Macau Business Daily, January 14, 2013 by Business Daily

Year I Number 198 Monday January 14, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00 www.macaubusinessdaily.com

Public housing to reduce home prices Higher wages can help Macau residents tackle the effects of price hikes but they can also lead to more inflation, Jacky So Yuk-Chow warns. In an interview to Business Daily, the dean of the Faculty of Business Administration of the University of Macau says that housing prices will stabilise thanks to new public housing projects. Pages 6 & 7

Melco Crown probed in Taiwan over ‘illegal’ money transfer A

subsidiary of Melco Crown Entertainment Ltd, a Macau gaming sub-concessionaire, is being investigated by public prosecutors in Taiwan on suspicion of illegal transfer of gamblers’ cash between Taiwan and Macau. Two people with direct knowledge of the situation confirmed the Taiwan inquiry to Business Daily. The prosecutor’s office there didn’t name the company involved. But the Melco Crown unit was identified following an investigation by GamblingCompliance.com. The growth of the Greater China economy and of Macau’s casino industry, has far outpaced the regional rules governing cross-border currency movement. Under Taiwanese law, anyone wishing to take more than the equivalent of US$10,000 (80,000 patacas) abroad must make a formal declaration to the authorities. Taiwan is considering building one or more casinos on outlying islands next door to mainland China. More on page 3

I SSN 2226-8294

HANG SENG INDEX 23480

First rules loom for unfinished homes

Opaque subcontracting system needs reform Page 2

Shine comes off for Chow Tai Fook

Page 2

23426

23372

Page 5

23318

New investment coming for CTM: Citic

23264

23210

January 11

HSI - Movers Name

%Day

SINO LAND CO

1.33

HSBC HLDGS PLC

0.84

BELLE INTERNATIO

0.71

TENCENT HOLDINGS

0.71

MTR CORP

0.65

HONG KONG EXCHNG

-2.31

CHINA UNICOM HON

-2.40

ALUMINUM CORP-H

-2.95

CITIC PACIFIC

-3.64

CHINA SHENHUA-H

-3.76

Source: Bloomberg

Brought to you by

itic Telecom International Holdings Ltd agreed yesterday to pay US$1.16 billion (9.3 billion patacas) to buy out CTM’s two major shareholders, Cable & Wireless Communications Plc and Portugal Telecom. Citic, the telecom unit of a state-owned group, will still have to wait at

least six months for the deals to be completed. But it has already pledged to invest in CTM to improve the troubled company’s performance and introduce innovative technologies such as a 4G network. Page 16

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business daily January 14, 2013

macau

Unfinished homes bill may be passed in Q1 The Legislative Assembly is still picking holes in parts of the bill on sales of unfinished homes, but will tolerate its lack of rules on how developers spend downpayments Tony Lai

tony.lai@macaubusinessdaily.com

he Legislative Assembly will try to pass the bill to regulate the sale of unfinished homes in the first quarter of this year, despite its flaws, assembly member Kwan Tsui Hang says. “As a preliminary estimate, we would hope to pass the bill during this first quarter but the government has not yet made any promise,” Ms Kwan said on Friday, after a meeting of legislators and officials held behind closed doors. She told reporters that because of the need to pass the bill quickly, it would not include a provision restricting how developers use downpayments made by buyers. “The government said this is a likely move in future, but that it involves many complexities. If we want to lay down this law as soon as possible, we cannot wait to include it,” she said. Assembly members had wanted to follow Hong Kong’s lead in mandating special accounts for downpayments which developers have limited access to. In Hong Kong, downpayments are kept in accounts held by bankers, lawyers or other professionals, and a developer can spend the money only on the construction of the homes sold. If a developer wishes to use the money for other purposes, it can spend it only after the housing project is completed. “But Macau lacks a mechanism for professional certification, and the support of other relevant laws and regulations,” Ms Kwan said. So, she said, assembly members had agreed to consider rules on

Legislators expect the bill on sales of unfinished homes to be passed soon (Photo: Manuel Cardoso)

downpayments only after the bill was enacted.

