Macau Business Daily, Sep 7, 2012 by Business Daily

North West drops Macau-HK service T

he Maritime Administration confirmed yesterday that ferry company Hong Kong North West Express Ltd has applied to cancel its licence to operate between Macau and the New Territories in Hong Kong. In July the firm suspended the service from Macau to Tuen Mun on the grounds of safety problems with its two vessels. North West was later reported overdue on the rent for its berthing at Tuen Mun pier. The HK$2.32 million (US$299,000) a month fee had put “much financial pressure on the company” chief

executive officer Chan Koji said. It’s the second ferry operator to abandon operations between the territory and Hong Kong in under a year. On September 15, 2011, Macao Dragon Co Ltd suspended its ferry operations between the Taipa terminal and Hong Kong and filed for bankruptcy. Now only two ferry operators – focused on delivering gamblers rather than general visitors – are left in the local market. “The situation is not ideal,” said legislator Kwan Tsui Hang yesterday. More on page 2

LRT: Graft watchdog backs residents Plans to route the new Light Rapid Transit (LRT) system via narrow residential streets on Rua de Londres and Rua do Porto in NAPE are unjustified says the city’s anti-graft watchdog. The proposal defies safety needs and technical standards, states the Commission against Corruption, adding that Avenida Dr Sun Yat-Sen is a more appropriate location. Residents claimed the Transportation Infrastructure Office neglected quality of life and safety when recommending Rua de Londres. The Commission of Audit yesterday also criticised the whole scheme’s massive overspend. Page 3

Worker import quotas ‘need transparency’: union

Okada proposes new Wynn directors

Page 4

HANG SENG INDEX

Page 5

HSI - Movers 2012-9-07

19200 19180 19160 19140 19120 19100 19080 September 6

www.macaubusinessdaily.com

Name

%Day

CITIC PACIFIC

3.13

ESPRIT HLDGS

2.67

COSCO PAC LTD

2.62

TENCENT HOLDINGS

2.13

TINGYI HLDG CO

1.98

BANK EAST ASIA

-1.10

CHINA MOBILE

-1.33

HANG LUNG PROPER

-1.36

SANDS CHINA LTD

-3.14

BOC HONG KONG HO

-2.11

26˚ 31˚

2012-9-08

26˚ 31˚

2012-9-10

26˚ 32˚ I SSN 2226-8294

Source: Bloomberg

Year I - Number 115 Friday September 7, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

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business daily September 7, 2012

macau

Ferry competition sinks North West drops Macau-HK route after default on Tuen Mun pier rent Xi Chen

xi@macaubusinessdaily.com

North West said it could no longer afford the rent for Hong Kong’s Tuen Mun pier

nly two ferry operators – focused on delivering gamblers rather than general visitors – are left in the local market. The Maritime Administration confirmed yesterday that Hong Kong North West Express Ltd has applied to cancel its licence between Macau and the New Territories in Hong Kong. The administration said it is currently reviewing the application, which would terminate the licence by September 10. It has also asked

the company to protect employees’ interests. The ferry operator said in an official letter it could no longer afford the rent for Hong Kong’s Tuen Mun pier. The firm suspended its ferry services between Macau and Tuen Mun in July on the grounds of safety problems with its two vessels. North West was later reported to be overdue on the rent for the Tuen Mun berthing. That cost – HK$2.32 million

(US$299,000) a month, had put “much financial pressure on the company” and made up about 30 to 40 percent of its operating costs, chief executive officer Chan Koji said in June. This is the second ferry operator to abandon operations between the territory and Hong Kong in under a year. On September 15, 2011, Macao Dragon Co Ltd suspended its ferry operations between the Taipa

terminal and Hong Kong and filed for bankruptcy. The company was found during the liquidation process to be in debt for over HK$10 million. Once North West stops operating, the territory will only have two ferry operators operating to Hong Kong, Shun Tak Holdings Ltd, led by Macau businesswoman Pansy Ho Chiu King, and casino operator Sands China Ltd with its CotaiJet service. Shun Tak is likely to emerge as the main beneficiary of North West’s demise, after paying HK$341 million to buy rival New World First Ferry Services (Macau) Ltd and its seven vessels last year, with the government’s approval. Legislator Kwan Tsui Hang said that “the situation is not ideal” and the recent development is not good for the industry as fewer companies mean limited competition and limited choices for consumers. “The government needs to reconsider its industry policy and try to reduce the monopolies,” the Macau Federation of Trade Unions vice-president said. Ms Kwan added that the company should compensate the affected employees if there are any overdue salaries, and employees could ask for help from the Labour Affairs Bureau or the federation.

No slot machines in youth arcades There are no licensed slot machines in video-game parlours open to teenagers, authorities say Vítor Quintã

vitorquinta@macaubusinessdaily.com

here are no legally licensed betting machines in Macau’s youth arcades, the Civic and Municipal Affairs Bureau said last week. The assurance came in a reply to an inquiry from legislator and gambling executive Angela Leong On Kei, who last April said there were slot-machine look-a-likes being installed in video-game parlours. The managing director of SJM Holdings Ltd warned the transformation of youth arcades in “other types of casinos” could make it easier for teenagers to become addicted to gambling. But the bureau said none of the machine licensed for video-game parlours, which are open to underage customers, involve betting, any cash prizes or token-to-cash conversion. In case of doubt authorities will ask for the opinion of the Gaming Inspection and Coordination Bureau and the Youth and Education Affairs Bureau before handing out a licence. Parlour operators who introduce “gambling-like” machines without authorisation could face a fine of up to 40,000 patacas (US$5,000) for individuals or up to 100,000 patacas for companies, along with criminal responsibility, the bureau said. The issue hit the spotlight in April, when the Macau General

No arcade betting, cash prizes or tokento-cash conversion, authorities pledge

Neighbourhood Unions Association said youth arcades could be acting as video-game betting centres, with arcade coins or toys being traded for cash. At the time the Civil and Municipal Affairs Bureau pledged to send inspectors to check out whether there are illegal activities underway in the arcades.

September 7, 2012 business daily | 3

MACAU

Please mind the budget gap The Commission of Audit says the Transport Infrastructure Office should have done a better job of making the budget for the Light Rapid Transit railway Xi Chen

xi@macaubusinessdaily.com

he estimated cost of the first phase of the Light Rapid Transit (LRT) elevated railway now exceeds 11 billion patacas (US$1.37 billion), almost three times the initial forecast, the Commission of Audit has said. The latest budget made by the Transport Infrastructure Office includes 5 billion patacas already spent and an estimated 6 billion patacas that still needs to be spent. The main structures are now estimated to cost 5.8 billion patacas and the ancillary work 4.9 billion patacas. The initial budget was less than 4.2 billion patacas. But in May last year, reassessments of the cost of the rolling stock and construction increased the forecast to 8.7 billion patacas. The latest budget is more than 11 billion patacas, a figure that

does not include the cost of future maintenance or administrative spending, according to a Commission of Audit report released yesterday. “The government needs to reflect on the legacy conduct that allows various government bodies to continue to increase their budgets as the projects move ahead,” legislator Chan Wai Chi said. The commission found that one construction job which was supposed to cost 266 million patacas turned out to cost 386 million patacas, and another which was supposed to cost 372 million patacas cost 489 million patacas. Its report says the Transport Infrastructure Office has warned that the budget may have to be increased again because it does not allow for changes in foreign exchange rates or rises in the costs of materials and labour. Prices of construction materials

from late 2010 to the first quarter of this year have increased by 40 percent in some cases, the office said.

Risk sharing The commission said the Transport Infrastructure Office should have had experts who could have realistically estimated costs. The report says that because the office could not put an upper limit on the budget, the government could not make precise arrangements to pay for the project. The commission believes the Transportation Infrastructure Office has inadequate cost controls and could do a better job of managing money. Legislative Assembly member Gabriel Tong Io Cheng told Business Daily the Transportation Infrastructure Office should have struck a risk-sharing deal with its

suppliers and contractors before starting the project, to minimise the effect of inflation on the cost of materials and labour. “If the government has enough bargaining power, it can set up a framework in the contracts to better regulate the costs,” he said. Mr Chan was more critical. He said that civil servants who mismanage their projects financially should be penalised by the government instead of continuing to “come up with excuses”. The Commission of Audit criticised the Transport Infrastructure Office’s quality control, saying the office failed to use the results of an evaluation of one of its contractors to encourage the company to improve its work. The report is its second on the light rail network. The commission said it would keep its eye on the Transport Infrastructure Office’s management of the project.

MOP11 billion

Latest budget for LRT phase one

Graftbuster wants LRT route altered Driving the LRT through the narrow streets of NAPE is unsafe, says the Commission against Corruption Vítor Quintã

vitorquinta@macaubusinessdaily.com

he Commission against Corruption has sided with NAPE residents demanding the route of the Light Rapid Transit (LRT) elevated railway be moved away from their homes and toward the coast. A report released by the commission yesterday says that to meet technical and safety standards the railway must be moved and pass underground along Avenida Dr Sun Yat-Sen. Earlier this year, a NAPE neighbourhood association had

complained to the commission that the government was neglecting the quality of life of residents and public safety. The commission’s report says putting the railway underground would allow for “more balanced development of the district” and “more protection for the legitimate rights and interests of the population”. The commission acknowledged that the change of route “might cause extra financial costs and delays in the

works,” but said that the LRT should be seen as a long-term project. The commission admitted that it lacked the technical knowledge to make a binding proposal for a new route but said the Transportation Infrastructure Office had failed to prove why the LRT must follow Rua de Londres and Rua do Porto. The commission, headed by Vasco Fong Man Chong, says that even if the office decided to stick to its original route, it “should stop resorting to abstract explanations

and vague words”. The LRT is a public undertaking and, “as such, the adequate use of the resources and the respect for the concept of reasonable financial management are essential”, the report says. The commission called for Chief Executive Fernando Chui Sai On to create a specialised technical group under his supervision to solve the problems that were bound arise because of “the lack of precision in the preliminary works”.

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business daily September 7, 2012

macau Brought to you by

HOSPITALITY No two alike Tourist spending is an important source of income for some retailers. The statistics bureau carries out a survey of tourist expenditure but, most often, the analysis focuses on the total amount spent by the average tourist. It is relevant to also look into what kinds of goods and services tourists spend their money on. Five categories of products typically represent more than 80 percent of all visitors’ shopping: clothing; jewellery and watches; local food products; cosmetics and perfumes; and shoes and handbags. If we break down visitors according to their place of residence, different patterns of consumption emerge. Most tourists to Macau come from the mainland, Hong Kong and Taiwan.

The latest quarterly figures, for the second quarter of this year, show the structure of tourism shopping is markedly different among those three groups. Mainlanders seem willing to buy a bit of everything. That may be an indicator of insufficient supply or persistent quality concerns across the border but, clearly, they do not come just for a holiday. Quality and supply are not concerns for visitors from Hong Kong, which overwhelmingly buy food. Alone, that category represents more than 80 percent of their shopping spend. Taiwanese visitors are an interesting hybrid. They spend mostly on food, which is more than half of their shopping list. But personal effects, such as clothing, shoes and handbags are also important items to pick up here.

