Macau Business Daily, May 31, 2012 by Business Daily

Year I - Number 44 - Thursday May 31, 2012

Editor-in-chief: Tiago Azevedo

Deputy editor-in-chief: José I. Duarte

MOP 6.00

GDP slows but still world leading The local economy slowed for the third consecutive quarter according to government data. But gross domestic product still managed an 18.4 percent hike year-on-year in the first quarter – nearly two-and-a-half times the expected growth rate of mainland China’s economy this year. Some slowing in the growth of Macau’s services – which includes gambling – had been expected because of a deceleration in the Chinese economy. But one surprise was a near 24 percent jump in exports year-on-year. Page 3

THE DAY

Tax evaders, beware – Macau signs new deals Page 6

Shun Tak profit down 10 percent Page 7

DIED

Stimulus ‘short-term medicine’ for China Pages 8 & 9

he government’s decision to ground Viva Macau after a string of cancelled flights in late March 2010 was ‘shocking’ and unprecedented, former management staff of the airline told the Court of Second Instance yesterday. The judges are reviewing an appeal from the bankrupt company that claims Secretary for Transport and Public Works, Lau Si Io, issued an illegal administrative act telling flagcarrier Air Macau to revoke Viva

Macau’s sub-concession contract. Viva Macau’s former director of engineering, Yok Cheow Lee – a 40year veteran of the aviation industry – said: “I have not come across any airline being terminated suddenly without a warning and a period of time to justify [why it was having problems].” In a message read in court, Air Macau admitted to the low-cost carrier that it had to terminate the contract due to government pressure. Viva Macau’s director of ground operations, Sharon

Chia, even said the two airlines had a “mutually beneficial” relationship in general terms. She claimed the carrier only stopped providing accommodation and transportation for stranded passengers after they were instructed by airport management to let the Macau Government Tourist Office handle the issue. Viva Macau’s lawyers also stressed that the cancellation rate of Viva Macau was much lower than Air Macau’s.

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HANG SENG INDEX 18900

Oz regulator probes MPEL

Ao Man Long 3rd trial verdict Former Macau planning boss Ao Man Long makes possibly his final public appearance for the next 24 years at the end of his third and ultimate trial today. But he could be back to court much sooner. He might be called as a witness in a possible new trial of two Hong Kong businessmen alleged to have bribed him over a Macau land deal. Page 4

Deposit protection scheme here soon As the spectre of more bank failures haunts Europe, Macau has moved to set up a deposit protection scheme. Under the draft law, local savers will each be compensated up to a limit of 500,000 patacas (US$62,500) in the event of a bank in the territory going under. The law will come into effect 90 days after its eventual publication in the Official Gazette. Page 5

An Australian gaming regulator is to investigate the Macau casino operations of joint venture Melco Crown Entertainment (MPEL). The reason is that Australia’s Crown Ltd, one half of MPEL, wishes to increase its stake in another Australian company with casinos in Sydney and Queensland and faces a “probity and suitability” test. “This will involve liaison with a large number of regulatory and enforcement agencies, both nationally and internationally,” said the Independent Liquor and Gaming Authority of New South Wales. The other half of MPEL is Melco International Development. Melco is a Hong Kong-listed company that until March 2006 was chaired by former Macau casino monopolist Stanley Ho Hung Sun and is now led by his son Lawrence Ho Yau Lung. Mr Ho senior has previously been told by Australian regulators he would not be considered for a gaming licence in that country. The reason was because of alleged connections to Chinese organised crime. Mr Ho has always denied that, and Lawrence Ho denies any connection with his father’s business interests. Crown sources have also stated that Crown chairman James Packer already has regulatory approval in two other Australian states and in the “strictest” regime in the world – Nevada, United States. The NSW regulator recently turned down an application by Mark A. Brown, a former president of The Venetian Macao, for a gaming employee licence.

18840

18780

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May 30

HSI - Movers Name

%Day

TINGYI HLDG CO

1.56

CHINA RES LAND

1.08

CHINA MERCHANT

0.21

CHINA OVERSEAS

AIA GROUP LTD

WHARF HLDG

-3.21

CNOOC LTD

-3.53

PETROCHINA CO-H

-3.89

HUTCHISON WHAMPO

-4.34

CHEUNG KONG

-4.4

Source: Bloomberg

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business daily May 31, 2012

macau

Viva Macau’s grounding ‘shocking’, unprecedented

InBrief

Viva Macau Airlines former staff defended the company in court against the government’s decision to terminate the sub-concession

Macau Pass profits tumble Profits of the Macau Pass payment system have decreased dramatically last year, which Macau Pass S.A. claims was due to an almost eightfold increase in capital investment. The company reported a profit of less than 138,800 patacas (US$17,400), a year after posting profits of 1.9 million patacas. For this year, Macau Pass wants to continue to expand its smart card payment system in the Pearl River Delta region. It also pledged to “fully update the hardware and software of the electronic payment system in buses”.

AERL seeks joint listing in HK Viva Macau’s lawyers claimed the airline’s cancellation rate before it was grounded was much lower than Air Macau’s rate

Tony Lai

tony.lai@macaubusinessdaily.com

ormer management staff of Viva Macau Airlines were “shocked” and had not “come across” any situation like the government’s ‘abrupt’ decision to ground the low-budget aviation company in 2010, they said in the Court of Second Instance yesterday. “I have not come across any airline being terminated suddenly without a warning and a period of time to justify [why it was having problems],” said Yok Cheow Lee, who was Viva Macau’s director of engineering. He spent over 40 years in the aviation industry in companies like Qantas, Cathay Pacific and Singapore Airlines. Sharon Chia, director of ground operations, said all the staff in the company was stunned with the government decision and did not see “any reason why the contract was revoked”. Viva Macau was grounded in March 2010, as it was allegedly unable to settle its jet fuel bills with supplier Nam Kwong Oil, causing delays and flight cancellations. The carrier took its plight to court, claiming that Secretary for Transport and Public Works, Lau Si Io, had issued an illegal administrative act telling flagcarrier Air Macau to revoke its subconcession contract. Mr Yok said the staff did not receive any information about the grounding until March 28 during a management meeting, when they received two notifications from Air Macau and from the Civil Aviation Authority. In the two messages read in the court, the authority told Air Macau that the secretary had advised the company to end its sub-concession contract with Viva Macau. Later Air Macau then wrote to the carrier saying it had to terminate the contract due to government pressure.

But in October 2010 the aviation authority told Macau Business that Mr Lau’s ‘decision’ was just a “nonenforceable opinion”. The two directors believe the decision came from the government, not from Air Macau. Ms Chia added that the two airlines had a “mutually beneficial” relationship in general terms.

‘Better’ image Viva Macau’s operation licence was revoked owing to the alleged damage to passengers and to Macau’s image from the cancellation and delays of flight on the weekend of March 2628, 2010.

I have not come across any airline being terminated suddenly without a warning and a period of time to justify [why it was having problems] Yok Cheow Lee, former Viva Macau director of engineering

Ms Chia admitted that the situation in the Macau airport was “quite chaotic” during that weekend as they had a lot of passengers to deal with, but they handled the situation the best they could and worked with the crisis management team of Macau Government Tourist Office. The company provided accommodation and transportation for the passengers in the first day “just out of goodwill”, she said, as the carrier was not obliged to do so. They were instructed by the airport management to allow the tourist office to take over the situation in the second day, the grounding operation director said, but she did not know the reason for this move. Raymond Lo, general manager of Menzies Macau, which provides grounding services at the airport, told the court that he received phone calls from his subordinates about the delays and cancellations of flights that weekend. He usually got an e-mail update on each day’s business from his staff. He only got phone calls when there was a “special case”, said the manager, noting, however, that it was not uncommon to experience delays and cancellations of flights. Viva Macau’s lawyers also stressed that the cancellation rate of Viva Macau in the second half of 2008 was nine percent, while Air Macau had a much higher rate, at 15.6 percent. Mr Yok added that over 85 percent of all Viva Macau flights arrived and departed on time, which was about industry average. He said there were very few cases of the company’s flights being cancelled or delayed due to safety or security problems. The technician said Viva Macau’s image outside of the territory was “a lot better” than Air Macau’s. He added that Viva Macau won international awards and passed an international safety inspection while Air Macau has experienced problems with their pilots and cabin staff.

Asia Entertainment & Resources Ltd, a promoter of VIP rooms in Macau casinos, says it has hired an investment bank and a Hong Kong law firm for a “pre-IPO enquiry” in relation to a dual listing of its shares in Hong Kong. AERL – founded by Lam Man Pou, a 20-year veteran of Macau junket operations and a Macau permanent resident – was first listed on Nasdaq in New York in July 2010.

Seventh best Asian city for expatriates Macau is Asia’s seventh most liveable city for expatriates, according to the latest edition of an annual ranking released by consultancy firm ECA International last month, Portuguese-language newspaper reported yesterday. The territory maintained the same position as in the 2011 edition, in front of cities like Seoul, Kuala Lumpur or Shanghai. In the worldwide ranking, again led by Singapore, Macau was in the 63rd spot. Hong Kong rose to the 5th position in Asia, overtaking Tokyo and Yokohama, which dropped as a consequence of the fallout from the devastating earthquake and tsunami in northeast Japan last year.

Hotel room rate rise with inflation The average room rates in Macau hotels rose by 6.7 percent year-onyear last month to 1,435 patacas (US$180), a growth similar to inflation, which reached 6,76 percent in April. But prices rose much faster (13 percent) in three-star hotels to 998 patacas, according to data released by the Macau Hotel Association. In fact, three-star rooms were more expensive than four-star rooms, whose price increased 11.2 percent to 872 patacas.

May 31, 2012 business daily | 3

MACAU

Growth stays high, but easing underway Latest data show an anticipated slowdown in economic growth is happening, as the global economy applies the breaks to exports of services José I. Duarte

