Macau Business Daily, May 10, 2012

Year I | Number 29 | Thursday May 10, 2012 Editor-in-chief | Tiago Azevedo Deputy editor-in-chief | José I. Duarte MOP $ 6.00

Fiscal reserve 99bln piggy bank

Page 2

Tobacco sales

Down in smoke

Small town values, even in boom times

Page 6

MPEL ‘optimistic’ on Studio City permit

Page 7

T

obacco sales have slumped in the wake of a ban on smoking indoors and increases in the tax on cigarettes, leaving Macau distributors concerned for their survival. But they say there’s little evidence that fewer people are smoking.

They fear their legal trade is simply being driven into the arms of criminals through an escalation in cigarette smuggling from mainland China.

The tax on a packet of 20 cigarettes rose to 10 patacas from four patacas in December and it now accounts for 37 percent of the retail price of about 27 patacas.

Tobacco manufacturers and distributors are being forced to rework their business strategies.

Insiders say the industry has experienced a drop of at least 70 percent in transaction volumes.

And although cigarettes are

much cheaper in Macau than in many other cities, traders who spoke to Business Daily believe there is no end in sight for the downturn.

“Many [firms] will close and others will soon consolidate,” one tobacco company owner says.

The tax rise also led to fears that there would be a rush to buy cheaper tobacco from the mainland. And while Health Bureau director Lei Chin Ion said last December there

was no indication that had taken place, in April the government began enforcing a new policy to reduce the number of dutyfree cigarettes each person can bring into Macau.

According to Macau Customs Service, the number of smuggling cases in the first quarter grew to 178 incidents, up 119 percent from the 81 cases reported a year earlier.

www.macaubusinessdaily.com

Brought to you by

HANG SENG INDEX

MORE ON Page 3

20400

20370

Sales push CTM’s profit up

20340

Telecom company reaches record revenue

Legislators exit meeting as ‘two plus two’ passes Two lawmakers voted against the draft bill and 24 gave their approvals

T

he first reading of the ‘two plus two’ draft law that would add two directly elected and two indirectly elected legislators to the current 29 members of the Legislative Assembly was approved yesterday.

Two directly elected members Au Kam San and Ng Kuok Cheong voted against the draft bill but the other 24 members gave their approvals.

Wednesday’s debate was again full of drama as legislators Paul Chan

Wai Chi and José Pereira Coutinho left the chamber in protest ahead of the vote.

Before heading out, Mr Chan sparked controversy as he compared Macau’s political scene to Nam Van Lake: “calm and dead”.

Throughout the debates, emotions ran high, with many legislators taking aim at claims made by the pandemocrats, who stood by their call for more directly elected members in the assembly.

Page 2

Corporate services and mobile sales help push CTM’s profit towards 1 billion patacas, the company said yesterday.

Growth this year, however, “will not be as substantial,” CTM’s chief executive Vandy Poon said.

The CTM boss revealed the telecommunications blackout in February was “not deliberate human error”. As a government tender will introduce new Internet providers in the market, CTM’s boss says he’s not worried with the threat of competition.

Page 4

20310

20280

20250

May 9

HSI - Movers Name

%Day

Ao denial - better late than never

CHINA MOBILE

1.37

SUN HUNG KAI PRO

0.90

HENGAN INTL

0.71

Former secretary denies taking bribes

HSBC HLDGS PLC

0.65

CATHAY PAC AIR

0.45

TENCENT HOLDINGS

-2.77

ESPRIT HLDGS

-2.77

CHINA UNICOM HON

-2.99

LI & FUNG LTD

-3.52

ALUMINUM CORP-H

-5.08

Jailed Macau government official Ao Man Long waited until the third week of his third corruption trial to comment on the latest accusations against him.

Mr Ao spoke at the Court of Final Appeal to deny taking a bribe from two Hong Kong businessmen over land near the airport. In total he’s charged with pocketing 30 million patacas in bribes from different deals. The president of the court said the verdict would be announced once the judges had finished their deliberation.

Page 5

Source: Bloomberg

Brought to you by

2012-5-10

2012-5-11

2012-5-12

25˚ 31˚

24˚ 29˚

24˚ 29˚

2 |

business daily May 10, 2012

macau

‘Two plus two’ passes amid high drama ‘Two plus two’ legislation was passed as two legislators left the chamber in protest ahead of the vote

T

he first reading of the “two plus two” draft law that would add two directly elected and two indirectly elected legislators to the current 29 members of the Legislative Assembly was passed yesterday.

After Tuesday’s heated debates and New Macau Association legislators throwing paper aeroplanes, yesterday’s meeting was full of drama.

Directly elected members Au Kam San and Ng Kuok Cheong voted against the draft bill.

Another pair of directly elected legislators, Paul Chan Wai Chi and José Pereira Coutinho left the chamber before a vote took place. They later said it was a protest gesture.

Mr Chan, the third speaker at the meeting, left immediately after addressing the assembly. Mr Coutinho left much later, claiming that the assembly had not answered his questions.

Mr Coutinho asked the President of the Legislative Assembly Lau Cheok Va to clarify the purpose of the public consultation and asked for results to be posted online.

Dead, calm Mr Chan called for more directly elected members and says the proposed changes are no improvement to the old system. He compared Macau’s political scene

assembly members similar to “monsters”.

something

Emotion charged

Legislator José Pereira Coutinho exits the chamber. He was one of two directly elected members who left in protest

to Nam Van Lake, saying it was “calm and dead”.

He also referenced statistics by Hong Kong universities which he said showed that just 43 percent of the interviewees surveyed supported the “two plus two” proposal, whereas 42 percent supported two new seats for directly elected members.

Legislator Tsui Wai Kwan, in response, said the New Macau Association had denigrated Macau and looking down on officialdom and scholars here for not having run their own survey.

Members also took turns in responding to a post by Au Kam San on the social networking website Facebook that called other

Throughout the debates, emotions ran high, with many legislators taking aim at claims made by the pan-democrats.

The pan-democrats have stood by their claim for more directly elected members in the assembly. They have accused the government of conspiring with industry groups represented among the indirectly elected members to control the outcome of political reform.

The indirectly elected legislators defended their legitimacy and demanded respect from the pan-democrats.

Kwan Tsui Hang is a directly elected legislator but has also been an indirectly elected member in the past.

She asked the pan-democrat trio to show evidence of corruption stemming from the accusation that there has been a transfer of power among a small group of players.

Even though there should be more transparency in the political decision-making process, legislators had the right intensions.

The current debates on political reform have been so heated that discussions on proposals have lasted up to five hours, with members making speeches lasting longer than 20 minutes.

Change lawmaking process, Alves says Member of the Legislative Assembly Leonel Alves has said bills should be sent direct to the assembly’s committees for discussion and only subsequently voted on.

The Portuguese-language newspaper Hoje Macau quoted Mr Alves as saying this would streamline lawmaking and “increase transparency in discussions with the government”.

After the assembly gives bills its initial approval, substantial changes to them are usually made in committee meetings held behind closed doors.

“Understanding the true goals of the government should be improved,” said Mr Alves.

He said his proposal was also meant to “reduce misunderstandings among the community”.

X.C.

Giant kick start for fiscal reserve Government moved 99 billion patacas into basic and special reserves in February Vítor Quintã

vitorquinta@macaubusinessdaily.com

Photo by Manuel Cardoso

T

he city’s fiscal reserve system is up and running after the government allocated 99 billion patacas (US$12.4 billion) to the basic and special reserves last February, the Monetary Authority of Macau has confirmed.

In a notice published in yesterday’s Official Gazette, the financial regulator confirmed that the basic reserve received the overwhelming majority, 98.8 billion patacas, largely due to soaring revenues.

The amount is 150 percent of the expenses incurred by the administration, services and entities, in accordance with the law.

This year’s public spending budget is close to 65.9 billion patacas, a 34.5-percent increase from the 49 billion patacas spent by the government last year.

In the end, the special system was left with just 58.3 million patacas.

The basic system can only be used if the special system’s funds have all dissipated. Any use of these funds first requires the approval of the Legislative Assembly.

In addition, 54.2 billion patacas of previously held accumulated capital was set aside for the creation of the foreign exchange reserve.

The law regulating the city’s reserve system came into effect on January 1 and the government was given 45 days to allocate the funds.

The notice says the administration transferred the money to the

The Monetary Authority is in charge of running the city’s fiscal reserve

Monetary Authority of Macau on February 13.

Initial profit Until the end of February, the reserve made a profit of 31.6 million patacas, a return of 0.03 percent on capital.

The authority is in charge of running the fiscal reserve but the law also calls for the creation of two independent bodies, one to provide investment strategies and the other to monitor reserve management.

Officials did not confirm if either

body had been set up when Business Daily asked for clarification.

Secretary for Economy and Finance Francis Tam Pak Yuen will head the advisory committee and Monetary Authority president Anselmo Teng Lin Seng will be its deputy director.

Another five people from the finance sector will be selected by Chief Executive Fernando Chui Sai On to take part. They will join the authority’s reserve administrators.

The monitoring body will have five experts and professionals from the accounting and law professions, also

appointed by the chief executive.

The members will then elect the head of the committee.

More detailed information on how fiscal reserve funds are being invested will only be available in an annual report due in the first quarter of next year.

The government forecast a budget surplus of 36 billion patacas this year but the surplus has already topped 29.7 billion in just the first four months.

Any surplus will be automatically transferred to the fiscal reserve.

May 10, 2012 business daily | 3

MACAU

Anti-smoking drive chokes tobacco trade Photo by Manuel Cardoso

Distribution networks fear for survival as the indoor-smoking ban and tax hike fuel illegal smuggling

Tobacco sales have slumped in the wake of a ban on smoking indoors and increases in the tax on cigarettes

T

obacco manufacturers and distributors are being forced to rework their business strategies after the government banned smoking indoors and raised taxes on cigarettes.

The ban and tax increase have tobacco distributors concerned for their survival, companies told Business Daily.

Gold Leaf Tobacco, a manufacturer and distributor of tobacco products, said it would close its distribution department, which employs more than 50 people, next month.

“There is no point selling in Macau after the price hike. The company will focus on manufacturing and exports to other markets,” said one employee.

The store used to sell 10,000 cartons of cigarettes in a month, each carton containing 10 packets, and now sells only 1,000, she said.

Other tobacco sellers have also reported drastic declines in sales and are worried about the future.

According to one report in the Chinese-language Macau Daily News, the industry has experienced a drop of at least 70 percent in transaction volume and traders believe there is no end in sight to the downturn.

“Many [firms] will close and others will soon consolidate,” one tobacco company owner said.

“The industry is a sunset industry.

The revenues increasingly cannot cover the costs of running the business. Some would have to close soon,” said an employee of speciality store International Liquor.

Even though restrictions on

smoking are gaining traction globally, merchants say people are smoking less because of the indoor smoking ban.

The tax on a packet of 20 cigarettes rose to 10 patacas (US$1.25) from 4 patacas in December and it now accounts for 37 percent of the retail price of about 27 patacas.

Taxes on cigars have risen more than fourfold.

Still, cigarettes are much cheaper in Macau than in many other cities.

In Hong Kong, where taxes account for 70 per cent of the price, a packet costs HK$50. In Sydney, a packet costs about HK$125, HK$117 in New York, HK$73 in Singapore and HK$62 in Paris, according to statistics by the Hong Kong Council on Health and Smoking.

The World Bank has suggested that tobacco taxes should be 67 percent to 80 percent of the retail price of a pack of cigarettes.

The World Health Organisation recommends a rate of more than 70 percent. Currently, at least 27 countries and territories have set a tobacco tax at 75 percent or above of the retail price.

Smuggling fears The tax rise led to fears that there would be a rush to buy cheaper tobacco from the mainland, where cigarettes are not as heavily taxed.

Health Bureau director Lei Chin Ion said last December there was no indication that had taken place.

“We have kept in touch with Zhuhai authorities and they say no increase in the sale of tobacco products was registered,” he said. However, that

KEY POINTS New tax hits tobacco sales Distributors concerned for their survival

Rush to buy cheaper tobacco in the mainland Cigarette smuggling increasing

was before the 150 per cent tax hike enforced in January.

In April, the government began enforcing another new policy to reduce the number of duty-free cigarettes each person can bring into Macau from 200 to 100.

Tobacco companies here believe the anti-smoking measures have only encouraged more smuggling.

