Macau Business Daily, April 24, 2012 by Business Daily

Year I | Number 17 | April 24, 2012 Editor-in-chief | Tiago Azevedo Deputy editor-in-chief | José I. Duarte MOP $ 6.00

Delta bridge to capture half of HK-Macau traffic Page 3

Seac Pai Van units ready by year end Page 6

Economy

ANNUAL INFLATION RATE HITS 4-YEAR HIGH M

acau’s Consumer Price Index rose by more than six percent in March compared to the same time last year. According to figures released on Monday by the Statistics and Census Bureau, the index reached 115.39, bringing the average inflation rate for the past 12 months to 6.12 percent. That’s the highest the index has been since late 2007 and early 2008 when the indicator reached growth rates of about 9 percent. Then, inflationary pressures were dampened by the global

Bo Xilai inquiry goes to Hong Kong Page 9

financial crisis and its aftermath. There was even a short bout of deflation late in 2009. At its low point in October 2009, the month-on-month CPI fell by 1.1 percent. Macau is especially sensitive to food price changes in the mainland. Prices of vegetables, for which Macau is almost totally dependent on mainland suppliers, surged by 20.5 percent compared to the same period a year earlier. Similarly, the prices of meat and eggs soared by more than 11 percent last month, on an annual basis. More on pages 3

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‘Inside information’ in land deal, court hears

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A Hong Kong development company and its associates were instructing advisers to make construction plans for a prime piece of land near Macau International Airport six months before the government’s land tender process even began, a Macau court heard yesterday. The companies may have had access to “inside information” and obtained it much earlier than rival bidders, the Court of Final Appeal heard during the latest corruption trial of Ao Man Long. Page 2

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New university campus costs under control

HSI - Movers Name

The 9.8-billion-pataca new campus for the University of Macau on Hengqin Island will be ready on schedule and without further cost overruns, says the government. The new facility will carry a 9.8 billion patacas price tag - 50 percent higher than the 6.5 billion patacas first envisaged. But Cheong U, Secretary for Social Affairs and Culture, made the cost ceiling pledge when he toured the project yesterday.

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Public worker pay hike not backdated

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CHINA MOBILE

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PING AN INSURA-H

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Source: Bloomberg

Salaries and pensions of Macau’s public workers are to rise by 6.45 percent – slightly above the current rate of annual consumer price inflation. The move was agreed unanimously yesterday at the Legislative Assembly and will take effect from May 1. Critics say in real terms the increase will be about 4.6 percent for the year because it’s not backdated to January. Page 5

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business daily April 24, 2012

MACAU

‘Inside information’ suspected in winning bid for airport plot Six months before a tender was launched, the company that secured a plot near the airport was making moves to build on the land Vítor Quintã

vitorquinta@macaubusinessdaily.com

he companies involved in the wining bid for a plot near the airport might have had access to “inside information” and much earlier than its rivals, the Court of Final Appeal heard yesterday. As part of the third trial of Ao Man Long for passive corruption and money laundering, the former secretary for transport and public works is charged with taking a bribe from two high-profile Hong Kong businessmen to secure the plot where La Scala is being built. The decision to launch a tender took place in April 2005 and Lei Pou Fat Development Company Ltd., a government-controlled company, invited a select group of companies to bid for the concession: Sociedade de Turismo e Diversões de Macau SA, CB Richard Ellis Group Inc., and Jones Lang LaSalle Inc. Jones Lang LaSalle acted on behalf of Moon Ocean Ltd., a company registered in the British Virgin Islands and controlled by Hong Kong businessman Steven Lo Kit-Sing. Lo got the financial backing of Joseph Lau Luen Hung, head of Hong Kong property developer Chinese Estates Holdings Ltd. In December 2004, six months before the tender was launched, Chinese Estates had already asked Hong Kong firm Hsin Yieh Architects & Engineers Ltd. for a preliminary development plan for the 78,742-square-metre plot.

Advance preparation

Early payment Mr Leung suggested there was nothing unusual in the timeframe for the architects to complete their proposal. “Even if we didn’t have any previous information or a starting plan, it would still have been possible to complete the

proposal within a week, but with a lot more overtime,” he told the court. According to the indictment, in early 2005, Lau and Lo paid Ao a bribe of 20 million patacas (US$2.5 million) to secure the parcel near the airport. They have both been charged on a related matter. On Friday, Lo claimed the money was an advance payment requested by the head of the San Meng Fai Engineering & Construction Co. Ltd., Ho Meng Fai. Ho was sentenced for corruption for his role in another Ao-related case and is at large. Lo said San Meng Fai gave him a bank account that purportedly belonged to a supplier. He claimed he did not know the account belonged to Ecoline Property Ltd, an offshore company controlled by Mr Ao. The tycoon said the payment was small compared to the “450 million or 500-million-pataca contract”

Somewhere between Christmas and New Year, Chinese Estates asked us for a feasibility study George Lew Wing Tim Hsin Yieh, architect

signed between the two sides. Mr Leung raised doubts on Friday over whether the works effectively carried out by San Meng Fai justified a large, advance payment. He said San Meng Fai had only done ground preparation work and that construction work began in early 2006.

Macau partner On Friday, Chinese Estates project manager Ng Yik Hei told the court San Meng Fai had built only a showroom on the site. The 20 million patacas that ended up in the hands of Ao originally came from Chinese Estates, as part of a loan agreed with Lau. The billionaire also got an option to buy 70.01 percent of Moon Ocean. A few months later, Chinese Estates paid HK$1 million to take the option. In March last year, the company bought the remaining 29.99 percent. However, Hsin Yieh Architects believed there was a third player in the dealings, “a Macau partner,” Mr Leung said. The judges asked both Mr Leung and Mr Lew if the Macau partner was contractor San Meng Fai. Mr Lew said, during his visit to check the plot in March 2005, an executive from San Meng Fai welcomed him and drove him to the site. According to the indictment, Moon Ocean paid Ao 200,000 patacas for a visit to the site. But Mr Lew said he only took a look at the plot from the airport and from a point up the Taipa Grande hill. “I didn’t enter the plot,” he said. Photo by Manuel Cardoso

“Somewhere between Christmas and New Year, Chinese Estates

asked us for a feasibility study,” Hsin Yieh architect George Lew Wing Tim told the court yesterday. The company gave the firm “an A3 sheet of paper with the site location, construction area. It was basically a very simple design plan,” Mr Lew said. A few months later, he said Chinese Estates added “other perspective plans and aerial photographs”. The design plan for the plot was ready by March, Mr Lew confirmed. When the tender was launched in May 2005, the plan needed very few changes, his colleague Leung Wah Tat said. “We had to correct some issues with the location of the towers, the division of the areas and the height restrictions.” The bidders were only given 10 days to prepare a proposal. “It is, in fact, too short,” Infrastructure Development Bureau official André Sales Ritchie said in court last week. But the proposal delivered by Jones Lang LaSalle was “obviously much better” than the other two, he said. Judge Viriato Lima asked the official if he felt Jones Lang LaSalle had “a longer period” to prepare its bid or access to “inside information”. “Obviously, that’s the first thing that crosses one’s mind. But I was working at the time; I didn’t ask those questions,” Mr Ritchie replied.

Chinese Estates Holdings Ltd. asked for a preliminary development plan for the airport plot before the tender had been called

April 24, 2012 business daily | 3

MACAU

No let up in prices last month

Consumer Price Index (Jan 2008 - Apr 2012) 120 115 110 105 100 95

Food prices surge last month, sending the city’s annual inflation rate to 6.1 percent José I. Duarte jid@macaubusinessdaily.com

he Consumer Price Index leapt 6.22 percent last month compared to the same time last year, driven largely by spiralling food prices. According to the figures released on Monday by the Statistics and Census Bureau, the Consumer Price Index (CPI) reached 115.39, bringing the average inflation rate for the past 12 months to 6.12 percent. This is the highest the index has been since late 2007 and early 2008, when the indicator reached growth rates of about 9 percent. Then, inflationary pressures were dampened by the Global Financial Crisis and its aftermath. There was

even a short bout of deflation late in 2009. At its low point in October 2009, the month-on-month CPI fell by 1.1 percent. This time, however, price pressures seem to have been building up relentlessly since the beginning of 2010. Although growth rates in most of the world are still low, Macau is especially sensitive to price changes in the mainland, where the strains of inflation have occupied the minds of authorities.

Food costs Not surprisingly, the main driver of prices is food. The bureau

highlighted the major increases seen in the prices of restaurant meals and for fresh produce. The increases are obviously related and food sourced from the mainland has become steadily more expensive. Prices of vegetables, for which Macau is almost totally dependent on mainland suppliers, surged by 20.5 percent compared to the same period a year earlier. Similarly, the prices of meat and eggs soared by more than 11 percent last month, on an annual basis. Food imports are particularly sensitive to import costs and changes in the exchange rate. Both have changed in ways that will keep the pressure on prices in at least the short-term. The increased costs of dining out also reflect increasing labour and

rent costs to businesses. The price index might have been even be higher were it not for heavy public subsidies in areas such as education, electricity and telecommunications. The recent increase in the cost of tobacco products had resulted in a 27 percent increase in the average costs of the corresponding component of the index. Escalating costs are bound to spark renewed discussion on government measures to fight inflation, including a long-delayed liberalisation of the city’s food importing regime. High rates of inflation will also add a sour aftertaste to the mouths of civil servants, who had their salaries increased by about 4.6 percent in real terms this year.

Photo by Manuel Cardoso

Delta bridge to capture half of HK-Macau traffic

The Hong Kong-Zhuhai-Macau Bridge will help the city attract more international tourists when it opens in 2016, says report Cherry Lee ceci-lqq@macaubusinessdaily.com

early half of all tourists travelling between Hong Kong and Macau will use the Hong Kong-Zhuhai-Macau Bridge when it opens in 2016, according to a forecast released by the Macau Association of Economic Sciences on Sunday. The bridge will help swell the number of international tourists, association president Joey Lao Chi Ngai was quoted as saying by Chinese-language newspaper Macau Daily News. In the first two months of this year,

mainland visitors accounted for 60.5 percent of all tourists. The association said the bridge would encourage many more tourists who are visiting Hong Kong from developed countries, including Europe and the United States, to come to Macau. In Hong Kong, the bridge will connect with Lantau island, which includes the Chek Lap Kok airport and Hong Kong Disneyland. The association called for the creation of a lookout and souvenir stores on land reclaimed from the sea to the northeast of the Macau peninsula.

With the business boom the bridge is likely to bring, Macau’s small and medium sized companies might face increasing shortages of labour, the report said. The bridge is expected to reduce travel time from Hong Kong to Macau or Zhuhai to half an hour. Currently, ferries take about an hour to link the two sides of the Pearl River Delta. The report predicts that at least 20,000 cars will use the road each day but may reach as high as 90,000 vehicles daily. Toll fees are one of the factors that will greatly impact traffic volume, the association says. According to the office overseeing the Pearl River Delta Bridge works, a one-way ticket for private cars

will cost upwards of 100 yuan (127 patacas). Cargo trucks will be charged between 200 and 300 yuan each. A final decision on charges will be made three months before the bridge opens to traffic. Mr Lao said Hong Kong and Macau should reach a consensus on the timetable for the movement of cargo trucks on the bridge. When it opens, the series of bridges will become the world’s longest span across sea, with a combined length of about 50km. The bridge is expected to cost more than 72.9 billion yuan (HK$89.7 billion), but last week Hong Kong media reported that its section alone would cost at least HK$48.5 billion – HK$25 billion more than the original estimate.

