Macau Business Daily, May 31, 2013 by Business Daily

Art for artists’ sake:1 Art Macao show, Cotai

Year II

Number 295

Friday May 31, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

Demand not subsidy, is the way to build a commercial market in painting and sculpture, says a joint curator of the Art Macao show that runs at CotaiExpo in The Venetian Macao until Sunday. Nearly a thousand artworks valued at hundreds of millions of patacas, are on display at the event.

Gaming tax to rise: Macquarie

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acau’s effective gaming tax rate is likely to rise beyond its present level of 39 percent when the current concessions and sub-concessions expire in 2020 and 2022 – with consequences for investor returns – suggests a report from Macquarie Equities Research in Hong Kong. They cite as evidence the fact that since 1976 tax on casino gambling in the city has steadily risen, but by a relatively modest 28.2 percentage points. In the period from 2005 to 2012, gaming revenue rose 560 percent. “Either regional competition will lower the rate of return, or the government will lower it via specific means. In either case, it is unreasonable to think that the current rates of return can continue into perpetuity,” say the report authors.

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Gaming speeds up GDP growth in Q1

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Gross domestic product was 10.8 percent bigger in the first quarter of this year than a year earlier, official data show. This was the fastest annual rate of economic growth for four quarters. Economic growth was driven by an annual rise of 8.5 percent in exports of services, notably gaming services, the Statistics and Census Service announced yesterday. The amount of money visitors bet in casinos rose by 8.9 percent as expansion of the gaming business picked up. Gambling revenue grew by 14.8 percent in the first quarter. Government capital spending on construction also helped propel economic growth.

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Govt pledges bus contract changes The bus service contract launched two years ago expires in 2018. But the government says it will not wait to launch a review of the contract terms. After a Commission of Audit report mentioned flaws in bus runs, the Transport Bureau pledged to tighten up supervision and launch a probe to check if any criminal action took place.

Pachinko company eyes market here Pachinko arcade operator Dynam Japan Holdings Co Ltd says it is looking for business opportunities in Macau’s gaming mass market – opportunities that it would take in cooperation with a casino operator here. Other pachinko firms have looked at involvement in Macau casino operations as a possible dry run prior to bidding for a Japanese casino licence – if that country’s government introduces liberalising legislation. Page 5

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May 31, 2013

Macau

Gaming tax likely to rise after concession expiry: Macquarie Equities research house says Macau has history of increasing its cut of gambling revenue Michael Grimes

michael.grimes@macaubusinessdaily.com

Raking it in – Macau got 83 pct of its government income from gaming tax last year

acau’s effective gaming tax rate is likely to rise beyond its present level of 39 percent when the current concessions and sub-concessions expire in 2020 and 2022, suggests a report from Macquarie Equities Research in Hong Kong. That could have implications for rates of return on capital investment for nine new multibillion U.S. dollar properties due to open on Macau’s land reclamation area Cotai between 2015 and 2018, believe the authors. They argue that at least some of the nine are likely to have payback periods extending beyond the life of the current gaming permissions. SJM Cotai in particular looks as though it will fall into that category. The projected opening date of the 20 billion patacas (US$2.5 billion) property is “between 2016 and 2017” said SJM Holdings Ltd’s chief executive Ambrose So Shu Fai earlier this month. The gaming concession of Sociedade de Jogos de Macau SA, founded by former monopolist Stanley Ho Hung Sun – and thus the related MGM China Holdings Ltd sub-concession – expires in 2020, two years earlier than the other concessionaires and subconcessionaires in the market. Galaxy Macau phases three and four, with a price tag of HK$60 billion, is due to open in “2016 through to 2018” said Bob Drake, chief financial officer of Galaxy Entertainment Group Ltd speaking at Global Gaming Expo Asia 2013 last week. Galaxy Macau phase one – a HK$16.5 billion project – achieved a return on investment of 42 percent in the latest 12 months, said Galaxy in its first quarter 2013 earnings

statement on May 15. Some analysts are bearish on the prospects of the new Cotai projects achieving those kinds of returns, especially if there is any slippage – linked to labour shortages – in the construction timetables.

KEY POINTS Macau’s current effective gaming tax rate 39 pct Concessions/subconcessions expire in 2020/2022 City may up tax upon renewal: Macquarie Alternatively one-off premium for renewal: industry source

“The Macau government has had a long history of increasing fees and upping taxes after the expiry of each concession contract,” states the report ‘Macau Gaming – Macau’s operators…now in 3D!’ by Gary Pinge, Macquarie’s head of consumer and gaming research Asia, and his colleague Roger Tse. Direct tax from gambling at 35 percent of the gross is the main

source of the government’s income, bringing in 83 percent of the 129.50 billion patacas in public revenue recorded last year. But the Macquarie analysts say the government might come back for an even bigger cut after 2020. “…the legislation specifically stipulates that the concessions must be renegotiated,” prior to or at the point of expiry, point out the authors, citing previous examples of how that has worked in practice. “In 1962, STDM [Sociedade de Turismo e Diversões de Macau SA, predecessor to SJM] agreed to pay a set casino tax base of three million patacas. Then this increased to 10.8 percent of gross casino revenues in 1976 and 25 percent in 1982. After, from 1986 onwards, the tax increased by one percent[age point] every year until it reached 30 percent,” say the analysts. “Finally before the liberalisation of the casino industry, the tax rate reached 31.8 percent in 1997. Between 1976 and 2012, the direct casino tax percentage increased by 24.2 percent to its current 35 percent. In addition to the direct tax, concessionaires also pay a social contribution tax and licence premiums which add up to around four percent, making the effective tax rate 39 percent,” they add.

‘Captive’ operators “What will be the rate of return of the concessionaires in 2020/2022?” ask the report authors, before offering an answer. “Either one of two things could happen. Either regional competition will lower the rate of return, or the government will lower it via specific means. In either case, it is unreasonable to think that the current rates of return can continue

into perpetuity,” they add. “Considering Macau’s history with concessions, we believe the government will likely increase taxes again when the concession terms end in 2020-2022. “We expect they will increase both the direct tax rate and contributions to other social funds. Even if the concessionaires object, the bargaining power rests with the government as it can easily tender the concessions to many eager competitors that have been vying for a spot in Macau for decades,” argues Macquarie.

Wiggle room The research unit says that although Macau’s casino gambling tax rates are high compared with other regional jurisdictions, New York City’s gaming taxes are two times higher. A senior industry source told Business Daily: “There’s been talk for some time that the government might raise the gaming tax rate at the end of the current concessions. I’m not sure about that because they are doing very well as it is from the current rate. What’s of more concern to me is whether they might charge an extra premium for renewal of the licences.” Manuel Joaquim das Neves, director of local regulator the Gaming Inspection and Coordination Bureau told our sister publication Macau Business magazine in March last year it would be “hard” for new operators to enter the market at the end of the current permits, but didn’t expand on the reasons. Asked whether the existing licensees and sub-licensees were likely to have their permissions renewed, Mr Neves replied: “It’s expected”.

May 31, 2013

Macau KEY POINTS Spending by visitors on gambling rises by 8.9 pct Private consumption rises by 10.2 pct Govt spending on capital equipment rises by 71.5 pct Private spending on construction rises by 24.2 pct

Government capital spending on new public housing helped propel economic growth

Gaming speeds up GDP growth in Q1 First-quarter economic growth was faster than forecasts for the whole year suggested Vítor Quintã

vitorquinta@macaubusinessdaily.com

ross domestic product was 10.8 percent bigger in the first quarter of this year than a year earlier, official data show. This was the fastest annual rate of economic growth for four quarters. Economic growth was driven

by an annual rise of 8.5 percent in exports of services, notably gaming services, the Statistics and Census Service announced yesterday. The amount of money visitors bet in casinos rose by 8.9 percent as growth in the gaming

business picked up. Gaming revenue grew by 14.8 percent in the first quarter, according to the Gaming Inspection and Coordination Bureau, growth having slowed in the second half of last year. The Statistics and Census Service said spending by residents had risen by 10.2 percent. “The job market stayed robust as total employment and working income rose simultaneously,” it said. The unemployment rate remained at 1.9 percent, the third-lowest in the world, in the first quarter. The median wage had risen to 12,000 patacas (US$1,500) by the end of March, 1,000 patacas more than a year earlier. Government capital spending on big infrastructure projects helped boost economic growth. Construction of the University of Macau’s campus on Hengqin Island, the Light Rapid Transit elevated railway and public housing were “in full swing” in the first quarter, the

Statistics and Census Service said. Government spending on construction rose by 40.4 percent and government spending on capital equipment rose by 71.5 percent. Private spending on construction rose by 24.2 percent as work on several casino resorts in Cotai gathered momentum. But private spending on capital equipment fell by more than one-quarter. The first-quarter economic growth rate was higher than suggested by most forecasts of economic growth for the whole year. In March the chairman of the Macao Association of Economic Sciences, Joey Lao Chi Ngai, forecast growth of between 5 percent and 8 percent this year. In January the Monetary Authority of Macau forecast “low single-digit” growth this year. In December the head of asset and liability management of the Macau branch of Bank of China Ltd, Wei Qiang, forecast growth of 7 percent to 8 percent for 2013. The highest forecast of growth this year is 14.3 percent, made by the Economist Intelligence Unit in January.

Manufacturing staff ends 7-year slump Working force up for the first time since 2006 thanks to food products Vítor Quintã

vitorquinta@macaubusinessdaily.com

fter losing two-thirds of its working force in the past seven years, the manufacturing sector experienced a slight rebound in the last two quarters, official data show. The manufacturing industry hired 119 people in the October-March period, taking its total staff to 11,193, the Statistics and Census Service announced yesterday. It was the first time since early 2006 – when the sector had 31,850 workers – that the number of manufacturing employees increased. In seven years the sector lost almost 20,800 jobs. Manufacturing used to be the dominant industry in Macau but the end of the World Trade

Organisation quota system in 2005 doomed it, particularly the textile and clothing sector. In fact, Macau clothing makers lost a further 360 jobs in the past two quarters, taking its total staff to just 3,400. This sector had almost 450 vacancies but it does not help that companies pays less than half the citywide average of 12,000 patacas (US$1,500). Unskilled female residents make an average of just 1,990 patacas per month – less than half of what unskilled male residents earn, 4,400 patacas. On the contrary, makers of food products now employ 3,541 people after hiring 368 more workers in that

Macau clothing makers lost a further 360 jobs in the past two quarters

same half-year period. The figure could be even higher as there were 515 job vacancies. It is the first time since the statistics bureau began colleting data on manufacturing staff in 2000 that food product makers employ more people than clothing factories. There were 1,260 vacancies in the manufacturing industry at the end of March, a staggering 11 percent of all job positions. Only half of those required working experience. But restaurants are the ones having a hardest time retaining their staff or hiring new people, even after

hiring a stunning 1,255 workers in the past year. They had the highest employee turnover rate, 6.9 percent, last quarter and 9.5 percent of their positions were vacant. “Most of the vacancies are not filled and the turnover of employees is prevalent,” the statistics bureau wrote. At the end of March there were 6,800 unemployed in Macau or 1.9 percent of the population, official data show. But hotels, restaurants and manufacturing alone had 5,453 vacancies.

