Macau Business Daily, December 13, 2012 by Business Daily

Gongbei rail terminal opens this month

Black box: the art of casino market predictions

Year I Number 182 Thursday December 13, 2012 MOP $ 6.00 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã

Page 4

Page 5

www.macaubusinessdaily.com

City can’t spend gaming tax harvest fast enough The city’s current public investment plan is underspent by two thirds. With just December’s numbers still to be totted, most government departments have used only a fraction of their 2012 allowances, show official data released yesterday. Even the city’s public bureaucracy – well known for its fondness for paperwork and process – only managed to spend 78.4 percent of the budget allotted to administrative costs. And that’s after an in-line with inflation six percent pay rise for public servants in May.

HK estate agents plan local expansion G overnment measures to cool property sales since October – mainly via a capital gains tax on transactions in order to curb speculation – will not be a barrier to expansion by famously bullish Hong Kong-based property brokerages, several say. Despite home and shop transactions reportedly falling 70 percent in Macau during October, Jacky Shek Po Tak, senior sales director for Centaline (Macau) Property Agency Ltd, says the firm has no plans to lay off staff. In fact Centaline, Midland Realty and Ricacorp are all planning on expanding their branches, and might hire more agents in 2013. “It would be desirable if we can employ 5 to 8 more people, making the whole team consist of 120 agents,” said Ronald Cheung Yat Fai, managing director of Midland Realty (Macau) Ltd. More on page 2

page 3

I SSN 2226-8294

Inflation ‘might’ be sub-6 pct after CNY: Tam Inflation in Macau “might” remain below six percent after the lunar New Year, the Secretary for Economy and Finance Francis Tam Pak Yuen told reporters yesterday. Choosing his words with care, and avoiding any definitive statements, Mr Tam said: “Aside from some fluctuations in the commodity prices under seasonal factors, the overall inflation rate may see a slowdown next year, especially after the Chinese New Year.”

HANG SENG INDEX 22510

22488

Page 2

22466

22444

22422

22400

December 12

HSI - Movers Name

Subsidy increase for MICE in 2013

AIA sales team to boost workforce by third

Subsidies amounting to about 40 million patacas (US$5 million) will go to the meetings, incentives, conferences and exhibitions industry next year. That’s an increase on this year’s MICE subsidy spending, which was never formally budgeted. In 2013 up to 50 percent of an event’s promotion and logistics costs will be paid by the government – to a maximum of 100,000 patacas for conferences and 200,000 patacas for exhibitions.

American International Assurance Co (Bermuda) Ltd plans to increase its Macau sales team by more than one-third next year. The company’s goal was to “employ 360 new agents to build a quality team” AIA Macau chief executive Chris Ma Chuk Ho told Business Daily. Company claims that market rival AXA had attempted to headhunt AIA agents and policyholders were dismissed by a court last month.

Page 6

Page 7

%Day

CITIC PACIFIC

3.21

CHINA RES POWER

3.15

SANDS CHINA LTD

2.92

CHINA OVERSEAS

2.80

HONG KONG EXCHNG

2.29

SWIRE PACIFIC-A

-0.58

HENGAN INTL

-0.93

POWER ASSETS HOL

-1.11

TINGYI HLDG CO

-1.13

HONG KG CHINA GS

-1.63

Source: Bloomberg

Brought to you by

2012-12-13

2012-12-14

2012-12-15

16˚ 20˚

17˚ 22˚

18˚ 23˚

2 |

business daily December 13, 2012

macau Airport operator has new chairman Ma Iao Hang is the new chairman of the Macau International Airport Company Ltd’s board of directors, replacing Deng Jun (pictured), who had been in charge since 2003. The appointment was decided during the company’s December 5 general assembly and confirmed in yesterday’s Official Gazette. Deng Jun will remain as head of the executive committee, while executive director Liu Suning stepped down. In addition, Charles Lo Keng Chio officially replaced the late Henrique de Senna Fernandes as the company’s General Assembly president.

HK property firms plot growth path

Mixed outlook Measures to cool the overheated property market will not stop seen brokerages from expanding their networks here next year Stephanie Lai

sw.lai@macaubusinessdaily.com

A big drop in home sales is expected this month, a typically slow time (Photo: Manuel Cardoso)

eightened measures to cool the property sector have led to a significant drop in transactions since October but will not slow the expansion of Hong Kongbased property brokerages. “With the new special stamp duty measures implemented and the housing pre-sales law expected for 2013, we are seeing a difficult time for trade,” said Jacky Shek Po Tak, senior sales director for Centaline (Macau) Property Agency Ltd. In October, a special stamp duty on property sales was extended to shops, offices and parking spaces, and mortgage ratios were tightened. The Legislative Assembly is also discussing Macau’s first-ever regulation on home pre-sales. Mr Shek said home and shop transactions had dropped 70 percent in October and an even bigger fall was expected this month, which is regarded as a “slow month”. “But we are not planning to cut staff or branches in Macau in the coming year and we have not heard of such move in Hong Kong yet,” he told Business Daily. Midland Holdings Ltd chairman Freddie Wong Kin Yip said on Tuesday that a higher stamp duty recently implemented in Hong Kong

was creating a “harsh winter” for property agents. He said a contraction in housing transactions would launch another wave of lay-offs in housing agencies. However, Hong Kong-based brokerages Centaline, Midland Realty and Ricacorp are all planning on expanding their Macau branches, and ready to hire more agents next year. Agents are also expecting salary rises to track inflation and labour market trends. “It would be desirable if we can employ five to eight more people, making the whole team consist of 120 agents,” said Ronald Cheung Yat Fai, managing director of Midland Realty (Macau) Ltd. “Our problem with running the business is more an acute turnover of staff, between 10 to 20 percent.”

Strategy shift With the impact of the property measures on residential and shop transactions, brokerages say they are trying to shift their focus to housing pre-sales and, in the future, sales in the mainland. “Until the government rolls out tougher laws regulating housing

presales in 2013, we will be relying more on the presales than the second-hand housing transactions, as the latter is unable to bring us profits,” said Ricacorp (Macau) Properties Ltd managing director Jane Liu Zee Ka. Each of the three agency representatives played down a recent report that one Hong Kong brokerage was preparing to scale back its operations in Macau after gloomy sales results. “The thing is, the agencies are still earning money. A retreat is simply impossible,” said Mr Cheung. “Next year, the trade will get rough, and private housing supply will be very limited.” “But housing demand is resilient and strong; we will see an active market for the small and medium flats priced at 6 million patacas [US$752,000] or below.” Mr Shek also said a retreat from the Macau market would be “unlikely”. “Whenever we expand our branch in a place, we will make a very cautious assessment and look at least five years ahead,” he said. “Even in the tougher times like 1997 or the 2008 crisis, we have chosen to stay and we survived it.”

nflation in Macau could remain below 6 percent after Chinese New Year, Secretary for Economy and Finance Francis Tam Pak Yuen forecast yesterday. “Aside from some fluctuations in the commodity prices due to seasonal factors, the overall inflation rate will slow next year, especially after Chinese New Year,” Mr Tam told journalists after a Commission for Convention and Exposition Development meeting. “We have predicted stable growth in Macau’s economy next year, [although] internal demand will also slow compared to this year.” In October, inflation fell for the second month in a row to 5.19 percent, official data show. The inflation rate this year will be approximately 6 percent, which is basically in line with the government’s estimate, Mr Tam said. Meanwhile, inflation rebounded to 2 percent in mainland China last month, mainly due to rising food prices, the National Bureau of Statistics announced on Monday. While mainland prices affect inflation here, internal demand and global monetary policy are having a stronger influence, said Pang Chuan, deputy dean of University of Science and Technology’s Faculty of Management and Administration. “We are not so optimistic for the inflation next year, as the major economies are all taking quantitative easing measures,” said Mr Pang. “Inflation will rise as more hot money flows in to mainland China and Macau. And the city may expect an inflation rate of over 6 percent next year.” S.L.

“The overall inflation rate may slow next year,” says Secretary for Economy and Finance Francis Tam

December 13, 2012 business daily | 3

MACAU GDP to grow by 7-8 pct: BoC The city’s gross domestic product (GDP) will grow by a single-digit next year, around 7-8 percent, said Wei Qiang, head of asset and liability management at the Bank of China Ltd, Macau branch. His forecast is based on the ongoing investment in public infrastructure by the government, the expected start of new Cotai casinos’ constructions and the growth in personal income. He added the new housing curbs introduced in October had a positive impact in ensuring a healthy growth in the real estate market.

Public investment plan underspent by two thirds With just December’s numbers still to be totted, government departments haven’t used all their 2012 allowance Vítor Quintã

vitorquinta@macaubusinessdaily.com

p to the end of last month, the government had spent just one third of its 19.8-billionpataca (US$2.5 billion) public investment plan, official data show. Last year the authorities unveiled an ambitious programme that included the offshore island that will host the Hong Kong-Zhuhai-Macau Bridge, public housing projects and the Light Rapid Transit. But with just December left the administration used up just 6.6 billion patacas or 33.3 percent of the budget – even though this figure is still more than twice as much as in the same period of last year. Now the only hope is for a similar boom as the one experienced in 2011, when public investment almost tripled, from 3.2 billion patacas in November to 9.35 billion patacas in December. Still, in order to reach the goal the government would have to spend a staggering 13.2 billion

Light Rapid Transit system, part of public investment plan (Photo: Manuel Cardoso)

patacas this month alone. The administration has spent a lot more – 33.7 billion patacas – on running costs. That figure includes the salaries and benefits of public servants. Up to September that accounted for 36 percent of running costs, including a

6.5 percent pay rise for civil servants that came into effect in May. Even then, the administration only managed to spend 78.4 percent of the budget allotted to bureaucracy costs. Overall, government spending has jumped by 16.7 percent year-on-year

to 42.5 billion patacas. However, this figure accounts for less than two-thirds of the 65.9 billion patacas budgeted. In fact, spending is likely to even fall below the 48.98 billion patacas registered last year. With the gambling revenue growth reaching 7.9 percent year-on-year in November, the government pocketed almost 9.9 billion patacas in casino tax. Direct taxes on gaming revenue amounted to 98.1 billion patacas, or 82.8 percent of all public revenue, in the January-November period. The government pockets 35 percent of gaming revenue directly, and takes another four percent in indirect taxes. The administration’s total revenue has hit 118.5 billion patacas, already past the 101.9 billion patacas target. The fiscal surplus so far this year has far surpassed last year’s surplus of 63.7 billion patacas. The cumulative surplus in the first 11 months was 76 billion patacas, more than double the 36 billion patacas budgeted for the whole of the year.

MOP 118.5 bln Public revenue in January-November

Macau job creation tops world ranking Despite a slowdown in GDP per capita this year, Macau had the best record in creating jobs Vítor Quintã

vitorquinta@macaubusinessdaily.com

acau was the top performer in an economic performance index compiled by United States-based think tank the Brookings Institution. The index, released late last month, analysed gross domestic product per capita and employment over the past 12 months in the world’s biggest cities. The Australian city of Perth and Riyadh, Saudi Arabia, were ranked second and third. The report said Macau registered GDP growth of 5.1 percent, a significant fall from last year’s extraordinary 18.2 percent. The decline was the biggest among cities in the survey, the Global Metro Monitor 2012. Employment grew by 5.7 percent in Macau, a figure that also topped all other cities in the report. “While it suffered declines in both employment and GDP per capita between 2008 and 2009, Macau rebounded strongly, recovering to pre-recession levels and growth rates in both indicators,” the report said.

