Macau Business Daily, April 5, 2012 by Business Daily

Brought to you by

2012-4-5

2012-4-6

20˚ 24˚

19˚ 22˚

2012-4-7

18˚ 21˚

Page 3

Page 7

Sands turns up heat in Macau kitchen

Luxury cars join Air Macau’s fleet

Page 5

Paying better to retain more There is pressure all around to hike salaries after the government announced plans to raise civil service salaries continue to rise

ive days after it was mentioned that about MOP700 million in public funds would be injected into Air Macau, the flag carrier put two luxury cars on the road – each was worth at least MOP1.3 million. The aviation regulator says the capital injection was destined for upgrades to the airline’s ageing fleet, to pay for facilities and staff training. The Civil Aviation Authority says it will keep an eye on the “important issues” through the government’s representative in the company’s

board of directors. The carrier says it will “renew all of its fleet starting this year and until 2018” but no definite move has been announced so far. Meanwhile three planes are back in the city after Air China dropped one of two wet-lease contracts. Air Macau is again training captains, but under supervision, after the regulator granted it a six-month trial. More on page 2

Tender for new taxis may be pushed back Page 8

Taiwan’s exchanges to expand portfolios Taiwan’s two main exchanges say they plan to include more Chinarelated financial products through tie-ups with mainland bourses

ext week’s looming deadline for 200 new taxi licences could be extended, the Transport Bureau has admitted, after saying it had received complaints from companies struggling to meet strict government requirements on pollution. Taxi associations claim there are not enough vehicles in the market that meet the Euro 4 standards on emissions, and the new vehicles would have to be imported from Hong Kong. More on page 3

Europe’s banks face US$323 bln capital hole Page 9

Wen urges breakup of bank monopoly China’s premier Wen Jiabao says the country’s big banks monopoly needs to be broken to get money flowing to cash-starved private firms

urope’s top banks would have had to raise 242 billion euros (US$323 billion) or more to achieve minimum capital ratios if tougher rules that are coming in for the industry had been in force last year, Reuters reported. The European Banking Authority said yesterday that if the Basel III capital rules had been in force at the end of June then 27 of Europe’s top 48 banks would have had a minimum core Tier 1 capital adequacy ratio of less than seven percent of assets, which is the target level for banks to meet when new rules come into force. Basel III will be formally phased in from January 2013. Ten banks, or a fifth of those assessed, would have had core capital of less than the 4.5 percent. Banks would need to raise 242 billion euros in aggregate to reach seven percent, the EBA said.

Brought to you by

HANG SENG INDEX 20800 20760 20720 20680 20640 20600

Last working day: April 3

HSI - Movers Name

%Day

China Overseqas Land

5.32

China Resources Land

5.11

Want Want China

4.66

Hankg Lung Properties

4.00

Hengan International

3.75

Tingyi Cayman Islands

-1.34

Cathay Pacific

-1.14

China Resources Power

-0.71

CLP Hold

-0.37

MTR Corp

-0.36

Source: Bloomberg

2 |

business daily April 5, 2012

MACAU

Air Macau buys luxury cars before public cash injection The airline bought two luxury sedans last October, while discussing an injection of MOP700 million in public money By Vítor Quintã vitorquinta@macaudailybusiness.com

The Mercedes Benz S350L Blue Efficiency costs at least MOP1.3 million

ust days after a MOP700million (US$87.5 million) injection of public funds into Air Macau was mentioned, the carrier bought a luxury car worth at least MOP1.3 million. When Air Macau chairman Zheng Yan called a shareholders’ meeting for November 3 in October last year, the biggest topic on the agenda was whether airline would approve a MOP700 million capital injection from the government. The meeting was called on October 13 and the announcement was published in the Official Gazette five days later. On the same day, Air Macau registered a Mercedes Benz S350L Blue Efficiency with the licence plate MI16-89, according to the

Commercial and Movable Goods Registry. According to local car retail websites, the luxury sedan would cost at least MOP1.3 million to put on the road in Macau. This pricetag includes a tax of MOP440,000, says the Financial Services Bureau. Business Daily understands that Air Macau bought a second Mercedes Benz S350L Blue Efficiency around the same time. The airline declined to comment. The government’s injection was approved on November 3. Air Macau issued 420,420 new shares valued at MOP100 each, which could only be exclusively subscribed to by the government. In addition, authorities paid a premium of MOP

1,565 a share. The deal made the Macau government the carrier’s second biggest shareholder with 520,420 ordinary shares. Its stake jumped from 5 percent to 21.5 percent. The government leapfrogged Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau, which has a 14 percent stake.

Fleet upgrade November’s capital injection was Air Macau’s second in three years. In 2008, the carrier reported a negative net asset value of about MOP107.3 million, before losing MOP673 million in just two years. The company has posted profits of MOP482 million in the past two years.

Business Daily asked the aviation regulator if there was a mechanism to oversee Air Macau’s investments. “Being one of the shareholders of Air Macau, the Macau SAR Government has its representation in the airline through the appointment of a government representative in the Board of Directors who acts as an executive director,” the Civil Aviation Authority said. The representative is Maria Cristina Freitas Gomes da Silva, who is also on the staff of the aviation authority. She attends the meetings where “important issues are discussed and decided,” the regulator said. The regulator confirmed the MOP700-million investment would be used “to upgrade their [Air Macau’s]

aircraft fleet, improve their facilities and staff training … in accordance with the capital restructuring plan”. The capital injection will help the company “cater for the air transport needs in the Pearl River Delta Region” and ultimately boost Macau as a tourism destination, the authority added. Right after the deal was approved, the carrier said it would introduce new aircraft to its fleet as soon as possible, either “by acquisition or wet-lease” to “lower the expenditure of daily checks and overhaul maintenance of the ageing fleet”. Last month, Air Macau’s executive director Zhu Songyan told the press the company would “renew all of its fleet starting this year and until 2018”.

Staff promotion back on trial basis Seven candidates have started Air Macau captain’s training after last year’s safety mishap saw the airline banned from promoting staff

acau’s aviation regulator has allowed Air Macau to train seven captains in a six-month trial of its training programme. The trial started on February 22 and will be supervised by the Civil Aviation Authority of Macau. The aviation authority suspended the airline’s training programme after an Air Macau airliner “wet leased” to Air China dropped off the radar for about an hour on October 1 last year. Two crew

members from the Beijing to Hong Kong flight were immediately suspended. A subsequent inquiry found that the airline had not complied with its internal procedure for selecting captains, and promotions were put on hold. The aviation authority has since granted the airline a six-month trial, during which staff promotion is allowed but only under its supervision. “Individual captain promotion must be proposed to and accepted by AACM,”

the aviation regulator told Business Daily. Air Macau put forward seven candidates for training as captains. All seven have been approved by the authority and are currently training. At the end of trial on August 22, Air Macau must submit a report on the changes to its promotion procedures, the regulator said. The authority pledged to “ensure that the industry is operating in compliance with Macau’s aviation laws and regulations

The aviation regulator found last year that Air Macau failed to comply with its own procedures for promoting captains

as well as international standards”. The October incident was most likely the reason behind Air China’s decision to drop one of the two wetlease contracts it has with Air Macau. Three aircraft have already returned to the territory, the Portuguese-language newspaper Hoje Macau reported, and

a second contract expires in September. More than one-third of Air Macau’s 14 aircraft have been on a wet lease to Air China since late 2009, when the mainland carrier took over the then loss-making airline with an initial injection of MOP158.7 million. Air China is Air Macau’s biggest shareholder.

business daily April 5, 2012 | 3

MACAU

Tender for new taxis may be pushed back The Transport Bureau mulls extending deadline for new taxi permits after industry says it cannot meet strict emission requirements By Cláudia Aranda claudiaaranda@macaubusinessdaily.com

he government wants greener or less polluting cabs if it is to issue 200 new permits, but taxi companies say they cannot meet the environmental requirements any time soon. The Transport Bureau is yet to announce it but an extension to the April 12 deadline for applications is being considered. The government was unaware of the reality of the city’s vehicle market when laying down the specifications of the tender to grant 200 new taxi licences, Mário Ferreira Sin of the Vang Iek Radio Taxi Company told Business Daily. The requirements say that the vehicles used by the holders of licences must have a 2,000-cc engine and meet Euro 4 standards on gas emissions. European Union emission standards have a measurement scale of 1 to

6, moving from higher to lower emissions. Mr Ferreira said there were not enough diesel vehicles available in Macau that could meet the tougher standards. He said taxi owners would need to “bring them from Hong Kong”, where the vehicles are imported from

There were not enough diesel vehicles available in Macau that could meet the tougher standards

either Japan or Europe. With the Transport Bureau’s change to the requirements for the taxi fleet, there have been several requests from taxi associations for an extension of the deadline to submit applications. Bureau director Wong Wan has confirmed to TDM News that the government is sensitive to the difficulty in meeting the requirements of the public tender and is considering extending the April 12 deadline. An extension would enable interested parties to have more time for gathering information on vehicle characteristics, repair and maintenance. While a new deadline has not yet been announced, the Transport Bureau said more information would be made available at a press conference today.

The government wants greener or less polluting cabs if it is to issue 200 new permits

The missing law Five weeks after it was approved in the Legislative Assembly, the Copyright Law remains unpublished

Photo: Manuel Cardoso

by José I. Duarte jid@macaubusinessdaily.com

The Copyright Law is still on hold five weeks after being green lighted by legislators

he long-delayed Copyright Law, after surviving a 15-month ordeal at the hands of the lawmakers, is still on hold. Approved by the Legislative Assembly five weeks ago, the bill on an author’s rights and related matters is yet to be published in the Official Gazette. The assembly approved four new laws on February 28. It was a very productive meeting, as far as passing of new laws is concerned.

Two laws concerning video surveillance in public places and the career regime of private school teachers were published on March 19 – a three-week delay that was somewhat surprising. The Official Gazette is divided into two series and, prior to coming into force, all laws must be published in the first series, which is usually published on Mondays. According to the provisions on the matter, legal documents for publi-

cation can be received up to 5pm on the previous Thursday. Save exceptional circumstances, one would expect those laws to have been published on March 5. The third law approved on February 28, which changes the statute of the Commission against Corruption, was published the following week, on March 26. There was no explanation why this bill came even later. The fourth law, on author’s rights

and related rights, is yet to be published. It is more than five weeks since its approval. The law is also missing from the list of approved laws on the Legislative Assembly website. The other laws approved in the same session are on the list. After emerging from the first reading without any remarks from lawmakers, the Copyright Law came to a grinding halt in the assembly. The law was hotly debated for more than a year, forcing the government to rewrite the draft several times. The law regulates the local public antenna companies. They are accused of illegally providing cable services using television signals, in competition with the legal holders of the transmission rights. Macau Cable TV, the legal concessionaire, went to court asking for compensation from the government for its inability to protect the company’s rights. The enforcement of the law may affect a big section of the population and has been a contentious issue for almost four years. The subject touches on sensitive legal issues with relevant social and economic consequences. But the law has been brewing slowly for a long time. The only reason for the delay given by the government was the decision to match the new law with two 1996 international treaties: the Copyright Treaty and the Performances and Phonograms Treaty. The fact that that it remains unpublished raises concerns among the legal profession and other observers of the legislative process about the existence of a “drawer veto”, the power of a committee chairman to deny action on a bill. There has been no word from the Government Printing Bureau on when the law might reappear.

