Macau Business Daily, June 8, 2012 by Business Daily

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Off-roaders: bus firm defends ops

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Food safety law ‘needs more teeth’

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Year I - Number 50 - Friday June 8, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

Singleton flats no use to families

Sands wants licence case blocked from Macau court L

as Vegas Sands Corp wants to keep a lawsuit – centring on the history of its Macau concession – out of a court here, arguing the suit has already been heard and dismissed in Nevada. The jurisdiction assertion is in contrast to the company’s position when former Sands China president Steve Jacobs’ launched a Nevadabased suit alleging ‘wrongful termination’ from his top job in Macau. In that case LVS argued that as Sands China was a “foreign” entity – a Hong Kong-listed company operating via Macau-incorporated

companies – the case should be heard in a Macau court. The new case over Sands’ Macau concession is just one of a raft of claims by individuals or companies who say they helped LVS get a Macau gaming licence and weren’t properly compensated, or claim they were promised a Macau partnership and were jilted. This one dates back to 2007. Asian American Entertainment – controlled by a Taiwan businessman – accused Sands in a U.S. Federal Court in Nevada of breaching an October 2001

contract promising a joint bid for a Macau gaming licence. The case bounced between Nevada federal and state courts until being dismissed in April 2010 when Asian American failed to retain lawyers. In January this year Asian American started an action on the same issue in the Macau courts. Asian American is asking for three billion patacas (US$375 million) in compensation. LVS describes the new suit as “vexatious” and is seeking an anti-suit injunction in the U.S. More on pages 2 & 3

www.macaubusinessdaily.com

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HANG SENG INDEX 18840

City’s airport bailout bill rises

18804

The government must pay an extra 225.8 million patacas (US$28.3 million) of public money to bail out Macau International Airport Co Ltd (CAM). That’s on top of the city’s existing 1.07 billion patacas commitment. When CAM went looking last month for 1.947 billion patacas’ recapitalisation, a group of minority shareholders with 11.7 percent found they’d lost their appetite for air travel – or at least for funding an airport that lost 93.7 million patacas in 2010 and 15.3 million patacas in 2011. The government – already with 55.24 percent of CAM shares – had to pick up their stake. STDM, the tourism investment company founded by Stanley Ho Hung Sun, guaranteed the remaining 33 percent of the equity. Pages 4 & 5

18768

18732

18696

18660

June 7

HSI - Movers Name

Local growth to slow says The Economist

Year of the Dragone: City of Dreams’ new show

The bad news is the Economist Intelligence Unit thinks Macau’s economy will slow this year to notch 9.8 percent growth – around half the year-on-year percentage gain predicted by some local experts. The good news is the unit also thinks inflation will slow to 4.2 percent this year, and 4.5 percent in 2013. In April inflation reached 6.76 percent.

Cotai casino resort City of Dreams is to launch a second show by the award-winning stage producer Franco Dragone. The new production is described as a ‘cabaret’ and will be on a smaller scale than the property’s existing hit show The House of Dancing Water. It will be staged at City of Dreams’ nightclub Club Cubic, which is closing temporarily to prepare for the new attraction.

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%Day

WHARF HLDG

4.87

COSCO PAC LTD

3.56

CHINA RES ENTERP

3.33

CHINA OVERSEAS

2.43

HONG KONG EXCHNG

2.26

HONG KG CHINA GS

0.43

CHINA SHENHUA-H

-1.79

WANT WANT CHINA

-1.79

ALUMINUM CORP-H

-1.90

NEW WORLD DEV

-1.97

Source: Bloomberg

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business daily June 8, 2012

macau

Sands asks U.S. court to block suit in Macau A Nevada court is asked to stop a former partner of Sands from persisting with a lawsuit in the MSAR Vítor Quintã

vitorquinta@macaubusinessdaily.com

asino operator Las Vegas Sands Inc has asked a U.S. court to force a former business partner to drop a lawsuit filed in Macau. But the motion will be pointless, the Asian Entertainment lawyer says. Last January Asian American accused Sands of breaching a contract signed in October 2001 to make a joint bid for a Macau gaming licence. The breach was seen in a rival bid Sands filed in early 2002 with a unit of Hong Kong’s Galaxy Entertainment Group. Sands had had until May to respond to Asian American’s allegations, but a spokesperson for Sands’ Macau unit has confirmed to Business Daily that the deadline has been put back. In the meantime Sands has gone to the Nevada state courts to try to stop the Macau lawsuit. On April 20, Sands filed a motion seeking an injunction against Asian American. Sands’s goal is to force Asian American, controlled by Taiwan businessman Marshall Hao Shi Sheng, to withdraw the Macau lawsuit before it must respond. To do so would mean paying a court fee of US$200,000 (1.6 million patacas), Sands said. The motion claims Asian American “has filed essentially the same complaint against the same defendants” as in a suit filed by the company in a Nevada federal court in 2007. Sands, controlled by tycoon Sheldon Adelson, argued at the time that the U.S. court had no jurisdiction over the case. On appeal, a higher court sent the case back in 2009. The lawsuit was dismissed in April 2010 because Asian American failed to retain lawyers.

Considering that the lawsuit was dropped, the Nevada courts no longer have any jurisdiction over this issue, Asian American claimed. “Macau, as a separate sovereign, does not adhere to the [United States] federal rules of civil procedure.” Mr Menezes said in March that the company had dropped its Nevada lawsuit because of doubts over whether the U.S. courts had jurisdiction over the case. But Sands’s motion tells a different story, that the company ran out of money to pay its lawyers in the United States. And Asian American “still faces the very same financial constraints … so there is every reason to believe that its prosecution of the Macau lawsuit will be similarly stymied by delay and dereliction”. Asian American’s Macau unit is in liquidation but has obtained legal aid, Mr Menezes confirmed.

Unpredictable impact The only big difference between the two lawsuits is the inclusion of gaming concessionaire Venetian Macau SA, which “did not even exist at the time of the event alleged in the new complaint”, Sands says. Sands believes Venetian was added as “a thinly veiled effort to bolster a nexus to Macau’s courts” to stress its gaming profits. Asian American is asking for 3 billion patacas (US$375 million) in compensation. “If the damaging actions of the defendants had not occurred, the plaintiff would today have a pecuniary situation that essentially corresponds to the results obtained by Venetian in the management

and operation of the venture [the Venetian Macau resort],” Asian American’s suit says. Sands is seeking an anti-suit injunction, which would bind Asian American, not “any foreign tribunal”. Sands’s lawyers believe any encroachment on the jurisdiction of the Macau courts would be “negligible, and certainly tolerable”. But Mr Menezes still believes that, even if the Nevada judge sides with the Sands, there would be no legal consequences. “A foreign court cannot prevent Macau courts from adjudicating actions for which the court considers itself competent,” he said. “It’s the MSAR court, not foreign courts, who decide on whether the procedural criteria for a suit to follow through are met. A foreign court decision could not have the effect of limiting access to justice in the MSAR,” the lawyer said. Business Daily tried to get further information from Las Vegas Sands but the operator refused to “comment on pending legal matters”. The company’s motion is the latest episode in the operator’s erratic relationship with the Macau legal system. In other lawsuits, including one over the dismissal of Steve Jacobs, the company has repeatedly tried to force applicants to file their claims in Macau, not in the United States. Mr Jacobs, the former head of Sands subsidiary Sands China Ltd, filed a lawsuit for wrongful dismissal, in which he alleged he had been told to spy on Macau government officials. These claims led to an investigation by the U.S. Securities and Exchange Commission.

Closed case Sands slams the Macau lawsuit as “vexatious and oppressive relitigation of duplicative claims” because it is dealing with “issues that were already resolved” in Nevada courts. The Macau lawsuit “is an obvious end-run around the statutes of limitations” enforced by the 2010 decision, Sands’ lawyers wrote on its motion. But Asian American disagrees. In its response to Sands’ motion, the company’s lawyers argue that its claims have “never been actually litigated” because in effect it gave up its Nevada lawsuit before any verdict. “The Nevada court did not adjudicate on the merits or substance of the case,” Asian American lawyer Jorge Menezes told Business Daily. “That is the issue under discussion in Macau courts: whether Sands breached the contract or not, and if damages should be awarded.” He also stressed that the Macau lawsuit includes “many news facts and arguments”.

business as usual

Take back the La Scala land Paulo A. Azevedo Publisher & Founder

court says the La Scala plots of land, in front of the airport, were given to the developer only because Ao Man Long, at the time the secretary for transport and public works, was bribed. It is written. It is done. The government should obviously take back the land. Failure to do so would send out a signal that you can always get away with a crime in this town if the deed is done.

“Protecting the public interest” has nothing to do with this or similar cases. The public interest lies in seeing all corrupt officials and businessmen where they belong – in prison. The government has the obligation, of course, to protect the buyers that have already made down payments on La Scala flats. As this newspaper has already reported, quoting experts, a buyer is entitled to compensation

worth twice the down payment. This is probably not ideal, but it is not bad. To show its commitment, the government can even authorise a refund of stamp duty already charged. Macau Business magazine was the first publication to investigate the strange deals with those plots of land. There has been no reaction so far. Justice can take a long time but eventually prevails. Nevertheless, until the case has run its course the government should not rush to repossess the plots. That would be to deny Joseph Lau Luen Hung – the majority shareholder of developer Chinese Estates Holdings Ltd – the presumption of innocence. It seems right, however, to ask the court for an injunction, stopping any La Scala construction work or sales. Then there is the further grant of land to the developer of La Scala in March last year, which almost doubled the construction area to over 730,000 square metres from about 390,000 square metres. We cannot blame Ao for this. But since the grant smells, the present secretary for transport and public works, Lau Si Io, needs to explain it in fine detail. The competent authorities must investigate the affair exhaustively, no matter what the consequences.

June 8, 2012 business daily | 3

MACAU KEY POINTS Nevada court asked to intervene in Macau lawsuit Jurisdiction encroachment ‘tolerable’, says Sands Suit involves claims ‘already resolved’: Sands motion Issues have never been litigated, says Asian American Macau has full autonomy: Asian American

There is every reason to believe that its [Asian American’s] prosecution of the Macau lawsuit will be similarly stymied by delay and dereliction Las Vegas Sands motion

A foreign court decision could not have the effect of limiting access to justice in the MSAR Las Vegas Sands, who operates Sands Macao casino, is trying to block another legal dispute over the licence bidding process

Jorge Menezes, Asian American Entertainment lawyer

Jumping ships in casino race A

sian American Entertainment, the former business partner of Las Vegas Sands, accuses the casino operator of breaking off a deal to bid for a Macau gaming licence during the gaming market liberalisation. According to the suit, the controlling shareholder of Asian American, Taiwan businessman Marshall Hao Shi Sheng, claims he “came up with the idea that in Macau a casino similar to the Venice-themed resort that Venetian Resort owned and operated in Las Vegas, Nevada, would be successful”. Sands and Mr Hao agreed to put forward a joint bid with financial support from Taipeibased China Development Industrial Bank, which agreed to underwrite the offer. The bank would get a share of 51 percent of the Macau gaming concessionaire, while Sands would get 27.5 percent and Mr Hao 10 percent. The deal forbade Sands from negotiating or teaming up with

a rival contestant and also from disclosing confidential documents from the joint bid. Asian American and a Sands subsidiary, Venetian Venture Development, submitted a formal bid to the government in December 2001. But “at the start of January 2002” Sands “initiated contacts and negotiation with bidders, in particular with the competitor Galaxy” Entertainment Group, without informing Asian American, the suit claims. And on February 1, 2002, Sands submitted a joint bid with Galaxy and informed the tender commission it had “severed its relationship” with Asian American. There were 18 qualified bids for the three gaming licences originally planned for the liberalisation of the market in 2002. Asian American’s bid was rejected, while the partnership between Sands and Galaxy won one of the licences. However, the two companies

eventually split up, which later pushed the government to create gaming sub-concessions, paving the way for the six present casino operators here.

