Macau Business Daily, September 17, 2012

Year I Number 120 Monday September 17, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00 www.macaubusinessdaily.com

Homes market heats as pataca dips, yuan rises T

he linking of the pataca’s value to the United States’ currency means any new round of U.S. economic stimulus – essentially printing more dollars – could make it cheaper for outside investors to enter the housing market here. That’s the view of Joey Lao Chi Ngai, president of the Macau Economic Association.

He says the more the U.S. dollar-pegged pataca’s buying power falls relative to China’s yuan, the more attractive Macau real estate prices will seem to mainland investors.

He also points out the last time so-called quantitative easing occurred in the U.S., a lot of the money went not into the

U.S. economy, but into emerging, high return Asian asset markets such as Macau and Hong Kong.

“When the [Macau] currency remains weak, capital will naturally flow to assets like gold and property,” adds Ronald Cheung Yat Fai, chief executive officer of Midland Realty (Macau) Ltd. On September 13 the Federal Reserve in the U.S. announced a third round of quantitative easing – QE3 – buying US$40 billion (320 billion patacas) a month in mortgage bonds and keeping the interest rate at nearly zero until at least mid-2015.

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HANG SENG INDEX 20650

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Electoral reform ‘not a joke’: expert

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dding two directly and two indirectly elected legislators to the city’s political set up is a ‘big change’, Gabriel Tong Io Cheng tells Business Daily. The University of Macau academic – appointed by the chief executive to advise on the city’s legal framework – says he prefers the term ‘change of method’ rather than ‘reform’ for the so-called 2+2+100 system passed recently after public consultation.

The new arrangement has been criticised by some for disadvantaging the directly elected bloc of Assembly members. They started with fewer members.

“Adding four legislators is not a joke. It’s a big change, in relation to the political structure,” says Mr Tong.

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A unit of Chinese Estates Holdings Ltd – the developer of the La Scala housing project – has filed an appeal against the government’s planned seizure of the land. Subsidiary Moon Ocean Ltd – and a would-be flat purchaser – have “jointly lodged an appeal” to the Court of Second Instance. In a separate legal move, the Macau trial of Joseph Lau Luen Hung, the company’s chairman, which is due to start today may also be delayed.

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HSI - Movers

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Shops, landlords rift on tourist visa boom Small businesses and estate agents are divided on the impact of China’s new visa policy for the city. Some traders say the swelling crowds downtown are encouraging crippling rent increases by landlords. Even before the new rules – allowing non-residents in six major mainland cities to apply for Macau visas without going back to their hometowns – package tour visitors to Macau reached a new high in July.

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business daily September 17, 2012

macau Pataca weakens after four-month rise Last month the Macau currency weakened for the first time since April in comparison with the currencies of the territories’ major trading partners, the Monetary Authority of Macau announced on Friday. The trade-weighted effective exchange rate index for the pataca fell 0.34 points from July to 98.85 points. However, the index is still up by 5.19 points from August last year. Macau’s foreign exchange reserves increased by 0.3 percent month-on-month to 133.2 billion patacas (US$16.68 billion), accounting for 19 times the currency in circulation.

La Scala dispute reaches court Chinese Estates files court appeal over government’s decision to take back La Scala land; corruption trial could be postponed Vítor Quintã

vitorquinta@macaubusinessdaily.com

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he dispute over residential project La Scala has reached the Macau courts, with developer Chinese Estates Holdings Ltd filing an appeal over the government’s decision to take back land granted in 2006.

The company confirmed on Friday that its subsidiary Moon Ocean Ltd had not received any reply from the chief executive after it asked Fernando Chui Sai On to review its decision.

As such, Moon Ocean and a purchaser of a La Scala flat “jointly lodged an appeal” to the Court of Second Instance against the decision on Friday, Chinese Estates told the Hong Kong Stock Exchange.

The lawyer representing Chinese Estates, Jorge Neto Valente, confirmed the move and criticised the administration for revoking the concession contract six years after it was signed.

“The government is claiming it had no other choice but that’s not at all true,” he told Business Daily.

“The same law they are using to revoke the contract states that, when these issues occur, the administration must ponder the facts that have taken place during that period of time,” the lawyer said.

Chinese Estates “paid over 1 billion patacas [US$125 million] for the land

La Scala developer has filed a court appeal before Friday’s deadline after not receiving a government reply to objection

The government is washing its hands off the decisions made by [Mr] Ao when it should be accepting its responsibilities Jorge Neto Valente, Chinese Estates lawyer

premium and has already spent 2.8 billion patacas in investments,” Mr Neto Valente stressed.

The administration’s decision is hurting “thousands of investors who believed in the company and the buyers, of which over a hundred are from Macau,” Mr Neto Valente said.

“The government is washing its hands off the decisions made by [Mr] Ao when it should be accepting its responsibilities,” he said.

The Court of Final Appeal found in May that then-secretary for Transport and Public Works Ao Man Long received HK$20 million from Chinese Estates boss Joseph Lau

Summer boom for airport traffic Airport’s positive trend climbed even higher in July and August; Air Macau profit grew in first half Vítor Quintã

vitorquinta@macaubusinessdaily.com

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Flag carrier Air Macau saw its profit grow by 11.1 percent during the first half of this year (Photo: Manuel Cardoso)

assenger traffic volume at the Macau International Airport grew twice as fast in July and August as in the first half of this year, as three new airlines started flying to the city this summer.

The infrastructure handled over 876,000 passengers and recorded more than 7,600 aircraft movements in the past two months, up by 13 percent and 12 percent year-on-year.

After growing by just 6.7 percent during the first half of 2012, passenger volume accelerated to 11.6 percent in July and 14.4 percent in August.

Last month there were 453,000 passengers using the airport, the highest monthly figure in the last four years.

Luen Hung and BMA Investment chairman Steven Lo Kit Sing to ensure they would get the land.

The trial of Mr Lau, Mr Lo, and six other defendants for corruption and money laundering is due to begin today but it be adjourned “for at least two months,” he predicted.

Presiding judge Alice Costa has been sick, Mr Neto Valente said.

“There are requirements that the court must deal with beforehand,” some “important” witnesses have not been notified and “some defendants will not show up,” including the head of Belgium-based Waterleau NV Group, Luc Vriens, the lawyer said.

In July South Korea’s Air Busan, Thai Smile Airways, and AirAsia Philippines began flying from Busan, Bangkok, and Clark to Macau.

The airport has recorded 14 months of continuous passenger growth since June 2011, the Macau International Airport Co. Ltd – CAM reported.

During the first eight months of this year almost 2.93 million people have gone through the airport, up by 8.4 percent from the same period of 2011.

Meanwhile flag carrier Air Macau Co Ltd posted a net profit of 120 million patacas (US$15 million) during the first half of 2012, up by 11.1 percent year-on-year, the carrier’s controlling shareholder Air China Ltd told the Hong Kong Stock Exchange last week.

The company recorded a turnover of 1.5 billion patacas, which came mainly from a 14.2 percent jump to 742,100 in the number of passengers.

On the contrary, Air Macau carried about half of the cargo and mail it had in the first half of 2011, just 5,106 tonnes. On average the carrier failed to fill even a third of its cargo space.

September 17, 2012 business daily | 3

MACAU Lawrence Ho ups stake in Melco, MPEL profits Lawrence Ho Yau Lung, chairman of Melco International Development Ltd, is to increase his holding from 36 percent to 48.5 percent says a regulatory filing.

Hong Kong-listed Melco is a 33.6 percent shareholder in Macau casino operator Melco Crown Entertainment Ltd, which posted first-half profit of HK$408.4 million (US$52.6 million). Great Respect, a firm controlled by Mr Ho, is to convert nearly HK$1.18 billion in loans to the company into equity. The move “would result in a significant reduction of debt and substantially strengthen the company’s financial position” said Melco. It will also entitle Mr Ho to a bigger share of MPEL’s profits.

Weak currency, hot money to drive up housing prices More quantitative easing in the United States may boost prices of homes here, experts say Tony Lai tony.lai@macaubusinessdaily.com

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new round of ultra-loose monetary policy in the United States may further stoke the already red-hot housing market here.

The Federal Reserve has announced a third round of quantitative easing, called QE3.

It said it would buy US$40 billion (320 billion patacas) worth of mortgage bonds a month and keep its official interest rate near zero until at least the middle of 2015.

The US dollar fell against the other main currencies immediately after the announcement.

“The value of the US dollar will surely go down in the short term as this easing simply means printing more money,” said the president of the Macau Economic Association, Joey Lao Chi Ngai.

“The Macau currency would also weaken as it is indirectly pegged to the US dollar through the Hong Kong dollar,” Mr Lao told Business Daily.

“Whether the US dollar or the Macau pataca will further depreciate or rebound will depend on how successful the policy can secure capital in the [U.S.] market to boost the [U.S.] economy,” he said.

Mr Lao said the first two rounds of quantitative easing had sent hot money racing into Asian asset markets, including Macau and Hong Kong, as investors sought better returns.

Financial analysts blame the rising housing prices and inflation in Hong Kong on the loose U.S. monetary policy and consequent weakness of the U.S. currency.

But Mr Lao said this time round the effect might be different as the Fed’s bond purchases were smaller than before.

The pataca is expected to remain weak as the United States prints more money

In the second round of quantitative easing the Fed bought up to US$75 billion worth of bonds per month.

DailyFX financial analyst David Song told Agence France-Presse: “As the Fed refrains from embarking on an unlimited buying programme, currency traders may start to scale back their bearish forecast for the US dollar.”

Bigger shoes Ronald Cheung Yat Fai, chief executive of Midland Realty (Macau) Ltd, expects the U.S. and Macau currencies to remain weak for the rest of this year, causing a rise of 10 percent in housing prices.

“When the currency remains weak, the capital will naturally flow to assets like gold and property,”

Mr Cheung said.

Financial Services Bureau data show the price of residential floor space here rose to a new record of 62,137 patacas (US$7,767) a square metre in July.

Mr Cheung thinks the insufficiency of the supply of new flats will also push up prices.

He predicts that the government will take new measures to curb housing prices this year as the imposition last year of the special stamp duty on reselling homes soon after they are bought new has lost its effect.

The government’s housing market think-tank said last month that it did not rule out new measures to cool what it described as the “somewhat overheating” housing market.

Midland Realty thinks the emphasis should be on increasing supply, by quickening the approval of private housing projects, rather than on taxation.

“You will buy a pair of bigger shoes for your growing feet but you won’t try to suppress the growth of your feet,” Mr Cheung said.

Mr Lao wants the government to choke surges of hot money through heavier taxation of foreign homebuyers.

However, University of Macau economics professor Kwan Fung told TDM that the Fed’s policy might weaken the effect of any new measures taken by the government here to cool the housing market.

Hong Kong tightened mortgage lending on Friday after saying a third round of quantitative easing by the Fed risks pushing up home prices that have already surpassed their 1997 peak.

SJM earmarks 600 tables for Cotai

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mbrose So Shu Fai, chief executive officer of SJM Holdings Ltd, says the casino operator will reserve at least 600 tables for its planned Cotai project from its permitted table inventory.

The firm currently has 1,700 tables in the market.

“We are already constantly adjusting our tables to improve profitability,” he added in comments in Chinese to TDM TV news.

He said the company had submitted its Cotai land application

before 2008. SJM is currently awaiting government approval of the land grant in order to build a resort there. He added the new project would have an original design with unique Macau characteristics.

Cotai is increasingly important to the market as revenues there grow.

Mr So said speedy approval was vital as such large schemes take at least two to three years to build.

SJM’s current casino concession is due to expire in 2020 – two years earlier than those of its competitors.

editorial

Twin voices, same tale José I. Duarte jid@macaubusinessdaily.com

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wo recent events from important public bodies have produced some telling observations. They are relevant to form a judgment about the government’s performance and the functioning of the political system.

In both events, the comments were not flattering for the government and, if followed to their logical conclusion, inevitably lead to the conclusion that we need to re-think the way the political system functions.

Let us start with the comments of the Commission of Audit about the elevated light rail system, the LRT. The watchdog said two things: there was no effective project management and some of the technical choices made were unsubstantiated and unwarranted.

The report concludes that cost estimates were unrealistic, cost controls were inadequate, that quality control mechanisms were not developed.

