Macau Business Daily, October 30, 2012 by Business Daily

Year I Number 151 Tuesday October 30, 2012 MOP 6.00 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte

Guangdong investment up, but profits down Investment from Macau and Hong Kong into the neighbouring mainland province of Guangdong reached US$11.9 billion (95.2 billion) in the first three quarters of 2012. The special administrative regions accounted for 63.7 percent of the total outside investment into Guangdong recorded in the first nine months of 2012. But profits for ‘foreign’ businesses, including enterprises from Macau, Hong Kong and Taiwan, declined by 16.1 percent.

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A stone certainty: Macau’s gaming tax

Housing sales risk slowing further H

ousing transactions may undergo further contraction in the coming months, say real estate agencies. The trading volume in October has gone down by at least 20 percent to 800 units compared with September, says Jane Liu Zee Ka, managing director of Ricacorp (Macau) Properties. Many owners have delayed selling their properties – a situation that is expected to last for the traditionally slow period from December to the Chinese New Year, Ms Liu adds. Meanwhile the government’s latest attempt to control real estate prices will have a limited impact on the market, half of the respondents of a survey said, adding they would like to see more measures being introduced. The Macao New Vision Association carried out the poll between October 18 and 19. It made more than 600 phone interviews with Macau residents aged 18 or above. The new property cooling measures will likely lead to an increase in home rental costs, London-listed Macau Property Opportunities Fund Ltd added in its latest investor update.

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Macau’s gaming tax rate is probably ‘set in stone’ for the foreseeable future says an expert on gaming regulation. David Green of Newpage Consulting, based in Macau, told a Singapore conference that with Macau revenue still growing at 12 to 15 percent year-on-year there was little incentive for the government to think about bringing down the 35 percent tax rate on gross bets.

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Money isn’t buying happiness – unions

The city’s five-star hotels here have been the busiest in Greater China since the beginning of last year, according to a report by real estate consultancy Knight Frank LLP. Among the five cities covered, Macau’s luxury hotels had the highest occupancy rate: 87.5 percent last year and in the first nine months of 2012. That strong occupancy rate persisted despite an increase in room supply.

Higher salary levels have not ensured a better life for the city’s workforce, the Federation of Trade Unions says. Economic growth, higher investment and labour shortages will probably mean wages will continue rising in the short-term. But that might not be enough to offset the effects of inflation, other experts told Business Daily. Davis Fong Ka Chio, head of the human resources policy research group at the public Economic Development Council, sees the median income figures for Macau’s workforce including non-residents – 11,700 patacas (US$1,470) a month in the third quarter this year – as a typical reflection of strong economic growth and the inflationary pressure. Meanwhile the government’s think tank is urging the administration to help the city’s middle class to expand. Despite Macau’s world-leading gross domestic product figures, individual and household income is currently distributed unevenly, with a lot of low-income people and a smaller number of very high income ones.

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City’s luxury hotels best performing in China

%Day

ADVANCED SEMICON

4.47

CHIMEI INNOLUX C

4.39

MEDIATEK INC

3.45

PRESIDENT CHAIN

2.82

AU OPTRONICS COR

2.42

WISTRON CORP

-4.13

COMPAL ELECTRON

-4.94

CATCHER TECH

-5.56

TPK HOLDING CO L

-6.72

HTC CORP

-6.99

Source: Bloomberg

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business daily October 30, 2012

macau

Wages predicted to keep climbing Demand for higher pay is inevitable, but not every industry can readily respond with better wages, experts say Stephanie Lai

sw.lai@macaubusinessdaily.com

Think tank defines a ‘middle class’ income

he government’s think tank is urging the administration to help the city’s middle class to expand. Despite Macau’s worldleading gross domestic product figures, household income is currently distributed unevenly, with a lot of lowincome people and a smaller number of very high income ones. The Policy Review Office, headed by Lao Pun Lap, said in a statement released yesterday the middle class can be defined by an individual monthly income ranging from 12,000 patacas (US$1,500) to 78,000 patacas. Mr Lao wrote that the calculation is based on the tax exemption rules in this fiscal year – those earning below 144,000 patacas per year are entitled to tax relief. The upper indicator of being middle class is if individual income is a maximum of six times the resident

median income of 13,000 patacas in the third quarter of this year. “This range can cover employed residents and owners of small- and medium-sized enterprises,” the statement said. “Helping the development of the middle-income group will be one of the focuses for the government’s future policies,” says the think tank. Mr Lao said the administration could help SMEs to develop in mainland China in terms of their financing and human resources. The government should also provide more tax relief to the middle class, as well as providing conditions for residents to engage in continuous education and establishing mechanisms for professional certifications, he said. T.L.

Estate duties will drive up rents Higher pay has not meant a better life for the workforce, a Federation of Trade Unions official says

conomic growth, higher investment and the labour shortage will ensure wages will continue rising in the short run, but the increases may not be enough to offset price inflation, experts say. The median pay of Macau’s workforce of 351,200 rose to 11,700 patacas (US$1,470) a month in the third quarter of this year, the highest since records began in 1996, data released by the Statistics and Census Service on Friday show. For residents, median monthly earnings rebounded to 13,000 patacas in the third quarter after falling in the second for the first time in four years. Davis Fong Ka Chio, the head of the Economic Development Council’s human resources policy research group, regards the pay figures as a reflection of strong economic growth and inflationary pressures. The annual rate of economic growth was 12.6 percent in the first half. The annual rate of inflation fell to 5.69 percent in September, having been above 6 percent for most of the year. “There is usually a time lag of six months to a year until we see economic growth translated into our median income level,” said Mr Fong. “We’ve seen a salary lift in the public administration and companies that responded to inflationary pressure this year, and there’ll be room for a further rise in median income,” he said. In the second quarter civil servants remained the highest paid employees, with a median salary of 22,500 patacas.

Mr Fong said the construction of important infrastructure and casino resorts would continue to propel the upward spiral of earnings next year. Richard Whitfield, a professor at the University of Saint Joseph and the coordinator of the “Macau Business Quality of Life Report”, thinks competition between casinos, each trying to offer better remuneration than the others, will be the main force behind rising earnings in the coming year. “The hospitality industry, as well as restaurants and bars, are doing good and growing fast,” Mr Whitfield said. “But in terms of pushing up wages, they are not catching up with the casinos,” he said. The recreational, cultural and gaming sector pays the secondhighest median salary, 14,000 patacas, the same as the electricity, gas and water supply sector. Although median pay has reached new heights, the director of the Federation of Trade Unions policy research and information department, Lei Chan U, does not think the lives of the workforce are any the better for it. “The trend of rising median income level is inevitable, but no matter how much it goes up, it cannot quite compensate for our diminishing purchasing power,” Mr Lei said. He said small and medium enterprises would continue to struggle to attract workers, especially while the casinos and the government offered a quicker run up the pay ladder.

The Fountainside residential project should be ready in early 2013

he new property cooling measures will likely lead to an increase in home rents, Londonlisted Macau Property Opportunities Fund Ltd said in its latest investor update, released last week. In the case of ‘The Waterside’ complex, the fund’s luxury en-bloc tower located in One Central for lease only, the management says the new measures “could actually help drive rental values”. The new property measures, including new stamp duty rules taking effect today, are largely targeted at non-Macau buyers and the luxury segment, the fund managed by Sniper Capital Ltd said. The fund believes the measures are aimed at averting the overheating of the estate market in face of possible capital inflows caused by the United States economic stimulus programme. “Given that Macau’s property market remains predominantly locally driven, with foreign buyers representing only 20 percent of the market, we view the latest measures

as preventive, rather than punitive, in nature,” it wrote. “Foreigners residing in Macau are likely to shift towards leasing whilst holding back on home purchases,” the fund added. The fund owns several top-end residential properties in Macau, both for sale and lease, but says the new measures are “unlikely to have any significant impact” on its portfolio. The construction of one of those properties, The Fountainside, “is progressing as planned” and should be ready in early 2013, the update says. With more than a third of the project’s total gross floor area already pre-sold, the fund is preparing to launch a second sale period “closer to the project’s completion early next year”. Meanwhile the fund’s is “cautiously optimistic” of launching the construction of a retail project near Senado Square by the end of 2013, even though it has yet to submit the architectural design. V.Q.

October 30, 2012 business daily | 3

MACAU

Flat sales down as curbs kick in Real estate agents say sales will slide further in a market without buyers or sellers Stephanie Lai

sw.lai@macaubusinessdaily.com

A new round of restrictions on credit for home loans and increased stamp duty for foreign investors began this morning (Photo: Manuel Cardoso)

he number of property deals has fallen since the government announced new measures to cool the market, according to real estate agents – and they expect a greater slide is yet to come. A new set of rules to curb real estate prices comes into effect today. The rules further restrict mortgage lending and extend the special stamp duty on transactions to commercial, office and car parks. Property agencies Ricacorp (Macau) Properties Ltd and Centaline

(Macau) Property Agency Ltd said the announcement a fortnight ago had lead to an immediate drop in transaction volumes. Ricacorp managing director Jane Liu Zee Ka said the volume of housing deals this month had dropped by at least 20 percent compared to September. In expensive housing categories, priced at 8 million patacas (US$1 million) or more, transactions were “completely still”, she said. Under the new rules, financial

institutions can only provide up to 50 percent of the finance for residents or 40 percent for non-resident buyers. Ms Liu said many flat owners and investors had put any deals on hold, a stand-off that was likely to continue at least until December, after which the market enters the quiet holiday period until the Chinese New year. “We’ve seen a 10 to 15 percent drop in transaction volumes of flats priced at below 6 million patacas in October,” Ms Liu said. “For the flats priced at around 4

million patacas, many owners have chosen to put them on hold.” The additional 10 percent stamp duty imposed on non-resident buyers and companies has been a strong deterrent to foreign investors. “We’ve seen much fewer sales in the flats priced in the range of 5 to 6 million patacas, traditionally the favourite for investors from mainland China or Hong Kong,” Ms Liu said. Real estate agents said the additional stamp duty had little effect on prices because foreign investors made up less than 10 percent of all buyers here. Centaline senior sales director Jacky Shek Po Tak predicted a further contraction in sales volumes. “Actually, even before the new measures were out, the gap in percentage between the transaction price and the banks’ assessed property value has already been up to 25 percent,” said Mr Shek. “So with the tightened loanto-value ratio now, it’s a lot more difficult for buyers to purchase a flat.” “In the coming two to three months we still have to observe how proprietors will be changing their minds on adjusting the price.” The government’s recent announcement that up to 29,230 flats were waiting for approval ahead of being released into the market has not helped, the agents said. A lack on detail on when they would go on sale had not offered much in the way of reassurance, they said.

New market rules futile, says survey People tell the Macao New Vision Association that long-term solutions to the problem of housing prices are needed Tony Lai

tony.lai@macaubusinessdaily.com

he government’s latest attempts to control real estate prices will have a limited effect, according to nearly half the respondents in a survey. The survey found that 46.4 percent of the people interviewed believe the new curbs will be of little or no use, while only 19 percent think the measures will cool the market. More than 30 percent said they were unaware of the measures. The Macao New Vision Association carried out the survey on October 18 and 19. It interviewed 658 residents aged 18 or older over the telephone. The vice-president of the association, Lou Shenghua, told a press conference yesterday that this shows residents “do not have enough confidence” in the property market curbs. Mr Lou said this was due to “a complete mismatch between what the citizens desire and what the government actually implements”. Most respondents suggested that the government should speed up the approval of new housing projects to increase the supply of homes. Capping the prices of flats and

giving priority to residents that wish to buy homes were the other favoured solutions to the problem of unaffordable housing. The government recently announced eight new measures meant to rein in property prices. They include speeding up the approval of new housing projects, tightening the mortgage lending rules and imposing heavier duties on purchases of property by foreigners and corporations. “The government can include what the citizens want in the coming Policy Address,” said Mr Lou, who is an academic at the Macau Polytechnic Institute. “If the administration does not have enough time to do this … they should review the current regulations and come up with a compromise,” said Mr Lou. Chief Executive Fernando Chui Sai On is due to deliver his annual Policy Address on November 16. The survey found that 14.6 percent of respondents would like Mr Chui to announce the quickening the construction of public housing, 13.6 percent would like him to announce stronger curbs on the property

market and 6.7 percent would like him to announce measures to stabilise consumer prices. Mr Lou said these findings were similar to the results of a survey last year. “What the government has done since last year is not enough to satisfy social needs,” he said. Mr Lou said more residents would like further welfare measures, including the cash handouts meant to compensate for inflation.

