Macau Business Daily, November 1, 2012 by Business Daily

MGM announces 3Q earnings

Year I Number 153 Thursday November 1, 2012 MOP 6.00 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte

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1 dependent per 2 workers by 2036

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Under-fire phone firm cuts Net prices

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‘Golf into gaming’

hope for Cotai

Venetian Macao – at 10.5 million square feet already one of the world’s biggest buildings. “If the land use issue is resolved, then in return the buyer will give some of the land back to the government,” said one source. But a Hong Kong-based analyst told Business Daily: “I think gaming operators will be looking to buy Cotai Lots 7 & 8 before they think about Caesars Golf. Lots 7 & 8 are in effect already zoned for gaming and leisure.”

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HANG SENG INDEX

Home price high as new supply squeezed

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Home prices reached a new high in September. The average cost rose by 1.3 percent from August to reach 62,552 patacas (US$7,836) per square metre, the Financial Services Bureau revealed yesterday. It was the second time in three months that residential prices exceeded 62,000 patacas. The main inflationary factor was a 14.6 percent rise in prices in Taipa to 72,837 patacas, the highest figure in almost two years. In just six months the price for Macau homes soared by more than 50 percent to reach in August the highest figure since authorities began releasing data, in 2004.

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October 31

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HSI - Movers

‘Middle class’ definition much too loose

Name

The definition of ‘middle class’ suggested by the government thinktank is too broad, suggests an academic – a view supported by at least one legislator. The Policy Review Office, headed by Lao Pun Lap, said in a statement released on Monday that the middle class can be interpreted as the middle-earning group with individual monthly income ranging from 12,000 patacas (US$1,500) to 78,000 patacas.

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Export growth on rare upward trend

%Day

ESPRIT HLDGS

3.70

CHINA SHENHUA-H

2.64

CHINA UNICOM HON

2.59

CHINA COAL ENE-H

2.53

CITIC PACIFIC

2.49

CHINA RES ENTERP

-0.79

SANDS CHINA LTD

-1.02

CHINA RES POWER

-1.43

BANK OF COMMUN-H

-1.95

PETROCHINA CO-H

-2.04

Source: Bloomberg

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Macau’s trade deficit this year is already higher than the one recorded for the whole of 2010. But the city’s exports are firmly on the comeback trail after years of slump. They posted four consecutive quarters of growth for the first time since 2004. That’s when the World Trade Organization agreement allowing clothing and textile exports from Macau to developed markets was phased out.

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business daily November 1, 2012

macau

Exports on best uptick since WTO quotas ended Seven years after textile industry started its decline, city sets new exports record but not with ‘made in Macau’ goods Vítor Quintã

vitorquinta@macaubusinessdaily.com

xports are on the comeback after years of decline, posting four consecutive quarters of growth for the first time since 2004 when trade was protected by World Trade Organization quotas. Exports grew to 742.8 million patacas (US$93.1 million) in September, a 40.2 percent increase compared to the same time last year, according to data released by the Statistics and Census Service yesterday. September was the eight consecutive month of year-on-year export growth, pushing third quarter exports up to 2.2 billion patacas, the highest since the end of 2008. The past four successive quarters of export growth is the strongest positive trend since 2004, when trade quotas that supported the city’s textile manufacturing industry were quashed. However, the territory is increasingly playing the role of trade middleman and not primary producer. September’s sales growth was mainly driven by a jump in exports of just less than two-thirds, to 573 million patacas. The value of domestic exports fell by 7.7 percent to just 170 million patacas. Sales of goods bought elsewhere were triple those of “made in Macau” exports for a second consecutive month. Just three years ago, domestic exports were almost 50 percent higher than re-exports.

Rising deficit Sales of mobile phones to Hong Kong were the main reason behind the

65.7%

Year-on-year growth of re-exports in September

The trade deficit to the end of September was greater than for all of 2010

increase in exports. They rose to 48.4 million patacas in September, from 4.4 million patacas 12 months before. Mobile phone exports have been a consistent feature of the economy this year. In the first nine months of the year, Macau re-exported handsets worth 725.5-million patacas, up from 69 million patacas during the same period 12 months before. In September, the second fastestgrowing exports were products for casinos, with sales reaching 109.8 million patacas, up from 47.9 million patacas.

The once dominant textile manufacturing industry saw exports drop by a further 22.4 percent to 73.6 million patacas in September – the lowest monthly figure since February last year. Meanwhile, imports rose by 10.2 percent year-on-year to 6.1 billion patacas in September, the highest figure this year. Most of that growth came from a 16 percent increase to 2 billion patacas in imports from the mainland, Macau’s major supplier, and from a 10.7 percent jump in imports of consumer goods.

Although exports grew faster than imports, Macau’s still buys many more goods than it sells. In the last quarter, the territory bought 17.9-billion patacas worth of goods from outside, a record since data was first collected in 1998. In September, Macau’s trade deficit increased by 7 percent in yearon-year terms to 5.4 billion patacas. For the first nine months of the year, the trade deficit was 46.3 billion patacas, which is already higher than the deficit of 37.2 billion patacas recorded for the whole of 2010.

MGM China easily outperforms U.S. but VIP shaky

GM Resorts International saw its net revenue from Macau gaming grow at triple the rate in its United States casino operations in the third quarter. However in Macau, MGM Resorts is only a 51 percent owner of the casino operator MGM China Holdings Ltd. That means it has to share the economic benefit of local earnings with other stakeholders. MGM’s U.S. casino net revenue rose two percent year-on-year, while that from MGM China climbed six percent to HK$5.15 billion (US$665 million) from HK$4.86 billion a year earlier. Macau’s adjusted earnings before interest, taxation, depreciation and amortisation were up nine percent from the equivalent period a year earlier, to HK$1.2 billion, net of a branding fee of HK$41.1 million paid to MGM. But Grant Bowie, chief executive officer and executive director of MGM China, said there had been some deterioration in the third quarter in VIP business, linked to bad luck versus the players, and the leadership

change in mainland China. “Our overall VIP win rate for the quarter was approximately three percent,” Mr Bowie told analysts on last night’s earnings conference call. “EBITDA was negatively impacted by the low win rate on our in-house business and [from] the rolling chip operators,” he added. He said the company faced the “double jeopardy” on the VIP trade of sometimes not holding well against the players but also having to pay commission to junket operators. The Macau boss added that China’s leadership change had also had an impact on the VIP business and “cooled the market somewhat”. MGM China – partly owned by Stanley Ho Hung So’s daughter Pansy Ho Chiu King – announced on October 18 it had been awarded a land concession to build a second resort on Cotai, an area increasingly focusing on higher margin massmarket gamblers rather than the traditional VIP junket operations of peninsular Macau. A.E.

November 1, 2012 business daily | 3

MACAU

‘Connected’ locals eyeing Caesars Golf site Developable area up to three times that of The Venetian: sources Associate Editor

everal of Macau’s best connected local business people are said to be interested in buying Caesars Golf Macau – a 175 acre (70 hectare) prime site at the southern end of Macau’s new casino district the Cotai Strip. But their interest is not in running it as a going concern, but for its land bank – possibly as a casino resort – two people familiar with the situation have separately told Business Daily. That’s a transformation the course’s current owner, Caesars Entertainment Corp, – an American company without strong political links locally – tried and failed to achieve after paying more than half a billion U.S. dollars (four billion patacas) for the site in 2007. In April 2008 Macau officials said no new casino gaming licences would be approved during the lifetime of the existing ones, which expire in stages between 2020 and 2022. But those now interested in buying the site aren’t looking for a new casino concession and are likely to have the right connections to link up with existing gaming concession holders, said the sources.

Right connections “There are several interested parties that have enough political influence locally to get the land use issue resolved to allow them to build whatever they wanted – whether it’s residential and commercial or commercial and gaming,” one of the people familiar with the situation told Business Daily. Caesars Golf Macau is immediately to the west of land near Macao Dome linked to a tourism project proposed by Angela Leung On Kei, fourth consort of Stanley Ho Hung Sun, the former Macau casino monopolist. Immediately to the northwest of Caesars Golf is a plot linked to SJM Holdings Ltd, a casino investment company founded

WYNN Cotai MGM Cotai

Caesars Golf Macau

Out of range – ‘no’ on Caesars’ golf course to casino plan

Cotai land map (Source: Union Gaming Research)

by Mr Ho. To the northeast is Studio City, a resort majority owned by a joint venture co-chaired by one of Mr Ho’s sons Lawrence Ho Yau Lung. Taken as a whole Caesars Golf is a huge land bank – offering possibly three times the developed area of The Venetian Macao – which at 10.5 million square feet is already one of the biggest buildings in the world. “It’s likely that if the land use issue is resolved, then in return the buyer will give some of the land back to the government,” said the second source. “It’s still likely to be a huge land bank. I understand the calculations are being done on the basis of a four times plot ratio,” added the first source.

then one or more hotel towers on top. Although the entire footprint of a site is not the same as the potential usable area, four times 175-acres is 700 acres or 30.5 million sq. ft. But a Hong Kong-based analyst told Business Daily: “I think gaming operators will be looking to buy Cotai Lots 7 & 8 before they think about Caesars Golf. The [Cotai] 7 & 8 sites are already in effect zoned for gaming and leisure. It would be politically easier for the government to give permission for a new project there.”

Huge area ‘Plot ratio’ refers to the ratio of a development’s total floor area relative to the size of the parcel of land upon which it is built. It assumes a building will have multiple storeys. Most of the current casino resorts on Cotai have a podium several storeys high, and

Lots 7 & 8 That’s a reference to two parcels of land that are to the south of the Sands Cotai Central resort already developed by Las Vegas Sands Corp. LVS had hoped to develop another resort on 7 & 8, and said in U.S. regulatory filings it had spent US$100 million on ground preparation work. But in December 2010 the government in a letter told LVS that its right to the site was “not approved”. In January

2011, subsidiaries of LVS’s local unit Sands China Ltd appealed against the government decision in the Court of Second Instance. But on May 30 this year Sands withdrew its appeal. As Business Daily reported at the time, the government in return agreed a timetable extension on Sands’ Lot 3, which is now earmarked for a Frenchthemed resort called The Parisian. The government has said it is currently holding back Lots 7 & 8 as a “land reserve” on Cotai. Another issue to be considered, said a second Hong Kong analyst, is whether the price tag for Caesars Golf as a private land sale will be lower on a per acre basis than the government land premiums that companies pay for land concessions from the government. As a point of reference, MGM China Holdings Ltd is to pay a land premium of 1.29 billion patacas – around US$162 million – for a 25-year concession on a Cotai plot of 18 acres. That’s approximately ten times smaller than the Caesars Golf site. MGM will also have to pay an annual rent.

Caesars’ likely huge loss on golf course sale But company says upbeat on its Asian prospects

aesars Entertainment Corp. could lose hundreds of millions of U.S. dollars on any sale of its Macau golf course, sources told Business Daily. The then Harrah’s Entertainment Inc. paid US$577.7 million (4.61 billion patacas) for the Cotai facility in September 2007. In August this year, Caesars wrote down US$101 million related to the company’s land concession in Macau and higher depreciation expenses in Las Vegas in its second quarter 2012 results. Even with write downs factored in, the site – if sold simply as a golf course – is unlikely to yield Caesars a profit, two sources separately told Business Daily. “As a golf course it’s worth maybe less than US$200 million,” said the second of the two sources. “The people that can spring higher value by getting the land use changed might possibly bump up the price if they compete among themselves to bid. But I don’t think it will get anywhere near US$450 million or even US$400 million,” said the first source. But Steven Tight, president international development, for

Caesars based in Hong Kong was more upbeat. He said yesterday: “Right now we are in the process of speaking to potential buyers. There’s a tremendous amount of interest. I don’t know if it will make a profit, but we’re looking for an offer that will be a significant one. Our focus is to try and redeploy that capital into investments that generate a greater near term return. “I think the money would go back

into general investment opportunities for Caesars, maybe in Asia or domestically,” Mr Tight told Business Daily. “But it’s mainly a treasury function to manage our overall cash.” Caesars – which changed its name from Harrah’s in 2010 – has casino operations focused on the still sluggish United States market, including Atlantic City. The New Jersey casino city was yesterday hit by Sandy, a powerful storm that blacked out power in much of southern Manhattan Island in New York City and flooded areas along the U.S. east coast.