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business daily April 24, 2012

macau

InBrief

Secretary for Social Affairs and Culture Cheong U toured the site yesterday and said there would be no more budget overruns

Canada’s new consul-general in Hong Kong and Macau, James Ian Burchett, took up his appointment yesterday, replacing Doreen Steidle. “Asia is a key priority for Canada, and Hong Kong and Macau play an important role in Canadian commercial success in this region,” Mr Burchett said in a written statement. “With the unique people-to-people ties that exist between Canada and Hong Kong and Macau, I am looking forward to representing Canada in these vibrant cities and strengthening our already excellent relations.”

Photo by Manuel Cardoso

New Canadian consul starts

New university campus on track The 9.8-billion-pataca campus of the University of Macau will be ready on schedule and without further cost overruns, says government

Highest bid for taxi licence MOP1.1m The Transport Bureau opened 2,172 bids for 200 new taxi licences on Sunday, and the highest bid was MOP1.1 million (US$137,600), less than the highest bid of MOP1.5 million in the last auction, in 2008. This time eight of the bids were over MOP1 million. Even though the reserve price was just MOP200,000, the lowest successful bid was MOP830,000. The eight-year licences will be distributed in four batches between July and November. Most bidders told reporters they expected to get back their investment within six years. About 1,000 people witnessed the opening of the bids.

Changes looming for commercial registry The revised Commercial Registry Code will come into effect three months from now, after the law amending it was published in yesterday’s Official Gazette. The new rules allow the Financial Services Bureau and the Businesses and Vehicles Registry to share information. But there will be a way to track use of the registry and to restrict access to personal data about entrepreneurs. Only lawyers and notaries are allowed to access the information. The government also intends to establish a legal basis to computerise the commercial registry.

Thai Smile’s Bangkok flights take off July 7 Low-cost carrier Thai Smile will fly twice a day to Macau from July 7, with flights to Bangkok departing at 12.15pm and 9.15pm, Bangkokbased website TTRWeekly.com reported. Macau’s Aviation Authority has confirmed that Thai Smile was granted the permit to start operations in July. The cheapest online fare will cost 6,210 baht (1,615 patacas) and the July 7 journey will be the airline’s maiden flight. The new low-cost-carrier was established by Thai Airways International to regain market share lost to budget airlines.

Alexandra Lages newsdesk@macaubusinessdaily.com

he main buildings for the new University of Macau campus being constructed on Hengqin Island will be complete by the end of October, while the underwater tunnel linking it to Macau will be ready in August. The Infrastructure Development Office said the main buildings had been topped out and that construction was on schedule. The campus has five faculty buildings, four residential colleges, sports facilities and a customs building. Excavation of the 25-metre deep tunnel that will link the campus to Macau is almost done and the project is half complete. The government expects to finish the work before the end of August. Like the main buildings, the tunnel will be ready to be tested in October. The construction of the entire campus must be finished by the end of the year. Secretary for Social Affairs and Culture Cheong U toured the site yesterday and said there would be no more budget overruns. “The latest budget announced

by the government covered the topping-out of the buildings,” Mr Cheong said. He said there would be no additional costs.

Digging deep The Secretary for Transport and Public Works, Lau Si Io, announced last November that the cost of building the new campus would be well over the original budget. Mr Lau said the campus would cost 9.8 billion patacas (US$1.23 billion) instead of the 6.5 billion patacas first envisaged. He said the cost of construction alone had increased to 7.8 billion patacas from 6 billion patacas, and that the cost of additional infrastructure and the tunnel had increased by 1.5 billion patacas from the budgeted 500 million patacas. Mr Cheong reiterated yesterday that the increase in the cost of building the campus was due to inflation and improvements in the foundations of the buildings. He said the initial budget for the

link between Hengqin and Macau was for a tunnel 13 metres deep, but that because of the ground conditions it would have to be 25 metres deep – as deep as an eightstorey building is high. The new campus, expected to open in 2017, will be 20 times the size of the university’s present campus on Taipa, covering 1.9 square kilometres. The campus will have a capacity for 10,000 students, with accommodation for about 6,000 students in dormitories. The campus is meant to be “peopleoriented” and environmentfriendly. It is designed to be quiet and green, best suited to pedestrians and cyclists, with few motor vehicles. It will use solar energy and recycle water. The rector of the university, Wei Zhao, said yesterday that the main purpose of the new campus is to transform the university into a world-class institution to satisfy Macau’s future need for welleducated people.

Old UM to remain centre of learning

he present University of Macau campus will not be used for business once the new Hengqin Island campus opens in 2017, the Secretary for Social Affairs and Culture, Cheong U, told reporters yesterday. “The government won’t use the old

premises of the UM for commercial purposes. We will follow the criteria of improving residents’ quality of life by using these premises for education and culture purposes,” he said. Other tertiary education institutions in Macau have been eyeing the old

campus, including the Institute for Tourism Studies and the Macau Polytechnic Institute. Mr Cheong said the government was still considering how to use the campus. He suggested that it could become the university’s Macau branch.

Over 15,000 studying abroad

total of 15,396 students from Macau are studying abroad, of which 2,867 are enrolled at universities in Australia, Britain, Canada or the United States. There are 33,821 Macau residents in undergraduate, master’s and doctoral programmes, according to the preliminary results of a survey of Macau university students released

yesterday by the Tertiary Education Services Office. The results show that most are studying in Macau, 4,244 are enrolled in Taiwan and 2,688 in Hong Kong. The most popular courses are in the social sciences, commerce or law, which have 13,854 enrolled students; followed by 4,871 students studying the humanities and arts; 3,433 enrolments in

service industry courses; and 2,657 students in health and social work courses. The director of the Tertiary Education Services Office, Sou Chio Fai, said about 5 percent of students were enrolled at top tier universities such as Oxford, Cambridge, the University of California, Berkeley, and Harvard. He said most were taking a master’s or doctoral degree.

April 24, 2012 business daily | 5

MACAU

Civil servant wage bump rolls out from next week Assembly passes bill updating salaries of public servants by 6.45 percent; law takes effect from May 1 Cláudia Aranda

claudia.aranda@macaubusinessdaily.com

he bill updating the salaries and pensions of public workers was unanimously approved at yesterday’s plenary meeting of the Legislative Assembly. The increase of 6.45 percent will take effect from May 1, if the law is published in the Official Gazette next Monday. In real terms, the increase will be about 4.6 percent for the full year, the Legislative Assembly’s third standing committee warned earlier this month. Lam Heong Sang, deputy director of the Macau Federation of Trade Unions, warned the government after the vote that any delay in publishing the law could push the wage increase back to June. Despite voting in support of the increase, the head of the Macau Civil Servants’ Association, José Pereira Coutinho, criticised the government for not backdating the increase to January 1. He said Chief Executive Fernando Chui Sai On promised to increase public workers’ salaries last November. The government could have submitted the bill for the Legislative Assembly’s approval and given civil servants the benefit of a more substantial increase. The legislator asked who in the government would take responsibility for the delay and for the loss of purchasing power of workers since January. He called for equal treatment to all public workers, saying that the government recently awarded free medical care for current and former members of the Executive Council and their families. He also questioned government claims that backdating the increase would cost it an extra 200 million patacas (US$25 million) and would

The 6.45-percent increase to public workers’ wages was approved unanimously at the Legislative Assembly, but not without criticism.

force it to dip into the recently created fiscal reserve. Mr Coutinho argued that the government did not want to pay employees their due, especially front-line employees, who are hardest hit by the impacts of inflation. If there was a will to solve the issue, there were always ways to find a solution, he said. The Legislative Assembly also unanimously approved the accounts report and the first supplementary budget of the Legislative Assembly.

Renewed call for more budget hotels

he government should introduce, as soon as possible, policies that promote the opening of lower-cost hotels, directlyelected member Ho Ion Sang said in the Legislative Assembly yesterday. The city had 22,310 hotels and guesthouse rooms at the end of February but Mr Ho said most rooms were aimed at “consumers with a high purchasing power, neglecting the real needs of most of the tourists”. Moreover, the quality of service at some two and three-star hotels “fail to satisfy the needs of tourists” and “don’t match the rates”. He said many tourists cut back on their stay in Macau because most hotel rooms were more expensive than Hong Kong. “(It) doesn’t allow them to enjoy the rich tourist resources we have and contributes nothing to increase

visitors’ consumption,” he said. Last February, Chief Executive Fernando Chui Sai On promised more land for budget hotels. Mr Ho said any government move to intervene would “prevent the development of a free market,” “increase costs” and do little to tackle “soaring hotel room prices”. The deputy director of the Macau General Union of the Neighbourhood Associations said he wanted more measures to “encourage and support investors” to open budget hotels and guesthouses, namely “simplifying the existing procedures” and “shortening the assessment and authorisation process for these requests”. In addition, authorities could “encourage cooperation between the hospitality sector and international hotel brands,” he said. V.Q.

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business daily April 24, 2012

macau

Mid-range Coloane units readied for end of year There will be 1,824 flats in the first batch of affordable units in Seac Pai Van

he first affordable units in Coloane’s Seac Pai Van public housing project will be available by December, Infrastructure Development Bureau head Wok Chi Cheong said. Construction on six of the eight towers in the CN3 plot of land were completed last month. By the fourth quarter of this year, all external construction is expected to be completed. CN3 will have 1,824 housing units — with eight units on each floor — featuring 392 T1-style units, 1,160 T2-style units and 262 T3style units. Nearby lot CN4 will have six towers and the CN5 plot will have 10. Together, they bring the total number of units available to 8,649. Additionally, 2,600 parking spaces are also to be created. “We’re going to make a balance,” Housing Bureau vice-president

Kelsey Wilhelm kelsey.wilhelm@macaubusinessdaily.com

Kwok Wai Han said, referring to the division of units into social and affordable housing. Families wait-listed for the new units will be informed of availability the day after sale prices are published. Those currently on the list and residing in Coloane will have priority. By the end of last week, there were 7,514 families on the waiting list for affordable housing. More than 500 families are the list for the Coloane area. Although most of the work will be complete by December, many of the units will not be available until the first quarter of next year, while services to the flat are installed. Included among the utilities to the flats in Seac Pai Van is Macau’s first system for recycling water. Work began on the system last August. Plans are also underway to build a bus station or Light Rail Transport station at the development.

Mock poll results scorn govt reform proposals A ‘referendum’ organised by the New Macau Association claims 93.5 percent want more directly-elected members of the Legislative Assembly

f the more than 2,500 people that took part in a referendum on reforming the city’s political system, 93.5 percent voted in favour of more members of the Legislative Assembly being elected by direct vote. Fewer than 2.9 percent voted for a decrease in the number of seats filled by direct vote, and 2.6 percent wanted to keep the status quo. The New Macau Association arranged Sunday’s “mock referendum”. The group has three seats in the Legislative Assembly and advocates Universal Suffrage. The association says 67.8 percent of referendum participants preferred fewer indirectly elected legislators and 3.8 percent wanted to keep the present number. And 74.8 percent

voted in favour of a reduction in the number seats filled by appointees of the chief executive. The New Macau Association says the results reflect the community’s desire for reforms that are more far reaching than the government’s proposals. The government’s stated preference is for one or two more directly elected seats, and one or two additional indirectly elected seats. “The proposals included in this document are the predominant opinions,” Secretary for Administration and Justice Florinda Chan said last month. Of the 2,565 people that took part in Sunday’s mock referendum, 1,336 voted online and 1,229 voted in person in polling stations throughout the peninsula and Taipa.

