Macau Business Daily, March 29, 2013 by Business Daily

Melco Crown profit up 41.6 pct

Year I Number 250 MOP 6.00 Friday March 29, 2013 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: Vitor Quintã www.macaubusinessdaily.com

Melco Crown Entertainment Ltd’s net profit climbed much faster than net revenues in 2012 the firm said in a Hong Kong filing of its preliminary annual results. Net income rose 41.6 percent year-onyear reaching US$417.20 million (3.34 billion patacas) for the year ended December 31, 2012.

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ainland customs officers say they will carry out more inspections on flights to and from Macau after a 50-percent growth in China during March of passengers caught carrying more cash than allowed. China National Radio reported the largest amount found by mainland authorities this year was on a flight between Macau and the capital of Shanxi province. Travellers are only allowed to carry up to 20,000 yuan and foreign currency to a maximum US$4,999 (40,000 patacas) when crossing mainland borders the People’s Bank of China said last year. The administration here told Business Daily it had not seen a rise in cash smuggling. More on page 4

Fiscal reserve rules limit return The rules governing the government’s fiscal reserve are restricting the amount of capital available for investment and, consequently, the returns, the Monetary Authority of Macau warned. The fiscal reserve reached 100.24 billion patacas at the end of last year, it said.

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A fourth ‘no’ for trade union bill The Legislative Assembly vetoed a trade union law proposal for the fourth time yesterday by 16 votes to eight. There were four abstentions. Lam Heong Sang, who voted ‘for’, said during the debate: “Why do some people have this mindset of considering the trade union bill as ‘fierce floods and savage beasts’ that would turn society into chaos?”

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Estate agent licensing starts next week Page 2

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HSI - MOVERS Name

Oceanus shuffles tables to Grand Lisboa Page 5

Higher costs dry Macao Water profits Page 16

%Day

POWER ASSETS

1.67

HONG KG CHINA GS

0.89

HANG LUNG PROPER

0.87

CITIC PACIFIC

0.80

CHEUNG KONG

0.79

CHINA LIFE INS-H

-2.90

LENOVO GROUP LTD

-3.14

HENGAN INTL

-3.37

BANK OF COMMUN-H

-3.97

CHINA MERCHANT

-4.32

Source: Bloomberg

Real estate agencies and brokers can apply between April 3 and June 30 for a three-year temporary licence from the Housing Bureau, Executive Council spokesperson Leong Heng Teng told media yesterday. Macau’s first ever law regulating estate agents was approved in October last year. It requires all estate agencies and brokers to apply for a temporary permit to practise before sitting a vocational exam.

Lunar New Year hols slice export numbers

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business daily March 29, 2013

macau opinion

A modest suggestion

Rules give estate agents 3 months to get licence The Executive Council says estate agents will have enough time to comply with the law, agents doubt Stephanie Lai

sw.lai@macaubusinessdaily.com

José I. Duarte Economist

he city hosted the annual Macao International Cooperation Forum and Exhibition last week. MIECF, for short, declared its main theme this year was “Sustainable Cities – The Way Towards a Green Future”. A few high-profile guests and speakers participated, as they do every year. I welcome the initiative and hope it too is sustainable. Big events on topical issues with a few international stars are relatively easy to organise. The critical aspect is ensuring that what took place generates positive effects beyond the event’s closing session. Namely, what did we learn from the suggestions, proposals and experiences discussed? What lessons could be used to frame future reflection and policymaking on environmental matters? The essential focus should be in what measure have these events contributed to an understanding of specific problems in the city’s neighbourhood, what tools are available to deal with them and what are the conditions for their successful application. Unfortunately these criteria do not appear to be a major goal. The outcomes of previous events show that much. On the webpage of this year’s event there is a link to past events. It leads to the final summary reports, mostly filled with official speeches, lots of photos and some data on the participants. Whatever proposals or discussions that took place are, apparently, inaccessible to anyone who did not attend and collect the papers, when available. That may be because of an oversight or an indication that the importance attached to the event, and its presentations and debates, was not excessive. In many cases, the report is a cut-and-paste of the documents prepared ahead of the event. Occasionally, not enough care has been displayed to change the tenses of verbs. Some reports state that “this forum” or “this session will discuss”. The so-called highlights of the sessions are reduced to collections of photos. What about the contents and substance?

state agencies and property brokers will have from April 3 until June 30 to apply to the Housing Bureau for three-year temporary licences, according to Executive Council spokesperson Leong Heng Teng. The law on estate agents, passed last October, requires all estate agencies and property brokers to obtain temporary licences allowing them to operate until they pass examinations held by the Labour Affairs Bureau, which will entitle them to permanent licences. “The time allowed for obtaining a temporary licence should be enough,” Mr Leong added. Estate agents disagree and they fear the government will not be able to process all applications within such a short period. “We are still in the dark of the training content required for acquiring the qualification license,” Marco Wong Kwok Ki, district sales director of HKP Estate Agency (Macau) Ltd, told Business Daily. “Since last year, we have had colleagues asking Labour Affairs Bureau fo r th e co n ten t o f th e qualification exam or the training

system required, but got no reply so far,” he added. Ricacorp (Macau) Properties Ltd executive director Jane Liu said the sector would like the government to disclose details on the training courses as soon as possible. The law will come into effect on July 1. Mr Leong told reporters yesterday that the Executive Council had reviewed the regulations for the application of the new law. He said the Housing Bureau would be responsible for issuing, renewing and, if necessary, suspending the licences of estate agents. He said that if any estate agency changed its name or address, set up a website or decided to close, it would have to tell the Housing Bureau 30 days beforehand. Mr Leong said the regulations would be promulgated on April 2. “The details of the steps to be taken in applying for an estate agent’s licence will be announced by the Housing Bureau after the official dispatch is released,” he said. According to the Financial Services Bureau, Macau has over 5,200 estate agencies.

Ambition thwarted Looking back at the mottos, the major topics addressed or the titles of many of the written communications, the event’s ambition has never been small. In 2009, the event’s strategic objectives included: to “brand Macau as the ‘Green Dot’ for the green resources and environmental industry” and to “continue with Macau’s initiative in calling for a collective effort to address the central issue of global warming and sustainable development”. Wow. The 2010 event was branded the “Green Gateway”. Past debates have included topics such as “Low-Carbon Urban Planning and Eco-Cities”, sustainable tourism, or communications on financing urban environmental projects and sustainable urban transportation. Was there any follow-up, lessons learned or useful suggestions made? Did they lead to any practical applications? In other words, other than the visibility provided by the event each year, was there any added value from them or flesh to put on the event’s motto “Thinking Green, Living Clean, Going Cool”? Certainly, not all the communications were that good or interesting, not all were relevant to the authorities and, in particular, useful for the purpose of informing the development of environmental policy. But an edition of those speeches and communications that would pass the test of quality and of relevance could be published and made available for the benefit of all. They would, hopefully, contribute to a more informed debate and policymaking process. That is just a suggestion.

The Housing Bureau said in October that the city had at least 16,474 property brokers. Once the new law comes into effect, property brokers may be fined from 20,000 patacas (US$2,500) to 100,000 patacas for operating without a licence. Estate agents may be fined from 30,000 patacas to 150,000 patacas for using unlicensed brokers.

Healthcare voucher value to be raised The value of the healthcare vouchers issued to Macau permanent residents will be raised from 500 patacas to 600 patacas in September, Executive Council spokesperson Leong Heng Teng announced yesterday. The annual healthcare voucher programme, begun in 2009, subsidizes medical expenses incurred at government-approved private clinics, including dental clinics and practitioners of Chinese traditional medicine. Beneficiaries can transfer their healthcare vouchers to their spouses or other immediate relatives. “We estimate that about 363 million patacas will be spent using the healthcare vouchers this year,” Mr Leong said. Residents had used almost 2.6 million vouchers by March 22, around 57 percent of all the vouchers printed. The vouchers are valid for one year. “There were suggestions to extend the period of validity of the healthcare vouchers, but that is being discussed by the government,” Mr Leong said. “The government is still planning how to form a long-term healthcare aid system,” he said. Health insurance is not compulsory here. S.L.

The regulations for the application of the law on estate agents will be out on April 2

Polytec awaits approval for Areia Preta projects P

roperty developer Polytec Asset Holdings Ltd says it is still waiting for the government’s “final approval” to launch the construction of its last two housing projects in Areia Preta. The authorities had already approved the architectural plans for its project on Pearl Horizon plot P, next to La Baie du Noble, in August but construction work will only start within “the first half of 2013”. Polytec told the Hong Kong Stock Exchange it made some “design modifications” to the

architectural plan for the smaller project on plots T and T1 near the Areia Preta health centre. The changes must be published in the Official Gazette before starting the foundation work, which is expected within this year, the developer said in Wednesday’s filing. Polytec expects the whole Pearl Horizon development to be ready by late 2016 or 2017. As the housing market has “gradually adapted” to cooling measures taken by the government, “home-buying appetite picked up

steadily” in the second half of 2012,” Polytec said. Pearl Horizon “has benefited from these favourable market conditions,” recording over HK$10 billion (US$1.3 billion) in presales. But Polytec fears the government might “trigger another round of additional restrictive measures”. The firm saw its profit grow by 40.8 percent to HK$288 million last year. It reported a 16.5 percent increase to HK$38.8 million in rental income from The Macau Square. V.Q.

March 29, 2013 business daily | 3

MACAU

A fourth ‘no’ for trade union bill Legislative Assembly again vetoed bid, with business sector saying it would hamper economy Tony Lai

tony.lai@macaubusinessdaily.com

A draft plan for a minimum wage for all security and cleaning staff will be ready for the Standing Committee for Coordination of Social Affairs to discuss next month, Secretary for Administration and Justice Florinda Chan told the Legislative Assembly yesterday. The government had promised to have the proposal ready in the first quarter of this year. Yesterday the assembly members approved a 6.06-percent hike in the wages of civil servants, as well a revision of the law on hiring imported labour.

The Legislative Assembly yesterday rejected a draft bill to legalise trade unions

he Legislative Assembly vetoed a trade union law proposal for the fourth time yesterday by 16 votes to eight. There were four abstentions. “The passing of this law is very important as it can promote better social harmony and secure the basic rights of the workers,” legislator José Pereira Coutinho, who put forward the bill, had earlier told the assembly. The draft would have given trade unions the power to call for a strike; offer legal advice to workers and benefit from an exemption in court fees. But legislators with business interests claimed the bill would damage the city’s image and economy. “The provisions in this law

are too harsh. It is totally unfair to the business sector,” said legislator and businessman Fong Chi Keong. “The introduction of this bill would endanger the stability of Macau’s economy as it gives special rights [to the workers].” Chan Chak Mo, owner of Hong Kong-listed restaurant operator Future Bright Group, thinks Macau “is already very harmonious” with the current rules. “Nowadays the employees act like ‘emperors’ as the unemployment rate is so low,” said Mr Chan. The unemployment rate was at 1.9 percent last month. “Look at the examples of those [places] with a trade union bill like Greece: there is a strike if [the employees]

Minimum wage proposal next month

are dissatisfied,” he said. “So would it be good for the international image of Macau if [striking] people would occupy the Senado Square?” Legislator Kwan Tsui Hang, vice-president of the Macau Federation of Trade Unions, defended the bill, saying, “I want to clarify that the Basic Law has already given us the right for strikes and collective bargaining but this bill can give us better regulations.”

Time-constraint “This bill makes it clearer that only people employed in an industry can join the related trade union… and who can represent the workers,” she said. Lam Heong Sang, also a

director of the city’s largest labour group, said, “Why do some people have this mindset of considering the trade union bill as ‘fierce floods and savage beasts’ that would turn society into chaos?” The business sector also said the assembly is too busy reviewing important laws, including the urban planning bill and the land law revision before this year’s election. “The assembly president has already told the government they should not submit any new bill… as the assembly’s workload is heavy,” said Kou Hoi In. Another businessman, Tsui Wai Kwan, accused Mr Coutinho of “putting on a show” for the assembly’s election in September. But legislator Ng Kuok

Cheong said, “It is a good timing for this legislation because the society has become more mature and most residents agree with such a need.” After the law was vetoed Mr Coutinho said he would try again in October if reelected, and blamed “the unfair composition of the assembly” for the result. The other legislators who voted in favour, Ho Ion Sang and Melinda Chan Mei Yi, think the government should take the initiative to put forward a trade union bill next time. The assembly members who voted ‘yes’ yesterday are all directly elected legislators except Mr Lam, an indirectly legislator representing the labour sector.

