Macau Business Daily, May 7, 2013 by Business Daily

Banks double down on outside loans

I SSN 2226-8294

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City closer to hiring mainland maids

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Hotpot giant denies rat-for-mutton link

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New Future Bright outlets fail to shine

Grand Waldo to get a facelift, for now

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alaxy Entertainment Group Ltd will likely move Grand Waldo’s tables to Galaxy Macau and revamp the casino, Union Gaming Research Macau predicts. With the operator focusing on Galaxy Macau’s second and third phases, the loss-making casino will get a new lifeline. A redevelopment of the plot will have to wait, analyst Grant Govertsen wrote in a note yesterday. In the short-term Galaxy gets 38 gaming tables, a valuable commodity in Macau these days, for ‘an attractive price’, the note says. Union Gaming believes other gaming concessionaires might be looking at buying tables from their own third-party satellite casinos or buying the casinos outright. More on page 3

Photo by Manuel Cardoso

Deputy editor-in-chief Editor-in-chief Tiago Azevedo Tuesday May 7, 2013 Number 277 Year II www.macaubusinessdaily.com

The performance of the banking sector improved in March as their operating profits rose to 645.5 million patacas (US$80.7 million), up by 38 percent from a year earlier, as they lent more money outside Macau. The combined first-quarter operating profit of the banks rose to 1.68 billion patacas this year, one-third more than last year, the Monetary Authority of Macau said yesterday.

Vitor Quintã

MOP 6.00

April 19, 2013

Open window for ‘mobile’ gambling A November bylaw allows for ‘mobile’ gambling inside some of Macau’s gaming venues. But there is no sign that the once-abandoned attempt to turn the city into a global jurisdiction for online gambling will be resumed. And the Las Vegas operators with Macau interests have also shown little interest in jumping into the online gambling bandwagon, amid legal complications. Page 4

SJM profit up, bucks mass-market trend At a time when the mass-market gaming segment is growing faster in Macau, SJM Holdings Ltd posted a 12 percent increase in first-quarter profit, mostly thanks to high rollers. In fact the operator has moved 50 more tables to its VIP rooms. The company is in excellent financial shape as it prepares to push into Cotai, with a cash balance of HK$25.99 billion. “We are very optimistic about the future, as we commit to a major expansion… with our project on Cotai,” said chief executive Ambrose So Shu Fai.

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Name

Waste as it were: CSR wins tender

%Day

SANDS CHINA LTD

2.60

HONG KONG EXCHNG

2.36

PETROCHINA CO-H

2.10

WHARF HLDG

1.99

CITIC PACIFIC

1.89

KUNLUN ENERGY CO

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ESPRIT HLDGS

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SWIRE PACIFIC-A

-0.25

BANK EAST ASIA

-0.32

TINGYI HLDG CO

-2.86

Source: Bloomberg

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Macau Waste Systems Co Ltd (CSR) will continue to be the city’s solid waste collector for the next 10 years after winning a controversial public tender. The Environmental Protection Bureau said CSR offered the lowest price among the five bidders and had the best overall score. The tender was overshadowed by accusations that the government was favouring the current concessionaire. Page 16

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May 7, 2013

Macau

SJM profit up as VIP push continues Adjusted EBITDA rises 11 percent to HK$2.1 billion. Vítor Quintã

vitorquinta@macaubusinessdaily.com

The group’s flagship casino Grand Lisboa gave a boost to revenue

JM Holdings Ltd posted a 12 percent increase in first-quarter profit as the company made the most of a rebound in spending by high-stakes gamblers at its casinos in Macau. Net income rose to HK$1.92 billion (US$247

million) from HK$1.71 billion a year earlier, according to a statement to the Hong Kong Stock Exchange yesterday. SJM’s gambling revenue from VIPs, or high rollers, rose 13 percent to HK$15.1 billion for the quarter

ended in March. VIP gaming accounts for over two-thirds of Macau’s casino business but the higher-margin mass market has been growing faster. SJM bucked the trend, with its mass-market revenue climbing 4.7 percent to

HK$5.9 billion. In fact the operator transferred 50 of its massmarket gaming tables to the VIP segment in the past 12 months. Gambling revenue climbed 10 percent to HK$21.7 billion. The group’s flagship Casino Grand Lisboa was the main reason behind this growth. It increased its first quarter gaming revenue by 24 percent to HK$8.3 billion. Analysts said the growth was decent considering the operator has no presence on Cotai. SJM, the former casino monopoly founded by Hong Kong tycoon Stanley Ho Hung Sun, runs 20 out of the 35 casinos in Macau. It won a land grant in October to build its first casino resort in Cotai strip. Adjusted earnings before interest, tax, depreciation and amortisation, or adjusted EBITDA, rose 11 percent to HK$2.1 billion. Ambrose So Shu Fai,

SJM’s chief executive, described the operator’s performance as “excellent”. “We increased our net profit, adjusted EBITDA and revenue figures to record levels,” he added in a statement. “We are very optimistic about the future, as we commit to a major expansion of our Macau operations in both gaming and gamingrelated businesses, with our project on Cotai,” the executive said. And the company has the money to back its expansion plans with a cash balance of HK$25.99 billion at the end of March. SJM has the second highest cash balance among 170 casino and gaming companies globally, Thomson Reuters data show. Shares of SJM climbed 2.5 percent to HK$19.76 in Hong Kong before the earnings announcement. The benchmark Hang Seng Index gained 0.99 percent. With Bloomberg News/Reuters

La Scala accused hits out at HK newspaper Tycoon Joseph Lau threatens to sue the Apple Daily Tony Lai

tony.lai@macaubusinessdaily.com

ong Kong billionaire Joseph Lau Luen Hung has threatened to sue Hong Kong’s Apple Daily over what he describes as a misleading report in the newspaper on his medical condition. The start of Mr Lau’s trial here for bribery has twice been postponed because, his lawyer says, he is ill. In a written statement which appeared in several Hong Kong publications yesterday, Mr Lau says he is “utterly shocked” that the Apple Daily published last week a certificate of his medical condition. The certificate says Mr Lau has diabetes and a high level of cholesterol, and has to rest more. Mr Lau says the certificate was issued on April 10, 2008. It is not the certificate that his lawyer submitted to the Court of First Instance here on April 29 as the excuse for his failure to appear for the start of his trial, he says. Mr Lau says “somebody had deliberately obliterated and concealed” the date on the certificate published by the Apple Daily, possibly to mislead readers. Mr Lau says the publication of the certificate was “a blatant and

malicious act committed in clear violation of legal rights to protect my privacy”. He says he intends to complain to Hong Kong’s privacy commissioner and to sue the newspaper. In his statement he also asks the authorities here to investigate the “suspected leakage” of the certificate, which he describes as confidential. Mr Lau is the boss of Chinese Estates Holdings Ltd. He and another Hong Kong businessman, Steven Lo Kit Sing, are charged with bribing Ao Man Long when Mr Ao was secretary for transport and public works. The two accused are alleged to have given Mr Ao HK$20 million (US$2.5 million) in exchange for the grant of land for an upmarket housing development here called La Scala. Their trial was due to begin last September. But last week the court postponed the start of the trial to June 17 because Mr Lau’s lawyer said his client was ill. It was the third postponement, and the second due to Mr Lau pleading ill-health. The court decided to send a medical team to Hong Kong to make their own evaluation of the fitness of Mr Lau to stand trial.

Sa Sa sales up over holidays

ainland Chinese visitors during the Labour Day holidays had time enough when not buying gold to shop for cosmetics, too, Sa Sa International Holdings Ltd sales figures show. The cosmetics retailing chain announced last week that its sales in Macau and Hong Kong during the three days of holidays ended May 1 were 25 percent higher than in the equivalent period of last year. Same-store sales – sales in its shops that were open last year – rose by about 17 percent. Sa Sa International told the Hong Kong Stock Exchange that the figures were “in line with the group’s expectation”. The company attributed the rise in sales to “continued growth in mainland tourist arrivals during the Labour Day holiday”. The sales figures were better than

several of the estimates compiled by the Hong Kong Chinese-language news media, which indicated growth of less than 10 percent. The Public Security Police counted over 548,000 people entering and leaving Macau during the Labour Day holidays, of whom 383,000 were tourists, 9.4 percent more than last year. The police figures were not broken down according to where the tourists came from. Data from the Statistics and Census Service show that in the first quarter 4.4 million visitors were mainlanders, or 62.4 percent of the total. Even before the Labour Day holidays, the global decline in the price of gold had since April driven an influx of mainlanders eager to buy gold here. T.L.

May 7, 2013

Macau

Grand Waldo revamp may be on the cards Union Gaming Research expects more purchases of satellite casinos by gaming companies

City brings in 300 mainland maids

Vítor Quintã

vitorquinta@macaubusinessdaily.com

alaxy Entertainment Group Ltd may move the Grand Waldo’s gaming tables to the Galaxy Macau while it redevelops the casino, Union Gaming Research Macau says. Galaxy Entertainment announced on Sunday that it was buying the loss-making Grand Waldo, which operates under its gaming licence, for HK$3.25 billion (US$418.9 million). The Grand Waldo, in Cotai, has 38 tables. Union Gaming Research says in a note to investors issued yesterday that it expects Galaxy Entertainment to redeploy these tables temporarily in the Galaxy Macau, Galaxy Entertainment’s flagship casino resort, which is also in Cotai. The note, written by analyst Grant Govertsen, says Galaxy Entertainment may “reconfigure” the Grand Waldo. “I believe any changes will happen within the context of the existing property, by improving certain aspects,” Mr Govertsen told Business Daily. He said Galaxy Entertainment “already has a lot on their plate”, being busy spending HK$66 billion on the second and third phases of the Galaxy Macau. Galaxy Entertainment saw its stock rise 5.9 percent to close at HK$36.15 in Hong Kong trading yesterday. Business Daily asked for a comment from Galaxy Entertainment but received no reply before press time. Galaxy Ent ertain ment told the Hong Kong Stock Exchange on Sunday that the Grand Waldo had “strategic value and

Secretary Francis Tam says they are now waiting for Beijing to confirm details Tony Lai

tony.lai@macaubusinessdaily.com

Galaxy’s acquisition of the Grand Waldo should be completed in the third quarter, Union Gaming says (Photo: Manuel Cardoso)

development potential”. HSBC analyst Sean Monaghan said in a note to investors issued in November that the Grand Waldo had “excellent redevelopment potential, given its long water frontage and location next to the marina site”. Union Gaming Research’s note says: “On a longer-term basis, the Grand Waldo could potentially fill a niche for Galaxy – maybe at the lower end of the mass-market scale.” It says Galaxy Entertainment paid “an attractive price” for the Grand Waldo. The purchase may increase Galaxy Entertainment’s value by HK$7.7 billion if the company can improve the returns from the Grand Waldo’s tables, the note says. The research house estimates that the Grand Waldo pays Galaxy Entertainment HK$20

More outside loans boost bank profits

he performance of the banks improved in March, their combined operating profit rising to 645.5 million patacas (US$80.7 million), 38 percent more than year earlier, as they lent more money outside Macau,

official data show. The data, released yesterday by the Monetary Authority of Macau, also show the combined first-quarter operating profit of the banks rose to 1.68 billion patacas this year, onethird more than last year.

million to operate under Galaxy Entertainment’s gaming licence. This is the first time a gaming company here has bought a satellite casino. Union Gaming Research believes more such acquisitions may be in the pipeline. “Table games are a finite and scarce resource (and therefore extremely valuable) in the context of the Macau government’s marketwide cap on the number of table games,” its note says. It adds that Galaxy Entertainment should complete its acquisition of the Grand Waldo in the third quarter of this year. Galaxy Entertainment will buy all the Grand Waldo’s assets, not just Get Nice Holdings Ltd’s stake of 65 percent as Business Daily had reported yesterday.