Lucky Galaxy The Taiwan company claims that Galaxy would never have won a licence if it had not been in partnership with Sands, recalling that the Hong Kong group was excluded from the tender’s second consulting phase. Jorge Oliveira, a former legal adviser to the government who came up with the idea of creating gaming sub-concessions, expressed the same view in a 2008 trial. A copy of the gaming licence bid reveals that in 2001 Sands was eyeing the concession of a 160 acre plot in Cotai that today would cover the City of Dreams, the Sands Cotai Central, the parcel where Wynn’s Cotai resort is being built, and at least part of the Macau University of Science and Technology campus.

Included in the bid was a plan to build an attraction “similar” to the Guggenheim Hermitage Museum in the Venetian in Las Vegas. Further, China Development Industrial Bank pledged to invest an additional US$780 million (6.2 billion patacas) to “buy one of the largest banks in Macau”, and set up a trade logistics centre and a new Macau airline. This is the third time Sands has been sued over the licence bidding process. In January 2006 Macau businessman José Cheong Vai Chi and two others filed a suit in Nevada but dropped the case after receiving compensation of US$42.5 million. In 2008 Hong Kong businessman Richard Suen won a US$58.6 million suit in Nevada against Sands. The company appealed and the Nevada Supreme Court ordered a retrial that is scheduled for March 25, 2013, according to Sands’ annual report, released in February. V.Q.

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business daily June 8, 2012

macau Brought to you by

HOSPITALITY Complex trends The Statistics and Census Service does a continuous survey of expenses incurred by visitors. The data from this survey do not include gambling expenses. The remaining expenses are broken down into two categories: shopping and non-shopping expenses. The accuracy of these kinds of survey depends on the memory and willingness of those answering them, and may be affected by sampling biases. But even if the absolute values cannot be taken without some caution, they still provide some insight into the consumption of those that visit us, and on its evolution. The quarterly data shown here start in 2010, when a new series was started.

Govt subscribes to more CAM shares The loss-making airport may benefit from anew aviation strategy

Visitors’ expenses per capita (MOP) 1000

Non-shopping Shopping

800

600

400

200

The general trend is one of growth, despite the slight slowdown in the first half of 2011. Overall, non-gambling expenses increased by 36 percent in the two years, growing at an average annual rate of about 16 percent at current prices. In broad terms, on average, those that visit us divide their non-gambling expenditure evenly between shopping and other expenses. Their shopping spending varies between 47 percent and 52 percent of the total.

Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

he lack of response from minor private shareholders has forced the government to subscribe to the remaining shares of the beleaguered Macau International Airport Co Ltd (CAM). The company has to repay this

month a syndicated loan of 2 billion patacas (US$ 250 million) that it got in 1994 for the construction of the airport. “Since then, CAM has not had the capability to repay the loans. The deadline of the repayment is June 2012,” the aviation authority said last month. The government is a guarantor to the loan. By May 30, the first deadline for

subscribing to the new shares, only the government and Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau SA (STDM) had joined the effort to inject almost 2 billion patacas in capital. The government had subscribed 55.24 percent and STDM 33.03 percent of the 1.95 billion patacas worth of new shares. “The second round of subscription

Vistors’ expenses, per region (MOP) 1500

Non-shopping Shopping

1200

900

600

GDP growth ‘to slow this year’ The Economist Intelligence Unit has trimmed its forecast of the city’s economic growth, citing mainland China’s economic cooling and slower investment

300

Vítor Quintã

vitorquinta@macaubusinessdaily.com

China

Hong Kong

Taiwan

But the mostly smooth upward trend and the even breakdown by kinds of expenses hides distinct differences in the behaviour of visitors. How much money they spend and what they spend it on depends on where they come from. A look at the main places of origin – mainland China, Hong Kong and Taiwan – illustrates this. Spending by mainland visitors is much bigger than spending by Hong Kong or Taiwan visitors, mainly because they do more shopping. Certainly, mainlanders spend more on everything. Their non-shopping expenses – which include food, lodging and transport – exceed those incurred by the others by some 15 percent. But it is their urge to shop that sets them apart. Their spending on shopping is five times that of Taiwan visitors and eight times that of Hong Kong visitors. J.I.D.

conomic growth will slow more sharply in the second half of this year, pushing growth for the whole of 2012 down to 9.8 percent, according to the Economist Intelligence Unit. The city’s runaway economy has now slowed for three quarters in a row but growth in its gross domestic product remains at a reassuring 18.4 percent. For the Economist Intelligence Unit report to be accurate, Macau’s economic growth rate would need to fall by almost two-thirds to an average of just 6.9 percent in the last three quarters of 2012. The report, quoted by Macauhub, says the cooling is due to a drop in mainland China’s economic growth, which this year is expected to reach 8.3 percent before rebounding in 2013. Economist Intelligence Unit analysts also believe increased competition for gaming revenue from Singapore will dampen casino growth here. Gaming revenue in Macau grew in May by 7.3 percent, the slowest rate since 2009.

Another reason is a slowdown in investment, with the report predicting growth of 7.4 percent this year, considerably slower than the 14.5 percent growth recorded in 2011. The trend was very different in the first quarter, with investment growing by 43.8 percent, mostly because of public investment, which increased more than fivefold. The analysts believe the economic growth rate will pick up to 13.5 percent in 2013, fuelled by a 10.4 percent increase in investment. The Economist Intelligence Unit believes inflation will slow to 4.2 percent this year and rise again to 4.5 percent in 2013. Annual inflation reached 6.76 percent in April. This forecast is much more cautious than the one released by the Economist Intelligence Unit in January, which said Macau would be the world’s fastest-growing economy this year, with 15 percent growth. Later that month the city’s financial regulator predicted that the economy would grow “at a high-single-digit rate” during the first half. The University of Macau’s Department of Finance and Business Economics forecast in May annual growth of 18 percent.

June 8, 2012 business daily | 5

MACAU Photo by Manuel Cardoso

MOP1.3 billion What the government paid for the new shares issued by Macau International Airport Co Ltd

Macau’s aviation is on the verge of changing its focus and new objectives may benefit the airport here. “Our aviation industry has, in the past, relied heavily on the Taiwan market. Despite this, we have taken steps to overcome the effects resulting from the direct cross-strait flights,” said Ms Lam. Aside from betting on the business aviation sector, as the airport moves to expand the parking area for private jets and small planes, the new aviation strategy aims at strengthening the regional positioning of the airport. Air Macau, says the aviation regulator, will have a pivotal role. “Our local airline has been transforming their operation strategy by gradually shifting their focus to the more economically developed markets in mainland China, North Asia and Southeast

Asia,” said Ms Lam. Air Macau will also increase the capacity on routes to neighbouring cities. “In the short- and medium-haul flights, the capacity on [the] Osaka, Tokyo and Seoul [routes] will be increased,” she said. Beijing will be exploited for longhaul flights as the transit hub “by carrying passengers from Macau to far-distance regions in the United States and Europe”. The shift in Air Macau’s strategy has been paying off. The airline’s profits for 2011 totalled 250 million patacas, the company said in March. After several years of losses, it was the second consecutive year in the black. The flag carrier plans to renew its fleet and increase the number of destinations to which it flies to by “two or three” this year, Air Macau chairman Zheng Yan said in March. The plan to increase regional traffic might reverse the drop in the number of passengers in recent years, with clear benefits to the airport. Passenger traffic at Macau International Airport had been falling since 2008, but it is gradually picking up this year. The airport handled about 1.4 million passengers between January and April this year, a growth of 8 percent from a year earlier, according to figures from Administration of Airports Ltd, the company that manages the infrastructure. Gross revenue for all companies at the airport, including CAM, grew by 29 percent to 3.01 billion patacas last year, official data show. The government plans to expand the airport in coming years and hopes to give it to an annual capacity of 15 million passengers by 2030. It can handle 6 million passengers per year now.

government to keep its promise of completing 19,000 public houses [by this year].” According to official data, there are 2,658 one-bedroom flats, 4,718 with two bedrooms, 1,772 with three bedrooms and 48 with four bedrooms in the 9,196 affordable flats to be ready by the end of this year. Mr Tam said the bureau tends to

build more two-bedroom homes in the next phase of public housing construction and it will collect more data on sales by early next year to avoid misuse of public resources. The authority opened a tender on Wednesday for the construction of two public housing projects in Ilha Verde, providing about 2,350 flats, among which over 1,500 units have two-bedroom units.

initial capital. The cash proceeds from the share issue “will be used to repay bank loans deriving from the financing needs of the airport infrastructure in its early stage of construction”, CAM said in May. CAM’s financial situation improved last year, but the company is struggling to make a profit. The public concessionaire of the airport recorded a loss of 15.3 million patacas in 2011, due mainly to interest payments on the company’s accumulated debts. The company’s financial situation has improved, however, with losses falling sharply from a 93.7-million pataca loss in 2010. The airport operator saw its revenue grow by 13 percent to 658.7 million patacas.

was, therefore, carried out and the Macau government has decided to subscribe the rest of the preferential shares, i.e. a total of 67 percent,” Euphemia Lam, the Civil Aviation Authority’s spokesperson, told Business Daily. “The Macau government has already informed CAM of the decision.” The government will pay over 1.3 billion for CAM non-voting,

redeemable preference shares, but will not raise its stake. The new shares are only “aimed at raising funds to repay CAM’s longterm bank loans,” Ms Lam said. None of the other private stakeholders has taken up the offer of shares. The remaining shares are held by a number of mainland Chinese and Macau businesses and institutions, including businessman Ng Fok (about 2 percent) and STDM founder Mr Ho (1 percent).