Two-fifths of respondents said they wanted a cash handout of 10,000 patacas (US$1,250). The chairman of the Macao New Vision Association, Li Lue, said the government should make it clear that the cash handouts would not be regular. The government handed out 7,000 patacas to permanent residents this year and 4,200 patacas to nonpermanent residents.

Increasing the supply of housing is the preferred method of cooling the market, a survey finds

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business daily October 30, 2012

macau Aviation regulator updates charges The Civil Aviation Authority of Macau has updated its service charges for the first time in 17 years, in an executive order published in yesterday’s Official Gazette. The aviation regulator charges had remained unchanged since 1995, still during Portuguese administration. Starting next month the minimum cost of an air operator’s certificate will rise from 3,500 patacas (US$440) to 5,250 patacas per aircraft, while the maximum will reach 210,000 patacas, up from 140,000 patacas for the bigger airplanes. The order also introduces charges for certification of aerodromes and heliports.

Macau, Hong Kong lead Guangdong investment The special administrative regions are the source of the greater part of external investment in South China’s economic powerhouse Tony Lai

tony.lai@macaubusinessdaily.com

acau and Hong Kong still play the dominant role in external investment in the neighbouring province of Guangdong, accounting for nearly two-thirds of investment there so far this year. Data from the statistics bureau in Guangdong show the two cities were the source of US$11.9 billion (95.2 billion patacas) or 63.7 percent of the external investment utilised in Guangdong in the first nine months of this year. Mainland China’s official news agency, Xinhua, said even more investment had been officially approved but had yet to be made. Capital from Macau and Hong Kong accounted for US$17 billion or 72.8 percent of the external investment officially approved in the first nine months. Counted separately, Macau’s investment in Guangdong made

US$11.9 bln

Amount invested in Guangdong by Macau and Hong Kong this year

Two-thirds of the investment in Guangdong province this year came from Macau and Hong Kong firms

it the seventh-biggest external investor, and the ninth-biggest source of external investment officially approved in the first nine months. Hong Kong on its own is still the biggest external investor in Guangdong. The statistics bureau in Guangdong gave no details of the investments. Its data show US$18.7 billion in capital from abroad was invested in the province in the first nine months, 8.9 percent more than a year before, and that US$23.4 billion in investment from more than 90 countries was officially approved, 0.3 percent more. The British Virgin Islands,

Singapore, Japan and South Korea were big foreign investors there. External investment in Guangdong keeps increasing despite what data released by the provincial statistics bureau in August indicate are unfavourable business conditions there for enterprises from abroad. The combined first-half profits of enterprises from abroad – including Macau, Hong Kong and Taiwan enterprises – declined by 16.1 percent to 93.38 billion yuan (116.7 billion patacas). Xinhua quoted analysts as blaming the decline on rising operating costs and a weakening of demand.

Macau-funded projects in Sichuan completed

ll of the 103 reconstruction projects in the western province of Sichuan financed by the Macau government have been finished, Secretary for Social Affairs and Culture Cheong U’s staff said on Sunday. Mr Cheong is leading a Macau government delegation on a four-day visit to Sichuan to inspect the progress of reconstruction work to rehabilitate the province after the 7.9-magnitude earthquake there in May 2008. The Macau government has allocated about 4.2 billion yuan (5.25 billion patacas) for reconstruction. The Sichuan provincial government said more than 30 million yuan had yet to be spent, but that the two governments would work out a way to spend it on infrastructure. Mr Cheong said the Macau government was “delighted” to see the completion of the work, which meant the end of the city’s assistance to Sichuan. The projects include water treatment plants, homes, roads, medical facilities and schools. In May it was reported that a school there rebuilt with money from Hong Kong was torn down less than a year after it opened to make room for expensive homes. The Macau and Sichuan governments said nothing similar had happened to facilities rebuilt with Macau money. T.L.

October 30, 2012 business daily | 5

MACAU

Drivers’ passion for power sends car sales skywards Three of the biggest brands in luxury and sports motoring have recorded some of their best sales this year Vítor Quintã

vitorquinta@macaubusinessdaily.com

Rolls-Royce opened its Macau showroom in March and the city already has 127 Rolls-Royces

ales of some of the world’s most expensive imported cars have increased this year, according to dealers here. German automaker Porsche has delivered 28 of its four-door Panamera saloons to customers here in the past 12 months, Porsche Centre Hong Kong and Macau marketing manager Jess Lam told Business Daily last week. The launch of the Panamera in 2009 is credited with opening

new markets for Porsche in Macau, leading to record sales. “We have been pleased with the customer response,” said Ms Lam. She expects sales to continue to grow. Rolls-Royce Motor Cars Ltd has sold 15 vehicles in Macau this year – a good result, the brand’s director of customer relations, John Lu, told Portuguese-language newspaper Tribuna de Macau. Casino operator Sands China

Civil servants demand 6.8 pct wage hike

he Macau Civil Servants’ Association is urging the government to raise the salaries for public workers by 6.8 percent next year. “This hike is used to cover the loss of the purchasing power for the civil servants as they face soaring inflation,” said legislator José Pereira Coutinho, the head of the association, after meeting with Macau’s Chief Executive Fernando Chui Sai On yesterday. Mr Coutinho said the requested increase is based on his members’ calculation of this year’s inflation. Average composite consumer price index inflation was 6.39 percent for the 12 months to September 30 according to the government data. The 6.8-percent pay rise demanded by the association would represent an increase of the government workers’ salary index from 66 patacas (US$8.25) to 70.5 patacas. The civil service payroll has had five increments since Macau’s handover from Portuguese administration in December 1999. The most recent was a 6.45

percent in May. When asked about public reaction toward the proposed hike, Mr Coutinho said, “It’s good for the public too. When the government takes the initiative to increase the civil servants’ salaries, the businesses in other industries will follow this lead too.” Another public workers’ group – the Professional Civil Servants’ Association of Macau – also asked last week for a six-percent increase next year. Mr Coutinho’s group has also urged the government to reserve more flats for civil servants to rent – only 160 flats for public servants have been put in the market since 1999 – and to increase available civil service allowances for marriage and wedding and birth allowances. The association also suggested the government should develop flats for residents in publicprivate partnership. Mr Chui was “open to these suggestions” and the meeting ended on a good note, added Mr Coutinho. T.L.

Ltd ordered eight Phantom Series II models. Each is worth about HK$7 million (US$900,000).

Mr Lu said they would be delivered in early March. It was Rolls-Royce’s single biggest order of Phantom Series IIs in the Asia-Pacific region. BMW Concessionaires started selling Rolls-Royces in Macau in 2005. In 2009 the company sold just one car. Rolls-Royce Motor Cars Ltd opened its first showroom here in March and the city now has 127 Rolls-Royces. Some are used as limousines by casino operator Wynn Macau Ltd. There is a similar story in the sales of Lamborghini sports cars. Ten have been sold so far this year, the company’s director for Macau, Thomas Wong, told to Tribuna de Macau. He said sales had been “very good”, considering the small size of the population. The Lusa news agency reported there were now 46 Lamborghinis in Macau among the 524 cars costing more than US$100,000 that have been registered. The most popular brand among the well-to-do is Bentley – there are 181 licensed. Gaming tycoon Stanley Ho Hung Sun has one registered in his name. The public’s passion for powerful and luxurious cars helps explain an increase the increased attendances at the China (Macau) International Automobile Exposition, which have grown by up to one-third in the past few years. According to a survey carried out by the Macau Economic Association, more than half of all visitors to the event were residents, followed by mainland Chinese, 28.2 percent, and Hong Kong residents, 12.8 percent.

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business daily October 30, 2012

macau

Macau gaming tax rate likely ‘set in stone’ Govt unlikely to shift on near 40 pct effective rate despite fresh regional competition Associate Editor

Rich harvest – Macau gaming tax

acau is unlikely to reduce its near 40 percent effective tax rate on casino gambling, gaming lawyers and regulators have been told. David Green of Newpage Consulting, based in Macau, made the remarks at the International

Association of Gaming Advisors’ 2012 International Gaming Summit in Singapore. “I’m not aware of any proposal for Macau to reduce its gaming tax rate. Its 35 percent rate is pretty much set in stone. And if you’re still achieving 12 percent to 15 percent [annual

revenue] growth after ten years, then there’s probably no compelling reason to cut it back,” he explained. And with gross gaming revenue bringing in 267.87 billion patacas (US$33.6 billion) last year, a near 40 percent effective rate means a massive tax harvest for the Macau government.

Mr Green is a former director of the gaming practice for financial services company PwC (then known as PricewaterhouseCoopers) and an expert on gaming regulation. With new casino projects under construction or proposed in many Asian jurisdictions including the Philippines, South Korea and Taiwan, gaming tax rates are however coming under scrutiny. Gaming tax is commonly (though not exclusively) levied on the gross amount of money bet. In some jurisdictions, including Singapore and the Philippines, gaming tax is applied in a two-tier system – with lower percentage tax rates for high volume VIP gambling and higher rates for mass-market play. Macau levies 35 percent across the board on all bets. When another four percent in other applicable taxes is included, it makes Macau’s effective tax rate on gambling close to 40 percent. Some industry executives believe low gambling tax rates can create a competitive advantage for a casino jurisdiction and help it to attract players willing to travel long distances. Last week Michael French, chief operating officer of Solaire Resort & Casino Manila – a new US$1 billion integrated resort being developed by Bloomberry Resorts Corp. at Entertainment City in Manila, the Philippines’ capital – told Business Daily that his jurisdiction’s low gaming tax rates would give his venue an edge. “…if we only pay 15 percent tax and Macau [operators] pay 40 percent tax, we’ve got 25 percent to play [work] with. We intend to use some of that leeway to reward our junket partners with a higher commission,” he told Business Daily.

US$100 mln to stay in MPEL’s Manila casino deal Leisure & Resorts World Corp. pays toward of shell construction costs in return for revenue share

eisure & Resorts World Corp. is to pay four billion Philippine pesos (US$97.1 million) to maintain an equity stake in the Belle Grande Manila Bay casino project in the Philippines and in return get a share of its eventual earnings. Doubts were raised about the continued involvement of the Manila-listed firm after Macau casino operator Melco Crown Entertainment Ltd confirmed last week it was taking over the fitting out of Belle Grande and the management of the casino, investing up to US$600 million in the scheme. Leisure & Resorts World had previously signed a memorandum of agreement with Belle Grande’s builder, Belle Corp., – a firm controlled by the family of FilipinoChinese entrepreneur Henry Sy – whereby LRWC would have managed the gaming operations at the resort. Blue Chip Gaming and Leisure Corp. – a 70 percent-owned subsidiary of LRWC – already runs several Philippine casinos. Under the original agreement, LRWC’s wholly-owned subsidiary AB Leisure Global Inc. was to be paid a share of either Belle Grande’s earnings before interest, taxation, depreciation and amortisation (EBITDA) or a share of the casino’s net win – whichever was the greater. MPEL’s announcement to the New York Stock Exchange didn’t mention Leisure & Resorts World Corp. by name in the deal, and referred to

MPEL as “the sole and exclusive representative of the licensees in connection with the casino license and the operation and management of the project”. That led to some speculation that LRWC was out of the deal. But as sources told Business Daily prior to the official MPEL announcement, LRWC was in effect told it would have to pay US$100 million if it wanted to stay inside the project.

