Macau Business Daily, May 22, 2013 by Business Daily

Inflation cools down but food hikes persist The prices of products and services here grew more slowly in the first four months of 2013 than a year earlier, mostly due to a cool-down in food prices. However, yearly food inflation still reached 6.88 percent during the January-April period, hitting low-income households the most. In addition, housing inflation has more than doubled year-on-year to over 9 percent, according to official figures. page 16

e l b u o d s e l a s l i a t e r s a e v i r h t s p o Sh

ith tourism rebounding and a stronger yuan boosting the purchasing power of mainland Chinese visitors, stores here have doubled their sales in less than three years.

In the third quarter of 2010 retail sales were at 7.7 billion patacas, which at the time was a new record. But in the first quarter this year sales reached 15.44 billion patacas (US$1.93 billion).

Luxury goods like watches and jewellery were still the biggest driver of retail sales. But the fastest yearon-year growth was felt in sales of footwear, cosmetics and pharmacies goods, official data show.

And retailers believe the good times will continue to roll, with two-thirds of those polled by the statistics bureau expecting to remain stable or even increase. More on page 2

Year II

Number 288

Wednesday May 22, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

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www.macaubusinessdaily.com

Pagcor will ‘consider’ pulling Okada’s licence

Hang Seng Index 23450

Japanese billionaire Kazuo Okada might lose its Manila casino licence if it is proved that bribes were paid, says Francis Hernando, Pagcor’s vice president. The Philippines gaming regulator has already warned Mr Okada’s Tiger Resorts, Leisure and Entertainment Inc. “If somebody proved that some bribes were paid in the past, then we would have to think very seriously about the continuation of the licence,” Mr Hernando said.

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More electronic tables to boost casino results

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HSI - Movers Name

Macau should follow the example of Singapore and bet more on huge stadium-style electronic baccarat tables, said Nelson Rose, law professor at Whittier Law School in the United States. Technology allows the game to be faster, with more money rolling into casino operators’ pockets, the gaming legal expert stressed. High-margin electronic tables and slot machines are among the fastest growing casino segments here.

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%Day

COSCO PAC LTD

4.07

TINGYI HLDG CO

3.49

CHINA COAL ENE-H

2.59

CHINA OVERSEAS

2.13

WHARF HLDG

1.79

CITIC PACIFIC

-0.20

HANG SENG BK

-1.37

TENCENT HOLDINGS

-1.75

IND & COMM BK-H

-2.13

CHINA RES POWER

-4.31

Source: Bloomberg

First-ever regulation for home pre-sales

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The Legislative Assembly approved the housing pre-sales law yesterday, giving the city its first-ever restrictions on transactions of unfinished units. Even though the bill was approved almost unanimously, the discussion took over three hours as many legislators expressed doubts over whether it will be enough to ensure buyers get what they pay for. The government pledged to close any potential loopholes.

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May 22, 2013

Macau

Retail sales double in just three years Sales rose by 17 percent to a new record in Q1, driven by footwear and cosmetics Tony Lai

tony.lai@macaubusinessdaily.com

he retail sales in this year’s first quarter rose by 17 percent year-on-year to 15.44 billion patacas (US$1.93 billion), a new record high, official data published yesterday show. Macau’s retail sales have doubled in less than three years. In the third quarter of 2010 the sector sold just 7.7 billion patacas, which at the time was a new record. The first quarter also posted a stronger year-on-year growth, data from the Statistics and Census Service show. Growth in the previous two quarters stayed below 15 percent – for the first time since mid 2009 – likely hit by a decline in tourist arrivals in the same period. The number of tourists rebounded in this year’s first quarter, growing by 1.9 percent to over 7.08 million travellers. Sales in footwear surged the most in the three months ended March, rising by 29 percent year-on-year to 264 million patacas. Macau stores sold over 800 million patacas in cosmetic products and goods in pharmacies, mostly favoured by tourists from mainland China, with these sales growing between 23

Sales in footwear surged by 29 percent year-on-year last quarter

percent and 25 percent. Watches and jewellery still accounted for the biggest slice – 30 percent – of the first quarter retail sales, 4.62 billion patacas, up by 14 percent year-on-year. Even though sales of cars went up by 23 percent from the same period of

last year to 918 million patacas, this figure is 10 percent lower quarterto-quarter. Sales of electrical goods were the only segment suffering a year-on-year decline of 3 percent to 202 million patacas in the January-March period. Despite the record sales, almost

43.8 percent of the retailers polled by the government reported declines in business, up by about 13 percentage points from the previous quarter. Still, over two-thirds of the retailers had a positive forecast for business this quarter, expecting sales to increase or at least to remain stable.

40,000 workers needed by 2016: think-tank Allowing outside students to work here would not meant to help casinos, says official Tony Lai

tony.lai@macaubusinessdaily.com

he government’s think-tank estimates the city will require 40,000 more workers by 2016, but stressed that big gaming enterprises will not be given priority. More labour will be needed as the city aims to become a world-class tourism city, said Lao Pun Lap, head of the Policy Research Office, in a press conference over a government proposal to set up a mechanism allowing university students from outside to work here. This idea, first mentioned by Chief Executive Fernando Chui Sai On last month, sparked opposition from some groups, worried gaming operators would use it to fill up their labour force. Mr Lao said yesterday: “The government currently has no stance on this proposal.” But he added the resident labour force “cannot satisfy the market demand”. “Quite a few associations and academics” suggested the hiring of outside students during the threemonth consultation on the city’s demographic policy held earlier this year, the official recalled. He also urged Macau people “to broaden their mindset”, saying this

practice had been common in other places like Hong Kong. The head of the think-tank also stressed: “It is not true that we are only concerned about big companies but we have actually considered more about the SMEs.” “We are very concerned about the situation of the SMEs [small and medium enterprises]… as the competition will be more fierce in the future.” But he failed to address how the proposal could help smaller businesses to have an edge over big enterprises in attracting workers. Mr Lao also failed to say whether residency or a working permit would be given to outside students, saying this issue was “too technical”. He added this proposal was only one of several they would analyse in order to improve the existing nonresident workers’ mechanism. They would again consult the public after the release of the demographic policy consultation report later this year, the official added. Latest official data show the employed population hit 351,800 in the first quarter, with over 110,000 imported workers.

MacauBusinessDaily 25x50_02.pdf

May 22, 2013

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May 22, 2013

Macau

Pagcor will ‘consider’ pulling Okada’s licence Senior executive from Philippines regulator says if bribe paying proved it may strip him of Manila casino rights Michael Grimes Michael.grimes@macaubusinessdaily.com

he Philippines gaming regulator has told Tiger Resorts, Leisure and Entertainment Inc., controlled by Kazuo Okada, that it will “think seriously” of stripping the firm of its Manila casino licence if it’s proved that bribes were paid to win the licence. The position of the regulator – the Philippine Amusement and Gaming Corporation – was confirmed to Business Daily by Francis Hernando, Pagcor vice president, on the sidelines of the Global Gaming Expo Asia 2013 in Macau yesterday. Mr Okada was stripped in February 2012 of his directorship of Wynn Macau Ltd and his near 20 percent stake in Wynn Resorts Ltd amid allegations from Wynn – strongly denied – of wrongdoing in Mr Okada’s pursuit of a Manila gaming licence. Since then he has faced a criminal investigation in the U.S. in relation to possible breaches of the Foreign Corrupt Practices

Act over the Philippines scheme, and also criminal investigations in the Philippines. In the latter country, the trouble is on two fronts. This it that money was paid to a consultant linked to former Pagcor chairman Efraim Genuino in pursuit of the Manila licence, and also that Mr Okada’s Japanese company Universal Entertainment Corp subverted the Philippines constitution by ensuring it controlled privately 64 percent of the US$2 billion (15.9 billion patacas) scheme. The constitution says foreigners cannot own more than 40 percent of a project. Universal Entertainment said in its earnings report, on Monday, that an independent internal investigation had determined a US$25 million payment to a firm called Subic Leisure should not have been paid. The payment was booked as an expense to resolve a land rights dispute in Manila, but, the company in its filing said “the land problem could be legally resolved prior to

signing a consulting contract with Subic Leisure”. Media reports have linked Subic Leisure, an entity registered

in the British Virgin Islands, to Rodolfo Soriano, a close associate of Mr Genuino. Pagcor’s Mr Hernando told Business Daily: “If somebody proved that some bribes were paid in the past, then we would have to think very seriously about the continuation of the licence. We’ve also told Tiger [Resorts] that.” Mr Hernando said however that even it Tiger kept its casino licence, the issue of the alleged subversion of the country’s constitution had to be resolved before the casino could open. He told us: “If they don’t resolve the issue of the land, then they can’t open a casino. They can build the hotel…we’re not the hotel regulator. They can even build a casino, they’re just not going to open unless they get that land issue out of the way.”

Francis Hernando of Pagcor

Casino mass market easier for investors to track: analyst Praveen Choudhary of Morgan Stanley says casino VIP segment subject to more variables Michael Grimes michael.grimes@macaubusinessdaily.com

asino investors should stick to operators with a strong massmarket offer if they want clarity on the future earnings direction of the operator’s stock, suggested analyst Praveen Choudhary on the first day of Global Gaming Expo 2013.

Mr Choudhary, an award-winning analyst and managing director of Morgan Stanley in Hong Kong, was speaking at the Global Markets Forum at the event at CotaiExpo in The Venetian Macao. He told delegates: “Stick with the

Stick with the mass market because you can actually see people coming to the gambling table and gamble. You can actually feel it Praveen Choudhary, managing director, Morgan Stanley

mass market because you can actually see people coming to the gambling table and gamble. You can actually feel it. If I come to Macau every week and see it’s busier, I know it’s good business, and if it’s sparse, it’s bad business. But if you’re relying on VIP business, you can’t get in to the VIP room [to check]. And it’s at the whims and fancies of the middleman [junket operator] who can have problems because of [capital] liquidity or financial situations.” “When you’re in the Chinese VIP business you are transferring money to other countries and that’s not easy,” he added. “Some countries will like it and some countries will not. If it’s a small amount of money it’s fine, but if you want to make it a mainstream business, it’s going to hit some snag. And that’s why I would be a little bit cautious on the VIP business overall.” Mr Choudhary did point out however that there had been plenty of upside for investors so far in Macau. “The market capital of the whole gaming space in Macau has gone to US$120 billion (959 billion patacas) today,” he stated. “That’s 37 times more than it was at the bottom [of the market]. You don’t have to invest in the best stock, you just have to invest in the sector to get

your money multiplied by 37 times. That’s the power.” The analyst stressed that investors should focus on operators with the strongest growth prospects in terms of new properties and whether those properties are bigger or smaller than the average in the existing base. “The current multiple that these companies are trading [at] is on their current earnings and current EBITDA [earnings before interest, taxation, depreciation and amortisation]. It is not impacted by what their EBITDA will be five years from now. So a company that is smaller right now but with a bigger growth base coming in to 2016, 2017, will tend to give you more upside,” he suggested. Mr Choudhary told Business Daily after the session that from his checks with industry sources, the recent report that SJM Holdings Ltd had been asked to redesignate some of its premium mass tables to VIP – because they were generating more than 300,000 patacas per game in bets – was not something that applied market wide. “If you have a table where you give a rebate [to the player], then it’s considered to be VIP. If there’s not a rebate and you gamble on a cash basis then it’s mass,” he told us.

