Macau Business Daily, November 13, 2012 by Business Daily

www.macaubusinessdaily.com Year I Number 161 Tuesday November 13, 2012 MOP 6.00 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte

I SSN 2226-8294

No escape from new jail price hike: govt

City’s top earners pay world’s lowest tax rate

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Cut red tape on labour imports urge SMEs

research paper published by the Small and Medium Enterprises (SMEs) Association and the University of Macau says a quarter of those polled expect trading conditions to worsen in the next 12 months. That’s despite Macau’s gross domestic product expanding by 7.3 percent

year-on-year in the second quarter. The report states labour import restrictions are one reason. They are felt by respondents to have a disproportionately negative effect on SMEs – those employing fewer than 100 people. SMEs – unlike the casino concessionaires – aren’t blessed with large human resources

departments. Labour restrictions push up administrative costs as small firms grapple with the paperwork and legal fees linked to applications. Salary thresholds set for some imported labour can also contribute to general wage inflation in the local jobs market. Over a quarter of the 1,127

businesses interviewed expect the business environment to worsen in the next 12 months, while just 16.5 percent think the situation will improve. The remainder, more than half, believed there would be no change. More on page 2

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Middle class? Start lobbying for tax breaks The recent local debate over the ‘middle class’ and whether Macau really has one is in fact all about lobbying for handouts and special treatment – seemingly Macau’s favourite pastime – it’s emerged. Measures expected from the chief executive’s Policy Address for 2013, due to be delivered today, include more tax exemptions for the middle-income community, several experts have told Business Daily. The government has sweetened the inflation pill for lower earners and generally kept them off the streets with several years of cash handouts. Now it’s likely to turn attention to a potentially more troublesome and articulate constituency – educated professionals – despite Macau having an enviably low income tax rate.

HANG SENG INDEX 21460

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Party over for ‘Broken Tooth’?

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Local police are trying to foil any plans for a public homecoming party for jailed gangster Wan Kuok Koi, better known as ‘Broken Tooth Koi’. He’s due to be released on December 2 after serving nearly 15 years. Hotels and casinos in Macau have been asked to inform officers of any “significant bookings” for parties or gatherings to be held in coming weeks, Business Daily has learned.

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2012’s tax harvest projections exceeded Government revenue slowed last month in line with a slowing in the expansion of gaming revenue. But cumulative revenue this year has surpassed the 101.9 billion patacas (US$12.8 billion) budgeted for 2012, official data show. Casino gambling is taxed at an effective rate of nearly 40 percent of the gross wagered and contributes the lion’s share of Macau’s public finances.

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HSI - Movers Name

%Day

CHINA RES POWER

2.76

BELLE INTERNATIO

2.42

WANT WANT CHINA

2.23

CHINA RES LAND

1.66

TENCENT HOLDINGS

1.65

SANDS CHINA LTD

-0.66

CHINA SHENHUA

-0.79

MTR CORP

-0.84

CHINA COAL ENE-H

-1.31

CHINA UNICOM HON

-3.01

Source: Bloomberg

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macau

End labour import quotas, SMEs say Smaller enterprises look for help from the government and the banks to solve their problems Tony Lai

tony.lai@macaubusinessdaily.com

Legislators call for loosen rules

SMEs have difficulty in retaining resident workers, a survey has found

maller businesses have called for an end to quotas for imported labour and for more financial assistance as they struggle to cope with a lack of suitable workers and a surge in costs. The Small and Medium Enterprises Association and the University of Macau released yesterday a discussion paper on the situation businesses with fewer than 100 employees found themselves in last year. More than one-quarter of 1,127 businesses surveyed by the association expected the business environment to worsen in the following 12 months, while just 16.5 percent thought the situation would get better. The remainder, more than half of all enterprises, believed there would be no change. Increases in the prices of raw materials and rents, fierce competition and a shortage of suitable workers were their most pressing problems. The vice-chairman of the association, Daniel Iong, told a press conference: “The most urgent thing for the government to do is to allow SMEs to import outside workers based on their operational situation instead

of a ratio, particularly for enterprises having fewer than 10 employees.” Mr Iong estimates that enterprises with no more than 10 employees account for at least half of Macau’s 15,000 small businesses, most of which are in manufacturing, retailing, real estate or catering. The law allows businesses to import workers in numbers proportionate to the numbers of residents they employ. The government has made public only the proportion that applies to the construction industry. Mr Iong said: “SMEs even have difficulty in retaining local labour. Who will work for them if they can only import outside workers by securing enough local workers?”

Give us the money The SMEs association is urging the government to allow an employer to renew an imported employee’s contract automatically if both parties agree. It also proposes that the government and banks give more financial support to smaller enterprises. The survey found that over 90 percent of the capital of smaller

enterprises came from their shareholders, while only 6 percent came from bank loans and 2.2 percent from the government. The association says the government should better promote its loan scheme for smaller enterprises and make the procedure for getting a loan easier. It also suggests raising the ceiling of the Financial Services Bureau’s SME Aid Scheme to 1 million patacas (US$125,000) from 600,000 patacas. Mr Iong thinks tax relief and other measures like electricity subsidies for smaller businesses should continue. His association wants consideration to be given to a development fund to give SMEs advice on investment and management to help them adapt. It also says a long-term plan for the development of smaller enterprises is sorely needed. “The government should consider setting up long-term policies, which are lacking now, for the SMEs,” a professor of economics at the University of Macau, Henry Lei Chun Kwok, told the press conference. “I believe SMEs, accounting for 90 percent of the Macau companies, will

‘No great harm done’ if night market: report Sai Van’s proposal will not spoil the environment, govt says Stephanie Lai

sw.lai@macaubusinessdaily.com

ittle noise impact will be generated from the tourism project for Sai Van Lake claims a report from AECOM, a consultancy and lobbying company. AECOM advised the Hong Kong government on how to redevelop the old Kai Tak airport site in Kowloon. The firm adds that the Sai Van scheme should not produce any serious pollution if the owners control emissions from restaurants and food stalls. The plan for the night market calls for construction of an open café, a

ship-themed western restaurant, a food court with 45 stalls and stalls for selling cultural and creative products. Sitting at the west side of the lower deck will be an open theatre. The initiative to set up Sai Van as a tourist draw has been questioned by business leaders, urban planners and residents. Although the plan has been drafted, there isn’t yet an estimate for the budget, the head of the Civic and Municipal Affairs Bureau, Raymond Tam Vai Man, said yesterday during a press conference.

The environmental assessment by AECOM – described by the government as an independent one – cost the government 350,000 patacas (US$43,841), Mr Tam said. Freeman CM Cheung, AECOM’s regional managing director, said the company’s study concluded that the noise produced from heavier traffic during the operation of the night market will not have an obvious impact on the zone. According to the plan, tourist coaches, taxis and buses will stop and park at the upper decker of the

The administration should consider shortening time and simplifying procedures for employers to hire foreign workers, said legislator Kou Hoi In. Legislative Assembly members representing the business sector – Mr Kou, Fong Chi Keong, Cheang Chi Keong and Ho Iat Seng – held a talk yesterday to discuss labour issues with business owners and government officials. “Right now the time for applying for imported labours is comparatively long and the procedures are also rather complicated,” Mr Kou told media after the seminar, adding the government should optimise such process. He also said importing foreign workers was “necessary” in order to complement the current labour market and sustain the city’s economic development. But for protecting the rights of local workers, the government should carefully draw up a long-term plant for the management of human resources, he added. The latest official data show the number of foreign workers reached a new record in September of over 109,000 workers, representing over 30 percent of the city’s employed population. Wong Chi Hong, director of the Labour Affairs Bureau, told reporters after the seminar that the government would listen to opinions from different sectors and fine-tune the foreign labour mechanism if necessary to satisfy the needs of both employers and employees. T.L.

play a major role in the city’s economic diversification,” Mr Lei said. The association says the government could encourage smaller enterprises to take part in joint ventures on Hengqin Island. It also wants a public body to handle the affairs of SMEs.

Sai Van plaza. A station of the Light Rapid Transit system will also be in the area of the proposed market. The assessment report from the government-appointed consultancy also predicted that the theatre performance will not be too noisy for residents living close to the lake. “We’ve made the predictions assuming 200 audience members, and two speakers,” said Mr Cheung. “We’ve adopted international standards to calculate the impact of the sound – the nearest residence at Sai Van, sitting 300 metres apart, will also have a noise level of 64 decibels, which should be an acceptable rate.” Vong Man Hung, deputy-director of the Environmental Protection Bureau, said the department is still analysing AECOM’s study. A final report with suggestions will be handed out to the Civic and Municipal Affairs Bureau by the end of this year, she said.

November 13, 2012 business daily | 3

MACAU No magnetic bank cards by 2015 The Monetary Authority of Macau will initiate procedures next year to replace magnetic stripe cards with bank cards with smart chips to better protect users’ data, members of the Choi In Tong Sam Association said after meeting with officials yesterday. The association is under the Macau Federation of Trade Unions. The replacement procedure for ATM cards is expected to be completed in the first quarter of 2014 and a year later for credit cards, the association members quoted officials as saying.

Middle class tipped to receive tax relief The Policy Address for 2013 will bring few surprises, but helping the middle class should be its priority, observers say Vítor Quintã

vitorquinta@macaubusinessdaily.com

ore tax exemptions for the middle-class are among the measures expected from Chief Executive Fernando Chui Sai On’s Policy Address for 2013, businesspeople and academics say. All eyes will be on Mr Chui today, mostly to see whether there will be any change to the amount of cash handed out to permanent and temporary residents. But experts say other, less flashy measures could do more good in the long run. Economist Henry Lei Chun Kwok is calling for tax benefits for middleincome earners. The director of the Institute for the Study of Commercial Gaming at the University of Macau, Davis Fong Ka Chio, expects “some tax relief … a rebate for the professional tax and, in the long term, some more property purchase relief for this income group”. Both say the middle class, including shopkeepers and bosses of small or medium enterprises, should be given priority in Mr Chui’s speech. Last month the government’s Policy Review Office defined middleincome earners as those getting between 12,000 patacas (US$1,500) and 78,000 patacas per month – or 55.9 percent of the population. Some critics said this definition was too broad. Mr Fong says: “The government should focus on enhancing the competitiveness of these income groups, making them into a real

middle class”. Mr Fong says the government should speed up the introduction of a system of accreditation for people qualified for certain occupations. “We’re talking about the build-up of a licensing system for the various occupations, like architects, and even casino staff,” he says.

Flexibility needed The unemployment rate is only 2 percent, and employers cannot find enough suitable workers among residents. The head of the government’s think-tank, Lao Pun Lap, thinks the city will need between 150,000 and 200,000 imported workers between now and 2036. “An increase in the amount of imported labour is inevitable” to solve the city’s manpower shortage problem, Mr Lei says. “But the government will probably include a better management mechanism to safeguard the rights of local workers.” Businessman Chan Chak Mo, who is also a member of the Legislative Assembly, says: “What I hope for is more help from the government in the form of relaxation of its human resource recruitment policy for SMEs, which face intense competition from gaming companies.” The chairman of the British Business Association of Macau, Henry Brockman says “more flexibility for hiring people with certain skill sets”

is sorely needed. “Why not give a little more preference to nationals of Portuguesespeaking countries in getting a work permit?” he says. “That would allow companies to bring in more skilled labour and give more credibility to the government’s intention to make Macau more of a platform between China and Portuguese-speaking countries.” Mr Brockman says “wage inflation is one of the major issues pushing up overall prices”. “As an employer, I have no problem in paying higher wages if productivity also increases. But in this case the only reason for that is to stop workers from leaving,” he says.