jid@macaubusinessdaily.com

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he city’s runaway economy has slowed again for the third quarter in a row. Data released by the Statistics and Census Bureau shows the economy grew by 18.4 percent compared to the same period last year. In comparison, the annual rate of growth during the first three months of 2010 and last year was 27 percent and 20.7 percent, respectively. “The slowdown was widely expected, given the lower growth target of China,” said Henry Lei Chun Kwok, assistant professor at the Department of Economics at the University of Macau. “Given the deterioration in the Euro debt crisis, the weak global demand and its adverse impacts on China’s exports, the growth pace of the Macau economy could hardly Macau’s runaway economy slows again on the back of a lower growth target in mainland China catch up with its progress in 2011.” The figure is in line with a forecast from the University of Macau earlier Mr Ho said the trend was explained mainland’s smaller target of 7.5 private investment is expected to this month. The study showed that “by the global economic downturn, percent growth this year – beneath remain healthy. the city will register economic as China and Hong Kong are not the 8-percent target Beijing says is Inflation, however, remains a the minimum needed to maintain concern. The shortage of labour growth of about 18 percent this year, doing very well either”. “Such growth social stability. created by consistently high levels down slightly pattern of our The university’s forecast also of economic growth will push up from last year’s exports of services anticipates that export services the inflation rate up, experts have 20.7-percent will probably growth will cool from last year’s warned. The consumer price index increase. The slowdown was continue for the 29.4 percent, falling to 26.7 percent rose by 6.27 percent in the four Patrick Ho Wai rest of this year,’ this year and 22.1 percent next year. months to April. Hong, a professor widely expected, given he said. Despite the expected slowdown, with Tiago Azevedo of economics at One curious the University of the lower growth development in Macau said first Macau Real Gross Domestic Product yesterday’s data quarter growth target of China is associated with Year-on-year growth rate, Chained prices, base= 2010 was consistent exports of goods. with the forecast. 30.0 After contracting “In view of the Henry Lei Chun Kwok, a l m o s t 22.5 sluggish global University of Macau continuously economy, it will 15.0 since the middle be wonderful of 2006 – in all quarters but one – if we can achieve the same GDP 7.5 it increased by 7.7 percent in the growth rate next quarter,” he said. final quarter of last year and by a 0.0 remarkable 23.8 percent in the first Trending down quarter of this year. -7.5 Investment was the guiding light The recovery, however, “is no longer last quarter, showing the highest significant” in absolute terms, Mr -15.0 rate of growth of any of GDP’s Lei said. But Mr Ho suggests the components with 43.8 percent. figures result mostly “from nonMost of this growth was due to textile products”, indicating that public investment, the data released the economy may “have achieved Gross Fixed Capital Formation, current prices (103 mop) a certain degree of success in yesterday shows. 15000000 “Given the low interest rate, the diversifying our export commodities”. Overall, however, yesterday’s data public housing projects and the commencement of public projects, showed an evolution in the city’s 12000000 such as the light rail system, I economy that was expected. speculate the investment amount 9000000 may grow continuously,” Mr Lei said. Expansion break This time last year, the investment 6000000 Murky economic conditions in the figures were also unusually low. Exports of services, the main driver mainland and outright confusion 3000000 further afield, of the city’s paired against economy, are 0 the rollout of new showing signs resorts and public of slowing. Such growth investment will In 2010, the likely make for quarterly growth pattern of our exports Exports of goods and services, current prices further easing of rates were, growth. in real terms, of services will Year-on-year growth rates (%) The university’s 80 constantly above probably continue for D e p a r t m e n t 40 percent, 60 of Finance peaking at about the rest of this year and Business 64 percent in the 40 Economics set second quarter. Patrick Ho Wai Hong, 20 this year’s range When signs of University of Macau for expected GDP slowing growth 0 growth at between were clear last 11.5 percent and year, it was -20 Services above 30 percent for the first three 24.5 percent. -40 quarters and fell to 22.2 percent for The report said the slowdown Goods was due to the gloomy economic the October-December quarter. -60 That fall is confirmed by the latest situation in the United States and European markets, as well as the figure of 19.2 percent.

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business daily May 31, 2012

macau

Riddles remain as Ao braces for verdict Ao receives an answer on his final fate today but more questions remain unanswered Vítor Quintã

vitorquinta@macaubusinessdaily.com

he curtain may fall today on the long-running drama starring Ao Man Long as the former secretary for Transport and Public Works waits to hear the verdict in his third trial on corruption and money laundering charges at the Court of Final Appeal. The former official is charged with taking a bribe of HK$20 million (US$2.6 million) from two highprofile Hong Kong businessmen, Joseph Lau Luen Hung and Steven Lo Kit Sing, in the process of granting the plot where La Scala is being built. He is also accused of receiving 4 million patacas from state-owned contractor China Civil Engineering Construction Co (Macau) Ltd to favour the company’s bid to win a 136.7-million-pataca contract to put up a building at the Zhuhai-Macau Cross-Border Industrial Park. In a third bribery charge, Mr Ao is alleged to have pocketed almost HK$7 million from a consortium of ATAL Engineering Ltd, Waterleau Global Water Technology NV and China State Construction Engineering (Hong Kong) Ltd in return for contracts to build and run wastewater treatment plants at Coloane and the industrial park. There is also a charge of money laundering. Mr Ao remained silent during most of the trial but denied having received bribes from the La Scala developers at the final hearing. He

HK$30.9 million in bribes allegedly taken by Ao

The La Scala land deal will be scrutinised in court for a second time, threatening to become more than a footnote to Ao’s third trial

laid the blame on Pedro Chiang – convicted for corruption in March last year for his role in the Ao scandal – for the money allegedly paid by Waterleau to a company he co-owned with Chiang. Mr Ao was arrested in December 2006, faced two trials and was convicted to a total jail term of 28-and-a-half years for passive corruption, money laundering, unjustified wealth and abuse of power. The maximum jail term under Macau law is 30 years.

The Court of Final Appeal is the only court that has the power to try high-level public officials. As in his first two trials, Mr Ao will not have the right to appeal against the top court’s decision, a fact that has been criticised by the International Association of Lawyers. The Commission Against Corruption sent these cases to the Public Prosecutor’s Office in October 2009 and the watchdog said at the time they were the last cases of this corruption scandal.

There is at least one more footnote to come in the Ao story, a related case involving men who did business with the government while Mr Ao was in charge. The Public Prosecutor’s Office and top judge Sam Hou Fai have already said that Mr Lau, Mr Lo and Chan Ying Lun, a Hong Kong-based executive from China Overseas Civil Engineering Ltd, a subsidiary of China Civil Engineering Construction Co Ltd, are defendants.

Ao’s third trial Key dates in the third trial of former Transport and Public Works Secretary Ao Man Long

April 16

Mr Ao’s third trial gets underway in the Court of Final Appeal. The jailed former secretary faces six counts of passive corruption and three of money laundering. He is accused of accepting bribes from companies tendering for public works linked to the Zhuhai-Macau CrossBorder Industrial Park, the Coloane wastewater treatment plant, and a parcel of land – originally earmarked for use by the airport – on which the La Scala flats are being built.

April 17

Hong Kong businessmen Joseph Lau Luen Hung and Steven Lo Kit Sing deny having bribed Mr Ao to get the La Scala land but admit they have been named as witnesses in another inquiry. Mr Lau says he “was not formally charged”. State-owned contractor China Civil Engineering Construction Co (Macau) Ltd denies bribing Mr Ao to win the contract to erect a building at the industrial park and instead blames a former manager surnamed Wang.

April 18

The Public Prosecutor’s Office claims the government sold the La Scala land for at least 800 million patacas (US$100 million) less than an appraisal by Savills Hong Kong. Judges and officials raise doubts over whether Jones Lang LaSalle had access to inside information that allowed it to win the tender.

April 22

Mr Lo testifies and again denies bribing Mr Ao. Mr Lau fails to show. The Public Prosecutors’ Office says that both are named defendants in a case related to the current trial. Top judge Sam Hou Fai reveals that Lo had asked for a pre-trial.

April 25

Chan Ying Lun, a Hong Kong-based executive from a subsidiary of China Civil Engineering Construction Corp, is named defendant in a corruption case linked to Mr Ao.

May 2

Mr Ao speaks. He questions the testimony of investigators and the integrity of documents presented by the Commission Against Corruption. Lau’s brother, Thomas Lau Luen Hung, is named in court for co-signing a cheque that ended up in Ao’s hands.

May 9

The final day. Mr Ao denies receiving bribes from the La Scala developers or being aware of bribes prosecutors say Waterleau paid to a company he co-owned with businessman Pedro Chiang. The bribes were to curry favour in tenders for the crossborder and Coloane wastewater plants, the indictment says.

Corporate Malo Clinic Macau in Luxury Spa Awards

Banyan Tree Macau among world’s top 60

Malo Clinic Macau was named as best luxury medical/wellness Spa in the World Luxury Spa Awards 2012. Integrated in the country winners, the award chose Malo Clinic as the best Medical Spa in China “by its high quality level and service excellence”. The results went through an independent judging process based on spa guests’ votes and the opinion of a selected global panel of professionals from the spa industry. “The level of competition in 2012 was exceptional evident from the calibre of spas that were nominated by clients,” the organisation said. “These spas stood up to the highest expectations and where tested by discerning spagoers looking for the ultimate experience where only the absolute best is acceptable,” said Marinique Truter, executive manager of World Luxury Spa Awards. “It is a great honour for us to receive this award,” Paulo Malo, president of Malo Clinic Health & Wellness, was quoted as saying in a statement.

The 5-star urban resort Banyan Tree Macau was voted among ‘The 60 Best New Hotels in the World’ on the popular Condé Nast Traveller (U.K.) Hot List 2012. Banyan Tree was applauded as an “oasis of serenity” and “probably the finest new hotel in a city full of brasher contenders”. It was also highlighted the fact that it is first hotel in Macau to feature private indoor relaxation pools in each of its 246 suites. The property was one of only three hotels in Greater China to be honoured in this year’s list. The Group is rapidly expanding in China with similar urban resort developments including Banyan Tree Tianjin Riverside and Banyan Tree Shanghai On The Bund slated to open by the end of the year. Banyan Tree Macau’s first 5-star all-suite resort is part of the new HK$16.5 billion integrated Galaxy Macau resort, focusing on luxury Asian-style hospitality.

May 31, 2012 business daily | 5

MACAU

Banks allowed to ease into savings guard fund Macau’s deposit protection scheme will begin this year but banks will only commence contributions in 18 months’ time Kristy Chan

kristyc@macaubusinessdaily.com

Better protection for bank deposits is the promise of a revamped scheme closing on legislative approval

anks will be allowed a “transition period” before their first contribution to the Deposit Protection Fund in 2014, according to a bill that the third standing committee of the Legislative Assembly has finished discussing. The draft law is now up for a final vote, that could take place next month, third standing committee president Cheang Chi Keong told reporters yesterday. Its provisions will come into effect after 90 days. The Monetary Authority of Macau expects the first yearly contribution from banks to reach about 44 million patacas (US$5.5 million), according to a statement. The 300-million-pataca fund will also receive a start-up allocation of 150 million

patacas from the government. All 25 Macau-licensed banks, with the exception of offshore institutions, will pay an annual contribution of 0.05 percent of the protected deposits in the fund every January from 2014 onwards.

MOP44 million

first paymen t by banks in 2014

The fund will be formally established through a bylaw that is “also ready to be reviewed”, Executive Council spokesperson Leong Heng Teng said

last October, and it will be managed by the Monetary Authority. The government and legislators have agreed to maintain the maximum limit of 500,000 patacas. According to the draft, if a bank flounders, its clients would be compensated up to 500,000 patacas. Legislators had feared the inclusion of a maximum cap would create a legal conflict with other legislation and suggested that the limit could be established through a bylaw instead of being included in the current law. The aim of the fund is to enhance the credibility of banking sector and “to protect every depositor in the banks of Macau”, Mr Cheang said after a closeddoor meeting. A temporary protection scheme has been in force since the Global Financial Crisis. “Macau has to take actions to stabilise the local financial market and eliminate any rumours about the local banking sector,” says a report drafted by the committee. But the scheme will not protect deposits in private pension funds. Legislators and the government agreed the issue was “too complex”. It will instead be covered by the central provident fund bill, also being reviewed by the committee.

