Year I Number 188 Friday, December 21, 2012 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP $ 6.00 www.macaubusinessdaily.com
www.macaubusinessdaily.com
CE with Xi Jinping in Beijing after handover anniversary Chief Executive Fernando Chui Sai On yesterday flew to Beijing to meet China’s new Communist Party leader Xi Jinping – hours after the official ceremony for the 13th anniversary of Macau’s handover from Portuguese administration. In his speech he pledged further cooperation with the mainland for Macau’s “sustainable development”. Li Gang, the new deputy director of the Central Government’s Liaison Office, reiterated on the sidelines of the handover anniversary that Beijing’s renewed efforts against corruption are “not related” to Macau’s gaming policy. Calls for cheaper housing – and direct elections – were again a key theme of handover anniversary rallies yesterday. The biggest was led by the pan-democratic New Macau Association.
No grace period for smoking ban intro T
he partial smoking ban on casino floors will take effect from January 1. There will be no grace period, confirmed the administration yesterday. It’s likely that not all the casinos will have their ‘smoking allowed’ areas ready, Health Bureau director Lei Chin Ion said yesterday. The official admitted on the sidelines of an official ceremony for the 13th anniversary of Macau’s handover that at the moment “no casino is in complete compliance with the guidelines” on the smoking areas. “There are some 20 casinos yet to make some minor adjustments on the smoking area, like moving away the gaming tables to create a four-metre buffer zone,” said Mr Lei. Senior executives from the gaming concessionaires expressed confidence they would be fully compliant in time.
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New tourism boss eyes more sights for visitors
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Taxi drivers’ anger over greener diesel shortage
The next edition of Macau Business Daily will be on Monday, December 31. Season’s greetings to all our readers and thanks for your support.
HANG SENG INDEX
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Mortgages slow as curbs come in
%Day
CHINA OVERSEAS
2.16
CHINA RES LAND
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HSBC HLDGS PLC
1.43
WANT WANT CHINA
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-1.02
CHINA LIFE INS-H
-1.02
CHINA RES ENTERP
-1.06
ESPRIT HLDGS
-1.43
ALUMINUM CORP-H
-2.24
Source: Bloomberg
With the new property market curbs coming into effect, the amount of new mortgage lending by local banks fell in October – the first time in three months. The drop was particularly noticeable for loans to nonresident buyers. Meanwhile loans for unfinished homes remain very low, as legislators discuss the first-ever regulation on such sales. The extension of the special stamp duty on shop sales seems to have done little to cool down commercial real estate lending. It doubled in the two months from August.
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business daily December 21, 2012
macau
Not all casinos will be ready for smoking ban: govt Gaming operators express confident but authorities warn there will be no grace period Stephanie Lai
sw.lai@macaubusinessdaily.com
T
he partial smoking ban on casino floors will take effect from January 1. There will be no grace period, confirmed the administration yesterday. But it’s likely that not all the casinos will have their ‘smoking allowed’ areas ready, Health Bureau director Lei Chin Ion said yesterday. The official admitted on the sidelines of an official ceremony for the 13th anniversary of Macau’s handover that at the moment “no casino is in complete compliance with the guidelines” on the smoking areas.
“There are some 20 casinos yet to make some minor adjustments on the smoking areas, like moving away the gaming tables to create a four-metre buffer zone,” said Mr Lei. A ban on smoking in all indoor public spaces in Macau came into effect this January. But casinos were given a grace period to make the changes – one year to ensure at least half the space on their gaming floors is smoke-free. To do that, they must designate the ‘smoking allowed’ areas and declare them to the government for compliance inspection. The
Fostering closer cooperation: Chui Chief Executive Fernando Chui Sai On pledged to further promote closer cooperation ties with mainland China to “provide a strong backing and new opportunities for Macau’s sustainable development”. During his speech at the official
ceremony on the 13th anniversary of Macau’s handover yesterday, he said the city would “face new opportunities but also higher risks” next year due to the “complexities in the global economy”. In face of doubts clouding the worldwide prospects, he said the
government has said however its policy aim is for a complete ban on casino smoking. The law regulating indoor smoking simply says the casino smoking regulations will be “reviewed” after three years. Official guidelines issued by the Health Bureau, published only in late October, require existing and future casinos to divide their gaming floors physically into smoking and non-smoking zones. But any existing casinos that for technical reasons cannot put up walls will be allowed to introduce a
administration would first ensure the stability of public finances and the employment of Macau residents. On gaming development, the government will continue to strive for enriching the non-gaming elements within the Macau casinos, Mr Chui said. He added the government would also establish long-term mechanisms in several sectors, including social welfare and education, next year.
“transition area”, which can be an “air curtain” (powerful ventilation) system or an airtight wall at least two metres high offering at least some separation between the smoking and non-smoking areas. “If the setting up of the smoking areas [in casinos] is still not compliant with the guidelines, a full smoking ban will then have to be applied to the whole venue,” said Mr Lei. The Health Bureau director also stressed there would be “no room for exercising discretion or another grace period” for enforcing the partial smoking ban in casinos. In an interview with Business Daily earlier this week, HSBC senior gaming analyst Sean Monaghan said he thought there would be “an extension or some sort of period given where the government has to allow more latitude for the industry to implement” the ban.
Mixed expectations With about 10 days left for compliance, gaming operators MGM China Holdings Ltd, Galaxy Entertainment Group Ltd and SJM Holdings Ltd said they were confident they would fully meet the new rules.
Also yesterday, Mr Chui started a three-day visit to Beijing by meeting Xi Jinping, the new leader of the Communist Party. The chief executive will discuss with the central government this year’s events and the policies for 2013, particularly the cooperation over Hengqin Island and Guangzhou’s Nansha New Area. T.L.
Gaming safe from graft drive: Beijing’s new man The deputy director of the liaison office says the mainland’s anti-corruption measures unconnected with gaming policy Stephanie Lai
sw.lai@macaubusinessdaily.com
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eijing’s renewed efforts against corruption are unrelated to gaming policy here, the new deputy director of the Liaison Office of the Central People’s Government in the Macau SAR, Li Gang, said yesterday. Mr Li is also a member of the Chinese Communist Party’s Central Commission for Discipline Inspection. “The task of the commission is to get to grips with anti-corruption moves in the mainland,” he told reporters on the sidelines of celebrations of the anniversary of the return of Macau to Chinese rule. “This task is not related to Macau’s affairs,” he said. His remarks echoed those made last week by his boss at the liaison office, Bai Zhijian. Mr Li said mainland China’s crackdown on graft and its attitude to casinos “are not the same matter” and that Beijing’s efforts against corruption were not expected to harm the gaming industry here. Reports in other news media have said the mainland authorities will intensify their scrutiny of
VIP gaming promoters, or junket operators, to deter corruption and money laundering. VIP gaming accounted for almost 70 percent of casino revenue in the first three quarters of this year, official data show. Mr Li said that although he was on “familiar terms” with “a few casino heads”, he wanted to learn more about the development of the gaming industry here. Before being posted to Macau Mr Li was deputy director and spokesman of the Liaison Office of the Central People’s Government in the Hong Kong SAR for nine years. Recent reports in the Chineselanguage news media have suggested that he will become the director of the Macau liaison office sometime after the National People’s Congress meeting in Beijing next March or after the Legislative Assembly elections here later next year. Asked to comment, he said: “Well, we still have a year to go. Let’s see then.” If Mr Li became chief of the Macau liaison office, he would have the rank of minister in China’s government hierarchy.
December 21, 2012 business daily | 3
MACAU
Casinos were given one year to set up smoking areas covering up to 50 percent of their gaming floor
“It is a bit of a rush, but I am confident that our casinos will be ready [for the smoking ban] by January 1,” said Francis Lui Yiu Tung, vice-chairman of Galaxy, after the ceremony.
Analysts have expressed fear over the impact of the ban on gaming revenue but Mr Lui was optimistic the effect on the mass-market segment would be limited. “I don’t think setting a non-
smoking zone will affect the business much,” he noted. Praveen K Choudhary, managing director of Morgan Stanley in Hong Kong, said in a report this week the partial smoking ban could depress
Macau’s mass-market gambling revenue by four to 20 percent, similar to what happened in Australia and some United States jurisdictions. In the report to investors, he also forecast that the ban would reduce the total gross gaming revenue growth in 2013 by “three to four percent”. Grant Bowie, chief executive and executive director of MGM China Holdings, operator of the MGM Macau casino resort, told media on the sidelines of yesterday’s ceremony it is “extremely difficult to project the smoking ban’s impact”. “It is difficult to determine whether it [the smoking ban] will have a short-term or long-term impact at this time,” said Mr Bowie. “But we are confident that the market in Macau has recently been robust and will be able to work through this issue,” the executive said. MGM “will be ready for the ban,” he pledged. Ambrose So Shu Fai, chief executive officer for casino developer SJM, also said after the ceremony “the preparation [for the ban] has progressed quite well”. “Hopefully we can achieve the partial smoking ban by January 1,” he added.
New tourism boss mulls more sights for visitors More places of interest to tourists are needed off the beaten track, such as in the northern district, says the tourist office director Tony Lai
tony.lai@macaubusinessdaily.com
T
he new director of the Macau Government Tourist Office, Helena de Senna Fernandes, has undertaken to come up with tourist attractions in the lessvisited parts of the city. Ms Senna Fernandes, who took up her post yesterday, replacing João Manuel Costa Antunes, said her office aimed to “enrich the tourism elements of the entire city to divert visitors to different spots”. She was speaking told reporters on the sidelines of an official ceremony to mark the anniversary of the handover of Macau from Portuguese to Chinese rule. By way of illustration, she s a i d: “The Ruins of S t Pau l’s is an attraction crowded with tourists and we hope that through cooperation with other public bodies or promotions we can let tourists know that Macau has other places worth visiting.” Ms Senna Fernandes said the government would improve the northern district next year. “There are already some churches and temples with potential in that area. We will use these as a foundation and add some new elements,” she said. Asked about the government’s effort to encourage the opening of low-cost hotels in the northern district, she said the government would “do it step by step” to “give confidence to investors”. The government said in July that it wished to have lowcost hotels by the new border
crossing planned for the Ilha Verde area.
Quality not quantity Ms Senna Fernandes said the government would persist next year with its efforts to tap India as a source of tourists. She said it would also endeavour to tap a new source: Russia. “Next year is the ChinaRussia Tourism Year and we hope we can have promotion there via the campaigns by the China National Tourist Office,” she said. She said the government would open a tourism promotion office in Russia next year, but gave no details. Macau had over 20,000 visitors from Russia and more than 126,000 from India in the first 10 months of this year, together accounting for 0.6 percent of all visitors, official data show. “It is unrealistic to continuously strive for growth in tourist arrivals, but we can work more on the quality, like prolonging visitors’ length of stay and attracting them to more places in Macau,” Ms Senna Fernandes said. She expects number of visitors this year to be about 28 million, similar to the number last year. She said growth in the number was being hindered by “uncertainties in the global economy”. Macau had 23.2 million visitors in the first 10 months, 0.8 percent more than in the
Russia is a target market for next year, says the new chief of the tourist office, Helena de Senna Fernandes
equivalent period last year. But the average length of a visitor’s stay remained just one day in October. Ms Senna Fernandes said next year’s figures depended on the economic outlook worldwide.
The tourism office will work with other government agencies to increase the city’s capacity to handle visitors in time for the extension this month of the new Guangzhou–Zhuhai railway to Gongbei, just across the border.
