Year I Number 180 Tuesday December 11, 2012 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP $ 6.00 www.macaubusinessdaily.com
Cable TV –
policy needs tuning Inauspicious start for Jade Hotel plan Legal action is holding up construction of a 25-storey hotel in the Nam Van area. The government says it is nowhere near setting a new deadline for the development of a five-star hotel on a long-vacant plot of land in the Nam Van area, contrary to what the developer says. Page 2
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acau Cable TV says it welcomes the government’s announcement that its licence will be “nonexclusive” if renewed after 2014 – provided that the competitive environment is fair. “Open competition is not a problem. But what the government really needs to carefully consider is how it will be licensing TV operators,” Ricky Tam Mong Teng, the company’s operations director told Business Daily. Earlier this year the firm sued the local public antenna companies – the dominant service providers in the city due to their cheaper
charges – for illegally broadcasting copyrightprotected TV channels. Cable TV then took its plight over the enforcement of the concession contract to an arbitration court. The company has asked for 500 million patacas (US$62.6 million) in compensation from the government. Macau Cable TV is also waiting for a reply from the administration on whether it can provide telecommunications services through its cable network, following concession renewal talks. More on page 3 I SSN 2226-8294
HANG SENG INDEX
Manila-listed firm offers MPEL share sale chance
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Melco Crown Entertainment Ltd’s decision to buy a Philippines-listed company as a vehicle for its planned joint venture casino provides the option of raising equity from the public via shares. The gaming regulator in the Australian state of Victoria, where ASXlisted Crown Ltd has its flagship casino operation, has not yet signed off on the Philippines casino project.
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HSI - Movers
Hengqin pilot for anti-graft scheme Outward investment to mainland down Mainland Chinese investment projects funded by Macau enterprises declined again in both number and value in October after recovering in the previous month, official data show. The Ministry of Commerce approved 19 investments from Macau businesses in October, down by nearly half from September, whereas the value of the deals declined by one-third to US$40 million (320 million patacas). Page 7
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he mainland Chinese authorities have chosen Hengqin Island and two other parts of Guangdong for a pilot scheme to require senior officials to declare their assets as a deterrent to corruption. The China Business Journal reported on Sunday that officials must declare their personal assets and those of their families, and that some of the information they disclosed would be
Name
published. The newspaper, quoting an unidentified source whom it described as being close to the Guangdong Commission for Discipline Inspection, said the scheme would be tried out in the Hengqin New Area, the Nansha New Area of Guangzhou and Shixing county in Shaoguan. The source said officials could be dismissed and prosecuted if they failed to disclose their assets or lied about them.
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%Day
CHINA RES POWER
2.51
SANDS CHINA LTD
2.50
CHINA RES LAND
2.13
COSCO PAC LTD
2.11
CITIC PACIFIC
2.00
TINGYI HLDG CO
-1.35
NEW WORLD DEV
-1.45
CHINA OVERSEAS
-1.48
KUNLUN ENERGY CO
-1.58
HENGAN INTL
-2.32
Source: Bloomberg
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business daily December 11, 2012
macau
Five-star hotel project still frozen, says govt Legal action is holding up construction of a 25-storey tower in the Nam Van area Vítor Quintã
vitorquinta@macaubusinessdaily.com
fraud, and has issued warrants for their arrest.
Penalty looms
A 25-storey, five-star hotel is meant to be built next to the Finance and IT Center (Photo: Manuel Cardoso)
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he government says it is nowhere near putting back the deadline for the development of a five-star hotel on a long-vacant plot of land in the Nam Van area, contrary to what the developer says. In an advertisement published in a newspaper last week, Jade Hotel Development Ltd said construction of the hotel could begin “in the near future” now that one of its shareholders was being prosecuted for alleged fraud. Jade Hotel is a shareholder i n S ociedade de In ve stime n to Imobiliário Fong Keng Van SARL, the concessionaire of the plot of land, which covers 4,563 square metres
next to the Finance and IT Center. But the Land, Public Works and Transport Bureau says a legal case is still holding up its answer on a request by Fong Keng Van to put back the deadline for the development of the hotel. “The application assessment was in the meantime suspended due to a still ongoing judicial action involving the said plot,” the bureau told to Business Daily in an email. The government has declined to reveal any further information about the legal action. Fong Keng Van’s advertisement says the Public Prosecutions Office is prosecuting two men, whom it does not properly identify, for alleged
Hotels should know target market: study
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joint survey by the Institute for Tourism Studies and the University of Macau surveyed more than 2,700 visitors travelling independently and staying in hotels. The results indicate more than one-third came primarily to see the sights. Only about 12 percent said they had come principally to gamble, according to our sister publication Macau Business magazine. Previous studies on Macau visitors’ behaviour and spending have taken account of what has been described as a “cultural disposition” of Chinese people to under report gambling as the main purpose of a visit. The study found that how much a hotel costs to stay in, which chain it belongs to and where it is, are the three most important considerations for independent visitors in choosing accommodation. The room rate is the main concern
of visitors travelling independently. Business travellers are more concerned about where in town the hotel is. Gamblers tend to be guided by hotel brands, it suggests. The study authors – Ruth Yeung Mo Wah and Wallace Yee – also found that recommendations, including reviews found online, carry more weight when a visitor chooses a hotel than the facilities the hotel has to offer. They advise hoteliers to make good use of the Internet to promote their establishments. The researchers say an independent visitor’s choice of hotel depends on the purpose of his or her visit. “A clear vision of tourists’ reasons for selecting a hotel is vital for the future development of the hotel sector,” their study report says. The results were disclosed at an international conference on tourism and hospitality in the Australian city of Melbourne.
Business Daily asked the Public Prosecutions Office to confirm or deny Fong Keng Van’s assertion. It would not comment. ThegovernmentgrantedtheplotNam Van plot to Fong Keng Van in 1994. It postponed the original deadline for the development of the plot until 2008 because of what Secretary for Transport and Public Works Lau Si Io called in 2007 “difficulties linked to infrastructure execution and the economic climate”. In May 2007 the government changed the concession contract to allow Fong Keng Van to use the plot for the construction of a 25-storey, five-star hotel with 52,505 square metres of floor space. It gave the company until August 2008 to build the hotel. The Land, Public Works and Transport Bureau said that as the deadline had approached, Fong Keng Van had asked for second postponement, saying it did not have
enough time to finish the project. Thecompany’samendedcontractsays itmustdeveloptheplotontimeorfaceafine of up to 900,000 patacas (US$112,750). The bureau said it could still fine Fong Keng Van unless the developer could prove that the delay in the construction of the hotel was due to “particular and duly justified reasons”.
The application assessment was in the meantime suspended due to a still ongoing judicial action Land, Public Works and Transport Bureau
December 11, 2012 business daily | 3
MACAU
Macau Cable TV rues lack of healthy competition Operator says there is not enough healthy competition in either the cable television or the telecommunications markets Stephanie Lai
sw.lai@macaubusinessdaily.com
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he government is aiming for open competition in the cable television market, according to Macau Cable TV Ltd’s operations director, Ricky Tam Mong Teng. Mr Tam told Business Daily that this is what the government had said in initial negotiations on renewing his company’s cable television concession, which expires in 2014. Public antenna companies dominate the cable television market because their services are cheaper. Asked if the government might give public antenna companies licences to offer cable television services, Mr Tam replied: “In terms of the concrete arrangement of how the licences will be issued, and how many will be issued, that is not clear yet.” He added: “But the government’s main direction will be aiming for an open TV market.” He said Macau Cable TV was worried not by the prospect of newcomers in the market, but by the unregulated environment for doing business. “Open competition is not a problem. But what the government really needs to carefully consider is how it will license TV operators,” Mr Tam said. This year Macau Cable TV sued the public antenna companies, alleging in the Court of Second Instance that they relayed copyrighted television channels. “The court suggested that we should sue the government instead, as it has the authority to maintain order in the market, and we don’t have contracted relations with the public antenna companies,” said Mr Tam. Macau Cable TV has not ruled out further action against the public
Macau Cable TV will lose its legal monopoly over cable television in 2014 (Photo: Manuel Cardoso)
antenna companies. “There has not been a decision yet as we need to seek legal advice on the court ruling,” Mr Tam said. What Macau Cable TV has done in the meantime is ask arbitrators to uphold its contention that the government is “failing to maintain a fair market”. The company is seeking 500 million patacas (US$62.6 million) in compensation from the government.
Not truly fair Mr Tam says that the public antenna companies are still relaying copyrighted, unencrypted television channels, particularly mainland Chinese and Taiwan channels that carry popular series, despite the amendment of the
copyright law in June. He says this is damaging for his company. “The issue is that these medium or small-scale Taiwan channels would not like to see their programmes aired in Macau, as they see little profit in it,” Mr Tam said. “These channels want to avoid the risks as unauthorised broadcasting is still happening in the local market.” Macau Cable TV is waiting for a reply from the government to its request to use its cable network for telecommunications, so it can offer internet access. “In a rough estimate it would take us about six months for the launching of the internet services, if the government accepts our proposal,” said Mr Tam.
Helicopter operator ‘looks forward’ to airspace reform Company wants to add more regular flights, says CEO
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ky Shuttle Helicopters Ltd – the sole operator of helicopter services connecting Hong Kong, Macau and Shenzhen – wants to open more mainland routes but is still waiting for airspace restrictions to be relaxed. “We look forward to the opening up of the airspace, as soon as possible,” said Cheyenne Chan, Sky Shuttle’s chief executive, in an interview with our sister publication Macau Business magazine. “[After that], we hope to be in a position to add more regular flights to more cities.” China’s military controls the mainland’s airspace. Reform has been discussed for several years to allow more open access to it by civilian transport. That has not so far been forthcoming. In 2010 China’s Central Military Commission – the supreme institution
governing the People’s Liberation Army – and the State Council, China’s cabinet, said in a policy paper that low altitude airspace – i.e., below 4,000 metres (13,000 feet) – would be gradually opened to private aircraft. Zhu Shicai, an official with the State Air Traffic Control Commission, said in August reforms would be carried out over ten years. Helicopter flights between Macau and Hong Kong – most of them by Sky Shuttle – decreased six percent year-on-year to around 12,500 for the first 10 months of 2012, while those between Macau and the mainland were down by five percent to fewer than 2,850, Macau Customs Service figures show. In 2011, 82 percent of days had weather suitable for helicopter services. “In 2012, the proportion of flyable days for the first nine months stood at 75 percent,” said Ms Chan.
His company did not bid for fixedline telecommunications licences, which the government is auctioning to break the monopoly of Companhia de Telecomunicações de Macau SARL (CTM). “We did not join the bidding in the end because the telecommunications market is not truly fair ,” Mr Tam said. “Even corporations like China Telecom and Hutchison gave up on the bidding, because the cost is high for newcomers to the market as they would have to lay their own network,” he said. “Aside from the maintenance costs, CTM can use the old network – the so-called chartered assets – free. They literally don’t need to make much in the way of new investment,” he said. “But for the others it’s very unfair.”
