Macau Business Daily, September 26, 2012

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www.macaubusinessdaily.com

Year I Number 127 Wednesday September 26, 2012

Editor-in-chief: Tiago Azevedo

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

LVS break-up idea splits market Las Vegas Sands Corp could see the value of its shares almost double if it spun off its shopping-mall and hotel properties into two real estate investment trusts, a former senior global real estate strategist at Citigroup suggested. But analysts are split on the idea, warning that non-gaming properties in Macau are still relatively under developed. Page 3

Macau investors struggle to find their way T

he worsening economic conditions in mainland China are the main reason behind a decline in Macau’s cross-border investment during the first seven months of this year, legal adviser Carlos Duque Simões says. From January to July, investment projects from Macau worth US$310 million (2.48 billion patacas) were approved, a decline of 11 percent year-on-year. But the decrease was even steeper in July, when total capital deployed shrank by 42.9 percent.

The drop reflects an overall trend in foreign direct investment in China, which fell to the lowest level in two years this July. Companies here might have an easier access due to the Mainland and Macau Closer Economic Partnership Arrangement but many obstacles remain, Mr Simões warned. Paperwork and government red-tape are a major burden and Macau investors have limited resources to deal with such challenges, he said. More on page 5

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HANG SENG INDEX 20750

20725

20700

20675

20650

September 25

Govt must fork out on recycled water

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Non-resident labour soars, except HK

La Scala freeze hits Chinese Estates’ sales Page 4

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HSI - Movers Name

%Day

ESPRIT HLDGS

4.25 1.77

CHINA RES LAND

1.45

NEW WORLD DEV

1.40

MPEL’s stake in Studio City could get higher

CTM fined for second blackout

CHINA RES ENTERP

HENGAN INTL

1.26

Melco Crown Entertainment Ltd and its partners will invest an additional US$350 million (2.8 billion patacas) in equity capital toward the Macao Studio City project on Cotai, the company said in a filing to the Hong Kong Stock Exchange yesterday. According to MPEL’s statement, an option in the agreement allows its partners six months to deliver its 40 percent share of the US$350 million. If not, MPEL would increase its stake in Studio City to 67 percent by investing the full amount itself through its subsidiary MCE Cotai Investments Ltd. MPEL acquired a 60 percent stake in Studio City in July last year for US$260 million. The deal comes as the long-running story of whether the Studio City has the right to a casino took a new twist. Macau’s Secretary for Economy and Finance, Francis Tam Pak Yuen, said last Friday that MPEL’s Studio City will be one of five Cotai projects for which new casino tables may be allocated.

Telecommunications provider Companhia de Telecomunicações de Macau SARL (CTM) got a second fine for a service breakdown in May, the second in less than six months, the regulator confirmed yesterday. However, the government is yet to make any decision on whether to break CTM’s monopoly or on the fate of the 2G mobile services after next year’s transition. Page 6

IND & COMM BK-H

-1.32

COSCO PAC LTD

-1.46

CHINA MERCHANT

-1.15

HONG KONG EXCHNG

-2.61

CITIC PACIFIC

-4.09

Source: Bloomberg

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business daily September 26, 2012

macau

Gaming wages reaching plateau SJM chief sees no major change in salary level for gaming staff in next few years Xi Chen

xi@macaubusinessdaily.com

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alaries of employees in the gaming industry will not see a significant increase in the coming years, Ambrose So Shu Fai, chief executive of casino operator SJM Holdings Ltd, told Business Daily yesterday. During the company’s celebration of the People’s Republic of China 63rd anniversary, Mr So stressed the importance of its staff in making SJM a famous Macau brand. SJM, the largest gaming operator in the territory by market share, currently has 20,000 employees, Mr So said. The executive said he could not predict how many more employees the company would hire in the future, as all the projects under planning – including a Cotai resort – would only be completed in at least three years’ time. He added that the number of employees would also depend on the size of the non-gaming elements. A dealer, who has been with the company and its predecessor Sociedade de Turismo e Diversoes de Macau (STDM) for over four decades, told Business Daily the group had over 30,000 employees at its peak. With the casino boom in the territory in the last 10 years, gaming employees have been hot commodities. SJM managing director Angela

Average monthly wage for employees in the gaming industry stood at 17,740 patacas in June

Leong On Kei told Business Daily that labour shortage is still an ongoing issue and new casinos could poach staff away from existing ones. She said that the company would continue to focus on internal training and welfare improvement to better retain its staff. But an SJM employee present at the

event, who did not disclose her name, said that the best way for the company to improve workers’ quality of life would be to further increase salaries. Average monthly wage for employees in the gaming industry has increased 22 percent in the last five years from 14,491 patacas (US$1815) to 17,740 patacas

in June this year, according to government statistics. In the first half of 2012 alone, gaming staff earnings rose by 7.78 percent year-on-year. However, yearly inflation remains high in the territory, hitting 6.3 percent in August and erasing most of the purchasing power improvement.

MGM China shareholder profit up 38pct in first half

MGM China is creating a new VIP table games area in MGM Macau

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rofit attributable to MGM China Holdings Ltd shareholders for the six months to June 30 rose 37.7 percent year-onyear to HK$2.63 billion (US$339.23 million) according to the company’s 2012 interim report. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 11 percent to HK$2.75 billion. That was despite a 0.5 percent fall in VIP table games turnover in the period, to HK$336.30 billion, although VIP revenue rose seven percent to HK$7.10 billion. “The decreases in [VIP] turnover primarily resulted from new gaming capacities and competition brought online by our competitors in May 2011 and April 2012,” said the report filed with the Hong Kong Stock Exchange on Monday. “The negative impact is partly offset by incremental VIP business in response to our new gaming products and new in-house VIP gaming areas, converted from

a number of high-end villas and the VIP spa area, with a total of 63 tables in 2011, and the addition of two new gaming promoters in October 2011 and January 2012,” it added. MGM China is currently creating a new VIP table games area on the second floor of MGM Macau. “This project will deliver a high quality product to house over 40 VIP gaming tables,” said the report, adding that the company would be looking to improve the efficiency of all its existing table allocation. Citywide the market is subject to a 5,500-table cap until next year. “It is our goal to increase revenue and productivity while re-examining the existing resource allocation,” the company stated. Revenue from main floor gaming operations increased by 16.4 percent to HK$2.66 billion for the six months to June, while revenue from slot machine operations increased by 31.2 percent to HK$1.03 billion. A.E.


September 26, 2012 business daily | 3

MACAU The Venetian Macao – possible target for REIT spin off?

Break up of LVS would ‘double’ investor value Former Citigroup strategist suggests REIT spin offs for hotels, malls Associate Editor

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nalysts have given a mixed response to a call by a real estate expert for Las Vegas Sands Corp. to break the business into three separate units. Jonathan Litt, former senior global real estate strategist at Citigroup Inc., suggested in a report this week the LVS parent would be worth US$85 (679 patacas) a share if it spun off its shopping-mall and hotel properties into two real estate investment trusts (REITs), with the rest of the company remaining a pure casino owner. The company has operations in Macau and Singapore, as well as Las Vegas and Pennsylvania in the United States. “LVS is a property company and when valued as such it can be a double to current pricing,” said Mr Litt, who now runs a Greenwich, Connecticut-based U.S. investment firm called LandandBuildings. At the close of trading on Monday Wall Street time, LVS shares on the New York Stock Exchange were valued at US$45.31 according to data from Reuters. In Hong Kong yesterday, the shares of Sands China Ltd were at HK$28.60 (US$3.69), up 1.24 percent on the day. Sands China, the Macau operating unit, is 70.3 percent owned by LVS following an initial public offering in 2009.

Growth business “LVS is a growth company at a value price at half the multiple of REITs despite twice the growth,” stated Mr Litt in his report. None of the analysts contacted by Business Daily were willing to be quoted by name on the REIT issue. But one said: “I don’t think they

[LVS] will do that…. They have already spun off Sands China. So I think it’s unlikely they will break up the remaining business as they have no pressing funding need.” In July Standard & Poor’s, a ratings agency, said it was considering raising LVS to investment grade if it maintained a debt to equity ratio of around 3:1. As of December 2011 LVS had been maintaining that level of leveraging said S&P in a prior report in April. LVS said last week it planned to raise up to US$900 million in fresh bank loans for a US$2.5 billion Paris-themed resort on Cotai. Another analyst said of the REIT spin off suggestion: “When it comes to building shareholder value, I don’t think the company would rule out any options.” A third said: “I think it’s a possibility, but it’s a question of valuation. Non-gaming properties in Macau are still relatively under developed. The company would not want to sell out too cheaply relative to its original investment.”

Majority owner Pivotal to any such decision would be Sheldon Adelson, chairman and chief executive of LVS. He owns 424 million shares, or almost 52 percent, of Las Vegas Sands, according to data compiled by Bloomberg. In Macau LVS has more hotel, retail, and conference real estate than any other single investor and more than a number of investors combined. Sands China’s Macau assets had a net book value of approximately US$6.99 billion as at June 30 according to the 2012 interim report filed with the Hong Kong

Stock Exchange. The net leasehold valuation of its Marina Bay Sands site in Singapore was US$1.06 billion as of December 31 last year according to LVS’s 2011 annual report. One potential due diligence issue for anyone interested in buying into LVS’s Macau real estate is how to measure its true market value. The attraction of REITs for equity investors is stable income and low risk. But this relies on the assets being physically located in a legally transparent and liquid property market. REITs typically return value to shareholders by returning most of the profit from shop leases and other revenue streams in the form of dividends. But the most important indicator of underlying value for a REIT – and what makes them regarded as

KEY POINTS Former Citigroup strategist calls for REIT spin offs for LVS hotels, malls Jonathan Litt says could near double share price to US$85 LVS and Sands China trading at combined value of US$49 overnight Mixed reception from analysts for the idea

a ‘safe’ asset by more conservative institutional equity investors such as mutual funds – is net asset value. This is the value of the REIT’s assets net of liabilities such as mortgage costs and depreciation. Cotai, where most of LVS’s Macau real estate is built, is not yet proven as a liquid commercial property market, say legal experts.

Title issues One issue is who will retain title to the real estate when LVS’s current Macau gaming concession ends in June 2022. Most importantly there’s the question of whether the Macau government will allow LVS and other casino operators with non-gaming property on Cotai to create legal entities into which they can inject their assets in order to sell title on the market. This is what LVS has been asking for since 2008 with the apartment tower at The Four Seasons Macao. The right to sell apartments at the Four Seasons is likely to be worth between US$800 million and US$1.2 billion net to LVS according to analysts’ estimates. That amount is arrived at after deducting construction and pre-opening costs for the Four Seasons apartment tower of US$115 million – a figure mentioned in LVS’s annual report for 2010 – from potential market value. LandandBuildings, also known as Land & Buildings Investment Management LLC, held 79,600 shares of Las Vegas Sands as of June 30, the firm said in a filing with the U.S. Securities and Exchange Commission. No comment was available from LVS at the time of going to press. With Bloomberg

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business daily September 26, 2012

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HOSPITALITY Fortune’s wheel Gambling has been the driving force behind Macau’s economic boom and the industry has changed a lot since 2004. The most visible sign of change is its growth but its structure has also changed. The gambling sector includes not only casinos, its most visible and dynamic part, but also other activities, such as lotteries and sports betting. The latter was never of the same order as the former but it has been dwarfed since the gambling monopoly ended.