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business daily December 21, 2012
macau Continuing education head steps down
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Ao Kam Meng, the head of the Education and Youth Affairs Bureau’s Continuous Education Centre, has stepped down due to “personal reasons,” the Chineselanguage Rádio Macau reported. Mr Ao was the official directly in charge of the continuing education development programme, which offers a maximum subsidy of 5,000 patacas (US$630) to residents aged 15 or older taking certified courses. Last month the Commission of Audit called for a ‘full and serious’ revision of the scheme due to flawed decision-making and lack of supervision.
HOSPITALITY Tax pump In the economy’s present state, the public could be forgiven for thinking that the only games of fortune take place in the casinos. Yet other forms of gambling, such as betting on sports and lotteries, have always coexisted with the big gambling halls. Governments are keen to obtain taxes from activities that can provide a steady flow of revenue to the treasury. Before the end of the casino monopoly, the revenue generated by such alternative betting was small compared to that generated by the casinos. Since the end of the monopoly, these activities have become practically invisible, but this masks growth in the past few years.
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Michael Grimes
michael.grimes@macaubusinessdaily.com
Compared with the increase of almost 250 percent in casino gaming revenue between 2008 and last year – equivalent to an average annual growth rate of 35 percent – the rise in revenue generated by sports betting and lotteries seems slow. It increased by 13 percent in the same period, growing at an average annual rate in excess of 4 percent. In absolute terms, these games of chance are small beer, overshadowed by the bigger casino gaming business. The revenue they made fell from the equivalent of about 1 percent of casino revenue in 2008 to 0.36 percent at the end of October. That is, it fell by about two-thirds of what was already a small figure. It is difficult to represent here appropriately sports betting and lotteries on the one hand and casino gaming on the other, but this is of little consequence to the public purse. Casinos will continue to dominate gaming. Gaming has generated in the past four fiscal years more than 250 billion patacas (US$30.7 billion) in government revenue, and this year promises to be another bumper year for the public coffers. J.I.D.
MOP684 billion Casino revenue from 2008 to last year
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or nearly 60 years until July 2008, it wasn’t possible to catch a direct civilian air flight between mainland China and Taiwan because of the bitter political differences between the two. That’s the main reason Macau International Airport used to be packed with transit passengers moving in both directions. The same cross-straits movement restrictions didn’t apply to Macau and Hong Kong residents. But for decades most visitors from the two cities to Taiwan were business travellers or families divided by the 1949 refugee crisis, rather than tourists. In recent years, much of the traffic has been the other way – Taiwanese visiting Macau’s casino resorts. Macau welcomed nearly a million
Taiwanese visitors in the ten months to the end of October according to the Statistics and Census Service. Now Taiwan is looking to boost its own economy via tourism. It’s stepping up its charm offensive among residents of Macau and Hong Kong, to persuade them to spend their 2013 Lunar New Year holiday there. Wang Chun-pao, head of the Taiwan Visitors Association’s Hong Kong office, this week said Taiwan will also continue a scheme offering one free plane trip to Taiwan to tourists from Macau or Hong Kong that have made three visits to the island in a single calendar year. If the government gets its way, it might within a few years be able to offer the visitors casino gambling entertainment; albeit on
remote outlying islands. Yesterday’s commemoration in Macau of the city’s 1999 handover from Portuguese administration reaffirms that Macau – and its neighbour Hong Kong – is now politically part of the mainland, albeit semi-autonomous. That fact and the West’s growing engagement with a now more open China means it was perhaps inevitable that for reasons of culture, proximity, and practical economics Taiwan would have to get more friendly with the mainland and to build fresh ties with a new generation in China’s SARs that has no memory of the civil war between the Nationalists and the Communists.
Realpolitik the game in Taiwan-China relations Since the 2008 election of Taiwan’s Hong Kong-born current president Ma Ying-jeou, China-Taiwan ties have advanced significantly. As well as direct air links, China has begun granting permission for its citizens to tour Taiwan. Most visit on short guided tours but now residents of certain Chinese cities can obtain visas to travel independently. In
2008, only 300,000 mainland Chinese visited Taiwan. This year, in the first 10 months alone, there were 3.8 million foreign tourists according to Taiwan’s Ministry of Transportation and Communications. UBS AG, a bank, estimates 2.3 million of these will be from the mainland. That’s still fewer than 10 percent of the 28 million people that visited Macau in 2011.
And the Cold War still lingers in terms of the amount of red tape faced by students from Macau and Hong Kong when studying in Taiwan. Now, in response to lobbying by student groups, Taiwan’s Ministry of Education says by July next year it will amend the rules to make the arrival and departure system easier.
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December 21, 2012 business daily | 5
MACAU
Comedown follows homebuying rush The enthusiasm of homebuyers waned in October after mortgage lending limits were tightened Vítor Quintã
vitorquinta@macaubusinessdaily.com
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he amount of new mortgage lending by banks here fell in October for the first time in three months, the Monetary Authority of Macau says. The combined value of new home loans fell to 4.2 billion patacas (US$530.8 million) in October, 9.1 percent less than in September, data released on Wednesday show. September had been the peak month for new mortgage lending this year, as homebuyers rushed to borrow before the government made it more difficult. New mortgage lending had been expected to fall after the government introduced in October new measures to cool the overheating real estate market. These measures include tighter restrictions on mortgage lending, especially for non-residents.
Banks are now permitted to lend a non-resident only 40 percent of the value of a home worth more than 8 million patacas. It was new mortgage lending to non-residents that fell the most in October, by 30.7 percent to 357.6 million patacas. But Macau people also stayed away from the property market, new mortgage lending to residents falling by 6.4 percent to less than 3.9 billion patacas. The deputy general manager of Bank of China Ltd’s branch here, Ip Sio Kai, told reporters last month that applications for mortgages had dropped by 30 percent in the month after the government’s new measures came into force. Loans for unfinished homes accounted for 81.2 million patacas or 1.9 percent of all new mortgage
lending in October, 15 percent more than in September.
Commercial boom The Legislative Assembly is deliberating on a bill to regulate the sale of unfinished homes. The bill would prohibit developers from selling space in blocks of flats that exist only on paper. Developers would have to have built at least the ground floor of a block before being allowed to sell space in it. The amount of new mortgage lending to buyers of commercial property increased for the second consecutive month in October, to 5.1 billion patacas, the most this year. October’s figure was 63 percent higher than September’s, which was 78.1 percent higher than August’s.
The increase in October was due mainly to new mortgage lending to resident buyers of commercial property, which rose by 67.3 percent and accounted for 99.1 percent of the total. New loans to non-residents dropped by 59.1 percent to less than 44 million patacas, the least since the Monetary Authority began collecting data of this kind in 2008. The government expanded in October the special stamp duty on housing sales to cover sales of commercial and office premises and parking spaces, saying the overheated market was “causing negative effects”. Sellers of commercial property must now pay a levy of 20 percent on the price if they sell a property within a year of buying it and a levy of 10 percent if they sell it within two years of buying it.
KEY POINTS New curbs end growth in new mortgage lending Non-resident buyers deterred the most Surge in loans for commercial property continues
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Drop in new mortgage lending to nonresidents in October
The government introduced in October new measures to cool the overheating real estate market
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business daily December 21, 2012
macau
Rally calls for democracy, cheaper housing
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Underappreciated growth As the end of the year approaches, a good deal of attention is being directed at estimates of growth in gross domestic product. There are several indicators suggesting there will be a slowdown in the rate of GDP growth this year. Quarterly figures underline the trend and all that remains to be determined is the size of the decline in the growth rate. It is important, however, to put the growth rate into context. In 2010 and last year growth was abnormally high. At the height of the financial crisis in 2008 and 2009, the economy suffered a couple of years of relative stagnation. It is probable that decisions about consumption and investment were delayed until the economic situation became clearer. Extraordinary growth in 2010 and last year was the outcome of improvements in external conditions combined with overcompensation for the restraint shown in the preceding two years.
Handover rallies have once again asked for better public housing, and direct elections Stephanie Lai
sw.lai@macaubusinessdaily.com
GDP components 106 mop (chained prices, 2010) 500000
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Most of the growth in the graph above occurred in the past two years. The most striking component of growth was exports. Exports grew by 100 percent in real terms between 2009 and last year. But most of the growth was concentrated in the past two years. The other GDP components follow a similar pattern. This year’s figures, especially the quarterly data for GDP components, suggest that the growth rate will fall by half this year. That would still be a fast rate of growth. But it would look slow when compared with the growth rate last year and the year before. J.I.D.
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Growth in exports from 2009 to last year
About 1,100 people joined yesterday’s handover rallies, the Public Security Police said (Photo: Manuel Cardoso)
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alls for cheaper housing were again the key theme of handover anniversary rallies yesterday. The biggest was led by the pan-democratic New Macau Association. The association’s march, toting green banners from the Iao Hon district to the government headquarters, accused the administration of “failing [to keep] the 19,000 public homes promise”. The 19,000 public homes plan was first announced in 2007 as a measure to fulfil demand from public housing applicants registered in 2002 and 2003 and unable to afford private housing. The plan originally aimed for a
completion of 19,000 subsidised and social housing units by 2012 But Secretary for Transport and Public Works Lau Si Io admitted in last month’s Policy Address for 2013 that the target would be missed. Mr Lau told media on the sidelines of an official ceremony on the 13th anniversary of Macau’s handover yesterday that the actual supply of subsidised housing would be announced next year. Mr Lau’s cabinet announced that by the fourth quarter next year, the administration would be ready to open applications for subsidised housing. “For failing the pledge, Lau Si Io should step down!” the rally
participants protested yesterday. Yesterday’s march also called for the direct election of Macau’s chief executive by 2019 – a recurrent request since the handover parade started in 2007, New Macau Association legislator Ng Kuok Cheong said. Three other rallies were organised yesterday but in the end they had all joined up together, including gaming workers asking for a full smoking ban in casinos, and Taipa and Coloane residents calling for the recognition of old land deeds (‘Sa Chi Kai’ in Cantonese). About 1,100 people joined the handover rallies, the Public Security Police said.
December 21, 2012 business daily | 7
MACAU
No greener fuel for new taxis
comment
New 200 taxis have better standards on emissions but there is no adequate fuel available
Take time to reflect on the spirit of Christmas
Tony Lai
tony.lai@macaubusinessdaily.com
Zen Udani
Assistant Professor of Management, University of Macau
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New taxis are more environmentally-friendly but fuel is lagging behind
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he taxi industry warns the city cannot provide green-enough diesel to go along with the 200 new taxis licences, which were issued in April this year. The new taxis must conform to the Euro 4 emission standards. European Union emission standards are measured on a scale from 1 (higher emissions) to 6 (lower emissions). Tai Kam Leong, vice-president of Macau Taxi Association, said over 100 of the new taxis would actually confirm to Euro 5 emission standards. “But there is no Euro 5 diesel provided in Macau due to the lack of oil depots, as the government explained to us in a meeting a week ago,” he said. Mr Tai said Macau only had one depot for storing diesel, which did not have enough room for fuels matching the new standards.