Repaying debts The decision to issue the new shares was made in May to cover CAM’s short-term cash needs. After losses in 2011, the company’s net equity fell to about 3 billion patacas. Cumulative losses had eaten up 1 billion patacas of the company’s

Too many one-room flats The Housing Bureau defended itself amid accusations of producing an excessive number of one-bedroom affordable flats Tony Lai

tony.lai@macaubusinessdaily.com

hile legislators and associations slam the government for having “too many” single-bedroom affordable flats, the government said such decision was based on scientific data. According to data from Housing Bureau, only 618 out of the 2,658 single-bedroom affordable flats included in the 19,000-flat public housing scheme have been sold until Wednesday. But only 498 households that want flats with one bedroom are still in the latest waiting list for the affordable houses, meaning there will still be 1,542 flats left if all families buy the flats. Housing Bureau director Tam Kuong Man told media on the sidelines of a conference yesterday that he does not agree with claims that authorities deliberately produced more one-bedroom homes than needed. Legislator Ng Kuok Cheong said in a written enquiry also yesterday he was “surprised and even angry” that there are many flats with one

bedroom in the affordable housing hubs, including two in Seac Pai Van blocks that should be ready this year. The pan-democrat added that the over-abundance of single-room homes might lead to a false impression that “nobody wants affordable flats”, suspecting it might be the government’s intention to “suppress the need of affordable homes”. Mr Tam said there were 3,792 applicants looking for onebedroom affordable flats when the Administration drafted the current plan. But about 2,676 households gave up after sales of the TN27 project in Taipa and the housing complex at Alameda da Tranquilidade were launched. Currently only affordable flats in those two hubs are on sale, but the majority of the unsold units only have one bedroom. Leong Kuai Peng, leader of the Housing Concern Group at the Macau General Union of Neighbourhood Associations, also agrees that such units do not reflect public need. She told Chinese-language newspaper Macau Daily News the large amount of one-bedroom units was “just a mere means for the

Photo by Manuel Cardoso

New strategy

There are 2,658 one-bedroom flats in the 9,196 affordable flats to be ready by the end of this year

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business daily June 8, 2012

macau Brought to you by

FDI returns Foreign Direct Investment (FDI) has been an important element in the economic boom, especially since 2004. Remember, however, that between the handover in 1999 and 2004 we had a spell of disinvestment, with the total stock of foreign investment decreasing. Growth since then has been considerable, as it is shown by the first chart. Note that, going by experience, we can expect data for 2011 to be available only at the end of this year. GDP, FDI flows and stock (106 mop) 250000

200000

150000

100000

50000

2004 2005 2006 2007 2008 2009 2010 FDI Stock

FDI Flows

GDP

The annual flows of FDI have increased almost continuously – with the exception of the contraction in 2009 – growing almost sixfold. The FDI stock more than tripled from 2004 to 2010, growing at an average annual rate of 34 percent per year. The pattern of growth has matched closely that of gross domestic product. In the last five years, in particular, the ratio of GDP to FDI stock has stabilised around two to one. The annual rates of change in the three variables are naturally different, but their parallel evolution and correlation are evident. FDI income and stock (106 mop) 120000

100000

80000

60000

40000

20000

2004 2005 2006 2007 2008 2009 2010 FDI Stock

Reolian insists its buses safe

FDI Income

Naturally, all investment expects returns. But with change happening so fast and with all the data lumped together, a detailed analysis of the profitability of foreign investment is impossible. But if we simply take the ratio of the stock of foreign capital to the annual income it has generated, we may arrive at an acceptable proxy for the return on investment. The resulting picture suggests that foreign investors, in general, cannot complain too loudly. In the period represented, annual income generated as a proportion of the stock of foreign capital varies between 15 percent in 2007 and 38 percent in 2006. The simple average for all years is 25.6 percent. J.I.D.

Reolian says it is taking safety measures and giving training in the light of its accident record Xi Chen

xi@macaubusinessdaily.com

fter numerous accidents and many complaints by residents, Reolian has said it has implemented measures to enhance operational and occupational safety. The company said it had already spent 1 million patacas (US$125,000) in January to install an advanced maintenance system and implement safety measures. These include importing brake and suspension equipment from Germany – a first for Macau, according to Reolian’s maintenance director, Mark Harbridge. He demonstrated the company’s maintenance procedure to the media yesterday. He said buses were required to come in for a check-up after being on the road for 10,000 km, which is around every two months. The maintenance check interval recommended by the manufacturer is every 12,000 km. Yutong, a large industrial group in Henan, supplied all of Reolian’s 245 buses. Maintenance accounted for 30 percent of the company’s operating

costs, Mr Harbridge said. In the event of an accident, an investigator is sent to the scene immediately to collect information and go through other procedures, according to Reolian. The company said in a written statement that accident statistics would be reviewed and analysed monthly so the necessary adjustments to bus maintenance could be made or extra training for drivers given. An internal safety committee had been established, Mr Harbridge said. The company said all drivers were required to participate in extensive training programmes. Reolian has been the focus of attention since it started operating last August. According to the government, the bus company has been linked to 50 percent of all bus-related traffic accidents since it started its services, and 20 per cent of these accidents were attributed to misconduct by Reolian drivers. In January 50 out of the 83 bus accidents involved Reolian. Its drivers were reportedly responsible for 15 of those 50 accidents. Reolian received over 8,000 complaints between August and December, according to reports in

other news media. It had over 2,000 complaints in its first month of operation. However, the number of complaints has decreased since. “We were in a bit of a rush to get ready by August. The buses only arrived in May,” assistant general manager Lilian Kwan said. At the outset the company had difficulty finding qualified drivers. It officially started its services with 250 drivers instead of the planned 400. The other two bus operators had to support Reolian at the government’s request. Since then its history has been laden with accidents. This year it has been involved three serious accidents that left two people dead and one severely injured. On Sunday a small Reolian bus ran off the road into a café. Mr Harbridge said the number of accidents had been decreasing since the company began operating. “Zero percent of the accidents were due to mechanical failures,” he said. The government has fined the company 50,000 patacas for failing to meet the standard bus frequency requirement of 10 to 15 minutes. Reolian is likely to appeal against the fine, according to reports in other media.

Weather Beijing 32/18o C Changchun 28/16o C

Harbin 28/15o C

Xian 34/18o C Shanghai 33/23o C Chengdu 29/23o C Kunming 25/17o C Haikou 31/24o C Sanya 33/27o C

Guangzhou 34/25o C

MACAU (04 June-09 June) Day

Temperature

Humidity

06/04

25/30o C

70/90 %

06/05

26/31o C

70/90 %

06/06

26/31o C

70/90 %

06/07

27/32o C

70/90 %

06/08

27/32o C

70/90 %

06/09

27/32o C

70/90 %

Shenzhen 32/25o C

ASIA (today)

Hong Kong 32/27o C

Manila

TOKYO

Jakarta

29/26o C

30/26o C

26/19o C

32/25o C

Macau 31/27o C

Bangkok

SEOUL

K. lumpur

34/27o C

SINGAPORE

27/18o C

34/27o C

taipei

34/27o C

June 8, 2012 business daily | 7

MACAU

New Dragone show for City of Dreams ‘Cabaret’ production will be at Club Cubic at Cotai resort Associate Editor

ity of Dreams is to launch a second show by the awardwinning stage producer Franco Dragone. The Cotai casino resort, developed and operated by Melco Crown Entertainment, has already had success with the Dragone-created and -produced ‘The House of Dancing Water’. That show – featuring one of the world’s biggest and most costly pool stages – is regularly sold out with visitors sometimes needing to book weeks in advance for tickets. This is in contrast to Cirque du Soleil’s ZAiA at The Venetian Macao. ZAiA – which had its own theatre purpose-built at a cost of US$100 million (800 million patacas) – closed in February after three-and-a-half years due to lower than expected box office sales even after a relaunch in 2011 featuring a changed character list and storyline alterations. The new Dragone production is to be on a smaller scale than either The House of Dancing Water or ZAiA. It is described as a ‘cabaret’ and will be staged at City of Dreams’ nightclub Club Cubic. The new production is described as a ‘burlesque’ by other sources. The original meaning of burlesque was a satirical drama or musical production making fun of more serious works, but in the

United States in the 20th century if became associated with musical review featuring skimpily-clad female dancers. In order to accommodate the new show, the main room at Club Cubic is closing temporarily for some renovation. When it reopens the Dragone show will run in the evenings, with the venue reverting to a nightclub after midnight, Business Daily has been told.

Club Cubic “There is a partial closure of Cubic main hall temporarily for decoration works,” said Maggie Ma, spokeswoman for Melco International Development in response to an inquiry. Ms Ma didn’t respond to a further inquiry specifically asking about a new Franco Dragone show at Club Cubic, but the news was confirmed by another source with direct knowledge of the situation. The web page for Club Cubic on the CoD official website had a message yesterday stating: “Special Notice: Kindly be informed that renovation work will be commenced from 4th – 7th June and only Junior Hall will be opened within this period. Sorry for any inconvenience caused.” It didn’t say when renovations

The House of Dancing Water cost HK$2 billion to develop and opened on September 16, 2010. Since then it has played to more than one million people according to a recent press release. It has an 80-strong cast and 160 backstage staff from more than 25 countries. Its purpose-built theatre was designed by the Pei Partnership – designers of iconic buildings across China including Macao Science Center. The theatre’s stage pool holds approximately 3.7 million gallons (14 million litres) of water – more than five Olympic-sized swimming pools.

would be completed. The revamp in the entertainment offer at Club Cubic coincides with the recent appointment of Alidad Tash – formerly an executive in strategic marketing at The Venetian Macao – as senior vice president, Gaming Operations & Strategy at MPEL. “Melco Crown Entertainment is reviewing its cost structure and trying to turn non-gaming departments into self-sustaining units or even generators of profit,” said Ben Lee of IGamix Management & Consulting Ltd in the latest edition of his newsletter Macau Gaming Gazette. The House of Dancing Water – made a splash for City of Dreams

Food safety enforcement questions remain Legislators think there is still room for clearer enforcement provisions in the food safety bill Tony Lai

Photo by Manuel Cardoso

tony.lai@macaubusinessdaily.com

An independent laboratory should carry out inspections, legislators say

he food safety bill should include more details about the execution of its provisions and coordination between government departments, the chairman of the Legislative Assembly’s second standing committee, Chan Chak Mo, said yesterday. The assembly’s legal advisers had said the bill had many provisions about penalties for food safety

violations but “too few about the execution and management of food inspection”, Mr Chan told reporters after a committee meeting. The Civic and Municipal Affairs Bureau is now responsible only for food safety in markets, restaurants and hawker stalls, but the law will give the bureau power to inspect all food, imported or home-produced. Mr Chan said the advisers thought

there should be more details on how the bureau would inspect food and follow up on products inspected. He also said the provision on the responsibilities of the bureau and other government institutions could be made clearer to eliminate duplication and waste of public resources. The government has explained that the bill envisages the Civic and Municipal Affairs Bureau having complete

responsibility for food safety, and the responsibilities of other departments remaining as they are. For instance, the Macau Government Tourism Office would still license and inspect restaurants and bars. But the committee still thinks the law should “list out clearly any instances” when other institutions feel the need to report cases to the Civic and Municipal Affairs Bureau, to “clear any grey areas in the future”. André Cheong Weng Chon, director of the Legal Affairs Bureau, confirmed to the committee that the Civic and Municipal Affairs Bureau would have the power to confiscate and destroy any irregular or harmful food it detected. Some committee members said at a meeting last month that this power might better be given to the security forces. The committee also has doubts over whether it is fair to have the Civic and Municipal Affairs Bureau involved in both inspection and prosecution. Some legislators, including Mr Chan, suggested that the government should engage an independent laboratory to carry out inspections. The government told the committee on June 7 that it was difficult to do this but that the bureau had an appeal mechanism to ensure fairness. Mr Chan said the committee still had to discuss the details of the bill with the government.

8 |

business daily June 8, 2012

GREATER CHINA

China’s outbound investment picks up Minority deals represent 78 percent of total deal value Nick Edwards

hina’s outbound investments accelerated to US$21.4 billion in the first three months of 2012 after stalling last year, with assets in the resource sector and South America the most sought-after by mainly state-backed buyers, a study showed yesterday. A US$4.8 billion deal struck in March by Sinopec, China’s secondlargest oil-and-gas producer, for 30 percent of Petrogal Brazil was the quarter’s single biggest deal and one underlining an emerging trend in Chinese minority stake purchases.

Going for a minority stake is increasingly recognised as a way to tap into high quality assets that would otherwise not be for sale or out of reach for Chinese investors A Capital, private equity fund

“Minority deals represent a clear majority (78 percent) of total deal value,” said a statement from A Capital, a private equity fund specialising in Chinese outbound investments and compiler of a quarterly index tracking Chinese outbound direct investments (ODI). “Going for a minority stake is increasingly recognised as a way

to tap into high quality assets that would otherwise not be for sale or out of reach for Chinese investors,” the statement said. That approach has been followed since 2009 when Australia outlined its preferences for foreign investment in big firms, pointing to the types of deals which would and would not succeed after a flurry of failed Chinese bids for resource assets. A key objection to Chinese asset purchases by many overseas governments and regulators is the state’s heavy involvement in transactions. State-owned enterprises generated 98 percent of all deal value in Q1, according to A Capital’s study. The role of private firms in China’s ODI shrank in the first quarter, representing 42 percent of deal volume versus 47 percent of deals struck in Q1 2011. Private firm activity is mainly in smaller transactions. These were worth a tiny 2 percent of the overall 2012 Q1 value.