When looking into the issue of the network’s route and complaints by some NAPE area residents, the Commission against Corruption said the chosen path does not meet technical and safety standards, and affects the “legitimate rights and interests of the population”.

Moreover, the Transportation Infrastructure Office failed to justify its decisions, “resorting to abstract explanations and vague words”.

One may agree or disagree with the report’s arguments and may accept or reject its conclusions.

What one cannot ignore is, the audit commission is stating as loudly as a body of its nature can, that the department in charge is either negligent or incompetent.

Amazingly, no one, at any level of responsibility in the civil service, stepped forward to either defend the performance of the department or accept responsibility for its failures.

Not to mention that the one thing any reasonable person would expect – a resignation – has not been asked for.

The second event of the past couple of weeks involved the president of the Legislative Assembly Lau Cheok Va. He had two complaints to make: the bills the government submits to the assembly are of poor quality and coordination between the two bodies is poor.

Moreover, he regrets the “slow response and stubborn attitude” of the government.

“This problem has been talked about for a long time, but won’t be solved without huge changes,” he said last week.

These complaints echo similar ones made by the immediate past president Susana Chou.

For what has been clearly a long time, the government has been submitting bad legal proposals to the assembly. Implicitly, even the compliance with the Basic Law of some proposals put forward by the government is put into question.

Then, it mostly failed to provide the adequate and timely information. Their attitude is stubborn.

This is the relationship the government has with the body that must approve its policies and the budget.

If this is what happens with the bills submitted to the assembly – which, lest we forget, are usually approved in the end without major changes – one shudders at what might go on with the decisions that are not subject to the immediate or direct control of any other body.

By allowing these situations to persist, the government is telling everyone that the public administration is intrinsically irresponsible.

Technically and administratively anything goes, nobody is supposed to take ultimate responsibility for the actions and performance of the government.

Both the audit report and Mr Lau’s comments, coming from within the system, are particularly damning. And we cannot fail to see them as related, as the outcome of some kind of deeper malaise.

An administrative culture that does not reward rigorous processes, technical competence or a solid sense of responsibility for the protection of the common good and the common goods.

The system is sputtering. Thank God pennies are still falling from heaven.

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business daily September 17, 2012

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HOSPITALITY Jobs growth As the numbers of casinos and hotels have climbed, demand for workers to fill certain jobs has increased extremely fast. We will leave aside construction, where increases in the number of jobs are often temporary and naturally precede the increased demand for staff to man the casinos, restaurants and hotels that construction workers build. Not all the new jobs in hotels and casinos are fulltime. But most are. The Statistics and Census Bureau’s surveys of employment in a few selected industries give a breakdown of some of the jobs that keep the casinos, restaurants and hotels running. The gaming industry and the hotel and restaurant industry offer some interesting clues about the dynamics of the market for full-time workers. The Statistics and Census Bureau does its surveys twice a year, but not simultaneously. They should be taken as indicative, and not as a rigorous measure of employment at any given time.

It is clear that growth in full-time jobs in the hotel and restaurant industry has been faster than growth in full-time jobs in the gaming industry. The figures indicate that the hotel and restaurant industry had 3.5 times more full-time jobs at the end of the period under review than at the beginning, and that the gaming industry had 2.7 times more. Hotels and restaurants have provided more full-time employment than casinos since 2008. Hotels and restaurants now have more than 10,000 more jobs than casinos. Housekeeping and waiting are among the most labour-intensive services in the hotel and restaurant industry. They are also important sources of jobs and income for not-so-highlyqualified workers.

The rise in the numbers of these kinds of jobs in hotels is in line with what we might expect from the expansion of the industry. The comparatively slow growth in the number of waiters in restaurants probably indicates the difficulty that smaller businesses have in filling their vacancies as they compete with bigger businesses for recruits from a relatively small pool of available labour.

J.I.D.

Jurist says four new legislators is no joke The addition of four new seats will be a great change for the Legislative Assembly next year, says a government-appointed member of the assembly, Gabriel Tong Io Cheng.

In an interview with Business Daily, Mr Tong says he regards the political reforms as the highlight of the past session of the assembly, and that he expects the new seats to allow representation of a wider range of interests in the assembly.

Mr Tong says that in general the law needs to be more specific and less susceptible to various interpretations.

He says the workings of the courts should be more open to public scrutiny and debate, and that their judgements should be more accessible to the public.

Luciana Leitão leitao.luciana@macaubusiness.com

What would you choose as the highlight of the legislative session that ended this month?

The changes to the electoral laws for the chief executive and the Legislative Assembly. I think we had foreseen the year before that we had to do it this year. Most of the attention of Macau society was on this issue.

What’s your opinion on the 2+2+100 solution?

There were people doubtful about the result for many and various reasons.

I see it differently. If Macau society had not supported this law, it would not have been so easy for us to have got it done and to have presented it to the central government. Sure, there are different opinions but, generally, the majority of Macau citizens were in favour of this project.

We can also say if you had had other alternatives there might have been other results but I think, in general, Macau society accepted this solution.

We’ve been talking about democratic reform for a long time. The fact that the result was an increase of only two directly-elected and two indirectly-elected legislators doesn’t seem as significant as the concept implies. Or was it?

It was never supposed to be a reform but a change of method. There were people expecting to have more participation in political issues as well as the development of society and to have some way to express their views.

But for the political development of Macau, we have to think of different matters. Macau is a special administrative region and we have autonomy in many aspects. The political structure of Macau, in itself, is different from that of a country. Using a conciliatory way is easier than being adversarial, I think everyone is working for the better of society and the majority were up for a conciliatory way.

Next month the current assembly will enter the final year of its term.

What do you expect for the coming session?

I have concerns about several matters that are pending, like the land bill, the bill on the sale of unfinished housing and the estate agency bill.

Now there’s an ongoing discussion on the bill about sales of properties, buildings still under construction.

All these kinds of things are basic civil matters. These have some political implications but, by and large, it’s more about the lives of people and the functioning of the government. I think we have a heavy schedule ahead of us.

I wish I could do more but there is also the very controversial reform of the criminal procedure law which falls upon our shoulders. It’s also a very sensitive issue.

It has to do with our judicial system, which is one of the things Macau society complains about a lot and wishes to see some changes to. There are opinions in different sections of the community about the system.

Sharp legal mind Gabriel Tong Io Cheng is a professor in the Faculty of Law at the University of Macau, acting dean of the faculty and a member of its academic council. He is a government-appointed member of the Legislative Assembly, who is also a member of the Law Reform Consultative Committee.

All these issues, which have to be done in one year, are a heavy duty.

It involves the very construction of our social structure, economy and public life.

What are your expectations about the bills you’ve mentioned?

I’m still working on them. As proposed by the government in the policy address for this year, they are expected to be approved within this session and this objective is, in itself, a very difficult one. At the moment we need more input from society, more technical exchanges.

For sure, I am myself a law professor and I have some knowledge in this field. I also need the support of our legal advisers.

On the other hand, making law is not only a technical issue. The public inputs or opinions on how to handle those are mostly different. How do you handle these conflicting interests? For sure, it will require the legislator to be objective and decisive. The most important thing for a legislator to do is to look at things objectively.

Regarding real estate, this year we’ve heard associations and citizens demanding a law defining limits for rents and prices of housing in Macau. Do you agree with them?

Having a regulatory framework does not mean the government can interfere with some very basic principles of an economy. In the present circumstances, direct intervention has been proven somehow to be not very effective.

If the government would like to control or to impose its own value on the market, we would have to see first if this kind of intervention would have an effect of a kind favourable to society. We cannot tell if it’s too big a risk, unless another society with similar characteristics has experienced it and has proved it cannot work. I think, when people are proposing these kinds of ideas, that the government has to think about the risk.

September 17, 2012 business daily | 5

MACAU On past occasions you have mentioned that there should be more laws regulating society. Why is that?

What I’ve mentioned is there should be more laws about the details. The bill on the sale of unfinished housing is a good example, as well as the legal aid bill.

They do not determine the basic structure of our system. Not every country has a legal foundation so firm that you don’t need to fight for it, argue for it for tens or hundreds of years, to establish a stable environment. We already have a stable environment.

The kind of laws I mentioned are about details. People want to know what they can or cannot do according to the law, and not according to the free judgement of officials or authorities. They need to have a way life where there is a level playing field. That’s why we need more laws on the details.

So the government shouldn’t intervene in this case?

It should be very cautious. If you do more than that, you it can have unintended consequences. You see surrounding regions like Hong Kong, mainland China – they have taken some measures and we can see if these measures work or not.

Our market is smaller and their experience could be taken into consideration when the government makes a decision. Personally, I think it depends on the weight of the measure.

I have concerns about several matters that are pending, like the land bill, the bill on the sale of unfinished housing and the estate agency bill

Are we improving in this regard?

It has to be the interested parties that state their needs to those that have the right to propose [legislation] in order to get a better system.

So, in light of this, I think society is more and more conscious about the real estate sector. They know they cannot survive forever with such a loose framework and they need more regulatory details. Society will demand this and the industry itself will also demand it. Awareness in society is the driving force.

The courts are constantly being criticised for the time they take to decide cases. Is there a way to improve this?

For sure, there is. I’ve continuously insisted on this point. We need to know what the courts are doing. The courts are independent and they are protected by their judicial autonomy.

We are not going to interfere in their decisions. But there are things that can be discussed. For example, administrative procedures in the courts can be discussed. It has nothing to do with autonomy and judicial power. In Portugal and everywhere in Europe, the modernisation of judicial procedures by computerisation had proved to be good and has helped.

On the other hand, there is one point I stress all the time: a court judgment has to be accessible to the public – particularly in Macau, since we’re such a small place.

We’re not going to wait for it to go through the entire appeal process to look at it.

In Macau, I think the Court of First Instance has to find a way to release the information, which is

very relevant for the construction of a better system and for ensuring a just decision and due process. If this is not reviewed, I will have a lot of worries. I’ll continue to ask for it.

Could more judges solve part of the problem?

It would solve it, but only partly.

But there is always this kind of dispute, this uncertainty about judgements, which is itself a very important element of the legal system. Comparing the number of judges with the size of Macau, how much should you increase it by?

Perhaps not much.

Next year there will be an election for the assembly. Do you expect any changes in the assembly’s structure?

Adding four legislators is not a joke. It’s a big change, in relation to the political structure. When people were discussing how many legislators would be needed to propose a public hearing, if you add four more and three of them are democrats, the situation could be different from what it is today.

For sure, there will also be growth in demand for participation by different sectors of society. They have to work hard for it, to fight for it in the next legislative session.

If in the past legislature we already saw many changes in the composition of the interest groups that got seats in the Legislative Assembly, next year the diversity will be even bigger. The other thing is how the citizens of Macau will judge the performance of the legislators. Are they really satisfied with the current ones, including me? This will reflect on the legislature.

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business daily September 17, 2012

macau MGM Resorts issues bonds to repay debt

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Casino operator MGM Resorts International sold US$1 billion (8 billion patacas) of eight-year bonds in its first offering in six months. The controlling shareholder of MGM Macau resort will pay an interest of 6.75 percent, 5.33 percentage points higher than similar-maturity treasuries, according to data compiled by Bloomberg. The company earlier marketed US$700 million of the securities. Proceeds will be used to repay bonds or loans, MGM Resorts said on Saturday in a filing. The company’s long-term debt reached US$14.1 billion at the end of June.

Employment stories Much is said about the sectors that drive the economy, especially gaming and construction.

Both of these sectors are leading providers of growth and contribute to rising income. Less common is a consideration of what is happening in other parts of the economy that may be less relevant in terms of income generation but that may have a significant impact on both the quality of life of residents and longer-term prospects for development. Such is the case with the civil service and sectors such as education, health, entertainment and cultural activities.

Overall, employment has gown by 48.2 percent between 2004 and 2001.

LVS and Sands China sanctioned in Jacobs case Nevada judge says firms ‘intended to deceive’ wrongful termination hearing Associate Editor

In each of the four sectors graphed here, the number of people employed has grown. But, with one exception, they have increased at a rate slower than the average. Administration staff, with 27 percent, and the education, with 16 percent, both increased their numbers well below the average. Staff in recreational and cultural activities, excluding gambling, rose by 41.7 percent – just slightly below the average. The number of people employed in the health sector are the only category in this analysis that have outgrown the average, with a growth rate of 70 percent. Altogether, these sectors lost relative weight in total employment. Between 2004 and last year, they lost two percentage points in their share of total employment which stood at 16.4 percent last year.