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business daily May 31, 2012

macau

The chairman of India’s Central Board of Direct Taxes, Mukesh Chand Joshi, and the Secretary for Economy and Finance, Francis Tam Pak Yuen, signed a tax deal in January

City signs tax treaties with India, Greenland New double taxation agreements to beat tax avoidance and evasion

acau will be working with India and Greenland in preventing offshore tax avoidance and evasion, Chief Executive Fernando Chui Sai On announced yesterday. “The necessary internal legal requirements have been fulfilled,” according to the Official Gazette. The accord with Denmark’s autonomous territory of Greenland was signed in April last year and with India in January. The treaties will provide signatories access to information on the financial position and income of citizens with a tax debt and may

reveal assets and earnings that have not been declared. Macau has signed double taxation treaties or Tax Information Exchange Agreements with 14 countries or regions. Two of these agreements, ratified earlier this year, involve Norway and the Faroe Islands, another autonomous territory of Denmark. The Financial Services Bureau said last September the government would also sign deals with Malta and Jamaica. Tax treaties with Ireland, New Zealand, Germany and Argentina are also in the pipeline. The Organisation for Economic

Cooperation and Development upgraded Macau’s classification on tax information exchange last September, less than two years after it almost labelled the city a tax haven. However, the head of the European Union office in Hong Kong and Macau, Maria Castillo Fernandez, said last January the territory must make improvements in tackling tax evasion. The government dropped the tax code draft law last month, after it lay frozen for almost a year at the Legislative Assembly, and said it would review the whole tax system.

countriesor regions have signed double taxation treaties with Macau

V.Q.

Ho to lead mission to Portugal and Angola

Former chief executive Edmund Ho leads a business delegation to Portugal, which includes Chinese state-owned enterprises

everal state-owned companies and a group of Macau businessmen will be part of a trade mission led by former chief executive Edmund Ho Hau Wah to Portugal and Angola next week. The delegation will include more than 10 Macau investors and entrepreneurs from industry sectors including banking, retail, legal consultancy, construction, tourism and pharmaceuticals, the Macau Trade and Investment Promotion Institute told Business Daily. The head of the institute, Jackson Chang, will not join the mission, a spokesperson confirmed. The trip was organised by the cabinets of Mr Ho and Economy and Finance Secretary Francis Tam Pak Yuen. Mr Tam will join the mission, as will representatives from the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries.

The secretary invited “some representative businesses” to promote Sino-Portuguese trade in Macau, a spokesman for the cabinet of Mr Ho, vice-president of Chinese People’s Political Consultative Conference, told Business Daily. In addition, “some significant [Chinese] stateowned enterprises in energy, environmental protection, infrastructure and agriculture” such as power distributor State Grid Corp of China and the Nam Kwong (Group) Co Ltd have been invited, a spokesperson said. State Grid bought a 25 percent share last February in Portugal’s Rede Energética Nacional, which operates the country’s electricity supply grid. The delegation’s first stop, between June 3 and 5, will be Lisbon, before it goes to Angola. The country is seen as an emerging powerhouse in Africa and the mainland’s biggest trade partner there. V.Q.

Weather Beijing 28/17o C Changchun 26/13o C

Harbin 26/14o C

Xian 19/12o C Shanghai 24/18o C Chengdu 24/16o C Kunming 23/17o C Haikou 30/24o C Sanya 32/26o C

Guangzhou 32/24o C

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May 31, 2012 business daily | 7

MACAU

Shun Tak profit down 10 percent in 2011 But strategic moves deal core ferry operation strong hand Associate Editor

rofit attributable to shareholders of Shun Tak – a Hong Kong-listed conglomerate that is the main ferry service provider between Hong Kong and Macau – fell 9.9 percent year-on-year according to the company’s annual report. The company – still chaired by 90-year-old former Macau gaming monopolist Stanley Ho Hung Sun, with his daughter Pansy Ho Chui King in day-to-day control as managing director – recorded a HK$781 million (US$100.6 million) shareholder profit in 2011. In 2010 it managed HK$867 million. But the firm achieved several strategic gains during 2011 that might help to boost its shipping earnings in future – even after the opening of the 68 billion yuan (US$10.7 billion) Hong Kong-Zhuhai-Macau bridge across the Pearl River Delta; due officially in 2016. That’s important because last year 56 percent of Shun Tak’s revenue – HK$1.739 billion out of HK$3.095 billion – was generated via its TurboJet ferry shipping and Sky Shuttle Helicopter operations. But Shun Tak is also spreading its bets by diversifying into mainland China’s tourism market via joint ventures. “Through Shun Tak, we definitely are in talks and now looking very closely at some possibilities” said Pansy Ho on the sidelines of the Global Tourism E c o n o m y Forum in Beijing on Monday – as reported by the Wall Street Journal.

Spreading bets

KEY POINTS Shun Tak profits down 10pct y-o-y Makes strategic moves in 2011 Raises SOME TurboJet fares above inflation Buys rival ferry firm for HK$341m Nova City Phase 5 due to start Q3 Central were sold to third parties – mainly institutional investors – and now attract some of the highest rental and sale prices in Macau. One of the smallest units – a 654 square feet, one-bedroom apartment – was on sale this week for HK$6.3 million. Shun Tak retained a 51 percent direct holding in the shopping complex and in the Mandarin Oriental Hotel inside One Central according to the firm’s 2010 annual report. The company’s 2011 annual report filed with the Hong Kong Stock Exchange this week added that the Nova City residential development in Taipa – in which the group has a 100 percent stake – has had strong sales for the first four phases. Phase five is due to start in the third quarter of 2012.

Ferry dominance Shun Tak has also diversified Pansy Ho Chiu King – running Shun Tak and Shun Tak moved closer to home still an investor in MGM China Holdings to strengthen its with real estate core operation developments in during 2011. Macau and Hong It received Macau government Kong. The most famous example is One Central, the residential and permission to increase TurboJet shopping complex attached to ferry fares. It was the first “fare the MGM Macau casino hotel on increment” on TurboJet services in seven years said Shun Tak in Macau peninsula. Shun Tak has a 51 percent equity its annual report. “Increment” in holding in the scheme with a further this context meant above-inflation 47 percent owned by Hongkong fare increase. Some TurboJet fares Land. One Central opened in phases rose last July by nearly double the from August 2009 and reported 7.9 percent consumer price index advanced sales of HK$6 billion. inflation rate recorded that month. The seven residential towers at One Shun Tak’s second strategic victory

came in September. It was allowed by the Macau government to purchase for HK$341 million the ferry operation and seven vessels of a rival company, New World First Ferry (Macau). The deal means Shun Tak now has a dominant position in the schedules of the two biggest ferry terminals out of Hong Kong – the Hong Kong-Macau Ferry Terminal at Sheung Wan on Hong Kong Island and the China Ferry Terminal at Tsim Sha Tsui in Kowloon. More than a quarter of Macau’s 2.4 million visitor arrivals last month were Hong Kong residents according to Macau’s Statistics and Census Service. Most of those people arrived on

ferries. The total number of people travelling to Macau via Hong Kong by ferry is even higher because many tourists from the Chinese mainland combine a shopping and sightseeing trip to Hong Kong with a visit to Macau. TurboJet’s hand has also been strengthened by the closure last September of Macao Dragon. The ferry operator – launched only 15 months earlier – had been offering cut-price services between TurboJet’s home base in Sheung Wan, Hong Kong and the Taipa Temporary Ferry Terminal in Taipa, Macau. Its major shareholder was listed as local businessman Ng Fok, who has also had business ties with Stanley Ho.

8 |

business daily May 31, 2012

GREATER CHINA

Experts warn against new big fiscal stimulus Academics and economists stress need to focus on structural adjustment and quality of growth

hina needs an appropriate amount of investment to spur economic growth but Beijing should not launch a new round of aggressive fiscal stimulus, influential academics said in remarks published in leading state-backed newspapers yesterday. They followed comments earlier this week from an official of the state planner, the National Development and Reform Commission (NDRC), who said a large scale economic stimulus package of the sort unveiled during the global financial crisis was unlikely. The top government researchers and economists warned that excessive investment would reduce the efficiency of economic growth and exacerbate over capacity in some industries. “It is not necessary for China to launch another massive 4 trillion yuan (US$635 billion) stimulus plan. We must hold off any impulse of making excessive investment,” said Liu Yuanchun, a professor at the Renmin

University, according to the official People’s Daily, the mouthpiece newspaper of the ruling Communist Party. Chen Bingcai, a professor at the National Academy of Governance, said China must not overly expand investment and sacrifice quality growth for high growth. Mr Chen’s school teaches and trains many senior leaders of the central government. “If Beijing returns to an investment boom again, the previous call of adjusting the economic structure would turn out to be nothing but empty talk,” the official China

Securities Journal citing Mr Chen as saying. China’s economy is on course this year to grow 8.2 percent, its slowest pace since 1999, according to the consensus forecast of investment bank economists in the latest benchmark Reuters poll. Beijing has unveiled an array of measures recently to boost domestic consumption and private investment to try to cushion the economy from the headwinds of a slowdown in export demand growth. The NDRC, China’s top economic planning agency,

We should pay attention to the investment growth pace, as the previous 4 trillion yuan stimulus plan has left us with many uncompleted projects Bai Chongen, Tsinghua University

gave the green light to around 100 projects on May 21, fanning speculation that Beijing may initiate a new fiscal spending spree.

Web-fuelled speculations Global financial markets have been caught in a frenzy of speculation on the subject, which lingered on Wednesday. Local media reports in China began on Tuesday citing unconfirmed talk that Beijing was readying fresh stimulus. By the end of the trading day in China the tone had reversed. Media began citing a microblog reference to a news briefing, purported to have been held by the NDRC, denying that a stimulus package like the 4 trillion yuan plan during the global financial crisis was in the pipeline. The original Twitter-like microblog entry, reported by local media to have been on the official Xinhua microblog, could not be found when checked by Reuters. There was

no mention of it on the Xinhua newswire or its public website. The NDRC website carried no reference to the report, or a news conference and declined to comment when contacted by Reuters. The later Chinese media reports cited the NRDC as saying there had been a misinterpretation of the May 21 announcements and that the project approvals had nothing to do with efforts to stabilise economic growth. China’s main news portal, www.sina.com, also cited a document from the NDRC

May 31, 2012 business daily | 9

GREATER CHINA Embraer expects to make jets in China Company’s chief executive optimist on getting a licence shortly

razil’s Embraer, the world’s largest maker of regional jets, is counting on getting permission to build Legacy business jets in China, cutting down on the cost and inconvenience of selling planes that require import licences. Asian executive jet sales in particular could get a boost when Embraer receives the authorisation. Speaking at the Reuters Latin America Investment Summit, Frederico Curado, the company’s chief executive, declared that “The local production of the Legacy is a pillar of Embraer’s executive aviation platform in China,” adding that he expects final authorization for the factory in June or July. Embraer’s has been facing a shortening number of due largely to cancelled orders for private jets, following a global slump in executive

aviation. But Mr Curado said he has seen recent signs of growing interest in business jets, indicating a recovery originally expected next year could come sooner. A recent agreement between Chinese state plane maker Comac and Embraer’s Canadian rival Bombardier to develop commercial aircraft raised no concerns for Mr Curado, who said China has shown no signs of carving up its aviation market. “It’s not just about the product. Having a local industrial operation is important because there the government is everything: client, regulator and final authority,” he said. Embraer expects Chinese demand for new regional jets to total 975 aircraft by 2030. The company sold 90 commercial jets in China from 2000 through September of

Last year the company sold 70 jets in China

last year, accounting for 70 percent of the Chinese market for aircraft smaller than 120 seats. Embraer, which has dominated the recent order flow in the 70-to-120-seat commercial jet market, is also weighing possibilities for a revamped line-up of E-Jets offering greater performance and fuel efficiency. The company is in talks to select a supplier for a new engine late this year or early in 2013, Mr Curado said. That would allow the board to make a final decision on the project next year and the new line-up to enter service in 2018. Reuters