Unions demand harder line on labour imports Quotas needed beyond the construction sector, unions tell government officials Tony Lai

tony.lai@macaubusinessdaily.com

he government should be stricter about issuing work permits for imported workers, closing loopholes in the system and publishing data, the Macau Federation of Trade Unions has urged. The federation’s vice-president, Ella Lei Cheng I, said the government was too lax about issuing work permits. Representatives of the federation and the government’s Human Resources Office met this week to discuss the matter. Police busted a recruitment agency last month which accuse of fraudulently obtaining labour import quotas for more than 20 employers. Employers are allowed to import workers only if they have a certain number of resident employees. The government announced in 2010 that it would create a committee on imported labour that would set minimum percentages for residents in various industries. But the government has since set a minimum percentage only for companies in the construction industry. It is 50 percent. Ms Lei told Business Daily that it would be better to have established limits for every industry because the government now has too much discretion in allowing the import of labour. “Even if the government does not set up a ratio for all industries, they should at least let the public know more information on imported labour in each enterprise, such as the number of non-resident workers and their salaries,” she said. “Hence, society

Building industry worker imports already controlled

can help see if there is any irregularity committed by the employers.” Ms Lei said it was not uncommon for employers to give the government false information indicating they were unable to recruit suitable resident workers and so needed to import labour. The Chinese-language Macao Daily News quoted Human Resources Office assistant coordinator Lau Wai Meng as telling reporters after this week’s meeting that the office cooperated closely with other government departments in supervising work permits, and that there were no loopholes in the system.

Ms Lei is unconvinced. “It’s difficult for the government to screen thoroughly and carry out an inspection in every case,” she said. “But publicising the data can serve as a stronger deterrent to employers [committing] any irregularities, as they know the public is scrutinising them.” Ms Lei is concerned that the government issued 135,000 work permits by July but that right now there are only about 105,000 imported workers in the city. She urged the government to publish data on on the number of work permits issued but unused and the number revoked.

Reolian faces further probes The jobs worked by those three groups of tourists also vary, influenced by proximity and availability of time. Tourists from Hong Kong and the mainland are mainly not working or unemployed – more than 30 percent in each case. Almost a quarter of Taiwanese tourists classify themselves the same way. The biggest share of Taiwanese tourists is top managers and professionals, which may be influenced by business travellers destined for the mainland transiting through the city. The other whitecollar workers are more prevalent in Hong Kong tourists. About 45 percent of all Hong Kong arrivals are represented in the final two categories of our analysis. J.I.D.

he Transport Bureau is currently investigating four cases in which public bus operator Reolian Public Transport Ltd is accused of breaching its concession contract, the office told Portugueselanguage newspaper Tribuna de Macau. On one case a Reolian bus driver allegedly stopped the vehicle with passengers on board “to go get

food,” the bureau revealed. The other probes are connected to the company being unable to keep its schedule and to route changes without prior approval. The bureau is aiming to complete all four investigations before the end of the year. Reolian has already been fined 50,000 patacas (US$6,300) for

not keeping up with bus schedules. The operator has already filed a court appeal. Tribuna de Macau also reported that the Public Security Police has already fined the three public bus operators over 900 times for traffic infractions since the new concession model came into effect in August 2011. V.Q.

September 7, 2012 business daily | 5

MACAU

Okada nominates ‘big hitters’ to Wynn Resorts board Japanese gaming boss opens new front in battle with casino operator Steve Wynn Associate Editor

Kazuo Okada – coming out fighting…again

azuo Okada, a Japanese billionaire whose stake in casino operator Wynn Resorts Ltd was forcibly redeemed by the company, has proposed two new directors for the board. The move, announced in a filing issued by Wynn on Wednesday evening U.S. time, comes ahead of the firm’s annual meeting on November 2. The nominees are Yale University law professor Jonathan Macey and former U.S. broadcasting executive Fredric G. Reynolds. Mr Macey is the Sam Harris Professor of Corporate Law, Corporate Finance and Securities Law at Yale, and the author of several books including Macey on Corporation Laws.

Mr Reynolds has been a director of U.S.-based food and beverage conglomerate Kraft Foods Inc. since 2007. He served as executive vice president and chief financial officer of CBS Corporation from January 2006 until his retirement in August 2009. Prior to that, Mr Reynolds was president and CEO of Viacom Television Stations group, where he oversaw the division’s 39 local television stations. He’s also a former chief financial officer for PepsiCo Foods International, PepsiCo’s Frito-Lay unit. Mr Okada’s privately held company, slot machine maker Aruze USA Inc., is paying each nominee a one-time fee of US$50,000 (399,500

patacas) according to the filing. “By nominating two big hitters in the business world as directors of Wynn Resorts, it appears Mr Okada is throwing down a challenge to the rest of the board,” one analyst speaking on condition of anonymity told Business Daily yesterday.

Fighting moves Mr Okada claims his right to make the nominations to Wynn Resorts’ board pending the outcome of his legal challenge to his shares’ redemption. He also remains a director of the Las Vegas-based firm. He was sacked in February as a non-executive director of its Hong

Kong-listed Macau unit, Wynn Macau Ltd. That happened at the same time as the Wynn Resorts board voted to cancel Mr Okada’s 20 percent stake – amounting to 24.5 million shares – and issue him with a promissory note for US$1.9 billion. The board alleged he was “unsuitable” as a partner because of business dealings in the Philippines. The note was in effect a 30 percent discount on the then US$2.77 billion valuation of his stake, held through his pachinko machine business Universal Entertainment Corp. Mr Okada, a Wynn Resorts co-founder and former vice chairman is scheduled to appear on September 18 in Las Vegas for a deposition by Wynn Resorts’ lawyers, according to an August 31 court filing in Las Vegas. The fight between Mr Okada and Wynn Resorts’ founder Steve Wynn has sparked a series of legal actions. The pachinko entrepreneur sued the casino operator in January for access to financial records in a dispute over use of company funds, citing a US$135 million donation announced in May 2011 to the University of Macau Development Foundation. He has also asked a Nevada judge to rule that Wynn Resorts can’t prevent him from voting his shares at the stockholder meeting, or from nominating directors, until the legal challenge to the redemption has been resolved. “This relief is necessary because the Wynn Resorts board of directors purports to have forcibly redeemed Aruze USA’s almost 20 percent interest in Wynn Resorts, seeking to disenfranchise Aruze USA with respect to critical upcoming stockholder votes and to silence Kazuo Okada as the lone voice of dissent against Steve Wynn on the board,” said Mr Okada’s August 31 filing in Las Vegas. With Bloomberg

MPEL talks on Philippines casino continue 60-day deadline passes without deal being finalised Associate Editor

gaming licence to the consortium – MPEL Projects; SM Group, a Philippines conglomerate controlled by the family of Henry Sy; SM Group’s unit Belle Corporation and Premium Leisure and Amusement Inc., a Philippines real estate firm.

Minimum investment Belle Grande Manila Bay in June this year

60-day deadline for a deal that would potentially give Macau casino operator Melco Crown Entertainment Ltd a presence in the Philippines casino market has expired without agreement. But a spokesman for MPEL’s erstwhile local partner Belle Corp. says the deal is still alive. “There are still some more or less routine things that have to be worked out pertaining to permits and similar things with the Philippine authorities. We don’t anticipate any problems as those things can take some time, but 60 days is the target and can be extended with mutual consent,” Manuel Gana, executive vice president and chief financial officer of Belle Corp., told GamblingCompliance. com yesterday. On July 5 MPEL said in a filing to

the Hong Kong Stock Exchange that a wholly-owned subsidiary – MPEL Projects Ltd – had signed a 60-day memorandum of agreement with three parties for the “leasing, development, operation and management” of “a world-class casino, hotel, retail and entertainment complex” in the Philippines. The site, presently a building shell, is located at Manila Bay in the country’s capital and is currently known as Belle Grande Manila Bay. The filing said the local gaming regulator-cum-operator, the Philippine Amusement and Gaming Corporation required the partners to make a minimum investment of US$650 million at the start of commercial operations and a total of US$1 billion for the entire project. PAGCOR has issued a provisional

The Hong Kong filing added that MPEL Projects’ total investment: “is expected to be no more than US$580 million, contributed by a combination of cash, cash flow and debt financing. It is expected that a loan facility of approximately US$320 million may be made available to MPEL.” But this Wednesday Business Daily reported that Melco International Development Ltd – one of the

investors in MPEL – has been seeking equity for the scheme via a US$300 million listing on the Philippine Stock Exchange in Manila. Melco International – which is already on the Hong Kong bourse – is a 33.6 percent shareholder in MPEL. Sources said Melco International planned to use the proceeds of the listing toward the cost of furbishing and operating the resort, along with a US$220 million loan provided to Melco by Philippine bank BDO Unibank Inc. The lender is 26.23 percent owned by SM Investments Corp., according to a filing to the Philippine Stock Exchange made by the bank in March. “We do not comment on market speculation or rumours,” said MPEL spokesman Maggie Ma yesterday.

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business daily September 7, 2012

macau Sands China first half profits fall 18.5 pct

Brought to you by

Pre-development costs written off from the loss of Cotai Plots 7 & 8 to the government and the closure of Cirque de Soleil’s ZAiA show at The Venetian Macao resulted in an 18.5 percent fall in Sands China Ltd’s first half profit this year. That was despite what the company said was an all time half-year record of US$873 million (6.97 billion patacas) generated in adjusted EBITDA across its four Macau properties in the period. Profits came in at US$439.8 million, compared to US$539.5 million a year earlier the firm said in a filing yesterday.

All consuming The economy has grown almost 2.5 times in size since 2004 and the average GDP per resident has almost doubled. Another indicator of economic well-being that is often forgotten is consumption, that is, how people spend their higher incomes. Consumption has grown by about 60 percent in the same period. That is a most remarkable figure but one that pales in comparison with growth in GDP.

Market for homes cooling but still hot Home sales eased in July – but the number was nearly double what it was a year before – just after the special stamp duty was imposed Vítor Quintã

vitorquinta@macaubusinessdaily.com

Consumption patterns become more complex when we look at some of its major components. Money spent on food has risen in real terms by about 22 percent between the start of 2005 and the second quarter of this year. That increase is line with population growth. The biggest share of consumption is services. This is a category that is too broadly defined, covering too many different activities, and without further details one might conclude that this growth is more or less tied to growth in per capita income. The consumer goods and consumption abroad categories provide the strongest suggestion that there has been a noticeable increase in individual wealth. The acquisition of consumer goods has doubled and spending overseas has increased by more than twothirds in the 30 quarters graphed here.

MOP7.27 billion Value of housing sales in July

The special stamp failed to keep housing prices in check (Photo: Manuel Cardoso)

T The second graph focuses on the quarterly growth rates of three types of household expenditure: food and beverages, spending overseas and durable goods, a sub-category of consumer goods. In parts of 2008, throughout most of 2009 and in two quarters of 2010, money spent on food actually contracted. Expenses abroad boomed in the period between the second half of 2009 and 2010, growing by rates greater than 35 percent in the middle of 2010. Excluding that period, growth in the low double digits seems to be the norm. Consumption of durable goods is the most volatile of these components, with wide and sharp movements across short periods of time, perhaps in response to consumer sentiment influenced by the economy’s health. J.I.D.

he special stamp duty on the resale of new homes seems to have lost its cooling effect on the housing market, as the number of homes sold in July was almost twice as high as a year before. Data released yesterday by the Statistics and Census Service show the number of homes sold in July was 1,678, 2.5 percent fewer than in June – a decline for the second consecutive month. The amount paid was 7.27 billion patacas (US$910 million), 1.6 percent less than in June and fell for the third consecutive month. The number of homes sold in July was 91.1 percent higher than in July last year, the first full month after the special stamp duty came into effect, and the combined value of the homes

sold more than tripled. Immediately after the special stamp duty was introduced the number of homes sold dropped sharply. The downturn lasted a few months but the market began showing signs of recovery in March. Financial Services Bureau data released a week ago show the average price per square metre of residential space reached a record 62,137 patacas in July. It was the first time the average price per square metre for housing had exceeded 60,000 patacas. A working group on housing led by Secretary for Transport and Public Works Lau Si Io said before those data were released that the market was “somewhat overheating”. Mr Lau did not rule out measures

to curb prices on top of the special stamp duty. The working group will research four aspects of the market: mortgages, taxation, sales of unfinished flats and the time it takes the government to approve projects. It also said it would look into complaints about foreign capital creating fluctuations in the real estate market. Estate agents and academics told Business Daily that the main problem was the lack of housing. They said this was pushing investors to put their money into commercial property. The value of sales of commercial premises was 1.67 billion patacas in July, 3.3 percent less than the record of over 1.7 billion patacas set in June.