“There are just other channels of getting cigarettes now. Customs inspections are not thorough enough. There are still a lot of cigarettes being smuggled in privately,” said the Gold Leaf Tobacco employee.

“A carton of cigarettes costs

HK$170 in Macau but HK$70 across the border in China,” she said, referring to wholesale price.

The source said that with better customs controls at the border, business might improve for merchants.

According to Macau Customs Service spokesperson Wong Chi Yong, measures to crack down on illegal smuggling are in place. Stores close to the border and airport are undergoing more frequent inspections. Additional customs officers have sent into the field.

But Mr Wong agreed illegal cigarette smuggling had increased this year.

In the first quarter of this year, there were 178 incidents of smuggling and 670 cartons were confiscated.

In the same period last year, there were 81 reported cases of smuggling involving 440 cartons.

Smoking has been banned in most public places and all indoor spaces, except casinos, since per January.

Casino operators have been given a one year grace period to create designated areas for smokers.

Saunas, massage parlours, dance halls and bars will have three years to prepare for a full smoking ban.

The government has also tightened restrictions on the sale of tobacco and banned vending machines.

Tobacco brands and producers are no longer allowed to advertise, sponsor public events or conduct promotions.

The government has also pledged to boost its stop-smoking service.

On Monday, the Executive Council announced it had finished reviewing graphic images to be displayed on cigarette packets.

X.C.

4 |

business daily May 10, 2012

macau

CTM profit rises 14.7pct InBrief on mobile sales

Beijing affirmed Macau’s role as the entry point to trade with Brazil at a seminar on investment opportunities in São Paulo on Tuesday. Three protocols were also signed to improve ties between commercial associations and the service sector in Brazil and Macau.

“Let’s use the Portuguese-speaking port of Macau as the entry to China for Brazilian trade and investment,” Vice-Minister of Commerce Jiang Yaoping told the seminar. He said the mainland wanted to extend cooperation to bilateral investment and industries, such as motor vehicles and electronic.

Investors were also being sought for the bio-fuels sector.

Corporate services and mobile sales help push telco’s profit towards 1 billion patacas Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

Photo by Manuel Cardoso

Beijing reaffirms Macau’s role

Industry bodies join building fair Two industry associations will join next month’s Guangzhou Electrical Building Technology fair, which will focus this year on electrical engineering, and home and building automation. The Macau Construction Association will join more than 230 international companies, while the Macau Properties and Facilities Management Association is one the fair’s supporting organisations.

This year’s event will occupy 18,000 square metres of exhibition space, 80 percent more than last year.

Mobile equipment sales grew 208 percent last year, allowing CTM to earn a record profit

C

Govt assesses shabby buildings Most of the old buildings in Macau classified as rundown or in imminent danger of collapsing are being inspected by the Lands, Public Works and Transport Bureau. Media reports said the government has notified 800 owners of such buildings to carry out repairs or demolitions since 2010. The bureau has since assessed 700 of the 800 cases.

More than 90 per cent of all building inspections in the first four months of this year reported falling plaster or other elements of the buildings’ facade and interior.

Man missing after Lantau ferry impact A man is missing and possibly dead after a 7-metre-long speedboat collided with a Macau-bound jetfoil off Lantau island on Tuesday afternoon. Hong Kong and Zhuhai authorities launched a search using boats, divers and a helicopter but the man has not yet been found.

None of the 142 passengers and nine crew on board the TurboJet ferry were hurt, Hong Kong media reported. Shun Tak Holdings Ltd said the 30-metrelong ferry “suffered no damage” but returned to the Sheung Wan terminal as a precaution. Passengers were offered a seat on another ferry or given a refund.

ompanhia de Telecomunicações de Macau (CTM), the city’s largest phone company and only Internet provider, said profit grew 14.7 percent last year to 933.6 million patacas (US$116.8 million).

Revenue for the year ended December 31, reached a record high at 3.98 billion patacas, up 44.4 percent from 2.78 billion patacas over the previous year, the company said in a statement yesterday.

“This strong surge in revenue was mainly contributed by the sale of mobile equipment, reflecting a growth of 208 percent over the preceding year,” CTM said. The company’s mobile subscriber base increased by 23 percent to 633,936 customers.

“Last year we did tremendously well in retail of handsets and devices,” CTM’s chief executive Vandy Poon told reporters.

Business services to corporate costumers also boosted the company’s income, which grew 48 percent last year.

Operating costs and expenses also shot up to 2.67 billion patacas from 1.56 billion patacas in 2010, which CTM blamed on “inflation and pressure on wages from the tight labour market”.

The company plans to invest 1.2 billion patacas in the next three years on network enhancement, cloud computing services and its 4G network.

Mr Poon does not expect CTM to grow as much this year, as basis for comparison will be much higher.

“This year the growth will not be as substantial,” he said. “We are optimistic that the market will continue to mature and the number of costumers will continue to grow.”

The company also performed well in the corporate sector. “Last year, there were quite a few major casino projects that were in their final stage of construction. We were

quite successful in that sector,” Mr Poon said.

“In 2012, we forecast that business will continue but some big projects are still in the designing phase, so the peak of the work will probably be next year. Macau’s economy has grown to a bigger base, so we expect CTM to ride on the opportunity.”

Human error Mr Poon also addressed the telecommunications blackout that left thousands of customers unable to use 3G mobile phones, landline telephones and the Internet for at least six hours in February.

“It was a software loop. Unfortunately, some of the commands that were input by some of our technicians caused the crash,” he told reporters.

“We’ve gone through several investigations … it was not a deliberate human error.”

At the time, the company had said that the blackout was likely due to a software malfunction.

“We’ve compensated our customers and made a special arrangement to other companies,” Mr Poon said, referring to other service providers that were affected.

CTM paid more than 30 million patacas in compensation. “So far, all has been settled.”

In February, mobile communications operator SmarTone said it was considering asking for compensation from CTM. During the failure, all of the 200 telecommunications stations SmarTone rents from CTM were affected, affecting its services.

CTM chief said he was positive that a similar blackout “won’t happen again”, as the company had enhanced its commands system and network.

CTM currently has the monopoly on fixed-line and Internet services.

A government tender will introduce

up to two new providers. A proposal by MTel to run fixed-line telecommunications is currently under review.

Competition closer The threat of competition does not worry CTM’s boss. “CTM has done a lot of work to support the government going forward with smooth liberalisation,” Mr Poon said. “At the end, only one [company] submitted [a bid]. CTM is determined to continue to provide the best service possible.”

Macau Cable TV also wants to provide broadband Internet services. In an interview with Business Daily, company chief executive officer Angela Lam In Nie said the company submitted its application to the government.

It said it could provide a service at about half the market price.

“We already have the resources and the infrastructure here, so it would be easier and it would take less time for us to provide better service and better price to the customers,” Ms Lam said.

CTM says it is prepared to deal with a liberalised market. “We believe that while we open up the telecom market, we are more than capable of serving a wider population in their different needs,” Mr Poon said.

CTM yesterday presented the Multi Media Video Service – a home entertainment service that will allow customers to access to interactive information. The company, however, is waiting for the government to roll out regulation.

“We haven’t applied because there is no regulation for the time being,” Mr Poon said, adding that the company was “ready to provide other services”.

May 10, 2012 business daily | 5

MACAU

Ao’s trials to end soon Court president says verdict will be announced on charges that Ao Man Long took more than 30 million patacas in bribes Tony Lai

tony.lai@macaubusinessdaily.com

F

help with the residential project.

He said Mr Ho gave him the number of a bank account that he believed was controlled by a supplier, and did not know the account was connected Ecoline.

Yesterday, Mr Ao told the court that he did not find the source of the money suspicious. “San Meng Fai usually paid the bills to Ecoline under different company names,” he said.

The payment was related to the sale of a 78,742-square-metre plot in 2006 by the Macau government to Moon Ocean, a company controlled by the two Hong Kong businessmen, for a price that was at least 830 million patacas less than its surveyed value.

Chiang’s deal The jailed former secretary is also accused of taking bribes worth more than HK$7 million for four contracts to build and manage wastewater treatment plants at Coloane and the Zhuhai-Macau Cross-Border Industrial Park, and four million patacas from a land plot contract in the industrial park.

Public prosecutor Kuok Un Man condemned Mr Ao in the final address for “abusing his power for his own interests”, which had damaged the government’s image. He also accused the former secretary of “using public resources to run his own business”.

Ms Kuok urged the government to seize more than 30 million patacas allegedly paid to Mr Ao. Mr Ao’s counsel Fong Kin Fao, how-

Photo by Manuel Cardoso

ormer Transport and Public Works secretary Ao Man Long yesterday denied he had been paid a bribe, as his third trial on fraud and corruption charges wound down in the Court of Final Appeal.

Mr Ao spoke in his defence against the latest set of charges based on a report from city’s watchdog on graft. He faces six corruption and three money laundering charges that allegedly saw him pocket more than 30 million patacas.

Sam Hou Fai, president of the court, said the verdict would be announced once the judges had finished their deliberation.

The jailed former official said that the HK$20 million cheque paid to Ecoline was for a consultancy service, not a bribe.

He denied that two prominent Hong Kong businessmen, Joseph Lau Luen Hung and Steven Lo Kit Sing, had ever paid the bribe alleged to help secure the airport plot where residential project La Scala is currently being built.

“I have only met them one or two times through Ho Meng Fai,” he said. Ho, the head of San Meng Fai Engineering & Construction Co Ltd, has been sentenced for corruption in another Ao-linked case and remains at large.

Mr Ao claimed the HK$20 million paid to his offshore company Ecoline was for consultancy services requested

by Mr Ho. Mr Lo told the court last month that Ho Meng Fai had asked for an advance payment of HK$20 million to

A final appearance at the Court of Final Appeal, as Ao tells the court he did not take a bribe

ever, continued to question the integrity of the four handwritten documents presented last week regarding the treatment plant, as well as the “friendship book”, in which his secret deals were allegedly marked.

Mr Ao said last week the handwriting on the four documents was not his and asked the judges to conduct a handwriting assessment to confirm its integrity. The request was rejected.

The items were reportedly found by the Commission Against Corruption in Mr Ao’s house during a search conducted in his absence, which highly affects the legitimacy of the evidence, said Mr Fong.

The former secretary is accused of granting plant contracts to a consortium composed of ATAL Engineering Ltd, Waterleau Global Water Technology NV and China State Construction Engineering (Hong Kong) Ltd. Best Choice, an offshore company controlled by Mr Ao and Pedro Chiang – who was found guilty of corruption in another related case and is at large – allegedly got 20 percent of Waterleau’s operation in the city, Waterleau Macau Ltda.

Yesterday, Mr Ao said he still did not know why there were two cheques from China State Construction Engineering and ATAL to Best Choice’s account. He said only his partner was aware of the deal.

Mr Fong argued that the deals regarding the wastewater treatment plant were not marked in Ao’s notebook as usual – “the project name, price, tick” – and only the project names appeared.

Bribes to Ao top HK$460m

A

o Man Long is alleged to have pocketed about HK$461 million (U$59.4 million) between 2004 and 2006 while serving as the Transport and Public Works secretary.

In Mr Ao’s third trial, currently being heard at the Court of Final Appeal, he is charged with taking bribes exceeding HK$30.9 million. He is facing charges of passive corruption and money laundering.

According to the indictment filed by the Public Prosecutor’s Office, the jailed official received HK$20 million from Hong Kong tycoons Steven Lo Kit Sing and Joseph Lau Luen Hung in exchange for favourable treatment in the tender for the plot of land where the residential property La Scala is being built.

In addition, the Macau branch of state-owned contractor China Civil Engineering Construction Corp. allegedly paid Mr Ao 4 million patacas to win a contract worth 136.7 million patacas to put up a building at the Zhuhai-Macau Cross-Border Industrial Park.

Mr Ao is also charged with pocketing almost HK$7 million from a consortium of ATAL Engineering Ltd, Belgian company Waterleau Global Water Technology NV and China State Construction Engineering (Hong Kong) Ltd in return for contracts for the wastewater treatment plants at Coloane and the crossborder industrial park.

In September 2009, the Commission Against Corruption announced it had recovered more than HK$350 million in bribes from bank accounts Mr Ao held in Hong Kong. At the time the graft watchdog said it was still trying to retrieve another HK$80 million.

There has been no update since then.

In his first trial, Mr Ao was also convicted of illicit enrichment, after the commission alleged he owned about 800 million patacas in assets, even though his wages as a civil servant amounted to 14 million patacas.

