Macau Business Daily, May 22, 2012 by Business Daily

Textile production shrinking fast

Air Asia unit gets Philippines route

Chinese stocks rise, rail leads

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Year I - Number 37 - Tuesday May 22, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

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G2E Asia 2012

Macau gaming soon ‘bigger than U.S.’ M

acau’s gross gaming revenue for 2012 could equal or even overtake that generated by the entire United States’ commercial gaming market in 2011 says an advisor to Global Gaming Expo Asia 2012. G2E Asia starts today in CotaiExpo at The Venetian Macao. Even at the most cautious analyst estimates for 2012, Macau could achieve US$36.85 billion (294.74

billion patacas) in revenue during this Year of the Dragon. At the most optimistic end of the analysts’ scale it could hit US$41.88 billion. The American Gaming Association – a trade body for casino operators and equipment suppliers – says in its industry overview ‘The State of the States’ that U.S. commercial casino gaming including non-casino activities such as racinos – generated revenues of

US$35.64 billion last year. “Based on the projected growth of Macau, Macau’s gross gaming revenue in 2012 is likely to pass the U.S. commercial casinos’ performance for 2011 – possibly before the year is out,” Ben Lee of IGamix Management & Consulting Ltd told Business Daily. It’s important to note that ‘U.S. commercial gaming’ excludes the contribution of tribal gaming. That brought

in a further US$20 billion in gambling revenue in the national market last year according to a study by the financial services company PricewaterhouseCoopers (PwC). Macau gross revenues overtook those of Clark County Nevada – where the Las Vegas Strip is located – in 2006, and those of the whole of Las Vegas including the downtown and Metro areas – in 2007. More on page 3

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May 21

Inflation again close to 7 percent

Local banks feel bonanza

Inflation rose for a second consecutive month in April, thanks to soaring food and housing prices. And official data show that price hikes are hitting lower-income families the hardest. Economist Liu

Macau banks have seen their results improve and displayed a year-on-year growth of 50 percent in the first quarter. The figures published by the Monetary Authority for March show high solvency ratios and increasing profitability.

Cheng Kun believes prices are feeling the pinch from mainland China’s imported inflation and that inflation will continue growing before stabilising only in the third quarter. Page 2

HSI - Movers Name The international crisis does not seem to be affecting the local banking system. Low costs of capital and profitable applications, namely loans for casino-related projects, seem to guarantee the bonanza. Page 6

Public flats cheaper in Seac Pai Van

%Day

WANT WANT CHINA

2.39

HANG LUNG PROPER

2.27

LI & FUNG LTD

2.10

BANK EAST ASIA

2.07

HENDERSON LAND D

1.96

CHINA MOBILE

0.76

PING AN INSURA-H

-1.21

ESPRIT HLDGS

-2.07

BELLE INTERNATIO

-2.66

TENCENT HOLDINGS

-3.39

Source: Bloomberg

Flats at Seac Pai Van will be cheaper than in two public housing developments put up for sale last year due to its Coloane location, the Housing Bureau admitted. But authorities refused to say whether buyers will have to fork out 21.6 million patacas the government mistakenly failed to charge when selling affordable flats between 2006 and 2010. Page 4

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business daily May 22, 2012

macau

Housing, food fuel inflation Annual inflation was again close to 7 percent in April and an economist believes it will increase again this month Vítor Quintã

vitorquinta@macaubusinessdaily.com

Prices of food and non-alcoholic drinks, which take up almost a third of family budgets, rose by almost 10 percent in the year to April

ith food and housing prices jumping, annual inflation rose for the second month on the trot in April to nearly 7 percent, official figures released yesterday show. According to the Statistics and Census Service, the consumer price index rose by 6.76 percent yearon-year last month, having risen by 6.22 percent in the year to March. The CPI reached 116.09 points in April, bringing the average inflation rate for the past 12 months to 6.27 percent. This rise was due mostly to inflation imported from mainland China, said Liu Cheng Kun, programme coordinator at the University of Science and Technology’s faculty of management and administration. Annual consumer price inflation in the mainland, Macau’s main source of supplies, moderated in April to 3.4 percent but food prices rose by 7 percent. “More and more tourists are coming to Macau, carrying a lot of money and putting that money into the local economy,” Mr Liu said. “When liquidity is high, prices will increase.” Macau had over 6.9 million visitors in the first quarter of this year, up by 7.9 percent year-on-year. April was also when the Sands Cotai Central casino resort opened, bringing with it new investment. The poorer you are, the faster inflation is. For about half of the city’s households – those with monthly expenditure between 6,000 patacas (US$750) and 19,000 patacas – annual inflation was 7.01 percent as food is a bigger share of families’ expenses. The biggest increase in April was in the prices of food and non-alcoholic drinks, which take up almost a third of family budgets. They rose

by 9.5 percent. Fresh meat and vegetables became more expensive, with eye-popping increases in Chinese lettuce (up by 41.3 percent), choy sum (up by 36.4 percent) and beef (up by 27.3 percent). Thai rice, a staple, rose by 10.3 percent. Almost one-third of the inflation rate in April was due to a 9.3 percent increase in the price of eating out or ordering out. Housing and fuel costs accounted for one-fifth, rising by 7.2 percent.

Up in smoke An increase of 29.6 percent was seen in the prices of alcoholic drinks and tobacco, fuelled partly by last December’s spike in tobacco duty from 4 patacas to 10 patacas. The prices of jewellery and watches, mainstays of the booming retail sector, grew by 14.6 percent on account of “dearer prices of gold jewellery,” the Statistics and Census Service says. Transport costs rose by 3.4 percent

and are set to rise even more in the future: the government may increase the flagfall rate of cabs to 15 patacas from 13 patacas in July. Communication became cheaper by 6.6 percent as CTM slashed the tariff of all residential internet broadband service plans last August. The price of outbound package tours decreased by 2.5 percent. Compared with March, the biggest increase in April was in prices of clothing and footwear, owing to the arrival of new summer fashions. After slowing in January and February, inflation is speeding up again, raising doubts about the accuracy of the government’s forecast that inflation will decrease after easing in the mainland.

130

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Annual increase in the CPI in April

105

Mainland inflation has fallen steadily from a peak of 6.5 percent in July 2011 as economic activity weakens and tighter monetary policy, including higher bank reserve requirements, takes effect. Mr Liu said there was not much the government here could do because the Monetary Authority has no power to take similar countermeasures against inflation. He believes inflation “will continue growing next month”. He said the latest consumer confidence index compiled by the University of Science and Technology shows that people are still optimistic about the future. He expects inflation to stabilise only in the third quarter of this year.

May 22, 2012 business daily | 3

MACAU

Macau 2012 casino rev ‘to outstrip 2011 U.S. commercial gambling’ Forecast excludes U.S. tribal gaming, accounting for US$20bln yearly Associate Editor

acau’s gross gaming revenue for 2012 could equal or even overtake that generated by the entire United States’ commercial gaming market in 2011, says an advisor to Global Gaming Expo Asia 2012. G2E Asia starts today in CotaiExpo at The Venetian Macao. “The US commercial casinos sector is likely to have generated US$39.5 billion during 2011 based on industry-compiled and US federal statistics,” Ben Lee of IGamix Management & Consulting Ltd told Business Daily. “By comparison, Macau grossed US$33.5 billion (267.87 billion patacas) for games of fortune in 2011. So based on the projected growth of Macau versus the growth of the U.S. market, that means Macau’s gross gaming revenue in 2012 is likely pass the U.S. commercial casinos’ performance for 2011.” It’s important to note that ‘U.S. commercial gaming’ excludes the contribution of tribal gaming in the United States. The tribal casinos have different regulatory systems to the state-by-state regulations of the U.S. commercial sector. And U.S. tribal gaming accounted for around a further US$20 billion in gambling revenue in the national market last year according to ‘Playing to Win’, a study of global casino and online gaming trends by the financial services company PricewaterhouseCoopers (PwC). Investment bank analysts are currently forecasting year-on-year growth in Macau’s GGR for 2012 ranging from 10 percent (the most bearish) to around 25 percent (the most bullish). Last year there was 42 percent growth year-on-year, but no one is expecting that to be repeated thanks to the strong linkage between Macau VIP revenue and the

Macau revenue overtook that of Las Vegas back in 2007

mainland China economy, which has slowed compared to 2011. But even at the most cautious analyst estimates, Macau could achieve US$36.85 billion in revenue during this Year of the Dragon. At the most optimistic end of the analysts’ scale it could hit US$41.88 billion.

U.S. stronger But the U.S. market is not standing still despite the downturn in business in Las Vegas, Atlantic City and elsewhere seen after the global financial crisis that began in late 2008. The American Gaming Association – a trade body for casino operators and equipment suppliers

– says in its industry overview ‘The State of the States’ that U.S. commercial casino gaming revenue grew by 3.0 percent year-on-year in 2011. AGA’s estimate for the size of the 2011 commercial gaming market by revenue – including noncasino activities such as racinos – was US$35.64 billion. PwC says that U.S. commercial gambling – including racinos – plus tribal gaming – is likely to expand by 4.3 percent year-on-year in in 2012 to reach a total of US$60.51 billion. “As regards Macau matching in 2012 the whole of the U.S. market revenue for 2011, that might happen, but only with respect to commercial gaming,”

says Grant Govertsen of Union Gaming Research. “Even then it may be 2013 before Macau equals the U.S. commercial market figures if Macau’s yearon-year growth this year is at the bottom of the market’s estimated range. We’re still probably a few additional years away from Macau overtaking the entire U.S. including tribal casino gaming,” adds Mr Govertsen. Macau gross revenues overtook those of Clark County Nevada – where the Las Vegas Strip is located – in 2006, and those of the whole of Las Vegas – including the downtown and Metro areas – in 2007.

major exhibitor at Global Gaming Expo Asia 2012 which opens today has agreed to withdraw a product from the show after being warned it breaches a Macau patent. While such disputes are common in North America until recently they’ve been a rarity in Macau. Alfastreet Gaming Instruments withdrew its so-called multi-game product reluctantly, saying it never intended to sell the product in Macau. The Slovenian firm makes awardwinning multi-terminal electronic games (meaning many player stations linked to one live dealer or automated dealer) and multi-game electronic games (meaning players can switch between games while sitting at one terminal). LT Game says Macau patent I/000380 – held by its British Virgin Islands-registered parent Natural Noble Ltd - gives only it the right to sell multi-game products in Macau

and wrote to Alfastreet on March 2 to that effect. In correspondence obtained by Business Daily, Alfastreet replied to Natural Noble: “G2E is an international show and the display of the products is not necessarily meant for Macao customers, but also for the whole Asian region. We strongly believe that even if you have the patent right for Macao you should not object our display of the product on this international exhibition.” But LT Game says it is simply following a precedent set at European trade shows.

European precedent “A Chinese company was barred from showing a product at a German trade show because a German company complained its copyright was being breached,” Jay Chun, chairman of LT Game

told Business Daily. “If Alfastreet didn’t want to sell their product in Macau, why would they show it here?” he stated, adding, “Alfastreet has told us by e-mail that they will not show their product during G2E Asia and we’re happy about that.” Natural Noble had said in its correspondence to Alfastreet: “The mere display of products, in Macau, even on international exhibitions like G2E Asia, is configured by the MIPC [Macau Intellectual Property Centre] as an “offer to the public” and in consequence is deemed as an infringement of the exclusive right of use conferred on its owner.” But a gaming industry source told Business Daily: “I thought the World Intellectual Property Organization has protocols precisely to avoid this kind of dispute at trade shows.” During G2E Asia 2009 several members of the management

of U.S. gaming supplier Shuffle Master were detained by Macau customs officers in a dispute about a baccarat game patent. Some Shuffle Master product was also removed from the show floor after the complaint by Paradise Entertainment Ltd – a company linked to LT Game. Shuffle Master gave the following account of the incident in a note to its financial statement for 2010: “On or about June 3, 2009, at the G2E Asia Gaming Show, customs officials from Macau SAR seized a Shuffle Master, Inc. Rapid Baccarat unit related to a claim by a Macau patent holder of our alleged patent infringement.” It added in October 2009 a Macau official decided no patent infringement had occurred in that case. But Mr Chun told Business Daily yesterday that litigation between Shuffle Master and Natural Noble was still ongoing.

