Strong end to 2012 for gaming revenue
Year I Number 186 Wednesday, December 19, 2012 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP $ 6.00 www.macaubusinessdaily.com
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Govt restarts review of bus charge hikes
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Shuffle Master earns appeal v. LT Game Shuffle Master Inc., which recently changed its corporate name to SHFL entertainment Inc., has won the right to appeal against a Macau court ban won by a rival firm – LT Game – on SHFL’s ‘Rapid’ electronic table products being displayed or sold in Macau. The companies have been involved in a patent dispute since 2009. Page 2
‘Slow’ 2013 likely to reap US$41 bln G
Eatery trade can grow 10 percent in 2013 Macau-based restaurant operator Future Bright Holdings Ltd is to spend between HK$80 million (US$10.3 million) and HK$100 million to develop a food-processing centre at the ZhuhaiMacau Cross-Border Industrial Park. Managing director Chan Chak Mo expects sales volume in the sector to grow by “at least 10 percent”, next year thanks to the new high-speed rail link. Page 5
aming revenue growth will slow further in 2013 says Fitch Ratings, a credit rating agency. It predicts eight percent expansion next year. That’s a significant slowing from the 12 percent to 13 percent growth expected for 2012 once the returns for the whole of December are known. Assuming that the Macau market grows by at least 13 percent this year to 302 billion patacas (US$37.8 billion), then Fitch’s forward assessment would nonetheless mean the annual market will be worth 326.16 billion patacas – equal to US$40.9 billion – by the end of December 2013. December’s casino revenue is heading for 15 percent to 18 percent year-on-year expansion at current daily play rates say several analysts. The calculations are based on industry returns up to and including December 16.
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Fair Trade winemaker looks east for growth Thandi Wines (Pty) Ltd – the first South African winemaker to be accredited by the Fair Trade Foundation – plans to sell its products in Macau. Hong Kong-based Vins Gallery is to cover local distribution once a current mainland China deal expires. Thandi recorded a 30 percent fall in its sales to Europe – its main market – last year. Page 6
First ‘chip and pin’ credit card for local bank Bank of China (Macau) Ltd yesterday launched the first Macau-issued credit card to contain a ‘smart’ electronic chip. It’s in response to public demand for better data protection. The card requires both a signature and a password for a transaction, instead of only a signature, as at present with Macau-issued cards. The Monetary Authority of Macau asked banks to begin replacing all old magnetic-strip cards with smart-chip cards as of next year, according to an affiliate of the Macau Federation of Trade Unions.
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KUNLUN ENERGY CO
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CHINA PETROLEU-H
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CHINA RES POWER
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CHINA MOBILE
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HONG KG CHINA GS
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CHINA RES LAND
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CHINA OVERSEAS
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WHARF HLDG
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AIA GROUP LTD
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Source: Bloomberg
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business daily December 19, 2012
macau
Row flared up again during this year’s Global Gaming Expo Asia show (Photo: Carmo Correia)
Electronic game patent dispute enters new chapter Shuffle Master granted right to appeal against ban on displaying and selling its live dealer machines at G2E Asia Vítor Quintã
vitorquinta@macaubusinessdaily.com
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patent dispute dating back to 2009 between two makers of electronic table games for casinos appears no nearer to resolution. In the latest development one of the parties – Shuffle Master Inc., which recently changed its corporate name to SHFL entertainment Inc. – has won the right to appeal against a Macau court ban brought by the rival firm – LT Game – on SHFL’s ‘Rapid’ electronic table products being displayed or sold in Macau. Prior to this year’s Global Gaming Expo Asia trade show in Macau in May, locally based LT Game Ltd obtained a Macau court injunction – a temporary order from a judge – against SHFL. LT Game, led by businessman Jay Chun, claimed it had a Macau patent on key technology it says is also contained in SHFL’s Rapid Baccarat electronic table game product. It said this patent made it illegal for SHFL
to display or sell its Rapid product in Macau. During the first day of the show at CotaiExpo, SHFL was told by Macau Customs to cover its Rapid Baccarat games. Customs cited the injunction as the reason for its action. On the second day of G2E Asia lawyers for SHFL went to court seeking to lift the LT Game injunction. After giving the court a one million patacas (US$125,000) guarantee, SHFL was again allowed to display its Rapid product. But that stay didn’t provide a permanent resolution to the dispute. SHFL’s Macau subsidiary then sought to appeal against LT Game’s initial court injunction but the Court of First Instance immediately turned down the right to appeal. The court did so citing technical reasons, pointing out the injunction was directed at Shuffle Master Australasia Pty Ltd, part of the SHFL group, not at the Macau subsidiary.
The company then took its plight to the Court of Second Instance and in a judgement handed out last month - but only disclosed on December 17 – the judges agreed to grant leave to appeal.
Four-year row The court said SHFL’s Macau subsidiary has to be recognised as either “having been directly and effectively harmed” by the injunction or having “mistakenly paid the guarantee”. The latest legal move is part of a dispute dating back to 2009. LT Game claims monopoly rights over multi-game electronic table game products here but SHFL strongly denies LT Game’s patent has any relevance to its own product. There’s a lot of money potentially at stake in the tussle between the two sides. They make rival electronic table game products that offer electronic
betting and bet settlement combined with a live human dealer. Live table baccarat is the preferred game of most Chinese gamblers in Macau. But that game is getting less affordable for low- and middle-income visitors as minimum bets rise. That’s a function of growing player demand as more visitors flood in, combined with limited supply of live table space in a market capped by the government at 5,500 live tables until next year. So when live tables get expensive, the next best thing for players is tables offering electronic betting and bet settlement, but with a live dealer. That’s the market segment that both SHFL and LT Game seek to serve with their respective products. Macau casino operators report that Chinese players much prefer – and are more likely to trust – a human dealer rather than a ‘virtual’ card dealer on a video screen or a robotic or other form of mechanical dealer.
Casino revenue growth likely ‘15 pct’ in 2012: analyst Strong start to December could help boost final annual tally
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ecember’s casino revenue is heading for 15 percent to 18 percent year-on-year expansion at current daily play rates, say several analysts. The calculations are based on industry returns up to and including December 16. If the month does finish as strongly as the analysts say it began, that would push up total year-on-year expansion for 2012 to the top end of the 10 percent to 15 percent range suggested by Macau’s gaming regulator Manuel Joaquim das Neves in an interview
with Business Daily in October. “We maintain our December ‘plus 16 percent’ year-on-year gross gaming revenue outlook and ‘plus 15 percent’ civil year [January to December] GGR forecast,” said David Bain of Sterne Agee, a privately owned brokerage based in the United States. “Gaming revenue [for December] is tracking 18 percent year-onyear growth,” said Kenneth Fong of J.P. Morgan in Hong Kong, in another note, citing industry returns. They suggest 15.2 billion patacas (US$1.9 billion) in revenue up to
and including December 16. “…if the upward trend continues, we believe that this may lead to some earning upgrades. Currently, the Street is looking for a headline gaming revenue of eight to 12 percent growth for 2013,” added Mr Fong. Sterne Agee adds that 16 percent year-on-year growth in December would be “second to an all-time monthly record” in cash terms. That record was achieved in October this year when monthly revenue reached 27.7 billion patacas (US$3.5 billion). The year-on-year growth was only
3.2 percent, but the record was a by-product of a big base number – a previous record of 26.85 billion patacas in the same month in 2011. Mr Bain states: “As expected, daily MOP [revenue] moderated in the past six days after an abnormally strong December start, which was partly boosted by [casino] hold [rates] and nearly two full weekends encompassed in the first 10 days of the month – though also driven by the continuance of improving market fundamentals, including VIP trends, in our view.” M.G.
December 19, 2012 business daily | 3
MACAU
Macau gaming to slow to 8pct growth in 2013: Fitch But casino industry could still be worth US$41 billion annually by next December Michael Grimes
michael.grimes@macaubusinessdaily.com
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itch Ratings, a credit rating agency, is predicting eight percent growth in Macau’s gaming revenues for 2013. That would mean significant slowing from the 12 percent to 13 percent expansion expected this year once the returns for the whole of December are known. The agency adds however that its 2013 assessment still represents “meaningful growth” in the context of 2011’s year-onyear leap of 42.2 percent. “Continued infrastructure development – supporting the massmarket segment and a further rampup of LVS’s Cotai Central – should propel revenue growth of roughly eight percent in 2013, which implies low-single-digit VIP revenue growth and roughly 20 percent mass market revenue growth,” states the report. Assuming that the Macau market grows by 13 percent this year to 302 billion patacas (US$37.8 billion) as suggested by a number of other analysts, then Fitch’s forward assessment would nonetheless mean the annual market will be worth 326.16 billion patacas – equal to US$40.9 billion – by the end of December 2013. The agency’s latest report on the sector ‘2013 Outlook: Asia-Pacific
visitors in 2011”. The study, produced by analysts based in Australia, the United States and Singapore cites a raft of infrastructure projects due to be completed between now and 2017 as aids to the development in particular of the mass market. They include the GuangzhouZhuhai high-speed railway with its feeder spur to the Gongbei border crossing point, that mainland officials said recently would open “this month” and that will reduce the journey time from Guangzhou to the border to 50 minutes. It also includes the new Taipa ferry terminal which could start trial operations as early as the middle of next year and be fully open by mid2014, according to Susana Wong Soi Man, director of the Maritime Administration, in comments made during her policy address to the Legislative Assembly on December 4.
Gaming’ adds that despite the yearon-year contraction seen in visitor numbers from some key markets such as Hong Kong this year, 2013 should see “a rise from the record 28 million
This dynamic should benefit Sands China (Las Vegas Sands Corp.), as its business model is weighted more toward the mass market,” says Fitch. But the agency cautions that the
Smoking woes “The mass market should continue to grow faster than the VIP segment over the next few years, supported by numerous infrastructure projects, as well as the potential for further development of Hengqin.
The broader Southeast Asia market is deep enough to absorb some additional market capacity without a significant negative impact on Macau Fitch Ratings
partial smoking ban on casino floors due to be implemented from January 1 will have an impact on revenue expansion. “A partial smoking ban in Macau is scheduled to be implemented, which will constrain revenue growth – and there has also been discussion of revising the smoking regulations to become a full ban.” It adds that despite the recent economic factors in China that have slowed the VIP baccarat market – a segment usually accounting for 70 percent of Macau’s annual gaming revenue – that “credit conditions have stabilised over the second half of 2012”. It states: “Longer term, Fitch expects Macau’s gaming revenue to grow at a similar rate to China’s GDP growth – or higher. This is supported mainly by Macau’s low penetration among Chinese nationals eligible to obtain visas to Macau, and growth
in transportation and immigrationprocessing infrastructure in and around Macau.” Fitch suggests that the Macau government’s decision to limit market capacity via a continued cap on the number of live gaming tables allowed in casinos – rather than a limit on the number of visitors allowed into Macau – “bodes well for the profitability of existing casino operators”.
Credit view The agency gives a “stable” outlook for the credit profile of casinos in Macau, Australia, Singapore and Malaysia. “The established casinos have completed most of their expansionary capex, and the casino gaming market overall is projected to expand. Market shares and profitability of existing operators will potentially be impacted by the new casinos to come on line, but not to extent that credit profiles are materially impaired,” says the report. Fitch says the “primary risk” to Macau-focused casino operators is that South Korea, Japan, and Taiwan could provide “credible competition” if they legalise gambling, at a time when Macau projects are still being constructed and are being fed into the market gradually thanks to the table cap. When extensions to existing properties and new build schemes are taken into account, Cotai is due to have eight new centres of gaming capacity between now and 2017. “But Fitch believes the broader Southeast Asia market is deep enough to absorb some additional market capacity without a significant negative impact on Macau. That said, new market development is the most important dynamic to monitor in light of the amount of supply that could enter the Macau market between 2015-2017,” concludes the report.