4 |

business daily April 5, 2012

macau

Govt pitches platform to resolve travel disputes The Macau Government Tourist Office wants the industry to create its own avenues for dispute resolution

he government and the tourism industry have been signing deals with overseas tourism bureaus and institutions as an alternative channel to solve travel disputes, says Macau Government Tourist Office director João Costa Antunes. Quoted by the Chinese-language Macau Daily News, Mr Antunes said travel disputes were inevitable as the city receives millions of visitors every year. To tackle the issue, the authority has signed agreements with tourism bureaus in different mainland cities – Macau’s biggest market for tourists - to improve cooperation. Mr Antunes has also encouraged the city’s tourism industry to forge relationships with overseas travel agencies. In the past few months a spate of clashes between tour guides and Chinese holidaymakers has required the intervention of the government, threatening the industry’s reputation. In August, the National Tourism Administration of China and the tourist office signed a pact aimed at eliminating dubious practices forced on mainland tour groups, including “forced shop-

Health technicians welcome new rules

edical professionals have welcomed the new regulations for senior health technicians in diagnosis and therapy that came into effect on Tuesday. Two bylaws published in the Official Gazette outline the discipline each technician is allowed to practice. The regulations cover staff in laboratory, radiology, rehabilitation, physiotherapy, speech

therapy, occupational therapy and nutrition. Macau Physical Therapists Association president Cheong Kin Chan told TDM News the new rules would improve the quality of the city’s health care. The new regulations would ensure everyone’s right to high-quality physical therapy, he said. While some institutions claim they offer physical massage services, the service provider was usually not a qualified health technician. The president of the Macau Radiological Technologists Association said the government’s new regulations would attract more people to work in the industry.

ping” and “zero-fee tour packages”. By law, the lowest cost for operating a mainland tour group to Hong Kong or Macau is about RMB300 (MOP380.8) a day. Mr Antunes said many disputes had arisen from mainland tourists not knowing their tour schedule. It was important to teach visitors to understand a tour’s agenda and the services and products offered. The report quoted Mr Antunes as saying it was easier to resolve conflicts if there was an established mechanism at industry level. In February, the Travel Industry Council of Macau called for rules that would make Macau and mainland agencies confirm package tour itineraries before tourists arrived here. The proposal included confirming relevant details so that travellers had clear, comprehensive details on the accommodation, dining and sight-seeing arrangements for all package tours before they signed up. The tourist office is also fighting against illegal accommodation establishments by recruiting more personnel. The authority hired 19 new inspectors and has begun a training programme. T.L.

business daily April 5, 2012 | 5

macau Macau’s unemployment rate fell to 2.1 percent in the three months to February

Paying better to retain more There is pressure all around to hike salaries after the government announced plans to raise civil service salaries By Sara Farr

here is mounting pressure on small and medium enterprises to increase wages by anywhere up to 5 and 6 percent following wage hikes in other industries. The government has already announced plans to increase salaries by 6.45 percent in the public sector and a recent report says money is the key to retaining human resources. There is talk of human resources shortages also increasing the cost of labour. Macau’s unemployment rate fell to 2.1 percent between for the three months from December to February. The rate of underemployment between last December and February stood at 0.8 percent. Underemployment seeks to describe those who either have parttime jobs when they wish to work full-time or those whose skills exceed the requirements of the jobs they have. The most recent figure is misleading because it excludes workers younger than 16 years. In 2009, when the minimum age for entering the labour market was 14, underemployment was 2 percent – the highest since mid-2006 – according to the Statistics and Census Service Bureau. Secretary for Economy and Finance Francis Tam Pak Yuen said last month it was necessary to ensure

adequate human resources if economic stability was to be maintained. Hinting at an increase in the labour force of 10 percent this year, Mr Tam said the figure took into account the needs of small and medium enterprises and the requirements of the gaming industry. That magnitude of increase means the government will need to allow the number of imported workers to increase by more than 30,000. Last year, the number of imported workers rose 18,215.

More dough A recent survey by recruitment agency hello-jobs. com found that 77 percent of those questioned got a pay rise of 5 to 10 percent last year, 9 percent between 10 and 15, and 11 percent of more than 15. University of Macau professor Jacky So says the sectors where workers could expect significant salary rise are gaming, construction, tourism as well as banking and finance. “Compared with other industries, these still maintain a reasonable growth rate and the shortage of labour and talent will be a problem for Macau,” he told Business Daily. Another survey by job agency macauHR found that 65 percent of re-

cent university graduates expect monthly starting salaries between MOP11,000 (US$1,375) and MOP15,000. More than half the employers were prepared to offer between MOP8,000 and MOP11,000 at entry level. However, given the shortage of skilled labour, 40 percent of companies thought MOP11,000 to MOP15,000 was satisfactory. The majority of new graduates are primarily looking for jobs within their fields. Career development opportunities are also a consideration, with 41 percent ranking this more important, 19 percent said they sought an attractive salary

and 28 percent wanted employee benefits. Official statistics put last year’s job turnover at 12 percent. With the labour force expected to grow, Mr So says turnover of fresh graduates is likely to be high within their first three years out of college. However, the turnover for senior employees will be lower. Alex Lu from macauHR says fresh graduates should stick to a job that allows a “good career path” and “view salary as a secondary consideration”. “Just getting into a corporate world which offers more learning and growth opportunities can help fresh grads build more

‘Imposing a restriction on the growth of the gaming industry will only trigger problems for other sectors’

Sectors likely to feel the most pressure from the hike in salaries are the real estate and international trade

Albano Martins

Jacky So

meaningful careers,” Mr Lu says.

Doing more The government has said repeatedly that it will address sustained cries for giving preference to residents. “Imposing a restriction on the growth of the gaming industry will only trigger problems for other sectors,” says economist Albano Martins. He adds that the gaming industry has the resources to lure employees from small- and medium-sized enterprises. “If the government were to allow every sector to equally import workers, this wouldn’t happen,” he said. The sectors likely to feel the most pressure from the hike in salaries are the real estate and international trade, according to Mr So. He says exports are likely to drop amid problems in the economies of Europe, the United States and Japan. If there is a decrease in exports, “an increase in salaries will be less [than in other sectors] or unlikely.” But there is more that can still be done when it comes to increasing wages. Mr So argues that salaries here are “way below” international standards and must be increased to help the city maintain growth and competitiveness.

6 |

business daily April 5, 2012

MACAU Financial Monitor Brought to you by

Monetary Authority diversifies portfolio The Monetary Authority of Macau is seeking to diversify its asset portfolio by including renminbi-denominated assets. The authority has signed an agreement with the People’s Bank of China, allowing it to buy up to 10 billion renminbi (US$1.59 billion) in bonds in the mainland interbank bonds market. The details of how the facility will work are yet to be decided. Net Foreign Assets came to about MOP300 billion (US$37.5 billion) at the end of January.

Melco ranks first in stock returns Melco Crown shareholders enjoyed the highest absolute return of the companies tracked by Bloomberg over the past year

Pataca Effective Exchange Rate index Base period - 1999-2001 300 250 200 150 100 50 Jan 2005

Jan 2012

Pataca depreciates slightly in February The nominal effective exchange rate index fell slightly in February. It stood at 88.08, down by 0.52 from the same month last year. The index measures the currency exchange rate against the currencies of the city’s main trading partners. A decreasing index indicates reduced purchasing power, making imports more expensive.

Pataca Effective Exchange Rate index Base period - 1999-2001 100

Jan 2005

Feb 2005

Return on Melco shares over the past year calculated at 78 percent

aming operator Melco Crown Entertainment Ltd. had the highest absolute return of the companies tracked by Bloomberg’s Riskless Return Ranking. The survey released yesterday calculated the return on Melco shares over the past year at 78 percent. Melco Crown, co-owned by businessman Lawrence Ho Yau Lung and Australian tycoon James Packer, was ranked third overall by the survey, which adjusts returns again risk. Yum! Brands Inc. topped the ranking and Mead Johnson Nutrition Co, an American maker of infant formula, took second place. The survey ranks the best returns adjusted for risk among 114 companies that are either based in the mainland or earn at least 25 percent of their revenue from there. While Melco Crown had the best re-

turn of the companies in the survey, it also scored highly for volatility. With an indexed volatility level of 71, it had a risk-adjusted return of 1.1 percent, lagging behind Yum! with 1.63 percent and Mead Johnson’s 1.58 percent. Mead Johnson had the third-lowest volatility level of 27 while Yum!

78 % return on Melco shares over the past year

had the second-lowest, just 25, because they are more diversified and viewed as less susceptible to changes in the economy and interest rates. “Investors need to be careful taking stocks that have already performed very well,” said Christopher Palmer, who helps manage US$2.5 billion (MOP20 billion) of assets as director of global emerging markets for Henderson Global Investors Ltd. in London. “They are managing their growth very well, but that doesn’t necessarily mean that will be the case going forward,” he added. The People’s Bank of China is moving its focus from containing inflation back to bolstering growth — banks’ reserve ratios have been cut twice since November — after the nation’s economy expanded the least for 10 quarters in the last three months of last year.

Weather Beijing 17/3o C Changchun 1/-5 o C

Harbin 3/-6 o C

Xian 18/5 o C Shanghai 24/12 o C Chengdu 25/15 o C Kunming 4/12 o C Haikou 27/21 o C Sanya 25/31 o C

Guangzhou 25/19 o C

MACAU (2-8 April) Day

Temperature

Humidity

04/02

19/24 o C

60/90 %

04/03

18/24 o C

55/95 %

04/04

17/23o C

55/90 %

04/05

19/23 o C

70/90 %

04/06

18/23 o C

75/95 %

04/07

17/22 o C

60/85 %

Shenzhen 24/19 o C

ASIA (today)

Hong Kong 26/21o C

Manila

Macau 24/20 o C

TOKYO

Jacarta

26/32 C

25/30 o C

8/14 o C

25/30 o C

Bangkok

SEOUL

K. lumpur

27/35 C o

SINGAPORE

2/11o C

24/32 o C

taipei

18/25 o C

business daily April 5, 2012 | 7

MACAU Conrad Macao at Sands Cotai Central

Sands turns up heat in Macau kitchen

Michelin-starred chef hired by new Cotai gaming resort By Associate Editor

ong Man - formerly of Michelin-starred restaurant Tim’s Kitchen in Hong Kong - is to be an executive chef at Macau’s latest casino resort Sands Cotai Central, which opens on April 11. Fine dining is one of the competitive battlegrounds for Macau’s casino operators as they try to attract high-spending gamblers and shoppers from the Chinese mainland and Hong Kong. All four of Macau’s currently Michelin-starred restaurants are inside either casino hotels or casino resorts. Sands Cotai Central will add nearly

6,000 luxury rooms to Macau’s hotel accommodation – increasing by around one quarter the city’s current capacity. At the end of January – the latest figures available there were 22,338 hotel rooms of all grades, including 14,187 five-star rooms, according to Macau’s Statistics and Census Bureau. Conrad Macao will offer 636 rooms including 206 suites, 48 meeting rooms, three junior ballrooms and a grand ballroom accommodating up to 4,000 people. Sands Cotai Central has two other hotels - Holiday Inn Macao Cotai Central, with 1,224 rooms including 65 suites.