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business daily May 22, 2012

macau A three-bedroom home in the block on Seac Pai Van’s CN3 plot may cost 1.1 million pataca

InBrief Accountants clinch Australia cooperation Certified Practising Accountants Australia (CPA Australia) and the Macau Society of Registered Auditors will sign a deal to offer more training and professional auditing in Hong Kong and Macau. The head of the Australian association, John Cahill, and his Macau counterpart, Iong Weng Ian, will attend the signing ceremony tomorrow. CPA Australia is one of the world’s largest accounting associations, with more than 139,000 members in 114 countries. The Macau society believes the deal will allow accountants here access to more exchange programmes.

Coloane housing more affordable Seac Pai Van public housing will be cheaper, partly because of where the flats will be Kristy Chan

kristyc@macaubusinessdaily.com

H The parking metres for motorcycles near China Plaza, in downtown Macau, began operating last Sunday. And the Transport Bureau says it is keen on expanding the initiative to 300 parking spaces in downtown and near the Red Market in the second half of 2012. Motorcycles and scooters will pay a fee of 1 pataca (US$0.13) an hour but will only be allowed to park for two hours in one of the 39 spots.

192 illegal workers caught this year The Public Security Police and the Labour Affairs Bureau found 32 illegal workers in the course of 282 inspections last month, according to official data released yesterday. This was less than half the number reported in March, when 67 such people were found in 433 inspections. In the first four months of this year the authorities caught 192 illegal workers in over 1,000 inspections, including visits to construction sites, factories and residences.

1,200 against new traffic centre Five environmental groups have already gathered more than 1,200 signatures for an online petition against the proposed relocation of the Traffic Information and Safety Centre to Macau’s only wetland area. On yesterday’s edition we mistakenly wrote that environmentalists had already received about 2,000 signatures. In fact, that is the number of signatures that the group wishes to collect until June 5, World Environment Day. For this mistake we apologise to our readers and to the five environmental groups involved in this initiative.

But he said useable area and where in Coloane the homes will be also had to be taken into account. The bureau expects the flats to be finished this year, so families could move in in the first quarter of 2013. Seac Pai Van, which is set to become the city’s biggest public housing complex, will also have community facilities such as a nursery, a centre for disabled people, piped natural gas and recycled water. The will be parking for vehicles belonging to the occupants of the nearly 6,800 homes. The Transportation Infrastructure Office has confirmed it is considering extending the second phase of the Light Rapid Transit system to serve Seac Pai Van. Applicants for homes in the block on the CN3 plot will begin receiving notices on May 22 and show flats will be available for viewing from June 5. Applicants may choose a flat after June 12. There are over 7,300 households on the waiting list for subsidised housing but most have said they would prefer to live on the peninsula. The government wants the nearly

19,000 flats built by the end of this year. Mr Tam said the number that would be homes for rent and the number that would be homes for sale would be announced this month.

The 21.6m pataca question dodged Housing Bureau chief Tam Kuong Man has refused to say whether the 21.6 million patacas that the government mistakenly failed to charge when selling subsidised flats in the north of the city between 2006 and 2010 will be recovered from the buyers. “The government respects the spirit of the contracts, will try its best to protect the interests of the buyers and sign the contracts as soon as possible, according to the laws and regulations,” Mr Tam said yesterday.

Campus contract awarded in July

he construction contract for the new University of Saint Joseph campus in Ilha Verde will be awarded by July 21, the institution’s new rector, Father Peter Stilwell, has said. “July 21 is the deadline to approve one of the five bids already put forward by contractors in a public tender,” Father Stilwell said in an interview last week with Portuguese-language Rádio Macau. But the university will first have to secure the necessary financing. “I’m still trying to understand how that could be possible,” he said. The new campus should have been ready early this year and the university was granted a subsidy of 150 million patacas (US$18.8 million) to be disbursed in phases by the Macau Foundation. “I hope there was no budget overrun but we will have to detail all of these figures,” Father Stilwell said, meaning they must be given

The new campus in Ilha Verde should have been ready early this year

Photo by Kakazi Chan

Parking metres for motorcycles

omes in one of Seac Pai Van’s public housing blocks will be cheaper than those in the two public housing developments put up for sale last year, partly because they are on Coloane, the Housing Bureau confirmed yesterday. The average price of flats in the block on Seac Pai Van’s CN3 plot has been set at 1,137 patacas (US$146.42) per square foot, 47 patacas less than the average price of flats in Taipa’s Edifício do Lago project and 119 patacas less than in the Alameda da Tranquilidade complex. The minimum and maximum prices for the 1,824 flats, ranging from 488,000 patacas for a onebedroom home to 1.1 million patacas for a three-bedroom home, were set in a chief executive’s dispatch published in the Official Gazette. Housing Bureau chief Tam Kuong Man said more than half the flats would be sold below the average price. “The main factor for setting the price was the purchasing power of the families,” he said.

to the Macau Foundation and the Catholic diocese. The rector said the institution would have to cut the number of courses it offered to achieve financial sustainability.

The university expects to become “a small but high-quality institution which will likely focus on postgraduate and specialised studies”, he said. V.Q.

May 22, 2012 business daily | 5

MACAU

Budget flights clear for take-off An Air Asia subsidiary will begin flying between Macau and Clark in the Philippines in July Tony Lai

tony.lai@macaubusinessdaily.com

AirAsia Philippines will fly daily between Macau and Clark Field

udget carrier AirAsia Philippines will launch flights between Macau and the Philippines on July 1, the Civil Aviation Authority of Macau confirmed yesterday. “In accordance with the permit from the Philippine Civil Aeronautics Board, as well as the seat entitlement which fits with the established passenger capacity between the aviation authorities of the two sides, we have approved AirAsia Philippines to operate MacauPhilippines flights,” the aviation authority told Business Daily. The carrier will fly daily between

Macau and Clark Field, north of Manila, the authority said. Manila’s Business World newspaper quoted the Philippine aviation authority as saying the airline had requested that the original allotment of 1,036 seats a week be increased by 224. “We are planning to [mount] daily Clark-Macau flights and vice versa, which will require a total of 1,260 weekly entitlements,” said a document sent by the airline to the Philippine aviation authority. The Macau aviation authority said it had agreed with the Philippine government’s approval of 224 extra

seats as it was within the passenger limit the two authorities had set. With the entry of AirAsia Philippines, the number of airlines flying from the Philippines to Macau will increase to five and the number of airlines with flights to Macau will increase to 22. Spirit of Manila, SEAir, Cebu Pacific and Philippine Airlines are the four carriers now operating between the Philippines and Macau. AirAsia Philippines is a joint venture between Malaysian carrier Air Asia – which owns 40 percent of the new airline – and Filipino businessmen including Antonio

Cojuangco, cousin of Philippine President Benigno Aquino. The Macau-Clark service and the deployment of two new 180seat Airbus A320 aircraft in the second half of the year are meant to enhance the carrier’s presence. The airline started domestic flights in the Philippines in March and will begin serving its first international route, between Clark and Kuala Lumpur on June 9. The carrier has also been granted rights to operate flights to Cambodia and Japan, while applications to fly to mainland China, Hong Kong, and Singapore are in the works.

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business daily May 22, 2012

macau

Q1 bank results rise 50pct The city’s banks do not seem to be suffering from the headaches afflicting other parts of the world José I. Duarte

jid@macaubusinessdaily.com

end of March. But lending to residents was equivalent to 50 percent of deposits by residents, and lending to non-residents was equivalent to 146 percent of deposits by nonresidents. This means money kept in the bank by residents is being lent to outsiders, which may be an extra risk for the banking system. “Not necessarily so,” Mr Morgado said. He said that in most cases banks here “can obtain deposits at very low rates” and that lending the money elsewhere, especially for casino-related operations, provided “much more attractive remuneration”. “The same applies, to a certain extent, to loans for real estate acquisition,” he said, “albeit these loans may be somewhat more risky”. However, non-residents are likely

to be less sensitive to increases in property acquisition costs and interest rates. And the data on non-performing loans show the proportion of lending to non-residents that

MOP1.25 billion

Combined operating results of the banks in the first quarter

turns bad seems more stable that the proportion of lending to residents that turns bad – which has increased noticeably in the past few months. But the combined figures must be treated with caution, as they may hide great differences in the performances of individual banks. What is more, the renegotiation of non-performing loans improves the indicator and so disguises the degree of financial stress endured by some borrowers. The solvency of the banks is good. Their capital adequacy has been mostly stable in the past 10 years at between 14 percent and 18 percent, well above what the Basel III rules require. “These are very good figures,” Mr Morgado said, “even if those rules are not followed by most of the local banks because in China they are not enforced.” Photo by Manuel Cardoso

he operating results of Macau banks in the first quarter promise a good harvest for this year, data published by the Monetary Authority suggest. Its banking sector statistics indicate that by the end of March the combined operating results of the banks had reached 1.25 billion patacas (US$156.3 million), 50 percent more than a year before. The total is a figure that in previous years was reached only in April or even, in less propitious years, in May. So it seems the banks are having a great spell. José Morgado, chief executive of Banco Espirito Santo do Oriente, says the indicator is “cause for optimism”. The data also show that lending by the banks was equivalent to 76 percent of their deposits at the

The banks keep coining it in despite global uncertainty

Weather Beijing 25/17o C Changchun 30/13o C

Harbin 30/13o C

Xian 18/12o C Shanghai 26/19o C Chengdu 23/17o C Kunming 25/16o C Haikou 30/24o C Sanya 33/27o C

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May 22, 2012 business daily | 7

MACAU

Manufacturing spirals to record low Textiles and apparel manufacturing see the biggest decline as the industrial index shrinks by over two-thirds in seven years

acauâ&#x20AC;&#x2122;s manufacturing sector nosedived to a record low in the first quarter of 2012 as an eight-year fall showed no signs of stopping. The overall industrial index dropped to a mere 49.4 points, the lowest since the Statistics and Census Service began collecting data in 2000. After reaching a historic high of 175.1 points in 2003, industrial production has been dropping consistently. Industrial production is usually lower during the first quarter, partly owing to the Lunar New Year holidays, but even year-on-year the index was down by 38 percent. The number of workers the manufacturing sector employs has declined by more than two-thirds since 2003 and continues to shrink. The output of both textiles and apparel manufacturing has shrunk to less than one-tenth of what it was in 2003. Compared to the same period last year, the sector shrank by 30 percent in the first quarter. With the operating environment becoming increasingly difficult, the sector has been struggling to survive. The production index of electricity, gas and water supply more than

The output of textiles and apparel manufacturing has decreased to less than one-tenth of what it was in 2003

halved year-on-year as electricity generation fell by almost two-thirds. Suspension of the natural gas supply has hit the sales of distributor supplier CEM. Manufacturing of tobacco products fell by 19.1 percent and food and beverages output fell by 13.8

China-Lusophone fund may start rolling soon The US$1 billion fund will finance cooperation between China and Portuguesespeaking countries Cherry Lee

ceci-lqq@macaubusinessdaily.com

he fund to promote cooperation between China and Portuguese-speaking countries awaits final approval but there is optimism that it could be put to use from July onwards. Chang Hexi, head of the Forum for Economic and Trade Cooperation between China and Portuguesespeaking Countries, told the Chinese-language Macau Daily News that investors from mainland China and Macau had already applied for money. He said few entrepreneurs from Portuguese-speaking countries had shown interest, mainly because they did not yet know how the special fund worked. The main investment areas, he said, included infrastructure, transport, agriculture and natural resource processing. Mainland entrepreneurs had expressed interest in expanding their business to Portuguese-speaking countries, he said. Mr Chang said more briefings on the US$1 billion (8 billion pataca) fund would be carried out to help applicants get a better understanding of Portuguese-speaking markets. The fund is aimed not only at supporting Chinese investment in and trade with Portuguese-speaking countries, but also at assisting com-

Chang Hexi says the US$1 billion fund could be put to use in the second half of 2012

panies from these countries in joint ventures with China. The creation of the fund was announced by Premier Wen Jiabao in 2010, during the last ministerial conference between China and Portuguese-speaking countries. The next such conference is slated for next year.

percent quarter-on-quarter. The only subsector that recorded strong growth was Chinese bakery products. Most likely driven by tourism, it increased by 38.7 percent quarter-on-quarter and by 46.1 percent year-on-year. The index of manufacturing of non-

metallic mineral products also more than doubled year-on-year in the first quarter. This sector is made up of the cement, ceramics, glass and lime industries and is usually fuelled by booming construction. X.C.

