Macau Business Daily, May 29, 2013 by Business Daily

Easier Taiwan visas starting in August

Year II

Number 293

Wednesday May 29, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

It will be easier for visitors from Macau to get a multi-entry visa for Taiwan, perhaps as soon as August, the island’s government announced yesterday. But visa-free entry is not yet on the agenda. Taiwan’s cabinet unveiled a series of measures after cutting its economic growth forecast.

Adult education:

lessons learned? T

he continuing education programme is likely to be extended after this year, but without major reforms. That’s despite a damning report by the public watchdog the Commission of Audit in November. It said as much as 10 percent of the 200 million patacas (US$25 million) spent up to August last year had been on “flawed” decisions.

Page 4

China Taiping buys parent’s Macau branch

But Leong Vai Kei, head of the education department the Education and Youth Affairs Bureau, said yesterday important changes had been made to the programme. She said the bureau has so far issued 686 warnings to course providers over irregular practices, and three cases of alleged forgery have been sent to the Public Prosecutions Office.

China Taiping Insurance Holdings Co Ltd saw its stock rise to a three-and-a-half year high after saying it would buy 10.6 billion yuan (13.8 billion patacas) of its parent’s assets, including a Macau operation. The holdings unit will issue 862.7 million shares at HK$15.39 (US$2) apiece for unlisted assets from China Taiping Insurance Group Co Ltd. Page 5

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Bus operators brush aside audit criticism

Hang Seng Index

The Transport Bureau and the operators have defended the public bus system in the face of a critical report from the Commission of Audit. The report released on Monday said there were not enough bus runs during peak hours but too many in the off-peak hours, allowing the operators to meet the tender regulations.

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Suspicious transactions mostly ‘medium-risk’ The Financial Intelligence Office (GIF) regards most reports of suspicious transactions in the city as indicating a “medium risk” for actual illegal activity it claims. The office’s director, Deborah Ng Man Seong, told Business Daily on the sidelines of a seminar yesterday that transactions regarded as medium-risk were those that “may be somehow connected to other cases, and we need time to follow up”. Page 3

‘Premium mass’ under pressure from regulator The reclassification of some high-limit mass gaming revenue to VIP by DICJ could be a first step in the gaming regulator asking the industry to set clear definitions for ‘premium mass’ and how precisely it differs from junket play. That could have implications in the future for operator profitability, as EBITDA margins on premium mass can be four times those available on traditional VIP gambling. Page 7

22690

May 28

HSI - Movers Name

%Day

COSCO PAC LTD

6.55

CHINA RES ENTERP

5.95

BELLE INTERNATIO

4.76

CHINA RES POWER

3.70

HENGAN INTL

3.38

HANG LUNG PROPER

BANK EAST ASIA

-0.16

HONG KG CHINA GS

-0.22

LENOVO GROUP LTD

-0.26

BOC HONG KONG HO

-0.36

Source: Bloomberg

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May 29, 2013

Macau

Bus operators brush aside audit criticism Bus run requirements need revamp, public utilities concern group says Stephanie Lai

sw.lai@macaubusinessdaily.com

An average of 440,000 passengers used public buses each day in the first two months this year (Photo: Manuel Cardoso)

he Transport Bureau and the operators have defended the public bus system in the face of a critical report from the Commission of Audit. The report released on Monday said there were not enough bus runs during peak hours but too many in the off-peak hours, allowing the operators to still meet the tender regulations. “We did not notice any sudden surge in bus runs during off-peak hours, but we will try to verify that,” a spokesperson from the Sociedade de Transportes Colectivos de Macau SARL (TCM) said. “We are still checking our own records and comparing with the irregularities mentioned by the audit commission,” the spokesperson told Business Daily. The Transport Bureau stressed in a statement that the number of bus passengers during off-peak hours has recently been getting closer to the one during busy hours. From August 2011 – when the new public bus system was launched – to September last year, one of the routes mentioned in the report got an average of 18.6 bus runs per hour during peak hours, “1.4 bus runs less than contractually required,” carrying an average of 119 paying passengers, the bureau noted. For that same route, off-peak bus

runs hit 14.5 per hour, “4.5 bus runs more than required,” and carrying an average of 103 passengers, the bureau added. Nevertheless, the bureau acknowledged the need to improve its monitoring and conducts stricter checks on bus runs. The audit commission’s report also noted instances where operators submitted only partial records on fares collected but were not penalised by the government. 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.

Time to review Both Transportes Urbanos de Macau SARL (Transmac) and Reolian Public Transport Co told Business Daily they were checking their own records against the commission’s report. “Normally with the payment data, we have a stringent check with our own GPS system and MACAUpass track record before passing it on to the government,” said Reolian deputy

general manager Abel Kwok. “And for the single case mentioned in the report where there had been a missing cash box not delivered to the government, I think it was an individual, rare incident instead of a sector-wide problem,” Mr Kwok added. Johnny Chan Veng Un, vice president of the Public Utilities Concern Association, believes not

The transport conditions have already changed a lot and thus the bus-run requirements ought to be fully reviewed Johnny Chan Veng Un, vice president, Public Utilities Concern Association

enough focus goes towards how efficient the current bus runs are in taking passengers. “The bus runs are stipulated by the bidding regulations, which were dated to 2009,” Mr Chan told Business Daily. “Now the transport conditions have already changed a lot and thus the bus-run requirements ought to be fully reviewed.” According to Transport Bureau data, an average of 440,000 passengers used Macau public buses each day in the first two months this year, up by more than 20 percent compared to before the new bus system was implemented, in August 2011. “I think that the Transport Bureau can do a better job in reviewing how the present bus runs could be arranged, and which [of the] underused routes should be cancelled,” said Mr Chan. “Overall, we still think the new bus system is better than a fully privatised model,” he added. “It can enable passengers to suffer less from a big variation in transport fares following the high inflation in recent years,” he said. “It is more of a problem over which [how] the government should improve its management over the bus operators, namely how it can review the bus runs,” he added.

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May 29, 2013

Macau SJM to benefit from Chow’s IPO: Macquarie Macau Legend Development Ltd’s initial public offering will drive up SJM Holdings Ltd’s earnings before interest, taxation, depreciation and amortisation (EBITDA) said finance house Macquarie Capital Securities Ltd in a report. It stated Macau Legend’s gaming tables come under SJM’s casino concession and are in some cases currently under-used. “Macau Legend’s desire to upgrade the facilities that these tables fit in should result in table yields rising,” it stated. Macau Legend – controlled by local businessman David Chow Kam Fai – has started pre-marketing for its planned approximately US$600 million (4.8 billion patacas) Hong Kong IPO.

Most suspicious deals ‘medium-risk’: GIF The Financial Intelligence Office refers fewer cases of suspicious transactions to the prosecutors Tony Lai

tony.lai@macaubusinessdaily.com

he Financial Intelligence Office (GIF) regards most reports of suspicious transactions it receives as indicators of a medium risk that something illegal is afoot, requiring more careful investigation. The office sorts the suspicious transaction reports it gets into those indicating a low risk of a crime being committed, those indicating a medium risk, those indicating a high risk and those indicating a very high risk. The office’s director, Deborah Ng Man Seong, told Business Daily on the sidelines of a seminar yesterday that transactions regarded as medium-risk were those that “may be somehow connected to other cases, and we need time to follow up”. Following-up might mean obtaining more information on the background of whoever carried out the transactions, Ms Ng said. She said following up such cases often took more than a year. Most of the reports her office gets are of transactions that it regards as

medium-risk, she said. Her office passed on to the Public Prosecutions Office fewer than 10 percent of the cases reported to it, Ms Ng said. The Financial Intelligence Office’s latest newsletter says the office received 1,840 suspicious transaction reports last year, 17.7 percent more than in 2011. The office referred 166 cases to the prosecutors last year, having referred 190 in 2011. Ms Ng her office passed on to the prosecutors only cases of very-highrisk transactions. A legal adviser to the Financial Intelligence Office, José Carapinha, said few reports resulted in cases being referred for investigation and prosecution. “If you go to other jurisdictions in the world, you will see that it’s exactly the same,” Mr Carapinha told Business Daily on the sidelines of the seminar. “The private sector is the front line against money laundering, and they report what for them is suspicious,

but they are dealing with specific cases,” he said.

Preferably proactive He said it was up to his office to decide whether the report was of something that was indeed suspicious. “When we receive that report, we have much more access to much more information that they do,” he said. “We’re there not to be a filter, but to be somebody that does some preliminary work.” Mr Carapinha said a single transaction could be the subject of five or six reports. The gaming industry made 1,328 suspicious transaction reports last year, or 72.2 percent of the total. Banks or insurers made most of the rest. Casinos are obliged to report any transaction bigger than 500,000 patacas (US$62,530), in cash or otherwise, to the Gaming Inspection and Coordination Bureau, which passes on their reports to the Financial Intelligence Office. In other parts of the world

transactions bigger than US$3,000 must be reported. In Macau, Mr Carapinha said, “we want to have fewer reports but to be proactive”. The law here also obliges casinos to report transactions of any value if they find any suspicious elements. The Financial Action Task Force, the international body set up to counter money laundering, requires casinos to give extra information about cash transactions bigger than US$3,000. Mr Carapinha said that if this requirement were to be enforced in Macau it would mean that gamblers betting more than US$3,000 would have to give proof of their identity. Mr Carapinha said casinos would have their work cut out simply identifying gamblers. “I guess the casinos would have to double their staff,” he said.

Hunt for dirty money a cooperative effort Cross-border cooperation is crucial to the city’s efforts to counter money laundering, particularly money laundering involving VIP gaming promoters, according to the Financial Intelligence Office. “It cannot just rely on one jurisdiction to suppress those activities. You need a lot of international cooperation because it involves transnational movement of funds,” the office’s director, Deborah Ng Man Seong, said yesterday. “If we revise our laws to strengthen our own measures, we can, to a certain extent, prevent such activities,” she said. The Financial Intelligence Office is revising the legislation that is meant to counter money laundering and the financing of terrorism. Asked what progress her office had made, Ms Ng said it was “not appropriate” to comment now on what parts of the legislation were being revised or when amendments to the law might be ready. She said only that the changes would bring the legislation up to the latest international standards for countering money laundering and that her office had consulted the private sector about the changes.

T.L.

