Macau Business, 15 May, 2012 by Business Daily

Year I - Number 33- Wednesday May 16, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

European Chamber wants Macau boost Page 2

Studio City casino - approval ‘soon’ Page 7

Cross border deal

JOURNEY THAT STARTS WITH A SINGLE STEP T

he road to greater Macau-Guangdong cooperation actually consists of two footpaths, both governments said yesterday. One is a new cross-border pedestrians-only route that will link Macau peninsula and Zhuhai near the existing Gongbei crossing point. The other is the alreadyreported undersea path that will allow Macau students to get to the new University of Macau campus being built

Outlook darkens as China FDI drops Page 8

on Hengqin Island across the border. Together they add up to an ever-greater integration of the infrastructure joining the Special Administrative Region and the motherland – even before the full reintegration of the ‘two systems’ into ‘one country’ 50 years after 1999 – as defined in Macau’s mini-constitution the Basic Law. But cooperation comes at a price. Wealthy Macau is being asked to pay 1.2 billion

patacas (US$150 million) in rent on the Hengqin campus, although that will give the territory the right of tenancy there until 2049. Macau’s Chief Executive Fernando Chui Sai On announced the public border crossing yesterday after the 2012 Guangdong-Macau Cooperation Joint Conference held with Zhu Xiaodan, the governor of Guangdong province and his officials. Also discussed was how to

make it easier for visitors to Macau to add side trips to cities in Guangdong. Foreign nationals currently require a visa to travel from Macau to the mainland. Mr Chui said the travel memorandum sought to promote the idea of “one trip, many stops”. “Macau cannot act alone, without support from Guangdong province,” Mr Chui added.

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HANG SENG INDEX

Demand for new flats pumps used market

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Strong demand for new flats is helping to push up the desirability and price of second hand homes in the city say property agents. Despite the Special Stamp Duty introduced in June 2011 – a tax on capital gains and designed to prevent speculative investors flipping properties and overheating the local market as happened in Hong Kong – demand for new luxury units is ramping up again says sales agent Simon Zhou of Centaline. Typically, new flats are bought by investors and second-hand flats by those seeking to move upmarket, he said. “Initially, the stamp duty curbed speculation in the market, but slowly, because no one can sell, there is very limited supply, which drove up prices,” he said.

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WANT WANT CHINA

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Winnie Ho claims thrown out of court

I’ve got CTM’s number – legislator

A court has rejected as ‘baseless’ efforts by Stanley Ho Hung Sun’s sister Winnie to force other clan members – including her niece Pansy – to prove they are legal shareholders of family-founded investment company STDM. It’s not the first time Winnie Ho Yuen Ki has been a legal thorn in her flesh and blood’s flesh. From 2007 to 2008 she tried unsuccessfully to obstruct her brother’s flotation of casino firm SJM Holdings.

A Macau legislator yesterday accused Macau’s main telecoms company CTM of “incompetence” after the second major service disruption in fewer than 100 days. The network blackout that affected half of all mobile phone users for over two hours on Monday night was – like the six-hour blackout in February – caused by human error, Companhia de Telecomunicações de Macau said.

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business daily May 16, 2012

macau

InBrief Second-hand flats in limited supply The Special Stamp Duty may be behind with the limited supply and rising prices of second-hand flats of late

STDM mum on airport injection Sociedade de Turismo e Diversões de Macau SA (STDM) declined to comment on whether it will inject capital into the Macau International Airport Co Ltd (CAM). Contacted by Business Daily, a company spokesperson said the decision was “in the hands of a team led by CAM”. The airport shareholders decided on Monday to issue shares worth nearly 1.95 billion patacas (US$244 million). Shareholders now have 15 days to subscribe to the new shares. “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 had said. The government is the major shareholder in CAM, with a 55.4 percent stake, followed by STDM with 33 percent.

Water tariff rises in 2014 The water tariffs will increase in 2014, the head of the Maritime Administration, Susana Wong Soi Man, said yesterday. According to the official, quoted Rádio Macau, the increase will be discussed with Guangdong province authorities. “I believe that by the end of the year we will sit down and talk about what could be acceptable to set this adjustment,” Ms Wong was quoted as saying.

Foreign reserves rise with surplus Macau’s foreign exchange reserves reached 130.3 billion patacas (US$16.3 billion) last month, after the allocation of 54.2 billion patacas in budget surplus, the financial regulator announced yesterday. The reserves represent 20 times the currency in circulation. The surplus allocation was part of the creation of a fiscal reserve, which is run by the Monetary Authority but the law also calls for the creation of two independent bodies, one to provide investment strategies and the other to monitor reserve management. Both bodies are yet to be created, the regulator told Business Daily.

Kiwi woman denies casino laundering A New Zealand woman denied in court on May 15 having laundered HK$1.5 million in Wynn Macau casino. Kara Hurring, is charged with money laundering and stealing NZ$11,000 (68,400 patacas) after a bank mistakenly deposited NZ$10 million into the account of her partner Hui Cao in April 2009. Prosecutors alleged she left for China and eventually opened an account at Wynn Macau for HK$1.5 million in gambling chips, accommodation and food. Only HK$100,000 was used to gamble with, prosecutors alleged.

econd-hand flats have turned costlier by up to 10 percent in recent months, property agents say. “Particularly since the end of February, prices have been going up visibly,” Centaline sales agent Simon Zhou told Business Daily. “Good sales of new flats recently also drove up sales of second-hand homes,” Macau Centaline head Jacky Shek Po Tak was quoted as saying by the Chinese-language Macau Daily News. Mr Zhou expects the trend to continue in the second half of the year as demand exceeds supply. “I used to hold 10 to 20 keys for showing [second-hand flats] at any time,” he said, “but now I have very few.” Typically, new flats are bought by investors and second-hand flats by those seeking to move upmarket, he said. He believes the Special Stamp Duty imposed by the government last year has led to limited supply in the second-hand market. “Initially, the stamp duty curbed speculation in the market, but slowly, because no one can sell, there is very limited supply, which drove up prices,” he said. “Rental incomes are also getting better in Macau, and this makes owners hesitant to sell cheap,” Mr Zhao said. The Special Stamp Duty is a duty of 20 percent on the sale of a new home resold less than a year after being originally purchased. The duty is 10 percent if the home is resold more than one year but less than two years after being originally purchased.

Mortgages galore Official data show 2,094 homes were sold in the first quarter, compared with 4,263 a year before, when there was no Special Stamp Duty. However, the total value of sales declined by only about one-third,

Second-hand flats are usually sold to residents seeking to move upmarket. New flats are generally for those seeking to invest

from 13.4 billion patacas (US$1.7 billion) to 8.3 billion patacas. Mortgage lending in the past two months was double what it was a year before, as more people borrowed to buy homes. The number of flats mortgaged for 4 million patacas or more also rose, the Macau Daily News reported. Mr Zhou said it was increasingly difficult to find acceptable flats for less than 4,000 patacas per square foot. A resident can get a mortgage of 70

percent on a home worth 3.3 million patacas or more, and a mortgage of 90 percent if the value is lower. That means a flat selling for 4 million patacas requires a down payment of 1.2 million patacas. The median salary is 10,000 patacas per month. Reports in other news media say rising prices have persuaded many residents to head north into mainland Chinese cities in search of property bargains. X.C.

European Chamber has sights on Macau The European Chamber of Commerce in Hong Kong is pondering extending its activities to Macau Terina Cao

tting@macaubusinessdaily.com

he European Chamber of Commerce in Hong Kong intends to be more active in Macau, says the chamber’s vicechairman, Jens-Erik Olsen. Mr Olsen told Business Daily yesterday: “Today Macau is more represented within the European Chamber of Commerce in Hong Kong. The Macau chamber will benefit from the joint venture with Hong Kong’s European chamber.” He said that if the chamber wanted to be stronger, it should become the European Chamber of Commerce in Hong Kong and Macau. He said the chamber is working on ways to develop in Macau. There was a meeting about this in

Hong Kong last month. The chamber has any European business operating in Macau in its sights and is soliciting the opinions of businessmen that want a more formal European chamber in the city. The chamber tries to create business opportunities through its network of business associations and government agencies. It encompasses 12 European national chambers in Hong Kong and one in Macau. Mr Olsen said the chamber is now negotiating with the European Union an extension of the EU Business Information Programme (EUBIP). EUBIP is a four-year programme

meant to increase business among companies in the European Union, Hong Kong and Macau. “We suggest to extend it by one year without asking money from the European Union,” said Mr Olsen. “The extension to formulate the next trend in Macau can be the EUBIP or another form of cooperation to promote European business,” he said. He said the European Union had said it would see how the chamber develops its Macau chapter before moving forward with the plan. Meanwhile, the head of the European Union office in Hong Kong and Macau, Maria Castillo Fernandez, will leave the office before the summer, Rádio Macau reported.

May 16, 2012 business daily | 3

MACAU

Guangdong agrees to new border crossing Macau and Guangdong will work on improving communications and other bilateral matters Tony Lai

tony.lai@macaubusinessdaily.com

border crossing between Macau and Zhuhai will be built for pedestrians near the present gate to ease visitor flows, Chief Executive Fernando Chui Sai On announced yesterday. The crossing, on the site of the Nam Yuet wholesale market, will not be open to vehicles, Mr Chui told reporters after the 2012 Guangdong-Macau Cooperation Joint Conference. “The new checkpoint can facilitate cross-border movement of citizens on both sides,” Mr Chui said. “This proposal will be submitted to the central government for approval.” He hopes the crossing will restructure the Canal dos Patos area and boost its economic and social development. Mr Chui and the governor of Guangdong province, Zhu Xiaodan, led their delegations to the talks – the 10th annual meeting – to discuss cooperation between Macau and Guangdong. “The economic diversification and sustainable development of

Macau have to depend on regional economic development in the Pearl River Delta,” Mr Chui said. “Macau cannot act alone, without support from Guangdong province.” The conference yielded five new pacts, including a working plan for the GuangdongMacau Cooperation Framework Agreement for 2012, a travel memorandum and an agreement to coordinate task forces. Mr Zhu said Macau and Guangdong would continue to focus on the development of Hengqin Island this year, and on industrial cooperation and the liberalisation of trade in services.

New heights Mr Zhu is confident that with the Closer Economic Partnership Arrangement between mainland China and Macau and its supplements coming into effect, trade in services will gradually be liberalised. The eighth and latest supplement

A new border crossing between Macau and Zhuhai will be open only to pedestrians

came into effect last month, bringing the number of liberalisation measures to 281. Among these measures is simplification of the procedures that allow visitors to Macau to go to cities in Guangdong. Mr Chui said the travel memorandum sought to establish a channel of communication between the tourism authorities on each side of the border and promote the idea of “one trip, many stops”. Mr Zhu acknowledged the outcome of the nine previous conferences and said he believed bilateral cooperation will “reach a new

level” this year. Mr Chui said Macau citizens could reap the benefits of such cooperation, notably stable supplies of water and electricity. He said the authorities would work on solving problems such as air pollution and unsafe food. A mechanism will be set up for better and regular communication between task forces on each side of the border to discuss and solve any problems. Macau Secretary for Economy and Finance Francis Tam Pak Yuen and the vice-governor of Guangdong, Zhao Yufang, are the leaders of the task forces.

New university campus rent 1.2b patacas Guangdong and Macau will continue to invest in Hengqin Island, undertaking projects worth about US$40 billion and Macau agree on them. He said Guangdong and Macau would gradually reach more agreements on increasing industrial cooperation.

Opportunity knocks

Macau and Guangdong officials signed the lease yesterday

he development of Hengqin Island will be the keystone of cooperation between the province of Guangdong and Macau, and will entail projects worth about US$40 billion (320 billion patacas). “Hengqin Island acts as the main platform for Guangdong-Macau cooperation and it also gives new room for the development and economic diversification of Macau,” the governor of Guangdong, Zhu Xiaodan, told reporters yesterday after talks here.

