Macau Business Daily, June 7, 2012

MOP 6.00 Year I - Number 49 - Thursday June 7, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte

La Scala - the soap opera

China frat boys spark hotel boom

Homebuyers fear land seizure T

he buyers of yet-to-be-built La Scala apartments are flocking to real estate agencies, worried about the money they invested in a plot that – according to media reports – the government has already decided to seize due to its links to the Ao Man Long corruption scandal.

Buyers want to know whether they should continue making their monthly payments to developer Chinese Estates Holdings; if they can get their money back; and what will happen to the property stamp duty they paid.

About 304 of La Scala’s 900 flats have been pre-sold, with Chinese Estates hav-

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Beijing probes casino capitalist ing received HK$384 million, the company said in a statement to the Hong Kong bourse yesterday.

Legal experts and real estate agencies are split on the stamp duty refund but agree that buyers’ interests are duly safeguarded, and that they would be entitled to compensation worth twice the down payment.

Bad publicity has frightened away other potential buyers, especially since the verdict of Mr Ao’s third trial, but agencies have yet to receive any notice from the developer or the government to stop selling La Scala flats.

Meanwhile experts warn that the decision

to take back the plots located near the airport might not be as straightforward as in previous cases also linked to the former secretary. To revoke the contract immediately could be to ignore defendants’ presumption of innocence, they added.

Chinese Estates, who suspended share trading yesterday, will be left with few alternatives if the plot is taken back.

The company said in yesterday’s statement it “may lodge an appeal” against any administrative action to annul the transfer of the land concession. Doubts, however, arise over how simple that process might be.

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HANG SENG INDEX 18550

Viva Macau ‘saviour’ wings clipped: lawyer

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Just days before Viva Macau began its spiral into bankruptcy, the airline was close to getting investment from Air Asia it’s claimed. The Malaysian budget operator considered buying a stake during discussions held on March 24, 2010, Viva Macau’s lawyer revealed at the Court of Second Instance yesterday. But the transaction never happened as the airline was grounded just four days later.

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HSI - Movers Name

No licensed sport bets: hours before Euro 2012

Airport recoups loss baggage

The concession of Macauslot – the city’s only licensed football betting operation – has expired just three days before the start of the Euro 2012 international soccer tournament. It’s common during such events for police on the mainland and in Macau to crack down on illegal sports betting. But with no new concession extension gazetted for Macauslot yesterday, it too could technically be labelled ‘illegal’ according to some opinion.

Operational profit at Macau International Airport Company Ltd (CAM) rose 54 percent last year to 242 million patacas (US$30.3 million), from 156.5 million patacas in 2010 according to yesterday’s Official Gazette. But CAM still recorded an overall loss for 2011 – albeit a narrower one than previously. In 2011 its deficit was 15.3 million patacas, down from a 93.7-million–pataca loss in 2010.

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%Day

NEW WORLD DEV

6.13

HENDERSON LAND D

4.91

SINO LAND CO

4.07

CNOOC LTD

3.77

TENCENT HOLDINGS

3.74

CATHAY PAC AIR

-0.33

MTR CORP

-0.60

CHINA SHENHUA-H

-2.71

IND & COMM BK-H

-4.69

BANK OF CHINA-H

-5.03

Source: Bloomberg

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business daily June 7, 2012

macau

Grounding ‘foiled’ Air Asia plan to buy Viva Macau Just days before Viva Macau began its spiral into bankruptcy, the airline was close to getting investment from Air Asia Tony Lai

tony.lai@macaubusinessdaily.com

M

alaysia-based budget airline Air Asia was negotiating a possible purchase of a 49 percent stake in Viva Macau to rescue it from financial distress, in the week before Viva’s subconcession was terminated.

Air Asia considered the possibility of buying a stake in Viva Macau during discussion held on March 24, 2010, Henrique Saldanha, Viva Macau’s lawyer, revealed at the Court of Second Instance yesterday, but the transaction never happened as the airline was grounded just four days later. Air Asia, led by Tony Fernandes, has established budget spin-offs in countries including Indonesia, Thailand and most recently the Philippines and Japan.

The company is current eyeing similar airline partnerships in South Korea, Vietnam and the Middle East.

Business Daily tried to confirm Air Asia’ interest in buying Viva Macau but was unable to get in contact with the company.

Viva Macau’s sub-concession with Air Macau was revoked owing to the damage to passengers and to Macau’s image from the cancellation and delays of flight on the weekend of March 26-28, 2010.

The “chaos” was caused as the company was allegedly unable to settle its jet fuel bills with supplier Nam Kwong Oil. The company pledges that Nam Kwong is not a creditor and says Nam Kwong had, in fact, been paid in full.

Maria Cristina Freitas Gomes da Silva, government representative in Air Macau at the time, said at the court she was not aware of the potential deal between Air Asia and Viva Macau, but was aware that the airline was “trying to find solutions” to solve its economic difficulties.

Loan requests For instance, Viva Macau was trying to get another loan from the government. Authorities granted loans of over 200 million patacas (US$25 million) to the low-cost carrier from 2008 to 2009.

But Ms Silva said another loan was impossible, as the company could not provide any proof or document to explain where the money was going to be invested.

“The airline’s economy had always been in bad shape… particularly since the financial crisis in 2008,” said Ms Silva, adding that Viva Macau had sent “more than 10 letters” to request assistance from the government.

The carrier was declared bankrupt, after the termination of its subconcession contract, in September 2010, as it was

unable to repay its debts.

“Jet fuel bills aside, the company also had other financial problems, namely the rentals for its aircraft,” she said.

The representative said the company had never clearly revealed its financial situation to the Civil Aviation Authority and that the regulator had to “even use some kind of threat” to get the relevant documents.

She said the airline had only submitted the annual financial report of 2005 and a few documents to the authority, noting, however, that she did not rule out any chance that the company might hand over the documents to other public departments.

The representative described the situation in the Macau airport during the March 26-28, 2010, weekend as “very chaotic” because the carrier did not provide any information to the passengers and continued selling tickets until the night of March 28.

“The government told Air Macau it had to either solve the problem or take up the responsibilities,” said Ms Silva.

Pressure claims In two letters read in the court last week, the aviation regulator told Air Macau that Secretary for Transport and Public Works Lau Si Io had advised the company to end its sub-concession contract with Viva Macau. Then later Air Macau wrote to the carrier saying

it had to terminate the contract due to government pressure.

Mr Saldanha also pointed out yesterday that the English-language version of the letter to Air Macau said it “must immediately” end its sub-concession to Viva Macau.

The carrier took its plight to court last year, claiming that this was an illegal administrative act issued by Mr Lau. Ms Silva said she

c o u l d not explain the message as she was not the author, but stressed that the government’s intention was “to remind Air Macau about its accountability”.

The aviation authority told Macau Business in October 2010 that Mr Lau’s ‘decision’ was just a “nonenforceable opinion”.

She added that the flight cancellation rate of Viva Macau had shot up since mid-2009, to 26 percent in September 2009, before dropping to 11 or 12 percent in January 2010.

According to official data from the regulator, the cancellation rate for Viva Macau was 4.6 percent during the second half of 2008 while Air Macau’s rate was 15.6 percent.

“The number of complaints [received by the authority] on Viva Macau about the lack of staff and cancellation of flights was higher than on other airlines,” said the representative.

Loi Sin I, public relations staff at the Macau Government Tourist Office, and Cheang Peng Tai, working in the office’s management team, said yesterday in court that they “had never seen any situation” similar to “the chaos in that weekend”.

Mr Cheang said they had to handle over 300 stranded passengers without the support from any Viva Macau representative or staff during those three days. Staff from the carrier only showed up on March 27 but they did not handle any passenger, he added.

Last week, Sharon Chia, former director of ground operations in Viva Macau, had said in court they handled the situation the best they could in the first day of that weekend but were instructed to

allow the tourism bureau to take over in the second day.

Yesterday Ms Silva said Civil Aviation Authority president Simon Chan Weng Hong told the airline to provide accommodation and transportation for stranded passengers on the first day.

KEY POINTS Air Asia was close to buying a stake in Viva Macau – lawyer Carrier was looking for another government loan Airline failed to send reports to regulator Viva staff did not help stranded passengers – tourism officials

June 7, 2012 business daily | 3

Photo by Manuel Cardoso

MACAU

La Scala owners worry as legal doubts intensify Buyers of La Scala flats rush to get information on their investments as confusion swirls around development’s future Vítor Quintã

vitorquinta@macaubusinessdaily.com

La Scala buyers are mostly worried about whether they should continue making their monthly payments to the developer

A

mid reports that the government has already decided to take the plots where La Scala is being built, real estate agencies are swamped with enquiries from buyers worried about their money.

The resolution might not be as simple as in the previous cases linked to the Ao Man Long corruption scandal, legal experts warn.

Yesterday, sources familiar with the case told Rádio Macau the government had already decided to seize the plot of land near the airport.

A spokesman for the Secretary for Transport and Public Works, Lau Si Io, declined to comment when contacted by Business Daily.

Midland Realty (Macau) Ltd chief executive Ronald Cheung told Business Daily the real estate company had so far “received no formal notice from the government or from the developer [Chinese Estates Holdings] to stop selling” La Scala flats.

But he said the “negative news” surrounding the residential project made it “impossible to have potential new buyers”.

The agency has received no inquiries since Friday, the day after Mr Ao’s

KEY POINTS Midland has received many enquiries of La Scala buyers No new interest but also no notice to stop sales Reports claim govt decided to take back plot Case not as simple as previous land deals, experts say Chinese Estates willing to appeal

third trial ended. The verdict says two Hong Kong businessmen, Chinese Estates Holdings chairman Joseph Lau Luen Hung and Steven Lo Kit Sing, bribed the former secretary to get the La Scala land.

At the same time, Midland has received “a lot of enquiries” from people who have already bought a flat in the yet-to-be-developed complex, Mr Cheung confirmed.

Over 300 of La Scala’s 900 flats have been pre-sold, with total contract sales amounting to approximately HK$3.8 billion, of which cash deposit of about HK$384 million was received, Chinese Estates said in a statement to the Hong Kong Stock Exchange late yesterday.

be third-party rights that must be provided for,” Mr Simões said.

Third parties would include people who have bought La Scala flats.

Another expert in commercial law who asked to remain unidentified told Business Daily that to take back the plots immediately would be “to ignore Joseph Lau the presumption of innocence”.

He believes the case should be “frozen” until the end of the Lau’s trial in the Lower Court. The government could ask the court for an injunction, stopping any construction works or sales of La Scala flats.

Not that simple

Buyers are mostly worried about whether they should continue making their monthly payments to the developer, Mr Cheung said.

Those who contacted a lawyer were advised not to delay the payment or risk “forfeiting the unit,” he said.

La Scala buyers were also “very, very concerned” about stamp duty – three percent of the sale value.

“Practice tells me it’s not normal for the Financial [Services] Bureau to give back the money,” he said.

Mr Simões agrees that the administration is not required to return the money. “The bill explicitly says the stamp duty is charged, even if the transaction eventually does not happen,” he said.

However, the legal expert believes the government will, in all likelihood, “authorise the refund” of the stamp duty charged.

The unidentified lawyer said it would be difficult to get back the money but buyers may be able to ask the developer to pay compensation for financial damages, including stamp duty.

Mr Cheung says just a few buyers have asked if it would be possible to get back the down payment, which total amounts to HK$384 million.

That would only be possible if the developer failed to deliver the units by 2015, he said.

Legal expert Carlos Duque Simões, from DSL Lawyers, says the authorities should not take into account the 300 buyers in reaching a decision. “If the government invoke their interests in upholding the concession, it would be acting wrongfully, using ruses,” he told Business Daily.

The specialist in property, contract and construction law is confident that buyers’ interests have been “duly safeguarded”, especially if the contract was revoked for reasons attributable to the developers.

In that case, he said, they would be entitled to compensation worth twice the down payment – a view also expressed by lawyer Vítor Gomes two weeks ago.

The sources quoted by Rádio Macau said the government had no alternative but to take back the plots, as happened with a land swap deal involving businessman Pedro Chiang. Mr Chiang was sentenced for corruption and money laundering for is dealings with Mr Ao and is still at large.