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business daily December 11, 2012
macau
MGM Grand Paradise credit now one notch below investment grade Fitch Ratings likes Macau operations’ strong cash flow and low leveraging casino resort on Cotai to ‘BB+’ – ‘speculative’ but just below investment grade. Its previous secured credit rating was ‘BB/RR2’ – firmly in the ‘speculative’ category. Fitch arrived at its estimate for the dividend contribution of MGM Grand Paradise to the parent based on pre-tax earnings at the current single casino operation on Macau peninsula – MGM Macau. Its assessment excludes future contributions from the planned MGM Cotai resort. MGM China says it will take 36 months to build the property, suggesting an opening date in late 2015 or the first half of 2016, subject to government approvals. The United States-based MGM Resorts is a 51 percent owner of MGM China Holdings Ltd. Fitch says in its latest review of MGM and its Macau investment: “MGM’s share of Macau dividends is projected to be US$200 million to US$250 million per year, as the Macau subsidiary – with US$678 million in latest 12 months EBITDA [earnings before interest, taxation, depreciation and amortisation] – is expected to retain ample flexibility to pay dividends.”
Cash flow MGM Macau
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itch Ratings says that MGM Grand Paradise SA – the Macau casino operating entity of MGM China Holdings Ltd – is likely to contribute up to US$250 million (two billion
patacas) per year to MGM Resorts International’s earnings in the form of dividends. The ratings firm also upgraded senior secured credit facilities for MGM China’s planned new
The agency says that the strong cash flow from Macau casino operations meant that as of September 30 MGM Grand Paradise’s ‘leveraging’ – the ratio of borrowed money to self-generated cash was better than 1:1 – i.e., only 0.8 times. That has given it plenty of leeway to increase its credit facility in order to help pay for the US$2.6
billion project costs of MGM Cotai. On October 22 MGM China said in a filing to the Hong Kong Stock Exchange that it had successfully negotiated new credit facilities to be spent mostly on MGM Cotai, in the Hong Kong dollar equivalent of US$2 billion, including a fully drawn US$550 million term loan and an undrawn US$1.45 billion revolving credit facility. MGM China said in a filing on October 18 that the Macau government had granted it a land concession for 7.2 hectares (17.8 acres) of land on Cotai. The company said it intends – subject to approval – to build a casino resort with 500 tables and 2,500 slots as well as 1,600 hotel rooms. As well as upgrading MGM Grand Paradise’s secured credit rating, Fitch has also upped the firm’s ‘issuer default rating’ from ‘B+’ (weak) to ‘BB-’ (speculative). MGM Grand Paradise might have had an upgrade before now, were it not for the debt load of its parent MGM Resorts. The latter had to reschedule its burden after the US$9.2 billion CityCenter project had its first phase opening into economic headwinds in Las Vegas in December 2009. MGM Resorts International said last week it plans to raise new, cheaper, debt in order to reduce its interest burden. Based on the company’s last quarterly earnings release, its net debt (net of cash) stood at almost US$13.9 billion. Fitch estimates the newly negotiated debt deal could save MGM Resorts US$200 million annually in interest charges. M.G.
Investment grade rating for LVS secured credit
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itch has given an investment-grade rating to senior secured credit facilities for Las Vegas Sands Corp. and its Macau and Singapore operations. It assigned a ‘BBB-’ rating to LVS and to Venetian Macau Ltd – the former’s Macau development unit. It says the outlook is
‘stable’. But it maintains a ‘BB+’ (moderately weak) assessment on LVS’s issuer default rating. This, said Fitch: “…reflects the risk that the company could increase leverage in order to pursue multiple large-scale projects at once. LVS has historically been an aggressive developer and is actively seeking
projects in several jurisdictions where certain regulatory changes are required to make large-scale casino resort developments feasible and more operator/developer friendly.” But Fitch forecasts Sands China Ltd – LVS’s 70-percent owned Macau operating entity – will outperform the market forecasts
in 2013 because of its strength in massmarket gaming. Fitch expects eight percent growth in gross gaming revenue for Macau in 2013, led by double-digit expansion in the mass market, with VIP lagging in the low-tomid single digit range.
Stay in the finest hotels in Macau and read Business Daily
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December 11, 2012 business daily | 5
MACAU
Melco Crown to dilute in Philippines, limit exposure Listed entity allows Macau casino firm to raise public cash for Manila project, say sources Michael Grimes
michael.grimes@macaubusinessdaily.com
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elco Crown Entertainment Ltd’s decision to buy a Philippines-listed company as a vehicle for its planned joint venture casino there will allow the company to raise equity from the public via shares. That will also mean the firm doesn’t fall foul of Philippine laws that prevent foreigners owning majority stakes in casino projects. The project – Belle Grande Manila Bay – has previously been described as a US$1 billion venture. MCE has committed to spending US$650 million (5.2 billion patacas) on it, according to a Hong Kong Stock Exchange filing in October. The City of Dreams operator will pay 1.26 billion pesos (245.6 million patacas) for a 93.1 percent stake in Manchester International Holdings Unlimited Corp., according to another Hong Kong filing on Friday. Manchester International’s share price jumped 2.67 percent to 16.9 pesos yesterday in Manila according to Bloomberg data. A share issue would also have
the fortunate side effect of limiting the risk exposure of the core MCE business in Macau to the Manila casino market, a person familiar with the situation told Business Daily. “The Manila market currently is mainly local rather than international players,” said the person. “It’s not yet proven as an international market. A big player in Manila is one gambling a million [Philippine] pesos in a session. But that’s only US$25,000 – less than HK$200,000. A Macau high roller can get through that in half an hour,” added the person.
Investment barriers Another potential hurdle for Melco Crown in Manila is that the gaming regulator in the Australian state of Victoria, where one of the MCE partners – ASX-listed Crown Ltd – has its flagship casino operation, has not yet signed off on the proposed investment. The Philippine Amusement and
Belle Grande Manila Bay
Gaming Corporation (PAGCOR) – the operator of state casinos-cumregulator of the whole industry – has a dream to create a Las Vegasstyle collection of casino resorts in the nation’s capital. It and the government hope Entertainment City Manila at Manila Bay – currently scheduled to have at least four gaming resorts costing at least US$1 billion each – will draw large numbers of foreign tourists. The Department of Tourism in the Philippines says 2011 saw a
record 3.9 million visitor arrivals to the country. But that’s only 14 percent of the 28 million mainly Chinese tourists that flocked to Macau in the same period. In September other sources told Business Daily that MCE hoped to raise at least US$300 million – via a share offering on the Philippine Stock Exchange – toward its total investment in the Belle Grande resort shell being constructed by Filipino-Chinese entrepreneur Henry Sy’s Belle Corp.
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business daily December 11, 2012
macau Sai Van market again under consultation A second three-month public consultation over the proposed plan to set up a night market in the Sai Van Lake area will start tomorrow after the controversial plan raised public concern and opposition in the past few months, said a statement released by a cross-departmental taskforce yesterday. The team, led by Secretary for Administration and Justice Florinda Chan, will hold four public sessions, with the first one on December 16. The administration will also instruct a third-party institution to carry out a telephone survey on the project.
Hengqin officials to declare assets in anti-graft scheme A pilot scheme to compel officials to be more open and honest may give investors more confidence, but critics say it will make no practical difference Tony Lai
tony.lai@macaubusinessdaily.com
The effects will be limited unless the project is tested on some economically developed regions Liu Bolong, political science professor at the University of Macau
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he mainland Chinese authorities have chosen Hengqin Island and two other parts of Guangdong for a pilot scheme to require senior officials to declare their assets as a deterrent to corruption. The China Business Journal reported on Sunday that officials must declare their personal assets and those of their families, and that some of the information they disclosed would be published. The newspaper, quoting an unidentified source whom it described as being close to the Guangdong Commission for Discipline Inspection, said the scheme would be tried out in the Hengqin New Area, the Nansha New Area of Guangzhou and Shixing county in Shaoguan. The source said officials could be dismissed and prosecuted if they failed to disclose their assets or lied about them. “[The] preparation work for the introduction of the test project is well under way in the three areas,” said the discipline watchdog, quoted by mainland media China Daily. The authorities on Hengqin set up this year the mainland’s first office that brings under one roof four organs of government with anti-corruption responsibilities. Liu Bolong, a professor of political science at the University of Macau, said the new scheme would make
We will not invest in Hengqin only because the authorities pledge to fight corruption Vong Kok Seng, vice-president of the Macau Chamber of Commerce
Hengqin Island is to be covered by an assets disclosure pilot scheme, along with Nansha district
little difference. “The places chosen for testing this scheme are new developing areas like Hengqin, where development has only just started,” Mr Liu told Business Daily. “The effects will be limited unless
Animal protection group wants fine for pet shops
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et shops could face fines of up to 60,000 patacas (US$7,500) and be forced to close if they flout new rules proposed by an animal rights group. According to a proposal sent to the Secretary for Administration and Justice Florinda Chan, pet shops would be banned from selling animals younger than three months. They would also be required to registered and neuter all pets older than six months, Anima – the Society for the Protection of Animals proposed. In addition, all pet sales would have to be reported to the Civic and Municipal Affairs Bureau, says the proposal released on Saturday.
The maximum fine for any infraction to these rules would be 10,000 patacas. But for a second infraction that value would soar to 60,000 patacas and the shop could be shut down. The association is also joining hands with animal protection groups Grey2K USA, Animals Australia e Animals Asia Foundation to once again push for the closing of the dog-racing track. The alliance has asked over 160 international organisations to write letters to Chief Executive Fernando Chui Sai On calling for the Canidrome to be shut down. V.Q.
they test the project on economically developed regions.” He said corruption was more common in developed regions. “More important, the central government should fight against corruption by beginning with institutional changes,” he said. Mr Liu said he did not see how the scheme would make any difference to investment by Macau in Hengqin or cooperation on the island between Guangdong and Macau.
Confidence booster Vong Kok Seng, the vice-president of the Macau Chamber of Commerce, said: “The business sector has always had unfaltering confidence about Hengqin’s development.” Mr Vong said building a “corruption-free environment” with greater transparency was a global aspiration. “We will not invest in Hengqin only because the authorities pledge to fight corruption. We do this because we see opportunities,” he said. He said it would be more practical if the government undertook more projects on the island that would help small and medium enterprises. Choi Meng Wa, the president of the Macau Industry and Commerce Association, said of the new scheme: “This will boost the confidence of Macau businesses.”
The central government surely knows nothing bad will happen in Hengqin, and that’s why they picked this place Choi Meng Wa, president of Macau Industry and Commerce Association
Mr Choi explained: “Though the actual impact will not be big, this helps Macau businessmen psychologically, through knowing some measures can safeguard their rights.” He said Macau firms that were already present on Hengqin or interested in a presence there would be treated in a “just and fair” manner. “The central government surely knows nothing bad will happen in Hengqin and that’s why they picked this place for this trial scheme,” he said. Mr Choi’s own company, shopping mall operator White Horse Investment Ltd, has expressed interest in 30,000 square metres of land on Hengqin that the Guangdong authorities are reserving for Macau enterprises. The submission of bids ends later this month. Mr Choi hopes more projects in Hengqin like this land plot, worth between US$50 million (400 million patacas) and US$100 million, could be open up for the city’s investment.