Better allocation Mr Brockman says the price of housing is another concern, but warns that the government’s measures to cool the property market could fuel inflation in other areas of the economy, especially because “it’s not clear until when these measures will be in place”. Businesswoman Melinda Chan Mei Yi, another member of the Legislative Assembly, expects the focus of the Policy Address for 2013 to be on livelihoods and social welfare, just like the last policy address. But she calls for the chief executive to look further ahead. “The government will have to see how to better allocate its resources to things like the social security system and medical services,” Ms Chan says. She bemoans the absence of any word about when contributions to the social security fund, now voluntary, will be made compulsory. Mr Fong shares her concern. “What matters more for the government now is the build-up of a social security system, and the investment methods for our fiscal reserve,” he says. Mr Fong hopes to hear some thoughts on how to use the government’s savings better. He wants to know whether they will be invested in stable bonds, or turned over to government-owned investment company to invest.

The government should focus on enhancing the competitiveness of these income groups, making them into a real middle class Davis Fong Ka Chio, director of the Institute for the Study of Commercial Gaming at University of Macau

An increase in the amount of imported labour is inevitable [to solve the city’s manpower shortage problem] Henry Lei Chun Kwok, economics professor at University of Macau

Relaxation of its human resource recruitment policy for SMEs, which face intense competition from gaming companies Chan Chak Mo, legislator and businessman

With Stephanie Lai, Tony Lai

The government will have to see how to better allocate its resources to things like the social security system and medical services Melinda Chan Mei Yi, legislator and businesswoman

Wage inflation is one of the major issues pushing up overall prices More tax exemptions for middle-income earners are among the measures expected

Henry Brockman, British Business Association of Macau chairman

November 13, 2012 business daily | 5

MACAU

‘Be on alert for Broken Tooth party’ casinos, hotels, told Homecoming event for notorious gangster could be over before it begins Michael Grimes

michael.grimes@macaubusinessdaily.com

otels and casinos in Macau have been asked to inform local police of any “significant bookings” for parties or gatherings involving 100-plus guests to be held before year-end, Business Daily has been told. The reason is either to prevent or to allow official monitoring of any homecoming celebration for jailed Wan Kuok Koi, better known by his nickname ‘Broken Tooth Koi’. Identifying and preventing any such party could prove difficult however with the Christmas season approaching and scores of local businesses planning major social events. Cheong Kuoc Va, Macau’s Secretary for Security, said during an unrelated press conference on Friday that Mr Wan would be released from prison in Coloane on December 2. He was arrested in May 1998 and later convicted and sentenced to 15 years of imprisonment for being a triad gang member and leader, for money laundering and involvement in loan sharking. His term was later reduced to 13 years and 10 months. That was due to be completed by March 31, 2012. But later a court confirmed that he would have to serve a further nine months for violating the terms of a 1989 suspended jail sentence imposed for entering a casino while banned. Business Daily has been told two casino resorts have separately each turned down a booking for a large event planned in the relevant December period, because they were not satisfied about the source of the booking or what was being planned. “Obviously any party booking won’t be made in the name of Wan Kuok Koi,” a person familiar with the situation told Business Daily. “But the authorities have asked all the local hotels and casinos

Wan Kuok Koi

to inform them about any large gathering – say upwards of 100 people – planned in the next few months,” the person added. “I think their purpose is ideally to disrupt any release party planned for him, but if they can’t disrupt it, they would at least like to monitor it,” added the source.

Old haunts Macau officials’ concern is probably justified. Last time he was free, in the 1990s, Mr Wan wasn’t merely a partygoer. He was linked to a string of murders, bombings and shootings in a turf war for control of Macau VIP gamin g r o o m s th a t ter r o r i s ed the local community prior to the city’s handover from Portuguese to Chinese administration in 1999. Mr Wan began his application for release on parole in 2008 after serving two thirds of his jail sentence, but the courts here rejected all his repeated

attempts and appeals. At the time Business Daily went to press there was no response available from the city’s Security Forces Coordination Office about plans to disrupt any homecoming party for Mr Wan. But on Friday Secretary Cheong said the police are already monitoring triad activities. “As for the fight against triads, Macau security forces have been working hard on it. They have been doing due diligence to retrieve more information to know what they are planning to do and [to] try to prevent it. Moreover, we are increasing policing in casinos … In addition there are always repressive measures. Whenever we catch them red-handed, the police will arrest them,” added Mr Cheong.

Keeping watch Business Daily understands that Mr Wan has a brother who is currently working in a Macau junket

operation. But a source told us that as a convicted gangster infamous for disrupting ‘social harmony’, Wan Kuok Koi is likely to be closely monitored upon release. “I don’t know for sure but I think it’s highly likely that Mr Wan has had a visit in prison from mainland officials. They will have told him in very clear terms that if there’s any resumption of his previous activities he will quickly find himself on the Zhuhai side of the border and he won’t be coming back,” said the person. According to legal sources spoken to by Business Daily there is no formal extradition agreement between Macau and mainland China. In 2008 however, the public prosecutor’s office did transfer a fraud suspect held in Macau to the custody of the mainland authorities, a decision that the Court of Final Appeal later determined was illegal. In September the Judiciary Police (PJ) told local media in response to concerns that Mr Wan’s release might provoke some kind of turf war in the junket industry: “The PJ has designated units and branches to study and follow up all kinds of unstable factors that might upset social security”. And a second source told us this week: “The junket rooms now are very different places from the junket rooms of the 1990s. Back then STDM [Stanley Ho Hung Sun’s former casino monopoly] in effect contracted out VIP operations and they were run independently without oversight from the licensee. “Now they are monitored by and answerable to the concessionaires and the DICJ [gaming regulator]. Business is good and it’s stable. The junket industry won’t want an unpredictable, troublesome person like Wan Kuok Koi on the scene.”

Leighton bags fifth Macau casino resort project Australia-based contractor has good track record for infrastructure in Greater China

eighton Contractors (Asia) Ltd has been selected by Wynn Resorts Ltd as the preferred bidder to design and build the Wynn Cotai casino resort in Macau. Wynn Resorts said in a regulatory filing in August the project would cost “in the range of US$3.5 billion [28 billion patacas] to US$4.0 billion”. The Wynn Cotai plot of 52 acres (21 acres) was granted as a land concession by the Macau government on May 1 and confirmed the same day in the Official Gazette. Piling work on the site began shortly afterwards, the company chairman Steve Wynn confirmed in a press conference earlier this year. But six months on from the land gazetting – and at the time this edition of Business Daily went to press – the project had yet to be

granted a construction permit by the government. Nonetheless Hamish Tyrwhitt, chief executive of Leighton Contractors (Asia) parent company Leighton Holdings Ltd, warmly welcomed the news of the latest Macau contract. “Leighton has built a solid track record in casino and hotel resorts in Macau over the past eight years with a number of significant projects successfully delivered, and we are delighted to be working with Wynn Resorts again,” he stated. The Macau casino resort contracts in the portfolio of Leighton Holdings – a Sydney, Australia-based company listed on the ASX – include the HK$2 billion Fisherman’s Wharf, originally a joint venture by local entrepreneur David Chow Kam Fai and Stanley

Ho Hung Sun’s SJM Holdings Ltd that opened in January 2006. Leighton also worked on Wynn Macau, which had its first phase opening at a cost of US$1.2 billion in September 2006 as well as on its sister property Wynn Encore next door. Leighton was also the lead contractor on Melco Crown Entertainment Ltd’s City of Dreams casino resort on Cotai that cost more than US$2 billion when it had a first phase opening in June 2009. Leighton Asia also currently has a contract to build some of the infrastructure on the Guangzhou-Shenzhen-Hong Kong Express Rail Link. Leighton Holdings’ share price ended the trading day in Sydney yesterday down 1.27 percent at A$17.05 (141.8 patacas). M.G.

Wynn Cotai site (Photo: Manuel Cardoso)

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business daily November 13, 2012

macau AICEP officer in Macau leaving The current director for Macau and Hong Kong of Portugal’s AICEP – Trade & Investment Agency is leaving the territory. Mariana Oom will leave Macau by December-end, Radio Macau reported, quoting sources. Ms Oom has been in Macau for two years. According to Radio Macau, AICEP is currently looking for a replacement for Ms Oom. Portugal will also have a new consul-general in Macau by early 2013, Vítor Sereno. The 41-year-old diplomat will replace the current consulgeneral Manuel Cansado de Carvalho, who took over the position in February 2009.

The government’s capital budget includes money for the artificial island where the Hong Kong-Zhuhai-Macau Bridge will land (Photo: Manuel Cardoso)

Govt revenue overshoots target for whole of 2012 The government splashed out more and raked in less last month, but still got richer Vítor Quintã

vitorquinta@macaubusinessdaily.com

overnment revenue slowed last month, but cumulative revenue this year has surpassed the 101.9 billion patacas (US$12.8 billion) budgeted for 2012, official data show. Provisional figures released by the Financial Services Bureau yesterday

indicate that government revenue last month was 11.2 billion patacas, 3.1 percent less than in September. But in the first 10 months of this year revenue was 104.7 billion patacas. The slowdown last month was due mainly to a slump in gaming tax revenue, which was 8.5 billion

patacas, 8.6 percent less than in September, although it was 3.2 percent more than a year before. Direct taxes on gaming revenue amounted to 88.2 billion patacas, or 84.3 percent of all revenue, in the first 10 months of this year. The government pockets 35 percent

of gaming revenue directly, and takes another 4 percent in indirect taxes. The fiscal surplus so far this year has surpassed last year’s surplus of 63.7 billion patacas. The cumulative surplus in the first 10 months was 66.8 billion patacas, more than double the 36 billion patacas budgeted for the whole of the year. This was despite a rebound in government spending last month to almost 5.6 billion patacas from 2.7 billion patacas in September. Current spending, including the salaries and benefits of civil servants, amounted to 5 billion patacas. Capital spending amounted to 581.2 million patacas, much of it invested in the Seac Pai Van public housing complex and the Chinese traditional medicine park on Hengqin Island. The government has so far spent only 29.5 percent of its capital budget of 19.8 billion patacas for this year.

New prison to cost extra, open late The new prison on Coloane will cost another 30 million patacas, and the opening has been pushed back Vítor Quintã

vitorquinta@macaubusinessdaily.com

he prison being built in Ka Ho village on Coloane has run into more trouble, with the government admitting yesterday that phase one of construction would cost another 30 million patacas. A contract for 113.1 million patacas (US$14.2 million) was signed with Zhen Hwa Harbour Construction Co Ltd in October 2010. It was revised last March. An official notice in yesterday’s Official Gazette says “additional works” will increase the cost by at least another 30 million patacas, about 27 percent of the original price. In April the Land, Public Works and Transport Bureau told Business Daily that the contractor would be responsible for any additional costs stemming from delays, including the wages of construction workers. Business Daily asked the government about who was liable for the additional

30 million pataca cost and about the new works, but had not received any reply by the time we went to press. Zhen Hwa Harbour Construction is a joint venture by state-owned contractor China Harbour Engineering Co Ltd, which owns 51 percent, and gaming company SJM Holdings Ltd. Yesterday’s notice says work will continue throughout next year, delaying the opening of first phase of the new prison by at least two years. The original contract specified that the first phase should have been ready last year. In April the director of Macau Prison, Lee Kam Cheong, said work would be completed this year. Officials said in January that a delay in completing the foundations had been caused by the complex characteristics of Ka Ho hill, heavy rain and the contractor’s difficulty in finding enough workers.

