www.macaubusinessdaily.com
Year I Number 128 Thursday September 27, 2012
Editor-in-chief: Tiago Azevedo
Deputy editor-in-chief: José I. Duarte MOP 6.00
Second casino for Fisherman’s Wharf P
lans for a HK$5 billion (US$645 million) redevelopment of Fisherman’s Wharf are likely to include a second casino, Business Daily has learned. It’s likely to be ready by 2016 and would operate – like the existing facility Babylon Casino – on a gaming licence from Sociedade de Jogos de Macau SA. The notice in the Official Gazette yesterday mentioned only a “dinosaur museum”, a four-star hotel and a five-star hotel. But the person with knowledge of the situation confirmed there are plans for a second
gaming facility at the Outer Harbour site. The site’s developer – Macau Legend Development Ltd – is 58.3 percent owned by former Macau legislator David Chow Kam Fai and his mother, Lam Fong Ngo. Babylon Casino opened in December 2006. It is a short walk from Sands Macao, the city’s first foreign-owned casino. Mr Chow also operates the Pharaoh’s Palace Casino at the Landmark Macau hotel on Macau peninsula under an SJM licence. More on page 5
Brought to you by
HANG SENG INDEX 20575
20550
20525
Grim prospects for Macau exporters
20500
The confidence of Macau’s industrial exporters took a severe blow during the second quarter of this year, an official survey shows. Almost half of all local manufacturers are pessimistic on exports during the rest of the year and a significant slice even expects a strong decline. Product orders are down, below the threemonth mark, mostly due to slower demand from Africa, companies say. But exporters are also worried about the rising prices of raw materials, as well as with a possible labour shortage, as more than half of them claimed to be struggling with lack of human resources. Manufacturing wages are low but could be set to rise in order for companies to keep their workers. Page 2
20475
September 26
HSI - Movers Name
%Day
DELTA ELECT INC
3.17
UNI-PRESIDENT
1.37
HOTAI MOTOR CO
0.96
CHENG SHIN RUBBE
0.80
TSMC
0.58
HON HAI PRECISIO
-3.53
ACER INC
-3.55
TPK HOLDING CO L
-3.79
AU OPTRONICS COR
-4.85
LARGAN PRECISION
-6.29
Source: Bloomberg
Brought to you by
Deposit protection capped at MOP500,000 Page 3
Macauslot 2011 profit down 14.6 percent
2012-9-28
2012-9-29
25˚ 32˚
24˚ 30˚
23˚ 30˚
I SSN 2226-8294
‘No contradictions’ on Studio City: CE Page 4
2012-9-27
Page 7
2 |
business daily September 27, 2012
macau
Rise in costs dims export prospects Confidence among exporters of manufactured goods tumbles in the second quarter as demand softens Vítor Quintã
vitorquinta@macaubusinessdaily.com
43.9 percent The proportion of companies predicting a fall in exports
The flagging textile and garment industry had orders for the next 2.9 months in July
A
lmost half of manufacturers have a pessimistic outlook about exports as demand softens and the cost of raw materials rises, a new survey has found. The Economic Services Bureau survey said the percentage of exporters with confidence about the
future of their business dropped to 15.7 percent in the second quarter from 28.4 percent in the first. The survey said 43.9 percent of all companies believed exports would shrink between now and the end of the year, a result 17 percentage points worse than three months earlier.
The results show 15.6 percent expect a strong decline during the second half. “These data reflect companies’ lower confidence in future exports,” the bureau said. Exporters had, on average, orders for the next 2.65 months in the second quarter, having had orders for almost three months in the first. The flagging textile and garment industry had the best export prospects, with orders to last the next 2.9 months. The drop in export orders was due mostly to reduced demand from
Africa. Exporters believed better prospects could be found in the mainland, Hong Kong, the United States and Canada. Almost one-third of all companies said softer demand was the main hindrance to exports, and 14.9 percent said it was rising prices of raw materials. Nearly two-thirds of all exporters were worried that they would run short of labour, with just over half saying they struggled with a lack of labour. The number of workers employed by the companies surveyed was 5 percent lower in the second quarter than in the first. Competition and a lack of suitable labour have combined to raise fears among employers that wages will have to rise. The survey found 43.1 percent of all companies fear high salaries will become an issue in the next few months. At the end of March, the average salary of full-time employees in manufacturing was 7,340 patacas (US$920), and that of sewing machine operators was 3,610 patacas. The median salary citywide was 11,000 patacas. The survey found 61.2 percent of exporters believed increasing international competition was a concern. Manufacturing production continued to bounce back in the second quarter, official data released last month show, but it remains far below what it was before the end of the World Trade Organisation quotas in 2005.
business as usual
Singular city vision Paulo A. Azevedo pazevedo@macaubusinessdaily.com
I
t is almost 3am when I turn on the television in my hotel room in Bangkok. Bloomberg is interviewing Sir Richard Branson. At times like these, I realise what a true visionary looks like. Compare his outlook and worldview to the politicians that abuse phrases such as “my vision”, even though we know they have no vision at all. It is doubtful these politicians have ever risked anything that belonged to them – they have seldom had an original idea – because they tend to thrive on the strength of connections, family ties and high levels of impunity. The Virgin Airlines founder was plugging his new book “Like a Virgin”, as if we needed any more proof of his acute sense of humour by plagiarising the title of the song that made Madonna a music diva. Bloomberg’s interviewer tried to be complementary, again and again raising the importance of Mr Branson’s achievements. The British entrepreneur sought refuge in simplicity, acknowledged a few favourable business decisions and a little luck, which all of us occasionally need. The interviewer asked what he would like to achieve next. Suborbital spaceflights with Virgin Galactic, something he has been working on for the past few years. I always sense the bitterness that comes from frustration when I see someone who deserves my profound recognition. It forces me to look back to Macau, a city that has become my home, and realise that most businessmen here lack the passion to achieve anything great beyond the scale of their bank accounts. The city desperately needs a couple of Richard Bransons so it can develop beyond a piece of land with nice buildings, interesting heritage and no sense of business serving the community.
September 27, 2012 business daily | 3
MACAU Top court backs wastewater tender The Court of Final Appeal has yesterday upheld the reopening of the public tender for the Macau peninsula wastewater treatment plant, rejecting an appeal from Indian-Austrian company Va Tech Wabag Ltd. After turning down an injunction in May, the judges again said the decision to reopen the tender is not final and will not cause damage to the interests of Wabag or the other bidders. Only the final outcome of the adjudication might be a valid reason for a judicial appeal, the judgement adds.
Govt puts cap on deposit protection Compensation of up to 500,000 patacas for each account will be paid if a bank collapses Tony Lai
tony.lai@macaubusinessdaily.com
T
he Executive Council has set the maximum compensation payable if a bank collapses at 500,000 patacas (US$62,500) for each account. The limit, announced yesterday, will mean 95 percent of all deposits in banks will be fully covered. Most of the officials managing the deposit protection scheme fund would come from the Monetary Authority of Macau, Executive Council spokesperson Leong Heng Teng told reporters. The council finished discussing the subsidiary legislation complementing the bank deposit protection act, which comes into effect next month. The act turns a temporary scheme into a permanent fixture. It was set up during the global financial crisis in 2008, when rumours circulating on the Internet started a run on Wing Hang Bank Ltd. A year ago, the International Monetary Fund called a scheme to compensate depositors in banks that fail. The limit of 500,000 patacas is no surprise as this was the ceiling the government set in 2010. Mr Leong said the Executive Council set the ceiling after taking into account the experience of other jurisdictions, particularly Hong Kong, where compensation is capped at HK$500,000. “Data from the Monetary Authority also tells us this amount
Housing subsidy raised, extended
A run on the Wing Hang Bank in 2008 led to the creation of the deposit protection scheme
can cover 95 percent of bank deposits in Macau,” he said. Mr Leong expects that at least 300 million patacas will be required to ensure the normal operation of the deposit protection scheme fund. The government will initially put 150 million patacas in the fund and all 25 of the city’s licensed banks, except offshore institutions, will start contributing an annual payment equivalent to 0.05 percent of their deposits by 2014. Mr Leong had no comment on when the fund might reach 300 million patacas. But he said the “bill allows the fund to borrow money from the Monetary Authority for compensation in case
of lack of capital”. He said three committees would be set up to manage the fund: one for administration, one for oversight and one for consultation. The fund’s administrative committee would be the same as the administrative committee of the Monetary Authority, he said, which means Monetary Authority chief Anselmo Teng Lin Seng will chair the new fund. Mr Leong said the other two committees would be made up of officials of the financial regulator, the Financial Services Bureau and members of the Macau Association of Banks, including association president Zhang Hong Yi.