December 11, 2012 business daily | 7
MACAU
Investors lukewarm towards mainland Macau investors are taking part in marginally more projects in mainland China this year, but are putting less money into them Tony Lai
tony.lai@macaubusinessdaily.com
US$40 million (320 million patacas). In the first 10 months of this year the number of Macau investments in the mainland was 230, one more than in the equivalent period last year. But the value of these investments was US$470 million, 13.3 percent less. The mainland authorities have approved over 13,000 investments by Macau enterprises since 1990. Altogether these investments are worth US$10.9 billion, or 0.86 percent of all external investment in the mainland. The value of trade between the mainland and Macau decreased to US$260 million in October, 7.4 percent less than a year before, as Macau imported less. But the value of bilateral trade in the first 10 months rose to US$2.3 billion, 11.3 percent more than in the equivalent period last year. The value of Macau’s imports in the first 10 months rose by about 10 percent to US$2.1 billion and the value of its exports rose by 22.3 percent to US$170 million. Bilateral trade has grown since the mainland-Macau Closer Economic Partnership Arrangement came into force in 2004. Macau’s exports have recovered Trade between Macau and mainland China decreased in October (Photo: Carmo Correia)
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he number and value of Macau investments in mainland China fell again in October, having recovered the month before, official data show. The Ministry of Commerce
approved 19 investments by Macau enterprises in October, having approved 35 in September – the most in any month since June 2011. The value of the investments in October declined by one-third to
China govt to extend tax reform policy Transport services between Macau, mainland now pay no value-added tax Stephanie Lai
sw.lai@macaubusinessdaily.com
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ompanies running transport services between mainland China and Macau, Hong Kong and Taiwan are exempt from valueadded tax starting from December 1, the Chinese Ministry of Finance said. The move is part of a taxcut programme in trial since the beginning of this year, according to a statement released last week. China’s tax-cut programme is an attempt to deal with the double taxation – business tax and valueadded tax – that has been impeding the development of service sectors, Chinese authorities explained. According to the policy in trial, “modern” service sectors, including information technology, cultural and creative industries, property rentals, accounting and logistics, will pay value-added tax to the government
instead of a business tax. Shanghai was the first city replacing the business tax with valueadded tax for some of its service sectors, including the transport sector, starting from January. The cities of Beijing, Tianjin and the provinces of Jiangsu, Anhui, Fujian, Guangdong, Zhejiang and Hubei have been carrying out the tax-cut programme on a trial basis starting from August 1. The tax reform will extend to telecommunications, railway transport, and construction and installation industries in 2013, the Ministry of Finance noted. The ministry also noted that Chinese movie companies are exempted from paying value-added tax for transferring film copyrights from December 1 to the end of 2013, as the programme stipulated.
this year, amounting to 6.8 billion patacas in the first 10 months, 21.5 percent more than in the equivalent period last year. The value of exports was higher than a year before for the ninth consecutive month in October – the longest spurt of growth in exports since an 11-month rise between 2005 and 2006, when exports of textiles dominated the city’s trade.
US$40 mln
Macau investments in mainland China approved in October
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business daily December 11, 2012
GREATER CHINA Beijing may extend ban on IPOs China may extend a two-month ban on initial share sales until February as stocks in Shanghai trade near a three-year low, the South China Morning Post reported. Regulators are studying ways to improve the approval process for IPOs and haven’t set a time frame for how long the suspension will last, the Hong Kong-based newspaper said, citing an unidentified official. The ban may be lifted after the Lunar New Year holiday in February, it said, citing bankers it didn’t name.
November export growth weaker than expected PPR acquires jewellery Qeelin PPR SA, the French owner of Gucci, acquired a majority stake in Chinese jeweller Qeelin for an undisclosed price to bolster growth in its largest market for high-end goods. Qeelin has 14 boutiques and its jewellery is sold in stores including Colette in Paris and Restir in Tokyo, PPR said yesterday in an e-mailed statement. The transaction will probably close in January, Paris-based PPR said. The acquisition shows China’s importance to global luxury brands, who rely on its increasingly affluent shoppers to drive sales at home as well as on visits overseas. Prada SpA, the Italian maker of US$3,000 luxury handbags, last week reported third-quarter earnings that beat analyst estimates after Asian tourists fuelled gains in Europe. “We’ve gotten to the point where Chinese consumers have had a lot of initial experience purchasing luxury products,” said Ben Cavender, analyst at China Market Research Group in Shanghai. “They are looking for the next step in terms of products and are not ready to buy haute couture full suits yet. Jewellery is a good next step for them.” Sales of discretionary goods in China will grow by a compounded annual rate of 13.4 percent between 2010 and 2020, McKinsey & Co. said in a report in March. Qeelin runs seven boutiques in mainland China, four in Hong Kong and three in Europe. The brand sells fine jewellery, accessories and watches made of precious metals and stones. PPR has “great ambitions” for the brand, PPR CEO Francois-Henri Pinault said in the statement.
Ping An’s new business value rebounds Ping An Insurance (Group) Co., whose biggest shareholder HSBC Holdings Plc agreed to sell its 15.6 percent stake, said growth in new business value recovered in the second half of 2012 after a decline in the first six months. The embedded value of new individual life policies “has resumed growth” and the most profitable, protection-type, 10-year or longer contracts sold through agents have “returned to the path of growth after some volatility in the first half,” chief insurance officer Li Yuanxiang told reporters in Guilin. Ping An’s new business value, which gauges the estimated profit from new policies sold, may rise 13 percent in the second half as agent sales shift back to long-term risk-protection products, improving from a 9 percent drop in the first half, Barclays Plc said last week. “We’re encouraged by the actions the company is taking to improve the quality of its agency force, including comprehensive training plans, welldesigned sales support and monitor systems, and clear growth targets,” Barclays analysts led by Mark Kellock wrote in a report after meeting Mr Li. “The successful execution in agency is critical for future new business value growth – a key driver of value creation.” Margins of new business should be able to remain stable for the long term, a trend that investors including Thailand’s Charoen Pokphand Group that is buying the insurer’s stake from HSBC, care more about than the short-term numbers, Mr Li said. HSBC last week agreed to sell its stake in Ping An Insurance to Thai billionaire Dhanin Chearavanont’s Charoen for US$9.4 billion as Europe’s biggest bank by market value moves to revive profit and boost capital. Bloomberg News
As global demand remained subdued
C
hina’s exports rose in November at a much weaker pace than expected and imports were flat compared with a year earlier, taking some shine off weekend data that suggested a revival in the world’s secondbiggest economy was deepening. Exports rose 2.9 percent from a year earlier, well below expectations for a 9.0 percent increase and October’s 11.6 percent pace, customs figures showed yesterday. Imports were unchanged on the year, weaker than forecasts for a 2.0 percent increase. The data represented the weakest performance for exports and imports since August. “The export slowdown shows external demand faces uncertainty due to concerns over the fiscal cliff in the U.S.,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “Nonetheless it does not change our view that growth is on track for a strong recovery in Q4, as [growth] is mostly domestically driven.” The trade data follows government figures on Sunday that showed industrial output rose a higher-than-expected 10.1 percent
in November from a year earlier, the fastest pace since March. The weekend figures also showed consumer inflation bounced off a 33-month trough, but remained at relatively low levels, and that retail sales growth picked up. “The extremely weak exports data have thrown in one more piece of evidence about the fragility of the recovery,” Ren Xianfang, a Beijing-based China economist with research firm IHS Global Insight, said in a note. Hurt by wilting export growth and lacklustre domestic demand partly owing to measures to cool down a hot property market, growth hit a three-year low of 7.4 percent in the July-September quarter and is poised this year for its weakest expansion since 1999. The People’s Bank of China, the central bank, cut interest rates in both June and July and has lowered banks’ reserve requirement ratio (RRR) by 150 basis points since late 2011, freeing an estimated 1.2 trillion yuan (US$193 billion) for lending. China’s economy is expected to grow in 2012 by 7.5 percent – in line with a government target –
Trade data – weakest performance since August
before picking up to expand 8.5 percent in 2013, the Organisation for Economic Cooperation and Development said in a November report.
Rebound looming “A rebound of the economy is just a matter of time, given that the destocking cycle which started in the final quarter of 2011 is nearing an end,” Mr Ren said. “But political factors have apparently contributed to a much earlier rebound.” Like factory output, retail sales were also stronger than expected. The 14.9 percent gain was above forecasts for a 14.6 percent increase. Analysts had expected industrial
AIG confirms sale of plane unit to Deal is expected to close in the second quarter of next year
A
Chinese group agreed to buy 80.1 percent of American International Group Inc.’s plane-leasing unit for US$4.23 billion in the nation’s largest acquisition of a U.S. company. The International Lease Finance Corp. acquirers, led by New China Trust Co. chairman Weng Xianding, have an option to buy another 9.9 percent, New York-based AIG said yesterday in a statement. The transaction, which values ILFC at US$5.3 billion, passes China Investment Corp.’s US$3 billion purchase of a stake in Blackstone Group LP in 2007 as the biggest Chinese-U.S. deal. The acquisition gives the group control of the world’s second-largest aircraft lessor as rising travel in China and Asia spurs demand for planes. AIG, which counts the U.S. government as its largest investor, is selling Los Angeles-based ILFC as chief executive Robert Benmosche
focuses on insurance operations and works to reduce debt. “AIG has made a strategic decision to be really an insurance company,” Paul Newsome, an analyst at Sandler O’Neill & Partners LP, said in an interview before the deal was announced. “Most investors in AIG and potential investors in AIG would like to see AIG be a simpler company.” AIG will record a US$4.4 billion non-operating loss, which includes a US$1.8 billion non-cash charge tied to tax assets, when the transaction meets criteria for “held for sale” accounting treatment, according to the statement.
Regulators approval The deal is subject to approval by U.S. and Chinese regulators. The group investing in ILFC includes New China Trust, China Aviation Industrial Fund and P3
Investments Ltd, AIG said. China Life Insurance Co. and a unit of ICBC International Holdings Ltd, the investment banking arm of the world’s biggest bank, may also join once the deal is approved by regulators and the option to buy a further stake is exercised, it said. ILFC will continue to be run by CEO Henri Courpron and president Frederick S. Cromer, according to the statement. It will remain as a
US$4.4 bln
AIG expected loss on the sale
December 11, 2012 business daily | 9
GREATER CHINA Lenovo’s parent plans public offering Legend Holdings Ltd, the parent company of personal computer maker Lenovo Group, plans to list in China’s A-share market sometime between 2014 and 2016, China Business News quoted the firm’s chairman as saying. Legend Holdings, which also owns private equity fund Hony Capital, venture capital firm Legend Capital and real estate firm Raycom, will invest around 20 billion yuan (US$3.2 billion) by 2014 to develop its businesses, chairman Liu Chuanzhi told the paper.
