lumpur trading after talks to build a US$4 billion convention centre next to its New York City casino fell through. Genting Malaysia wanted to build a 3.8 million-square-foot convention center at Aqueduct Racetrack in Queens where it opened Resorts World Casino New York City last year. Negotiations fell through after weeks of discussion, New York Governor Andrew Cuomo said in an interview on the WOR-AM radio station. This follows a delay in the group’s plan to build a US$3 billion hotel and casino in Miami after a Florida House of Representatives committee postponed a vote on a bill to expand casino gambling. “This news gave Genting Malaysia a double whammy, experiencing failure in two of the group’s expansion plans in the U.S.,” Low Yee Huap, an analyst at Hong Leong Financial Group Bhd., wrote in a report today. Conversations with Genting “haven’t worked out,” said Mr Cuomo, who added that he’s now discussing building a similar project
India policy options limited
Lim Kok Thay, chairman and CEO of Genting
with other companies. Genting may still bid on a convention centre project in the city, said Stefan Friedman, a Genting spokesman. Genting operates the only gaming resort on a hilltop in Muslimmajority Malaysia. Unable to
open more casinos on home turf, it’s been expanding abroad. The group is already the U.K.’s biggest casino-operator and opened one of two gambling resorts in Singapore in 2010. Bloomberg
India’s finance minister admitted yesterday that the government had no scope to increase public spending to spur the flagging economy, but said interest rate cuts might be possible. Shock economic growth figures published last Thursday showed the Indian economy growing at 5.3 percent in the January-March period, the slowest quarterly growth figure in nine years. India unveiled a huge stimulus programme after the last global slowdown following the financial crisis of 2008 in the United States and Europe, but its finances are now strained as the eurozone debt crisis gathers pace. For 2012/13, the government is targeting a deficit of 5.1 percent, but analysts say this is based on a very optimistic growth estimate of 7.6 percent and under current spending plans the gap could be much larger.
EU in talks with Pakistan
New airline flying lighter planes Low-cost Scoot replaces entertainment systems, saves fuel
S
coot Pte is offering Apple Inc. iPads to budget long-haul travelers after ripping out aircraft entertainment systems weighing more than two tons to save fuel. The tablets helped the carrier cut 7 percent off the weight of planes obtained from parent Singapore Airlines Ltd even after a 40 percent increase in seating, Chief Executive Officer Campbell Wilson said. The savings will help Scoot cope with fuel prices that have jumped about 36 percent in two years. Fuel is “the number one worry” for any airline, as it usually accounts for at least 40 percent of costs, Mr Wilson said in a June 1 interview in Singapore. Scoot will charge econo-
CEO Campbell Wilson has iPad’s flying high
my passengers S$22 (US$17) a trip to rent the tablets, which are loaded with movies, music, games and television shows. Cutting costs and finding new sources of revenue will be key for Singapore-based Scoot as it seeks to make a profit flying older planes than other low-cost carriers and selling tickets as cheap as S$158 (US$122) one-way to Sydney, a flight of more than seven hours. Singapore Air formed Scoot after budget operators led by Jetstar and AirAsia Bhd. won 26 percent of the city’s air-travel market. The iPads are “a very smart move,” said Corrine Png, JPMorgan Chase & Co.’s Singapore-based head of
regional transportation research. “If they can make the aircraft lighter, it does help improve fuel efficiency.” The budget carrier will loan the iPads free to passengers in its business-class seats. It also eventually intends to have users access content via a wireless system on planes. Qantas Airways Ltd. began trials of a similar product in December.
China flights The carrier will have four Boeing Co. 777s this year, each fitted with 400 seats, including 32 in business class. The airline will add its second destination, Australia’s Gold Coast, next week. Services to Tianjin, China will begin in August followed by two other northern Chinese cities before the end of the year, Mr Wilson, 40, said. “China has a huge amount of potential,” he said. “It’s developing fast and the propensity of people there to spend is increasing dramatically.” China will probably be the world’s fastest-growing aviation market through 2014, with international passenger numbers swelling at an average pace of 11 percent, the International Air Transport Association said last year. Scoot plans to increase its fleet to as many as 14 777s by the middle of the decade. The carrier will be able to pare maintenance costs by working with its parent, Mr Wilson said. Singapore Air also owns regional carrier SilkAir and has a stake in short-haul budget carrier Tiger Airways Holdings Ltd. Bloomberg
EU foreign policy chief Catherine Ashton heads to Pakistan yesterday to launch a wide-ranging “strategic dialogue” covering foreign and security issues, as well as development and trade. Ms Ashton, who flies to Islamabad after an EURussia summit in Saint Petersburg, will today join Foreign Minister Hina Rabbani Khar to launch the talks aimed at giving new impetus to ties between Pakistan and the 27-nation bloc. “My visit to Pakistan is an expression of the EU’s support for the consolidation of democracy in the country,” she said in a statement ahead of the three-day trip. The dialogue aims to spell out how to work toward an ambitious five-year plan agreed in January that would culminate in a Free Trade Agreement and include anti-terrorist measures and heightened development aid.
Sony dips in Tokyo trading Sony Corp. dropped below 1,000 yen (US$12.8) in Tokyo trading for the first time since 1980, when the Walkman was new, after Japan’s currency gained and the U.S. added jobs at a slower-than-estimated pace. The shares yesterday fell 1.7 percent to close at 996 yen on the Tokyo Stock Exchange. Sony, which recorded an all-time intraday high of 16,950 yen in March 2000, last closed below 1,000 yen on August 1, 1980, according to data compiled by Bloomberg.