May 31, 2013

Macau

LVS to pay Suen US$101.6 mln: judgment

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Slow moving Visitors from different origins often display markedly different spending patterns when they visit the region. Among Asians, which represent the vast majority of total visitors, some patterns are very clear. Visitors from the mainland are by far the biggest spenders. Visitors from Hong Kong, often on a short trip, are those who spend the less. But all Asian visitors are spending today more than they did three years ago. Comparing the figures for the first quarters of 2010 and the current year, the slowest growth was shown by Hong Kong, with just about 6 percent, while China’s expenditure rose by 42 percent. But the top spot in growth goes to Taiwan. Spending at the end of the period observed was 2.5 times bigger than at the beginning. However, caution is needed here. As direct flight between the mainland and Taiwan started, many transit passengers stopped using Macau. Those were shortterm visitors that spent very little. The rise in Taiwanese visitors expenditure is mainly the result of that change in the nature of the visitors.

as Vegas Sands Corp was ordered to pay US$101.6 million (812.5 million patacas) to Hong Kong businessman Richard Suen for his help in obtaining a Macau casino licence more than a decade ago. Nevada District Court Judge Rob Bare in Las Vegas on Wednesday U.S. time issued a judgment that added US$31.6 million in interest to the US$70 million in damages the jury awarded Mr Suen on May 14. Mr Suen has prevailed twice at trial on claims that meetings he helped arrange for Sheldon Adelson, Las Vegas Sands’ founder and controlling shareholder, with Chinese leaders in Beijing were instrumental in the selection of the gaming operator by the Macau government in 2002 as one of the companies that could own and operate casinos here. The US$70 million award was nearly US$10 million more than the US$43.8 million plus interest the first jury gave Mr Suen in 2008. The Nevada Supreme Court overturned that verdict on technical grounds in 2010 after an appeal by LVS. And there is no indication Mr Suen will get the money from his latest courtroom win any time soon. “We believe there are compelling and sufficient grounds on which to appeal this verdict and we will do so aggressively,” Ron Reese, a spokesman for the casino company,

Richard Suen to be paid US$101.6 mln for its ‘helping hand’

said in an e-mailed statement. John O’Malley, one of Mr Suen’s lawyers, said after the verdict he believed the latest decision would survive any appeal. Mr Adelson testified that Mr Suen, a friend of his younger brother Lenny Adelson, contributed nothing to helping the company getting a concession. LVs argued that the Macau government made its decisions independent of the central government in Beijing, which is legally prohibited from intervening in the city’s internal affairs.

LVS’s 2012 annual report shows that last year Macau – where LVS now has four casino resorts – accounted for 53 percent of the company’s US$3.79 billion global adjusted property earnings before interest, taxation, depreciation and amortisation. Sands China Ltd, the company’s Hong Kong-listed unit, on May 2 reported first-quarter net income of US$452.9 million, a 63 percent increase from a year earlier, as it drew a record number of visitors. T.A. with Bloomberg News

Macau Legend IPO to fund Fisherman’s Wharf revamp If we deflate the figures using the tourist price index, a different picture appears. The overall rise drops to just 5 percent. Expenditure levels for Chinese visitors, in constant prices, are below what hey were in the second half of 2010. They declined neatly afterwards and have not fully recovered since then. A similar pattern is followed in the case of the Japanese tourists’ expenses. Spending from Hong Kong and the SouthEast Asian countries seems to be following a slow but steady downward trend. The only country with rising expenditure is Taiwan, with the caveats mentioned earlier. Once the flows of Taiwanese passengers stabilise the growth rate is also likely to subside. J.I.D.

150 %

rise in Taiwanese visitors expenditure, 2010Q1-2013Q1

David Chow confirms June 27 initial public listing of casino developer Vítor Quintã

vitorquinta@macaubusinessdaily.com

ll the proceeds from the Hong Kong initial public offering (IPO) of casino developer Macau Legend Development Ltd will go towards financing the redevelopment of the Fisherman’s Wharf theme park, chief executive David Chow Kam Fai said. Quoted b y th e P o r tu g u es elanguage newspaper Tribuna de Macau, the local businessman confirmed that it plans to price the initial public offering on June 21, with listing scheduled for June 27. According to a term sheet seen by Reuters, Macau Legend aims to secure US$600 million (4.8 billion patacas).

The operation consists of 100 percent primary shares and would value the business at US$2.4 billion. CLSA Asia-Pacific Markets is the sole sponsor for the offer. Mr Chow declined to disclose any estimates for the offering proceeds, saying: “We still need to have internal meetings to discuss the share price”. Last August Mr Chow announced a HK$5 billion redevelopment of his Fisherman’s Wharf waterfront site on Macau peninsula. He said that “60 percent” of the new attractions on the rejigged Fisherman’s Wharf site would be ready by 2015 and the remainder by the following year.

In August Macau Legend also said it would sell 4 percent of its stock to a subsidiary of Stanley Ho Hung Sun’s SJM Holdings Ltd for HK$480 million. SJM’s investment will leave Mr Chow and his mother, Lam Fong Ngo, with 58.3 percent of the company. Mr Chow’s existing casinos – including Babylon Casino at Fisherman’s Wharf – operate under a service agreement with SJM’s subsidiary Sociedade de Jogos de Macau SA. Some of the proceeds from the initial public offering are likely to go on a second casino at Fisherman’s Wharf, Business Daily has been told.

May 31, 2013

Macau

Pachinko company eyes market here Japan’s Dynam intends to expand overseas, particularly in Macau Stephanie Lai

sw.lai@macaubusinessdaily.com

achinko arcade operator Dynam Japan Holdings Co Ltd says it is looking for business opportunities in Macau’s gaming mass market – opportunities that it would take in cooperation with a casino operator here. “We are in talks on cooperation terms with Macau gaming companies, but do not have any actual agenda at the moment,” Dynam chairman Yoji Sato said during an earnings

We are in talks on cooperation terms with Macau gaming companies Yoji Sato, Dynam chairman

presentation yesterday. Dynam, a Japanese company listed in Hong Kong, is also seeking to change its charter, allowing it to get into restaurants, manufacturing, selling coffee and lending to companies in Japan and overseas. But it will still concentrate on pachinko arcades. Pachinko machines are a cross between slot machines and pinball machines, and something of a national institution in Japan. Dynam has 362 pachinko arcades in Japan and has plans to increase its share of the market there by adding 85 gaming arcades this year and next. Mr Sato said his company’s target is to increase its market share to 10 percent within a decade, which would mean it having 1,000 arcades in Japan by then. Dynam made a net profit of 20.9 billion yen (1.66 billion patacas) in the year ended on March 31, 31.6 percent more than the year before. But its revenue fell by 0.7 percent to 163.9 billion yen. The drop reflected the stagnation of the Japanese economy and a drop in domestic spending, the company’s annual report says. Because Japan remains in a slump,

Dynam has 362 pachinko arcades in Japan

Dynam is looking elsewhere for opportunities to grow. “We will expand the business overseas,” Mr Sato said. Hong Kong news media quoted unidentified sources as saying Dynam meant to expand in Southeast Asia, mainland China and Macau. Another pachinko company, Maruhan Corp, recently sold a stake in the Ponte 16 casino resort in Macau. Mr Sato said his company was also

MIN

interested in developing casinos in Japan, should they ever be allowed. He said the Japanese diet would begin deliberations on a gaming bill in the autumn. If casinos were to be allowed in Japan, Dynam would seek partnerships with Macau companies to develop them, he said. Mr Sato said his company would also pay close attention to the potential for development of the lottery market in mainland China.

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May 31, 2013 April 19, 2013

Macau

Art for artists’ sake

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Demand not subsidy, the way to build commercial market Financial Monitor in painting and sculpture says joint curator of Art Macao Michael Grimes

michael.grimes@macaubusinessdaily.com

Building pressure Fast rising housing prices are a major source of concern. As the market took off, the government acted to “cool” the market, mostly by restricting loans. Young families are among the hardest hit. High prices and credit restrictions have put all but the smallest down payment and monthly repayments beyond most. The policy seems to be failing in its primary aim of making housing more affordable, specially for the younger generations. The graph below plots the average price per square metre for homes in Macau and its three main geographic areas: the peninsula, Taipa and Coloane.

At the beginning of 2010, the prices differences between them were not remarkable. Coloane was the cheapest , but price was just 4 percent less than the global average. The Macau peninsula and Taipa both follow a similar pattern and follow closely the average home price evolution. Prices have increased at slightly less than the average rate, which has almost tripled in the past three years. Coloane is a different case. Prices more than doubled suddenly in the second quarter of 2010 and have increased steadily since. In the first quarter of this year, prices were about four times higher than in the first quarter of 2010, implying an average annual rate of growth of close to 60 percent. These trends do not appear to be headed for a reversal and the government’s policy seems to have had barely any impact on the rate of growth.

ith ‘economic diversification’ currently a buzz phrase in Macau political circles, it’s become fashionable to support any business activity that isn’t linked directly with casino gambling. But if new ways of earning a living in the city are to have any long-term chance of flourishing, they need to be based on commercial imperatives, not subsidies, suggests Beijing-based artist Gary Mok Wai Hong. Mr Mok – originally from Hong Kong – is the curator of the Macao Artists Thematic Exhibition at the first Art Macao show. “Being able to live on your own income as an artist is much better than having constant sponsorship from government – even if the government likes to do that,” Mr Mok told Business Daily. The show – also including works from South Korea and Japan – is being held from today until Sunday at CotaiExpo in the The Venetian Macao. It’s part public exhibition, part sales event, and has been jointly organised by Long Hei Group (Macao) Investment Co. Ltd and the Macao Creative Industry Association, with The Venetian Macao as the venue sponsor. The Macau section of

the exhibition includes 16 of the city’s artists ranging in age from 28 to 76. “The purpose of an art ‘fair’ is first of all commercial. It’s about building up the art market of Macau,” Mr Mok explained. “This is a rich city if we compare it to some other places in Asia, but it’s never had a proper commercial market for art. I know some Macau residents that like to collect art, and they have to fly to different cities to find it. At this event art dealers, galleries, artists are coming from all over the world both to look at art produced here, and to exhibit works from their markets,” he added. He thinks that Macau’s position as a special administrative region of China – on the doorstep of a huge potential market of art collectors, and its low-tax economy, can help the city develop as the centre of a regional trade in art – but it might take a decade to achieve.

Low tax “Macau will be an international art market in time. Not this year, not in the next five years, but perhaps in ten years. Before that can happen we need to build up the local market,” he states.

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

299.5 %

Rise in the average cost of housing in Coloane, 2010Q1-2013Q1

Gary Mok, curator of the Macao Artists Thematic Exhibition

“We’re not building an art market merely for speculative investment in art. In China there’s quite a bit of speculative investment in art. In Macau I think it can be healthier as a market because the tax burden is low. We don’t have art tax, we don’t have import or export tax for art. That makes it commercially a good base for the business of art,” he suggests. Exhibits at Art Macao include early works by Wang Guangyi – a Harbin-born painter – valued at US$600,000 (4.8 million patacas) each. Mr Wang is best known for his ‘Great Criticism’ paintings juxtaposing Western brand logos with poster images from China’s Cultural Revolution. Nearly a thousand pieces – including sculpture – from more than 50 galleries and institutions around the world, and valued at hundreds of millions of patacas, are on display at the event. Tim Merrill, vice president of casino operations, Venetian Macau Ltd, welcomed visitors to the preview yesterday. “Our company is always looking for opportunities that can benefit the local community of Macau, and this event goes to the very heart of what we stand for,” he stated.