Households on the waiting list for social housing will receive a monthly rental subsidy of between 1,350 patacas (US$168.80) and 2,050 patacas until next August, the Executive Council announced yesterday. The government has extended the scheme for an another year and increased the subsidy by 100 patacas for households of up to two people and by 150 patacas for bigger families. The increments were approved after taking into account rising inflation and the average cost of rented flats. Council spokesperson Leong Heng Teng said extending the plan was likely to forecast to cost the government about 100 million patacas. Mr Leong said the income ceiling for the subsidy had been raised by about 8 percent to help more households. The new ceiling is 7,570 patacas for individuals and at 22,440 patacas for families of seven members or more. There were more than 6,700 applicants on the waiting list for social housing in July. The government has spent 223 million patacas in subsidies since it launched the programme in 2008.
Govt to set rules for green vehicles The government will solicit public opinion this year on a bill to cut vehicle emission standards Xi Chen
xi@macaubusinessdaily.com
R
ules on importing newer environmentally friendly vehicles will probably be introduced this year, the head of the Environmental Protection Bureau, Cheung Sio Kei, told reporters yesterday. Mr Cheung was taking part in a forum at the Cultural Centre about the technology and the development of electric vehicles, co-organised by the bureau. Mr Cheung said the government needed to consider carefully the safety and suitability of vehicles powered by natural gas or electricity, or of other kinds of environmentally friendly vehicles. The bureau was also studying the extra infrastructure that would be needed for greener motoring.
Speaking on the sidelines of the forum, Mr Cheung said the bureau was nearing completion a draft bill on vehicle emission standards and would begin public consultations this year. A study last year by the University of Macau and electricity company Companhia de Electricidade de Macau – CEM SA found it was 70.4 percent cheaper to run an electric vehicle here than a vehicle powered by an internal combustion engine. Vehicles imported into Macau must now meet the European Union’s Euro IV emission standard but imports to Hong Kong must meet the cleaner Euro V standard. The government considers vehicle emissions as the No. 1 cause of air
pollution in Macau. The forum was told that green vehicles used less energy and did less harm to the environment, but there were constraints on their widespread adoption.
Fire risk A researcher at the Chinese Academy of Sciences institute of physics, Huang Xuejie, said electric vehicles, despite themselves producing no emissions, were 10 times more expensive to make than conventional vehicles and had lower endurance. He said electric vehicles were likely to become a more viable commercial
proposition after 2015, once the technology needed to build them had improved and become cheaper. The city has two public recharging stations for electric vehicles: one at the Park Lane Car Park, in the Senado Square area, and the other at the Vasco da Gama Car Park near Tap Seac Square. The safety of electric vehicles may also affect their take-up. An electric car in the mainland burst into flames when it was involved in a collision, raising questions about the ability of such vehicles to protect their occupants in the event of a crash. The rate of adoption of electric vehicles will also depend on the rate of installation of recharging stations.
4 |
business daily September 27, 2012
macau
Macauslot profit wanes with footy fortunes With operating costs up and two years until the next World Cup, sport-betting operator is likely to see lean times Vítor Quintã
vitorquinta@macaubusinessdaily.com
A
fter a results boost from the 2010 World Cup in South Africa, sport betting concessionaire Sociedade de Lotarias e Apostas Mútuas de Macau Lda (Macauslot) fell back to earth last year. Macauslot recorded a profit just shy of 55 million patacas (US$6.9 million), down by 14.6 percent year-on-year. Macauslot’s 2011 results were published in yesterday’s Official Gazette. The company is part of the business empire built by Stanley Ho Hung Sun. The percentage drop in profit was much bigger than the 2.4 percent decrease in revenue, which reached 448 million patacas, indicating that the company’s operating costs grew. Macauslot pocketed just 12.3 percent of its revenue last year, down from 14 percent the year before. The main reason for the revenue decrease was a drop in betting on football. Revenue from football betting fell by 4.7 percent to 362 million patacas, after jumping by more than one-third in 2010 because of the World Cup. Revenue from betting on
basketball grew to a record 86 million patacas, 8.9 percent more than in 2010. Macauslot’s management board, led by Louis Ng Chi Sing, said it would “explore potential markets, promote product development and increase service quality”. Sport betting rebounded in the first half of this year. With the Euro 2012 football tournament having been held in June, revenue in the first half rose to 264 million patacas, 16.3 percent more than a year before, and betting
turnover rose by almost one-third to 3.9 billion patacas. Macauslot failed to announce its annual results on time for the seventh consecutive year. The law says a concessionaire has until June 30 the following year to announce its results for any given calendar year, otherwise it may be fined between 10,000 patacas and 1 million patacas for each day they are late. Macauslot’s 2010 results were
published 411 days late, making the company, in theory, liable to a fine of between 4.11 million patacas and 411 million patacas. The gaming regulator told Business Daily last month that the delay was “due to the fact that the auditors have other opinion on some accounting treatment that is different from the management”. The bureau accepted the late submission of the results and no fine was imposed.
MOP55 million Macauslot’s 2011 profit
Macauslot failed to announce its annual results on time for the seventh consecutive year (Photo: Manuel Cardoso)
Corporate
Sands China’s record half million weekend visits Sands China Ltd says its four Macau properties received half a million visitors in the weekend immediately following the opening of Phase II of Sands Cotai Central – a record for 2012. The visitor numbers were recorded for the period Friday September 21 to Sunday September 23 inclusive. “We are very pleased with the customer response to our new facilities at Sands Cotai Central and it bodes well for the long term growth of Cotai,” said Edward Tracy, president and chief executive officer of Sands China. “Sands China Ltd strives to diversify Macau tourism industry through bringing in the absolute best in hotels, restaurants, shops and entertainment events,” stated Mr Tracy. “The addition of Sheraton Macao to Sands Cotai Central means Sands China’s integrated resorts on the Cotai Strip will soon have a combined 9,000 rooms on offer – a significant step towards developing Macao into a world centre of business, tourism and leisure,” the Sands China CEO said.
Mandarin Oriental, Macau, ‘Best Hotel Spa in China’ Mandarin Oriental, Macau was named ‘Best Hotel Spa in China’ at the recent SpaChina Awards. The hotel also received an award for ‘Most Novel Facial Treatment of the Year’. Andrew Gibson, Mandarin Oriental Hotel Group’s group director of spa said: “We are delighted to have been honoured again in the SpaChina Awards, and are pleased that the hard work and consistency of our spa teams are being recognised…” The Spa at Mandarin Oriental, Macau offers eight treatment rooms with single and couples’ suites, a room for Thai massage, a VIP suite containing what the company says is Macau’s first heated scrub table, and a full range of manicure and pedicure services. Mandarin Oriental spas are also providing what the company describes as “the ideal venue in which to experience superb therapeutic massages and excellent skin care programmes”.
September 27, 2012 business daily | 5
MACAU Extra day-off for civil servants Macau’s 26,000 civil servants will get an extra day-off on October 3, Chief Executive Fernando Chui Sai On announced in yesterday’s Official Gazette. Public workers will thus have a long weekend covering five days, as they already had October 1-2 off, due to the celebrations of the Mid-Autumn Festival and China’s National Day. The dispatch also states that any servants who must work on October 3 will be entitled to requesting an extra day-off until the end of June 2013.
Second casino planned for Fisherman’s Wharf Macau Legend to build facility using SJM gaming licence Associate Editor
P
lans for a HK$5 billion (US$645 million) redevelopment of Fisherman’s Wharf are likely to include a second gaming facility to complement the Babylon Casino already on the site, a person with knowledge of the matter told Business Daily yesterday. The notice in the Official Gazette yesterday mentioned only a “dinosaur museum”, a four-star hotel and a fivestar hotel. But the person confirmed there are plans for a second gaming facility. “The agreement with the government is for a casino in addition to Babylon Casino,” said the person. No information was available on how many tables are being sought for the second casino.