Loan facility for Swedish companies Excessive investment could reduce the efficiency of economic growth, experts say

Beijing eyes increased cooperation with Nordic SMEs

To think about having another large-scale government-led investment spurt to stimulate economic growth is not sustainable

Luo Guosan, NDRC

branch in central Hunan province as saying that China would not roll out huge investment, as seen in the previous stimulus package, and Beijing would not relax property tightening policies, blamed by many for slowing domestic activity. Luo Guosan, deputy director of the investment office at the NDRC, had said earlier in the week that there was little chance of Beijing unveiling another big spending plan to pump-prime the economy. “We want to target and maintain a reasonable level of investment in society to stabilise economic growth. To think about having another large-scale governmentled investment spurt to stimulate economic growth, that is unlikely because it is not sustainable,” Mr Luo was quoted as saying in the Chongqing Commercial Daily on Monday. China’s mammoth 4 trillion yuan stimulus package to counter the 2008-09 global financial

hina’s government has signed a deal with Sweden for loans to small and mediumsized enterprises, which media reports said could be worth 1 billion euros (US$1.25 billion), a sign of further Chinese interest in the Nordic state after buying car maker Volvo. Sweden’s Industry Ministry said in a statement that an investment agreement was signed during a visit by Industry Minister Annie Loof to Beijing. In a statement, the ministry said the agreement aimed at deepening cooperation

between small and mediumsized Swedish and Chinese companies. “I am very pleased with our agreement which strengthens the possibilities for Swedish companies operating in China and Chinese companies in Sweden,” Ms Loof said in the statement. She told Swedish television in Beijing after her talks that the agreement meant companies would be able to apply for innovation loans from the China Development Bank. Swedish television said on its website that Chinese Prime

US$635 InBrief billion

Minister Wen Jiabao had stunned his hosts, during an April visit, by saying China wanted to invest about 1 billion euros in Sweden. No one at Sweden’s Industry Ministry was available to comment on the sum mentioned in the reports. Chinese business has shown increased interest in the Nordic region, including the purchase in 2010 by Zhejiang Geely Holding Group, parent of Hong Kong-listed Geely Automobile Holdings Ltd., of upmarket car maker Volvo from Ford Motor Company.

Diplomatic restraint

Previous stimulus package

crisis fuelled speculation in the real estate sector and left a mountain of local government debt. “We should pay attention to the investment growth pace, as the previous 4 trillion yuan stimulus plan has left us with many uncompleted projects. If we start new projects again, we may finally fail to wean the economy from investment,” Bai Chongen, a professor at the Tsinghua University, was quoted as saying by the People’s Daily. Reuters

China and the Philippines have agreed to show restraint in their tense standoff over a disputed shoal in the South China Sea, Manila’s defence chief said Tuesday. Defence Secretary Voltaire Gazmin said he had held a brief meeting with his Chinese counterpart in the Cambodian capital on Monday during which both sides agreed to tone down the rhetoric and find “a peaceful resolution” to the spat. “We agreed on three points: to restrain our actions, to restrain our statements so that it does not escalate, and then we continue to open our line of communication until we come up with a peaceful resolution to the case,” Mr Gazmin told reporters. Mr Gazmin made the remarks after attending talks with the defence ministers of the 10-member Association of Southeast Asian Nations (ASEAN) in Phnom Penh.

Loans off-target China’s biggest banks may fall short of loan targets for the first time in at least seven years as an economic slowdown crimps demand for credit, three bank officials with knowledge of the matter said. A decline in lending in April and May means it’s likely the banks’ total new loans for 2012 will be about 7 trillion yuan (US$1.1 trillion), less than the government goal of 8 trillion yuan to 8.5 trillion yuan (US$1.26-1.34 trillion), said one of the officials, declining to be identified because the person isn’t authorized to speak publicly. Banks are relying on small- and midsized companies for loan growth after demand from the biggest state-owned borrowers dropped, the people said.

10 |

business daily May 31, 2012

ASIA

Markets drop as China damps stimulus bets HTC’s phones pass U.S. customs review Smartphone maker HTC said yesterday its latest smartphones have passed a U.S. customs review, clearing the way for it to ramp up sales in the United States as it looks to turn around a decline in what was once its largest market. Earlier in May HTC had said that U.S. sales of two new smartphones, the HTC One X and HTC EVO 4G LTE, would be delayed due to a requirement for customs inspections after the Taiwanese company lost a patent dispute with Apple Inc. That news sent its shares tumbling on concerns over its ability to win back share in the U.S. market. HTC said at the time that its new phones contained a workaround to avoid the technology covered in the patent case, but that inspections were still required. HTC has struggled to compete with Apple’s iPhones and Samsung’s Galaxy range, and faces a further threat after Samsung launched its latest S3 model in Europe on Tuesday In April, HTC Chief Executive Peter Chou said HTC would not return to the days when more than 50 percent of its revenue came from the United States. The company said in a brief statement yesterday that its phones “met International Trade Commission standards and imports to the U.S. would proceed according to normal processes”.

Concerns over a potential Spanish bailout persist Yoshiaki Nohara and Adam Haigh

sian stocks fell, with the regional benchmark index headed for its biggest monthly drop since the 2008 financial crisis, as China damped optimism for large-scale stimulus, adding to global growth concerns after Spain’s credit rating was downgraded. Samsung Electronics Co., an exporter of consumer electronics that gets 47 percent of its sales in Europe and China, lost 1 percent in Seoul. Industrial & Commercial Bank of China Ltd slid 1.7 percent. Renesas Electronics Corp., the world’s biggest maker of microcontrollers for cars, surged 27 percent in Tokyo after shortselling of its shares was restricted. The MSCI Asia Pacific Index declined 0.8 percent to 112.79 as of 5:16 pm in Tokyo with about two shares dropping for each that rose. The gauge is headed for a 10 percent decline this month amid signs of a deeper slowdown in China and as European leaders pressure Greece to observe bailout terms before June elections. “Over the past 12 months, the Western world has been trying to find holes in the China growth story,” said Khiem Do, Hong

Kong-based head of Asian multiasset strategy at Baring Asset Management (Asia) Ltd. “Investors are still not convinced about the debt crisis in Europe and that’s being reflected in higher bond yields in Spain and Italy. I think that’s the most significant risk from a global investor view point.” Japan’s Nikkei 225 Stock Average lost 0.3 percent with volume 4.7 percent below the 30-day average, and Australia’s S&P/ASX 200 fell 0.5 percent. South Korea’s Kospi index dropped 0.3 percent. Taiwan’s Taiex Index slid 1.1 percent. Futures on the Standard & Poor’s 500 Index fell 0.7 percent yesterday. The gauge advanced 1.1 percent in New York on Tuesday, trimming this month’s slump to 4.7 percent. Hong Kong’s Hang Seng Index lost 1.9 percent. The Shanghai Composite Index fell 0.2 percent.

Banks decline China lenders dropped in Hong Kong on a report mainland China has no plan to introduce stimulus measures on the scale deployed during the global financial crisis to counter this year’s economic

slowdown, the official Xinhua News Agency said yesterday without attributing the information. “The Chinese authorities do see downside risk to growth this year,” said Dwyfor Evans, a HongKong based macro strategist at State Street Global Markets, part of State Street Corp. “They will continue addressing the slowdown, but it’s hard to assess if it will be enough,” he said.

1.9 % Hong Kong’s Hang Seng Index loss

Bank of Japan calls for govt steps Jakarta to restrict use of fuel Indonesia plans to restrict the use of subsidised fuel in a bid to shield the state from surging costs after the government failed to pass a price hike through parliament in March. The plan, announced late Tuesday by President Susilo Bambang Yudhoyono, bars vehicles owned by the government, mining and plantation firms from using cheap petrol and comes amid claims subsidies are poorly targeted, benefitting the rich more than the poor. “The budget for fuel and electricity subsidies is very large and is increasing year to year,” Mr Yudhoyono said, adding such expenditure could force Indonesia beyond the three percent budget deficit capped by law. “We do not want our debt to increase and ultimately burden our grandchildren.” The proposal will see petrol stations keep electronic records of vehicles and their fuel consumption to assess who is benefitting from the subsidies, he added. Drivers of ineligible vehicles will be told to show a sticker at the petrol pump, Mr Yudhoyono said, but did not explain how the measure would be enforced. The government also plans to phase in by 2013 the use of compressed natural gas for public transportation to reduce the nation’s dependency on oil. Parliament in April approved energysubsidy expenditure of 225 trillion rupiah (US$23.8 billion) for this year, accounting for 16 percent of the budget, most of which goes to fuel subsidies to counter high global prices.

Country likely to achieve 1 percent inflation target Leika Kihara

ank of Japan policymakers signalled that they have offered enough monetary stimulus for now to beat deflation, calling for government efforts to deregulate the economy and cope with a shrinking labour force that is keeping price growth weak.

BOJ deputy governor Hirohide Yamaguchi does not rule out further easing

BOJ deputy governor Hirohide Yamaguchi said the central bank will not rule out further easing if risks in Europe materialise and exert strong downward pressure on Japan’s economy. But he signalled that Japan will likely achieve the bank’s 1

percent inflation target without further monetary easing steps, saying the bank’s stimulus measures in February and April have heightened the chance the economy will resume a recovery. “The decision on whether further easing is necessary would depend on whether the economy and prices undershoot our forecasts, and whether such risks heighten,” Mr Yamaguchi said in an interview with the Nikkei business daily that ran yesterday. “Monetary policy is not something that is done automatically,” he was quoted as saying. BOJ Governor Masaaki Shirakawa, in a speech delivered yesterday, did not speak directly on monetary policy but said Japan’s rapidly ageing population was partly behind the grinding deflation that has plagued the country for more than a decade. Mr Yamaguchi’s remarks are in line with recent signals from

May 31, 2012 business daily | 11

asia

Investors are still not convinced about the debt crisis in Europe and that’s being reflected in higher bond yields in Spain and Italy. I think that’s the most significant risk from a global investor view point Khiem Do, Baring Asset Management (Asia) Ltd

Industrial & Commercial Bank of China slid 1.7 percent yesterday

Industrial & Commercial Bank of China slid 1.7 percent to HK$4.65. Bank of Communications Co. Ltd, a Chinese provider of commercial banking services, lost 1.4 percent to HK$5.07 in Hong Kong. Agricultural Bank of China Ltd slid 4 percent to HK$3.12 in Hong

BOJ officials, who are keen to pause on monetary easing unless a disorderly Greek exit from the euro zone shocks markets and triggers a spike in the yen, threatening Japan’s recovery prospects. Mr Yamaguchi added that while the BOJ will not hesitate to act again if further easing is needed to beat deflation, monetary policy alone was not enough to overcome price falls and that government measures to boost the economy such as deregulation was needed. The BOJ set a 1 percent inflation target and eased policy in February, and followed up with another stimulus in April in a show of its determination to beat deflation. Central bankers have been trying to cool market expectations that the BOJ will continue to ease frequently until 1 percent inflation is achieved, regardless of how the economy is performing.