V.Q.

6 |

business daily May 10, 2012

macau The National Wellbeing Index - highest score in eleven surveys since 2007 at 64.4 percent

Small town values, even in boom times Family and friends come first despite influx of newcomers - Macau Business Quality of Life Report Kelsey Wilhelm

kelsey.wilhelm@macaubusinessdaily.com

F

amily is the most important thing for people in Macau according to the latest Macau Business Quality of Life Report.

The survey is conducted every three months by the University of Saint Joseph (USJ) in the city and sponsored by Macau Business magazine, our sister publication.

For the first quarter - covering Chinese New Year – the report focused on personal relationships and religious belief.

A total of 91 percent of those polled ranked ‘family’ top of their value system, followed by ‘friends’ at 82 percent. But only 42 percent of respondents call themselves either ‘religious’ or ‘very religious’.

“Religion is not something people consider to be a significant issue... and my conclusion is that religion does not affect the quality of life”, USJ professor Richard Whitfield said at the latest report’s public launch.

The Macau Business Quality of Life Report samples approximately 1,000 respondents in order to

measure their ‘Personal Wellbeing’ and their ‘National Wellbeing’.

“In Macau and, actually, in many Chinese cultures, family is paramount. So everything is focused on the family and people don´t really care about the outsiders. People don’t see them as their responsibility and most people don’t really concern themselves with the rest of the world,” professor Whitfield told Business Daily.

Although the city itself is becoming reasonably cosmopolitan and international, “that doesn´t seem to impact the local population, which appears to be “only concerned on the local group and to know only the local group”. “That is a characteristic of small towns, which tend to be more insular and less cosmopolitan,” Mr Whitfield explained.

Happiness accrues Respondents appear not to give much weight to formal religion for

their moral guidance, but they do seem reasonably content. A total of 65.1 percent said they were ‘satisfied’ with life – the highest level since the survey began in 2007.

For Mr Whitfield “this is also a reflection of the Chief Executive’s 2011 annual address to the population announcing measures to improve people’s lives, such as social housing and social services and the cash hand outs scheme. And those initiatives are still happening and having impact”.

While 56 percent of respondents attended religiously sponsored schools, 31.1 percent of them claimed to have ‘no religion’. That was the second most popular answer after ‘Catholicism’ at 38.7 percent.

Forty-two percent of respondents claim to be religious, but a mere 0.7 percent said that they attended church or temple every day, with fewer than 10 percent going at least a few times a week.

The National Wellbeing Index shows the highest score it has seen

in its eleven surveys since 2007.

The 64.4 percent score is 3.2 percentage points higher than last quarter and interestingly enough, is very close to the values of the Personal Wellbeing Index, which dropped 0.6 percentage points to 65.1 percent.

“This value is within the expected values for an Asian society” say the researchers, stating that normal values vary between a “normative of 50 to 70 percent.”

The overall level of satisfaction with the government however is still relatively low.

“Despite substantial improvements in the two most recent quarters, satisfaction with the government continues to be well below the aggregate National Wellbeing Index score” explain researchers, adding that it is the second lowest-scoring domain of the report.

The state of the environment was ranked the lowest in the index for the third time running. with C.A.

Weather Beijing 30/18o C Changchun 22/11o C

Harbin 22/10o C

Xian 30/18o C Shanghai 27/18o C Chengdu 25/22o C Kunming 24/15o C Haikou 34/24o C Sanya 33/28o C

Guangzhou 32/26o C

MACAU (7 May-12 May) Day

Temperature

Humidity

05/7

25/31o C

65/95 %

05/8

26/32o C

65/95 %

05/9

26/32o C

65/95 %

05/10

27/32o C

70/95 %

05/11

26/30o C

80/95 %

05/12

25/30o C

70/95 %

Shenzhen 34/25o C

ASIA (today)

Hong Kong 32/26o C

Manila

TOKYO

Jakarta

34/26o C

32/23o C

20/16o C

32/24o C

Macau 31/25o C

Bangkok

SEOUL

K. lumpur

36/28 C o

SINGAPORE

25/14 C o

32/25 C o

taipei

24/21o C

May 10, 2012 business daily | 7

MACAU Studio City build permit ‘near end of first half’ - MPEL But investors struggle to understand Cotai approvals race says banker Associate Editor

Lawrence Ho - Studio City restart ‘near the end of the first half’

T

he 1.9 billion-U.S. dollar question not asked – or answered – in an hourlong call on Melco Crown Entertainment’s first quarter earnings last night was whether the company now has permission for a casino at its planned Studio City site on Cotai.

Officially the Macau government insists approval for a casino component – as opposed to mere architectural approval for a casino layout – still has to be granted.

But Lawrence Ho Yau Lung, cochairman of MPEL indicated to analysts the company was confident it could receive its Studio City

Corporate Marc Brugger leaves Crown Towers After six years living in Macau, Marc Brugger is leaving his position as General Manager of Crown Towers at City of Dreams. Mr Brugger has been in Macau since 2006 when he joined Melco Crown Entertainment to open their first property, the Crown Macau Hotel & Casino (now Altira).

“Opening the ‘original’ Crown Macau and then taking over the

reins of Crown Towers at City of Dreams have been very rewarding professional assignments, however ‘all good things come to an end’,” Mr Brugger said in his farewell message.

Mr Brugger will be moving to Beijing as Managing Director of a new property – yet to be announced – scheduled for opening in the second quarter of 2013.

Kevin Clayton departs Sands China

Kevin Clayton, Executive Vice President of Marketing Operations for Sands China Ltd, is leaving the company after three years managing all properties and brands in the Sands portfolio in Macau.

Mr Clayton joined Sands in 2009 with more than 25 years of experience working with marketleading international brands and businesses in senior executive and board appointments. He has spent more than 15 years living and working in East Asia. He has also worked in the United Kingdom, Europe, Africa, India, Australia and New Zealand.

Before joining Sands China, Mr Clayton was principal for strategic marketing at Galaxy Entertainment Group.

“After leading the launch of Sands Cotai Central and two-and-a-half record-breaking years leading marketing ops with SCL it’s the right time for me to look forward to a fresh challenge,” Mr Clayton said.

construction permit in weeks.

He added the company might start work (or rather re-start work, as MPEL took the scheme over from a deadlocked consortium last year) as soon as it arrives – without the fanfare of a press conference or formal announcement.

“We’re still optimistic that we can get to restart near the end of the first half. It’s also no secret that we have started quite a bit of site preparation as we speak,” said Mr Ho. Asked if he was confident Studio City would get the labour and gaming table allocation needed, he replied: “The government is going to stagger these [Cotai] projects and obviously don’t want a repeat of what happened in 2007 when you effectively had four casinos – major resorts – open at the same year, thereby causing a bit of chaos in terms of the society in general and also the labour sector,” he said.

“We have had a lot of communications not just with the senior leadership of the government but also on the working level and we have been assured time and time again that they will process… whether it’s foreign labour quota… but of course subject to us meeting the rules of the game.”

But it’s precisely the rules of the Cotai approvals game – featuring Studio City, Wynn Cotai, MGM Cotai and SJM Cotai – that are

KEY POINTS Q1 adjusted EBITDA of US$243m – 13pct above analyst consensus – on above normal casino hold rates for baccarat Net revenue at City of Dreams US$716.8 million – up 43.3 pct y-o-y US$1.9b budget for Studio City and will take 36 months to complete MPEL hopes for construction permit ‘near the end of first half 2012’ No plans to raise equity in HK or New York for Studio City

not clear to many observers of the process.

“We still struggle to get an idea who will be first to complete and who will have to postpone to 2016 and 2017, but we will keep coming back to you,” said Praveen Choudhary, executive director of Morgan Stanley Asia in Hong Kong.

8 |

business daily May 10, 2012

GREATER CHINA

Correspondent visas refused, InBrief Al Jazeera Beijing bureau closed China stocks falling

Channel coverage on jails and forced abortions seen the motif behind unexplained decision

A

l Jazeera English said it was closing its Beijing bureau after China refused to renew the visa of a correspondent whose stories included reports on secret jails and forced abortions in the country.

The government also declined to grant approval to replace the correspondent, Melissa Chan, who had reported from China since 2007, Al Jazeera said yesterday.

“The channel has expressed its disappointment in the situation and said it is continuing to request a presence in China,” Salah Negm, director of news at Al Jazeera English, was quoted as saying on its website. “We are committed to our coverage of China.” Mrs Chan, who is a U.S. citizen, declined to comment in an e-mail and directed questions to the company’s press office.

The decision not to renew Mrs Chan’s visa comes at a sensitive time for China, which has been roiled by the ouster of Chongqing party Secretary Bo Xilai in April and legal activist Chen Guangcheng’s move to seek shelter at the U.S. embassy for almost a week earlier this month.

‘Open and Free’ Foreign Ministry spokesman Hong Lei declined to say whether Mrs Chan’s visa had been revoked, saying only that the government had

with security officials, who told them they risked having their visas revoked, according to the FCCC.

‘Grave Threat’

dealt with the “relevant” journalist in accordance with the law. In the email she said she left Beijing on Monday night.

“We welcome foreign journalists to report objectively in China,” Mr Hong said at a briefing yesterday in Beijing. “The environment for their reporting activities is very open and free. At the same time, foreign journalists should abide by Chinese laws and regulations.”

The Foreign Correspondents Club of China said it was “appalled” by the move, which it called an expulsion.

Foreign journalists who sought to cover Chen, who is still staying at a Beijing hospital after he left the embassy, were summoned for meetings

The FCCC called the ministry’s decision not to renew her visa a “grave threat to foreign reporters’ ability to work in China.”

The Foreign Correspondents’ Club in Hong Kong said objecting to bad news was “a flawed and self-defeating response that should have no place in a strong and modern nation,” according to a statement on its website.

According to the FCCC, Chan had been issued short-term press credentials over the last three months instead of the typical one-year accreditation.

The Committee to Protect Journalists urged China to grant visas to Al Jazeera English correspondents.

The New York-based organization said that authorities often delay approving visas or threaten to revoke them as part of “an overall strategy of intimidation.”

“The refusal to renew Melissa Chan’s credentials marks a real deterioration in China’s media environment, and sends a message that international coverage is unwanted,” the CPJ said.

Bloomberg

China sets new rules for ‘dim sum’ market C hina published new rules on Tuesday to regulate the issuance of yuan-denominated bonds in Hong Kong by non-financial firms on the mainland, its latest effort to broaden the investment channels for a swelling pool of offshore yuan deposits.

The market for the international sale of bonds denominated in yuan currency, also known as the renminbi (RMB), has boomed in Hong Kong since July 2010 after China liberalised trade settlement rules.

The National Development and Reform Commission (NDRC), the top economic planning authority, said any firm planning to sell yuan bonds in Hong Kong must submit an application and only those with “strong profitability” and “good credit status” would be approved.

“The rule is to regulate RMB bond issuance in Hong Kong by the mainland’s non-financial institutions and to effectively prevent the risks from foreign debt,” the NDRC said in a statement on its website.

NDRC said proceeds obtained from the bond sales should be mainly

China’s stocks fell, dragging the benchmark index down by the most in five weeks, as political tension in Greece heightened concern Europe’s debt crisis may further slow Chinese export growth. Europe is China’s biggest export market, making up about 18 percent of the nation’s overseas shipments. These may have cooled further to 8.5 percent in April from a year earlier based on the median estimates of economists surveyed by Bloomberg ahead of a customs bureau report tomorrow.

Car sales down Car sales in China rose 12.5 percent in April from a year earlier, the China Association of Automobile Manufacturers (CAAM) said on Wednesday.

China’s car market grew by 5.2 percent last year, a significant cooling from the respective 33 percent and 53 percent rises in 2010 and 2009.

The slowdown has been attributed to a raft of factors, from the end of tax incentives for small cars to local authorities’ efforts to combat ever-worsening traffic congestion in major cities.

Wine scam in Hong Kong Hong Kong police broke up a scam in which “hundreds” of investors were allegedly duped into investing in red wine that never existed, the South China Morning Post said, citing unidentified officers. People from mainland China were induced to pay “tens of thousands” of Hong Kong dollars each to buy wines claimed to be still maturing in barrels, the Hong Kong-based newspaper said.

Four women complained that they hadn’t received any wine and couldn’t contact the sales agents, it said.

Ai Weiwei challenges fine used for fixed-asset investment projects and those investments must comply with Beijing’s related policy for industry development.