June 5, 2012 business daily | 11
asia parliament’s upper house, which the opposition controls. However, in the past weeks the LDP has indicated a compromise was possible if the ruling Democrats agreed to drop parts of the tax and social security reform that could lead to more spending. The Japanese prime minister is increasing efforts to narrow the gap with the opposition, and at the same time struggling to unite his own Democratic Party after a second round of talks in a week with the party’s power broker, Ichiro Ozawa, fell apart on Sunday. Without the votes of a group of legislators loyal to Mr Ozawa, the
Japanese PM re-shuffles govt Move aims at obtaining opposition support for tax package Noda hopes tax changes will stem rising public debt
J
apanese Prime Minister Yoshihiko Noda replaced five cabinet ministers yesterday hoping to smooth the way to a deal with the opposition on doubling sales tax in spite of a rift in the ruling party over the plan. Defence, transport, farm, banking and justice ministers were replaced. By removing the ministers, who the opposition has criticised for not performing properly, Mr Noda hopes to persuade the biggest opposition party, the Liberal Democratic Party
(LDP), to back a package of tax bills including the sales tax increase. He needs opposition support to bet bills through a divided parliament. The increase in sales tax, which would bring it to 10 percent by 2015 from 5 percent now, is seen as essential in an effort to curb Japan’s snowballing public debt. The debt exceeds the value of two years of economic output, the highest among industrialised nations and ratings agency Fitch cut its credit rating last month,
citing scant progress in coping with swelling social security costs. “This reshuffle is to strengthen the cabinet and ensure that the government can make progress on several different policies, including tax and welfare reform,” Mr Noda said at a news conference. “I cannot allow this bill to be defeated. I will do my best to make sure this bill gets passed.” The LDP has long tried to force Mr Noda to call an early election by threatening to block the bills in
5 Ministers to be replaced Democratic Party’s biggest faction, Mr Noda needs opposition help to pass bills through the lower and upper houses of parliament. A former finance minister, Mr Noda has staked his career on the tax increase, pledging to force a vote in this session of parliament that ends on June 21. The opposition reacted coolly to the cabinet reshuffle. LDP upper house secretary general Kensei Mizote said any talks on a compromise on welfare reform had nothing to do with Mr Noda’s decision to shake up his cabinet, according to Kyodo News.
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12 |
business daily June 5, 2012
MARKETS Hang SENG INDEX NAME
NAME
PRICE
Day %
VOLUME
24.65
-2.376238
48106623
CHINA UNICOM HON
ALUMINUM CORP-H
3.11
-2.8125
23433655
CITIC PACIFIC
BANK OF CHINA-H
2.94
-1.342282
312075566
BANK OF COMMUN-H
4.97
-1.388889
29298731
BANK EAST ASIA
25.8
-0.1934236
4439651
11.98
-3.231018
21.1 12.32
AIA GROUP LTD
BELLE INTERNATIO BOC HONG KONG HO CATHAY PAC AIR
VOLUME
-5.639098
54355848
11.1
-4.639175
6994392
63.6
0.6010756
3119287
-2.620087
63958973
COSCO PAC LTD
8.93
-3.771552
19625722
ESPRIT HLDGS
11.9
-3.094463
-2.088167
12560894
HANG LUNG PROPER
24.3
-1.282051
5128374
HANG SENG BK
99.5
HENDERSON LAND D HENGAN INTL
CHEUNG KONG
86.3
-2.70575
5051838
6.68
-4.843305
33679004
CHINA CONST BA-H
Day %
10.04
13.38
CHINA COAL ENE-H
CLP HLDGS LTD
PRICE
CNOOC LTD
5.32
-1.845018
256943520
CHINA LIFE INS-H
17.06
-4.90524
55085000
CHINA MERCHANT
22.35
-4.077253
8557941
CHINA MOBILE
76.75
-1.476252
CHINA OVERSEAS
15.42
-2.15736
CHINA PETROLEU-H
6.77
-1.311953
86256254
LI & FUNG LTD
CHINA RES ENTERP
23.35
-3.71134
4276884
MTR CORP
CHINA RES LAND
14.16
-3.013699
12773087
CHINA RES POWER
13.94
-1.274788
CHINA SHENHUA-H
26.3
-4.189435
NAME
PRICE
Day %
54.4
0.5545287
3242129
SANDS CHINA LTD
25.05
-4.752852
34651311
SINO LAND CO
POWER ASSETS HOL
VOLUME
10.26
-4.64684
5066629
SUN HUNG KAI PRO
86.4
-1.762365
3999738
8617484
SWIRE PACIFIC-A
81.3
-2.166065
1836648
7472174
TENCENT HOLDINGS
208.6
-2.523364
3263313
-1.818182
6622620
TINGYI HLDG CO
18.14
-0.3296703
9896153
-0.5
1451557
WANT WANT CHINA
9.14
-0.2183406
14735144
38.6
-1.78117
2535039
WHARF HLDG
39.2
-3.567036
5519883
71.8
-2.775897
2573123
MOVERS
1
HONG KG CHINA GS
18.26
-0.2185792
7170546
HONG KONG EXCHNG
101.5
-4.78424
7367717
HSBC HLDGS PLC
60.15
-1.15037
20231955
14157529
HUTCHISON WHAMPO
62.45
-2.421875
8527454
16678072
IND & COMM BK-H
4.65
-1.06383
245083877
14.08
-2.493075
30477849
HIGH
18717.11
24.95
-1.188119
1827369
LOW
18091.96
NEW WORLD DEV
8.21
-3.751465
10141306
4077819