Cheap recycled water only with subsidies Government subsidies are required to make the recycled water project ‘cost-effective’ Tony Lai

tony.lai@macaubusinessdaily.com

The supply of recycled water would require an initial investment of at least 630 million patacas on facilities (Photo: Manuel Cardoso)

R The graph above illustrates the ratio between the casinos’ revenue and revenue from other gaming activities. At the beginning of 2005, the casinos earned about 26 times the amount generated by lotteries and betting. Within two years, that value was oscillating around a multiple of 100 times. Since May last year, it has consistently been above 200 times and has broke the 300-times barrier in May and August. This is the result not only of the expansion of casinos but also of a contraction in the city’s other gaming activities. Revenue generated by the lotteries and on sports betting dropped from above 100 million patacas in the middle of 2005 and have rarely reached similar heights. The average monthly revenue over the past seven years has been about 87 million patacas, with some great variation, and has only occasionally reached 100 million patacas or more.

ecycled water would be 15 percent cheaper than the usual tap water but only if government subsidies are granted to cover its high operation costs, a survey suggests. The Maritime Administration commissioned Singapore-based CPG Corporation Pte Ltd to carry out a study on Macau’s 10-year future use of recycled water – treated wastewater. The report, released on a conference held yesterday, proposes the price of future recycled water could be set at 85 percent of the tap water rate to “encourage more people to use it”. Tap water in Macau is currently charged at anywhere between 4.35 patacas (US$0.54) and 5.27 patacas per cubic metre, according to the amount of water used.

But CPG points out that the operation costs of reclaimed water would be at least 3.69 patacas per cubic metre, together with an initial investment of at least 630 million patacas (US$78.9 million) on suitable facilities. Such spending will be higher than the costs of tap water, said the report, adding “the reclaimed water project will not be cost-effective without either the adjustment on the price or reliance on the government subsidies”. Maritime Administration director Susana Wong Soi Man agrees that the recycled water rate has to be set slightly lower than the tap water to “encourage proper use but not over-use of the water”. She said on the sidelines of the conference that the study – for which the government paid about

2.1 million patacas – would serve as the “theoretical foundation” of the 10-year plan on the city’s reclaimed water development. The administration hopes to carry out a two-month consultation on the matter and release the revised plan this year. But at this point authorities are not considering providing recycled water to the old neighbourhood districts in the Macau peninsula due to its density and the difficulties in establishing relevant facilities in the area, Ms Wong added. The report suggests the administration should prioritise recycled water supply – mainly for flushing toilet and irrigation – to Cotai, Seac Pai Van, northern district of Taipa, Ilha Verde and the five new reclaimed zones.

HK labour yet to recover from crisis With hotels and restaurants hiring, non-resident workers continue to rise but Hong Kong remains exception Vítor Quintã

vitorquinta@macaubusinessdaily.com

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Revenues generated by the casinos seem to have no limit. From typically below 4 billion patacas a month for most of 2005, revenue increased steadily until 2008. For more of that year, revenues appeared to have reached a plateau, and declined in the later part of that year and the first half of 2009. Revenue has risen sharply to more than 20 billion patacas a month since then. In the first eight months of this year, monthly revenue stabilised at around 25 billion patacas. J.I.D.

our years after hitting a historic high, the number of non-resident workers from Hong Kong has yet to recover, falling a third consecutive month, even as overall imported labour continues to set new records. According to data released by the Human Resources Office yesterday, there was 5,247 non-resident staff from Hong Kong at the end of last month, down by more than 100 from July. The current figures are a far cry from August 2008, before the global financial crisis first battered Macau, when Hong Kong was the second biggest supplier of imported labour,

with 16,445 workers. Now the neighbouring territory is just fourth on the ranking, behind mainland China (65,048 nonresident staff), Philippines (15,567) and Vietnam (9,514). Hong Kong’s decline is the exception on Macau’s imported labour figures, which show that a further 2,463 outside workers were hired in July alone. This is second highest-ever monthly figure after February’s 3,087 employees and it helped set a new record (107,401) for a second consecutive month. Most of the new staff (951) joined hotels or restaurants, which means

this sector has hired almost 1,900 people in just two months. This hiring boom is not surprising considering that more than one out of every 10 job posts in restaurants were vacant in March, with close to 3,400 vacancies, according to official data. In addition, the construction industry, still beaming from the launch of the second phase of Galaxy Macau and Wynn’s Cotai resort, hired a further 370 non-resident employees. Meanwhile, anti-illegal work operations launched by the Public Security Police and the Labour Affairs Bureau nabbed a total of 35 people without a valid work permit.


September 26, 2012 business daily | 5

MACAU

China investment slide reflects frail economy Fewer investors are seeking out business opportunities in the mainland, reflecting a world-wide trend Xi Chen

xi@macaubusinessdaily.com

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ainland investment by Macau businesses has declined relentlessly during the first seven months of this year, according to economic data released by the Ministry of Commerce on Monday. Beijing approved 154 investments from Macau businesses worth US$310 million (2.48 billion patacas) which was slighter fewer projects than at the same time last year and a 11 percent fall in value. There was a steep decline in July, with 23 approvals for US$40 million of projects, a 42.9 percent fall. “Not only have Macau’s cross-border investments declined but worldwide investment in China has declined as well,” said DSL Lawyers Macau managing partner Carlos Duque Simões. “It is a reflection of the worsening economic conditions in China.” He said falling investment in mainland projects also reflected the competitive nature of finding good business opportunities. Foreign direct investment in the mainland fell to its lowest level in two years in July. Bloomberg reported that investment fell 8.7 percent to US$7.58 billion compared to the

Macau’s direct investment in the mainland is mainly directed into the services sector

same time last year. “People realise that there are a lot of opportunities but there are also many obstacles for doing business in China, such as paperwork and government redtape,” Mr Simões said.

Limited resources Mr Simões said although Macau investors enjoyed greater

advantages in seeking out mainland investments, they were also constrained by limited resources. “One cannot do a linear comparison between Macau and other countries when investing in China,” he said. “When facing the same difficulty, other countries with larger companies might have more resources to overcome it.” The Ministry of Commerce

says Macau has provided about 0.87 percent of the mainland’s total foreign direct investment since 1990. Most capital is directed into the services sector, including logistics, transportation and entertainment, according to Mr Simões. He said the investment decline was not necessarily an indication that the Closer Economic Partnership Arrangement was ineffective. But he said the government here needed to be more targeted in promoting trade and investment opportunities. Under the Cepa agreement, made-in-Macau products are exempt from mainland import duties. Macau businesses also enjoy preferential access to 43 service sectors, and that will increase to 48 by January, under the terms of the latest supplement to the agreement signed in July. Trade between Macau and the mainland in July was worth US$200 million, a month-on-month fall of 19 percent. However total bilateral trade in the first seven months of this year has increased by 6.8 per cent to US$1.5 billion.


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business daily September 26, 2012

macau First four-city tourism deal inked

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Tourism authorities from Macau, Hong Kong, Shenzhen and Zhuhai signed the first-ever four-city tourism cooperation agreement yesterday in Shenzhen. The four cities will each set up a tourism liaison team to regularly exchange information on management practices and tourism policies. The new agreement aims to strengthen cooperation and communication among the four cities to promote multi-destination tourism and attract more international visitors. The deal is also aimed at further improving the quality of tourism management and services in the four cities.

Price leaders Data from the Statistics and Census Service reveals the prices of some important products increased again last month. And compared to the first year in this analysis, 2007, almost all of the components of the CPI have grown. Over the past five years (almost), the consumer price index has risen by 27.7 percent. That is the equivalent of an annual average growth of about 4.4 percent. Nothing too impressive, you might say, particularly when the economy has been growing at a double-digit rate. Moreover, in 2007, the inflation rate was approaching a rate close to 9 percent and that was only tamed by the 2008 financial crisis.

CTM cops fine for second blackout Telco provider will face a second, as yet undisclosed, fine for a two-hour service shutdown in May Tony Lai

tony.lai@macaubusinessdaily.com

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The graph above displays the average annual growth in the three components of the index that grew the most in the past five years, and the two components of the index that saw prices fall. The fastest growing component of the index is food and non-alcoholic beverages. It rose by about 53.4 percent, which is an annual average rate of 7.8 percent. Food is also the most socially most sensitive part of the overall index. The second biggest annual increase was in health, another important contributor towards the quality of life. The average annual increase was 5.6 percent. Somewhat surprisingly, clothing and footwear was ranked third. In previous years, prices in this category had either actually decreased or risen at very low rates. Two components that saw prices decline were education and communications, which fell by about 25 percent and 18 percent.

However, both of these components make up only a small proportion of the standard basket of goods used to gauge prices. The two combined represent less than 8.7 percent of the basket, limiting their contribution to reducing prices. Conversely, food and beverages is not only the fastest rising section but also the most significant in terms of consumption. It represents 32.8 percent of the typical basket of goods. The five components in this analysis amount to just over of the public’s typical consumption. J.I.D.

uthorities have decided to penalise Companhia de Telecomunicações de Macau SARL for a two-hour shutdown of its 3G service in May. Telecommunications Regulation Bureau director Lawrence Tou Veng Keong said the inquiry into the service interruption was nearing its “final stage” but he did not reveal the size of the fine. CTM paid a 800,000 pataca (US$100,000) fine for its first blackout in February. Thousands of customers were unable to access CTM’s 3G mobile service, landline-based telecommunications and the Internet for at least six hours. May’s service interruption lasted two hours and affected 3G subscribers only. The company said human error had caused both breakdowns. Speaking to reporters after a forum on cyber security, Mr Tou said the government had not yet decided if older 2G mobile services would continue after the transition to 3G services at the beginning of next year. In a written inquiry on Monday, Legislative Assembly member Chan Meng Kam was told a 2G roaming service for tourists would also be axed after next year’s switch to the newer service. Mr Tou did not rule out the possibility. “At this current stage we have no final decision on how to tackle the [2G] roaming services,” he said. He said it was not “a one-sided decision” because the provision of a 2G service depended on the telecommunications technology available in a tourist’s home market. The bureau was reviewing plans for 2G and 3G services and would have a final decision ready soon.

The switch to 3G was pushed back from July to early next year after the Commission against Corruption said Macau residents would be disadvantaged if a 2G service was offered only to tourists. The ombudsman’s June report recommended keeping both services running in tandem for the next one or two years. “We do not see this as an issue of fairness … Instead, the situation of the usage [of 2G services] by local residents and tourists is one of policymaking,” Mr Tou said yesterday. He did not comment on whether he was confident of a smooth service transition in January. By late July, there were 8,000 2G subscribers, according to the Telecommunications Regulation Bureau.

Fixed-line decision ready by year-end The city could know before the end of the year if the monopoly on landline telecommunications will be broken. Telecommunications Regulation Bureau director Lawrence Tou Veng Keong said yesterday the results of the tender for landline services licence could be announced by the end of the year. Companhia de Telecomunicações de MTEL, Ltda was the only company to lodge a competitive bid in the March tender. Its business plan would include an investment of up to 1 billion patacas (US$125 million) in fixed-line services. Mr Tou told reporters there had been a “a small delay” in assessing the bid. He said the bureau had to be scrupulous. He did not say if MTEL had secured a licence. The bureau had intended to grant two landline licences in the first half of this year to break the monopoly held by Companhia de Telecomunicações de Macau SARL.