Missed chances

I don’t know if it will make a profit, but we’re looking for a significant offer Steven Tight, president international development, Caesars Entertainment Corp.

Harrah’s didn’t bid for a Macau gaming concession in 2002. And in 2006 the company – at the time the world’s biggest casino operator by revenue – dropped out of the running for a Singapore casino licence just days before the final bidding deadline. In January 2008 Harrah’s took on debt when it was bought for US$30.7 billion in a leveraged

buyout by affiliates of private equity firms Apollo Global Management LLC and TPG Capital. Last week CreditSights Inc., a New York-based debt research company, said Caesars – still burdened with US$22.7 billion of debt – would need to restructure its borrowings in order to obtain even a modest US$187 million loan it has been seeking for a U.S. opportunity. But Mr Tight told Business Daily: “We don’t see our finances as a constraint for pursuing our opportunities in Asia. It’s not as though we need to set this money aside specifically for Asia development. The corporate strategy is to reduce our leverage as a company and they’re taking a number of steps to do so.” However a New York-based analyst told us: “Caesars’ debt load is crushing and their leverage ratio [debt divided by cash flow over preceding 12 months] is very high. With asset sales Caesars might reduce its absolute debt number, but its leverage ratio is probably going to increase.” A.E.

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business daily November 1, 2012

macau Chui to deliver policy address on Nov. 13 Chief Executive Fernando Chui Sai On will deliver his Policy Address for the fiscal year 2013 on November 13, the Spokesperson Office said in a statement. The session, to be held in the Legislative Assembly at 3pm, will be followed by a press conference at the government headquarters. Mr Chui will be back to the assembly the following day to answer questions from the legislators. In his policy address, the chief executive is expected to announce measures to tackle housing shortage, rising inflation and fine-tune welfare policies.

Govt’s middle class definition ‘too broad’ Critics say income bracket defining the middle class is too broad, although it is a useful starting point for policy development Tony Lai

tony.lai@macaubusinessdaily.com

riteria suggested by a government think tank to define the city’s middle class are too broad and require further work, according to critics. The government’s Policy Review Office said in a statement released on Monday that the middle class worker earned an individual monthly income between 12,000 patacas (US$1,500) and 78,000 patacas. “This range covers employed residents and owners of small- and medium-sized enterprises,” said Lao Pun Lap, director of the policy review office.

While Jenny Huang Bihong, public finance professor at the University of Macau, agrees it was time for the administration to pay more attention to the middle class, the way the group is defined is too broad. “When the government devises policies to help the middle class, this definition may cause some hindrance as the range is quite broad right now,” she said. “It needs to be narrowed down. For instance, the income range can be divided into lower middleincome and higher middle-income groups. This will lead to more focused policy.”

According to government statistics, individuals who earn between 10,000 patacas and 80,000 patacas accounted for 55.9 percent of the employed population – more than 180,000 people – by the end of the second quarter last year. Ms Huang said that while employees in the gaming industry, such as dealers, and employees in the banking industry have different education levels, they may have similar salaries. Such diverse groups will need different assistance to climb the social ladder. She wants the criteria extended to

consider educational backgrounds and occupations.

Starting point Member of the Legislative Assembly Ho Ion Sang echoed the academic’s views but says he understands the difficulties the government faces. “The Macau economy is currently dominated by the gaming industry and its related sectors and I don’t see there will be any change to this situation in the short run,” he said. “This [definition] serves as a starting point for assisting the middle class, and the administration should continue to polish this concept with further studies.” Both experts agree there is an urgent need for the government to raise the competitiveness of the middle class. Mr Ho said the government should design policies to help the “sandwich class” – an informal term used in Hong Kong to describe the middle class – to secure housing and provide some tax relief. The ceiling for professional tax exemption should also be raised from annual earnings of 144,000 patacas to 216,000 patacas. Ms Huang said greater investment in on-the-job education was needed because the city faces “a lack of human resources and many workers require more training”. The Policy Review Office, a government think tank, says the government should assist the middle class with issues such as tax relief, continuous education subsidies and involvement in development of Hengqin Island. It has also recommended the establishment of a professional certification mechanism.

City’s population to grow older faster The number of senior citizens is going to accelerate dramatically inside the next two decades, a government study says Vítor Quintã

vitorquinta@macaubusinessdaily.com

or every two workers there will be one nonworking resident by 2036, according to population projections released on Tuesday. The Macau Population Projections said the proportion of people younger or older than the working age compared to working age residents was 23.7 percent last year. The proportion will increase to

more than 50 percent by 2031. The increase in the so-called dependency ratio means the workforce will need to work harder to support a growing number of seniors citizens. Seniors accounted for just 7.3 percent of the population last year. They will account for 20 percent of the population within 20 years. The report published by the Statistics and Census Service says

the number of people aged 80 years or more will see a four-fold increase from current levels to 43,500 people by 2036. The population is estimated to rise fromabout562,900toanywherebetween 680,400 and 830,800 people by 2036. Recent population growth has been largely fuelled by a jump in imported labour but the report says residents will account for most of the population

increase during the next few decades. The forecast says the number of imported workers will not exceed 100,900 people by 2036. At the end of September, there were 109,038 foreign workers in Macau. The projection shows there will be increased pressure on younger generations and the city’s social security system, launched last year, to which non-resident workers do not contribute.

November 1, 2012 business daily | 5

MACAU

Costly Taipa flats fuel property price record As owners wait to judge the impact of government moves to cool the market, limited supply is creating record housing prices in some districts Vítor Quintã

vitorquinta@macaubusinessdaily.com

Home prices in Taipa hit a two-year high in September (Photo: Manuel Cardoso)

verage property prices have recovered in September from a dip one month earlier and hit a record high, official data released yesterday show. The average price of housing was 62,552 patacas (US$7,836) a square metre in September, a 1.3 percent increase compared to the month earlier, the Financial Services Bureau said. The average price peaked largely because of the sales of costlier units in Taipa. In just six months, the average price of homes in Macau has soared by more than 50 percent to its highest rate since authorities began

releasing data in 2004. Experts and realtors have warned that a lack of supply would keep prices high despite new government policies designed to cool the market. It is the second time in three months that home prices have exceeded the 62,000-pataca level, a fact that does not surprise Midland Realty (Macau) Ltd managing director Ronald Cheung Yat Fai. Mr Cheung said he expects prices to remain “steady during the next five to six months, rising a bit after March”. Average prices in Taipa rose by 14.6 percent to 72,837 patacas in September, the biggest jump in almost two years.

A batch of 73 units sold in the Pac On and Taipa Grande area for an average of 92,412 patacas a square metre – these were likely flats at the high-end One Grantai development. Some 53 units in Coloane’s luxury high-rise residential project One Oasis also sold for an average of 83,930 patacas a square metre, a 4.9 percent increase on August’s price. The price hikes in Taipa and Coloane more than offset a 4.8 percent drop in Macau peninsula prices to 56,548 patacas a square metre. The cost of buying a flat on the peninsula has been rising each month since February, when it was

just 38,430 patacas a square metre. The government last month extended its special stamp duty regime on housing to shops, offices and car parks, and announced stricter rules on mortgage lending for non-residents. Mr Cheung expects the market to take a couple of months to “digest and adapt to the new measures”. In September and last month, there were deals designed to entice buyers to accelerate transactions before higher stamp duty rates come into effect. Despite those efforts, the number of sales citywide fell by 1 percent to 1,219 homes – a six-month low – but Mr Cheung expects this to “drop dramatically” until the end of the year, in part reflecting traditionally slow sales during the holiday period. “Even though there is demand, most of the buyers and landlords have no intention of selling. They want to keep their property because it’s the most effective investment in a context of high inflation and currency depreciation,” Mr Cheung said. So far, no measures have been announced to boost the supply side but the government “has been studying [the issue],” Executive Council spokesperson Leong Heng Teng said last month. The drop in sales was sharpest in Coloane, where transactions fell by 63 percent in September. In just two months, home sales in Coloane dropped by more than two-thirds from 226 in July. Sales in Taipa dropped by 2.3 percent to 250 and even on the Macau peninsula, transactions fell by 9.7 percent to 916. As in August, the busiest part of town was the reclaimed area near the Areia Preta, surrounding the Pearl of Orient roundabout, where 215 units were sold.

CTM cuts broadband tariffs for home services Photo by Manuel Cardoso

To accompany the official sales launch for the iPhone 5, telco CTM announces broadband tariff cuts Stephanie Lai

sw.lai@macaubusinessdaily.com

esidential broadband services will be 10 percent cheaper on average from today and upload speeds double for all Home Fibre Broadband services from CTM, Companhia de Telecomunicações de Macau, SARL. CTM said yesterday the cost of its three home fibre broadband plans would fall by between 12 percent and 20 percent a month as a result of the changes. A 50Mbps download service will now cost 318 patacas (US$40), while the 250Mbps and 100Mbps speeds will cost 438patacasand368patacasrespectively. The tariff cuts for other monthly home broadband service plans with unlimited usage and a download speed between 4Mbps and 15Mbps range from 4 to 9 percent.

CTM said the decision to cut costs was made as a result of “constant reviews on tariff plans” and was “a response to clients’ demand”. In August last year, similar tariff cuts for all home broadband services were closer to 20 percent, while the rates for fibre broadband services fell by 41.9 percent. However, this year’s price slash comes later than expected. CTM’s chief executive Vandy Poon Fuk Hei had told media in May that it could be expected in summer. The tariff cut does not include business services. They were cut by up to 30 percent in June last year. CTM is yet to clarify any change in the cost of office broadband service plans this year. It has said a decision on pricing is

pending government approval. At the beginning of this year, CTM announced a three-year investment plan worth 1.2 billion patacas to expand the network’s infrastructure in Macau.

Popularity in doubt Alongside yesterday’s news of lower tariffs for home broadband services, CTM said Apple’s iPhone 5 would be available in stores from Friday. The mobile phone was launched in Hong Kong on September 21. Authorised iPhone 5 sellers CTM and Hutchison started taking preorders from customers on Monday. CTM told Business Daily that the pre-orders for the iPhone 5 had fallen, but not by a “huge drop” compared to previous models.

However, stores selling parallel imports of iPhone 5, mainly sold to customers from the mainland, said there were fewer inquiries and sales for this year’s model. “A reason for the dwindled popularity of the iPhone 5 may have to do with the intense competition with Samsung,” a sales representative at mobile phone shop Iat Tung Tin Son told Business Daily. The grey market price for an iPhone 5 has hovered at about 8,000 patacas since late September, with the top-line model costing about 9,600 patacas.

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business daily November 1, 2012

macau 2G users down in September The number of users of the threatened 2G mobile phone network has dropped below 7,000, data released by the Bureau of Telecommunications Regulation on Monday show. Earlier this month the government said the 2G network could remain operational beyond the end of the year, a clear departure from authorities’ original intention to shut down the network last July. Fixed service users continue to shrink, falling by 1 percent from August to 162,668. On the contrary, mobile service users rose again, up by 1.4 percent to 1.5 million in September.

Bus route tweaks to cut traffic snarls Starting with the city centre this Sunday, bus routes and stops will be restructured to reduce traffic jams, improve service Stephanie Lai

sw.lai@macaubusinessdaily.com

he locations of some bus stops in Macau peninsula and in Taipa will be tweaked to improve service from Sunday but there are no plans to expand routes, the Transport Bureau has said. In a move that is hoped will reduce waiting times, a bus stop in front of former Estoril Hotel will now service routes 2, 4, 7, 18A and 19, all of which pass through San Ma Lou said Lou Ngai Wa, the head of the bureau’s public transport management. In Patane, an extra bus stop will be set up in front of the Banco Nacional Ultramarino branch at Avenida do Almirante Lacerda for routes 26, 26A and 33, all of which travel to Taipa.