Demographics matter Mr Shirakawa, in the speech to a gathering of central bankers and academics hosted by the BOJ, said Japan has underestimated the widespread effect an ageing population has on the economy, such as a shrinking labour force, sharp rises in social welfare costs and changing spending patterns. “Demographic changes have affected the Japanese economy slowly but steadily and profoundly,” he said. “Downward pressure on the Japanese economic growth rate resulting from various channels reflecting the continuing population aging will persist for the foreseeable future.”

Kong after Caixin.com reported that the lender’s vice president, Yang Kun, is under investigation by the Chinese Communist Party’s Central Commission. The report cited unidentified people. Recent declines in equities dragged down the average price of stocks on

the MSCI Asia Pacific Index to 11.7 times estimated earnings yesterday, compared with a multiple of 12.7 for the S&P 500 and 10.1 for the Stoxx Europe 600 Index. Asian shares also fell after Spain’s sovereign-credit rating was cut by Egan-Jones Ratings Co. to B

from BB-minus on the country’s deteriorating economic outlook. Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned a month early amid criticism over the May 9 nationalisation of Bankia group, Spain’s third-biggest lender. Bloomberg

KEY POINTS BOJ ready to act if Europe risk heightens Japan to see 1 pct inflation due to Feb, April steps Ageing population behind deflation Overseas shipments in May expected to fall 1 percent

S.Korea May exports seen down Annual inflation steady at the 2.5 percent Mr Shirakawa stressed that Japan’s ageing population is partly behind deflation, saying that while the correlation between money growth and inflation has been waning among major advanced economies, that of population growth and inflation has been positive over the past decade. U.S. and European countries, which also face ageing societies and shrinking working-age populations, may experience the kind of deflation Japan is undergoing now, he said. “I cannot entirely rule out the looming menace that may unveil itself into downward pressure on inflation rates if such demographic changes are to undermine the momentum toward income creation in the economy,” he said. Reuters

outh Korea’s exports likely fell for a third consecutive month in May from a year ago on weak demand from the crisisstricken euro zone and slowing recovery elsewhere, while inflation probably held steady from April. While bleak exports at a time of depressed domestic demand mean it will take longer for Asia’s fourthlargest economy to turn around, the economy is not seen slowing to an extent that would prompt an immediate central bank policy shift. The median forecast from a Reuters survey of 13 economists was for overseas shipments in May to fall 1 percent from a year earlier after a revised 4.8 percent fall in April. Imports were seen down 2.0 percent. Officials in Seoul have said the economy may have touched a

bottom during the first quarter but recent indicators and May’s likely weak export figures will sharply cut the chances of a near-term rebound. “The Korean economy will remain in a slump in the second quarter, weighed by shrinking exports and lacklustre domestic demand,” said Lee Sang-jae, economist at Hyundai Securities. “For the economy to realise the government’s 2012 forecast of a gradual recovery in the second half, exports need to first pick up.” Annual inflation in May will probably hold steady at the 2.5 percent set in April, a Reuters survey of 14 economists showed, halting after a four-month fall that was attributed mainly to one-off factors such as expanded government welfare packages. Reuters