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business daily May 22, 2012

GREATER CHINA

Yahoo agrees to sell half InBrief Alibaba stake for US$7.1b U.S. Internet company said it has reached a deal to sell part of its stake in China’s biggest Internet company

Graff launches HK IPO roadshow

High-end London-based jeweller Graff Diamonds yesterday launched the roadshow for its reported US$1 billion initial public offering in Hong Kong, one of the biggest this year. Graff Diamonds Founder and chairman Laurence Graff and Chief Executive Officer Francois Graff met potential investors at a hotel in the southern Chinese city, but did not speak to reporters. In a filing to the Hong Kong stock exchange, the company said it plans to open five more directly operated stores selling jewellery and watches in Asia this year, one in Macau. The roadshow is due to continue until May 31 when the IPO will be priced.

China key money rate falls

China’s key money rates fell slightly yesterday on ample liquidity in the market, but dealers expect a rebound later this week as the impact of a cut in the amount of cash reserves banks must hold begins to fade. The benchmark weighted-average seven-day bond repurchase rate inched down 1.92 basis points to 2.6726 percent by midday, hovering around a 13-month low. The 14-day money rate rose 0.18 basis points to 2.8296 percent from 2.8278 percent, while the one-day money rate fell to 1.8207 points from Friday’s 1.8295 percent. “Money was still very ample in the market, so the rate continued to hovered around low level,” said a dealer at a Chinese bank in Shanghai. “But, as the effects of RRR cut fade out, the rate could rebound slightly.”

Pension funds may get new investment channel

China’s stock regulator said it may give pension funds from Hong Kong, Taiwan and Singapore an additional channel for investing in China’s capital markets other than the established Qualified Foreign Institutional Investors (QFII) scheme, the official China Securities Journal reported yesterday. “As for pension organisations from Hong Kong, Taiwan and Singapore, if their quota demand is really big, the CSRC will consider to use other ways than the QFII to give them special licenses and quotas,” the China Securities Regulatory Commission (CSRC) was quoted as saying. Regulators have raised the overall QFII quota to US$80 billion from the previous US$30 billion as part of policy support the China’s stock market.

China police chief faces treason trial

Former Chongqing province police chief Wang Lijun, at the centre of the biggest political scandal to engulf the communist leadership in decades, will be tried for treason, South China Morning Post reported yesterday. Mr Wang, who fled to a U.S. consulate in February reportedly seeking asylum, would be tried as early as next month, the newspaper reported quoting unnamed sources. Mr Wang had been the right-hand-man of Chongqing party boss Bo Xilai, who had been widely expected to ascend to the all-powerful Politburo later this year until he was ousted over a scandal involving alleged murder and corruption.

hinese Internet entrepreneur Jack Ma is buying back up to half of a 40 percent stake in his Alibaba Group from Yahoo Inc for US$7.1 billion, in a deal that moves the Chinese e-commerce leader closer to a public listing. Under the agreement, Yahoo will sell half its stake in Alibaba for at least US$6.3 billion in cash and up to US$800 million in new Alibaba preferred stock. The deal, announced in a joint statement yesterday, caps years of often acrimonious talks over how Alibaba could reclaim some or all of the 40 percent stake that Yahoo bought for about US$1 billion in 2005. While Alibaba founder Mr Ma had a strong personal rapport with Jerry Yang, Yahoo’s co-founder who led the initial investment in Alibaba, ties between the two firms soured when Mr Yang was ousted and replaced as CEO by Carol Bartz. Relations were also complicated by a spat over the Chinese group’s payment unit Alipay, and Yahoo’s attempt to appoint more directors at Alibaba. Negotiations over a complex deal for Mr Ma, who owns close to 7.5 percent of Alibaba, to buy back most of the Yahoo stake for up to US$9 billion faltered earlier this year over valuation. Yahoo, which has come under fire from shareholders for failing to take aggressive action to reverse a decline in advertising revenue in the face of competition from Google Inc and Facebook, will hand most of the sale proceeds, after tax, to its stockholders. “For Yahoo it’s a decent compromise, they were never going to keep all the 40 percent stake and expect to see these guys

Alibaba Group has incentive for IPO by end-2015

IPO. I think they sold it off at a pretty reasonable valuation,” said Michael Clendenin at RedTech Advisors in Shanghai. “Yahoo still has a lot of bigger problems ahead of them, I mean, they are a portal so they’re going the way of the dodo bird.” “Credit to Jack Ma, he’s a wheeler and dealer and he got a very good deal on this one,” he added. A source familiar with the deal said Yahoo built in incentives for Alibaba, which operates the popular Chinese online marketplace Taobao, to hold an initial public offering by end2015. Alibaba would buy back half of Yahoo’s remaining stake – a 10 percent holding – at the IPO price or allow Yahoo to sell those shares in the offering before end-2015. Alibaba Group, valued at US$3035 billion, listed its Alibaba.com unit in 2007, and in February

agreed to buy it out, with Mr Ma saying a group IPO would reward employees for their service. “The valuation is reasonable ... but I don’t think this is going to affect the IPO strategy,” said Elinor Leung, analyst at CLSA. “I don’t think the IPO is going to be imminent, meaning this year. Net-net this is going to be positive for Yahoo because you cash out on half the stake, but Yahoo’s main worry is their U.S. business.” Alibaba said it would raise the money through a mix of cash, debt and equity. Sources said the group was in talks with existing shareholders including Singapore state investor Temasek Holdings to raise about US$2.3 billion in equity to partfinance the deal. Alibaba was not immediately available to comment and a Temasek spokesman declined to comment. Reuters

China’s Wanda to buy AMC cinema Chinese conglomerate has agreed to buy U.S. cinema chain for US$2.6 billion

anda, a property firm owned by one of China’s richest men, said yesterday it would buy U.S. cinema chain AMC Entertainment for US$2.6 billion, in a sign of China’s growing clout in the entertainment business. The deal, which Wanda said would create the world’s largest cinema owner by revenue, gives the Chinese company access to the US movie market, the world’s largest – a key aim for China’s rapidly growing movie industry. Founded by tycoon Wang Jianlin, Wanda has business interests ranging from commercial property to film production and is China’s third largest cinema operator behind two state-owned giants. The company has moved aggressively to capitalise on China’s growing box-office revenues by putting cinemas in its

property developments, and now owns 86 movie theatres in China, with a total of 730 screens. “This is about Chinese money purchasing something that could allow it to gain access to a market,” Teng Jimeng, professor of film at Beijing Foreign Studies University, told AFP. “It will allow China to exercise a kind of soft power influence by gaining this kind of movie theatre chain,” he said. Mr Wang, who was ranked as China’s sixth richest person last year with a personal fortune of US$7.1 billion, according to the independent Hurun Report, said the purchase would turn Wanda into a “truly global” cinema owner. At a signing ceremony for the deal, Mr Wang said he supported AMC becoming bigger, not only in the U.S. but globally. AMC has been facing growing losses

as growth in the U.S. has slowed. The company reported a net loss of US$73 million in the fourth quarter of 2011. Mr Wang said AMC’s financial problems were due to the cost of servicing high debt. The combined movie box office for the United States and Canada was valued at US$10.2 billion last year, according to the Motion Picture Association of America, although the audience is shrinking as people turn to the Internet. Privately-held AMC, the second largest movie exhibitor in the United States, operates 346 multiplex theatres mostly located in major U.S. and Canadian cities with a total of 5,034 screens. Wanda will invest a further US$500 million in AMC for future initiatives, the companies said in a joint statement. AFP

May 22, 2012 business daily | 9

GREATER CHINA

Chinese stocks rise on Wen’s comments Rail leads as new credit line gets approved

Rail open to private investment

China’s two biggest train makers jumped almost 3 percent yesterday

hina’s benchmark stock index rose after Premier Wen Jiabao said the government will focus more on bolstering economic growth, overshadowing concern Europe’s debt crisis will deteriorate. CSR Corp. and China CNR Corp., the nation’s two biggest train makers, jumped at least 2.9 percent after the 21st Century Business Herald reported the railway ministry has gotten a credit line of more than 2 trillion yuan (US$316 billion), signalling transport projects may resume. Cosco Shipping Co., a unit of China’s biggest shipping company, fell 2.1 percent after a gathering of the leaders of the Group of Eight nations failed to deliver a unified strategy to quell the European debt crisis. “Premier Wen’s speech is a signal that future policies will emphasise growth,” said Mao Sheng, an analyst for Huaxi Securities Co.

in Chengdu. “It could be a change in fiscal, monetary or tax-related policies but for sure, the government is now eyeing the economy.” The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, added 3.78 points, or 0.2 percent, to 2,348.30 at the close, even as 497 stocks dropped and 393 gained. The CSI 300 Index advanced 0.5 percent to 2,587.23. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. slid 7.2 percent in New York last week. For the year, the Shanghai index has climbed 6.8 percent on expectations the government will relax monetary policies and take more measures to bolster equities. Stocks in the gauge are valued at 10.1 times estimated earnings, compared with a record low of 8.9 times on January 6, according to weekly data compiled by Bloomberg. “The country should properly handle the relationship between

maintaining growth, adjusting economic structures and managing inflationary expectations,” Mr Wen said during a tour of Wuhan, the capital of Hubei province, from Friday to Sunday.

Easing speculation Mr Wen’s remarks cited in the report, which didn’t mention concern about inflation, indicate the government might take more aggressive steps to support the economy after April data showed the slowdown may be sharper than expected. The central bank this month cut banks’ reserve requirement ratio for the third time since November to boost liquidity. Gauges of energy and material stocks rose 1.4 percent and 1.2 percent respectively, the secondand third-biggest gainers in the CSI 300. China Shenhua Energy Co., the biggest coal producer, advanced 1.4 percent to 26 yuan,

Growth concerns

Bloomberg

Boost comments fail to lift the benchmark equity index

while Jiangxi Copper, the largest producer of the metal, jumped 2 percent to 25.61 yuan.

outcome over the next four to six weeks to surprise positively.” Hong Kong’s benchmark index retreated 2.8 percent this year through May 18. Shares on the index trade at 9.6 times estimated earnings on average as of May 18, compared with a multiple of 12.3 on the Standard & Poor’s 500 Index, and 10 times for the Stoxx Europe 600 Index. Futures on the Hang Seng Index expiring this month were little changed on 18,809. The HSI Volatility Index lost 2.1 percent to 28.88, indicating that traders expect a swing of 8.3 percent in the next 30 days.