Earnings stream That money will now go towards Belle Corp.’s construction costs. In return LRWC will get a share of Belle Corp.’s portion of the earnings from the gaming resort. Independent brokerage CLSA Asia-Pacific Markets estimates the entire country’s casino revenue will reach US$3 billion by 2015, compared to US$1.3 billion last year. It thinks much of the revenue growth will be driven by the supply of up to four casino resorts being built at Entertainment City by Manila Bay in the country’s capital. Belle Grande’s casino licence issued by the country’s regulator and state casino operator – the Philippine Amusement and Gaming Corporation – is expected to run until July 2033. LRWC was granted a one-hour trading suspension for its stock on the Philippine Stock Exchange yesterday while it clarified its

Work in progress – Belle Grande Manila Bay

position. The company said in a statement to the bourse that LWRC’s cash contribution of four billion pesos is to be paid for via “debt and internally generated income” said the firm in its filing. In return LWRC will be entitled to 30 percent of the 50 percent of annual resort EBITDA that will accrue to Belle unit Premium Leisure and Amusement Inc., or to 30 percent of PLAI’s 15 percent share of casino net win – whichever is greater. The four billion pesos investment is equivalent to an overall economic interest of six percent in the project, with 44 percent for Belle, said Cora Guidote, investor relations officer at the Sy family’s holding company

SM Investments Corp. which has the controlling interest in Belle Corp. The opening of Belle Grande is likely to be in the first quarter of 2014, a source with direct knowledge of the matter told Business Daily last week. And MPEL is still pursuing a Manila listing for a subsidiary in order to raise as much as half of the US$600 million it is committed to spending, Business Daily has been told. Sources say it is currently talking to an existing Manila-listed company – specialising in construction materials – about the possibility of injecting its Belle Grande asset into that local firm. A.E.

October 30, 2012 business daily | 7

MACAU

Macau luxury hotels the busiest in China Hotel growth is expected to slow but the future is still rosy, given developments such as the Chimelong International Ocean Resort, a survey shows Vítor Quintã

vitorquinta@macaubusinessdaily.com

ive-star hotels in Macau have been the busiest in Greater China since the beginning of last year, according to the results of a recent survey which, however, predicts that the hospitality boom will slow next year. Among the five cities covered by the survey, conducted by estate agency and consultancy firm Knight Frank LLP, Macau’s luxury hotels had the highest occupancy rate: 87.5 percent last year and 86.3 percent in the first half of this year. The city’s five-star hotels for the first time registered a higher average occupancy rate than their Hong Kong counterparts, which posted a rate of 82 percent in the first half. Macau and Hong Kong top the rankings, leading Beijing, Shanghai and Guangzhou, where occupancy rates hovered around 60 percent. The occupancy rate for five-star hotels in Macau remained high even though the number of rooms and the average room rate both increased. The opening of the Galaxy Macau resort in Cotai added 2,200 five-star hotel rooms to Macau’s supply last year, while the average room rate rose by 12.3 percent, according to the Macau Hotel Association. “This remarkable pace is likely to slow in the short term as demand softens due to the gloomy world economic outlook and slower economic growth in mainland China,” Knight Frank’s survey report says.

The numbers so far this year support this prediction, the average room rate having risen by 5.9 percent in the first nine months to 1,567 patacas (US$196) and the occupancy rate having risen by just 1.2 percentage points to 87.5 percent.

Ocean of money “With growth in visitor arrivals likely to be moderate, growth in hotel occupancy rates and [the average daily room rate] will likely be significantly slower in the coming year,” Thomas Lam, Knight Frank’s head of research for Greater China, says in the survey report. But Mr Lam is bullish about Macau’s hotel market in the long run, citing increasing demand from tourists and business travellers. With China’s tourism market expected to continue to grow rapidly, the country as a whole will remain an attractive hotel market in need of more rooms, the report says. “International hotel operators have shown strong confidence in China’s market and are pursuing aggressive expansion plans,” it says. The outgoing head of the Government Tourist Office, João Manuel Costa Antunes, said in July that Macau was expected to gain up to 50,000 hotel rooms in the next five years. Knight Frank is also keeping an eye on Hengqin’s Chimelong

The opening of the Galaxy Macau added 2,200 five-star hotel rooms to the city’s inventory

International Ocean Resort, which is under construction and should be completed next year. “The development should not be in direct competition to Macau’s fivestar hotel market, as future hotels there are expected to serve a different market segment,” the report says. “Given its proximity to Macau,

its ease of access and presumably a longer length of stay of visitors to its theme parks, Hengqin’s development will be a new driver for Macau’s tourism and gaming markets,” Mr Lam says. “This will mark an important step for Macau towards greater economic diversification.”

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business daily October 30, 2012

GREAT CHINA Clearwire to use Huawei equipment Wireless service provider Clearwire Corp said it will use equipment from China’s Huawei in a highspeed network upgrade it starts in 2013, with the blessing of the U.S. government. Clearwire said it reviewed its plans “with the technical arms of multiple federal agencies” and that it has “great respect for the U.S. government and their oversight role over the nation’s infrastructure.” The decision follows a U.S. congressional report earlier this month that said Huawei network equipment should be kept out of the U.S. market as potential Chinese state influence could pose a security threat. Clearwire’s biggest shareholder and customer is Sprint Nextel, which provides telecom services to the U.S. government. Sprint, which is being taken over by Softbank Corp , plans to use the Clearwire high-speed network to boost its capacity for its own service. Clearwire, which already uses Huawei gear for its existing service, plans to use the Chinese vendor’s technology to upgrade its network in markets where Huawei equipment is already in use. He said Huawei represents less than 5 percent of Clearwire’s total budget for the network upgrade to Long Term Evolution Technology and that the company is “materially reducing their footprint” for its LTE network.

Guangdong Nuclear sells 1.5 bln dim sum bond State-owned China Guangdong Nuclear Power Holding has completed the sale of its first offshore yuan bond, raising 1.5 billion yuan (US$240 million) via a 3-year bond at the tight end of 3.75 percent, two sources with knowledge of the deal said on Friday. The initial price guidance range for the dim sum bond was 3.85-4 percent and was narrowed to 3.75-3.85 percent later due to strong demand, the sources said. The issue has a rating of A+/A3 (Fitch/Moody’s). China Guangdong Nuclear Power Holding was established in September 1994 with a registered capital of 10.2 billion yuan with nuclear power as its core business. Bank of China International (BOCI) and China Development Bank are joint global coordinators of the deal. BOCI, Agricultural Bank of China International and Industrial and Commercial Bank of China (Asia) work as joint bookrunners and lead managers. China’s National Development and Reform Commission granted a 25 billion yuan quota to mainland corporates to issue yuan bonds offshore. Before Guangdong Nuclear’s transaction, only Baosteel Group used up its 6.5 billion yuan quota. Hong Kong’s offshore yuan bond market has developed rapidly since the first dim sum bond was issued in July, 2007. Total issuance volume has reached 116.7 billion yuan over year to date.

Toyota misfires with Chinese Company seen as not thinking local enough Norihiko Shirouzu

he roots of Toyota Motor Corp’s China troubles run far deeper than the anti-Japan protests that have swept the country, stretching back to the 2008 launch of the Yaris subcompact - a spectacular flop with price-conscious Chinese buyers. The car, a success elsewhere, was meant to help build brand loyalty and send Toyota hurtling towards a still-unattained goal of selling one million vehicles annually in the world’s largest auto market. However the Yaris missed the mark with China’s traditional higherend customers as well as its new emerging middle class. To some company insiders and dealers it epitomises all that does not appeal to the status-conscious, lacking what the Chinese call ‘daqi’ or ‘road presence’. Next to Nissan Motor Co Ltd’s pricier Tiida, for example, it feels small and lacks oomph. But for frugal first-time buyers, the Yaris which is priced from 87,000 yuan (US$13,900) was a non-starter, costing some 55 percent more than General Motor’s Chevy Sail and putting Toyota at a competitive disadvantage in a must-win market. “The Yaris is too expensive, way too sleek for its target market. This group of consumers is very, very price sensitive,” said an operator of a few dozen Toyota dealerships across China. Toyota sold an average of just 1,250 Yaris cars a month in China in 2012 data through August, before the territorial row between Japan and China flared up in September. By contrast, Nissan sold 12,000 Tiida subcompacts per month and GM moved 17,000 Chevy Sails. The Yaris shows how Toyota misread the evolution of China’s auto market. Surprised by how

Yaris failed to woo in the mainland consumers

quickly the emerging middle class grew rich enough to buy cars, the automaker failed to grasp that the vast majority of those new buyers preferred no-frills models. Even now, with a new entry-level vehicle for China on the way, company insiders and dealers are not sure if Toyota has learnt enough from a valuable lesson about the importance of localising.

Black eye The misstep in China is a black eye for Toyota CEO Akio Toyoda, the founding-family scion who

used to run the automaker’s China operations, and who also has had to deal with a major recall scandal and last year’s Japan quake and tsunami that paralysed parts production. Back in 2003, he and his lieutenants set the “aspirational” goal of selling one million cars annually by 2010 or taking 10 percent of the China market, said a senior China-based Toyota executive, who did not want to be identified because he was discussing non-public information. The automaker will again likely fail to sell one million units this year and Toyota officials have laid the

Slowing revenue may limit po Additional spending may need budget expansion Ningbo opposes chemical project after protests The city of Ningbo said it “firmly opposes” a project to produce the toxic chemical paraxylene at a local plant after hundreds of residents protested. Authorities will halt early work on the facility and study the project further, according to a statement posted to the website of the government of Zhenhai district, where the plant is located. More than 1,000 residents protested against an expansion of the plant owned by Sinopec. The Ningbo protests are the latest in a series of confrontations pitting residents against local governments over pollution concerns linked to industrial projects. Thousands of people in the city of Shifang protested in July over the construction of a molybdenum copper plant, and demonstrators in Dalian succeeded in getting a chemical factory closed last year on environmental grounds. The demonstrations in Ningbo started on October 24 when about 200 villagers began petitioning over environmental concerns and blocked traffic. Paraxylene is a toxic petrochemical used in plastics, paints and cleaning solvents. Ningbo pledged to conduct an environmental assessment of the facility. Chen Bingrong, the city’s vice secretary general, said the study would be done in a “public and transparent” way and that all details of the project would be released publicly.

hina’s government spent more than planned in the first nine months of the year, and revenue gains moderated, leaving little room for public outlays to stoke the economy this quarter without an expansion of the budget. Fiscal revenue rose 10.9 percent in January-to-September from a year earlier to 9.06 trillion yuan (US$1.5 trillion), compared with a 29.5 percent gain in the same period in 2011, Ministry of Finance data showed this month. Spending in the January-September period rose 21.1 percent, higher than the targeted 14.1 percent rise for the full year, leaving a surplus of about half last year’s level. “The effects of China’s fiscal policy were expansionary in the first nine months but will be neutral in the fourth quarter as spending won’t be higher than a year earlier,” said Ding Shuang, senior China economist with Citigroup Inc. in Hong Kong, who formerly worked at the People’s Bank of China and International Monetary Fund. “Policy effects from previous

months will ensure a modest recovery, but the rebound is restrained.” Policy makers across Asia have restrained their stimulus efforts compared with 2008-2009 as the global expansion slowed, either opting to preserve firepower should Europe’s crisis worsen, or seeking to avoid assetprice bubbles. In China, departing Premier Wen Jiabao’s government has fought to rein in housing costs in the run-up to the nation’s once-ina-decade leadership transition that starts next month.