Investor haircut
Babylon Casino is part of Fisherman’s Wharf phase one
Permission given The person added that the legal right to gaming on the site was contained in the original Fisherman’s Wharf development agreement. It allowed for a so-called service provider agreement using the gaming licence of Sociedade de Jogos de Macau SA. It didn’t detail how many gaming
facilities could be built using the service provider agreement said the person. “It doesn’t specify the number of facilities. The requirement is just that it has to be within the perimeter of the site,” said the person. If a second casino is built it should be ready by 2016 at the latest. The site’s developer – Macau Legend
Angela Leong to seek re-election
D
Development Ltd, 58.3 percent owned by former Macau legislator David Chow Kam Fai and his mother, Lam Fong Ngo – didn’t mention a second casino for Fisherman’s Wharf at a press conference in August. But the firm did say that “60 percent” of the new attractions would be ready by 2015 and the remainder by the following year. The existing gambling facility on the site, Babylon Casino, opened in December 2006. It is a short walk from Sands Macao, the city’s first foreign-owned casino. The latter launched in May 2004.
Table cap Grant Govertsen of Union Gaming Research Macau, told Business Daily the main challenge faced by the Fisherman’s Wharf developers would
SJM executive to run for third-term as legislator despite low performance ranking in recent survey irectly elected legislator Angela Leong On Kei would like to be re-elected next year, she told the media on Tuesday. Ms Leong, also the managing director of SJM Holdings Ltd, said on the sidelines of the gaming operator’s China National Day celebration she still feels able of performing her duty as a legislator and serving the public. She is the second lawmaker to announce her re-election bid after legislator Melinda Chan Mei Yi, the wife of gaming businessman David Chow Kam Fai, announced hers last week. However, a recent public survey conducted by the Association of Macau New Vision indicated that she ranked last in terms of performance
be getting tables for a second casino. “I think if there were to be a second casino the issue would be getting tables to populate it during the operation of the table cap. There are a lot of greenfield projects already in line for table allocation,” said Mr Govertsen. Mr Chow announced on August 30 that the government had given “overall” approval to a redevelopment of Fisherman’s Wharf. The revamped site is also expanding by 22 percent. Macau Legend will pay the government a land premium of 208.7 million patacas for an extra 23,500 square metres. SJM Holdings Ltd, a Hong Kong-listed company founded by Stanley Ho Hung Sun has taken a four percent stake in Macau Legend for HK$480 million. The current Fisherman’s Wharf site has had a troubled history. After opening to a gala concert performed by the violinist Vanessa Mae on December 31 2005, the HK$2 billion waterside collection of shops, restaurants and themed architecture failed to draw crowds. At that time Stanley Ho had a 51 percent stake in the venture with Mr Chow on 49 percent.
among all directly elected legislators. The survey found that public satisfaction on the contributions of those legislators have declined in the last two years, even though all of them still achieved a passing grade above the 50 points out of 100. Pan-democrats Ng Kuok Cheong and Au Kam San ranked top of the chart in terms of performance, while Kwan Tsui Hang was shown to be the most well-known legislator among the sample public. The survey also revealed that only 2.4 percent of the interviewees were satisfied with the overall performance of the Legislative Assembly last year, while 60 percent believe the performance was mediocre. X.C.
In 2010 a group of international investors – including investment bank Merrill Lynch, Och-Ziff Capital Management Group (a U.S. hedge fund) and TPG-Axon Capital Management – took a 68 percent haircut on US$390 million worth of convertible bonds Mr Chow had raised from them on the strength of the Fisherman’s Wharf story. “In our opinion, Macau Fisherman’s Wharf has never lived up to its potential despite having what some would consider extremely prime real estate. The proposed redevelopment plan should go a long way towards 1) improving earnings and 2) lifting the development’s profile,” said Union Gaming Research in a note before news of the second casino was revealed. MrChowalsooperatesthePharaoh’s Palace Casino at the Landmark Macau hotel on Macau peninsula under an SJM licence. Attempts to contact Mr Chow yesterday for comment were unsuccessful.
6 |
business daily September 27, 2012
macau Diaoyu dispute to affect Food Festival The escalating tension in the Sino-Japanese ties over the disputed Diaoyu Islands, also known as Senkaku Islands, might prevent over 30 Japanese restaurants from joining this year’s Macau Food Festival, said Chan Chak Mo on Tuesday. The president of the United Association of Food and Beverages Merchants said they would know in two weeks whether the Japanese businesses could join the event as in previous years. About 130 booths would be set up in the 12th Macau Food Festival, to be held during 17 days in November near the Macau Tower.
Macau bright spot in Esprit’s drab results Sales at Esprit’s stores in Macau rose in the year ended June, even as group restructures Vítor Quintã
vitorquinta@macaubusinessdaily.com
G
lobal clothing retailer Esprit Holdings Ltd fell 11 percent in the year ended June 2012, with Macau one of the few bright spots for the company. The retailer saw sales at its three local stores grow by 9.2 percent to HK$106 million (US$13.67 million), it told the Hong Kong Stock Exchange yesterday. With Esprit’s overall revenue falling to HK$30.2 billion, Macau took up 0.6 percent of the group’s turnover, up from 0.5 percent in the previous year. In addition, the company’s Macau operations also recorded wholesale turnover of HK$477 million, up by 2.6 percent year-on-year. However, these figures, which account for 3.9 percent of the group’s wholesale turnover, also include sales to Colombia, Chile, and Thailand, the company said in the statement.
Despite Esprit’s revenue drop, it still posted a 11-fold rise in full-year net profit, boosted by an exceptional
HK$106 million
Esprit sales in Macau shops
Europe-focused clothing retailer Esprit currently has three stores in Macau
gain related to the closure of its North American operations. In the previous year the company took a one-time charge of HK$2.3 billion to set aside provisions for the closure of stores. The overall closure costs were less than expected and the company was able to write back some of those provisions in the latest term. Esprit reported a net profit of HK$873 million for its fiscal year ended in June, up from just HK$79 million a year earlier. However, the Europe-focused retailer missed analysts’ forecasts, whose average estimate was of HK$1.01 billion of profit in a poll of
10 analysts by Thomson Reuters. Esprit lost 73 percent of its market value last year because of the recession in Europe but its shares have gained 29 percent so far in 2012. Still, shares of Esprit fell heavily by 6.94 percent to close at HK$12.34 in Hong Kong trading yesterday. The earnings underline the challenge the new chief executive officer Jose Manuel Martinez Gutierrez, who ran distribution and operations at rival Inditex SA, faces to revive Esprit. Mr Martinez officially became chief executive officer yesterday, taking the place vacated by Ronald Van der Vis, who announced his departure in June. With Reuters/Bloomberg
Vincent Piket heads EU office
D
Vincent Piket will lead the Office of the EU to Hong Kong and Macau
utch diplomat Vincent Piket has already assumed his duties as the new head of the Office of the European Union (EU) to Hong Kong and Macau, the office confirmed. Mr Piket, who during the last four years was the European Union Ambassador to Malaysia, pledged to boost the ties with the two regions. “The European Union and Hong Kong and Macao SARs are enjoying a strong relationship,” Mr Piket said in a press statement. “We are linked by longstanding historical ties and shared values, and there are thriving trade and investment flows as well as vibrant people-to-people exchanges,” he added.
Mr Piket replaces Maria Castillo Fernandez, who will return this month to the European Union headquarters in Brussels to be in charge of the India, Nepal and Bhutan affairs. “Together with the EU member states I hope to contribute to the further growth of these relations,” Mr Piket stressed. Before leaving, she assured Business Daily in an interview that her successor would be a diplomat with Asia experience. Prior to his position in Malaysia, Mr Piket was head of the European Commission’s unit for regional cooperation programmes for Asia and Central Asia from 2005 to 2008. V.Q.
September 27, 2012 business daily | 7
MACAU
Studio City ‘qualified’ for casino bid, Chui says
G
aming operator Melco Crown Entertainment Ltd is “fully qualified” to apply for casinos in Studio City project on Cotai, Fernando Chui Sai On said yesterday. The chief executive was speaking to reporters about the recent controversy on whether the Studio City project has the right to a casino before leaving to Beijing. Secretary for Transport and P u blic Wor ks , L au Si Io, and Secretary for Economy and Finance, Francis Tam Pak Yuen, had said on several occasions the project could not include any gaming elements as it had applied for it before 2008. However, Mr Tam said last Friday the project was eligible after all. The original developer of the Studio City project had applied for casinos before 2008 but the international financial crisis stalled the works, Mr Chui confirmed yesterday. After MPEL took over the project last year, it submitted a new integrated development plan to Mr Lau, he said. The plan included no gaming element at the time but the company later officially applied for casinos to “a public department” under Mr Tam, the chief executive added. Mr Chui sees no “contradiction in the explanations of the two secretaries, as well as no conflicts in the government policy”.