Lunar New Year slices exports Sales of ‘made in Macau’ goods and telecom equipment fall in February Vítor Quintã

vitorquinta@macaubusinessdaily.com

acau’s exports fell by almost half last month to a 16-month low, official data show, as the city’s trade took a break during the Lunar New Year holiday period. The Statistics and Census Service announced yesterday that exports fell to 577.1 million patacas (US$72.2 million) after reaching a four-year high of 1 billion patacas in January. Exports were also down by 11.5 percent year-on-year due to a drop in the sales of ‘made in Macau’ goods and in the re-exports – goods shipped in only to be shipped out –

of telecommunications’ equipment. Domestic exports fell by 38 percent year-on-year to 106 million patacas in February thanks to a 41 percent drop in textile and garment sales. Re-exports decreased just 2 percent from the same month of last year as the sales of telecommunications’ equipment shrank 36 percent and the shipments of diamonds and diamond jewellery fell 45 percent. These drops were almost offset by skyrocketing growth in exports of clocks and watches, which more than doubled to 65.1 million patacas,

Macau’s trade deficit widened 16 pct year-on-year in January-February

and a 49 percent increase in sales of electronic components. Imports grew by 3.3 percent from February 2012 to 5.83 billion patacas. But any year-on-year comparison is skewed by the Lunar New Year holidays falling this year in February, having fallen last year in January. Putting the two first months of this year together, exports increased by 24 percent year-on-year to 1.58

billion patacas. That growth continues to be built on re-exports, which increased by 44 percent to 1.3 billion patacas. Domestic exports meanwhile shrank 23 percent to just 286 million patacas. But with exports also rising by 17 percent Macau’s trade deficit widened 16 percent year-on-year in January-February to 11.4 billion patacas.

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business daily March 29, 2013

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HOSPITALITY Trodden paths The number of visitors to Macau was higher last year than in 2011, but only 0.3 percent higher. The increase was due mainly to more visitors coming at the beginning of last year. The plots for the numbers of visitors last year and in 2011 are uncannily similar. In the second part of each year they are almost identical, differing by less than 2 percent. There is a corresponding pattern in the plots for the numbers of visitors from mainland China last year and in 2011. Mainlanders made up 60 percent of all visitors last year and 57 percent in 2011. From May onwards these plots, too, are almost indistinguishable. The numbers of visitors were higher last year than in 2011 but differed, again, by less than 2 percent.

The plots for the numbers of visitors in January and February seem different this year from those last year and in 2011. This is probably because the Lunar New Year holidays, a peak season for visitors, fell this year in February, having fallen last year in January. The plot for the number of visitors in January and February this year is almost parallel to the plot in 2011 – another year when the Lunar New Year holidays fell in February. By the same token, the fall in the number of visitors in January this year is similar to the fall in February last year, only smaller. So, making allowances for Lunar New Year being a moveable feast, the plot for January and February followed this year a course equivalent to the course it followed in the preceding two years, but at a slightly higher level. However, the proportion of visitors that were mainland Chinese was greater in January and February this year than last year or in 2011.

Mainland cracks down on cash smugglers But the Macau authorities see no increase in cash smuggling or links to money laundering Tony Lai

tony.lai@macaubusinessdaily.com

he mainland Chinese customs service has said it will examine passengers on flights to and from Macau more thoroughly after a spike in the number of passengers caught carrying more cash than allowed. But the authorities here told Business Daily that they had detected no increase in cash smuggling or links between cash smuggling and money laundering. State-run China National Radio reported that so far this month mainland customs had detected 240 violations of the rules limiting the amount of cash travellers can bring in or out of the mainland, up by half from the corresponding period last year. Travellers are allowed to carry a maximum of 20,000 yuan and US$5,000 (40,000 patacas) worth of other currencies across mainland borders, according to the People’s Bank of China. The radio said the value of the excess cash carried by the violators caught so far this month was 95.2 million yuan (122.4 million patacas), 60 percent more than a year earlier. Mainland customs gave no particular reason for the increases. The radio quoted mainland customs as saying Macau flights would become the focus of customs inspections. It did not say how many of the violators were passengers on

Macau flights. Business Daily asked mainland customs for more information, but we had received no reply by the time we went to press. “We consider Macau flights as high-risk flights,” the radio quoted a customs official in Nanjing, Tian Baozhen, as saying. “The mixture of travellers to Macau is relatively complex. Some are businessmen, some are only sightseers, some go for gambling as well as what we would call money laundering,” Mr Tian said. The radio said half the 14 violators caught in Nanjing this month were passengers on flights to or from Macau.

Getting lucky A spokesperson for the Macau Customs Service had no comment to make on the radio report. He told Business Daily that Macau had no law restricting the amount of cash a traveller could carry. “But there are guidelines requiring us to record cases in which we find a passenger crossing the Macau border with over 200,000 patacas in cash,” he said. In such cases customs would tell the Financial Intelligence Office and the Judiciary Police, the spokesperson said. He said the authorities had recorded two such cases so far this year.

They had recorded 16 cases last year and three in 2011, he said. The spokesperson did not disclose how much cash was involved in these cases. The director of the Financial Intelligence Office, Deborah Ng, declined to comment on the radio report. But Ms Ng did say, in a written reply to questions from Business Daily: “According to the statistics on suspicious transactions reports received, there is no sign that cash smuggling is a common moneylaundering method in Macau.” She added: “There is no increasing trend for cases related to cash smuggling.” Her office received 982 reports of suspicious transactions in the first half of last year, 31.6 percent more than a year earlier. The radio report said the largest sum of smuggled cash found by the mainland authorities this year was HK$13 million, carried on a mainland Chinese passenger on a flight from Macau to Taiyuan on March 7. Other mainland news media reported that the passenger had said the money was winnings from the casinos in Macau. The reports said the authorities had fined the passenger. There are flights between Macau and 19 places in the mainland.

J.I.D.

63.6 %

Proportion of visitors that were mainlanders in January and February

In Nanjing, customs regard passengers on flights from Macau with extra suspicion

news where it matters

March 29, 2013 business daily | 5

MACAU AERL’s 2012 net income down Asia Entertainment & Resources Ltd – a Nasdaq-listed investor in Macau casino junket operations – reported a nine percent fall in net income, to US$70.1 million (560.5 million patacas) or US$1.66 per share on a fully diluted basis in the year ended December 31, 2012. In 2011 net income was US$77.3 million or US$2.00 per share, fully diluted. The business also saw a nine percent year-on-year drop in rolling chip turnover for the year ended December 31. In the fourth quarter, rolling chip turnover fell 27 percent year-on-year to US$4.1 billion, compared to US$5.6 billion for the same period a year earlier. “The decrease in net income and non-GAAP [generally accepted accounting principles] income for the three months ended December 31, 2012 was due primarily to decreased rolling chip turnover and a lower-than-average win rate,” said the firm in a New York filing. AERL’s VIP room gaming promoter partners currently participate in four major Macau VIP gaming facilities.

Paradise Entertainment profits jump

SJM net profit HK$6.7b in 2012: reports Casino operator moving 30 tables from Oceanus to Grand Lisboa

asino operator and developer SJM Holdings Ltd achieved net profits of HK$6.75 billion (US$868.8 million) last year on turnover that rose 4.5-percent year-on-year, reported Chineselanguage newspaper Macao Daily News. At the time Business Daily went to press, SJM had not filed its official 2012 results with the Hong Kong Stock Exchange. The newspaper reported the figures from a conversation with Ambrose So Shu Fai, SJM’s chief executive, following the board meeting of SJM’s parent Sociedade

de Turismo e Diversões de Macau SA on Wednesday. The executive added SJM planned to move “some 30 tables” from its core property Casino Oceanus next door to the Macau Maritime Ferry Terminal, to SJM’s flagship property Casino Grand Lisboa. That’s against the background of the government’s cap on gaming table numbers that creates incentives for operators to use the tables they already have in more efficient ways. “It is difficult to have further expansion in the Macau peninsula which has limited space, so we

Paradise Entertainment Ltd, a Hong Kong-listed firm and parent to casino games maker LT Game Ltd, saw its net profit leap 264 percent in 2012 compared to a year earlier. It recorded a post-tax profit attributable to shareholders of HK$143.31 million (US$18.5 million) in 2012 on turnover of HK$728.95 million. Earnings per share were 3.61 Hong Kong cents on a diluted basis. Net profit in 2011 was HK$39.34 million. Under ‘intangible costs’ is HK$182.07 million spent during the year on a “patent betting terminal system”. “The patent was acquired during the year 2010 from Mr Jay Chun, the chairman and an executive director of the company, for a total consideration of HK$280 million comprising cash payment of HK$30 million and a promissory note of HK$250 million,” said Paradise in a filing. “The patent relates to a computerised system for operating multi-gambling games. The system was installed in Casino Kam Pek Paradise and other casinos in Macau,” it added.

Neptune profits rise 33.5 pct Half-year net profits for Neptune Group Ltd – a Hong Kong-listed investor in Macau VIP gambling – rose 33.5 percent year-on-year to end-December, registering HK$306.64 million (US$39.5 million) it said. Basic earnings per share rose 26.5 percent to 4.58 Hong Kong cents. The directors did not recommend a dividend. Lin Cheuk Fung, Neptune’s chairman, said in the 2012-13 interim report that 11 tables at Guangdong 31 Sky Club VIP room in SJM Holdings Ltd’s Casino Grand Lisboa “will filter quickly to the balance sheet of the company providing added profit and shareholder value”, though he added their launch was subject to “pending regulatory filings”. In August Business Daily reported Neptune had signed agreements to take over profit share agreements of three smaller junket operations with an aggregate 64 tables spread between Grand Lisboa, MGM Macau and Wynn Macau. GamblingCompliance.com reported yesterday Neptune’s chairman had stepped up charitable donations in China amid media speculation it’s under official scrutiny there.

Richer pastures – 30 Oceanus tables moving to Grand Lisboa

can only move those tables with insufficient performance to a casino with better revenues,” Mr So told the newspaper. “If there is still room in Grand Lisboa, [we] will move gaming tables from other small casinos to Grand Lisboa to raise the operational efficiency,” the newspaper quoted the CEO as saying. Union Gaming Research Macau said in a note following the reports: “This does not surprise us given that there will be some level of related construction disruption around Oceanus for some period of time as the company’s adjacent Jai Alai casino is rebuilt from the inside out, and in addition, the tables at Oceanus have consistently underperformed the tables at Grand Lisboa on a win per day basis. We believe this could positively impact second half 2013 EBITDA by HK$140 million.” In October Mr So confirmed to Business Daily that 40 gaming tables removed from Greek Mythology Casino in Taipa in August had been transferred to Grand Lisboa and were operational. Asked on Wednesday about SJM’s new project in the Cotai strip, he told Macao Daily News the project was “still in the exploring stage”. It would be focused on “diversified development” and there might be elements of performance, he added. He also stated the company was actively looking for new homes for two SJM slot parlours – Yat Yuen Canidrome Slot Lounge and Treasure Hunt Slot Lounge, both on Macau peninsula – that the government said last November must relocate from residential areas. M.G with Tony Lai

Jockey Club blames LRT works for new loss Construction works bring inconvenience to gamblers, affecting betting revenues Tony Lai

tony.lai@macaubusinessdaily.com

Amax ousts two directors Two independent non-executive directors of Macau junket investor Amax Holdings Ltd that objected to a new share issuance were on Wednesday voted off the board at a special general meeting in Hong Kong. The ousted directors are Dingjie Wu, a mainland businessman, and Li Li Tang, described in media reports as a 57-year-old mainland lawyer. In early March another director chairing Amax’s audit committee resigned “for personal reasons” fewer than six months after taking the job according to another filing. At Wednesday’s company meeting, CCIF CPA Ltd was confirmed as the new auditor of the company. CCIF had previously been sacked after declining to give an opinion on Amax’s results for the year ended March 31, 2011. Baker Tilly Hong Kong Ltd had replaced it. The latter in turn declined to provide an audit opinion on Amax’s 2012 annual report due to lack of “sufficient appropriate audit evidence”. That report mentioned HK$2.06 billion (US$265 million) in bad debts. M.G.

he start of Light Rapid Transit railway construction works in Taipa last year hurt business at the Macau Jockey Club, which has remained in the red since 2004. Thomas Li Chu Kwan, the club’s chief executive, said on Wednesday that his company recorded a loss of about 50 million patacas (US$6.25 million) in 2012. This figure is nearly three times higher than the loss of 17.8 million patacas posted in 2011 and also higher than the initial estimate of 30 million patacas given by Mr Li earlier this month. Mr Li laid the blame on the construction works surrounding the venue in Taipa, saying, “We are affected by [the construction works

of] the Light Rapid Transit, as there are fewer spectators.” The situation was particularly severe in last summer but started to get better at the end of last year, he said, estimating the bets in each race now were worth between 2 million patacas to 3 million patacas. There are usually about seven to eight races in a racing day. Mr Li expects the railway project – set to become operational by 2015 – to continue to scare away his customers and affect the club “for the next two to three years”. According to data from the Gaming Inspection and Coordination Bureau, gross revenue from horseracing bets dropped by 19.1 percent to 356 million patacas last year.