The international offshore yuan bond market is known as the “dim sum” market by traders and investors. Total issuance of these instruments has been equivalent to about US$ 21.5 billion since the start of 2011, most

of which has been sold by Chinese entities. Foreign firms have issued about US$ 5 billion worth.

Analysts said the new rules could apply to all non-financial corporates registered on the mainland, although state-owned enterprises are more likely to get the regulator’s nod in the future.

Reuters

A Beijing court has accepted Ai Weiwei’s lawsuit challenging the 15 million yuan (US$2.4 million) tax evasion penalty the government levied against the company that markets his work, the artist said in an interview. Ai was detained for almost three months last year and released without charges. After he was freed, authorities handed him the bill for back taxes. He said the tax bill was “a joke” meant to cover for the fact that he was never charged.

May 10, 2012 business daily | 9

GREATER CHINA

Prospect of gas reforms prompts investment boom Chinese energy market expected to take off amid buying flurry

Waiting for a promising market

C

hina’s big state companies, confident on the outlook for domestic natural gas reforms, are buying up local distributors and raising fresh capital - and making gas the hottest prospect for energy investment in the world’s top energy consumer.

The prospects for expansion and acquisitions also have China’s natural gas distributors trading like growth stocks, instead of bog-

standard utilities.

China is pushing energy price reforms and spending billions of dollars on gas imports and infrastructure to cut the use of coal, which supplies over 70 percent of its energy but has made it the world leader in mine accidents and greenhouse emissions, and among the worst in air pollution.

While nuclear power and renewables such as solar and wind

are also benefiting from the shift, for now gas looks set to gain the most, since plentiful supplies and its use in industrial production and conventional thermal power plants mean it can be developed quickly and efficiently.

“Natural gas is clean energy that is enjoying a lot of state policy support,” said Liu Yang, chief investment officer of regional fund house Atlantis, which manages

Cosco claims Vale is boycotting its ships Vale mega-ships banned in China, safety concerns invoked

C

hina Ocean Shipping, the nation’s biggest operator of dry-bulk ships, said Vale SA was refusing to use its vessels to protest a Chinese ban on the Brazilian miner’s mega-ships.

The state-owned company, known as Cosco, expects a “big” impact on operations from the boycott and it’s considering filing a complaint with China’s Ministry of Commerce, President Ma Zehua said in an interview yesterday in Beijing.

Vale, the world’s biggest iron-ore producer, has shunned unit Cosco’s fleet for about two months, even if it meant using more expensive ships from other owners, he said.

Sino-Brazilian iron wars

“Many recent steps taken by Vale aren’t rational,” Mr Ma said. “We believe their decisions are based on their perception that Cosco is doing something to lobby the government and not allow Valemaxes into Chinese ports.”

Cosco has safety concerns about the Valemax vessels, which are almost as big as the Bank of America Tower in New York, Mr Ma said. The miner’s plan to spend at least US$8 billion on a fleet of 35 mega-ships has also hit shipowners’ earnings by creating new competition, and stoked tensions between Brazil and China.

“We don’t think the 400,000-ton iron-ore carrier designed and built

by Vale is a safe design,” he added.

“Over the years ahead, we may see a growing number of safety problems.”

Vale, based in Rio de Janeiro, didn’t comment on whether it was boycotting Cosco or on safety concerns in reply to Bloomberg News questions about the topics.

The company has previously said it expects to eventually win Chinese permission to use the ships. The miner sold 47 percent of its iron ore and pellets to China, up from 41 percent a year earlier. China transport ministry spokesman He Jianzhong didn’t answer a call to his office in Beijing today.

Bloomberg

US$4 billion and holds shares of Hong Kong-listed Chinese city gas distributors.

“The city gas sector has been under-invested and is just about to take off,” she said.

Shares of Hong Kong-listed distributors, which include ENN , China Gas Holdings, China Resources Gas , Kunlun Energy and Beijing Enterprises , have risen as much as 37 percent over the past 12 months.

The sector, with a combined market value around US$32 billion, boasts valuations of more than 20 times historical earnings, and investors and analysts remain upbeat about its prospects.

State oil giants such as Sinopec and PetroChina are also swooping in on the sector, threatening to squeeze out non-state firms such as China Gas that entered the business more than a decade ago and have since dominated it.

Sinopec and ENN recently made a US$2.2 billion cash bid for China Gas and a bidding war may be brewing with state-run conglomerate Beijing Enterprises Group – parent of Hong Kong-listed distributor Beijing Enterprises Holding.

Beijing Enterprises snapped up about 9 percent of China Gas in deals on Monday and last Friday, including buying a 5.4 percent holding from Oman Oil, to take its stake to 12.65 percent.

The bid for China Gas, which also counts SK Holdings and Gail India among its key shareholders, will spark further consolidation in the sector, bankers say.

Kunlun, PetroChina’s gas distributor arm, has just raised US$1.3 billion via an international share sale to expand its LNG distribution business, partly via acquisitions.

PBOC keeps the yuan exchange rate stable

T

he yuan was largely flat against the dollar yesterday after the central bank set a midpoint that was weaker than the previous day’s fixing but stronger than the market had expected. As increasing instability in the euro zone has pushed the dollar up since the start of this month, the People’s Bank of China has kept the yuan firmly above 6.3 versus the greenback.

That has sent a signal to the market that the government hopes to keep the yuan stable, traders said, adding that the strategy reflects a Chinese tradition to keep its currency largely flat amid global economic uncertainties.

Traders also reported a reduced supply of dollars in the domestic market in recent months, reflecting slowing capital inflows into China as the country’s export growth decelerates.

“There is a rough balance of dollar supply and demand in recent months, and that has kept the yuan around 6.3 per dollar,” said a trader at a European bank in Shanghai.

“The government appears to have been alarmed by enduring global economic weaknesses, and the PBOC’s relatively strong midpoint helps to stabilise sentiment towards the yuan.” The PBOC set Wednesday’s mid-point at 6.2865, slightly weaker than Tuesday’s 6.2804.

Reuters

10 |

business daily May 10, 2012

ASIA

InBrief

India’s industrial output slows further in March

S. Korea asks North to stop GPS jamming Emerging Asian power hit by inflation, high interest The South Korean government plans to urge North Korea via international agencies to stop jamming global positioning systems, the Ministry of Land, Transport and Maritime Affairs said in an e-mailed statement. Some planes and ships have experienced the signal jamming since April 28, according to the ministry. All routes affected the problem are operating normally using main navigation systems, the ministry said.

Toyota ops profit to triple in 2012 Toyota Motor Corp, Japan’s largest car maker, said quarterly operating profit jumped more than fivefold to US$3 billion (MOP24 bn) and would treble in the current year as vehicle production recovers from post-tsunami lows.

January-March operating profit increased to 238.5 billion yen beating analyst consensus. Fourth-quarter net profit jumped to 121 billion yen from 25.4 billion yen a year ago. For the year to next March, Toyota forecast operating profit would rise to 1 trillion yen (US$12.54 billion), its highest since the global financial crisis.

It sees net profit rising to 760 billion yen from 284 billion yen in the year just ended.

W. Australia plans ore export port Western Australia is buying land for a new deep water port capable of shipping 350 million metric tons of iron ore to emerging Asian economies and beyond.

Australia, the world’s biggest exporter of iron ore, is adding ports as global iron ore purchases are forecast by Australia’s Bureau of Resources and Energy Economics to increase 40 percent to 1.5 billion metric tons by 2017. China will account for half of that quantity, the bureau estimates.

BHP Billiton Ltd., the world’s biggest mining company is leading the expansion of the state’s biggest existing harbour at Port Hedland.

The project will cost about A$14 billion (MOP113.4 bn), the state’s Department of Mines and Petroleum estimated last year.

S. Korea, Japan, in Beijing summit South Korean President Lee Myung Bak, Japanese Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao will meet at a summit to be held in Beijing May 13 and 14, South Korea’s presidential office said in a statement on its website.

The leaders will discuss a possible trilateral free-trade accord and regional cooperation, it said.

Slow work – India’s economy hit by industrial, political inertia

I

ndia’s industrial output grew at a sharply slower pace in March thanks to a cooling infrastructure sector, a Reuters poll showed, underscoring the wider economic gloom in the country.

A survey of 28 economists showed industrial production (IIP) probably rose around 1.5 percent year-onyear in March, significantly lower than February’s 4.1 percent.

That would be in line with the findings of a purchasing managers’ survey that showed India’s factory sector expansion slowed for the third consecutive month in March.

Infrastructure sector output, a core component of the wider industrial output, grew by a meagre two percent in March, much less than the 6.9 percent in the previous month.

The sector accounts for around 38 percent of overall industrial output and trends in infrastructure data are typically reflected in the headline number.

“The core sector data shows

that there has been a substantial slowdown in quite a few important segments of industries,” said Madan Sabnavis, chief economist at CARE Ratings, forecasting IIP at 2.7 percent.

India’s economy, once a key driver of growth in Asia, has slowed considerably due to surging inflationary pressures, which have resulted in high interest rates.

A sustained pick-up in industrial output is not yet in sight, economists say.

“The growth of industrial production is likely to remain highly dampened going ahead, led by slack in investment activity owing to the elevated interest rates,” said Arun Singh, senior economist at Dun & Bradstreet.

His views were similar to those of CARE Ratings’ Sabnavis, who is not expecting IIP to cross the 3.5 percent mark for the year.

Growth prospects for the Indian economy have been consistently downgraded. Economists polled

by Reuters cut their gross domestic

product forecasts for the fifth straight quarterly poll in April.

Annual exports fell in March for the first time in four months as demand from key trade partners, Europe and the United States, weakened.

However, there are a few bright spots in the faltering Indian growth story that might boost the industrial output number ahead. An uptick in both the manufacturing and services purchasing managers’ index numbers for April offers room for optimism. So does the surprisingly sharp rate cut by the central bank at its April meeting in an effort to boost the slowing economy.

“Overall, we do see some improvement (in IIP) going forward but it will not be a very sharp reversal,” said ING Vysya economist, Upasna Bhardwaj, who is forecasting IIP growth of 2.8 percent for March. “The policy inertia that has set in, there has to be some movement on that front as well to really see a substantial improvement in industrial activity.”

Reuters

Singtel unit buys Silicon Valley startup Target company specialises in mobile advertising Poornima Gupta

S

ingapore Telecommunications Ltd , Southeast Asia’s largest telecoms company, has acquired a Silicon Valley startup in the mobile advertising sector, its second such purchase in two months.

SingTel’s Amobee unit said on Tuesday it bought AdJitsu, which provides tools to make threedimensional animated ads in mobile apps for iPhone and iPads.

The acquisition of AdJitsu follows SingTel’s purchase of mobile advertising company Amobee in March for US$321 million (MOP2.57bn). The terms of the latest deal were not disclosed.

AdJitsu will be folded into Redwood City, California-based Amobee,

according to both companies.

AdJitsu was a unit of Palo Alto, California-based startup Cooliris, which has raised US$28 million from big venture capital names such as Kleiner Perkins Caufield & Byers, DAG Ventures and The Westly Group.

Cooliris chief executive Soujanya Bhumkar said mobile advertising is seeing a lot of activity with advertising networks and media content providers jostling to gain a foothold. “The space is hot right now,” Mr Bhumkar said.

“The numbers are actually insane in terms of both economics and engagement.”

This year, U.S. mobile ad spending will grow 80 percent to US$2.61

billion, according to research firm eMarketer. The market grew 89 percent last year to US$1.45 billion in 2011, it said.

Even mobile handset makers are getting in the market. Samsung Electronics Co Ltd, which makes the Galaxy line of smartphones, last month announced its own mobile advertising service called AdHub Market.

In less than a year, AdJitsu had snagged major clients, including carmaker BMW and mobile handset maker Nokia.

Mr Bhumkar said Cooliris sold AdJitsu - a business-to-business unit - to focus on its consumeroriented divisions.

Reuters

May 10, 2012 business daily | 11

ASIA

Asian currencies wobble on fresh Greek bailout fears The euro zone crisis won’t go away – and the world economy is suffering

M

ost emerging Asian currencies fell on Wednesday, with the South Korean won and the Malaysian ringgit breaking through technical support, on worries that the austerity moves Europe has taken to deal with its debt crisis could be derailed. The won came under more pressure from local importers and as foreign investors continued to shed local stocks.