Xi travels to Guangdong echoing Deng visit
KEY POINTS Nov exports up 2.9 pct, Oct rose 11.6 pct
Trip may signal new push to spur economic growth
Imports flat on year, versus 2.4 pct Oct rise Both figures weaker than expected Takes shine off strong domestic activity figures
output to expand by 9.8 percent. Fixed asset investment, or spending in such areas as bridges, factories and housing, rose 20.7 percent in the first 11 months of the year over the same yearearlier period. That compared with expectations for a 20.8 percent gain. Sunday’s inflation report showed China’s consumer price index rose 2 percent in November from a year ago, slightly less than forecasts for a 2.1 percent gain. Vegetable prices soared 11.3 percent. Although that leaves consumer inflation well below Beijing’s 4 percent target for 2012, the central bank has said rising prices represent the biggest risk long term as China makes a transition from a planned
to a market-based economy. Underlining its worries about consumer and property inflation, the central bank has not cut interest rates or the RRR since July. Instead it has used open-market operations to manage cash in the economy to try to target its impact more precisely. November’s data showed price momentum may also be changing in industry. Factory-gate prices fell 2.2 percent in November from a year earlier. It marked the ninth straight month of decline but was the second month that deflation narrowed after September’s 3.6 percent drop, the steepest in nearly three years. Reuters/AFP
Xi Jinping chose to visit Guangdong in his first trip as party leader
o Chinese investors
U.S. corporation and be registered with the Securities and Exchange Commission. A new board, which will include Mr Benmosche, will be appointed following the completion of the transaction. The deal is expected to close in the second quarter of next year, AIG said. A deal would be “credit positive” for both AIG and ILFC, Moody’s
X
Investors Service Inc. analysts Mark Wasden and Bruce Ballentine said in a weekly report. “AIG would shed a noncore operation with significant debt, while ILFC would benefit from clarity regarding its future ownership and potentially greater access to clients and funding sources in growing Asian markets.” Bloomberg News
i Jinping visited the southern province of Guangdong in his first trip since taking over the Communist Party, drawing parallels to a 1992 tour by paramount leader Deng Xiaoping that spurred economic opening. The visit included stopping on December 8 at a statue of Mr Deng built in the city of Shenzhen to commemorate the late leader’s visit two decades earlier, according to footage broadcast by Phoenix Television. Mr Xi was shown telling members of his entourage, which Phoenix said included retired officials who had accompanied Mr Deng on his trip, that China’s reforms were correct and must continue. Th e n ew p a r ty l e a d e r , w h o succeeded Hu Jintao as the Communist Party’s general secretary last month, confronts economic growth this year forecast to be the lowest since 1999. The trip may signal that his tenure will follow that of Mr Deng, whose 1992 visit to Guangdong was credited with helping rekindle China’s push to overhaul its economy after growth plummeted following the 1989 Tiananmen Square crackdown. “Now is the time to remind people that only by continuing the Dengstyle reform can China continue to
cross the river by touching on the next stone,” said Huang Jing, a political science professor at the National University of Singapore, in reference to a phrase Mr Deng made famous at the outset of his push to open China’s economy starting in 1978. Mr Deng, who oversaw China’s economic rise after Mao Zedong’s death in 1976, championed the idea of testing policies locally and adopting them more broadly if they succeeded. “Now they are already in the middle of the river, where the water is deep and runs fast,” Mr Huang said. “They will fall in the river and drown unless they find the next stepping stone fast, and they know that.” Reports of Mr Xi’s trip to Guangdong have yet to be carried by the official Xinhua News Agency, state broadcaster China Central Television or the Communist Partypublished People’s Daily newspaper. Mr Xi’s visit to Guangdong sets him apart from previous leaders such as Hu Jintao and Jiang Zemin, whose first official trips were to Communist Party “revolutionary meccas in former inland guerrilla bases,” said Willy Wo-Lap Lam, an adjunct professor of history at the Chinese University of Hong Kong. Bloomberg News
10 |
business daily December 11, 2012
ASIA Australia moves to wind up Tinkler unit Australia’s tax office is seeking to wind up the holding firm of Nathan Tinkler over unpaid debt, one of the highest profile lawsuits filed against the coal baron, who had his private helicopter and jet seized by liquidators in another recent case. Mr Tinkler became Australia’s youngest billionaire by riding on the back of the country’s mining boom, but a slide in coal prices has hit his net worth. The Deputy Commissioner of Taxation launched action yesterday in the New South Wales Supreme Court, pursuing Tinkler Group Holdings Administration Pty Ltd over an unspecified debt.
Japan sinks into recession Data keeps BOJ under pressure to ease more Kaori Kaneko
J
apan’s economy contracted for a second straight quarter in JulySeptember, revised government data showed yesterday, indicating that weak global demand nudged the export-reliant economy into a mild recession. Analysts expect another quarter of contraction in the final three months of this year due to sluggish exports to China, keeping the Bank of Japan under pressure to loosen monetary policy as early as this month. “There have been some positive indicators out in October but there is still a good chance that Japan’s economy will suffer another contraction in the October-December quarter,” said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo. “The Bank of Japan may ease policy this month, as suggested in remarks by Deputy Governor Kiyohiko Nishimura last week. The bias is for further easing, so even if the central bank stands pat this month it will likely act in January.” Banks including Citigroup Inc. also forecast another contraction. “It’s likely that Japan’s economy
hit bottom in the last quarter,” said Shuichi Obata, senior economist at Nomura Securities in Tokyo. “The new government will aim to have solid growth by the middle of next year as they have to decide whether to raise the sales tax or not.” Japan’s gross domestic product (GDP) shrank 0.9 percent in JulySeptember from the previous quarter, revised government figures showed, unchanged from preliminary data reported last month. That compared with economists’ median forecast for a 0.8 percent contraction.
-0.9 %
Japan’s GDP shrank in the July-September period from the previous quarter
The figure translates into an annualised contraction of 3.5 percent in real, price-adjusted terms, also unchanged from the preliminary data issued last month.
Economic contraction The government revised GDP figures for April-June to show a small contraction of 0.03 percent, indicating that the economy contracted for two straight quarters and meeting the technical definition of a recession. The prior figure had shown growth of 0.1 percent. Capital expenditure fell a revised 3.0 percent, compared with a 2.8 percent decline expected by economists and a preliminary reading of a 3.2 percent decline. The economy will shrink an annualised 0.4 percent in the October-to-December period and grow 1.6 percent in the following three- month period, according to a median estimate of 21 economists surveyed by Bloomberg News. Separate data showed Japan’s current account surplus fell 29.4 percent in October from a year earlier,
The country’s economy contracted for a second straight quarter
compared with the median estimate for a 59.2 percent annual decline, largely due to shrinking exports and increasing costs of fuel oil imports. Japan’s main opposition Liberal Democratic Party, a champion of big spending on public works, is on course to win a solid majority in a lower house election on Sunday, according to media polls, and return to power for the first time since 2009. Opposition leader Shinzo Abe has called for more fiscal stimulus and “unlimited” monetary easing, and has said that economic conditions next year will determine whether the
Vietnam lowers growth outlook Renesas Annual GDP estimate cut to 5.1 pct, inflation forecast at 7.5 pct Ho Binh Minh
V
ietnam’s economic growth will slow slightly to 5.1 percent this year, a government report said, but the central bank will maintain a prudent and flexible policy on interest rates next year as inflation remains a concern. The estimate for gross domestic product this year was previously 5.2 percent, and that target was lowered from 6.0-6.5 percent earlier in the year. The economy expanded 5.89 percent in 2011. The country’s annual inflation is forecast at 7.5 percent this year, while lending rates have eased and foreign currency reserves have risen to a level equivalent to 12 weeks of imports, the Planning and Investment Ministry said in a report yesterday. Early this year the central bank tightened lending to help control inflation, making it difficult for domestic firms to access fresh funds. Lending only eased from the second half of the year when Hanoi projected a stabilising inflation rate. Vietnam’s consumer price inflation stood at 18.58 percent in
2011, the highest since 2008 when prices jumped 22.97 percent. The International Monetary Fund said “persistently high core inflation with weak demand conditions may still indicate high inflation expectation”, while reform of the banking system, now facing high bad debt and slow lending, was slower than expected. “There is an urgent need to remedy major structural weaknesses that have become critical to the macro-economy,” Sanjay Kalra, IMF Resident Representative in Vietnam, said in a report, a copy of which was released before a Vietnam donors’ meeting in Hanoi. “Given the weaker growth outlook and the need for banking sector reform and consolidation through 2015, NPLs are likely to increase further,” the report said, referring to non-performing loans. The State Bank of Vietnam is working on a plan to manage bad debts, Governor Nguyen Van Binh told donors and government officials at the meeting, without providing a timeframe.
secures US$1.8 bln bailout
S
The consumer price inflation stood at 18.58 percent in 2011
The central bank will continue its prudent and flexible policy on regulating interest rates, keep control on lending growth for each bank in line with the inflation target, while fresh loans should go to agriculture, production of export goods and job creation, Mr Binh said. It will also continue to restructure banks and allow “domestic and foreign investors to participate in the process of banking reform,” he added. Reuters
truggling Japanese chipmaker Renesas Electronics Corp said yesterday it would raise up to US$2.43 billion from a share sale and a separate capital injection to rescue its troubled balance sheet. Renesas said it would sell about 150 billion yen (US$1.82 billion) worth of shares to the state-backed Innovation Network Corp. of Japan (INCJ) and top corporate names including Toyota Motor Corp and Panasonic Corp. INCJ is also ready to kick in another 50 billion yen worth of investments or loans, it added, as the chipmaker bleeds cash. “The global financial crisis, natural disasters such as last year’s earthquake and flooding in Thailand... have been threatening Japan’s major industries, manufacturers in particular,” Renesas said in a statement announcing the deal. “We face a situation where our
December 11, 2012 business daily | 11
ASIA S.Korea to boost coal power generators South Korea is considering allowing non-state companies to generate coal-fired power for the first time in three decades, as it adds capacity to prevent blackouts that cost the economy US$11 billion. “It will be good to allow a certain number of private coal power generators,” said Nam Ho Ki, the chairman of Korea Power Exchange, the government-run company that oversees the country’s power supply. Korea Power is aiming to decide on more than 30 applications from state and private companies to build new plants by the end of the year, Mr Nam said.
Seoul may further tighten forex derivatives rules Future adjustments may include bank levy, bond market inflows
sales tax rise goes ahead. A weak economic outlook and threats from politicians to limit the BOJ’s independence are likely to keep up pressure on the central bank to ease monetary policy further. BOJ Deputy Governor Kiyohiko Nishimura said last week the central bank will debate whether further stimulus is needed to support the economy, offering the strongest signal to date that it may loosen policy again at its next rate review on December 19-20 in the face of growing political pressure. Reuters/Bloomberg News
financial condition could rapidly worsen.” Renesas is one of the world’s top suppliers of microcontrollers, which function as the brain of automobiles and many electronics products. But Japan’s microchip sector has struggled with a strong yen and fierce competition, especially from South Korean and Taiwanese rivals, with Renesas in desperate need of a cash injection. The firm – created through the mergers of Hitachi Ltd, Mitsubishi Electric and NEC Corp.’s chip units – posted a whopping 94.3 billion yen loss in the three months to September owing to huge restructuring costs, and has forecast a full-year net loss of 150 billion yen. The deal announced yesterday was reportedly put together to counter an investment bid from U.S.-based Kohlberg Kravis Roberts, over fears about a key supplier of electronic parts to Japanese industry falling into foreign hands. AFP
Banks may be required to meet forex derivatives ceilings weekly
S
outh Korea may start checking banks’ daily foreign-exchange derivatives positions, finance ministry officials said yesterday, as regulators seek to strengthen the country’s defences against rapid foreign capital flows. Banks are currently required to meet their currency derivatives ceiling based on their monthly average, which officials say allows them to temporarily exceed the limit on some days then roll back the positions to meet the requirements. “Requiring the banks to meet their caps on a daily basis would be consistent with the intent behind establishing the foreign-exchange derivatives regulation,” Deputy Finance Minister Choi Jong-ku told Reuters. South Korea already lowered the ceilings on banks’ foreign currency derivatives positions in November, seeking to stem the flow of hot money into its markets. The South Korean won climbed to a 15-month high against the dollar yesterday. The won strengthened to 1,079.0 against the dollar at the end of onshore trade, compared to Friday’s close at 1,081.7. It went as high as 1,078.0 during intraday trade, its strongest since September 9, 2011. “The appetite to trade any more died down after the won’s moves were capped by the authorities. Investors offshore and onshore were in a waitand-see mode afterwards,” said a dealer in Seoul. The currency is up nearly 7 percent against the dollar so far this year. It has appreciated roughly 15 percent against the Japanese yen so far this year, as
well, putting more pressure on the country’s struggling exporters.