May 22, 2013

Macau

Expo Bytes

SHFL ‘encouraged’ peaceful solution possible with LT Game

Ken Jolly and Gavin Isaacs of SHFL entertainment Inc.

HFL entertainment Inc. said yesterday it was “encouraged” by recent statements from its trade rival LT Game Ltd that the latter did not claim a monopoly in Macau on multi-game terminals involving live dealer baccarat. LT

Game said so in a ‘right of reply’ statement in Business Daily. “It could definitely contribute to a peaceful way forward and hopefully a settlement of all disputes,” Gavin Isaacs, chief executive of SHFL told Business Daily.

On the first day of last year’s Global Gaming Expo Asia in Macau, SHFL was barred by temporary injunction – granted to LT Game by a Macau court – from displaying its Rapid Baccarat product on the grounds that LT Game claimed

a patent on live dealer multigame products in Macau. SHFL’s Rapid Baccarat, featuring a live dealer but with electronic bet settlement, offering high numbers of decisions per hour has been popular for so-called stadium games installations in Asian casinos. But ongoing litigation with LT Game has made it difficult for the firm to sell the equipment in Macau. SHFL went to court on the second day of the 2012 show to get the temporary injunction lifted, but the row severely disrupted its marketing efforts at last year’s event. Mr Isaacs said yesterday: “We are encouraged by LT’s recent statements recognising that neither LT nor its affiliates or officers, have any monopoly on [electronic] multi-gaming, including multi-gaming with live dealer baccarat. This corresponds to the obvious and inevitable conclusion that no patent can cover a general idea or concept nor cover any technical solution for multigaming – obviously including solutions that incorporate live dealer baccarat.” He added: “ We’ve only been defending the obvious, and that includes the possibility of competing [in Macau] with LT’s products, which is what we want to do. We can’t be denied such a right, and strongly continue pursuing the right to display and market our products in Macau in a fair competitive environment.” M.G.

Golf course an option for Galaxy on Hengqin Michael Grimes michael.grimes@macaubusinessdaily.com

Galaxy eyes investment in Hengqin

asino operator Galaxy Entertainment Group Ltd says it is considering a “golf course” or “some other non-gaming amenity” if it is successful in acquiring a piece of land on Hengqin Island. The island, 100 square kilometres in area and part of Zhuhai prefecture on the mainland, is in some places only 50 metres away from Macau. It has special economic zone status from the central government, and the potential to be a major feeder area of new customers to Macau’s casino resorts. Multiple non-gaming resorts are being planned for the island. One, Chimelong, could eventually have capacity for 10 million visitors per year – nearly a third of Macau’s 28 million visitors last year. Bob Drake, Galaxy’s chief financial

officer said yesterday during G2E Asia 2013 that if the firm was successful in acquiring a plot there, it would seek to develop facilities complementary to what it has across the water at Galaxy Macau on Cotai. “[Casino] Gaming is illegal in China and we foresee that will continue for some time. But what we can do as Galaxy Entertainment is build a nongaming resort with facilities over on Hengqin Island,” explained Mr Drake. “All the six concessionaires do market into mainland China with no focus on gaming, so we believe what we can develop on Hengqin Island will be very complementary – whether it’s a golf club, a golf resort, golf course or other amenities that are complementary to what we do here,” he added.

May 22, 2013 April 19, 2013

Macau

Embrace latest technology to earn more, casinos told

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HOSPITALITY

An academic says Macau should follow Singapore’s example and make greater use of electronic gaming machines

Rooms aplenty The number of hotels has risen steadily since the liberalisation of the gaming market. In 2011 and last year seven hotels opened, adding thousands of rooms to the stock. The number of hotel rooms rose by more than 40 percent in 2011 and last year. But the rise in the number of visitors meant more rooms did not reduce hotel occupancy rates, for the most part. So great was the rise in the number of visitors that until the second quarter of last year occupancy rates tended to be higher than a year earlier. But by the middle of last year the average occupancy rate had fallen by three or four percentage points from a year earlier.

Tony Lai

tony.lai@macaubusinessdaily.com

Electronic gaming tables could be bigger in Macau, Nelson Rose says

The second half of any year is usually the busiest time for hotels, and occupancy rates recovered in the second half of last year. Although the city had many more hotel rooms than before, occupancy rates in the later months of last year were comparable to those a year earlier, only slightly lower. The figures for this year so far may worry some hoteliers. Occupancy rates were unusually high in January, considering that this year the Lunar New Year holidays, a peak period for hotels, fell in February. After that occupancy rates dropped below those in the preceding years, dashing expectations that the holidays would bring more guests. The average occupancy rate in February was the lowest since September 2010. It is too soon to draw from these figures any projections for the rest of this year. But the somewhat atypical start to the year may suggest that competition among hotels is beginning to bite. J.I.D.

80.12 %

Average hotel occupancy rate, Q1

asinos should install more electronic gaming equipment to develop the industry, an academic says. Nelson Rose, a law professor at Whittier Law School in the United States, says Macau could learn some lessons from Singapore, which “has a lot of forms of gambling that Macau doesn’t have yet”. Mr Rose, speaking on the sidelines of a gaming law seminar on Monday, said: “Games like baccarat now in Singapore are very fast, and they have it here too.” He told Business Daily: “But it is really big there, with a stadium seating 100 or 200 people, all with their own video screen.” He said the gaming industry and regulator here should understand that “the future is with technology”. Electronic baccarat tables make the game faster and more lucrative for casinos. “The more bets per hour, the more the casinos make,” Mr Rose said. “Singapore is doing that more than Macau, and Macau still has the high-roller suites where people squeeze the cards and the games are slow.” According to the Gaming Inspection and Coordination Bureau, Macau had 5,749 gaming tables and 16,406 slot machines at the end of March.

No figure is available for the number of electronic gaming tables the city has. The bureau classifies electronic gaming tables as slot machines. “In the United States, many casinos make more than 70 percent of their money from machines. That’s where the future is,” Mr Rose said. The combined gross gaming revenue of the casinos here was 85.28 billion patacas (US$10.66 billion) in the first quarter of this year, 14.8 percent more than a year earlier, but slot machines generated only 3.57 billion patacas.

You decide Las Vegas Sands Corp’s president of global gaming operations, Rob Goldstein, said in March that among the segments of his company’s business in Macau that were fastest-growing and had the widest profit margins was the slot machine segment. Mr Goldstein told analysts at a presentation that Las Vegas Sands could accommodate 6,000 players of slot machines or electronic table games simultaneously in Macau. He said his company thought this would bring in “US$1 billion of top line, at a 48 percent margin” in the next few years. The profit margin on VIP

baccarat was typically 10 to 12 percent, the margin on premium mass-market baccarat 42 percent and the margin on mass-market baccarat 45 percent, he said. Mr Rose said it was up to the casinos, not the gaming bureau, whether they should make greater use of new technology. “The regulator can force change, but it really shouldn’t,” he said. “They should really tell casinos: ‘You decide the games you want and then we will make sure they are run honestly.’” He added: “The companies will always figure a way to get around the law, and the law has to catch up.” Last November subsidiary legislation setting standards for electronic gaming machines and for licensing manufacturers of electronic gaming equipment came into force. Lawyer Luís Melo, a specialist in gaming law, told the seminar that the subsidiary legislation established “a direct regulatory relationship between the gaming manufacturers and the Macau gaming regulator”, cutting the casinos out of the relationship. “Only time will tell if the legislative options taken in this gaming regulatory enhancement will actually provide for a more credible and transparent gaming market,” he said.

May April22, 19,2013 2013

Macau

Casino video cam ban ambiguous, prof says An ill-conceived attempt to prevent filming in casinos could cause problems Tony Lai

tony.lai@macaubusinessdaily.com

provision in the law on admittance to casinos barring people carrying video recording devices is ambiguous, a law professor says. The law, which came into effect last November, raised the minimum age for admittance to or employment in casinos to 21 from 18. It also bars people carrying “devices primarily designed for video recording” from entering casinos. An associate professor of law at the University of Macau, Jorge Godinho, speaking at a gaming law seminar on Monday, said he supposed the purpose of denying admittance to people carrying video recording devices was to prevent filming in casinos. But the law does not prohibit filming in casinos. Mr Godinho said that, at present, no regulation made it illegal to film inside gaming premises. He said there were all kinds of reasons for filming to be prohibited, one being the protection of the

A law that came into effect last November raised the minimum age for admittance to casinos to 21 from 18 (Photo: Manuel Cardoso)

privacy of gamblers. Mr Godinho said the ambiguity of the law meant the government had yet to enforce the provision barring people carrying video-

recording devices. “If you want to comply with this law you have to check every person, their bags, and ask, ‘Do you have a video camera?’”

MIN

But, he said, this procedure was followed nowhere in Macau. “The custom in Macau is not to check everyone, unlike in Singapore.” Mr Godinho said barring people carrying video-recording devices was “extreme”. “People today carry about video cameras all the time,” he said. He said the law made gamblers caught carrying video recording devices in casinos liable to have any winnings they might have confiscated. Speaking on the sidelines of the seminar, Mr Godinho told Business Daily that the law should have spelt out the precise circumstances in which people with cameras would be denied admittance to casinos. Or the law should simply have prohibited filming in casinos, he said. Mr Godinho said the provision barring people carrying video recording devices could have been better drafted. But he had no complaints about any other provisions. He declined to comment on whether other gaming laws were badly drafted. He said only that the government could put the expertise of law teachers to good use by involving them in the drafting of bills. Lawyer Luís Melo told the seminar that there was room for improvement in the law governing gaming. Mr Melo said some gaming regulations were based on instructions from the Gaming Inspection and Coordination Bureau that had not been disclosed to the public. He did not elaborate.