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business daily December 19, 2012
macau
BoC launches first smart-chip card
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HOSPITALITY
The Bank of China is introducing smart-chip credit cards in response to data protection fears Tony Lai
Growth engine
tony.lai@macaubusinessdaily.com
There are steady flows of information on the performance of Macau’s casino operators and of news that may affect the gaming industry. Far less attention is paid to the gaming industry’s performance as a sector of the economy. For example, the Statistics and Census Service’s annual review of what has become the main driver of the economy usually receives only a passing mention in the press.
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The gaming industry is an important employer, with a payroll of more than 1 billion patacas (US$125.27 million) a month. It also fills the public coffers with steady tax revenue. Revenue generated by the gaming industry rose by more than percent last year. Even during the international financial crisis it continued growing, increasing by almost 10 percent in 2009. The gross value added by the gaming industry in that period was the equivalent of about 60 percent of revenue. The implication is that the gaming industry is clearly a big buyer of goods and services from other industries. Last year, it paid other industries in average more than 9 billion patacas (US$1.13 billion) each month. With the investments that the gaming industry made last year – when its capital stock more than doubled – its importance to the economy can only increase.
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ank of China (Macau) Ltd launched the first Macau-issued credit card to contain a ‘smart’ electronic chip in response to public demand for better data protection. “The security on this smart chip card is raised as the data inside are difficult to copy or steal,“ said BoC Macau deputy general Ip Sio Kai at the launching of a smart-chip card the bank is offering jointly with restaurant operator Future Bright Holdings Ltd. “More important, the card requires both a signature and a password for a transaction, instead of only a signature, as in the past,” Mr Ip said. The Monetary Authority of Macau will require banks to begin next year replacing all old magnetic-strip cards with smart-chip cards, according to an affiliate of the Macau Federation of Trade Unions that had a meeting with the authority last month. All old ATM cards must be replaced by 2014 and all old credit cards a year later. “Apart from this new card, we will also upgrade other cards as well as the equipment for the cards,” Mr Ip told reporters. He said some point-of-sale equipment and ATMs had to be upgraded to allow the use of smartchip cards, but that over half of the
Fixed capital investment growth last year
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equipment in use here was already compatible with the new cards. He said BoC Macau would follow the Monetary Authority’s schedule and that it would begin making the necessary changes in the first quarter of next year. Mr Ip said there had been about 10 cases of credit-card crime this year, slightly more than in years gone by.
Eyes on the Fed Mr Ip thinks Macau investors will have “a more cautious attitude” to U.S. monetary policy despite the prospect of U.S. and therefore Macau interest rates remaining low
until 2015. “Owing to low interest rates and the depreciation of the [U.S.] currency, people will surely invest in assets. This psychological impact, I believe, will still be there,” he said. “But some investors will wonder whether the interest rate will be kept low until 2015 or adjusted at an earlier time. So there will be some changes in the way they invest,” he said. The U.S. Federal Reserve said last week that its main interest rate would stay close to zero unless the U.S. unemployment rate fell below 6.5 percent and the U.S. annual inflation rate surpassed 2 percent.
HK gold trader fights Macau govt penalty
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There have been about 10 cases of credit-card crime this year, slightly more than in years gone by, says Ip Sio Kai
Hong Kong company that trades in precious metals has asked the courts here to overturn a fine imposed by the Macau government for offering financial intermediation without a licence. Chung’s Financial (Macau) Co and its controlling shareholder, Chan Yen Yee, learned last year that the government would fine it 2.5 million patacas (US$310,000) on the orders of Secretary for the Economy and Finance Francis Tam Pak Yuen. The Monetary Authority of Macau decided in July 2011 last year that Chung’s Financial had illegally offered financial intermediation services. Chung’s Financial “accepted and carried out clients’ orders to
invest in assets traded in the foreign exchange and financial markets”, the authority recalled in a written reply to Business Daily questions. The authority believes the company broke the law, making it liable to a fine of between 10,000 patacas and 5 million patacas. Mr C h a n i s th e ma n a g e r o f Chung’s Gold Dealer Ltd, a precious metals trading company founded in 1999 and licensed in Hong Kong, according to the Chinese Gold and Silver Exchange Society’s website. He brought his case against the fine to the Court of Second Instance, but the judges did not take it up. Mr Tam’s office and the Public Prosecutions Office say that the court is the wrong place to dispute a penalty that is in essence administrative.
MOP2.5 mln
Fine imposed on Chung’s Financial for unlicensed financial intermediation
In a judgement dated November 15 but made public only last week, the judges agreed with the government and sent the case to the Administrative Court. V.Q.
December 19, 2012 business daily | 5
MACAU
Future Bright’s 2012 prospects look good The restaurant operator aims to build a food-processing centre to keep up with the growth it expects in sales Tony Lai
tony.lai@macaubusinessdaily.com
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estaurant operator Future Bright Holdings Ltd is “cautiously optimistic” about the food and drink market next year despite doubts about the outlook for the domestic and global economies. Looking ahead to the next two years, the company’s managing director, Chan Chak Mo, told reporters yesterday: “The restaurant sector still has room for development as long as there is no decline in tourist arrivals. They all need to eat.” Mr Chan expects the restaurant industry’s sales volume to grow by “at least 10 percent” next year, owing to an influx of visitors due to the opening of the Gongbei station of the new Guangzhou–Zhuhai railway. Mainland Chinese news media reported this week that the stretch from Zhuhai North to Gongbei would open sometime between December 26 and 31. “But when it comes to the net profit, it is difficult to say,” Mr Chan said. He said restaurants would raise their prices next year because of higher rents and other rising costs. Speaking on the sidelines of a
‘The restaurant sector still has room for development as long as there is no decline in tourist arrivals’, says Chan Chak Mo
ceremony to launch a credit card that Future Bright and Bank of China (Macau) Ltd are offering
jointly, Mr Chan said forecasts of zero economic growth here next year were “too pessimistic”.
The annual rate of growth in gross domestic product was 5.1 percent in the third quarter, the slowest since the global financial crisis. Future Bright intends to build a food-processing centre costing between HK$80 million (US$10.3 million) and HK$100 million on 2,700 square metres of land in the Zhuhai-Macau Cross-Border Industrial Park. The five-storey building will have over 13,000 square metres of floor space for processing, packaging and storing food. “Construction will take only a year and half but we’re still waiting for approval from the government to finalise the design,” Mr Chan said. He said the project would be financed in part with capital raised by the company’s share placement this month. Future Bright raised HK$86.25 million by issuing 75 million shares. The company told the Hong Kong Stock Exchange that it would spend HK$34 million of the proceeds on the food-processing centre and HK$30 million on new restaurants here and in mainland China. It intends to add seven food and drink outlets to the 40 it already has. “We don’t have any plan for loans from banks as we have abundant cash in hand,” Mr Chan. Future Bright expects to have over 1.8 million customers this year.
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business daily December 19, 2012
macau Moiselle profits hit by sluggish demand
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Clothing retailer Moiselle International Holdings Ltd has seen its sales improve in Macau during the six months ended September, as the group opened two more stores. But the expansion was not enough to offset a slowdown in Hong Kong’s retail market and a deterioration of the mainland China, the company told the Hong Kong Stock Exchange yesterday. In the end the retailer saw its operational profit tumble by 84 percent to HK$4.2 million (US$542,000), while turnover fell by 14 percent to HK$182.6 million.
Balancing act The city’s trading relationships are increasingly within Asia, and its biggest deficits are with its Asian trading partners. Macau is on track to record a deficit in trade with its Asian partners that is almost double its deficits with Europe and the Americas combined. The growth in the deficit is due mainly to trade with mainland China. The bilateral deficit with the mainland has typically hovered around 60 percent of the deficit with all Asian economies. Between 2008 and last year the deficit with the mainland rose by more than one-fifth.
Fair trade wine looks eastward Macau consumers are ready to embrace fair trade products, says a pioneering wine producer Stephanie Lai
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The next biggest deficits are with Hong Kong, Taiwan and Japan. The deficits with Taiwan and Japan have been mainly stable since 2008. Last year the proportion of the overall deficit that they made up had changed by only one or two percentage points since 2008. Hong Kong is another case altogether. The trade deficit with Hong Kong was smaller than the trade deficits with Taiwan and Japan in 2008, but it is now the second-biggest deficit with any Asian trading partner. The trade deficit with Hong Kong accounts almost singlehandedly for the rise in the overall trade deficit in the four years covered in this analysis. It was equivalent to about one-quarter of the trade deficit with the mainland last year, having been equivalent to less than 10 percent just three years before. This year’s balance-of-trade figures suggest a slight increase of about 16 percent in the trade deficit with other Asian economies.
327 %
Growth in trade deficit with Hong Kong over four years
handi Wines (Pty) Ltd, the first South African company accredited as a fair trade wine brand, in 2003, has arrived in Macau as it expands into the Asian market. The company’s distribution network in Asia already covers Singapore, Japan, Hong Kong, and the mainland Chinese cities of Beijing and Shanghai. The general manager of Thandi Wines, Vernon Henn, told Business Daily that he was optimistic about the Macau market’s response to his wine, attributing his confidence to six years of experience in Hong Kong. Thandi Wines focuses on the European market, which accounts for 85 percent of its sales. The Nordic countries, particularly Finland, are the biggest buyers. But Mr Henn said Europe’s economic plight had been a drag on Thandi Wines, its sales there having fallen by 30 percent last year. “I think Macau will be like Hong Kong, where the consumers are becoming more aware of fair trade, green issues and sustainability. Their level of understanding is ready for fair trade wine,” he said.
“Another 26 African fair trade wine brands are also very interested in the Asian market, and they will be coming to Macau and Hong Kong in just a matter of time,” he said. Mr Henn said his experience had not been as smooth in the mainland as in Hong Kong, even though the mainland was one of the world’s fastest-growing markets for wine. “It was a bit difficult for Thandi getting into China in the beginning, because the consumers were more focused on price. Fair trade consciousness was not really high,” he said.
Empowerment model The company is waiting the contract for the distribution of its products in the mainland to end. “Then we’ll have Vins Gallery cover distribution in Hong Kong, Macau and the mainland,” Mr Henn said. Vins Gallery is a Hong Kong company. “Afterwards we’ll be considering Taiwan, because the people there are also much more open.” He said that despite the expansion of the Thandi Wines market, it still
had plenty supply. Its three vineyards – in Elgin, Stellenbosch and Hermanus, all in the Western Cape province – produce 600,000 litres of wine per year. Thandi Wines was South Africa’s first agricultural Black Economic Empowerment project. The company’s 250 families of vineyard workers are part-owners of the land that its vineyards stand on. “Currently the families have a 59 percent share in the land ownership, which is still quite a low percentage,” said Mr Henn. “We hope that by 2014 the percentage can grow to 85 percent.” He said the concept of agricultural workers becoming business owners had been greeted with scepticism at first, and that many “sad failures” had been due to lack of expertise in land management. “Actually now the government is trying to adjust the strategy. It will not be granting the land to farmers, but instead leasing it first,” he said. “They’ll see how well businesses are sustained before offering farmers land ownership. I think that is a better plan.”