Weather Beijing 24/17o C Changchun 25/14o C

Harbin 24/13o C

Xian 29/19o C Shanghai 28/24o C Chengdu 27/21o C Kunming 26/16o C Haikou 31/24o C Sanya 32/26o C

Guangzhou 34/25o C

MACAU (3-8 September) Day

Temperature

Humidity

09/3

25/31o C

55/95 %

09/4

25/31o C

55/95 %

09/5

25/29o C

70/95 %

09/6

25/30o C

65/95 %

09/7

25/30o C

65/95%

09/8

25/31o C

60/95 %

Shenzhen 33/26o C

ASIA (today)

Hong Kong 29/26o C

Manila

Macau 31/26o C

TOKYO

Jakarta

33/26 C

29/27o C

30/26o C

32/24o C

Bangkok

SEOUL

K. lumpur

31/25 C o

SINGAPORE

28/19o C

33/24o C

taipei

33/26o C

September 7, 2012 business daily | 7

MACAU

New planes boost Air Macau capacity Two Airbus A321 jets will be delivered early next year, adding lift to airline’s progress Tony Lai

tony.lai@macaubusinessdaily.com

ir Macau has ordered two new aircraft to enter service early next year and wants another two in service soon after to help develop its passenger business. The first two Airbus A321 passenger jets will come into service between February and March next year, Air Macau chairman Zheng Yan said yesterday at the launch of a new route to Changsha, the capital of Hunan. “After the new planes are in service, I believe they will have their contribution to the market structure of Air Macau,” he told Business Daily. “And we are also in negotiations to buy two more aircraft, the same model, to be in use by 2014.” The A321 jets can carry 178 passengers and Mr Zheng said the planes would help the flag carrier’s passenger business, which has been doing well this year. “The business this year continues on a positive trend and matches the company’s expectations,” said Mr Zheng. “Comparing to last year, I believe there should be at least a 20 percent increase in profits until now.” Air Macau chief executive Zhu

Songyan said this year’s passenger volume was between 8 percent and 10 percent better than last year’s. Seat occupancy had grown by between 3 percent and 5 percent compared to last year. The carrier had posted losses for five straight years, accumulating losses o f 8 5 7 m i l l i o n p a ta ca s (US$107.3 million), until turning the corner in 2010 and recording a profit of 231.9 million patacas. Last year’s profit was about 250 million patacas. Mr Zheng said the airline was now considering its future direction and development. “There are certain destinations where we see potential to operate direct flights … but, right now, our focus is to consolidate the present network of routes,” he said. Though Air Macau has added just one new route this year, Mr Zheng said the number of flights on its other routes had increased. On some routes, schedules of three flights a week had been replaced by daily services. Mr Zhu said the company would announce a five-year plan by the end of this year, hoped to start a new route to Shenyang, the capital of Liaoning,

China Eastern eyes cash injection Beijing pumps more money into state-controlled airlines as fuel prices soar and earnings slump Vítor Quintã

vitorquinta@macaubusinessdaily.com

hina Eastern Airlines Corp., which flies between Shanghai and Macau, said it would sell new shares to its state-owned parent to help reduce debt. The mainland’s second-largest carrier by passengers didn’t say how much it would raise in a statement released late on Wednesday. The goal is “to further reduce the asset-to-debt ratio of the company so as to support the development of the company,” it said. The airline’s stock was halted from trading in both Shanghai and Hong Kong yesterday. China Eastern will make a statement on the share sale and resume trading within five working

days, it said. The Shanghai-based carrier is one of four airlines currently connecting Macau to Shanghai-Pudong airport, with one daily flight. Air China Ltd and China Southern Airlines Co., the nation’s two other big state-controlled carriers, have already announced capital injections as the government helps the industry following a slump in first-half earnings. The carriers’ profits declined because of an economic slowdown, currency fluctuation and rising fuel prices. Last weekend the government raised the state-set aviation fuel price. “We are not surprised that China Eastern comes up with similar plan now,” said Deutsche Bank AG analysts Vincent Ha and Joe Liew in a note to clients on Wednesday. It is “a sign of the government’s continual support to the sector”. Air China said earlier this year that it planned to raise 1.05 billion yuan (1.32 billion patacas) from its parent. China Southern said in June that it would get as much as 2 billion yuan from its majority shareholder. All three of the big mainland Chinese carriers have tumbled more than 15 percent in the city this year. With Bloomberg/AFP

Air Macau focus ‘is to consolidate the present network of routes,’ says chairman Zheng Yan

and would next year increase flights to Osaka in Japan. Southeast Asia would continue to be the carrier’s focus. During an international conference held here this week, aviation experts criticised Air Macau’s right of first refusal of routes coveted by other

airlines, but Mr Zheng stressed his the airline’s policy was to welcome new airlines. Civil Aviation Authority director Simon Chan supported Mr Zheng’s statement, saying an airline did not need to be based here to operate flights to Macau.

8 |

business daily September 7, 2012

GREATER CHINA

Solar panel face EU pro

Inquiry draws warning fr Philip Blenkinsop

he European Commission said yesterday it will investigate suspected dumping of solar panels by Chinese producers, drawing a warning from China that restrictions on its solar exports would hurt the global clean energy sector. The investigation into one of the biggest import sectors ever targeted by the Commission stems from a complaint by a group of European solar companies, led by Germany’s SolarWorld AG. The group, comprising members in Germany, Italy, Spain and other EU countries, says Chinese solar firms have been selling panels below market value in Europe. China’s solar firms warned in July of a trade war, calling on their government to strike back against the impending investigation.

The European Commission will examine whether dumping is taking place

Leadership change offers reform window

HK chief take

Transactions keep falling Kelvin Wong and Stephanie Tong

EU Chamber urges Beijing to unleash the entrepreneurial potential of the private industry

hina’s once-in-a-decade leadership transition provides an “ideal opportunity” for the country to take “bold steps” to overhaul its economy, according to a report by the European Union Chamber of Commerce in China. “Reforms to substantively reduce state involvement in the business environment and to give full play to market principles are needed to unleash the entrepreneurial potential of China’s private industry,” the Beijing-based chamber said in its annual position paper released yesterday. “This requires providing equal access to all actors, whether stateowned or private, or whether Chinese or foreign-invested.” China needs a “fundamental shift in mindset” and a determination to reduce state involvement in business for it to create sustainable growth by upgrading industries to higher-valueadded products, the chamber said. The nation’s goal of moving from investment-led growth to an economy driven more by consumption is at risk unless it builds on market-opening policies initiated a decade ago as the country was entering the World Trade Organization, it said. “With signs of over-investment and poor productivity returns already perceptible, and with China’s demographic dividend coming to an end, these changes are now urgently required not only for China but also for global economic growth,” the paper says. “As the next five years will be critical, China’s leadership transition provides an ideal opportunity for these bold steps to be taken.”

US$7.58 billion

Foreign direct investment in China in July

Foreign direct investment in China fell to the lowest level in two years in July, fuelling concern that waning confidence in the nation’s growth prospects may restrain a

rebound from the slowest expansion in three years. Investment declined 8.7 percent in July from a year earlier to US$7.58 billion, the eighth drop in nine months and the smallest inflow since July 2010. The EU is home to some of the biggest foreign companies doing business in China, including German carmaker Volkswagen AG, Munich-based engineering company Siemens AG, London-based bank HSBC Holdings Plc, and Danish wind-turbine maker Vestas Wind Systems A/S. The EU was China’s secondbiggest export market in the first half of the year, behind the U.S. China accounted for more than a quarter of global revenue for 26 percent of respondents, compared with 17 percent in 2009, according to a May survey from the chamber. Bloomberg

ong Kong’s new leader is taking up the battle his predecessor failed to win, seeking to overcome record low mortgage rates and an influx of Chinese buyers to make housing in the world’s most expensive city more affordable. Leung Chun Ying, the property surveyor who took over as the city’s chief executive in July, said he’ll boost the supply of homes and start drafting laws giving preference to locals over buyers from mainland China. He’s trying to cool prices that surged 85 percent since 2009 even as predecessor Donald Tsang raised minimum mortgage deposits, added taxes and increased land sales in a losing bid to stem the boom. Like his predecessor, Mr Leung has had to tweak demand and supply through curbs and land releases rather than monetary policy as Hong Kong’s currency peg to the U.S. dollar pushes borrowing costs to a record low. Banks, including HSBC Holdings Plc and Standard Chartered Plc, are charging homebuyers an average 2.17 percent, less than half that of six years ago, fuelling demand along with the rising wealth of buyers from China’s mainland. “Whenever government measures were rolled out in the past few years, the market stabilised for a while and then regained the upward momentum,” said Lawrence Lam, Hong Kong-based director of sales and secured lending at Citigroup Inc. “Property prices are under pressure to climb as interest rates are still low.”

Mortgages down

The EU was China’s second-biggest export market in the first half of 2012

Mr Tsang raised the minimum deposit for some mortgages three times since August 2010, with borrowers now having to put down 40

September 7, 2012 business daily | 9

greater china

ls obe

rom Beijing

Chinese producers include Yingli Green Energy, Suntech Power Holdings Co. Ltd, Trina Solar Ltd and Canadian Solar Inc. But China’s immediate response to the announcement of an investigation was more measured, and did not mention any retaliatory steps. “China expresses deep regret” about the decision, Ministry of Commerce spokesman Shen Danyang said in a statement on the ministry’s website. “Restricting China’s solar panel products will not only hurt the interests of both Chinese and European industry, it will also wreck the healthy development of the global solar and clean energy sector,” said Mr Shen. He urged the European Union to “seriously consider China’s position and proposals, and to resolve friction

over solar panel trade through consultations and cooperation”.

