Macau Business Daily, September 24, 2012 by Business Daily

Year I Number 125 Monday September 24, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00 www.macaubusinessdaily.com

Nevada regulators need ‘boots on ground’ in Macau Nevada gaming regulators need to increase their regulatory oversight in Macau suggests Jonathan Galaviz. In a wideranging interview with Business Daily, Mr Galaviz, head of an economic research consultancy advising gaming businesses and investors in the United States and Asia, says a cap on tables is not the best way for public policy to control the growth of casino gaming in Macau.

More on pages 8 & 9

Tougher mortgage rules considered

ocal first-time homebuyers could be worst hit as the Macau government ponders tougher rules on mortgage lending by local banks. The idea is to help locals by preventing an influx of overseas homebuyers seeking local loans. But recent house price rises have been caused not by hot money from outside but by a lack of new supply say real estate experts. The average price of residential property has been soaring and hit a record-high of 62,137 patacas per square metre in July. Local mortgages for properties above 3.3 million patacas have been capped at 70 percent of purchase

price since December 2010. According to the Monetary Authority of Macau, new approvals of residential mortgage loans fell 5.9 percent in July to 3.78 billion patacas (US$473.3 million). Economist Albano Martins told Business Daily the most widely used mechanism on the mainland to curb commercial lending is for the central bank to raise banks’ capital reserve requirements. But such a measure applied in Macau “would restrict credit to the whole economy,” he explained, which could dangerous at a time when the city’s economic growth is slowing significantly. More on page 3

Brought to you by

HANG SENG INDEX 20795

20770

20745

Food prices push up inflation

20720

Macau’s inflation accelerated for the first time in three months in August. Consumer prices rose 6.33 percent from a year earlier, the Statistics and Census Service said. The rise in CPI inflation is mainly due to a surge in food prices. After showing signs of slowing down, the August inflation rate for food and non-alcoholic drinks is again picking up, growing by 8.44 percent. Page 2

Legislators unhappy over Studio City explanation The planned Studio City project on Cotai is entitled to a gaming table allowance under the table cap says Francis Tam Pak Yuen, Macau’s Secretary for Economy and Finance, quoted by the Government Information Bureau. That’s despite the fact Mr Tam said only a week ago that Studio City doesn’t have gaming permission. The government has an explanation for the apparent inconsistency, but some legislators are sceptical. Page 5

20695

September 21

HSI - Movers Name

%Day

WHARF HLDG

3.05

BELLE INTERNATIO

2.46

ALUMINUM CORP-H

2.19

BANK OF COMMUN-H

2.13

HENDERSON LAND D

2.09

POWER ASSETS HOL

-0.77

SANDS CHINA LTD

-0.87

CITIC PACIFIC

-1.11

HANG LUNG PROPER

-2.02

LI & FUNG LTD

-2.56

Source: Bloomberg

Brought to you by

Hospital defends funeral monopoly The chairman of the charity that runs Kiang Wu Hospital has defended the decision to give an exclusive concession to one company for traditional Chinese rituals at its funeral home. Fong Chi Keong said the deal would prevent problems with ‘middlemen’. Hong Kong’s public hospitals have had a long-running problem with predatory agents working on commission approaching newly bereaved families offering funeral services. Page 6

2012-9-24

2012-9-25

2012-9-26

25˚ 30˚

24˚ 29˚

25˚ 30˚

I SSN 2226-8294

2 |

business daily September 24, 2012

macau

August figure dashes hopes that inflation is decelerating Consumer price inflation gathers steam again after easing for two months in a row Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

A surge in food prices fed inflation last month

nflation accelerated last month for the first time in three months, reaching an annual rate of 6.33 percent. The Statistics and Census Service said on Friday that August’s figure brought the average annual rate of consumer price inflation over the past 12 months to 6.46 percent.

The rise in inflation was due mainly to a surge in food prices. After showing signs of slowing, the annual rate of increase in food and non-alcoholic drink prices took off again, reaching 8.44 percent. Food and non-alcoholic drinks account for about one-third of

household budgets. While the rates of increase in prices of fresh meat and vegetables seem to be under control in the mainland, they are accelerating here. The annual rate of consumer price inflation in the mainland rose to 2 percent last month. Food price inflation rose to 3.4 percent. Most of Macau’s meat and vegetables are imported from the mainland. The prices of most vegetables here were more than 20 percent higher last month than a year before. Consumers had to pay 43 percent more for tomatoes and 24.4 percent more for beef. Economists do not expect inflation to slow much because prices of food, housing and fuel are rising.

Tightening rules Housing and fuel costs were 8.17 percent higher last month than a year before. Together, food and non-alcoholic drinks, housing and fuel accounted for more than half of inflation last month. Economist Albano Martins told Business Daily last month that if there were no curbs on the costs of food and non-alcoholic drinks, housing and fuel it would “be very difficult for the government to control the inflation rate”. Housing prices are expected to increase in the second half of this year. Midland Realty (Macau) Ltd chief executive Ronald Cheung Yat Fai

said the United States and Macau currencies were likely to remain weak for the rest of this year, causing a rise of 10 percent in housing prices here as investors put their money into property. 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. The government may soon introduce new measures to cool the housing market. The president of the Monetary Authority of Macau, Anselmo Teng Lin Seng, said on Thursday the government was considering tighter rules for mortgage lending.

Clean air cost The Macau Post Daily quoted Mr Teng as saying that this would depend on the effect on the real estate market here of the US Federal Reserve’s new round of ultra-loose monetary policy. He said any changes in the mortgage rules would be announced “at the appropriate time”. (see page 3) Consumers will probably have to pay more for fuel eventually, as the Environmental Protection Bureau is close to introducing new, cleaner standards for fuel for diesel vehicles. Macau’s biggest supplier of diesel fuel, Nam Kwong Petroleum & Chemicals Co Ltd, part of state-owned Nam Kwong (Group) Co Ltd, says this will mean higher prices at the pump. It predicts the higher standards will add 1 pataca to the cost of a litre of diesel. The company estimates that altogether consumers will have to pay 130 million patacas a year extra for fuel that meets the new standards, assuming consumption of petrol remains at 60,000 tonnes a year and consumption of diesel remains at 50,000 tonnes a year. Mr Martins said he expected inflation to slow in the coming months but that it was unreasonable to expect inflation to finish this year below last year’s 5.81 percent.

business as usual

Traffic terrors Paulo A. Azevedo pazevedo@macaubusinessdaily.com

his photo is an example of the police force’s lack of professionalism. Either that or we do not actually have traffic police. All over the city, these buses take up most of the road, while the tourists onboard are dragged to shops in some of the most incredible places. Heavy trucks, meanwhile, seemingly stop for days in places that might block the view of the traffic ahead for other road-users. And nobody does a thing. Our traffic police does not see, hear or act. Their inaction is shameless. At least the Transport Bureau realise they do not have the skills to control drivers that do not know how to drive, that talk on their mobile phones while driving, and that drive in the wrong lane as if it were Sunday everyday. The bureau acted as anyone who cannot think outside the box would. They slow traffic with silly decisions – making the right lane on the Sai Van Bridge for motorcycles only, is the latest example – and they place cameras everywhere, as if it matters much. The bigger problem, a lack of civility that endangers society, is not being addressed. Is that because the city’s officials do not care if the public lives in a place where people have stopped giving a damn about each other? I think not but sometimes it looks like it.

September 24, 2012 business daily | 3

MACAU

Mortgage curbs could hit first-time buyers

editorial

The gaming boom – it’s your funeral

Young couples could be worst hit as Macau government ponders tougher rules on mortgage lending Vítor Quintã

vitorquinta@macaubusinessdaily.com

Associated Editor old,” she added. Mr Martins criticised the government for failing to keep the mortgage lending price ceiling updated. “The plafond [upper limit] must keep up with the market evolution”. If the government lowers the cap even further, “it will only make it even more difficult for younger people, firsttime buyers,” Ms Cheung warned. “They will need a bigger deposit, more initial capital, to buy a flat,” the real estate agent added. Mr Martins is also concerned: “There should no disincentive to couples looking to buy their first home”.

More supply

Most homebuyers have to fork out a down payment of more than 1 million patacas, a real estate agent said

he tougher mortgage-lending rules for local banks being considered by the government could make life even more difficult for first-time homebuyers, experts told Business Daily. On September 20 financial regulator Anselmo Teng Lin Seng said the government is considering toughening mortgage-lending rules to cool down the housing market. Mr Teng told Macau Post Daily the government’s approach would depend on whether the Federal Reserve’s third round of quantitative easing in the United States had an impact on the real estate market here. Mr Teng, president of the Monetary Authority of Macau said ‘hot money’ generated by U.S. policy is unlikely to flood into the city, but he added the authority would keep a close eye on the issue. Possible adjustments on mortgage rules would be announced “at the appropriate time”, the head of Macau’s de facto central bank added. Those adjustments might involve preventing non-residents from taking local home loans, shrinking the loan period or lowering the mortgage rate, Mr Teng said. “These are classic financial mechanisms to control the real estate market,” economist Albano Martins said. In mainland China the most widely used mechanism is to raise banks’ reserve requirements he added. But such a measure “would restrict credit to the whole economy,” he explained, which could dangerous at a time the

city’s economic growth is slowing sharply. According to statistics released on September 21 by the Monetary Authority of Macau, new approvals of residential mortgage loans fell 5.9 percent in July to 3.78 billion patacas (US$473.3 million).

Careful management Mr Martins warned that any measure, particularly lowering the mortgage rate, “should not be done blindly”. Mortgages for properties valued above 3.3 million patacas have been capped at 70 percent of the purchase value for both residents and outsiders since December 2010. The reasoning was that at the time these were ‘luxury’ level units most likely to be bought by outsiders. But with house price inflation, that’s now the bracket being pursued by local buyers but they’re facing the hurdle of a 30 percent deposit – a minimum of 990,000 patacas. For properties valued below 3.3 million patacas, Macau residents currently enjoy 90 percent mortgage lending and outsiders 70 percent. The average price of residential property has been soaring and it hit a record-high of 62,137 patacas per square metre in July. Houses valued below 3.3 million patacas are in demand and sell very quickly, says Centaline (Macau) Property Agency Ltd sales director Noelle Cheung. “There are not many houses available at that price and all of them are very old, over 20 years

Ms Cheung suggests first-time homebuyers should be exempt from the restrictions and in return, face restrictions on re-selling the flats, similar to the restrictions imposed on government-subsidised apartments. She believes an increased supply of affordable housing would be the ideal tool to cool down the property market. “It’s all about supply and demand. The low-end and the high-end [segments] are taken cared of but not the ones in the middle,” she stressed. Mr Martins agrees that “imposing restrictions solely on the last step of the food chain” is no magical formula. “There should also be curbs on capital entering Macau to buy up and develop major plots of land,” he said. The economist called on the government to “lower the land premiums, by negotiating its value in connection with the retail prices of the future flats”.