Construction of the new prison in Ka Ho started in October 2010

November 13, 2012 business daily | 7

MACAU

Top earners pay world’s least tax When combined, the effective income tax and social security rate paid by workers here earning more than 800,000 patacas a year is the lowest in the world Vítor Quintã

vitorquinta@macaubusinessdaily.com

f you earn about 800,000 patacas (US$100,000) a year here, you pay the world’s lowest combined income tax and social security rate, according to global accounting firm KPMG. KPMG calculated that a worker earning that much would pay an effective income tax rate of 4.6 percent and opt out of payments to the social security system. The firm’s “Individual Income Tax and Social Security Rate Survey 2012” report, released last month, says Macau had the lowest effective combined rate among the 114 countries covered. The survey assumed that the taxpayer would not contribute to the voluntary social security scheme. Employers are asked to contribute 30 patacas a month and employees 15 patacas. The survey found there were other countries, including some tax havens and oil-rich states, that do not have personal income tax but make workers pay more in social security contributions than they would have paid under Macau’s income tax system. The income tax rate increases to a maximum of 12 percent in Macau for annual earnings greater than 424,000 patacas. That is lower than the top rates in Hong Kong, where it is 15 percent,

A top income tax rate of 12 percent helps Macau beat other Asian cities competing for talent, such as Hong Kong and Singapore

and Singapore, where it is 20 percent. Macau’s income tax ceiling is much lower than the average for East Asia of 33.3 percent, and is one of the lowest in the world, above only the maximum of 10 percent in Albania, Bosnia, Bulgaria and Macedonia. The government here has left personal taxes unchanged for the past eight years, as have the governments

of mainland China, Japan and India – at least for high-income earners. “That being said, there are indications that this trend is set to change,” the survey report says. South Korea has introduced an extra tax band to tap high-income earners for revenue, and next year Japan will impose a surtax to help fund the rebuilding of parts of the country ruined

by the earthquake in March 2011. The average top rate of personal income tax in all countries surveyed went up by 0.3 percent this year, increasing for only the third time in the past 10 years. “In large part, this upward tick in personal tax rates is the result of a lack of economic recovery and increasing debt concerns,” the report says.

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business daily November 13, 2012

GREATER CHINA

Beijing to increase foreign investor yuan quota Facilitation of foreign funds flows under study

hina will increase fourfold a programme that allows investors to bring in yuan raised overseas to meet demand for the nation’s securities. The China Securities Regulatory Commission, the People’s Bank of China and the State Administration of Foreign Exchange have agreed in principle to increase the quota for the Renminbi Qualified Foreign Institutional Investor programme by 200 billion yuan (US$32 billion), Guo Shuqing, chairman of the securities regulator, said at a briefing in Beijing yesterday. Hong Kong officials asked for the amount to be lifted, Mr Guo said. The current quota is 70 billion yuan. China approved the RQFII program last December, allowing the Hong Kong units of Chinese financial companies to raise yuan offshore for investment in domestic capital markets. Mr Guo has cut trading fees, pushed companies to increase dividends and allowed trust companies to buy equities since becoming chairman a year ago in an effort to shore up the stock market. “The RQFII programme is very positive,” said Wu Kan, a fund manager at Dazhong Insurance Co. in Shanghai, which oversees US$285 million. Still, “the 200 billion-yuan quota isn’t big enough to shore up stocks immediately.” While the yuan is freely convertible for trade transactions, investment in stocks or bonds onshore can only be made using quotas assigned by the government and direct investments need regulatory approval. China also plans to boost its stock markets by announcing bigger tax deductions on dividends for longterm investors, the Xinhua News

Agency reported over the weekend, citing the CSRC. “The tax policy will guide investors to holding stocks for the long-term, and companies paying high dividends will attract more attention in the market,” Xinhua reported on November 10, citing an unidentified CSRC spokesman.

QFII Expansion China will “definitely” expand the foreign-currency quota provided under the Qualified Foreign Institutional Investor programme once the current allotments are filled, Mr Guo said. The central bank and the foreign exchange regulator have no objection, he said. “We are ready to implement many more measures to help resolve the issue of inconvenience,” he said at the briefing, held as the 18th Chinese Communist Party congress gathered to elect new leaders. Those changes include tax incentives and rebates for foreign investors, on which there has been “solid progress,” and support from other government departments,

Guo Shuqing, China Securities Regulatory Commission chairman

We are ready to implement many more measures to help resolve the issue of inconvenience

he said, without giving more details about the policies. China raised QFII quotas to US$80 billion from US$30 billion in April. The securities regulator is studying the possibility of boosting the US$1 billion ceiling on individual funds in the QFII programme, Mr Guo said. The securities regulator is also studying rule changes that would lower the threshold for Chinese companies to sell shares in Hong

Kong, Mr Guo said. Any changes would need the approval of Hong Kong authorities and no formal agreement has been reached yet, according to Mr Guo. Regulators are studying ways to improve the management of foreign exchange flows, according to Mr Guo. The securities regulator is considering rules allowing large institutional investors, to move money out of China in stages, either within a few years

Yuan appreciates to new against the dollar PBOC fixes highest midpoint in six months

he yuan hit a record high yesterday as persistent dollar selling by Chinese corporates drove the spot rate to its maximum daily limit under China’s managed float regime, after the central bank set an unusually strong official daily midpoint. The yuan has appreciated 1.0 percent so far this year, reversing a depreciation of as much as 1.6 percent in the year by late July, but the appreciation would have been greater if the central bank had not kept the market in check, either through its midpoint fixes or suspected intervention. Yesterday, the People’s Bank of China (PBOC) fixed the midpoint at 6.2920 per dollar, the strongest the yuan has been fixed at since May. On Friday the midpoint was fixed at 6.3012 yuan to the dollar. The spot exchange rate, which is allowed to rise or fall by 1 percent away from the midpoint on any given day, took full advantage of the new room.

The yuan opened at 6.2310 to the dollar before swiftly moving to hit the yuan’s strong-side limit at 6.2291. The spot rate had closed at 6.2450 yuan to the dollar on Friday. It was the yuan’s strongest open and intra-day trading level since China opened its domestic currency market in 1994. The central bank has been trying to restrain the yuan by fixing midpoints that held the market back, but as a consequence the spot rate has repeatedly struck the yuan’s strongside limit every day for over two weeks. Some market analysts believe the central bank should bow to market pressure by widening the trading band, while others say the dollar selling will subside soon and the central bank can afford to wait until China’s incoming new leaders roll out more reforms. Offshore one-year non-deliverable yuan forwards have consistently forecast depreciation of between 1.6-

November 13, 2012 business daily | 9

GREATER CHINA

Film industry ‘shaken’ since opening up Opening to foreign films putting pressure on domestic production

or in a single year, he said. “In the past, we encouraged inflows and restricted outflows of funds,” Mr Guo said. China should move to “more balanced” and “more neutral” measures, he said. “That doesn’t mean that there will be no control at all. There will certainly have to be some control so that market movements will not be too volatile,” Mr Guo said.

hina’s film industry has been “shaken” after the country’s cinemas were opened up to show more foreign productions, a government official said on Sunday on the sidelines of a pivotal party congress. China, which is set to become the world’s second-largest movie market this year, agreed in February to lift its quota of foreign movies per year from 20 to 34 in a move long sought by Hollywood. “This has brought handsome profits to the American film industry but has also posed pressure and challen g e to th e C h i n es e fi l m industry,” vice minister Tian Jin said at a press conference on the sidelines of the Communist Party’s 18th congress in Beijing. “Domestic films are facing great pressure,” said Mr Tian, who is the party member responsible for radio, film and television. “The objective reason is that more foreign films in the Chinese market have dealt a blow to domestic films, and the subjective reason is that the domestic film industry

needs to be more competitive,” he said. He urged domestic filmmakers to “enhance creativity”. Scores of cinemas are being built across China to cater to growing demand which has seen box office takings of more than 13 billion yuan (US$2.1 billion) this year until the end of last month – up 40 percent from the same period last year, Mr Tian said. But the domestic industry’s takings were just 40 percent of that total, which was “much lower than last year”, he added, without elaborating. Mr Tian denied that Beijing had imposed restrictions on the scheduling of foreign films in China. “The release schedule of films is purely a market act,” he said, responding to a question about a ‘month-long restriction’ on foreign films. “The government will never impose a schedule to any film or release.” China has shown foreign films for many years, but agreed to open its cinemas to more overseas productions in February following a visit to the U.S. by Vice President Xi Jinping last year. AFP

Bloomberg

Money rates slip on liquidity data China’s money rates fell slightly yesterday after central bank data showed the country’s real economy remains topped up with sufficient liquidity, and traders they expected further falls in the coming weeks. China’s total social financing (TSF), an economic barometer that sums up the total fundraising that occurs in the real economy - including bonds, trust financing, and IPOs in addition to bank lending - jumped 64 percent to 1.29 trillion yuan (US$207.1 billion) year-on-year in October, the People’s Bank of China (PBOC) said yesterday. “Total social financing in the first ten months grew by 23percent year-on-year, outpacing loan growth,” said Dongming Xie, economist at OCBC Bank in Singapore. “This suggests that Chinese funding channels are more diversified now. I think TSF is becoming the most important indicator of China’s credit expansion.” Given the abundance of liquidity now in the system, money market rates have the potential to fall further in coming weeks, with the sevenday repo rate possibly falling back below 3 percent, traders said. “It’s quite easy to borrow money since the start of this month,” said a trader at a Chinese commercial bank in Shanghai. “And overall liquidity conditions are expected to improve even more in coming weeks.” China’s interest rate swaps (IRS) were almost unchanged at midday, with few players expecting changes to monetary policy in the near term, traders said.