“The administration is thinking of possible solutions but it is still not sure when the problem can be solved,” he told Business Daily. Mr Tai explained: “If the fuel does not match the equivalent emission standards of the vehicles, this will affect their performance, leading to more maintenance needs.” “The government should have paid more attention to this issue. It is now like they have taken a step forward on environmental protection in one aspect but they lag behind in other areas,” he complained. The Environmental Protection Bureau hopes to finish drafting a bylaw requiring all vehicle diesel to reach Euro 5 standard, director Cheong Sio Kei said earlier this year. But no progress has been announced so far. The government also hinted that the price for the Euro 5 diesel would
be higher than for other fuel, thus breaking a promise to ensure the price would be similar, said Mr Tai. The price would be higher due to higher costs for the oil suppliers, said Nam Kwong Petroleum & Chemicals Co Ltd in a consultation report on the issue published in September. The city’s largest diesel company, a branch of state-owned Nam Kwong (Group) Co Ltd, said the price for Euro 5 diesel would be notably higher as their costs would rise by 1 pataca (US$0.13) a litre. Mr Tai also said about 60 of the new 200 taxis had already hit the road and the remainder would be in service before Chinese New Year. All of them would be covered by contracts co-written by several insurers after the intervention of the Monetary Authority, as no single insurer wanted to cover taxis due to their accident rate, he added.
Corporate
Dance students perform with National Ballet of China Twelve local dance students are to perform a scene with the National Ballet of China when it presents The Nutcracker at Sands China Ltd’s Venetian Macao-Resort-Hotel. The evening shows at the Venetian Theatre run from today until Christmas Day, December 25, inclusive, with matinee performances on Saturday and Sunday. The ballet, with musical score by the Russian composer Pyotr Ilyich Tchaikovsky, is a seasonal favourite in the West because of its Christmas theme. China’s national ballet company has adapted the work for audiences in this region, incorporating China’s traditional Spring Festival and setting the story in Beijing. On this visit it has invited a dozen students aged six to seven from the respected Escola de Ballet Hong Peng Wa, Macau, to perform a scene called ‘The Golden Pig Dance’. A total of 180 of the national company’s members are coming to Macau, including more than 60 dancers. Most are graduates of the Beijing Dance Academy.
City of Dreams’ Tasting Room awarded Michelin star The Tasting Room restaurant at Melco Crown Entertainment Ltd’s City of Dreams casino resort on Cotai has been awarded its first Michelin star. The venue is the only new venue this year to receive a Michelin star rating in the just-published Michelin Guide Hong Kong & Macau 2013. Only seven restaurants in Macau were awarded one or more stars in the latest edition. Chef de Cuisine of The Tasting Room – located at Crown Towers in CoD – is Guillaume Galliot. Chef Galliot has worked for prestigious hotels and restaurants across the region, including Raffles Grill in Raffles Hotel in Singapore, JAAN restaurant in Raffles Beijing Hotel, and Jardin des Sens, a Michelin-starred restaurant and resort in Montpellier, France. The Tasting Room recently ranked number five in Hong Kong Tatler’s inaugural list of the 20 top restaurants in Hong Kong and Macau. City of Dreams’ signature Chinese restaurant, Jade Dragon, was also named ‘Best New Restaurant’.
lot of goodness could accrue to the business world if it anchored its core values on the true spirit of Christmas. The meaning of Christmas goes beyond the gifts and glitter that seasonally flood commercial centres. Christmas is about loving and caring, giving and sharing, and uplifting the spirit of people. Marketing guru Jim Stengel, in his book “Grow: How Ideals Power Growth and Profit at the World’s 50 Greatest Companies”, says: “A brand ideal of improving people’s lives is the only sustainable way to recruit, unite and inspire all the people a business touches, from employees to customers.” People easily sense when the company they work for is doing the right thing. Likewise, customers know when a company is just out there to make money at the expense of their wellbeing. Companies in Macau, especially the big businesses, have the resources that could potentially improve the lives of employees. But enhancing employee welfare is more than just increasing their benefits and compensation. Commitment to the integral development of employees is indispensable to expressing care for them genuinely. The returns of people development to the company are obviously not immediate but this could win the loyalty many organisations long for among their employees. In a study here about employee loyalty in a non-gaming company, researchers found that the attitude of the boss, the workplace culture and the company’s status had a bearing on the inclination of employees to remain in the organisation. Employees were very happy to work for a boss that truly cared for them. They were not “used” nor treated like objects. They felt valued and respected as human beings. The employees also considered their immediate workplace like home. Their colleagues were genuine friends. The office culture allowed them to work well and develop personally and professionally. Moreover, the company’s financial status was strong and stable. Employees were spared any anxiety about losing their jobs in the near future. They considered the company worthy of their loyalty. As the year is about to end, it is worthwhile for employers, executives and managers to examine the quality of their care and concern for their employees. While they may be in a mood to give, they should consider being a lot more generous in their commitment to enhance the personal and professional development of their people. Thus the new year will be brighter and better, even if it is not Christmas time.
As the year is about to end, it is worthwhile for employers, executives and managers to examine the quality of their care and concern for their employees
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business daily December 21, 2012
GREATER CHINA
Beijing urges U.S. to end ‘political’ vetting of companies Officials made progress on a number of commercial issues
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hina wants the U.S. to end its “political background check” of Chinese companies seeking to do business in America, the nation’s vice premier said as economic talks between the two nations concluded. “Our two countries have to strengthen our economic relationship,” Vice Premier Wang Qishan said through a translator at a dinner in his honour on Wednesday night U.S. time after the annual U.S.-China Joint Commission on Commerce and Trade meetings in Washington. Mr Wang said Chinese companies want to ensure that they receive fair treatment in the U.S., regardless of their links to the Communist Party, while acknowledging that checks for national security
makers Huawei Technologies Co. and ZTE Corp. of providing opportunities for the country’s government to spy on the U.S. industry. Huawei said at the time the report’s outcome was pre-determined, and ZTE said it was too narrow in scope. China’s biggest concern in its economic relations with the U.S. is ensuring that the country receives “fair and equal treatment,” Chen Deming, the country’s commerce minister, said at a news conference yesterday.
Intellectual property U.S. Trade Representative Ron Kirk and Acting Commerce Secretary Rebecca Blank, co-hosts of the economic summit, said at a separate news conference that the U.S.
The talks took place after China’s ruling Communist Party concluded a once-a-decade leadership change and President Barack Obama was elected to a second term. “We’re entering a unique moment in which we can work together” because of the political situation in both countries, Ms Blank said. Mr Wang said at the dinner that recovery from the global economic crisis is still ongoing, and growth may be sluggish for the next three to five years. The economic discussions were held a day after Ms Blank’s agency raised import duties on wind towers from Chinese producers and exporters, increasing tariffs announced earlier this year for companies including Chengxi Shipyard Co., Titan Wind
KEY POINTS China agreed to address concerns about piracy and counterfeiting U.S. pledged Chinese firms fair treatment in security reviews of investment plans China complains about U.S. prejudice against state-owned firms
Wang Qishan took a shot at U.S. suspicions
concerns should continue. He said U.S.-based businesses operating in China also want to ensure that they receive treatment on par with domestic competitors. Economic tensions between the U.S. and China, the world’s two largest economies, are high amid trade disputes over solar cells, clean-energy programmes, autos, rare-earth elements and electronicpayment services. In October, a U.S. House intelligence committee report accused Chinese phone-equipment
welcomes foreign direct investment from China and other nations. China agreed to increase its enforcement of intellectual property laws, with an emphasis on ensuring that government-owned companies use legal versions of software and not pirated copies, Ms Blank told reporters. “Some of these issues may seem a bit esoteric, but they can make the difference between millions, billions of dollars of new exports and jobs being retained here at home,” Mr Kirk told reporters.
Yuan closes flat as recovery in trading volume sustained
T
he yuan closed virtually flat yesterday as traders watched global currency markets and waited to find out if the U.S. can steer away from going over the “fiscal cliff”. The yuan closed at 6.2302 per dollar, compared with 6.2303 at the end of Wednesday. The central bank set its midpoint at 6.2877 per dollar compared to 6.2865 on Wednesday. The exchange rate is only allowed to diverge by 1 percent in either direction from the central bank’s daily midpoint. Market volumes remained healthy with more than US$11 billion transacted by market close, down slightly from Wednesday. Traders say supply and demand
from corporates has remained relatively balanced this week in the absence of developments at home or abroad to give fresh direction. The dollar index fell slightly overnight, remaining on the gradual downward trend it has been on since mid-November. Increasing optimism about economic recovery has pushed global forex investors into higheryielding but riskier currencies, including the yuan. The onshore yuan hit an alltime high against the dollar in late November, after which point the Chinese central bank moved to restrain further appreciation, but the offshore market remains bullish. Offshore yuan (CNH), which is
Energy Suzhou Co. and the Chinese unit of CS Wind Corp., based in South Korea. A U.S. industry complaint last year triggered the department’s action, the latest example of a dispute between the U.S. and China over government support for clean energy. Mr Kirk said the talks this week were important to improving trade relations between the two nations. “When we solve problems, that’s what leads to this explosive growth in our trade,” he said at the dinner. Reuters
not subject to the central bank’s daily trading range, began trading at a premium to the onshore market in late November and went on to set its own record high against the dollar on December 11 when it changed hands at 6.2030. It has remained in that neighbourhood since, offering an opportunity for cross-border arbitrage. In ordinary circumstances, analysts say, corporates quickly move to exploit gaps between the CNH and the CNY, and gaps are usually closed quickly. But in this case, optimism about the yuan’s future value is keeping the CNH strong. “The spread between CNH and CNY spot could be sustained going into the first quarter of next year due to strong bullish sentiment toward the renminbi, which has less price constraints offshore,” said Wang Ju, senior Asian FX strategist at HSBC. Reuters
UBS faces Ho
Bank being probed for p Stephanie Tong
U
BS AG, which will pay US$1.5 billion to settle charges with U.S. and U.K. regulators for manipulating interest rates, is now under scrutiny in Hong Kong for possible misconduct linked to the city’s rates. The Hong Kong Monetary Authority has started an investigation to see if there was wrongdoing by the bank in its submission of data for setting the Hong Kong Interbank Offered Rate, according to a statement from the de-facto
HK property ov poses financia
Housing prices surged 23 p Kelvin Wong
H
ong Kong’s overheated property market is increasingly disconnected from the rest of the economy and poses “macro-financial risks,” the city’s monetary authority said. Loose global monetary conditions and low interest rates may fuel mortgage borrowing that intensifies “the disconnect between property prices and economic fundamentals,” the Hong Kong Monetary Authority said yesterday in a quarterly report. Government measures to cool the market have failed to prevent home prices in Hong Kong, the world’s most expensive place to buy an apartment, doubling in four years and surpassing a previous
December 21, 2012 business daily | 9
GREATER CHINA their internal controls.” For years, traders at Royal Bank of Scotland Group Plc, Barclays Plc, UBS, Deutsche Bank AG, Rabobank
Groep and other firms that stood to profit worked with employees responsible for setting the London interbank offered rate, or Libor, to rig the price of money, according to documents obtained by Bloomberg and interviews with two dozen current and former traders, lawyers and regulators.