The bureau also wants to alleviate heavy traffic in some narrow streets around Patane by combining two bus stops – one in front of the market and the another at Rua do Guimarães – into one, located at Ian Heng building. In Taipa, one new bus stop for routes 35, 50X and MT4 will be set up in front of the International School of Macau following the bus route redistribution plan launched last year. The bureau said it had no plans to launch any new bus routes this year. It cited traffic congestion as a major factor. “Previously, we had a bus route readjustment done in the central zone, which worked quite well,” said Mr Lou.

“For this rearrangement, if it eventually eases the traffic, we’ll come up with more bus route redistribution plans.” Meanwhile, there was still “no

concrete timeframe” to accept the requests by the three public bus operators for a service charge raise due to inflation, and hike in bus drivers’ salary and fuel prices, Mr Lou said.

Bus routes will be altered and combined in an attempt to streamline the service and reduce traffic congestion

Tomorrow Gala Dinner

Corporate Sands’ Cotai resorts honoured UK team at MGM Macau in World Travel Awards 2012 world lion dance contest

For more information visit www.macau-event.com or write to golf@macaubusiness.com

ands China Ltd’s collection of Cotai casino resorts – now branded as Sands Cotai Macao – has been named ‘Asia’s Leading Tourism Development Project’ in the World Travel Awards 2012. The prize was presented by Graham Cooke, president and founder, World Travel Awards, at a ceremony in Singapore. “Sands China is delighted that our company’s integrated resort city has been singled out for this honour,” said Sands China president and chief executive Edward Tracy. Phase 2A of the firm’s newest Cotai property – Sands Cotai Central – launched in September. It added the first of two Sheraton hotel towers, which together form Sheraton Macao Hotel, Cotai Central, Macau’s largest hotel. Sands China’s Cotai Strip development now has three integrated gaming resorts – The Venetian MacaoResort-Hotel, The Plaza Macao and Sands Cotai Central. The award for Sands Cotai Macao was accepted on behalf of Sands China by George Tanasijevich, managing director of global development for its parent company Las Vegas Sands Corp.

he MGM Macau casino resort will host the third MGM Macau International Lion Dance Championship on November 10 and 11 at the property’s indoor square known as Grande Praça. This year’s contest will include for the first time a team from the United Kingdom. The other teams in the men’s competition are from mainland China, Hong Kong, Taiwan, Indonesia, Malaysia, Singapore, Thailand, and Vietnam as well as Macau. The women’s competition – held for the first time last year – will also return, with eight teams from China, Hong Kong, Macau, Taiwan, Indonesia, Malaysia and Singapore. The top prize for the men’s contest is 50,000 patacas (US$6,250) while the prize pool to be shared among the top three female teams is 18,000 patacas. The event is supported by the Macau Sport Development Board, Macau Government Tourist Office and the Dragon & Lion Dances Federation of Asia.

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business daily November 1, 2012

GREAT CHINA

Shanghai, Beijing lure back investors Investors see less visibility in second-tier cities increased building of low-cost social housing and placed home-purchase restrictions in about 40 cities. Home prices have risen about 155 percent nationwide since reforms that privatized the country’s housing market in 1998.

‘More advantages’

Monthly prime office rents in Shanghai are 563 yuan per square meter, says a real estate consultancy

eal estate investors and developers are abandoning a two-year foray into China’s provincial cities and switching back to Shanghai and Beijing, where offices are fuller, rents are higher and home prices are stabilising. Of the US$34 billion of direct investment in commercial real estate in 2010 and 2011 combined, 20 percent went to China’s 50 biggest second-tier cities, according to Jones Lang LaSalle Inc., up from 5 percent in the prior two years. That percentage is now set to decline, according to Michael Klibaner, China head of research for the world’s secondbiggest commercial realtor. A three-year building boom, fuelled by government stimulus, has pushed up office vacancy rates in second-tier cities such as Chongqing and Chengdu

to almost 40 percent, while rising land prices have squeezed homebuilders’ profit margins. Investors and developers are refocusing on Beijing and Shanghai, where prime offices are close to full occupancy and rents are on par with cities such as New York and Sydney, according to Cushman & Wakefield Inc. “In a world of uncertainties, the best investment is the one that produces stable rents,” said Albert Lau, head of China at property broker Savills Plc. “When the whole world gets riskier, when financing is harder, if the market is difficult, you’d rather buy some good stuff rather than gamble.”

Cheaper land The capital Beijing, the financial centre of Shanghai and the two southern business centres of Shenzhen

and Guangzhou are ranked as firsttier cities, according to the National Bureau of Statistics. The second tier includes provincial capitals, while the third includes smaller cities. In the wake of the 2008 credit crisis, developers and investors were lured to inland cities by cheaper land and rising incomes. China’s Premier Wen Jiabao, who is set to hand over power in March after a once-in-adecade leadership transition that begins next month, has sought to curb property speculation in Shanghai and Beijing. That encouraged developers to seek opportunities elsewhere, where property policies were more relaxed. China has over the past two years raised down-payment and mortgage requirements for home buyers, imposed a property tax for the first time in Shanghai and Chongqing,

Monthly prime office rents in Beijing and Shanghai are 690 yuan (US$110) and 563 yuan per square metre (10.8 square feet), according to Cushman & Wakefield. That compares with 284 yuan in Nanjing, the capital of eastern Jiangsu province, which is the most expensive among China’s second-tier cities, according to the broker. Fantasia Holdings Group Co., a Shenzhen-based developer, paid about 779 million yuan to buy Huawanli Investment, which holds a 17,138-square-metre site in Beijing’s central business district, according to a statement to the Hong Kong Stock Exchange on October 24. It plans to develop a business complex on the land, executive director Lam Kam Tong said by e-mail. Fantasia plans to expand to first-tier cities such as Beijing and Shanghai, Mr Lam said, citing better prospects for commercial properties in the biggest cities. “There are more advantages than disadvantages to develop in firsttier cites compared with smaller ones,” he said. “With the high value-added development model, it can bring in a relatively higher gross margin to the company.” “In China’s second-tier cities we see less visibility on price and growth of the local office markets,” said Daan Van Aert, head of strategic real estate at APG Investment Asia Ltd, a subsidiary of APG Algemene Pensioen Groep NV. “The returns at this stage don’t really seem to justify the risks for institutional investors.” Bloomberg

Hong Kong intervenes again to weaken dollar Fifth intervention in two weeks to defend peg

he Hong Kong Monetary Authority sold its own currency for a fifth time in less than two weeks after it touched the upper limit of a 29-year-old peg to the United States dollar. The central bank added HK$2.71 billion (US$350 million) to the banking system in Hong Kong on Tuesday, according to a spokeswoman for the HKMA, who declined to be identified because of government policy. That followed a US$603 million intervention on October 19, the first time since 2009, and a combined US$1.25 billion on October 23. Funds are flowing into Hong Kong after the U.S., Europe and Japan introduced policies to stimulate their economies and data signal China’s growth slowdown is abating. Last month, the Federal Reserve unveiled a third round of quantitative easing and Europe announced bond-buying

We will remain closely vigilant of the situation and to maintain the exchange rate stability in accordance with the currency board mechanism Hong Kong Monetary Authority plans, spurring capital inflows into emerging markets. The Bank of Japan expanded its asset-purchase

The monetary authority added HK$2.71 bln to the banking system

programme for the second time in two months on Tuesday. The HKMA said it expects net inflows into the currency will continue “for a period of time,” according to an e-mailed statement. “We will remain closely vigilant of the situation and to maintain the exchange rate stability in

accordance with the currency board mechanism,” it said. Macau’s Secretary for Economy and Finance, Francis Tam Pak Yuen, said last week there was no sign of hot money flowing into the market here. “At this present stage, I don’t see a strong influx of capital to Macau,

November 1, 2012 business daily | 9

GREAT CHINA

Big banks set for slimmest annual profit growth Following the central bank’s interest rate cuts Taiwan cuts growth forecast

Kelvin Soh

Bank of China last week posted its biggest quarterly gain in a year

hina’s top four banks are on course for their weakest annual profit growth since going public, as the central bank’s interest rate cuts in the middle of the year kick in, slicing lending margins. After posting profit gains of more than 20 percent for years, the so-called “Big Four”, led by Industrial and Commercial Bank of China Ltd (ICBC), are expected to report growth of as little as 5 percent in 2012, according to Thomson Reuters Starmine. That would be the slimmest growth since China Construction Bank Corp became the first of the four to list in 2005, following the central bank’s interest rate cuts in June and July. “As loans mature, they will have to be re-priced downwards based on the new benchmark rate,” said Bill Stacey, an analyst at KBW in Hong Kong. “The margin pressure has been deferred, but it’s coming.” The sobering estimate comes after the banks, including Agricultural Bank of China Ltd and Bank of China Ltd, surpassed third-quarter profit

but there are, of course, some minor fluctuations,” he said.

Chinese economy When the Hong Kong dollar reaches the so-called strong end of the permitted trading range, the HKMA offers to buy U.S. dollars to prevent further appreciation under its currency board system. Hong Kong fixed the currency in 1983, and in 2005 committed to keep the exchange rate between HK$7.75 and HK$7.85. The city had US$301.2 billion of foreign-exchange reserves as of the end of September, amounting to about eight times the currency in circulation. The holdings grew 8.5 percent in the past year. The latest intervention will raise the banking system’s aggregate balance to HK$165.7 billion on November 1, according to HKMA data. Capital inflows into Hong Kong signal the Chinese economy is bottoming, Credit Suisse Group AG said in a report last week. Industrial production in September rose at a better-than-estimated 9.2 percent from a year earlier, retail sales climbed 14.2 percent, the most since March, and fixed-asset investment excluding rural households for the first nine months of the year increased 20.5 percent. Bloomberg

expectations, helped by the central bank’s landmark decision to allow lenders to set their own loan rates. ICBC, whose market value alone is roughly equals that of Bank of America Corp, Morgan Stanley and Goldman Sachs put together, said yesterday it expects margins to fluctuate around current levels. “There will be some volatility with margins, but things should remain largely stable,” ICBC’s president Yang Kaisheng said on a conference call with analysts. Barclays estimates ICBC’s net interest margin was about 2.7 percent in the third quarter.

