Macau Business Daily, September 25, 2012 by Business Daily

www.macaubusinessdaily.com

Year I Number 126 Tuesday September 25, 2012

Editor-in-chief: Tiago Azevedo

Deputy editor-in-chief: José I. Duarte MOP 6.00

No life or death struggle for SJM Page 3

City ‘too dependent’ on mainland visitors A

4.1 percent increase in mainland visitors yearon-year in August can’t disguise a steep decline in tourists from other markets. It underlines the city’s struggle to become a genuinely world class destination says a University of Macau academic. Casino resorts were “definitely something visitors would be interested in” but Amy So Si Ian, coordinator of the university’s hospitality and gaming management programme, believes Macau needs “other types of attraction, including more festivals”. The number of tourists from Singapore was about

12,700 last month, 24 percent fewer than a year before. Visitors from Hong Kong fell by 10.3 percent to under 677,100, while arrivals from Taiwan decreased by 8.5 percent. The number of Indian visitors continues to fall, dropping by 22.3 percent last month from a year before. Travel industry experts told Business Daily earlier this month that a depreciation of the rupee and a sharp fall in air capacity between India and Hong Kong were major factors in that decline. More on page 6

Brought to you by

HANG SENG INDEX 20750

20700

20650

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20550

20500

September 24

Polytec profits down in 1st half

City U’s Coloane campus rejected Page 4

Fishermen lobby over water deaths Page 7

HSI - Movers Page 8

Inflation at stake as meat prices rise During the past 12 months the wholesale price of beef has jumped to 3,800 patacas per 60-kilo load. Meat costs are likely to rise even further. But the government is yet to draft any plan to tackle inflation. Economic Services Bureau director Sou Tim Peng said price hikes were caused by increased domestic demand in Macau and the market should regulate any price adjustment. Page 2

Name

%Day

CHINA MERCHANT

2.29

SINO LAND CO

1.56

SUN HUNG KAI PRO

1.26

CHINA RES POWER

1.18

NEW WORLD DEV

1.06

BANK OF CHINA-H

-1.01

CHINA OVERSEAS

-1.14

HENGAN INTL

-1.18

ALUMINUM CORP-H

-1.22

CHINA RES ENTERP

-2.12

Source: Bloomberg

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Macau fund net asset value up 10pct The growth of the Macau Property Opportunities Fund has slowed, but its net asset value is up, on the back of property appreciation citywide. The London-listed property fund invests solely in Macau and the western Pearl River delta. It informed the London Stock Exchange yesterday the fund’s net asset value rose 10 percent to US$3.01 per share. Page 4

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business daily September 25, 2012

macau Beijing hosts Macau trade forum The first edition of the Beijing Macau Economic and Trade Exchange Symposium will be held at the Chinese capital starting Thursday, the city’s Government Information Office announced yesterday. The four-day event organised by the Beijing and Macau governments will aim to “explore the huge market prospects and business opportunities” on both regions, China Daily wrote. In addition, the symposium will discuss trade prospects on the Portuguese-speaking countries, the report added. A Macau delegation was in Beijing earlier this month to join the China Incentive, Business Travel and Meetings Exhibition.

Cost of meaty meals just keeps mounting Beef, chicken prices are likely to keep on rising because mainland suppliers are struggling to meet demand Tony Lai

tony.lai@macaubusinessdaily.com

holesale prices for beef are going to keep rising but there may be some relief in store with “moderation” in poultry prices, the city’s two main suppliers of fresh meat told a government hearing yesterday. Representatives from Nam Kwong Kok Fong Distribution and Transportation Ltd and Nam Yue Food Stuff and Aquatics Co. Ltd did not offer a forecast for when prices would change after their meeting with the taskforce on food prices. Nam Kwong general manager

Chiang Kun Man told reporters that wholesale prices for beef had gone up several times this year. They would probably rise again because of “lack of supply” from the mainland. During the past 12 months, the wholesale price of beef has jumped from 2,500 patacas (US$312.5) a 60-kg lot to 3,800 patacas, the Chinese-language newspaper Macao Daily News reported. A 60kg lot is a traditional weight used in the mainland. Nam Yue executive deputy general manager Tony Chen said the wholesale

Wholesale beef prices are up by more than 50 percent in the space of 12 months

price of poultry had also increased, due to a “double-digit” rise in the cost of feed. A pricing mechanism taking into account the cost of importation and suppliers’ operating expenses was introduced for pork in January and was due to be introduced for beef and poultry. Nam Kwong says the wholesale price for pork has since dropped from 1,610 patacas a 60-kg portion to 1,450 patacas.

The government’s taskforce says it has no immediate plans to tackle rising food prices. Economic Services Bureau director Sou Tim Peng told reporters the taskforce would continue to carry out “in-depth studies” on the city’s food import market. He said rising food prices were primarily caused by increased demand within Macau and that the market should be free to regulate prices.

Macau fires Wynn to fastest-growing list Wynn Resorts increased its profit by 81 percent in the past three years

asino operator Wynn Resorts Ltd is the 26th fastest-growing listed company in the Unites States, thanks to three years of strong growth in Macau. The rankings released by Fortune magazine are based on average profit growth, revenue growth and return across three years. Fortune said Wynn Resorts increased its profit by 81 percent and its revenue by 25 percent in the past three years. The company’s net revenue grew to US$5.32 billion last year from US$3.05 billion (24.4 billion patacas) in 2009. Wynn Resorts was the only company in Nevada to make last week’s list but it was the company’s performance in Macau that helped it up the list.

The company’s revenue in Macau rose by 31.2 percent last year, growing much faster than its revenue in Las Vegas, which rose by 14.2 percent. However, in the first half of this year revenue was US$2.57 billion, 2.3 percent less than a year before, and net profit was US$278.6 million, 5.8 percent less. Canadian silver miner Silver Wheaton Corp topped Fortune’s list of fastest-growing US-listed companies and Internet search engine operator Baidu Inc was third. Wynn Macau casino opened in 2006 and the Wynn Encore in 2010. It has also been plagued by lawsuits filed by director Kazuo Okada about a donation of 200 million patacas to the University of Macau. T.L.

September 25, 2012 business daily | 3

MACAU Cotai Central to take time to ramp up Last week’s opening of Sands Cotai Central’s phase IIA has been praised by Nomura analyst Charlene Liu. In a note to investors released on September 21, she said the extension has “expanded the offering and diversified the product”. “In addition, we think the additional room inventory will help Sands (particularly mass business) to benefit significantly from the upcoming Golden week,” Ms Liu added. However, she warned, Sands China Ltd’s property will take time to pick up steam.

Cotai land race ‘not matter of life and death’ SJM boss dismisses idea that firm falling behind in battle for Cotai presence Associate Editor

“I

t’s not a matter of life or death” who is first in getting the next approval to build a casino resort on Cotai, the chief executive of SJM Holdings Ltd told Business Daily yesterday. Portuguese-language newspaper Jornal Tribuna de Macau reported last week – quoting an unidentified source – that MGM China Holdings Ltd’s land application for a Cotai resort was closer to getting approval than SJM’s request for a 70,000 square metres plot on Cotai near to Macao Dome. And even then, suggested the report, MGM China was unlikely to get its land approval until next year. “I haven’t heard that,” Ambrose So Shu Fai, executive director and chief executive of SJM Holdings told Business Daily yesterday. Mr So was speaking at the launch of an exhibition of artwork created from plastic bottle waste generated by the company’s Grand Lisboa Casino. The works, by Hong Kong artist Wong Kwok Chung, were billed as a celebration of China’s National Day on October 1, and of the mid-autumn festival.

Long term Mr So added in reference to the Cotai bid: “These are not projects you can do in two days. They take around three years to complete. So it’s not a matter of life and death who gets over the line first in terms of [government] permission.” Despite Mr So’s relaxed stance, analysts suggest a Cotai presence is important for the future story of SJM and of another concessionaire currently restricted to Macau peninsula – MGM China. Some

SJM Holdings Ltd chief executive Ambrose So Shu Fai

analysts are predicting Cotai – with its greater appeal to general tourists rather than dedicated gamblers – could actually outperform the more gambling-focused Macau peninsula in gross gaming revenue (GGR) growth in the second half of the year. Citigroup analyst Anil Daswani suggested earlier this month Cotai’s second half GGR growth will be 24 percent year-on-year. Since SJM confirmed publicly in December 2010 that it had applied for a Cotai land grant, several other Cotai schemes – including the

majority Melco Crown Entertainment Ltd-owned Studio City, and the justannounced The Parisian, a US$2.5 billion (19.96 billion patacas) Frenchthemed resort planned by Las Vegas Sands Corp. for Cotai Lot 3 – look to have leapfrogged ahead of SJM in the line for building permission and precious construction labour quota.

November start LVS chairman Sheldon Adelson said at the opening of Sands Cotai Central Phase II on Thursday the

firm hoped to break ground on The Parisian in November. And a note from Union Gaming Research Macau yesterday said that MPEL and its 40 percent partners appeared to be ramping up construction work on the Studio City site, although the company has made no formal announcement. “We believe the company is moving forward with the resumption of construction on MSC [Macao Studio City] in a meaningful way,” said Union Gaming’s note. “Over the past two weeks alone, we have counted a 56 percent increase in the amount of heavy equipment at the MSC site, which now includes 10 cranes and 4 pile drivers,” it added. A statement attributed to Francis Tam Pak Yuen, Secretary for Economy and Finance, published by the Government Information Bureau at the weekend, attempted to clarify the pecking order for Cotai permissions. “Francis Tam said The Parisian is not a newly-submitted project, as it is part of The Venetian and Four Seasons project. It’s just that the constructionworksaredividedindifferent phases,” said the bureau’s statement. It added: “The same official clarified that, concerning the total number of gaming tables during those 10 years, the government will split them between the five remaining developments, namely the Wynn, MGM, SJM, Galaxy projects in Cotai, as well as the Studio City project, which filed a request with the government to open a casino before 2008.” Responding to questions from the Chinese language media at yesterday’s event, SJM’s Ambrose So said the company hoped to get “600 to 700 tables” for its Cotai project.

Greek Mythology row hurts SJM’s third quarter Shareholder battle made dent in market share admits SJM boss

he shareholder dispute at Greek Mythology Casino in Taipa was a factor in SJM Holdings Ltd’s lower than expected market share so far in the third quarter it was claimed yesterday. Asked why the company was only on 25 percent to 26 percent market share this quarter when it had predicted 30 percent for the period, Ambrose So Shu Fai, executive director and chief executive of SJM Holdings referred to the internal problems at the Taipa casino, a satellite operation managed by third parties that nonetheless contributes a share of revenue to the parent SJM. Mr So said: “We had a little hiccup with Greek Mythology. As you know there is an internal dispute between the shareholders. This affected our revenue a little bit.