Rigging Libor
Hong Kong investigation
potential misconduct on rates
The whole episode is a wake-up call to regulators globally that markets are moving faster than regulators Sandy Mehta, Value Investment Principals
central bank yesterday. The HKMA is also reviewing whether the potential misconduct may have had a material impact on the rates. The Hibor is the basis for the interest paid on various forms of deposits or loans not only in Hong Kong, but also in Macau. Overseas regulators alerted the HKMA about potential manipulation of the local interbank lending rates and other reference rates in the region, it said. The move signals that the world’s biggest
verheating al risks: HKMA
pct in the year to October
peak in 1997. In contrast with “tepid” income growth, housing prices surged 23 percent in the year to October, the HKMA said in the report. The “overheating property market carries macro-financial risks to the economy,” the HKMA said. Mortgagors may end up “in distress when the interest rate returns to a more normal level,” the monetary authority said. The International Monetary Fund warned on December 12 that property is “the main source of domestic economic risk” for the city. At the same time, the odds of a slump that has major economic and financial consequences is “fairly low
banks – some of which have already been penalised in Japan – may now come under scrutiny in more Asian nations even as they seek to placate U.S. and U.K. authorities. “The whole episode is a wakeup call to regulators globally that markets are moving faster than regulators,” Sandy Mehta, chief executive of Value Investment Principals Ltd in Hong Kong, said yesterday. “While we do not need more rules and regulations, large firms in particular need to tighten
in the near term,” the fund said. The Hang Seng Property Index, which tracks the nine biggest developers listed in Hong Kong, went up 0.38 percent yesterday. The gauge has gained 37 percent this year, compared with a 22 percent increase in the Hang Seng Index. Chief Executive Leung Chun Ying, who took over in July, has imposed extra taxes and tightened mortgage lending. Hong Kong’s interest rates track those of the U.S. because of the city’s currency peg. Hong Kong’s economic outlook is “relatively weak” because of sluggish export demand, the HKMA said. The economy faces “downside risks, particularly for the external environment,” the report said. “The latest reading of our in-house composite index of leading indicators also points to continued soft growth in the months ahead.” Hong Kong’s economy is set for its weakest annual expansion since the global financial crisis as the European sovereign debt crisis damps global trade. The government in November cut its estimate for full-year growth to 1.2 percent from an August projection of a range of 1 percent to 2 percent. Bloomberg News
Libor is the global benchmark for more than US$300 trillion of contracts, from mortgages and student loans to interest-rate swaps. The attempts to manipulate of the rate – which is at the heart of the biggest and longest-running scandal in banking history – flourished for years, even after bank supervisors were made aware of the system’s flaws. The penalties of US$1.5 billion that UBS, Switzerland’s biggest bank, must pay to U.S., U.K. and Swiss regulators for trying to rig rates represent about one-third of the bank’s 2011 net income. The amount, announced on Wednesday, is triple the penalties against London-based Barclays. “We continue to work closely with various regulatory authorities to resolve issues relating to the setting of certain global benchmark interest rates,” Mark Panday, a Hong Kongbased spokesman at UBS, said in an e-mailed statement yesterday following the HKMA’s statement. “As we are currently in active discussions with these authorities, we cannot comment further.” Bloomberg News
10 |
business daily December 21, 2012
ASIA Philippines raises tobacco tax The Philippines yesterday raised tobacco and alcohol taxes in a reform President Benigno Aquino hailed as helping to liberate “more Filipinos from the vices of smoking and drinking”. Mr Aquino, a smoker himself, said the “sin tax” law was a victory against the powerful tobacco lobby and would provide extra funds for better health care and facilities. Mr Aquino spokesman Ramon Carandang said the sin taxes would raise 33 billion pesos (US$800 million) in 2013, rising gradually over the succeeding years.
Bank of Japan adds to easing programme BOJ boosts stimulus as incoming PM turns up heat Leika Kihara
Qantas, Emirates deal backed Qantas Airways Ltd won provisional approval from the nation’s antitrust regulator to cooperate with Emirates on services as it seeks to turn around unprofitable international operations. The agreement should be permitted for five years, rather than the 10 sought by the carriers, the Australian Competition & Consumer Commission said in a statement yesterday. Sydney-based Qantas has previously said the venture will begin in April. The venture will let Qantas sell tickets to 60 new one-stop destinations in Europe, the Middle East and Africa via Emirates’ Dubai hub, and help it overhaul Asian schedules.
GrainCorp open to higher bids GrainCorp Ltd defended yesterday its rejection of a sweetened US$2.9 billion takeover offer by Archer Daniels Midland, but said it remained open to higher offers. GrainCorp last week rejected ADM’s higher offer saying that the offer materially undervalued Australia’s last major independent grains handler. GrainCorp’s chief executive Alison Watkins left the door open for another offer. “The board has had and will continue to have constructive dialogue with ADM,” Mr Watkins said. “But we will respond to superior proposals that are in the best interest of shareholders.”
Vietnam sees enough room to cut rates Vietnam has sufficient ground to lower interest rates as inflation has been easing in recent months, Prime Minister Nguyen Tan Dung was quoted as saying by a state-run newspaper yesterday. Inflation last month eased to a rate of 0.47 percent against October, from a monthly rise of 0.85 percent the previous month and 2.2 percent in September, the Vietnam Economic Times newspaper quoted Mr Dung, who cited government data. “Inflation is slowing as such, the ground is sufficient to lower interest rates,” he said.
Japan might review its current 1 pct inflation target in January
T
he Bank of Japan delivered its third dose of monetary stimulus in four months yesterday in a prelude to more aggressive action next year, as it faces intensifying pressure from the country’s next leader for stronger efforts to beat deflation. Shinzo Abe, whose opposition Liberal Democratic Party (LDP) won Sunday’s election by a landslide, has put the central bank’s independence on the line by repeatedly calling for a binding 2 percent inflation target, double its current price goal. The BOJ expanded its assetbuying and lending programme by 10 trillion yen (US$119 billion) to 101 trillion yen, a widely expected move to ease monetary policy in response to the intense political pressure. It also signalled a review of its current 1 percent inflation target at its next policy-setting meeting in January, when Mr Abe will have a new cabinet in place ready to negotiate with the central bank. “The Bank will discuss at the next meeting the medium- to long-term price stability it aims to achieve in the conduct of monetary policy,” the central bank said in a statement after yesterday’s meeting. With the latest action, the BOJ has expanded asset purchases five times this year, the most frequent activity during single year in a decade. The last time it eased so many times was in 2001, when then Governor Masaru Hayami was battling a domestic banking crisis. Markets had priced in BOJ action yesterday, with 14 out of 19 economists polled by Reuters last week expecting further easing via an increase in asset purchases. The yen has fallen almost 9 percent
against the dollar since September, as Mr Abe’s emergence as the likely next prime minister raised market expectations of more expansionary policy and spending. The dollar rose from about 84.23 yen to an intraday high of about 84.39 yen right after the BOJ’s decision, but later sagged back down. It last stood at 84.21 yen, down 0.2 percent on the day. Mr Abe has said once he forms a cabinet on Wednesday he will instruct his ministers to begin working with the BOJ on setting a shared inflation target.
Pondering action Some in the BOJ, particularly officials close to the conservative Governor Masaaki Shirakawa, had wanted to delay any action until
US$119 bln Added to BOJ’s asset-buying programme
January, when there is more clarity on the new government’s policies and when the central bank conducts a quarterly review of its long-term growth projections. But that was too costly with business sentiment already slumping and companies delaying capital spending plans on weak global demand, adding to evidence that any rebound from recession early next year will be minor, analysts say. Mr Abe made a rare, direct push for a higher inflation target when Mr Shirakawa visited the LDP’s headquarters on Tuesday, saying that the central bank must pay heed to the fact that he won an election campaigning for bolder monetary stimulus. The LDP and its coalition partner, the New Komeito, together won a two-thirds majority in the powerful lower house that would allow them to overrule parliament’s upper house in most matters, including on any bill to revise the law guaranteeing the central bank’s independence from government interference. The incoming prime minister, who plans to compile a big stimulus package to revive the economy, may use that threat to nudge the central bank into buying bonds more aggressively to finance the costs. Politicians kept up the heat with a senior LDP official telling Reuters hours before the policy decision that it would make a difference if the BOJ showed its willingness to ease policy aggressively. Mr Shirakawa has consistently argued that setting a 2 percent inflation target would be counter-productive in a country that has not seen consumer inflation exceed 1 percent for most of the past two decades. Reuters
December 21, 2012 business daily | 11
ASIA
Park vows to heal scars Pledges to scale back power granted to the chaebol conglomerates Cynthia Kim and Sangwon Yoon
P
ark Geun Hye first lived in South Korea’s presidential mansion as a child, after her father seized power in a coup. Fifty years later, she returns as the country’s first female leader, vowing to heal the wounds of his legacy. Ms Park on Wednesday defeated opposition candidate Moon Jae In, culminating a 14 year-career as a lawmaker, during which she earned the nickname “Queen of Elections” for engineering victories as chairwoman of her party. As she begins her single five-year term, Ms Park must honour the support of older South Koreans who yearn for a return to the average 10.3 percent annual growth of her father’s last nine years, while persuading younger South Koreans that she’s left the shadow of his dictatorial 18-year regime. Her policy challenges include a newly emboldened North Korea and pressure to tame the business conglomerates known as chaebol that her father helped create. “She has recanted some of her father’s excesses but we have to see how she treads on particular issues,” said Hahm Chai Bong, president of the Asan Institute for Policy Studies in Seoul. “She’s a very principled woman and is known for sticking to her position despite all opposition and odds. If she wants something,
she’ll go after it.” Ms Park, 60, became South Korea’s first lady at age 22, after her mother was slain in a 1974 attempt on the life of her father, Park Chung Hee, and temporarily left public life when he was killed in 1979. While per capita income expanded more than six-fold during his rule, he also used torture, censorship and public executions to crack down on dissent.
‘Lasting value’ “I will end the history of division and conflict through reconciliation and fairness,” Ms Park said at a press conference yesterday in Seoul. In September, she apologised to the families of victims of her father’s regime and said she wanted to heal those scars. Spending so much of her life steeped in South Korea’s politics may help Ms Park as the first woman leader in a country dominated by men, said Oh Suk Tae, an economist at Standard Chartered Bank Korea. South Korea ranks 108th among 135 countries surveyed in the World Economic Forum’s annual Global Gender Gap Report, and none of South Korea’s top 20 business groups is led by a woman. Just 6.2 percent of executives in companies with more than 1,000 employees are women. Ms Park has said she would
Australia budget surplus unlikely: Swan Weak commodity prices and high currency hit revenue
A
ustralia’s government abandoned a long-held pledge to return its budget to surplus, blaming a painfully high local currency, lower export earnings and lower company profits for blowing a massive hole in tax takings. Treasurer Wayne Swan said cutting spending further to achieve its pledge of a small surplus in the fiscal year to end June 2013 would threaten economic growth and be “self-defeating”. “Dramatically lower tax revenue now makes it unlikely that there will be a surplus in 2012-13,” Mr Swan told reporters in Canberra yesterday, adding that revenue in the July-October period was A$3.9 billion (US$4.1 billion) lower than had been forecast. “At this stage I don’t think it would be responsible to cut harder or further in 2012-13 to fill the hole in the tax system, if that puts jobs or growth at risk,” he said. Mr Swan’s comments will be a major blow to the Labor minority government, well behind in opinion polls and due to face elections in the second half of 2013. It has long promised to deliver a surplus in the year ending June 30, 2013. Labor was first elected in late 2007 with a promises to deliver
budget surpluses, but Mr Swan pushed the budget into deficit to fund massive stimulus spending to help the economy avoid recession following the 2008 global financial crisis. But with signs that Australia’s mining boom has peaked, falling prices for iron ore and coal, and with a new tax on iron ore and coal mine profits generating less revenue than forecast in the first quarter, the surplus budget has been increasingly difficult to deliver. Ratings agency Standard & Poor’s said the shift from a small surplus to a small deficit would not hurt Australia’s AAA credit rating and financial markets were unaffected by yesterday’s decision. “The government has bowed to grim reality and done the inevitable,” said Commonwealth Bank of Australia chief economist Michael Blythe. “Fiscal policy is still being tightened. It just wasn’t sensible to go even further with many parts of the economy subdued,” he said. Mr Blythe added that the outlook for the budget was still favourable by international standards, with his models currently showing a likely deficit of only around A$1.6 billion for 2012/13. Reuters
Park Geun Hye defeated her liberal rival Moon Jae In in Wednesday’s election
offer incentives to companies to increase the number of women in management roles, and triple childsupport subsidies for single-parent homes to 150,000 won (US$140) per month. She also wants to create a “Women Talent Academy” to nurture future female leaders in business and government.