Hong Kong’s benchmark index retreated 2.8 percent this year through May 18

The Hang Seng Index declined 0.2 percent to 18,922.32 at the close of trading as three stocks rose for every two that fell. The Hang Seng China Enterprises Index of mainland stocks climbed 0.1 percent to 9,582.46. “In the case of a Greek exit from the euro zone, we think there would be a rapid, sentiment-driven sell-off on the fear of contagion,” said Michael Kurtz, head of global equity strategy at Nomura Holdings Inc., Japan’s largest brokerage. “This would likely bring about a large policy response to circle the wagons around the other periphery countries. With such a negative scenario apparently already priced, the bias is increasingly for the actual

Reuters

Copper rose one percent to US$7,729.75 a metric ton by 7:32 a.m. on the London Metal Exchange. Oil gained as much as 0.6 percent after falling to the lowest close in almost seven months on May 18. China is seriously concerned about growth and ready to introduce further stimulus measures, Bank of America Merrill Lynch economist Lu Ting wrote in a note. He expects three more cuts in lenders’ reserve ratios before the end of the year as the chance of a cut in interest rates increases. China CNR gained 2.9 percent to 4.28 yuan after the 21st Century Business Herald reported the railway ministry obtained a tentative credit line of more than 2 trillion yuan from banks. CSR Corp. advanced 3.4 percent to 4.83 yuan. The government may further ease credit supply, start more projects, spend more on social welfare and quicken construction of social housing and infrastructure, especially in railway, subway, urban transit, water system and power grid, according to the Bank of America report. Morgan Stanley is the latest brokerage to cut its gross domestic product estimate for China for this year. It lowered its forecast to 8.5 percent from 9 percent. Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp. and UBS AG pared their forecasts after April economic data were released.

Hang Seng Index in fourth straight loss ong Kong’s Hang Seng Index fell for a fourth day as speculation China may do more to support growth failed to lift the benchmark equity index ahead of a meeting of European leaders to discuss the region’s debt crisis this week. HSBC Holdings Plc, Europe’s biggest bank, fell one percent in Hong Kong, capping its biggest four-day retreat since November. Esprit Holdings Ltd, the retailer that gets 79 percent of sales in Europe, retreated 2.1 percent. China Overseas Land & Investment Ltd. paced gains by property developers after Premier Wen Jiabao said China will focus more on bolstering economic growth.

China’s railway industry will open to private investment on an unprecedented scale, according to a document issued last week by the Ministry of Railways, which is struggling with mounting debts and a corruption scandal while attempting to resolve the country’s infrastructure bottlenecks. Private investors will be encouraged to bid for contracts, subsidiaries will be allowed to list shares, and pension funds welcomed to invest in railway companies, the ministry said in a policy document issued late Friday. The document did not address allowing foreign firms to invest directly in rail. While foreign companies such as Alstom, GE, Bombardier and Kawasaki Heavy Industries have won lucrative tenders to supply China’s rail expansion, in many cases their participation has been limited to supplying components. Many foreign firms have also complained that they have been forced to transfer technology to win contracts only to see China compete against them in international rail tenders. The need for funding is acute. China still needs billions more in rail investment, to remove bottlenecks in cargo transport, ease overcrowding in passenger transport and develop commuter lines in its sprawling megacities. The ministry lost US$1.1 billion in the first quarter of this year, due to high operating costs and debt payments. It had US$384 billion in debt at the end of March.

10 |

business daily May 22, 2012

asia Stocks mostly up after G8 meeting Asian stocks rose, with the regional index rebounding from its biggest drop in six months, after Premier Wen Jiabao said China will focus more on bolstering economic growth. BHP Billiton Ltd advanced 2 percent in Sydney after RBC Capital Markets said the world’s largest mining company may buyback shares. Nintendo Co., a manufacturer of gaming consoles that gets a third of its sales in Europe, fell 1.4 percent in Osaka. OCI Co., a chemicals maker, slumped 4.4 percent in Seoul after delaying expansion plans because of Europe’s debt crisis. The MSCI Asia Pacific Index rose 0.2 percent to 112.78 as of 7:30 pm in Tokyo. The gauge fell 2.5 percent on May 18, the most since November 10, wiping out this year’s gains as Europe’s crisis worsened and U.S. economic data missed estimates. Mr Wen’s pledge on Chinese growth “will be a support for the market when we see clear signs of it,” said Shintaro Takeuchi, portfolio investment group manager at Tokio Marine & Nichido Fire Insurance Co.. “Stocks are becoming cheaper and fewer people are selling them, but they’re not cheap enough to buy either.” Japan’s Nikkei 225 Stock Average climbed 0.3 percent yesterday before the Bank of Japan begins a two-day meeting today. The broader Topix Index slid 0.1 percent after a drop last week that capped the longest streak of weekly losses since the September 11 terrorist attacks in 2001. Australia’s S&P/ASX 200 Index increased 0.7 percent, its first increase in five days, while South Korea’s Kospi Index rose 0.9 percent.

Japan, Myanmar in investment talks Japan will start negotiations on an investment treaty with Myanmar tomorrow, the trade ministry said, as corporations around the world scramble to do business in one of the last frontier markets in response to encouraging political reforms. The earliest possibility for an agreement would be a November summit of the Association of South East Asian Nations (ASEAN) and Japan in Cambodia, although the trade ministry said there was no pre-set schedule. “Since many Japanese private companies are trying to do business with Myanmar, we want to reach the agreement as soon as possible,” a ministry official said. “We hope to support Japanese firms’ investment in Myanmar” by preparing investment terms that are nondiscriminatory to foreign firms, he added. Japan will seek most-favoured-nation status, meaning Myanmar will have to grant Japan at least as favourable conditions it grants other nations, the official said. Japan’s move follows an announcement in April to write off US$3.7 billion debt owed by Myanmar and restart development loans. The United Stated last week suspended sanctions barring U.S. investment in Myanmar in response to political reforms in the nation. Analysts and experts have said there will be opportunities for foreign companies across the industrial landscape – from energy, mining and construction to agriculture, finance and tourism. Myanmar has largely untapped natural resources, including minerals, metals and fossil fuels, and a potentially huge tourism sector, although challenges abound with the rule of law weakly enforced and a major infrastructure deficit.

Currencies to extend slide on growth – Citigroup Global money managers to favour the dollar’s safety over riskier assets

sian currencies are poised to keep falling after the biggest decline in eight months as the region’s economy slumps more than investors expect, spurring more interest-rate cuts, according to Citigroup Inc. Volatility will increase as Europe’s debt crisis hurts demand for Asian exports and prompts global money managers to favour the dollar’s safety over riskier assets, said Nadir Mahmud, the head of Asia-Pacific markets at Citigroup in Singapore, which ranked second in worldwide currency trading volume after Deutsche Bank AG in a Euromoney Institutional Investor Plc survey. “The slowdown in Asia which we’ll see in the very near term will catch the markets off guard,” Mr Mahmud said in an interview. “What you will see is an up move in the dollar and a down move in interest rates which most people are not expecting.” The Bloomberg-JPMorgan Asia Dollar Index lost 1.8 percent so far in May and is headed for the steepest monthly drop since September. The MSCI Asia-Pacific Index of shares tumbled 10 percent, set for the worst drop since October 2008. The Dollar Index, which measures the U.S. currency against those of six major trader partners, advanced 3 percent. India’s rupee, the region’s worstperforming currency this month with a 3.5 percent decline, touched a record low of 54.91 per dollar last week. South Korea’s won slid 3.3 percent. The rupee’s one-month

Asian currencies are expected to rebound in the long-term

implied volatility, a measure of exchange-rate swings used to price options, jumped 350 basis points, or 3.5 percentage points, this month to 13 percent. International investors pulled US$6.2 billion from the stock markets of India, Indonesia, South Korea, Taiwan and Thailand this month, according to exchange data.

‘Turbulence’ ahead “You might see some turbulence in local foreign-exchange markets, bond markets and equity markets,” Mr Mahmud said. “In the short term, in a risk-averse environment, the dollar still looks like the king.” Asian currencies will rebound in the longer term as currentaccount balances and government finances improve, he added. China had a current-account surplus of US$24.7 billion in the first quarter and a similar measure in Korea

climbed to a four-month high of US$3 billion in March. “The fundamentals of Asia are positive,” Mr Mahmud said. “Most countries run current-account surpluses and they don’t have huge public debt issues like in Europe. Asia may possibly have some hiccups near term but in the long run, the outlook continues to be very positive.” Barclays Capital also predicts Asian emerging currencies will weaken over the next month, strategists Olivier DesBarres and Nick Verdi wrote in May 17 research note. “Asian currencies will be forced to weaken against a broadly stronger dollar,” said Sacha Tihanyi, a senior strategist in Hong Kong at Scotiabank, a unit of Bank of Nova Scotia. “When Europe goes through financial strain, it bleeds into the real economy and eventually hits Asian economic growth.” Bloomberg

Qantas cuts 500 maintenance jobs Airline says it needs to change the way it maintains newer planes

ustralian flag carrier Qantas said yesterday it will axe 500 jobs in its heavy maintenance and engineering operations as part of a restructuring to cut costs, sparking an angry backlash from unions. The move follows an 83 percent slump in first-half net profit in the six months to December and an announcement it would delay the delivery of two A380 superjumbos by three years as part of spending reductions. In the reorganisation, Qantas will cease heavy maintenance at Tullamarine airport in Melbourne by August, with work being consolidated in Avalon, another facility near

the Victorian state capital, and the eastern city of Brisbane. Of the 500 jobs cut, which were signalled in the profit announcement in February and amount to 10 percent of the maintenance staff, 422 will be lost at Tullamarine, while 113 will go at Avalon. A total of 35 new positions will also be created. The embattled carrier’s chief executive Alan Joyce said there was not enough work for three separate facilities, with new technology meaning a 60 percent reduction in maintenance requirements over the next seven years. “Like the manufacturing industry,

Qantas’ net profit slumped 83 percent in the six months to December

aviation maintenance is a labour and capital-intensive sector. Our cost base in heavy maintenance is 30 percent higher than that of our competitors,” he said. “We must close this gap to secure Qantas’ future viability and success.” The consolidation will save up to Aus$100 million (US$99 million) a year, the airline said, with one-off costs from the closure of Tullamarine and the redundancies amounting to about Aus$50 million. “Qantas has invested heavily over the past 10 years in new aircraft that are more advanced, more efficient, attractive to our customers and require less maintenance, less often,” added Mr Joyce. “But we cannot take advantage of this new generation of aircraft if we continue to do heavy maintenance in the same way we did 10 years ago.” The Qantas Engineers Alliance, made up of members from three unions, said Australia’s capacity to maintain aircraft was at risk and urged the government to intervene. “We are calling on government to immediately intervene and call an urgent aviation industry round table before any jobs and critical skills are lost,” said the alliance’s Cesar Melham. “This should be done in the interests of our nation’s capability and future security.” AFP

May 22, 2012 business daily | 11

asia

Thai growth rebounds after floods Economy posted double-digit growth in the first quarter

hailand’s economy grew a record 11.0 percent in the first quarter from the previous three months, rebounding from last year’s severe flooding, and strong full-year growth is expected due to a jump in consumption and investment after the disaster. The January-March expansion was the highest since Thailand started measuring quarterly GDP in 1993 but given worries about the euro zone, economists said the central bank would probably hold its policy rate at 3 percent on June 13 and maybe for the rest of the year. “Looking forward, we believe that risks to growth will shift from capacity constraints to weak external demand due to the European debt crisis,” said Usara Wilaipich at Standard Chartered Bank in Bangkok, forecasting no rate change this year. The quarterly growth of 11.0 percent reported yesterday by the National Economic and Social Development Board beat the 10.2 percent expected in a Reuters poll, and came after a revised record contraction of 10.8 percent in the

final quarter of 2011 due to the floods. Household consumption, private investment and a recovery in the service and manufacturing sectors after the floods, were the main drivers of growth in Southeast Asia’s second-largest economy, the planning agency said.