12 |

business daily May 31, 2012

MARKETS Hang SENG INDEX PRICE

Day %

VOLUME

PRICE

Day %

VOLUME

25.15

89290195

CHINA UNICOM HON

10.96

-1.792115

38199877

ALUMINUM CORP-H

3.38

-0.2949853

21194000

CITIC PACIFIC

11.74

-1.839465

BANK OF CHINA-H

2.94

-0.6756757

413219904

CLP HLDGS LTD

63.05

BANK OF COMMUN-H

5.07

-1.361868

28911470

14.2 9.45

-0.1057082

6754067

12.46

-2.65625

5797100

NAME AIA GROUP LTD

BANK EAST ASIA BELLE INTERNATIO

26.1

-2.06379

4661630

12.72

-3.196347

27257378

NAME

CNOOC LTD COSCO PAC LTD ESPRIT HLDGS

NAME

PRICE

Day %

POWER ASSETS HOL

53.75

-1.736746

VOLUME 4795865

2728000

SINO LAND CO

10.68

-1.838235

9939097

-1.252937

4913301

SUN HUNG KAI PRO

87.55

-1.573918

6074772

-1.852364

63061842

SWIRE PACIFIC-A

84.05

-2.380952

2020290

TENCENT HOLDINGS

215.4

-0.1853568

5425677

TINGYI HLDG CO

18.28

1.555556

25683716

BOC HONG KONG HO

22.55

-0.660793

15037480

HANG LUNG PROPER

24.75

-3.131115

9080192

WANT WANT CHINA

8.91

-2.622951

16435898

CATHAY PAC AIR

11.98

-2.28385

5689250

HANG SENG BK

100.4

-1.568627

1662908

WHARF HLDG

40.7

-3.210464

3707268

CHEUNG KONG

90.15

-1.658122

5152663

HENDERSON LAND D

39.7

-0.2512563

6312077

CHINA COAL ENE-H

7.21

-1.637108

24189896

CHINA CONST BA-H

5.25

-1.129944

375187498

CHINA LIFE INS-H

18.26

-2.352941

36646765

CHINA MERCHANT

23.8

0.2105263

4979502

CHINA MOBILE

79.15

-2.102659

CHINA OVERSEAS

16.94

CHINA PETROLEU-H

7.05

-1.810585

68564830

CHINA RES ENTERP

24.5

-0.203666

4266840

HENGAN INTL HONG KG CHINA GS

74.4

-3.061889

4503723

18.22

-0.6543075

10741031

HONG KONG EXCHNG

111.2

-1.41844

3808060

HSBC HLDGS PLC

61.25

-2.777778

28183375

20292035

HUTCHISON WHAMPO

65.05

-2.136302

9060856

23701590

IND & COMM BK-H

4.65

-1.691332

311147091

LI & FUNG LTD

15.14

-0.656168

20976159

MTR CORP

25.25

-0.3944773

3381140

MOVERS

2 19100

INDEX 18690.22 HIGH

19057.33

LOW

18648.24

CHINA RES LAND

15.02

1.076716

18331261

NEW WORLD DEV

8.44

-2.088167

15462396

52W (H) 23707.94

CHINA RES POWER

13.72

-0.867052

5232086

PETROCHINA CO-H

9.88

-2.168074

94629671

(L) 16170.35

CHINA SHENHUA-H

28.45

-1.557093

15667393

PING AN INSURA-H

57.7

-1.367521

12293903

PRICE

DAY %

VOLUME

22.95

-2.132196

9433200

28-May

30-May

18550

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.12

-4

292541120

AIR CHINA LTD-H

4.85

-2.610442

10933500

CHINA PETROLEU-H

7.05

-1.810585

68564830

ALUMINUM CORP-H

3.38

-0.2949853

21194000

CHINA RAIL CN-H

6.14

-3.307087

ANHUI CONCH-H

24.1

-2.03252

13370500

CHINA RAIL GR-H

2.99

BANK OF CHINA-H

2.94

-0.6756757

413219904

CHINA SHENHUA-H

28.45

CHINA PACIFIC-H

PRICE

DAY %

VOLUME

13.26

-0.748503

18381120

ZIJIN MINING-H

2.46

-2.766798

29484970

16463150

ZOOMLION HEAVY-H

11.5

0.5244755

16323840

-3.236246

37111960

ZTE CORP-H

15.34

-0.3896104

4490614

-1.557093

15667393

5.07

-1.361868

28911470

CHINA TELECOM-H

3.63

-1.891892

39701913

15.74

-2.114428

3415500

DONGFENG MOTOR-H

13.8

0.2906977

15134469

CHINA CITIC BK-H

4.02

-1.228501

37377454

GUANGZHOU AUTO-H

6.7

-0.887574

8533643

CHINA COAL ENE-H

7.21

-1.637108

24189896

HUANENG POWER-H

4.74

-2.868852

19208822

CHINA COM CONS-H

7.49

0.672043

25937541

IND & COMM BK-H

4.65

-1.691332

311147091

CHINA CONST BA-H

5.25

-1.129944

375187498

JIANGXI COPPER-H

16.74

-1.413428

12116787

BANK OF COMMUN-H BYD CO LTD-H

3.76

-1.052632

23225951

PETROCHINA CO-H

9.88

-2.168074

94629671

18.26

-2.352941

36646765

PICC PROPERTY &

8.54

-1.499423

23698000

CHINA LONGYUAN-H

4.77

0.210084

6543248

PING AN INSURA-H

57.7

-1.367521

12293903

CHINA MERCH BK-H

14.84

-0.9345794

14291237

SHANDONG WEIG-H

7.88

-1.5

7372000

CHINA COSCO HO-H CHINA LIFE INS-H

NAME YANZHOU COAL-H

MOVERS

INDEX 9690.67 HIGH

9858.19

LOW

9488.44

CHINA MINSHENG-H

7.38

-0.135318

24769643

SINOPHARM-H

17.96

-0.5537099

2121100

52W (H) 13317.51

CHINA NATL BDG-H

9.62

-1.635992

46208000

TSINGTAO BREW-H

-0.1062699

1028196

(L) 8058.58

10.82

-1.814882

6586000

WEICHAI POWER-H

2691524

CHINA OILFIELD-H

9900

28-May

30-May

9400

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.69

52553200

DAQIN RAILWAY -A

7.46

-0.5333333

58149257

SHANGHAI ELECT-A

AIR CHINA LTD-A

6.23

-0.6379585

17992511

DATANG INTL PO-A

5.03

-3.082852

14653237

ALUMINUM CORP-A

6.93

-0.1440922

12813551

DONGFANG ELECT-A

22.31

0.08972633

ANHUI CONCH-A

17.92

1.014656

63490332

EVERBRIG SEC -A

14.73

1.516196

BANK OF BEIJIN-A

10.03

31907399

GD MIDEA HOLDING

BANK OF CHINA-A

3.03

14720513

GD POWER DEVEL-A

2.54

NAME

PRICE

DAY %

VOLUME

5.76

2.12766

12858493

SHANXI LU'AN -A

27.32

-1.050344

8379613

12957763

SHANXI XINGHUA-A

73.69

-0.7274687

2102572

16622931

SHANXI XISHAN-A

18.34

-2.134472

23024231

-2.548726

55018443

SHENZ DVLP BK-A

15.7

-1.443817

21712593

-0.3921569

21626057

SHENZEN OVERSE-A

6.14

4.244482

126871205

BANK OF COMMUN-A

4.77

-0.4175365

34899710

GF SECURITIES-A

32.13

0.06228589

6260741

2.761721

3079318

BAOSHAN IRON & S

4.85

-1.020408

24500153

GREE ELECTRIC

22.35

0.5398111

15996821

SUNING APPLIAN-A

9.11

-0.1096491

39944966

BBMG CORPORATI-A

8.56

0.7058824

42443616

GUIZHOU PANJIA-A

34.14

-1.072153

5322793

TONGLING NONFE-A

22.28

-1.109632

15901074

10.46

0.6737247

69682127

TSINGTAO BREW-A

37.44

-0.3194888

1478933

46.99

0.5563878

1873180

WEICHAI POWER-A

33.79

-1.687518

5885767

3.08

-0.6451613

39190501

WULIANGYE YIBIN

32.35

-0.2159161

19033201

SINOVEL WIND-A

24.46

0.6584362

5593863

HAITONG SECURI-A

CHINA CITIC BK-A

4.29

24132258

HANGZHOU HIKVI-A

CHINA CNR CORP-A

4.48

52366043

HEBEI IRON-A

CHINA COAL ENE-A

9.16

-0.972973

13242847

HENAN SHUAN-A

59.06

-2.072625

5442491

XCMG CONSTRUCT-A

15.4

-1.660281

19978847

11.44

0.6156552

29047227

XIAMEN TUNGSTEN

48.85

-0.5699165

13053672

BYD CO LTD -A

CHINA CONST BA-A

4.5

-0.6622517

46130757

HUATAI SECURIT-A

CHINA COSCO HO-A

5.08

-0.78125

9608883

HUAXIA BANK CO

9.97

-1.09127

32500842

XINJIANG GUANG-A

15.03

-1.377953

22765472

CHINA CSSC HOL-A

31.71

-1.18417

5706053

IND & COMM BK-A

4.22

40954885

YANGQUAN COAL -A

19.47

-0.9160305

10387536

CHINA EAST AIR-A

4.2

-1.408451

13495249

INDUSTRIAL BAN-A

13.45

-1.248164

65543342

YANTAI CHANGYU-A

94.2

-1.164621

557742

CHINA EVERBRIG-A

3.04

-0.6535948

39102769

INNER MONG BAO-A

44.11

-1.496204

52627351

YANTAI WANHUA-A

14.7

-0.06798097

8927141

CHINA LIFE INS-A

17.57

-1.014085

9505378

INNER MONG YIL-A

22.66

-1.862278

8459981

YANZHOU COAL-A

-1.160292

4776182

CHINA MERCH BK-A

11.78

61386996

INNER MONGOLIA-A

6.36

-1.395349

76806104

YUNNAN BAIYAO-A

-1.25847

3310185

CHINA MERCHANT-A

13.71

0.0729927

19267676

JIANGSU YANGHE-A

169.9

0.7292346

899922

ZHONGJIN GOLD

23.09

-0.8161512

8571238

CHINA MERCHANT-A

25.5

0.2358491

7440856

JIANGXI COPPER-A

26.04

-1.288855

11089015

ZIJIN MINING-A

4.11

-0.7246377

41278337

CHINA MINSHENG-A

6.42

-0.7727975

111367679

JINDUICHENG -A

14.04

-0.9873061

6473086

11.03

-0.9874327

66268240

20.89

-0.42898

11794398

15.3

-1.985906

26576935

228.66

1.405827

2570070

6.65

-0.2998501

31933385

JIZHONG ENERGY-A

CHINA OILFIELD-A

18.06

-2.378378

12347198

KWEICHOW MOUTA-A

CHINA PACIFIC-A

21.47

0.04659832

10487787

LUZHOU LAOJIAO-A

39.35

-1.625

9356715

6.77

-0.2945508

28297826

METALLURGICAL-A

2.68

-1.107011

22120091

CHINA NATIONAL-A

CHINA PETROLEU-A CHINA RAILWAY-A

2.81

-1.748252

48726009

NINGBO PORT CO-A

2.66

21890400

CHINA RAILWAY-A

4.57

-1.93133

28295193

PANGANG GROUP -A

8.18

-1.445783

45886487

CHINA SHENHUA-A

26.43

-0.8998875

9694747

PETROCHINA CO-A

9.55

-0.3131524

20905310

42.25

0.07105637

18402378

CHINA SHIPBUIL-A

5.88

-0.6756757

22644609

PING AN INSURA-A

CHINA SOUTHERN-A

4.82

-0.8230453

40789719

POLY REAL ESTA-A

13.82

-1.002865

31532846

12.14

-0.4101723

ZOOMLION HEAVY-A ZTE CORP-A

MOVERS

186

23 2660

INDEX 2642.258

CHINA STATE -A

3.4

50204640

QINGDAO HAIER-A

15198184

HIGH

2655.22

CHINA UNITED-A

4.11

79985929

QINGHAI SALT-A

31.95

-0.436273

5716418

LOW

2551.46

CHINA VANKE CO-A

9.31

0.4314995

70798071

SAIC MOTOR-A

15.76

0.7028754

22022114

CHINA YANGTZE-A

6.81

13305725

SANY HEAVY INDUS

15.07

-0.8552632

30330764

CITIC SECURITI-A

13.82

0.5822416

88206734

SHANDONG GOLD-MI

34.33

-0.2034884

5452108

CSR CORP LTD -A

5.07

54241352

SHANG PUDONG-A

8.82

-1.452514

88036486

PRICE DAY %

Volume

PRICE DAY %

Volume

52W (H) 3140.10 (L) 2254.56

2550

28-May

30-May

FTSE TAIWAN 50 INDEX NAME

NAME

PRICE DAY %

Volume

31.5

0.8

16465577

FORMOSA PLASTIC

78.3

-3.333333

14907631

TAIWAN MOBILE CO

93.3 -0.8501594

10526764

ADVANCED SEMICON

27.85

24995364

FOXCONN TECHNOLO

106 -0.9345794

18653733

TPK HOLDING CO L

442

3.391813

8790553

ASIA CEMENT CORP

35.65

1.278409

6328585

FUBON FINANCIAL

-1.870748

25188065

TSMC

81.7 -0.7290401

75284835

88.9 -0.6703911

49572903

UNI-PRESIDENT

46.05

-2.745512

17251909

UNITED MICROELEC

13.35

0.3759398

40547579

ACER INC

ASUSTEK COMPUTER

302

-1.468189

7030260

HON HAI PRECISIO

12.55

48057637

HOTAI MOTOR CO

188

-1.052632

10875713

CATHAY FINANCIAL

29.15

-2.833333

CHANG HWA BANK

15.4

CHENG SHIN RUBBE

72.6

CHIMEI INNOLUX C

AU OPTRONICS COR CATCHER TECH

CHINA DEVELOPMEN CHINA STEEL CORP CHINATRUST FINAN

28.85 189.5

-2.570694

1832379

HTC CORP

424

-1.851852

14194010

WISTRON CORP

39.4

3.684211

16759838

22368444

HUA NAN FINANCIA

15.8

-2.167183

12131672

YUANTA FINANCIAL

13.4

-3.249097

33220243

-1.910828

11133679

LARGAN PRECISION

565

-3.087479

2466646

YULON MOTOR CO

51.5

1.377953

20635619

4521979

LITE-ON TECHNOLO

37.6

4.444444

11495572

12.95

3.187251

73106514

MEDIATEK INC

267

-2.018349

8645955

7.13

-1.519337

59771476

MEGA FINANCIAL H

20.9

35387476

28.05 -0.7079646

29434206

NAN YA PLASTICS

53.1

-4.83871

18005049

16.7

-2.623907

45546491

PRESIDENT CHAIN

154.5

-1.592357

1899896

-0.990099

18281466

QUANTA COMPUTER

79.4

0.3792668

20629411

COMPAL ELECTRON

31.5 -0.9433962

17851407

SILICONWARE PREC

32.15

1.100629

12934067

DELTA ELECT INC

83.6

-2.222222

9391671

SINOPAC FINANCIA

10.4

33917431

FAR EASTERN NEW

30.55

1.15894

12127236

SYNNEX TECH INTL

67.4 -0.8823529

5671192

FAR EASTONE TELE

65.3

-3.829161

14956976

TAIWAN CEMENT

34.65

FIRST FINANCIAL

16.9

-1.744186

14830784

TAIWAN COOPERATI

FORMOSA CHEM & F

77.8

-2.992519

10278187

TAIWAN FERTILIZE

FORMOSA PETROCHE

83.4

-2.910361

3670877

CHUNGHWA TELECOM

NAME

TAIWAN GLASS IND

1.315789

14758245

17.35

-1.699717

8852644

69.4

0.4341534

2859416

-1.926445

2967453

MOVERS

4 5080

INDEX 5009.83 HIGH

5074.78

LOW

4874.04

52W (H) 6247.96 (L) 4643.05

4870

28-May

30-May

May 31, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) gALAXy eNTerTAINMeNT

Max 19.70

Average 19.52

MeLCo CrowN eNTerTAINMeNT

Min 19.24

19.7

32.20

12.9

19.6

32.18

12.8

19.5

32.16

12.7

19.4

32.14

12.6

19.3

32.12

12.5

19.2

Last 19.68

Max 32.15

SANDS CHINA LTD

Max 27.70

Average 27.39

Average 32.14

Min 32.10

METALS

32.10

Max 12.86

Min 27.00

Last 27.25

Average 12.60

Min 12.40

Last 12.60

wyNN MACAu LTD 14.15

20.05

27.64

14.09

19.85

27.48

14.03

19.65

27.32

13.97

19.45

27.16

13.91

19.25

27.00

13.85 Max 14.10

Average 13.97

Min 13.88

Last 14.08

19.05 Max 20.05

Average 19.72

Last 19.80

Min 19.08

CURRENCY EXCHANGE RATES PRICE

WTI CRUDE FUTURE Jul12

89.67

-1.200958704

-9.770577581

111.4899979

77.40000153

BRENT CRUDE FUTR Jul12

105.45

-1.152980877

-0.170406135

125.6100006

94.34999847

GASOLINE RBOB FUT Jun12

289.15

-0.516084638

5.490696826

336.8899822

245.539999

GAS OIL FUT (ICE) Jul12

891.25

-1.682294539

-0.917176209

1045.75

810

NATURAL GAS FUTR Jul12

2.431

-2.173038229

-25.03854456

5.130000114

2.095999956

HEATING OIL FUTR Jun12

278.89

-0.70848761

-2.002881338

331.5699816

256.0600042

1548

-1.6606

-1.0806

1921.18

1478.78

Gold Spot $/Oz Silver Spot $/Oz

DAY %

YTD %

(H) 52W

27.59

-2.4616

-0.8802

44.2175

26.085

1412.38

-1.5935

1.2822

1915.75

1339.25

Palladium Spot $/Oz

594.67

-1.774

-9.0023

848.37

537.54 1955.75

LME ALUMINUM 3MO ($)

2017

-0.247279921

-0.148514851

2695

LME COPPER 3MO ($)

7670

-0.195185426

0.921052632

9905

6635

LME ZINC

1915

0.261780105

3.79403794

2539.5

1718.5

3MO ($)

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

PRICE

(L) 52W

Platinum Spot $/Oz

16550

-2.647058824

-11.54462854

25195

16538

14.24

-0.070175439

-7.351984385

19.375

14.07500076

561.75

-0.133333333

-15.04725898

795

557

MAJORS

ASIA PACIFIC

CROSSES

0.9755 1.5556 0.9653 1.2443 79.3 7.9958 7.7628 6.358 56.145 31.86 1.2816 29.711 43.52 9453 77.356 1.20111 0.79987 7.9133 9.9502 98.68 1.03

DAY %

-0.9343 -0.8035 -0.7252 -0.7419 0.29 0.0025 0.009 -0.1557 -0.8348 -0.408 -0.3277 -0.3433 -0.5974 -0.0635 1.2281 0.02 -0.0638 0.7506 0.7417 1.0235 -0.0097

YTD %

-4.4471 0.0836 -2.8178 -3.9966 -3.0139 0.0475 0.0593 -0.9909 -5.4858 -0.973 1.1704 1.9117 0.7353 -4.0622 1.391 1.3055 4.1907 2.7915 4.0381 0.9931 0.0097

(H) 52W

1.1081 1.6618 0.9659 1.4697 84.18 8.0449 7.8113 6.4909 56.3875 31.96 1.3199 30.716 44.35 9645 88.637 1.24736 0.90835 9.514 11.7768 117.9 1.0311