Chaebol power The incoming president says she also wants to scale back power granted to the chaebol business conglomerates including Samsung Group that make up more than half the total value of the 1,779 companies on the Korea Stock Exchange. Ms
Park’s father provided chaebol with subsidies including unlimited cheap credit, protection from foreign competition and tax breaks. She said during her campaign that she wants to increase fines for conglomerates that violate fair-trade laws to as much as 10 times the incurred damage and wants to ban new cross- shareholdings. Following through on those policy promises will pose a major challenge, said Standard Chartered Bank’s Mr Oh. “She will have a hard time fighting the chaebol in the end because they’re the ones growing the economy,” he said. “Let’s face it. Korea’s chaebol are beyond anyone’s control.” Bloomberg News
12 |
business daily December 21, 2012
MARKETS Hang SENG INDEX PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
30.45
0.1644737
73379561
CHINA UNICOM HON
12.14
0.6633499
38168464
ALUMINUM CORP-H
3.49
-2.240896
34764075
CITIC PACIFIC
10.82
-0.1845018
3846309
BANK OF CHINA-H
3.46
-0.5747126
275251390
BANK OF COMMUN-H
5.81
-1.022147
35458975
29.35
-0.3395586
1331517
16.5
0
10984374
NAME AIA GROUP LTD
BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO
NAME
64.1
-0.311042
9147809
CNOOC LTD
CLP HLDGS LTD
16.84
0
36659354
COSCO PAC LTD
11.58
0.5208333
4469083
11
-1.433692
17800622
ESPRIT HLDGS
NAME
PRICE
DAY %
POWER ASSETS HOL
64.95 -0.07692308
SANDS CHINA LTD
34.25
SINO LAND CO SUN HUNG KAI PRO
VOLUME 3037000
0.4398827
12161742
14.08
0
1971718
116.9
0.08561644
2219978
SWIRE PACIFIC-A
93.8
0.1067236
1329319
TENCENT HOLDINGS
249
-0.1603849
3344364
24.2
-0.8196721
7126590
HANG LUNG PROPER
30.05
0.6700168
8678833
TINGYI HLDG CO
21.3
-0.9302326
3871302
CATHAY PAC AIR
14.08
-0.2832861
2108140
HANG SENG BK
118.1
0.4251701
1372512
WANT WANT CHINA
10.76
1.318267
14691569
CHEUNG KONG
119.9
0
3200040
HENDERSON LAND D
56.2
0.5366726
2477796
WHARF HLDG
60.15
0.08319468
3608459
8.33
-0.239521
21175313
HENGAN INTL
69.4
0.2890173
2909701
HONG KG CHINA GS
20.9
-0.7125891
4805304
HONG KONG EXCHNG
130.8
-0.456621
3836587 22902563
CHINA COAL ENE-H CHINA CONST BA-H
MOVERS
6.26
-0.9493671
288004923
CHINA LIFE INS-H
24.15
-1.02459
41652194
CHINA MERCHANT
25.1
-0.3968254
2145383
HSBC HLDGS PLC
81.65
1.428571
CHINA MOBILE
90.5
0.2770083
15970009
HUTCHISON WHAMPO
80.95
0.4342432
4784666
CHINA OVERSEAS
23.6
2.164502
21051653
IND & COMM BK-H
5.6
0.1788909
357033248
CHINA PETROLEU-H
8.87
0.7954545
69410370
LI & FUNG LTD
13.62
-1.017442
14954985
CHINA RES ENTERP
28.05
-1.058201
1700872
30.7
-0.1626016
1499608
CHINA RES LAND
20.55
1.481481
12033174
NEW WORLD DEV
12.22
-0.4885993
10659147
52W (H) 22683.72
CHINA RES POWER
19.26
-0.1037344
3458509
PETROCHINA CO-H
11.02
0.1818182
64320192
(L) 18010.26
PING AN INSURA-H
62.85
-0.3172086
11990132
PRICE
DAY %
VOLUME
27.35
0.5514706
9514002
8.87
0.7954545
69410370
ZIJIN MINING-H
CHINA SHENHUA-H
33.75
0.2971768
19091818
MTR CORP
8
39
3 22673
INDEX 22659.78 HIGH
22673.55
LOW
22449.74 22449
18-December
20-December
Hang SENG CHINA ENTErPRISE INDEX NAME
NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.84
0.5235602
164458021
AIR CHINA LTD-H
6.4
1.587302
13889426
CHINA PETROLEU-H
3.49
-2.240896
34764075
CHINA RAIL CN-H
9
-0.2217295
13018500
ANHUI CONCH-H
28.25
-2.920962
17138135
CHINA RAIL GR-H
4.53
-1.521739
15105063
BANK OF CHINA-H
3.46
-0.5747126
275251390
CHINA SHENHUA-H
33.75
0.2971768
19091818
CHINA TELECOM-H
ALUMINUM CORP-H
CHINA PACIFIC-H
5.81
-1.022147
35458975
4.29
0.7042254
58247901
19.94
0.3018109
1737764
DONGFENG MOTOR-H
12.14
-0.3284072
19611189
CHINA CITIC BK-H
4.52
-0.4405286
56830656
GUANGZHOU AUTO-H
6.71
-0.1488095
3114748
CHINA COAL ENE-H
8.33
-0.239521
21175313
HUANENG POWER-H
7.08
-1.25523
13094620
CHINA COM CONS-H
7.52
0.400534
15114904
IND & COMM BK-H
5.6
0.1788909
357033248
CHINA CONST BA-H
6.26
-0.9493671
288004923
JIANGXI COPPER-H
20.65
-0.9592326
6633338
BANK OF COMMUN-H BYD CO LTD-H
3.86
0.2597403
15174412
PETROCHINA CO-H
11.02
0.1818182
64320192
24.15
-1.02459
41652194
PICC PROPERTY &
10.38
-0.3838772
16083219
CHINA LONGYUAN-H
5.32
2.504817
37182197
PING AN INSURA-H
62.85
-0.3172086
11990132
CHINA MERCH BK-H
16.48
-2.137767
23747187
SHANDONG WEIG-H
8
0.3764115
4441500
CHINA COSCO HO-H CHINA LIFE INS-H
NAME
PRICE
DAY %
VOLUME
12.78
-0.4672897
21223975
3.07
-2.229299
39765200
ZOOMLION HEAVY-H
11.64
-2.020202
20556127
ZTE CORP-H
12.88
1.898734
11585106
YANZHOU COAL-H
MOVERS
23
2 11416
INDEX 11352.45 HIGH
11416.06
LOW
11240.72
CHINA MINSHENG-H
8.52
-0.5834306
37401000
SINOPHARM-H
24.7
1.022495
1836800
52W (H) 11916.1
CHINA NATL BDG-H
11.34
-2.072539
26749222
TSINGTAO BREW-H
45.55
-1.725998
383250
(L) 8987.76
15.6
1.694915
11263702
WEICHAI POWER-H
34.35
0.8810573
4655631
CHINA OILFIELD-H
15
11240
18-December
20-December
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.74
-0.3636364
60827694
CITIC SECURITI-A
12.04
2.033898
84589064
SAIC MOTOR-A
16.38
2.439024
25206308
AIR CHINA LTD-A
5.65
1.436266
21957807
CSR CORP LTD -A
4.88
-0.8130081
41559966
SANY HEAVY INDUS
10.01
0.8056395
67656444
ALUMINUM CORP-A
5.14
0.5870841
14832677
DAQIN RAILWAY -A
6.52
0.7727975
38148704
SHANDONG GOLD-MI
36.2
-0.9033671
19653531
ANGANG STEEL-A
3.79
0
25272063
DATANG INTL PO-A
4
0.5025126
11329661
SHANG PHARM -A
10.74
-0.2785515
7761997
ANHUI CONCH-A
18.3
-1.187905
22379010
EVERBRIG SEC -A
13.53
2.655539
23431635
SHANG PUDONG-A
9.05
0
149750877
NAME
NAME
NAME
BANK OF BEIJIN-A
9.01
-0.5518764
45016495
GD POWER DEVEL-A
2.43
0
41571374
SHANGHAI ELECT-A
3.92
0
6908640
BANK OF CHINA-A
2.87
-0.6920415
24911930
GF SECURITIES-A
14.01
0.4301075
79237571
SHANXI LU'AN -A
20.83
-0.2872188
16286165
BANK OF COMMUN-A
4.62
-0.6451613
58175725
GREE ELECTRIC
24.83
3.243243
22757426
SHANXI XINGHUA-A
38.08
-2.032416
4307359
15.57
0.6464124
37297085
SHANXI XISHAN-A
13.25
0.9139375
23109307
BANK OF NINGBO-A
9.98
-0.8937438
17400702
GUANGHUI ENERG-A
BAOSHAN IRON & S
4.86
0.4132231
26521494
HAITONG SECURI-A
9.51
2.038627
58201811
SHENZEN OVERSE-A
6.35
1.926164
29229266
BBMG CORPORATI-A
7.56
2.024291
26491214
HANGZHOU HIKVI-A
30.03
0.670466
2445329
SUNING APPLIAN-A
6.47
-1.371951
43968951
18.56
-0.6955591
5841715
2.63
0.7662835
33861831
TSINGTAO BREW-A
31.73
-0.9056839
2148455
4.1
-0.7263923
21837143
HENAN SHUAN-A
55.05
-0.4520796
1944517
WEICHAI POWER-A
24.93
-1.617995
8645699
CHINA CNR CORP-A
4.49
-1.750547
58353196
HONG YUAN SEC-A
17.49
2.34055
17222209
WUHAN IRON & S-A
2.71
-0.7326007
18943176
CHINA COAL ENE-A
7.58
0.530504
11896481
HUATAI SECURIT-A
8.95
0.4489338
24653534
WULIANGYE YIBIN
27.6
-0.6836992
43103084
CHINA CONST BA-A
4.53
0
30391168
HUAXIA BANK CO
9.73
-1.017294
56697372
YANGQUAN COAL -A
14.14
2.986162
26100013
CHINA COSCO HO-A
4.3
-1.376147
18066583
IND & COMM BK-A
4.07
-0.7317073
48457063
YANTAI CHANGYU-A
46.12
-1.642141
2221478
CHINA CSSC HOL-A
20.59
-0.8666346
13043788
INDUSTRIAL BAN-A
15.24
-0.7166124
93277746
YANTAI WANHUA-A
14.41
0.06944444
5905093
CHINA EAST AIR-A
3.42
1.48368
24565994
INNER MONG BAO-A
38.26
6.901369
107506851
YANZHOU COAL-A
17.59
1.266552
5188889
CHINA EVERBRIG-A
2.9
-0.6849315
149654250
INNER MONG YIL-A
20.18
-0.2471577
6123924
YUNNAN BAIYAO-A
63.6
-0.1883239
1282315
19.28
-0.4132231
9153387
INNER MONGOLIA-A
5.54
5.927342
172167643
ZHONGJIN GOLD
15.84
-0.1261034
24308029
12
1.010101
82884413
JIANGSU HENGRU-A
27.82
-0.5007153
3717469
ZIJIN MINING-A
3.76
0.5347594
40365878
10.19
2.104208
16960995
JIANGSU YANGHE-A
93.96
-2.551338
4168240
9.2
0
74577689
JIANGXI COPPER-A
22.73
0.4418913
16269089
ZTE CORP-A
8.73
1.276102
12692652
11.4
2.059087
9126213
ZTE CORP-A
8.38
2.444988
17657199
13.28
4.402516
44090405
BYD CO LTD -A CHINA CITIC BK-A
CHINA LIFE INS-A CHINA MERCH BK-A CHINA MERCHANT-A
HEBEI IRON-A
CHINA MERCHANT-A
26.4
3.125
11479212
CHINA MINSHENG-A
7.44
-0.9320905
219312240
CHINA NATIONAL-A
7.88
2.204929
33215171
15.78
0.8306709
7497557
KANGMEI PHARMA-A
12.53
-5.718585
147863751
218.41
-0.4739121
3443414
-0.5820722
8326798
CHINA OILFIELD-A
JINDUICHENG -A JIZHONG ENERGY-A
20.41
0.8399209
18297183
KWEICHOW MOUTA-A
CHINA PETROLEU-A
6.72
1.510574
38354606
LUZHOU LAOJIAO-A
34.16
CHINA RAILWAY-A
5.91
0.3395586
32565849
METALLURGICAL-A
2.16
0.9345794
26476090
2.52
-0.3952569
15048658
4.02
4.6875
111004603
8.9
0
CHINA PACIFIC-A
CHINA RAILWAY-A
3.03
-1.302932
37212087
NINGBO PORT CO-A
CHINA SHENHUA-A
23.55
-0.5069708
15122067
PANGANG GROUP -A
ZOOMLION HEAVY-A
MOVERS 183
107
10 2397
INDEX 2348.25
CHINA SHIPBUIL-A
4.43
-1.336303
51817925
PETROCHINA CO-A
15559434
HIGH
2397.45
CHINA SOUTHERN-A
3.82
2.688172
68501002
PING AN BANK-A
15.11
-0.4611331
29347538
LOW
2348.25
CHINA STATE -A
3.63
2.253521
113040828