Moving fast Policy makers have repeatedly voiced concerns about the currency’s strength. Its appreciation has accelerated since September despite weak economic indicators, which officials said may be due to speculation. Mr Choi also said authorities may temporarily require banks to meet their caps based on a weekly average to ease the transition. The currency reacted little to the news, as most investors had already been expecting additional steps against foreign inflows. But dealers said the ministry’s comments, combined with fears of additional market interventions, will provide
KEY POINTS South Korea concerned about won’s appreciation Currency climbed to a 15-month high against the dollar Banks to meet forex caps based on a weekly average Ceiling requirements currently based on a monthly average
additional support for the dollar. “The announcement appears to be strategically timed to coincide with the won rising above the 1,080 resistance level,” Hyundai Futures analyst Lee Dae-ho said, adding that authorities may also be trying to coax importers to buy dollars by undercutting expectations for any sharp falls for the U.S. unit. From January 1, 2013, ceilings on currency derivative positions will be cut to 30 percent of equity for local banks from the current 40 percent while the cap for the foreign bank branches will be cut to 150 percent from 200 percent. The ministry is studying whether to cut these caps further, Mr Choi said. Based on current regulations, a bank that exceeds the derivatives cap will have its cap reduced based on how long the firm breached the cap and by how much. Another finance ministry official said that while the government is studying various options, tighter rules on derivatives trading is likely to come first as it takes the least amount of time to implement. The foreign-exchange authorities are also considering steps involving the non-deliverable forwards market and foreigners’ bond investments in order to bolster existing capital flows management regulations, the official said, without providing specifics. Authorities could also adjust existing levies on banks’ offshore borrowings or also start subjecting brokerages to the same levies, Mr Choi said, though adding that such steps would require additional discussions within the government. Reuters
12 |
business daily December 11, 2012
MARKETS Hang SENG INDEX NAME
NAME
PRICE
DAY %
VOLUME
12.38
1.309329
19899601
POWER ASSETS HOL
10.2
2
10895481
CLP HLDGS LTD
67.25
0.3731343
2078471
CNOOC LTD
16.78
1.084337
49268957
11.6
2.112676
7956554
SWIRE PACIFIC-A
9710413
TENCENT HOLDINGS
PRICE
DAY %
VOLUME
AIA GROUP LTD
29.9
-0.3333333
18738343
CHINA UNICOM HON
ALUMINUM CORP-H
3.45
1.470588
18438322
CITIC PACIFIC
BANK OF CHINA-H
3.34
1.212121
261907923
BANK OF COMMUN-H
NAME
PRICE
DAY %
VOLUME
67.9
1.19225
2297270
SANDS CHINA LTD
32.75
2.503912
8356149
SINO LAND CO
14.14
1.58046
3201996
SUN HUNG KAI PRO
114.6
0.1748252
2879141
95.3
-0.5738132
1416529
253.4
0.9561753
2528035
5.75
0.174216
48555050
BANK EAST ASIA
29.75
-0.6677796
1799980
BELLE INTERNATIO
16.46
1.856436
17800409
ESPRIT HLDGS
12.44
2.725021
HANG LUNG PROPER
29.05
-0.3430532
4709984
TINGYI HLDG CO
21.9
-1.351351
5900153
HANG SENG BK
118.8
0.6779661
1227802
WANT WANT CHINA
10.8
-1.098901
16642308
HENDERSON LAND D
WHARF HLDG
60
-0.4975124
2835485
BOC HONG KONG HO
23.85
-0.625
14130825
CATHAY PAC AIR
13.58
-0.4398827
2975333
CHEUNG KONG
118.5
0
2859719
7.91
0.1265823
24793236
CHINA COAL ENE-H CHINA CONST BA-H
6.12
0.8237232
208533686
23.35
-0.4264392
27157476
24
1.479915
4196648
88.55
0.453772
12448633
CHINA OVERSEAS
23.3
-1.479915
23498224
CHINA PETROLEU-H
8.62
1.292597
71797440
CHINA RES ENTERP
27.7
-0.8944544
3570160
21.6
2.12766
11203372
17.94
2.514286
14091220
CHINA LIFE INS-H CHINA MERCHANT CHINA MOBILE
CHINA RES LAND CHINA RES POWER CHINA SHENHUA-H
31.9
-0.931677
15676940
COSCO PAC LTD
55.65
0.08992806
1750514
HENGAN INTL
69.5
-2.319044
2235929
HONG KG CHINA GS
21.3
1.187648
4235148
HONG KONG EXCHNG
126.7
-0.5494505
3726341
HSBC HLDGS PLC
12802778
79.45
0.2523659
HUTCHISON WHAMPO
79.3
-0.9987516
5760763
IND & COMM BK-H
5.38
1.318267
268125685
LI & FUNG LTD
13.1
1.080247
13711855
MTR CORP
31.15
1.631321
1838632
NEW WORLD DEV
12.24
-1.449275
14221500
PETROCHINA CO-H
10.7
0.1872659
43041190
PING AN INSURA-H
60.25
0.4166667
14244274
MOVERS
37
10
3 22380
INDEX 22276.72 HIGH
22377.56
LOW
22191.17
52W (H) 22377.56 22190
(L) 17821.51953 6-December
8-December
Hang SENG CHINA ENTErPRISE INDEX NAME
PRICE
DAY %
VOLUME
CHINA PACIFIC-H
26.3
1.348748
14568180
YANZHOU COAL-H
37134126
CHINA PETROLEU-H
8.62
1.292597
71797440
ZIJIN MINING-H
1.470588
18438322
CHINA RAIL CN-H
9.3
2.649007
20574312
28.4
0.8880995
9184503
CHINA RAIL GR-H
4.73
1.068376
21922730
3.34
1.212121
261907923
CHINA SHENHUA-H
31.9
-0.931677
15676940
CHINA TELECOM-H
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.52
1.734104
164846216
AIR CHINA LTD-H
5.96
7.387387
ALUMINUM CORP-H
3.45
ANHUI CONCH-H BANK OF CHINA-H
NAME
5.75
0.174216
48555050
4.3
-0.6928406
61169347
19.18
-0.3118503
9058871
DONGFENG MOTOR-H
11.8
0.6825939
21881783
CHINA CITIC BK-H
4.25
3.15534
138709109
GUANGZHOU AUTO-H
6.48
-0.4608295
3343124
CHINA COAL ENE-H
7.91
0.1265823
24793236
HUANENG POWER-H
6.92
-3.755216
24513292
CHINA COM CONS-H
7.34
-0.9446694
11580985
IND & COMM BK-H
5.38
1.318267
268125685
CHINA CONST BA-H
6.12
0.8237232
208533686
JIANGXI COPPER-H
20.5
0
6436137
CHINA COSCO HO-H
3.76
3.296703
36850209
PETROCHINA CO-H
10.7
0.1872659
43041190
23.35
-0.4264392
27157476
PICC PROPERTY &
10.02
-0.9881423
21548442
5.25
0
8247000
PING AN INSURA-H
60.25
0.4166667
14244274
16
1.78117
22396036
SHANDONG WEIG-H
7.62
-2.056555
7994408
BANK OF COMMUN-H BYD CO LTD-H
CHINA LIFE INS-H CHINA LONGYUAN-H CHINA MERCH BK-H
NAME
PRICE
DAY %
VOLUME
12.24
0.8237232
21704247
3.08
0.3257329
31340959
ZOOMLION HEAVY-H
10.62
1.919386
28409696
ZTE CORP-H
12.74
1.594896
9460545
MOVERS
26
24
3 11020
INDEX 10993.9 HIGH
11019.38
LOW
10828.51
CHINA MINSHENG-H
8.55
4.141291
78626466
SINOPHARM-H
25.05
-0.7920792
1835251
52W (H) 11916.1
CHINA NATL BDG-H
11.18
1.268116
38112382
TSINGTAO BREW-H
44.3
0.7963595
887253
(L) 8987.76
CHINA OILFIELD-H
16.24
2.138365
7780560
WEICHAI POWER-H
32.65
-0.7598784
2011888
10820
6-December
8-December
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.67
1.908397
144023798
CITIC SECURITI-A
10.89
1.680672
104658438
AIR CHINA LTD-A
5.07
0.7952286
14259355
CSR CORP LTD -A
4.99
1.012146
47318411
ALUMINUM CORP-A
4.86
0.8298755
17840369
DAQIN RAILWAY -A
6.41
0.6279435
ANGANG STEEL-A
3.63
1.680672
27876754
DATANG INTL PO-A
3.91
ANHUI CONCH-A
17.72
0.1129944
25232461
EVERBRIG SEC -A
BANK OF BEIJIN-A
8.05
0.7509387
71087473
BANK OF CHINA-A
2.83
1.433692
71108460
BANK OF COMMUN-A
4.48
0.6741573
104068936
NAME
NAME
NAME
PRICE
DAY %
VOLUME
14.86
0.951087
28149309
SANY HEAVY INDUS
8.89
0.2254791
88394340
50610540
SHANDONG GOLD-MI
36.57
0.4946414
12010947
2.088773
14960787
SHANG PHARM -A
10.63
0.3777148
10044071
11.49
0.08710801
16839530
SHANG PUDONG-A
8.33
0.8474576
215254803
GD POWER DEVEL-A
2.36
0.4255319
86286787
SHANGHAI ELECT-A
3.88
2.105263
7621424
GEMDALE CORP-A
5.96
1.188455
68374622
SHANXI LU'AN -A
17.78
2.774566
23969775
GF SECURITIES-A
12.72
0.07867821
39502809
SHANXI XINGHUA-A
34.62
3.312444
8122549
GREE ELECTRIC
22.65
0.4880213
25666661
SHANXI XISHAN-A
11.7
1.123596
14636332
SAIC MOTOR-A
BANK OF NINGBO-A
9.32
1.414581
21960593
BAOSHAN IRON & S
4.74
0.6369427
31702454
GUANGHUI ENERG-A
15.73
-0.6944444
27007458
SHENZEN OVERSE-A
6.22
0.8103728
42523077
BBMG CORPORATI-A
7.06
3.823529
82464696
HAITONG SECURI-A
8.94
0.5624297
73351743
SUNING APPLIAN-A
6.32
0.9584665
60830659
16.75
1.885645
6616476
HANGZHOU HIKVI-A
29.31
1.48892
2357205
TSINGTAO BREW-A
30.39
0.1317957
2378170
3.87
0.78125
40455378
2.5
1.214575
43714828
WEICHAI POWER-A
24.15
-0.7806081
10584918
WUHAN IRON & S-A
BYD CO LTD -A CHINA CITIC BK-A
HEBEI IRON-A
CHINA CNR CORP-A
4.5
1.351351
75594807
HENAN SHUAN-A
54.52
0.6832872
3757212
2.71
-0.3676471
31990451
CHINA COAL ENE-A
7.12
0
13288516
HONG YUAN SEC-A
16.15
1.572327
12515559
WULIANGYE YIBIN
25.92
1.210465
63511156
CHINA CONST BA-A
4.34
0.9302326
69896728
HUATAI SECURIT-A
8.47
0.7134364
18243953
YANGQUAN COAL -A
12.42
1.553557
16469354
CHINA COSCO HO-A
4.37
0
24328009
HUAXIA BANK CO
9.15
0.4390779
64111837
YANTAI CHANGYU-A
43.13
6.969246
4377319
CHINA CSSC HOL-A
20.4
1.040119
7805000
IND & COMM BK-A
3.95
0.5089059
113002349
YANTAI WANHUA-A
14.12
0.8571429
18350629
CHINA EAST AIR-A
3.13
0.6430868
27777737
INDUSTRIAL BAN-A
14.18
0.7102273
146303204
YANZHOU COAL-A
16.66
0.7255139
5742522
CHINA EVERBRIG-A
2.71
0.7434944
163236239
INNER MONG BAO-A
32.77
2.342286
44171198
YUNNAN BAIYAO-A
62.2
-2.047244
3255893
CHINA LIFE INS-A
18.68
0.7008086
14486187
INNER MONG YIL-A
20.16
0.7496252
9341121
ZHONGJIN GOLD
15.29
1.057502
17493475
CHINA MERCH BK-A
10.97
1.574074
119013339
INNER MONGOLIA-A
5
2.040816
57492515
ZIJIN MINING-A
3.68
0.8219178
63438945
16861731
JIANGSU HENGRU-A
27.75
-2.42616
5714354
ZOOMLION HEAVY-A
8.63
0.817757
66414847
JIANGSU YANGHE-A