HK, Chinese stocks see small gains China’s stocks rose, driving up the benchmark index for the first time in six days, after the nation’s export growth exceeded forecasts and regulators announced steps to boost investment into equities. The Shanghai Composite Index rose 0.5 percent to 2,079.27 at the close. The CSI 300 Index climbed 0.5 percent to 2,251.85. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong slipped 0.1 percent. “October economic data including exports have confirmed the economy is stabilising,” said Wu Kan, a fund manager at Dazhong Insurance Co. in Shanghai. “The programme to attract more yuan investment is positive news and it will boost stock performance in the long term. The market is waiting for further catalysts.” Hong Kong shares also rose slightly yesterday after last week’s slump. The Hang Seng index rose 0.2 percent to close at 21,430.3 points.

w record Pandas face bamboo shortage threat 1.8 percent in the next twelve months. Traders said they suspect that the central bank was intervening through major state banks to buy up the dollars at the end of last week. “There was a wave of dollar buying from major state-owned banks on Friday, but some traders suspected it was actually intervention from the PBOC to absorb dollars,” said a trader at a European bank in Shanghai. Market participants offer different explanations for the yuan’s strength, which has continued despite the dollar’s gains against other currencies, reflected in the rise of the dollar index since mid-October. Some market analysts believe Chinese corporate treasurers may be rebalancing their positions after going too long in dollars earlier in the year. Others say the dollar selling partly reflects an unexpectedly strong recovery in export growth, which hit a five-month high in October. Reuters

Central bank is thought to be buying dollars

Their numbers already threatened by a slow breeding rate and rapid habitat loss, China’s endangered giant pandas now also risk losing their staple food, bamboo, to climate change, a report said on Sunday. A study in China’s northwestern Qinling Mountains, home to around 270 pandas – about a fifth of the world’s wild population – predicts a “substantial” bamboo decline this century as the globe warms. “The pandas may face a shortage of food unless they can find alternative food resources,” a team of researchers from the United States and China warn in the journal Nature Climate Change. The international symbol of environmental conservation efforts, the giant panda is a picky eater.Ninety-nine percent of its diet consists of bamboo – devouring up to 38 kilograms (84 pounds) per day. This means the iconic blackand-white bear’s survival is closely linked to a thriving bamboo habitat. Bamboo itself also has a slow reproductive rate, flowering only every 30 to 35 years, which means it would be slow to adapt to a change in local climate, said a statement on the research. Based on the data gathered for this study, researchers predict that three bamboo species which make up almost the entire diet of the Qinling pandas, will all but disappear in a warmer climate. The researchers say bamboo distribution has historically fluctuated in response to changes in the climate.

10 |

business daily November 13, 2012

ASIA Exxon’s PNG project costs balloon to US$19b Exxon Mobil said it faces a US$3.3 billion spike in costs at its LNG project in Papua New Guinea, the latest Asia-Pacific project to be hit by cost overruns as competition is set to grow from new gas supplies coming on tap in North America and Africa. The more than 20 percent jump in costs to US$19 billion was blamed on unfavourable foreign exchange rates and delays caused by disgruntled workers and landowners. Exxon told its partners in a letter published yesterday the project remained on schedule for start-up and delivery of gas in 2014.

Japan economy contracts amid slowdown Economy may already be in recession, minister says Leika Kihara and Kaori Kaneko

apan’s economy shrank in the September quarter for the first time since last year, adding to signs that slowing global growth and tensions with China are nudging the world’s third-largest economy into recession. The 0.9 percent fall in gross domestic product was in line with expectations, although a decline in capital expenditure was much steeper than forecast. Sony Corp and Panasonic Corp have slashed spending plans to cope with massive losses as they struggle with competitive markets and a strong yen. The fall in GDP translated into an annualised rate of decline of 3.5 percent, government data showed yesterday. While U.S. growth showed a modest pick up in the third quarter, Japan and the euro zone economies are shrinking. “The GDP data confirms that the economy has fallen into a recession,” said Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “It is set for a second straight quarter of contraction in the current quarter.” A recession is commonly defined as two consecutive quarters of contraction. The data kept government pressure on the Bank of Japan to boost monetary stimulus even after it eased policy in October for the second straight month as a strong yen and a territorial row with China exacerbate weak demand for exports.

Economy Minister Seiji Maehara said the central bank should pursue powerful policy easing to boost the economy, although BOJ Governor Masaaki Shirakawa shot back that the government should do its bit too. Many analysts expect the BOJ to leave policy unchanged at a review next week, but some see it boosting stimulus again at a December 1920 meeting, shortly after the U.S. Federal Reserve is due to meet. External demand accounted for 0.7 percentage points of JulySeptember GDP contraction, matching the median projection. Japan’s exports fell 5.0 percent in July-September, the biggest slide since a 6.0 percent decline in AprilJune last year, the data showed. A row with China over sovereignty of some islands in the East China

I can not deny the possibility that Japan has fallen into a recession phase Seiji Maehara, Japan’s economics minister

Sea sparked violent protests in China and the boycott of Japanese goods, which added to the slide in exports, particularly for automakers such as Nissan Motor Co. Private consumption – which accounts for roughly 60 percent of the economy – fell 0.5 percent in the third quarter against a median forecast of a 0.6 percent drop.

Companies struggling Capital expenditure tumbled 3.2 percent, the fastest pace of decline since a 5.5 percent drop in AprilJune 2009, as companies turned more pessimistic about earnings from domestic and overseas markets. In Japan’s ailing electronics sector, Sony plans to reduce capital spending by 29 percent in the year to March 2013 and Panasonic plans a 27 percent cut, after incurring huge losses in their TV manufacturing businesses. The companies are struggling to compete with more nimble rivals, such as South Korea’s Samsung Electronics and America’s Apple Inc., and with a steady rise in the yen, which makes exports from Japan more expensive. Analysts said Japanese companies face too many uncertainties to plan future spending with confidence and that is unlikely to change in the current quarter. Resolving the protracted euro zone debt crisis is no nearer, U.S. tax increases and government

KEY POINTS Japan GDP falls first time in 3 quarters Exports slump, private consumption falls Capital expenditure drops more than expected Govt calls for action from central bank BOJ says govt should promote deregulation, reform

spending cuts in early 2013 could tip America into recession unless Congress acts, and adding domestic uncertainty Japan’s Prime Minister Yoshihiko Noda has promised to call a national election “soon” to break a political deadlock. Masamichi Adachi, senior economist at JPMorgan Securities, said business investment would fall again in the fourth quarter as the global economy recovers only gradually. “If some of these uncertainties are removed, it is possible for things to improve,” Mr Adachi said.

India factory output in shock dip Adds to concerns about slowing growth in the country’s economy

ndian industrial production unexpectedly fell in September, adding to signs that Asia’s thirdlargest economy is struggling. Output at factories, utilities and mines declined 0.4 percent from a year earlier after a revised 2.3 percent gain in August, the Central Statistical Office said in a statement in New Delhi yesterday. The median of 28 estimates in a Bloomberg News survey was for a 2.8 percent gain. Factory production has been subdued for most of this year, hurt by moderating consumer demand and a drop in exports as the global recovery falters. The Reserve Bank of India has signalled it may lower interest rates in the first quarter of 2013 to aid growth as elevated inflation cools, after resisting calls from the Finance Ministry for a cut last month to back a growth push.

“It is not plunging into an abyss but equally any signs of recovery seem to be nascent and brittle at the moment,” Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd, said before the release. The rupee, which has weakened more than 8 percent against the dollar in the past year, was little changed in Mumbai. The BSE India Sensitive Index fell 0.1 percent. The yield on the 10year government bond due June 2022 held at 8.21 percent.

Policy changes Prime Minister Manmohan Singh’s administration began a policy overhaul on September 13, unveiling curbs to fuel subsidies to restrain spending and the next day allowing more investment from abroad in industries such as retail

and aviation. Officials have also lowered a levy on overseas borrowing to spur capital inflows and aid the currency. The government is trying to avert a credit-rating downgrade to junk status and bolster an economy that the International Monetary Fund predicts will expand 4.9 percent in 2012, the least in a decade. Manufacturing dropped 1.5 percent in September from a year earlier, while capital goods output decreased 12.2 percent, yesterday’s data showed. Mining rose 5.5 percent and electricity output increased 3.9 percent. India faces elevated inflation, preventing the central bank from joining nations such as Brazil and Thailand in extending interest-rate cuts as the world economy struggles. Consumer prices rose 9.75 percent in October from a year earlier, after a

India’s manufacturing sector has been hurt by a slowdown in global and domestic market

previously reported 9.73 percent gain in September, a report showed yesterday. Reserve Bank Governor Duvvuri Subbarao held interest rates at 8 percent for a fourth meeting on Oct. 30, while reducing banks’ reserve requirements to 4.25 percent from 4.5 percent. The central bank said last month there is a “reasonable likelihood” of further policy easing

November 13, 2012 business daily | 11

ASIA Indonesia pension fund bets on growth Indonesia’s biggest pension fund is preparing to put more money into stocks and bonds, betting the fastest pace of economic growth in Southeast Asia will continue. PT Jaminan Sosial Tenaga Kerja will raise its holdings of consumer, construction and banking-related stocks that are poised to gain from a bigger middle class and government infrastructure spending, President Director Elvyn Masassya said. “For 2013, we will keep reducing our investments in time deposits and raise the allocation in stocks, bonds and direct investments,” Mr Masassya said. “We are still predicting economic growth will be above 6 percent next year.”

Japanese PM eyes snap election

Slowing global growth is nudging Japan’s economy into recession

He forecast capital expenditure will fall 0.5 percent in OctoberDecember and then rise 0.7 percent in January-March. Japan’s economy outperformed most of its Group of Seven peers in the first half of this year on robust private consumption and spending for reconstruction following last year’s earthquake.

Bad news But growth has stalled since then. Indeed, second-quarter growth was revised down in the latest figures by half to just 0.1 percent. The last quarterly economic contraction was in the Oct-Dec period of 2011, when GDP fell 0.3 percent. With the economic affect of rebuilding from last year’s earthquake and tsunami fading, the

government acknowledged last week that its index of leading indicators gauge fell to a level suggesting the onset of a recession. “I can not deny the possibility that Japan has fallen into a recession phase,” Mr Maehara told reporters after the data was released. He said he expected the BOJ to pursue powerful policy easing, although in a speech BOJ head Mr Shirakawa stressed that flooding markets with cash alone wouldn’t inflation the economy when interest rates are near zero. The government should boost the economy’s growth potential with deregulation and structural reform, he said. “Exports and output are likely to remain weak, and domestic demand won’t increase enough to make up for the weakness in exports,” Mr Shirakawa said.

The BOJ set a 1 percent inflation target and eased policy in February. It followed up with further stimulus based on asset buying in April, September and October on mounting evidence the economy was on the cusp of a recession. The deterioration may undermine plans by Mr Noda to implement the nation’s first sales-tax rise in more than a decade, and raises the stakes of a political impasse that’s left the government running out of cash. “Today’s bad economic numbers deliver unpleasant news for Noda,” said Hiroshi Shiraishi, senior economist at BNP Paribas SA in Tokyo. “It will take a while for Japan to get back to a sound recovery, considering a modest pick-up in the global economy at best and the country’s damaged relationship with China.

Under growing opposition pressure to keep a promise to call an election “soon”, Japanese Prime Minister Yoshihiko Noda looks to be leaning toward calling a vote as early as next month, after pledging backing for a controversial U.S.-led free trade pact. The unpopular Mr Noda may be hoping to emulate charismatic leader Junichiro Koizumi’s bold election gamble in 2005 and use a call for a major economic reform to ease the bashing his Democratic Party is expected to suffer at the hands of disappointed voters. Now Mr Noda, with voter support for his cabinet below 20 percent, wants to enshrine backing for the U.S.-led Trans-Pacific Partnership (TPP) trade pact in his Democratic Party of Japan’s (DPJ) new campaign platform. “We will simultaneously pursue the TPP and the free trade agreement between Japan, China and South Korea and this stance will be included in our manifesto,” Mr Noda told reporters over the weekend. “I think an election is close,” Motohisa Furukawa, a former National Strategy Minister, told Reuters last week, adding that a Dec. 16 vote was possible. “I don’t think the situation will improve if we put it off.” Political analysts are not convinced Noda can steal victory at the ballot box like Mr Koizumi, but how badly the Democrats will lose is unclear given lukewarm voter support for the LDP and the wild card of new parties such as one led by populist Osaka Mayor Toru Hashimoto.