5.7%

Macau’s employment growth rate in 2011-2012 In October, the city’s jobless rate dropped to 1.9 percent, the lowest rate on record, official statistics show. The International Labour Organisation data also shows the city’s unemployment rate is the thirdlowest in the world. The Brookings’ Metropolitan Policy Programme said Macau’s positive performance was mostly thanks to the “rapid growth of disposable income among Chinese urbanites” feeding casino revenues. The service sector, dominated by the gaming industry, accounted for

Casinos accounted for most of the city’s economic growth and job creation this year

70 percent of economic growth and job creation this year, the report says. “For all intents and purposes, Macau remains a one-industry metro area and relies heavily on tourists from China,” the report said.

The construction of the Hong Kong-Zhuhai-Macau Bridge and the relocation of the University of Macau campus to Hengqin Island are all attempts to tackle this “structural weakness,” it said.

4 |

business daily December 13, 2012

macau

Gongbei station preparing to open A prominent academic says ferry routes across the city’s waterways could help handle an expected influx of tourists Tony Lai

tony.lai@macaubusinessdaily.com

A high-speed railway link between Guangzhou and Macau is set to reduce the journey time to 50 minutes

he opening of the Guangzhou– Zhuhai Intercity Railway’s station at Gongbei this month could bring more tourists to Macau next year, says the Macau Economic

Promotion Association. The group’s president, Ieong Tou Hong, said the government should continue to improve the city’s transport capability to deal with the

expected surge, saying ferries might be one, affordable solution. It was confirmed on Tuesday that the Zhuhai section of the railway from Zhuhai North to Gongbei was currently undergoing tests and could go into operation this month, the Chinese-language newspaper Macao Daily News reported. The Gongbei station is close to the border gate between Macau and Zhuhai. “This route expands the

transportation network connecting Macau to other places … and can be an effective driving force for tourist growth and their spending in Macau in 2013,” Mr Ieong told reporters yesterday. He said the railway would bring more tourists to Macau from Hebei and Henan in the north, and the central provinces of Hubei and Hunan. Predicting the exact level of growth was difficult but the population in the four provinces was close to 290 million people. He said Macau might not have enough facilities and adequate infrastructure to receive a substantial influx of tourists. “If Macau can adapt, this will create business opportunities; if not, this will increase pressure [upon the city’s infrastructure],” he said. Mr Ieong, who is also the deputy coordinator of the Macau Foundation’s Institute for Studies, said intercity ferries could be one solution to expand the city’s ability to handle tourists and traffic. “The government should change its way of thinking, as the Light Rail Transit can only be completed several years from now but the city’s traffic already faces great pressure,” he said. Mr Ieong said ferries could run between the Inner Harbour on the peninsula and the Taipa ferry terminal. They would be faster than land transport, which is marred by traffic jams, and affordable.

Gaming to grow 10 pct in 2013: academic Mass market expansion likely to outpace VIP sector next year Tony Lai

tony.lai@macaubusinessdaily.com

aming revenue will maintain a steady growth next year based on the positive outlook for mainland China, gaming expert Zeng Zhonglu said. The Macao Polytechnic Institute professor told reporters yesterday: “Growth will probably be around 10 percent – it will be in a range between 13 percent and 7 or 8 percent.” Casino revenue surged by 42 percent to over 267 billion patacas (US$33.4 billion) last year but the growth has been smaller this year. That’s been attributed by commentators mainly to a slowdown in the mainland economy. But Mr Zeng says “there is still a lot of development potential” in China’s economy. Individual disposable income in China had been steadily increasing in the past few years, he stated on the sidelines of a business forum. China’s President Hu Jintao said

last month the annual individual income could double in 2020 compared to 2011 – to an average of 38,000 yuan (50,667 patacas) for urban inhabitants and 16,000 yuan for rural inhabitants. “The increase in the individual income [of mainland Chinese] will first spur the mass market [casino] business,” which will grow faster than the VIP market, Mr Zeng added. But he expects the VIP sector to still see expansion next year due to the increase in the proportion of rich people in the mainland population. When asked whether Beijing’s efforts on anti-corruption would affect the industry, the scholar said the impact “will not be big”. “The proportion of mainland officials gambling in Macau has been dropping in the recent years, ever since the authorities imposed stricter measures on their visits to Macau in 2007,” he asserted.

December 13, 2012 business daily | 5

MACAU

Black box economics The science – and occasional art – of Macau market prediction Michael Grimes

michael.grimes@macaubusinessdaily.com

inancial analysts that cover Macau have given a good deal of time and thought to understanding what recent developments – including the reported arrest of six junket managers – might mean for the local casino industry in the remaining weeks of this year and the growth prospects for next year. In the absence of hard facts or clear statements from the central government, one of the best tools at their disposal for making short-term projections is so-called “channel checks”. These usually involve discussions with contacts in the Macau industry to find out estimates on key indicators such as “daily run rate” – the amount of gross revenue generated in Macau casinos per 24 hours. These raw data must then be refined to account for other factors such as the number of weekends in the period under analysis and seasonal factors such as public holidays. “The reality is that the more channels and the more data points you have available, then the greater the chances of your analysis being of use to investors,” says one commentator spoken to by Business Daily. A casino senior executive – one of the people that get called by analysts – gives a slightly less reassuring view. “Macau and China generally are such ‘black boxes’ in policy terms that it doesn’t matter whether you’re Western or Chinese. It’s very hard to know in advance how things are going to develop in terms of public policy,” says the person. One element that is predictable – up to a point – when assessing the industry’s prospects for 2013 is the potential impact of the partial smoking ban in casinos due in January. That’s in part because

other jurisdictions have already done something similar. A report on Tuesday by Praveen K Choudhary, managing director of Morgan Stanley in Hong Kong titled ‘Casino Tale No.18 – Gambling Without Smoking’, says however the market might not have “fully factored” the impact of the new rules on gaming revenue growth, given that in Macau, according to casino managers, “80-90 percent of gamblers” are smokers, while in the U.S. and Australia, the percentage of smokers is “below 50 percent”. “Current consensus expectation for 2013 [Macau] revenue growth is 11 percent; this assumes similar seasonality as in 2012, but the smoking ban could push it to singledigit growth in 2013, and that could be a negative surprise in the near term,” states Morgan Stanley. The report adds the mass-market is more likely to be affected by the new smoking rules than the VIP segment and that could have a disproportionate effect on casino margins. “More importantly, 70 basis points margin expansion expected by consensus in 2013 could be optimistic,” says the report. “This year 100 bps of margin expansion was driven by much stronger mass revenue growth (higher-margin business), but mass will likely be affected more than VIP in 2013 (meaning it won’t grow as fast as in 2012) by the smoking ban and limited increase in minimum bets due to the base effect.”

Official signals Occasionally analysts do get some guidance on policy issues in the form of brief comments made either publicly or privately by

Beijing officials. That happened on Tuesday when Bai Zhijian, Macau director of the Liaison Office of the Central Government, told reporters: “Measures against corruption and casinos are not the same matter.” That was possibly a signal to reassure information-hungry outside investors that the central government doesn’t wish to micromanage Macau’s key – and in taxation and social terms – redistributive – industry. “The revenue trend [for December] is stronger than our expectation and reflects a continued improving VIP demand,” says Kenneth Fong of J.P. Morgan Hong Kong in a note this week. “Based on our recent channel checks, Macau market-wide gaming

Mainland official Bai Zhijian

revenue is approximately 10.1 billion patacas (US$1.26 billion) till December 10,” the note states. Mr Fong adds that a high daily run rate for gambling revenue has been helped by the fact there were two weekends in the first ten days of the month, and a “slightly higher” win rate for the casinos on VIP baccarat. The latter is the game of choice for Macau’s high roller players and the business responsible in recent years

for 65 percent to 70 percent of all gambling revenue in that market. “If we assume the daily revenue for the rest of the month stays at 820 million patacas (similar as [to] November), December should end at around 27.3 billion patacas or 16 percent year-on-year growth,” says the J.P. Morgan note. Mr Fong adds that the bank expects 10 percent headline growth for the Macau market in 2013, compared to Wall Street analysts’ consensus of eight to 12 percent expansion.

2012 numbers As Business Daily reported on December 4, Union Gaming Research Macau expected overall growth for 2012 to be 13 percent – around the midpoint of the expansion predicted by Manuel Joaquim das Neves, head of Macau’s casino regulator the Gaming Inspection and Coordination Bureau when he spoke to this newspaper in October. Morgan Stanley in Hong Kong, says in its Tuesday report that any hopes for 15 percent-plus growth in 2012 might be “optimistic”. “…for the first 11 months of the year, revenue growth has been 13 percent, and to achieve 15 percent growth for the year, December revenue would have to be 29 percent higher than in November, which is very unlikely,” states the Morgan Stanley paper. Union Gaming said in another note yesterday that the Bankcard Consumer Confidence Index published monthly by UnionPay – China’s national association of bank card issuers – was up monthon-month in November by 22 basis points to 86.63, but down seven bps year-on-year.

3%-4%

Negative impact of smoking ban on 2013 revenue expansion, says Morgan Stanley

6 |

business daily December 13, 2012

macau

More public moneyto spark MICE trade Government extends subsidy scheme to meetings and conferences industry and broadens support to promotion and logistics Stephanie Lai

sw.lai@macaubusinessdaily.com

bout 40 million patacas (US$5 million) will be allocated to subsidising the meetings, incentives, conferences and exhibitions industry next year, an increase on this year’s budget. The government will also extend the scope of the subsidies to help fund the promotion, translation and logistics of MICE events.

MOP 200,000

Maximum subsidy for event logistics

Economic Services Bureau director Sou Tim Peng said the government would pay for up to 50 percent of an event’s promotion and logistics costs to a maximum of 100,000 patacas for conferences and 200,000 patacas for exhibitions. “For conference translation, the subsidy is up to 15 percent of the respective expenses, and the upper limit is 20,000 patacas,” Mr Sou said. The Commission for Convention and Exposition Development approved the extension of the subsidy programme yesterday, based on views from representatives from the meetings and events industry. The Conventions and Exhibitions Stimulus Programme begins on January 1. Mr Sou said companies could apply for a subsidy for any event scheduled next year. Up to October this year, the government had spent more than 30 million patacas on the stimulus programme that supports professional buyers’ accommodation costs and the

More than 30 million patacas has been spent by the government this year on subsidising MICE events

event’s opening ceremonies. When asked if there were a danger the sector would become reliant on the government’s financial support, Mr Sou said the subsidies would help. “It is necessary and important that the government is enlarging its support to the newly emergent

[MICE] sector,” Mr Sou said. “But we will assess the effect of our stimulus programme after some time. “We will keep on monitoring if the subsidy is properly used by the companies in accordance with their expense documentation and on-thespot checks at the events.”

Overcrowded city worries residents Public think-tank says better urban planning could help deal with growing population Tony Lai

tony.lai@macaubusinessdaily.com

esidents are worried about the territory’s ability to withstand a future increase of over 270,000 inhabitants predicted in the consultation text for Macau’s demographic policy framework. The government’s Policy Research Office, headed by Lao Pun Lap, put out a consultation text last month, which forecasts the population would grow to between 754,000 and 852,000 by 2036. Several speakers in the only consultation session open to the public, held on late Tuesday, were

anxious over whether Macau had enough land and housing resources. Choi Kam Fu, vice-secretary of the Gaming Enterprises Staff’s Association said: “Macau is already overcrowded right now with people and cars while the population is only at around 576,000.” “How can the city stand a minimum growth of over 200,000 people in the future when there are only five new reclaimed land plots?” he questioned. Kou Ngon Fong, president of the Macao Tri-decade Action

Union – known for a sometimes sceptical approach to government policy – added: “Any good policies from the government will become useless in the future when Macau is already overloaded.” A recent graduate named Au Wing Leung said the administration “should not blindly import workers to Macau without knowing what the city needs.” Mr Lao told reporters on the sidelines that the figures mentioned in the consultation paper were only estimates and the population policy

was yet to be finalised. The city would lack workers in the future due to the aging problem, he said. “It is a trend around the world, not only Macau, to import quality professionals for the development of society,” he said, adding better urban planning could raise the city’s load capacity. He pledged the administration always prioritises residents’ rights and would listen to different opinions during the ongoing threemonth consultation.