Rates on hold To help business deal with the floods, the Bank of Thailand (BOT) cut its policy rate in November and

again in January before leaving it steady at the two most recent meetings. It recently said the recovery had gained traction and that inflationary pressures were growing. “The BOT’s optimism on the economy was likely validated by Q1 numbers, though we doubt the optimistic year-end growth projections, especially if protracted euro zone uncertainties and slowing demand for Thai agricultural shipments stymie the pace of the recovery in the external sector,”

Gross Domestic Product (% change) Period Q/Q Y/Y

Q1/12 Q4/11 Q3/11 Q2/11 Q1/11 Q4/10 Q3/10

Annual

-10.8*

1.1*

-0.2*

1.1*

1.1

-0.1

0.3

-8.9* 3.7

2.7

3.2

3.8

6.6

2011

2010

2009

2008

2007

2006

2005

0.1

7.8

-2.3

2.5

4.9

5.1

4.6

Source: Reuters * revised

Thailand’s economy rebounded sharply as factories boosted production

said Radhika Rao, an economist at Forecast in Singapore. She expected the policy rate be held steady until year-end to avoid choking off the tentative recovery. The worst floods in half a century hit industrial zones at the heart of the economy last October, with car and electronics makers the worst hit. Factory output fell 4.2 percent in the first quarter from a year before and exports 4 percent. Around a quarter of the affected plants have still not reopened, but the central bank has said manufacturing should get back to normal by the end of June, sooner than it had first expected. Still, the economy grew just 0.3 percent from a year before, indicating the extent of the catastrophe, even though that beat the forecast of a 0.5 percent contraction in the Reuters poll. Despite the external risks, the National Economic and Social Development Board stuck to its forecast of 5.5 percent to 6.5 percent growth in the economy this year, citing strong consumption and investment after the floods as well as government stimulus policies. “The economy has rebounded from the floods; growth in the second quarter will increase a lot because two major industries – cars and electronics – have clearly recovered,” secretary-general Arkhom Termpittayapaisith told a news conference. “We will probably see growth of 4-5 percent, with the pace accelerating in subsequent quarters.” The official said he did not expect any major impact from the problems in the euro zone, which only accounts for about 10 percent of exports at the moment. The bureau cut its export growth forecast to 15.1 percent for this year from the 17.2 percent seen in February. This month the central bank predicted export growth of just 9.2 percent. Reuters

Australia to seal trade deal with Malaysia

F1 to pre-market Singapore IPO today

Agreement to add new momentum to bilateral trade talks

Company seeking to raise up to US$3 billion

ustralia will sign a free trade agreement (FTA) with Malaysia today in a move it hopes will add new momentum to stalled bilateral trade talks with other key Asian trading partners. Australia is still negotiating free trade deals with South Korea, Japan and China, with progress in reaching agreement with Beijing and Tokyo slow. The deal with Malaysia, which will be Australia’s sixth FTA, will be signed in Kuala Lumpur, said a spokesman for Australian Trade Minister Craig Emerson. “Such agreements can generate momentum for further deals, providing a head-turning effect from other countries,” Mr Emerson told the Australian newspaper. Australia already boasts FTAs with New Zealand, the United States,

Singapore, Thailand and Chile, and reached a regional trade deal with 10 ASEAN countries in 2010. The agreement with Malaysia is a step further than the ASEAN deal, granting Australia’s service sector the right to operate majorityowned operations in Malaysia and allowing access to Malaysia without endorsement from other ASEAN countries. Under the deal, more than 97 percent of tariffs on Australian goods sold in Malaysia will be eliminated. In return Australia has agreed to accelerate the removal of tariffs for goods from Malaysia, the Australian newspaper reported. Malaysia is Australia’s third-largest trading partner in ASEAN and ninth-biggest trading partner with two-way trade worth about US$13 billion a year.

otor racing business Formula One will start pre-marketing for its up to US$3 billion Singapore initial public offering today after receiving approval from the city’s stock exchange for the deal, a source with direct knowledge of the plans said yesterday. The company is seeking to raise between US$2.5 billion to US$3 billion, vying to rank among the top IPOs in the world this year after Facebook Inc raised as much as US$18.4 billion and a planned US$3 billion listing by Malaysia’s Felda Global Ventures Holding. The IPO is set to be priced before the end of June, after the company and its bankers meet with investors and fund managers to gauge demand for the IPO, added the source, who was not

authorised to speak publicly on the matter. Formula One, which holds 20 races around the world and has a more than 500 million television viewers, is controlled by private equity firm CVC Capital Partners, with a 63.4 percent stake. CVC plans to reduce its stake as part of the IPO along with other shareholders in Formula One, the source added. Formula One earlier this month unveiled a US$1.8 billion refinancing package to help lay the groundwork for the IPO. Goldman Sachs and UBS were hired to lead the IPO. Morgan Stanley, Spain’s Banco Santander, Singapore’s DBS Group and Malaysia’s CIMB will also act as joint bookrunners on the deal.