One of the most important projects on Hengqin is the new campus of the University of Macau, which is due to be completed by the end of this year. Representatives of Guangdong and Macau signed the land lease during the talks. The lease gives the Macau government jurisdiction over almost 1.1 square kilometres of the island for the new campus and associated facilities. The Macau government must pay 1.2 billion patacas to rent the land

until December 2049. The lease can be renewed with the approval of the central government. The Hengqin campus will be 22 times bigger than the university’s present one, with over 80 buildings for more than 10,000 students. Construction will cost 9.8 billion patacas, including the cost of an undersea tunnel linking the campus to Macau. Mr Zhu is confident that the new campus will be finished on time and that other projects on Hengqin will be undertaken as Guangdong

Hengqin is zoned for development in accordance with the GuangdongMacau Cooperation Framework Agreement, which was signed in March last year. The most important projects are the Traditional Chinese Medicine Industrial Technology Park and a cultural creativity industrial park. Guangdong and Macau set up in January a joint company to establish and manage the Chinese traditional medicine park with the investment of an estimated 1.2 billion yuan (1.5 billion patacas). Mr Zhu said the Guangdong authorities are preparing to set up industrial zones for small and medium enterprises from Macau to give them better access to the opportunities on Hengqin. Macau Chief Executive Fernando Chui Sai On said last year that his government would take measures to help smaller companies make use of the island. Mr Zhu said both governments would continue to work on projects in the Nansha area, another important element of GuangdongMacau cooperation. T.L.

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business daily May 16, 2012

macau

Ho’s sister loses appeal in court

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HOSPITALITY

Winnie Ho loses another battle in the long-running dispute with her estranged brother Stanley Ho over his gaming empire Vítor Quintã

Airport blues

vitorquinta@macaubusinessdaily.com

The airport is a facility that most would consider critical for the diversification of the sources of visitors to the region. But most people would also say its original business model has reached its end. As direct flights between mainland China and Taiwan increase, the need for a stopover en route is not there any more. As a result, the decrease in the number of flights from and to Taiwan was expected, unless other attractions could make a stopover particularly compelling. Not surprisingly, the number of connections with Taiwan dropped by more than 50 percent between 2006 and 2011. The data from the first quarter allow us to suppose that the downward trend will continue this year.

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More worrying, however, is that in the same period the overall number of flights decreased by 25 percent. This means that the loss of flights to Taiwan is not being compensated for by gains of flights elsewhere, at least not to the degree that might prevent a contraction of activity. Moreover, traffic from the other big market, the mainland, has also dropped by almost 30 percent. The relationship between Air Macau and Air China does not seem to have changed that significantly. Although there has been a recovery in the past two years, we are still far from the levels registered in 2006 and 2007.

he Court of Second Instance has rejected an appeal that sought to force several companies and businesswomen to prove that they were shareholders of Sociedade de Turismo e Diversões de Macau SA (STDM), the flagship company of gaming mogul Stanley Ho Hung Sun. Winnie Ho Yuen Ki, Mr Ho’s sister, had filed the appeal against eight defendants, including the Henry Fok Foundation, Mr Ho’s daughter Pansy Ho Chiu King, and his wives Ina Chan Un Chan and Angela Leong On Kei. The three-judge bench said Winnie Ho and her company, Moon Valley, had admitted that all defendants were, in fact, STDM shareholders and dismissed the request as “baseless”. The court also rejected a counterappeal from STDM, which asked the court to confirm that all defendants were shareholders. “To consider that the request is unfounded only means that the applicant is exempt from the request which asked for it to be declared as non-shareholder. That does not necessarily mean that it was,” the judgement says. The court was critical of both the sides. It accused Ms Ho of using the appeal to fight the defendants. STDM was slammed for “responding with an equally pointless verbose counter-claim”. “It is due these and other reasons … that this case is going on 17 volumes and 3,983 pages,” the judgement says. “With such an attitude no swift [justice] is possible.”

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non-shareholders of STDM. “It’s not clear how that sentence alone would automatically lead to the cancellation of all the ruinous deals mentioned.” The court also rejected several appeals from the defendants calling for Ms Ho and Moon Valley to be fined 12 million patacas (US$1.5 million) for “procedural bad faith”. The judgement said “just about all” the doubts raised by the appeal were dispelled by previously available evidence or by a consensus of both sides. The judges concluded that “the core conditions for the procedural bad faith were not fulfilled”.

No damage Ms Ho claimed that she faced “a serious situation, causing huge financial loss” after the creation of Sociedade de Jogos de Macau (SJM) diluted her shares in mother

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company STDM. This claim was rejected by the court. It said: “In fact, all evidence points exactly in the opposite direction.” STDM was created to bid for the gaming concessions put out to tender in 2002. The government required all bidders to be companies meant exclusively to operate Macau casinos. “If STDM had not proceeded in this way … it would have had no chance to win a concession and would have been cut off from this highly lucrative sector,” the judgement says. The judges doubted a significant outcome if the appeal were to be accepted and the defendants named

Winnie Ho said the creation of Sociedade de Jogos de Macau caused her ‘huge financial losses’, a claim rejected by the Court of Second Instance

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Sands China offers green scholarships

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Southeast Asia is the bright spot, but it is not enough to reverse the trend. The only markets generating more traffic are the smaller ones, but they provide insufficient impetus to compensate for the contraction in the two main ones. And, curiously enough, their best year was the crisis year of 2008. Current numbers of flights, although higher than in 2006, are still below what they were in 2008. J.I.D.

fund will soon be instituted to promote environmental conservation among students, its sponsors, Sands China Ltd, announced yesterday. The China Green Fund, to be managed by the Macau Ecological Society’s president, Ho Wai Tim, will offer scholarships for students taking bachelor’s or master’s degrees in environment-related disciplines. There will be a fund-raiser on May 26: a charity ball with live jazz, a

silent auction and a sale of Mardi Gras beads. The fund will get 10 percent of the proceeds. Melina Leong, vice-president of public relations and community affairs for Sands China’s Venetian Macau, said the company’s charity ball last year raised 500,000 patacas (US$62,500). She said the company was confident of doing better at next week’s ball. Sands China is also undertaking

Sands 360, a programme of resource conservation work, including the installation of special shower heads, water flow controllers and an automatic irrigation system in its premises. The work saved about 342 million litres of water, enough to fill 120 Olympic swimming pools, in a year. Nearly 250,000 energy-efficient light bulbs were installed in Sands China premises, saving the company about US$5.3 million. K.C.

May 16, 2012 business daily | 5

MACAU

Human error caused blackout – CTM Mobile phone users suffer the second service disruption in less than 100 days, which was again due to human error, CTM says technology by July. The disruptions have caught the government’s attention. Secretary for Transport and Public Works Lau Si Io met the management board of CTM yesterday. A preliminary report has been delivered but Mr Lau asked the company to carry out an in-depth investigation of the incident. Member of the Legislative Assembly Lee Chong Cheng asked the government to review CTM’s concession contract and assess the effect of the two blackouts on users. He said the two incidents reflected the “incompetence” of CTM in network management and supervision. Mr Poon said in response that an independent third party was already in place to test the system’s stability. He said the University of Macau was also investigating the incidents. However, he could not promise that there would not be another incident in the system, given the human factor. CTM has a monopoly in landline telecommunications. Its annual profit rose by 14.7 percent to 933.6 million patacas (US$116.8 million) last year. Its monopoly may soon end, as the government is considering a bid by another company interested in a second landline service licence. X.C.

Photo by Manuel Cardoso

he network blackout that affected half of all mobile phone users for over two hours on Monday night was caused by human error, Companhia de Telecomunicações de Macau (CTM) has said. The incident was attributed to human error, which led to a failure in the radio network controller on the peninsula. The chief executive of CTM, Vandy Poon, said the system had to be rebooted at an inappropriate time, which caused a signal traffic jam between 8:45pm and 11pm on Monday. The company made another formal apology but announced no compensation. Another network disruption occurred on February 6 and affected the entire city. It lasted about six hours, and for some users days went by before the problems were fully solved. Mr Poon said the two incidents were unrelated. CTM said last week that the first blackout had been caused by a software loop when a technician input several commands. However, the news media have asked whether the incidents are linked to CTM trying to make the transition from second-generation technology to third-generation

CTM said the two blackouts were not related

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business daily May 16, 2012

macau

Informal bank slowing might hit Macau VIP

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Grey lending vital to China’s private sector says analysts’ report

Fantastic plastic The Monetary Authority publishes quarterly its Monetary Research Bulletin focusing, naturally, on money and credit-related issues. In the April issue, its staff analyse the use of credit cards over the preceding three semesters. Those figures provide some insights into the evolution of the economy and the economic behaviour of residents. An observation worth underlining is the continuing growth in the number of cards issued. The democratisation of credit cards, so to speak, keeps up its momentum. The number issued rose by more than 50 percent in the second half of 2011, compared with the same period a year before.

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Another noticeable feature is the growth in the number of cards billable in yuan. In the same period it rose by 106 percent and is now almost at par with the number billable in Hong Kong dollars. The use of credit cards, as measured by the proportion of purchases they are used for, has remained stable, however. The proportion of private consumption accounted for by credit card transactions has hovered around 16 percent. In that sense, it appears there is still ample potential for wider use of credit cards. 18 15

Associate Editor

reported further contraction in China’s informal banking sector could lead to a further slowdown in Macau’s VIP gambling market say researchers from Macquarie Capital Securities in Hong Kong. That’s important because high roller baccarat accounts for around 70 percent of annual gross gaming revenue in the city. The report from Gary Pinge and Elaine Lai, refers to a story in First Financial Daily in China. The newspaper suggests a period of ‘debt deflation’ might be under way in the People’s Republic. That happens when borrowers seeking liquidity rush to pay off existing loans – often via sales of assets, which in turn can create a fall in asset values and meaning would-be lenders are left with cash in their hands and no one to borrow it. Taken as a whole, it could squeeze discretionary spending among the country’s asset holding classes – and that includes VIP gambling. “Back in October 2011, Wenzhou – the bastion of informal lending in China, proved to be the leading indicator of this [VIP gaming] velocity trend,” says the note. “Wenzhou has hit the headlines again in China – this time suggesting a withdrawal of capital from the informal lending market is starting,” adds the document. “We believe that this could offer

an interesting read-through to Macau’s junkets and that falling ‘money supply’ for junkets could be the next leg of a VIP slowdown,” states the note. “We believe that what is being seen in Wenzhou is a valuable test case for Macau. While some may be looking for attractive valuations to get into Macau names, we note that there is still uncertainty around how prolonged any VIP slowdown can be (after two consecutive years of 40pct – 60pct per annum growth rates).”

Taking profits Jon Oh of CLSA Asia-Pacific Markets based in New York, remained upbeat about Macau’s gaming prospects: “… the [gaming] sector has done relatively well year-to-date to prompt investors to take some shortterm profits. I see the fundamentals of this sector being solid, especially Macau, as cash flow improves drastically and the stocks convert from being high-growth high-risk to being relatively defensive given the dividend outlook.” Informal lending is considered by independent economists to be vital to the private enterprise part of the Chinese economy. That includes the sort of self-made entrepreneurs that like to use Macau VIP rooms. The major banks in China are instructed by the government to direct most of their lending facilities

to the large state-owned sector, according to HSBC’s Purchasing Managers’ Index for China. This emphasis by the formal banking sector on big-firm lending makes it harder for startup businesses – the sorts that typically grow quickly and can produce great personal wealth – to get money through official channels. Managers of Chinese state enterprises used to spend a lot of cash gambling in Macau. But because many of them were allegedly embezzling public money to do it, in 2006 the Macau and mainland authorities cracked down on so-called ‘politically-exposed persons’ gaming in Macau. That means most Macau high rollers nowadays are business people coming from the private sector on the Chinese mainland, Hong Kong or Taiwan. Wenzhou, a city in southeastern China, is considered by some economists to be the true birthplace of China’s private enterprise economy, although Shenzhen Special Economic Zone next door to Hong Kong likes to claim that honour. When China began economic reforms in 1978, Wenzhou was the first city to set up individual and private enterprises and was thus the first to produce surplus private capital – available initially on a selfhelp basis – and later on a more ‘organised’ informal basis.