Sheraton Macao Hotel is described by Sands China as Macau’s largest hotel and has 4,000 rooms and more than 20,000 square metres of function space. Sands China says the Dynasty 8 restaurant at Conrad Macao that Mr Wong will lead, represents the development of Chinese cuisine over 2,000 years inspired by eight Chinese dynasties. Mr Wong’s former employer, Tim’s Kitchen, offers traditional Cantonese cuisine done in a fine dining style. Yau-Tim Lai founded it in 2000 when he retired after 33 years as a chef for Hong Kong’s

Hang Seng Bank. The restaurant is popular with local celebrities including Hong Kong actor Andy Lau. In 2007 Chef Lai opened a branch of Tim’s Kitchen at Hotel Lisboa in Macau. The business also has a branch in Shanghai. Macau currently has four restaurants with Michelin stars. The Michelin Guide Hong Kong and Macau 2012 lists them as: French chef Joël Robuchon’s three-starred Robuchon Au Dôme at SJM’s Grand Lisboa, and the one-starred Golden Flower  at Wynn Macau; Lei Garden at Sands China’s The Venetian Macao and Tim’s Kitchen also at Grand Lisboa.

Gaming boss Packer raises stakes Australian casino to cash in on Chinese players

By Associate Editor

ames Packer, co-chairman of Macau gaming operator Melco Crown Entertainment Ltd., has raised the stakes with his bid to build a new A$1-billion (US$1.03 billion) casino in Sydney. Doubts have been voiced before about Mr Packer’s long-term commitment to Macau’s gaming market but the Sydney plan is being portrayed in Australia as complementary to his existing investments Down Under — including in Melbourne and Perth — and not as an alternative to his Macau joint venture with Hong Konglisted Melco. Some mainland high-rollers at Melco’s casinos, Altira Macau and City of Dreams, also visit Mr Packer’s Crown casinos in Australia. If he develops a property in Sydney, it will boost his ability to sell another destination to VIP players who are already familiar with Macau. Mr Packer’s Australian gaming company, Crown Ltd., plans to build a 350-room hotel, spa,

casino and entertainment complex at Barangaroo Central, an urban renewal site in the heart of the city. Standing in his way is Australian rival Echo Entertainment, which runs The Star Sydney Hotels & Casino, in the centre of Sydney. The harbour-side property completed an A$800-million refurbishment last year and has also chased Macau’s VIP gamblers. Echo has a deal to operate the only legal casino in New South Wales until 2019. Mr Packer is lobbying the government of Australia’s most populous state to end The Star’s stranglehold on casino gaming. Echo was spun off last year from Tabcorp Holdings, an Australian institution best known for running racetrack betting and slot machine clubs. Mr Packer has also been linked with a possible takeover of Echo. Crown spent A$250 million in February to raise its stake in Echo from 4.9 percent to 10 percent. The Australian newspaper quoted Mr Packer as saying Crown would increase its ownership in Echo

to 19.9 percent, pending approval from gaming regulators in New South Wales and Queensland, where Echo also has casinos. The leader of New South Wales, premier Barry O’Farrell, is said to be supportive of Crown’s plan to open a second Sydney casino.

James Packer

8 |

business daily April 5, 2012

GREATER CHINA

InBrief Beijing likely to cut rates China is “almost guaranteed” to either cut interest rates or reserve requirement ratios in April, Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, said in a Bloomberg television interview. China could lower rates or reserve ratios as soon as today, he said. “What China often does is, they move at the end of the holiday period; today (yesterday) is the end of the long weekend, it’s quite possible they will announce the decision to make sure when the weak first quarter GDP data comes, the market won’t panic,” said Kowalczyk.

Taiwan stock exchange to sign MoU with Shanghai bourse

Taiwan’s exchanges to expand portfolios Two main stock exchanges to introduce more China-related financial products By Lee Chyen Yee and Jeanny Kao

aiwan’s two main exchanges said they plan to expand their portfolios with more China-related financial products through tie-ups with mainland bourses amid warming cross-strait ties. Taiwan Stock Exchange Chairman Schive Chi said that the bourse planned to sign a memorandum of understanding with the Shanghai stock exchange as early as this year. The over-the-counter Gre Tai Securities Market, the main exchange for Taiwan’s bond trades, plans to offer renminbidenominated bonds to emulate the success of nearby Hong Kong, Chairman Gorden Chen said. “Our preparations are almost complete. We are just one step away from signing a deal with Shanghai,” Schive said at the 2012 Boao Forum for Asia on the

Chinese island of Hainan. “After we sign the deal, both exchanges will be able to exchange information, which will allow people to come up with new indexes and new products, such as ETFs (exchange traded funds),” said Schive, 64, who assumed his post in 2008. ETFs are traded like shares and used to track indexes, either by holding underlying assets or by synthetically replicating returns through derivatives. Hong Kong and Taiwan’s stock regulators agreed in May 2009 on ETF cross-listings between exchanges. Schive said once the Taiwan exchange reached an agreement with Shanghai, a similar alliance with the Shenzhen stock exchange could be next. Taiwan’s exchange, with a market capitalisation of US$636 billion

and 790 listed companies as of January, aims to have 38 initial public offerings this year, Schive added, roughly level with 2011. China sees self-ruled, democratic Taiwan as a renegade province that has to be unified eventually, although a free trade agreementlike deal was clinched after Taiwan President Ma Ying-jeou was first elected in 2008. Taiwan hopes to become a major offshore renminbi market following Hong Kong’s success in offering so-called “dim sum” renminbidenominated bonds. “There are already many Taiwanese businesses in China and they need more funds to expand and restructure their operations,” Gre Tai’s Chen said. “We have done all the preparations and once regulations are approved, we plan to roll out related products.” Reuters

Taipei likely to impose capital-gains tax

aiwan is likely to impose a capital-gains tax on share transactions to bolster revenues, causing equities to decline, said Schive Chi, the chairman of the island’s stock exchange. “The market will certainly react to this but I think that is because how the capital gains are going to be taxed is still not clear,” Schive said yesterday in an interview in Boao, China. “That will cause some kind of concern for uncertainty.” The benchmark Taiex index retreated 3.4 percent the past four days since the Economic Daily reported the government was evaluating the tax, making the benchmark gauge the second-worst performer in Asia in that period. During elections earlier this year, President Ma Ying-jeou and the opposition advocated a

Schive Chi

capital-gains tax to help narrow the wealth gap. Taiwan has exempted securities transactions from capital- gains taxes since Jan. 1, 1990, according

to the stock exchange’s website. The tax was set aside after a year because of widespread evasion and the government has contemplated reintroducing it since at least 1993. The Ministry of Finance aims to reach a decision in a month, Finance Minister Christina Liu said in a reply to questions from lawmakers at a meeting in parliament on April 2. The tax overhaul panel will continue discussing whether to reinstate the tax at its meeting on April 8, a Finance Ministry spokesman who declined to be identified, said yesterday. There’s a “99 percent” chance Taiwan will reimpose the duty, Schive said. Taiwan needs it “for fairness and additional tax revenue. It’s just as simple as that,” he said. Bloomberg

Hong Kong flat sales up in March Hong Kong’s Land Registry announced that it recorded 14,306 sale and purchase agreements for all building units in March, up 6 percent year-onyear. The total consideration for sale and purchase agreements in March was HK$74.8 billion, 7.9 percent more than in March 2010. According to the information, 11,358 of these agreements were for residential units, fetching HK$59 billion.

Lawson to buy 3 store operators in mainland Lawson Inc., Japan’s second-largest convenience-store chain, is in talks to buy at least three operators in China in its first overseas acquisition as the company looks to faster growing markets to increase sales. “There will be a huge opportunity to acquire businesses in China,” Chief Executive Officer Takeshi Niinami said in an interview in Tokyo yesterday, declining to name any targets. “We are negotiating with more than three or four parties.” Niinami is in discussions with an operator of an 800-store chain and another with 150 in China, to help meet his target of opening 10,000 outlets in the country by 2020.

Imperial Chinese bowl fetches US$27 million An extremely rare Chinese porcelain bowl fetched nearly US$27 million smashing pre-sale estimates by about three times - at a hotly anticipated Sotheby’s auction in Hong Kong yesterday. The modest-looking imperial ceramic bowl that was made around 900 years ago had been expected to fetch up to HK$80 million, but it was snapped up by an unidentified telephone bidder for HK$208 million. The price sets a new world record for a piece of ceramic from the Northern Song Dynasty (960-1127), according to Sotheby’s.

business daily April 5, 2012 | 9

GREATER CHINA

Wen urges breakup of bank monopoly Break-up may unlock more credit to private sector

hina’s premier called the country’s big banks a monopoly that needed to be broken to get money flowing to cash-starved private firms, as the nation’s economy appears to have skidded to its slowest growth in three years. China’s state banks make money “far too easily”, state media quoted Premier Wen Jiabao as saying, in comments that reignited debate over the role of banking in cushioning the descent of the high-flying economy, the world’s second largest. “Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital,” China National Radio quoted Wen as telling local businesses at a roundtable discussion. “That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have

to break up their monopoly,” the radio news service reported Wen as saying on Tuesday. Wen’s comments came as a senior economic official, citing a “related research agency”, revealed the economy might have grown 8.4 percent in the first quarter from a year earlier, the slowest growth since the second quarter of 2009, when China began to accelerate out of the global financial crisis. The official GDP figures are due to be released next week. As the economy has slowed, the role of state banks in rationing credit has come more into focus. They prefer to lend to other state firms, starving smaller entrepreneurial companies that must then borrow from informal lenders at high rates. Experts said the need for further steps was apparent, though it remained to be seen whether the views of Wen, due to step down next year in China’s biggest leadership change in a decade, would translate into action under the new

leadership. “The basic need for drastic financial reforms is clear,” said William Overholt, senior research fellow at the Kennedy School of Government at Harvard University and author of “Asia, America, and the Transformation of Geopolitics.” “This is a time in China’s economic history where future growth, and future jobs, depend heavily on small and medium enterprises and the private sector.” The Big Four banks, including Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China and China Construction Bank , have long maintained a stranglehold on virtually every aspect of the financial services industry. Reuters

Capital markets opening ‘positive’:

China more than doubled the amount foreign investors can pump into its capital markets

hina accelerated the opening of its capital markets by more than doubling the amount foreigners can invest in stocks, bonds and bank deposits as the government shifts its growth model to domestic consumption from exports. The China Securities Regulatory Commission increased the quotas for qualified foreign institutional investors to US$80 billion from US$30 billion, according to a statement on its website. Offshore investors will also be allowed to pump an extra 50 billion renminbi (US$7.95 billion) of local currency into the country, up from 20 billion renminbi.