Despite the nine-year losing streak, the club has no intention of sacking any of their 900 employees, Mr Li told media after a shareholders’ meeting. But they would try to cut down on other expenses, for instance using cheaper feeds for the horses, the executive said. He added they would try to broadcast more horse races in other places outside Macau this year to raise the volume of bets. The chief executive said he hopes to break even this year despite growing competition from other gambling projects in the Cotai strip. The club holds an exclusive horse racing concession here, which will expire in August 2015.

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business daily March 29, 2013

macau Capital Estate scales down luxury project

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Capital Estate Ltd, one of the owners of Hotel Fortuna (pictured), has filed a revised application to the government in late 2012 to build just six luxury homes in a Ka Ho plot, the company told the Hong Kong Stock Exchange in a filing. The original building plan for the 9,553-square-metre plot next to Estrada de Nossa Senhora de Ka Ho included 46 houses. Hotel Fortuna posted revenue of HK$257.2 million (US$33.1 million) last year, up by 14.6 percent. Capital Estate owns a 32.5 percent stake in the hotel-casino.

Irreducible unemployment? Employment continues to rise. In the fourth quarter of last year the number of people with jobs reached 350,000, 12 percent more than during the trough in employment late in 2009. The latest employment figure, an estimate for the three months ended February, is 350,600. The unemployment rate in that period was 1.9 percent, the same as it was in the preceding four months. That unemployment is stable while employment continues to rise suggests that unemployment has reached a floor that is difficult to cross. Most of the remaining unemployed probably have no job because of structural unemployment.

Melco Crown net profit up 41.6 pct in 2012 ‘Meaningful’ improvement in EBITDA margin due to more mass table gaming, slot play, says company Michael Grimes

michael.grimes@macaubusinessdaily.com

The numbers without work are small: 4,000 men and 2,700 women. The plot for unemployment among men is quite different from the plot for unemployment among women. The differences are greater in the first half of the period represented here. In the second half, the absorption by employers of the spare labour makes the plots less likely to differ. Throughout the period fewer women than men were unemployed. This is common, usually because a smaller proportion of women belong to the labour force, and those women that do belong to it are more likely to drop out of it. Unemployment reached its peaks during the financial crisis that began in 2008. But unemployment among men reached its peak at the end of 2008 and unemployment among women reached its peak in the third quarter of 2009. The number of unemployed of both sexes at the end of last year was almost half of what it was when unemployment was at its highest in the period under review. That was early in 2009, when 12,700 people were without work. J.I.D. The content of this column is the work of Business Daily’s journalists.

6,700

Number of unemployed in 2012Q4

City of Dreams – improvement in gaming margins

elco Crown Entertainment Ltd’s net profit climbed much faster than net revenues in 2012 the firm said in a Hong Kong filing of its preliminary annual results. Net income rose 41.6 percent year-on-year reaching US$417.20 million (3.34 billion patacas) for the year ended December 31, 2012, compared to US$294.70 million a year earlier. But net revenue grew more slowly – by 6.5 percent – to US$4.08 billion, an increase of US$250 million compared with the US$3.83 billion recorded for the year ended December 31, 2011. The disproportionate increase in profit could be due to a range of factors. One possibility is a significant improvement in margins during the year. Melco Crown has been a market leader in its aggressive pursuit of high bet minimums on its mass-market gaming tables, and in expanding its ‘premium mass’

table business. That segment – consisting of the affluent Chinese middle class rather than the super rich that tend to populate Macau’s VIP rooms – is attractive to casinos because it bets high volumes but on better margins for the house. That’s because premium mass players reportedly don’t come via junket agents and don’t receive all the complimentary services such

US$920.2 mln

Record annual EBITDA in 2012

as free hotel rooms and rebates on losses typically offered to VIP players. Rob Goldstein, president of global gaming operations at Melco Crown’s Macau market rival Las Vegas Sands Corp., told analysts at a recent conference in Las Vegas that margins on its Macau premium mass table play could go as high as 42 percent, compared to 10 to 12 percent on traditional VIP tables. He said traditional mass tables yielded 45 percent margins, albeit at much lower betting volumes than premium mass. Deutsche Bank research published in January suggested that last year on average MCE’s City of Dreams resort on Cotai had the highest exposure to the premium mass market – with 49 percent of its tables with minimum bets of HK$2,000 or above. MCE said in its 2012 earnings filing late on Wednesday that adjusted earnings before interest, taxation, depreciation and amortisation for the year were US$920.2 million, an increase of US$110.8 million, or 13.7 percent, compared to US$809.4 million for 2011. It said record EBITDA was “primarily attributable to substantially higher mass market table games and gaming machine revenues, complemented by a strict cost control focus which in turn contributed to a meaningful expansion in EBITDA margins and free cash flow”. The company’s co-chairman Lawrence Ho Yau Lung added in the filing that construction of the firm’s 60 percent owned Studio City project on Cotai “continues to move closer to realisation, with the majority of foundation and piling work now complete,” and was “on track to open in the middle of 2015”.

March 29, 2013 business daily | 7

MACAU

Fiscal reserve returns hobbled, review says The Monetary Authority says the reserve needs more basic capital before it can make high-risk investments Vítor Quintã

vitorquinta@macaubusinessdaily.com

he rules governing the fiscal reserve restrict the amount of capital available for investment and, consequently, the returns, the Monetary Authority of Macau has said. The fiscal reserve comprises the basic reserve, which is kept for a rainy day, and the special reserve, which is for investment. The fiscal reserve contained 100.24 billion patacas (US$12.5 billion) at the end of last year but almost all of that money was kept in the basic reserve, the Monetary Authority said in its first annual review of the fiscal reserve, published in Wednesday’s Official Gazette. The basic reserve must amount to 150 percent of the annual expenditure budgeted by the government, which rose to 65.9 billion patacas last year. That left the special reserve with 60 million patacas, or 0.1 percent of the fiscal reserve. The Monetary Authority said this meant the special reserve had “a very limited ability” to fulfil its role. The authority had to “generally embrace cautious investment management strategies” to prevent

MIN

“short-term fluctuations” from pushing the basic reserve below the legal requirement. This meant that 68 percent of what had been invested by the end of last year was in bonds and the rest in bank deposits. The bonds were mainly highlyrated Asian bonds and yuandenominated bonds. The investments in bonds have had an a n n u a l r etu rn o f 1 . 9 2 percent since the reserve was set up in February last year. The bank deposits have earned an annual return of 0.57 percent. The Monetary Authority said the experiences of other reserve funds had shown that to include “high-risk investment vehicles” in the portfolio could lead to “a sharp rise in the return volatility”. For instance, it said the annual return of the Exchange Fund of Hong Kong had ranged from minus 5.6 percent to plus 11.8 percent between 2002 and 2011. If the goal was to obtain higher long-term returns from investment of the fiscal reserve, “it becomes indispensable” for the reserve to have

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“a stronger ability” to deal with shortterm volatility, the authority said. The Monetary Authority said in January that only when the value of the special reserve had risen to 10 percent of the value of the basic reserve would it be safe to invest it in higher-risk investments. The government’s budget surplus last year of 72.76 billion patacas will be transferred to the fiscal reserve later this year. The amount in the basic reserve will have to be raised, though, because the expenditure budgeted by the government for this year is

73.98 billion patacas. The purpose of the basic reserve is to secure the government’s ability to fulfil its commitments even if there is a drastic reduction in its revenue. The government habitually overestimates its expenditure. Last year it spent 56.7 billion patacas, just 86.1 percent of the amount it had budgeted. The Monetary Authority said the fiscal reserve had hit its investment targets despite its having been constrained by the rules. The authority did not ask for changes in the rules.

The fiscal reserve needs to be better able to deal with short-term volatility, the Monetary Authority says (Photo: Manuel Cardoso)

Corporate

Nominate!

Napoleon’s treasures shown during Le French May

For m plea ore in form se v ww w.aw isit our ation, w or c onta ardsma ebsite inqu a cau c .com t iries t us @aw ards mac au.c om

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The city is to play a major role this year in Le French May – a festival of French arts and culture held annually here and in Hong Kong. From April 18 to July 14 – France’s national day – Macao Museum of Art is to host ‘Napoleon and the Decorative Arts – Treasures of the Imperial Palaces’, a major exhibition of works from the French emperor Napoleon I’s reign. The local segment of the remainder of the festival – which runs from April 17 to June 23 – will also include “important performances and exhibitions in various cultural institutions, building on the cultural tradition of Macau,” says Arnaud Barthélémy, Consul General of France in Hong Kong and Macau (pictured second right above). The Museum exhibition will include furniture, tapestries, candelabras, chandeliers and pendulum clocks from the First French Empire dating between 1804 – Napoleon I’s accession to the throne – and 1855, the third year of the reign of his nephew Napoleon III.

Genting exec to join Melco Crown in Manila A senior executive for casino operator Genting Malaysia Berhad is moving to Melco Crown Entertainment Ltd’s planned Philippines casino joint venture Belle Grande Manila Bay. Kevin Sim Kia Ju will join MCE’s local unit Melco Crown (Philippines) Resorts Corporation on April 29 as chief operating officer. He has been working as executive vice president – resorts operations, at Resorts World Genting, formerly known as Genting Highlands. The latter opened a casino in 1971 on a three-month gaming licence which has been renewed by the Malaysian authorities on a rolling basis ever since. Mr Sim helped manage a major upgrade of Resorts World Genting’s facilities, including a 10-month revamp of the Snow World attraction. He was also involved in starting Genting Malaysia’s Business Intelligence Unit. It uses so-called data mining to identify valuable customers. Lawrence Ho Yau Lung, co-chairman of MCE, said Mr Sim’s experience would be “instrumental in customer acquisition and profitability management” for Belle Grande.

8 |

business daily March 29, 2013

GREATER CHINA Official PMI seen at 11-month high China’s factory activity likely expanded at its fastest rate in 11 months in March, with an anticipated pick-up in both domestic and external demand set to bolster the case that its economic recovery is gathering pace, not simply stabilising, a Reuters poll found. Economists reckon China’s official manufacturing purchasing managers’ index (PMI) rose to 52 in March, bouncing back strongly from February’s fivemonth low of 50.1, according to the median estimate of 13 respondents to the poll. February’s drop took the official PMI to within a whisker of the 50-point mark that separates accelerating from slowing growth in China’s giant factory sector. Many investors had bet that last month’s reading was mainly the product of a holidayinduced lull in activity and expected March to return to a rising trend. The Lunar New Year fell in February this year and in January last year. “Factory production gets back to normal after the festive season and we expect the real economy to show brisker momentum from March due to reviving domestic and overseas orders,” said Nie Wen, an analyst at Hwabao Trust in Shanghai. An earlier private sector survey of purchasing managers showed activity in China’s industrial sector quickened in March.

PBOC said to be stepping up interventions China’s central bank says it has let market forces play a greater role in the forex market, but traders suspect that authorities have stepped up their interventions this year to curb the yuan’s ascent amid a worrying surge of capital inflows. The yuan was little changed yesterday, as the central bank’s use of its midpoint to enforce its preference for exchangerate stability has reduced volatility in the spot market. Spot yuan changed hands at 6.2143 per dollar, virtually unchanged from Wednesday’s close of 6.2140. Hot money flows have been driven by large-scale quantitative easing by the U.S. Federal Reserve and other Western central banks since the second half of 2012, causing foreign exchange to flood into China’s interbank market at a time when regulators are eager to keep the yuan largely stable, traders say. Chinese bank clients – mostly corporates involved in foreign trade – bought US$32.2 billion more yuan than foreign currency from banks in February, data showed on Monday. That marked the sixth straight month of net yuan purchases by corporates, indicating that yuan demand still outweighs dollar demand onshore. Despite such upward pressure on the yuan, it has only risen a paltry 0.3 percent in 2013.