Allocated funds The Finance Ministry had allocated 97 percent of the year’s budgeted funds for infrastructure spending by the end of September, the official Xinhua news agency reported on October 23. In railways, for example, China boosted spending plans this year by about 25 percent to 516 billion yuan. The 2012 budget endorsed in March by China’s rubber-stamp National People’s Congress set a target deficit of

800 billion yuan and any change would require the legislature’s approval. “The fiscal money left for spending in the coming months is actually very limited,” Song Guoqing, an academic adviser to the central bank and professor at Peking University, said in an October 18 speech in Beijing. “That will put a question mark on whether the present economic recovery will be sustained.” “The government can revise the budget if it really wants to,” Mr Song said. “So far there is no sign that the budget will be altered this year.” Data released this month suggest the worst is over for China’s growth slowdown. Factory production, retail sales and fixed-asset investment showed bigger-than-forecast gains in September, while industrial companies’ profits rose for the first time in six months. Five out of 25 economists surveyed in October forecast at least one lending-rate cut by year-end, down from 15 of 25 in September’s survey. Bloomberg

October 30, 2012 business daily | 9

GREAT CHINA

buyers

market share objective several years ago,” said a major operator of Toyota dealerships who declined to be named because of the sensitive nature of his comments. Toyota spokesman Akihiro Yamamoto declined to comment on the dealer’s view, saying only that the company should “continue to strive to provide products that satisfy and appeal to more Chinese consumers.”

Think local

blame squarely on the territorial row that halved September sales. Its longer-term pledge to boost sales to 1.8 million cars a year by 2015 also looks like a stretch. Toyota and its local Chinese partners sold 883,400 vehicles in China last year. But some Toyota dealers lament what could have been, if the automaker had had an entry-level model that sold as many as 100,000 vehicles a year as initially envisioned for the Yaris. “If they had executed their small car planning right, Toyota could have easily hit that 1 million unit sales milestone or 10 percent

Toyota’s fix for the Yaris problem is a new, affordable minicar that it has developed specifically for China. Toyota sources told Reuters that the car is loosely based on the nofrills Etios, which sells for as low as US$8,350 in India and is expected to hit showrooms in China as early as next year. The Japanese automaker is adding a few upgrades to appeal to Chinese consumers, taking the price tag closer to US$10,000, according to the Toyota sources, who spoke on condition of anonymity because the details are confidential. That would make it more competitive with GM’s Chevy Sail, which costs about 56,000 yuan (US$9,000) and well below the Nissan Tiida, which starts at about 100,000 yuan (US$16,000). To succeed, it must not repeat the mistakes of the Yaris and some insiders say that at the core of Toyota’s China problem is a failure to localise that has its roots in Japancentric thinking. The planners thought the car was too shabby for Chinese buyers and decided to introduce it in India instead. That car later became the Etios. Nor did Toyota seek help from its minicar affiliate Daihatsu Motor Co Ltd, believing Daihatsu cars were not upscale enough. It also felt no immediate need to come up with a low-cost China car designed from the ground up. Instead, several top executives pushed the Yaris because it was one of the few lower priced left-handdrive small cars available and it had a global supply base for parts that could be used in China.

olicy options

Limited margin for expenditure in the last quarter

Reuters

Liquor companies make strong quarterly profits Govt clampdown on luxury expenses yet to be felt

Consumption of alcoholic drinks keeps increasing

hina’s high-end liquor companies raised prices in a faltering economy and faced a Beijing clampdown on drinking their pricey booze at banquets, yet still managed to turn in strong quarterly profits. Kweichow Moutai Co Ltd, China’s leading maker of the potent and expensive baijiu liquor, reported a doubling of its third-quarter net income to 3.4 billion yuan (US$544.72 million). Its biggest rival, Wuliangye Yibin Co Ltd, said last week it expects a nearly 90 percent rise in its thirdquarter profit on higher production and robust sales. Wuliangye Yibin will report its results next week. Repeating that success in the current period may be tough. Analysts said a government clampdown on using public funds to buy luxury items such as baijiu, announced in March, had a limited impact on high-end liquor firms because of private sector demand and stronger sales of lower-end brands. But Zhao Yong, an analyst with Haitong Securities, cautioned that the impact of the crackdown on luxury gift-giving could be felt in the coming months. “There may not be such a big impact now as most of the gifting occurred from the budget set in the first half of the year. However, moving forward there may be a bigger impact seen,” he said. Kweichow Moutai said on September 4 it had raised prices on some of its products by as much as 30 percent from the start of that month. The hike came late into the thirdquarter period, so it may have a greater impact on the current quarter’s sales. Baijiu was the largest category in the global spirits market in 2010,

accounting for more than a third of the total, according to a Credit Suisse report this month. The rise of China’s alcohol makers come as China’s burgeoning middle class and wealthy become more comfortable splurging on red wine, cognac and baijiu to show off their rising status. It has continued to grow even as China’s economy slowed for the seventh straight quarter during the July-September period, thanks to rising incomes and government policies that supported consumer spending. Moutai said on Friday it will invest a total of 6.31 billion yuan (US$1 billion) in seven projects to expand production capacity. Foreign brands have enjoyed success too. Australia’s Treasury Wine Estates, which has been pushing its premium wines including Penfolds and Beringer in China with high-end product launches, aims to sell into 100 Chinese cities over the next five years, up from 15 now. “We have not actually seen any evidence of a real slowdown in Asia at all,” chief executive David Dearie told reporters this week. Treasury Wine is the world’s second-largest wine company. Australian government data released last week showed bottled wine exports to China surged 23 percent by value in the year to September, and 16 percent by volume. Not everyone fared well, however. A media storm over pesticide residue hurt sales at Yantai Changyu Pioneer Wine, a leading maker of red and white wine in China. Its net profit fell 38 percent in the quarter, which the company blamed on negative media coverage and increased marketing costs. Reuters

10 |

business daily October 30, 2012

ASIA

India’s oil minister vows speedy decisions Vows to push domestic oil firms to bid for energy assets overseas

We have to create a level of confidence among investors. The emphasis will be on quick decisions as delayed decisions cost the nation Veerappa Moily, India’s Petroleum and Natural Gas Minister

Shares in Reliance Industries rose nearly 2 percent yesterday

ndia’s new oil minister has promised to speed decision making in an effort to attract foreign investment, and will push domestic oil companies to aggressively bid for foreign oil and gas assets to meet growing energy demand. Veerappa Moily was appointed as the country’s new Petroleum and Natural Gas Minister, replacing Jaipal Reddy, as part of a broader cabinet reshuffle unveiled on Sunday. Mr Moily said his ministry would create a roadmap to help the energystarved nation improve its investment climate and increase oil and gas output and build downstream infrastructure, such as liquefied natural gas terminals and pipeline networks. “We have to keep our doors and windows open for whosoever

wants to invest here,” Mr Moily told reporters yesterday. “We have to create a level of confidence among investors. The emphasis will be on quick decisions as delayed decisions cost the nation.” Shares in Reliance Industries Ltd rose nearly 2 percent on hopes the appointment of a new oil minister would improve what has been seen as a contentious relationship between the energy conglomerate and the Indian government. Reliance, controlled by billionaire Mukesh Ambani, Asia’s secondrichest man, had clashed with the oil ministry under Mr Reddy over gas output at the conglomerate’s KG-D6 block on India’s east coast. Reliance and partner BP Plc have blamed a decline in pressure and

water ingress for falling production, and sought an increase in gas prices to justify higher expenditure to develop the block, but the government has so far remained unconvinced. Asked if he favoured a revision in the price of gas from the D6 block earlier than a review scheduled for 2014, Mr Moily declined to address the matter specifically. “I don’t want to take name of any particular company ... It is a matter of detail ... Decisions will be quick and hastened,” he said.

Loosen regulation Investors will welcome Mr Moily’s appointment, said one industry analyst at a large domestic brokerage, who declined to be identified.

“Sentiment-wise this would be positive, as with the earlier minister approvals were not coming on time. Talks between the company and the ministry may improve.” The new minister may fasttrack some approvals, said V.K. Vijayakumar, an investment strategist at Geogit BNP Paribas. “Further approval regarding the joint application by Reliance Industries and BP for KG-D6 gas might get expedited, that is one possibility,” he said. Mr Moily said India had attracted US$13 billion worth of investment in the nine auctions held under its licensing policy since 1999. India plans to relax rules for oil and gas exploration licences in time for the next bidding round, so as to attract global companies. In the past, regulatory uncertainty discouraged many of them from bidding for exploration blocks. Mr Moily said there was a need to boost investment in the exploration sector, adding that he would mobilise resources from every avenue, including getting the external affairs ministry to encourage local oil companies to buy assets abroad. Without directly touching upon cutting fuel subsidies, he expressed concern over mounting revenue losses at state fuel retailers, adding, “There are inefficiencies in the system that have to be removed.” Many of India’s gas-based power plants are idle as domestic gas output has declined and infrastructure to import and supply gas is inadequate. Reuters

S’pore, Malaysia deal on Iskandar project Govt firms to build US$1.2 bln industrial park

ingapore government-linked firm Ascendas will help build a US$1.2 billion industrial park in Malaysia’s Iskandar economic zone, boosting an area

Malaysia has been promoting aggressively, in a sign of improving ties between the neighbours. Ascendas, whose projects include the Singapore Science Park and

the International Tech Park in Bangalore, India, said last week it will team up with Malaysia’s UEM Land Holdings to develop a 519-acre (210 hectare) site that will cater to industries including electronics and pharmaceuticals. Ascendas will hold a 60 percent stake in the joint venture, while UEM Land, whose main shareholder is Malaysian state investor Khazanah Nasional, will take the remaining 40 percent. The park will be in Nusajaya, a part of Iskandar near a bridge connecting Singapore and Malaysia. “UEM Land sees this joint venture as an important and timely milestone as it kickstarts the second wave of catalytic projects (in Nusajaya),” chief executive Wan Abdullah Wan Ibrahim said in a statement.

Malaysia has been trying to attract companies to Iskandar, a 2,200 square kilometre (850 square mile) economic zone three times the size of Singapore, separated from the wealthy Southeast Asian city-state by a narrow strip of water. Firms that have moved to Iskandar said the zone’s attractions include labour and electricity costs that are half that of Singapore’s, as well as industrial land that can be purchased for a fraction of the price. “Iskandar fits well into Singapore’s need to regionalise to overcome domestic supply constraints,” said Kit Wei Zheng, an economist at Citigroup. “Malaysia is also looking to revive private investment so there is a convergence of economic interests,” he added. Reuters

October 30, 2012 business daily | 11

ASIA

Honda reports surging profit but slashes forecast

Korean banks’ quarterly profit falls 11 pct South Korean banks’ combined profit dropped 11 percent in the third quarter from a year earlier after lenders set aside more bad-loan provisions and central bank rate cuts squeezed their loan margin. Net income at the 18 lenders fell to 2.4 trillion won (US$2.2 billion) on a preliminary basis from 2.7 trillion won a year earlier, the Financial Supervisory Service said in an e-mailed statement yesterday. Both KB Financial Group Inc. and Hana Financial Group Inc., owners of the nation’s biggest banks, reported lower-than-expected earnings last quarter as they set aside more funds to cover potential losses on corporate and household loans. Banks’ combined loan provisions in the period rose to 2.2 trillion won from 2.1 trillion won a year earlier, the FSS said. The net interest margin, a key measure of profitability from lending, narrowed to 2.06 percent last quarter, compared with 2.14 percent three months earlier and 2.31 percent a year ago, according to the regulator, citing policy rate cuts and slowing asset growth.