Most reports of suspicious transactions here are made by casinos

May 29, 2013

Macau

Easier Taiwan visa in August

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Island bets on tourism promotion to attract more Greater China visitors

HOSPITALITY

Vítor Quintã

vitorquinta@macaubusinessdaily.com

The same, for more In the past six months average spending per visitor has been over 2,000 patacas (US$250). Average spending per visitor was 2,019 patacas in the fourth quarter of last year and 2,046 in the first quarter of this year. This means that in the first quarter the average visitor spent 44.4 percent more patacas than three years earlier, his spending having risen at an average annual rate of about 13 percent. Some of the rise was probably due to the increase in the purchasing power of mainland Chinese visitors as the yuan strengthened. Some of the rise was due to tourist price inflation here. Deflating average spending per visitor using the tourist price index allows us to estimate average spending per visitor at constant prices. Comparing the two gives a rough idea of how much the rise in spending by visitors is due to inflation.

t will be easier for visitors from Macau to get a multiple entry visa for Taiwan, perhaps as soon as August, the island’s government announced yesterday. But visa-free entry is not yet on the agenda. Taiwan’s cabinet led by premier Jiang Yi-huah unveiled a series of measures after the statistics bureau cut its forecast for this year’s economic growth. Those measures include to “loosen visa procedures for mainland [Chinese], Hong Kong and Macau travellers to allow multiple entry” visas, the government’s statement says. The easing could come into effect from August 1, said Yeh Kuang Shih, Taiwan’s minister of Transportation and Communications, quoted by

Taiwanese media. No mention was made of a possible exemption policy, something that has been repeatedly asked by Macau authorities. In November 2011 the head of the Chief Executive cabinet, Alexis Tam Chong Weng, said: “Taiwan visitors don’t need one when they reach Macau. It’s not fair.” Four months earlier, Lai Shin Yuan, the minister of Mainland Affairs Council – Taipei’s top China policy-making body –, said Taiwan authorities would consider offering visa-free entry for Macau residents. Macau citizens are currently able to apply online free of charge for Taiwan visas. If the request is accepted, all the tourists have to do is print out the visa

agreement. The entry permit is valid for three months and allows visitors to stay on the island for a month. Taiwan is also planning to boost tourism promotion in order to attract more Greater China visitors, especially young white-collar groups, high-end spenders and special interest travellers, Mr Yeh said. The government expects 1.1 million travellers from Hong Kong and Macau – including 150,000 “foreigners” living in the two regions – this year, up from 800,000 in 2012, he added. Mainland Chinese, Macau and Hong Kong visitors could leave as much as 73.28 billion Taiwan dollars (19.6 billion patacas) in the island, the minister estimated. With Bloomberg News

Some casinos failed second air quality check Problems remain in some smoking zones, say unions, quoting government officials Tony Lai

tony.lai@macaubusinessdaily.com

The data suggest that visitors’ expenditure has an element of seasonality to it. Visitors tend to me more profligate in the second half of the year. But that’s not our main concern here. More generally, the rise in average spending per visitor at current prices is far steeper than average spending per visitor at constant prices, implying most of the increase is due to prices rising. Spending by visitors at constant prices has recovered slowly from a fall of about 15 percent at the beginning of 2011, but has yet to rise above what it was before the fall. The data suggest that average spending per visitor at constant prices has been mainly steady for the past five quarters. Visitors are not buying more, just paying more for what they buy. J.I.D.

MOP2,046

Average spending per visitor, 2013Q1

ome of Macau’s casinos have failed a second air quality check in their smoking zones reported labour union officials after a meeting with the government yesterday. Some gaming workers have called for a complete ban on casino smoking, saying the partial ban simply doesn’t work. Venues that failed the first checks in late March were warned in April they could have their smoking zones reduced if they failed a second time. But the Health Bureau has not yet officially released the results of the second set of tests, and has not so far indicated a date they will be given to the public. As a consequence, it’s not clear what sanctions if any will be taken against the failing venues. Ella Lei Cheng I of the Macao Federation of Trade Unions – following a meeting yesterday with Secretary for Social Affairs and Culture Cheong U and Health Bureau officials – revealed some casinos were still having air problems. She stressed the government did not say how many casinos were

involved nor reveal the details of the second round of checks. The Health Bureau announced on April 10 that 28 out of the city’s 46 gaming venues had air quality issues in their first round checks. The authorities gave them four weeks to improve. Angela Leong On Kei, executive director of SJM Holdings Ltd, said earlier this month that she

Partial smoking ban in casinos began on January 1

had “no confidence” all the firm’s licensed venues identified as having problems the first time would pass a second scrutiny. Journalists at another event earlier in the day asked Mr Cheong about the details of the second official air quality checks. They took place in early May. He declined to go into details, but said the government would reduce the casinos’ smoking area “if they fail the test again”. He didn’t specify if that was a reference to the second test or to future checks. “Failing the tests in [the] longterm, this will eventually lead to the revoke [revoking] of the smoking areas,” he said. He denied the partial smoking ban in casinos – effective since the start of this calendar year – was “not effective”. Union official Ms Lei said she was also unhappy that the government did not say how they would penalise casinos that fail to submit their own air quality report every month.

May 29, 2013

Macau China Taiping buys parent’s Macau branch First overseas-listed mainland Chinese insurer launches restructuring Vítor Quintã

vitorquinta@macaubusinessdaily.com

China Taiping’s Macau branch operates mostly in the property and casualty businesses

hina Taiping Insurance Holdings Co Ltd soared the most in more than three-anda-half years after saying it would buy 10.6 billion yuan (13.8 billion patacas) of assets from its parent. Under the deal, China Taiping will issue 862.7 million shares at

HK$15.39 (US$2) apiece to pay for unlisted assets from parent China Taiping Insurance Group Co Ltd. Those assets include China Taiping Insurance (Macau) Co Ltd, for which China Taiping will pay 368.6 million yuan, the company told the Hong Kong Stock

Store relocation slows footwear retailer’s sales Le Saunda takes new rental hike hit over prime-location street store Vítor Quintã

vitorquinta@macaubusinessdaily.com

e Saunda Holdings Ltd saw its revenue here grow slower last year, after the footwear manufacturer and retailer relocated its Venetian Macao shop. The company told the Hong Kong Stock Exchange yesterday its Macau sales rose by 8.2 percent to HK$31.3 million (US$4 million) in the 12 months ended in February. In the previous period Le Saunda had seen its revenue here soar by a much stronger 40.9 percent. The slowdown “was mainly due to the expiry of the lease of the outlet in The Venetian in Macau,” the company said in a filing. Le Saunda opened a new street store “at a prime location,” which “enhanced our exposure within the region,” the filing adds. On the other hand the new outlet “has increased our rental expenses,” the company said. The retailer has two stores in Macau. Last January it agreed to a 60 percent increase in the rent of its other outlet here, located at Rua de São Domingos, near the tourist-heavy Senado area. Le Saunda is now paying HK$3.46 million per year for a store with just 103.7 square metres, even though the company is leasing the store from

Exchange on Monday. As part of the restructuring, the Macau branch will increase its issued share capital from 80 million patacas to 120 million patacas, according to a notice published in the Official Gazette on Monday. The shares of the first overseaslisted mainland Chinese insurer jumped as much as 14.89 percent in Hong Kong trading before closing at HK$ 14.20. That was the biggest advance since October 2009, making the stock the best performer on the MSCI China Index. The restructuring will help the insurer consolidate its business in China and capture growth potential, Deutsche Bank AG analyst Esther Chwei wrote in a report yesterday. “The transaction will have minimal dilution impact on minority shareholders, which should alleviate market concerns,” wrote Ms Chwei, who maintained a buy recommendation on the stock. China Taiping Insurance Holdings said on April 19 it might acquire assets from its parent, after receiving approval from the Ministry of Finance and the China

MIN

Insurance Regulatory Commission to restructure. China Taiping’s Macau branch operates mostly in the property and casualty businesses. The branch posted a net profit of HK$73.41 million last year, up by 162.7 percent from 2011, as a result of “strong premium growth and better investment performance,” China Taiping said in the filing. Insurance premiums increased by a third to HK$406.54 million and investment income rose almost six-fold to HK$49.29 milion. With Bloomberg News/Reuters

RMB368.6 million Price tag on China Taiping Insurance (Macau)

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one of its executive directors, Marces Lee Tze Bun. The total revenue of the firm increased by 14.1 percent to HK$1.76 billion in the 12 months ended in February. But “due to continuously increasing operating costs,” operating profit dropped by 4.6 percent year-on-year to HK$233.8 million, Le Saunda said.

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Footwear manufacturer and retailer Le Saunda has two stores in Macau

May 29, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Bubbly property The consequences of the rapid rise in property prices on the lives of people and the viability of businesses should not be underestimated. The table shows how the average prices per square metre of residential, office and industrial floor space have risen recently. It shows how many times higher the average prices were in the first quarter of this year than a year earlier, two years earlier and three years earlier. Of course, average prices hide differences in price due to where and how old the premises are. But they are a good enough guide to dominant trends.

Housing includes many kinds of premises, ranging from subsidised flats to apartments in upmarket condominiums to whole houses. Part of the rise in the average price of housing is due to some new homes being bigger and better built than older homes. Even so, this does not account in full for the average price of housing being 72 percent higher in the first quarter than a year earlier, double what it was two years earlier and almost triple what it was three years earlier. This implies unusual annual rates of increase. The average price of office space rose in a similar manner, but not so fast. The average price of industrial space trumps all. In the first quarter it was about 4.4 times what it was three years earlier.

Govt eyes better-targeted adult education subsidies The continuing education programme may carry on, but not like before Stephanie Lai

sw.lai@macaubusinessdaily.com

he continuing education programme will probably be extended after this year, but will offer greater subsidies for more “serious” courses, the Education and Youth Affairs Bureau has said. The head of the bureau’s education department, Leong Vai Kei, told reporters yesterday that the programme would favour courses to do with tourism, business management and languages. “We may impose certain limits on the proportion of the cost subsidised, according to the type of course. Now, there is no a definite ratio set,” said Ms Leong. The continuing education programme entitles each Macau resident older than 14 years to up to 5,000 patacas (US$625) to spend on government-approved courses or examinations. “The direction for the programme will be more favourable to courses that can contribute to the city’s turning itself into a tourism centre and a platform for exchanges between China and Portuguese-speaking countries,” Ms Leong said. The programme began in 2011 and was due to end at the end of this year.

It has so far cost the government over 340 million patacas (US$42.5 million). By yesterday over 210,000 people had enrolled for courses covered by the programme, according to the Education and Youth Affairs Bureau. Most people enrolled for courses to do with languages, information technology, finance and business management. The bureau said more and more people were taking courses related to the tourism industry and the meetings, incentives conventions and exhibitions industry.

Their money’s worth Ms Leong said 21.7 percent of the 106,000 or more courses approved by the government were in recreational activities, such as tai chi or art. “We are now considering having residents pay for these courses – perhaps 20 percent of the course fees – instead of having them fully subsidised by the government,” she said. She said feedback from educational institutions showed that students taking courses they paid for themselves tended to attend

classes more regularly and study more diligently. The Education and Youth Affairs Bureau said it had noticed irregularities in the conduct of educational institutions that offered subsidised courses, such as changing the content of courses from that advertised, or changing when and where classes were held without informing the bureau. Ms Leong said that in one case a course provider had persisted with such irregularities despite several warnings. “We have already stopped subsidising it,” she said. The bureau has issued 686 warnings to course providers about irregularities. It has referred three cases of suspected forgery to the Public Prosecutions Office. The bureau declined to give details. The continuing education programme covers courses given by nearly 300 educational institutions. In November the Commission of Audit criticised the programme, saying flaws had allowed hundreds of courses and exams to be mistakenly approved.

J.I.D. The content of this column is the work of Business Daily’s journalists.

190 %

Rise in the average price of housing in the three years ended in the first quarter

Over 210,000 people have enrolled for courses covered by the continuing education programme

May April29, 19,2013 2013

Macau

‘Premium mass’ facing pressure from regulator DICJ asks SJM to redefine some high limit mass tables as VIP – industry wonders if battle brewing Michael Grimes

michael.grimes@macaubusinessdaily.com

defined. But normally the theoretical win of the operator or the theoretical loss of the customer is around HK$300,000 to HK$800,000 per year. And normally they [the players] come once every one or two months.” Average losses for VIP players in Macau are US$250,000 to US$750,000 suggested Praveen Choudhary of Morgan Stanley in another conference session. Mr Fong’s point about the current vague definition of what counts as premium mass in Macau appears to be justified. Business Daily has been told some Macau operators are providing their most valuable premium mass players with socalled ‘promo chips’ – a form of non-cashable chip and therefore with parallels to the rolling chip programme normally only available to VIP players. This newspaper understands other operators are offering premium mass players rebates if they buy in (buy chips) using a credit card. Business Daily approached DICJ seeking more information on how it classifies VIP versus premium mass tables, but no statement was available at the time the newspaper went to press.