(L) 52W

0.9388 1.5235 0.7071 1.2435 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 7.8999 9.9427 97.04 1.0288

0.9388 1.5235 0.7071 1.2496 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 7.9406 10.0097 97.04 1.0288

MACAU RELATED STOCKS

WHEAT FUTURE(CBT) Jul12

650.25

-0.989722116

-5.245901639

932

592.25

NAME

(H) 52W

(L) 52W

SOYBEAN FUTURE Jul12

1377.5

-0.667027222

12.26568867

1512.5

1125.5

ARISTOCRAT LEISU

2.92

-0.3412969

32.72727

3.25

1.88

842529

COFFEE 'C' FUTURE Jul12

165.5

0.060459492

-28.72523686

290.75

164.6000061

CROWN LTD

8.53

-0.5827506

5.438811

9.29

7.45

1319025

SUGAR #11 (WORLD) Jul12

19.49

-0.204813108

-13.60815603

27.02999878

19.3599987

AMAX HOLDINGS LT

0.078

-2.5

-10.34483

0.131

0.06

1136000

COTTON NO.2 FUTR Jul12

72.81

0.013736264

-20.26065053

117

70.52999878

BOC HONG KONG HO

22.55

-0.660793

22.55435

24.45

14.24

15037480

PRICE

CENTURY LEGEND

0.233

1.304346

0.41

0.204

-0.6622517

7.142859

4.79

2.3

6000 23701590

CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

DAY % YTD %

VOLUME CRNCY

CHINA OVERSEAS

16.94

30.50848

17.86

9.99

CHINESE ESTATES

-0.1109878

-28

14.1

8.3

125000

CHOW TAI FOOK JE

9.5

-0.8350731

-31.75287

15.16

9.39

7482900

EMPEROR ENTERTAI

1.19

-0.8333333

7.207206

2.09

0.97

210000

FUTURE BRIGHT

0.86

1.176471

104.7619

1.09

0.3

468000

GALAXY ENTERTAIN

19.68

0.203666

38.20225

24.95

8.69

10164250 1662908

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12580.69

1.010532

2.972205

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2870.99

1.179195

10.20441

3134.17

2298.89

HANG SENG BK

100.4

-1.568627

8.952793

125

84.4

FTSE 100 INDEX

5315.82

-1.397107

-4.602425

6084.08

4791.01

HOPEWELL HLDGS

20.35

-0.7317073

2.467268

24.903

18.56

523500

DAX INDEX

6329.38

-1.054583

7.307633

7523.53

4965.8

HSBC HLDGS PLC

61.25

-2.777778

3.813559

82.15

28183375

NIKKEI 225

8633.19

-0.2759591

2.103293

10255.15

8135.79

HUTCHISON TELE H

3.33

-3.197674

11.37124

3.71

2.33

3262523

HANG SENG INDEX

18690.22

-1.916721

1.387787

23707.94922

16170.35

LUK FOOK HLDGS I

16.9

-5.797101

-37.63838

46.15

16.56

4829000

MELCO INTL DEVEL

6.66

-2.058824

15.42461

10.76

4.3

2348000

CSI 300 INDEX

2642.258

-0.3242729

12.64061

3140.102

2254.567

MGM CHINA HOLDIN

12.6

-1.5625

31.35736

17.183

7.6

16029098

TAIWAN TAIEX INDEX

7261.8

-1.096252

2.682658

9089.47

6609.11

MIDLAND HOLDINGS

3.84

0.08862013

-4.950494

5.48

2.95

1556000

NEPTUNE GROUP

0.1

-4.761905

-9.909911

0.157

0.08

40000

NEW WORLD DEV

8.44

-2.088167

34.82428

12.381

6.13

15462396

SANDS CHINA LTD

12693856

KOSPI INDEX

1844.86

-0.2729863

1.047246

2192.83

1644.11

S&P/ASX 200 INDEX

4094.229

-0.4905198

0.9285811

4724.8

3765.9

3917.916

-0.02931822

2.509793

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1575.17

0.6292643

2.903194

1609.33

NZX ALL INDEX

778.145

0.03561015

6.624378

806.015

JAKARTA COMPOSITE INDEX

PHILIPPINES ALL SHARE IX

12.4

27.80

NAME

CORN FUTURE

Last 32.15

SJM HoLDINgS LTD

Commodities ENERGY

MgM CHINA HoLDINgS

3348.73

-0.1023221

9.973266

3518.96

27.25

0.1838235

24.14578

33.05

14.9

SHUN HO RESOURCE

1.18

1.32

0.82

1310.53

SHUN TAK HOLDING

2.82

-1.052632

10.19377

4.686

2.241

900589

700.441

SJM HOLDINGS LTD

11491972

2695.06

14.08

0.5714286

12.59014

20.711

10.079

SMARTONE TELECOM

14.3

-0.27894

6.398813

18.5

9.8

655733

WYNN MACAU LTD

19.8

1.747174

1.538462

27.48

14.807

17904988

HSBC Dragon 300 Index Singapor

530.97

0.52

6.98

ASIA ENTERTAINME

4.5

7.913669

-23.46939

10.8692

3.66

317511

STOCK EXCH OF THAI INDEX

1145.11

-0.7411196

11.68319

1247.72

843.69

BALLY TECHNOLOGI

45.88

1.101807

15.97573

49.32

24.74

333962

HO CHI MINH STOCK INDEX

435.34

0.9039496

23.83445

492.44

332.28

BOC HONG KONG HO

2.87

1.413428

19.72364

3.15

1.81

12150

Laos Composite Index

1004.1

0.5819952

11.63364

1146.63

876.33

GALAXY ENTERTAIN

2.56

7.563025

36.8984

3.24

1.08

2336

INTL GAME TECH

14.32

1.344657

-16.74419

19.15

13.38

3202806

JONES LANG LASAL

74.24

2.768549

21.18838

99.89

46.01

212988

LAS VEGAS SANDS

49.03

2.316361

14.74374

62.09

36.08

9313447

MELCO CROWN-ADR

12.58

3.966942

30.76923

16.15

7.05

4414451

MGM CHINA HOLDIN

1.66

39.2976

2.21314

1.00254

4000

MGM RESORTS INTE

11.17

3.425926

7.094915

16.05

7.4

7835609

SHUFFLE MASTER

16.03

1.071879

36.77474

18.77

7.35

354324

1.75

8.859767

2.60368

1.26239

5500

104.61

2.51862

-5.321747

165.4931

98.26

1497356

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

SJM HOLDINGS LTD WYNN RESORTS LTD

AUD HKD

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business daily May 31, 2012

Opinion College crackup and the online future (part II)

Mark C. Taylor

Chairman of the department of religion at Columbia University and professor emeritus at Williams College

(This is the second part from the third and last of a series articles on how online education may revolutionise learning and college life. It follows the articles ‘How competition is killing higher education’ and ‘Is college’s stone age about to end?’ For editorial reasons, this last article was published in two parts. Part I was published in yesterday’s edition)

Virtual Harvard In two previous articles, I argued that excessive competition and overspecialisation are the plagues of higher education. Online education can address both of these problems. By collaborating to provide it, colleges and universities make more efficient use of their limited resources. Producing high-quality online classes isn’t easy and often costs more than investors expect. No proven financial model exists yet. Some schools facing economic challenges see online education as a source of revenue, but top-tier schools are currently making their courses available free of charge. In the future, I suspect these schools will introduce a variable cost structure for different kinds of courses. A successful online programme will strengthen the brand and increase the demand for the “real” Harvard, Yale or Princeton education. When institutions cooperate in this way, the faculty expands, and students at participating universities as well as other colleges have a broader range of classes from which to choose.

Less-affluent schools can outsource courses and even entire departments to qualified providers. Students can take courses from leading teachers and scholars anywhere in the world while receiving credit at the school in which they are enrolled. Efficiency, however, has its cost. There are going to be winners and losers in the new world of networked higher education. The success of Harvard, MIT, Yale, Stanford and Princeton online programmes will prove a challenge to many colleges and universities. Why pay a quarter of a million dollars to go to a second-tier school when you can get a Harvard education online for little or nothing? This also raises the question of whether one is paying for an education or certification when attending college. Facing skyrocketing debt and dismal job prospects, many students and their families may even ask whether the difference between the virtual and the real Harvard is worth the cost. These practical considerations shouldn’t overshadow one of the most promising innovations that online education will bring: The very structure of knowledge will change.

Mix and match Imagine a curriculum or even an educational institution organised like a web or network rather than an assembly line. As students mix and match courses online, pressure will increase for professors to develop classes that integrate different

There is a widening gap between the rate at which knowledge is expanding and the rate at which colleges and universities change. In higher education, as in business, institutions must become more flexible and agile

approaches and disciplines. This, in turn, will promote research that isn’t confined to current specialised fields and subfields, but will create new areas of inquiry. A moreintegrated approach will encourage the development of courses that focus on issues and problems that aren’t narrowly defined but have practical relevance and prepare students to become responsible citizens who are capable of pursuing productive and creative careers. There is a widening gap between the rate at which knowledge is expanding and the rate at which colleges and universities change. In higher education, as in business,

institutions must become more flexible and agile. Colleges and universities that can’t adapt will fail. Departments will either be eliminated or redesigned in ways that support more extensive collaboration among faculty members and students working in different areas. These changes will meet considerable resistance, but they are unavoidable and will have beneficial results. In all areas of endeavor, innovation comes about by bringing together what is usually held apart. Just as artistic creativity often occurs by mixing different genres, so intellectual innovation frequently results from crossing different disciplines. With growing competition abroad and increasing financial problems at home, the worldwide pre-eminence of U.S. higher education isn’t assured in the 21st century. Even if it were possible to increase funding in this era of shortsighted austerity, it wouldn’t be enough. A fundamental transformation in higher education will require a thorough rethinking of both what and how we teach. Colleges and universities will have to be reorganised and create new strategies for cooperation and collaboration that will enable them to provide the best education to the most students for the lowest price. If we have the imagination and determination to rise to this challenge, we will be able to provide the education our children and grandchildren deserve and the world needs. 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 31, 2012 business daily | 15

OPINION

Greece-proofing China wires Business Leading reports from Asia’s best business newspapers

Yu Yongding

Former member of the monetary policy committee of the Peoples’ Bank of China

and former Director of the Chinese Academy of Sciences Institute of World Economics and Politics

Business Standard Yamaha Motor Co Ltd is looking at scaling up research and development (R&D) operations in India, with an aim to designing the country’s cheapest motorcycle indigenously. Yamaha’s new low-cost bike is expected to be priced at around US$500. Market leader Hero MotoCorp Ltd’s cheapest product in the category starts at US$520. Yamaha, at present, has marginal share in the low-cost commuter segment selling 5000-odd units every month. The move aims at a greater market share in this seven-million strong segment in the country.

Yomiuri Shimbun Panasonic Corp. has begun discussions on a plan to halve the number of workers at its headquarters in Kadoma, Osaka Prefecture, by the end of next March to streamline its operations and speed up decision-making. The company plans to make most of the personnel cuts by relocating employees to other business divisions in an effort to survive the fast-changing business environment of the electronics industry. Of about 130,000 Panasonic employees working in Japan, about 7,000 workers at its headquarters will be affected by the plan.