Growing fast The Chinese solar industry expanded rapidly on the back of profitable exports to Europe but is now struggling with severe overcapacity as export markets have shrivelled and domestic demand remains insufficient. China sold about 21 billion euros (US$26.47 billion) in solar panels and components to the European Union in 2011 – about 60 percent of all Chinese exports of the product. The European Union imported goods from China worth a total of 292 billion euros (US$368.01 billion) last

US$26.47 billion

China sold in solar panels and components to the EU in 2011

year. Imports of Chinese products subject to trade defence duties total less than one percent of that amount. The United States imposed duties on solar panel imports from China in May after a similar initiative led by SolarWorld there. The European Commission will examine whether dumping is taking place, whether it is damaging EU industry and whether duties would harm the EU’s economic interests. Western solar firms have been at odds with their Chinese counterparts for years, alleging that they receive lavish credit lines to offer modules at cheaper pricing. German solar company Q-Cells became the most prominent EU victim of an increasingly competitive market, filing for insolvency in April. However, some European solar companies such as those that install panels say Europe should welcome Chinese imports because they make solar power more affordable and are essential for the 27-member bloc to achieve its goal of having 20 percent of energy from renewables by 2020. The Commission will send questionnaires to the Chinese exporters as well as to EU producers and importers and make a recommendation to EU members. They have within 15 months of the opening of the investigation to impose any duties, which are generally in place five years. Reuters

es up battle over cheaper housing

g but prices remain stubbornly high

percent for home purchases of more than HK$7 million (US$902,000). He also introduced an additional stamp duty on residential units sold within two years of purchase. While transactions are down, prices are up. The value of new mortgages fell 42 percent to HK$98.1 billion in the first seven months of this year, while the number of homes sold dropped 22 percent, according to data from the Monetary Authority of Hong Kong and the Land Registry. Home prices have gained 12 percent this year, according to Centaline Property Agency Ltd. BOC Hong Kong Holdings Ltd, the biggest Hong Kong-based lender, has risen 33 percent this year, the best performer in the 12-member Hang Seng Finance Index. Hang Seng Bank Ltd has the second best return in the index with 19 percent. “The property measures have limited impact on banks,” Dominic Chan, an analyst at BNP Paribas SA in Hong Kong, said. “To a certain extent, you can say the impact is actually positive to banks as they control banks’ risks and exposure to property lending.” The seven-member Hang Seng Property Index, which tracks the city’s developers, has risen 0.8 percent since Mr Leung announced the new measures after the market closed on August 30.

Bo Xilai ex-police chief charged Former Chongqing police chief Wang Lijun, the protege of ousted Politburo member Bo Xilai who fled to a U.S. consulate in February, was charged with defection, abuse of power and taking bribes. The People’s Procuratorate of Chengdu City filed the charges against Mr Wang, former head of Chongqing’s public security bureau, with the Chengdu City Intermediate People’s Court, China’s official Xinhua News Agency said on Wednesday, citing authorities. Mr Wang’s visit to the U.S. consulate touched off events that led to Mr Bo’s downfall.

Sony mobile clients’ data disclosed Sony Corp. is investigating a hacker attack that exposed information on about 400 customers of the company’s mobile-phone business in China and Taiwan. About 400 user names, matched with e-mail addresses, were disclosed online by a hacker group, George Boyd, a Tokyo-based spokesman for Sony, said yesterday, declining to elaborate further. The Japanese electronics maker believes the data was obtained from a thirdparty service provider, Mr Boyd said. No credit-card or bank-account data was compromised, he said.

Beijing approves 25 rail projects

Banks in Hong Kong are charging homebuyers an average 2.17 percent, less than half that of six years ago

is 47 percent of household income, the London-based bank said. Still, there’s “few alternative investment options for those cashrich property investors to switch into,” wrote Andrew Lawrence, a Hong Kong-based property analyst at Barclays. Mr Leung’s measures are “not sufficient to cause a material correction in property prices.” While most of Mr Leung’s

Few alternatives The average deposit cost for a firsttime home buyer in Hong Kong is now equivalent to 3.3 times the city’s annual household income. That’s nearing the level in 1998 on the eve of the city’s last property crash, when home prices lost two-thirds of their value in a year, according to an August 22 report by Barclays Plc. The average monthly mortgage payment

InBrief

Property prices are under pressure to climb as interest rates are still low Lawrence Lam, Citigroup Inc.

10-point package is an extension of the initiatives started by Mr Tsang, he pledged to tackle one area that his predecessor had shied away from: putting a stop to buyers from other Chinese cities who accounted for more than half of new property sales in the third quarter of last year. “He has fired a warning shot and the message is clear,” said James To, a lawmaker from the Democratic Party. “He’s telling the market not to push him into rolling out even tougher measures. At the same time he’s buying time so he can formulate policies to boost supply and bring down prices in the long run.” The government will begin drafting laws that may be incorporated into land sale agreements to put restrictions on purchases by people outside of Hong Kong, Mr Leung said. He didn’t specify a timetable and said the measures will be implemented “when necessary.” Bloomberg

China’s top planning body has approved 25 rail projects that could be worth more than 700 billion yuan (US$110.3 billion), the official China Securities Journal reported yesterday, the latest measure to stimulate the country’s slowing economy. The National Development and Reform Commission (NDRC) has approved project plans and feasibility studies for the 25 projects in cities such as Suzhou, Hangzhou, Chengdu, Shenzhen, Changchun and Tianjin, the paper reported, quoting the NDRC’s website.

Lenovo buys into Brazil‎ Lenovo Group Ltd, the world’s secondlargest personal computer maker, will buy consumer electronics maker Digibras to expand its Brazil computermarket share and add mobile products including phones and tablets. The deal has a base price of 300 million reais (US$147 million), the company said in a Hong Kong stock exchange filing late on Wednesday. The purchase will double Lenovo’s PC market share in Brazil, boosting market position to third from seventh, chief financial officer Wong Wai Ming said.

10 |

business daily September 7, 2012

ASIA Australia jobless rate falls Australia’s jobless rate unexpectedly declined in August on signs employers in mining states are still hiring workers, boosting the local currency after a threeday slide. The unemployment rate fell to 5.1 percent from 5.2 percent in July, the statistics bureau said in Sydney yesterday. The participation rate reached the lowest level in more than five years, a sign job seekers exited the labour force. The number of people employed fell by 8,800, compared with economists’ forecast for an increase of 5,000.

Vietnam risks biggest East Asia IMF rescue Aid aimed at recapitalise banks and clean up bad debt

ietnam risks becoming the biggest East Asian economy to seek an International Monetary Fund rescue loan since the region’s financial crisis more than a decade ago as it moves to support a faltering banking system. The nation may need IMF aid to recapitalise banks and must act quickly to clean up bad debt or risk “prolonged stagnation,” the National Assembly’s economic committee said in a report published on its website yesterday. The financial system needs an injection of 250 trillion dong (US$12 billion) to 300 trillion dong, according to the 298-page report that included recommendations to address economic risks. Prime Minister Nguyen Tan Dung’s government is struggling to regain confidence in Vietnam after the arrest of a banking tycoon last month highlighted the frailty of a financial system hobbled by Southeast Asia’s highest bad debt levels. Growth slowed to 4.4 percent in the first half of this year from 8.5 percent in 2007 as lending stagnated, damping state revenue and crimping the country’s ability to rescue banks. The country’s last IMF lending programme was a poverty reduction and growth facility announced in April 2001. “Vietnam is now at a point where

For the Vietnamese, particularly given their history of fierce independence, to go to the IMF before exhausting all other alternatives would be very surprising Peter Ryder, Indochina Capital

it really does have to explore ways of recapitalising and restructuring the foundation for its banking system,” said Peter Ryder, the Hanoi-based chief executive of fund manager and property developer Indochina Capital. “However, for the Vietnamese, particularly given their history of fierce independence, to go to the IMF before exhausting all other alternatives would be very surprising.”

Apart from the suggestion for Vietnam to seek an IMF loan to restructure the banking system, the National Assembly committee’s report also recommended other funding sources such as selling government bonds with three-tofive-year maturities, trimming state spending and drawing funds or investments from foreign companies. Vietnam’s non-performing loans climbed to 4.47 percent of total lending as of May 31, from 3.07 percent at the end of 2011, according to central bank data. State Bank of Vietnam Governor Nguyen Van Binh said in April that the level of nonperforming loans at some lenders may be “much higher” than reported figures, with Mizuho Corporate Bank Ltd. estimating as much as 20 percent of debts may be bad.

Taking action The central bank should set up a company to buy bad debt using foreign funding, the parliamentary panel said in this week’s report. “The ratio of bad debt and overdue debt in the banking system is at an alarming level,” while bank provision for bad debt is inadequate, it said. The central bank hasn’t officially

been presented with the report by the National Assembly and the recommendations are “just the committee’s view” for now, Nghiem Xuan Thanh, chief administrator at the bank, said yesterday. Vietnam had recognised the risks and unveiled plans to prevent a collapse of its banking system months ago. The country said in March it would buy bad debt from lenders as the nation sought to overhaul the industry and cut

Qantas and Emirates form alliance Tie up to boost Europe flights David Fickling

antas Airways Ltd will work with Emirates on European routes as it quits a 17-year partnership with British Airways in a bid to end losses on international operations. The accord will let Qantas add more than 60 new one-stop destinations to its network, as it shifts its European hub to Dubai from Singapore, the Sydneybased carrier said in a statement. The airlines will offer 98 flights a week to Dubai under the 10-year agreement, which is due to begin in April. Qantas rose the most in six weeks on speculation cooperation with the world’s largest international carrier and changes to Asian services will help revive long-haul operations that lost A$450 million ($459 million) in the year ended June. The Sydney-based carrier has struggled to compete with fast-growing Middle East airlines that have used hubs in the Gulf to offer a wider range of connections between Australia and Europe. “This is the biggest arrangement

Qantas has ever entered into with another airline,” chief executive Alan Joyce said at a media conference in Sydney yesterday. “This agreement represents a step-change for the aviation industry.”

Frequent fliers The two airlines, the biggest and third-biggest by passenger numbers on routes from Australia, intend to coordinate pricing, sales and scheduling. They will also align their frequent-flier programmes, allowing passengers to earn points on both carriers’ flights. Neither company will buy equity in the other under the deal, which requires regulatory approval. The deal will probably be worth more than A$90 million a year to Qantas, as it will boost the carrier’s appeal to corporate travellers and grow its international business said Sondal Bensan, a BT Investment Management Ltd analyst. The fund manager’s parent Westpac Banking Corp. owns

5 percent of Qantas. “It’s a huge step in the right direction,” Mr Bensan said. “Take this in conjunction with the fleet deal with Boeing and it’s a material change in both their balance sheet and their operating profit outlook.” Qantas on August 23 cancelled an order for 35 Boeing Co. 787 Dreamliners. It also got US$433 million in compensation and refunds from the planemaker. The airline rose 6.7 percent to A$1.20 at the close of trading in Sydney, the biggest gain since July 26. Virgin Australia Holdings Ltd, which cooperates with Abu Dhabi-based Etihad Airways PJSC on competing routes to Europe, dropped 2.2 percent. Qantas has surged 24 percent since a record low close of 97 cents on June 8.

Dubai A380s Qantas will begin services to Dubai from Melbourne and Sydney using Airbus SAS A380s. These services will

Emirates CEO Tim Clark, left, and Qantas CEO Alan Joyce inked a 10-year partnership yesterday

continue to London. The carrier will halt routes to Europe via Singapore and end flights to Frankfurt. The deal will give Qantas passengers one-stop services to more than 70 Emirates destinations in Europe, the Middle East and Africa. Emirates will gain access to Qantas’ domestic

September 7, 2012 business daily | 11

asia MasterCard eyes Myanmar market MasterCard Inc. has reached an agreement with a bank in Myanmar to issue its first branded cards in the country, which has an antiquated banking system and a largely cash economy. MasterCard Worldwide said in a statement yesterday that it had given the licence to Co-Operative Bank Ltd, which it said had the largest ATM network in the country. The new MasterCard plastic, which should be available in a few months’ time, will be accepted by Co-Operative Bank ATMs and by retailers in the country as payment cards.