Hold rates

Grey area – difference between VIP and premium mass can be hard to spot

decision by Macau’s gaming regulator to classify for revenue tallying purposes some premium mass gaming tables as VIP is making it harder for investors to analyse the industry, sources have told Business Daily. SJM Holdings Ltd reportedly said in its first quarter earnings call – an event only accessible to professional financial analysts, unlike the earnings conference calls of the other Macau licensees – that tables with a “maximum pay” per game above HK$300,000 (US$37,500) would need to be classified for accounting purposes as VIP. “Maximum pay” is understood to be a reference to how much is staked per game. The thinking behind the Gaming Inspection and Coordination Bureau’s request hasn’t been made public. Commentators have speculated that it’s because some premium mass players at some operator venues are being treated very much like traditional high rollers – i.e., given incentives to maximise their play but on much better margins to the house than traditional junket operations. This, say commentators, has implications for the global marketing of Macau as a mass tourism destination. At a time of capped table numbers – 5,500 plus three percent compound annual growth for the next ten years – a gaming market that responds to increased demand and constrained table supply by offering ever rising minimum bets looks like a playground for China’s rich, not a destination for the masses.

There are also potentially political implications for a booming and loosely-defined premium mass segment because while VIP players need to be registered with agents in order to get credit; cash-play premium mass gamblers can stay anonymous and under the radar of the mainland authorities. The latter are reportedly trying to curb the outflow of ‘hot money’ – some corruptly obtained – from China. Ben Lee of IGamiX Management and Consulting Ltd, a gaming industry consultancy, said several months ago there were reports of VIPs switching to premium mass in order to gamble anonymously.

KEY POINTS SJM asked to reclassify some premium mass rev. as ‘VIP’ No impact on EBITDA or EBITDA margin But does distort casino hold rates Industry definition of premium mass ‘vague’: analyst

Defining terms Reclassification post-play by DICJ of some Macau premium mass revenue as VIP revenue won’t of itself alter the profitability of the operators, but it does distort hold rates – a factor considered by gaming analysts when understanding the fundamentals of an operator’s gaming operations. If, however, the reclassification of some premium mass revenue to VIP is in fact a first step in DICJ asking the industry to set clear definitions for ‘premium mass’ then it could have implications in the future for operator profitability. Rob Goldstein, president of global gaming operations for Las Vegas Sands Corp, said recently the EBITDA (earnings before interest, taxation, depreciation and amortisation) margin for the

operators on premium mass play can be 42 percent compared to 10 to 12 percent for junket play, where the house has to share either revenue or commission with the middlemen agents that bring in the high rollers. Kenneth Fong of J.P. Morgan in Hong Kong, told a conference session at Global Gaming Expo Asia in Macau last week: “Different operators have different definitions of premium mass. It is pretty vaguely

Whatever DICJ’s thinking, industry sources say a side effect of putting some ‘premium mass’ revenue into the VIP ‘pot’ is that it distorts hold rates on baccarat, the live dealer game of choice for Macau gamblers. This is because chip sales in the mass segment are not equivalent to chip sales in the VIP segment. Chip sales in the mass are – theoretically at least – all for negotiable (cashable) chips, whereas chips sold in the VIP market start life as non-negotiable currency and only become cashable when a player wins. This means that VIP chip turnover (sales) is a bigger number than VIP gross revenue, the latter number being computed after the rolling process has been completed. One industry source told us: “If you add premium mass revenue to the VIP segment’s revenue, then it messes up everybody’s numbers. That’s because you’re mixing up two concepts. If you want to work out VIP hold then the denominator – the bottom number of the fraction – is gross chip sales, and the numerator – the top number of the fraction – is how much of that sales turnover has been turned into cashable chips. By adding pure mass revenue to the cashable VIP chips number, it looks as though you’re holding more in the VIP than you really are.” Grant Govertsen of Union Gaming Research Macau said in a note on May 6 following SJM’s first quarter earnings call: “Management noted that as per a directive from the DICJ, the company is now reclassifying certain of its premium mass tables as VIP tables. This event was triggered by maximum bets exceeding an apparent HK$300,000 threshold that the DICJ views as the cut-off between mass and VIP tables. This resulted in 28 of Grand Lisboa’s premium mass-market tables being classified as VIP tables in the eyes of the DICJ, up from just three tables in the prior year quarter. We do not believe the company’s peer group in Macau are necessarily following this reporting structure (yet)…” Union Gaming added that to do so would potentially result in “a mismatch between the published DICJ quarterly segment data and the gaming concessionaires/subconcessionaires quarterly results announcements,” but pointed out it would not in itself have an affect on EBITDA or EBITDA margin.

May 29, 2013 April 19, 2013

Greater China Zoomlion checking data after sales questioned Zoomlion Heavy Industry Science and Technology Co., China’s second-largest construction equipment maker, said it is checking data after a report on Internet portal Sina.com accused the company of falsifying sales. Trading of its domestic shares and bonds will continue to be halted as the company is “seriously” examining relevant data, the company said in a filing to the Shenzhen stock exchange yesterday. Zoomlion hasn’t issued a statement on Hong Kong shares. The company halted stock trading in Shenzhen and Hong Kong on Monday after Sina. com published the report by xkb.com, the Xin Kuai Bao Newspaper website.

Li targets 7 percent growth for decade Says China, Germany could be economic ‘Dream Team’

Li Keqiang chose Berlin for first visit to EU as premier

hinese Premier Li Keqiang told German business leaders his country is confronted by “huge challenges” as it seeks 7 percent annual growth this decade, down from more than 10 percent in the previous 10 years. China needs growth of about 7 percent to double per capita gross domestic product by 2020 from the level in 2010, Mr Li said in Berlin after meeting with Chancellor Angela Merkel during his first trip abroad as premier. Expansion is cooling from the pace that propelled the nation to become the world’s second-biggest economy. Mr Li, who succeeded Wen Jiabao as premier in March, is signalling the limits of leaders’ tolerance for slower growth as Europe’s debt crisis curbs shipments abroad, manufacturing weakens and a government antiextravagance campaign restrains restaurant and retail sales. The comments came days after President Xi Jinping said China won’t sacrifice the environment to ensure shortterm expansion and policy makers outlined plans for a bigger role for the private sector.

“I don’t think it’s a change of policy stance, but I do feel that in the past several months we’ve started to hear more and more signals from the central government that they want to tolerate lower growth,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. Monday’s comments at a Germany-China business forum compare with Mr Li’s remarks at a March 17 press conference that China must average 7.5 percent growth through 2020. State-media transcripts that day said Mr Li gave a 7 percent figure.

‘Dream Team’ Other recent documents from Chinese leaders have referred to 7 percent average growth through 2020, and Mr Li’s comments lend support to that goal as “there might be some confusion” over the March remarks, Mr Zhang said. Mr Li said that the Chinese government will move forward with market-driven reforms to generate stable growth after the economy

unexpectedly slowed in the first quarter. Industrialisation and urbanisation give “huge” potential for expansion during the rest of the decade, he said. “For a very big economy, this is not easy,” Mr Li said. “But we have the conditions.” The premier said China’s economy is “entering a range of reasonable growth”. The goal for the rest of the decade compares with a 7.5 percent target for this year’s growth. He called China’s 7.7 percent first-quarter expansion “within the reasonable expectations of our macroeconomic controls”. Mr Li also said China is ready to open up new sectors of its economy to German investors, in comments that highlight Beijing’s drive for a special bilateral partnership with Berlin bypassing the EU. “If we both come together in an ideal and optimal way, a dream team will emerge,” he stressed. China’s prime minister urged closer cooperation in manufacturing – an area where German firms increasingly see China as a competitor as it moves up the value chain – and

he singled out logistics, education and healthcare as sectors for German investment. “China is willing to open up this space preferentially to Germany,” said Mr Li, without elaborating. Bloomberg News/Reuters

I do feel that in the past several months we’ve started to hear more and more signals from the central government that they want to tolerate lower growth Zhang Zhiwei, Nomura Holdings Inc.

Singapore hoists Dim Sum challenge As banks in the city-state sell first yuan-denominated bonds

ingapore kicked off its challenge to Hong Kong’s dominance of the US$42 billion offshore yuan bond market yesterday, with HSBC Holdings Plc and Standard Chartered Plc offering the city-state’s first Dim Sum notes. HSBC sold 500 million yuan (US$82 million) of two-year debt

at 2.25 percent, while Standard Chartered priced 1 billion yuan of three-year notes at 2.625 percent after the Industrial and Commercial Bank of China Ltd started clearing services in the Chinese currency in Singapore. Average yields on Dim Sum bonds, first sold in Hong Kong in 2007, and Asian dollar corporate securities were 3.55 percent and 3.86

percent, respectively, according to Bank of America indexes. Singapore has surpassed Hong Kong as a base for Asia’s rich. The city had 91,000 millionaires with a combined US$439 billion of investable assets, compared to Hong Kong’s 84,000 with US$408 billion, according to RBC Wealth Management and Capgemini SA.

May April29, 19,2013 2013

Greater China First Pacific drops on plan for rights offer First Pacific Co Ltd, controlled by billionaire Anthoni Salim, fell to the lowest level in three weeks in Hong Kong trading after a plan to offer as much as HK$3.9 billion (US$502 million) of rights shares. The company, whose businesses include telecommunications, infrastructure and food products, dropped 2.43 percent to close at HK$11.22. First Pacific said it will offer existing investors the right to buy one new share at HK$8.10 for every eight held. That’s 30 percent cheaper than the closing price on Monday. Funds raised will be used to strengthen the company’s balance sheet, to finance acquisitions and for general corporate purposes, First Pacific said.

Taiwan allows insurers to invest in infrastructure Government unveils plan to boost growth as Ma popularity slumps

aiwan will let insurers invest in infrastructure projects and create a NT$1 billion (US$33 million) fund to channel money to companies as President Ma Ying-jeou bids to boost growth and revive his flagging popularity. The island also plans to revise capital-gains tax rules, give cash incentives to trade in old cars for new ones, simplify visa procedures for Chinese visitors and set aside NT$400 million to subsidise energysaving home appliances including gas stoves and heaters, Premier Jiang Yi-huah said in Taipei yesterday. “The contribution to economic growth will be more obvious in the longer term if insurers’ funds can be directed successfully to infrastructure projects,” said Andrew Tsai, an economist at KGI Securities. “The government will also benefit from that because its fiscal situation has been challenging.” Mr Ma, whose disapproval rating of 70 percent this month is at its highest since he took office in May 2008, joins policy makers from Australia to South Korea in moving to aid their economies as the global recovery falters. The island’s statistics bureau last week cut its forecast for gross domestic product growth this year to 2.4 percent from 3.59 percent. “President Ma is under pressure to deliver some solutions after economic growth slowed in the first quarter,” said Yang Tai-shuenn, a political scientist at Chinese Culture University in Taipei. “But I don’t think this would help lift his approval rating or bring real benefits to the economy.” Proposed revisions to capitalgains tax rules include removing the condition that investors will be taxed when the stock index closes at 8,500 points or higher, and reducing the tax rate on investors with NT$1 billion or more in trading volume to 0.1 percent from 2.25 percent. The measures are awaiting legislative approval, and may be passed in

Hong Kong had the world’s largest offshore yuan savings pool at 668 billion yuan at the end of March and handles about 90 percent of China’s trade denominated in the currency, according to Hong Kong Monetary Authority data. “We will see Singapore become very significant in terms of sharing the volume of yuan traded offshore,” Aaron Russell-Davison, Singaporebased global head of bond syndicate at Standard Chartered, said in an interview. “It is a trading city, historically mercantile by nature.” Singapore is the world’s fourthlargest currency trading centre, while

while an index showed manufacturing activity eased last month. China and Taiwan will sign a service-trade agreement in the “near future,” Wang Yu-chi, Minister of Taiwan’s Mainland Affairs Council, said on Monday. The two sides have signed 18 agreements since Mr Ma took office in 2008, including an Economic Cooperation Framework Agreement in June 2010. “Given that the measures are coming just days after the government’s GDP downgrade and given the still-sizeable challenges ahead for Taiwan exporters, I think growth is the overriding concern right now,” said Donna Kwok, a Hong Kong- based economist at HSBC Holdings Plc.

hina is to cut import duties on Swiss watches by 60 percent over the next 10 years under a free-trade agreement which should help reinvigorate Swiss watchmakers’ sales in a key market. Swatch Group and Cie. Financiere Richemont SA are grappling with slowing demand for luxury timepieces in mainland China due to a crackdown on expensive gifts for favours and slowing economic growth. Exports of Swiss watches to mainland China, their third biggest market, grew just 0.6 percent in 2012, down from almost 49 percent growth in 2011. Under the first free trade pact China will sign with a country in continental Europe, the Asian country will allow 84 percent of Swiss exports to be duty-free, Assistant Minister of Commerce Yu Jianhua told a press conference. “In the first year, we will cut import duties on [Swiss watches] by 18 percent and then by around 5 percent annually in the following years,” Mr Yu said. “They will be cut by 60 percent in 10 years.” The agreement, which should be signed when Switzerland’s Economy Minister Johann Schneider-Ammann visits China in mid-July, will bring retail prices of Swiss watches in China down, but it is difficult to say by how much exactly, Mr Yu said. Vontobel analyst Rene Weber said Swiss watches in China were subject to an import tax of 11 percent and a luxury tax of 20 percent on watches costing more than 1,500 Swiss francs (US$1,600). There is also a valueadded tax. “If the import tax is cut by 18 percent, the rate would fall to 9 percent from 11 percent. This wouldn’t lead to lower prices and only have an impact on margins,” Mr Weber said, adding the development was nevertheless positive.