12 |

business daily May 22, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

Day %

VOLUME

11.8

1.37457

29234428

CITIC PACIFIC

11.74

1.733102

CLP HLDGS LTD

63.85

CNOOC LTD

14.28

PRICE

Day %

VOLUME

0.5802708

18430902

CHINA UNICOM HON

ALUMINUM CORP-H

3.25

1.880878

12037838

BANK OF CHINA-H

2.85

0.3521127

284379651

BANK OF COMMUN-H

5.18

0.9746589

14960537

BANK EAST ASIA

27.1

2.071563

2373534

13.18

-2.658789

22903666

21.9

-0.2277904

7126128

CATHAY PAC AIR

12.34

-0.483871

5979709

CHEUNG KONG

AIA GROUP LTD

BELLE INTERNATIO BOC HONG KONG HO

91.85

0.1635769

4998287

CHINA COAL ENE-H

7.39

-0.672043

15411054

CHINA CONST BA-H

5.2

0.3861004

199616564

CHINA LIFE INS-H

18.26

23305156

CHINA MERCHANT

23.25

1.086957

1118449

CHINA MOBILE

82.15

0.7632989

12228207

CHINA OVERSEAS

15.06

1.756757

16666668

CHINA PETROLEU-H

7.12

-0.8356546

88405483

CHINA RES ENTERP

26.05

0.9689922

1724431

CHINA RES LAND

13.06

1.083591

4418597

CHINA RES POWER

14.04

0.2857143

4791949

CHINA SHENHUA-H

28.65

1.236749

11632916

NAME

PRICE

Day %

POWER ASSETS HOL

57.95

-0.2581756

VOLUME 1787666

2960159

SINO LAND CO

11.36

-0.1757469

7188346

-0.6998445

1886268

SUN HUNG KAI PRO

87.2

0.05737235

3917253

-0.41841

60463470

SWIRE PACIFIC-A

1.510574

989251

216.4

-3.392857

5859230 4040575

COSCO PAC LTD

9.45

1.656627

10817410

TENCENT HOLDINGS

ESPRIT HLDGS

12.3

-2.070064

12607973

TINGYI HLDG CO

20.2

HANG LUNG PROPER

24.75

2.272727

4512107

WANT WANT CHINA

9.44

2.386117

9525706

HANG SENG BK

101.3

-0.7835455

2077238

WHARF HLDG

40.4

0.248139

2454952

2723213

39.1

1.955671

HENGAN INTL

HENDERSON LAND D

78.45

1.422107

1831668

HONG KG CHINA GS

18.28

1.218162

6828933

HONG KONG EXCHNG

MOVERS

111.1

1.368613

2826431

HSBC HLDGS PLC

63.1

-1.019608

17278583

HUTCHISON WHAMPO

67.4

0.6721434

4314471

IND & COMM BK-H

4.64

198138941

HIGH

19422.26

14.56

2.103787

24744895

MTR CORP

25.5

-0.1956947

1836228

LOW

18644.18

NEW WORLD DEV

8.51

1.916168

8036900

PETROCHINA CO-H

10.16

0.5940594

43628419

PING AN INSURA-H

57.2

-1.208981

11196685

PRICE

DAY %

VOLUME

22.35

0.2242152

8219026

7.12

-0.8356546

88405483

LI & FUNG LTD

3 19500

INDEX 18922.32

52W (H) 23707.94 (L) 16170.35

18600

17-May

21-May

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.2

-0.9287926

150363733

AIR CHINA LTD-H

4.91

-2.385686

9303008

ALUMINUM CORP-H

3.25

1.880878

12037838

CHINA RAIL CN-H

5.9

5.357143

ANHUI CONCH-H

21.55

-4.222222

27947106

CHINA RAIL GR-H

2.81

BANK OF CHINA-H

2.85

0.3521127

284379651

CHINA SHENHUA-H CHINA TELECOM-H

BANK OF COMMUN-H

NAME CHINA PACIFIC-H CHINA PETROLEU-H

PRICE

DAY %

VOLUME

13.34

0.1501502

15642120

ZIJIN MINING-H

2.51

3.292181

63508628

24104762

ZOOMLION HEAVY-H

9.65

2.878465

16799052

3.308824

32018860

ZTE CORP-H

15.3

-5.204461

19799247

28.65

1.236749

11632916

5.18

0.9746589

14960537

3.6

-1.098901

68602827

15.88

3.116883

2892081

DONGFENG MOTOR-H

12.12

-3.656598

29340723

CHINA CITIC BK-H

4.13

2.227723

28564598

GUANGZHOU AUTO-H

6.41

0.15625

7582624

CHINA COAL ENE-H

7.39

-0.672043

15411054

HUANENG POWER-H

4.9

1.449275

25097197

CHINA COM CONS-H

6.69

2.764977

17630644

IND & COMM BK-H

4.64

198138941

CHINA CONST BA-H

5.2

0.3861004

199616564

JIANGXI COPPER-H

16.08

10876012

BYD CO LTD-H

CHINA COSCO HO-H CHINA LIFE INS-H CHINA LONGYUAN-H CHINA MERCH BK-H

3.38

0.2967359

13501106

PETROCHINA CO-H

10.16

0.5940594

43628419

18.26

23305156

PICC PROPERTY &

8.34

-2.570093

29318384

4.8

1.479915

4838463

PING AN INSURA-H

57.2

-1.208981

11196685

14.54

1.3947

29599923

SHANDONG WEIG-H

8.22

-0.8443908

5404256

NAME YANZHOU COAL-H

MOVERS

3 9900

INDEX 9582.46 HIGH

9837.35

LOW

9398.4

CHINA MINSHENG-H

7.13

0.281294

39592450

SINOPHARM-H

18.12

1.342282

1032801

52W (H) 13317.51

CHINA NATL BDG-H

8.84

-2.212389

48862948

TSINGTAO BREW-H

46.8

0.9708738

962187

(L) 8058.58

10.18

-2.115385

10486576

WEICHAI POWER-H

-0.4815409

1865961

CHINA OILFIELD-H

9300

17-May

21-May

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.65

60731201

DATANG INTL PO-A

5.32

-0.5607477

1875676

SHANG PUDONG-A

8.87

0.1128668

46679612

AIR CHINA LTD-A

6.04

-1.145663

11547270

DONGFANG ELECT-A

21.52

0.419972

3804885

SHANGHAI ELECT-A

5.48

0.3663004

5113409

ALUMINUM CORP-A

6.95

2.0558

18421977

EVERBRIG SEC -A

13.39

-2.191381

10875327

SHANXI LU'AN -A

26.86

1.974184

12251316

ANHUI CONCH-A

16.13

0.1863354

17298950

GD MIDEA HOLDING

13.81

1.172161

16250599

SHANXI XINGHUA-A

75.96

3.038524

1787123

BANK OF BEIJIN-A

9.77

-0.509165

31433990

GD POWER DEVEL-A

2.58

-0.3861004

15008325

SHANXI XISHAN-A

17.81

3.426249

33893608

SHENZ DVLP BK-A

15.77

0.3180662

8569485

7.35

-0.6756757

12346259

NAME

BANK OF CHINA-A BANK OF COMMUN-A BAOSHAN IRON & S BYD CO LTD -A

NAME

GF SECURITIES-A

NAME

0.3344482

8714988

30.5

-4.118202

12067944

4.71

0.856531

34425311

GREE ELECTRIC

21.73

0.4623209

8814415

SHENZEN OVERSE-A SINOVEL WIND-A

4.8

0.2087683

12340018

GUIZHOU PANJIA-A

31.98

4.441541

8177901

15.38

0.1954397

716214

24.58

1.570248

2995104

HAITONG SECURI-A

9.93

-1.292247

55031525

SUNING APPLIAN-A

9.8

-0.203666

26464092

HANGZHOU HIKVI-A

44.95

-2.705628

1569986

TONGLING NONFE-A

21.45

3.623188

22651820

0.6711409

14588830

TSINGTAO BREW-A

36.76

1.828255

1131292

CHINA CITIC BK-A

4.29

0.4683841

8097510

CHINA CNR CORP-A

4.28

2.884615

100172309

CHINA COAL ENE-A

9.17

1.325967

7127281

HENAN SHUAN-A

62.63

-0.5873016

951027

WEICHAI POWER-A

31.36

0.1277139

3212670

CHINA CONST BA-A

4.52

0.4444444

18576626

HUATAI SECURIT-A

10.51

-3.400735

22392037

WULIANGYE YIBIN

33.96

1.222057

22024196

CHINA COSCO HO-A

-0.990099

10694933

HUAXIA BANK CO

9.79

-1.706827

40200242

XIAMEN TUNGSTEN

46.6

3.601601

10366391

CHINA CSSC HOL-A

31.59

-3.777033

13856811

IND & COMM BK-A

4.23

-0.4705882

39166846

XINJIANG GUANG-A

26.98

2.702703

10178311

CHINA EAST AIR-A

4.05

0.4962779

9875131

INDUSTRIAL BAN-A

13.48

0.4470939

26813155

YANGQUAN COAL -A

19.24

-0.1556824

16741889

HEBEI IRON-A

2.95

23754270

INNER MONG BAO-A

44.8

2.775866

92709863

YANTAI CHANGYU-A

96.65

2.069912

743013

CHINA LIFE INS-A

17.78

0.2254791

5427391

INNER MONG YIL-A

22.95

2.227171

8238891

YANTAI WANHUA-A

14.31

1.633523

6300389

CHINA MERCH BK-A

11.64

0.6920415

46862803

INNER MONGOLIA-A

6.36

1.597444

74687876

YANZHOU COAL-A

22.84

0.7498897

6334750

CHINA MERCHANT-A

12.74

-0.5464481

12936709

JIANGSU HENGRU-A

0.3584229

1550090

YUNNAN BAIYAO-A

1.344767

1311673

JIANGSU YANGHE-A

CHINA EVERBRIG-A

168.08

7.077786

1645242

ZHONGJIN GOLD

22.91

0.9251101

10800754

JIANGXI COPPER-A

25.61

1.950637

11486669

ZIJIN MINING-A

4.13

0.2427184

37168755

5328928

JINDUICHENG -A

13.83

1.54185

6861501

ZOOMLION HEAVY-A

9.61

35892712

0.6199332

8143990

JIZHONG ENERGY-A

19.81

2.113402

15796424

15.59

-2.501563

21029027

6.98

0.867052

25821767

KWEICHOW MOUTA-A

223.19

2.418319

2884345

CHINA RAILWAY-A

2.68

3.076923

55051692

LUZHOU LAOJIAO-A

42.78

2.246654

8739804

CHINA RAILWAY-A

4.36

3.317536

31944565

METALLURGICAL-A

2.64

1.538462

20553122

CHINA MERCHANT-A

0.9214568

2941985

CHINA MINSHENG-A

6.56

0.9230769

66183957

CHINA OILFIELD-A

18.3

1.779755

CHINA PACIFIC-A

21.1

CHINA PETROLEU-A

1.404056

13227933

NARI TECHNOLOG-A

19.79

-1.296758

6041703

5.71

-0.1748252

18714512

NINGBO PORT CO-A

2.66

-5.673759

86235795

CHINA SOUTHERN-A

4.62

-0.4310345

15568024

PANGANG GROUP -A

8.01

3.088803

50760122

CHINA STATE -A

3.25

0.931677

33058259

PETROCHINA CO-A

9.52

0.1051525

13367933

CHINA SHENHUA-A CHINA SHIPBUIL-A

ZTE CORP-A

MOVERS

183

4.1

-0.4854369

43473917

PING AN INSURA-A

41.62

0.5071239

15580665

8.67

1.048951

29233305

POLY REAL ESTA-A

12.72

-0.0785546

11601583

HIGH

2619.08

CHINA YANGTZE-A

6.72

-0.4444444

14121444

QINGDAO HAIER-A

12.03

-0.5785124

18830631

LOW

2566.86

CHONGQING WATE-A

6.31

1.610306

13894499

QINGHAI SALT-A

32.41

1.34459

3221441

CITIC SECURITI-A

12.94

-0.9946442

59987514

SAIC MOTOR-A

15.12

-0.3952569

11857754

CSR CORP LTD -A

4.83

3.426124

60371912

SANY HEAVY INDUS

13.71

0.2192982

17589018

7.5

0.6711409

61296772

SHANDONG GOLD-MI

34.34

0.556369

5819114

PRICE DAY %

Volume

PRICE DAY %

Volume

DAQIN RAILWAY -A

16 2620

INDEX 2587.23

CHINA VANKE CO-A

CHINA UNITED-A

101

52W (H) 3140.10 (L) 2254.56

2560

17-May

21-May

FTSE TAIWAN 50 INDEX NAME ACER INC

30.6

0.990099

9180068

ADVANCED SEMICON

27.3 -0.7272727

22254019

ASIA CEMENT CORP

33.25

ASUSTEK COMPUTER

297.5

AU OPTRONICS COR

12.15

NAME FORMOSA PLASTIC FOXCONN TECHNOLO

NAME

PRICE DAY %

Volume

78.6

1.28866

5601125

TAIWAN MOBILE CO

97.5

1.668405

1.030928

6938937

TPK HOLDING CO L

385

1.717305

7729258 3841623

0.172117

8809717

TSMC

82.5

0.8557457

32414856

UNI-PRESIDENT

46.05

11566536

UNITED MICROELEC

13.25

22356474

40.6

0.2469136

4613273

2502968

FUBON FINANCIAL

29.1

0.5067568

2158445

HON HAI PRECISIO

83.2

22694138

0.4132231

17369726

HOTAI MOTOR CO

181

2.549575

625232

171

-1.440922

16293451

HTC CORP

407

1.622971

7674365

WISTRON CORP

CATHAY FINANCIAL

0.8695652

6231296

HUA NAN FINANCIA

1.265823

3699068

YUANTA FINANCIAL

12.55

0.4

16924175

CHANG HWA BANK

15.4

0.3257329

6118087

LARGAN PRECISION

558

2.385321

2534759

YULON MOTOR CO

47.7

1.059322

5540872

CHENG SHIN RUBBE

72.3 -0.4132231

3362381

LITE-ON TECHNOLO

35.5

4480051

CATCHER TECH

CHIMEI INNOLUX C

12.35

2.489627

30689208

MEDIATEK INC

262

3877738

CHINA DEVELOPMEN

7.39

1.790634

47534502

MEGA FINANCIAL H

21.05

1.201923

11777190

CHINA STEEL CORP

28.2

0.7142857

10353364

NAN YA PLASTICS

57.2

3591827

CHINATRUST FINAN

17.05

1.488095

11017862

PRESIDENT CHAIN

90.8

0.5537099

6368515

QUANTA COMPUTER

81.9

CHUNGHWA TELECOM COMPAL ELECTRON

156.5 -0.6349206

956611

5.405405

7728101

1.265823

4921397

SILICONWARE PREC

31.15

5362297

DELTA ELECT INC

90.1

2.154195

7353618

SINOPAC FINANCIA

9.63

1.368421

7666812

FAR EASTERN NEW

31.7

1.116427

2610864

SYNNEX TECH INTL

67.4

0.297619

1985450

FAR EASTONE TELE

67.7 -0.5873715

2551866

TAIWAN CEMENT

32.45

1.40625

3627820

FIRST FINANCIAL

16.9

0.5952381

4552905

TAIWAN COOPERATI

17.35

1.461988

2384411

FORMOSA CHEM & F

78.3

0.3846154

3364479

TAIWAN FERTILIZE

68.6

0.1459854

1081101

FORMOSA PETROCHE

83.2

0.1203369

1130680

TAIWAN GLASS IND

28.05

0.3577818

357829

MOVERS

8 5100

INDEX 4980.92 HIGH

5083.02

LOW

4943.91

52W (H) 6247.96 (L) 4643.05

4900

17-May

21-May

May 22, 2012 business daily | 13

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

Max 20.35

Average 20.11

MELCo CroWN ENTErTAINMENT

Min 19.78

Last 20.20

20.6

32.1

12.9

20.4

31.9

12.8

20.2

31.7

12.7

20.0

31.5

12.6

19.8

31.3

12.5

19.6

Max 31.80

SANDS CHINA LTD

Max 27.50

Average 27.18

Average 31.54

Min 31.15

Min 26.65

31.1

Max 12.86

Last 27.50

Average 12.56

Min 12.46

Last 12.62

PRICE

WyNN MACAu LTD

27.5

14.7

19.40

27.3

14.6

19.34

27.1

14.5

19.28

26.9

14.4

19.22

26.7

14.3

19.16

26.5

14.2 Max 14.70

Average 14.36

DAY %

YTD %

(H) 52W

Min 14.22

Last 14.34

19.10 Max 19.36

Average 19.27

91.7

0.240489725

-7.820667471

111.3000031

76.87999725

BRENT CRUDE FUTR Jul12

107.5

0.33600896

1.770330399

125.6100006

94.34999847

GASOLINE RBOB FUT Jun12

290.18

0.425679183

5.86647209

336.8899822

245.539999

GAS OIL FUT (ICE) Jun12

907.5

-0.027540622

0.833333333

1046.25

809.25

NATURAL GAS FUTR Jun12

2.732

-0.364697301

-14.14204903

5.09400034

1.981999993

HEATING OIL FUTR Jun12

PRICE

(L) 52W

WTI CRUDE FUTURE Jun12

Last 19.32

Min 19.14

MAJORS

ASIA PACIFIC

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

DAY %

0.9853 1.5821 0.9403 1.2774 79.28 7.9978 7.7646 6.3274 54.845 31.35 1.2724 29.567 43.176 9309 78.111 1.20113 0.8074 8.0848 10.2163 101.27 1.03

YTD %

0.0914 0.0253 -0.0638 -0.0469 -0.328 0.0313 0.0348 0.0126 -0.7658 0.1914 0.2201 0.1048 -0.0255 0.4404 -0.4212 0.0017 0.0458 -0.6073 -0.6539 -0.2864 0

(H) 52W

-3.4871 1.7886 -0.234 -1.4428 -2.9894 0.0225 0.0361 -0.5121 -3.2455 0.638 1.9019 2.4081 1.5379 -2.5782 0.411 1.3038 3.219 0.611 1.3283 -1.5898 0.0097

(L) 52W

1.1081 1.6618 0.9596 1.4697 84.18 8.0449 7.8113 6.5069 54.91 31.96 1.3199 30.716 44.35 9398 88.637 1.24736 0.90835 9.514 11.7768 117.9 1.0311

0.9388 1.5235 0.7071 1.2624 75.35 7.9823 7.7529 6.2769 43.855 29.63 1.1992 28.562 41.879 8458 72.057 1.00749 0.79505 7.9674 10.1031 97.04 1.0288