MOP3.78 billion new residential mortgage loans approved in July

“That would automatically cool down the market,” he predicted. Mr Teng’s comments came a week after the Hong Kong Monetary Authority decided to limit the maximum term on all new mortgages to 30 years. Mortgage payments for investment properties can’t be more than 40 percent of buyers’ monthly incomes, from the current 50 percent, Norman Chan, the de-facto central bank’s chief executive, said on September 14. 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. with Bloomberg

‘E

xperience the difference. The difference is Macau.’ So said a recent government marketing campaign. Well if it’s referring to fighting your way down San Ma Lo through crowds of visitors four abreast in order to get to your local coffee shop – only to find it has closed to make way for (yet another) jewellery shop then that’s certainly different compared to say Paris or even Venice. Such complaints could easily be dismissed as the rantings of a grumpy expat who doesn’t like progress. It appears I’m not alone however when it comes to questioning the current instalment of Macau’s economic miracle. And the voices of dissent are coming from the locals. They’re unhappier than they have been for years according to the Macau Business Quality of Life Report. If quality of life were measured only by gross domestic product, then Macau would be a world leader. But it is not, and Macau is not. The basic problem as far as tourism is concerned is Macau is not in control of its own destiny. It cannot regulate – other than by lobbying the central government – how many Chinese visitors come into Macau over any given period. It cannot as a government, formulate a tourism strategy that prices some visitors out of the market. That would be ‘unpatriotic’. So instead, like a family that invites the in-laws to visit and finds them staying for a month and eating every piece of cake in the house, the locals must keep on smiling, gritting their teeth and pouring the tea, hoping that with time the relatives will get bored and head for home. Perhaps the only cure for Macau’s growing pains is time. As Chinese people become more familiar with travelling outside the country, they are likely to become more adventurous. They might then seek a real Venetian experience, rather than a near-Venetian one. The issues are not simply those of Macau’s lack of sovereignty and the desire of Chinese tourists to take their traveller baby steps in Macau. There’s also a misalignment between the private interest in Macau’s tourism market growing as quickly as possible, and the public interest of balancing that growth against the quality of life for the people who live here. Locals get the right to full employment in the gaming boom, but it is a Mephistophelian bargain. They have not been let in on the big joke that underpins most of what happens in this market. This is that almost every moneymaking sector in Macau has been carved up between local elites and their political allies on the mainland. Everything from the food they eat to the fuel they put in their cars comes via the hands of a tiny number of local businesspeople and of state-owned enterprises. And many of the people involved don’t live here. They don’t have to put up with the social and environmental consequences of supercharged growth. The tax raised from gambling does go into some shiny new infrastructure projects. But much of the work seems to be done by companies linked to these elites – following opaque tendering processes. Cheering on the gaming boom are the foreign gaming investors. In tones of luscious hypocrisy they talk of the need for ‘world class tourism facilities’. What they really mean is: ‘Chinese people are pathological gamblers. We’d like to build a lovely big mousetrap so we can make more money than God’. This cynicism has reached levels that are truly beyond satire. Many Macau residents now cannot even choose who conducts their funeral, following a monopoly deal between Kiang Wu Hospital and a local funeral director. Perhaps we shouldn’t be surprised that in a town sold on the idea of getting rich quickly, money talks, even in death.

Almost every money-making sector in Macau has been carved up between local elites and their political allies on the mainland

4 |

business daily September 24, 2012

macau Brought to you by

HOSPITALITY Driving wages higher Employment in activities closely associated with the gaming industry, such as running hotels and leisure facilities catering to gamblers, has ballooned. This is an almost immediate effect of the growth in gaming. Other activities not so obviously associated with the gaming industry have also benefitted from its growth. Among these activities are retailing, road transport and security. The number shop assistants, drivers and security guards – and their wages – have followed the general upward trend that the liberalisation of the gaming sector in 2004 set in motion. Biannual surveys by the Statistics and Census Service give some insights into employment in retailing, road transport and security.

The rising numbers and continuous flow of visitors mean some retailers just cannot get enough staff. The number of shop assistants rose by 84 percent in the period under review, to 14,214 from 7,726. The number of security guards rose by 76.6 percent, to more than 4,200 in 2011 from just over 2,400 in 2004. Our traffic congestion is testament to the increase in the number of people employed as drivers, which rose to nearly 1,100 from just 760.

Beijing promises more MICE events Macau’s MICE industry will get more support from the central government, via a new cooperation agreement Tony Lai

tony.lai@macaubusinessdaily.com

eijing has pledged to support Macau in holding international exhibitions in the fields of tourism and food and drink, and to make the exhibitions industry part of the development of Hengqin Island. The Macau government and the Ministry of Commerce signed on Friday a cooperation pact that may lead to further development of the meetings, incentives, conventions and exhibitions (MICE) industry. The agreement includes 20 measures to consolidate cooperation in financial incentives, tax benefits, training and customs clearance. Last year, Beijing agreed to fasttrack the processing of applications for visas by mainland businesspeople attending important MICE events here. Beijing and Macau also agreed to continue to explore the Lusophone, European and Southeast Asian markets. “The MICE industry has been developing in recent years but I believe future development will require the strengthening of regional cooperation,” the secretary of the economy and finance, Francis Tam Pak Yuen, said after the signing ceremony. Beijing and Macau will set up a group to keep an eye on the industry and help coordinate the participation of mainland enterprises and individuals in Macau exhibitions. Vice-minister of Commerce

Jiang Yaoping said collaboration could help to “internationalise and professionalise” the exhibition industry in the mainland, to diversify the economy here, and to strengthen Macau’s position as a global tourist destination and centre for Portuguese-speaking countries to do business with China. Several exhibitions have moved from the mainland to Macau in the past year, including the China International Automobile Fair and the China Catering Expo, a threeday exhibition that ended yesterday. After meeting Mr Jiang on Friday, Chief Executive Fernando Chui Sai On said it was a pleasure for Macau to co-organise the catering expo with the Ministry of Commerce.

Mr Chui said the government would endeavour to “develop and internationalise” the exhibition industry with Beijing’s support. The three-day catering expo, previously held in the southwestern mainland city of Chengdu and the central city of Xi’an, attracted more than 200 enterprises from 25 countries. In the first half of this year the number of meetings and exhibitions here was 6 percent lower than a year before, but they attracted more than 291,000 people, 17 percent more than a year before. Data from the Statistics and Census Service show the mainland was the origin of 20 percent of the 1,600 exhibitors, two-thirds fewer than a year before, and 15 percent of the 14,500 buyers, one-quarter fewer.

Venetian lays on trio of tourist attractions Sands China plans three attractions for tourists to boost diversification and revitalise gaming figures Xi Chen

xi@macaubusinessdaily.com

W Increased demand for labour and increased general prosperity mean rising wages. And shop assistants, drivers and security guards have done comparatively well. While in commerce in general the average wage rose by 66.4 percent, the average wage of shop assistants more than doubled. Even more striking is the average wage of drivers. It used to trail the average for their industry but in the second half of last year it increased by 31.5 percent. It is now above the industry average. J.I.D.

ith gaming revenue growth falling at The Venetian Macao Resort Hotel, Sands China Ltd has made good on diversifying its offering to tourists, including an ice-skating rink and an exhibition of Titanic relics. “We aim to diversify the city’s tourism industry and make the Cotai Strip Asia’s number one destination for entertainment and leisure,” said Brendon Elliott, The Venetian’s vice-president of sales and resort marketing. The resort will spend more than US$1 million (8 million patacas) on each of the three events planned between now and next year, according

to The Venetian’s associate director of events marketing Brett Ingram. Titanic The Exhibition coincides with the 100th anniversary of the ship’s only voyage and tells the story of the vessel through an artful recreation of the ship’s cabins, dotted with 400 replicas of artefacts recovered from the shipwreck. In The Human Bodies Exhibition there are more than 200 permanently preserved specimens injected with plastic in place of water and fat. Both exhibitions run from October 25 to February 24. The third attraction is Winter in Venice, a signature event that may become an annual offering, includes

light and sound shows to create “a winter wonderland atmosphere”. A n ice-skating rink will be installed outside the hotel’s main lobby. The resort will launch an exclusive hotel package for visitors incorporating these new events starting today. “These upcoming events are attractions unique to the region and ones that members of all the family can enjoy at The Venetian Macao,” Mr Elliott said. During the first half of this year the resort saw gaming revenue grow by just 2.7 percent to US$1.2 billion (9.8 billion patacas), a pace far below the market-average growth of 19.8 percent in the same period.

September 24, 2012 business daily | 5

MACAU

Studio City casino saga in new twist Project included in govt table cap calculations: despite no permission for gaming

he long-running story of whether the Studio City project on Cotai has the right to a casino has taken a new twist. The Government Information Bureau issued a statement at the weekend designed to clarify what will happen with the casino table cap policy from next year. The market is limited to 5,500 live table games until next year, and then three percent annual compound growth thereafter. In the process of issuing its table cap clarification, the bureau quoted Francis Tam Pak Yuen, Macau’s Secretary for Economy and Finance, as saying some of the new tables would be allocated to “the Studio City project, which filed a request with the government to open a casino before 2008”. This has surprised some observers because the weekend before in comments quoted by the Macau Daily Times, Mr Tam had repeated his earlier assertion that the Studio City project did not have gaming permission. At first hearing it sounds like the government is getting its messages muddled. But in the cloistered world of government bureaucracy, there is a logical basis to the statements, a person with administrative knowledge of the situation told Business Daily. “It relates to the technical definition of ‘gaming permission’,” said the person. “Up to 2008, if you had a

piece of land you could apply to the government for a service provider agreement for your hotel that would allow gaming. I believe that’s what happened with Studio City. That’s why although it isn’t gazetted as having a casino, it was always understood by the government that the project would have one.”

Historical precedent Up to 2008, service provider agreements were quite common in Macau. It’s the system used for the so-called ‘satellite’ casinos operating on a Sociedade de Jogos de Macau SA gaming licence but managed by third parties. When the system began, gaming in Macau was still a monopoly under Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau. Service provider agreements were therefore a way of introducing some product diversity and even a mild form of competition into a market constrained by law as a 40-year monopoly. When a government official uses the term ‘gaming permission’ in the post market liberalisation era he or she is thinking about the so-called concession model, whereby one of the six current gaming concessionaires applies to the government for piece of land to build a casino, adds the source. But local legislators are increasingly

Long running saga – Studio City’s casino permission (Photo: Manuel Cardoso)

questioning the technical distinction between ‘service provider agreement’ ‘and’ ‘gaming concession’. This has the potential to cause political complications for the government and for the industry. In comments quoted by Chineselanguage newspaper Shimin Daily, legislator Au Kam San described Mr Tam’s explanation of the Studio City situation as “ridiculous”. He questioned why Studio City’s original investors had been allowed

to apply for a resort project where gaming was clearly intended as an element, when they were not one of the six gaming concessionaires. Legislator Kwan Tsui Hang said she was worried that – despite government assurances of a moratorium on service provider agreements – more would be allowed. She said the government has to give out “a convincing rationale” for approving such projects.

6 |

business daily September 24, 2012

macau Brought to you by

Credit for all As the economy has grown, so has credit to the private sector. The two are related. Credit to the private sector since 2004 has followed a path as remarkable as the path followed by gross domestic product. Between 2004 and last year, credit rose by 4.6 times, from 36.7 billion patacas to 167.9 billion patacas.

This happened in two phases. In the first, between 2006 and 2007, credit to the private sector jumped by 42.2 percent, to 72 billion patacas from 50 billion patacas. In the second, between 2009 and 2010, it jumped by 29.2 percent – from a much higher base than before – to more than 130 billion patacas. The figures for the first half of this year suggest growth that is slower but comparable to growth over the preceding two years.