Bloomberg News/Reuters

Reuters

start is part of China’s grand plan of internationalising the yuan,” said James Su, who oversees about US$40 million as a fixed-income p o r tfo l i o m a n a g er a t S i n o p a c Asset Management in Hong Kong. “From China’s perspective, Singapore is likely to be the hub for Asean nations.” He added that Hong Kong will remain the dominant centre due to trade flows. Singapore has a large pool of private bank money in U.S. dollars, which can buy into the yuan’s appreciation, Clifford Lee, Singapore-based head of

fixed-income at DBS Group Holdings Ltd, said. “What you see out of Singapore now, the renminbi here and in Hong Kong, they are all fungible so they are not two separate markets,” said Mr Lee. “I don’t see this as a replacement or competition in any form in terms of what Hong Kong’s role is.” Yuan deposits in Singapore were about 60 billion yuan, Ong Chong Tee, the Monetary Authority of Singapore’s deputy managing director, said in June 2012. At that time, Hong Kong’s savings stood at 558 billion yuan.

Taipei making efforts to support economy

the current session without further delays, Mr Jiang said.

Economic agenda “We are introducing these measures to bolster the economy as recent economic data failed to meet expectations,” Cabinet spokeswoman Cheng Li-wun said. Taiwan’s GDP grew 1.67 percent in the three months through March from a year earlier, after expanding 3.97 percent in the fourth quarter, a report showed. Mr Ma has simplified investment procedures, reshuffled the government’s top posts, resumed trade talks with the U.S. and sought closer ties with China to revive his economic agenda. Taiwan’s exports fell for a second time in four months in April,

Hong Kong is sixth, according to a triennial survey by the Bank for International Settlements issued in September 2010. The city doubled a currency-swap agreement with China to 300 billion yuan in March. Singapore is also part of the 10-member Association of Southeast Asian Nations, which took up 11.6 percent of China’s exports in April, from 9.8 percent in September, according to the Beijing-based Customs General Administration. That’s the fourthlargest after Hong Kong, the U.S. and the European Union. “Singapore’s yuan clearing

Beijing to cut duties on Swiss watches C

Bloomberg News

May 29, 2013

Asia FIRB signs off Virgin’s Tiger stake Australia’s Foreign Investment Review Board has approved Virgin Australia Holdings Ltd’s plan to take control of loss-making rival Tiger Australia, setting up a battle for domestic budget air travellers with Qantas Airways Ltd’s Jetstar unit. Virgin, Australia’s No.2 carrier, in October announced plans to buy 60 percent of Tiger Australia for A$35 million (US$33.7 million) and invest a further A$62.5 million to increase the fleet size to 35 aircraft from 11 by 2018. Australia’s airline industry has been a battleground for global airlines seeking partnerships in recent months to secure domestic passengers to feed into their global and regional networks. Qantas has established a wide-ranging alliance with Emirates Airlines, while Singapore Airlines Ltd (SIA) announced last month it was increasing its stake in Virgin Australia to 19.9 percent. The Virgin-Tiger Australia deal, already approved by the country’s competition regulator, is expected to be completed by mid-July, Virgin Australia said in a statement.

DHL to boost Asean investment DHL, the courier and freight company of Deutsche Post AG, plans to spend US$181 million in the next two years building warehouses and adding workers in Southeast Asia as economic growth spurs consumption by the middle class. DHL’s Southeast Asia warehouse capacity will surge 50 percent while the number of people employed in the region will increase by 65 percent to 25,000, Oscar de Bok, head of DHL Supply Chain for South and Southeast Asia, said in an interview on Bloomberg Television. Most of Southeast Asia’s 600 million people – the combined population of the U.S., Germany and Brazil – will be middle class by 2020, and that will boost demand for food, beverages and other goods, according to Bain & Co. “There’s a great development of the middle class,” Mr de Bok said in Singapore. “The market is maturing, therefore requiring a more mature and more sophisticated supply chain. Southeast Asia is an important focus.” The 10-nation Association of Southeast Asian Nations is expected to expand 5.5 percent in 2013 compared with 0.2 percent shrinkage in the euro area, the International Monetary Fund forecast in April. The bulk of DHL’s investments will be in Indonesia because of the country’s growth, Mr de Bok said. “Southeast Asia has a lot of potential,” he added. “Southeast Asia shows, by itself, a compelling case to make those investments.”

S.Korea halts more nuclear reactors South Korea is suspending the operations of two nuclear power reactors and extending a shutdown of a third for maintenance to replace cables that were supplied using fake certificates, the country’s nuclear regulator said yesterday. The country previously halted the operations of some of its 23 reactors last November after a scandal emerged over parts being supplied using fake documents. Asia’s fourth-largest economy is heavily dependent on oil, gas and coal imports, but usually gets about a third of its electricity from nuclear power generation. The nuclear problems could increase the risk of power shortages in the hot Korean summer when power demand is seasonally high for air conditioning. The shutdown took place yesterday, according to a spokesman at Korea Hydro and Nuclear Power Co Ltd, which runs nuclear reactors in South Korea and is owned by state-run utility Korea Electric Power Corp. Of the three reactors, two are in Kori, about 320 km southeast of the capital Seoul, and one is in Wolsong, about 280 km from Seoul, a statement from the Nuclear Safety and Security Commission said. The reactors each have a capacity of 1,000 megawatts.

New Zealand rethinks Meridian IPO Government says it may sell shares in tranches

he New Zealand government said breaking up its sale of shares in Meridian Energy Ltd into tranches is one of several options, as recent weakness in equity markets raises the prospect of the IPO coming in at the lower end of expectations. The planned offering of 49 percent of Meridian Energy, the country’s biggest power generator, could raise NZ$2.8 billion (US$2.3 billion) to NZ$3.2 billion for the government as part of its plans to return to a budget surplus and is potentially Asia’s biggest IPO of the year. Worldwide for 2013 so far, it would trail only the US$5.1 billion IPO of insurer BB Seguridade Participacoes SA in Brazil in April and the US$2.6 billion offering of animal health company Zoetis Inc in January. But a disappointing post-debut performance from peer Mighty River Power Ltd, in which the government unloaded a minority stake this month, as well as the government’s determination to have Meridian 85 percent owned by domestic investors, have put pressure on pricing. “It’s possible that you don’t sell it, it’s possible that you sell it in tranches, it’s possible you sell a smaller percentage of it, it’s possible that some completely unexpected event arises that changes how we think about it,” Finance Minister Bill English told reporters. He was speaking before the government announced lead managers for the sale, which is expected no sooner than September. Fund managers don’t expect the plan to be scrapped, but say the government could offer a discount to the company’s widely perceived valuation of NZ$6.5 billion to attract domestic investors.

“Every day that Mighty River Power tracks lower, it puts pressure on the potential pricing of Meridian,” said Shane Solly, portfolio manager at Mint Asset Management.

State asset sales Mighty River Power shares closed at NZ$2.44 yesterday, down 2.4 percent from the IPO price, hurt in part by growing expectations that the U.S. Federal Reserve may rein in its stimulus programme. Demand for Meridian may also be vulnerable due to its negotiations with its biggest customer, Pacific

It’s possible that you don’t sell it, it’s possible that you sell it in tranches, it’s possible you sell a smaller percentage of it… Bill English, New Zealand’s Finance Minister

Reliance bullish as Ambani wins approvals Company to develop areas off India’s east coast

The tariff for Reliance comes up for renewal in April

eliance Industries Ltd, controlled by India’s richest man, is optimistic for the first time in three years about reversing a slide in gas output after the government began approving its

Aluminium, which wants lower power prices to support a loss-making aluminium smelter in the country. Meridian would be the second partial sale of a state-owned company this year as the government sells assets to pay down debt and achieve a budget surplus by 2014-2015. Even if the amount that the government raises comes in at the low end of market expectations, it will likely remain on track to raise a planned NZ$5 billion-NZ$7 billion, as it is expected to garner more than US$1 billion in two other partial asset sales. The 49 percent sale of Mighty

expansion plans. The company in January got endorsement for its proposals to explore and develop areas off India’s east coast submitted in 2010, Mumbai-based Executive

Director P.M.S. Prasad, 61, said in an interview. That assent helped Reliance make a “significant” gas discovery in KG-D6, its biggest block in the Bay of Bengal, after drilling the first exploration well in the area in more than four years. Prime Minister Manmohan Singh’s government is accelerating permissions to allow companies including billionaire Mukesh Ambani’s Reliance and Cairn India Ltd boost output and help Asia’s second-largest energy consumer slash purchases from overseas by half by 2020. An unprecedented US$151 billion oil import bill in the year ended March 31 propelled India’s current account deficit to a record, weakened the rupee and fuelled inflation that’s the highest among large emerging nations. “The approvals have started coming in after nothing was happening for three years,” said Mr Prasad. “This year, we drilled a new well looking for more gas, submitted plans to produce from discoveries, got budgets approved, and resolved various issues. Things are moving now.”

Peak output Reliance’s output fell 39 percent to an average 26 million cubic meters of gas a day from the KG-D6 block in

May 29, 2013

Asia River Power raised NZ$1.7 billion. Opposition political parties oppose the sale of power generators and have promised to reform the electricity market if elected next year, which could cut revenues and decrease their market value. Lead managers for the Meridian sale are Craigs Investment Partners, Deutsche Bank, Goldman Sachs and Macquarie Capital. The government also said UBS New Zealand had been appointed to assist with preparations for the partial float of Genesis Energy, while adding that it had not decided when that sale would happen. In addition, the government plans to reduce its 73 percent stake in the national carrier, Air New Zealand, but has taken struggling coal miner Solid Energy off the table for now. Meridian operates hydro stations and windfarms across New Zealand and sells electricity. It also operates a windfarm in Australia and on Ross Island. Reuters

PetroChina locked out in Indonesia gas dispute Regional government blocked access to 14 wells

etroChina International Co Ltd said that access to 14 of its oil and gas wells in Sumatra island, Indonesia, had been blocked by a local government hoping to secure energy supply. Domestic disputes over how Southeast Asia’s largest economy manages its resources are common. Central and regional administrations often disagree over authority and overlapping permits as a result of increased regional autonomy. Indonesia struggles to attract investment to reverse declining oil output amid ballooning domestic energy demand, but has faced international criticism for unstable regulations and its nationalist stance on resources. “They’ve locked the gates so we can’t get in to carry out maintenance,” PetroChina International Companies Inc. Indonesia communication manager Novie Latanna said, referring to East Tanjung Jabung administration. “We cannot be sure the wells are operating safely,” she said, adding that the wells were still producing 433 barrels of oil and around 11 million standard cubic feet of gas a day.