December 13, 2012 business daily | 7

MACAU Old Coloane shipyards to be revamped The site of the now defunct Lai Chi Vun shipyards in the north-western bank of Coloane, occupying 50,300 square metres, will be transformed in a “leisure zone”, comprising exhibition centres of the site’s history, food and beverage area and space for workshops, the Old Neighbourhood Regeneration Committee announced yesterday. The government has already asked the shipyards’ owners to join the development plans for the site and has not faced much opposition, said Lao Iong, head of the Land, Public Works and Transport Bureau’s urban planning department.

Insurance leader to hire 360 agents AIA Macau branch chief executive says city’s small insurance market is competitive Tony Lai

tony.lai@macaubusinessdaily.com

he Macau branch of American International Assurance Co (Bermuda) Ltd plans to consolidate growth by increasing the size of its sales team by more than one-third next year. Starting this month, the company’s goal was to “employ 360 new agents to build a quality team” said AIA Macau chief executive Chris Ma Chuk Ho. “Establishing a quality agency force has been our major goal for development in the past two years and [it will remain so for] the future,” said Mr Ma. He told Business Daily on Tuesday the company planned to build a better sales team by providing more training and support, and imposing stricter recruitment policies. AIA Macau, the city’s biggest insurance company by market share, currently has about 1,000 agents. Mr Ma did not disclose AIA Macau’s operating result in the financial year that ended last month, saying only that the market was competitive. The company brought an unfair competition suit against AXA China Region Insurance Company (Bermuda) Ltd in the Macau Court

of Second Instance. A judgment published last month said AIA Macau had accused some of its former agents and AXA of attempting to headhunt AIA agents, bringing their policyholders with them. The court ruled there was not enough evidence to support the allegation. “It was four or five years ago. It was something that happened in the past and [we should] let it be,” Mr Ma said. He added: “In my memory, I think we won this case by getting a restraining order from the court against anyone [seeking] to harass our clients.” Mr Ma said insurance companies in Macau remained “close”. “There will not be any vicious competition among the firms but only healthy competition,” he said. Mr Ma said more than 70 percent of the insurance market was linked to life insurance, including retirement and savings products. The remainder of the market was made up of non-life policies, such as third-party coverage for driver’s vehicles. He said the government’s plan to extend a cooling-off period for life insurance policies would have little

impact on the industry. “A cooling-off period has always existed and it is only a minor adjustment. We are just following what Hong Kong is doing,” he said. From June, consumers will be able to claim a full refund on life insurance policies cancelled within 21 days. Announcing the changes last month, the Monetary Authority of Macau said the cooling-down window would begin from the day consumers signed the contract.

AIA Macau is the city’s biggest insurance company by market share

Easier insurance for cross-border drivers

Drivers with double-licence plates must buy two insurance policies to ensure adequate coverage

he Macau Monetary Authority and the Macau Insurers’ Association are in talks with mainland authorities to make it easier for drivers crossing the border to acquire third-party insurance. A member of the authority’s board of directors, António Félix Pontes, said the talks were studying the possibility of a single insurance policy that would cover vehicles on both sides of the border. He said

the move would enhance closer regional cooperation. Cross-border drivers currently have to buy two separate policies, one for Macau and another for the mainland. Mr Pontes said single-policy coverage would probably be first available for drivers crossing between Macau and Hengqin Island, then to the rest of Guangdong and finally Hong Kong.

The authority expects the issue will progress during the first half of next year, Mr Pontes told reporters yesterday. Meanwhile, the authority says all of the 50 new taxis – part of a batch of 200 new licences – are on the road and have asked for the regulator’s help in gaining coverage from insurers. If three or more firms refuse to provide coverage, a would-be policyholder can ask the Monetary Authority for help in

securing a joint policy. Leng Sai Ho, Macau Traffic and Transport General Association chairman, has slammed insurers for their reluctance to give taxis coverage. “They claim to be losing money because we have too many accidents,” he said in August. In the first 10 months of this year, taxis were involved in 1,214 traffic accidents, 163 fewer than a year before. T.L.

8 |

business daily December 13, 2012

GREATER CHINA

Chinese think tank sees exports rising China’s exports are likely to grow 8 percent in 2013 from the previous year while imports could rise 7.8 percent, leading government think tank the State Information Centre (SIC) said in a research report published yesterday. “China’s foreign trade will expand slowly in 2013 as factors hampering global economic recovery may not disappear easily while China’s economic growth will stabilise,” it said in the report published in the China Securities Journal. China’s exports grew 7.3 percent in the first 11 months of 2012 from a year earlier, while imports grew 4.1 percent, official data showed. The government aims for 10 percent growth for combined exports and imports this year. China’s economy could grow 8 percent in 2013, with industrial output expanding 10.5 percent, the think tank said. The economy is on track to grow around 7.7 percent in 2012, overshooting the official target of 7.5 percent. Sources told Reuters last week the government is likely to stick with the 7.5 percent growth goal in 2013. China could see a 3 percent annual rise in foreign direct investment (FDI) inflows next year to US$116 billion, the SIC report said. China’s retail sales are likely to grow 14.6 percent in 2013, quickening from 14.2 percent this year, thanks to rising incomes as the government pushes forward reforms and urbanisation, according to the forecasts.

IMF warns of HK property slu

Sharp run-up in home prices raises the risk of an abrupt corr Prices of homes in Hong Kong have increased 20 percent this year

ong Kong is at risk of an abrupt decline in house prices after they doubled to a record in the past four years, climbing 20 percent in 2012 even as the economy cooled, the International Monetary Fund said. “The property sector is the main source of domestic economic risk,” the IMF said in a report on the city released yesterday. At the same time, the odds of a slump that has major economic and financial consequences is “fairly low in the near term,” the fund said. Hong Kong’s apartment prices have surged to become the world’s most expensive after low interest rates and limited supply fuelled demand, prompting the government to tighten mortgage lending and add taxes. Since taking office in July, Chief Executive Leung Chun Ying imposed three rounds of curbs, including an extra 15 percent tax on buyers from overseas, and officials have signalled more measures are possible. “The sharp run-up in house prices raises the risk of an abrupt correction,” the IMF said in the report. The property sector represents half of outstanding loans for use

in Hong Kong, with additional risks from the use of real estate as collateral, it said. The city should maintain its currency pegged to the U.S. dollar, the IMF said. Economic growth may rebound to about 3 percent in 2013, up from an estimated 1.25 percent this year, the fund said. Inflation may average 3.75 percent this year and 3.5 percent next year.

“best arrangement” for the special administrative region and “warrants continued support,” Mr Barnett said, calling the system “transparent and credible”. Hong Kong linked its exchange rate to the dollar in 1983 when negotiations between China and the U.K. over the city’s return to Chinese rule spurred capital outflows. The system ties monetary policy to that of

Defying slowdown This year’s house price increase has defied “the general slowdown in economic activity,” the report said. Concerns about the affordability and supply of housing “will take time to address,” Steven Barnett, the fund’s Hong Kong mission chief, said in a Bloomberg Television interview from Washington. While measures such as stamp duties may have a short-term effect, “in the long run, it’s really about increasing supply,” he said. Hong Kong needs to make hard choices about the use of land and how much countryside is needed, Mr Leung said last week. The dollar peg is still the

KEY POINTS IMF says there is a chance of an abrupt correction Sees GDP growth of 1.25 pct this year, 3 pct in 2013 Inflation may average 3.75 pct this year, 3.5 pct next year Hong Kong’s currency regime ‘effective’, merits support

PetroChina buys BHP’s stake in Br

BoC hopes to begin Deal comes as China seeks more foreign energy sources RMB clearing business in Taiwan Bank of China Ltd hopes its Taipei branch will open yuan clearing business in Taiwan in a month, Taiwan’s central bank chief said yesterday, a move seen as finally bringing together the last leg of an economic integration between the one-time political foes. Governor Perng Fai-nan told lawmakers in a parliamentary session that he would meet the Chinese bank’s executive in Taipei and talk about the quota that the mainland bank will give to Taiwan banks and people. “We will negotiate with them...the bigger the quota, the better,” he said. Mr Perng’s comments come a day after the BoC was appointed as the clearing bank for yuan transactions in Taiwan. China and Taiwan, which were once political foes, signed an agreement on a clearing system for each other’s currencies in September, starting the last leg of an economic integration that has drawn both sides closer and lifted trade to more than US$160 billion annually. Mr Perng also said that the central bank will likely consider putting the Chinese yuan into its forex reserves portfolio, which is the fourthlargest behind China, Japan and Russia. Banking shares rose 1.3 percent on investor hopes the appointment of BoC would boost banking ties across the Taiwan Straits. The broader market was up 0.6 percent. Reuters

hina’s PetroChina Co Ltd has agreed to pay US$1.63 billion for a minority stake in a controversial Australian liquefied natural gas (LNG) project, as it steps up efforts to source more of its energy in foreign countries. Mining and energy giant BHP Billiton Ltd said it would sell PetroChina its share of the Browse LNG project, estimated to cost US$30 billion to build, after deeming it a “non-strategic” asset. China’s state-owned energy giants have been bidding aggressively for foreign oil and gas fields as Beijing looks to secure future energy supplies to meet rising demand. China also aims to double the share of gas in its overall energy mix to more than 8 percent by 2015, while coal will be cut to just over 60 percent. PetroChina will acquire an 8.33 percent stake in the East Browse joint venture and a 20 percent share of West Browse, Melbourne-based BHP said yesterday in a statement. The deal comes as Chinese oil and gas acquisitions reached a record this year, following Cnooc Ltd’s US$15.1

billion bid for Nexen Inc. It gives PetroChina a share in natural gas resources off the Australian coast that may underpin an LNG venture estimated by Deutsche Bank AG to cost A$44 billion (US$46 billion). The Chinese state-owned company wants half its oil and gas output to come from overseas by the end of the decade. The purchase confirms “China’s intensifying interest for natural gas imports,” Gordon Kwan, head of energy research at Mirae Asset Securities HK Ltd, said in an e-mail response to questions. “Expect more

US$1.63 bln PetroChina to pay BHP for minority stake

such deals, and they will gain speedy regulatory approvals as they are minority stakes.”