Reuters

United Spirits jumps as Diageo buys stake

9.75 % Consumer price inflation rose in October

in the January-to-March period, providing inflation moderates. Finance Minister Palaniappan Chidambaram had called for cheaper credit before the rate decision. He pledged on October 29 to contain the budget shortfall at 5.3 percent of gross domestic product in the year through March 2013, as officials try to increase the central bank’s scope for a rate cut. Bloomberg

Company headed for its biggest gain since listing

nited Spirits Ltd surged by a record in Mumbai trading after Diageo Plc said it will buy a controlling stake in India’s largest distiller for US$2.04 billion. United Spirits climbed as much as 28.02 percent to 1,716 rupees (US$31.7), headed for the biggest gain since its listing in September 2001. The stock was the biggest gainer on the 10-member BSE India Fast Moving Consumer Goods Index. London-based Diageo will acquire a 53.4 percent stake in United Spirits for 111.7 billion rupees (US$2.04 billion), it said in a statement on Friday. The investment will help the Indian company controlled by Vijay Mallya boost sales and spend on marketing, said Arun Kejriwal, director of advisory firm Kejriwal Research & Investment Services Pvt.

“It will now be managed by a company that is cash-rich,” Mr Kejriwal said. “Till today it has had the baggage of being overleveraged and not having the free cash required to run such a business.” The Indian company had net debt of 42.9 billion rupees in the year ended March 31, according to data compiled by Bloomberg. United Spirits’s net debt including that of units was 83.8 billion rupees in the same period, the data shows. The deal with the Johnnie Walker Scotch maker will help United Spirits compete in India’s premium whiskey market, analysts at Religare Capital Markets said in a research note yesterday. India’s whiskey market may grow to US$31 billion in 2016 from US$21 billion in 2011, according to Euromonitor International estimates.

India’s whiskey market forecast to grow to US$31 billion in 2016

“Earlier there were restrictions not only from within the group but from the regulator, from the bankers, because of the debts of other group companies,” Mr Kejriwal said about United Spirits. “All those things will be a thing of the past.” The deal comes as chairman Mallya’s Kingfisher Airlines Ltd is struggling with a cash shortage and a suspended operating licence. Mr Mallya has declined to comment on what the deal means for Kingfisher. Bloomberg

