Macau Business Daily, March 7, 2013 by Business Daily

Year I Number 234 MOP 6.00 Thursday March 7, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã www.macaubusinessdaily.com

Still no income cap for affordable homes The government has yet to say if it will impose an income ceiling on those wanting to buy public housing – even though there’s less than a month before the waiting list is due to open. The process is expected to start before the end of March. Housing Bureau director Tam Kuong Man said yesterday the application window for onebedroom government flats would last three months.

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Ignoring public on land deals carries ‘risk’ The Land Law revision will have no mechanism requiring the government to consider public opinion before granting land plots without a public tender, the Legislative Assembly admits. But if the government ignores public sentiment before handing out land concessions, that will carry political risk says Kwan Tsui Hang, head of the assembly’s first standing committee. It’s currently discussing the proposal. Page 6

Tax casinos for right to smoking zones: workers

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he administration should tax casinos for the privilege of having smoking areas until such time as the government imposes a full ban on the habit in the venues a gaming workers’ group suggests. The thinking is that allowing some smoking to continue in casinos confers some economic benefits on the casino operators. Those economic benefits should be shared with those casino employees that spend

working hours in the smoking zones, suggests the group. “For those casinos applying for a smoking area, the government should levy a so-called ‘smoking tax’ on them and use the money collected to provide medical coverage and compensation for frontline [casino] employees,” said Ieong Man Teng, president of Forefront of the Macau Gaming. More on page 3

Public spending growth slows in 2012

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Growth in Macau’s public expenditure slowed significantly in 2012 compared to a year earlier according to data released yesterday by the Statistics and Census Service. It appeared to correlate with the slower 13.5 percent year-on-year expansion in gross gaming revenue from casino games recorded in 2012 versus the 42 percent expansion in gaming revenue in 2011. Direct tax from gambling at 35 percent of the gross is the main source of the government’s income, bringing in 83 percent of the 129.50 billion patacas (US$16.2 billion) in public revenue recorded in the provisional figures for last year.

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Retailer wants Watchdog criticises assurances on Japan Pinoy casinos’ sunscreen safety money scrutiny Page 4

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Telco’s 2012 performance stable: Hutchison CEO Page 7

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business daily March 7, 2013

macau China Star moves back to black China Star Entertainment Ltd – a Hong Kong film and television producer that also has an investment in Hotel Lan Kwai Fong, a casino hotel in Macau – says it expects to make a profit for the year ending December 31, 2012. In a filing to the Hong Kong Stock Exchange, China Star said its deficit in financial year 2011 was due mainly to a HK$700 million (US$90.3 million) loss from “gaming promotion operations” – a reference to junkets for high roller gamblers. That 2011 loss on the casino operation was due to “keen competition in Macau”, it added.

Public spending growth slows in 2012 Appears to track slower expansion in gambling revenue – source of most govt income Michael Grimes

michael.grimes@macaubusinessdaily.com

rowth in Macau’s public expenditure slowed significantly in 2012 compared to a year earlier according to data released yesterday by the Statistics and Census Service. That appeared to correlate with the slower 13.5 percent year-on-year expansion in gross gaming revenue from casino games recorded in 2012 versus the 42 percent expansion in gaming revenue in 2011. Direct tax from gambling at 35 percent of the gross is the main source of the government’s income, bringing in 83 percent of the 129.50 billion patacas (US$16.2 billion) in public revenue recorded in the provisional figures for last year. If there were a direct link between the slowing of casino tax income growth in 2012 and the slowing of public spending it would be consistent with previous public policy. Francis

Tam Pak Yuen, Secretary for Economy and Finance since the handover from Portuguese administration in 1999, has followed a cautious course. He has consistently issued conservative forecasts for GGR and tailored his budget plans to reflect that. In 2012 expansion of current spending – basically the day-to-day running costs of the government via staff salaries and services such as street lighting and rubbish collection – reached 40.44 billion patacas. That was up 5.5 percent year-on-year; below the rate of consumer price index inflation for the 12 months, which stood at 6.11 percent. Capital expenditure – on infrastructure such as public housing projects and the Light Rapid Transit system – rose 53.3 percent for the year, to 16.30 billion patacas. But the overall public spending growth was 15.8 percent year-on year, compared to the

29.7 percent expansion seen in 2011. Although data for January’s public spending were released to the public last month, the December numbers have only just been consolidated into the rest of the 2012 accounts. That’s because of the way the administration organises its financial reporting. The budgets of a number of autonomous public agencies: Monetary Authority of Macao; Macao Postal Savings; Macao Post; Pension Fund; Automobile and Maritime Security Fund; and Macao Foundation, are managed separately. A levy on casino gaming of up to two percent of the gross is imposed by the government and paid to Macao Foundation and then redistributed to local charities and associations. A further levy of up to three percent of the gambling gross goes on city development, tourism promotion, and social security.

Francis Tam – cautious approach to public finance

Still no income cap for affordable homes The government aims to open applications for one-flat public homes this month Tony Lai

tony.lai@macaubusinessdaily.com

There are about 2,000 one-bedroom flats available, most of which in Seac Pai Van

he government has reaffirmed that the applications for onebedroom affordable homes can re-open for residents this quarter but there are still no news on an income ceiling for the applicants. Housing Bureau director Tam

Kuong Man said in a public event yesterday that the application period for buying the public homes with one bedroom would last for three months. Secretary for Transport and Public Works Lau Si Io pledged

last year the administration would open applications for such homes this month, and for other types of affordable flats in the fourth quarter. Mr Tam, however, could not tell reporters what the ceiling for applicants’ monthly earnings will be, even though less than a month is left before the procedures open. “In the past we once mentioned 17,800 patacas [for a single individual] and I believe… this will serve as a basis considering other factors like inflation,” he said. Chief Executive Fernando Chui Sai On told the Legislative Assembly last August that the administration aimed to set the income cap at 19,355 patacas (US$2,419) for an individual while 38,710 patacas for a two-person household. This range could cover over 80 percent of the households, the chief executive said at the time. The median monthly earnings for Macau’s employed population were 12,000 patacas in the October-

December period of last year, official data show. The Housing Bureau confirmed to Business Daily yesterday that the income ceiling figures have not been finalised but pledged they would be ready “this first quarter”. Mr Tam also said there were about 2,000 one-bedroom flats available this time around, and the number they would put on sale would depend on the demand from the public. The director believes the applicants can move in to these flats in the fourth quarter of this year the earliest. These one-bedroom flats are part of the 19,000-unit programme that the administration aimed to complete last year for the households that applied for public housing before 2005. The sales of such houses were suspended last year as the demand from the existing applicants was low. Most of these homes were located in the public housing hub of Seac Pai Van, in Coloane. With S.L.

March 7, 2013 business daily | 3

MACAU Gaming staff have petitioned the government to tax casinos and raise funds for their healthcare

Tax casinos for partial smoking ban: workers Casino employees say a part-ban on tobacco in casinos is not enough to protect their health Tony Lai

tony.lai@macaubusinessdaily.com

asinos should be taxed until a complete ban on tobacco is in place, with the revenue used to provide health care to affected casino employees, say a group representing gaming workers. Forefront of Macau Gaming president Ieong Man Teng yesterday submitted a petition to the government calling for the tax, based on the views of workers at the city’s six gaming operators. “The government should levy a so-called smoking tax on casinos applying for a smoking area. The money collected could be used to provide medical coverage and compensation for frontline [casino] employees,” Mr Ieong told reporters. Since January 1, a partial ban on tobacco has meant smoking areas can only cover 50 percent or less of the area of a casino’s gaming floor. The government has to approve operators’ plans to accommodate the law. Mr Ieong said a smoking tax could raise funds to treat casino workers affected by passive smoking but did not offer a rate of tax. His group advocates a full smoking ban in all indoor areas of casinos to protect employees’ health and says the tax would be an interim measure. “There were some worries at the beginning that [the partial ban] might affect the casino business but, going by our observations, there has been no decline in the number of clients,” he said. “The number of clients in both smoking and non-smoking areas is similar.”

24-hour inspections The group carried out an online survey of its members earlier this year, with about 90 percent of 1,400 respondents backing a complete ban on smoking in casinos. Members of the Legislative

Assembly, including Angela Leong On Kei, executive director of SJM Holdings Ltd, lobbied the government last week for an early review of the anti-tobacco policy. At the time, Health Bureau director Lei Chin Ion said a review would only take place in 2015, as the law provided. Forefront of Macau Gaming also wants the government to post inspectors around the clock at every casino to monitor for

violations of the ban. Mr Ieong said the law had not been complied with at some casinos, with some failing to properly segregate smoking and non-smoking areas. Speaking yesterday, Mr Ieong said existing penalties for anyone breaking the law were too lenient. Gaming Inspection and Coordination Bureau deputy director Leong Man Ion said the bureau would work with the Health Bureau to further implement the ban, including

studying the possibility of aroundthe-clock inspections. Mr Lei said last week the government was preparing to release a report on air quality inside casinos and on the partitioning of smoking and non-smoking areas. Also yesterday, Mr Ieong said about 10,000 people had been prevented from entering casinos each month since November, when a new law raised the minimum entry age from 18 to 21.

‘Blues’ in the red for 2011 says BIHL

irmingham International Holdings Ltd, the owner of Birmingham City Football Club in the United Kingdom, warns it expects “to record a significant net loss” for the year ended 30 June 2011. In a filing to the Hong Kong Stock Exchange it says the reason is “primarily due to impairment loss on intangible assets and goodwill and amortisation of intangible assets of a subsidiary engaged in football club operation in the United Kingdom”. In January the football club – nicknamed The Blues – lodged a financial statement with the Londonbased Companies House registry that showed it made a net loss of 12.4 million pounds (150 million patacas) in the year to June 2011. Its first team was also relegated from the top division the English Premier League in May that year. But the Companies House statement added that in the financial year to June 2012 the club actually made a profit, recording a net income of 16.4 million pounds on sales of 39 million pounds. The improvement in

performance was partly due to the club achieving a 44 percent cut in its wage bill – mainly via reduction of player salaries – to 25.1 million pounds. The club – which currently lies 18th in the Football League Championship, the second tier of English professional football – is the main asset held by BIHL. The club’s improved performance off the field in fiscal 2012 is therefore also reflected in BIHL’s forecast performance for that period. Yesterday’s filing in Hong

St Andrews – Birmingham City’s ground

Kong confirms the parent expects to make a profit for the year to June 2012. BIHL will confirm release of its fiscal 2011 and 2012 results after a board meeting in Hong Kong on March 15. The company’s stock has been suspended from trading since June 2011 following the arrest of its chairman Carson Yeung Ka Sing on money laundering charges. He faces trial in Hong Kong in April. M.G

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macau Tourism industry keeps expanding Macau’s tourism industry kept expanding last year, with more travel agencies, tour guides and hotels operating here, even though the number of visitors was caught in a slump. Data provided by the Macau Government Tourist Office shows that the number of travel agencies last year stood at 169, up by 8 percent in comparison with 2011. There were also more tour guides: in 2012, their ranks reached 1,643, 125 more than in 2011. The number of hotels likewise increased, to 102, five more than in 2011.