Major acquisition The Browse stake marks Petrochina’s first major acquisition this year after it set aside US$16 billion for overseas investment as part of a plan to have half its production outside of China within eight years. “PetroChina is under pressure to grow its overseas output,” a source familiar with the company’s strategy said. PetroChina could not be reached for immediate comment. The Browse project has been plagued by controversy over its proposed location at James Price Point on the northwestern coast of Australia, which has been opposed by some project partners, environmentalists and Aboriginal landowners. The investment also comes against a backdrop of soaring costs for some US$170 billion worth of LNG export projects under

December 13, 2012 business daily | 9

GREATER CHINA

Chinese screaming mad over flight delays Skies are hardly crowded, but its restricted routes are getting busier Kazunori Takada

ump

rection

the U.S., where the Federal Reserve is using near-zero interest rates to aid a recovery. Recent purchases of U.S. dollars by the Hong Kong Monetary Authority (HKMA) amid fresh capital inflows was part of the normal functioning of the system, it added. The HKMA has injected a total of US$9.25 billion worth of Hong Kong dollars into the market since October 20 in order to curb the strength of its currency. The Hong Kong dollar is pegged at 7.8 to the U.S. dollar but can trade between 7.75 and 7.85. Under the currency peg, the HKMA is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85 to keep the band intact. The HKMA stepped into the currency market twice on Tuesday, selling a total of HK$12.013 billion (US$1.6 billion) in Hong Kong dollars as the local currency repeatedly hit the strong end of its trading range. “Hong Kong really has the preconditions to maintain the system,” Mr Barnett said. “It has flexible markets, robust and proactive financial oversight, and a very healthy fiscal position.” Bloomberg News/Reuters

irline crews and ground staff are assaulted, passengers storm a runway, and a person yanks open an emergency exit door on a plane. In China, angry passengers are resorting to extreme measures to protest delays as the country’s restricted air corridors are becoming clogged with millions of new fliers each year – a fact attributed to the fast rise of the middle class and cheap flights. There have been dozens of incidents involving irate travellers on both domestic and international flights this year, as airlines struggle to stick to their schedules. With manufacturers predicting a new plane will take to China’s skies every other day for the next two decades, industry officials say congestion is only going to get worse. And that means more delays. Some 30 years ago, flying was a travel option only available to top government and company officials who needed to submit a special document from their employer to buy a plane ticket. While most Chinese people still use trains for long-distance travel because of the lower cost, rising income and cheaper flights as a result of increased competition means more are now using planes. Over 270 million passengers flew on domestic routes in China last year, up nearly 10 percent from 2010 and over 70 percent from 2003, according to government data. The International Air Transport

270 million

Passengers flew on domestic routes in China last year

Rising income and cheaper flights means more people are now using planes

Association projects 379 million will be flying domestically by 2014. Airlines have been adding planes to keep pace with the increased demand. Boeing Co predicts China will need to add 5,260 new airliners worth US$670 billion over the next 20 years.

Restricted routes Airlines are increasing the number of flights but with China’s air force controlling much of the airspace, flight delays are likely to become increasingly common. China’s skies are hardly crowded, but its restricted routes are. Experts and pilots say airspace allocated for commercial use is only around 20 percent. “The airspace is too small. It’s like

rowse LNG project construction in Australia, owing to labour shortages, construction challenges and the strength of the Australian dollar. Chevron Corp last week revised up the cost of its Gorgon LNG export complex by US$15 billion to US$52 billion. “For [PetroChina], obviously that particular country probably is not just worrying about the next couple of years. They’ve got a long-term requirement for energy,” said David Lennox, a mining resources analyst for Fat Prophets in Sydney. “You’ll find a lot of Chinese companies are stepping into the operational phases of projects like this to learn the trade,” he added. “Possibly they can take those skills back to what they are doing in their own offshore region.” The sale hinges on the remaining joint venture partners – Woodside Petroleum, Royal Dutch Shell Plc, BP, Japan’s Mitsui & Co and Mitsubishi Corp – choosing not to exercise rights to match the offer from PetroChina. Reuters/Bloomberg News

China’s energy demand has risen over the past few years as its economy has expanded

an eight-lane highway with just two lanes open,” said Jeff Zhang, a pilot at one of the top three Chinese carries. Earlier this year around 20 angry passengers dashed toward the runway at Shanghai’s main international airport, coming within 200 metres of an oncoming plane from the United Arab Emirates. Their action was sparked by a 16-hour flight delay. It was not clear why they charged onto the tarmac, unless they were seeking to create a scene in order to boost their chances of getting compensation. In August, two passengers furious after being refused compensation for a delay yanked open an emergency exit door on their plane – resulting in a further delay. An Australian pilot and crew were surrounded and threatened by an angry mob in October after a Jetstar flight, which originated in Melbourne, was diverted from Beijing to Shanghai because of bad weather, Australian media reported. That incident echoed another involving a United Airlines flight that was delayed for three days in Shanghai. Media reported frustrated passengers started shouting and rushed at the pilots. Last week, angry passengers came to blows with ground staff after their flight was delayed from Guiyang in southwestern China, according to a witness. The cause of these protests partly lies with the Chinese carriers themselves. It is not uncommon for passengers to have to wait for hours inside a plane or at the boarding gate without any information about how long the delay might last. “In the past, only ‘first class’ people had the privilege to travel by plane so the average Chinese has very high expectations for services,” said Li Yuliang, an independent civil aviation commentator who is also the chief trainer for China Eastern Airline’s Shandong office. “But when they actually fly, they find the services are not as good, especially when there is a delay, and these disappointed passengers make a lot of trouble.” According to the Civil Aviation Administration of China, about a quarter of the 2.4 million domestic flights were delayed in 2011. The ratio is roughly comparable with delays seen in Britain but this data does not reflect delays that occur after all the passengers have boarded the plane. Reuters

10 |

business daily December 13, 2012

ASIA Qantas plans earlier Asia arrivals Qantas Airways Ltd, seeking to end losses on international routes, will reschedule Hong Kong and Singapore services that arrive too late for business meetings as part of an Asia restructuring to lure corporate travellers. Many of Qantas’s flights from Australia to Singapore and Hong Kong currently take up most of the working day, as the schedule is designed around onward connections to Europe. The changes would mean travellers waste less of the business day in the air and can make regional connections without overnighting in Asian ports.

India factory output surges 8.2 pct Boosted by increased demand during the festive season Arup Roychoudhury

big surge in manufacturing output pushed India’s industrial growth to its highest in more than a year in October, a sign that Asia’s third largest economy may have turned a corner that strengthens the central bank’s case against a rate cut. The Reserve Bank of India (RBI) has kept interest rates on hold since April because of stubborn inflation, defying calls from business and politicians for help in fighting a slump that has dragged the economy toward its slowest growth in a decade. The index of industrial production (IIP) grew 8.2 percent annually in October, data released by the Central Statistics Office showed yesterday. October factory and mine output showed the strongest growth since June 2011, after IIP growth spent most of this year close to, or below zero percent. However, the industrial index is a volatile indicator that often lurches violently. Economists said the rebound was largely due to a low base a year earlier, when religious festivals closed factories. “We should be careful in not over-interpreting this number. With some shifting of festivals in October and more number of working days, we should see some payback in November,” said A. Prasanna, an economist with ICICI Securities. “That said, there are enough signs of optimism. A lot of supply side issues that were there last year,

A slowdown in global and domestic demand has hurt India’s manufacturing sector

seem to have gone away.” India’s year-on-year rate of GDP growth has been below 6 percent for the past three quarters, damagingly sluggish for a country that aspires to at least 8.5 percent annual expansion to provide jobs for its burgeoning population. The turnaround in industrial

output, which contracted a revised 0.7 percent a month earlier, was helped by a revival in infrastructure development, where the government has been trying to clear red tape restraining large projects. Manufacturing output, which accounts for the bulk of industrial production and contributes about

15 percent to overall GDP, rose 9.6 percent from a year ago. Persistently high consumer price inflation, reported yesterday at 9.9 percent in November, will provide more ammunition for RBI Governor Duvvuri Subbarao to maintain a hawkish monetary policy stance at a policy meeting on Tuesday.

Asia-Pacific free trade talks make slow progress October next year still target date for free trade pact Gyles Beckford

.S.-led talks in New Zealand on a free trade deal for the AsiaPacific region have made some progress but have a long way to go to reach a pact to dismantle entrenched trade barriers by the end of next year, the negotiators said yesterday. Several hundred officials from 11 countries have spent more than a week in Auckland for the 15th set of negotiations on the Trans Pacific Partnership (TPP), which began in March 2010. New Zealand’s chief delegate said the talks had brought new TPP members, Canada and Mexico, into the process and made progress on the language and mechanisms of any deal, as well as clearly identified

what needs to be done on the difficult issues such as intellectual property, environment and investment. “There is considerable amount of work to do,” David Walker told a media briefing, adding there was a common desire among the 11 nations to reach a deal next year. “On the various market access negotiations, discussions continue as we move towards construction of an overall package, which meet the ambitions set out by leaders and ministers and is acceptable to all,” he said. There is no formal deadline for an agreement, but October next year is being targeted to coincide with the annual summit of the Asia Pacific Economic Cooperation (APEC). The

next round of talks will be held in early March in Singapore. The major roadblocks to a final deal were not detailed, but the sensitive issue of pharmaceuticals, where the United States wants to see greater patent protection for its drug companies was not discussed. Critics said the TPP was still aimed at benefiting large U.S. corporations. “The proposals give greater power to large corporations and fleet-footed investors who would have little interest in creating good jobs and improving social conditions,” said Bill Rosenberg of the NZ Council of Trade Unions. Other issues the TPP is struggling

with include a common dispute resolution process, which could see government measures challenged by private companies, state procurement policies, and greater intellectual property protection.

December 13, 2012 business daily | 11

ASIA Suntory panning food, drinks unit IPO Japan’s Suntory Holdings Ltd plans to raise up to US$6 billion in an initial public offering of its food and non-alcoholic drinks unit, as it looks to build funds for overseas acquisitions. Japanese drinks firms including Suntory, Kirin Holdings Co Ltd and Asahi Group Holdings Ltd have aggressively chased expansion abroad, including through acquisitions, to be less dependent on a shrinking home market. Suntory Beverage and Food Ltd plans to list in Tokyo in the second half of 2013, raising 400500 billion yen (US$4.9 billion-US$6.1 billion), sources told Reuters.

Singapore growth forecasts cut

BOT: Low rates could cause imbalances

We should be careful in not over-interpreting this number. With some GDP seen growing 1.5 percent this year, shifting of festivals survey shows in October and more conomists have cut their number of working days, forecasts and raised their we should see some inflation outlook for Singapore, a central bank survey payback in November released yesterday showed, in a further

A. Prasanna, ICICI Securities

The central bank has said any interest rate cut is “highly improbable” at the meeting next week, since it expects price pressures to remain elevated following a hike in the price of heavily subsidised diesel in September. Some economists expect a cut in cash reserve ratios (CRR) for banks, to help liquidity. Any data signals that the economy is past the trough of its slowdown will bolster the RBI’s case that taming inflation should take precedence over reviving growth in its rate-setting policy. “With inflation likely at 7.8 percent in November, a rate cut is ruled out in December. I do not expect any CRR cut also as the government is maintaining large cash balances with the RBI,” said Sujan Hajra, chief economist with Anand Rathi securities in Mumbai. Reuters

sign that the country is likely to face another year of sub-par growth and elevated inflation in 2013. Singapore, whose trade is three times gross domestic product (GDP), has been hurt by the downturn in Western economies that has crimped demand for its exports. The wealthy city-state of 5.3 million people has also underperformed neighbours such as Malaysia and Indonesia, which can rely on their much larger populations to prop up growth. “The key thing is Singapore’s small domestic market. Regional economies, especially in the rural household sector, have benefitted from still strong resource prices so there is the domestic consumption story,” said CIMB regional economist Song Seng Wun. Economists now expect the Southeast Asian city-state’s GDP to grow 1.5 percent this year, down almost a full percentage point from the median estimate of 2.4 percent in the previous poll, according to the Monetary Authority of Singapore’s (MAS) latest quarterly Survey of Professional Forecasters. However, Singapore may avoid a technical recession based on the median

Singapore’s economy grew by 4.9 percent in 2011

estimate of 1.8 percent year-on-year growth in the fourth quarter, which works out to an annualised quarteron-quarter and seasonally adjusted expansion of around 3 percent. The city-state’s economy contracted an annualised and seasonally adjusted 5.9 percent in the third quarter from the second quarter. MAS conducts its survey every quarter after the release of economic data for the preceding three-month period. The median forecasts in the latest report were based on the estimates of 21 economists. For 2013, the Singapore economy is now seen growing by just 2.7 percent, down from 3.9 percent in the previous survey but in line with the government’s latest forecast for an expansion of 1-3 percent next year. Reuters

Thailand’s central bank warned yesterday that a protracted period of low interest rates could, on past experience, cause financial imbalances and said it would closely monitor credit growth, especially some types of household debt. However, in minutes of its November policy committee meeting, it also said that although the outlook for the global economy had improved, substantial risks remained, so “it was important to preserve policy space for such contingencies”. The Bank of Thailand left its policy rate unchanged at 2.75 percent at a meeting on November 28, taking a more optimistic view on the global economy than at the previous meeting on October 17, when it surprisingly cut the rate by 25 basis points. Overall, it said there was more risk to the growth outlook than to inflation because of global uncertainties. “As such, an accommodative monetary policy stance was deemed necessary and appropriate to sustain ongoing economic expansion.” However, it would need to monitor credit growth. “If warranted, macroprudential measures could also be used along with the policy interest rate to ensure financial stability.”