China, the world’s second-biggest economy, has pledged this year to free up control of its currency and liberalise interest rates as the government deepens reforms to revive growth and offset slowing exports and a cooling housing market. China needs to rely more on markets and the private sector as its export- oriented model isn’t sustainable, World Bank President Robert Zoellick said in February. “More action on opening up their markets to outside investment is definitely a positive,” Jeff Papp, a senior analyst in Lisle, Illinois at Oberweis Asset Management Inc. said in a phone interview. “It’s not a huge amount. They’re taking

a small-steps approach to see how markets will react with more participants.” The regulator had granted a total of $24.6 billion in quotas to 129 overseas companies since the programme first started in 2003 through the end of March. About 75 percent of assets were invested in Chinese stocks, with the rest in bonds and deposits, according to the statement. The CSRC accelerated the programme last month, granting a record US$2.1 billion of quotas to 15 companies. It was more than the US$1.9 billion in 2011 as a whole.

“The QFII programme enhances our experience of monitoring and regulating cross-board investment and capital flows,” the CSRC said in the statement. “It is a positive experiment to further open up the market and achieve the renminbi convertibility under the capital account.” Premier Wen Jiabao is seeking to attract international investment as economic growth cools. “Wen is signalling that China can’t afford to let investment slow down too much,” said Shen Jianguang, a Hong Kong-based economist for Mizuho Securities Asia Ltd.

10 |

business daily April 5, 2012

ASIA

InBrief

Singapore cuts investment residency Singapore will end a programme that allows wealthy individuals to gain permanent residence quicker by putting money in the island, after an influx of foreigners in recent years spurred property prices and fuelled voter anger. The Monetary Authority of Singapore will scrap its so-called Financial Investor Scheme, the central bank said. The program was aimed at individuals who hold at least S$10 million (MOP63.5 million) of assets in Singapore for five years.

Investors concerned that Tokyo’s sharp equities rally could be grinding to a halt

Nikkei sheds 2.3 pct to 4-week closing low By Sophie Knight and Mari Saito

J Indonesia weighs mine export tax Indonesia is considering a hefty tax on mining exports to stop miners from overexploiting resources to beat a 2014 ban on shipments of some unprocessed metals and lower grade coal, an official said yesterday, but the plan may backfire if foreign buyers turn elsewhere. The proposal to impose a 25 percent export tax on coal and base metals - rising to 50 percent in 2013 - was greeted with a mix of confusion and scepticism.

apan’s Nikkei share average shed 2.3 percent yesterday in its worst performance in five months, after stop-losses were triggered on index futures, raising concern that Tokyo’s sharp equities rally so far this year could be grinding to a halt. The Nikkei closed down 230.40 points at 9,819.99, below 10,000 for the first time in three weeks that saw the benchmark hit the highest level since the massive earthquake and tsunami in March last year. Sliding more than 100 points in five minutes during mid-morning trade on the triggering of stop-losses, the Nikkei was also hurt as investors dumped widely held Fast Retailing Co Ltd, which reported disappointing sales figures for March. Market participants worried that the day’s move below 10,000, a psychologically key level, marked a negative shift in sentiment for the index, which has gained 17.2 percent for the year to date, its best first-quarter performance in 24 years. “There is quite aggressive selling as 10,000 represented a trigger level. Also, part of the reason is Fast Retailing’s drop, which is breaking down key support levels,” said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo. Fast Retailing, the operator of Uniqlo casual clothing

India, the world’s secondbiggest cotton producer, will buy 2.5 million bales of fibre from farmers to build a reserve for the domestic textiles industry. Cotton Corp. of India, a state-owned company, will purchase one million bales each month for the next two months at market prices, the textiles ministry said in an e-mailed statement yesterday. The company will buy cotton from the market until the new crop season begins in October, it said.

Reuters

San Miguel buys 49 pct in Philippine Airlines S

India to build cotton reserves

chain and Asia’s largest apparel retailer, sagged 5.7 percent as the heaviest-weighted loser after reporting an underwhelming 5.1 percent year-on-year increase in same-store sales last month, well below market expectations for a double-digit rise. Investrust Chief Executive Hiroyuki Fukunaga said the market was still going through some necessary corrections. “This looks likely to continue until at least the middle of the month, when there’ll be an options special quotation,” he said. Yesterday’s fall saw the Nikkei close below its 25-day moving average and the 61.8 percent retracement of its fall from February to November last year near 9,833. Bucking the trend was Enplas Corp, the biggest percentage gainer with an increase of 9.8 percent after Mizuho Securities updated its rating to “buy” from “neutral”. Also fighting the current was Asahi Group Holdings Ltd, which finished 2 percent up as the top weighted gainer on the main board after it was outbid by U.S. Molson Coors Brewing Co for East European brewer StarBev. Trading was moderate, with 1.48 billion shares changing hands on the Nikkei. An unusually thin morning exaggerated the impact of a large futures sell order, a senior dealer at a foreign brokerage said.

an Miguel Corp., the Philippines’ largest company by revenue, agreed to buy 49 percent stakes in tycoon Lucio Tan’s airlines for US$500 million as it expands away from food and drink to meet a target of doubling sales. San Miguel will get the stakes in Philippine Airlines Inc., the nation’s largest airline, and low-cost carrier Air Philippines Corp., President Ramon Ang said in a mobile phone text message yesterday. The agreements were signed on Tuesday, the Manila-based company said in a statement. Recently there were question marks over the Philippines Airlines and Cebu Pacific safety, after a report by the US Federal Aviation Authority on the failure of the Civil Aviation Authority of the Philippines to meet international safety standards. As result, the Civil Aviation Authority of Macau demanded both airlines provide information on their safety inspections, a procedure it called normal. The purchase would support Ang’s goal of increasing sales to 1 trillion pesos (US$23 billion) by 2016 through expansion beyond its main food and brewing business into industries such as oil, power and infrastructure. It will help unprofitable Philippine Air raise funds to

add planes and routes amid market share losses to budget airline Cebu Air Inc. and increased competition from AirAsia Bhd. “It might take time to recover the investment, but given the outlook on tourism and infrastructure, PAL should eventually contribute to San Miguel’s bottomline,” Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila, said before the announcement. “San Miguel wants to be an integrator by putting up a complete infrastructure offering.” Trustmark Holdings Corp. and Zuma Holdings & Management Corp., the holding companies of PAL and Air Philippines, will issue new shares to a wholly owned unit of San Miguel, according to the statement. Tan controls Trustmark and Zuma. PAL had direct and indirect shareholdings of 81.57 percent and 3.1 percent respectively in Philippine Air, according to a filing from the holding company in February. Tan controls about 98 percent of PAL through Trustmark, according to data compiled by Bloomberg. San Miguel’s investment “will help the flag carrier in its refleeting programme and make the airline more viable and competitive,” Philippine Airlines President Jaime Bautista said in an e-mailed statement. Agencies

business daily April 5, 2012 | 11

ASIA

KOSPI suffers worst drop in three months By Joonhee Yu

eoul shares yesterday fell from an eight-month closing high in the previous session, tracking declines in global peers after minutes from the U.S. Fed’s March meeting suggested it was shying away from more stimulus measures. The Korea Composite Stock Price Index (KOSPI) dropped 1.5 percent to close at 2,018.61 points, its worst daily percentage fall since declining 3.4 percent on December 19, the day of Kim Jong-il’s death. “We are seeing a clear divide in performance between shares underpinned by solid fundamentals and those that have been buoyed by liquidity factors alone, with focus now set firmly on first quarter earnings,” said Kyobo Securities analyst Kim Hyoung-ryoul. The Federal Reserve minutes showed policymakers, while noting signs of slightly stronger growth, remained focused on a still elevated jobless rate. It also suggested the appetite for further

quantitative easing has waned significantly in light of the improving U.S. economy. Losses were amplified in late trade on institutional selling, with a net 406.3 billion won (US$362.2 million) of shares sold during the day, the most in more than two months. Declining sectors were led by liquidity-dependent, high-beta stocks such as builders and shipyards. Samsung Engineering Co tumbled 5.3 percent, while Daewoo Shipbuilding & Marine Engineering slid 4.9 percent. Volatile brokerage issues also added weight, Woori Investment & Securities fell 3.8 percent, while Daewoo Securities shed 4.4 percent. Tech-heavyweight Samsung Electronics Co Ltd touched yet another all-time high earlier in the session after a string of similar feats in recent sessions, but reversed gains to close 1.1 percent lower. Samsung Electronics will release its preliminary earnings guidance for January-March on Friday, with

Asian currencies fall

most in two weeks

David Yong and Yumi Teso

sian currencies fell the most in two weeks after minutes from the Federal Reserve’s March meeting showed policy makers are less inclined to stimulate the U.S. economy further due to an improving job market. South Korea’s won snapped a threeday rally and Malaysia’s ringgit fell the most in two weeks as the MSCI Asia-Pacific Index of stocks headed for its biggest loss since December 19. A transcript of the March 13 Fed meeting released on Tuesday in Washington showed it was holding off from increasing monetary accommodation unless the economic recovery falters, meaning an increase in the amount of funds available to be invested in emerging markets probably won’t happen. “The Fed statement dragged the stocks down and therefore, the regional currencies are weakening,” said Hideki Hayashi, an economist at the Japan Center for Economic Research in Tokyo. India’s rupee slumped 1 percent to 51.2262 per dollar as of 2:52 p.m. in Mumbai, according to data compiled by Bloomberg. The won declined 0.7 percent to 1,129.41 at the close in Seoul, Thailand’s baht weakened 0.6 percent to 31 and the

ringgit lost 0.5 percent to 3.0665. Financial markets in China, Hong Kong and Taiwan were closed for public holidays. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, fell 0.19 percent, the most since March 20, after reaching a three-week high yesterday. Its 60-day historical volatility rose to 3.35 percent from 3.33 percent yesterday. “The U.S. economy is currently looking up, which could decrease inflows into emerging markets,” said Ravi Ranjit, chief manager at Federal Bank Ltd. in Mumbai. Korea’s currency had the biggest slide since February 16 on concern foreign investors will repatriate payments to shareholders made by local companies. KB Financial Group Inc., owner of the nation’s largest bank, is scheduled to pay a dividend on April 6. “The won is weakening as expectations for monetary stimulus is damped, and also on speculation overseas investors are repatriating dividends,” said Lee Jin Ill, a Seoul-based currency dealer at Hana Bank. Bloomberg