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May 22, 2013 April 19, 2013

Macau Three more hotel projects put forward

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In the first quarter of this year there were 28 hotel projects being assessed by the Land, Public Works and Transport Bureau, three more than at the end of 2012. Those three new hotels are planned for Taipa, Cotai and Coloane and they could provide just 600 rooms, the bureau said in a statement yesterday. There are a further 10 hotels being built, eight of which in Macau peninsula and two in Cotai. If all these 38 hotels open doors then the territory will have a further 23,000 rooms.

Financial Monitor Irregular flows Macau’s population growth depends on various sources other than its natural growth. They include new immigrants granted residence, both Chinese and non-Chinese, and those we usually designate as non-resident workers. The latter are, for demographic purposes, residents, even if their stay is conditional on their working status. The concern here is that natural growth is very low, as fecundity has declined in the past 20 to 30 years. Economic growth of Macau is increasingly dependent on immigrants. The inflow of immigrants is irregular and extremely sensitive to the moods of the moment. That is, sudden changes in policy can have significant impact on the demographic patterns.

Pre-sales law approved after long discussion Assembly passed the housing pre-sales law yesterday, a ‘first step’ to regulate unfinished flats’ transactions Stephanie Lai

sw.lai@macaubusinessdaily.com

Buyers can rescind contracts that fail to include these components.

Minor doubts

The chart shows plots for natural population growth, immigration from mainland China, immigration from elsewhere and the inflow of non-resident workers. Natural growth is low, both in relative and absolute terms. Numbers have risen a bit lately, more as a result of a bigger population than any neat changes in the reproductive behaviour. Macau will be stuck for a long time with slow natural growth in its labour force. The plots for immigration from mainland China and immigration from elsewhere both show changes in immigration policy, which are not difficult to see. The bulk of the workers needed to sustain the economy will have to be non-resident workers. But the plot for the inflow of non-resident workers shows their numbers are the most susceptible to sudden changes in policy or to the economic cycle. This makes any forecast of their contribution to population growth a risky one. J.I.D. The content of this column is the work of Business Daily’s journalists.

1,121

Natural growth in the population, Q1

Macau’s first-ever law on home pre-sales should come into effect next month (Photo: Manuel Cardoso)

he Legislative Assembly approved the housing presales law yesterday, giving the city its first-ever restrictions on transactions of unfinished units. Even though there were few disagreements among legislators over the content of the bill, it still took over three hours to approve the 28 articles. Kwan Tsui Hang, who led the discussion of the law at the assembly’s first standing committee, noted yesterday that any new sales of unfinished flats would have to be confirmed by a notary, once the law comes into effect. Buyers are required to complete the property registration of the purchased flat within 30 days, the law says. In the past, the lack of any rules allowed for less ethical developers to sell an unfinished flat to several buyers at the same time. “The new law has no retroactive

effect on any transactions of unfinished flats that have been completed,” noted Legal Affairs Bureau director André Cheong Weng Chon. “But after the law comes into effect, any re-sales of such [unfinished] flats will have to abide by the law,” he added. The law names several components that must be included in any transaction contract, including the detailed description of the unfinished flat and the building it is located in, the mortgage terms, and the building’s expected date of completion. The contract should also state that the final payment, which should be at least 30 percent of the price of the flat, should fall due only when the government has issued the housing permit for the building. A residential building cannot be occupied unless it has a housing permit.

But legislators still expressed many doubts over the new law. Construction businessman Fong Chi Keong questioned why the sales contract required developers to maintain the building’s exterior walls, drainage pipes and other public areas. The Legal Affairs Bureau head said this requirement was necessary to guarantee buyers’ rights, in particularly those who bought unfinished flats at a residential complex. “In many cases individual owners cannot employ their own property management company to handle maintenance, because they need to form a owners committee to handle it,” said Mr Cheong. “But as it usually takes at least one or two years to form a owners committee, the buyers have to face this gap period where they have no maintenance guaranteed,” he added. “So the developer was required to take up that responsibility during the gap period.” Even though they voted in favour, the New Macau Association legislators and Ho Ion Sang expressed dissatisfaction with the new law, saying that it still failed to monitor how the money paid by buyers was used. “The new law does not offer any particular protection against the disparity found between the advertisement [on unfinished flats] and the real thing,” said Mr Ho. “It does not fall in line with the law’s aim to enhance sales transparency.” Secretary for Transport and Public Works Lau Si Io said future regulations might include measures to plug any potential loopholes, such as the one mentioned by Mr Ho.

May April22, 19,2013 2013

May 22, 2013

Greater China U.S. joins talks on solar-energy spat The Obama administration is engaged in preliminary talks with the European Union and China to settle a dispute over trade in solarenergy equipment and avoid a conflict among the world’s largest economies, according to people familiar with the discussions. The effort is focused on setting a quota on Chinese exports and a minimum price for solar-energy equipment, in exchange for suspending U.S. duties on the goods, according to two people familiar with the U.S. position. “After expressing our intentions to the White House, we are very encouraged that these long-needed negotiations appear ready to proceed,” said John Smirnow, vice president of trade and competitiveness for the Solar Energy Industries Association. “It’s time for everyone to work together toward a fair resolution of these cases.” Tensions over China’s policies flared in recent months and each of the partners has either imposed or is considering duties to limit imports of solar-energy goods. The U.S. wants to coordinate with the EU, which is a larger market and hasn’t yet imposed final duties to block Chinese goods from being sold in the EU below cost, according to an industry official. The U.S. wants to avoid giving Chinese producers a way to bypass a deal with the EU by sending partially finished equipment to the U.S. for final assembly and export – duty free – to Europe, the person said.

Banks’ bad loans spread beyond govt debt: Block Carson Block (pictured), the short seller who runs Muddy Waters LLC, said China’s bad-loan problem is more widespread than just local government debt and includes public and private sector borrowing. Non-performing loan “figures greatly understate the potential scope of the problem of poor-quality loans,” Mr Block said in an e-mail. “We believe that the PRC banking system will be hit hard by the unwind, and that the government will be forced to recapitalize a number of the banks.” Chinese banks are grappling with rising defaults and slowing profit growth as regulators ease controls over loan pricing and deposits to spur competition. The country’s soured debt, which has risen for six straight quarters, in part prompted Mr Block to bet against the bonds of Standard Chartered Plc, the U.K. bank that earns most of its profit in Asia. Bad debt in China climbed to 526.5 billion yuan (US$86 billion) in the three months through March, marking the longest deterioration streak in at least nine years, according to regulatory data released this month. China’s largest lenders are state-owned and that makes shorting the country’s banks “somewhat difficult,” Mr Block said.

US$8.1 trln needed for urban shift China needs at least 50 trillion yuan (US$8.1 trillion) in new investment by 2020 to accommodate a burgeoning population of city-dwellers, according to the president of China Development Bank. China must urgently find special financing channels to support the urbanisation process because local governments can’t afford the spending, Zheng Zhijie, the bank’s president, wrote in an article of China Finance, a journal run by the People’s Bank of China. Mr Zheng didn’t elaborate on the estimate, which is about equal to the nation’s nominal gross domestic product in 2012. The figure shows the extent to which China will need to come up with funds for roads and benefits as part of Premier Li Keqiang’s efforts to make urbanisation a key engine of growth. China Development Bank, the world’s largest policy lender, created the nation’s system of local financing for infrastructure projects. “In the coming 20 years, China’s urbanisation ratio will increase by another 20 to 30 percentage points,” with another 300 million to 400 million people moving into cities, Mr Zheng said. “By then, China will have more than 1 billion people living in cities – the number will be larger than the population of all industrialised countries combined.” The 50 trillion yuan is necessary to bring the urban population share to 60 percent by 2020 and increase benefits for the almost 200 million migrant workers already living in cities, Mr Zheng wrote.

Goldman Sachs exits ICBC U.S. bank sells remaining stake for US$1.1 billion

Goldman acquired a US$2.58 billion stake in 2006

oldman Sachs Group Inc. raised US$1.1 billion by selling its remaining shares in Industrial and Commercial Bank of China Ltd, ending a seven-year old investment and handing the Wall Street firm a return of nearly four times its original stake. Goldman’s relationship with ICBC was similar to that of other big global financial institutions that purchased stakes in Chinese banks and insurers. While the relationship was profitable, involved some cooperation and helped Chinese lenders become some of the world’s biggest banks, few products or strategic benefits emerged. The selldown also comes at a time when Goldman, like other big Western banks, is keen to boost its balance sheet ahead of new capital requirements. Prior to its 2006 initial public offering, ICBC was a technically insolvent state institution, reeling from the bad loans that had saddled China’s financial industry. ICBC’s fortunes turned after it went public, and the bank grew along with China’s economic boom. The bank’s US$240 billion market

value is now just shy of the combined worth of JP Morgan Chase & Co and Barclays Plc. Goldman agreed to invest US$2.58 billion in ICBC in January 2006, using internal funds that invest a mix of client, employee and corporate cash. With the final selldown, the last of six, gross proceeds from the sales would be US$10.1 billion. Calculating Goldman’s own profit on the stake is tricky because not all of the investment came from its own balance sheet, and the cost of acquiring and maintaining the ICBC stake is unknown. Goldman late on Monday sold 1.585 billion Hong Kong-traded shares of ICBC at HK$5.50 each, equivalent to a 2.5 percent discount to Monday’s close of HK$5.64, a person familiar with the matter told Reuters. The deal, which was marketed in a range of HK$5.47-HK$5.50 per share, totalled HK$8.72 billion (US$1.1 billion). ICBC shares fell 2.13 percent to close at HK$5.52 in Hong Kong trading. Bank of America Merrill Lynch, Citigroup Inc., UBS AG and Royal