The New Macau Association arranged Sunday’s ‘mock referendum’

The referendum put three questions about reform of the political system. It was held a week after the leaders of the New Macau Association went on a 24-hour hunger strike to protest against the way the government has conducted its consulta-

tions on political reform. The second round of consultations on changes in the way the Legislative Assembly will be elected next year, and in the way the chief executive will be selected in 2014, ended yesterday. C.A.

Weather Beijing 20/11o C Changchun 25/9o C

Harbin 24/8o C

Xian 22/8o C Shanghai 25/18o C Chengdu 26/17o C Kunming 27/13o C Haikou 33/25o C Sanya 32/26o C

Guangzhou 29/23o C

MACAU (23-28 April) Day

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Shenzhen 27/24o C

ASIA (today)

Hong Kong 28/25o C

Manila

Macau 23/28o C

TOKYO

Jacarta

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April 24, 2012 business daily | 7

MACAU

Galaxy’s value eclipses InBrief Wynn Resorts and SJM Lawrence Ho scholarship fund to help students

A Scottish university has received a gift of £500,000 (MOP6.4 million) from Macau casino entrepreneur Lawrence Ho. It will help students from Macau, Hong Kong, and mainland China study in Scotland. Up to 100 students at Edinburgh Napier University will benefit from scholarships, work placements, travel bursaries and student prizes following the donation by Mr Ho, a co-chairman of Macau gaming concessionaire Melco Crown Entertainment. Edinburghbased students wishing to study in China will also be able to apply to the fund.

Sands proposes HK$0.58 per share Sands China Ltd’s board recommended on Friday the payment of a final dividend of HK$0.58 (MOP0.60) per share for 2011. The proposed final dividend is subject to the approval of shareholders at the annual general meeting scheduled for June 1. If approved, the dividend is expected to be paid on June 22. The first-ever Sands China dividend, announced on January 31, was also HK$0.58 per share. Sands China’s parent, Las Vegas Sands Corp, is expected to announce its first quarter results tomorrow.

Shares up more than 4,000 pct from 2008’s global financial crisis Richard Frost and Vinicy Chan

alaxy Entertainment Group Ltd, a Macau casino operator, last week surpassed separately its market rivals Las Vegas-based Wynn Resorts Ltd and Stanley Ho’s SJM Holdings Ltd by market value. Galaxy’s shares have risen 4,306 percent in fewer than four years. The value of Galaxy’s Hong Kongtraded shares reached US$12.58 billion (100.6 billion patacas) on April 16, surpassing Steve Wynn’s Wynn Resorts that day and SJM, the casino operator that has dominated Macau for four decades, in late March. The lower panel tracks the equities on a normalised basis starting from October 28, 2008, when Galaxy fell to a five-year low. Galaxy’s rally since compares with Hong Kong-listed SJM’s 1,070 percent climb and U.S.-traded Wynn’s 275 percent gain. Galaxy, founded by billionaire Lui Che Woo, began with casino-hotels downtown in the former Portuguese colony before opening the US$1.9 billion, 450-table Galaxy Macau resort last year on the Cotai Strip. “The company added a massive property which has been successful given its location, size, Asian

Hats off to the chairman – Galaxy’s founder Lui Che Woo

theme and strong relationships with junkets,” said Aaron Fischer, Hong Kong-based head of Asian consumer and gaming research at CLSA Ltd. “Galaxy Macau was executed better than we expected.” In mid-March Union Gaming Research estimated Galaxy’s 2012 gross gaming revenue would reach HK$50.4 billion generated by its flagship properties, Galaxy Macau and StarWorld on Macau peninsula. “We note that this implies a 16 percent share of market-wide GGR based on 20 percent-plus market growth and adjusting for fair share dilution from new supply coming online beginning in April (Sands Cotai Central),” said Union Gaming. Both Wynn’s Macau unit and

SJM run casino-hotels downtown and are waiting for approval of land leases to build on the Cotai Strip. The Macau unit of Sheldon Adelson’s Las Vegas Sands Corp, the world’s biggest casino company by market value, opened the Sands Cotai Central this month on the strip, where it already has The Venetian Macao. General gambling market grew 27 percent year-on-year to 74.3 billion patacas in the first quarter - considerably down on the 42.9 percent year-on-year for 2011’s first quarter. Deutsche Bank AG said in a report last month that gambling revenue in Macau will rise 25 percent this year, from the 267.8 billion patacas in 2011. Bloomberg

SVG Capital’s NAV up 16 pct on back of Galaxy shares SVG Capital Plc, a London-based private equity firm, says net asset value per share climbed 16 percent, influenced by its investment in Macau casino operator Galaxy Entertainment Group. SVG holds the stake via Permira, another private equity firm. Shares in Galaxy added more than 50 percent in value in the first quarter of this year. Permira’s original US$842 million equity exposure to GEG and its parent, Hong Kong-listed building materials business K. Wah, was purchased in November 2007. It lost 94% of its value within a year of the deal, thanks to the global financial crisis in the autumn of 2008. But by June 2011 Permira’s Galaxy investment had more than doubled from its original value to reach US$1.7 billion. In September that year Permira sold 270 million shares in Galaxy for HK$4.8 billion. That meant it still retained 12.8 per cent of Galaxy’s issued capital. Permira described GEG as “a very successful investment” with “attractive long-term growth potential for Macau and the company”.

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business daily April 24, 2012

GREATER CHINA

China manufacturing improves - HSBC

Purchasing managers’ index up but investor scepticism, need for stimulus, still present. Stocks fell the most in almost a week

hina’s manufacturing activity improved in April but remained in contraction, HSBC said on Monday, bolstering the case for the government to give a stimulus to the world’s number two economy. HSBC Holdings Plc and Markit Economics’ purchasing managers’ index (PMI), which measures factory output, rose to 49.1 in April, up from 48.3 in March, the bank said in a statement. A reading above 50 indicates expansion, while a reading below 50 suggests contraction - the sixth straight month this has happened. China’s stocks fell the most in almost a week on that news. It came against a background of continued nervousness for investors. Chinese officials have just tightened reporting standards for small companies listed on the ChiNext Board, and Hong Kong has also tightened its due diligence rules for banks involved in Chinese company flotations on the city’s bourse. HSBC’s chief economist for China, Qu Hongbin, said the purchasing managers’ data suggested government measures to spur the economy were having an impact and “should ease concerns of a sharp growth slowdown”. “That said, the pace of both output and demand growth remains at a low level in an historical context and the job market is under pressure. This calls for additional easing measures in the coming months,” Mr Qu said in the statement. Other analysts echoed that view, saying the government will need to further ease monetary policy, most likely through a cut in reserve requirements for banks. “The pick-up in PMI has reduced worries over China’s economic

growth, but it will not affect the overall loosening trend for China’s monetary policy,” You Hongye, an analyst at Essence Securities in Beijing, said.

Slow growth China’s economy grew by 8.1 percent in the first quarter of this year, its slowest pace in nearly three years, putting pressure on Beijing to loosen its monetary policy. Beijing has cut bank reserve

requirements twice since December last year, as policymakers aim to boost lending. In a research report, securities house Nomura said China would boost spending on infrastructure and cut bank reserves as early as May. “We still expect monetary and fiscal policy to be loosened in Q2,” said Zhang Zhiwei, Nomura China chief economist. HSBC’s figures are typically more pessimistic than China’s official numbers. The official data for April

have not yet been released. The HSBC survey puts more emphasis on smaller companies, which are suffering more in the economic downturn than stateowned giants. China’s economy is widely expected to slow this year as woes in key export markets such as Europe and the United States hit its overseas sales. The government has set a target of 7.5 percent economic growth this year. China’s economy grew 9.2 percent last year and 10.4 percent in 2010. AFP/Bloomberg

China’s ZTE aims to reverse Fined and barred Mega Capital handset profit margin decline may ‘sue audit advisors’

TE Corp, China’s secondlargest telecommunications equipment maker, said on Monday it expects to reverse a decline in handset profit margins this year. It forecasts global sales of its smartphones will more than double from the 15 million sold in 2011. The firm launched its first basic mobile phone in Africa little more than ten years ago. It says it could be shipping 100 million smartphones a year by 2015, as it goes upmarket to reverse a decline in handset margins. ZTE says it could sell up to 50 million handsets this year and plans to launch its first two phone-cumtablet ‘phablets’ this year, hoping to branch out from China’s fiercely competitive mobile mass market The world’s number four handset maker and its bigger crosstown rival Huawei Technologies Co Ltd have diversified from selling telecom network gear, where growth has slowed, into consumer electronic devices such as smartphones and tablet PCs. “As handsets contribute more to overall revenue, it will affect our profit margins. In 2012, our aim is to increase handset margins,” Executive Director He Shiyou told reporters on the sidelines of

the company’s annual analyst conference in Shenzhen, where the company is based. “Going forward, we would like to stick with the number of models we have and keep upgrading them,” Mr He said, adding that the company forecast its global tablet PC sales to double this year. ZTE and Huawei have had trouble breaking into the U.S. market for telecom equipment sales as the U.S. government has reservations related to cyber security issues, although handset sales have been fairly strong. Reuters

ega Capital says will pay the record HK$42 million (US$5.4 million) fine imposed by Hong Kong’s securities regulator after due diligence failures in the 2009 share prospectus of mainland textile maker Hontex. But Mega Capital also added in a filing to the Taiwan stock exchange by Mega Financial Holding Co., the parent company that it may sue “the advisory body or professionals who provided auditing views”. No auditors were identified in the statement. Hong Kong’s securities regulator stripped Mega Capital (Asia) Co. of its corporate finance licence for failing to highlight misleading information in the share sale prospectus of Hontex International Holdings Co. Mega Capital was the sole sponsor in the 2009 listing of Hontex, whose shares were suspended from trading on Hong Kong’s stock exchange in March 2010 after the Securities and Futures Commission alleged the company disclosed materially false or misleading information in its prospectus. Mega Capital denies all allegations of wrongdoing, the regulator said. The punishment comes as auditor disputes and delistings involving

Chinese companies trading on foreign exchanges are fuelling investor distrust. It’s the first time the SFC has stripped a licence from a sponsor, spokesman Jonathan Li said. “This highlights the fact that the SFC is paying attention, you just can’t get away with substandard work,” said Low Chee Keong, an associate professor at the Chinese University of Hong Kong. “Sponsors are very important gatekeepers in maintaining the quality of our markets. If they fail, the implication is quite significant.” Bloomberg

April 24, 2012 business daily | 9

GREATER CHINA

China ‘inquiry team in HK’ to probe InBrief Bo family wealth Alibaba 1Q 2012 profit down 25 pct

Beijing moves to limit damage to Communist Party following revelations over Briton’s death

Alibaba.com Ltd, China’s largest listed e-commerce company, posted a 25 percent slide in first-quarter earnings yesterday, weighed by a stagnant paying member base and higher operating expenses. A document regarding the US$2.5 billion offer made by Jack Ma’s Alibaba Group to take Alibaba.com private will be sent to shareholders on Tuesday. Alibaba. com, a unit of Alibaba Group, said January-March net profit fell to 339.2 million yuan (US$53.8 million) from 452.5 million yuan a year earlier.

he Chinese government has sent a team to Hong Kong to investigate the business interests of suspended Politburo member Bo Xilai and his family, according to media reports. Mr Bo was sacked from his post as Communist Party boss of Chongqing city last month, and subsequently suspended from the party’s top-level Politburo for “serious discipline violations” - code in China for graft. His wife, Gu Kailai, has been placed under investigation for the suspected murder of a British businessman - a scandal that came to light when Bo’s city police chief fled to a US consulate and reportedly asked for asylum. Some analysts suggest the scandal is the most serious crisis for the Communist leadership since the 1989 Tiananmen Square massacre and has exposed splits within the party ahead of this year’s leadership transition. “The working group which has been investigating issues relating to Bo... has already arrived in Hong Kong,” the South China Morning Post quoted an unnamed source as saying. The team will look into the “alleged huge amount of assets held by the family in Hong Kong” as well as their relations with China’s powerful security chief, Zhou Yongkang, the source said.