Shisheido sunscreen faces metal contamination scare Despite safety assurance, some retailers have yet to resume sales of sunscreen Stephanie Lai

sw.lai@macaubusinessdaily.com

apanese cosmetics giant Shisheido Co Ltd’s Anessa sunscreens returned to most counters on Tuesday in Hong Kong and Macau after a brief 24-hour hiatus on sales induced by a cadmium contamination report released in mainland China. However, major cosmetics retailer Sa Sa International Holdings Ltd told Business Daily that the sunscreen will be kept away from shelves in Hong Kong, Macau and the mainland until the company receives further assurance from China’s customs that the batches imported are free of cadmium. On March 3, China’s General Administration of Quality Supervision, Inspection and Quarantine found the heavy metal cadmium in 60 bottles of Anessa Perfect UV Sunscreen EX

N imported from Japan, mainland media reported. However, the administration did not disclose in detail the amount of cadmium found in the batch, only saying that the products “have been destroyed”. The mainland media added that the 60 bottles of sunscreen were imported from Japan to the Tsingtao branch of China Duty Free Group Co Ltd. “We are still trying to understand the whole incident and the respective inspection procedures from the mainland administration,” said a spokesperson for Shisheido in Hong Kong. “None of the Shisheido products [imported from Japan] contain any cadmium,” the spokesperson told Business Daily.

Shisheido stressed that the heavy metal mainland authorities found in the sunscreen was “extremely minimal”, and would not pose any health threat to users The company added traces of cadmium existed naturally in soil, water and air. Cadmium is a poisonous metal banned from all cosmetics sold in the European Union, Japan and China but it exists in natural minerals and it

is not very easily absorbed by human skin, Taiwan’s Department of Health pointed out in a statement. Taiwan also imported Shisheido’s Anessa sunscreens. Macau’s Economic Services Bureau told Business Daily it is concerned with the cadmium report and has been cheking local cosmetics outlets, some of which “have temporarily removed” the Anessa sunscreens. However, the bureau did not say whether it would impose a compulsory recall for the Anessa sunscreen sold in local retail outlets.

Special Olympics Is not about disabilities. It’s about abilities

Corporate April 22nd-27th 2013

Holy House of Mercy donation from Sands

City championed at Jakarta’s MICE seminar

Sands China Ltd has donated 200,000 patacas (US$25,000) to Santa Casa da Misericórdia de Macau – known in English as Macau Holy House of Mercy. The charity’s work includes community welfare programmes. The money will be used to support the group’s welfare shop. The outlet was launched early this year to aid local households facing economic difficulties. Edward Tracy, president and CEO of Sands China presented the cheque to António J. Freitas, president of the Macau Holy House of Mercy. During the handover event hamper bags with food and household basics were given out to disadvantaged households. A team of 30 volunteers from the Sands China Care Ambassador programme and volunteers from the charity distributed hampers. They went to 215 families with either a single parent in the household or with elderly, sick or handicapped members living at home. The first Holy House of Mercy was founded in Lisbon in 1498 by Queen Eleanor of Portugal.

An eight-strong delegation from Macao Trade and Investment Promotion Institute (IPIM) visited Indonesia’s capital Jakarta to promote Macau’s MICE (meetings, incentives, conventions and exhibitions) industry. They joined a seminar organised by The Global Association of the Exhibition Industry (UFI) and the Indonesia Exhibition Companies Association. Jackson Chang, president of IPIM, stressed the support offered to would-be exhibitors interested in Macau as a venue. This included IPIM’s ‘one stop’ approach in giving advice and back up. IPIM also had a booth at the seminar venue with staff on hand to distribute promotional material and answer inquiries. The Macau delegation included Eva Lou from the Association of Macao Convention & Exhibition Organizers; Lam Chong In, of the Macao Fair & Trade Association, and Kevin Bi, from the Association of Advertising Agents of Macau. IPIM has been a member of UFI since 2005. UFI’s membership includes MICE industry managers and professionals and it aims to promote the sector.

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MACAU

G-7 finance watchdog criticises Philippines’ casino policy Financial Action Task Force attacks loophole freeing gaming industry of anti-money laundering checks Michael Grimes

michael.grimes@macaubusinessdaily.com

Philippine lawmakers promise to tighten AML

n international body responsible for improving the global fight against money laundering has criticised the Philippines government for exempting its casino industry from new, tighter financial oversight. The Paris-based Financial Action Task Force said in a statement it was “concerned” at an “outstanding deficiency” in the Philippine state’s financial controls on anti-money laundering and the financing of terrorism. Lawmakers have now said they will end the exemption, but that’s unlikely to come in time for the soft opening of Solaire Resort & Casino Manila, a US$1 billion integrated resort developed by Bloomberry Resorts Corp. and due to open on March 16. The row focuses fresh attention on the decision of Macau casino developer and operator Melco Crown Entertainment Ltd to invest in another Manila casino scheme – Belle Grande Manila Bay. MCE said in a Hong Kong filing on October 25 it is interested in investing US$650 million (5.19 billion patacas) in order to furnish and operate the casino. The exclusion of casinos from tougher anti-money laundering rules was at the request of the country’s gaming regulator and operator of state casinos, the Philippine Amusement and Gaming Corporation, one of the country’s senators told the local media. “[They] excluded casinos from coverage because [House members] warned it would deter investors. That’s the number one reason. A n d n u m b e r t w o , P AG C O R , ” Senator Teofisto Guingona told The Philippine Star, a newspaper, referring to the regulator’s acronym.

But days later the lawmaker requires “each member organization” assured the Paris-based Financial to “establish and implement policies Action Task Force that lawmakers and procedures that can reasonably would enact more amendments to the be expected to detect and cause the anti-money laundering law [AMLA] reporting of transactions required that will allow effective regulation under 31 U.S.C. 5318(g) [a section of casino operations in the country. of the U.S. Bank Secrecy Act].” “Our first act in the coming 16th The FATF was set up in 1989 Congress will at a meeting be to introduce of the G-7 – a a fourth set of body made up amendments of the finance to AMLA to ministers include casinos of seven that was taken industrialised out from the nations – the Senate version U.S., United at the bicameral Kingdom, conference F r a n c e , level,” Senator Germany, Italy, Philippines’ AntiGuingona said. Canada, and Money Laundering Melco Crown Japan. It was Act of 2001 is expected in response to raise up to mounting to US$450 international million of its concern about contribution to Belle Grande from the money laundering globally. The sale of 1.2 billion shares in an off-the- G-7 heads of government and shelf Philippine unit, Manila-listed the President of the European Manchester International Holdings Commission convened the Task Unlimited Corp. The developer Force from the G-7 member states, of Belle Grande’s shell – Manila- the European Commission and eight listed firm Belle Corp. controlled by other countries. Filipino-Chinese entrepreneur Henry Sy – describes the entire project as a Criticism made US$1 billion scheme. FATF added in its statement One of the MCE partners, Crown Ltd, an Australian-listed firm on the Philippines: “…the FATF with casino operations in several h a s c o n c e r n s t h a t t h e c a s i n o Australian states, is still awaiting sector in the Philippines continues regulatory approval for its Philippine to be unregulated for AML and venture from its domestic regulators. CFT [combatting the financing of Melco Crown has its main share terrorism] purposes and is still not listing on the NASDAQ in New subject to AML/CFT requirements York, regulated by the United States a n d u r g e s t h e P h i l i p p i n e s t o Securities and Exchange Commission. promptly and effectively address this New York Stock Exchange Rule 445 outstanding deficiency.”

House Bill 6565

Philippines media first reported in December that the country’s casinos and Internet gaming operations – the latter licensed in the jurisdiction but mainly targeting their services at customers offshore – had been exempted from the terms of amendments to the country’s AntiMoney Laundering Act of 2001. House Bill 6565 was a consolidation of several measures seeking changes in the law against the laundering or hiding of funds generated from illegal activities in the country or abroad. But before the country’s House of Representatives passed the bill, House Minority Leader Danilo Suarez introduced an amendment that watered down the measure. He removed casinos, Internet gaming businesses, real estate agents and dealers in precious metals and stones from the expanded list of covered institutions and individuals, according to The Philippine Star. The FATF blacklisted the Philippines in June 2000 for being “non-cooperative” in the global campaign against money laundering. This prompted the country’s Congress to enact Republic Act 9160 – also known as the Anti-Money Laundering Act of 2001. Business Daily approached MCE for comment on the FATF’s statement on AML standards for Philippines casinos, but no response was available at the time the newspaper went to press. On December 4, Belle Corp. said in a filing to the Philippine Stock Exchange that the interior and fitout of Phase 2 of Belle Grande was “targeted to be completed in January 2013”. It did not mention an opening date for the facility.

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macau Luxury home project for Coloane plot Capital Estate Ltd, the owner of Hotel Fortuna, filed an application to the government in late 2011 to build 46 luxury homes in a 10,154-square-metre plot next to Estrada de Nossa Senhora de Ka Ho, in Coloane, the Portuguese-language newspaper Ponto Final reported yesterday. The chairman of Capital Estate is prominent businessman Sio Tak Hong, a Macau delegate to the Chinese People’s Political Consultative Conference. Mr Sio is also linked to a Coloane plot where an old Portuguese military bunker – whose possible demolition has created controversy – is located.

More light shed on direct land grants Land Law would not force the government to hear public opinion on grants to developers that have not gone out to tender Tony Lai

tony.lai@macaubusinessdaily.com

Reasons behind direct land grants must be better explained by the government, say legislators

he revised Land Law will not have a mechanism to take public opinion into account before the land is granted without a public tender. But the public will have the chance to discuss grants before the government signs off on them, according to the head of the Legislative Assembly’s first standing committee, Kwan Tsui Hang. The

committee is currently discussing revisions to the Land Law. Revisions to the law would require the government to publicise information about land it offers directly to a developer between the period an application is filed and its approval. “Such new provisions give the government powers to release related information and make the process

more transparent,” Ms Kwan told reporters yesterday after a closed-door meeting with government officials. “Through this process, the public can be made more aware of the matter and voice their opinions.” The current version of the bill permits land grants without a bidding process for non-profit projects linked to education, culture, health and public utilities. Projects in line with government policies are also exempt. Ms Kwan said the changes to the revised Land Law bill would ensure a “natural” means for the public to form views on land use. “The government said the goal of this process is to let the public comment on whether [the application] is justified or not, based on the information provided,” she said.