Mr Chiang appealed but the Court of Final Appeal said the decision to revoke a “hopelessly flawed” deal was inevitable, as soon as it was proven that it was based on a corruption crime.

Mr Simões, who has been licensed to practise in Macau since 1993, is not so sure.

“It depends on what kind of evidence there are and the type of link to the defendant,” he said.

Unlike the Chiang deal, he said, there may be more people and legal entities involved. “There might

Money worries

Developer impact Trading in shares of Chinese Estates was suspended during yesterday’s session, after which the company stressed that it “may lodge an appeal” against a possible seizure of the plots within 30 days.

The Hong Kong-listed company,

with a market value of US$2.2 billion (17.6 billion patacas), builds residential and commercial property in Hong Kong, Macau and the mainland.

Mr Lau owns 75 percent of the shares of Chinese Estates, which last closed at HK$9. The company’s shares have fallen 28.2 percent in the past three months.

Two weeks ago, Chinese Estates said a special committee would be set up “to consider and handle all matters in relation to the accusation,” including “its potential impact … on the La Scala project” and appointed two additional executive directors.

If the plot is taken back, the company might sue the government. Mr Simões said it might use a defence that it did not know the acquisition

HK$384 M Chinese Estates received from the pre-sale of 304 flats

was based on an act of corruption.

“There is very little experience, few legal precedents, in which this strategy has had any success,” the lawyer said.

The company would also have to fire Mr Lau to “distance itself” from the corruption charges, he said.

In the end, the land would finally return to the administration, after first being granted to the airport company in 1990. The five private companies who sold the land to a Chinese Estates subsidiary – four of which have already been liquidated – are “simple vehicles for the government,” he said.

But the other lawyer fears the situation might be a lot more complex. “If only the tender is annulled, then legally the companies’ shareholders would have to return” the 1.37 billion patacas they received, he said.

The alternative is to revoke the land concession, ensuring that the plots return to the government. However, the expert said, the government would need “a penal justification” such as a corruption conviction from Mr Lau’s trial.

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business daily June 7, 2012

macau

Softer economy, stable hotel outlook Hoteliers expect occupancy and room rates to hold up ahead of influx of mainland students this summer Cherry Lee

ceci-lqq@macaubusinessdaily.com

T

he head of the Macau Hoteliers and Innkeepers Association says the industry is on the verge of a boom over the summer months, despite mixed performances from some hotels here.

The association’s chairman Chan Chi Kit said the industry was heading into a purple patch because of an expected boom in the number of mainland students travelling during the summer holidays. The group represents guesthouses and hotels with a three-star rating.

Macau’s hotel occupancy rate for all rated hotel rooms stood at 88.2 percent in April – a slight decline on the same time last year. The average occupancy rate last July and August was about 93 percent.

Speaking to the Chinese-language newspaper Macau Daily News, Mr Chan said the city’s hotels had welcomed fewer guests so far this year compared to last year.

The average occupancy rate had remained higher than 70 percent, which was encouraging to hoteliers who had enjoyed more stable prices.

Prices had stabilised at about the same levels as last year, he said.

Data from the Macau Hotel Association says room rates increased 6.7 percent year-onyear in April. The hotel association represents the city’s four- and fivestar hotels, and a handful of threestar properties.

The Macau Daily News report quoted a source from an unnamed four-star hotel saying room rates had eased by about 10 percent in year-onyear terms but that the property had welcomed more tourists in the first five months of this year than in the

Corporate

Mr Philip Cheng, right, director of Galaxy Entertainment Group, received the award

Galaxy Entertainment hotel group award Local casino operator Galaxy Entertainment Group has been given a special award at an event organised by CAPITAL CEO and CAPITAL Entrepreneur, two magazines of Hong Kong-based South China Media. GEG received the ‘World’s Distinguished and Leisure Hotel Group Award’ during Macau Enterprise Pilgrimage 2012. Philip Cheng, a director of GEG, received the honour on behalf of the casino firm, pledging it would continue to promote Macau as a world centre of tourism and leisure under the group’s philosophy of quality service with an ‘Asian Heart’. GEG opened Phase 1 of its HK$16.5 billion (US$2.1 billion) flagship Cotai resort Galaxy Macau in May 2011 and this April started work on the HK$16 billion Phase 2.

VIP refit for LVS Boeing 737 Taikoo (Xiamen) Aircraft Engineering Co. Ltd is to do a cabin refit to VIP standard for a Boeing 737-300 aircraft belonging to casino operator Las Vegas Sands Corp. reports Avionics Intelligence. The work will be done at the TAECO facility in Xiamen, Fujian province, in southern China. LVS uses its fleet of aircraft to transport the company’s executive officers and VIP guests. The casino firm said that in the first quarter of this year 81 percent of its US$1.1 billion earnings before interest, taxation, depreciation and amortisation came from Asia. It operates four casino resorts in Macau – Sands Macao, The Venetian Macao, The Four Seasons Macao, and Sands Cotai Central, as well as Marina Bay Sands in Singapore.

Steady performances are predicted by the city’s hotel industry associations this summer, even though question marks hang over global markets

same period last year.

The report said uncertainty in global markets and the softening economy had led to less demand for rooms. It said the number of overnight tourists from the mainland travelling on individual visas dropped by more

than 10 percent in May and early days of June.

Mr Chan said the opening of new properties at Sands Cotai Central in April had not created the same level of tourism boom that the Galaxy Macau opening had sparked in May last year.

June 7, 2012 business daily | 5

MACAU

Macauslot sports betting licence expires Concession ends on eve of Euro 2012 but renewal expected Associate Editor

T

Photo by Manuel Cardoso

he 12-month concession of Macauslot – a monopoly provider in Macau of instant lottery, soccer and basketball betting – expired on Tuesday, only three days before the start of the Euro 2012 soccer championships.

There was no mention in yesterday’s Official Gazette that Macauslot – full name Sociedade de Lotarias e Apostas Mutuas de Macau Lda – has had its concession extended for another year.

Macauslot generated gross revenues of 659.36 million patacas (US$82.5 million) in 2011 – more than half of all revenues from non-casino gaming in Macau that year. All officially-licensed mutual betting and lotteries in Macau – including Macauslot – is currently run by companies and individuals linked to former casino monopolist Stanley Ho Hung Sun. There is a precedent for a gap between the expiry date of an existing Macauslot licence and the gazetting of a new one, and thus the granting of a rollover licence by default. Last year when the licence was renewed for 12 months it was said to have taken effect from June 6 2011, but wasn’t signed until July 28 and not gazetted until August 10.

Under Macau’s Basic Law, technically a concession cannot legally take effect until it is published in the Official Gazette, legal sources have told Business Daily. Macauslot is a subsidiary of Sociedade de Turismo e Diversões de Macau, the tourism investment company and former Macau casino operator founded

by Stanley Ho.

Euro 2012 Industry sources told Business Daily it was highly unlikely Macauslot’s sports betting concession would not be rolled over on the eve of a major international soccer tournament.

They say even if the government were minded not to renew Macauslot’s permission or to open the concession to other bidders, the disruption that would do to business in what is likely to be a peak earnings period for licensed domestic sports betting would not be in the public interest.

MOP 659.36M Macauslot gross revenues in 2011

Yesterday the Chinese version of macauslot.com, the official website of the company and the portal for online and telephone betting on those products within the borders of the Macau Special Administrative Region, was displaying betting price information for Euro 2012.

In 2011 gross revenue from Macauslot’s soccer betting operation – via telephone, Internet and betting parlours – with bets taken only within Macau, was 362 million patacas according to a

Parlour games – no official word on Macauslot’s sports betting licence renewal

research paper prepared by MdME, a law firm in Macau that specialises in gaming industry issues. That year Macauslot’s basketball betting operations grossed 297 million patacas, and its instant lottery 360,000 patacas.

That year all non-casino betting in Macau brought in 1.19 billion patacas (US$148.9 million).

Non-casino gaming activities aside from Macauslot’s products are: greyhound racing (at the Canidrome, run by Yat Yuen, a company with senior executives from STDM and Sociedade de Jogos de Macau on its board) which grossed 86 million patacas in 2011; horse racing (run by Companhia de Corridas de Cavalos SARL, a company linked to Macau Jockey Club, the latter acquired in 1991 by a consortium led by Stanley Ho) which grossed 440 million patacas; and Chinese lottery (run by Sociedade de Lotarias Wing Hing Lda, with SJM Holdings’ directors Angela Leong On Kei and Louis Ng Chi Sing listed by the Official Gazette in June 2011 as directors) grossing six million patacas last year.

Foreign interest Outside investors have previously indicated an interest for bidding for sports betting licences in Macau.

In 2008, with the second term of

Macau’s first post-handover chief executive coming to an end and a shorter concession renewal cycle announced for Macauslot; foreign sports betting companies sensed an opportunity. Several including British brands William Hill and Ladbrokes expressed interest in entering the market.

An earlier version of the Macauslot concession had a ‘partialexclusivity’ clause on sports betting that also opened a window for sports betting in Macau casinos.

This possibility was also echoed in the concession contracts of the casino operators.

Venetian Macau Ltd, a unit of Macau casino operator Las Vegas Sands Corp., applied to the government for such a licence in May 2004. Galaxy Entertainment Group and Melco Crown Entertainment also publicly stated an interest in opening sports betting on casino floors.

But no reply was received to LVS’s request from Macau’s gaming regulator, the Gaming Inspection and Coordination Bureau. And in June 2009, Macauslot’s concession contract was amended to grant it exclusivity in sports betting inside Macau.

But MdME said in a study paper: “The fact that since 2009 the SLOT concession has been renewed on a yearly basis seems to indicate that the Macau government doesn’t want to commit to an exclusive

sports betting concession for a longer period.”

“There is a clear expectation that the government will, sooner or later, open the sports betting market to other players, ending the SLOT exclusive concession,” added MdME.

KEY POINTS Macauslot sports betting licence now expired – three days before Euro 2012 No Official Gazette announcement of renewal All licensed mutual betting and lotteries in Macau run by companies or people linked to Stanley Ho Hung Sun Mutual betting and lotteries grossed 1.19 billion patacas in 2011

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business daily June 7, 2012

macau

Fall of mainland banker InBrief throws spotlight on city Macau delegation moves on to Angola

A special anti-graft team from Beijing is looking for hard evidence in Macau’s casinos to unravel the network surrounding mainland banker facing a corruption inquiry

The business delegation led by former Chief Executive Edmund Ho Hau Wah left for Angola yesterday. Speaking in Portugal on Tuesday, Secretary for Economy and Finance Francis Tam Pak Yuen said “concrete measures” were being adopted to boost the MSAR as a “platform” between China and Portuguese-speaking countries.

“Investors are always welcome” to use Macau as a base for negotiations with other Asian regions, he added.

Disabled-friendly buildings pledge All new buildings and public infrastructure will be designed obstruction-free to aid the disabled, the Land, Public Works and Transport Bureau pledged, in a reply to Portuguese-language newspaper Hoje Macau. Projects that “don’t have the necessary conditions” to prevent architectural barriers will have “to install adequate support equipment”. Last December authorities promised to launch a public consultation on whether to revise the relevant planning law.

Corrections Wynn Cotai Our story on Wynn Cotai yesterday said: “the split on table numbers at Wynn Cotai would be 60:40 in favour of the mass-market, the same as Wynn Macau”. This was in fact a company reference to table revenue and should have been stated as 60:40 in favour of VIP. We apologise for the error.

New Macau Assn In Monday’s edition we published an article titled ‘New Macau wants e-Research probe’, which said the New Macau Association spent HK$700,000 on an opinion survey from the University of Hong Kong’s Public Opinion Programme last April.

But in fact the association spent just HK$70,000 (US$9,000) on that research project. For that inaccuracy we apologise to our readers and to the New Macau Association.

An executive vice-president of the Agricultural Bank of China is suspected of gambling illegally in Macau and misusing bank capital

Xi Chen xi@macaubusinessdaily.com

B

eijing’s top anti-corruption watchdog is probing Macau casinos in its efforts to unravel the complex network behind a mainland banker being held on corruption allegations.