Kiang Wu ‘would close’ without public money The Kiang Wu Charitable Association denies it has misspent government money meant for the private hospital Xi Chen

xi@macaubusinessdaily.com

T Growth in credit to the private sector is visible in some critical industries. Credit to the construction industry rose by 8.6 times in the period under review, to more than 18 billion patacas from just over 2 billion patacas. Credit to the hotel and restaurant industry rose by 6.6 times to 16.5 billion patacas. Retailers are also borrowing more. Credit to commerce, both wholesaling and retailing, rose by five times. These three industries all got about the same amount of credit last year: between 16.5 billion patacas and 18 billion patacas. The most surprising rise in credit, however, was the rise in credit to manufacturing. Although manufacturing is contracting fast, it is borrowing more. Credit to manufacturing rose 2.8 times in the period under review, to about half of the amount granted to the hotel and restaurant industry. J.I.D.

he private Kiang Wu Hospital would not survive without government subsidies, the chairman of the Kiang Wu Charitable Association, Fong Chi Keong said. Mr Fong said it needed government assistance as “the hospital is surviving on few resources while providing over half of the territory’s medical services”. He told a press conference on Friday that 67 per cent of the hospital’s expenses were covered by income from medical services, with the remainder provided by government funding. Mr Fong, also a legislator, said criticism of extra subsidies was unreasonable, as the government had always outsourced treatment to the hospital. Representatives of the Kiang Wu Charitable Association defended the way it spent its subsidies, in response to allegations of misspending made by Legislative Assembly member José Pereira Coutinho. Mr Fong said the government had granted the association 20 million

patacas (US$2.5 million) so it could offer better salaries to help reduce staff turnover, which had been high for years. But he could not say if the pay packets of all staff had increased. Mr Coutinho, who is also president of the Macau Civil Servants Association, said five doctors had told him last week they had not benefited from the grant. Mr Fong said the association had sought to raise average pay at the hospital to about 80 per cent of what employees of the public hospital earn. Previously it had been about 50 percent.

Grey areas He said the association had spent 566.6 million patacas on the salaries of hospital staff last year. The hospital has 1,700 employees, including more than 300 doctors and 1,000 nurses and other medical staff. Since the start of last year the association has received 89.8 million patacas in grants from the Macau

Foundation and 1.75 million patacas in subsidies from the Health Bureau. Mr Fong also defended the hospital’s actions in offering an exclusive concession to San Long Yuen Services Funeral Co Ltd to conduct funerals with traditional Chinese rites. He said there were many grey areas in traditional funerals which meant middlemen made great profit. He said the contract with a single undertaker was meant to make the arrangement of funerals more transparent and improve the quality of service. Mr Fong said San Long Yuen had only a temporary contract, lasting until the association built a new funeral parlour sometime in the next couple of years. He said the former undertaker at the hospital, who had held the contract for 21 years, had not obeyed the rules. The association said it would monitor San Long Yuen’s compliance with its contract.

September 24, 2012 business daily | 7

MACAU a service charge to the newspaper, but no rent – an arrangement similar to the one the newspaper has with the Macau Civility Development and Research Centre. Members of the Legislative Assembly have relentlessly criticised that arrangement because the newspaper’s lease of the land that its building occupies says it cannot sublet any of the premises. But the government says the arrangement does not break the terms of the newspaper’s lease. The Kiang Wu Charitable Association manages numerous assets around the city and says it collects 10 million patacas in rent every year. It recently sold a commercial property close to Rua de S. Domingos for 120 million patacas.

Macau Foundation to shed light on subsidies Mr Fong said the new contract spelt out that San Long Yuen must offer six kinds of set funeral package, with a view to preventing subcontractors from overcharging.

Rent free Rival undertakers have warned that the exclusive concession could force many of them to close and so increase the price of funerals. The Kiang Wu Charitable Association also runs the Kiang Wu Nursing College and the Kiang Peng Middle School. Mr Fong said the Kiang Peng Middle School would be expanded after next summer, more than doubling its floor area from 70,000 square feet to 150,000 square feet. He said the Kiang Wu Nursing College would use four floors of the Macao Daily News building for training nurses until the second public hospital was opened in Cotai in 2017. He said the college would pay only

he Macau Foundation is considering publicising in detail on its website every subsidy it grants. The aim is to increase transparency. Vice-president Peter Lam Kam Seng said by next year it would also establish an electronic database for handling subsidy applications and follow-up management, reported Chineselanguage newspaper Va Kio. The Commission of Audit slammed the foundation in June for not carrying out thorough reviews on associations, leading to over-subsidising or repeated financial assistance to the same associations. Grants of 10 million patacas (US$1.25 million) to the Macau Civility Development and Research Center for refurbishment and operations – and of 61 million patacas in the past three quarters to the City University of Macau also raised eyebrows. T.L.

opinion

Smile, and the world smiles

Zen Udani

Assistant Professor of Management, University of Macau

acau’s vision is to be worldclass tourism and leisure destination. Tourism infrastructure is definitely important to realise the dream but even more crucial are the people that make this vision a daily, living reality. Being a preferred tourism destination is challenging enough, especially if we are talking about attracting nongaming visitors to Macau. Aiming at world-class status is even tougher for a tiny region that relies on foreign workers to greet, smile at and serve tourists, while strictly restricting the entry of foreign workers to the labour market. But all Macau’s people can contribute in a modest but effective way to realising the city’s vision by making an effort to greet tourists and smile at them more. These good habits, of course, can be acquired and practised even among ourselves. Good habits have to be acquired early in one’s life. Perhaps the culture here inhibits outward sociability. But the human heart and face have been created to communicate with others. Quite often a simple and sincere smile and greeting can serve as a bridge between strangers and even bring happiness to the anxious. Erik Qualman, in his book “Digital Leader”, says: “The best way to improve other people’s lives around you is to ensure that you are happy – your positivity will influence others. Maintain an outlook of optimism, geared toward action to change a negative situation.” We develop ourselves, including our social skills, by associating with other people and not by isolating ourselves

from the rest of the world. People in the front lines of the hospitality and other service industries know that they have to put on a good face and a jovial demeanour, even if confronted by an uncouth customer. If they persevere in their jobs, doing it with care and quality, they gain not only customer loyalty but, more importantly, personal virtues such as patience, understanding and serenity. With Macau’s highly restrictive labour policy, the hospitality and gaming industries do not have the luxury of hiring as many Asians as they need who have suitable interpersonal skills, work experience and a positive attitude. Responsibility for enhancing Macau’s culture of cheerful service lies rests on the shoulders of everyone, especially residents. From now on, we can strive to smile more and greet people, beginning with those around us at home or in the workplace.

The hospitality and gaming industries do not have the luxury of hiring as many Asians as they need who have suitable interpersonal skills

8 |

business daily September 24, 2012

macau

The cap that doesn’t fit Limiting the number of live gaming tables is not the best way to control Macau’s gaming industry says Jonathan Galaviz, head of Jonathan Galaviz & Company LLC. In an interview with Business Daily, Mr Galaviz says the tables allocated to each new Macau project should be decided case by case. He doesn’t believe however that the slowdown in the industry growth poses any threat to Macau, describing it as “a pause” that allows infrastructure growth to catch up with market development Luciana Leitão

leitao.luciana@macaubusiness.com

Casino operators were told that they were getting help to promote poker and mahjong despite the table cap. For example the government allowed casinos to count multiple poker tables as equal to one baccarat table. Then the government denied that was ever agreed. What do you make of that? Public policy makers are looking at the casino gaming sector. There’s a lot of ambivalence about what to do in a situation where there’s a slowdown from a very fast growth. There’s a question of whether different policies and regulations are necessary and important to ensure there’s macro-stability of the gaming market, which is really the tourism market. The reason is that for the last 10 years Macau has really never experienced a slowdown of growth. It should actually be expected to see mixed signals when it comes to the regulatory environment and what kind of new growth or new offerings the government would allow. Considering the number of new properties planned for Cotai and the fact that we’re already at or near the 5,500-table cap, how is it possible to make the cap policy work in practical terms? I personally think – and I don’t say it because I’m a consultant or strategist to the gaming industry or the companies operating in there – that managing the growth of the Macau gaming industry should not be a function of a cap on a number of tables. A cap on tables is not the best way for public policy to control the growth of casino gaming in Macau. Casino gaming in Macau should be controlled, if at all, based on real estate zoning and approvals by the government to operate specific physical plans. The historical approach of managing the growth of the industry by table limits might have served Macau when it was a very limited industry, in which there were very few market participants. Now Macau has matured into a global tourism destination, and it’s much more prudent from a public policy perspective, to look at the management of Macau’s growth in the casino gaming area from a case by case basis, rather than a fixed number that applies to the entire sector. Looking at the current slowdown in revenues, are there reasons for concern? The danger of a slowdown or a decline in casino gaming revenues of Macau exists only if the non-gaming revenues in integrated resorts, like food and beverage, hotel and convention centre revenues, go down at the same time. If there’s an off-setting – or, in other words, if casino gaming revenues are moderating, but non-casino gaming revenues are increasing – I would argue that’s actually okay and even economically beneficial, because the economic multiplier and the

economic benefit to Macau on the non-gaming revenues is actually, more valuable, and more useful to the economy. Casino gaming revenues are great because they create tax revenues. But they don’t provide a very strong economic multiplier [the idea that when one dollar is spent on for example a restaurant meal, it benefits a chain of people from the restaurant owner, to the food wholesaler, to the waiting staff to the building’s landlord].

deploy over the next couple of years to capitalise upon the continuous growth of wealth in the middle class, the government and the private sector, would be very beneficial. Will the next properties in Cotai be targeting the mass market?

A cap on tables is not the best way for public policy to control the growth of casino gaming in Macau

The danger is if we start seeing a situation in which tourist numbers go down, casino gaming revenues go down and non-gaming revenues go down all at the same time. The latest data I’ve been looking at doesn’t seem to indicate that. There seems to be a moderation of casino revenue, yet at the same time tourist arrivals seem to be growing at a healthy pace. In addition, the non-gaming revenues at properties in Macau seem to be growing on a percentage basis. What we’re seeing now is a pause of maturity, and there will be a pause for maybe two years allowing the market to mature, allowing the infrastructures to catch up to where Macau is. You can say the slowdown is a function of the macro-economic condition of China and that China is not doing so well. Whatever it is, I think it’s not necessarily an unhealthy thing to have a one or two year moderation of growth. In the long term, I still think Macau will grow substantially, but media and the industry will look at the casino revenues and that’s all that matters. That’s the wrong way to tell the story. You have to look at it more at the fundamental aspects of the economic development of Macau. Some analysts suggest mass gaming revenue growth will continue to outpace VIP revenue growth. Do you see that happening? I see that happening and I hope that it happens. I’m a big advocate of the idea of mass gaming and massmarket growth of Macau. I’m not a fan of relying on concentrated populations or concentrated business models, so I think the more mass-market [the better]. Any strategy that Macau – either the government or operators – can

Jonathan Galaviz

Folks get too set on the macro-aspects of what Cotai really is. They look at specific projects or, even within specific projects certain components of those projects, to see how they are performing. I think it’s probably a good time to step back, and say: look, Cotai wants to capitalise the intellectual concept of the Las Vegas strip. It’s basically doing the best attempt to be what the Las Vegas strip is to Nevada – but in Macau and in an Asia-style context. So it is by definition a mass-market play in a long-term. If we look at the development of the Las Vegas strip, the largest portion of it took about thirty to forty years to develop. The Cotai Strip, as a master plan, has only been in development for a decade. If it’s done well, another decade from now, you can have critical mass projects that make it compelling to tourists to stay in Cotai. It’s a question of proper management of a master plan, and that’s more of a government public policy. Cotai is a mass-market play. It has to be, because of the breadth, the amount of capital, the amount of project, the amount of hotel space that is being put in there.