Reasoned debate Ms Kwan said the law did not explicitly demand that the government take the public’s opinion into account when offering land to developers. “Whether the government will listen to the opinions depends on how the entire society looks at the matter,” she said. “Any decision will invoke differ-

ent opinions… and the government is subject to political risks when weighing [those opinions].” She told reporters that committee members wanted more public input, above publishing the details of land grants that are exempt from a tender process. “The content to be publicised should also detail why the administration is giving out the land without tender and the land plot area,” she said. The government is considering the suggestion. The first standing committee is due to discuss the details of land granted without a tender next week. As it stands, the bill does not include time limits for the government to process requests for land that fall into the “without tender” category. Yesterday’s committee meeting also covered the criteria that individuals and companies must meet before applying for land. Ms Kwan said the bill bans anyone found guilty of squatting from applying for a land grant for five years. The Legislative Assembly hopes to complete debate on the revised bill before the current session ends in the middle of August.

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MACAU

Better but best yet to come, says Hutchison Hong Kong-based mobile telecommunications provider will extend its network to Henquin by September Stephanie Lai

sw.lai@macaubusinessdaily.com

utchison Telephone (Macau) Co Ltd’s performance was “satisfactory” last year, better than 2011, chief executive Ho Wai Meng said yesterday. Mr Ho did not reveal earnings growth in Macau

ahead of the release of the annual report of Hutchison’s parent company, Hutchison Whampoa International Ltd, on March 19. In the first of last year, profit at Hutchison’s 3 brand grew by 15 percent in Hong Kong and Macau to HK$568 million (US$73.2 million). First-half revenue was HK$6.73 billion, a 12-percent increase over the same period in 2011. Fitch Ratings said in November the “cash drain from 3G business” had affected Hutchison’s rating: A-, the lowest rating in the agency’s third-best category. Yesterday, Mr Ho said both the business and the private Ho Wai Meng, customer base were chief executive, “progressing well Hutchison Telephone (Macau)

We would expect much room for growth in terms of smartphone sales and data services

and stable”. “We would expect much room for growth in terms of smartphone sales and data services in Macau,” he said. “We would also like to provide more discounts for the data services and improve the [Internet] streaming speed this year.” Speaking to reporters at a media lunch, Mr Ho said he hoped competition when a second, fixed-line telecommunication provider begins operating this year could reduce charges. Companhia de Telecomunicações de MTEL, Ltd made the only bid in last year’s tender and the Bureau of Telecommunications Regulation has not yet awarded the licence. Hutchison is currently preparing to extend its coverage to the University of Macau’s Hengqin campus. The service should be in

place by September for the start of the academic year, the firm’s chief operating officer Windus Lam told Business Daily. While extending the network to Hengqin is this year’s biggest investment for Hutchison Macau, Mr Lam did not say how much the

whether they were buying a flat or a hotel room, trusted Cheung Kong. A typical flat with 500 square feet of usable space costs HK$3.54 million. If the flat was a hotel room that cost, let us say, HK$2,000 per night to stay in, the buyer would be paying for a stay of 4.84 years. Buying a hotel room sounds like a bargain. Buying hotel rooms as investments is common in other parts of the world. In the Canadian ski resort town of Whistler, many hotels are run by management companies or hotel chains but owned by a multitude of owners. The same happens in Las Vegas. In Hong Kong, it is just another way of speculating on property. A buyer from mainland China paid HK$20 million right away for five rooms. Another buyer sold the room the day after he or she bought it and made a profit of HK$427,000. Investors seem undeterred by doubts about the legality of selling hotel rooms in this way, which the Hong Kong government is still looking into. How can it be so profitable? The rooms are just like serviced apartments, albeit without kitchens, but cheaper than flats, making

them attractive to young couples or singles that seldom cook. But the sale of hotel rooms in Hong Kong just gives another unwelcome twist to the already expensively contorted property market. Could something similar happen in Macau? I cannot help but think of the serviced apartments beside the Four Seasons Hotel in the Cotai Strip. Luckily, Macau has a Roman Law system which, in a nutshell, means you cannot do anything that is not regulated. Hong Kong has a Common Law system which, in a nutshell, means you can do anything that is not expressly illegal. Since the law there does not expressly prohibit the sale of hotel rooms, it is not illegal, at least for the time being. Another lesson to learn is the value of corporate social responsibility. We all know that much demand for housing is from young, first-time homebuyers. Are developers doing any good by selling small flats, which appear to be more affordable but which are no cheaper per square foot than any other sort? What can Macau learn from all these examples? Should the government here copy Hong Kong’s new policy? A real estate association has proposed a government fund of 6 billion patacas to subsidise firsttime homebuyers, like a similar fund in Singapore. But this would have the same effect as any other subsidy. When the seller knows that the buyer has extra money, in this case from the government, the seller will raise the asking price. So a subsidy would not help much. But why does it work in Singapore? There, the money comes out of the provident fund, not direct from the government. In other words, the buyer is just using his or her own money, which happens to be

comment

My home is a hotel room

Rose Neng Lai Associate Professor of Finance, University of Macau

he week after the Lunar New Year was a dramatic week for the Hong Kong housing market. Within a period of 10 days there were four pieces of interesting news, two of them about billionaires Li Ka-shing and Lee Shau-kee. On Tuesday Hong Kong newspapers reported that a Hong Kong developer had put on the market space in a housing development that had five flats on each floor. The original plan had been for only four flats per floor. The developer created an extra flat on each floor by dividing a flat with 500 square feet of usable space into two, one with 219 square feet of usable space and the other with 280 square feet. So one flat that could have been sold for HK$3.37 million (US$435,000) became two that can now be sold for a total of HK$3.89. Are you not amazed by the brilliance of the idea? It is only one of several similar cases. What puzzles me is how a household consisting of more than one member can live in a flat of such size. Another recent piece of news was the

sudden doubling to 8.5 percent of the stamp duty on sales of homes costing HK$2 million or more, with a view to curbing speculation. This is good news for the economy in general. Another item of good news is the proposal of Lee Shau-kee, boss of Henderson Land Development Co Ltd, to build flats for sale for as little as HK$1 million to young firsttime homebuyers, as long as the developer is exempted from paying the land premium. Never mind the reasoning behind this proposal; it still injects some constructive sentiment into the market. In contrast, on February 18 Mr Li Ka-shing’s Cheung Kong Holdings Ltd put on the market hotel rooms in its Apex Horizon development for “investment purposes” and said the buyers could live in these rooms as “tenants”. This way, the sales will be exempt from Special Stamp Duty and the Buyer’s Stamp Duty because the premises sold are not residential property. Surprisingly, all 360 rooms were sold within two days of being put on the market, and the offer created unbelievably long queues of would-be buyers who, although unsure about

Hutchison plans to open its seventh 3 network shop in Taipa, sometime inside the next two months (Photo: Manuel Cardoso)

company would spend. “We are still in the final stage of getting all the network set-up figures,” he said. The company also plans to open another shop in Taipa within the next two months. It will be the seventh 3 outlet here.

managed by the government. Given that the housing market here is still reacting to the measures the government took in October to curb speculation, it helps to let the market get on with swallowing this medicine and at the same time increase the supply of housing in the long run. Any new measure at this moment is very likely to be like another Panadol taken too early: the effect cannot be seen, and it is wasted, making the effectiveness of the previous measures blurred. After all, if a crucial cause of the problem is speculation, it is better to calm speculators and owner-occupiers alike than agitate them by taking more measures and provoking another bout of speculation driven by fear of what the government might do next.

Any new measure at this moment is very likely to be like another Panadol taken too early: the effect cannot be seen, and it is wasted, making the effectiveness of the previous measures blurred

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business daily March 7, 2013

GREATER CHINA

Yuan hits headwinds in global currency bid After explosive initial growth, shift to yuan in China’s trade abroad is easing

hina’s campaign to get the world using its currency, the yuan, is hitting headwinds in corporate boardrooms, raising doubts as to whether it will ever challenge the dominance of the United States dollar in global trade and finance. Despite aggressive marketing by banks touting its benefits and steady pressure from China itself, the multinationals whose acceptance will ultimately determine the fate abroad of the yuan, or renminbi, remain reluctant. In particular, executives say, they are not convinced using yuan will lower the cost of doing business with suppliers and customers in China. Banks offering renminbid e n o m inat ed s ervice s sugge st companies using yuan for trade in China can save up to 7 percent on transaction costs. “I’d say that [the advertised savings] are mostly bank marketing,”

said the treasurer in charge of implementing yuan settlements at one of Europe’s largest multinationals. He requested anonymity because he was not authorised to speak to the press. “We would very much like to settle in yuan and reduce our currency risk a little, but the clients in the major European countries and the U.S. won’t do it,” said Li Bin, manager at Lipac, a manufacturer of bathroom fixtures in Wenzhou, China. After explosive initial growth, therefore, the shift to yuan in China’s trade abroad appears to be easing. The proportion of trade settled in yuan expanded just 3 percentage points, to 12 percent, in 2012, after surging to 9 percent from just 3 percent in 2011, Reuters calculations of data from China’s central bank show. China faces a chicken-and-egg dilemma: to make yuan widely avail-

able abroad, they need to be widely accepted; to earn wide acceptance, they need to be widely available.

Slowing appreciation “We are playing a waiting game in some respects,” said Adam Vos, global head of forward foreignexchange contracts at Deutsche Bank in London. “Clients would like to do more, but they will only do more once market depth and liquidity has further improved.” Lured by higher interest rates on a currency whose value seemed to be rising in line with China’s economy, investors and companies flocked to the yuan when it first became available in Hong Kong. In January, the yuan overtook the rouble as the 13th most popular currency for international payments, according to the Society

for Worldwide Interbank Financial Telecommunication, the Brusselsbased consortium that handles most international bank payments. The share of global transactions based in yuan nearly tripled between January 2012 and January 2013, the consortium said. But that still represents a mere 0.63 percent of all international payments. And attracting investors isn’t likely to be as easy now that the renminbi no longer looks to be a one-way bet up. After rising roughly 30 percent between 2004 and last year, the People’s Bank of China, China’s central bank, let the yuan sink 1.6 percent in the first seven months of 2012 amid sluggish exports and slowing economic growth. But the yuan rose to within 0.1 percent of a 19-year high yesterday, after the central bank set the

Housing measures more bark than bite Local governments likely to temper enforcement of tax on home sales

hina’s plans to curb property speculation are likely to be more bark than bite, and markets have over-reacted because of the uncertainty over how local governments will implement measures including a 20 percent capital gains tax on house sales. Investors took fright this week over the potential impact of the tax – which has been in place for almost two decades but never strictly enforced – hammering shares of big property development firms such as China Vanke, Poly Real Estate, China State Construction Engineering and China Resources Land. Nervous homeowners have rushed to finalise sales, hoping to cash in on apartments before the rules take hold, and there were angry comments on microblogs, illustrating the level of sensitivity to any attempts to cool prices in a country where so many people have much of their wealth tied up in property. But local governments, expected to act by the end of next month on the plans announced on Friday – just days ahead of the formal transfer of power to new leadership in the world’s second-biggest economy – are likely to temper Beijing’s attempts to take the steam out of rampant property speculation. “The market always over-reacts when new rules are announced because of uncertainties and misinterpretation,” He Qi, vice chairman of the China Property Society in Beijing, told Reuters, noting Beijing was handing responsibility for checking house inflation to provincial governments which would, in turn, oversee the cities under their jurisdiction. “That means policies will be quite different in cities with (housing)