Trade surplus seen at one-tenth customs figure C

hina’s trade surplus is onetenth the official US$61 billion reported so far this year after accounting for fake transactions used to disguise hot-money inflows, Bank of America Corp. says. The true surplus is about US$6 billion, according to Lu Ting, Bank of America’s head of Greater China economics in Hong Kong. That would be the smallest for January-April since the nation posted a US$10.8 billion deficit in 2004. Mr Lu’s calculations suggest the surplus shrank instead of tripling from a year earlier, a sign that global demand is restraining rather than boosting the world’s second-largest economy. Bank of America’s estimate underscores the size of possible discrepancies in the trade data, which has been disputed by analysts for four months, and broader scepticism about Chinese statistics from gross domestic product to jobs. “Growth is weak in China now – the

overstated export growth means the real growth is slightly weaker,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd in Hong Kong. “We are expecting to see a fairly big drop in export growth in the coming months” as regulators crack down on so-called hot-money inflows, he said. The government reported a trade surplus of US$18.8 billion for the first four months of 2012. According to Mr Lu, ruses may have included exports and imports that enabled money flows for people engaged in arbitrage between the onshore and offshore exchange rates for the yuan. He speculates that shipments of gold in and out of Hong Kong have been for this purpose, since valuable goods with low transportation costs are “ideal channels” for hot money flows, according to a May 10 report. Louis Kuijs, Royal Bank of Scotland Group Plc’s chief China

Bank of Scotland Group Plc all bought into Chinese banks shortly after Goldman’s deal, as Beijing prepared to float its major financial institutions on the Hong Kong and Shanghai stock exchanges. Goldman began to sell its ICBC stake in 2009. The New York bank, like other foreign financial groups, was able to reap a hefty windfall from China holdings at the time, when cash was precious post financial crisis. But unlike other foreign banks that sold out of China quickly, Goldman remained. Goldman increased its pace of ICBC sales in the last few years, as banks needed to meet tougher capital requirements under the global Basel III accord, with asset sales one of the quickest ways for them to bolster their balance sheets. U.S. regulators are still in the process of finalising how they will implement Basel III, though banks are under pressure from investors to show they can meet the requirements regardless of whether the laws have been finalised or not. “Many foreign banks are facing capital shortages with the new Basel requirement, so I’m not surprised that they dumped holdings in Chinese banks on which they’ve already made massive returns,” said Chen Xingyu, a Shanghai-based analyst at Phillip Securities Group. “The exit strategy has been on the table for these foreign investors since the very beginning because they know these aren’t real strategic investments.” Goldman also has a securities joint venture and a 12 percent stake in Taikang Life Insurance Co Ltd. Goldman’s sale on Monday is its third in about a year. The New York-based investment bank raised US$2.5 billion from a partial selldown of ICBC in April 2012, most of which was bought by Singapore state investor Temasek Holdings Ltd, and another in January this year worth US$1 billion. Reuters

economist in Hong Kong, estimates that US$37 billion of the trade surplus in the first quarter resulted from export-data “irregularities”. Steve Wang, Hong Kong-based chief China economist at Reorient Financial Markets Ltd, said the actual surplus probably wasn’t as low as Mr Lu’s estimate because both exports and imports are inflated. Mr Lu said his estimate was based on assuming true export growth of 5 percent, compared with the government’s 17.4 percent figure, and 7.6 percent import gains, below the official 10.6 percent number. Bloomberg News

US$6 bln

China’s trade surplus in the first four months, according to Bank of America’s estimate

May 22, 2013

Asia

Japan panel warns of debt risks ‘No guarantee’ domestic investors will keep buying bonds

Myanmar’s democratic steps fuel growth Obama Thein Sein appeals for ‘assistance’ as country attempts reforms

agreement, filed in New York on Monday, permits Sprint and its representatives to furnish Dish with non-public information and to engage in negotiations on Dish’s offer. On April 30, SoftBank waived some terms of its Sprint agreement so Sprint could seek more info from Dish but said at the time that the waiver did not allow Sprint to disclose non-public information or to negotiate with Dish. SoftBank had come under pressure to grant the waivers and to consider improving its bid with some major Sprint shareholders continuing to show support for Dish’s offer. Sprint said on Monday it “has not determined that the Dish proposal in fact constitutes a superior offer under the existing merger agreement [with SoftBank]”. It added that there could be no assurance the Dish proposal would ultimately lead to a superior offer. Sprint has set a shareholder meeting for June 12 to vote on the SoftBank proposal. Dish said it welcomed the waiver, which will allow full due diligence with Sprint. “We remain confident that this process will confirm the superiority of our proposal,” Dish said in a statement.

.S. President Barack Obama told Myanmar President Thein Sein that building democracy and ending human rights abuses will bring greater prosperity to the Southeast Asian nation. Thein Sein’s White House visit on Monday U.S. time was the first by a leader from the country in 47 years and comes amid warming relations and U.S. support for its budding democratic institutions after decades of military rule. The U.S. wants to assist in spurring broad-based economic development “and that includes the prospect of increasing trade and investment in Myanmar, which can produce jobs and higher standards of living,” Mr Obama said at the conclusion of an Oval Office meeting with Thein Sein. “As President Sein is the first to admit, this is a long journey.” Mr Obama said he also expressed “deep concern” about violence against ethnic and religious minorities and that abuse of human rights “needs to stop”. The meeting took place as Thein Sein, who took office two years ago, is clearing the way for overseas investment in Myanmar, which is sandwiched between China and India. U.S. and European companies including Ford Motor Co., Coca-Cola Co. and Unilever NV are scouting for opportunities in Myanmar. As western sanctions are lifted, Mr Sein’s government is seeking to modernise the country’s financial system and infrastructure before elections in 2015. “The U.S. has decided to rebalance its foreign policy toward Asia, and the idea behind that rebalancing is that the U.S. can benefit from Asia continuing to be a growth engine for the global economy,” said Vikram Nehru, a senior associate at the Carnegie Endowment for Peace in Washington who focuses on East Asia. Mr Obama referred to the nation as Myanmar in his remarks, even though the U.S. officially uses the name Burma. White House press secretary Jay Carney said the U.S. “has begun to allow limited use of the name Myanmar as a diplomatic courtesy” to show respect for the progress made there. In Monday’s talks, the two leaders discussed the rule of law, proper use of courts and property rights of farmers, among other items, Thein Sein said. “It is a daunting task ahead of us,” Thein Sein said of the changes toward greater democracy. The Myanmar leader said earlier this month that the growth of democracy in his homeland must go hand in hand with economic development and that improved relations on a global scale will create jobs and provide the country with advanced technology.

Reuters

Bloomberg News

Bank of Japan is buying 70 percent of newly issued bonds

Japanese government panel warns there is “absolutely no guarantee” that domestic investors will keep financing the country’s massive public debt, citing the risk of a spike in bond yields that could crimp long-term growth prospects, draft report seen by Reuters shows. The warning from the advisory panel to Finance Minister Taro Aso comes at a critical time – when the government bond market has seen volatile price falls, underscoring a delicate balancing act for Prime Minister Shinzo Abe’s government. Mr Abe has unleashed huge fiscal and monetary stimulus to spur shortterm growth, sending stock prices soaring. But at the same time, he is trying to convince investors that over the longer term Japan will tackle a public debt that, at more than twice the nation’s annual economic output, is the biggest in the developed world. Whether Japan can begin to

get its fiscal house in order will be key to determining if the early boost to confidence from so-called “Abenomics” can translate into balanced and sustainable growth for the world’s third-biggest economy. The surge in Tokyo share prices in recent months has been heavily influenced by foreign investors betting Mr Abe can break with 15 years of deflation and tepid growth. By contrast, JGBs – more than 90 percent-owned by Japanese investors – were until recently little changed by the government’s stimulus plans and massive quantitative easing from the Bank of Japan. “As financial transactions are being globalised, there’s a great deal of freedom for overseas investment, so there is absolutely no guarantee that Japan’s domestic funds will be directed towards JGB purchases,” the panel’s draft report says. “An important requirement is for JGBs to continue to be trusted by markets

SoftBank grants Sprint disclosure waiver U.S. wireless carrier clears hurdle to discussions with rival bidder

print Nextel Corp said its Japanese suitor SoftBank Corp granted it a waiver allowing it to consider a US$25.5 billion rival bid by Dish Network Corp, as pressure mounts on SoftBank to sweeten its offer for the No. 3 U.S. wireless carrier. Sprint said its recommendation in favour of the SoftBank agreement

had not changed, although some major Sprint shareholders including Paulson & Co and Omega Advisors have publicly said the Dish offer looks better than SoftBank’s deal. SoftBank, which agreed last October to pay US$20.1 billion for a 70 percent stake in Sprint, said it was confident its bid would prevail. It also announced in a separate filing yesterday that it would issue 400 billion yen (US$3.9 billion) in bonds in June, the largest issuance ever by a non-financial Japanese company, to help pay for the Sprint deal. The waiver from SoftBank on various provisions of their merger

as safe assets.” The draft report says fiscal discipline is vital to avoid spreading concerns that the BOJ, with its huge debt purchases, is giving the government a blank cheque for profligate spending. “If the government fails to firmly tackle fiscal reforms and produce concrete results, that could lead to loss of market confidence in Japan’s finances and cause a spike in interest rates, possibly offsetting effects of monetary easing,” the panel warned in its draft report, adding that interest rates could deviate sharply from fundamentals, particularly when the BOJ eventually begins to seek an exit from its quantitative easing. The report is preliminary and could still change before the 30-member panel submits it to Mr Aso around the end of the month as the basis for the government’s mid-term fiscal reform plan due in the summer. Reuters