12 |

business daily November 13, 2012

MARKETS Hang SENG INDEX NAME

PRICE

Day %

VOLUME

AIA GROUP LTD

30.5

0.9933775

10788326

ALUMINUM CORP-H

3.29

-0.3030303

8449656

BANK OF CHINA-H

3.15

177086053

BANK OF COMMUN-H

5.47

0.1831502

18605705

BANK EAST ASIA

28.6

934677

BELLE INTERNATIO

14.4

2.418208

13158775

BOC HONG KONG HO

NAME CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD

PRICE

Day %

VOLUME

PRICE

Day %

11.62

-3.005008

34902565

POWER ASSETS HOL

66.5

0.1506024

1190231

9.96

1.014199

10105479

SANDS CHINA LTD

29.9

-0.6644518

13487674

SINO LAND CO

13.24

-0.1508296

3775005

SUN HUNG KAI PRO

113.4

0.7104796

3774558

92.5

0.2710027

1286810

271.4

1.64794

2754451

65.8

0.2284844

1493274

CNOOC LTD

15.98

0.1253133

21722824

COSCO PAC LTD

10.62

0.5681818

4941894

ESPRIT HLDGS

11.12

10186212

NAME

SWIRE PACIFIC-A TENCENT HOLDINGS

23.7

0.2114165

6333211

HANG LUNG PROPER

27.15

1.117318

3584669

TINGYI HLDG CO

CATHAY PAC AIR

13.86

1.464129

1279191

HANG SENG BK

115.1

-0.5185825

1910316

WANT WANT CHINA

CHEUNG KONG

114.4

1.328609

2917966

HENDERSON LAND D

53.1

0.6635071

3722199

WHARF HLDG

7.54

-1.308901

29867745

HENGAN INTL

73.15

1.315789

2417814

HONG KG CHINA GS

19.98

-0.3491272

4051006

CHINA COAL ENE-H CHINA CONST BA-H

5.76

0.3484321

168699599

CHINA LIFE INS-H

22.95

-0.6493506

18280625

CHINA MERCHANT

24.2

-0.2061856

4024570

CHINA MOBILE

85.65

-0.5803831

10558862

CHINA OVERSEAS

20.75

9518487

CHINA PETROLEU-H

8.1

0.4962779

50426891

CHINA RES ENTERP

25.65

-0.3883495

1767332

MTR CORP

CHINA RES LAND

HONG KONG EXCHNG

126.2

-0.3159558

3161447

HSBC HLDGS PLC

74.25

-0.2016129

9532458

HUTCHISON WHAMPO

77.6

0.7792208

3828644

IND & COMM BK-H

5.05

-0.1976285

121580635

12.52

1.130856

10784844

29.5

-0.8403361

759454

LI & FUNG LTD

MOVERS

VOLUME

23.2

1.089325

4828694

11.02

2.226345

7989929

53.5

1.134216

1832169

4 21860

INDEX 21430.3 HIGH

21855.92

LOW

21358.14

18.32

1.664817

5963007

NEW WORLD DEV

12.22

-0.3262643

16357372

52W (H) 22149.69922

CHINA RES POWER

16.4

2.756892

4890471

PETROCHINA CO-H

10.34

0.7797271

54192161

(L) 17613.19922

CHINA SHENHUA-H

31.55

-0.7861635

12267070

PING AN INSURA-H

-0.3267974

6184108

PRICE

DAY %

VOLUME

24.3

1.25

6305200

8.1

0.4962779

50426891

ZIJIN MINING-H

21350

8-November

12-November

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.33

93020587

AIR CHINA LTD-H

5.21

-1.13852

5812000

CHINA PETROLEU-H

ALUMINUM CORP-H

3.29

-0.3030303

8449656

CHINA RAIL CN-H

8.76

5.035971

25775840

ANHUI CONCH-H

25.5

-3.225806

18747975

CHINA RAIL GR-H

4.38

2.336449

45329440

BANK OF CHINA-H

3.15

177086053

CHINA SHENHUA-H

31.55

-0.7861635

12267070

BANK OF COMMUN-H

5.47

0.1831502

18605705

CHINA TELECOM-H

4.24

-0.7025761

57347180

BYD CO LTD-H

20.6

5.532787

9979860

DONGFENG MOTOR-H

9.77

1.45379

22839473

CHINA CITIC BK-H

3.91

0.2564103

20997317

GUANGZHOU AUTO-H

5.19

-0.1923077

3649570

CHINA COAL ENE-H

7.54

-1.308901

29867745

HUANENG POWER-H

6.18

1.145663

8951430

CHINA COM CONS-H

7.12

0.9929078

15163611

IND & COMM BK-H

5.05

-0.1976285

121580635

CHINA CONST BA-H

5.76

0.3484321

168699599

JIANGXI COPPER-H

19.66

-1.601602

6711619

CHINA PACIFIC-H

3.63

-3.457447

21841000

PETROCHINA CO-H

10.34

0.7797271

54192161

22.95

-0.6493506

18280625

PICC PROPERTY &

10.02

-0.7920792

11588105

CHINA LONGYUAN-H

5.1

-0.5847953

3910000

PING AN INSURA-H

-0.3267974

6184108

CHINA MERCH BK-H

14.1

11089385

SHANDONG WEIG-H

9.99

-2.821012

3116000

CHINA COSCO HO-H CHINA LIFE INS-H

NAME

PRICE

DAY %

VOLUME

11.56

-1.027397

28781065

3.21

-0.619195

32816250

ZOOMLION HEAVY-H

10.16

-3.053435

21563620

ZTE CORP-H

11.88

1.712329

9746163

YANZHOU COAL-H

MOVERS

3 10700

INDEX 10443.47 HIGH

10694.47

LOW

10424.13

CHINA MINSHENG-H

7.36

1.517241

20265258

SINOPHARM-H

26.05

-0.3824092

836338

52W (H) 11916.1

CHINA NATL BDG-H

9.79

-4.951456

90192141

TSINGTAO BREW-H

-0.9433962

1107400

(L) 8987.76

14.26

0.281294

5836000

WEICHAI POWER-H

28.5

-1.724138

1931334

CHINA OILFIELD-H

10420

8-November

12-November

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.58

74618339

CITIC SECURITI-A

10.86

0.742115

32759868

SANY HEAVY INDUS

9.14

1.218162

10351501

AIR CHINA LTD-A

4.85

0.6224066

9911578

CSR CORP LTD -A

4.8

2.783726

71319999

SHANDONG DONG-A

39.2

-1.309164

3765914

ALUMINUM CORP-A

4.81

1.263158

6160976

DAQIN RAILWAY -A

6.16

1.149425

23647374

SHANDONG GOLD-MI

38.27

-0.7263294

6826195

ANHUI CONCH-A

15.65

-4.339853

23422542

DATANG INTL PO-A

4.15

0.4842615

2582044

SHANG PHARM -A

1.569714

6070182

BANK OF BEIJIN-A

7.24

2.115656

25515821

EVERBRIG SEC -A

11.19

1.084011

9150102

SHANG PUDONG-A

7.63

1.328021

43645487

BANK OF CHINA-A

2.83

43504676

GD POWER DEVEL-A

2.37

-1.25

39435666

SHANGHAI ELECT-A

4.1

0.4901961

2524604

BANK OF COMMUN-A

4.27

0.2347418

28699519

GF SECURITIES-A

12.51

1.872964

20903368

SHANXI LU'AN -A

17.34

1.462844

5479705

BANK OF NINGBO-A

9.09

1.90583

5237405

GREE ELECTRIC

22.84

0.1754386

11597844

SHANXI XINGHUA-A

40.77

-2.042287

3490628

15.98

0.9475679

15161767

SHANXI XISHAN-A

12.45

1.137287

6540617

0.575374

29973367

SHENZEN OVERSE-A

5.96

1.016949

20805145

NAME

4.66

0.2150538

13373813

GUANGHUI ENERG-A

17.05

4.987685

16819965

HAITONG SECURI-A

8.74

CHINA CITIC BK-A

3.65

1.955307

12373890

HANGZHOU HIKVI-A

28.49

-1.758621

2669648

SUNING APPLIAN-A

6.65

-1.188707

32771439

CHINA CNR CORP-A

4.24

2.168675

93975055

HENAN SHUAN-A

60.9

-0.4251145

1435351

TASLY PHARMAC-A

49.65

-0.3612282

2093516

CHINA COAL ENE-A

0.4304161

4616755

HONG YUAN SEC-A

17.18

-0.4057971

8583151

TSINGTAO BREW-A

30.9

-0.06468305

728125

CHINA CONST BA-A

4.31

0.4662005

42719154

HUATAI SECURIT-A

8.73

0.6920415

10341708

WEICHAI POWER-A

20.78

2.213478

5867530

BAOSHAN IRON & S BYD CO LTD -A

CHINA COSCO HO-A

4.11

1.481481

4878847

HUAXIA BANK CO

8.65

1.764706

18568029

WULIANGYE YIBIN

32.36

-1.130461

17390242

CHINA CSSC HOL-A

19.98

3.042806

5051696

IND & COMM BK-A

3.9

0.5154639

52483101

YANGQUAN COAL -A

13.8

1.396032

5049291

CHINA EAST AIR-A

3.31

0.9146341

15510427

INDUSTRIAL BAN-A

12.79

1.669316

60076519

YANTAI CHANGYU-A

43.63

-0.6602914

1278416

CHINA EVERBRIG-A

2.61

0.3846154

102740922

INNER MONG BAO-A

33.39

3.438662

37922536

YANTAI WANHUA-A

13.14

-0.3790751

6008007 2954007

CHINA INTERNAT-A

31.66

5003850

INNER MONG YIL-A

20.99

-3.137979

13842958

YANZHOU COAL-A

17.58

-1.180438

CHINA LIFE INS-A

17.77

-0.9476031

7072182

INNER MONGOLIA-A

5.21

0.5791506

37173818

YUNNAN BAIYAO-A

65.2

-0.1531394

2340525

CHINA MERCH BK-A

10.26

0.489716

25317439

JIANGSU HENGRU-A

28.78

-2.275042

2748531

ZHONGJIN GOLD

16.11

0.0621118

12914104

CHINA MERCHANT-A

9.18

-0.2173913

10066361

JIANGSU YANGHE-A

108.75

-4.185022

3086193

ZIJIN MINING-A

3.84

28563496

11570885

JIANGXI COPPER-A

20.92

0.8192771

3382335

ZOOMLION HEAVY-A

8.27

0.6082725

30277192

JINDUICHENG -A

11.2

0.6289308

2582666

ZTE CORP-A

8.65

1.764706

12728636

JIZHONG ENERGY-A

11.7

0.862069

7511273 11774352

CHINA MERCHANT-A

22.57

2.126697

CHINA MINSHENG-A

6.23

1.963993

115007170

CHINA NATIONAL-A

6.55

2.503912

14141073

CHINA OILFIELD-A

15.79

-0.06329114

2530756

KANGMEI PHARMA-A

16.22

-1.517911

CHINA PACIFIC-A

18.01

0.5022321

10446098

KWEICHOW MOUTA-A

231.46

-1.426685

2046433

36.4

-2.097902

6744206

CHINA PETROLEU-A

6.24

-0.3194888

18249617

LUZHOU LAOJIAO-A

CHINA RAILWAY-A

5.38

2.087287

34353035

METALLURGICAL-A

2.08

0.9708738

16202718

CHINA RAILWAY-A

2.87

0.7017544

70985533

NINGBO PORT CO-A

2.48

0.4048583

11817603

PANGANG GROUP -A

3.63

1.114206

30594720

MOVERS

214

CHINA SHENHUA-A

22.81

0.6175562

3633780

4.38

0.4587156

15006746

PETROCHINA CO-A

8.75

0.6904488

6946852

13.62

1.490313

14534904

HIGH

2274.54

LOW

2234.1

CHINA SOUTHERN-A

3.51

2.034884

26806427

CHINA STATE -A

3.11

0.974026

47056497

PING AN INSURA-A

38.2

-1.061901

17485156

CHINA UNITED-A

3.46

83083429

POLY REAL ESTA-A

11.62

3.197158

42366499

CHINA VANKE CO-A

8.56

2.147971

47566823

QINGDAO HAIER-A

11.49

0.1743679

5273393

CHINA YANGTZE-A

6.45

0.624025

7820680

QINGHAI SALT-A

24.58

0.7377049

2926547

CHONGQING WATE-A

5.36

2.095238

4225738

SAIC MOTOR-A

13.74

1.552106

12125756

PRICE DAY %

Volume

17 2280

INDEX 2251.848

CHINA SHIPBUIL-A

PING AN BANK-A

52W (H) 2754.001 (L) 2172.878906

2230

8-November

12-November

FTSE TAIWAN 50 INDEX PRICE DAY %

Volume

ACER INC

23.7

-2.868852

14653651

FORMOSA PLASTIC

75.2 -0.9222661

6045087

ADVANCED SEMICON

22.7

0.4424779

19979194

FOXCONN TECHNOLO

98.6

-5.645933

21585518

ASIA CEMENT CORP

36.35

1809874

31.85

7151619

ASUSTEK COMPUTER

317.5 -0.9360374

AU OPTRONICS COR

12.05

NAME

CATCHER TECH

NAME FUBON FINANCIAL

2520809

HON HAI PRECISIO

-1.531729

41073664

1.260504

85413011

HOTAI MOTOR CO

183.5

208077

241.5

134

18641666

HTC CORP

CATHAY FINANCIAL

29.55

-1.005025

10055784

HUA NAN FINANCIA

CHANG HWA BANK

14.85 -0.6688963

3000688

CHENG SHIN RUBBE

72.7 -0.6830601

2206436

CHIMEI INNOLUX C

11.5

0.4366812

84368532

MEDIATEK INC

322 -0.9230769

4716822

CHINA DEVELOPMEN

6.69

-1.035503

14343701

MEGA FINANCIAL H

21.1 -0.4716981

10603565

CHINA STEEL CORP

25.15

-0.984252

5499957

NAN YA PLASTICS

51.1 -0.3898635

2034014

CHINATRUST FINAN

15.95

0.3144654

23698542

PRESIDENT CHAIN

150 -0.3322259

92.2 -0.3243243

4530975

QUANTA COMPUTER

72.1

0.698324

CHUNGHWA TELECOM COMPAL ELECTRON

TPK HOLDING CO L TSMC UNI-PRESIDENT UNITED MICROELEC

Volume

-1.492537

418.5

-2.674419

4945676 7290238

91.3

0.5506608

29957365

52.2

0.7722008

6444391

10.65

-1.843318

21962027

6.858407

4992414

WISTRON CORP

28.8

-1.873935

4179776

2074273

YUANTA FINANCIAL

13.7

1.107011

18473237

LARGAN PRECISION

694

-1.699717

1500456

YULON MOTOR CO

50.8

-1.930502

2815128

LITE-ON TECHNOLO

36.9 -0.2702703

1215862

807164 5311442

18.55

-3.385417

19054844

SILICONWARE PREC

28.6

-1.038062

4392841

107

1838837

SINOPAC FINANCIA

11.75

8268173

FAR EASTERN NEW

30.7 -0.3246753

4085629

SYNNEX TECH INTL

57.8

1.403509

2020355

FAR EASTONE TELE

66.7

0.6033183

5355396

TAIWAN CEMENT

37.65

4125198

15.45

3289788

70.4 -0.4243281

3471163

16.75 -0.5934718

4060693

TAIWAN COOPERATI

FORMOSA CHEM & F

64.7 -0.9188361

4845111

TAIWAN FERTILIZE

FORMOSA PETROCHE

82.6

1017071

TAIWAN GLASS IND

-0.120919

PRICE DAY %

TAIWAN MOBILE CO

15.4 -0.6451613

DELTA ELECT INC

FIRST FINANCIAL

NAME

26.45

-1.489758

1127601

MOVERS

8 5115

INDEX 5096.34 HIGH

5113.04

LOW

5029.12

52W (H) 5621.53 (L) 4643.05

5025

8-November

12-November

November 13, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) galaXy eNtertaINMeNt

MelCo CrowN eNtertaINMeNt

MgM CHINa HolDINgS 37.4

28.0

14.0

27.8

13.8 37.3

27.6

13.6

27.4

Max 27.8

average 27.716

Min 27.35

last 27.7

27.2

SaNDS CHINa ltD

Max 37.35

average 37.302

Min 37.3

last 37.35

37.2

SjM HolDINgS ltD

Max 13.82

average 13.639

Min 13.54

last 13.68

wyNN MaCaU ltD

30.2

30.0

18.0

22.8

17.9

22.6 22.4

17.8

22.2

29.8

average 29.912

Max 30.1

Min 29.8

last 29.9

29.6

17.7

average 17.906

NAME

PRICE

WTI CRUDE FUTURE Dec12

85.83

-0.278842802

-12.51656304

110.25

79.11999512

BRENT CRUDE FUTR Dec12

109

-0.365630713

4.918663972

122.0999985

89.84999847

GASOLINE RBOB FUT Dec12

271.1

0.437166568

9.252841138

295.8800077

217.2600031

933

0.484652666

4.071388734

1040.25

798

3.484

-0.542392235

-7.266435986

4.350000381

2.90899992

NATURAL GAS FUTR Dec12 HEATING OIL FUTR Dec12

DAY %

YTD %

(H) 52W

last 17.94

21.8 Max 22.75

299.84

-0.236233572

4.422929581

335.1700068

254.2500019

1733.92

0.1641

10.8

1796.11

1522.75

Silver Spot $/Oz

32.6094

0.0288

17.1525

37.4775

26.1513

Platinum Spot $/Oz

1566.28

0.774

12.3184

1736

1339.25

609

0.3708

-6.8095

725.19

553.75

Palladium Spot $/Oz LME ALUMINUM 3MO ($)

1921

-0.207792208

-4.900990099

2361.5

1827.25

LME COPPER 3MO ($)

7570

-0.786369594

-0.394736842

8765

7100.25

LME ZINC

1892

-1.918092276

2.547425474

2220

1745

3MO ($)

LME NICKEL 3MO ($)

15950

-1.29950495

-14.7514698

22150

15236

15.115

-0.722495895

-1.563008792

16.60000038

14.60000038

742

23.61516035

846.25

511

WHEAT FUTURE(CBT) Dec12

878.25

-0.930626058

21.97916667

953.25

629.5

SOYBEAN FUTURE Jan13

1423.5

-1.912144703

17.35366859

1781.5

1126.75

COFFEE 'C' FUTURE Mar13

157.2

1.06075217

-33.93570078

249

154.9499969

AGRICULTURE ROUGH RICE (CBOT) Jan13 Mar13

PRICE

(L) 52W

Gold Spot $/Oz

CORN FUTURE

Min 17.68

average 22.567

last 22.65

Min 21.9

CURRENCY EXCHANGE RATES

GAS OIL FUT (ICE) Dec12

METALS

22.0

17.6 Max 17.96

Commodities ENERGY

MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

1.0416 1.5886 0.9485 1.2709 79.49 7.9834 7.7508 6.2295 54.99 30.64 1.2237 28.994 41.103 9638 82.793 1.20541 0.80003 7.9219 10.1455 101.02 1.03

0.2792 -0.0629 0.0316 -0.0393 0 0.0063 0.009 0.2167 -0.4274 0 0.0572 0.0552 -0.0852 -0.0415 -0.2875 0.0382 -0.0675 0.4809 0.0375 0.0297 0

YTD %

(H) 52W

2.0276 2.2068 -1.0965 -1.9443 -3.2457 0.2029 0.2142 1.0514 -3.5006 2.97 5.9573 4.432 6.6589 -5.9037 -5.2674 0.9441 4.1698 2.6799 2.0354 -1.3463 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.3815 84.18 8.0308 7.7979 6.3964 57.3275 32 1.315 30.5 44.35 9662 88.637 1.24438 0.86648 8.7472 11.0595 111.44 1.0311

0.9582 1.5235 0.8931 1.2043 76.03 7.9823 7.7498 6.2268 48.6088 30.2 1.2152 28.914 40.996 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS NAME