PETROCHINA CO-H
9.71
-0.7157464
71687556
21139496
PING AN INSURA-H
53.4
-5.486726
26306969
48
0 18800
INDEX 18185.59
52W (H) 23338.76 (L) 16170.35 31-May
4-Jun
18000
Hang SENG CHINA ENTErPRISE INDEX NAME
NAME
PRICE
DAY %
VOLUME
21.75
-4.395604
9932474
CHINA PETROLEU-H
6.77
-1.311953
86256254
ZIJIN MINING-H
23433655
CHINA RAIL CN-H
5.56
-5.119454
26792144
-3.846154
11919207
CHINA RAIL GR-H
2.75
-6.462585
26367794
2.94
-1.342282
312075566
CHINA SHENHUA-H
26.3
-4.189435
21139496
CHINA TELECOM-H
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.09
-0.6430868
92310845
CHINA PACIFIC-H
AIR CHINA LTD-H
4.76
-3.448276
12617800
ALUMINUM CORP-H
3.11
-2.8125
ANHUI CONCH-H
22.5
BANK OF CHINA-H
4.97
-1.388889
29298731
3.37
-3.988604
46720963
15.02
-4.33121
3129500
DONGFENG MOTOR-H
13.28
-2.496329
16425539
CHINA CITIC BK-H
3.79
-2.593516
32830579
GUANGZHOU AUTO-H
6.4
-4.191617
4549376
CHINA COAL ENE-H
6.68
-4.843305
33679004
HUANENG POWER-H
4.98
2.258727
49130698
CHINA COM CONS-H
6.83
-3.531073
14654323
IND & COMM BK-H
4.65
-1.06383
245083877
CHINA CONST BA-H
5.32
-1.845018
256943520
JIANGXI COPPER-H
15.52
-3.602484
14832067
BANK OF COMMUN-H BYD CO LTD-H
3.51
-3.038674
12585650
PETROCHINA CO-H
9.71
-0.7157464
71687556
17.06
-4.90524
55085000
PICC PROPERTY &
7.9
-7.168038
39196707
CHINA LONGYUAN-H
4.71
-1.05042
5226472
PING AN INSURA-H
53.4
-5.486726
26306969
CHINA MERCH BK-H
14.38
-1.506849
20404826
SHANDONG WEIG-H
7.49
-6.140351
5752000
CHINA COSCO HO-H CHINA LIFE INS-H
NAME
PRICE
DAY %
VOLUME
12.22
-4.53125
17027902
2.59
2.371542
79702804
ZOOMLION HEAVY-H
10.26
-5.524862
19664234
ZTE CORP-H
14.26
-6.675393
7774157
YANZHOU COAL-H
MOVERS
3
0
INDEX 9375.33 HIGH
9730.5
LOW
9326.29
CHINA MINSHENG-H
6.97
-3.596127
62476556
SINOPHARM-H
16.98
-1.508121
3433448
52W (H) 13002.46
CHINA NATL BDG-H
8.89
-3.579176
44370672
TSINGTAO BREW-H
49.05
3.154574
1988840
(L) 8058.58
10.48
-4.379562
13202504
WEICHAI POWER-H
32.35
-3.432836
2059003
CHINA OILFIELD-H
37
9800
31-May
4-Jun
9300
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.61
-1.509434
72754086
DATANG INTL PO-A
5.04
-0.591716
6471460
SHANG PUDONG-A
8.59
-2.164009
69367973
AIR CHINA LTD-A
6
-4.912837
14922960
DONGFANG ELECT-A
21.31
-3.224342
11024688
SHANGHAI ELECT-A
5.41
-5.41958
9324664
6.65
-3.623188
15145316
EVERBRIG SEC -A
14.17
-4.256757
13385982
SHANXI LU'AN -A
25.2
-5.369884
17730837
16.56
-4.387991
43723679
GD MIDEA HOLDING
12.37
-2.675059
26406134
SHANXI XINGHUA-A
74
-2.759527
1480169
2.5
-1.574803
33424604
SHANXI XISHAN-A
17.12
-4.143337
25214258
NAME ALUMINUM CORP-A ANHUI CONCH-A BANK OF BEIJIN-A
NAME
9.56
-2.944162
29889346
GD POWER DEVEL-A
NAME
3
-0.990099
14306532
GEMDALE CORP-A
6.84
-2.425107
28982902
SHENZ DVLP BK-A
15.4
-2.408112
17177789
BANK OF COMMUN-A
4.55
-1.515152
45402968
GF SECURITIES-A
31.65
-4.17802
11023831
SHENZEN OVERSE-A
6.01
-1.313629
36863076
BAOSHAN IRON & S
4.74
-2.066116
20663048
BANK OF CHINA-A
BYD CO LTD -A
23.65
-2.594728
GREE ELECTRIC
22.43
-0.6643047
15243559
SINOVEL WIND-A
15.28
-2.675159
1511522
3269424
GUIZHOU PANJIA-A
31.25
-5.930163
10817201
SUNING APPLIAN-A
8.71
-3.543743
45800733 2626019
4.13
-2.59434
24590436
HAITONG SECURI-A
10.19
-4.139229
72446597
TSINGTAO BREW-A
37.77
1.070377
CHINA CNR CORP-A
4.2
-3.448276
43727548
HANGZHOU HIKVI-A
47.59
2.015005
4237188
WEICHAI POWER-A
32.4
-2.96496
6926722
CHINA COAL ENE-A
8.79
-2.115813
12041092
HEBEI IRON-A
2.98
-1.650165
21016410
WULIANGYE YIBIN
32.69
-1.595424
21399341
CHINA CONST BA-A
4.44
-1.113586
27793321
HENAN SHUAN-A
61
1.615859
5628525
XCMG CONSTRUCT-A
14.58
-4.518664
13629842
11.42
-3.465765
32126156
XIAMEN TUNGSTEN
47.51
-2.663389
7494282
9.54
-2.752294
32115669
XINJIANG GUANG-A
15.08
-4.617331
23010571 18661509
CHINA CITIC BK-A
CHINA COSCO HO-A
4.86
-3.952569
14351866
HUATAI SECURIT-A
CHINA CSSC HOL-A
30.01
-5.12172
7611335
HUAXIA BANK CO
CHINA EAST AIR-A
4.01
-4.750594
17200575
IND & COMM BK-A
4.17
-1.650943
59435341
YANGQUAN COAL -A
18.02
-5.207785
CHINA EVERBRIG-A
2.82
-1.74216
30332415
INDUSTRIAL BAN-A
13.06
-2.245509
52211280
YANTAI CHANGYU-A
92.5
-1.700319
923521
16.95
-3.583618
13114815
INNER MONG BAO-A
45.22
-0.9853295
79142228
YANTAI WANHUA-A
14.78
-2.248677
10407412
CHINA MERCH BK-A
11.4
-2.313625
77398721
INNER MONG YIL-A
22.17
-0.9825815
11075230
YANZHOU COAL-A
21.91
-3.861343
7386853
CHINA MERCHANT-A
12.91
-4.01487
16530796
INNER MONGOLIA-A
6.27
-2.639752
73341575
YUNNAN BAIYAO-A
51.93
-0.5172414
5818784
CHINA LIFE INS-A
CHINA MERCHANT-A
24.6
-2.574257
5157276
JIANGSU HENGRU-A
26.9
-0.03716091
6723354
ZHONGJIN GOLD
23.26
0.779896
26136268
CHINA MINSHENG-A
6.16
-2.839117
117021619
JIANGSU YANGHE-A
138.5
-1.738205
1496665
ZIJIN MINING-A
4.15
0.2415459
98333488
CHINA NATIONAL-A
6.46
-3.58209
23192445
JIANGXI COPPER-A