The South China Morning Post reported that the Central Commission for Discipline Inspection is investigating Yang Kun, an executive vice-president of the Agricultural Bank of China, for allegedly gambling illegally in Macau and misusing bank capital.

Business Daily tried to confirm the development with the Office of the Secretary for Security. Its spokesperson, Sam Chong Nin, said the office had no comment.

The city’s Gaming Inspection and Coordination Bureau was not immediately available for comment.

According to the Hong Kong daily newspaper, Beijing’s anti-graft team is in the middle of an inquiry into Mr Yang’s role in the bank’s provision of a 10-year loan worth about 3 billion yuan (3.69 billion patacas) to businessman Wang Yaohui.

Mr Wang used the loan to develop a mixed-use commercial project,

Sonala, in Beijing. The project has lost money since it went into operation in 2008, according to Hong Kong’s Sing Tao Daily.

The newspaper said the government opened an inquiry into Mr Wang in February after complaints about his excessive gambling in Macau.

It quoted sources saying the probe against Mr Wang likely triggered the investigation into Mr Yang.

The bank tried to recover the loan in April but Mr Yang delayed the process. Reports say he was officially detained last month.

Under scrutiny The South China Morning Post says Beijing is now examining both Mr Yang and Mr Wang’s gambling activities in Macau.

“There are already some clues as to how much money they lost in Macau, but, of course, the government needs evidence, so that it can put a specific number on this,” the paper quoted one of the sources as saying.

It reported that the two men lost several hundred million yuan during their gambling trips to Macau. Beijing got wind of their losses after receiving a tip-off from an informant to the Ministry of

State Security. The names of the casinos were not mentioned.

The newspaper also said part of the loans granted by the bank might have been misused to cover gambling losses.

The complicated web of relationships of Mr Yang might even involve the Bo Xilai downfall, according to a report by Caijin magazine.

Mr Yang is also suspected to be close to Mr Bo’s father-in-law, Lieutenant General Gu Junshan, the former deputy director of the PLA General Logistics Department, and is involved in the case of Dalian Shide football club boss, Xu Ming, who was closely related to former Chongqing Party boss Bo Xilai. The exact nature of their dealings has not been confirmed.

A 2009 study of official media reports found that ‘‘57 percent of Chinese high-stakes gamblers in Macau are either government officials or senior managers in state-run companies”. The report said each of these high-ranking officials lost US$3.3 million (26.4 million patacas) each. Most was public money.

In 2009, Li Peiying, the former chairman of Beijing’s Capital Airports Holding Co, was executed for losing tens of millions of yuan in Macau.

Weather Beijing 32/20o C Changchun 28/14o C

Harbin 25/14o C

Xian 33/18o C Shanghai 29/23o C Chengdu 30/19o C Kunming 25/17o C Haikou 30/24o C Sanya 32/27o C

Guangzhou 34/26o C

MACAU (04 June-09 June) Day

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Shenzhen 32/25o C

ASIA (today)

Hong Kong 31/27o C

Manila

TOKYO

Jakarta

29/26o C

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32/24o C

Macau 31/25o C

Bangkok

SEOUL

K. lumpur

34/27o C

SINGAPORE

29/18o C

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taipei

32/26o C

June 7, 2012 business daily | 7

MACAU CAM extends losses but finances improve analysis The Macau International Airport Company’s losses narrowed last year, weighed down by debt payments

The roots of corruption

Kelsey Wilhelm

kelsey.wilhelm@macaubusinessdaily.com

T

Photo by Manuel Cardoso

he Macau International Airport Company Ltd (CAM) recorded a loss of 15.3 million patacas (US$1.9 million) last year, mainly due to interest payments on the company’s accumulated debts, according to yesterday’s Official Gazette.

The company’s financial situation has improved however, with losses falling sharply from a 93.7-million-pataca deficit in 2010.

Operational profit rose 54 percent to 242 million patacas, from 156.5 million patacas in 2010. Operating and administrative costs fell 2 percent and the airport operator saw its revenue grow 13 percent to 658.7 million patacas.

Net equity was stable at 3 billion patacas. Cumulative losses have eaten through 1 billion patacas of the company’s initial capital.

Accumulated debt also cost the firm last year, through a deduction of bank loan interest payments and more

than 200 million patacas in depreciation expenses.

The company is still waiting for an injection of capital which is earmarked for paying back a 2-billion-pataca loan from 1994 that is due this month.

CAM has issued 1.95 billion patacas of shares to cover the loan repayment. These non-voting, redeemable preference shares, decided on in mid-May, have seen little interest from smaller shareholders and it is up to the government to decide if it will step in. “[The] MSAR [government] has already subscribed 55.24 percent and STDM 33.03 percent of the 1.947-billion-pataca new

MOP242 million

capital,” a CAM spokesperson told Business Daily last week.

The second stage of the share subscription ends next Monday and the government will decide then if it will acquire the remaining 11.73 percent of shares.

Legislator Chan Meng Kam has been critical of the move to raise capital.

He said that, even after the capital injection, the company would have debts of “close to 2 billion patacas”.

He wrote that the airport’s development plan could face a “slow death” if the company continued losing money.

Last year’s passenger flow of 4.045 million represented a year-on-year drop of one percentage point and was the lowest passenger volume since 2005, according to company data.

Cargo volumes dropped by 24 percent drop last year, compared to 2010, and cargo has got off to a slow start this year.

CAM’s operating profit last year

A smaller loss was recorded by the airport company last year, a deficit of 15.3 million patacas, down from a 93.7-million–pataca loss in 2010

Political reform nears final hurdle

T

he political reform process has moved on to its final step after Chief Executive Fernando Chui Sai On approved two draft laws yesterday and formally sent them to the standing committee of the Chinese People’s Congress.

A press release from Mr Chui’s office said the bills matched the provisions of the Basic Law and the interpretations of the Chinese People’s Congress. They

were sent to the Hong Kong and Macau Affairs Office of the State Council to be presented to the congress.

The reform bills add four new seats to the Legislative Assembly, two seats each for directly and indirectly elected legislators. Further, it adds 100 seats to the committee that elects the Chief Executive.

Meanwhile, Mr Chui said the government would “reassess” the relocation

of the Traffic Information and Safety Centre to a wetland area in Taipa where egrets breed.

After receiving a petition with 2,100 signatures, Mr Chui admitted that the government had received “many opinions” calling for the protection of the wetland. The issue has already been discussed with Secretary for Transport and Public Works Lau Si Io. V.Q.

Zen Udani Assistant Professor of Management, University of Macau

S

ome years ago, the members of a task force, which had been given the responsibility of instituting reforms in an Asian government institution, began their work by analysing the roots of corruption.

They discerned three basic elements present in all forms of corruption.

First, there is always an element of attraction, something that appeals to or arouses any of the so-called three concupiscences in man: the concupiscence of the eyes, the concupiscence of the flesh, and the pride of life.

People fall prey to the concupiscence of the eyes when they give in to a disorderly desire for wealth.

Consider, for example, those who commit all sorts of crimes for money, or those who worm themselves into government positions with the intention of illegally enriching themselves.

Then there are those who get corrupted because they yield to the concupiscence of the flesh – for example married men who keep mistresses; superiors who curry sexual favours from subordinates by threatening to fire them or block their promotion if they refuse to give in; or employees who allow themselves to become accomplices in shady deals in exchange for illicit pleasures.

As for the pride of life, we can cite those who lust for power at all costs and who are willing to throw all moral principles overboard to get the positions they covet or to keep themselves in power.

A second element common to all forms of corruption is rationalisation.

Corrupt people become masters at justifying their actions.

We have all heard the familiar lines: “My salary is too low, I need to earn more to support my family,” or, “If my bosses are doing it, why can’t I?” or, “This is the only way we can survive in our business,” or, “Everyone in the industry is doing it anyway.”

In offering these “reasons”, corrupt people want to make it appear that they are just being forced by circumstances.

In most cases, it is doubtful whether that is really so.

Third, people become corrupt because they give in to occasions of corruption.

Certain positions, situations, places, and persons can provide such occasions.

Good resolutions A person who is not determined to avoid these occasions will easily succumb to the attraction and will just as easily justify his or her misdeed.

Corruption militates against personal and societal development because it encourages the vices that destroy people’s lives.

To break the scourge of corruption ultimately, individuals have to resolve to pursue the good and to cultivate human and moral virtues.

The development of virtues calls for the harnessing of the intellect and the free will – in fact, the whole person.

The first step is a sincere knowledge of self.

This requires daily, sincere, and unflinching reflection and selfexamination.

One must learn to step back and look at oneself – warts and all – as objectively as possible.

Self-knowledge, however, is only the point of departure.

The next step in the formation of virtues is making resolutions at the end of one’s daily self-examination.

These resolutions manifest one’s willingness and commitment to transform the good values one believes in into virtues.

Resolutions serve, if we may again borrow a term from business strategy lingo, as “key result areas” for personal development.

Daily resolutions, however, are not enough.

A third step is needed: carrying out the resolutions one has drawn up as a result of one’s selfexamination.

This effort is crucial to the attainment of the overall objective of forming good habits and uprooting undesirable ones.

At the end of the day, defeating corruption requires everyone’s positive contribution.

The maxim, “Do good, avoid evil” is immutable.

And as someone put it, societal transformation is achieved by “drowning evil with an abundance of good.”

People fall prey to the concupiscence of the eyes when they give in to a disorderly desire for wealth ...

At the end of the day, defeating corruption requires everyone’s positive contribution

8 |

business daily June 7, 2012

GREATER CHINA

Property cooling policy untouched, says ministry Sales increasing in China’s larger cities Pete Sweeney

C

hina’s main real estate regulator reaffirmed its commitment to maintaining current restrictions on property sales yesterday, the official Xinhua news service reported, as Beijing continues to resist calls for wider easing to offset a slowing economy.

A spokesperson for the Ministry of Housing and Urban-Rural Development, speaking at a press conference, denied recent reports in domestic media claiming the government was planning to loosen real estate policy, emphasising that policies targeting real estate speculation and price inflation would remain in place.

Chinese policymakers are attempting to implement targeted reforms that will reinvigorate growth in the world’s second-largest economy, but without encouraging a second round of overinvestment in property markets.

A report released by Soufun.com, China’s largest real estate website, said sales increased in 34 out of 40 large cities from April to May, causing concerns that property prices may begin to increase again.

China has recently increased its policy emphasis on supporting growth, fast tracking infrastructure investment and providing subsidies for consumption, fuelling speculation that Beijing may be eyeing another round of fiscal stimulus, like the 4 trillion yuan (US$635 billion) programme used to combat the last global financial crisis.

But the government is worried that any policy easing will inadvertently reinflate the property bubble it has

KEY POINTS China Banking Regulatory Commission says it will not accelerate lending China’s largest real estate website says sales increased in 34 out of 40 large cities Govt insists there will be no easing until property prices return to ‘reasonable levels’

Beijing is worried that any policy easing may inadvertently reinflate the country’s property bubble

been struggling to deflate for the past two years.

Government leaders have repeatedly insisted there will be no easing of the tightening policy until property prices return to what are described as “reasonable levels”.

The China Banking Regulatory Commission (CBRC) published a report on Friday saying it will not accelerate lending at present.

Some local governments have

implemented their own easing policies on property markets, such as the Yangzhou government, which has instituted a reimbursement policy for new home buyers.

The housing ministry spokesperson said the central government would keep a close eye on such initiatives and would step in quickly to remedy “improper” policies.

However, prices have not yet shown signs of any increase. A survey

released last week by the China Real Estate Index System showed average home prices in 100 key Chinese cities fell in May. Property developer Vanke reported on Monday that property sales for the first five months of the 2012 were down 6 percent year-on-year.

On Tuesday, Vanke’s chief executive officer Yu Liang said in a television interview that there were about 114 million square metres of unsold property inventory on hand in China’s first-tier cities, enough to last for 11 months at the current sales tempo.

Reuters

Apple eyes new stores in China

A

pple Inc is looking to open flagship stores in the major Chinese cities of Chengdu and Shenzhen, government officials said yesterday, while it continues to fight a Chinese company over the use of the iPad trademark.