Steve Jacobs

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In terms of their share of the city’s workforce, the four sectors display different patterns.

The relative size of the civil service or public administration went backwards up to 2008 but that trend seems to have been reversed. It is still, however, about 1.2 percentage points below what it was in 2004. The comparative number of people employed in education has decreased, a trend that may have reached a plateau. The percentage of people employed in the healthrelated industries has increased, mainly within the past three years. The pattern of employment in the recreational and cultural activities has shows a mixed evolution. Employment rose and decreased immediately after. Recent steady growth seems to be headed downwards.

J.I.D.

as Vegas Sands Corp. and its Sands China Ltd unit have been criticised and punished by a Nevada judge in the wrongful termination lawsuit brought by its former Macau boss Steve Jacobs.

Clark County District Judge Elizabeth Gonzalez, sitting in Las Vegas, said the companies intentionally deceived her in nine hearings in the case between May 2011 and May 2012. The procedural wrangles centred on what electronic evidence – including e-mails from Mr Jacobs’ work computer in Macau – could or could not be exported to the United States because of what the companies described as the constraints of Macau’s personal data privacy law.

The judge ordered a sanctions hearing after Sands’ lawyers disclosed to Mr Jacobs in June that his e-mails and other computer files had been in Las Vegas for more than a year.

After a three day hearing on the

sanctions issue, Ms Gonzalez said in a written ruling: “The repeated nature of defendants’ and defendants’ agents conduct in making inaccurate representations over a several month period is further evidence of the intention to deceive the court.”

She said the companies would not in future be allowed to use Macau’s personal data rules as a pretext for limiting another procedural debate in the case; whether the Nevada court even has jurisdiction over Sands China.

Costs order The judge also ordered LVS and Sands China to pay US$25,000 (200,000 patacas) to the Legal Aid Center of Southern Nevada and to pay the attorneys’ fees of Mr Jacobs relating to the nine ‘unnecessary’ hearings.

“Given the number of occasions the Macau Personal Data Privacy Act and the production of ESI [electronically stored information] by

defendants was discussed, there can be no other conclusions than that the conduct was repetitive and abusive,” she added in her order.

Judge Gonzalez said the companies had moved key information to Las Vegas as early as August 2010. That was before Mr Jacobs even filed suit following his dismissal in July that year.

Mr Jacobs started his suit in October 2010 alleging he was dismissed because he wouldn’t give in to “illegal demands” from Sheldon Adelson, the chairman and majorityowner of LVS. The former Sands China boss said Mr Adelson directed him secretly to investigate Macau government officials and use “improper leverage” against them. LVS has denied Mr Jacobs’s allegations and has said it is cooperating with U.S. Department of Justice investigations into the claims.

LVS declined to comment on the judge’s ruling.

With Bloomberg

September 17, 2012 business daily | 7

MACAU Ao-linked executive out on parole Macau businessman Frederico Nolasco da Silva (pictured left) has been granted parole after serving over half of a six-year jail term for active corruption and money laundering in connection with former secretary Ao Man Long. According to Rádio Macau sources, the former administrator of Macau Waste Systems Co. left a Portugal prison, to where he had been transferred on July 31, 2010. Mr Nolasco was sent to jail for bribing Mr Ao to secure and later renew a solid waste management contract, the Macau lower court found.

Govt legal reform ineffective: Chou Former head of the Legislative Assembly asks government to improve efficiency and speed up legal reform Xi Chen

xi@macaubusinessdaily.com

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dministrative and legal reforms in the territory have been ineffective in the last decade, the former president of the Legislative Assembly Susana Chou Kei Jan, wrote in her blog last week.

The government had designed numerous reform plans but little was done, she said.

Ms Chou quoted a past quip by the president of the Court of Final Appeal, Sam Hou Fai, that many laws currently applied in the territory are already ‘museum items’ in Portugal to stress that many present laws are outdated and irrelevant.

Reforms should not be empty talk and the government should have a clear goal in mind and improve its administrative efficiency, she said.

Without a budget framework law, it’s impossible for legislators to supervise public spending, Susana Chou wrote

Ka Ho residents stand their ground After demolition scuffles, residents from Ka Ho remain firm on protecting their homes and take up issue with legislators Xi Chen

xi@macaubusinessdaily.com

T

he government has no right to reclaim land allegedly occupied illegally while the issue is still being reviewed in court, a group of Ka Ho residents told legislator Chan Meng Kam. Mr Chan said he would reflect the residents’ views back to the government for a proper resolution.

“If there is already a legal verdict, then the government should just enforce it. But if the issue is still under the legal appeal process, maybe the government could have dealt with the matter better and communicate more with the residents,” Mr Chan said quoted by public broadcaster TDM. On Thursday the Land, Public Works and Transport Bureau launched an operation to take back a Ka Ho plot where a house has been built two years ago.

But the residents claimed they had appealed to the Court of Final Appeal and that the bureau should not make any move, Macau Daily Times reported.

The government action last

week was met with intense protests.

Around 70 residents faced off with 100 police officers that resulted in five people being hospitalised and 12 protestors detained.

Legislator Au Kam San, in a press conference organised by the Ka Ho residents, said that the conflict would continue if the government does not deal with the legacy of historical land contracts properly, TDM reported.

Unclear land titles have been an issue plaguing Coloane’s development, as many buildings there are not officially registered with the government as private properties.

The old land deeds, known as ‘sa chi kai’ in Cantonese, were not recognised by the former Portuguese administration.

And the MSAR Basic Law states that the current government will not recognise such deeds as a valid certification document of land ownership.

The government will hold a meeting with Ka Ho residents today to discuss the matter further.

Legal reforms should start small and focus on areas that are most relevant to improve people’s day-today life, Ms Chou said.

Criticism over the assembly’s poor supervision of government spending is deserved, the former official added.

However, she revealed, “When I was at the assembly I never stopped asking the government [to put forward] a draft law on a budget framework”.

Without such a law, “it is almost impossible to effective supervise the use of public money,” Ms Chou said.

The current Legislative Assembly president Lau Cheok Va also voiced his criticism in the same week, saying that the government had drafted poor quality bills and its legislative programme was not well coordinated.

8 |

business daily September 17, 2012

macau Macau founding member of tourism cities union The World Tourism Cities Federation was founded in Beijing on Saturday and Macau is one of its founding members. The city was also appointed for the federation council, the Macau Government Tourist Office announced during the 1st World Tourism Cities Expo. The federation has 58 members, including the cities of Barcelona, Berlin, Dubai, and Los Angeles. Its goal is “not only to promote tourism resources among cities but also to foster the implementation of tourism policies at national level through tourism exchange among member cities”.

Mainland tourist surge may be mixed blessing Visitors may mean more business, but may also increase shop rents and put the city’s resources under extra strain Xi Chen

xi@macaubusinessdaily.com

S

hop rents in tourist areas here may be buoyed now that the mainland no longer makes internal migrants living in six cities return to their home towns to get a permit to visit Macau.

“The rents around the San Ma Lou area will go up forever unless the government terminates the individual visit scheme for a few months,” said Lo Tong Yui, the owner of Leitaria I Son, a milk dessert shop in the San Ma Lou tourist area.

Public broadcaster TDM quoted Mr Lo as saying said his shop had to make at least 20,000 patacas (US$2,500) a day to break even and that he would move it elsewhere if the rent rose to unbearable heights.

Cafes and restaurants in San Ma Lou have been closing or moved away in the past few years because of high rents.

TDM quoted an estate agent as saying that shop rents in the area had increased tenfold in the past few years to at least 300,000 patacas a month.

The new rule for mainland internal migrants makes it easier for up to 20 million people to visit Macau.

Shopkeepers and estate agents expect the new rule to mean more business.

Restrict the flow Lok Fu Realty Co chairman Si Fong Un said profits had gone up along with shop rents in San Ma Lou. He believes the business

High rents have forced cafes and restaurants to close or move away from San Ma Lou

environment for small and medium enterprises there is much better than in the north of the city.

Mr Si said rising rents were attributable not only to the growing number of tourists but also to mainland monetary policy and the U.S. Federal Reserve’s ultra-loose monetary policy.

University of Macau academic Ricardo Siu Chi Sen said the government should follow the Hong Kong government’s lead and restrict

visits by mainland internal migrants travelling as individuals rather than in tour groups, and come up with a sustainable tourism policy.

Mr Siu doubts that the city can handle all the tourists that wish to visit here.

He said trying to squeeze them all in would use too many resources and damage the economy in the long run.

“The profiles of mainland China’s migrant workers and their consumption habits might not be

Package tourists at all-time high Rising numbers of package tourists buck general decline in tourist arrivals Tony Lai

tony.lai@macaubusinessdaily.com

D

espite a year-on-year decline of 4.2 percent in tourist arrivals in July, the number of tourists entering Macau with a tour group increased by 19.5 percent over the month before.

July’s 825,464 tour-group arrivals was the highest figure since the Statistics and Census Bureau began compiling data on package tours in 1998.

The mainland is the city’s leading source for package tourists, accounting for more than 70 percent, the data released on Friday shows.

The number of visitors coming from Guangdong more than doubled

in July to more than 256,000 tourists.

The city also received 50 percent more travellers from Taiwan tour packages, while Hong Kong arrivals increased by 14.4 percent in July.

In the first seven months of this year, more than 4.9 million visitors arrived in Macau as part of package tours, a year-on-year growth of nearly 25 percent.

But the number of overall visitors tells a very different story.

The number of travellers visiting Macau has decreased year-on-year from May to July.

Macau Travel Industry Council president Andy Wu Keng Kuong said the decrease in the number of arrivals was “due to drops in the Hong Kong sector”.

“The number of visitors in package tours, mainly composed of mainland Chinese, is unaffected,” he told Business Daily.

“Package tours, usually offering a very low price, can attract tourists when consumer prices in Macau are high.”

Meanwhile, more Macau residents went on tours abroad in July, up by 73.2 percent from a year ago.

Even though the number of hotels and guesthouses remained unchanged at 99, the number of rooms fell by 33 to 24,235.

The average occupancy rate was at 85 percent, a drop of 3.2 percentage points from 12 months before.

Mr Wu expects the occupancy rate to stay above 80 percent for the rest of

in line with Macau’s long-term development path,” he said.

Mr Siu thinks the government should reallocate tourism resources and improve infrastructure to prepare for the next big wave of tourists when the Hong Kong-MacauZhuhai Bridge opens in 2015.

The first of the mainland internal migrants to obtain permits to visit Macau without returning to their home towns may arrive next month, during the National Day holidays.

the year and the room rate to remain stable, thanks to stable demand.

Macau Hoteliers and Innkeepers Association president Chan Chi Kit said last week that hotels might start a price war to attract customers because of September’s low occupancy rate and the opening of the first phase of Sheraton Macau Hotel this week with 1,800 rooms.

825,464 Package tourists in July

September 17, 2012 business daily | 9

greater china

Xi Jinping reappears in public After a two-week public absence

C

Japan urges China to stop attacks Panasonic plant was on fire as protests escalate

P

anasonic Corp.’s factory in the port city of Qingdao was damaged by fire yesterday, while thousands demonstrated at the Japanese consulate in Shanghai as protests escalated across China over a territorial dispute with Japan.

Smoke and flames were reported as coming from Panasonic’s electronicparts plant in eastern Shandong province because of crowds of demonstrators, said Atsushi Hinoki, a Tokyo-based Panasonic spokesman.

A janitor’s office at a plant in Suzhou, Jiangsu province, was also damaged, he said. There were no injuries and the damages are being assessed, Mr Hinoki said.

In Shanghai, military police in riot gear were called in to control more than several thousand protesters outside the consulate calling for a boycott of Japanese goods. Japan’s new ambassador to China died yesterday after an illness, the Foreign Ministry said.

Japan’s Prime Minister Yoshihiko Noda will tell China to ensure the safety of Japanese citizens after protests in Chinese cities over disputed islands led to attacks on facilities of Panasonic Corp. and Toyota Motor Corp.

“I intend to strongly demand that the Chinese government ensure security” of Japanese citizens, Mr Noda said yesterday on public broadcaster

NHK’s “Sunday Debate” programme.

“I strongly object” to the burning of Japanese flags and the protests.