Impairment charges Smaller lenders such as Bank of Communications Ltd will be hit worse by the rate cuts, having reported earnings that largely met expectations as a rise in loan volumes offset flat to narrower interest margins. The central bank’s rate cuts – and the resulting narrower margins – will be felt most keenly by the smaller

banks, including China CITIC Bank Corp Ltd and China Minsheng Bank Corp Ltd, which have no choice but to compete with state-owned behemoths by offering cheaper loans. China Minsheng’s third-quarter net interest margin narrowed 10 basis points to 3.04 percent, while China Merchants Bank Co Ltd’s margin shrank 11 basis points to 2.92 percent. The plight of the smaller banks will also be exacerbated by a scramble for deposits after the central bank gave lenders more leeway in setting their own deposit rates, on top of loan rates. “None of them have enough market share to have the ability to fix interest rates,” said Jim Antos, an analyst at Mizuho Securities in Hong Kong. The better-than-expected thirdquarter earnings growth posted by the Big Four would have been smaller if they had taken bigger impairment charges by putting aside more funds as provisions for bad loans. By cutting back on provisions, a greater sum of a bank’s revenue can be counted as profit. “It depends which direction an investor thinks earnings can go,” said Alexander Lee, an analyst at DBS Vickers. “If you think things are going to get worse, then a bank isn’t setting aside enough. If you think things will get better, then it’s great because it means more profits.” Bank of China, which posted its biggest quarterly gain in a year, would have seen its earnings slashed by 2 billion yuan in July-September if it had set aside more funds to cover potential bad loans, according to DBS Vickers. ICBC reduced impairment charges by about 1.9 billion yuan in the quarter from a year earlier. Reuters

Air China reports lower profits

Cosco narrows loss on container rates

hina Cosco Holdings Co., the nation’s biggest listed shipping company, narrowed its thirdquarter loss after raising container rates and paring its dry-bulk fleet. The net loss of 1.53 billion yuan (US$245 million) compares with a 2.07 billion yuan loss a year earlier, the Tianjin, China-based company said in a Hong Kong stock exchange filing yesterday. Sales rose 4.5 percent to 19.06 billion yuan. China Shipping Containers Lines Co., the nation’s biggest cargo-box carrier after Cosco, posted a profit compared with a year-earlier loss as greater cooperation helped operators raise fees. Asia-Europe rates have since fallen because new ships entered service and as the Euro area’s debt crisis damps demand for Chinesemade toys, furniture and auto parts. China Shipping had a third-quarter profit of 991 million yuan compared with a loss of 951 million yuan a year earlier. “The container business won’t

Taiwan cut its 2012 growth forecast for a ninth time in just over a year yesterday as Europe’s ongoing woes, concerns over the U.S. economy and China’s slowdown kept third-quarter growth below forecasts, but bright spots indicate the economy may have bottomed out. The economy grew a preliminary 1.02 percent in the third quarter of 2012 year-on-year, the statistics agency said, below the median forecast in a Reuters poll for 1.55 percent growth, and ticked up 0.86 percent from the previous quarter. But persistent global concerns saw the 2012 full-year forecast cut to 1.05 percent from 1.66 percent, the ninth cut since August last year. The statistics office left its inflation forecast for 2012 unchanged at 1.93 percent, close to the central bank’s comfort level of 2 percent and likely to underscore views that interest rates will be left on hold when the bank next meets at the end of December. Economists, however, said the economy appeared to be turning the corner and was heading towards a modest recovery. “Taiwan is recovering but at a slow pace,” said Aidan Wang, economist at Yuanta Securities in Taipei. “We forecast a 3-4 percent growth in Q4. This should be the last time the government revises down full-year GDP because the economy has reached the bottom. From Q4 to Q2 next year the growth will be better on a low base effect.” Taiwan is one of the most exposed among Asian exporting economies to fluctuations in overseas demand, particularly for high-tech items. Its exports fell for six straight months to August, as did orders for its exports, a leading indicator of demand.

be too good in the fourth quarter,” Sarah Wang, a Shanghai-based analyst at Masterlink Securities Corp, said before the results were released. “Rates have already trended down and the peak Christmas shipping period is pretty much over.” Cosco’s container unit boosted revenue 27 percent to 11.5 billion yuan in the third quarter and volume rose 13 percent to 2.15 million TEUs. Asia-Europe volumes jumped 19 percent and average rates rose 22 percent. Transpacific shipments increased 7.4 percent, with rates climbing 15 percent. Volumes at Cosco’s dry-bulk unit fell 16 percent, as the company pares it commodity-shipping fleet because of falling rates. The Baltic Dry Index, a benchmark for commodity-shipping rates, averaged 45 percent lower in the third quarter than a year earlier, as expansion in the global fleet outpaces China’s demand for iron ore and coal. Reuters

Air China Ltd and China Eastern Airlines Corp., two of the nation’s big three carriers, reported lower quarterly profits because of a weaker yuan and slowing demand for air travel. Air China’s net income fell 16 percent to 3.17 billion yuan (US$509 million) in the third quarter, it said on Tuesday. China Eastern’s profit dropped 20 percent to 2.63 billion yuan. China Southern Airlines Co., the nation’s biggest carrier by passenger numbers, also reported a lower profit in the period as the weaker yuan increased the cost of dollardenominated debts and fuel purchases. China’s slower economic growth has also damped demand for flights. China Eastern, based in Shanghai, had a net exchange loss of 143 million yuan in the quarter, compared with a 685 million yuan gain a year earlier, it said. Beijing-based Air China said the effect of exchange rates on cash and cash equivalents narrowed to minus 58.1 million yuan from minus 126.8 million yuan. The People’s Bank of China weakened the yuan reference rate against the dollar by 0.25 percent in the third quarter, compared with an increase of 1.8 percent a year earlier. Air China carried 13.5 million passengers in the period, 2.3 percent more than a year earlier. China Eastern boosted passenger numbers 10 percent to 20.6 million. Air China rose 0.54 percent to close at HK$5.54 in Hong Kong trading yesterday. China Eastern gained 2.26 percent to HK$2.72. Both companies have declined about 4 percent this year, compared with a 16 percent gain for the benchmark Hang Seng Index.

10 |

business daily November 1, 2012

ASIA

InBrief Won at fresh 14-month high The South Korean won was a tad higher yesterday to its strongest value against the dollar in nearly 14 months on greater appetite for risk as worries about the euro zone ease. But dealers said further gains were capped by speculation of possible intervention by local foreign exchange authorities to prevent the currency from rising too high. The won stood at 1,090.7 against the dollar at the end of onshore trade. “Most Asian currencies are on a strengthening track and the Korean won has developed a strong tolerance to euro zone events,” said a dealer.

All Nippon profit jumps 62pct All Nippon Airways Co., Japan’s largest listed carrier by sales, boosted firsthalf profit 62 percent due to a rebound in travel following last year’s nuclear crisis and cost cuts. Net income rose to 36.9 billion yen (US$464 million) in the six months ended September, from 22.9 billion yen a year earlier, it said in a statement yesterday. Sales rose 6.9 percent to 753.2 billion yen. The carrier reiterated that it expects net income of 40 billion yen for the full year. It trimmed its sales forecast 2 percent to 1.47 trillion yen.

Panasonic cleans house with writedowns Panasonic Corp said it will lose almost US$10 billion this business year as it cleans house of risky assets, writing down billions of dollars of goodwill and assets in its mobile and energy units while its new boss readies for a fresh bout of restructuring. Panasonic is heading for a fourth net loss in five years after forecasting a 765 billion yen (US$9.6 billion) loss for the year to March. The result would boost its cumulative loss over five years to nearly US$25 billion. In the three months to September 30, Panasonic posted an operating profit of 48.8 billion yen.

Softbank net income falls on rising costs Softbank Corp., the Japanese mobilephone carrier that agreed this month to buy a US$20 billion stake in Sprint Nextel Corp., said second-quarter profit fell 36 percent as it spent more to boost network capacity. Net income fell to 78.8 billion yen (US$980 million) in the three months ended September 30 from 122.5 billion yen a year earlier, the Tokyo-based company said in a statement yesterday. The company left its projection for at least 700 billion yen in operating profit for the year ending March 31 unchanged.

India cuts bank reserve not rates Chidambaram irked as central bank defies call for rate cut Kartik Goyal and Tushar Dhara

ndia’s central bank resisted calls from Finance Minister Palaniappan Chidambaram for lower interest rates, prompting him to say the government will revive economic expansion by itself if necessary. Governor Duvvuri Subbarao kept the repurchase rate at 8 percent to damp price increases, while reducing the cash reserve ratio to 4.25 percent from 4.5 percent to support lending, the Reserve Bank of India said in Mumbai yesterday. Borrowing costs have remained unchanged since a 50 basis-point cut in April. Mr Chidambaram called for cheaper credit earlier this month to back a government push to spur growth, and pledged on Monday to contain the budget deficit as officials try to increase scope for a rate cut. While the monetary authority signalled it may ease policy in January-to-March as inflation cools, the finance minister said boosting the economy is already a key task. “Growth is as much a challenge as inflation,” Mr Chidambaram told reporters in New Delhi after the Reserve Bank’s decision. “If government has to walk alone to face the challenge of growth, then we’ll walk alone.” An inflation rate near 8 percent

curbed Mr Subbarao’s scope to join counterparts from Brazil to Thailand in extending rate cuts as the global recovery falters. Indian inflation, fanned by food and fuel costs, accelerated to a 10-month high of 7.81 percent in September.

‘Bit peeved’ The reduction in reserve requirements, the fourth this year, is effective on November 3 and will add about 175 billion rupees (US$3.2 billion) to the banking system, the Reserve Bank said. The 25 basis-point cut takes the cash reserve ratio to a 36-year low. “Both the government and the Reserve Bank share concerns both about growth and inflation,” Mr Subbarao told reporters in Mumbai in response to a question about Mr Chidambaram’s comments. Prime Minister Manmohan Singh’s administration started a policy revamp on September 13, including fuel-subsidy curbs and a push to spur investment. That snapped months of gridlock over how to bolster growth. The rupee is up 2.7 percent versus the dollar since then, paring its one-year drop to 9.6 percent. “As recent policy initiatives by the

If government has to walk alone to face the challenge of growth, then we’ll walk alone Palaniappan Chidambaram, India’s Finance Minister government start yielding results in terms of revitalising activity, they will open up space for monetary policy to work in concert to stimulate growth,” the central bank said, adding the administration’s steps need to yield “effective action.” The rupee strengthened 0.2 percent to 53.9675 per dollar yesterday in Mumbai, while the BSE India Sensitive Index of stocks fell 1.1 percent. “The central bank is still waiting to see the government effectively implement the reforms it announced before it cuts interest rates,” said Robert Prior-Wandesforde, an economist at Credit Suisse Group AG

News Corp seals US$2.1 bln pay-TV deal Consolidated shareholders approved takeover

upert Murdoch’s News Corp boosted its share of Australia’s pay-TV market after shareholders in Consolidated Media Holdings Ltd voted in favour of a A$2 billion (US$2.1 billion) takeover offer from News Corp. The deal will double the stake of News Corp’s Australian arm in dominant pay-TV operator Foxtel to 50 percent and give it 100 percent of content provider Fox Sports, increasing its pay-TV exposure at the same time as it cuts costs at its print operations. Consolidated Media said shareholders at a meeting yesterday voted 99.9 percent in favour of the takeover. Its board had backed the offer. “Foxtel and Fox Sports are going to be two cornerstone assets in the News Corp publishing business after the demerger, and I assume the market will put fairly healthy multiples on those assets,” said Citi analyst Justin Diddams. News Corp announced plans in June to split the US$60 billion media conglomerate into two publicly traded companies, publishing and entertainment. The split will take about a year to complete. The publishing arm will include Australian newspaper The Australian, UK newspapers The Times and The Sun, The Wall St Journal, book publisher Harper Collins, and pay-TV assets including Fox Sports, Foxtel

James Packer exits media business to focus on gambling

and Sky TV New Zealand. After the takeover of Consolidated, pay-TV – including affiliates such as Foxtel – would contribute 39 percent of News Corp’s publishing company revenues in fiscal 2014, CLSA analyst Digby Gilmour said in a note to clients last week. Gilmour estimated that Fox Sports would contribute 11 percent of publishing group earnings before interest, tax and depreciation in fiscal 2014, while the half-share of Foxtel would contribute 17 percent.

The Consolidated Media deal also clears the way for billionaire James Packer, who held a 50.1 percent stake in the firm, to exit his last big media venture as he focuses on gambling. Mr Packer, who has built stakes in casinos in Macau, Australia and London, owns casino group Crown Ltd which is hoping to build a casino in Sydney, the second casino for the city. News Corp’s Australian listed shares rose 0.3 percent, while the broader market rose 0.7 percent. Reuters

November 1, 2012 business daily | 11

ASIA

Incheon plans gaming destination Leisure and entertainment area to have three times the size of Macau

in Singapore. “The finance minister was probably a bit peeved that the RBI wasn’t prepared to take his word for it.”