“We hope that after they resolve all these disputes, business will come back as usual. And of course in this competitive world everyone is trying to gain more market share. So we will try our best and hope we can achieve our target of about 30 percent.” In August Mr So revealed SJM had taken back 40 gaming tables from Greek Mythology’s table allocation, as well as 200 employees. In June Ng Man Sun – also known as Ng Wai, a long-term junket operator for SJM’s founder Stanley Ho Hung Sun and a partner in Greek Mythology – was beaten by masked men. The attack occurred at a time when Mr Ng was in a dispute about the size of his stake in Greek Mythology and about his role in the operations of the New Century Hotel where the casino is located. A.E.

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business daily September 25, 2012

macau MTR gets LRT oversight contract Hong Kong railway operator MTR Corporation Ltd was awarded a contract for the oversight of the Macau Light Rapid Transit system and carriages, according to yesterday’s Official Gazette. The deal is worth 7.5 million patacas (US$941,600) and will last until the end of next year, a dispatch signed by Chief Executive Fernando Chui Sai On reveals. Last December the Transportation Infrastructure Office signed a technical cooperation deal with the MTR Corporation aimed at improving the railway operations know-how of its Macau staff.

Macau Property Opportunities Fund growth slows but net assets up NAV rises on property appreciation city wide Xi Chen

xi@macaubusinessdaily.com

acau Property Opportunities Fund Ltd experienced slower but robust growth in fiscal year 2012. The fund told the London Stock Exchange yesterday that its property portfolio expanded 15.8 percent to US$ 374.8 million (2.99 billion patacas), mainly due to gross property value appreciation and additional development. The property fund invests solely in Macau and the western Pearl River delta. During the reporting period the fund made a new acquisition of an 8,000 square feet triplex penthouse in One Central Residences for US$12.6 million in April. It already owns the entire block of tower six at One Central branded ‘Waterside’ and with designer furnishing. “We have achieved a nearly 90 percent occupancy rate at Waterside this year, which is a great milestone. Waterside is one of our most important assets in the portfolio,” Tom Ashworth, co-founder of MPO’s manager Sniper Capital Ltd, told Business Daily. The fund’s rental income nearly doubled to US$3.1 million in fiscal year 2012. The fund’s net asset value also continued to grow, increasing 10 percent to US$3.01 per share, however it represented a slower growth rate comparing to the 16 percent the fund

One third of the residential project Fountainside has already been pre-sold (Photo: Manuel Cardoso)

experienced in fiscal year 2011. No dividends were declared this year compared to an eight percent special dividend last year. “The board will consider making future distributions to shareholders as and when further disposals are made,” David Hinde, the fund’s chairman stated in the annual report, clarifying the fund’s dividend policy. On the other hand, the company has been buying back 2.57 million of its own shares since May as an alternative

to boost up shareholder returns. Listed on the London Stock Exchange and trading at 1.09 pound (US$1.77) per share, the stock price represents a nearly 45 percent discount to its current net asset value. Aside from investment in One Central Residences, the fund is in the process of finishing Fountainside, a low-rise residential complex close to Lilau Square. One third of the project has already been pre-sold with the remaining units to be sold in early

2013 upon completion of the building. The fund is also developing a logistics centre in neighbouring Zhuhai and is in the advanced planning stage for a retail development close to Senado Square. “The fund’s portfolio is well positioned and we are optimistic going into next year,” Mr Ashworth said. But “the fund is selective about segments and new acquisitions will only be considered in exceptional circumstances,” he added.

Polytec warns of earnings shortfall Polytec’s two Areia Preta housing developments will be ready only in three to four years Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

roperty developer Polytec Asset Holdings Ltd’s first-half net profit dropped by 10.9 percent and the company has warned its earnings in coming years may fall short because of the time it will take to complete its housing projects in Areia Preta. The Hong Kong developer told the Hong Kong Stock Exchange on Thursday its unaudited net profit attributable to shareholders amounted to HK$126.6 million (US$16.3 million) in the first half, compared with HK$142.1 million a year earlier. Work on its last two housing projects in Areia Preta is about to start. The company said the government had approved the architectural plans for its developments on Pearl Horizon

Plot P, next to La Baie du Noble, and on Plot T and Plot T1, near the Areia Preta health centre. It said construction of the Pearl Horizon Plot P development in the Orient Pearl District was scheduled to begin in the fourth quarter. As for the development on Plot T and Plot T1, the company said: “We are currently clearing all necessary formalities for this development project before the start of construction work.” Polytec expects the first phase of its Pearl Horizon project and all of its project on Plot T and Plot T1 to be ready by late 2015 or early 2016. The company owns 80 percent of the projects. “For the next three to four

years before completion of two development property projects, there will be an earnings shortfall,” Polytec said.

Macau Square pays The Pearl Horizon development will have several residential towers, a large shopping mall and clubhouse, with a combined floor area of 669,700 square metres. The project on Plot T and Plot T1 is on a site covering 17,900 square metres. It will have housing blocks and a few shops, with a combined floor area of 195,600 square metres. Polytec’s gross income from rent was HK$21.5 million in the first half, 8.8 percent more than a year before

because of higher income from rent for commercial and office space in Macau Square, in the city centre. Its income from rent for space in Macau Square, of which it owns half, rose by 17.2 percent to HK$19.2 million. The Court of First Instance rents space in Macau Square. Polytec’s first-half underlying net profit rose by 50.1 percent to HK$87 million because of a better performance by its oil business in Kazakhstan. The Kazakh oil business made a first-half operating profit of HK$73.2 million, having made a loss of HK$29.1 million in the first half of last year. The board has proposed an interim dividend of HK$0.90 a share.

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business daily September 25, 2012

macau Two-year extension for energy regulator The Office for Development of the Energy Sector has seen its mandate extended until the end of 2014, according to yesterday’s Official Gazette. The energy regulator, headed by Arnaldo Ernesto Santos, gets a two-year extension for the first time since 2007. Without this dispatch signed by Chief Executive Fernando Chui Sai On, the office created in 2006 would have had to close doors by the end of this year. The regulator is currently focusing on the newly-signed natural gas distribution concession.

Forget mainlanders, woo foreigners, expert says Mainland arrivals cannot disguise a steep decline in the number of tourists from other markets, underlining the city’s struggle to become a tourism destination Vítor Quintã

vitorquinta@macaubusinessdaily.com

ourist arrivals are on their biggest downswing since the global financial crisis, with the number of arrivals below last year’s for four consecutive months. Tourism marketing expert Amy So Si Ian told Business Daily it was time for Macau to pay more attention to foreign visitors and tourists from Hong Kong and Taiwan to wean itself off its dependence on mainland Chinese visitors. Data released by the Statistics and Census Service yesterday show under 2.7 million tourists arrived last month, 0.6 percent fewer than a year before. Visitor arrivals have been tumbling since April, eating into annual growth. For the first eight months of this year, arrivals are up by 1.1 percent over the same period last year. The last time Macau experienced four months in a row where arrivals dipped below the corresponding period the year before was in

2.7 million

August tourist arrivals

In the first eight months of this year 59.9 percent of all tourists were mainlanders. In the first eight months of last year 57.7 percent were mainlanders.

Missing the goal

About six out of every 10 visitors in the first eight months of this year came from the mainland

2009, when the effects of the global financial crisis were squeezing the city. “We need to look at why there is a decrease,” said Ms So, the coordinator of the University of Macau’s hospitality and gaming management programme. “Singapore, India, Taiwan and Hong Kong show the biggest drops.” The number of visitors from Singapore was about 12,700 last month, 24 percent fewer than a year before.

Canny customers The number of arrivals from Singapore has been dropping since January. “There is even a drop of two digits in the last

few months. I believe the integrated resorts in Singapore might have some impact,” said Ms So. The number of visitors from Hong Kong fell by 10.3 percent to under 677,100 tourists, while arrivals from Taiwan decreased by 8.5 percent to about 106,300 people. Macau Travel Industry Council president Andy Wu Keng Kuong told Business Daily last month that the double-digit drop in the number of visitors from Hong Kong was due mainly to higher prices. “Hong Kongers are smart consumers. If the price in Macau is similar to or even higher than in Hong Kong they will, of course, have less desire to come to

Macau,” Mr Wu said. Ms So agrees that price is becoming a deterrent. She said Macau was becoming more expensive. The tourist price index, which measures the prices of goods and services most used by visitors, such as restaurants, entertainment and accommodation, was 6.57 percent higher in the second quarter than a year before. Ms So warned that a reliance on mainland tourism could not be sustained in the long run. Mainland tourist arrivals were up by 4.1 percent last month compared to the same time last year, with 1.6 million arrivals, of which 790,000 arrivals hailed from Guangdong.

The mainland authorities are now making it easier for internal migrants living in six big cities, including Guangzhou, to visit Macau. This “might help in terms of numbers but it will not help turn Macau into an international leisure and entertainment destination, which is the government’s goal,” Ms So said. “We need to pay more attention to the international market.” She suggests more promotion abroad. The Macau Government Tourist Office took part in joint promotions in three Indian cities with the Hong Kong Tourism Board and the Guangdong Tourism Administration earlier this month. The number of Indian visitors continues to fall, dropping by 22.3 percent last month from a year before to under 9,000 arrivals. Ms So said casino resorts were “definitely something visitors would be interested in” but she believes Macau needs “other types of attraction, including more festivals”. Ms So called for the tourism industry to improve the quality of its services to ensure visitors come back.

September 25, 2012 business daily | 7

MACAU

Govt says no to City U beachside campus A City University campus at Hac Sa would slash the city’s green space, the government says Vítor Quintã

vitorquinta@macaubusinessdaily.com

he City University of Macau will have to look for somewhere else to build its new campus after the government rejected its application to develop land near Hac Sa Beach in Coloane. The Land, Public Works and Transport Bureau told Business Daily it turned down the university’s application mainly because of what it called environmental and urban planning concerns. The bureau said the university had applied twice in the past few years to develop land adjacent to Hac Sa. The bureau did not offer any details about the first application. The government said it had asked for opinions on the second application from several departments, including the Environmental Protection Bureau. The Land, Public Works and Transport Bureau said the Cultural Affairs Bureau told it that building on the proposed plot might harm an archaeological site near the beach. Asked if it meant the site excavated in 2006 that contained evidence of 4,000-year-old ornament workshops, the Cultural Affairs Bureau declined to comment.

