Macau Business Daily, 15 May, 2012 by Business Daily

No new consultation on political reform

China growth risks hint need for fiscal action Page 8

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Year I - Number 32 - Tuesday May 15, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

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Cable Internet bid still on hold

CAM funding

AIRPORT NEEDS BAILOUT TO STOP IT FOLDING M

Taiwan air deal in dire straits Taiwan and Macau have been cohabiting – in terms of civil air services – from 2000. But since the original official agreement expired in 2005, the deal – formalising air travel between the two communities under international law – has only been renewed annually on an informal basis. Now Taiwan wants the marriage solemnised. But that’s bumping up against Chinese politics, says the director of the Taipei Economic and Cultural Office in Macau, Jeffrey Liu. The visa exemption for Macau residents, however, can soon be a reality, he adds.

acau International Airport’s operator CAM needs a cash injection of nearly two billion patacas (US$250 million) from its shareholders – including the Macau government. The company has already burned through one billion patacas of stockholders’ money – a quarter of the original total – because of cumulative losses recorded up to the end of 2011. News of the need for a new bailout will do little to calm the concerns of those who have questioned the management and business strategy of the airport since it opened in November 1995. A press statement released by CAM said the shareholders

had approved both measures unanimously and would now be asked to subscribe to the new shares, so keeping the shareholder structure intact. Macau’s government is the major shareholder of CAM with a 55.4 percent stake in the company, followed by STDM – Sociedade de Turismo e Diversões de Macau, the investment holding company founded by Stanley Ho – with 33.03 percent. If the investors with the remaining 11.57 percent of the stock decide not to put fresh money in, then the two main shareholders will bear the financial responsibility on a 67:33 basis, the aviation regulator told Business Daily. CAM said shareholders had decided

only yesterday to inject preference shares worth 1.95 billion patacas for short term cash needs. More on page 3

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HENGAN INTL

CTM down again as first inquiry due

Houses of Windsor back on sale Four years after the global financial crisis caused pre-sales to be frozen, one of Macau’s most prestigious new addresses is back on the market. Star River Windsor Arch – the 10-block, 47-storey luxury housing complex near Macau Jockey Club in Taipa – has produced strong pre-sales for the past 10 days. The positive response has already made the developer raise prices. Page 4

ith the telecommunications regulator still preparing a report on a February six-hour blackout, CTM’s third-generation mobile phone service network failed again yesterday night. The company said the service failed “in some districts” at 8.45pm and was restored after 11pm. CTM must submit a preliminary report on the incident today, the Bureau of Telecommunications Regulation said. Earlier yesterday the regulator said it had completed an investigation of the February blackout but it was still waiting for an official response from CTM. Meanwhile there is yet no decision on MTEL, the sole bidder to compete with CTM on landline telecommunications.

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business daily May 15, 2012

macau

Taiwan aviation deal faces political barrier Political considerations prevent a new Taiwan aviation deal but Macau residents could soon get visa exemption Vítor Quintã

vitorquinta@macaubusinessdaily.com

t is highly unlikely that the air services agreement between Macau and Taiwan will be revised anytime soon, says Macau’s newly inaugurated representative office in Taipei. The director of the Taipei Economic and Cultural Office, Jeffrey Liu, told Business Daily there were political sensibilities and revision seemed implausible in the short term. Taiwan’s Mainland Affairs Council minister, Lai Shin-Yuan, during a meeting with a Macau delegation led by Social Affairs and Culture Secretary Cheong U on Friday, had expressed hope of new air service deals. Flights between the two sides are regulated by a deal signed in 2000 between Air Macau and Taipei Airlines Association, which expired in 2005 and “it has been extended so that the provisions are still effective,” the aviation regulator told Business Daily. During his 2007 policy address, the secretary for Transport and Public Works, then Ao Man Long, said negotiations for a new deal had been postponed twice. Mr Liu is not optimistic about a new agreement. He pointed out that the original deals were not between the two governments. Mr Liu says Taiwan would like to introduce an “official” new deal, which would be signed by both governments. According to the website of the Civil Aviation Authority, Macau has signed air service agreements with 40 jurisdictions and has initiated negotiations with seven.

Opening wishes But the Macau administration is wary of the repercussions of such an agreement, he said, given the

delicate relationship between Beijing and Taipei. Though the central government has repeatedly encouraged both Macau and Hong Kong to boost cooperation with Taiwan, it has firmly rejected any move that could be seen as recognition of the island’s independence. “Macau believes this is an issue that should be kept in the economic sphere,” Mr Liu said. “This is a deal that is being hampered by political considerations.” The lack of a new agreement has not prevented flights between the two places. In fact, even though the existing deal only mentions Taipei and Kaohsiung as the designated points to be served in Taiwan, Mandarin Airlines began a new service between the central Taiwan city of Taichung and Macau just last month. After direct flights between mainland China and Taiwan were launched in 2009, “the air transport need between the two places has slowed down”, the aviation regulator said. “The passenger throughput for the Taiwan market is under the present capacity,” the Civil Aviation Authority said. “Despite this, Taiwan is still an important market for Macao’s aviation. The Macau SAR Government therefore wishes to see that the air transport market between the two places can be further liberalised,” it added.

Visa hope Mr Liu is more confident of Macau residents with Chinese nationality being granted visa exemption when visiting the island. “With the opening of the [Taipei] office, I’m sure that the

The Macau government wants flights with Taiwan to be further liberalised but a new aviation deal seems out of the picture

negotiations will move forward much faster,” he said. At the moment Macau gives visa exemption to Taiwan tourists. On the other hand, Macau residents have to apply online free of charge for a visa. If the request is accepted, the entry permit is valid for three months and allows visitors to stay on the island for a month. However Mr Liu said granting visa exemption to Macau residents was a complex move that required a change in Taiwan law, which states that all visa applications of Chinese nationals must be approved before arrival. Both sides hailed the formal opening of Macau’s representative office, which began operating in December, as a step towards further bilateral cooperation and trade. In the first quarter of this year Taiwan investors ploughed a

record 50.3 million patacas (US$6.3 million) into eight new businesses in Macau. This compares with 160,000 patacas a year earlier. But the Statistics and Census Service told Business Daily that a single company in the financial sector accounted for almost all of it – 50 million patacas. This firm is most likely the Macau branch of Hua Nan Commercial Bank, which will open its first office in the city tomorrow, after gaining approval last year. Hua Nan is the third Taiwanowned bank to open a Macau branch, after Bank SinoPac in 1996 and First Commercial Bank in 2009. Taiwan’s Financial Supervisory Commission also recently authorised Yuanta Bank, an arm of Taiwan’s Yuanta Financial Holdings Co., to set up a branch in Macau.

Hotel occupancy rises after Galaxy opening

In March alone the average occupancy at local hotels and guesthouses rose to 85 percent. It hit as much as 89.5 percent at four-star hotels

ven though the opening of Cotai resort Galaxy Macau in May 2011 provided a further 4,200 rooms, local hotels became even more crowded afterwards, official data released yesterday shows. According to the Statistics and Census Service, between June 2011 and March 2012 the average occupancy of Macau hotels reached 85.5 percent, up by more than four points from the same period a year earlier. There is still no data on whether a similar impact has been felt from the opening of Sands Cotai Central on April 11. The first phase of the resort includes 1,800 five-star and four-star rooms. In March alone the average occupancy at local hotels and guesthouses rose by 3.6 points to 85 percent but hit as much as 89.5 percent at four-star hotels. As a result, even though the number

of available rooms increased 10.6 percent year-on-year to 22,272 in March, the number of guests rose even faster, by 12.2 percent to over 760,400. In addition, almost two-thirds (64.3 percent) of all overnight visitors stayed at a hotel, up from 61.5 percent from the same month of 2011. However, the average length-ofstay decreased by 0.08 nights to 1.38 nights, the lowest figure in three years. Meanwhile visitor arrivals in package tours surged by 51.1 percent year-on-year to almost 754,200 in March, backed a soar in mainland China. Moreover, tours from Taiwan more than doubled to about 70,600. Package tour visitors accounted for almost a third (29.5 percent) of all tourists in the first quarter, up from 21.9 percent year-on-year. Kazuo Okada V.Q.

May 15, 2012 business daily | 3

MACAU

CAM to issue new shares to get off the ropes Macau International Airport Co wants an injection of almost 2 billion patacas to meet its pressing cash needs José I. Duarte

jid@macaubusinessdaily.com

Macau government may have to inject about 1.3 billion patacas into CAM

acau International Airport Co Ltd (CAM) shareholders decided in a general meeting yesterday to issue non-voting redeemable preference shares worth nearly 1.95 billion patacas (US$244 million) to cover its short-term cash needs. CAM is the public concessionaire of Macau International Airport. The shareholders also decided to reduce the company’s capital stock. After its losses in 2011 the company’s net equity fell to about 3 billion patacas. Cumulative losses have now eaten up 1 billion patacas of the

company’s initial capital, and shareholders decided also to reduce its stock accordingly. A press statement released by the company said the shareholders had approved both measures unanimously and would now be asked to subscribe to the new shares, so keeping the shareholder structure intact. However, if the shareholders do not wish to do so, the government will take two-thirds of the share issue and Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau SA (STDM) one-third. “The non-voting redeemable

preferential shares will be acquired by the shareholders in accordance with their share proportion. If it happens that the shareholders do not acquire the new shares, the Macau SAR Government and STDM will then acquire all the shares respectively in the proportion of 67 percent and 33 percent,” the aviation regulator told Business Daily. A source told Business Daily that this caution seemed advisable, as it was difficult to see what advantage private investors could derive from throwing more cash into what seemed to be a bottomless pit. The source said private stakeholders, STDM included, had expressed before their unwillingness to put more money into a company that seemed to have outlived its usefulness.

Deadline looms The cash proceeds from the of share issue “will be used to repay bank loans deriving from the financing needs of the airport infrastructure back in its early stage of construction,” the company said. CAM has to repay next month the syndicated loan of 2 billion patacas that it got in 1994 for the construction of the airport. “Since then, CAM has not had the capability to repay the loans. The deadline of the repayment is June 2012,” the aviation authority

confirmed. The government is a guarantor to that loan. The company has never managed to generate enough funds to pay it back. Several guarantees and injections of capital later, it appears the deadline for repayment cannot be postponed any more. The financial difficulties of the company have been apparent for several years and its performance has been marred by dubious management decisions. Big investments in new facilities, such as the new hangars for cargo when traffic was already declining, or the disposal of assets such as the large strip of land next to the airport, have not helped shore up the fortunes of the company. CAM made a loss of 15 million patacas last year. It said the loss was due mainly to a deduction of bank loan interest payments and over 200 million patacas in depreciation costs. The government is the major shareholder in CAM, with a 55.4 percent stake, followed by STDM with 33.03 percent. The remaining shares are held by a number of mainland Chinese and Macau businesses and institutions. Among the main minor shareholders are businessman Ng Fok, who holds about 2 percent through his companies, and Mr Ho of STDM with 1 percent. with C.A.

Govt sitting on blackout probe, phone network crashes again With the telecommunications regulator still waiting for a reply from CTM on the February blackout, the network failed again yesterday Vítor Quintã

vitorquinta@macaubusinessdaily.com

hree months after a first blackout, the CTM telecommunications system crashed again yesterday, leaving thousands of subscribers unable to use their third-generation mobile phones for more than two hours. According to a press statement, CTM confirmed that its third-generation mobile phone service network “in some districts failed to function starting at 8.45pm tonight”. “The technical team of CTM undertook emergency repair works and the service was gradually recovered and is now fully restored,” the company added in a statement after 11pm. The city’s largest telecommunications carrier apologised to the affected users, which “at the peak” of the incident amounted to 50 percent of its 130,000 customers, CTM said. The company said it will “strive to find the cause of the incident and properly handle the follow-up in order to ensure uninterrupted mo-

bile telecommunications services”. The crash forced the fire services to deploy several of its fire trucks roaming through the Macau streets in order to respond to any emergency. In a press statement issued late last night, the Bureau of Telecommunications Regulation said it “has requested CTM to submit a preliminary incident report within 24 hours, and seriously deal with the incident”. The regulator said CTM claimed the failure only affected some districts in the Macau peninsula and was caused by a failure in the radio network controller.