Telecommunications regulator Lawrence Tou said there is yet no decision on 2G roaming services for tourists


September 26, 2012 business daily | 7

MACAU

Holiday influx to keep pressure on food costs Restaurants, retailers set to cash in as mainland tourists prepare to travel ahead of Golden Week holiday tiago.azevedo@macaubusinessdaily.com

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that 6 percent inflation or above is an alert to remind the government that certain actions, such as financial

Tiago Azevedo

nflation will not ease anytime soon as Macau prepares to welcome thousands of tourists during next week’s Golden Week holiday, says University of Macau economics professor Henry Lei Chun Kwok. The monthly inflation rate sped up for the first time in three months in August. In year-on-year terms, inflation stood at 6.33 percent. The average annual rate of consumer price inflation for the past 12 months is 6.46 percent, the government reported last Friday. Prices are likely to stay high. Thousands of mainlanders are expected to holiday in Macau to celebrate the Mid-Autumn Festival and the National Day Golden Week vacation. Mr Lei told Business Daily that the tourist influx would provide restaurants and retailers a strong incentive “to mark up their prices” without fear of losing customers. While a tourist wave is expected, Mr Lei says domestic demand will also be strong during the start of the month. “It may also support the level of inflation above the 6 percent,” he said. The government has few policy tools to tackle inflation, said Mr Lei. “Given the market-oriented economic structure, it may be hard for the Macau government to implement policies or any kind [of measures] to directly control the price level,” he said. Inflation has been fuelled by rising food prices, which are forecast to increase further. The annual increase

I believe

support, have to be in food and non-alcoholic drink prices reached 8.44 percent last month. At a meeting with government officials on Monday, the city’s two biggest suppliers of fresh meat said wholesale prices for beef and poultry would probably increase. Economic Services Bureau director Sou Tim Peng said the government was studying the problem but did not have a plan ready to arrest food prices. Mr Sou said rising food prices were primarily caused by increased demand from consumers in Macau

and that the market should be free to regulate prices. Residents are the biggest customers of the city’s restaurants and demand was increasing Mr Lei said. “They have created a strong demand for restaurant services, which have driven up the prices,” he said. He said the city’s younger generation could no longer afford to buy their own home and were instead spending more on consumption, including restaurant meals. Without the tools to curb consumer price inflation, the government

introduced to support the low-income class Henry Lei Chun Kwok, University of Macau economics professor should consider other options to help low-income earners. “I believe that 6 percent inflation or above is an alert to remind the government that certain actions, such as financial support, have to be introduced to support the low-income class,” said Mr Lei.

Strong domestic demand and a tourism surge is expected to keep inflation above 6 percent

La Scala freeze hurts New areas for residents Chinese Estates’ sales until 2049, govt told With work at luxury residential development Outside home buyers should be cut off at a standstill, developer’s sales revenue from new urban zones, legislators say shrank by 97.6 percent in first half

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he dispute over the La Scala housing development has hit Chinese Estates Holdings Ltd, with revenue at the Hong Kongbased property developer falling 97.6 percent in the first half. Gross profit of HK$809.4 million (US$104.4 million) was down by 5.4 percent compared to the same time last year, the company told the Hong Kong Stock Exchange on Monday. The company said the decline was partially due to “a decrease in profit … in property sales” which was offset by an increase in profit from lease deals. With flat sales at La Scala suspended while legal teams prepare for a challenge to the government’s decision to take back the land, sales revenue fell to HK$78 million this year from HK$3.2 billion a year earlier. Chinese Estates presold 302 La Scala units, worth HK$3.8 billion, and received HK$383.1 million in deposits. The company suspended presales

and work at the site after the government declared the original 2006 land concession invalid last month. The government later repealed a second land grant that was issued last year. The court case to decide the legality of the government’s actions is due to start on January 7. The government took back the land after the Court of Final Appeal said a former Secretary for Transport and Public Works, Ao Man Long, took bribes worth HK$20 million in 2005 from Chinese Estates boss Joseph Lau Luen Hung and another businessman, BMA Investment Ltd chairman Steven Lo Kit Sing. Chinese Estates has already appealed against both government decisions. In its latest filing to the court, the company says it is “determined to pursue claims it may have against the Macau government … for the compensation for the losses of the group”. V.Q.

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he New Macau Association has urged the government to restrict the sale of all private housing projects in the five new reclaimed zones for Macau residents only until 2049. “At least half of the residential area in the five new reclaimed zones should be used for public housing while the rest should be developed as private housing projects for Macau residents only,” legislator and association member Paul Chan Wai Chi said. The overall reclamation project was estimated last year to cost about 7 billion patacas (US$877 million). During a press conference held yesterday, the association proposed the sales of private houses in those zones to non-Macau residents should only be allowed after 2049 to protect the future generations. Mr Chan’s fellow legislator Ng Kuok Cheong thinks it is “the right time” to talk about this issue, as the urban planning for the new

areas has not been finalised. “The government should include this idea in its policy. If it does not do this, we do not rule out hitting the streets to protest,” Mr Ng said. The pan-democrats also doubt whether the government could fulfil its promise to build 19,000 public houses by year-end. Over 3,800 flats were completed but there are still over 15,000 houses under construction. Mr Ng believes the administration would go around the issue by counting the combined number of flats completed together with houses allocated to applicants but not yet completed. “It is an irresponsible attitude,” he told journalists. Mr Chan also urged the government to find out who is accountable for the overabundance in one-bedroom subsidised flats. T.L.


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business daily September 26, 2012

greater china China’s first carrier in service China’s first aircraft carrier, built with the hull of an unfinished Soviet-era ship, was handed over to the navy and formally commissioned this morning, the defence ministry said. The 65,000-ton vessel, named the Liaoning, enters operation after months of sea trials amid a dispute with Japan over islands claimed by both sides. Chinese President Hu Jintao and Premier Wen Jiabao visited the ship yesterday after it was commissioned, the state-run Xinhua news agency reported. For now the carrier has no operational aircraft and will be used for training.

China wealth gap in danger zone Beijing doesn’t have the luxury to delay reforms, government adviser says

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hina’s income gap will persist at a “dangerously” high level over the coming decade, putting pressure on the nation’s incoming leaders to curb corruption and state control of industries, according to a government adviser. China’s Gini coefficient, a measure of inequality, may hover around 0.5, Li Shi, who helped draft a government plan on income distribution, said in an interview last week. The government hasn’t published a countrywide Gini figure since 2000. The index ranges from 0 to 1, readings at 0.4 or higher are used by analysts as a gauge of the potential for social disturbances. “The situation is very dangerous now, and it’s a life-or-death battle for the new leaders to fight,” said Mr Li, 55, executive dean of Beijing Normal University’s China Institute of Income Distribution, who compiled his own Gini survey in 2007. “Many reforms have been delayed in past years, but I don’t think China has the luxury to delay any more.” Ousted Politburo member Bo Xilai drew attention to the Gini coefficient in March, saying that the figure exceeded 0.46. His downfall also heightened focus on the role of wealth and influence in the Communist Party, with his wife

convicted last month of murdering British businessman Neil Heywood, and his former police chief this week convicted of covering up the crime. With economic growth for 2012 at risk of the weakest performance since 1990, Mr Li sees a slowing in wage gains that will counter improvements that authorities are championing in social security coverage. The wealth gap adds urgency to the need to distribute income from the “monopoly profits” garnered by China’s state-owned enterprises, according to Mr Li.

Power Transition Wage gains are expected to slowdown as China’s economic growth eases

Vice President Xi Jinping and Vice Premier Li Keqiang – who are forecast to head the next group of leaders in the Communist Party’s once-in-a-decade power transition by year-end – have yet to publicly lay out their policy priorities. China’s authorities have for eight years been working on a blueprint to boost citizens’ share of economic growth. “It’s a well-established consensus that inequality is a huge economic and political problem and that it needs to be resolved if China’s growth is going to resemble anything that could be called sustainable,” said Alistair Thornton, an economist in

Beijing at IHS Global Insight. “We haven’t seen enough in terms of reform to warrant the view that we are moving in the right direction.” China doesn’t deliberately hide its Gini coefficient, and will release the data once it improves its survey methods, Ma Jiantang, the government’s statistics chief, said in March. The rural Gini coefficient was 0.3949 last year, state news agency Xinhua said in August, citing a survey by Central China Normal University’s Centre for China Rural Studies.

Beijing warns at Japan island talks Ministers fail to reduce tensions over islands dispute

China has warned Japan it will not tolerate violations of its sovereignty in high-level talks

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iplomats from China and Japan failed to ease tensions over a territorial dispute as the Japanese Coast Guard used water cannons to drive off Taiwanese vessels near the islands at the centre of the spat. Japan’s move this month to buy the islands was “blatantly illegal,”

China’s Vice Foreign Minister Zhang Zhijun told Japanese counterpart Chikao Kawai yesterday in Beijing, according to a Chinese Foreign Ministry statement. While the two sides agreed to more discussions, Mr Kawai said no consensus was reached to hold a foreign ministers’ meeting this week at the United

Nations General Assembly in New York, Kyodo News reported. The meeting was the first since protests in China last week damaged operations for Japanese companies such as Toyota Motor Corp. and Aeon Co. Japan’s purchase of the islands, known as Senkaku in Japanese and Diaoyu in Chinese, exacerbated the worst diplomatic crisis since 2005, which has threatened a US$340 billion trade relationship between Asia’s two biggest economies. About 50 Taiwanese fishing boats and patrol vessels left waters administered by Japan after the Japanese Coast Guard fired water cannons at them this morning, the Coast Guard said in a statement. Five Chinese government boats were also spotted in or near what Japan calls its “contiguous zone,” according to a separate statement. “We will continue to guard the area around the Senkakus intensely and remain in contact with the

Mr Li said the survey of 20,000 Chinese households he conducted in 2007 determined a coefficient of 0.48. The figure has risen from 0.302 in 1978, when the Communist Party began to open the economy to market forces, according to a 2008 report by Chen Jiandong at Southwestern University of Finance and Economics in Sichuan province. China’s rapid economic growth has helped pull much of its population out of poverty, along with swelling the nation’s ranks of billionaires. The

relevant agencies,” Chief Cabinet Secretary Osamu Fujimura told reporters yesterday in Tokyo. The clash between the Coast Guard and the Taiwanese boats was broadcast on NHK Television.

‘Serious violation’ Mr Zhang told Mr Kawai that Japan had ignored China’s protests in buying the islands, a move he called “a serious violation of historical facts and international jurisprudence,” according to the Foreign Ministry statement. Separately, Japan’s de facto envoy to Taiwan visited Taipei yesterday to discuss the dispute over the East China Sea islands claimed by all three governments. Tadashi Imai is president of Japan’s Interchange Association, which represents the Japanese government in Taiwan in the absence of formal diplomatic relations. Mr Fujimura said the situation with Taiwan should be dealt with “calmly” to ensure good relations continue. He said yesterday the government protested “at a high diplomatic level” after Chinese vessels entered the waters. Bloomberg


September 26, 2012 business daily | 9

GREATER CHINA C.Bank makes record cash injection China’s central bank injected a record amount of cash yesterday but the move was shrugged off by money markets, with a severe pre-holiday liquidity squeeze pushing rates higher as banks hoard cash to meet holiday demand and quarter-end regulatory checks. The benchmark short-term borrowing rate hit a seven-month high, despite the central bank’s injection of 290 billion yuan (US$45.96 billion) into the market via reverse bond repurchase agreements. When deducted from yesterday’s injection, it means that the central bank is already set to inject at least 185 billion yuan for the week.

The situation is very dangerous now, and it’s a life-or-death battle for the new leaders

Foxconn resumes production at Taiyuan plant

to fight Li Shi, China Institute of Income Distribution, said in reference to China’s income gap

a ninth quarter to below 7 percent in the first three months of the year.