Sinopharm to raise up to US$515 mln Sinopharm Group Co., China’s biggest drug distributor, will sell as much as a fifth of its H-share capital to raise up to HK$4 billion (US$515 million) for expanding its sales network. The company will place as many as 165.7 million shares at HK$24.60 each, Sinopharm said in a filing to the Hong Kong Stock Exchange yesterday. That’s 8.9 percent less than the stock’s closing price on Wednesday. Shares of the Shanghai-based company fell the most in almost three years after the announcement. Sinopharm dropped 7.22 percent to close at HK$25.05 in Hong Kong trading, poised for the biggest decline since May 25, 2010. The money raised will be used for “the expansion of pharmaceutical distribution and retail network and replenishment of liquidity after the expansion,” Sinopharm said in the statement. State-owned China National Pharmaceutical Group Corp. will retain control of the company after the sale, according to the statement. The maximum number of shares to be sold respectively represent 20 percent and 6.9 percent of Sinopharm’s H shares and total issued share capital.

Chinese industrial profits extend growth streak Factory recovery to help bolster rebound

hinese industrial companies’ profits rose 17.2 percent in the January-February period, extending a four-month streak of gains and bolstering a rebound in the world’s second-biggest economy. Net income increased from a year earlier to 709.2 billion yuan (US$114 billion), the National Bureau of Statistics said on its website yesterday. That compares with a 5.2 percent decline in the same period last year and a 17.3 percent gain in December. The bureau doesn’t release separate data for January and February because of distortions caused by the weeklong Lunar New Year holiday. Higher profits will help boost investment and aid new Premier Li Keqiang in sustaining a recovery after industrial production and retail sales had the weakest start to a year since 2009. Manufacturing is expanding at a faster-than-forecast pace this month, a private survey showed last week. “This is a stronger-than-expected figure and it indicates the economic rebound since the fourth quarter still remains on track,” said Ren Xianfang, a Beijing-based analyst with researcher IHS Inc. “The robust profit growth could boost corporate investment, which in turn should help sustain the recovery.”

China’s economy expanded 7.9 percent in the final three months of last year, the first acceleration in two years after a 7.4 percent gain in the previous quarter.

Sales increase Industrial companies’ sales rose 13.1 percent to 13.7 trillion yuan, yesterday’s report showed. Among 41 industry categories covered in the report, 30 saw profits increase, eight reported declines, two returned to profit after losses and one had narrower losses, according to the statistics bureau. “After a difficult year last year, many companies have managed to clean up their cost structure and the fruits are showing up in the first

RMB709.2 billion

Companies’ net income in the first two months of 2013

two months of this year,” said Steve Wang, head of China research at Reorient Group Ltd in Hong Kong. Some “business-friendly policies” from former Premier Wen Jiabao, such as tax changes, are helping profits now, Mr Wang said. Industrial profits may gain by an average 30 percent this year as the economy rebounds, businesses start restocking and export demand improves, Standard Chartered Plc said in January. That kind of increase is “probably too optimistic,” said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. “Manufacturing investment is still probably the biggest uncertainty for the recovery story at this moment,” Mr Zhu said in a Bloomberg Television interview yesterday in Beijing. “Corporate profits usually are a good leading indicator to suggest the timing of the turningaround or bottoming-out.” China’s factory output expanded 9.9 percent in the first two months of 2013 from a year earlier, the least for a January-February period since 2009, statistics bureau data showed on March 9. Retail sales increased 12.3 percent in the first two months, the weakest gain for the period since 2004. Bloomberg News

Manufacturing seen expanding at a faster-than-forecast pace

China Cosco posts second biggest annual net loss C hina Cosco Holdings Co., the nation’s biggest shipping company, reported a widerthan-expected annual loss as drybulk rates slumped. The net loss was 9.56 billion yuan (US$1.54 billion), compared with 10.5 billion yuan a year earlier, under international accounting standards, the Tianjin-based company said in a Hong Kong Stock Exchange filing. Sales rose 4.4 percent to 88.3 billion yuan. Chairman Wei Jiafu is restructuring the company’s assets in a bid to return to profitability as a third straight annual loss may result in shares being delisted in Shanghai. The company has unveiled a plan to sell its logistics unit. It may raise as much as 27 billion yuan selling assets to its parent, said two people with

knowledge of the matter this month. “The outlook remains challenging,” Vivian Tao, an analyst at Citigroup Inc., said in a note to clients yerterday. The logistics unit sale “is far from enough” to turn China Cosco profitable this year and further restructuring can be expected, she said. China Cosco fell as much as 4.19 percent, the most in almost three weeks, to close at HK$3.60 in Hong Kong trading. China Cosco plans to sell Cosco Logistics Co. to state-backed parent company China Ocean Shipping (Group) Co. for 6.74 billion yuan, the company said in a separate statement. The sale will give China Cosco a pre-tax gain of about 1.96 billion in 2013, the company said.

“2012 was a very difficult year for China Cosco,” Mr Wei said in a statement in Shanghai Stock Exchange. “Low rates, high costs and imbalanced fleet structure” caused the loss, he said. The company’s main business units include container and dry-bulk shipping, logistics and port terminal operations. China Cosco last had an annual profit in 2010. According to Shanghai stock exchange rules, companies that post two straight annual losses can be subject to a “special treatment” designation that cuts the daily trading limit for gains or losses to 5 percent from 10 percent. A third consecutive annual loss may result in shares being delisted. Reuters

March 29, 2013 business daily | 9

GREATER CHINA

Beijing names Liu to NDRC

Banks drop on tighter rule

Appointment of Harvard-educated official may hail policy shift

Mr Liu helped draft the plans that underpin China’s economy

iu He was appointed as a vice chairman of China’s top economic-planning agency, a sign that President Xi Jinping’s government may be preparing to quicken market-driven policy changes to sustain growth. The National Development and Reform Commission’s website yesterday showed Mr Liu, previously Communist Party secretary of the State Council’s Development Research Centre, as one of 11

deputies. He was also promoted this month to director of the Office of the Central Leading Group on Financial and Economic Affairs from deputy director, his online biography shows. Mr Liu was a “major collaborator” in a World Bank report published last year that advocates accelerating market-driven change, and is a proponent of financial liberalisation, according to Cheng Li, a China scholar at Washington’s Brookings Institution. Taking the post may indicate Mr Liu

will play a key role in government efforts to restructure the economy, according to BNP Paribas SA. “This is an extraordinary appointment for China,” said Stephen Roach, a senior fellow at Yale University and former non-executive chairman for Morgan Stanley in Asia. “Liu He is on the leading edge in articulating China’s reform imperatives – especially the longoverdue structural transformation of the growth model toward more of a consumer-led economy,” he said. Liu is a 61-year-old graduate of Harvard University’s Kennedy School of Government who played a pivotal role in coordinating U.S.China relations during the global financial crisis. He was named to the party’s 205-member Central Committee in November, suggesting he would have a senior position in the new government that took office this month. “Liu He is the key person in determining what kind of economicpolicy package ultimately makes it to Xi Jinping’s desk,” Barry Naughton, Chinese economy professor at the University of California at San Diego, said in November. “These new appointments make him a major mover and shaker in China’s financial policies,” Mr Li of Brookings said. Bloomberg News

Chinese bank shares tumbled in Shanghai and Hong Kong after the banking regulator tightened rules on wealth-management products and the cabinet called for new measures to deregulate interest rates. China Citic Bank Corp. fell 9.11 percent to 4.79 yuan in Shanghai after dropping by its 10 percent daily limit, and lost 4.12 percent in Hong Kong. China Minsheng Banking Corp. dropped 8.82 percent in Shanghai and Huaxia Bank Co., which faced customer protests in December, plunged 6.19 percent. The regulator told banks to limit investments of client funds in credit assets that aren’t publicly traded, and to isolate the risks from their operations. Wealth management products increased 56 percent to 7.1 trillion yuan (US$1.1 trillion) last year, equivalent to 7.6 percent of total deposits, according to Standard & Poor’s, prompting warnings from regulators and ratings firms that credit risks are rising. Chinese banks rely on wealth management products, which pay higher rates than regulated deposits, to retain clients who are diverting savings to other investments. “This is so far the harshest and most concrete tightening measures regarding WMPs,” Yao Wei, Hong Kong-based China economist at Societe Generale SA, said in a note. “However, the immediate impact should be manageable to banks, as the banking regulator has been communicating with the major banks about (potential) rule changes for some time.” Reuters

10 |

business daily March 29, 2013

ASIA Sharp seeking investment from funds Sharp Corp., the Japanese electronics maker forecasting a record loss, is considering seeking investments from private equity funds to replenish dwindling cash levels, two people familiar with the matter said. The company is also considering selling shares to the public as an option, the people said. Details of the funding could be included in Sharp’s mid-term plan, which may be released in May. Sharp’s cash pile tumbled to 164 billion yen (US$1.7 billion) as of December 31, the lowest level based on records stretching back to 1992, amid slumping earnings. “Sharp is looking at various measures to raise funds,” a spokeswoman said.

South Korea lowers growth forecast Government announces new stimulus aimed at reviving economy Se Young Lee

Seoul has taken various measures in recent months to try and spur growth

outh Korea’s new government sharply cut this year’s economic growth forecast yesterday and pledged various stimulus measures including an extra budget, but the announcement failed to impress

markets and merely fuelled rate cut expectations. The administration of President Park Geun-hye, sworn in a month ago, now sees the export-reliant economy growing by just 2.3

GS Yuasa shares tumble as more batteries overheat Mitsubishi Motors asks customers not to charge the plug-in hybrid Outlander vehicle externally

S Yuasa Corp., the Japanese maker of the batteries that overheated and led to the grounding of all Boeing Co. Dreamliner planes, tumbled in Tokyo trading after separate lithium-ion incidents with Mitsubishi Motors Corp. cars. The stock fell as much as 17 percent, the most in two years, after Mitsubishi Motors said on Wednesday that a lithium-ion car battery caught fire and another melted – both produced by a GS Yuasa unit. The battery maker closed 11.1 percent down at 392 yen (US$4.16) in Tokyo trading.

Mitsubishi Motors declined as much as 5.9 percent, before closing 3.9 percent down at 98 yen. The incident occurs two months after a battery fire on a Japan Airlines Co. flight and the emergency landing of an All Nippon Airways Co. plane caused the grounding of all Boeing 787 Dreamliners globally from January 16. A lithium-ion battery caught fire while being tested at a Mitsubishi Motors factory in Japan on March 18, while another melted in a separate incident last week, Mitsubishi said. “With lithium-ion incidents spreading from airlines to automobiles investors are reacting

percent instead of 3 percent seen in December, the Ministry of Strategy and Finance said in a statement. Consequently “The government has decided to act in a more pre-emptive manner in response to heightened macroeconomic uncertainties,” Choi Sang-mok, a director-general at the ministry, told reporters in the administrative capital of Sejong. South Korea’s exports have also come under pressure from the recent weakness in the Japanese currency. The ministry said it will propose an extra budget and unveil other stimulus measures in a bid to boost job growth, living conditions for the working class, the depressed property market and provide support for heavily-indebted households. Ms Park’s government prioritises job growth and helping low-income people while improving regulations for fair trade, the statement said. Measures to stabilise the foreign exchange market may include higher levies on banks that hold debt in foreign currencies. “We will strengthen monitoring of capital flow movement and stabilise the currency market against herd behaviour,” the statement said. “There may be a setback in tax revenue, which isn’t good for economic growth. Economic

indicators across industrial production and service sector aren’t so positive,” Mr Choi said.

excessively,” said Minoru Matsuno, president of Value Search Asset Management Co., a Tokyo-based investment advisory firm. “Still, with the lithium-ion business being only a limited part of Yuasa’s sales I don’t think it will have a very serious impact soon.” The batteries were made by Lithium Energy Japan, a venture between GS Yuasa, Mitsubishi Motors and Mitsubishi Corp., which is separate from the factory where the Boeing 787 batteries were made, said Tsutomu Nishijima, a spokesman for Yuasa. Yuasa owns 51 percent of Lithium Energy, Mitsubishi Corp. owns 44.6 percent and Mitsubishi Motors holds 4.4 percent, according to the Mitsubishi Motors spokeswoman Tomoko Kawabe. The lithium-ion batteries were also made to different specifications from the Dreamliner battery, Yuasa’s Mr Nishijima said.