Analysts expect new policy to hit smaller homebuilders harder

over-supply and those with short supply,” he added. Real estate and credit experts predicted the measures – which also include higher down payments on homes and increased mortgage rates – would do little to harm the homebuilding industry or dampen enthusiasm among those first-time buyers Beijing is keen to encourage. “We don’t see the new policy will have a particularly huge impact on the industry,” Standard & Poor’s

credit analyst Bei Fu told Reuters. “It targets speculators, but the market recovery since last year is driven by self-user demand.” Analysts expect the impact of the new policy to hit smaller homebuilders harder than their bigger peers, further polarising an industry that looks set for more consolidation. “The new regulations will disproportionately affect smaller players with lower margins, with projects targeting speculative buyers

or with high concentration in cities which are targeted for stricter policy implementation,” Fitch Ratings said. Kong Qingping, vice president at China State Construction Engineering, the country’s biggest construction contractor, told reporters on the sidelines of the National People’s Congress that the new policy “will curb market demand, but our company will have no problem.” Reuters

March 7, 2013 business daily | 9

GREATER CHINA Mobile industry too dependent on Android China’s smartphone makers are “heavily dependent” on Google Inc.’s Android mobile operating system, hampering the development of the domestic industry, according a white paper from a government research institute. Android’s core technology is strictly controlled by Google, and Chinese businesses face commercial discrimination, including delays in sharing code, according to the China Academy of Telecommunication Research. New market entrants will encounter substantial obstacles, the institute said.

EU prepares retroactive duties on solar panels The proportion of trade settled in yuan expanded just 3 percentage points in 2012

currency’s fixing at the strongest level in seven weeks amid signs of fund inflows. The central bank and domestic financial institutions sold a record

683.7 billion yuan (US$110 billion) to buy foreign exchange in January, according to data published on Tuesday by the People’s Bank of China. The central bank raised the

currency’s reference rate by 0.08 percent yesterday to 6.2745 per dollar, the strongest level since January 16. Reuters / Bloomberg

Firms forced to fix vitamin prices: ex-official

European Union duties on solar panels coming from China could take effect retroactively from this month after the European Commission ordered customs officials to start registering imports from yesterday. The European Commission last September launched an investigation into whether Chinese solar panels were being dumped and in November began a study into allegations of illegal subsidies. The commission has until June 6 to impose provisional duties. The deadline for imposing definitive duties, which would require a vote by member states, is December 5.

Beijing authorities intervened to set vitamin C prices and trade volume China bets billions on US shale oil

former Chinese official testifying for vitamin C exporters sued by United States companies said they had no choice but to follow China’s rules and thus can’t be blamed for price-fixing in the US$500 million market. Qiao Haili, a retired Ministry of Commerce official who oversaw the vitamin C companies, testified Tuesday in federal court in New York. A key witness for the defense, he told jurors vitamin C makers were required by the Chinese government to adhere to agreed-upon pricing and volume restrictions. Hong Kong-based China Pharmaceutical Group Ltd., its Weisheng Pharmaceutical unit, North China Pharmaceutical Co., and its Hebei, China-based unit Hebei Welcome Pharmaceutical Co. are accused of fixing prices for bulk vitamin C sold in the United States. Speaking through a translator, Mr Qiao testified that the agency where he worked would “convene meetings, discuss export pricing and prevent malicious competition in order to protect the healthy development” of vitamin C manufacturers in China. Mr Qiao told jurors that he instructed the defendants to form a subcommittee for the purpose of conducting the industry coordination of vitamin C exports. “Defendants were required to strictly implement industry coordination measures under the chamber’s supervision, with penalties imposed for any attempts at circumvention,” lawyers for the

China National Petroleum Corp, the country’s biggest oil company, is seeking its first stake in the United States as Chinese explorers with US$40 billion of cash try to join a renaissance unlocking billions of barrels of crude. “We are currently studying” investing in American oil, chairman Jiang Jiemin said Tuesday at the National People’s Congress meetings in Beijing. Chinese oil companies using government loans want stakes in shale fields that are fostering the most crude production in the United States in 21 years and helping wean it off Middle Eastern imports.

defendants said in court documents. American bulk vitamin C buyers filed complaints in 2005 accusing the Chinese companies of conspiring to inflate prices, abusing their dominance over the global market from at least late 2001 through mid-2006. Prices rose to as much as US$15 a kilogram in April 2003 from about US$2.5 a kilogram in December 2001 as a result of the alleged conspiracy, the plaintiffs said. State action isn’t an unusual defense in antitrust cases targeting foreign companies, said Jeffrey S. Jacobovitz, an antitrust lawyer at

Arnall Golden Gregory LLP who isn’t involved in the case. However, when the foreign government is accused of direct involvement, “it changes the nature of the litigation,” he said in a phone interview. “The political overtones are important to the extent that the government probably will not be pleased to be accused of facilitating antitrust violation.” Mr Qiao’s testimony marks the first time a former Chinese official has testified in a United States court, according to lawyers in the case. Bloomberg News

Chinese art sales stay top despite slowing market Works by Chinese artist Zhang Daqian came second in the list of auction sales in 2012, behind Andy Warhol, the French watchdog Artprice told AFP Tuesday. Though China retained the number one spot in art auction sales, sales dropped 44 percent from 2011 to US$5.07 billion. Suspicious of dodgy transactions and counterfeit works, collectors are buying less, said Artron, specialists in the Chinese art market. In terms of the sales worth more than 10 million yuan (US$1.6 million), only 45 percent of transactions were actually completed, the group said.

10 |

business daily March 7, 2013

ASIA

Traders flee Asia hedge funds Trading losses are turning hedge fund haven into dead-end job

Hong Kong and other Asian financial centres are seeing hedge-fund managers quit

aul Smith moved from London to Hong Kong to work in Asia’s hedge-fund industry almost 17 years ago, and he rode the boom to its peak. Last year, like other industry veterans, he quit.

“I decided not to wait the cycle out but to do something more productive with my time,” said Mr Smith, 53, who remains in the city heading the Asia-Pacific office of the nonprofit CFA Institute, the global association

of chartered financial analysts. Hedge-fund managers, traders and analysts in Asia are quitting as assets have failed to recover after the 2008 global financial crisis, and trading losses have left a majority of funds

unable to collect performance fees. They are moving to mutual funds, endowments, consulting firms and companies outside of the moneymanagement business, often at a cut in pay.

Australia expands at fastest pace since 2007 on exports Australia’s economy expanded in 2012 at the fastest pace in five years

ustralia’s economy grew 0.6 percent in the three months to December thanks to a pick-up in exports but analysts warned the country’s mining boom covered up weakness in other sectors. The bureau of statistics said the quarter-on-quarter expansion followed a 0.7 percent gain in the September quarter, and resulted in a 3.1 percent annual growth rate in 2012, compared to 2.3 percent in 2011. Treasurer Wayne Swan said the numbers represent “21 continuous calendar years of growth for Australia, which is

a record unmatched by any other advanced economy over this period”. He also hailed a 3.3 percent rise in exports in the three months to December as “the second-fastest quarterly increase in almost a decade” as coal and iron ore shipments rebounded, making them the largest contributor to growth. The mining, manufacturing, health and finance sectors

March 7, 2013 business daily | 11

ASIA Asian hedge-fund assets are 28 percent below their 2007 peak, according to data provider Eurekahedge Pte. A total of 296 Asian hedge funds liquidated in the two years to December, 33 more than the number that started. “Five years on, many of these guys are tired of the huge swings in hedge-fund compensation, and some have not tasted the sweet promise of hedge-fund payouts,” said Will Tan, managing director at Singapore-based recruiting firm Principle Partners Pte. A number of Asian hedge-fund managers and traders who joined the industry before its 2007 peak have departed. Others are investing privately because of the lack of suitable jobs and difficulty of raising money for new funds, according to 18-year Credit Suisse Group AG veteran Marvin Kelly, a New York City native who left the Swiss bank when it scaled back proprietary trading in 2010. “Launching a fund is tough in this environment because investors seem to prefer large, well-known managers,” said Mr Kelly, 50, who invests his own and his family’s money through Quaternion Capital Management Ltd.

Sweet promise Asian hedge funds may have had a harder time attracting assets because the industry primarily consists of smaller boutiques without the teams and infrastructures to attract capital from large institutions, according to Alex Mearns, Eurekahedge’s Singaporebased chief executive officer.

were the main drivers of growth in the quarter, each contributing 0.1 percentage points to the increase in gross domestic product (GDP), the bureau said. The plunge in Australia’s terms of trade – the value of its exports against its imports – slowed to 2.7 percent from 5.3 percent in the previous quarter, suggesting conditions were improving in the key mining sector. However, tepid consumer spending growth of 0.3 percent and a clear divide between mining and non-mining states indicate there are still imbalances in the economy, with southern provinces technically in recession as the north booms.

Chronic imbalances “Australian GDP growth clearly slowed through the course of last year,” said AMP Capital Investors economist Shane Oliver, estimating that underlying growth had stagnated and would likely remain under pressure another six months. “The response to interest rate cuts has been sub-par, with most economic indicators taking longer to pick up than has been the case through past easing cycles,” he added. “This reflects a combination of

A bonus can be as high as US$50 million a year for a star hedge-fund manager, while hedge-fund base salaries are typically lower than for other, more-stable jobs in the finance industry, according to Principle Partners’ Mr Tan. About half of the job candidates that Graham Smith talks to are open to more stable positions with long-only funds or in banking now, while the ratio was much lower before 2008, the London-based recruiter for Options Group said in a telephone interview. The firm has seen a 25 percent increase in the number of hedge funds that have retained it to scout for job candidates globally last year compared with 2011, said Mr Smith. Yet in terms of actual hiring, Asia has been tough in the last couple of years, he added, noting that potential employers are being more patient and selective in seeking talent. Candidates in Asia also face mounting competition from job seekers in Europe, he said, with about 30 percent of potential hires willing to consider relocating to the region. “This trend has been driven by a decrease in employment opportunities and an increase in taxes in Europe,” Mr Smith said. With banks now adapting to a fresh host of regulatory rules, from new capital requirements to tightened scrutiny over derivatives, the Asian hedge-fund industry’s fortunes seem unlikely to turn soon. Hedge funds in Asia used to rely heavily on wealthy investors making investments through funds of funds, financed partly through bank borrowing. That lending has dried up.