Behind target The current run rate for transactions leaves China well behind target to spend US$560 billion on overseas investments by the end of 2015. Total deals in the first quarter lifted the A Capital Dragon Index up 2 percent versus the full year for 2011 to a level of 2,056 points. It remains beneath 2010’s record high of 2,069. The index dropped in 2011 for the first time since 2003, falling 2.6 percent to 2,015 points. ODI is now at an historic high of 74 percent of the value of foreign direct investment, according to A Capital. That compares with 20 percent in 2005 and the government’s target

to reach 100 percent by 2015. Ministry of Commerce data shows that China attracted almost twice as much inward investment as the US$60.1 billion it managed to send outbound in 2011. Roughly half of China’s attempted foreign forays ended in failure last year. A Capital believes deal flow has been driven by the likely bottoming of the global economic cycle in 2012 and China’s determination to move its economy up the value chain. That said, 92 percent of all merger and acquisition deals done by Chinese entities in the first

98 % Of all deal value generated by stateowned enterprises

Property: Beijing’s last lever in case of emergency Govt seen in no hurry to relax property restrictions

ny move by Beijing to relax restrictions on home purchases for investment is a sure sign that the government is worried about the economy heading for a sudden dive and has resorted to desperate measures to avoid a stimulus programme. China clamped down on speculative real estate transactions after its 4 trillion yuan (US$635 billion) stimulus of 2009-2010 triggered a property frenzy and Premier Wen Jiabao has personally pledged to keep curbs in place until prices return to a reasonable level. Beijing is so determined to avoid a repeat of the previous upheaval that it is prepared to keep restrictions and sacrifice economic growth, as long as job creation remains steady. That means lifting property

restrictions will likely be deployed as a last ditch measure to keep the economy on track without introducing a stimulus package, which last time led to speculative bubbles, ballooning local government debt and souring loans for banks. “An outright property relaxation is reserved as the last resort and the government is in no hurry to use it now,” Jianguang Shen, an economist with Mizuho Securities Asia in Hong Kong, told Reuters. So far, Beijing has confined itself to a gentle easing of monetary and fiscal policies since the autumn of 2011 when it began “fine-tuning” economic settings to support growth. Indeed the cabinet on May 23 decided to “stabilise and strictly implement macro control measures in the property sector,” reinforcing

that Beijing remains far from its worst-case-scenario for jobs and growth, regardless of relentless market speculation about the future of real estate curbs. The official Xinhua news agency quoted

an official of the housing ministry this week as saying that restrictions on buying second and third homes as well as differentiated credit and tax policies are likely to stay. Reuters

June 8, 2012 business daily | 9

GREATER CHINA Foxconn’s Gou pitches Taiwan wealth tax

US$560 billion

Levy on the 300 richest people would net an additional US$603m

China’s target to spend on overseas investments by the end of 2015

with 13 percent going to Africa, 12 percent to Oceania and 1 percent going to Beijing’s Asian neighbours. The A Capital Dragon Index measures the growth of outbound investment stock relative to GDP. It aims to be a reference indicator tracking the globalisation rate of the Chinese economy since accession to the World Trade Organisation in 2001. The index, started in 2010, collects information on confirmed deals exceeding US$5 million which yield a stake of more than 10 percent in an asset.

oxconn Technology Group chairman Terry Gou proposed a tax programme targeting wealthy individuals as an alternative to the government’s plan that has led to a debate on capital gains. Mr Gou, founder of Taipei-listed flagship Hon Hai Precision Industry Co., which assembles Apple Inc.’s iPads and iPhones, said a levy on the 300 richest people would net an additional NT$18 billion (US$603 million) in annual revenue and help narrow the budget deficit. Under the plan, the 100 wealthiest will pay NT$10 billion, with the next 100 richest contributing NT$5 billion and the rest NT$3 billion, he said in a briefing in Taipei yesterday. The ruling Kuomintang party and opposition lawmakers have been at odds over a proposed tax on securities gains, which is aimed at narrowing a wealth gap in the population and bolstering government finances as the economy slows. Christina Liu resigned as finance minister on May 29 after disagreeing with the KMT plan that differed from her flat-tax proposal for all investors. “Terry Gou’s proposal to tax the richest people is unlikely to convince the administration to scrap the plan on a stock gains tax,” said Tu Jinlung, chairman at Taipei-based Grand Cathay Investment Services Corp. “There may be barriers to how to carry out Gou’s proposal of taxing the richest people.” Chang Sheng-ford was named finance minister last week. Mr Gou said he came up with the plan to help end the bickering, so the government could focus on strengthening the economy. The KMT proposal is aimed at improving “tax fairness,” and is a different concept from Mr Gou’s, the Finance Ministry said in a statement on its website last night.

Reuters

Bloomberg

Brands are one of China’s main investment targets in Europe

quarter were in the resource and energy sector, worth a total of US$10.2 billion.

Targeting Europe Europe was the most popular destination for Chinese ODI outside of the resource sector, home to 83 percent of the non-resource deals in Q1, though remaining flat in value terms year-on-year at just US$1.7 billion. Brands, technologies and high-end manufacturing were cited as the main investment targets in Europe.

Annual ODI outflows to Europe tripled from 2006 to 2009 before tripling again last year to US$10 billion, according to Rhodium’s report released yesterday. The number of deals worth more than US$1 million doubled to almost 100 in each of the years 2010 and 2011. And Rhodium expects the trend to continue: it projects US$1 trillion to US$2 trillion in global Chinese ODI between 2010 and 2020. South America attracted 43 percent of China’s ODI in the first quarter of the year, Europe took 16 percent, North America snagged 15 percent,

Carmakers worsen glut as dealers struggle Stiff competition and more choices have led to falling profits

hina’s biggest auto-dealer association said carmakers need to scale back their sales targets or sweeten incentives because the worsening glut of vehicles across the nation’s dealerships is unsustainable. Average inventory carried at Chinese dealerships bloated to a level exceeding two months of sales by the end of May, compared with more than 45 days at the end of April, Luo Lei, deputy secretary general of the state-backed China Automobile Dealers Association, said in an interview yesterday. That’s forcing dealers to deepen

discounts and sell cars at a loss to meet mandatory sales targets set by automakers, he said. “Dealers can’t shoulder the burden anymore,” said Mr Luo, whose association is authorised by the central government and represents 2,100 dealership groups. “Their backs are broken.” Mr Luo’s warning is a contrast to the jump in sales reported by automakers including General Motors Co. and Honda Motor Co., which only disclose the number of vehicles sold to Chinese dealers – instead of consumers. Wholesale passengervehicle deliveries increased 12

SAIC Motor Corp. dropped to the lowest in two months

percent in May, according to analyst estimates compiled by Bloomberg, after rising more than expected for two straight months. SAIC Motor Corp., the Chinese partner of GM, declined 1.8 percent to the lowest close in more than two months in Shanghai. Dongfeng Motor Group Co. fell as much as 3.6 percent in Hong Kong trading, while the benchmark Hang Seng

Index gained 1 percent. In the showrooms, surging inventory will lead to intense price competition, forcing out weaker dealerships that can’t absorb losses, Mr Luo said. There were about 21,000 dealership outlets in China as of the end of 2011, compared with 16,000 the year before, according to him. Bloomberg

10 |

business daily June 8, 2012

ASIA

Asian countries brace for tighter sanctions on Iran Refusal of insurance, not shortage, the biggest source of concern

ran’s top crude oil buyers in Asia have just weeks to come up with ways to keep imports flowing without falling foul of the toughest Western sanctions to date against Tehran’s oil trade. Solutions have proved elusive so far. A year ago, Iran was selling around two-thirds of its crude exports, or roughly 1.45 million barrels per day, to China, Japan, India and South Korea, securing vital flows of foreign exchange for a government many Western nations accuse of running a secret nuclear weapons programme. Those imports have already dropped by about a fifth after the European Union and the United States drew up fresh sanctions, and they could drop further after the end of this month when those financial restrictions come into force. South Korean refineries have already given up, industry sources said. They will switch to other sources of crude supply from July 1. China, India and Japan are scrambling to deal with the biggest headache – an EU ban on insuring shipments of Iranian crude from July 1 – and are considering sovereign guarantees.

US$ 1 billion Supertanker liability insurance tag

Europe dominates the world’s tanker insurance market, so Asian buyers are finding it difficult, if not impossible, to replace mandatory cover, which for a supertanker means liability protection on personal injury and pollution of US$1 billion. “No responsible financial institution is going to take on this kind of risk lightly,” said Jonathan Hare, senior vice president for Oslo-based maritime insurer Skuld. “This doesn’t mean that it can’t happen, but it is going to require a significant commitment on the part of governments or potential underwriters.”

Insurance conundrum In what could be the first sign of whether Asian crude buyers have found a way around the sanctions, refineries over the next week must start chartering tankers if they intend to receive Iranian crude in July. South Korea, which has a term import agreement with Iran for 200,000 bpd, plans to halt all imports by the time the ban takes effect, industry sources have said. Japan could follow suit, unless the government decides to provide sovereign insurance guarantees for oil tankers. Japan is preparing a bill that would enable the government to provide insurance cover. Japan secured an exemption from U.S. sanctions in March after cutting Iranian crude imports by 15-22 percent in the second half of 2011, but Tokyo has hit a wall in the EU insurance ban. “We are waiting for the government

With European oil embargo approaching, Asia seeks supply alternatives

Vietnam to see more rate cuts Authorities want to speed up bank sector reforms

ietnam’s central bank signalled yesterday an acceleration of reforms in its debt-ridden banking sector and predicted further interest rate cuts following a drop in one of Asia’s highest inflation rates. The State Bank of Vietnam expects the country’s weakest banks to volunteer for restructuring under close central bank supervision that could lead to mergers among banks, said its deputy governor, Dang Thanh Binh. The comments come as Vietnam returns to the radar of foreign investors following a host of problems in recent years that have overshadowed its promise, from spiralling inflation to a stumbling currency, red tape, a debilitating trade deficit and creaking infrastructure. “The government and the State Bank are determined in dealing with weak credit institutions that could threaten the safety of the

banking system,” Mr Binh said in written answers sent to Reuters. He said the central bank would maintain a flexible monetary policy “to ensure liquidity in the banking sector, stabilise the exchange rate [and] gradually cut interest rates”, adding that systemic risk had been minimised by coordinating with stronger

The government and the State Bank are determined in dealing with weak credit institutions that could threaten the safety of the banking system

Dang Thanh Binh, central bank deputy governor

banks to provide liquidity to weaker ones. A state-run newspaper said the central bank will cut the ceiling on dong deposits rates for a fourth time this year as part of monetary easing to boost economic growth. The ceiling will be cut by 2 percentage points to 9 percent on Monday, and down from 14 percent at the start of the year, it said. Rating agency Standard & Poor’s on Wednesday raised its outlook on Vietnam’s sovereign rating to stable from negative, citing its renewed confidence in the country’s price stability. Despite its confidence in Vietnam’s price stability, Standard & Poor’s on Wednesday also cautioned the central bank against easing policy too fast, saying that could revive inflationary pressures. “As the government eases its policy stance, it risks renewing concerns about its commitment to price stability. This could reverse the recent improvements,”

Kim Eng Tan, S&P’s primary credit analyst, said in announcing the upgrade. The credit outlook upgrade sent Vietnam’s benchmark

stock index up nearly 2 percent yesterday, taking its total gain to nearly 24 percent this year.