Bias denied Ms Kwan said the bill was urgent as homebuyers lacked legal protection when they bought unfinished flats. She added: “Resales and irregular sales of such flats are pushing up property prices.” The bill would allow sales

of unfinished homes only after the foundations of the building containing them had been completed. Ms Kwan said this was not too early in the construction process as building the foundations made up one-third of the work required by many housing projects here. “If we were to set a criterion such as the developers being able to start sales only after the building had been topped out … this might affect how the developers raised funds or

their willingness to sell uncompleted flats,” she said. But she denied that the bill was “bent towards the interests of developers”, saying legislators had a “balanced perspective”. The bill would make payments by homebuyers dependent on progress in construction. “Right now we are taking a first step toward regulating this market, and we can have a review in one or two years,” Ms Kwan said.

Mong Ha project on schedule, says govt Government officials say the Mong Ha public housing project will be completed on time, despite a row over payment for construction work Stephanie Lai

sw.lai@macaubusinessdaily.com

dispute over payment for work on building phase two of the Mong Ha public housing project remains unsettled despite government intervention. Subcontractor Kam Wah Construction and Engineering Co Ltd held a brief protest at the construction site on Thursday, demanding payment of over 40 million patacas (US$5 million) for building retaining walls it completed last year. The Infrastructure Development Office has admitted to Business Daily that its efforts to mediate between Kam Wah and the principal contractor, Hobbs Construction Co Ltd, had been fruitless. “If both Hobbs and Kam Wah are no longer willing to negotiate, they must settle the dispute through legal processes,” a spokesperson for the Infrastructure Development Office told

Business Daily. Even if the dispute ends up in the courts, the Infrastructure Development Office and Hobbs are both confident the project will be finished by 2014. In response to Kam Wah’s complaint, Hobbs published a statement in the Chinese-language Macao Daily News on Thursday. Hobbs said it had paid for work done by five Macau construction companies and one mainland Chinese machinery company subcontracted by Kam Wah. The executive director of Hobbs, Chan Lou Sang, said work at the site was at a standstill but would resume this month when piling machines were ready. The Infrastructure Development Office said it had no authority to oversee payments by Hobbs to Kam Wah. A member of the Legislative Assembly, Lee Chong Cheng, said the

affair highlighted the need for reform of the way construction work is contracted out here. “Oral agreements are too often relied on, especially when a construction project is subcontracted down to a fourth or fifth level,” Mr Lee told Business Daily. “All subcontractors do is just quote a price and get a deal,” he said. “Because of this, it is hard to uncover the responsible party when problems arise,” he said. “We have always suggested that the principal contractor should be the one liable to shoulder all responsibility for construction, and simplification of the subcontracting layers,” Mr Lee said. The government came up with a proposal for reform of subcontracting two years ago, but the Standing Committee for Coordination of Public Affairs has yet to discuss it.

The principal contractor should be the one liable to shoulder all responsibility for construction Lee Chong Cheng, Legislative Assembly member

January 14, 2013 business daily | 3

MACAU editorial Melco Crown unit probed in Taiwan for illegal cash transfer Fast-track Up to US$179 mln in cross-straits money movement budget law is involved, says public prosecutor’s office in Taipei Michael Grimes

michael.grimes@macaubusinessdaily.com

Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

subsidiary of Melco Crown Entertainment Ltd, a Macau gaming sub-concessionaire, is being investigated by public prosecutors in Taiwan on suspicion of illegal transfer of gamblers’ cash between Taiwan and Macau. Under Taiwanese law, anyone wishing to take more than the equivalent of US$10,000 (80,000 patacas) abroad must make a formal declaration to the authorities. Two people with direct knowledge of the situation confirmed the Taiwan investigation to Business Daily. The growth of the Greater China economy along with Macau’s casino industry, has far outpaced the regional rules governing cross-border currency movement. Taiwan’s current limit would buy a player only 40 hands of baccarat on one of Macau’s premium mass table with a minimum bet of HK$2,000. That’s under an hour’s worth of gambling.