May April31, 19,2013 2013

Macau

Govt to review bus service contract soon Transport Bureau chief admitted management flaws but expressed faith in new bus system Stephanie Lai

sw.lai@macaubusinessdaily.com

he Transport Bureau says it would soon launch a review of the service contract terms with the three public bus operators, in particular over bus runs requirements. Bureau director Wong Wan held a briefing yesterday, three days after a Commission of Audit report accused it of faulty supervision on the operators’ bus runs in peak hours and payment data. The report claimed that in some routes there were not enough bus runs during peak periods but a lot more than required during off-peak hours. Mr Wong promised a “full review” that would focus on “the relation between passenger volume and the bus runs arrangement during peak and off-peak hours”. “We agree with the findings of the audit commission,” he said. “It reminded us to crosscheck the cashbox balance, the electronic payment data and the bus runs to confirm if the service is really fulfilled.” Asked several times if he would step down, Mr Wong did not reply directly, but said he was confident

that he would work with his team to solve the issues. The audit report found instances where an operator was still able to get government’s pay though its bus had no electronic payment data record to prove the bus run took place. Under the new bus system, the three operators collect fares and hand them to the government. In return, the government pays them between 9.6 patacas (US$1.2) and 25 patacas per kilometre for each bus run. The bureau will soon launch an investigation to confirm if operators filed any irregular payment records and if any criminal action took place, Mr Wong said. He also admitted the new bus system is heavily burdened by the cost of supervising bus services. In addition there is a “disproportioned” cost from any expansion of bus routes, such as the ones connected to the Seac Pai Van public housing site. “The more remote places that had very few bus runs before can now have a better service coverage as the government has taken a leading position,” said Mr Wong.

Corporate Adelson receives lifetime achievement award Las Vegas Sands Corp chairman and chief executive Sheldon Adelson was recognised Tuesday at the 2013 Jerusalem Innovative Tourism Summit “for his unprecedented and innovative contributions to global tourism”. “There is no one more earning than him to receive the Lifetime Achievement award,” Israel’s minister of Tourism Uzi Landau said at the ceremony. The two-day summit is organised by the Prime Minister’s Office, the Ministry of Tourism, the Jerusalem Municipality and the Jerusalem Development Authority, in cooperation with the Hebrew University and the Jerusalem International Convention Center. The organisers said Mr Adelson is “the head of an empire attracting close to a billion tourists a year,” and they praised him for investing “over 30 billion dollars in tourism projects across the globe.” According to a post on LVS’s official blog, the organisers went on to say that he “has changed tourism in three continents”.

New Mercedes-Benz launched in Macau To celebrate the debut of the new Mercedes-Benz E-Class, a preview party and unveiling ceremony with more than 300 guests was held at Grand Hyatt Hotel last week. With new, efficient engines, new assistance systems and a new design, Mercedes-Benz has modernised the E-Class to try to boost its position in the luxury segment. The ceremony started with a computer-animated footage, which together with a laser show, presented the style of seven new E-Class saloons. The new E-Class has included some new or optimised assistance systems, which Mercedes-Benz refers to as “intelligent drive”. In addition, its new BlueDIRECT four-cylinder petrol engines feature direct injection technology. In November, Mercedes-Benz Hong Kong Ltd also launched the sales of the third generation of its series A-Class automobiles in Macau. At the time the company’s new chief operating officer, Andreas Binder, said they wanted to increase their leadership of the premium market here.

A probe to confirm if any criminal action took place will be launched, said Wong Wan, left

“I have to admit that we have to do better in ensuring the good use of our administrative costs and supervision,” he added. The bureau is launching a service quality evaluation system in July,

open to residents. The results will be used as a basis to decide on future service charge increases. This new arrangement will also be discussed in the upcoming contract review, Mr Wong said.

May 31, 2013 April 19, 2013

Greater China Official PMI to show minimal growth: poll The mainland’s slowing factory sector may have barely grown in May amid lacklustre local and foreign demand, a Reuters poll showed. The median forecast of 10 economists polled by Reuters showed China’s official Purchasing Managers’ Index likely retreated to 50.1 in May from April’s 50.6 to hover a whisker above the 50-point threshold. The data is published tomorrow. “Overall, the economy seems to be slowing so a drop below 50 in the PMI is likely,” said Zhang Zhiwei, a Nomura economist in Hong Kong who forecast the PMI would fall to 49. “There are also seasonal factors. There is usually a big drop in the PMI in May.”

Credit not enough to jolt Chinese economy Failure to grow with US$1 trillion is warning to Li Keqiang

hina’s economy is proving less responsive to credit, escalating pressure on Premier Li Keqiang to strengthen the role of private enterprise. The government’s broadest measure of credit rose 58 percent to a record 6.16 trillion yuan (US$1 trillion) in January-to-March, when gross domestic product gained 7.7 percent, compared with 8.1 percent a year earlier. Each US$1 in credit firepower added the equivalent of 17 cents in GDP, down from 29 cents last year and 83 cents in 2007, when global money markets began to freeze, according to data compiled by Bloomberg. The diminishing returns to lending heighten focus on the need for what the International Monetary Fund said on Wednesday are “decisive” policy changes in the world’s secondlargest economy. Without a refocus away from state-approved projects, Mr Li and President Xi Jinping risk overseeing both a further slowdown in growth and an increase in nonperforming loans. “Less efficient and more highly leveraged borrowers have been kept afloat, tying up credit that could be used to generate more growth,” said David Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department. “To boost growth, China needs to channel more financing to its private enterprises, which are both more profitable and less leveraged than their state-owned counterparts.” State enterprises have seen their return on equity fall to 5.9 percent last year from 10.2 percent in 2010,

according to the Ministry of Finance. The biggest concern from China’s credit surge is the money going to companies and state-run enterprises whose performance is deteriorating, Francis Cheung, head of China-Hong Kong strategy at CLSA Asia-Pacific Markets, wrote in a May 9 report.

Bond market Signals from China’s bond market, which has expanded 39 percent so far this year compared with the same period in 2012, indicate businesses are struggling to improve profitability even with greater access to credit. Borrowing in the debt market by the biggest Chinese companies is more than five times a measure of their operating earnings, twice the leverage ratio in 2007, according to data compiled by Bloomberg. State-owned enterprises in energy and power production are among the biggest borrowers, including China National Petroleum Corp, the nation’s largest oil producer, and China State Grid Corp, the country’s largest power distributor. Among 102 non-financial companies in the MSCI China Index, total debt over earnings before interest, taxes, depreciation and amortisation rose to 5.74 times based on the latest filings through May 28, from 2.49 times in 2007. One example of what Mr Loevinger, now an emergingmarkets analyst in Los Angeles at TCW Group Inc., called “inefficient and leveraged borrowers,” may be LDK Solar Co., a maker of solar

Businesses seen struggling to improve profitability

panels. The company, which cut solar-cell production capacity by 89 percent last year, said in April it’s in the process of getting a new loan facility of about 2 billion yuan. With debt of US$3.1 billion, seven straight quarterly losses and cash at a three-year low, LDK needs access to funds “to get through this very challenging time,” chief financial officer Jack Lai said on an April 18 conference call. The announcement came after larger competitor Suntech Power Holdings Co.’s biggest unit was forced into bankruptcy in March. The 2014 yuan bonds of LDK, which failed to fully repay US$23.8 million of convertible notes in April,

Shuanghui agrees US$4.7 bln Smithfield deal Chinese pork producer seeks U.S. group’s expertise

huanghui International Holdings Ltd is buying Smithfield Foods Inc., the world’s biggest hog producer, for US$4.7 billion to feed a growing Chinese appetite for U.S. pork, in a deal that has stirred concern among U.S. politicians. Announced on Wednesday, the takeover would be China’s biggest of a U.S. company, with an enterprise value of US$7.1 billion, including debt, and follows a call by Smithfield’s largest shareholder, Continental Grain Co, to break up the company. Continental could not be reached for comment on Shuanghui’s proposal. The deal highlights China’s

growing appetite for protein-rich food, particularly pork, as its middle class expands, making China more reliant on foreign producers. “I think this is a move by China to make sure their population is going to get fed in a cheaper manner. It’s the right move for them,” said Brian Bradshaw, a pig producer with operations in Illinois and Indiana, who has sold hogs to Smithfield. “Time will tell whether it’s the right move for the rest of the pork industry.” The deal will face scrutiny by the Committee on Foreign Investment in the United States (CFIUS), a government panel that assesses

national security risks. At least one member of Congress said the deal raised alarms about food safety, noting Shuanghui was forced to recall tainted pork in the past. “I have deep doubts about whether this merger best serves American consumers, and urge federal regulators to put their concerns first,” U.S. Representative Rose DeLauro, a Democrat from Connecticut, said in a statement. Shuanghui’s proposal will also have to face rival bids. Under the terms of its deal, Smithfield has 30 days to continue talks with possible bidders Bangkok-based Charoen Pokphand Foods Pcl and Sao Paulo-

slid to a seven-month low of 34 yuan per 100 yuan face value earlier this month. Companies may be holding some of the new credit in reserve in bank deposits, according to Michael Werner, a banking analyst with Sanford C. Bernstein & Co. in Hong Kong. A 3.1 trillion yuan increase in corporate bank deposits in March may indicate companies frontloaded lending to guard against any crackdown on credit channels after Xi and Li took office, he said. “That tells me that not all of the money has been allocated yet into the economy,” Mr Werner said. Bloomberg News

based JBS SA, according to a person familiar with the matter.

Complex structure Shuanghui, which controls Henan Shuanghui Investment & Development Co, China’s largest meat processor, would be joining forces with a company that has a global herd of 1.09 million sows, according to Successful Farming magazine, and which raises close to 16 million hogs a year. The U.S. firm, which also brings its grocery brands such as Armour, Eckrich and Farmland, earned 11 percent of its US$13.1 billion revenue in the year to April 2012 outside the United States, including in China. Goldman Sachs’ main investing arm owns a 5.2 percent stake in an offshore affiliate of Shuanghui International, public filings show. Funds associated with China-focused private equity firm CDH own 33.7 percent of the same offshore affiliate, and Singapore state investor Temasek Holdings Pte Ltd owns 2.8 percent.

May April31, 19,2013 2013

Greater China China Mobile sees future in 4G China Mobile Ltd, the world’s largest phone company by users, sees its future in the expansion of fourth-generation service to help it cope with threats including Tencent Holdings Ltd’s WeChat message app. The way that WeChat instant messaging replaces traditional telecom services is “quite severe,” China Mobile’s chairman Xi Guohua said at the company’s annual shareholder meeting in Hong Kong yesterday. The company must boost data usage and investment in 4G services in response, Mr Xi said. “We are rolling out 4G as this represents the company’s future,” he added. “Capex investment is a must.”

PetroChina raising cash to spend abroad

etroChina Co Ltd, the world’s second biggest publicly traded oil company, is set to sell minority stakes in oil and gas fields as well as gas pipeline projects in western China to raise cash for overseas acquisitions, said a person familiar with the plans. Some agreements may be announced in the next few months, said the person who asked not to be identified because the information isn’t public. The pipelines offer near double-digit investment returns, the person said without identifying the assets. Talks are taking place with several parties and their investments will be in the billions of yuan, the person said, declining to be more specific or identify who the company is in discussions with. PetroChina needs more private capital in the company’s domestic oil and gas businesses to relieve its

RMB115 billion PetroChina’s profit in 2012

financing burden, chairman Zhou Jiping said alst week in Beijing. It had 505 billion yuan (US$82 billion) in interesting-bearing debt at the end of 2012, from 350 billion yuan in 2011, according to its annual report published in April. “PetroChina can use the cash to buy more assets or expand its overseas projects that over time will provide higher returns than what domestic projects can currently provide,” said Simon Powell, an oil and gas analyst at CLSA Ltd in Hong Kong.