Death in Chongqing China’s liaison office in Hong Kong refused to comment on the report, while an official with the local mainland affairs ministry said the southern city’s government was “not in a position to comment”. Mr Bo’s elder brother, Bo Xiyong, is believed to be a top director of Hong Kong-listed China Everbright International under the

Mainland power gap in summer months

Bo Xilai

assumed name of Li Xueming, the Post reported. Gu’s eldest sister, Gu Wangjiang, meanwhile had held numerous board positions in the regional banking centre which serves as a springboard for foreign companies wanting to do business with China. A commentary by the official Xinhua news agency last week said the death of Briton Neil Heywood in Chongqing in November was “a serious criminal case involving the kin and aides of a party and state leader”. Mr Bo had been widely tipped to take a seat on the nine-member Politburo Standing Committee after the ruling party’s once-a-decade power transition later this year.

While the accumulation of influence is commonplace among relatives of politicians worldwide, the Bo family fortune of at least US$136 million may fuel perceptions of corruption in the Communist Party and deepen social tensions over China’s widening wealth gap. “The danger for them, the Chinese, is that the whole of the Politburo and their Central Committee colleagues will be exposed as a new propertyowning class,” said Roderick MacFarquhar, a Harvard University professor who focuses on Chinese politics. “It’s already got out of hand. The problem for the regime is that it is now out in the public sphere.” AFP/Bloomberg

Taiwan’s property sales fall to ten-year low

Taiwan property sales down

roperty sales in Taiwan fell almost 40 percent in the first quarter of 2012 to a ten-year low, mainly due to a new “luxury tax” aimed at reining in speculators, the interior ministry said. About 64,000 properties were sold or purchased in the three months to March, the lowest level since 2002, down 38.9 percent from the same

period last year. Home sales have been in decline across the island, particularly in the capital Taipei, since the “luxury tax” was imposed in June 2011, the ministry said in a statement. The special tax was introduced in an attempt to stem an increasing wealth gap between rich and poor. Under the “luxury tax” bill, anyone

who sells non-residential properties and vacant land within two years of their purchase faces a levy of up to 15 percent. The bill also includes a 10 percent special sales tax on luxury goods such as yachts, private jets, furs and high-end furniture. On Monday Taiwan stocks ended 0.35 percent lower, with the shares of liquid crystal display manufacturers the biggest losers, down 3.64 percent, ahead of the top two companies, Chimei Innolux and AU Optronics, reporting results this week and next. Heavyweight Hon Hai lost 3.01 percent and saw the biggest turnover in the session. The main TAIEX index fell 26.06 points at 7,481.09, after opening down 0.24 percent. Banking shares gained 0.34 percent. The Taiwan dollar was up by T$0.041 to trade at T$29.480. Foreign investors were net sellers on Friday, bringing their total selling to T$39.92 billion this month. AFP/Reuters

China faces a power supply gap of 30-40 gigawatts this summer. That’s around the same as it experienced last summer, as temperatures soar, hydropower output dips and coal shortages begin to bite, the China Electricity Council said in its first-quarter report published on Monday. Despite slowing electricity consumption growth, China’s structural power shortages remain unsolved, and load-shedding activities which will force factories either to close or to work shorter hours are expected to be particularly severe in eastern and southern regions, the industry lobby group said.

Va va voom for Renault in China Renault and China’s Dongfeng Motor Group have signed a framework agreement on a joint venture, a senior Renault executive confirmed on Monday, a step towards the French automaker’s goal of assembling cars in the world’s biggest auto market. The joint venture factory with China’s no.-2 automaker would have annual capacity of 200,000300,000 cars, Katsumi Nakamura, Renault’s director of China business operations, told reporters at the Beijing auto show. According to sources, the deal would include plans for joint production of vehicles including an electric car and an SUV.

China to exploit substantial shale gas in decade China has been slow to tap its huge shale gas resources, the largest in the world, and may take at least ten years to start producing “substantial” quantities of the fuel, an independent U.S. energy company said. It’s very unlikely China can meet its production targets for 2015 and 2020, Chris Faulkner, chief executive officer of Breitling Oil and Gas Corp., said in Beijing. Delays in shale-gas production plans may increase China’s imports of liquefied natural gas and curb expectations the country can replicate the U.S. shale boom.

10 |

business daily April 24, 2012

ASIA

Qantas eyes Singapore for premium airline Chief executive Alan Joyce says the company is still looking at a range of options for a premium Asian airline ‘We’re still keen to set up a premium airline in Asia,’ says Alan Joyce

ustralian flag carrier Qantas is still considering Singapore as the base for a premium carrier in Asia, chief executive Alan Joyce said in a report published yesterday. Qantas’ Asian plans, which it sees as key to its strategy of revitalising its loss-making international business, were dealt a blow when talks with Malaysian Airlines over the premium joint-venture collapsed last month. Talks with Singapore on the issue had also lapsed but Joyce told The Australian newspaper that the airline was still looking at a range of options for a premium Asian airline, including the city state. “This will take a bit longer than we originally thought, but we’re still keen to set up a premium airline in Asia and we’re still looking at a range of options available to us - and Singapore is one of them,” Joyce said. He added that Qantas was still talking to the Singapore government on the idea. “We work with them on a range of issues and one of them is keeping the door open to the possibility of a premium airline,” Joyce told the newspaper. Qantas holds a 65 percent share of the domestic Australian market but has struggled with an underperforming international business. It is attempting to refocus on Asia, the world’s fastgrowing aviation market, and last month announced a new Hong Kong-based budget airline, Jetstar Hong Kong, which it hopes will be in the air in 2013. But Joyce said that for long-term success Qantas, which has a weak market share in Asia, needed to participate in the premium end of the regional market. “Qantas could probably live with it for the next few years but I’m committed to (the idea) that in the future we have to address it, and the way to address it is to be involved in a premium airline in Asia,” he said. Joyce said while there would be costs associated with establishing a new Asian operation, it was needed to fix the longer-term problem of Qantas being relevant in the region. “It’s something we have to do in the long-term but we don’t have to do immediately,” he said. Qantas’s Asia plans sparked a fierce domestic backlash when unveiled last year, with Australian unions concerned the move would see jobs sent abroad. AFP

India said to plan fuel-price increase The government may announce the increase as early as this quarter Unni Krishnan

ndia may raise fuel prices for the first time this year to reduce its subsidy payments and help cut losses at refiners, a finance ministry official said. The government may announce the increase this quarter because it can neither afford higher payouts nor could the state-owned oil companies continue selling below cost as crude soars, the official said, asking not to be identified because he isn’t authorised to speak on the subject. The government last raised gasoline prices on November 4, while those of diesel, kerosene and cooking gas in June. “An increase is inevitable as there is no cushion left and it is necessary to back the government’s resolve to correct fiscal imbalances,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai. “There will be some impact on inflation, but if fiscal discipline is getting restored, it will help in the long run.” Finance Minister Pranab Mukherjee is under pressure to curb spending after failing last year to meet his own goal of reining in the budget deficit to a four-year low. His advisers said in a report on March 15 that cutting subsidies is key to bolstering state finances. India caps energy prices to rein in inflation, a sensitive issue in a country where the World Bank says about 75 percent of the population lives on less than US$2 a day. Government-owned refiners may be paid 150 billion rupees (US$2.9 billion) in part-compensation for losses incurred

State-run refiners are losing billions a day on fuel sales

in the quarter ended March 31, the official said. Brent crude, a benchmark for Indian importers, has increased 11 percent this year in London trading, adding to costs. State-run refiners are losing 5.6 billion rupees a day on fuel sales, according to oil ministry data. Revenue loss in the nine months ended December 31 was 973.1 billion rupees. The budget deficit widened to 5.9 percent in the year ended March 31, from a target of 4.6 percent. Mukherjee aims to lower it to 5.1 percent this year.

SE Asia stocks mostly lower

ost Southeast Asian markets extended losses yesterday for a third day running on renewed worries over the euro zone debt crisis and further signs of weakness in European economies. Singapore fell 1.1 percent to a near two-week low in thin trade and Thailand eased 0.4 percent from a two-week high, led by energy shares. Indonesia ended down 0.6 percent at a one-week low in heavy volume, with US$7.2 million of foreign outflows, after credit rating agency Standard and Poor’s said it was not prepared to upgrade the country’s sovereign rating to investment grade status, as had been widely expected. S&P maintained its positive outlook on the rating, but said it was concerned by signs of “policy slippages”. Despite US$28.6 million of foreign inflowd, Malaysia fell 0.5 percent to its lowest since March 26, while Vietnam edged down 0.1 percent in light volume. Bucking the trend, the Philippines inched up 0.1 percent in improved volume compared to the market’s 30-day average volume. Regional markets reacted positively to a survey that showed China’s factory activity was stabilising.

April 24, 2012 business daily | 11

ASIA

Japan utilities expect power shortage

Asia currencies fall on growth concern Asian currencies dropped, led by India’s rupee and Thailand’s baht, on concern a slowing Chinese economy and Europe’s debt crisis will curb the region’s exports. The Bloomberg-JPMorgan Asia Dollar Index touched its lowest level in more than a week after a survey of companies indicated China’s manufacturing shrank for a sixth month in April. Reports this week may show South Korea’s economy expanded 3 percent in the first quarter, slowing from 3.3 percent growth, and Thailand’s exports rose 0.1 percent in March from a year earlier, down from 0.9 percent, according to median estimates of economists in Bloomberg surveys. “Currencies will stay bearish, especially with the recent data highlighting concerns,” said Vikas Babu, a currency trader at state-run Andhra Bank in Mumbai. “Europe continues to be the source of pain for Asian and other emerging markets.” The rupee slumped 0.8 percent to 52.50 per dollar in Mumbai, after touching 52.57, the weakest level since January 9, according to data compiled by Bloomberg. The baht dropped 0.2 percent to 30.97 and the Philippine peso declined 0.2 percent to 42.673. The Asia Dollar Index, which tracks the region’s 10 most active currencies excluding the yen, slid 0.1 percent to 116.45.

Kansai Electric may have biggest power deficit in July‎, as nuclear plant operators forecast shortfalls for the summer Osamu Tsukimori and Yoko Kubota

Bloomberg

Kansai Electric said it might have a power shortage of 19.3 percent in July

Electric also said the August gap may be 16.3 percent. Industry minister Yukio Edano and other officials have been trying to win the support of local communities to reactivate two idled reactors at Kansai Electric’s Ohi nuclear power plant in Fukui prefecture in western Japan. The two Ohi reactors are the first to be considered for reactivation by the central government, but the government faces an uphill battle in the face of public concern.