Outlook cut “The baseline scenario suggests a reasonable likelihood of further policy easing in the fourth quarter of 2012-13,” the Reserve Bank said. “The above policy guidance will, however, be conditioned by the evolving growth-inflation dynamic.” The central bank added that “it is critical that even as the monetary policy stance shifts further towards addressing growth risks, the objective of containing

inflation and anchoring inflation expectations is not de-emphasised.” The Reserve Bank raised its inflation forecast to 7.5 percent by March 2013 from 7 percent, adding the pace of price increases is expected “to rise somewhat” in the October through December period before easing in the following quarter. The projection for economic growth was cut to 5.8 percent for the year through March 2013, from 6.5 percent, on moderating investment and consumer spending, declining exports and the impact on farming of a weak monsoon season. Bloomberg

outh Korea’s Incheon city, where the nation’s busiest airport is located, plans to team up with a group of investors to develop a 317 trillion won (US$290 billion) leisure and gaming destination three times the size of Macau. The project called 8-City will be located in Yongyu-Muui island district in Incheon and built over 18 years, according to developer Eightcity Co., whose shareholders include luxury hotel operator Kempinski AG, Korean Air Lines Co. and Daewoo Engineering & Construction Co. The development will spread across an 80 squarekilometre (31 square-mile) area, it said in a statement yesterday. The new development, which will include hotels, casinos, performance halls, shopping malls, a marina resort and Formula 1 race course, will help push South Korea up in the ranks of Asia’s top destinations. The project will be built through 2030 and will draw 130 million visitors annually from the country and overseas markets including China and Japan, the developer said. “Eightcity is aiming to become a city that has the advantages of gaming and entertainment offered by Las Vegas, the shopping and financial hubs of

Singapore and Hong Kong, as well as Macau,” Shawn Park, chairman of Eightcity, told reporters and investors at a briefing in Seoul yesterday. The cost will include construction and land, as well as roads and other infrastructure developments, it said. The first phase of construction will begin in the first half of next year, according to the statement. The development is expected to add 930,000 jobs, it said. Incheon is located 40 kilometres (25 miles) west of Seoul and has the main airfield to South Korea. The board of the United Nations’ Green Climate Fund, set up to channel US$100 billion in aid annually to developing nations by 2020, proposed South Korea’s Songdo in Incheon city as the site for its planned headquarters earlier this month. The selection will be presented for approval at the UN climate summit scheduled to start on November 26 in Doha, Qatar. Bloomberg

Mongolia plans new laws to boost market

ongolia may pass a new securities market law allowing dual listings as the nation’s stock exchange attempts to boost trading volume amid slowing economic growth and Asia’s biggest equity slump this year. The Mongolian Stock Exchange is working with parliament on the new law that would enable companies listed overseas to sell shares domestically, according to the bourse’s chief executive Altai Khangai. The legislation is expected to pass within three to four months, he said. More than 300 companies listed on the exchange have a total market capitalisation of US$1.27 billion, less than Hong Kong-listed Mongolian Mining Corp., which is valued at US$1.81 billion. “The law is an absolute priority for us,” Mr Khangai said in a Bloomberg Television interview in Hong Kong yesterday. “That will help us increase the market and increase liquidity.” The benchmark MSE Top 20 Index has tumbled 26 percent this year as economic growth slowed in China, the nation’s biggest trading partner. Mongolia, squeezed between China and Russia, was the world’s fastestgrowing economy last year, according to the World Bank. Growth may slow to as low as 11 percent this year from a record 17.3 percent last year, central bank governor Naidansuren Zoljargal said in an interview with Bloomberg Television in Hong Kong on Tuesday. The slowdown in China has had a “big-time impact” on share prices in Mongolia, which relies on commodity exports to the world’s second-largest economy, Mr Khangai said.

Altai Khangai, chief executive of the Mongolian Stock Exchange

The exchange is also working with the London-based FTSE Group to introduce a Mongolian index and expects to obtain FTSE’s frontiermarket status within a year, Mr Khangai said. That would mean the country has met requirements on market size, governance and infrastructure required by international institutional investors, according to FTSE’s website. Mongolia’s government is considering easing curbs placed on foreign companies buying local assets, including in industries such as mining, as investors pull out of deals and economic growth slows, Chuluunbat Ochirbat, vice minister of economic development, told a conference in Hong Kong yesterday. The stock exchange is valued at 1.77 trillion tugrik (US$1.27 billion), compared with China’s US$2.74 trillion, according to data compiled by Bloomberg. Mongolian companies listed outside the country include Mongolian Mining and Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. in Shanghai. Bloomberg

Macau at your breakfast table. With Business Daily. Find us in the following newsstands Pacapio at San Ma Lo Opposite HKSB (Nam Van) Beside Luso Bank Building Wen Hang Bank at San Ma Lo In front of Portuguese Bookshop In front CTM at San Ma Lo In front Daiso shop at San Ma Lo Next to S. Lourenço Market Next to Human Resources Dpt Next BNU at Av. Sidonio Pais San Miu, Av. Horta e Costa Next to Metro Park Hotel