“Of course, what the market will be looking at is what price PetroChina can get for the assets,” he added. PetroChina and its parent China National Petroleum Corp have announced plans to spend about US$7 billion in the past six months on assets from Mozambique to Australia, according to data compiled by Bloomberg. The company’s profit fell to 115 billion yuan in 2012 from 133 billion yuan in 2011 and 140 billion yuan in 2010. Capital spending is forecast

to rise to 355 billion yuan in 2013 from 352 billion yuan in 2012 and 284 billion yuan in 2011. “PetroChina will increasingly have to make the choice between growth, dividend or raising additional capital to fund growth,” Mr Beveridge said. “Give the infrastructure investment over the next decade on gas, pursuit of overseas growth and unconventional growth, it seems inevitable PetroChina will have to make some unpleasant choices ahead.” Bloomberg News

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Shares in Henan Shuanghui jumped as much as 10 percent in trading on the Shenzhen stock market yesterday, before closing at 42.86 yuan, up 8.73 percent. Shares in Smithfield, founded in 1936 as a single meat-packing plant in Smithfield, Virginia, rose to as high as US$33.96 on Wednesday, close to Shuanghui’s US$34 offer price. Shuanghui is offering a 31 percent premium to Smithfield’s Tuesday closing price, and would take on US$2.4 billion of Smithfield debt. The deal will help Smithfield sell its products to a growing Chinese middle-class through Shuanghui’s distribution network, while Shuanghui gains access to highquality and safe U.S. products, said company chairman Wan Long. Shuanghui has promised not to close or move any of Smithfield’s operations and will keep current management, including CEO Larry Pope, in place.

On a conference call with analysts, Mr Pope said Smithfield had been trying to strike a deal with Shuanghui since 2009, long before Continental agitated for change at the company. “The Asian market is a huge opportunity for us,” he said. “We just haven’t been able to put something together until today.” Reuters

KEY POINTS Deal is biggest Chinese acquisition of a U.S. company Shuanghui unit shares jump as much as 10 pct Bullish bets placed on Smithfield options before announcement

Langham tumbles in Hong Kong debut

angham Hospitality Investments Ltd, a trust backed by Great Eagle Holdings Ltd hotels, dropped as much as 9.20 percent in its trading debut in Hong Kong yesterday, underscoring concerns that rising yields in the United States could reduce demand for REITs and trusts in Asia and affect upcoming real estate sector IPOs. The shares closed at HK$4.54, below the HK$5.00 IPO price set last week. It was the worst debut for an initial public offering of least US$500 million in Asia this year. The weak debut comes after a plunge in benchmark indexes for real estate investment trusts (REITs) in Singapore and Hong Kong in recent

success

days on concerns that the U.S. Federal Reserve could soon scale back its massive bond buying programme. These concerns have pushed up yields on U.S. Treasuries and reduced the relative appeal of REITs and other yield-paying securities. “Sentiment has changed, particularly over the last few days, on fears over a scale-back of the easing programme in the U.S. and there’s also some concern than the rate hike cycle will come earlier than many people previously expected,” said Wilson Ho, a property analyst at brokerage Core Pacific-Yamaichi in Hong Kong. “There’s been a sectorwide correction. It’s not just Langham.” The Hong Kong REIT index has plunged 10.3 percent since reaching an all-time high last week, while the REIT index in Singapore has fallen in eight of the past 10 sessions, down nearly 11 percent. Reuters

May 31, 2013

Asia Panasonic to cut 5,000 workers Panasonic Corp said it will cut around 5,000 workers from its automotive and industrial division in a bid to bolster its operating profit margin over the next three years to a 5 percent minimum set by the company’s president, Kazuhiko Tsuga. The division, which covers automotive components, semiconductors, production machinery and other devices, employs 110,000 people, around a third of Panasonic’s workforce. The business is at the forefront of Mr Tsuga’s strategy to shift Panasonic away from consumer electronics to building gadgets and machinery it sells to other companies.

Philippines surprises with best growth since 2010 Economic growth hits 7.8 pct amid manufacturing surge Karen Lema

he Philippines yesterday posted surprisingly strong growth in the first quarter, knocking China from pole position in Asia, driven by robust domestic consumption and government spending. The stellar pace of expansion, which blew past expectations, pulled the peso up from an 11-month low and cemented views the central bank would leave its key policy rate on hold this year. Growth is seen powering on after the Philippines earlier this month got an investment grade rating from Standard & Poor’s, the second debt agency to do so this year. That lowers borrowing costs and helps to attract foreign capital for an economy mired with high unemployment and poverty. First quarter GDP grew a seasonally adjusted 2.2 percent over the prior three months, the fastest clip since the first quarter of 2012. A Reuters poll of economists had forecast 1.6 percent growth. From a year earlier, the economy grew 7.8 percent, helped by robust domestic spending, making the Philippines the fastest growing

economy in Asia as it pushed past China’s 7.7 percent annual pace and 1.6 percent quarterly growth. The Philippines’ year-on-year GDP figure also topped the 6.1 percent growth forecast in a Reuters poll and was the fastest since the second quarter of 2010, then boosted by spending related to national elections that put President Benigno Aquino in power.

New trajectory “We may now be moving along a new growth trajectory,” economic planning chief Arsenio Balisacan told reporters. Capital formation jumped an annual 47.7 percent in the first quarter as the private sector invested heavily to expand capacity given strong domestic consumption. Public construction climbed 45.6 percent as a faster budget roll-out and better fiscal position allowed for more spending to rehabilitate decrepit school buildings, roads and bridges. “It’s showing domestic demand in the Philippines is very resilient in the

KEY POINTS Philippine quarterly growth fastest in a year Strong Q1 growth eclipses China Per capita GDP up 6.1 pct y-o-y in the first quarter Unemployment at year-high of 7.1 pct as of March

face of slowing growth regionally,” said Trinh Nguyen, Hong Kongbased economist at HSBC Holdings Plc. “Government spending surprised on the upside, raising optimism that investment in the country is picking up.” Per capita GDP grew an annual 6.1 percent in the first quarter, the highest in at least two years, although unemployment was at a year-high of

Manufacturing grew an annual 9.7 percent in Q1

7.1 percent as of March. With a fast-growing population, estimated at 96.8 million as of March, job creation can’t keep pace with the around 1 million new entrants to the job market every year, Mr Balisacan said. The challenge was to create more broad-based growth so that the poorer sectors of society could benefit from jobs in high growth sectors, he added.

OECD warns on mining boom near end Says RBA should keep rates low as mining peak saps growth

ustralia’s central bank should keep interest rates low as a high currency and fragile confidence inhibit growth needed to compensate for a mining slowdown, the Organization for Economic Cooperation and Development said. Gross domestic product growth will slow to 2.6 percent in 2013, down from 3 percent projected in November, the OECD said in its latest report. With the economy slowing, the government’s “gradual approach” to reducing the public deficit is welcome, it said. “The surge in mining investment, which is likely to peak in 2013, is gradually losing its stimulatory effect on activity, while new drivers of growth are taking time to emerge,” it said. “Signs of an upturn in the nonmining sector, which the easing of monetary conditions aims to stimulate, remain timid because of the persistently high exchange rate, which is weighing on

companies’ confidence and their investment.” Reserve Bank of Australia Governor Glenn Stevens and his board slashed borrowing costs by 2 percentage points over the past 19 months to 2.75 percent, joining global counterparts in embracing record-low rates to combat currency strength. The government in December abandoned a pledge to return the budget to surplus this fiscal year and this month projected a deficit of A$19.4 billion (US$18.7 billion). Traders are pricing in a 75 percent chance the RBA will lower its benchmark borrowing cost by at least a quarter percentage point to 2.5 percent or lower by the end of September, swaps data compiled by Bloomberg show. The Australian dollar, which has declined 7.1 percent this month, averaged about US$1.0350 in the past two years, versus 75.80 U.S. cents in the prior 10 years. Bloomberg News

May 31, 2013

Asia C.bank may impose more measures: Thai PM Thailand’s prime minister said the central bank could take more action to ensure stability in the baht after Wednesday’s interest rate cut, which the government had pushed for as a way of holding down the currency. “I strongly believe that the central bank will probably impose more measures to alleviate the impact of the baht on exporters,” Yingluck Shinawatra said, adding that the Bank of Thailand might want to see the impact of the rate cut first. “The government has long wanted to see a rate cut. It wants to see the baht stable and competitive,” she added.

DBS bank deal seen derailed As Indonesia can bar the bank from gaining full control

Bernard Aw, analyst at Forecastweb in Singapore said the Philippines’ improved risk and debt profile would help shield the peso from external vagaries. The export-reliant Philippines is facing some risk that demand for its high-tech products will slow on more evidence that the recovery in global growth is losing momentum. But the global slowdown had little impact on manufacturing. Data

Japanese investors file criminal complaint against U.S.’s MRI

apanese clients of MRI International Inc., the U.S. investment company suspected of mismanaging assets, filed a complaint to Tokyo prosecutors and police alleging fraud. The complaint against Edwin Fujinaga, president of Las Vegasbased MRI, was filed with the Tokyo District Public Prosecutor’s Office and Tokyo Metropolitan Police Department yesterday, a group of 60 lawyers led by Hiroshi Yamaguchi said in a statement distributed at a news briefing. Japanese regulators last month stripped MRI of its registration to operate in the country after finding that it failed to properly manage assets and falsified business reports. As much as 130 billion

yen (US$1.3 billion) of clients’ funds may be missing, the Nikkei newspaper reported last month. The lawyers representing 1,472 Japanese clients of MRI also asked Tokyo investigators to examine whether the U.S. asset manager and Fujinaga violated Japan’s financial products laws, Mr Yamaguchi said. Some 523 of the clients had invested at least 14.8 billion yen in MRI’s products, according to the statement. The probe comes a year after Japan’s Financial Services Agency investigated asset managers amid allegations of fraud at Tokyobased AIJ Investment Advisors Co., which was found to have lost more than 100 billion yen of clients’ money. The Securities and Exchange Surveillance Commission, the investigative arm of the FSA, said on April 26 that it has yet to identify MRI’s asset balance and the amount of money that the company may have lost, adding that the firm’s inaccurate reports made it difficult to track the money flow. The U.S. firm failed to separate assets collected from clients from funds used to pay investment returns, the regulator said.

nvestors are betting that Indonesia will drive DBS Group Holdings Ltd to abandon Southeast Asia’s largest bank takeover. Indonesia’s central bank last week gave approval for Singapore-based DBS, which bid US$6.8 billion for all of PT Bank Danamon Indonesia, to buy only 40 percent of the company as the regulator pushes for Indonesian banks to have equal access in Singapore. With the agreement expiring in three days, Danamon is trading at a larger discount to its takeover price than any pending deal in Asia larger than US$500 million, according to data. While a minority stake in Danamon would cut DBS’s reliance on Singapore, which is Southeast Asia’s least lucrative lending market, Indonesian ownership laws can bar the bank from ever gaining full control. The original deal assumed DBS would buy all of Danamon, and the terms must be changed before a smaller purchase is logical for DBS, said CMC Markets Singapore Pte. The other option is for DBS to scrap the transaction altogether, according to IG Asia Pte. “At this point, it’s not a good deal for DBS,” Kelly Teoh, a Singaporebased market strategist at IG Asia, said in a phone interview. “A minority stake doesn’t make sense for DBS, without the control to steer the business in the direction they would like. I won’t be surprised if they step away from this.” DBS said last year that it would pay about 66.4 trillion rupiah (US$6.8 billion) to buy Danamon from Singapore’s state-owned investment company, Temasek Holdings Pte, and minority shareholders. The deal was announced before Indonesia, Southeast Asia’s most profitable lending market, revealed new rules that restrict ownership of local banks. Speaking to Parliament last week, Darmin Nasution, who was then Bank Indonesia governor, said DBS is allowed to buy 40 percent of Danamon. “There seems to be much remaining up for discussion in this deal, but with a 40 percent minority stake and the original terms well away from current levels, this no longer seems as attractive a deal for DBS,” Jason Hughes, Singapore-based head of sales trading at CMC Markets, said in an e-mail. The takeover agreement, already extended once, is now set to expire on June 2. Spokesmen for DBS and Temasek, which is DBS’s largest shareholder, declined to comment on any renegotiation or potential extension.