Central bank may cut the ceiling on dong deposits rates for a fourth time this year

Reuters

June 8, 2012 business daily | 11

asia

KEY POINTS Saudi Arabia increasing production European insurance ban, oil embargo on July 1 Slowing global demand

to come up with a solution. Without insurance we cannot do any business,” said a trading source at a Japanese buyer. China and India are also considering sovereign guarantees for tankers. On July 1, the European sanctions, which include an EU oil embargo, come into force. They have already had a dramatic impact as the sanctions cut off financial networks and made it difficult to make or receive trade payments with Iran, even affecting the SWIFT system, which handles most international cross-border payments. India is paying for some oil in rupees and Iran has swapped oil and gold for food. On the streets of Iran, prices for food in dollar terms have doubled or tripled as the country struggled to import rice, cooking oil and other staples for its 74 million population. It buys 45 percent of its rice and most of its animal feed from abroad.

Slowing demand Morgan Stanley researchers estimate Iran exports had fallen to just shy of 1.7 million bpd in April. That would compare with 2.2 million bpd in 2011. When President Barack Obama signed the U.S. sanctions into law late last year and the EU followed with its own sanctions plans, oil prices were rising, offering some comfort to Iran as it faced the prospect of reduced exports. Now, oil prices are a fifth lower. Saudi Arabia is pumping at its highest rate in 30 years. Asian buyers have also sought crude to replace Iranian oil from other Middle East suppliers. While supply is ample, demand is showing signs of faltering. Japan and India have also turned to Saudi Arabia and other OPEC producers for extra barrels at the expense of Iran. So far this year, South Korea and India have imported 10 percent less Iranian crude compared to a year ago, while Japan and China have taken around 30 percent less. Reuters

India plans infrastructure push India’s government has pledged to move ahead with major infrastructure projects to give a boost to the country’s slowing economy. The economy grew at the slowest rate since 2003 in the first three months of 2012, because of a widening trade gap and poor investment. Prime Minister Manmohan Singh unveiled a series of projects to kickstart investment, including contracts to build 9,500km of roads, three new airports at Navi

Mumbai, Goa and Kannur, two new aviation hubs and two new ports. Mr Singh said building infrastructure needed about US$1 trillion in the next five years, and the government alone would be unable to invest the amount. “Therefore, importance is being given to public-private partnership. Achieving targets in key infrastructure sectors is key to success and will inspire confidence about the overall economic growth rate,” he said.

Najib seen delaying election

Malaysia is planning a fresh round of cash handouts to poorer families in August, government sources said, as Prime Minister Najib Razak likely delays elections until late this year to shore up support among undecided voters. Two senior officials told Reuters the government is

considering giving out payments to 5.2 million low-income households ahead of a Muslim festival in August. Mr Najib would then present a generous election budget in September before announcing an election date, they said. Speculation has been swirling for a year over the timing of what is expected to be a fiercely fought election, which Mr Najib must call by next March as he seeks to improve on the ruling coalition’s dismal showing at the polls four years ago. A June or July poll had been the favourite, but Mr Najib appears to have calculated that he needs more time – and more handouts – to maximise his chances of regaining the two-thirds parliamentary majority that the government lost in 2008.

Jobs give Australian economy another boost‎ Growth a welcome relief for Australia’s central bank

ustralian employment surged by 38,900 in May to beat all expectations, another sign of economic resilience that sent the local dollar up sharply and forced the market to further scale back expectations of aggressive rate cuts. Yesterday’s data showed the unemployment rate rose as expected to 5.1 percent from a revised 5.0 percent, but only because of a sharp rise in the participation rate as more people went looking for work. The jump in jobs blew away forecasts of a 5,000 fall, and all the gains came in full-time employment, which rose 46,100. “It does seem an extraordinary set of numbers,” said Michael Blythe, chief economist at Commonwealth Bank. “The economy is probably in better shape than we are all willing to admit.” The Australian dollar climbed around

three-quarters of a cent on the upbeat data to a peak of US$0.9967, its highest since mid-May. The jobs growth will be a welcome relief for the Reserve Bank of Australia (RBA), which earlier this week cut rates for a second month running, in part to support domestic sentiment amid a darkening global outlook. The data also came just a day after figures showed the economy grew far faster than anyone suspected in the first quarter of the year, a result that helps explain the resilience of the labour market in recent months. Australia’s A$1.4 trillion economy grew by 1.3 percent in the quarter, more than double market forecasts, as households spent big on everything from health to education and eating out, while miners poured money into engineering projects. Reuters

12 |

business daily June 8, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

Day %

VOLUME

AIA GROUP LTD

25.6

1.185771

21401166

ALUMINUM CORP-H

3.09

-1.904762

23623341

BANK OF CHINA-H

2.85

0.7067138

295570118

BANK OF COMMUN-H

5.12

0.3921569

14216244

BANK EAST ASIA

25.9

0.7782101

1702954

BELLE INTERNATIO

12.6

1.941748

15793135

BOC HONG KONG HO

21.7

0.9302326

8633999

HANG LUNG PROPER

CATHAY PAC AIR

12.16

2914386

HANG SENG BK

CHEUNG KONG

89.45

1.590006

6238631

6.52

-0.761035

23314695

CHINA COAL ENE-H CHINA CONST BA-H

CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD CNOOC LTD COSCO PAC LTD ESPRIT HLDGS