concrete reason why the All Nippon Airways’ 787 battery failed. Boeing earlier this month announced safety upgrades to the 787’s battery systems, including to the lithium-ion unit and charger, and said that may allow commercial flights to restart within weeks. The

Tests underway U.S. and Japanese authorities are still investigating the cause of the overheated batteries on Dreamliners, and Japan said on Wednesday that it had found no

Modest stimulus But analysts said the stimulus measures unveiled yesterday failed to impress, as they were largely a continuation of previous attempts to revive the economy. This government package is a modest one that may raise the growth rate by few tenths of a percentage point, they say, and nothing like the ultra-aggressive fiscal and monetary policy reforms in countries like Japan. Instead, the market’s focus was solely on the Bank of Korea and whether it will lower its benchmark rate in the coming months. Bond prices soared in yesterday’s trade as news of the government’s revised forecasts leaked into the market during the early hours. “Investors are pricing in another 50 basis points’ worth of rate cuts from the Bank of Korea this year, and definitely betting on a rate cut in April,” said HI Investment & Securities economist Park Sang-hyun. The South Korean won was also down 0.3 percent against the dollar for the day. Dealers said offshore players were selling the local currency as leaks on the lowered

With the lithium-ion business being only a limited part of Yuasa’s sales I don’t think it will have a very serious impact soon Minoru Matsuno, president, Value Search Asset Management

March 29, 2013 business daily | 11

ASIA Yen becoming ‘weapon’ for Japanese The weakening yen is becoming a “weapon” for Japanese automakers by making them more competitive, said a senior executive at South Korea’s second-largest carmaker. “The weakening yen reinforces the Japanese competitors,” Kia Motors Corp. vice president Lee Soon Nam said yesterday at the Seoul Motor Show. “The weakening yen will become the Japanese automaker’s weapon, they now have reinforcements.” The Japanese currency has weakened 17 percent against the South Korean won in the past six months. Morgan Stanley has estimated the currency advantage generates about US$1,500 a car for Japan’s automakers.

government growth projection increased expectations for a central bank rate cut. The extra budget is the most closely watched of the government’s stimulus package announced yesterday. The ministry declined to disclose details, but local media and analysts say this budget may be worth around 10 trillion Korean won (US$9 billion), around 1 percent of the country’s nominal gross domestic product of 1,273 trillion won. Such a budget would be relatively small in comparison with past supplementary budgets aimed at stimulating the economy. In 2009, the government had drawn up an extra budget scaled at over 3 percent of the GDP to counter the global financial crisis. “Even if a spending bill around 10 trillon won is proposed, it wouldn’t have much an impact on boosting growth if the additional spending ends up going towards tax incentives for property transactions and smaller firms as well as increase in public sector hiring,” said SK Securities economist Yum Sang-hoon. Reuters

KEY POINTS Finance ministry sees 2013 growth at 2.3 pct Government promises extra budget, but no comment on size Analysts say govt stimulus package underwhelming

Australia to end interbank rate-setting panel Rates to be set directly from trading venues

Regulators seeking to reform rate-setting practices

ustralia is scrapping the panel that sets its interbank lending rates after an exodus of banks from the panel, the first major market to dismantle the tarnished structure in the wake of the Libor rate-rigging scandal. Australia instead plans to base its reference rates on actual market transactions, in line with recommendations earlier this month by a group of global central bankers, and could set the pace for moves in other markets. Regulators are seeking to reform rate-setting practices after Barclays Plc, UBS AG and Royal Bank of Scotland Group Plc were hit with fines

totalling billions of dollars for rigging the London Interbank Offered Rate, known as Libor. The Australian Financial Markets Association (AFMA), which administers Australia’s bank bill swap (BBSW) reference rate, said it planned to bypass the panel and derive the rates directly from brokers and electronic markets. “An advantage of this enhancement is that it will remove the need for a BBSW Panel, which will eliminate the associated compliance and ancillary costs which otherwise exist for panellist banks,” the association said in a statement issued late on Wednesday.

“This change is subject to technical requirements being satisfied, but it is hoped that this solution will be achievable within a period of months.” Banks around the world are reviewing their involvement in interest rate-setting panels in the aftermath of the Libor scandal, which was sparked by findings on manipulation of rates used to price home loans, credit cards and other financial products worth trillions of dollars. While British regulators have stopped rate fixings on some less-used currencies and tenors, this would mark the first time the panel for a market’s main interbank lending benchmark has been disbanded. AFMA said HSBC Holdings Plc and Citibank were pulling out of the BBSW panel, joining the departures of JP Morgan Chase & Co and UBS announced earlier this year. JP Morgan, Citi and HSBC are also withdrawing from the panel on the New Zealand equivalent, the head of the New Zealand Financial Markets Association, Paul Atmore, said. Mr Atmore told Reuters that the association was reviewing its rate setting process, which uses bank contributions based on trades made in a daily two-minute trading window and would look at pricing rates directly from the market. Reuters

Chicago-based company said the fixes cover all possible scenarios for the cause and the actual reason may never be determined. GS Yuasa announced in 2009 that lithium-ion batteries for vehicles will become a core business for the company. It has four factories in Japan and makes lithium-ion batteries for Honda Motor Co. as well as Mitsubishi Motors and Boeing’s 787. Honda and Yuasa produce batteries at their own factory, separate from Mitsubishi Motors, and have verified the safety of the batteries and the entire battery system, Kumiko Hashimoto, a spokeswoman for Honda said. The companies haven’t received any reports of accidents with the batteries, she said. Mitsubishi Motors yesterday asked customers not to charge the plug-in hybrid Outlander vehicle externally until it identifies the cause of the problem. The car manufacturer has also suspended shipments of its Outlander PHEV vehicle until the cause of the battery incidents has been determined, Yuki Murata, a company spokesman, said. Bloomberg News

GS Yuasa tumbled 11.1 percent yesterday

12 |

business daily March 29, 2013

MARKETS Hang SENG INDEX NAME AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H BANK OF COMMUN-H