284.33

0.469964664

-0.0913595

331.5699816

256.0600042

Gold Spot $/Oz

1592.36

-0.0421

1.7541

1921.18

1478.78

Silver Spot $/Oz

28.4575

-1.0088

2.2364

44.2175

26.085

Platinum Spot $/Oz

1466.37

0.7468

5.1538

1915.75

1339.25

Palladium Spot $/Oz

616.13

2.0928

-5.7184

848.37

537.54

LME ALUMINUM 3MO ($)

2068

0.681596884

2.376237624

2695

1955.75

LME COPPER 3MO ($)

7650

0.013073604

0.657894737

9905

6635

LME ZINC

1894

-0.315789474

2.655826558

2539.5

1718.5

16825

-2.151788311

-10.0748263

25195

16550

15.27

0.626029654

-0.650618087

19.375

14.07500076

640.25

0.747442958

-3.175803403

795

572.25

697.75

0.359582884

1.675774135

957.5

592.25

NAME

(H) 52W

(L) 52W

1415

0.711743772

15.32192339

1512.5

1125.5

ARISTOCRAT LEISU

2.9

0.6944444

31.81818

3.25

1.88

1243917

180.25

0.614010606

-22.37295435

290.75

172.1999969

CROWN LTD

8.7

7.540171

9.29

7.45

1403821

SUGAR #11 (WORLD) Jul12

20.55

0.390815828

-8.909574468

27.02999878

20.06999969

AMAX HOLDINGS LT

0.079

1.282051

-9.1954

0.131

0.06

1632000

COTTON NO.2 FUTR Jul12

78.07

0.102577253

-14.50005476

117

76.25999451

BOC HONG KONG HO

21.9

-0.2277904

19.02174

24.45

14.24

7126128

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul12 CORN FUTURE

Jul12

WHEAT FUTURE(CBT) Jul12 SOYBEAN FUTURE Jul12 COFFEE 'C' FUTURE Jul12

CROSSES

MACAU RELATED STOCKS PRICE

CENTURY LEGEND CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

DAY % YTD %

VOLUME CRNCY

0.233

1.304346

0.41

0.204

-1.639344

7.142859

4.79

2.3

20000 16666668

CHINA OVERSEAS

15.06

1.756757

16.02466

17.86

9.99

CHINESE ESTATES

10.02

-1.377953

-19.84

14.1

10.02

25000

CHOW TAI FOOK JE

10.1

-0.1976285

-27.44253

15.16

9.97

5015400

EMPEROR ENTERTAI

1.16

4.504503

2.09

0.97

375000

FUTURE BRIGHT

0.86

-2.272727

104.7619

1.09

0.3

776000

GALAXY ENTERTAIN

20.2

41.85393

24.95

8.69

17257653

101.3

-0.7835455

9.929461

125

84.4

2077238

0.1001001

0.7049314

24.903

18.56

313000

63.1

-1.019608

6.949153

82.15

17278583

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12369.38

-0.5875834

1.24264

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2778.79

-1.240364

6.665265

3134.17

2298.89

HANG SENG BK

FTSE 100 INDEX

5285.81

0.3453172

-5.140979

6084.08

4791.01

HOPEWELL HLDGS

DAX INDEX

6306.81

0.5675132

6.924987

7523.53

4965.8

HSBC HLDGS PLC

NIKKEI 225

8633.89

0.2622133

2.111563

10255.15

8135.79

HANG SENG INDEX

18922.32

-0.1558159

2.646845

23707.94922

16170.35

CSI 300 INDEX

2587.231

0.5149621

10.29478

3140.102

2254.567

TAIWAN TAIEX INDEX

7192.23

0.5738905

1.698933

9089.47

HUTCHISON TELE H

3.56

2.59366

19.06354

3.6

2.13

3446003

LUK FOOK HLDGS I

18.04

5.620609

-33.43174

46.15

16.56

3328000

MELCO INTL DEVEL

6.44

11.61179

10.76

4.3

1832001

MGM CHINA HOLDIN

12.62

-0.9419152

31.56587

17.183

7.6

3945188

6609.11

MIDLAND HOLDINGS

3.49

-1.133144

-13.61386

5.48

2.95

1952002

NEPTUNE GROUP

0.101

-9.00901

0.157

0.08

NEW WORLD DEV

8.51

1.916168

35.94249

12.381

6.13

8036900

SANDS CHINA LTD

27.5

3.383459

25.28473

33.05

14.9

12939656

SHUN HO RESOURCE

1.18

1.32

0.82

SHUN TAK HOLDING

2.69

0.3731343

5.113918

4.686

2.241

3910253

SJM HOLDINGS LTD

14.34

-2.04918

14.66921

20.711

10.079

7316085

0.1430615

4.16667

18.5

9.8

1099001

WYNN MACAU LTD

19.34

0.3112033

-0.8205128

27.48

14.807

6582020

ASIA ENTERTAINME

4.64

-6.262626

-21.08844

10.8692

4.6148

243794 677710

KOSPI INDEX

1799.13

0.9352244

-1.45749

2192.83

1644.11

S&P/ASX 200 INDEX

4073.623

0.6713279

0.4206149

4756.2

3765.9

3940.108

-1.014647

3.09043

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1538.91

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781.031

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814.431

700.441

JAKARTA COMPOSITE INDEX

12.4

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NAME

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Last 31.80

SJM HoLDINGS LTD

Commodities ENERGY

MGM CHINA HoLDINGS

SMARTONE TELECOM

PHILIPPINES ALL SHARE IX

3308.04

1.284721

8.636996

3518.96

2695.06

HSBC Dragon 300 Index Singapor

527.29

-2.07

6.24

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1135.16

-1.670074

10.71276

1247.72

843.69

BALLY TECHNOLOGI

44.27

-1.818585

11.90596

49.32

24.74

HO CHI MINH STOCK INDEX

448.02

3.004943

27.44133

492.44

332.28

BOC HONG KONG HO

2.78

-0.7142857

15.96924

3.15

1.81

9500

Laos Composite Index

1013.92

-0.7002458

12.72541

1165.57

876.33

GALAXY ENTERTAIN

2.52

-0.7874016

34.75936

3.24

1.08

33000 2746239

INTL GAME TECH

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

-0.990099

-18.60465

19.15

13.38

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70.14

0.2859594

14.4956

99.89

46.01

394444

LAS VEGAS SANDS

46.38

-1.633086

8.542009

62.09

36.08

13749516

MELCO CROWN-ADR

12.06

1.005025

25.36383

16.15

7.05

10009393

MGM CHINA HOLDIN

1.65

38.45846

2.21314

1.00254

695

MGM RESORTS INTE

10.33

-0.6730769

-0.9587757

16.05

7.4

16396374

SHUFFLE MASTER

15.11

28.92491

18.77

7.35

464529

1.86

-1.06383

15.70238

2.60368

1.26239

7900

101.942

0.3959031

-7.736445

165.4931

101.02

3069183

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business daily May 22, 2012

Opinion American decline a mirage in a world that’s rising Ezra Klein

Columnist at The Washington Post and policy analyst for MSNBC

“

Anyone who tells you that America is in decline or that our influence has waned,” said President Barack Obama in his 2012 State of the Union address, “doesn’t know what they’re talking about.” It was a “rah-rah America!” applause line for a president who needed to get the assembled Republicans out of their seats a few times over the course of the evening. But the line works literally, too. Whenever someone tells me that the U.S. is in decline, I don’t have any idea what they’re talking about. And neither, I tend to think, do they. The claim is maddeningly vague. What does it mean for the U.S. to be in decline? Are we talking about our geopolitical influence relative to other world powers? Our standard of living relative to other nations? Our current standard of living compared with some assumption about its appropriate rate of improvement? Let’s flip the question: What does it mean for the U.S. to be on the rise? If it’s growing at a perfectly respectable 3.5 percent a year while China is growing at 8.5 percent a year, enabling China’s economy to surpass the U.S. in a decade or so, does that mean the U.S. is in decline? My hunch is that’s how most Americans define decline. That’s a problem. Consider a different scenario: Let’s say the U.S. is growing at 3 percent annually, and China’s growth slows to 4 percent. In that case, China won’t surpass the U.S. for decades, forestalling American “decline.” Yet that’s a worse outcome for everybody. It means more impoverished Chinese and more impoverished Americans – who will, incidentally, be competing with those low-wage Chinese workers who still can’t afford to buy American-made goods and services. It means fewer life-improving innovations will be developed in both countries. It may also mean less geopolitical stability as the Chinese people channel their frustrations against their political system, or their political system tries to distract them by channeling their frustrations against competitor nations.

Wealth and stability If American preeminence relies on the continued immiseration of Brazil, China and India, then, even in the most selfish terms, I’m not sure that it’s worth having. Yet it seems that some Americans would prefer to be the only superpower in hell than the foremost member of a more prosperous Group of 20 in heaven. A world in which global growth slows so much that countries with three or four times our population never surpass the U.S.’s economic output is a world in which much is going wrong. Even now, many

Chinese think that 8 percent annual growth is necessary for their society to remain stable. If growth falls to 4 percent, the Chinese system could crack, with untold geopolitical and human consequences. Perhaps it would lead to a more pluralistic, open political system. But I wouldn’t bet on it. More likely, it would lead to increased nationalism, xenophobia and internal repression. If hundreds of millions of Chinese and Indians continue to be stuck on unproductive farms or in unskilled jobs rather than being freed to develop their human capital, the rest of the world will be denied access to the endless innovations they otherwise might have developed. Put another way, the sun may now set on the British Empire, but the average British citizen lives much better because of the medical and computer technologies developed in Britain’s former colonies. If those colonies hadn’t grown rich and strong enough to throw off the mother country’s yoke, the result would be a worse world for everyone – including the British. So, yes, the U.S. has its problems. But I wouldn’t trade our problems for anyone else’s. Europe, China and Japan face immense demographic challenges. All three are aging rapidly and, for cultural and political reasons, immigration is unlikely to swell their workforces. Japan, with a median age of 44.6, is one of the oldest countries in the world. In China, the birth rate has fallen from

Put another way, the sun may now set on the British Empire, but the average British citizen lives much better because of the medical and computer technologies developed in Britain’s former colonies

2.6 births per woman 30 years ago to 1.56 today.

Values and diplomacy Political challenges loom equally large. The euro area looks irredeemably flawed – perhaps even unsalvageable. It’s unclear how China’s political system will evolve as the country grows richer, or how it will survive if the rapid growth of the past few decades slows dramatically. As for

India, its political system makes the euro area look like a model of farsighted governance. Then there are the economic challenges. Brazil, China and India are becoming middle-income countries. Historically, that is a harbinger of slower growth. Ruchir Sharma, head of emerging markets at Morgan Stanley and author of the book “Breakout Nations,” says the “gold medalists of growth” all experience a similar fate. “Japan and Korea and Taiwan, at a similar stage to where China is today in economic development, all slowed down,” he says. “It’s much easier to grow from a low base. Once your base becomes bigger, it’s much more difficult to grow.” If Europe gets back on track, and if Brazil, China and India manage to sustain their high growth rates, then it’s true that more nations will be vying for influence on the world stage: America’s unquestioned geopolitical dominance could decline. At that point, ensuring that the values the U.S. has imperfectly promoted – liberal democracy, human rights, open capitalism – continue to hold sway becomes a matter of statecraft. Diplomacy will have to achieve what being the only superpower on the block once assured. But that’s why we have the State Department, not to mention a military budget larger than the next dozen or so states combined. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Chief REPORTER Vitor Quintã Newsdesk Cláudia Aranda, Kristy Chan, Kelsey Wilhelm, Cherry Lee, Terina Cao, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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May 22, 2012 business daily | 15

OPINION Business

The death of inflation targeting

Leading reports from Asia’s best business newspapers

Jeffrey Frankel

wires Taipei Times

Taiwan industrial and financial leaders on Sunday stepped up protests against a plan to tax capital gains on securities investments, asking the government to rescind the bill. The plea came hours after President Ma Ying-jeou’s reinauguration ceremony. The return of financial turmoil in the eurozone should merit reconsideration of tax reform, let alone a capital gains tax on securities transactions, General Chamber of Commerce chairman Lawrence Chang was quoted as saying.