PRICE

Day %

VOLUME

10.32

0.3891051

40032922

NAME

0.6427916

VOLUME 2297752

-1.140684

10593158

-0.5424955

4212190

63.8

0.2356638

2345248

SINO LAND CO

10.56

-1.675978

10563950

14.04

1.886792

57003860

SUN HUNG KAI PRO

88.45

0.4542873

3784099

9.32

3.555556

5498152

83.5

-0.0598444

1248023

12.68

1.277955

11014403

TENCENT HOLDINGS

219.4

1.480111

3197444

TINGYI HLDG CO

19.02

1.770748

4523000

9.32

-1.791359

9439803

43.05

4.872107

7851836

25.3

-0.1972387 0.1992032

858629

HENDERSON LAND D

40.2

-0.9852217

3129777

HENGAN INTL

74.3

2.06044

2333051

3821805

HONG KG CHINA GS

16.52

0.4254209

20189615

HONG KONG EXCHNG

108.4

2.264151

6004405

63.2

2.100162

20153186

SWIRE PACIFIC-A

WANT WANT CHINA WHARF HLDG

MOVERS

5.5

0.7326007

270590349

CHINA LIFE INS-H

17.38

-0.4581901

37433099

CHINA MERCHANT

21.65

0.9324009

4328077

CHINA MOBILE

78.55

-0.5066498

14914707

HUTCHISON WHAMPO

CHINA OVERSEAS

16.04

2.426564

15739479

IND & COMM BK-H

CHINA PETROLEU-H

7.02

0.4291845

60140022

LI & FUNG LTD

CHINA RES ENTERP

23.3

3.325942

4916924

24.85

-0.7984032

2418772

CHINA RES LAND

14.6

-0.1367989

10508593

NEW WORLD DEV

8.48

-1.965318

12400095

CHINA RES POWER

14.2

-0.4207574

5966265

52W (H) 22928.96

PETROCHINA CO-H

10.04

1.516684

74602119

CHINA SHENHUA-H

24.7

-1.789264

45128115

(L) 16170.35

PING AN INSURA-H

55.95

0.179051

7214479

MTR CORP

Day %

54.8

SANDS CHINA LTD

100.6

HSBC HLDGS PLC

PRICE

POWER ASSETS HOL

63.65

2.003205

7166038

4.48

0.2237136

314278923

14.74

2.077562

18360022

1 19000

INDEX 18520.53 HIGH

18839.62

LOW

18237.52 18000

5-Jun

7-Jun

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

0.2277904

6959839

CHINA PETROLEU-H

7.02

0.4291845

60140022

23623341

CHINA RAIL CN-H

5.73

-0.5208333

6465026

ZOOMLION HEAVY-H

0.15086

9257021

CHINA RAIL GR-H

2.88

8921218

ZTE CORP-H

0.7067138

295570118

CHINA SHENHUA-H

24.7

-1.789264

45128115

5.12

0.3921569

14216244

CHINA TELECOM-H

3.4

0.591716

39096529

15.4

-0.6451613

4033153

DONGFENG MOTOR-H

13.08

-3.111111

17323703

CHINA CITIC BK-H

4.03

2.544529

50206497

GUANGZHOU AUTO-H

6.5

1.088647

6339036

CHINA COAL ENE-H

6.52

-0.761035

23314695

HUANENG POWER-H

5.21

0.3853565

37515644

CHINA COM CONS-H

7.1

2.305476

14104203

IND & COMM BK-H

4.48

0.2237136

314278923

CHINA CONST BA-H

5.5

0.7326007

270590349

JIANGXI COPPER-H

16.02

-0.8663366

18795750

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.16

0.6369427

108071676

AIR CHINA LTD-H

4.74

-0.2105263

10327040

ALUMINUM CORP-H

3.09

-1.904762

ANHUI CONCH-H

22.6

BANK OF CHINA-H

2.85

BANK OF COMMUN-H BYD CO LTD-H

NAME CHINA PACIFIC-H

3.5

0.8645533

9079566

PETROCHINA CO-H

10.04

1.516684

74602119

17.38

-0.4581901

37433099

PICC PROPERTY &

8.29

1.96802

24522122

CHINA LONGYUAN-H

4.97

3.326403

6278239

PING AN INSURA-H

55.95

0.179051

7214479

CHINA MERCH BK-H

14.64

0.9655172

9135056

SHANDONG WEIG-H

7.7

3.633917

4502000

CHINA COSCO HO-H CHINA LIFE INS-H

NAME

PRICE

DAY %

VOLUME

YANZHOU COAL-H

11.9

0.676819

17844314

ZIJIN MINING-H

2.76

-1.779359

90993279

10.04

-3.646833

32428841

14.3

-0.6944444

2066351

MOVERS

INDEX 9438.03 HIGH

9608.63

LOW

9346.21

CHINA MINSHENG-H

7.33

0.5486968

23187569

SINOPHARM-H

18.04

2.733485

3653708

52W (H) 12902.97

CHINA NATL BDG-H

8.89

-1.767956

35412315

TSINGTAO BREW-H

50.95

3.346856

1420000

(L) 8058.58

10.82

3.639847

12898890

WEICHAI POWER-H

30.8

-2.066773

2932275

CHINA OILFIELD-H

9600

5-Jun

7-Jun

9300

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.63

-0.3787879

36282797

DATANG INTL PO-A

5.32

1.526718

18086828

AIR CHINA LTD-A

6.21

-0.4807692

9523063

DONGFANG ELECT-A

21.23

-1.163873

6876958

6.6

-1.049475

7394153

EVERBRIG SEC -A

13.5

7896140

16.58

0.5457853

22104585

GD MIDEA HOLDING

12.16

-0.08216927

21293644

NAME ALUMINUM CORP-A ANHUI CONCH-A

NAME

PRICE

DAY %

VOLUME

37.26

-1.947368

30206811

SHANG PUDONG-A

8.56

-0.6960557

48026408

SHANGHAI ELECT-A

5.38

-0.7380074

7057505

SHANXI LU'AN -A

24.1

0.041511

11227405

SHANDONG GOLD-MI

BANK OF BEIJIN-A

9.53

-0.7291667

14433657

GD POWER DEVEL-A

2.61

0.7722008

45511681

SHANXI XINGHUA-A

74.76

-0.4394726

1161852

BANK OF CHINA-A

3.01

-0.3311258

16352189

GEMDALE CORP-A

6.85

1.632047

28347821

SHANXI XISHAN-A

16.4

-1.796407

15812678

BANK OF COMMUN-A

4.56

-0.8695652

36085560

GF SECURITIES-A

30.93

0.2593193

7615544

SHENZ DVLP BK-A

15.21

-0.7180157

13130248

4.8

14700140

GREE ELECTRIC

21.4

-2.859737

27312926

SHENZEN OVERSE-A

6.08

0.1647446

36374357

22.81

-1.553733

1746744

GUANGHUI ENERG-A

14.9

0.4043127

11644818

SINOVEL WIND-A

15.06

-0.132626

1028537

4.1

-1.204819

15955887

GUIZHOU PANJIA-A

30.49

0.3951268

6117311

SUNING APPLIAN-A

8.58

-0.9237875

37324848

BAOSHAN IRON & S BYD CO LTD -A CHINA CITIC BK-A CHINA CNR CORP-A

4.15

-0.7177033

18498140

HAITONG SECURI-A

10.14

0.3960396

44369701

TONGLING NONFE-A

20.93

-0.8996212

10576522

CHINA COAL ENE-A

8.75

0.3440367

10830005

HANGZHOU HIKVI-A

48.6

0.2682071

2938092

TSINGTAO BREW-A

38.59

1.713231

4115665

CHINA CONST BA-A

4.49

26305679

HEBEI IRON-A

2.93

-1.013514

17657600

WEICHAI POWER-A

31.87

-0.5616225

2746042

CHINA COSCO HO-A

4.73

-1.046025

8424213

HENAN SHUAN-A

61.25

-1.685393

1533571

WULIANGYE YIBIN

32.49

0.09242144

11585264

CHINA CSSC HOL-A

30.57

-1.418897

4949234

HUATAI SECURIT-A

11.11

16767026

XIAMEN TUNGSTEN

48.82

4.338534

37427639

CHINA EAST AIR-A

4.1

-1.204819

10532876

HUAXIA BANK CO

9.62

-0.8247423

28378150

YANGQUAN COAL -A

17.2

-1.035673

12605180

CHINA EVERBRIG-A

2.83

-0.3521127

21134039

IND & COMM BK-A

4.19

-0.2380952

31741697

YANTAI CHANGYU-A

92.65

-1.310183

590179

CHINA LIFE INS-A

16.66

-1.768868

10576437

INDUSTRIAL BAN-A

13.06

-0.8352316

28659993

YANTAI WANHUA-A

14.25

9035506

CHINA MERCH BK-A

11.25

-0.08880995

48697205

INNER MONG BAO-A

45.5

-1.043932

58362880

YANZHOU COAL-A

21.16

-1.39795

3565155

CHINA MERCHANT-A

12.67

9325228

INNER MONG YIL-A

22.57

0.04432624

5368611

YUNNAN BAIYAO-A

53.5

-1.017576

2051699

CHINA MERCHANT-A

25.07

2.70381

5961762

INNER MONGOLIA-A

6.2

0.3236246

47270126

23.83

-1.243266

23383339

CHINA MINSHENG-A

6.31

0.317965

68397956

JIANGSU HENGRU-A

26.97

-0.5530973

3900716

26609777

JIANGSU YANGHE-A

138.7

-0.2014678

538884

JIANGXI COPPER-A

24.71

-1.239009

9806862

13.37

-1.036269

5808478

CHINA NATIONAL-A

6.12

-2.08

CHINA OILFIELD-A

16.71

0.7233273

4791505

CHINA PACIFIC-A

19.88

-1.045296

14762262

JINDUICHENG -A

CHINA PETROLEU-A

6.48

-0.3076923

18810753

JIZHONG ENERGY-A

CHINA RAILWAY-A

2.63

-1.12782

25705080

KWEICHOW MOUTA-A

17.8

-0.8356546

11898776

237.98

0.591766

1967730

39.65

1.5625

7144761

CHINA RAILWAY-A

4.33

-1.141553

20419375

LUZHOU LAOJIAO-A

CHINA SHENHUA-A

24.83

-0.8386581

17381011

METALLURGICAL-A

2.55

-1.162791

14557215

5.5

-0.5424955

25836066

NINGBO PORT CO-A

2.56

-0.7751938

12615588

8.04

59829010

CHINA SHIPBUIL-A CHINA SOUTHERN-A

4.68

34457332

PANGANG GROUP -A

CHINA STATE -A

3.26

-1.212121

29299316

PETROCHINA CO-A

9.13

-0.3860178

10462706

41.08

0.195122

ZHONGJIN GOLD

4.14

-1.193317

63246092

ZOOMLION HEAVY-A

ZIJIN MINING-A

10.58

-0.1886792

28851471

ZTE CORP-A

14.33

0.2097902

18095515

MOVERS

218

21 2580

INDEX 2557.401

CHINA UNITED-A

3.94

-0.2531646

43171243

PING AN INSURA-A

15063533

HIGH

2579.43

CHINA VANKE CO-A

8.96

-0.2227171

53650850

POLY REAL ESTA-A

13.64

0.887574

32584247

LOW

2537

CHINA YANGTZE-A

6.79

0.1474926

9327713

QINGDAO HAIER-A

11.86

-0.5033557

9195269

CITIC SECURITI-A

13.15

0.3816794

61764889

QINGHAI SALT-A

30.08

-0.6932981

3989923

CSR CORP LTD -A

4.77

-0.209205

14874218

SAIC MOTOR-A

14.55

-1.755571

15991805

DAQIN RAILWAY -A

7.29

-0.5457026

26729790

SANY HEAVY INDUS

14.19

0.2826855

14201309

PRICE DAY %

Volume

PRICE DAY %

Volume

52W (H) 3140.102 (L) 2254.56

2530

5-Jun

7-Jun

FTSE TAIWAN 50 INDEX NAME

NAME

ACER INC

30.35

-2.096774

16720257

FORMOSA PLASTIC

ADVANCED SEMICON

25.95

-1.142857

26243680

FOXCONN TECHNOLO

ASIA CEMENT CORP

35.95

0.9831461

3949480

NAME

76.5

-0.520156

6938477

101.5

12285931

TPK HOLDING CO L

FUBON FINANCIAL

28.8

1.946903

18866530

6758452

TSMC

79.8

2.570694

47699974

UNI-PRESIDENT

46.4

0.3243243

4955689

UNITED MICROELEC

11.9

0.4219409

37904381

37.3

2.754821

7439679

12.95 -0.3846154

16894505

291

-2.512563

4064575

HON HAI PRECISIO

83.9

1.328502

26071589

11.7

0.4291845

43020193

HOTAI MOTOR CO

188

-2.083333

846728

CATCHER TECH

186.5

-1.842105

15784201

HTC CORP

378

-6.896552

6656658

WISTRON CORP

CATHAY FINANCIAL

28.85

1.22807

7903465

HUA NAN FINANCIA

15.95

0.9493671

6112538

YUANTA FINANCIAL

CHANG HWA BANK

15.3

6919819

LARGAN PRECISION

564 -0.5291005

2044636

YULON MOTOR CO

CHENG SHIN RUBBE

71.2 -0.5586592

2731155

LITE-ON TECHNOLO

36.65

1.805556

CHIMEI INNOLUX C

11.45 -0.4347826

28214092

MEDIATEK INC

260.5

1.165049

7439621

-0.979021

73123231

MEGA FINANCIAL H

20.5

1.736973

16990145

CHINA STEEL CORP

28.15

-0.177305

18042277

NAN YA PLASTICS

53.3

1.330798

5380237

CHINATRUST FINAN

16.5

2.484472

25608078

PRESIDENT CHAIN

153

0.3278689

1263120

CHUNGHWA TELECOM

90.8

0.1102536

6705349

QUANTA COMPUTER

78.8

2.604167

10364325

COMPAL ELECTRON

29.3

1.913043

11376992

SILICONWARE PREC

29.95 -0.4983389

12965843

DELTA ELECT INC

84.5

5.099502

12862983

SINOPAC FINANCIA

10.85

0.9302326

28382344

FAR EASTERN NEW

29.8

0.8460237

5752752

SYNNEX TECH INTL

66.9

0.6015038

3922973

FAR EASTONE TELE

66.3

0.4545455

4049614

TAIWAN CEMENT

34.5

1.02489

4563706

FIRST FINANCIAL

16.8 -0.2967359

9565865

TAIWAN COOPERATI

17.3

0.5813953

2096473

FORMOSA CHEM & F

75.3 -0.3968254

5220996

TAIWAN FERTILIZE

1.949025

1431252

2212675

TAIWAN GLASS IND

27.95

1.268116

1784173

-2.291918

-1.185771

5208353

2532100

7.08

4117288

0.9060023

AU OPTRONICS COR

FORMOSA PETROCHE

Volume

94.4 -0.1058201 445.5

ASUSTEK COMPUTER

CHINA DEVELOPMEN

PRICE DAY %

TAIWAN MOBILE CO

MOVERS

3 4900

INDEX 4848.08 HIGH

4896.13

LOW

4795.31

52W (H) 6224.53 (L) 4643.05

4790

5-Jun

7-Jun

June 8, 2012 business daily | 13

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

MELCO CrOwN ENTErTAINMENT

MGM CHINA HOLDINGS

18.8 18.6

30.2

12.1

12.0

29.8

11.9

18.4 18.2

Max 18.02

Average 18.43

Min 18.76

18.0

Last 18.1

SANDS CHINA LTD

Max 30.1

Average 29.76

Min 29.7

Last 30.1

29.6

Max 12.08

SJM HOLDINGS LTD

Average 11.97

Min 11.8

Last 11.8

11.8

wYNN MACAu LTD 13.8

27.1

19.6

26.9 19.4

26.7 26.5

13.7

26.3

19.2

26.1

25.9 Max 27

Average 26.33

Min 25.85

25.7

Last 26

13.6 Max 13.78

Average 13.71

Min 13.6

Commodities ENERGY

NAME

PRICE

WTI CRUDE FUTURE Jul12

84.86

-0.188191014

-14.61058563

111.4899979

77.40000153

BRENT CRUDE FUTR Jul12

100.17

-0.467011129

-5.168986083

125.6100006

94.34999847

GASOLINE RBOB FUT Jul12

267.7

-0.494368658

-1.388735404

332.1799994

246.4999914

855

-0.668022074

-4.947192885

1045.75

810

2.397

-0.991325898

-26.08695652

5.130000114

2.095999956

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

DAY %

YTD %

(H) 52W

Average 19.22

266.02

-0.430437549

-6.419952862

331.9299936

256.3099861

1618.32

-1.0668

3.413

1921.18

1478.78

29.29

-0.0958

5.2272

44.2175

26.085

1458.5

-0.3927

4.5895

1915.75

1339.25

Palladium Spot $/Oz

627.25

0.5289

-4.0168

848.37

537.54 1955.75

LME ALUMINUM 3MO ($)

1979

0.329531052

-2.02970297

2695

LME COPPER 3MO ($)

