Macau Business Daily, March 20, 2013 by Business Daily

Ao’s UK assets still on the loose

Year I Number 243 MOP 6.00 Wednesday March 20, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã www.macaubusinessdaily.com

Five years after a Macau court ordered the seizure of assets belonging to jailed public servant Ao Man Long, some located in the United Kingdom are still out of reach. They include a five million pounds (60.2 million patacas) flat in London. Macau has no bilateral legal cooperation deal with Britain. Here the Court of Second Instance says getting the assets is ‘difficult’ but ‘not impossible’. Page 4

Ferry firms unhappy over fare hike cap F

erry operator TurboJET will increase the price of a single economy class daytime ticket from Macau to Hong Kong by eight patacas (US$1.25) – or 5.7 percent – from March 29. It had asked the government for average fare price increases of 13 percent. The Maritime Administration capped the rise this year at six percent. The smaller hike will mean the journey to Hong Kong during office hours will now cost HK$148 – or the equivalent in patacas, which works out fractionally cheaper because of the exchange rate difference. Fares for the return leg from Hong Kong were already slightly more expensive than the outward journey but will also rise. More on page 3

Air Macau starts flying to Jinjiang in April

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High roller gambling ‘strongest’ since Q1 2012

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VIP gambling revenue appears to be growing at the strongest rate since the first quarter of last year says a note from J.P. Morgan, a bank. Kenneth Fong of the institution’s Hong Kong office, says the Macau casino market can expect gross gaming revenue of 31.2 billion patacas this month – an expansion of 25 percent year-on-year. He bases it on current daily run rates, including 1.093 billion patacas (US$137 million) per day for the seven days to March 17 inclusive.

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March 19

The city’s flag carrier Air Macau Co Ltd will start flying three times a week to Jinjiang, Fujian province, on April 2. It will be the third new route to mainland China launched in just three months as the company seeks to gain a stronger presence in the market. Mainland carrier Xiamen Airlines already runs five flights a week.

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Emperor sees sales of watches, jewellery fall

HSI - MOVERS Name

The Macau operations of retailer Emperor Watch & Jewellery Ltd had a difficult time last year, with sales falling and higher rental costs squeezing its profits. Emperor Watch told the Hong Kong Stock Exchange late on Monday that sales in Macau fell by 5.6 percent last year to HK$395.3 million (US$50.9 million). Across all markets the retailer’s profit fell by more than one third to HK$404 million.

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%Day

CHINA RES POWER

8.11

SANDS CHINA LTD

5.42

LENOVO GROUP LTD

2.79

ESPRIT HLDGS

2.20

POWER ASSETS HOL

2.18

CHINA MERCHANT

-1.68

CHINA OVERSEAS

-1.90

CHINA COAL ENE-H

-2.01

BELLE INTERNATIO

-2.83

TINGYI HLDG CO

-3.41

Source: Bloomberg

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business daily March 20, 2013

macau

High roller gambling ‘strongest’ since Q1 2012 Earlier flat showing likely linked to uncertainty on central government personnel changes, say analysts Michael Grimes

michael.grimes@macaubusinessdaily.com

IP gambling revenue appears to be growing at the strongest rate since the first quarter of last year says a note from J.P. Morgan, a bank. Kenneth Fong of the institution’s Hong Kong office, says the Macau casino market can expect gross gaming revenue of 31.2 billion patacas this month – an expansion of 25 percent year-on-year. He bases it on current daily run rates including 1.093 billion patacas (US$137 million) per day for the seven days to March 17 inclusive. “Given that mass market is steadily growing at 30 percent and it contributes 30 percent of the top line, a 25 percent headline revenue growth would imply that VIP revenue is growing at 15 to 20 percent, the strongest since the first quarter 2012,” says Mr Fong in a note. Many analysts’ monthly estimates on GGR focus on live dealer table gaming in the mass-market and VIP table segments. Slot gaming annually accounts for about five percent of GGR. David Bain of Sterne Agee, an independent brokerage based in the United States, says his numbers include slot revenues and suggest a 32 percent year-on-year growth for March. “According to our checks, Macau table-only gross gaming revenue is 17.6 billion patacas through March 17,” Mr Bain said in his note. “Including slots, the GGR run rate

VIP baccarat – best performance for 12 months

for March is 33.3 billion patacas or approximately 32 percent up yearon-year. We are raising our March year-on-year [expansion] estimate to plus 20 percent year-on-year (30.0 billion patacas) from plus 14 percent, and note our March estimate is approximately six percent higher than Macau’s all-time monthly record set in December of last year.”

Defining slots Some caution is advisable when discussing the term ‘slot GGR’ in Macau. Games that in other markets might be considered slot machines

can in Macau be classified as tables. According to a note by Union Gaming Research Macau last July, some electronic table games – those with electronic betting and automated bet settlement but with a human attendant for the card dealing “are classified by the local regulator as table games and therefore are part of the total table allocation for each operator and subject to the marketwide table cap”. The note added that 50 or 60 ETG seats in that case are counted for the purposes of the cap as equivalent to one live baccarat table. Electronic table games with no human attendant or dealer are

Adelson in court next month over Macau licence lawsuit HK businessman Richard Suen claims he was middleman in talks with Chinese govt

Sheldon Adelson

heldon Adelson, chairman of Las Vegas Sands Corp., is to give evidence in person in a Nevada court during another civil trial linked to his successful bid for a Macau gaming licence. According to minutes from the Clark County District Court the LVS founder will take the witness stand on April 4, United States time. Hong Kong businessman Richard Suen claims in court filings he and his business associates arranged a meeting in Beijing in 2001 between Mr Adelson and Chinese Vice Premier Qian Qichen. At that meeting the Vice Premier is said to have welcomed LVS’s approach, according to Mr Suen’s court depositions. He alleges that although the company won a Macau licence the following year, it reneged on a promise to pay him a “success fee”. A Nevada jury awarded Mr Suen US$43.8 million (350 million

“recognised by the DICJ (regulatory body) as part of the slot floor with each ETG seat counting as one electronic gaming position,” added Union Gaming. Union Gaming’s note doesn’t mention how ETG revenue is classified, but logic would suggest that those ETGs regulated as tables will be added to the table tally, and those regulated as slots will be added to the slots numbers. No definitive answer on that question was available from DICJ at the time Business Daily went to press. In any case, the number of all kinds of ETGs has been rising as minimum bet prices on live tables have also been soaring due to the table cap. “…we estimate a total of 3,500 to 4,000 new ETGs throughout Asia over the next five years,” stated Union’s note. Looking ahead to the market prospects for all segments of Macau gaming in 2013, Japanese bank Nomura Securities International this week hinted at raising its estimates. “Consensus market growth of 11 to 12 percent could be low for 2013 by 200 to 400 basis points,” says a note from its analysts Harry Curtis, Louise Cheung and Brian H. Dobson following a visit to the city. “Most operators believe that flat VIP volumes year-to-date should improve in June-July, once the central government appointments have been made,” adds the note.

patacas) in compensation in 2008, but a Nevada appeals court in 2010 reversed the decision and sent the case back for a new trial. LVS has faced other claims by middlemen or former partners who claim they helped it win Macau gaming rights. In 2009 the firm agreed to pay US$42.5 million in an out of court settlement to Clive Bassett Jones, Dax Turok and Cliff Cheong. The men said they paired LVS with a company controlled by Lui Che Woo, founder of Hong Kong conglomerate K.Wah Group. Mr Lui’s family was successful in its bid for a Macau gaming licence, setting up Galaxy Entertainment Group Ltd to manage its gaming interests. LVS however, asked to pursue its Macau ambitions alone, and so was awarded in effect a sublicence of Galaxy’s licence. Las Vegas Sands also faces a lawsuit seeking as much as US$376 million in Macau by Asian American Entertainment Corp., a Taiwanesebacked venture with which LVS was pursuing a licence before it teamed with Galaxy. LVS said in its appeal evidence that Mr Suen “did virtually nothing” to help the casino operator to get a gaming licence in Macau. Jury selection on the new trial is to start on March 27 with opening statements the following week. M.G. with Bloomberg News

March 20, 2013 business daily | 3

MACAU

Ferry operators grudgingly accept smaller rise in fares TurboJET and Cotai Water Jet grumble that the forthcoming increase is insufficient Stephanie Lai

sw.lai@macaubusinessdaily.com

But the Maritime Administration approved an average increase of only 6 percent. The administration said it had taken into consideration “affordability for residents, the consumer price index and the actual operational status of the ferry operators”. TurboJET said the size of the increase approved would make it “hard for the company to offset the operational pressure, which will continue to be a considerable challenge to the business”.

Surcharge brainwave

Ferry passengers will have to pay more for their tickets from March 29 (Photo: Manuel Cardoso)

erry operator TurboJET has said it will increase the price of a single economy class daytime ticket from Macau to Hong Kong by between 8 patacas (US$1.00) and 10 patacas on March 29. The fare for a trip from Macau to Hong Kong on a weekday during working hours will rise to at least HK$148 from HK$140, up by 5.7 percent. Fares for the return leg from Hong

Kong were already slightly more expensive than the outward journey but will also rise. TurboJET – which is controlled by China Travel Ship Management Ltd, a unit of Hong Kong-listed Shun Tak Holdings Ltd – also announced on Monday that it will increase its baggage charge by 5 patacas. Macau residents will still be eligible for a discount of 15 patacas. Cotai Water Jet – which is run by

Chu Kong High-Speed Ferry Co Ltd and has links with casino operator Sands China Ltd – told Business Daily yesterday that it would announce its own fare increases later. The ferry operators had applied to the government to increase fares for their services to Shenzhen and Hong Kong by an average of 13 percent, to allow them to cope with the pressure of mounting fuel, labour and maintenance costs.

Cotai Water Jet said the increase approved might soothe the effects of the operational pressure it was under, but only a little. TurboJET and Cotai Water Jet said the costs of fuel, labour, maintenance and using the ports were rising. They said fuel accounted for nearly half their operating costs. Chu Kong said Cotai Water Jet had been losing money for the past five years, although it gave no figures. Chu Kong director Leng Buli told Business Daily that the fare increase approved gave Cotai Water Jet little leeway to make a profit this year. Mr Leng said fuel was the major cost, but that the company had also been burdened by a pay increase of 5 percent for its 650 workers and the mounting cost of maintaining its Australian-made catamarans. Cotai Water Jet has over 80 sailings a day. It has carried 7.5 million passengers in the past year. “The last time the local ferry operators had their fares adjusted was back in 2011, when a hike of 10 to 13 percent was approved,” Mr Leng said. “But at that time the hike still could not totally compensate for our cost surge.” TurboJET has suggested a standing fuel surcharge as a solution to its problems. No ferry operator levies a fuel surcharge at present. The Maritime Administration told Business Daily it was considering TurboJET’s suggestion.