City University rector Yan Zexian said the new campus would have allowed the university to double its capacity to 6,000 students (Photo: Manuel Cardoso)

The Land, Public Works and Transport Bureau said the construction of a campus on Coloane would “reduce the c u rrent g r een a r ea s o f Ma ca u and impact Macau’s future urban development and environmental protection policy”. Coloane is the city’s green lung, containing 53.7 percent of all public

green areas, covering 8.52 square kilometres at the end of last year.

In the spotlight The exact location of the proposed site has not been made public but the government decided the plot was “not adequate” for the campus. Earlier this month, City University

rector Yan Zexian said the new campus would allow the university to double its capacity to 6,000 students from 3,000, and to raise its teaching and research standards. “We tentatively chose Coloane to be the new site as the land supply is tight in Macau and Taipa,” he said. Mr Yan said he did not know any details of the project, stressing that the new campus was a plan lead by the university board, headed by Legislative Assembly member Chan Meng Kam. Mr Chan bought City University and became chairman of the university council in 2010. The institution has since begun to focus on courses for full-time students instead of part-time students. City University was formerly known as Asia International Open University (Macau) and has two campuses in the NAPE district. The university was recently in the spotlight after receiving subsidies of more than 61 million patacas (US$7.6 million) in the past three quarters, including 21 million patacas in the fourth quarter of last year that was allotted, in part, to the decoration of its campuses.

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business daily September 25, 2012

macau

Collision at sea sounds call for safer navigation After fatal a collision at the weekend, fishermen call for better control of maritime traffic Tony Lai

tony.lai@macaubusinessdaily.com

fisherman’s association has urged the government to improve management of the busy navigation channels in the Inner Harbour near the Macau Tower after a collision there killed three fishermen on Saturday night. A fishing boat and a mainland Chinese cargo ship collided near Sai Van Bridge, only five minutes after the navigation channels were reopened after a fireworks display. The owners of the boat, a Macau couple, and three members of their crew were rescued. The bodies of the three dead, mainland fishermen were found in the cabin of the wrecked boat on Sunday. The Maritime Administration and the Customs Service told a press conference on Sunday that a preliminary investigation had found that the collision was caused by the fishing boat attempting to overtake the cargo vessel. The Customs Service said a full investigation would reach a definitive conclusion once it was completed. Fishermen’s Mutual Help Association president Fung Hee said: “The water traffic in that area has been busy, with the increasing number of

A fishing boat and a mainland Chinese cargo vessel collided near Sai Van Bridge, killing three fishermen on Saturday night

vessels using the channels over the years. “There are different boats of different sizes, like fishing boats, cargo vessels, passenger ships and so forth.” Mr Fung said several vessels

had been waiting for the navigation channels to be reopened just before the collision occurred. “With numerous boats crossing the waters at the same time, an accident can easily occur if there is any mistake committed by any ship,” he said. Mr Fung said there was “room for improvement” in the management of maritime traffic. “The administration should learn a lesson from this accident. They

can dispatch more boats to monitor the traffic when the channels are reopened,” he said. Two more fireworks displays – part of the Macau International Fireworks Display Contest – are due to be held in the area, on Saturday and Monday. Mr Fung said the wrecked boat might be salvageable and might be able to operate again once repaired. He said the owners had yet to estimate their financial loss.

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ontracts worth more than 2 billion patacas (US$250 million) were signed at the Third China Catering Expo, prompting speculation that the expo may return to Macau in years to come. The expo wrapped up on Sunday after more than 800 deals were discussed, resulting in 30 contracts covering wine trading, distribution, franchising, investment and cooperation agreements. Representatives of about 500 Hong Kong and Macau enterprises, including hotel operators, met representatives of household names in the catering trade in the mainland to talk business. Some big-ticket contracts involving businesses here were signed, including a 130 million pataca deal struck by Victory Trade and Investment Co. Ltd and Beijing Xiangeqing Co. Ltd to build a logistics centre in the city. In 2009, Beijing Xiangeqing

became the mainland’s first privately owned catering enterprise to float its shares. Other mainland restaurant groups, hotel operators and suppliers have also shown interest in opening here. Beijing Quan Jude Group, which runs a chain of roast-duck restaurants, said it was considering setting up an outlet. The group has been in talks with The Venetian Macao-Resort-Hotel and Galaxy Entertainment Group. “The key to the success of this expo was the collaboration between Macau and mainland China, as the two complement each other with their own strengths,” said Macau Convention and Exhibition Association vicechairman Alan Ho. “This national-level event represented a breakthrough for the convention and exhibition business in the territory, and with more events like this in the future, more international brands can branch out to Macau and help the territory to further diversify its economy.” A spokesman for the China Catering Expo said the event could make Macau its permanent home. The Economic Services Bureau said it was evaluating the results and would then announce it decision. The three-day expo included five forums and 26 promotional events, attracting more than 7,000 people in the industry and more than 100,000 members of the public.

September 25, 2012 business daily | 9

GREATER CHINA Li Keqiang sets to create a caring image

Housing a likely priority for premier-in-waiting Policy to dampen a major source of social tension

ne day last summer, the man slated to become China’s next premier strolled through a rundown alley between cramped brick huts and then toured a construction site a few miles away where brightly painted tower blocks promised new homes for the country’s poor. The contrasting neighbourhoods, both in Beijing’s poor, mining region of Mengtougou, embody the affordable housing policy overseen by Vice Premier Li Keqiang, who is expected to replace Premier Wen Jiabao in an upcoming leadership handover. Affordable housing - and how to pay for it - will be one of the defining challenges of the next leadership as it tries to deal with the high housing prices that are one of the greatest

sources of discontent in today’s China. Mr Li’s personal involvement hasn’t resolved all of the problems of a programme fundamental to the Communist Party’s claim on power, but it gives some insight into the broader issues he would have to deal with as premier. Chinese leaders generally keep their cards close to their chest, but Mr Li’s long association with affordable housing suggests a populist leadership style even if his policy preferences remain unknown. His visits to Mengtougou are helping create an image of a politician in the mode of current Premier Wen, who is often portrayed in media as shedding tears over the plight of China’s poor. “Li has been trying to establish himself as a Wen Jiabao-like populist

who looks after the disadvantaged,” said David Kelly, who follows elite politics closely for Beijing-based consultancy, China Policy.

Making housing affordable While the local issue in 2004 was basic housing in an economically depressed area, the national policy now aims to ease discontent over the high price of buying a home. Average urban disposable income is just 21,810 yuan (US$3,500) a year, but prime apartments sell for millions of yuan. The programme being championed by Mr Li aims to build 36 million units between 2010 and 2015, at an estimated cost of US$800 billion.

Through August, China had built just over 4 million such homes in 2012 against a full-year target of 5 million. However, critics say the programme is a mish-mash of initiatives, uneven building standards and poor planning, issues often highlighted in Chinese media reports. Targets are missed, scrapped and re-set, leaving pledges to the poor in places like Mengtougou - a hilly county pocked with depleted coal mines - ringing hollow. Some of these issues, such as missed targets, were apparent during a visit to the area by Reuters. Other criticisms, such as shoddy construction and how well-connected people are able to jump to the top of the waiting list, were not in evidence. The 144-tower complex Li visited last year is designed to house 40,000 people resettled from Mengtougou’s mining villages and squatter towns. Today, construction is still underway at most blocks. New residents complained that local authorities razed their former homes to meet relocation quotas and free up land long before their new units were completed. That left families to bounce between expensive temporary rentals for as long as three years. Children have to commute for miles to their former schools, hospitals aren’t built yet and extended families crowd into tiny rooms, awaiting the completion of apartments they were promised. Finished buildings are brightly painted and roses bloom in the courtyards. For many, the new apartments provide a higher living standard than their former rooms, which lacked heating or plumbing. “The biggest improvement is that I do not have to go to a public toilet in cold winter nights and that I do not have to cook with coal,” said 80-year-old Zhou Shu, proudly showing off the gas cooker in her new 40-square-metre apartment. Under the affordable housing programme, Beijing gives construction targets to regional authorities each year. To meet targets, some local authorities simply reclassify homes built for government employees or state-owned enterprises as part of the affordable housing programme. Reuters

Ex-police chief gets 15 years jail

Foxconn plant in China closed after major workers brawl

Defendant found guilty on every count

Fighting broke out between ‘possibly thousands’

hinese ex-police chief Wang Lijun, who exposed a scandal that shocked the Communist Party, was sentenced to 15 years in prison yesterday for defection and other crimes. Mr Wang, the right-hand man of top politician Bo Xilai, fled to the U.S. consulate in Chengdu in February, sparking a crisis that saw Mr Bo sacked and his wife found guilty of murder ahead of a generational transfer of power. Mr Wang’s conviction and sentence are the latest move by the authorities to try to deal with the fall-out from the scandal ahead of the once-in-a-decade leadership transition at a Communist Party congress expected next month. The former police chief of the sprawling metropolis of Chongqing, where Mr Bo was the top Party official, Mr Wang was tried for defection, bribery, abuse of power and bending the law for selfish ends, admitting all the charges. In a statement the Intermediate People’s Court in the southwestern city

of Chengdu found him guilty on each count, adding that the circumstances of the bending the law offence were “very serious”. But it said that he was shown leniency as he had reported the role of Mr Bo’s wife Gu Kailai in the murder of British businessman Neil Heywood. He “actively helped with the re-investigation” which “played an important role in the breaking of the case by police authorities”, it said. The court sentenced Mr Wang to nine years for bribery, seven for bending the law, and two each for abuse of power and defection, but reduced the combined term to a total of 15 years in accordance with Chinese law. AFP

aiwan’s Foxconn Technology Group closed its Taiyuan plant in northern China yesterday after a brawl involving possibly thousands of workers began in dormitory facilities early in the morning. The Taiyuan plant, which employs about 79,000 workers, makes parts for automotive electronics and assembles various electronic devices, according to Foxconn spokesman Louis Woo. “The fight is over now ... we’re still investigating the cause of the fight and the number of workers involved,” said Mr Woo, adding that “involving a couple thousand workers is possible”. Mr Woo said the fight happened in the workers’ dormitory. China’s Xinhuanet. com, operated by the Xinhua News Agency, said about 10 people were hurt in the fighting, citing police. Foxconn, the trading name of Hon Hai Precision Industry Co. Ltd and the world’s largest contract maker of electronic goods, has seen a few violent disputes at its sprawling plants

in China, where it employs a total of about 1 million workers. In June, about 100 workers went on a rampage at a Chengdu plant in southwestern China. The company has faced allegations of poor conditions and mistreatment of workers at its China operations, and has been spending heavily in recent months to improve the work environment and to raise wages. A staff member at the Taiyuan plant said he was told the plant could be closed up to two to three days for police investigations. “There are a lot of police at the site now,” the staff member, who asked not to be named because he is not authorized to speak to media, told Reuters by telephone. He said the plant also makes parts and assemble Apple’s iPhone 5. Calls to the Taiyuan police were not immediately answered, while an official at the plant declined to comment when reached by telephone. Reuters