September 24, 2012 business daily | 9

MACAU There’s been a lot of coverage in the past months of allegations of corruption and illegal money transfer in Macau casino industry. Some people in the United States think U.S. companies simply shouldn’t be here. What’s your view? The gaming industry is rightfully highly regulated. The 100-year history of the gaming industry has shown that with proper regulation and with a smart approach to handling these issues you can

If casino gaming revenues are moderating, but noncasino gaming revenues are increasing, I would argue that’s actually okay

overcome them. In the opposite, if you choose to ignore them, you can have different types of outcomes. This is an industry that requires high levels of regulation and scrutiny from the government, because of issues such as dealing with so much cash, and the aspect of all the backend operations that exist in these companies. If Wall Street did not have faith in Macau and in the regulatory environment and the safety of the investment, you wouldn’t have pension funds and all these different institutions of capital having the confidence to put their money in a place that’s on the other side of the world. It’s really important for companies that operate in Macau – all of them – to ensure that they operate with the best global standards. It doesn’t mean you just comply with what the government requests at a minimum standard. The good companies in Macau will actually exceed the minimum standard that the Macau government sets or any government establishes.

Should the Nevada regulators act upon allegations relating to Macau if it involves a Nevada licensee? The Nevada regulators need to increase the regulatory oversight of what is going on in Macau. I would argue that they should actually have a few of the Nevada Gaming Control Board employs posted in Macau, full-time, so they can understand the environment and the dynamics. Obviously they would just be observers. The Nevada law deals with foreign gaming. The regulators can’t just sit there idly and observe. They’re tasked with enforcing the Nevada law. And Nevada law clearly states that foreign gaming activity is just as much under the auspices of the Nevada Gaming Commission and Nevada Gaming Control Board as if it were occurring in Nevada. There cannot be any excuse related to not understanding what is going on in Macau. Do you see any real regional competition to Macau coming from other Asian jurisdictions? I’ve long held a thesis that the idea of competition in Asia over the gaming industry is a concept that hasn’t proven itself out. There hasn’t been any tourism or casino market development that has taken away market share from another country in the last 10 years. A l l o f E a s t A s i a h as h a d v e r y significant macro-economic growth and continues to do so. Even with the moderation of a slight slowdown, the wealth effect of the middle class in Asia continues to grow and continues to be very wealthy. Any

Global consultancy Jonathan Galaviz is the head of Jonathan Galaviz & Company LLC, an economic research consultancy firm specialising in economic analysis, forecasting, and strategy consulting in the United States and Asia. He advises his clients on Asia strategy, international monetary policy, and global tourism economics. His clients include firms such as The Bank of Tokyo-Mitsubishi UFJ, Goldman Sachs, CapitaLand Ltd, Deutsche Bank, Caesars Entertainment Inc., Station Casinos Inc., eSun Holdings Ltd, Lai Sun Group and Keppel Land Ltd.

new market opening up in Asia, whether that would be Taiwan, Japan or the liberalisation in South Korea, the idea that this would somehow translate into decreased market share or decreased revenues in Macau, is just not going to happen.

PLATINUM SPONSORS

GOLD SPONSORS

SPONSORS

PARTNERS

ORGANIZER

PRODUCTION

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

10 |

business daily September 24, 2012

GREATER CHINA

Microsoft lodges complaints over piracy State firms allegedly using massive amounts of unlicensed software HK shares rebound, China worst week in 11 months

Gains on Friday helped Hong Kong shares achieve a third-straight weekly rise, lifted by commodities-related sectors, with appetites for risk increasing gingerly after oil prices steadied at the end of a volatile week. Mainland Chinese markets inched higher on the day, but suffered their biggest weekly losses in 11 months. Investors unwound gains from a stimulus-led rally of the past two weeks on reduced hopes that Beijing will further ease monetary policy and a territorial spat between China and Japan. The Shanghai Composite Index and CSI300 Index each were up 0.1 percent on Friday, but dived 4.6 and 5 percent respectively this week, their biggest weekly losses since October. Gains in Shanghai came in bourse volumes that slipped more than 10 percent from Thursday to the third lowest in the last 11 sessions. The China Enterprises Index of the top Chinese listings in Hong Kong, also known as the H-share index, climbed 1 percent on Friday, but was down 0.3 percent for the week, extending its outperformance compared with onshore markets. The Hang Seng Index closed up 0.7 percent on the day and 0.5 percent on the week at 20,734.9. Gains in Hong Kong on Friday came in the lowest turnover in more than a week. Turnover spiked three weeks ago when China first announced infrastructure project approvals that investors saw as fiscal stimulus, but since then, it has steadily declined despite monetary easing by Japan, Europe and the United States. Reuters

Five to elect local lawmakers by year-end China will complete a new round of elections of lawmakers at county- and township-level by the end of 2012, with the last five provincial regions currently proceeding with their elections, a statement said yesterday. Altogether 26 of 31 provinces, autonomous regions and municipalities on the Chinese mainland have completed their county and township lawmaker elections, held every five years, said the statement from the National People’s Congress (NPC) Standing Committee, China’s top legislature. The elections started in the first half of 2011. More than 2 million lawmakers at county- and townshiplevel will be elected by more than 900 million electorates in more than 2,000 counties and 30,000 townships, according to the NPC. The new round of local legislature elections has been regarded as a test after last year’s amendments to the Electoral Law, under which rural and urban citizens enjoy equal representation in legislative bodies. The five regions that are undergoing their elections at present are Liaoning, Hunan and Yunnan provinces as well as Ningxia and Inner Mongolia autonomous regions, the statement said. Xinhua

icrosoft Corp has lodged a complaint with China to stop four state-owned companies from allegedly using pirated and unlicensed versions of its software, Bloomberg News reported on Friday. Microsoft alleged that China Railway Construction Corp , TravelSky Technology, China Post Group and China National Petroleum Corp (CNPC) were using pirated or unlicensed software and filed a complaint last month to a government panel overseen by China’s Vice Premier Wang Qishan, Bloomberg reported, quoting three unnamed sources. Microsoft declined to comment on the article but said the company was having “ongoing discussions” with China about protecting intellectual property. Mr Wang, in a meeting with Microsoft Chief Executive Steve Ballmer in May, promised to crack down on software piracy, the official Xinhua News Agency reported. Wang also told Ballmer that central government organs in China were using authorised software since China’s push last year to use and purchase only legitimate software. According to the Bloomberg report, Microsoft alleged last month that 84 percent of its Office software used at China Railway Construction was unlicensed as was 97 percent of its Windows server client software. Microsoft also said that more than 40 percent of Office and Windows

Rampant piracy, Microosft says

server client software used by CNPC was unlicensed while almost all of Travelsky’s Office software was unlicensed and 93 percent of China Post’s come from pirated versions. Bloomberg said Microsoft’s allegations were based on its own estimates. A TravelSky investor relations executive declined to comment when contacted by Reuters as did an official at CNPC who only identified himself as Liu. Officials at China Post and China Railway Construction could not immediately be reached. Bloomberg reported that a China Post executive told the news service that Microsoft’s allegations were

China envoy warns Canada on Nexen deal Canada govt. to assess benefits after shareholders’ approval

State-owned CNOOC likely to raise some reservations

hina’s ambassador to Canada warned in remarks published on Saturday against allowing domestic politics to drive the Canadian government’s decision on whether to approve Chinese stateowned oil company CNOOC Ltd’s proposed US$15.1 billion takeover of Canadian oil producer Nexen Inc. “Business is business. It should not

be politicised,” Ambassador Zhang Junsai said in an interview with Canada’s Globe and Mail newspaper. “If we politicise all this, then we can’t do business.” The CNOOC deal, if completed, would mark the first outright takeover of a large Canadian energy producer by a Chinese state-owned enterprise. The ambassador also said

“inaccurate” while a China Railway Construction public relations executive said estimated use of unlicensed software was greatly exaggerated. Rampant software piracy in China has made the market difficult for Microsoft to crack, but over the past few years the company has stepped up assertion of its intellectual property rights. Earlier this year Microsoft sued Gome Electrical Appliances Holding, one of China’s largest homegrown electronics distributors, and a Beijing electronics mall, for allegedly infringing on the copyright of its software. Reuters

negotiating a full free-trade agreement within a decade would be the best way of assuring fair, two-way trade and investment between China and Canada. “It’s time to open up each other’s markets,” Zhang said. “It’s high time to do the exploratory work on the possibility of a free-trade agreement.” The newspaper said it was the first time that a senior Chinese representative called for early, accelerated talks on a free-trade deal. Concern that China has unfairly limited Canadian companies from investing there is one of the issues affecting the debate on approving CNOOC’s bid for the energy producer. Industry ministry officials are looking closely at the bid to determine whether it is of net benefit to Canada. Canadian Trade Minister Ed Fast could not be reached immediately for reaction to Zhang’s comments, which coincide with Chinese Commerce Minister Chen Deming’s visit to Canada next week. CNOOC, whose offer was endorsed by Nexen shareholders last week, said it did not expect Chen to raise its sensitive takeover bid during talks with the Canadian government. In the Globe interview, Zhang said a free-trade treaty would go a long way toward expanding trade and investment between the two countries, something that Canadian Prime Minister Stephen Harper sees as a top priority. Harper wants to ease the dependence of Canada’s exportoriented economy on the United States, its main trade partner. Reuters

September 24, 2012 business daily | 11

asia

Myanmar’s Dawei SEZ struggling, failed negotiations Japan and Thailand come to the rescue

fter months of negotiations and failed promises, a proposed multi-billion dollar Myanmar port and special economic zone that could transform Southeast Asian trade appears back on track. Thai banks aim to keep the project afloat with short-term loans until an expected Japanese loan of up to US$3.2 billion can be secured, officials and sources famliar with negotiations told Reuters. Thailand’s largest construction firm, Italian-Thai Development Pcl, signed a deal in 2010 to build a deepsea port and Special Economic Zone (SEZ) in southern Myanmar’s coastal Dawei into Southeast Asia’s largest industrial complex. But the project foundered, as the Thai builder failed to secure US$8.5 billion to finance construction of its first phase - roads, utilities and a port. Underlining Dawei’s strategic importance, Japan and Thailand have since intervened to rescue the project. “Italian-Thai has had difficulty in mobilizing the funding. So now the Thai government has effectively taken over the project,” Thaung Lwin, chairman of the Dawei SEZ told

Reuters. “The next step is to invite Japan”, which he said is committed to seeing the project succeed. Since the Thai and Myanmar governments agreed on July 23 to connect Dawei to the Thai port of Laem Chabang, 100 km southeast of Bangkok, Thai banks led by Bangkok Bank and Siam Commercial Bank have arranged a 10 billion baht (US$325 million) bridge loan to sustain it for another 8-10 months, Somjet Thinaphong, managing director of the Dawei Development Co, an Ital-Thai unit, told Reuters in an interview. That loan would be followed by a soft loan from the state-backed Japan Bank for International Cooperation to finance the basic port and road infrastructure needed to push the project forward, he added. A source involved in the negotiations said the soft loan could total US$3.2 billion. Thaung Lwin of the Dawei SEZ said he expected Japan to emerge as the project’s biggest shareholder. As the former British colony embarks on its most dramatic changes since a 1962 military coup in what was then Burma, mega-

projects like the US$50 billion 250 sq km (155 sq mile) Dawei SEZ hint at what lies ahead. Super-highways, steel mills, power plants, shipyards, refineries, pulp and paper mills and a petrochemical complex are part of it, as are two golf courses and a holiday resort. Road and rail routes could link Dawei to neighbors China, India and other parts of Southeast Asia, allowing cargo to bypass the narrow and congested Strait of Malacca to forge shorter trade routes from the Middle East and Africa to China and Japan. The Association of Southeast

Asian Nations (ASEAN), a grouping of 10 countries, hopes Dawei will play an important role in its ambitions for a common market in 2015. For Japan, a better-connected Southeast Asia makes it easier to sell their products and knit together a vast network of suppliers to Japaneseowned factories and manufacturing plants, which include autos and electronic goods. “Before the yearend, we will have major progress,” Pisanu Suvanajata, Thailand’s ambassador to Myanmar, said in an interview with Reuters. Reuters

BASIC group calls for Kyoto 2 Ministers met to set a common negotiation position

inisters from Brazil, India, China and South Africa called for an extension of the Kyoto Protocol, the world’s only treaty that forces countries to cut greenhouse gas emissions, which expires at the end of the year. The emerging economies, who form the BASIC bloc, met in Brazil’s capital Brasilia on Thursday and Friday to discuss their common negotiating position for the upcoming climate talks in Doha, Qatar, in November. They said a new Kyoto commitment period should start on January 1 and that a decision on the treaty’s fate should be “a key deliverable for Doha and an essential basis for ambition within the regime.” The EU and poorer nations have said they want to extend the

treaty, which set binding targets for 37 industrialized countries and the European community, but still remain split over how to do so. A Kyoto resolution, as well as advancing talks on how to agree in 2015 a deal to force all nations to cut emissions starting in 2020, will be major priorities at the Qatar talks. “The idea is that the results from the Durban conference, which were carefully balanced, should be fully implemented,” said Brazil’s Foreign Relations Minister Antonio Patriota.