May 22, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

36.1

-0.9602195

29106503

CHINA UNICOM HON

11.6

0.1727116

23793389

POWER ASSETS HOL

ALUMINUM CORP-H

3.22

1.577287

16502316

CITIC PACIFIC

9.88

-0.2020202

12068252

SANDS CHINA LTD

BANK OF CHINA-H

3.77

-1.308901

351252495

BANK OF COMMUN-H

6.17

-0.8038585

15697076

BANK EAST ASIA

31.45

0.3189793

1500614

BELLE INTERNATIO

12.46

-1.735016

35314390

BOC HONG KONG HO

27.5

-1.256732

13171125

CATHAY PAC AIR

14.58

-0.1369863

5175368

CHEUNG KONG

117.3

0.4280822

4376041

CHINA COAL ENE-H

5.54

2.592593

73277345

CHINA CONST BA-H

6.46

-1.374046

222739532

CHINA LIFE INS-H

21.65

-1.141553

24385572

CHINA MERCHANT

25.95

0.5813953

1977728

CHINA MOBILE

NAME

PRICE

DAY %

79.1

-1.063164

VOLUME 3840026

12381358

CLP HLDGS LTD

69.55

0.724113

3583105

SINO LAND CO

12.52

-0.4769475

5202474

CNOOC LTD

14.42

-0.4143646

36336848

SUN HUNG KAI PRO

111.9

0.2688172

2653618

COSCO PAC LTD

11.24

4.074074

11087107

SWIRE PACIFIC-A

102.3

0.5899705

1320989

ESPRIT HLDGS

11.16

1.639344

8102142

TENCENT HOLDINGS

304

-1.745314

6659453

HANG LUNG PROPER

30.25

0.331675

2251010

TINGYI HLDG CO

20.75

3.491272

6989500

HANG SENG BK

129.3

-1.372998

1244475

WANT WANT CHINA

12.26

1.322314

9595035

WHARF HLDG

76.9

1.786896

3947108

57.5

0.2615519

2278693

HENGAN INTL

HENDERSON LAND D

88.75

-0.2248454

5009500

HONG KG CHINA GS

23.65

-0.8385744

4854925

HONG KONG EXCHNG

133.1

-1.040892

3917273

HSBC HLDGS PLC

90.4

0.166205

17790653

85.45

-1.04227

16364693

HUTCHISON WHAMPO

86.6

-0.4025302

6578022

CHINA OVERSEAS

2.12766

26736772

IND & COMM BK-H

5.52

-2.12766

2172121683

CHINA PETROLEU-H

8.6

-0.116144

58951036

LI & FUNG LTD

11.36

0.1763668

27406060

CHINA RES ENTERP

-0.621118

6748075

MTR CORP

32.15

-0.1552795

CHINA RES LAND

23.9

1.057082

12098800

NEW WORLD DEV

13.7

CHINA RES POWER

21.1

-4.30839

24875900

PETROCHINA CO-H

9.82

CHINA SHENHUA-H

27.05

-0.9157509

20155388

PING AN INSURA-H

60.85

MOVERS

1 23510

INDEX 23366.37 HIGH

23501.84

2091024

LOW

22978.85

0.2928258

4944968

52W (H) 23944.74

-1.107754

63392089

-0.4091653

7838133

PRICE

DAY %

VOLUME

28.6

0.8818342

5592373

8.6

-0.116144

(L) 18056.4

22970

16-May

21-May

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.74

-0.795756

139399621

AIR CHINA LTD-H

6.88

-1.573677

5538000

ALUMINUM CORP-H

3.22

1.577287

16502316

CHINA RAIL CN-H

8.06

ANHUI CONCH-H

27.1

-0.7326007

11030850

CHINA RAIL GR-H

BANK OF CHINA-H

3.77

-1.308901

351252495

CHINA SHENHUA-H CHINA TELECOM-H

NAME CHINA PACIFIC-H CHINA PETROLEU-H

PRICE

DAY %

VOLUME

YANZHOU COAL-H

8.54

4.273504

68070504

58951036

ZIJIN MINING-H

2.19

0.921659

37045921

-0.4938272

10184750

ZOOMLION HEAVY-H

8.2

0.4901961

14087160

4.2

0.4784689

8614500

13.1

-1.7991

4844498

27.05

-0.9157509

20155388

6.17

-0.8038585

15697076

4.1

-1.913876

46105003

33.45

-1.617647

4108500

DONGFENG MOTOR-H

12.6

-0.1584786

15656697

CHINA CITIC BK-H

4.44

-1.769912

38895675

GUANGZHOU AUTO-H

7.74

3.2

9474147

CHINA COAL ENE-H

5.54

2.592593

73277345

HUANENG POWER-H

8.66

-6.073753

53209939

CHINA COM CONS-H

7.74

0.2590674

8737921

IND & COMM BK-H

5.52

-2.12766

2172121683

CHINA CONST BA-H

6.46

-1.374046

222739532

JIANGXI COPPER-H

15.66

1.293661

11587500

CHINA COSCO HO-H

3.54

3.508772

13977450

PETROCHINA CO-H

9.82

-1.107754

63392089

21.65

-1.141553

24385572

PICC PROPERTY &

9.94

-2.54902

38840952

CHINA LONGYUAN-H

8.02

-0.9876543

14115167

PING AN INSURA-H

60.85

-0.4091653

7838133

CHINA MERCH BK-H

16.7

-0.476758

11037439

SHANDONG WEIG-H

8.12

1.627034

8867591

CHINA MINSHENG-H

10.08

-0.9823183

19858159

SINOPHARM-H

22.2

-1.333333

5062374

CHINA NATL BDG-H

9.19

-0.7559395

17895600

TSINGTAO BREW-H

54.8

-0.6346328

1903342

16.54

-1.076555

3873000

WEICHAI POWER-H

BANK OF COMMUN-H BYD CO LTD-H

CHINA LIFE INS-H

CHINA OILFIELD-H

30.6

3.553299

NAME

ZTE CORP-H

MOVERS

0 11245

INDEX 11083.23 HIGH

11241.08

LOW

10961.63

52W (H) 12354.22 10960

(L) 8987.76 16-May

4206800

21-May

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

7.82

0.5141388

18451850

PING AN INSURA-A

40.55

-0.7586882

24493908

CHONGQING CHAN-A

10.22

48862256

POLY REAL ESTA-A

12.32

0.5714286

58028112

17008757

CHONGQING WATE-A

6.86

5.214724

16619298

QINGDAO HAIER-A

13.13

-0.3793627

16169412

0.05675369

19669472

CITIC SECURITI-A

12.8

-1.081917

91042474

QINGHAI SALT-A

23.81

1.491901

8243721

11.54

6.163753

53062113

CSR CORP LTD -A

4.34

0.462963

41792004

SAIC MOTOR-A

15.64

-0.635324

36966306

BANK OF BEIJIN-A

9.13

-0.436205

27539716

DAQIN RAILWAY -A

7.15

-0.4178273

39573796

SANY HEAVY INDUS

9.77

0.8255934

33108213

BANK OF CHINA-A

2.96

19955062

DATANG INTL PO-A

4.87

-1.01626

14462967

SHANG PHARM -A

12.16

0.4958678

16944626

BANK OF COMMUN-A

4.77

-0.209205

48520733

EVERBRIG SEC -A

13.99

0.2867384

25598579

SHANG PUDONG-A

10.34

-0.6724304

91775245

BANK OF NINGBO-A

10.57

-0.5644403

16522261

GD MIDEA HOLDI-A

14.5

-0.5486968

11425383

SHANGHAI ELECT-A

3.92

6285541

BAOSHAN IRON & S

4.98

0.2012072

25411731

GD POWER DEVEL-A

2.95

49196306

SHANXI LU'AN -A

17.07

1.065719

25573932 18677557

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.76

69171978

AIR CHINA LTD-A

5.54

0.1808318

6354766

ALUMINUM CORP-A

4.16

-0.2398082

ANHUI CONCH-A

17.63

AVIC AIRCRAFT-A

NAME CHINA YANGTZE-A

NAME

23.5

-0.7182087

9967969

GEMDALE CORP-A

7.7

1.315789

50856420

SHANXI XISHAN-A

10.94

0.7366483

35.85

-0.802435

17812537

GF SECURITIES-A

13.73

-0.4350979

24960960

SHENZEN OVERSE-A

6.56

0.9230769

58436975

CHINA AVIC ELE-A

27.9

0.6130545

14461965

GREE ELECTRIC

27.92

1.379811

32383639

SUNING COMMERC-A

6.38

3.739837

106257575

CHINA CITIC BK-A

4.45

-0.6696429

20707578

GUANGHUI ENERG-A

19.49

0.1027221

18317862

TASLY PHARMAC-A

77.55

2.146997

4094011

11.43

-0.8673027

104179072

TSINGTAO BREW-A

38.66

2601064

BEIJING TONGRE-A BYD CO LTD -A

CHINA CNR CORP-A

4.49

-0.443459

24048795

HAITONG SECURI-A

CHINA COAL ENE-A

6.89

0.4373178

9981726

HANGZHOU HIKVI-A

41.78

6.826898

18233001

WEICHAI POWER-A

23.64

8616493

CHINA CONST BA-A

4.88

-0.4081633

15295395

HENAN SHUAN-A

38.95

-0.1282051

5276015

WULIANGYE YIBIN

23.5

0.08517888

19535193

CHINA COSCO HO-A

3.47

3.27381

22638863

HONG YUAN SEC-A

24.38

0.4118616

27387796

YANTAI WANHUA-A

17.94

-3.910016

27256459

CHINA EAST AIR-A

3.07

0.3267974

14217279

HUATAI SECURIT-A

9.94

-0.6

31091238

YANZHOU COAL-A