Monopoly profits

gross domestic product of the world’s most populous nation increased about 10 percent on average in the past two decades. World Bank data show that 600 million people were lifted out of poverty from 1981 to 2004. Now, the GDP growth engine is moderating. Song Guoqing, a central bank adviser and Peking University professor, sees expansion of 7 percent to 7.5 percent in the first half of 2013, while Yuan Gangming, an economist with the Chinese Academy of Social Sciences, said growth may slow for

The utility of Gini coefficient readings as a predictor for social unrest may be limited, with China’s reading estimated to be little different than the U.S. – at 0.45 for 2007, according to the U.S. Central Intelligence Agency’s World Factbook. In China, the number of so-called mass incidents – strikes, protests, riots – doubled in the period from 2006 to 2010 to 180,000 a year, Sun Liping, a sociologist at Beijing’s Tsinghua University, wrote last year. “Many social problems today are actually related to income gaps,” Mr Li said. “Public trust and confidence in the government has been jeopardised, and if the new leaders want to rebuild trust and confidence, it must deliver something real.” He said many resources are in hands of large state-owned big companies, which are enjoying “extraordinary monopoly profits”. Bloomberg

Hyundai starts auto finance venture As it seeks to boost sales in the mainland market

H

yundai Motor Co., South Korea’s largest carmaker, will start providing auto loans this month to buyers in China as it seeks to increase the share of sales in the world’s largest vehicle market. Hyundai’s auto-financing venture aims to get as many as 45 percent of customers who buy Hyundai and affiliate Kia Motors Corp. cars on loan in three years, Lee Kyo Chang, chief executive of Beijing Hyundai Auto Finance Ltd, said yesterday. It expects to match the 30 percent annual growth in terms of volume coverage achieved by the auto-financing industry, he said. The automaker, based in Seoul, joins General Motors Co. and

Volkswagen AG in setting up an auto-financing business in China, as an increasing number of the nation’s younger population embrace the idea of buying cars with borrowed

2 million units

Hyundai plans to sell annually in China by 2016

F

oxconn Technology Group said it expects limited impact on production after resuming operations yesterday at a China factory where fighting between almost 2,000 workers left 40 hospitalised. “Overall it probably won’t be significant because this factory mainly does a lot of components, auto electronics, consumer electronics and precision moulding” and not finished products, Louis Woo, a spokesman for the Taipeibased company, said yesterday. “If we lose just one day, I don’t expect it will impact any finished goods significantly and, with overtime, we could make up any shortfall.” The fighting highlights the tensions that can build up between migrant workers from different provinces working at the same factory campus. Sunday’s incident involved labourers from Shandong province and Henan province, with about 5,000 police being sent to the facility, the state-run Xinhua news agency reported. Some employees were arrested. Foxconn Chairman Terry Gou agreed with a management decision to shut production for a day to “give people time to cool down” after the fight was brought under control

money. Sales of cars trailed analyst estimates for a second month in August as consumers held off purchases in anticipation of more discounts amid a slowing economy. “Hyundai will be able to expand client base and it can attract more buyers with loans for more expensive high-end models,” said Yim Eun Young, an auto-industry analyst at Dongbu Securities Co. in Seoul. “It can help Hyundai, Kia to maintain competitive edge against China’s local makers.”

Financing cars About 10 percent of vehicle purchases made last year in China were on loans, a ratio that China Minzu Securities Co. estimates will triple by 2017 as more of the nation’s youth buy their first cars. The Hyundai financing arm will provide loans to retail buyers and dealers across China, Mr Lee said. The company will first rely on bank loans for funding and later consider selling bonds and asset-backed securities when the venture meets local regulations to sell such notes, he added. “We’ll focus on risk management and stabilization of operation for

about 3am on Monday, Mr Woo said earlier.

iPhone 5 unaffected Production of Apple Inc.’s iPhone 5 is unlikely to be affected because the facility doesn’t assemble the device, which is made at factories in Zhengzhou, Henan province and Shenzhen, in Guandong province, Fubon Financial Holding Co. analyst Jeff Pu said yesterday. The Taiyuan plant, which employs 79,000 people, is one of about a dozen factories that Foxconn operates in China for clients including Hewlett-Packard Co., Nintendo Co. and Sony Corp. Mr Woo declined to say which products were made at the site. In January 2011, clashes between rival groups left two people injured in Chengdu, central China, Foxconn said at the time. That conflict and the most recent dispute were linked to regional rivalries and not the work itself, Foxconn has said. Shares of Hon Hai Precision Industry Co Ltd the Taipei-listed flagship of Foxconn Technology Group, declined 2.4 percent to close at NT$93.50 (US$3.19), compared with a 0.4 percent drop in the benchmark Taiex index. The stock has added 24 percent this year, outpacing the Taiex’s 9.4 percent gain. Reuters

Hyundai wants to lure more buyers with loans for more expensive high-end models

the first several years,” Mr Lee said. “We’re confident we can provide competitive services after stacking up experience.” Hyundai has forecast to sell 2 million Hyundai and Kia cars annually in 2016 in China, Mr Lee said. The carmaker opened its third Chinese factory in June and aims to increase wholesale shipments in the market 6.8 percent to 790,000 units this year from 2011, according to a company presentation in January. Kia Motors targets to boost sales 6.4 percent to 460,000 units this year, it said in January. Bloomberg


10 |

business daily September 26, 2012

asia Nomura reorganises units in Asia Nomura Holdings Inc. is reorganising its global finance team in Asia outside of Japan, according to an internal memo, as chief executive Koji Nagai pursues his overhaul of the country’s biggest brokerage. Global finance units within the investment banking and fixed-income divisions will reconfigure into two main streams: debt origination including debt capital markets, private placements, leveraged finance and private financing activities; and risk solutions, according to the memo. Less than two months into the job, Mr Nagai is reshaping Nomura by pledging to cut US$1 billion of costs and make Asia the centre of its global operations.

S.Korea pushes back surplus target Government plans smallest deficit in six years

S

outh Korea’s government plans to cut its fiscal deficit next year to the smallest in six years as policy makers preserve firepower amid a slowing global economy and rising welfare costs. Total spending will increase 5.3 percent to 342.5 trillion won (US$306 billion), the Ministry of Strategy and Finance said in its budget proposal for 2013 released yesterday. The deficit will shrink to 4.8 trillion won, or 0.3 percent of gross domestic product in 2013, down from 14.3 trillion won, or 1.1 percent this year, according to its calculations. Seoul has pushed back by one year its goal of achieving a fiscal surplus by 2013. The government now aims to post a fiscal surplus equal to 0.1 percent of annual gross domestic by 2014. The finance ministry cut its 2013 growth forecast to 4 percent from 4.3 percent seen in June, but the view still expects the economy to recover next year in line with global growth. “We need to secure fiscal room to respond pre-emptively to long-term challenges,” Vice Finance Minister

Kim Dong Yeon said in remarks embargoed for yesterday’s budgetstatement release. “The budget draft aims to improve fiscal health as the South Korean economy is very much vulnerable to changes in global economic conditions.” President Lee Myung Bak’s plan calls for the smallest deficit since the

budget swung to a shortfall in 2008, the year Lehman Brothers Holdings Inc.’s collapse sparked a global crisis. Meeting the target will depend on how Asia’s fourth-largest economy recovers as European turmoil and slowing growth cut demand for exports that fell 6.2 percent from a year earlier in August.

Fiscal balance

KEY POINTS S.Korea delays fiscal surplus goal by one year to 2014 Govt’s total fiscal spending to grow by 5.3 pct Finance ministry now sees 2013 GDP growth at 4 pct

“ Th e g o v er n m en t ’ s p l a n t o achieve fiscal balance next year or the year after may be delayed as tax collection slows with waning growth,” said Kang Joong Koo, an economist at the LG Economic Research Institute. “Balancing the budget should be a medium-term goal but it’s questionable whether that should be rushed when the economy needs more fiscal support.” The finance ministry announced 5.9 trillion won of spending and tax relief this month, adding to 8.5 trillion won of support measures in June. Standard & Poor’s, Fitch Ratings and Moody’s Investors Service all cited South Korea’s strong position to weather shocks when they

upgraded the country during a threeweek period starting last month. South Korea’s government plans to sell 79.9 trillion won of bonds in 2013, compared with 79.8 trillion won this year, according to a financial ministry official who declined to be identified as the official report is yet to be released. Of the total, 57.5 trillion

Ex-Olympus chairman pleads guilty To charges of falsifying accounts, covering up losses of US$1.7 billion

O

lympus Corp.’s former chairman Tsuyoshi Kikukawa pleaded guilty to covering up losses at the Japanese camera maker in an accounting fraud case that sparked criticism of ineffective corporate governance in Japan. “The entire responsibility lies with me,” Mr Kikukawa said in Tokyo District Court yesterday, the trial’s first day. “The action troubled shareholders, business partners, employees and the public.” “As the president of the company I take full responsibility for what happened,” he added. Mr Kikukawa, former Olympus Executive Vice President Hisashi Mori and Hideo Yamada, a former auditing officer, all pleaded guilty yesterday to using fraudulent takeover transactions to hide losses for 13 years starting in the 1990s. The executives face as much as 10 years in jail and 10 million yen (US$128,000) in fines, according to a legal database operated by the government. They are accused of falsifying accounts and covering up losses of

US$1.7 billion in one of Japan’s biggest corporate scandals. “We’re looking for a strong reaction from the court in terms of a strong sentence,” said Jamie Allen, secretary general of the Asian Corporate Governance Association. “That’s what investors are looking for and clearly that’s what the government would like.” Olympus President Hiroyuki Sasa also submitted a guilty plea yesterday for the company’s role in the fraud. The camera and endoscope maker faces as much as 700 million yen in fines for violating the rules, according to the government database.

Market value

Olympus’s market value has shrunk 42 percent since October 14

Olympus rose 0.3 percent to close at 1,441 yen in Tokyo trading. Among the seven analysts who track Olympus, five have a hold rating on the stock and two recommend selling it, according to data compiled by Bloomberg. Olympus’s market value has shrunk 42 percent since the October 14 dismissal of former chief executive Michael

Woodford, who had challenged Mr Kikukawa and the board over inflated takeover payments. Mr Woodford’s whistleblowing led to an investigation that uncovered the accounting irregularities. “Olympus was one of the biggest frauds in Japanese history,” Mr Allen told Bloomberg Television. “A lot of money was lost.”

The company is now seeking investors to help shore up capital eroded after acknowledging the fraud. Founded in 1919 as a microscope and thermometer maker, Olympus produced its first camera in 1936 and a predecessor to the modernday endoscope in 1950, according to its website. The company controls


September 26, 2012 business daily | 11

asia Okada tipped for finance minister job Japanese Prime Minister Yoshihiko Noda is considering naming Katsuya Okada, a senior politician in the ruling Democratic Party, as the country’s new finance minister, the Sankei newspaper reported yesterday. Mr Okada, who serves as a cabinet minister responsible for welfare and tax reform, would replace Jun Azumi as finance minister. Mr Okada, who has previously served as foreign minister and held other senior posts in the party, shares Mr Noda’s drive for fiscal and tax reform, so his appointment as finance minister would indicate no change in the government’s fiscal policy.

N.Korea seen planning economic reforms As parliament meets for a special session

N

Economy to grow 4 percent next year, said the finance ministry

won will be used for buybacks and redemption payments. The finance ministry will present the budget draft to lawmakers by October 2 for parliamentary approval. Spending on welfare will rise 4.8 percent to a record 97.1 trillion won. Education spending will increase 7.9

75 percent of the global market for endoscopes, instruments doctors use to peer inside the body to help diagnose disease. Akio Nakagawa and Nobumasa Yokoo, investment advisers cited in an outside panel’s December report as having helped Olympus cover up losses, were also indicted separately from the three whose trial started yesterday. The date of their trial hasn’t been decided. Taku Hada, an associate of Mr Nakagawa and Mr Yokoo, is also under indictment. The accounting fraud “destroyed the image of Japanese companies internationally,” Mr Kikukawa said yesterday in court.