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Two other interesting ratios can be mentioned here as indicators of financial stress. First, the amount of cash advances as a proportion of credit card turnover is below 6 percent and has decreased slightly. Second, the amount of credit card rollover as a proportion of personal credit for purposes other than buying homes or cars has dropped below 3 percent. This suggests a fair level of financial comfort among residents. J.I.D.

No smooth ride? – VIP gambling could slow further in Macau

Weather Beijing 28/15o C Changchun 21/9o C

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Photo by Manuel Cardoso

MACAU

Studio City casino rights ‘soon’ – sources Gaming rights never formally gazetted officials confirm Associate Editor

he majority-owned Melco Crown Entertainment project Studio City is to receive Macau government permission for a casino ‘very soon’ Business Daily has been told. One well-placed industry source – who asked not to be identified – said: “My understanding is the casino permission is just a formality and will happen very soon.” This was confirmed to the newspaper by a second source. Temporary structures – estimated by an investment analyst to be worth US$5 million – have already gone up on the Cotai site to house what appear to be project offices but this has not been confirmed by the company. “We’re still optimistic that we can get to restart near the end of the first half. It’s also no secret that we have started quite a bit of site preparation as we speak,” said MPEL’s co-chairman Lawrence Ho Yau Lung at a conference call to discuss MPEL’s first quarter earnings last week. The Studio City project was mentioned in many of the questions posed during the call. But none of the investment analysts in the hour-long session asked Mr Ho or his senior management team if there was doubt the US$1.9 billion scheme would get permission for a casino.

Non-issue “The fact none of the analysts asked management about the casino permission issue suggests the analysts consider it a non-issue,” added the first source. That raises the question of why casino approval was ever a doubt in the first place. The answer appears to be politics and timings on further Cotai casino building.

The grounds the government is using for this political manoeuvre is that a request for gaming on the site – made by the original investors in 2006 – was never published in Macau’s Official Gazette according to Business Daily’s research and confirmed by other sources. That means technically gaming was never approved, even though the investors thought they had an understanding with the government on this key part of the enterprise and actually began construction on that basis in 2007. After the global financial crisis of 2008 the project was suspended amid disputes over funding among the original partners. One of the original Studio City investors, Hong Kong-listed eSun Holdings, said in its annual report for 2005: “Prior to 2004, the Group committed to invest in the development of a television city with a programme production centre on a piece of land in Macau. During the year ended 31st December, 2004, the Group changed its original plan of the project and proposed to develop a television studio, concert hall, convention and exhibition centre, retail complex and hotels.” But by the time of the company’s 2006 annual report, eSun was referring to “Las Vegas style gaming facilities and world-class hotels,” adding that in December 2006 there had been “approval from the Macao government in respect of the modification of the intended land usage going on the site”. This is the change of use ‘approval’ that was never actually gazetted. MPEL was originally only going to manage the gaming at Studio City but took over the whole scheme – including construction – last summer as 60 percent equity owner. In December last year MPEL did apply officially for a casino

confirms the government, but this is the formal permission that is still outstanding. But it’s possible Studio City will now be allowed to re-start building work even without the gazetting of a casino according to sources spoken to by Business Daily. That effectively means a return to the system of retrospective government planning approvals that used to occur regularly in Macau until five years ago.

No fanfare As recently as three weeks ago, Lau Si Io, Macau’s Secretary for Public Works and Transport – the department that oversees the casino permission process – repeated during an unrelated media briefing that the Studio City project didn’t have casino approval. When Mr Lau first raised this point in conversation with local media in July 2011, he was careful not to say Studio City would never get a casino. But he did say that the scheme as last approved in 2008 did not contain any “gambling elements”. He added that a film production facility was a “major component” of the property. When Lawrence Ho spoke to analysts last week, he indicated recommencement of work on

what has clearly been conceived as a casino resort was imminent and might not even be announced in advance. “We’re still contemplating whether to hold an [restart announcement] event or not,” Mr Ho told analysts. “We tend to try and do stuff in a more low profile and humble basis, so we’ll probably try and get moving first. But we do [will] have some announcement to make, because since we took over the property we’ve made significant design changes and so we would like to share that with the investment community and also the greater public as well.” “MPEL think they are sufficiently covered and are effectively commencing their construction work, and are in a different situation to Wynn in that the land for Studio City was gazetted a long time ago,” says Ben Lee of IGamix Management & Consulting Ltd, a company that advises on the viability of casino projects in Asia. A request for comment from the Land, Public Works and Transport Bureau on the reports of imminent casino approval was not answered by the time Business Daily went to press.

8 |

business daily May 16, 2012

GREATER CHINA Beijing may raise investment quota for foreigners China may increase the maximum amount that a foreign financial institution can invest in the country’s capital markets as part of broad reforms in the sector, the official China Securities Journal reported, citing unidentified sources. Quotas are individually capped at US$1 billion under the Qualified Foreign Institutional Investor (QFII) scheme, the main channel for foreign investment in Chinese stocks and bonds since 2003. The country’s securities watchdog and foreign exchange regulator are in talks on the prospect of increasing the cap, the newspaper reported, without saying when or by how much the quota may be raised. Thirtyseven QFIIs, including Norges Bank and ABU Dhabi Investment Authority, have applied to increase their quotas by a combined US$12.54 billion, according to the newspaper. Thirty-three investors are also applying for quotas for the first time worth a combined US$10.25 billion, the newspaper said. Beijing said in April it will raise the total QFII quota by US$50 billion to US$80 billion as the current programme nears its limit. As of April 16, China had approved a combined QFII quota of US$25.19 billion in investment by 129 investors.

Outlook darkens as China FDI drops Foreign investment falls in sixth monthly drop

China drew US$8.4 billion investment in April

ANZ to invest millions in expansion Australia and New Zealand Banking Group, the country’s fourth largest bank, said yesterday it would invest a further A$300 million (US$300 million) to support growth in its Chinese subsidiary as part of the bank’s push into Asia. The additional investment is the first since an initial investment of A$395 million in 2010, the bank said in a statement. ANZ is trying to model itself on HSBC by turning into an Asian lender and is seeking to get 25 to 30 percent of its profit from Asia by 2017. “ANZ aims to become a super regional bank in the Asia Pacific region, and China is a strategically important market for us,” ANZ chief executive officer Mike Smith said in a statement. ANZ’s Chinese operations consist of six outlets, and the lender said it plans to increase its network to 20 outlets in the next five to 10 years, subject to regulatory approval. ANZ owns a 20 percent stake in both Shanghai Rural Commercial Bank and Bank of Tianjin.

Loosen restrictions for insurers China’s insurance regulator will allow insurers to invest in a wider range of corporate bonds and relax limits on equity and real estate investment, granting them greater freedom to seek higher returns and play a stronger role in the financial system. Insurers can now buy unsecured corporate bonds via an underwriters’ book-building process, according to a notice issued on the website of the China Insurance Regulatory Commission late on Monday. Previously, insurers were restricted to purchasing unsecured bonds issued via open auction. The notice also indicated a relaxation of rules governing equity and real estate investment by insurers, allowing them to draw on funds from different subsidiaries for such investments. The rules clarify the approval process for the issuance of new insurance products based on investments such as infrastructure bonds and real estate. China’s financial regulators have been working in recent years to diversify the country’s financial system away from reliance on bank lending to de-concentrate risk and improve capital allocation by developing a broader base of institutional investors.

oreign direct investment (FDI) in China fell for a sixth month in April, the longest stretch of declines since the global financial crisis, amid renewed turmoil in financial markets. Inbound investment dropped 0.7 percent from a year earlier to US$8.4 billion, the Ministry of Commerce said yesterday in Beijing. That compares with a 6.1 percent drop in March. The data underscore the risk of a deeper slowdown in China after April export and import gains missed estimates and industrial output growth was the slowest since 2009. China cut banks’ reserve requirements on May 12 to spur lending and arrest the deterioration, with UBS AG and Bank of America Corp. lowering their second-quarter and full-year growth estimates. “Trade data was bad, production data last week was bad, and this time FDI is also pointing to the same direction,” Zhang Zhiwei, chief China economist with Nomura Holdings Inc. in Hong Kong, said in a Bloomberg Television interview. The reports show a “very weak economy at this moment,” with chances of an interest-rate cut rising though “still below 50 percent,” Mr Zhang said.

shrink,” he said. The risk is increasing of China failing to meet its 2012 growth target, while odds of further monetary and fiscal easing are also rising, Mr Kowalczyk added. FDI is an important gauge of the health of external economy, to which China’s vast factory sector is oriented, but it is a small contributor to overall capital flows compared to exports, which were worth about US$1.9 trillion in 2011. Commerce Ministry spokesman Shen Danyang said yesterday that authorities are “prudently optimistic” about the outlook for foreign investment, which has dropped partly because of the lackluster global economy. He said he’s “neither optimistic nor pessimistic” on trade. FDI from the European Union in the first four months of 2012 slumped 27.9 percent to US$1.9 billion from a year earlier, the ministry said, while investment from the U.S. rose 1.9 percent to US$1.05 billion. China drew a record US$116 billion in foreign direct investment in 2011. The Commerce Ministry aims to attract an average of US$120 billion in each of the next four years.

Cumulative decline

A weaker-than-expected reading from economic data released last week raised investor concerns that a five-quarter long slide has not bottomed and more must be done to support growth. Trade data had set the scene, with April’s 4.9 percent annual rate of export growth barely half that forecast by economists and import growth at a standstill, expanding by just 0.3 percent versus expectations of 11 percent growth. A ministry spokesman told a news conference after the FDI data was published that it was impossible to say whether the outlook for trade was either optimistic or pessimistic. “Looking from the trade data last month and the deals signed at the Canton trade fair, China’s export situation is still severe,” the

China’s FDI inflows dropped 2.4 percent in the first four months of 2012 versus last year. The ministry said that the country drew US$37.9 billion between January and April, down from US$38.8 billion attracted in the same period in 2011. “We believe the negative trend reflects concerns over China’s lower growth potential, lack of confidence in the global growth outlook, and poorer access to funding from deleveraging banks,” Dariusz Kowalczyk, senior economist and strategist at Credit Agricole-CIB in Hong Kong, said in a note to clients. “It is worrying that despite very favourable base effects, foreign direct investment is continuing to

Trade woes

KEY POINTS April inflows at US$8.4 bln vs US$8.5 bln a year ago Longest streak of slowing inflows since 2009 Export situation still severe-Commerce Ministry spokesman

spokesman said. The just-concluded Canton Fair, a bi-annual export trade fair widely considered a barometer of China’s export growth, saw the value of signed export deals shrink 2.3 percent from a year ago, the first annual drop since the global financial crisis. “Providing that there is no sharp external slowdown, China’s trade growth may grow at a slower clip in the early months of the year and then stabilise in the middle period of this year before picking up in the final several months.” China has an official target of 10 percent growth in exports and imports for 2012 and both have been volatile in the opening months of the year, with demand in its two biggest customers – the European Union and the United States – tepid at best. The first quarter as a whole was largely in balance and the ministry spokesman said for the year overall trade might be at a “basically balanced level”, albeit with a slight surplus for the full year. The April trade surplus of US$18.4 billion was unlikely be representative of the whole year, he said. Bloomberg/Reuters

May 16, 2012 business daily | 9

GREATER CHINA

Stocks fall on economy, investment concern

according to weekly data compiled by Bloomberg.