16,345

Barrels of oil per day is PetroChina’s net production in Jabung

the year ended March 31, according to an April 16 report. Production is currently about 15 million cubic meters a day. The company started output in April 2009 with a plan to raise it to a peak daily rate of 80 million cubic metres in a year. The company achieved its highest gas production in 2010 helping Reliance post a 25 percent profit increase in the year ended March 31, 2011, the fastest pace of growth in three years. Revenue from the business has plunged 52 percent since then, pulling the stock down 20 percent even as the benchmark S&P BSE Sensex gained 3.1 percent. Reliance attributed the drop in gas output to difficult geology, which the company hadn’t anticipated earlier. “There’s nothing yet to suggest the difficult geology won’t extend to the other discoveries in the block,” said K.K. Mital, a fund manager with Globe Capital Market Ltd in New Delhi. “We’ve already seen and experienced the geological difficulties Reliance has faced.” India has 27 trillion cubic feet of proven and possible gas reserves in fields that are yet to be developed, researcher IHS Cera said in a January report. India’s 12 major petroleum basins may hold another 64 trillion cubic feet of undiscovered gas, according to the report. Reuters

“The problem is they’ve asked for gas,” Ms Latanna said, explaining that the local government had requested 5 million standard cubic feet of gas per day for local electricity supply last year. “But the process to supply that gas has been lengthy… Perhaps the local government wanted it quickly,” she said, adding that the local government had withheld PetroChina’s land permit as a result. “If all goes according to the deadlines agreed to in the road map, the gas purchase agreement is expected to be signed in November 2013.”

Jakarta move Indonesia’s central government, which oversees its oil and gas industry directly via upstream regulator SKKMigas, criticised East Tanjung Jabung administration for the move and requested that the seals on entrances be removed. “Regional administrations shouldn’t do that,” Deputy Energy and Mineral Resources Minister Susilo Siswo Utomo told reporters. “We always explain this but they’re impatient… We request that the [wells] are not sealed so that production can continue.” SKKMigas spokesman Elan Biantoro said the East Tanjung Jabung had acted outside its authority. “We’re disappointed. Why did they have to seal them. They’re sealing state assets. This shows they don’t understand the oil and gas industry,” he said, urging the local government to be more understanding of the processes involved. “Buying and selling gas is not like buying and selling tofu and tempe,” he said. According to PetroChina, a team from SKKMigas will meet the

PetroChina is mainland’s main oil and gas producer

regional administration yesterday. While the incident covers only a small amount of the company’s overall production, it is not the first time the wholly owned Indonesian unit of PetroChina Ltd, China’s main oil and gas producer, has faced problems. PetroChina’s Indonesian CEO was replaced in 2011 in a separate dispute also in Jambi, and also in connection with the issue of permits involving the local administration, Mr Biantoro said. “They made a mistake in the permit process, and that mistake was fatal,” Mr Biantoro said. PetroChina’s net production from its Jabung operations reached approximately 16,345 barrels of oil and 265 million standard cubic feet of gas per day as of January according to data from SKKMigas, making it the country’s ninth-biggest oil and gas producer. The company exports its gas from Jambi province to Singapore via pipeline. Reuters

Japan retains status as top creditor nation J

apan kept its position as the world’s largest creditor nation for the 22nd straight year in 2012, government data showed yesterday, as the dollar’s gains helped inflate the value of overseas assets. Tokyo was followed by mainland China and Germany in third place in the ranking, which reflects the difference between the value of assets held abroad, including foreign debt and property, minus a nation’s liabilities, such as foreign purchases of its own debt and domestic assets. In Japan’s case, net overseas assets stood at 296.3 trillion yen at the end of last year, or US$2.9 trillion at yesterday’s rate, from 86.32 yen at the end of the year, according to the finance ministry. Japan’s currency has tumbled since Prime Minister Shinzo Abe swept landslide December elections on a pledge to boost the world’s third-largest economy with a plan that incl u d es b i g g o v er n m en t

spending and aggressive central bank monetary easing, which tends to weigh on the unit. A weaker yen means that assets denominated in another currency, such as the dollar, would become more valuable when calculated in yen terms. But analysts said there were no guarantees Japan would retain the title going forward as it faces big trade deficits, fuelled by surging dollardenominated energy imports in the wake of the Fukushima atomic crisis, while carrying a massive public debt. Mr Abe’s pro-spending measures

threaten to inflate a debt pile, which at more than twice the size of the economy is the worst among industrialised nations. “The exchange-rate effect provides only a temporary boost,” said Tsuyoshi Nakazawa, foreign investment analyst for Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “Whether Japan can stay as a major creditor nation will depend on its economic competitiveness and energy consumption pattern… Japan is living off its legacy right now,” he told Dow Jones Newswires. AFP