Malakoff to offer a third of shares Malaysian builder MMC Corp Bhd will offer nearly a third of the enlarged capital of its power unit Malakaoff Corp Bhd in a share market listing expected in the second quarter of 2013, according to a stock exchange filing. The US$1 billion initial public offering of Malaysia’s largest independent power producer comes as a series of governmentlinked privatisations and a strengthening economy have made the country Asia Pacific’s top destination for IPOs this year. Malakoff’s IPO will be made up of 500 million new shares and 260.87 million shares contributed by existing shareholders, MMC, which owns 51 percent of Malakoff, said in a filing late on Tuesday. MMC said a listing would assist Malakoff’s growth by giving it greater financial flexibility and allowing it lower its cost of capital by accessing equity capital markets. The institutional offering will make up 25.2 percent of Malakoff’s enlarged share capital and will comprise all the shares from existing shareholders, as well as 368.5 million of the new shares, MMC said. The retail portion will involve 131.5 million shares, of which 75 million will be offered to the public, the filing read.

Defiant N.Korea launches rocket

Asia Pacific – trying to dismantle entrenched trade barriers

Collectively the TPP countries represent 650 million people in some of the fastest growing economies in the region with a total gross domestic product of around US$21 trillion. Reuters

orth Korea fired a rocket that placed a satellite into orbit, defying international sanctions and showcasing the nucleararmed totalitarian regime’s progress in ballistic missile technology. The North America Aerospace Defence Command said in a statement that it detected the launch at 9.49am Korea time, after which the first stage fell into the Yellow Sea and the second dropped into the Philippine Sea. The U.S. agency said the missile deployed an object that appeared to achieve orbit, after North Korea’s official news agency said the Unha-3 rocket had successfully sent a satellite into space. The Obama administration denounced the rocket test, with National Security Council spokesman Tommy Vietor calling it “a highly provocative act” that jeopardises regional security. China expressed regret at

North Korea’s long-range rocket launch, echoing a similar reaction from Russia. “We express regret at the Democratic People’s Republic of Korea’s launch in spite of the extensive concerns of the international community,” said foreign ministry spokesman Hong Lei, using North Korea’s formal name. Japan’s Chief Cabinet Secretary Osamu Fujimura said the action “threatens the peace and security of the region and it is against relevant” UN Security Council resolutions. Japan plans to seek a new resolution after yesterday’s incident, he said. Australian Prime Minister Julia Gillard urged the Security Council to respond firmly and UN Secretary-General Ban Ki Moon said in a statement that the launch “is a clear violation” of the world body’s restrictions against North Korea. Bloomberg News/AFP

Vietnam: coffee farmers curb sales Coffee growers in Vietnam, the world’s biggest producer of the robusta variety used by Nestle SA in instant drinks, are curbing sales to seek higher prices after making faster progress on harvesting than last year. Farmers have gathered about 75 percent of the crop, or about 1.1 million tonnes, and sold 360,000 tonnes, according to the medians of seven trader and shipper estimates compiled by Bloomberg. The harvest is set to drop 12 percent to 1.45 million tonnes from a record 1.65 million tonnes last season, the survey shows. Robusta traded in London may climb 14 percent to US$2,150 a tonne by the end of June, a separate survey shows. Curbs on sales from Vietnam may support prices as global supplies increase. Robusta has tumbled 13 percent since the end of September when harvesting began in Vietnam. Farmers have the financial resources to limit sales and are waiting for domestic prices to reach 40,000 dong (US$1.92) a kilogram, Luong Van Tu, chairman of Vietnam Coffee & Cocoa Association, said last week. Prices are around 38,000 dong to 39,000 dong and sometimes lower, he said.