Deeper slowdown

Shares decline due to bad news from Europe and China Weiyi Lim

Asia stocks dropped as the political impasse in Greece added to speculation the nation will leave the euro currency union and Moody’s Investors Service cut the credit ratings of 26 Italian banks, damping demand for riskier assets. Pimco, which oversees the world’s largest bond fund, sees Chinese growth this year in the “mid-7 percent range,” a pace unseen since 1999. Its call is still lower than that of banks from Citigroup Inc. and JPMorgan Chase & Co. to Bank of America Corp. and UBS AG, which all pared their forecasts after April economic data were released last week. “Anything less than 7.5 percent GDP growth would border on a disaster,” Michael Mullaney, who helps manage US$9.5 billion as chief investment officer at Fiduciary Trust in Boston, wrote yesterday. “Material stocks as a whole will continue to suffer with any incremental weakness.”

Stimulus speculation

The Shanghai Composite Index fell to the lowest level since April 17

hina’s stocks fell, dragging the benchmark index to the lowest level in a month, after foreign direct investment dropped and Pacific Investment Management Co. said the nation’s economic slowdown may deepen. Jiangxi Copper Co. and Aluminum Corp. of China Ltd. paced declines for metal producers as the political impasse in Greece fuelled concerns that the country may leave the euro area. Yanzhou Coal Mining Co. slid to the lowest in three weeks after the price of the country’s coal for power stations declined for the first time since at least 2009. Qingdao Haier Co. led a rally for household appliance stocks on speculation the

government may introduce stimulus measures for the industry. “Stocks are falling because there’s a combination of bad news from Europe and China,” said Zhou Lin, an analyst at Huatai Securities Co. in Nanjing. “The Europe crisis is worsening with Greece potentially being kicked out. The Chinese cut in reserve-ratio requirements indicates the government’s concern about the economy’s health. Investors are expecting the growth to slow further in the second quarter.” The Shanghai Composite Index fell 5.9 points, or 0.3 percent, to 2,374.84 at the close, the lowest level since April 17. The CSI 300 Index snapped five days of losses,

gaining 0.1 percent to 2,617.37. The Shanghai index dropped 0.6 percent on Monday even as the central bank announced a third cut in lenders’ reserve ratios since November. About 9 billion shares changed on Monday, 15 percent higher than the daily average this year. Thirty-day volatility in the gauge was at 15.2 yesterday, the lowest since March 27. For the year, the Shanghai index has climbed 8 percent on expectations the government will relax monetary policy and take measures to bolster equities. Stocks in the gauge are valued at 10.2 times estimated earnings, compared with a record low of 8.9 times on January 6,

“Last month, there was a report saying the government may have more stimulus measures for home appliances,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “That’s due to happen by the first half. It could be that there’s new information on this matter.” China may set up a new mechanism for foreign pension funds to invest in the country’s capital markets, the Wall Street Journal reported, citing unidentified people familiar with the matter. The programme would be separate from the qualified foreign institutional investor program, known as QFII, China’s main official international investment programme, the report said. Taiwan, Hong Kong and Singapore pension funds without QFII licences may be among the first to be included in the new program, the report cited one of the people as saying. South Korea’s National Pension Service, the country’s biggest investor, plans to seek approval to buy more yuan-denominated Chinese stocks after using up the initial quota of US$100 million it received in March. Bloomberg

News Corp to buy stake on film distributor U.S. media company to take 19.9 percent stake in Bona Film

ews Corp has agreed to buy a stake in Chinese movie distributor Bona Film Group Ltd, becoming the latest U.S. media company to expand into China’s booming movie market. News Corp will take a 19.9 percent stake in Bona Film from founder and chief executive Yu Dong, Bona said in a statement. It gave no financial details. The Nasdaq-listed company has a market capitalisation of about US$392 million. China, which posted box office revenue of US$2.1 billion last year, agreed in February to open its market to more U.S. movies, adding 14 premium films,

such as 3D or IMAX, to the current quota of 20 foreign films a year. News Corp China Investments chief executive Jack Gao was quoted in the Bona statement as saying the company was attractive because had film distribution and production as well as operating cinemas. “China’s film market is growing at a rapid pace, positioning the country to be the second-largest film market following the United States,” Mr Gao was quoted as saying. News Corp in Beijing could not be reached for an immediate comment. Bona Film spokeswoman Hou Ningning said the company

would not comment beyond the statement. Bona Film distributes films through most theatres in China, and owns and operates theatres in several large Chinese cities. It has also expanded into home video products, digital distribution and television. Bona CEO Yu said in the statement the company had developed significantly since its 2010 IPO and wanted to take on select strategic investors. “News Corporation’s extensive global reach, investment and distribution will help accelerate our strategy to expand our global footprint,” he said. DreamWorks Animation

Bona Film has a market capitalisation of about US$392 million

SKG Inc, creator of “Kung Fu Panda”, said in February it would build a production studio in Shanghai in a joint venture with three major Chinese media companies.

The venture, called Oriental Dreamworks, will develop and produce Chinese animated and live-action films for distribution in China and internationally. Reuters

10 |

business daily May 16, 2012

ASIA

South Korea Lee pledges InBrief support for Myanmar Korean president offers expanded loans and aid

S Late buying lifts Singapore, Thailand Stocks in Singapore and Thailand pushed higher yesterday, with beaten down commodities-related shares rebounding, as strong growth in Germany spurred late buying and eased worries over the political turmoil in Greece and the euro debt problems. Singapore’s main index edged up 0.44 percent at 2,876.70, bouncing back from an intraday low of 2,850.61 and reversing losses of the past two sessions. The Thai SET index climbed 1.63 percent after Monday’s 2.1 percent drop. A flurry of foreign selling activity pulled Thai shares off their 16year highs hit early this month.

New Delhi to cut Iran oil imports India has said it will cut imports of Iranian oil by 11 percent in the current financial year as it continues to face pressure from the US. The U.S. is threatening to impose sanctions which could exclude nations from the US financial system if they do not reduce Iran oil imports. “In order to reduce its dependence on any particular region of the world, India has been consciously trying to diversify its sources of crude oil imports to strengthen the country’s energy security,” said junior oil minister RPN Singh. Mr Singh said that India’s refiners were likely to import 15.5 million tonnes of crude oil from Iran in the current financial year, down from 17.44 million tonnes last year.

outh Korean President Lee Myung Bak met Myanmar opposition leader Aung San Suu Kyi and offered support for democracy efforts in the former dictatorship a day after pledging economic aid to President Thein Sein. “The South Korean people and I will take deep interest in ensuring that Myanmar achieves its important task of economic growth together with democratisation,” Mr Lee told a briefing with Suu Kyi in Yangon yesterday, according to a pool report on his website. The visit highlights South Korea’s effort to seek a stake in the energyrich nation as it moves away from five decades of military rule and opens its markets. “Myanmar is welcoming South Korean investment and aid because it needs to have a balanced and diversified sources of aid to reduce economic risk,” said Choi Myeong Hae, senior research fellow at Samsung Economic Research Institute in Seoul. “Lee’s visit reinforces how much South Korea values Myanmar as a strategic centre and definitely boosts opportunities for South Korean businesses.” Mr Lee offered expanded loans and aid at Monday’s summit in

the capital of Naypyidaw and the leaders agreed to increase cooperation on energy and resource development. Thein Sein pledged to halt arms dealing with North Korea, according to Kim Tae Hyo, Mr Lee’s aide for national security.

Revamped system Myanmar lawmakers are revamping the financial system after holding the most inclusive elections in two decades on April 1. Thein Sein, who took over from Than Shwe in March 2011, signed a preliminary cease-fire with the country’s largest armed rebel force in a move to end the world’s longest civil war. The U.S. is lifting certain economic and financial sanctions on Myanmar and Japan last month forgave about US$3.7 billion in debt. Mr Lee and Ms Suu Kyi met at Yangon’s Sedona Hotel and agreed the two countries can benefit from the shared experience of simultaneous democratisation and industrialisation, according to the pool report. The fourth-largest investor in Myanmar after China, Thailand and Hong Kong, South Korea invested US$110 million in Myanmar

last year, according to the Korea Export-Import Bank.

Manufacturing hub Trade between the two countries amounted to US$966 million in 2011, according to South Korean government statistics. Myanmar exported US$299 million worth of clothing, beans, marine products, jade and timber to South Korea and imported US$667 million of South Korean motor vehicles, engines, spare parts, tin and steel products, and raw plastic materials. “About 170 South Korean companies are already in Myanmar and that number will only grow, especially those in the garment industry and raw material manufacturing,” said Mr Choi of SERI. “Myanmar’s strategic location and labour costs cheaper than Vietnam and China has great significance as manufacturing hub.” Daewoo International Corp.’s natural gas project is expected to cost US$1.7 billion and may begin production in May 2013. The trading company, which is controlled by steelmaker Posco, is also South Korea’s biggest rice trader. Bloomberg

South Korean President Lee Myung Bak said the country will increase cooperation with Myanmar on energy and resource development

India, China said to breach carbon law Ten Chinese and Indian commercial airlines have failed to abide by EU law requiring them to offset their carbon emissions, while all other international carriers have complied with the scheme, the European Union’s climate chief said yesterday. EU law demanding that all airlines using EU airports offset their emissions using the EU’s Emissions Trading Scheme (ETS) has prompted international outcry and threats of a trade war. But only China and India have delivered on threats not to comply, EU Climate Commissioner Connie Hedegaard told a news briefing. “We have given them until mid-June to report back their data,” Ms Hedegaard said.

S.Korea’s LNG imports rise in April South Korean liquefied natural gas imports rose 15 percent in April from a year earlier, even as the average price paid climbed 25 percent. The North Asian nation, the world’s secondbiggest buyer of LNG, purchased about 2.7 million metric tons of the powerstation fuel last month, compared with 2.4 million tons a year ago, data on the Korea Customs Service’s website showed yesterday. Imports totalled 3.5 million tons in March.

Thai AirAsia seeks IPO to expand fleet Roadshow has kicked off in Singapore and it will move on to Hong Kong

sia Aviation Plc, which currently owns 51 percent of budget airline Thai AirAsia, is seeking to raise as much as US$235 million in a Bangkok initial public offering, according to a term sheet obtained by Bloomberg News. The company, along with six shareholders, is offering 1.94 billion shares for 3.30 baht to 3.80 baht apiece, the document shows. The selling shareholders include Asia Aviation Chief Executive Officer Tassapon Bijleveld. Asia Aviation began taking orders

on Monday, and plans on pricing the IPO by tomorrow, according to the sales document. The international roadshow has kicked off in Singapore yesterday and it will move on to Hong Kong. The company, which expects the shares to start trading on May 31, will use the IPO proceeds to expand Thai AirAsia’s fleet, and for general corporate purposes, the document shows. Asia Aviation Plc also plans to use the IPO proceeds to subscribe for new shares in Thai AirAsia to increase its shareholding to

55 percent from the current 51 percent, according to the term sheet. This will ensure the money raised is transferred to the operating unit. Malaysia’s AirAsia owns the remaining 49 percent of Thai AirAsia. The IPO will be managed by Credit Suisse Group AG, CIMB Group Holdings Bhd. and Thanachart Capital Pcl, according to a February 28 filing. The sale was delayed from the fourth quarter of 2011 because of flooding across much of Thailand, Mr Tassapon said earlier that month.

May 16, 2012 business daily | 11

ASIA

Japan’s top banks report profits up But still see a tough year ahead as loan demand likely to remain sluggish Taiga Uranaka

The three ‘megabanks’ forecast earnings above analysts’ expectations

apan’s top banks forecast earnings above analysts’ expectations but still see a tough year ahead, with two of the big three predicting a fall in profits, as a limp domestic economy restrains demand for loans. The three “megabanks” – Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group and Sumitomo Mitsui Financial Group (SMFG) – are not expected to see the hefty bond trading gains and very low bad loans booked that have boosted profits in recent years.