Studio City – ‘fully qualified’ for a casino (Photo: Manuel Cardoso)
He stressed the administration would assess any gaming project in accordance with the existing procedures, and continue to publicise relevant information to the public. According to plans seen by Business Daily in April, the Cotai venue is likely to have 336 gaming
tables – 36 of them for VIPs. Lawrence Ho Yau Lung, cochairman and chief executive of MPEL told media at a presentation in July last year that Studio City would have 400 tables. MPEL told the Hong Kong Stock Exchange on Tuesday the company
would invest an additional US$350 million (2.8 billion patacas) in equity capital toward the Studio City project. As a result its stake will rise from 60 percent to 67 percent and the stake of the other partner New Cotai will be diluted from 40 percent to 33 percent. T.L.
10 |
business daily September 27, 2012
asia
Ex-PM Abe wins Japan party vote Polls show opposition widening lead ahead of election Isabel Reynolds and Takashi Hirokawa
What is the LDP going to do to revive the economy?” The opposition faces pressure to help pass legislation funding this year’s budget or imperil an economic recovery threatened by falling exports. The LDP agreed to support a bill raising the sales tax to cope with the world’s largest debt in exchange for Mr Noda’s pledge to call elections “soon”. Mr Noda, who was re-elected head of the ruling Democratic Party of Japan last week, has yet to say when that might be.
LDP has lead
J
apan’s main opposition party chose Shinzo Abe as its leader to contest the next election, five years after he suddenly resigned as prime minister blaming illness and a policy deadlock. Mr Abe, 58, defeated former Defence Minister Shigeru Ishiba in a runoff to become head of the Liberal Democratic Party ahead of elections
Prime Minister Yoshihiko Noda must call by August. Polls indicate the LDP may win, putting Mr Abe in line to become premier for a second time. An advocate of revising Japan’s pacifist constitution to loosen military restrictions, Mr Abe has called for building on islands at the heart of a territorial dispute with China that is threatening trade between Asia’s two
biggest economies. He also favours having the Bank of Japan adopt an inflation target of 3 percent to combat more than a decade of falling prices. “He’s taken a hard line on China, but foreign policy doesn’t win elections,” said Jeff Kingston, head of Asian studies at the Tokyo campus of Temple University. “Abe stumbled so badly the last time as prime minister.
“Abe is pro-growth, meaning he is in favour of inflation targeting and more money printing,” said Hiromichi Shirakawa, chief economist in Tokyo at Credit Suisse Group AG and a former Bank of Japan official. “There will be more instability politically because Abe will just criticise DPJ policies.” Japan and China are mired in their biggest diplomatic crisis since 2005 over islands in the East China Sea called Senkaku in Japanese and Diaoyu in Chinese. Mr Noda’s government bought them from a private owner this month, sparking outrage from China. While he has no construction plans, Mr Abe and other senior LDP officials have called for building facilities on them to aid
Malaysia’s PM may extend handouts Generous budget expected as election looms Siva Sithraputhran and Anuradha Raghu
M
alaysia’s Prime Minister Najib Razak is expected to unveil a voter-pleasing budget on Friday, placing the priority on winning a tough election above addressing the country’s rising debt burden. Economists say Mr Najib will likely delay much-needed reforms to broaden Malaysia’s tax base and reduce its dependence on oil revenues to at least next year, while announcing measures to help poorer families struggling with rising living costs. Strong revenues in 2012 mean Mr Najib can afford to be generous in the budget for next year without alarming financial markets, but further signs of fiscal slippage would add to investor concerns over a steady deterioration in Malaysia’s finances. The Southeast Asian country’s public debt as a percentage of gross domestic product is just short of its self-imposed ceiling of 55 percent – up from 43 percent in 2008 – while its budget deficit of 4.7 percent in the first half of 2012 is the third-biggest in Asia after Japan and India. Fitch Ratings said in August that Malaysia’s public finances were weak compared with other countries on equivalent sovereign ratings (A minus) and on a par with heavily indebted countries such as Italy and Israel. “Very plainly this is going to be an election budget. It’s going to be generous,” said Irvin Seah, an economist at DBS Bank in Singapore.
“At this point, the need for political support will take precedence over some economic considerations.” Mr Najib must call an election by next April and has already announced a series of handouts this year, including 2.6 billion ringgit (US$847 million) in cash payments to poor families, to shore up support for the long-ruling Barisan Nasional coalition. Although the coalition is widely expected to win the election, it suffered its worst-ever performance in 2008 polls and faces perhaps the closest-ever election this time as the opposition gains ground.
Record budget Mr Najib, who is also Malaysia’s finance minister, is widely expected to announce further cash payments to poorer citizens, combining them with steps to ease living costs for low-income households and public servants. That could give a further boost to the country’s buoyant consumer spending. Malaysia’s 2013 budget will be 259 billion ringgit, bigger than last year’s record 232.8 billion ringgit, Citigroup Inc. estimates. The economy grew at a brisk annual pace of 5.4 percent in the second quarter, but many lowerincome and middle-class Malaysians complain their salaries have not kept pace with rising living costs and
PM Najib Razak’s efforts to build support ahead of national elections may limit progress in reducing the budget deficit
surging house prices. “The budget will be people friendly and will ensure the country will achieve its goal to become a highincome nation by 2020,” Malaysia’s deputy finance minister Donald Lim told reporters on Tuesday. Helped by strong economic growth, Malaysia’s revenues for 2012 are expected to top 200 billion ringgit, well above the government’s 187 billion ringgit target. But public spending is also growing, raising doubts over whether the government can achieve its goal of keeping the fiscal deficit at 4.7 percent of GDP this year. The deficit would exceed 4 percent for a sixth straight year. Mr Najib is expected to set the
deficit target for 2013 lower than the 4.7 percent goal for this year. In one bow to fiscal discipline, he is unlikely to announce any corporate or individual income tax cuts. Reuters
US$847 million
Value of cash handouts announced this year
September 27, 2012 business daily | 11
asia Of course my victory in this race doesn’t clear away my responsibility for what happened five years ago Shinzo Abe, new leader of Japan’s Liberal Democratic Party
Japanese fisherman. Mr Abe resigned as premier on September 12, 2007 after a year in office citing health problems, setting off a revolving door of Japanese prime ministers. His popularity plummeted after the government revealed that millions of dollars in pension-fund money had gone unaccounted for, and his cabinet ministers were involved in a succession of scandals. “Of course my victory in this race doesn’t clear away my responsibility for what happened five years ago,” Mr Abe told party members yesterday in Tokyo. “With my responsibility for that experience engraved in my heart, I will do all in my power to win the next election.” A Yomiuri newspaper poll published on September 18 showed 31 percent of respondents planned to vote for the LDP in the proportional representation section of the next election, compared with 14 percent for Mr Noda’s Democratic Party of Japan and 16 percent for a new party formed by Osaka Mayor Toru Hashimoto. Bloomberg
IMF urges Indonesia to continue fiscal reforms Points out to significant external risks to the country’s outlook
I
ndonesia should use fiscal stimulus as a first policy response if risks to growth materialise because it has little room to cut interest rates, according to the International Monetary Fund. Indonesia’s economic growth will slow to 6 percent this year from 6.5 percent in 2011 and accelerate to 6.3 percent next year, the Washingtonbased IMF’s staff predicted in an annual assessment of the country’s economy released yesterday. The central bank should stand ready to increase its policy rate if inflation, now seen at 5 percent by the end of the year, accelerates further, IMF staff said. “There are significant external risks to the outlook, accentuated by domestic factors,” the IMF staff wrote in the report. If risks such as a worsening of Europe’s debt crisis or a so-called hard landing in China materialise, “additional discretionary spending would be the best channel,” according to the report, which recommended preparing “a list of infrastructure projects that could be quickly ramped up”. President Susilo Bambang Yudhoyono is increasing spending on roads, seaports and airports as he woos investment to spur Southeast Asia’s largest economy. More than a decade after the Asian financial crisis forced the nation to seek an IMF bailout,
Indonesian central bank should boost spending if risks materialise, IMF says
Fitch Ratings and Moody’s Investors Service have raised Indonesia to investment grade, and the country’s growth is among the fastest in the Group of 20 nations. Bank Indonesia kept its benchmark interest rate at a recordlow 5.75 percent for a seventh straight meeting in September as accelerating economic growth and inflation reduced the scope for monetary easing to counter an export slump.