Air Macau starts flying to Jinjiang in April Three new routes in three months as carrier pushes on with mainland expansion Tony Lai

tony.lai@macaubusinessdaily.com

he city’s flag carrier Air Macau Co Ltd will start flying three times a week to Jinjiang, Fujian province, on April 2, a spokesperson confirmed to Business Daily yesterday. It will be the third new route to mainland China launched in just three months as the company seeks to gain a heavier presence in the market. It is also the first time the only Macau-based airline is operating the hour-and-a-half flight between the two cities. Mainland carrier Xiamen Airlines already runs five flights a week between Macau and the city located in the southeast coast. Air Macau has already launched two new routes to the mainland since January 9 with

flights to Liaoning province’s Shenyang and to Wenzhou, capital of Zhejiang province. Air Macau chairman Zheng Yan said in January that the airline aims for an expansion in the mainland market this year. The carrier would launch two or three routes to the mainland this year, Mr Zheng said at the time. With that target already reached, the Air Macau spokesperson did not comment on whether there would be any further flights launched during the rest of the year. It would probably depend on the central government’s visa policy for mainlanders seeking to visit the territory, according to Mr Zheng. “On our routes there are usually more passengers departing [Macau] than arriving here … as a result of the

visa restraints [for Chinese citizens] coming here,” he said in January. The carrier current flies to 22 destinations in Asia with 16 of those places located across the border. Mainland media also reported Air Macau would have a special price for the Jinjiang route during the launching period: 420 yuan (525 patacas) for one way and 730 patacas for a round trip. The spokesperson declined to comment on ticket fares. Fujian province, where Jinjiang is located, is the second most important tourist market for the city in the mainland, after neighbouring Guangdong province. Over 67,000 visitors from Fujian visited Macau in January, up by 1.8 percent year-on-year, official data show.

Air Macau current flies to 16 destinations in mainland China

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business daily March 20, 2013

macau

Ao’s UK assets still on the loose

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HOSPITALITY

Court rejects bid to seize two Macau flats transferred to Mr Ao’s brother-in-law Vítor Quintã

Losing its shine

vitorquinta@macaubusinessdaily.com

Comparatively few visitors apart from mainland Chinese and Hongkongers stay in hotels here. Taiwan is our fourthbiggest source of hotel guests behind Macau, but only slightly over 360,000 Taiwanese spent a night in a hotel last year. That is only 55 percent of the number of Macau residents that stayed a night in a hotel here. Trailing Taiwan, just over 240,000 Japanese and just over 185,000 South Koreans were hotel guests last year. That means the changes in their numbers will have a small impact in the overall trends. Even Taiwan and Japan, the biggest of the smaller ones, represent just 3.8 percent and 2.5 percent of the total number of guests. Even so, getting visitors from a wider variety of places is a valid objective, and analysis of the trends among hotel guests from the lesser sources gives us some clues about the progress of the diversification effort.

Ao Man Long and his wife had about 275 million patacas in British bank accounts

The numbers of hotel guests from some other Asian countries have been decreasing. India once raised expectations as a potential source of tourists, but the number of Indians staying in hotels dropped by almost 15 percent last year. The number of Singaporean hotel guests fell by a similar percentage. Fewer hotel guests were Indonesian, Malaysian or from the Philippines last year. Even countries that sent us more hotel guests last year than the year before accounted for smaller proportions of the total, because their rates of growth were below the average. The only clear gain was in the number of South Korean hotel guests, which rose by 22.3 percent, more than double the average rate of growth. However, only about 500 South Koreans stayed in hotels here each day, on average. All in all, the proportion of hotel guests from our three main sources increased last year – meaning less diversity. J.I.D.

106,029 Number of Indian guests in Macau hotels in 2012

ive years after the Macau Court of Final Appeal ordered the seizure of assets of former secretary Ao Man Long, the Macau administration is yet to get hold of assets in the United Kingdom. In January 2008 Mr Ao was found guilty of corruption and money laundering and sentenced to forfeit all his assets, including a London flat and bank deposits and bonds. In May 2010 the government formally asked the United Kingdom for cooperation to retrieve those assets, a Court of Second Instance judgement reveals. Mr Ao and his wife, Chan Mei

Ieng had about 275 million patacas (US$34.4 million) in British bank accounts in 2006 and a London flat they had bought for almost 5 million pounds (60.2 million patacas). But so far it has not been possible to seize the assets because there is no bilateral legal cooperation deal with the British government, the verdict signed March 7 but only released on Monday says. In response the administration tried to seize two Macau flats that Mr Ao had transferred to his brother-inlaw, Chan Ion Kai, two months after being sentenced. The flats were bought even before

Hutchison Macau revenue slightly up T he revenue of mobile telecommunications provider Hutchison Telephone (Macau) Co Ltd’s grew just slightly in 2012, which the chief executive described as a “satisfactory” performance. Hutchison Macau’s turnover rose by 0.4 percent last year to HK$ 6 8 7 m i l l i o n ( US $ 8 8 . 5 million), parent company Hutchison Telecommunications Hong Kong Holdings Ltd said. This figure is a far cry from the 16.7 percent growth recorded in the

Hong Kong operations of Hutchison Telecommunications, the firm said in a stock exchange filing yesterday. Two weeks ago Hutchison Macau chief executive Ho Wai Meng said both the business and the private customer base were “progressing well and stable”. “We would expect much room for growth in terms of smartphone sales and data services in Macau,” he told media. “We would also like to provide more discounts for the data services and improve the [Internet] streaming

Mr Ao became a public servant. The court agreed that the former secretary for Transport and Public Works “purposely” transferred the flats to prevent the administration from seizing them. But – just like the first instance – the second instance judges struck down the move, saying it was not yet certain that the United Kingdom assets were out of reach. “The conclusion we can take from these elements and facts is perhaps the difficulty of the legal cooperation procedures towards the seizure of assets located overseas, not its impossibility,” the judgement says.

speed this year.” Hutchison is currently preparing to extend its coverage to the University of Macau’s Hengqin campus. The company also plans to open another shop in Taipa within the next two months. It will be the seventh outlet of Hutchison’s 3 brand here. Hutchison Telecommunications told the Hong Kong Stock Exchange its profit rose by 20 percent to HK$2.2 billion, mostly thanks to higher sales of smartphones. V.Q.

March 20, 2013 business daily | 5

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business daily March 20, 2013

macau Li Fei heads Basic Law committee

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Li Fei was yesterday promoted to the leadership of both the Macau SAR Basic Law Committee and the Hong Kong SAR Basic Law Committee, replacing Qiao Xiaoyang, official news agency Xinhua reported. Mr Li, who was the deputy director of the committees, was also among the nine new deputy secretary-generals named during the first meeting of the 12th National People’s Congress Standing Committee. Zhang Rongshun – head of the department of legal affairs at the State Council’s Hong Kong and Macau Affairs Office – was named as the deputy director of the two committees.

Revolving door One of the distinctive features of the economy in the past couple of years has been the reversal in the flow of non-resident workers. In 2008 and 2009 their numbers decreased, as the effects of the international financial crisis were at their height and expectations were at a low point. The number of non-resident workers dropped by almost 20 percent between 2008 and 2009 to just under 75,000. That figure was almost unchanged in 2010. The number has recovered rapidly in the past two years. It rose by 20 percent in 2011 and by 15 percent last year to a record peak of over 110,000, or almost one-fifth of the population.

MIECF to focus on business-matching

Another important feature of imported labour, which is not always clear, is that the turnover of non-resident workers is high. No matter whether the total number of non-resident workers is rising, falling or stable, in any given period considerable numbers are coming to the city and considerable numbers are going. The total barely changed in 2010, the tally of nonresident workers on December 31 that year being 75,813. But in the preceding 12 months 35,508 had come and 34,600 had gone. In other words, at the end of 2010 almost half the non-resident workers were new, having been here less than a year. In the past two years the proportion of non-resident workers that are new has risen to 55 percent, more or less. J.I.D. The content of this column is the work of Business Daily’s journalists.

19 %

Proportion of the population that are non-residents

bout 430 business-matching meetings have already been arranged even before the Macao International Environmental Co-operation Forum & Exhibition (MIECF) begins tomorrow. The meetings will bring together companies dealing with sewage treatment, energy saving, hydroelectric power and lithium battery technology, Irene Lau Kuan Va, executive director of the Macao Trade and Investment Promotion Institute, said yesterday. Aside from promoting sales of green products from over 400 exhibitors, the three-day event is

featuring two workshops and nine sessions on energy savings, green architecture and transport, sewage treatment and sustainable tourism. Last year’s edition included 702 green business-matching meetings, which show a 22 percent annual rise, official data from the exhibition shows. Over half of those meetings were the initiative of hotel operators seeking to buy green products. The Macau pavilion, put together by three local environmental associations, will feature 100 companies introducing electric vehicles, trash recycling equipment, kitchen ventilators, and air purifiers

for casinos and hotels, said Frederico Ma Chi Ngai, chairman of the Association of Macao Environmental Protection Industry. The total projected budget for the sixth edition of the forum, to be held at the Venetian Macao resort – stands at 23 million patacas (US$2.8 million), similar to last year’s spending, Ms Lau added in a press briefing. The event will occupy an area of more than 16,000 square metres, also similar to the 2012 edition. Last year about 8,000 people checked out the exhibition, 6,000 of which were professional visitors. S.L.

MGTO opens Moscow office T he Macau Government Tourist Office (MGTO) opened a representative office in the Russian capital Moscow yesterday seeking to tap into a new source of visitors. The opening was scheduled for a peak period of travel shows in the country, the office stressed in a statement, with Moscow hosting three events in the space of 10 days. “We are very excited to open a representative office here in Moscow following a few years conducting

seasonal promotions to test the market,” office director Maria Helena de Senna Fernandes said. “Russia is one of the most soughtafter markets in the world in terms of tourism potential and for Macau the Russian market is the fastest growing emerging market,” she said at the opening ceremony. Visitor arrivals from Russia have been increasing annually since 2004. Last year Macau welcomed 26,844 Russian visitors, marking a year-onyear growth of 62.6 percent.

The Macau tourism office has already joined the Luxury Travel Mart, held on March 14, and the Intourmarket International Travel Fair, which ended yesterday. The Moscow International Travel and Tourism Exhibition, seen as the main international travel show held annually in Russia, starts today. Tomorrow the tourism office will hold a joint event with Hong Kong Tourism Board to promote the two cities as one destination for Russian travellers.