Probe on hold Last February a six-hour blackout affected third-generation mobile phones, landlines and Internet service. Last week CTM said the incident was triggered by a software loop when a technician

input several commands. Earlier yesterday the Bureau of Telecommunications Regulation deputy director, Hoi Chi Leong, said authorities had completed an investigation of the February blackout. The bureau said its report would be released this month, after it received an official response from the company. Mr Hoi declined to comment on whether his bureau would punish CTM, or on whether any measures would be taken to prevent similar occurrences. The head of the bureau, Lawrence Tou Veng Keong, said the government would do its research and come up with plans for the development of 4G services in the near future. He also said the bureau had given the government its views on the sole bidder to compete with CTM on landline telecommunications. But the official said he was not sure when the result of the bidding would

be announced, as it still needed the approval of the tender committee. MTEL was the only company that showed interest in landline services when bids were invited in March, although the intention of the government was to bring two new players into the market. The intention of the government is to “liberalise the landline telecommunications market and bring more new facilities to the city,” Mr Tou said. He said that the requirements for landline carriers were similar to those in other places and that he did not believe the criteria here were too strict or demanding. with Tony Lai

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business daily May 15, 2012

macau

Windsor Arch starts pre-sales InBrief Four years after the global financial crisis caused pre-sales to be frozen, Windsor Arch is back in the market

aimed at regulating sales of unfinished buildings sent to the Legislative Assembly helped rush transactions. The property should be ready next year. The proposals intend to prevent developers from selling properties that remain only on paper and to limit market speculation. It seeks to force them to get authorisation from the Land, Public Works and Transport Bureau before selling flats or buildings. The authorisation would depend on the following: the project must have a construction licence; the foundation, basements and ground floor must be complete; and there must be horizontal property registration.

Bumpy ride Originally named just Windsor Arch, the property was developed by Xin Jian Ye Group together with Victory Trade and Investment Company. Both are Macau-based companies. The project has not had a smooth ride despite intensive marketing that included a three-day promotional event in London in 2008. The developer launched pre-sales of one block in early 2007 and, according to Mr Ho, only some units were sold before the global financial crisis started in 2008 and the project was put on hold. There have also been legal issues after it became apparent that it would block the views of residences located at Small Taipa hill, given the height

of the buildings and their location Residents have asked the government to re-examine the approval process for the land, but it is not clear if the issue has been resolved. Windsor Arch prospects have picked up since the recovery of Macau’s housing market in the last two years. Star River Group, a mainlandbased high-end property developer, also entered the picture and joined hands with Windsor Arch in designing, building and marketing the property. The buildings are now modelled on other Star River properties in China, which the company says have “an 15th Century British royal flair”. All flats are already refurbished. Headquartered in Guangzhou, Star River has developed some of the most expensive properties in mainland China cities such as Beijing and Shanghai in the last few years. This project is the first for Star River in Macau. It is alo the first collaboration between mainland China and Macau property developers, according to Mr Ho. Windsor Arch continues to spend heavily on marketing and it was one of the major sponsors of the Macau Grand Prix and the Jockey Club last year. The property will also provide a permanent venue for the World Chinese Entrepreneurs Convention, to attract high-income Chinese buyers by offering networking opportunities.

Photo by Manuel Cardoso

tar River Windsor Arch – the 10-block, 47-storey luxury building complex by the Jockey Club in Taipa – have been in a frenzy of VIP pre-sales for the last 10 days. The positive response has already made the developer raise prices. Two blocks, both composed of 200 flats from 1,400 to 4,300 square feet (130 to 400 square metres), are selling for 8,000 patacas to 10,000 patacas (US$1,000 to US$1,250) per square foot, the company told Business Daily. The entire project spans an area of 18,530 square metres, totalling 857 units and 1,800 parking spaces. It includes duplex apartments as large as 7,400 square feet each. When pre-sales were launched, new buyers could enjoy discounts of 10 percent for the larger units and 15 percent for the smaller ones, according to property agents. However, they have been reduced after the positive market response. The developers suspended the sales of large units as of May 14 to adjust the prices, two days after reducing the discount to 5 percent. The sales of smaller units will continue at a discount of 14 per cent. “Sales have been good; every day there are a few deals,” Roy Ho, regional director of sales at Centaline, told Business Daily. “The main selling point of the property is its location: right in front of the racetrack.” He also said that the draft law

X.C.

Neighbours to sign new campus lease The governments of Macau and Guangdong are likely to sign the lease for the new University of Macau campus on Hengqin Island today, during the annual Guangdong-Macau Cooperation Joint Conference. The Macau government issued a written statement saying the two sides will sign several agreements during the meeting. Yesterday the secretary for transport and public works, Lau Si Io, was officially authorised to sign the campus lease. Chief Executive Fernando Chui Sai On and the governor of Guangdong, Zhu Xiaodan, will review the results of various joint projects such as the development of Hengqin Island.

New Cotai hospital faces two-year delay The emergency service of the new Cotai hospital will be up and running by 2017 but the whole infrastructure will only be ready two years later, the director of Health Services, Lei Chin Ion said yesterday. Last October the Secretary for Social Affairs and Culture, Cheong U, said the Taipa emergency service would last for “at least five years,” until the opening of the second public hospital, which was slated for 2015. In addition, the new emergency service at Hospital Conde de São Januário will be done during the first half of 2013, Mr Lei said yesterday. He also said Macau aims to recruit a further 150 physicians within 10 years to meet the city’s healthcare needs. Ten Portuguese doctors have already been recruited but only two are already working.

New HK, Macau study centre

Windsor Arch flats are selling for an average of 8,000 patacas to 10,000 patacas per square foot in pre-sales

Tsinghua University set up a new centre – Hong Kong and Macau Study Centre – at its Shenzhen campus on May 12 to study the relationships between the two SARs and mainland China, South China Morning Post reported. The centre led by Tsinghua University dean of law Wang Zhenmin will study “strategic” issues and the long-term development of China. The centre will also provide training courses for civil servants.

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business daily May 15, 2012

macau Happy returns for Galaxy Macau investors, workforce Cotai resort marks first anniversary with thank you to staff Associate Editor

Present–Galaxy Macau Phase 1

low-key celebration is planned for the first anniversary Galaxy Macau Phase 1 the parent company Hong Kong-listed Galaxy Entertainment Group told Business Daily. Michael Mecca, the group’s president and chief operating officer will be meeting personally with many of Galaxy Macau’s 9,000 staff today and this week to thank them for their efforts since the HK$16.5 billion (US$2.1 billion) resort opened to the public on May 15 last year. The 39,000 square metre main gaming

Future–Galaxy Macau Phase 2

floor and its supporting VIP table gaming rooms and VIP slot gaming rooms have rapidly pushed up the company’s earnings and its share price, as the table below shows. GEG is now tussling monthly with Sands China for second spot in the Macau gaming revenue league table behind Sociedade de Jogos de Macau, the company founded by Macau’s former monopoly operator Stanley Ho Hung Sun. Galaxy’s management considers the ability to keep hold of key executives and front line workers - in a market where labour

Building on success Galaxy has given Business Daily a photograph showing detailed views of the foundation work for Galaxy Macau Phase 2, which started on April 23. The new phase will double the size of the total property to one million square metres. It will add as many as 500 gaming tables and offer 1,300 more hotel rooms to the 2,300 rooms Galaxy Macau currently has. The new guest accommodation will be provided by JW Marriott and Ritz-Carlton, complementing the Galaxy Hotel, Hotel Okura and Banyan Tree brands already on site. Even when Phase 2 is ready – probably by mid-2015 – Galaxy will still have spare land on its Cotai plot for further major expansion. The company said in its unaudited first quarter earnings filing to the

Hong Kong Stock Exchange last week that the group more than tripled its first quarter earnings before interest, taxes, depreciation and amortisation compared to a year earlier. Just over 60 percent of that came from Galaxy Macau. Union Gaming Research said in a note after the company’s first quarter results: “Galaxy Macau continues to be a share taker, while also ramping during its first year of operations. During 1Q12 the property generated HK$7.2bn in revenue and HK$1.3bn in EBITDA [earnings before interest, taxation, depreciation and amortisation] (margin of 18%).” In March, Union Gaming estimated Galaxy’s 2012 gross gaming revenue would reach HK$50.4 billion generated by its flagship properties, Galaxy Macau and StarWorld on Macau peninsula.

is in short supply – a key reason it has been able to outperform average market revenue growth and take a disproportionately larger share of the growing Macau pie from its rivals. Francis Lui, group vice chairman, told Business Daily recently: “We claim we look after our labour forces much better. Even in StarWorld we have 3,000 staff that have already been working for us continuously over five years. That’s basically a testimony to the fact we have a very stable workforce with us.” “All the Macau gaming operators are focused on looking after their people and keeping them engaged in the work they do and keeping them in the workplace,” says Robert Kirby, chief executive officer of Kirby Group, a company specialising in personal and

organisational development – with clients in Macau, Hong Kong and across Asia. By ‘engaged’ Mr Kirby says he’s referring to staff motivation and their understanding how they contribute to the business. “As more resorts open, staff retention becomes more important. Human resources are the oxygen of the organisation and I think the heads of the gaming companies recognise that, he adds. A Galaxy spokesman said: “Our aim is to celebrate the first year anniversary directly with our guests via the continuing high quality of our offers. And we’re having a staff celebration inside the company, to thank the team members that have made the property a success.”

Galaxy’s share price performance 25

20 May 2011- Galaxy Macau Phase 1 opens

October 2006 - StarWorld opens

5 May 2004 - Sands Macau opens

0 Dec 1991

May 2012

Weather Beijing 25/15o C Changchun 20/8o C

Harbin 22/10o C

Xian 26/12o C Shanghai 28/18o C Chengdu 25/18o C Kunming 26/15o C Haikou 34/24o C Sanya 31/26o C

Guangzhou 31/24o C

MACAU (14 May-12 May) Day

Temperature

Humidity

05/14

23/30o C

75/95 %

05/15

25/29o C

80/95 %

05/16

25/30o C

70/95 %

05/17

26/30o C

75/95 %

05/18

26/30o C

75/95 %

05/19

26/30o C

75/95 %

Shenzhen 33/24o C

ASIA (today)

Hong Kong 30/26o C

Manila

TOKYO

Jakarta

33/27o C

31/26o C

20/17o C

32/25o C

Macau 29/24o C

Bangkok

SEOUL

K. lumpur

36/28 C o

SINGAPORE

22/13 C o

34/27 C o

taipei

32/23o C

May 15, 2012 business daily | 7

MACAU

Legislators reject new political consultation An assembly committee presided by Chan Chak Mo rejected the proposal for an independent political consultation

he Legislative Assembly second standing committee rejected yesterday a proposal to launch a public consultation on political reform independent of the government initiative that ended last month. The suggestion came from legislator Ng Kuok Cheong, but was rejected by the other eight members of the committee, committee chairman Chan Chak Mo was quoted as saying by Rádio Macau. “The consultation period was sufficiently long and reasonable,” he said. “We don’t have to do it again.” The government conducted a 45day public consultation prior to sending two bills to the Legislative Assembly, which, if enacted, will add two directly elected and two indirectly elected seats to the assembly and increase the size of the committee that elects the chief executive by 100 members. Mr Ng also asked the assembly

‘The consultation period was sufficiently long and reasonable,’ legislator Chan Chak Mo said referring to the political reform process

to request formally from the government a schedule for the implementation of electoral reform but the committee told the legislator to ask the administration direct. The meeting lasted about 30 minutes. “There was general consensus and the certainty that the draft laws are in accordance with the Macau legal system,” Mr Chan said. During the first reading of the bills there were unprecedented protests by pan-democrats, but the proposals were approved nonetheless. The next committee meeting will take place tomorrow. Government representatives will attend. Mr Chan hopes the discussions will conclude soon and that the final vote can take place this month. In its latest annual report on Macau, released last week, the European Union says it hopes to see progress towards greater democracy in the city in accordance with its Basic Law and the wishes of its people.