It was the most profitable first quarter for the 29 banks here since the authority began publishing such data in 1990. The rise in profit in March was boosted by a jump in combined lending to companies or individuals outside Macau to 256.7 billion patacas, 9.3 percent more than in February. It was the biggest jump in any month since January 2011. Lending to residents rose by 1.7 percent to 210.8 billion patacas. The amount of non-performing loans more than doubled to 1.16 billion patacas. Combined deposits rose by 0.1 percent to 383 billion patacas. Loans as a proportion of deposits rose to 82.3 percent in March, the most since July 2011 and 4.6 percentage points more than in February. In mainland China, loans by commercial banks as a proportion of their deposits should not exceed 75 percent. In the first quarter, combined lending by the banks to manufacturers and to hotels and restaurants was about 19.5 percent higher than in the fourth quarter of last year. Lending to the gaming sector was 58.4 percent lower. T.L.

acau could soon bring in about 300 domestic workers from mainland China under a trial scheme after confirmation from Beijing, said Secretary for Economy and Finance Francis Tam Pak Yuen. He told media on the sidelines of a public event yesterday that 200 housemaids would come from Guangdong province and the remainder from Fujian province. Mr Tam said it was still up to the Chinese Ministry of Commerce to decide the final number, stressing it “will not be big as the scheme is on a trial basis”. The government first mentioned in 2011 they would ask Beijing to allow mainland domestic workers in Macau. By the end of March, nearly 18,500 non-residents were employed here as domestic helpers, with 47 percent from the Philippines and 34 percent from Vietnam. Only 12 came from mainland, official data show. Mr Tam said earlier this year Macau could hire the first batch of mainland housemaids during the first half. “We are now finalising the implementation details with the Ministry of Commerce… like how the future employment contract could be drafted and protection for the mainland housemaids,” he said yesterday. Ao Ieong Kuong Kao, president of the Macau Overseas Employment Agency Association, thinks the city requires about 6,000 mainland workers to meet demand and suggests the market should decide their salary. In March Mr Tam said the wages for mainland helpers could be higher than for other non-residents. The remark led non-resident workers’ groups to cry foul and ask for equal treatment. There is no formal minimum wage in Macau but the Human Resources Office does not approve any applications to hire non-resident staff if the wage is lower than 2,500 patacas (US$312.5) per month. A draft proposal on a minimum wage for all cleaning and security workers here will only be sent to the Legislative Assembly “by year-end or early next year,” Mr Tam said yesterday. The proposed range of 23 to 28 patacas an hour was only a suggestion “to facilitate discussions,” he added. Labour groups have called for a minimum wage of 30 patacas an hour after Hong Kong raised its minimum wage to HK$30.

May 7, 2013

Macau

Online gambling – the next frontier? Operators of traditional casinos reluctant to do anything that might interfere with their licensing privileges Michael Grimes

michael.grimes@macaubusinessdaily.com

Macau bylaw gazetted in November last year foresaw the possibility of “mobile” gaming inside some of the city’s bricks and mortar gambling premises. The particular bylaw was mainly concerned with conventional slot machines and slot parlours. But it also mentioned the possibility of mobile gambling using wireless networks, but “only inside gambling areas especially authorised” by the city’s regulator the Gaming Inspection and Coordination Bureau. In the past preparatory work has even taken place with the goal of regulating Macau as a global jurisdiction for online gambling. It was abandoned. So far, Macauslot’s monopoly on non-racing sports betting – including an online portal – has not been challenged in Macau. But Nevada in the United States allows sports betting in its casinos, and has just allowed a subsidiary of one of its traditional offline casinos to get involved in Internet poker on a statewide basis only. Ultimate Gaming, a subsidiary of Station Casinos LLC, launched its Internet poker site Ultimate Poker in the state and began taking bets last week. It seems unlikely however that any of the Las Vegas operators with Macau interests will get involved in online gaming any time soon – even on a Nevada-only basis. That’s because of a combination of factors, including fresh legal headwinds out of the U.S. – and the scepticism of senior casino executives who are in some cases already earning more from traditional gambling in Macau than from any of their U.S. activities. Steve Wynn – chairman of Wynn Resorts Ltd and Wynn Macau Ltd – had a three-week flirtation with online gambling portal PokerStars in early 2011 in the form of a shortlived strategic partnership. It ended when U.S. federal prosecutors moved to shut down PokerStars and other major brands such as Full Tilt Poker, accusing them of operating illegal gambling businesses.

… the rules, the regulations, the laws, the absence of laws… All of this makes digital gaming a little bit murky to us Steve Wynn, chairman of Wynn Resorts

On April 15 that year Wynn Resorts said in a statement it had “terminated its alliance”. It added: “The decision was reached as a result of the indictment unsealed by the U.S. Attorney for the Southern District of New York.” Since then PokerStars has made a comeback. On July 31, 2012, the

Online poker – growing in popularity in China

U.S. government withdrew ‘with prejudice’ all civil complaints against PokerStars and Full Tilt Poker after reaching a settlement with PokerStars that included PokerStars purchasing Full Tilt. No wrongdoing was admitted by either brand. The federal authorities also acknowledged both companies could apply for licences to operate online gaming in the U.S. once a legal framework was available. On August 9, 2012, PokerStars paid US$225 million (1.80 billion patacas) to the U.S. Department of Justice and concluded the acquisition of Full Tilt Poker.

‘Murky’ business But despite the rehabilitation of PokerStars and Full Tilt in the U.S., eight days ago during Wynn Resorts’ first quarter earnings call, Mr Wynn referred to the online gambling market as “murky”. He stated: “…in a complicated world full of change, things like Internet gambling, which almost defy analysis month-to-month – the rules, the regulations, the laws, the absence of laws…All of this makes digital gaming a little bit murky to us.” Sheldon Adelson, chairman of Las Vegas Sands Corp., has gone even further, telling the Las Vegas Sun newspaper’s Jon Ralston he was “morally opposed” to online gaming. “You don’t want a casino in every

home,” Mr Adelson told him. He also said online didn’t make good business sense. “PokerStars is the biggest and most successful online gaming entity in the world, and the most they made in a year was US$440 million,” stated Mr Adelson in late 2011. “Now, how is US$440 million divided up amongst several other players [operators] going to make a difference? It ain’t going far,” he added. In business however, there is rarely such a thing as “never”. Poker as a game seems to be gaining in popularity among educated urban Chinese. PokerStars launched its branded poker room at Melco Crown Entertainment Ltd’s City of Dreams casino resort on Cotai on April 19 with the Macau Poker Cup. Danny McDonagh, PokerStars’ director of live operations for Asia Pacific, told Business Daily around 100 players – one in nine – joined the tournament by qualifying for the buy-in through victory in online tournaments linked to PokerStars.com. And despite his “murky” comment, Steve Wynn said in the same conference call in relation to online: “…we’ll have our oar in the water as we should on behalf of our shareholders.”

Product liability There is however a new and typically American threat facing online

gambling: product liability lawyers. Reuters has reported that a group of 10 lawyers and academics with experience in prior liability cases met in Indianapolis in the U.S. in midApril to discuss whether a lawsuit claiming online gaming further promotes gambling addiction has a chance of winning. The legal strategy under consideration would be modelled on the class action lawsuits that forced cigarette companies to agree to pay US$206 billion over 25 years to compensate for medical costs, caring for people with smoking-related illnesses, and to fund anti-smoking advocacy groups. David Stewart, a Washingtonbased lawyer with Ropes & Gray and general counsel to the American Gaming Association – a co-organiser of the Global Gaming Expo Asia to be held in Macau later this month – is sceptical about the class action approach to online gambling in the U.S. “It’s a government-approved, regulated product,” said Mr Stewart. “Nobody’s made Nordstrom [a U.S. retailer] reimburse somebody who is a shopaholic.” The courts have thrown out previous lawsuits targeting traditional gambling, Mr Stewart said. “The legal arguments are flawed,” he said. “It’s gambling. And when you gamble, you lose.” With Reuters

May 7, 2013 April 19, 2013

Macau

No rats in our stews, Little Sheep says The chain says the mutton served in its restaurant here is the real thing Stephanie Lai

sw.lai@macaubusinessdaily.com

ll meat sold in Macau’s Little Sheep outlet is authentic, the restaurant chain said yesterday after the state news agency, Xinhua, suggested that the flesh of rats, foxes or minks may have got into the Little Sheep supply chain. Mainland China’s Ministry of Public Security said on Thursday that the police had broken up a criminal syndicate which had made over 10 million yuan (12.95 million patacas) from selling rat, fox and mink flesh as mutton in Shanghai and the neighbouring province of Jiangsu. The ministry said the police had arrested 904 people and seized over 20,000 tonnes of illegal meat products in the past three months. Xinhua reported yesterday that the authorities in Shanghai, acting on a tip-off they had received on Friday, had raided a market

Little Sheep has one restaurant in Macau, in the Horta e Costa district

in the Minhang district of the city and seized large quantities of meat bearing labels that described it as sliced lamb from New Zealand, but which carried no production dates or list of ingredients. Purchase orders found at the market indicated that at least 11 tons of the suspect meat was bought

from Yangxin county in the province of Shandong in March. Food safety officials collected samples for DNA testing. The results should be out in about a week. One delivery order found at the market indicates that some of the suspect meat may have entered the supply chain that serves several restaurant

chains, including the Little Sheep chain. Staff in Macau’s sole Little Sheep restaurant said they were surprised to hear the Xinhua report. They said the restaurant here got its mutton from Little Sheep’s farms in Inner Mongolia. The owner of the Little Sheep chain, the China division of Yum! Brands Inc, denied that the chain bought mutton from sources other than its own farms. “Our imports of mutton to the restaurants in China, including Hong Kong and Macau, all undergo stringent food safety checks and are all from Inner Mongolia,” a spokesperson for Yum’s China division told Business Daily. The spokesperson gave no details of the precautions the company takes. The Civic and Municipal Affairs Bureau told Business Daily that it had found no meat in Macau that was not what it was supposed to be.

Corporate

MIN

CESL Asia teams with BNU on staff card CESL Asia Investments & Services Ltd – an investor in Macau’s infrastructure – is celebrating its 25th anniversary this year. As part of the celebrations, the firm has joined with Banco Nacional Ultramarino SA (BNU) to offer a CESL Asia staff card. CESL sees the card in part as a tool for staff retention in a labour squeezed market. “This is a staff card that doubles as a credit card and will offer a range of benefits that are not universally accessible to our staff,” said CESL chief executive António Trindade (centre left). “We are loading this card not only with very attractive credit facilities and other financial services provided by BNU, but also with the best offers and discounts from local suppliers of services and products that our staff will require when looking for a loan to finance a family investment or when doing their purchases for useful things of every day life”, added Mr Trindade.