And loan demand at home is likely to remain sluggish as Japan’s long battle against deflation continues, putting further pressure on their overseas drive to fill the gap. “We want to see whether they can generate solid profits from loans under the current condition of low interest rates,” said Chikako Horiuchi, a director of financial institutions at Fitch Ratings. “I feel the driver will be overseas loans, so we need to see how banks can increase volume in overseas loans. That will be the key to

determine the profit outlook for banks,” she added. Mizuho, the second largest lender by assets, forecast a net profit of 500 billion yen (US$6.26 billion) for the current financial year, well ahead of the consensus forecast of 374.2 billion yen but up only 3.1 percent on the year just ended. The improvement was mainly due to an expectation that its investment banking arm, Mizuho Securities, will swing to a profit in the current year after booking a loss last year. SMFG expected net profit for the year that began April

1 of 480 billion yen, down 7.4 percent on 2011/12 but ahead of the consensus call of 441.2 billion yen. MUFG, the biggest lender, forecast net profit of 670 billion yen, down 31.7 percent on the year just ended – when a hefty onetime gain from its Morgan Stanley stake saw profits jump – and roughly in line with an average estimate of 651.5 billion yen.

Bond trading gains With limited exposure to Europe’s troubled sovereign debt, Japan’s banks enjoyed

solid earnings in the year just ended. Results were lifted by chunky government-bond trading gains, while the banks’ massive equity portfolios got a boost in their fiscal fourth quarter to the end of March, during which the benchmark Nikkei average rose 19.3 percent. “It’s true that the results were dependent on JGB [trading gains],” MUFG President Katsunori Nagayasu told a news conference. He expected the bank’s JGB trading gains for the current financial year to be less than half of last year’s 270 billion yen. Mizuho said net profit was 484.52 billion yen (US$6.1 billion) for the full year ended March, up 17.2 percent from 413.23 billion yen a year earlier. SMFG posted a net profit of 518.54 billion yen (US$6.5 billion) for the April-March period, up 9 percent from 475.9 billion yen a year earlier. MUFG reported a 68 percent spike in net profit to 981.3 billion yen (US$12.3 billion) for the 2011/12 financial year, up from 583.1 billion yen a year earlier. The bank booked a 290 billion yen gain from converting Morgan Stanley preferred shares it acquired in 2008, giving it around a 22 percent stake in the U.S. investment bank. Reuters

India’s central bank Sony, Panasonic in talks ‘intervenes’ as rupee slides to make OLED TVs Currency hurt by escalating fears over eurozone debt crisis

ndia’s central bank likely intervened in foreign exchange markets yesterday after the rupee breached the key 54 level against the dollar, nearly hitting its lifetime low, dealers said. India’s Reserve Bank of India (RBI) is suspected to have started selling dollars after the rupee hit an intraday low of 54.13 against the dollar in early trade, the lowest level since December 15, when it hit a record low of 54.3. “We suspect that the RBI intervened in early trade today to aid the currency,” an analyst with a state-run bank said, declining to be named. After the intervention, the rupee strengthened to 53.67 levels. The currency has been hurt by escalating fears over eurozone debt crisis, flagging domestic indicators, slowing overseas funds inflows and pressure from oil importers, who must exchange rupees for dollars when they buy crude.

Shipments of OLED TVs may grow to 2.1 million sets in 2015

Energy-poor India imports fourfifths of its crude oil needs. The unit was also weakened on Monday by data showing annual inflation unexpectedly accelerated in April to over seven percent, reducing chances of swift interest rate cuts to boost slowing economic growth. Traders say the central bank appears to have intervened to sell dollars more than a dozen times this year in a bid to curb the Indian currency’s fall. The bank has a policy of not commenting on its actions in the forex market. The rupee was Asia’s worst performing currency in 2011, losing more than 20 percent of its value in the calendar year. But after it hit a record low in midDecember, it rebounded to 48.67 rupees in February, led by strong foreign fund buying of Indian assets, before falling again. AFP

ony Corp and Panasonic Corp are in talks to develop the technology to mass produce next-generation OLED televisions, sources close to the matter said yesterday, but may already be running to catch up with South Korean rivals in a technology widely seen replacing current LCD TVs. Samsung Electronics and LG Electronics plan to sell 55-inch OLED televisions, which are as slim as 4 millimetres and consume less power and offer sharper images than liquid crystal display sets, by the year-end. Sony pioneered the technology with the world’s first OLED TV in 2007, but halted production of the US$2,000 screens three years later because of the global downturn. Sony still makes OLED screens costing as much as US$26,000 for high-end customers. Shipments of OLED TVs may grow to 2.1 million sets in 2015 from

just 34,000 this year, according to research firm IHS Inc. As a way to spread development costs, Sony has been in talks with Taiwan’s AU Optronics Corp on a possible tie-up to produce OLED televisions, an industry source said last month. One option may be for Panasonic to join those talks. “I think the [Sony-Panasonic] tie-up is to make sure they can stay ahead of the Korean rivals in terms of technology because Samsung and LG have expanded very quickly and have the capacity ready. AUO is also under financial pressure and a technological bottleneck in OLED,” said H.P. Chang, head of research at Taiwan-based LCD industry research company Witview. “If Sony and Panasonic need to have a partner to enlarge production scale, AU is likely their only choice,” he added. Reuters