The Korea Composite Stock Index dropped 1.5 pct to close at 2,018.61 points

some analysts forecasting a profit of up to 5.5 trillion won (US$4.9 billion), which would represent a quarterly record. Automakers snapped a two-day rally after a strong start yesterday, tracking broad falls in the index to reverse gains. But they were seen supported by healthy sales in the recovering U.S. car market, as Hyundai Motor Co edged 0.6 percent

lower after touching an all-time high during morning trade, while KIA Motors Corp ended flat. Over 600 million shares exchanged hands on the main bourse, while losing shares outnumbered winners 693 to 153. The benchmark KOSPI 200 index fell 1.5 percent and the junior KOSDAQ index tumbled 2.5 percent. Reuters

12 |

business daily April 5, 2012

MARKETS Hang Seng Index - Last 6 months

Hang SENG INDEX

22000

Price

Day %

VOLUME

(H) 52 W

(L) 52 W

28.45

1.246

39433552

29.9

19.84

ALUMINUM CORP OF CHINA LTD-H

3.74

1.081

13196000

7.8

3.2

BANK OF CHINA LTD-H

3.13

1.623

348028583

4.5

2.2

3328

BANK OF COMMUNICATIONS CO-H

5.87

0.514

51585214

7.845

4.15

BANK OF EAST ASIA

29.2

-1.518

2564084

34.45

21.85

1880

BELLE INTERNATIONAL HOLDINGS

13.94

-0.429

8855820

17.54

11.38

2388

BOC HONG KONG HOLDINGS LTD

21.45

-0.694

14586947

25.6

14.24

293

CATHAY PACIFIC AIRWAYS

14.38

-2.575

17829313

20.15

11.8

CHEUNG KONG HOLDINGS LTD

100.3

-2.998

13813594

131.8

79.1

1898

CHINA COAL ENERGY CO-H

8.71

-0.229

27535221

11.66

6.59

939

CHINA CONSTRUCTION BANK-H

0.503

218484625

7.58

4.41

2628

CHINA LIFE INSURANCE CO-H

20.15

0.249

18836916

30.6

17.04

144

CHINA MERCHANTS HLDGS INTL

0.971

3975363

37.6

941

CHINA MOBILE LTD

85.45

1.545

23677116

87.5

68.05

688

CHINA OVERSEAS LAND & INVEST

14.76

0.682

35346021

17.86

386

CHINA PETROLEUM & CHEMICAL-H

8.46

68260317

291

CHINA RESOURCES ENTERPRISE

27.1

-0.184

9473298

1109

CHINA RESOURCES LAND LTD

13.42

0.299

17270900

15.92

836

CHINA RESOURCES POWER HOLDIN

14.38

2.276

4481125

16.2

1088

CHINA SHENHUA ENERGY CO-H

32.75

0.153

20483423

40.2

762

CHINA UNICOM HONG KONG LTD

13.16

1.075

21989036

267

CITIC PACIFIC LTD

13.08

-0.153

CLP HOLDINGS LTD

-0.298

883

CNOOC LTD

15.96

0.251

1199

COSCO PACIFIC LTD

11.72

330

ESPRIT HOLDINGS LTD

15.6

101

HANG LUNG PROPERTIES LTD

28.45

HANG SENG BANK LTD

HENDERSON LAND DEVELOPMENT

1044

HENGAN INTL GROUP CO LTD

78.5

2.951

HONG KONG & CHINA GAS

19.9

-0.748

CODE

Name

1299

AIA GROUP LTD

2600 3988

20800 19600 18400 17200 16000 (L) 52 W

VOLUME

(H) 52 W

-1.136

4310865

186.5

-1.083

16808315

85.35

-1.834

16225337

94.7

53.6

5.01

1.623

326805173

6.75

3.46

17.82

-2.835

35615169

20.9

10.82

3996912

29.2

22.45

58252527

13.226

6.13

CODE

Name

388

HONG KONG EXCHANGES & CLEAR

HSBC HOLDINGS PLC

9.99

HUTCHISON WHAMPOA LTD

9.67

6.22

1398

IND & COMM BK OF CHINA-H

35.5

494

LI & FUNG LTD

7.28

MTR CORP

27.8

1.091

10.82

NEW WORLD DEVELOPMENT

9.33

-2.406

27.1

857

PETROCHINA CO LTD-H

10.98

2.235

94596143

12.5

8.59

17.68

12.54

2318

PING AN INSURANCE GROUP CO-H

58.7

0.514

8094321

87.9

37.35

3632208

24.6

10.26

POWER ASSETS HOLDINGS LTD

3407696

75.2

SINO LAND CO

75314692

21.3

11.2

SUN HUNG KAI PROPERTIES

9668609

17.16

7.52

SWIRE PACIFIC LTD-A

-0.763

9442206

36.75

7.55

700

TENCENT HOLDINGS LTD

216.6

0.53

14075298

36.25

20.85

322

TINGYI (CAYMAN ISLN) HLDG CO

22.45

103.2

-1.244

1886351

127

84.4

151

WANT WANT CHINA HOLDINGS LTD

42.85

-2.503

17343181

56.95

33.2

WHARF HOLDINGS LTD

3375201

78.5

56.05

12441917

20.65

16.68

Price 20555.58

(L) 16170.35

Price

Day %

130.5 68.5 77.6

99.15

2344201

64.8

51.1

12.4

-3.577

29072157

14.16

8.482

96.5

-13.141

120526573

129

85.45

87.05

-1.971

2140338

103.896

69.321

0.278

4397562

230.8

139.8

3.695

16998786

17.84

8.68

2.118

24295428

9.07

5.99

42.2

-2.877

10494104

33.15

(H) 24468.641

Shanghai Shenzhen CSI 300 Name

Price

Day %

VOLUME

AGRICULTURAL BANK OF CHINA-A

2.68

1.132

96216187

AIR CHINA LTD-A

5.88

0.685

7988064

ALUMINUM CORP OF CHINA LTD-A

6.57

0.922

12333571

ANGANG STEEL CO LTD-A

4.28

0.234

6686214

Name

Price

Day %

VOLUME

CHINA UNITED NETWORK-A

4.23

0.714

101526501

CHINA VANKE CO LTD -A

8.28

1.099

43236556

CHINA YANGTZE POWER CO LTD-A CITIC SECURITIES CO-A

6.52

0.617

9355050

11.59

2.657

73157155

Name

Price

Day %

NINGBO PORT CO LTD-A

2.46

-0.405

7486111

PANGANG GROUP STEEL VANADI-A

6.71

-1.468

48139788

PETROCHINA CO LTD-A

VOLUME

9.69

-0.206

12614723

PING AN INSURANCE GROUP CO-A

36.58

0.938

19483204 49255781

15.78

1.675

26566333

CSR CORP LTD -A

4.44

0.452

16105991

POLY REAL ESTATE GROUP CO -A

11.29

4.537

BANK OF BEIJING CO LTD -A

9.82

1.656

13513149

DAQIN RAILWAY CO LTD -A

7.45

1.915

52067190

QINGHAI SALT LAKE INDUSTRY-A

31.9

-2.267

8929999

BANK OF CHINA LTD-A

2.98

2.055

35279766

DATANG INTL POWER GEN CO-A

5.03

-1.373

4112584

SAIC MOTOR CORPORATION LTD-A

14.83

4.216

37503806 19369027

ANHUI CONCH CEMENT CO LTD-A

BANK OF COMMUNICATIONS CO-A

4.71

1.29

38629220

DONGFANG ELECTRIC CORP LTD-A

21.65

-0.046

8164043

SANY HEAVY INDUSTRY CO LTD-A

12.27

-0.406

BAOSHAN IRON & STEEL CO-A

4.77

0.421

17499506

EVERBRIGHT SECURITIE CO -A

11.97

1.269

8338634

SHANDONG GOLD MINING CO LT-A

32.79

-1.413

6686273

7.9

-0.126

5970109

GD MIDEA HOLDING CO LTD -A

13.12

0.923

12929451

SHANGHAI ELECTRIC GRP CO L-A

5.31

2290365

SHANGHAI PHARMACEUTICALS-A

11.14

-0.801

15680507

8.93

0.676

50587012

BBMG CORPORATION-A BYD CO LTD -A

28.3

4.044

10245919

CHINA CITIC BANK CORP LTD-A

4.26

0.948

9879058

2.58

1.976

58032525

GF SECURITIES CO LTD-A

GD POWER DEVELOPMENT CO -A

27.18

3.543

9599713

CHINA CNR CORP LTD-A

4.11

19654426

GREE ELECTRIC APPLIANCES I-A

20.33

2.109

13519941

CHINA COAL ENERGY CO-A

9.09

2.712

12740071

GUIZHOU PANJIANG REFINED-A

26.5

0.189

3389816

CHINA CONSTRUCTION BANK-A

4.83

1.684

46510422

HAITONG SECURITIES CO LTD-A

9.01

2.27

47256406

CHINA COSCO HOLDINGS-A

4.95

1.227

11913620

HANGZHOU HIKVISION DIGITAL-A

42.6

0.972

488977

32.25

3.068

8363704

HEBEI IRON & STEEL CO LTD-A

2.88

-0.69

15552534

3.58

1.13

11902572

HENAN SHUANGHUI INVESTMENT-A

68.9

1337109

CHINA CSSC HOLDINGS LTD-A CHINA EASTERN AIRLINES CO-A CHINA EVERBRIGHT BANK CO-A

2.85

1.064

25585157

CHINA INTL MARINE CONTAIN-A

13.61

0.074

6425109

HUATAI SECURITIES CO LTD-A HUAXIA BANK CO LTD-A

SHANGHAI PUDONG DEVEL BANK-A SHANXI LU’AN ENVIRONMENTAL-A

24.49

0.492

6903970

SHANXI XISHAN COAL & ELEC-A

14.68

-0.542

11469479

SHENZHEN DEVELOPMENT BANK-A

15.71

0.899

10631246

SHENZHEN OVERSEAS CHINESE-A

7.01

17025638

SINOVEL WIND GROUP CO LTD-A

15.08

0.199

1149434

9.75

-1.015

40978758

SUNING APPLIANCE CO LTD-A

8.78

1.738

12252712

TSINGTAO BREWERY CO LTD-A

32.57

-1.512

808443

10.73

1.514

14440840

WEICHAI POWER CO LTD-A

30.16

0.033

4763164 18187821

CHINA LIFE INSURANCE CO-A

16.35

1.742

6031784

IND & COMM BK OF CHINA-A

4.33

1.168

38033990

WULIANGYE YIBIN CO LTD-A

32.84

-2.898

CHINA MERCHANTS BANK-A

11.9

0.677

39187875

INDUSTRIAL BANK CO LTD -A

13.32

1.524

28867304

XINJIANG GUANGHUI INDUSTRY-A

23.56

-1.008

5860299

CHINA MERCHANTS PROPERTY -A

20.5

2.912

12936011

INNER MONGOLIA BAOTOU STEE-A

66.76

-1.228

33554678

YANGQUAN COAL INDUSTRY GRP-A

17.23

-1.317

11874245

CHINA MERCHANTS SECURITIES-A

11.35

-0.7

6933629

INNER MONGOLIA YILI INDUS-A

22.04

0.182

6518775

YANTAI CHANGYU PIONEER-A

94.22

-0.758

241521

6.27

2.451

132762711

5.95

-4.187

134498148

YANZHOU COAL MINING CO-A

22.21

0.09

4074427

49.22

1.234

2173582

20.5

-2.288

10582113

CHINA MINSHENG BANKING-A CHINA OILFIELD SERVICES-A

16.67

1.03

7721298

CHINA PACIFIC INSURANCE GR-A

19.29

1.956

17002961

INNER MONGOLIAN BAOTOU STE-A JIANGSU HENGRUI MEDICINE C-A JIANGSU YANGHE BREWERY -A

26.23

0.115

1429733

YUNNAN BAIYAO GROUP CO LTD-A

147.15

-3.508

1936829

ZHONGJIN GOLD CORP-A

CHINA PETROLEUM & CHEMICAL-A

7.19

0.842

17889436

JIANGXI COPPER CO LTD-A

23.91

0.252

6798177

CHINA RAILWAY CONSTRUCTION-A

3.96

0.508

17267670

JINDUICHENG MOLYBDENUM CO -A