7410

0.665670425

-2.5

9905

6635

LME ZINC

1878

-0.634920635

1.788617886

2539.5

1718.5

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul12 Jul12

16100

-13.94975949

25195

15980

14.11

0.319943121

-8.197787899

19.375

13.72500038

589.75

0.597014925

-10.81285444

795

551

WHEAT FUTURE(CBT) Jul12

624.25

-9.034608379

928

592.25

SOYBEAN FUTURE Nov12

1312.25

1.000577256

8.968237492

1400

1115.75

157.15

0.801796023

-32.32127476

290.75

154.6499939

COFFEE 'C' FUTURE Jul12

PRICE

(L) 52W

Platinum Spot $/Oz

CORN FUTURE

Max 19.46

Last 19.06

Min 18.86

CURRENCY EXCHANGE RATES

GAS OIL FUT (ICE) Jul12

METALS

18.8

Last 13.7

MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

0.9945 1.5512 0.9542 1.2589 79.48 7.991 7.7583 6.3638 54.9925 31.51 1.2756 29.877 43.17 9459 79.037 1.20127 0.81148 7.9899 10.0597 100.05 1.03

YTD %

0.8518 0.1679 0.7126 0.7442 -0.4026 0.0013 0.0039 0.0016 0.6774 -0.0635 0.2273 0.0301 0.0695 -1.3744 -1.2349 -0.0383 -0.5644 -0.3004 -0.7416 -1.1294 0

(H) 52W

-2.586 -0.1994 -1.6873 -2.8701 -3.2335 0.1076 0.1173 -1.0811 -3.505 0.1269 1.6463 1.3455 1.552 -4.1231 -0.7655 1.292 2.7 1.806 2.9057 -0.3898 0.0097

(L) 52W

1.1081 1.6618 0.9772 1.4653 84.18 8.0449 7.8113 6.4909 56.515 31.96 1.3199 30.716 44.35 9662 88.637 1.24736 0.90835 9.486 11.739 117.74 1.0311

0.9388 1.5235 0.7071 1.2288 75.35 7.9823 7.7529 6.2769 43.855 29.63 1.1992 28.661 41.879 8458 72.057 1.00749 0.79505 7.8544 9.8423 95.6 1.0288

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

NAME

PRICE 2.84

DAY % YTD % 0.7092199

29.09091

3.25

1.88

VOLUME CRNCY 1359152

CROWN LTD

8.36

1.210654

3.337452

9.29

7.45

1304814

SUGAR #11 (WORLD) Jul12

20.19

1.457286432

-10.50531915

27.02999878

18.8599987

AMAX HOLDINGS LT

0.079

-2.469136

-9.1954

0.125

0.06

5502000

COTTON NO.2 FUTR Dec12

69.88

2.223522528

-20.44626594

107.1999969

64.61000061

BOC HONG KONG HO

21.7

0.9302326

17.93479

24.45

14.24

8633999

World Stock MarketS - Indices NAME

CENTURY LEGEND

0.23

0.41

0.204

CHEUK NANG HLDGS

3.04

3.050847

8.57143

4.79

2.3

11000

CHINA OVERSEAS

16.04

2.426564

23.57473

17.86

9.99

15739479

CHINESE ESTATES

-28

13.68

8.3

1057980

CHOW TAI FOOK JE

9.02

0.2222222

-35.20115

15.16

8.55

5897700

EMPEROR ENTERTAI

1.16

0.8695652

4.504503

2.09

0.97

1635000

0.8

90.4762

1.09

0.3

1777200

18.1

-0.7675439

27.10674

24.95

8.69

9570345 858629

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12414.79

2.365115

1.61432

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2844.72

2.397673

9.196018

3134.17

2298.89

HANG SENG BK

100.6

0.1992032

9.16983

125

84.4

FTSE 100 INDEX

5424.47

0.7496132

-2.652587

6084.08

4791.01

HOPEWELL HLDGS

19.78

1.02145

-0.4028228

24.903

18.56

696341

DAX INDEX

6125.78

0.5216615

3.855819

7523.53

4965.8

HSBC HLDGS PLC

63.2

2.100162

7.118644

80.25

20153186

NIKKEI 225

8639.72

1.244385

2.180515

10255.15

8135.79

HANG SENG INDEX

18678.29

0.8518115

1.323062

22928.96094

16170.35

CSI 300 INDEX

2542.184

-0.5950181

8.374413

3140.102

TAIWAN TAIEX INDEX

7080.31

0.3423963

0.1163728

9070.25

3.41

2.710843

14.04682

3.71

2.33

1456006

LUK FOOK HLDGS I

15.34

-3.764115

-43.39483

46.15

14.84

3617001

MELCO INTL DEVEL

6.16

0.6535948

6.759099

10.76

4.3

2003004

2254.567

MGM CHINA HOLDIN

11.8

-1.006711

23.01721

17.183

7.6

4478898

6609.11

MIDLAND HOLDINGS

3.75

1.078167

-5.160459

5.217

2.887

1302903

NEPTUNE GROUP

0.101

-9.00901

0.157

0.08

205000

NEW WORLD DEV

8.48

-1.965318

35.46325

11.794

6.13

12400095 10593158

1847.95

2.558482

1.216491

2192.83

1644.11

S&P/ASX 200 INDEX

4108.57

1.313789

1.282103

4657.4

3765.9

3840.596

-0.01913399

0.486762

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1575.31

0.3746583

2.912341

1609.33

NZX ALL INDEX

775.19

0.2020353

6.21947

806.015

PHILIPPINES ALL SHARE IX

3349.11

0.9449146

9.985749

3518.96

GALAXY ENTERTAIN

HUTCHISON TELE H

KOSPI INDEX

JAKARTA COMPOSITE INDEX

FUTURE BRIGHT

-1.140684

18.45102

33.05

14.9

SHUN HO RESOURCE

1.18

1.32

0.82

1310.53

SHUN TAK HOLDING

2.82

1.075269

10.19377

4.668

2.241

1759761

700.441

SJM HOLDINGS LTD

17060055

2695.06

SANDS CHINA LTD

13.7

1.934524

9.551481

20.711

10.079

SMARTONE TELECOM

14.58

1.25

8.482146

18.5

9.8

292102

WYNN MACAU LTD

19.04

1.492537

-2.358974

27.48

14.807

9516071

ASIA ENTERTAINME

4.19

1.452785

-28.7415

10.8692

3.66

60376

BALLY TECHNOLOGI

45.88

2.38786

15.97573

49.32

24.74

288546

HSBC Dragon 300 Index Singapor

522.04

2.42

5.18

STOCK EXCH OF THAI INDEX

1118.53

0.05188067

9.090829

1247.72

843.69

HO CHI MINH STOCK INDEX

434.41

1.880907

23.56991

492.44

332.28

BOC HONG KONG HO

2.7

12.63199

3.15

1.81

8000

Laos Composite Index

1013.92

0.8434118

12.72541

1146.63

876.33

GALAXY ENTERTAIN

2.32

-2.92887

24.06417

3.24

1.08

11060

INTL GAME TECH

13.83

1.392962

-19.59303

19.15

13.12

2612346

JONES LANG LASAL

70.24

3.248567

14.65883

99.89

46.01

339058

LAS VEGAS SANDS

46.1

2.376194

7.886732

62.09

36.08

12266463

MELCO CROWN-ADR

11.735

3.255609

21.98545

16.15

7.05

4880062

MGM CHINA HOLDIN

1.64

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business daily June 8, 2012

Opinion Can science save Europe? Helga Nowotny

President of the European Research Council

urope’s current financial squeeze defies easy solutions. Self-inflicted austerity has met popular restlessness for more tangible measures to revive economic growth and create jobs. Protesters vividly express widespread frustration with deepening inequality, and condemnation of privileges of a global financial elite comes uncomfortably close to implicating government. In previous times, such a situation would have been described as prerevolutionary. In today’s world, the consequences may seem more benign, but they are no less worrisome: a loss of solidarity, a return to nationalist insularity, and greater scope for political extremism. Europe’s image has suffered accordingly, notably from the perspective of Asia’s booming economies. Whereas China, India, and others have enjoyed continuing economic growth and investment in research and innovative capacity, Europe is perceived as being on the brink of decline, economically as well as politically. Worse still, Europe also seems intent on ignoring its persistent strengths. Those strengths lie in Europe’s science base, part of the cultural

heritage that shapes European identity. In terms of numbers – whether of scientific publications, researchers, or overall access to high-quality tertiary education – Europe compares favourably with its international partners (which are also competitors). So why, critics ask, does Europe produce many novel scientific ideas and discoveries, but fail to transform them into marketable products? In fact, that question is wedded to an obsolete linear model of innovation. What is lacking in Europe is public and official awareness of where the real potential of European science lies. Scientific curiosity, given sufficient space and autonomy, remains the most powerful driving force behind the completely unforeseeable transformations in how our societies develop. In order to understand what science can do for Europe, it is important to clarify what science – that is, curiositydriven frontier research – cannot do for Europe: deliver results that can immediately be commercialised.

Uncertainty at the core Frontier research, like innovation, is an inherently uncertain process. One

does not know what one will find when working at the cutting edge and attempting to push into unknown territory. Any short-term economic benefits are welcome byproducts, not the main “deliverables” that can be planned. Nor will science create

Scientific curiosity, given sufficient space and autonomy, remains the most powerful driving force behind the completely unforeseeable transformations in how our societies develop

much-needed jobs, except for those who work in research organisations and universities. Instead, cutting-edge research pioneers new ways of working (and models of future workplaces), which require novel skills and knowledge that will diffuse widely into society and transform production and services. For example, it could lead to more environmentally friendly and resourceefficient uses of natural resources, or to investment in services that are more responsive to human needs and better attuned to human interaction. Science is the only civic institution with a built-in long-term time horizon – a feature that builds confidence in a fragile future. Modern science began in Europe 300 years ago with relatively few people – perhaps no more than a thousand when the putative scientific revolution was in full swing. They began to engage in the systematic inquiry of how the natural world (and to a lesser extent, the social world) functioned. They obtained new knowledge of how to manipulate and intervene in natural processes. The experimental practices that they invented spread beyond the laboratories. Later, they began to underpin and merge with progress in the crafts to drive forward the Industrial Revolution.

Long-term view The idea that we can only know what we can make gained wide acceptance. New tools provide new means of investigation, enabling researchers to speed up computation, for example, and hence increase the production of new knowledge. Science and technology mutually reinforce each other, and both percolate through the social fabric. This was the case in 1700, and it remains true today. Let us now look forward towards the future. According to health statistician Hans Rosling, our planet will probably be home to at least nine billion people by 2050. Six billion will live in Asia, one billion in Africa, 1.5 billion in the Americas, and 500 million in Europe. By ensuring that the pursuit of new knowledge remains a high priority, Europe can safeguard the scientific revolution and retain a leading edge globally, despite having fewer people than other regions. Europe’s scientific institutions are already evolving and adapting to new global challenges. People working within science and people working with science – ordinary citizens – will assure that the unending quest for human betterment continues to be an important part of European identity. Science alone will not save Europe. Rather, a Europe that knows how to put its science to work will not need to be saved. © 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 8, 2012 business daily | 15

OPINION China is a black box of wires misinformation Business Leading reports from Asia’s best business newspapers

Taipei Times

Junheng Li

Founder and senior equity analyst of JL Warren Capital LLC, an independent equity research firm

Cathay Financial Holding Co., Taiwan’s largest financial services provider, on Wednesday revised down its GDP growth forecast for this year to 2.45 percent, from the 3.73 percent it estimated in March, amid rising uncertainties about both external and internal economic momentum. The team’s forecast was the lowest among domestic think tanks and it was lower than the 3.03 percent growth forecast by the Directorate-General of Budget, Accounting and Statistics last month. “In our view, it is impossible that Taiwan’s economy could expand by more than 3 percent this year,” National Central University economics professor Hsu Chih-chiang.