90.79
-0.4495614
4902177
ZTE CORP-A
8.42
0.477327
21429942
JIANGXI COPPER-A
21.59
1.504466
12646611
ZTE CORP-A
8.38
2.444988
17657199
JINDUICHENG -A
10.95
0.8287293
5900358 19901976
CHINA MERCHANT-A
9.17
1.550388
CHINA MERCHANT-A
25.1
2.115541
19889195
CHINA MINSHENG-A
7.02
2.481752
217479495
CHINA NATIONAL-A
7.75
2.513228
51676104
16.26
2.457467
7788312
KANGMEI PHARMA-A
15.15
-1.43136
198.79
0
9950141
31.7
0.9875757
17025672
CHINA OILFIELD-A
19.26
2.012712
27977617
KWEICHOW MOUTA-A
CHINA PETROLEU-A
6.4
0.1564945
35345658
LUZHOU LAOJIAO-A
CHINA RAILWAY-A
5.91
1.72117
30319221
METALLURGICAL-A
2.1
0.4784689
46077495
2.48
0
37147476
CHINA PACIFIC-A
CHINA RAILWAY-A
3.05
0.9933775
60668249
NINGBO PORT CO-A
CHINA SHENHUA-A
22.76
0.2643172
13910779
PANGANG GROUP -A
3.54
1.142857
63079160
8.73
0.2296211
MOVERS 265
24
11 2280
INDEX 2271.046
CHINA SHIPBUIL-A
4.25
1.431981
58747091
PETROCHINA CO-A
18963966
HIGH
2274.72
CHINA SOUTHERN-A
3.56
0.5649718
27310339
PING AN BANK-A
14.32
2.1398
48181441
LOW
2193.12
CHINA STATE -A
3.38
1.807229
209577282
PING AN INSURA-A
39.99
1.72984
31565980
CHINA UNITED-A
3.36
0
90159530
POLY REAL ESTA-A
12.4
1.973684
71984152
CHINA VANKE CO-A
9.34
1.521739
102496108
QINGDAO HAIER-A
11.67
0
8176147
CHINA YANGTZE-A
6.55
0.7692308
29037039
QINGHAI SALT-A
24.76
2.229562
8112547
PRICE DAY %
Volume
PRICE DAY %
Volume
52W (H) 2717.825 (L) 2102.135
2190
6-December
8-December
FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP ASUSTEK COMPUTER
NAME
25.6
0.589391
19894874
FORMOSA PLASTIC
77
1.182654
6554646
24.85
0.4040404
19412654
FOXCONN TECHNOLO
98
-2
13361418
37.6
-0.397351
5162341
FUBON FINANCIAL
33.1 -0.8982036
8586732
2414255
HON HAI PRECISIO
96.1
0.6282723
41497184
AU OPTRONICS COR
13.15
-1.12782
178467778
HOTAI MOTOR CO
210 -0.7092199
171825
CATCHER TECH
144.5
0.3472222
5918819
HTC CORP
31.2 -0.4784689
9962494
HUA NAN FINANCIA
CATHAY FINANCIAL CHANG HWA BANK
313 -0.4769475
TPK HOLDING CO L
494.5
0.5081301
5914407
96.5
-1.630989
29085940
TSMC UNI-PRESIDENT
-1.716738
WISTRON CORP
31.35
-0.317965
3926192
14.7 -0.3389831
10358227
YULON MOTOR CO
LARGAN PRECISION
879
2.209302
2120457
LITE-ON TECHNOLO
39.4
-1.5
4257334
CHIMEI INNOLUX C
14.7
-1.342282
159554482
MEDIATEK INC
318
-1.700155
9090457
CHINA DEVELOPMEN
7.19 -0.1388889
26483462
MEGA FINANCIAL H
22.5
-1.746725
19387680
CHINA STEEL CORP
26.1 -0.7604563
12887966
NAN YA PLASTICS
52.2
0.5780347
5467061
36419275
PRESIDENT CHAIN
156.5
1.623377
1870991
17.45
0.5763689
CHUNGHWA TELECOM
94.5
0.3184713
6951436
QUANTA COMPUTER
69
-2.12766
10613092
COMPAL ELECTRON
20.3 -0.7334963
14849293
SILICONWARE PREC
32
4.065041
9893941
12.35 -0.8032129
23406210
106
-1.395349
2715359
SINOPAC FINANCIA
FAR EASTERN NEW
33.75
-0.147929
8946443
SYNNEX TECH INTL
56
-1.060071
5261179
FAR EASTONE TELE
73.5
2.083333
11810458
TAIWAN CEMENT
39
-1.015228
12611113
16.05
17.75
-1.114206
6861283
TAIWAN COOPERATI
-0.619195
7406783
FORMOSA CHEM & F
69.5
1.017442
3829788
TAIWAN FERTILIZE
73.8 -0.2702703
2772270
FORMOSA PETROCHE
85.2 -0.5834306
1609760
TAIWAN GLASS IND
27.8
0
810897
5355209
11.45
YUANTA FINANCIAL
3313482
52.8 -0.3773585
2505768
UNITED MICROELEC
5918118
7177767
FIRST FINANCIAL
1.415094
25254728
-1.26183
Volume
107.5
4.11985
76.2 -0.5221932
DELTA ELECT INC
PRICE DAY %
TAIWAN MOBILE CO
16.35 -0.6079027
CHENG SHIN RUBBE
CHINATRUST FINAN
15.65
278
NAME
MOVERS
53
38
12
-2.033272
39677444
3580925
0 5400
INDEX 5364.06 HIGH
5398.57
LOW
5351.33
52W (H) 5621.53 5350
(L) 4643.05 6-December
8-December
December 11, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT
MELCo CroWN ENTErTAINMENT
MGM CHINA HoLDINGS 38.8
28.6
14.50 14.38
28.4
14.26
38.5
14.14
28.2
14.02 Max 28.55
Average 28.364
Min 28.2
28.0
Last 28.5
Max 38.7
SANDS CHINA LTD
Average 32.564
Max 32.8
Average 38.393
Min 32.15
Last 32.75
PRICE
17.4
32.6
17.3
32.4
17.2
32.2
17.1
Average 17.24
DAY %
YTD %
(H) 52W
Min 17.12
Last 17.28
0.546956825
-11.64740771
109.6699982
79.68000031
BRENT CRUDE FUTR Jan13
107.59
0.532610727
3.951690821
120.7699966
90.15999603
GASOLINE RBOB FUT Jan13
261.59
0.712250712
5.761300234
293.3099985
218.4999943
GAS OIL FUT (ICE) Jan13
910.75
0.16497113
1.617852162
1036.25
799.25
3.492
-1.661503802
-10.06953387
4.127000332
3.062000036
HEATING OIL FUTR Jan13
292.61
0.370459301
1.834064175
334.2199802
255.5699825
Gold Spot $/Oz
1711.5
0.436
9.3673
1796.08
1522.75
Silver Spot $/Oz
33.3606
0.894
19.8513
37.4775
26.1513
Platinum Spot $/Oz
1617.83
0.694
16.0151
1736
1339.25
Palladium Spot $/Oz
700.15
0.2362
7.1385
725.19
553.75 1827.25
NATURAL GAS FUTR Jan13
LME ALUMINUM 3MO ($)
2094
0.19138756
3.663366337
2361.5
LME COPPER 3MO ($)
8035
0.4375
5.723684211
8765
7131
LME ZINC
2028
0.148148148
9.918699187
2220
1745
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan13 Mar13
WHEAT FUTURE(CBT) Mar13
17225
0.145348837
-7.936932122
22150
15236
15.21
-0.360301343
-0.944317812
16.60000038
14.60000038
733.5
-0.508646999
22.19908372
846.25
511
21.0 Average 21.168
Last 21.05
Min 21
PRICE MAJORS
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
0.9582 1.5235 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 30.2 1.2152 28.914 40.795 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029
MACAU RELATED STOCKS 1199950
CROWN LTD
10.19
0.2952756
25.95797
10.34
7.92
1049331
18.65999985
AMAX HOLDINGS LT
0.066
0
-24.13793
0.119
0.055
5023000
66.84999847
BOC HONG KONG HO
23.85
-0.625
29.61957
25
17.46
14130825
152.45
-0.909977251
-35.93191847
249
146.3499908
SUGAR #11 (WORLD) Mar13
19.15
-0.312337324
-18.02226027
25.12999916
COTTON NO.2 FUTR Mar13
73.84
0.067759859
-16.57439837
98.5
World Stock MarketS - Indices
NAME ARISTOCRAT LEISU
0.28
0
21.73913
0.335
0.204
0
0.2207506
62.14286
4.54
2.5
67000 23498224
CHINA OVERSEAS
23.3
-1.479915
79.7091
24.25
12.066
CHINESE ESTATES
11.88
0.3378378
-4.96
13.26
8.3
16000
CHOW TAI FOOK JE
11.6
3.202847
-16.66667
15.16
8.4
4803610 1185000
EMPEROR ENTERTAI
1.74
0
56.75675
1.82
0.99
FUTURE BRIGHT
1.13
0
169.0476
1.43
0.38
4632000
GALAXY ENTERTAIN
28.5
1.06383
100.1405
29.85
13.28
11702384
118.8
0.6779661
28.92024
120
91.15
1227802
31.15
-0.7961783
58.91108
31.6
19.049
1016472
79.45
0.2523659
34.66102
80.3
57.05
12802778
HUTCHISON TELE H
3.38
-2.873563
13.04348
3.88
2.84
8768000
LUK FOOK HLDGS I
23.9
2.795699
-11.80812
33.2
14.7
3977000
MELCO INTL DEVEL
8.47
2.666667
46.79376
8.48
5.12
5224656
14
-2.642559
45.95263
14.76
9.432
2964800
3.64
0.5524862
-7.942419
5.217
3.249
5142217
NEPTUNE GROUP
0.156
0
40.54054
0.222
0.084
1805000
NEW WORLD DEV
12.24
-1.449275
95.52715
13.2
6.13
14221500
SANDS CHINA LTD
8356149
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
13155.13
0.6202367
7.673957
13661.87
11735.19
NASDAQ COMPOSITE INDEX
US
2978.041
-0.3755102
14.31361
3196.932
2518.01
HANG SENG BK
FTSE 100 INDEX
GB
5904.15
-0.1733058
5.955733
5989.07
5229.76
HOPEWELL HLDGS
DAX INDEX
GE
7490.29
-0.3659315
26.98958
7554.51
5637.53
HSBC HLDGS PLC
NIKKEI 225
JN
9533.75
0.0667549
12.75406
10255.15
8238.96
HANG SENG INDEX
HK
22276.72
0.3855137
20.84327
22377.56
17821.51953
CSI 300 INDEX
CH
2271.046
1.081069
-3.184325
2717.825
2102.135
MGM CHINA HOLDIN
TAIWAN TAIEX INDEX
TA
7609.5
-0.428669
7.599177
8170.72
6609.11
MIDLAND HOLDINGS
4557.947
0.1359694
12.35989
4581.8
3985
ID
4302.609
0.2753102
12.57504
4381.746094
3635.283
FTSE Bursa Malaysia KLCI
MA
1632.15
0.8888779
6.6256
1679.37
1448.54
NZX ALL INDEX
NZ
873.384
-0.2080655
19.67438
878.077
PHILIPPINES ALL SHARE IX
PH
3696.39
-0.54003
21.39052
3719.32
VOLUME CRNCY
4.54
DAY %
AU
DAY % YTD %
CENTURY LEGEND
PRICE
1750.6
PRICE
CHEUK NANG HLDGS
COUNTRY
2057.28
(L) 52W
1.0857 1.6309 0.9972 1.3487 84.18 8.0198 7.7864 6.3964 57.3275 32 1.3138 30.396 44.35 9752 88.637 1.23977 0.85545 8.4985 10.7712 111.44 1.0314
2.16
COFFEE 'C' FUTURE Mar13
7.212421
(H) 52W
2.6251 3.1654 0.3316 -0.4012 -6.5492 0.2142 0.2245 0.8798 -2.3553 2.9364 6.044 4.1052 7.0574 -5.8549 -9.0295 0.8086 3.5203 1.0133 0.4619 -6.1935 0.0097
(L) 52W
1126.75
-0.001532606
YTD %
3.32
652
1781.5
1957.42
-0.1049 -0.0249 -0.0535 -0.1392 0.2309 0 0.0013 -0.2532 0.2392 0.0653 -0.1472 -0.0722 -0.0122 0.7786 0.348 0.0762 0.1168 -0.1105 0.132 0.4047 0
(H) 52W
948.25
21.49629019
SK
DAY %
1.0477 1.6035 0.935 1.2909 82.3 7.9825 7.75 6.2401 54.345 30.65 1.2227 29.085 40.95 9633 86.217 1.20703 0.80505 8.0526 10.3044 106.24 1.03
42.72727
16.55313351
0.10188487
S&P/ASX 200 INDEX
21.1
-1.875
-0.638792102
1473.75
JAKARTA COMPOSITE INDEX
21.2
3.14
855.5
SOYBEAN FUTURE Jan13
KOSPI INDEX
13.90
Last 14
21.3
Max 21.3
(L) 52W
86.4
NAME
Min 13.98
17.0 Max 17.34
WTI CRUDE FUTURE Jan13
CORN FUTURE
Average 14.103
WyNN MACAU LTD
32.8
32.0
Max 14.4
CURRENCY EXCHANGE RATES
NAME
METALS
Last 38.7
SJM HoLDINGS LTD
Commodities ENERGY
Min 38.25
38.2
32.75
2.503912
49.20273
33.95
20.35
SHUN HO RESOURCE
1.4
4.477612
40
1.43
0.97
186500
SHUN TAK HOLDING
4.13
-1.431981
61.38308
4.23
2.418
16729036
712.548
SJM HOLDINGS LTD
17.28
-0.3460208
38.1788
18.36
11.973
5807000
2965.32
SMARTONE TELECOM
14.32
-0.9681881
6.547622
17.5
12.96
2301000
WYNN MACAU LTD
21.05
0.2380952
7.948718
25.5
14.62
2672400
ASIA ENTERTAINME
2.91
-3