S.Korea growth misses estimates Economy grows at a slower pace hurt by a fall in capital investment, slowdown in exports Se Young Lee

Vietnam’s financial system needs an injection of at least US$12 billion

bad-debt ratios at state-owned banks to below 3 percent by 2015. The central bank has also said it’s ready to force mergers among weak lenders, and Mr Dung has ordered the monetary authority to “solve” a shortage of funds after the credit crunch forced thousands of companies out of business. Restructuring the banking system is necessary as lenders are “not truly strong,” Vu Duc Dam, chairman of the

government office, said at a briefing in Hanoi yesterday. Gross domestic product growth could be as low as 5 percent this year, Mr Dam said. Vietnam’s state spending has risen 19 percent this year as of August 15, while income gained 1.7 percent, a government statement showed yesterday. Government expenditure totalled 534 trillion dong, compared with income of 418.5 trillion dong. Bloomberg

KEY POINTS Qantas to add more new destinations to its network Drops 17-year partnership with British Airways Deal aimed at helping revive Qantas’ int’l business

outh Korea’s export-reliant economy is in a far deeper slump than seen just a few months ago as the protracted eurozone crisis put an additional drag on already sputtering growth, data showed yesterday. A senior statistics official at the country’s central bank abandoned its projection made just two months ago that growth would bounce back sharply in the current quarter as August data released separately underscored a deepening slump. The remarks and data reinforced the market’s bias for an interest rate cut next while the news and comment failed to lift bond prices, even with the additional policy easing participants see being implemented around the world. “We will have to wait and see further whether growth [in the third quarter] will rise or fall,” Jung Yungtaek, director of the Bank of Korea’s National Accounts Division, told reporters at a briefing. The central bank said as recently as July that Asia’s fourth-largest economy would likely see quarterly growth picking up to more than 1 percent in the third quarter from less than 0.5 percent recorded in the second quarter. Mr Jung spoke after the central bank’s revised data showed South Korea’s economy grew just 0.3 percent in the April-June period over the previous quarter, down a tad from 0.4 percent growth estimated earlier by the central bank. The finance ministry is due next week to offer a modest set of plans to boost public spending by around US$2 billion, but it has declined to adopt a bigger stimulus package, saying it has to reserve some policy

room for a “worse time”. Investors now expect the Bank of Korea to cut the policy interest rate to 2.75 percent at its September 13 meeting after having lowered it by 25 basis points to 3.00 percent in July in its first policy easing since the 2008-2009 financial crisis. “The possibility that the simultaneous weakness in exports and domestic demand will continue in the third quarter is leading to the expectations for a rate cut next week,” said Hyundai Securities economist Lee Sang-jae. Finance ministry data showed the country’s top three department store chains and top three discount store chains both saw sales fall in August for the third month in a row over a year earlier. It was the first time since at least early 2005 that sales at both categories posted annual losses for three successive months, according to data on a government website. South Korea’s economy, heavily reliant on exports because domestic demand is also strongly influenced by overseas sales of its products, has been hit hard as the crisis in the eurozone dragged down demand around the world. Ex po rts h av e al rea dy b een losing steam, with combined exports in July and August falling by 7.6 percent from a year earlier, sharper than the 0.8 percent onyear decline in overseas sales seen in the second quarter. The central bank has slashed its forecast for this year’s economic growth twice this year and is widely expected to downgrade the projection again in October from the current 3.0 percent, compared with last year’s 3.6 percent.

Would help Emirates compete vs. Etihad, Qatar Airways

network covering more than 50 destinations. The two airlines will also coordinate Australia-New Zealand and Australia-Southeast Asia services. The Australian carrier will also reorganise services to Asia to offer passengers a 25 percent increase in connections via Singapore. The carrier

will boost dedicated capacity to the city-state as it shifts Europe services to Dubai, it said. Qantas’ tie-up with International Consolidated Airlines Group’s British Airways will end in March, according to a separate statement. Qantas will remain in the Oneworld alliance. IAG is looking for new partnership, CEO Willie Walsh said in the statement. “Asia has become a key market focus for IAG and we’re talking to a number of airlines about alternative options,” he said. The end of the Qantas partnership “won’t have any negative impact on IAG’s financial targets.” Bloomberg

Domestic consumption in South Korea has not risen enough to offset a decline in exports