12.74

-2.075

12572067

CHINA RAILWAY GROUP LTD-A

2.45

1.24

22200326

JIZHONG ENERGY RESOURCES-A

CHINA SHENHUA ENERGY CO-A

25.61

1.386

13316435

KWEICHOW MOUTAI CO LTD-A

CHINA SHIPBUILDING INDUSTR-A

5.61

1.081

20523869

CHINA SHIPPING CONTAINER-A

2.83

0.712

8528160

LUZHOU LAOJIAO CO LTD-A METALLURGICAL CORP OF CHIN-A

17.17

-0.98

7185637

196.96

-2.083

3795990

39.09

-2.251

5102636

2.55

19469249

ZIJIN MINING GROUP CO LTD-A

4.11

0.244

36403642

ZOOMLION HEAVY INDUSTRY S-A

8.66

0.932

19252893

16.43

2.177

12694968

ZTE CORP-A

Price 10640.16 (L) 2254.57

(H) 3380.53

CHINA SOUTHERN AIRLINES CO-A

4.51

0.895

21241875

NARI TECHNOLOGY DEVELOPMEN-A

31.57

0.445

3060635

CHINA STATE CONSTRUCTION -A

3.05

0.993

44244472

NEW HOPE LIUHE CO LTD-A

16.69

0.907

2365546

Price

Day %

VOLUME

Price

Day %

VOLUME

7.03

0.000

24562390

PICC PROPERTY & CASUALTY -H

9.53

3.139

17340259

CHINA NATIONAL BUILDING MA-H

10.14

3.575

73819590

PING AN INSURANCE GROUP CO-H

58.9

0.341

4390024

160

130

Hang SENG CHINA ENTREPRISE INDEX Name

Price

Day %

VOLUME

AGRICULTURAL BANK OF CHINA-H

3.34

0.300

69413959

Name

AIR CHINA LTD-H

5.25

-2.416

9715177

ALUMINUM CORP OF CHINA LTD-H

3.67

-1.872

23518105

CHINA OILFIELD SERVICES-H

11.26

1.077

5288000

SHANDONG WEIGAO GP MEDICAL-H

8.54

-3.720

5996000

ANHUI CONCH CEMENT CO LTD-H

24.9

1.220

13776118

CHINA PACIFIC INSURANCE GR-H

24.15

0.416

9303270

SINOPHARM GROUP CO-H

21.5

-0.922

3204800

BANK OF CHINA LTD-H

3.14

0.319

159547021

8.42

-0.473

48751131

TSINGTAO BREWERY CO LTD-H

42.55

1.430

943500

WEICHAI POWER CO LTD-H

36.35

0.276

3484417

YANZHOU COAL MINING CO-H

CHINA MINSHENG BANKING-H

CHINA PETROLEUM & CHEMICAL-H

BANK OF COMMUNICATIONS CO-H

5.88

0.170

25039701

CHINA RAILWAY CONSTRUCTION-H

5.23

8.282

20233000

BYD CO LTD-H

21.2

-2.304

3607265

CHINA RAILWAY GROUP LTD-H

2.69

8.032

44696946

4.6

-1.499

37608000

CHINA SHENHUA ENERGY CO-H

32.65

-0.305

11589281

CHINA COAL ENERGY CO-H

8.83

1.378

18804373

CHINA TELECOM CORP LTD-H

4.23

-1.628

40593989

CHINA COMMUNICATIONS CONST-H

7.53

-3.338

19518577

DONGFENG MOTOR GRP CO LTD-H

14.24

1.569

10294702

CHINA CONSTRUCTION BANK-H

6.01

0.167

111381717

4.9

-0.204

20620218

CHINA CITIC BANK CORP LTD-H

CHINA COSCO HOLDINGS-H CHINA LIFE INSURANCE CO-H

20.4

1.241

19073890

CHINA LONGYUAN POWER GROUP-H

6.46

-0.462

2812062

15.78

-0.630

11210656

CHINA MERCHANTS BANK-H

GUANGZHOU AUTOMOBILE GROUP-H HUANENG POWER INTL INC-H IND & COMM BK OF CHINA-H

7.9

2.597

6281253

4.33

2.607

14306000

5.01

0.000

211813877

JIANGXI COPPER CO LTD-H

18.14

1.568

10914344

PETROCHINA CO LTD-H

10.96

-0.182

49992738

NAME

PRICE DAY %

Name

16.76

-0.475

13669621

ZIJIN MINING GROUP CO LTD-H

3.1

0.649

21188500

ZOOMLION HEAVY INDUSTRY - H

10.3

-0.387

11129160

20.65

-1.196

5941732

ZTE CORP-H

Price 2454.90 29

(L) 8058.58

(H) 13770.730

FTSE TAIWAN 50 INDEX NAME

PRICE DAY %

Volume

Acer Inc

0.902

2703.059

39.15

Advanced Semiconductor Engineering Inc

1.700

6712.086

29.7

Asia Cement Corp

0.721

2351.863

Volume

First Financial Holding Co Ltd

0.870

5749.076

17.75

Formosa Chemicals & Fibre Corp

3.137

4267.854

86.2

35.95

Formosa Petrochemical Corp

1.488

1897.217

NAME

PRICE DAY %

Volume

SinoPac Financial Holdings Co Ltd

0.662

7288.503

Synnex Technology International Corp

0.966

1544.603

10.65 73.3

Taiwan Cement Corp

1.088

3692.176

34.55 18.5

Asustek Computer Inc

1.788

752.760

278.5

Formosa Plastics Corp

4.536

6120.840

86.9

Taiwan Cooperative Financial Holding

0.781

4947.619

AU Optronics Corp

1.020

8760.837

13.65

Foxconn Technology Co Ltd

1.220

1172.720

122

Taiwan Fertilizer Co Ltd

0.479

735

76.4

Catcher Technology Co Ltd

1.287

723.796

208.5

Fubon Financial Holding Co Ltd

1.905

6718.311

33.25

Taiwan Glass Industry Corp

0.484

1706.742

33.25

Cathay Financial Holding Co Ltd

2.242

7824.354

33.6

Chang Hwa Commercial Bank

0.565

3931.746

16.85

Cheng Shin Rubber Industry Co Ltd

1.121

1854.356

70.9

Chimei Innolux Corp

0.791

6741.975

13.75

China Development Financial Holding Corp

0.863

11250.646

China Steel Corp

2.901

11284.657

30.15

Chinatrust Financial Holding Co Ltd

1.778

11238.437

18.55

Chunghwa Telecom Co Ltd

2.947

3801.149

Compal Electronics Inc

1.252

4420.952

Delta Electronics Inc

1.758

Far Eastern New Century Corp

1.070

Far EasTone Telecommunications Co Ltd

0.824

10.377

10627.373

114.5

Taiwan Mobile Co Ltd

1.285

1676.208

89.9

Hotai Motor Co Ltd

Hon Hai Precision Industry Co Ltd

0.831

409.634

238

TPK Holding Co Ltd

0.719

176.453

477.5

HTC Corp

4.389

862.052

597

TSMC

18.646

25753.417

84.9

Hua Nan Financial Holdings Co Ltd

0.888

6160.736

16.9

Uni-President Enterprises Corp

1.583

4544.369

40.85

Largan Precision Co Ltd

0.498

100.605

580

United Microelectronics Corp

1.600

12987.771

14.45

Lite-On Technology Corp

0.699

2296.218

35.7

Wistron Corp

0.779

2052.140

44.5

MediaTek Inc

2.765

1147.610

282.5

Yuanta Financial Holding Co Ltd

1.311

10016.140

15.35

90.9

Mega Financial Holding Co Ltd

1.519

8544.629

20.85

Yulon Motor Co Ltd

0.563

1170.255

56.4

33.2

Nan Ya Plastics Corp

4.466

7852.299

66.7

2383.486

86.5

President Chain Store Corp

1.090

779.717

164

3672.913

34.15

Quanta Computer Inc

1.895

2874.431

77.3

1596.665

60.5

Siliconware Precision Industries Co

0.951

3116.361

35.8

Price 5503.52 34

(L) 4643.05 2

(H) 6265.48

business daily April 5, 2012 | 13

MARKETS gaLaXy eNTerTaINMeNT

MeLco croWN eNTerTaINMeNT

Last Max Average Min

22.0

21.45 21.80 21.42 21.10

Last Max Average Min

21.8 21.6

30.35 30.75 30.31 29.85

21.0

34.5

14.15

WyNN Macau LTD Last Max Average Min

16.02 15.94

23.15

22.7 23.10 22.77 22.65

23.02 22.89

29.8

15.78

22.63

29.5

15.70

22.50

CURRENCY EXCHANGE RATES MAJORS

ASIA PACIFIC

0.80 0.75

MACAU RELATED STOCKS (H) 52 W (L) 52 W

Volume CRNCY

ARISTOCRAT LEISU

3.02

1.342

37.273

3.3

1.88

1554186

CROWN LTD

8.69

1.164

7.417

9.2

7.45

1591335

AMAX HOLDINGS LT

0.086

-1.149

0.147

0.06

3683000

BOC HONG KONG HO

21.45

-0.694

16.576

25.6

14.24

14586947

CENTURY LEGEND

0.243

1.25

5.652

0.475

0.204

196000

3.33

18.929

4.79

2.3

47000

CHINA OVERSEAS

14.76

0.682

13.713

17.86

9.99

35346021

CHINA STAR LTD

0.215

-2.273

0.407

0.128

63015

CHINESE ESTATES

10.72

-1.471

-14.24

14.88

10.2

299400

CHOW TAI FOOK JE

12.3

-2.844

-11.638

15.16

12.22

9132346

EMPEROR ENTERTAI

1.43

1.418

28.829

2.09

0.97

847680

0.66

57.143

0.76

0.3

1104000

GALAXY ENTERTAIN

21.45

-0.464

50.632

22.45

8.69

12440324

HANG SENG BK

103.2

-1.244

11.991

127

84.4

1886351

HOPEWELL HLDGS

21.3

-1.160

7.251

24.903

18.56

1816726

HSBC HLDGS PLC

68.5

-1.083

16.102

85.35

16808315

HUTCHISON TELE H

3.29

-1.201

10.033

3.6

2.13

3844436

23.6

-12.915

46.15

19.2

2488942

MELCO CROWN ENTE

-2.778

42.857

37.35

22.4

34200

MGM CHINA HOLDIN

14.18

-1.391

47.829

17.183

7.6

3092892

4.08

-1.923

0.990

6.123

2.95

1540087

0.108

-1.818

-2.703

0.158

0.08

110000

NEW WORLD DEV

9.33

-2.406

49.042

13.226

6.13

58252527

SANDS CHINA LTD

30.35

0.165

38.269

32.55

14.9

14179154

SHUN HO RESOURCE

1.2

1.32

0.82

SHUN TAK HOLDING

3.14

-0.633

22.698

4.686

2.241

2811021

SJM HOLDINGS LTD

15.8

-1.619

24.606

10.22

12040773

15.94

-3.860

18.601

18.5

9.8

9156199

WYNN MACAU LTD

22.7

-2.575

16.410

27.48

14.807

9363623

ASIA ENTERTAINME

6.52

3.002

10.884

10.869

4.72

64643

BALLY TECHNOLOGI

46.75

-0.107

18.175

47.468

24.74

323087

BOC HONG KONG HO

2.82

4.059

17.638

3.22

1.81

760

GALAXY ENTERTAIN

2.73

0.368

45.989

2.87

1.08

25500

16.79

-0.651

-2.384

19.15

13.38

2783712

JONES LANG LASAL

83.31

0.446

35.994

107.84

46.01

187524

LAS VEGAS SANDS

57.57

0.489

34.730

59.85

36.08

8093062

MACAU CAPITAL IN

0.11

10.000

0.11

500

MELCO CROWN-ADR

13.64

2.711

41.788

16.15

7.05

8343097

MGM CHINA HOLDIN

1.85

1.648

55.241

2.213

1.003

169

MGM RESORTS INTE

13.62

-1.661

30.585

16.05

7.4

16245859

SHUFFLE MASTER

17.6

2.385

50.171

18.380

7.35

557559

SJM HOLDINGS LTD