Toyota overhauls management to battle GM, Volkswagen New change at the top of the world’s largest carmaker

Bloomberg News

factors including post-GFC [global financial crisis] caution [and] the failure of the Australian dollar to fall.” The Reserve Bank of Australia cut rates by 125 basis points in 2012 to historic lows of 3.0 percent, hoping to stoke non-mining areas of the economy as resources sector investment approaches its peak. Mr Swan conceded that the “transition from mining to nonmining drivers of growth may not be seamless” but said Australia’s economy continued to outstrip “every major advanced economy and the vast bulk of the developed world”. Mr Swan said food and car sales grew strongly in the December quarter but he described households as cautious overall, with an emphasis on saving rather than spending and the bullish Australian dollar weighing on local investment. Central bank governor Glenn Stevens noted Tuesday that investment outside the mining sector remained “relatively subdued” and the exchange rate was inflated, suppressing local industries like tourism, manufacturing and education. AFP

Executive who led Toyota into hybrid car segment promoted to chairman

oyota Motor Corp president Akio Toyoda overhauled his top management for a second straight year, strengthening his control over the world’s largest carmaker to vie with General Motors Co and Volkswagen AG. Of the seven executive vice presidents ranked below Mr. Toyoda, three will step down and two will be brought in effective April 1, the Toyota City, Japan-based carmaker said in a statement yesterday. Chairman Fujio Cho, serving in a largely ceremonial role, will be succeeded by current vice chairman Takeshi Uchiyamada. Mr Toyoda, who added only one executive vice president during his first three years as president, is tightening his grip on the carmaker as he prepares to enter a fourth year of running Japan’s largest company. A weakening yen is boosting earnings, while the scion and his team face the challenge of making Toyota more competitive in global markets from China to the United States. “ I t’ s b een g r a d u a l , s t e a d y process and this is just part of the change that’s in his mind,” said Edwin Merner, president of Atlantis Investment Research Corp in Tokyo, which manages about US$300 million in assets. “It’s good for Toyota.” Mr Uchiyamada, 66, led Toyota’s development of the Prius – the

world’s best-selling gasoline-electric car – before he was promoted to executive vice president in 2005. He became vice chairman of Toyota’s board in June 2012. Uchiyamada graduated from Nagoya University in 1969 with a degree in applied physics and joined Toyota the same year, according to the company’s website. Atsushi Niimi, who managed production and dealt with supply chain interruption after the March 11 earthquake and tsunami, and Shinichi Sasaki, who was in charge of quality control when Toyota had the massive recall in 2009, and Yukitoshi Funo, who looked after Toyota’s business in Asia, will step down as executive vice presidents. Yasumori Ihara, 61, senior managing officer in charge of logistics and purchasing, and Seiichi Sudo, president of Toyota Motor Kyushu Inc. will be promoted to executive vice presidents. The new appointments will come into effect after the annual general shareholders’ meeting in June. Mr Cho, 76, was president of Toyota from 1996 to 2005 before becoming chairman in 2006. He will become honorary chairman. Mr Uchiyamada, currently vice chairman at Toyota, may also become vice chairman of the Keidanren, Japan’s largest business lobbying group, Nikkei said in January. Bloomberg News