No ‘fluinfected chicken The Civic and Municipal Affairs Bureau told Business Daily it has found no chicken infected with the H7N9 avian ‘flu virus. A sample taken from a chicken in a Dongguan wet market in late-April was confirmed to contain the virus, the first case of infection in Guangdong province. Macau imports live poultry from Guangdong, though not from Dongguan, the bureau said. The city will remain on high alert on the hygiene of local poultry market, it added. “Vendors have been required to butcher all their poultry during day-time sales,” a bureau spokesman said.

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MGM sponsors welfare shop MGM China Holdings Ltd has donated 200,000 patacas (US$25,000) to Santa Casa da Misericórdia de Macau – known in English as Macau Holy House of Mercy. The charity’s work includes community welfare programmes. The money will be used to support the group’s welfare shop. The outlet was launched early this year to aid local households facing economic difficulties. Grant Bowie, chief executive of MGM China presented the cheque to António J. Freitas, president of the Macau Holy House of Mercy. During the handover event hamper bags with food and household basics were given out to disadvantaged households. A team of 30 volunteers from MGM Macau casino and volunteers from the charity distributed hampers. They went to 223 families with either a single parent in the household or with elderly, sick or handicapped members living at home. The number of families helped since the project was launched jumped to 870.

For m plea ore in form se v ww w.aw isit our ation, or c ards webs o inqu ntact u macau ite at .com iries s @aw ards mac au.c om

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May 2013 April7,19, 2013

Macau

Poor start for new outlets pares Future Bright profit But the company forges ahead with its plans to make food souvenir products Tony Lai

tony.lai@macaubusinessdaily.com

sub-par performance by its new restaurants has trimmed Future Bright Holdings Ltd’s first quarter profit. Future Bright, run by Legislative Assembly member Chan Chak Mo, told the Hong Kong Stock Exchange

on Friday that its first-quarter gross profit was HK$61.8 million (US$8 million), 0.3 percent less than last year. Turnover increased by 11 percent to HK$175.6 million but operating expenses surged by almost 25 percent to HK$64.5 million.

Gross operating margin narrowed by 4 percentage points to 35.2 percent. Some of the restaurants that Future Bright opened last year “have not generated sufficient revenue to cover the increased operating expenses”, the company said.

Future Bright opened 10 new outlets last year, giving it a total of 31 restaurants and 10 food court counters. The company’s first quarter results have not altered its intention to open 10 more outlets this year. The expansion plan “is on schedule”, the company said. It said it had found premises for its first Macau-style tea restaurant. Mr Chan could not be reached for comment. He told Hong Kong financial news agency Finet Group after a meeting of Future Bright shareholders that four new outlets on the University of Macau’s new campus on Hengqin Island were set to open in the second half of this year. The company’s Japanese restaurants generated HK$90.7 million or nearly half of its revenue in the first quarter. Revenue from its Western restaurants fell by 9.3 percent to HK$7.8 million. Revenue from its Pacific Coffee outlets and wholesale business rose by more than half to HK$16.7 million. Future Bright said it was still aiming to “launch the group’s food souvenir products by early next year to tap into the food souvenir market in Macau”. Mr Chan reportedly said he hoped the company’s share of the market for food souvenir products could reach 2 percent within two years. Last month the company signed a four-year lease for more than 1,580 square metres of industrial floor space for making food souvenir products such as almond cookies and egg rolls. Future Bright chief business development officer Cheung Kwok Wah told Finet Group that the company would keep concentrating on Macau because of the development of more resorts in Cotai.

May 7, 2013 April 19, 2013

Greater China

HK IPO market heats up

China Resources to merge gas, power units

As Sinopec unit joins China Galaxy to seek US$3.6 bln

State-owned conglomerate China Resources (Holdings) Co Ltd plans to merge its Hong Kong-listed power producer with its natural gas distribution unit to form an energy group with a combined market value of nearly US$22 billion, the listed firms said yesterday. Shares in China Resources Gas Group Ltd and China Resources Power Holdings Co Ltd – both more than 63 percent owned by China Resources (Holdings) – were suspended from trading yesterday morning, they said in filings with the Hong Kong Stock Exchange. “There is synergy in the merger. As an enlarged entity, it can help to enhance their competitiveness,” said Linus Yip, chief strategist at First Shanghai Securities. “The firms can more effectively manage their resources and increase cost efficiency.” China Resources Gas is one of a number of Chinese natural gas distributors listed in Hong Kong, whose revenue and earnings have been growing rapidly in the past decade on Beijing’s efforts to boost gas consumption and cut the use of coal. Its earnings rose 38 percent year on year to HK$1.65 billion (US$213 million) in 2012. China Resources Power is an independent power producer with total generating capacity of 25,271 megawatts. Its net profit soared 68 percent to HK$7.48 billion in 2012.

Illegal rare earth production still rife Illegal production and smuggling still dog China’s rare earth industry despite a long campaign to clean up the sector, contributing to a supply glut that has depressed global prices, a senior industry official said. “Problems in the industry that have accumulated over the long-term have still not been fundamentally resolved,” Su Bo, vice-minister of industry, said in comments published on the ministry’s website. “Unplanned exploitation and production of rare earths has affected the normal workings of the market, and illegally-produced rare earth products have reached downstream consumers through a variety of channels or been smuggled abroad, leading to a continuous decline in prices,” he said. China, which supplied 97 percent of the world’s rare earths, used in products from computers to wind turbines, launched a nationwide campaign in 2010 to “rectify” the chaotic and ill-regulated sector to curb severe environmental damage. It reduced domestic output and shut hundreds of small and unlicensed miners, processors and traders, leading to a fourfold spike in export prices and complaints from buyers in Europe, Japan and the United States. Mr Su added that while China needed to continue to restructure the sector and prevent oversupply, it should not impose “excessive controls” over the production of light rare earths and thereby lose market share.

Export growth seen edging up China’s annual export growth may have picked up slightly in April due to a low comparison from a year ago, while import growth probably eased, a Reuters poll showed, suggesting the underlying momentum for both the domestic and global economies remains tepid. Economists said the likely uptick in the year-on-year export figure cannot mask weakness in real external demand, given the patchy recovery in the U.S. and no quick turnaround for the euro zone. “Recent data including Korea’s exports data and global leading indicators have been indicating weaker external demand growth momentum,” Yu Song, China economist at Goldman Sachs, said in a note to clients. “We expect the sequential exports growth rate to be low. However, year-onyear growth is likely to show a modest rebound, due to a low base,” he added. The median forecast of 27 economists polled by Reuters showed China’s exports likely grew 10.3 percent in April from a year ago, up from an increase of 10 percent in March. Imports were seen rising 13.9 percent last month, down from a rise of 14.1 percent in March. That would leave an estimated trade surplus of US$15.1 billion, compared with a slight trade deficit of about US$880 million in March. The Customs Administration is scheduled to announce April trade data tomorrow. Reuters

Sinopec unit’s US$2.24 bln IPO biggest since November

inopec Engineering Group Co., a unit of China’s biggest refiner, and China Galaxy Securities Co. are seeking as much as a combined US$3.6 billion in Hong Kong initial public offerings this month after first-time share sales in the city slumped to a four-year low. The massive IPOs have been eagerly anticipated in Hong Kong and their success could trigger a wave of other deals, ranging from hotel operators to banks looking to sell new shares in coming months. “The sentiment in Hong Kong and China is still cautious but people can be opportunistic and yield hungry,” said Nicholas Yeo, a fund manager at Aberdeen Asset Management Plc. “If these two deals are priced attractively, they may garner some decent demand.” Sinopec Engineering offered 1.33 billion shares in an indicative range of HK$9.8 to HK$13.1 each, putting the deal value at up to HK$17.4 billion (US$2.24 billion), sources said. At the top end, the deal would be Hong Kong’s largest IPO since People’s Insurance Company (Group) of China Ltd raised US$3.56 billion in late November.

Regulator tightens rules on capital inflows

hina will increase scrutiny on importers and exporters who channel in money disguised as trade bills, the top foreign exchange regulator said, after the Chinese yuan hit a record high last week. The State Administration of Foreign Exchange (SAFE) said in a statement it would hand down a risk warning notice 10 days after it finds any company’s goods and capital flows do not match or it is channelling big amounts of money into China. Such companies will then be placed on the SAFE’s B list, which is for companies that are more closely

The offer values Sinopec Engineering at 9-12 times its forecast earnings in 2013, added the sources, who declined to be identified because details of the deal are not yet public. China Galaxy Securities, whose larger rivals include Citic Securities Co Ltd and Haitong Securities Co Ltd, is offering about 1.5 billion shares in an indicative range of HK$4.99 to HK$6.77 each, the sources said. The range is equivalent to a price-to-book ratio of 1.19 to 1.49 times. The company initially planned for a dual listing in Shanghai and Hong Kong, but gave up plans for a simultaneous offering in mainland China after the country’s securities regulator froze IPO approvals late last year.

Activity pick-up The two deals underscore a pickup in activity after IPO issuance in Asia excluding Japan plunged 56 percent to US$3.3 billion in the first quarter, making it the worst start to a year for new share listings since the first quarter of 2009, according to Thomson Reuters data. IPOs in Hong Kong are down 20

monitored, for three consecutive months and will only be moved back on the A list if all the relevant indicators return to the normal range, the regulator said in the statement published late on Sunday. The measures, which SAFE said were aimed at strengthening management of capital inflows, came after the yuan hit a record high last Tuesday following a steady rise since April. Chinese exporters and importers often bring capital into or out of the country disguised under their trade accounts, and SAFE has launched regular campaigns against the practice. Chinese export data in recent months has pointed to a gradual revival in external demand, but some analysts suspect local exporters may have overstated their business to sneak funds into the country and avoid capital restrictions. The country is looking into how individuals and small businesses can

percent so far in 2013 from the same period of 2012 to US$1.05 billion, data shows. After holding the crown of global IPO hub for several years, the city had US$7.72 billion worth of deals in 2012, the lowest volume since the 2008 global financial meltdown. Hong Kong’s lacklustre performance is in sharp contrast to Southeast Asia, where a string of deals including BTS Infrastructure Fund and Temasek Holdings-backed Mapletree China REIT have kept bankers busy. The two deals rank as Asia’s biggest IPOs this year. Other large deals likely to hit Hong Kong later this year include a series of commercial real estate spinoffs from Hong Kong property and investment companies, including an up to US$1 billion IPO by NW Hotel Investments, which is part of New World Development Co. Great Eagle Holdings Ltd also plans to spin off its Langham hotel chain through an US$800 million IPO, while property and infrastructure group Hopewell Holdings Ltd is looking to raise as much as US$800 million from a spinoff of its property and hospitality business, Hopewell HK Properties. Reuters

settle trade using yuan this year, a People’s Bank of China official told Reuters yesterday, potentially opening a massive new conduit for Chinese currency to flow into global markets. At the same time, by allowing individual traders and companies, Beijing can help eliminate the risk of currency fluctuation for individuals and small enterprises in the import/ export sector. Guo Jianwei, deputy director of one of two central bank departments focused on monetary policy, said that regulators were considering how to include provisions for travel, online commerce and trade by small businesses. “After several years of operation, yuan trade settlement by corporations has matured; the next step is trade settlement for individuals,” said Mr Guo. “A pilot programme in Yiwu is already under way, and the next step is to expand it throughout the whole country.” Reuters