12 |

business daily December 13, 2012

MARKETS Hang SENG INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.8

0.1626016

21821196

CHINA UNICOM HON

12.52

1.130856

24117181

POWER ASSETS HOL

ALUMINUM CORP-H

3.48

1.754386

13937582

CITIC PACIFIC

10.94

3.207547

20854211

SANDS CHINA LTD

BANK OF CHINA-H

3.42

2.089552

449869267

BANK OF COMMUN-H

5.79

1.223776

58097331

NAME

CLP HLDGS LTD CNOOC LTD

67.2

-0.2967359

2731657

16.88

0.3567182

35944758

NAME

PRICE

DAY %

66.75

-1.111111

VOLUME 3827864

33.5

2.918587

15700773

SINO LAND CO

14.12

0.4267425

6889846

SUN HUNG KAI PRO

116.8

0.0856898

4803816

BANK EAST ASIA

29.9

1.355932

4235832

COSCO PAC LTD

11.32

0.1769912

5206470

SWIRE PACIFIC-A

94.3

-0.5798629

2185744

BELLE INTERNATIO

16.3

-0.3667482

13894497

ESPRIT HLDGS

12.32

6045323

TENCENT HOLDINGS

253

0.1583531

3280465

BOC HONG KONG HO

23.85

0.6329114

14605596

HANG LUNG PROPER

29.9

1.355932

5585885

TINGYI HLDG CO

21.95

-1.126126

5236150

CATHAY PAC AIR

13.54

1.651652

3425776

118.1 -0.08460237

1349875

WANT WANT CHINA

10.86

1.876173

12925800

CHEUNG KONG

121.8

1.754386

4683689

WHARF HLDG

59.65

1.101695

3722227

8.12

2.01005

45252186

CHINA COAL ENE-H CHINA CONST BA-H

HANG SENG BK HENDERSON LAND D

55.65

1.089918

4178148

HENGAN INTL

69.05

-0.9325681

4438671

HONG KG CHINA GS

21.15

-1.627907

4757409

HONG KONG EXCHNG

129.8

2.285264

12862078

HSBC HLDGS PLC

79.95

0.3136763

10634690

6.25

1.957586

368881170

CHINA LIFE INS-H

23.55

1.727862

32721867

CHINA MERCHANT

24.25

1.041667

3146291

CHINA MOBILE

89.35

0.2805836

14405560

HUTCHISON WHAMPO

79.55

0.9517766

4016882

CHINA OVERSEAS

23.85

2.801724

26103602

IND & COMM BK-H

5.48

1.669759

349131764

CHINA PETROLEU-H

8.73

0.1146789

64525084

LI & FUNG LTD

13.2

0.3039514

17985227

CHINA RES ENTERP

27.65

0.5454545

3012194

MTR CORP

30.9

0.4878049

1801134

CHINA RES LAND

MOVERS

6 22510

INDEX 22503.35 HIGH

22505.68

LOW

22242.06

52W (H) 22508.01

21.1

0.7159905

14887353

NEW WORLD DEV

12.26

0.9884679

16676722

CHINA RES POWER

18.98

3.152174

14633951

PETROCHINA CO-H

10.8

1.123596

53637985

CHINA SHENHUA-H

32.2

1.257862

12276214

PING AN INSURA-H

60.55

1.000834

14556472

PRICE

DAY %

VOLUME

26.45

0.1893939

10490649

YANZHOU COAL-H

(L) 17821.51953

22240

10-December

12-December

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.7

4.815864

332483303

AIR CHINA LTD-H

5.98

2.572899

17527814

CHINA PETROLEU-H

8.73

0.1146789

64525084

ALUMINUM CORP-H

3.48

1.754386

13937582

CHINA RAIL CN-H

8.72

-2.351624

ANHUI CONCH-H

28.45

2.338129

7984945

CHINA RAIL GR-H

4.61

BANK OF CHINA-H

3.42

2.089552

449869267

CHINA SHENHUA-H CHINA TELECOM-H

CHINA PACIFIC-H

PRICE

DAY %

VOLUME

12.34

0.4885993

20440818

ZIJIN MINING-H

3.11

1.302932

66673228

19868477

ZOOMLION HEAVY-H

10.6

1.145038

14242860

-0.6465517

19835136

ZTE CORP-H

12.6

2.439024

10052355

32.2

1.257862

12276214

5.79

1.223776

58097331

4.3

0.4672897

63737388

19.52

0.6185567

3008669

DONGFENG MOTOR-H

12.28

1.153213

26128356

CHINA CITIC BK-H

4.39

2.570093

97433719

GUANGZHOU AUTO-H

6.9

5.182927

11287962

CHINA COAL ENE-H

8.12

2.01005

45252186

HUANENG POWER-H

7.02

1.007194

10418084

CHINA COM CONS-H

7.4

1.092896

13862218

IND & COMM BK-H

5.48

1.669759

349131764

CHINA CONST BA-H

6.25

1.957586

368881170

JIANGXI COPPER-H

20.6

1.228501

5392301

BANK OF COMMUN-H BYD CO LTD-H

CHINA COSCO HO-H CHINA LIFE INS-H CHINA LONGYUAN-H CHINA MERCH BK-H

3.76

1.897019

15812740

PETROCHINA CO-H

10.8

1.123596

53637985

23.55

1.727862

32721867

PICC PROPERTY &

10.04

1.107754

22058902

5.4

1.694915

9657703

PING AN INSURA-H

60.55

1.000834

14556472

16.44

1.732673

40902243

SHANDONG WEIG-H

7.71

3.768506

24840091

NAME

MOVERS

0 11170

INDEX 1.54387 HIGH

11162.76

LOW

10967.86

CHINA MINSHENG-H

8.55

0.5882353

40912201

SINOPHARM-H

24.75

-0.6024096

4161388

52W (H) 11916.1

CHINA NATL BDG-H

11.26

0.7155635

34631930

TSINGTAO BREW-H

44.45

0.1126126

963472

(L) 8987.76

CHINA OILFIELD-H

16.76

2.195122

5545292

WEICHAI POWER-H

33.75

3.527607

2749363

10960

10-December

12-December

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.68

0.3745318

93613906

CITIC SECURITI-A

10.82

0.2780352

44666367

SAIC MOTOR-A

AIR CHINA LTD-A

5.04

0.3984064

9038981

CSR CORP LTD -A

4.92

0.203666

24102053

ALUMINUM CORP-A

4.82

-0.4132231

10552140

DAQIN RAILWAY -A

6.33

-0.6279435

25904991

3.6

12205435

DATANG INTL PO-A

3.83

-0.7772021

17.94

1.184433

17352713

EVERBRIG SEC -A

11.65

NAME

ANGANG STEEL-A ANHUI CONCH-A

NAME

PRICE

DAY %

VOLUME

14.98

-0.7289596

19071028

SANY HEAVY INDUS

8.82

0.6849315

26944241

SHANDONG GOLD-MI

37.32

3.293662

18372569

9160260

SHANG PHARM -A

10.42

-1.419111

8580981

10420132

SHANG PUDONG-A

8.4

1.449275

174126970

BANK OF BEIJIN-A

8.2

0.7371007

48005172

GD POWER DEVEL-A

2.34

-0.4255319

38665826

SHANGHAI ELECT-A

3.81

-0.5221932

3363166

BANK OF CHINA-A

2.84

19642962

GEMDALE CORP-A

5.85

-0.1706485

50494265

SHANXI LU'AN -A

17.88

0.6756757

10546145

BANK OF COMMUN-A

4.44

0.2257336

84817640

GF SECURITIES-A

12.75

0.2358491

20061364

SHANXI XINGHUA-A

35.51

0.4526167

3101703

18811577

GREE ELECTRIC

22.84

1.061947

13940177

SHANXI XISHAN-A

11.73

-0.8453085

9419609

BANK OF NINGBO-A

9.4

BAOSHAN IRON & S

4.75

0.422833

17096526

GUANGHUI ENERG-A

15.81

1.086957

17957663

SHENZEN OVERSE-A

6.28

1.453958

39316885

BBMG CORPORATI-A

6.91

0.4360465

31520576

HAITONG SECURI-A

8.86

0.3397508

36659787

SUNING APPLIAN-A

6.17

-0.3231018

31500345

16.26

-1.633394

2978465

HANGZHOU HIKVI-A

28.89

-1.667801

2967952

TSINGTAO BREW-A

30.52

0.7260726

1444267

CHINA CITIC BK-A

3.86

0.5208333

26736766

HEBEI IRON-A

2.51

0.8032129

20542611

WEICHAI POWER-A

24.24

3.148936

7483198

CHINA CNR CORP-A

4.48

0.6741573

31944538

HENAN SHUAN-A

55.01

0.7878344

1609421

WUHAN IRON & S-A

2.67

15900370

BYD CO LTD -A

2.173913

CHINA COAL ENE-A

7.15

0.140056

7945122

HONG YUAN SEC-A

15.89

-0.1884422

8700513

WULIANGYE YIBIN

25.91

0.348567

31971579

CHINA CONST BA-A

4.38

0.6896552

29053201

HUATAI SECURIT-A

8.41

0.8393285

12418222

YANGQUAN COAL -A

12.46

-0.5586592

9851299

CHINA COSCO HO-A

4.32

0.2320186

10845067

HUAXIA BANK CO

9.25

0.9825328

34418216

YANTAI CHANGYU-A

43.05

-1.487414

1623017

CHINA CSSC HOL-A

19.73

-1.30065

7980303

IND & COMM BK-A

1.265823

80522393

YANTAI WANHUA-A

13.9

-0.5010737

5215640

CHINA EAST AIR-A

3.12

0.3215434

11259413

INDUSTRIAL BAN-A

14.16

0.8547009

71919948

YANZHOU COAL-A

16.6

-0.8363202

3241417

2.74

0.7352941

117789607

INNER MONG BAO-A

32.76

0.1222494

31069845

YUNNAN BAIYAO-A

61.86

-0.06462036

1187480

CHINA LIFE INS-A

18.75

0.6441224

7696458

INNER MONG YIL-A

20.3

-0.0984252

3966668

ZHONGJIN GOLD

15.97

5.273566

36853468

CHINA MERCH BK-A

11.05

0.5459509

67726906

INNER MONGOLIA-A

4.93

-0.4040404

39150944

ZIJIN MINING-A

3.72

1.362398

63737354

9748158

JIANGSU HENGRU-A

28.15

1.47801

2543738

ZOOMLION HEAVY-A

8.6

0.7025761

36982465

JIANGSU YANGHE-A

90.5

0.1881988

3547778

ZTE CORP-A

8.25

-0.7220217

8596232

JIANGXI COPPER-A

21.4

-0.742115

5844603

ZTE CORP-A

8.38

2.444988

17657199

CHINA EVERBRIG-A

CHINA MERCHANT-A

9.07

0.2209945

CHINA MERCHANT-A

24.85

0.4446241

9503884

CHINA MINSHENG-A

7.01

1.594203

226122382

7.63

1.733333

31914110

JINDUICHENG -A

10.92

0.8310249

3294040

CHINA OILFIELD-A

16.24

0.1233046

2182012

KANGMEI PHARMA-A

14.96

-0.729927

8271824

CHINA PACIFIC-A

18.9

-0.05288207

12555231

KWEICHOW MOUTA-A

211.86

4.720478

6432531

CHINA PETROLEU-A

6.33

-0.1577287

21225085

LUZHOU LAOJIAO-A

32.05

0.4702194

7152648

CHINA RAILWAY-A

5.74

1.056338

25677589

METALLURGICAL-A

2.1

0.4784689

18512158

2.47

12283405

CHINA NATIONAL-A

CHINA RAILWAY-A

2.99

0.6734007

21506369

NINGBO PORT CO-A

CHINA SHENHUA-A

22.69

9438988

PANGANG GROUP -A

3.54

-0.8403361

35277703

8.73

0.4602992

MOVERS 137

143

20 2280

INDEX 2267.767

CHINA SHIPBUIL-A

4.15

-2.352941

61429388

PETROCHINA CO-A

11370474

HIGH

2274.72

CHINA SOUTHERN-A

3.51

0.2857143

14942777

PING AN BANK-A

14.24

0.9213324

22739653

LOW

2250.09

CHINA STATE -A

3.35

0.2994012

117157245

PING AN INSURA-A

39.88

0.201005

17711023

CHINA UNITED-A

3.33

0.3012048

44735038

POLY REAL ESTA-A

12.29

1.235585

41341171

CHINA VANKE CO-A

9.24

47958007

QINGDAO HAIER-A

11.53

0.3481288

8634375

CHINA YANGTZE-A

6.58

-0.4538578

13296409

QINGHAI SALT-A

24.48

-0.729927

4708809

PRICE DAY %

Volume

PRICE DAY %

Volume

52W (H) 2717.825 (L) 2102.135

2250

10-December

12-December

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

NAME

PRICE DAY %

Volume

1.298701

9001257

TAIWAN MOBILE CO

106 -0.9345794

4829923

FOXCONN TECHNOLO

96.9

0.8324662

7530358

TPK HOLDING CO L

502

5026472

5557063

FUBON FINANCIAL

33.7

1.812689

25147583

TSMC

98.4

0.1017294

32555408

UNI-PRESIDENT

25.2

2.647658

13045674

FORMOSA PLASTIC

2.040816

24852324

37.55

0.6702413

320

2.073365

6681522

HON HAI PRECISIO

95.6

0.6315789

50665284

13.05

1.953125

118336984

HOTAI MOTOR CO

217

2.843602

598193

CATCHER TECH

146

3.180212

11097467

HTC CORP

282.5

4.051565

22795406

CATHAY FINANCIAL

31.4

1.453958

25351945

HUA NAN FINANCIA

16.6

0.6060606

859 -0.8083141

AU OPTRONICS COR

54.4

2.06379

14373405

11.55

1.315789

37778109

WISTRON CORP

30.9

0.1620746

6421143

12136695

YUANTA FINANCIAL

15.2

2.013423

36259819

2013228

YULON MOTOR CO

0.9345794

3483950

CHANG HWA BANK

1.587302

14270622

LARGAN PRECISION

CHENG SHIN RUBBE

76.5

0.9234828

6101152

LITE-ON TECHNOLO

39.65

0.8905852

6647294

CHIMEI INNOLUX C

MEDIATEK INC

14.55

2.105263

116722409

340.5

5.745342

21258302

CHINA DEVELOPMEN

7.34

0.9628611

71384964

MEGA FINANCIAL H

22.9

3.153153

40144548

CHINA STEEL CORP

26.3

0.3816794

24391452

NAN YA PLASTICS

53.7

2.676864

8762236

CHINATRUST FINAN

17.6

1.149425

41083975

PRESIDENT CHAIN

157.5

0.3184713

2289703

CHUNGHWA TELECOM

94.8 -0.2105263

7724783

QUANTA COMPUTER

66.6

-2.058824

17428289

COMPAL ELECTRON

19.8 -0.2518892

25048498

SILICONWARE PREC

DELTA ELECT INC

107

4490328

SINOPAC FINANCIA

12.55

1.619433

34807215

FAR EASTERN NEW

33.7

2.121212

20855771

SYNNEX TECH INTL

53.7

11606937

FAR EASTONE TELE

74.9

0.4021448

9863550

TAIWAN CEMENT

0.2570694

12212486

FIRST FINANCIAL

31.5 -0.3164557

UNITED MICROELEC

MOVERS

3 5430

INDEX 5428.76

8954151

0.8403361

17888358

16.25

0.619195

10392648

FORMOSA CHEM & F

69.6

0.723589

6855744

TAIWAN FERTILIZE

75.8

2.432432

3725812

FORMOSA PETROCHE

88.2

1.146789

2581128

TAIWAN GLASS IND

28.9

3.214286

2171611

TAIWAN COOPERATI

NAME

HIGH

5428.76

LOW

5337.22

52W (H) 5621.53 (L) 4643.05

5330

10-December

12-December

December 13, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GAlAXy ENtErtAINMENt

MElco crowN ENtErtAINMENt

MGM cHINA HolDINGS 40.5

29.40

14.1

29.15

14.0 40.0

28.90

13.9

28.65

Max 29.35

Average 28.908

Min 28.45

28.40

last 29

SANDS cHINA ltD

Average 33.372

Max 33.55

Max 40

Average 39.891

Min 32.85

wyNN MAcAu ltD 17.35

20.85

33.2

17.3

20.70

33.0

17.25

20.55

17.2 Max 17.34

Average 17.285

86.19

0.466254808

-11.86215359

109.6699982

79.68000031

BRENT CRUDE FUTR Jan13

108.6

0.546245718

4.927536232

120.7699966

90.15999603

GASOLINE RBOB FUT Jan13

263.46

0.92319479

6.517344546

293.3099985

218.4999943

GAS OIL FUT (ICE) Jan13

914.75

0.798898072

2.064156206

1036.25

799.25

3.412

-12.12979655

4.127000332

3.062000036

HEATING OIL FUTR Jan13

294.19

0.509053639

2.383935408

334.2199802

255.5699825

Gold Spot $/Oz

1714.7

0.3177

9.5718

1796.08

1522.75

Silver Spot $/Oz

DAY %

YTD %

(H) 52W

Min 17.22

last 17.32

20.40 Max 20.85

Average 20.704

33.115

0.0867

18.9689

37.4775

26.1513

1643.68

1.1763

17.8688

1736

1339.25

Palladium Spot $/Oz

697.53

-0.2103

6.7376

725.19

553.75

LME ALUMINUM 3MO ($)

2116

-0.750469043

4.752475248

2361.5

1827.25

LME COPPER 3MO ($)

8100

-0.430239705

6.578947368

8765

7131

LME ZINC

2080

-0.19193858

12.73712737

2220

1745

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan13 Mar13

WHEAT FUTURE(CBT) Mar13

PRICE

(L) 52W

Platinum Spot $/Oz

17800

0.112485939

-4.863709246

22150

15236

15.525

0.032216495

1.107131228

16.60000038

14.60000038

726.75

-0.171703297

21.07455227

846.25

511

last 20.7

Min 20.5

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 (L) 52W 2.16

1924933

CROWN LTD

10.19

0.2952756

25.95797

10.34

7.92

1582198

18.65999985

AMAX HOLDINGS LT

0.066

-24.13793

0.119

0.055

1332500

66.84999847

BOC HONG KONG HO

23.85

0.6329114

29.61957

17.46

14605596

1138

COFFEE 'C' FUTURE Mar13

149.3

-0.133779264

-37.25572599

249

146.3499908

SUGAR #11 (WORLD) Mar13

18.9

0.105932203

-19.09246575

25.12999916

COTTON NO.2 FUTR Mar13

74.91

0.013351135

-15.36549542

98.5

NAME ARISTOCRAT LEISU

CENTURY LEGEND CHEUK NANG HLDGS

World Stock MarketS - Indices

DAY % YTD %

VOLUME CRNCY

0.26

13.04348

0.335

0.204

4.6

1.321586

64.28572

4.6

2.5

366607 26103602

23.85

2.801724

83.95116

24.25

12.066

CHINESE ESTATES

11.64

-1.355932

-6.88

13.26

8.3

25924

CHOW TAI FOOK JE

11.8

-0.8403361

-15.22989

15.16

8.4

5381512

EMPEROR ENTERTAI

1.67

-0.5952381

50.45045

1.82

0.99

865000

FUTURE BRIGHT

1.18

180.9524

1.43

0.38

1068000

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13248.44

0.5965126

8.437698

13661.87

11735.19

NASDAQ COMPOSITE INDEX

3022.302

1.183176

16.0126

3196.932

2518.01

HANG SENG BK

FTSE 100 INDEX

5921.66

-0.05586526

6.269972

5989.07

5229.76

HOPEWELL HLDGS

DAX INDEX

7604.88

0.1993478

28.93232

7611.85

5637.53

HSBC HLDGS PLC

NIKKEI 225

9581.46

0.5893765

13.31832

10255.15

8238.96

HANG SENG INDEX

22503.35

0.8036664

22.07265

22508.01

17821.51953

CSI 300 INDEX

2267.767

0.4103166

-3.324102

2717.825

2102.135

TAIWAN TAIEX INDEX

7690.19

1.004769

8.740142

8170.72

6609.11 1750.6

PRICE

CHINA OVERSEAS

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 0.8506 8.4894 10.7712 111.44 1.0314