Korea Post A Korean unit of the Parisbased luxury goods company LVMH Group is mired in a labour dispute over pay that could halt sales of some luxury perfumes and cosmetics. Union members of LVMH Perfumes and Cosmetics Korea have staged protests since its latest negotiations with management over pay and conditions failed early last week. The union is demanding wage increases, a fixed annual bonus and reform in the way sales staff salaries vary. The company makeup brands include Dior, Guerlain, and Make Up For Ever.

Business Times JAPAN’S Nikko Asset Management and US-based Principal Financial Group are among the suitors to advance to the next round of bidding for ING Groep’s Asia asset management business in a deal that could be worth up to US$600 million. Royal Bank of Canada (RBC) and Singapore’s United Overseas Bank Ltd (UOB) are the other shortlisted parties. A successful buyer will get a ready platform to expand into Asia’s rapidly growing funds management business, which excluding Japan, is expected to double its size to US$4 trillion by 2015.

espite repeated assurances by European Union leaders, after more than two years, there is still no light at the end of Europe’s debt-crisis tunnel. Recently, the president of the European Commission, José Manuel Barroso, referring to a possible Greek exit from the eurozone, told the European Parliament that there is no “Plan B.” Barroso’s statement was meant to be reassuring. But, after so many disappointments, China cannot accept at face value the assurances of European politicians, which even they themselves do not know whether they can redeem. China should have its own Plan B in case Greece has to leave the eurozone. Indeed, it is increasingly likely that Greece will renege on its bailout obligations. If that happens and the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) cuts off financial support, Greece’s exit from the euro will become all but inevitable. In that event, China must be prepared for any ensuing global financial turmoil and longerterm consequences. For starters, Chinese officials should be under no illusion that the country will be immune to financial contagion. A “Grexit” would hit European banks that hold peripheral eurozone countries’ sovereign bonds. Shock waves from the deleveraging would, in turn, spread to emerging markets like China. Although the exposure of Chinese banks and financial institutions to eurozone sovereign and banking-sector assets is negligible, post-Grexit capital flight from risky markets could rival, or even surpass, that in the weeks following Lehman Brothers’ collapse in September 2008. Compared to 2007 and 2008, foreign investors’ holdings in emerging markets are much higher, owing to these countries’ relative economic strength in recent years and rock-bottom returns on developed-market financial assets.

In fact, China already experienced the impact of deleveraging late last year, when the European financial system seemed on the brink of collapse. With European banks hunkering down, the renminbi’s exchange rate fell for 11 consecutive days, even though China was running a current-account surplus. The performance of emergingmarket currencies and other assets so far in the second quarter suggests that deleveraging has begun once again. Disappointing first-quarter growth data have already led foreign investors to have second thoughts about keeping money in China. A Grexit could prove to be the last straw, and would surely lead to a tightening in domestic monetary conditions at a very precarious point in the economic cycle.

PBoC on alert As such, the timing could not be worse to float the idea of speeding up capital-account liberalisation. On the contrary, the Peoples Bank of China (PBoC) and other relevant authorities should consider capital controls, market suspensions, and emergency liquidity provision. These measures are not dissimilar to those that the eurozone will pursue if Greece exits. Ideally, the response would be coordinated with China’s international partners in the G-20. The infrastructure for such cooperation has developed strongly since 2008, and China must not shy away from advocating its deployment. Moreover, China must have a medium-term plan to deal with the economic aftermath of a Grexit. Should contagion prove to be limited, with Greece the only casualty, the drop in eurozone output may be severe, but not catastrophic. Nonetheless, the EU is China’s most important trading partner, and China must be braced for serious job losses in the export sector. Japan’s experience shows that a recession that results from a financial crisis can be

extremely prolonged, because deleveraging is a long process. It is highly likely that today’s recession will drag on for many more years in both America and the EU. So China’s government must have a mediumand long-term plan to address problems caused by a drawnout global slump. The problems include a surge in unemployment, and the need to reallocate fiscal resources to these individuals, whose welfare is critical to the preservation of social stability. More importantly, the Chinese government should not retreat from efforts to implement structural reforms aimed at shifting China’s growth model to one that places much greater emphasis on domestic demand. In addition, net foreign capital inflows are likely to dwindle for several quarters at least, affecting domestic monetary conditions while aggregate demand is weak. As such, the PBoC will need to maintain countercyclical policies in order to avoid a deflationary spiral.

Monetary flexibility Although bound to be controversial, especially in an election year in the United States, enough flexibility should be given to the renminbi in both directions when it is needed. One of the biggest failures of the eurozone periphery is a loss in competitiveness, hidden by a wall of credit that has been leveraged from Germany’s balance sheet. This is always unsustainable. Any

loosening by the PBoC should not be used to avoid painful structural reforms. Finally, China should be ready to extend a helping hand. To ensure that the post-Grexit eurozone’s integrity faces no further immediate threats, China must join international partners in establishing a fully credible firewall, via the IMF. However, the eurozone, and Germany in particular, must fully acknowledge the fundamental causes of Greece’s exit and pledge to move towards fiscal union, while acknowledging that an austerity-only approach towards other at-risk members is a dead end. An adequate firewall and a European commitment to structural reform would go far toward calming markets and reducing the risks to any Chinese contribution. In other words, any assistance that China provides must be “throwing good money after good potential results.” Of course, IMF governance reform will also need to be part of the discussion. Meanwhile, the eurozone will likely be more open to foreign investment out of necessity, and cash-rich Chinese companies should continue to pursue opportunities via FDI or corporate acquisitions. A potential Grexit will present entirely new challenges to China in the coming months, and the country must avoid complacency over its own exposure. A battle plan for both the present and the future is needed now. © Project Syndicate

The Chinese government should not retreat from efforts to implement structural reforms aimed at shifting China’s growth model to one that places much greater emphasis on domestic demand

16 |

business daily May 31, 2012

CLOSING Romney seals party nomination

Japan mulling restart of reactors

Mitt Romney clinched his Republican party’s White House nomination on Tuesday by winning its Texas primary, vowing to get America “back on the path to prosperity” by defeating Barack Obama in November. In Texas, 155 delegates were at stake – which added to Romney’s tally of 1,064 should take him well over the 1,144 nomination threshold, according to the website RealClearPolitics. Polls show a steadily tightening White House race. The latest RealClearPolitics average shows the president with a two-point lead, 45.6 to 43.6 percent.

Japanese Prime Minister Yoshihiko Noda, keen to restart idled nuclear reactors to avoid a summer power crunch, said yesterday it was necessary to start those whose safety has been confirmed, adding he was winning understanding from local authorities. Mr Noda, talking after a meeting with key ministers to discuss resuming operations at two of Kansai Electric Power Co’s reactors in western Japan, said he would make a final decision once local authorities have made up their minds. All of the country’s 50 reactors have been taken offline for checks.

Eurozone bank bailouts proposed Common bond issuance also seen as antidote to the debt crisis

he European Commission called for direct euro-area aid for troubled banks, and touted a Europe-wide depositguarantee system and common bond issuance as antidotes to the debt crisis now threatening to overwhelm Spain. The commission, the European Union’s central regulator, sided with Spain in proposing that the euro’s permanent bailout fund inject cash to banks instead of channelling the money via national governments. It also offered Spain extra time to squeeze the budget deficit. The use of the rescue fund to recapitalise banks “might be envisaged” and would “sever the link between banks and the sovereigns,” the commission said yesterday in Brussels. José Manuel Barroso, the commission’s president, said “it is important to use all possibilities offered in terms of flexibility”. Proposals for more liberal use of European bailout money are likely to face resistance in creditor countries such as Germany, Finland and the Netherlands, the scenes of growing taxpayer opposition to more aid. Signs of stress multiplied in financial markets yesterday. Italy missed its target in a bond auction, driving

Commission head José Manuel Barroso is charged with making sure countries comply with budget rules

its 10-year yields as high as 6.01 percent, the highest since January 31. The yield was at 5.95 percent at 2:10 pm in Brussels. Doubts over the health of Spain’s banks pushed up Spanish 10-year yields as high as 6.70 percent, the highest since November 28. That yield was last at 6.62 percent. After more than two crisis-filled years and 386 billion euros (US$480 billion) in loan pledges to Greece, Ireland and Portugal,

“markets remain exceptionally tense and vigilant and confidence is still weak,” the commission said.

Hurdles ahead Spain, the 17-nation euro area’s fourth-largest economy, is trying to simultaneously plug holes in regional budgets and detoxify its banks, all while struggling to lift the economy out of a recession. Current EU plans call for the 500

billion-euro European Stability Mechanism, set to start up in July, to funnel bank-aid money through national governments and, ultimately, require those governments to pay it back. Germany is spearheading resistance to direct European financing for banks because that would let governments bypass the conditions set for full aid programmes, such as deeper budget cuts and more European intrusion into economic management. “Direct help for banks is out of the question, that won’t fly,” Norbert Barthle, the budget spokesman in parliament for Chancellor Angela Merkel’s Christian Democratic Union, said in an interview on Tuesday. Finland is in Germany’s camp, Martti Salmi, a Finance Ministry official, said in a telephone interview yesterday. The commission appealed for a “banking union” that would more tightly integrate supervision and create a pool of European funds to clean up banks with cross-border exposure and segregate their underperforming assets. “It’s hard enough to bail out local banks let alone non- domestic banks,” said Harvinder Sian, a London-based fixed-income strategist at Royal Bank of Scotland Group Plc. “A crisis lesson so far is that big ideas coming from Brussels or the guys taking the money are noise up until the point that the Germans get on the same page.” Bloomberg

JP Morgan caught in Japan insider probe Group says it has not been accused of any ‘organisational’ involvement

A JPMorgan Chase & Co. employee in Japan was found to have leaked insider information in 2010

apan’s widening probe of insider trading reached JP Morgan Chase & Co on Tuesday as the embattled United States bank was identified as the source of leaked confidential information regarding a planned share offering by Nippon Sheet Glass Co Ltd in 2010. Three people with knowledge of the probe said officials had determined that a JP Morgan salesman had been the source of the leak about the offering to a Tokyo-based fund, Asuka Asset Management. The development marks the first time a foreign bank has been caught up in an investigation by Japanese officials that has put the spotlight on what insiders and regulators say had become a near-endemic practice in the Tokyo market. There is no indication JP Morgan will face any penalty in Japan. Insider trading fines, even when imposed by Japanese regulators, tend to be token. Even so, the revelation of JP Morgan’s involvement in the probe could raise new questions about the internal controls of a Wall Street bank already under scrutiny after reporting a trading loss of at least US$2 billion (16 billion patacas) in

the ‘London Whale’ case. JP Morgan, one of two lead underwriters for the Nippon Sheet Glass stock sale, said it had not been accused of any “organisational” involvement in insider trading. Japan’s securities watchdog, the Securities and Exchange Surveillance Commission, said it was seeking a fine against Asuka after finding the fund had profited by shorting the glassmaker’s shares ahead of a US$505 million share offer in September 2010. Regulators said a tip on the share offering came from one of the underwriters of the deal without naming the broker. The share offering was led by JP Morgan Securities and Daiwa Capital Markets. Asuka, which manages money for Japanese pensions and other institutional investors, said one of its fund managers had been involved in the insider trading. The company said the fund manager had been relieved of his duties at the Asuka Opportunities Master Trust but did not say if he had been fired. The fund had US$288 million under management as of April. Reuters