There is still rising pressure on home prices, so it’s very difficult for the government to relax the measures Vernon Henn,
general manager of Thandi Wines
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December 19, 2012 business daily | 7
MACAU
Govt restarts review of bus charge hikes
Further restrictions on China shipping
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Larry Lam Chong Lui, deputy general manager of Reolian Public Transport Co, told Business Daily they did not know the exact adjustment but they were glad about the government’s move. However Reolian is wary of linking the charge increase with the service quality the company offers. “We are not turning down this idea but more discussions are needed,” he said. “It is different from how the rules laid out in the beginning, when the contract was granted,” Mr Lam stressed.
maller vessels will be banned from shipping routes between mainland China, Macau and Hong Kong, as Beijing tries to further rein in overcapacity in the sector. According to a statement published on the Chinese Ministry of Transport on December 14, companies can now only operate vessels able to carry above 5,000 tonnes on routes to the two SARs. Smaller boats – above 2,500 tonnes – are allowed between Macau, Hong Kong and Guangdong, Fujian and Hainan provinces, as well as to Guangxi Zhuang autonomous region. In addition, shipping companies will have to request approval from ministry before increasing their capacity in services to Macau or Hong Kong, the statement adds. “We are doing this to keep market in order and promote healthy development,” the ministry said. “Recently there has been overcapacity and over-competition on services linked to Hong Kong and Macau.” Chinese authorities have recently introduced several measures to protect a domestic shipping industry hit hard by overcapacity and slowing global trade. Starting January 1 outside companies – namely those from Macau – will be banned from operating services in mainland waterways, including the Pearl River, the State Council announced in October.
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A 23-percent service charge hike requested by the three operators was suspended in July due to public criticism (Photo: Manuel Cardoso)
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he Transport Bureau has announced it will again begin pondering whether to increase the money the administration pays to the three public bus operators, a move that has been on hold since July. According to a statement released by the bureau late on Monday, it was due to the improvement shown in the companies’ performance, namely during last month’s Macau Grand Prix. The number of accidents also dropped from 4 cases per 100,000 kilometres to 2.42 cases between August and October, said the bureau. The companies are also gradually
implementing their improvement plans, the statement added. A 23-percent service charge hike requested by the three operators was suspended in July due to public criticism over the service quality. The government did not mention a possible increase rate but next year’s public budget reserved some 190 million patacas (US$23.8 million), or 28 percent of the charges, for a possible adjustment. Bus operators Transportes Urbanos de Macau SARL and Sociedade de Transportes Colectivos de Macau (TCM) declined to comment.
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business daily December 19, 2012
GREATER CHINA
Beijing to keep growth target at 7.5pct As external risks impede recovery, more easing seen
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hina has set its initial target for economic growth at 7.5 percent for a second year and tightened its inflation goal to the lowest level since 2010, two bank executives and a regulatory official briefed on the matter said. Policy makers said during the annual central economic work conference that ended on Sunday that they aim to keep inflation at about 3.5 percent, they said, asking not to be named as they aren’t authorised to disclose the details. The government didn’t set targets for money supply or new loans at the meetings, the three bank executives said. Chinese officials are signalling tolerance for a slower pace of growth than the average of more than 10 percent for the past decade as the nation seeks to shift to a consumerdriven economy. China will seek a higher “quality and efficiency” of growth next year, the official Xinhua News Agency reported after the leaders’ meeting. “A 7 percent growth target would have given a stronger signal that the government wants to focus more on quality and structural change,” said
Wang Tao, chief China economist at UBS AG in Hong Kong. “However, given that the economy is already in a cyclical upswing, a 7 percent target would mean policy tightening, so 7.5 percent is more neutral and realistic.”
Economic targets The government usually reveals specific economic targets at the legislature’s annual meeting in March. Nine of 16 economists surveyed by Bloomberg News last month forecast China would keep its 7.5 percent goal for growth in gross domestic product next year. The figure – announced in March 2012 – was the lowest target since 2004. China’s policy makers have set the inflation target at 3.5 percent for next year, the China Securities Journal reported yesterday, citing a person it didn’t identify. Communist Party chief Xi Jinping, Premier Wen Jiabao and Vice Premier Li Keqiang were among those who attended the conference, according to Xinhua. This year’s inflation target is 4 percent. Next year’s growth target is
Home prices gain in most cities As property curbs reduce supply available for sale
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hina’s new home prices rose in the majority of cities the government tracks in November as property curbs slowed construction, reducing the supply available for sale. Prices climbed in 53 of the 70 cities from the previous month, compared with 35 in October, according to data from the National Bureau of Statistics yesterday. That was the most in 18 months. Prices fell in 10 cities. The government is maintaining property controls, while it said it will seek a higher “quality and efficiency” of growth next year after the annual central economic work conference in Beijing over the weekend.
There is still rising pressure on home prices, so it’s very difficult for the government to relax the measures Ding Shuang, Citigroup Inc.
China will stick to its real estate curbs, Liao Yonglin, an official from the Ministry of Land and Resources, said at a press conference in Beijing yesterday, according to a transcript on the ministry’s website. “Because of the lower new starts in construction, with fewer new projects, prices will continue to rise in the bigger cities,” Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG, told Bloomberg Television. “The government will be more focused on the housing prices in Shanghai and Beijing than in the smaller cities.” China’s new property starts fell 7.2 percent in the first 11 months from last year to 1.62 billion square
metres (17.4 billion square feet), according to statistics bureau data.
Price pressures The western city of Luzhou in Sichuan province led gains in November, with a 0.9 percent increase from October, according to yesterday’s data. Among major cities, Beijing, Guangzhou and Shenzhou rose 0.6 percent each, while home prices in Shanghai climbed 0.2 percent from October. “There is still rising pressure on home prices, so it’s very difficult for the government to relax the measures,” Ding Shuang, a Hong Kong-based economist with Citigroup Inc., said yesterday. “The government will strengthen the enforcement of the current curbs if not necessarily issue new measures.” The statistics bureau stopped releasing national average property prices and changed the methodology of the survey from January last year, saying it more accurately reflected the market. In its more than two-year effort to rein in prices, the central government raised down-payment and mortgage requirements, imposed a property
The past few months were supposed to be the low season, but housing sales have been relatively strong. Next year is expected to be better Jinsong Du, Credit Suisse Group AG
Home prices rose in 53 of 70 mainland cities
December 19, 2012 business daily | 9
GREATER CHINA “reasonable,” said Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong. “Maybe the year after it can be adjusted down to 7 percent. Potential growth is in a glide-path downwards, not a collapse.” The economic recovery and food
KEY POINTS Beijing keeps growth target unchanged Shows tolerance for a slower pace of growth Inflation target at 3.5 percent in 2013 Market expects more interest rate cuts
Bankers see policy easing ahead
tax for the first time in Shanghai and Chongqing, increased building of low-cost social housing, and placed home-purchase restrictions in about 40 cities. Home prices were little changed in the first 11 months of this year at 8,791 yuan (US$1,411) per square metre, according to SouFun Holdings Ltd, the nation’s biggest real estate website owner. They rose 0.26 percent last month from October, based on SouFun’s per-square-metre calculations. That was the most in four months. Existing home prices rose 0.8 percent in Beijing last month from October and increased by 0.2 percent in Shanghai, according to the report. Home prices rose in 25 cities from a year earlier, more than double the 12 cities that increased from a year ago in October.
Strong sales China’s housing sales in November climbed 18 percent to 595.8 billion yuan ($96 billion) from a month earlier, government data showed. “What has given developers the confidence is the sales,” Mr Du said. “The past few months were supposed to be the low season, but housing sales have been relatively strong. Next year is expected to be better.” Some developers have already achieved the year’s sales target. Evergrande Real Estate Group Ltd sold 84.6 billion yuan of properties in the first 11 months, 5.8 percent higher than its annual sales target. China Vanke Co., the country’s biggest developer, sold properties for a total 127.2 billion yuan in the first 11 months, higher than the full-year sales last year. The recovery in housing will be maintained or even accelerate in 2013, with a 10 percent gain in both home prices and sales from this year, Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd, wrote in a December 13 report. The government may tighten policies in the middle or later next year if housing prices continue to rise, Mr Jin said. Bloomberg News
prices are likely to push inflation above 5 percent in the second half of 2013, resulting in a full-year pace of 4 percent, Green said.
Policy easing China’s burgeoning economic recovery may need central bank easing to spur it along next year, as foreign investors scale back spending commitments in the face of a gloomy external outlook that clouds prospects for the world’s biggest exporter. The People’s Bank of China’s (PBOC) fourth quarter survey of economic expectations, published yesterday, saw a jump in the number of bankers anticipating monetary easing in the first quarter of 2013, even as recent hard data shows a mild rebound taking hold this quarter. Weakness in the external environment – to which the world’s second biggest economy is levered – remains a drag, according to the Ministry of Commerce. “Next year, there are still many uncertainties for external demand and the prospect of a slowly growing global economy will last for a while,” ministry spokesman, Shen Danyang, said. “In addition, there is also increasing trade protectionism emerging. So we cannot be optimistic about the external trade environment next year,” Mr Shen
told a news conference. China is on course to end 2012 with the slowest full year of growth since 1999 and while the 7.7 percent rate forecast in a benchmark Reuters poll is way above the world’s other major economies, it is far below the roughly 10 percent annual growth seen for most of the last 30 years. Private sector economists, such as ING’s head of Asian economic research Tim Condon, believe Beijing will act to drive the economy forward in 2013 as new leaders at the top of the ruling Communist Party get a firmer grip on the policy reins. Many analysts believe room for further interest rate cuts is limited as inflation and property prices start to pick up. Any easing is thought likely to be directed through money market operations that inject liquidity into the financial system. The PBOC survey showed a rising proportion of Chinese commercial bankers it questioned are joining those outside the system who anticipate more policy easing early next year. Some 19.8 percent of survey respondents said they expected easier policy during the first three months of next year, up sharply from 5.9 percent who had expected easing this quarter. The vast majority of survey respondents – 75 percent – said current policies were appropriate. Bloomberg News/Reuters
China FDI declines for 12th time in 13 months
Dim Sum debt sales may reach US$58 bln: HSBC Dim Sum debt sales may reach 360 billion yuan (US$58 billion) next year as China’s new leaders encourage use of the yuan in finance centres from London to Taipei, the leading underwriter predicts. Yuan bond and certificate of deposit issuance outside mainland China will rise from 263 billion yuan in the first 11 months of 2012 as cross-border trade settlement in the currency increases, according to HSBC Holdings Plc. Yields on Dim Sum debt have dropped 88 basis points since December 31 to 4.64 percent, according to a Bank of America Merrill Lynch index. That compares with an average 2.61 percent for corporates globally. Last week’s approval for Bank of China Ltd’s Taipei branch to clear trades in the currency and China Construction Bank Corp.’s Dim Sum sale listed in London in November show regulators are supporting the expansion of the global use of yuan beyond Hong Kong. Singapore, and possibly London, may also be permitted to clear yuan in 2013, analysts at Deutsche Bank AG wrote in a report last month. “We’re optimistic and are expecting a decent market next year,” said Gina Tang, head of debt capital markets for greater China at HSBC. “The further growth of the offshore renminbi market and development in other centres including London and Taipei is actually beneficial for Hong Kong as we will continue to be well positioned as the centre of most of the business.” Issuance of Dim Sum bonds and certificates of deposit will likely grow to between 280 billion yuan and 360 billion yuan in 2013, according to an HSBC report dated December 13. About 860 billion yuan is currently in bank accounts around the world, according to the November 30 report from Deutsche Bank, with yuan deposits in Hong Kong, Singapore, Taiwan and London likely to rise to 1.25 trillion yuan in 2013.