Sony bailout Sony Corp. will likely approve a plan this week to invest 50 billion yen (US$642 million) in cash-strapped Olympus, becoming its biggest shareholder with around a 10 percent stake, three sources familiar with the deal told Reuters. Sony will set up a joint business with Olympus to develop new medical equipment, and next year will send an executive to join its board of directors, the sources said on condition they were not identified. Sony wants to nurture new businesses, including medical equipment, to increase revenue as it draws back from lossmaking televisions.

percent to 49.1 trillion won. South Korea expects to collect 37.4 trillion won of revenue next year outside of tax collection from asset sales, including selling stakes in the Industrial Bank of Korea, Korea Development Bank and Incheon International Airport Corp. Bloomberg/Reuters

orth Korea’s parliament held a rare session yesterday, presided over by Kim JongUn, which had been expected to confirm an apparent push by the new, young leader to introduce limited economic reforms. The country has one of the world’s most rigidly-controlled economies and is desperately poor following decades of mismanagement and isolation, as well as the imposition of international sanctions over its nuclear programme. The rubber-stamp parliament last convened in April and it is unusual to hold two sessions in the same year. North Korea watchers and media reports in South Korea had speculated it would adopt market reforms that Mr Kim has shown signs of experimenting with since taking power following the death of his father Kim Jong-Il last December. However, the state Korean Central News Agency’s (KCNA) description of the day’s proceedings mentioned only a report on education and a minor reshuffle in the parliament’s standing committee. Since assuming the leadership, Kim Jong-Un has made several public statements on the need to improve living standards, and there

have been signs of introducing incentives for workers and farmers to boost productivity. “Reforms are always risky in a closed totalitarian country, but JongUn appears to be confident that his leadership is now stable enough to enforce a new system,” Yang MooJin at the University of North Korean Studies in Seoul told AFP. Newspaper reports in Seoul had suggested one change may see the North’s regime taking only 70 percent of the harvest from collective farms, allowing farmers to keep or sell the remainder. Andrei Lankov, a Russian professor at Seoul’s Kookmin University, said it seemed clear that Kim Jong-Un was looking to move the economy in a new direction. The obvious model, Mr Lankov said, would be a Chinese-style “development dictatorship” combining an authoritarian political structure with a market economy. However, this would inevitably require an initial period of uncertainty as any market changes took root. “A reforming North Korea will likely be very unstable and might collapse,” Mr Lankov said. AFP

United Spirits may sell stake As the president of the company I take full responsibility for what happened Tsuyoshi Kikukawa, Olympus Corp.’s former chairman

Meanwhile Olympus, seeking to retain a high degree of independence, may favour a capital injection from Sony rather than offers of closer business ties from rivals such as medical device maker Terumo Corp. and camera maker Fujifilm Holdings Corp. In the year to March 31 the company booked a net loss of 49 billion yen. In June its ratio of shareholders’ equity to total assets fell to 2.2 percent, from 4.6 percent in March. The figure is a barometer of a company’s liquidity, with the 20 percent level regarded as indicative of financial stability. Bloomberg/Reuters

Vijay Mallya in talks with Diageo Plc

I

ndian liquor baron Vijay Mallya’s United Spirits Ltd is in talks towards selling a stake to U.K.-based Diageo Plc, the world’s biggest spirits group, the companies said in statements. Mr Mallya has been scrambling for nearly a year to raise capital for his ailing Kingfisher Airlines Ltd, prompting market speculation that he may need to sell stakes in United Spirits or United Breweries Ltd, maker of his flagship Kingfisher beer. United Spirits and Diageo held talks towards a deal that ultimately collapsed in 2009, and the companies said yesterday that the current negotiations might not result in a deal. “There is no certainty that these discussions will lead to a transaction,” United Spirits, the world’s largest spirits maker by volume, said in a statement to India’s stock exchanges. Diageo is looking initially to buy a 15 percent stake from Mr Mallya, who owns about 28 percent of the company, and a further 10 percent from investors, one banker familiar with the matter told Reuters yesterday. Mr Mallya would retain a minority stake after the deal, sources have said. Diageo may offer 1,200 rupees to

1,300 rupees a share, valuing the 25 percent stake at 42.5 billion rupees (US$793 million), sources have said, declining to be identified because the talks were confidential. Shares in United Spirits rose 2.4 percent yesterday to 1079.30 rupees and have more than doubled in 2012, with much of those gains coming in the past four months. If it acquired 25 percent of United Spirits, Diageo would have to launch a mandatory open offer for at least 26 percent more of United Spirits in order to bring its stake to 51 percent. Diageo is known to covet deals in which it sees a path to control, which Mr Mallya has long been seen to be unwilling to cede. Reuters