12 |

business daily May 16, 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

70.5

0.4273504

5037511

93.1

1398

IND & COMM BK-H

4.81

0.4175365

344452955

6.56

3.46

494

LI & FUNG LTD

14.9

0.1344086

31923012

20.15

10.82

1299

AIA GROUP LTD

26.8

1.132075

26215380

29.9

19.84

MTR CORP

25.75

-0.9615385

1846078

28.8

22.45

2600

ALUMINUM CORP-H

3.33

0.3012048

16695571

6.99

3.2

NEW WORLD DEV

9.29

3.107658

14091345

12.4

6.13

3988

BANK OF CHINA-H

2.98

0.3367003

484579548

4.35

2.2

857

PETROCHINA CO-H

10.52

2.534113

65144504

11.92

8.59

3328

BANK OF COMMUN-H

5.45

1.113173

22199803

7.409

4.15

2318

PING AN INSURA-H

60.85

3.135593

16902657

83.8

37.35

BANK EAST ASIA

28.45

1787813

34.45

21.85

POWER ASSETS HOL

58.5

0.862069

3018004

64.8

52.55

1880

BELLE INTERNATIO

13.6

-0.4392387

18355347

17.54

11.38

SINO LAND CO

11.98

0.5033557

11742177

14.16

8.482

2388

BOC HONG KONG HO

23.2

1.531729

17061398

24.65

14.24

SUN HUNG KAI PRO

89.25

1.593625

4384404

122

85.45

293

CATHAY PAC AIR

12.36

-0.3225806

5653006

19.34

11.8

SWIRE PACIFIC-A

85.85

0.5858231

1623430

102.199

69.321

CHEUNG KONG

97.3

1.248699

5422578

122.4

79.1

700

TENCENT HOLDINGS

1898

CHINA COAL ENE-H

8.12

1.754386

19060978

11.66

6.59

322

TINGYI HLDG CO

939

CHINA CONST BA-H

5.46

-0.1828154

368353348

7.36

4.41

151

2628

CHINA LIFE INS-H

19.42

0.2063983

49101370

28.1

17.04

144

CHINA MERCHANT

941

CHINA MOBILE

688

CHINA OVERSEAS

386

CHINA PETROLEU-H

291

CHINA RES ENTERP

1109

CHINA RES LAND

13.84

836

CHINA RES POWER

13.48

1088

CHINA SHENHUA-H

30.6

762

CHINA UNICOM HON

12.56

267

CITIC PACIFIC

CLP HLDGS LTD

883

CNOOC LTD

1199

COSCO PAC LTD

330

ESPRIT HLDGS

101

HANG LUNG PROPER

HANG SENG BK

HENDERSON LAND D

1044 3

105.4

1.737452

2696141

125

84.4

40.2

0.124533

3596164

52.95

33.2

HENGAN INTL

78.35

0.06385696

607565

83.45

56.8

HONG KG CHINA GS

18.72

-0.1067236

12820903

20.65

16.68

388

HONG KONG EXCHNG

115.6

1.492537

5760666

175

99.15

HSBC HLDGS PLC

68.8

1.624815

13774799

82.15

1200 900 600 300 K-A MB OM &C

INA

CO NAME

IND

PET

Shanghai Shenzhen CSI 300

-A

20.85

7.55

33.55

31.35

6331425

A-A

10480920

0.5847953

-0.9845288

25.8

14.08

1500

7.52

11.2

16.24

1800

19.7

10034288

S-A

54006827

1.7294

0.136612

14.66

Unit: 109 CNY

E IN

62.1

LIF

10.26

75.2

1659531

3237781

0.539707

A-A

0.6655574

65.2

12.1

Shanghai Shenzhen 300 index Top 10, by market capitalisation

INA

12.36

17.68

32741328

-A

-0.9463722

IN FOCUS

27.1

LEU

10.82

40.2

INA

16.2

3245801 13758965

-1.0279 -0.3257329

-A

7.28

PET

15.6

INA

6726500

0.5813953

INDEX 19894.31 52W (H) 23707.94 (L) 16170.35 MOVERS 32 14 2

INA

6.22

35.5

33.15

9.67

4523038

75939659

4726608

ALA

0.9271523 -0.7104796

-0.9345794

7.62 27.95

42.4

9.99

6.03

WHARF HLDG

17.86

9.78

ULT

21543661

12623563

A-A

-0.373599

-2.558635

9.14

RIC

68.05

17.84

WANT WANT CHINA

89.85

139.8

18787512

248.8

4469290

4820605

0.9211284

4124267

INA

-0.6369427

2.131439

-A

23.4 87.65

230 20.15

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.69

64827769

CHINA VANKE CO-A

8.91

-0.1121076

32082786

PETROCHINA CO-A

9.6

-0.5181347

28884561

AIR CHINA LTD-A

6.08

-1.138211

14287084

CHINA YANGTZE-A

6.71

0.9022556

24903472

PING AN INSURA-A

42.19

3.432214

47031366

ALUMINUM CORP-A

6.91

-0.8608321

15543494

CITIC SECURITI-A

13.03

1.243201

67807999

POLY REAL ESTA-A

12.97

1.566171

18422745

ANHUI CONCH-A

16.49

0.7330483

30707369

CSR CORP LTD -A

4.81

-0.2074689

22151618

QINGDAO HAIER-A

12.2

7.773852

56172181

BANK OF BEIJIN-A

10.07

-0.1982161

17659849

DAQIN RAILWAY -A

7.4

-0.2695418

30455799

QINGHAI SALT-A

32.91

-0.2727273

4782831

BANK OF CHINA-A

3.02

-0.330033

14071104

DATANG INTL PO-A

5.47

-0.5454545

5527618

SAIC MOTOR-A

15.22

-1.488673

14581125

22.17

0.6811989

6482148

SANY HEAVY INDUS

14.31

0.845666

22027775

13.5

1.047904

10559131

SHANDONG GOLD-MI

33.2

-0.5690326

7554714

13.75

4.245641

47893632

SHANG PHARM -A

12.48

1.134522

13820399

NAME

BANK OF COMMUN-A

4.74

-0.8368201

70908848

DONGFANG ELECT-A

BAOSHAN IRON & S

4.83

-1.02459

23552480

EVERBRIG SEC -A

BYD CO LTD -A

24.2

-2.694009

5141007

GD MIDEA HOLDING

NAME

CHINA CITIC BK-A

4.36

-0.9090909

14742691

GD POWER DEVEL-A

2.55

-1.162791

29893935

SHANG PUDONG-A

9.04

-0.4405286

60429994

CHINA CNR CORP-A

4.26

-0.9302326

23083053

GF SECURITIES-A

32.21

0.8137715

8682249

SHANGHAI ELECT-A

5.93

1.367521

14993059

CHINA COAL ENE-A

9.18

-0.2173913

6844799

GREE ELECTRIC

21.91

2.81558

30688006

SHANXI LU'AN -A

26.91

-0.07426662

12245418

CHINA CONST BA-A

4.59

-0.4338395

30282482

GUIZHOU PANJIA-A

30.81

-1.186658

7972299

SHANXI XINGHUA-A

74.07

-0.05397382

1351172

CHINA COSCO HO-A

5.08

14914037

HAITONG SECURI-A

9.98

2.254098

68644291

SHANXI XISHAN-A

17.45

-1.579244

26037196

HANGZHOU HIKVI-A

46.15

0.04335573

946218

SHENZ DVLP BK-A

16.02

0.5018821

13445478

2.98

-0.6666667

19188805

7.64

2.139037

22083903

15.76

-2.233251

2494630

SUNING APPLIAN-A

9.98

3.099174

66451509

CHINA CSSC HOL-A

34.88

1.072153

6522278

CHINA EAST AIR-A

3.97

-1.975309

27643654

HEBEI IRON-A

CHINA EVERBRIG-A

3.01

39360747

HENAN SHUAN-A

63.45

-1.704105

1959344

CHINA INTL MAR-A

15.38

1.117686

10513956

HUATAI SECURIT-A

10.2

1.290963

18609002

CHINA LIFE INS-A

17.85

0.9615385

10334735

HUAXIA BANK CO

10.57

25455335

TSINGTAO BREW-A

37.21

3.389831

2497439

CHINA MERCH BK-A

11.84

-0.4205214

55255360

IND & COMM BK-A

4.33

-0.9153318

33980415

WEICHAI POWER-A

31.75

-1.028678

5504094

CHINA MERCHANT-A

12.45

0.4032258

18001434

INDUSTRIAL BAN-A

13.7

-0.6526468

40764899

WULIANGYE YIBIN

35.17

0.5431675

15434020

CHINA MERCHANT-A

23.31

-1.604052

6018504

INNER MONG BAO-A

43.08

1.293205

78166854

XINJIANG GUANG-A

27.11

1.878993

10979075

CHINA MINSHENG-A

6.58

-0.6042296

95922791

INNER MONG YIL-A

22.59

0.98346

8882886

YANGQUAN COAL -A

19.44

-1.169293

12123877

CHINA NATIONAL-A

6.61

0.608828

18209018

INNER MONGOLIA-A

6.44

-2.12766

92502106

YANTAI CHANGYU-A

97.28

722017

CHINA OILFIELD-A

18.67

0.9734992

9496338

JIANGSU HENGRU-A

28.59

-0.6256517

3697212

YANZHOU COAL-A

23.26

-1.440678

5472372

CHINA PACIFIC-A

2394709

SHENZEN OVERSE-A SINOVEL WIND-A

21.03

1.251805

22753230

JIANGSU YANGHE-A

160.55

0.4630499

1006278

YUNNAN BAIYAO-A

52.23

-1.601356

CHINA PETROLEU-A

-0.5681818

22815282

JIANGXI COPPER-A

25.22

-1.252937

18061960

ZHONGJIN GOLD

21.88

-0.1824818

8780233

CHINA RAILWAY-A

2.61

-1.879699

25285519

JINDUICHENG -A

13.92

-1.276596

8314955

ZIJIN MINING-A

4.14

-0.2409639

41390168

CHINA RAILWAY-A

4.26

-0.6993007

14776852

JIZHONG ENERGY-A

0.9081736

35946646

CHINA SHENHUA-A

25.95

-1.21812

18583722

KWEICHOW MOUTA-A

16.92

3.045067

19787966

-1.960784

33303127

LUZHOU LAOJIAO-A

CHINA SHIPBUIL-A CHINA SHIPPING-A

19.4

-1.871523

13726965

223.11

0.4185795

1616874

43.3

5127557 15874321

3.1

1.30719

16897948

METALLURGICAL-A

2.59

-1.145038

CHINA SOUTHERN-A

4.65

-0.8528785

25141105

NARI TECHNOLOG-A

21.17

0.9537434

7265146

CHINA STATE -A

3.26

-1.510574

72638060

NINGBO PORT CO-A

2.55

-0.7782101

11812946

CHINA UNITED-A

4.18

-0.4761905

57087497

PANGANG GROUP -A

7.91

-0.7528231

64987747

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.33

0.9090909

121778750

AIR CHINA LTD-H

5.25

-3.846154

16354625

NAME

ZOOMLION HEAVY-A ZTE CORP-A

INDEX 2617.37 52W (H) 3154.935 (L) 2254.567 MOVERS 116 169 15

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

CHINA LONGYUAN-H

4.95

-4.990403

17830868

PETROCHINA CO-H

10.52

2.534113

65144504

CHINA MERCH BK-H

15.2

0.2638522

13443395

PICC PROPERTY &

9.66

1.898734

27501185

CHINA MINSHENG-H

7.63

0.6596306

31997602

PING AN INSURA-H

60.85

3.135593

16902657

CHINA NATL BDG-H

9.22

5.371429

67211955

SHANDONG WEIG-H

8.56

2.026222

1934756

CHINA OILFIELD-H

10.72

-0.3717472

13778576

SINOPHARM-H

18.1

-0.7675439

2158129 1028931

NAME

ALUMINUM CORP-H

3.33

0.3012048

16695571

CHINA PACIFIC-H

23.15

1.477746

8734678

TSINGTAO BREW-H

2.893891

ANHUI CONCH-H

22.9

2.921348

18774406

CHINA PETROLEU-H

7.62

0.9271523

75939659

WEICHAI POWER-H

33.65

1.051051

1191330

BANK OF CHINA-H

2.98

0.3367003

484579548

CHINA RAIL CN-H

5.46

0.3676471

12798762

YANZHOU COAL-H

14.46

2.698864

16513838

BANK OF COMMUN-H

5.45

1.113173

22199803

CHINA RAIL GR-H

2.69

3.861004

18766786

ZIJIN MINING-H

2.43

3.404255

32577501

16.66

-1.768868

5550382

CHINA SHENHUA-H

30.6

-0.3257329

13758965

ZOOMLION HEAVY-H

10.32

4.137235

12035812

CHINA CITIC BK-H

4.47

0.4494382

35771882

CHINA TELECOM-H

0.5025126

61831356

ZTE CORP-H

17.58

3.533569

5750550

CHINA COAL ENE-H

8.12

1.754386

19060978

DONGFENG MOTOR-H

13.6

3.500761

11316394

CHINA COM CONS-H

6.75

1.503759

10672183

GUANGZHOU AUTO-H

6.54

1.081917

8618168

CHINA CONST BA-H

5.46

-0.1828154

368353348

HUANENG POWER-H

4.62

-1.070664

12166334

CHINA COSCO HO-H

3.55

-0.2808989

95901565

IND & COMM BK-H

4.81

0.4175365

344452955

19.42

0.2063983

49101370

JIANGXI COPPER-H

1.431981

28348276

BYD CO LTD-H

CHINA LIFE INS-H

NAME

FTSE TAIWAN 50 INDEX NAME

PRICE DAY %

Volume

PRICE DAY %

Volume

INDEX 10084.59 52W (H) 13317.51 (L) 8058.58 MOVERS 30 10 0

NAME

PRICE DAY %

Volume

FAR EASTERN NEW

32.3

0.7800312

6433419

SINOPAC FINANCIA

9.68

-1.425662

FAR EASTONE TELE

68.3

1.940299

6825640

SYNNEX TECH INTL

70.8

0.7112376

1923872

17 -0.2932551

16982081

TAIWAN CEMENT

32.75

-3.676471

25065908

FIRST FINANCIAL

9739177

FORMOSA CHEM & F

0.3811944

4634418

TAIWAN COOPERATI

17.55 -0.5665722

3873675

ACER INC

31.35

-2.336449

18543584

FORMOSA PETROCHE

88.6

2.073733

1751411

TAIWAN FERTILIZE

69.8 -0.5698006

1438545

ADVANCED SEMICON

28.65 -0.5208333

10587159

FORMOSA PLASTIC

6556565

TAIWAN GLASS IND

28.7

1.056338

1182441

ASIA CEMENT CORP

34.05

-1.161103

4474576

FOXCONN TECHNOLO

94.7

-1.354167

20242358

TAIWAN MOBILE CO

97.9

1.450777

9359808

310

0.8130081

3246950

FUBON FINANCIAL

29.45

-1.505017

18208417

TPK HOLDING CO L

373.5

3.75

3766032

12.65

-2.316602

49548118

HON HAI PRECISIO

85.4

-1.726122

59836229

TSMC

85.5

0.117096

30739719

CATCHER TECH

191

3.243243

20499768

HOTAI MOTOR CO

182

1.675978

771673

UNI-PRESIDENT

45.95

-2.129925

10913634

CATHAY FINANCIAL

29.6 -0.8375209

12531579

HTC CORP

440

3.529412

7870673

UNITED MICROELEC

14.45

-1.70068

36936624

CHANG HWA BANK

15.85 -0.6269592

4624302

HUA NAN FINANCIA

16.15

6535734

WISTRON CORP

-1.408451

9506734

497.5

6.989247

3779102

YUANTA FINANCIAL

12.6

-2.702703

40265574

36 -0.6896552

1830190

YULON MOTOR CO

0.6289308

4214485

ASUSTEK COMPUTER AU OPTRONICS COR

CHENG SHIN RUBBE

72.1

1.264045

6113227

LARGAN PRECISION

CHIMEI INNOLUX C

11.7

-3.305785

33660154

LITE-ON TECHNOLO

CHINA DEVELOPMEN

7.23

-1.498638

32943666

MEDIATEK INC

269

1.893939

7024353

CHINA STEEL CORP

28.25 -0.3527337

14225859

MEGA FINANCIAL H

21.7

0.2309469

15023521

CHINATRUST FINAN

18.05

-1.902174

22262739

NAN YA PLASTICS

56.6 -0.1763668

6279982

91.4

1.555556

13972181

PRESIDENT CHAIN

159 -0.9345794

32.95

-0.753012

5253405

QUANTA COMPUTER

82.5

3.125

10441774

95.2

0.3161222

7773259

SILICONWARE PREC

33.25

-1.335312

8067878

CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC

652597

INDEX 5100.67 52W (H) 6247.96 (L) 4643.05 MOVERS 21 27 2

May 16, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GalaXY eNTerTaINMeNT

Max 20.95

average 20.38

MelCo CroWN eNTerTaINMeNT

Min 19.88

21.00

36.00

13.00

20.76

35.56

12.84

20.52

35.12

12.68

20.28

34.68

12.52

20.04

34.24

12.36

19.80

last 20.90

Max 36.05

saNds CHINa lTd

Max 27.55

average 26.89

MGM CHINa HoldINGs

average 34.43

Min 33.95

last 34.50

33.80

sJM HoldINGs lTd

Min 26.45

last 27.50

20.10

27.36

15.3

19.98

27.12

15.1

19.86

26.88

14.9

19.74

26.64

14.7

19.62

26.40

14.5 Max 15.08

average 15.04

Min 14.58

last 15.08

MAJORS

10.5 ASIA PACIFIC

10.4 10.3

16-April

15-May

10.2

MACAU RELATED STOCKS PRICE

DAY % YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

2.97

0.6779661

3.25

1.88

2426610

-1.315789

11.24845

9.29

7.45

1986116

AMAX HOLDINGS LT

0.082

-1.204819

-5.747124

0.131

0.06

2858000

BOC HONG KONG HO

23.2

1.531729

26.08696

24.65

14.24

17061398

0.233

1.304346

0.41

0.204

3.12

11.42857

4.79

2.3

CHINA OVERSEAS

-0.373599

23.26657

17.86

9.99

21543661

CHINESE ESTATES

10.8

-1.818182

-13.6

14.1

10.2

511276

CHOW TAI FOOK JE

11.66

-1.186441

-16.23563

15.16

11.46

2695403