Wine auctions plunge 19pct
F
oreign direct investment in China fell for the 12th time in 13 months, suggesting the nation’s economic-growth rebound has yet to attract a fresh influx of capital spending from abroad. Investment dropped 5.4 percent in November from a year earlier to US$8.29 billion, the Ministry of Commerce said in Beijing yesterday. FDI inflows in the first 11 months of the year fell 3.6 percent to US$100 billion. China will step up efforts to stabilise investment inflows next year and expand outflows, state media reported on December 16 after an annual economic-planning meeting in Beijing. While factory output and retail sales have accelerated for the last three months, trade and lending trailed forecasts in November, restraining the pace of recovery. “As China’s economic growth may pick up slightly next year, so may FDI inflows,” Ren Xianfang, a Beijingbased analyst with IHS Global Insight, said before the release. “But don’t expect any big increase partly due to the government’s efforts in curbing the property sector.” Foreign-investment inflows are likely to be stable next year and won’t drop significantly, Shen Danyang, a ministry spokesman, said at a press briefing yesterday. China’s economy
will probably rebound further in 2013 even as slow global growth may continue, Mr Shen said in Beijing. Non-financial investment abroad rose 25 percent in the first 11 months to US$62.5 billion, the ministry said yesterday, highlighting the nation’s search for opportunities overseas amid slower growth at home. Investment from Japan showed a pickup in November, with spending in the first 11 months gaining 11.3 percent from last year, compared with a 10.9 percent rise in the January-October period. Investment had slowed from the first nine months as a dispute between the two nations over uninhabited islands intensified.
Wine sales by the biggest auction houses plunged 19 percent in 2012 as economic and political uncertainty in China cooled demand for trophy-name Bordeaux. Sales by Acker Merrall & Condit, Christie’s International, Sotheby’s, Zachys and Hart Davis Hart Wine Co., excluding Internet business, raised US$322 million with fees this year, down from the record US$397 million achieved at equivalent events in 2011, according to data compiled by Bloomberg News. Buying from China, the main driver of growth in the international trade for fine wines, was sluggish in the first three quarters of 2012, reversing the rises of 14 percent and 75 percent posted by the same five auction houses in 2011 and 2010. “China has been a sleeping giant for most of the year,” Miles Davis, partner at Londonbased Wine Asset Managers, said in an interview. “It feels as if it’s gently waking now. We’ve recently had some big orders from Asia and prices have fallen far enough for business to pick up across the board.” Demand revived in the last two months of this year, following the selection of a new leadership in Beijing in November and perceptions that the prices of certain Bordeaux vintages – such as 2000 and 2005 – had once again become attractive, dealers said. Mr Davis cited slowing economic growth, over-stocking by Hong Kong dealers and a government crackdown on corruption as factors behind somnolent Chinese wine buying in early-to-mid 2012. Still, by the end of the year Hong Kong accounted for 44 percent of all sales at the five leading companies, making it once again the biggest international auction centre.
Reuters
Reuters/Bloomberg News
US$8.29 billion Foreign direct investment in November
10 |
business daily December 19, 2012
ASIA Toshiba to sign US$1.9 bln loan Toshiba Corp., Japan’s biggest reactor maker, plans to sign a 160 billion yen (US$1.9 billion) syndicated loan this month to refinance debt and help pay for an acquisition, three people familiar with the matter said. The two-tranche facility will include a five-year term loan priced at 7 basis points more than the three-month Tokyo interbank offered rate, the people said. Toshiba has 110.5 billion yen of bonds and loans maturing next year including 50 billion yen of notes due January, according to data compiled by Bloomberg.
BOJ to mull 2pct inflation target Bank seen easing via increase in asset buying this week Leika Kihara and Stanley White
T
he Bank of Japan will ease monetary policy this week and consider adopting a 2 percent inflation target no later than in January, sources say, responding to pressure from next Prime Minister Shinzo Abe for stronger efforts to beat deflation. Turning up the heat, Mr Abe made a rare, direct push for a higher inflation target when BOJ Governor Masaaki Shirakawa visited the headquarters of his Liberal Democratic Party (LDP) yesterday. “I told him that during my election campaign, I called for setting a policy accord with the BOJ and a 2 percent inflation target,” Mr Abe told reporters. “The governor just listened,” he said when asked how Mr Shirakawa responded. The LDP swept to power in Sunday’s lower house election after campaigning for big fiscal spending to revive the economy and “unlimited” monetary easing to achieve higher inflation in a country mired in deflation for the past 15 years. A day after the election, Mr Abe called on the BOJ to boost its monetary stimulus at a two-day meeting that ends tomorrow and pressed it to adopt a 2 percent inflation target, double its current price goal, as soon as next month.
Monetary policy Under pressure, the central bank will likely ease policy this week amid looming risks to Japan’s economic outlook, sources familiar with its thinking have told Reuters, and may also start debating how to meet Mr
Korea election may hang on youth
S
Abe’s calls to set a higher price target. The next prime minister will form a new cabinet on December 26 and is seen choosing LDP’s members expected to toe the party’s line calling for aggressive easing and public works splurge. That means the central bank will be under pressure to respond again at its policy-setting meeting on January 21-22, when it is set to cut its economic forecast for the year ending in March 2013 due to the widening pain from slowing global growth. “Abe’s comments have really raised expectations for easing this week,” said Norio Miyagawa, senior economist at Mizuho Securities Research & Consulting in Tokyo. “I think the BOJ will deliver with increased purchases of government debt. Next year could also be a big year for monetary policy easing, because of the inflation target debate and a change in leadership at the BOJ.” Fourteen of 19 economists polled by Reuters last week said they expected the BOJ to ease this week, most likely by increasing its 91 trillion yen (US$1 trillion) asset buying and lending programme by up to 10 trillion yen. The BOJ currently has a 1 percent inflation target but has said this is a goal for the time being, and that it considers a range of zero to 2 percent as long-term desirable price growth. The central bank may thus opt to clarify that after the 1 percent inflation is met, it will aim for 2 percent inflation as a long-term policy goal, to meet demands from Mr Abe for more aggressive monetary
stimulus. The BOJ and the government may issue a joint statement, similar to one crafted in October between the central bank and the outgoing government led by the Democratic Party, pledging to take measures to aim for 2 percent inflation in the long run, the sources said.
Asset buying Mr Shirakawa yesterday told reporters he did not discuss monetary policy with Japan’s next prime minister, and that he only visited to pay respect. It is rare for a premier or a would-be prime minister to reveal what was discussed at a closed-door meeting with a central bank governor. The BOJ has eased monetary policy four times so far this year via an increase in its asset-buying and lending programme. But politicians like Mr Abe have criticised the central bank for not doing enough to end 15 years of grinding deflation in Japan. Some central bankers are keen to boost stimulus again, with the world’s third-largest economy already in mild recession and unlikely to rebound strongly early next year due to weak exports to China and the potential impact from the U.S. “fiscal cliff”. Any BOJ action tomorrow will likely take the form of a further increase in its asset-buying programme. But central bankers, feeling the heat, have been privately pondering options for next year including setting a higher inflation target and buying government bonds more aggressively.
Taro Aso tipped as next finance minister Japan’s next Prime Minister Shinzo Abe will offer the finance minister’s job to Taro Aso, media said, a veteran lawmaker and former prime minister expected to toe the party line calling for aggressive monetary easing and a public works splurge. Asahi and Mainichi newspapers reported yesterday Mr Aso, 72, would get the finance post while Yomiuri said he was also being considered as a possible foreign minister. Mr Abe, whose Liberal Democratic Party (LDP) and its small ally New Komeito captured a two-thirds majority in Sunday’s landslide, will announce his cabinet line-up on December 26. The choice of Mr Aso suggests that Abe is looking to LDP veterans to fill important positions to avoid criticism that his ministers lack experience.
Reuters
hin So Yoon had wanted to spend today’s national holiday in Seoul indulging her appreciation of “Edward Scissorhands” director Tim Burton’s works. Instead, she’ll be skipping the exhibition and voting. How many of the 29-yearold high school nutritionist’s generation join her in South Korean voting booths today may determine whether Park Geun Hye, daughter of the nation’s 1970s military dictator, or Moon Jae In, a former human-rights lawyer, becomes president. In the last election, when Ms Park’s party won, voters in their late 20s made up the lowest share of votes. Ms Shin said she will vote for Mr Moon, countering the Park vote from her mother, who at age 64 exemplifies the appreciation of some older voters for the rapid growth under Park Chung Hee four decades ago. At issue for Asia’s fourth-largest economy is how concerted an effort will be made under the incoming government to rein in the role of chaebols, the conglomerates that Park senior embraced to propel exports and development. “The support from those above age 50 is strong but it’s not enough to guarantee a win for Park,” said Kim Ji Yoon, director of the Public Opinion Studies Centre at the Asan Institute for Policy Studies in Seoul. “Moon hasn’t been in the lead but he has shown a steady rise, especially a steep one toward the end,” she said, referring to opinion polls that closed on December 12. Ms Shin is among the more than 60 percent of swing voters below 50 years old who will decide tomorrow’s outcome. The winner will inherit an economy forecast by the central bank to grow 2.4 percent in 2012, the weakest since 2009. At the same time, the nation’s exchange rate has climbed 7.5 percent against the dollar this year, an advance that risks undermining export competitiveness. Stocks have gained, with the benchmark Kospi Index up 8.9 percent in the same period. In 2007, voter turnout was 63 percent, with voters in their 50s recording the highest participation rate of all age groups. A turnout of more than 70 percent this time may give Mr Moon, 59, a win, according to Mr Kim. The victor takes office in February, replacing Lee Myung Bak, who has seen support slide during his term as economic growth weakened and an income-gap widened. Bloomberg News
December 19, 2012 business daily | 11
ASIA Sharp rises most in 38 years Sharp Corp., Japan’s worst-performing major stock, rose the most in at least 38 years in Tokyo trading as concerns the company can’t pay its debts eased. Sharp surged as much as 24 percent, the biggest gain since at least 1974, and traded at 327 yen (US$3.89) at the closing of Tokyo trading. Sharp has declined 52 percent this year, the biggest drop on Japan’s benchmark Nikkei 225 Stock Average, which has gained 18 percent. The TV maker reached an agreement this month to sell as much as 9.9 billion yen of shares to San Diego-based Qualcomm Inc.
India central bank holds fire Reiterates guidance of further easing next quarter
RBI Governor Duvvuri Subbarao has so far withstood calls for lower rates
I
ndia’s central bank kept interest rates on hold yesterday, ignoring government pressure to reduce borrowing costs, but said it was shifting its focus towards boosting a flagging economy, raising the odds of a rate cut as early as January. The Reserve Bank of India (RBI) reiterated guidance from its last policy meeting in October that it was likely to resume monetary policy easing in the January-March quarter, as inflation pressures are expected to ease in the next few months. Wary of stubbornly high inflation, the RBI has kept its key policy rates on hold since a 50 basis point cut in April, in contrast to other big emerging market central banks in China, Brazil and South Korea that have been more aggressive in easing policy to support growth. Yesterday the central held the
repo rate at 8.00 percent and also kept its cash reserve ratio (CRR) for banks steady at 4.25 percent, its lowest level since 1974. The CRR is the share of deposits that lenders must keep with the central bank. “In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards,” the central bank wrote in its mid-quarter monetary policy review. A Reuters poll last week showed 37 of 41 economists had expected the RBI to hold the policy repo rate steady, while respondents were roughly evenly split over the likelihood of a cut in the CRR. A lower-than-expected headline inflation reading in data released on Friday, after the polling was completed, had been seen in some quarters as raising the chances of a rate cut.