Opening stores in Shenzhen and Chengdu will be a big boost for Apple’s China business, which currently has only five stores on the mainland, three in Shanghai and two in Beijing.

In April, Apple reported quarterly profit that almost doubled after a jump in iPhone sales, particularly for the greater China region.

But the possibility of selling iPads in Shenzhen could lead to more legal action after Roger Xie, a lawyer for Proview Technology (Shenzhen), told Reuters that if Apple tried to sell the popular tablets there, Proview would seek an injunction to stop them.

Apple and Proview are battling it out in the Higher People’s Court in Guangzhou over the right to use the iPad trademark, which Proview contends it owns. Mr Xie said both sides are currently undergoing courtmediated negotiations.

Apple submitted documents on

China Nuclear plans IPO China National Nuclear Power Co, the country’s biggest nuclear power developer, plans to raise money to help fund projects worth US$27.3 billion via what could be one of China’s biggest initial public offerings. It did not specify its fundraising target or IPO timing in a statement on the Ministry of Environment Protection’s website, The funds will be used to build and operate five nuclear power projects in the Jiangsu, Zhejiang,

Monday to the Shenzhen government to open a store in Holiday Plaza, an upscale mall in the Nanshan district, according to an official with the Market Supervision Administration.

“Apple is in the final stage and only needs to submit an environmental permit in order to gain approval,” he said.

In Chengdu, in southwestern China, Apple received approval in late May to set up a business unit to handle retail sales and after-sales service, according to an official with the Chengdu Industry and Commerce Administration bureau.

Tsingtao, Suntory team up in Shanghai

Fujian and Hainan provinces that will cost 174 billion yuan. The ministry said in a statement it had approved the IPO plan, which would also need the go-ahead from the securities regulator.

Tsingtao Brewery Co Ltd and Japanese beverage firm Suntory Holdings Ltd are joining hands to produce and distribute beer in Shanghai and neighbouring Jiangsu province, in a bid to boost their competitiveness in the fastgrowing market. China is the world’s biggest beer market and its consumption of 45 million kilolitres in 2010 is expected to

Apple in the final stage to open stores in Shenzhen and Chengdu

grow 5 percent per year in the next few years. In a filing to the Hong Kong exchange yesterday, Tsingtao said it and Suntory (China) Holding Co Ltd would form two 50-50 joint ventures, one in production and one in sales.

June 7, 2012 business daily | 9

GREATER CHINA

Yam gets the blame over Lehman losses

Stocks post mixed results Hong Kong Hong Kong stocks rose, with its benchmark index gaining the most in a month, amid speculation China’s central bank will cut interest rates this month. The Hang Seng Index advanced 1.4 percent to 18,520.53 at the close, the steepest gain since April 30. About six stocks rose for each that fell in the 49-member gauge.

The Hang Seng China Enterprises Index of mainland stocks, known as the H-Share index, gained 0.4 percent to 9,438.03.

“For long-term investors this level is good but it’s not at bargain levels as we saw in October 2008, definitely not. But it is cheap,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd. Hong Kong’s benchmark index has advanced for two days after a 12 percent slide in the four weeks through June 1 erased the measure’s gains for the year. Stocks fell amid signs of slowing economic growth in U.S. and China and mounting concern about Europe’s debt crisis.

Former chief of the HKMA denies ‘ultimate’ blame

F

ormer Hong Kong central banker Joseph Yam bears “ultimate responsibility” for the improper sale of securities that led to street protests when the collapse of Lehman Brothers Holdings Inc. threatened to wipe out retail investors’ savings, legislators say.

More than 43,700 people had invested in about US$2.6 billion of securities linked to Lehman, a Hong Kong Legislative Council subcommittee said yesterday, without giving a final value for losses after banks paid compensation. The elderly and mentally ill were among customers that were offered the products by lenders, according to an earlier investigation by the Hong Kong Monetary Authority (HKMA).

Mr Yam, the former head of the city’s de-facto central bank, “should take ultimate responsibility for HKMA’s failure to detect and rectify problems related to the sale of investment products before they became widespread,” the subcommittee, set up in October 2008, said in its report.

Hong Kong banks were forced to change the way they sell investment products after the initial investigation, and some investors got money back through a settlement negotiated by the monetary authority and the city’s

securities regulator. During his 16-year tenure Mr Yam fended off an attack by speculators on Hong Kong’s currency peg, and developed the city’s monetary system, which he steered through the British handover to China in 1997.

“I don’t agree with the conclusion

and bullhorns blaring pre-recorded messages, outside bank branches, asking for their money back.

More than 100 investors protested outside the LegCo yesterday. They expressed disappointment and anger over the report and also criticised three legislators who refused to endorse the findings.

‘Consistent’ regulation

I don’t agree with the conclusion reached about me made by the [LegCo] subcommittee Joseph Yam,

former chief executive of the Hong Kong Monetary Authority

reached about me made by the subcommittee,” Mr Yam said in an e-mailed statement yesterday. Mr Yam, who when he retired in 2009 was Asia’s longest-serving central banker, said he had served Hong Kong’s citizens as well as he could.

Some investors continued to stage daily protests after a settlement last year, featuring banging of cymbals

The sales of securities by banks should be overseen by the Securities and Futures Commission, not the HKMA, to ensure “consistent” regulation, said the report, signed by 16 committee members. Three others prepared a minority report.

The HKMA said in a statement yesterday that it helped most investors recover “a significant portion” of their money and the legislators’ report didn’t take fully into account information it provided.

Mr Yam navigated the financial system through the economic slump caused by severe acute respiratory syndrome, or SARS, in 2003, which killed almost 300 people in the city as tourists stayed away, leading to empty hotels and restaurants. He offered assurances and extended deposit insurance to end a run on the Bank of East Asia Ltd in 2008.

Shanghai China’s stocks fell, dragging the benchmark index lower for a second time this week, on concern a slowdown in economic growth is deepening and that the government will stick to measures to contain real-estate prices.

China Vanke Co. and China Merchants Property Development Co. dropped after the Xinhua News Agency said property curbs will remain in place. China Shenhua Energy Co. led declines for coal producers on concerns about the nation’s growth prospects after a former central bank adviser said the economy will have a “lukewarm” performance. “There won’t a big run-up on stocks because the economy isn’t likely to see a strong V-shaped recovery,” said Zhang Ling, general manager at Shanghai River Fund Management Co. “Cyclical stocks will be under pressure because there isn’t a clear sign of a strong pick-up in economic growth.” The Shanghai Composite Index fell 0.1 percent to 2,309.56 at the close.

Two stocks declined for every one that gained. The CSI 300 Index lost 0.1 percent to 2,557.40.

Bloomberg

Hu sees role for regional bloc

A

bloc bringing together China, Russia and central Asian states wants to play a bigger role in troubled Afghanistan, Chinese President Hu Jintao said in an interview published yesterday, as regional leaders gathered for their annual summit.

The future of neighbour Afghanistan, facing the withdrawal of most foreign combat forces by the end of 2014, is likely to be discussed at the two-day meeting of the Shanghai Cooperation Organisation (SCO), whose member states fear growing instability spilling across the central Asian region as the pullout goes on.

“We will continue to manage regional affairs by ourselves, guarding against shocks from turbulence outside the region, and will play a bigger role in Afghanistan’s peaceful reconstruction,” Mr Hu was quoted as saying in an interview with China’s official People’s Daily

newspaper about the SCO summit.

“We’ll strengthen communication, coordination and cooperation in dealing with major international and regional issues,” said Mr Hu. The SCO, founded in 2001, includes China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Iran, India, Pakistan and others attend the summits, but not as full members. Each has a strong interest in Afghanistan’s future.

Afghan President Hamid Karzai is attending the summit as a guest, and his country is due to be granted “observer” status in the SCO, meaning it can attend meetings but not vote.

On Sunday, Afghan officials told Reuters that China and Afghanistan will soon announce a plan to deepen ties, signalling Beijing’s desire to play a role beyond their economic partnership as Western forces prepare to leave.

Taiwan

Chinese President Hu Jintao says a regional bloc wants to play a bigger role in Afghanistan

Taiwan stocks rose 0.8 percent yesterday along with other regional bourses on hopes for policy measures to stem the European debt crisis, with touch-panel maker TPK Holding jumping by its daily limit on a deal with Intel. The main TAIEX index ended up 55.70 points at 7,056.15 and has climbed almost 2.5 percent over the past two sessions. Intel is set to sign an agreement with TPK Holding, Wintek, Cando and Hannstar Touch to ensure there is capacity for 13-inch and above touch panels for the expected growth of touch ultrabooks.

TPK, a supplier for Apple, surged by a daily limit of 7 percent. Smaller rival Wintek added 0.9 percent. The computer and peripherals subindex rose 1.2 percent. The cement sector was the biggest gaining sector of the day with a 1.5 percent rally. The Taiwan dollar rose

by T$0.118 to trade at T$29.882.

10 |

business daily June 7, 2012

ASIA

Australian economy steams ahead

InBrief

Consumption and investment driving growth, prices low Singapore PMI returns to growth Manufacturing activity in Singapore expanded slightly in May, reversing a contraction in April as orders and inventories rose, the latest Purchasing Manager’s Index (PMI) showed.

The sub-indicator for employment, however, contracted for the 11th straight month, the Singapore Institute of Purchasing & Materials Management said. Singapore’s PMI stood at 50.4 points in May, recovering from 49.7 in April. A reading above 50 indicates an increase in manufacturing activity. A separate PMI for Singapore’s important electronics sector stayed in positive territory for the fifth straight month.

Ringgit leads rally in Asian currencies

A

ustralia’s resource-fuelled economy outpaced all expectations last quarter as households and businesses went on a spending spree, boosting the local dollar and lessening the urgency for further aggressive cuts in interest rates.

Gross domestic product (GDP) rose 1.3 percent in the first quarter, more than double the 0.5 percent increase forecast. Growth was a robust 4.3 percent higher compared with the first quarter of 2011, the fastest pace in more than four years.

Concerns about growth globally, and particularly in China, will continue to haunt the outlook but analysts were cheered that the economy had more momentum than anyone had supposed.

4.3% Australia’s first quarter growth from a year earlier

“Rumours of the economy’s death have been totally exaggerated,” said Michael Blythe, chief economist at Commonwealth Bank of Australia.

“It does tell you we had a decent amount of momentum in the run up to the latest round of the European woes, and it’s not a bad place to be in.”

Only the day before, the Reserve Bank of Australia (RBA) had cut rates for a second month running,

in part because domestic growth has disappointed while the global outlook turned ever darker.

“For the RBA it’s all about forwardlooking risks and Europe’s the main source of those,” added Mr Blythe.

“But these sorts of numbers would suggest they won’t be looking to aggressively cut rates from here unless something really does go wrong in Europe.”

Breathing space The data were eagerly seized on by the Labor government, which is trailing badly in the polls as it pushes ahead with unpopular fiscal tightening and carbon tax plans.

“Today’s National Accounts paint an extraordinary picture of exceptional growth, and showcase the rock-solid economic fundamentals which put our economy in a league of its own,” crowed Treasurer Wayne Swan.

Australia’s annual growth of 4.3 percent compared with 1.7 percent in the United States, zero growth in the European Union and a fall of 0.1 percent in Britain.

In all, GDP for the 12 months to March reached a real A$1.35 trillion (US$1.32 trillion), or some A$64,000 (US$62500) for each of Australia’s 22.8 million people. That compared to per capita GDP in the United States of around US$43,000.

Australia was one of the very few advanced economies to sail through the global financial crisis without sliding into recession, largely propped up by Chinese-led demand for its coal, iron ore and other resources.

While the Chinese economy has since slowed markedly, miners continue to invest heavily in the belief demand from its urbanising millions will run for years yet.

Yesterday’s data showed spending on engineering projects such as mines and liquefied natural gas jumped 20 percent in the first quarter to be up a heady 53 percent on the year. That alone added 1.1 percentage points to GDP growth in the quarter.