“We intend to react calmly and firmly,” Mr Noda said. “We will act firmly and securely protect the Senkaku islands.”

Tensions between Asia’s two largest economies escalated after Mr Noda’s government said last week his country would purchase disputed islands in the East China Sea from their private Japanese owner, prompting China to dispatch government vessels near the islands known as Senkaku in Japanese and Diaoyu in Chinese.

Protests occurred in Qingdao, Xi’an, Guangzhou and Hong Kong on Saturday as more than 1,000 demonstrators gathered outside the Embassy of Japan in Beijing. Japan’s Kyodo News said more than 40,000 people joined the demonstrations in 20 Chinese cities.

Japan envoy In Shanghai yesterday, hundreds of military police were brought in to separate groups of protesters outside the Japanese consulate chanting, “down with Japan devils, boycott Japanese goods, give back Diaoyu”.

There were no reports of injuries.

“Japan is becoming more and more arrogant and the feelings

of Chinese are increasingly being oppressed,” said Xiao Feng, 26, an office worker who came to Shanghai to join a few hundred other protesters from Jiangxi province. “We need to step up and make our feelings known that they can’t just have their way.”

Japan’s incoming envoy Shinichi Nishimiya died yesterday morning after an illness, the Foreign Ministry said in an e-mailed statement. Mr Nishimiya was sent to the hospital for an unspecified illness two days after his appointment, the ministry said on September 13.

Foreign Minister Koichiro Gemba and Defence Minister Satoshi Morimoto returned to Tokyo on Saturday after cutting short a visit to Australia, public broadcaster NHK reported.

Chinese fishermen from Fujian and Zhejiang provinces may resume their activities near disputed islands with Japan yesterday after a threemonth seasonal moratorium, China National Radio reported. More than 1,000 fishing boats go there every year, according to CNR. Activists from Hong Kong plan to sail to the islands tomorrow China National Radio reported on its website yesterday. Japan last month arrested and deported a group that departed from Hong Kong, including one activist from Macau, and landed on the islets to assert China’s claim.

Bloomberg

hinese Vice President Xi Jinping appeared in public for the first time in two weeks, ending an absence that fuelled speculation about his health and prospects for succeeding Hu Jintao as the nation’s leader.

Mr Xi visited an exhibition at the China Agricultural University in Beijing on Saturday, according to the official Xinhua news agency. China Central Television showed footage of the 59-year-old smiling and shaking hands with children while taking part in activities to mark National Science Popularisation Day, and China National Radio broadcast Mr Xi’s voice as he delivered a speech during the event.

His appearance may alleviate concern about the leadership succession in China, where the Communist Party is likely to meet as early as next month ahead of a once-in-a-decade transfer of power.

Chinese officials had declined to comment on reasons for Mr Xi’s cancellation of meetings this month with U.S. Secretary of State Hillary Clinton and Singaporean Prime Minister Lee Hsien Loong.

“The photo and news release from Xinhua aren’t enough to end all the rumours and doubts about Xi,” Linda Li, a professor of political science at City University of Hong Kong, said. “This can only show that Xi’s situation isn’t deteriorating. If China wants to further allay speculation over his health and uncertainties over leadership transition, it might need to release more information on Xi’s schedule in the near term.”

Mr Xi will attend the 9th China-ASEAN Expo that starts on September 21 in the southwestern city of Nanning, Foreign Ministry spokesman Hong Lei announced in a statement posted on the ministry’s website yesterday.

Agencies

Hong Kong tightens mortgages To prevent bubble after Fed stimulus

H

ong Kong’s central bank tightened mortgage lending after saying a third round of quantitative easing by the U.S. Federal Reserve risks pushing up home prices that have already surpassed their 1997 peak.

The central bank is limiting the maximum term on all new mortgages to 30 years, Norman Chan, chief executive of the Hong Kong Monetary Authority, told reporters on Friday. Mortgage payments for investment properties can’t be more than 40 percent of buyers’ monthly incomes, from the current 50 percent, he said.

The measures are the second set of curbs in as many weeks by the government of new Chief Executive Leung Chun Ying, who is trying to rein in home prices that have gained more than 85 percent since early 2009.

Hong Kong property stocks surged, pushing the benchmark Hang Seng Index to a four-month high, after the Fed said on Thursday it will continue buying assets in a third round of quantitative easing and may employ other policy tools if the U.S. labour market doesn’t improve.

“The new measure will deter speculative and investment demand and the yield for property investors will be lower,” said Raymond Yeung, a Hong Kong-based economist at Australian & New Zealand Banking Group Ltd.

Stand ready Record low mortgage rates, an influx of buyers from other parts of China and a lack of new supply have been underpinning the Hong Kong property market, prompting

Mr Leung, who was sworn in as the city’s leader in July, to accelerate land sales and give preference to local buyers in some projects.

The introduction of QE3 “will create the potential for renewed influx of capital into Hong Kong,” Mr Chan said. “We have to stand ready for it.”

The central bank also raised the minimum down payment on investment properties for buyers who derive their income from outside Hong Kong. Investors using their assets – not income – to borrow can now only take out loans for as much as 30 percent of a property’s value, Mr Chan said. The restrictions are effective immediately.

The city’s Financial Secretary John Tsang also said on Friday that QE3 may push up Hong Kong home prices and the government won’t hesitate to introduce more property curbs if needed.

Home prices in HK have gained more than 85 percent since 2009

Buyers from other parts of China made up 36.8 percent of all new sales by value in the first quarter, down from 37.9 percent in the previous three months, according to Midland Holdings Ltd. The proportion reached 53.9 percent in the third quarter last year, the realtor said.

The nine-member Hang Seng Property Index jumped 3.2 percent to the highest since August 2011 at the close of trading in Hong Kong, before Chan announced the new measures.

That extended its gain this year to 27 percent, more than double the 12 percent advance in the Hang Seng Index over the period.

Bloomberg/Reuters

10 |

business daily September 17, 2012

ASIA Seoul halts crude imports from Iran South Korea stopped buying crude oil from Iran in August after its refiners lost insurance coverage on ships carrying the fuel from the Persian Gulf nation. Purchases fell to zero last month, reducing imports from Iran for the first eight months of this year by 34 percent from a year earlier to 5.39 million tons, according to data posted on the Customs Service’s website on Saturday. South Korea bought 1.14 million tons of crude oil, or 36,738 tons a day, from Iran in August 2011.

India opens retail, aviation to overseas investors These steps will help strengthen our growth process and generate employment in these difficult times Manmohan Singh, India’s Prime Minister

KEY POINTS Spate of reforms aimed at reviving economy Allies, opponents protest moves on supermarkets, diesel Policy reforms needed for average GDP growth of 8.2 pct – PM Singh

But coalition ally says the government ‘must scrap’ retail reform

I

ndia threw open its retail and aviation industries to foreign investment as a newly assertive government bids to shake off a sense of crisis over the slowing economy and a stalled agenda, risking a political backlash.

In the biggest policy push of Prime Minister Manmohan Singh’s second term, proposals to allow overseas retailers like Wal-Mart Stores Inc. and Carrefour SA to own 51 percent of supermarket chains, shelved last year after alliance partners threatened to revolt, have been enforced, Commerce Minister Anand Sharma said on Friday. Overseas airlines are allowed to own 49 percent of Indian carriers, he said.

The measures “will help change the perception about the government that it doesn’t have the ability to take decisions,” said Samiran Chakraborty, a Mumbai-based economist at Standard Chartered Plc. “If this changes the perception that investors have about India, this could be positive for inflows, equities and for the currency.”

Mr Singh and his ruling Congress party have just 18 months to reverse shrinkingsupportandrestoreconfidence in their economic management before

Opponents say the move will have a drastic effect on smaller retailers and cornershops

the next general election. The changes in ownership rules don’t require approval by parliament.

Together with a September 13 deficit-reducing 14 percent increase in diesel prices, the decisions announced

by Mr Sharma in New Delhi mark a sustained effort to ease criticism of Mr Singh’s administration. The government has been assailed by two years of corruption allegations, while its agenda has been stymied

by opposition parties and coalition allies alike.

Political opponents and a key coalition ally took to the streets on Saturday.

“We demand a rollback of diesel prices and no FDI [foreign direct investment] in retail should be allowed. Do not attack the livelihood of small traders,” Mamata Banerjee, chief minister of West Bengal state, told a rally

Stocks post biggest weekly advance this year On Federal Reserve pledge to help U.S. economy

A

sian stocks gained last week, with the regional benchmark index posting its biggest weekly advance since December, after the Federal Reserve in the U.S. said it will buy mortgage-backed securities to bolster economic growth.

Sony Corp., Japan’s biggest electronics exporter, climbed 8.3 percent in Tokyo. BHP Billiton Ltd, the world’s biggest mining company and Australia’s No. 1 oil producer, increased 4.2 percent in Sydney as commodities gained. Fraser & Neave Ltd rose 7 percent to a record high in Singapore after Thai billionaire Charoen Sirivadhanabhakdi offered to buy the rest of the developer and brewer for S$9 billion (US$7.4 billion).

“The Fed move has provided the market a shot in the arm,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd. “This should help

keep mortgage rates low and boost the housing sector. While there are still constraints to U.S. growth, the Fed has pledged to keep stimulating the economy until the labour market improves.”

The MSCI Asia Pacific Index advanced 3.8 percent last week to 123.60, the most since the period ended December 2. It rose 5 percent through Friday this quarter amid speculation U.S., China and Europe will step up efforts to support economic growth. The Asian benchmark traded at 12.8 times estimated earnings, compared with 14.2 for the Standard & Poor’s 500 Index and 12.3 for the Stoxx Europe 600 Index.

Combating slowdown South Korea’s Kospi index gained 4 percent as data showed the nation’s

exports and imports increased in August from July and brokerages surged. Japan’s Nikkei 225 Stock Average rose 3.2 percent. Australia’s S&P/ASX 200 advanced 1.5 percent.

Hong Kong’s Hang Seng Index jumped 4.2 percent, while China’s Shanghai Composite Index slid 0.2 percent amid warnings that investors shouldn’t expect the same sort of massive stimulus that accompanied the last economic downturn in 2008.

The MSCI Asia Pacific Index on Friday rallied to its highest close since May 4 after the Fed said on Thursday it will conduct open-ended purchases of US$40 billion of mortgage debt a month and pledged to keep federal fund rates near zero “at least through mid-2015.”

“The Fed’s statement made clear that this monetary easing will go on until employment growth is satisfactory,” said Akio Yoshino,

South Korea’s Kospi index gained 4 percent last week

chief economist in Tokyo at Amundi Japan Ltd. “This time around we have a clear link between the economy and monetary policy, and that’s a very big thing. It should give powerful support for markets to appreciate.”

Euro bailout Companies that do business in Europe rose after Germany’s Federal Constitutional Court cleared the way for a permanent euro-area bailout fund. Canon Inc., the world’s largest camera maker, added 7.5 percent to 2,783 yen in Tokyo. HSBC Holdings

September 17, 2012 business daily | 11

asia Sony, Olympus in tie-up talks Sony Corp. yesterday declined to comment on media reports it’s near agreement to invest in Olympus Corp. Olympus on Saturday denied a report by public broadcaster NHK that the two companies are in the final stages of talks. Sony will invest about 50 billion yen (US$640 million) in Olympus and set up a company to manufacture medical equipment, NHK reported. “We haven’t narrowed down the candidates for capital alliance,” Tsuyoshi Oshima, a spokesman for Olympus, said. Sony has made no decision and wasn’t the source of the reports, it said in a statement.

attended by thousands in Kolkata.

Mr Banerjee, whose Trinamool Congress party has been an unreliable ally to Mr Singh’s Congress party in the coalition, said the party would “take a tough decision” if the measures were not reversed, a hint she could withdraw the party’s support.

Fuelling growth Offering an olive branch to regional leaders who have said they’ll oppose the arrival of large overseas retail chains over concerns they will put millions of small shopkeepers out of work, Mr Sharma said it will be up to state governments to decide if they want to adopt the policy.

Indian airlines, which have delayed salaries and defaulted on payments to airports and fuel suppliers because of cash shortages, will now be free to seek foreign investors.

India has been planning the policy change for its airlines for more than three years as Kingfisher Airlines Ltd, controlled by billionaire Vijay Mallya, and state-owned Air India Ltd delayed salaries and defaulted on payments to airports and fuel suppliers because of cash shortage.

