1
April 19, 2013
Vitor Quintã
MOP 6.00
Bureau missed bus on transport: watchdog
www.macaubusinessdaily.com
Year II
Number 292
Tuesday May 28, 2013
Editor-in-chief Tiago Azevedo
Deputy editor-in-chief
The Transport Bureau has not been doing a satisfactory job in monitoring bus runs or fare collection, the public spending watchdog Audit Commission reports. When the commission did spot checks on routes in 2011 and 2012, it found that on nine of the 10 most profitable ones, buses were not operating as scheduled and drivers on some routes weren’t handing in cash collected from passengers. It added there had been a ‘missed opportunity’ for Macau to introduce the latest vehicles and world-leading emission standards. Page 2
‘Scrap outside labour quota system’: SMEs T
he quota system for hiring non-resident workers should be scrapped to meet the city’s labour needs, the Macau Small and Medium Enterprises (SMEs) Association
says. It thinks the red tape involved with such staff import quotas disproportionately handicaps small firms. It suggests a labour import policy based on need and
skills – with some safeguards to protect the interests of resident workers – started on a sixmonth trial basis. A month ago Chief Executive Fernando Chu Sai On appeared
to test the public mood when he said the city might want to “absorb qualified talents from elsewhere”. Local unions are expected to oppose the idea. More on page 3
US$600 mln IPO for Home pre-sales law Chow’s Macau Legend leaves ads untouched Casino developer Macau Legend Development Ltd – led by local entrepreneur David Chow Kam Fai – has started pre-marketing its planned US$600 million (4.8 billion patacas) Hong Kong initial public offering, according to a term sheet. The company – which owns Macau Fisherman’s Wharf and its accompanying Babylon Casino, and The Landmark Macau and its Pharaoh’s Palace Casino – plans to price the IPO on June 21, with listing scheduled for June 27, the terms showed. The IPO would value the business at US$2.4 billion.
The government has closed one door on aggressive marketing of unbuilt homes but left another flapping open. The city’s first law on sales of unfinished homes comes into force on June 1. It requires developers to finish a project’s foundations and complete a temporary registration process before being allowed to sell flats. But the new rules will not cover marketing of unfinished properties. “…the law could not be so comprehensive due to the time limit,” said Legal Affairs Bureau director André Cheong Weng Chon.
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I SSN 2226-8294
Hang Seng Index 22730
22696
22662
22628
22594
22560
May 27
HSI - Movers Name
%Day
BOC HONG KONG HO
2.21
LENOVO GROUP LTD
1.96
CATHAY PAC AIR
1.85 1.58
POWER ASSETS HOL
1.43
LI & FUNG LTD
-1.28
COSCO PAC LTD
-1.48
Fewer referrals on suspicious transactions
Conde Group coaches ad agency talents
China-bound investment rises by 22 percent
WHARF HLDG
BELLE INTERNATIO
-1.67
The number of suspicious transactions sent to the Public Prosecutions Office dropped last year, though the number of reports received by the Financial Intelligence Office on such activities rose to more than 1,800. According to the intelligence office’s latest newsletter, released yesterday, it received 1,840 reports in 2012, 17.7 percent more than a year before. But only 166 of these were sent to the prosecutors for further investigation.
On Thursday Conde Group Ltd, a local marketing communications agency, is holding a forum on marketing effectiveness. On Friday the firm will host a seminar at Macau University of Science and Technology on the fundamentals of award-winning campaigns. It’s ahead of the industry’s Effie China award ceremony in Hong Kong on October 27. Entries must be submitted by August.
Macau firms remained positive towards the mainland Chinese market last month, after outward investment dipped to a record low in February. The mainland’s Ministry of Commerce disclosed on May 24 that it approved 27 new projects funded by Macau enterprises in April, a 22.7-percent rise from the same month a year ago. The combined value of the deals was US$50 million (400 million patacas).
CHINA COAL ENE-H
-1.69
CHINA RES POWER
-2.38
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Source: Bloomberg
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May 28, 2013
Macau
Public bus service not worth the money: audit Transport Bureau supervision lacking over bus runs and bus fare payments Stephanie Lai
sw.lai@macaubusinessdaily.com
T
he Transport Bureau has not been doing a satisfactory job in monitoring bus runs, the payment to the government of collected bus fares and the quality of emission standards, the Audit Commission public spending watchdog said in a report. In a spot check conducted from August 2011 – when the new public bus system was launched – to September last year, the commission found that in nine of the 10 routes that made the most money buses were not departing according to schedule. In addition there were not enough bus runs during peak hours, the watchdog said. “Some of the routes were only having bus runs reaching 65 percent of what was contractually required,” stated the report published yesterday. “Six of the said nine routes, though not having enough bus runs during the peak hours, they were having more bus runs in the off-peak hours,” the report added. “As such the bus companies could still meet the total bus runs as required by the tender regulations.” The report says the Transport Bureau only paid attention to the total volume of runs and paid the bus operators without carefully checking the service record of the individual runs. “The Transport Bureau only checked whether the bus runs fulfilled their designated routes as a confirmation for paying the operators’ service charges, without taking other customer-related information into consideration,” the commission pointed out. Under the new bus system, the three bus operators collect bus fares and hand them to the government. In return, the government pays them between 9.6 patacas (US$1.20) and 25 patacas per kilometre for
each bus run, which is effectively a public subsidy on how much it costs in resources and labour to make those journeys. The operators will collectively receive at least 4.8 billion patacas up to the time of the expiry of their franchises in July 2018.
Faulty settlements The report mentions some operators submitted only partial records on fares collected but were not penalised by the government. “The commission spot-checked the handling of bus fares paid in cash on a bus for two days, and found out that the bus driver failed to deliver
the cash box [to the operator],” the report noted. “There was a risk of losing those bus fares, which should be paid to the government.” In the first year of the new system, the government received over 292.3 million patacas in bus fares. Fares paid in cash by travellers accounted for 21 percent of fare revenue. It “is not a low amount and should be better supervised,” the commission stated. In its response the Transport Bureau said it also carries out spot checks to supervise the delivery of bus fares. But the checks may not be carried
Not green enough The Audit Commission criticised the Transport Bureau for only requiring public bus concessionaires to operate vehicles meeting Euro III emission standards, a level that it said “lagged far behind international trends”. It added: “The bureau has missed the best time to follow the global green trend, when the new bus system was about to operate in Macau”. The bureau stated it would in future encourage imports of buses that meet Euro IV standards or electric buses.
out frequently as the bureau “lacks enough staff” and the amount of cash fares is not “large”. The bureau admitted that it had imposed no fines on the operators over “losses of bus fares paid in cash” or for “insufficient data on bus fares” during the first year of the new system. It pledged to foster more stringent checks on whether buses were running on time, as well as on operators’ payment data.
Operators sometimes lost records on bus fare collection, watchdog report says (Photo: Manuel Cardoso)
Fewer dubious deals tackled by prosecutors Casinos remained the main breeding ground for suspicious transactions last year
T
he number of cases of suspicious transactions sent to the Public Prosecutions Office dropped last year, though the number of reports of suspicious transactions received by the Financial Intelligence Office rose to more than 1,800. According to the office’s latest newsletter, released yesterday, it received 1,840 reports in 2012, 17.7 percent more than a year before. There were 1,563 suspicious transactions reports overall in 2011. But the number of cases it sent to the prosecutors for further investigation dropped to 166 from 190, according to yesterday’s data. The number of cases probed remains just a small fraction of
the total number of suspicious transaction reports. The office passed on to the prosecutors roughly 9 percent of the cases of suspicious transactions in received last year. The gaming sector remains the main breeding ground for dubious deals, accounting for 1,328 cases, or 72.2 percent of the total. Most of the other cases were in the banking or insurance sectors. Casinos are required to report to the Gaming Inspection and Coordination Bureau any transaction worth over 500,000 patacas (US$62,530). The bureau then passes cases of suspicious transactions to the Financial Intelligence Office.
Last year, the international Financial Action Task Force, of which Macau is a member, revised its recommendations for preventing money laundering and terrorist financing. The task force now requires financial institutions always to identify and verify the identity of
Number of STRs
their account holders. The purpose of the task force is to stop money laundering. The government here is amending the law on money laundering and terrorist financing to bring tax evasion within its ambit. T.A.
2012
%
2011
%
Financial Institutions and Insurance Companies
510
27.7
477
30.5
Games of Fortune Operators
1328
72.2
1082
69.2
2
0.1
4
0.3
1840
100
1563
100
Other Institutions Total Source: Financial Intelligence Office
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May 28, 2013
Macau
Scrap labour import quotas, say SMEs As the gaming industry enlarges its share of the resident labour force at the expense of smaller businesses Vítor Quintã
vitorquinta@macaubusinessdaily.com
Q
uotas for hiring non-resident workers should be scrapped so demand for labour can be satisfied, the Macau Small and Medium Enterprises Association says. “We have always proposed to the government to, if possible, develop a policy of no restrictions instead of the current quotas,” association administrator Kenneth Lei Chi Leong told Business Daily. “The employer could hire anybody who has the right qualifications outside Macau freely, with no need to apply for a quota,” Mr Lei said. “Maybe there could be a trial period for six months, to see if there is any need for improvement or change. If something is wrong we can adjust it or stop it,” he said. His association is now preparing the second of its annual white papers on smaller businesses which, he said, would come out before the government’s Policy Address for 2014, which is due to be delivered in November. Mr Lei said the white paper would propose the abolition of labour import quotas for all employers, not just smaller businesses. Chief Executive Fernando Chu Sai On called last month for public debate on importing labour, asking the Legislative Assembly: “When there are not enough resident workers, can we absorb qualified talent from elsewhere … to serve the city and contribute to Macau’s economic development?” Mr Lei acknowledges that trade unions, including the powerful
Macau Federation of Trade Unions, will oppose his association’s proposal.
The lion’s share But he said he believed a consensus could be reached “through some face-to-face conversation”. The Macau SME Association was willing to discuss the details of its proposal with a view to protecting resident workers, Mr Lei said. The gaming industry hired 1,800 new employees last month, most poached from other industries, official data indicate. Casinos employed 82,900 people last month, or 23.5 percent of Macau’s labour force, the highest proportion ever, the Statistics and Census Service announced yesterday. Most of the gaming industry’s new employees are residents. Imported workers make up less than 14 percent of the industry’s workforce. The Human Resources Office announced yesterday that the recreational, cultural and gaming services industries hired just 127 new non-resident employees last month, taking their imported workforce to 11,413. The number of people in employment in Macau increased by fewer than 700 last month, implying that the gaming industry found most of its new recruits in other industries. In the past 12 months the city’s economy has gained 14,100 jobs. About two out of every five are in casinos. Mr Lei remarked: “There is no
possible competition with the salaries paid by gaming companies, which are much higher than what SMEs can afford.” At the end of last year median monthly pay in the gaming industry was 15,000 patacas (US$1,876). Median monthly pay generally was 12,000 patacas.
Tax burden “Our members are facing a very difficult situation, especially when it comes to retaining people,” Mr Lei said. His association has a second suggestion for the government to consider. “Is it possible for employees working in SMEs to pay lower taxes?” he said. “Maybe it would make a difference for certain people, especially for management staff that earn a bit more money.” The top rate of income tax is 12 percent, levied on annual earnings greater than 424,000 patacas. And the Macau SME Association has a third suggestion for the government. “Provide additional resources for training courses, more after-work vocational training,” Mr Lei says. Mr Chui warned last month that the labour shortage would only worsen in the next few years, after the completion of several casino resorts in Cotai. These resorts would “need a large number of employees, which will
Is it possible for employees working in SMEs to pay lower taxes? Kenneth Lei Chi Leong, Macau SME Association administrator
further tighten the number of workers available for SMEs,” he said. “We may not face this problem this year, but it will become more conspicuous by 2016.” Mr Lei said the prospect of SMEs losing more employees to the casinos “is of great concern to us”.