-50.51021
7.24
2.4
106392
BALLY TECHNOLOGI
46.17
-0.3238342
16.70879
51.16
35.79
436187 1300
HSBC Dragon 300 Index Singapor
SI
611.31
0.84
23.17
NA
NA
STOCK EXCH OF THAI INDEX
TH
1334.95
-0.3679434
30.19838
1343.03
1006.16
HO CHI MINH STOCK INDEX
VN
386.69
0.7529964
9.995738
492.44
332.28
BOC HONG KONG HO
3.06
-2.857143
27.64959
3.3
2.24
Laos Composite Index
LO
1198.48
0
33.24438
1249.34
876.33
GALAXY ENTERTAIN
3.6
0
92.51337
3.87
1.75
380
14.4
-0.3460208
-16.27907
18.1
10.92
2634701
INTL GAME TECH
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
JONES LANG LASAL
81.72
0.876435
33.39863
87.52
56.51
198048
LAS VEGAS SANDS
43.65
-0.4333942
8.753636
58.3216
32.6127
4886451
MELCO CROWN-ADR
15.13
2.22973
57.27651
16.02
8.32
5463345
MGM CHINA HOLDIN
1.82
0
52.72387
1.96
1.1917
1200
MGM RESORTS INTE
10.93
-0.3646308
4.793861
14.9401
8.83
14411185
SHFL ENTERTAINME
13.29
-3.345455
13.3959
18.77
10.61
358091
SJM HOLDINGS LTD
2.25
0
39.96256
2.36
1.5484
10057
110.26
-1.067743
6.427029
129.6589
84.4902
1108408
WYNN RESORTS LTD
AUD HKD
USD
14 |
business daily December 11, 2012
Opinion Behind Citigroup’s amazing Abu Dhabi adventure
O
William D. Cohan
Bloomberg View columnist
ff in a small corner of the judicial system is a big-time Wall Street lawsuit that neither side in the dispute wants anyone to know much about. Thanks, however, to George B. Daniels – the federal judge in the case – we can catch a rare glimpse of what happens when a multibillion-dollar investment a supposed pillar of Wall Street goes terribly wrong. At issue is the US$7.5 billion investment that Abu Dhabi Investment Authority, a large sovereign wealth fund, made in Citigroup Inc. in November 2007, just after the bank fired chairman and chief executive officer Chuck Prince. Michael Klein, one of Citigroup’s most senior investment bankers, negotiated the deal; Robert Rubin, the former Treasury Secretary, in nearly his first official act after taking over for Prince as Citigroup’s chairman, flew off to Abu Dhabi to bless it. A year later, of course, Citigroup collapsed, and American taxpayers bailed it out to the tune of US$45 billion, plus another US$306 billion to ring-fence a pile of toxic assets. ADIA, as the Abu Dhabi fund is known, lost nearly its entire investment after Citigroup’s shares were diluted down to pennies on the dollar by the rescue financing. (ADIA did receive some US$2.5 billion in
dividends on its stock before Citigroup’s implosion.)
Convoluted rules By the convoluted rules of redress on Wall Street, ADIA’s only legal recourse against Citigroup was arbitration. In December 2009, ADIA filed a complaint with the International Centre for Dispute Resolution, a part of the American Arbitration Association, an independent non-profit arbitration organisation theoretically unaffiliated with Wall Street. According to a heavily redacted copy of ADIA’s arbitration complaint, the wealth fund claimed it was “induced” to make the investment in Citigroup based on Citigroup’s “fraudulent misrepresentations” to ADIA. ADIA also claimed that Citigroup committed a “wilful and material breach” of the November 2007 investment agreement. Chief among Citigroup’s “misrepresentations” was that “it would not seek additional capital … as ADIA was agreeing to convert its investment into common stock at an agreedupon conversion rate.” ADIA asked the arbitrators to rescind the original deal or, alternatively, award it US$4 billion due to Citigroup’s “misconduct.” No surprise, ADIA lost its arbitration claim in October
2011. Far from the norm, though, the arbitrators wrote a very lengthy ruling of 65 pages. I, for one, would love to see it, but the organisation is keeping it confidential. In January 2012, ADIA filed a federal lawsuit in the Southern District of New York against Citigroup, asking that the arbitration decision be
It’s incredible that in one year’s time ADIA could lose its US$7.5 billion investment in Citigroup and not have a colourable civil claim against the bank for why things went so wrong
vacated on the grounds that the panel incorrectly applied New York State law instead of Abu Dhabi law. At a court hearing last month, David Eisberg, a lawyer for the wealth fund, argued that applying the New York law instead of the Abu Dhabi law was “like an umpire has the wrong rulebook and balls aren’t balls anymore and strikes aren’t strikes anymore and you’re sitting here saying I know that they were using the rules of football.” Judge Daniels, who deserves credit for following Eisberg’s mixed metaphors and shaky logic, is expected to rule in early 2013. More interesting, though, were the few details about the case that slipped out during the various hearings. When ADIA filed the case in January, its complaint was sealed, which is unusual. At a hearing in February, Judge Daniels got into a discussion with Peter Calamari, another ADIA attorney, about why the arbitration record was being kept confidential. Calamari explained that the wealth fund is “a government agency and it has a very strong interest in keeping much of the factual information that was presented in this arbitration confidential.” “There is information about their investment practices,” he continued. “There is information about their employees. There are commentaries about individual people who live and work in Abu Dhabi that should not be made public.” He also wanted the federal court record sealed.
Not persuaded Judge Daniels wasn’t persuaded. “I’m not particularly comfortable with saying that parties get to agree that they have a dispute and that if they want to resolve that dispute in a federal district court that they can agree to do that in secret and nobody gets to know what the nature of that dispute is,” he said. “It’s just not the way to conduct business.” By last month, however – when Eisberg and Calamari made their opaque legal argument about how the arbitrators applied the wrong law – ADIA and Citigroup had agreed to be circumspect about what to put on the public record.
Judge Daniels, with apparent reluctance, agreed to keep the arbitration documents and the original complaint sealed. Still, there were a few revealing moments at the November hearing. According to transcripts, at one point Eisberg said of Citigroup, “Just days and weeks after taking seven-and-a-half billion dollars from ADIA, it turned out that three critical representations were not just wrong but were wrong by billions of dollars.” He also said a “top executive” at Citigroup provided ADIA with a transparency letter, the “gist” of which was that “we have been transparent about our financial conditions and our plans … and we don’t know of anything we need to tell you that would change the impression that we’ve given you.” He told Judge Daniels that under Abu Dhabi law, a misrepresentation of the transparency letter would be a “slam dunk” case. Calamari added that ADIA’s case against Citigroup “was always a fraud case right from the beginning.” He elaborated, somewhat: “There were certain documents and representations that were made to ADIA in order to induce them to sign the contract that ultimately provided for the acquisition of the stock.” As for the misrepresentation to ADIA about Citigroup’s capital needs, Calamari said Citigroup had “documents” that “would have shown what the capital needs truly were as opposed to what we were told was the capital needs.” He said the documents were not disclosed to ADIA at the time of its investment.
Arbitrators’ ‘zillions’ Les Fagen, the lawyer representing Citigroup, disagreed with the ADIA lawyers. He said of the arbitrators: “They listened to every argument. Everything you heard today that panel heard at length. Briefing, argument, analysis. They did everything. They spent zillions of hours on this matter.” It’s incredible that in one year’s time ADIA could lose its US$7.5 billion investment in Citigroup and not have a colourable civil claim against the bank for why things went so wrong. What’s more incredible is that both ADIA and Citigroup were bound and determined to make sure nobody found out the details of their disagreement. The real question, though, is why the full record – of both the arbitration and the federal suit – isn’t publicly available. Judge Daniels, the taxpayers who bailed out Citigroup deserve to know what it was up to in its dealings with Abu Dhabi. Bloomberg View
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December 11, 2012 business daily | 15
OPINION Business
wires Leading reports from Asia’s best business newspapers
America’s hope against hope
Joseph E. Stiglitz
Nobel laureate in economics and Professor at Columbia University
Jiji Press
financial system that serves all of society, rather than operating as if it were an end in itself. That means that the system’s focus must shift from speculative and proprietary trading to lending and job creation, which implies reforms of financial-sector regulation, and of anti-trust and corporate-governance laws, together with adequate enforcement to ensure that markets do not become rigged casinos.