Reuters

12 |

business daily September 7, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

Day %

VOLUME

AIA GROUP LTD

26.3

0.5736138

27281444

ALUMINUM CORP-H

2.88

0.6993007

8511141

BANK OF CHINA-H

2.76

313923804

BANK OF COMMUN-H

4.86

-0.6134969

29433134

BANK EAST ASIA

27.05

-1.096892

4480539

COSCO PAC LTD

BELLE INTERNATIO

13.68

1.333333

5096667

ESPRIT HLDGS

BOC HONG KONG HO

23.4

-2.112529

19343040

CATHAY PAC AIR

12.16

0.4958678

5860066

CHEUNG KONG

103.8

-0.8595989

2739054

CHINA COAL ENE-H

6.21

0.3231018

19944161

CHINA CONST BA-H

4.99

0.6048387

234129059

CHINA LIFE INS-H

21.15

1.196172

17660825

CHINA MERCHANT

22.05

1.847575

3537377

CHINA MOBILE

CHINA UNICOM HON CITIC PACIFIC CLP HLDGS LTD CNOOC LTD

Day %

VOLUME

12.24

0.6578947

20499448

NAME POWER ASSETS HOL

9.24

3.125

15460592

SANDS CHINA LTD

5074972

89.9

0.2229654

1127007

TENCENT HOLDINGS

239.2

2.134927

1979547

23.15

1.982379

6660581

9.21

-0.2166847

11154322

9.81

2.615063

3523091

SWIRE PACIFIC-A

12.32

2.666667

3826397 7864082

TINGYI HLDG CO WANT WANT CHINA

HENDERSON LAND D

47.75

-0.5208333

2421610

78.1

1.297017

1303345

HONG KG CHINA GS

18.14

1.002227

4938099

HONG KONG EXCHNG

101.6

-0.3921569

2548464

HSBC HLDGS PLC

67.25

1.586103

12916266

HUTCHISON WHAMPO IND & COMM BK-H

CHINA PETROLEU-H

6.91

0.7294416

33779278

LI & FUNG LTD

CHINA RES ENTERP

23.2

1.531729

1976410

MTR CORP

66.9

3946080

4.1

0.7371007

283359108

11.82

1.72117

26394226

0.1788909

2802088

CHINA RES LAND

15.66

1.42487

11531918

NEW WORLD DEV

9.49

-0.7322176

8296510

CHINA RES POWER

17.26

1.172333

7151884

PETROCHINA CO-H

9.12

0.4405286

49627912

CHINA SHENHUA-H

27.05

1.310861

13513584

PING AN INSURA-H

55.1 -0.09066183

14151464

12146063 7934372

1402409

16401756

-3.142329 0

12140123

1959867

26.2

SUN HUNG KAI PRO

-1.356589

0.789177

VOLUME

-0.39801

52155814

25.45

0.4556867

1.312551

12.5

2579555

0.2477876

110.1

81.5

Day %

61.75

100.1

-0.3149606

HANG LUNG PROPER

HENGAN INTL

PRICE

SINO LAND CO

63.3 14.16

HANG SENG BK

17.88

CHINA OVERSEAS

PRICE

MOVERS

4 19600

INDEX 19209.3 HIGH

19565.42

LOW

19086.96

52W (H) 21760.33984 (L) 16170.35

19080

4-Sep

6-Sep

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

CHINA PACIFIC-H

23.1

1.094092

3985538

8247205

CHINA PETROLEU-H

6.91

0.7294462

33779278

0.6993007

8511141

CHINA RAIL CN-H

6.39

6.5

19.72

0.407332

4240529

CHINA RAIL GR-H

3.17

BANK OF CHINA-H

2.76

313923804

CHINA SHENHUA-H

BANK OF COMMUN-H

4.86

-0.6134969

29433134

4.166667

2331631

CHINA CITIC BK-H

3.52

0.2849003

CHINA COAL ENE-H

6.21

0.3231018

CHINA COM CONS-H

5.87

CHINA CONST BA-H

4.99

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

2.75

-0.3623188

134658493

AIR CHINA LTD-H

4.53

0.6666667

ALUMINUM CORP-H

2.88

ANHUI CONCH-H

BYD CO LTD-H

NAME

PRICE

DAY %

VOLUME

10.32

-0.5780347

20618679

ZIJIN MINING-H

2.56

4.918033

37850508

26503813

ZOOMLION HEAVY-H

7.87

2.473958

25704263

7.094595

72520942

ZTE CORP-H

9.28

-2.315789

10562940

27.05

1.310861

13513584

CHINA TELECOM-H

4.37

2.102804

82538875

DONGFENG MOTOR-H

9.36

18904651

31135546

GUANGZHOU AUTO-H

4.98

0.4032258

3188798

19944161

HUANENG POWER-H

5.61

0.5376344

16037132

1.206897

21089469

IND & COMM BK-H

4.1

0.7371007

283359108

0.6048387

234129059

JIANGXI COPPER-H

16.66

0.8474576

7214454 49627912

2.8

1.449275

22224425

PETROCHINA CO-H

9.12

0.4405286

21.15

1.196172

17660825

PICC PROPERTY &

8.83

1.377727

9033323

CHINA LONGYUAN-H

5.07

4.106776

7009451

PING AN INSURA-H

55.1

-0.09066183

14151464

CHINA MERCH BK-H

12.24

-0.8103728

93137988

SHANDONG WEIG-H

8.63

1.172333

2704953

CHINA COSCO HO-H CHINA LIFE INS-H

NAME YANZHOU COAL-H

MOVERS

3 9310

INDEX 9069.39 HIGH

9303.61

LOW

8995.34

CHINA MINSHENG-H

5.78

119759049

24.15

0.625

1362171

52W (H) 11916.1

CHINA NATL BDG-H

7.24

0.8356546

27608335

TSINGTAO BREW-H

42.7

0.5889282

912158

(L) 8058.58

CHINA OILFIELD-H

12.4

0.3236246

13323924

WEICHAI POWER-H

20.95

1.207729

1346564

SINOPHARM-H

8990

4-Sep

6-Sep

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.43

0.4132231

35686776

CSR CORP LTD -A

4.04

4.392765

65449659

SAIC MOTOR-A

AIR CHINA LTD-A

4.65

2.649007

15210543

DAQIN RAILWAY -A

5.93

0.8503401

12818981

0.6036217

8363853

DATANG INTL PO-A

4.45

0.4514673

ANHUI CONCH-A

13.7

2.391629

10769050

DONGFANG ELECT-A

14.29

BANK OF BEIJIN-A

7.18

0.4195804

8261540

EVERBRIG SEC -A

11.43

NAME ALUMINUM CORP-A

NAME

PRICE

DAY %

VOLUME

11.92

1.016949

10629251

SANY HEAVY INDUS

9.03

0.8938547

33951716

2310689

SHANDONG GOLD-MI

37.04

1.646542

13573235

1.708185

5533836

SHANG PHARM -A

11.79

1.462995

7479701

1.419698

4494013

SHANG PUDONG-A

7.38

0.8196721

38370245

2.7

8097600

GD MIDEA HOLDING

9.18

9139999

4.06

1.5

2498219

BANK OF COMMUN-A

4.19

32076655

GD POWER DEVEL-A

2.52

-0.3952569

18236581

SHANXI LU'AN -A

16.16

0.4975124

21752421

BANK OF NINGBO-A

9.38

1.625135

9831827

GF SECURITIES-A

10.48

0.6724304

16556816

SHANXI XINGHUA-A

37.07

0.4607046

950863

GREE ELECTRIC

20.98

0.1431981

5621695

SHANXI XISHAN-A

12.43

0.8928571

7459157

BANK OF CHINA-A

BAOSHAN IRON & S

4.45

1.598174

45736182

SHANGHAI ELECT-A

BYD CO LTD -A

15.77

1.873385

7696888

GUANGHUI ENERG-A

13.11

1.944012

16206520

SHENZEN OVERSE-A

5.67

1.069519

11653324

CHINA AVIC AVI-A

19.87

-0.5007511

1000378

HAITONG SECURI-A

8.67

0.5800464

24774266

SUNING APPLIAN-A

6.65

-0.2998501

95571311

CHINA CITIC BK-A

3.78

0.8

10279040

HANGZHOU HIKVI-A

27.84

0.9427121

2222506

TSINGTAO BREW-A

33.35

0.09003601

599786

CHINA CNR CORP-A

3.53

4.43787

73712385

HENAN SHUAN-A

54.96

0.1092896

1720448

WEICHAI POWER-A

17.8

-0.280112

5158225 10048199

CHINA COAL ENE-A

6.73

1.051051

6364724

HONG YUAN SEC-A

16.99

1.797484

12728237

WULIANGYE YIBIN

33.5

0.08963251

CHINA CONST BA-A

3.89

0.257732

14953723

HUATAI SECURIT-A

8.69

0.812065

7900740

XIAMEN TUNGSTEN

38.25

0.9234828

5505214

CHINA COSCO HO-A

3.8

2.150538

13995306

HUAXIA BANK CO

8.3

0.973236

19266310

YANGQUAN COAL -A

13.48

0.5219985

10137310

CHINA EAST AIR-A

3.29

11139144

IND & COMM BK-A

3.71

0.2702703

24600546

YANTAI CHANGYU-A

50.37

0.921659

999079

CHINA EVERBRIG-A

2.71

28935342

INDUSTRIAL BAN-A

0.5025126

38804295

YANTAI WANHUA-A

12.86

0.8627451

2290717 2191144

0.3904071

10427924

INNER MONG BAO-A

32.78

0.9858287

21940304

YANZHOU COAL-A

17.08

0.8264463

CHINA MERCH BK-A

9.73

0.2059732

39391305

INNER MONG YIL-A

20.64

-0.5301205

4645771

YUNNAN BAIYAO-A

58.9

0.5119454

1470633

CHINA MERCHANT-A

9.78

0.8247423

6802566

INNER MONGOLIA-A

4.89

0.8247423

42236680

ZHONGJIN GOLD

15.02

1.076716

12989896

CHINA MERCHANT-A

20.52

-0.5813953

5749385

JIANGSU HENGRU-A

30.44

0.1645278

1234465

ZIJIN MINING-A

3.8

1.604278

37928892

234683865

JIANGSU YANGHE-A

120.53

-1.285831

1581625

ZOOMLION HEAVY-A

1.78117

39943069

20.39

2.001001

6942259

ZTE CORP-A

9.9

2.484472

12086673

CHINA LIFE INS-A

CHINA MINSHENG-A CHINA NATIONAL-A

5.68

3.839122

17475732

JIANGXI COPPER-A

6.07

2.360877

CHINA OILFIELD-A

16.31

0.4929144

3359592

JINDUICHENG -A

11.13

1.089918

3960826

CHINA PACIFIC-A

19.8

1.226994

9066265

JIZHONG ENERGY-A

12.01

0.7550336

11152052

CHINA PETROLEU-A

6.02

-0.4958678

18348036

KANGMEI PHARMA-A

15.64

0.3207184

8382324

231.75

-0.9869264

2079419

CHINA RAILWAY-A

4.49

4.176334

26919595

KWEICHOW MOUTA-A

CHINA RAILWAY-A

2.49

2.892562

35986999

LUZHOU LAOJIAO-A

35.8

4056113

CHINA SHENHUA-A

21.5

2.186312

8342187

METALLURGICAL-A

2.02

1.507538

14122933

2.48

1.22449

17404373 32490033

CHINA SHIPBUIL-A

4.67

24304446

NINGBO PORT CO-A

CHINA SOUTHERN-A

3.41

0.5899705

28802000

PANGANG GROUP -A

3.61

0.2777778

8.78

0.1140251

MOVERS

247

15 2240

INDEX 2217.823

CHINA STATE -A

3.05

0.660066

25495058

PETROCHINA CO-A

7910344

HIGH

2231.72

CHINA UNITED-A

3.79

30649518

PING AN BANK-A

13.73

0.8076358

10356038

LOW

2188.04

CHINA VANKE CO-A

8.35

0.3605769

28171593

PING AN INSURA-A

39.82

1.452229

9615674

CHINA YANGTZE-A

6.33

-0.3149606

10609629

POLY REAL ESTA-A

10.2

-0.390625

36367126

CHONGQING WATE-A

5.43

1.30597

2395792

QINGDAO HAIER-A

10.88

0.6475486

6825927

10.67

0.4708098

32492223

QINGHAI SALT-A

30.89

0.4226268

2488965

PRICE DAY %

Volume

PRICE DAY %

Volume

CITIC SECURITI-A

52W (H) 2796.352 (L) 2186.962

2180

4-Sep

6-Sep

FTSE TAIWAN 50 INDEX NAME

NAME

ACER INC

26.1

13138161

FORMOSA PLASTIC

80.3

0.1246883

6294648

ADVANCED SEMICON

22.7

0.8888889

17353536

FOXCONN TECHNOLO

118

1.287554

12001853

33.95 -0.1470588

3188335

FUBON FINANCIAL

29.25

0.1712329

6487234

88.4 -0.4504505

36957961

ASIA CEMENT CORP ASUSTEK COMPUTER

295

-1.172529

1799714

HON HAI PRECISIO

AU OPTRONICS COR

9.52

-1.85567

75834863

HOTAI MOTOR CO

CATCHER TECH

141

-6.312292

32513868

HTC CORP

CATHAY FINANCIAL

28.25

0.177305

8935678

CHANG HWA BANK

15.15

CHENG SHIN RUBBE

71.1 -0.4201681

CHIMEI INNOLUX C

9.41

-1.569038

25065441

MEDIATEK INC

314

-2.180685

10671270

CHINA DEVELOPMEN

7.03

0.1424501

15954992

MEGA FINANCIAL H

21.9

15870036

CHINA STEEL CORP

24.05

-2.434077

52848549

NAN YA PLASTICS

53.4

-1.657459

5481181

CHINATRUST FINAN

17.7

0.5681818

14997120

PRESIDENT CHAIN

155.5 -0.6389776

1189463

CHUNGHWA TELECOM

90.4

0.4444444

5383431

QUANTA COMPUTER

77.7

1.171875

4108299

COMPAL ELECTRON

25.2 -0.9823183

5545565

SILICONWARE PREC

33.6 -0.7385524

3458592

DELTA ELECT INC

107

3.883495

8420697

SINOPAC FINANCIA

11.4

0.8849558

16401086

FAR EASTERN NEW

30.8 -0.1620746

5105402

SYNNEX TECH INTL

65.9

-1.1994

2476254

FAR EASTONE TELE

72.4

0.4160888

2587389

TAIWAN CEMENT

32.5 -0.1536098

4641061

17.35 -0.2873563

8792148

TAIWAN COOPERATI

75 -0.6622517

4792524

TAIWAN FERTILIZE

2755640

TAIWAN GLASS IND

FIRST FINANCIAL FORMOSA CHEM & F FORMOSA PETROCHE

83.4

-3.24826

205.5

-1.201923

355654

254

-1.167315

13418977

HUA NAN FINANCIA

15.85

0.3164557

4389311

4018503

LARGAN PRECISION

642

0.4694836

2916863

5493559

LITE-ON TECHNOLO

35.35 -0.4225352

1486747

16.15

-0.308642

6682680

72.5

-1.091405

2226380

28.05

-2.941176

2711650

NAME

PRICE DAY %

TAIWAN MOBILE CO

Volume

103

-1.435407

399.5

-1.600985

5065124

81.1

-1.097561

25873922

UNI-PRESIDENT

48.05

2.452026

12161004

UNITED MICROELEC

11.65 -0.4273504

22864838

TPK HOLDING CO L TSMC

WISTRON CORP

4453245

33.6

1.664145

6559065

YUANTA FINANCIAL

13.55

0.3703704

5838458

YULON MOTOR CO

51.7

-1.897533

5840197

MOVERS

3 5140

INDEX 5019.54 HIGH

5134.08

LOW

5011.06

52W (H) 5621.53 5010

(L) 4643.05 4-Sep

6-Sep

September 7, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) gaLaXy eNtertaINMeNt

MeLco croWN eNtertaINMeNt

MgM cHINa HoLDINgS

21.9

30.3

12.7

21.7

30.1

12.6

21.5

29.9

12.5

21.3

average 20.912

Min 20.55

Last 20.7

20.7

29.3

20.5

29.1

SaNDS cHINa LtD

Max 30.25

average 30.006

Min 29.2

Last 29.6

SJM HoLDINgS LtD 27.1

16.3

26.9

16.2

Last 26.2

26.1

average 16.02

PRICE

DAY %

YTD %

(H) 52W

96.54

1.237416107

-2.069385271

110.6499939

78.15999603

BRENT CRUDE FUTR Oct12

114.31

1.078786807

9.314334895

123.2900009

89.11000061

GASOLINE RBOB FUT Oct12

298.22

1.098379551

17.99477724

304.0199995

220.5600023

988

0.636618284

10.02227171

1044.75

799

2.785

-0.357781753

-16.16496087

4.590000153

2.299999952

HEATING OIL FUTR Oct12

315.07

1.061714139

10.26071741

333.8899851

252.5300026

Gold Spot $/Oz

1709.2

0.9897

9.2203

1885.73

1522.75

Silver Spot $/Oz

32.8844

2.3091

18.1405

42.705

26.085

Platinum Spot $/Oz

1581.68

1.3183

13.4227

1863.94

1339.25

Palladium Spot $/Oz

646.75

1.2128

-1.0329

764.3

537.54 1827.25

GAS OIL FUT (ICE) Oct12 NATURAL GAS FUTR Oct12

LME ALUMINUM 3MO ($) LME COPPER 3MO ($) 3MO ($)

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

Min 15.92

Last 15.92

Last 12.1

17.3

17.1

16.9

Dec12

PRICE

1972

1.388174807

-2.376237624

2438

7735.5

1.316306483

1.782894737

9160

6635

1890

0.692594566

2.43902439

2269

1718.5

16100

0.940438871

-13.94975949

22150

15236

14.835

-0.569705094

-2.433410062

17.5

14.15499973

794.5

0.474233323

35.52238806

849

499

MAJORS

ASIA PACIFIC

CROSSES

average 17.11

Last 17.04

Min 16.96

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

DAY %

1.0185 1.586 0.9592 1.2524 78.42 7.9893 7.7565 6.3492 55.915 31.28 1.2488 29.868 42.022 9599 79.873 1.20137 0.78968 7.9395 10.0052 98.22 1.03

-0.5274 -0.0882 -0.5004 -0.4847 -0.0128 -0.0025 -0.0013 -0.0299 -0.4537 -0.2558 -0.1842 -0.0603 -0.3498 -0.1146 0.5033 -0.0275 0.3951 0.8111 0.4987 0.4582 0

YTD %

(H) 52W

-0.2351 2.0395 -2.1997 -3.3717 -1.9255 0.1289 0.1405 -0.8537 -5.097 0.8632 3.8277 1.3761 4.3263 -5.5214 -1.8041 1.2835 5.5352 2.4523 3.4662 1.4661 0.0097