The other big surprise was the strength of household demand,

Asian currencies rose the most in eight weeks after data showed U.S. services industries grew faster than expected last month and as Europe prepared actions to ease its debt crisis. Malaysia’s ringgit headed for the biggest gain in five weeks. The ringgit climbed 0.6 percent to 3.1797 per dollar as of 6 pm in Kuala Lumpur, according to data compiled

by Bloomberg. The baht strengthened 0.5 percent to near a two-week high of 31.47 and the Philippine peso rose 0.6 percent to 43.190.

KEY POINTS Quarter-on-quarter growth bigger than forecasts Household spending and business investment pushing GDP Inflation low, at 1.4 percent

which climbed 1.6 percent in the quarter. That was the biggest rise in four years and contributed 0.9 percentage points to GDP. The spending was also broadbased, with sizable increases in food, health, education, clothing, transport and restaurants.

Solid gains in wages and salaries helped support spending habits while also allowing households to save a relatively high 9.3 percent of disposable income.

Intense discounting by retailers played a big part in driving demand, while keeping inflation well contained. The price deflator of household spending edged up a tiny 0.1 percent in the quarter to be up a benign 1.4 percent for the year.

That should in turn provide scope for the RBA to ease further should events in China or Europe turn for the worse.

“The RBA has been setting policy with an eye toward Europe, and things there will continually get worse,” noted Ben Jarman, an economist at JPMorgan.

“But the underlying domestic story is pretty favourable and isn’t forcing them to up the pace of what they’re doing,” he added. “We don’t expect the RBA to move in July. We think the next cut will come in August.”

Reuters

Olympus shares rise on reports Olympus Corp., the camera maker that admitted to a US$1.7 billion accounting fraud, rose to its highest in more than a month after Kyodo news agency reported Panasonic Corp. will invest in the company. The shares gained as much as 3.5 percent to 1,378 yen (US$17.4) before trading at 1,338 yen, the highest since March 30, at the close in Tokyo. Panasonic is in talks to invest between 30 billion yen (US$380 million) and 50 billion yen in Tokyo-based Olympus and become the largest shareholder, the Kyodo reported yesterday, without citing anyone.

Malaysia’s exports drop for a 2nd-month Malaysia’s exports unexpectedly fell for a second month in April as shipments of electronics and palm oil dropped, underscoring easing demand for goods as the global economy weakens. Overseas shipments slid 0.1 percent to 57.74 billion ringgit (US$18.2 billion) from a year earlier after a similar decline in March, according to a Trade Ministry statement yesterday. Exports are forecast to climb 5 percent to 6 percent this year, Minister for International Trade and Industry Mustapa Mohamed said. Shipments increased 8.7 percent in 2011.

June 7, 2012 business daily | 11

asia

India-U.S. meet for defence talks Focus on U.S. withdrawal from Afghanistan and South China Sea tensions

U

.S. Defence Secretary Leon Panetta held talks yesterday with his Indian counterpart focused on NATO’s planned exit from Afghanistan and China’s rising power, officials said.

Mr Panetta’s two-day visit to New Delhi is part of a tour of the region that has stressed Washington’s strategic shift to Asia, with U.S. officials portraying India as an anchor for the new approach.

Panetta met Defence Minister A.K. Antony before giving a policy speech at the Institute for Defence Studies and Analyses.

In his meeting with his counterpart, officials said Mr Panetta discussed NATO’s planned withdrawal of combat forces from Afghanistan by the end of 2014 as well an expanding arms trade and joint military training between the two countries.

In talks on Tuesday with Prime Minister Manmohan Singh, Mr Panetta “underscored the link India plays between East and West Asia and how the United States views India as a net provider of security from the Indian Ocean to Afghanistan and beyond”, his press secretary George Little said.

Indian officials are worried the departure of most of the U.S.-

India may have a stronger role in Afghanistan

led force could leave a dangerous vacuum in Afghanistan, and question if the Kabul government and its fledgling army will be able to fend off Taliban insurgents.

Earlier on his nine-day tour through Asia, Mr Panetta unveiled plans to shift the majority of the U.S.

naval fleet to the Pacific by 2020, a symbolic step meant to signal U.S. determination to preserve its influence in the face of a rising China.

Beijing said on Monday the U.S. naval plan was “untimely” and called on Washington to respect its interests in the region.

The tilt towards Asia is designed mainly as a way to check China’s role, particularly in the contested South China Sea, reinforcing US diplomacy in support of smaller nations locked in territorial disputes with Beijing.

AFP

Noda faces opposition to tax reform Lawmakers, public support for sales tax bill weakening

J

apanese Prime Minister Yoshihiko Noda’s push to win opposition support for his bill to double the consumption tax is at odds with increasing public sentiment against the legislation.

The number of voters opposed to the tax rose 5 percentage points to 56 percent this month from May, while those in favour fell 7 points to 32 percent, an Asahi newspaper poll yesterday showed. The results are in line with a May 28 Nikkei newspaper poll showing opposition rose three points to 53 percent from the previous month, compared with 38 percent who backed it.

Mr Noda this week reshuffled his Cabinet in a bid to gain support from the main opposition Liberal

Japan PM is staking his fortunes on passing of the bill

Democratic Party, which has indicated a deal on the bill is possible. He has vowed to stake his career on raising the tax, in a step toward reining in Japan’s ballooning public debt as welfare costs rise.

“Of course Mr Noda can’t change course at this point,” said Tokyobased independent political analyst Minoru Morita. “I think his government will plough ahead regardless of public opinion, and so will the LDP.” Mr Noda needs the support of the LDP to pass the bill in the upper house of parliament, where his Democratic Party of Japan lacks a majority. While the LDP also favours raising the sales tax, its leaders insisted that two Cabinet ministers

who were censured by the upper house in April be removed. The ministers were replaced last Monday.

DPJ Secretary-General Azuma Koshiishi yesterday met with his counterparts in the LDP and the smaller Komeito party to discuss the tax legislation without reaching an agreement.

Economic blues The poor state of the economy was probably a factor behind the change in public opinion, Mr Morita said.

Japan’s Topix Index this week fell to its lowest since 1983 amid concern over the European debt crisis and an economic slowdown in China.

Almost three-fourths of respondents

in the Asahi poll said they oppose his aim of passing the bill during the current Diet session, compared with 17 percent in favour. The session ends on June 21, but can be extended. Mr Noda’s approval rating rose by one percentage point to 27 percent, while his disapproval rating was at 51 percent. The survey received 1,063 valid responses and provided no margin of error.

“It’s easy to say things that will make you popular,” Foreign Minister Koichiro Gemba told Keidanren, Japan’s biggest business lobby yesterday after Mr Noda reiterated his determination to pass the bill. “Real politics is about doing unpopular things if they are necessary.”