Common but differentiated At last year’s U.N. climate talks in Durban, South Africa, the EU-led efforts to get a tentative deal that would get all emitters, including the BASIC countries, to set emissions

reduction targets. While the BASIC group recognized that all countries “should participate in an enhanced global effort to be implemented after 2020” it stressed that its countries should not take on the same level of commitment as industrialized countries. The BASIC countries said the new agreement should “respect the principles of equity and common but differentiated responsibilities,” referring to their view that rich countries should take on more of a burden to reduce emissions because of their historical contribution to global warming. The U.S., which did not sign the Kyoto treaty because major economies, such as China and its BASIC partners, did not adopt binding targets, has said

Singapore extends F1 contract City will host race until 2017

ingapore extended its contract to host a Formula One race for five years till 2017, providing a continued boost to the economy from visitor arrivals and tourism receipts. The agreement to renew the contract was reached yesterday, said S. Iswaran, Singapore’s second trade minister, who oversees the tourism industry. The Singapore Grand Prix has attracted more than 150,000 international visitors over the past four years and generated about S$140 million (US$114

million) to S$150 million in tourism revenue annually, with benefits to the economy expected to remain “at least at this level” for the extended period, he said. “F-1 has been good for Singapore,” Mr Iswaran said as the city stages the night race for the fifth time today. “Negotiations have taken some time because all parties had specific objectives.” Singapore is seeking to encourage tourists to spend more by offering marquee events such as Formula

One and other attractions as a faltering global recovery threatens to curtail growth in visitor arrivals. Tourism spending is expected to increase as much as 8 percent to S$24 billion this year, according to government estimates.

Co-funding The grand prix costs S$150 million to organize, with the Singapore government co-funding 60 percent, Mr Iswaran said.

Emissions control controversies

it expects the countries to do so in a 2020 agreement. The BASIC members also addressed the controversial issue of Europe’s inclusion of international airlines in its carbon cap-and-trade system, expressing “concern” about what they called its “unilateral action.” “This approach undermines confidence and weakens efforts to tackle climate change on a multilateral basis,” they said. The BASIC countries will hold their next meeting in China in November just before the Doha climate talks. Reuters

“We expect to achieve a further reduction in the net cost to government through a combination of factors including optimization of infrastructure, operational efficiencies in race organization and revised terms with the race promoter and Formula One administration,” he said. Singapore forecast arrivals to rise to 17 million and tourism spending to S$30 billion by 2015. The opening of two casino resorts that include a downtown convention center and a Universal Studios theme park spurred a 13 percent increase in visitors last year after a 20 percent climb in 2010. The country expects tourist arrivals to rise as much as 9.8 percent to 14.5 million in 2012.

12 |

business daily September 24, 2012

MARKETS Hang SENG INDEX PRICE

Day %

VOLUME

PRICE

Day %

VOLUME

28.45

0.5300353

19195130

CHINA UNICOM HON

12.7

1.926164

61517221

ALUMINUM CORP-H

3.27

2.1875

32056666

CITIC PACIFIC

9.76

-1.114488

6157215

BANK OF CHINA-H

2.96

0.3389831

282648685

BANK OF COMMUN-H

5.28

2.12766

76483457

BANK EAST ASIA

29.25

0.1712329

2123126

BELLE INTERNATIO

14.18

2.456647

13904483

24.3

0.621118

12140038

-0.4594181

2512494

HENDERSON LAND D

53.85

2.085308

4197399

76.5

0.8569545

2703113

HONG KG CHINA GS

19.26

-0.1037344

6705986

HONG KONG EXCHNG

119.3

0.505476

3895482

HSBC HLDGS PLC

74.1

0.8163265

16376955

NAME AIA GROUP LTD

BOC HONG KONG HO CATHAY PAC AIR CHEUNG KONG CHINA COAL ENE-H CHINA CONST BA-H CHINA LIFE INS-H CHINA MERCHANT CHINA MOBILE