2.02

23.926

2.64

1.28

11500

124.88

-0.040

13.024

165.493

101.02

1289926

WYNN RESORTS LTD

Last Max Average Min

22.76

0.85

INTL GAME TECH

16.10

15.86

0.90

SMARTONE TELECOM

15.80 16.06 15.89 15.76

30.1

0.95

NEPTUNE GROUP

14.33

14.21

1.00

DAY % YTD %

14.39

34.7

Macau Pataca / renminbi exchange rate - Last 5 years

MIDLAND HOLDINGS

35.1

SjM HoLDINgS LTD

Last Max Average Min

LUK FOOK HLDGS I

35.3

14.45

14.18 14.40 14.24 14.16

21.2

30.4

FUTURE BRIGHT

Last Max Average Min

14.27

30.7

CHEUK NANG HLDGS

35.5

34.9

31.0

PRICE

35.00 35.25 34.89 34.60

21.4

SaNDS cHINa LTD

Name

MgM cHINa HoLDINgS

AUD

CROSSES

HKD

PRICE

DAY %

YTD %

(H) 52 W

(L) 52 W

JPY

82.87

-0.857

-7.192

85.53

75.35

GBP

1.601

0.825

2.992

1.675

1.524

CHF

0.903

0.598

3.945

0.960

0.707

EUR

1.334

0.497

2.947

1.494

1.262

AUD

1.035

-0.010

1.342

1.108

0.939

IDR

9146

0.405

-0.842

9367

8458

INR

50.876

1.020

4.302

54.305

43.855

PHP

42.91

0.163

2.167

44.35

41.879

THB

30.83

0.162

2.335

31.96

29.63

TWD

29.505

0.186

2.623

30.716

28.48

SGD

1.258

0.072

3.093

1.320

1.199

CNY

6.299

0.125

-0.056

6.549

6.289

HKD

7.766

-0.017

0.017

7.811

7.753

MOP

7.999

-0.01

0.013

8.045

7.982

EURJPY

110.56

-1.339

-9.859

123.33

97.04

EURCHF

1.204

0.101

1.055

1.324

1.007

EURGBP

0.833

0.429

0.084

0.908

0.822

EURCNY

8.400

0.120

-3.163

9.677

7.967

EURMOP

10.662

-0.399

-2.909

11.951

10.103

AUDJPY

85.726

-0.840

-8.509

90.031

72.057

World Stock MarketS - Indices Name

country

PRICE

DAY %

DOW JONES INDUS. AVG

13212.04

0.504

8.140

NASDAQ COMPOSITE INDEX

3091.57

-0.122

FTSE 100 INDEX

5768.45

0.460

DAX INDEX

6946.83

13289.08

10404.49

18.671

3134.17

2298.89

3.520

6103.73

4791.01

1.043

17.776

7600.410

4965.8

NIKKEI 225

10083.56

-0.309

19.257

10255.15

8135.79

HANG SENG INDEX

20555.58

-0.261

11.507

24468.641

16170.35

CSI 300 INDEX

2454.9

0.482

4.653

3380.527

2254.567

TAIWAN TAIEX INDEX

7933

0.766

12.174

9099.75

6609.11

KOSPI INDEX

2014.04

-0.018

10.314

2231.47

1644.11

S&P/ASX 200 INDEX

4335.242

-0.061

6.870

4976.4

3765.9

JAKARTA COMPOSITE INDEX

USD

YTD % (H) 52 W (L) 52 W

4121.551

0.399

7.838

4195.724

3217.951

FTSE Bursa Malaysia KLCI

1596.33

0.687

4.286

1597.08

1310.53

NZX ALL INDEX

782.22

0.350

7.182

814.431

700.441

PHILIPPINES ALL SHARE IX

3458.73

0.328

13.586

3464.85

2695.06

FTSE STRAITS TIMES INDEX

3010.46

0.547

13.759

3227.28

2521.95

STOCK EXCH OF THAI INDEX

1196.77

-0.593

16.722

1214.31

843.69

HO CHI MINH STOCK INDEX

441.03

0.318

25.453

488.02

332.28

Laos Composite Index

1033.18

2.525

14.867

1348.88

876.33

Due to third-party related technical issues, our Market pages have not been updated. We apologise to our readers and promise to have the pages back on track in tomorrow’s edition. Contact Information

ONE YEAR Suscription REGULAR 1,560 Mop 20% discount 1,150 Mop

First Name (Mr/Mrs/Ms)

Last name

Address Postal Code

Country

Phone Fax Email

Payment

Subscription Period: from

(yy)|

(mm)|

to |

(yy) |

(mm) |

I wish to pay by Cheque or Direct Deposit Make payable to De Ficção-Projectos Multimedia Banco Comercial de Macau (BCM) Acct# 1099732111 Make payable to De Ficção-Projectos Multimedia Limitada Banco Nacional Ultramarino (BNU) Acct# 9008096687 Visa Master Card American Express Credit Card Account Number

Expiration Date mm

Cardholder’s Name Cardholder’s Signature

CVV2/CVC2

14 |

business daily April 5, 2012

Opinion Perhaps cities are the right place and have the right scale for massive social change

Intelligent urban design Esther Dyson CEO of EDventure Holdings, an investor in start-ups around the world

ities matter, as they always have, but now more of the world is starting to take notice of their problems and possibilities. At their worst, cities are slums, places where the social constraints of the village are loosened, people can misbehave in anonymity, and poor and unemployed people live in squalor. At their best, they are places where the best and the brightest congregate, new wealth is created, and scholars and artists sharpen their wits and hone their creativity. Most cities have grown through evolution, from unpremeditated beginnings. Moreover, they rarely die. Cities (and their imperfections) persist in a way that large political entities, even those of which they are a part, do not. Compare, say, Athens, Jerusalem, Vienna, Beijing, Moscow, or Istanbul, to the Roman Empire, Austria-Hungary, the Ottoman Empire, Imperial Russia, the Third Reich, or the Soviet Union. And, as we are seeing worldwide nowadays, national governments are difficult to overturn and also difficult to (re)build. Democracy does not always lead to liberty or good outcomes. So, perhaps cities are the right place and have the right scale for massive social change. This does not mean that national governments are irrelevant, or that they no longer hold life-anddeath power over people’s lives; but cities make more of a difference in people’s daily lives. Especially in a world where many of the big things – trade, technology, legal regimes – are globalized, most of the small things are actually happening in cities. By 2050, seven out of ten human beings will live in cities, up from about 50% now and barely 14% in 1900. Cities run schools, collect garbage, maintain police forces (and local power of life and death), issue building permits, build sewers, regulate power companies, and generally determine the overall quality of life. They can also raise revenue,

whether through income taxes, property taxes, or myriad fees. But cities still often operate in a pre-market way. They mostly build their infrastructures themselves, and innovations do not spread easily, owing to a lack of incentives and, for that matter, much of a market…other than when one city hires managers from another. On the other hand, cities are increasingly behaving like companies, becoming intimately involved in their citizens’ quality of life, and, in an increasingly mobile world, competing for “customers.” Despite registration systems such as those in Russia and China that restrict movement, people can come and go from cities much more freely than they can cross national borders. Meanwhile, cities can be both more flexible and more arbitrary, and compete on terms not available to legislatively restricted national governments. Paul Romer, a former Stanford University economist best known for his Charter City initiative, has a scheme

for building new cities from scratch – and using competition to spread the benefits to old cities over time. As he points out, if you want a new business model, you don’t fix an old company; you start a new one. In the same way, if you want a new kind of city,

The goal is not perfection in a single city, but more effective innovation and competition, so that the best cities prosper and other cities emulate them it is easier to build a new one than to change an old one. Most cities evolved blindly, and have ended up semiworkable, whereas a city that is started from scratch can, in theory, benefit from intelligent design. But, even with long-term investors, to build a viable city at

scale nowadays represents a daunting challenge, requiring not just architecture, but also modern infrastructure, schools, and hospitals. Moreover, in addition to people, investors, land, and other tangible assets, an independent yet accountable government must create and enforce rules, and a charter must specify how the rules can be changed. While Romer’s formula is complex, his charter cities will be subject to the ultimate form of accountability: they will succeed only if they can attract investors and citizens who want to live and work there. But, skeptics ask, will they attract a favorable selection of people? Romer’s and Hursh’s answer is that migrants are not slum-dwellers by nature; put them in a good city and they will reach their innate potential. The key is not just to allow, but to lure, people inside the system. According to Romer: “A new city can attract the working poor and still succeed as a large-scale real-estate development project. And a good thing too, because charity will never finance urban liv-

Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com

ing space for 3-4 billion additional people. If new places enter the ‘city business,’ the working poor will find [affordable] urban housing and transport for the same reason that they now find food: because someone profits by offering it to them.” That calls for a system that will return their investment and more over time, which means that investors will design a city that helps its citizen/taxpayers to prosper. In the background, the board of governors that Romer proposes makes sure that everyone takes the long view. The goal is not perfection in a single city, but more effective innovation and competition, so that the best cities prosper and other cities emulate them. There are enough mobile people that one city’s success won’t harm others; on the contrary, it is more likely to encourage existing cities to change, just as new market entrants force incumbents to improve. Sometimes, in order for evolution to do its best work, the individual components need some intelligent design. © Project Syndicate

Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte

Business Daily is a product of De Ficção – Multimedia Projects

Creative Director José Manuel Cardoso Designer Janne Louhikari

Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong

Newsdesk Cláudia Aranda, Kristy Chan, Kelsey Wilhelm, Cherry Lee, Terina Cao, Tony

Av. Dr. Francisco Vieira Machado, No. 679, Macau

Lai, Vitor Quintã Photography Carmo Correia, John Si, Manuel Cardoso

Tel. (853) 2833 1258 / 2870 5909

Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com

Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

business daily April 5, 2012 | 15

OPINION

Finding the reality in housing bubbles Rose N. Lai Associate Professor of Finance, University of Macau

e have all read there are bubbles in the real estate markets in Macau, Hong Kong, the mainland and Taiwan. What actually makes up the price of a house? What is a bubble? Is it the additional amount the seller wants from a buyer over and above his budgeted price? These were the same questions investors asked about the United States, Spanish and British markets, and to certain extent, the Australian market, before the collapse of financial markets worldwide. The Australian market, however, was largely insulated from the Global Financial Crisis. Let us start with the basics! In setting a price, the developer includes the price of acquiring land, the costs of developing it, including construction, interest on his loans and wages. He then adds a mark-up for profit, as any business does. Within any segment of the market, those costs do not

Business

wires Leading reports from Asia’s best business newspapers

tally with the price the buyer is asked to pay. Does it sound bad enough paying a higher price than what the property is worth, or at least should cost? Why is then the market still in a frenzy? Here is an analogy: You buy shares in a company, which does quite well and

‘Price is all about expectations. Any deviations away from an estimate based on the fundamentals imply different ideas about the growth rate of the real estate market or the risk premium, even if the risk-free rate is the same’

Hua Nan Bank is the first Taiwanese bank to be allowed to operate yuan-denominated accounts for its business clients in the mainland. Its Shenzhen branch hopes to start the service by May. Another five Taiwanese banks are waiting for approval. In return, Bank of China and Bank of Communications will be allowed to open branches in Taiwan.

refrains from changing the way it does business every five minutes, yet the stock price keeps fluctuating. That’s it! Expectations about the company’s future vary among the company’s many shareholders. Prices for real estate tend to be less volatile. Property markets, whether commercial or residential, are relatively illiquid, thanks to the time it takes for a transaction to be completed. There is also an information asymmetry between buyers and sellers because they do not share information freely or completely among all participants. Also, the expectations of the market’s participants tend to converge more than in stock markets. So, how do we know when real estate is reasonably priced? Let’s return to the stock analogy. The textbooks say the price of a stock should be the next dividend divided by the difference between the required rate of return and

South Korea’s credit rating outlook has been raised to positive by the Moody’s ratings agency. The report said prospects for growth, government prudence and fewer bank-related risks were among the reasons for the upgrade. The agency maintained South Korea’s credit rating at the fifth-highest given by Moody’s.

the company’s growth rate. This means that the value of a company should be the sum of what it can distribute to the shareholders – its dividends, which grow at the growth rate of the company – throughout the life of the company, which is assumed to be perpetual. With real estate, the dividend is annual rental income. So the price of a flat should be the annual income from rent, divided by the rate of return required by the investor, less the rate of growth of the market. In our example, the rate of growth of the market accounts for the increase in rent every year. Simple as it looks, this is a formula that must be used with caution. When calculating the rate of return, the textbooks tell us to take into account the risk-free rate of return, plus a premium that reflects the risk of investing. Arriving at the risk-free rate, the risk premium and the growth rate of the market depends on broad economic data. In the United States, the risk-free rate is the treasury bond rate. In Hong Kong, it is the rate for exchange bills

issued by the Hong Kong Monetary Authority. The risk premium can be estimated using a tool such as the Capital Asset Pricing Model. And the growth rate of the real estate market can be estimated from the historical growth in prices. This is our formula to constitute the fundamentals of the price. Anything beyond the fundamentals constitutes a bubble. Too simple? It may look like but the market is far more complex. Remember that it is all about expectations. Any deviations away from an estimate based on the fundamentals imply different ideas about the growth rate of the real estate market or the risk premium, even if the risk-free rate is the same. It is the consensus of expectations in the market that really matters. Even if you understand the formula, if your expectation coincides with what the market expects, it is time to stop and think. What about depreciation, you say? Homes are for living in, not just investments. That is a question I’ll answer next time.

Singapore is reviewing its human resources policies for attracting overseas workers and the laws that allows them to become permanent residents. In response to public criticism and rising house prices, the Monetary Authority of Singapore will cancel the mechanism allowing wealthy immigrants to become residents..

Petronas’ South African subsidiary, Engen, has stopped oil imports from Iran. Engen runs the second biggest refinery in South Africa and had sourced 80 percent of its supplies from Iran. The move comes as sanctions against the Middle East country begin to bite.

16 |

business daily April 5, 2012

CLOSING

Eurozone economy shrinks

Private sector signals a mild contraction, managers’ survey suggests

urozone private sector activity retreated in March, providing new evidence that the 17-nation single currency area is in recession, a key survey showed on Wednesday. The composite Purchasing Managers Index (PMI) compiled by Markit research firm hit a three-month low, dropping to 49.1 points in March compared to 49.3 in February. A score below the neutral 50-point mark indicates contraction. The result, however, was better than a previous estimate of 48.7 points and indicates a “mild” contraction, Markit said, publishing

the results of its survey which is closely watched as a leading indicator of the trend of activity. “With the exception of a marginal expansion seen in January, the economy has been in continual decline since last September,” said Markit chief economist Chris Williamson. “Although the average rate of decline seen over the first quarter eased compared with the final three months of last year, the survey data nevertheless indicate that the region has slipped back into a technical recession,” he said. Battling a relentless debt crisis, the eurozone took a first step towards

recession when its economy shrank by 0.3 percent in the fourth quarter of 2011. A recession is defined as two consecutive months of economic contraction. The PMI, a survey of 4,500 manufacturing and services firms, showed that Service sector business activity dropped for the second month running in March, while manufacturing output shrank for the first time in three months. The survey also highlighted gaps between eurozone states, with Italy and Spain “firmly” stuck in recession despite slower rates of contraction. Germany, Europe’s economic loco-

motive, saw growth slow down to a three-month low, Markit said. France recorded a first contraction for four months while Ireland “was the only bright spot” with the rate of expansion reaching an 11-month high. “The Eurozone is not out of the woods yet, although the economy has been stabilised,” said Christian Schulz, senior economist at Berenberg Bank. “In the short-term, austerity measures in several important countries are likely to hold back the recovery,” he said.

Hollande to seek fiscal treaty review

England challenges Oil prices China by reviving mine easing slightly

French Socialist presidential candidate François Hollande said if elected he would freeze gas prices and seek agreement on revamping a European Union fiscal treaty in June by adding stimulus measures, Bloomberg reported. Hollande, if elected, would discuss changing the fiscal accord, which stiffens budget rules to stabilise the euro, at a June 28-29 summit of EU leaders. State spending would rise by 20 billion euros (US$26.3 billion) over the five-year presidential term, Hollande said. At the same time, tax increases and eliminating loopholes would raise 29 billion euros of additional revenue over the same period, he said. The budget plan will aim for a zero-deficit target in 2017, one year later than under Sarkozy’s plan, with a 3 percent of gross domestic product deficit target for 2013. Parliament would vote on Hollande’s fiscal reform that would include higher taxes for big companies and lower ones for small and medium-sized businesses. It would also vote on a 75 percent income tax for people earning above 1 million euros a year and special taxes on banks and oil companies, according to his plan, which didn’t provide further details. He said a bill to split banks’ retail and investment activities would also be submitted to a vote as early as July.

An English mine last used to make armaments to defeat Hitler’s forces will be revived to challenge China’s grip on tungsten, among strategic metals at the heart of a deepening trade dispute with Europe and the United States. Wolf Minerals Ltd. is developing a tungsten mine in Devon, southwest England, 70 years after it was last extracted there. The Hemerdon site is the world’s fourth-largest deposit and can produce about 3.5 percent of global demand for the metal, used to harden steel in ballistic missiles and in drill bits. China provides about 85 percent of worldwide supplies. “A big element of what we are doing is providing a strategic supply to companies outside of China,” Wolf Managing Director Humphrey Hale told Bloomberg. “We’re answering a requirement from the market, which is strategic supply, and prices are at a position where we can make money from that.” China has imposed export restraints on raw materials including rare earths, tungsten and molybdenum, causing worldwide supplies to plummet, sending prices higher and threatening strategic stockpiles. The move soured ties with the United States and Japan, where buyers cut usage after prices soared in the first half of 2011.

AFP

Brent oil price slid on industry data showing a larger-than-expected rise in crude inventories in the United States, the world’s top oil consumer. Front-month Brent crude fell 21 cents to US$124.65 a barrel yesterday, after touching a low of US$124.42 earlier. U.S. crude futures lost 47 cents to US$103.55, after falling by more than US$1 in the previous session. “The Fed comments had an influence on oil prices,” said Natalie Robertson, a commodities strategist with ANZ Bank in Melbourne. Federal Reserve policymakers appear less inclined to launch a fresh round of monetary stimulus as the U.S. economy gradually improves, according to minutes for the central bank’s March meeting. Oil prices were also pressured by news that Saudi Arabia is likely to maintain high oil production if consumer countries release strategic oil reserves, although the kingdom will not seek to attract buyers for more oil by discounting its crude. But actual and potential disruptions continue to put a floor under prices, with at least seven cargoes of North Sea Forties crude loading in April being delayed following production problems. A ban on European insurance cover for Iranian oil exports from July 1 is also threatening to curtail shipments and raise costs for major buyers.