Support dropping Voter support for Japanese Prime Minister Yoshihiko Noda has dropped to its lowest since he took office in 2011, a newspaper survey showed yesterday, with the majority of Japanese opposing his plan to restart nuclear reactors, the Nikkei business daily reported. Support for the government fell to 29 percent from 34 percent a month ago, the lowest since Noda took office last September. The Nikkei survey found 54 percent of respondents opposed the nuclear

restart decision and only 30 percent supported it. With most reactors shut for periodic checks, only the No. 3 reactor at Hokkaido Electric Power Co.’s Tomari plant in Hokkaido is operating among Japan’s 50 reactors. Tokyo Electric Power Co last week formally declared the four damaged reactors at its Fukushima Daiichi plant to be no longer commercially operational. The Hokkaido reactor is due to be idled on May 5 for a periodic checkup, meaning Japan will have no operating reactors then, should none be reactivated. Kansai Electric said that if summer temperatures were average, it would face a 16.7 percent shortfall in July and a 13.5 percent gap in August. The other three utilities predicting deficits are Hokkaido Electric, Kyushu Electric Power Co and Shikoku Electric Power Co. Tokyo Electric said it may have a surplus of 4.8 percent in July and 4.5 percent in August. A government panel started reviewing the forecasts yesterday.

investment and an investmentgrade credit rating in January from Moody’s Investors Service. But analysts cautioned that new mining rules and weak infrastructure could deter future investors. Mining, which accounted for about 12 percent of Indonesia’s GDP last year and is creating new millionaires in a commodityled economic boom, took in nearly one-fifth of foreign direct investment in the first quarter as existing investors pledged another US$1.1 billion. Reuters

AFP

Reuters

S&P warns on Indonesia policy moves

ndonesia’s recent policy moves bode ill for Southeast Asia’s largest economy, ratings agency Standard and Poor’s warned yesterday, forgoing an expected upgrade in its credit rating to investment grade even as it lauded strong economic fundamentals. Although S&P retained a positive outlook on its Indonesia rating and praised record first-quarter foreign direct investment figures released earlier in the day, it singled out policies in the key mining sector and failure to approve an immediate fuel price hike as negative developments.

“We feel that the policy environment has deteriorated because of this raft of recent measures or proposed measures, and the government’s inability to push through what is really not subsidy reform, it is really a price adjustment and they couldn’t even do that,” said S&P analyst Agost Bernard. Indonesia’s foreign direct investment surged 30.3 percent year-on-year to 51.5 trillion rupiah (US$5.61 billion) in the January to March period, exceeding the 25.2 percent rate posted in the last quarter of 2011, boosted by mining

Philippines warns neighbours about China Philippine President Benigno Aquino warned his country’s neighbours yesterday they should fear Beijing’s growing aggressiveness over its claims in the South China Sea. Aquino stressed China’s territorial claims spanned a huge area and were getting “closer and closer” to the Philippine archipelago. “They claim this entire body of water practically. Look at what is excluded and what they are claiming,” Aquino told reporters as he pointed to a map of the area. “So how can the others not be fearful of what is transpiring?” Aquino’s comments came shortly after his government said it would raise an increasingly tense dispute with China over the Scarborough Shoal at a high-level bilateral meeting with the US next week. Manila and Beijing have been locked in a standoff over Scarborough, a group of islands in the South China Sea, since Chinese vessels blocked Philippine attempts to arrest eight Chinese fishing boats’ crews earlier this month. China said late yesterday that it had withdrawn two ships from the disputed area on Sunday, leaving only one vessel for maritime surveillance, China’s official Xinhua news agency reported. It quoted a spokesman for the Chinese Embassy in the Philippines, Zhang Hua, as saying Beijing was trying to reduce tensions.

File photo

ansai Electric Power Co, the Japanese utility most reliant on nuclear energy, might face a power shortage of about 20 percent in July unless it can restart reactors taken offline after the Fukushima crisis amid safety concerns, the company warned yesterday. Kansai Electric’s expected deficit was the highest among four Japanese nuclear plant operators that forecast shortfalls for the summer, when demand peaks. Japan’s power companies have been struggling to secure stable power supplies because of widespread anti-nuclear sentiment after last year’s massive earthquake and tsunami devastated the Fukushima Daiichi nuclear plant, causing meltdowns, spewing radiation and forcing mass evacuations. Kansai Electric said it might have a power shortage of 19.3 percent in July unless it can use reactors it has not been able to restart after maintenance. The forecast shortfalls assume power savings measures and temperatures similar to those in the record summer of 2010. Kansai