Temasek to reduce stake in SingTel Company to raise US$1 billion from sale
T
emasek Holdings Pte, Singapore’s state-owned investment company, is selling S$1.28 billion (US$1 billion) of shares in Southeast Asia’s biggest phone company, according to two people with knowledge of the deal. The stock slumped the most in more than a year. Temasek is selling 400 million shares in Singapore Telecommunications Ltd (SingTel), representing a 2.5 percent stake, at S$3.20 each, according to the people, who asked not to be identified because the information isn’t public. The
price, at the lower end of a S$3.20 to S$3.25 range in a term sheet sent to investors, is a 3.9 percent discount from Tuesday’s closing price of S$3.33. Temasek, which managed S$198 billion of assets as of March, said in June it’s seeking investment opportunities as the turmoil in Europe may result in a market slump rivalling the 2008 global financial crisis. Before the sale, SingTel rose 7.8 percent this year, lagging behind the 16 percent gain in the Singapore benchmark Straits Times Index.
“As an active investor for the long term, we rebalance our portfolio from time to time,” Temasek said in an e-mailed statement. “We continue to be a significant shareholder in SingTel, which remains the largest company in our portfolio,” it said, without providing any numbers.
Stable earnings SingTel shares dropped 3.6 percent to S$3.2 as of 4pm, set for the
“Increasing the policy rate does not appear necessary at this stage – staff analysis suggests that monetary tightening could be achieved by allowing short-term rates to drift back toward the policy rate, which has been unchanged at 5.75 percent since February,” according to the report. The IMF also estimated that the country’s real exchange rate is “moderately undervalued” by zero to 10 percent. Bloomberg
biggest decline since August 2011. “It’s probably part of their rebalancing and they are probably looking at something else,” said Carey Wong, an analyst at OCBC Investment Research in Singapore. “SingTel’s earnings, while not fantastic, continue to remain stable,” he said, adding that “the market has overreacted a bit”. The phone company last month reported first-quarter profit that missed analysts’ estimates as currency moves and lower sales at its Australian unit cut earnings. Temasek owned 8.67 billion shares, or 54.4 percent of the outstanding shares of SingTel, Singapore’s biggest phone operator, according to data compiled by Bloomberg. It will reduce its stake to 51.9 percent. Temasek’s stake was worth S$29 billion, based on its market valuation of S$53 billion at the end of trading in Singapore yesterday. Bloomberg
Singapore production unexpectedly falls S ingapore’s industrial production unexpectedly declined for the first time in four months in August as companies reduced output of electronics, pushing the local dollar to the weakest level in two weeks. Manufacturing fell 2.2 percent from a year earlier after a revised 2.5 percent gain in July, the Economic Development Board said yesterday. The World Trade Organization last week cut its forecast for commerce growth this year, and the International
Monetary Fund is preparing to reduce its global expansion estimates, Managing Director Christine Lagarde signalled. Singapore trimmed its gross domestic product outlook for 2012 after the economy contracted in the three months through June from the previous quarter. “There’s a risk that weak numbers will tip Singapore into a technical recession,” Selena Ling, a Singaporebased economist at Oversea-Chinese
Banking Corp., said before the report. “There are hopes that global stimulus implementation will give a boost or stabilize output towards the year-end. But it’s too early to see any strong recovery in the pipeline.” The island’s central bank, which uses the exchange rate to manage inflation, said in April it would allow faster local dollar gains to damp price pressure. Economists including Irvin Seah at DBS Group Holdings Ltd have said they expect the monetary
authority to ease its policy stance next month and adopt a more gradual pace of currency appreciation as growth risks increase. Output fell a seasonally adjusted 2.3 percent from the previous month, when it slid a revised 8.7 percent. Electronics production declined 7.3 percent from a year earlier in August, while pharmaceutical output rose 13.6 percent. Chemicals increased 6.6 percent, the report showed. Reuters
12 |
business daily September 27, 2012
MARKETS Hang SENG INDEX NAME
PRICE
Day %
64.3
0.1557632
2676773
SANDS CHINA LTD
28.45
-0.5244755
6295585
SINO LAND CO
14.46
1.830986
10750361
SUN HUNG KAI PRO
111.6
0.6311993
6270631
SWIRE PACIFIC-A
93.9
-1.520713
1696765
TENCENT HOLDINGS
256 -0.07806401
POWER ASSETS HOL
TINGYI HLDG CO
8
2470207
22.95
0.2183406
4046904
9.74
-0.408998
9842910
WANT WANT CHINA
MOVERS
VOLUME
39
2 20750
INDEX 20527.73 HIGH
20744.41
LOW
20485.99
52W (H) 21760.33984 (L) 16170.35
20490
24-Sep
26-Sep
Hang SENG CHINA ENTErPRISE INDEX
MOVERS
5
35
0 9790
INDEX 9628.4 HIGH
9824.51
LOW
9676.14
52W (H) 11916.1 (L) 8058.58
9590
24-Sep
26-Sep
Shanghai Shenzhen CSI 300 NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
4.27
-1.157407
1648208
SANY HEAVY INDUS
9.01
-1.422319
16725460
11.52
-1.285347
7428945
SHANDONG GOLD-MI
38.98
-1.961771
13965770
GD MIDEA HOLDING
9.18
0
9139999
SHANG PHARM -A
11.28
-1.225919
5296115
GD POWER DEVEL-A
2.33
-0.8510638
19463772
SHANG PUDONG-A
7.11
-0.698324
28344266
SHANGHAI ELECT-A
DATANG INTL PO-A EVERBRIG SEC -A
GF SECURITIES-A
NAME
12.6
1.531023
47158383
GREE ELECTRIC
20.43
0.1470588
3589144
GUANGHUI ENERG-A
14.38
-0.2081888
16786748
SHANXI XINGHUA-A
GUIZHOU PANJIA-A
16.65
0.5434783
19241968
SHANXI XISHAN-A
HAITONG SECURI-A
8.86
-1.116071
29829000
SHENZEN OVERSE-A
SHANXI LU'AN -A
3.94
0
6295259
17.59
-1.731844
13328392 1145986
36.6
-1.267872
12.71
-1.012461
9791510
5.36
-0.1862197
12133189
HANGZHOU HIKVI-A
26.68
-1.839588
1375542
SUNING APPLIAN-A
6.1
-0.974026
52826625
HENAN SHUAN-A
56.79
-1.917098
641609
TONGLING NONFE-A
18.59
-2.054795
10228507
HONG YUAN SEC-A
17.17
-2.276608
10748898
TSINGTAO BREW-A
31.44
-1.100975
1696519
HUATAI SECURIT-A
8.95
-1.540154
6696364
WEICHAI POWER-A
17.97
-0.5534034
3697849
HUAXIA BANK CO
7.79
-0.8905852
11479992
WULIANGYE YIBIN
32.38
-1.460743
10572671
IND & COMM BK-A
3.64
-0.2739726
19912907
XIAMEN TUNGSTEN
38.17
-1.369509
3940999
INDUSTRIAL BAN-A
11.65
-0.08576329
17832574
YANGQUAN COAL -A
13.84
0
8882216
INNER MONG BAO-A
32.06
-1.049383
17501287
YANTAI CHANGYU-A
44.45
-4.037133
1898250
INNER MONG YIL-A
20.06
-0.5946482
3323455
YANTAI WANHUA-A
13.05
-0.4576659
6273599
INNER MONGOLIA-A
4.9
-1.408451
24029758
YANZHOU COAL-A
17.69
-0.5621135
2437443
JIANGSU HENGRU-A
30.2
1.444407
1601977
YUNNAN BAIYAO-A
59.8
-1.206014
776981
JIANGSU YANGHE-A
118.6
0.1858422
1346357
ZHONGJIN GOLD
16.63
-3.817235
48487002
JIANGXI COPPER-A
21.36
-2.3766
6938437
ZIJIN MINING-A
JINDUICHENG -A
11.16
-1.06383
3222833
ZOOMLION HEAVY-A
JIZHONG ENERGY-A
11.98
-0.6633499
11897806
KANGMEI PHARMA-A
14.89
-0.5344021
10077934
KWEICHOW MOUTA-A
2036267
235.87
-1.106872
LUZHOU LAOJIAO-A
36.7
-1.71398
5104255
METALLURGICAL-A
1.99
-0.9950249
9783700
NARI TECHNOLOG-A
17.74
0
20835387
NINGBO PORT CO-A
2.43
-0.4098361
11937150
PANGANG GROUP -A
3.6
-2.439024
32598956 10629779
ZTE CORP-A
MOVERS
23
8.52
-1.616628
PING AN BANK-A
12.64
-0.7849294
7078915
HIGH
2220.74
PING AN INSURA-A
40.35
-0.3211462
10248266
LOW
2178.59
POLY REAL ESTA-A
10.03
-1.376598
18244775
QINGDAO HAIER-A
10.6
-0.09425071
3283446
28