112.9

2886716

7.13

1.278409

33819599

5.3

1.145038

332719898

22.65

0.8908686

40597316

0.2087683

4459616

85.6

1.182033

23889437

19.34

-0.7186858

112624078

CHINA PETROLEU-H

7.18

0.8426966

75819206

CHINA RES ENTERP

25.95

0.5813953

2932077

CHINA RES LAND

CHINA OVERSEAS

NAME

PRICE

Day %

64.45

-0.7698229

2815808

28.4

-0.8726003

12270466

SINO LAND CO

14.06

-0.5657709

7749427

SUN HUNG KAI PRO

110.8

0.1808318

4534624

POWER ASSETS HOL SANDS CHINA LTD

VOLUME

CLP HLDGS LTD

65.85

2244072

CNOOC LTD

15.74

0.6393862

53803477

COSCO PAC LTD

10.88

1.872659

6418289

SWIRE PACIFIC-A

94.2

0.1062699

1535361

ESPRIT HLDGS

12.76

-0.3125

3838113

TENCENT HOLDINGS

254

0.8737093

2742098

HANG LUNG PROPER

26.65

-2.022059

13664659

-0.2169197

5688736

HANG SENG BK

116.1 -0.08605852

1388630

9.67

0.9394572

16966017

HENGAN INTL

HUTCHISON WHAMPO

73.8

0.8196721

5905266

IND & COMM BK-H

4.58

1.552106

324621743

LI & FUNG LTD

12.2

-2.555911

43995169

MTR CORP

29.2

-0.5110733

2390209

TINGYI HLDG CO WANT WANT CHINA

MOVERS

2 20885

INDEX 20734.94 HIGH

20880.65

LOW

20578.56

52W (H) 21760.33984

16.46

0.4884005

14137902

NEW WORLD DEV

11.28

1.621622

22760652

CHINA RES POWER

-0.7009346

3166000

PETROCHINA CO-H

10.18

1.394422

79821755

CHINA SHENHUA-H

30.05

0.6700168

22926971

PING AN INSURA-H

58.1

0.5190311

9515438

PRICE

DAY %

VOLUME

22.85

1.106195

19525401

YANZHOU COAL-H

(L) 16170.35

20575

19-Sep

21-Sep

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.03

0.6644518

252649269

CHINA PACIFIC-H

AIR CHINA LTD-H

4.95

3.556485

108178136

CHINA PETROLEU-H

7.18

0.8426966

75819206

ALUMINUM CORP-H

3.27

2.1875

32056666

CHINA RAIL CN-H

6.73

-0.148368

6935000

ANHUI CONCH-H

22.9

0.6593407

14046066

CHINA RAIL GR-H

3.37

0.8982036

12543408

BANK OF CHINA-H

2.96

0.3389831

282648685

CHINA SHENHUA-H

30.05

0.6700168

22926971

5.28

2.12766

76483457

CHINA TELECOM-H

4.61

1.766004

188460347

15.72

0.6402049

1600204

DONGFENG MOTOR-H

9.32

-0.4273504

31746380

CHINA CITIC BK-H

3.69

1.373626

82358838

GUANGZHOU AUTO-H

5.41

2.075472

8630239

CHINA COAL ENE-H

7.13

1.278409

33819599

HUANENG POWER-H

5.53

0.1811594

20433000

CHINA COM CONS-H

6.37

17082007

IND & COMM BK-H

4.58

1.552106

324621743

CHINA CONST BA-H

5.3

1.145038

332719898

JIANGXI COPPER-H

19.3

0.4162331

15234753

BANK OF COMMUN-H BYD CO LTD-H

3.24

3.846154

59157372

PETROCHINA CO-H

10.18

1.394422

79821755

22.65

0.8908686

40597316

PICC PROPERTY &

9.56

2.35546

27071429

CHINA LONGYUAN-H

5.11

0.7889546

8565000

PING AN INSURA-H

58.1

0.5190311

9515438

CHINA MERCH BK-H

13.02

-0.1533742

29398113

SHANDONG WEIG-H

9.69

1.148225

6645790

CHINA COSCO HO-H CHINA LIFE INS-H

NAME

PRICE

DAY %

VOLUME

11.78

1.376936

27127302

ZIJIN MINING-H

3.13

1.954397

67617735

ZOOMLION HEAVY-H

8.79

1.267281

10085356

11.24

1.261261

4644597

ZTE CORP-H

MOVERS

1 9880

INDEX 9804.77 HIGH

9877.34

LOW

9697.47

CHINA MINSHENG-H

6.15

0.9852217

54146563

SINOPHARM-H

24.3

1.25

2349200

52W (H) 11916.1

CHINA NATL BDG-H

8.41

1.325301

38924383

TSINGTAO BREW-H

42.8

0.9433962

1517200

(L) 8058.58

CHINA OILFIELD-H

13.4

-0.5934718

8666790

WEICHAI POWER-H

23.5

1.075269

1514411

9695

19-Sep

21-Sep

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

4.4

1.149425

4363106

SANY HEAVY INDUS

8.96

-0.1114827

20730756

11.34

0.4428698

7553135

SHANDONG GOLD-MI

41.67

2.86349

26192134

GD MIDEA HOLDING

9.18

9139999

SHANG PHARM -A

11.33

-1.904762

8760750

12741020

GD POWER DEVEL-A

2.37

0.8510638

29139937

SHANG PUDONG-A

7.21

-0.2766252

37540673

-0.723589

15688919

GF SECURITIES-A

12.22

0.9917355

46688600

SHANGHAI ELECT-A

-0.2493766

2162298

13569927

GREE ELECTRIC

20.39

-0.5365854

18791817

SHANXI LU'AN -A

17.13

2.821128

16511660

4.12

-0.2421308

29769338

GUANGHUI ENERG-A

13.93

0.8689356

16280368

SHANXI XINGHUA-A

35.72

1241021

4.66

1.084599

39857653

GUIZHOU PANJIA-A

15.95

1.141408

13527802

SHANXI XISHAN-A

12.48

0.6451613

10496425

-3.976908

5741037

HAITONG SECURI-A

8.66

0.2314815

32584334

SHENZEN OVERSE-A

5.32

-0.1876173

13282294

26.49

-4.368231

2572671

SUNING APPLIAN-A

6.05

-6.20155

94526597 20280850

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.41

-0.8230453

62289792

DATANG INTL PO-A

AIR CHINA LTD-A

4.82

3.655914

22627503

EVERBRIG SEC -A

ALUMINUM CORP-A

4.99

0.6048387

11755414

14.72

0.752909

BANK OF BEIJIN-A

6.86

BANK OF CHINA-A

2.63

BANK OF COMMUN-A BAOSHAN IRON & S

14.97

ANHUI CONCH-A

BYD CO LTD -A

NAME

CHINA CITIC BK-A

3.58

-0.5555556

10704027

HANGZHOU HIKVI-A

CHINA CNR CORP-A

3.46

-1.424501

23395859

HENAN SHUAN-A

58.64

0.9989666

752680

TONGLING NONFE-A

18.92

1.88476

CHINA COAL ENE-A

6.75

1.1994

8277027

HONG YUAN SEC-A

17.13

0.29274

9746781

TSINGTAO BREW-A

31.94

0.156789

933744

CHINA CONST BA-A

3.87

-0.257732

18870397

HUATAI SECURIT-A

8.9

0.2252252

9372488

WEICHAI POWER-A

18.02

0.6703911

4545321 9435010

CHINA COSCO HO-A

4.07

5.989583

28277301

HUAXIA BANK CO

7.94

-0.5012531

24835430

WULIANGYE YIBIN

32.53

0.9308098

CHINA CSSC HOL-A

20.32

-3.696682

14221516

IND & COMM BK-A

3.66

-0.5434783

20841047

XIAMEN TUNGSTEN

38.67

0.7293566

6664533

CHINA EAST AIR-A

3.34

2.140673

45006903

INDUSTRIAL BAN-A

11.74

-0.4240882

25872651

YANGQUAN COAL -A

13.71

0.5131965

10285129

2.63

-1.12782

27512857

INNER MONG BAO-A

32.68

1.522212

29171677

YANTAI CHANGYU-A

44.74

-0.555679

2068830

18.13

1.796743

7027549

INNER MONG YIL-A

19.97

-0.1999

6377268

YANTAI WANHUA-A

12.97

1.407349

6750961

CHINA MERCH BK-A

9.81

0.7186858

33379500

INNER MONGOLIA-A

4.93

26193911

YANZHOU COAL-A

17.58

0.6872852

4054804

CHINA MERCHANT-A

9.68

-0.4115226

7592926

JIANGSU HENGRU-A

29.67

-0.7692308

2697904

YUNNAN BAIYAO-A

59.6

-1.520159

985011

CHINA MERCHANT-A

18.64

0.8658009

7736061

JIANGSU YANGHE-A

113.88

0.7787611

1180302

ZHONGJIN GOLD

18.25

4.704532

93573584

CHINA MINSHENG-A

5.49

0.3656307

49295782

JIANGXI COPPER-A

22.02

0.5938785

10369575

ZIJIN MINING-A

16754180

JINDUICHENG -A

11.58

0.2597403

5740518

11.86

0.5937235

18061827

-2.386935

11777314

CHINA EVERBRIG-A CHINA LIFE INS-A

CHINA NATIONAL-A

6.31

-1.40625

CHINA OILFIELD-A

15.47

-2.088608

7572948

JIZHONG ENERGY-A

CHINA PACIFIC-A

18.79

-0.05319149

8736755

KANGMEI PHARMA-A

15.54

KWEICHOW MOUTA-A

230.59

0.6767377

1567968

35.95

0.9831461

3589857

CHINA PETROLEU-A

5.94

1.538462

19871964

CHINA RAILWAY-A

4.44

0.4524887

7114033

LUZHOU LAOJIAO-A

CHINA RAILWAY-A

2.44

0.4115226

15415862

METALLURGICAL-A

1.99

13130404

CHINA SHENHUA-A

21.62

1.597744

7303615

NARI TECHNOLOG-A

17.74

5.910448

20835387

CHINA SHIPBUIL-A

4.77

-4.6

60668152

NINGBO PORT CO-A

2.44

12109798

3.69

1.09589

35029286

CHINA SOUTHERN-A

3.41

3.021148

68960751

PANGANG GROUP -A

CHINA STATE -A

2.94

-0.3389831

31466381

PETROCHINA CO-A

8.67

0.4634994

10974795

12.88

-0.9992314

4.1

3.535354

250146759

ZOOMLION HEAVY-A

8.04

0.5

29513344

ZTE CORP-A

10.2

1.290963

11447830

MOVERS

147

132

21 2250

INDEX 2199.063

CHINA UNITED-A

3.51

36287585

PING AN BANK-A

15751258

HIGH

2246.24

CHINA VANKE CO-A

7.81

-0.1278772

38855004

PING AN INSURA-A

39.58

-0.5777443

10509783

LOW

2189.45

CHINA YANGTZE-A

6.27

0.4807692

13817849

POLY REAL ESTA-A

9.85

3.033473

63495005

CITIC SECURITI-A

10.77

-0.2777778

34734068

QINGDAO HAIER-A

10.57

0.8587786

7582667

CSR CORP LTD -A

3.91

-0.7614213

15455746

QINGHAI SALT-A

29.29

-1.546218

3706633

DAQIN RAILWAY -A

5.86

13687069

SAIC MOTOR-A

12.6

0.07942812

14492510

NAME

PRICE DAY %

Volume

ACER INC

29.5 -0.8403361

17365510

FORMOSA PLASTIC

ADVANCED SEMICON

23.4

0.862069

17139824

FOXCONN TECHNOLO

37.45

2.322404

8142515

308

-1.910828

11.45

5.045872

52W (H) 2781.99 (L) 2186.962

2185

19-Sep

21-Sep

FTSE TAIWAN 50 INDEX

ASIA CEMENT CORP ASUSTEK COMPUTER AU OPTRONICS COR

NAME

PRICE DAY %

Volume

6328746

TAIWAN MOBILE CO

119.5

0.4201681

5077726

TPK HOLDING CO L

403 -0.7389163

FUBON FINANCIAL

31.8

0.1574803

15170828

TSMC

85.7

3950757

HON HAI PRECISIO

96.8

0.8333333

34484515

UNI-PRESIDENT

50.2

6084644

146414114

HOTAI MOTOR CO

208

0.9708738

229521

UNITED MICROELEC

12.3

0.8196721

30847081

317

3.594771

22825128

35.85

1.991465

16304836

16.65

0.9090909

7664651

YUANTA FINANCIAL

15.7

0.6410256

19102180

YULON MOTOR CO

0.8695652

3898104

151.5 -0.3289474

11364960

HTC CORP

31.95 -0.9302326

22728192

HUA NAN FINANCIA

CHANG HWA BANK

16.2

0.621118

9174247

LARGAN PRECISION

653 -0.1529052

1215673

CHENG SHIN RUBBE

74.8

0.6729475

6834174

LITE-ON TECHNOLO

36.7

0.5479452

5276580

CHIMEI INNOLUX C

11.35

1.793722

68337848

MEDIATEK INC

321.5

-1.076923

13158526

7.4

0.4070556

52178529

MEGA FINANCIAL H

22.6

0.4444444

17319660

CHINA STEEL CORP

26.7

0.754717

16407622

NAN YA PLASTICS

58.7

0.3418803

5066966

CHINATRUST FINAN

17.8

0.2816901

31666050

PRESIDENT CHAIN

156.5 -0.9493671

1765872

0.5405405

9773965

QUANTA COMPUTER

77.6

0.3880983

7259563

COMPAL ELECTRON

26.8

0.3745318

13885988

SILICONWARE PREC

33.2

-1.043219

8668914

DELTA ELECT INC

113

5134301

SINOPAC FINANCIA

12.25

13695113

FAR EASTERN NEW

33.3

0.1503759

8182730

SYNNEX TECH INTL

66.9

1.363636

4856360

FAR EASTONE TELE

0.5586592

4586852

TAIWAN CEMENT

35.9

1.843972

9411219

FIRST FINANCIAL

Volume

105.5 -0.9389671

4957615

CATCHER TECH

CHUNGHWA TELECOM

PRICE DAY %

CATHAY FINANCIAL

CHINA DEVELOPMEN

NAME

83.7

18.3

1.104972

13386669

TAIWAN COOPERATI

16.8

0.2985075

9572640

FORMOSA CHEM & F

3474742

TAIWAN FERTILIZE

80.5

2.027883

4820474

FORMOSA PETROCHE

88.3

-1.230425

2413846

TAIWAN GLASS IND

1.694915

1617085

WISTRON CORP

MOVERS

5380.23

LOW

5318.73

4322695 51084876

5 5385

INDEX 5348.91 HIGH

0.4689332

52W (H) 5621.53 (L) 4643.05

5315

19-Sep

21-Sep

September 24, 2012 business daily | 13

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

MELCo CroWN ENTErTAINMENT

MGM CHINA HoLDINGS 34.6

25.0

13.5

34.4 24.9

34.0

24.8

Average 24.893

Min 24.6

Last 24.85

24.6

SANDS CHINA LTD

33.6

Max 34.5

Average 34.308

Min 33.3

33.2

Last 33.3

PRICE

Average 16.527

DAY %

YTD %

(H) 52W

Min 16.26

Last 16.26

20.6 20.5 20.4 Max 21

Average 20.704

92.89

0.508547933

-5.532390929

109.8899994

78.73000336

BRENT CRUDE FUTR Nov12

111.42

1.26329183

6.877697842

122.6499939

89.5

GASOLINE RBOB FUT Oct12

294.25

1.325757576

16.42399304

307.9600096

220.5600023

GAS OIL FUT (ICE) Nov12

969.25

1.227154047

8.054626533

1038.75

799.25

2.885

3.146228102

-13.15472607

4.427999973

2.299999952

HEATING OIL FUTR Oct12

312.07

0.748991122

9.210848644

333.8899851

252.5300026

Gold Spot $/Oz

1773.1

0.718

13.3036

1803

1522.75

Silver Spot $/Oz

NATURAL GAS FUTR Oct12

34.5313

0.7772

24.0571

37.4775

26.085

Platinum Spot $/Oz

1635.1

1.1319

17.2535

1736

1339.25

Palladium Spot $/Oz

671.35

1.0461

2.7314

725.19

537.54 1827.25

LME ALUMINUM 3MO ($)

2116

0.28436019

4.752475248

2361.5

LME COPPER 3MO ($)

8281.5

0.139056832

8.967105263

8765

6635

LME ZINC

2115.5

0.260663507

14.66124661

2220

1718.5

18175

1.564682872

-2.859433458

22150

15236

15.24

0.329163924

0.230187438

17.5

14.15499973

748.25

0.301608579

27.63326226

849

499

WHEAT FUTURE(CBT) Dec12

897.25

2.018192155

24.61805556

953.25

629.5

SOYBEAN FUTURE Nov12

1621.75

0.185328185

34.66888105

1789

1115.75

COFFEE 'C' FUTURE Dec12

173.3

2.787663108

-26.56779661

253.9499969

SUGAR #11 (WORLD) Mar13

20.07

0.803616273

-14.08390411

COTTON NO.2 FUTR Dec12

73.25

-2.618984313

-16.60974499

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov12 Dec12

PRICE

(L) 52W

WTI CRUDE FUTURE Nov12

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

Last 20.9

Min 20.4

DAY %

1.0458 1.623 0.9328 1.298 78.17 7.986 7.7539 6.3054 53.465 30.8 1.2248 29.34 41.643 9552 81.736 1.21125 0.79985 8.1775 10.3855 101.46 1.03