Stay in the finest hotels in Macau and read Business Daily

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March 20, 2013 business daily | 7

MACAU

Emperor sees sales of watch, jewellery tumble Emperor Watch & Jewellery’s profit also fell as supply prices and rents soared Vítor Quintã

vitorquinta@macaubusinessdaily.com

Emperor Watch & Jewellery paid 54.9 percent more to lease a downtown Macau shop last year (Photo: Manuel Cardoso)

he Macau operations of retailer Emperor Watch & Jewellery Ltd had a difficult time last year, with sales falling and higher

rental costs squeezing its profits. Emperor Watch told the Hong Kong Stock Exchange late on Monday that sales in Macau fell by

5.6 percent last year to HK$395.3 million (US$50.9 million). “The global economy remained volatile with full of challenges, which

caused consumers to become more cautious on spending,” the retailer said in a filing. “Having said that, the appetite of mainland consumers towards luxury watch items [showed] relative resilience,” the Hong Kong-based company added. Emperor Watch’s Macau profits faced an even bigger drop of 24 percent to HK$62.6 million, “owing to the decrease in gross profit margin and rising rental expenses”. Four of the retailer’s five outlets here are located at Grand Emperor Hotel, owned by Emperor Watch’s parent company Emperor International Holdings Ltd. Nevertheless Emperor Watch had to paid HK$9.76 million in rent, up by a staggering 54.9 percent, for its shop at downtown Macau’s Avenida do Infante D. Henrique last year. In addition the company’s profit margin was hit by “the substantial and frequent price hikes implemented by watch suppliers as a result of Swiss franc’s appreciation and rising raw material costs”. The Swiss franc has appreciated by 8.5 percent against the Hong Kong dollar – and the Macau pataca – in the last 12 months. Emperor Watch’s overall revenue rose by 11.4 percent in 2012 to HK$6.5 billion, mostly thanks to improved sales in Hong Kong, where the company has 21 shops. But the retailer’s profit fell by more than one third to HK$404 million. As a result the company decided to paid a final dividend of 1.78 Hong Kong cents a share for 2012, lower than the 2.8 cents paid in the previous year.

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business daily March 20, 2013

macau

Legislators claim have ‘no say’ on urban plans Legal advisors to Legislative Assembly fear urban planning law may contradict the Basic Law Tony Lai

tony.lai@macaubusinessdaily.com

City still to have a master urban plan (Photo: Manuel Cardoso)

he administration hinted yesterday it would not seek the Legislative Assembly’s consent when forming the city’s urban plans. “The government gave many examples like what happens in mainland China, Hong Kong … where their urban plans do not need to seek the approvals from the legislature,” said Chan Chak Mo, president of the assembly’s second standing committee. The committee is discussing the city’s first draft bill on urban planning. “So we have the impression that they will not ask for the legislators’ approval on the master plan and detailed plans,” Mr Chan told reporters after a closed-door meeting with government officials yesterday. The bill mentions there will be a master plan, containing the overall strategy for Macau’s urban development, and detailed plans guiding development for specific areas. But it says the content of these

plans would be decided by subsidiary legislation, which does not require the assembly’s approval. Legislator Kwan Tsui Hang expressed her dissatisfaction last month on this matter. Mr Chan declined to comment yesterday on his committee’s reaction to the government’s move, saying it would be up to each legislator to give the nod or rebuff the bill during its final reading. The assembly’s legal advisors are also concerned that some provisions

of the bill related to compensation may contradict Macau’s Basic Law on the safeguarding of individuals’ rights, he said; a reference to the city’s de facto constitution drafted by China and Portugal prior to the 1999 handover. Mr Chan declined however to detail the advisors’ concerns, adding that the administration appeared to take the view there were no problems regarding urban planning. “They say Hong Kong has been expropriating land, carrying out

reconstruction and urban planning for a long time… and Hong Kong and Macau have the exact same provision on rights for individuals and private properties in their own Basic Laws,” he said. The committee president also downplayed the impact of such provision, saying the legal advisors from the assembly and the administration always had different views. The advisors would have separate meetings to solve their differences, he added.

Chui says development should strike balance The chief executive hints that the controversial private housing project on Coloane will go ahead Tony Lai

tony.lai@macaubusinessdaily.com

More buffer zones urged for heritage protection Legislators have urged the government to provide more details about proposed heritage ‘buffer zones’. They’re designed to preserve historic sites not yet protected by law. Cheang Chi Keong, head of the Legislative Assembly’s third standing committee, said that a more detailed law would restrict the “randomness” currently found in what gets saved and what doesn’t. The committee is discussing the draft law on heritage protection with government representatives. “Macau has few land plots and narrow streets,” Mr Cheang told reporters after a closeddoor meeting yesterday. “A balance is needed” in order to better plan the new buffer zones, he added. The committee also thinks the law could be clearer in setting provisions for new heritage sites and for the historic centre of Macau, which is already part of the UNESCO World Heritage List.

hief Executive Fernando Chui Sai On has responded to the controversy over a private housing project on Coloane by saying the government will “strive for a balance between development and resource preservation”. Mr Chui, speaking in Beijing on Monday, declined to comment on the government’s attitude to a private project to build 2,000 homes at Alto de Coloane, the site of an 80-year-old Portuguese military bunker. But he hinted that the government would allow it, saying the “next step is to consider how that project should be developed”. He asked the public to give the government more time to deal with the matter and promised to make its dealings more open. The project has caused concern among the public that it would spoil Coloane’s landscape. The government has said it will allow buildings 100 metres tall on the site.

Sio Tak Hong, who owns the developer, Capital Estate Ltd, insisted this month that it would pursue the project despite the public outcry. Mr Sio, who is a Macau member of the Chinese People’s Political Consultative Conference, said the developer had formally proposed the project to the government on February 27. Jaime Carion, director of the Land, Public Works and Transport Bureau, yesterday said he was yet to see the proposal in detail. But the bureau is already seeking opinions from the Cultural Affairs Bureau and the Environmental Protection Bureau, he added. Early in the day, Guilherme Ung Vai Meng, head of the Cultural Affairs Bureau, told reporters the bunker on the site should be preserved. Mr Carion also said there are regulations to protect Coloane’s landscape. But this private housing project cannot be brought under those rules as the land plot is located

below an altitude of 80 metres, he said, explaining that the regulation only applies for areas 80 metres above sea level. A group of people are using social media to arrange a hike and an exhibition of art on Coloane on Sunday to demonstrate their wish to protect Coloane’s landscape. On Monday, Mr Chui said: “There will be certain changes during the development of Macau, Taipa and Coloane, but these changes may not necessarily be bad.” He said the government might commission an academic institution to look into the development of Coloane and collect public opinion on the matter, if needed. “If you look at the record, Macau has actually done a pretty good job of protecting [the environment], from the era of Portuguese administration until now,” he said. But Mr Chui conceded that the government could do more, as society had become more demanding.

March 20, 2013 business daily | 9

GREATER CHINA The meeting comes at a time of raised tensions between the two global powers

China, U.S. hail ‘shared interests’ Xi stresses positive ties with Washington in Lew meeting

hinese President Xi Jinping stressed positive ties with the U.S. in his first meeting with a foreign official since taking the post amid tensions between the world’s two biggest economies over espionage and exchange rates. The nations’ economies have a “seamless connection” and their relationship is of “great importance,” Mr Xi, in his sixth day as president, said during a meeting with U.S. Treasury Secretary Jacob J. Lew at the Great Hall of the People in Beijing. “In the China-U.S. relationship, we have enormous shared interests, but of course, unavoidably, we have some differences,” Mr Xi said. Mr Lew, in his first trip since taking office on February 28, said they had a “special responsibility” for strong global growth, before reporters were ushered out of the room. The session with Mr Xi began two days of talks for Mr Lew on topics ranging from the nations’ half-trillion dollars in annual trade to accusations that the yuan is undervalued and that China engages in online spying. New Premier Li Keqiang, who will meet with the U.S. representative today, said this week that the country opposes hacking and is a victim of attacks. “Maintaining a healthy r e l at ions hip with C h ina is an important task for Mr Lew,” said Eswar Prasad, a former International Monetary Fund official who is now

a professor at Cornell University in Ithaca, New York. “The U.S. administration recognises the need to engage with China in a more constructive fashion so that a variety of contentious issues can be dealt with frontally rather than becoming roadblocks to a smoother relationship.” Mr Lew raised the exchange rate, intellectual property, cybersecurity and North Korea during the 45-minute meeting, according to a U.S. official who asked not to be identified. The two also discussed the global economy including Cyprus, according to the official, after a decision by euro-area finance ministers to tax bank deposits in the island nation threatened to revive debt turmoil in the region. Mr Lew also met with Xu Shaoshi, head of the National Development and Reform Commission, and Finance Minister Lou Jiwei.

Currency talks Mr Lew, 57, will discuss “opportunities for cooperation and growth” and “efforts to level the playing field and create new opportunities for U.S. workers and businesses,” the Treasury Department said in an e-mailed statement. “The fact that Lew chose China as his first foreign visit and that he will

be the new Chinese economic team’s first foreign visitor highlights how important each country has become to the other’s economic agenda,” said David Loevinger, a former senior coordinator for China affairs at the U.S. Treasury Department, now an analyst in Los Angeles at TCW Group Inc. China’s new premier also said that the new government will, as in the past, “attach great importance to our relationship with the U.S., a relationship between the world’s largest developed country and the world’s largest developing country”. Members of the U.S. Congress have called for China to let its currency strengthen further, saying that the yuan is undervalued, making U.S. exports too expensive and Chinese imports too cheap. Mr Lew told U.S. lawmakers earlier this year that addressing China’s exchange rate would be a “top priority”. After keeping the yuan stable for a decade, China allowed its currency to strengthen 21 percent from July 2005 to July 2008. Appreciation was then halted for almost two years to help exporters weather a global recession and the currency has advanced about 10 percent against the dollar since controls were loosened in June 2010. China has repeatedly said that the yuan is close to an equilibrium level. Bloomberg News

FDI drops in the first two months of 2013 C

hina’s foreign direct investment inflows fell 1.35 percent in the first two months of 2013 from a year earlier, extending a run of falls triggered by a drop in investor confidence in emerging markets as global economic growth has slipped. The Commerce Ministry said yesterday that China drew US$17.5 billion in foreign direct investment in January and February combined. February’s inflow alone was US$8.2 billion, the smallest monthly inflow for seven months, albeit up 6.32 percent from a year earlier. FDI is an important gauge of the health of the external economy, to which China’s vast factory sector is oriented, but it is a small contributor to overall capital flows compared with exports, which were worth about US$2 trillion in 2012. The FDI figure followed February’s strong export growth data which suggests to some economists that China remains on track for a modest recovery and a sign that global demand for goods produced in the country’s vast – and substantially foreign-funded – factory sector may also be on the mend. The Commerce Ministry data also showed investment inflows from the European Union rose 34.0 percent in the first two months from a year ago to US$1.2 billion, while investment by U.S. firms fell 5.4 percent during the same period to US$497 million. FDI from 10 top Asian economies, including Hong Kong, Japan and Singapore, fell 1.3 percent year on year in the first two months, to US$15.2 billion, the ministry said. Reuters

US$17.5 billion Foreign direct investment in the first two months of 2013

Beijing eyes faster trade talks C hina will hold three rounds of trade negotiations with Japan and South Korea this year and step up talks with other trading partners, the Ministry of Commerce said yesterday, as U.S. efforts to seal a trans-Pacific free trade deal gather pace. China said the first set of talks on a three-way free trade agreement (FTA) with its two neighbours would be staged in Seoul, the South Korean capital, from March 26-28. They will then move to China, with a third leg to be held in Japan, ministry spokesman Shen Danyang told a news conference.