Probe confirmed Maggie Ma, head of group corporate communications for MCE, later said in a statement to Business Daily: “Investigations are currently ongoing in Taiwan related to certain activities regulated by their banking regulations. We are not in a position to comment on the investigation. “We believe our corporate activities are consistent with general market practice. We always strive to operate within the confine of applicable rules and regulations and to uphold good corporate governance. None of Melco Crown Entertainment’s corporate entities has been charged at the current time. If required, we will cooperate with the authorities,” she added. News of the investigation was first released to the Taiwan

media by public prosecutors there on Thursday. The prosecutors did not name the company involved. But an investigation the following day by GamblingCompliance.com revealed the company to be a Taiwan branch of Hong Kong-registered MCE International Ltd, which opened in Taiwan in 2009. The local subsidiary allegedly accepted deposits by Taiwanese gamblers allowing them to withdraw money once they were in Macau, said the Taipei district prosecutor’s office. It added a suspected US$179 million in transfers was involved. That’s the equivalent of around a half a percent of Macau’s gross gaming revenue for 2012. The head of the local unit was questioned on Wednesday on suspicion of violating Taiwanese law which stipulates only banks are allowed to handle domestic and international money transfers, the prosecutor’s office said in a statement. The office did not name the employee, but television footage on Thursday showed MCE International employee Wang Yen Sheng on his way from questioning on Wednesday evening, said GamblingCompliance. The Chinese-language press release from the prosecutor’s office said cross-border transfers involving NTD5.2 billion were under scrutiny. “Taipei Independent Commission Against Corruption’s prosecutor Chen Yun-ru has instructed Kaoshiung investigation units to search the company and its operators’ homes with six warrants issued from the court. An amount of about NTD3 billion was found in the company’s bank accounts,” said the statement. It added: “The Hong Kong company has violated the Banking

Law (Article 29, item I; article 125, item I) by arranging foreign exchange business since 2008. The company has worked with several casinos from Macau, and enabled Taiwanese gamblers’ money to be remitted to Macau through its underground exchange system.” Taiwan’s Chinese language media reported the name of the company involved as Lai Ying International Ltd, a business with branches in Taipei, Taichung and Kaoshiung. The reports added Mr Wang was released from custody in the early hours of Thursday, on bail of NTD500,000. Sources confirmed to Business Daily that Lai Ying is a unit of MCE International.

Legal limit Under Taiwanese law, only registered banks are allowed to engage in foreign exchange services. Unauthorised moneychangers face a prison sentence of between three and ten years. Taiwan has for several decades been concerned about the transfer of money offshore for gambling by its citizens. It is currently debating the possibility of constructing one or more casinos on its own outlying islands next door to mainland China. It sees that as a way of tapping into the neighbouring mainland’s strong economic growth as well as preventing offshore ‘leakage’ of revenue by Taiwan gamblers. Crown Ltd, an Australian company that is one of the partners in MCE, is currently awaiting approval from Australian regulators for MCE’s planned US$600 million investment in Belle Grande Manila Bay, a casino resort in the Philippines. With Stephanie Lai

or years, the government has been promising to amend the budget framework law. It has postponed keeping its promise year after year, without plausible explanation. Last month Secretary for Economy and Finance Francis Tam Pak Yuen said the government would amend the law this year, but he gave no details about when, or what changes are being mulled. It is hard to believe that such a bill will make its way to the Legislative Assembly in the first half of the year. Even if it does, it might be difficult for members to give their nod before the assembly’s summer recess, and before some of its members – the ones that have to be elected – begin their preparations for this year’s elections. In discussing this year’s budget, several members voiced concern about rises in public spending, questioning why the government was allocating so much money to some departments. More public spending is expected this year as some large infrastructure projects get off the ground. But the same was expected last year, and the most recent figures are not encouraging. By the end of November the government had spent just one-third of its 19.8 billion pataca [US$2.5 billion] investment plan, data from the Financial Services Bureau show. Last year the government unveiled an ambitious programme that included an artificial island where this end of the Hong Kong-Zhuhai-Macau Bridge will land, public housing and the Light Rapid Transit (LRT) elevated railway. Last month we saw the usual rush to pay bills and sign contracts, including the contract for the operation and modernisation of the peninsula’s sewage treatment plant. The signing of the contract took place more than a year after the operator took over the facility. Still, in order to reach its capital expenditure goals, the government would have needed to spend 13.2 billion patacas last month. Although it is highly unlikely that it achieved this, let us wait for the official figures to come out. All this calls into question the way the budget is compiled. On one hand, the government is extremely conservative in making revenue forecasts and, given the casino boom, its estimates are usually out by a few billion patacas. On the other hand, it keeps ignoring the capital spending target it sets annually, holding up the flow of cash that it plans to inject into the economy. It is time to fine-tune the budget framework law and to introduce amendments that make it clearer where public money is being spent. The government should respond not only to the legislators. The public also has the right to know how much money is being spent and where, especially when it comes to big projects like the LRT. Putting large infrastructure projects like the railway, under their own headings in the budget would give people a clearer grasp of government spending. This would also make the budgeting process more transparent and eventually allow for better oversight of public spending, so averting, perhaps, the cost overruns that we see time and again in public projects.