“These steps will help strengthen our growth process and generate employment in these difficult times,” Mr Singh said in comments posted by his office on his Twitter Inc. account.

India’s growth target was lowered to 8.2 percent for the 12th five-year plan started April 1 from an earlier estimate of 9 percent given the state of the global economy, Mr Singh said on Saturday while addressing the Planning Commission.

Growth could easily slow to 5

percent annually if the worst case scenario of a policy logjam persists, he said.

The higher fuel prices brought calls for a rollback from Singh’s allies, pressure he has in the past responded to by lowering the size of the increases. He may face even stiffer opposition to the biggest change to foreign investment caps since the government was re-elected in 2009.

Allies such as Mr Banerjee have said they will continue to oppose moves to allow overseas companies Wal-Mart and others into the country.

Mr Banerjee’s party yesterday gave the government 72 hours to reverse the policy changes, Press Trust of India reported.

“There seems to be agreement among policy makers that growth is taking a huge hit,” N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy in New Delhi, said yesterday before the foreign investment announcement. “If you don’t take policy measures you’re not going to be able to control the slide.”

Amid the political gridlock, India’s economic growth potential may have fallen to 6 percent to 6.5 percent a year, below the Reserve Bank of India’s 7.5 percent estimate, JPMorgan Chase & Co. said. Foreign direct investment fell 67 percent to US$4.43 billion in the three months ended June from a year earlier, government data show.

India’s benchmark wholesaleprice index, which has remained above the central bank’s 5 percent comfort level since December 2009, accelerated to 7.55 percent in August, data released on Friday showed.

Bloomberg/Reuters

Pacific-trade talks end on a positive note No formal deadline for finishing the negotiation process

O

fficials from nine nations drafting a Pacific-region trade accord made progress on lowering customs barriers and meshing health standards, the top U.S. negotiator said as the talks recessed until December.

“We are pleased with the outcome of the negotiations this week,” Barbara Weisel said at a press conference in Leesburg, Virginia, where the 14th round of talks for the Trans-Pacific Partnership concluded yesterday.

Negotiators from Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S. met for 10 days in Leesburg to discuss the pact, one of President Barack Obama’s top trade priorities.

Canada and Mexico are scheduled to join the group next month, effectively allowing the U.S. and its continental neighbours an opportunity to update the 1994 North American Free Trade Agreement, which went into effect before the age of Internet commerce.

Negotiators also made progress on issues related to telecommunications, government procurement and nontariff barriers to trade, according to Ms Weisel. She didn’t provide a target date for its completion. “Substance is going to drive timing,” she said. “We

are continuing to focus on concluding this agreement as quickly as we can.”

Supplant NAFTA The Trans-Pacific Partnership would supplant NAFTA as the largest U.S. trade accord. Negotiators are working to create an agreement that can be used as a model for future pacts, addressing “21st century” issues including pharmaceutical patents, rules for Internet access and protections for companies that compete against government-owned entities.

State-owned enterprises in Malaysia often operate commercially, and the proposal for dealing with such entities has implications that “would require a serious revamp of our system,” J. Jayasiri, Malaysia’s top negotiator, said at yesterday’s press conference.

The negotiators want to establish a “level playing field” to ensure that government-owned companies don’t benefit from preferential treatment, such as non-commercial financing, Deputy U.S. Trade Ambassador Demetrios Marantis said in an interview.

“We’re not seeking that countries change the fact that they have stateowned enterprises,” Mr Marantis said.

Reuters/Bloomberg

Japan aims to abandon nuclear power Proposal underpins country’s LNG, oil purchases

J Plc, Europe’s biggest lender, gained 5.5 percent to HK$72.70.

Suppliers to Apple Inc. rallied after the world’s most valuable company unveiled its iPhone 5 last Wednesday. Samsung Electronics Co., which makes chips for the iPhone and iPad, climbed 6.9 percent to 1.336 million won in Seoul. TDK Corp., a battery supplier to Apple, jumped 7.3 percent to 3,080 yen in Tokyo.

Hon Hai Precision Industry Co., which counts Apple as its biggest customer, advanced 9 percent to NT$97 in Taipei.

apan’s government said it intends to stop using nuclear power by the 2030s, marking a major shift from policy goals set before last year’s Fukushima disaster that sought to increase the share of atomic energy to more than half of electricity supply.

Japan joins countries such as Germany and Switzerland in turning away from nuclear power after last year’s earthquake unleashed a tsunami that swamped the Fukushima Daiichi plant, causing the worst nuclear crisis since Chernobyl in 1986.

Japan was the third-biggest user of atomic energy before the disaster.

In abandoning atomic power, Japan aims to triple the share of renewable power to 30 percent of its energy mix, but will remain a top importer of oil, coal and gas for the foreseeable future.

Prime Minister Yoshihiko Noda’s unpopular government, which could face an election this year, had faced intense lobbying from industries to maintain atomic energy and also concerns from its major ally, the

United States, which supplied it with nuclear technology in the 1950s.

“This is a strategy to create a new future,” a policy statement said, after key ministers finalised the decision on Friday. “It is not pie in the sky.

It is a practical strategy.”

All but two of Japan’s nuclear 50 reactors are idled for safety checks and the government plans to allow restarts of units taken off line after the disaster if they are deemed safe by a new atomic regulator.

Japan’s growing anti-nuclear movement, which wants an immediate end to the use of atomic power, is certain to oppose any such proposal to secure electricity supplies by restarting reactors.

By applying a strict 40-year limit on the lifetime of reactors, most will be shut down by the 2030s.

A shift from nuclear means Japan should remain the world’s biggest importer of liquefied natural gas (LNG) and third-largest purchaser of oil to feed its power stations. The company is also a major importer of coal and is likely

to increase reliance on it.

The government estimated last week it will need to spend about 3.1 trillion yen (US$40.03 billion) more on fuel imports a year if it abandons nuclear power immediately.

The government’s strategy calls for a push to reduce energy consumption through efficiency and other measures to at least 10 percent less than 2010 levels.