Photo by Manuel Cardoso

Night market urged for Northern District 15 May, 2012

CTM mobile service announcement A local association has called for a night market near the Macau Palace casino, to help renovate the district’s old neighbourhoods

he Industry and Commerce Association of Macau Northern District has called for the government to renovate the district’s old neighbourhoods and establish a night market in Fai Chi Kei. The Chinese-language Macau Daily News reported that the association told a meeting of the Northern District Community Affairs Advisory Council that the night market could be near the Macau Palace casino, which could be turned into a museum of the gaming industry and development. A representative of the association, Ma Kin Cheong, said in December that the council had proposed a night market to the government last year but that it had received no reply. The Macau Palace has been closed for the past four years but it is still listed by the gaming regulator as

one of the 20 casinos run by Stanley Ho Hung Sun’s Sociedade de Jogos de Macau. The renovation of the Macau Palace was one of 10 suggestions for the redevelopment of the Northern District made by association president Wong Kin Chong to Chief Executive Fernando Chui Sai On. To attract more young people to live in the area, the association urged the government to rejuvenate old neighbourhoods by dealing with the problems of the poor environment, the ageing drains and poor public security. The association said the new buildings should include more shops, to offer opportunities to small and medium enterprises. Mr Chui said the government would study the proposals and try its best to develop the old neighbourhoods. T.C.

Part of CTM’s mobile service failed to function at 8:45pm on 14 May. Following the recovery actions, mobile services gradually recovered at 10:15pm and resumed normal at around 11:00pm. CTM would like to express its sincere apologies to the affected residents. CTM is investigating the cause of the incident and will implement appropriate measures to ensure stability of mobile services. Companhia de Telecomunicações de Macau

X.C.

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business daily May 15, 2012

GREATER CHINA

Growth risks hint InBrief need for fiscal action Guoco agrees to buy Gala casinos

Guoco Group said it will spend 205 million pounds (US$329 million) to buy the third largest casino operator in the United Kingdom. Guoco’s subsidiary, London-listed Rank Group, will acquire Gala Group’s 23 land-based operating casinos in the U.K. – of which four are in London – and their associated licences, the company said in a regulatory filing to the Hong Kong stock exchange on Sunday. The takeover of the casinos is conditional on approval by Rank’s shareholders and the receipt of UK merger control clearance. Rank will become U.K.’s leading casino operator once the deal completes in September.

GDP growth may go below 8 percent in Q2 if fiscal spending doesn’t speed up – analysts Nick Edwards

KEY POINTS China cut banks’ reserve requirement ratio to 20.0pct Move followed weak April trade, production and investment data Bank of America/Merrill Lynch cuts growth estimate to 7.6pct Q2, 8 pct 2012 Analysts predict fiscal response on top of further policy easing

Economy fares down this year: Cathay Cathay Pacific Airways Ltd said economy fares have dropped between 8 percent and 10 percent this year as economic uncertainties sap travel demand. “Fares are responding to the market,” Chief Executive Officer John Slosar said in an interview in Hong Kong yesterday. “We certainly make our fares competitive at the moment,” he told Bloomberg. The Hong Kong-based carrier said last week that it expects “disappointing” first-half earnings as it cuts fares amid competition and contends with fuel prices that have jumped 40 percent in two years. In a bid to cut costs, the airline has suspended hiring ground staff, offered cabin crew voluntary unpaid leave and pared growth.

Paul Smith plans Shanghai megastore British fashion label Paul Smith Ltd is planning a flagship store in Shanghai to enter mainland China as the clothing market surges. The brand will set up a 5,000 square-foot (465 square-metre) location in Shanghai in December, and add 24 shops in China over the next five years, said Balbina Wong, chief executive officer for ImagineX Group, the designer label’s Greater China distributor. China’s clothing market will more than triple to 1.3 trillion yuan (US$206 billion) by 2020 from 400 billion yuan in 2010 as rising incomes fuel demand, Boston Consulting Group Inc. said in a July report. “This is the right time to join the race,” said Ms Wong.

David Li to leave LegCo Bank of East Asia Ltd’s Chief Executive Officer David Li will leave Hong Kong’s Legislative Council after serving as a lawmaker for 27 years. Mr Li will not seek another term after the current period ends on June 30, the bank told Bloomberg. “I wish I never entered” politics, the 73-year-old head of the third-largest Hong Kong-based lender said, according to Sing Tao Daily, which cited an interview with him. Mr Li led an election team for Henry Tang, who unsuccessfully campaigned to become Hong Kong’s chief executive earlier this year. Mr Li said his departure had nothing to do with Mr Tang’s loss in the March 25 election.

The People’s Bank of China cut the amount of cash that banks must hold as reserves, freeing an estimated 400 billion yuan for lending

hina may need a back-up plan to stop economic growth being cut short by a surprise dip in demand at home and abroad that suggests monetary policy easing steps taken since the final quarter of last year are insufficient to deal with the downturn. The People’s Bank of China cut the amount of cash that banks must hold as reserves on Saturday, freeing an estimated 400 billion yuan (US$63.5 billion) for lending to add to the roughly 800 billion injected in two previous 50 bps cuts since the government tilted its policy stance towards growth in October. The move came after data on Friday showed the economy weakening, not recovering, from its slowest quarter of growth in three years. Industrial production growth slowed sharply in April and fixed asset investment – a key growth driver – hit its lowest level in nearly a decade, confounding economists expecting signs of a rebound in Q2 data. “There are risks that policy loosening may under-deliver. If fiscal spending doesn’t speed up quickly, GDP growth faces the risk of going below 8 percent in Q2,” Zhang Zhiwei, chief China economist at Nomura in Hong Kong, told Reuters. “The critical factor to watch now is fiscal policy. We expect more policy measures on this front will be announced in coming weeks. Premier Wen said on April 13 that ‘we need to prepare back-up plans in case growth weakens further’. Now that growth has indeed weakened more, it is time for the back-up plans to be rolled out,” Mr Zhang said. April 13 was when China revealed its weakest three months of growth

on an annual basis in nearly three years, at 8.1 percent. Back then many economists thought that would mark the bottom of China’s current downswing – especially as new bank lending data for March published the day before had topped one trillion yuan in the strongest showing in a year – and triggered widespread raising of bearish 2012 growth forecasts. Last week’s data, by contrast, saw economists at UBS and Bank of America/Merrill Lynch slash their growth estimates within hours of the numbers being published and call for policy action to achieve growth of around 8 percent, widely regarded as government’s aim, rather than the 7.5 percent official target.

More spending Faster, fatter spending on infrastructure and social housing, more tax breaks for business and incentives to boost consumer spending are among the typical additional measures called for. That would be on top of the measures already anticipated – including another 100 bps of required reserve ratio cuts for banks in the second half of the year – to keep growth on track. “We were wrong and we revise down growth forecasts,” was the straight-to-the-point heading in the message line of an email sent to clients by Ting Lu, China economist at Bank of America/Merrill Lynch in Hong Kong after Friday’s torrent of data drowned his call of a Q2 GDP bounce to 8.5 percent. He now expects growth of 7.6 percent in Q2 and 8 percent for the year versus 8.6 percent previously. The consensus forecast for 2012 growth in the benchmark Reuters poll before

Friday’s data was 8.4 percent. Mr Lu is struggling to understand why the April data was so far away from market expectations and thinks a new reporting system requiring China’s 700,000 biggest manufacturers, representing 90 percent of the total value added in the factory sector, to submit numbers directly the National Bureau of Statistics in Beijing – rather than local offices – might be the root cause.

Slightly worse trend Whatever is behind the drop-off, the new consensus view is that Beijing will have to raise its game to stop the rot. Especially as trade data earlier last week saw an annual rate of export growth around half the level expected and growth in imports grinding to a halt on a nominal basis in April, underlining China’s vulnerability to weakness in global demand for goods produced in the country’s vast factory sector. “The April data reconfirmed our view that the first quarter was not the bottom. If anything, the trend seems to be slightly worse than what we had priced into our call for 7.8 percent year-on-year real GDP growth in Q2,” Yao Wei, China economist at Societe Generale in Hong Kong told Reuters. Ms Yao expects action on three fronts – accelerating infrastructure investment, easing property tightening policies and rolling out a package of tariff cuts and consumption incentives. “A quickened and strengthened policy stimulus is key for stabilising China’s growth in the coming months. Chances of more aggressive easing have increased,” analysts at HSBC said in a client note. “The immediate delivery of RRR cut right after the weak April data suggest that Beijing is responding actively. We expect more aggressive delivery of policy stimulus via quantitative easing, substantial tax breaks, fiscal spending and investment deregulation in the coming months to ensure a soft landing.” Reuters

May 15, 2012 business daily | 9

GREATER CHINA

HK stocks drop as Europe tempers China easing The benchmark Hang Seng Index tumbled 7.4 percent from May 2 through yesterday, the longest losing streak in a year Jonathan Burgos

ong Kong stocks fell, with the Hang Seng Index dropping nearly one percentage point in the final two hours of trade, as European markets opened facing the prospect of Greece exiting the euro and as Spain prepared to sell debt. Developers rose after China cut lenders’ reserve requirements. Esprit Holdings Ltd, a clothier that depends on Europe for about 80 percent of its sales, sank 5.8 percent. China Longyuan Power Group Corp. sank 11 percent after the nation’s largest developer of wind farms proposed a share sale. Greentown China Holdings Ltd climbed 2 percent, pacing gains among mainland developers listed in Hong Kong. “Where China sits is problematic at this stage,” said Tim Schroeders, who helps manage about US$1 billion in equities at Pengana Capital Ltd in Melbourne. “Some investors are saying the aggressive nature of the move highlights growth is slowing

Coal prices drop in May more quickly than policy makers would like. Given greater concerns in Europe, it’s unlikely we’re going to see any significant follow-through buying as a result of this.” The Hang Seng Index fell an eighth day, dropping 1.2 percent to 19,735.04 at the 4 pm close in Hong Kong, erasing gains of as much as 0.4 percent. About 10 shares fell for each that rose. The Hang Seng China Enterprises Index of mainland stocks slid 1.5 to 9,986.98. The benchmark Hang Seng Index tumbled 7.4 percent from May 2 through yesterday, the longest losing streak in a year, as China’s economy showed signs of slowdown and a backlash at the polls against austerity in Greece renewed concern Europe’s debt crisis will worsen.

Greek deadlock Companies that do business in Europe dropped as the Greek deadlock looked set to continue for a

The Hang Seng Index fell an eighth day, erasing gains of as much as 0.4 percent

second week after President Karolos Papoulias failed to secure agreement on a unity government. European policymakers have been weighing the nation’s possible exit from the monetary union. Greece’s withdrawal “is not necessarily fatal, but it is not attractive,” European Central Bank Governing Council member Patrick Honohan said on May 12. Esprit sank 5.8 percent to HK$14.22. Cosco Pacific Ltd, which operates a port in Greece, dropped 5.5 percent to HK$9.83. HSBC Holdings Plc, Europe’s biggest lender by market value, decreased 1 percent to HK$67.70. After the close of Hong Kong’s market, Spanish 10-year bond yields climbed to the highest since December 1 after the ECB said borrowing by the nation’s banks jumped 16 percent to a record 263.5 billion euros (US$339 billion) in April as lenders tapped emergency loans. The Hang Seng Index has slumped 9 percent from this year’s peak on February 29, driving the value of shares on the gauge to 10 times estimated earnings on average. That compares with 12.9 times on the Standard & Poor’s 500 Index, and 10.3 times for the Stoxx Europe 600 Index. Of the 80 companies on the Hang Seng Composite Index that posted quarterly earnings since April 10, 28 missed analysts’ estimates, while 16 exceeded expectations, according to data compiled by Bloomberg News. Futures on the Hang Seng Index slid 1.1 percent 19,518. The HSI Volatility Index jumped 5.2 percent to 24.51, indicating traders expect a swing of about 7 percent in the benchmark index during the next 30 days.