Bloomberg News

showed the sector grew an annual 9.7 percent in the first quarter on domestic demand for food items, household appliances, chemicals, and communication, transport and machinery equipment. Market reaction was mixed. While the peso was up at 42.28 per dollar, the stock market there slid as much as 3.4 percent in line with sharp declines in regional bourses. Reuters

Japanese stocks enter correction Japanese shares entered a correction as the Nikkei 225 Stock Average plunged 5 percent and extended losses from last week. All but two stocks dropped on the Nikkei 225, which plunged 5.2 percent to close at 13,589.03. The index’s volatility increased for the first time in five days to near a two-year high. The broader Topix index lost 3.8 percent, ending the day down 11 percent from a fiveyear high reached last week. A correction is defined as a decline of more than 10 percent from a recent peak. “Selling is feeding into more selling,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. “It’s mind-boggling that this market, which is one of the most liquid in the world, can move so much in one day like this.”

Vietnam stock inflows at 5-year high International investors are buying the most Vietnamese stocks in five years, lured by Southeast Asia’s cheapest valuations and government efforts to bolster economic growth. Overseas funds bought a net US$253 million of Vietnamese stocks this year to May 29, the biggest year-to-date purchases since 2008, speculating corporate profits will grow for the first time since 2010 as inflation eases and borrowing costs decline, data compiled by Bloomberg show. More foreigners opened Vietnamese equity trading accounts in the first four months of this year than the whole of 2012, data from the Vietnam Securities Depository show. Vietnam’s VN Index has gained 25 percent this year, making it Southeast Asia’s best performing benchmark gauge, as the central bank cut interest rates this month for an eighth time since the start of 2012 and the government approved the formation of a debt asset management company to soak up banks’ bad loans that were hampering growth.

SoftBank gets nod for Sprint purchase SoftBank Corp won U.S. national-security clearance for its US$20.1 billion takeover of Sprint Nextel Corp, helping shore up the deal as the Japanese company tries to ward off a counteroffer from Dish Network Corp. SoftBank and Sprint were notified on Wednesday U.S. time by the Committee on Foreign Investment in the U.S. that it has completed its investigation of the proposed transaction and found no unresolved national-security issues, according to a statement yesterday. SoftBank expects the deal to close July 1. Dish Network Corp, which made a US$25.5 billion bid last month for Sprint, has said allowing Tokyo-based SoftBank to control a U.S. phone network would compromise national security. The most contentious matter was whether SoftBank would use Chinesemanufactured equipment in Sprint’s network, something it pledged not to do. Gaining the CFIUS’s blessing removes some ammunition from Dish in its attacks on the deal. The national-security agreement requires the companies to appoint an independent security director to the new Sprint board, according to a regulatory filing. Regulators also will have oversight on network-equipment and service purchases by the company.