-1.304195
2907679
12.49
-0.4780876
9512542
SAIC MOTOR-A
-2.813299
82056039
-1.3382
24183001
10.31
-1.622137
8849312
267
10 2225
INDEX 2184.891
PETROCHINA CO-A
QINGHAI SALT-A
3.8 8.11
52W (H) 2781.99 (L) 2172.878906
2175
24-Sep
26-Sep
FTSE TAIWAN 50 INDEX NAME ACER INC
PRICE DAY %
Volume
NAME
28.5
-3.553299
37172478
FORMOSA PLASTIC
ADVANCED SEMICON
22.75
-1.086957
14846291
ASIA CEMENT CORP
37.15 -0.8010681
PRICE DAY %
Volume
84
0
3044436
FOXCONN TECHNOLO
112
-3.448276
14142662
NAME
PRICE DAY %
TAIWAN MOBILE CO
Volume
107.5
-0.462963
2575783
TPK HOLDING CO L
394
-3.785104
10196113
4952960
FUBON FINANCIAL
31.6 -0.7849294
13018367
TSMC
86.4
0.5820722
36962277
ASUSTEK COMPUTER
313
-0.792393
2469246
HON HAI PRECISIO
90.2
-3.529412
78933427
UNI-PRESIDENT
51.7
1.372549
10256068
AU OPTRONICS COR
10.8
-4.845815
89739517
HOTAI MOTOR CO
210
0.9615385
249303
UNITED MICROELEC
12.05 -0.8230453
22491948
CATCHER TECH
141
-1.398601
17726760
HTC CORP
301
-3.215434
20288975
WISTRON CORP
34.85
-2.106742
8706001
CATHAY FINANCIAL
31.8
-1.242236
22076435
HUA NAN FINANCIA
16.4
-1.204819
6583292
YUANTA FINANCIAL
15.1
-1.30719
18388672
5673391
LARGAN PRECISION
596
-6.289308
3299177
YULON MOTOR CO
57.9
-1.194539
3549963
6161702
LITE-ON TECHNOLO
37.2 -0.2680965
3214392
CHANG HWA BANK CHENG SHIN RUBBE CHIMEI INNOLUX C
16 -0.9287926 75.7
0.7989348
11
-3.508772
44954542
MEDIATEK INC
322
-1.226994
9512612
CHINA DEVELOPMEN
7.33 -0.6775068
32896512
MEGA FINANCIAL H
22.65
0.2212389
26284880
CHINA STEEL CORP
26.7
0
13367240
NAN YA PLASTICS
58.3
-0.681431
4507327
17.55 -0.2840909
20066875
PRESIDENT CHAIN
CHINATRUST FINAN CHUNGHWA TELECOM COMPAL ELECTRON
156.5 -0.3184713
93.2
0
7370512
QUANTA COMPUTER
77.4
-2.025316
1148031 7002181
25.85
-2.636535
8628352
SILICONWARE PREC
32.5 -0.9146341
DELTA ELECT INC
114
3.167421
7591565
SINOPAC FINANCIA
12.3
0.4081633
10983279
FAR EASTERN NEW
33.5 -0.1490313
4459726
SYNNEX TECH INTL
66.6
0.3012048
1631168
FAR EASTONE TELE
71.5 -0.6944444
3479412
TAIWAN CEMENT
35.8 -0.5555556
3267192
TAIWAN COOPERATI
16.6 -0.8955224
6950819
TAIWAN FERTILIZE
79.7 -0.1253133
4229740
TAIWAN GLASS IND
30.1
17.95
-1.373626
17534782
FORMOSA CHEM & F
FIRST FINANCIAL
77.6
-1.146497
3501197
FORMOSA PETROCHE
88.3
0
742411
-0.660066
MOVERS
8
38
4 5370
INDEX 5287.41
4483151
855290
HIGH
5365.1
LOW
5271.95
52W (H) 5621.53 (L) 4643.05
5270
21-Sep
25-Sep
September 27, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT
MELCO CrOWN ENTErTAINMENT
MGM CHINA HOLDINGS 33.4
24.8
13.05
24.7 13.00
24.6
33.3
24.5
12.95
24.4 Max 24.8
Average 24.556
Min 24.35
24.3
Last 24.65
SANDS CHINA LTD
Average 28.445
Max 28.6
Max 33.3
Average 33.3
Min 27.75
Last 28.45
16.5
28.5
16.4
28.3
16.3
28.1
16.2
27.9
16.1
27.7
Average 16.283
YTD %
(H) 52W
(L) 52W
WTI CRUDE FUTURE Nov12
90.74
-0.689504214
-7.718905726
109.8899994
78.73000336
BRENT CRUDE FUTR Nov12
109.68
-0.697148031
5.208633094
122.6499939
89.5
GASOLINE RBOB FUT Oct12
299.07
0.795389437
18.33109124
307.9600096
220.5600023
GAS OIL FUT (ICE) Nov12
961.75
-0.978120978
7.218506132
1038.75
799.25
2.957
1.128590971
-10.98735701
4.425000191
2.299999952
HEATING OIL FUTR Oct12
309.18
-0.540436209
8.199475066
333.8899851
252.5300026
Gold Spot $/Oz
1764.9
0.0261
12.7796
1803
1522.75
Silver Spot $/Oz
33.945
-0.2389
21.9508
37.4775
26.1513
Platinum Spot $/Oz
1631.6
0.6167
17.0025
1736
1339.25
Palladium Spot $/Oz
635.23
-1.4765
-2.7957
725.19
537.54 1827.25
NATURAL GAS FUTR Oct12
LME ALUMINUM 3MO ($)
2105
1.201923077
4.207920792
2361.5
LME COPPER 3MO ($)
8275
1.124282048
8.881578947
8765
6635
LME ZINC
2136
1.569186876
15.77235772
2220
1718.5
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov12 Dec12
WHEAT FUTURE(CBT) Dec12
18400
2.364394993
-1.656867985
22150
15236
14.875
-0.067181727
-2.170338704
17.5
14.15499973
737.75
-0.806722689
25.84221748
849
499
877.75
-0.987027637
21.90972222
953.25
629.5
SOYBEAN FUTURE Nov12
1595
-1.023890785
32.44758148
1789
1115.75
COFFEE 'C' FUTURE Dec12
172.5
-0.662251656
-26.90677966
253.3999939
153.6999969
SUGAR #11 (WORLD) Mar13
20.83
0.530888031
-10.83047945
25.29999924
19.47999954
COTTON NO.2 FUTR Dec12
72.26
-0.096778653
-17.73679417
97.98999786
64.61000061
World Stock MarketS - Indices COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
13457.55
-0.7476259
10.14925
13653.24
10404.49
NASDAQ COMPOSITE INDEX
US
3117.727
-1.362163
19.67553
3196.932
2298.89
FTSE 100 INDEX
GB
5802.19
-0.9816185
4.125962
5989.07
4868.6
DAX INDEX
GE
7327.93
-1.308802
24.23695
7478.53
5118.19
NIKKEI 225
JN
8906.7
-2.033099
5.338048
10255.15
8135.79
HANG SENG INDEX
HK
20527.73
-0.8258981
11.35562
21760.33984
16170.35
CSI 300 INDEX
CH
2184.891
-1.143043
-6.857141
2781.99
2172.878906
TAIWAN TAIEX INDEX
TA
7669.63
-0.8339658
8.449421
8170.72
6609.11
KOSPI INDEX
SK
1980.44
-0.550866
8.473274
2057.28
1644.11
S&P/ASX 200 INDEX
AU
4361.602
-0.2575201
7.519708
4448.5
3840.2 3217.951
JAKARTA COMPOSITE INDEX
ID
4180.163
-1.105376
9.371321
4272.829
FTSE Bursa Malaysia KLCI
MA
1619.3
0.04448344
5.786133
1655.49
1310.53
NZX ALL INDEX
NZ
834.811
-0.861336
14.38896
847.344
712.548 2695.06
PHILIPPINES ALL SHARE IX
PH
3531.25
-0.4344933
15.96728
3558.72
HSBC Dragon 300 Index Singapor
SI
599.74
0.14
20.83
NA
NA
STOCK EXCH OF THAI INDEX
TH
1273.6
-1.072696
24.21488
1290.7
843.69
HO CHI MINH STOCK INDEX
VN
395.12
0.8550935
12.39369
492.44
332.28
Laos Composite Index
LO
1047.94
-0.8655838
16.50767
1067.27
876.33
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
Average 12.99
Min 12.94
Last 13
12.90
20.6 20.5 20.4 20.3
16.0 Max 16.48
DAY %
NAME
Max 13.04
WyNN MACAU LTD
28.7
PRICE
CORN FUTURE
33.2
Min 16.04
Last 16.2
20.2 Max 20.55
CURRENCY EXCHANGE RATES
NAME
METALS
Last 33.3
SJM HOLDINGS LTD
Commodities ENERGY
Min 33.3
MACAU RELATED STOCKS
Average 20.382
Min 20.3
Last 20.5
14 |
business daily September 27, 2012
Opinion Coal and nuclear power can’t substitute for pricey oil (Part 1) Jeff Rubin
A
Former chief economist and chief strategist at CIBC World Markets
bout 40 percent of the world’s electric power is generated from burning coal, which is second only to oil in contributing to global energy use. And affordable coal may soon be running out just as fast as affordable oil is. No resource can withstand the pressure of an exponential growth in demand. China burned 3.7 billion tons of coal in 2010, according to the U.S. Energy Information Administration, compared with 1.2 billion tons in 2000. Today, China uses almost twice as much coal as the U.S. while possessing only half of its reserves. Coal is behind China’s world-leading economic growth, accounting for more than three-quarters of the country’s power. An everincreasing supply is needed to keep factories humming, lights on and, most of all, its gross domestic product growing. Just as oil prices hit unprecedented highs a few years ago, so, too, did the price of its hydrocarbon cousin. At the peak of the boom in global com-
modity demand in 2008, coal prices rose to almost US$200 a metric ton, a price matching the US$147-per-barrel for oil at the time. Oil prices tumbled 70 percent when the recession hit. Although coal didn’t fall as dramatically, its price still dropped by more than half. And, like oil, coal prices perked up again along with the global recovery.
China’s needs In today’s economy, to expand their GDP, countries need to burn more hydrocarbons. That’s why China is digging up its coal reserves at an unprecedented pace. The official growth plan calls for burning as much as 5 billion tons per year, a third more than recent consumption. The country already accounts for almost half of global coal production, yet it holds less than 15 percent of the world’s coal reserves. China now uses more coal each year than the U.S. and Europe combined, forcing it to be a net importer. India’s fuel demands are