Bloomberg

12 |

business daily June 7, 2012

MARKETS Hang SENG INDEX PRICE

Day %

VOLUME

PRICE

Day %

VOLUME

AIA GROUP LTD

25.3

0.3968254

31146076

CHINA UNICOM HON

10.28

1.984127

31512378

ALUMINUM CORP-H

3.15

1.941748

12383587

CITIC PACIFIC

11.06

0.7285974

2148100

SANDS CHINA LTD

BANK OF CHINA-H

2.83

0.7146486

424315502

CLP HLDGS LTD

63.65

0.7120253

1922797

5.1

2

23445343

CNOOC LTD

13.78

3.76506

63574149

25.7

-0.1941748

1861584

9

1.925255

12.36

0.8156607

12815272

21.5

1.415094

8161384

CATHAY PAC AIR

12.16

-0.3278689

CHEUNG KONG

88.05

1.791908

6.57

-0.1519757

27887322

NAME

BANK OF COMMUN-H BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO

CHINA COAL ENE-H CHINA CONST BA-H

NAME

COSCO PAC LTD

NAME

PRICE

Day %

54.45

0

2587220

26.3

3.665747

14888133

SINO LAND CO

10.74

4.069767

10778166

SUN HUNG KAI PRO

88.05

2.383721

4690117

6169779

SWIRE PACIFIC-A

83.55

1.828154

1168627

POWER ASSETS HOL

VOLUME

ESPRIT HLDGS

12.52

2.791461

4186010

TENCENT HOLDINGS

216.2

3.742802

3633867

HANG LUNG PROPER

25.35

1.807229

6557689

TINGYI HLDG CO

18.98

1.824034

6991449

2174435

HANG SENG BK

100.4

0.2997003

573424

9.49

1.064963

15232977

5242590

HENDERSON LAND D

40.6

4.909561

4944518

41.05

3.140704

13064259

HENGAN INTL

72.8

2.535211

3297566

HONG KG CHINA GS

18.5

0.4343105

17898258

HONG KONG EXCHNG

106

2.021174

4541682

HSBC HLDGS PLC

61.9

2.568351

11996067

WANT WANT CHINA WHARF HLDG

MOVERS

41

5.46

1.675978

225082231

CHINA LIFE INS-H

17.46

2.224824

34196005

CHINA MERCHANT

21.45

1.41844

5068554

CHINA MOBILE

78.95

2.933507

16892966

HUTCHISON WHAMPO

62.4

0.8077544

7279751

CHINA OVERSEAS

15.66

2.352941

15746360

IND & COMM BK-H

4.47

0.0615884

315407159

CHINA PETROLEU-H

6.99

2.794118

74687140

LI & FUNG LTD

14.44

2.266289

13719769

HIGH

18521.57

CHINA RES ENTERP

22.55

1.348315

7154463

MTR CORP

25.05

-0.5952381

1150506

LOW

18091.96

CHINA RES LAND

14.62

3.102962

7765964

NEW WORLD DEV

8.65

6.134969

14088825

CHINA RES POWER

14.26

1.566952

14459989

PETROCHINA CO-H

9.89

2.487047

53573281

CHINA SHENHUA-H

25.15

-2.70793

37103845

PING AN INSURA-H

55.85

3.521779

12004762

7

1 18600

INDEX 18520.53

52W (H) 23338.76 (L) 16170.35 4-Jun

6-Jun

18000

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.14

0.9646302

123068636

AIR CHINA LTD-H

4.75

0.2109705

10536220

ALUMINUM CORP-H

NAME

PRICE

DAY %

VOLUME

21.95

1.385681

5965442

CHINA PETROLEU-H

6.99

2.794118

74687140

ZIJIN MINING-H

CHINA PACIFIC-H

NAME YANZHOU COAL-H

3.15

1.941748

12383587

CHINA RAIL CN-H

5.76

3.971119

21346485

ZOOMLION HEAVY-H

ANHUI CONCH-H

22.95

1.773836

8880013

CHINA RAIL GR-H

2.88

3.225806

12410822

ZTE CORP-H

BANK OF CHINA-H

2.83

0.7145699

424315502

CHINA SHENHUA-H

25.15

-2.70793

37103845

5.1

2

23445343

CHINA TELECOM-H

3.38

2.114804

73689108

BYD CO LTD-H

15.5

3.333333

1904639

DONGFENG MOTOR-H

13.5

4.166667

12147153

CHINA CITIC BK-H

3.93

3.421053

40169654

GUANGZHOU AUTO-H

6.43

0.6259781

4657673

CHINA COAL ENE-H

6.57

-0.1519757

27887322

HUANENG POWER-H

5.19

2.366864

41271179

CHINA COM CONS-H

6.94

0.5797101

13821410

IND & COMM BK-H

4.47

0.061524

315407159

CHINA CONST BA-H

5.46

1.675978

225082231

JIANGXI COPPER-H

16.16

3.722721

10312265

BANK OF COMMUN-H

3.47

1.461988

7405048

PETROCHINA CO-H

9.89

2.487047

53573281

17.46

2.224824

34196005

PICC PROPERTY &

8.13

1.498127

16403072

CHINA LONGYUAN-H

4.81

1.263158

5904810

PING AN INSURA-H

55.85

3.521779

12004762

CHINA MERCH BK-H

14.5

1.256983

10620731

SHANDONG WEIG-H

7.43

-4.987212

7965231

CHINA COSCO HO-H CHINA LIFE INS-H

MOVERS

33

DAY %

11.82

0

23470279

2.81

6.844106

119616033

10.42

-0.9505703

10945836

14.4

1.408451

4419936

6

VOLUME

1

INDEX 9438.03 HIGH

9469.81

LOW

9326.29

CHINA MINSHENG-H

7.29

3.11174

30349343

SINOPHARM-H

17.56

3.294118

1922803

52W (H) 13002.46

CHINA NATL BDG-H

9.05

2.029312

26963822

TSINGTAO BREW-H

49.3

2.601457

1070416

(L) 8058.58

10.44

1.162791

6119940

WEICHAI POWER-H

31.45

0.1592357

2688027

CHINA OILFIELD-H

PRICE

9500

4-Jun

6-Jun

9300

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.64

0.7633588

28350647

DATANG INTL PO-A

5.24

0

17915207

SHANG PUDONG-A

8.62

0.7009346

49918846

AIR CHINA LTD-A

6.24

0.3215434

9856223

DONGFANG ELECT-A

21.48

0.6088993

3462063

SHANGHAI ELECT-A

5.42

-0.3676471

4670618

ALUMINUM CORP-A

6.67

0.3007519

6003409

EVERBRIG SEC -A

13.5

0.07412898

6918387

SHANXI LU'AN -A

24.09

-3.369434

17749323

16.49

-0.1815981

18881856

GD MIDEA HOLDING

12.17

-0.6530612

30552021

SHANXI XINGHUA-A

75.09

1.34971

2139107

13272692

GD POWER DEVEL-A

2.59

1.568627

59615181

SHANXI XISHAN-A

16.7

-2.224824

23464889

SHENZ DVLP BK-A

15.32

0.3931848

18886005

6.07

-0.1644737

29881891

15.08

-1.437908

1006806

8.66

0.3476246

39610152

NAME

ANHUI CONCH-A BANK OF BEIJIN-A

9.6

0.5235602

BANK OF CHINA-A

NAME

NAME

3.02

0.3322259

11473646

GEMDALE CORP-A

6.74

-0.8823529

21812732

BANK OF COMMUN-A

4.6

0.877193

43138580

GF SECURITIES-A

30.85

0.1948685

5324025

SHENZEN OVERSE-A

BAOSHAN IRON & S

4.8

0

12444768

GREE ELECTRIC

22.03

-0.3618272

7792732

SINOVEL WIND-A

23.17

-0.1293103

1714348

GUIZHOU PANJIA-A

30.37

-2.691445

8464954

SUNING APPLIAN-A

BYD CO LTD -A CHINA CITIC BK-A

4.15

0.4842615

15907597

HAITONG SECURI-A

10.1

0.3976143

39494731

TONGLING NONFE-A

21.12

0.9560229

9017013

CHINA CNR CORP-A

4.18

-0.2386635

26946696

HANGZHOU HIKVI-A

48.47

4.057535

2895740

TSINGTAO BREW-A

37.94

-0.9916493

2093049

CHINA COAL ENE-A

8.72

-0.228833

9867857

HEBEI IRON-A

2.96

-0.3367003

13209409

WEICHAI POWER-A

32.05

0.7544797

3068271

CHINA CONST BA-A

4.49

0.6726457

26305679

HENAN SHUAN-A

62.3

1.005188

2703054

WULIANGYE YIBIN

32.46

-0.976205

12320677

CHINA COSCO HO-A

4.78

-1.646091

12275676

HUATAI SECURIT-A

11.11

-1.244444

21678680

XIAMEN TUNGSTEN

46.79

0

5511829

CHINA CSSC HOL-A

31.01

3.229028

9674019

HUAXIA BANK CO

9.7

1.358412

38394195

XINJIANG GUANG-A

14.84

-0.06734007

11995203

CHINA EAST AIR-A

4.15

-0.7177033

13128589

IND & COMM BK-A

4.2

0

32607491

YANGQUAN COAL -A

17.38

-3.229399

16837748

CHINA EVERBRIG-A

2.84

0.3533569

16501384

INDUSTRIAL BAN-A

13.17

0.6111536

32458993

YANTAI CHANGYU-A

93.88

-0.01065076

741705

CHINA LIFE INS-A

16.96

0.892326

5160108

INNER MONG BAO-A

45.98

2.58813

71270191

YANTAI WANHUA-A

14.25

-1.994498

11789533

CHINA MERCH BK-A

11.68

1.213172

68970155

INNER MONG YIL-A

22.56

-0.5729396

4903274

YANZHOU COAL-A

21.46

-1.01476

3526226

CHINA MERCHANT-A

12.67

0

8472611

INNER MONGOLIA-A

6.18

-0.6430868

48601484

YUNNAN BAIYAO-A

54.05

1.141467

3966507

CHINA MERCHANT-A

24.41

-0.6916192

3510585

JIANGSU HENGRU-A

27.12

0.25878

5015972

ZHONGJIN GOLD

24.13

4.233261

45917591

CHINA MINSHENG-A

6.29

0.8012821

73418676

JIANGSU YANGHE-A

138.98

-0.158046

827232

ZIJIN MINING-A

4.19

2.195122

126134795

17798448

JIANGXI COPPER-A

25.02

1.009285

7897371

ZOOMLION HEAVY-A

10.6

1.145038

37121881

13.51

0.7457122

6079022

ZTE CORP-A

14.3

-1.718213

20140138

17.95

-3.907923

22238776

CHINA NATIONAL-A

6.25

-2.4961

CHINA OILFIELD-A

16.59

-1.718009

6173042

JINDUICHENG -A

CHINA PACIFIC-A

20.09

-1.37457

9704204

JIZHONG ENERGY-A

CHINA PETROLEU-A

6.5

0

16894893

KWEICHOW MOUTA-A

236.58

-1.752492

1872894

CHINA RAILWAY-A

2.66

-0.3745318

21088956

LUZHOU LAOJIAO-A

39.04

-1.538462

5683094

2.58

-0.3861004

9250829

CHINA RAILWAY-A

4.38

1.388889

17963599

METALLURGICAL-A

CHINA SHENHUA-A

25.04

-1.339638

14065804

NINGBO PORT CO-A

2.58

0.3891051

10869118

CHINA SHIPBUIL-A

5.53

-1.073345

27415474

PANGANG GROUP -A

8.04

0

59829010

9.33

0

15355010

CHINA SOUTHERN-A CHINA STATE -A

4.68

0

34457332

PETROCHINA CO-A

3.3

0.6097561

35479043

PING AN INSURA-A

41

0.8114089

15565706

13.52

0

MOVERS

101

70

29 2610

INDEX 2557.401

CHINA UNITED-A

3.95

-1.002506

52757194

POLY REAL ESTA-A

18116953

HIGH

2602.91

CHINA VANKE CO-A

8.98

-1.427003

35461686

QINGDAO HAIER-A

11.92

0.7607777

7273621

LOW

2547.79

CHINA YANGTZE-A

6.78

-1.453488

12132712

QINGHAI SALT-A

30.29

0.7316262

3076058

CITIC SECURITI-A

13.1

-0.2284844

49137279

SAIC MOTOR-A

14.81

-0.8701473

16940751

CSR CORP LTD -A

4.78

0.2096436

13436800

SANY HEAVY INDUS

14.15

-0.840925

18680975

DAQIN RAILWAY -A

7.33

-0.1362398

22241113

SHANDONG GOLD-MI

38

6.771565

48473869

PRICE DAY %

Volume

PRICE DAY %

Volume

52W (H) 3140.10 (L) 2254.56

2540

4-Jun

6-Jun

FTSE TAIWAN 50 INDEX NAME ACER INC

NAME

31

-1.430843

19995895

FORMOSA PLASTIC

26.25

-1.129944

22231159

ASIA CEMENT CORP

35.6

0.4231312

ASUSTEK COMPUTER

298.5

AU OPTRONICS COR

11.65

ADVANCED SEMICON

76.9

0.6544503

5445319

FOXCONN TECHNOLO

101.5

4.209446

18816777

2546144

FUBON FINANCIAL

28.25

0

9375993

2.57732

4444005

HON HAI PRECISIO

82.8

0.729927

24954772

3.097345

55436608

HOTAI MOTOR CO

192

0.5235602

634276

NAME

PRICE DAY %

TAIWAN MOBILE CO TPK HOLDING CO L TSMC

3.825137

17961824

HTC CORP

406

3.17662

7622250

WISTRON CORP

0.3521127

5212545

HUA NAN FINANCIA

15.8

0

5264807

YUANTA FINANCIAL

CHANG HWA BANK

15

0.6711409

5641365

LARGAN PRECISION

567

2.903811

2544281

YULON MOTOR CO

CHENG SHIN RUBBE

71.6

0.1398601

2542461

LITE-ON TECHNOLO

36

0.5586592

1605417

CHIMEI INNOLUX C

11.5

0.4366812

29638236

MEDIATEK INC

257.5

1.377953

5583418

CHINA DEVELOPMEN

7.15

1.997147

108867730

MEGA FINANCIAL H

20.15

0.4987531

15793291

CHINA STEEL CORP

28.2

0.5347594

11545572

NAN YA PLASTICS

52.6

0.7662835

4108488

CHINATRUST FINAN

16.1

0.625

15430313

PRESIDENT CHAIN

152.5

-0.974026

852792

CHUNGHWA TELECOM

90.7

0.7777778

5105328

QUANTA COMPUTER

76.8 -0.5181347

9314826

28.75

0.877193

11210059

SILICONWARE PREC

30.1

0.8375209

6090437

80.4

1.772152

16130359

SINOPAC FINANCIA

10.75

-0.921659

57708137

FAR EASTERN NEW

29.55

0.8532423

4396211

SYNNEX TECH INTL

66.5

0.1506024

2780869

FAR EASTONE TELE

66

-1.197605

4623719

TAIWAN CEMENT

34.15

2.861446

6313652

16.85

0.8982036

6268159

TAIWAN COOPERATI

17.2 -0.2898551

5241339

FORMOSA CHEM & F

75.6

0.1324503

6306881

TAIWAN FERTILIZE

66.7

0

1264201

FORMOSA PETROCHE

82.9

1.221001

1111971

TAIWAN GLASS IND

27.6

0.9140768

1758033

9406523

77.8

-0.511509

33715255

11.85

190

FIRST FINANCIAL

6.900726

46.25 -0.4305705

28.5

COMPAL ELECTRON

441.5

UNITED MICROELEC

CATHAY FINANCIAL

DELTA ELECT INC

0.1059322

UNI-PRESIDENT

CATCHER TECH

0.4237288

36.3 -0.5479452

MOVERS

37

10

Volume

94.5

5097441

7685458 55154970 8209512

13

1.960784

12381531

50.6

0.3968254

3771591

3 4900

INDEX 4848.08 HIGH

4864.8

LOW

4731.56

52W (H) 6224.53 (L) 4643.05

4700

4-Jun

6-Jun

June 7, 2012 business daily | 13

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

Max 18.48

Average 18.30

MElCo CroWN ENTErTAINMENT

Min 18.20

18.50

29.8

12.10

18.44

29.6

12.02

18.38

29.4

11.94

18.32

29.2

11.86

18.26

29.0

11.78

18.20

last 18.24

SANDS CHINA lTD

Max 26.40

Average 26.22

Max 29.70

Average 29.19

Min 29.00

Min 25.90

last 26.30

last 11.92

11.70

WyNN MACAu lTD

26.3

13.4

18.88

26.2

13.3

18.76

26.1

13.2

18.64

26.0

13.1

18.52

25.9

13.0 Max 13.46

Average 13.13

85.49

1.42

-13.98

111.49

77.40

BRENT CRUDE FUTR Jul12

100.31

1.49

-5.04

125.61

94.35

GASOLINE RBOB FUT Jul12

271.23

1.03

-0.09

332.18

246.50

GAS OIL FUT (ICE) Jul12

857.00

1.60

-4.72

1045.75

810.00

2.43

-0.82

-25.19

5.13

2.10

HEATING OIL FUTR Jul12 Gold Spot $/Oz Silver Spot $/Oz

DAY %

YTD %

(H) 52W

Min 13.02

last 13.44

18.40 Max 18.94

Average 18.72

266.85

1.33

-6.13

331.93

256.31

1635.15

1.11

4.49

1921.18

1478.78

29.36

4.02

5.48

44.22

26.09

1464.25

1.79

5.00

1915.75

1339.25

Palladium Spot $/Oz

624.33

2.06

-4.46

848.37

537.54

LME ALUMINUM 3MO ($)