May 31, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

34.45

-0.5772006

23591084

CHINA UNICOM HON

ALUMINUM CORP-H

3.15

3.960396

31411055

CITIC PACIFIC

BANK OF CHINA-H

3.72

-0.2680965

381881246

AIA GROUP LTD

BANK OF COMMUN-H

6.01

-0.331675

26327811

BANK EAST ASIA

30.25

-0.4934211

1833336

BELLE INTERNATIO

12.04

-0.1658375

27887304

26.4

-0.7779908

16769927

14.46

-2.297297

1763569

BOC HONG KONG HO CATHAY PAC AIR CHEUNG KONG

110

-1.345291

8529929

CHINA COAL ENE-H

5.14

-1.720841

23529318

CHINA CONST BA-H

6.35

0.4746835

281789322

CHINA LIFE INS-H CHINA MERCHANT CHINA MOBILE

20.6

-0.4830918

37499659

2948288

NAME

CLP HLDGS LTD

PRICE

DAY %

Volume

10.78

1.506591

23840863

9.36

-0.5313496

7111217

66.95

-3.251445

11727257

DAY %

Volume

70.5

-3.688525

6995372

SANDS CHINA LTD

39.6

-0.2518892

9073965

SINO LAND CO

11.74

-2.003339

10843535

13.76

1.0279

44772920

COSCO PAC LTD

11.14

-0.7130125

8174899

ESPRIT HLDGS

11.9

-1.162791

11980643

HANG LUNG PROPER

27.8

-2.62697

6929951

TINGYI HLDG CO

HANG SENG BK

126.4

0.1584786

1152719

HENDERSON LAND D

55.15

-1.780944

7746559

HENGAN INTL

86.15

-0.7488479

3580588

HONG KG CHINA GS

-3.719912

19849006

HONG KONG EXCHNG

130.7

0.1532567

3018368

HSBC HLDGS PLC

86.05

0.3498542

12080641

83.25

0.9090909

7853876

5.41

-0.1845018

293473905

10.92

0.7380074

10992577

82.7

0.06049607

15902203

HUTCHISON WHAMPO

-0.2173913

25507255

IND & COMM BK-H

CHINA PETROLEU-H

8.14

-0.245098

91240158

LI & FUNG LTD

CHINA RES ENTERP

25.6

1.185771

7193108

MTR CORP

31.7

0.7949126

2804779

23.55

-0.6329114

8768575

NEW WORLD DEV

12.44

-3.265941

34568637

CHINA RES POWER

20.9

0.9661836

18588422

PETROCHINA CO-H

9.24

-0.3236246

86162687

CHINA SHENHUA-H

25.6

-0.1949318

14946016

PING AN INSURA-H

58.2

-0.9361702

14891106

CHINA RES LAND

PRICE

POWER ASSETS HOL

CNOOC LTD

22.95

CHINA OVERSEAS

NAME

SUN HUNG KAI PRO

103.2

-2.457467

11289509

SWIRE PACIFIC-A

97.55

-1.464646

2212392

TENCENT HOLDINGS

307.8

1.383399

3627702

20.5

1.99005

3759291

WANT WANT CHINA

11.88

1.886792

7580000

WHARF HLDG

69.85 -0.07153076

9439423

MOVERS

1 22930

INDEX 22484.31 HIGH

22928.32

LOW

22291.17

52W (H) 23944.74 (L) 18056.4

22290

28-May

30-May

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.65

-0.5449591

101265230

AIR CHINA LTD-H

6.49

-3.278689

9916096

ALUMINUM CORP-H

3.15

3.960396

ANHUI CONCH-H

25.55

BANK OF CHINA-H

NAME

PRICE

DAY %

Volume

PRICE

DAY %

Volume

CHINA PACIFIC-H

26.5

-1.486989

14584043

YANZHOU COAL-H

8.05

-0.9840098

19824005

CHINA PETROLEU-H

8.14

-0.245098

91240158

ZIJIN MINING-H

2.13

0.4716981

53357846

31411055

CHINA RAIL CN-H

7.66

0.2617801

6906918

ZOOMLION HEAVY-H

7.56

0.9345794

23149738

-2.419162

16917451

CHINA RAIL GR-H

4.04

-1.703163

11884558

12.76

-1.391036

2636516

3.72

-0.2680965

381881246

CHINA SHENHUA-H

25.6

-0.1949318

14946016

CHINA TELECOM-H

6.01

-0.331675

26327811

3.79

0.2645503

72172534

34.85

-0.286123

5546054

DONGFENG MOTOR-H

12.38

0.3241491

10947155

CHINA CITIC BK-H

4.19

-0.9468334

58347706

GUANGZHOU AUTO-H

8.43

-2.317497

15703197

CHINA COAL ENE-H

5.14

-1.720841

23529318

HUANENG POWER-H

8.26

-0.6016847

25802365

CHINA COM CONS-H

7.3

-1.88172

23577981

IND & COMM BK-H

5.41

-0.1845018

293473905

CHINA CONST BA-H

6.35

0.4746835

281789322

JIANGXI COPPER-H

15.16

-1.430429

14634432

CHINA COSCO HO-H

3.38

-0.2949853

3818721

PETROCHINA CO-H

9.24

-0.3236246

86162687

CHINA LIFE INS-H

20.6

-0.4830918

37499659

PICC PROPERTY &

9.14

-0.7600434

23830499

CHINA LONGYUAN-H

7.91

-3.418803

28121196

PING AN INSURA-H

58.2

-0.9361702

14891106

CHINA MERCH BK-H

15.66

-1.38539

44861736

SHANDONG WEIG-H

8.21

-3.183962

4899418

CHINA MINSHENG-H

9.64

-1.330604

37448668

SINOPHARM-H

CHINA NATL BDG-H

8.28

-2.702703

49504123

TSINGTAO BREW-H

16.88

0.4761905

5388829

WEICHAI POWER-H

BANK OF COMMUN-H BYD CO LTD-H

CHINA OILFIELD-H

21.55

3.357314

6718055

-0.8115419

1222343

29.05

-2.842809

NAME

ZTE CORP-H

MOVERS

0 10930

INDEX 10689.99 HIGH

10928.65

LOW

10558.66

52W (H) 12354.22 10550

(L) 8987.76 28-May

2190196

30-May

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

Volume

PRICE

DAY %

Volume

6.57

-0.9049774

8408945

PING AN INSURA-A

39.98

-0.6461233

24605238

CITIC SECURITI-A

13.21

0.4562738

113328028

POLY REAL ESTA-A

12.83

0.234375

35769046

14568835

CSR CORP LTD -A

4.43

31921168

QINGDAO HAIER-A

12.77

-1.237432

17819989

-1.784686

20762796

DAQIN RAILWAY -A

7.14

1.276596

38990792

QINGHAI SALT-A

23.61

-0.8816121

4231523

-0.6666667

30095901

DATANG INTL PO-A

4.91

0.6147541

14414927

SAIC MOTOR-A

15.74

-1.006289

47336787

-0.5458515

21387977

EVERBRIG SEC -A

14.63

1.035912

31011922

SANY HEAVY INDUS

9.2

-1.709402

33676367

-0.3367003

21980515

GD MIDEA HOLDI-A

-1.960784

24529461

SHANG PHARM -A

12.59

-0.3167063

10580712

2.71

-0.3676471

44562314

SHANG PUDONG-A

10.54

0.1901141

89454796

-1.112485

32331960

SHANGHAI ELECT-A

3.92

-1.010101

4917071

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.73

-0.3649635

127680505

AIR CHINA LTD-A

5.46

-0.3649635

8670073

ALUMINUM CORP-A

4.15

0.2415459

ANHUI CONCH-A

17.06

AVIC AIRCRAFT-A

11.92

BANK OF BEIJIN-A

9.11

BANK OF CHINA-A

2.96

NAME CHONGQING WATE-A

NAME

BANK OF COMMUN-A

4.74

-0.4201681

54870289

GD POWER DEVEL-A

BAOSHAN IRON & S

4.83

-0.2066116

12469036

GEMDALE CORP-A

BEIJING TONGRE-A

24.05

-0.4964832

5645401

GF SECURITIES-A

14.26

0.9200283

30318695

SHANXI LU'AN -A

16.53

-0.3015682

11504425

BYD CO LTD -A

36.75

-2.597403

18110603

GREE ELECTRIC

26.88

-0.7385524

11804603

SHANXI XISHAN-A

10.65

-0.1874414

10384081

CHINA AVIC ELE-A

27.41

-1.402878

6281293

GUANGHUI ENERG-A

20.43

-2.108289

16418720

SHENZEN OVERSE-A

6.55

-0.7575758

29457253

CHINA CITIC BK-A

4.38

-1.128668

30072003

HAINAN AIRLINE-A

5.13

0.5882353

16113437

SUNING COMMERC-A

6.25

-0.9508716

55089916

CHINA CNR CORP-A

4.7

-0.2123142

35747556

HAITONG SECURI-A

12.26

2.938707

154078456

TASLY PHARMAC-A

42.42

2.16763

6159981

CHINA COAL ENE-A

6.6

-0.6024096

7621707

HANGZHOU HIKVI-A

37.21

-2.387198

9530694

TSINGTAO BREW-A

39.71

-0.3763171

2054354

CHINA CONST BA-A

4.82

-0.4132231

23163444

HENAN SHUAN-A

42.86

8.726535

31373453

WEICHAI POWER-A

23.49

-0.7185123

7520535

CHINA COSCO HO-A

3.46

1.169591

14625616

HONG YUAN SEC-A

24.69

-0.2021019

20256640

WULIANGYE YIBIN

-1.112485

17585467

CHINA EAST AIR-A

3.09

-0.6430868

10207942

HUATAI SECURIT-A

10.7

1.134216

71615993

YANTAI WANHUA-A

18.01

-0.4972376

10516310

CHINA EVERBRIG-A

3.15

-0.3164557

59698674

HUAXIA BANK CO

10.76

-0.7380074

31033052

YANZHOU COAL-A

14.57

-0.4781421

3556764

CHINA LIFE INS-A

16.74

-0.2977963

10313025

IND & COMM BK-A

4.2

-0.2375297

40534464

YUNNAN BAIYAO-A

89.98

-0.02222222

1052604

CHINA MERCH BK-A

13.58

-0.2204262

46826224

INDUSTRIAL BAN-A

18.67

-0.3203417

59357631

ZHONGJIN GOLD

12.42

1.470588

32038654

CHINA MERCHANT-A

13.46

-0.148368

35791942

INDUSTRIAL-A

12.02

0.8389262

32272802

ZIJIN MINING-A

CHINA MERCHANT-A

30.27

0.2982107

7258161

INNER MONG BAO-A

27.96

-1.653183

26467371

ZOOMLION HEAVY-A

CHINA MINSHENG-A

10.51

-1.128881

106978214

INNER MONG YIL-A

28.6

-0.0698812

10472725

ZTE CORP-A

CHINA NATIONAL-A

11.97

1.440678

38045406

INNER MONGOLIA-A

4.86

-1.419878

54891014

CHINA OILFIELD-A

16.93

-1.45518

5957920

JIANGSU HENGRU-A

30.64

-0.03262643

6684249

CHINA PACIFIC-A

18.87

-0.9448819

15706815

JIANGSU YANGHE-A

65.16

-1.272727

4443778

6.75

-0.7352941

38113378

JIANGXI COPPER-A

21.17

-0.7501172

8768417

10.77

-1.283226

6076170

CHINA PETROLEU-A CHINA RAILWAY-A

5.23

0.1915709

19499232

JINDUICHENG -A

CHINA RAILWAY-A

2.89

0.3472222

30835505

KANGMEI PHARMA-A

19.11

0.8443272

27208999

CHINA SHENHUA-A

20.67

-0.5293551

9781622

KWEICHOW MOUTA-A

200.25

-0.6154152

2501942

CHINA SHIPBUIL-A

4.52

59982923

LUZHOU LAOJIAO-A

26.89

-1.3573

7165427

14006346

METALLURGICAL-A

2.04

-0.9708738

25748798

23.23

0.7372073

8369077

2.45

-0.4065041

10668218

CHINA SOUTHERN-A

3.52

-0.2832861

CHINA STATE -A

3.82

-1.036269

95320984

NARI TECHNOLOG-A

CHINA UNITED-A

3.83

0.5249344

82444938

NINGBO PORT CO-A

CHINA VANKE CO-A

12.31

-0.08116883

51775025

OFFSHORE OIL-A

8.15

-2.043269

40063854

CHINA YANGTZE-A

7.59

-0.6544503

11713603

PETROCHINA CO-A

8.54

-0.4662005

15125525

-3.568243

47446053

PING AN BANK-A

21.2

-0.3759398

42544168

PRICE DAY %

Volume

PRICE DAY %

Volume

CHONGQING CHAN-A

10.81

MOVERS

3.1

-0.3215434

47209453

7.08

-0.4219409

48580993

12.22

-1.451613

31658015

206

14 2660

INDEX 2634.323 HIGH

2657.76

LOW

2589.67

52W (H) 2791.303 (L) 2102.135

2580

28-May

30-May

FTSE Taiwan 50 Index NAME ACER INC

24.45

8546733

ADVANCED SEMICON

25.55

-1.160542

12443255

ASIA CEMENT CORP

37.25

-1.193634

NAME FORMOSA PLASTIC

NAME

PRICE DAY %

-1.547117

9505615

TAIWAN MOBILE CO

FOXCONN TECHNOLO

80.1

-1.476015

3688137

4314003

FUBON FINANCIAL

40.1

-1.353014

-5.194805

TPK HOLDING CO L

588

-2.649007

5150171

17649500

TSMC

110 -0.9009009

36121568

UNI-PRESIDENT

ASUSTEK COMPUTER

345

2443389

HON HAI PRECISIO

77.2

-1.404853

34705365

AU OPTRONICS COR

13.6

-2.857143

101461812

HOTAI MOTOR CO

325

1.72144

736059

165

12312022

HTC CORP

280

0.3584229

7048855

WISTRON CORP

CATHAY FINANCIAL

39.3

-1.380176

20859826

HUA NAN FINANCIA

17.3

-1.142857

9862559

YUANTA FINANCIAL

CHANG HWA BANK

16.85

-1.173021

9065788

LARGAN PRECISION

982 -0.8080808

1185501

YULON MOTOR CO

CHENG SHIN RUBBE

91.5

-2.24359

5489389

LITE-ON TECHNOLO

47.65 -0.5219207

7326519

361.5 -0.6868132

CHIMEI INNOLUX C

-3.381643

56899338

MEDIATEK INC

8.66

-1.478953

49677554

MEGA FINANCIAL H

23.7

-1.25

21914803

CHINA STEEL CORP

25.45

-1.165049

17997083

NAN YA PLASTICS

62.1

-2.816901

9773612

CHINATRUST FINAN

18.85 -0.5277045

CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC

36856749

PRESIDENT CHAIN

184 -0.5405405

1311792

14838125

QUANTA COMPUTER

64.7

-1.671733

8200327

18.85 -0.2645503

21854928

SILICONWARE PREC

35.4

0.2832861

10131279

141 -0.7042254

6345935

SINOPAC FINANCIA

14.5

-1.694915

13359781

FAR EASTERN NEW

31.75

-1.090343

5044991

SYNNEX TECH INTL

42.2

-1.28655

6434281

FAR EASTONE TELE

-2.439024

8588504

TAIWAN CEMENT

38.75

-2.760351

6262159

FIRST FINANCIAL

-1.993355

6981258

-1.098901

68641871

31.1

1.468189

14502675

16.25

-1.215805

21327464

50.8 -0.5870841

3458489

4800047

-1.544799

95.6

13643365

13.5

UNITED MICROELEC

CATCHER TECH

CHINA DEVELOPMEN

Volume

109.5

18.05

-1.36612

14989288

TAIWAN COOPERATI

17.1

-1.156069

8614292

FORMOSA CHEM & F

71.4

-1.923077

5811273

TAIWAN FERTILIZE

75.9

-1.043025

2681166

FORMOSA PETROCHE

78.6

-2.962963

3356468

TAIWAN GLASS IND

28.85

-2.20339

931931

MOVERS

3 5790

INDEX 5708.02 HIGH

5782.98

LOW

5699.07

52W (H) 5896.71 (L) 4719.96

5690

28-May

30-May

May 31, 2013

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

Max 40.05

average 39.843

Max 39.7

average 39.535

Min 39.35

Last 39.95

Min 39.35

Last 39.6

40.2

61.4

20.6

39.95

61.2

20.5

39.7

61.0

20.4

39.45

60.8

20.3

39.20

Max 61.35

average 61.156

PRICE

Min 20.2

Last 20.55

39.6

21.3

23.7

39.5

21.2

39.4

21.1

39.3

23.6 23.5

Max 21.4

average 21.666

DAY %

YTD %

(H) 52W

Min 21

Last 21.25

(L) 52W

-0.547621604

-1.152614728

100.4000015

81.5

BRENT CRUDE FUTR Jul13

102.2

-0.224543591

-4.850572572

115.9300003

96.04000092

GASOLINE RBOB FUT Jun13

279.4

-0.324640577

-2.382782475

324.119997

235.9499931

860.75

-0.57753393

-5.438066465

987.5

814

NATURAL GAS FUTR Jul13

GAS OIL FUT (ICE) Jul13

4.157

-0.645315488

16.70409882

4.499000072

3.256000042

HEATING OIL FUTR Jun13

286.22

-0.254399721

-4.834419471

323.8899946

258.589983

21.0

COUNTRY MAJOR

ASIA PACIFIC

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

Gold Spot $/Oz

1407.17

1.2848

-15.4579

1796.08

1322.06

Silver Spot $/Oz

22.688

1.4919

-24.6496

35.365

20.3395

Platinum Spot $/Oz

1461.7

-0.2321

-3.693

1742.8

1374.55

Palladium Spot $/Oz

752.79

-0.0451

7.5937

786.5

553.75

1863

0.566801619

-10.13024602

2200.199951

1809

LME COPPER 3MO ($)

7265

-0.792025126

-8.397427815

8422

6762.25

LME ZINC

1884

0.694815607

-9.423076923

2230

1745

14815

-0.403361345

-13.15943728

18920

14609

15.45

-0.064683053

-1.87361067

17.07500076

14.79500103

565

-0.132567388

-5.794080867

665

512

700.75

-0.284596229

-11.71653543

900

664.75

1498

-0.249708673

7.364271636

1605.75

1225

127.85

0.195924765

-14.51019726

202.1999969

125.7999954

NAME

16.55999947

ARISTOCRAT LEISU

69.94999695

CROWN LTD

LME ALUMINUM 3MO ($)