The ringgit weakened past a 100-day moving average as some European banks offered to buy dollars and investors added to their positions.

Wednesday’s slides in regional units came as Greece struggled to form a government after the weekend’s election, heightening the risk that a hard-won bailout deal could be scrapped.

Radical leftist Alexis Tsipras was due to meet the leaders of Greece’s mainstream parties to try to form a coalition government, an effort seen as doomed after he demanded that pledges made in exchange for a joint European Union and International Monetary Fund rescue package be torn up.

“Concerns over disorderly exit of the country from the euro zone are coming back, triggering uncertainty in global markets,” said Dariusz Kowalczyk, Credit Agricole CIB’s senior economist and strategist in Hong Kong. “We expect Asia to see a continuation of the market trend towards weaker currencies and equities while rates are likely to fall as well.”

Going broke

Officials estimate that Greece could run out of money as soon as next

Greek ruins – Asian currencies suffering under euro zone uncertainty

month if Athens does not stick to the aid package terms, which kept the currency solvent and in the single currency bloc. The concerns hit other risky assets including Asian stocks and the euro. “Markets are starting to build up risk-off positions. Euro and other risky currencies will drift lower thanks to Greece,” said a senior Malaysian bank dealer in Kuala Lumpur.

The euro weakened against the dollar and yen in Asian trade on Wednesday as investors fretted over the political uncertainty in Europe and its impact on the common currency.

The euro bought US$1.2975 and 103.48 yen in Tokyo afternoon trade, down from US$1.3005 and 103.84 yen in New York late Tuesday. The dollar edged down to 79.75 yen from 79.84 yen in New York.

Political turmoil in Greece and policy differences between French president-elect Francois Hollande and German Chancellor Angela Merkel over how to tackle the euro zone’s debt crisis will continue to weigh on the unit, said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ. The “political situation remains unclear,” Kamei said.

Credit Suisse analyst Hiromichi Shirakawa said in a note that Greece was unlikely to leave the euro zone even if Syriza formed a government, although more fiscally healthy nations could benefit from exiting the 17-nation bloc.

“We should watch for the possibility of euro zone exit of four countries - the Netherlands, Finland, Luxembourg and Germany especially the Netherlands,” he said. “The euro should plunge if a healthy country leaves. We need to pay constant attention to the risk,” Mr Shirakawa added.

Reuters/AFP

Foreign investors eye Myanmar villagers want Indonesia’s booming banks share of energy bonanza Domestic lenders’ assets tipped to grow to US$5.1 trillion by 2050

I

ndonesia’s banking sector is becoming a magnet for foreign firms willing to accept an uncertain investment environment in return for booming growth and an untapped market of tens of millions.

Major players are watching with interest the outcome of DBS Group of Singapore’s trail-blazing US$7.3 billion deal struck on April 2 to acquire Bank Danamon Indonesia, the nation’s fifth-largest bank.

Underlining the uncertainties, the central bank declined to approve the deal until it establishes new rules on foreign ownership, which currently allow local and foreign investors to own up to 99 percent of Indonesian banks.

Bank Indonesia also said investors would require separate licences for different services, such as taking deposits, setting up ATMs and opening branches.

A green light on the closely watched deal, which highlights the

Fears the poor could lose as country opens to foreign investors

eagerness of major institutions to expand in Indonesia, would give foreign firms more confidence to invest in an economy that posted 6.5 percent growth last year.

“Indonesian banks are attractive because they are growing much faster than foreign banks,” said Harry Su, head of research at Jakarta-based brokerage Bahana securities.

“DBS’ current return on investment is around 10 percent, while Danamon’s is around 15 percent,” he said.

Indonesia’s banks are growing much faster than in Europe and the United States, says a report from PricewaterhouseCoopers.

Indonesia’s domestic banking assets are tipped to grow to US$5.1 trillion by 2050 from US$187 billion in 2009 - a 27-fold increase.

Over the same period, U.S. assets are expected to expand just threefold to US$46.5 trillion.

AFP

M

yanmar is rich in oil and gas but only 13 percent of the population has access to electricity, according to 2009 figures from the World Bank.

France’s Total, in partnership with US energy giant Chevron, and Malaysia’s Petronas are among the overseas firms enjoying the fruits of a tieup with Myanmar Oil and Gas Enterprise.

Critics say the rewards of the nation’s energy bounty are being shared among foreign investors and the regime, rather than its impoverished people.

There is hope that the new government “will be much more accountable and much more transparent with what it does with oil and gas revenues, but it is still to be seen,” said Sean Turnell, a Myanmar expert at Macquarie University in Sydney.

Locals fear the new government led by former general President Thein Sein, which replaced the junta in March 2011, will do little to share the spoils while at the same time damaging the environment.

There are several controversial projects to exploit gas reserves off the coast of Rakhine state in Myanmar.

These include plans for an 800 kilometre (500 mile) pipeline to transport the country’s gas to China, and a parallel line for oil shipped in from Africa and the Middle East.

The China National Petroleum Corporation is the major partner in the two pipelines, which will be able to carry 10-13 million cubic metres (350-450 million cubic feet) of gas and 22 million tonnes of oil a year from 2013, according to its website.

AFP

12 |

business daily May 10, 2012

PRICE

Day %

VOLUME

(H) 52W

(L) 52W

72.45

-1.428571

6866903

93.1

53.6

4.97

-0.9960159

263113087

6.56

3.46

22346149

20.15

10.82

MARKETS Ticker NAME

Hang SENG INDEX Ticker NAME

PRICE

Day %

VOLUME

(H) 52W

(L) 52W

13

HUTCHISON WHAMPO

1398

IND & COMM BK-H

494

LI & FUNG LTD

15.88

-3.523694

1299

AIA GROUP LTD

27.15

0.1845018

27453468

29.9

19.84

66

MTR CORP

26.75

-0.3724395

1346627

28.8

22.45

2600

ALUMINUM CORP-H

3.36

-5.084746

54185224

7.18

3.2

17

NEW WORLD DEV

9.21

-0.6472492

11452363

12.418

6.13

3988

BANK OF CHINA-H

3.02

-0.9836066

607929764

4.35

2.2

857

PETROCHINA CO-H

10.74

-1.286765

61690595

11.92

8.59

3328

BANK OF COMMUN-H

5.58

-1.587302

29431452

7.409

4.15

2318

PING AN INSURA-H

62

-2.66876

15043791

84.7

37.35

23

BANK EAST ASIA

1880

BELLE INTERNATIO

2388

BOC HONG KONG HO

293

28.9

-0.5163511

1874838

34.45

21.85

6

POWER ASSETS HOL

14.76

0

9214832

17.54

11.38

83

SINO LAND CO

58.4

-0.5957447

2998345

64.8

52.15

12.34

-2.063492

11612161

14.16

24

-1.030928

13916127

24.65

14.24

16

8.482

SUN HUNG KAI PRO

89.8

0.8988764

6845056

122

CATHAY PAC AIR

13.36

0.4511278

5479148

20.05

11.8

85.45

19

SWIRE PACIFIC-A

90.6

-0.0551572

1511849

102.539

69.321

1

CHEUNG KONG

99.35

-1.536174

3651717

122.4

1898

CHINA COAL ENE-H

8.32

-2.002356

19078794

11.66

79.1

700

TENCENT HOLDINGS

224.8

-2.768166

5194374

248.8

139.8

6.59

322

TINGYI HLDG CO

20.4

-0.729927

2758037

26

939

CHINA CONST BA-H

5.7

-1.554404

265952356

17.84

7.36

4.41

151

WANT WANT CHINA

9.37

0.1068376

7536870

9.78

2628

CHINA LIFE INS-H

20.15

-1.22549

40440554

6.03

28.1

17.04

4

WHARF HLDG

43.75

-1.463964

2636195

59

33.15

144

CHINA MERCHANT

23.8

-2.459016

2698273

35.2

19

941

CHINA MOBILE

88.55

1.373784

22682199

89.45

68.05

688

CHINA OVERSEAS

16.02

-2.07824

16925724

17.86

9.99

386

CHINA PETROLEU-H

7.87

-0.3797468

64194977

9.67

6.22

291

CHINA RES ENTERP

28.2

-1.052632

2674020

35.5

24

1109

CHINA RES LAND

13.7

-1.862464

9573121

15.6

7.28

836

CHINA RES POWER

13.6

-0.5847953

2769866

16.2

10.82

1088

CHINA SHENHUA-H

31.95

-1.843318

15558900

40.2

27.1

762

CHINA UNICOM HON

13

-2.985075

20445799

17.68

12.6

267

CITIC PACIFIC

12.36

-0.6430868

3310675

23

10.26

2

CLP HLDGS LTD

65.9

-0.6033183

2254304

75.2

62.1

883

CNOOC LTD

15.36

-2.414231

69715276

19.7

11.2

1199

COSCO PAC LTD

10.32

-0.3861004

8233315

16.3

7.52

330

ESPRIT HLDGS

14.02

-2.773925

14247788

31.35

7.55

101

HANG LUNG PROPER

27.05

-0.9157509

5653776

35.3

20.85

11

HANG SENG BK

106.5

0.09398496

1241506

125

84.4

12

HENDERSON LAND D

41.3

-1.431981

6622487

52.95

33.2

1044

HENGAN INTL

78.2

0.7083065

1529236

83.45

56.8

3

HONG KG CHINA GS

19.62

-1.009082

6392270

20.65

16.68

388

HONG KONG EXCHNG

118.9

-1.89769

4653368

176

99.15

5

HSBC HLDGS PLC

69.5

0.6517017

14941903

84.05

56

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.72

-1.449275

75335044

CHINA YANGTZE-A

AIR CHINA LTD-A

6.45

-1.826484

17338545

ALUMINUM CORP-A

IN FOCUS Aluminium Corporation of China (2600 HK) share price 7.0 6.2 5.4 4.6 3.8