10 |

business daily September 25, 2012

GREATER CHINA

Ships in Japan waters off isles: coastguard China postpones celebrations as diplomatic ties turn sour

hree Chinese government ships were in Japanese territorial waters off a disputed island chain yesterday, the coastguard said, in the latest salvo of an increasingly heated international dispute. The move came a day after China dealt a diplomatic snub to Japan by postponing long-planned events marking the 40th anniversary of ties, as relations plumb depths not seen for decades. It also came as Japanese Prime Minister Yoshihiko Noda warned Beijing’s uncompromising stance could affect its economy and have knock-on effects on the wider world. Japan’s coastguard said that as of 0200 GMT, two maritime surveillance ships and one fishery patrol boat were in sovereign waters off Uotsurijima, the largest island in the Japaneseadministered Senkaku chain, which China claims as the Diaoyus. The coastguard said six other vessels were in contiguous waters, an area under international law that extends up to 12 nautical miles outside a territory. Osamu Fujimura, Japan’s top government spokesman and chief cabinet secretary, said Japan has “protested strongly” over the intrusion through diplomatic channels. Up to 14 Chinese government ships have been in the area for over a week,

dipping in and out of contiguous waters. Beijing sent vessels to the islands on September 11, the day Tokyo announced it had completed a deal to buy three of the uninhabited rocks from their private owner. Commentators say the nationalisation of the islands was intended to prevent their purchase by the nationalist governor of Tokyo, who said he wanted to develop them.

Cancelled ceremony But Beijing reacted angrily and unleashed a firestorm of protest, which also saw sometimes violent rallies rocking several cities, with Japanese businesses suffering vandalism and arson at the hands of rioters. On Sunday, Chinese state media announced Beijing was “postponing” celebrations to mark the 40th anniversary of the normalisation of diplomatic ties. A ceremony, which was due to take place on Thursday, was to be hosted by a friendship organisation. It has been held every decade and never before been cancelled. The Japanese government yesterday described the cancellation as “regrettable”. In an interview with the Wall Street Journal ahead of the UN meet, Mr Noda warned China’s attitude

Tension keeps building up at a sensitive time

could damage its economy. He said Japanese companies were now facing a form of economic harassment in China. “Recent delays in customs and visa issuance are of concern,” he said. “Damaging our ties over such things would be bad for not just the two countries’ economies, but for the global economy.” The Japanese government has decided to dispatch its Foreign Ministry’s top official to China on a two-day tour to repair frayed

bilateral ties over islands in the East China Sea, the ministry said. Deputy Foreign Minister Chikao Kawai is expected to hold talks today with Chinese Vice Foreign Minister Zhang Zhijun, Japanese government officials said. Earlier in the day, Mr Kawai lodged a protest over the phone with Chinese Ambassador to Japan Cheng Yonghua about the latest entry of Chinese surveillance vessels into waters near the Diaoyu Islands. AFP, Xinhua

Beijing halts land auctions Stocks rise on speculation Move aimed at cooling real estate market of market-boosting measures Mounting worries as the economy keeps slowing down

eijing suspended auctions of 10 land parcels in the Chinese capital, after a recovery in sales fuelled expectations among homebuyers that housing prices will surge again even as the government keeps its property curbs. The auctions are suspended “to stabilise market expectations,” the city’s land reserve centre said in a statement dated September 21 on its website. The land slots, mostly on the suburbs, will re-enter the market after adjustments, according to the statement that didn’t elaborate. The government will prepare policy options to prevent a rebound in property prices and will hold local authorities accountable for loosening restrictions to lead to rapid price increases, the official People’s Daily reported yesterday, citing remarks by an unidentified official from the Ministry of Housing and Urban-Rural Development. China’s home prices rose for a third month in August, according to SouFun Holdings Ltd, after the central bank cut interest rates this year to stem an economic slowdown. “The land market may see another high tide by the end of the year,” Hu Jinghui, vice president of Bacic & 5i5j

Group, Beijing’s second-biggest real estate broker, said in a September 20 report. “Since some land parcels may attract the attention of many developers, the government may interfere by adjusting the times, venues or terms of auctions to avoid the occurrence of ‘land kings’ and stabilise market expectations.” The value of land transactions in China rose to 96.4 billion yuan (US$15 billion) in August, the highest this year, as developers expect home prices to recover after interestrate cuts in June and July, according to the National Bureau of Statistics. Land sales by area jumped about 50 percent in the first 13 days of September from a month earlier in 13 key cities as property companies’ liquidity pressures eased, Centaline Group, parent of China’s biggest real estate agency, said in an emailed report on September 17. The 10 land slots include four commercial and financial land parcels, two of which also have residential sections, according to the land reserve centre. They also include five multi-use slots and one for tourism facilities. Bloomberg

hina’s stocks rose, erasing earlier losses yesterday, on speculation regulators will introduce measures to bolster equities after the benchmark index dropped to the lowest levels since 2009. Regulators may introduce “concrete” measures to bolster the stock market should the Shanghai Composite Index fall below the 2,000 level, according to Shenyin & Wanguo Securities Co. Anhui Conch Cement Co. and Gansu Qilianshan Cement Group Co. jumped at least 3.7 percent after Shenyin & Wanguo said prices of the building material rose last week. Metallurgical Corporation of China Ltd, the construction company that helped build the “Bird’s Nest” Olympic stadium in Beijing, climbed the most in two weeks as company executives bought back shares. “With the Shanghai Composite close to 2,000, there’s speculation among investors that the government may unveil some market-boosting measures,” said Wu Kan, Shanghaibased fund manager at Dazhong Insurance Co., which oversees US$285 million. “They will focus on boosting confidence in the short term.”

CSRC measures The Shanghai index may rebound by about 10 percent should it breach 2,000, Ling Peng, a strategist at Shenyin & Wanguo, wrote in a report dated September 21. The Shanghai-

based brokerage was ranked No. 1 for equity strategy research by New Fortune magazine in 2010. The China Securities Regulatory Commission will implement measures to raise the level of returns for investors in capital markets, the Securities Daily reported yesterday, citing Zhang Yujun, assistant chairman at the regulator. The Shanghai Composite fell earlier after Song Guoqing, an academic adviser to the People’s Bank of China, said the economic slowdown may persist into 2013 amid a lack of funding for approved infrastructure projects. Downward pressure on the economy is increasing, the Economic Information Daily reported, citing the transcript of a speech by Zhang Ping, head of the National Development and Reform Commission. China’s manufacturers and retailers are less optimistic about sales than they were three months ago and more companies are cutting jobs, according to a survey modeled on the U.S. Federal Reserve’s Beige Book. Bloomberg

September 25, 2012 business daily | 11

asia

Aussie debacle flags China hard landing Mining bonanza coming to an end

rom the end of 2008 through July, no major currency appreciated as much as Australia’s dollar, thanks to booming shipments of iron ore and other commodities to China. Since then, it’s the worst performer as the engine of world growth slows. The so-called Aussie depreciated 1.5 percent in the past month, the second-biggest decline among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. Traders are betting Australia’s central bank will cut interest rates to boost growth, dragging down the currency even though the Standard & Poor’s GSCI Index of commodities has risen almost 20 percent from its low this year in June. This reversal shows the dangers for an economy tied too closely to another. China, which buys 28 percent of Australia’s exports, said industrial output grew at the slowest pace in three years last month as Europe’s debt crisis cut sales of Chinese goods. Polls show Prime Minister Julia Gillard’s governing Labor Party is under pressure before elections due next year. “The Australian dollar is very expensive from whichever metrics you look at,” Dagmar Dvorak, a director of fixed-income and currencies in London at Baring Asset Management,

growth and reduce unemployment. The gain was short-lived, and the currency has since weakened against 12 of its 16 major counterparts. Australia’s currency fell 0.9 percent last week as a report on September 20 showed China’s manufacturing may contract for an 11th-straight month and an International Monetary Fund official said the same day it would cut its forecasts for global economic expansion.

Resource Boom

Resource-hungry China drove mining boom

which oversees US$50 billion, said in an interview on September 20. “When a currency overvaluation is that extreme, you have to question what could be a trigger that stops it. For the Aussie, it’s the economic slowdown in China and falling commodity prices. The currency looks vulnerable.”

Rebound Curtailed Baring has joined Credit Suisse Asset Management and Quantum Global Investment Management

as onetime bulls turned bearish. Th e A u s tr a l i a n d o l l a r w a s 3 9 percent overvalued against its U.S. counterpart on September 20 as measured by the Organization for Economic Cooperation and Development. That’s more than other currencies that tend to rise and fall with commodity prices, such as those of New Zealand and Canada. The Aussie appreciated to its highest level against the U.S. dollar in about six months on September 14, after the Federal Reserve announced a third round of bond buying designed to boost

“We are worried about Chinese growth and think the short-term risk for Australian dollar is a bit too high for us,” Gareth Fielding, the chief executive officer at Quantum Global Investment Management in Zug, Switzerland, said on September 17. “The rally has come a long way. We are a buyer if it falls below parity with the dollar.” Australia’s economy was bolstered by the biggest resources bonanza since a gold rush in the 1850s as Chinese-led demand for iron ore, coal and natural gas surged in part because of Beijing’s 4 trillion yuan (US$635 billion) stimulus package in 2008. Iron ore from Australia went into everything from skyscrapers in Shanghai to a shipyard in Dalian. Bloomberg

Park’s daughter apologises for abuses Presidential candidate pressured to clarify position on father’s rule