“Whatever the RBI spelt out in October seems to have got support from the inflation trajectory,” said Abheek Barua, chief economist at HDFC Bank, in New Delhi. “Net of the base effect, we see the current trend continuing and a case for a rate cut strengthening, which they could do in January.”
GDP performance The central bank has repeatedly resisted pressure from the finance ministry to cut rates to prop up an economy that has posted GDP growth below 6 percent for the past three quarters and is on track for its weakest annual performance in a decade in the fiscal year ending March. Whilst such a growth rate is still robust by the standards of developed economies, it is worryingly sluggish for a country that aspires to annual
expansion of at least 8.5 percent to provide jobs for it burgeoning population. “I think it is good that RBI sees there is room to ease and clearly they are taking a decision, keeping in mind their main job is combating inflation,” said Raghuram Rajan, chief economic adviser to the finance ministry. “But they also have some incentive to seek growth in the country.” The 10-year bond yield fell 3 basis points to 8.14 percent from levels before the decision, reflecting somewhat heightened expectations of a rate cut early in 2013. The benchmark stock index was flat. “Liquidity conditions will be managed with a view to supporting growth ... thereby preparing the ground for further shifting the policy stance to support growth,” the RBI said. Reuters
Indonesia’s growth seen at 6.3pct
I
ndonesia is expected to grow 6.3 percent in 2013 after expanding this year by 6.1 percent, the World Bank said yesterday. The World Bank, in a statement, projected that inflation next year will be 4.9 percent, compared with 4.3 percent in 2012. For the fourth quarter of this year, it sees inflation at 4.4 percent, and it projects 5.4 percent for the last quarter of 2013. The bank sees exports growing 1.1 percent this year and 3.8 percent in 2013, while imports are seen increasing 3.9 percent in 2012 and 3.1 percent next year. Indonesia’s budget deficit is seen at 1.7 percent of gross domestic product next year compared with 2.5 percent this year while investment growth was forecast at 11.2 percent in 2013 compared with this year’s 10.3 percent. T he Wor ld Ban k state ment
said the GDP projection for 2013 assumes that domestic consumption and investment growth remain strong, with gradually improving growth in Indonesia’s major trading partners supporting a modest recovery in exports. “The global economic outlook remain relatively uncertain and vulnerable to shocks, so it is not a time to be complacent,” said Stefan Koeberle, World Bank country director for Indonesia. “The outcome of the ‘fiscal cliff’ negotiations in the U.S., developments in the Euro area, as well as any further slowdown in China’s economy, can impact our baseline growth projections. And investment growth domestically – which has been crucial for Indonesia’s recent strong economic performance – also faces risks,” he said. Reuters
Exports are expected to grow by 3.8 percent next year, the World Bank says
12 |
business daily December 19, 2012
MARKETS Hang SENG INDEX NAME
PRICE
DAY %
VOLUME
AIA GROUP LTD
30.6
-3.317536
1859866588
ALUMINUM CORP-H
3.53
0
13456560
BANK OF CHINA-H
3.49
0.5763689
282176111
BANK OF COMMUN-H
5.82
0.6920415
39603429
BANK EAST ASIA
NAME
PRICE
DAY %
VOLUME
CHINA UNICOM HON
11.98
-1.317957
32737980
CITIC PACIFIC
10.78
0.9363296
CLP HLDGS LTD CNOOC LTD
PRICE
DAY %
POWER ASSETS HOL
65.75
-0.3787879
2067400
7052229
SANDS CHINA LTD
33.95
0.1474926
8135697
SINO LAND CO
14.08
0.5714286
4704748
SUN HUNG KAI PRO
115.9
-0.6003431
2473363
64.8
0
7200375
16.66
0.482509
38016872
29.45
0
4013609
COSCO PAC LTD
11.38
-0.1754386
6486913
16.3
0.617284
12171020
ESPRIT HLDGS
11.68
-1.351351
13139185
BOC HONG KONG HO
24.25
-0.4106776
12725198
HANG LUNG PROPER
29.85
-0.6655574
8311377
CATHAY PAC AIR
13.88
-0.7153076
1755902
HANG SENG BK
117.7
-0.338696
959853
CHEUNG KONG
118.4
-0.7544007
2283044
HENDERSON LAND D
55.5
-0.3590664
3367863
8.26
-0.4819277
22178200
HENGAN INTL
68.8
0.07272727
2014910
HONG KG CHINA GS
21.1
0.9569378
5298817
130.6
0
3675549
80.1 -0.06238303
6203527
BELLE INTERNATIO
CHINA COAL ENE-H CHINA CONST BA-H
6.26
0.3205128
193576352
CHINA LIFE INS-H
24.35
0.2057613
27503552
CHINA MERCHANT
24.55
0.2040816
2450921
HONG KONG EXCHNG HSBC HLDGS PLC
CHINA MOBILE
89.95
1.067416
18906182
HUTCHISON WHAMPO
CHINA OVERSEAS
22.95
-1.923077
20617805
IND & COMM BK-H
CHINA PETROLEU-H
8.65
1.169591
62762276
LI & FUNG LTD
CHINA RES ENTERP
28.05
0.8992806
3066860
CHINA RES LAND
MTR CORP
80.25
0.1872659
4534374
5.55
0.9090909
308654868
13.52
-0.7342144
16829597
30.4
-0.6535948
2249344
NAME
SWIRE PACIFIC-A
VOLUME
93.2
-0.3741315
1256425
TENCENT HOLDINGS
250.2
0.3207698
2436208
TINGYI HLDG CO
21.15
-1.398601
5500680
WANT WANT CHINA
10.54
-1.679104
16129560
57.8
-2.11685
6208105
WHARF HLDG
MOVERS
28
17
5 22627
INDEX 22494.73 HIGH
22627.17
LOW
22396.72
19.96
-1.916462
11054484
NEW WORLD DEV
12.22
0
13977117
52W (H) 22636.42969
CHINA RES POWER
18.9
1.069519
8199296
PETROCHINA CO-H
10.84
-0.1841621
44759993
(L) 17821.51953
CHINA SHENHUA-H
32.6
-1.062215
14751603
PING AN INSURA-H
63.55
-0.5477308
12183388
PRICE
DAY %
VOLUME
27.45
-1.258993
11177214
YANZHOU COAL-H
22396
14-December
18-December
Hang SENG CHINA ENTErPRISE INDEX NAME
NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.76
0.8042895
98292260
CHINA PACIFIC-H
AIR CHINA LTD-H
6.09
-3.025478
30012136
CHINA PETROLEU-H
8.65
1.169591
62762276
ZIJIN MINING-H
ALUMINUM CORP-H
3.53
0
13456560
CHINA RAIL CN-H
8.87
2.900232
20864024
ANHUI CONCH-H
29.2
-0.6802721
8389045
CHINA RAIL GR-H
4.6
1.995565
14735032
BANK OF CHINA-H
3.49
0.5763689
282176111
CHINA SHENHUA-H
32.6
-1.062215
14751603
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5.82
0.6920415
39603429
4.23
-0.2358491
68301860
19.36
0.5192108
2692990
DONGFENG MOTOR-H
11.56
-2.857143
31129080
CHINA CITIC BK-H
4.48
0.4484305
29386754
GUANGZHOU AUTO-H
6.56
-5.202312
11675834
CHINA COAL ENE-H
8.26
-0.4819277
22178200
HUANENG POWER-H
7.09
0.997151
11978092
CHINA COM CONS-H
7.56
0.5319149
24648330
IND & COMM BK-H
5.55
0.9090909
308654868
CHINA CONST BA-H
6.26
0.3205128
193576352
JIANGXI COPPER-H
20.65
0.7317073
6910178 44759993
BANK OF COMMUN-H BYD CO LTD-H
3.83
0.2617801
10637080
PETROCHINA CO-H
10.84
-0.1841621
24.35
0.2057613
27503552
PICC PROPERTY &
10.32
0
9507604
CHINA LONGYUAN-H
5.17
-1.147228
8663142
PING AN INSURA-H
63.55
-0.5477308
12183388
CHINA MERCH BK-H
16.6
0.973236
10520649
SHANDONG WEIG-H
8.01
-1.597052
6385140
CHINA COSCO HO-H CHINA LIFE INS-H
NAME
PRICE
DAY %
VOLUME
12.68
0.6349206
31902173
3.12
-0.3194888
44044345
ZOOMLION HEAVY-H
11.72
2.987698
42375576
ZTE CORP-H
12.56
-0.1589825
7757916
MOVERS
21
2 11372
INDEX 11301.72 HIGH
11372.96
LOW
11095.43
CHINA MINSHENG-H
8.68
-0.4587156
32673178
SINOPHARM-H
24.7
-1.2
2445343
52W (H) 11916.1
CHINA NATL BDG-H
11.48
-0.8635579
38729145
TSINGTAO BREW-H
46.1
-1.284797
785580
(L) 8987.76
15.8
-1.25
54128475
WEICHAI POWER-H
34.6
0.8746356
3803617
CHINA OILFIELD-H
17
11095
14-December
18-December
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.77
1.094891
191191081
CITIC SECURITI-A
11.83
0.3392706
111068685
AIR CHINA LTD-A
5.61
0
28987492
CSR CORP LTD -A
4.93
-0.6048387
42528221
ALUMINUM CORP-A
5.14
1.782178
36105909
DAQIN RAILWAY -A
6.48
-0.4608295
ANGANG STEEL-A
3.82
1.32626
29191227
DATANG INTL PO-A
3.99
ANHUI CONCH-A
18.64
-1.009028
25614742
EVERBRIG SEC -A
13
BANK OF BEIJIN-A
9.14
2.696629
72791684
GD POWER DEVEL-A
BANK OF CHINA-A
2.9
0.3460208
50466519
GF SECURITIES-A
4.67
1.301518
173727685
NAME
BANK OF COMMUN-A
NAME
GREE ELECTRIC
NAME
PRICE
DAY %
VOLUME
15.71
2.145644
36628791
SANY HEAVY INDUS
9.26
-1.173959
41737397
37681475
SHANDONG GOLD-MI
37.39
1.16342
12198805
0.2512563
18042583
SHANG PHARM -A
10.78
-0.5535055
12959388
0.231303
30625700
SHANG PUDONG-A
9.14
0.7717751
234880214
2.44
0
80650414
SHANGHAI ELECT-A
3.91
-0.5089059
8084856
13.94
0.1436782
70261671
SHANXI LU'AN -A
20.25
-0.147929
25486632
SAIC MOTOR-A
24.2
0
17609879
SHANXI XINGHUA-A
37.93
2.237197
6774347
15.21
-1.361868
23916552
SHANXI XISHAN-A
13.04
1.085271
32637114
24640079
GUANGHUI ENERG-A
-0.2061856
43752557
HAITONG SECURI-A
9.32
-0.5336179
90912924
SHENZEN OVERSE-A
6.28
-2.028081
59843378
1.35318
39757833
HANGZHOU HIKVI-A
29.2
-1.084011
4223063
SUNING APPLIAN-A
6.48
1.408451
55877035
17.57
3.841608
10459070
HEBEI IRON-A
2.62
1.158301
52937417
TSINGTAO BREW-A
31.93
-0.1875586
1551876
CHINA CITIC BK-A
4.15
0.2415459
49670219
HENAN SHUAN-A
54.87
-0.5257433
1991511
WEICHAI POWER-A
25.31
0.03952569
12409365
CHINA CNR CORP-A
4.62
0.2169197
38112690
HONG YUAN SEC-A
17.04
0.2352941
20626336
WUHAN IRON & S-A
2.74