24.77
-3.618677
11570326
ZOOMLION HEAVY-A
10.61
-3.545455
59816706
13.48
-4.397163
8544068
ZTE CORP-A
14.79
-3.270111
22110301
18.74
-6.159239
23037204 2432761
CHINA OILFIELD-A
16.88
-5.434174
10715549
JINDUICHENG -A
CHINA PACIFIC-A
20.3
-5.272982
22986164
JIZHONG ENERGY-A
CHINA PETROLEU-A
6.49
-3.134328
43257741
KWEICHOW MOUTA-A
236.53
-1.597537
CHINA RAILWAY-A
2.64
-3.649635
46265613
LUZHOU LAOJIAO-A
39.45
-2.472188
6178226
2.57
-3.383459
22465810
-2.651515
22910694
CHINA RAILWAY-A
4.33
-3.991131
28312415
METALLURGICAL-A
CHINA SHENHUA-A
25.21
-2.626497
23553494
NINGBO PORT CO-A
2.57
CHINA SHIPBUIL-A
5.62
-4.258944
38751100
PANGANG GROUP -A
8.04
0
59829010
9.3
-1.691332
27032996
CHINA SOUTHERN-A
4.68
-3.901437
34457332
PETROCHINA CO-A
CHINA STATE -A
3.25
-2.402402
45070195
PING AN INSURA-A
40.81
-3.225041
36666779
13.25
-3.072421
MOVERS
16
278
6 2660
INDEX 2559.026
CHINA UNITED-A
3.99
-2.919708
84829847
POLY REAL ESTA-A
29227911
HIGH
2651.69
CHINA VANKE CO-A
9.04
-1.202186
39877280
QINGDAO HAIER-A
11.64
-2.919099
12224518
LOW
2559.03
CHINA YANGTZE-A
6.78
-1.453488
15017848
QINGHAI SALT-A
30.51
-3.814628
6129273
CITIC SECURITI-A
13.34
-3.89049
88782331
SAIC MOTOR-A
14.98
-3.41715
15312771
CSR CORP LTD -A
4.81
-2.631579
32068494
SANY HEAVY INDUS
14.26
-4.423592
35169956
DAQIN RAILWAY -A
7.34
-1.211306
42608152
SHANDONG GOLD-MI
36.31
5.73675
47450250
PRICE DAY %
Volume
PRICE DAY %
Volume
77 -0.1297017
8992643
52W (H) 3140.10 (L) 2254.56
2550
31-May
4-Jun
FTSE TAIWAN 50 INDEX NAME ACER INC
NAME
29.4
-2.163062
12346968
FORMOSA PLASTIC
ADVANCED SEMICON
26.65
-3.090909
18754943
FOXCONN TECHNOLO
ASIA CEMENT CORP
34.85 -0.8534851
3991334
FUBON FINANCIAL
NAME
PRICE DAY %
Volume
TAIWAN MOBILE CO
94.2 -0.3174603
3780510
95.5
-6.372549
18943326
TPK HOLDING CO L
386
-6.763285
5304907
27.75
-2.972028
21260540
TSMC
76.5
-4.255319
66008677
UNI-PRESIDENT
ASUSTEK COMPUTER
281
-1.748252
3347354
HON HAI PRECISIO
82
-3.868699
45093762
AU OPTRONICS COR
11.1
-6.722689
54027979
HOTAI MOTOR CO
179.5
-3.753351
902754
CATCHER TECH
44.7 -0.3344482
UNITED MICROELEC
6122257
11.85
-5.577689
76694820
178
-2.197802
14619420
HTC CORP
387
-6.521739
12715490
WISTRON CORP
35.7
-4.926764
11745987
CATHAY FINANCIAL
28
-2.439024
13944134
HUA NAN FINANCIA
15.6
-1.577287
8648071
YUANTA FINANCIAL
12.4
-3.501946
28550941
CHANG HWA BANK
14.6
-3.630363
11444801
LARGAN PRECISION
529
-1.121495
2561162
YULON MOTOR CO
48.65
-1.117886
8938948
CHENG SHIN RUBBE
69.4
-3.20781
6055507
LITE-ON TECHNOLO
35.95
-1.909959
2835710
CHIMEI INNOLUX C
11.35
-6.967213
41921238
MEDIATEK INC
245
-4.854369
10242986
6.9
-3.361345
44366111
MEGA FINANCIAL H
19.4
-3.960396
30092861
CHINA STEEL CORP
27.5 -0.7220217
23686610
NAN YA PLASTICS
51.6
0.1941748
6549230
CHINATRUST FINAN
15.5
-4.320988
45364199
PRESIDENT CHAIN
154 -0.9646302
CHUNGHWA TELECOM
89.7 -0.3333333
10269284
QUANTA COMPUTER
76.5
0.1308901
CHINA DEVELOPMEN
COMPAL ELECTRON
815144 10866355
28.95
-1.864407
17853541
SILICONWARE PREC
29.6
-3.583062
8800944
DELTA ELECT INC
76.8
-6.909091
12617286
SINOPAC FINANCIA
10.15
-1.932367
21929027
FAR EASTERN NEW
28.7
-3.040541
5283130
SYNNEX TECH INTL
66 -0.9009009
3175605
FAR EASTONE TELE
67.9
1.343284
5276545
TAIWAN CEMENT
33.15
-1.485884
7350338
16.45
-2.373887
14542549
TAIWAN COOPERATI
16.95
-1.453488
8383899
76.5 -0.6493506
8043546
TAIWAN FERTILIZE
66.4
-2.352941
2365706
1289380
TAIWAN GLASS IND
27.05 -0.9157509
1970902
FIRST FINANCIAL FORMOSA CHEM & F FORMOSA PETROCHE
82
0
MOVERS
3
46
1 5050
INDEX 4746.59 HIGH
5042.25
LOW
4731.56
52W (H) 6224.53 (L) 4643.05
4700
31-May
4-Jun
June 5, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) gALAXy eNTerTAINMeNT
Max 17.68
Average 17.17
MeLCo CroWN eNTerTAINMeNT
Min 16.98
17.8
30.3
11.4
17.6
29.8
11.3
17.4
29.3
11.2
17.2
28.8
11.1
17.0
28.3
11.0
16.8
Last 17.48
Max 30.30
SANDS CHINA LTD
Max 25.50
Average 24.98
Average 28.89
Min 27.80
Min 24.75
Last 25.05
Average 10.09
Min 10.96
Last 11.10
WyNN MACAU LTD 18.50
25.34
12.8
18.38
25.18
12.7
18.26
25.02
12.6
18.14
24.86
12.5
18.02
24.70
12.4 Max 12.84
Average 12.52
WTI CRUDE FUTURE Jul12
82.18
-1.26156434
-17.30730529
111.4899979
77.40000153
BRENT CRUDE FUTR Jul12
97.21
-1.239459514
-7.971220297
125.6100006
94.34999847
GASOLINE RBOB FUT Jul12
263.2
-0.933453779
-3.046377132
332.1799994
246.4999914
GAS OIL FUT (ICE) Jul12
832.5
-1.245551601
-7.448582546
1045.75
810
NATURAL GAS FUTR Jul12
2.336
0.429922614
-27.96793093
5.130000114
2.095999956
DAY %
YTD %
(H) 52W
Min 12.40
Last 12.62
17.90 Max 18.50
Average 18.07
260.27
-0.958940599
-8.442677736
331.9299936
256.3099861
1618.03
-0.3676
3.3944
1921.18
1478.78
Silver Spot $/Oz
28.4138
-0.3986
2.0794
44.2175
26.085
Platinum Spot $/Oz
1431.5
-0.9343
2.6533
1915.75
1339.25
Palladium Spot $/Oz
608.38