(L) 52W

1.0857 1.6302 0.9972 1.4247 84.18 8.0413 7.8077 6.406 57.3275 32 1.3199 30.716 44.35 9662 88.637 1.24736 0.88423 9.0421 11.4015 111.6 1.0311

0.9388 1.5235 0.8482 1.2043 75.35 7.9823 7.7526 6.2769 45.98 29.91 1.2063 29.065 41.57 8553 72.057 1.19995 0.77553 7.7018 9.6245 94.12 1.0288

MACAU RELATED STOCKS NAME

WHEAT FUTURE(CBT) Dec12

877.5

1.123595506

21.875

953.25

629.5

SOYBEAN FUTURE Nov12

1743.5

-0.228898426

44.77890803

1789

1115.75

COFFEE 'C' FUTURE Dec12

161.85

0.778331258

-31.41949153

281.0499878

153.6999969

CROWN LTD

ARISTOCRAT LEISU

PRICE

(H) 52W

(L) 52W

2.68

DAY % YTD % 1.901141

21.81818

3.25

1.88

VOLUME CRNCY 4047486

9.2

1.545254

13.72064

9.29

7.47

1909418

SUGAR #11 (WORLD) Oct12

19.24

1.209889532

-15.72492335

25.39999962

18.97999954

AMAX HOLDINGS LT

0.061

-29.88506

0.119

0.055

COTTON NO.2 FUTR Dec12

75.52

0.225613802

-14.02550091

102.25

64.61000061

BOC HONG KONG HO

23.4

-2.112529

27.17392

24.95

14.24

19343040

CENTURY LEGEND

0.233

1.304346

0.335

0.204

3.18

13.57143

3.5

2.3

CHINA OVERSEAS

17.88

0.789177

37.90553

19.138

9.979

16401756

CHINESE ESTATES

9.75

0.619195

-22

13.68

8.3

9000

CHOW TAI FOOK JE

9.24

0.1083424

-33.62069

15.16

8.4

2728515

CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13047.48

0.08852449

6.792853

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

3069.266

-0.1883866

17.81534

3134.17

2298.89

FTSE 100 INDEX

5701.39

0.7693722

2.317011

5989.07

4868.6

DAX INDEX

7056.37

1.316354

19.63295

7194.33

4965.8

NIKKEI 225

8680.57

0.008640732

2.663647

10255.15

8135.79

HANG SENG INDEX

19209.3

0.3354911

4.203611

21760.33984

16170.35

CSI 300 INDEX

2217.823

0.8158645

-5.45324

2796.352

TAIWAN TAIEX INDEX

7326.72

-0.5527022

3.60064

8170.72

EMPEROR ENTERTAI FUTURE BRIGHT GALAXY ENTERTAIN

1.4

26.12612

1.48

0.97

805000

1.15

3.603604

173.8095

1.24

0.3

2244000

20.7

-5.045872

45.36517

24.95

8.69

28965226

110.1

19.47911

112

84.4

1402409

HOPEWELL HLDGS

24.9

-0.2004008

25.37764

25.4

18.56

610441

HSBC HLDGS PLC

67.25

1.586103

13.98305

71.8

12916266

HANG SENG BK

3.53

0.5698006

18.0602

3.88

2.53

6549173

LUK FOOK HLDGS I

-1.960784

-26.19926

39.75

14.7

2503935

MELCO INTL DEVEL

5.93

-3.889789

2.772964

8.54

4.3

2332000

2186.962

MGM CHINA HOLDIN

12.1

-3.66242

26.14477

14.76

7.6

3917927

6609.11

MIDLAND HOLDINGS

4.3

1.176471

8.749341

5.217

2.887

737074

NEPTUNE GROUP

0.168

51.35135

0.205

0.08

3360000

NEW WORLD DEV

9.49

-0.7322176

51.59744

10.96

6.13

8296510

SANDS CHINA LTD

26.2

-3.142329

19.36218

33.05

14.9

12146063

KOSPI INDEX

1881.24

0.3847324

3.039863

2057.28

1644.11

S&P/ASX 200 INDEX

4312.888

0.7974729

6.318842

4448.5

3840.2

JAKARTA COMPOSITE INDEX

12.0

17.5

Max 17.58

(L) 52W

WTI CRUDE FUTURE Oct12

LME ZINC

Min 12

CURRENCY EXCHANGE RATES

NAME

METALS

average 12.176

15.9 Max 16.3

Commodities ENERGY

Max 12.68

16.0

26.3 Min 26.1

12.1

16.1

26.5

average 26.433

12.2

WyNN Macau LtD

26.7

Max 27.05

12.3

29.5

20.9

Max 21.85

12.4

29.7

21.1

4096.524

0.5195134

7.182956

4234.734

3217.951

FTSE Bursa Malaysia KLCI

1617.35

-1.441795

5.658738

1655.49

1310.53

NZX ALL INDEX

819.596

0.6523523

12.30415

819.736

712.548

HUTCHISON TELE H

SHUN HO RESOURCE

1.13

1.28

0.82

SHUN TAK HOLDING

2.8

9.412256

3.75

2.241

4448858

SJM HOLDINGS LTD

15.92

-2.570379

27.30362

17.614

10.079

4978234

SMARTONE TELECOM

15.22

0.3957784

13.24405

18.5

9.8

3603432

WYNN MACAU LTD

17.04

-4.697987

-12.61538

25.5

14.62

9638705

ASIA ENTERTAINME

3.3

-1.197605

-43.87755

7.65

2.4

89770

PHILIPPINES ALL SHARE IX

3428.9

0.1325795

12.60607

3531.5

2695.06

HSBC Dragon 300 Index Singapor

576.17

-0.58

16.09

STOCK EXCH OF THAI INDEX

1244.85

0.8923361

21.41088

1247.72

843.69

BALLY TECHNOLOGI

44.28

0.02258866

11.93124

49.32

24.74

794557

HO CHI MINH STOCK INDEX

393.41

-1.381229

11.90727

492.44

332.28

BOC HONG KONG HO

3.18

2.912621

32.65546

3.25

1.81

15187

Laos Composite Index

1027.6

14.24632

1064.23

876.33

GALAXY ENTERTAIN

2.78

48.6631

3.24

1.08

155

INTL GAME TECH

12.09

-0.2475248

-29.70931

18.1701

10.92

3003151

JONES LANG LASAL

71.61

-1.485761

16.8952

87.52

46.01

344640

LAS VEGAS SANDS

41.72

0.144023

-2.363678

62.09

34.72

8268205

MELCO CROWN-ADR

11.49

-3.037975

19.43867

16.02

7.05

4479623

MGM CHINA HOLDIN

1.64

37.61931

1.96

1.0025

10400

MGM RESORTS INTE

9.77

0.102459

-6.327903

14.9401

7.4

6246187

14.58

-2.27882

24.40273

18.77

7.55

556108

2.1

30.63172

2.2782

1.2624

39145

99.61

-1.102065

-9.847043

154.7051

90.108

1580460

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

SHUFFLE MASTER SJM HOLDINGS LTD WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily September 7, 2012

Opinion

Manufacturing revival is good politics but bad policy Deborah Solomon Paula Dwyer Bloomberg Editors

anufacturing has been declining as a share of the U.S. economy for three decades, but you wouldn’t know it from tuning into the campaign frequencies. Both Republican presidential nominee Mitt Romney and President Barack Obama talk dreamily about a manufacturing revival, with Romney promising to roll back regulations and Obama offering tax breaks and other incentives that border on industrial policy. Manufacturing matters, especially this year, when industrial Midwestern states are where a big part of the electoral battle is being fought. But globalisation, productivity gains and advances in automation make it unlikely the sector will ever return to its place of prominence in the U.S. economy. Rather than promising to restore manufacturing to unachievable heights, Obama and Romney should focus on policies that can keep the U.S. competitive without wasting resources, awarding special treatment and undermining sound regulation. Any discussion should be based on a realistic assessment of the state of U.S. manufacturing. It had been among the rosier spots in the U.S. economy, helping to power much of the early recovery. Its contribution to gross domestic product has increased 11 percent since 2009. Low natural gas prices have encouraged some companies to return to the U.S. However, the sector has lost steam in recent months as the global economic slowdown has weakened demand for U.S. goods. New data show manufacturing contracted for a third

month in August, marking the longest decline since the recession ended.

Long decline The sector’s overall slide has been under way for decades. Over the past 12 years, manufacturers have cut 31 percent of their workforce, or nearly 6 million workers. Their contribution to GDP fell to 12.2 percent in 2011 from 22.7 percent in 1970. Economists argue over the cause of the sector’s decline, but the culprits are many: globalisation encouraged employers to shift jobs overseas; productivity gains enabled companies to do more with fewer workers; and advancements in automation made many jobs obsolete.

The key will be finding new industries to fill manufacturing’s void rather than chasing diminishing returns through distortive policies

Manufacturing is also no longer generating the kind of high-paying, benefit-rich jobs long associated with the sector as cheaper overseas labour and a steep drop in the number of unionised workers take their toll. Wages have failed to keep pace with inflation: manufacturing workers now earn about what they did in 2000, according to the Bureau of Labor Statistics. This is not to say the U.S. should give up on manufacturing, which remains important in large part because it helps reduce the trade gap. But as with agriculture, manufacturing is likely to keep shrinking as a share of national output. The key will be finding new industries to fill manufacturing’s void rather than chasing diminishing returns through distortive policies. You might not know it, yet Romney and Obama do have some sound ideas to reboot manufacturing – ideas that aren’t as far apart as their rhetoric suggests. Both support lowering the corporate income-tax rate from its current 35 percent to 25 percent (Romney) and 28 percent (Obama), a move that would help all industries, including manufacturing, compete overseas. Both candidates also call for a permanent research and development tax credit, which is used overwhelmingly by manufacturers. And both support expanded free-trade agreements, which provide access to new markets and are critical to manufacturers. Unfortunately, both candidates have also thrown some ill-conceived ideas into the mix. Romney wants to roll back financial, environmental and transportation rules he says hinder

manufacturers; Obama wants to spend more than US$120 billion over the next decade on tax breaks for manufacturing (money he says will come from cutting oil and gas subsidies). Although some regulations can surely be made less burdensome, and some targeted tax breaks make sense, both men go overboard, albeit in opposite directions.

Tax breaks The soundest approach would be to start with the areas of common agreement, including lowering to 25 percent the corporate income tax, now among the highest in the world and consistently cited as a primary reason companies send jobs overseas. Lawmakers should also make permanent the R&D tax credit. Manufacturers claimed 42 percent of total credits in 2009, according to a Bloomberg Government analysis, yet a broad array of industries could benefit, too. Expanding free-trade agreements and targeting money to improve labourforce skills are other ways Obama and Romney could ensure the U.S. remains competitive. China outpaces the U.S. in awarding doctoral degrees and has nearly doubled its number of engineering degrees over the past decade. Businesses can play a role, too, by investing more to retrain employees. Reviving manufacturing will always be an easy campaign line; unfortunately, finding realistic solutions that don’t raise false hopes about a new manufacturing golden age is a little harder. Bloomberg View

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

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September 7, 2012 business daily | 15

OPINION

China’s made-in-America wires success story Business

Leading reports from Asia’s best business newspapers

Financial Express No frill carrier IndiGo had the least number of flight cancellations while national carrier Air India fared the worst between July 2011 to June 2012. IndiGo cancelled just 0.3 percent of its total flights between July 2011 and June this year. On the other hand, Air India, which faced a 58-day-long strike by its pilots, had the most number of its flights cancelled (3.4 percent). Interestingly, 462 flights were cancelled in April, when there was no internal problem in the airline.