14.93

0.3360215

5894281

CHINA EVERBRIG-A

3.18

-0.625

79159439

HUAXIA BANK CO

10.88

-0.729927

25640007

YUNNAN BAIYAO-A

-0.990099

2940483 26885424

CHINA INTL MAR-A

12.58

-0.2379064

7426890

IND & COMM BK-A

4.2

0.2386635

45848717

ZHONGJIN GOLD

12.15

0.2475248

CHINA LIFE INS-A

16.86

0.1782531

11075712

INDUSTRIAL BAN-A

18.47

-0.538503

63483384

ZIJIN MINING-A

3.1

41438489

CHINA MERCH BK-A

13.57

-2.092352

106905782

11.8

-0.2535926

20363873

ZOOMLION HEAVY-A

7.5

0.4016064

38469584

CHINA MERCHANT-A

12.99

-0.3834356

26110615

INNER MONG BAO-A

28.7

-1.000345

27256194

ZTE CORP-A

12.99

-1.888218

39568282

29.06

-5.710578

35462285

INDUSTRIAL-A

CHINA MERCHANT-A

28.95

2.369165

10753013

INNER MONG YIL-A

CHINA MINSHENG-A

10.66

-0.5597015

124500765

INNER MONGOLIA-A

4.88

-0.204499

40961685

CHINA NATIONAL-A

11.55

2.758007

44033174

JIANGSU HENGRU-A

30.54

-1.260912

16706496

CHINA OILFIELD-A

16.49

0.5487805

3696552

JIANGSU YANGHE-A

63.22

-0.3153579

4168621

21.43

0.6103286

10331949

10.76

1.509434

10995527

19.27

-0.2587992

11580115

JIANGXI COPPER-A

CHINA PETROLEU-A

6.85

-0.8683068

31029794

JINDUICHENG -A

CHINA RAILWAY-A

5.24

-1.318267

34196932

KANGMEI PHARMA-A

16.78

0.659868

24902095

CHINA RAILWAY-A

2.89

-0.6872852

25090218

KWEICHOW MOUTA-A

195.02

0.01025641

2310234

9263217

LUZHOU LAOJIAO-A

26.78

1.825095

9756049

2.07

0.4854369

35193465

0.7656316

23477406

CHINA PACIFIC-A

CHINA SHENHUA-A

21.06

0.190295

CHINA SHIPBUIL-A

4.52

59982923

METALLURGICAL-A

CHINA SOUTHERN-A

3.48

25135338

NARI TECHNOLOG-A

23.69

CHINA STATE -A

3.87

1.044386

112577142

NINGBO PORT CO-A

2.46

-0.4048583

11759165

CHINA UNITED-A

3.71

-0.802139

90666253

PETROCHINA CO-A

8.6

-0.3476246

12259838

12.03

0.838223

69293266

PING AN BANK-A

PRICE DAY %

Volume

CHINA VANKE CO-A

21.1

0.5719733

44757454

PRICE DAY %

Volume

MOVERS 177

27 2630

INDEX 2614.853 HIGH

2626.12

LOW

2548.71

52W (H) 2791.303 (L) 2102.135

2540

17-May

21-May

FTSE Taiwan 50 Index NAME

PRICE DAY %

Volume

24.7

0.2028398

15461605

FORMOSA PLASTIC

73.9

0.8185539

3858074

TAIWAN MOBILE CO

114 -0.4366812

3373191

26.05

0.5791506

13445060

FOXCONN TECHNOLO

81.5

1.368159

4493773

TPK HOLDING CO L

606

1.507538

4863371

ASIA CEMENT CORP

37.9

0.397351

2084032

FUBON FINANCIAL

-1.983664

15826147

TSMC

112.5

-1.315789

17238193

ASUSTEK COMPUTER

348.5

0.1436782

2262348

HON HAI PRECISIO

77.3

0.2594034

35952754

UNI-PRESIDENT

60.6

0.3311258

4690310

AU OPTRONICS COR

13.7

1.481481

112374411

HOTAI MOTOR CO

302

-1.628664

144113

UNITED MICROELEC

14.1

4.832714

170738619

288.5

ACER INC ADVANCED SEMICON

NAME

CATCHER TECH

162

10294298

HTC CORP

CATHAY FINANCIAL

40.9

-2.386635

25390217

HUA NAN FINANCIA

CHANG HWA BANK

17.35 -0.2873563

-1.19863

7367880

WISTRON CORP

29.7

5093754

17.4 -0.5714286

4963726

YUANTA FINANCIAL

16.35

-1.506024

20062853

YULON MOTOR CO

51.9

1.169591

1610640

6007325

LARGAN PRECISION

981

3.809524

1702341

2.150538

6955801

LITE-ON TECHNOLO

49.3

0.407332

6022513

CHIMEI INNOLUX C

20.5

1.234568

55559196

MEDIATEK INC

CHINA DEVELOPMEN

8.86 -0.4494382

49700656

MEGA FINANCIAL H

CHENG SHIN RUBBE

377.5 -0.2642008

4797849

24.3 -0.8163265

20448423

CHINA STEEL CORP

26.15

0.3838772

9997150

NAN YA PLASTICS

CHINATRUST FINAN

18.75

0.2673797

35346195

PRESIDENT CHAIN

193

1.04712

878932

98.1

0.6153846

9419988

65 -0.4594181

7628766

18.5

13205151

SILICONWARE PREC

36.05

1.40647

11828833

146.5 -0.3401361

2493465

SINOPAC FINANCIA

15.1

11915673 14210078

CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC

QUANTA COMPUTER

3340490

FAR EASTERN NEW

32.8

0.6134969

2891519

SYNNEX TECH INTL

43.4 -0.3444317

FAR EASTONE TELE

74.5 -0.2677376

3923252

TAIWAN CEMENT

39.5

0.6369427

3780715

FIRST FINANCIAL FORMOSA CHEM & F FORMOSA PETROCHE

NAME

18.55

0.2702703

6741726

TAIWAN COOPERATI

17.35

0.5797101

8143769

74.5

0.5398111

3029944

TAIWAN FERTILIZE

76.5

0.6578947

5972261

84 -0.1189061

695886

TAIWAN GLASS IND

29.8 -0.5008347

522839

MOVERS

5 5870

INDEX 5844.43 HIGH

5869.14

LOW

5831.48

52W (H) 5896.71 5830

(L) 4719.96 17-May

21-May

May 22, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 39.9

64.2

20.6

39.8

63.9

20.5

63.6

20.4

63.3

20.3

39.7 39.6 39.5 Max 39.85

average 39.604

Min 39.4

39.4

Last 39.55

Max 64.2

average 63.864

Min 63.1

63.0

Last 63.4

Max 20.55

average 20.370

Min 20.25

Last 20.35

21.8

41.2

20.2

25.7

21.6 41.0

25.6

21.4 21.2

40.8

25.5

21.0 Max 41.1

average 40.975

Min 40.65

40.6

Last 41

Max 21.7

average 21.25

Commodities PRICE

WTI CRUDE FUTURE Jun13

96.44

BRENT CRUDE FUTR Jul13 GASOLINE RBOB FUT Jun13 GAS OIL FUT (ICE) Jul13

DAY %

YTD %

(H) 52W

(L) 52W

-0.279185193

3.155417692

101.4199982

81.34999847

104.23

-0.54389313

-2.960618192

115.9300003

96.04000092

289.14

-0.488711454

1.020194256

324.119997

235.9499931

879.75

-0.45261669

-3.350727822

987.5

814

4.091

0.024449878

16.61915621

4.457000256

3.203999996

293.92

-0.393113732

-2.274238596

323.8899946

258.589983

Gold Spot $/Oz

1385.59

2.4314

-16.7544

1796.08

1322.06

Silver Spot $/Oz

22.5389

4.0577

-25.1448

35.365

20.3395

NATURAL GAS FUTR Jun13 HEATING OIL FUTR Jun13 METALS

Last 20.85

20.8

Max 25.65

average 25.518

Min 25.4

Last 25.4

Platinum Spot $/Oz

1469.2

1.6536

-3.1988

1742.8

1374.55

Palladium Spot $/Oz

742.53

1.0066

6.1273

786.5

553.75

LME ALUMINUM 3MO ($)

1860.5

0.621957815

-10.25084419

2200.199951

1809 6762.25

LME COPPER 3MO ($)

7399

1.28678987

-6.707855252

8422

LME ZINC

1854

0.760869565

-10.86538462

2230

1745

15115

1.956155143

-11.40093787

18920

14609 14.79500103

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul13

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 %

YTD %

(H) 52W

(L) 52W

0.9796 1.5195 0.9676 1.2873 102.73 7.9945 7.7615 6.1371 55.07 29.76 1.2574 29.832 41.205 9786 100.632 1.24558 0.8472 7.8965 10.2912 132.24 1.0301

0.1636 -0.0132 0.0517 0.0855 -0.1752 0.0125 0.009 0.0358 0.0794 0.2352 -0.1591 0.3654 -0.0485 -0.2861 -0.3349 -0.0217 -0.0932 0.0735 -0.0641 -0.2571 0

-5.608 -6.0645 -5.3948 -2.4033 -16.1881 -0.1413 -0.1404 1.5235 -0.1362 2.7554 -2.8631 -2.6783 -0.4854 0.0715 -11.234 -3.0588 -3.7512 4.0651 2.3243 -14.1183 -0.0194

1.0625 1.6381 0.9972 1.3711 103.31 8.0111 7.7678 6.3964 57.3275 32 1.2971 30.203 43.975 9904 105.433 1.25692 0.88151 8.4957 10.9254 132.77 1.032

0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1291 51.3863 28.56 1.2152 28.913 40.54 9301 74.482 1.20054 0.77553 7.7018 9.6245 94.12 1.029