Shareholders of eAccess Ltd approved the plan for the fourth-largest Japanese mobile phone carrier to become a wholly owned subsidiary of Japan’s third-ranked SoftBank Corp. Through the acquisition, the SoftBank group aims to strengthen its high-speed mobile services at a time when communications traffic is rapidly increasing amid the growing use of smartphones. SoftBank, which currently provides its mobile phone services through subsidiary SoftBank Mobile Corp., is set to make eAccess a wholly owned unit through equity swaps on January 1.
Business Inquirer Standard & Poor’s Ratings Services expects natural gas prices to remain “regionalised” over the next few years, which would allow existing gas producers to continue enjoying a “favourable pricing power”. In a report, S&P said structural and regulatory factors were causing the divergence in global gas prices. “We expect liquefied natural gas [LNG] producers to maintain favourable pricing power for the next few years, given tight LNG supplies and the forecast for demand outpacing new liquefaction capacity until at least 2014,” said S&P credit analyst Andrew Wong.
China Daily Chinese enterprises’ net income and revenue growth for 2012 fell sharply due to the economic slowdown, Fitch Ratings said in a report. According to Fitch’s analysis, which is based on a sample portfolio of 40 Chinese corporations, their net income growth fell by 11 percent in 2012. Fitch forecasts the average net income growth for the 40 corporations will slow to just 0.1 percent in 2012 from 10 percent in 2011. The fall in net income is broadly in line with China’s recent overall economic performance this year, the report said.
Economic Times A panel of ministers is due to announce the price for selling a 10 percent stake in staterun miner NMDC as India’s government makes one more attempt to add momentum to its disinvestment programme. A senior government official said the empowered group of ministers headed by Finance Minister P Chidambaram will consider a proposal to price the NMDC share sale at between 145 rupee (US$2.6) and 150 rupee per share, which will be 5-8 percent less than the current market price of 158.70 rupee.
Standing still
A
fter a hard-fought election campaign, costing well in excess of US$2 billion, it seems to many observers that not much has changed in American politics: Barack Obama is still President, the Republicans still control the House of Representatives, and the Democrats still have a majority in the Senate. With America facing a “fiscal cliff” – automatic tax increases and spending cuts at the start of 2013 that will most likely drive the economy into recession unless bipartisan agreement on an alternative fiscal path is reached – could there be anything worse than continued political gridlock? In fact, the election had several salutary effects – beyond showing that unbridled corporate spending could not buy an election, and that demographic changes in the United States may doom Republican extremism. The Republicans’ explicit campaign of disenfranchisement in some states – like Pennsylvania, where they tried to make it more difficult for AfricanAmericans and Latinos to register to vote – backfired: those whose rights were threatened were motivated to turn out and exercise them. In Massachusetts, Elizabeth Warren, a Harvard law professor and tireless warrior for reforms to protect ordinary citizens from banks’ abusive practices, won a seat in the Senate. Some of Mitt Romney’s advisers seemed taken aback by Obama’s victory: Wasn’t the election supposed to be about economics? They were confident that Americans would forget how the Republicans’ deregulatory zeal had brought the economy to the brink of ruin, and that voters had not noticed how their intransigence in Congress had prevented more effective policies from being pursued in the wake of the 2008 crisis. Voters, they assumed, would focus only on the current economic malaise. The Republicans should not have been caught off-guard by Americans’ interest in issues
like disenfranchisement and gender equality. While these issues strike at the core of a country’s values – of what we mean by democracy and limits on government intrusion into individuals’ lives – they are also economic issues. As I explain in my book The Price of Inequality, much of the rise in U.S. economic inequality is attributable to a government in which the rich have disproportionate influence – and use that influence to entrench themselves. Obviously, issues like reproductive rights and gay marriage have large economic consequences as well.
Economic opportunity In terms of economic policy for the next four years, the main cause for post-election celebration is that the U.S. has avoided measures that would have pushed it closer to recession, increased inequality, imposed further hardship on the elderly, and impeded access to health care for millions of Americans. Beyond that, here is what Americans should hope for: a strong “jobs” bill – based on investments in education, health care, technology, and infrastructure – that would stimulate the economy, restore growth, reduce unemployment, and generate tax revenues far in excess of its costs, thus improving the country’s fiscal position. They might also hope for a housing programme that finally addresses America’s foreclosure crisis. A comprehensive programme to increase economic opportunity and reduce inequality is also needed – its goal being to remove, within the next decade, America’s distinction as the advanced country with the highest inequality and the least social mobility. This implies, among other things, a fair tax system that is more progressive and eliminates the distortions and loopholes that allow speculators to pay taxes at a lower effective rate than those who work for a living,
and that enable the rich to use the Cayman Islands to avoid paying their fair share. America – and the world – would also benefit from a U.S. energy policy that reduces reliance on imports not just by increasing domestic production, but also by cutting consumption, and that recognises the risks posed by global warming. Moreover, America’s science and technology policy must reflect an understanding that long-term increases in living standards depend upon productivity growth, which reflects technological progress that assumes a solid foundation of basic research. Finally, the U.S. needs a
In the absence of strong American leadership, longstanding global problems … will continue to fester
Globalisation has made all countries more interdependent, in turn requiring greater global cooperation. We might hope that America will show more leadership in reforming the global financial system by advocating for stronger international regulation, a global reserve system, and better ways to restructure sovereign debt; in addressing global warming; in democratising the international economic institutions; and in providing assistance to poorer countries. Americans should hope for all of this, though I am not sanguine that they will get much of it. More likely, America will muddle through – here another little programme for struggling students and homeowners, there the end of the Bush tax cuts for millionaires, but no wholesale tax reform, serious cutbacks in defence spending, or significant progress on global warming. With the euro crisis likely to continue unabated, America’s continuing malaise does not bode well for global growth. Even worse, in the absence of strong American leadership, longstanding global problems – from climate change to urgently needed reforms of the international monetary system – will continue to fester. Nonetheless, we should be grateful: it is better to be standing still than it is to be heading in the wrong direction. © Project Syndicate
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business daily December 11, 2012
CLOSING HK intervenes to defend dollar peg
Monti resignation blow to stocks
The Hong Kong Monetary Authority (HKMA) stepped into the currency market yesterday, selling HK$3.875 billion (US$500 million) in Hong Kong dollars as the local currency repeatedly hit the strong end of its trading range. According to Reuters data, the latest intervention will lift the aggregate balance – the sum of balances on clearing accounts maintained by banks with the HKMA – to HK$208.32 billion on December 12. Before this intervention, the HKMA had injected a total of US$7.2 billion worth of Hong Kong dollars into the market.
European shares fell yesterday after Italy’s Prime Minister Mario Monti said he would resign, reviving fears about the country’s economy. Mr Monti said he would quit once Italy’s 2013 budget is approved. The news came two days after the party of his predecessor Silvio Berlusconi withdrew parliamentary support for the technocrat government and hours after Mr Berlusconi said he would again run for premier. “The stress is back, we’re asking ourselves again: ‘which stock has exposure to Italy?’” said David Thebault, head of quantitative sales trading at Global Equities.
China among most unequal countries: survey Gini coefficient stood at 0.61 in 2010, well above warning line
Migrant workers are the hardest hit amid the economic boom
C
hina’s wealth gap has widened to a level where it is among the world’s most unequal nations, a Chinese academic institute said in a survey, as huge numbers of poor are
left behind by the economic boom. China’s Gini coefficient – a commonly used measure of inequality – was 0.61 in 2010, the Survey and Research Centre for
China Household Finance said, well above what some academics view as the warning line of 0.40. A figure of 0 would represent perfect equality, and 1 total inequality. “Currently, China’s household income gap is huge,” said the institute, founded by the Southwestern University of Finance and Economics and the Institute of Financial Research, which operates under China’s central bank. “The Gini coefficient is as high as 0.61, rare in the world.” China’s growing wealth gap is a major concern for mainland authorities, who are keen to avoid public discontent that could lead to social unrest in the country of 1.3 billion people. In a sign of the sensitivity surrounding the issue the government has not released an official Gini coefficient for the country as a whole for more than a decade, since it put the statistic at 0.412 in 2000.
A figure of 0.61 would put China at the top of a list of 16 countries by 2010 Gini coefficient on the World Bank website. The largest set of figures available on the site is for 2008, covering 47 countries and headed by Honduras on 0.613. The Global Times newspaper, which reported the latest survey results yesterday, said China’s wealth gap had reached an “alarming” level. But the research centre played down its own findings, saying such a phenomenon was common in rapidly developing economies. It called on the government to use its vast financial resources to support low-income earners in the short term, while improving education to help address the imbalance in the long term. “The Gini coefficient certainly points to the serious issue of income inequality,” the director of the Chengdu city-based centre Gan Li told AFP. “But more importantly about the interpretation of the figure is that it does not necessarily indicate imbalance in China’s economy,” he said, adding it was normal for greater resources to flow to developed areas. “There’s no need to make a big fuss about it.” The government-backed Chinese Academy of Social Sciences estimated China’s Gini coefficient at nearly 0.47 in 2005. AFP
Europe’s banks seek Basel review As lenders fear the impact of the new rules
E
urope’s banks are calling for a review of tougher financial regulations on the eve of their adoption as the region sinks into a recession, dimming prospects of raising US$621 billion in capital needed to meet the rules. Christian Clausen, president of the European Banking Federation, said the cumulative impact on lenders and the economy of new rules is unknown because of their piecemeal creation during the global financial crisis. After correctly anticipating Europe won’t be ready to implement tougher standards on schedule, Mr Clausen now wants politicians to allow an impact study to measure the economic cost of all the requirements due to be enforced. “We don’t really know the implications,” Mr Clausen, who is also the chief executive officer of Nordea Bank AB, said in an interview in Copenhagen. “Remember, it’s come in steps. It’s not one plan. It’s many plans put together.” The European Union aims to implement collateral and liquidity
recommendations by the Basel Committee on Banking Supervision during 2013, after a January 1 deadline was pushed back. The Basel committee meets this week to resolve clashes over the liquidity provisions, which European Central Bank President Mario Draghi has said could choke interbank lending. Basel envisaged the new rules should be phased in from the start of next month and be effective by 2019. U.S. regulators said last month they won’t be able to apply the Basel rules on schedule. The Boston Consulting Group estimates global lenders have to raise as much as 474 billion euros (US$621 billion) to meet the requirements, which more than triple the core capital banks must hold to absorb losses. Mr Clausen, whose own bank is cutting about 10 percent of its workforce “over a few years” to adjust to stricter rules, estimates capital ratios may climb as high as 25 percent of risk-weighted assets if provisions for bail-in instruments are included. Nordea has already eliminated about
Impact study needed to measure economic cost of Basel rules, says Christian Clausen
7 percent of its employees, the bank said last week. “The bigger the capital, the bigger the implications,” Mr Clausen said. “Do we want to build a society, an economy, with such a high capital level that new investments get expensive
and therefore difficult to do?” European banks have a 256 billioneuro shortfall to meet minimum Basel III core Tier 1 capital ratios based on their year-end figures, according to the Boston Consulting Group. Bloomberg News