The price of Chinese coal for power stations fell for the first time in three years for May, a month when power producers normally buy to stockpile the fuel before peak demand in the summer. The benchmark coal price at Qinhuangdao port with an energy value of 5,500 kilocalories per kilogram fell 0.6 percent from a week earlier to a range from 775 yuan (US$123) to 785 yuan a metric ton as of Sunday, according to data from the China Coal Transport and Distribution Association. Chinese utilities typically buy coal around this time of the year to meet peak electricity consumption starting in July. The May contraction in Qinhuangdao prices was the first for that month in any year since at least 2009, according to a Bloomberg compilation of data from the association. “The situation is worse than expected,” Helen Lau, an analyst at UOB-Kay Hian Ltd, said by telephone from Hong Kong. “Economic growth is already decelerating. Whether the government’s monetary easing will lead to a fast enough recovery in power and coal demand is a question mark.”

Yongda auto launches HK IPO China Yongda Automobiles Services has launched its Hong Kong initial public offering, aiming to raise as much as HK$3.37 billion (US$434 million), IFR, a Thomson Reuters publication, reported yesterday. The Shanghaibased car dealership operator is making available 312.2 million shares, or about 20 percent of its enlarged share capital, at an indicative price range of HK$7.60-HK$10.80 each, the report said. The price range represents a 2012 P/E ratio of 8.1-11.5, IFR reported, adding that the deal had attracted two cornerstone investors. Baring Private Equity is investing as much as US$120 million in offering and Oman Investment Fund will buy US$30 million. The deal will price on May 23. HSBC and UBS AG are joint global coordinators and joint bookrunners with BoCom International, the report said.

Bloomberg

Chen reappointed as Taiwan premier New cabinet list to be presented on May 20

aiwan President Ma Yingjeou reappointed Sean Chen premier, as the island’s leader heads into a second term battling a 15 percent approval rating over plans to impose a capital gains tax and raise power prices. Mr Chen and the rest of Mr Ma’s Cabinet resigned last week as a formality and the new ministers will be sworn in May 20 after the president’s inauguration, Mr Ma spokesman Fan-Chiang Tai-chi said yesterday. Mr Chen, who was appointed in February a month after Mr Ma won a second five-year term, said last week the cabinet will not see major changes. The president appointed Mr Chen for his government experience and expertise in finance and law, Mr Fan-Chiang said. The president wants to keep a loyal administration in place as he pushes ahead with his agenda to close Taiwan’s wealth

gap, said Liao Da-chi, director of National Sun Yat-sen University’s Institute of Political Science. “The political stability aims to safeguard Ma’s leadership and to encourage the administration to carry out his election pledge to social justice and fairness,” Ms Liao said. Approval for Mr Ma’s performance was 15.1 percent, according to a survey conducted by the Apple Daily newspaper from April 30 to May 3. The poll of 1,198 people did not give a margin of error. Mr Ma won a second term after beating opposition candidate Tsai Ing-wen on January 14, and the ruling Kuomintang party also won its bid to keep a parliamentary majority. He promised to levy capital gains tax as part of his election campaign to narrow a widening wealth gap among Taiwan’s population.

Tony Chan in court over tycoon’s will

Sean Chen said last week the cabinet will not see major changes

The economy expanded at the slowest pace in more than two years, the statistics bureau reported on April 30, prompting the government to cut its growth forecast. Bloomberg

The Hong Kong feng shui master accused of forging the will of late property tycoon Nina Wang appeared in court yesterday at a pre-trial hearing. Bartender-turned-fortune teller Tony Chan was arrested a year ago for allegedly forging the will of Ms Wang, whom he claimed was his lover, after he lost a claim on her estimated US$13 billion estate. Mr Chan arrived at the magistrates’ court with his wife and listened calmly as prosecutors and his defence lawyers ironed out technical details on the charges, evidence and the calling of witnesses. Prosecutors allege Mr Chan, 52, forged the will between October 2006 and April 2007, and then presented it as authentic between 2007 and 2010. His defence team argued that the alleged forgery had been compromised by forensic testing, and requested a stay on proceedings, according to state-run RTHK news website. No date has been fixed for the start of the trial. The “preliminary inquiry” will resume on Thursday. Mr Chan lost his high-profile legal campaign for a piece of her estate in 2010 after a court ruled that a will in Chan’s possession was a fake.

10 |

business daily May 15, 2012

ASIA

Tepco reports loss as costs soar Operator posted a bigger-than-expected annual loss and warned of tough times ahead

S.Korea president in Myanmar visit Lee Myung Bak arrived in Myanmar yesterday for the first visit by a South Korean president since an assassination attempt on one of his predecessors almost 30 years ago, as investor interest rises in the former dictatorship. Mr Lee arrived in the capital of Naypyidaw for a two-day state visit, presidential spokeswoman Lee Mi Yon said. He was due to meet President Thein Sein later yesterday and discuss boosting economic cooperation and trade, she added. The trip following a two-day summit in Beijing was not made public ahead of time. “Korea corporate interest in Myanmar has grown since last year on optimism the U.S.-led sanctions would be eased,” said Kim Jong Sang, head of the emerging market research team at the Korea Trade-Investment Promotion Agency in Seoul. “Cheap wages, which are a third of that in China, is one appealing factor.” Trade between the two countries amounted to US$966 million in 2011, according to South Korean government statistics. A total of 108 Korean companies have invested US$2.93 billion in Myanmar as of June 2011, according to Mr Kim’s agency.

Asia safe from Europe woes: Fitch Asian economies are better shielded from Europe’s financial woes than other regions and China is unlikely to undergo a “hard landing” despite recent gloomy data, credit watchdog Fitch said yesterday. In a media telephone conference, the U.S.-based firm’s head of Asia-Pacific sovereigns Andrew Colquhoun said Asia’s limited exposure to European banks would buffer it against financial disruption in the debt-stricken continent. “Asian economies are more dependent on foreign households and consumers buying Asia’s exports than they are dependent on foreign banks providing funding,” he said. “Thinking about whether developments in Europe constrain or in any way cap sovereign ratings in Asia, I can be clear that the answer is no,” Mr Colquhoun added. Colquhoun said he was less concerned with China’s near-term economic outlook than other commentators. “Fitch expects eight percent GDP growth in 2012 … We have not revised that forecast, it was already a somewhat below-consensus forecast and the recent data appeared to be in line with our estimates,” Mr Colquhoun said. “I don’t expect China to hit a hard landing,” he added.

More Air India flights cancelled At least 14 Air India flights have been cancelled as a strike by the pilots of the national carrier entered its seventh day. Thousands of passengers have been stranded at Delhi and Mumbai airports and many have complained of any lack of information from the airline. The airline has sacked more than 70 pilots over the past few days. Meanwhile, Aviation Minister Ajit Singh has renewed his call for the pilots to end their strike and enter talks. Reports said about 200 pilots have called in sick since last Tuesday amid a dispute over training for the new Boeing 787 Dreamliner planes. The pilots are protesting against the decision to train pilots from Indian Airlines, which merged with Air India in 2007, to fly the new planes. Air India pilots have said the planes were ordered before the merger, so they should be preferred for training. A day after the strike began, the Delhi High Court ruled that the pilots’ strike was “illegal” and ordered them back to work, but many pilots have refused to return to duty. The airline last week said it had stopped taking bookings for the U.S. and Europe-bound flights until today.

Tepco submitted on May 11 a request to raise electricity rates for households and small users by an average 10.28 percent from July

okyo Electric Power Co. expects a narrower annual loss after a government-approved business plan proposed measures including an increase in electricity rates to return the company to profitability in two years. The utility known as Tepco forecast a 100 billion yen (US$1.2 billion) net loss for the year ending March 2013, according to a statement from the company. Tepco posted yesterday a loss of 781.6 billion yen in the previous fiscal year. The Japan government on May 9 agreed to provide one trillion yen to Tepco in return for more than 50 percent of voting stock, effectively nationalising the owner of the crippled Fukushima Dai-Ichi nuclear station. Tepco may return to a profit in two years if the government approves an increase in electricity rates and the restart of the Kashiwazaki Kariwa nuclear station, according to the business plan. “The government will have no choice but approve” the two measures, Hirofumi Kawachi, a Tokyo-based analyst at Mizuho Investors Securities Co., said by phone before the release

of the earnings. The company said yesterday it will apply to delist from the Osaka and Nagoya stock exchanges.

Power rates Tepco submitted on May 11 a request to the Trade and Industry Ministry, which oversees the nation’s power industry, to raise electricity rates for households and small users by an average 10.28 percent from July. Tepco has increased power tariffs for companies by an average of 17 percent from April when their contracts are renewed. The utility has been on government support since the March 11, 2011, quake and tsunami wrecked the Fukushima Dai-Ichi station, causing reactor meltdowns and forcing about 160,000 people to evacuate from towns around the plant. The government has set aside 9 trillion yen as part of the bailout of Tepco and to pay compensation and cleanup costs related to radiation leaks from the Fukushima nuclear plant. To create a “new” Tepco, the company will adopt a committee sys-

tem and increase the number of outside directors, according to the plan. Six new outside directors will be appointed, including Fumio Sudo, adviser to JFE Holdings Inc. and Yoshimitsu Kobayashi, president of Mitsubishi Chemical Holdings Corp., according to yesterday’s statement. The number of board members will decrease to 11 from 16, pending shareholder approval, it added. Corporate turnaround lawyer Kazuhiko Shimokobe, who leads the government-backed Nuclear Damage Liability Facilitation Fund, was named to replace Chairman Tsunehisa Katsumata. Naomi Hirose, 59, will take President Toshio Nishizawa’s job, according to a Tepco statement on May 8. Mr Hirose warned that “unexpected situations” this summer could make its already shaky energy supply even tougher as Japan’s atomic reactors remain offline. “Even if we have power supply to barely meet demand this summer, it doesn’t mean we will be fine,” he told a press briefing in Tokyo. Bloomberg/AFP

Asian markets mixed, Europe fears weigh Philippine stocks fall most amid dispute with China

sian markets were mixed in choppy trade yesterday amid fears over political uncertainty in Europe while China’s move to boost liquidity in the slowing economy was unable to provide a lift. The euro also continued to face pressure as Greek politicians failed again to form a government while Angela Merkel’s party was beaten in a local German poll. Tokyo closed 0.23 percent, or 20.53 points, higher at 8,973.84 while Sydney added 0.28 percent, or 11.9 points, to 4,297.0. Seoul closed 0.18 percent lower, easing 3.40 points to 1,913.73. Philippine stocks slumped, driving the benchmark index to its sharpest loss in two months, amid speculation a dispute with China over territory may hurt trade relations between the two countries. The Philippine Stock Exchange Index sank 1.4 percent to 5,083.62

at the close of trading in Manila, its biggest decline since February 27 and falling the second-most among Asian gauges after Vietnam. Markets have suffered heavy selling pressure after pro-austerity parties were kicked out of government in France and Greece on May 6 in a backlash against the swingeing cuts put in place as part of moves to balance budgets. Regional trading remains uneasy as efforts to form a coalition failed for a fourth time at the weekend, leading Greek President Karolos Papoulias to call a final meeting for yesterday. If the crunch talks also end without a deal he will call fresh elections, which could lead to more gains for anti-austerity groups, which many fear could lead the country out of the eurozone. “The lack of transparency, particularly in Europe, with the possibility of Greek re-elections in mid-June, is a worry that looks

to remain with us for the time being,” said Monex market analyst Toshiyuki Kanayama. “And that will keep the investor bias to the downside,” he told Dow Jones Newswires. In Germany the party of Chancellor Angela Merkel - the main proponent of swingeing austerity measures to rebalance the region’s economies suffered a severe defeat on Sunday in a pivotal German state vote. The poll in North Rhine-Westphalia, the country’s most populous state and a guide to future German elections, handed her conservatives their heaviest loss ever, raising questions about her chances of reelection in 16 months. It also comes days before she hosts French president-elect Francois Hollande who won on a platform of growth over cuts and a promise to renegotiate the eurozone’s fiscal pact for tighter budgetary rigour. AFP/Bloomberg

May 15, 2012 business daily | 11

ASIA

Stagflation pressures build in India Output at three-year low as inflation tops seven percent in April

ndia’s inflation accelerated in April to 7.23 percent as price pressures for food, fuel and manufactured items picked up. A simultaneous fall in economic growth to a three-year low is creating ‘stagflation’ pressures. India’s industrial output shrank unexpectedly in March for the first time in five months, hit by weak investment and global demand. Maruti Suzuki India Ltd., the nation’s biggest carmaker, posted a three percent decline in fourthquarter profit because of high raw material costs and discounts on some models. At the same time the rise in the wholesale price index topped the increase in March’s data of 6.89 percent, the commerce ministry said in a statement on Monday. “Today’s number underscores the point that the Reserve Bank of India has limited room to cut monetary policy rates because it highlights the risks that inflation poses,” said Leif Eskesen, chief economist for India and Asean, HSBC, Singapore. “Inflationary pressures are still quite strong,” said Dharmakirti Joshi, Mumbai-based chief economist at Crisil Ltd. Inflation has cooled from 2011, when it was above nine percent for most of the year. But it is still the highest among its BRICS counterparts Brazil, Russia, China and South Africa. While the BRICS and other developed countries rely on consumer price index based inflation data, India still uses wholesale prices for policy decision-making. The annual reading for February was revised to 7.36 percent from 6.95 percent, the data showed.