12 |

business daily November 1, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

12.66

2.593193

26214191

CITIC PACIFIC

9.88

2.489627

5119390

CLP HLDGS LTD

66.1

0.07570023

2305863

CNOOC LTD

16.1

0.4993758

36573648

11.44

1.238938

3140493

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.7

0.4909984

14104585

CHINA UNICOM HON

ALUMINUM CORP-H

3.39

0.295858

20137199

BANK OF CHINA-H

3.19

2.24359

361267361

BANK OF COMMUN-H

5.54

-1.946903

76818348

28.75

0.3490401

1890195

BANK EAST ASIA

COSCO PAC LTD

NAME SANDS CHINA LTD

5651768

91.95

0.05440696

1414618

ESPRIT HLDGS

10.08

3.703704

13821537

8862662

HANG LUNG PROPER

26.95

0.5597015

4156690

TINGYI HLDG CO

CATHAY PAC AIR

14.04

1.73913

3852113

HANG SENG BK

119 -0.08396306

1000107

WANT WANT CHINA

CHEUNG KONG

114.5

2.049911

4652844

HENDERSON LAND D

53.7

1.225259

4729844

WHARF HLDG

CHINA COAL ENE-H

7.7

2.52996

23975466

HENGAN INTL

70.6

-0.2120141

3664335

CHINA CONST BA-H

5.84

2.276708

243544015

HONG KG CHINA GS

20.6

4541474

CHINA LIFE INS-H

22.9

1.103753

18468544

127.9

1.83121

3491512

CHINA MERCHANT

25.7

1.782178

3320494

11684789

85.95

0.7620164

10904874

HUTCHISON WHAMPO

CHINA OVERSEAS

20.3

1.601602

14156418

IND & COMM BK-H

CHINA PETROLEU-H

8.23

1.35468

68991557

LI & FUNG LTD

CHINA RES ENTERP

25.2

-0.7874016

1798849

CHINA RES LAND

17.7

1.607348

10631363

NEW WORLD DEV

11.98

2.044293

19761615

52W (H) 21847.69922

CHINA RES POWER

16.6

-1.425178

5447492

PETROCHINA CO-H

10.58

-2.037037

142859185

(L) 17613.19922

PING AN INSURA-H

61.4

1.487603

9113947

CHINA SHENHUA-H

2.643857

12583157

MTR CORP

6568050

5.13

1.988072

263651037

0.931677

16858447

30.3

1.848739

3299509

8159253

SWIRE PACIFIC-A

14282567

1.26162

10624250

1.313869

1.273885

0.9247028

-1.018676 0.9354537

0.979021

76.4

3448021

29.15 13.88

14.44

76.25

VOLUME

107.9

23.85

HSBC HLDGS PLC

0.2281369

SINO LAND CO

BELLE INTERNATIO

CHINA MOBILE

DAY %

65.9

SUN HUNG KAI PRO

BOC HONG KONG HO

HONG KONG EXCHNG

PRICE

POWER ASSETS HOL

TENCENT HOLDINGS

MOVERS

274

0.8836524

2699663

23.05

-0.2164502

2673920

10.6

7657506

53.05

0.8555133

1508055

2 21660

INDEX 21641.82 HIGH

21647.95

LOW

21341.34 21300

29-October

31-October

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

CHINA PACIFIC-H

24.3

1.039501

6972328

15592873

CHINA PETROLEU-H

8.23

1.35468

68991557

ZIJIN MINING-H

0.295858

20137199

CHINA RAIL CN-H

7.7

6.944444

34891017

26.8

2.879079

12606828

CHINA RAIL GR-H

3.95

7.629428

55521122

BANK OF CHINA-H

3.19

2.24359

361267361

CHINA SHENHUA-H

2.643857

12583157

BANK OF COMMUN-H

5.54

-1.946903

76818348

CHINA TELECOM-H

4.61

0.6550218

23780501

BYD CO LTD-H

15.3

1.593625

2227601

DONGFENG MOTOR-H

9.6

0.1042753

24205728

CHINA CITIC BK-H

3.96

1.020408

35130616

GUANGZHOU AUTO-H

5.31

3.508772

14290767

CHINA COAL ENE-H

7.7

2.52996

23975466

HUANENG POWER-H

6.2

-1.116427

11168377

CHINA COM CONS-H

7.27

0.6925208

33727274

IND & COMM BK-H

5.13

1.988072

263651037

CHINA CONST BA-H

5.84

2.276708

243544015

JIANGXI COPPER-H

20.05

0.7537688

10332434

CHINA COSCO HO-H

3.85

4.904632

32006707

PETROCHINA CO-H

10.58

-2.037037

142859185

CHINA LIFE INS-H

22.9

1.103753

18468544

PICC PROPERTY &

10.32

0.9784736

12135790

CHINA LONGYUAN-H

5.05

3778416

PING AN INSURA-H

61.4

1.487603

9113947

CHINA MERCH BK-H

14.48

1.971831

25027249

SHANDONG WEIG-H

10.48

-0.7575758

6291563

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.36

1.510574

123894973

AIR CHINA LTD-H

5.5

-0.1814882

ALUMINUM CORP-H

3.39

ANHUI CONCH-H

NAME

PRICE

DAY %

VOLUME

11.66

1.215278

22225286

3.12

26827228

ZOOMLION HEAVY-H

10.44

0.1919386

18576424

ZTE CORP-H

10.92

0.7380074

6225156

YANZHOU COAL-H

MOVERS

1 10600

INDEX 10582.05 HIGH

10582.78

LOW

10417.22

CHINA MINSHENG-H

7.05

-1.398601

64842927

SINOPHARM-H

26.05

3.784861

3021991

52W (H) 11916.1

CHINA NATL BDG-H

9.88

2.38342

63117692

TSINGTAO BREW-H

41.9

-1.295642

2417972

(L) 8987.76

CHINA OILFIELD-H

14.7

0.4098361

5542418

WEICHAI POWER-H

27.45

2.04461

3757822

10400

29-October

31-October

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

AGRICULTURAL-A

2.5

0.8064516

34747620

DAQIN RAILWAY -A

6.04

0.6666667

19741921

SHANDONG DONG-A

41.46

1.917404

4640719

AIR CHINA LTD-A

5.06

13471981

DATANG INTL PO-A

4.08

-1.686747

9027984

SHANDONG GOLD-MI

37.14

-2.621919

12032961

11.61

-0.08605852

6119998

SHANG PHARM -A

11.17

0.1793722

8428600

2.43

0.4132231

18827901

SHANG PUDONG-A

7.51

0.4010695

36411101

NAME ALUMINUM CORP-A ANHUI CONCH-A

4.84

0.2070393

5511979

16.48

1.854141

10506537

NAME EVERBRIG SEC -A GD POWER DEVEL-A

NAME

VOLUME

BANK OF BEIJIN-A

6.86

0.5865103

7834800

GF SECURITIES-A

12.88

0.7824726

20163166

SHANGHAI ELECT-A

4.14

0.729927

4961707

BANK OF CHINA-A

2.73

11304558

GREE ELECTRIC

23.09

7.846801

35734695

SHANXI LU'AN -A

17.19

2.199762

9488741

BANK OF COMMUN-A

4.22

-0.2364066

22408971

GUANGHUI ENERG-A

16.15

3.063178

30519136

SHANXI XINGHUA-A

45.42

1.361303

3448673

BAOSHAN IRON & S

4.63

0.4338395

17328217

HAITONG SECURI-A

8.9

1.598174

35254966

SHANXI XISHAN-A

12.66

1.03751

9786493

14.41

1.622003

2015911

HANGZHOU HIKVI-A

31.1

0.974026

4470254

SHENZEN OVERSE-A

5.89

0.6837607

23419960

CHINA CITIC BK-A

3.58

-0.2785515

13538352

CHINA CNR CORP-A

3.99

3.636364

100913546

CHINA COAL ENE-A

7.01

0.8633094

CHINA CONST BA-A

4.13

BYD CO LTD -A

HENAN SHUAN-A

60.3

3.430532

1386618

SICHUAN KELUN-A

2.095648

1101896

HONG YUAN SEC-A

18.05

-1.041667

10045530

SUNING APPLIAN-A

6.74

0.8982036

48740660

6184148

HUATAI SECURIT-A

9.26

0.1081081

10819506

TASLY PHARMAC-A

52.83

1.32336

1951986

9701359

HUAXIA BANK CO

8.36

0.3601441

13685693

TSINGTAO BREW-A

31.29

1.988266

2938904

CHINA COSCO HO-A

4.14

6052671

IND & COMM BK-A

3.82

0.2624672

19402727

WEICHAI POWER-A

19.97

0.8076729

4262693

CHINA CSSC HOL-A

19.44

0.4132231

2813147

INDUSTRIAL BAN-A

12.4

1.30719

53080816

WULIANGYE YIBIN

33.6

-0.2967359

13039320

CHINA EAST AIR-A

3.47

1.166181

33615535

INNER MONG BAO-A

28.47

2.742692

27798465

YANGQUAN COAL -A

14.05

1.370851

6684587

CHINA EVERBRIG-A

2.67

14535927

INNER MONG YIL-A

21.69

3.631151

15099776

YANTAI CHANGYU-A

43.69

0.854109

1350529

CHINA INTERNAT-A

30.44

2.079142

4239223

INNER MONGOLIA-A

5.9

-1.502504

208327082

YANTAI WANHUA-A

13.69

3009602 2077844

CHINA LIFE INS-A

17.36

-1.363636

9518101

JIANGSU HENGRU-A

30.05

1.692047

2834707

YANZHOU COAL-A

17.96

1.297236

CHINA MERCH BK-A

10.08

0.09930487

20997491

JIANGSU YANGHE-A

118.04

-1.469115

1032077

YUNNAN BAIYAO-A

65.5

6.991179

6301289

CHINA MERCHANT-A

9.56

-0.4166667

15134442

JIANGXI COPPER-A

21.14

1.342282

4643009

ZHONGJIN GOLD

15.8

-0.6289308

15207978

CHINA MERCHANT-A

22.7

0.6651885

8094647

CHINA MINSHENG-A

6.02

1.006711

JINDUICHENG -A

11.22

0.7181329

2019723

ZIJIN MINING-A

3.81

21858679

80480293

JIZHONG ENERGY-A

11.78

0.9425878

8478927

ZOOMLION HEAVY-A

8.39

-1.061321

31038577

16.99

3.157256

18375140

ZTE CORP-A

8.28

-4.936854

33783871

247.34

1.128465

1584535

6.64

0.7587253

14352272

KANGMEI PHARMA-A

CHINA OILFIELD-A

15.81

-0.440806

1819530

KWEICHOW MOUTA-A

CHINA PACIFIC-A

CHINA NATIONAL-A

17.93

-1.537617

18902433

LUZHOU LAOJIAO-A

39.03

2919158

CHINA PETROLEU-A

6.23

0.483871

16189769

METALLURGICAL-A

2.06

18491421

CHINA RAILWAY-A

5.02

3.933747

31012479

NARI TECHNOLOG-A

17.74

20835387

CHINA RAILWAY-A

2.71

4.230769

70698361

NINGBO PORT CO-A

2.45

-0.4065041

6077323

CHINA SHENHUA-A

0.9214568

6031716

PANGANG GROUP -A

3.72

-0.8

31525991

8.68

-0.6864989

9813241

MOVERS

193

CHINA SHIPBUIL-A

4.49

10510444

CHINA SOUTHERN-A

3.64

-1.086957

45321859

PING AN BANK-A

13.16

0.5347594

7512545

38.8

0.8316008

10140528

HIGH

2254.82

LOW

2229.53

CHINA STATE -A

3.04

-0.3278689

27604402

CHINA UNITED-A

3.55

-0.2808989

28849516

POLY REAL ESTA-A

11.11

1.183971

24577854

CHINA VANKE CO-A

8.32

0.2409639

47222524

QINGDAO HAIER-A

11.36

1.428571

13028094

CHINA YANGTZE-A

6.42

0.6269592

11499241

QINGHAI SALT-A

24.99

0.5633803

5162721

CITIC SECURITI-A

10.89

1.114206

33013651

SAIC MOTOR-A

12.96

2.369668

13097008

CSR CORP LTD -A

4.47

5.424528

104329997

8.98

-1.101322

24684807

PRICE DAY %

Volume

PRICE DAY %

Volume

SANY HEAVY INDUS

20 2260

INDEX 2254.82

PETROCHINA CO-A PING AN INSURA-A

52W (H) 2781.99 (L) 2172.878906

2220

29-October

31-October

FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP

22.6

NAME

-1.310044

14065802

FORMOSA PLASTIC

22 -0.9009009

32266802

FOXCONN TECHNOLO

36.4

ASUSTEK COMPUTER

313

AU OPTRONICS COR CATCHER TECH

127

CATHAY FINANCIAL

29.35

CHANG HWA BANK

79.6

0.887199

4292567

101.5

1.5

10919616

3203014

FUBON FINANCIAL

-0.990099

9548859

-1.417323

6991905

HON HAI PRECISIO

88.7

0.7954545

88523400

11.1 -0.8928571

62439999

HOTAI MOTOR CO

208

0.9708738

201020

21113368

HTC CORP

211

3.178484

38549896

-1.510067

11281705

HUA NAN FINANCIA

15.35 -0.3246753

3923862

14.75 -0.6734007

4092642

LARGAN PRECISION

622

0.3225806

810152

LITE-ON TECHNOLO

37.2

0.2695418

2215325

CHENG SHIN RUBBE

73.1

0.6887052

6440347

CHIMEI INNOLUX C

10.9

-0.456621

65153552

MEDIATEK INC

324.5 -0.1538462

8707585

CHINA DEVELOPMEN

6.53 -0.7598784

16056241

MEGA FINANCIAL H

21.25 -0.7009346

17214033

CHINA STEEL CORP

25.1 -0.7905138

12291142

NAN YA PLASTICS

51.5

1.577909

6299033

CHINATRUST FINAN

16.1

18179275

PRESIDENT CHAIN

144.5

-1.027397

992261

CHUNGHWA TELECOM

91.6 -0.2178649

5382285

QUANTA COMPUTER

66.8

-1.764706

7485859

COMPAL ELECTRON

18.4

-2.12766

14112780

SILICONWARE PREC

28.5

-6.557377

17823181

99.8

-3.106796

7303837

SINOPAC FINANCIA

11.3

-1.310044

7490146

30.25 -0.8196721

4509838

SYNNEX TECH INTL

61.8 -0.8025682

2675398

DELTA ELECT INC FAR EASTERN NEW

FAR EASTONE TELE

67.4

-1.173021

4460470

TAIWAN CEMENT

FIRST FINANCIAL

16.6

-1.190476

9260241

FORMOSA CHEM & F

69.2

-1.142857

4078302

85 -0.9324009

1344638

TAIWAN GLASS IND

FORMOSA PETROCHE

37.45

0.1336898

5217197

TAIWAN COOPERATI

15.2 -0.3278689

5715441

TAIWAN FERTILIZE

69.6 -0.8547009

1606795

27.95

2.380952

1882244

NAME

PRICE DAY %

Volume

TAIWAN MOBILE CO

102

-1.449275

TPK HOLDING CO L

367

5.45977

5282568

TSMC

88.7

0.7954545

26035534

UNI-PRESIDENT

6390153

51.6

1.775148

11296354

UNITED MICROELEC

10.85

-1.363636

17618233

WISTRON CORP

28.05

3.888889

10731134

YUANTA FINANCIAL

13.2

-1.858736

12453811

YULON MOTOR CO

51.1

0.3929273

6640799

MOVERS

3 5050

INDEX 5030.3 HIGH

5044.38

LOW

4976.82

52W (H) 5621.53 4970

(L) 4643.05 29-October

31-October

November 1, 2012 business daily | 13

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

MELCo CroWN ENTErTAINMENT

MGM CHINA HoLDINGS 37.5

27.0 26.8

14.50 14.25

37.0

26.6

14.00 36.5

26.4

Max 26.9

Average 26.539

Min 26.3

Last 26.65

26.2

SANDS CHINA LTD

13.75 Max 37.05

Average 36.993

Min 36.5

Last 36.5

SJM HoLDINGS LTD

28.0

21.8

16.4 Max 17.26

Average 16.876

PRICE

WTI CRUDE FUTURE Dec12

86.39

0.828664799

-11.94577515

110.25

79.11999512

BRENT CRUDE FUTR Dec12

109.43

0.32086542

5.332563288

122.0999985

89.84999847

GASOLINE RBOB FUT Nov12

282.66

3.583992964

13.11829678

299.2899895

218.1499958

950

-0.052603893

5.96765198

1040.25

798

3.723

0.86697372

-0.904977376

4.628000259

2.90899992

NATURAL GAS FUTR Dec12 HEATING OIL FUTR Nov12 Gold Spot $/Oz Silver Spot $/Oz

DAY %

YTD %

(H) 52W

Min 16.74

Last 16.88

21.6 Max 22.25

Average 21.954

309.04

0.12311281

7.822203615

333.8899851

253.3499956

1715.82

0.0922

9.6434

1803

1522.75

32.06

0.0662

15.1787

37.4775

26.1513

1562.3

0.7545

12.033

1736

1339.25

Palladium Spot $/Oz

606.9

1.8494

-7.1308

725.19

553.75

LME ALUMINUM 3MO ($)

1910

0.685292567

-5.445544554

2361.5

1827.25

LME COPPER 3MO ($)

7720

0.272762696

1.578947368

8765

7100.25

LME ZINC

1855

1.643835616

0.54200542

2220

1745

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan13 Dec12

16050

0.500939261

-14.21699626

22150

15236

15.09

0.066312997

-1.725822208

16.60000038

14.60000038

746.75

0.674081564

27.37739872

849

499

WHEAT FUTURE(CBT) Dec12

Last 22

Min 21.85

ASIA PACIFIC

CROSSES

DAY %

1.0391 1.6119 0.9293 1.3 79.8 7.9826 7.7501 6.2373 53.925 30.67 1.2196 29.213 41.165 9624 82.911 1.20806 0.80649 8.1066 10.377 103.73 1.03

0.106 0.2987 0.4089 0.3629 -0.4762 0 0 0.0449 0.0766 0.1304 0.0656 0.1232 0.068 -0.0104 -0.5705 0.043 -0.0657 -0.3812 -0.3594 -0.8194 0

YTD %

(H) 52W

1.7827 3.7058 0.9469 0.3009 -3.6216 0.213 0.2232 0.9251 -1.5948 2.8693 6.3135 3.6491 6.4982 -5.7668 -5.4022 0.7226 3.3354 0.3405 -0.2409 -3.9236 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.3868 84.18 8.0308 7.7979 6.3964 57.3275 32 1.315 30.5 44.35 9662 88.637 1.24569 0.86648 8.7923 11.089 111.44 1.0311

0.9582 1.5235 0.8762 1.2043 76.03 7.9823 7.7498 6.234 48.6088 30.2 1.2152 29.084 41.12 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.0288