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul13 Dec13

WHEAT FUTURE(CBT) Jul13 SOYBEAN FUTURE Jul13 COFFEE 'C' FUTURE Jul13 SUGAR #11 (WORLD) Jul13

16.78

COTTON NO.2 FUTR Jul13

81.55

0.659868026 1.053283767

-14.99493414 6.088200859

23.05999947 94.19999695

World Stock Markets - Indices

23.4 Max 23.8

average 23.535

Min 23.3

Last 23.7

23.3

CROSSES

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9659 1.5168 0.9593 1.2964 100.67 7.9964 7.7637 6.1315 56.26 30.17 1.2638 29.986 42.285 9808 97.234 1.24361 0.85467 7.959 10.3665 130.5 1.03

0.4054 0.6703 0.6567 0.2397 0.5463 0.0075 0.0064 -0.075 -0.1532 0.0331 0.3323 0.0033 0.473 -0.0306 0.1419 0.4246 0.4317 -0.8142 -0.2354 0.3065 0

-6.9281 -6.2315 -4.5763 -1.7134 -14.473 -0.1651 -0.1687 1.6162 -2.2485 1.359 -3.355 -3.1781 -3.0271 -0.1529 -8.1319 -2.9053 -4.5924 3.2479 1.5811 -12.9732 -0.0097

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 9930 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.9528 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

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.22

-1.860465

33.96825

4.49

2.29

VOLUME CRNCY 4928007

12.84

-0.8494208

20.33739

13.75

8.06

1909524

AMAX HOLDINGS LT

0.9

-5.263158

-35.71428

1.72

0.75

987525

BOC HONG KONG HO

26.4

-0.7779908

9.543567

20.85

16769927

CENTURY LEGEND

0.31

16.98114

0.42

0.215

CHEUK NANG HLDGS

5.76

-0.3460208

-3.839729

6.74

2.8

82497

CHINA OVERSEAS

22.95

-0.2173913

-0.6493523

25.6

15.223

25507255

CHINESE ESTATES

13.54

-0.2945508

11.62943

14.12

7.901

589000

CHOW TAI FOOK JE

9.73

-0.7142857

-21.78456

13.4

8.4

3439100

EMPEROR ENTERTAI

2.64

-0.3773585

39.68254

2.73

1.12

345156

FUTURE BRIGHT

2.71

7.968127

123.5925

2.732

0.765

11940000

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15302.8

-0.6917211

16.77836

15542.4

12035.08984

NASDAQ COMPOSITE INDEX

3467.515

-0.6126021

14.83687

3532.038

2726.68

GALAXY ENTERTAIN

39.95

1.395939

31.63097

40.65

16.94

16889409

FTSE 100 INDEX

6640.01

0.1937479

12.58433

6875.62

5229.76

HANG SENG BK

126.4

0.1584786

6.486945

132.8

99.2

1152719

DAX INDEX

8331.67

-0.05889705

9.448803

8557.86

5914.43

HOPEWELL HLDGS

27.1

-3.558719

-18.49624

35.3

19.049

2696445

HSBC HLDGS PLC

86.05

0.3498542

5.842554

90.7

59.8

12080641

NIKKEI 225

13589.03

-5.147329

30.72434

15942.6

8238.96

HANG SENG INDEX

22484.31

-0.3131023

-0.7618396

23944.74

18056.4

CSI 300 INDEX

2634.323

-0.311743

4.414317

2791.303

2102.135

TAIWAN TAIEX INDEX

8243.29

-1.134698

7.062667

8439.15

KOSPI INDEX

2000.1

-0.05496702

0.1527216

S&P/ASX 200 INDEX

4930.682

-0.8853951

5129.647

FTSE Bursa Malaysia KLCI

NZX ALL INDEX PHILIPPINES ALL SHARE IX

JAKARTA COMPOSITE INDEX

20.2

23.8

92.62

NAME

average 20.364

21.4

WTI CRUDE FUTURE Jul13

CORN FUTURE

Max 20.6

Currency Exchange Rates

NAME

METALS

60.6

Last 61.2

39.7

Commodities ENERGY

Min 60.65

4.1

-7.239819

15.16854

4.66

2.98

7185000

LUK FOOK HLDGS I

20.15

-17.41803

30.05

14.7

1148000

MELCO INTL DEVEL

17.22

0.7017544

91.12097

18.18

5.12

2944000

6857.35

MGM CHINA HOLDIN

20.55

1.231527

54.76403

20.85

9.509

6598033

2042.48

1758.99

MIDLAND HOLDINGS

3.36

-0.2967359

-9.18919

3.25

1370000

6.060119

5249.6

3985

NEPTUNE GROUP

0.183

20.39474

0.226

0.084

32010000

-1.366087

18.83296

5251.296

3635.283

NEW WORLD DEV

12.44

-3.265941

3.494172

15.12

34568637

1779.49

-0.2231605

5.36073

1826.22

1554.51

SANDS CHINA LTD

39.6

-0.2518892

16.64212

43.7

20.65

9073965

SHUN HO RESOURCE

1.53

9.285716

1.67

1.03

957.306

-0.3623072

8.531579

998.487

755.149

SHUN TAK HOLDING

4.15

0.7281553

-0.9546553

4.65

2.56

2692263

4298.18

-3.023124

16.19907

4571.4

3279.09

SJM HOLDINGS LTD

5798100

HSBC Dragon 300 Index Singapor

640.14

-0.96

3.07

STOCK EXCH OF THAI INDEX

1590.9

-0.6687021

14.29454

1649.77

1099.15

HO CHI MINH STOCK INDEX

521.45

1.234736

26.0363

521.45

372.39

Laos Composite Index

1359.16

-0.521123

11.8862

1455.82

980.83

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

HUTCHISON TELE H

21.25

1.190476

18.05556

22.7

12.34

SMARTONE TELECOM

13.6

-3.40909

17.38

12.5

892260

WYNN MACAU LTD

23.7

1.066098

13.12649

26.5

14.62

3942163

ASIA ENTERTAINME

4.4

5.769231

43.79085

5.18

2.4

686090

BALLY TECHNOLOGI

56.23

-0.8464116

25.76605

57.17

41.74

379640 3000

BOC HONG KONG HO

3.48

-1.136364

13.35505

3.6

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GALAXY ENTERTAIN

5.084

-0.3137255

28.06045

5.16

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100

INTL GAME TECH

18.24

-3.030303

28.72265

18.81

10.92

3321210

JONES LANG LASAL

91.5

-1.549387

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101.46

61.39

580312

LAS VEGAS SANDS

58.67

-0.1191692

27.10139

60.54

32.6127

4412805

MELCO CROWN-ADR

23.52

-1.010101

39.66746

25.15

9.13

1823899

MGM CHINA HOLDIN

2.6

40.54054

2.67

1.36

500

MGM RESORTS INTE

15.09

-1.178782

29.63917

15.95

8.83

8638900

SHFL ENTERTAINME

16.8

-0.8849558

15.86207

17.2199

11.75

160626

SJM HOLDINGS LTD

2.82

22.07793

2.99

1.65

8350

138.48

-1.493811

23.10428

144.99

84.4902

1086634

WYNN RESORTS LTD

AUD HKD

USD

May 31, 2013

Opinion

A new chance for European politics Javier Solana

President of the ESADE Centre for Global Economy and Geopolitics, was EU High Representative for Foreign and Security Policy, Secretary-General of NATO and Foreign Minister of Spain

correct Europe’s institutional design and strengthen its democratic legitimacy, thereby enabling them to respond to Euro-scepticism and ad hoc bilateral deals with more integration. If Europeans are to overcome their fear of giving up sovereignty in order to achieve political union, a civic sense of attachment to Europe and its institutions must be regained and nurtured.

Growing stronger

ost political leaders in Europe want the European Union to emerge from its current crisis stronger and more united. But the economic policies that have been implemented in most EU countries since the crisis began have given rise to an unprecedented threat to deeper integration – and, indeed, to what already has been achieved. After five years of financial and economic crisis, antiEuropean politics has come resoundingly to the fore in many EU countries – France, the United Kingdom, Italy, Austria, Holland, Finland, Greece, Portugal, and even Germany. Growing institutional disaffection has become a corrosive reality almost everywhere in Europe. The only way to overcome Europe’s existential crisis, and to respond to citizens’ demands for change, is to confront Europe’s domestic opponents head-on: politics without palliatives. Europe needs, first and foremost, to break the vicious circle of recession,

unemployment, and austerity that now has it in its grip. That means, first of all, refocusing economic policy on growth, employment, and institutional innovation. It is impossible to advance toward political union while seeming to abandon Europe’s citizens along the way, which is the impression that unremitting austerity has created. Sacrifice, too many Europeans believe, is not laying the groundwork for a better, more prosperous Europe, but is dragging them into a fatal tailspin.

New cycle European leaders cannot remain passive in the face of the dangerous populist tsunami now crossing the continent, and they know it. There is still time to react – by demonstrating strong leadership and prioritising growth over short-sighted policies – but that time is limited and the clock is ticking. Next year will be crucial, for it will mark the end of the current political cycle and the beginning of a new one.

There will be a new German government, European Parliament elections, and, at the end of the year, a new European Commission. It is here that political leaders

If Europeans are to overcome their fear of giving up sovereignty in order to achieve political union, a civic sense of attachment to Europe and its institutions must be regained and nurtured

should devote their efforts. No one wants the EU to fail because of its citizens’ disaffection. To take advantage of the political opportunity offered in 2014 requires launching an open, pedagogical effort now. European citizens have already shown a sense of responsibility and capacity for sacrifice, but they should know why hope – in the form of higher employment and living standards – is not futile. If that does not happen, next year’s European elections may give rise to an unfortunate paradox. Just when, as a result of the Lisbon Treaty, the European Parliament gains more power than it has ever had, the risk of it being condemned to irrelevance is greatest. If, reflecting the mood in the member states, the elections result in a fragmented Parliament – possibly rendered less representative by low voter turnout – paralysis, disaffection, and ineffectiveness are guaranteed. That is why Europe’s leaders should take advantage of the coming political cycle to

Achieving this requires, among other things, the recovery of the Franco-German axis as Europe’s driving force. It also presupposes a European budget that is sufficient to meet expectations and equal to the challenges that await. Resolving these issues is as important as resolving individual countries’ economic problems. Indeed, they are in large part the same problem. Institutions are legitimised in part by their effectiveness, and the EU must recover its authority to defend common interests and harmonise them with national concerns. The European Parliament can exercise its power only if citizens feel represented there. As Kemal Dervi, a vice president of the Brookings Institution, recently put it: “If independent technocrats are allowed to determine long-term policy and set objectives that cannot be influenced by democratic majorities, democracy itself is in serious jeopardy.” Next year will also mark the centenary of the outbreak of World War I. From that moment until the present, Europe has both endured the worst and enjoyed the best of its history. We should bear in mind the enormous symbolism of this date in order to understand how much Europe has changed – and, at the same time, to recognise the need to defend those changes. The EU is one of the great political milestones of mankind. For this reason, and in order to emerge stronger from the difficult situation in which Europeans now find themselves, Europe’s leaders must work with the conviction that the future is inexorably linked to a more integrated and more capable Union. © 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 31, 2013

Opinion

Tax transparency would take wires a bite out of future Apples Business

Leading reports from Asia’s best business newspapers

China Daily Nearly four out of every 10 Chinese business people feel they were under serious stress despite their happiness improving each year, a recent survey has found. The survey, conducted by Forbes China, found the happiness index of Chinese entrepreneurs increased from 7.8 in 2011 to 9 this year, an indicator that the majority of them are optimistic. But the survey also discovered that nearly 40 percent were under pressure and one third felt stressed. Career, responsibility and social factors are major contributors to the mounting pressure they are under.