Bond yields

Held up – fuel and food prices rise as output hits three-year low

The main BSE stock index was down 0.4 percent, slightly extending losses after the data. The yield on the 10-year bond rose three basis points to 8.56 percent. A steep drop in the rupee - down more than eight percent against the U.S. dollar since March, making it one of the Asia’s worst performing currencies - has made imported items such as fuel – India ships in 80 percent of its crude oil needs - food

oil, gold and machinery costlier. Costlier credit and the impact of Europe’s debt crisis on exports have helped sap the energy of India’s economic expansion. Gross domestic product rose 6.1 percent in the December quarter from a year earlier, the slowest pace in nearly three years. The reserve bank raised rates by a record 3.75 percentage points from mid-March 2010 to October last

year to rein in inflation, but is now struggling to support growth. While a slowdown in the global economy and political gridlock has hurt investments, firm domestic consumption is allowing some companies to increase prices of their goods after an increase in tax rates in the annual budget presented in March. The data showed the prices of manufacturing goods rose 5.12

percent in the year through April, up from 4.87 percent in March. Companies raised prices after the government increased a factory gate tax by 2 percentage points in the budget. Food prices rose 10.49 percent on year in April compared with a 9.94 percent rise in the previous month as vegetable output shrank with the onset of summer season. Reuters/Bloomberg/AFP

JAL reports US$2.33b annual net profit

S. Korea firm mulls bid for London airport

Possible stock market re-listing by September

Stansted target of Incheon Airport operator

apan Airlines (JAL), which went bankrupt two years ago in one of the country’s biggest-ever corporate failures, on Monday logged an annual net profit of US$2.33 billion (18.63 billion patacas) thanks to cost-cutting efforts. It had forecast a 160 billion yen net profit. The carrier said a strong domestic currency saw more Japanese people travel overseas, although demand was hit by last year’s quaketsunami disaster. “Amid uncertain economic uncertainty stemming from such factors as the earthquake of March 11, 2011 and Europe’s debt problem, we have continued our efforts and have taken measures to further expand revenue and increase profitability,” the airline said in a statement. The carrier predicted it would earn a profit of 130 billion yen in the present fiscal year. In March 2011,

the company exited bankruptcy, more than a year after a spectacular collapse that prompted a government bailout of the once-venerable flag carrier. It went bust in 2010 with staggering debts of about 2.32 trillion yen but continued flying during its rehabilitation process, which included massive job and route cuts. The airline underwent an aggressive cost-cutting plan guided by charismatic businessman Kazuo Inamori, who was brought in by the government to help turn the firm around. Japanese media have reported that JAL, which was forced to delist during its crisis, may return to the market by September 2012. Last month, domestic rival All Nippon Airways posted a record operating profit of US$1.2 billion in the year ended in March. AFP

outh Korea’s main airport operator is interested in buying London’s Stansted from the British Airports Authority an official said on Monday. State-owned Incheon International Airport Corp is “watching with interest” Stansted as well as Glasgow airport, the Incheon official told AFP on condition of anonymity. “We also have an interest in other British airports to be put up for sale in the near future,” he said. Britain’s Competition Commission in 2009 ordered BAA, owned by Spanish conglomerate Ferrovial, to offload London’s Gatwick and Stansted airports as well as either Edinburgh or Glasgow to meet anticompetition requirements. BAA has subsequently sold Gatwick and Edinburgh airports to US investment fund Global Infrastructure Partners. In February

it lost an appeal against the order to sell Stansted. The Korea Economic Daily reported on Monday that Incheon was in talks with companies such as JP Morgan Asset Management for a potential joint bid for Stansted or Glasgow. Incheon airport has been seeking to expand its overseas businesses, which accounted for less than one percent of its total revenue of 1.5 trillion won (US$1.3 billion) last year. “Our overseas business since 2009 is only in its infancy. We’re mulling various plans to develop it including buying stakes in foreign airports or construction of [new airports],” the airport official told AFP. Incheon handled about 35 million passengers last year and has several times been rated the world’s best airport by the Airports Council International. AFP

12 |

business daily May 15, 2012

PRICE

Day %

MARKETS Ticker NAME

Hang SENG INDEX Ticker NAME

PRICE

Day %

VOLUME

(H) 52W

(L) 52W

VOLUME

(H) 52W

(L) 52W 53.6

HUTCHISON WHAMPO

70.2

-1.886792

5450716

93.1

1398

IND & COMM BK-H

4.79

-2.04499

420563429

6.56

3.46

494

LI & FUNG LTD

14.88

-4.615385

18278317

20.15

10.82

1299

AIA GROUP LTD

26.5

26872608

29.9

19.84

MTR CORP

-0.3831418

1782831

28.8

22.45

2600

ALUMINUM CORP-H

3.32

-1.190476

14595322

6.99

3.2

NEW WORLD DEV

9.01

-1.20614

9691553

12.4

6.13

3988

BANK OF CHINA-H

2.97

-1

375871333

4.35

2.2

857

PETROCHINA CO-H

10.26

-1.724138

47078785

11.92

8.59

3328

BANK OF COMMUN-H

5.39

-1.642336

27566711

7.409

4.15

2318

PING AN INSURA-H

-1.993355

12895289

83.8

37.35

BANK EAST ASIA

28.45

-0.6980803

2529972

34.45

21.85

POWER ASSETS HOL

-0.5145798

1914000

64.8

52.55

1880

BELLE INTERNATIO

13.66

-2.706553

24833318

17.54

11.38

SINO LAND CO

11.92

-1.812191

10155781

14.16

8.482

2388

BOC HONG KONG HO

22.85

-1.72043

15728677

24.65

14.24

SUN HUNG KAI PRO

87.85

-0.7905138

3559489

122

85.45

293

CATHAY PAC AIR

12.4

-2.053712

6776226

19.34

11.8

SWIRE PACIFIC-A

85.35

-1.613833

1490558

102.199

69.321

CHEUNG KONG

96.1

-1.131687

4532210

122.4

79.1

700

TENCENT HOLDINGS

225.2

0.7155635

5698559

248.8

139.8

1898

CHINA COAL ENE-H

7.98

-1.965602

25434566

11.66

6.59

322

TINGYI HLDG CO

20.15

-0.982801

6193929

17.84

939

CHINA CONST BA-H

5.47

-2.146691

349036809

7.36

4.41

151

WANT WANT CHINA

9.38

0.5359057

9463404

9.78

6.03

2628

CHINA LIFE INS-H

19.38

-2.022245

30048012

28.1

17.04

WHARF HLDG

42.8

-0.1166861

3014015

33.15

144

CHINA MERCHANT

23.55

2611592

941

CHINA MOBILE

86.85

-0.0575374

17022654

89.85

68.05

688

CHINA OVERSEAS

16.06

-0.2484472

18502829

17.86

9.99

386

CHINA PETROLEU-H

7.55

-1.048493

67861694

9.67

6.22

291

CHINA RES ENTERP

28.15

-0.5300353

4509571

35.5

1109

CHINA RES LAND

13.76

-0.2898551

4429142

15.6

7.28

836

CHINA RES POWER

13.62

-0.4385965

3655137

16.2

10.82

1088

CHINA SHENHUA-H

30.7

-0.1626016

10575936

40.2

27.1

762

CHINA UNICOM HON

12.68

-1.092044

19744885

17.68

12.58

267

CITIC PACIFIC

12.02

-0.331675

3542911

10.26

CLP HLDGS LTD

64.85

-1.067887

1960207

75.2

62.1

883

CNOOC LTD

14.64

-1.744966

47496463

19.7

11.2

1199

COSCO PAC LTD

9.83

-5.480769

9280370

16.24

7.52

330

ESPRIT HLDGS

14.22

-5.827815

7980002

31.35

7.55

101

HANG LUNG PROPER

25.65

0.1953125

7906137

33.55

20.85

HANG SENG BK

104.7

1329240

125

84.4

HENDERSON LAND D

40.15

0.6265664

4835019

52.95

33.2

1044

HENGAN INTL

78.3

-2.49066

913071

83.45

56.8

HONG KG CHINA GS

18.74

-2.294056

15325475

20.65

16.68

388

HONG KONG EXCHNG

113.9

-1.214224

4071961

175

99.15

HSBC HLDGS PLC

67.7

-1.023392

15497604

82.15

IN FOCUS China Longyuan Power Group (916 HK) share performance 6.0 5.8 5.6 5.4 5.2 5.0