The talks are seen by analysts as a two-pronged initiative by Beijing to engage with Japan after recent diplomatic tension over disputed island territory in the East China Sea, while also countering the “pivot” by the United States to reaffirm its role in Asia in the face of China’s economic rise. Japanese Prime Minister Shinzo Abe said last week that Tokyo would seek to join the U.S.-led TransPacific Partnership (TPP) talks that currently bring together the United States, Canada, Mexico, Australia, New Zealand, Chile, Peru, Vietnam,

Malaysia, Brunei and Singapore. “We will improve communications and talks with the related parties and push forward the progress of our own free trade areas,” Mr Shen told reporters when asked to respond to Japan’s plan to join TPP negotiations. “We always think that every economy in the world has the right to participate in the process of world economic integration and we always take an open and inclusive attitude for all efforts to push for regional and world cooperation,” he added. Reuters

10 |

business daily March 20, 2013

GREATER CHINA

Beijing seen cancelling subsidy for solar projects Officials seeking to avoid duplication of projects

China’s Suntech Power Holdings Co., the world’s biggest solar panel maker, has defaulted on its debt. The firm said it had failed to repay US$541 million worth of bonds due on March 15. That triggered cross-default clauses on its other loans as well. The failure to make payments on the bonds could lead to potential lawsuits against Suntech. However, the firm said it was in talks with the bondholders and was unaware of any legal proceedings being initiated. “It is currently a very difficult time for our company and our industry, but the management and board of Suntech are committed to finding a way forward,” David King, chief executive of Suntech, said in a statement. “We are currently exploring strategic alternatives with lenders and potential investors, which could help to set us on a path towards longer term success.”

hina, forecast to become the largest solar-power market this year, may abolish subsidy programmes for some of its largest projects and target the money instead to smaller ones, an industry official said. Ending subsidies for utility-scale projects would avoid duplication, Meng Xiangan, vice chairman of the China Renewable Energy Society in Beijing, said in an interview. The new policy would preserve aid for less-powerful plants owned by the final user of the electricity, Mr Meng said. His organisation acts as a liaison between the government and industry. Should the government confirm the move, incentives under the Golden Sun programme would shrink just as China calls on developers to install more photovoltaic devices than any other country. Its manufacturers already are hurting. “The wave of solar industry consolidation that’s hit Europe and the U.S. is coming to China,” said Nathanael Greene, director of renewable energy policy at the Natural Resources Defence Council in New York. “China’s manufacturers are counting on domestic market growth this year, so major cuts in

Suntech in US$541m default

incentives could really hurt.” The government picked hundreds of developers last year, including Yingli Green Energy Holding Co. and Trina Solar Ltd, to get subsidies as demand for their solar devices slumped in Europe. Mr Meng didn’t mention names of companies that could be most

affected by a policy change. The programmes “have been increasingly accused of using public resources inefficiently by providing developers with an overgenerous capital expenditure-based subsidy before installation,” said Wang Xiaoting, an analyst at Bloomberg New Energy Finance in Beijing.

“The developers are therefore not incentivised to build highperformance systems.” Even with solar subsidies, which began in China in 2009, photovoltaic manufacturer’s profit margins have been crushed after the US$75 billion solar-components industry built too much factory capacity in the past two years. Bloomberg News

March 20, 2013 business daily | 11

ASIA S.Korea to set extra budget South Korea will draft an extra budget spending bill worth more than 10 trillion won (US$8.97 billion) to boost economic growth, Yonhap news agency reported yesterday, citing the finance ministry. The finance ministry plans to announce details of the package on March 26, it reported, adding the extra spending would be aimed at creating jobs and supporting the low-income earners.

India cuts rates amid slower growth Key rate lowered to 7.50 percent, cash reserve ratio unchanged Neha Dasgupta and Tony Munroe

ANA targets Southeast Asia All Nippon Airways Co., Japan’s largest airline by sales, is looking for acquisitions and partnerships in countries such as India and Thailand after raising US$1.8 billion in a share sale last year for expansion. “We’re considering various options, including acquisitions or collaboration with a partner if we find one,” said Osamu Shinobe, who will become president of the airline on April 1, when it becomes part of a holding company. “Our main focus is Southeast Asia. We haven’t made any decisions yet.”

N. Korea runs trade surplus After decades in the red, North Korea may be running a trade surplus, according to two economists who warn the breakthrough makes Pyongyang less vulnerable to pressure on its nuclear programme. Marcus Noland and Stephen Haggard, both North Korea experts at the Washington-based Peterson Institute for International Economics, say their research suggests the North’s current account went into surplus in 2011. In a posting on the institute’s website, they said the improvement had come “largely on the back of expanding trade with China” and added that preliminary research also pointed to a 2012 surplus.

The central bank warned that elevated inflation could limit further action

ndia’s central bank lowered its benchmark policy rates by 25 basis points yesterday for the second time this year in a bid to help revive growth in Asia’s third-largest economy, but warned that the scope for further easing is limited. The rate cut was overshadowed by a political crisis in the governing coalition when a key ally quit, raising fresh doubts about Prime Minister Manmohan Singh’s ability to push through a late burst of reforms and win back investors’ confidence. In its mid-quarter policy review, the Reserve Bank of India lowered its policy repo rate to 7.50 percent as expected, and reduced the reverse repo rate to 6.50 percent. It also left the cash reserve ratio for banks unchanged at 4.00 percent, in line with expectations. India’s economy is on track to

grow at its slowest in a decade at around 5 percent in the fiscal year ending this month, and had been expected to see modest improvement in the coming year. A recent uptick in headline wholesale inflation, rising food price-driven consumer inflation and a record-high current account deficit limit the RBI’s space for monetary easing despite pressure from a government facing elections in 2014. “Even as the policy stance emphasises addressing the growth risks, the headroom for further monetary easing remains quite limited,” the RBI said in its statement.

Ally departure That caution reinforced market expectations that the RBI, which left rates on hold for nine months before

Singapore REITs must diversify funds: Fitch Power failure hits Fukushima plant No spike in radiation levels has been recorded near Japan’s Fukushima Dai-Ichi nuclear station after a power failure disabled the tsunami-damaged plant’s cooling pools for spent uranium fuel rods, the government said. There has been “absolutely no change” reported in radiation levels, Yoshihide Suga, Japan’s chief cabinet secretary, said at a media briefing yesterday. Without power to pump cooling water through the pools, the rods can heat up and release radiation.

ingapore’s property trusts, the second-best performers in Asia in the past year, may have to diversify funding sources as they aren’t prepared for an “interest rate shock,” according to Fitch Ratings. The city’s real estate investment trusts or REITs have been increasing short-term debt with record-low interest rates, according to Johann Kenny, director of corporates at Fitch. They face refinancing risks when borrowing costs rise, and may be pushed to sell assets or shares to boost their funding, he said. “Singapore REITs are not really well equipped to withstand an

interest rate shock,” Mr Kenny said in a phone interview. “When a rating agency looks at a company, we look at the long-run average through the cycle of the interest rate environment and we don’t see the current low interest rates as a sustainable model from a macro-economic perspective.” Singapore REITs, the biggest fundraisers in the city’s initial public offering market in the past year, had relied on short-term debt to reflect the length of commercial leases, Mr Kenny said. Their funding costs in the past six years don’t reflect the challenges in a “normalised” interest rate scenario, he said.

cutting them in January, will only lower them by a further 25 or 50 bps in the fiscal year starting in April. After an initially muted reaction to the widely expected rate cut, Indian stocks and the rupee fell on news that the Dravida Munnetra Kazhagam (DMK) would leave the ruling coalition due to differences over the government’s stand on alleged war crimes in Sri Lanka. The withdrawal leaves Mr Singh’s coalition at the mercy of smaller parties which are sceptical of reforms such as landmark land acquisition legislation aimed at boosting investment in infrastructure. “As the coalition becomes more fractured, and depends on outside support from parties that have a narrow agenda, the very act of policymaking gets diluted,” said Abheek Barua, chief economist at HDFC Bank. The current account deficit hit a record-high 5.4 percent in the September quarter and is expected to end the 2012/13 fiscal year at its highest level ever. “Although capital inflows, mainly in the form of portfolio investment and debt flows provided adequate financing, the growing vulnerability of the external sector to abrupt shifts in sentiment remains a key concern,” the RBI said. February’s wholesale price index rose an annual 6.84 percent, faster than in January, although non-food manufacturing inflation, which the central bank uses to assess demanddriven price pressures, slowed to 3.8 percent, the weakest pace since March 2010. The central bank said the divergence between wholesale and consumer price inflation was “exacerbating the challenge for monetary management in anchoring inflationary expectations”. Reuters

The REITs raised S$3.4 billion (US$2.7 billion) or 68 percent of the S$5 billion of stock sold in Singapore IPOs in the past 12 months, according to data compiled by Bloomberg. The biggest share sale was the S$1.6 billion raised by Mapletree Greater China Commercial Trust, a REIT that owns assets including the Festival Walk shopping mall in Hong Kong and an office complex in Beijing. The trust, which was also Asia’s biggest share sale this year, surged 13 percent since its trading debut on March 7. Singapore REITs posted a oneyear total return of 45 percent, trailing Japan’s 63 percent in Asia, according to data compiled by Bloomberg. The measure tracking REITs in Singapore climbed 29 percent in the past year, compared with the 8.2 percent increase in the Singapore benchmark Straits Times Index. Bloomberg News