May 29, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

35.25

0.8583691

12851710

CHINA UNICOM HON

ALUMINUM CORP-H

3.08

1.315789

12223000

CITIC PACIFIC

BANK OF CHINA-H

3.77

2.168022

290992217

6.1

1.160862

19651910

BANK EAST ASIA

30.65

-0.1628664

2488152

BELLE INTERNATIO

12.32

4.761905

27722100

AIA GROUP LTD

BANK OF COMMUN-H

NAME

PRICE

DAY %

VOLUME

11.12

0.3610108

10457800

9.48

0.6369427

4874000

SANDS CHINA LTD

CLP HLDGS LTD

69.85

0.5035971

1760795

CNOOC LTD

14.18

1.721664

COSCO PAC LTD

11.38 11.9

ESPRIT HLDGS

BOC HONG KONG HO

27.65

-0.3603604

4986483

HANG LUNG PROPER

CATHAY PAC AIR

14.76

3.216783

5058250

HANG SENG BK

CHEUNG KONG

113.6

0.8880995

3223764

CHINA COAL ENE-H

5.36

2.095238

18321786

CHINA CONST BA-H

6.41

1.424051

129122538

CHINA LIFE INS-H

21.05

1.201923

29682488

CHINA MERCHANT

25.6

1.789264

1359962

CHINA MOBILE

PRICE

DAY %

VOLUME

74.75

0.6734007

1475838

40.2

1.005025

7470355

SINO LAND CO

12.38

1.309329

3634500

36842456

SUN HUNG KAI PRO

108.5

0.2772643

3021278

6.554307

10059468

SWIRE PACIFIC-A

102

1.694915

681760

1.883562

11747530

TENCENT HOLDINGS

304.2

1.26498

2779156

29.6

2541105

128.4

0.3125

719535

HENDERSON LAND D

57.5

0.7887818

1393739

HENGAN INTL

88.7

3.379953

1755000

HONG KG CHINA GS

23.05

-0.2164502

9030407

HONG KONG EXCHNG

132.1

0.6859756

2748953

0.4618938

8131569

84.2

0.3575685

3357648

5.5

1.663586

217978339

10.86

0.1845018

15929250

HSBC HLDGS PLC

83.6

0.6016847

9889403

23.75

2.37069

15653500

IND & COMM BK-H

CHINA PETROLEU-H

8.31

1.465201

43910569

LI & FUNG LTD

CHINA RES ENTERP

25.8

5.954825

4609758

MTR CORP

0.4709576

3.225806

9202000

NEW WORLD DEV

13.26

0.7598784

CHINA RES POWER

20.45

3.701826

12875260

PETROCHINA CO-H

9.55

0.5263158

56236125

CHINA SHENHUA-H

26.35

1.151631

10984932

PING AN INSURA-H

60.05

1.69348

10643002

CHINA OVERSEAS

CHINA RES LAND

HUTCHISON WHAMPO

NAME POWER ASSETS HOL

TINGYI HLDG CO

20.5

2.244389

3566000

WANT WANT CHINA

11.8

0.6825939

6855000

WHARF HLDG

74.1

0.4065041

2539010

MOVERS

1 22930

INDEX 22924.25 HIGH

22928.32

2054632

LOW

22563.93

5658088

52W (H) 23944.74 22560

(L) 18056.4 24-May

28-May

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.72

1.917808

98501366

AIR CHINA LTD-H

6.65

-0.1501502

6404000

ALUMINUM CORP-H

3.08

1.315789

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

27.6

2.222222

6010420

CHINA PETROLEU-H

8.31

1.465201

43910569

12223000

CHINA RAIL CN-H

7.78

1.038961

3961900

1.886792

8914300

CHINA RAIL GR-H

4.12

1.980198

15990643

3.77

2.168022

290992217

CHINA SHENHUA-H

26.35

1.151631

10984932

6.1

1.160862

19651910

CHINA TELECOM-H

3.92

0.2557545

47008000

BYD CO LTD-H

33.4

5.863708

6176700

DONGFENG MOTOR-H

12.16

0.330033

10256000

CHINA CITIC BK-H

4.48

2.517162

37318391

GUANGZHOU AUTO-H

8.62

-0.5767013

30161413

CHINA COAL ENE-H

5.36

2.095238

18321786

HUANENG POWER-H

8.34

2.836005

15655000

CHINA COM CONS-H

7.43

-0.6684492

11714793

IND & COMM BK-H

5.5

1.663586

217978339

CHINA CONST BA-H

6.41

1.424051

129122538

JIANGXI COPPER-H

15.54

1.701571

8766675

CHINA COSCO HO-H

3.45

2.678571

7964699

PETROCHINA CO-H

9.55

0.5263158

56236125

ANHUI CONCH-H BANK OF CHINA-H BANK OF COMMUN-H

NAME

21.05

1.201923

29682488

PICC PROPERTY &

9.3

0.01182936

20235278

CHINA LONGYUAN-H

8.22

0.7352941

11049000

PING AN INSURA-H

60.05

1.69348

10643002

CHINA MERCH BK-H

16.34

1.239157

28457247

SHANDONG WEIG-H

8.74

8.302354

8794000

CHINA MINSHENG-H

9.92

2.479339

26178900

SINOPHARM-H

21.65

3.341289

14789400

CHINA NATL BDG-H

8.69

1.596746

53250979

TSINGTAO BREW-H

3.703704

1216635

16.68

1.831502

3490400

WEICHAI POWER-H

30.5

3.21489

1853500

CHINA LIFE INS-H

CHINA OILFIELD-H

NAME

PRICE

DAY %

VOLUME

YANZHOU COAL-H

8.24

1.353014

20192164

ZIJIN MINING-H

2.14

0.4694836

30550650

ZOOMLION HEAVY-H

7.92

12.98

3.508772

2119916

ZTE CORP-H

MOVERS

1 10930

INDEX 10920.58 HIGH

22928.32

LOW

10685.61

52W (H) 12354.22 10680

(L) 8987.76 24-May

28-May

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.74

0.7352941

155911476

CHONGQING CHAN-A

10.93

1.769088

34064445

PING AN INSURA-A

40.72

3.166962

34407106

AIR CHINA LTD-A

5.51

1.473297

16179095

CHONGQING WATE-A

6.61

-0.6015038

9964637

POLY REAL ESTA-A

12.64

3.267974

59272486

ALUMINUM CORP-A

4.16

1.216545

15168741

CITIC SECURITI-A

13.25

3.032659

172354397

QINGDAO HAIER-A

12.89

1.656151

19244893

17.47

3.31165

34700463

CSR CORP LTD -A

4.45

3.488372

72580074

QINGHAI SALT-A

23.99

1.998299

6633744

BANK OF BEIJIN-A

9.2

2.335929

36847960

DAQIN RAILWAY -A

7.03

1.005747

34148242

SAIC MOTOR-A

15.58

1.896664

37746963

BANK OF CHINA-A

2.98

1.016949

43967657

DATANG INTL PO-A

4.76

-0.41841

9382303

9.5

1.713062

41212374

4.8

1.694915

63175398

EVERBRIG SEC -A

14.67

2.947368

39797647

SHANG PHARM -A

12.67

1.117318

17555672

10.95

3.010348

30638006

GD MIDEA HOLDI-A

14.37

0.7713885

14606099

SHANG PUDONG-A

10.55

2.526725

111377099

NAME

ANHUI CONCH-A

BANK OF COMMUN-A BANK OF NINGBO-A

NAME

SANY HEAVY INDUS

BAOSHAN IRON & S

4.87

0.8281573

17759468

GD POWER DEVEL-A

2.69

1.509434

39509889

SHANGHAI ELECT-A

3.96

0.7633588

6134022

BEIJING TONGRE-A

24.11

1.601349

8156671

GEMDALE CORP-A

8.06

4.404145

74729251

SHANXI LU'AN -A

16.83

3.888889

24818623

BYD CO LTD -A

34.65

-1.92471

13751553

GF SECURITIES-A

CHINA AVIC ELE-A

27.29

0.146789

6435153

CHINA CITIC BK-A

4.45

1.830664

CHINA CNR CORP-A

4.72

CHINA COAL ENE-A

14.3

3.924419

49348486

SHANXI XISHAN-A

10.75

2.674308

22659681

GREE ELECTRIC

27.36

1.937407

14269974

SHENZEN OVERSE-A

6.57

2.816901

48690283

31102790

GUANGHUI ENERG-A

20.72

0.7292173

24449627

SUNING COMMERC-A

6.27

1.620746

46157534

3.964758

59174053

HAITONG SECURI-A

12.02

4.795118

207991504

TASLY PHARMAC-A

41.78

-0.09564802

6288699

6.63

1.531394

13318997

HANGZHOU HIKVI-A

38.12

0.02623983

8701103

TSINGTAO BREW-A

38.93

1.353814

1574645

CHINA CONST BA-A

4.86

1.461378

32418757

HENAN SHUAN-A

38.85

-1.119878

5043678

WEICHAI POWER-A

23.79

1.97171

10070298

CHINA COSCO HO-A

3.44

1.176471

10098981

HONG YUAN SEC-A

25.36

1.72483

29994481

WULIANGYE YIBIN

24.27

1.209341

21013388

CHINA EAST AIR-A

3.12

2.295082

26407876

HUATAI SECURIT-A

10.66

2.995169

98990312

YANTAI WANHUA-A

18.06

-0.9868421

17549108

CHINA EVERBRIG-A

3.18

1.597444

107162669

HUAXIA BANK CO

10.93

2.725564

39938384

YANZHOU COAL-A

14.77

2.7121

7067727

CHINA INTL MAR-A

12.5

2.543068

11286022

IND & COMM BK-A

4.19

1.452785

49309090

YUNNAN BAIYAO-A

89.5

0.9019166

1384327

CHINA LIFE INS-A

16.87

2.242424

15809128

INDUSTRIAL BAN-A

18.74

2.404372

99408093

ZHONGJIN GOLD

12.3

2.92887

41084831

CHINA MERCH BK-A

13.76

2.763256

85149220

INDUSTRIAL-A

12.04

2.380952

39248838

ZIJIN MINING-A

3.12

1.960784

97266200

CHINA MERCHANT-A

13.69

3.948368

54351477

INNER MONG BAO-A

28.55

1.241135

30236993

ZOOMLION HEAVY-A

7.29

36814315

CHINA MERCHANT-A

30.29

6.280702

20113689

INNER MONG YIL-A

28.75

3.417266

21988196

ZTE CORP-A

12.34

-2.29612

48859936

CHINA MINSHENG-A

10.74

2.77512

156179023

INNER MONGOLIA-A

4.84

0.8333333

46639984

CHINA NATIONAL-A

11.83

3.77193

31696780

JIANGSU HENGRU-A

30.66

0.2944063

7444958

CHINA OILFIELD-A

17.13

-0.4069767

10324736

JIANGSU YANGHE-A

66.3

5.48926

8514443

CHINA PACIFIC-A

19.24

2.887701

15951892

JIANGXI COPPER-A

21.32

2.009569

15197191

10.92

1.581395

10290454 26611147

CHINA PETROLEU-A

6.8

1.190476

33847750

JINDUICHENG -A

CHINA RAILWAY-A

5.19

1.964637

20632240

KANGMEI PHARMA-A

18.4

-0.701565

202.14

0.2529386

2367636

27.27

1.526433

6965706

CHINA RAILWAY-A

2.88

2.12766

30875250

KWEICHOW MOUTA-A

CHINA SHENHUA-A

20.84

0.7736944

15520104

LUZHOU LAOJIAO-A

CHINA SHIPBUIL-A

4.52

59982923

METALLURGICAL-A

2.07

1.470588

45542651

23.29

-3.32088

13296748

CHINA SOUTHERN-A

3.54

2.017291

32275685

NARI TECHNOLOG-A

CHINA STATE -A

3.85

3.217158

156800582

NINGBO PORT CO-A

2.47

0.8163265

14657277

CHINA UNITED-A

3.85

1.583113

195653934

OFFSHORE OIL-A

8.42

0.5973716

59172601

CHINA VANKE CO-A

12.36

4.745763

94178764

PETROCHINA CO-A

8.6

0.5847953

23197641

CHINA YANGTZE-A

7.56

0.8

20094518

PING AN BANK-A

PRICE DAY %

Volume

21.6

5.778648

78361711

PRICE DAY %

Volume

MOVERS 229

13 2650

INDEX 2644.359 HIGH

2644.36 2573.19

LOW

2573.19

52W (H) 2791.303

2570

(L) 2102.135

24-May

28-May

FTSE Taiwan 50 Index NAME

NAME

ACER INC

24.4

-0.204499

5287361

ADVANCED SEMICON

25.7

0.1949318

10811269

37.55

0.6702413

1672499

FUBON FINANCIAL

ASIA CEMENT CORP

NAME

PRICE DAY %

0.8522727

3735618

TAIWAN MOBILE CO

115

0.877193

FOXCONN TECHNOLO

-0.621118

2350896

TPK HOLDING CO L

611

1.3267

2686810

40.25 -0.4944376

13133527

TSMC

109.5

-2.232143

21430131

77 -0.3880983

19820907

UNI-PRESIDENT

59.7

-1.15894

4550204

UNITED MICROELEC

13.6

-1.805054

65083947

ASUSTEK COMPUTER

343 -0.5797101

1307417

HON HAI PRECISIO

AU OPTRONICS COR

13.8 -0.7194245

65598090

HOTAI MOTOR CO

303.5

6.866197

458306

CATCHER TECH

161

5400381

HTC CORP

282.5

1.073345

6513089

WISTRON CORP

CATHAY FINANCIAL

39.6 -0.1261034

12375044

HUA NAN FINANCIA

17.25 -0.5763689

4099041

YUANTA FINANCIAL

CHANG HWA BANK

17 -0.2932551

3690639

LARGAN PRECISION

1000

3.519669

2188719

YULON MOTOR CO

CHENG SHIN RUBBE

0.5405405

3687699

LITE-ON TECHNOLO

47.9

-1.440329

7366054

363

0.8333333

4479434

0.2087683

22278007

CHIMEI INNOLUX C

36831227

MEDIATEK INC

8.66 -0.5740528

26631976

MEGA FINANCIAL H

CHINA STEEL CORP

25.55 -0.5836576

10908751

NAN YA PLASTICS

62.5

-1.574803

5302601

CHINATRUST FINAN

18.5 -0.8042895

22831495

PRESIDENT CHAIN

184.5

-1.072386

856104

CHINA DEVELOPMEN

CHUNGHWA TELECOM COMPAL ELECTRON

Volume

FORMOSA PLASTIC

5745324

QUANTA COMPUTER

65.4 -0.1526718

5008934

18.85

1.344086

30049667

SILICONWARE PREC

35.35 -0.1412429

5287262

14.6 -0.3412969

5875686

DELTA ELECT INC

141

-1.74216

6132136

SINOPAC FINANCIA

FAR EASTERN NEW

31.5

-2.325581

6407830

SYNNEX TECH INTL

41.75

0.1199041

5756734

FAR EASTONE TELE

1.23119

4914840

TAIWAN CEMENT

39.3

2663026

FIRST FINANCIAL

18.2 -0.2739726

3379207

TAIWAN COOPERATI

17.2

0.5847953

7084568

FORMOSA CHEM & F

71.4

-0.41841

3068470

TAIWAN FERTILIZE

76.7

1.85923

3854424

FORMOSA PETROCHE

80.6 -0.4938272

650366

29.15 -0.1712329

854576

TAIWAN GLASS IND

MOVERS

30.6 -0.1631321 16.25

4621738

9932575

10347028

50.6 -0.1972387

1200845

5 5765

INDEX 5723.49 HIGH

5762.35

LOW

5680.42

52W (H) 5896.71 5680

(L) 4719.96 24-May

28-May

May 29, 2013

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

Max 39.6

average 39.308

Max 40.25

average 40.014

Min 38.5

62.0

20.2

39.3

61.7

20.1

39.0

61.4

20.0

38.7

61.1

19.9

38.4

Last 39.2

Min 39.75

39.6

Max 61.95

PRICE

0.414232608

BRENT CRUDE FUTR Jul13

103.39

GASOLINE RBOB FUT Jun13

284.36

GAS OIL FUT (ICE) Jul13 NATURAL GAS FUTR Jun13 HEATING OIL FUTR Jun13

Min 19.86

Last 19.96

23.65

40.00

21.10

23.50

39.85

20.85

23.35

Max 21.6

average 21.091

(H) 52W

Min 20.75

Last 21.55

(L) 52W

0.896478122

100.4000015

81.5

0.750341064

-3.74266828

115.9300003

96.04000092

0.162028883

-0.649849766

324.119997

235.9499931

869

1.075894155

-4.531722054

987.5

814

4.241

0.09440642

20.89509692

4.457000256

3.203999996

288.95

1.141096993

-3.926718979

323.8899946

258.589983

1379.75

-1.03

-17.1052

1796.08

1322.06

Silver Spot $/Oz

22.3251

-1.6299

-25.8549

35.365

20.3395

Platinum Spot $/Oz

1447.65

-0.7677

-4.6187

1742.8

1374.55

Palladium Spot $/Oz

731.75

-0.1419

4.5865

786.5

553.75

1840

-0.540540541

-11.23974916

2200.199951

1809 6762.25

LME ALUMINUM 3MO ($) LME COPPER 3MO ($) 3MO ($)