Vijay Mallya


12 |

business daily September 26, 2012

MARKETS Hang SENG INDEX NAME

PRICE

Day %

VOLUME

28.45

-0.5244755

14292781

ALUMINUM CORP-H

3.24

0.3095975

9071996

BANK OF CHINA-H

2.92

-0.3412969

228991720

BANK OF COMMUN-H

5.22

-0.5714286

16635778

BANK EAST ASIA

29.1

0.3448276

1103123

AIA GROUP LTD

BELLE INTERNATIO

NAME

PRICE

Day %

VOLUME

12.76

0.3144654

14599232

CITIC PACIFIC

9.39

-4.085802

CLP HLDGS LTD

66.1

CHINA UNICOM HON

-1.158645

5336049 1162032

13.26

4.245283

8844756

TENCENT HOLDINGS

256.2

0.3918495

1832541

26.8

0.5628518

5699009

TINGYI HLDG CO

22.9

0

3343321

117.4

0.427716

1145745

WANT WANT CHINA

9.78

0.8247423

8370860

54.1

0.09250694

3632972 1036282

HANG SENG BK

CHEUNG KONG

114.1

0.70609

2271276

HENDERSON LAND D

24.05

-1.150843

4470283

CHINA MOBILE

3738781

0.4741834

1266040

CHINA MERCHANT

-0.5602241

110.9

0.1547988

18660410

14.2 95.35

12.94

0.443459

SINO LAND CO SWIRE PACIFIC-A

CATHAY PAC AIR

22.65

2950694

SUN HUNG KAI PRO

ESPRIT HLDGS

CHINA LIFE INS-H

6266961

0.7621951

2933402

HANG LUNG PROPER

11973088

1.238938

31691753

8385200

167438219

28.6

-1.462523

7620997

0.5657709

SANDS CHINA LTD

0.1277139

0

-0.5671078

2387637

9067306

15.68

-0.1416431

5.26

VOLUME

-0.4651163

10.78

14.1

7.11

Day %

64.2

CNOOC LTD

24.25

CHINA CONST BA-H

PRICE

POWER ASSETS HOL

COSCO PAC LTD

BOC HONG KONG HO

CHINA COAL ENE-H

HENGAN INTL

76.55

1.256614

HONG KG CHINA GS

19.28

0.2079002

3973617

HONG KONG EXCHNG

115.8

-2.607233

10367548

HSBC HLDGS PLC

73.75

0.4084411

8659527

86.3

0.3488372

14672191

HUTCHISON WHAMPO

73.9

0.4076087

6061010

19.16

0.209205

15615551

IND & COMM BK-H

4.49

-1.318681

228549789

CHINA PETROLEU-H

7.16

0

48547789

LI & FUNG LTD

11.98

-0.8278146

24519548

CHINA RES ENTERP

25.85

1.771654

5222572

MTR CORP

29.55

0.8532423

3709059

CHINA OVERSEAS

CHINA RES LAND

16.74

1.454545

6300838

NEW WORLD DEV

11.56

1.403509

27478427

CHINA RES POWER

17.18

-0.1162791

5702786

PETROCHINA CO-H

10.16

0.1972387

35732640

CHINA SHENHUA-H

29.85

0.3361345

7091007

NAME

PING AN INSURA-H

58.5

0.6884682

5941130

PRICE

DAY %

VOLUME

22.85

0.660793

7150904

MOVERS

30

16

3 20800

INDEX 20698.68 HIGH

20794.76

LOW

20543.76

52W (H) 21760.33984 20540

(L) 16170.35 21-Sep

25-Sep

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

2.99

-0.9933775

73583613

PRICE

DAY %

VOLUME

11.54

-1.535836

AIR CHINA LTD-H

4.92

0

9362187

CHINA PETROLEU-H

7.16

0

48547789

18866836

ZIJIN MINING-H

3.11

-0.3205128

ALUMINUM CORP-H

3.24

0.3095975

9071996

CHINA RAIL CN-H

6.56

-1.796407

36555076

13266663

ZOOMLION HEAVY-H

8.83

-1.670379

ANHUI CONCH-H

24.65

2.708333

24327175

CHINA RAIL GR-H

3.31

14163568

-1.488095

22577882

ZTE CORP-H

11.3

0.177305

BANK OF CHINA-H

2.92

-0.3412969

228991720

CHINA SHENHUA-H

3532397

29.85

0.3361345

7091007

BANK OF COMMUN-H

5.22

-0.5714286

16635778

BYD CO LTD-H

14.7

-3.669725

5415719

CHINA TELECOM-H

4.51

-0.4415011

47454575

DONGFENG MOTOR-H

9.38

-0.212766

CHINA CITIC BK-H

3.62

-1.092896

14588361

45200391

GUANGZHOU AUTO-H

5.22

-1.509434

CHINA COAL ENE-H

7.11

5140825

0.5657709

11973088

HUANENG POWER-H

5.69

2.522523

27163228

CHINA COM CONS-H

6.15

-2.070064

22096461

IND & COMM BK-H

4.49

-1.318681

228549789

CHINA CONST BA-H

5.26

-0.5671078

167438219

JIANGXI COPPER-H

19.38

0.1033058

7659013

CHINA COSCO HO-H

3.15

-2.47678

18675908

PETROCHINA CO-H

10.16

0.1972387

35732640

CHINA PACIFIC-H

22.65

0.443459

18660410

PICC PROPERTY &

9.41

-0.7383966

13171645

CHINA LONGYUAN-H

5.14

-1.34357

2248862

PING AN INSURA-H

58.5

0.6884682

5941130

CHINA MERCH BK-H

12.74

-1.848998

18496621

SHANDONG WEIG-H

9.98

3.634476

6688364

CHINA LIFE INS-H

CHINA MINSHENG-H CHINA NATL BDG-H CHINA OILFIELD-H

NAME YANZHOU COAL-H

MOVERS

15

21

4 9830

INDEX 9745.4 HIGH

9824.51

LOW

9676.14

6

-1.477833

26228463

SINOPHARM-H

24.35

-0.6122449

2015227

52W (H) 11916.1

8.69

1.75644

52735062

TSINGTAO BREW-H

43.15

0

1598757

(L) 8058.58

13.56

1.649175

5740069

WEICHAI POWER-H

23.95

-1.237113

592488

9670

21-Sep

25-Sep

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

4.32

-1.594533

1870623

SANY HEAVY INDUS

9.14

-0.1092896

18859626

11.67

1.302083

7123780

SHANDONG GOLD-MI

39.76

-3.02439

19387567

GD MIDEA HOLDING

9.18

0

9139999

SHANG PHARM -A

11.42

-0.6092254

3952433

GD POWER DEVEL-A

2.35

-0.4237288

17922415

SHANG PUDONG-A

7.16

-0.13947

23528437

12.41

-0.7993605

49999930

SHANGHAI ELECT-A

3.94

-1.745636

2449305

20.4

0

3974279

SHANXI LU'AN -A

17.9

0.7315701

21916677

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.41

0

22952187

AIR CHINA LTD-A

4.74

-1.25

5419742

EVERBRIG SEC -A

ALUMINUM CORP-A

4.86

-1.619433

7179189

15.48

1.375246

31310312

ANHUI CONCH-A

DATANG INTL PO-A

BANK OF BEIJIN-A

6.71

-1.178203

10927439

GF SECURITIES-A

BANK OF CHINA-A

2.61

-0.3816794

14315021

GREE ELECTRIC

NAME

BANK OF COMMUN-A

4.09

-0.968523

19278320

GUANGHUI ENERG-A

14.41

-0.5521049

12672652

SHANXI XINGHUA-A

37.07

1.06325

1725276

BAOSHAN IRON & S

4.56

0.4405286

59013668

GUIZHOU PANJIA-A

16.56

-0.5405405

13055986

SHANXI XISHAN-A

12.84

-2.357414

15173089

14.78

-0.4043127

2843697

HAITONG SECURI-A

8.96

1.587302

47000182

SHENZEN OVERSE-A

5.37

0

11133004

HANGZHOU HIKVI-A

27.18

1.040892

1237658

SUNING APPLIAN-A

6.16

0

40325488

57.9

-1.160806

1215575

TASLY PHARMAC-A

51.47

2.427861

1277133

1.035078

11332384

TONGLING NONFE-A

18.98

-1.658031

10261935

BYD CO LTD -A CHINA CITIC BK-A

3.56

-0.280112

4658524

CHINA CNR CORP-A

3.45

-0.2890173

13216935

CHINA COAL ENE-A

6.78

-0.7320644

6542638

HONG YUAN SEC-A

17.57

CHINA CONST BA-A

3.83

-0.5194805

8465743

HUATAI SECURIT-A

9.09

0.6644518

13805378

TSINGTAO BREW-A

31.79

-0.9965743

1517671

6662056

HUAXIA BANK CO

7.86

-0.6321113

8264355

WEICHAI POWER-A

18.07

-2.692515

4551356

HENAN SHUAN-A

CHINA COSCO HO-A

3.91

-1.758794

CHINA CSSC HOL-A

20.62

-0.1936108

8230402

IND & COMM BK-A

3.65

0.2747253

22093165

WULIANGYE YIBIN

32.86

0.6431853

11410955

CHINA EAST AIR-A

3.22

-2.12766

13010867

INDUSTRIAL BAN-A

11.66

-0.4269855

15528786

YANGQUAN COAL -A

13.84

-1.072194

8311132

CHINA EVERBRIG-A

2.6

-0.7633588

16053887

INNER MONG BAO-A

32.4

-1.669196

16808783

YANTAI CHANGYU-A

46.32

2.979102

2582629

18.58

0.5411255

6655735

INNER MONG YIL-A

20.18

0.2483855

4580896

YANTAI WANHUA-A

13.11

-1.056604

7375361

9.87

0.1014199

18479084

INNER MONGOLIA-A

4.97

1.01626

37455398

YANZHOU COAL-A

17.79

-1.111729

2475620

CHINA LIFE INS-A CHINA MERCH BK-A CHINA MERCHANT-A

9.83

0.6141249

8667949

JIANGSU HENGRU-A

29.77

-0.1006711

2156897

YUNNAN BAIYAO-A

60.53

-0.5258833

691105

CHINA MERCHANT-A

19.78

2.380952

10370417

JIANGSU YANGHE-A

118.38

3.842105

1764818

ZHONGJIN GOLD

17.29

-4.475138

52841786

CHINA MINSHENG-A

5.49

-0.7233273

28862297

JIANGXI COPPER-A

21.88

-1.485817

6047972

ZIJIN MINING-A

3.91

-2.977667

128618142

24511569

JINDUICHENG -A

11.28

-2.506482

5225953

ZOOMLION HEAVY-A

8.22

-1.083032

27082171

12.06

-0.7407407

16042459

10.48

-1.503759

12039746

CHINA NATIONAL-A

6.54

0.9259259

CHINA OILFIELD-A

15.87

1.861361

3632912

JIZHONG ENERGY-A

CHINA PACIFIC-A

19.38

0.466563

6966167

KANGMEI PHARMA-A

14.97

-2.981205

8511734

CHINA PETROLEU-A

5.91

0.3395586

11015573

KWEICHOW MOUTA-A

238.51

2.646755

2623050

CHINA RAILWAY-A

4.43

-1.99115

8928204

LUZHOU LAOJIAO-A

37.34

2.04974

6211238

2.01

-0.9852217

17209968

0

20835387

CHINA RAILWAY-A

2.44

-1.612903

12761506

METALLURGICAL-A

CHINA SHENHUA-A

21.81

0.3681546

6606454

NARI TECHNOLOG-A

17.74

CHINA SHIPBUIL-A

4.73

-1.25261

29885326

NINGBO PORT CO-A

2.44

0

8264519

3.69

-0.8064516

31515386 7155590

CHINA SOUTHERN-A

3.34

-1.474926

18035840

PANGANG GROUP -A

CHINA STATE -A

2.93

0

25677455

PETROCHINA CO-A

8.66

0.4640371

12.74

-1.316809

ZTE CORP-A

MOVERS

81

201

18 2225

INDEX 2210.154

CHINA UNITED-A

3.54

0.2832861

29668983

PING AN BANK-A

9882594

HIGH

2220.74

CHINA VANKE CO-A

7.91

0.2534854

23961651

PING AN INSURA-A

40.63

0.9190263

13825132

LOW

2178.59

CHINA YANGTZE-A

6.19

0.487013

7521156

POLY REAL ESTA-A

10.17

0.4940711

21162665

CITIC SECURITI-A

11.02

1.754386

76232515

QINGDAO HAIER-A

10.61

-0.3755869

2700530

CSR CORP LTD -A

3.86

-1.278772

13396857

QINGHAI SALT-A

28.37

-0.700035

3611532

DAQIN RAILWAY -A

5.87

-0.170068

7897135

SAIC MOTOR-A

12.55

0.7223114

9697973

PRICE DAY %

Volume

52W (H) 2781.99 (L) 2172.878906

2175

21-Sep

25-Sep

FTSE TAIWAN 50 INDEX NAME ACER INC

NAME

-2.31405

25581984

FORMOSA PLASTIC

23 -0.4329004

26777031

FOXCONN TECHNOLO

ASIA CEMENT CORP

37.45 -0.2663116

2732820

ASUSTEK COMPUTER

315.5

2.10356

AU OPTRONICS COR

11.35 -0.4385965

ADVANCED SEMICON

29.55

PRICE DAY %

Volume

0

4213753

116

-2.92887

10214407

TPK HOLDING CO L

FUBON FINANCIAL

31.85

-0.46875

15581197

TSMC

3608813

HON HAI PRECISIO

93.5

-2.400835

53748646

UNI-PRESIDENT

50457089

HOTAI MOTOR CO

208

0.9708738

363300 11421551

CATCHER TECH

143

-4.666667

24709475

HTC CORP

311 -0.3205128

CATHAY FINANCIAL

32.2

-0.770416

16044399

HUA NAN FINANCIA

16.6

CHANG HWA BANK

16.15

0

7460748

LARGAN PRECISION

CHENG SHIN RUBBE

75.1

0.8053691

7009682

LITE-ON TECHNOLO

-2.453988

1521975

YULON MOTOR CO

58.6

0.6747638

4346155

-1.212121

7907571

0.4444444

16087680

CHINA STEEL CORP

26.7

0.1876173

14805615

NAN YA PLASTICS

58.7

-0.170068

5584009

CHINATRUST FINAN

17.6

-1.123596

21216432

PRESIDENT CHAIN

157

0

1340329

93.2

0.3229279

7572328

QUANTA COMPUTER

79 -0.3783102

6865122

26.55 -0.1879699

10705965

SILICONWARE PREC

32.8 -0.9063444

5295610

SYNNEX TECH INTL

FAR EASTONE TELE

72

0.2785515

3946490

TAIWAN CEMENT

15592931

12.25

0.4098361

11785180

66.4 -0.7473842

2432746

36 -0.8264463

7628620

FIRST FINANCIAL

18.2 -0.5464481

16.75

-0.297619

5545443

FORMOSA CHEM & F

78.5

0

2989223

TAIWAN FERTILIZE

79.8

-1.237624

3765485

FORMOSA PETROCHE

88.3

0.9142857

2825024

TAIWAN GLASS IND

30.3

1.677852

2550349

TAIWAN COOPERATI

27698202

636 326

SINOPAC FINANCIA

6976239

0

37.3 22.6

3833298

1.190476

6956439

MEGA FINANCIAL H

7808331

51 12.15

16254735

MEDIATEK INC

-1.339286

35919223

0.2816901

36405762

0.7507508

-0.232288

15.3 -0.6493506

32885395

110.5

6124899

85.9

35.6

0

33.55

UNITED MICROELEC

0.3676471

YUANTA FINANCIAL

11.4

DELTA ELECT INC

2408563

409.5

WISTRON CORP

7.38 -0.5390836

FAR EASTERN NEW

Volume

108 -0.4608295

6789192

CHIMEI INNOLUX C

CHUNGHWA TELECOM

PRICE DAY %

TAIWAN MOBILE CO

0

CHINA DEVELOPMEN

COMPAL ELECTRON

NAME

84

MOVERS

15

28

0.1709402

5352034

7 5370

INDEX 5329.41 HIGH

5365.1

LOW

5316.21

52W (H) 5621.53 5315

(L) 4643.05 21-Sep

25-Sep


September 26, 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

13.25

33.3 24.95

33.0

Min 24.8

24.8

Last 24.9

Average 33.079

Min 32.8

Last 33.3

28.7

16.6

28.6

16.5

28.2

Last 28.6

PRICE

20.85

20.75

16.1 16.0 Max 16.56

Average 16.413

DAY %

YTD %

(H) 52W

Min 16.06

Last 16.32

20.65 Max 20.95

Average 20.826

0.641792668

-5.90867487

109.8899994

78.73000336

BRENT CRUDE FUTR Nov12

110.46

0.591931518

5.956834532

122.6499939

89.5

GASOLINE RBOB FUT Oct12

293.01

0.42843433

15.93337026

307.9600096

220.5600023

GAS OIL FUT (ICE) Nov12

968.5

0.832899531

7.971014493

1038.75

799.25

NATURAL GAS FUTR Oct12

2.847

0.352485019

-14.29861529

4.425000191

2.299999952

HEATING OIL FUTR Oct12

310.83

0.309807339

8.776902887

333.8899851

252.5300026

Gold Spot $/Oz

1767.95

0.5969

12.9745

1803

1522.75

Silver Spot $/Oz

34.175

1.1843

22.7771

37.4775

26.1513

Platinum Spot $/Oz

1621.7

0.758

16.2926

1736

1339.25

Palladium Spot $/Oz

646.8

0.7555

-1.0252

725.19

537.54 1827.25

LME ALUMINUM 3MO ($)

2080

-1.701323251

2.97029703

2361.5

LME COPPER 3MO ($)

8183

-1.189398056

7.671052632

8765

6635

LME ZINC

2103

-0.590876861

13.98373984

2220

1718.5

3MO ($)