12 |

business daily March 7, 2013

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

33.2

-0.8955224

40973690

CHINA UNICOM HON

ALUMINUM CORP-H

3.24

1.886792

25222198

CITIC PACIFIC

BANK OF CHINA-H

3.63

2.542373

354086842

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

5.95

0.8474576

32781962

31.65

0.4761905

2152485

15.4

3.633917

63479014

CLP HLDGS LTD

PRICE

DAY %

VOLUME

1.663586

43162993

POWER ASSETS HOL

10.66

-0.744879

15840151

SANDS CHINA LTD

0.2210759

3602938

SINO LAND CO

CNOOC LTD

14.66

0.5486968

61476981

COSCO PAC LTD

12.14

0.6633499

7806298

ESPRIT HLDGS

9.69

-1.122449

10666425

NAME

PRICE

DAY %

VOLUME

70.7

1.072194

1493784

36.45

1.815642

6230865

13.98

1.451379

5174223

SUN HUNG KAI PRO

116.5

0.6914434

3273403

SWIRE PACIFIC-A

97.85

0.3075346

900036

TENCENT HOLDINGS

278.8

1.234568

6541979

26.2

0.9633911

8125191

HANG LUNG PROPER

28.8

0.3484321

5555664

CATHAY PAC AIR

14.32

1.416431

2613686

TINGYI HLDG CO

HANG SENG BK

129

1.176471

2731942

CHEUNG KONG

116.8

0.4299226

2857599

WANT WANT CHINA

HENDERSON LAND D

52.4

0.8662175

1467946

7.28

0.5524862

19402000

WHARF HLDG

1.186758

2132000

CHINA COAL ENE-H CHINA CONST BA-H

6.34

2.093398

320768271

CHINA LIFE INS-H

22.95

1.101322

31766524

CHINA MERCHANT

27.55

2.607076

2981456

CHINA MOBILE CHINA OVERSEAS

HENGAN INTL HONG KG CHINA GS

21.7

0.2309469

5824872

HONG KONG EXCHNG

137.9

0.4369993

3185047

HSBC HLDGS PLC

84.05

0.2983294

13400150

84.3

1.505117

4369524

5.5

2.420857

252543025

83.3

-0.3588517

27462380

HUTCHISON WHAMPO

22.05

3.278689

20903069

IND & COMM BK-H

1.123596

91476657

LI & FUNG LTD

10.44

1.162791

12255422

MTR CORP

32.05

1.424051

CHINA PETROLEU-H

MOVERS

2.439024

6735119

11.5

0.174216

58777605

65.25

1.477449

3847038

1 22890

INDEX 22777.84 HIGH

22866.51

3332980

LOW

22488.09

52W (H) 23944.74

CHINA RES ENTERP

24.75

1.851852

3989168

CHINA RES LAND

20.55

1.732673

17419360

NEW WORLD DEV

1.156069

7235483

CHINA RES POWER

22.65

4688462

PETROCHINA CO-H

10.66

1.912046

51713655

CHINA SHENHUA-H

28.6

0.5272408

16179813

PING AN INSURA-H

64.3

2.47012

19911548

PRICE

DAY %

VOLUME

28.25

1.801802

12840171

YANZHOU COAL-H

1.123596

91476657

22480

(L) 18056.4 4-March

6-March

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.98

2.313625

129900476

PRICE

DAY %

VOLUME

11.34

0.3539823

AIR CHINA LTD-H

6.62

3.115265

10953543

CHINA PETROLEU-H

28320662

ZIJIN MINING-H

2.57

-2.281369

ALUMINUM CORP-H

3.24

1.886792

25222198

CHINA RAIL CN-H

8.2

1.359703

90072125

11200004

ZOOMLION HEAVY-H

9.82

1.028807

ANHUI CONCH-H

28.55

1.601423

12968468

CHINA RAIL GR-H

4.24

9997988

0.952381

13423181

ZTE CORP-H

14.14

8.936826

24583552

BANK OF CHINA-H

3.63

2.542373

354086842

CHINA SHENHUA-H

BANK OF COMMUN-H

5.95

0.8474576

32781962

CHINA TELECOM-H

28.6

0.5272408

16179813

4.09

1.995012

BYD CO LTD-H

29.1

2937375

90546327

DONGFENG MOTOR-H

10.78

1.506591

CHINA CITIC BK-H

4.84

1.043841

22568331

77795542

GUANGZHOU AUTO-H

6.51

1.086957

CHINA COAL ENE-H

7.28

5149356

0.5524862

19402000

HUANENG POWER-H

8.35

-2.224824

30570180

CHINA COM CONS-H

7.4

1.928375

13521721

IND & COMM BK-H

5.5

2.420857

252543025

CHINA CONST BA-H

6.34

2.093398

320768271

JIANGXI COPPER-H

17.98

2.860412

12847518

CHINA COSCO HO-H

4.28

4.901961

41622738

PETROCHINA CO-H

10.66

1.912046

51713655

22.95

1.101322

31766524

PICC PROPERTY &

11.14

0.9057971

9619976

CHINA LONGYUAN-H

6.99

-2.916667

194412805

PING AN INSURA-H

64.3

2.47012

19911548

CHINA MERCH BK-H

17.06

2.524038

16579685

SHANDONG WEIG-H

7.19

9340000

CHINA LIFE INS-H

CHINA PACIFIC-H

CHINA MINSHENG-H

10.94

2.819549

46367348

SINOPHARM-H

25.45

1.394422

3643954

CHINA NATL BDG-H

12.14

2.881356

25818086

TSINGTAO BREW-H

50.35

1.307847

2183910

CHINA OILFIELD-H

15.94

0.1256281

4878408

WEICHAI POWER-H

28.6

0.7042254

1833933

NAME

MOVERS

1 11390

INDEX 11359.04 HIGH

11382.93

LOW

11053.66

52W (H) 12354.22 11050

(L) 8987.76 4-March

6-March

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

7.2

-1.773533

69242994

SANY HEAVY INDUS

10.78

-0.9191176

53151163

CITIC SECURITI-A

14.39

-0.621547

107686892

SHANDONG DONG-A

1.112235

6638345

16023447

CSR CORP LTD -A

4.83

2.547771

45493530

SHANDONG GOLD-MI

34.6

-0.1731102

11533954

26686641

DAQIN RAILWAY -A

8.12

0.9950249

47427264

SHANG PHARM -A

13.97

3.711952

21457645

77977691

DATANG INTL PO-A

4.27

2.891566

29370986

SHANG PUDONG-A

11.11

0.3613369

205631621

EVERBRIG SEC -A

14.44

-1.701838

25322679

2.96

4.964539

173811745

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.94

-1.010101

198033012

AIR CHINA LTD-A

5.69

2.893309

25612379

4.8

0.8403361

18.28

1.162147

ALUMINUM CORP-A ANHUI CONCH-A

CHONGQING WATE-A

BANK OF BEIJIN-A

9.52

BANK OF CHINA-A

2.97

56981907

BANK OF COMMUN-A

4.92

-0.2028398

120772911

11.46

-0.3478261

30681684

GF SECURITIES-A

15.57

-0.3201024

32243545

GREE ELECTRIC

27.96

-1.16649

BANK OF NINGBO-A BAOSHAN IRON & S

0.3161222

NAME

4.98

0.6060606

GD POWER DEVEL-A

NAME

4.1

1.485149

6736776

SHANXI LU'AN -A

SHANGHAI ELECT-A

19.69

-0.706001

23272239

42849069

SHANXI XINGHUA-A

38.93

2.989418

7795898

26839816

SHANXI XISHAN-A

12.42

0.4854369

15559437 62924951

25.41

-0.7421875

5597057

GUANGHUI ENERG-A

19.56

-1.757911

30180244

SHENZEN OVERSE-A

5.84

-0.1709402

CHINA CITIC BK-A

4.68

30199897

HAITONG SECURI-A

12.46

-1.111111

154154647

SICHUAN KELUN-A

70.14

3.375092

1654036

CHINA CNR CORP-A

4.82

2.335456

39857110

HANGZHOU HIKVI-A

36.99

1.957001

7771737

SUNING APPLIAN-A

6.68

5.696203

108150298

CHINA COAL ENE-A

7.37

0.1358696

13839697

HENAN SHUAN-A

75.35

-0.9334736

1956198

TASLY PHARMAC-A

67.41

1.337943

4006668

19.72

-1.645885

18878140

TSINGTAO BREW-A

37.12

0.8695652

3169037

-0.7758621

98772674

WEICHAI POWER-A

23.2

-0.5145798

10045448

BYD CO LTD -A

CHINA CONST BA-A

4.67

45046361

HONG YUAN SEC-A

CHINA COSCO HO-A

4.18

0.7228916

28336582

HUATAI SECURIT-A

11.51

CHINA CSSC HOL-A

23.22

-0.08605852

9737144

HUAXIA BANK CO

11.09

0.2712477

45636681

WULIANGYE YIBIN

24.74

1.768819

38240601

CHINA EAST AIR-A

3.44

1.775148

22456159

IND & COMM BK-A

4.17

-0.2392344

60037664

YANGQUAN COAL -A

13.9

0.3610108

15362847

CHINA EVERBRIG-A

3.4

0.8902077

163785654

INDUSTRIAL BAN-A

20.56

1.984127

140656085

YANTAI WANHUA-A

16.75

1.515152

11626424

CHINA INTL MAR-A

13.37

0.8295626

9533802

INNER MONG BAO-A

32.11

-0.03113325

24716828

YANZHOU COAL-A

16.97

1.252983

4658979

CHINA LIFE INS-A

17.92

1.818182

34535976

INNER MONG YIL-A

29.91

1.424212

14474077

YUNNAN BAIYAO-A

79.3

-0.5767302

2242073

CHINA MERCH BK-A

13.45

0.6736527

152953415

INNER MONGOLIA-A

4.85

0.4140787

35114002

ZHONGJIN GOLD

15.13

0.2650762

20103688

CHINA MERCHANT-A

14.46

-1.699524

80705207

JIANGSU HENGRU-A

33.96

-1.565217

8073608

ZIJIN MINING-A

3.66

0.5494505

67108977

26039596

JIANGSU YANGHE-A

79.76

1.28254

6935056

ZOOMLION HEAVY-A

8.6

-0.6928406

97763236

JIANGXI COPPER-A

23.62

1.373391

15121780

10.86

10.0304

58921891

JINDUICHENG -A

11.69

2.09607

9006596

CHINA MERCHANT-A CHINA MINSHENG-A

24.92

-0.8750994

10.55

3.431373

484117026

8.8

5.515588

65082834

CHINA OILFIELD-A

17.11

0.4697592

6306391

JIZHONG ENERGY-A

14.08

-0.7052186

21121811

CHINA PACIFIC-A

19.45

2.801268

34334994

KANGMEI PHARMA-A

17.39

-0.7986309

26116819

177.22

1.268571

4922726

2.087347

17718243

CHINA NATIONAL-A

CHINA PETROLEU-A

7.26

1.538462

41424934

KWEICHOW MOUTA-A

CHINA RAILWAY-A

5.57

1.457195

18246058

LUZHOU LAOJIAO-A

31.79

CHINA RAILWAY-A

3.05

0.9933775

32989483

METALLURGICAL-A

2.14

1.421801

43463773

2.53

0.7968127

30185150

ZTE CORP-A

MOVERS 208

CHINA SHENHUA-A

22.15

0.4079782

18117552

CHINA SHIPBUIL-A

5.59

2.946593

100870038

PETROCHINA CO-A

8.92

0.6772009

18108714

PING AN BANK-A

24.25

1.337234

113828103

HIGH

2651.38

LOW

2529.81

3.82

2.688172

42142798

CHINA STATE -A

3.56

0.8498584

113110304

PING AN INSURA-A

44.52

1.296928

46295749

CHINA UNITED-A

3.55

2.305476

99070651

POLY REAL ESTA-A

11.35

0.8888889

100533880

11.15

2.387511

145417479

QINGDAO HAIER-A

12.86

-0.1552795

20245205

7.3

1.81311

26422424

QINGHAI SALT-A

28.42

3.083061

13488211

9.11

6.924883

54541139

SAIC MOTOR-A

16.07

1.644529

27291685

PRICE DAY %

Volume

PRICE DAY %

Volume

CHINA VANKE CO-A CHINA YANGTZE-A CHONGQING CHAN-A

22 2660

INDEX 2650.202

NINGBO PORT CO-A

CHINA SOUTHERN-A

52W (H) 2791.303 (L) 2102.135

2520

4-March

6-March

FTSE TAIWAN 50 INDEX NAME ACER INC

NAME

PRICE DAY %

Volume

0.3717472

23581195

FORMOSA PLASTIC

74.7

0.538358

6646073

TAIWAN MOBILE CO

104

ADVANCED SEMICON

25.5

0.7905138

27358985

FOXCONN TECHNOLO

81.5

1.368159

7234500

TPK HOLDING CO L

604

5500995

ASIA CEMENT CORP

36.8

0.5464481

2494650

FUBON FINANCIAL

40.4

0.1239157

21824436

TSMC

104

36120546

ASUSTEK COMPUTER

368

-2.387268

3785026

HON HAI PRECISIO

80.5

0.625

62565651

UNI-PRESIDENT

58.7

2.982456

12799629

AU OPTRONICS COR

13.1

-1.872659

144083999

HOTAI MOTOR CO

233

2.869757

581216

UNITED MICROELEC

11.2

0.9009009

31266819

CATCHER TECH

128

-4.11985

43423037

HTC CORP

255.5

-6.410256

30873157

-1.785714

8674742

39 -0.5102041

38555851

HUA NAN FINANCIA

17.2

5440290

YUANTA FINANCIAL

15.5

11290023

YULON MOTOR CO

55.3

2.218115

5678819

CATHAY FINANCIAL CHANG HWA BANK

17.1

0.5882353

10314217

LARGAN PRECISION

772

-5.276074

3977539

CHENG SHIN RUBBE

1.840491

11016612

LITE-ON TECHNOLO

47.5

2.702703

8402738

16.85 -0.5899705

127786189

8.67 -0.6872852

52060071

MEGA FINANCIAL H

CHIMEI INNOLUX C CHINA DEVELOPMEN

MEDIATEK INC

346 -0.4316547

9745330

24.95 -0.5976096

23164419

CHINA STEEL CORP

27.65

0.9124088

10684101

NAN YA PLASTICS

2.3766

5495168

CHINATRUST FINAN

17.55

0.2857143

29145583

PRESIDENT CHAIN

163.5

-0.304878

779924

91.8

0.1090513

4969713

QUANTA COMPUTER

65.4

0.9259259

6503385

20.65

0.486618

7573053

SILICONWARE PREC

33.8

3.680982

14728001

CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC

114

1.785714

4387914

SINOPAC FINANCIA

14.2

1.428571

56776283

FAR EASTERN NEW

32.1

0.9433962

5006823

SYNNEX TECH INTL

58.7

-2.166667

6120987

FAR EASTONE TELE

69.1

0.728863

7730381

TAIWAN CEMENT

38.6

6429125

18.45 -0.5390836

13398551

FIRST FINANCIAL

17.05

0.2941176

6817398

FORMOSA CHEM & F

74.8

1.355014

3427421

TAIWAN COOPERATI TAIWAN FERTILIZE

70.3

0.4285714

3374266

FORMOSA PETROCHE

0.1221001

2653176

TAIWAN GLASS IND

28.1

745993

WISTRON CORP

MOVERS

2702383

6 5565

INDEX 5549.45 HIGH

5560.32

LOW

5476.16

52W (H) 5639.93 5470

(L) 4719.96 4-March

6-March

March 7, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 31.60 31.45

50.4

17.7

49.8

17.6

49.2

17.5

31.30 31.15

Max 31.5

Average 31.347

Min 31.2

31.00

Last 30.45

Max 50.2

Average 49.368

Min 48.65

48.6

Last 49.5

Max 17.66

Average 17.505

Min 17.

17.4

Last 17.66

19.0

36.8 36.6

21.1 21.0

18.9

36.4

20.9 18.8

36.2

Max 36.7

Average 36.518

Min 36.1

36.0

Last 36.45

Max 18.98

Average 18.902

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Apr13

90.8

-0.022021581

-2.081311334

108.4599991

BRENT CRUDE FUTR Apr13

111.53

-0.071678165

2.264808362

118.2900009

GASOLINE RBOB FUT Apr13

314.5

-0.101645385

8.429581107

334.4000101

238.2400036

933

0.592991914

1.413043478

1010.5

800.25

3.548

0.538396146

4.260946224

3.997000217

3.032000065

GAS OIL FUT (ICE) Apr13 NATURAL GAS FUTR Apr13 HEATING OIL FUTR Apr13 METALS

Gold Spot $/Oz

297.93

0.211907164

-0.544131393

326.7999887

254.189992

1575.02

-0.4349

-5.3735

1796.08

1527.21

Silver Spot $/Oz

28.665

-0.7723

-4.7991

35.365

26.1513

Platinum Spot $/Oz

1595.2

0.7675

5.1029

1742.8

1379.05

Palladium Spot $/Oz

741.98

2.4509

6.0487

777.38

553.75

LME ALUMINUM 3MO ($)

1977

0.202736949

-4.630969609

2290.75

1827.25

LME COPPER 3MO ($)

7772

0.608414239

-2.004791325

8702.75

7219.5

2007.5

0.274725275

-3.485576923

2230

1745

LME ZINC

3MO ($)

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

18.7

Last 18.9

Max 21.05

Average 20.854

Min 20.75

Last 21.05

16700

1.365705615

-2.110199297

19600

15236

15.32

-0.357723577

-1.065547304

16.95000076

15.22999954

709

1.249553731

838

520.25

May13

WHEAT FUTURE(CBT) May13

705.25

-0.106232295

-10.47286576

938

665

SOYBEAN FUTURE May13

1466

-0.034094783

4.770412721

1639.5

1218.75

COFFEE 'C' FUTURE May13

140.7

-0.318809777

-4.08997955

213.7999878

137.5999908

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 %

1.027 1.51 0.943 1.3051 93.43 7.9889 7.7561 6.218 54.815 29.73 1.2451 29.625 40.725 9693 95.947 1.23076 0.86431 8.1127 10.4267 121.93 1.03

0.4794 -0.3695 -0.1379 0.1458 -0.289 -0.0013 0 0.0499 0.2007 0.2691 0.1365 0.216 -0.0123 0.031 -0.766 -0.2933 -0.5102 0.0592 -0.14 -0.4347 0

YTD %

(H) 52W

-1.0407 -6.6518 -2.9268 -1.0538 -7.8454 -0.0713 -0.0709 0.2026 0.3284 2.8591 -1.9035 -1.9983 0.6875 1.0317 -6.8996 -1.8915 -5.6565 1.2918 0.9946 -6.8564 -0.0097