-0.3636364
25043048
CHINA COAL ENE-A
7.51
0
16593257
HUATAI SECURIT-A
8.99
0.6718925
24843635
WULIANGYE YIBIN
27.19
1.987997
76262869
CHINA CONST BA-A
4.52
0.4444444
67001681
HUAXIA BANK CO
9.87
0.4069176
58998292
YANGQUAN COAL -A
13.75
-0.4344678
32476504
CHINA COSCO HO-A
4.41
0.4555809
35599500
IND & COMM BK-A
4.12
0.7334963
118725548
YANTAI CHANGYU-A
46.04
1.23131
3085601
CHINA CSSC HOL-A
20.1
-0.7897335
10203905
INDUSTRIAL BAN-A
15.33
0.1960784
113038006
YANTAI WANHUA-A
14.44
-0.7560137
7097562
CHINA EAST AIR-A
3.36
0.2985075
30684678
INNER MONG BAO-A
36.17
5.053732
100517879
YANZHOU COAL-A
17.31
-1.254991
8221354
CHINA EVERBRIG-A
2.92
1.038062
244458740
INNER MONG YIL-A
20.16
-2.183406
26833474
YUNNAN BAIYAO-A
63.32
1.882542
3353519
CHINA LIFE INS-A
19.56
-1.460957
15614871
INNER MONGOLIA-A
5.28
1.930502
115690923
ZHONGJIN GOLD
16.13
1.255493
26220041
CHINA MERCH BK-A
11.85
1.195559
123379959
JIANGSU HENGRU-A
27.9
-0.1788909
5141287
ZIJIN MINING-A
3.78
-0.2638522
54108905
20360239
JIANGSU YANGHE-A
94.72
0.7874016
4850216
ZOOMLION HEAVY-A
8.88
-0.6711409
58114507
JIANGXI COPPER-A
22.85
0
16952755
ZTE CORP-A
8.63
-1.596351
17563417
JINDUICHENG -A
11.3
0.08857396
7145209
ZTE CORP-A
8.38
2.444988
17657199
12.4
0.4048583
39562417 184634990
BANK OF NINGBO-A
10.06
-0.8866995
BAOSHAN IRON & S
4.84
BBMG CORPORATI-A
7.49
BYD CO LTD -A
CHINA MERCHANT-A
25.26
-4.136622
CHINA MERCHANT-A
9.96
1.529052
30357242
CHINA MINSHENG-A
7.52
0.2666667
232054858
CHINA NATIONAL-A
7.71
-1.153846
30946642
JIZHONG ENERGY-A
15.81
-5.668258
29733866
KANGMEI PHARMA-A
13.51
-2.030457
214.53
1.629637
4694545
CHINA OILFIELD-A
20.46
0.9373458
25131416
KWEICHOW MOUTA-A
CHINA PETROLEU-A
6.6
-0.1512859
36702049
LUZHOU LAOJIAO-A
33.99
2.688822
19537149
CHINA RAILWAY-A
3.06
0
41235370
METALLURGICAL-A
2.15
-0.462963
49176323
2.55
1.190476
64869864
CHINA PACIFIC-A
CHINA RAILWAY-A
5.87
1.206897
34177510
NINGBO PORT CO-A
CHINA SHENHUA-A
23.4
0.1283697
19007799
PANGANG GROUP -A
3.83
1.861702
107840538
8.91
0
MOVERS
130
153
17 2397
INDEX 2368.12
CHINA SHIPBUIL-A
4.43
1.83908
67469704
PETROCHINA CO-A
23577568
HIGH
2397.45
CHINA SOUTHERN-A
3.74
0.8086253
46259854
PING AN BANK-A
15.25
0.1971091
41162950
LOW
2245.64
CHINA STATE -A
3.55
-0.8379888
154840381
PING AN INSURA-A
42.18
-0.7762879
29215574
CHINA UNITED-A
3.39
-0.877193
97049954
POLY REAL ESTA-A
12.14
-3.574265
115844444
CHINA VANKE CO-A
9.22
-3.657262
141128470
QINGDAO HAIER-A
12.18
0.4950495
13016663
CHINA YANGTZE-A
6.74
-0.295858
28601086
QINGHAI SALT-A
25.91
1.927616
10554174
PRICE DAY %
Volume
52W (H) 2717.825 (L) 2102.135
2245
14-December
18-December
FTSE TAIWAN 50 INDEX PRICE DAY %
Volume
25.15
0.8016032
18417945
FORMOSA PLASTIC
77.5 -0.3856041
4034290
ADVANCED SEMICON
24.5
-1.606426
17077298
FOXCONN TECHNOLO
89.8
0.1114827
ASIA CEMENT CORP
37.6
0.669344
4514205
FUBON FINANCIAL
33.8
ASUSTEK COMPUTER
335.5
0.2989537
4479535
HON HAI PRECISIO
AU OPTRONICS COR
13.85 -0.7168459
187719693
HOTAI MOTOR CO
CATCHER TECH
136.5
-1.798561
14243333
HTC CORP
31.1
0.974026
12621250
HUA NAN FINANCIA
CHANG HWA BANK
15.85 -0.6269592
8358577
LARGAN PRECISION
755
CHENG SHIN RUBBE
76.1 -0.5228758
5145785
LITE-ON TECHNOLO
39
NAME ACER INC
CATHAY FINANCIAL
CHIMEI INNOLUX C
0.3184713
113422439
7.58 -0.2631579
43546114
MEGA FINANCIAL H
CHINA STEEL CORP
26.35 -0.5660377
17886584
NAN YA PLASTICS
CHINATRUST FINAN
CHINA DEVELOPMEN
15.75
NAME
MEDIATEK INC
PRICE DAY %
Volume
TAIWAN MOBILE CO
107
1.421801
14857991
TPK HOLDING CO L
497
5.632306
6662022
0.2967359
11502452
TSMC
96.7 -0.3092784
35330802
88.4
1.376147
59764510
UNI-PRESIDENT
221
0.913242
361466
278.5
1.642336
16654465
16.6 -0.5988024
6392403
YUANTA FINANCIAL
1.889339
2949688
YULON MOTOR CO
54.6
-1.015228
3204077
335.5
-0.739645
7245655
22.9
0.8810573
11743695
56
0.1788909
4384516
17.65
0.5698006
25230842
PRESIDENT CHAIN
159
0.6329114
1132412
CHUNGHWA TELECOM
93.7
0
8228933
QUANTA COMPUTER
66.8
-1.037037
10636736
COMPAL ELECTRON
19.1 -0.5208333
24492272
SILICONWARE PREC
30.4 -0.9771987
DELTA ELECT INC
107
0
2595724
SINOPAC FINANCIA
12.6
0
14408167
FAR EASTERN NEW
34.35
0.1457726
8130700
SYNNEX TECH INTL
53.1
-1.666667
10485592
FAR EASTONE TELE
73.5
0.1362398
6083740
TAIWAN CEMENT
38.75 -0.2574003
8464024
17.95
FIRST FINANCIAL
NAME
UNITED MICROELEC WISTRON CORP
MOVERS
25
21
3679814
54.7
1.109057
5716618
11.65
0.8658009
46556214
29.6
-1.986755
11839963
14.95
0.3355705
11425564
0.7380074
2370902
4 5446
INDEX 5365.3
5275435
0
7009537
TAIWAN COOPERATI
16.3
0.3076923
6148250
FORMOSA CHEM & F
70.6 -0.2824859
4651938
TAIWAN FERTILIZE
76.5
0.5256242
1222250
FORMOSA PETROCHE
86.7 -0.4592423
1536244
TAIWAN GLASS IND
29.4 -0.1697793
1302986
HIGH
5446.55
LOW
5336.72
52W (H) 5621.53 (L) 4643.05
5336
14-December
18-December
December 19, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT
MELCo CroWN ENTErTAINMENT
MGM CHINA HoLDINGS 43.0
29.75
14.10
29.66
14.04 42.9
29.57
13.98
29.48
Max 29.75
Average 29.568
Min 29.40
Last 29.45
29.40
SANDS CHINA LTD
Max 43
Average 42.816
Min 42.8
42.8
Last 43
SJM HoLDINGS LTD
Max 14.10
Average 13.99
Min 13.92
Last 13.92
13.92
WyNN MACAU LTD 17.82
34.60
21.70
34.35
21.55 17.69
34.10
Average 34.241
Max 34.60
Min 33.85
Last 33.95
33.85
21.40 17.56 Max 17.82
Average 17.730
Commodities ENERGY
NAME
PRICE
WTI CRUDE FUTURE Jan13
87.65
0.516055046
-10.3691584
109.6699982
79.68000031
BRENT CRUDE FUTR Feb13
108.13
0.455221107
4.868586946
119.2999954
90.38999939
GASOLINE RBOB FUT Jan13
267.01
0.583892112
7.952615832
293.3099985
218.4999943
GAS OIL FUT (ICE) Jan13
921.25
-0.108430469
2.789400279
1036.25
799.25
3.348
-0.297796307
-13.7780067
4.088000298
3.062000036
HEATING OIL FUTR Jan13 Gold Spot $/Oz Silver Spot $/Oz
DAY %
YTD %
(H) 52W
297.23
0.541217062
3.441915501
334.2199802
255.5699825
1701.72
0.6875
8.7424
1796.08
1522.75
32.48
0.8617
16.6876
37.4775
26.1513
1614.85
0.598
15.8014
1736
1339.25
Palladium Spot $/Oz
701.35
0.7643
7.3221
725.19
553.75
LME ALUMINUM 3MO ($)
2105.5
-0.777568332
4.232673267
2361.5
1827.25
LME COPPER 3MO ($)
8063
-0.024798512
6.092105263
8765
7198
LME ZINC
2091
0.04784689
13.33333333
2220
1745
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar13
17605
-1.51048951
-5.905932656
22150
15236
15.575
0.451467269
#N/A N/A
16.84000015
14.90999985
724
0
20.61640983
846.25
511
Mar13
Average 21.514
Last 21.3
Min 21.25
PRICE MAJORS
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
DAY %
1.0538 1.6208 0.9182 1.3162 83.93 7.9828 7.7504 6.2325 54.8563 30.59 1.2193 29.044 41.067 9709 88.436 1.20855 0.81207 8.2018 10.5078 110.46 1.03
0.038 -0.0185 -0.0109 0.0456 -0.2621 -0.0038 -0.0039 0.0722 -0.0024 0 0.1312 0.0689 -0.017 -0.103 -0.2917 -0.0538 -0.064 0.0939 -0.0495 -0.3078 0
YTD %
(H) 52W
3.2226 4.2785 2.1673 1.5508 -8.3641 0.2105 0.2193 1.0028 -3.2654 3.1383 6.3397 4.2522 6.7524 -6.5918 -11.3121 0.6818 2.6254 -0.8242 -1.4827 -9.7773 0.0097
(L) 52W
1.0857 1.6309 0.9972 1.3487 84.48 8.0189 7.7855 6.3964 57.3275 32 1.3092 30.38 44.35 9752 89.125 1.22426 0.8506 8.4894 10.7712 111.44 1.0314
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 (H) 52W
(L) 52W
3.07
0.6557377
39.54545
3.32
2.16
763187
CROWN LTD
10.31
1.177625
27.44128
10.34
7.92
2224384
18.30999947
AMAX HOLDINGS LT
0.066
-1.492537
-24.13793
0.119
0.055
4411500
66.84999847
BOC HONG KONG HO
24.25
-0.4106776
31.79348
25
18.1
12725198
0.26
0
13.04348
0.335
0.204
1500
4.6
0
64.28572
4.66
2.6
228000
CHINA OVERSEAS
22.95
-1.923077
77.00961
24.25
12.066
20617805
CHINESE ESTATES
12.22
1.495017
-2.24
13.26
8.3
32023
CHOW TAI FOOK JE
12.28
-1.444623
-11.78161
15.16
8.4
2727700
EMPEROR ENTERTAI
1.68
0
51.35135
1.82
0.99
375000
FUTURE BRIGHT
1.21
0
188.0952
1.43
0.38
1134000
WHEAT FUTURE(CBT) Mar13
808.25
0.030940594
10.11580381
948.25
652
SOYBEAN FUTURE Mar13
1484.25
-0.268772048
21.2622549
1728.25
1179
COFFEE 'C' FUTURE Mar13
145.95
1.95599022
-38.66358479
249
142.1999969
SUGAR #11 (WORLD) Mar13
19.38
-0.154559505
-17.03767123
25.12999916
COTTON NO.2 FUTR Mar13
75.84
-0.013183916
-14.31476669
98.5
NAME ARISTOCRAT LEISU
CENTURY LEGEND CHEUK NANG HLDGS
World Stock MarketS - Indices NAME
21.25 Max 21.7
(L) 52W
Platinum Spot $/Oz
CORN FUTURE
Last 17.56
CURRENCY EXCHANGE RATES
NATURAL GAS FUTR Jan13
METALS
Min 17.56
PRICE
DAY % YTD %
VOLUME CRNCY
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
13235.39
0.7642172
8.330878
13661.87
11735.19
GALAXY ENTERTAIN
29.45
0.5119454
106.8118
29.85
13.28
8003371
NASDAQ COMPOSITE INDEX
US
3010.604
1.321595
15.56356
3196.932
2518.01
HANG SENG BK
117.7
-0.338696
27.72653
120
91.15
959853
FTSE 100 INDEX
GB
5927.77
0.2642017
6.379619
5989.07
5229.76
HOPEWELL HLDGS
31
-0.6410256
58.14586
31.6
19.049
455640
DAX INDEX
GE
7639.57
0.4553619
29.52045
7649.27
5637.53
HSBC HLDGS PLC
80.1
-0.06238303
35.76271
80.85
57.05
6203527
NIKKEI 225
JN
9923.01