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

20.60

7299

-0.01369863

-7.968730299

8422

1855.5

-0.026939655

-10.79326923

2230

1745

14805

-0.903614458

-13.21805393

18920

14609 14.79500103

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

15.75

0.222717149

0.031756113

17.07500076

541.75

0.978564772

-9.670696123

665

512

WHEAT FUTURE(CBT) Jul13

695.75

-0.250896057

-12.34645669

900

664.75

SOYBEAN FUTURE Jul13

1484.5

0.558848434

6.3967031

1605.75

1225

COFFEE 'C' FUTURE Jul13

127.35

0.078585462

-14.8445336

202.1999969

126.7999954

NAME

16.55999947

ARISTOCRAT LEISU

69.94999695

CROWN LTD

Dec13

SUGAR #11 (WORLD) Jul13

16.99

COTTON NO.2 FUTR Jul13

82.38

0.890736342 1.092158547

-13.93110436 7.167945883

23.05999947 94.19999695

World Stock Markets - Indices

Max 23.7

average 23.493

Min 23.2

Last 23.4

23.20

15.09435

0.42

0.215

118500

-2.83806

6.74

2.8

49533

CHINA OVERSEAS

23.75

2.37069

2.813851

25.6

15.223

15653500

CHINESE ESTATES

13.74

0.4385965

13.27831

14.12

7.697

318500

CHOW TAI FOOK JE

9.91

1.536885

-20.33762

13.4

8.4

8812400

EMPEROR ENTERTAI

2.72

3.422053

43.91535

2.73

1.12

2080000

FUTURE BRIGHT

2.42

8.035714

99.66566

2.732

0.765

6804000

GALAXY ENTERTAIN

39.2

2.083333

29.1598

40.65

16.94

7789473

128.4

0.3125

8.171865

132.8

99.2

719535

29.2

3.180212

-12.18045

35.3

19.049

870900

0.4618938

7.011066

90.7

59.8

8131569

HUTCHISON TELE H

4.44

0.9090909

24.7191

4.66

2.98

1551550

LUK FOOK HLDGS I

20.7

0.2421308

-15.16393

30.05

14.7

551000

MELCO INTL DEVEL

17.4

3.571429

93.11875

18.18

5.12

4240000

3532.038

2726.68

FTSE 100 INDEX

6765.68

1.673194

14.71513

6875.62

5229.76

HANG SENG BK

DAX INDEX

8477.45

1.123066

11.36384

8557.86

5914.43

HOPEWELL HLDGS HSBC HLDGS PLC

4.8121

2791.303

2102.135

1270412

0.6920415

14.55964

1.722274

8.06

5.82

-0.007891503

2644.359

13.75

0.305

3459.144

20.24367

CENTURY LEGEND

CSI 300 INDEX

-0.2332815

511900

NASDAQ COMPOSITE INDEX

8238.96

4254605

12.83

4986483

(L) 52W

18056.4

VOLUME CRNCY

0.75

12035.08984

15942.6

2.29

20.85

15542.4

23944.74

(L) 52W

4.49

(H) 52W

37.67901

(H) 52W

28.57142

1.72

16.78065

1.179905

YTD %

0.7462687

-40

YTD %

1.1973

DAY %

4.05

14.73029

DAY %

1.049984

PRICE

2.439024

0.05622936

22924.25

0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9329 74.482 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

-0.3603604

15303.1

14311.98

(L) 52W

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

0.84

PRICE

(H) 52W

-6.8703 -6.7569 -5.5705 -2.1531 -15.6627 -0.1663 -0.1662 1.7773 -1.6937 1.8654 -3.5077 -3.0197 -2.2177 -0.6997 -9.4689 -3.4865 -4.6995 4.0124 2.0358 -13.8054 -0.0194

27.65

YTD %

0.1554 -0.3304 -0.8253 -0.3013 -1.195 -0.0063 -0.0013 -0.0114 -0.6569 -0.533 -0.5609 -0.2405 -0.6915 -0.6997 -1.3479 -0.5235 -0.0222 0.2747 0.3043 -0.8956 -0.0097

AMAX HOLDINGS LT

COUNTRY

HANG SENG INDEX

DAY %

0.9665 1.5083 0.9694 1.2906 102.09 7.9965 7.7635 6.1218 55.9425 30.02 1.2658 29.937 41.935 9862 98.67 1.2511 0.85563 7.9005 10.3203 131.76 1.0301

BOC HONG KONG HO CHEUK NANG HLDGS

NIKKEI 225

PRICE

Macau Related Stocks

DOW JONES INDUS. AVG

TAIWAN TAIEX INDEX

8263.05

-0.2059154

7.319304

8439.15

6857.35

MGM CHINA HOLDIN

19.96

50.32068

20.85

9.509

4030200

KOSPI INDEX

1986.22

0.3156613

-0.5423038

2042.48

1758.99

MIDLAND HOLDINGS

3.4

-0.8746356

-8.108109

3.25

1232000

S&P/ASX 200 INDEX

4970.652

0.2176474

6.919877

5249.6

3985

5176.235

1.791476

19.91221

5251.296

3635.283

FTSE Bursa Malaysia KLCI

1778.68

0.6536022

5.312774

1826.22

1544.63

NZX ALL INDEX

958.906

-0.1249862

8.712972

998.487

PHILIPPINES ALL SHARE IX

4377.97

0.1413609

18.35615

4571.4

JAKARTA COMPOSITE INDEX

19.8

21.35

Gold Spot $/Oz

NAME

average 19.972

40.15

YTD %

94.54

CORN FUTURE

Max 20.1

23.80

DAY %

WTI CRUDE FUTURE Jul13

LME ZINC

60.8

Currency Exchange Rates

NAME

METALS

Last 61.3

21.60

Commodities ENERGY

Min 61.05

40.30

39.70

Last 40.2

average 61.225

NEPTUNE GROUP

0.179

4.678363

17.76316

0.226

0.084

55605000

NEW WORLD DEV

13.26

0.7598784

10.31614

15.12

5658088

SANDS CHINA LTD

40.2

1.005025

18.40942

43.7

20.65

7470355

SHUN HO RESOURCE

1.5

7.142859

1.67

1.03

755.149

SHUN TAK HOLDING

4.09

1.488834

-2.386636

4.65

2.56

2183016

3279.09

SJM HOLDINGS LTD

21.55

4.61165

19.72222

22.7

12.34

8648560

SMARTONE TELECOM

13.72

-0.723589

-2.556818

17.38

12.5

331800

WYNN MACAU LTD

23.4

0.862069

11.69451

26.5

14.62

5009900

ASIA ENTERTAINME

4.37

2.34192

42.81046

5.18

2.4

250205

BALLY TECHNOLOGI

0.160973

25.25162

56.4

41.74

462231

HSBC Dragon 300 Index Singapor

647.75

0.21

4.29

STOCK EXCH OF THAI INDEX

1613.46

1.278011

15.9153

1649.77

1099.15

HO CHI MINH STOCK INDEX

516.33

0.7650124

24.79878

518.46

372.39

Laos Composite Index

1357.12

-0.744533

11.71827

1455.82

980.83

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

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 1806407

INTL GAME TECH

18.25

1.388889

28.79322

18.64

10.92

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

MELCO CROWN-ADR

23.2

-0.2579536

37.76722

25.15

9.13

3741479

MGM CHINA HOLDIN

2.6

40.54054

2.67

1.36

500

MGM RESORTS INTE

14.93

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

May 29, 2013

Opinion

Why Turkey is thriving

Jeffrey D. Sachs

Director of the Earth Institute at Columbia University and Special Adviser to the United Nations Secretary-General on the Millennium Development Goals

recent visit to Turkey reminded me of its enormous economic successes during the last decade. The economy has grown rapidly, inequality is declining, and innovation is on the rise. Turkey’s achievements are all the more remarkable when one considers its neighbourhood. Its neighbours to the west, Cyprus and Greece, are at the epicentre of the euro zone crisis. To the southeast is war-torn Syria, which has already disgorged almost 400,000 refugees into Turkey. To the east lie Iraq and Iran. And to the northeast lie Armenia and Georgia. If there is a more complicated neighbourhood in the world, it would be difficult to find it. Yet Turkey has made remarkable strides in the midst of regional upheavals. After a sharp downturn in 19992001, the economy grew by 5 percent per year on average from 2002 to 2012. It has remained at peace, despite regional wars. Its banks avoided the boombust cycle of the past decade, having learned from the banking collapse in 2000-2001. Inequality has been falling. And the government has won three consecutive general elections, each time with a greater share of the popular vote.

There is nothing flashy about Turkey’s rise, which has been based on fundamentals, rather than bubbles or resource discoveries. Indeed, Turkey lacks its neighbours’ oil and gas resources, but it compensates for this with the competitiveness of its industry and services. Tourism alone attracted more than 36 million visitors in 2012, making Turkey one of the world’s top destinations. Even a short stay in Ankara allows one to see these underlying strengths. The airport, highways, and other infrastructure are first class, and a highspeed intercity rail network links Ankara with other parts of the country. Much of the advanced engineering is homegrown. Turkish construction firms are internationally competitive and increasingly win bids throughout the Middle East and Africa.

Seizing opportunities Turkey’s universities are rising as well. Ankara has become a hub of higher education, attracting students from Africa and Asia. Many top programmes are in English, ensuring that Turkey will attract an increasing number of international students. And the country’s universities are increasingly spinning off high-

tech companies in avionics, information technology, and advanced electronics, among other areas. To its credit, Turkey has begun to invest heavily in sustainable technologies. The country is rich in wind, geothermal, and other renewable energy, and will most likely become a global exporter of advanced green innovations. Waste-treatment facilities are not typically tourist attractions, but Ankara’s novel integrated urban waste-management system has rightly attracted global attention. Until a few years ago, the waste was dumped into a fetid, stinking, noxious landfill. Now, with cutting-edge technology, the landfill has been turned into a green zone. The private waste-management company ITC receives thousands of tons of solid municipal waste each day. The waste is separated into recyclable materials (plastics, metals) and organic waste. The organic waste is processed in a fermentation plant, producing compost and methane, which is used to produce electricity in a 25-megawatt power plant. The electricity is returned to the city’s power grid, while the heat exhaust is piped to the facility’s greenhouses, which produce tomatoes, strawber-

ries, and orchids. Turkey’s diversified, innovative base of industry, construction, and services serves it well in a world in which market opportunities are shifting from the United States and Western Europe to Africa, Eastern Europe, the Middle East, and Asia. Turkey has been deft in seizing these new opportunities, with exports increasingly headed south and east to the emerging economies, rather than west to high-income markets. This trend will continue, as Africa and Asia become robust markets for Turkey’s construction firms, information technology, and green innovations.

Long-term goals So, how did Turkey do it? Most important, Prime Minister Recep Tayyip Erdoğan and his economics team, led by Deputy Prime Minister Ali Babacan, have stuck to basics and looked to the long term. Erdoğan came to power in 2003, after years of short-term instability and banking crises. The International Monetary Fund had been called in for an emergency rescue. Step by step, the Erdoğan-Babacan strategy was to rebuild the banking sector, get the budget under control, and invest

heavily and consistently where it counts: infrastructure, education, health, and technology. Smart diplomacy has also helped. Turkey has remained a staunchly moderate voice in a region of extremes. It has kept an open door and balanced diplomacy (to the extent possible) with the major powers in its neighbourhood. This has helped Turkey not only to maintain its own internal balance, but also to win markets and keep friends without the heavy baggage and risks of divisive geopolitics. No doubt, Turkey’s ability to continue on a rapid growth trajectory remains uncertain. Any combination of crises – the euro zone, Syria, Iraq, Iran, or world oil prices – could create instability. Another global financial crisis could disrupt short-term capital inflows. A dangerous neighbourhood means inescapable risks, though Turkey has demonstrated a remarkable capacity during the last decade to surmount them. Moreover, the challenge of raising educational quality and attainment, especially of girls and women, remains a priority. Fortunately, the government has clearly acknowledged the education challenge and is pursuing it through school reforms, increased investments, and the introduction of new information technologies in the classroom.