0.4997 0.2409 0.0536 0.2162 0.064 0.0038 -0.0052 -0.0381 1.7208 0.3247 -0.0245 0.1261 0.2089 0.2303 -0.4099 -0.2047 0.015 -0.0465 -0.3986 -0.138 0

YTD %

(H) 52W

2.439 4.42 0.5682 0.1466 -1.6119 0.1703 0.1741 -0.1649 -0.7482 2.4351 5.8622 3.2004 5.2758 -5.0565 -4.0423 0.4574 4.1933 -0.5295 -0.3226 -1.7741 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.4247 84.18 8.0356 7.8026 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 48.6088 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

NAME

2.74

-0.7246377

24.54545

3.25

1.88

10356901

153.6999969

CROWN LTD

9.27

0.3246753

14.58591

9.4

7.47

5017575

25.29999924

19.47999954

AMAX HOLDINGS LT

0.061

-29.88506

0.119

0.055

98.5

64.61000061

BOC HONG KONG HO

24.3

0.621118

32.06522

24.95

14.24

12140038

0.247

7.391302

0.335

0.204

3.69

2.5

31.78572

3.71

2.3

218882

CHINA OVERSEAS

19.34

-0.7186858

49.16627

20.4

9.979

112624078

CHINESE ESTATES

9.81

-4.757282

-21.52

13.26

8.3

320868

CHOW TAI FOOK JE

10.92

0.1834862

-21.55172

15.16

8.4

5374600

EMPEROR ENTERTAI

1.49

-0.6666667

34.23423

1.57

0.97

225000

FUTURE BRIGHT

1.13

3.669725

169.0476

1.24

0.3

810000

GALAXY ENTERTAIN

24.85

74.50843

25.95

8.69

12882491 1388630

CENTURY LEGEND CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

20.7

CURRENCY EXCHANGE RATES

NAME

CORN FUTURE

20.8

16.25

Commodities

METALS

20.9

16.35

Max 16.62

PRICE

DAY % YTD %

VOLUME CRNCY

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13579.47

-0.1284113

11.14715

13653.24

10404.49

NASDAQ COMPOSITE INDEX

3179.963

0.1260406

22.06449

3196.932

2298.89

HANG SENG BK

116.1

-0.08605852

25.99023

117.9

84.4

FTSE 100 INDEX

5852.62

-0.03450255

5.030981

5989.07

4868.6

HOPEWELL HLDGS

26.85

2.285714

35.19637

26.9

18.56

989158

DAX INDEX

7451.62

0.8407887

26.33398

7478.53

4973.92

HSBC HLDGS PLC

74.1

0.8163265

25.59322

74.15

16376955

NIKKEI 225

9110

0.2533295

7.74244

10255.15

8135.79

HUTCHISON TELE H

3.45

1.769912

15.38462

3.88

2.53

5376154

HANG SENG INDEX

20734.94

0.6994345

12.47966

21760.33984

16170.35

LUK FOOK HLDGS I

24.8

-0.2012072

-8.487086

37.1

14.7

5092335

MELCO INTL DEVEL

6.89

0.7309942

19.41075

8.28

4.3

1602092

CSI 300 INDEX

2199.063

0.1417154

-6.252988

2781.99

2186.53

MGM CHINA HOLDIN

13.46

1.508296

40.32302

14.76

7.6

2042578

TAIWAN TAIEX INDEX

7754.59

0.3499169

9.650764

8170.72

6609.11

MIDLAND HOLDINGS

4.67

1.082251

18.10684

5.217

2.887

1679373

NEPTUNE GROUP

0.184

-0.5405405

65.76576

0.222

0.08

8560000

NEW WORLD DEV

11.28

1.621622

80.19169

11.5

6.13

22760652

SANDS CHINA LTD

28.4

-0.8726003

29.38496

33.05

14.9

12270466

SHUN HO RESOURCE

1.25

4.166667

1.37

0.82

146000

SHUN TAK HOLDING

3.01

-0.9868421

17.61818

3.51

2.241

3073160

SJM HOLDINGS LTD

16.26

-2.983294

30.02241

17.614

10.079

4758208

SMARTONE TELECOM

15.46

2.248677

15.02977

17.5

9.8

6987387

WYNN MACAU LTD

20.9

2.200489

7.179487

25.5

14.62

4555597

ASIA ENTERTAINME

3.28

-2.670623

-44.21769

7.49

2.4

205590

BALLY TECHNOLOGI

47.44

1.497647

19.91911

49.32

24.74

806281

KOSPI INDEX

2002.37

0.6049248

9.674434

2057.28

1644.11

S&P/ASX 200 INDEX

4408.291

0.2515903

8.670657

4448.5

3840.2

4244.621

0.6426769

11.05782

4272.829

3217.951

FTSE Bursa Malaysia KLCI

1623.7

-0.1162655

6.073571

1655.49

1310.53

NZX ALL INDEX

839.031

-0.2855839

14.96721

847.344

712.548

JAKARTA COMPOSITE INDEX

13.1

21.0

16.45

26.3 26.1

Last 13.46

16.55

26.5

Last 27.1

Min 13.16

16.65

26.7

Min 26.15

Average 13.27

WyNN MACAU LTD

26.9

ENERGY

Max 13.48

SJM HoLDINGS LTD 27.1

Average 26.752

13.2

33.4

27.3

Max 27.2

13.3

33.8

24.7

Max 25

13.4

34.2

PHILIPPINES ALL SHARE IX

3530.34

-0.2077627

15.9374

3558.72

2695.06

HSBC Dragon 300 Index Singapor

599.42

-0.52

20.77

STOCK EXCH OF THAI INDEX

1286.26

0.2791031

25.44963

1288.37

843.69

HO CHI MINH STOCK INDEX

395.48

1.592684

12.4961

492.44

332.28

BOC HONG KONG HO

3.3

4.761905

37.66132

3.3

1.81

2500

Laos Composite Index

1047.94

-0.09723917

16.50767

1064.23

876.33

GALAXY ENTERTAIN

3.15

-0.3952569

68.4492

3.25

1.08

12100 5611390

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

INTL GAME TECH

12.82

1.746032

-25.46512

18.1701

10.92

JONES LANG LASAL

79.45

-0.6750844

29.69311

87.52

46.01

559989

LAS VEGAS SANDS

44.92

-2.028353

5.125206

62.09

34.72

7935247

MELCO CROWN-ADR

12.745

-0.4296875

32.48441

16.02

7.05

4524091

MGM CHINA HOLDIN

1.68

40.97588

1.96

1.0025

200

MGM RESORTS INTE

10.72

-0.6487488

2.780438

14.9401

7.4

9591064

SHUFFLE MASTER

15.7

1.948052

33.95904

18.77

7.55

733817

SJM HOLDINGS LTD

2.15

33.742

2.2782

1.2624

7325

114.37

-0.4612707

3.511632

138.4895

90.108

2378625

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily September 24, 2012

Opinion How to lose weight fast the Deutsche Bank way Jonathan Weil

Bloomberg View columnist

magine if I told you I could reduce my own body weight by 80 percent or more, on paper, through a series of calculations utilizing my own proprietary mathematical models, the details of which are so complex and highly prized that I couldn’t divulge them. You would be right not to believe me, and might think I’m nuts. Yet this, in essence, is what regulators let banks do all the time with their balance sheets. Huge swaths of assets are allowed to vanish, making too-big-to-fail financial institutions seem leaner and safer than they are. Under the system known as risk weighting, banks get away with this because they are allowed to stipulate that some assets carry little, if any, risk. Many government bonds, for instance, fall into the riskless category for purposes of determining regulatory-capital ratios. So a bank can assume it won’t incur losses on them, which allows it to keep a lower capital cushion. The flaw here is that rulemakers aren’t good at predicting what kinds of assets might blow up. Some

governments, especially in Europe, are in awful shape and pose a real risk of defaulting. In other words, the notion of risk weighting is a farce, at least the way it is practiced now. Yet it carries the imprimatur of the Basel Committee on Banking Supervision, the Swiss body that writes capital standards for most of the developed world. Thankfully, a U.S. regulator has stepped up to say the world should scrap the Basel committee’s standards.

Speaking out The American speaking out against the latest Basel proposal is Thomas Hoenig, the former head of the Federal Reserve Bank of Kansas City who now sits on the Federal Deposit Insurance Corp.’s board. And to see why he is right to do so, take a look at Germany’s largest bank, Deutsche Bank AG. Deutsche Bank had 2.24 trillion euros (US$2.84 trillion) of assets on its June 30 balance sheet, which was prepared using the International Accounting Standards Board’s rules. Yet the company said it

had only 372.6 billion euros of risk-weighted assets. That’s the figure it used to come up with a 10.2 percent capital ratio for regulatory purposes. So, somehow Deutsche Bank made 83 percent of its assets disappear, which really is all you need to know to realize that the whole Basel construct is a sham. More than three-quarters of Deutsche Bank’s total assets consist of securities, loans and derivative instruments, all of them carrying varying degrees of risk. Yet the much smaller risk-weighted figure would have us believe that the bulk of Deutsche Bank’s assets were riskless, which

The notion of risk weighting is a farce, at least the way it is practised now

obviously can’t be true. There’s no way to tell from the company’s latest report to investors how Deutsche Bank got this figure, except we know some asset classes, such as sovereign debt, are deemed much less risky by Basel rules than other kinds of assets, such as plain- vanilla loans. The Basel rules let the largest banks rely on their own proprietary models to determine how risky their assets are. The latest revisions proposed by the Basel committee, which span several hundred pages, wouldn’t change that. In a September 14 speech, Hoenig said the better way to assess capital adequacy is to develop a rule that is simple and enforceable. “It should reflect the firm’s ability to absorb loss in good times and in crisis,” he said. “It should be one that the public and shareholders can understand, that directors can monitor, that management cannot easily game, and that bank supervisors can enforce.” And it “should result in a bank having capital that approximates what the market would require” if no

government safety net were in place, Hoenig said.

Capital ratios The measure that best achieves those goals, he said, is a capital ratio that divides a bank’s tangible equity by tangible assets. Tangible equity would start with shareholder equity and exclude all intangible assets (such as goodwill), which are worthless in a crisis. Hoenig also would exclude deferred tax assets; profitable companies can use these to reduce their tax bills, but they are worthless to companies going broke. Hoenig said a reasonable capital ratio would be 10 percent or higher, depending on examiners’ findings at a given bank. Deutsche Bank would look much weaker by this measure, mainly because the assets in the calculation would be about six times as large. Its capital ratio under Hoenig’s formula would be 1.4 percent. That translates into leverage of about 70-to-1. Because of differences in how derivatives are treated under international accounting standards, Deutsche Bank’s reported assets probably would drop by about half if the bank used U.S. generally accepted accounting principles. Likewise, its capital ratio under Hoenig’s way would be higher using U.S. GAAP numbers, but nowhere near 10 percent. Hoenig’s proposal has weak spots. Arguably, a 10 percent minimum isn’t high enough. And the contents of banks’ assets and liabilities wouldn’t be any more transparent than they are now. (To read about ultratransparency as an antidote to the financial crisis, check out a blog called Trust Your Instincts run by a fellow named Richard Field.) U.S. banking regulators, including the FDIC and the Federal Reserve, are in the process of adopting their version of the latest Basel proposals, known as Basel III. At least under Hoenig’s idea we would move away from a system that is designed to breed excessive leverage. And we would get regulators out of the business of guessing which assets are safe and which aren’t. It’s worth a shot. 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.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

September 24, 2012 business daily | 15

OPINION The next task for China’s wires new leaders Business

Leading reports from Asia’s best business newspapers Ana Palacio

Korea Herald KB Financial Group said Friday it will open an exclusive counter to offer financial consultations for people in the low- to middle-income brackets, expand support for small companies and create more jobs. KB unveiled the package of new measures, including a 200 billion won (US$178.6 million) fund for shared growth and a 150 billion won fund for lowinterest loans, as follow-up to a meeting of the nation’s largest financial groups and the Financial Services Commission last month.