0.957688
17.35777
10255.15
8238.96
HUTCHISON TELE H
3.56
0.8498584
19.06354
3.88
2.85
3870890
HANG SENG INDEX
HK
22494.73
-0.08386038
22.0259
22636.42969
17821.51953
LUK FOOK HLDGS I
24.25
0.4140787
-10.51661
33.2
14.7
2200299
MELCO INTL DEVEL
8.94
-1.758242
54.93934
9.2
5.12
3385000
CSI 300 INDEX
CH
2368.12
0.05999915
0.9539912
2717.825
2102.135
MGM CHINA HOLDIN
13.92
0.1438849
45.11861
14.76
9.46
4004800
TAIWAN TAIEX INDEX
TA
7643.74
0.1632754
8.083339
8170.72
6609.11
MIDLAND HOLDINGS
3.64
-2.150538
-7.942419
5.217
3.249
1742000
NEPTUNE GROUP
0.154
0.6535948
38.73874
0.222
0.084
774000
NEW WORLD DEV
12.22
0
95.20766
13.2
6.13
13977117
SANDS CHINA LTD
8135697
KOSPI INDEX
S&P/ASX 200 INDEX
SK
1993.09
0.5052772
9.166145
2057.28
1750.6
AU
4595.205
0.4768886
13.27836
4610.3
3985
ID
4285.232
-0.7095926
12.12038
4381.746094
3635.283
FTSE Bursa Malaysia KLCI
MA
1655.91
0.4446251
8.177801
1679.37
NZX ALL INDEX
NZ
861.12
0.2488993
17.99392
PHILIPPINES ALL SHARE IX
PH
3630.27
-0.2774443
19.21912
JAKARTA COMPOSITE INDEX
33.95
0.1474926
54.6697
34.65
20.35
SHUN HO RESOURCE
1.37
0.7352941
37
1.43
0.97
39500
1463.25
SHUN TAK HOLDING
4.18
-2.790698
63.33687
4.33
2.418
7506915
878.077
712.548
SJM HOLDINGS LTD
17.56
-1.237345
40.41781
18.36
11.973
3267000
3756.31
2971.97
SMARTONE TELECOM
14.18
0
5.505956
17.5
12.96
1660500
WYNN MACAU LTD
21.3
0.4716981
9.230769
25.5
14.62
4230000
ASIA ENTERTAINME
3.13
-3.095975
-46.76871
7.24
2.4
124041
BALLY TECHNOLOGI
45.5
0.2202643
15.01516
51.16
36.29
388272 51479
HSBC Dragon 300 Index Singapor
SI
620.77
-0.22
25.07
NA
NA
STOCK EXCH OF THAI INDEX
TH
1353.18
-0.4348498
31.97637
1366.17
1019.55
HO CHI MINH STOCK INDEX
VN
393.39
-0.06097096
11.90159
492.44
332.28
BOC HONG KONG HO
3.19
4.934211
33.07261
3.3
2.32
Laos Composite Index
LO
1206.61
0.08460588
34.14826
1249.34
876.33
GALAXY ENTERTAIN
3.85
0
105.8824
3.88
1.75
5900
INTL GAME TECH
14.36
-0.4851005
-16.51163
18.1
10.92
4222602
JONES LANG LASAL
84.06
2.412281
37.21842
87.52
56.51
194045
LAS VEGAS SANDS
46.57
0.4313133
16.02879
58.3216
32.6127
4993110
MELCO CROWN-ADR
16.69
-0.4176611
73.49273
16.98
8.79
4434339
MGM CHINA HOLDIN
1.8
0
51.04559
1.96
1.1917
100
MGM RESORTS INTE
11.42
0.3514938
9.491847
14.9401
8.83
7659386
SHFL ENTERTAINME
13.29
1.683244
13.3959
18.77
10.61
469611
SJM HOLDINGS LTD
2.33
0
44.939
2.36
1.5484
450
113.69
-0.05274725
9.737792
129.6589
84.4902
957282
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
WYNN RESORTS LTD
AUD HKD
USD
14 |
business daily December 19, 2012
Opinion Almost everyone is lying to you about tax reform Ramesh Ponnuru
A
Bloomberg View columnist
lmost everyone thinks we should broaden the tax base; that is, reduce the number and size of tax deductions, exclusions and credits. The Bowles-Simpson fiscal-reform plan went after tax breaks so aggressively it was able to slash the deficit and still cut tax rates. Most conservative reformers follow that model. Even economists who aren’t conservatives generally say the government should raise revenue by getting rid of tax breaks before it raises rates. That is the position Republican leaders in the House and Senate have taken, too. As pleasing as it is to find a consensus in this polarised era, this one is mistaken. It would be either undesirable or politically impossible to reduce the largest loopholes in the code. At the top of the Congressional Budget Office’s list of the biggest tax breaks is the exclusion of employerprovided health insurance from the income and payroll taxes. You pay taxes on your wages, but not on your benefits, encouraging employers to provide more of your compensation in the latter form. The policy is something of a historical accident: It arose
after employers used benefits to evade World War II-era wage controls. If we were designing a code from scratch, we would certainly tax these benefits. We have had this break for an awfully long time, though. It would be disruptive, as well as unpopular, to get rid of it. The exclusion should be modified so that it doesn’t reward people for choosing more expensive policies, and so that people who have no access to employer plans can buy insurance for themselves. What we won’t do is get big savings from shrinking this tax break, and we shouldn’t try.
Investments, mortgages Several other large breaks benefit savings and investment, the most famous being the low tax rate on capital gains and dividend income, compared with labour income. In a way, though, these aren’t tax breaks at all: They are a partial corrective to the code’s bias against saving and investment. A better code would just tax consumption, which would mean a smaller tax base. Economists generally dislike the mortgage-interest deduction, another big one. They argue that it has reduced national wealth without doing much to increase
The idea that the federal government can painlessly raise a lot of money from a base-broadening tax reform is a myth
homeownership. Withhousingfinallyshowing signs of a recovery, though, it seems like an inopportune time to fight against this deduction. Anyway, realtors in every congressional district in the country, all of whom know a lot of people in their communities, would surely jam the phone lines on Capitol Hill if anyone
tried it. It’s not happening. Like the tax breaks for saving, the tax credit for children can be justified as a partial corrective to other federal policies. By raising kids, most parents make a contribution to the future of Social Security and Medicare beyond what they pay in payroll taxes. Fully recognising that double contribution would require expanding the credit, not shrinking it. The deduction for charitable contributions is another sacrosanct tax break – and that’s fine. How many people really think the tax code has wreaked damage on American society by encouraging more charitable giving than would otherwise take place? Rounding out the list of the top breaks is the deductibility of state and local taxes. It’s hard to see the justification for making people in low-tax areas pay more to subsidise states that choose to have larger governments – especially when many of the high-tax states have higher incomes than the low-tax ones, and when the biggest beneficiaries of the break are high earners. Even this break won’t be curtailed easily, though. Politicians in high-tax jurisdictions tend to be strong supporters of this deduction,
and you can’t blame them: Their voters would get hit hard if this deduction were scaled back, and it might force changes to their budgets as those voters grew more sensitive to state and local taxes. The Ronald Reagan administration tried to eliminate this deduction in the 1986 tax reform but failed because of opposition from high-tax areas.
Political trouble The more closely you look at the tax code, the less promising the idea of broadening the base becomes. That may be why Mitt Romney’s campaign proposed imposing a cap on the total value of all deductions anyone can take (and why so many congressmen are now talking about the idea). It is more or less an admission that paring back the number and size of specific tax breaks is more political trouble than it is worth in revenue. The Bowles-Simpson model of tax reform – broadening the base and lowering rates – is the wrong one. Some tax breaks should be scaled back, to be sure. But the idea that the federal government can painlessly raise a lot of money from a base-broadening tax reform is a myth. Bloomberg View
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December 19, 2012 business daily | 15
OPINION Business
wires
Time for nominal growth targets
Leading reports from Asia’s best business newspapers
Jeffrey Frankel
Yomiuri Shimbun
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The Democratic Party of Japan plans to hold a meeting of its lawmakers from the two chambers of the Diet on Saturday to choose a replacement for Prime Minister Yoshihiko Noda as party president. The party will deal with a special session of the Diet scheduled to be convened on December 26, after selecting its new leader. Calls are growing within the party to field Goshi Hosono, 41, chairman of the party’s Policy Research Committee, as a candidate to succeed Mr Noda.
Jakarta Globe Indonesia’s pace of economic growth can rise to 6.6 percent in 2013, driven by increased activity ahead of elections the next year, a central bank official was quoted as saying. Bank Indonesia has projected the economy will grow 6.3 percent this year. Perry Warjiyo, the central bank’s director of monetary research, told reporters that a higher growth rate than this year is attainable. The central bank estimates that annual inflation in December would stay mild at 4.3 percent on an annual basis, similar to November’s pace.