Jakarta Globe The Indonesian government has announced it will raise the price of three types of renewable energies for electricity production, saying the move is necessary to encourage Indonesia’s overall renewable energy production. The price of geothermal electricity is now up to between 10 and 18.5 US cents per kilowatt-hour from the previous 9 cents per kWh. Meanwhile, biomass electricity was also raised. The ministry is presently drafting another regulation that will similarly increase the price of hydro electricity.

Nikkei Mitsubishi Motors Corp. said that it will release at the beginning of next year a plug-in hybrid version of its Outlander, making it the world’s first hybrid sport utility vehicle that can be charged from a household outlet. The vehicle’s target fuel efficiency is at least 61km per litre of gasoline when powered by both the engine and its rear and front motors. The large batteries, with a capacity of 12kwh, are expected to allow the SUV to travel 55km or more on electricity alone.

Business Times LYNAS Corp. Ltd expects the production of rare earth concentrates at its advanced materials plant in Malaysia to reach 11,000 tonnes by the first quarter of next year. Production will kick off upon full completion of the first phase of construction, which is expected to happen by the end of this year. It was reported that by 2016, the world demand for rare earth elements is expected to hit 160,000 tonnes, with China dominating the industry.

Brahma Chellaney

Author of Asian Juggernaut and Water: Asia’s New Battleground

merica’s strategy in Asia for more than a century has sought a stable balance of power to prevent the rise of any hegemon. Yet the United States, according to its official National Security Strategy, is also committed to accommodating “the emergence of a China that is peaceful and prosperous and that cooperates with us to address common challenges and mutual interests.” So America’s Asia policy has in some ways been at war with itself. In fact, the U.S. has played a key role in China’s rise. For example, rather than sustain trade sanctions against China after the Tiananmen Square massacre in 1989, the U.S. decided instead to integrate the country into global institutions. But U.S. foreign policy had been notable for a China-friendly approach long before that. In 1905, President Theodore Roosevelt, who hosted the peace conference in Portsmouth, New Hampshire, after the RussoJapanese War, argued for the return of Manchuria to Manchu-ruled China and for a balance of power in East Asia. The war ended up making the U.S. an active participant in China’s affairs.

Allies of convenience during the second half of the Cold War, the U.S. and China emerged from it as partners tied by interdependence

After the Communists seized power in China in 1949, the U.S. openly viewed Chinese Communism as benign, and thus distinct from Soviet Communism. And it was after the Communists crushed the pro-democracy movement in 1989 that the U.S. helped to turn China into an export juggernaut that has accumulated massive trade surpluses and become the principal source of capital flows to the U.S. America’s policy toward Communist China has traversed three stages. In the first phase, America courted Mao Zedong’s regime, despite the Korean War, China’s annexation of Tibet,

and domestic witch hunts, such as the Hundred Flowers Campaign. Courtship gave way to estrangement during the second phase, as U.S. policy for much of the 1960’s sought to isolate China. The third phase began immediately after the 1969 Sino-Soviet military clashes, with the U.S. actively seeking to exploit the rift in the Communist world by aligning China with its antiSoviet strategy. Although China clearly instigated the bloody border clashes, America sided with Mao’s regime. That helped to lay the groundwork for the China “opening” of 1970-1971, engineered by U.S. National Security Adviser Henry Kissinger, who until then had no knowledge of the country.

Beijing-friendly policy Since then, the U.S. has pursued a conscious policy of aiding China’s rise. Indeed, President Jimmy Carter sent a memo to various U.S. government departments instructing them to help in China’s rise – an approach that remains in effect today, even as America seeks to hedge against the risk that Chinese power gives rise to arrogance. Indeed, even China’s firing of missiles into the Taiwan Strait in 1996 did not change U.S. policy. If anything, the U.S. has been gradually loosening its close links with Taiwan, with no U.S. cabinet member visiting the island since those missile manoeuvres. Seen in this light, China’s spectacular economic success – including the world’s largest trade surplus and foreigncurrency reserves – owes much to U.S. policy from the 1970’s on. Without the significant expansion in U.S.Chinese trade and financial relations, China’s growth would have been much slower and more difficult to sustain. Allies of convenience during the second half of the Cold War, the U.S. and China emerged from it as partners tied by interdependence.

America depends on China’s trade surplus and savings to finance its outsize budget deficits, while China relies on its huge exports to the U.S. to sustain its economic growth and finance its military modernisation. By ploughing more than two-thirds of its mammoth foreign-currency reserves into U.S. dollar-denominated assets, China has gained significant political leverage. China is thus very different from previous U.S. adversaries. America’s interests are now so closely intertwined with China that a policy to isolate or confront it is not feasible. Even on the issue of democracy, the U.S. prefers to lecture other dictatorships rather than the world’s largest autocracy. Yet it is also true that the U.S. is uneasy about China’s not-too-hidden aim to dominate Asia – an objective that runs counter to U.S. security and commercial interests and to the larger goal of securing a balance in power in Asia. To avert Chinese dominance, the U.S. has already started to build countervailing influences and partnerships, without making any attempt to contain China.

China containment For the U.S., China’s growing power actually helps to validate its forward military deployments in Asia, maintain

existing allies in the region, and win new strategic partners. Indeed, an increasingly assertive China has proven a diplomatic boon for the U.S. in strengthening and expanding its Asian security relationships. The lesson is clear: The muscle-flexing rise of a world power can strengthen the strategic relevance and role of a power in relative decline. Barely a decade ago, the U.S. was beginning to feel marginalised in Asia, owing to several developments, including China’s “charm offensive.” But now America has returned firmly to centre stage. South Korea has beefed up its military alliance with the U.S.; Japan has backed away from an effort to persuade the U.S. to move its Marine base out of Okinawa; Singapore has allowed the U.S. Navy to station ships; Australia is hosting U.S. Marine and other deployments; and India, Vietnam, Indonesia, and the Philippines, among others, have drawn closer to the U.S. as well. But no one should have any illusions about U.S. policy. Despite America’s “pivot” to Asia, it intends to stick to its two-pronged approach: seek to maintain a balance of power with the help of strategic allies and partners, while continuing to accommodate a rising China. © Project Syndicate

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business daily September 7, 2012

CLOSING Indian named World Bank economist

Honda invests US$425m in U.K. plant

The World Bank has appointed Kaushik Basu, who recently served as the economic adviser to the Indian government, as its chief economist. Mr Basu “brings first-hand experience from a developing country and will be a terrific asset to the institution,” the Bank said in a release. “Having worked in the [Indian] ministry of finance, Kaushik is uniquely suited to help us offer evidence-based solutions and advise to client countries and provide innovative excellence in leading our development research,” World Bank group president Jim Yong Kim said.

Japanese carmaker Honda says investment at its U.K. plant in Swindon has reached 267 million pounds (US$425 million) amid plans to ramp up production. The money will support the introduction of its new Civic and CR-V car models and a new 1.6-litre diesel engine. The site is expected to produce 183,000 cars this year, with output forecast to rise to 250,000 within three years. Honda’s Swindon factory builds cars and engines for export to more than 60 countries in Europe, the Middle East, Africa and Australia.

Draghi outlines new E bond-buying plan Eurozone’s economy heads towards recession

uropean Central Bank president Mario Draghi said policy makers agreed to an unlimited bond-purchase programme as they try to regain control of interest rates in the euro area. The ECB needs to be in a position to ensure the transmission of its rates in all euro-area countries, Mr Draghi said after the ECB held its benchmark rate at a record low of 0.75 percent. “We will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability,” Mr Draghi said at a press conference in Frankfurt yesterday. Mr Draghi has staked his credibility on the bond plan, telling lawmakers in Brussels this week that the ECB needs to intervene to wrest back control of rates in a fragmented euro-area economy and save the single currency. Now it’s up to governments such as Spain and Italy to trigger ECB bond purchases by requesting aid from Europe’s rescue fund and signing up to conditions. “Governments must stand ready to activate” the rescue fund in bond markets when needed “with strict and effective conditionality,” Mr Draghi said. The ECB reserves the right to terminate bond purchases if governments don’t fulfil their part of the bargain, Mr Draghi said. Purchases will be fully sterilised, meaning that the overall impact on the money supply will be neutral, he said.

Gradual recovery ‎ECB cuts growth forecasts, sees only gradual recovery

Theeurozoneeconomywillprobably contract more than previously expected this year, according to a new ECB

forecast, which also raised the bank’s outlook for inflation for 2012/2013. The ECB said it expected a very gradual economic recovery and revised down its forecasts for gross domestic product (GDP) for this year to a fall of between 0.6 percent and 0.2 percent. Mr Draghi said the forecasts also showed a range of between -0.4 percent to growth of 1.4 percent. The bank’s previous forecasts three months ago had been between -0.5 to 0.3 percent for 2012 and 0.0 percent to 2.0 percent for 2013. “We expect the euro area economy to recover only very gradually,” Mr Draghi said. The September macroeconomic projections, however, also raised forecasts for inflation this year to between 2.4 and 2.6 percent from a previous forecast of 2.3-2.5 percent. Prices are seen rising 1.3 to 2.5 percent in 2013, compared with 1.0-2.2 range in the June forecasts. Strong exports limited the eurozone’s economic contraction in the second quarter of this year despite falling investment, inventories and private consumption that point to output shrinking overall in 2012. The EU’s statistics office Eurostat confirmed yesterday that gross domestic product in the 17 countries using the euro fell 0.2 percent quarteron-quarter. It revised the year-on-year fall to 0.5 percent from a previously reported 0.4 percent. Mr Draghi said the 17-nation bloc’s economy was subject to downside risks stemming especially from the eurozone debt crisis and the tensions that has caused in a number of countries. Agencies

AIG to sell US$2b stake in AIA U.S. insurer seeks funds for buybacks

merican International Group Inc., the bailed-out U.S. insurer, is raising as much as US$2 billion selling a stake in AIA Group Inc. as chief executive Robert Benmosche accumulates funds to repurchase his company’s stock from the Treasury Department. AIG is offering about 600 million AIA shares at HK$25.75 to HK$26.75, according to a term sheet obtained by Bloomberg News. AIG plans to spend as much US$5 billion buying back its shares, it said in a statement released via Business Wire. Mr Benmosche is raising funds to buy back stock of New York-based AIG from the U.S., which still has a stake of 53 percent, about four years after

the government rescue. Treasury has trimmed its holding from 92 percent through four share sales as of August 22, and a lockup period on the next U.S. offering expired September 2. “If they can free up more cash they’ll buy back more stock from the U.S. taxpayer,” Cliff Gallant, an analyst at KBW Inc., said before the sale was announced. “Everybody benefits by having the government exit and for AIG to truly break free from that, I think is a positive for the shareholders.” It is the third offering of shares in the Hong Kong-based insurer by AIG, which will leave the insurer with a 13.6 percent stake. AIG had cut its AIA stake to 33 percent in a 2010 offering that raised

about US$20.5 billion and priced AIA shares at HK$19.68. AIG sold US$6 billion more in March, with shares priced at HK$27.15. AIA, the thirdlargest Asia-based insurer by market value, closed 0.6 percent higher at HK$26.30 yesterday. AIG is offering the shares at a 2.1 percent discount to a 1.7 percent premium to AIA’s closing price yesterday, according to the term

sheet. It is restricted from selling the remaining AIA shares in the next 90 days. “Investors are willing to buy a small lot” given the current market conditions, said Kenneth Yue, a Hong Kong-based analyst at CCB International Securities Ltd, of AIG’s decision not to sell all remaining shares in one go. Bloomberg