3.32

652

1728.25

8.199412

(H) 52W

3.2912 3.7187 0.6221 0.3626 -7.2368 0.2142 0.2232 0.6958 -2.067 3.0036 6.1221 4.1804 6.9008 -6.2151 -10.2855 0.3389 3.2829 0.0923 -0.312 -7.5939 0.0097

(H) 52W

948.25

19.44444444

0.5507426

YTD %

40.90909

11.34196185

-0.628717077

1975.44

0.5147 0.2612 0.2574 0.3859 -0.4583 0 0 -0.1024 0.1661 -0.0326 -0.0409 0.0963 -0.1683 0.2585 -0.9734 -0.1187 -0.1215 -0.4713 -0.3833 -0.8438 0

1.30719

-0.517346318

1462

DAY %

1.0545 1.6121 0.9323 1.3008 82.91 7.9825 7.7501 6.2515 54.185 30.63 1.2218 29.064 41.01 9670 87.424 1.21268 0.8069 8.1267 10.3844 107.85 1.03

3.1

817.25

SOYBEAN FUTURE Mar13

S&P/ASX 200 INDEX

GALAXY ENTERTAIN

3.019538

103.6517

29.85

13.28

20580632

118.1

-0.08460237

28.16061

120

91.15

1349875

1.141925

58.14586

31.6

19.049

520500

79.95

0.3136763

35.50847

80.3

57.05

10634690

HUTCHISON TELE H

3.55

0.8522727

18.7291

3.88

2.84

4376000

LUK FOOK HLDGS I

24.35

1.037344

-10.1476

33.2

14.7

3483000

MELCO INTL DEVEL

8.74

4.047619

51.47314

8.81

5.12

7406000

MGM CHINA HOLDIN

13.96

1.601164

45.53562

14.76

9.432

2394826

MIDLAND HOLDINGS

3.7

1.369863

-6.424986

5.217

3.249

6262000

NEPTUNE GROUP

0.155

-1.273885

39.63964

0.222

0.084

670000

NEW WORLD DEV

12.26

0.9884679

95.84664

13.2

6.13

16676722

SANDS CHINA LTD

33.5

2.918587

52.61958

33.95

20.35

15700773

SHUN HO RESOURCE

1.41

1.43

0.97

SHUN TAK HOLDING

4.21

2.933985

64.50914

4.23

2.418

11011927 7103146

4583.81

0.1705636

12.99745

4603.5

3985

4337.528

0.4541541

13.48867

4381.746094

3635.283

FTSE Bursa Malaysia KLCI

1648.71

0.4349495

7.707433

1679.37

1448.54

NZX ALL INDEX

864.261

-0.7397479

18.42431

878.077

712.548

SJM HOLDINGS LTD

17.32

1.524033

38.49866

18.36

11.973

PHILIPPINES ALL SHARE IX

3730.89

0.05873361

22.52351

3750.28

2965.32

SMARTONE TELECOM

14.3

-0.4178273

6.398813

17.5

12.96

4436194

WYNN MACAU LTD

20.7

1.222494

6.153846

25.5

14.62

10923825

JAKARTA COMPOSITE INDEX

13.8

33.4

WTI CRUDE FUTURE Jan13

KOSPI INDEX

last 13.96

21.00

PRICE

NAME

Min 13.9

17.4

NAME

CORN FUTURE

Average 13.991

33.6

32.8

last 32.5

Max 14.08

CURRENCY EXCHANGE RATES

NATURAL GAS FUTR Jan13

METALS

39.5

last 39.9

SJM HolDINGS ltD

Commodities ENERGY

Min 39.5

HSBC Dragon 300 Index Singapor

612.68

0.19

23.44

STOCK EXCH OF THAI INDEX

1353.21

0.8856881

31.97929

1354.4

1006.16

HO CHI MINH STOCK INDEX

391.08

0.439171

11.24449

492.44

332.28

Laos Composite Index

1207.63

0.7634671

34.26167

1249.34

876.33

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

ASIA ENTERTAINME

3.448276

-48.97959

7.24

2.4

118900

BALLY TECHNOLOGI

45.67

-0.1093613

15.44489

51.16

35.79

336971

BOC HONG KONG HO

3.1

1.973684

29.31821

3.3

2.24

1290

GALAXY ENTERTAIN

3.65

95.18717

3.87

1.75

2500

INTL GAME TECH

14.36

-0.06958942

-16.51163

18.1

10.92

2439840

JONES LANG LASAL

83.83

1.661412

36.84297

87.52

56.51

218139

LAS VEGAS SANDS

44.54

2.24977

10.97106

58.3216

32.6127

6892413 7039895

MELCO CROWN-ADR

15.6

2.092905

62.16216

16.02

8.32

MGM CHINA HOLDIN

1.8

-1.098901

51.04559

1.96

1.1917

100

MGM RESORTS INTE

10.93

0.1833181

4.793861

14.9401

8.83

12314357

SHFL ENTERTAINME

13.3

0.7575758

13.48123

18.77

10.61

257989

SJM HOLDINGS LTD

2.19

-2.666667

36.23022

2.36

1.5484

4000

WYNN RESORTS LTD

109.8

-0.2181025

5.98302

129.6589

84.4902

1593857

AUD HKD

USD

14 |

business daily December 13, 2012

Opinion China setbacks are no reason to bet on its failure Clive Crook

Bloomberg View columnist

hina’s economy, which paused earlier this year, is picking up again – good news for China and for the U.S. and Europe, which need all the external stimulus they can get. China pessimists aren’t convinced, though. They still see a hard landing coming. “Pause” and “hard landing” have special meanings in China, of course. Growth slowed to an annualised rate of about 7 percent in the first half of this year – lame by China’s standards, athletic by anybody else’s. Even the most pessimistic analysts talk of growth dropping at some point to 3 percent or 4 percent a year, which would hardly count as a landing, let alone a hard one, in most of the world. For now, the economy seems to be rebounding. Factory output in November was 10.1 percent higher than a year earlier, beating expectations. Still, the question remains whether China is about to slip to a slower trajectory – and, if it does, whether the government can handle the political implications. China’s development model has produced spectacular growth. The fear is that anything less might start a vicious circle and the miracle could start to unravel. Might

that happen? The experts are divided, but there’s agreement on several points.

Slowing reform First, under the leadership that just stepped down, promarket economic reform slowed. China’s third decade of fast growth was powered by the momentum from earlier efforts. Second, the model has to change in any event. China should rely less on investment and more on consumption, a switch that requires bold financial reforms – and which threatens entrenched interests. Third, the underlying drivers of China’s growth remain strong. If the government does what’s needed, the miracle has further to run. Pessimists emphasise the stalling, and some say reversal, of reform efforts. State-owned enterprises are no longer shrinking, they say; if anything, the state-run sector, with all its growth-retarding distortions and inefficiencies, is resurgent. I would say this concern is exaggerated. The pace of restructuring from public to private ownership has slowed, it’s true. That was bound to happen as state-owned enterprises lost ground. They accounted for more than 80 percent of industrial output in

China’s reliance on investment rather than consumption to fuel growth is testing the limits, and the need to reform public finance is pressing

the late 1970s; today, between 25 percent and 30 percent. It’s also true that stateowned enterprises led the government’s stimulus programme during the post2008 global slowdown. This was less a strategic reorientation, however, than a temporary expedient: Fiscal policy had to be eased quickly. State-owned companies’ share of assets rose after 2008 because of the surge of spending on infrastructure. Their share of bank lending, industrial output and exports continued to fall. Overall, the stimulus was a success. China pushed

through the global recession virtually unscathed. In the U.S., fiscal tightening in the states partly neutralised lower taxes and higher spending at the federal level. In China, higher spending at the subnational level reinforced (and in fact exceeded) stimulus from the centre. Fiscal policy had previously been conservative, and high domestic savings meant that China didn’t rely on external borrowing. That created fiscal space for action when it was needed, and the government used it. China’s public debt is reckoned to be less than 50 percent of gross domestic product. Unlike the U.S. (to say nothing of Europe), China has scope for another big stimulus if one should be needed.

Dubious financing The real danger for China isn’t that the consolidated public sector is flirting with insolvency or that the dead hand of government planning is reaching out to strangle the country’s private sector. It’s that the financing model for subnational public investment has been dangerously overstretched. The money for all that new infrastructure has mainly come not from long-term bond issuance but from

short-term bank lending, opaquely mediated through local financing vehicles. If the investments fail to generate high economic returns, the revenue needed to service the debts will fall short. That’s a real possibility. China has been here before. Heavy lending to public borrowers exposed banks to big losses in the 1990s, and the central government had to absorb the bad debts. Many observers think that China has lately invested in projects that are marginal, at best. Efficient public investments attract companies, spur activity and boost local tax revenue – the means to service the debts. Bridges to nowhere don’t. Local officials are also counting on revenue generated by rising property values. A crash in land or housing prices might not wreak as much havoc as it did in the U.S. China’s borrowers are much less leveraged. A real estate crash would check spending, though, and brake the growth on which everything else depends. It would also deny provincial and local governments the revenue they hope to collect by leasing land. A lot will depend on the real extent of overinvestment – and that’s hard to say, reports of “ghost towns” with empty roads and buildings notwithstanding. Rapid growth has a way of justifying apparently excess investment, as China has proved before. (Meanwhile, ask India what too little investment in infrastructure does for your growth prospects.) There’s no doubt, the pessimists have a point: China’s reliance on investment rather than consumption to fuel growth is testing the limits, and the need to reform public finance is pressing. In the future, spending on infrastructure should be judged more cautiously and financed with bonds. The government should liberalise interest rates and phase out disguised subsidies to enterprises that implicitly tax consumers. Switching from investmentdriven growth to consumptiondriven growth doesn’t have to happen all at once. China can make policy gradualism work again, but it has to act deliberately, and the job won’t be easy. Political interests have aligned around the present model. Who knows whether China’s weirdly impenetrable leadership even understands the issues? So yes, expect setbacks. Yet China’s underlying advantages – a vast population, a daunting work ethic, the untapped catch-up opportunities and an unsurpassed appetite for capitalism – are formidable. I wouldn’t bet on its failing. Bloomberg View

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

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

December 13, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

The IMF’s half step Kevin P. Gallagher

Professor at Boston University and Co-Chair of the Pardee Task Force on Regulating Global Capital Flows for Development

Yonhap News The number of South Koreans who filed for a personal bailout programme nearly quadrupled over five years as the economic slowdown began to kick in. The government programme is designed to give people some leeway on overdue interest on loans and have their debts written off when they fulfil debt obligations. Most applicants of the rescue programme belong to the middle class, who have a stable income or assets but are struggling to pay their debts. Experts said the current housing crisis and high unemployment rates have pushed more people to file for the bailout system.