Minimum wage up next month T
he minimum wage for government-outsourced cleaning and security staff will increase by 13 percent to 26 patacas per hour (US$3.25) next month. According to a notice published in yesterday’s Official Gazette, the minimum wage will also reach 208 patacas per day and 5,408 patacas per month, up by 13 percent as well. The previous adjustment to this minimum wage was done in September 2011. “The hike responds to the inflation rate changes in the past two years,” the Secretary for Economy and Finance Francis Tam Pak Yuen said last month. “But I have to reiterate that this 26-pataca [figure] is not meant to be a benchmark for the private sector to follow, or an absolute reference for the [citywide] minimum wage law discussion,” he added. Also next month the subsidies paid by the Social Security Fund for unemployment, illness, childbirth, wedding or funeral will increase between 63.6 percent and 71.4 percent. It is the first increase in three years. The unemployment subsidy will reach 120 patacas per day. The same value will be paid over an illness that requires the resident to be hospitalised. In case a close relative dies, social security beneficiaries will receive 2,200 patacas to help with the funeral expenses. A subsidy of 1,700 patacas is also available in case of wedding or childbirth.
Casinos employed a larger proportion of Macau’s labour force in April than ever before
V.Q.
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May 28, 2013
Macau Stanley Ho’s Portuguese casinos further into red Grupo Estoril-Sol, the group controlled by Stanley Ho Hung Sun that operates three casinos in Portugal, posted losses of 8.9 million euros (92.1 million patacas) last year, 7.2 percent more than in 2011. The company said Portugal’s casino revenue fell 11 percent last year due to the government’s austerity policies and “high and inadequate” taxes on gaming. According to the group’s annual report released last week, 91 workers were fired and staff costs fell by 24 percent. Estoril-Sol still holds a market share of 64 percent in the Portuguese casino sector.
Rendering of Fisherman’s Wharf’s revamp
Macau Legend markets US$600 mln IPO Second casino likely for Fisherman’s Wharf: sources Michael Grimes
michael.grimes@macaubusinessdaily.com
include a Portuguese-themed plaza and commercial centre. When the plan for Fisherman’s Wharf’s new look was published in the Official Gazette last September, there was no mention of a second casino. The issue is a politically sensitive one because the Macau government has publicly committed to a moratorium on casino venue proliferation via so-called “service agreements”. The practice began under the 40-year casino monopoly of Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau SA, and has continued since market liberalisation. Under the system, existing casino concessionaires have been allowed to spin off their gaming rights to an independent third party either owning or managing a new venue. In exchange the concessionaire gets usually a service fee and a percentage of the takings. Mr Chow’s existing casinos operate under a service agreement with Sociedade de Jogos de Macau SA. In 2008 Macau’s first chief executive Edmund Ho Hau Wa announced a freeze on new land for casinos but pledged to honour existing service agreements between investors and concessionaires or subconcessionaires. Business Daily understands it’s this pledge on which Macau Legend and Mr Chow are relying in their bid for a second casino on the Fisherman’s Wharf site. “The agreement with the government is for a casino in addition to Babylon Casino,” said one of Business Daily’s two sources. No information was available on how many tables are being sought for the second casino.
Permission given
David Chow – stock flotation in Hong Kong (Photo: Naty Torres)
C
asino developer Macau Legend Development Ltd – led by local entrepreneur David Chow Kam Fai – has started pre-marketing its planned US$600 million (4.8 billion patacas) Hong Kong initial public offering, according to a term sheet seen by Reuters. The company – which owns Macau Fisherman’s Wharf and its accompanying Babylon Casino, and The Landmark Macau and its
Pharaoh’s Palace Casino – plans to price the IPO on June 21, with listing scheduled for June 27, the terms showed. The IPO consists of 100 percent primary shares and would value the business at US$2.4 billion. CLSA Asia-Pacific Markets is the sole sponsor for the offer. When Business Daily contacted Mr Chow yesterday, he told us: “I can’t say any more at this stage. It’s confidential.” But some of the proceeds from the
IPO are likely to go on a second casino at Fisherman’s Wharf, Business Daily has been told. Last August Mr Chow announced a HK$5 billion (US$645 million) redevelopment of his Fisherman’s Wharf waterfront site on Macau peninsula. Shortly afterwards he also won a 250 million yuan tender for a plot of land on Hengqin Island. He pledged to invest 1.6 billion yuan on the site, which he said would
A second person added that the legal right to gaming on the site was contained in the original Fisherman’s Wharf development agreement. It allowed for a so-called service provider agreement using the gaming licence of SJM SA. It didn’t detail how many gaming facilities could be built using the service provider agreement said the person. “It doesn’t specify the number of facilities. The requirement is just that it has to be within the perimeter of the site,” explained the person. Macau Legend Development Ltd is 58.3 percent owned by Mr Chow, a former Macau legislator, and his mother, Lam Fong Ngo. At a press conference last August, the firm said that “60 percent” of the new attractions on the rejigged Fisherman’s Wharf site would be ready by 2015 and the remainder by the following year. The existing gambling facility – Babylon Casino – opened in December 2006, a year after the rest of the site. Fisherman’s Wharf is a short walk from Sands Macao, the city’s first foreign-owned casino. The latter launched in May 2004. Union Gaming Research Macau suggested to Business Daily last year that the main challenge faced by the Fisherman’s Wharf developers would be getting gaming table allocation from the government if there were to be a second casino.
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May 28, 2013
Macau
New home pre-sale law leaves ads untouched Law regulating sales of unfinished homes comes into force on Saturday but advertising is still unregulated Tony Lai
tony.lai@macaubusinessdaily.com
T
he city’s first law on sales of unfinished homes, which will come into force on June 1, will not regulate the promotional campaigns, the authorities admitted. The law requires developers to finish the project’s base foundations, and to complete the temporary horizontal property registration before being allowed to sell the flats. But it is not illegal for developers to carry out promotional campaigns before obtaining the sales permit, Legal Affairs Bureau director André Cheong Weng Chon said. “The [new] law does not cover the selling practices of the unfinished houses, like sales brochures, advertisements and sample flat visits,” Mr Cheong said yesterday. “The Legislative Assembly has a very strong desire to regulate such practices during the discussion of the bill but the law could not be so comprehensive due to the time limit,” the director said in a discussion about
the law attended by developers, bankers and lawyers. The government would soon draft guidelines on promotional practices for the industry to follow. The guidelines would later be turned into binding legislation, said Mr Cheong. “But I advise you [the developers] to do such [promotional] moves after getting the sales permit… for better protection of consumers and developers as well,” he added.
Mortgage doubts Wong Chan Tong, who heads the cabinet of the Secretary for Transport and Public Works, said the government has enough resources to tackle the added work created by the new law. He said there were 81 unfinished housing projects consisting of over 7,100 flats by May 20. Just 21 projects of those projects, with over 3,700 flats, qualify for a pre-
Corporate German watchmaker launches branded store German watchmaker Junghans is opening its first branded outlet in Macau at The Landmark Macau. Its local partner in the venture is Xu Xing Long Watch Ltd. Junghans timepieces are already sold in Macau by City Great Ltd, a subsidiary of Tic Tac Time and the agent of the Junghans brand in Hong Kong and Macau. Junghans’ chief executive Matthias Stotz is flying from Germany to join Ken Lam, director of Tic Tac Time, and Ken Sou, managing director of Xu Xing Long Watch, at the Landmark Macau store’s opening ceremony tomorrow. TVB actress Christine Kuo and singer-composer Pong Nan will also attend the event. Junghans Uhren GmbH – Germany’s largest watch and clock manufacturer – was founded in Baden-Württemberg in the southwest of the country in 1861. Its timepieces are noted for their accuracy. The company says it keeps direct control over design, manufacturing and marketing of its products.
Melco Crown Philippines among ‘best managed’ Melco Crown Philippines Ltd – a unit of Macau casino developer Melco Crown Entertainment Ltd – has been named as one of the Philippines’ best-managed corporations and one of the best for corporate social responsibility according to a regional survey by FinanceAsia magazine. MCP was only incorporated under that name in March this year after the Melco Crown parent gained approval from the island nation’s Securities and Exchange Commission to convert an off-the-shelf listed company – Manchester International Holdings – to a vehicle for a share flotation. In April MCP raised US$325 million (2.60 billion patacas) net, excluding an over allotment of shares, via the flotation. The money will go towards furbishing and operating the US$1 billion Belle Grande Manila Bay casino resort. It’s a joint venture with local firm Belle Corp., controlled by Filipino-Chinese entrepreneur Henry Sy. Belle Grande is due to open in mid-2014 says Melco Crown’s co-chairman Lawrence Ho Yau Lung.
sales permit while 35 developments with about 2,100 flats satisfy most conditions. Mr Wong added the law was rushed to come into force, after the assembly approved it last week, to “reduce the vacuum period” in which pre-sales remained unregulated. The law defines unfinished homes as all housing units before their horizontal property registration are changed from temporary to permanent – when the buyers officially take over the flats. Executives from Bank of China Ltd’s Macau branch and Banco Weng Hang, SA said they would follow the guidelines from the Monetary Authority of Macau and treat units with housing permits as finished homes when it comes to mortgage lending. The ceiling for home loan ratios is different, up to 90 percent of the value of completed houses and just 70 percent for unfinished residential
There were 81 unfinished housing projects consisting of over 7,100 flats by May 20
units, said the bankers. The definition of unfinished homes “should follow this law”, said Mr Cheong, adding his bureau would follow up the case with the Monetary Authority to “keep the rules consistent”. The sales of unfinished homes before June 1 would still be effective but re-sales of such houses would only be allowed after the houses are registered in the Real Estate Registry.
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May 28, 2013 April 19, 2013
Macau Activist arrested in Hong Kong Hong Kong police arrested Macau grassroots activist Lei Kin Yun at the Sheung Wan ferry terminal on Sunday after the 34-year-old was returning from the memorial rally of the 1989 Tiananman Square protests. Mr Lei is charged with a crime of unlawful assembly for joining an opposition rally against Hong Kong chief executive Leung Chun Ying in April last year. The activist was released on bail and must face a court hearing on June 3, Apple Daily reported. Mr Lei confirmed yesterday his candidacy for the upcoming Legislative Assembly election, representing his Association for Democracy Activism.
Students are not being trained to be open-minded, to ask questions, to be creative Rebecca Choi, Conde Group director
Marketing men’s inbox overflowing with work Even entering their work for an Effie award is a drain on their time Vítor Quintã
vitorquinta@macaubusinessdaily.com
M
acau marketing companies are finding it difficult to cope with demand, says Rebecca Choi, a director of Conde Group Ltd and the representative here of the marketing industry’s Effie China awards. One of the main problems marketing companies here have “is that there are a lot of things happening”, Ms Choi told Business Daily. “It’s very difficult for brand owners, agencies to cope, especially because there is not sufficient manpower.” Even ent er ing a marke tin g campaign for an Effie China award requires time to prepare a case for presentation and assess the results, Ms Choi says. “But at the moment we are always fire-fighting,” she says. Any company in Greater China can enter a marketing campaign for an Effie China award.