Shanghai Shenzhen CSI 300 NAME

INDEX 19735.04 52W (H) 23707.94 (L) 16170.35 MOVERS 4 41 3

09-May

14-May

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

AGRICULTURAL-A

2.69

-1.465201

79791979

CHINA VANKE CO-A

8.92

-0.1119821

58382706

PETROCHINA CO-A

9.65

-0.1035197

19680494

AIR CHINA LTD-A

6.15

-2.070064

20239307

CHINA YANGTZE-A

6.65

-0.4491018

12458064

PING AN INSURA-A

40.79

-0.9470617

23924826

POLY REAL ESTA-A

12.77

1.108472

42250728

-0.6323397

5709575

ALUMINUM CORP-A

NAME

VOLUME

6.97

-1.830986

23298266

CITIC SECURITI-A

12.87

0.7830854

101946191

ANHUI CONCH-A

16.37

0.5528256

35360954

CSR CORP LTD -A

4.82

0.8368201

23441272

QINGHAI SALT-A

BANK OF BEIJIN-A

10.09

-0.9813543

25699463

DAQIN RAILWAY -A

7.42

-0.669344

37704703

SAIC MOTOR-A

15.45

1.046436

16055938

BANK OF CHINA-A

3.03

-0.9803922

16899603

DATANG INTL PO-A

5.5

3.578154

16863184

SANY HEAVY INDUS

14.19

0.07052186

23786925

BANK OF COMMUN-A

4.78

-0.6237006

58501603

DONGFANG ELECT-A

22.02

0.3646308

11952741

SHANDONG GOLD-MI

33.39

-2.282704

10676047

BAOSHAN IRON & S

4.88

-0.8130081

19443789

EVERBRIG SEC -A

13.36

0.2250563

12135135

SHANG PHARM -A

12.34

-0.2425222

24047587

BBMG CORPORATI-A

8.09

0.6218905

16138525

GD MIDEA HOLDING

13.19

-2.656827

22653079

SHANG PUDONG-A

9.08

-0.8733624

70896633

24.87

-1.893491

3906855

GD POWER DEVEL-A

2.58

-0.3861004

31088427

SHANGHAI ELECT-A

5.85

4.83871

22526881

CHINA CITIC BK-A

4.4

-1.345291

17121386

GF SECURITIES-A

31.95

0.4085481

14002438

SHANXI LU'AN -A

26.93

-1.571637

11686748

CHINA CNR CORP-A

4.3

-0.921659

31361093

GREE ELECTRIC

21.31

-1.342593

11823584

SHANXI XINGHUA-A

74.11

-4.398865

1953187

CHINA COAL ENE-A

9.2

-1.814301

15156992

GUIZHOU PANJIA-A

31.18

-3.047264

6383599

SHANXI XISHAN-A

17.73

-2.742732

33666560

SHENZ DVLP BK-A

15.94

-0.4993758

20696000

7.48

1.630435

33293247

16.12

-2.065614

2073172

9.68

-1.626016

50119379 2730542

BYD CO LTD -A

CHINA CONST BA-A

4.61

-1.495726

43025691

HAITONG SECURI-A

9.76

0.6185567

82562210

CHINA COSCO HO-A

5.08

-1.167315

16355000

HANGZHOU HIKVI-A

46.13

-1.473729

1335086

CHINA CSSC HOL-A

34.51

-1.708915

11340037

HEBEI IRON-A

-0.990099

22728959

CHINA EAST AIR-A

4.05

-3.110048

23722725

HENAN SHUAN-A

64.55

-1.720463

2394890

SUNING APPLIAN-A

SHENZEN OVERSE-A SINOVEL WIND-A

CHINA EVERBRIG-A

3.01

-0.3311258

39360747

HUATAI SECURIT-A

10.07

-0.4940711

33913701

TSINGTAO BREW-A

35.99

-0.9085903

CHINA INTL MAR-A

15.21

-1.169591

7662819

HUAXIA BANK CO

10.57

-1.399254

44422927

WEICHAI POWER-A

32.08

-2.492401

5635200

CHINA LIFE INS-A

17.68

-1.777778

14671545

IND & COMM BK-A

4.37

0.2293578

40536680

WULIANGYE YIBIN

34.98

-2.153846

24261728

CHINA MERCH BK-A

11.89

-1.081531

67202716

INDUSTRIAL BAN-A

13.79

-0.8626887

51269032

XINJIANG GUANG-A

26.61

-1.078067

17753124

CHINA MERCHANT-A

12.4

-1.195219

23090077

INNER MONG BAO-A

42.53

-3.032376

97298389

YANGQUAN COAL -A

19.67

-1.403509

12680527

CHINA MERCHANT-A

23.69

1.67382

12224036

INNER MONG YIL-A

22.37

-1.497138

9101818

YANTAI CHANGYU-A

97.28

-0.2665573

722017

CHINA MINSHENG-A

6.62

-0.3012048

89206117

INNER MONGOLIA-A

6.58

-4.081633

221257306

YANTAI WANHUA-A

14.2

-2.405498

11342458 5851138

CHINA NATIONAL-A

6.57

-1.351351

14489220

JIANGSU HENGRU-A

28.77

1.624868

3986521

YANZHOU COAL-A

23.6

-1.666667

CHINA OILFIELD-A

18.49

14049501

JIANGSU YANGHE-A

159.81

-2.554878

1513425

YUNNAN BAIYAO-A

53.08

-0.5620082

2247977

CHINA PACIFIC-A

20.77

-2.442461

32594751

JIANGXI COPPER-A

25.54

-2.295333

15289509

ZHONGJIN GOLD

21.92

-2.621057

10766520

CHINA PETROLEU-A

7.04

-1.123596

51140335

JINDUICHENG -A

CHINA RAILWAY-A

2.66

-0.3745318

18731076

JIZHONG ENERGY-A

CHINA RAILWAY-A

4.29

0.4683841

13173584

KWEICHOW MOUTA-A

CHINA SHENHUA-A

26.27

-0.8305021

13235428

LUZHOU LAOJIAO-A

14.1

-0.9135629

9422120

ZIJIN MINING-A

4.15

-1.190476

52395788

19.77

-1.543825

7374200

ZOOMLION HEAVY-A

9.91

-0.2014099

42437454

222.18

-2.419957

3879704

ZTE CORP-A

16.42

-0.7255139

12539100

43.3

-2.499437

7832044 16233623

CHINA SHIPBUIL-A

6.12

-0.6493506

32667364

METALLURGICAL-A

2.62

-0.3802281

CHINA SOUTHERN-A

4.69

-1.470588

26718871

NARI TECHNOLOG-A

20.97

1.304348

7272235

CHINA STATE -A

3.31

-0.8982036

77240006

NINGBO PORT CO-A

2.57

-1.153846

15870929

CHINA UNITED-A

4.2

-0.9433962

66783609

PANGANG GROUP -A

7.97

-2.686203

75489871

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

19.38

-2.022245

30048012

JIANGXI COPPER-H

16.76

-3.121387

16501817

CHINA LONGYUAN-H

5.21

-10.78767

13587683

PETROCHINA CO-H

10.26

-1.724138

47078785

CHINA MERCH BK-H

15.16

-0.9150327

19168088

PICC PROPERTY &

9.48

0.6369427

20041950

CHINA MINSHENG-H

7.58

-0.3942181

17075025

PING AN INSURA-H

-1.993355

12895289

CHINA NATL BDG-H

8.75

-2.12528

70476664

SHANDONG WEIG-H

8.39

1.944107

2055768

SINOPHARM-H

18.24

0.5512679

2478765

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

SHORT_NAME

PX_LAST CHG_PCT_1D

PX_VOLUME

NAME CHINA LIFE INS-H

INDEX 2615.534 52W (H) 3154.935 (L) 2254.567 MOVERS 74 220 6

NAME

AGRICULTURAL-H

3.3

-1.197605

112993995

AIR CHINA LTD-H

5.46

-2.5

9957321

CHINA OILFIELD-H

10.76

-3.584229

10611001

ALUMINUM CORP-H

3.32

-1.190476

14595322

CHINA PACIFIC-H

23.2

-1.902748

8870444

TSINGTAO BREW-H

46.65

-0.7446809

456000

22.25

-0.4474273

14249883

CHINA PETROLEU-H

7.55

-1.048493

67861694

WEICHAI POWER-H

33.3

-1.91458

1446033

ANHUI CONCH-H BANK OF CHINA-H

2.97

-1

375871333

CHINA RAIL CN-H

5.44

1.682243

11124149

YANZHOU COAL-H

14.08

-3.825137

23744222

BANK OF COMMUN-H

5.39

-1.642336

27566711

CHINA RAIL GR-H

2.59

-1.145038

14157821

ZIJIN MINING-H

2.35

1.293103

37469689

16.96

-3.96376

2700780

CHINA SHENHUA-H

30.7

-0.1626016

10575936

ZOOMLION HEAVY-H

9.91

-2.268245

17482906

CHINA CITIC BK-H

4.45

-1.548673

21917787

CHINA TELECOM-H

3.98

0.7594937

63378202

ZTE CORP-H

16.98

-4.067797

6593791

CHINA COAL ENE-H

7.98

-1.965602

25434566

DONGFENG MOTOR-H

13.14

-1.49925

13047840

CHINA COM CONS-H

6.65

-0.1501502

12184049

GUANGZHOU AUTO-H

6.47

-3.576751

7943861

CHINA CONST BA-H

5.47

-2.146691

349036809

HUANENG POWER-H

4.67

-0.4264392

12459569

CHINA COSCO HO-H

3.56

-7.772021

23096426

IND & COMM BK-H

4.79

-2.04499

420563429

BYD CO LTD-H

NAME

FTSE TAIWAN 50 INDEX NAME

PRICE DAY %

Volume

ACER INC

32.1

0.3125

8785822

ADVANCED SEMICON

28.8

-1.369863

10398863

ASIA CEMENT CORP

34.45 -0.7204611

ASUSTEK COMPUTER

307.5

AU OPTRONICS COR CATCHER TECH

PRICE DAY %

Volume

INDEX 9986.98 52W (H) 13317.51 (L) 8058.58 MOVERS 16 34 0

NAME

32.05

1.424051

3895537

SINOPAC FINANCIA

9.82

FAR EASTONE TELE

3.395062

10408807

SYNNEX TECH INTL

70.3 -0.5657709

17.05

6481117

TAIWAN CEMENT

FORMOSA CHEM & F

78.7 -0.3797468

3237168

TAIWAN COOPERATI

FORMOSA PETROCHE

86.8

FIRST FINANCIAL

940102

28.4

0.1763668

806115

9882483

TAIWAN MOBILE CO

96.5

0.6256517

6975464

7524372

TPK HOLDING CO L

360

1.265823

3224129

0.5787037

31223494

TSMC

85.4 -0.1169591

13957562

FOXCONN TECHNOLO

2.671119

3104676

FUBON FINANCIAL

29.9

12.95 -0.7662835

35047492

HON HAI PRECISIO

86.9

-1.538462

8153210

HOTAI MOTOR CO

179

-2.98103

988361

8884700

HTC CORP

425

-1.162791

6001174

UNITED MICROELEC

CHANG HWA BANK

15.95

4149020

HUA NAN FINANCIA

16.15 -0.6153846

CHENG SHIN RUBBE

71.2

-1.111111

3959915

LARGAN PRECISION

465

42.6

-0.234192

9073215

12.95

-1.520913

22035560

36.25

0.554785

1848713

YULON MOTOR CO

47.7

-0.625

3504738

264

0.3802281

3567638

1.25523

18213373

LITE-ON TECHNOLO

29499194

MEDIATEK INC

28.35

9758365

MEGA FINANCIAL H

21.65

1.168224

9432969

18.4 -0.2710027

9007680

NAN YA PLASTICS

56.7

-2.072539

8066929

160.5

1.582278

879131

-1.599016

6360536

33.7

2279589

QUANTA COMPUTER

DELTA ELECT INC

94.9

1.064963

5671221

SILICONWARE PREC

13568690

YUANTA FINANCIAL

0.273224

4985344

9737975

WISTRON CORP

12.1

1.065449

0.751073

14.7

2186845

7.34

33.2

46.95

4180486

CHIMEI INNOLUX C

COMPAL ELECTRON

UNI-PRESIDENT

-1.483051

CHINA DEVELOPMEN

PRESIDENT CHAIN

17.65

TAIWAN GLASS IND

2276246

8032467

6151107

3885378

78 -0.3831418

-1.306241

1838365

FORMOSA PLASTIC

991585

0.2840909

185 -0.5376344

CHUNGHWA TELECOM

6089601

70.2 -0.7072136

841620

29.85 -0.1672241

CHINA STEEL CORP

Volume

0.1019368

TAIWAN FERTILIZE

-0.8

CATHAY FINANCIAL

CHINATRUST FINAN

PRICE DAY %

FAR EASTERN NEW

INDEX 5101.31 52W (H) 6247.96 (L) 4643.05 MOVERS 19 24 7

May 15, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT

Max 21.70

Average 21.08

MELCo CroWN ENTErTAINMENT

Min 20.60

21.80

37.50

12.80

21.56

37.34

12.74

21.32

37.18

12.68

21.08

37.02

12.62

20.84

36.86

12.56

20.60

Last 20.75

Max 37.45

SANDS CHINA LTD

Max 29.05

Average 28.50

MGM CHINA HoLDINGS

Average 37.15

Min 36.75

Last 36.75

36.70

SJM HoLDINGS LTD

Min 27.75

Last 27.75

Min 12.56

12.50

Last 12.56

29.10

15.90

21.70

28.82

15.74

21.46

28.54

15.58

21.22

28.26

15.42

20.98

27.98

15.26

20.74

27.70

15.10 Max 15.96

Average 15.56

Min 15.18

Last 15.18

20.50 Max 21.60

Average 21.05

Last 20.55

Min 20.55

CURRENCY EXCHANGE RATES

SJM Holdings (SJMHF US) share performance 3.0

MAJORS

2.4 1.8 ASIA PACIFIC

1.2 0.6 0.0 09-Jun 2011

11-May 2012

MACAU RELATED STOCKS PRICE

DAY % YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

ARISTOCRAT LEISU

2.95

1.724138

34.09091

3.25

1.88

2083457

CROWN LTD

9.12

0.6622517

12.73177

9.29

7.45

859509

AMAX HOLDINGS LT

0.083

-1.190476

-4.597698

0.131

0.06

14294000

BOC HONG KONG HO

22.85

-1.72043

24.18479

24.65

14.24

15728677

CENTURY LEGEND

0.233

-8.627451

1.304346

0.41

0.204

32000

3.12

-0.952381

11.42857

4.79

2.3

12000

CHINA OVERSEAS

16.06

-0.2484472

23.72882

17.86

9.99

18502829

CHINESE ESTATES

1.102941

-12

14.1

10.2

40000

CHOW TAI FOOK JE

11.8

-2.155887

-15.22989

15.16

11.46

3774000

EMPEROR ENTERTAI

1.25

-0.7936508

12.61261

2.09

0.97

1576200

FUTURE BRIGHT

0.94

-5.050505

123.8095

1.09

0.3

5576400

GALAXY ENTERTAIN

20.75

-3.488372

45.71629

24.95

8.69

22158125