NAME

PRICE

DAY %

VOLUME

-0.2932551

19269207

CHINA UNICOM HON

2.99

-4.472843

36373474

CITIC PACIFIC

3.6

-0.5524862

497026893

5.81

-3.966942

93854745

CLP HLDGS LTD CNOOC LTD

PRICE

DAY %

VOLUME

10.4

-1.886792

33545200

10.08

0.8

68 14.92

NAME

PRICE

DAY %

POWER ASSETS HOL

73.25

1.66551

VOLUME 4363670

6878548

SANDS CHINA LTD

40.25

-1.348039

8677608

0.4431315

4961564

SINO LAND CO

13.16

-0.3030303

6008305

-1.192053

50786496

SUN HUNG KAI PRO

104.6

-0.9469697

10584889 1601404

BANK EAST ASIA

30.6

-0.8103728

1253014

COSCO PAC LTD

11.2

-1.408451

12558480

SWIRE PACIFIC-A

98.95

0.6612411

BELLE INTERNATIO

12.9

-1.07362

29939484

ESPRIT HLDGS

9.34

-0.6382979

4101862

TENCENT HOLDINGS

246.8

-1.516361

5434173

BOC HONG KONG HO

25.9

-0.1926782

21412070

HANG LUNG PROPER

0.8695652

5513740

TINGYI HLDG CO

20.25

-1.459854

3195593

124.5 -0.08025682

CATHAY PAC AIR

13.28

0.7587253

3051851

HANG SENG BK

CHEUNG KONG

114.6

0.7915567

5702863

HENDERSON LAND D

CHINA COAL ENE-H

6.92

-0.4316547

18528340

CHINA CONST BA-H

6.34

-0.9375

358441681

CHINA LIFE INS-H

20.1

-2.898551

74071297

CHINA MERCHANT

25.45

-4.323308

5990177

CHINA MOBILE

82.2

-0.3636364

12625500

HUTCHISON WHAMPO

80.9

-1.281269

6438134

CHINA OVERSEAS

21.4

-2.505695

20286887

IND & COMM BK-H

5.44

-0.1834862

465632612

CHINA PETROLEU-H

9.14

0.4395604

134422716

LI & FUNG LTD

10.7

-0.742115

15344750

-0.6441224

2138864

CHINA RES ENTERP

HENGAN INTL

1153872

WANT WANT CHINA

11.9

-0.3350084

11294327

53.1

-1.025163

5762866

WHARF HLDG

69.2

0.3625816

8096856

75.95

-3.371501

4153320

HONG KG CHINA GS

22.65

0.8908686

6174301

HONG KONG EXCHNG

132.2

-0.8995502

3242768

-1.025951

14224288

HSBC HLDGS PLC

-0.862069

5369580

MTR CORP

30.85

21.7

-0.913242

6644261

NEW WORLD DEV

13.14

0.152439

15093649

CHINA RES POWER

23.25

-2.515723

9071574

PETROCHINA CO-H

10.18

-0.5859375

73249092

CHINA SHENHUA-H

28.2

-1.398601

22147703

PING AN INSURA-H

60.2

-0.5780347

10653542

PRICE

DAY %

VOLUME

25.55

-1.730769

11734160

CHINA RES LAND

MOVERS

0 22490

INDEX 22299.63 HIGH

22487.26

LOW

22106.97

52W (H) 23944.74 22100

(L) 18056.4 26-March

28-March

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.72

-2.105263

218300600

AIR CHINA LTD-H

6.9

-1.428571

13302370

CHINA PETROLEU-H

9.14

0.4395604

134422716

2.99

-4.472843

36373474

CHINA RAIL CN-H

7.36

0.9602195

25.75

-3.013183

18226733

CHINA RAIL GR-H

3.95

3.6

-0.5524862

497026893

CHINA SHENHUA-H

ALUMINUM CORP-H ANHUI CONCH-H BANK OF CHINA-H

CHINA PACIFIC-H

PRICE

DAY %

VOLUME

10.46

-2.242991

26563957

ZIJIN MINING-H

2.56

-1.158301

32276741

23664194

ZOOMLION HEAVY-H

9.37

0.861141

14815443

-0.2525253

20817742

ZTE CORP-H

13.4

-4.011461

7516766

28.2

-1.398601

22147703

5.81

-3.966942

93854745

CHINA TELECOM-H

3.91

-1.511335

73202000

24.75

-1.590457

2714172

DONGFENG MOTOR-H

10.9

3.219697

29574705

CHINA CITIC BK-H

4.66

-4.115226

103481660

GUANGZHOU AUTO-H

6.57

1.545595

8740699

CHINA COAL ENE-H

6.92

-0.4316547

18528340

HUANENG POWER-H

8.28

1.098901

22144559

CHINA COM CONS-H

7.22

1.690141

51273242

IND & COMM BK-H

5.44

-0.1834862

465632612

CHINA CONST BA-H

6.34

-0.9375

358441681

JIANGXI COPPER-H

17.14

0.5868545

10183366

CHINA COSCO HO-H

3.66

-4.188482

22399318

PETROCHINA CO-H

10.18

-0.5859375

73249092

CHINA LIFE INS-H

20.1

-2.898551

74071297

PICC PROPERTY &

9.97

-1.676529

28152420

CHINA LONGYUAN-H

7.04

0.4279601

20076477

PING AN INSURA-H

60.2

-0.5780347

10653542

CHINA MERCH BK-H

16.44

-4.195804

41939415

SHANDONG WEIG-H

7.03

-0.9859155

12068197

BANK OF COMMUN-H BYD CO LTD-H

CHINA MINSHENG-H

9.89

-7.914339

170782999

25.05

-7.222222

19947444

CHINA NATL BDG-H

9.77

-1.809045

75268023

TSINGTAO BREW-H

49.5

3.01769

3482954

16.26

-0.1228501

6474000

WEICHAI POWER-H

25.85

-0.7677543

2728084

CHINA OILFIELD-H

SINOPHARM-H

NAME YANZHOU COAL-H

MOVERS

0 11090

INDEX 10896.22 HIGH

11086.94

LOW

10778.76

52W (H) 12354.22 10770

(L) 8987.76 26-March

28-March

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

7.38

-0.135318

25108458

SAIC MOTOR-A

15.23

2.077748

28539542

CHONGQING CHAN-A

9.5

1.604278

43738282

SANY HEAVY INDUS

10.16

-3.878903

41917864

24024626

CHONGQING WATE-A

6.57

-0.3034901

13265645

SHANDONG DONG-A

53.3

-2.36307

4737282

28956392

CITIC SECURITI-A

12.27

-3.915427

144386920

SHANDONG GOLD-MI

33.34

0.81645

12643426

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.7

-4.255319

396446248

AIR CHINA LTD-A

5.7

-1.554404

11145145

4.21

-4.318182

-3.954802

ALUMINUM CORP-A ANHUI CONCH-A

NAME CHINA YANGTZE-A

NAME

BANK OF BEIJIN-A

8.76

-6.410256

84988817

CSR CORP LTD -A

4.06

-5.361305

70875317

SHANG PHARM -A

13.41

-2.045289

18409855

BANK OF CHINA-A

2.9

-2.684564

87848549

DAQIN RAILWAY -A

7.43

-1.196809

43440157

SHANG PUDONG-A

10.02

-6.877323

298069476

DATANG INTL PO-A

BANK OF COMMUN-A

4.69

-3.497942

135285264

BANK OF NINGBO-A

10.65

-7.310705

39723788

EVERBRIG SEC -A

BAOSHAN IRON & S

4.73

-0.8385744

27455941

GD POWER DEVEL-A GF SECURITIES-A

BEIJING TONGRE-A

4.31

-1.598174

10666559

SHANGHAI ELECT-A

3.96

-3.414634

9205127

13.02

-6.398275

28585524

SHANXI LU'AN -A

17.53

-3.787047

15904602

2.92

-1.016949

52785775

SHANXI XISHAN-A

11.48

-3.529412

17306537

13.19

-6.850282

45684427

SHENZEN OVERSE-A

5.83

-3.31675

31445671

28.94

-0.3100241

13423008

SICHUAN KELUN-A

63.66

-0.7793017

1035270

SUNING COMMERC-A

6.36

-2.752294

40684269

22.76

-0.9573542

14845580

22.7

-2.700386

3451881

GREE ELECTRIC

CHINA AVIC AVI-A

23.23

-0.1289768

4692419

GUANGHUI ENERG-A

21.1

-0.8924378

26039942

CHINA CITIC BK-A

4.79

-9.108159

151947329

HAITONG SECURI-A

10.23

-5.801105

156623145

TASLY PHARMAC-A

69.42

-0.4873853

2313030

38.89

-1.369516

2900422

TSINGTAO BREW-A

37.21

2.591674

7485422

82.24

2.8

3928581

WEICHAI POWER-A

21.4

-3.167421

7552200

17.5

-7.013815

19386929

WULIANGYE YIBIN

21.89

-1.838565

27491007

BYD CO LTD -A

CHINA CNR CORP-A

-5.437352

60545828

HANGZHOU HIKVI-A

CHINA COAL ENE-A

7.16

-1.513067

10077242

HENAN SHUAN-A

CHINA CONST BA-A

4.56

-2.564103

92186938

HONG YUAN SEC-A

CHINA COSCO HO-A

4.01

9391574

HUATAI SECURIT-A

9.61

-6.426485

58489960

YANGQUAN COAL -A

13.58

-1.236364

12861260

CHINA EAST AIR-A

3.25

-3.27381

17627048

HUAXIA BANK CO

10.15

-6.192237

88640119

YANTAI WANHUA-A

18.38

0.7675439

21476458

CHINA EVERBRIG-A

3.13

-4.573171

234490523

IND & COMM BK-A

4.01

-2.669903

157197997

YANZHOU COAL-A

17.37

-0.1724138

10610691

CHINA INTL MAR-A

12.49

-2.801556

8642006

INDUSTRIAL BAN-A

17.87

-10.02014

365744991

YUNNAN BAIYAO-A

85.4

-0.9280742

1839998

CHINA LIFE INS-A

17.07

-1.727116

15871669

INNER MONG BAO-A

30.01

-4.274322

28258447

14.47

1.188811

23032825

CHINA MERCH BK-A

12.13

-5.011746

126617155

INNER MONG YIL-A

32.33

-2.059982

11842677

36975160

INNER MONGOLIA-A

5.34

-0.1869159

207668974

33.63

1.082056

6319896

64.08

1.940821

7932101

22.4

-2.396514

9626663

11.28

-4.081633

10402263

CHINA MERCHANT-A

12.59

-5.551388

CHINA MERCHANT-A

24.53

-3.614931

17609633

JIANGSU HENGRU-A

CHINA MINSHENG-A

9.62

-8.815166

617429357

JIANGSU YANGHE-A

CHINA NATIONAL-A

9.16

-4.08377

46547981

CHINA OILFIELD-A

16.86

-2.655889

7595192

CHINA PACIFIC-A

JIANGXI COPPER-A JINDUICHENG -A

18.31

-2.033173

17274930

KANGMEI PHARMA-A

18.08

-0.7138935

29481880

CHINA PETROLEU-A

7.42

-0.669344

41149737

KWEICHOW MOUTA-A

166.82

0.01798669

4149090

CHINA RAILWAY-A

4.98

-1.581028

22165694

LUZHOU LAOJIAO-A

25.7

-1.908397

16085376

2.01

-1.470588

29706220 19634094

CHINA RAILWAY-A

2.79

-2.447552

38551918

METALLURGICAL-A

CHINA RESOURCE-A

32.32

2.310858

9445606

NINGBO PORT CO-A

2.46

-1.204819

8.71

-1.247166

ZHONGJIN GOLD ZIJIN MINING-A ZOOMLION HEAVY-A ZTE CORP-A

MOVERS

0.8645533

86218124

-2.50298

43968110

11.54

-0.2592913

31502341

12 2610

INDEX 2499.302

CHINA SHENHUA-A

21.79

-0.6836828

15379326

PETROCHINA CO-A

27915204

HIGH

2606.57

CHINA SHIPBUIL-A

4.94

-3.515625

44557831

PING AN BANK-A

20.02

-9.616253

117504326

LOW

2496.81

CHINA SOUTHERN-A

3.68

-3.157895

17648333

PING AN INSURA-A

41.05

-2.563494

37070087

CHINA STATE -A

3.34

-1.764706

108766122

POLY REAL ESTA-A

11.77

-2.404643

84089908

CHINA UNITED-A

3.52

-1.675978

103300821

QINGDAO HAIER-A

12.84

-2.505695

9901170

10.96

-2.577778

105144156

QINGHAI SALT-A

28.4

-0.140647

7978946

PRICE DAY %

Volume

CHINA VANKE CO-A

259

3.5 8.18

52W (H) 2791.303 (L) 2102.135

2490

26-March

28-March

FTSE TAIWAN 50 INDEX NAME

NAME

PRICE DAY %

Volume

FORMOSA PLASTIC

70.6 -0.2824859

7190849

TAIWAN MOBILE CO

101

FOXCONN TECHNOLO

82.4 -0.4830918

5114118

TPK HOLDING CO L

594 -0.3355705

2260277

42.75 -0.5813953

15384256

TSMC

100 -0.4975124

27908310

UNI-PRESIDENT

56.7 -0.3514938

14761513

UNITED MICROELEC

11.1 -0.4484305

25189979

ACER INC

25.9

-1.520913

7931518

ADVANCED SEMICON

24.2

13196418

ASIA CEMENT CORP

36.2 -0.2754821

2335461

FUBON FINANCIAL

ASUSTEK COMPUTER AU OPTRONICS COR CATCHER TECH CATHAY FINANCIAL CHANG HWA BANK CHENG SHIN RUBBE CHIMEI INNOLUX C CHINA DEVELOPMEN

3906215

3299937

HON HAI PRECISIO

82.7 -0.9580838

28934224

-2.985075

99011835

HOTAI MOTOR CO

240.5 -0.6198347

139684

134

1.901141

13253780

HTC CORP

244

-1.810865

7356912

WISTRON CORP

32.7

-1.506024

11124830

41.05

-1.322115

23158043

HUA NAN FINANCIA

17.2 -0.2898551

5554207

YUANTA FINANCIAL

15.1

0.3322259

13546623

17.5 -0.8498584

10359931

LARGAN PRECISION

780 -0.2557545

926817

YULON MOTOR CO

53.2

0.7575758

4180000

LITE-ON TECHNOLO

48.5 -0.2057613

7004362

YULON MOTOR CO

52.8

2804319

340

-0.729927

5684643

1.311085

7371285

18.4

56811999

MEDIATEK INC

8.51

50222637

MEGA FINANCIAL H

24.15 -0.8213552

19776201

20341129

NAN YA PLASTICS

52.6 -0.1897533

6504410

CHINATRUST FINAN

17.8 -0.5586592

33052835

PRESIDENT CHAIN

164 -0.6060606

913429

65.8 -0.3030303

5532255

92.2

0.1085776

5603524

QUANTA COMPUTER

21.05

0.2380952

6779270

SILICONWARE PREC

125

0.1472754

4824670

2.040816

8352181

SINOPAC FINANCIA

14.2

-1.388889

13470921

FAR EASTERN NEW

30.65 -0.1628664

5221802

SYNNEX TECH INTL

-2.877698

9079220

FAR EASTONE TELE

67.7 -0.2945508

4479174

TAIWAN CEMENT

36.8 -0.8086253

4673770

FIRST FINANCIAL

Volume

-1.112656

-1.16144

DELTA ELECT INC

25.95 -0.7648184

COMPAL ELECTRON

PRICE DAY %

355.5

CHINA STEEL CORP CHUNGHWA TELECOM

NAME

18.65

10768558

FORMOSA CHEM & F

66.9

-2.478134

8640508

TAIWAN FERTILIZE

FORMOSA PETROCHE

78.5 -0.5069708

1579499

TAIWAN GLASS IND

TAIWAN COOPERATI

17.05

4271224

71.3

2391201

27.35 -0.9057971

1117436

MOVERS

6 5490

INDEX 5457.82 HIGH

5487.23

LOW

5441.68

52W (H) 5639.93 5440

(L) 4719.96 26-March

28-March

March 29, 2013 business daily | 13

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

Max 32.65

average 32.364

Min 32.15

32.8

59.8

17.0

32.6

59.4

16.8

32.4

59.0

16.6

32.2

58.6

16.4

32.0

Last 32.4

Max 59.45

average 58.970

Min 58.6

58.2

Last 59.3

40.3

40.2

40.1

Max 40.3

average 40.147

Min 40

40.0

Last 40.25

Max 20.1

average 19.332

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE May13

96.57

-0.010343758

3.660369257

107.2099991

BRENT CRUDE FUTR May13

109.51

-0.164098824

0.958790449

117.4300003

91.54999542

GASOLINE RBOB FUT Apr13

309.99

-0.500722195

6.87467678

334.4000101

238.2400036

GAS OIL FUT (ICE) May13

917.25

0.355579869

0.163800164

1000.75

801.25

4.083

0.368731563

18.24500434

4.12100029

3.072000027

NATURAL GAS FUTR May13 HEATING OIL FUTR Apr13 METALS

Gold Spot $/Oz

291.54

-2.677259981

324.5100021

254.189992

1604.23

0.6898

-3.6186

1796.08

1527.21

Silver Spot $/Oz

28.695

1.6112

-4.6994

35.365

26.1513

Platinum Spot $/Oz

1581.9

0.681

4.2267

1742.8

1379.05

Palladium Spot $/Oz

765.23

1.3644

9.3717

786.5

553.75

LME ALUMINUM 3MO ($)

1916

0.314136126

-7.573564882

2200.199951

1827.25

LME COPPER 3MO ($)

7606

-0.249180328

-4.097843904

8702.75

7219.5

LME ZINC

1909

0.209973753

-8.221153846

2230

1745 15236

3MO ($)

LME NICKEL 3MO ($)

16850

0.41716329

-1.23094959

18920

15.43

0.652315721

-0.355182435

16.95000076

14.5

735

-0.03400204

4.962513388

838

520.25

WHEAT FUTURE(CBT) May13

739

0.305395317

-6.188511584

938

665

SOYBEAN FUTURE May13

1451

-0.18916595

3.698409862

1639.5

1218.75

136.95

0.256222548

-6.646216769

204.5999908

AGRICULTURE ROUGH RICE (CBOT) May13 CORN FUTURE

Min 16.28

Last 16.6

May13

COFFEE 'C' FUTURE May13

20.8

19.95

20.7

19.70

20.6

19.45

20.5 Max 20.75

average 20.568

Min 20.45

Last 20.6

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

PRICE

DAY %

1.0434 1.5154 0.9539 1.2772 94.16 7.9955 7.7633 6.2143 54.3462 29.29 1.2423 29.91 40.82 9740 98.243 1.21834 0.84281 7.9529 10.2119 120.25 1.0299