-0.7941
-6.9044
848.37
537.54
LME ALUMINUM 3MO ($)
1955.75
1972.5
-1.078234704
-2.351485149
2695
LME COPPER 3MO ($)
7361
-0.861952862
-3.144736842
9905
6635
LME ZINC
1890
1.042502005
2.43902439
2539.5
1718.5
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul12 Jul12
PRICE
(L) 52W
Gold Spot $/Oz
16100
-0.800985829
-13.94975949
25195
16020
14.02
-0.142450142
-8.783344177
19.375
14.02000046
561.75
1.858567543
-15.04725898
795
551
WHEAT FUTURE(CBT) Jul12
617.75
0.898325847
-9.981785064
928
592.25
SOYBEAN FUTURE Nov12
1262
0.317965024
4.795515881
1400
1115.75
COFFEE 'C' FUTURE Jul12
157.5
-1.960784314
-32.17054264
290.75
156.5
SUGAR #11 (WORLD) Jul12
19.09
-1.699279094
-15.38120567
27.02999878
18.94999886
COTTON NO.2 FUTR Dec12
65.47
-3.165212247
-25.46675774
107.1999969
64.61000061
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
Last 18.08
Min 17.94
YTD %
-0.268 0.0456 -0.0621 -0.0965 0.0128 0.0125 0.0155 0.0911 0.2118 0.6654 0.2482 -0.3929 -0.1034 -0.698 0.2796 0.0375 0.1423 -0.5262 -0.7353 0.1032 -0.0097
(H) 52W
-5.2307 -1.113 -2.9585 -4.1586 -1.4101 0.0938 0.1044 -1.0811 -4.3314 -0.0317 0.5584 0.8191 0.7469 -4.0926 3.922 1.3282 3.1168 2.8981 4.2781 2.8377 0.0097
(L) 52W
1.1081 1.6618 0.9772 1.4697 84.18 8.0449 7.8113 6.4909 56.515 31.96 1.3199 30.716 44.35 9662 88.637 1.24736 0.90835 9.514 11.7768 117.9 1.0311
0.9388 1.5235 0.7071 1.2288 75.35 7.9823 7.7529 6.2769 43.855 29.63 1.1992 28.63 41.879 8458 72.057 1.00749 0.79505 7.8544 9.8423 95.6 1.0288
(H) 52W
(L) 52W
ARISTOCRAT LEISU
NAME
PRICE 2.71
-5.244755
23.18182
3.25
1.88
1394956
CROWN LTD
8.06
-3.473054
-0.3708301
9.29
7.45
4531346
AMAX HOLDINGS LT
0.078
-3.703704
-10.34483
0.125
0.06
2403000
BOC HONG KONG HO
21.1
-2.088167
14.67392
24.45
14.24
12560894
0.225
0
-2.173915
0.41
0.204
0
2.95
-0.6734007
5.357145
4.79
2.3
16000 16678072
CENTURY LEGEND
World Stock MarketS - Indices
DAY %
0.9675 1.537 0.9667 1.2422 78.01 7.9921 7.7593 6.3638 55.4675 31.56 1.2894 30.033 43.515 9456 75.472 1.20084 0.8082 7.9051 9.9273 96.91 1.03
MACAU RELATED STOCKS
CHEUK NANG HLDGS
DAY % YTD %
VOLUME CRNCY
CHINA OVERSEAS
15.42
-2.15736
18.79816
17.86
9.99
CHINESE ESTATES
9
0.1112347
-28
13.68
8.3
235500
CHOW TAI FOOK JE
8.59
-3.047404
-38.29023
15.16
8.55
10388500
EMPEROR ENTERTAI
1.15
-2.542373
3.603602
2.09
0.97
460000
FUTURE BRIGHT
0.81
-7.954545
92.85715
1.09
0.3
2880000
17.48
-3.104213
22.75281
24.95
8.69
24173288
99.5
-0.5
7.976124
125
84.4
1451557
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
12118.57
-2.217946
-0.8102212
13338.66016
10404.49
NASDAQ COMPOSITE INDEX
US
2747.48
-2.824563
5.463412
3134.17
2298.89
HANG SENG BK
FTSE 100 INDEX
GB
5260.19
-1.140229
-5.600757
6084.08
4791.01
HOPEWELL HLDGS
19.52
-2.008032
-1.711987
24.903
18.56
576300
DAX INDEX
GE
5975.22
-1.240767
1.303248
7523.53
4965.8
HSBC HLDGS PLC
60.15
-1.15037
1.949153
80.25
56
20231955
NIKKEI 225
JN
8295.63
-1.713456
-1.888978
10255.15
8135.79
HUTCHISON TELE H
3.27
-2.38806
9.364548
3.71
2.33
3812010
HANG SENG INDEX
HK
18185.59
-2.008531
-1.349656
23338.76
16170.35
LUK FOOK HLDGS I
15.04
-4.3257
-44.50185
46.15
14.84
2908000
MELCO INTL DEVEL
5.85
-4.5677
1.386482
10.76
4.3
5016193
CSI 300 INDEX
CH
2559.026
-2.809421
9.092387
3140.102
2254.567
MGM CHINA HOLDIN
11.1
-5.290102
15.71958
17.183
7.6
8611809
TAIWAN TAIEX INDEX
TA
6894.66
-2.975335
-2.508738
9070.25
6609.11
MIDLAND HOLDINGS
3.67
-5.897436
-7.183702
5.217
2.887
2952000
NEPTUNE GROUP
0.097
-5.825243
-12.61261
0.157
0.08
710000
NEW WORLD DEV
8.21
-3.751465
31.15015
11.794
6.13
10141306
SANDS CHINA LTD
34651311
KOSPI INDEX
SK
1783.13
-2.800748
-2.333848
2192.83
1644.11
S&P/ASX 200 INDEX
AU
3985.025
-1.940435
-1.763456
4657.4
3765.9
ID
3654.582
-3.820867
-4.380174
4234.734
3217.951
FTSE Bursa Malaysia KLCI
MA
1555.18
-1.169936
1.597282
1609.33
NZX ALL INDEX
NZ
771.639
-1.036652
5.732895
806.015
JAKARTA COMPOSITE INDEX
PHILIPPINES ALL SHARE IX
10.9
12.9
PRICE
NAME
Max 11.32
25.50
NAME
CORN FUTURE
27.8
CURRENCY EXCHANGE RATES
HEATING OIL FUTR Jul12 METALS
Last 28.45
SJM HoLDINgS LTD
Commodities ENERGY
MgM CHINA HoLDINgS
PH
3279.09
-2.576497
7.686272
3518.96
GALAXY ENTERTAIN
25.05
-4.752852
14.123
33.05
14.9
SHUN HO RESOURCE
1.18
0
18
1.32
0.82
0
1310.53
SHUN TAK HOLDING
2.74
-3.180212
7.067708
4.668
2.241
1078013
700.441
SJM HOLDINGS LTD
12.62
-4.538578
0.915306
20.711
10.079
15962582
14.2
-1.525659
5.654765
18.5
9.8
319713
18.06
-4.241782
-7.384615
27.48
14.807
9705631
2695.06
SMARTONE TELECOM WYNN MACAU LTD
HSBC Dragon 300 Index Singapor
SI
512.54
-1.63
3.27
na
na
ASIA ENTERTAINME
4.33
-6.88172
-26.36055
10.8692
3.66
38736
STOCK EXCH OF THAI INDEX
TH
1115.19
-2.304862
8.765069
1247.72
843.69
BALLY TECHNOLOGI
44.56
-4.274973
12.63903
49.32
24.74
730700
HO CHI MINH STOCK INDEX
VN