also surging. World coal consumption, according to the Intergovernmental Panel on Climate Change, is forecast to double over the next two
The world will never geologically run out of coal, just as it will never run out of oil. But just as we are rapidly running out of affordable oil, the same constraint is being felt in the world coal market
decades. Where will all this coal come from? China is already struggling this year to meet current needs, and its companies are scouring the world looking for new reserves. State-run Chinese enterprises spent more than US$32 billion to acquire foreign mining companies from 2005 to 2010. Industry experts will tell you that enough coal exists to fuel the generation of electricity for the next 200 years. In one sense, they are probably right. The world will never geologically run out of coal, just as it will never run out of oil. But just as we are rapidly running out of affordable oil, the same constraint is being felt in the world coal market. As it turns out, our supply of economically viable coal is a lot smaller than we think, at least when it comes to the high- grade variety. Not all coal is created equal. The highest grades, such as anthracite and bituminous coal, can have as much as five times the energy content of other “brown” varieties, such as sub-bituminous and lignite. If you have to ship
five times as much low-grade coal to match the energy content of high-grade coal, it makes little sense to transport it to faraway power plants. Unfortunately, the socalled brown coals are the most abundant. The type with the highest energy density, anthracite, has been depleted far more rapidly.
Coal quality Physical tonnage can offer a misleading picture of supply. For example, coal production in the U.S., which has the world’s largest reserves, has never been greater. But from the standpoint of how much energy is produced, coal peaked in 1998, and the substitution of lower-grade coal for higher grades has resulted in a reduction in actual energy content. The U.S.’s annual production of high-grade anthracite is now less than a quarter of its 1950 level. Production of the next-highest grade of coal, bituminous, peaked in 1990 and has since been declining, as well. But despite a dropoff in high-quality production, the total coal output – mostly brown varieties – from U.S. mines has increased by about 20 million tons per year. Less energy for more tons mined: this is just another example of the concept of diminishing returns that is now common in our energy landscape. Nuclear has been hailed as a potential alternative to oil and coal. But every time it seems poised to take off, we get an unpleasant reminder of its dangers. The meltdown of three reactors in Japan in early 2011 was the latest setback to nuclear energy’s chances of becoming the fuel of tomorrow. Before the accident at Fukushima, concerns about carbon emissions had translated into a new receptiveness toward the nuclear industry. That completely changed in the hours after the tsunami struck. Investors quickly sold off everything that had anything to do with generating nuclear power, and governments bailed out. Bloomberg View
(For editorial reasons, this article is published in two parts. The second part will be published in tomorrow’s edition)
editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Newsdesk Vitor Quintã (Chief Reporter) Tony Lai, Xi Chen Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
September 27, 2012 business daily | 15
OPINION Business
wires Leading reports from Asia’s best business newspapers
Iran confronts reality Javier Solana
Former Secretary-General of NATO and EU High Representative for the Common Foreign and Security Policy
Business World The Asian chapter of an international group of tobacco growers, meeting in Manila, has expressed opposition to a set of guidelines proposed by the World Health Organization (WHO) seeking to lessen tobacco production worldwide. In a press conference on Tuesday during the Asia Tobacco Forum, the International Tobacco Growers Association (ITGA) said that a series of recommendations from the WHO-Framework Convention on Tobacco Control (FCTC) present “a real threat” for tobacco producing communities in various countries party to the convention.
Korea Herald Bosch Group will spend 200 billion won (US$178.7 million) on facility expansion in South Korea by next year and hire 300 workers. The German group’s Korean arms sell auto parts, industrial equipment, security systems and other industrial and home appliances. They racked up a combined 2.5 trillion won in sales last year, up 14 percent from a year earlier. The group sold its entire stake in KEFICO Corp., a 50-50 joint venture with Hyundai Motor Co. last month.
Economic Times Airlines in India have declared a full-blown price war to entice more passengers with budget carrier IndiGo becoming the third to offer up to 40 percent discounts on a month’s advance booking, after Air India and Jet Airways did so a few days ago. SpiceJet, the third-largest airline in terms of market share, is also expected to announce a similar move shortly. These discounts give respite for passengers who have shifted to other modes of transport due to high airfares with the removal of Kingfisher Airlines’ capacity.
Business Times Global Islamic financial assets will double by 2015 to as much as US$3 trillion as demand for the securities in Malaysia and the Gulf Cooperation Council lures issuers to the market, Standard and Poor’s said. Yields on syariah-compliant bonds, known as sukuk, and paying returns on assets to comply with Islam’s ban on interest, dropped to record lows this month, prompting issuers including the Turkish government to sell the securities. Islamic financial assets are currently valued at US$1.3 trillion, said S&P.
W
ho has not seen what looks like water on a highway on a hot summer’s day? Or a three-dimensional image that was actually a picture on a flat surface? The nature of illusion is that we mistake what we perceive for reality. That is true whether an illusion is cognitive or political. Depending on how a particular event develops, it can lead us to formulate erroneous interpretations of what is actually happening. Such perceptions are often mediated by ideas and previous experiences. And, as Robert Jervis argued in Perception and Misperception in International Politics, published during the Cold War, the illusions that we create have an enormous influence on decision-making – even becoming a fundamental cause of conflict. To a certain extent, this is what has happened with analysis of the recent 16th Summit of the Non-Aligned Movement (NAM), held at the end of August in Tehran – the first time Iran has hosted the meeting. The summit took place against a background of scant progress in negotiations with Iran on its nuclear programme and growing pressure from Israel for the international community to establish a “trigger” – a line that the Islamic Republic must not cross. Moreover, regional tensions heightened the perception of the NAM summit’s importance and that of its host. In the Middle East, only Iran and Hezbollah support Syrian President Bashar al-Assad’s regime in a civil war that is nearing the point of no return and destabilising Lebanon and Jordan.