May 2013 April7,19, 2013

Greater China

HSBC services growth slows sharply in April Private survey shows slowest growth since August 2011 Beijing hosts Netanyahu, Abbas Israeli Prime Minister Benjamin Netanyahu arrived in China yesterday to boost economic ties and urge Communist Party leaders to clamp down harder on Iran and its ally Syria, amid reports of Israeli airstrikes there. While en route to Shanghai, his first stop, Mr Netanyahu declined to answer questions about Syria. Mr Netanyahu’s visit overlaps with a visit to China by Palestinian Authority President Mahmoud Abbas (pictured), though the two have no plans to meet. “The Chinese leadership was recently replaced and it is expected to rule there for the coming decade,” Mr Netanyahu’s office said in a statement. Mr Netanyahu has set a goal of bringing trade with China to US$10 billion within three years, from about US$8 billion, his office said in the statement. In addition to Chinese President Xi Jinping and Prime Minister Li Keqiang, he plans to meet industrialists and businesspeople in Shanghai and Beijing to advance a free trade agreement and economic cooperation accords, according to the statement. “China could be the engine for Israeli economic growth,” Mr Netanyahu said during the flight to Shanghai. Mr Xi yesterday met with the Palestinian leader in Beijing. Mr Xi was quoted as telling Mr Abbas he had “maintained the strategic choice of peace” and helped “building a country which has received the wide respect and support of the Palestinian people and international society”. Bloomberg News/AFP

rowth in China’s services sector slowed sharply in April to its lowest point since August 2011, a private sector survey showed yesterday – fresh evidence of rising risks to a revival in the world’s No.2 economy. The HSBC Holdings Plc and Markit Economics services Purchasing Managers’ Index (PMI) fell to 51.1 in April from 54.3 in March, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009. Two separate PMIs last week had already shown that China’s manufacturing sector growth slowed, with the weakness spreading to services, which make up almost half of gross domestic product, the risk to the recovery may be increasing. “The weak HSBC service PMI figure provides further evidence of a slowdown not only in the factory sector but also in the service sector,” said Zhang Zhiwei, chief China economist at Nomura Securities Ltd in Hong Kong. “This confirms our worries about insufficient growth momentum in the economy, which we expect to slow to 7.5 percent in the second quarter.” The HSBC services PMI follows a similar survey by China’s National

Services make up almost half of China’s GDP

Bureau of Statistics, which found non-manufacturing activity eased to 54.5 from 55.6. The official PMI is more weighted towards large stateowned firms. Readings above 50 indicate activity in the sector is growing. The HSBC survey showed that the sub-index measuring new business orders dropped sharply to a 20-month low of 51.5 in April, with only 15 percent of survey respondents reporting an increased volume of new orders that month.

“This started to bite employment growth. All these are likely to add some risk to China’s growth in 2Q, as there’s still a bumpy road towards sustaining growth recovery,” said HSBC’s China chief economist Qu Hongbin. The employment sub-index decreased to 49.6 in April, the first net reduction in staff numbers since January 2009, although HSBC said job losses were marginal, partially caused by firms down-sizing and employee resignations. Reuters

May 7, 2013

Asia

Ringgit jumps, stocks reach record post election Opposition plans to contest seats lost by narrow margins

alaysia’s ringgit rallied the most since 2010 and stocks rose to a record after Prime Minister Najib Razak won a clear majority in the election, giving him a mandate to continue his economic reforms. The currency gained 2.1 percent to 2.9719 per dollar in Kuala Lumpur and reached 2.9625, the strongest level since September 2, 2011, data compiled by Bloomberg show. That was the biggest advance since June 2010. The FTSE Bursa Malaysia KLCI Index climbed 3.3 percent to 1,751.05 and rose as much as 7.8 percent earlier, the most in more than a decade. Barisan Nasional, also known as the National Front, won 133 of the 222 parliamentary seats, according to the Election Commission, while the opposition People’s Alliance led by Anwar Ibrahim had 89. Mr Najib has embarked on a US$444 billion development programme to build railways, power plants and roads to help the country achieve developed-nation status by 2020. “The market is focused on the reduction in political-risk premium and I do think that the reaction is bordering on euphoria,” Christy Tan, a currency strategist in Singapore at Bank of America Corp., said in a phone interview. “The central bank could come in and restrain the momentum.”

The ringgit rallied the most among 24 emerging-market currencies tracked by Bloomberg yesterday. Ms Tan forecasts the ringgit will strengthen 1.1 percent to 2.94 per dollar by the end of September, while Goldman Sachs Group Inc. said in a research note that it may advance to 2.95 in six months and 2.9 in a year. Bank Negara Malaysia, the central bank, may have intervened in the market yesterday at around 2.9860 to manage the gains, Singapore-based analysts led by Ray Farris and Santitarn Sathirathai at Credit Suisse Group AG, wrote in a research note. The ringgit rose as much as 2.3 percent earlier, the biggest advance since the Asian financial crisis in 1998.

Anwar told AFP in an interview. “The government has lost its legitimacy.” Members of Anwar’s Pakatan Rakyat (People’s Pact) opposition alliance were left bitter and despondent after a Sunday election that they hoped would end with a historic change of power but left them with only minimal gains. “We will look at cases in about 30 to 40 constituencies in question and whether [to file] election petitions or to go to the courts,” Mr Anwar said. “Najib and his government can now push through the reforms and pump in the fiscal infrastructure,” said David Poh, Singapore-

Push reforms Mr Najib had campaigned on a promise to bring down living costs and announced measures such as cash handouts for low-income families and higher pensions for civil servants to woo voters. The opposition vowed to create jobs, cut utility costs and reduce corruption. Mr Anwar hasn’t yet conceded defeat and said he planned to contest some results after highlighting electoral irregularities. “I today maintain we won the elections. The Election Commission is complicit in the crime of stealing the election from Malaysians,” Mr

KEY POINTS Malaysian coalition extends 55-year mandate Opposition to contest some results Ringgit rallied the most since 2010 Market focused on less political-risk – analyst

Indonesia GDP growth at slowest in two years Hurt by slowing private consumption, contraction in mining services

The mining sector contracted 0.43 percent year-on-year

based regional head of portfoliomanagement solutions at Societe Generale Private Banking. “The whole economic growth is going to be positive.” Before yesterday’s gains, Malaysia’s KLCI was little changed this year, trailing the benchmarks of Indonesia, Thailand and the Philippines that had rallied at least 13 percent in 2013. The KLCI traded at 14.9 times projected, 12-month earnings on May 3, the lowest level in a month. That compares with 14.5 for the MSCI South East Asia Index. Shares that will benefit from the

ndonesia’s economy grew at the slowest pace in more than two years last quarter as slower exports and government spending countered gains in consumption and investment. Gross domestic product increased 6.02 percent in the first three months of 2013 from a year earlier, the Central Bureau of Statistics said in Jakarta yesterday. That compares with a 6.11 percent pace reported previously for the fourth quarter of 2012. A Reuters poll of 11 analysts expected first-quarter growth of 6.18 percent, and a 1.50 percent rise on a quarterly and seasonallyunadjusted basis. Faltering expansion in Southeast Asia’s largest economy may make it more difficult for President Susilo Bambang Yudhoyono to implement a planned cut in fuel subsidies, with Standard & Poor’s last week lowering its outlook on the country’s rating as it cited a stalling in reforms. At the same time, higher fuel prices may increase price pressure even as growth eases. “Exports are still underperforming and government spending is still not up to speed,” said Euben Paracuelles, a Singapore-based economist at Nomura Holdings Inc. “They could grow much more if they had some spending on infrastructure and a few other reform measures,” he said, adding that the data would make the central bank “even more reluctant” to raise rates. Indonesia’s GDP rose 1.41 percent last quarter from the previous three months. Household consumption grew

May 7, 2013

Asia

Australian mining tax revenue cut As government faces slump in tax receipts

Najib Razak’s coalition extended its 55-year rule

poll results include governmentlinked banks such as CIMB Group Holdings Bhd., which have been “regional laggards,” according to a research report from Nomura Holdings Inc. All 30 stocks in the KLCI index rose yesterday, led by a 12.9 percent rally in UEM Land Holdings Bhd. and a 10 percent gain in CIMB Group. Trading volumes climbed 314 percent above the 30-day average, data compiled by Bloomberg show, falling from earlier levels as the gauge pared its advance. “The enthusiasm has been

somewhat tempered,” said Chong Yoon- Chou, a Singapore-based investment director at Aberdeen Asset Management Plc. The ringgit has appreciated 2.8 percent this year, the second-best performance among Asia’s 10 mosttraded currencies after the Thai baht’s 3.4 percent gain. “It’s a relief rally with Najib’s election victory,” Wong Chee Seng, a currency strategist in Kuala Lumpur at Ambank Group, said in an interview. “The market was a little too negative going into the polls.”

5.17 percent in the first quarter from a year earlier, while investment rose 5.9 percent, Suryamin, chairman of the statistics office, said yesterday. Government spending increased 0.42 percent. The mining sector contracted 0.43 percent on the year, after growing 1.49 percent in the December quarter. Overseas shipments fell the most in seven months in March, while imports dropped the most since 2009, the statistics department said last week. The country is the biggest producer of palm oil, and its commodity exports include coal, rubber, tin and cocoa.

and led to a record current-account shortfall, hurting the rupiah as foreign investors lost confidence. Andry Asmoro, senior economist at Bank Mandiri, said slower private consumption and moderation in investment accounted for the deceleration in growth. “It is in line with our Mandiri leading indicators that GDP growth will drop in 1Q13 and rebound slightly in 2Q13 to around 6.1-6.3 percent,” Mr Asmoro said. “However, the risk on the GDP will come from the uncertainty of policy regarding the subsidised fuel price. This will create higher inflation expectations. We expect that full year 2013 GDP growth will stay at around 6.1-6.2 percent,” he said.