12 |

business daily March 20, 2013

MARKETS Hang SENG INDEX NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

33.4

0.149925

23379723

ALUMINUM CORP-H

3.13

6865906

BANK OF CHINA-H

3.47

-0.5730659

273401107

BANK OF COMMUN-H

5.75

-0.862069

28664008

BANK EAST ASIA

30.75

-0.8064516

2079341

BELLE INTERNATIO

13.04

-2.831595

51688691

NAME CHINA UNICOM HON CITIC PACIFIC

PRICE

DAY %

VOLUME

10.44

-0.5714286

29063904

9.91

0.8138352

7114843

66.75

0.9070295

4373193

14.28

-1.244813

74339217

COSCO PAC LTD

11.32

0.1769912

7659273

9.3

2.197802

13244172

29.2

1.565217

6644687

124.6 -0.08019246

1300412

WHARF HLDG

ESPRIT HLDGS

26.3

0.3816794

11113448

13.7

-0.1457726

3633299

HANG SENG BK

111.7

0.540054

4217856

HENDERSON LAND D

48.7

0.3089598

4004384

CHINA COAL ENE-H

6.83

-2.008608

28773120

HENGAN INTL

76.1

-1.168831

2885284

CHINA CONST BA-H

6.05

-1.305057

244061946

-0.4739336

45157709

26.4

-1.675978

2747223

CHINA MERCHANT CHINA MOBILE

HANG LUNG PROPER

HONG KG CHINA GS

22.6

1.118568

14977377

HONG KONG EXCHNG

132.7

-0.4501125

3303262

HSBC HLDGS PLC

84.45

0.3565062

17368416

80.1

-0.4968944

4765086

5.2

-1.328273

283964345

80.35

-0.8024691

28686718

HUTCHISON WHAMPO

CHINA OVERSEAS

20.7

-1.895735

39434935

IND & COMM BK-H

CHINA PETROLEU-H

8.68

0.6960557

68526212

LI & FUNG LTD

10.3

17132351

30.9

0.6514658

3656680

CHINA RES ENTERP

24.05

0.6276151

2259000

MTR CORP

19.9

0.4036327

9069583

NEW WORLD DEV

13.04

11654220

CHINA RES POWER

22.65

8.114558

20290519

PETROCHINA CO-H

10.36

-0.3846154

49304191

CHINA SHENHUA-H

28.35

-1.219512

19594658

PING AN INSURA-H

59.55

-1.488834

21843917

PRICE

DAY %

VOLUME

25.45

-0.7797271

9075429

CHINA RES LAND

PRICE

DAY %

72.8

2.175439

2680070

5.417277

23331175

SANDS CHINA LTD

CLP HLDGS LTD

CATHAY PAC AIR

CHINA LIFE INS-H

POWER ASSETS HOL

CNOOC LTD

BOC HONG KONG HO CHEUNG KONG

NAME

VOLUME

SINO LAND CO

12.66

-0.1577287

5299350

SUN HUNG KAI PRO

106.3

1.045627

6050566

SWIRE PACIFIC-A

96.35

-1.583248

2594289

TENCENT HOLDINGS

259.2

-1.519757

8183454

TINGYI HLDG CO

19.28

-3.406814

18101452

WANT WANT CHINA

11.88

1.192504

13862913

61.5

1.736973

7738088

MOVERS

3 22800

INDEX 22041.86 HIGH

22791.46

LOW

22014.02

52W (H) 23944.74 22000

(L) 18056.4 15-March

19-March

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.71

-0.2688172

104166621

AIR CHINA LTD-H

6.31

-0.6299213

8156000

CHINA PETROLEU-H

8.68

0.6960557

68526212

ALUMINUM CORP-H

3.13

6865906

CHINA RAIL CN-H

7.26

0.2762431

7563500

ANHUI CONCH-H

25.6

3.018109

15462911

CHINA RAIL GR-H

3.88

-1.522843

16696500

BANK OF CHINA-H

3.47

-0.5730659

273401107

CHINA SHENHUA-H

28.35

-1.219512

19594658

CHINA TELECOM-H

CHINA PACIFIC-H

5.75

-0.862069

28664008

3.9

-2.255639

62254463

23.55

0.4264392

2743888

DONGFENG MOTOR-H

10.5

2.539062

20983652

CHINA CITIC BK-H

4.58

30362556

GUANGZHOU AUTO-H

5.94

2.061856

6855596

CHINA COAL ENE-H

6.83

-2.008608

28773120

HUANENG POWER-H

8.09

5.338542

22946797

CHINA COM CONS-H

6.69

12782070

IND & COMM BK-H

5.2

-1.328273

283964345

CHINA CONST BA-H

6.05

-1.305057

244061946

JIANGXI COPPER-H

17.06

0.2350176

10367338

CHINA COSCO HO-H

3.95

-0.7537688

6509282

PETROCHINA CO-H

10.36

-0.3846154

49304191

-0.4739336

45157709

PICC PROPERTY &

10.82

0.3710575

10575842

CHINA LONGYUAN-H

6.77

0.4451039

15218734

PING AN INSURA-H

59.55

-1.488834

21843917

CHINA MERCH BK-H

16.18

-1.461632

15915435

SHANDONG WEIG-H

7.48

-0.2666667

5732000

BANK OF COMMUN-H BYD CO LTD-H

CHINA LIFE INS-H

CHINA MINSHENG-H

10.12

-0.3937008

25095079

SINOPHARM-H

26.15

1.553398

2559000

CHINA NATL BDG-H

10.46

2.54902

39954063

TSINGTAO BREW-H

48.55

1.145833

1707000

CHINA OILFIELD-H

15.44

9892341

WEICHAI POWER-H

24.9

1.840491

1816760

NAME

PRICE

DAY %

VOLUME

10.84

-1.275046

20468021

ZIJIN MINING-H

2.48

-0.8

25831474

ZOOMLION HEAVY-H

8.93

-0.8879023

7102853

14.64

0.5494505

5634179

YANZHOU COAL-H

ZTE CORP-H

MOVERS

4 11210

INDEX 10740.05 HIGH

11208.71

LOW

10723.77

52W (H) 12354.22 10720

(L) 8987.76 15-March

19-March

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

6.64

0.4538578

15867543

CITIC SECURITI-A

12.66

0.3169572

126256643

19933100

CSR CORP LTD -A

4.34

-0.2298851

4.169221

33341126

DAQIN RAILWAY -A

7.6

1.103753

21357949

DATANG INTL PO-A

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.81

0.3571429

115664743

AIR CHINA LTD-A

5.57

0.5415162

9884202

ALUMINUM CORP-A

4.37

1.157407

ANHUI CONCH-A

16.99

BANK OF BEIJIN-A

9.16

NAME CHONGQING WATE-A

NAME

PRICE

DAY %

VOLUME

14.9

1.637108

31550185

SANY HEAVY INDUS

10.52

0.7662835

19927372

22807447

SHANDONG DONG-A

49.68

-1.992503

4121639

-1.041667

27639046

SHANDONG GOLD-MI

33.59

1.541717

6936345

4.43

1.83908

11483182

SHANG PHARM -A

12.82

-0.5430566

6552294

13.58

2.413273

18672437

SHANG PUDONG-A

10.65

1.622137

114470221

2.99

3.103448

86916286

SHANGHAI ELECT-A

4.13

-1.196172

9251983

1.642129

12619226 13293243

SAIC MOTOR-A

BANK OF CHINA-A

2.92

41717860

EVERBRIG SEC -A

BANK OF COMMUN-A

4.69

0.6437768

60408049

GD POWER DEVEL-A

BANK OF NINGBO-A

10.81

2.659069

13813022

GF SECURITIES-A

14.38

1.125176

31312519

SHANXI LU'AN -A

17.95

BAOSHAN IRON & S

4.79

-0.4158004

17279905

GREE ELECTRIC

27.24

-0.9454545

11017145

SHANXI XINGHUA-A

35.07

-4.101723

19.58

-0.2547122

15337596

SHANXI XISHAN-A

12.01

0.6705784

9284997

0.0923361

115418991

SHENZEN OVERSE-A

5.98

2.39726

33900453

BYD CO LTD -A CHINA CITIC BK-A

22.36

0.8115419

3300045

GUANGHUI ENERG-A

4.69

3.303965

39900995

HAITONG SECURI-A

10.84

HANGZHOU HIKVI-A

37.1

-5.669972

7059011

SUNING APPLIAN-A

6.42

2.555911

38507038

HENAN SHUAN-A

73.5

0.4784689

1723881

TASLY PHARMAC-A

68.98

-1.975274

1929034 1133620

CHINA CNR CORP-A

4.25

-1.392111

37757904

CHINA COAL ENE-A

7.22

0.1386963

9864044

CHINA CONST BA-A

4.58

0.6593407

31295159

HONG YUAN SEC-A

18.62

1.195652

11994397

TSINGTAO BREW-A

35.25

0.2274666

CHINA COSCO HO-A

-0.2493766

12446738

HUATAI SECURIT-A

10.54

2.429543

58554254

WEICHAI POWER-A

22.3

0.8137432

5129581

CHINA CSSC HOL-A

21.52

1.79754

4163737

HUAXIA BANK CO

10.59

1.631478

25074634

WULIANGYE YIBIN

22.44

-2.051506

28699764 16925624

CHINA EAST AIR-A

3.32

0.3021148

11937524

IND & COMM BK-A

4.08

0.2457002

59011541

YANGQUAN COAL -A

14.3

2.43553

CHINA EVERBRIG-A

3.2

0.9463722

69781455

INDUSTRIAL BAN-A

18.88

2.054054

91608115

YANTAI WANHUA-A

16.37

0.9247842

5158377

CHINA INTL MAR-A

12.41

1.721311

4448683

INNER MONG BAO-A

29.1

0.4487401

21646847

YANZHOU COAL-A

19.11

1.325557

26615422

CHINA LIFE INS-A

YUNNAN BAIYAO-A

17.25

1.232394

10647206

INNER MONG YIL-A

30.8

-0.5489183

9867949

78.52

-1.232704

2385651

CHINA MERCH BK-A

12.6

0.9615385

54739579

INNER MONGOLIA-A

4.79

-0.6224066

34054509

ZHONGJIN GOLD

14.6

1.038062

10254095

CHINA MERCHANT-A

12.91

2.786624

43022319

JIANGSU HENGRU-A

31.9

-0.962434

3859716

ZIJIN MINING-A

3.49

0.867052

57145468

15094758

JIANGSU YANGHE-A

66.13

-2.75

6980822

ZOOMLION HEAVY-A

8.35

0.6024096

31931362

JIANGXI COPPER-A

22.16

0.4533092

7551946

ZTE CORP-A

12.25

0.3276003

36830821

JINDUICHENG -A

11.91

2.938634

11328087

CHINA MERCHANT-A CHINA MINSHENG-A CHINA NATIONAL-A

24.44

5.254091

10.31

2.587065

227835152

8.8

2.325581

51196388

CHINA OILFIELD-A

17.24

0.5247813

7641779

JIZHONG ENERGY-A

12.86

1.660079

19220872

CHINA PACIFIC-A

18.07

0.3888889

19679104

KANGMEI PHARMA-A

15.88

-1.305158

23320186

165.18

-2.519917

6341403

CHINA PETROLEU-A

7.35

2.653631

53617013

KWEICHOW MOUTA-A

CHINA RAILWAY-A

5.14

0.7843137

14065732

LUZHOU LAOJIAO-A

27.26

-1.196086

16423628

CHINA RAILWAY-A

2.86

0.7042254

24115556

METALLURGICAL-A

2.03

0.4950495

13573563

2.49

11014484