MACAU RELATED STOCKS (H) 52W

(L) 52W

2.82

-0.3533569

28.18182

3.25

2.16

7961816

153.6999969

CROWN LTD

9.72

3.624733

20.14833

9.8

7.83

2389260

25.12999916

19.27000046

AMAX HOLDINGS LT

0.069

-2.816901

-20.68965

0.119

0.055

6193000

97.98999786

64.61000061

BOC HONG KONG HO

23.85

1.273885

29.61957

16.24

8862662

0.729501021

19.86111111

953.25

629.5

0.797266515

27.6793075

1781.5

1126.75

157.5

0.190839695

-33.26271186

248.25

SUGAR #11 (WORLD) Mar13

19.62

0.306748466

-16.01027397

COTTON NO.2 FUTR Dec12

71.63

1.001128032

-18.45400729

COFFEE 'C' FUTURE Dec12

MAJORS

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

ARISTOCRAT LEISU

863 1548.75

SOYBEAN FUTURE Jan13

PRICE

(L) 52W

Platinum Spot $/Oz

World Stock MarketS - Indices NAME

22.0

16.6

NAME

CORN FUTURE

22.2

CURRENCY EXCHANGE RATES

GAS OIL FUT (ICE) Dec12

METALS

NAME

PRICE

DAY % YTD %

VOLUME CRNCY

CENTURY LEGEND

0.25

8.69565

0.335

0.204

CHEUK NANG HLDGS

4.29

1.41844

53.21429

4.36

2.5

199099 14156418

CHINA OVERSEAS

20.3

1.601602

56.57059

20.75

11.507

CHINESE ESTATES

12.42

-0.1607717

-0.64

13.26

8.3

238533

CHOW TAI FOOK JE

9.56

-0.4166667

-31.32184

15.16

8.4

2337800

EMPEROR ENTERTAI

1.45

1.398601

30.63063

1.57

0.99

1120000

FUTURE BRIGHT

1.22

190.4762

1.36

0.37

564000

26.65

-0.929368

87.14888

27.45

13.2

10455313 1000107

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13107.21

0.026939

7.281735

13661.87

11231.56

NASDAQ COMPOSITE INDEX

2987.951

0.06138404

14.69401

3196.932

2441.48

HANG SENG BK

119

-0.08396306

29.13727

120

91.05

FTSE 100 INDEX

5850.72

0.01401733

4.996885

5989.07

5075.22

HOPEWELL HLDGS

27.95

2.757353

42.58634

31.091

18.319

2012967

DAX INDEX

7330.95

0.6390368

24.28815

7478.53

5366.5

HSBC HLDGS PLC

76.4

0.9247028

29.49153

76.9

11684789

NIKKEI 225

8928.29

0.9761388

5.593387

10255.15

8135.79

HANG SENG INDEX

21641.82

0.9951196

17.39916

21847.69922

17613.19922

CSI 300 INDEX

2254.82

0.6669101

-3.876039

2781.99

2172.878906

TAIWAN TAIEX INDEX

7166.05

-0.230279

1.328742

8170.72

6609.11

KOSPI INDEX

1912.06

0.6569873

4.72795

2057.28

1750.6

S&P/ASX 200 INDEX

4516.998

0.6980202

11.35044

4581.8

3973.8

4350.291

-0.3277965

13.82261

4366.856

3618.969

FTSE Bursa Malaysia KLCI

1673.07

-0.09554121

9.298829

1679.37

NZX ALL INDEX

863.078

0.2526417

18.26222

874.107

JAKARTA COMPOSITE INDEX

13.50

22.4

16.8

Commodities ENERGY

Last 14

17.0

28.5

Last 29.15

Min 14

17.2

29.0

Min 28.8

Average 17.185

17.4

29.5

Average 29.114

Max 14.3

WyNN MACAU LTD

30.0

Max 29.55

36.0

GALAXY ENTERTAIN

HUTCHISON TELE H

3.22

1.577287

7.692307

3.88

2.77

5923000

LUK FOOK HLDGS I

19.48

-1.317123

-28.11808

37.1

14.7

3788000

MELCO INTL DEVEL

7.51

1.486486

30.15598

8.28

5.12

2704480

MGM CHINA HOLDIN

-1.960784

45.95263

14.76

9.347

2085649

MIDLAND HOLDINGS

3.91

0.7731959

-1.113972

5.217

3.249

3501000

NEPTUNE GROUP

0.153

-3.164557

37.83784

0.222

0.08

1470000

NEW WORLD DEV

11.98

2.044293

91.37379

13.2

6.13

19761615

SANDS CHINA LTD

10624250

29.15

-1.018676

32.80182

33.05

19.96

SHUN HO RESOURCE

1.27

1.6

1.37

0.82

1424.19

SHUN TAK HOLDING

3.09

0.6514658

20.74424

3.51

2.418

2709500

712.548

SJM HOLDINGS LTD

16.88

-1.0551

34.98022

17.72

11.519

8807021

SMARTONE TELECOM

15.66

0.3846154

16.51786

17.5

11.72

1522842

WYNN MACAU LTD

21.95

-0.4535147

12.5641

25.5

14.62

2988628

ASIA ENTERTAINME

3.49

3.254438

-40.64626

7.49

2.4

94072

BALLY TECHNOLOGI

49.82

5.483803

25.93528

51.16

34.75

1733063

PHILIPPINES ALL SHARE IX

3580.59

-0.2001243

17.58762

3607.89

2939.18

HSBC Dragon 300 Index Singapor

595.82

0.5

20.05

STOCK EXCH OF THAI INDEX

1298.82

0.3391454

26.6746

1314.64

945.4

HO CHI MINH STOCK INDEX

388.42

-0.3693634

10.48785

492.44

332.28

BOC HONG KONG HO

3.17

32.2383

3.3

9000

Laos Composite Index

1068.29

0.09557094

18.77015

1068.29

876.33

GALAXY ENTERTAIN

3.43

8.201893

83.42246

3.43

1.68

13079

INTL GAME TECH

12.67

-0.938233

-26.33721

18.1701

10.92

3975509

JONES LANG LASAL

75.17

-1.079089

22.7065

87.52

55.88

280917

LAS VEGAS SANDS

45.97

-0.6054054

7.582496

62.09

34.72

5078568

MELCO CROWN-ADR

14.36

-2.710027

49.27235

16.02

8.18

3506369

MGM CHINA HOLDIN

1.86

-2.105263

56.08044

1.96

1.1917

300

MGM RESORTS INTE

10.59

-2.665441

1.534033

14.9401

8.83

7131409

SHFL ENTERTAINME

14.04

1.66546

19.79522

18.77

10.12

361837

SJM HOLDINGS LTD

2.23

-1.327434

38.71845

2.3

1.4695

1106

118.97

-1.212323

7.674905

138.28

90.108

3151632

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 1, 2012

Opinion A Europe of solidarity, not only discipline George Soros

Chairman of Soros Fund Management and of the Open Society Institute

riginally, the European Union was what psychologists call a “fantastic object,” a desirable goal that inspires people’s imaginations. I saw it as the embodiment of an open society – an association of nation-states that gave up part of their sovereignty for the common good and formed a union dominated by no one nation or nationality. The euro crisis, however, has turned the EU into something radically different. Member countries are now divided into two classes – creditors and debtors – with the creditors in charge. As the largest and most creditworthy country, Germany occupies a dominant position. Debtor countries pay substantial risk premiums to finance their debt, which is reflected in their high economy-wide borrowing costs. This has pushed them into a deflationary tailspin and put them at a substantial – and potentially permanent – competitive disadvantage visà-vis creditor countries. This outcome does not reflect a deliberate plan, but rather a series of policy mistakes. Germany did not seek to occupy a dominant position in Europe, and it is reluctant to accept the obligations and liabilities that such a position entails. Call this the tragedy of the European Union.

will perpetuate the division between creditor and debtor countries. A widening gap in economic performance and political dominance is such a dismal prospect for the EU that it must not be allowed to become permanent. There must be a way to prevent it – after all, history is not predetermined. The EU, originally conceived as an instrument of solidarity, is today held together by grim necessity. That is not conducive to a harmonious partnership. The only way to reverse the trend is to recapture the spirit of solidarity that animated the European project from the start. To that end, I recently established an Open Society Initiative for Europe (OSIFE). In doing so, I recognised that the best place to start would be where current policies have created the greatest human suffering: Greece. The people who are suffering are not those who abused the system and caused the crisis. The fate of the many migrant and asylum seekers caught in Greece is particularly heart-rending. But their plight cannot be separated from that of the Greeks themselves. An initiative confined to migrants would merely reinforce the

growing xenophobia and extremism in Greece.

Solidarity renewed I could not figure out how to approach this seemingly intractable problem until I recently visited Stockholm to commemorate the centenary of Raoul Wallenberg’s birth. This reawakened my memories of World War II – the calamity that eventually gave birth to the EU. Wallenberg was a hero who saved the lives of many Jews in my home city of Budapest by establishing Swedish safe houses. During the German occupation, my father was also a heroic figure. He helped to save his family and friends and many others. He taught me to confront harsh reality rather than to submit to it passively. That is what gave me the idea. We could set up solidarity houses in Greece, which would serve as community centres for the local population and also provide food and shelter to migrants. There are already many soup kitchens and civil-society efforts to help the migrants, but these initiatives cannot cope with the scale of the problem. What I have in mind is to reinforce these efforts.

The EU’s asylum policy has broken down. Refugees must register in the member country where they enter, but the Greek government cannot process the cases. Some 60,000 refugees who sought to register have been put into detention facilities where conditions are inhumane. Migrants who do not register and live on the street are attacked by the hooligans of the neo-fascist Golden Dawn party.

A widening gap in economic performance and political dominance is such a dismal prospect for the EU that it must not be allowed to become permanent

Sweden has made migration and asylum policy a high priority, while Norway is concerned about the fate of migrants in Greece. So both countries would be prime candidates to support solidarity houses. And other better-off countries could join them. OSIFE is ready to provide support for this initiative, and I hope other foundations will be eager to do the same. But this has to be a European project – one that eventually must find its way into the European budget. Currently, Golden Dawn is making political headway by providing social services to Greeks while attacking migrants. The initiative that I propose would offer a positive alternative, based on solidarity – the solidarity of Europeans with Greeks and of Greeks with migrants. It would provide a practical demonstration of the spirit that ought to infuse the entire EU. As soon as possible, I will dispatch an OSIFE needsassessment team to Greece to contact the authorities – and the people and organisations already helping the needy – to work out a plan for which we can generate public support. My goal is to revive the idea of the EU as an instrument of solidarity, not only of discipline. © Project Syndicate

Correcting mistakes Recent developments seem to offer grounds for optimism. The authorities are taking steps to correct their mistakes, especially with the decision to form a banking union and the outright monetary transactions programme, which would allow unlimited intervention by the European Central Bank in the sovereign-bond market. Financial markets have been reassured that the euro is here to stay. That could be a turning point, provided it is adequately reinforced with additional steps toward greater integration. Unfortunately, the EU’s unfolding tragedy characteristically feeds on such glimmers of hope. Germany remains willing to do the minimum – and nothing more – to hold the euro together, and the EU’s recent steps have merely reinforced German resistance to further concessions. This

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November 1, 2012 business daily | 15

OPINION A few Fed numbers worth wires a thousand words Business

Leading reports from Asia’s best business newspapers

Business Standard India yesterday asked Sweden to provide greater market access to its products. The issue was raised by Commerce and Industry Minister Anand Sharma in the presence of Swedish Minister for Enterprise Annie Loof during the meeting of IndoSwedish Joint Commission for Economic, Industrial and Scientific Cooperation. Bilateral trade between the countries stood at US$2.81 billion in 2011-12. India’s imports from SwedenwasUS$2billion,exports were merely US$825 million. Swedish companies like Volvo, Ericsson and Astra Zeneca have manufacturing facilities and research bases in India.