N/A

-1.08

-2.35

2695.00

1955.75

LME COPPER 3MO ($)

N/A

-0.86

-3.14

9905.00

6635.00

LME ZINC

N/A

1.04

2.44

2539.50

1718.50 16020.00

3MO ($)

LME NICKEL 3MO ($)

N/A

-0.80

-13.95

25195.00

13.96

1.16

-9.17

19.38

13.73

574.25

1.19

-13.16

795.00

551.00

WHEAT FUTURE(CBT) Jul12

620.00

1.10

-9.65

928.00

592.25

SOYBEAN FUTURE Nov12

1289.00

0.94

7.04

1400.00

1115.75

157.80

1.02

-32.04

290.75

154.65

SUGAR #11 (WORLD) Jul12

19.47

2.15

-13.70

27.03

18.86

COTTON NO.2 FUTR Dec12

66.30

1.44

-24.52

107.20

64.61

AGRICULTURE ROUGH RICE (CBOT) Jul12 Jul12

COFFEE 'C' FUTURE Jul12

PRICE

(L) 52W

Platinum Spot $/Oz

World Stock MarketS - Indices

MAJORS

ASIA PACIFIC

CROSSES

last 18.80

Min 18.42

NAME

(L) 52W

3.25

1.88

859060

CROWN LTD

8.26

-0.12

2.10

9.29

7.45

2025235

AMAX HOLDINGS LT

0.08

3.85

-6.90

0.13

0.06

856000

BOC HONG KONG HO

21.50

1.42

16.85

24.45

14.24

8088622

CENTURY LEGEND

0.23

1.77

0.00

0.41

0.20

0

CHEUK NANG HLDGS

2.95

0.00

5.36

4.79

2.30

19000

CHINA OVERSEAS

15.66

2.35

20.65

17.86

9.99

17164134

CHINESE ESTATES

9.00

0.00

-28.00

13.68

8.30

78500

CHOW TAI FOOK JE

9.00

-1.32

-35.34

15.16

8.55

7926900

EMPEROR ENTERTAI

1.15

0.88

3.60

2.09

0.97

515000

FUTURE BRIGHT

0.80

0.00

90.48

1.09

0.30

3624000

DOW JONES INDUS. AVG

US

12127.95

0.22

-0.73

13338.66

10404.49

NASDAQ COMPOSITE INDEX

US

2778.11

0.66

6.64

3134.17

2298.89

HANG SENG BK

FTSE 100 INDEX

GB

5320.68

1.15

-4.52

6084.08

4791.01

DAX INDEX

GE

6056.40

1.46

2.68

7523.53

4965.80

NIKKEI 225

JN

8533.53

1.81

0.92

10255.15

8135.79

HANG SENG INDEX

HK

18520.53

1.43

0.47

23338.76

16170.35

CSI 300 INDEX

CH

2557.40

-0.06

9.02

3140.10

2254.57

TAIWAN TAIEX INDEX

TA

7056.15

0.80

-0.23

9070.25

6609.11

2192.83

1644.11

S&P/ASX 200 INDEX

AU

4055.29

0.29

-0.03

4657.40

3765.90

ID

3841.33

3.32

0.51

4234.73

3217.95

FTSE Bursa Malaysia KLCI

MA

1569.43

0.58

2.53

1609.33

NZX ALL INDEX

NZ

773.63

1.22

6.01

806.02

PH

3317.76

0.73

8.96

3518.96

0.939 1.524 0.707 1.229 75.350 7.982 7.753 6.277 43.855 29.630 1.199 28.661 41.879 8458.000 72.057 1.007 0.795 7.854 9.842 95.600 1.029

(H) 52W

(L) 52W

-1.31

(L) 52W

1.108 1.662 0.977 1.470 84.180 8.045 7.811 6.491 56.515 31.960 1.320 30.716 44.350 9662.000 88.637 1.247 0.908 9.514 11.777 117.900 1.031

28.18

(H) 52W

1.05

(H) 52W

-3.497 -0.495 -2.393 -3.611 -2.756 0.106 0.115 -1.083 -4.275 0.191 1.376 1.315 1.482 -2.787 0.660 1.331 3.164 2.113 3.694 0.860 0.010

0.71

YTD %

1801.85

YTD %

1.264 0.782 0.510 0.483 -1.062 0.001 0.001 0.053 0.379 0.445 0.735 0.308 0.755 1.286 -2.296 0.016 0.287 -0.642 -0.470 -1.538 0.000

2.82

DAY %

SK

DAY %

0.985 1.547 0.961 1.249 79.090 7.991 7.759 6.364 55.435 31.490 1.279 29.886 43.200 9329.000 77.918 1.201 0.808 7.966 9.983 98.810 1.030

ARISTOCRAT LEISU

PRICE

KOSPI INDEX

AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP

MACAU RELATED STOCKS

COUNTRY

PHILIPPINES ALL SHARE IX

Min 11.70

19.00

WTI CRUDE FUTURE Jul12

JAKARTA COMPOSITE INDEX

Average 11.82

13.5

PRICE

NAME

Max 12.02

26.4

NAME

CORN FUTURE

28.8

CURRENCY EXCHANGE RATES

NATURAL GAS FUTR Jul12

METALS

last 29.70

SJM HolDINGS lTD

Commodities ENERGY

MGM CHINA HolDINGS

PRICE

GALAXY ENTERTAIN

DAY % YTD %

VOLUME CRNCY

18.24

1.22

28.09

24.95

8.69

10400486

100.40

0.30

8.95

125.00

84.40

787633

HOPEWELL HLDGS

19.58

0.41

-1.41

24.90

18.56

329426

HSBC HLDGS PLC

61.90

2.57

4.92

80.25

56.00

8218673 1625647

HUTCHISON TELE H

3.32

0.61

11.04

3.71

2.33

LUK FOOK HLDGS I

15.94

4.32

-41.18

46.15

14.84

4915145

MELCO INTL DEVEL

6.12

2.17

6.07

10.76

4.30

2678617

MGM CHINA HOLDIN

11.92

4.93

24.27

17.18

7.60

3919300

MIDLAND HOLDINGS

3.71

0.82

-6.17

5.22

2.89

314181

NEPTUNE GROUP

0.10

0.00

-9.91

0.16

0.08

220000

NEW WORLD DEV

8.65

6.13

38.18

11.79

6.13

8642500

SANDS CHINA LTD

13400013

26.30

3.67

19.82

33.05

14.90

SHUN HO RESOURCE

1.18

0.00

18.00

1.32

0.82

0

1310.53

SHUN TAK HOLDING

2.79

2.20

9.02

4.67

2.24

2594165

700.44

SJM HOLDINGS LTD

13.44

5.16

7.47

20.71

10.08

6051445

SMARTONE TELECOM

14.40

0.70

7.14

18.50

9.80

420835

WYNN MACAU LTD

18.76

2.18

-3.79

27.48

14.81

4246038

2695.06

HSBC Dragon 300 Index Singapor

SI

509.70

0.65

2.69

na

na

ASIA ENTERTAINME

4.13

1.72

-29.76

10.87

3.66

149365

STOCK EXCH OF THAI INDEX

TH

1117.95

1.71

9.03

1247.72

843.69

BALLY TECHNOLOGI

44.81

0.72

13.27

49.32

24.74

643150

HO CHI MINH STOCK INDEX

VN

426.39

1.28

21.29

492.44

332.28

BOC HONG KONG HO

2.70

-4.26

12.63

3.15

1.81

68556

Laos Composite Index

LO

1005.44

0.00

11.78

1146.63

876.33

GALAXY ENTERTAIN

2.39

5.75

27.81

3.24

1.08

21500

INTL GAME TECH

13.64

1.94

-20.70

19.15

13.12

2567536

JONES LANG LASAL

68.03

2.21

11.05

99.89

46.01

502848

LAS VEGAS SANDS

45.03

5.48

5.38

62.09

36.08

18969366

MELCO CROWN-ADR

11.37

4.17

18.14

16.15

7.05

4289283

MGM CHINA HOLDIN

1.64

0.00

37.62

2.21

1.00

100

MGM RESORTS INTE

10.92

4.90

4.70

16.05

7.40

12856466

SHUFFLE MASTER

12.38

-13.12

5.63

18.77

7.35

1990361

1.65

-3.51

2.64

2.60

1.26

2000

100.99

2.87

-8.60

165.49

95.82

2625293

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

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business daily June 7, 2012

Opinion Democracy versus the Eurozone Daniel Gros

T

Director of the Centre for European Policy Studies

he European Union is a voluntary quasi-federation of sovereign and democratic states in which elections matter and each country seeks to determine its own destiny, regardless of the wishes of its partners. But it should now be apparent to everyone that the eurozone was designed with a very different institutional arrangement in mind. Indeed, that design gap has turned out to be a major source of the monetary union’s current crisis.

Last October, Greece’s then-prime minister, George Papandreou, proposed a popular referendum on the second rescue package that had just been agreed at the EU’s summit in Brussels. He was quickly told off by German Chancellor Angela Merkel and former French President Nicolas Sarkozy, and Greeks never voted on it.

But, less than a year later, the referendum is de facto taking place anyway. In a union of democracies, it is impossible to force sovereign countries to adhere to rules if their citizens do not accept them anymore.

This has profound implications: all of those grandiose plans to create a political union to support the euro with a common fiscal policy cannot work as long as EU member countries remain both democratic and sovereign.

Governments may sign treaties and make solemn commitments to subordinate their fiscal policy to EU rules (or to be more precise, to the wishes of Germany and the European Central Bank). But, in the end, the “people” remain the real sovereign,

and they can choose to ignore their governments’ promises and reject any adjustment programme from “Brussels.”

In contrast to the United States, the EU cannot send its marshals to enforce its pacts or collect debt. Any country can leave the EU, and thus the eurozone, when the perceived burden of its obligations becomes too onerous. Until now, it had been assumed that the cost of exit would be so high that it would never be considered. That is no longer true, at least for Greece.

Lesser guarantees

the need for austerity can crumble quickly. What recourse do creditor countries have if the debtor countries become the majority and decide to increase spending?

The recently agreed measures to strengthen economic-policy coordination in the eurozone (the socalled “six pack”) imply in principle that the European Commission should be the arbiter in such matters, and that its adjustment programmes can formally be overturned only by a twothirds majority of the member states.

But it is unlikely that the Commission will ever be able to impose its view on a large country.

But, more broadly, EU commitments have now become relative, which implies that jointly guaranteed Eurobonds cannot be the silver bullet that some hope. As long as member states remain fully sovereign, no one can fully reassure investors that in the event of a eurozone breakup, some states will not simply refuse to pay, or at least refuse to pay for the others.

It is not surprising that bonds issued by the European Financial Stability Facility (the eurozone’s rescue fund) are trading at a substantial premium over German debt.

All variants of Eurobonds come with supposedly strong conditionality.

Countries that want to use them must follow strict fiscal rules. But who guarantees that these rules will actually be followed? François Hollande’s victory over Sarkozy in France’s presidential election shows that an apparent consensus on

No one can fully reassure investors that in the event of a eurozone breakup, some states will not simply refuse to pay, or at least refuse to pay for the others

Spain’s experience is instructive in this respect. After the recent elections there, Prime Minister Mariano Rajoy’s new government announced that it did not feel bound by the adjustment programme agreed to by the previous administration.

Rajoy was roundly rebuked for the form of his announcement, but its substance was proven right: Spain’s adjustment programme is now being made more lenient.

Equality in shades The reality is that the larger member states are more equal than the others.

Of course, this is not fair, but the EU’s inability to impose its view on democratic countries might actually sometimes be for the best, given that even the Commission is fallible.

The broader message from the Greek and French elections is that the attempt to impose a benevolent creditors’ dictatorship is now being met by a debtors’ revolt. Financial markets have reacted as strongly as they have because investors recognise that the “sovereign” in sovereign debt is an electorate that can simply decide not to pay.