Lower forecast

Expected revenue from tax on iron ore and coal profits

billion slump in tax receipts that forced the government in December to abandon a commitment to return Australia’s budget to surplus. “There are plenty of pressures on because our currency has appreciated, grown in value by around 50 percent,” Ms Gillard said. “That is a really tough pressure. It is meaning for businesses that they are less profitable, that is meaning that there is less tax money coming into the government than was expected. That means you do face grave decisions as you address budget questions.” The budget, scheduled for release on May 14, is being put together in “very challenging” fiscal circumstances, Treasurer Wayne Swan said in a separate e-mailed statement yesterday. Bloomberg News

Diesel imports rose to 2.6 million barrels in the first quarter

Bloomberg News/AFP

Reuters/Bloomberg News

The International Monetary Fund last month lowered its forecasts for global growth in 2013, while China and the U.S. expanded less than analysts estimated last quarter. The euro-area economy will shrink more than previously estimated in 2013, the European Commission said May 3. Indonesia’s government may cut its 2013 growth target to a range of 6.3 percent to 6.5 percent, from 6.8 percent earlier, Deputy Finance Minister Mahendra Siregar said on April 24. Mr Yudhoyono said last week he will only increase fuel prices after Parliament approves compensation programmes for the poor, a move that could delay efforts to contain a budget deficit that may be more than twice as much as estimated without subsidy cuts. Failure to reduce subsidies last year drained government finances

ustralia’s forecast mining tax revenue has been downgraded, underscoring the “grave” budget decisions facing Prime Minister Julia Gillard as the strength of the local dollar squeezes trade-exposed businesses. Ms Gillard’s 30 percent tax on iron ore and coal profits will reap A$800 million (US$824 million) in tax revenue for the year to June 30, down from an October estimate of A$2 billion, according to a Parliamentary Budget Office document released by the Greens party yesterday. In the following four fiscal years, the tax will raise A$3.5 billion less than earlier forecast, it said. The erosion of tax receipts played a part in the government’s decision to raise health-care taxation by 0.5 percentage point to fund a national disability insurance programme, Ms Gillard said in an interview with Australian Broadcasting Corp. television yesterday. Her ruling Labor party, trailing in polls ahead of a September 14 election, faces a A$12

A$800 million

S.Korea might end diesel import tariff exemption

Exports are still underperforming and government spending is still not up to speed Euben Paracuelles, economist, Nomura Holdings

outh Korea could scrap a diesel import incentive in June, a source close to the matter told Reuters, allowing the country’s refiners to recapture domestic market share lost to cheaper foreign suppliers. Diesel imported for trade on the online Korea Exchange is exempt from a 3 percent tariff, making it competitive with local supplies. South Korea’s first quarter diesel exports rose more than 10 percent on the year as cargoes priced out of the local market were shipped overseas. The source said exports from South Korea, one of Asia’s top two suppliers of the fuel with India, could fall sooner than June as tariff-free diesel imports are already nearing the 3 million barrel quota for the first half.

“Oil importers won’t import aggressively in the second quarter compared with earlier this year, considering their import tariff won’t be refunded from July,” the source, an importer of the fuel, said. Officials at the energy ministry declined to comment on a review of the import tariff exemption for the online market, saying a decision has yet to be taken. Diesel volumes traded on Korea Exchange are now equal to around 10 percent of South Korea’s diesel consumption, and about 1,300 entities participate in the market, the exchange says. Korea Exchange launched last year in a bid to tame record-high fuel prices, increase transparency and reduce the influence of the four refiners – Hyundai Oilbank, GS Caltex, SK Energy and S-Oil. Combined with other import exemptions diesel prices can be as much as 44 Korean won (US$0.04) per litre lower when traded online, according to Korea Exchange data. South Korea’s diesel imports rose to 2.6 million barrels in the first quarter compared with just 150,000 barrels a year ago. Nearly 70 percent of the imports came from Japan, with the rest from Singapore, Malaysia, Russia and China. Reuters