(H) 52W

(L) 52W

2.72

-0.729927

23.63636

3.25

2.16

1092475

CROWN LTD

10.12

-0.1972387

25.0927

10.2

7.92

1292963

ARISTOCRAT LEISU

PRICE

DAY % YTD %

VOLUME CRNCY

SUGAR #11 (WORLD) Mar13

19.1

0.209863589

-18.23630137

25.12999916

18.65999985

AMAX HOLDINGS LT

0.071

1.428571

-18.3908

0.119

0.055

6303000

COTTON NO.2 FUTR Mar13

70.41

-0.042575247

-20.4496667

98.5

66.84999847

BOC HONG KONG HO

23.7

0.2114165

28.80435

16.24

6333211

0.255

-1.923077

10.86956

0.335

0.204

28000

4.18

49.28572

4.36

2.5

41000

CHINA OVERSEAS

20.75

60.04137

21.95

11.507

9518487

CHINESE ESTATES

11.46

-1.206897

-8.32

13.26

8.3

46500

CHOW TAI FOOK JE

9.98

-1.964637

-28.3046

15.16

8.4

7023600

1.5

-1.315789

35.13513

1.57

0.99

335000

1.27

4.098361

202.381

1.36

0.37

2208000

CENTURY LEGEND CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

EMPEROR ENTERTAI

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12815.39

0.03176878

4.893204

13661.87

11231.56

NASDAQ COMPOSITE INDEX

2904.874

0.3207987

11.50506

3196.932

2441.48

HANG SENG BK

FTSE 100 INDEX

5769.86

0.003119757

3.545768

5989.07

5075.22

DAX INDEX

7148.68

-0.2068821

21.19796

7478.53

5366.5

NIKKEI 225

8676.44

-0.9267379

2.614804

10255.15

8135.79

HANG SENG INDEX

21430.3

0.2147362

16.25175

22149.69922

17613.19922

CSI 300 INDEX

2251.848

0.4874775

-4.002744

2754.001

2172.878906

TAIWAN TAIEX INDEX

7267.75

-0.3492285

2.766794

8170.72

6609.11

KOSPI INDEX

1900.87

-0.1858843

4.115044

2057.28

1750.6

S&P/ASX 200 INDEX

4448.031

-0.3136021

9.650299

4581.8

3973.8

4318.591

-0.34726

12.9932

4366.856

3618.969

FTSE Bursa Malaysia KLCI

1637.59

-0.2126648

6.980982

1679.37

1424.19

NZX ALL INDEX

865.546

0.5928328

18.60039

874.107

712.548

JAKARTA COMPOSITE INDEX

13.4

FUTURE BRIGHT GALAXY ENTERTAIN

27.7

1.838235

94.52248

29.45

13.2

13102752

115.1

-0.5185825

24.90504

120

91.05

1910316

HOPEWELL HLDGS

28.7

-0.6920415

46.41245

31.091

18.319

564000

HSBC HLDGS PLC

74.25

-0.2016129

25.84746

9532458

HUTCHISON TELE H

3.22

-0.3095975

7.692307

3.88

2.81

1698000

LUK FOOK HLDGS I

20.6

-0.7228916

-23.98524

34.8

14.7

1607000

MELCO INTL DEVEL

7.77

2.777778

34.66205

8.28

5.12

2157000

MGM CHINA HOLDIN

13.68

-1.013025

42.61657

14.76

9.347

2232400

MIDLAND HOLDINGS

3.65

-2.925532

-7.689513

5.217

3.249

3404000

NEPTUNE GROUP

0.153

-3.164557

37.83784

0.222

0.08

874500

NEW WORLD DEV

12.22

-0.3262643

95.20766

13.2

6.13

16357372

SANDS CHINA LTD

29.9

-0.6644518

36.21867

33.05

19.96

13487674

SHUN HO RESOURCE

1.23

1.37

0.95

24000

SHUN TAK HOLDING

3.18

0.6329114

24.26106

3.51

2.418

2776516

SJM HOLDINGS LTD

17.94

2.39726

43.45647

18.18

11.519

4246559

SMARTONE TELECOM

14.76

-3.213115

9.821432

17.5

11.72

5956667

WYNN MACAU LTD

22.55

2.968037

15.64103

25.5

14.62

4033744

ASIA ENTERTAINME

3.91

7.417582

-33.5034

7.2508

2.4

54906

BALLY TECHNOLOGI

46.69

-0.5961252

18.02325

51.16

35.45

716954 4215

PHILIPPINES ALL SHARE IX

3588.65

-0.02145193

17.85231

3607.89

2952.17

HSBC Dragon 300 Index Singapor

587.81

-0.14

18.43

STOCK EXCH OF THAI INDEX

1293.98

0.244029

26.20256

1314.64

964.65

HO CHI MINH STOCK INDEX

388.62

0.4939102

10.54473

492.44

332.28

BOC HONG KONG HO

3.11

29.73537

3.3

Laos Composite Index

1150.67

0.1776029

27.92898

1150.67

876.33

GALAXY ENTERTAIN

3.468

-3.666667

85.45454

3.73

1.68

2120

13.5

5.222136

-21.51163

18.1

10.92

13528400

JONES LANG LASAL

75.96

-0.7707381

23.99609

87.52

55.88

221203

LAS VEGAS SANDS

43.5

1.802013

1.802014

62.09

34.72

6831225

MELCO CROWN-ADR

14.5

2.184637

50.72765

16.02

8.18

3208628

MGM CHINA HOLDIN

1.76

47.68902

1.96

1.1917

2000

MGM RESORTS INTE

10.01

2.351738

-4.026848

14.9401

8.83

9232233

SHFL ENTERTAINME

13.43

1.511716

14.59044

18.77

10.22

234466

SJM HOLDINGS LTD

2.17

34.98611

2.32

1.4695

204300

108.35

-0.8237986

4.583426

129.6589

84.4902

1574706

INTL GAME TECH

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

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily November 13, 2012

Opinion Mr Xi, tear down this firewall! James Gibney Mary Duenwald

Bloomberg View editors

his week’s meeting in Beijing of the 18th National Congress of the Communist Party of China, which will inaugurate a new slate of leaders, has not exactly brought a golden dawn of free expression. In addition to cracking down on all forms of media, China’s creatively paranoid security forces are on the lookout for threats such as taxi passengers carrying pingpong balls that they might slip through windows to deliver subversive messages. Such off-the-wall measures, however, usefully highlight one of the central challenges that will confront Xi Jinping, the princeling pegged to be China’s next president, and his new colleagues on the elite Politburo Standing Committee: how to maintain the flow of information vital to economic growth and public wellbeing in China without undermining the party’s legitimacy and primacy. An explosion in Chinese Internet use and the rise of social media have made it harder for the outgoing duo of Party Secretary and President Hu Jintao and Premier Wen Jiabao to maintain a “harmonious” society, to use one of Hu’s favourite adjectives. The number of Internet users has jumped to 538 million from 20 million in 2001; China also has about 274 million microblog accounts. To keep tabs on them and block information it doesn’t like, China’s government has built a sophisticated regime of technological filters and human minders. Access to foreign websites is routed through only a few entry/exit points.

Deceitful web

rankings) without tamping down popular discontent over corruption, pollution and other hot-button issues. The number of protests and social disturbances has grown by some estimates to about 500 per day, up almost fourfold from a decade ago. To their credit, in areas such as pollution and food safety, Chinese authorities recognise that social media can help them do their jobs by exposing problems and focusing public ire. China has also begun to use the Web to promote greater transparency about government decision-making, not least for foreign consumption. Still, those who violate Beijing’s taboos on topics of public discussion or journalistic

Just as the Internet and social media have helped shine a spotlight on pollution and food safety, they can also help curb financial fraud, corruption and abuses of power

inquiry – whether about the Dalai Lama, restive Xinjiang province, Falun Gong or the Party’s leadership – are persecuted. For instance, Freedom House noted that during 2011’s short-lived Jasmine Revolution (a phrase inspired by the Arab Spring, and quickly blocked on Chinese social networking sites and chat rooms), dozens of Chinese bloggers, activists and lawyers were abducted and imprisoned. Since Bloomberg News reported this summer on the US$376 million in assets controlled by the extended family of incoming leader Xi Jinping, its website and that of Bloomberg Businessweek have been blocked within China – a fate that also befell the New York Times several months later when it published its report on the family of Wen Jiabao. Chinese journalists are penalised or imprisoned for crossing the Party’s redlines; the reporters and staff of foreign news organisations, including Bloomberg, have been harassed and interrogated.

Apparatchik Apps Chinese Communism and Western journalism may never mix, but China’s leaders have at times championed greater public access to reliable information. During the early 1980s, for example, when the economic reforms of Deng Xiaoping were just gearing up, one of his pet projects was a joint venture with Encyclopaedia Britannica to create reference books that would help lead the Chinese out of the dark night of the Cultural Revolution.

China has come a long way since then, and print encyclopaedias are going the way of the dodo, but as the country grows richer and the challenges of development become more complex, public access to wider sources of information is even more essential. Just as the Internet and social media have helped shine a spotlight on pollution and food safety, they can also help curb financial fraud, corruption and abuses of power - all stated goals of the Chinese Communist Party. And without greater Internet access, Chinese companies will find it harder to climb the value chain or compete in the services market. Outsiders have worked to punch holes in China’s Great Firewall. The U.S. Congress has appropriated about US$95 million since 2008 for the State Department and USAID to support proxy servers, websites, apps and software targeting users in China and a dozen other countries. Other groups such as the Broadcasting Board of Governors, which oversees Radio Free Asia and other U.S. international broadcasters, are also involved. More money for such efforts would help, especially if it provided more bandwidth and training for users. Groups such as Freedom House and the Open Net Initiative deserve wide public support for exposing censorship, filtering and surveillance. And all foreign media organisations operating in China have a shared interest in protesting censorship, regardless of whom it targets – something that hasn’t happened often

enough in the past. The genius of what Internet researcher Rebecca MacKinnon calls China’s “networked authoritarianism,” however, is that it focuses on satisfying average users who don’t need or want access to foreign sites, and relies on self-censorship to achieve its goals. To push for change to China’s intranet means finding a way to target Baidu and other domestic providers. Legislative proposals to require U.S.-listed companies such as Baidu to disclose their censorship arrangements to investors make sense if they are tailored in a way that doesn’t swamp an already overburdened Securities and Exchange Commission. As we have argued about Iran and Syria, we are less enthusiastic about legislating broad new export controls on U.S. Internet technology than about enhancing the effectiveness of voluntary groups such as the Global Network Initiative, which seeks to minimise the potential for censorship and other humanrights abuses while maximising the span of the Web. We are sceptical about any proposals for “reforming” Internet governance that China itself may offer at next month’s meeting in Dubai organised by the International Telecommunication Union. That said, the former U.S. Ambassador Jon Huntsman recently predicted that Xi Jinping and his colleagues will inevitably have to re-balance China’s own Internet policies in favour of more openness. That would indeed be harmonious, and we hope he’s right. Bloomberg View

Within China itself, layers of formal and informal arrangements seek to create a well-tended simulacrum of the Web’s wide-open spaces. At Sina Weibo, China’s most popular microblogging site, users are given 80 points, which can be deducted for various anti-social offenses; hundreds of its employees are engaged 24/7 in deleting posts or rendering them invisible to followers, closing accounts, or doctoring search results. Under Hu and Wen, China has also insinuated more censors and moles into newsrooms and management offices of traditional media. These and other repressive measures have raised hackles (and lowered press freedom

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November 13, 2012 business daily | 15

OPINION Business

A man without a plan

Leading reports from Asia’s best business newspapers

Robert Shiller

wires

Bangkok Post The National Broadcasting and Telecommunications Commission (NBTC) expects to introduce a temporary third-generation (3G) price benchmark for both voice and data service by midDecember. The new tariff rates will apply to 3G operators running wireless broadband service on the 2.1-gigahertz spectrum plus TOT Plc and CAT Telecom. The three bid winners from last month’s 3G auction must inform the NBTC of their real operating costs and submit their temporary tariff rates for 3G service by November 23.