-0.0862 0.2713 -0.1677 -0.1642 0.223 0 0.0013 -0.008 0.0346 0.1024 0.1851 -0.0401 -0.0612 -0.154 0.3166 -0.0025 0.4402 0.2402 0.1596 0.3992 0

YTD %

(H) 52W

0.5396 -6.318 -4.0361 -3.1691 -8.5599 -0.1538 -0.1636 0.2623 1.1938 4.4042 -1.6824 -2.9321 0.4532 0.5441 -9.0755 -0.8914 -3.2498 3.3271 3.1189 -5.5551 0

1.0625 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

0.9582 1.4832 0.9002 1.2043 77.13 7.9824 7.7498 6.2078 50.515 29.08 1.2152 28.913 40.54 9095 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

NAME

PRICE 3.66

DAY % YTD % 0.5494505

16.19047

3.94

2.29

VOLUME CRNCY 5504871

132.0500031

CROWN LTD

12.3

-0.3241491

15.27648

12.59

8.06

1135325

SUGAR #11 (WORLD) May13

17.88

0.168067227

-8.775510204

24.56999969

17.67000008

AMAX HOLDINGS LT

0.045

-96.78571

1.96

0.9

13645500

88.1

-0.485711058

16.1349855

93.93000031

68.18999481

BOC HONG KONG HO

25.9

-0.1926782

7.468878

27.1

20.85

21412070 100000

CENTURY LEGEND

World Stock MarketS - Indices

0.305

1.666667

15.09435

0.42

0.215

CHEUK NANG HLDGS

5.92

-0.5042017

-1.168611

6.74

2.8

71000

CHINA OVERSEAS

21.4

-2.505695

-7.359309

25.6

14.124

20286887

CHINESE ESTATES

12.6

0.4784689

3.879672

12.964

7.697

196500

CHOW TAI FOOK JE

10.6

0.56926

-14.79099

13.4

8.4

7029754

EMPEROR ENTERTAI

2.43

5.194805

28.57143

2.49

1.1

1115000

FUTURE BRIGHT

2.41

-7.307692

97.54098

2.75

0.64

7434000

GALAXY ENTERTAIN

32.4

-1.219512

6.754529

35.7

16.94

10391496 1153872

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14526.16

-0.2300193

10.85169

14563.75

12035.08984

NASDAQ COMPOSITE INDEX

3256.522

0.124182

7.849221

3263.627

2726.68

HANG SENG BK

124.5

-0.08025682

4.886271

131.5

99.2

FTSE 100 INDEX

6402.16

0.2285693

8.55148

6533.99

5229.76

HOPEWELL HLDGS

31.45

-0.4746835

-5.413534

35.3

19.049

802372

DAX INDEX

7809.7

0.2646009

2.591959

8074.47

5914.43

HSBC HLDGS PLC

-1.025951

0.8610048

88.45

59.8

14224288

NIKKEI 225

12335.96

-1.263268

18.67

12650.26

8238.96

4022000

HANG SENG INDEX

22299.63

-0.7353275

-1.576953

23944.74

18056.4

CSI 300 INDEX

2499.302

-3.260191

-0.9373901

2791.303

2102.135

TAIWAN TAIEX INDEX

7866.88

-0.345067

2.173906

8089.21

6857.35

KOSPI INDEX

S&P/ASX 200 INDEX

1993.52

0.004013163

-0.1767622

2051.8

1758.99

4966.499

-0.5704512

6.830549

5163.5

3985

4913.481

-0.2966862

13.82528

4930.034

3635.283

FTSE Bursa Malaysia KLCI

1673.32

0.3448131

-0.9254274

1699.68

NZX ALL INDEX

941.44

0.2706361

6.732819

PHILIPPINES ALL SHARE IX

4234.31

1.695603

14.47237

JAKARTA COMPOSITE INDEX

20.4

(L) 52W

COTTON NO.2 FUTR May13

NAME

16.2

20.20

19.20

Last 19.38

average 16.504

CURRENCY EXCHANGE RATES

NAME ENERGY

Min 19.22

Max 16.94

3.84

-1.538462

7.86517

4.05

2.98

24.9

-1.190476

2.049182

30.05

14.7

928000

MELCO INTL DEVEL

13.44

-2.749638

49.16759

13.96

5.12

4688250

MGM CHINA HOLDIN

16.6

-2.007084

25.0162

18.449

9.509

5667700

MIDLAND HOLDINGS

3.43

1.179941

-7.297298

3.249

3248000

NEPTUNE GROUP

0.152

-1.935484

0.226

0.084

7590000

NEW WORLD DEV

13.14

0.152439

9.317799

15.12

7.95

15093649

SANDS CHINA LTD

8677608

40.25

-1.348039

18.5567

41.05

20.65

SHUN HO RESOURCE

1.48

-0.6711409

5.714288

1.67

1.03

20000

1526.6

SHUN TAK HOLDING

4.18

-1.415094

-0.2386648

4.65

2.56

6489144

944.123

755.149

SJM HOLDINGS LTD

19.38

-2.613065

7.666667

22.15

12.34

6891500

4268.160156

3238.77

SMARTONE TELECOM

12.8

0.4709576

-9.090909

17.38

12.5

850955

WYNN MACAU LTD

20.6

0.243309

-1.670648

25.5

14.62

19875348

HSBC Dragon 300 Index Singapor

642.19

0.6

3.4

STOCK EXCH OF THAI INDEX

1553.42

-0.4772979

11.60188

1601.34

1099.15

HO CHI MINH STOCK INDEX

490.67

-0.1200993

18.59667

500.59

Laos Composite Index

1401.89

0.2911677

15.40374

1455.82

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

HUTCHISON TELE H LUK FOOK HLDGS I

ASIA ENTERTAINME

4.12

1.477833

34.64053

6.8

2.4

271875

BALLY TECHNOLOGI

51.74

-0.5955812

15.72355

52.7

41.74

190263

372.39

BOC HONG KONG HO

3.38

10.09772

3.59

2.7

45800

973.8

GALAXY ENTERTAIN

4.27

-1.83908

7.556674

4.57

2.25

9000

INTL GAME TECH

16.5

-1.315789

16.44319

17.49

10.92

2134831

JONES LANG LASAL

99.08

-1.598967

18.03669

100.86

61.39

238498

LAS VEGAS SANDS

56.32

-0.4243281

22.0104

58.3216

32.6127

4373332

MELCO CROWN-ADR

23.165

0.3682842

37.55938

23.25

9.13

4505720

MGM CHINA HOLDIN

2.19

18.37838

2.44

1.36

500

MGM RESORTS INTE

12.96

-1.369863

11.3402

14.65

8.83

10274911

SHFL ENTERTAINME

16.51

-0.2416918

13.86207

18.77

11.75

338492

SJM HOLDINGS LTD

2.53

2.016129

9.523812

2.85

1.65

59969

124.13

-0.3292115

10.34759

129.6589

84.4902

800494

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily March 29, 2013

Opinion

Escape from the euro zone, a tragedy in three acts Caroline Baum

Author of ‘Just What I Said,’ is a Bloomberg View columnist

hat if Cyprus said no? What if the small island-nation decided to repudiate the terms of the 10 billion-euro (US$12.8 billion) bailout handed down by European leaders on Monday, bid “auf Wiedersehen” to the euro and the 16 other countries that share it, and become a free agent? What if, as U.K. member of the European Parliament Daniel Hannan wrote in the U.K.’s Telegraph this week, “Cyprus were to default, decouple, devalue – and then prosper? What effect would a successful return to the Cyprus Pound have on the rest of the euro zone?” Little, if any, in the short run. Cyprus accounts for less than 0.2 percent of euro zone gross domestic product. It could be cut loose without any macroeconomic impact. European savers were unfazed by the initial rescue package’s proposed tax on insured bank deposits: Bank runs in other countries never materialised. Even the financial-market reaction to the Cypriot parliament’s March 19 rejection of that plan turned out to be a non-event. Perhaps officials in Brussels saw the response as a sign that Cyprus could be treated differently without any adverse consequences. Over the longer term, an escape by Cyprus would signal the beginning of the end of a dream that was decades in the making: a United States of Europe. Other uncompetitive countries would see exiting as a viable option, a way of unshackling their economies from the chains of a single currency and policies more suited to, and determined by, the northern countries. (Although the Maastricht Treaty provides no mechanism for leaving the euro, a country’s refusal to comply with bailout terms would probably be a de facto deal-breaker.)

Bailout repackaged The effect on Cyprus would be just the opposite: a disaster in the short run, as Cypriot banks collapsed, taking the economy down with them. In the long run,

Cyprus would become more competitive through a devalued currency rather than by a decline in wages. So who could blame Cypriots for wanting their freedom? The rescue package agreed to early this week in Brussels is certainly better than the first go-round. In fact, it’s in line with normal resolution procedures for insolvent institutions. Cyprus Popular Bank Pcl, the country’s second-largest bank, will be liquidated, with shareholders and bondholders taking the hit. Uninsured depositors could suffer a loss of up to 40 percent. Bank of Cyprus Pcl, the largest financial institution, will be recapitalised by converting uninsured deposits to equity shares to achieve a capital ratio of 9 percent, according to a Eurogroup statement. Insured depositors at both banks will be fully protected. So a better plan, yes, despite the haphazard execution and perilous message it sends to European bank creditors and depositors, including small savers supposedly covered by deposit insurance. It’s also unique in the context of earlier euro zone bailouts, the cost of which was largely borne by taxpayers. Consider, for example, the

decision to spare depositors in Greek branches of Cyprus Popular, whose troubles started with the 50 percent “haircut” it was forced to take on its large portfolio of Greek government debt, a condition of that country’s bailout. Piraeus Bank SA agreed to buy Cyprus Popular’s Greek branches, with half of the financing provided by the Cyprus bailout. The goal is to shield the Greek banking system from

Cypriots may tire of waiting to see how things play out – and opt to write a different ending for their country

Cyprus’s crisis and prevent a mass deposit exodus. (Contagion would only create additional problems for German Chancellor Angela Merkel in advance of September’s parliamentary election.) Cypriot banks remained shut for most of the week and will be subject to capital controls once they open. Earlier this week, Dutch Finance Minister Jeroen Dijsselbloem, who serves as head of the Eurogroup, said Cyprus may serve as a model for future bailouts. Europe’s stock markets and the euro headed south, prompting Dijsselbloem to issue a terse, 37-word statement clarifying that “Cyprus is a specific case” and future adjustment programmes will be “tailormade” for each country.

End game So which is it? Euro zone depositors must be wondering. Investors didn’t wait for the answer. The Euro Stoxx Banks Index (SX7E) lost almost 4 percent on March 25 and 6.8 percent so far this week. Hannan, of the European Parliament, wonders why Cyprus doesn’t “copy Iceland, let its banks collapse, and leave their shareholders

and bondholders to sustain the loss.” That’s exactly what Cyprus is doing – without a possible offset from currency devaluation. Like Cyprus, Iceland’s banking system had grown to be many times the size of the nation’s economy. When short-term funding dried up during the 2008 financial crisis, Iceland nationalised the domestic units of its banks, imposing losses on foreign creditors. The krona lost 80 percent of its value versus the euro. Today, Iceland’s economy is recovering, thanks to a weaker currency, fiscal consolidation and accommodative monetary policy. Capital controls have yet to be lifted. It’s not clear how Cyprus will manage without the flexibility Iceland had. Cypriots may tire of waiting to see how things play out – and opt to write a different ending for their country. Act I of this drama dealt with the negotiations and manipulations leading up to the creation of the European monetary union. Act II was the realisation. Act III, which is still being written, is certain to test the viability of “No Exit”. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok 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.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

March 29, 2013 business daily | 15

OPINION

Leading reports from Asia’s best business newspapers

The temptation of China’s capital account

China Daily

Yu Yongding

Business

wires

China will adjust the prices of oil products every 10 working days to better reflect changes in the global oil market, the National Development and Reform Commission (NDRC) announced on Tuesday. Previously, domestic fuel prices were adjusted when prices for Brent, Dubai and Cinta crude changed by more than 4 percent over 22 working days. The new pricing system also cancels the 4-percent floating band for oil price changes. Domestic prices will be kept unchanged if price changes in international oil markets are less than 50 yuan per ton, according to the NDRC.