15.19

0.098846787

-3.524928549

17.07500076

639

-1.616628176

-8.354248835

824

534

676.5

-1.276906239

-14.77165354

900

664.75

SOYBEAN FUTURE Jul13

1464.25

-0.017070673

4.945350296

1605.75

1217.75

COFFEE 'C' FUTURE Jul13

135.25

0.073991861

-9.562019392

202.1999969

132.6999969

NAME

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

16.79999924

ARISTOCRAT LEISU

4.23

-0.9367681

34.28571

4.49

2.29

6092755

69.94999695

CROWN LTD

13.2

-2.294597

23.71134

13.75

8.06

1142074

CORN FUTURE

Jul13

WHEAT FUTURE(CBT) Jul13

SUGAR #11 (WORLD) Jul13

16.81

COTTON NO.2 FUTR Jul13

85.23

-14.84295846

-0.641175099

10.8755041

23.05999947 94.19999695

World Stock Markets - Indices NAME

Macau Related Stocks VOLUME CRNCY

AMAX HOLDINGS LT

0.79

1.282051

-43.57143

1.72

0.75

163400

BOC HONG KONG HO

27.5

-1.256732

14.10788

20.85

13171125

CENTURY LEGEND

0.31

16.98114

0.42

0.215

CHEUK NANG HLDGS

5.84

0.3436426

-2.50417

6.74

2.8

252584 26736772

CHINA OVERSEAS

2.12766

3.896102

25.6

14.883

CHINESE ESTATES

13.96

-0.2857143

15.09208

14.06

7.697

293000

CHOW TAI FOOK JE

9.7

1.358412

-22.02572

13.4

8.4

7072425

EMPEROR ENTERTAI

2.61

4.819277

38.09524

2.61

1.12

3260000

2.4

0.41841

98.01553

2.732

0.765

1782000

GALAXY ENTERTAIN

39.55

-1.125

30.31301

40.65

16.94

7851000 1244475

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15335.28

-0.1245246

17.02623

15391.83984

12035.08984

NASDAQ COMPOSITE INDEX

3496.432

-0.07239284

15.79454

3509.41

2726.68

FTSE 100 INDEX

6768.16

0.1854749

14.75717

6769.13

5229.76

HANG SENG BK

129.3

-1.372998

8.930079

132.8

99.2

DAX INDEX

8446.25

-0.1132946

10.95398

8462.160156

5914.43

HOPEWELL HLDGS

29.75

-10.52632

35.3

19.049

1729108

HSBC HLDGS PLC

90.4

0.166205

11.19311

90.7

59.8

17790653

NIKKEI 225

15381.02

0.1315686

47.963

15388.37

8238.96

HANG SENG INDEX

23366.37

-0.5391386

3.13127

23944.74

18056.4

CSI 300 INDEX

2614.853

0.2010264

3.642603

2791.303

2102.135

TAIWAN TAIEX INDEX

8383.05

0.07162426

8.877847

8420.679688

KOSPI INDEX

1981.09

-0.06759381

-0.7991829

S&P/ASX 200 INDEX

5180.057

-0.5563027

5172.579

FTSE Bursa Malaysia KLCI

NZX ALL INDEX

PHILIPPINES ALL SHARE IX

JAKARTA COMPOSITE INDEX

25.4

Currency Exchange Rates

NAME ENERGY

Min 20.8

FUTURE BRIGHT

HUTCHISON TELE H

4.27

0.4705882

19.94382

4.66

2.98

6794000

LUK FOOK HLDGS I

20.1

1.005025

-17.62295

30.05

14.7

2276000

MELCO INTL DEVEL

17.02

-1.618497

88.90122

18.18

5.12

3844000

6857.35

MGM CHINA HOLDIN

20.35

-0.4889976

53.25781

20.85

9.509

4329200

2042.48

1758.99

MIDLAND HOLDINGS

3.49

-0.2857143

-5.675677

3.249

1732000

11.42423

5249.6

3985

NEPTUNE GROUP

0.164

-0.6060606

7.89474

0.226

0.084

8280000

-0.8129855

19.82752

5251.296

3635.283

NEW WORLD DEV

13.7

0.2928258

13.9767

15.12

7.95

4944968

1787.52

0.5835186

5.836174

1826.22

1531.95

20.76583

43.7

20.65

12381358

SHUN HO RESOURCE

1.5

7.142859

1.67

1.03

980.963

-0.1206539

11.21362

998.487

755.149

SHUN TAK HOLDING

4.17

0.4819277

-0.4773283

4.65

2.56

2504600

4506.74

0.3764054

21.83738

4571.4

3267.04

SJM HOLDINGS LTD

20.85

-3.24826

15.83333

22.7

12.34

17603500

SMARTONE TELECOM

13.72

-2.418208

-2.556818

17.38

12.5

2546000

25.4

-0.3921569

21.24105

26.5

14.62

10766300

SANDS CHINA LTD

HSBC Dragon 300 Index Singapor

661.7

0.2

6.54

STOCK EXCH OF THAI INDEX

1647.3

0.2373129

18.34647

1649.77

1099.15

HO CHI MINH STOCK INDEX

500.18

1.606842

20.89527

518.46

372.39

ASIA ENTERTAINME

4.14

2.475248

35.29412

5.18

2.4

552847

BALLY TECHNOLOGI

55.32

1.953557

23.73071

56.4

41.74

1299359

Laos Composite Index

1358.14

11.80223

1455.82

980.83

BOC HONG KONG HO

3.6

17.26385

3.6

2.7

2300

GALAXY ENTERTAIN

5.1

2.822581

28.46348

5.15

2.25

6800

INTL GAME TECH

18.44

1.096491

30.13409

18.49

10.92

3783556

JONES LANG LASAL

96.57

-0.3816794

15.04646

101.46

61.39

340366

LAS VEGAS SANDS

58.93

0.494543

27.66465

59.97

32.6127

4128918 3183258

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

WYNN MACAU LTD

MELCO CROWN-ADR

24.6

2.457309

46.08076

25.15

9.13

MGM CHINA HOLDIN

2.67

0.754717

44.32432

2.67

1.36

7500

MGM RESORTS INTE

15.5

1.043025

33.16151

15.95

8.83

6952838

SHFL ENTERTAINME

1.13028

17.24138

17.2199

11.75

251853

SJM HOLDINGS LTD

2.81

21.64502

2.99

1.65

40750

143.11

1.503653

27.2202

143.56

84.4902

1094509

WYNN RESORTS LTD

AUD HKD

USD

May 22, 2013

Opinion

Greece isn’t turning the corner Megan Greene

Bloomberg View columnist and chief economist at Maverick Intelligence

udging from the markets and English-speaking news media last week, Greece’s damaged economy has finally turned the corner. I doubt it. The Financial Times and Wall Street Journal ran prominent pieces about bullish investors ploughing back into Greek markets. On May 15, the Greek government’s borrowing costs on 10-year bonds fell by one percentage point, to the lowest level in three years. Against this euphoria, the Greek statistics agency Elstat says the Greek economy contracted 5.3 percent in the first quarter of 2013 compared with a year earlier. This is the 19th consecutive quarter in which it has shrunk. There will be a recovery some day, so is this it? Certainly, there have been positive signs. Early last week, the euro area’s finance ministers agreed to release 7.5 billion euros (US$9.6 billion) of bailout funds to Greece – 4.2 billion euros at the weekend, and the remaining 3.3 billion euros in June, provided that Greece first completes a number of measures. The following day, Fitch Ratings upgraded Greece to Bfrom CCC. That is still six levels below investment grade, yet the improvement inspired one of the biggest sovereign-bond market rallies we have seen in Greece since the beginning of the crisis. Prime Minister Antonis Samaras

even said Greece plans to reenter the bond markets in the first half of next year.

Investment flurry There has also been a flurry of recent investment activity in Greece. After years of procrastination, the government on May 1 accepted a tender to privatise Opap SA, the gambling company that is the country’s most profitable state-owned enterprise. You have to try pretty hard to read this as a success story, though. Opap is the jewel in Greece’s crown, yet the government received only two bids for a 33 percent stake in the company, and the final price of 652 million euros was at the low end of expectations. The state’s natural-gas company, Depa SA, is the next big privatisation expected. There has also been some investor interest in Greek banks and corporations. According to the Financial Times, a group of hedge funds has agreed to participate in the recapitalisation of Alpha Bank SA in June. Two Greek companies – refrigeratorparts maker Frigoglass SA and refinery company Hellenic Petroleum SA – succeeded in issuing corporate bonds with yields of about 8 percent in recent weeks. While these yields are high, Greek companies were completely shut out of the bond

markets in 2012. Another glimmer of hope is that the price of Greek grossdomestic-product warrants has increased significantly. These were issued as a sweetener to private-sector bondholders who participated in the restructuring of privately held Greek sovereign debt in March 2012. They pay out in a number of years, if Greece reaches certain GDP-growth targets. A year ago, they were priced at about 0.2 euro cent. Last week, they broke through the 1 eurocent mark, a price increase that indicates investors are

The political situation is precarious as a result, with the governing coalition holding together through a survival instinct

betting Greece is on a path to sustainable growth. This is all hard to square with some of Greece’s economic fundamentals. According to Elstat, Greece’s economy is now smaller than it was in 2005, having shrunk a cumulative 28 percent since mid-2008. The European Commission forecasts a further contraction of 4.2 percent in 2013, which will be difficult to achieve given that the decline in the first quarter was so much larger.

Target pipedream The nature of economic activity in Greece also suggests that the European Commission’s growth target is a pipe dream. Although hedge funds have been active in buying Greek sovereign debt and made a killing doing so, the number of investments in the private sector can be counted on one hand. In addition to corporate-debt sales – amounting to US$2 billion so far this year, according to the consulting firm Dealogic – Third Point LLC announced a 60 millioneuro investment in Greece’s Energean Oil & Gas SA last week. These are very small numbers, insufficient to stimulate growth across the economy. Furthermore, any lending to big companies in Greece isn’t being matched by loans to small companies or households. Borrowing costs

for small- and medium-sized enterprises in Greece remain far higher than for those in the other peripheral countries, let alone in Germany or France. According to the Greek central bank, credit to the private sector continued to contract in March, the latest month for which there are data. While Greek banks will be recapitalised soon, they face a long road before they have healthy balance sheets and are willing and able to lend. Furthermore, the business operating environment in Greece remains unattractive because of high levels of red tape, an unstable regulatory environment, an opaque legal system, and a slow and often corrupt judiciary. These grim prospects for economic growth are accompanied by extreme social strain (unemployment reached a record 27 percent in February). The political situation is precarious as a result, with the governing coalition holding together through a survival instinct. The delicate economic, social and political balance that Greece has maintained over the past six months could be tested later this year, when the government must deliver a 2014 budget and a mediumterm economic programme. According to a report released last week by the European Commission, Greece is on track to reach its fiscal targets in 2013-14, but it will probably need to raise an additional 8 billion euros to achieve those for 2015-16. If the “troika” – the European Central Bank, the European Commission and the International Monetary Fund – demands that the Greek government implement yet more austerity to fill the gap, this could prove too much for Greece. It is undeniable that there are signs of hope coming out of Greece today, where there were none six months ago. There is always the chance that Greece can fake it until it makes it, capitalising on these small pieces of good news to instil confidence in investors and households, until a real recovery takes hold. Undermining the confidence fairies, however, are economic fundamentals that indicate the recent euphoria is a bit overdone. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, 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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May 22, 2013

Opinion Business

wires

A New Deal for fragile states

Leading reports from Asia’s best business newspapers Erik Solheim

Former Norwegian minister of development and minister of the environment, is Chair of the OECD Development Assistance Committee

Korea Herald South Korea is seeking to resume talks on a free trade deal with Russia as part of efforts to expand its economic cooperation with the country, the government said yesterday. Free trade agreement (FTA) talks with Russia came to a halt in 2008 when Russia suspended negotiations unilaterally. The government decided to resume FTA talks with Russia as quickly as possible, a move aimed at pre-empting the market there and laying the foundation to resolve possible trade disputes between the two countries.

Inquirer Business Barclays Plc has raised its 2013 growth forecast for the Philippines as it expects the economy to post one of the fastest growth rates among emerging markets in Asia. In one of its latest reports, Barclays said the Philippines was now seen growing by 6.2 percent this year and 6.3 percent in 2014. It earlier projected that the Philippine economy would grow by 5.9 percent this year. Barclays said the Philippines would likely post the third-fastest growth rate among emerging economies in Asia, behind China and Indonesia.