EMPEROR ENTERTAI

1.23

-1.6

10.81081

2.09

0.97

1375000

FUTURE BRIGHT

0.95

1.06383

126.1905

1.09

0.3

3234000

CHEUK NANG HLDGS

GALAXY ENTERTAIN

20.9

0.7228916

46.76967

24.95

8.69

27840295

HANG SENG BK

105.4

1.737452

14.37873

125

84.4

2696141

HOPEWELL HLDGS

20.25

0.2475248

1.963743

24.903

18.56

682451

HSBC HLDGS PLC

68.8

1.624815

16.61017

82.15

13774799

HUTCHISON TELE H

3.46

1.169591

15.71906

3.6

2.13

4013000

LUK FOOK HLDGS I

18.1

0.1106195

-33.21033

46.15

17.5

3454400

MELCO INTL DEVEL

6.9

-2.12766

19.58406

10.76

4.3

6503000

MGM CHINA HOLDIN

12.92

2.866242

34.69342

17.183

7.6

11132637

MIDLAND HOLDINGS

3.79

-0.2631579

-6.188118

5.48

2.95

1254757

NEPTUNE GROUP

0.104

-6.306308

0.157

0.08

NEW WORLD DEV

9.29

3.107658

48.40255

12.4

6.13

14091345

SANDS CHINA LTD

27.5

-0.9009009

25.28473

33.05

14.9

30461415

SHUN HO RESOURCE

1.19

1.32

0.82

SHUN TAK HOLDING

2.89

-0.3448276

12.92908

4.686

2.241

5316460

SJM HOLDINGS LTD

15.08

-0.6587615

20.58659

20.711

10.079

18931642

SMARTONE TELECOM

14.66

-1.079622

9.077384

18.5

9.8

1816424

WYNN MACAU LTD

19.94

-2.96837

2.25641

27.48

14.807

21879269

ASIA ENTERTAINME

5.15

-2.091255

-12.41497

10.8692

4.72

65129

BALLY TECHNOLOGI

-2.190091

16.27907

49.32

24.74

506845

BOC HONG KONG HO

2.92

-1.016949

21.80941

3.15

1.81

2220

GALAXY ENTERTAIN

2.66

-6.338028

42.24599

3.24

1.08

27806

INTL GAME TECH

14.7

-2.842036

-14.53489

19.15

13.38

2833051

JONES LANG LASAL

75.14

-3.518233

22.65753

99.89

46.01

317456

LAS VEGAS SANDS

49.3

-4.605263

15.37562

62.09

36.08

13699652

MACAU CAPITAL IN

N/A

0.11

12.995

-9.568546

35.08316

16.15

7.05

16254259

MELCO CROWN-ADR MGM CHINA HOLDIN

1.65

38.45846

2.21314

1.00254

695

MGM RESORTS INTE

11.14

-4.213242

6.807284

16.05

7.4

9630872

SHUFFLE MASTER

15.6

-4.176904

33.1058

18.77

7.35

794432

SJM HOLDINGS LTD

1.89

-11.26761

17.56855

2.60368

1.26239

58550

108.09

-4.260407

-2.17214

165.4931

101.02

3214877

WYNN RESORTS LTD

19.50 Max 20.15

average 19.77

last 19.98

Min 19.52

CURRENCY EXCHANGE RATES

10.6

CENTURY LEGEND

12.20

last 12.92

15.5

10.7

ARISTOCRAT LEISU

Min 12.20

27.60

SJM Holdings (SJMHF US) share performance

CROWN LTD

average 12.53

WYNN MaCaU lTd

IN FOCUS

NAME

Max 12.96

CROSSES

AUD HKD

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

AUD

0.9992

0.1503

-2.1256

1.1081

0.9388

GBP

1.607

0.0498

3.3906

1.6618

1.5235

CHF

0.9351

-0.2139

0.3208

0.9596

0.7071

EUR

1.2844

-0.202

-0.9027

1.4697

1.2624

JPY

79.89

-0.025

-3.7301

84.18

75.35

MOP

7.9985

0.0025

0.0138

8.0449

7.9823

HKD

7.766

-0.0039

0.018

7.8113

7.7529

CNY

6.318

0.0538

-0.364

6.5087

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54.305

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31.96

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3.1996

1.3199

1.1992

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2.7068

30.716

28.562

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42.698

0.1101

2.6746

44.35

41.879

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9240

0.1082

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9367

8458

AUDJPY

79.823

-0.1704

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88.637

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1.20106

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4.2767

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0.79633

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8.1208

0.1564

0.165

9.514

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10.273

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10.1031

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102.61

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117.9

97.04

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World Stock MarketS - Indices COUNTRY

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DOW JONES INDUS. AVG

NAME

12695.35

-0.9769434

3.910683

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2902.58

-1.064823

11.41701

3134.17

2298.89 4791.01

FTSE 100 INDEX

5470.7

0.09477598

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6084.08

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6459.38

0.1148486

9.51164

7523.53

4965.8

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8900.74

-0.81459

5.26756

10255.15

8135.79

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19894.31

0.8070417

7.919546

23707.94922

16170.35

CSI 300 INDEX

2617.374

0.07034892

11.57979

3154.935

2254.567

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7395.64

0.2502311

4.575175

9089.47

6609.11

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1898.96

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4.010427

2192.83

1644.11

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4266.276

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5.169782

4763.9

3765.9

JAKARTA COMPOSITE INDEX

USD

4045.644

-0.1831453

5.851716

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1561.07

-0.8894786

1.982059

1609.33

1310.53

NZX ALL INDEX

788.398

-0.6380906

8.029282

814.431

700.441 2695.06

PHILIPPINES ALL SHARE IX

3297.16

-1.414869

8.27969

3518.96

HSBC Dragon 300 Index Singapor

550.55

-1.3

10.92

STOCK EXCH OF THAI INDEX

1182.09

1.422553

15.28986

1247.72

843.69

HO CHI MINH STOCK INDEX

455.65

-2.989206

29.61172

492.44

332.28

Laos Composite Index

1032.22

0.6975133

14.75996

1260.53

876.33

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business daily May 16, 2012

Opinion

After austerity

Joseph E. Stiglitz

Professor at Columbia University and a Nobel laureate in economics

his year’s annual meeting of the International Monetary Fund made clear that Europe and the international community remain rudderless when it comes to economic policy. Financial leaders, from finance ministers to leaders of private financial institutions, reiterated the current mantra: the crisis countries have to get their houses in order, reduce their deficits, bring down their national debts, undertake structural reforms, and promote growth. Confidence, it was repeatedly said, needs to be restored. It is a little precious to hear such pontifications from those who, at the helm of central banks, finance ministries, and private banks, steered the global financial system to the brink of ruin – and created the ongoing mess. Worse, seldom is it explained how to square the circle. How can confidence be restored as the crisis economies plunge into recession? How can growth be revived when austerity will almost surely mean a further decrease in aggregate demand, sending output and employment even lower? This we should know by now: markets on their own are not stable. Not only do they repeatedly generate destabilising asset bubbles, but, when demand weakens, forces that exacerbate the downturn come into play. Unemployment, and fear that it will spread, drives down wages, incomes, and consumption – and thus total demand. Decreased rates of household formation – young Americans, for example, are increasingly moving back in with their parents – depress housing prices, leading to still more foreclosures. States with balanced-budget frameworks are forced to cut spending as tax revenues fall – an automatic destabiliser that Europe seems mindlessly bent on adopting.

it for investment would enhance long-term growth, with positive spillovers to the rest of Europe. A longrecognised principle is that balanced expansion of taxes and spending stimulates the economy; if the program is well designed (taxes at the top, combined with spending on education), the increase in GDP and employment can be significant. Europe as a whole is not in bad fiscal shape; its debtto-GDP ratio compares favorably with that of the United States. If each US state were totally responsible for its own budget, including paying all unemployment benefits, America, too, would be in fiscal crisis. The lesson is obvious: the whole is more than the sum of its parts. If Europe – particularly the European Central Bank – were to borrow, and relend the proceeds, the costs of servicing Europe’s debt

So many economies are vulnerable to natural disasters – earthquakes, floods, typhoons, hurricanes, tsunamis – that adding a manmade disaster is all the more tragic. But that is what Europe is doing

would fall, creating room for the kinds of expenditure that would promote growth and employment. There are already institutions within Europe, such as the European Investment Bank, that could help finance needed investments in the cashstarved economies. The EIB should expand its lending. There need to be increased funds available to support small and medium-size enterprises – the main source of job creation in all economies – which is especially important, given that credit contraction by banks hits these enterprises especially hard.

Wrong diagnostics Europe’s single-minded focus on austerity is a result of a misdiagnosis of its problems. Greece overspent, but Spain and Ireland had fiscal surpluses and low debt-to-GDP ratios

Other alternatives There are alternative strategies. Some countries, like Germany, have room for fiscal maneuver. Using

before the crisis. Giving lectures about fiscal prudence is beside the point. Taking the lectures seriously – even adopting tight budget frameworks – can be counterproductive. Regardless of whether Europe’s problems are temporary or fundamental – the eurozone, for example, is far from an “optimal” currency area, and tax competition in a free-trade and freemigration area can erode a viable state – austerity will make matters worse. The consequences of Europe’s rush to austerity will be long-lasting and possibly severe. If the euro survives, it will come at the price of high unemployment and enormous suffering, especially in the crisis countries. And the crisis itself almost surely will spread. Firewalls won’t work, if kerosene is simultaneously thrown on the fire, as Europe seems committed to doing: there is no example of a large economy – and Europe is the world’s largest – recovering as a result of austerity. As a result, society’s most valuable asset, its human capital, is being wasted and even destroyed. Young people who are long deprived of a decent job – and youth unemployment in some countries is approaching or exceeding 50 percent, and has been unacceptably high since 2008 – become alienated. When they eventually find work, it will be at a much lower wage. Normally, youth is a time when skills get built up; now, it is a time when they atrophy. So many economies are vulnerable to natural disasters – earthquakes, floods, typhoons, hurricanes, tsunamis – that adding a man-made disaster is all the more tragic. But that is what Europe is doing. Indeed, its leaders’ willful ignorance of the lessons of the past is criminal. The pain that Europe, especially its poor and young, is suffering is unnecessary. Fortunately, there is an alternative. But delay in grasping it will be very costly, and Europe is running out of time. © Project Syndicate

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 16, 2012 business daily | 15

OPINION China’s big banks look more wires like paper tigers Business Leading reports from Asia’s best business newspapers

Taipei Times

Several academics, led by Taiwan’s former minister of finance Lin Chuan, unveiled a draft securities capital gains tax on Monday. Their proposal calls for a 0.1 percent withholding tax on all securities transactions that can be deducted from a capital gains levy of 20 percent on individual investors and 17 percent on domestic and foreign institutional investors. The proposal does not propose a threshold for taxable income or the write-down of securities transactions taxes as expenses, Mr Lin told a media briefing. “Our version would require little extra cost in terms of tax collection, but could generate NT$30 billion [US$1.02 billion] a year in tax revenue, if it were adopted,” said Mr Lin, who was finance minister between 2002 and 2006 under the Democratic Progressive Party (DPP) administration.

Strait Times

The Singapore government will back up wages of low-income earners with an array of targeted schemes, Minister of State for Manpower Tan Chuan-Jin said on Monday. The help includes subsidies for housing, education and health care, income top-ups through Workfare, funds for retraining, and support for companies that pledge to share their productivity gains with lower-wage workers. Mr Tan laid out the multi-pronged approach to helping low-income families, saying wages are only part of the equation. The government, he said, has put in place a “comprehensive and active strategy to help low-income families improve their overall quality of life and share in Singapore’s continued progress”.