Conde has been associated with the Effie China awards for two years. It brought an exhibition of Effie award-winning work and a seminar on effective advertising to Macau in 2011. For this year, Conde has arranged a forum on marketing effectiveness in the MGM Macau on Thursday and a seminar on Effie award-winning campaigns at the Macau University of Science and Technology on Friday. These events are meant to help people working in the marketing industry “network and share the experience of marketing experts”, Ms Choi told Business Daily. “That’s what the Effie awards are all about.”
Statistical evidence Effies were first awarded in mainland China in 2003, after the China Advertising Association and the American Marketing Association, which created the awards in 1968,
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agreed to introduce them there. The 39 sets of Effies awarded around the world each year recognise the most effective advertising efforts. The Effie judges like creativity, and advertising that delivers tangible business results. Companies that enter must support their assertions about the effectiveness of their campaigns with statistics. Ms Choi says entering can help brand owners improve their returns by teaching them how to measure marketing results, and by allowing them to see how they measure up against other people in the industry and to learn from them. There were about 400 entries for Effie China awards last year, from all over Greater China. Only one entry had anything to do with Macau: the advertising campaign for the show “The House of Dancing Water” at the City of Dreams casino resort.
This year’s Effie China award presentation ceremony is due to take place on October 27. Entries must be submitted by August. Ms Choi says it is hard to tell if there will be more entries from Macau this year. Most of Macau’s gaming companies use Hong Kong marketing companies.
Broad minds wanted “Big corporations want to guarantee a certain level of quality in the services they get. I’m sure they would like to give opportunities to local firms but, on the other hand, they have their budgets and might not want to run any risks,” Ms Choi says. Hong Kong has had its own Effie awards, run by the Association of Accredited Advertising Agents of Hong Kong, for 10 years. There were 79 entries for Hong Kong Effies this year, more than ever before. The Hong Kong Effie award presentation ceremony is on Thursday. Ms Choi says young people looking for a career are aware that job opportunities in marketing are growing in Macau and the vicinity. But she says education here is clipping their wings. “Students are not being trained to be open-minded, to ask questions, to be creative,” she says. She believes higher education or an internship abroad is essential to “broaden the mind beyond the Macau size”. Of the winners of Effies around the world last year, British-Dutch multinational Unilever Group was the most successful advertiser, fast-food chain McDonald’s Corp had the most effective brand, and Ogilvy & Mather Worldwide Inc had the most effective network of advertising agencies.
celebration
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May April28, 19,2013 2013
Macau
Macau stake in mainland growing faster than FDI Macau investment across the border pulls itself out of a slump Tony Lai
tony.lai@macaubusinessdaily.com
I
nvestment by Macau enterprises in mainland China remained vigorous last month as it bounded back from a slump in February. The Ministry of Commerce disclosed on Friday that it approved last month 27 new investments in the mainland by Macau enterprises, 22.7 percent more than a year earlier.
US$150 mln
Value of Macau investments in mainland approved in first four months
The combined value of these investments was US$50 million (400 million patacas), US$20 million more. In February the ministry approved only seven such investments, the fewest since it began publishing monthly data on Macau investments, in September 2006. In the first four months of this year Beijing approved 85 new investments by Macau enterprises, three more than a year earlier. Together, these investments were worth US$150 million, 15.4 percent more. This means growth in the value of investment in the mainland by Macau enterprises so far this year has been faster than growth in the value of foreign direct investment generally. The Ministry of Commerce approved 6,687 new investments by foreign enterprises in the first four months, 4.7 percent fewer than a year earlier, according to China’s official news agency, Xinhua. Excluding those in the finance industry, these investments were
together worth US$38.3 billion, 1.2 percent more. “We expect FDI to grow steadily this year,” Xinhua quoted a spokesperson for the ministry, Shen Danyang, as saying earlier
this month. FDI in the mainland has been higher than a year earlier for the past three months, having been lower than a year earlier in the preceding eight months. Since 1990 the ministry has approved 13,227 investments in the mainland by Macau enterprises, which together account for about 0.8 percent of FDI. The ministry also disclosed that the value of trade between Macau and the mainland rose to US$370 million in April, about three-quarters as much again as a year earlier. The value of Macau’s imports rose by 70 percent to US$340 million and the value of Macau’s exports tripled to US$30 million. Macau’s main exports to the mainland are integrated circuits and cotton clothing, the Statistics and Census Service says.
The value of trade between Macau and the mainland rose last month
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May 28, 2013 April 19, 2013
Greater China
NZ, China in talks on convertibility Governments may allow direct currency conversion for trade
N
ew Zealand and China are in the early stages of negotiating the direct convertibility of each other’s currencies, but an agreement is likely to be some way off. They aim to reduce costs as trade between the two countries is targeted to surge 33 percent in the next two years. The New Zealand prime minister’s office has confirmed that the issue was raised during John Key’s visit to China last month and preliminary work has started on a deal that would aim to cut the costs of doing business between the two countries. At present, New Zealand businesses wanting to buy or sell yuan must convert their holdings into U.S. dollars, Japanese yen, or the Australian dollar, the only developed economy currencies that can be directly converted with the yuan. “It’s a signal of China’s desire to do business with us and that is huge given they are the greatest consumer of New Zealand milk and meat products,” said Westpac Banking Corp chief economist Dominick Stephens. “It will make life easier for the transactor at the Chinese end… they clearly see themselves doing more business with us.”
New Zealand’s biggest trade partner, Australia, started direct currency convertibility with the yuan last month after nearly a year’s negotiations. Westpac Bank and the ANZ Bank Ltd have been appointed as the market makers in the direct trade. A New Zealand dollar-yuan convertibility agreement would complement the five-year-old free trade agreement between the pair, which has seen trade almost triple since its inception. The currency talks are underway as New Zealand targets NZ$20 billion (US$16.2 billion) in two-way annual trade with China by 2015 from about NZ$15.2 billion in the year ended March. New Zealand’s exports to China jumped 32 percent in the first quarter, surpassing shipments to Australia for the first time, led by dairy products, logs and meat. “By having direct convertibility, that would reduce the transaction cost of doing business with China,” said Jane Turner, economist at ASB Bank Ltd in Auckland. “It reduces the cost of hedging and the risk of currencies moving against you, and you can become more competitive
The yuan was the 13th most-used currency in global payments in April
in your pricing.” Direct convertibility would be also help to boost service industries, such as tourism and education, which are both growth areas. Chinese tourist arrivals have leapt 31 percent in the past year, while more than 24,000 Chinese students
– the largest source – are studying in New Zealand this year. At present the only official currency link between China and New Zealand is a currency swap facility, worth 25 billion yuan or NZ$5 billion and set to expire in 2014, to cover possible market
Industrial profits tick up in April Net income growth accelerates as sales increase
C
hina’s industrial profits growth quickened in April from the previous month, though the government noted that the pickup was due mainly to a low comparative base, indicating that the world’s second largest economy still faces slack domestic and external demand. Chinese firms made profits of 436.7 billion yuan (US$71.22 billion) in April, up 9.3 percent from the same month last year, quickening from a year-on-year growth of 5.3 percent in March, the National Bureau of Statistics said yesterday.
The improved gains in April were caused by the low comparison base in the same month a year earlier, Yu Jianxun, an official from the bureau’s industrial department, said in a statement accompanying the data. Profits had fallen 2.2 percent in April last year from 2011, compared with gains of 4.5 percent year-onyear growth in March 2012, said the statement. In the first four months on 2013, Chinese firms made total profits of 1.61 trillion yuan, up 11.4 percent from the same period a year ago, the NBS said.
Industrial companies’ revenue rose 11.9 percent in the first four months to 30.4 trillion yuan, according to the statistics bureau statement, after a previously reported 11.9 percent increase in the first quarter. No figure was given for April sales. Among the 41 industries tracked, 30 posted profit growth and eight reported a profit drop in the first four months compared with the year earlier period. Three sectors reported turnarounds in profitability. Profits for manufacturers of computers, telecommunications
equipment and electronics were up 44.8 percent from the same period last year, while those in the electricity and heat production and supply industry leapt 92.6 percent. The ferrous metal smelting and rolling industry reported a 38.6 percent year-on-year increase in profits during the period, while profits in auto manufacturing rose 12.9 percent. Petroleum refining, coking and nuclear fuel processing sectors swung into profit from losses in the first four months, while profits in oil and gas exploration dropped 7.9 percent. Stronger profit growth may spur investment in factories and equipment, helping sustain growth in the world’s second-biggest economy as the government avoids adding stimulus. Stocks in China have dropped 6 percent since this year’s high on February 6 and a survey last week showed manufacturing is contracting this month for the first time since October. Reuters
US$71.22 billion
Profits for computers and electronics manufacturers grew 44.8 pct
Chinese companies’ profits in April
99
May April28, 19,2013 2013
Greater China
Merkel vows to avert dispute as Li rejects EU duties Both leaders call for end to solar trade row
G
disruption making it difficult for transactions to be settled. China’s yuan was the 13th mostused currency in global payments in April, according to the Society for Worldwide Interbank Financial Telecommunication. Reuters
erman Chancellor Angela Merkel and Chinese Premier Li Keqiang called for an end to a trade row between Europe and China over solar panels and wireless equipment, telling a joint news conference they were both for free trade. The European Union accuses China of pricing its solar panels and mobile telecom devices too cheaply and “dumping” them in Europe to corner the market. It plans to impose duties on Chinese panel makers. China denies the allegations. Mrs Merkel said Germany would do everything it could to prevent the trade dispute from escalating to the point where the European Commission imposed import duties on Chinese panel makers. “Germany will do what it can so that there are no permanent import duties and we’ll try to clear things up as quickly as possible,” Mrs Merkel told reporters after a meeting with Mr Li in Berlin. “We don’t believe that this will help us so we want to use the next six months intensively.” The European Union is considering whether to impose punitive import duties on solar panels from China after the United States levied its own duties last year – a move opposed by Beijing. China has threatened to retaliate if the EU pushes ahead with the investigation. Mr Li, standing next to Mrs
Li Keqiang said he ‘values’ Merkel’s position on solar tariffs
Merkel at the briefing that followed the signing of a range of business agreements, said a trade dispute between the EU and China would harm both sides and benefit neither. He said China was interested in both a two-way dialogue and consultation on how to resolve the issue. “We don’t agree with this decision and emphatically reject it,” Mr Li said, adding the step was “especially dubious” because the global economic recovery was still in fragile shape. “It not only endangers jobs in Germany. It will also endanger the development of the sector in Europe. That will harm the interests of the European consumers and Europe’s industry.”