Korea Herald Buoyed by surging popularity overseas of K-pop, the nation’s trade balance in the culture and entertainment service sector was positive for the first time ever, data showed Sunday. The trade surplus of cultural and entertainment products, including movies, music, TV programmes and games, reached US$37.3 million over the first three quarters this year, according to financial information provider FnGuide and the Bank of Korea. The turnaround is noteworthy as the balance had been in the red in the industries for many years.

Jakarta Post As the European Commission launches its investigation into biodiesel imports from Indonesia and Argentina, Indonesian biodiesel producers have again demanded the government step in to help them defend accusations by the European Union of dumping. Biofuel Producers Association secretary-general Paulus Cakrawan said on Sunday that the government should provide sufficient and clear data and an explanation of the operation of the biodiesel industry in Indonesia, the world’s largest producer of palm oil – the crop used to make the fuel.

Business Times Petroliam Nasional Bhd offered to appoint more independent directors to Progress Energy Resources Corp’s board to help win Canadian approval for its takeover, the Financial Times said, citing an interview with chief executive Shamsul Azhar Abbas. The CEO of the Malaysian state-owned energy company known as Petronas also stressed its arms length operations from the government in the Southeast Asian nation, telling the newspaper it behaves as a publicly traded company. Petronas is seeking to convince Canadian authorities of its operational independence.

Professor of Economics at Yale University

uring the United States’ recent presidential election campaign, public-opinion polls consistently showed that the economy – and especially unemployment – was voters’ number one concern. The Republican challenger, Mitt Romney, sought to capitalise on the issue, asserting: “The president’s plans haven’t worked – he doesn’t have a plan to get the economy going.” Nonetheless, Barack Obama was re-elected. The outcome may reflect the economy’s slight improvement at election time (as happened when Franklin Roosevelt defeated the Republican Alf Landon in 1936, despite the continuing Great Depression). But Obama’s victory might also be a testament to most U.S. voters’ basic sense of economic reality. Economic theory does not provide an unambiguous prescription for policymakers. Professional opinion in macroeconomics is, as always, in disarray. Because controlled experiments to test policy prescriptions are impossible, we will never have a definitive test of macroeconomic measures. Romney had no miracle cure, either, but he attempted to tap into voters’ wishfulthinking bias, by promising to reduce the size of the government and cut marginal tax rates. That would work if it were true that the best way to ensure economic recovery were to leave more money on the table for individuals. But the electorate did not succumb to wishful thinking. The idea that Obama lacks a plan is right in a sense: nothing he has proposed has been big enough to boost the U.S. economy’s painfully slow recovery from the 20079 recession, nor to insulate it from shocks coming from Europe and from weakening growth in the rest of the world.

Economic advice What Obama does have is a history of bringing in capable economic advisers. Is there anything more, really, that one can ask of a president? And yet U.S. presidential campaigns generally neglect discussion of advisers or intellectual influences. Although a president’s advisers may change, one would think that candidates would acknowledge them, if only to suggest where their own ideas come from; after all, realistically what they are selling is their ability to judge and manage expertise, not their own ability as economists. This time, too, however, there was no mention by name of any deep economic thinker, or of any specific economic model. Obama originally had a wonder team of economic advisers, including Lawrence

Summers, Christina Romer, Austan Goolsbee, and Cass Sunstein. But they are gone now. Today, the most powerful economic adviser remaining in the White House is Gene Sperling, head of the National Economic Council (NEC), the agency created by President Bill Clinton in 1993 to serve as his main source of economic policy (somewhat shunting aside the Council of Economic Advisers). Because this position does not require Congressional approval,

director from its beginning in 1993 until 1996, and its director from 1996 to 2000. Obama reappointed him as head of the NEC in January 2011. His 2005 book The ProGrowth Progressive contains many ideas about how to make the economy perform better. None is grandiose, but together they might help substantially. Some of these ideas found their way into the American Jobs Act, which might have had some real impact had Congress passed it in 2011.

Pragmatic idealism

Because controlled experiments to test policy prescriptions are impossible, we will never have a definitive test of macroeconomic measures

the president may appoint whomever he wants, without having his choice raked over the coals in the U.S. Senate. That is why Obama could appoint the highly talented but politically unpopular Summers, the former president of Harvard University. Sperling is not nearly so well known as Summers. But his record of influence in government is striking; indeed, he has been at the pinnacle of economic-policymaking power in the U.S. for almost a decade. He was the NEC’s deputy

The AJA embodied some of what Sperling describes in his book: subsidies for hiring, wage insurance, and job training, as well as support for education and early learning. Moreover, the AJA would have offered some balancedbudget stimulus – the kind of stimulus that would boost the level of economic activity without increasing the volume of government debt. But the public, despite its concern about unemployment, is not very interested in the details of concrete plans to

create more jobs. Sperling is just not very visible to the public. His book was not a best seller: in commercial terms, it might be better described as a dud. Sperling is fundamentally different from the typical academic economist, who tends to concentrate on advancing economic theory and statistics. He concentrates on legislation – that is, practical things that might be accomplished to lift the economy. He listens to academic economists, but is focused differently. At one point in his book, Sperling jokes that maybe the US needs a third political party, called the “Humility Party.” Its members would admit that there are no miraculous solutions to America’s economic problems, and they would focus on the “practical options” that are actually available to make things a little better. In fact, Americans do not need a new political party: with Obama’s re-election, voters have endorsed precisely that credo of pragmatic idealism. © Project Syndicate

16 |

business daily November 13, 2012

CLOSING EU freezes carbon emissions law

Olympus swings back into profit

The European Union will put on hold its rule that all airlines must pay for their emissions on flights to and from Europe, but will resume enforcement if a U.N. airline body fails to deliver a global deal, Climate Commissioner Connie Hedegaard said. The European Union has come under intense pressure to tear up its law making all airlines using EU airports buy carbon allowances. “If this exercise ends in nothing, we are back to exactly where we were with the EU ETS automatically,” Ms Hedegaard said. This would give the ICAO until next November to strike a new deal.

Olympus Corp. returned to profit in the six months to the end of September as it recovered from its accounting scandal. The camera and medical equipment maker reported net profit of 8.02 billion yen (US$101 million) compared with a loss of 32 billion yen in the same period last year. The camera business made a loss as a result of the strong yen and popularity of camera-equipped smartphones. Olympus is engaged in a five-year restructuring plan, which will involve reducing its global workforce by 7 percent by 2014 and cutting the number of its factories from 30 to 18 by 2015.

made an economic Frankenstein out of Portugal,” the newspaper said, warning of a downward spiral in activity.

Praise, warning

Merkel arrives in Lisbon amid street protests National consensus on austerity measures breaking down

nti-austerity protesters draped Lisbon statues in black mourning sashes to greet Angela Merkel yesterday and a business newspaper blamed the visiting German chancellor for “Frankenstein” policies driving Portugal into poverty. Mrs Merkel is expected to repeat her endorsement of sharp spending cuts and tax increases being pushed through by fellow conservative Prime Minister Pedro Passos Coelho to meet the terms of last year’s Germanbacked European rescue deal for the deeply indebted Portuguese state. Her six-hour visit also seems

intended to reassure German voters that the bailout money they lent is being well used. But though she is unlikely to suffer the tear gas and Nazi taunts which soured a similar visit to troubled Athens a month ago, Portuguese patience with austerity, once much remarked on, has begun to fray during the worst slump since the 1970s. The people of Lisbon woke yesterday to find a dozen or so public statues in the city centre draped with black plastic bands in a sign of mourning; an online campaign has been urging Portuguese to wear black

themselves during Mrs Merkel’s visit. Protesters had also pasted up posters showing Mr Passos Coelho, Mrs Merkel and European Central Bank chief Mario Draghi in a casino with an inscription reading: “We pay, they play, bank wins.” In a startling example of how a consensus on deficit-cutting has broken down within the Portuguese establishment, a major business newspaper, Diario Economico, ran an opinion piece yesterday condemning Mrs Merkel for pushing the Portuguese government to impose austerity measures in the depth of a recession: “Merkel has

The German leader, however, has insisted that only reforms to cut the public deficit can restore growth and she and her ministers have cited Portugal as a model for other debtors: “Portugal is meeting the commitments it has assumed very well,” Mrs Merkel told Portuguese broadcaster RTP on Sunday. German business leaders, to whom Portugal is looking for more investment, also offered praise – but warned Lisbon against weakening the drive to strengthen public finances: “We see in Portugal the government’s valiant action to seriously improve the country’s framework in order to win back investors’ confidence,” Hans-Peter Keitel, head of the BDI German industry grouping, said in a statement. Mr Passos Coelho blames Lisbon’s debt crisis on overspending by previous governments and says its only option now is to keep to budget goals set under last year’s 78-billioneuro (US$99.2 billion) bailout deal. Among political leaders, however, consensus on deficit cuts has broken down, posing risks to the financing deal as the country prepares for a third year of recession in 2013 and the Portuguese face the biggest tax increases of modern times. Reuters

Greek MPs vote for budget cuts Required for Athens to tap more aid financing

he Greek parliament approved an austerity budget for next year, allowing it to extend its international financial bailout and avoid bankruptcy. With backing from all three parties in conservative Prime Minister Antonis Samaras’s coalition, the bill passed by a more comfortable margin than a separate package of deficit-cutting measures on which some of his allies had abstained on Wednesday. The budget foresees debt rising to 346 billion euros, or almost 190 percent of GDP, from 175 percent this year. Passing both bills had been necessary to unblock a new tranche of credit from the European Union and International Monetary Fund before the government ran out of cash. Mr Samaras said he now expected the funds to be forthcoming, although a meeting yesterday in Brussels of euro zone finance ministers is not expected

Ruling parties approved the budget by comfortable majority

to take a final decision on that. Referring to the 2013 budget and to last Wednesday’s other measures,

Mr Samaras told parliament before Sunday’s late-night vote that Greece was turning a corner: “The sacrifices

included in that law and in the budget we are voting today are the last. “We will start rectifying the injustices included in them once we get out of the deficits ... But the reforms we passed will be permanent and will boost the economy.” His critics are sceptical, though after years of mounting public anger there are signs of fatigue. A demonstration called by trade unions and communists mustered thousands of protesters outside parliament, but the numbers were a small fraction of the almost 100,000 who gathered outside the legislature last week. Many of the country’s 10 million people, driven to despair by five years of economic contraction, fear attempts to cut the deficit will only deepen the crisis; unemployment is running at 25 percent and many find living standards have fallen sharply. Reuters