12 |

business daily April 24, 2012

MARKETS Ticker NAME

Hang SENG INDEX Ticker NAME

PRICE

Day %

VOLUME

(H) 52W

(L) 52W

PRICE

Day %

VOLUME

(H) 52W

(L) 52W

73.65

-2.836412

8262811

93.1

53.6

5.15

-2.462121

250411779

6.75

3.46

LI & FUNG LTD

16.52

-2.823529

12879910

20.15

10.82

HUTCHISON WHAMPO

1398

IND & COMM BK-H

494

1299

AIA GROUP LTD

27.5

-1.785714

13211399

29.9

19.84

MTR CORP

27.05

-1.457195

1301045

28.8

22.45

2600

ALUMINUM CORP-H

3.72

-3.875969

14158030

7.45

3.2

NEW WORLD DEV

9.13

-2.038627

3366744

12.675

6.13

3988

BANK OF CHINA-H

3.22

-1.829268

285552640

4.43

2.2

857

PETROCHINA CO-H

11.2

-1.754386

35265360

11.92

8.59

3328

BANK OF COMMUN-H

5.77

-3.02521

20022352

7.7

4.15

2318

PING AN INSURA-H

61.9

-3.28125

7271208

86.85

37.35

BANK EAST ASIA

28.85

-1.367521

996827

34.45

21.85

POWER ASSETS HOL

57.15

-0.6086957

1564616

64.8

1880

BELLE INTERNATIO

14.88

11344228

17.54

11.38

SINO LAND CO

13.1

-2.529762

6005880

14.16

8.482

2388

BOC HONG KONG HO

22.85

-0.2183406

12706300

24.7

14.24

SUN HUNG KAI PRO

0.1064963

6304980

124.4

85.45

293

CATHAY PAC AIR

13.04

-1.361573

5066558

20.15

11.8

SWIRE PACIFIC-A

88.35

-0.9529148

899881

102.539

69.321

CHEUNG KONG

99.05

-2.79686

4128032

127

79.1

700

TENCENT HOLDINGS

236.6

1.111111

2952772

240.2

139.8

1898

CHINA COAL ENE-H

8.59

-2.164009

15278579

11.66

6.59

322

TINGYI HLDG CO

20.5

-2.380952

5687772

17.84

939

CHINA CONST BA-H

5.92

-2.631579

225008415

7.55

4.41

151

WANT WANT CHINA

9.14

-1.402373

10765621

9.37

6.03

2628

CHINA LIFE INS-H

20.7

-2.816901

26021718

29.4

17.04

WHARF HLDG

44.5

-0.6696429

4649669

33.15

144

CHINA MERCHANT

24.7

-1.2

2142661

37.5

941

CHINA MOBILE

84.8

-3.030303

22278435

87.6

68.05

688

CHINA OVERSEAS

15.92

-1.970443

14776252

17.86

9.99

386

CHINA PETROLEU-H

8.14

-1.927711

54312624

9.67

6.22

291

CHINA RES ENTERP

27.7

-2.120141

2318467

35.5

1109

CHINA RES LAND

14.18

-1.527778

5945896

15.6

7.28

836

CHINA RES POWER

13.7

-2.698864

2820442

16.2

10.82

1088

CHINA SHENHUA-H

33.75

-1.746725

8893279

40.2

27.1

762

CHINA UNICOM HON

12.92

-2.269289

18198581

17.68

12.6

267

CITIC PACIFIC

12.66

-2.314815

4940760

23.85

10.26

CLP HLDGS LTD

66.1

-1.047904

1183256

75.2

62.1

883

CNOOC LTD

-1.477833

28944842

20.1

11.2

1199

COSCO PAC LTD

11.08

-1.598579

2692175

17.16

7.52

330

ESPRIT HLDGS

16.08

-1.711491

2986751

33.95

7.55

101

HANG LUNG PROPER

28.45

-2.065404

5817298

35.3

20.85

HANG SENG BK

103.9

-1.14177

666845

125

84.4

HENDERSON LAND D

44.45

-1.222222

1943721

54.25

33.2

1044

HENGAN INTL

-0.6662629

1274667

83.45

56.8

HONG KG CHINA GS

19.96

-1.432099

6292227

20.65

16.68

388

HONG KONG EXCHNG

127.7

-0.8540373

3095506

182.5

99.15

HSBC HLDGS PLC

68.2

-1.799856

9444309

85.35

INDEX 20624.39 52W (H) 24260.76 (L) 16170.35 MOVERS 2 45 1

IN FOCUS Galaxy renevue, by semester (Billion HKD) 30 24 18 12 6 0

Shanghai Shenzhen CSI 300 NAME

31-Dec-2011

30-Jun-07

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

AGRICULTURAL-A

2.71

-0.7326007

47812201

CHINA STATE -A

3.3

174121823

PANGANG GROUP -A

7.92

-0.8760951

92284758

AIR CHINA LTD-A

6.25

7971215

CHINA UNITED-A

4.41

1.37931

147830710

PETROCHINA CO-A

9.85

-1.005025

10450453

NAME

VOLUME

ALUMINUM CORP-A

6.93

-1

11796368

CHINA VANKE CO-A

8.6

-0.462963

35176415

PING AN INSURA-A

40.63

-1.788736

27937810

ANGANG STEEL-A

4.42

-0.896861

9142326

CHINA YANGTZE-A

6.5

-0.1536098

9776809

POLY REAL ESTA-A

-1.639344

26424590

ANHUI CONCH-A

17.84

0.5636979

59059995

CITIC SECURITI-A

13.12

-2.814815

122580766

QINGHAI SALT-A

33.86

-0.5287897

5471073

-1.088032

21840675

CSR CORP LTD -A

4.92

-1.006036

69314892

SAIC MOTOR-A

15.11

-1.819363

16529595 27586281

BANK OF BEIJIN-A BANK OF CHINA-A

3.06

18908204

DAQIN RAILWAY -A

7.5

-0.1331558

29529748

SANY HEAVY INDUS

14.47

-0.2068966

BANK OF COMMUN-A

4.83

-0.4123711

33226978

DATANG INTL PO-A

5.13

1.183432

5706264

SHANDONG GOLD-MI

32.92

4485720

BAOSHAN IRON & S

4.96

-0.6012024

20902010

DONGFANG ELECT-A

22.01

-1.609298

8651190

SHANG PUDONG-A

9.24

-0.7518797

41839068 3885467

BBMG CORPORATI-A

8.73

3.68171

53914681

EVERBRIG SEC -A

13.62

-3.129445

31363789

SHANGHAI ELECT-A

5.56

-0.5366726

BYD CO LTD -A

27.1

-2.482908

5662414

GD MIDEA HOLDING

13.46

15479727

SHANXI LU'AN -A

27.09

-0.9144111

9393841

CHINA CITIC BK-A

4.47

-0.886918

15995321

GD POWER DEVEL-A

2.6

-0.3831418

49780928

SHANXI XISHAN-A

16.7

-1.764706

20153058

CHINA CNR CORP-A

4.48

-0.2227171

84073199

16.42

-0.9650181

19738112

CHINA COAL ENE-A

9.21

-0.861141

7514690

7.39

-0.9383378

19185699

GF SECURITIES-A

31.49

-1.005973

22938870

SHENZ DVLP BK-A

GREE ELECTRIC

21.55

-0.2314815

14073594

SHENZEN OVERSE-A

CHINA CONST BA-A

4.73

-0.2109705

24022179

GUIZHOU PANJIA-A

31.35

1.390686

6685235

CHINA COSCO HO-A

5.39

-1.100917

21964307

HAITONG SECURI-A

10.08

-2.420136

109186640

CHINA CSSC HOL-A

37.04

10.00891

24983528

HANGZHOU HIKVI-A

43.38

1005124

CHINA EAST AIR-A

3.91

1.558442

27781822

HEBEI IRON-A

3.07

-0.6472492

22410496

SINOVEL WIND-A

16.16

-2.709211

2771210

SUNING APPLIAN-A

10.42

-2.616822

70537423

TSINGTAO BREW-A

-1.191514

1252922

WEICHAI POWER-A

3.343465

14376400

CHINA EVERBRIG-A

2.95

42499963

HENAN SHUAN-A

65.39

-1.905191

3821205

CHINA INTL MAR-A

14.64

0.4115226

9926986

HUATAI SECURIT-A

10.25

-2.843602

42123043

CHINA LIFE INS-A

18.17

-0.7646095

26976695

HUAXIA BANK CO

11.08

-0.8057296

22836169

XINJIANG GUANG-A

24.65

-0.8845999

9918314

12.1

-0.7383101

38660794

IND & COMM BK-A

4.39

-0.678733

43879376

YANGQUAN COAL -A

19.16

-0.4158004

14047863

CHINA MERCH BK-A

WULIANGYE YIBIN

34.37

1.17751

21673599

XCMG CONSTRUCT-A

15.16

0.4638834

16633183

CHINA MERCHANT-A

13.35

-1.111111

24251670

INDUSTRIAL BAN-A

13.91

-0.143575

57990186

YANTAI CHANGYU-A

95.05

-0.7518012

1200328

CHINA MERCHANT-A

21.55

-3.058929

7645611

INNER MONG BAO-A

69.02

-0.9614005

24949820

YANTAI WANHUA-A

14.37

-0.6224066

11265086

CHINA MINSHENG-A

6.48

-1.068702

85122017

INNER MONG YIL-A

22.38

0.3587444

8089061

YANZHOU COAL-A

23.71

5009129

CHINA NATIONAL-A

6.64

-0.8955224

22440440

INNER MONGOLIA-A

6.11

-0.8116883

66596641

YUNNAN BAIYAO-A

49.51

0.7734582

3344536

JIANGSU YANGHE-A

CHINA OILFIELD-A

17.23

-1.204128

5458318

CHINA PACIFIC-A

21.64

-0.6883892

28401426

157.19

-1.633292

875896

ZHONGJIN GOLD

22.68

16242932

JIANGXI COPPER-A

25.26

-1.328125

10648828

ZIJIN MINING-A

4.29

-1.152074

38542898

13.97

-1.896067

14468395

19.5

-1.015228

8808778

211.84

-0.3105882

1328165

41.98

0.2387775

6991901

CHINA PETROLEU-A

7.27

-1.088435

27771383

JINDUICHENG -A

CHINA RAILWAY-A

2.67

0.3759398

44096366

JIZHONG ENERGY-A

CHINA RAILWAY-A

4.41

0.4555809

36034246

KWEICHOW MOUTA-A

CHINA SHENHUA-A

26.4

-1.271503

11217706

LUZHOU LAOJIAO-A

CHINA SHIPBUIL-A

6.35

2.917342

109721949

METALLURGICAL-A

2.68

1.132075

48934064

CHINA SHIPPING-A

3.21

-2.431611

24574010

NARI TECHNOLOG-A

19.79

-0.4527163

3266324

4.8

0.8403361

46504161

NINGBO PORT CO-A

2.64

-1.123596

20806706

CHINA SOUTHERN-A

NAME

Hang SENG CHINA ENTREPRISE INDEX NAME AGRICULTURAL-H

PRICE

DAY %

VOLUME

3.5

-2.506964

105807591

ZOOMLION HEAVY-A ZTE CORP-A

1.419878

59477175

17.3

0.4645761

16561057

INDEX 2606.038 52W (H) 3325.45 (L) 2254.567 MOVERS 71 204 25

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

CHINA LONGYUAN-H

6.06

0.4975124

5446100

PETROCHINA CO-H

11.2

-1.754386

35265360

CHINA MERCH BK-H

16.22

-2.171291

9305610

PICC PROPERTY &

9.52

-2.857143

13541477

CHINA MINSHENG-H

7.44

-1.32626

30249877

PING AN INSURA-H

61.9

-3.28125

7271208

CHINA NATL BDG-H

10.26

-1.912046

19238000

SHANDONG WEIG-H

8.33

-3.252033

3227500 3217445

NAME

AIR CHINA LTD-H

5.12

CHINA OILFIELD-H

11.8

-2.155887

5578439

SINOPHARM-H

20.25

-4.929577

ALUMINUM CORP-H

3.72

-3.875969

14158030

CHINA PACIFIC-H

25.45

-2.676864

9552434

TSINGTAO BREW-H

44.85

-2.605863

678000

ANHUI CONCH-H

25.5

-0.9708738

11019049

CHINA PETROLEU-H

8.14

-1.927711

54312624

WEICHAI POWER-H

36.5

-1.084011

3638574

BANK OF CHINA-H

3.22

-1.829268

285552640

CHINA RAIL CN-H

5.72

-1.37931

7028603

YANZHOU COAL-H

16.5

-1.668653

8771168

BANK OF COMMUN-H

5.77

-3.02521

20022352

CHINA RAIL GR-H

2.98

-1.324503

17274355

ZIJIN MINING-H

3.01

-2.272727

20294829

BYD CO LTD-H

21.4

-1.834862

2359036

CHINA SHENHUA-H

33.75

-1.746725

8893279

CHINA CITIC BK-H

4.71

-2.484472

32149336

CHINA TELECOM-H

4.12

-1.199041

30510845

CHINA COAL ENE-H

8.59

-2.164009

15278579

DONGFENG MOTOR-H

14.44

-2.300406

8125275

CHINA COM CONS-H

7.74

-0.5141388

16238170

GUANGZHOU AUTO-H

8.3

0.4842615

7068920

CHINA CONST BA-H

5.92

-2.631579

225008415

HUANENG POWER-H

4.38

-3.097345

14963660

CHINA COSCO HO-H

4.58

-2.966102

15965101

IND & COMM BK-H

5.15

-2.462121

250411779

CHINA LIFE INS-H

20.7

-2.816901

26021718

JIANGXI COPPER-H

18.32

-1.505376

6755559

NAME

PRICE DAY %

FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP

PRICE DAY %

Volume

ZOOMLION HEAVY-H

11.32

-1.048951

11782389

ZTE CORP-H

19.38

-0.7172131

7539806

INDEX 10810.48 52W (H) 13721.26 (L) 8058.58 MOVERS 2 37 1

NAME

Volume

9.9 -0.2016129

4025127

33.4

2687235

SINOPAC FINANCIA

FAR EASTONE TELE

63.9

0.7886435

5850935

SYNNEX TECH INTL

68.5

1.331361

5208828

17.35

0.872093

12019036

TAIWAN CEMENT

35.1 -0.8474576

3934855

FIRST FINANCIAL

Volume

FORMOSA CHEM & F

84.5

0.7151371

3146550

TAIWAN COOPERATI

34.3

-2.970297

13036763

FORMOSA PETROCHE

87.2

1.395349

1824150

TAIWAN FERTILIZE

28.95

0.6956522

10860379

FORMOSA PLASTIC

84 -0.2375297

5094369

36.1 -0.8241758

1481543

FOXCONN TECHNOLO

98.4

3.036649

30.8

17.55

1.73913

7836875

70.5

-1.67364

2699959

TAIWAN GLASS IND

29.85

-1.809211

2406067

13023969

TAIWAN MOBILE CO

91.6

1.21547

7061774

0.1626016

11607727

TPK HOLDING CO L

376

-3.092784

11463378

TSMC

84.3

20351923

ASUSTEK COMPUTER

279.5

2.380952

2721988

FUBON FINANCIAL

AU OPTRONICS COR

13.8

-2.816901

42829469

HON HAI PRECISIO

99.9

-3.009709

50776048

CATCHER TECH

190

2.702703

25362239

HOTAI MOTOR CO

180.5

-3.475936

1375062

UNI-PRESIDENT

30.75 -0.6462036

9549108

HTC CORP

473

2.380952

8101236

UNITED MICROELEC

CATHAY FINANCIAL

PRICE DAY %

FAR EASTERN NEW

42 -0.1189061 15.05

3.082192

3416203 45565327

CHANG HWA BANK

16.1

0.625

15223178

HUA NAN FINANCIA

16.3

0.9287926

4511356

WISTRON CORP

42.1

0.7177033

6192955

CHENG SHIN RUBBE

71.7

1.271186

6955012

LARGAN PRECISION

522

-6.785714

3344904

YUANTA FINANCIAL

14.1 -0.7042254

21102028

YULON MOTOR CO

46.8

10352931

CHIMEI INNOLUX C

12.8

-4.477612

21980175

LITE-ON TECHNOLO

34.35

1.777778

2939571

CHINA DEVELOPMEN

7.39

-1.59787

68047561

MEDIATEK INC

260.5

0.1923077

8358160

CHINA STEEL CORP

28.8

0.3484321

13579597

MEGA FINANCIAL H

22.3

3.480278

50109807

20062036

NAN YA PLASTICS

60.4

1.003344

4893777

CHUNGHWA TELECOM

88.3

0.7990868

12941692

PRESIDENT CHAIN

158

0.3174603

834332

COMPAL ELECTRON

33.8

2.269289

9867044

QUANTA COMPUTER

76.6 -0.2604167

9394423

DELTA ELECT INC

89.5 -0.8859358

9022878

SILICONWARE PREC

CHINATRUST FINAN

33.45

-1.035503

7862852

-1.473684

INDEX 5211.03 52W (H) 6265.48 (L) 4643.05 MOVERS 26 21 3

April 24, 2012 business daily | 13

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

Max 23.55

average 23.02

MeLCo CroWN eNTerTaINMeNT

Min 22.65

23.6

43.0

14.20

23.4

42.6

14.14

23.2

42.2

14.08

23.0

41.8

14.02

22.8

41.4

13.96

22.6

Last 22.70

Max 43.00

SaNDS CHINa LTD

Max 32.00

average 31.67

MgM CHINa HoLDINgS

average 42.44

Min 41.50

Last 42.25

41.0

SJM HoLDINgS LTD

Min 31.40