S. Korea to resume Iran crude imports after 2-month gap Shipments to go back to full contracted levels

outh Korea imported no crude oil fromIraninAugustduetoEuropean Union restrictions on shipping insurance,butpurchasesinSeptemberare expected to be up to 200,000 barrels per day, or back to full contracted volumes, after skirting sanctions. South Korea’s overall crude oil imports rose 11.2 percent in August from the same month a year ago as it increased shipments from other Middle Eastern producers, according to data from the state-run Korea National Oil Corp. South Korea is the world’s fifthlargest crude oil importer, and one of Iran’s biggest oil customers. Its imports from Iran during the first eight months of the year were 38.77 million barrels, down 32.2 percent from a year ago, KNOC said. Iranian crude oil imports between January-August were equivalent to about 159,000 barrels per day. South Korea stopped importing Iranian crude from July 1 due to the EU ban, which is part of a raft of Western sanctions aimed at cutting Iran’s oil revenues and squeezing funding to its

disputed nuclear programme. Seoul, however, brought in an unexpected 137,400 bpd of crude from Iran in July because of shipment delays to June cargoes, KNOC data released in August showed. In a bid to keep crude flowing to its top Asian customers, Iran offered to provide up to US$1 billion of insurance cover to Iranian vessels shipping its oil and last week South Korea’s SK Energy lifted a 2-million-barrel cargo in Iran. Sources at the economy ministry also said last month that South Korean refiners planned to resume from September monthly imports of up to 6 million barrels, or 200,000 barrels per day, of Iranian crude. Of South Korea’s four refiners, only SK Energy and Hyundai Oilbank import Iranian crude. SK Energy’s term contracts with Iran this year provide for imports of two Very Large Crude Carriers (VLCCs) of crude per month, or 4 million barrels, and Hyundai Oilbank imports one VLCC per month, or 2 million barrels, sources say. Reuters

he ruling party candidate in South Korea’s presidential election apologised yesterday for human rights abuses during the repressive rule of her late father, military strongman Park Chung-Hee. Under increasing pressure to clarify her position on her father’s 1961-79 rule, Park Geun-Hye offered her “sincere apologies to those who suffered and were wounded during this period, and to their families.” Her comments were made in a 10-minute speech to reporters that was broadcast live from her conservative New Frontier Party headquarters. Ms Park, who one month ago seemed a firm favourite to become South Korea’s first woman president, has lost ground in opinion polls in recent weeks to her left-leaning rivals, Moon Jae-In and Ahn Cheol-Soo. The weakening support was partly attributed to what were seen as her ambiguous statements on her father’s legacy, which remains a deeply divisive and emotive subject in South Korea. Park Chung-Hee, who seized power in a 1961 military coup and

Park Geun-Hye’s father rule is a divisive issue in Korea

ruled with an iron hand until his assassination in 1979, is credited with laying the foundations for the country’s economic rise. Admirers say his autocratic style was necessary to lift South Korea out of poverty, while critics say he stalled democratic progress by ruthlessly crushing all opposition during a period marked by systemic human rights abuses. In her comments yesterday, Park Geun-Hye sought to balance the two sides, stressing the special circumstances her father faced while apologising for the excesses that ensued. “For my father, economic growth and national security were the two most pressing issues for the country,” she said. “Behind the stellar growth were sacrifices by workers who suffered under a repressive labour environment. “Behind the efforts for national security to protect [ourselves] from North Korea were human rights abuses committed by state power,” she said. AFP

12 |

business daily September 25, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