Reuters

All but two of Japan’s nuclear 50 reactors are idled for safety checks

12 |

business daily September 17, 2012

MARKETS Hang SENG INDEX NAME

PRICE

Day %

VOLUME

AIA GROUP LTD

29.1

3.558719

56914155

CHINA UNICOM HON

ALUMINUM CORP-H

3.37

9.061489

71308175

CITIC PACIFIC

BANK OF CHINA-H

2.95

3.873239

423661476

BANK OF COMMUN-H

5.21

2.964427

55739758

BANK EAST ASIA

28.9

2.120141

2917994

BELLE INTERNATIO

14.5

3.42368

28008100

BOC HONG KONG HO

NAME

CLP HLDGS LTD

PRICE

DAY %

VOLUME

13.48

2.900763

33146346

POWER ASSETS HOL

9.77

3.386243

12332360

SANDS CHINA LTD

DAY %

62.75

0.07974482

VOLUME 4002758

28.5

1.423488

19285759

SINO LAND CO

14.34

3.913043

21233655

SUN HUNG KAI PRO

111.8

4.388422

15525906

SWIRE PACIFIC-A

93.35

1.577802

3811904

65.2

0.7727975

3141926

15.66

4.819277

109085649

COSCO PAC LTD

11.08

9.486166

16638314

13.3

3.582555

8093866

TENCENT HOLDINGS

255.6

2.733119

4984047

TINGYI HLDG CO

23.35

0.2145923

7555000

ESPRIT HLDGS

24

0

22169967

HANG LUNG PROPER

28.05

1.814882

7954569

0.7911392

13313074

HANG SENG BK

114.2

0.9725906

1807626

CHEUNG KONG

114

2.425876

7409705

HENDERSON LAND D

54.15

4.034582

8750853

CHINA COAL ENE-H

7.35

7.61347

83324210

76.7

0.1959504

3256029

18.94

1.500536

8882736

HONG KONG EXCHNG

118

7.566089

16492165

HSBC HLDGS PLC

72.7

2.901628

37124279

CHINA CONST BA-H

PRICE

CNOOC LTD

12.74

CATHAY PAC AIR

NAME

HENGAN INTL

5.17

2.173913

455867809

CHINA LIFE INS-H

22.95

4.318182

57668292

CHINA MERCHANT

24.3

4.741379

3957537

CHINA MOBILE

83.2

1.7737

26736791

HUTCHISON WHAMPO

74.4

1.569966

13906698

CHINA OVERSEAS

19.7

1.756198

46441997

IND & COMM BK-H

4.43

3.504673

376862437

CHINA PETROLEU-H

7.31

2.668539

124713502

LI & FUNG LTD

12.88

6.622517

57053662

CHINA RES ENTERP

26.15

3.564356

5634000

MTR CORP

29.15

1.391304

6260923

HONG KG CHINA GS

CHINA RES LAND

17.6

2.088167

9969042

NEW WORLD DEV

10.88

5.222437

40329662

CHINA RES POWER

16.9

-0.3537736

7931500

PETROCHINA CO-H

9.91

3.552769

119141998

CHINA SHENHUA-H

31.4

4.318937

38530642

PING AN INSURA-H

59.85

3.72617

22224657

PRICE

DAY %

VOLUME

22.85

-0.4357298

7248149

7.12

-0.280112

39504473

MOVERS

46

2

1 20650

INDEX 20629.78 HIGH

20644.28

LOW

19996.14

52W (H) 21760.33984 (L) 16170.35

19990

12-Sep

14-Sep

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

2.78

-1.41844

135677406

AIR CHINA LTD-H

4.53

-1.948052

14289000

ALUMINUM CORP-H

3.09

0

9024106

CHINA RAIL CN-H

6.9

0.1451379

ANHUI CONCH-H

22.65

-1.091703

16162299

CHINA RAIL GR-H

3.36

BANK OF CHINA-H

2.84

-0.3508772

204315175

CHINA SHENHUA-H

30.1

CHINA PACIFIC-H CHINA PETROLEU-H

PRICE

DAY %

VOLUME

11.26

1.624549

21686330

ZIJIN MINING-H

2.73

0

49768894

15504000

ZOOMLION HEAVY-H

8.71

-1.470588

13376120

2.752294

36125463

ZTE CORP-H

10.86

2.840909

13299915

1.006711

21493692

5.06

-1.364522

24543697

CHINA TELECOM-H

4.76

2.586207

104812905

15.84

0.2531646

4265251

DONGFENG MOTOR-H

9.89

-2.272727

14841875

CHINA CITIC BK-H

3.55

-0.2808989

44861932

GUANGZHOU AUTO-H

5.36

-2.898551

9692557

CHINA COAL ENE-H

6.83

-0.8708273

17690499

HUANENG POWER-H

5.73

2.139037

18710600

CHINA COM CONS-H

6.26

-1.105845

15227403

IND & COMM BK-H

4.28

0.4694836

273832075

CHINA CONST BA-H

5.06

-0.1972387

173061519

JIANGXI COPPER-H

18.22

-0.3282276

14805665

CHINA COSCO HO-H

2.89

-0.3448276

23335582

PETROCHINA CO-H

9.57

-0.1043841

47938284

22

-0.4524887

17249485

PICC PROPERTY &

9.19

0

14571164

CHINA LONGYUAN-H

5.23

-0.1908397

4167942

PING AN INSURA-H

57.7

0.2606429

8347490

CHINA MERCH BK-H

12.66

0

10826935

SHANDONG WEIG-H

8.66

0.6976744

2884000

BANK OF COMMUN-H BYD CO LTD-H

CHINA LIFE INS-H

NAME YANZHOU COAL-H

MOVERS

38

0 9850

INDEX 9829.43 HIGH

9851.02

LOW

9448.58

CHINA MINSHENG-H

6.18

1.145663

39677493

SINOPHARM-H

24.2

-2.811245

1402400

52W (H) 11916.1

CHINA NATL BDG-H

8.06

-0.1239157

66530054

TSINGTAO BREW-H

42.8

-0.5807201

789000

(L) 8058.58

13

-1.065449

3918543

WEICHAI POWER-H

23.25

-3.326403

2348123

CHINA OILFIELD-H

2

9440

12-Sep

14-Sep

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

Volume

PRICE

DAY %

Volume

4.5

0.2227171

5936330

SANY HEAVY INDUS

9.78

-0.9118541

54948199

DONGFANG ELECT-A

14.83

-0.268998

8184743

SHANDONG GOLD-MI

39.68

5.307856

52172905

15478084

EVERBRIG SEC -A

11.97

0

16812439

SHANG PHARM -A

12.01

0

7864459

37385688

GD MIDEA HOLDING

9.18

0

9139999

SHANG PUDONG-A

7.52

0.9395973

60553998

2.49

0

30831895

SHANGHAI ELECT-A

4.25

0

3545358

12.63

2.850163

70815786

SHANXI LU'AN -A

18.19

2.305962

35076117

SHANXI XINGHUA-A

38.34

0

1114731

SHANXI XISHAN-A

13.37

1.211204

17313867

SHENZEN OVERSE-A

5.76

-0.3460208

27038703

SUNING APPLIAN-A

6.79

-1.30814

58117522

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.48

1.22449

62367161

DATANG INTL PO-A

AIR CHINA LTD-A

4.99

0

9732299

ALUMINUM CORP-A

5.33

1.912046

ANHUI CONCH-A

15.29

2.069426

BANK OF BEIJIN-A

7.23

0.5563282

16989080

GD POWER DEVEL-A

BANK OF CHINA-A

2.7

0.3717472

57048471

GF SECURITIES-A

BANK OF COMMUN-A

4.23

0.4750594

55522784

GREE ELECTRIC

20.94

-0.1906578

9607717

BAOSHAN IRON & S

4.63

0.8714597

40503240

GUANGHUI ENERG-A

14.62

0.2056203

28081434

16.67

2.082058

6793544

GUIZHOU PANJIA-A

16.83

2.559415

22380759

9.17

0.7692308

53835256

BYD CO LTD -A

NAME

CHINA CITIC BK-A

3.79

0.7978723

22973535

HAITONG SECURI-A

CHINA CNR CORP-A

3.73

0.2688172

35069721

HANGZHOU HIKVI-A

27.39

-2.87234

4711106

TONGLING NONFE-A

19.68

4.237288

45878795

CHINA COAL ENE-A

7.11

0.9943182

16980528

HENAN SHUAN-A

58.95

-0.08474576

1783419

TSINGTAO BREW-A

33.15

0.882532

1299132

CHINA CONST BA-A

3.99

1.526718

28325518

HONG YUAN SEC-A

18.28

0.7717751

16079938

WEICHAI POWER-A

19.74

0.2030457

8598533

CHINA COSCO HO-A

4.13

1.724138

17663474

HUATAI SECURIT-A

9.25

0.4343105

12269414

WULIANGYE YIBIN

34.62

0.8447422

14317210

CHINA CSSC HOL-A

21.81

-3.79356

22547448

HUAXIA BANK CO

8.46

0.8343266

24915692

XIAMEN TUNGSTEN

41.61

1.4136

14750634

CHINA EAST AIR-A

3.36

0

25160906

IND & COMM BK-A

3.78

0.8

44337185

YANGQUAN COAL -A

14.94

2.398903

19152325

CHINA EVERBRIG-A

2.73

0

34257085

INDUSTRIAL BAN-A

12.24

0.9068425

41111141

YANTAI CHANGYU-A

51.4

0.6264683

1910059

CHINA LIFE INS-A

18.65

0.8108108

13391842

INNER MONG BAO-A

35.49

2.217742

48466856

YANTAI WANHUA-A

13.24

0.9916095

7455791

CHINA MERCH BK-A

10.25

1.284585

57192156

INNER MONG YIL-A

20.8

0.289296

6373720

YANZHOU COAL-A

18.86

1.180258

7537173

CHINA MERCHANT-A

10.37

0.7774538

14795726

INNER MONGOLIA-A

5.35

1.904762

62359986

YUNNAN BAIYAO-A

61

-0.3593597

1301804

CHINA MERCHANT-A

20.78

-1.329535

12254052

JIANGSU HENGRU-A

31.28

0.6435006

2678638

ZHONGJIN GOLD

16.39

6.705729

92380165

CHINA MINSHENG-A

5.74

1.234568

62235242

JIANGSU YANGHE-A

126

1.204819

1668552

ZIJIN MINING-A

4.03

3.333333

190207001

37743393

JIANGXI COPPER-A

23.13

2.93725

35847442

ZOOMLION HEAVY-A

8.78

0.4576659

54233695

JINDUICHENG -A

12.22

2.259414

12448999

ZTE CORP-A

10.78

0.1858736

16298977

13.21

2.086553

29799977

CHINA NATIONAL-A

6.78

0.8928571

CHINA OILFIELD-A

16.89

0.5955926

5474992

CHINA PACIFIC-A

20.15

0.6996502

19246290

JIZHONG ENERGY-A

CHINA PETROLEU-A

6.14

0.3267974

20702556

KANGMEI PHARMA-A

16.29

-0.6101281

11059900

CHINA RAILWAY-A

4.67

0.6465517

19855499

KWEICHOW MOUTA-A

244.76

1.991833

2458683

38.05

0.7146638

7693885

2.1

1.941748

32100733

CHINA RAILWAY-A

2.57

0

32790344

LUZHOU LAOJIAO-A

CHINA SHENHUA-A

22.97

1.952952

20898947

METALLURGICAL-A

CHINA SHIPBUIL-A

5.15

-0.9615385

98741338

NINGBO PORT CO-A

2.5

0

15335452

4.03

1.511335

82588450

CHINA SOUTHERN-A

3.48

-0.286533

36223547

PANGANG GROUP -A

CHINA STATE -A

3.08

-0.3236246

90142798

PETROCHINA CO-A

8.95

0.6749156

12004187

14.05

1.151908

MOVERS

191

88

21 2340

INDEX 2315.542

CHINA UNITED-A

3.79

1.066667

66695554

PING AN BANK-A

15327279

HIGH

2335.14

CHINA VANKE CO-A

8.34

-0.9501188

77417708

PING AN INSURA-A

41.03

0.4898359

19983968

LOW

2298.46

CHINA YANGTZE-A

6.38

0.4724409

12393796

POLY REAL ESTA-A

10.41

-0.1917546

45410049

CITIC SECURITI-A

11.36

1.067616

70184035

QINGDAO HAIER-A

10.84

0.3703704

9087687

CSR CORP LTD -A

4.24

0

23327329

QINGHAI SALT-A

31.8

0.952381

4139319

DAQIN RAILWAY -A

6.01

0.1666667

26695795

SAIC MOTOR-A

12.81

2.48

25761023

PRICE DAY %

Volume

52W (H) 2781.99 (L) 2186.962

2295

12-Sep

14-Sep

FTSE TAIWAN 50 INDEX NAME

NAME

ACER INC

28.8

5.882353

64384440

FORMOSA PLASTIC

ADVANCED SEMICON

23.1

1.986755

43920700

37.05

2.916667

ASIA CEMENT CORP ASUSTEK COMPUTER AU OPTRONICS COR CATCHER TECH

PRICE DAY %

Volume

NAME

PRICE DAY %

85

2.905569

13504989

TAIWAN MOBILE CO

FOXCONN TECHNOLO

120

2.564103

30876616

8757957

FUBON FINANCIAL

31.5

3.448276

Volume

107.5

0.4672897

TPK HOLDING CO L

431

0

6372868

45439368

TSMC

86.5

1.764706

52174702

UNI-PRESIDENT

315

0

4931537

HON HAI PRECISIO

97

4.301075

75812378

11.55

6.944444

201795230

HOTAI MOTOR CO

213.5

1.909308

542621

UNITED MICROELEC

5098191

50.5

1.814516

9319076

12.25

2.083333

85216353

145

1.754386

18067690

HTC CORP

296.5

6.846847

37987500

WISTRON CORP

35.6

5.481481

22560242

CATHAY FINANCIAL

30.85

6.747405

60570381

HUA NAN FINANCIA

16.45

1.857585

15077334

YUANTA FINANCIAL

15.1

6.713781

76569799

CHANG HWA BANK

16

3.225806

30392572

LARGAN PRECISION

652

1.085271

3269666

YULON MOTOR CO

57.7

6.851852

21730505

CHENG SHIN RUBBE

75.2

0.669344

7604938

LITE-ON TECHNOLO

36.6

1.104972

5108295

CHIMEI INNOLUX C

11.15

6.698565

56246807

MEDIATEK INC

339

1.345291

11847089

7.29

2.38764

83239263

MEGA FINANCIAL H

23.35

3.547672

58275641

CHINA STEEL CORP

26.45

1.730769

28789681

NAN YA PLASTICS

57.5

2.131439

6942422

CHINATRUST FINAN

18.6

3.910615

72022872

PRESIDENT CHAIN

161

1.577287

2722833

92

1.210121

16716676

QUANTA COMPUTER

80

3.092784

11765820

COMPAL ELECTRON

26.7

3.288201

15747939

SILICONWARE PREC

33.7

1.049475

11516727

DELTA ELECT INC

114

1.333333

3771055

SINOPAC FINANCIA

12.25

3.813559

28326641

FAR EASTERN NEW

33.65

2.124431

42305522

SYNNEX TECH INTL

67.5

0.2971768

2696437

FAR EASTONE TELE

73.5

0

6143694

TAIWAN CEMENT

36.7

3.672316

24895322

CHINA DEVELOPMEN

CHUNGHWA TELECOM

18.35

2.80112

40988614

TAIWAN COOPERATI

16.8

2.439024

19705161

FORMOSA CHEM & F

FIRST FINANCIAL

78.9

1.806452

7193551

TAIWAN FERTILIZE

78.3

3.984064

21396313

FORMOSA PETROCHE

90.2

4.277457

3271467

TAIWAN GLASS IND

29

2.112676

1783631

MOVERS

47

0

3 5380

INDEX 5363.64 HIGH

5363.64

LOW

5187.55

52W (H) 5621.53 (L) 4643.05

5180

12-Sep

14-Sep

September 17, 2012 business daily | 13

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

MELCo CroWN ENTErTAINMENT

MGM CHINA HoLDINGS 34.5 34.3 34.2 34.0 33.8 33.6 33.4 33.2 33.0 32.8 32.6 32.4

25.0 24.8 24.6 24.4

Max 24.95

Average 24.464

Min 24.2

Last 24.95

24.2

Max 34.6

SANDS CHINA LTD

Average 28.660

Max 28.85

Average 32.704

Min 28.3

PRICE

Average 13.115

Min 13

Last 13.18

WyNN MACAU LTD

28.7

16.8

19.7

28.5

16.7

19.5

16.6 Max 16.9

Average 16.838

DAY %

YTD %

(H) 52W

Min 16.6

Last 16.88

19.3 Max 19.84

Average 19.62

0.426049909

110.6499939

78.15999603

BRENT CRUDE FUTR Nov12

116.66

0.673110114

11.90407674

122.6499939

89.5

GASOLINE RBOB FUT Oct12

301.56

1.802714199

19.31629342

307.9600096

220.5600023

1011.25

0.897979546

12.73690078

1038.75

799.25

2.943

-3.095159697

-11.40878989

4.590000153

2.299999952

HEATING OIL FUTR Oct12

323.95

0.878149036

13.36832896

333.8899851

252.5300026

Gold Spot $/Oz

1770.5

2.2772

13.1375

1827.88

1522.75

Silver Spot $/Oz

34.6625

4.9902

24.5285

40.825

26.085

1709

3.4034

22.5529

1824

1339.25

695.65

2.3617

6.4499

733

537.54 1827.25

GAS OIL FUT (ICE) Nov12 NATURAL GAS FUTR Oct12

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

2200

4.662226451

8.910891089

2403.75

LME COPPER 3MO ($)

8380

3.777089783

10.26315789

8852

6635

LME ZINC

2116

3.929273084

14.68834688

2221

1718.5

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov12

17775

6.119402985

-4.997327632

22150

15236

15.275

1.19244783

0.460374877

17.5

14.15499973

782

1.066235864

33.3901919

849

499

Dec12

WHEAT FUTURE(CBT) Dec12

PRICE

(L) 52W

0.701861459

Last 19.82

Min 19.38

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 %

1.0551 1.6217 0.9267 1.313 78.39 7.9841 7.7516 6.3151 54.3063 30.78 1.2202 29.418 41.385 9520 82.7 1.21687 0.80943 8.2271 10.4577 102.93 1.03