PING AN INSURA-A
42.26
1.173091
17918215
CHINA UNITED-A
3.4
0.591716
97356262
POLY REAL ESTA-A
12.32
1.566364
72586486
CHINA VANKE CO-A
9.48
1.825994
79967397
QINGDAO HAIER-A
12.62
4.556752
17783381
CHINA YANGTZE-A
6.75
0.148368
13390283
QINGHAI SALT-A
25.6
-0.7367197
6570747
PRICE DAY %
Volume
PRICE DAY %
Volume
52W (H) 2717.825 (L) 2102.135
2348
18-December
20-December
FTSE TAIWAN 50 INDEX NAME
NAME
ACER INC
24.45
-1.609658
14624080
FORMOSA PLASTIC
ADVANCED SEMICON
24.35
-1.417004
13918713
FOXCONN TECHNOLO
37.3
-1.322751
3139527
FUBON FINANCIAL
3377483 157966338
ASIA CEMENT CORP ASUSTEK COMPUTER AU OPTRONICS COR CATCHER TECH
325 -0.9146341 14.15
0.7117438
NAME
PRICE DAY %
Volume
77.3
-1.277139
5062629
TAIWAN MOBILE CO
104
-1.886792
90
0
7803735
TPK HOLDING CO L
512
1.992032
7408057
33.85
-1.884058
15731389
TSMC
96
-1.336074
35517115
HON HAI PRECISIO
88.1 -0.5643341
40737211
UNI-PRESIDENT
HOTAI MOTOR CO
219
-4.366812
603063
UNITED MICROELEC
53
-3.284672
10946325
11.7
1.73913
145227149
140
0
14205140
HTC CORP
275.5
0.3642987
13586315
29.2
-2.504174
5581571
31.15
-2.808112
33690817
HUA NAN FINANCIA
16.65 -0.8928571
6377411
YUANTA FINANCIAL
14.85
-1
12407586
CHANG HWA BANK
15.9 -0.9345794
7434888
LARGAN PRECISION
796
1.401274
2282293
YULON MOTOR CO
54.1
-1.814882
4601696
CHENG SHIN RUBBE
75.6 -0.7874016
4023042
LITE-ON TECHNOLO
38.4
-2.040816
3621293
CHIMEI INNOLUX C
17.5
4.477612
171381152
MEDIATEK INC
323
-1.223242
9248392
7.6
-2.061856
70426972
MEGA FINANCIAL H
22.6
-1.310044
19826731
CHINA STEEL CORP
26.45
0
14034674
NAN YA PLASTICS
54.4
-2.857143
5788270
CHINATRUST FINAN
17.5
-1.685393
15941610
PRESIDENT CHAIN
156
-2.5
1294297
CHUNGHWA TELECOM
93.6 -0.1067236
6326799
QUANTA COMPUTER
66.9 -0.4464286
5979209
CATHAY FINANCIAL
CHINA DEVELOPMEN
COMPAL ELECTRON
19
-1.041667
13730827
SILICONWARE PREC
30.55
-1.610306
5331909
103.5
-3.271028
5387047
SINOPAC FINANCIA
12.35
-2.371542
19329213
FAR EASTERN NEW
33.4
-1.620029
9837448
SYNNEX TECH INTL
53.1 -0.9328358
6585397
FAR EASTONE TELE
72.5
-1.628223
6942677
TAIWAN CEMENT
38.5
0
7310583
17.75 -0.8379888
DELTA ELECT INC
FIRST FINANCIAL
7739298
TAIWAN COOPERATI
16.15
-1.52439
6252099
FORMOSA CHEM & F
70
-1.129944
5098644
TAIWAN FERTILIZE
75.1
-1.830065
3070824
FORMOSA PETROCHE
87
-2.027027
1459668
TAIWAN GLASS IND
29.4 -0.3389831
1200195
WISTRON CORP
3409234
MOVERS
6
40
4 5388
INDEX 5325.11 HIGH
5388.31
LOW
5314.59
52W (H) 5621.53 (L) 4664.33
5314
18-December
20-December
December 21, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT
MELCo CroWN ENTErTAINMENT
MGM CHINA HoLDINGS 43.30
31.00
14.14
30.76
14.10 43.20
30.52
14.06
30.28
Max 31
Average 30.843
Min 30.05
30.05
Last 30.95
SANDS CHINA LTD
14.02 Max 43.2
Average 43.2
Min 43.2
Last 43.2
43.10
SJM HoLDINGS LTD
Max 14.14
Average 14.059
Min 13.98
Last 14.14
WyNN MACAU LTD 18.10
34.75
21.45
18.04 34.55
21.37
17.98 21.30
17.92
34.35
21.22
17.86 Average 34.418
Max 34.75
Min 34.15
Last 34.25
34.15
17.80 Max 18.1
Average 17.963
Commodities ENERGY
NAME
PRICE
WTI CRUDE FUTURE Feb13
89.61
-0.411202489
-8.073450964
109.4300003
80.05999756
BRENT CRUDE FUTR Feb13
109.92
-0.398695179
6.604597032
119.2999954
90.38999939
GASOLINE RBOB FUT Jan13
273.33
-0.357260034
10.50780302
293.3099985
218.4999943
938
0.080021339
4.716717834
1031.5
800.25
3.376
1.686746988
-13.05691476
4.088000298
3.062000036
NATURAL GAS FUTR Jan13 HEATING OIL FUTR Jan13
DAY %
YTD %
(H) 52W
Last 18.06
302.82
-0.243773883
5.387346001
334.2199802
255.5699825
1670.59
-0.1512
6.7531
1796.08
1522.75
Silver Spot $/Oz
31.1619
-1.3708
11.9522
37.4775
26.1513
Platinum Spot $/Oz
1593.38
-0.2517
14.2617
1736
1339.25
694.6
-0.3014
6.2892
725.19
553.75
Palladium Spot $/Oz LME ALUMINUM 3MO ($)
2085
-0.714285714
3.217821782
2361.5
1827.25
LME COPPER 3MO ($)
7926
-1.221335992
4.289473684
8765
7219.5
LME ZINC
2089
-0.04784689
13.22493225
2220
1745
17750
-0.280898876
-5.130946018
22150
15236
15.48
-0.129032258
N/A
16.84000015
14.90999985
699.75
-0.46230441
16.57642649
846.25
511
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar13 Mar13
Average 21.302
Last 21.15
Min 21.15
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 %
1.0496 1.6265 0.9129 1.3228 83.94 7.9825 7.75 6.2306 54.775 30.62 1.2189 29.06 41.095 9655 88.089 1.20762 0.81331 8.2425 10.5586 111.05 1.03
-0.1237 -0.1719 -0.2629 -0.339 0.5838 0 0.0013 0.0048 -0.3971 -0.0653 0 -0.0069 -0.1338 0.3729 0.722 0.0729 0.1611 0.0255 0.3476 0.9095 0
YTD %
(H) 52W
2.8112 4.6452 2.7604 2.06 -8.375 0.2142 0.2245 1.0336 -3.1219 3.0372 6.3746 4.1948 6.6796 -6.0694 -10.9628 0.7593 2.4689 -1.3139 -1.9567 -10.2566 0.0097
(L) 52W
1.0857 1.6309 0.9972 1.3487 84.62 8.0158 7.7829 6.3964 57.3275 32 1.3054 30.37 44.35 9763 89.125 1.22426 0.8506 8.4894 10.7712 112.5 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
3.1
0.9771987
40.90909
3.32
2.16
1841080
CROWN LTD
10.47
1.650485
29.41903
10.47
7.92
2435571
18.30999947
AMAX HOLDINGS LT
0.077
13.23529
-11.49425
0.119
0.055
121441000
66.84999847
BOC HONG KONG HO
24.2
-0.8196721
31.52174
25
18.1
7126590
0.275
1.851852
19.56522
0.335
0.204
56000
4.71
0.856531
68.21429
4.72
2.6
606669 21051653
WHEAT FUTURE(CBT) Mar13
802.25
-0.434377909
9.298365123
948.25
652
SOYBEAN FUTURE Mar13
1422.5
-0.593990217
16.21732026
1728.25
1183
COFFEE 'C' FUTURE Mar13
145.05
0.103519669
-39.04181551
249
142.1999969
SUGAR #11 (WORLD) Mar13
19.13
-0.520020801
-18.10787671
25.12999916
COTTON NO.2 FUTR Mar13
75.45
-0.579786533
-14.75539487
98.5
NAME ARISTOCRAT LEISU
CENTURY LEGEND CHEUK NANG HLDGS
World Stock MarketS - Indices NAME
21.15 Max 21.45
(L) 52W
Gold Spot $/Oz
CORN FUTURE
Min 17.8
CURRENCY EXCHANGE RATES
GAS OIL FUT (ICE) Feb13
METALS
PRICE
DAY % YTD %
VOLUME CRNCY
CHINA OVERSEAS
23.6
2.164502
82.02295
24.25
12.066
CHINESE ESTATES
12.34
0.1623377
-1.28
13.26
8.3
57000
CHOW TAI FOOK JE
12.34
0.4885993
-11.35058
15.16
8.4
1873700
EMPEROR ENTERTAI
1.78
2.890173
60.36036
1.82
0.99
2750000
FUTURE BRIGHT
1.21
0
188.0952
1.43
0.38
1950000
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
13251.97
-0.7414448
8.466586
13661.87
11768.83
GALAXY ENTERTAIN
30.95
4.033613
117.3455
31.05
13.28
21393155
NASDAQ COMPOSITE INDEX
US
3044.365
-0.3327844
16.85949
3196.932
2544.66
HANG SENG BK
118.1
0.4251701
28.16061
120
91.15
1372512
FTSE 100 INDEX
GB
5961.24
6.980275
5989.07
5229.76
HOPEWELL HLDGS
32.5
3.011094
65.79808
32.55
19.049
2261471
DAX INDEX
GE
7658.38
-0.1319684
29.83936
7682.9
5637.53
HSBC HLDGS PLC
81.65
1.428571
38.38983
81.8
57.35
22902563
NIKKEI 225
JN
10039.33
-1.191587
18.73347
10255.15
8238.96
HANG SENG INDEX
HK
22659.78
0.1609398
22.92123
22683.72
18010.26
CSI 300 INDEX
CH
2384.816
0.5780839
1.66574
2717.825
2102.135
TAIWAN TAIEX INDEX
TA
7595.46
-1.06819
7.40065
8170.72
6646.3
KOSPI INDEX
S&P/ASX 200 INDEX
SK
1999.5
0.3216112
9.517238
2057.28
1750.6
HUTCHISON TELE H
3.62
0.5555556
21.07023
3.88
2.88
6620300
LUK FOOK HLDGS I
24.05
-0.2074689
-11.25461
33.2
14.7
1332000
MELCO INTL DEVEL
9.12
0.9966777
58.05893
9.3
5.12
7221500
MGM CHINA HOLDIN
14.14
0.2836879
47.41215
14.76
9.46
3427200
MIDLAND HOLDINGS
3.65
-1.084011
-7.689513
5.217
3.249
2596000
NEPTUNE GROUP
0.154
1.986755
38.73874
0.222
0.084
310000
NEW WORLD DEV
12.22
-0.4885993
95.20766
13.2
6.14
10659147
SANDS CHINA LTD
12161742
AU
4634.107
0.3536334
14.23734
4643.5
3985
ID
4254.816
-0.492135
11.32456
4381.746094
3635.283
FTSE Bursa Malaysia KLCI
MA
1670.6
0.2977834
9.13747
1679.37
1464.31
NZX ALL INDEX
NZ
882.966
1.314733
20.98734
883.433
712.548
SJM HOLDINGS LTD
PHILIPPINES ALL SHARE IX
PH
3693.97
0.1542725
21.31105
3756.31
2989.77
SMARTONE TELECOM WYNN MACAU LTD
JAKARTA COMPOSITE INDEX
13.98
34.25
0.4398827
56.03644
34.9
20.35
SHUN HO RESOURCE
1.37
0
37
1.43
0.97
50000
SHUN TAK HOLDING
4.17
0.968523
62.94611
4.33
2.418
6734287
18.06
0.4449388
44.41604
18.36
11.973
3944493
14.14
-0.8415147
5.208337
17.5
12.96
1279500
21.15
-1.398601
8.461538
25.5
14.62
4110000
ASIA ENTERTAINME
3.09
-1.277955
-47.44898
7.24
2.4
202898
BALLY TECHNOLOGI
46.17
0.5882353
16.70879
51.16
36.93
467494
HSBC Dragon 300 Index Singapor
SI
620.48
-0.1
25.01
NA
NA
STOCK EXCH OF THAI INDEX
TH
1374.17
-0.3068775
34.02354
1381.38
1019.55
HO CHI MINH STOCK INDEX
VN
399.68
0.273464
13.6908
492.44
332.28
BOC HONG KONG HO
3.19
2.903226
33.07261
3.3
2.32
22310
Laos Composite Index
LO
1199.5
-0.6732194
33.35779
1249.34
876.33
GALAXY ENTERTAIN
3.89
1.038961
108.0214
3.9
1.75
10700
INTL GAME TECH
14.24
-2.331962
-17.20931
18.1
10.92
4328504
JONES LANG LASAL
84.53
-1.891829
37.98564
87.52
58.21
707134
LAS VEGAS SANDS
47.38
1.023454
18.0469
58.3216
32.6127
8331858
MELCO CROWN-ADR
16.92
0.4750594
75.88358
16.98
8.86
6115901
MGM CHINA HOLDIN
1.8
0
51.04559
1.96
1.2863
100
MGM RESORTS INTE
11.54
-0.7738607
10.64237
14.9401
8.83
9039011
SHFL ENTERTAINME
14.27
1.205674