Other carmakers likely to revise growth prospects too

onda Motor Co Ltd shares tumbled yesterday after the Japanese automaker warned that its full-year results would be much weaker than forecast, even as its first-half profit more than doubled to US$2.7 billion. Investors pushed the stock down 4.65 percent to 2,399 yen by the close in Tokyo as they reacted to news that the maker of the Accord and Civic would report a profit that was 20 percent lower than previously expected. Blaming a strong yen and weakening sales, Japan’s third-biggest automaker said it now expects to earn 375 billion yen (US$4.7 billion) in its fiscal year to March 2013, down from an earlier 470 billion yen forecast. Sales were tipped to fall to 9.8 trillion yen, from 10.3 trillion yen. “We expect earnings to come below the estimates announced on April 27, 2012, due to a decrease in sales volume amid the changing business environment and the impact of currency exchange rates,” Honda said in a statement. Honda’s profit and sales downgrade, which dragged down the shares of rivals Nissan Motor Co and Toyota Corp, stood in marked contrast to its latest half-year results. These saw net profit soar to 213.96 billion yen, up from 92.23 billion yen

Half-year results show post-tsunami recovery

in the same period a year earlier. Sales in the period were 4.71 trillion yen, up from 3.60 trillion yen. Honda said the rosy results were largely due to a rebound from last year’s quake-tsunami disaster. The automaker did not elaborate on the impact of a simmering territorial dispute between Tokyo and Beijing, which has put the brakes on Japanese carmakers’ sales in China, the world’s biggest vehicle market. Japanese factories and businesses

across China closed or scaled back operations in September over fears they or their workers could be targeted by mobs protesting against Tokyo’s nationalisation of the islands. “Honda’s sales apparently felt the impact from a weaker China market, as well as the stronger yen, and (this) raises the possibility that it will revise down its full-year forecast yet again,” Hideyuki Ishiguro, strategist at Okasan Securities, told Dow Jones Newswires. AFP

Thai growth forecast seen slowing down Weak exports hitting 2013 gross domestic product

hailand’s economy is likely to expand by 5.5 to 6.0 percent this year, the state planning agency said yesterday, sticking to a forecast made in August, and could grow 4-5 percent next year even if exports weaken as domestic demand will still be healthy. “Growth this year should still be in our range of 5.5-6.0 percent, helped by domestic factors as private consumption and investment have grown steadily,” Porametee Vimolsiri, deputy secretary-general of the National Economic and Social Development Board (NESDB), told Reuters in an interview. “The outlook for 2013 will mainly depend on global conditions ... But growth of 4-5 percent is possible,” he said. With softer global demand, the

NESDB – which compiles Thailand’s gross domestic product data – is now forecasting export growth of 5-6 percent this year, down from the 7.3 percent seen in August. On Friday, the central bank slashed its 2012 export growth estimate to 4.4 percent from 7 percent but kept its GDP growth forecast at

4.6 %

GDP growth forecast for 2013

Thailand’s central bank cut its policy rate to 2.75 percent

5.7 percent for this year. The central bank lowered its 2013 GDP growth forecast to 4.6 percent from 5 percent due to the weak outlook for exports, which are equal each year to more than 60 percent of GDP. The World Bank has forecast GDP growth of 4.5 percent for this year and 5.0 percent next year. Economists in a Reuters poll forecast 5.3 percent growth for 2012 and 4.5 percent for 2013. In 2011, economic growth was just 0.1 percent due to devastating floods in late 2011 that swamped big industrial zones and shut factories. But Southeast Asia’s second-biggest economy is now back to normal and industry has largely restored capacity. It expanded 3.3 percent in the second quarter of 2012 from the previous three months and 4.2 percent year-on-year, driven by post-flood domestic demand as exports slowed. Mr Porametee declined to give forecast for third-quarter GDP figures, which are due to be released by the agency along with new economic forecasts on November 19. He noted only that “GDP should be positive quarter-on-quarter” but it would not be as strong as in the second quarter. Earlier yesterday, the Finance Ministry said it expected annual economic growth of 3.5-4.0 percent for the third quarter of 2012 and 12-14 percent for the final quarter compared with the last quarter of 2011, when the floods hit. Reuters

Govt ‘will stall’ without debt bill, Japan PM says The day-to-day functions of Japan’s government will seize up unless deadlocked politicians pass a new debt financing bill, Prime Minister Yoshihiko Noda warned yesterday. “If the current situation continues, bread-and-butter administrative services will stall to the extent that it will have a great impact on people’s lives, which in turn could be an obstacle to economic recovery,” he told parliament. Mr Noda, speaking at the start of an extraordinary session of parliament, warned that without agreement from his opponents on a bill to allow the government to issue new bonds to cover its spending, large parts of public life will grind to a halt. “No government will be able to finance its workings without a special public-bond bill,” he said. “Already we see limits on carrying out budgeted local government policies.” A bill to expand the amount of money that Japan can borrow has fallen foul of politicking, with the opposition refusing to co-operate until they have extracted a definite promise from Noda on when he will call elections.

Myanmar seeks to regain top spot in rice exports Myanmar, the world’s top rice shipper before five decades of military dictatorship made it Southeast Asia’s poorest nation, plans to double exports over five years, threatening to aggravate a global glut. Overseas sales may climb to as much as 3 million tonnes by 2017 from 1.5 million tonnes in the year ending March 2013 as yields and infrastructure improve, Ye Min Aung, secretarygeneral of the Myanmar Rice Federation, said. The U.S. Department of Agriculture raised its export forecast for Myanmar by 25 percent to 750,000 tonnes for this year on October 11. The country that could be Asia’s next economic frontier, according to the International Monetary Fund, is reviving the rice trade as it reengages with the global economy and shifts back toward democracy. The 2017 target would be equivalent to 8 percent of world exports this year, which are forecast by the USDA at 37.7 million tonnes. The global market in rice, a staple for half the world, has been in a surplus for seven years. “We are looking to boost productivity as well as income for farmers,” said Ye Min Aung of the federation.

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business daily October 30, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.3