Japan Today Honda is aiming to double its global auto sales to more than 6 million vehicles over the next five years as the Japanese automaker gears up for ambitious growth after bouncing back from last year’s disasters. The automaker sold 3.1 million vehicles for the fiscal year through March 2012. Emerging markets are expected to drive growth, including India and China, as Honda plans to strengthen its lineup of cheaper models tailored for such regions. Plans include also a fuel-cell vehicle in 2015 in Japan, U.S. and Europe.

Jakarta Globe Rising fuel subsidies will prompt the budget deficit to widen this year.   The soaring budget shortfall would subvert Indonesia’s long term sustainability efforts as it reflects no change in energy policy, encouraging present consumption over future investments. The government deficit may reach 2.3 percent of the country’s gross domestic product this year, above the 2.23 percent set in the 2012 revised budget, due to increasing subsidy expenses for fuel and electricity.   Moody’s Investors Services and Fitch Ratings had raised the country’s sovereign debt rating earlier this year.

Business Standard Chennai-based TVS Motors, India’s fourth-largest two-wheeler maker, is going strong on one of its most-trusted models. The humble moped, which has been spurned by all manufacturers but one, has only grown in numbers for the company, commanding a 45 per cent of the total sales. Mopeds saw sales of 58,618 units in August, which, though a slight fall of 0.3 per cent when compared to the same month a year ago, is nearly double when compared to December 2008. VS enjoys complete monopoly in this segment.

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

n a recent factfinding trip to China, organized by the European Council on Foreign Relations, I began with the assumption that the country’s biggest challenge revolved around the need to promote domestic consumption in order to maintain rapid economic growth. By the end of the trip, what had emerged was a complex picture of Chinese assertiveness and uncertainty, poise and anxiety. Although impending, the 18th Congress of the Chinese Communist Party (CCP) is shrouded in mystery. While the congress is presumably set for October, the exact dates remain unknown, as does much about the internal process and preparatory discussions. For much of this year, there seemed to be one certainty in the coming leadership transition: the CCP’s new general secretary would be Xi Jinping, a man whose political vision could be elaborated in well under 30 seconds. But Xi’s mysterious vanishing act, in which he dropped from public view for almost two weeks in September – after abruptly canceling meetings with US Secretary of State Hillary Clinton and the prime minister of Singapore (rare occurrences for the protocolfixated Chinese leadership) – has stirred more speculation. It has also fueled concerns about whether so secretive a leadership can effectively govern the world’s secondlargest economy. Despite its outward appearance of monolithic resolve, China is in a state of flux, flaunting its confidence while bulging with internal sources of insecurity. Its undeniable economic success – albeit closely tied to that of the global economy – stands in stark contrast to the heightened sense of crisis and insecurity that hovers in the background. Two distinct quandaries confront China’s leaders: the first centers on the growing demands and dissatisfactions of Chinese society – from peasants and students to white-collar workers and pensioners; the second consists in the country’s conduct of foreign policy. Will the next CCP administration address these critical issues?

Popular dissatisfaction Internally, as China has moved from mass poverty to widening prosperity, economic growth – though a vital source of the CCP’s legitimacy – is no longer enough. Restlessness is pervasive: while statistics vary, depending on how government agencies define the term, it is estimated that

there were roughly 180,000 “mass incidents” in China in 2011 alone. China’s rising urban middle class and its surprisingly well-organized rural communities are increasingly demanding less corrupt and more accountable government, cleaner air and water, safer food and drug supplies, and an independent, well-functioning judicial system. Popular dissatisfaction partly reflects a phenomenon that invariably arose in numerous conversations with academics, intellectuals, and top officials: the murky frontier of legality currently reigning in China. The blurriness of the law creates a no-man’s land of ambiguity in which the authorities thrive: legal predictability is aspirational, while daily life for ordinary people requires navigating the shallow, shifting waters of what the powerful will tolerate. At the same time, the rule of law plays a prominent role in Chinese political discourse. But, while nominally acknowledging its importance, officials creatively turn the concept on its head. Nowhere was this more apparent than in recent efforts to portray the purge of Chongqing’s former Party boss, Bo Xilai, as an example of the CCP “safeguarding the rule of law.” And yet, formal pronouncements aside, if China’s leadership is to meet growing popular demands and quell rising discontent, it will have to commit itself to the rule of law in fact. Such a move would have far-reaching benefits for China’s global standing as well. China’s recent emergence as a key international player (albeit a reluctant one) has exposed its leaders’ uncertainty about the country’s future global role, as well as raising questions about their readiness to bear the responsibilities that its stature implies. China still falters when it comes to

building “soft power” or assuring interlocutors, near and far, that its “peaceful rise” will remain peaceful.

Rule of law needed Indeed, China today is increasingly perceived to be undermining the international order, while promoting novel interpretations of concepts such as democracy, pluralism, and representation. For many, its behavior toward Syria – aligning itself with Russia to block international action – and in maritime territorial disputes with its neighbors exemplifies this tendency. It is, therefore, little surprise that China’s policies are widely regarded as a reflection of former Chinese Premier Deng Xiaoping’s call for a strategy of “hiding our light and nurturing our strength.” But China’s ability to persuade others that its international behavior stems from its search for balance will depend on its leaders’ ability to embrace the rule of law – in substance rather than just in rhetoric – as a fundamental basis for the harmony that they publicly espouse. So far, the survival of China’s political system has

rested on the identification and deft handling of the most pressing issues of the day. Every Chinese leader since Mao Zedong’s death in 1976 has left an indelible mark. For Deng, it was the move toward a market economy, articulated through the “Four Modernizations.” His successor, Jiang Zemin, undertook internal reevaluation of the CCP and expansion of its base through the “Three Represents.” And the outgoing Hu Jintao’s objective was development, particularly in the country’s vast interior, unleashed through large-scale privatization. Despite continuing uncertainty surrounding China’s coming political transition, it is expected that pragmatism – the common thread among its leaders after Mao – will carry over to the new ruling cohort. If so, it should impress upon them the notion that their best strategy, both internally and internationally, is to devote their considerable resources and energy to strengthening China’s rule-of-law institutions, even though such reforms will invariably curtail the CCP’s arbitrary power. © Project Syndicate

16 |

business daily September 24, 2012

CLOSING China navy gets first aircraft carrier China’s first aircraft carrier was handed over yesterday to the navy of the People’s Liberation Army, state press said, amid rising tensions over disputed waters in the East and South China Seas. The handover ceremony of the 300-metre (990-foot) ship, a former Soviet carrier called the Varyag, took place in Dalian after a lengthy refitting by a Chinese shipbuilder, the Global Times reported. A ceremony to place the ship into active service would be held sometime in the future, the paper said without elaboration.

Portugal gov’t gives up on levy In an about-face, Portugal’s government has agreed to negotiate alternatives solutions to a social security tax hike that sparked the worst backlash to austerity since last year’s European Union/ International Monetary Fund bailout, an official statement said on Saturday. After an eight-hour meeting of the presidential state council that was besieged by protesters and ended long after midnight, the council said the negotiations would now proceed between the government, unions and employers. The government planned to raise the contributions in 2013 to 18 percent from 11 percent.

Senate shields US airlines from EU carbon scheme After China, US also rejects European Union airline carbon scheme, increasing pressure for global deal

he Senate unanimously passed a bill on Saturday that would shield US airlines from paying for their carbon emissions on European flights, pressuring the European Union (EU) to back down from applying its emissions law to foreign carriers. The European Commission has been enforcing its law since

January to make all airlines take part in its Emissions Trading Scheme to combat global warming, prompting threats of a trade fight. The Senate approved the bill shortly after midnight, as it scrambled to complete business to recess ahead of the November 6 congressional and presidential elections. Republican senator John Thune, a sponsor of the

measure, said it “will help ensure that US air carriers and passengers will not be paying down European debt through this illegal tax and can instead be investing in creating jobs and stimulating our own economy,” Thune said in a statement. Democratic senator Claire McCaskill, the measure’s other chief sponsor, said, “It’s refreshing to see strong,

bipartisan support for the commonsense notion that Americans shouldn’t be forced to pay a European tax when flying in US airspace.” The House of Representatives has passed a similar measure, and could either work out differences with the Senate’s version or accept the Senate bill after the elections. Clark Stevens, a White House spokesman, said the administration is reviewing the bill. The State Department did not immediately respond to a request for comment.So far, nearly all airlines have complied reluctantly with the EU law, but Chinese and Indian carriers missed an interim deadline to submit information required under it. China earlier this year threatened retaliation including impounding European aircraft – if the EU punishes Chinese airlines for not complying with the scheme. The dispute froze Airbus purchase deals worth up to US$14 billion (112 billion patacas), though China signed an agreement with

Germany for 50 Airbus planes worth over US$4 billion during Chancellor Angela Merkel’s visit to Beijing last month. The Senate bill gives the US transportation secretary authority to stop US airlines from complying with the EU law. But a new amendment agreed to during negotiations among lawmakers said the secretary could reconsider the prohibition if the EU trading scheme is amended, an international alternative is agreed to, or the United States implements its own program to address aviation emissions. The bill increases pressure on the United Nations International Civil Aviation Organization to devise a global alternative to the EU law. Connie Hedegaard, the European Climate Commissioner, said on Saturday that she is sceptical that Washington will accept to work within the United Nations for a global deal on aviation emissions. Reuters

Apple asks judge for more Samsung damages Samsung’s patent infringement was deliberate, Apple says, asking for more compensation; South Korean rival rejects charges

pple Inc. asked a judge to award an extra US$535 million (4.3 billion patacas) in its United States patent case with Samsung Electronics Co. in addition to its requested permanent injunction against sales of Samsung’s infringing products. “The harm to Apple was deliberate, not accidental,” Apple attorneys said in court papers filed Friday in the US District Court in San Jose, State of California.

Samsung “wilfully diluted its trade dress, taking billions in sales in the fast-growing US smartphone market at a key moment in the transition between feature phones and smartphones,” attorneys said. Cupertino, Californiabased Apple sued Samsung in April 2011, and Samsung countersued as part of a battle being waged on four continents over a smartphone market valued by Bloomberg Industries at around US$219.1 billion. The companies have also

sued each other in the United Kingdom, Australia and South Korea. In August, the company founded by Steve Jobs won a jury verdict of more than US$1.05 billion against Samsung after a finding that Samsung infringed six of seven patents for the mobile devices. Apple is requesting an enhancement of US$135 million under the Patent Act and US$400 million under the Lanham Act, for a combined total of US$535 million, compared with

US$268 million from the verdict under both statutes, court papers show. The court may increase the damages up to three times the amount assessed, court papers show. “Many of the jury’s determinations and their damage calculations were based on insufficient evidence and questionable decisionmaking procedures,” Samsung said in an e-mailed statement to Reuters yesterday. “ A pp l e is r e q u e s t i ng permanent injunctions and

additional damages based on these highly questionable prior decisions,” the South Korean company added. In its Friday brief, lawyers for Samsung told the San Jose judge Apple didn’t present convincing evidence of intentional infringement, and doesn’t deserve treble damages. Samsung is seeking to have the damages thrown out, the verdict overturned, and/or a new trial, according to court papers. Reuters