MOVERS 219

CHINA SHENHUA-A

21.82

0.9250694

9810281

CHINA SHIPBUIL-A

4.89

-1.609658

41939553

PANGANG GROUP -A

3.52

-1.40056

56041064

8.89

0.5656109

13397726

HIGH

2593.86

21.5

0.7025761

52977120

LOW

2496.99

CHINA SOUTHERN-A

3.79

1.88172

16155787

CHINA STATE -A

3.41

1.791045

96668255

PING AN BANK-A

CHINA UNITED-A

3.37

0.5970149

59407071

PING AN INSURA-A

41.59

2.362786

22498867

CHINA VANKE CO-A

10.95

2.43218

70996709

POLY REAL ESTA-A

11.19

3.996283

71745296

CHINA YANGTZE-A

7.45

3.616134

35198420

QINGDAO HAIER-A

12.52

1.788618

9879344

CHONGQING CHAN-A

8.52

2.527076

18503915

QINGHAI SALT-A

28.53

1.170213

7837150

PRICE DAY %

Volume

16 2600

INDEX 2525.097

NINGBO PORT CO-A PETROCHINA CO-A

52W (H) 2791.303 (L) 2102.135

2490

15-March

19-March

FTSE TAIWAN 50 INDEX NAME

PRICE DAY %

Volume

PRICE DAY %

Volume

FORMOSA PLASTIC

72.5 -0.2751032

6105531

TAIWAN MOBILE CO

102 -0.9708738

5009905

9519066

FOXCONN TECHNOLO

82.3

2.618454

9141508

TPK HOLDING CO L

595

1.362862

1788106

2917663

FUBON FINANCIAL

41.7

0.7246377

25598295

TSMC

100 -0.4975124

47270167

UNI-PRESIDENT

58.8

-1.342282

7813667

UNITED MICROELEC

11.2

42265719

ACER INC

26.9

1.701323

11613357

ADVANCED SEMICON

24.2 -0.2061856

ASIA CEMENT CORP ASUSTEK COMPUTER

36.15

0.4166667

NAME

353

2.915452

3507360

HON HAI PRECISIO

83.2

2.08589

53553406

AU OPTRONICS COR

12.75

0.7905138

96738431

HOTAI MOTOR CO

244.5

0.4106776

383037

CATCHER TECH

NAME

128.5

5032766

HTC CORP

249

3.75

16881214

CATHAY FINANCIAL

2.960103

40597690

HUA NAN FINANCIA

17.1

0.2932551

6102217

YUANTA FINANCIAL

CHANG HWA BANK

17.25

YULON MOTOR CO

8795785

LARGAN PRECISION

751

-1.054018

2223305

CHENG SHIN RUBBE

80.3 -0.4956629

5525435

LITE-ON TECHNOLO

46.75

0.1070664

4718676

CHIMEI INNOLUX C

17.8

0.2816901

67125851

MEDIATEK INC

340

0.4431315

7313189

8.5

1.796407

49023982

MEGA FINANCIAL H

24.4

-0.204499

23416001

CHINA STEEL CORP

26.7 -0.3731343

13099507

NAN YA PLASTICS

52.6

-0.754717

6498323

CHINATRUST FINAN

17.6 -0.5649718

34648093

PRESIDENT CHAIN

159.5

1.592357

760452

CHUNGHWA TELECOM

92.3

6811399

QUANTA COMPUTER

64.2

6043755

COMPAL ELECTRON

20.1

-0.248139

8676333

SILICONWARE PREC

33.6

-0.591716

5376188

CHINA DEVELOPMEN

DELTA ELECT INC

121

1.680672

11892807

SINOPAC FINANCIA

13.85

1.838235

22259147

FAR EASTERN NEW

30.7

6570919

SYNNEX TECH INTL

55.5

0.1805054

5698155

FAR EASTONE TELE

68.2

-1.587302

6751744

TAIWAN CEMENT

36.75

1.519337

7144924

FIRST FINANCIAL

18.4

8935879

TAIWAN COOPERATI

16.75

-0.297619

6017934

72 -0.5524862

3778627

TAIWAN FERTILIZE

71.4

-1.381215

3553865

2899197

TAIWAN GLASS IND

27.4 -0.3636364

1281787

FORMOSA CHEM & F FORMOSA PETROCHE

80.5

-1.105651

WISTRON CORP

MOVERS

33.45

1.363636

6490080

14.8

-1.003344

18090023

0.952381

2078145

7 5580

INDEX 5459.62 HIGH

5573.79

LOW

5443.01

52W (H) 5639.93 5440

(L) 4719.96 15-March

19-March

March 20, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 53.30

31.90

16.80

31.65

16.65 52.85

31.40

16.50

31.15

Max 31.8

Average 31.385

Min 30.9

30.90

Last 31.7

16.35 Max 53.25

Average 52.589

Min 52.5

52.40

Last 53.25

Max 16.72

Average 16.42

Min 16.24

Last 16.56

18.8

36.4 35.9

21.0 20.8

18.6

35.4

20.6 18.4

34.9

Max 36.25

Average 35.495

Min 34.65

34.4

Last 36

Max 18.68

Average 18.478

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Apr13

93.62

-0.128013655

0.959775693

108.4599991

BRENT CRUDE FUTR May13

109.07

-0.401789791

0.553148336

117.4699936

91.54999542

GASOLINE RBOB FUT Apr13

311.1

-0.572086037

7.257369419

334.4000101

238.2400036

914.75

-0.081922447

-0.109200109

1000.75

801.25

3.885

0.077279753

14.16397297

3.997000217

3.032000065

HEATING OIL FUTR Apr13

290.85

-0.621860799

-2.90759781

324.6999979

254.189992

Gold Spot $/Oz

1603.9

0.0899

-3.6384

1796.08

1527.21

GAS OIL FUT (ICE) May13 NATURAL GAS FUTR Apr13

METALS

Silver Spot $/Oz

28.875

0.2973

-4.1016

35.365

26.1513

Platinum Spot $/Oz

1577.7

0.2096

3.9499

1742.8

1379.05

761

0.2992

8.7671

786.5

553.75

Palladium Spot $/Oz LME ALUMINUM 3MO ($)

1936

-1.425661914

-6.608779547

2281

1827.25

LME COPPER 3MO ($)

7575

-2.283281734

-4.488715168

8702.75

7219.5

LME ZINC

1919

-1.791197544

-7.740384615

2230

1745 15236

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) May13 CORN FUTURE

Min 18.34

Last 18.62

May13

16605

-1.74556213

-2.667057444

19100

14.57

0.206327373

-5.908944139

16.95000076

14.5

722.25

0.3125

3.141735095

838

520.25

Max 21

Average 20.581

Min 20.25

Last 20.9

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

MACAU RELATED STOCKS 1235201

12.11

-1.142857

13.49578

12.59

8.06

1938790

17.67000008

AMAX HOLDINGS LT

0.049

-2

-30

0.098

0.048

8706000

68.18999481

BOC HONG KONG HO

26.3

0.3816794

9.128629

27.1

20.85

11113448 239650

134.65

0.223297358

-8.214042263

204.5999908

134.0500031

SUGAR #11 (WORLD) May13

18.37

0.437397485

-6.275510204

24.56999969

COTTON NO.2 FUTR May13

90.59

-0.2642189

19.41734775

93.93000031

NAME ARISTOCRAT LEISU

CENTURY LEGEND

World Stock MarketS - Indices

FTSE 100 INDEX

0.9582 1.4832 0.9002 1.2043 77.13 7.9824 7.7498 6.2105 50.1888 29.33 1.2152 28.913 40.54 9095 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

CROWN LTD

COFFEE 'C' FUTURE May13

1.0637 1.6381 0.9972 1.3711 96.71 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 99.978 1.25692 0.88151 8.4957 10.9254 127.71 1.0314

2.29

1218.75

-0.1253 -6.7693 -3.3675 -1.9636 -9.739 -0.1226 -0.1237 0.2381 1.1588 4.1908 -2.2958 -2.4396 0.7246 0.751 -9.6475 -1.423 -4.8962 2.2217 1.8828 -7.9287 -0.0097

(L) 52W

665

1639.5

PRICE

DAY % YTD %

VOLUME CRNCY

0.335

26.4151

0.42

0.215

CHEUK NANG HLDGS

6.03

0.08298755

0.6677835

6.74

2.8

32250

CHINA OVERSEAS

20.7

-1.895735

-10.38961

25.6

14.124

39434935

CHINESE ESTATES

11.9

0.8474576

-1.891421

12.964

7.697

610500

CHOW TAI FOOK JE

10.46

-1.876173

-15.9164

13.4

8.4

6429200

EMPEROR ENTERTAI

2.14

5.418719

13.22751

2.15

1.1

4145000

FUTURE BRIGHT

2.63

5.62249

115.5738

2.68

0.58

8724000

DAY %

YTD %

(H) 52W

(L) 52W

14452.06

-0.427515

10.28621

14539.29

12035.08984

31.7

4.620462

4.448104

35.7

16.94

17045444

3237.59

-0.3532399

7.222237

3260.616

2726.68

HANG SENG BK

124.6

-0.08019246

4.970517

131.5

99.2

1300412

6446.44

-0.1777662

9.302264

6533.99

5229.76

HOPEWELL HLDGS

32.15

-0.3100775

-3.308271

35.3

19.049

926923

DAX INDEX

7963.06

-0.5947046

4.606568

8074.47

5914.43

HSBC HLDGS PLC

84.45

0.3565062

3.874535

88.45

59.8

17368416

NIKKEI 225

12468.23

2.026082

19.94242

12560.95

8238.96

HUTCHISON TELE H

3.68

-0.5405405

3.370788

3.92

2.98

5882000

HANG SENG INDEX

22041.86

-0.1879243

-2.71467

23944.74

18056.4

LUK FOOK HLDGS I

23.1

-0.4310345

-5.327867

30.05

14.7

2925000

MELCO INTL DEVEL

12.46

2.635914

38.29078

13.96

5.12

4312305

CSI 300 INDEX

2525.097

0.9032593

0.08502023

2791.303

2102.135

MGM CHINA HOLDIN

16.56

2.096178

24.71495

18.449

9.509

3595600

TAIWAN TAIEX INDEX

7838.47

0.3473156

1.804925

8123.15

6857.35

MIDLAND HOLDINGS

3.36

-0.591716

-9.18919

3.249

3970000

KOSPI INDEX

1978.56

0.5273908

-0.9258651

2055.34

1758.99

NEPTUNE GROUP

0.157

3.289477

0.226

0.084

3766500

NEW WORLD DEV

13.04

8.485853

15.12

7.95

11654220 23331175

S&P/ASX 200 INDEX

4987.4

-0.5583202

7.280132

5163.5

3985

4825.003

0.461749

11.7756

4904.477

3635.283

FTSE Bursa Malaysia KLCI

1626.74

0.3318202

-3.683351

1699.68

NZX ALL INDEX

930.39

0.1149225

5.480061

PHILIPPINES ALL SHARE IX

4049.12

-1.111214

9.465857

JAKARTA COMPOSITE INDEX

20.2

(L) 52W

3.94

938

0.893335716

NASDAQ COMPOSITE INDEX

-0.1445 -0.2975 -0.2639 -0.1159 -0.5032 0 0.0052 -0.0225 -0.3495 0.6474 0.008 -0.0638 -0.1105 -0.0514 -0.355 -0.1388 -0.1726 0.0622 0.1451 -0.381 0