Not-so-united anymore The NAM played an important role during the Cold War. Its vision was shaped by the recent independence struggles of many of its member countries, and its agenda promoted national sovereignty, noninterference, a rebalancing of North-South relations, and support for national liberation movements. But the reality that united NAM in the past has changed. The Cold War’s bipolar governance structures and a subsequent period of American unilateralism – to which the non-aligned states attempted to act as a counterbalance – have given way to a much more complex and interdependent multi-polar world. While the United States and Europe are still struggling to overcome a serious economic crisis, many NAM members, such as India,
Chile, and Singapore, have maintained relative strong growth and form a part of new global governance structures, such as the G-20. Likewise, many of the problems that we now face – whether climate change, financial crisis, development challenges, terrorism, or nuclear proliferation – reflect growing global interdependence. Managing them effectively obliges us to rethink the concept of sovereignty. These changes have transformed not only the traditional structures of power, but also the leitmotif of NAM and the fate of its members. Globalisation has fuelled everwidening disparities among its members – just compare Colombia with Afghanistan, or Chile with Sudan – that make it difficult to transform sheer numbers into coherent influence.
Who benefitted? The impact of the Tehran summit, and whom it may have benefited, is not entirely clear. Iran certainly regarded the meeting as a propaganda opportunity, promising wide media coverage at a time when it was in the eye of a diplomatic hurricane. But the participants’ inability to reach a common position on their hosts’ nuclear programme or the violence in Syria – two of the fundamental questions that confronted the summit – obviously undermined Iran’s effort to demonstrate that, despite facing severe economic and diplomatic sanctions, it remains an effective international player.
The illusions that we create have an enormous influence on decision-making – even becoming a fundamental cause of conflict Indeed, United Nations Secretary-General Ban Kimoon criticised Iran for not assuring the world that it is not seeking nuclear arms at a time when the International Atomic Energy Agency has published a new report suggesting that it is. And, in a speech of great
depth, Mohamed Morsi, the first Egyptian president to visit Iran since the Islamic Republic’s birth in 1979, firmly rejected the Syrian regime, as he did in a subsequent appearance before the Arab League as well. Moreover, Morsi urged Iran to join Egypt, Turkey, and Saudi Arabia – all Sunni-majority countries – in pressing for political transition in Syria (a role that the Syrian opposition rejected before Iran could even say no). In other words, reality betrayed the perception that Iran sought to create in hosting the NAM summit. Instead, Morsi’s speech provided the occasion’s most memorable moment. And Iran’s nuclear quest remains a reality that must not be ignored during the next key three years, when the Islamic Republic will lead NAM while itself remaining one of the most serious problems on the international agenda. © Project Syndicate
16 |
business daily September 27, 2012
CLOSING Kingfisher in rescue talks
EU probes import duties evasion
Indian billionaire Vijay Mallya said yesterday he was in talks with foreign carriers to sell a stake in his ailing Kingfisher Airlines after the government relaxed foreign investment rules. “Yes, we are in talks with some foreign airlines and investors,” Mr Mallya told reporters in Bangalore ahead of Kingfisher’s annual shareholders meeting, while declining to give any names. India this month allowed foreign airlines to buy stakes of up to 49 percent in domestic carriers, a long-pending policy reform that could save debt-laden Kingfisher, which is in desperate need of funds.
The European Commission is investigating whether Chinese bicycle makers are dodging European antidumping duties by routing shipments through third countries. There has been evidence that tariffs imposed from last October have been avoided by shipping Chinese bicycles through Indonesia, Malaysia, Sri Lanka and Tunisia, the Commission said in the EU Official Journal. The investigation will also examine whether bicycle assembly operations using Chinese bike parts have moved to those countries just to avoid payment of EU duties.
Greece stages new general strike Clashes erupted during the first trade union-led action since a coalition government came to power in June
Greeks rallied against planned spending cuts of US$15 billion
G
reek police fired teargas at hooded youths hurling petrol bombs and stones as tens of thousands took to the streets in Greece’s biggest antiausterity demonstration in months yesterday. The clashes occurred after more than 50,000 people marched to parliament chanting “We won’t submit
to the troika [of lenders]” and “EU, IMF Out!” on a day of strikes against a new round of cuts demanded by EU and IMF lenders. As the rally ended, dozens of black-clad youth threw stones, petrol bombs and bottles at riot police, who responded with several rounds of teargas. Police chased the protesters through
Syntagma square in front of parliament. The strikes, called by the country’s two biggest unions representing half the fourmillion-strong work force, is shaping up to be the first test of whether Prime Minister Antonis Samaras can stand his ground. Police officials estimated the demonstration was the
largest since a May 2011 protest, and among the biggest since Greece first resorted to aid from international lenders in 2010. “We can’t take it anymore – we are bleeding. We can’t raise our children like this,” said Dina Kokou, a 54-yearold teacher and mother of four who lives on 1,000 euros a month. “These tax hikes and wage cuts are killing us.” The traditional summer break has allowed the fragile conservative-led coalition to enjoy relative calm on the streets since narrowly coming to power on a pro-euro, probailout platform, but unions predict an end to the lull.
Walk off Much of the union anger is directed at spending cuts worth nearly 12 billion euros (US$15.55 billion) over the next two years that Greece has promised the European Union and International Monetary Fund in an effort to secure its next tranche of aid. The bulk of those cuts
is expected from cutting wages, pensions and welfare benefits, heaping a new wave of misery on Greeks who say repeated rounds of austerity have pushed them to the brink and failed to transform the country for the better. “We can’t just sit by idly and do nothing while the troika and the government destroy our lives,” said Dimitra Kontouli, a 49-year-old local government employee whose salary was cut to 1,100 euros a month from 1,600 euros previously. “My husband has lost his job, we just can’t make ends meet.” Yesterday ships stayed docked, museums and monuments were shut to visitors and air traffic controllers walked off the job for a three-hour stoppage. Unions argue that Greece should remain in the euro but default on part of its debt and ditch the current recipe of austerity cuts in favour of higher taxes on the rich and efforts to nab wealthy tax evaders. Reuters
BOJ’s Sato warns of recession risks Says central bank won’t hesitate easing again
T
he Bank of Japan is ready to expand monetary stimulus again even after this month’s action and may ponder new steps if necessary, board member Takehiro Sato said, warning of global uncertainties that could push the economy into recession. In an exclusive interview with Reuters, Mr Sato also said Japan may not achieve the BOJ’s 1 percent inflation target as early as the central bank had hoped, issuing the strongest warning to date by a policymaker of risks to the country’s recovery. “We won’t hesitate in taking additional monetary easing steps if we feel that risks have heightened enough and that the
economy may undershoot our forecasts even after this month’s monetary easing,” he said yesterday. Mr Sato also warned of uncertainties over the outlook, such as the widening fallout from Europe’s prolonged debt crisis, the potential damage to exports from anti-Japan protests in China and a slowdown in Chinese growth that was starting to hurt growth of other economies. “If these risks materialise, there’s a chance Japan may slip into recession,” he said, offering the bleakest view on the outlook to date from a BOJ policymaker. The remarks suggest that the central bank, which eased policy a week ago as
weakening global demand hit exports, may consider expanding stimulus again as early as next month if the fragile economy shows signs of slowing further. Just two months into the job, the former Morgan Stanley economist appeared unafraid of rocking the boat, saying that the central bank should consider new measures, like buying foreign bonds, if Japan faces serious obstacles in resuming a recovery. “Buying more risky assets is a possible option,” Mr Sato said, although he stressed the central bank should carefully weigh the merits and costs in considering such measures. However, he said that if legal limits make it difficult for the BOJ to buy foreign
Japan may not achieve the 1 percent inflation target as planned, said Takehiro Sato
bonds, the finance ministry could do so instead as that would have the same effect of intervening in the currency market to step sharp rises in the yen.
What is important is for policymakers to work together to counter a strong yen that hurts the exportreliant economy, he said. Reuters