(L) 52W

1.067 1.6381 0.9972 1.3711 94.77 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 97.728 1.25692 0.88151 8.4957 10.9254 127.71 1.0314

0.9582 1.4986 0.9002 1.2043 77.13 7.9824 7.7498 6.2105 49.795 29.63 1.2152 28.913 40.54 9095 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS NAME

(H) 52W

(L) 52W

3.61

0.2777778

14.60317

3.94

2.29

3991447

CROWN LTD

12.18

0.9113505

14.15183

12.25

8.06

2243028

ARISTOCRAT LEISU

PRICE

DAY % YTD %

VOLUME CRNCY

SUGAR #11 (WORLD) May13

18.22

0.164925783

-7.040816327

24.56999969

17.67000008

AMAX HOLDINGS LT

0.072

2.857142

0.104

0.055

8058500

COTTON NO.2 FUTR May13

87.05

0.080478271

14.75085684

92.62999725

68.18999481

BOC HONG KONG HO

26.2

0.9633911

8.713691

27.1

20.8

8125191

CENTURY LEGEND

0.36

35.84906

0.42

0.215

8000

6.4

6.844745

6.74

2.8

205000 20903069

CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

CHINA OVERSEAS

22.05

3.278689

-4.545456

25.6

14.124

CHINESE ESTATES

11.72

0.1709402

-3.375416

12.964

7.697

73500

CHOW TAI FOOK JE

11.02

0.1818182

-11.41479

13.4

8.4

5080186

EMPEROR ENTERTAI

2.04

0.990099

7.936509

2.15

1.1

1175000

FUTURE BRIGHT

2.45

5.603448

100.8197

2.47

0.485

6388000

31.45

2.11039

3.624381

35.7

16.94

6739519 2731942

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14253.77

0.8915034

8.773028

14286.37

12035.08984

NASDAQ COMPOSITE INDEX

3224.13

1.323023

6.776463

3227.309

2726.68

HANG SENG BK

129

1.176471

8.677341

129.1

99.2

FTSE 100 INDEX

6449.99

0.2804748

9.362461

6451.68

5229.76

HOPEWELL HLDGS

33.4

-0.4470939

0.4511278

35.3

19.049

1142697

DAX INDEX

7935.55

0.8289381

4.24518

7937.02

5914.43

HSBC HLDGS PLC

84.05

0.2983294

3.38253

88.45

59.8

13400150

NIKKEI 225

11932.27

2.129679

14.78656

11933.82031

8238.96

3241067

HANG SENG INDEX

22777.84

0.9633652

0.5336998

23944.74

18056.4

CSI 300 INDEX

2650.202

1.044492

5.043695

2791.303

2102.135

TAIWAN TAIEX INDEX

7950.3

0.2217401

3.257352

8170.31

6857.35

KOSPI INDEX

2020.74

0.2047991

1.186247

2057.28

1758.99

S&P/ASX 200 INDEX

5116.79

0.8162372

10.06334

5131.6

3985

4824.683

1.535913

11.76819

4835.069

3635.283

FTSE Bursa Malaysia KLCI

1651.84

0.5943681

-2.197222

1699.68

JAKARTA COMPOSITE INDEX

20.7

CURRENCY EXCHANGE RATES

NAME ENERGY

Min 18.78

20.8

GALAXY ENTERTAIN

HUTCHISON TELE H

3.81

-0.78125

7.022474

3.92

2.98

LUK FOOK HLDGS I

24.85

-1.388889

1.844264

30.05

14.7

3297000

MELCO INTL DEVEL

12.2

2.177554

35.4051

13.96

5.12

3769266

MGM CHINA HOLDIN

17.66

0.5694761

32.99916

18.449

9.509

9501543

MIDLAND HOLDINGS

3.44

4.878049

-7.027028

3.249

2906000

0.182

19.73685

0.226

0.084

30763000

NEPTUNE GROUP NEW WORLD DEV

1.156069

16.47254

15.12

7.95

7235483

36.45

1.815642

7.363768

39.95

20.65

6230865

SHUN HO RESOURCE

1.56

0.6451613

11.42857

1.67

1.03

64000

1526.6

SHUN TAK HOLDING

4.36

0.6928406

4.057278

4.65

2.56

6235409

SANDS CHINA LTD

NZX ALL INDEX

926.132

0.4366092

4.997324

934.988

755.149

SJM HOLDINGS LTD

18.9

1.831897

22.15

12.34

8304108

PHILIPPINES ALL SHARE IX

4257.79

1.246501

15.10714

4261.67

3238.77

SMARTONE TELECOM

13.28

-0.3003003

-5.681818

17.5

13.16

1990500

HSBC Dragon 300 Index Singapor

625.14

0.24

0.65

WYNN MACAU LTD

21.05

2.43309

0.4773233

25.5

14.62

11476746

STOCK EXCH OF THAI INDEX

1559.07

0.6299579

12.00778

1561.72

1099.15

ASIA ENTERTAINME

3.71

2.770083

21.24183

6.95

2.4

63840

BALLY TECHNOLOGI

49.95

1.359578

11.71998

51.16

41.74

628431

HO CHI MINH STOCK INDEX

471.09

1.941054

13.86411

497.87

372.39

BOC HONG KONG HO

3.39

10.42346

3.55

2.68

12290

Laos Composite Index

1437.51

0.1421137

18.33598

1455.82

926.85

GALAXY ENTERTAIN

4.08

-3.716814

2.77078

4.57

2.25

7695

INTL GAME TECH

16.86

2.119927

18.98377

17.37

10.92

4206972

JONES LANG LASAL

97.89

1.115587

16.61901

100.33

61.39

292561

LAS VEGAS SANDS

50.69

-1.189084

9.813692

58.3216

32.6127

5121229

MELCO CROWN-ADR

19.29

1.100629

14.54869

21.475

9.13

2384221

MGM CHINA HOLDIN

2.29

-6.147541

23.78378

2.44

1.36

1200

MGM RESORTS INTE

12.09

-0.5756579

3.865976

14.8

8.83

8866685

SHFL ENTERTAINME

15.08

-5.691057

18.77

11.75

1203002

SJM HOLDINGS LTD

2.62

13.41992

2.85

1.65

4730

WYNN RESORTS LTD

116

-0.4719005

3.120279

129.6589

84.4902

959721

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

AUD HKD

USD

14 |

business daily March 7, 2013

Opinion

What is Italy saying?

Joseph E. Stiglitz

Nobel laureate in economics, is University Professor at Columbia University

he outcome of the Italian elections should send a clear message to Europe’s leaders: the austerity policies that they have pursued are being rejected by voters. The European project, as idealistic as it was, was always a top-down endeavor. But it is another matter altogether to encourage technocrats to run countries, seemingly circumventing democratic processes, and foist upon them policies that lead to widespread public misery. While Europe’s leaders shy away from the word, the reality is that much of the European Union is in depression. The loss of output in Italy since the beginning of the crisis is as great as it was in the 1930’s. Greece’s youth unemployment rate now exceeds 60 percent, and Spain’s is above 50 percent. With the destruction of human capital, Europe’s social fabric is tearing, and its future is being thrown into jeopardy. The economy’s doctors say that the patient must stay the course. Political leaders who suggest otherwise are labeled as populists. The reality, though, is that the cure is not working, and there is no hope that it will – that is, without being worse than the disease. Indeed, it will take a decade or more to recover the losses incurred in this austerity process. In short, it is neither

The European electorate seems to have recognized that, under current arrangements, the euro is undermining the very purposes for which it was supposedly created

populism nor shortsightedness that has led citizens to reject the policies that have been imposed on them. It is an understanding that these policies are deeply misguided. Europe’s talents and resources – its physical, human, and natural capital – are the same today as they were before the crisis began. The problem is that the prescriptions being imposed are leading to massive underutilization of these resources. Whatever Europe’s problem, a response that entails waste on this scale cannot be the solution.

Greater federalism The simplistic diagnosis of Europe’s woes – that the crisis countries were living beyond their means – is clearly at least partly wrong. Spain and Ireland had fiscal surpluses and low debt/GDP ratios before the crisis. If Greece were the only problem, Europe could have handled it easily. An alternative set of welldiscussed policies could work. Europe needs greater fiscal federalism, not just centralized oversight of national budgets. To be sure, Europe may not need the two-to-one ratio of federal to state spending found in the United States; but it clearly needs far more European-level expenditure, unlike the current miniscule EU budget (whittled down further by austerity advocates). A banking union, too, is needed. But it needs to be a real union, with common deposit insurance and common resolution procedures, as well as common supervision. There will also have to be Eurobonds, or an equivalent instrument. European leaders recognize that, without growth, debt burdens will continue to grow, and that austerity by itself is an anti-growth strategy. Yet years have gone by, and no growth strategy is on the table, though its components are well known: policies that address Europe’s internal imbalances and Germany’s huge external surplus, which now is on par with China’s (and more than twice as high relative to GDP). Concretely, that means wage increases in Germany and industrial policies that promote exports and productivity in Europe’s peripheral economies. What will not work, at least for most eurozone countries,

is internal devaluation – that is, forcing down wages and prices – as this would increase the debt burden for households, firms, and governments (which overwhelmingly hold eurodenominated debts). And, with adjustments in different sectors occurring at different speeds, deflation would fuel massive distortions in the economy.

Seeds of discord If internal devaluation were the solution, the gold standard would not have been a problem in the Great Depression. Internal devaluation, combined with austerity and the single-market principle (which facilitates capital flight and the hemorrhaging of banking systems) is a toxic combination. The European project was, and is, a great political idea. It

has the potential to promote both prosperity and peace. But, rather than enhancing solidarity within Europe, it is sowing seeds of discord within and between countries. Europe’s leaders repeatedly vow to do everything necessary to save the euro. European Central Bank President Mario Draghi’s promise to do “whatever it takes” has succeeded in providing a temporary calm. But Germany has consistently rejected every policy that would provide a long-term solution. The Germans, it seems, will do everything except what is needed. Of course, the Germans have reluctantly come to accept the necessity of a banking union that includes common deposit insurance. But the pace with which they accede to such reforms is out of kilter with the markets. Banking

systems in several countries are already on life support. How many more will be in intensive care before a banking union becomes a reality? Yes, Europe needs structural reform, as austerity advocates insist. But it is structural reform of the eurozone’s institutional arrangements, not reforms within individual countries, that will have the greatest impact. Unless Europe is willing to make those reforms, it may have to let the euro die to save itself. The EU’s Economic and Monetary Union was a means to an end, not an end in itself. The European electorate seems to have recognized that, under current arrangements, the euro is undermining the very purposes for which it was supposedly created. That is the simple truth that Europe’s leaders have yet to grasp. © Project Syndicate

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes Newsdesk Alex Lee, Luciana Leitão, Stephanie Lai, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, José I. Duarte, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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March 7, 2013 business daily | 15

OPINION Business

The European-American dream

Leading reports from Asia’s best business newspapers

Javier Solana

wires The Asahi Shimbun Japan will let the United States continue imposing tariffs on Japanese vehicles for now, a decision expected to help prime minister Shinzo Abe announce Japan’s participation in talks for the Trans-Pacific Partnership free trade arrangement. Although a major premise of the partnership is to eliminate all tariffs in principle, Tokyo and Washington are manoeuvring to allow exemptions of certain productsthatarepoliticallysensitive at home. For example, American automakers are concerned about an increase in Japanese car imports, while Tokyo wants to maintain tariffs on various US agricultural products.