9-May-2012

11-May-2011

Shanghai Shenzhen CSI 300 NAME

INDEX 20330.64 52W (H) 23707.94 (L) 16170.35 MOVERS 16 30 2

NAME

NAME

3.0

PRICE

DAY %

VOLUME

PRICE

DAY %

6.66

-0.2994012

23558845

PING AN INSURA-A

41.45

-0.3366194

VOLUME 25938000

CITIC SECURITI-A

12.88

-1.604278

88131609

POLY REAL ESTA-A

12.75

-1.847575

16556984 15215677

7.15

-3.247632

36074748

CSR CORP LTD -A

4.81

-2.828283

31390880

QINGDAO HAIER-A

11.66

-2.752294

ANHUI CONCH-A

16.48

-3.229595

45600487

DAQIN RAILWAY -A

7.5

-1.445466

38983864

QINGHAI SALT-A

33.99

-2.691096

6707015

BANK OF BEIJIN-A

10.3

-2.091255

21082299

DATANG INTL PO-A

5.34

-2.018349

8564675

SAIC MOTOR-A

15.53

-2.9375

20118883

BANK OF CHINA-A

3.05

-0.6514658

27673536

DONGFANG ELECT-A

21.67

-2.912186

11833197

SANY HEAVY INDUS

14.31

-3.376097

30687633

BANK OF COMMUN-A

4.89

0

89720674

EVERBRIG SEC -A

13.34

-0.2243829

13234588

SHANDONG GOLD-MI

34.9

-3.3241

10826728

4.95

-1.590457

31087560

GD MIDEA HOLDING

13.58

-2.582496

14308853

SHANG PUDONG-A

9.2

-1.709402

65066893

25.83

-3.149606

3932146

GD POWER DEVEL-A

2.6

-1.515152

52962991

SHANGHAI ELECT-A

5.61

-2.434783

11998199 12626999

BAOSHAN IRON & S BYD CO LTD -A

4.5

-2.173913

10662428

GF SECURITIES-A

31.94

-0.8690255

11077395

SHANXI LU'AN -A

27.79

-3.271841

CHINA CNR CORP-A

CHINA CITIC BK-A

4.33

-2.696629

49528300

GREE ELECTRIC

21.92

-1.12765

17031758

SHANXI XINGHUA-A

76.71

-1.641236

2008268

CHINA COAL ENE-A

9.45

-2.376033

12190638

GUIZHOU PANJIA-A

32.3

-2.269289

7228389

SHANXI XISHAN-A

18.02

-2.594595

25420336

SHENZ DVLP BK-A

16.16

-2.297461

21367675

7.59

-2.442159

21866216

CHINA CONST BA-A

4.71

-0.8421053

57951855

HAITONG SECURI-A

9.86

-1.498501

76322620

CHINA COSCO HO-A

5.24

-4.204753

19906246

HANGZHOU HIKVI-A

46.98

-1.530078

2099199

CHINA CSSC HOL-A

38.42

4.006497

32195743

HEBEI IRON-A

3.08

-1.910828

32927081

CHINA EAST AIR-A

4.27

-0.6976744

24430461

HENAN SHUAN-A

65.4

-2.721999

1698903

SHENZEN OVERSE-A SINOVEL WIND-A

16.47

-2.371073

4032848

SUNING APPLIAN-A

10.02

-2.243902

37701232 17043656

CHINA EVERBRIG-A

3.04

-1.298701

53460626

HUATAI SECURIT-A

10.04

-1.472031

20106404

TONGLING NONFE-A

22.27

-2.1529

CHINA INTL MAR-A

15.5

-0.8951407

15621809

HUAXIA BANK CO

10.7

-1.654412

30057646

TSINGTAO BREW-A

35.79

-0.8861811

1932969

18.47

-0.7522837

12209537

IND & COMM BK-A

4.38

-0.9049774

45487362

WEICHAI POWER-A

33.28

-3.536232

6865126

14

-2.439024

55035751

WULIANGYE YIBIN

35.68

-2.246575

21872930

43.69

-2.41233

153047620

27.7

0.2896452

15398295 19790023

CHINA LIFE INS-A CHINA MERCH BK-A

12.12

-2.021019

76685775

INDUSTRIAL BAN-A

CHINA MERCHANT-A

12.99

-1.441578

9735920

INNER MONG BAO-A

XINJIANG GUANG-A

CHINA MERCHANT-A

23.15

-1.237201

4669673

23

-1.414488

10151213

YANGQUAN COAL -A

19.89

-3.446602

CHINA MINSHENG-A

6.72

-0.7385524

127697057

INNER MONGOLIA-A

6.31

-4.248862

99838825

YANTAI CHANGYU-A

98.95

-1.542289

1005134

CHINA NATIONAL-A

6.76

-3.428571

17393200

JIANGSU HENGRU-A

27.79

-1.767409

3529013

YANTAI WANHUA-A

14.83

-1.527224

12746444

INNER MONG YIL-A

CHINA OILFIELD-A

19.01

3.315217

26051506

JIANGSU YANGHE-A

169.3

0.8939213

1454857

YANZHOU COAL-A

23.88

-2.371218

7745887

CHINA PACIFIC-A

21.34

-1.522843

14842376

JIANGXI COPPER-A

26.21

-2.601263

16090100

YUNNAN BAIYAO-A

50.99

-2.839177

2632579

CHINA PETROLEU-A

7.11

-1.931034

50422992

JINDUICHENG -A

14.24

-4.621567

15034512

ZHONGJIN GOLD

22.83

-3.221704

13788501

CHINA RAILWAY-A

2.69

-2.181818

29277555

JIZHONG ENERGY-A

20.56

-1.532567

9239579

ZIJIN MINING-A

4.28

-2.283105

59025299

230.83

-1.401051

3290959

ZOOMLION HEAVY-A

44.37

-2.05298

6779979

ZTE CORP-A

25801864

CHINA RAILWAY-A

4.34

-2.252252

24827636

KWEICHOW MOUTA-A

CHINA SHENHUA-A

26.96

-1.209234

16263138

LUZHOU LAOJIAO-A

CHINA SHIPBUIL-A

6.41

2.070064

125498544

METALLURGICAL-A

2.66

-1.481481

CHINA SOUTHERN-A

4.79

-1.64271

43062945

NARI TECHNOLOG-A

20.97

-2.009346

8036750

CHINA STATE -A

3.34

-3.468208

101948497

NINGBO PORT CO-A

2.64

-1.492537

14047413

CHINA UNITED-A

4.23

-2.534562

88279304

PANGANG GROUP -A

8.27

-6.022727

126621961

CHINA VANKE CO-A

8.93

-1.216814

58309872

PETROCHINA CO-A

9.73

-2.014099

29083395

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

10.08

-2.796528

40728864

17

-2.298851

10946533

INDEX 2657.514 52W (H) 3164.65 (L) 2254.567 MOVERS 19 275 6

PRICE

DAY %

VOLUME

CHINA LONGYUAN-H

5.8

-0.8547009

6814807

PETROCHINA CO-H

CHINA MERCH BK-H

15.8

-1.25

12854862

CHINA MINSHENG-H

7.7

-1.282051

9.32

NAME

PRICE

DAY %

VOLUME

10.74

-1.286765

61690595

PICC PROPERTY &

9.4

-2.792141

19916546

46160000

PING AN INSURA-H

62

-2.66876

15043791

-3.419689

62792700

SHANDONG WEIG-H

8.26

-1.314217

2362000

11.48

0.3496503

9794669

18.42

-3.052632

3798805

24

-2.439024

10323800

TSINGTAO BREW-H

47.2

-0.9443861

1472000

7.87

-0.3797468

64194977

WEICHAI POWER-H

35.2

-2.493075

2954377

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.42

-1.156069

85343322

CHINA NATL BDG-H

AIR CHINA LTD-H

5.78

-0.8576329

21070468

CHINA OILFIELD-H

ALUMINUM CORP-H

3.36

-5.084746

54185224

CHINA PACIFIC-H

23.25

-1.898734

14778720

CHINA PETROLEU-H

BANK OF CHINA-H

3.02

-0.9836066

607929764

CHINA RAIL CN-H

5.5

-1.785714

11597500

YANZHOU COAL-H

14.92

-4.113111

27954004

BANK OF COMMUN-H

5.58

-1.587302

29431452

CHINA RAIL GR-H

2.71

-1.454545

11839000

ZIJIN MINING-H

2.32

-4.526749

81537988

18.44

-3.757829

2701000

CHINA SHENHUA-H

31.95

-1.843318

15558900

ZOOMLION HEAVY-H

10.1

-3.441683

21347340

CHINA CITIC BK-H

4.65

-1.898734

34943560

CHINA TELECOM-H

3.9

-2.5

63615544

ZTE CORP-H

17.96

-0.443459

4335223

CHINA COAL ENE-H

8.32

-2.002356

19078794

DONGFENG MOTOR-H

13.86

-1.702128

17121154

CHINA COM CONS-H

6.82

-2.849003

23017868

GUANGZHOU AUTO-H

7.19

-2.70636

10552088

CHINA CONST BA-H

5.7

-1.554404

265952356

HUANENG POWER-H

4.5

0.4464286

12805379

CHINA COSCO HO-H

4.04

-4.716981

21468350

IND & COMM BK-H

4.97

-0.9960159

263113087

20.15

-1.22549

40440554

JIANGXI COPPER-H

17.52

-3.417861

23688970

NAME

PRICE DAY %

ANHUI CONCH-H

BYD CO LTD-H

CHINA LIFE INS-H

FTSE TAIWAN 50 INDEX NAME

PRICE DAY %

Volume

Volume

SINOPHARM-H

INDEX 10356.64 52W (H) 13317.51 (L) 8058.58 MOVERS 12 38 0

NAME

PRICE DAY %

Volume

FAR EASTERN NEW

31.7

0.6349206

8812441

SINOPAC FINANCIA

9.91

-1.881188

10342437

FAR EASTONE TELE

64.5

-0.309119

4882178

SYNNEX TECH INTL

70.6

0.8571429

4343586

17.15

-0.867052

7408038

TAIWAN CEMENT

35 -0.1426534

5439901

81.2

-1.694915

5546922

TAIWAN COOPERATI

87 -0.2293578

2653994

TAIWAN FERTILIZE

-0.75

9432129

TAIWAN GLASS IND

103.5 -0.9569378

4802205

TAIWAN MOBILE CO

FIRST FINANCIAL FORMOSA CHEM & F

ACER INC

33.3

-2.202643

10999944

FORMOSA PETROCHE

ADVANCED SEMICON

29.1

-1.355932

18029041

FORMOSA PLASTIC

ASIA CEMENT CORP

34.8 -0.7132668

4541745

FOXCONN TECHNOLO

79.4

17.55

-1.126761

5289821

70.9 -0.5610098

1277626

28.85

-2.368866

1684788

92.9 -0.4287245

13438146

ASUSTEK COMPUTER

313.5

-3.538462

5526042

FUBON FINANCIAL

29.9 -0.9933775

17606988

TPK HOLDING CO L

371

-0.536193

2881155

AU OPTRONICS COR

13.1

-1.872659

30586545

HON HAI PRECISIO

87.3

48066380

TSMC

84.6

0.2369668

40792531

HOTAI MOTOR CO

CATCHER TECH

196.5

0.7692308

9170012

CATHAY FINANCIAL

30.4

-2.250804

15690823

CHANG HWA BANK

16.05

-0.619195

CHENG SHIN RUBBE

72.3

CHIMEI INNOLUX C CHINA DEVELOPMEN CHINA STEEL CORP CHINATRUST FINAN CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC

-1.355932

184

-3.157895

861844

46.7

-1.580611

13544397

HTC CORP

452.5

0.5555556

6347110

UNITED MICROELEC

14.45

-2.033898

37256300

8220582

HUA NAN FINANCIA

16.25

-1.515152

4709146

WISTRON CORP

42.75

-4.040404

17817010

-2.297297

3777449

LARGAN PRECISION

481

1.583949

1810595

YUANTA FINANCIAL

13.35

-2.197802

32907697

12.2

-2.4

17716968

LITE-ON TECHNOLO

35.6

-2.997275

3181502

YULON MOTOR CO

49.45

-2.079208

5806881

7.54

-1.437908

51061445

MEDIATEK INC

265

0

5839496

28.5 -0.6968641

17654533

MEGA FINANCIAL H

21.85

-2.237136

15711917

-1.608579

19086528

NAN YA PLASTICS

59.2

-1.986755

6387860

90.2 -0.9879254

9863300

PRESIDENT CHAIN

159.5

0

1143194

18.35 33.25

-2.777778

11282658

QUANTA COMPUTER

80.8

-1.343101

14209040

93.5

-1.058201

5820441

SILICONWARE PREC

33.3

-2.915452

9142225

UNI-PRESIDENT

INDEX 5142.97 52W (H) 6247.96 (L) 4643.05 MOVERS 6 42 2

May 10, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) gaLaXy ENTERTaINMENT