-1.941748

21192238

CHINA UNICOM HON

ALUMINUM CORP-H

3.37

-0.295858

12937786

CITIC PACIFIC

BANK OF CHINA-H

3.17

0.955414

274038730

BANK OF COMMUN-H

5.72

-0.3484321

28124179

-0.6849315

BELLE INTERNATIO

14.12

BOC HONG KONG HO

PRICE

DAY %

VOLUME

12.58

-1.100629

39738265

9.71

-0.9183673

PRICE

DAY %

POWER ASSETS HOL

65.65

1830378

6760658

SANDS CHINA LTD

30.15

0.5

13051645

2863606

SINO LAND CO

13.74

-6.40327

23045680

SUN HUNG KAI PRO

106.1

-5.09839

14136657

SWIRE PACIFIC-A

91.8

-1.290323

3165903

TENCENT HOLDINGS

270

1.1994

2147130

-0.2169197

4906198

WANT WANT CHINA

10.18

0.3944773

6793026

WHARF HLDG

52.85 -0.09451796

5737106

CLP HLDGS LTD

65.95 -0.07575758

CNOOC LTD

16.14

0.3731343

35235827

2392744

COSCO PAC LTD

11.36

-0.525394

3590001

0.2840909

6059479

ESPRIT HLDGS

9.71

0.5873639

25443543

23.45

-1.882845

27228251

HANG LUNG PROPER

26.5

-1.851852

7090163

CATHAY PAC AIR

13.84

0.4354136

4395818

HANG SENG BK

119 -0.08396306

708917

CHEUNG KONG

112.3

-4.66893

9875614

HENDERSON LAND D

53.25

-6.414763

12022701

CHINA COAL ENE-H

7.43

-1.328021

38041724

HENGAN INTL

71.25

-0.8350731

3076568

CHINA CONST BA-H

5.79

0.8710801

198992920

HONG KG CHINA GS

20.45

6540896

CHINA LIFE INS-H

22.5

-0.2217295

17375026

HONG KONG EXCHNG

126.9

0.7942812

4468139

CHINA MERCHANT

25.45

-0.1960784

2619450

HSBC HLDGS PLC

76.2

0.3952569

9313647

85.9

0.1749271

12222291

HUTCHISON WHAMPO

75.7

-1.496422

7688953

IND & COMM BK-H

BANK EAST ASIA

CHINA MOBILE

19.66

-1.20603

18539421

CHINA PETROLEU-H

CHINA OVERSEAS

8.25

2.86783

117684187

CHINA RES ENTERP

25.45

1.192843

1803020

MTR CORP

CHINA RES LAND CHINA RES POWER CHINA SHENHUA-H

LI & FUNG LTD

5.12

0.589391

217235437

12.68

0.7949126

11141602

0.1669449

4271600

NAME

TINGYI HLDG CO

MOVERS

HIGH

21847.7

LOW

21458.92

0.94451

4726125

NEW WORLD DEV

12.08

-6.356589

67470979

52W (H) 21847.69922

-0.7211538

4609482

PETROCHINA CO-H

10.76

2.087287

66064362

(L) 17613.19922

PING AN INSURA-H

61.2

0.2457002

7853322

14700337

2 21850

17.1

0.310559

INDEX 21511.05

16.52 32.3

VOLUME

21450

25-October

29-October

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

CHINA PACIFIC-H

24.2

-0.4115226

6986791

13462600

CHINA PETROLEU-H

8.25

2.86783

117684187

-0.295858

12937786

CHINA RAIL CN-H

7.26

0.9735744

7994200

25.95

1.565558

9155477

CHINA RAIL GR-H

3.68

1.657459

9494950

BANK OF CHINA-H

3.17

0.955414

274038730

CHINA SHENHUA-H

32.3

0.310559

14700337

BANK OF COMMUN-H

5.72

-0.3484321

28124179

CHINA TELECOM-H

4.57

0.8830022

82024270

BYD CO LTD-H

15.7

3.562005

2080350

DONGFENG MOTOR-H

9.58

-1.74359

30406975

CHINA CITIC BK-H

4.02

1.005025

47518002

GUANGZHOU AUTO-H

5.09

-1.547389

5607880

CHINA COAL ENE-H

7.43

-1.328021

38041724

HUANENG POWER-H

6.17

1.313629

11806570

CHINA COM CONS-H

7.21

1.980198

16818849

IND & COMM BK-H

5.12

0.589391

217235437

CHINA CONST BA-H

5.79

0.8710801

198992920

JIANGXI COPPER-H

20.25

0.2475248

5118085

CHINA COSCO HO-H

3.66

-0.5434783

14731071

PETROCHINA CO-H

10.76

2.087287

66064362

CHINA LIFE INS-H

22.5

-0.2217295

17375026

PICC PROPERTY &

10.3

1.577909

13557575

CHINA LONGYUAN-H

5.06

0.998004

5071000

PING AN INSURA-H

61.2

0.2457002

7853322

CHINA MERCH BK-H

14.92

1.084011

8578515

SHANDONG WEIG-H

10.1

-1.174168

1643769

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.34

3.08642

216009842

AIR CHINA LTD-H

5.49

1.666667

ALUMINUM CORP-H

3.37

ANHUI CONCH-H

NAME

PRICE

DAY %

VOLUME

11.46

-4.975124

92574096

3.1

2.649007

33409203

ZOOMLION HEAVY-H

10.58

3.320312

17195162

ZTE CORP-H

10.94

2.626642

6389151

YANZHOU COAL-H ZIJIN MINING-H

MOVERS

0 10700

INDEX 10546.24 HIGH

10684.5

LOW

10429.3

CHINA MINSHENG-H

7.35

2.51046

56316000

SINOPHARM-H

-0.5964215

2355200

52W (H) 11916.1

CHINA NATL BDG-H

9.54

4.034896

63214020

TSINGTAO BREW-H

42.8

-1.268743

1506300

(L) 8987.76

14.96

2.185792

11978000

WEICHAI POWER-H

27.45

0.9191176

2696906

CHINA OILFIELD-H

10400

25-October

29-October

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.47

32231244

DAQIN RAILWAY -A

5.97

-0.8305648

13595254

SHANDONG DONG-A

41.32

0.2669255

4827342

AIR CHINA LTD-A

5.01

-0.5952381

9586487

DATANG INTL PO-A

4.26

-1.160093

5219350

SHANDONG GOLD-MI

37.96

1.172708

7829216

4.8

-2.040816

7519701

EVERBRIG SEC -A

11.46

-0.5208333

5536067

SHANG PHARM -A

11.81

1.373391

5017321

16.06

1.709943

14478224

2.37

-1.659751

30580916

SHANG PUDONG-A

7.47

0.1340483

28176827

SHANGHAI ELECT-A

NAME ALUMINUM CORP-A ANHUI CONCH-A

NAME

GD POWER DEVEL-A

BANK OF BEIJIN-A

6.78

-0.4405286

8937624

GF SECURITIES-A

12.63

-0.785546

16553003

BANK OF CHINA-A

2.72

0.3690037

13101972

GREE ELECTRIC

20.98

-0.756859

6141283

BANK OF COMMUN-A

4.21

-1.405152

27943222

GUANGHUI ENERG-A

15.85

0.3164557

BAOSHAN IRON & S

4.58

-0.2178649

14657079

HAITONG SECURI-A

8.74

14.35

-0.6920415

2081223

HANGZHOU HIKVI-A

BYD CO LTD -A

NAME

4.15

0.4842615

4675843

SHANXI LU'AN -A

16.83

-0.7079646

8907357

19361025

SHANXI XINGHUA-A

44.29

3.723653

3043377

-1.576577

30867352

SHANXI XISHAN-A

12.47

-0.399361

7805644

1.867572

2351580

SHENZEN OVERSE-A

5.78

0.3472222

8484700

CHINA CITIC BK-A

3.58

6462553

HENAN SHUAN-A

58.82

-0.976431

981540

SICHUAN KELUN-A

55.67

5.296009

3295019

CHINA CNR CORP-A

3.75

0.8064516

16042158

HONG YUAN SEC-A

18.35

0.4378763

6488482

SUNING APPLIAN-A

6.93

2.061856

32768084

CHINA COAL ENE-A

6.89

-1.851852

6234831

HUATAI SECURIT-A

9.17

-0.7575758

5856770

TASLY PHARMAC-A

51.47

-0.290585

1107235

CHINA CONST BA-A

4.13

9472986

HUAXIA BANK CO

8.3

0.2415459

8675168

TSINGTAO BREW-A

30.98

-0.6732927

1411338

CHINA COSCO HO-A

4.06

-1.456311

7202868

IND & COMM BK-A

3.81

-0.78125

17430244

WEICHAI POWER-A

19.46

-2.112676

6897150

CHINA CSSC HOL-A

19.33

-1.377551

2814424

INDUSTRIAL BAN-A

12.19

22872149

WULIANGYE YIBIN

33.69

0.3275759

11320744

CHINA EAST AIR-A

3.45

-1.146132

24236103

INNER MONG BAO-A

27.35

-5.428769

47071483

YANGQUAN COAL -A

13.8

0.877193

6211653

CHINA EVERBRIG-A

2.67

-0.3731343

16514636

INNER MONG YIL-A

20.84

-0.9034712

3670595

YANTAI CHANGYU-A

-0.766802

3418145

CHINA INTERNAT-A

29.95

2.638794

3414273

INNER MONGOLIA-A

5.6

1.449275

132117709

YANTAI WANHUA-A

13.63

0.8882309

5398927

29.6

-0.6377979

1756050

YANZHOU COAL-A

17.53

-1.016375

2591354

120.68

0.4494756

1390864

YUNNAN BAIYAO-A

61.74

-0.4193548

1021693

20.68

-1.052632

3827702

ZHONGJIN GOLD

16.23

0.3090235

11993856 26738991

17.6

12722021

JIANGSU HENGRU-A

CHINA MERCH BK-A

10.12

-1.55642

22386478

JIANGSU YANGHE-A

CHINA MERCHANT-A

9.67

-1.62767

20948511

JIANGXI COPPER-A

CHINA MERCHANT-A

-0.4074242

4670126

CHINA LIFE INS-A

CHINA MINSHENG-A

6.03

0.8361204

JINDUICHENG -A

11.09

-1.33452

3524322

ZIJIN MINING-A

3.83

0.2617801

69747353

JIZHONG ENERGY-A

11.58

-0.8561644

6722431

ZOOMLION HEAVY-A

8.36

-1.065089

23242791

16.45

1.106331

9765387

ZTE CORP-A

8.85

0.9122007

10819403

1449080

6.47

0.622084

13982669

KANGMEI PHARMA-A

CHINA OILFIELD-A

16.12

1.767677

3060081

KWEICHOW MOUTA-A

241.82

0.3027915

CHINA PACIFIC-A

18.25

-3.234358

17672178

LUZHOU LAOJIAO-A

38.87

0.7255766

3600080

6.24

1.134522

14441499

METALLURGICAL-A

2.05

-0.9661836

13564208

CHINA NATIONAL-A

CHINA PETROLEU-A CHINA RAILWAY-A

4.79

0.4192872

4776280

NARI TECHNOLOG-A

17.74

20835387

CHINA RAILWAY-A

2.59

0.3875969

12856001

NINGBO PORT CO-A

2.46

-0.4048583

11260273

CHINA SHENHUA-A

22.6

-0.877193

5662037

PANGANG GROUP -A

3.71

-1.329787

31953330

8.71

-0.2290951

5193112

CHINA SHIPBUIL-A

4.52

-0.2207506

12381484

PETROCHINA CO-A

CHINA SOUTHERN-A

3.68

54351048

PING AN BANK-A

12.94

0.07733952

12964193

38.06

-4.227479

MOVERS

186

19 2340

INDEX 2235.854

CHINA STATE -A

3.03

-0.9803922

21353534

PING AN INSURA-A

34008844

HIGH

2320.85

CHINA UNITED-A

3.61

32823564

POLY REAL ESTA-A

10.71

-0.09328358

16583654

LOW

2229.53

CHINA VANKE CO-A

8.22

0.2439024

31262939

QINGDAO HAIER-A

11.12

-0.8028546

9191580

CHINA YANGTZE-A

6.4

-0.466563

7661848

QINGHAI SALT-A

25.59

-8.443649

11750079

CITIC SECURITI-A

10.75

-2.272727

59327946

SAIC MOTOR-A

12.7

-0.07867821

7116159

CSR CORP LTD -A

4.18

0.4807692

14705423

SANY HEAVY INDUS

9.11

-0.5458515

12530234

NAME

PRICE DAY %

Volume

PRICE DAY %

Volume

ACER INC

22.5 -0.4424779

26886389

FORMOSA PLASTIC

78.3

0.1278772

4005914

FOXCONN TECHNOLO

97.1

-2.9

14227514

TPK HOLDING CO L

347

-6.72043

8633135

14420509

TSMC

88.1

0.9163803

36144925

UNI-PRESIDENT

52W (H) 2781.99 (L) 2172.878906

2220

25-October

29-October

FTSE TAIWAN 50 INDEX NAME

NAME TAIWAN MOBILE CO

ADVANCED SEMICON

21.05

4.466501

30042242

ASIA CEMENT CORP

35.95

2272557

FUBON FINANCIAL

ASUSTEK COMPUTER

313

1.130856

3469775

HON HAI PRECISIO

84 -0.3558719

37984176

AU OPTRONICS COR

10.6

2.415459

66088362

HOTAI MOTOR CO

205.5 -0.7246377

291716

CATCHER TECH

119

-5.555556

26111453

HTC CORP

219.5

-6.991525

2000165

WISTRON CORP

CATHAY FINANCIAL

29.3 -0.5093379

10648048

HUA NAN FINANCIA

15.35 -0.6472492

3986416

YUANTA FINANCIAL

CHANG HWA BANK

14.75 -0.6734007

5608075

LARGAN PRECISION

-0.974026

1315203

YULON MOTOR CO

5008734

LITE-ON TECHNOLO

37 -0.2695418

1950317

610

CHENG SHIN RUBBE

72.1

CHIMEI INNOLUX C

10.7

4.390244

101621033

MEDIATEK INC

329.5

3.453689

16807530

CHINA DEVELOPMEN

6.47

-1.820941

26227396

MEGA FINANCIAL H

21.15

0.2369668

15277511

CHINA STEEL CORP

25.3

0.5964215

11398661

NAN YA PLASTICS

50.4 -0.9823183

7855292

CHINATRUST FINAN

15.8 -0.6289308

23165928

PRESIDENT CHAIN

146

2.816901

3106889

CHUNGHWA TELECOM COMPAL ELECTRON

91 -0.5464481 18.3

8472715

QUANTA COMPUTER

67.4

1.966717

6810909

-4.935065

26758919

SILICONWARE PREC

30.1

6053095

DELTA ELECT INC

100.5

0.5

4535079

SINOPAC FINANCIA

11.2

11149864

FAR EASTERN NEW

30.05

-0.661157

5542430

SYNNEX TECH INTL

-2.66876

5003177

FAR EASTONE TELE

68.7

0.7331378

4628213

TAIWAN CEMENT

36.95

1.371742

5780901

FIRST FINANCIAL

16.7 -0.2985075

9612143

TAIWAN COOPERATI

15.15

-1.302932

8215722

FORMOSA CHEM & F

69.3

-2.531646

5285685

TAIWAN FERTILIZE

68.7

-2.553191

5952755

FORMOSA PETROCHE

83.5

0.7237636

925679

27 -0.5524862

1231833

TAIWAN GLASS IND

UNITED MICROELEC

MOVERS

PRICE DAY %

Volume

103.5 -0.4807692

3743216

50.6

0.3968254

4842308

10.85

-0.913242

15280713

26.7

-4.129264

16600223

17286348

51.3

-1.912046

6456181

6 5100

INDEX 4976.82 HIGH

5063.89

LOW

4976.82

52W (H) 5621.53 4950

(L) 4643.05 24-October

26-October

October 30, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) gaLaXy enTerTaInMenT

MeLCo CroWn enTerTaInMenT

MgM CHIna HoLDIngs 38

28.0

14.6

27.5

14.4 37

27.0

14.2

26.5

Max 27.4

average 27.179

Min 26.65

Last 27.25

26.0

sanDs CHIna LTD

average 30.106

Max 30.35

14.0 Max 37.55

average 37.464

Min 29.65

Last 30.15

Min 13.98

Last 14.3

Wynn MaCaU LTD 23.0

30.5

17.5

22.8

30.0

17.4

22.6

29.5

17.3

22.4

29.0

17.2 Max 17.52

average 17.490

WTI CRUDE FUTURE Dec12

85.56

-0.83449235

-12.79176435

110.25

79.11999512

BRENT CRUDE FUTR Dec12

108.89

-0.602464628

4.812782751

122.0999985

89.84999847

GASOLINE RBOB FUT Nov12

DAY %

YTD %

(H) 52W

Min 17.4

Last 17.48

22.2 Max 22.8

average 22.708

272.37

0.911414916

9.000320154

299.2899895

218.1499958

953.5

0.131268049

6.358059119

1040.25

798

NATURAL GAS FUTR Nov12

3.383

-0.5

-2.759413625

4.351000309

2.565999985

Gold Spot $/Oz Silver Spot $/Oz

310.95

0.377687391

8.488591166

333.8899851

253.3499956

1711.57

0.0216

9.3718

1803

1522.75

31.955

-0.4207

14.8015

37.4775

26.1513

Platinum Spot $/Oz

1543.86

-0.1158

10.7106

1736

1339.25

Palladium Spot $/Oz

594.85

-0.5268

-8.9748

725.19

553.75

LME ALUMINUM 3MO ($)