European Trade Commissioner Karel De Gucht said earlier this month he and fellow commissioners agreed in principle to open an anti-dumping and anti-subsidy case against China, but would first seek to negotiate a solution with Chinese authorities. Mrs Merkel told the news conference that it was a “somewhat complicated situation” because the Commission has the authority to launch a procedure on its own. She said she believed a trade dispute could still be prevented with dialogue. “Germany will do all it can so that this won’t lead to import tariffs,” she said. “That’s not something we believe in.” Reuters
KEY POINTS Germany to do all it can to prevent trade row escalating Chinese premier rejects EU solar panel investigation EU-China trade disputes multiplying
HK makes fifth Rates set to rise amid arrest in HKMEx probe slower growth: analysts Beijing seen ‘more tolerant’ of weaker growth H E ong Kong police arrested a fifth person in its investigation of Hong Kong Mercantile Exchange Ltd, the failed commodities market set up by its chairman and largest shareholder Barry Cheung. Police arrested a 35-year-old woman with the surname Zheng on Sunday on suspicion of possession of false instruments, according to the Police Public Relations Branch. Four men were arrested last week as part of the case begun by the Securities and Futures Commission into suspected financial irregularities at HKMEx. HKMEx, as the exchange is known, surrendered its trading licence this month after failing to attract sufficient revenue to support its operations. The regulator said last week it found “serious” suspected irregularities in the exchange’s financial affairs and referred the case to the police. Mr Cheung, who ran the 2012 election campaign of the city’s Chief Executive Leung Chun Ying, resigned from all public service positions, including the city’s executive council, because he’s under police investigation, the government said in a statement on Friday. He also resigned as an independent non-executive director of AIA Group Ltd, the insurer said in a Saturday statement, and as an independent director at United Co. Rusal, the Russian aluminium producer said in a statement yesterday. Bloomberg News
conomists are forecasting that the People’s Bank of China is more likely to raise interest rates than cut them in the coming year, even as they slash growth projections for the world’s second-largest economy. Eight of 15 analysts surveyed by Bloomberg News this month project an increase in the benchmark deposit rate by the end of June 2014, compared with two who see a reduction. The survey showed economists cut their forecast for the 10-year bond yield by 30 basis points in the past month to 3.5 percent, while keeping their two-year yield forecast at 3.08 percent, based on median estimates. The government “seems to have become more tolerant” of weaker growth, UBS AG says, as Premier Li Keqiang grapples with credit expansion and price gains seen approaching the official target. The gap between two- and 10-year yields has narrowed to an 18-month low of 38 basis points, suggesting the market is anticipating a slowdown without stimulus. The similar gap in India, which is expanding at its slowest pace in a decade, is 11 basis points. “As long as growth is within the range of 7 to 7.5 percent, there’s no need to stimulate growth with
interest-rate cuts,” said Li Wei, a Shanghai-based economist at Standard Chartered Plc, which is forecasting a deposit-rate increase to 3.75 percent through the second quarter of 2014 from the current 3 percent. “Concerns still exist on local-government debt risks and property-price rebounds.” Standard Chartered this month lowered its growth forecast to 7.7 percent for 2013 from 8.3 percent.
Growth outlook
quarter growth to 7.7 percent and data on investment and factory output that missed forecasts. Manufacturing unexpectedly contracted for the first time in seven months, a report from HSBC Holdings Plc and Markit Economics showed on Thursday. The May preliminary reading for HSBC and Markit’s Chinese Purchasing Managers’ Index was 49.6, down from April’s final 50.4 level. A reading below 50 indicates contraction. Bloomberg News
Other respondents forecasting an interest-rate increase include JPMorgan Chase & Co., Daiwa Capital Markets, BNP Paribas SA and Banco Bilbao Vizcaya Argentaria SA. Analysts at Mizuho Securities Asia Ltd and Norddeutsche Landesbank Girozentrale projected a reduction. Economists made their biggest cuts to growth projections since September, trimming the 2013 and 2014 outlooks each by 0.2 percentage point to 7.8 percent, based on median estimates. The monthly Bloomberg News survey was conducted from May 16 to May 21. The economy expanded 7.8 percent in 2012, the slowest pace in 13 years. The reductions follow an unexpected deceleration in first-
As long as growth is within the range of 7 to 7.5 percent, there’s no need to stimulate growth with interest-rate cuts Li Wei, economist, Standard Chartered
10
May 28, 2013
Asia
Nikkei’s share average skidded 3.2 pct yesterday
BOJ minutes show rift over price goal Highlight concern that 2 percent target may be elusive Leika Kihara
A
rift within the Bank of Japan’s board over how to steer its radical monetary stimulus to end nearly two decades of damaging deflation underlined the early challenges Governor Haruhiko Kuroda faces in his efforts to foster sustained growth. The differences of opinion were highlighted in the minutes of the April 26 meeting, which showed some policymakers opposed targeting 2 percent inflation in two years and called for more flexibility in guiding monetary policy. The board also engaged in considerable debate over the recent bond market volatility that followed the BOJ’s monetary easing on April
4, a sign the members were uneasy about the rise in borrowing costs that could undermine the central bank’s ultra-loose policy. “We’re still seeing potential instability in the bond market,” one member was quoted as saying in the minutes released yesterday. The rift and the market volatility, which also hit Tokyo shares, pose a challenge to Prime Minister Shinzo Abe’s sweeping monetary and fiscal expansionary policies aimed at reviving Japan’s long-dormant economy. They also underscore concerns, even within the BOJ, over the central bank’s stimulus plan that relies heavily on lifting sentiment and creating expectations of future
inflation and growth. “Given how extreme the April easing step was, it’s natural for disagreements to exist within the BOJ,” said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo. “Failure to meet the price target will test the BOJ’s credibility. But the bank’s policy itself is contradictory. When expectations of inflation heighten, bond yields will rise. The BOJ can’t really do anything to stop that.” The BOJ unleashed the world’s most intense burst of stimulus last month, promising to inject US$1.4 trillion into the economy in less than two years to meet its pledge of achieving 2 percent inflation in
roughly two years. At a subsequent meeting on April 26, the BOJ extended the period for its economic forecasts to three years and said Japan will likely approach 2 percent inflation in the latter half of the three-year period to March 2016.
Sentiment souring? Among the nine-member board, former economists Takahide Kiuchi and Takehiro Sato dissented against the new forecasts on the view that they were too ambitious in a country that has been mired in deflation for 15 years. “A few members said it was tough to achieve 2 percent inflation in the latter half of the forecast period as
Gillard wants TV ban on live sport betting odds
A
ustralian Prime Minister Julia Gillard has called for a ban on sports bookmakers advertising ‘in play’ betting odds during matches broadcast live. Under the new rules, gambling advertisements would be prohibited during the commercial breaks while matches are being played. Advertisements of this sort would only be allowed before or after a game; or during a scheduled break in play, such as quarter-time and half time, the Prime Minister’s office confirmed. The Labor government will also “monitor the intensity of generic gambling advertisements within the allowed periods,” a spokesman added. It’s expected the
broadcasting industry will submit a revised code to the Australian Communications and Media Authority, added the prime minister’s office. The federal administration has claimed up to 500,000 Australians are at risk of becoming, or are, problem gamblers. According to the Australian Bureau of Statistics, the country’s population was 23.03 million as of April this year. So if the government’s assessment is correct, up to two percent of the nation’s citizens are in the at-risk group. Australia’s National Rugby League, which in the past has allowed bookmakers to give odds during broadcasts of its games, said it agreed with the government’s plan.
Julia Gillard – ‘good news for families’
“The overwhelming sentiment is that we do not want to see betting as the primary focus of our game,”
NRL chief executive Dave Smith said. “Fans, and particularly young fans, should not
be subject to excessive promotion of betting during matches,” he added. M.G.
11
May 28, 2013
Asia Singapore dollar N. Korea nuclear losing most since 2012 affirmation fuels
KEY POINTS BOJ’s April 26 meeting debated bond volatility Two members opposed pledging to c.bank’s targets One said setting uncertain target hurts BOJ credibility
there is uncertainty over how changes in future inflation expectations will actually push up prices,” according to the minutes, which likely referred to Mr Kiuchi and Mr Sato. One of the two said the credibility of the BOJ’s policy would be hurt if the central bank made forecasts bound with uncertainty and failed to achieve them, the minutes showed. Both made unsuccessful proposals to water down the BOJ’s commitment to meet 2 percent inflation in two years. Mr Kiuchi said the central bank should limit the period for committing to its ultra-easy policy for two years, and review it thereafter to see whether it should be sustained. At the April 26 meeting, the BOJ voted unanimously to stick with the massive easing announced three weeks earlier, in which it pledged to double its Japanese government bond (JGB) holdings in two years as it expands the supply of money at an annual pace of 60 trillion (US$593 billion) to 70 trillion yen. While the aggressive stimulus has sent stocks soaring, the massive scale of the BOJ’s buying jolted the bond market and nudged the 10-year yield to its highest level in a year last week, casting a cloud over the effectiveness of its easing. A decline in bond prices would hit the balance sheet of many Japanese banks that have heavily loaded up on bonds, and increase the cost of financing Japan’s huge debt pile, already the biggest in the developed world at more than double the size of its economy. Mr Kuroda has played down the risks, saying on Sunday that banks have sufficient buffers against losses they may incur from rises in bond yields. Reuters
Amid China slowdown and gloomy economic forecast
N
percent, as the Trade Ministry said gross domestic product rose an annualised 1.8 percent in the first quarter. On the same day, Singapore’s Department of Statistics said that the consumer price index rose 1.5 percent from a year earlier after the government tightened curbs on vehicle and property purchases, down from 3.5 percent in March. Recently, Singapore’s dollar has “weakened substantially from the top of its band to trade at the mid-point, driven by unwinding of the Singapore dollar basket trade” and buying of the U.S. currency, Credit Suisse Group AG analysts wrote in a note. China’s slowing growth remains the main weight on the Singaporean currency because of the island state’s dependence on exports, according to Morgan Stanley’s Mr Redeker.
orth Korea affirmed its commitment to nuclear weapons in a statement that attacked South Korea’s leader, fuelling scepticism over the regime’s claim it wants to return to dialogue over its atomic programme. The North is demonstrating its might as a “military power and nuclear weapons state envied by world people and feared by enemies,” the official Korea Central News Agency said. The rest of the statement was directed at South Korean President Park Geun-hye, saying she had behaved “coquettishly” and “kicked up confrontation hysteria.” The statement came after the North’s envoy, Choe Ryong-hae, told Chinese President Xi Jinping on Friday his country wants to find ways to resolve its conflicts via talks. The nuclear affirmation signals the North won’t abandon weapons development, a condition the U.S. has set for the resumption of six-party talks that collapsed in 2008. “In order for the six-nation talks to restart, North Korea will need to internally shift and rejig its policy stance,” Yoo Ho-yeol, a North Korean professor at Korea University in Seoul, said. “The North has de facto rejected the condition by issuing a statement the day after Choe met Xi.” Tensions with the North flared after it defied United Nations sanctions with a rocket launch in December and a nuclear test in February. It later threatened preemptive nuclear strikes against the U.S. and South Korea. South Korea yesterday expressed its regret at KCNA’s comments on Ms Park. “North Korea should exercise restraint in behaviour and word to improve the relationship” between the North and South, Unification Ministry spokesman Kim Hyung-suk said in a briefing. Seoul also brushed off an apparent offer by North Korea to resume nuclear disarmament talks.
Bloomberg News
Bloomberg News/AFP
were up 0.4 percent. Wesfarmers Ltd dropped the most in two years on May 17 after forecasting that earnings at its Target unit, the
country’s largest department store chain, would fall as much as 43 percent this fiscal year.