1.131 0.7017 1.2949 1.7435 -0.8675 0.0501 0.049 0.2359 2.0416 0.8122 0.8441 0.8056 0.8457 0.8298 -1.9722 -0.4446 -0.9995 -0.5567 -1.4171 -2.5746 0

YTD %

(H) 52W

3.35 4.3364 1.2302 1.3039 -1.888 0.1941 0.2038 -0.3183 -2.2857 2.5016 6.2613 2.9268 5.9321 -4.7374 -5.1608 -0.0066 2.9601 -1.1292 -1.0107 -3.1769 0.0097

(L) 52W

1.0857 1.6302 0.9972 1.4247 84.18 8.0382 7.8048 6.4029 57.3275 32 1.3199 30.716 44.35 9662 88.637 1.24736 0.88308 9.0277 11.4015 111.6 1.0311

0.9388 1.5235 0.8568 1.2043 75.35 7.9823 7.751 6.2769 47.43 30.2 1.2176 29.084 41.34 8795 72.057 1.19995 0.77553 7.7018 9.6245 94.12 1.0288

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

2.63

1.544402

19.54545

3.25

1.88

1989849

153.6999969

CROWN LTD

9.17

1.550388

13.34981

9.4

7.47

1698173

25.29999924

19.47999954

AMAX HOLDINGS LT

0.061

0

-29.88506

0.119

0.055

0

102.25

64.61000061

BOC HONG KONG HO

24

0

30.43479

24.95

14.24

22169967

924.25

2.466740576

28.36805556

953.25

629.5

SOYBEAN FUTURE Nov12

1739

-0.472170554

44.40523147

1789

1115.75

COFFEE 'C' FUTURE Dec12

181.1

1.258037462

-23.26271186

268.6000061

SUGAR #11 (WORLD) Mar13

20.77

1.664219285

-11.08732877

COTTON NO.2 FUTR Dec12

75.9

3.223174215

-13.59289617

NAME

CENTURY LEGEND

World Stock MarketS - Indices

PRICE

DAY % YTD %

VOLUME CRNCY

0.245

0

6.521737

0.335

0.204

0

CHEUK NANG HLDGS

3.34

3.08642

19.28572

3.5

2.3

341364

CHINA OVERSEAS

19.7

1.756198

51.94289

20.4

9.979

46441997

CHINESE ESTATES

9.58

1.268499

-23.36

13.68

8.3

37500

CHOW TAI FOOK JE

10.4

6.666667

-25.28736

15.16

8.4

25368400

EMPEROR ENTERTAI

1.55

0.6493506

39.63964

1.56

0.97

1234802

FUTURE BRIGHT

1.14

0

171.4286

1.24

0.3

1362000

GALAXY ENTERTAIN

24.95

4.612159

75.21068

25

8.69

18870964

HANG SENG BK

1807626

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

US

13593.37

0.3952035

11.26093

13653.24

10404.49

NASDAQ COMPOSITE INDEX

US

3183.952

0.8911766

22.21761

3195.672

2298.89

114.2

0.9725906

23.92838

114.7

84.4

FTSE 100 INDEX

GB

5915.55

1.64315

6.160316

5989.07

4868.6

HOPEWELL HLDGS

26.6

0.7575758

33.93756

26.9

18.56

1478200

DAX INDEX

GE

7412.13

1.392689

25.66446

7446.47

4973.92

HSBC HLDGS PLC

72.7

2.901628

23.22034

72.75

56

37124279

NIKKEI 225

JN

9159.39

1.825873

8.326563

10255.15

8135.79

HUTCHISON TELE H

3.44

-0.2898551

15.05017

3.88

2.53

17001000

HANG SENG INDEX

HK

20629.78

2.903835

11.9092

21760.33984

16170.35

LUK FOOK HLDGS I

25.25

12.47216

-6.82657

37.1

14.7

9940107

MELCO INTL DEVEL

6.82

6.5625

18.19757

8.28

4.3

5234985

CSI 300 INDEX

CH

2315.542

0.7431494

-1.287437

2781.99

2186.962

MGM CHINA HOLDIN

13.18

2.647975

37.40397

14.76

7.6

5566800

TAIWAN TAIEX INDEX

TA

7738.05

2.101256

9.416886

8170.72

6609.11

MIDLAND HOLDINGS

4.74

7.482993

19.87718

5.217

2.887

9097000

NEPTUNE GROUP

0.192

-0.5181347

72.97297

0.222

0.08

36520000

NEW WORLD DEV

10.88

5.222437

73.80191

10.98

6.13

40329662

SANDS CHINA LTD

28.5

1.423488

29.84054

33.05

14.9

19285759

SHUN HO RESOURCE

1.18

2.608696

18

1.2

0.82

0

SHUN TAK HOLDING

3.05

6.271777

19.18121

3.565

2.241

31876767

SJM HOLDINGS LTD

16.88

2.55164

34.98022

17.614

10.079

9037000

SMARTONE TELECOM

15.52

-1.647655

15.47619

18.5

9.8

16693000

KOSPI INDEX

SK

2007.58

2.916404

9.959795

2057.28

1644.11

S&P/ASX 200 INDEX

AU

4389.956

1.164556

8.218675

4448.5

3840.2

ID

4256.998

2.070642

11.38166

4269.049

3217.951

FTSE Bursa Malaysia KLCI

MA

1642.95

0.8935151

7.331141

1655.49

1310.53

NZX ALL INDEX

NZ

840.377

0.1012475

15.15164

844.532

712.548

JAKARTA COMPOSITE INDEX

13.0

19.9

99

NAME

Max 13.26

16.9

WTI CRUDE FUTURE Oct12

CORN FUTURE

13.1

28.9

28.3

Last 28.5

13.2

CURRENCY EXCHANGE RATES

NAME

METALS

Last 34

SJM HoLDINGS LTD

Commodities ENERGY

Min 32.5

13.3

PHILIPPINES ALL SHARE IX

PH

3530.66

1.13085

15.9479

3534.1

2695.06

HSBC Dragon 300 Index Singapor

SI

590.45

-0.04

18.96

NA

NA

STOCK EXCH OF THAI INDEX

TH

1276.12

1.465385

24.46066

1279.67

HO CHI MINH STOCK INDEX

VN

398.87

1.918949

13.46039

Laos Composite Index

LO

1039.81

0

15.60381

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

WYNN MACAU LTD

19.8

4.984093

1.538462

25.5

14.62

13890800

ASIA ENTERTAINME

3.58

-0.5555556

-39.11565

7.49

2.4

218916

843.69

BALLY TECHNOLOGI

47.32

0.6808511

19.61577

49.32

24.74

572294

492.44

332.28

BOC HONG KONG HO

3.06

0.3278689

27.64959

3.25

1.81

2060

1064.23

876.33

GALAXY ENTERTAIN

3.22

2.547771

72.19251

3.24

1.08

2000

INTL GAME TECH

13.22

2.401239

-23.13954

18.1701

10.92

5982715

JONES LANG LASAL

83.81

5.077733

36.81032

87.52

46.01

820836

LAS VEGAS SANDS

46.75

3.018951

9.407911

62.09

34.72

11365799

MELCO CROWN-ADR

13.15

1.309707

36.69439

16.02

7.05

7980300

MGM CHINA HOLDIN

1.66

0

39.2976

1.96

1.0025

5545

MGM RESORTS INTE

11.41

1.152482

9.39597

14.9401

7.4

13935969

SHUFFLE MASTER

14.94

1.356852

27.4744

18.77

7.55

461351

2.18

2.347418

35.60817

2.2782

1.2624

6375

113.02

2.726777

2.289802

154.7051

90.108

3451701

SJM HOLDINGS LTD WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily September 17, 2012

Opinion The stunning triumph of cost-benefit analysis

Cass R. Sunstein

Felix Frankfurter professor of law at Harvard University and former administrator of the White House Office of Information and Regulatory Affairs

I

t is not exactly news that we live in an era of polarised politics.

But Republicans and Democrats have come to agree on one issue: the essential need for cost- benefit analysis in the regulatory process.

In fact, cost-benefit analysis has become part of the informal constitution of the U.S. regulatory state. This is an extraordinary development.

To understand the point, a little history is in order.

When Ronald Reagan became president in 1981, he was greatly concerned about excessive regulation.

He was also aware that the federal bureaucracy was large, decentralised and sprawling. He was the boss, but he had limited tools by which to oversee federal rulemaking.

Republicans and Democrats have come to agree on one issue: the essential need for costbenefit analysis in the regulatory process

As one of his very early actions, Reagan issued an executive order with two essential components.

First, he told executive agencies that to the extent permitted by law, they must not issue a regulation unless the potential benefits to society “exceed the potential costs to society.”

Second, he directed the Office of Management and Budget to oversee a process to ensure compliance with the cost-benefit requirement (among others) and to promote consistency with the president’s goals. The Office of Information and Regulatory Affairs, within OMB, soon assumed that responsibility.

At the time, both the cost-benefit requirement and the OIRA process were exceptionally controversial, especially among Democrats and groups on the left. Some activists argued that the result would be to undermine important public protections, designed to safeguard health, safety and the environment.

Reagan approach Defenders of cost-benefit analysis responded that such protections would be spurred, not undermined, if they promised to deliver big benefits at an acceptable cost – and that if the costs were high and the benefits low, the protections might not be such a good idea. The enthusiasts insisted that we can’t know whether to support public protections unless we have a sense of both costs and benefits. But many public-interest advocates remained unconvinced, contending that we should not put crucial safeguards into a kind of arithmetic straitjacket.

Not surprisingly, President George H.W. Bush endorsed the Reagan approach. But when President Bill Clinton came into office, there was a real question whether that approach would be maintained, and a number of Clinton’s supporters hoped he would repudiate cost-benefit analysis. He didn’t. Although Clinton took steps to make the regulatory process more

transparent, he embraced the need for careful analysis of costs and benefits.

For eight years, President George W. Bush operated under the framework established by Reagan and Clinton, and many advocacy groups became increasingly agitated about cost-benefit analysis. Some critics claimed that business had disproportionate influence over the process, exaggerating costs so as to block necessary safeguards.

Others said that important protections had become vulnerable to “paralysis by analysis,” because the need to assemble information about costs and benefits, and to establish that benefits justify costs, can be difficult and time-consuming.

When President Barack Obama was elected, critics of the whole approach hoped he would jettison it. But he had no interest in doing so. I was head of OIRA from September 2009 until August 2012, and from the beginning, the Obama administration was committed to careful consideration of both costs and benefits. And in an executive order issued in January 2011, the administration doubled down on cost-benefit analysis. First, Obama made an unprecedented commitment to quantification of both costs and benefits. Second, he ordered executive agencies to review all significant rules on the books, largely with the goal of eliminating or streamlining excessive requirements.

Obama order Under the order, it has proved possible to move forward with rules protecting public health, safety and the environment. In late August, for example, the Environmental Protection Agency and the Transportation

Department finalised ambitious rules to increase the fuel economy of cars. The benefits of the rules greatly exceed the costs – the annual net benefits (benefits minus costs) are in the billions of dollars.

At the same time, the requirement of cost-benefit analysis has deterred agencies from proceeding with rules that promise to impose big economic burdens without corresponding gains.

With its embrace of cost-benefit analysis, the Obama administration has approved rules with net benefits well in excess of US$100 billion.

It is true that even if we accept costbenefit analysis, serious questions remain.

Some of those issues are scientific. If we cut emissions of certain air pollutants, what, exactly, are the public-health benefits? Other questions are economic.

Suppose that a rule would save 30 lives a year. How do we turn that figure into monetary equivalents? These and other issues have a philosophical dimension.

How should we deal with values that are hard or impossible to quantify, such as human dignity? And should our valuations change if a rule would mostly benefit members of future generations?

It is also true that regulators often face considerable uncertainty, and they have to give ranges for both costs and benefits, rather than specifying a single number. There are also continuing questions about scope, including the role of cost- benefit analysis in the context of homeland security or financial regulation, where the benefits may be especially hard to quantify.

What is remarkable is that all of these issues are being addressed under a framework that is now broadly shared.

Endorsed for more than three decades and by five presidents, cost-benefit analysis is here to stay.

Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte 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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September 17, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

Korea Herald South Korea and China have agreed to speed up their ongoing free trade talks as part of efforts to increase economic cooperation between the neighbouring countries, South Korean finance ministry said on Saturday.