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

17975

-1.100412655

-3.928380545

22150

15236

15.135

-0.329272308

-0.460374877

17.5

14.15499973

746

0.167841558

27.24946695

849

499

Dec12

WHEAT FUTURE(CBT) Dec12

PRICE

(L) 52W

92.52

Last 20.75

Min 20.65

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 %

1.0424 1.6235 0.9366 1.2913 77.71 7.9855 7.7529 6.3059 53.3375 30.92 1.2271 29.331 41.898 9582 80.997 1.2094 0.79539 8.1422 10.3107 100.34 1.03

0.279 0.2037 0.0427 0.0465 0.4247 -0.0038 -0.0052 0.0539 0.2578 0.097 0.1711 0.1193 -0.2769 -0.1774 0.1506 -0.0099 0.1471 0.0504 -0.0533 0.3787 0

YTD %

(H) 52W

2.106 4.4522 0.1602 -0.3703 -1.0295 0.1766 0.187 -0.1729 -0.5109 2.0375 5.6638 3.2321 4.6351 -5.3538 -3.1668 0.611 4.7775 -0.0983 0.4006 -0.6777 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.4247 84.18 8.0341 7.8005 6.3992 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

2.75

1.102941

25

3.25

1.88

831644

153.6999969

CROWN LTD

8.99

0

11.12484

9.4

7.47

2377997

25.29999924

19.47999954

AMAX HOLDINGS LT

0.061

0

-29.88506

0.119

0.055

0

97.98999786

64.61000061

BOC HONG KONG HO

24.25

0

31.79348

24.95

14.24

7620997

CENTURY LEGEND

0.247

0

7.391302

0.335

0.204

0

3.73

0

33.21429

3.75

2.3

254000

CHINA OVERSEAS

19.16

0.209205

47.77796

20.4

9.979

15615551

CHINESE ESTATES

10.8

4.046243

-13.6

13.26

8.3

362947

CHOW TAI FOOK JE

10.86

0.929368

-21.98276

15.16

8.4

7642500

892

0

23.88888889

953.25

629.5

SOYBEAN FUTURE Nov12

1618.75

0.543478261

34.41976334

1789

1115.75

COFFEE 'C' FUTURE Dec12

173.25

0.5513639

-26.58898305

253.3999939

SUGAR #11 (WORLD) Mar13

20.42

0.740009867

-12.58561644

COTTON NO.2 FUTR Dec12

72.82

0.44137931

-17.0992714

NAME

CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

US

13558.92

-0.1513314

10.97896

13653.24

10404.49

NASDAQ COMPOSITE INDEX

US

3160.782

-0.6031831

21.32822

3196.932

2298.89

FTSE 100 INDEX

GB

5835.88

-0.050695

4.730561

5989.07

DAX INDEX

GE

7377.85

-0.4763151

25.08329

7478.53

EMPEROR ENTERTAI FUTURE BRIGHT GALAXY ENTERTAIN

PRICE

DAY % YTD %

VOLUME CRNCY

1.5

-0.6622517

35.13513

1.57

0.97

550000

1.24

6.896552

195.2381

1.25

0.3

8744000

24.9

0.2012072

74.85955

25.95

8.69

8798963

HANG SENG BK

117.4

0.427716

27.40097

117.9

84.4

1145745

4868.6

HOPEWELL HLDGS

27.15

0.742115

36.70694

27.3

18.56

1012000

4973.92

HSBC HLDGS PLC

73.75

0.4084411

25

74.15

56

8659527

HUTCHISON TELE H

3.41

-1.729107

14.04682

3.88

2.53

6336000

LUK FOOK HLDGS I

25.25

2.226721

-6.82657

37.1

14.7

3466500

MELCO INTL DEVEL

6.91

0.1449275

19.75737

8.28

4.3

1498000 1828694

NIKKEI 225

JN

9091.54

0.2453334

7.524117

10255.15

8135.79

HANG SENG INDEX

HK

20698.68

0.01923198

12.28296

21760.33984

16170.35

CSI 300 INDEX

CH

2210.154

-0.2420204

-5.780171

2781.99

2172.878906

MGM CHINA HOLDIN

13.12

-0.7564297

36.77846

14.76

7.6

TAIWAN TAIEX INDEX

TA

7734.13

-0.4398646

9.361458

8170.72

6609.11

MIDLAND HOLDINGS

4.7

-1.67364

18.86556

5.217

2.887

774000

NEPTUNE GROUP

0.178

-1.111111

60.36036

0.222

0.08

2420000

NEW WORLD DEV

11.56

1.403509

84.66453

11.64

6.13

27478427

SANDS CHINA LTD

28.6

1.238938

30.29612

33.05

14.9

6266961

SHUN HO RESOURCE

1.25

0

25

1.37

0.82

0

SHUN TAK HOLDING

3.03

-0.6557377

18.39969

3.51

2.241

1923750

KOSPI INDEX

SK

1991.41

-0.6004672

9.074131

2057.28

1644.11

S&P/ASX 200 INDEX

AU

4372.863

-0.2875402

7.797302

4448.5

3840.2

ID

4226.886

0.6182464

10.5938

4272.829

3217.951

FTSE Bursa Malaysia KLCI

MA

1618.58

0.3845247

5.73909

1655.49

1310.53

NZX ALL INDEX

NZ

842.064

0.4638644

15.3828

847.344

712.548

JAKARTA COMPOSITE INDEX

13.00

20.95

16.2

WTI CRUDE FUTURE Nov12

CORN FUTURE

Last 13.12

CURRENCY EXCHANGE RATES

NAME

METALS

Min 13.04

16.3

Commodities ENERGY

Average 13.132

16.4

28.3 Min 28.2

Max 13.22

wyNN MACAu LTD

28.4

Average 28.545

32.7

SJM HoLDINGS LTD

28.5

Max 28.65

13.05

32.8 Max 33.3

SANDS CHINA LTD

13.10

32.9

24.85

Average 24.912

13.15

33.1

24.9

Max 25

13.20

33.2

SJM HOLDINGS LTD

16.32

1.115242

30.5022

17.614

10.079

3274800

SMARTONE TELECOM

15.42

-0.8997429

14.73215

17.5

9.8

3283052

WYNN MACAU LTD

20.8

1.216545

6.666667

25.5

14.62

2986663

ASIA ENTERTAINME

3.2

-2.439024

-45.57823

7.49

2.4

168544

BALLY TECHNOLOGI

46.86

-1.222597

18.45298

49.32

24.74

452427 23854

PHILIPPINES ALL SHARE IX

PH

3546.66

-0.02846939

16.47334

3558.72

2695.06

HSBC Dragon 300 Index Singapor

SI

598.91

-0.8

20.67

NA

NA

STOCK EXCH OF THAI INDEX

TH

1284.99

0.05372577

25.32576

1290.7

843.69

HO CHI MINH STOCK INDEX

VN

391.77

0.3586341

11.44076

492.44

332.28

BOC HONG KONG HO

3.17

-3.939394

32.2383

3.3

1.81

Laos Composite Index

LO

1057.09

-0.9538355

17.52495

1067.27

876.33

GALAXY ENTERTAIN

3.25

3.174603

73.79679

3.25

1.08

2000

INTL GAME TECH

12.77

-0.3900156

-25.75582

18.1701

10.92

2076696

JONES LANG LASAL

79.34

-0.1384519

29.51355

87.52

46.01

237800

LAS VEGAS SANDS

45.31

0.8682102

6.037914

62.09

34.72

9536476

MELCO CROWN-ADR

12.7

-0.3530796

32.01663

16.02

7.05

2010371

MGM CHINA HOLDIN

1.68

0

40.97588

1.96

1.0025

200

MGM RESORTS INTE

10.68

-0.3731343

2.396929

14.9401

7.4

8740504

SHUFFLE MASTER

15.45

-1.592357

31.82594

18.77

7.55

300327

2.06

-4.186047

28.1435

2.2782

1.2624

700

114.07

-0.2623065

3.240114

138.4895

90.108

1052748

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

SJM HOLDINGS LTD WYNN RESORTS LTD

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business daily September 26, 2012

Opinion NAM in Tehran Jaswant Singh

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Former Indian finance minister, foreign minister, and defence minister

owadays, the NonAligned Movement (NAM) is no longer much of a movement. Since the Cold War’s end, it has fractured into a far more heterodox grouping whose members range from leftist regimes, as in Cuba, North Korea, and Venezuela, to the conservative monarchies (Saudi Arabia, Bahrain, Qatar) of the Persian Gulf. So it should be no surprise that ideological cacophony has severely diluted the group’s founding impulse of avoiding entanglement in the disputes of the world’s superpowers. Thus, today’s NAM finds itself as a group in search of purpose and principle. Its sole comfort, it seems, is that it has not yet withered away. But, despite its diminished status, the recent NAM summit in Tehran was able to claim the world’s attention. Why hold the summit in Tehran, some members asked? This, however, only raised heckles from those who still see the group as a means to stare down the superpowers. Their retort – “Why not in Tehran?” – angered more than it soothed. The dispute over the wisdom of holding the summit in Iran’s capital revived the core debate about what “non-aligned” means in the post-Cold War world. Why keep such an anachronistic construct alive when the world is no longer frozen into two ideologically antagonistic blocs? Furthermore, given the

proliferation of strategic partnerships that claim many NAM members (India, for example, has strategic partnerships with the United States, Japan, and Brazil), are the non-aligned really still non-aligned? To this, the movement’s defenders ask: “Why persist with NATO and expand it ever eastward, until its troops now sit almost on the banks of the Indus, and in the foothills of the Hindu Kush?” The Cold War has ended, they argue, but that only means that the world is divided in many more ways than before. So maintaining NAM is not some nostalgic longing for an influential past; rather, it is a means for countries to maintain as much international influence as possible in our globalised world.

NAM did not back India’s position.” The same is true, Sibal continues, of Kashmir and India’s nuclear tests. As a result, India, he argues, owes NAM’s other members nothing, and should act only according to what is “best for its own interests.” And yet India, like so many other countries, maintains its NAM membership, because NAM does provide an additional platform, which India needs and treats as one tool among others in its diplomatic toolkit. Occasionally, NAM provides a

Nothing to share But how can NAM help its members when nothing else unites them? According to Kanwal Sibal, a former head of India’s foreign service, “India’s own experience of NAM in areas of its core national interest has been most unsatisfactory, which is enough reason to shed any undue sentimental or ideological attachment to the movement.” Indeed, as Sibal points out, NAM did not protect India from decades of “U.S./Western technology-related sanctions,” even when it was the movement’s leader. Likewise, “in the 1962 conflict with China,

Given the proliferation of strategic partnerships that claim many NAM members, are the non-aligned really still nonaligned?

useful counterweight to Western pressure – say, regarding Iran, with which India remains eager to build trade and energy relationships. So, to be blunt, NAM survives because of America’s recent global domination and its efforts to impose its policies globally. And, with a rising China seeking to do much the same in its immediate neighbourhood (and perhaps farther afield in the future), the movement has a second reason for surviving as a check on the super-powerful. In a recent article, Ashley Tellis of the Carnegie Endowment for International Peace bemoans that, “India’s foreign-policy establishment is in the process of disinterring a long-dead grand strategy from its Cold War grave.” He cites a recent report, “Nonalignment 2.0,” that promotes non-alignment – a “doctrine that calls upon India to refuse staunchly any strategic alliances with other actors” – in order to ensure the country’s “strategic autonomy.”