1922

-0.825593395

-4.851485149

2361.5

1827.25

LME COPPER 3MO ($)

7820

0.063979527

2.894736842

8765

7100.25

LME ZINC

1834

-0.108932462

-0.596205962

2220

1745

3MO ($)

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

PRICE

(L) 52W

GAS OIL FUT (ICE) Dec12

16005

-0.774953503

-14.45750935

22150

15236

15.08

-0.198544011

-1.790947574

16.60000038

14.60000038

737.25

-0.067773636

25.75692964

849

499

Last 22.65

Min 22.3

MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

1.0352 1.6062 0.9366 1.2911 79.69 7.9827 7.7502 6.2436 53.9725 30.74 1.2215 29.263 41.3 9610 82.5 1.20913 0.80382 8.0533 10.3073 102.89 1.03

-0.2024 -0.2732 -0.2029 -0.2087 -0.0502 0 0.0013 0.0929 -0.7365 -0.0651 -0.0737 -0.0171 0.0121 0.0832 0.1479 0.0273 -0.0162 0.3539 -0.1232 0.1555 0

YTD %

(H) 52W

1.4007 3.3391 0.1602 -0.3858 -3.4885 0.2117 0.2219 0.8232 -1.6814 2.635 6.1482 3.472 6.1501 -5.6296 -4.9309 0.6335 3.6787 1.0046 0.4337 -3.1393 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.4171 84.18 8.0308 7.7979 6.3964 57.3275 32 1.315 30.5 44.35 9662 88.637 1.24569 0.87843 8.9881 11.3316 111.6 1.0311

0.9582 1.5235 0.8611 1.2043 75.35 7.9823 7.7498 6.234 48.6088 30.2 1.2152 29.084 41.148 8806 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.0288

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

2.89

-0.3448276

31.36363

3.25

2.16

935601

153.6999969

CROWN LTD

9.43

-0.3171247

16.56366

9.7

7.83

678579

25.12999916

19.27999878

AMAX HOLDINGS LT

0.07

14.7541

-19.54023

0.119

0.055

105044543

97.98999786

64.61000061

BOC HONG KONG HO

23.45

-1.882845

27.44565

16.24

27228251

WHEAT FUTURE(CBT) Dec12

862.25

-0.17366136

19.75694444

953.25

629.5

SOYBEAN FUTURE Jan13

1546.25

-1.119104716

27.47320692

1781.5

1126.75

COFFEE 'C' FUTURE Dec12

156.85

-0.570522979

-33.53813559

248.25

SUGAR #11 (WORLD) Mar13

19.31

-0.206718346

-17.33732877

COTTON NO.2 FUTR Dec12

72.53

0.151891743

-17.42941712

World Stock MarketS - Indices

NAME

PRICE

DAY % YTD %

VOLUME CRNCY

CENTURY LEGEND

0.25

8.69565

0.335

0.204

CHEUK NANG HLDGS

4.28

-1.609195

52.85715

4.36

2.5

519372

CHINA OVERSEAS

19.66

-1.20603

51.63438

20.75

11.507

18539421

CHINESE ESTATES

12.42

-0.64

13.26

8.3

140309

CHOW TAI FOOK JE

9.56

-0.3128259

-31.32184

15.16

8.4

5218400

EMPEROR ENTERTAI

1.45

-2.027027

30.63063

1.57

0.99

1570000

FUTURE BRIGHT

1.23

192.8572

1.36

0.37

618000

27.25

1.679104

91.36236

27.45

13.2

11893770

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

708917

FTSE 100 INDEX

5781.24

-0.4386305

3.75

5989.07

5075.22

HOPEWELL HLDGS

27.85

-3.466205

42.0762

31.091

18.319

2797966

DAX INDEX

7198.42

-0.4622607

22.04124

7478.53

5366.5

HSBC HLDGS PLC

GALAXY ENTERTAIN

76.2

0.3952569

29.15254

76.9

9313647

HUTCHISON TELE H

3.2

-0.621118

7.023411

3.88

2.77

3700571

LUK FOOK HLDGS I

20.1

-0.4950495

-25.83026

37.1

14.7

1056095

MELCO INTL DEVEL

7.49

0.1336898

29.80936

8.28

5.12

1191000

NIKKEI 225

8929.34

-0.04164307

5.605803

10255.15

8135.79

HANG SENG INDEX

21511.05

-0.1602186

16.68979

21847.69922

17613.19922

CSI 300 INDEX

2235.854

-0.5361877

-4.684571

2781.99

2172.878906

MGM CHINA HOLDIN

14.3

0.8462623

49.08018

14.76

9.347

2169108

TAIWAN TAIEX INDEX

7091.67

-0.5941918

0.2770026

8170.72

6609.11

MIDLAND HOLDINGS

3.83

-14.50893

-3.137215

5.217

3.249

16702000

KOSPI INDEX

1891.52

0.004758305

3.602924

2057.28

1750.6

S&P/ASX 200 INDEX

4476.859

0.100148

10.36095

4581.8

3973.8

4331.365

-0.179482

13.32743

4362.343

3618.969

FTSE Bursa Malaysia KLCI

1672.56

0.04007441

9.265519

1679.37

1424.19

NZX ALL INDEX

862.658

-0.7632639

18.20467

874.107

712.548

JAKARTA COMPOSITE INDEX

13.8

17.6

PRICE

NAME

average 14.28

31.0

NAME

CORN FUTURE

Max 14.36

CURRENCY EXCHANGE RATES

HEATING OIL FUTR Nov12 METALS

Last 37.5

sJM HoLDIngs LTD

Commodities ENERGY

Min 37.35

NEPTUNE GROUP

0.159

1.923077

43.24324

0.222

0.08

60000

NEW WORLD DEV

12.08

-6.356589

92.97124

13.2

6.13

67470979

SANDS CHINA LTD

13051645

30.15

0.5

37.35763

33.05

19.96

SHUN HO RESOURCE

1.25

-1.574803

1.37

0.82

100000

SHUN TAK HOLDING

3.08

-1.910828

20.35348

3.51

2.418

4944874

SJM HOLDINGS LTD

17.48

0.2293578

39.77809

17.72

11.519

7549282

SMARTONE TELECOM

15.56

0.6468305

15.77381

17.5

11.72

1206785

WYNN MACAU LTD

22.65

0.8908686

16.15385

25.5

14.62

3194206

ASIA ENTERTAINME

3.49

3.254438

-40.64626

7.49

2.4

94072

5.483803

25.93528

51.16

34.75

1733063

PHILIPPINES ALL SHARE IX

3571.77

-0.1020859

17.29797

3607.89

2939.18

HSBC Dragon 300 Index Singapor

598.78

-0.05

20.64

STOCK EXCH OF THAI INDEX

1279.94

-0.1458875

24.83322

1314.64

945.4

BALLY TECHNOLOGI

49.82

HO CHI MINH STOCK INDEX

391.36

-0.08680112

11.32414

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 October 30, 2012

Opinion Europe’s Nobel wake-up call Ana Palacio

Former Spanish foreign minister and former Senior Vice President of the World Bank, is a member of the Spanish Council of State.

n a decision criticised and praised in equal measure, the Norwegian Nobel Committee awarded this year’s Peace Prize to the European Union in recognition of its contributions “to the advancement of peace and reconciliation, democracy and human rights in Europe” over the past six decades. But, to what extent is Europe preoccupied with “perpetual peace” at the expense of its current, vastly different ailments? Is this award a swan song confirmation of the moribund state of the European project, as the 2001 Nobel Prize was for the United Nations? In announcing the prize, the committee explained how “the work of the EU represents fraternity between nations.” While it acknowledged that “the EU is currently undergoing grave economic difficulties and considerable social unrest,” it highlighted the EU’s role as a beacon of hope – a democratic anchor, particularly meaningful for peoples who have lived through the horrors of dictatorships. But it is precisely the mismatch between the EU’s past achievements and its current distress that has fuelled anger and led to its rejection by many Europeans. That is why the prize has invited comparisons to an Oscar lifetime achievement award that comes only when the

recipient is nearing death. The decision to establish the EU was an ingenious response to the biggest challenge of the day – war and conflict. And, of course, the resurgence of nationalism and extremism of all kinds around the world is a potent reminder, as if any were needed, that peace is not to be taken for granted. But the prospect of war in Europe now seems like a remote threat, and the varnish of the EU’s past success seems to have faded, even to those who have not forgotten the bloodstains beneath.

Missing vision Instead, it is Europe’s lack of a vision and narrative for the future – with which it could address issues like chronic unemployment, capital flight, and the ever-tightening grip of austerity – that keeps people awake at night, and that fosters populism, dismay, and internal disarray. The EU’s ability to capitalise on – or even justify – the award hinges on its prospects for overcoming the sovereign-debt crisis and re-establishing trust among its member countries. But, more important, the EU needs to restore its allure, an integral part of which has always been economic prosperity. Aside from the eurozone’s design flaws, the pressing items on Europe’s agenda concern competitiveness, jobs,

innovation, and technology. Europe’s first order of business should be to accept reality: the emerging economies are catching up in terms of innovation while the EU is losing traction, with China on the cusp of surpassing Europe as the second-largest hub for venture capital globally, behind only the United States. In fact, a 2012 study by Ernst & Young reveals that one U.S. hub (Silicon Valley) alone boasts almost US$12.6 billion in cumulative venture capital, while the United Kingdom, first among European countries, accounts for roughly US$1.75 billion and Germany for US$665 million. A similar study, conducted in 2012 by Javier Santiso, a professor at the ESADE business school in Barcelona and a managing director at Telefónica, found that Europe’s

per capita investment in venture capital in 2011 was a meager US$7, compared to US$142 in Israel and US$72 in the U.S. An equally telling statistic is that only one company in the eurozone, Spain’s Inditex (ZARA), has made it to the FT Global 500 since 1996. Research and development offers little consolation. Although European research has given rise to many new technologies used in industries worldwide, its recent record is wobbly at best, owing mainly to the difficulty in translating basic science into industrial advantage. Europe is losing its technological edge, whether in telecoms, technology, or the Internet, with its companies being displaced by those from emerging markets, while the U.S. remains dominant. The NASDAQ index confirms this disturbing trend: only 15 European companies are listed, compared to 498 for the U.S., 43 for China, and 23 for Israel.

It is Europe’s lack of a vision and narrative for the future that fosters populism, dismay, and internal disarray

Looking ahead Looking to the future, Europe should take note of the potential consequences revealed by the latest Program for International Student Assessment, a worldwide comparison of student performance. In mathematics and science, PISA’s latest report card puts Asia at the

head of the class, with China, Singapore, and South Korea on top. Meanwhile, with some exceptions – most notably Finland – Europe has slipped into riding in the peloton. The EU is, at last, beginning to understand that betting its future on services will not be enough to safeguard the European socioeconomic model. Member states’ governments and the European Commission’s last communication, “A Stronger European Industry for Growth and Economic Recovery,” display an awareness of the need to revive Europe’s industrial policy. Such efforts should promptly translate into legislative changes in areas ranging from insolvency to patents, from CO2 emissionreduction schemes to “smart” electricity grids. Europe urgently needs to devote its energy to revitalising the building blocks of its economy – industry, human capital, and a policy framework that enables healthy growth and future prosperity. One hopes that this year’s Nobel Peace Prize provides a boost in pride that allows Europeans to look beyond their immediate financial problems, consolidate the Union’s strengths, and establish a coherent vision of the future. Otherwise, the EU’s finest achievements will remain in the past. © Project Syndicate

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Newsdesk Vitor Quintã (Chief Reporter) Tony Lai, Xi Chen Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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October 30, 2012 business daily | 15

OPINION Breaking up big banks wires is a severely conservative project Business

Leading reports from Asia’s best business newspapers

Simon Johnson

Professor at the MIT Sloan School of Management as well as a senior fellow at the Peterson Institute for International Economics

Business Standard September has been a good month for the capital goods and infrastructure sectors of India, with analysts seeing green shoots of recovery as industrial activity starts picking up slowly. The first sign of revival has come from Larsen & Toubro’s second quarter results, which showed a 30 percent growth in order inflows. The engineering and capital goods behemoth is virtually a proxy for these two sectors; so an uptick in its order book and robust execution shows some initial positive signals.