Day %

VOLUME

AIA GROUP LTD

28.6

0.5272408

13163417

CHINA UNICOM HON

ALUMINUM CORP-H

3.23

-1.223242

12470556

CITIC PACIFIC

BANK OF CHINA-H

2.93

-1.013514

190380396

BANK OF COMMUN-H

5.25

-0.5681818

14538559

-0.8547009

645437

BANK EAST ASIA

CLP HLDGS LTD

PRICE

Day %

VOLUME

12.72

0.1574803

18730391

NAME

9.79

0.307377

2244065

SANDS CHINA LTD SINO LAND CO SUN HUNG KAI PRO

94.9

65.6

-0.3796507

1552184

CNOOC LTD

15.66

-0.5082592

32550383

COSCO PAC LTD

10.94

0.5514706

2869329

SWIRE PACIFIC-A

BELLE INTERNATIO

14.12

0.2719116

9311805

ESPRIT HLDGS

12.72

-0.3134796

3941580

TENCENT HOLDINGS

BOC HONG KONG HO

24.25

-0.2057613

5380525

HANG LUNG PROPER

26.65

4322580

TINGYI HLDG CO

CATHAY PAC AIR

12.92

-0.6153846

2789788

HANG SENG BK

116.9

0.6890612

653335

CHEUNG KONG

113.3

0.3542958

1734630

HENDERSON LAND D

54.05

0.371402

3104687

7.07

-0.8415147

21593997

75.6

-1.176471

1592117

CHINA COAL ENE-H CHINA CONST BA-H

5.29

-0.1886792

151698389

CHINA LIFE INS-H

22.55

-0.4415011

24414094

CHINA MERCHANT

24.55

2.291667

3653164

CHINA MOBILE

HENGAN INTL HONG KG CHINA GS

19.24

-0.1038422

2616178

HONG KONG EXCHNG

118.9

-0.3352892

4316795

HSBC HLDGS PLC

73.45

-0.877193

8644945

0.4672897

13222343

HUTCHISON WHAMPO

73.6

-0.2710027

3835063

19.12

-1.137539

32131993

IND & COMM BK-H

4.55

-0.6550218

161096878

CHINA PETROLEU-H

7.16

-0.2785515

58922113

LI & FUNG LTD

12.08

-0.9836066

22990935

CHINA RES ENTERP

25.4

-2.119461

3388725

MTR CORP

29.3

0.3424658

2108198

CHINA OVERSEAS

CHINA RES LAND

16.5

0.2430134

3783200

NEW WORLD DEV

11.4

1.06383

21087675

CHINA RES POWER

17.2

1.176471

6259140

PETROCHINA CO-H

10.14

-0.3929273

46993779

CHINA SHENHUA-H

29.75

-0.9983361

10311120

PING AN INSURA-H

58.1

7112423

PRICE

Day %

64.5

0.07757952

1209314

28.25

-0.528169

4720887

14.28

1.564723

4464508

112.2

1.263538

3548224

0.7430998

1278382

255.2

0.4724409

2267255

22.9

-0.4347826

4258000

POWER ASSETS HOL

MOVERS

VOLUME

2 20820

INDEX 20694.7 HIGH

20816.77

LOW

20543.76

52W (H) 21760.33984 (L) 16170.35

20540

20-Sep

24-Sep

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.02

-0.330033

81860312

CHINA PACIFIC-H

22.7

-0.6564551

7801806

AIR CHINA LTD-H

4.92

-0.6060606

27828892

CHINA PETROLEU-H

7.16

-0.2785515

58922113

ALUMINUM CORP-H

3.23

-1.223242

12470556

CHINA RAIL CN-H

6.68

-0.7429421

4.803493

14555449

CHINA RAIL GR-H

3.36

2.93

-1.013514

190380396

CHINA SHENHUA-H

29.75

CHINA TELECOM-H

NAME

ANHUI CONCH-H BANK OF CHINA-H

NAME

PRICE

DAY %

VOLUME

11.72

-0.5093379

14024270

ZIJIN MINING-H

3.12

-0.3194888

42114196

11154198

ZOOMLION HEAVY-H

8.98

2.161547

12889630

-0.2967359

16975524

ZTE CORP-H

11.28

0.3558719

3328966

-0.9983361

10311120

5.25

-0.5681818

14538559

4.53

-1.735358

69611430

15.26

-2.926209

1581600

DONGFENG MOTOR-H

9.4

0.8583691

24631641

CHINA CITIC BK-H

3.66

-0.8130081

26251371

GUANGZHOU AUTO-H

5.3

-2.033272

6130012

CHINA COAL ENE-H

7.07

-0.8415147

21593997

HUANENG POWER-H

5.55

0.3616637

15139502

CHINA COM CONS-H

6.28

-1.412873

18262094

IND & COMM BK-H

4.55

-0.6550218

161096878

CHINA CONST BA-H

5.29

-0.1886792

151698389

JIANGXI COPPER-H

19.36

0.3108808

8003921

CHINA COSCO HO-H

3.23

-0.308642

18061885

PETROCHINA CO-H

10.14

-0.3929273

46993779

BANK OF COMMUN-H BYD CO LTD-H

22.55

-0.4415011

24414094

PICC PROPERTY &

9.48

-0.8368201

12008123

CHINA LONGYUAN-H

5.21

1.956947

4280000

PING AN INSURA-H

58.1

7112423

CHINA MERCH BK-H

12.98

-0.3072197

12782465

SHANDONG WEIG-H

9.63

-0.619195

2605000

CHINA LIFE INS-H

NAME YANZHOU COAL-H

MOVERS

1 9860

INDEX 9767.49 HIGH

9852.01

LOW

9676.14

CHINA MINSHENG-H

6.09

-0.9756098

33738804

SINOPHARM-H

24.5

0.8230453

857475

52W (H) 11916.1

CHINA NATL BDG-H

8.54

1.545779

42748880

TSINGTAO BREW-H

43.15

0.817757

1268023

(L) 8058.58

13.34

-0.4477612

4216795

WEICHAI POWER-H

24.25

3.191489

1576933

CHINA OILFIELD-H

9670

20-Sep

24-Sep

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

4.39

-0.2272727

3901248

SANY HEAVY INDUS

11.52

1.587302

5930541

SHANDONG GOLD-MI

GD MIDEA HOLDING

9.18

9139999

31932146

GD POWER DEVEL-A

2.36

-0.4219409

-1.020408

15709742

GF SECURITIES-A

12.51

-0.3802281

23942355

GREE ELECTRIC

20.4

0.2427184

34764088

GUANGHUI ENERG-A

14.49

4.020101

-2.575107

50683518

GUIZHOU PANJIA-A

16.65

4.388715

-0.8684035

3845473

HAITONG SECURI-A

8.82

HANGZHOU HIKVI-A

26.9

HENAN SHUAN-A

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.41

58130945

DATANG INTL PO-A

AIR CHINA LTD-A

4.8

-0.4149378

10251500

EVERBRIG SEC -A

4.94

-1.002004

16517126

ANHUI CONCH-A

15.27

3.736413

BANK OF BEIJIN-A

6.79

BANK OF CHINA-A

2.62

BANK OF COMMUN-A

4.13

BAOSHAN IRON & S

4.54 14.84

ALUMINUM CORP-A

BYD CO LTD -A

NAME

PRICE

DAY %

VOLUME

9.15

2.120536

40012058

-1.607871

17891555

SHANG PHARM -A

11.49

1.41218

5147653

14588821

SHANG PUDONG-A

7.17

-0.554785

44280628

2.373159

59515465

SHANGHAI ELECT-A

0.04904365

7309273

4.01

0.25

2108617

SHANXI LU'AN -A

17.77

3.736135

18283336

23364453

SHANXI XINGHUA-A

36.68

2.68757

1072122

15918595

SHANXI XISHAN-A

13.15

5.36859

20489809

1.847575

35090779

SHENZEN OVERSE-A

5.37

0.9398496

13981854

1.547754

3589003

SUNING APPLIAN-A

6.16

1.818182

40325488

58.58

-0.1023192

1046610

TONGLING NONFE-A

19.3

2.008457

21133948 1268363

CHINA CITIC BK-A

3.57

-0.2793296

9823419

CHINA CNR CORP-A

3.46

29172676

CHINA COAL ENE-A

6.83

1.185185

9388555

HONG YUAN SEC-A

17.39

1.517805

10695622

TSINGTAO BREW-A

32.11

0.532248

CHINA CONST BA-A

3.85

-0.5167959

16218498

HUATAI SECURIT-A

9.03

1.460674

11990479

WEICHAI POWER-A

18.57

3.052164

6142624

CHINA COSCO HO-A

3.98

-2.211302

14378513

HUAXIA BANK CO

7.91

-0.3778338

17152785

WULIANGYE YIBIN

32.65

0.3688903

11856068

CHINA CSSC HOL-A

20.66

1.673228

13186696

IND & COMM BK-A

3.64

-0.5464481

34200116

XIAMEN TUNGSTEN

38.89

0.5689165

7356504

CHINA EAST AIR-A

3.29

-1.497006

23863834

INDUSTRIAL BAN-A

11.71

-0.2555366

28415521

YANGQUAN COAL -A

13.99

2.042305

14079659

2.62

-0.3802281

24170951

INNER MONG BAO-A

32.95

0.8261934

26952138

YANTAI CHANGYU-A

44.98

0.5364327

2025525

18.48

1.930502

7946174

INNER MONG YIL-A

20.13

0.8012018

7203924

YANTAI WANHUA-A

13.25

2.158828

12646050

CHINA EVERBRIG-A CHINA LIFE INS-A CHINA MERCH BK-A

9.86

0.509684

33853748

INNER MONGOLIA-A

4.92

-0.2028398

33877430

YANZHOU COAL-A

17.99

2.332196

4780874

CHINA MERCHANT-A

9.77

0.9297521

8245714

JIANGSU HENGRU-A

29.8

0.438153

1815762

YUNNAN BAIYAO-A

60.85

2.097315

1047539

CHINA MERCHANT-A

19.32

3.648069

11038566

JIANGSU YANGHE-A

CHINA MINSHENG-A

5.53

0.7285974

65901125

JIANGXI COPPER-A

CHINA NATIONAL-A

6.48

2.694136

23456151

114

0.1053741

1116412

ZHONGJIN GOLD

18.1

-0.8219178

53220586

22.21

0.862852

10961200

ZIJIN MINING-A

4.03

-1.707317

145430837

8.31

3.358209

52071156

10.64

4.313725

20171911

JINDUICHENG -A

11.57

-0.08635579

8920847

JIZHONG ENERGY-A

12.15

2.445194

18732712

CHINA OILFIELD-A

15.58

0.7110537

2633928

CHINA PACIFIC-A

19.29

2.66099

12734668

KANGMEI PHARMA-A

15.43

-0.7078507

11009613

CHINA PETROLEU-A

5.89

-0.8417508

12827987

KWEICHOW MOUTA-A

232.36

0.7675962

1763483

CHINA RAILWAY-A

4.52

1.801802

11782154

LUZHOU LAOJIAO-A

36.59

1.78025

5463869

2.03

2.01005

27610126

20835387

CHINA RAILWAY-A

2.48

1.639344

29144911

METALLURGICAL-A

CHINA SHENHUA-A

21.73

0.5087882

7222881

NARI TECHNOLOG-A

17.74

CHINA SHIPBUIL-A

4.79

0.4192872

37469628

NINGBO PORT CO-A

2.44

10981624

3.72

0.8130081

47622416

ZOOMLION HEAVY-A ZTE CORP-A

MOVERS

200

CHINA SOUTHERN-A

3.39

-0.5865103

20972223

CHINA STATE -A

2.93

-0.3401361

34065274

PETROCHINA CO-A

8.62

-0.5767013

9303101

12.91

0.2329193

17905626

HIGH

2236.19

LOW

2178.59

CHINA UNITED-A

3.53

0.5698006

45890581

CHINA VANKE CO-A

7.89

1.024328

45501387

PING AN INSURA-A

40.26

1.718039

10467018

CHINA YANGTZE-A

6.16

-1.754386

10785514

POLY REAL ESTA-A

10.12

2.741117

41113015

CITIC SECURITI-A

10.83

0.5571031

54290121

QINGDAO HAIER-A

10.65

0.756859

4535438

CSR CORP LTD -A

3.91

23760713

QINGHAI SALT-A

28.57

-2.458177

6219789

DAQIN RAILWAY -A

5.88

0.3412969

16868838

SAIC MOTOR-A

12.46

-1.111111

15925011

PRICE DAY %

Volume

19 2240

INDEX 2215.516

PANGANG GROUP -A PING AN BANK-A

52W (H) 2781.99 (L) 2172.878906

2170

20-Sep

24-Sep

FTSE TAIWAN 50 INDEX NAME ACER INC

NAME

30.25

2.542373

35439605

FORMOSA PLASTIC

23.1

-1.282051

15521349

FOXCONN TECHNOLO

37.55

0.2670227

2671866

ASUSTEK COMPUTER

309

0.3246753

AU OPTRONICS COR

11.4 -0.4366812

ADVANCED SEMICON ASIA CEMENT CORP

CATCHER TECH

PRICE DAY %

Volume

NAME

PRICE DAY %

0.3584229

2393683

TAIWAN MOBILE CO

119.5

4785312

FUBON FINANCIAL

0.6289308

3232759

HON HAI PRECISIO

95.8

66219892

HOTAI MOTOR CO

Volume

108.5

2.843602

TPK HOLDING CO L

408

1.240695

5573370

17823689

TSMC

86.1

0.4667445

30360921

-1.033058

27300699

UNI-PRESIDENT

50.4

0.3984064

5332596

206 -0.9615385

315707

12.15

-1.219512

17621931

UNITED MICROELEC

4079521

150

-0.990099

7021016

HTC CORP

312

-1.577287

12635427

WISTRON CORP

35.5 -0.9762901

CATHAY FINANCIAL

32.45

1.564945

23092998

HUA NAN FINANCIA

16.6 -0.3003003

4629885

YUANTA FINANCIAL

15.4

-1.910828

19616339

CHANG HWA BANK

16.15

-0.308642

6474835

LARGAN PRECISION

599410

YULON MOTOR CO

58.5

0.862069

6662675

74.5 -0.4010695

3500751

LITE-ON TECHNOLO

CHENG SHIN RUBBE

652 -0.1531394 37.05

0.9536785

3417286

CHIMEI INNOLUX C

11.4

0.4405286

34569242

MEDIATEK INC

330

2.643857

13050558

CHINA DEVELOPMEN

7.42

0.2702703

60031806

MEGA FINANCIAL H

22.5 -0.4424779

15672361

26.65 -0.1872659

10991233

NAN YA PLASTICS

58.8

0.1703578

2843369

15444179

PRESIDENT CHAIN

157

0.3194888

1067372

CHUNGHWA TELECOM

92.9 -0.1075269

6101864

QUANTA COMPUTER

79.3

2.190722

5103455

COMPAL ELECTRON

26.6 -0.7462687

7654993

SILICONWARE PREC

33.1 -0.3012048

5638134

DELTA ELECT INC

112 -0.8849558

5621145

SINOPAC FINANCIA

12.2 -0.4081633

9928200

FAR EASTERN NEW

33.3

8724768

SYNNEX TECH INTL

66.9

3190154

FAR EASTONE TELE

71.8 -0.2777778

2416780

TAIWAN CEMENT

36.3

1.114206

6132763

FIRST FINANCIAL

18.3

7758356

TAIWAN COOPERATI

16.8

4364233

FORMOSA CHEM & F

78.5 -0.6329114

2370476

TAIWAN FERTILIZE

80.8

0.3726708

4247330

FORMOSA PETROCHE

87.5 -0.9060023

1590220

TAIWAN GLASS IND

29.8 -0.6666667

848003

CHINA STEEL CORP CHINATRUST FINAN

17.8

MOVERS

8448774

6 5360

INDEX 5355.64 HIGH

5359.52

LOW

5316.21

52W (H) 5621.53 5310

(L) 4643.05 20-Sep

24-Sep

September 25, 2012 business daily | 13

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

MELCo CroWN ENTErTAINMENT

MGM CHINA HoLDINGS 33.4

25.0

13.35

24.9 13.30

24.8 24.7

33.3

24.6

13.25

24.5

13.20

24.4 Max 24.95

Average 24.610

Min 24.35

24.3

Last 24.85

SANDS CHINA LTD

Max 33.3

Average 33.3

Min 33.3

Last 33.3

33.2

SJM HoLDINGS LTD

Max 13.3

Average 13.246

Min 13.18

Last 13.22

13.15

WyNN MACAU LTD 16.4

28.7

20.9

16.3

28.5

20.7

16.2 28.3

Average 28.406

Max 28.7

Min 28.15

Last 28.25

28.1

16.0 Max 16.32

Average 16.163

Commodities PRICE

DAY %

YTD %

(H) 52W

91.6

-1.388739369

-6.844299807

109.8899994

78.73000336

BRENT CRUDE FUTR Nov12

109.71

-1.534733441

5.237410072

122.6499939

89.5

GASOLINE RBOB FUT Oct12

290.53

-1.264231096

14.95212471

307.9600096

220.5600023

GAS OIL FUT (ICE) Nov12

961.25

-0.825380449

7.162764771

1038.75

799.25

2.871

-0.485268631

-13.57615894

4.425000191

2.299999952

HEATING OIL FUTR Oct12

308.86

-1.028615375

8.087489064

333.8899851

252.5300026

Gold Spot $/Oz

1759.08

-0.7907

12.4077

1803

1522.75

Silver Spot $/Oz

33.8763

-1.8968

21.704

37.4775

26.085

Platinum Spot $/Oz

1609.58

-1.5608

15.4234

1736

1339.25

649.5

-3.2546

-0.6121

725.19

537.54 1827.25

Palladium Spot $/Oz

2116

0.28436019

4.752475248

2361.5

LME COPPER 3MO ($)

LME ALUMINUM 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

15.19

-0.32808399

-0.098651759

17.5

14.15499973

748.5

0.033411293

27.67590618

849

499

3MO ($)