Power considerations At first glance, nonalignment looks like an attractive option for still-emerging countries like India, Indonesia, Brazil, and others, because it promises freedom from the insidious grip of entangling alliances. But, more important, it holds out the prospect that a people can chart its own path,

free from external pressure – a particularly attractive proposition for countries that remain scarred by their colonial pasts. But how can these impulses be reconciled with the strategic partnerships that India, Brazil, and others are currently forming, or with those – like the U.S.-Saudi relationship – that have lasted for decades? The answer is simple: international order does not adhere to a logically consistent code. In the harsh light of realpolitik, only power and influence matter. If NAM enhances a country’s power and influence, it will maintain its membership. Of course, the bothersome aspect of NAM’s Tehran summit is that Iran will head the movement for the next three years. But that could well divide NAM even further: Egyptian President Mohamed Morsi, invited to sit next to Iran’s leadership, used the occasion to denounce publicly his hosts’ policy in Syria. India’s participation in the Tehran summit should not strain its ties with the U.S. Just because the U.S. continues to pursue its sterile policy of not speaking with Iran, India – with its own strategic, geopolitical, and energy-related interests to protect – does not need to tag along. Neither strategic partnership with the U.S., nor membership in NAM, will divert India from safeguarding those interests. © Project Syndicate

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September 26, 2012 business daily | 15

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

Leading reports from Asia’s best business newspapers

Business Standard India granted as many as 3,488 patents to pharmaceutical products between 2005 and 2010. Experts attribute this significant change in the patent regime to entry of product patents. According to an intellectual property right (IPR) lawyer, India granted as many as 970 pharmaceutical product patents between 2007 and 2011. In 1994, India, along with various other developing countries, signed the World Trade Organisation’s (WTO) agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) which mandated it to start granting patents on medicines no later than 2005.

(Part 2) Jeff Rubin

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

Jakarta Post PT Kawasaki Motor Indonesia is set to establish its second factory in Indonesia, worth Rp 600 billion (US$62.76 million), to increase production on its flagship sport bikes by 40 percent. The 15-hectare plant is expected to boost the firm’s yearly production, from 100,000 units to 140,000 units. The factory is set to reach its total production capacity by 2014. Last year, Kawasaki sold 99,000 motorcycles in Indonesia, most of which were imported from Thailand.

Korea Herald Hanwha Chemical, a listed Korean chemical company, made its first landmark deal to license its newly developed biosimilar compound to Merck, a global pharmaceutical giant.
Merck will be further developing the “HD203” compound by Hanwha into a drug for joint pain. Hanwha has more compounds ready to be developed into biosimilar drugs. Biosimilars are medicines that are similar to drugs that already exist and have succeeded commercially in the market. The company is looking for more international partnerships.

Bangkok Post The Bank of Thailand is preparing to allow listed companies the ability to freely invest abroad. Previously, only companies with assets of at least 5 billion baht (US$970.2 million) were given leeway to invest abroad. The central bank is also considering lifting restrictions on foreign portfolio investment by institutional and individual investors. Institutional investors are restricted to foreign portfolio investment of US$50 million, with individual investors limited to US$20 million. The deregulation policy is expected to be finalised next year and incorporated into changes in the country’s Exchange Control Act.

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here are many ways an oil shock can hurt an economy. When prices spike, most of us have little choice but to open our wallets. Paying more for oil means we have less cash to spend on food, shelter, furniture, clothes, travel and pretty much anything else. Expensive oil, coupled with the average American’s refusal to drive less, leaves a lot less money for the rest of the economy. Worse, when oil prices go up, so does inflation. And when inflation goes up, central banks respond by raising interest rates to keep prices in check. From 2004 to 2006, U.S. energy inflation ran at 35 percent, according to the Consumer Price Index. In turn, overall inflation, as measured by the CPI, accelerated from 1 percent to almost 6 percent. What happened next was a fivefold bump in interest rates that devastated the massively leveraged U.S. housing market. Higher rates popped the speculative housing bubble, which brought down the global economy. Unfortunately, this pattern of oil-driven inflation is with us again. And world food prices are being affected. According to the food-price index tracked by the United Nations Food and Agriculture Organization, the cost of food rose almost 40 percent from 2009 to the beginning of 2012. And since 2002, the FAO’s food-price index, which measures a basket of five commodity groups (meat, dairy, cereals, oils and fats, and sugar), is up about 150 percent.

Food prices A double whammy of rising oil and food prices means inflation will be here sooner than anyone would like to think. Rising inflation rates

Future economic growth will be fuelled by expensive oil from non-conventional sources such as the tar sands, offshore wells in the deep waters of the world’s oceans

in China and India are a clear signal that those economies are growing at an unsustainable pace. China has made GDP growth of more than 8 percent a priority but needs to recalibrate its thinking to recognise the damping effects of high oil prices. Growth might not stall entirely, but clocking double-digit gains is no longer feasible, at least without triggering a calamitous increase in inflation. If China and India, the new engines of global economic growth, are forced to adopt antiinflationary monetary policies, the ripple effects for resourcebased economies such as Canada, Australia and Brazil will be felt in a hurry. Triple-digit oil prices will end the lofty economic hopes of India and China, which are looking to achieve the same sort of sustained growth that North America and Europe enjoyed in the post-war era. There is an unavoidable obstacle that puts such ambitions out of reach: today’s

oil isn’t flowing from the same places it did yesterday. More importantly, it’s not flowing at the same cost. Conventional oil production, the easy-to-get-at stuff from the Middle East or west Texas, hasn’t increased in more than five years. And that’s with record crude prices giving explorers all the incentive in the world to drill. According to the International Energy Agency, conventional production has already peaked and is set to decline steadily over the next few decades. That doesn’t mean there won’t be any more oil. New reserves are being found all the time in new places. What the decline in conventional production does mean, though, is that future economic growth will be fuelled by expensive oil from nonconventional sources such as the tar sands, offshore wells in the deep waters of the world’s oceans and even oil shales, which come with environmental costs that range from carbon-dioxide emissions to potential groundwater contamination. And even if new supplies

are found, what matters to the economy is the cost of getting that supply flowing. It’s not enough for the global energy industry simply to find new caches of oil; the crude must be affordable. Tripledigit prices make it profitable to tap ever-more-expensive sources of oil, but the prices needed to pull this crude out of the ground will throw our economies right back into a recession. The energy industry’s task is not simply to find oil, but also to find stuff we can afford to burn. And that’s where the industry is failing. Each new barrel we pull out of the ground is costing us more than the last. The resources may be there for the taking, but our economies are already telling us we can’t afford the cost. Today, the world burns about 90 million barrels of oil a day. If our economies are no longer growing, maybe we won’t need any more than that. We might even need less. Maybe the oil trapped in the tar sands or under the Arctic Ocean can stay where nature put it. Bloomberg View


16 |

business daily September 26, 2012

CLOSING Oil-Tanker Glut expanding

Taiwan, U.S. to reopen trade talks

The surplus of the largest oil tankers available to load cargoes in the Persian Gulf expanded to a threeweek high. There are 20 percent more very large crude carriers for hire over the next 30 days than there are likely cargoes, according to the median estimate in a Bloomberg survey of seven shipbrokers and owners today. VLCCs on the Saudi Arabia-to-Japan voyage, the benchmark route for supertankers sailing to Asia, are losing US$1,406 daily. That compares with earnings of US$855 a day as of September 21.

The United States plans to send a team to Taiwan next month to kick off Taipei-Washington trade talks, a visiting U.S. government official said yesterday. Negotiations between the U.S. and Taiwan on Trade and Investment Framework Agreement, seen as a precursor to a full-fledged free-trade agreement, have been dormant since 2007. The hiatus was prompted by a dispute over the import of U.S. beef containing a growth drug. Washington had repeatedly urged Taipei to ease restrictions, indicating the stalled trade talks between the two sides hinge on the issue.

ECB, Bundesbank checking legality of bond programme Merkel reaffirms stance on joint policies

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he European Central Bank and Germany’s Bundesbank are examining the legality of the ECB’s new bond-buying programme, a German newspaper said yesterday, pointing to another possible barrier to moves to end the eurozone debt crisis. German tabloid Bild, which did not give details of its sources, said ECB

and Bundesbank in-house lawyers were checking what scale and duration the programme could reach before breaching EU treaties. The newspaper said this meant there was a possibility that the issue could soon be referred to the European Court of Justice and added that the ECB and Bundesbank wanted to legally “arm” themselves for

this scenario. The report alarmed financial markets, which lauded the bond-buying announcement this month as the sort of bold action needed to end the crisis. The euro fell in response. Bild said the background to this was controversy over the issue of whether the ECB bond-buying programme violates the ban in EU

Jens Weidmann, head of the Bundesbank

treaties of direct financing of state deficits. The Bundesbank and the ECB would not comment on the story. ECB President Mario Draghi said earlier this month, when he announced the programme, that he was certain it abided by the rules. “We are sure that we are acting within our mandate, that we are not violating Article 123,” he told a news conference after the bank’s monthly decision on interest rates. Article 123 prohibits the ECB financing governments. The ECB said then it stood ready to buy unlimited amounts of bonds issued by eurozone member states, provided they put in a formal request for aid and fulfilled strict domestic policy conditions. Jens Weidmann, head of the Bundesbank, was the sole dissenting voice in the ECB’s decision. Meanwhile, German Chancellor Angela Merkel said other euro-area countries couldn’t expect her to support the “false happiness” of shared liability

to stem the debt crisis because the root causes have become clear to everyone. Almost three years into the financial crisis that is tugging at the currency union, Mrs Merkel said policy makers agree with her assessment that the causes of the “crisis of confidence” in the euro area are excessive debt and gaps in competitiveness. “This analysis is, I believe, generally shared,” she said in a speech to the annual meeting of Germany’s BDI industry association in Berlin. “That’s already something. If you want to solve a problem, you at least have to be on the same basis when you ask about the cause. This wasn’t always the case at the start.” United Europe is worth defending, she said. “But this good fortune can’t lead to a false happiness where we looks into each other’s eyes and smile without talking about the real problems. The more united we are, the more honest we have to be with each other.” Addressing the audience of German executives and politicians, Mrs Merkel stuck by her stance that joint policies to combat the crisis require an increase in joint oversight in lockstep. The “right sequence of events” must be followed and “that’s why we still have a lot of tasks ahead of us.” Reuters/Bloomberg

Syria violence keeps destabilising Middle East UN envoy urges world body to intervene

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nited Nations Special Envoy Lakhdar Brahimi told the Security Council that reducing the violence in Syria isn’t possible unless the world body is united on a way to end the 18-month conflict. Mr Brahimi’s remarks on Monday underscored the UN’s paralysis in dealing with a civil war that has claimed more than 26,000 lives. He also was making clear that, if he fails in his mission to help the country make the transition to new leadership, the responsibility won’t be his alone. “You all say you support me individually; why don’t you support me collectively?”

Mr Brahimi told the gathered ambassadors when he briefed the Security Council, according to a diplomat in the room who wasn’t authorised to speak about the meeting. “It shouldn’t be very difficult,” the envoy told them. Mr Brahimi, who just returned from a trip to Damascus, Cairo and Syrian refugee camps in Jordan and Lebanon, spoke at the UN as world leaders gathered this week for the annual General Assembly. The Syrian conflict threatens to further destabilise a region already facing the possibility of an Israeli strike on Iranian nuclear facilities. The veteran

Algerian diplomat warned of the consequences. “There is no disagreement anywhere that the situation in Syria is extremely bad and getting worse, that it is a threat to the region and a threat to peace and security in the world,” Mr Brahimi said, speaking to reporters outside the Security Council chamber. Mr Brahimi’s predecessor, Kofi Annan, also placed some blame on the Security Council when he resigned from the position after less than six months, telling reporters about the “clear lack of unity” in the council as well as the “fingerpointing and name-calling”. Bloomberg

UN Envoy Lakhdar Brahimi


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