(H) 52W

-9.266899397

0.159631075

DOW JONES INDUS. AVG

1.0365 1.5081 0.9473 1.2931 95.39 7.993 7.7602 6.2158 54.365 29.35 1.2501 29.759 40.71 9720 98.865 1.22491 0.8574 8.0389 10.3358 123.35 1.03

YTD %

18.09523

0.280603297

1411.75

PRICE

DAY %

714.75

SOYBEAN FUTURE May13

COUNTRY

PRICE

3.72

WHEAT FUTURE(CBT) May13

NAME

18.2

20.4

CURRENCY EXCHANGE RATES

NAME ENERGY

16.20

GALAXY ENTERTAIN

SANDS CHINA LTD

5.417277

6.038289

39.95

20.65

SHUN HO RESOURCE

1.53

9.285716

1.67

1.03

1526.6

SHUN TAK HOLDING

4.1

0.7371007

-2.147973

4.65

2.56

2335150

944.123

755.149

SJM HOLDINGS LTD

18.62

2.307692

3.444444

22.15

12.34

7066620

4268.160156

3238.77

SMARTONE TELECOM

12.64

-0.6289308

-10.22727

17.38

12.6

1104500

20.9

3.209877

-0.2386671

25.5

14.62

34104813

ASIA ENTERTAINME

4.29

0.2336449

40.19608

6.95

2.4

138366

BALLY TECHNOLOGI

51.53

0.6838609

15.25386

51.66

41.74

260308

WYNN MACAU LTD

HSBC Dragon 300 Index Singapor

627.44

-1.02

1.02

STOCK EXCH OF THAI INDEX

1571.64

-1.257186

12.91085

1601.34

1099.15

HO CHI MINH STOCK INDEX

480.48

0.2817607

16.13371

497.87

372.39

BOC HONG KONG HO

3.59

16.93811

3.59

2.68

8800

Laos Composite Index

1397.82

-0.6503337

15.06869

1455.82

951.03

GALAXY ENTERTAIN

3.9

-4.176904

-1.763225

4.57

2.25

25875 2788036

INTL GAME TECH

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

17.26

1.410106

21.80663

17.38

10.92

JONES LANG LASAL

98.5

0.03046613

17.34572

100.33

61.39

204487

LAS VEGAS SANDS

53.49

-0.186602

15.87955

58.3216

32.6127

4616081

MELCO CROWN-ADR

20.33

-1.046483

20.72446

21.475

9.13

6306988

MGM CHINA HOLDIN

2.29

23.78378

2.44

1.36

1200

MGM RESORTS INTE

13.03

-0.9878419

11.94158

14.8

8.83

7555949

SHFL ENTERTAINME

17.01

-0.2346041

17.31034

18.77

11.75

344968

SJM HOLDINGS LTD

2.32

-0.8547009

0.4329029

2.85

1.65

5800

120.11

0.1166958

6.773937

129.6589

84.4902

1065637

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily March 20, 2013

Opinion

Euro area ruins its progress with Cyprus deal Megan Greene

Bloomberg View columnist and chief economist at Maverick Intelligence

here’s nothing like having part of your savings account confiscated overnight to make you feel that your money isn’t safe. That’s what depositors in Cypriot banks awoke to on March 16, when they found their accounts frozen for at least five days to avoid panicked withdrawals. As part of a bailout package for Cyprus, euro-area leaders agreed to impose a onetime tax of 9.9 percent on uninsured deposits in Cypriot banks of 100,000 euros or more (US$129,570) and 6.75 percent on insured deposits of less than 100,000 euros. The exact size and scope of the levies may yet change, but regardless a line has been crossed: Forcing depositors to participate in bailouts is now on the table in troubled euroarea countries. The move would not only ensure that Cyprus’s economy will contract sharply, necessitating more bailout money or a debt restructuring in the future, but it may also reverse most of the progress euro-area policy makers have made toward ending the euro crisis. The one-off deposit levy was agreed to as part of the Cyprus bailout for two reasons. First, Germany’s

main opposition party, the Social Democrats, demanded that depositors participate in the bailout so that German funds wouldn’t be used to bail out Russian oligarchs with money of questionable origin in Cypriot banks. The German government can’t pass the Cyprus bailout in the Bundestag without the Social Democrats’ support, so it had to cater to this demand.

Unsustainable burden Second, the International Monetary Fund insisted that Cyprus’s debt burden would be unsustainable if the country received all of the 17 billion euros that it needs in the form of bailout loans. To reduce the size of the bailout, policy makers had three options: write down sovereign debt, write down bank debt or raid deposits. Most Cypriot sovereign debt is under English law and can’t be restructured. Cypriot banks have very little debt and are heavily reliant on deposits for funding. Raiding deposits seemed the most expedient way to shrink the size of the bailout, but in reality this just ensures that additional money will have to be stumped up for Cyprus, or that Cyprus will have to

restructure its debt, or both. Cyprus’s banks are already a mess. Cypriots reacted to the deposit levy over the weekend by lining up at disabled ATMs in the hopes of withdrawing money. If there is a run, the banks will need far more than the estimated 10 billion euros estimated to be recapitalised. The European Central Bank could plug the gap with emergency liquidity assistance, but bank

The bailout agreement will fail to deal with the Cyprus problem and may reintroduce the risk of a financial collapse in the region

lending would continue to contract sharply. Private consumption would also fall as unemployment continued to rise and Cypriots worried that they may be subject to future tax increases – on bank deposits among other things. Furthermore, the new government burned through almost all of its political capital with this bailout package. Implementing the bailout agreement’s unpopular structural reforms would become difficult, if not impossible. Cyprus couldn’t expect to benefit from competitiveness gains any time soon. The economy would almost certainly contract more sharply than previously assumed, causing Cyprus to miss its government deficit targets and sending Cyprus’s debt-to-gross-domesticproduct ratio soaring. As was the case in Greece, the only way to plug the funding gap for Cyprus would be a second bailout, a debt restructuring or both.

Meltdown risk Whatever the implications of the depositor levy for Cyprus, they’re minor compared with the potential impact on the rest of the region. The tail risk of a meltdown of the euro area is significantly lower now than it was a year ago. This is down to two developments: the ECB’s announcement of a bond-buying programme – the Outright Monetary Transactions – and the tentative steps that policy makers have taken toward constructing a banking union. The Cyprus bailout agreement could significantly undermine these developments. Policy makers have stressed that Cyprus is a unique case given its tax-haven status and its supersized banking sector (about 800 percent of GDP). Depositors in other weak euro-area countries may believe this for now. The second a country comes under stress, however, depositors will know that their participation in a potential solution is now part of the bailout tool kit. As a result, they may rush to

withdraw their savings. So far the ECB’s promise to do whatever it takes has gone untested, but the mere existence of the OMT programme has calmed markets significantly. The heightened risk of a bank run in the euro area may reveal the Achilles’ heel of the ECB’s strategy: No amount of bond buying by the euro area’s central bank can mitigate the impact of a bank run on the economy. The Cyprus depositor levy could also undermine steps toward establishing a banking union. First, a banking union is aimed at – among other things – breaking the negative feedback loop between banks and governments in the euro area. The Cyprus bailout achieves the opposite. As in Greece, Portugal and Ireland, the funds to recapitalise Cyprus’s ailing banks will be funnelled through the state and added onto the sovereign-debt burden. In Cyprus, the nexus between banks and governments will be tightened further as loans to banks (namely deposits) are captured to finance sovereign debt. If there were a bank run in the euro area, the ECB would probably finance the run by allowing national central banks to provide emergency lending assistance. Such borrowing by banks is guaranteed by the government, further blurring the line between the finances of the commercial banks and the state. Second, the Cyprus bailout deal makes a mockery of deposit insurance in Europe. This doesn’t bode well for the credibility of a European Union-wide deposit guarantee, one of the basic tenets of a banking union. The bailout agreement will fail to deal with the Cyprus problem and may reintroduce the risk of a financial collapse in the region, which had been significantly reduced. If this is the case, then market pressure on the weaker economies in Europe could reach levels not seen since last August, only this time against a backdrop of much higher austerity fatigue. That is an explosive combination. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes Newsdesk Alex Lee, Luciana Leitão, Stephanie Lai, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, José I. Duarte, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani 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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March 20, 2013 business daily | 15

OPINION Business

wires

A global ‘New Deal’?

Leading reports from Asia’s best business newspapers Yannos Papantoniou

Former economy and finance minister of Greece (1994-2001), is President of the Centre for Progressive Policy Research

Myanmar Times Foreign nationals can now withdraw from their foreigncurrency bank accounts every weekday, an official from the Myanmar Central Bank said. The new policy went into effect on March 6. Prior to March 6, foreign nationals could only withdraw from their foreign-currency accounts two days a week. “Withdrawals of foreign currency were only allowed in stateowned banks, but we are now allowing withdrawals at private banks,” U Han Min Soe was quoted as saying. However, foreign nationals are still not allowed to open savings accounts at stateowned or private banks.

Inquirer Business The Bangko Sentral ng Pilipinas may soon ban foreign funds from being invested in its overnight borrowing facility, a move seen to address risks of the country attracting even bigger volumes of speculative capital from abroad. Prohibiting foreign funds from being parked in the reverse repurchase (RRP) facility of the central bank is seen to complement the standing rule against the investment of foreign funds in special deposit accounts in the central bank.

Korea Herald Top executives at stateowned financial institutions, organisations and companies are expected to be replaced soon as Shin Je-yoon, the Financial Services Commission chairmannominee, heralded sweeping changes of top financial posts. At a confirmation hearing, the nominee for Korea’s financial regulatory body said that he would suggest and recommend the replacement of incumbent executives despite their terms. He added that he would replace them, if necessary, with new heads closely aligned with President Park’s policy vision and philosophy, while considering their professionalism in the field.