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

Last 16.14

20.3 Max 20.9

Average 20.519

Dec12

WHEAT FUTURE(CBT) Dec12

PRICE

(L) 52W

WTI CRUDE FUTURE Nov12

NATURAL GAS FUTR Oct12

METALS

Min 16.02

Last 20.6

Min 20.4

CURRENCY EXCHANGE RATES

NAME ENERGY

20.5

16.1

MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

1.0403 1.6199 0.9369 1.2908 78.02 7.9857 7.7531 6.3093 53.405 30.95 1.2278 29.366 41.782 9565 81.164 1.2094 0.79684 8.1463 10.308 100.71 1.03

-0.5259 -0.191 -0.4376 -0.5547 0.1923 0.0038 0.0103 -0.0618 0.1123 -0.4847 -0.2443 -0.0885 -0.3327 -0.1359 0.7047 0.153 0.3777 0.383 0.7518 0.7447 0

YTD %

(H) 52W

1.9003 4.2205 0.1281 -0.4089 -1.4227 0.1741 0.1844 -0.2266 -0.6366 1.9386 5.6035 3.109 4.9256 -5.1856 -3.366 0.611 4.5869 -0.1485 0.4269 -1.0426 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

2.72

-0.729927

23.63636

3.25

1.88

839963

153.6999969

CROWN LTD

8.99

-0.9911894

11.12484

9.4

7.47

2174795

897.75

0.055725829

24.6875

953.25

629.5

SOYBEAN FUTURE Nov12

1608

-0.847849545

33.52709155

1789

1115.75

COFFEE 'C' FUTURE Dec12

170

-1.904212349

-27.96610169

253.3999939

NAME

PRICE

DAY % YTD %

VOLUME CRNCY

SUGAR #11 (WORLD) Mar13

20.07

-14.08390411

25.29999924

19.47999954

AMAX HOLDINGS LT

0.061

-29.88506

0.119

0.055

COTTON NO.2 FUTR Dec12

72.89

-0.491467577

-17.01958106

97.98999786

64.61000061

BOC HONG KONG HO

24.25

-0.2057613

31.79348

24.95

14.24

5380525

CENTURY LEGEND

0.247

7.391302

0.335

0.204

3.73

1.084011

33.21429

3.74

2.3

328774

CHINA OVERSEAS

19.12

-1.137539

47.46944

20.4

9.979

32131993

CHINESE ESTATES

10.38

5.810398

-16.96

13.26

8.3

222839

CHOW TAI FOOK JE

10.76

-1.465201

-22.70115

15.16

8.4

3121250

EMPEROR ENTERTAI

1.51

1.342282

36.03603

1.57

0.97

710000

FUTURE BRIGHT

1.16

2.654867

176.1905

1.24

0.3

1374000 17022677

CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

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

FTSE 100 INDEX

5824.4

-0.4821772

4.524542

5989.07

DAX INDEX

7406.33

-0.6077873

25.56613

7478.53

GALAXY ENTERTAIN

24.85

74.50843

25.95

8.69

HANG SENG BK

116.9

0.6890612

26.85838

117.9

84.4

653335

4868.6

HOPEWELL HLDGS

26.95

0.3724395

35.6999

27.3

18.56

1126164

4973.92

HSBC HLDGS PLC

73.45

-0.877193

24.49153

74.15

8644945

HUTCHISON TELE H

3.47

0.5797101

16.05351

3.88

2.53

6564000

LUK FOOK HLDGS I

24.7

-0.4032258

-8.85609

37.1

14.7

3431000

MELCO INTL DEVEL

6.9

0.1451379

19.58406

8.28

4.3

866000

13.22

-1.783061

37.82098

14.76

7.6

1199697 3460000

NIKKEI 225

9069.29

-0.4468716

7.26097

10255.15

8135.79

HANG SENG INDEX

20694.7

-0.1940686

12.26137

21760.33984

16170.35

CSI 300 INDEX

2215.516

0.7481823

-5.551584

2781.99

2172.878906

TAIWAN TAIEX INDEX

7768.3

0.1767985

9.844625

8170.72

6609.11

MIDLAND HOLDINGS

4.78

2.35546

20.8888

5.217

2.887

NEPTUNE GROUP

0.18

-2.173913

62.16216

0.222

0.08

8021500

NEW WORLD DEV

11.4

1.06383

82.10862

11.64

6.13

21087675

SANDS CHINA LTD

4720887

KOSPI INDEX

2003.44

0.05343668

9.733037

2057.28

1644.11

S&P/ASX 200 INDEX

4385.473

-0.5176156

8.108165

4448.5

3840.2

4200.914

-1.029703

9.914257

4272.829

3217.951

FTSE Bursa Malaysia KLCI

1612.38

-0.6971731

5.334058

1655.49

1310.53

NZX ALL INDEX

838.176

-0.1019033

14.85005

847.344

712.548

JAKARTA COMPOSITE INDEX

MGM CHINA HOLDIN

28.25

-0.528169

28.70159

33.05

14.9

SHUN HO RESOURCE

1.25

1.37

0.82

SHUN TAK HOLDING

3.05

1.328904

19.18121

3.51

2.241

2476013

SJM HOLDINGS LTD

16.14

-0.7380074

29.06284

17.614

10.079

3322595

SMARTONE TELECOM

15.56

0.6468305

15.77381

17.5

9.8

3834000

WYNN MACAU LTD

20.55

-1.674641

5.384615

25.5

14.62

6945731

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

PHILIPPINES ALL SHARE IX

3547.67

0.4908876

16.50651

3558.72

2695.06

HSBC Dragon 300 Index Singapor

603.73

0.72

21.64

STOCK EXCH OF THAI INDEX

1285.34

-0.0715252

25.35989

1288.57

843.69

HO CHI MINH STOCK INDEX

390.37

-1.292101

11.04253

492.44

332.28

BOC HONG KONG HO

3.3

4.761905

37.66132

3.3

1.81

2500

Laos Composite Index

1067.27

1.844571

18.65675

1067.27

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 25, 2012

Opinion Blood sport politics Anne-Marie Slaughter Former director of policy planning in the U.S. State Department (2009-2011), is Professor of Politics and International Affairs at Princeton University

ormer U.S. President Bill Clinton gave one of the best speeches of his life at the recent Democratic National Convention. One of the biggest rounds of applause came when he said that President Barack Obama’s appointment of Hillary Clinton as his Secretary of State after she had been his principal political rival proved that “democracy does not have to be a blood sport.” That applause reflected the view of the majority of American voters that U.S. politics has become much too partisan, and that rivals are more interested in attacking each other – “drawing blood” – than they are in focusing on political issues. But what President Clinton was really saying was that Secretary Clinton’s ability to go to other countries and work with her former political rival in pursuit of the national interest is a powerful example of the way democracy is supposed to work. That is an important point to make, because in far too many countries democracy remains – literally – a blood sport. The value of the ballot is to seize power and then harass, detain, or even kill your opponents. As the slogan goes: “One man, one vote, one time.” Indeed, the National Endowment for Democracy in the U.S. describes some countries as “electoral dictatorships.” Many fear precisely such an

outcome for the Arab awakening, with popular movements toppling despots, only to install new dictators via elections. The only way to avoid it is to be more committed to the process of electing a government freely and fairly than to the leader or party that is elected, even when the victor is frankly inimical to your interests. That is also the conundrum of U.S. policy in the Middle East in the midst of ongoing revolution.

Clear principle For 30 years, the U.S. government supported secular rulers who justified their iron grip on power by insisting that the choice was between them and “the Islamists” – whom they portrayed as religious zealots bent on taking their countries back to the Middle Ages. Now the U.S. must convince sceptical populations that it is prepared to do business with elected Islamist governments. People who have come to believe in U.S. omnipotence and determination to pursue its interests in their region cannot easily believe that its government is suddenly prepared to endorse an outcome that it did not want. Indeed, some Coptic Christian and liberal parties protested against Hillary Clinton during her visit to Egypt this past June, because, in their view, the U.S. must have wanted the Muslim Brother-

hood to come to power. Future U.S. policy must embody a simple but powerful principle: America will engage with and support (through various kinds of foreign assistance) any government chosen through internationally monitored free and fair elections that then governs according to a popularly ratified national constitution, with compliance overseen by an independent judiciary. Americans do not believe that liberal democracy is the best form of government

Many fear precisely such an outcome for the Arab awakening, with popular movements toppling despots, only to install new dictators via elections

because what “the people” want is automatically right or good, but because it pits interest against interest. As James Madison wrote in The Federalist Papers, “It is of great importance in a republic not only to guard the society against the oppression of its rulers, but to guard one part of the society against the injustice of the other part.” A genuinely representative assembly in the twenty-first century will not establish a polity that tolerates political prisoners, censorship, oppression of minorities and women, torture, disappearances, or detention without trial. Governments that live by their constitutional principles, even when they are imperfectly interpreted and applied, should avoid slipping back into dictatorship and are likely to be self-correcting over time.

Power of example As long as governments operate within these broad parameters, the U.S. should look to itself before passing judgment on others. Vice President Joseph Biden also gave a powerful speech at the Democratic convention, in which he quoted a line from Obama’s inaugural address: the U.S. should lead in the world not by “the example of our power, but by the power of our example.” Unfortunately, in terms of democratic prac-

tice, that example is badly tarnished at the moment. The U.S. Supreme Court has interpreted the U.S. Constitution in a way that vitiates all restrictions on campaign spending, essentially allowing wealthy American individuals and corporations to buy elections. T h e s u p p o r t o f a multi-millionaire now counts vastly more than that of an ordinary citizen, making a mockery of the principle of “one man, one vote.” Moreover, both major U.S. parties routinely use their power when they win to redraw electoral districts’ lines to favour themselves and hurt their opponents. And, in some states, the Republican Party is openly trying to impede voting by requiring citizens to show official photo identification, which can be difficult and expensive to obtain. These requirements are a new version of the poll tax, which Democrats in the American South used for years to disenfranchise African-American voters. Democracy can work properly only if all citizens’ operative principle is: “I may hate what you stand for, but as long as you are elected fairly and govern constitutionally, I will defend to the death your right to compete and win.” If democracy is to be any sport at all, all players must abide by the rules of the game. © Project Syndicate

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

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September 25, 2012 business daily | 15

OPINION How high oil prices will wires permanently cap economic growth Business

Leading reports from Asia’s best business newspapers

(Part 1) Jeff Rubin

Business World The government has fixed the key dates for its October retail Treasury bond (RTB) sale where it hopes to raise at least P60 billion (US$718.4 million). “The offer period of the RTB sale is set on October 9-22,” Lilia G. Baun, Development Bank of the Philippines (DBP) corporate banking sector head told. “The issue date is October 24,” she added. Deputy Treasurer Eduardo S. Mendiola had said the government had decided on the 25-year securities as part of moves to lengthen its debt maturity profile.