21.75768
18.77
10.66
542618
SJM HOLDINGS LTD
2.33
0
44.939
2.36
1.5484
450
113.64
-0.2720491
9.68953
129.6589
84.4902
1056403
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 21, 2012
Opinion Why India is being forced to overhaul economy A. Gary Shilling
E
President of A. Gary Shilling & Co. and author of ‘The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation’
conomic conditions in India became so dire last summer that the government was forced to implement reforms. The crisis was precipitated by weakness in the global economy and the effects of recent policy errors. Other contributors were the strategies left over from the pre-1991 Soviet-style planning era and the Congress Party’s socialist background and bent toward income redistribution in favour of rural areas instead of economic growth. Furthermore, the elections scheduled for 2014 added further urgency to take action because the next budget, in the spring of 2013, will probably have a populist tinge. India suffered from the global recession, though – unlike China – its economy is mostly domestically focused. This bias and India’s traditional zeal to protect local businesses, especially small shopkeepers, has prevented Wal-Mart Stores Inc., Carrefour SA and other large retailers from entering the market in a major way. Singlebrand retailers such as Ikea of Sweden AB and Nike Inc. had been allowed to own 51 percent of their Indian operations. That threshold has been raised to 100 percent as of November 2011, though the retailers must source products worth at least 30 percent of their sales from small- and mediumsized Indian companies. Also in November 2011, the
government proposed allowing foreign big-box retailers such as Wal-Mart to enter India, though it backtracked on the plan after opponents said it would put small shopkeepers out of business.
Foreign retailers In July, however, the plan to let foreign multi-brand retailers own as much as 51 percent of local ventures was revived to attract foreign direct investment, improve supplychain infrastructure, raise incomes for farmers by cutting out marketing middlemen, and reduce costs for consumers. Nevertheless, individual Indian states have to approve the proposal, and only nine out of 28 have done so promptly. The central government also is allowing single-brand foreign retailers to source from bigger Indian companies. With poor infrastructure, including inadequate warehouses and cold-storage facilities, and difficulties in buying land, Wal-Mart says it will take a year to 18 months to open its first Indian store, and profits may be much further off. A maze of sales taxes, local road taxes and other levies add to costs. Furthermore, foreign retailers are only allowed in cities of more than 1 million people as a way to protect small-town retailers. Facing similar start-up problems in China, it took a decade for Wal-Mart to make
money there. It may take even longer in India. In early November, the Reserve Bank of India asked the enforcement wing of the Finance Ministry to investigate Wal-Mart for illegally investing in a local supermarket chain before the recent policy liberalisation. Furthermore, Wal-Mart is examining whether some of its employees violated the U.S. Foreign Corrupt Practices Act by paying bribes in India. Among other recent policy changes geared to help the economy, foreign carriers will be allowed to own as much as 49 percent of Indian
The recent batch of reforms was clearly forced on the government, and it remains to be seen if they will be pursued vigorously and effectively
airlines. This is seen as a way to help prop up this troubled sector: only one of India’s six commercial airlines makes a profit because of high fuel costs and the expense of jet leases. In addition, the cap for foreign investment in cable- and satellite-television operations will rise to 74 percent from 49 percent. The government also plans to sell US$5.56 billion of equity in several state-controlled companies in the current fiscal year and open the pension sector to foreign investors. To ease borrowing by local companies and spur capital inflows and infrastructure investment, the government raised by 50 percent the limit on rupee loans that infrastructure and manufacturing companies can finance overseas.
Diesel fuel Furthermore, the government increased the price of diesel fuel by 14 percent. Still, diesel fuel, along with kerosene, fertiliser and food, continues to be heavily subsidised. The International Monetary Fund estimates that freeing diesel prices and reforming other subsidies would eliminate about two-thirds of the baseline fiscal deficit. Also, the gap between the price of gasoline, which was deregulated in mid-2010, and still-subsidised diesel fuel has created severe problems for Indian auto producers. Gasoline prices are almost 45 percent higher than those of diesel, and sales of gasoline-fuelled vehicles have declined. The 12 percent interest rate on car loans has also depressed sales. Low diesel prices have forced the government to subsidise the losses of stateowned oil companies. Labour disputes have disrupted the Indian automotive industry, among others. In July, nine policemen and 100 managers were injured at a diesel-vehicleproducing factory belonging to Maruti Suzuki India Ltd, when workers rioted over the suspension of a worker who beat up a supervisor. The government also hopes to cut subsidy costs by switching to direct cash transfers to individuals. The finance minister has said that giving recipients cash to buy
food and cooking gas, and to cover rural job guarantees, will be more efficient than price discounts and will reduce fraud. He also said the switch will result in huge savings, though it’s not clear how. The government’s fiveyear plan targets a deficit of 5.3 percent of gross domestic product for the fiscal year ending March 31, with the shortfall shrinking to 3 percent by 2017. The IMF, however, says the budget deficit may widen to 9 percent of GDP this fiscal year from 5.8 percent in the previous 12 months. The recent batch of reforms was clearly forced on the government, and it remains to be seen if they will be pursued vigorously and effectively. In any case, the coalition government apparently hasn’t convinced the Reserve Bank of India that the weak economy and new reforms warrant a further cut in interest rates, even though the central bank set deficit reduction and encouragement of foreign direct investment as prerequisites for monetary easing.
GDP forecasts In July, the Reserve Bank of India also lowered its real-GDPgrowth forecasts for the current fiscal year to 6.5 percent from 7.3 percent. Many forecasters expect growth to be as low as 5 percent. In the third quarter, real GDP fell 0.4 percent at annual rates from the second quarter. The central bank continues to be concerned about inflation, which accelerated to 9.6 percent in October compared with a year earlier. Artificial demand created by food and fuel subsidies, and inefficient supply, give inflation an upward bias and insulates it from monetaryand fiscal-policy control. In any event, in justifying its decision in September to leave interest rates unchanged, the central bank stated, “In the current situation, persistent inflationary pressures alongside risks emerging from twin deficits – current account deficit and fiscal deficit – constrains a strong response of monetary policy to growth risks.” The Reserve Bank of India hasn’t moved since it cut its policy rate by 0.5 percentage point in April, though in September it did reduce bank reserve requirements by 0.25 percentage point to 4.5 percent of deposits. Unlike the U.S., India doesn’t enjoy the luxury of being able to run twin deficits. Foreigners so value the dollar and U.S. Treasuries that they freely recycle the dollars they receive from the U.S. currentaccount deficit. Those recycled greenbacks help finance the budget shortfall. Bloomberg View
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December 21, 2012 business daily | 15
OPINION An economics masterpiece wires you should be reading now Business
Leading reports from Asia’s best business newspapers Clive Crook
Bloomberg View columnist
Jakarta Post Asia-Pacific airlines are expected to be the best performers, contributing US$2.3 billion profit next year, according to the International Air Transport Association (IATA). This region will deliver the second highest absolute profit among the regions with earnings before interest and tax margins for Asia-Pacific airlines expected to grow significantly to 4.7 percent. “Our central forecast is for airline net profits to improve to US$8.4 billion next year from US$6.7 billion this year,” IATA chief economist Brian Pearce said.