416.65
-2.833489
18.51799
492.44
332.28
BOC HONG KONG HO
2.82
-1.74216
17.63786
3.15
1.81
68556
Laos Composite Index
LO
1015.25
0
12.87328
1146.63
876.33
GALAXY ENTERTAIN
2.49
0
33.15508
3.24
1.08
1000
INTL GAME TECH
13.41
-6.223776
-22.03489
19.15
13.38
4690060
JONES LANG LASAL
68.88
-4.993103
12.43879
99.89
46.01
383836
LAS VEGAS SANDS
42.97
-6.951061
0.5616674
62.09
36.08
20702862
MELCO CROWN-ADR
10.95
-6.808511
13.82537
16.15
7.05
5430499
MGM CHINA HOLDIN
1.64
0
37.61931
2.21314
1.00254
100
MGM RESORTS INTE
10.37
-4.247461
-0.5752666
16.05
7.4
15664708
SHUFFLE MASTER
657395
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalization. All data supplied by Bloomberg unless otherwise indicated.
14.81
-6.620429
26.36518
18.77
7.35
SJM HOLDINGS LTD
1.71
-3.932584
6.371544
2.60368
1.26239
2000
WYNN RESORTS LTD
97.38
-5.493012
-11.86533
165.4931
96.52
3345814
AUD HKD
USD
Contact Information
ONE YEAR Suscription REGULAR 1,560 Mop 20% discount 1,150 Mop
First Name (Mr/Mrs/Ms)
Last name
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business daily June 5, 2012
Opinion Hey, Germany: you got a bailout, too Mark Whitehouse Paula Dwyer Bloomberg Editors
I
n the millions of words written about Europe’s debt crisis, Germany is typically cast as the responsible adult and Greece as the profligate child. Prudent Germany, the narrative goes, is loath to bail out freeloading Greece, which borrowed more than it could afford and now must suffer the consequences. Would it surprise you to know that Europe’s taxpayers have provided as much financial support to Germany as they have to Greece? An examination of European money flows and centralbank balance sheets suggests this is so. Let’s begin with the observation that irresponsible borrowers can’t exist without irresponsible lenders. Germany’s banks were Greece’s enablers. Thanks partly to lax regulation, German banks built up precarious exposures to Europe’s peripheral countries in the years before the crisis. By December 2009, according to the Bank for International Settlements, German banks had amassed claims of US$704 billion on Greece, Ireland, Italy, Portugal and Spain, much more than the German banks’ aggregate capital. In other words, they lent more than they could afford. When the European Union and the
European Central Bank stepped in to bail out the struggling countries, they made it possible for German banks to bring their money home. As a result, they bailed out Germany’s banks as well as the taxpayers who might otherwise have had to support those banks if the loans weren’t repaid. Unlike much of the aid provided to Greece, the support to Germany’s banks happened automatically, as a function of the currency union’s structure.
Irresponsible borrowers can’t exist without irresponsible lenders. Europe’s taxpayers have provided as much financial support to Germany as they have How it worked to Greece Here’s how it
worked. When German banks pulled money out of Greece, the other national central banks of the euro area collectively offset the outflow with loans to the Greek central bank. These loans appeared on the balance sheet of the Bundesbank, Germany’s central bank, as claims on the rest of the euro area. This mechanism, designed to keep the currency area’s accounts in balance, made it easier for the German banks to exit their positions. Now for the tricky part: As opposed to the claims of the private banks, the Bundesbank’s claims were only partly the responsibility of Germany. If Greece reneged on its debt, the
losses would be shared among all euro-area countries, according to their shareholding in the ECB. Germany’s stake would be about 28 percent. In short, over the last couple of years, much of the risk sitting on German banks’ balance sheets shifted to the taxpayers of the entire currency union. It’s hard to quantify exactly how much Germany has benefited from its European bailout. One indicator would be the amount German banks pulled out of other euro-area countries since the crisis began. According to the BIS, they yanked US$353 billion from December 2009 to the end of 2011 (the latest data available). Another would be the increase in the Bundesbank’s claims on other euroarea central banks. That amounts to 466 billion euros (US$590 billion) from December 2009 through April 2012, though it would also reflect non-German depositors moving their money into German banks. By comparison, Greece has received a total of about 340 billion euros in official loans to recapitalise its banks, replace fleeing capital, restructure its debts and help its government make ends meet. Only about 15 billion euros of that has come directly from Germany. The rest is all from the ECB, the EU and the International Monetary Fund.