Yomiuri Shimbun Listed domestic companies will see strong profit growth for the year ending in March 2013, even assuming an average exchange rate of 78 yen to the dollar, according to Nomura Securities Co. The projection was part of Nomura’s earnings forecasts for fiscal 2012 and 2013 for the top 296 domestic listed companies by market value. In the report, analysts said even with average exchange rates of 78 yen to the dollar and 96 yen to the euro, domestic companies would see ordinary profits increase by an average 15.6 percent in fiscal 2012 from fiscal 2011.

Business Inquirer The research arm of Moody’s Investors Services has raised its economic growth forecast for the Philippines this year to 4.7 percent from 4 percent, citing the government’s ant-corruption drive and big push for infrastructure development. “The Philippines kicked off 2012 at a blistering pace. This prompted an upward revision to the growth forecast,” Moody’s Analytics, the economic research unit of credit watcher Moody’s, said in its latest paper on the country. The revision of the forecast came after the Philippines posted a 6.4-percent growth in its gross domestic product in the first quarter.

Bangkok Post Thailand’s rice production is poised for a new record for a third year in a row. Rice production this year is poised to expand Thailand’s global inventories to the highest level in more than a decade, driving down prices and helping to contain the more than US$1 trillion spent on food imports annually. Farmers will harvest 466.4 million metric tonnes in the 2012 to 2013 season, boosting stockpiles by 0.7 percent to 104.9 million tonnes, the largest since 2001 to 2002, said the Department of Agriculture.

o this day, many Chinese people believe that Mao Zedong didn’t know millions of people were starving in the Great Leap Forward. The agricultural production statistics were all rosy, a testament to the success of his new economic policy, while hordes of hungry masses migrated from province to province, chasing false reports of bumper crops. Thirty million or so people starved, in no small part because of the manipulation of economic data. Half a century later, China has the second-largest economy in the world, and the country has lifted about 400 million people out of poverty. The magnitude and speed of urbanisation are unprecedented in the history of human civilisation. I am proud of what China has done for its people since the introduction of state capitalism in the 1980s. Gross domestic product has quadrupled in the past decade, from US$1.2 trillion in 2000 to almost US$6 trillion in 2011. But as a China native and a U.S.-trained investor, I struggle with the country’s governance, openness and, therefore, the reliability of its data. Behind the scenes of an economic miracle, China has remained a gigantic black box to insiders and outsiders.

Cooking the books In the 1980s and 1990s, during China’s opening-up stage, both my parents left employment in the state-owned sector to jump into the newly opened private sector. As they toiled through the “wild west,” I learned the most important lesson about doing business in China: numbers don’t mean much. Most companies have three books: a real one for internal use, one for the tax bureau and one for the CEO’s wife (and, in some cases, a fourth for his mistress). More than a decade later the practice hasn’t changed much, as has been highlighted by the

recent allegations of fraudulent accounting associated with a slew of China-based U.S.-listed companies. China as a whole is a giant black box – no one really knows what is in it. Chinese bureaucrats don’t have any interest in reporting anything that doesn’t paint a good picture, and, even if they did, the sta-

As long as the upper levels of governance maintain their authority and lower levels of governance don’t take any heat for a missed target, then everyone can be happy

tistics bureau remains woefully inadequate. At the same time, gross domestic product forecasts issued by major investment banks are equally unreliable. Just as with equity research analysts and stockbrokers who package IPOs and sell them to investors, major banks’ economists try to curry favor with Chinese bureaucrats. As such their forecasts are essentially a point-for-point rehash of what fiscal and monetary policies the bureaucrats say are coming down the pipe. The information is repackaged and sold as euphoria to support banks’ profit-generating activities, such as IPOs and securities trading. So far, these forecasts have worked relatively well, as one would imagine. China’s hybrid economy depends more heavily on government policy than

most, and can count on the cushion of intervention from on high. Once a growth target is set by the top, the central government then allocates GDP growth from the top down. The state gives provinces a target, each province mandates to the regions, regions to departments, and departments to corporations, including state-owned enterprises and private companies. Despite the admirable economic growth that China has delivered, at its core the reward and punishment system hasn’t changed in stride. Those who comply are rewarded and those who raise uncomfortable subjects are punished; a cut in pay or a cork in one’s career advancement are to be expected if one can’t provide the euphoria package.

Everybody’s happy There is a Chinese saying usually applied to the legal system: while the top has its policies, the bottom has its counter policies. In economics, if the bottom can’t meet the mandate, they cook the books and send the data back up the ranks. Everyone’s happy – for a while. It’s as if Mao’s proposed farming methods could actually produce the amount of crops that were

being reported – if the powers that be must be pleased, so be it. As long as the upper levels of governance maintain their authority and lower levels of governance don’t take any heat for a missed target, then everyone can be happy. Many unbiased economists would argue that it is statistically improbable for any economy to have produced a real GDP data stream as smooth as China’s since 1980. During its early years of modern growth, China was still overwhelmingly agricultural, so it should have been subjected to Mother Nature’s unpredictability in the form of bad harvests or bumper crops. As manufacturing and industrial productions have grown as a percentage of GDP, business cycles driven by demand and productivity fluctuations should have generated far more significant swings in the economy than what the reported data have indicated. Moreover, in the span of the past 32 years, the structures of the Chinese and world economies have changed rapidly and unpredictably. China opened up to international trade and foreign direct investment, and therefore subjected itself to more external economic shocks. Yet in this same period Chinese official statistics show aggregate GDP advancing like an Audi at a high but steady speed on an empty highway. GDP-ism has become the Chinese government’s strongest ideology, and as such might not be an accurate indicator of reality. In the political and economic matrix of China, rosy statistics are the strongest self-justification mechanism for authority. But, as history has shown, statistics and ideology don’t always work in a harmonious relationship; one has a habit of eclipsing the other until the lie that has been said a thousand times becomes the truth. Data manipulation, however, is a non-truth that can only fool for so long. Let us hope that when it is exposed, it won’t result in China’s next Great Leap Backward. Bloomberg View

16 |

business daily June 8, 2012

CLOSING Beijing drops euro assets

Australia lifts Myanmar sanctions

China’s sovereign wealth fund has cut its European assets amid rising risk of a eurozone collapse, the fund’s chief told the Wall Street Journal in an interview published yesterday. Lou Jiwei, chairman of the China Investment Corp. (CIC) which manages the nation’s US$410-billion sovereign fund, told the newspaper that there was growing risk of a break up of the eurozone. “Europe hasn’t formed the necessary fiscal discipline and hasn’t got the right policies in place,” Mr Lou said. “The risk is too big, and the return too low,” he said.

Australia will lift remaining sanctions against Myanmar and more than double its foreign aid to encourage democratic reforms, the country’s foreign minister said yesterday. Bob Carr said, in a statement released by his office, that targeted travel and financial sanctions would be scrapped although an arms embargo will be maintained against the country. “This is a time of great opportunity for the people of Myanmar, and countries like Australia should be doing what we can to add momentum to the process of democratisation,” he added. “The point has been reached where lifting sanctions is the best way to promote further progress.”

China cuts interest rates to stoke growth First rate cut since global financial crisis

hina delivered twin surprises on interest rates yesterday, cutting borrowing costs to combat faltering growth while giving banks additional flexibility to set competitive lending and deposit rates in step along the path of liberalisation. Beijing cut interest rates for the first time since 2008. The benchmark one-year lending rate will drop to 6.31 percent from 6.56 percent effective today, the People’s Bank of China (PBOC) said on its website yesterday. The one-year deposit rate will fall to

3.25 percent from 3.5 percent. Banks can also offer a 20 percent discount to the benchmark lending rate, the PBOC said, widening from a previous 10 percent. European stocks and U.S. index futures extended gains as China’s move added to an Australian rate cut this week and expressions of concern from European and U.S. central bank officials that fanned expectations for more stimulus. The announcement, two days before China is due to report inflation, investment and output figures, may

Beijing seen stepping up efforts to support growth

signal that the economy is weaker than the government expected. “This will be the beginning of a rate cut cycle and there will be at least one more reduction this year,” said Shen Jianguang, a Hong Kong-based economist with Mizuho Securities Asia Ltd. “The data to be released over the weekend must be very weak and inflation must have eased sharply.”

Slower growth The central bank last reduced benchmark interest rates in late 2008, when the government unveiled a 4 trillion yuan (US$586 billion at the time) stimulus package to counter the effects of the global financial crisis. Interest rates have been unchanged since an increase in July 2011. The move signals policy makers’ concern at weakness in demand for loans. While the cut to borrowing costs should help in the near term, it is the liberalisation measure that is likely to have the greatest longerterm repercussions. The PBOC said it was giving banks the freedom from today to set deposit rates as high as 110 percent of the benchmark rate and offer rates on new loans for as little as 80 percent of official policy rates, an additional 10 percentage points from the current 90 percent limit.

Commercial banks until now have been barred from charging rates on deposits higher than the benchmark set by the central bank. “It’s a significant move,” Qinwei Wang, economist at Capital Economics in London, told Reuters. “It’s a first step in rate liberalisation and it increases the returns for households. The lower floor for lending rates creates more competition between banks. So banks cannot guarantee their profits as before.” The moves, announced after financial markets closed in Asia, gave an initial bounce to risk assets elsewhere, as investors took it as a sign that China’s policymakers were stepping up their action to bolster the world’s single-biggest driver of global economic growth. But with a deluge of data due over the weekend that includes all of the country’s key barometers of investment and industrial activity, it raised concerns for others that the rate move is pre-empting grim news. “The concern is that with industrial production and CPI data coming out of China at the weekend that it’s indicative of them knowing something about weak data going forward,” said Adrian Schmidt, currency strategist at Lloyd’s Bank in London. Bloomberg/Reuters

Spain raises fresh money, eyes turn to coming summit Sale of bonds dispels fears of market shut out, while Merkel lowers expectations

pain weathered funding pressures in European credit markets yesterday and managed to raise money at an affordable if rising cost, while behind-the-scenes planning for a likely rescue of its debt-stricken banks intensified. Madrid sold 2.1 billion euros (US$2.6 billion) of government bonds, paying just over 6 percent to sell 10-year debt, up from 5.74 percent last month. That laid to rest – at least for now – fears raised by Treasury Minister Cristobal Montoro on Tuesday that Spain was being shut out of credit markets. Despite a rally in stocks, bonds and the euro owing partly to expectations of action by central banks to revive economic growth, the euro zone remains under pressure from investors and global partners to act decisively –

and quickly – to resolve its debt crisis. The most immediate threat comes from Spain, where the banking sector is saddled with bad property loans and may need 40 billion euros of new capital as a bare minimum to shore it up. U.S. President Barack Obama and Canadian and Japanese leaders telephoned Europe’s main leaders this week to express concern at the worsening crisis and press for stronger action – ratcheting up hopes ahead of an EU summit on June 28-29. But German Chancellor Angela Merkel doused expectations that the summit will produce a major breakthrough towards a tighter fiscal and banking union in the 17-nation currency bloc, saying progress would take longer. In a television interview broadcast

Spain sold US$2.6 billion of government bonds, laying to rest fears that it was being shut out of credit markets

yesterday, she said the euro area was moving inevitably towards a political union ceding more national sovereignty, and that would lead to more of a twospeed Europe, with non-euro states in

the slow lane. “I don’t believe that there will be one single summit that will decide on a big bang,” Ms Merkel said. Reuters