S
ingapore’s dollar is suffering its biggest losses in a year as Asia’s economic slowdown confounds local policy makers whose priority is controlling inflation. The Singapore dollar has weakened 3.4 percent against its U.S. counterpart this year and is lower against all but two of the 10 most-traded Asian currencies tracked by Bloomberg. A weaker exchange rate has the potential to add to inflation by making the cost of imported goods more expensive. “In Asia, there’s a lot of concern about the region’s economic outlook and the Singapore dollar’s weakness is linked primarily to that,” Hans Redeker, the global head of currency strategy at Morgan Stanley in London, said in a phone interview. The firm called the Singapore dollar “one of our key shorts” in a research report last week, referring to trades that would profit from the currency’s decline. China’s unexpected loss of momentum in the first quarter is weighing on Singapore’s economy, which is already smarting from Prime Minister Lee Hsien Loong’s measures to curb property speculation. That’s putting pressure on the island state’s central bank, which last month maintained its policy of allowing the Singapore dollar to gradually appreciate to curb inflation. This month’s 2.6 percent drop is its biggest since May 2012. Singapore’s dollar has tumbled against all of its main Asian peers this year except the Japanese yen and South Korean won. It’s down 5.5 percent versus the Thai baht. “It’s a massive depreciation,” said Dariusz Kowalczyk, a senior economist at Credit Agricole SA in Hong Kong. Money is being drawn “away from Singapore,” he said. The Singapore dollar got a respite on Thursday, rising 0.3
doubt over talks
Singapore dollar – weakness linked to region’s economic outlook
David Jones drops as sales slump to 8-year low
D
avid Jones Ltd, Australia’s second-largest department store company, fell to the lowest in more than three months after warm winter weather and competition helped drive quarterly sales to an eight-year low. The stock fell 0.8 percent to A$2.56 at the close in Sydney, the lowest since February 6, after earlier declining as much as 5.4 percent. Sales in the three months ended April 27 dropped 2.2 percent from a year earlier to A$391 million (US$377 million), David Jones said in a statement yesterday, the lowest since the same quarter of the Sydney-based company’s 2005 financial year. Weak consumer sentiment
has depressed sales at Australian retailers and the currency’s strength has stoked online shopping from overseas stores, leading competitors to reduce prices. Third-quarter sales from David Jones stores open at least 12 months dropped 3.4 percent. While the ongoing depth and breadth of price cuts in the industry isn’t sustainable, “in the short term, we expect to see heavy discounting as other retailers attempt to address excess winter inventory,” chief executive Paul Zahra said in the statement. Myer Holdings Ltd, the country’s largest department store company, said last week that quarterly sales from stores open at least 12 months
Bloomberg News
12
May 28, 2013
Markets Hang Seng Index NAME
PRICE
DAY %
VOLUME
34.95
0
13784363
CHINA UNICOM HON
ALUMINUM CORP-H
3.04
-2.250804
10150400
BANK OF CHINA-H
3.69
0.8196721
160175486
BANK OF COMMUN-H
6.03
0.166113
11017073
BANK EAST ASIA
30.7
0.3267974
574431
BELLE INTERNATIO
11.76
-1.672241
27037764
BOC HONG KONG HO
27.75
2.209945
6211548
14.3
1.851852
2749205
AIA GROUP LTD
CATHAY PAC AIR CHEUNG KONG
NAME
PRICE
DAY %
VOLUME
11.08
0.1808318
10619700
POWER ASSETS HOL
CITIC PACIFIC
9.42
0.6410256
11886665
SANDS CHINA LTD
CLP HLDGS LTD
69.5
0.2886003
1444574
CNOOC LTD
13.94
0.1436782
35010854
COSCO PAC LTD
10.68
0.2158206
ESPRIT HLDGS
11.68
HANG LUNG PROPER HANG SENG BK HENDERSON LAND D
112.6
-0.2657219
4039178
CHINA COAL ENE-H
5.25
-1.685393
24172281
HENGAN INTL
CHINA CONST BA-H
6.32
0.3174603
91042384
HONG KG CHINA GS HONG KONG EXCHNG
CHINA LIFE INS-H
20.8
0
15608534
CHINA MERCHANT
25.15
0.6
1384418
HSBC HLDGS PLC
PRICE
DAY %
VOLUME
74.25
1.434426
1599910
39.8
-0.3754693
7047126
SINO LAND CO
12.22
0
2875165
SUN HUNG KAI PRO
108.2
-0.3683241
3513128
5176612
SWIRE PACIFIC-A
100.3
-0.9871668
1149296
0.1715266
8246391
TENCENT HOLDINGS
300.4
0.3340013
2258748
29.6
-0.3367003
1184949
TINGYI HLDG CO
20.05
0.551655
6952119
128
0.8668243
611054
WANT WANT CHINA
11.72
0.8605852
2431932
57.05
0.2636204
1725000
73.8
1.582932
3200063
85.8
0
1187911
23.1
-0.4310345
4929970
131.2
0.2291826
1962166
86.6
0.5223447
5517022
CHINA MOBILE
83.1
0.2412545
9449218
HUTCHISON WHAMPO
83.9
1.02348
3134581
CHINA OVERSEAS
23.2
0.4329004
11146186
IND & COMM BK-H
5.41
0.3710575
244179091
CHINA PETROLEU-H
8.19
-0.2436054
62439273
LI & FUNG LTD
10.84
-1.275046
9985633
CHINA RES ENTERP
24.5
0
1982996
MTR CORP
31.85
0.3149606
CHINA RES LAND
23.25
0.2155172
5356188
NEW WORLD DEV
13.16
0
CHINA RES POWER
19.72
-2.376238
10773880
PETROCHINA CO-H
9.5
0.5291005
65364178
CHINA SHENHUA-H
26.05
0.1923077
6090487
PING AN INSURA-H
59.05
0.6820119
4796280
PRICE
DAY %
Volume
27
0.7462687
4585923
8.19
-0.2436054
62439273
NAME
WHARF HLDG
MOVERS
32
13
5 23130
INDEX 22686.05 HIGH
23123.43
1816559
LOW
22563.93
6514732
52W (H) 23944.74 (L) 18056.4
22560
23-May
27-May
Hang Seng China Enterprise Index NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.65
0
93919213
AIR CHINA LTD-H
6.66
0.4524887
5328964
ALUMINUM CORP-H
3.04
-2.250804
10150400
CHINA RAIL CN-H
7.7
-0.6451613
ANHUI CONCH-H
26.5
-0.3759398
10444333
CHINA RAIL GR-H
4.04
-0.4926108
BANK OF CHINA-H
3.69
0.8196721
160175486
CHINA SHENHUA-H
26.05
0.1923077
6090487
BANK OF COMMUN-H
6.03
0.166113
11017073
CHINA TELECOM-H
3.91
0.7731959
20355378
NAME CHINA PACIFIC-H CHINA PETROLEU-H
PRICE
DAY %
Volume
YANZHOU COAL-H
8.13
-1.215067
17306679
ZIJIN MINING-H
2.13
-0.4672897
15875318
3068167
ZOOMLION HEAVY-H
7.92
-0.8760951
684140
7996771
ZTE CORP-H
12.54
-2.790698
4294518
31.55
-0.7861635
2593072
DONGFENG MOTOR-H
12.12
1.337793
9324405
CHINA CITIC BK-H
4.37
0.4597701
24020212
GUANGZHOU AUTO-H
8.67
6.380368
23147165
CHINA COAL ENE-H
5.25
-1.685393
24172281
HUANENG POWER-H
8.11
-1.218027
17543698
CHINA COM CONS-H
7.48
-0.5319149
6982316
IND & COMM BK-H
5.41
0.3710575
244179091
CHINA CONST BA-H
6.32
0.3174603
91042384
JIANGXI COPPER-H
15.28
-1.036269
8201236
CHINA COSCO HO-H
3.36
-1.466276
6484379
PETROCHINA CO-H
9.5
0.5291005
65364178
CHINA LIFE INS-H
20.8
0
15608534
PICC PROPERTY &
9.73
1.143451
12545911
CHINA LONGYUAN-H
8.16
2
18739186
PING AN INSURA-H
59.05
0.6820119
4796280
CHINA MERCH BK-H
16.14
0.1240695
20485242
SHANDONG WEIG-H
8.07
-1.944107
2374997
CHINA MINSHENG-H
9.68
0.5192108
21690925
SINOPHARM-H
CHINA NATL BDG-H
8.75
-0.7936508
50492084
TSINGTAO BREW-H
16.38
1.612903
3563849
WEICHAI POWER-H
BYD CO LTD-H
CHINA OILFIELD-H
20.95
-4.772727
5492355
54
0.1855288
775783
29.55
2.961672
NAME
MOVERS
23
15
2 11020
INDEX 10753.49 HIGH
11013.73
LOW
10685.61
52W (H) 12354.22 (L) 8987.76
10680
23-May
1731361
27-May
Shanghai Shenzhen CSI 300 NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
Volume
PRICE
DAY %
Volume
AGRICULTURAL-A
2.72
-0.3663004
87805765
CHONGQING CHAN-A
10.74
-0.463392
37329491
PING AN INSURA-A
39.47
-0.3031068
17261047
AIR CHINA LTD-A
5.43
0
5679385
CHONGQING WATE-A
6.65
1.06383
10837503
POLY REAL ESTA-A
12.24
-0.1631321
35545591
ALUMINUM CORP-A
4.11
-0.9638554
10272740
CITIC SECURITI-A
12.86
1.419558
87814981
QINGDAO HAIER-A
12.68
-1.476301
15856267
ANHUI CONCH-A
16.91
-1.168907
24351472
CSR CORP LTD -A
4.3
0
34692904
QINGHAI SALT-A
23.52
-0.7176024
4052476
AVIC AIRCRAFT-A
11.87
0.1687764
30910207
DAQIN RAILWAY -A
6.96
-0.286533
30210889
SAIC MOTOR-A
15.29
0.1965924
34226657
NAME
NAME
BANK OF BEIJIN-A
8.99
-0.4429679
22130341
DATANG INTL PO-A
4.78
0.8438819
11020470
SANY HEAVY INDUS
9.34
-1.580611
31133416
BANK OF CHINA-A
2.95
0.3401361
25687068
EVERBRIG SEC -A
14.25
2.962428
31462198
SHANG PHARM -A
12.53
-0.07974482
11981158
BANK OF COMMUN-A
4.72
-0.6315789
47012043
GD MIDEA HOLDI-A
14.26
0.7773852
12339321
SHANG PUDONG-A
10.29
0.8823529
69546991
BANK OF NINGBO-A
10.63
0.3777148
12016110
GD POWER DEVEL-A
2.65
-0.7490637
45905357
SHANGHAI ELECT-A
3.93
0.255102
10048678
BAOSHAN IRON & S
4.83
-0.8213552
12475796
GEMDALE CORP-A
7.72
-0.7712082
37123834
SHANXI LU'AN -A
16.2
-1.87765
18652759
BEIJING TONGRE-A
23.73
0.2534854
7093388
GF SECURITIES-A
13.76
0.8797654
26515232
SHANXI XISHAN-A
10.47
-1.412429
12257345
BYD CO LTD -A
35.33
0.9428571
12583189
GREE ELECTRIC
26.84
-0.739645
16395594
SHENZEN OVERSE-A
6.39
-0.15625
39850569
CHINA AVIC ELE-A
27.25
-1.801802
7646150
GUANGHUI ENERG-A
20.57
2.542373
46002879
SUNING COMMERC-A
6.17
-0.483871
35273393
CHINA CITIC BK-A
4.37
-0.4555809
19507643
HAINAN AIRLINE-A
5.02
0.8032129
17339285
TASLY PHARMAC-A
41.82
-1.715629
9054692
CHINA CNR CORP-A
4.54
-0.2197802
24892538
HAITONG SECURI-A
11.47
1.955556
127458157
TSINGTAO BREW-A
38.41
0.3920544
1346034
CHINA COAL ENE-A
6.53
-1.060606
9117145
HANGZHOU HIKVI-A
38.11
-3.567814
13717634
WEICHAI POWER-A
23.33
-0.0428449
8312887
CHINA CONST BA-A
4.79
0.209205
27556577
HENAN SHUAN-A
39.29
2.584856
7727894
WULIANGYE YIBIN
23.98
-0.8681273
19000291
CHINA COSCO HO-A
3.4
-0.2932551
8602113
HONG YUAN SEC-A
24.93
0.9311741
21732216