Economic Times Declaring that the economic slowdown had “bottomed out” and inflation was “moderating”, the government has predicted growth rebounding in the second half and made a pitch to the Reserve Bank of India (RBI) for “supportive” steps to keep up the spirits. In its mid-year economic analysis presented in Parliament on Monday, the finance ministry said it expected GDP growth of between 5.7 percent and 5.9 percent for the year, which is lower than the 7.6 percent budgeted but higher than 5.4 percent achieved in the first half.
The Star AirAsia Bhd has announced the appointment of Yoshinori Odagiri, 50, as the new chief executive and representative director for AirAsia Japan Co Ltd. Mr Odagiri will replace Kazuyuki Iwakata, 55, who has been promoted to chairman of AirAsia group’s Japanese subsidiary. In a statement, AirAsia also said that James Rhee had joined the group this month as the CEO of the newly created region of North Asia. “This covers Japan, where we already have an airline, as well as Korea and China, which are all potential new business opportunities for us,” AirAsia said.
Professor of Capital Formation and Growth at Harvard University
t is time for the world’s major central banks to reconsider how they conduct monetary policy. The U.S. Federal Reserve and the European Central Bank are grappling with sustained economic weakness, despite years of low interest rates. In Japan, Shinzo Abe, the opposition Liberal Democratic Party’s (LDP) candidate for prime minister, campaigned for a more expansionary monetary policy ahead of the general election on December 16. And central banks in both the United Kingdom and China are coming under new leadership, which might entail new thinking. Monetary policy makers in some countries should contemplate a shift toward targeting nominal GDP – a switch that could be phased in gradually in such a way as to preserve credibility with respect to inflation. Indeed, for many advanced economies, in particular, a nominal-GDP target is clearly superior to the status quo. Central banks announce rules or targets in terms of some economic variable in order to communicate their intentions to the public, ensure accountability, and anchor expectations. They have fixed the price of gold (under the gold standard); targeted the money supply (during monetarism’s early-1980’s heyday); and targeted the exchange rate (which helped emerging markets to overcome very high inflation in the 1980’s, and was used by European Union members in the 1990’s, during the move toward monetary union). Each of these plans eventually foundered, whether on a shortage of gold, shifts in demand for money, or a decade of speculative attacks that dislodged currencies. The conventional wisdom for the past decade has been that inflation targeting – that is, announcing a growth target for consumer prices – provides the best framework for monetary policy. But the global financial crisis that began in 2008 revealed some drawbacks to inflation targeting, analogous to the shortcomings of exchange-rate targeting that were exposed by the currency crises of the 1990’s.
Nominal-GDP target A nominal-GDP target’s advantage relative to an inflation target is its robustness, particularly with respect to supply shocks and terms-of-trade shocks. For example, with a targeting nominal GDP, the ECB could have avoided its mistake in July 2008, when, just as the economy was going into recession, it responded to a spike in world oil prices by raising interest rates to fight
consumer price inflation. Likewise, the Fed might have avoided the mistake of excessively easy monetary policy in 2004-06 (when annual nominal GDP growth exceeded 6 percent). The idea of targeting nominal GDP has been around since the 1980’s, when many macroeconomists viewed it as a logical solution to the difficulties of targeting the money supply, particularly with respect to velocity shocks. Such proposals have been revived now partly in order to deliver monetary stimulus and higher growth in the U.S., Japan, and Europe while still maintaining a credible nominal anchor. In an economy teetering between recovery and recession, a 4-5 percent target for nominal GDP growth in the coming year would have an effect equivalent to that of a 4 percent inflation target. Monetary policy makers in some advanced countries face the problem of the “zero lower bound”: short-term nominal interest rates cannot be pushed any lower than they already are. Some economists have recently proposed responding to high unemployment by increasing the target for annual inflation from the traditional 2 percent to, say, 4 percent, thereby reducing the real
(inflation-adjusted) interest rate. They like to remind Fed Chairman Ben Bernanke that he made similar recommendations to the Japanese authorities ten years ago. But many central bankers are strongly averse to countenancing inflation rate targets of 4 percent – or even 3 percent. They have no desire to abandon a hard-won target that has succeeded in keeping inflation expectations wellanchored for so many years. Even if the increase were explicitly temporary, they worry, it might do permanent damage to the credibility of the long-term anchor. This is also one reason why the same central bankers are wary of proposals for nominal-
GDP targeting. They worry that to set a target for nominal GDP growth of 5 percent or more in the coming year would naturally be interpreted as setting an inflation target in excess of 2 percent, again damaging the credibility of the anchor permanently. But the commitment to the 2 percent target need not be abandoned. The practical solution is to phase in a nominal GDP target gradually.
Growth projection Monetary authorities should start by omitting public projections for near-term real growth and inflation, while keeping longer-run projections and the inflation setting where it is. But they should add a longerrun projection for nominal GDP growth. This would be around 4-4.5 percent for the United States, implying a long-run real growth rate of 2-2.5 percent, the same as now. For Japan, lower targets would be needed – perhaps 3 percent nominal GDP growth, as the LDP recently proposed – owing largely to the absence of population growth. No one could call such moves inflationary. Shortly thereafter, projections for nominal GDP growth in the coming three years should be added – higher
than 4 percent for the U.S., U.K., and euro zone (perhaps 5 percent in the first year, rising to 5.5 percent after that, but with the long-run projection unchanged at 4-4.5 percent). This would trigger much public speculation about how the 5.5 percent breaks down between real growth and inflation. The truth is that central banks have no control over that – monetary policy determines the total of real growth and inflation, but not the relative magnitude of each. A nominal-GDP target would ensure either that real growth accelerates or, if not, that the real interest rate declines automatically, pushing up demand. The targets for nominal GDP growth could be chosen in a way that puts the level of nominal GDP on an accelerated path back to its pre-recession trend. In the long run, when nominal GDP growth is back on its annual path of 4-4.5 percent, real growth will return to its potential, say 2-2.5 percent, with inflation back at 1.5-2 percent. Phasing in nominalGDP targeting delivers the advantage of some stimulus now, when it is needed, while respecting central bankers’ reluctance to abandon their cherished inflation target. © Project Syndicate
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business daily December 19, 2012
CLOSING Facebook underwriter fined US$5 mln
More Chinese firms seeking HK listing
Morgan Stanley, the lead underwriter for Facebook Inc.’s initial public offering, will pay a US$5 million fine to Massachusetts for violating securities laws governing how investment research can be distributed. Massachusetts’ top securities regulator said that a top Morgan Stanley banker had improperly coached Facebook on how to disclose sensitive financial information selectively, perpetuating what he calls “an unlevel playing field” between Wall Street and Main Street. Morgan Stanley has faced criticism since Facebook went public for revealing revised earnings and revenue forecasts to select clients before the company’s US$16 billion IPO.
Chinese companies seeking a mainland listing may wait for up to five years, prompting some to turn to Hong Kong for fundraising, analysts at Ernst & Young said yesterday. They estimated that over 800 Chinese companies are currently seeking approvals for a listing on the Shanghai or Shenzhen exchange, seeking to raise a total of around 500 billion yuan (US$80 billion). “Many Chinese companies are considering listing in Hong Kong because if they wait for another 4-5 years, their growth would be constrained due to funding shortages,” Zhehui Tang, partner at Ernst & Young’s China venture, said.
AIG sells AIA stake for US$6.5 bln Sale marks exit after almost 100 years
AIA share offering priced at HK$30.30, near top of range
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merican International Group Inc. raised US$6.45 billion from the sale of its remaining stake in AIA Group Ltd in Asia’s second-largest block sale ever,
exiting a business the U.S. insurer started nearly 100 years ago. The sale, which priced near the top of its indicative range, marks the end of an era for AIG in Asia and its
chief executive Robert Benmosche, who took AIA public in Hong Kong in the world’s third-biggest IPO two years ago. AIA’s Macau branch is the city’s biggest insurance company by market share. AIG was forced to sell parts of its massive business, including AIA, after the U.S. government bailed the company out in 2008 as it teetered on the brink of collapse. The government ultimately spent US$182 billion on the rescue. AIG priced its 13.69 percent stake or 1.65 billion shares in Asia’s thirdlargest insurer at HK$30.30 per share. The deal had been marketed at HK$29.65-HK$30.65 apiece. That is a discount of 4.3 percent to AIA’s close at HK$31.65 in Hong Kong on Friday. AIA shares fell 1.05 percent to close at HK$30.6, less than the discount, underscoring demand for the stock. Trade had been suspended on Monday at the company’s request. “There are plenty of candidates out there ready to buy into the stock,” said Ping Cheng, an insurance analyst at DBS Vickers in Shanghai. “AIA offers very solid growth outlook and has a profitable profile. The expectation is that there is plenty of growth out there. They just did an acquisition in Thailand, they’re in the low penetration markets like Vietnam, Cambodia.”
Shares in AIA have soared about 61 percent since the US$20.5 billion IPO in 2010, and have become a top choice of fund managers looking to benefit from growing wealth in Asia and booming demand for insurance and other financial products. The block offering, surpassed only by Vodafone Plc’s US$6.6 billion stake sale in China Mobile two years ago, comes one week after a lockup on the shares expired, adding to two other rounds of AIA share sales in September and March that had raised about US$8 billion in total. “The short time frame in which [the placing] was completed demonstrates the strength of investor support for AIA and its growth prospects,” AIA’s chief executive Mark Tucker said in a statement. The deal also adds to a flurry of block offerings which target a select number of institutional investors and seek to bypass volatile demand from retail investors. Those share sales have surged nearly 90 percent so far in 2012 from 2011 to US$49.2 billion, according to Thomson Reuters data, helping investment banks in Asia, ex-Japan, buffer their business from a 60 percent plunge in IPOs. AIG, which expects to use the net proceeds from the AIA sale for general corporate purposes, has not identified the buyers. Reuters
Gazprom to cut gas price for Europe Company keen in defending its dominant position
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ussia’s Gazprom OAO, pressured by customers and competitors to reduce its gas prices, is likely to cut long-term contract prices to Europe next year to levels comparable to the spot market, a source at the company said. The price of the natural gas Russia’s gas export monopoly sells to Europe on long-term contracts could fall to around US$370 per 1,000 cubic metres in 2013 from over US$400 this year. “This [price] is a base-case scenario. The forecast is subject to change during the course of the year,” the source said yesterday. It would equate to a spot market price of around 26 euros (US$34.22) per megawatt-hour (MWh), below current German spot gas prices of over 27 euros a MWh and still slightly below price levels for delivery next summer. “It puts Russian contracts into the money for summer, so they should
export at top [capacity],” one gas trader with a German utility said. Gazprom is Europe’s biggest supplier of natural gas, providing around a third of its needs. The company is keen to defend its dominant position because it depends on European revenues, which account for around 80 percent of its income. The source said gas exports to Europe are expected to increase to 152 billion cubic metres (bcm) next year from just over 140 bcm in 2012, which came in below forecasts due to sluggish demand. In 2011 the price was US$390 per 1,000 cubic metres, and Gazprom said earlier this year that its average price for 2012 was likely to be US$405 to US$415 by the end of the year. Europe’s gas demand has declined because of its economic slump, energy efficiency drives and competing fuels in its main market, Germany. Because of these developments,
Gazprom has been under pressure from customers and competitors to cut its prices. Norway’s Statoil, Gazprom’s biggest rival to supply Europe with
gas, said earlier in December that it expected the majority of its supplies to be sold under spot market pricing models in future. Reuters