This is already the case in Greece, but the fate of the euro will be decided in the larger, systemically important countries like Italy and Spain. Only determined action by their governments, supported by their citizens, will show that they merit unreserved support from the rest of the eurozone. At this point, nothing less can save the common currency. © Project Syndicate

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 7, 2012 business daily | 15

OPINION Tall tales about China’s banks wires hide economy’s problems Business Leading reports from Asia’s best business newspapers

VN Economy The nation’s first private credit information center, the PCB, has submitted application for license to the State Bank of Vietnam (SBV). In 2007, the private credit information project was kicked off with supports from the International Finance Corporation (IFC), which is an arm of the World Bank. In July 2010, the PCB was launched with capital contributed by 11 commercial banks, including BIDV, Vietcombank, VietinBank, ACB, Techcombank, VIB, DongA Bank, VPBank, ABBank, VPBank and SCB.

Nikkei Sales of imported cars rose 8.2 percent on the year to 20,814 vehicles in May, up for the first time in two months, according to preliminary data released by the Japan Automobile Importers Association. The top sellers were models covered by the government’s incentive program to support purchases of environmentally friendly vehicles. Volkswagen led the industry with a market share of 20.94 percent, followed

by BMW at 14.19 percent and Mercedes-Benz at 12.16 percent. Nissan Motor Co., which imports its March compact from Thailand, came in fourth at 9.14 percent.

Business Standard Air India, the national carrier will tomorrow announce its new business plans, including plans for operating new Boeing 787 Dreamliners to be delivered in a few weeks.

Civil Aviation Minister Ajit Singh on Tuesday met Prime Minister Manmohan Singh to discuss the plans for Air India.

With the Air India pilots strike completing a month tomorrow, Mr Singh said, “It’s evident that these pilots are not interested in working any longer. They’re off the payrolls. That episode is over. We are now focusing on new business plans.”

Bangkok Post The Japanese mobile giant Softbank will serve as a principal technical adviser to TOT Plc this month to conduct overall business strategy and asset management plans for the state telecom enterprise. The collaboration is aimed at helping TOT escape a possibly critical financial loss in 2013, said TOT board chairman Panthep Chamrasromran. TOT staff will also be able to train at Softbank in Japan. He added Softbank could have a business partnership with TOT in the future, as the mobile market in Japan is saturated.

Yukon Huang

Senior associate at the Carnegie Endowment and former World Bank country director for China

A

s China’s growth slows, its banking system is coming under greater scrutiny. The general perception outside the country is that negative real interest rates are causing financial instability, repressing consumption and encouraging excessive investment in capital-intensive industries.

Amplifying this perception was Premier Wen Jiabao’s muchpublicised recent statement that the big four state commercial banks – Industrial & Commercial Bank of China Ltd, China Construction Bank Corp., Agricultural Bank of China Ltd and Bank of China Ltd – have a monopoly position and earn excessive profits while neglecting small private companies and catering to the interests of large state enterprises. Although this storyline has a degree of validity, some aspects of it are more myth than reality.

Those myths risk diverting attention from the real nature of the banking system’s problems.

MYTH: Negative real interest rates are a problem specific to China.

REALITY: These days, negative real interest rates are a global norm. Real interest rates for savers are more negative in the U.S. (-2 percent) than they are in China (-0.5 percent) given recent inflation and benchmark one-year deposit rates.

What makes China’s form of financial repression unique is not negative real interest rates per se but the restricted investment choices – reinforced by capital controls – for household savings. The authorities strictly limit how much cash individuals can take out, review the purpose and origins of bank transfers and regulate investment options. As a result, government can more easily capture household savings for its own spending.

MYTH: Negative real interest rates explain low consumption in China.

REALITY: Such rates are a relatively minor factor in explaining the 15 percentage point decline in the share of consumption to GDP in China over the past two decades. Most of this decline is due to the industrialisation process as workers move from agriculture to industry. In the process, household income typically declines relative to GDP, causing the share of consumption to fall.

The same phenomenon occurred in other rapidly industrialising economies including Japan, South Korea, Taiwan and even the U.S. a century ago. In these countries, consumption as a share of GDP fell by 20 to 40 percentage points over several decades. Household consumption in China has notably grown by more than 8 percent annually over the past two decades.

This is higher than any other major economy. The goal is to maximise sustainable growth in consumption over time and not its share of gross domestic product. The concern that con-

sumption has been repressed is thus misplaced.

MYTH: China’s big four state commercial banks enjoy a monopoly position and earn excessive profits.

REALITY: The four banks now command about 45 percent of banking assets, but this compares with 75 percent two decades ago. And while reporting high profits, these banks will inevitably be forced to take major write-offs by the defaults from the 2008 stimulus programme.

So the big four neither enjoy more of a monopoly position nor earn excessive profits. The real problem is the limited presence of other financial intermediaries and the rudimentary nature of bond and equity markets, both of which poorly serve the needs of small private companies and local governments.

MYTH: China’s low interest rates encourage excessive investment in capital-intensive industries.

REALITY: Given China’s unusually high savings rate of about 50 percent of GDP, inter-

The real problem is the limited presence of other financial intermediaries and the rudimentary nature of bond and equity markets, both of which poorly serve the needs of small private companies and local governments

est rates might actually fall in a fully liberalised financial system. Regardless, the government’s intentions, and not low interest rates, drive the investment pattern in China.

In an economy of China’s size and diversity, the industrial structure would normally span the full range of light to heavy industries. The buildup in heavy industries has been triggered not by low interest rates but by an overly ambitious effort to rapidly rebuild its depleted capital stock in the post-Mao period.

Despite high investment rates, China’s capital stock in relation to the size of its economy has been below average for middleincome East Asian countries.

Together with the strategic push for rapid urbanisation, this has driven growth in steel, cement and heavy construction machinery.

MYTH: Reforms will allow the banking sector to play a more prominent role in the economy.

REALITY: Bank deposits as a share of GDP are abnormally large in China because the government has been using credit expansion to drive demand and households have limited investment options. In a reformed world, the banking footprint will shrink and other financial services will increase to serve more diversified interests.

MYTH: Reforming the bank-

ing system means improving its governance and regulatory framework.

REALITY: This thinking misses the point. Weaknesses in the banking system – as serious as they may be – are less important than the inadequacies of the fiscal system in serving the needs of a state-driven economy. Government expenditures account for only 27 percent of GDP in China compared with about 35 percent in other middle-income economies and more than 40 percent in Organisation for Economic Cooperation and Development countries.

When reforms began decades ago, government revenue and the profits of state enterprises had collapsed and the only feasible option to secure resources for investment was to tap household savings deposits.

With an increasingly sophisticated economy, China’s leadership needs to move away from having banks as the main instrument for funding public expenditures.

Thus the key to reforming the financial sector begins by getting the fiscal system to take on the responsibilities it should normally have. This would encourage more accountable and transparent practices, and reduce the likelihood of waste and corruption.

Bloomberg View

16 |

business daily June 7, 2012

CLOSING ‘US$1.4bn Studio City loan’ – IFR Asia

Green Europe needs milestones

A US$1.4 billion (11.2 billion patacas) loan to back Melco Crown Entertainment’s Studio City casino project in Macau is taking shape with eight banks likely to be in the arranger group, said a report from International Financing Review Asia yesterday. A request to Melco International Development Ltd, one part of the joint venture, for comment on the loan report brought no response as Business Daily went to press. MPEL said in its first quarter earnings call that Studio City would cost US$1.9 billion and take 36 months to complete, stating the company hoped for a construction permit from the government ‘near the end of first half 2012’.

Europe must agree 2030 milestones as soon as possible to spur investment in renewable energy, or green power growth will fizzle once firm policy runs out in 2020, the European Commission said yesterday in its latest strategy statement. Many in the renewable energy sector agree there is a need for strong guidance, but they want binding targets, rather than vague aims. At the other extreme, some of the 27 member states are strongly opposed to legal goals for renewables.

The European Union currently has a firm target to increase the share of renewable energy in the mix to 20 percent.

ECB leaves interest rate unchanged Dashing expectations of a rate cut, bank keeps pressure on European leaders

T

he European Central Bank left interest rates at 1 percent yesterday, dashing some market expectations that it might move quickly to combat fears about the health of the eurozone.

Markets were unsure how the ECB would react to the recent wave of weak economic data, knowing that the bank also wants to keep the pressure on euro zone leaders to tackle the crisis more effectively.

“I can imagine that the market is a little disappointed that they didn’t cut rates,” said Rabobank economist Elwin de Groot.

“It had been pricing some action on this front.

Whilst the ECB is widely seen as the only institution capable of immediate action on behalf of the euro zone, its president Mario Draghi and the rest of the ECB are urging governments to ditch their gradualist approach and address the euro zone’s crisis head on. But the central bank is facing pressure to help out from all sides.

Fix crisis, Europe told Earlier yesterday, the Japanese Finance Minister Jun Azumi was quoted saying that Europe must act “responsibly” to solve the debt crisis that is wracking the world economy.

“As the big aim is to overcome the crisis, Europe in particular needs to act appropriately and responsibly,” he told reporters.

Mr Azumi was speaking the

Spanish bailout may be too big to handle

morning after an emergency teleconference with fellow finance ministers in the G7 group of leading industrialised nations.

Immediately after the conference call late Tuesday, Mr Azumi said he had been given assurances by his European counterparts that they will work to fix the problems gripping the continent. “[They] said they will handle the issues, including Spain’s debt problems, in a responsible manner, and I trust them,” he said, according to Dow Jones Newswires.

He added political leaders needed to act to reassure markets, which have proved increasingly volatile, with traders seemingly unimpressed by what many see as half-measures.

“European leaders seem to be moving with a heightened sense of urgency and we welcome that.

We are hoping to see accelerated European action over the next several weeks,” White House spokesman Jay Carney said.

Spanish pains European members of the G7 told the conference call they would act “speedily” as Spain pleaded for deeper fiscal and banking integration that would help its stumbling banks.

“Europe must say where it is going, to give itself unity, it must say that the euro is an irreversible project that is not in danger, it must help nations in difficulty,” Spanish Prime Minister Mariano Rajoy told lawmakers.

“In my opinion it needs fiscal integration, with a fiscal authority, and banking

integration, a banking union with eurobonds, with a banking supervisor and a European bank deposit guarantee fund.”

Spain wants the EU to allow the European Stability Mechanism (ESM) bailout fund – due to come into force in the coming weeks – to directly recapitalise banks struggling to raise 80 billion euros (US$99.8 billion) to shore up their books.

But the German government opposes a cross-border European banking deposit guarantee before other “important steps towards integration” have been taken, the government spokesman said yesterday. “We mustn’t take the second step before the first,” Steffen Seibert told a regular government news conference.

Agencies

Tax evasion rises in election time Greece’s financial pains compounded by prolonged election season

T

he prolonged campaign season is worsening Greece’s chronic difficulties with tax evasion that has helped wreak havoc on the

The taxmen relaxes when elections approach

country’s finances.

Greece, which Bank of America Merrill Lynch says may run out of money in early July, fell short of revenue goals

by 495 million euros (US$615 million) that may determine whether the in the first four months of 2012, country stays in the 17-nation euro.

Tax evasion increases by an average according to the Finance Ministry.

Tax collections dropped 20 percent 0.2 percent of annual gross domestic during the first 20 days of May from the product in periods around Greek same year-earlier period, Kathimerini elections, as the bureaucracy that newspaper reported May 25, without relies heavily on day-to-day control by politicians slows and tax collectors saying where it got the information.

Russian Putin andthe Chinese President Hu Jintao perform fewer audits,met according to a After thePresident June Vladimir 17 election, yesterday in Beijing so-called troika – the European study published last year by Spyros Commission, European Central Bank Skouras and Nicos Christodoulakis, and International Monetary Fund – a former finance minister, from the will “almost certainly find that Greece Athens University of Economics and has slipped far behind targets in May Business. The study looked at 13 and June,” Holger Schmieding, chief elections between 1974 and 2009. economist at Berenberg Bank, said in “I don’t think anything has changed in an e-mail. “If Greece gets a cooperative essence in how the public sector works government, the troika will likely in the last two years,” Mr Skouras said recalibrate the program for Greece in an interview. “People respond to to take account of the new starting incentives, and when they know the likelihood of being punished for tax position for the new government.”

Greece is preparing for its second evasion is low, they will evade more.”

Bloomberg national election in six weeks, a vote