YANTAI WANHUA-A
18.24
1.728946
14621951
CHINA EAST AIR-A
3.05
-0.3267974
8783157
HUATAI SECURIT-A
10.35
4.334677
91710862
YANZHOU COAL-A
14.38
-2.043597
4611886
CHINA EVERBRIG-A
3.13
-0.6349206
45830222
HUAXIA BANK CO
10.64
-0.7462687
29237201
YUNNAN BAIYAO-A
88.7
-1.279911
2330839
CHINA LIFE INS-A
16.5
-0.1814882
8817048
IND & COMM BK-A
4.13
-0.7211538
30953794
ZHONGJIN GOLD
11.95
-1.239669
14667848
CHINA MERCH BK-A
13.39
-0.8882309
49964608
INDUSTRIAL BAN-A
18.3
-0.7053717
57200831
ZIJIN MINING-A
3.06
-0.6493506
36463145
CHINA MERCHANT-A
13.17
1.152074
32818217
INNER MONG BAO-A
28.2
-1.433065
22409127
ZOOMLION HEAVY-A
7.29
0
36814315
CHINA MERCHANT-A
28.5
-0.5929543
11358662
INNER MONG YIL-A
27.8
0.9807483
29277071
ZTE CORP-A
12.63
-2.244582
32394138
CHINA MINSHENG-A
10.45
0.1917546
82157997
INNER MONGOLIA-A
4.8
-0.8264463
34472555
CHINA NATIONAL-A
11.4
-0.08764242
34386030
JIANGSU HENGRU-A
30.57
2.343488
12072695
CHINA OILFIELD-A
17.2
4.053237
16741867
JIANGSU YANGHE-A
62.85
-0.490817
3389068
CHINA PACIFIC-A
18.7
-0.4259851
11056629
JIANGXI COPPER-A
20.9
-1.228733
8758322
CHINA PETROLEU-A
6.72
0.2985075
27082559
JINDUICHENG -A
10.91
1.488372
15904819
CHINA RAILWAY-A
5.09
-0.9727626
18255082
KANGMEI PHARMA-A
18.53
3.7514
51525523
KWEICHOW MOUTA-A
2677812
CHINA RAILWAY-A
2.82
-1.052632
32132378
201.63
0.34838
CHINA SHENHUA-A
20.68
-0.9103977
8682158
LUZHOU LAOJIAO-A
26.86
-0.7757665
6581545
CHINA SHIPBUIL-A
4.52
0
59982923
METALLURGICAL-A
2.04
-0.4878049
20264736
24.09
0
10553770
-0.4065041
9067150
CHINA SOUTHERN-A
3.47
-0.2873563
17298634
NARI TECHNOLOG-A
CHINA STATE -A
3.73
-1.061008
71119281
NINGBO PORT CO-A
2.45
CHINA UNITED-A
3.79
2.98913
156517087
OFFSHORE OIL-A
8.37
8
82690048
CHINA VANKE CO-A
11.8
-0.9235936
51237499
PETROCHINA CO-A
8.55
0.117096
11077379
CHINA YANGTZE-A
7.5
-0.1331558
9032095
PING AN BANK-A
20.42
-1.304978
35854608
PRICE DAY %
Volume
NAME
PRICE DAY %
Volume
MOVERS 118
158
24 2630
INDEX 2599.587 HIGH
2623.8
LOW
2573.19
52W (H) 2791.303 (L) 2102.135
2570
23-May
27-May
FTSE Taiwan 50 Index NAME
NAME
PRICE DAY %
ACER INC
24.45
1.242236
4346064
FORMOSA PLASTIC
70.4
0.5714286
4312586
TAIWAN MOBILE CO
114
ADVANCED SEMICON
25.65
-0.965251
8510742
FOXCONN TECHNOLO
80.5
0.7509387
1851677
TPK HOLDING CO L
603 -0.6589786
37.3 -0.1338688
570909
FUBON FINANCIAL
40.45
0.2478315
8103651
TSMC
112
2.283105
ASIA CEMENT CORP ASUSTEK COMPUTER
345
1.02489
1110099
HON HAI PRECISIO
77.3
0.520156
16786181
AU OPTRONICS COR
13.9
1.831502
61908404
HOTAI MOTOR CO
284
-1.730104
154245
161
CATCHER TECH
UNI-PRESIDENT
0.8849558
Volume 2373205 1689655 19161396
60.4
0.3322259
5379592
UNITED MICROELEC
13.85
4.528302
106876927
1.577287
6931955
HTC CORP
279.5
0.1792115
4854478
WISTRON CORP
30.65
1.322314
10695933
CATHAY FINANCIAL
39.65 -0.6265664
12078621
HUA NAN FINANCIA
17.35
1.166181
7137560
YUANTA FINANCIAL
16.25
1.5625
9272984
CHANG HWA BANK
17.05
0.5899705
4053128
LARGAN PRECISION
966
1.151832
819993
YULON MOTOR CO
50.7 -0.5882353
1890733
CHENG SHIN RUBBE
92.5
0.6528836
4776407
LITE-ON TECHNOLO
48.6 -0.3076923
7730332
CHIMEI INNOLUX C
20
3.626943
46451703
MEDIATEK INC
CHINA DEVELOPMEN
8.71
1.752336
23237127
MEGA FINANCIAL H
23.95
1.698514
16869028
CHINA STEEL CORP
25.7 -0.5802708
14176120
NAN YA PLASTICS
63.5
1.6
4032296
PRESIDENT CHAIN
186.5
2.754821
760539
65.5
0.4601227
3593053
CHINATRUST FINAN CHUNGHWA TELECOM COMPAL ELECTRON
18.65
1.084011
14228936
97
0.5181347
4700398
QUANTA COMPUTER
360 -0.8264463
5149656
18.6
1.639344
15019495
SILICONWARE PREC
35.4
0.5681818
4771811
DELTA ELECT INC
143.5
1.056338
2569153
SINOPAC FINANCIA
14.65
1.034483
5168598
FAR EASTERN NEW
32.25
-0.309119
1413954
SYNNEX TECH INTL
41.7
-3.24826
16382747
73.1 -0.2728513
2491236
TAIWAN CEMENT
39.3
0.3831418
3711078
FAR EASTONE TELE FIRST FINANCIAL
18.25
0.8287293
2766785
TAIWAN COOPERATI
17.1
0.5882353
6051964
FORMOSA CHEM & F
71.7
0.4201681
2367253
TAIWAN FERTILIZE
75.3
0.1329787
2510413
FORMOSA PETROCHE
81
0.7462687
1059698
TAIWAN GLASS IND
29.2 -0.6802721
215319
MOVERS
37
12
1 5820
INDEX 5757.42 HIGH
5817.16
LOW
5680.42
52W (H) 5896.71 (L) 4719.96
5680
23-May
27-May
13
May 28, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
Max 38.65
average 38.510
Min 38.3
38.80
62.0
20.5
38.65
61.7
20.3
38.50
61.4
20.1
38.35
61.1
19.9
38.20
Last 38.4
Max 62
average 61.172
Min 60.85
39.9
20.80
39.8
20.65
39.7
Min 39.4
39.4
Last 39.8
Max 20.75
average 20.620
Commodities PRICE
DAY %
YTD %
(H) 52W
Min 20.2
Last 20.6
(L) 52W
WTI CRUDE FUTURE Jul13
93.6
-0.58417419
-0.106723586
100.4000015
BRENT CRUDE FUTR Jul13
102.23
-0.399454404
-4.822642212
115.9300003
96.04000092
GASOLINE RBOB FUT Jun13
282.54
-0.479041916
-1.285724268
324.119997
235.9499931
GAS OIL FUT (ICE) Jul13
81.5
856
0.02921414
-5.959901126
987.5
814
4.233
-0.09440642
20.66704675
4.457000256
3.203999996
284.57
-0.392033323
-5.383029658
323.8899946
258.589983
Gold Spot $/Oz
1392.78
0.4428
-16.3224
1796.08
1322.06
Silver Spot $/Oz
22.6577
1.1504
-24.7502
35.365
20.3395
Platinum Spot $/Oz
1459.13
0.4565
-3.8623
1742.8
1374.55
Palladium Spot $/Oz
732.99
0.6509
4.7637
786.5
553.75
1840
-0.540540541
-11.23974916
2200.199951
1809 6762.25
NATURAL GAS FUTR Jun13 HEATING OIL FUTR Jun13 METALS
LME ALUMINUM 3MO ($) LME COPPER 3MO ($)
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
7299
-0.01369863
-7.968730299
8422
-0.026939655
-10.79326923
2230
1745
14805
-0.903614458
-13.21805393
18920
14609
15.715
1.028608165
-0.190536678
17.07500076
14.79500103
536.5
0.327255727
-10.54606086
665
512
697.5
-0.817632421
-12.12598425
900
664.75
SOYBEAN FUTURE Jul13
1476.25
-1.550516839
5.805411217
1605.75
1225
COFFEE 'C' FUTURE Jul13
127.25
-2.15301807
-14.91140087
202.1999969
126.7999954
NAME
16.55999947
ARISTOCRAT LEISU
69.94999695
CROWN LTD
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul13 CORN FUTURE
Dec13
WHEAT FUTURE(CBT) Jul13
SUGAR #11 (WORLD) Jul13
16.84
COTTON NO.2 FUTR Jul13
81.49
0.477326969
-14.69098278
-0.354609929
6.010147001
23.05999947 94.19999695
World Stock Markets - Indices NAME
20.20
COUNTRY MAJOR
1855.5
LME ZINC
Min 19.88
Last 19.96
23.3
23.2
23.1
Max 23.3
average 23.220
Min 23
Last 23.2
23.0
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
0.9649 1.5148 0.9605 1.2941 100.87 7.996 7.763 6.1211 55.67 29.87 1.2608 29.865 41.645 9799 97.326 1.2429 0.85437 7.9222 10.3478 130.53 1.0301
-0.0311 0.1388 0.1041 0.0696 0.4362 0.0063 -0.0013 0.1911 -0.0449 0.3348 0.2776 0.1909 -0.096 -0.2551 0.4716 0.0282 0.0901 0.5201 0.1218 0.3677 -0.0097
-7.0245 -6.3551 -4.6955 -1.8878 -14.6426 -0.1601 -0.1597 1.7889 -1.2125 2.377 -3.125 -2.7859 -1.5368 -0.0612 -8.2188 -2.8498 -4.5589 3.7275 1.7646 -12.9932 -0.0194
1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7676 6.3964 57.3275 32 1.2971 30.203 43.76 9904 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032
0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.121 51.3863 28.56 1.2152 28.913 40.54 9329 74.482 1.20054 0.77553 7.7018 9.6245 94.12 1.029
Macau Related Stocks PRICE
DAY %
YTD %
(H) 52W
(L) 52W
4.02
-1.711491
27.61904
4.49
2.29
VOLUME CRNCY 2223541
12.86
0.233827
20.52484
13.75
8.06
919861
AMAX HOLDINGS LT
0.82
1.234568
-41.42857
1.72
0.75
125850
BOC HONG KONG HO
27.75
2.209945
15.14523
28
20.85
6211548
CENTURY LEGEND
0.305
0
15.09435
0.42
0.215
0
5.78
0.6968641
-3.505839
6.74
2.8
40518 11146186
CHEUK NANG HLDGS CHINA OVERSEAS
23.2
0.4329004
0.4328988
25.6
15.223
CHINESE ESTATES
13.68
-0.4366812
12.78364
14.12
7.697
379000
CHOW TAI FOOK JE
9.76
-0.4081633
-21.54341
13.4
8.4
4046701
EMPEROR ENTERTAI
2.63
2.734375
39.15344
2.64
1.12
795000
FUTURE BRIGHT
2.24
-0.4444444
84.8145
2.732
0.765
558000
GALAXY ENTERTAIN
38.4
-0.6468305
26.52389
40.65
16.94
5986965 611054
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
15303.1
0.05622936
16.78065
15542.4
12035.08984
NASDAQ COMPOSITE INDEX
US
3459.144
-0.007891503
14.55964
3532.038
2726.68
FTSE 100 INDEX
GB
6654.34
-0.6338858
12.8273
6875.62
5229.76
HANG SENG BK
128
0.8668243
7.834881
132.8
99.2
DAX INDEX
GE
8357.95
0.6336902
9.794034
8557.86
5914.43
HOPEWELL HLDGS
28.3
-2.581756
-14.88722
35.3
19.049
944348
HSBC HLDGS PLC
86.6
0.5223447
6.519061
90.7
59.8
5517022
NIKKEI 225
JN
14142.65
-3.215067
36.05008
15942.6
8238.96
HANG SENG INDEX
HK
22686.05
0.2978955
0.1285738
23944.74
18056.4
CSI 300 INDEX
CH
2599.587
0.09082761
3.037514
2791.303
2102.135
TAIWAN TAIEX INDEX
TA
8280.1
0.8565394
7.540745
8439.15
6857.35
KOSPI INDEX
SK
1979.97
0.3303859
-0.8552654
2042.48
1758.99
S&P/ASX 200 INDEX
AU
4959.857
-0.4744056
6.687676
5249.6
3985
ID
5086.979
-1.321295
17.84452
5251.296
3635.283
FTSE Bursa Malaysia KLCI
MA
1768.45
-0.2600025
4.707067
1826.22
1540.49
NZX ALL INDEX
NZ
960.106
-1.015204
8.84902
998.487
PHILIPPINES ALL SHARE IX
PH
4371.79
-2.098314
18.18907
4571.4
JAKARTA COMPOSITE INDEX
19.7
Currency Exchange Rates
NAME ENERGY
average 20.133
20.35
39.5 average 39.660
Max 20.45
20.50
39.6
Max 39.9
60.8
Last 61.05
4.4
1.382488
23.59551
4.66
2.98
2852396
LUK FOOK HLDGS I
20.65
0.7317073
-15.36885
30.05
14.7
1753000
MELCO INTL DEVEL
16.8
-1.754386
86.45948
18.18
5.12
3241257
MGM CHINA HOLDIN
19.96
-2.634146
50.32068
20.85
9.509
3083047
MIDLAND HOLDINGS
3.43
1.179941
-7.297298
5
3.25
1026000
NEPTUNE GROUP
0.171
6.21118
12.5