Both parties also agreed to intensify cooperation in currency polices, while seeking to increase settlements by using the won and the yuan, the ministry was quoted as saying. China is South Korea’s largest trading partner, with bilateral trade expected to reach US$300 billion by 2015.

Economic Times Indian ministers led by agriculture minister Sharad Pawar will meet on September 20 to take a final view on bringing 348 essential medicines under price control. At present, the government regulates prices of 74 drugs under the Drug Price Control Order, 1995. The group will take a final view on the National Pharmaceutical Policy, which was drafted last year. The draft policy proposed that the ceiling price should be based on average prices of the three top-selling brands in each molecule.

Taipei Times Small-scale protests against the Taipei City Government’s handling of urban renewal projects marred the award ceremony of the Taipei Culture Award on Saturday. Protesters urged the city government to pay more attention to housing justice in dealing with controversial cases such as the preservation of the Losheng Sanatorium and an urban renewal project in Shihlin District. Losheng Sanatorium was completed in the 1930s to isolate people with leprosy, since it was believed to be a contagious and incurable disease at the time.

Bangkok Post Community malls in Bangkok now rival hypermarkets in terms of the number of outlets in the city, property consultant Colliers International Thailand said. Alluring designs, locations close to people’s homes and a shift in consumer’s shopping preferences have resulted in a community mall boom over the past six years. “The lifestyles of Bangkokians changed after floods last year,” said Surachet Kongcheep, the senior manager for research. “They now prefer going to a community mall to buy something or eat dinner, as it’s closer to their home.”

Hard truths about global growth Michael Spence Nobel laureate in economics, Professor of Economics at New York University’s Stern School of Business and Senior Fellow at the Hoover Institution

T

he world’s highincome countries are in economic trouble, mostly related to growth and employment, and now their distress is spilling over to developing economies.

What factors underlie today’s problems, and how appropriate are the likely policy responses?

The first key factor is deleveraging and the resulting shortfall in aggregate demand.

Since the financial crisis began in 2008, several developed countries, having sustained demand with excessive leverage and consumption, have had to repair both private and public balance sheets, which takes time – and has left them impaired in terms of growth and employment.

The non-tradable side of any advanced economy is large (roughly two-thirds of total activity). For this large sector, there is no substitute for domestic demand. The tradable side could make up some of the deficit, but it is not large enough to compensate fully. In principal, governments could bridge the gap, but high (and rising) debt constrains their capacity to do so (though how constrained is a matter of heated debate).

The bottom line is that deleveraging will ensure that growth will be modest at best in the short and medium term. If Europe deteriorates, or there is gridlock in dealing with America’s “fiscal cliff” at the beginning of 2013 (when tax cuts expire and automatic spending cuts kick in), a major downturn will become far more likely.

The second factor underlying today’s problems relates to investment.

Longer-term growth requires investment by individuals (in education and skills), governments, and the private sector. Shortfalls in investment eventually diminish growth and employment opportunities. The hard truth is that the flip side of the consumption-led growth model that prevailed prior to the crisis has been deficient

There is little evidence of willingness to reduce current consumption further via taxation in order to create room for expanded growth-oriented investment

investment, particularly on the public-sector side.

Burden sharing issues If fiscal rebalancing is accomplished in part by cutting investment, medium- and longer-term growth will suffer, resulting in fewer employment opportunities for younger labourmarket entrants. Sustaining investment, on the other hand, has an immediate cost: it means deferring consumption.

But whose consumption?

If almost everyone agrees that more investment is needed to elevate and sustain growth, but most believe that someone else should pay for it, investment will fall victim to a burdensharing impasse – reflected in the political process, electoral choices, and the formulation of fiscal-stabilization measures.

The core issue is taxes. If public-sector investment were to be increased with no rise in taxation, the budget cuts required elsewhere to avoid unsustainable debt growth would be implausibly large.

The most difficult challenge concerns inclusiveness – how the benefits of growth are to be distributed. This is a longstanding challenge that, particularly in the United States, goes back at least two decades before the crisis; left unaddressed, it now threatens social cohesion.

Income growth for the middle class in most advanced countries has been stagnant, and employment opportunities have been declining, especially in the tradable part of the economy. The share of income going to capital has been rising, at the expense of labour. Particularly in the U.S., employment generation has been disproportionately in the non-tradable sector.

These trends reflect a combination of technological and global market forces that have been operating over the last two decades. On the technology side, labour-saving innovations in network-based information processing and transactions automation have helped to drive a wedge between growth and employment generation in

both the tradable and nontradable sectors.

In the tradable part of advanced economies, manufacturing automation – including expanding robotic capabilities and, prospectively, 3D printing – has combined with the integration of millions of new entrants into rapidly evolving global supply chains to limit employment growth.

Multinational companies’ growing ability to decompose these global supply chains by function and geography, and then to reintegrate them at ever lower transaction costs, removes the labour-market protection that used to come from local competition for workers.

Low growth This challenge is particularly difficult, because economic policy has not focused primarily on the adverse distributional trends arising from shifting global market outcomes. And yet the income distributions across advanced economies, presumably subject to similar technological and global market forces, are, in fact, startlingly different, suggesting that a combination of social policies and differing social norms does have a distributional impact. Although the theory of optimal income taxation directly addresses the trade-offs between efficiency incentives and distributional consequences, the appropriate equilibrium

remains a long way off.

A healthy state balance sheet could help, because part of the income flowing to capital would go to the state. But, with the exception of China, fiscal positions around the world are currently weak.

As a result, deleveraging remains a clear priority in a range of countries, reducing growth, with fiscal countermeasures limited by high or rising government debt and deficits.

Thus far, there is little evidence of willingness on the part of politicians, policymakers, and perhaps the public to reduce current consumption further via taxation in order to create room for expanded growthoriented investment.

In fact, under fiscal pressure, the opposite is more likely. In the U.S., few practical measures that address the distributional challenge appear to be part of either major party’s electoral agenda, notwithstanding rhetoric to the contrary.

To the extent that this is true of other advanced economies, the global economy faces an extended multi-year period of low growth, with residual downside risk coming from policy gridlock and mistakes in Europe, the U.S., and elsewhere. That scenario implies slower growth – possibly 1-1.5 percentage points slower – in developing countries, including China, again with a preponderance of downside risk. © Project Syndicate

16 |

business daily September 17, 2012

CLOSING EU urges Russia to respect market rules S.Korea opposition names Moon Jae In Russia must abide by the European Union’s internal market rules and stop offering widely varying prices to its member states, EU Energy Commissioner Guenther Oettinger said. Mr Oettinger’s remarks are the latest turn in a gas pricing row between Russia and the EU that is becoming increasingly political. The Kremlin banned its strategic companies, such as gas export monopoly Gazprom, from disclosing information to foreign regulators after the European Commission started an antitrust investigation into Gazprom’s activities. “The Russian partners have to accept our European Union rules,” Mr Oettinger said.

South Korean lawmaker and human rights activist Moon Jae In won the nomination yesterday as the main opposition party’s candidate trying to win back the nation’s presidency in the December election.

Mr Moon, 59, won the district of Seoul, the final of 13 local races held over the past three weeks as part of the Democratic United Party’s nomination contest. “The driving force behind my victory today is the people’s thirst for change,” he said in his acceptance speech at a stadium in a Seoul suburb. “I promise you victory and a regime change this December!”

Bank oversight plan may disappoint markets

Protesters marched against planned tax hikes that have shattered the consensus behind the austerity measures

Ministers’ talks reveal deep divide on banking union

H

anding bank oversight to the European Central Bank is not in itself sufficient to allow the eurozone’s rescue fund to directly assist banks, Germany’s Finance Minister said, warning he expected no such deal on supervision in 2012.

Wolfgang Schaeuble made the comments after talks between EU finance ministers on Saturday exposed deep divisions about a proposed banking union. That may disappoint investors who had been pinning hopes on a pledge by eurozone leaders to agree sweeping new powers for the ECB in 2012.

This in turn had been expected to unlock the possibility of direct aid to banks from the eurozone’s rescue fund, the European Stability

German Finance Minister, Wolfgang Schaeuble, says further steps needed before banks tap the European Stability Mechanism

Mechanism (ESM), for countries such as Spain or Ireland.

“We have the declaration of the heads of governments of the eurozone that European banking supervision is a necessary but not sufficient prerequisite,” Mr Schaeuble told reporters after the ministers’ meeting in Cyprus. “The rules of the ESM remain.”

He said any country that is home to troubled banks would still need to apply for an adjustment programme through the ESM. The remarks contrasted with those of French Finance Minister Pierre Moscovici, who called for quick action and underlined the commitment by eurozone leaders to reach a deal this year.

“There are many questions on all of its aspects: the calendar for implementation, the scope of supervision, the role of the European Central Bank, the mechanism for supervision,” Mr Moscovici told reporters.

“These differences do not appear insurmountable at all to me. I am convinced that we will get there before the end of 2012: both because it’s our duty and we have the possibility to do so,” he said.

Deep divisions Talks among EU finance ministers laid bare deep divisions not only among eurozone countries but also with many neighbouring states, worried that the ECB’s power could impinge on their banks.

Mr Schaeuble reiterated his criticism of elements of the proposal, cautioning against expectations that a deal could be reached by the end of the year.

“My concern is always that there is the risk to raise expectations with financial-market participants that can’t be fulfilled later,” he said.

“I don’t see the possibility of a direct bank capitalisation from the European Stability Mechanism as of January 1.”

“I don’t see that there can be direct recapitalisation through the European Stability Mechanism already by January 1,” he said.

Germany, which is keen to retain primary oversight for its regional savings and cooperative banks, had questioned whether the ECB should get the authority to supervise all 6,000 banks in the euro area, arguing that it would overstretch the bank.

Officials in Berlin say it would be better to proceed more slowly with the reforms to ensure a water-tight system.

Sweden underscored the depth of the division. “There is a large number of countries that are very worried,” said Finance Minister Anders Borg, saying Poland, the Czech Republic and the Nordic countries shared his concerns. “There are very few countries outside [the euro] that think this is a balanced solution.”

Establishing a common framework for dealing with problem banks would mark a departure from the previously haphazard approach taken by the euro zone’s 17 members that has frustrated investors and helped drive up borrowing costs for weaker states.

A banking union foresees three steps: the ECB getting the power to monitor all eurozone banks and others in the wider EU that agree to the oversight; the establishment of a fund to close troubled banks; and a fully fledged scheme to protect citizens’ deposits across the euro zone.

Reuters

Portugal sees big anti-austerity rally Tens of thousands of people rally in Portugal and Spain in protest at spending cuts and tax rises in the debthit countries

T

ens of thousands of people have rallied in Portugal and Spain in protest at spending cuts and tax rises in the debt-hit countries.

While some reports mention that more than 150,000 Portuguese took part in the rallies on Saturday, Portuguese-language newspaper Expresso says that more than 660,000 people took to the streets in about 40 cities.

Protesters marched against planned tax hikes that have shattered the consensus behind austerity imposed by an EU/IMF bailout, and tens of thousands more marched in Spain, seen as the next country needing to be bailed out.

The rallies in Portugal were mostly incident-free, but a young protester of about 20 was taken to hospital with burns after an attempted selfimmolation during the protests in the northern town of Aveiro. Firemen were quoted as saying his life was not in danger.

Organised via the Internet, the rallies brought together Portuguese from all walks of life, chanting: “Out of here! IMF is hunger and misery!” and calling on the centre-right government to resign.

“Stop this government before it halts the country!” read one

placard in Lisbon, where more than 100,000 crammed the main Republica thoroughfare and nearby streets, marching past IMF offices cordoned off by riot police.

Some threw tomatoes and bottles at the building.

The rally ended at the vast Square of Spain near the Spanish embassy to express solidarity with protesters across the border in Spain after tens of thousands rallied in Madrid earlier on Saturday against spending cuts and tax rises.

The Portuguese and Spanish governments say the austerity measures will lead to economic recovery.

One in four is out of work in Spain and it is mired in its second recession in three years.

In Portugal, tax hikes and spending cuts imposed since last year’s bailout have contributed to record unemployment above 15 percent and pushed the economy into its worst recession since the 1970s.

On Thursday, the main opposition Socialists threatened to end crossparty backing for the 78-billion-euro bailout by voting against the 2013 draft budget unless the government drops its planned increase in the social security levy for all workers to 18 percent from 11 percent.

Reuters