Nation The central bank of Thailand is carefully monitoring personal loans, the property market and household finances to prevent asset bubbles from forming and household debt from exploding while weighing the risks of slower growth against high bank lending before making a move on interest rates. “While the risk of inflation has subsided, the risk of economic slowdown has increased,” Paiboon Kittisrikangwan, assistant governor, said last week. Global inflation has eased as oil prices have dropped recently, so the threat of inflation in Thailand has abated, he said.

Korea Post The price of gasoline sold in Korea has more than doubled since 1997 when the country lifted restrictions on oil prices, industry data showed yesterday. According to the data compiled by the Korea National Oil Corporation (KNOC), the gasoline price at the pump averaged 1,929 won (US$1.73) per litre last year, up 130 percent from 838 won in 1997. The KNOC data showed the gasoline price has risen at an annual average of 7.9 percent for the 14-year period.

Jakarta Post Pertamina EP, the upstream business unit of Indonesian stateowned oil and gas company PT Pertamina, expects to squeeze additional oil production of 4,000 barrel of oil per day (bpd) throughout the year from its well reactivation project. Under the reactivation program, which started last year and will continue until 2015, Pertamina EP plans to revive the operation of 400 old wells a year. The company needed to allocate around US$80 million to complete the project.

Former chief economist and chief strategist at CIBC World Markets Inc.

or most of the last century, cheap oil powered global economic growth. But in the last decade, the price of oil has quadrupled, and that shift will permanently shackle the growth potential of the world’s economies. The countries guzzling the most oil are taking the biggest hits to potential economic growth. That’s sobering news for the U.S., which consumes almost a fifth of the oil used in the world every day. Not long ago, when oil was US$20 a barrel, the U.S. was the locomotive of global economic growth; the federal government was running budget surpluses; the jobless rate at the beginning of the last decade was at a 40-year low. Now, growth is stalled, the deficit is more than US$1 trillion and almost 13 million Americans are unemployed. And the U.S. isn’t the only country getting squeezed. From Europe to Japan, governments are struggling to restore growth. But the economic remedies being used are doing more harm than good, based as they are on a fundamental belief that economic growth can return to its former strength. Central bankers and policy makers have failed to fully recognise the suffocating impact of US$100-a-barrel oil. Running huge budget deficits and keeping borrowing costs at record lows are only compounding current problems. These policies cannot be long-term substitutes for cheap oil because an economy can’t grow if it can no longer afford to burn the fuel on which it runs. The end of growth means governments will need to radically change how economies are managed. Fiscal and monetary policies need to be recalibrated to account for slower potential growth rates.

Energy source Oil provides more than a third of the energy we use on the planet every day, more than any other energy source. And you can draw a straight line between oil consumption and gross-domestic- product growth. The more oil we burn, the faster the global economy grows. On average over the last four decades, a 1 percent bump in world oil consumption has led to a 2 percent increase in global GDP. That means if GDP increased 4 percent a year – as it often did before the 2008 recession – oil consumption was increasing by 2 percent a year. At US$20 a barrel, increasing annual oil consumption by 2 percent seems reasonable enough. At US$100 a barrel, it becomes easier to see how

a 2 percent increase in fuel consumption is enough to make an economy collapse. Fortunately, the reverse is also true. When our economies stop growing, less oil is needed. For example, after the big decline in 2008, global oil demand actually fell for the first time since 1983. That’s why the best cure for high oil prices is high oil prices. When prices rise to a level that causes an economic crash, lower prices inevitably follow.

Running huge budget deficits and keeping borrowing costs at record lows are only compounding current problems

Over the last four decades, each time oil prices have spiked, the global economy has entered a recession. Consider the first oil shock, after the Yom Kippur War in 1973, when the Organization of Petroleum Exporting Countries’ Arab members turned off the taps on roughly 8 percent of the world’s oil supply by cutting shipments to the U.S. and other Israeli allies.

Crude prices spiked, and by 1974, real GDP in the U.S. had shrunk by 2.5 percent. The second OPEC oil shock happened during Iran’s revolution and the subsequent war with Iraq. Disruptions to Iranian production during the revolution sent crude prices higher, pushing the North American economy into a recession for the first half of 1980. A few months later, Iran’s war with Iraq shut off 6 percent of world oil production, sending North America into a double-dip recession that began in the spring of 1981.

Kuwait invasion

the time. The first Gulf War disrupted almost 10 percent of the world’s oil supply, sending major oil-consuming countries into a recession in the fall of 1990. Guess what oil prices were doing in 2008, when the world fell into the deepest recession since the 1930s? From trading around US$30 a barrel in 2004, oil prices marched steadily higher before hitting a peak of US$147 a barrel in the summer of 2008. Unlike past oil price shocks, this time there wasn’t even a supply disruption to blame. The spigot was wide open. The problem was, we could no longer afford to buy what was flowing through it. Bloomberg View

When Saddam Hussein invaded Kuwait a decade later, oil prices doubled to US$40 a barrel, an unheard-of level at

(For editorial reasons, this article is published in two parts. The second and final part will be published in tomorrow’s edition)

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business daily September 25, 2012

CLOSING Italy must stick to reforms: OECD

Royal Bank of Scotland cuts jobs

Italy must resist the temptation to go back on key reforms launched by Prime Minister Mario Monti’s government since they are crucial for the future of Europe, the OECD said yesterday. “No to the temptation to go back and dismantle the reforms that have been accomplished!” Angel Gurria, the head of the Organisation for Economic Cooperation and Development said in Rome. Mr Gurria said the reforms “have been necessary for a long time” and were “courageous, ambitious and vast”, adding: “This is not just about the future of Italy but also the future of the European construction.”

Royal Bank of Scotland Group Plc said it would cut 300 more jobs at its investment banking unit and is “on track” with its plan to exit businesses. RBS will eliminate 3,800 jobs at the division by the fourth quarter of next year, according to a presentation to analysts. About 3,000 of the cuts will have completed by the end of this year, RBS said. Chief executive Stephen Hester has cut assets by more than 800 billion pounds (US$1.3 trillion), eliminated 36,000 jobs and scaled back RBS’s securities and Irish units since he took over in 2008.

Europe must not slacken in its reforms, says Van Rompuy EU president vows fresh urgency on euro crisis

Herman Van Rompuy, left, says European leaders have to ‘deal with the hard questions on the euro’

uropean Union President Herman Van Rompuy called yesterday for a fresh sense of urgency in tackling the eurozone debt crisis in the run up to a “crucial” summit of national EU leaders next month. “Europe is on the way out of the crisis,” Mr Van Rompuy said in a video statement before attending

the UN General Assembly in New York this week. But amid stalemate over the need or otherwise for a full Spanish sovereign bailout, over whether to give Greece more time to meet budget and reform commitments and over how far and fast to push eurozone and EU banking union, Mr Van Rompuy warned against complacency.

“As long as 25 million people ... are looking for a job and as long as we have not yet fully stabilised the euro, we cannot sit back and I will make sure that we will not sit back,” he said. Mr Van Rompuy said he detected around national capitals “a tendency of losing the sense of urgency” on both short- and long-term

issues, and stressed: “This must not happen.” The upcoming October 18-19 summit must “deal with the hard questions on the euro,” he said, referring to faults in the design of the single currency. He said that “some elements were missing from the [euro’s] structure.” Accordingly, the summit will “discuss very concrete plans” for closer political, economic and currency union – “something that should have been done a long time ago,” he said. Efforts to put the EU on a stronger footing were not just for the sake of sound budgets but “for growth and jobs and for our common future,” he added.

Budget struggle Sharp differences have once more emerged between France and EU powerhouse Germany over how to implement plans for tighter EU policy coordination, after the European Central Bank acted to reduce pressure on financial markets. France nevertheless wants to convince Spain to accept

a full debt bailout under the EU’s new machinery, offer Greece more time to meet the terms of its rescue and accelerate plans to set up a cross-border banking union. The eurozone has already agreed to lend up to 100 billion euros (US$130 billion) to Spain’s stricken banks. Germany is notably cool on upgrading that aid into a full bailout, but it also wants the EU to take a slow but steady approach on the banking sector reforms. Senior EU officials are also warning that it is proving harder than ever to reach an agreement on the European Union’s next multi-annual budget. Ministers were meeting yesterday for further talks and EU leaders will hold a special summit in November to try to strike a budget deal. The European Commission has proposed an overall budget of 1,033 billion euros (US$1,337 billion) for 20142020. But Britain and others say it should be about 100 billion euros less than that. Every six years or so, the EU has a big political fight about the size and structure of its next multi-annual budget. Reuters

Total to sell US$20 bln of assets by 2014 Oil company raises output goal

otal SA, Europe’s third-largest oil company, plans to sell as much as US$20 billion in assets to raise cash for oil and gas projects. The French oil company expects to increase output an average of 3 percent a year from 2011 to 2015, compared with an earlier goal of 2.5 percent a year, according to a statement. Paris-based Total gave a longer-term target for the first time, saying production will reach about 3 million

barrels of oil equivalent a day in 2017. Total said it would try to sell US$15 billion to US$20 billion of assets between 2012 and 2014 to cement “active portfolio management” as part of its strategy. Chief executive Christophe de Margerie said the outlook for cash flow gave the company the scope to increase dividend payments and invest in production. Total has pledged to step up the search for oil and gas while selling mature fields

and reducing exposure to European refining. The strategy has seen Total move into so-called frontier nations including French Guiana and Kenya, while continuing to invest in large production projects in Kazakhstan, Canada and Australia. “For the 3 million barrel a day target by 2017, you should note that 70 percent of the projects are either in production or in development,” said Patrick de la Chevardiere, Total chief financial officer, at

Total has pledged to step up the search for oil and gas

a briefing in London. The company’s newer projects are more profitable than the rest of its portfolio, he said. “We are enforcing our active portfolio management.” “Total’s bold exploration programme is focused on high-risk, high-reward prospects, and new acreage has added to the potential for giant discoveries,” the company said.

The company, which plans to accelerate free cash flow growth between 2015 and 2017, said yesterday the restructuring of its refining and chemicals division that’s under way will add US$650 million a year to net results by 2015. Refining profits are about US$60 a ton at present, Mr de la Chevardiere said in London. Bloomberg