Max 22.70

average 21.73

MELCO CROwN ENTERTaINMENT

Min 21.35

22.8

36.2

13.50

22.5

36.1

13.38

22.2

36.0

13.26

21.9

35.9

13.14

21.6

35.8

13.02

21.3

Last 22.05

Max 36.20

SaNDS CHINa LTD

Max 29.50

average 28.58

average 35.94

Min 35.75

Last 35.80

Min 28.70

Last 28.70

29.16

16.48

22.38

28.92

16.36

22.26

28.68

16.24

22.14

28.44

16.12

22.02

28.20

16.00 Max 16.60

average 16.22

Min 16.00

Last 16.08

21.90 Max 22.50

average 22.15

Last 22.40

Min 21.90

CURRENCY EXCHANGE RATES MAJORS

ASIA PACIFIC

2400 2300 2200

MACAU RELATED STOCKS PRICE

DAY % YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

2.9

-2.027027

34.54545

3.25

1.88

2731232

CROWN LTD

9.06

-1.414581

13.59703

9.29

7.45

1812032

AMAX HOLDINGS LT

0.09

0

3.448279

0.132

0.06

4933500

BOC HONG KONG HO

24

-1.030928

31.79348

24.65

14.24

13916127

0.255

0

10.86956

0.41

0.204

0

3.15

0

12.5

4.79

2.3

31000 16925724

CHINA OVERSEAS

16.02

-2.07824

26.04007

17.86

9.99

CHINESE ESTATES

10.94

-0.7259528

-11.84

14.3

10.2

151841

CHOW TAI FOOK JE

12.12

-1.141925

-11.92529

15.16

11.46

3758000

1.3

-2.255639

19.81982

2.09

0.97

1095000

1.06

1.923077

147.6191

1.09

0.3

5568000

FUTURE BRIGHT

12.90

Last 13.12

22.50

2500

EMPEROR ENTERTAI

Min 12.92

wyNN MaCaU LTD

2600

CHEUK NANG HLDGS

average 13.05

16.60

2700

CENTURY LEGEND

Max 13.50

29.40

Euro Stoxx 50 index (SX5E) performance, year-to-date

ARISTOCRAT LEISU

35.7

SJM HOLDINgS LTD

IN FOCUS

NAME

MgM CHINa HOLDINgS

GALAXY ENTERTAIN

22.05

-4.130435

61.51686

24.95

8.69

33604760

HANG SENG BK

106.5

0.09398496

15.46392

125

84.4

1241506

HOPEWELL HLDGS

20.6

-0.9615385

4.733129

24.903

18.56

394440

HSBC HLDGS PLC

69.5

0.6517017

17.0339

84.05

56

14941903

HUTCHISON TELE H

3.54

4.117647

13.71237

3.6

2.13

13206109

LUK FOOK HLDGS I

18.6

-5.102041

-27.67528

46.15

18.38

7323003

CROSSES

AUD HKD

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

AUD

1.0062

-0.5829

-1.4399

1.1081

0.9388

GBP

1.6112

-0.2847

3.6608

1.6618

1.5235

CHF

0.9256

-0.2161

1.3505

0.9596

0.7071

EUR

1.2976

-0.223

0.1157

1.4697

1.2624

JPY

79.67

0.251

-3.4643

84.18

75.35

MOP

7.995

0.0013

0.0575

8.0449

7.9823

HKD

7.7626

-0.0026

0.0618

7.8113

7.7529

CNY

6.3098

-0.0269

-0.2346

6.5098

6.2769

INR

53.68

-0.9944

-1.1457

54.305

43.855

THB

31.06

-0.161

1.5776

31.96

29.63

SGD

1.2505

-0.2319

3.6865

1.3199

1.1992

TWD

29.353

-0.0954

3.1547

30.715

28.48

PHP

42.535

-0.6301

3.0681

44.35

41.879

IDR

9259

-0.2268

-2.0521

9367

8458

AUDJPY

80.16

0.852

-2.1557

88.637

72.057

EURCHF

1.20112

0.005

1.3046

1.27019

1.00749

EURGBP

0.80535

-0.0559

3.4817

0.90835

0.80357

EURCNY

8.192

0.3003

-0.7056

9.514

7.9674

EURMOP

10.3751

0.2226

-0.0501

11.7768

10.1015

EURJPY

103.38

0.4837

-3.5984

117.9

97.04

HKDMOP

1.0299

0.0097

0

1.0311

1.0288

World Stock MarketS - Indices COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

NAME

US

12932.09

-0.5876144

5.848388

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

US

2946.27

-0.3884697

13.09407

3134.17

2298.89 4791.01

FTSE 100 INDEX

GB

5537.98

-0.298314

-0.6155434

6084.08

DAX INDEX

GE

6450.62

0.09123719

9.363128

7566.410156

4965.8

JN

9045.06

-1.487641

6.974401

10255.15

8135.79

7.26

-2.288022

28.7695

10.76

4.3

3490902

NIKKEI 225

MGM CHINA HOLDIN

13.12

-3.529412

41.78255

17.183

7.6

7752300

HANG SENG INDEX

HK

20330.64

-0.7523157

10.28648

23707.94922

16170.35

MIDLAND HOLDINGS

3.75

-2.34375

-4.950494

5.7

2.95

1331007

CSI 300 INDEX

CH

2657.514

-1.904754

13.29097

3164.65

2254.567

NEPTUNE GROUP

0.11

0

-0.9009022

0.157

0.08

0

NEW WORLD DEV

9.21

-0.6472492

48.08306

12.418

6.13

11452363

TAIWAN TAIEX INDEX

TA

7475.71

-0.9276794

5.707372

9089.47

6609.11

SANDS CHINA LTD

28.7

-2.546689

34.16856

33.05

14.9

19417348

MELCO INTL DEVEL

SHUN HO RESOURCE

1.19

0

19

1.32

0.82

0

SHUN TAK HOLDING

3.02

-1.948052

20.35348

4.686

2.241

7774877

SJM HOLDINGS LTD

16.08

-3.942652

32.01892

21

10.22

22911449

SMARTONE TELECOM

15.24

0.2631579

13.09524

18.5

9.8

2023784

22.4

-2.183406

17.4359

27.48

14.807

18445219

WYNN MACAU LTD ASIA ENTERTAINME

5.08

-4.511278

-9.523811

10.8692

4.72

85191

BALLY TECHNOLOGI

46.85

-0.6994489

19.26188

49.32

24.74

436349

BOC HONG KONG HO

3.15

3.278689

27.23244

3.15

1.81

5865

GALAXY ENTERTAIN

2.93

-2.006689

59.89305

3.24

1.08

83650

INTL GAME TECH

14.94

-1.190476

-12.09303

19.15

13.38

3827029

JONES LANG LASAL

78.34

-0.7977713

28.90957

101.362

46.01

332971

LAS VEGAS SANDS

52.42

-1.743205

24.85373

62.09

36.08

13284971

MACAU CAPITAL IN

N/A

N/A

N/A

0.11

0.11

0

MELCO CROWN-ADR

13.99

-1.478873

47.60915

16.15

7.05

10084959

MGM CHINA HOLDIN

1.78

0

49.36731

2.21314

1.00254

1100

MGM RESORTS INTE

11.81

-2.878289

16.58677

16.05

7.4

22122129

SHUFFLE MASTER

16.57

-3.438228

46.41638

18.77

7.35

730807

2.12

-6.19469

38.65031

2.64

1.28

95500

119.23

-4.760764

13.30437

165.4931

101.02

4636317

SJM HOLDINGS LTD WYNN RESORTS LTD

KOSPI INDEX

SK

1950.29

-0.8500211

6.821894

2192.83

1644.11

S&P/ASX 200 INDEX

AU

4275.081

-0.910195

5.386842

4795.9

3765.9

JAKARTA COMPOSITE INDEX

USD

ID

4129.06

-1.244011

8.034243

4234.734

3217.951

FTSE Bursa Malaysia KLCI

MA

1584.9

-0.3583553

3.538837

1609.33

1310.53

NZX ALL INDEX

NZ

793.752

0.3460111

8.762907

814.431

700.441 2695.06

PHILIPPINES ALL SHARE IX

PH

3448.33

-0.5502666

13.24416

3518.96

HSBC Dragon 300 Index Singapor

SI

568.46

0.07

14.53

na

na

STOCK EXCH OF THAI INDEX

TH

1210.92

-1.63439

18.10168

1247.72

843.69

HO CHI MINH STOCK INDEX

VN

487.62

-0.09219989

38.70574

492.44

332.28

Laos Composite Index

LO

1032.22

0

14.75996

1318.9

876.33

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

Contact Information

ONE YEAR Suscription REGULAR 1,560 Mop 20% discount 1,150 Mop

First Name (Mr/Mrs/Ms)

Last name

Address Postal Code

Country

Phone Fax Email

Payment

Subscription Period: from

(yy)|

(mm)|

to |

(yy) |

(mm) |

I wish to pay by Cheque or Direct Deposit

Make payable to De Ficção-Projectos Multimedia

Banco Comercial de Macau (BCM) Acct# 1099732111

Make payable to De Ficção-Projectos Multimedia Limitada

Banco Nacional Ultramarino (BNU) Acct# 9008096687

Visa Master Card American Express Credit Card Account Number

Expiration Date mm

Cardholder’s Name Cardholder’s Signature

yy

CVV2/CVC2

14 |

business daily May 10, 2012

Opinion

Greek elections force Germany to weigh austerity Marc Champion Max Berley Bloomberg editors

G

reece’s elections have confirmed its role as the worst pupil in the euro-area class.

But with all respect to Paul Krugman and others, austerity isn’t dead: It’s now up to Germany to decide whether to ease up, or hold firm and watch Greece leave the euro.

The May 6 vote showed clearly that Greeks aren’t willing to accept further cuts. Almost 70 percent of voters backed political parties – from antiEuropeans to neo-fascists – that oppose sticking to the terms of the two bailouts since May 2010.

There’s now a high likelihood the country will miss its next deadlines under the 130 billion euro (US$169 billion) program it agreed to in February. That means the European Union and other exasperated international creditors may soon have to decide whether to pull the plug, leaving Greece to default and exit the euro. Economists at Citigroup Inc. say the odds of that happening in the next 18 months are now as high as 75 percent. The mild reaction of currency and equity markets – outside Greece – after Sunday’s election shouldn’t fool anyone. Letting Greece go would be a reckless gamble with the future of the single currency, risking political turmoil and unknown consequences for the European project as a whole.

Fragile coalition The center-right New Democracy party, which came in first in the election with just 19 percent of the vote, has already said it’s unable to form a government.

Others will now try, but even if a rickety coalition is assembled, it won’t have a mandate to stick with the current austerity program.

That makes it hard to see how the parties can form a government able to meet the May 31 deadline for Greece to elaborate further deficit reductions

worth 5.5 percent of gross domestic product for 2013-2014. That’s on top of a reduction in the primary deficit (excluding interest payments) of 8.25 percent of GDP that Greece already made and that affected mainly pensioners and wage earners, rather than wealthy tax evaders.

No wonder Greek voters are mad.

But if the government misses the deadline, then the so-called troika monitoring Greece’s bailout (the International Monetary Fund, the European Commission and the European Central Bank) has indicated it would halt further payments.

German Chancellor Angela Merkel said Monday that it was of ‘utmost importance’ that the government in Athens continue its programme.

Greece is due to get about 30 billion euros, much of it for recapitalising the country’s banks, in the second quarter. A little less than 4 billion euros of bonds come up for redemption over the next month.

Greek officials say that if bailout funds are halted, they would run out of money to pay pensions and salaries within weeks. Given that the state power company recently had to be given emergency funding, the lights might literally go out.

There are two ways to respond. One is to give the Greeks more time. Even though they are repeat offenders, there are signs that they are finally on track with the fiscal side of the program.

In March, bank deposits finally began to rise, for the first time since 2009.

The alternative is to stick with the austerity plan’s deadlines and impose more tough love. Under that scenario, the flow of money would be allowed to stop, making Greeks understand the true cost of going it alone. Then, when they hold fresh elections, by candlelight if need be, the result might be different. If it isn’t, Greece could

The best course would be for Germany to acknowledge that it will have to risk more by agreeing to some form of euro bond, boosting demand at home, tolerating a little more inflation, and giving Greece, Spain and others more time to get meet their fiscal targets

be allowed to default and spin out of the euro, strengthening the remaining currency zone.

Wanting it all Although an anti-bailout party roared to second place with 17 percent of the vote, and the neo-fascist Golden Dawn received 7 percent, making it into parliament for the first time, opinion polls suggest more than twothirds of Greeks still want to keep the euro. They just don’t want the austerity plan that goes with it. They would now understand that they can’t have it both ways.

The trouble with tough love is that it may not work – politics isn’t always

rational. It also could have unintended consequences. True, Greece’s debt has been transferred from private hands to the ECB and other sovereigns better able to absorb the losses. But a default could cause investors to wonder just how determined euroarea leaders would be to save Spain, Portugal and Ireland. That could trigger bank runs and capital flight in those countries, with ripple effects for France and even Germany. Those kinds of concerns might help explain why investors are suddenly snapping up insurance on German debt.

The ultimate decisions will have to be taken by Germany, the euro area’s unwilling guarantor. So far it has preferred partial – and ineffective – responses to the crisis, rather than bolder – but necessary – steps that we have advocated before, such as common euro bonds or a firewall big enough to cover the potential risks. Unfortunately, Germany seems prepared to offer more partial solutions to Francois Hollande, France’s president-elect, as he presses for a growth pact to accompany austerity.

Three years into the crisis, it is clear that markets need to be convinced that Greece, Italy, Spain and others will be able to pay their sovereign debts, now and in the future. Otherwise, these countries will pay usurious rates that exacerbate the meltdown.

Taken as a whole, Europe’s finances are sound, and it can afford to pay: The euro area’s consolidated budget deficit last year was 4.1 percent of GDP, less than half the U.S.’s 9.6 percent. Common euro bonds would fix the problem of shoring up struggling countries, but would require Germany to pay higher interest rates for credit.

There’s little sign that the German government or the ECB want to change course. Finance Minister Wolfgang Schäuble oozed contempt recently when he said that Germany might make some gestures on growth measures to allow Mr Hollande to ‘save face.’

Greece’s chaotic election result will force a hard decision on the euro area soon. The best course would be for Germany to acknowledge that it will have to risk more by agreeing to some form of euro bond, boosting demand at home, tolerating a little more inflation, and giving Greece, Spain and others more time to get meet their fiscal targets.