Better prepared Germany’s changing financial exposure has major implications for its role as a leader of Europe’s response to the crisis. Before Germany’s banks pulled back their funds, they stood to lose a ton of money if Greece left the euro. Now any losses will be shared with the taxpayers of the entire euro
area – particularly France, whose banks still have a lot of outstanding loans to Greece. Perhaps this is what some German officials mean when they say that the euro area is better prepared for a Greek exit. Ultimately, though, the cost of letting Greece go would come home to Germany. If bank runs and market turmoil forced Portugal, Spain, Italy and others out of the euro area as well, the losses could wipe out much of the capital of German banks. Not to mention the longer-term damage the euro breakup would do to the exports that drive Germany’s economy, and the potential demise of a European project designed to prevent a repeat of the horrors of two world wars. To prevent such an outcome, with or without Greece, Germany will have to do everything it has so far refused, and more. This would include allowing the ECB to stand behind the debt of sovereigns. The euro area also needs a mechanism that would transfer money to economically troubled countries just as automatically as the region’s payment system bailed out Germany – an element economists have long said is crucial to making the euro area a workable currency union. As we have advocated, a joint unemployment insurance fund could be a first step toward such a fiscal union. As German Chancellor Angela Merkel considers the next step in the euro crisis – one that could help the euro area return to growth or, alternatively, risk the survival of the entire currency union – she should keep in mind that her country is indebted to the euro system as much as Greece is. Bloomberg View
editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Chief REPORTER Vitor Quintã Newsdesk Cláudia Aranda, Kristy Chan, Kelsey Wilhelm, Cherry Lee, Terina Cao, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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June 5, 2012 business daily | 15
OPINION
Asia exposed wires Business Leading reports from Asia’s best business newspapers
Taipei Times Australia and New Zealand Banking Group Ltd (ANZ) cut its forecast of Taiwan’s economic growth for this year to take into account lingering concerns over the debt crisis in the eurozone, which has had an impact on the world’s economic fundamentals. The bank said that slowing economic activity in China, the largest buyer of Taiwanmade goods, is also expected to have an impact on the nation’s exports. ANZ has lowered its forecast of GDP growth for this year to 3.1 percent from an earlier estimate of 3.97 percent.
Business Standard The Indian government is set to remove the legal hurdle in the entry of banks into commodity futures trading, despite the Reserve Bank of India’s reservations. Banks will be able to trade in shares, bonds and currencies, but by law they are still banned from trading in goods. The finance ministry is supporting the consumer affairs ministry’s proposal to amend the law, as it would provide a hedging tool for banks. The RBI has been against allowing banks to trade goods, as there is no “autonomous and independent” commodity regulator in the country.
Business Inquirer The Philippine Central Bank has lifted restrictions on market penetration by banks, allowing them to put up as many branches as they want and in as many locations as they intend to as long as their capital can support such expansion. The bank-branching liberalisation is consistent with the central bank’s intention to make loans and other financial services meet the increasing demands of the growing Philippine economy, especially for consumers and micro-enterprises in remote areas. The move follows the release of official data showing the country GDP grew by 6.4 percent in the first quarter from a year ago.
Yomiuri Shimbun Toyota Motor Corp. and other Japanese automakers posted strong year-on-year growth in new auto sales in the United States in May, against last year’s slump caused by supply shortages after the earthquake and tsunami in March 2011. Data released late last week by Autodata Corp. showed Toyota increased sales 87.3 percent to 202,973 units thanks to strong demand for the Camry sedan and other flagship models. Sales at Honda Motor Co. grew 47.6 percent to 133,997 units and Nissan Motor Co. sold 91,794 vehicles, up 20.5 percent.
Stephen S. Roach
Member of the faculty at Yale University and former chairman of Morgan Stanley Asia
A
sian authorities were understandably smug in the aftermath of the financial crisis of 2008-2009. Growth in the region slowed sharply, as might be expected of export-led economies confronted with the sharpest collapse in global trade since the 1930’s. But, with the notable exception of Japan, which suffered its deepest recession of the modern era, Asia came through an extraordinarily tough period in excellent shape. That was then. For the second time in less than four years, Asia is being hit with a major external demand shock. This time it is from Europe, where a raging sovereign-debt crisis threatens to turn a mild recession into something far worse: a possible Greek exit from the euro, which could trigger contagion across the eurozone. This is a big deal for Asia. Financial and trade linkages make Asia highly vulnerable to Europe’s malaise. Owing to the former, the risks to Asia from a European banking crisis cannot be taken lightly. Lacking well-developed capital markets as an alternative source of credit, bank-funding channels are especially vital in Asia. Indeed, the Asian Development Bank estimates that European banks fund about 9 percent of total domestic credit in developing Asia – three times the share of financing provided by banks based in the United States. The role of European banks is especially significant in Singapore and Hong Kong – the region’s two major financial centers. That means that Asia is far more exposed to an offshore banking crisis today than it was in the aftermath of Lehman Brothers’ collapse in 2008, which led to a near-meltdown of the US banking system. The transmission effects through trade linkages are just as worrying. Historically, the US was modern Asia’s largest source of external demand. But that appears to have changed over the past decade. Seduced by China’s spectacular growth, the region shifted from US- to China-centric export growth. That seemed like a good move. Combined shipments to the US and Europe fell to 24 percent of developing Asia’s total exports in 2010 – down sharply from 34 percent in 1998-1999. Meanwhile, over the same period, Asia’s dependence on intraregional exports – trade flows within the region – expanded sharply, from 36 percent of total exports in 1998 to 44 percent in 2010.
Below the surface These numbers seem to paint a comforting picture of an increasingly autonomous
Asia that can better withstand the blows from the West’s recurring crises. But research by the International Monetary Fund shows that, beneath the veneer, 60-65 percent of all trade flows in
Financial and trade linkages make Asia highly vulnerable to Europe’s malaise
the region can be classified as “intermediate goods” – components that are made in countries like Korea and Taiwan, assembled in China, and ultimately shipped out as finished goods to the West. With Europe and the US still accounting for the largest shares of China’s end-market exports, there can be no escaping the tight linkages of Asia’s China-centric supply chain to the ups and downs of demand in the major developed economies. Moreover, there is an important and worrisome twist to those linkages: China itself has tilted increasingly toward Europe as its major source of external demand. In 2007, the European Union surpassed the US as China’s largest export market. By 2010, the EU accounted for 20 percent of total Chinese exports, while the US share was just 18 percent. In other words, a Chinacentric Asian supply chain has made a big bet on the grand European experiment – a bet that now appears to be backfiring. Indeed,
in China, a now-familiar pattern is playing out yet again – another slowdown in domestic growth stemming from a crisis in the advanced economies of the West. And, as goes China, so will go the rest of an increasingly integrated Asia. The good news is that, so far, the downside has been much better contained than was the case in late 2008 and early 2009. Back then, Chinese exports went from boom to bust in just seven months – from 26 percent annual growth in July 2008 to a 27 percent decline in February 2009. This time, the annual export gain has slowed from 20 percent in 2011 to 5 percent in April 2012 – a significant deceleration, to be sure, but one that stops well short of the previous outright collapse. That could change in the event of a disorderly euro breakup, but, barring that outcome, there is reason to be more sanguine this time around.