Business Inquirer

The Philippine government posted a budget surplus of P26.26 billion (US$6.2 billion) in April, the biggest in 25 years and more than 10 times the P2.6-billion surplus a year ago, Finance Secretary Cesar V. Purisima announced on Monday. The fiscal performance for the month of April brought the record for the first four months to a surplus of P61 million, documents from the Bureau of the Treasury showed. The JanuaryApril figure was a reversal of the P131.8-billion budget deficit recorded in the same period last year. Revenues for the first four months of 2012 reached P461.4 billion, or 18.2 percent higher than last year’s P390.3 billion, showed the government data.

Jonathan Weil

Bloomberg View columnist

fter spending time combing through the financial reports of China’s biggest publicly traded, state-owned banks, I now understand what Jim Chanos, the famous shortseller, means when he keeps saying they are “built on quicksand.” He’s definitely on to something. Start with Industrial & Commercial Bank of China Ltd, the world’s most valuable bank, at least on paper, with a US$238 billion market capitalisation. Much of its capital consists of the remnants of bad loans dating to the 1990s, which ICBC now calls receivables. One such receivable represented about a third of ICBC’s shareholder equity, as of December 31. It was scheduled to start coming due in 2010 but wasn’t repaid, and still sits on ICBC’s books at its original value. At the same time, ICBC has been reporting torrid, almost cartoonish, growth since going public in 2006. Total assets, about half of which are loans, rose 15 percent last year to 15.5 trillion yuan (US$2.5 trillion). Earnings jumped 26 percent to 208.4 billion yuan. It has been quite a transformation. At the end of 2004, before its most recent restructuring by the Chinese government, Beijing-based ICBC said about 21 percent of its loans were nonperforming. Today, the same bank, which is 71 percent stateowned, classifies less than 1 percent of its loans that way.

New skills You can choose to believe that latest figure if you like. Either the Chinese government has become extremely skilled at lending in a very short time, and Chinese borrowers have become even better at repaying; or the numbers are too good to be true, in which case the quality of the bank’s capital matters a great deal, as a gauge of its ability to absorb losses. If nothing else, a look at the receivables at ICBC and other large Chinese banks provides insights into what passes for normal in the country’s banking system. Everything is a big circle. The largest receivable at ICBC is a 313 billion-yuan asset called “Huarong bonds”. The footnotes to ICBC’s latest annual report say they were issued to ICBC starting in 2000 by China Huarong Asset Management Corp., an asset-management company established by China’s finance ministry. The bonds’ book value hasn’t changed over the years. After ICBC bought the bonds, Huarong used the cash to buy nonperforming loans

from ICBC at full face value, cleansing ICBC’s books. In short, ICBC swapped bad loans for bonds backed by the loans’ new owner. The old loans didn’t really go away. Perhaps not surprisingly, ICBC wasn’t repaid its principal when the Huarong bonds began to come due 10 years later in 2010. Instead, ICBC received a notice from the finance ministry saying the maturity dates had been extended by another 10 years. ICBC has said the ministry “will provide support for the repayment” if Huarong can’t make good, citing a separate 2005 notice. Such a notice isn’t the same as a guarantee, however, which is a point that

ber 31. A 2008 notice from the ministry said the amount would be “settled annually over a period of 15 years.” At least there, the ministry has been paying the bank’s receivable down. A year earlier, Ag Bank showed the same asset at 568.4 billion yuan, which was 5 percent more than its equity then. It got the receivable as part of its last restructuring, in 2008, in exchange for transferring bad assets to the finance ministry.

Cleaning up As recently as 2007, Ag Bank classified about 24 percent of its loans as nonperforming,

The Big Four banks each have set up loan-loss reserves ranging from about two to three times the size of their nonperforming loans. Those reserves wouldn’t be enough should loan losses return to historical norms

Carl Walter and Fraser Howie made in their acclaimed 2011 book, “Red Capitalism,” about the frailty of China’s banking system. The bonds are non-transferable, meaning they can’t be sold. Maybe ICBC will get paid eventually, maybe not. The finance ministry owns 35 percent of ICBC’s shares. A state-owned investment company holds another 35 percent. At Beijing-based Agricultural Bank of China Ltd., a receivable from the finance ministry represented 474.1 billion yuan, or 73 percent, of shareholder equity, as of Decem-

compared with 1.4 percent last quarter. After cleaning up its books, the company went public in 2010, raising US$22.1 billion in the largest IPO ever. The bank, which is 83 percent state-owned, now has a US$141 billion market cap. Last quarter alone, Ag Bank’s total assets rose 7.6 percent from their December 31 level to 12.6 trillion yuan. Similar receivables reside at China’s other Big Four banks, Bank of China Ltd. and China Construction Bank Corp., though the amounts there aren’t as large. Before their

restructurings almost a decade ago, Bank of China and China Construction classified about 16 percent and 17 percent of their loans as nonperforming, respectively. Now both show about 1 percent. The warning signs about China’s construction boom and state-owned banks have been evident for years. News reports of local-government financing vehicles that can’t repay their loans are so abundant, they are hardly surprising anymore. The Big Four banks each have set up loan-loss reserves ranging from about two to three times the size of their nonperforming loans, which probably are understated to begin with. Those reserves wouldn’t be enough should loan losses return to historical norms. Charlene Chu, a Beijingbased analyst for Fitch Ratings, wrote in a December 2 report on Chinese banks that “Fitch expects the authorities to continue a selective policy of forbearance and liquidity support for borrowers, including loan rollovers and restructurings, new loans, and bond issuance.” As a result, “asset quality issues may not fully appear in NPL (nonperforming loan) ratios until well into a deterioration, if at all.” By the time any big problems show up in the banks’ numbers, the jig will be up. The hard part is figuring out the timing. Foreign shareholders would suffer the brunt of any losses should the government need to inject capital or restructure the banks again. The banks would survive, though. The Chinese government is like Wall Street in that it always pays itself first. In a Bloomberg Television interview last week, Chanos said “the Chinese banks ought to be sending a thankyou note to Greece and Spain every month for keeping them out of the limelight.” It’s anyone’s guess how long they will stay this way. Bloomberg View

16 |

business daily May 16, 2012

CLOSING JPM helps case for reform – Geithner

Okada in Korea casino talks Kazuo Okada is expanding his Japanese pachinko company by opening a string of his own restaurants and is in negotiations to build a casino resort in South Korea. The 69-year-old billionaire, neck deep in a fierce legal battle with Las Vegas high-flyer Steve Wynn, opened a 25,000-square-foot fine dining complex in Hong Kong yesterday, the first step in his expansion plans. “We want to be the No. 1 casino company in the world,” Okada said in an interview with Reuters. He is building a US$2 billion casino resort in the fast-growing gambling destination of the Philippines, due to open in 2014.

The loss of billions of dollars in trading at JPMorgan Chase & Co strengthens the case for reforms of the financial system, U.S. Treasury Secretary Timothy Geithner said yesterday. “I think this failure of risk management is just a very powerful case for ... financial reform,” Mr Geithner said. “The test of reform is not whether you can prevent banks from making mistakes ... the test of reform should be do those mistakes put at risk the broader economy, the financial system or the taxpayer?” Mr Geithner expressed confidence that U.S. financial reforms would “come out as tough and effective as they need to be.”

Hollande vows new path for France New president says he is fully aware of the challenges facing France after being sworn in as the country’s new president.

ew French President Francois Hollande called for a European pact for growth to balance out German-driven austerity measures in his inaugural address yesterday, hours before taking his challenge to Chancellor Angela Merkel in Berlin. Sworn in with all the pomp of the French Republic, Mr Hollande won support from Germany’s opposition Social Democrats, who vowed to use their parliamentary blocking power to delay ratifying a European budget discipline treaty until Ms Merkel accepts accompanying measures to boost growth and jobs. “I will propose to our partners a pact that will tie the necessary reduction of our public debt to the indispensable stimulation of our economies,” the Socialist president said in his 10-minute maiden speech. As widely expected, Mr Hollande has chosen Jean-Marc Ayrault as his prime minister, according to a statement read out yesterday on the steps of the Elysee presidential palace. Eurozone finance ministers dismissed talk of Greece leaving the 17-nation currency area as “propaganda and nonsense” on Monday. But with the country facing the likelihood of a repeat general election that leftist anti-

Nicolas Sarkozy, left, welcomes his successor Francois Hollande, as he arrives at the Elysee Palace before being sworn in

bailout parties believe they can win, speculation about a possible Greek exit is rattling financial markets and won’t go away.

Crisis management The Greek political crisis and persistent jitters about the health of Spain’s debt-laden banks meant that the new French leader will have no political honeymoon before plunging into crisis management with his German counterpart.

Greece to hold new election Attempts to form a government collapsed yesterday, jolting financial markets

uropean stock markets fell and the euro slid sharply yesterday on news that Greece faces new elections after last-ditch talks failed, just as Francois Hollande became France’s new president. Ahead of Mr Hollande’s first foreign visit as president, official data showed that Germany avoided entering recession in the first quarter, while France also side-stepped a contraction to register zero growth for the same period. The 17-nation eurozone also logged zero growth in the first quarter of the year, confounding gloomy predictions of recession. In afternoon deals, London’s benchmark FTSE 100 index lost 0.31 percent to 5,448.53 points, Frankfurt’s DAX 30 fell 0.49 percent to 6,420.30 points and in Paris the CAC 40 shed 0.45 percent to 3,044.08 points. Milan’s FTSE Mib slumped 1.37 percent to 13,473.37 points, on news that Moody’s has downgraded the ratings of 26 Italian lenders amid fears over their exposure to the debt crisis.

Madrid’s IBEX 35 index slid 1.27 percent to 6,722.80 points, as the nation’s troubled banking sector remained under intense pressure. In foreign exchange deals, the European single currency dived below US$1.28 to US$1.2771 – the lowest point since January 18.

Markets and policymakers are watching the dialogue between the conservative German chancellor and the centre-left French leader for signs that they can overcome their differences on Merkel’s drive for austerity and lead the euro zone together. Declaring that Europe needed “projects, solidarity and growth”, Mr Hollande added a protectionist note that found wide support during the presidential election campaign but may worry France’s EU partners to whom he addressed it.

“I will tell them of the need for our continent, in such an unstable world, to protect not only its values but also its interests in the name of reciprocity in our trade relations,” he said. Mr Hollande has said he will press Berlin to lift its veto on issuing common euro zone bonds to harmonise borrowing costs within the currency area, or to allow the European Central Bank to lend directly to governments.

“Investors are pricing in a Greek exit from monetary union with a risk that it could turn out to be disorderly,” said VTB Capital analyst Neil MacKinnon. “In addition, the problems facing eurozone banks, especially those in Spain, are a significant worry. “Add a changing political landscape in Europe, you end up with a very unattractive and volatile situation.” Investor sentiment was hit hard, and earlier gains erased, after socialist Pasok party leader Evangelos Venizelos said Greece will have to hold fresh elections after talks on

forming a new government broke up. In Athens, a spokesman for President Karolos Papoulias said his efforts to broker a compromise on a cabinet of technocrats to steer the country away from bankruptcy had failed, nine days after an inconclusive general election. A caretaker government will now be formed pending a new vote probably in mid-June. “For God’s sake, let’s move towards something better and not something worse,” Socialist leader Evangelos Venizelos told reporters after party leaders met the head of state. Trading had been boosted earlier by official data that showed export-driven Germany grew 0.5 percent in the first quarter, beating expectations for slender expansion of 0.1 percent. That followed a 0.2-percent contraction in the final three months of last year, dodging a recession defined as two consecutive quarters of negative growth. France’s economy meanwhile showed zero growth in the first quarter of 2012, official statistics agency INSEE said yesterday. It also revised downward fourth-quarter growth to 0.1 percent from 0.2 percent. And the eurozone itself also registered zero growth, narrowly avoiding recession after a 0.3-percent contraction in the last quarter of 2011, according to official data from statistics agency Eurostat.

Pasok party leader Evangelos Venizelos said Greece will have to hold fresh elections. New vote probably in mid-June

Reuters

AFP