HANG SENG BK

104.7

13.6191

125

84.4

1329240

HOPEWELL HLDGS

20.2

1.711981

24.903

18.56

265013

HSBC HLDGS PLC

67.7

-1.023392

14.74576

82.15

15497604

HUTCHISON TELE H

3.42

0.2932551

14.38127

3.6

2.13

2274000

LUK FOOK HLDGS I

18.08

-0.1104972

-33.28413

46.15

17.76

3439601

CHEUK NANG HLDGS

Average 12.69

WyNN MACAu LTD

IN FOCUS

NAME

Max 12.80

CROSSES

AUD HKD

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

AUD

0.998

-0.3992

-2.2431

1.1081

0.9388

GBP

1.6069

3.3842

1.6618

1.5235

CHF

0.933

-0.3323

0.5466

0.9596

0.7071

EUR

1.2873

-0.3406

-0.679

1.4697

1.2624

JPY

80.03

-0.1125

-3.8985

84.18

75.35

MOP

7.9987

0.0075

0.0113

8.0449

7.9823

HKD

7.7656

-0.0077

0.0232

7.8113

7.7529

CNY

6.3214

-0.1756

-0.4176

6.5098

6.2769

INR

53.835

-0.3715

-1.4303

54.305

43.855

THB

31.35

-0.4785

0.638

31.96

29.63

SGD

1.257

-0.3262

3.1504

1.3199

1.1992

TWD

29.496

-0.3289

2.6546

30.716

28.562

PHP

42.745

-0.4796

2.5617

44.35

41.879

IDR

9250

-0.5622

-1.9568

9367

8458

AUDJPY

79.868

0.2805

-1.798

88.637

72.057

EURCHF

1.20098

0.0167

1.3164

1.26462

1.00749

EURGBP

0.80106

0.3508

4.0359

0.90835

0.79965

EURCNY

8.1335

0.3996

0.0086

9.514

7.9674

EURMOP

10.2965

0.4652

0.539

11.7768

10.1031

EURJPY

103.01

0.2427

-3.2521

117.9

97.04

1.03

0.0097

1.0311

1.0288

HKDMOP

World Stock MarketS - Indices COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

NAME

12820.6

-0.2679105

4.935847

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2933.82

12.61617

3134.17

2298.89

2298.89 4791.01

FTSE 100 INDEX

5475.78

-1.788891

-1.731787

6084.08

4791.01

DAX INDEX

6438.73

-2.145919

9.161543

7523.53

4965.8

8973.84

0.2293007

6.132097

10255.15

8135.79

7.05

-2.892562

22.18371

10.76

4.3

5053000

NIKKEI 225

MGM CHINA HOLDIN

12.56

-0.3174603

30.94036

17.183

7.6

4442400

HANG SENG INDEX

19735.04

-1.149984

7.055554

23707.94922

16170.35

MIDLAND HOLDINGS

3.8

1.876676

-5.940593

5.48

2.95

1190000

CSI 300 INDEX

2615.534

-0.8109091

11.50135

3154.935

2254.567

NEPTUNE GROUP

0.104

-1.886792

-6.306308

0.157

0.08

820000

NEW WORLD DEV

9.01

-1.20614

43.92971

12.4

6.13

9691553

7377.18

-0.3268314

4.314149

9089.47

6609.11

SANDS CHINA LTD

27.75

-3.979239

26.42369

33.05

14.9

13632066

MELCO INTL DEVEL

SHUN HO RESOURCE

1.19

1.32

0.82

SHUN TAK HOLDING

2.9

-1.023891

13.31984

4.686

2.241

2578559

SJM HOLDINGS LTD

15.18

-3.741281

19.71609

10.22

17801281

SMARTONE TELECOM

14.82

-1.462766

10.26786

18.5

9.8

830000

WYNN MACAU LTD

20.55

-3.066038

5.384615

27.48

14.807

6328939

ASIA ENTERTAINME

5.26

2.734375

-10.54422

10.8692

4.72

119614

BALLY TECHNOLOGI

47.03

-0.04250797

18.88271

49.32

24.74

221531

BOC HONG KONG HO

2.95

-5.144695

23.06088

3.15

1.81

350

GALAXY ENTERTAIN

2.84

-0.3508772

51.87166

3.24

1.08

28300

INTL GAME TECH

15.13

1.543624

-12.03489

19.15

13.38

3698084

JONES LANG LASAL

77.88

0.6982157

27.13027

99.89

46.01

225881

LAS VEGAS SANDS

51.68

-0.1159644

20.94547

62.09

36.08

8289683

MACAU CAPITAL IN

#N/A N/A

0.11

14.37

-0.2083333

49.3763

16.15

7.05

5715662

MELCO CROWN-ADR MGM CHINA HOLDIN

1.65

-3.508772

38.45846

2.21314

1.00254

695

MGM RESORTS INTE

11.63

-0.2572899

11.50527

16.05

7.4

6785250

SHUFFLE MASTER

491445

16.28

-0.1839362

38.90785

18.77

7.35

SJM HOLDINGS LTD

2.13

30.67485

2.64

1.28

16100

WYNN RESORTS LTD

112.9

-0.3090508

2.181195

165.4931

101.02

2462556

TAIWAN TAIEX INDEX KOSPI INDEX

USD

1913.73

-0.1773484

4.819415

2192.83

1644.11

S&P/ASX 200 INDEX

4296.993

0.2782686

5.927007

4763.9

3765.9

JAKARTA COMPOSITE INDEX

4053.067

-1.484466

6.04593

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1575.08

-0.5832155

2.897309

1609.33

1310.53

NZX ALL INDEX

793.461

0.3238083

8.723031

814.431

700.441

PHILIPPINES ALL SHARE IX

3344.48

-1.783732

9.833695

3518.96

2695.06

557.82

-0.7

12.39

1167.52

-1.972276

13.86885

1247.72

843.69

469.69

-2.168298

33.60547

492.44

332.28

1025.07

-0.947936

13.96504

1260.53

876.33

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business daily May 15, 2012

Opinion

Are humans getting better?

Business

wires Leading reports from Asia’s best business newspapers

Peter Singer

Professor of Bioethics at Princeton University

Taipei Times

ith daily headlines focusing on war, terrorism, and the abuses of repressive governments, and religious leaders frequently bemoaning declining standards of public and private behaviour, it is easy to get the impression that we are witnessing a moral collapse. But I think that we have grounds to be optimistic about the future. Thirty years ago, I wrote a book called The Expanding Circle, in which I asserted that, historically, the circle of beings to whom we extend moral consideration has widened, first from the tribe to the nation, then to the race or ethnic group, then to all human beings, and, finally, to non-human animals. That, surely, is moral progress. We might think that evolution leads to the selection of individuals who think only of their own interests, and those of their kin, because genes for such traits would be more likely to spread. But, as I argued then, the development of reason could take us in a different direction. On the one hand, having a capacity to reason confers an obvious evolutionary advantage, because it makes it possible to solve problems and to plan to avoid dangers, thereby increasing the prospects of survival. Yet, on the other hand, reason is more than a neutral problemsolving tool. It is more like an escalator: once we get on it, we are liable to be taken to places that we never expected to reach. In particular, reason enables us to see that others, previously outside the bounds of our moral view, are like us in relevant respects. Excluding them from the sphere of beings to whom we owe moral consideration can then seem arbitrary, or just plain wrong.

existence. The decline in violence holds for families, neighbourhoods, tribes, and states. In essence, humans living today are less likely to meet a violent death, or to suffer from violence or cruelty at the hands of others, than their predecessors in any previous century. Many people will doubt this claim. Some hold a rosy view of the simpler, supposedly more placid lives of tribal hunter-gatherers relative to our own. But examination of skeletons found at archaeological sites suggests that as many as 15 percent of prehistoric humans met a violent death at the hands of another person. (For comparison, in the first half of the twentieth century, the two world wars caused a death rate in Europe of not much more than 3 percent). Even those tribal peoples extolled by anthropologists as especially “gentle” – for example, the Semai of Malaysia, the Kung of the Kalahari, and the Central Arctic Inuit – turn out to have murder rates that are, relative to population, comparable to Detroit, which has one of the highest murder rates in the United States. In Europe, your chance of being murdered is now less than one-tenth, and in some countries only one-fiftieth, of what it would have been had you lived 500 years ago. Pinker accepts that reason is an important factor underlying the trends that he describes. In support of this claim, he

In essence, humans living today are less likely to meet a violent death, or to suffer from violence or cruelty at the hands of others, than their predecessors in any previous century

refers to the “Flynn Effect” – the remarkable finding by the philosopher James Flynn that since IQ tests were first administered, scores have risen considerably. The average IQ is, by definition, 100; but, to achieve that result, raw test results have to be standardised. If the average teenager today took an IQ test in 1910, he or she would score 130, which would be better than 98 percent of those taking the test then.

In a world of symbols It is not easy to attribute this rise to improved education, because the aspects of the

tests on which scores have risen the most do not require a good vocabulary, or even mathematical ability, but instead assess powers of abstract reasoning. One theory is that we have gotten better at IQ tests because we live in a more symbol-rich environment. Flynn himself thinks that the spread of the scientific mode of reasoning has played a role. Pinker argues that enhanced powers of reasoning give us the ability to detach ourselves from our immediate experience and from our personal or parochial perspective, and frame our ideas in more abstract, universal terms. This, in turn, leads to better moral commitments, including avoidance of violence. It is just this kind of reasoning ability that improved during the twentieth century. So there are grounds to believe that our improved reasoning abilities have enabled us to reduce the influence of those more impulsive elements of our nature that lead to violence. Perhaps this underlies the significant drop in deaths inflicted by war since 1945 – a decline that has become even steeper over the past 20 years. If so, there would be no denying that we continue to face grave problems, including of course the threat of catastrophic climate change. But there would nonetheless be some reason to hope for moral progress. © Project Syndicate

Better times Steven Pinker’s recent book The Better Angels of Our Nature lends weighty support to this view. Pinker, a professor of psychology at Harvard University, draws on recent research in history, psychology, cognitive science, economics, and sociology to argue that our era is less violent, less cruel, and more peaceful than any previous period of human

Taiwan’s Minister of Finance Christina Liu is expected to address the issue of the rising national debt at the Legislative Yuan’s Finance Committee meeting, shows a draft report seen by Chinese-language Liberty Times – Taipei Times’ sister publication. The draft report indicates that Ms Liu would tell lawmakers of the ministry’s plans to manage the country’s debt, including targets to cut the national deficit between NT$20 billion to NT$40 billion (US$680 million to US$1.36 billion) annually. The government faces a NT$209.5 billion deficit this year with its annual budget for the year projecting revenues of NT$1.7295 trillion and expenditures of NT$1.939 trillion.