Straits Times Singapore’s national carrier has agreed to sell its 49 percent stake in Virgin Atlantic to Delta Air Lines for US$360 million in cash. In a statement issued on Tuesday, Singapore Airlines said it had been “evaluating strategic options for the stake for some time, as the investment has not performed to expectations and the synergies the parties originally hoped for have not materialised”. It also said the sale will result in a profit being booked in its accounts. Singapore Airlines acquired the stake in the United Kingdom-based airline group in 2000.

Economic Times Standard & Poor’s on Tuesday warned again that India still faced one-in-three chance of downgrade in its sovereign rating to junk grade over the next 24 months citing high fiscal deficit and debt burden, but rival Moody’s said the country’s growth prospects for 2013 have improved. “A downgrade is likely if India’s economic growth prospects dim, its external position deteriorates, its political climate worsens, or fiscal reforms slow,” the S&P said in the statement. “High fiscal deficits and a heavy debt burden remain the most significant rating constraints” it said.

Asahi Shimbun Government-backed fund Innovation Network Corp. of Japan (INCJ) said it will take over ailing chipmaker Renesas Electronics Corp., a move that will avert the loss of the company’s technology overseas. Eight firms from the private sector, including Toyota Motor Corp., will also take part in the investment, totalling 150 billion yen (US$1.8 billion). Kimikazu Nomi, chief executive of the INCJ, emphasised the need for more restructuring steps for Renesas rather than the company’s long-term potential. The INCJ is expected to provide 138.3 billion yen to assume a 69.16 percent stake in Renesas.

“W

hat used to be heresy is now endorsed as orthodox,” John Maynard Keynes remarked in 1944, after helping to convince world leaders that the newly established International Monetary Fund should allow the regulation of international financial flows to remain a core right of member states. By the 1970’s, however, the IMF and Western powers began to dismantle the theory and practice of regulating global capital flows. In the 1990’s, the Fund went so far as to try to change its Articles of Agreement to mandate deregulation of cross-border finance. With much fanfare, the IMF recently embraced a new “institutional view” that seemingly endorses reregulating global finance. While the Fund remains wedded to eventual financial liberalisation, it now acknowledges that free movement of capital rests on a much weaker intellectual foundation than does the case for free trade. In particular, the IMF now recognises that capital-account liberalisation requires countries to reach a certain threshold with respect to financial and governance institutions, and that many emerging-market and developing countries have not. More fundamentally, the Fund has accepted that there are risks as well as benefits to cross-border financial flows, particularly sharp inward surges followed by sudden stops, which can cause a great deal of economic instability. What grabbed headlines was that the IMF now believes that countries could even use capital controls, renamed “capital flow management measures,” if implemented alongside monetary and fiscal measures, accumulation of foreign-exchange reserves, and macroprudential financial regulations. Even under such circumstances, CFMMs should generally not discriminate on the basis of currency.

‘One size fits all’ But has the IMF’s reconsideration of financial globalisation gone far enough? This month, the IMF’s Independent Evaluation Office released an assessment of the Fund’s policy on reserve accumulation that implies that a “one size fits all” approach to reserve accumulation continues to prevail within the organisation. Many emerging-market policy makers view accumulation of foreignexchange reserves during the 2000’s as having insured their countries against exchangerate volatility and loss of export competitiveness. Yet the IMF pinned significant

blame for global financial instability on this policy. Not surprisingly, given their decades of experience with the management and mismanagement of capital flows, emerging-market policy makers have been watching the IMF’s “rethink” on these issues very closely. From 2009 to 2011, with advanced economies pursuing near-zero interest rates and quantitative easing, yieldhungry investors flooded countries like South Korea and Brazil with hot money, fuelling currency appreciation and inflating asset bubbles. When the euro zone panic ensued in July 2011, inflows came to a halt and fled to the “safety” of the United States, Switzerland, and beyond. Unlike in the past, however, emerging and developing countries avoided the worst, precisely because they had learned to accumulate foreign reserves and regulate crossborder capital flows, and to ease such measures to prevent or mitigate sudden stops. And yet, despite abundant academic evidence and country experience to the contrary, the IMF remains stubbornly wedded to the idea of eventual capitalaccount liberalisation.

Optimal tools In a new study that surveys and updates the economics literature, Arvind Subramanian, Olivier Jeanne, and John Williamson conclude that “the international community should not seek to promote totally free trade in assets – even over the long run – because … free capital mobility seems to have little benefit in terms of long-run growth.” Thus, the IMF’s recommendation to use capital controls only after exhausting interest-rate adjustment, reserve accumulation, and prudential regulation is out of step with the profession. Indeed, recent work in economic theory shows that capital controls can actually

The IMF is making strides in the right direction, but emerging markets will have to remain in the lead

be the optimal policy choice. For example, the new welfare economics of capital controls views unstable capital flows as negative externalities on recipient countries, which implies that regulations on cross-border flows are the optimal tools to address market failures, improve market functioning, and enhance growth, not worsen it. Indeed, the IMF’s own research shows that countries that deployed capital controls first – or alongside a host of other macroprudential measures – were among the

most resilient during the global financial crisis. In many cases, the controls were neither market-based nor temporary. The IMF also fails to appreciate fully that capital flows should be regulated at “both ends,” or at least that advanced-country regulations will not make matters worse. IMF research over the last year has outlined circumstances in which industrialised countries should also take part in regulating global capital flows. But the new view also highlights an important obstacle: many advanced countries’ trade and investment treaties prohibit the regulation of cross-border finance. The good news is that Article VI of the IMF Articles of Agreement still stands: “Members may exercise such controls as are necessary to regulate international capital movements.” The IMF is making strides in the right direction, but emerging markets will have to remain in the lead. They have proven to be the best judges of their economic needs and priorities; as they consider the IMF’s new stance on financial globalisation, they should continue to heed their own counsel. © Project Syndicate

Business news at your reach Find us at the nearest 7-Eleven store

Macau Square

New World Garden/Taipa

Behind Landmark Hotel

Mei Keng Garden/Taipa

La Cite building complex

Opposite to Jockey Club

Nearest to CTM in Taipa

Beside McDonalds/Ho Lan Yun

Taipa village

Beside Grand View Hotel/Taipa

Nearest to Nova Taipa

Opposite of San Miu/San Malo

Kiang Wu Hospital

China Civil Plaza/Nape

16 |

business daily December 13, 2012

CLOSING Hong Kong to increase minimum wage Small China banks start rescue fund Hong Kong’s government plans to raise the city’s minimum wage by 7.1 percent, helping residents squeezed by inflation and the world’s highest home prices. Hourly salaries will gain to HK$30 (US$3.9) from May 1, Labour Secretary Matthew Cheung said yesterday at a press conference. The proposal will bolster the wages of about 327,200 employees, or a tenth of the city’s workers, according to an earlier report by a government commission. This will be the first revision to Hong Kong’s minimum wage since it was implemented in May 2011. Inflation jumped 5.3 percent last year and may gain 3.9 percent this year.

A group of small- and medium-sized Chinese banks including China Minsheng Banking Corp has started a 3 billion yuan (US$480.3 million) rescue fund to guard against financial risks as the country frees its interest rate market and as its economy slows. The group of 22 banks and one insurance firm have banded together to start the fund with 10 percent cash upfront, said Shi Jie, an assistant to the chairman of Minsheng Bank. Members pay at least 10 million yuan to join the fund and get up to 500 million yuan of financing when in need.

CESL Asia invests in energy sector Company ploughs millions in two power plants in Portugal

António Trindade, CESL Asia Group chief executive

acau-based CESL Asia Group will invest in the development of two power plants in the south of Portugal, chief executive António Trindade announced yesterday. He was speaking during the company’s Christmas dinner. CESL Asia is joining with Portugal’s Magpower Inc., a manufacturer of an advanced technology called CPV solar

modules and trackers, to invest about 200 million patacas (US$25 million) in enabling clean and renewable electricity. “Three months ago and as a result of several years of collaboration, CESL Asia and Magpower, a leading CPV solar technology developer, agreed to jointly invest in two power plants of six megawatts (in total) in Portugal,” Mr Trindade said in a prepared statement.

Concentrated photovoltaic technology – CPV for short – uses optics to concentrate sunlight onto a small area of solar photovoltaic cells in order to generate electricity. CESL Asia provides environmental infrastructure, facility management and consultancy services to companies. Through its subsidiaries, it runs the operation and maintenance of the technical and energy infrastructures of Macau International Airport. It also manages the Areia Preta wastewater treatment plant on the peninsula. “This is our first investment in a energy producing asset – valued at about 200 million patacas – that will start feeding electricity to the grid in the first quarter of 2013,” said Mr Trindade. To go ahead with the deal, the company got the backing of Banco Nacional Ultramarino SA, he added. “The move reflects our interest in investing in a field where we are usually only a service provider,” he told Business Daily. “This is a very

exciting development to our business.” CESL Asia also wants to bring the technology to Macau. “We have agreed to set up a joint company in Macau covering the transfer of technology from Magpower, [for] R&D [research and development], manufacturing, marketing and operation of CPV and other products derived from the technology,” Mr Trindade said. “We intend to make Magpower’s CPV technology Macau’s contribution to the ‘new energy’ developments in China,” he stated. The company’s CEO revealed the partners are also seeking opportunities in the mainland market. “We are working with [the] relevant authorities of Golmud, Qinghai – the cradle of solar energy in China – and I am convinced that we can contribute with our experience and capability to develop and implement innovative, practical green energy solutions for public and private use in China, Macau, and the Portuguese speaking countries,” he said. T.A.

HK unveils tough new rules for IPO sponsors Watchdog repeats call for banks’ liability

ong Kong’s securities regulator proposed to make banks criminally liable for false statements in initial public offering documents, seeking to strengthen investor protection after a series of accounting scandals. The Securities and Futures Commission said Hong Kong should clarify its laws to make an IPO sponsor’s criminal and civil liability unambiguous. The proposal, first raised in May, was repeated yesterday after the regulator considered responses to the plan, according to a statement. The SFC said a stricter regime is needed to protect investors, after a string of accounting scandals involving publicly traded Chinese companies hurt investor confidence. Critics have said the regulator already has powers to hold underwriters accountable for improper disclosure, and the new requirements will increase the cost of underwriting IPOs.

“Having someone on the hook for the quality of the information that’s provided, at face value, appears to be a positive step,” said Mark Konyn, chief executive officer of Cathay Conning Asset Management Ltd. “Whether or not the market can bear that level of liability is a question for the sponsors.” Banks expressed concerns that the proposed changes may increase the costs of arranging IPOs because it will require more onerous due diligence work, the SFC said. The regulator said it received feedback warning that the stricter rules may stifle the city’s IPO market and harm smaller underwriters. Banks should be held criminally liable if they “knowingly or recklessly approved a prospectus containing an untrue statement (including an omission) which was materially adverse from an investor’s perspective,” the regulator said. Starting next October, the SFC will require companies to publish early

Proposals make banks explicitly liable for prospectuses

drafts of IPO prospectuses, to be filed together with a listing application to Hong Kong’s stock exchange. Firms that act as IPO sponsors should be paid regardless of whether the deal gets completed, the SFC said. “The changes, along with a streamlined regulatory process, will incentivise sponsors to raise standards, pick the right deals and manage them well, which should in turn reduce risks

for investors and all those involved in IPOs,” SFC chief executive Ashley Alder said in the statement. The proposal comes as Hong Kong is on track for its worst year for IPOs since 2003, with proceeds falling 68 percent from last year to US$6.6 billion, data compiled by Bloomberg show. It may add to pressure on banks already stung by falling fees. Bloomberg News