Foreign Minister of Spain, Secretary-General of NATO, and EU High Representative for Foreign and Security Policy

The three-day Myanmar Upstream Summit oil and gas conference kicked off with the government planning to open bids for offshore blocks by April, U Zaw Aung, the director of planning at Myanma Oil and Gas Enterprise (MOGE). While foreign companies will have to partner with local companies to work on shallow-water blocks and onshore, MOGE has not decided yet whether or not foreign companies will be able to have a 100 percent stake in deep-water blocks, he said. The process for onshore bids, he said, will probably not be decided on until November.

oday, three European countries are among the world’s seven largest economies. Ten years from now, only two will remain. By 2030, only Germany will still be on the list, and by 2050, none will remain. Indeed, by then, the United States will be the only representative of the West in the top seven. What this means is that the European states are too small to compete separately in the world of the twenty-first century. It’s as simple as that. By 2030, according to the World Bank, there will be two billion more people, mainly Asians, in the middle class. The pressure on the planet’s resources, commodities, water, and food will be huge, making a global rebalancing practically inevitable. And in a world marked by interdependence and constant change, Europe will find that unity is strength. Indeed, unless Europeans work toward integration, they may find themselves surpassed by emerging countries in terms of technological development, job creation, production costs, talent, and creativity. The European Union is still the place where economic and social institutions assure a better quality of life. In this sense, the demand for a European voice in the world is clear – Brazil’s former president, Luiz Inácio Lula da Silva, spoke of the EU as a “singular international heritage” – because it guarantees the values that represent humanity at its best.

The Jakarta Globe

International appeal

Indonesia and Denmark have set a target to double their bilateral trade volume over the next few years, as Denmark is simultaneously seeking to boost its green technology investments in Indonesia. Hatta Rajasa, Indonesia’s coordinating minister for the economy, said trade between the two countries has been growing by an average of 14.7 percent per year over the past five years. “At least over the next few years, we wish to double it,” Mr Hatta said after a meeting with visiting Danish Trade and Investment minister Pia Olsen Dyhr in Jakarta.

Those values are embodied partly in Europe’s welldeveloped welfare states, which are an important component of Europeans’ collective identity and a principal point of pride. True, in terms of economic equality, there is only a twoto-one difference in per capita GDP between the richest U.S. state and the poorest (excluding the District of Columbia), while in the EU the ratio is 6.5 to one. But, in terms of conditions within U.S. states and EU countries, things are very different. The average Gini coefficient (where zero is absolute equality

The Times of India India’s domestic air traffic declined by almost five percent in January even though the overall global market showed an upswing with China becoming the second largest domestic marketworldwide,theInternational Air Transport Association said. “India’s domestic market was also in negative territory with a 4.9% decline in demand and 5.3% capacity reduction,” the global airlines’ body said. Without naming Kingfisher Airlines, it said the decline was caused by “one of the major domestic players” effectively exiting the market, apart from rising infrastructure costs and impact of high fuel prices “exaggerated by excessive taxation.”

The Myanmar Times

and one is absolute inequality) in Europe is 0.30, compared to 0.45 in the U.S. China’s coefficient is 0.47. American society is very unequal (and China’s is slightly more so). In Europe, the opposite is true. Its societies are much more egalitarian, while convergence among them is still a long way off (this is, indeed, the great

European states are too small to compete separately in the world of the twenty-first century

task that Europe faces). From this perspective, it is not difficult to comprehend Europe’s international appeal. Consider the following thought experiment (a variation on the “veil of ignorance” conjured by the philosopher John Rawls in his effort to design a just society): Taking into account the level and quality of social protection, public education, and health care in the EU and the U.S., and without knowing beforehand what your social position would be in either society, where would you prefer to be born? But, if Europe wants to maintain its prosperitysharing institutions, it must generate economic growth in order to pay for them. That means raising productivity and strengthening

competitiveness – and, equally important, asserting Europe’s place in the world.

Growth expectations Europeans have a new reason for hope as they seek to achieve these goals: a transatlantic free-trade agreement. Not long ago, in the 1980’s, Europe was dismissed (by conservative Americans in particular) with the term “eurosclerosis”. The decade following the oil crisis of 1979 was marked by a spike in unemployment, fiscal paralysis, and, indeed, frozen accession negotiations for Spain and Portugal. European economies were stagnating, while the U.S. and Japan were growing. At the time, Europe’s common market was not yet a single market. Then, a historic convergence of national interests and ideological positions (from François Mitterrand’s Socialists to Margaret Thatcher’s Conservatives to Helmut Kohl’s Christian Democrats) occurred. With great foresight, Europe’s leaders concluded that it was their economies’ lack of integration that was keeping Europe from growing as strongly

as the U.S. and Japan. The solution was to create a much larger market: a single market. This effort culminated in the Single European Act of 1986, which laid the foundation for the virtuous circle of strong growth and lower unemployment in the 1990’s. Today, the Transatlantic Trade and Investment Partnership (TTIP) is finally on the table, promising to boost growth in the EU and the U.S. alike. In 2012, U.S. exports to the EU totalled roughly 206 billion euro (US$272 billion), while EU exports to the U.S. amounted to nearly 300 billion euro. Thirty million jobs in Europe (about 10 percent of the total work force) depend on foreign trade. The quantities are huge, which suggests that the TTIP could have an effect comparable to that of the single market for Europe. But realising the TTIP’s potential requires completion of the European integration project. That process is long and slow, but it is the only way to maintain Europe’s relevance as an international actor, with something to say and to offer. Indeed, it has been this process – now in its seventh decade – that has enabled Europeans to enjoy the highest standard of living in the world. © Project Syndicate

16 |

business daily March 7, 2013

CLOSING Residence permits to replace ‘hukou’

Sharp announces tie-up with Samsung

China’s new leaders are planning a system of national residence permits to replace the household registration or ‘hukou’ regime, a government source said, a vital reform that will boost its urbanisation campaign and drive consumption-led growth. Critics have called for changes for years and a government researcher told Reuters a “unified national residence permit system” would be adopted as policy as part of a 10-year urbanisation plan to be published after the current annual session of parliament. Benefits and entitlement under the new system would be “basically equal”, he said, although the changes would be eased in slowly.

Sharp yesterday announced a US$111 million capital tie-up deal with South Korean rival Samsung, in a rare move for a Japanese firm that underscores the fading fortunes of its electronics giants. Sharp, which is scrambling to repair its battered balance sheet, said Samsung would buy 10.4 billion yen of new shares, or a three-percent stake in the Japanese firm, making the smartphone and tablet maker its biggest foreign shareholder. The decision to accept a capital injection from foreign firms marks a major comedown for Japan’s manufacturers, said Hiroshi Sakai, chief economist with SMBC Friend Research Centre.

Lights off monthly as new Microsoft Earth Hour scheme grows fined by EU Three casino concessionaires now involved in local extension of World Wildlife Fund initiative

for violating browser accord

Now you see it…now you don’t. Cotai during monthly Earth Hour on Tuesday

hree of Macau’s six casino concessionaires are now switching their exterior lights off for an hour at night once per month. It’s an extension of the Earth Hour initiative by the World Wildlife Fund. That event, usually held annually at the end of March and involving all six Macau casino operators, is where homes and businesses across the world are encouraged to switch off non-essential lights for an hour. Sands China Ltd says its four casino resorts and their six hotels: Conrad Macao, Cotai Central; Sheraton Macao Hotel, Cotai Central; Holiday Inn Macao Cotai Central; The Venetian Macao; Four Seasons Hotel Macao and Sands Macao Hotel; pioneered the move to a monthly version of Earth Hour. On Tuesday those venues were joined by Galaxy Entertainment Group Ltd’s StarWorld Hotel & Casino on Macau peninsula, and Galaxy Macau and its hotel brands Hotel Okura Macau, Banyan Tree Macau and Galaxy Hotel. Additionally taking part were

Melco Crown Entertainment Ltd’s City of Dreams resort and its hotels Crown Towers, Grand Hyatt Macau and Hard Rock Hotel Macau as well as MCE’s Altira Macau in Taipa. “We are glad to see major corporations taking the lead in saving energy in Macau, and are pleased that Sands China has taken the initiative to raise the bar for sustainable operations with this important effort to make Earth Hour a monthly exercise in conservation,” said Arnaldo Santos, director of the Macau government’s Office for the Development of Energy Sector.

Electricity charges In January Business Daily reported on the lack of availability of offshore natural gas for electricity production because a supply pipe to the city was closed while construction on Hengqin Island is completed. That’s meant the local electricity distributor Companhia de Electricidade de Macau SA (known as CEM) – which

also generates some energy – has had to use fuel oil for the latter process. Wholesale fuel oil prices in Macau rose 14.8 percent in the first three quarters of 2012 data show. On January 20, CEM announced it was increasing its tariff for large enterprises – including big hotels and casino resorts – by one cent to 0.44 patacas (US$0.06) per kilowatthour. That’s around 2.3 percent. In November the Statistics and Census Service revealed Macau is more dependent than ever on electricity imports from mainland China. The city used more electric power in the third quarter of 2012 that in any previous quarter. Consumption was up by 5.2 percent from the previous record of 1.2 billion kWh set in the third quarter 2011. The growth of the gaming industry explained most of the increased consumption. It used 467 million kWh in the first quarter 2012, 11.6 percent more than a year before according to the statistics service. M.G.

icrosoft Corp. was fined 561 million euros (US$731 million) by European Union (EU) regulators for violating the terms of a settlement to give users a choice of web browsers aside from its Internet Explorer. Yesterday’s fine – about 1 percent of the company’s 2012 revenues – brings to 2.24 billion euros the penalties faced by Microsoft in its European Union antitrust clashes over the past decade, including an 899 millioneuro fine for failing to obey an order to share data with competitors. “A failure to comply is a very serious infringement that must be sanctioned accordingly,” European Union Competition commissioner Joaquin Almunia said in an e-mailed statement yesterday. The world’s largest software maker agreed in 2009 to offer access to rival browsers as a part of a settlement to repair its relationship with the bloc’s regulators. The company said last July it only learned that month that it didn’t offer its browser choice software to some 28 million computers running Windows 7 Service Pack 1, or 10 percent of the computers that should have received it. Under the terms of Microsoft’s 2009 pledge, consumers who bought personal computers were given a choice of the 12 most widely used browsers to install in addition to, or instead of, Microsoft’s Internet Explorer. Bloomberg