Jakarta Globe Indonesia might be a potential market for ethanol-fueled cars, following in the footsteps of other sugarcane-producing nations like Brazil that promote the alternative source to fossil fuel, a General Motors executive said. “The key is the government policy that makes ethanol mandatory or at least ensures ethanol availability nationwide,” said William Bertagni, GM Brazil’s executive director of engineering. “If Indonesia has sufficient infrastructure for ethanol distribution, we are more than ready to sell flex-fuel cars there or introduce this technology to Indonesia”.

Yomiuri Shimbun The government expects to reach soon a basic agreement with Mozambique under which coal will be exported to Japan for steelmaking as early as fiscal 2014, according to government sources. The deal will help Japan secure a stable supply of coking coal. The government also expects it will result in lower prices for ordinary coal used to fuel thermal power plants. The agreement would mark the first time a Japanese company held drilling rights for coal in Africa.

Korea Herald The Chinese government ordered a recall of six types of South Korean instant noodles that were found to contain benzopyrene, a substance classified as a carcinogen. China’s General Administration of Quality Supervision, Inspection and Quarantine announced on its website that it had ordered importers to immediately recall the noodles. The decision came after the Korea Food and Drug Administration ordered a recall of the products on Thursday as an excess amount of benzopyrene was found in six of Nongshim’s ramen brands.

he columnist George F. Will recently shocked his fellow conservatives by endorsing Richard Fisher, president of the Federal Reserve Bank of Dallas, to be Treasury secretary in a Mitt Romney administration. Fisher’s appeal, in Will’s eyes, is that he wants to break up the largest U.S. banks, arguing that this is essential to re-establish a free market for financial services. Big banks get big implicit government subsidies and this should stop. Will’s endorsement was on target: the true conservative agenda should be to take government out of banking by making all financial institutions small enough and simple enough to fail. As Will asks, “Should the government be complicit in protecting – and by doing so, enlarging – huge economic interests?” But Will could have gone further – much of what Fisher recommends also is appealing to people on the left of the political spectrum. Fisher should be considered for a top administration post regardless of who wins the presidency on November 6. He also should be a strong candidate to become chairman of the Federal Reserve Board when Ben Bernanke’s second term ends January 31, 2014. Unfortunately, Fisher’s views on “too big to fail” banks draw the ire of powerful people on Wall Street, and he almost certainly will remain in Dallas. That is, until the next crisis.

Policy rethink Fisher and Harvey Rosenblum, executive vice president and director of research at the Dallas Fed, have laid the groundwork for a comprehensive reassessment of finance and banking – and the effects on monetary policy. The closest parallel is the rethink that happened during the 1930s, as the gold standard broke down and the world descended into depression followed by chaos.

But their approach is also reminiscent of the way that monetary policy was reoriented in the early 1980s, as Fed Chairman Paul Volcker and others brought down inflation. The world and the U.S. economy have changed profoundly. We need to alter the way we think about the financial system and monetary policy. Fisher and Rosenblum have expressed, separately and together, three deep ideas since the financial crisis erupted in 2008. First, very large banks are too complex to manage. “Not just for top bank executives, but too complex as well for creditors and shareholders to exert market discipline,” they wrote in a Wall Street Journal op-ed in April. “And too big and complex for bank supervisors to exert regulatory discipline when internal management discipline and market discipline are lacking.” Complexity, they say, magnifies “the opportunities for opacity, obfuscation and mismanaged risk.” This is a problem in other industries, too, though market forces compel U.S. businesses to reconfigure their organisational structures all the time, including through divestitures and by becoming smaller in other ways. Banking is different. There are large implicit government subsidies available if your financial institution is perceived as too big to fail. These subsidies – in the form of implicit downside protection or guarantees for creditors – drive up size and exacerbate complexity. Second, too-big-to-fail banks do actually fail, in the sense that they require bailouts and other forms of government support. This is exactly what happened in the U.S. in 2007 through 2009, and it is what is occurring in Europe today.

Breaking up For anyone who finds the phrase “break up” hard to swallow – for example because

you believe the government shouldn’t take on this role – Fisher and Rosenblum argue: “Though it sounds radical, restructuring is a far less drastic solution than quasinationalisation, as happened in 2008-09.” Third, monetary policy cannot function properly when a country’s biggest banks are allowed to become too complex to manage and prone to failure. In “The Blob That Ate Monetary Policy,” a Wall Street Journal op-ed published in September 2009, Fisher and Rosenblum pointed out that cutting interest rates doesn’t work when systemically

Monetary policy cannot function properly when a country’s biggest banks are allowed to become too complex to manage and prone to failure

important banks are close to insolvency. The funding costs for banks go up, not down, as a crisis develops. So pulling the classic policy lever, the federal funds rate, becomes less than effective in such an environment. As banks come under pressure, the Fed may cut its policy rate but the interest rates charged by banks to customers may actually go up, and it becomes harder to get a loan. This is what happened in 2008 and 2009. Or think about what happens during any attempted economic recovery – such as the one we are in now. “Well-capitalised banks can expand credit to the private sector in concert with monetary policy easing,” Rosenblum wrote with his colleagues Jessica J. Renier and Richard Alm in the Dallas Fed’s “Economic Letter” of April 2010. “Undercapitalised banks are in no position to lend money to the private sector, sapping the effectiveness of monetary policy.” If you want monetary policy to become effective again, you need the largest banks to be broken up. Equity capital also must increase, relative to debt, throughout the financial system. Bloomberg View

16 |

business daily October 30, 2012

CLOSING Baosteel Q3 net profit dips

Petronas, Progress extend deadline

Baoshan Iron & Steel Co Ltd, China’s biggest listed steelmaker, said yesterday third-quarter profit fell 4.9 percent on a rapid decline in steel prices and weakening demand. The Shanghai-based company, known as Baosteel, saw its third-quarter net profit fall to 1.18 billion yuan (US$188.9 million), exceeding an average forecast of 876 million by four analysts polled by Reuters. Baosteel also said in a filing to the Shanghai stock exchange that it expects China’s steel prices to stabilise in the fourth quarter, but a rebound in raw materials prices and oversupply in the sector will curb steel mills’ margins.

Malaysian state oil firm Petronas said yesterday it has extended the closing date on its bid for Canadian gas producer Progress Energy Resources until November 30, as it works to overturn the Canadian government’s rejection of the proposed deal. Canada blocked Petronas’ C$5.17 billion (US$5.18 billion) bid for Progress this month after Industry Minister Christian Paradis said it was unlikely to bring a “net benefit” to the country. The government gave Petronas 30 days to make additional representations to alter the ruling. Petronas said it intends to make further submissions in order to obtain approval of the proposed deal.

Politics puts Italy, Spain Global consumer back in market focus confidence ticks up Markets unsettled by Spanish hesitancy on bailout

talian political turmoil and Spanish hesitancy over seeking euro zone assistance put the two countries on the front line of the currency area’s debt crisis back under market pressure yesterday as their leaders met in Madrid. Former Prime Minister Silvio Berlusconi’s weekend threat to bring down his successor Mario Monti’s government, and regional elections in Sicily in which a protest party led by a standup comic polled strongly, highlighted the political risks in Italy. Rome’s borrowing costs have fallen since July partly due to the European Central Bank’s pledge to buy unlimited quantities of bonds if necessary to help states that request aid and accept strict conditions, but also due to hopes that Mr Monti, a reformist technocrat, may stay on after next year’s general election. Italian and Spanish bond yields rose yesterday as some investors sought the safety of German Bunds, partly due to political uncertainty in the euro zone’s recessionstricken third and fourth

largest economies. But Italy paid less than a month ago to sell 8 billion euros (US$10.3 billion) of six-month bills. The euro also slipped on uncertainty over whether nearbankrupt Greece, the country that triggered Europe’s debt crisis, can agree to a deal on new austerity measures and its international lenders can figure out how to make its huge debts sustainable. A German government spokesman rejected talk of any new write-down of Greek debt, this time involving official creditors, saying German law would not permit such a haircut while new aid for the struggling country was being discussed. The European Central Bank has also refused to take any losses on its sizeable holdings of Greek government bonds, saying that would be illegal.

Bailout stigma Some market players are also concerned by signs that Spanish Prime Minister Mariano Rajoy, having almost completed this year’s borrowing, will try to avoid the stigma of requesting a

precautionary credit line from the euro zone’s ESM rescue fund. “As time passes there should be a growing move towards pricing in an uncertainty premia to the Spanish curve ... and Berlusconi’s rant perhaps highlights the less than stable nature of Italian politics and reinjects some degree of political risk into BTPs,” said Richard McGuire, rate strategist at Rabobank. The risk premium on Spanish bonds has tumbled since ECB President Mario Draghi’s move, some Spanish banks have regained money market access and the Treasury has almost cleared its 2012 issuance needs and can soon being to pre-fund 2013 borrowing. But Spanish yields have stopped falling and some analysts expect them to rise the longer Mr Rajoy holds off. In a sign of the depth of the recession battering Spain, retail sales fell at their fastest pace on record in September, hit by a hike in value-added tax, after unemployment topped a record 25 percent in August.

Spanish bond yields rose as investors sought the safety of German Bunds

Reuters

But consumers still cautious, try to save more

Consumer confidence strongest in India, Indonesia

lobal consumer confidence edged higher in the third quarter, underpinned by an improvement in the United States, although uncertainty about the economy continued to cap spending, a survey showed. Sixty two percent of global consumers said they believed their national economies were in recession, up from 57 percent in the previous quarter, according to the survey by global information company Nielsen, released yesterday. Half of them expected recession to last for another year. Sixty nine percent of respondents said they were changing their spending habits to save more. Confidence remained strongest in emerging markets, headed by India and Indonesia. Switzerland, however, also featured in the top 10 most bullish consumer markets after its score jumped from the previous quarter, highlighting a widening recovery gap between northern and southern Europe. Thailand, Belgium, Australia and Norway also saw a noticeable increase in confidence while sentiment deteriorated sharply in Hong Kong, Israel,

Argentina and South Korea. The Nielsen Global Consumer Confidence Index rose 1 point in the third quarter to 92, after dipping 3 points in the second quarter, and was 4 points higher than a year earlier. The reading of below 100 nevertheless signals consumers are pessimistic about the outlook. Venkatesh Bala, chief economist at The Cambridge Group, a part of Nielsen, said further policy action was needed to boost global consumer confidence. “Much depends upon policy makers in the U.S., Europe and Asia to ensure healthy growth and lower unemployment as we move into 2013,” Mr Bala said. “Support for the weaker economies in Europe and eliminating the threat of combined tax increases and federal spending cuts in the U.S. are critical,” he said. “Emerging economies, such as China and India, need to also shift more toward domestic consumption and industrial liberalisation respectively.” “With the right policy actions, the global consumer will gain confidence to resume spending next year,” Mr Bala added. Reuters