0.226
0.084
24490000
NEW WORLD DEV
13.16
0
9.484189
15.12
8
6514732
SANDS CHINA LTD
39.8
-0.3754693
17.23122
43.7
20.65
7047126
SHUN HO RESOURCE
1.5
0
7.142859
1.67
1.03
0
755.149
SHUN TAK HOLDING
4.03
0
-3.818617
4.65
2.56
2270032
3279.09
SJM HOLDINGS LTD
9260020
HSBC Dragon 300 Index Singapor
SI
646.39
0.08
4.07
NA
NA
STOCK EXCH OF THAI INDEX
TH
1594.2
-0.8249039
14.53161
1649.77
1099.15
HO CHI MINH STOCK INDEX
VN
512.41
2.432832
23.8513
518.46
372.39
Laos Composite Index
LO
1367.3
0
12.55629
1455.82
980.83
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
HUTCHISON TELE H
20.6
2.743142
14.44444
22.7
12.34
13.82
0.5822416
-1.84659
17.38
12.5
432000
WYNN MACAU LTD
23.2
-0.2150538
10.73985
26.5
14.62
6358988
ASIA ENTERTAINME
4.37
2.34192
42.81046
5.18
2.4
250205
BALLY TECHNOLOGI
56
0.160973
25.25162
56.4
41.74
462231
BOC HONG KONG HO
3.52
2.028986
14.65798
3.6
2.7
7000
GALAXY ENTERTAIN
5.03
2.443992
26.70025
5.16
2.25
1335
INTL GAME TECH
18.25
1.388889
28.79322
18.64
10.92
1806407
JONES LANG LASAL
92.44
-1.941233
10.12628
101.46
61.39
256939
LAS VEGAS SANDS
57.55
-0.432526
24.67504
60.54
32.6127
3465176 3741479
SMARTONE TELECOM
MELCO CROWN-ADR
23.2
-0.2579536
37.76722
25.15
9.13
MGM CHINA HOLDIN
2.6
0
40.54054
2.67
1.36
500
MGM RESORTS INTE
14.93
0
28.2646
15.95
8.83
7646342
SHFL ENTERTAINME
16.65
-0.2396645
14.82759
17.2199
11.75
207009
SJM HOLDINGS LTD
2.6
-3.345725
12.55412
2.99
1.65
500
137.9
-0.3972553
22.58868
144.99
84.4902
944256
WYNN RESORTS LTD
AUD HKD
USD
14
May 28, 2013
Opinion
The Sino-American decade Michael Spence
Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business
T
he California summit between U.S. President Barack Obama and Chinese President Xi Jinping on June 7-8 comes at a time of heightened tension between the world’s two preeminent powers. But divisive issues – from computer hacking to America’s “pivot to Asia” – must not claim all of the attention. If Obama and Xi lift their heads above the parapets and begin charting a jointly agreed course through the coming decade, they may find that they have much in common. The next ten years will be characterised by major structural adjustments and shifts in individual economies, and by a huge reconfiguration of the global economy as a whole. Above all, much depends on the policies adopted by the two largest economies, China and the United States, and their cooperation and leadership in creating global public goods and maintaining a stable and open economic environment. Cooperation will be needed in many areas. One is the management of natural resources and the environment. The growth of China and the developing world will lead to a doubling of global output in 1015 years, and probably a tripling in the 15 years after that. The growth model on which both advanced and developing countries relied in the past will not work at two or three times the scale. Climate, ecology, food, water, energy, and liveability will not withstand the pressure. Global problems are hard to solve. A productive starting point would be China-U.S. collaboration on energy efficiency and security, greener growth, and climate change.
changing rapidly, but it is not declining in significance. In the past, the U.S. brought a large open market, foreign direct investment, and technology, while China supplied low-cost labour-intensive components in key global manufacturing supply chains. Today, China provides a large and rapidly growing market for a widening array of previously unaffordable goods, and will increasingly produce as well as absorb new technologies. In the process, it will shed lower-value-added jobs in its export sector as production moves to lower-cost developing countries. Depending on policies on both sides, China may also become a foreign direct investor in the U.S. economy in a wide range of areas – including infrastructure. The U.S. will continue to provide a large open market, even as China’s role in serving it will shift upward in value added and in global supply chains. The U.S. will also provide, share, and absorb technology and human talent, remaining at the top end of the higher-education spectrum and in basic and applied research. Of course, there is also a healthy element of competition. The sharp differences in comparative advantage that
were apparent two decades ago are diminishing as the gap in income, capital depth (including human capital), and capabilities narrows. Chinese multinationals with recognised brands will begin to appear, just as they did in Japan and South Korea. They will compete with multinationals from a wide range of countries, and will become architects of global supply chains. Fair, rulesbased competition in a rapidly expanding global economy is far from a zero-sum game.
Leading role The outlines of the structural changes needed to move toward a healthier, more sustainable growth pattern in the coming decade are relatively clear in China. The remaining questions concern policy implementation and institutional development – issues that will be clarified in the course of 2013, as China’s new leaders formalise and communicate their reform priorities. The U.S. economy, meanwhile, retains many elements of dynamism and flexibility. But, while GDP growth seems to be returning slowly to potential, the slow pace of recovery in employment and the residual secular shifts in income distribution remain
causes of concern. In particular, the shift of income from those who save less to those who save more implies uncertainty about the restoration of aggregate demand. Political polarisation has become another source of uncertainty. Many centrists agree that an optimal fiscal policy would feature short-term stimulus, a multi-year medium-term deficit reduction plan, and measures to reduce long-term liabilities, especially if retrenchment protected growth-oriented
The growth model on which both advanced and developing countries relied in the past will not work at two or three times the scale
public-sector investments. But that is difficult to achieve in a context of deleveraging and fixation on debt. If current trends continue, with the U.S. economy recovering slowly but steadily, the pattern of convergence with China will continue. East Asia as a whole will surpass the U.S. in terms of aggregate GDP by 2015, with China contributing the highest proportion of the total. China’s GDP is projected to catch up to that of the U.S. and Europe in 10-15 years, at which point (if not sooner) both Chinese and U.S. real GDP will exceed US$25 trillion (in 2012 prices), more than three times China’s current GDP. Each will account for approximately 15 percent of global output. And yet this shift will be accompanied by very substantial global economic challenges and uncertainties, underscoring the importance of Sino-U.S. cooperation. A constructive, cooperative relationship can make a significant contribution to both countries’ efforts to adapt their policies and institutions to achieve sustainable, inclusive growth patterns. Beyond the bilateral benefits, the rest of the global economy is dependent on Chinese and U.S. leadership – both in terms of growth and in matters concerning global economic governance and coordination. Trade and economic openness, financial stability and regulation, energy security, climate change, and many other issues confront the world collectively. It is very difficult to imagine successful global rebalancing and progress without China and the U.S. taking a leading role in the process. © Project Syndicate
Narrowing gap China’s 12th Five-Year Plan sets ambitious goals in this area. In the U.S., progress is somewhat more decentralised, though new national policies have been adopted, including Corporate Average Fuel Economy (CAFE) standards for automobiles. The U.S. also is set to become energy independent, owing to the rise of shale oil and gas, with diminishing reliance on coal already bringing down per capita carbon emissions. The complementarity of the Chinese and U.S. economies is
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May 28, 2013
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Leading reports from Asia’s best business newspapers
Taipei Times Taiwan’s First Commercial Bank began Chinese yuanbased business at its Shanghai branch yesterday, as the bank looks to the overseas market to offset squeezed profitability at home. The bank is now offering yuan services, such as deposits, loans, foreign exchanges and remittances, in mainland China. The yuandenominated transactions will account for at least 70 percent of the Shanghai branch’s revenue, the bank said in a statement.
The Star Malaysia’s Election Commission will soon begin a review of election laws and voter registration procedures to deal with complaints such as unusually large number of voters registered at the same address. Among the matters being considered by the commission was to seek the power to “remove” voters from the lists. “We will examine in detail all aspects related to the present laws governing voter registration to look at all the loopholes which can give room for fraud by any political party when they register voters,” deputy chairman Datuk Wan Ahmad Wan Omar said.