24.00

31.88

16.86

23.84

31.76

16.72

23.68

31.64

16.58

23.52

31.52

16.44

23.36

average 16.59

Min 16.30

Last 16.42

MAJORS

18.3 14.6 11.0 7.3 3.6 0.0

ARS

Argentine Peso

RSD

Serbian Dinar

VND

Vietnamese Dong

INR

Indian Ruppee

EGP

Egyptian Pound

HKD

Hong Kong Dollar

OMR

Omani Rial

CHF

Swiss Francs

SGD

Singapore Dollar

JPY

Japanese Yen

ASIA PACIFIC

MACAU RELATED STOCKS DAY % YTD %

(H) 52W

(L) 52W

VOLUME CRNCY

ARISTOCRAT LEISU

3.14

0.6410256

42.72727

3.25

1.88

1717509

CROWN LTD

8.99

0.1113586

11.12484

9.2

7.45

2084326

AMAX HOLDINGS LT

0.09

-2.173913

3.448279

0.143

0.06

13713000

BOC HONG KONG HO

22.9

-0.4347826

24.45652

24.7

14.24

5400901

CENTURY LEGEND

0.26

13.04348

0.41

0.204

CHEUK NANG HLDGS

3.18

-0.625

13.57143

4.79

2.3

916

CHINA OVERSEAS

16.24

0.9950249

25.11557

17.86

9.99

13347875

CHINESE ESTATES

11.1

1.277372

-11.2

14.8

10.2

265433

CHOW TAI FOOK JE

11.78

-0.6745363

-15.37356

15.16

11.66

3997400

EMPEROR ENTERTAI

1.39

-1.41844

25.22522

2.09

0.97

710000

FUTURE BRIGHT

0.98

24.05063

133.3333

0.99

0.3

29574000

GALAXY ENTERTAIN

23.65

0.4246285

66.08146

24.35

8.69

9467680

HANG SENG BK

105.1

14.05317

125

84.4

613010

HOPEWELL HLDGS

20.75

-0.2403846

4.481366

24.903

18.56

1077055

HSBC HLDGS PLC

69.45

0.3612717

17.71186

85.35

9597453

3.4

2.102102

13.71237

3.6

2.13

8623476

21.45

-1.605505

-20.84871

46.15

19.2

2692309

LUK FOOK HLDGS I

23.20

16.30 Max 17.00

Max 23.90

average 23.67

Min 23.35

Last 23.40

CURRENCY EXCHANGE RATES

22.0

HUTCHISON TELE H

13.90

Last 14.00

17.00

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

AUD

1.0294

-0.8285

0.8326

1.1081

0.9388

GBP

1.6092

-0.1923

3.5321

1.6747

1.5235

CHF

0.9141

-0.5689

2.6255

0.9596

0.7071

EUR

1.3145

-0.5598

1.4196

1.494

1.2624

JPY

81.07

0.5551

-5.1314

84.18

75.35

MOP

7.9941

-0.0063

0.0688

8.0449

7.9823

HKD

7.7613

-0.009

0.0786

7.8113

7.7529

CNY

6.3086

-0.2156

6.5391

6.2846

INR

52.47

-0.7338

1.134

54.305

43.855

THB

30.99

-0.2581

1.807

31.96

29.63

SGD

1.2495

-0.088

3.7695

1.3199

1.1992

World currencies: Highest and lowest deposit rates

PRICE

Min 13.94

32.00

31.40

Last 31.50

average 14.12

WyNN MaCaU LTD

IN FOCUS

NAME

Max 14.20

CROSSES

AUD HKD

TWD

29.507

-0.0203

2.6163

30.716

28.48

PHP

42.699

-0.1616

2.6722

44.35

41.879

IDR

9192

-0.087

-1.3381

9367

8458

AUDJPY

83.449

1.4236

-6.0121

89.601

72.057

EURCHF

1.20157

0.0033

1.2667

1.29654

1.00749

EURGBP

0.81686

0.3513

2.0236

0.90835

0.8162

EURCNY

8.2961

0.1796

-1.9515

9.6769

7.9674

EURMOP

10.5072

0.3702

-1.4771

11.9509

10.1031

EURJPY

106.57

1.1448

-6.484

121.84

97.04

1.03

0.0097

1.0311

1.0288

HKDMOP

World Stock MarketS - Indices COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

NAME

13029.26

0.5026188

6.643718

13297.11

10404.49

NASDAQ COMPOSITE INDEX

3000.45

-0.2364043

15.17379

3134.17

2298.89 4791.01

FTSE 100 INDEX

5694.65

-1.342654

2.196051

6103.73

DAX INDEX

6606.63

-2.12574

12.0081

7600.410156

4965.8

9542.17

-0.2007037

12.85364

10255.15

8135.79

MELCO INTL DEVEL

8.13

0.6188119

40.90121

10.76

4.3

5470026

NIKKEI 225

MGM CHINA HOLDIN

14.1

-1.810585

46.99514

17.183

7.6

7390400

HANG SENG INDEX

20624.39

-1.838354

11.87997

24260.76953

16170.35

MIDLAND HOLDINGS

4.03

-0.2475238

5.976

2.95

794021

NEPTUNE GROUP

0.11

-0.9009022

0.157

0.08

140000

CSI 300 INDEX

2606.038

-0.7918643

11.09654

3325.459

2254.567

NEW WORLD DEV

9.32

-0.2141328

48.88178

12.675

6.13

6629763

TAIWAN TAIEX INDEX

7481.09

-0.3471357

5.783443

9099.75

6609.11

SANDS CHINA LTD

32.25

-1.376147

46.92482

33.05

14.9

14025206

SHUN HO RESOURCE

1.2

1.32

0.82

SHUN TAK HOLDING

3.28

1.547988

28.16864

4.686

2.241

6855089

SJM HOLDINGS LTD

16.96

-2.191465

33.75394

10.22

14463814

SMARTONE TELECOM

16.36

0.7389163

21.72619

18.5

9.8

1647012

WYNN MACAU LTD

23.85

0.845666

22.30769

27.48

14.807

11992819

ASIA ENTERTAINME

5.9

-2.317881

0.3401341

10.8692

4.72

48640

BALLY TECHNOLOGI

46.93

0.5355613

18.62993

47.6

24.74

445253

BOC HONG KONG HO

3.01

25.56381

3.16

1.81

13050

GALAXY ENTERTAIN

3.04

62.56684

3.09

1.08

9912

INTL GAME TECH

16.57

2.664188

-3.662795

19.15

13.38

2505979

JONES LANG LASAL

80.21

1.173058

30.93373

107.77

46.01

193422

LAS VEGAS SANDS

57.91

-0.7710761

35.52539

62.09

36.08

6898442

MACAU CAPITAL IN

0.11

9.999998

0.11

500

MELCO CROWN-ADR

15.58

1.830065

61.95426

16.15

7.05

6463629

MGM CHINA HOLDIN

1.78

-6.315789

49.36731

2.21314

1.00254

1500

MGM RESORTS INTE

13.52

-1.815541

29.62607

16.05

7.4

10809975

SHUFFLE MASTER

16.91

0.8949881

44.28327

18.77

7.35

885437

2.21

-0.896861

35.58282

2.64

1.28

3000

128.99

-0.4322655

16.7436

165.4931

101.02

1565842

SJM HOLDINGS LTD WYNN RESORTS LTD

KOSPI INDEX

1972.63

-0.1022966

8.045506

2231.47

1644.11

S&P/ASX 200 INDEX

4352.432

-0.3222487

7.293656

4930.6

3765.9

JAKARTA COMPOSITE INDEX

USD

4138.009

-1.036957

8.268381

4232.923

3217.951

FTSE Bursa Malaysia KLCI

1581.44

-0.6539561

3.312796

1609.33

1310.53

NZX ALL INDEX

783.493

0.0785563

7.357176

814.431

700.441 2695.06

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876.33

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business daily April 24, 2012

Opinion

Budgetary wishful thinking Jeffrey Frankel

Professor at Harvard University

hy do many countries find it hard to control their budgets? Concern about budget deficits has become a burning political issue in the United States; helped to persuade the United Kingdom to enact stringent cuts, despite a weak economy; and is the proximate cause of the Greek sovereign-debt crisis, which has grown to engulf the entire eurozone. Indeed, among industrialized countries, hardly anyone is immune from fiscal woes. Clearly, part of the blame lies with voters who don’t want to hear that budget discipline means cutting programs that matter to them, and with politicians who tell voters only what they want to hear. But another factor has attracted little notice: systematically over-optimistic official forecasts. Such forecasts underlie governments’ failure to take advantage of boom periods to strengthen their finances, including running budget surpluses. During the expansion of 2001-2007, for example, the US government projected that budget surpluses would remain strong. These forecasts supported enactment of large longterm tax cuts and faster spending growth (both military and otherwise). European countries behaved similarly, running up ever-higher debts. Not surprisingly, when global recession hit in 2008, most countries had little or no “fiscal space” to implement countercyclical policy. The US Office of Management and Budget (OMB) has perennially turned out optimistic budget forecasts. For eight years, it never stopped forecasting that the budget would return to surplus by 2011, even though virtually every independent forecast showed that deficits would continue into the new decade unabated. The US projections were over-optimistic even at short time horizons. From 1986 to 2009, the bias averaged 0.4 percent of GDP at the one-year horizon, 1 percent at two years, and 3.1 percent at three years. Sanguine macroeconomic assumptions and fanciful theories about the effects of tax cuts underpinned rosy scenarios. For the quarter-century until 2009, the OMB’s three-year forecasts of economic growth were biased upward by a whopping 3.8 percent, on average.

and Iraq were financed with “supplemental” budget requests each year, as if they were some unpredictable surprise. Likewise, every year, Congress canceled “planned” cuts in payments to physicians that, if ever implemented, would drive doctors out of the Medicare system. And, on the revenue side, the tax cuts that were enacted in 2001 were all extended into 2011-12, despite an expiry date of 2010; those who proposed the law

Unrealistic macroeconomic assumptions, farfetched theories about tax cuts, and legislation that deliberately misrepresented policy plans all worked as intended, yielding overly optimistic forecasts, which in turn help to explain excessive budget deficits

never intended to allow it to expire. Unrealistic macroeconomic assumptions, farfetched theories about tax cuts, and legislation that deliberately misrepresented policy plans all worked as intended, yielding overly optimistic forecasts, which in turn help to explain excessive budget deficits. In particular, such forecasts explain the failure to run surpluses during the economic expansion from 2002-2007: if growth is projected to last indefinitely, retrenchment is deemed unnecessary. Many have suggested that budget woes can best be held in check through fiscal-policy rules such as deficit or debt caps. Some countries have already enacted laws along these lines. The most important and wellknown example is the eurozone’s fiscal rules, which supposedly limit candidate countries’ budget deficits to 3 percent of GDP, and their public debt to 60 percent of GDP. The European Union’s Stability and Growth Pact (SGP) dictated that member countries must continue to meet these criteria. We know now how well that worked out.

Geography of bias Other countries have also adopted fiscal rules, most of which fail. Indeed, part of the problem is that governments that are subject to budget rules like Europe’s SGP put out official forecasts that are even more biased than those of the US or other countries. The Greek government, for example, projected in 2000 that

its fiscal deficit would shrink below 2 percent of GDP one year in the future and below 1 percent of GDP two years into the future, and that the fiscal balance would swing to surplus three years into the future. The actual balance was a deficit of 4-5 percent of GDP – well above the EU’s 3 percentof-GDP ceiling. In almost all industrialized countries, official forecasts have an upward bias, which is stronger at longer time horizons. On average, the gap between the projected budget balance and the realized balance among a set of 33 countries is 0.2 percent of GDP at the one-year horizon, 0.8 percent at the two-year horizon, and 1.5 percent at the three-year horizon. So, how can governments’ tendency to satisfy fiscal targets by wishful thinking be overcome? In 2000, Chile created structural budget institutions that may have solved the problem. Independent expert panels, insulated from political pressures, are responsible for estimating the long-run trends that determine whether a given deficit is deemed structural or cyclical. The result is that, unlike in most industrialized countries, Chile’s official forecasts of growth and fiscal performance have not been overly optimistic, even during economic booms. Thus, unlike many countries in the North, Chile took advantage of the 2002-2007 expansion to run substantial budget surpluses, which enabled it to loosen fiscal policy in the 2008-2009 recession. Perhaps other countries should follow its lead. © Project Syndicate

Projections, projections…. But, in order to get buoyant budget forecasts out of the rival Congressional Budget Office, which is more independent than the OMB, a more extreme strategy was required. Elected officials hardwired misleading projections by excising from current law expensive policies that they had every intention of pursuing. For example, the wars in Afghanistan

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April 24, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

The Challenge of Islamic Finance

Taipei Times

Andrew Sheng

Far EasTone Telecommunications Co. Ltd., Taiwan’s third-largest mobile phone operator, had faster growth in revenue from carrying data than its bigger competitors in the first quarter of this year. The company announced on Friday revenue from mobile services of NT$14.57 billion (3.95 billion patacas) for the first three months of the year, with data revenue accounting for 27.4 percent.