May 7, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

34.65

1.315789

13454291

CHINA UNICOM HON

ALUMINUM CORP-H

2.88

0.3484321

16897180

CITIC PACIFIC

BANK OF CHINA-H

3.69

1.09589

271406695

BANK OF COMMUN-H

6.12

0.990099

20770206

BANK EAST ASIA

31.3

-0.3184713

584778

1.72144

15978632

AIA GROUP LTD

BELLE INTERNATIO

NAME

CLP HLDGS LTD

DAY %

VOLUME

11.12

16689226

9.69

1.892744

9016260

NAME

PRICE

DAY %

76.2

0.461437

1091996

SANDS CHINA LTD

41.45

2.59901

12313892

SINO LAND CO

12.96

0.777605

3572367

SUN HUNG KAI PRO

111.7

0.994575

2881536

POWER ASSETS HOL

VOLUME

68.6

1363858

CNOOC LTD

14.38

1.410437

49023217

COSCO PAC LTD

10.24

0.3921569

3013690

SWIRE PACIFIC-A

98.55

-0.2530364

695062

10.9

-0.1831502

6419660

TENCENT HOLDINGS

274.8

1.402214

2421961

TINGYI HLDG CO

ESPRIT HLDGS

BOC HONG KONG HO

26.95

0.3724395

9608647

HANG LUNG PROPER

CATHAY PAC AIR

13.72

1.47929

1436207

HANG SENG BK

CHEUNG KONG

117.2

0.9474591

4816603

HENDERSON LAND D

CHINA COAL ENE-H

5.81

1.043478

29898498

CHINA CONST BA-H

6.52

0.9287926

236866520

CHINA LIFE INS-H

21.3

1.187648

29871239

CHINA MERCHANT

24.25

1.041667

2740692

CHINA MOBILE

85.15

0.4127358

9609129

HUTCHISON WHAMPO

CHINA OVERSEAS

24.15

1.257862

9199760

IND & COMM BK-H

CHINA PETROLEU-H

8.45

0.9557945

84504255

CHINA RES ENTERP

27.3

1.675978

2623603

23.75

1.06383

6136898

CHINA RES POWER

25.4

CHINA SHENHUA-H

1.123596

11204844

PING AN INSURA-H

CHINA RES LAND

PRICE

30.9

1.812191

13711221

129.3

0.3881988

829895

56.9

1.516503

1797775

HENGAN INTL

80.65

0.3109453

582012

HONG KG CHINA GS

23.45

0.4282655

3779522

HONG KONG EXCHNG

134.4

2.361005

4168802

HSBC HLDGS PLC

86.05

0.9384164

10934483

85.6

0.5875441

6153706

5.5

1.289134

223454934

9.99

-0.1

25006520

MTR CORP

31.95

1722361

NEW WORLD DEV

14.12

1.436782

13107113

PETROCHINA CO-H

9.73

2.098636

81092320

62.5

1.626016

9726906

PRICE

DAY %

VOLUME

27.75

1.648352

5765425

LI & FUNG LTD

20.35

-2.863962

8155314

WANT WANT CHINA

12.2

0.8264463

5608073

WHARF HLDG

71.9

1.985816

2690495

MOVERS

4 22970

INDEX 22915.09 HIGH

22967.78

LOW

22592.93

52W (H) 23944.74 22590

(L) 18056.4 2-May

6-May

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.76

1.075269

61794524

CHINA PACIFIC-H

AIR CHINA LTD-H

6.75

3.686636

14250340

CHINA PETROLEU-H

8.45

0.9557945

84504255

ALUMINUM CORP-H

2.88

0.3484321

16897180

CHINA RAIL CN-H

7.98

2.176697

11140485

ANHUI CONCH-H

29.05

3.014184

17168949

CHINA RAIL GR-H

4.09

0.4914005

9298185

BANK OF CHINA-H

3.69

1.09589

271406695

CHINA SHENHUA-H

1.123596

11204844

BANK OF COMMUN-H

6.12

0.990099

20770206

CHINA TELECOM-H

3.96

1.278772

28311291

BYD CO LTD-H

29.1

2.105263

6146957

DONGFENG MOTOR-H

12.14

1.845638

15250587

4.4

2.088167

24259324

GUANGZHOU AUTO-H

6.48

4.012841

6306586

CHINA COAL ENE-H

5.81

1.043478

29898498

HUANENG POWER-H

9.26

1.982379

12823232

CHINA COM CONS-H

7.49

1.35318

12530730

IND & COMM BK-H

5.5

1.289134

223454934

CHINA CONST BA-H

6.52

0.9287926

236866520

JIANGXI COPPER-H

15.86

5.172414

33209773

CHINA COSCO HO-H

3.25

0.931677

5564605

PETROCHINA CO-H

9.73

2.098636

81092320

CHINA LIFE INS-H

21.3

1.187648

29871239

PICC PROPERTY &

0.9081736

12290775

CHINA LONGYUAN-H

7.31

1.527778

13659222

PING AN INSURA-H

62.5

1.626016

9726906

CHINA MERCH BK-H

16.64

1.339829

8972899

SHANDONG WEIG-H

7.52

5578795

CHINA MINSHENG-H

10.6

3.515625

47791741

SINOPHARM-H

23.05

-0.8602151

3046794

CHINA NATL BDG-H

9.08

0.8888889

51693255

TSINGTAO BREW-H

52.15

0.3849856

948472

16.08

5.235602

8984979

WEICHAI POWER-H

4.693141

4643765

CHINA CITIC BK-H

CHINA OILFIELD-H

NAME

PRICE

DAY %

VOLUME

7.93

1.277139

24053892

ZIJIN MINING-H

2.3

34818426

ZOOMLION HEAVY-H

7.7

0.6535948

9824951

13.64

2.556391

6218471

YANZHOU COAL-H

ZTE CORP-H

MOVERS

3 11060

INDEX 11001.77 HIGH

11052.54

LOW

10762.41

52W (H) 12354.22 10760

(L) 8987.76 2-May

6-May

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

AGRICULTURAL-A

2.72

90823085

CITIC SECURITI-A

12.96

0.777605

91762826

QINGHAI SALT-A

22.46

1.85941

7861620

AIR CHINA LTD-A

5.48

1.481481

7001350

CSR CORP LTD -A

4.05

0.7462687

25808731

SAIC MOTOR-A

15.42

1.048493

24328450 21607013

NAME

VOLUME

4.05

2.272727

15376614

DAQIN RAILWAY -A

7.14

1.564723

24137916

SANY HEAVY INDUS

9.49

1.172708

ANHUI CONCH-A

17.98

1.410039

20661710

DATANG INTL PO-A

4.44

0.2257336

6398343

SHANDONG GOLD-MI

32.13

4503942

BANK OF BEIJIN-A

9.05

0.6674082

29388766

EVERBRIG SEC -A

14.76

2.713987

36146803

SHANG PHARM -A

12.06

0.5838198

11828884 87865272

ALUMINUM CORP-A

2.9

0.3460208

38918079

GD MIDEA HOLDI-A

14.74

1.028101

27044098

SHANG PUDONG-A

10.13

1.198801

4.72

0.6396588

47030430

GD POWER DEVEL-A

2.91

-0.3424658

32012969

SHANGHAI ELECT-A

3.81

1.6

2983272

10.49

1.450677

17440273

GEMDALE CORP-A

7.33

0.8253095

46380289

SHANXI LU'AN -A

16.25

2.848101

18880674

BAOSHAN IRON & S

4.91

0.6147541

31637281

GF SECURITIES-A

13.83

1.54185

32872403

SHANXI XISHAN-A

10.72

2.290076

11253750

BEIJING TONGRE-A

23.49

0.4275331

9681066

GREE ELECTRIC

26.87

0.9012392

12641295

SHENZEN OVERSE-A

5.92

0.3389831

28927797

BYD CO LTD -A

28.82

25601655

GUANGHUI ENERG-A

18.34

0.2733734

15556713

SICHUAN KELUN-A

63.3

-0.1577287

1244834

CHINA CITIC BK-A

4.42

2.790698

36520389

HAINAN AIRLINE-A

4.86

0.2061856

21098648

SUNING COMMERC-A

5.93

2.417962

41342571

CHINA CNR CORP-A

4.21

1.445783

41209834

HAITONG SECURI-A

11.3

0.8928571

111793027

TASLY PHARMAC-A

79.89

-0.3865337

2221559

CHINA COAL ENE-A

6.74

1.201201

6889646

HANGZHOU HIKVI-A

37.35

0.9459459

6334729

TSINGTAO BREW-A

37.43

0.1605566

1549681

CHINA CONST BA-A

4.8

25732134

HENAN SHUAN-A

42.49

3.836755

6808676

WEICHAI POWER-A

22.35

1.775956

6139156

CHINA COSCO HO-A

3.34

0.9063444

9333468

HONG YUAN SEC-A

22.69

1.294643

32300673

WULIANGYE YIBIN

22.29

3.098982

22143542

CHINA EAST AIR-A

3.05

14352680

HUATAI SECURIT-A

10.19

1.292247

37603473

YANGQUAN COAL -A

12.41

1.721311

6960408

CHINA EVERBRIG-A

3.16

1.607717

96662538

HUAXIA BANK CO

10.85

0.5560704

45325537

YANTAI WANHUA-A

18.9

0.9076348

13109845

0.2949853

20653808

IND & COMM BK-A

4.1

0.4901961

42808178

YANZHOU COAL-A

14.35

0.8432888

4434383

18.76

0.7518797

65602534

YUNNAN BAIYAO-A

-1.168014

1388727

BANK OF CHINA-A BANK OF COMMUN-A BANK OF NINGBO-A

CHINA LIFE INS-A CHINA MERCH BK-A CHINA MERCHANT-A

12.53

1.45749

50270560

INDUSTRIAL BAN-A

2.929533

43578345

INNER MONG BAO-A

27.91

5.003762

39824773

ZHONGJIN GOLD

12.48

1.134522

15015212

CHINA MERCHANT-A

0.2227171

8566644

INNER MONG YIL-A

29.84

1.704158

12543474

ZIJIN MINING-A

3.14

1.290323

38044741

CHINA MINSHENG-A

10.27

0.3910068

150602081

INNER MONGOLIA-A

4.83

2.330508

33299316

ZOOMLION HEAVY-A

7.43

0.541272

32246492

CHINA NATIONAL-A

9.24

0.7633588

22008972

JIANGSU HENGRU-A

31.64

1.96584

4222277

12.87

5.233034

62156777

CHINA OILFIELD-A

15.79

1.608752

4385762

JIANGSU YANGHE-A

57.28

2.56043

4301845

CHINA PACIFIC-A

21.33

3.644315

16659429

10.4

2.261554

6682658

19.12

0.6845708

20335318

JIANGXI COPPER-A

CHINA PETROLEU-A

6.89

1.772526

31526766

JINDUICHENG -A

CHINA RAILWAY-A

5.27

1.541426

26246071

KANGMEI PHARMA-A

18.08

0.724234

28314653

CHINA RAILWAY-A

2.93

1.736111

45716431

KWEICHOW MOUTA-A

177.8

3.102349

3019639

CHINA SHENHUA-A

20.66

0.7804878

9134287

LUZHOU LAOJIAO-A

24.58

2.759197

9447061

CHINA SHIPBUIL-A

4.18

1.210654

30893307

METALLURGICAL-A

2.05

0.9852217

19696490

CHINA SOUTHERN-A

3.48

0.5780347

16879718

NARI TECHNOLOG-A

18.78

2.73523

26280060

166452926

NINGBO PORT CO-A

2.46

11539307

8.54

0.4705882

11503017

2.939686

84054468

CHINA STATE -A CHINA UNITED-A CHINA VANKE CO-A

3.69

3.361345

3.72

2.197802

200843393

PETROCHINA CO-A

11.32

-0.6145742

70548375

PING AN BANK-A

20.31

7.18

-0.5540166

15963181

PING AN INSURA-A

41.53

1.07082

27369226

CHONGQING CHAN-A

11.21

0.990991

23708467

POLY REAL ESTA-A

12.09

0.4152824

38972270

CHONGQING WATE-A

6.26

1.130856

7239679

QINGDAO HAIER-A

13.36

1.288855

20981571

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

CHINA YANGTZE-A

ZTE CORP-A

MOVERS 271

10 2540

INDEX 2525.983 HIGH

2533.28

LOW

2430.07

52W (H) 2791.303 (L) 2102.135

2420

2-May

6-May

FTSE Taiwan 50 Index NAME ACER INC

NAME

24.2

2.542373

19984569

FORMOSA PLASTIC

71.6

1.129944

6470261

TAIWAN MOBILE CO

ADVANCED SEMICON

26.05

0.3853565

13132292

FOXCONN TECHNOLO

80.9

0.3722084

6962155

TPK HOLDING CO L

ASIA CEMENT CORP

37.75

0.8010681

3279941

FUBON FINANCIAL

40.9

-3.423849

32669684

TSMC

ASUSTEK COMPUTER

358.5

3.913043

3693662

HON HAI PRECISIO

77.9

0.516129

34762001

AU OPTRONICS COR

13.65

108493829

HOTAI MOTOR CO

260

113872

CATCHER TECH

PRICE DAY %

Volume

109.5 -0.4545455

4067065

590

0.8547009

2418344

111.5

1.363636

19393798

UNI-PRESIDENT

58.5

-1.845638

8465303

UNITED MICROELEC

11.8

3.508772

109090364

160

5.960265

25528341

HTC CORP

280.5

0.3577818

12050185

WISTRON CORP

29.3 -0.1703578

5761982

CATHAY FINANCIAL

39.65

-2.219482

39167331

HUA NAN FINANCIA

17.15

3635078

YUANTA FINANCIAL

14.9

-1.324503

8224626

CHANG HWA BANK

17.05 -0.2923977

5446839

LARGAN PRECISION

842

3.950617

2794742

YULON MOTOR CO

51.1

0.7889546

1816134

LITE-ON TECHNOLO

1.503759

3981616

CHENG SHIN RUBBE

98.4

-1.6

3444547

CHIMEI INNOLUX C

18.85

62980129

MEDIATEK INC

372.5

1.637108

7969214

CHINA DEVELOPMEN

8.24

20613589

MEGA FINANCIAL H

23.6

0.8547009

26315767

CHINA STEEL CORP

25.5 -0.9708738

14444094

NAN YA PLASTICS

59.5 -0.3350084

7756822

CHINATRUST FINAN

18.2

0.2754821

23561688

PRESIDENT CHAIN

95.1

CHUNGHWA TELECOM

188.5

-0.105042

7134617

QUANTA COMPUTER

COMPAL ELECTRON

18.65 -0.2673797

15612230

SILICONWARE PREC

35.25

DELTA ELECT INC

145.5 -0.3424658

-1.049869

60.3 -0.4950495

1085787 4807501

0.8583691

17033474

3412855

SINOPAC FINANCIA

14.95

10869875

FAR EASTERN NEW

31.7

0.1579779

3173087

SYNNEX TECH INTL

48.8

0.6185567

4802978

FAR EASTONE TELE

73.2 -0.1364256

3611276

TAIWAN CEMENT

38.45

0.3916449

3800977

FIRST FINANCIAL

-1.369863

11622939

0.2949853

5073376

FORMOSA CHEM & F

1.892285

6173879

TAIWAN FERTILIZE

73.2

1.525659

4807497

FORMOSA PETROCHE

81.4

0.9925558

1568730

TAIWAN GLASS IND

29.4 -0.8431703

1007553

TAIWAN COOPERATI

MOVERS

6 5720

INDEX 5710.09 HIGH

5715.83

LOW

5650.06

52W (H) 5726.94 5640

(L) 4719.96 2-May

6-May

May 7, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 64.3

36.2 35.8

19.0 18.9

64.0

18.8

35.4

Max 36.2

average 35.462

Min 34.7

Last 36.15

34.6

18.7

63.7

35.0

18.6 Max 64.25

average 63.937

Min 63.4

63.4

Last 64.25

41.5

Max 19

average 18.834

Min 18.52

Last 18.9

18.5

19.9

24.0

19.8

23.9

19.7

23.8

41.4 41.3 41.2 41.1 Max 41.5

average 41.264

Min 41

Last 40.45

41.0

Max 19.84

average 19.755

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Jun13

96.35

0.773977617

3.059150711

101.4199982

81.34999847

BRENT CRUDE FUTR Jun13

104.72

0.508686054

-2.983138781

116.6699982

90.91999817

GASOLINE RBOB FUT Jun13

283.13

0.20881999

-1.079589127

324.119997

235.9499931

GAS OIL FUT (ICE) Jun13

863

0.116009281

-5.372807018

992.75

799.25

NATURAL GAS FUTR Jun13

4.01

-0.767136847

14.31014823

4.457000256

3.203999996

289.37

0.322424074

-3.787072749

323.8899946

258.589983

Gold Spot $/Oz

1473.16

0.1639

-11.4932

1796.08

1322.06

Silver Spot $/Oz

24.1563

0.1609

-19.7732

35.365

22.0713

Platinum Spot $/Oz

1495.55

-0.2967

-1.4627

1742.8

1374.55

Palladium Spot $/Oz

691.15

-0.3805

-1.2163

786.5

553.75

LME ALUMINUM 3MO ($)

1882

3.920485919

-9.213699952

2200.199951

1809

LME COPPER 3MO ($)

7270

6.162383178

-8.334384063

8422

6762.25

LME ZINC

1885

3.628367235

-9.375

2230

1745

15225

3.71253406

-10.75615475

18920

14609 14.79500103

HEATING OIL FUTR Jun13 METALS

3MO ($)

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

Jul13

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

19.6

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

15.38

0.162813416

-2.318196253

17.07500076

648.25

-1.965973535

-7.027608462

824

527

712.5

-1.178918169

-10.23622047

900

664.75

1392.25

0.360425302

-0.21501523

1605.75

1217.75

140.9

1.039799211

-5.784018723

202.1999969

132.6999969

NAME

17.18000031

ARISTOCRAT LEISU

69.94999695

CROWN LTD

17.53

COTTON NO.2 FUTR Jul13

86.91

-0.397727273 0.555362721

-11.19554205 13.0610121

23.05999947 94.19999695

World Stock Markets - Indices NAME

Last 19.76

Max 24

average 23.866

Min 23.7

Last 23.95

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

1.0249 1.5559 0.9375 1.3108 99.37 7.9921 7.7595 6.1666 54.1138 29.63 1.2324 29.548 40.925 9736 101.837 1.22889 0.84243 8.0869 10.4709 130.24 1.03

-0.6784 -0.0963 -0.224 -0.0458 -0.3824 0.0013 -0.009 -0.1687 -0.3304 0.2362 0.1298 -0.0508 -0.1833 -0.0103 0.2966 -0.1863 -0.038 -0.2288 0.1471 -0.3071 0.0194

-1.243 -3.8143 -2.3573 -0.6217 -13.3541 -0.1114 -0.1147 1.0378 1.6284 3.2062 -0.8926 -1.7429 0.1955 0.5855 -12.2843 -1.7422 -3.2062 1.615 0.5682 -12.7994 -0.0097

1.0625 1.6381 0.9972 1.3711 99.95 8.0111 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 105.433 1.25692 0.88151 8.4957 10.9254 131.12 1.032

0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1529 51.3863 28.56 1.2152 28.913 40.54 9208 74.482 1.20054 0.77553 7.7018 9.6245 94.12 1.029