Times of India India’s foreign exchange reserves decreased by US$1.72 billion to US$291.96 billion for the week ended on May 17, according to data released by the Reserve Bank of India. The foreign currency assets (FCA) – the biggest component of the forex reserves – fell by US$1.68 billion at US$261.47 billion, the statistical supplement of the central bank shows. Gold reserves remained stagnant at US$23.97 billion, the reserves had dipped heavily by US1.71 billion at US$23.97 billion early in the month.
Bangkok Post Thai Beverage Plc (ThaiBev) is seeking a greater presence in Myanmar through its partnership with Fraser and Neave Ltd (F&N), the Singaporean firm acquired earlier this year by the Thai drinks giant. “Myanmar is the rising star of Asean, the one everyone is looking at, and the market there is similar to Thailand’s,” said Thapana Sirivadhanabhakdi, ThaiBev’s president and chief executive. “With growing income per capita, there’s a huge opportunity for consumer goods and companies such as ThaiBev.”
Apple’s tax dodge should prompt rethink in Ireland Megan Greene
Bloomberg View columnist and chief economist at Maverick Intelligence
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hey say there is no such thing as bad publicity. Ireland might beg to differ, having been at the centre of a U.S. Senate hearing on Apple Inc.’s tax accounting practices at a time when the European Union is working hard to crack down on tax evasion. On May 21, the Senate Permanent Subcommittee for Investigations dug into Apple’s tax activities in deep and gory detail. Their findings show that Ireland has been at the very centre of Apple’s success in tax avoidance. Using information provided by Apple, the subcommittee found that the company used subsidiaries in Ireland to funnel about US$74 billion in worldwide income away from the U.S. The three units involved – Apple Sales International, Apple Operations Europe and Apple Operations International – were incorporated in Ireland but not tax resident anywhere. The structure allowed Apple to pay an effective tax rate of 2 percent or less since 2003, well below Ireland’s corporate tax rate of 12.5 percent. Perhaps the most damning part for Ireland came in the explanation of the low rate in the subcommittee’s report: “Apple told the Subcommittee that, for many years, Ireland has provided Apple affiliates with a special tax rate through negotiations with the Irish government.” This is serious. It would be hugely awkward – to say the least – to have the Irish government cutting special deals with large multinational companies while also, as the current holder of the EU presidency, presiding over a push for greater transparency in corporate tax dealings. Irish Prime Minister Enda Kenny immediately rebutted Apple’s version of events, insisting that Ireland doesn’t make special deals with companies.
typically funnelled through the Netherlands on their way to Bermuda, where there is no corporate tax. In Apple’s case, the subsidiaries are strangely not resident anywhere. This is an issue indeed – but for Apple, not Ireland. Whether Ireland really is a tax haven, the perception could be just as damaging as the reality. The countries calling the shots in the EU (namely, Germany) aren’t favourably disposed to countries that lure away their tax revenue. Just ask Cyprus, which received very little sympathy for its banking troubles. Ireland will almost certainly succeed in exiting its bailout programme in the next year, but it may need assistance from its euro-area partners in the future. Ireland should use the Apple drama as an opportunity to consider whether the benefits of an attractive tax regime are worth the costs. Many multinational corporations have set up headquarters in Ireland for access to the greater European market. The low corporate tax is clearly a draw, but so is the skilled, Englishspeaking talent pool.
Legal loophole Is there another explanation for why Apple pays such a low tax rate? Seamus Coffey offers a convincing one on the Irish Economy blog: Apple benefited from a perfectly legal loophole in the way Ireland defines taxable income. The country’s 12.5 percent tax rate applies to income after subtracting expenses such as royalty payments for intellectual property licences. In Apple’s case, these payments are very large, significantly reducing taxable income. The royalties are paid to another Apple subsidiary in a different tax jurisdiction. This is sometimes referred to as a “Dutch sandwich,” because the payments are
Ireland should use the Apple drama as an opportunity to consider whether the benefits of an attractive tax regime are worth the costs
Multinational companies have helped to keep Ireland’s exports buoyant throughout the crisis, with pharmaceuticals, chemicals and business services performing relatively well over the past few years. As of 2012, multinational companies employed about 150,000 people in Ireland.
Questionable benefit Some analysts, however, question how much Ireland really benefits from the presence of multinationals. Most of their profits flow back to shareholders outside the country. This is reflected in the
difference of almost 30 billion euros (US$39 billion) between gross national product and gross domestic product in Ireland. The latter includes exports by multinationals based in Dublin, while the former does not. Without multinational companies, Ireland would have struggled to achieve the exportled growth it posted last year. In the longer term, however, a sustainable growth model must involve Ireland weaning itself from exports and fostering domestic demand. Perhaps the Apple embarrassment will awaken Ireland to that reality. Bloomberg View
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May 28, 2013
Closing Migrant workers saw slower wage growth Club Med investors in takeover bid The annual increase in pay for China’s 163 million migrant workers almost halved in 2012, an official survey showed yesterday, signalling a looser labour market as economic growth slows. The average monthly wage of migrant workers grew 11.8 percent in 2012 from the previous year to 2,290 yuan (US$370). That marked a sharp slowdown from the annual 21.2 percent surge in 2011, according to the latest survey by the National Bureau of Statistics. The survey showed the number of migrants working outside their home towns grew 3 percent in 2012 from the previous year to 163.4 million.
Beijing eyes U.S. property market China is studying the possibility of investing a portion of its US$3.4 trillion in foreign exchange reserves in U.S. real estate, said two people with direct knowledge of the situation. The State Administration of Foreign Exchange began the study after seeing signs of a recovery in the U.S. property market, said the people, who asked not to be identified as they weren’t authorised to speak publicly about the matter. China may acquire properties, invest in real estate funds or buy stakes in property companies, they said. The safety of the investments will be the top priority, said the people, who didn’t elaborate on a timetable or other details. China has set up an operation in New York to make alternative investments in the U.S., an effort by the country’s foreign-exchange reserves manager to diversify away from U.S. government debt, the Wall Street Journal reported last week, citing people it didn’t identify. Prices for single-family homes increased in 89 percent of U.S. cities in the first quarter as the housing market extended its recovery following a five-year slump. The median sales price rose in 133 of 150 metropolitan areas measured from 74 areas a year earlier, the National Association of Realtors said in a report on May 9. China Investment Corp., the nation’s sovereign wealth fund set up in 2007 to seek higher returns on part of the reserves, is adding stable-return assets including infrastructure and real estate as it cuts an “over-reliance” on U.S. debt, then-chairman Lou Jiwei told a forum in Hong Kong in January.
Zoomlion trading halted after report of fake sales Zoomlion Heavy Industry Science and Technology Co., China’s second-largest construction equipment maker, halted stock trading and saw its bonds decline after a report on Sina.com accused it of falsifying sales. Shares were suspended in Shenzhen and Hong Kong after the report, and trading will resume once the company issues a filing on the matter, Changsha-based Zoomlion said in a statement yesterday. The report on Sina.com was by xkb.com, the website of Guangzhoubased Xin Kuai Bao Newspaper. News reports questioning Zoomlion’s sales data are forcing the company to halt stock trading for a second time this year. Chinese companies’ finances have drawn increased scrutiny after short seller Carson Block’s Muddy Waters LLC uncovered irregularities including those at nowbankrupt Sino-Forest Corp in 2011. “This has happened a few too many times in the past six months for it to be forgotten or swept under the rug,” Vik Chopra, a Hong Kong-based analyst at Sun Hung Kai Financial Ltd wrote in an e-mail. “The company has to take drastic action.” In January, Zoomlion halted trading on its shares in Hong Kong after Ming Pao Daily cited an unsigned letter that alleged the company’s sales were exaggerated. Zoomlion has repeatedly denied the allegations. Zoomlion’s first-quarter profit plummeted 72 percent, the company said last month. The company makes equipment including concrete pumps, cranes and excavators. Bloomberg News
French holiday firm Club Mediterranee SA’s board said it received a takeover bid from management and the two largest shareholders, Axa Private Equity and Fosun International Ltd, that values the company at 540 million euros (US$699 million). The bidders are proposing 17 euros for each share of French all-inclusive tour operator, according to a statement yesterday, 23 percent more than the May 24 closing price. Club Med rose as much as 25 percent in Paris trading, the most in more than two decades. The board said it considers the proposal “friendly” and will nominate a panel to advise on the bid.
HSBC sells Singapore’s first yuan bonds As mainland regulator eases controls on the currency
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SBC Holdings Plc and Standard Chartered Plc sold the first yuan-denominated bonds in Singapore, making the city state the third offshore hub for notes in the Chinese currency. HSBC priced 500 million yuan (US$81.7 million) of two-year notes through its Singapore branch at 2.25 percent, according to an e-mailed statement from Europe’s biggest bank. Standard Chartered, which generates most of its operating profit in Asia, sold 1 billion yuan of three-year notes at 2.75 percent hours later, according to a person familiar with the matter, who asked not to be identified because the terms aren’t set. DBS Group Holdings Ltd is also looking to issue yuan securities in Singapore as Industrial & Commercial Bank of China Ltd’s branch there began clearing services yesterday for the renminbi. Taipei became the second hub for offshore yuan note sales in February, following the start of the Dim Sum bond market in Hong Kong in 2007. “This issuance will help open the market to other issuers looking to fund themselves internationally in RMB, offer new investment opportunities to the substantial pool of wealth managed in Singapore and assist in funding the rapidly growing RMB-denominated trade business in Asia,” Matthew Cannon, head of global markets at HSBC Singapore, said in the statement. Offshore debt sales in the currency of Asia’s biggest economy may reach as much as 360 billion yuan this year, according to estimates from HSBC. The yuan has gained 0.7 percent
HKEx eyes China co-listings
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ong Kong Exchanges and Clearing Ltd is considering joint listings of commodities products on mainland Chinese bourses to capitalise on last year’s acquisition of the London Metal Exchange, chief executive Charles Li said yesterday. “This is about developing mutual product listing/licensing
HSBC’s earlier pricing beat rival StanChart to the punch
against the dollar this month while the Singapore dollar has lost 2.2 percent, according to data compiled by Bloomberg. “We see this as another milestone for Singapore in the development of its status as an offshore RMB hub,” said Ray Ferguson, chief executive of Standard Chartered Bank Singapore, in a statement. The Dim Sum notes issued by both banks will be cleared through Central Depository Pte, a unit of
Singapore Exchange Ltd. ICBC was appointed as Singapore’s renminbi clearing bank by the People’s Bank of China on February 8, according to a statement on the Singapore monetary authority’s website. The Hong Kong regulator’s CMU unit and Bank of China Hong Kong Ltd provide that infrastructure in Hong Kong, while Taiwan Depository & Clearing Corp and Bank of China’s Taipei branch operate in Taiwan.
arrangements and forming strategic partnerships with leading exchanges,” Mr Li said in a blog post outlining developments for the exchange’s commodities business. “Mainland China institutions would be key partners for us given the sheer size of the mainland market and the mainland’s need to internationalise. These partnerships would ultimately take us beyond metals and into other commodities,” he added. HKEx, the world’s No.2 exchange operator by market value, paid US$2.2 billion for the LME last year, as it seeks to expand beyond its traditional business in equities trading.
“We would also like to extend eventually to soft commodities and agriculture as opportunity permits,” Mr Li said. He had said earlier this year that the exchange will use the LME’s status as the world’s biggest metals marketplace to extend HKEx’s commodity platform into ferrous metals, such as iron ore, coking coal and energy. One key sticking point in the exchange’s drive to boost Asian membership has been its prerequisite for members to have a London presence. The exchange is reviewing this rule, Mr Li said.
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