President of the Fung Global Institute in Hong Kong and Chief Adviser to the China Banking Regulatory Commission

Ajit Singh

Emeritus Professor of Economics at Cambridge University

Jakarta Globe

The Indonesian Motorcycle Industry Association expects the industry’s sales to drop because of credit curbs. From June, consumers seeking loans to buy motorcycles will have to make down payments of at least 25 percent instead of the current 5 percent. The association forecasts that sales will shrink by about 20 percent this year to 6.5 million bikes, as tighter rules for vehicle financing crimp demand. The industry sold 8.1 million bikes last year, the report said.

Times of India

India’s commerce department is proposing new tax concessions in special economic zones and a reduction in the minimum area that the zones must cover. The report said zones located far from cities with 40 million or more inhabitants or state capitals would qualify for tax breaks on capital investment in the construction of hotels, hospitals, schools and colleges, housing and business complexes.

The Straits Times

Singapore consumer groups are worried that a new credit card may encourage overspending. The report said OCBC Bank’s new Cashflo credit card lets consumers pay for purchases costing more than US$100 (799 patacas) over three or six months, interest-free. Consumer groups warned cardholders to make sure that they have enough funds to cover the payments.

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ith Britain now in talks to sell part of the government’s 82 percent stake in the Royal Bank of Scotland to Abu Dhabi sovereign-wealth funds, the Islamic world’s growing financial clout is once again on display. That clout also poses a systemic challenge to the dominant way that finance is now practiced around the world. From humble beginnings in the 1990’s, Islamic finance has become a trillion-dollar industry. The market consensus is that Islamic finance has a bright future, owing to favorable demographics and rising incomes in Muslim communities. Despite skepticism regarding accommodation between Islamic and global finance, leading banks are buying Islamic bonds and forming subsidiaries specifically to conduct Islamic finance. Special laws have been enacted in nonMuslim financial centers – London, Singapore, and Hong Kong – to facilitate the operation of Islamic banks and associated financial institutions. How should these developments be viewed from the perspective of Western finance and mainstream economic analysis? Does Islamic finance really constitute a viable alternative financial system? The very fact that such a question is asked nowadays is significant. Not so long ago, Islamic finance was superficially dubbed a zero-interestrate system that would lead to inadequate and inefficient resource mobilization and utilization. Ironically, mainstream central bankers today routinely use precisely such

The test of any alternative financial system depends ultimately on whether it is – or can be – more efficient, ethical, stable, and adaptable than the prevailing system. For now, there is no Islamic global reserve currency and no lender of last resort

policies when pursuing massive “quantitative easing.”

Risk and equity There are two central precepts of Islamic finance: absolute prohibition on charging interest on financial transactions, and high moral standards on the part of lenders and borrowers. Interestingly, the best economic rationale for a zero-interest-rate system is provided in John Maynard Keynes’s The General Theory: “Provisions against usury are amongst the most ancient economic practices of which we have record…. In a world, therefore, which no one reckoned to be safe, it was almost inevitable that the rate of interest, unless it was curbed by every instrument

at the disposal of society, would rise too high to permit of an adequate inducement to invest.” Keynes suggested that only a very low or zero interest rate could ensure continuous full employment and distributional equity. Keynes’s endorsement of such a policy does not necessarily make it right, but his analysis does suggest that it should be regarded as a serious proposition. Importantly, although interest is prohibited under Islamic finance, profit is not; the latter is derived from various arrangements that combine finance and enterprise. In essence, this is a profit-sharing and risk-sharing system that is based entirely on equity finance. Islamic finance thus contrasts with the current dominant system based on interest-bearing debt, in which risks are theoretically transferred to debt holders, but in practice are socialized during crises. Other things being equal, most economists will agree that debt finance leads to greater instability than equity finance. It follows from the second major tenet of Islamic finance that if people adhered strictly to its ethical requirements, there would be fewer moralhazard problems in Islamic banking. Moral hazard exists in all systems in which the state ultimately absorbs the risks of private citizens.

Dealing with moral hazard But, whether any particular system is efficient in avoiding moral hazard is a matter of practice, rather than of theory. Many would agree that,

historically, Christian morality played an important role in the rise of Western capitalism. Secular capitalism, however, has experienced an erosion of values, whereby the financial sector has put its own interests above those of the rest of society. If the ethical values in Islamic finance – grounded in sharia religious law – can further deter moral hazard and the abuse of fiduciary duties by financial institutions, Islamic finance could prove to be a serious alternative to current models of derivative finance. Moreover, the basic tenets of Islamic finance force us to re-think the ethical basis of modern monetary arrangements, which have evolved into a global reserve-currency system founded on fiat money. In the past, gold had been the anchor of monetary stability and financial discipline, even if it was deflationary. The test of any alternative financial system depends ultimately on whether it is – or can be – more efficient, ethical, stable, and adaptable than the prevailing system. For now, there is no Islamic global reserve currency and no lender of last resort. But the Islamic world is the custodian of huge natural resources that back its trading and financial activities. As the Islamic world grows in stature and influence, Islamic finance will become a formidable competitor to the current financial system. The world would have much to gain if the two systems were to compete fairly and constructively to meet people’s needs for different types of finance. © Project Syndicate

16 |

business daily April 24, 2012

CLOSING Interventionism fear if Hollande wins

New Cadillac model in China

German companies are concerned France will ease up on efforts to get its public finances in shape as close-run French presidential elections enter a second round. “France is once again on the path to more interventionism in the economy, to a greater degree of economic steering by the state and to attempts to foster growth” using state measures, BDI President Hans-Peter Keitel told a news conference. Following a first-round vote in the French presidential elections on Sunday, polls now put Socialist Francois Hollande ahead of Nicolas Sarkozy to win the second round on May 6 by 54 percent to 46. Mr Hollande has said he would block the EU’s pact for greater fiscal rigour if it failed to include measures for growth.

General Motors expects sales of its Cadillac models in China to match U.S. sales levels by 2015 or 2016, the company’s chief executive said yesterday. Speaking at a briefing at the start of the Beijing Autoshow, Dan Akerson said Cadillac sales in China grew 73 percent to over 30,000 last year, and were up 20 percent in the first quarter over the year-ago period. Last year, GM sold about 152,000 Cadillac cars in the United States. He added that the company plans to add one new Cadillac model in China each year through 2016. The XTS luxury sedan will be built in Shanghai starting in the fourth quarter of this year, Akerson said.

President Hu Jintao

China calls Asia to weather for ‘stability’ global storms: IMF after N. Korea missile failure President Hu praises leader and his “strong and prosperous” country

hinese President Hu Jintao yesterday told a visiting North Korean official the two countries should work towards “peace and stability” after a missile launch by Pyongyang, state media said. Speaking in a meeting with Kim Yong-Il, a top official of North Korea’s ruling Korean Workers’ Party, Mr Hu called for greater cooperation between the diplomatically isolated, militarised state and China, its traditional ally, China’s state-run Xinhua news agency reported.

“We will... strengthen strategic links and coordination on major international and regional issues for the purpose of safeguarding lasting peace and stability of the Korean peninsula,” President Hu was quoted as saying. His remarks follow the April 13 launch of what Pyongyang says was a communications satellite, but which the United States has called a disguised ballistic missile test. The U.S. said the rocket disintegrated minutes after launch. The United States and other critics

Fears over euro zone private sector Global slide in stocks and euro, oil drops below US$118 as Dutch reach impasse with austerity budget Luciana Lopez

lobal stocks and the euro slid on Monday as investors, rattled by a slump in the euro zone’s private sector and a Dutch budget crisis, rushed to perceived safe havens such as the dollar. With the Dutch government set to resign on Monday in an impasse over budget cuts and dismal purchasing managers’ index figures from the euro zone, economists worry that the region’s economy will stay in recession

until the second half of the year. U.S. stocks fell sharply soon after opening, with the Dow Jones industrial average, the Standard & Poor’s 500 Index and the Nasdaq Composite Index all dropping more than one percent. Wal-Mart Stores Inc. sank more than four percent after the New York Times reported officials at the retailer stymied an internal investigation into allegations of extensive bribery at its

have said the launch violated United Nations restrictions imposed on North Korea. The UN Security Council strongly condemned it and said it would tighten existing sanctions. The Xinhua report made no specific mention of the missile launch. However, China has previously voiced misgivings over its neighbour’s defiant act. Speaking before the launch, Mr Hu expressed “serious concern” about the plan during a meeting last month with US President Barack Obama.

Mexican subsidiary. Dutch and peripheral euro zone bonds sold off, driving Spanish yields back above six percent and taking the spread of Dutch bonds over German benchmarks to its highest in three years. European stocks fell as well, with the FTSE Eurofirst index of top European shares off 2.17 percent, after having posted its best week in a month. The euro fell against both the dollar and the yen, dropping 0.68 percent to US$1.3131 and 1.17 percent to 106.50 yen. “Our base case scenario is still for a gradual return to modestly positive growth in the second half of this year, but with the lingering debt crisis and the ongoing drag from fiscal policy, the risks are clearly skewed to a more protracted recession,” said Martin van Vliet of ING, speaking of the euro zone. Oil fell below US$118 a barrel on Monday, pressured by concern over the euro zone debt crisis, although supply worries due to tightening Western

In Monday’s meeting, Mr Hu praised North Korea’s new leader Kim Jong-Un, saying he would lead the country to new achievements. Kim Jong-Un took the reins of the poor and isolated state after the death in December of his father, longtime supreme leader Kim Jong-Il. President Hu’s remarks echo China’s top diplomat who met with the visiting North Korean official a day earlier. Dai Bingguo, who is China’s most senior official on foreign policy, on Sunday praised the leadership of North Korea and vowed closer ties despite the international outcry over the recent missile launch. Dai told Kim Yong-Il that Beijing would work with Pyongyang to “push friendly and cooperative China-North Korean relations to a new level”, a statement released by China’s foreign ministry said. “Under the leadership of Korean Workers’ Party First Secretary, comrade Kim Jong-Un, the North Korean Party, government and people will certainly make new achievements in the cause of building a strong and prosperous country,” Dai was quoted as saying. The U.S. State Department said Friday that it had raised with China allegations that Beijing supplied North Korea with technology for its missile program. The allegations were made last week by US Congressman Mike Turner, who cited an expert as saying a new missile launcher unveiled in a Pyongyang military parade was likely based on a Chinese design. North Korea has defiantly pledged to follow up the missile launch with further tests. A South Korean newspaper, quoting government sources in Seoul, reported on Saturday that North Korea may be preparing for its third nuclear test, possibly. AFP

Dutch asked to tighten belts in austerity budget

sanctions on Iran checked the slide. China, one of Iran’s top crude oil buyers, made sharp cuts in imports during the first quarter as companies haggled with Iran’s state-run oil company over prices and contract terms. Iran has been forced to deploy more than half its fleet of super tankers to store oil at anchorage in the Gulf as buyers of its crude cut back because of sanctions, two Iranbased shipping sources said. Reuters