Any comparison to the 1930s is overblown, but the political scene in Europe is fragmenting. The rise of anti-European and, in some cases, xenophobic parties in France, Greece, Italy, the U.K. and elsewhere is disturbing. If Germany refuses to bend, then it will, fairly or not, be held responsible for whatever happens next.

Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Chief REPORTER Vitor Quintã Newsdesk Cláudia Aranda, Kristy Chan, Kelsey Wilhelm, Cherry Lee, Terina Cao, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Photography Carmo Correia, John Si, 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.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

May 10, 2012 business daily | 15

OPINION

Reinventing the Sino-American wires relationship Business Leading reports from Asia’s best business newspapers

Inquirer Business Asean countries will get a helping hand to improve their crisis-prevention ability amid a backdrop of global economic uncertainties. The recently created Asean+3 Macroeconomic Research Office is expected to attract more investors who are in search of safe havens as industrialised countries continue to grapple with economic and debt problems, said the Philippines central bank. The institution will conduct regular surveillance of the economic performance of member-countries of the Asean+3, and should come up with prescriptions in case of deteriorating indicators of economic health.

Members have agreed to double the size of its pool of pledged funds to US$240 billion, said Diwa Guinigundo, deputy governor of the central bank.

Taipei Times The government’s executive branch suffered a setback to a major policy for a second consecutive day when Chinese Nationalist Party (KMT) legislators refused to place on the legislative agenda an amendment imposing taxes on income earned from securities. KMT Legislator Wu Yu-sheng proposed delaying review of the amendment at the legislature’s Procedure Committee meeting. “I think we have neither the ability nor the willingness [to review the tax bill]; Let’s leave it to the next session,” Mr Wu said. On Monday, a government proposed amendment seeking to conditionally relax a ban on imports of beef containing residue of the feed additive ractopamine was voted down in a preliminary review.

Straits Times Singapore Telecommunications Ltd (SingTel) customer base reached 445 million users as of March 2012, up nearly 11 percent from a year ago, the company said in a statement. In Singapore, its total mobile customer base grew by 273,000 customers or 8.3 percent from a year ago to 3.58 million as at March 31. Full-year net additions in the postpaid segment were 171,000 customers, lifting total postpaid customer base to 1.95 million.

The growth was driven by increasing demand for smartphones and data SIMs from integrated mobile broadband bundles, the company added.

In the prepaid segment, SingTel’s customer base grew by 102,000 customers or 6.7 per cent to 1.63 million.

Michael Spence

Nobel laureate in economics and Professor of Economics, New York University

C

hina and the United States are in the grip of major structural changes that both dread will end the Halcyon era when China produced low-cost goods and the U.S. bought them. In particular, many fear that if these changes lead to direct competition between the two countries, only one side can win.

That fear is understandable, but the premise is mistaken.

Both sides can and should gain from forging a new relationship that reflects evolving structural realities: China’s growth and size relative to the U.S.; rapid technological change, which automates processes and displaces jobs; and the evolution of global supply chains, driven by developing countries’ rising incomes. But first they must acknowledge that the old pattern of mutually beneficial interdependence really has run its course and that a new model is needed.

The old model served both sides well for three decades.

China’s growth was driven by labour-intensive exports made more competitive by transfers of technology and knowledge from the U.S. and other Western countries.

This, coupled with massive Chinese public and private investment (enabled by high – and recently excessive – savings), underpinned rising incomes for millions of Chinese.

The U.S. consumer, meanwhile, benefited greatly from declining relative prices of manufactured goods in the tradable side of the economy. Accordingly, U.S. employment shifted to highervalue-added activities, in turn supporting higher incomes in America, too.

Multinational companies operated increasingly efficient and complex global supply chains, which could be reconfigured as the shifting pattern of comparative advantage dictated. Global supply chains ran largely from East to West, reflecting the composition and location of demand in the tradable part of the global economy.

Embracing change But all of this is starting to change. The benefits are shifting from cost to growth.

Supply chains are now running in both directions, and are being combined in novel ways. Chinese demand is not only growing, but, as incomes rise, its composition is shifting to more sophisticated goods and services.

Thus, China’s role is changing: once the West’s lowcost supplier, it is now becoming a major customer for Western products. This represents a major opportunity

Many fear that if these changes lead to direct competition between the two countries, only one side can win. That fear is understandable, but the premise is mistaken

for advanced economies to rebalance their growth and employment, provided that they are positioned to compete for the appropriate parts of evolving supply chains.

Rising Chinese incomes also imply structural change for China, as continued growth presupposes a shift to highervalue activities. Technology and knowledge will still be important, but China must begin generating new technologies, in addition to absorbing Western tools and skills.

In order to meet the challenges of structural change, the goal for U.S. policy should be to expand the scope of its tradable sector, with a focus on employment. Reorienting U.S. policy toward external demand across a broader array of sectors, in turn, requires attention to two critical areas: education and investment.

High-quality education and more effective skills development are crucial to generating new employment opportunities for the middle class, while investment can rectify America’s disconnection – particularly that of its medium-size businesses – from global supply chains.

The trading companies and infrastructure that smaller, more open economies have

created in order to connect to global markets are underdeveloped in the United States.

Win-win game To be sure, success in these areas will not come overnight. But nor is the status quo a permanent condition; it can be improved with investment and supportive policy.

Moreover, the U.S. would benefit in the short term from relatively simple measures, such as removing barriers to inward foreign direct investment, particularly from China.

On the Chinese side, policy prescriptions are not the issue. The importance of evolving a different growth pattern is already understood, and has been enshrined in China’s 12th Five-Year Plan.

Its successful implementation will require strengthening incentives to innovate, deepening the technology base, investing more in human capital, developing the financial sector and applying competition policy equally to domestic, foreign and stateowned enterprises.

Given the requirements on both sides, how to ensure a productive and mutually beneficial relationship between the U.S. and China is a rela-

tively straightforward matter. China still needs access to advanced-country markets and technology, but the emphasis is shifting to homegrown knowledge, skills and innovation. The U.S., still an innovation powerhouse, can help, but requires access to the growing Chinese market and a level playing field once there. The same is true of financial-sector development.

In the U.S., a determined effort to restore fiscal balance and establish a sustainable growth pattern – that is, one not based on excessive domestic consumption – is crucial to longterm economic health. Such rebalancing implies sustained reduction of the current-account deficit by expanding exports, rather than merely curtailing imports. Chinese demand will help, all the more so as its economy grows in size and sophistication. So expanding linkages with China now is an investment in the future with a rising return, rather than a quick fix.

A lower U.S. current-account deficit will also benefit China, whose US$3.2 trillion (MOP25.6 trillion) in foreignexchange reserves – held mostly in dollar-denominated assets – is becoming a large and risky investment. Progress towards external balance in the U.S. would allow a slow reduction in China’s reserves, alleviating its assetmanagement headache.

A deeper understanding of each other’s shifting structural challenges would facilitate both sides’ ability to identify areas of mutually beneficial cooperation. But the core of the relationship is simple: China needs U.S. innovation to grow and the U.S. needs Chinese markets to grow. If both countries are to benefit from such symbiosis, there is no alternative to collaboration, substantial investment and reforms on both sides of the Pacific. © Project Syndicate

16 |

business daily May 10, 2012

CLOSING Spain banks in trouble

Europe’s Plan B Europe should prepare a ‘plan B’ to cope with any possible departure of a country from the euro zone, Germany’s former finance minister Peer Steinbrück said yesterday. “If I had political responsibility, I would want to prepare for a plan B that would foresee that the European currency union, that the euro zone, no longer necessarily consists of 17 member states,” Mr Steinbrück said in an interview on German television, when asked about Greece’s future. “And that means to make provisions so that other countries are not pulled into the maelstrom through contagion.”

Spain will demand banks set aside another 35 billion euros (US$45 billion) against loans to the ailing building sector, financial sources said, raising the possibility more public cash will be needed to rescue the country’s lenders. The government and banks are belatedly recognising a multi-billion funding gap in the financial system linked to a 2008 property crash that has heightened fears the country may need an international bailout. Lenders, already trying to write down 54 billion euros of losses on bad property investments, are unlikely to be able to find the extra funds without public help.

Tax evasion law making life difficult for Americans Financial institutions shy away from complex rules and expected high costs of enforcement

G

o away, American millionaires! That’s what some of the world’s largest wealth-management firms are saying ahead of Washington’s implementation of the Foreign Account

said Su Shan Tan, head of private banking at Singapore-based DBS, Southeast Asia’s largest lender, who described regulatory attitudes toward U.S. clients as “Draconian”.

The 2010 law, to be phased in starting

living abroad, which could affect their ability to generate returns.

“In the long run, if Americans have less and less opportunities to invest overseas, it would be a disadvantage,” Marc Faber, the fund manager and publisher of the Gloom, Boom and Doom report, said last month in Singapore.

The almost 400 pages of proposed rules issued by the U.S. Internal Revenue Service in February create “unnecessary burdens and costs,” the Institute of International Bankers and the European Banking Federation said in an April 30 letter to the IRS, one of more than 200 submitted to the agency. The IRS plans to hold a hearing May 15 and could amend how and when some aspects of the rules are implemented.

It can’t rescind the law.

Tax evasion

The Foreign Account Tax Compliance Act was approved in 2010

Tax Compliance Act, which seeks to prevent tax evasion by Americans with offshore accounts. HSBC Holdings Plc, Deutsche Bank AG, Bank of Singapore Ltd and DBS Group Holdings Ltd all say they have turned away business.

“I don’t open U.S. accounts, period,”

January 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. It means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens

The government needs to be tougher on offshore tax crimes than it has been, said U.S. Representative Richard Neal, a Massachusetts Democrat and one of the original sponsors of the legislation. FATCA, introduced after Zurich-based UBS AG said in 2009 that it aided tax evasion

by Americans and agreed to pay US$780 million to avoid prosecution, is already helping to improve banking transparency, he said.

“People should know, and the

IRS should know, what money is being held offshore and for what purpose,” Mr Neal said. “I don’t think there’s anything unreasonable about that.”

UBS, the world’s biggest nonU.S. private bank according to London-based industry tracker Scorpio Partnership Ltd, said in 2008 it would discontinue offshore accounts for U.S. citizens.

The firm now refers them to its wealth-management offices in the U.S., or to its Swiss Financial Advisers unit, which complies with U.S. and Swiss regulations, said Serge Steiner, a spokesman for UBS. The company continues to provide Americans outside the U.S. with services other than securities investments, including consumer and commercial loans, foreigncurrency spot trading and preciousmetals transactions, he said.

Coutts, the wealth division of U.K. government-owned Royal Bank of Scotland Group Plc, plans to comply with FATCA and to continue accepting tax-compliant U.S. persons, according to Tim Winter, associate director of the U.S. Competence Centre at Coutts.

The London-based bank has invested since July 2010 in a “global program of work established to support the implementation of FATCA,” he said in an e-mail.

Bloomberg

Gold weakening on euro concerns Investors seen taking refuge on U.S. dollars and German bonds

G

old fell for a third day on Wednesday, touching a four-month low and all but wiping out its gains for 2012 as the escalation in the euro zone debt crisis prompted investors to favour dollars and German government bonds as safe havens.

Political disarray in Greece, a change in the French presidency and renewed concerns about the resilience of the Spanish banking sector sent the euro to a 15week low against the dollar and propelled German bond futures to record highs.

Spot gold was yesterday down 1.2 percent on the day at US$1,585.30 an ounce at 1145 GMT, having lost more than 3 percent so far this week in its largest weekly slide since mid-March.

“It’s not as though the escalation of the political risk in Europe is doing anything positive for gold prices at all, and this is totally different to

Spot gold was yesterday down 1.2 percent on the day

how we were between 2008 and 2010, when all the correlations were totally reversed and the weakening of the euro actually led to a strengthening in the gold price,” Natixis head of commodity research Nic Brown said.

“This very much suggests that we

are not getting demand for gold from European investors. The dynamic is purely from the impact of the crisis on to the FX market and from that directly on to the gold price,” he said.

The gold price is on the verge of wiping out all the gains for 2012,

with the year-to-date gain reduced to 1.4 percent from as much as 14 percent in late February.

This compares with an 8.4 percent advance in the S&P 500 and gains of nearly 10 percent in Chinese equities and nearly 6.5 percent in crude oil in 2012.