Lessons forgotten The bad news is that Asia seems to be learning little from repeated external demand shocks. In the end, internal demand is the only effective defense against external vulnerability. Yet the region has failed to construct that firewall. On the contrary,
private consumption fell to a record-low 45 percent of developing Asia’s GDP in 2010 – down ten percentage points from 2002. In these circumstances, immunity from external shocks – or “decoupling,” as it is often called – seems fanciful. As with most things in Asia nowadays, China holds the key to supplying Asia’s missing consumer demand. The recently enacted 12th FiveYear Plan (2011-15) has all the right ingredients to produce the ultimate buffer between the dynamism of the East and the perils of a crisis-battered West. But, as the euro crisis causes China’s economy to slow for the second time in three and a half years, there can be little doubt that implementation of the Plan’s pro-consumption rebalancing is lagging. There are no oases of prosperity in a crisis-prone globalised world. That is equally true for Asia, the world’s fastest-growing region. As Europe’s crisis deepens, the twin channels of financial and trade linkages have placed Asia’s economies in a vice. Rebalancing is the only way out for China and its partners in the Asian supply chain. Until that occurs, the vice now gripping Asia will only continue to tighten. © Project Syndicate
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business daily June 5, 2012
CLOSING Weeks to save euro, says Soros Billionaire investor George Soros has warned European leaders they have a “three-month window” to save the euro. “The crisis is likely to come to a climax in the [autumn]. By that time, the German economy will also be weakening, so that Chancellor Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities,” he said. Mr Soros said the crisis was “more of a banking problem and a problem of competitiveness”. European leaders have “applied the wrong remedy,” he said.
Factory orders in U.S. drop Orders to U.S. factories unexpectedly fell in April for a second month, pointing to a deceleration in manufacturing as the global economy cools. Bookings dropped 0.6 percent after a revised 2.1 percent decrease in March, the first back-to-back declines in more than three years, figures from the Commerce Department showed yesterday. Slowdowns in Europe and parts of Asia combined with a cooling in business spending in the U.S. following a reduction in a government tax credit may limit manufacturing this year. The last time bookings decreased in consecutive months was in January and February 2009.
Legislators want La Scala plots back The plots where La Scala is being built should be taken back as quickly as possible, legislators say kelsey.wilhelm@macaubusinessdaily.com
I
n the busy aftermath of the latest verdict on former government secretary Ao Man Long, many legislators are calling for repossession of the plots given to the developer of La Scala, but the proposal to have a Legislative Assembly probe last year’s land grant seems to have earned a much cooler response than expected. The Court of Final Appeal found on May 31 that the original five plots were granted in 2006 only after two Hong Kong businessmen bribed the secretary for transport and public works at the time, Ao Man Long. “It is certain that the government should get back the land” after the court decision, legislator Kwan Tsui Hang told Business Daily. She said the government should start the process of seizing the land as soon as possible. In an enquiry to the government quoted by Chinese-language Rádio Macau, legislator Chan Meng Kam has also called for the five original plots to be quickly returned to the government. But legislator José Pereira Coutinho says the eight plots granted to the La Scala developer in March 2011
by Mr Ao’s successor as secretary for Transport and Public Works, Lau Si Io, should also revert to the government immediately. Legislator Ho Io Sang agrees: “There are eight more land plots and, from the point these eight are linked to the other five, I personally believe that the eight plots should revert to the administration.” The government has pledged to “strictly enforce the court decision”, but Mr Lau told journalists on June 1 that the review of the concession would “take some time”.
Photo by Manuel Cardoso
Kelsey Wilhelm
Committee doubts And not all legislators agree with taking back the plots as soon as possible. More information was needed for the government to carry out a full review of the situation in order to truly justify any annulment of the concession, legislator Gabriel Tong Io Cheng said. Legislator Tommy Lau Veng Seng echoed that sentiment: “They are going to analyse the sentence and then will take whichever steps are appropriate.” Two pan-democratic legislators, Ng Kuok Cheong and Paul Chan Wai Chi, have called for an assembly committee to investigate whether the secretary lied about last year’s La Scala land grant. Mr Coutinho has backed the creation
Secretary Lau Si Io said the review of the La Scala concession would ‘take some time’
of an independent committee of inquiry, but said that it should include directly elected legislators only to examine officials’ conduct in this case. “Accountability of the top officials, including the chief executive and the secretary for transport and public works, should not be overlooked,” he said. But Mr Tong warned that the corruption case “really is a judicial question” and should not be brought into the legislature. Secretary Lau’s staff said they had written to the Commission Against Corruption asking it for further
information on whether the 2006 La Scala grant “might have involved criminal actions” but received a notice “which did not include information on any criminal case”. But the commission has denied this, saying it had sent a notice on November 30, 2009, “explicitly stating that the plots were involved in an ongoing investigation”. The New Macau Association has accused Mr Lau and his staff of lying to the public and to legislators. Pan-democrat legislator Au Kam San has lodged a complaint against the secretary with the Public Prosecutors Office.
Vigils in Macau, HK mark Tiananmen Small vigil held at Largo de São Domingos
A few dozen people joined the candlelight vigil in Macau
T
housands of people gathered at Hong Kong’s candlelight vigil yesterday to mark the 23rd anniversary of the Tiananmen Square crackdown, in stark contrast to mainland China where activists said hundreds of people were detained.
A smaller vigil was also held in Macau, at Largo de São Domingos, organised by the New Macau Association. At early night yesterday there only a few dozen people had joined the initiative. Hong Kong’s Victoria Park glowed with candlelight in what has become
an annual act of remembrance for the hundreds, perhaps thousands, of people killed in the June 3-4, 1989 onslaught against prodemocracy activists in Beijing. People’s Liberation Army soldiers stormed into central Beijing on June 3-4, 1989, firing upon unarmed demonstrators and citizens as they ended six weeks of democracy protests on Tiananmen Square and around the vast country. The anniversary of the brutal army action in the heart of Beijing is always hugely sensitive, but particularly so this year ahead of a once-in-a-decade handover of power marred by fierce in-fighting in the ruling Communist Party. Searches on China’s popular social media sites for June 4, the number 23, the words “candle” and “Victoria” were blocked. After the Shanghai stock market opened at 2346.98 points – which some pointed out could mean the 23rd anniversary, June 4, 1989
– censors responded by blocking searches for “Shanghai Composite Index” on the Sina microblog. The United States and France called for all those still jailed over the demonstrations to be freed, but Chinese foreign ministry spokesman Liu Weimin hit back at what Beijing called “groundless accusations”. Despite the heightened security, more than 80 rights campaigners met in a Beijing square on Saturday, carrying banners and shouting slogans calling for a reassessment of the 1989 protests. A similar protest occurred in a park in southeast China’s Guiyang city last week, with police subsequently taking into custody at least four of the organisers, the Chinese Human Rights Defenders group said. Rights activists and lawyers said police had contacted them and warned against participating in activities marking the crackdown. with AFP