Jakarta Post Indonesia’s President Susilo Bambang Yudhoyono is praising Chatib Basri, his new finance minister, as an economist with extensive experience. Under the one year that Mr Basri led the Investment Coordinating Board (BKPM), investments in Indonesia grew significantly and contributed to the economic growth, Mr Yudhoyono said. Before serving as BKPM chairman, Mr Basri was deputy chairman of the National Commission on Economics. He was sworn in as finance minister yesterday.

The Age Australian wine sales to Britain have broken through the 1-billion-pound barrier (A$1.56 billion) and extended their lead on second-ranked Italy as the country’s favourite imported wine, according to latest figures from market analysis firm Nielsen. Australia remained in the top spot for 2012 as Britain’s largest source of wine. According to Nielsen, France and the U.S. were in third and fourth place with sales to Britain of 765 million pounds and 686 million pounds, respectively.

oday, roughly onequarter of the world’s population lives in conflict-affected and fragile states. Despite vast sums of money spent aiding such states over the last 50 years, armed conflict and violence continue to blight the lives of millions of people around the world. International and national partners must radically change the way they engage such states. I experienced firsthand the need for a new approach in 2004 in Sri Lanka. Within the first two months of the devastating tsunami that struck that December, close to 50 heads of state and foreign ministers visited the island. Each came with their own programmes, their own civilsociety organisations, and their own television crews. Few came with any deep understanding of the dynamics of the political conflict between militant Tamils and the Sri Lankan state. Big mistakes were made, fuelling further violence. Our major challenge today is to move away from the model of partnership according to which priorities, policies, and funding needs are determined in donor capitals and development partners’ headquarters. Conflict-affected states need to be able to determine their own destinies. We should establish models of post-conflict transition like the one advocated by the g7+, a group of eighteen fragile states. The model is simple: Countries assess their own situation, using tools that they develop and that are appropriate to the context, in order to formulate a vision and a plan to consolidate peace and achieve prosperity. This may sound like pie in the sky, but we have already tasted it in Africa, where Sierra Leone’s Agenda for Prosperity 2013-2017 and the Liberia Vision 2030 exemplify the

potential of such programmes. Progress on meeting national priorities such as peace consolidation, expanding access to justice, or increasing security is monitored locally. Using local systems and capacities, it turns out, can strengthen them.

‘About us’ The “New Deal for Engagement in Fragile States,” which builds on a series of international commitments regarding aid and development, and was endorsed at the at the Fourth High-Level Forum on Aid Effectiveness in Busan, South Korea in 2011, proposes just such a model.

National leadership and ownership of agendas are key to achieving visible and sustainable results

It enshrines what matters most in building peaceful states and societies: commitments – the Peace- and State-building Goals – to improve how national and international partners engage in conflict-affected and fragile contexts. The New Deal recognises what the history of peacebuilding teaches us: national leadership and ownership of

agendas are key to achieving visible and sustainable results. As Kosti Manibe Ngai, South Sudan’s finance minister, has put it, “Nothing about us without us.” In many conversations with South Sudan’s president, Salva Kiir, we have discussed setting out a short list of clear priorities for the new state. But such goals are meaningful only if a fragile state’s partners are ready to accept the lead from a capital like Juba rather than from their own headquarters. More than 40 countries and institutions have endorsed the New Deal way of working, committing themselves to building better partnerships – and to investing the required resources and political capital. This is why the New Deal model is innovative; it creates political support around issues that need to be addressed if countries are to make the transition from conflict and fragility to peace and stability. Supporting inclusive political dialogue and ensuring that conflict is resolved through peaceful means are the highest priorities, as are security, access to justice, and a dynamic private sector that generates sufficient job opportunities. Moreover, many fragile states are rich in natural resources, and must establish transparent resource management – aimed at curbing corruption and controlling illicit flows of money and goods – in order to raise the revenues needed to deliver services.

National leadership A focus on these processes would ensure that fragile states take the lead and the responsibility. As partners, we must accept this national leadership. After Haiti’s catastrophic earthquake in 2010, the country was dubbed “the republic of NGOs”. Unable

to create conditions in which Haitians themselves could take the lead in rebuilding their country, Haiti’s external partners undermined the establishment of a functioning internal governance system. So, how can we translate our commitments and priorities into better lives for people who are affected by conflict and fragility? OECD countries need to lead by example and meet the commitments that they have made. Our partners, through groupings like the g7+, must continue to demand the changes in policies and practices that have been promised. We also must plan to change for the long term. As the Millennium Development Goals’ 2015 end date approaches, promotion of peace, security, and nonviolent conflict resolution continues to be vitally important, and must be fully integrated into any future development agenda. Recently, the members of the International Dialogue on Peacebuilding and Statebuilding, the high-level political forum that produced the New Deal, met in Washington, DC, to assess our progress in changing how we work and in implementing the New Deal commitments. They agreed to the Washington Communiqué, which urges development partners, g7+ countries, and civil-society organisations to intensify their efforts to use the New Deal to deliver concrete results on the ground, and calls for a post-2015 development agenda that recognises the universal importance of peaceand state-building. Ultimately, our progress depends on the resolve of everyone to transform the lives of the 1.5 billion people whose lives are marred by violence, conflict, and insecurity. © Project Syndicate

May 22, 2013

Closing New gaming trade show in November

U.S., China leaders to hold summit

Macau Gaming Equipment Manufacturers Association is to launch its own trade show in November, the body said yesterday on the first day of Global Gaming Expo Asia 2013. The new event – to be known as Macau Gaming Show – will be held from November 14 to 16 at The Venetian Macao, the organisers said yesterday. It may contain a conference programme as well as an equipment exhibition, but that has not been confirmed. “It’s especially aimed at local manufacturers that may not be able to come to events like G2E Asia,” said an association spokesman.

The U.S. and Chinese presidents will hold their first summit in California in June, both sides have announced. Barack Obama and Xi Jinping will meet from June 7-8 at an estate in Rancho Mirage, a U.S. statement said. Topics on the agenda are likely to include North Korea, cyber espionage, tensions in the South China Sea and Syria. “They will review progress and challenges in U.S.-China relations over the past four years and discuss ways to enhance co-operation, while constructively managing our differences, in the years ahead,” said a statement.

Inflation slower so far this year But rises in food and housing costs hit low-income households the hardest Vítor Quintã

vitorquinta@macaubusinessdaily.com

he prices of consumer goods and services rose more slowly in the first four months of this year than a year earlier, the Statistics and Census Service announced yesterday. But increases in food prices and housing costs meant low-income households suffered. The average annual rate of consumer price inflation was 5.35 percent in the first four months of this year. It was 6.4 percent in the first four months of last year. The easing of inflation was due mainly to a slowdown in the average annual rate of increase in food prices to 6.88 percent from 9.59 percent. This easing of food price inflation was due mainly to gentler increases in food prices in mainland China, where most of Macau’s food comes from.

The average annual rate of food price inflation across the border slowed to 3.9 percent from 7.8 percent, according to the National Bureau of Statistics. Macau households spend almost a third of their budgets on food and non-alcoholic drinks. Food and non-alcoholic drinks accounted for almost half of consumer price inflation in the first four months. The next-biggest expense for Macau households is housing and fuel. Housing costs include mortgage payments. The average annual rate of increase in housing and fuel costs jumped to 9.06 percent from 4.52 percent. Last month the annual rate of housing and fuel cost inflation was

8.86 percent, remaining above 8.5 percent for the sixth consecutive month. Housing cost inflation was 13.24 percent in April alone. The annual rate of healthcare cost inflation was 7.27 percent as outpatient charges rose by 14.7 percent. In the first four months the average annual rate of inflation in prices of goods and services typically bought by low-income households was 5.95 percent. This was faster than consumer price inflation generally because low-income households spend a greater proportion of their budgets on basic necessities – the prices of which rose fastest. Low-income households are those that spend between 6,000 patacas (US$750) and 19,000 patacas per month.

Apple ‘among U.S.’s big tax avoiders’ Apple Inc. has been accused of being “among America’s largest tax avoiders” by a Senate committee. Apple has created a web of offshore entities to avoid paying billions of dollars in U.S. taxes, including three foreign subsidiaries the company says have no home country for tax purposes, congressional investigators say. The world’s most valuable technology company has US$102 billion in offshore accounts and shifted billions in profits out of the U.S. into affiliates based in Ireland where it negotiated a tax rate of less than 2 percent, according to a report by the Senate Permanent Subcommittee on Investigations. The offshore entities of Apple have paid little or no tax in recent years, the probe found. The committee said there was no indication it had done anything illegal. The report was released before a subcommittee hearing, yesterday U.S. time, where Apple executives including chief executive Tim Cook and chief financial office Peter Oppenheimer are scheduled to testify. In prepared testimony to Congress posted on its website yesterday, Apple defended its practices, saying it paid US$6 billion in U.S. taxes last year and is one of the largest taxpayers in the country. The company doesn’t use foreign subsidiaries or gimmicks to avoid U.S. taxes, said the testimony. Mr Cook will set out proposals to simplify corporate tax laws when he appears at the hearing.

Yahoo’s rise in Asia offsets Tumblr risk

Households spend almost half their budgets on food and housing (Photo: Manuel Cardoso)

Yahoo! Inc. chief executive Marissa Mayer’s US$1.1 billion acquisition of blogging service Tumblr will be a test of her ability to revive the aging Web portal. Ms Mayer faces plenty of challenges in her efforts to turn six-year-old Tumblr into a moneyspinner, not least among them retaining users while devising new types of non-intrusive online ads outside of Yahoo’s traditional area of expertise. And then there is Tumblr’s hefty price tag: a sum that equates to a fifth of Yahoo’s cash. But some investors and analysts say that Wall Street is more focused on the rising value of Yahoo’s Asian assets, such as its 24-percent slice of China’s Alibaba, than on actual business operations. That means the 37-yearold executive faces less immediate pressure to prove that Yahoo’s biggest acquisition in years is a profitable one. “Overall I’m relatively sceptical, but I don’t think it matters much to the stock,” Macquarie Research analyst Ben Schachter said of the deal. If Ms Mayer’s bet delivers, however, some investors say it could provide even more upside to a stock already trading at its highest levels in years. The combination of Yahoo and Tumblr creates an online powerhouse with roughly one billion users, which will draw in more advertisers and help Yahoo keep visitors on its properties for longer periods of time, Ms Mayer told Reuters in an interview. “Tumblr in terms of users and traffic is an immediate growth story for us,” she said.