Jakarta Post Palm oil exports from Indonesia dropped 2.1 percent in September to the lowest level in three months as India and China reduced purchases of the most-used cooking oil, according to an industry group. Shipments were 1.38 million metric tons, down from 1.41 million tons in August, the Indonesian Palm Oil Association said on Monday. Palm, used in everything from biofuels to noodles, has suffered this year because of low demand and rising production in Indonesia and Malaysia, where reserves gained to a record level last month.

Korea Times KG Inicis, Korea’s leading provider forvariouscomprehensivepayment services, said on Tuesday it has formed a strategic alliance with Alipay of China in what analysts see as a move to bolster the Korean company’s Chinese presence. Under the alliance, customers in China who have appetites to buy consumer products in Korea are allowed to pay Chinese currency by using Alipay’s processing networks, while registered Korean companies using Inicis’ payment systems will be paid by the South Korean won, Inicis said in a statement.

Business World Philippine importers should maximise the advantages of the Korea-ASEAN free trade agreement (FTA), speakers at the Korea-Philippines FTA Forum 2012 said yesterday. The speakers were also optimistic there will be an eventual FTA between the Philippines and Korea. The ASEAN-Korea FTA, which entered into force in June 2007, provides tariff reductions for certain goods, including automotive parts, and preferential treatment for some sectors through more liberalised trade in services. Trade between Korea and the Philippines grew to US$10.9 million in 2011 from US$9.3 million in 2010.

Michael Feroli

Chief U.S. economist at JPMorgan Chase & Co

odern central banks have been described as “an army with only a signal corps.” It’s an apt portrayal. The instrument that central banks most directly control – the interest rate at which commercial banks lend to each other overnight – affects virtually no transactions that most people care about. But expectations about the path of that rate shape long-term interest rates, which then influence economic activity. The signal that central banks send about this path is how they exert leverage over an economy. Among the world’s central banks, the U.S. Federal Reserve’s signal corps has been the most active in sending out and refining its message. The logical next step is to specify numerical thresholds that will govern the Fed’s deliberations on the timing of its first rate increase since June 2006. More to the point, numerical thresholds will probably involve stating employment and inflation values that would need to be met before the Fed considers raising rates. This is a worthy undertaking, but one that could take time to refine and put into practice. Fed governors have already started the discussion. Further progress at this week’s Federal Open Market Committee meeting would be a welcome development. The Fed’s current calendar guidance – that near-zero interest rates will likely be warranted at least through mid- 2015 – is the FOMC’s best estimate of what constitutes a “considerable period after the recovery strengthens.” This guidance communicates two things at once: the Fed’s economic forecast, and the expected policy response given that forecast.

Numerical thresholds Numerical thresholds downplay the first part, and instead focus on articulating with more specificity the second part – the reaction to economic outcomes. This should provide important benefits. Instead of breathlessly waiting on the Fed to alter its rate guidance, the market can automatically adjust its rate expectations in light of incoming economic data. By focusing on how the Fed will react instead of what it forecasts, the tone of Fed communications should change for the better, too. Calendar guidance often risks sending a pessimistic signal about the Fed’s outlook for the economy. Communicating numerical thresholds, by contrast, would send a more affirmative message about the Fed’s commitment to full employment and price

Ben Bernanke, chairman of the Federal Reserve

stability – a message that should help bolster business and consumer confidence. Make no mistake: the immediate benefit of establishing these thresholds would likely be minimal. After several fits and starts, the Fed has finally pushed back market expectations on the timing of the first post-crisis rate increase. In late 2009, even as the unemployment rate hovered at about 10 percent, markets were expecting the Fed to raise rates at least twice over the following year. Now, the Fed has convinced the market that the first tightening is at least three years away. If the Fed says that rate increases won’t begin until unemployment is at least below 7 percent, that would likely do little to change market expectations on when shortterm rates will rise and, hence, on longer-term rates. Instead, the benefits would slowly accrue over time. A more predictable, stable, rules-based policy framework should reduce uncertainty and prevent another situation like 2009 when interest rates moved at odds with the Fed’s mandated goals. Operational hurdles remain. Take the example of Chicago Fed President Charles Evans’s “7/3” rule, which says the first rate hike won’t occur until the unemployment rate falls below 7 percent, provided inflation doesn’t get above 3 percent. There are still public misperceptions about what the 7 and the 3 really mean.

Minimally acceptable First, Evans has suggested that rates shouldn’t be raised before unemployment falls below 7 percent. After the surprise move down in the September unemployment rate, many analysts misinterpreted the 7 as a trigger rather than a minimally acceptable improvement in the labour market.

A more predictable, stable, rules-based policy framework should reduce uncertainty If unemployment falls below 7 percent (or whatever the threshold is) in a low-quality way – because, say, people are dropping out of the labour force or more people are accepting part-time jobs – there is no obligation for the Fed to raise rates. The Fed would need to emphasise that reaching an unemployment threshold is a necessary but not sufficient condition for tightening. Second, Evans stipulated that 3 percent inflation should be considered a serious enough deviation from the Fed’s 2 percent inflation target that it should release the Fed from its commitment to keep rates low, even if the

employment objective hasn’t yet been attained. Regrettably, many have misinterpreted this to mean that Evans intends to raise the Fed’s inflation objective to 3 percent from 2 percent. The Fed must do a better job of spelling out the distinction between an inflation objective and a threshold that represents an intolerable deviation from that objective. These are tactical issues. The strategic consideration, as it must be whenever a central bank is being innovative or aggressive in spurring growth, is inflation. The inherent conservatism of the Evans rule or similar thresholds is that they contain an automatic inflation firebreak. If structural unemployment is greater than anticipated, the ensuing wage and price inflation would activate the inflation circuit breaker and policy would be free to adjust. Inflation, the greatest risk in a numerical threshold policy, would be inherently limited. Over time the benefits could be large, including more stable, predictable policy-setting that would automatically adjust to ensure interest rates are geared toward getting the economy back to work. Bloomberg View

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business daily November 1, 2012

CLOSING Nomura gets record fine

Disney buys Star Wars firm

Nomura Holdings Inc. was fined 200 million yen (US$2.5 million), the biggest penalty imposed on any company by the Tokyo Stock Exchange, after employees of Japan’s biggest brokerage gave tips on clients’ share sales. The firm’s Nomura Securities Co. unit lacked a proper framework to prevent the misuse of inside information on equity offerings, the bourse said in a statement yesterday. Exchanges in Osaka and Nagoya also fined Nomura. The penalties come after the Japanese Securities Dealers Association last month fined Nomura 300 million yen, the largest by the lobby group against any firm in 12 years.

Walt Disney Co agreed to buy filmmaker George Lucas’s Lucasfilm Ltd and its “Star Wars” franchise for US$4.05 billion in cash and stock, a blockbuster deal that includes the surprise promise of a new film in the series in 2015. Disney plans to release at least three more films in the Star Wars sci-fi saga that ranks among the biggest movie franchises of all time, chief executive Bob Iger told analysts on Tuesday. The last “Star Wars” picture was “Revenge of the Sith” in 2005. Mr Lucas said: “It’s now time for me to pass Star Wars on to a new generation of film-makers.”

U.K. Conservatives demand EU budget cut Cameron faces rebellion within his party

ritish Prime Minister David Cameron faces a rebellion from Conservative lawmakers who are demanding a cut in the European Union budget, highlighting the splits in his party over Europe. Mr Cameron wants the budget to rise only in line with inflation and his spokesman on Tuesday signalled he is ready to wield the British veto in EU talks next month if necessary. More than 30 Conservative lawmakers have backed a rebel amendment to a U.K. parliamentary vote yesterday, demanding Mr Cameron toughens his negotiating stance and argues for a real-terms cut. “This is not an antiEuropean amendment,” Tory lawmaker Mark Pritchard, who introduced the measure, said in a telephone interview. “It merely represents the view

of millions of U.K. taxpayers that the EU budget should not be increased at a time of financial austerity and fiscal restraint in the U.K. which has seen family, local council and government budgets cut.” The European Commission has proposed a spending package of 1.033 trillion euros (US$1.34 trillion) for the years 2014 through 2020, an increase of almost 6 percent compared with the 20072013 budget. EU leaders will try to clinch a deal at a November 22- 23 summit.

Excessive spending Mr Cameron has said the spending proposal is excessive at a time of national fiscal constraints and has vowed to use the British veto for a second time unless he gets “a good deal”. Conservative lawmaker

David Davis, who challenged Cameron for the party leadership in 2005, called the EU budget plans a “selfserving, inflation-busting bonus for Brussels”. “It would force Britain to pay an extra 1.3 billion pounds next year in annual EU contributions, on top of our existing 11 billion pounds,” Mr Davis wrote in the Daily Mail newspaper yesterday. “That’s a hike of more than 10 percent.” But the difficulties in restraining the EU budget were underlined on Tuesday as poorer countries in eastern Europe rebelled against a push to cut subsidies for farming and construction. Mr Cameron’s spokesman signalled the premier is willing to block a deal next month. He became the first British prime minister to use the veto last year when he refused to sign

Barclays in new regulatory probes New investigation into relationships to win business

Barclays reported a pre-tax statutory loss of 47 mln pounds for the third quarter

arclays Plc, already rocked by an interest rate rigging scandal, unveiled two new U.S. regulatory investigations into the bank’s financial probity yesterday and said its profit was hit by charges for mis-

selling insurance. Following investigations in the U.K. over its dealings with Qatari investors, Barclays said the United States Department of Justice and Securities and Exchange Commission

were investigating whether its relationships with third parties who help it win or retain business are compliant with the U.S. Foreign Corrupt Practices Act. The bank is currently under investigation by Britain’s financial regulator and fraud prosecutor into payments to Qatari investors after it raised billions of pounds from the Gulf state five years ago to save it from taking a taxpayer bailout. The Financial Services Authority (FSA) is investigating the bank and four current and senior employees, including finance director Chris Lucas, to determine whether it made adequate disclosure of the fees it paid in a 2008 capital raising. Barclays disclosed the FSA investigation when it released half-year results in July. The FSA investigation relates to fees paid to the Qatar Investment

Cameron ready to wield the British veto in EU talks

up to an EU-wide treaty to enforce fiscal discipline. “We need to be realistic,” Steve Field told reporters in London. “It’s going to be challenging to get agreement. We’re going into that negotiation with good

intentions. We want to try and reach a deal, but it needs to be in our country’s interests.” If no agreement is reached by the end of next year, the 2013 budget would be rolled over into 2014.

Authority on deals in June and November 2008, when Barclays raised 11.5 billion pounds (US$18.5 billion). Barclays declined to comment on whether the U.S. probe was linked to the same transactions. Barclays also said yesterday that the U.S. Federal Energy Regulatory Commission was investigating whether it manipulated power prices in the western United States from late 2006 until 2008. The bank said it would “vigorously” defend this matter.

stakeholders, our universal banking franchise remains strong and well positioned,” Mr Jenkins said. The bank said its adjusted pre-tax profit in the three months to the end of September was 1.73 billion pounds, in line with analysts’ forecasts and up from 1.34 billion a year ago. But a 700 million pound charge for mis-selling payment protection insurance pulled pre-tax profit down 23 percent to 1.03 billion pounds, and a 1.1 billion pound loss on the value of its own debt dragged it to a loss of 47 million pounds for the quarter. Investment bank income was 2.6 billion pounds in the quarter, up 17 percent on the same period the previous year, but down 13 percent on a strong performance in the second quarter. The bank also said performance during October had been affected by the “challenging economic environment and subdued market volumes”.

Charges hit profit New Barclays chief executive Antony Jenkins, who took over at the end of July when his predecessor Bob Diamond quit after the bank admitted rigging Libor interest rates, is in the midst of a review aimed at changing its culture and boosting profitability, which is expected to cut jobs and the size of investment banking. “While we have much to do to restore trust among

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