Korea Herald Seoul will propose talks with Pyongyang “at an appropriate time” to resume reunions of separated families in a two-track approach to defrosting tension on the Korean Peninsula, the Unification Ministry said on Wednesday. For this, the ministry will suggest meetings between the Red Cross representatives of each side, while also seeking dialogue between government officials. The Foreign Ministry said it would place priority on pressuring the North to give up its nuclear ambitions but also promote dialogue as part of the first stage of President Park Geun-hye’s “trust-building” process.

Jakarta Globe Garuda Indonesia plans to sell rupiah-denominated bonds in the second quarter of this year to help finance the company’s business plan. Handrito Hardjono, the company’s finance director, was quoted as saying that with the 2 trillion rupiah (US$206 million) note sale, the company has scrapped its original plan to sell dollar-denominated bonds. Garuda’s net income rose 73 percent to US$110.6 million last year, according to a statement published in Bisnis Indonesia. The company’s revenue increased 12 percent to US$3.47 billion last year.

Bangkok Post The Election Commission on Wednesday endorsed Democrat Party candidate Sukhumbhand Paribatra as Bangkok governor, more than three weeks after his election victory. Mr Sukhumbhand could still be disqualified later if the commission finds compelling evidence to present to a court showing he committed electoral violations. Mr Sukhumbhand was accused of being involved in alleged defamation committed in the lead-up to the election by fellow Democrat Sirichoke Sopha and media expert Seree Wongmontha.

Former president of the China Society of World Economics and director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences

espite fluctuations, China’s overall economic growth has been stable over the last three decades, owing not only to the economy’s strong fundamentals, but also to the government’s successful management of cross-border capital flows. Capital controls enabled China to emerge from the Asian financial crisis of 19971998 largely unscathed, even though its financial system was at least as fragile as those of the affected countries. The Asian financial crisis persuaded China’s leaders to shelve plans, launched in 1994, to liberalise the capital account. In 2002, China reinitiated liberalisation efforts, lifting restrictions on Chinese enterprises’ ability to open foreign-currency bank accounts, and allowing residents both to open foreigncurrency accounts and to convert the renminbi equivalent of US$50,000 annually into foreign currencies. The authorities also introduced the “qualified domestic institutional investors” (QDII) programme to enable residents to invest in foreign assets – one of many initiatives aimed at easing upward pressure on the renminbi’s exchange rate by encouraging capital outflows. At the same time, the “qualified foreign institutional investors” (QFII) scheme allowed licensed foreign entities to invest in domestic capital markets. In early 2012, the People’s Bank of China (PBOC) released a report calling for policymakers to take advantage of a “strategic opportunity” to accelerate capital-account liberalisation. Shortly after the release, QFII quotas were relaxed significantly. In fact, such an acceleration has been underway since the government initiated renminbi internationalisation in 2009. Although currency internationalisation is not tantamount to capital-account liberalisation, progress on the former presupposes progress on the latter. By allowing enterprises to choose currencies for trade settlement, and creating renminbi “recycling mechanisms,” the government effectively eased the restrictions on short-term cross-border capital flows.

Easing risks Most economists in China seem to support the PBOC’s stance, citing the potential benefits of capital-account liberalisation. But Chinese policymakers should also recognise the significant

an attack akin to those that triggered the Asian financial crisis without the protection of capital controls. Already, even without a major speculative attack, the exchange-rate and interest-rate arbitrage facilitated by renminbi internationalisation have imposed significant losses on China.

Cautious steps

risks inherent in relaxing capital controls. First, China needs capital controls to retain monetarypolicy independence until it is ready to adopt a floating exchange-rate regime. As Barry Eichengreen has pointed out in the context of the post-WWII Bretton Woods system, capital controls weaken “the link between domestic and foreign economic policies, providing governments room to pursue other objectives”. Because capital controls capped “the resources that the markets could bring to bear against an exchange-rate peg,” they “limited the steps that governments had to take in its defence”.

Given China’s extensive reform agenda, further opening of the capital account can wait

With current- and capitalaccount surpluses, the renminbi’s exchange rate is still under upward pressure. Without adequate controls on short-term cross-border capital inflows, the PBOC will find it difficult to maintain monetarypolicy independence and exchange-rate stability at the same time. Second, China’s financial system is fragile, and its economic structure rigid. Hence, the Chinese economy is highly vulnerable to capital flight. In recent years, China’s financial vulnerability has been rising, with enterprise debt

estimated to exceed 120 percent of GDP, and broad money supply (M2) amounting to more than 180 percent of GDP. At the beginning of 2012, China’s concerns centred on local-government debt, underground credit networks, and real-estate bubbles. Now, growth in shadow-banking activities has been added to the list. Without capital controls, an unforeseen shock could trigger large-scale capital flight, leading to significant currency devaluation, skyrocketing interest rates, bursting asset bubbles, bankruptcy and default for financial and nonfinancial enterprises, and, ultimately, the collapse of China’s financial system. A third reason to go slow on easing capital controls is that China’s economic reforms remain incomplete, with property rights not yet clearly defined. Amid ambiguity over ownership and pervasive corruption, the free flow of capital across borders would encourage money laundering and asset-stripping, which would incite social tension. Finally, with more than US$3.3 trillion in foreignexchange reserves, China is a particularly attractive target for international speculators. Owing to its underdeveloped financial system and inefficient capital markets, China would be unable to withstand

To be sure, a cautious approach should not be allowed to impede incremental progress toward capitalaccount liberalisation. But a broad framework for determining the timing of each policy step, based on rigorous cost-benefit analysis, is essential. While some measures that the PBOC has taken under the banner of capital-account liberalisation have turned out to be both necessary and appropriately moderate, others may need to be reassessed and rescinded. Today, as all major developed economies resort to expansionary monetary policy, the global economy is being flooded with excess liquidity, and a “currency war” is looming large. As a result, short-term capital inflows, whether seeking a safe haven or conducting carry trades, are bound to become larger and more volatile. In these circumstances, with China’s financial system too fragile to withstand external shocks, and the global economy mired in turmoil, the PBOC would be unwise to gamble on the ability of rapid capital-account liberalisation to generate a healthier and more robust financial system. On the contrary, policymakers should tread carefully in their pursuit of financial liberalisation. Given China’s extensive reform agenda, further opening of the capital account can wait; and, in view of liberalisation’s ambiguous benefits and significant risks, it should. © Project Syndicate

16 |

business daily March 29, 2013

CLOSING Wynn Macau profit up on lower gaming

OECD predicts stronger global growth

Wynn Macau Ltd’s profits attributable to shareholders rose 8.8 percent in calendar year 2012 on casino revenues that actually fell 3.8 percent year-onyear, the company said yesterday. Profit rose to HK$6.44 billion (US$829.4 million) compared to HK$5.92 billion a year earlier. That was despite a fall in casino revenue to HK$26.71 billion from HK$27.76 billion in 2011. The board recommended a final dividend of HK$1.24 per share, compared to the special dividend of HK$1.20 issued in 2011. In a separate filing, Wynn Resorts Ltd said chief operating officer Marc Schorr will retire with effect from June 1.

The world’s major economies will see stronger growth this year, but Europe’s recovery will continue to be slow, the Organisation for Economic Cooperation and Development (OECD) said, as it predicted stronger growth in the U.S., Japan and Germany. Overall, the OECD forecast an average annualised growth of 2.4 percent among the seven biggest economies in the first quarter of this year. That suggests a marked recovery from the last three months of 2012, when they shrank at an annualised rate of 0.5 percent. “The bottom line is that we are moderately more optimistic,” the OECD’s chief economist Pier Carlo Padoan told Reuters.

Higher costs slice Macao Water profit Vítor Quintã

vitor.quinta@macaubusinessdaily.com

he city’s only water distributor has seen its profit fall in 2012 for the second consecutive year, adding weight to the firm’s request for raising its service fee. The Macao Water Supply Co Ltd

announced that its profit after tax was 49.43 million patacas (US$6.2 million) last year, down by 12.6 percent from 2011. The decrease was largely due to the high inflation and the cost rise

in raw materials, electricity and human resources, the company said in a press statement. The cost rise more than offset an increase of nearly 10 percent in water sales income. Macau’s water consumption reached 75.28 million cubic metres, up by 6.7 percent compared to 2011. Water sales rose thanks to “the positive development of the entertainment, tourism and leisure industries” last year, Macao Water stressed. Commercial and industries clients accounted for more than half all water consumption. On the contrary there was a slowdown in the growth of domestic water consumption, thanks to the government’s water conservation policies, the company said. With water demand increasing, Macao Water decided to launch a The authorities are planning to reopen 1-billion-pataca project the country’s banksexpansion today for its main storage reservoir, which should be ready by the end of 2014. The investment will increase the city’s water supply capacity from 330,000 to 390,000 cubic metres per day. Macao Water reiterated it is “under a tremendous pressure and concerned about the future”. The company requested in May last year a hike of 26.2 percent in the water supply service fee paid by the government. Last month the head of the Maritime Administration, Susana Wong Soi Man, said the proposed increase was too high and that the authorities were “to give it more thought”.

Trilateral trade talks conclude China, Japan and South Korea concluded a first round of talks yesterday on securing a free trade pact to bind three economies that account for 20 percent of global gross domestic product. “Usually, it takes around one to three years at the least to conclude FTA talks with a large trading partner,” South Korean deputy trade minister Choi Kyong-lim said. “But I think the ongoing talks may take some more time, considering the importance and size of the involved countries and the fact that they are three-way negotiations,” he added.

U.S. airlines merger gets approval The merger of American Airlines and US Airways has been approved by a U.S. judge, moving the two companies one step closer to forming the world’s largest carrier. The deal between AMR Corp, parent of American Airlines, and US Airways Group had to be approved by the judge because American Airlines has been in bankruptcy protection since November 2011. It still needs approval by the Justice Department and US Airways shareholders. The two combined airlines will have 6,700 daily flights and annual revenue of roughly US$40 billion. The merger is expected to close in the third quarter.

BRICS agree on crisis fund

Cypriot banks open doors as customers hunt cash Authorities set daily limit on withdrawals

yprus’s banks opened their doors yesterday for the first time in almost two weeks, with new rules curbing access to the cash some customers have been struggling to find for food and bills. The Central Bank of Cyprus’s capital controls will include a 300-euro (US$383) daily limit on withdrawals and restrictions on transfers to accounts outside the country. Banks opened at midday Cyprus time, with lines of about 15 to 20 people waiting to enter branches in Nicosia. They were open for only six hours. “I only bought a few small items during these days to survive,” said

pensioner Kyriakos Hadjisophocleos, 65, waiting on a bench in front of a Bank of Cyprus branch in Nicosia since 7.30am to get money to pay part of his 380-euro rent. “I had many coins saved up so I was using them. If the banks didn’t open today I would have had to borrow from some friends.” Cyprus’s lenders have been closed since March 16, when the European Union presented a proposal to force losses on all depositors in exchange for a 10 billion-euro bailout. That plan touched off protests and political upheaval on the island, and was rejected by the country’s parliament. A subsequent agreement

shuts Cyprus Popular Bank Pcl, the second-largest lender, and imposes larger losses on uninsured depositors. The controls will be in force for seven days, according to a statement from the Finance Ministry. Security guards at banks in Nicosia said they had been instructed to allow only eight customers in at any one time. The European Commission said in a statement yesterday the control on capital movements must remain “proportionate” and be lifted as soon as possible. The Cyprus Parliament last week gave wide-ranging powers to the central bank governor, Panicos Demetriades, and Finance Minister Michael Sarris, who have spent the last days deciding which measures to implement. Those chosen include bans on terminating time deposits and cashing checks. Customers can transfer abroad at most 5,000 euros per month from a given financial institution. Bloomberg News

After five years of meetings, the BRICS emerging-market nations made some headway in their push for more sway in the global financial system, agreeing to set up a US$100-billion currency crisis fund and a new development bank. The fund, approved at a summit in South Africa, will help the BRICS nations – Brazil, Russia, India, China and South Africa – ward off balance of payments or currency crises. While leaders of the five countries agreed to create a bank to fund infrastructure projects, they didn’t find common ground on how to finance it.

Rural lenders to tighten loans China’s banking watchdog has ordered rural financial firms to strictly control lending to local government financing vehicles (LGFVs) and cut exposure to shadow banking assets, in the latest move to strengthen risk controls in the sector. The China Banking Regulatory Commission (CBRC) told medium-to-smaller financial institutions in rural areas to particularly cut back loans to LGFVs at county level or below, according to an official circular seen by Reuters. The document also said rural financial institutions must not extend new loans to LGFVs or buy corporate bonds, medium-term notes and other debt instruments issued by them.