Turkey’s successes have deep roots in governmental capacity and its people’s skills, reflecting decades of investment…

Turkey’s successes have deep roots in governmental capacity and its people’s skills, reflecting decades of investment and centuries of history dating back to Ottoman times. Other countries cannot simply copy these achievements; but they can still learn the main lesson that is too often forgotten in a world of “stimulus,” bubbles, and short-term thinking. Long-term growth stems from prudent monetary and fiscal policies, the political will to regulate banks, and a combination of bold public and private investments in infrastructure, skills, and cutting-edge technologies. © Project Syndicate

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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May 29, 2013

Opinion Business

wires

Europe’s troika should grow up

Leading reports from Asia’s best business newspapers

Korea Herald

Jean Pisani-Ferry

Professor of Economics at Université Paris-Dauphine and currently serves as Director of Economic Policy Planning for the Prime Minister of France

South Korea’s top financial supervisor has pledged to reduce inconveniences experienced by foreign financial services firms operating in the country. “We plan to simplify business licensing procedures, which would shorten the period between foreign firms’ application for opening branches and regulators’ endorsement,” said Financial Supervisory Service Governor Choi Soo-hyun. For enhanced communication, the top regulator also said he would hold a periodical “meeting with foreign CEOs twice a year”.

China Daily Environmentalexpertsarecalling for a newly amended version of the nation’s Atmospheric Pollution Prevention Act to have greater teeth to curb serious atmospheric pollution. Chai Fahe, vice-president of the Chinese Research Academy of Environmental Sciences, called for the revision of the law to be accelerated as this would help to reduce the thick haze in many urban areas. “It is very possible the amended law will come out by the end of the year,” Mr Chai said at a sustainable energy forum in Beijing on Monday.

Jakarta Post The number of individual investors involved in trading activities in the Indonesian Stock Exchange (IDX) remains low despite the rapid growth of the market in past years. Data from the Indonesian Central Securities Depository shows that the total investment in the country’s equity market rose by 20.7 percent to 2,524 trillion rupiah (US$258.39 billion) in 2012. Foreign investors made up more than half of the figure. Meanwhile, the contribution from domestic investors surged 24 percent to 1,040 trillion rupiah, but with only 13.5 percent of this figure, coming from retail or individual investors.

Straits Times Singapore’s financially vulnerable casino patrons will have a cap imposed on the number of times they can enter the casino each month, starting Saturday. The cap will differ from person to person as it depends on the individual’s circumstances. Factors such as frequency and number of casino visits, credit record, work situation and information provided by family members will be taken into consideration. Individuals or family members may voluntarily apply to limit the number of casino visits a person can make a month or a committee from the National Council on Problem Gambling may impose it upon an individual.

n early 2010, a group of men (and a few women) in dark suits landed in Athens. They belonged to a global institution, the International Monetary Fund, and to a pair of regional ones, the European Commission and the European Central Bank. Their mission was to negotiate the terms and conditions of a financial bailout of Greece. A few months later, what became known as the “troika” was dispatched to Ireland, then to Portugal, and later to Cyprus. This endeavour was bound to have wide implications. The troika negotiated what ended up being the largest financial assistance packages ever: loans to Greece from the IMF and European partners are set to reach 240 billion euros (US$310 billion), or 130 percent of the country’s 2013 GDP – far more in both absolute and relative terms than any country has ever received. Loans to Ireland (85 billion euros) and Portugal (78 billion euros) are also significantly bigger than those usually provided by the IMF. Moreover, cooperation between the three institutions is unprecedented. Back in 19971998, during the Asian crisis, the G-7 flatly rejected Japan’s proposal for an Asian Monetary Fund. Now the IMF has even accepted a minority-lender role, with the bulk of assistance coming from the European Stability Mechanism (ESM), a new institution often viewed as an embryonic European Monetary Fund. It is frequently argued that the size of the assistance packages is a testament to Europe’s clout within the IMF. Perhaps, but the packages are, first and foremost, a consequence of the constraints to which Europeans were (and still are) subject.

Mixed results Economic adjustment is necessarily slower within a monetary union than it is

for countries with their own currency, because, even for very flexible economies, prices change more slowly than the exchange rate. Delivering the same result therefore takes more time, and requires keeping countries in intensive care for longer – and at higher cost.

Three years later, the results are mixed at best. Unemployment has increased much more than anticipated and social hardship is unmistakable

Three years later, the results are mixed at best. Unemployment has increased much more than anticipated and social hardship is unmistakable. There is one bright spot: Ireland, which is set to recover from an exceptionally severe financial crisis. But there is also a dark spot: Greece, where GDP has shrunk by 20 percent since 2009 and where the public debt/GDP ratio is now higher than anticipated at the launch of the programme, despite the debt reduction negotiated with private creditors in February 2012. This is not because of a lack of fiscal consolidation. On the contrary, the Greek authorities have done more than planned on this front. But the collapse of GDP has necessarily implied a rising debt ratio, driving the country into a recessionary spiral as economic contraction forces further spending cuts.

Could the troika have done better? It was not responsible for existing monetary conditions – a currency union with a central bank focused on price stability. But European officials’ hesitant response to the crisis added to the difficulty. Prolonged controversies over the terms and conditions of assistance and the absurdly high interest rate initially set on official loans exacted a heavy toll on countries already under stress.

Troika mistakes Furthermore, the troika made three mistakes. First, Greek debt reduction was postponed for too long. Once it became clear that the burden was unbearable, debt should have been cut expeditiously. Too many creditors were reimbursed at par on their maturing claims. Second, the troika based its programmes on overly optimistic assumptions. It misjudged the consequences of fiscal consolidation and credit constraints, underestimating the contraction of employment and overestimating exports and privatisation receipts. Finally, not unlike what happened during the Asian crisis in the late 1990’s, the troika took country cases one by one. As a result, it did

not pay enough attention to cross-country spillovers and deteriorating conditions in the wider euro zone. Should the troika survive? Its three participating institutions have different mandates and different roles. It was perhaps inevitable that initially they worked jointly; but there is reason to question such an approach now. Operationally and financially, the IMF has become much more involved in Europe than its global shareholders deem sustainable. It should become a catalytic lender whose participation in euro zone programmes remains desirable but not indispensable – giving it the possibility to disagree and walk away. The ECB is in an odd position as well, but for different reasons. As the euro zone’s central bank, rather than a lending institution, it does not have a clear role in negotiations on behalf of creditors. If it remains in the troika, its participation should be mostly silent. Finally, Europe should transform the ESM into a European Monetary Fund capable of providing policy assessment and advice, as well as financial assistance – possibly drawing on European Commission staff. Beyond European specifics, the troika experiment answers a question of major importance to other parts of the world: Can the IMF cooperate with regional institutions? The answer is yes – but not easily. The troika has proved functional, and Europe would have been at pains to provide conditional assistance to euro zone countries without the IMF’s participation and support. But cooperation has proved to be difficult, if only because each participating institution has rules and constraints that are not easy to reconcile with the others’. * This column draws on a Bruegel report co-authored with André Sapir and Guntram Wolff. © Project Syndicate

May 29, 2013

Closing Australia ranked ‘happiest’ nation

U.K. banks cut 189,000 jobs

Australia is the world’s happiest nation based on criteria including income, jobs, housing and health, the Organization for Economic Cooperation and Development said. Australia led Sweden and Canada, the Paris-based group’s Better Life Index showed, when each of 11 categories surveyed in 36 nations is given equal weight. Norway and Switzerland also made it to the top five. More than 73 percent of people aged 15 to 64 in Australia have a paid job, above the OECD average of 66 percent, while life expectancy at birth in Australia is almost 82 years, the survey showed.

Britain’s four biggest banks will have eliminated about 189,000 jobs by the end of this year from their peak staffing levels, bringing employment to a nine-year low. Royal Bank of Scotland Group Plc, HSBC Holdings Plc, Lloyds Banking Group Plc and Barclays Plc will employ about 606,000 people worldwide by the end of 2013, according to data compiled by Bloomberg. That’s 24 percent below the peak of 795,000 in 2008 and the least since 2004. The firms are under pressure from investors to reduce fixed costs. The four firms posted 108 billion pounds (US$164 billion) of revenue for 2012.

Blow to EU action against China U.K. and Germany oppose solar duties

Karel De Gucht’s proposed tariffs opposed by half of EU members

ermany and the United Kingdom are among at least 14 European Union members opposed to punitive tariffs on Chinese solar panel imports, according to diplomats. The revelation shows a split among the EU bloc’s 27 members. T he Eur opean C ommission argues that Chinese firms are unfairly undercutting rivals and plans to impose duties, making it far harder for China to gain market share. It claimed China was pressuring members to oppose the duties, a day after German Chancellor

N Korea to let Kaesong managers in N

orth Korea said yesterday it would allow South Korean businessmen to visit their plants in a shuttered joint economic zone, but declined Seoul’s offer of official workinglevel talks on the complex. The Committee for the Peaceful Reunification of Korea (CPRK), which handles ties with the South, said it had approved a trip by Seoul businessmen to the Kaesong industrial complex and would guarantee their safety. Operations at Kaesong ground to a halt after the North pulled all its workers out in early April amid

Angela Merkel hinted in favour of a negotiated agreement. The survey undermines efforts by Brussels to pressure Beijing over its trade practices. The duties, averaging 47 percent, will come into force from June 6 for a trial period and could be withdrawn if both sides reach a negotiated settlement. It is the largest trade case the Commission has undertaken, with about 21 billion euros (US$27 billion) of China-made solar panels sold in the EU. The EU’s trade commissioner, Belgian lawyer Karel

soaring military tensions with Seoul. The South withdrew its managers and officials soon afterwards, but many asked to return to check up on their machinery, as well as stocks of raw materials and finished goods they were forced to leave behind. Seoul insists Pyongyang must first agree to working-level talks on the assets of the South Korean firms and other issues. The CPRK statement argued that such discussions could be held with the businessmen when they arrive. “The South [does] not need to worry about their safety,” the statement said. “If they still do not feel reassured, they may send with them members of the Committee for Operating the Kaesong Industrial Zone,” it said, referring to Seoul’s state body that oversees the complex. A spokeswoman for Seoul’s Unification Ministry which handles North Korea affairs repeated the condition of holding working-level talks first. Established in 2004 as a

De Gucht, is proposing the duties. He met China’s vice-minister of commerce Zhong Shan for informal talks on Monday. The Chinese side described the meetings as “constructive” and said the pair discussed solar duties as well as an EU threat to open an investigation into mobile telecom equipment makers Huawei Technologies Co Ltd and ZTE Corp.

‘Not acceptable’ But Mr Zhong said that either EU move would lead to a definitive

Chinese response. “Such practices of trade protectionism are not acceptable to China,” a spokeswoman for the Chinese mission to the European Union said in a statement, and would “seriously sour the climate on bilateral trade and economic engagement.” “The Chinese government would not sit on the sidelines, but would rather take necessary steps to defend its national interest,” if the EU went ahead, the statement said. The fear of Chinese reprisal and potential loss of business has led Germany, Britain and the Netherlands to be among at least 14 member states to oppose the sanctions, diplomats told Reuters. France and Italy are leading a group of countries that say Mr De Gucht is right to go ahead with sanctions, arguing that China’s rapid rise in solar panel output to more than the world’s entire demand could not have happened without illegal state support. Chinese companies have captured more than 80 percent of the European market from almost zero a few years ago. “Commissioner De Gucht… made it very clear to the Vice-Minister that he was aware of the pressure being exerted by China on a number of EU member states, which explains why they are positioning themselves as they are in their advisory positions towards the European Commission,” the Commission said in a statement. Provisional duties will more than likely still go ahead on June 6, once they are published in the European Union’s official journal, officials say, but the pressure to roll them back before they become permanent in December will be intense. Reuters

Kaesong was one of the last remaining symbols of inter-Korean cooperation

rare symbol of inter-Korean cooperation, the Kaesong joint industrial zone was the most highprofile casualty of two months of elevated tensions that followed the North’s nuclear test in February. Some 123 South Korean

companies have factories inside the Kaesong Industrial Complex, which lies just across the border inside North Korea. The firms employ some 53,000 North Koreans and the zone is a key revenue earner for the North. AFP