Inquirer Business

Analysts from the First Metro Investment Corp. and the University of Asia and the Pacific say that global investors would likely take note of the gains made by the Philippines in the past decade as well as the improving outlook in the coming years, which may trigger the flow of more “hot money” into the country. “This will add to an already high liquidity provided by the ever-increasing remittances [from overseas Filipinos],” they said. The study from the two institutions also showed that the peso could weaken steadily in the next three months and settle at 43.10 against the dollar in July as the greenback recovers amid an improving U.S. economy.

Jakarta Globe

Indonesia’s largest port authority is pumping in more than US$2.5 billion to expand Tanjung Priok, the country’s busiest port. The expansion of Jakarta’s port comes as the infrastructure has long been constrained by a lack of berth space and an inability to serve large container vessels. The expansion is expected to help triple the port’s present annual capacity to more than 18 million TEUs – or twenty-foot equivalent units – when all phases are completed in 2023. The first phase of development, which begins in July, involves the construction of three container terminals and two petroleum product terminals. The first terminal is expected to be completed by 2014.

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.

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May 15, 2012 business daily | 15

OPINION As European austerity ends, so could the euro Peter Boone

Visiting senior fellow at the Peterson Institute for International Economics and the London School of Economics

Simon Johnson

Professor at the MIT Sloan School of Management and senior fellow at the Peterson Institute for International Economics

he euro currency is a malady that condemns at least a generation of Greeks, Italians, Spaniards, Portuguese and Irish to the economic infirmary. In these nations, unemployment rates are now at their highest levels in recent decades, and there are few prospects for recovery in sight. The economists and politicians who created the system still proclaim it can survive. Their time would be better spent recognising they made a bad mistake and preparing for an orderly dismantling of the euro before the damage spreads and further undermines European unity. The problem isn’t just the region’s lack of competitiveness or its budget deficits or the high stock of existing government debt, which the International Monetary Fund now puts at 90 percent of the euro area’s gross domestic product. It is all of the above, compounded by five years of complete political denial. For three years, capital has been fleeing Europe’s periphery for Germany. That country’s liquid banks, competitive labor markets and sound fiscal policies have made it the ideal location in Europe for investment. The periphery’s illiquid banks are sharply contracting credit to the productive sector, even as their governments are cutting back and political protests are mounting. Wages are too slow to adjust to dent these powerful forces: Germany looks ever more attractive for investors, further exacerbating the imbalances that brought us to this point.

Fiscal union Is there any hope for the euro dream? One potential way forward would be to create a European-level fiscal union that assumes all national debt, much like what Alexander Hamilton did as first U.S. secretary of the Treasury. That isn’t going to happen in modern Europe. Why would German taxpayers and savers agree to pay for the good times previously enjoyed in Greece, Italy or Spain? Who could even ask them to do so? As a result, all eyes are turning to the European Central Bank, because some in the euro policy elite still hope loose monetary policy and higher inflation rates will provide an escape hatch. But addressing fiscal issues through monetary means

generally doesn’t work, and it does nothing to improve the competitiveness of the struggling euro-area periphery. It appears that the euroarea politicians and the ECB agreed to a pact last year whereby banks bought government debt, and the central bank provided the financing. In return, the ECB got national governments to sign on to fiscal austerity. So far, the results are disturbing. Employment levels and leading indicators in Spain and Italy imply the economic decline has accelerated. Greece continues to fall. Ireland is held up as a success story, but its debt levels are enormous, a great deal of fiscal adjustment remains to be done, and the domestic economy declined over the past six months. Voters are already tired of what they perceive as austerity – see Greece, Spain and now France – and the policy debate has begun to shift. The changed tone of the discussion is gradual but it would be a mistake to overlook this development: Austerity programs have been huge social and political failures, removing one more hope for saving the euro area. The ECB surely has more “firepower” to deploy. And it probably will, not least because the institution itself could disappear if the euro area fails. Its natural reaction will be to double or quadruple its bets, issuing potentially limitless credits to banks to keep sovereigndebt markets afloat (and bond yields down).

most attention is focused on Greece as the trigger for a euro-area collapse. There are good reasons to believe Greece would be better off leaving the euro area (although the exit could well be traumatic initially), but the same logic also applies to many more nations. And there are other triggers: Germany might become fed up, Italy will eventually turn against

Allowing inflation The ECB will also lobby for austerity, which would reduce the amount of credit it needs to create. But democratically chosen governments will simply refuse to comply. The central bank will jettison its inflation-fighting credentials, and instead pray that the monetary issuance needed to keep troubled nations afloat isn’t too large and that inflation expectations don’t start to increase. But here’s the problem: Pursuing such a monetary policy is a recipe for a dangerous loss of confidence in the euro system. So far, this confidence has survived. A 10-year German bund, priced in euros, yields only 1.5 percent, showing that investors believe that credit risk, rather than inflation risk, is all that matters. Bund investors should beware. At the moment,

A cheap currency won’t solve Europe’s deeper problems. It increases the risk that European and international investors may simply lose confidence in the euro, leading to mayhem in the area’s leveraged financial markets

Prime Minister Mario Monti, and Spain’s woes are escalating. Europe’s highly leveraged financial system may prove too fragile to suffer even modest increases in the perceived risk of a euro collapse.

Interest rates Anyone who has bet heavily on interest rates staying low – for example, an investor with a great deal of leverage – would be at risk of failure. This type of shock could produce instability at least as extensive as the aftermath of the collapse of Lehman Brothers Holdings Inc. in September 2008. It would lead to massive redistribution of capital and wealth, forcing some leveraged institutions into instant insolvency. Investors would flee first and check the details later. Until recently, whenever troubles worsened in the euro area, investors ran to German, Dutch and French bonds. Since capital flight stayed within the currency area, the value of the euro didn’t fall. During the last week, however, the number of troubled nations increased. French bonds weakened alongside those of Italy and Spain as concerns over Greece intensified. External investors are also showing signs of impatience. The Norwegian sovereignwealth fund recently declared that it would continue to reduce its

holdings of euro-area assets due to the long-term uncertainty in the region. It also cited what it said was unfair treatment of national wealth funds, which were involuntarily forced to accept Greek write-downs, while the ECB and European Investment Bank made profits from their purchases of that debt. Here’s what happens next: The euro becomes cheaper, prodded by the ECB taking extreme credit risk and the popular revolt against austerity. A cheap currency won’t solve Europe’s deeper problems. Depreciation amounts to a nontransparent way for the Germans to bear more of the costs of the failed euro experiment as their purchasing power falls, but investors will still prefer Germany to Greece. It also increases the risk that European and international investors may simply lose confidence in the euro, leading to mayhem in the area’s leveraged financial markets. For European politicians, the most important task now is to cover their tracks and blame others. Inflation is confusing. It also is an unfair tax on savers and a transfer of wealth to borrowers (assuming that interest rates can be held down or otherwise controlled, probably through nonmarket means). The ECB will now be under great pressure to take actions that create inflation. This may bring the end of the euro. Bloomberg View

16 |

business daily May 15, 2012

CLOSING Yahoo chief executive steps down

Seoul, Tokyo want EU cover for Iran oil South Korea and Japan are asking the European Union to give them access to European insurance for Iranian oil shipments even after a July 1 embargo comes into effect, the Korean economy ministry said yesterday. South Korea and Japan are major buyers of Iran’s oil and the EU ban would prevent EU insurers and reinsurers from covering tankers carrying this crude anywhere in the world. “To the EU members, we explained the problems that could be caused to non-EU members by the EU insurance embargo,” the ministry said in a statement. “In close cooperation with Japan, we are in the process of discussing this with the EU.”

Yahoo Inc is replacing its CEO for the third time in as many years, and giving three board seats to a hedge fund led by Daniel Loeb, putting him in a strong position to influence strategy at the struggling Internet company. Chief Executive Scott Thompson stepped down on Sunday, 10 days after Mr Loeb accused him of padding his biography by faking a computer science degree. Yahoo did not give a reason for Mr Thompson’s exit but said the company’s global media head, Ross Levinsohn, will be interim CEO. It also said it will nominate three of the fund’s slate of four candidates to the board, including Mr Loeb.

Govt, Cable TV at odds over internet service The telecommunications regulator says it is still reviewing Cable TV’s application for an internet service and denies that it has failed to engage in dialogue with the company Tony Lai

tony.lai@macaubusinessdaily.com

The director of the Bureau of Telecommunications Regulation, Lawrence Tou Veng Keong, said yesterday that it is considering a revised application by Macau Cable TV to offer an internet service. Macau Cable TV is interested in expanding its services to include telecommunications, something its concession contract with the government allows. In an interview with Business Daily, Angela Lam In Nie, chief executive of Macau Cable TV, said last month that the company had received no clear reply from the government to its application to offer an internet service, only a string of questions. Ms Lam said her company could charge a “very reasonable price” for the service. “I have no idea why they left us hanging there, without giving us a clear answer: yes, no or what we have to do to correct in our proposal,” Ms Lam said. “They never gave us an answer,”

The government says it is considering a revised application by Macau Cable TV to offer an internet service

she said. “They only raised one problem after another.” Mr Tou denied this, saying: “We have replied to the application which Cable TV submitted a year ago and they have recently submitted a new

proposal based on the suggestions we have given them.” “The Telecommunication Regulation Bureau is now at the stage of analysing their proposal,” Mr Tou said.

He said there was no schedule for the completion of the review. “It all depends on whether the proposal is in accordance with the concession contract and administrative regulations,” he said.

JPMorgan executive Drew resigns Bank says its chief investment officer is to leave after a US$2 billion trading blunder revealed a huge trading loss

PMorgan Chase & Co sacrificed investment chief Ina Drew yesterday in response to trading losses that could reach US$3 billion or more and which have tainted the reputation of the bank’s high profile chief executive Jamie Dimon. The biggest bank in the United States by assets said Ms Drew, its New York-based chief investment officer and one of its highestpaid executives, would retire. The statement confirmed what sources close to the matter had previously told Reuters, that Ms Drew would depart the firm. It also said Matt Zames would take Ms Drew’s position, while Daniel Pinto, currently co-head of global fixed income with Mr Zames, would become sole head of the group. Mike Cavanagh, CEO of the Treasury & Securities Services group, will lead a team of executives overseeing and co-ordinating the group’s response to the recent losses. The statement made no mention of two of Ms Drew’s subordinates who were involved with the costly derivatives trades, London-based Achilles Macris and Javier Martin-

JPMorgan Chase & Co said investment chief Ina Drew would retire

Artajo, who the sources had also said were expected to leave. JPMorgan said Mr Cavanagh “will ensure that best practices and lessons learned are carried across the firm”. In a statement issued in New York, Mr Dimon said: “Ina Drew has been a great partner over her many years with our firm. Despite our recent losses in the CIO, Ina’s vast contributions to our company should not be overshadowed by

these events.” “It’s important to remember that our company is very strong and well capitalised. We maintain our fortress balance sheet and capital strength to withstand setbacks like this.” The departure of Ms Drew after 30 years at JPMorgan comes after the unit she ran, known as the Chief Investment Office (CIO), mismanaged a portfolio of derivatives

tied to the creditworthiness of bonds, according to bank executives. The portfolio included layers of instruments used in hedging that became too complicated to work and too big to quickly unwind in the esoteric, thinly traded market. Departures had been on the cards in the wake of the trading losses, though in disclosing the losses on Thursday, CEO Jamie Dimon said only that the bank was continuing to investigate and would take disciplinary action with those involved. Mr Dimon said the bank’s losses could reach US$3 billion or more as it unwinds the positions in coming months. The losses have marred JPMorgan’s reputation for risk management, prompted a downgrade in its credit ratings and thrown an unflattering spotlight on Mr Dimon, a critic of increased regulation who had become one of America’s bestknown bankers. JPMorgan lost US$15 billion in stock market value the day after the latest loss announcement. Reuters