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

3.9

0.2570694

23.80952

3.99

2.29

VOLUME CRNCY 1292236

12.85

-0.3875969

20.43111

13.12

8.06

908163

AMAX HOLDINGS LT

0.81

-42.14286

1.9

0.75

217725

BOC HONG KONG HO

26.95

0.3724395

11.82572

27.1

20.85

9608647

CENTURY LEGEND

0.305

15.09435

0.42

0.215

6.05

-0.4934211

1.001673

6.74

2.8

26113

CHEUK NANG HLDGS CHINA OVERSEAS

24.15

1.257862

4.545453

25.6

14.624

9199760

CHINESE ESTATES

13.66

-0.2919708

12.61876

13.8

7.697

1005500

CHOW TAI FOOK JE

10.38

0.1930502

-16.55948

13.4

8.4

4088600

EMPEROR ENTERTAI

2.35

-0.8438819

24.33863

2.49

1.1

1875000

FUTURE BRIGHT

2.26

-9.6

85.2459

2.75

0.77

27102000 23909439

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14973.96

0.9599786

14.26893

15009.58984

12035.08984

NASDAQ COMPOSITE INDEX

3378.633

1.137872

11.89329

3388.115

2726.68

GALAXY ENTERTAIN

36.15

5.856515

19.11038

36.2

16.94

FTSE 100 INDEX

6521.46

0.9402991

10.57426

6541.69

5229.76

HANG SENG BK

129.3

0.3881988

8.930079

131.5

99.2

829895

DAX INDEX

8133.17

0.1339524

6.841212

8148.14

5914.43

HOPEWELL HLDGS

31.05

2.306425

-6.616541

35.3

19.049

1167074

NIKKEI 225

13694.04

-0.7631519

31.73452

13983.87

8238.96

HSBC HLDGS PLC

HANG SENG INDEX

22915.09

0.992201

1.139475

23944.74

18056.4

CSI 300 INDEX

2525.983

1.326601

0.1201373

2791.303

2102.135

TAIWAN TAIEX INDEX

8169.05

0.4181915

6.098445

8197.519531

6857.35

MGM CHINA HOLDIN MIDLAND HOLDINGS

86.05

0.9384164

5.842554

88.45

59.8

10934483

HUTCHISON TELE H

4.35

1.162791

22.19101

4.36

2.98

5580807

LUK FOOK HLDGS I

21.85

0.6912442

-10.45082

30.05

14.7

1461362

MELCO INTL DEVEL

16.22

4.375804

80.02219

16.24

5.12

7219216

18.9

1.941748

42.33772

19.04

9.509

9585765

3.53

0.2840909

-4.594596

3.249

854000

NEPTUNE GROUP

0.158

1.282051

3.947372

0.226

0.084

6130000

NEW WORLD DEV

14.12

1.436782

17.47088

15.12

7.95

13107113

SANDS CHINA LTD

41.45

2.59901

22.09131

43.7

20.65

12313892

SHUN HO RESOURCE

1.51

7.857145

1.67

1.03

20000

755.149

SHUN TAK HOLDING

4.16

0.4830918

-0.7159918

4.65

2.56

2456188

3238.77

SJM HOLDINGS LTD

19.76

2.489627

9.777778

22.15

12.34

9366203

SMARTONE TELECOM

14.24

3.039074

1.136364

17.38

12.5

6993326

WYNN MACAU LTD

23.95

1.268499

14.3198

24.3

14.62

5436043

ASIA ENTERTAINME

4.51

-1.528384

47.38562

5.52

2.4

83026

41.74

412784

KOSPI INDEX

1961.48

-0.2151894

-1.781131

2042.48

1758.99

S&P/ASX 200 INDEX

5156.202

0.5205772

10.91111

5201.3

3985

4991.871

1.347848

15.64126

5062.673

3635.283

FTSE Bursa Malaysia KLCI

1753.66

3.474808

3.831379

1826.22

1526.6

NZX ALL INDEX

979.209

1.169347

11.01476

983.204

PHILIPPINES ALL SHARE IX

4479.95

-0.2238307

21.11312

4525.92

JAKARTA COMPOSITE INDEX

23.7

Currency Exchange Rates

NAME ENERGY

Min 19.6

HSBC Dragon 300 Index Singapor

656.17

-0.86

5.65

STOCK EXCH OF THAI INDEX

1578.95

-0.6443534

13.43601

1603.01

1099.15

HO CHI MINH STOCK INDEX

488.32

2.752294

18.02866

518.46

372.39

BALLY TECHNOLOGI

52.55

-0.492331

17.53523

54.92

Laos Composite Index

1366.28

-0.297732

12.47232

1455.82

980.83

BOC HONG KONG HO

3.52

1.440922

14.65798

3.59

2.7

6500

GALAXY ENTERTAIN

4.47

2.382043

12.59446

4.93

2.25

26150 1961554

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

INTL GAME TECH

17.45

1.04227

23.14749

17.58

10.92

JONES LANG LASAL

98.77

0.7035073

17.66738

101.46

61.39

249256

LAS VEGAS SANDS

57.11

0.2457434

23.72184

57.88

32.6127

5342112

MELCO CROWN-ADR

24.75

1.893783

46.9715

24.95

9.13

3539102

MGM CHINA HOLDIN

2.29

23.78378

2.44

1.36

5000

MGM RESORTS INTE

14.66

0.7560137

25.94501

14.9

8.83

12153623

SHFL ENTERTAINME

15.8

1.869761

8.965517

17.36

11.75

224615

SJM HOLDINGS LTD

2.49

0.8097166

7.79221

2.85

1.65

9613

WYNN RESORTS LTD

138.8

1.595667

23.38875

139

84.4902

1553611

AUD HKD

USD

May 7, 2013

Opinion

Asian leaders’ tough talk hides failure of leadership Pankaj Mishra

Bloomberg View columnist

isiting China in 1928, when a rising Japan had begun to prey on its neighbour, the Japanese poet Akiko Yosano took a surprisingly broad-minded view of anti-Japanese passion among the Chinese: “It’s surely frightful from the imperialists’ point of view,” she wrote in her travelogue, “but for the Chinese people it must be celebrated in the name of humanity”. Writing last year in the Asahi Shimbun, as anti-Japanese rioting erupted in China, the writer Haruki Murakami had a wholly unsympathetic take on the same phenomenon. He assailed the “cheap alcohol” of nationalism that “makes you speak loudly and act rudely” and leaves you “with nothing but an awful headache the next morning”. I was recently reminded of these contrasting responses, as Chinese and Korean leaders protested high-profile Japanese visits to Tokyo’s Yasukuni Shrine, which commemorates, among others, Japanese indicted for war crimes during Japan’s early 20th-century invasions and occupations of China and Korea. The South Korean foreign minister cancelled his visit to Japan. Japan’s conservative Prime Minister Shinzo Abe then caused further outrage by appearing to question whether Japan had actually invaded its neighbouring countries.

Korea boiling Abe’s remarks were never likely to go down well in Korea, where anti-Japanese sentiments are kept on the boil by the issue of “comfort women” forced into sexual slavery by the Japanese in their occupation of Asia during World War II. But the reaction in China, where Abe’s grandfather Nobusuke Kishi was accused of employing Chinese as slave labour in the 1930s, was also predictably fierce. Undaunted, Abe threatened a robust military response by Japan to any Chinese presence on the Senkaku Islands. This dangerous diplomatic brinkmanship, which could spark war, cannot be grasped without reference to Asia’s tormented history in the first

half of the 20th century, when Japanese imperialists sought to turn a large part of the Asian mainland into a resource for their hungry economy. But the exploration of “ancient enmities” can only take us part of the way in understanding the real sources and potential of conflict today. It is always worth asking about resurgent nationalisms or freshly ignited tempers over territorial disputes: Why now? When in the 1920s Akiko Yosano wrote benevolently about the nascent Chinese sense of nationality, it seemed essential to the survival of a country ravaged by civil war and threatened by Japanese imperialism. But why have anti-Japanese sentiments resurfaced in 2013 when Japan is trying to recover from two lost decades and China seems to have surpassed its old rival’s economic and political power? A plausible explanation of the fresh outbreaks of nationalism in East Asia must necessarily begin with internal politics and the vulnerability of rulers. It may seem strange today but Mao Zedong discouraged public discourse about the Japanese invasion and

Taiwan and Western imperialists worldwide.

A plausible explanation of the fresh outbreaks of nationalism in East Asia must necessarily begin with internal politics and the vulnerability of rulers

waived reparations. The People’s Republic of China sought diplomatic recognition from Japan. Furthermore, the communists in the 1950s and 1960s already had a bogey: the nationalists in

Economic distraction China’s troubled history with Japan came to be reinterpreted, as the historian Rana Mitter shows in his forthcoming book on the Sino-Japanese War, in the post-Mao era. This was when communist leaders, ushering their country into a market economy, first began to face the problems of uneven growth, which now included social unrest on a huge scale. They became desperate to boost their credibility after the killings of unarmed protestors near Tiananmen Square in 1989, and images of the perfidious and vicious Japanese came in handy. The commemoration of the Sino-Japanese War is now central to the post-Cold War Chinese strategy of finding new foils internationally and fresh ideological legitimacy at home. And it can claim some success: Chinese nationalists, both virtual and real, have been a force to reckon with since NATO’s accidental bombing of the Chinese Embassy in Belgrade in 1999 sparked large demonstrations.

As in China, anti-Japanese nationalism in South Korea has a potentially large constituency and is a touchstone of national identity. But it coexists in uneasy symbiosis with extreme inequality and unemployment – problems created by a lopsided national development that favoured state support for big conglomerates. Certainly, the country’s new president, Park Geun-hye, faces many other challenges besides a rogue neighbour to the north and an impenitent former occupier to the east. But she, too, may discover that in an unequal and fractious country, anti-Japanese nationalism remains the best way to orchestrate national unity. Shinzo Abe is also playing a tricky domestic game that shapes his international gambits. He has just started an ambitious programme to stem years of falling prices and reinflate Japan’s economy. A rising stock market and improving business sentiment – among other initial results of Abenomics – seem to have emboldened Abe, and account at least partly for his confident diplomatic manoeuvring aimed at the Chinese. But Abe still needs Chinese and Korean tolerance for the steadily devalued yen, and his growth strategy will suffer if Japan’s exports to China don’t recover. Japan also seeks to cooperate with China in dealing with the looming threat from North Korea. If Abenomics turns out to be more sizzle than steak, as the economist and Japan watcher Richard Katz argues, economic setbacks at home will make Abe assume a more aggressive posture with his neighbours. Nationalism remains, despite decades of economic and cultural globalisation, the default escape mode for politicians in trouble; and, as the events of 1914 proved, populist amplifications of it can quickly destroy the geopolitical equilibrium achieved by deeply interdependent economies. Certainly, as the centenary of World War I approaches, some extra caution will become imperative for “politicians and polemicists,” who, as Murakami wrote, “lavish us with this cheap alcohol and allow things to get out of control”. Bloomberg View

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

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May 7, 2013

Opinion Business

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Leading reports from Asia’s best business newspapers

Europe’s tax on financial trades is a risky bet

Taipei Times British-based banking group Barclays Plc stuck to it forecast of higher-than-average growth for Taiwan’s economy this year, thanks to an investment rebound and improving consumption, despite a disappointing first quarter of the year. “We maintain our 4 percent growth forecast for 2013, although the soft start to the year has created some downside risks,” Leong Wai Ho, a Singapore-based Barclays economist, wrote in a research note. The figure is higher than the 3.6 percent forecast by the government and the 3.7 percent expected by the Taiwan Institute of Economic Research.