Business Inquirer

The Philippine central bank says the hike in the minimum wage in Metro Manila is not expected to have a major effect on consumer prices in the country. Governor Amando Tetangco Jr. said the increase in the daily wage by P30 (US$0.69) had been taken into consideration when the central bank made its inflation forecasts. The latest estimate by the central bank shows inflation may average at 3.1 percent this year and 3.3 percent next year.

Straits Times

Some M1 fibre broadband customers in Singapore had trouble logging on during a brief disruption on Sunday. M1 said on its Facebook page at 1.30pm that day it was experiencing a ‘technical difficulty on (its) fixed network’ and added that engineers were rectifying the issue. In response to queries, a spokesman said the disruption to its fibre services lasted for about an hour before it was restored. She added that only a ‘small number of customers’ were affected, and did not give specific numbers.

Nikkei.com

A government panel is pushing for total liberalisation of household power, a measure that may expand options for consumers. Members of a committee under the Ministry of Economy, Trade and Industry made the suggestion last weekend. “Electricity sales should definitely be liberalised,” says committee member Kikuko Tatsumi of the Nippon Association of Consumer Specialists. “No one says the current situation is good.” If deregulation is achieved, it could pave the way for companies specialising in the sale of renewable energy.

Professor at Harvard University

t is with regret that we announce the death of inflation targeting. The monetary-policy regime, known as IT to friends, evidently passed away in September 2008. The lack of an official announcement until now attests to the esteem in which it was held, its usefulness as an ornament of credibility for central banks, and fears that there might be no good candidates to succeed it as the preferred anchor for monetary policy. Inflation targeting was born in New Zealand in March 1990. Admired for its transparency, and thus for facilitating accountability, it achieved success there, and soon in Canada, Australia, the United Kingdom, Sweden, and Israel. It subsequently became popular in Latin America (Brazil, Chile, Mexico, Colombia, and Peru) and among other developing countries (including South Africa, South Korea, Indonesia, Thailand, and Turkey). One reason that IT gained such wide acceptance as the monetary-policy anchor of choice was the demise of its predecessor, exchangerate targeting, in the currency crises of the 1990’s. Pegged exchange rates had come under fatal speculative attack in many of these countries, whose authorities thus needed something new to anchor the public’s expectations concerning monetary policy. Inflation targeting was in the right place at the right time. In the early 1980’s, prior to the reign of exchange-rate targeting, the fashion was money-supply targeting, the brainchild of the monetarist Milton Friedman. But that rule succumbed rather quickly to violent money-demand shocks, though Friedman’s general argument – that a credible commitment to low inflation requires favoring rules over discretion – remains very influential. Inflation targeting was best known as a rule that instructed central banks to set – and

try their best to attain – a target range for the annual rate of change of the consumer price index (CPI). Close cousins included targeting the price level instead of the inflation rate, and targeting core inflation (the CPI minus volatile food and energy prices). There were also proponents of flexible inflation targeting, who held that it was fine to put some weight on real GDP growth in the short run, so long as there was a clear longer-term target for CPI inflation. But some felt that if the definition of IT were stretched too far, it would lose its meaning.

Real world shocks Regardless of the form it took, IT began to receive some heavy blows a few years ago (analogous to the crises that hit exchange-rate targets in the 1990’s). Perhaps the biggest setback hit in September 2008, when it became clear that central banks that had been relying on IT had not paid enough attention to asset-price bubbles. Central bankers had told themselves that they were giving asset markets all of the attention that they deserved, by specifying that housing prices and equity prices could be taken into account to the extent that they implied information regarding goods inflation. But this escape clause proved insufficient: when the global financial crisis hit (suggesting, at least in retrospect, that monetary policy had been too loose from 2003 to 2006), it was neither preceded nor followed by an upsurge in inflation. That the boom-bust cycle could occur without inflation should not have come as a surprise. After all, the same thing happened when asset-price bubbles ended in crashes in the United States in 1929, Japan in 1990, and Thailand and Korea in 1997. And the hope of long-time U.S. Federal Reserve Chair-

man Alan Greenspan that monetary easing could clean up the mess in the aftermath of such a crash proved wrong. While the lack of response to asset bubbles was probably IT’s biggest failing, another major setback was inappropriate responses to supply shocks and terms-oftrade shocks. An economy is healthier if monetary policy responds to an increase in the world prices of its exported commodities by tightening enough to cause the currency to appreciate. But CPI targeting instead tells the central bank to tighten policy in response to an increase in the world price of imported commodities – exactly the opposite of accommodating the adverse shift in the terms of trade. It is widely suspected, for example, that the reason for the European Central Bank’s otherwise puzzling decision to raise interest rates in July 2008, as the world was sliding into the worst recession since the 1930’s, was that oil prices were just then reaching an all-time high. Oil prices are given substantial weight

The monetarypolicy regime, known as IT to friends, evidently passed away in September 2008. The lack of an official announcement until now attests to the esteem in which it was held

in the CPI, so stabilising the CPI when dollar-denominated oil prices go up requires euro appreciation vis-à-vis the dollar.

Another candidate steps in One candidate to succeed IT as the preferred nominal monetary-policy anchor has lately received some enthusiastic support in the economic blogosphere: nominal GDP targeting. The idea is not new. It had been a candidate to succeed money-supply targeting in the 1980’s, since it did not share the latter’s vulnerability to so-called velocity shocks. Nominal GDP targeting was not adopted then, but now it is back. Its fans point out that, unlike IT, it would not cause excessive tightening in response to adverse supply shocks. Nominal GDP targeting stabilises demand – the most that can be asked of monetary policy. An adverse supply shock is automatically divided equally between inflation and real GDP, which is pretty much what a central bank with discretion would do anyway. A dark-horse candidate is product-price targeting, which would focus on stabilising an index of producer prices rather than an index of consumer prices. Unlike IT, it would not dictate a perverse response to terms-of-trade shocks. Supporters of both nominal GDP targeting and productprice targeting claim that IT sometimes gave the public the misleading impression that it would stabilise the cost of living, even in the face of supply shocks or terms-of trade-shocks, over which it had no control. Inflation targeting is survived by the gold standard, an elderly distant relative. Although some eccentrics favor a return to gold as the monetary anchor, most would prefer to leave this relic of another age to its peaceful retirement. © Project Syndicate

16 |

business daily May 22, 2012

CLOSING Google anti-trust

Suu Kyi Peace prize

European Union anti-trust yesterday asked Google to come up with “remedies” to satisfy Brussels concerns the Internet search king has abused its dominant market position. In November 2010, the European Commission launched an antitrust investigation into allegations that Google had abused a dominant market position, following complaints from rivals. The probe had identified areas of significant concern, notably: “preferential treatment” in the hierarchical presentation of search results; doubts over Google’s full respect of copyrights; and “restrictions” written into advertising contracts and the “portability” of advertising across different Internet platforms.

Aung San Suu Kyi will make a speech in Oslo next month to accept the Nobel Peace Prize she was awarded in 1991. Suu Kyi confirmed last month that she planned to leave Myanmar for the first time since 1988 to travel to Norway and Britain, and was issued her first passport in two decades on May 8. She has said the trip is a sign of gratitude for the support she received during her captivity and to accept the Nobel Peace Prize she won 21 years ago for her peaceful struggle for democracy.

A growth strategy for Europe Talk in Europe focuses on growth but skepticism abounds

U leaders will lay foundations for a new growth strategy at a Wednesday summit, agreeing cross-border borrowing to kickstart targeted investment in the run-up to key Greek and French elections. But for all the talk at a weekend G8 summit that saw US President Barack Obama join calls to temper austerity with growth, EU leaders have very little room for maneouvre until the Greeks and the French end voting on June 17. With a black hole in Spanish bank books of as much concern on markets than the risk of Greece exiting the eurozone, EU leaders are also watching whether the European Central Bank needs to, or will, step in to ease investor worries. In his invitation to the informal summit being held over dinner, European Union president Herman Van Rompuy called for a “no taboos” debate on how to boost growth and jobs. But the sums involved for new “project bonds” towards targeted investment are tiny: just 230 million euros in a pilot phase though the funds are then expected to attract top-up lending from the European Investment Bank (EIB) and privatesector, an EU diplomat said. The project bonds are the first of three policy changes also involving EU governments putting another 10 billion euros into the EIB, and “re-directing” unspent EU grants currently in national coffers, the source added. The European Parliament is to be asked to approve the plans on Tuesday, “so that we can

Looking for the growth engine starter

deliver this pilot phase in time for Wednesday’s dinner,” in the words of a top EU diplomat who asked to remain anonymous. But sceptics among leaders will only agree to launch dedicated EU project bonds “on the understanding that if it doesn’t work, we’re going to kill” all talk of future, permanently-pooled eurobonds, this source underlined. Meanwhile, “traditionally cautious” countries remain unconvinced about calls to increase EIB resources, warning that a lack of private funding means risky projects may get go-aheads, in turn threatening the bank’s Triple-A rating.

With a German-led treaty obliging fiscal austerity still to face an Irish referendum and pass ratification hurdles in a host of its 25 signatories, a related growth declaration offering a new equilibrium must wait until end-June. New Socialist French President Francois Hollande has to see what kind of backing he gets from his country’s parliamentary election, while on Greece, “it is very difficult to see what meaningful we can do,” the diplomat underlined. “Whatever we do there runs the risk of being seen as undue interference in the democratic

process,” the diplomat stressed, “and experience shows it always backfires” in such circumstances. Gilles Moec of Deutsche Bank said that the “minimum” requirement from this fraught four-week period would be “another round of massive liquidity injection by the ECB” and “a doubling” of the eurozone firewall’s 800-billion-euro size. The London-based analyst also said there is a need to change European Stability Mechanism rules “to allow it to help re-capitalise banks without keeping the cost on the ailing member states’ balance sheet.” AFP

World oil market tightening, reduced surplus Price bottom reached on expectations of growth in Asia and Iran sanctions, analysts say

Crude surplus falling on supply woes

il rose for the first time in seven days in New York after China pledged to boost the nation’s economy and Goldman Sachs Group Inc. said the balance between supply and demand of crude is tightening. The extent of oil’s decline was unwarranted, Goldman said in a report. “The emphasis for oil prices is ultimately where demand is growing the most strongly, such as China and India. Prices seem to have found a bottom at last.” West Texas Intermediate futures gained as much as 0.8 percent after settling at the lowest level in almost seven months on May 18. Crude for June delivery rose as much as 72 cents to US$92.20 a barrel in electronic trading on the New York Mercantile Exchange. It fell 1.2 percent on May 18 to US$91.48, the lowest close since October 26. “Despite concerns over the softening economic data, oil demand continues to improve,” David Greely, head of energy research at Goldman Sachs in New York, said in the e-mailed report. “The supply of oil actually available to the market is increasingly constrained by the inability of Iran

to market its oil owing to the effects of US and European sanctions.” Brent, the benchmark price for more than half the world’s petroleum, has dropped about 3 percent since May 13, when Saudi Arabia’s Oil Minister Ali al-Naimi said it should fall to US$100 a barrel because global supply is outweighing demand. Prices slid earlier after Saudi Arabia’s output in March climbed to the second-highest level in at least 31 years before a European embargo on Iran that starts in July. “With Saudi ramping up production to meet the need for oil once sanctions against Iran come into full effect, the oil market was pushed into surplus this year,” Greely said. “However, as Iranian supplies are increasingly shut out from the market as the sanctions take effect, that surplus is disappearing.” Oil has also fallen this month amid speculation the U.S. and its allies will use strategic supplies to protect the global economy as they prepare for the EU ban on imports from Iran. Bloomberg