The Australian Australia’s parliament could shelve a plan to oversee press standards while proceeding with long-promised cuts to TV industry fees, as the government seeks agreements to save some of its media proposals. The six bills include controversial and noncontroversial measures, raising the prospect of some changes going through parliament with the support of the Coalition, despite the furore over a bill to establish a public interest media advocate to oversee the press.

he International Monetary Fund’s belated admission that it significantly underestimated the damage that austerity would do to European Union growth rates highlights the self-defeating character of “orthodox” recipes to address the causes of the debt crisis that followed the financial crash of 2008-2009. Conventional theory suggests that a single country (or group of countries) consolidating its finances can expect lower interest rates, a weaker currency, and an improved trade position. But, because this cannot happen for all major economies simultaneously – one country’s (or group of countries’) austerity implies less demand for other countries’ products – such policies eventually lead to beggar-thy-neighbour situations. Indeed, it was this dynamic – against which John Maynard Keynes fought – that made the Great Depression of the 1930’s so grim. Today’s problems are compounded by a lack of sufficient private demand – particularly household consumption – in the advanced economies to compensate for demand losses stemming from austerity. During the last two decades, consumption drove these countries’ economic growth, reaching historically high GDP shares. Moreover, major advanced economies, such as the United States, Germany, and Japan, face longer-term fiscal problems in the form of ageing populations or oversize welfare states, limiting their capacity to contribute to demand management. Recent moves to ease monetary policy have been a step in the right direction; but, so far, they have not proved to be a game changer. For domestic demand to act as an engine of growth, policies should shift resources from investment to consumption. While the magnitudes involved are huge, they must be attained if an extended period of low growth, high unemployment,

and declining living standards among the world’s poorest is to be avoided.

Political will International economic policy coordination should be significantly strengthened in order to deal effectively with changes on such a scale. Start with Europe. It is by now patently obvious that austerity and domestic reforms are not enough to pull the euro zone’s periphery out of deep recession. Growing awareness of the failure of current policies is causing social discontent, civil disorder, and political instability, with the recently concluded Italian elections and the growing popular resistance to Greek reform efforts serving as a bellwether. Returning the euro zone’s peripheral economies to the path of growth requires more than structural reforms and fiscal consolidation. It also requires a substantial reform of the monetary union’s system of economic governance, aimed at restoring financial stability and lowering borrowing costs, together with a boost in external demand in order to compensate for the effects of austerity.

Reforming governance implies significant progress toward economic unification: centralising European debt through Eurobonds, mobilising sufficient rescue funds, allowing the European Central Bank to intervene in the primary bond markets, and establishing both a fiscal and a banking union. This is a tall order, in view of the reluctance of most EU member states to cede competences to European institutions. But Europe should move more decisively in this direction. Otherwise, speculation on member states’ national debt will persist, keeping borrowing costs at levels that are inconsistent with the conditions required to sustain economic recovery. Concerning external demand, intra-European help in the form of reflationary policies in stronger economies is unlikely to prove sufficient, owing primarily to the fiscal and political conditions prevailing in Germany. Implementing a Marshall Plan-type initiative by mobilising EU budget resources and additional lending by the European Investment Bank to finance investments in weaker countries could be an alternative, but it lacks political support.

Asian economies

The time is right for a new global settlement that targets growth, addresses crisis conditions … and rebalances the global economy

On a global scale, neither the U.S. nor Japan is in a position to provide significant external stimulus. Only the emerging and developing economies of Asia could effectively contribute to lifting global demand through a coordinated effort aimed at boosting domestic consumption, which, in turn, would stimulate additional investment. Recent IMF experience suggests that, through appropriate coordination, private funds could be mobilised for big private-public partnership projects linking demand expansion with infrastructure investment. In other words, a global “New Deal” – combining policies designed to achieve an orderly

realignment of consumption and investment worldwide – seems to be required. The advanced economies should promote productivityenhancing structural reforms with renewed vigour. The euro zone should solidify its currency union. And the emerging and developing economies should support domestic sources of growth. For such a deal to become possible, certain preconditions must be met. First, international policy coordination by the G-20 must be tightened by creating a permanent secretariat to make policy proposals and recommendations concerning macroeconomic and financial developments. The secretariat should actively cooperate with the IMF to benefit from its analysis, notably regarding exchange rates. Second, global financial reform must proceed at a faster pace. The financial sector requires tougher regulation, strengthened supervision, and internationally consistent resolution mechanisms to address the problems posed by very large, global institutions that are considered too big (or too complex) to fail. Such reform is essential if the international financial system is to mediate the sizeable resource transfers that will underpin the required changes in the structure of global demand. Finally, a new trade pact – possibly, but not necessarily, within the Doha Round – is needed to ensure the major trading powers’ access to foreign markets. This is critically important for inspiring confidence in Asian countries, which might be persuaded to favour domestic, as opposed to external, sources of demand. Moreover, trade liberalisation will also increase consumer confidence worldwide. The time is right for a new global settlement that targets growth, addresses crisis conditions in certain parts of the world, and rebalances the global economy to set it back on a path of strong and steady growth. © Project Syndicate

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business daily March 20, 2013

CLOSING Packer pledges jobs for indigenous people No quick fix to Japan’s deflation: Shirakawa James Packer, chairman of Australian casino operator Crown Ltd, has pledged to create more than 2,000 jobs for that country’s indigenous people by 2021. Currently it has 35 Aboriginal and Torres Strait Islanders working at its Crown Melbourne flagship casino in the state of Victoria, and another 70 indigenous people employed in Perth, West Australia out of about 14,400 staff. The new premier of Victoria, Denis Napthine, welcomed the initiative. Crown is currently seeking approval from the state’s gaming regulator for its planned investment in the Belle Grande Manila Bay casino project in the Philippines.

Departing Bank of Japan Governor Masaaki Shirakawa warned yesterday there is no quick way to fix an economy that has suffered 15 years of deflation and that aggressive money printing alone was not the answer. “A lack of cash isn’t what’s keeping companies from increasing capital expenditure,” Mr Shirakawa said, on the last day of his five-year term. “If there was a single thing that would have cleared the fog and solved all problems, Japan wouldn’t have been in this situation for 15 years,” he said, shrugging off the view that monetary stimulus alone can revive the economy.

Cyprus aims to let small savers out of deposit tax

HSBC in new money laundering claims

Bank levy unlikely to get parliament green light – govt spokesman new structure would raise less than the amount required by euro zone partners and the International Monetary Fund as a contribution to rescuing the island’s shattered financial sector.

yprus’s government proposed yesterday to spare small savers from a divisive tax on bank deposits in a last-minute attempt to win parliamentary backing for an international bailout and avoid default and a banking collapse. Lawmakers still seem likely to reject the unprecedented levy, a government spokesman said, plunging one of the smallest European states closer to financial oblivion with potentially severe consequences for the rest of the troubled euro zone. A weekend announcement that Cyprus would break with previous practice and impose a levy on bank accounts as part of a 10 billion euro (US$13 billion) EU bailout sparked

outrage among Cypriots and unsettled European financial markets. Stunned by the backlash and fearing rejection by Cypriot lawmakers, euro zone finance ministers urged Nicosia on Monday to avoid hitting accounts with less than the EU-wide guaranteed 100,000 euros, and to raise the required 5.8 billion euros instead from a higher levy on larger accounts. However, the Cypriot government has gone only part of the way. A revised draft bill seen by Reuters would exempt savings under 20,000 euros, charge a rate of 6.75 percent for amounts between 20,000 and 100,000 euros and maintain a 9.9. percent tax on deposits above that level. Cyprus’s central bank chief said the

It was not clear how the government intends to plug the funding gap but French Finance Minister Pierre Moscovici said the euro zone could not lend Cyprus any more, since the country’s debt would become unmanageable. “Above 10 billion euros we are entering into a size of debt that is not sustainable,” Mr Moscovici told reporters in Paris. Passage of the bill in the 56-member chamber, where no party has a majority, seemed unlikely and it was not clear if the vote would even go ahead yesterday if leaders were sure it would be rejected. “It looks like it won’t pass,” Cypriot government spokesman Christos Stylianides told state radio. Rejection of the measure would effectively block a bailout that Cyprus needs to keep its banks afloat and the government paying wages and welfare. Yesterday’s vote, originally planned for Sunday, has been postponed twice already. The proposal sets an “incredibly dangerous precedent” and undermines confidence built up in recent months over Europe’s handling of its debt crisis, the head of a global banking association said. Tim Adams, managing director of the Institute of International Finance, said the announcement broke with practices that depositors’ savings were guaranteed. “Crossing the Rubicon of addressing insured deposits and undermining the explicit guarantee – you can call it a tax or whatever you want – but essentially the broken guarantee opens up lots of different possibilities for destabilising effects in the short-, medium- and long-term,” Mr Adams said. “The next time there is a crisis in any one of these countries, depositors are going to ask themselves, why am I going to stick around to see if the same set of rules are applied or not? I do think it is an incredibly dangerous precedent, without question,” he added.

anking giant HSBC Holdings Plc, which was hit with a U.S. fine for money laundering last year, is facing fresh accusations of illegal activity in Argentina. Argentina’s tax agency accused the local unit of HSBC of conspiracy to hide bank accounts, thereby helping private companies evade tax payments and launder money. The Buenos Aires-based agency investigated accounts at the bank over a six-month period and discovered tax evasion of 224 million pesos (US$44 million) and 392 million pesos in money laundering, it said. According to agency Director Ricardo Echegaray, the bank set up a system to help companies hide bank accounts. “It’s clear to us that there was a conspiracy between HSBC and private companies,” Mr Echegaray told reporters yesterday in Buenos Aires. “The first thing they have to do is to pay the state what it’s owed and dismantle a gang of swindlers.” Federal Judge Javier Lopez Biscayart of the tax crimes court in Buenos Aires has received the agency’s file against the bank, Mr Echegaray said. “We hope to recover what is due and see the courts apply an appropriate penalty,” he said. “The allegations made by regulators in Argentina are of great concern,” Lyssette Bravo, an HSBC spokeswoman for Latin America, said in an e-mailed response. “We are committed to working cooperatively with authorities to ensure a thorough review and appropriate resolution of the matter.” HSBC is the seventh-largest bank by deposits in Argentina, according to the central bank website. Last year, HSBC agreed to pay US authorities US$1.9 billion in a settlement over money laundering, the largest paid in such a case. HSBC, which has previously admitted to having poor money laundering controls, has been taking steps to tighten its operations. Last year, it said that it had spent US$290m on improving its systems to prevent money laundering.

Reuters

Bloomberg News

‘Dangerous precedent’

Cypriots say they have been betrayed by Europe

Bank aided money laundering in Argentina, tax chief says