China Daily Mobile gaming is one of the fastest growing sectors in China, with estimates indicating that the sector could clock up turnover in excess of 20 billion yuan (US$3.2 billion) by 2015. That is sweet music for developers and mobile gaming software makers in China as statistics indicate that more than 32 percent of the total time spent by a consumer on mobile devices is for gaming purposes. “The thriving mobile game sector has fueled the growth of China’s smartphone market with mobile game users exceeding 250 million in the fourth quarter of last year,” the Beijing-based Internet research company Analysys International said in a recent report.

Korea Herald South Korea’s financial authorities will increase surveillance on speculative movements in local shares this week, market sources said. A team of officials from the Financial Services Commission (FSC), the Financial Supervisory Service (FSS), the Korea Exchange and prosecutors will launch a probe into pricerigging activities, according to sources. The local stock market has been suffering from pricerigging deals involving several so-called “celebrity shares,” which are usually related to politicians or celebrities.

Jakarta Post Indonesia’s largest airline, the Lion Air Group, is preparing to use its eastern regional hub in Manado, North Sulawesi, as a springboard to reach destinations in East Asia. “We are aiming to open a route to Canton [Guangzhou] this year using Batik Air,” Lion Air president director Rusdi Kirana told media. “After Canton, we will serve other destinations such as Shanghai, Beijing, Seoul and Tokyo,” he added. Mr Kirana said he expected Batik’s service to Guangzhou to begin in the third or fourth quarter this year.

Mark Buchanan

Bloomberg View columnist

illions of Europeans are about to become the subjects of a vast social experiment. What’s troubling is how little anyone understands about where it might lead. A total of 11 European Union member states – including France, Germany, Italy and Spain, but not the U.K. – plan to introduce a small tax on financial transactions by the beginning of 2014. Financial institutions will pay 0.1 percent on all stock and bond trades, and 0.01 percent on derivatives. Although taxes that are at least crudely similar exist in about 40 nations around the world, the European measure will be the first introduced on such a large scale. The idea of a financial transactions tax goes back to the economist John Maynard Keynes. In the 1930s, he argued that speculation on assets drives market instability and suggested that an appropriate levy could deter it. If small enough, the tax would have a negligible effect on long-term stock investors, who trade infrequently and focus on real economic factors in making their decisions. It would primarily deter shortterm speculators who buy and sell frequently in response to temporary market movements. The idea makes intuitive sense and could, in principle, help channel investment to productive economic activity. There’s much debate, though, over whether it can work in reality. Well-known economists such as Joseph Stiglitz and Larry Summers have supported a transactions tax. Others of equal prominence have countered that it would be likely to lower equity prices, drive trading across borders and possibly increase market volatility.

Inconclusive evidence The empirical evidence is inconclusive. In general, studies find that volatility tends to rise in markets with higher transaction costs. There are plenty of exceptions, though, where higher costs were associated with reduced volatility or had no effect. A study in Sweden followed the introduction of a transactions tax in 1984 – initially 1 percent, rising to 2 percent in 1986. It found no effect at the 1 percent rate, but a significant rise in volatility at 2 percent. No one is proposing anything nearly as large as a 2 percent tax. As so often happens in finance, the debate has been clouded by alarmist warnings and the arguments of those who, for ideological reasons, see any tax or market intervention as an unmitigated evil. This is unfortunate, because beyond the fog and controversy

lie legitimate questions that deserve exhaustive study. A tax can influence market stability through multiple and interfering mechanisms. It would probably discourage speculative activity, but it might also curb the kind of short-term trading that seeks to exploit price distortions and hence stabilises the market. By making trades more costly, it might also drive out so-called market makers, who earn a living by standing ready to buy and sell at any moment. This could increase volatility

The European Commission is clearly attracted by the prospect of tens of billions of euros in revenue that a financialtransactions tax could generate

by impairing liquidity – that is, the ease of buying and selling securities. Teasing out all the competing effects in a theory isn’t easy. The most detailed studies of financial taxation have used computer modelling to simulate market ecologies, with virtual investors who interact, trade and evolve their strategic behaviour over time. They found, as of 2006 or so, that a transaction levy, in the simplest setting, can improve stability just as Keynes expected. The tax rate, though,

matters a lot. Set it too high (as in Sweden after 1986) and markets become less stable. Further studies confirm that a tax could indeed reduce market liquidity enough to undermine any positive effects. The general theme appears to be that a tax might do good things in a market blessed with high liquidity, but cause trouble in markets where liquidity is sometimes in short supply.

Details matter More recently, the economists Frank Westerhoff and Paolo Pellizzari have gone further, finding that the success of a transactions tax might well depend entirely on fine details of how the market works, including the specific mechanisms by which buyers and sellers come together. In a market with orders handled by a dealer who provides liquidity, the tax has good effects. Replace the dealer with a simple auction mechanism, where trades are executed whenever the prices of buy and sell orders match, and the tax has a malign effect. Just to be clear, no one, especially Westerhoff and Pellizzari, thinks the existing studies do more

than scratch the surface. “Right now,” Westerhoff said to me, “we do not have nearly enough convincing studies on this issue”. The real-world outcome will probably depend on the characteristics of the market in question, including how liquid it is to begin with, how trading takes place, the mix of participants and how they respond to the tax. It’s reasonable to anticipate that many other fine details of market structure will matter, too, including things no one has ever considered. The European Commission is clearly attracted by the prospect of tens of billions of euros in revenue that a financial-transactions tax could generate. And I suppose there’s something to be said for trying out the idea, as long as you’re prepared to learn and adjust quickly in light of what happens. It’s true that not having a tax is also a grand experiment, one we’ve been trying for the past two decades with rather dismal results. I can’t help but find it odd, though, that Europe’s policy makers are taking such a risky bet with so little understanding of the likely outcome. Bloomberg View

May 7, 2013

Closing HK dockers accept wage offer

Italy economy to shrink 1.4 pct

Port workers at billionaire Li Ka Shing’s Hongkong International Terminals Ltd ended the longest strike at Hong Kong’s container terminal as they accepted a 9.8 percent wage increase, resolving a dispute that damaged the city’s reputation as a trade hub. The union will discuss arrangements for workers to return to work, Chan Chiu Wai, organiser at Union of Hong Kong Dockers, said yesterday. Workers had earlier demanded a 23 percent gain, while their employers had offered a 7 percent increase. The workers, hired by contractors, will get an increase in wages from HK$55 per hour.

Italy’s economy will shrink by 1.4 percent this year, a much sharper contraction than previously forecast, according to the national statistic agency. Istat forecast that Italy will post 0.7 percent growth in 2014, but added that unemployment will reach a record high of 12.3 percent next year. Istat predicted in November that the euro zone’s third largest economy would shrink by just 0.5 percent this year. Istat said its downward revision for Italian growth was due to an expected reduction in domestic demand. Import growth was also expected to remain negative.

CSR wins controversial trash collection tender Current operator to continue managing solid waste in the next decade Tony Lai

tony.lai@macaubusinessdaily.com

he current operator Macau Waste Systems Co Ltd (CSR) will continue to be the city’s solid waste collector for the next 10 years after winning a controversial public tender. The Environmental Protection Bureau announced in two separate statements yesterday that the joint venture of Hong Kong’s Swire SITA Waste Services Ltd and Macau’s H. Nolasco Group won the tender. CSR got the contract by submitting an offer of 2.1 billion patacas (US$258.9 million), the lowest price among the five bidders. The tender programme estimated the minimum bid at 2 billion patacas. The bureau said CSR “scores the highest in

the overall assessment, particularly in the areas like employee protection and environmental protection”. No details on the scores awarded by the tender jury were disclosed. The regulator expects the new service contract to come into effect in the next quarter. CSR’s existing contract was due to end in March but was extended for a third time until end-October after the administration said it would take more time than expected to review the tender bids. The tender procedures and criteria have raised concerns and doubts from the public. Legislator José Pereira Coutinho accused the administration in a February written inquiry of favouring CSR.

The tender rules required all bidders to have at least 10 years of experience in waste management and banned bids by consortiums. Luis de la Campa, director of Spanish bidder Urbaser SA, told Business Daily in February that they understood the criticism. “The normal procedure for a foreign company to come here is to find local partners and create a consortium to present the offer,” he said. Another uncommon practice was the absence of anti-corruption safeguards among the evaluation criteria. Former CSR directors were sentenced for corruption as part of the bribing scandal surrounding former Secretary for Transport and

CSR has been Macau’s solid waste manager since before the 1999 handover (Photo: Manuel Cardoso)

Public Works Ao Man Long. The company defended in February that they “do not see the tender as specifically tailored for anybody”. The bureau stressed yesterday that the administration

France says austerity over As Germany offers flexibility on deficit cutting James Hertling

rench Finance Minister Pierre Moscovici declared the era of austerity over after his German counterpart offered flexibility on deficit cutting amid renewed bickering between Europe’s two biggest economies. “We’re witnessing the end of the dogma of austerity” as the only tool to fight the euro debt crisis, Mr Moscovici said yesterday on Europe 1 radio. “We’ve been pleading for a growth policy for a year. Austerity on its own impedes growth.” The gap between the French Socialist finance chief’s view and the election-year positioning of Germany’s Wolfgang Schaeuble underscores the divergence between their economies and the wrangling

Germany needs a France ‘that is successful’, said Mr Moscovici

that has marked the crisis fight since Francois Hollande replaced Nicolas Sarkozy as French leader a year ago. Coalition lawmakers in Germany are pushing back against the two-

year extension for France to meet European Union deficit rules floated by Olli Rehn, the EU economic and monetary affairs commissioner. “We made it clear to our government, the chancellor and finance minister that in the case of France a one-year delay to 2014 to fulfil the euro’s deficit rules is the absolute limit for us,” Norbert Barthle, budget-policy spokesman for Schaeuble’s Christian Democratic Union, said in a May 3 interview from his constituency in southwestern Germany. “France must show that it’s willing to tackle structural reforms.” With German Chancellor Angela Merkel campaigning for a third term in a September 22 vote, policy making among Europe’s elected leaders has

could terminate the contract if the operator breached integrity standards. The government pledged to introduce a service evaluation mechanism to better monitor the company.

ground to a crawl, with European Central Bank President Mario Draghi set to take the initiative. The risk is that they’ll back off policies needed to spur competitiveness and restore growth. “Markets should be fine with” slowing austerity “as long as governments keep focusing on structural reforms,” Joachim Fels, coglobal head of economics at Morgan Stanley in London, wrote in a note yesterday. “All fingers crossed.” The task was underscored last week when the European Commission predicted little relief through next year for the 17- nation euro area’s record unemployment. Average joblessness, now 12.1 percent, will remain above 12 percent through 2014, according to the commission’s May 3 predictions. With French gross domestic product now seen by the commission as shrinking this year, Mr Moscovici and Mr Hollande have led the charge against German-inspired budget-cutting. Mr Moscovici and Mr Schaeuble are scheduled to meet in Berlin today, along with Bank of France Governor Christian Noyer and Bundesbank chief Jens Weidmann. Bloomberg News