Straits Times Singapore has slipped for the third year running in a key global competitiveness study, coming in fifth behind the United States, Switzerland, Hong Kong and Sweden. The city-state dropped a spot in the 2013 IMD World Competitiveness poll from the previous year, dragged down by rising costs and an economic slowdown. This year’s showing is its lowest ranking since 2002, when it was eighth. Singapore topped the charts in 2010, but slid to third in 2011 and fourth last year in the annual study of 60 economies.

Thanh Nien Vietnamese inflation slowed to its weakest pace in eight months in May, according to official data, in the latest sign that the economy is cooling. Consumer prices rose 6.36 percent year-onyear in May, the Government Statistics Office said, slightly down from a 6.61 percent increase reported in April. Economists attribute the slowdown in inflation to past monetary policy tightening and an easing of demand from domestic consumers.

The Age Spending by businesses on things like buildings and equipment fell more sharply than expected to start the year, new data show. Figures from the Australian Bureau of Statistics showed capital expenditure fell 4.7 percent in the three months to the end of March. JP Morgan economist Ben Jarman said the weak March quarter capital expenditure figures were expected to put pressure on the first-quarter gross domestic product data, which will be released next week.

Bloomberg Editors

pple Inc.’s clever taxavoidance strategies, revealed at last week’s highly publicised U.S. Senate hearing, probably inspired more than a few copycats. What company, after all, wouldn’t want to sidestep billions of dollars in U.S. taxes, as Apple did, by creating stateless Irish subsidiaries that owe no taxes anywhere? Before executives file the paperwork, they should consider this: The hearing also inspired European Union leaders to push for a new law that would require corporations to reveal the amount of taxes they paid, country by country. EU officials put the measure on a legislative fast track in hopes it would become law this summer. Such transparency could accomplish two things: First, by forcing corporations to reveal revenue, head count, profit and taxes paid per country, the EU would subject companies that pay less than their fair share to potentially embarrassing public scrutiny. Starbucks Corp in December voluntarily paid the U.K. more than it legally owed to quiet a controversy over its low tax payments. Second, similar public pressure could dissuade politicians in low-tax countries, including Ireland, Luxembourg and the Netherlands, from continuing to offer their countries as tax havens, depriving others of needed revenue.

Behaviour modification If the EU wants companies to pay more tax, it would be far better simply to amend its tax laws. But behaviour modification through transparency is the next best thing. The tactic makes such good sense that the U.S., and individual states, should do the same. As two left-leaning advocacy groups reported in 2011, many U.S. corporations pay little income tax to the states, on top of low federal taxes. They showed that 68 out of 265 companies studied had paid no state income tax in at least one year between 2008 and 2010, despite reporting collective profits of US$117 billion in that period. Over three years, the 265 companies avoided about US$43 billion in state taxes. Competition to attract investment is a main reason for the decline in state tax payments. When California offers generous research-anddevelopment credits to attract manufacturers, other states must match those tax breaks or watch jobs move across the border. The result is a race to the bottom. And corporations know all too well how to play one state against another. Companies shouldn’t be

faulted for seeking the best tax deals they can find, and states are right to try to lure jobs. But public officials need to do a better job of ensuring that the breaks they’re offering to corporations are in taxpayers’ interests. The Pew Center on the States said in a study published in April 2012 that half the states hadn’t taken basic steps to find that out. Some well-intentioned breaks, such as the film production tax credits that 44 states now offer, may have gone too far.

If the EU wants companies to pay more tax, it would be far better simply to amend its tax laws. But behaviour modification through transparency is the next best thing

Louisiana alone issued US$180 million in film tax credits in 2011. In most states, unused credits can be sold to other companies – even if they aren’t in the film business – to lower their tax bills. Bank of America Corp, the Hershey Co. and Comcast Corp have benefited from this secondary market. A watchdog group called Good Jobs First, which seeks to hold accountable the government officials who dole out economic-development money, is on the right track. It follows 249,000 awards from 427 programmes in 50 states and offers a database that anyone can search.

Tax disclosure Here’s another way to take advantage of transparency’s positive effects: Require

companies to disclose what they actually pay in federal income taxes. As the Senate Permanent Subcommittee on Investigations reported last week, Apple’s 2011 annual report states that its tax liability on US$34.2 billion in revenue came to US$8.2 billion, for an effective tax rate of 24.2 percent. That calculation, however, includes U.S., state and foreign taxes. In fact, Apple paid only US$2.5 billion in federal income taxes, for a 20.1 percent effective rate. The Securities and Exchange Commission could make tax transparency a reality by requiring publicly traded companies to report actual taxes paid to federal, state, local and foreign governments. Investors should urge the SEC to adopt this change.

Those who believe that lower taxes always equal higher earnings should consider the long term: Companies will eventually suffer if states are unable to provide good roads, schools and essential services. What’s more, state subsidies encourage companies to lobby for loopholes rather than maximise profits through innovation and cost-cutting. Unless states know what economic benefit they are getting in return, tax privileges can become another form of corporate welfare. And if the EU, the U.S. and the 50 states won’t stop handing them out like lollipops, taxpayers at least deserve to know who’s paying what to whom – or not. Bloomberg View

May 31, 2013

Closing Free trade in services with mainland by 2016 BOJ to conduct more bond purchases Mainland China will seek to achieve free trade in services with Macau and Hong Kong by 2015 or 2016, National Development and Reform Commission vice-chairman Zhang Xiaoqiang said yesterday. Companies from the two regions will receive the same treatment as mainland enterprises, he stressed in a speech made here. Quoting State Council vice-premier Wang Yang, Mr Zhang said Beijing hopes to first liberalise trade between Guangdong and the two regions as a trial scheme. A pilot free-trade zone proposed for Nansha will be a key part of this plan, he added.

The Bank of Japan will increase the number of its monthly government bond purchases after market participants asked for the move to tame volatility in debt prices. The central bank will purchase Japanese government bonds about 8 to 10 times a month starting June, according to a BOJ statement yesterday. The BOJ is trying to steady a debt market where volatility has risen to the highest in four years in the wake of unprecedented monetary easing steps last month. Governor Haruhiko Kuroda indicated that Japan can weather an increase in yields if it occurs alongside an economic recovery.

EU nations allowed to ease austerity France, Spain win two more years for deficit cuts Jan Strupczewski

EU member states need to ‘reform - and reform now’, says José Manuel Barroso

uro zone countries must focus on reforming their labour and services markets and can slow the pace of debt-cutting, the European Commission said, marking a shift away from austerity. The change of emphasis comes as the euro zone

struggles to escape a second consecutive year of recession and record high unemployment brought on by the collapse of investor confidence during three years of debt crisis. The EU’s executive warned urgent action was required but said spending

cuts would still have to be made. “Member states should now intensify their efforts on structural reforms for competitiveness,” European Commission President José Manuel Barroso told a news conference as the Commission presented its annual recommendations. “We need to reform, and reform now. The cost of inaction will be very high,” Mr Barroso said. “Fiscal consolidation is ongoing and should continue with a pace that reflects the situation in each country.” The Commission gave France and Spain, the euro zone’s second and fourth biggest economies, two extra years to cut their budget deficits to below the European Union ceiling of 3 percent of GDP as they struggle with recession. French unemployment is above 10 percent and set to grow. In Spain it is 27 percent, with more than half of young people without jobs – a level that could have

Myanmar may attract US$100 bln in FDI by 2030 But McKinsey warns of risks for investors

yanmar has the potential to quadruple the value of its economy to US$200 billion by 2030 if it presses on with reforms, embraces technology and shifts away from agriculture, McKinsey Global Institute said in a report yesterday. The nation, whose economy was stifled by decades of corruption and mismanagement under the former military junta, could add 10 million jobs and lift 18 million people out of poverty, according to the report.

“There is everything to play for – but also a major risk of disappointment,” the report said, warning the government’s task is to continue economic and political reforms in the face of major social challenges. It estimated that Myanmar’s gross domestic product (GDP) grew at an average of 4.7 percent a year from 1990 to 2010, lagging regional neighbours, but could potentially expand at an average annual rate of

profound social impact. Showing just how far the 17-nation euro zone is from returning to health, the Organization for Economic Cooperation and Development said on Wednesday that the currency bloc would shrink 0.6 percent this year. Poland and Slovenia also got two extra years while Portugal and the Netherlands each got a one-year extension to the deficit reduction deadline, imposed as part of the disciplinary framework agreed by member states to underpin the euro. In a tribute to tough consolidation efforts undertaken so far, the Commission ended its disciplinary steps against Italy, Hungary, Latvia, Lithuania and Romania because they have cut their deficits to within EU limits.

Reforms now key Because debt-laden governments cannot afford to kick-start growth through public spending, they must reform the way their economies are run, largely by tackling inefficiencies in labour markets, pension systems and public services. The Commission emphasised the need for labour markets to be made more flexible and on the opening up of product and services markets. It also called for Germany to push wages up in line with productivity so that domestic

roughly 8 percent until 2030. The country may attract as much as US$100 billion in foreign direct investment over the next two decades if it spends enough to achieve its economic growth potential, McKinsey said. The annual growth may help lure US$170 billion in capital inflows, it said, with FDI accounting for US$100 billion – more than twice as much as it attracted in the previous two decades. “Myanmar is unique in terms of a country being isolated for many decades and opening up, trying to make changes very fast,” Heang Chhor, a McKinsey & Co. director in Southeast Asia, said. “The US$170 billion would come only if Myanmar keeps its credibility and support with the international stakeholders, investors in particular.” President Thein Sein has allowed

demand is increased. Much of its attention was focused on France, which it said must carry out labour and pension reforms to regain the country’s lost business dynamism while cutting public spending to address its swollen budget. It must also simplify its tax system to help companies compete and make its pensions system sustainable by 2020. Mr Barroso said Paris should use the extra two years granted by the Commission to reform. “This extra time should be used wisely to address France’s failing competitiveness, as France’s enterprises have suffered a worrying loss of competitiveness in the last decade, indeed we can say in last 20 years,” he said. The commissioner for economic affairs, Olli Rehn, hammered home that message. “It is now of paramount importance that this breathing space created by the slower pace of consolidation is used by member states for implementing those economic reforms that are necessary to unleash our growth potential and improve our capacity to create jobs,” he said. The recommendations, once approved by EU leaders at a summit in late June, will become binding and are expected to influence how national budgets are drafted for 2014 and onwards. Reuters

more political freedom and loosened controls on the economy following about five decades of military rule, attracting companies including Ford Motor Co. and Coca-Cola Co. Myanmar’s economy may grow 6.75 percent this fiscal year, led by natural gas sales and investment as the country moves to modernize its financial system, the International Monetary Fund said in a report earlier this month. Buddhist-Muslim clashes this week in the eastern state of Shan have left one dead and several wounded so far. Investors “want reassurance that the government can resolve ethnic and communal violence, maintain its momentum towards political and economic reform, and ease constraints on doing business” the study said. AFP