Bangkok Post Thailand could save expenditures for stimulus programmes to fund social welfare and enact policies to reduce inequality and raise the skill level of the population, says the World Bank. The bank expects Thai public debt to reach 50 percent of gross domestic product by the end of 2013, up from 45 percent at the end of this year. The rapid increase in public debt from hidden liabilities and continued consumption spending could eat away funds for social investment, although so far it remains under control.
Jiji Press Sales at domestic department stores in November rose 2.2 percent from a year before on a same-store basis, growing for the first time in seven months, the Japan Department Stores Association has said. Due to cold weather, sales of seasonal goods, such as winter coats, scarves and gloves were strong. Growth also came as department stores in urban areas completed remodelling. By item, clothing sales grew 3.4 percent while sales of personal items increased 5.2 percent, led by boots and handbags.
Yonhap News The number of South Korean corporate bankruptcies fell to the lowest level in eight months last month amid the protracted downturn, the central bank said yesterday. The number of firms that went belly-up totalled 93 last month, compared with 116 in October, according to the Bank of Korea. It is the lowest since 90 firms recorded in March. The on-month drop in corporate bankruptcies is largely attributable to the economic situation not becoming any worse amid continued government efforts to boost growth, the central bank said.
T
he most valuable new book I’ve read this year is Justin Yifu Lin’s “The Quest for Prosperity”. George Akerlof, a Nobel laureate in economics and a man not given to reckless overstatement, calls it “a masterpiece.” I’d say that’s right. Lin is an interesting man. In 1979, as an officer in Taiwan’s army on the fast track to the elite, he defected to the People’s Republic of China by swimming the channel between a Taiwanese island and Xiamen on the mainland. He continued his studies in economics, became a leading scholar, and was an observer and participant in China’s economic miracle. From 2008 until earlier this year, he was the World Bank’s chief economist. Today he’s back in China, at Peking University. Lin’s book is intellectually ambitious. He sets out to survey the modern history of economic development and distil a practical formula for growing out of poverty. It’s a serious undertaking: Lin isn’t trying to be another pop economics sensation. But “The Quest for Prosperity” is lightly written and accessible. It weaves in pertinent stories and observations, drawing especially from his travels with the World Bank. He leavens the economics skilfully.
Two schools Essentially, he proposes a middle way between two contending schools: structuralism, which emphasises barriers to development that government intervention is needed to overcome, and the neoclassical approach, which stresses market forces and frowns on industrial planning. He calls his hybrid “new structuralism,” suggesting a closer affinity with the first. (That branding is a bit misleading, but I can see that the alternative – new neoclassicism – doesn’t roll off the tongue.) Under the banner of the old structuralism, governments in developing countries made huge mistakes in the 1960s and 1970s. The prevailing approach was import-substitution: Develop capital-intensive industries behind tariff barriers to supply domestic consumers. It worked in the sense that many places industrialised quickly, sometimes on a massive scale. For decades the Soviet Union was perceived both as a great success and as a development model. In India, Africa and Latin America, economic planning led the way.
For today’s developing countries, Lin says, the global economy is the indispensable setting, and looking outward is the sine qua non of rapid development Justin Yifu Lin
In every case, this approach ran into the ground. One problem was technological backwardness. Isolation from global markets slowed the accumulation of industrial knowledge, so growth in productivity stalled. Another was fiscal stress. Supporting industrial champions required enormous subsidies, and governments lacked the revenue. Support had to be given in other ways – through overvalued exchange rates (to lower the cost of inputs), price controls, financial repression (forced saving) and administrative direction. These distortions obliterated market signals not just for the favoured industries but also across the rest of the economy. Import-substitution came to be seen as a stunning failure. Especially after the Latin American debt crisis of the early 1980s, the neoclassical consensus and its “structural adjustment” formula took over. Keep government intervention to a minimum, squeeze public spending, free the exchange rate, liberalise finance and foreign trade, and give market forces full rein. This didn’t work either – at least, not as well as its most enthusiastic advocates had predicted. Growth in many countries stayed slow. Financial crises kept happening. In Africa, countries such as Ghana, once a leader of the import- substitution school, moved abruptly to a marketfriendly development strategy. They grew, but still too slowly. Ghana, Lin says, “has not achieved the type of structural transformation that the radical free-market revolution was supposed to bring.”
China’s success Structural transformation, of course, is exactly what China has achieved. Elsewhere Lin
has acknowledged that China needs further policy reforms and that all is not well. Yet the country’s success of the past several decades is indisputable – and this is no Soviet-style industrialisation mirage. Russian factories sold their output to captive markets. Nobody with a choice ever bought a Soviet-made car or television. China’s outward-looking producers are world-class. I’m typing this on a best-of-breed Apple Inc. laptop, manufactured in China. As I argued in my last column, China is a capitalist country. But how did it get that way? Lin’s answer draws on both development paradigms. He sees a vital role for government in overcoming barriers to development. But interventions, he argues, must respect compelling market realities. Of these, the most important is international comparative advantage. Poor countries have lots of cheap labour. For them, capitalintensive heavy industry isn’t the way to go. For today’s developing countries, Lin says, the global economy is the indispensable setting, and looking outward is the sine qua non of rapid development. On the input side, that’s because of the opportunity it affords for technologically driven catch-up growth. On the output side, it’s because the world is a market for exports. On this view, “export pessimism,” the idea that poor countries couldn’t prosper through international trade, was one of the biggest mistakes of the importsubstitution school. Globalisation is the poor’s best friend. Even so, Lin says, rapid growth won’t happen spontaneously, merely by letting the market work its magic. Governments have to identify industries that are
trading internationally and doing well elsewhere – not those based in the most advanced economies (too big a leap) but in countries with incomes roughly double their own. If those industries are getting started at home, help them upgrade their technology. If they aren’t, draw in foreign investors. If infrastructure is poor and doing business is difficult, create special economic zones where those problems can be fixed. Recognise that pioneer companies are taking on larger risks and compensate them with temporary tax incentives, co-financing of investments or preferential access to foreign exchange. And don’t expect to shut down nonviable producers all at once; that has to be done gradually. So yes, this is “industrial policy” and “picking winners” – ideas disdained by your typical pro-market type. And I’d say the record justifies a good deal of such scepticism. The book’s main weakness is that it understates the political difficulty of delivering support of the kind it advocates: intelligent, measured, timelimited and disciplined in crucial ways by market imperatives. This isn’t just an issue in democracies, by the way. As China itself proves, interests gather around patterns of explicit and implicit subsidy, however well-judged at the outset, and the flexibility demanded by Lin’s new structuralism gets ever harder to maintain. Still, it’s hard to quarrel with the results to date, in China most of all, but also in Taiwan, South Korea, Singapore and other rapidly industrialising economies that adopted similar strategies. If you’re interested in development, you have to read Lin’s book. Bloomberg View
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business daily December 21, 2012
CLOSING HK to ban high-polluting vehicles
Google to sell Motorola Home
Hong Kong will ban high-polluting vehicles and offer subsidies to replace diesel-powered buses and trucks, after 15 years of clean-air measures failed to limit smog responsible for more than 3,000 premature deaths a year. The government will introduce its new “carrot and stick” approach next month, Christine Loh, undersecretary for environment, said. She said past incentives weren’t big enough, declining to provide the size of the planned subsidies. “When we look at the totality of what we’re going to be pushing out, I think we’ll be among the most aggressive in the world,” Ms Loh told Bloomberg.
Google Inc. agreed to sell its Motorola Home business to Arris Group Inc. for US$2.35 billion, finding a buyer for a division that sells television set-top boxes while it focuses on expanding in smartphones. Arris, a cable-equipment maker, will pay about US$2.05 billion in cash and about US$300 million in newly issued shares that will give Google a stake of about 15.7 percent, the companies said yesterday in a statement. Google, which acquired the division through the US$12.5 billion purchase of Motorola Mobility Holdings Inc. in May, received multiple offers on December 7, according to a source.
Cathay Pacific crews call off holiday strikes Union accepts deal averting Christmas protests Jasmine Wang
C
athay Pacific Airways Ltd, Asia’s biggest international carrier, and its flight attendants union agreed on a labour deal, averting the threat of possible industrial action over the Christmas travel period. The accord includes changes in flight patterns and working conditions, Dora Lai, the union’s chairwoman, told reporters in Hong Kong yesterday. The group had set a noon deadline for Cathay to respond to a proposal following two days of talks with management and government mediators. The agreement means Hong Kongbased Cathay and its passengers won’t have to contend with flight attendants working-to-rule during the year-end rush. The union had also said it could stage a strike next year if no agreement was reached.
“This is the best possible outcome for our customers, who have always been at the forefront of this issue for us,” chief executive John Slosar said in an e-mailed statement. “They can now look forward to their holiday travel plans with confidence.” The carrier also agreed to keep overseas attendants within 15 percent of total crew staffing in the two years starting January 1, Liza Ng, Cathay’s cabin crew general manager said. All destinations will remain available to Hong Kong based crew, she said. The dispute, which intensified after the carrier announced on November 30 a pay increase of about 2 percent against the union’s 5 percent demand, mainly focused on Cathay’s use of cabin crew based outside of Hong Kong, some of whom receive less pay than staff living in the city.
Cathay Pacific and union reached deal after long labour talks
Coupled with the airline cutting long-haul flights because of slower demand, Hong Kong-based flight attendants faced potentially fewer flight hours, lower take-home pay, and reduced opportunities for promotion, according to the labour group. Union members had authorised leaders to initiate industrial action in a vote earlier this month. The group represents more than 5,800
of Cathay’s 9,000 cabin crew. “We were worried that more jobs may go to overseas,” Ms Lai said. “Now we are satisfied because it gives us some guarantee of local positions.” The carrier fell 0.3 percent to HK$14.08 at the close in Hong Kong trading. It has risen 5.7 percent this year, compared with a 23 percent gain for the city’s Hang Seng Index. Bloomberg News
Germany to cut 2013 bond sales Bond sales will be closer to pre-bank crisis levels
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Germany will sell US$331 bln in bonds
ermany will cut its sovereign bond sales next year to the lowest in five years as it strives to push down borrowing to pre-crisis levels as well as test new debt instruments including a joint federal-state bond. Chancellor Angela Merkel’s government will sell 250 billion euros (US$331 billion) in bonds in 2013 compared with 255 billion euros this year, the Federal Finance Agency said yesterday in presenting its calendar for the coming year. Germany sold a record 334 billion euros of debt in 2009, up from 220 billion euros a year earlier, as the economy sagged following the collapse of Lehman Brothers Holdings Inc. While the government is striving to cut borrowing, it will “stick as far as possible to the issuance calendar to promote the security that investors need in their decisions,” the agency said in an e-mailed statement. Germany’s bond seller also said it will issue as much as 12 billion euros in inflation-linked bonds next
year, sell a novel debt instrument in combination with the country’s states, and stamp all new bonds from January with collective action clauses in line with policy adopted by all euro-area states. Mrs Merkel’s budget benefitted in successive years as the economy showed resilience in the debt crisis and investors showed a willingness to accept record-low yields on new German bonds. Yet savings this year may be replaced by growing drains on the budget next year. The economy may contract this quarter, the Bundesbank said on December 17. Unemployment is rising and may erode tax revenue slated into the budget as could a revised rescue plan for Greece. Germany will sell 173 billion euros in bonds and 77 billion euros in bills in 2013, the agency said. In the first quarter it will sell 44 billion euros in bonds and 21 billion euros in bills, it said. The agency will redeem 215 billion euros in maturing bonds next year. Reuters