It is time to finetune the budget framework law and to introduce amendments that make it clearer where public money is being spent

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business daily January 14, 2013

macau Brought to you by

HOSPITALITY Visas up The mainland represents the biggest source of visitors to the city. Those coming from Guangdong province strongly determine the volume and patterns shown over time by the numbers for visitors from the mainland. And in no other province are the individual visas as strongly represented as in that one. The relationship between all this variables, as depicted in the chart below, seems rather stable. Their overall patterns are very similar. On average for the period from July 2010 to November 2012, the mainland contributed with 57.5 percent of the total visitors. Half of them were coming from Guangdong; about 57 percent of these had individual visas. But a more observant look shows there is more to the figures than meets the eye. Note that the period shown is the only one for which the monthly figures as available for all the variables.

In the first place, the region is becoming more dependent of visitors from the mainland. At the beginning of the period depicted, in the second half of 2010, their percentage of the total was set in the low fifties. For most of 2012 the corresponding figures had risen to values close to or above 60 percent. At the same time, the contribution of Guangdong visitors for mainland contingent started declining slowly but steadily. In the past six months shown here their average had dropped to 46.7 percent, a full 6 percentage points below the average at the beginning of the period, two years early. That means growth is being sustained by rising numbers of visitors coming from other provinces. Conversely, the share of Guangdong residents coming to Macau on individual visas seems to be increasing, implying a relative decrease in the number of package tour visitors. J.I.D.

27.7 %

Guangdong visitors on individual visas, as percentage of mainland visitors, Nov. 2012

Sa Sa retail growth slows in December Despite disappointing Christmas sales, cosmetics retailer is optimistic on Chinese New Year Tony Lai

tony.lai@macaubusinessdaily.com.mo

“W

orse than expected” retail sales in December sent the stock of cosmetics retailer Sa Sa International Holdings Ltd plunging by over 6 percent in Hong Kong trading. The retailer posted a year-on-year increase of 18.7 percent in its retail sales in Macau and Hong Kong to HK$1.77 billion (US$228.3 million) in the October-December period. But the growth slowed to 14 percent last month, which was supposed to be a strong month due to Christmas, the company told the Hong Kong Stock

Exchange on Thursday. Its same-store sales in the two cities recorded a 7-percent growth last month alone, comparing to a surge of 12.6 percent in the three months ended December 31. The company’s turnover reached HK$2.19 billion in the OctoberDecember period, rising by 18.9 percent from the same period a year earlier. Sa Sa does not provide result for Macau alone. The December performance was “worse than expected,” the company admitted, as “the customers were

more cautious in spending” and “the business for local customers was affected by the increasing number of outbound tourists during the Christmas holidays”. Its stock plunged by over 6 percent to close at HK$6.36 in the Hong Kong trading on Friday. The market benchmark Hang Seng Index closed down by 0.39 percent. But the company is looking upbeat at the coming months. “As the Chinese New Year will come in February, the group believes the retail market will gradually recover and hold cautiously optimistic attitude to the future,” the company added. The retailer had over 101 stores in the two SARs last year with the average value of each transaction at HK$413 in the previous quarter, up by 14.1 percent year-on-year.

HK$1.77 bln Sa Sa’s OctoberDecember sales in Macau, Hong Kong

With customers ‘more cautious in spending’, December sales were lower than expected for Sa Sa

Air Macau’s new Shenyang route broadens visitor base A

ir Macau’s new route to Shenyang in Liaoning province, northeastern China, could potentially bring an extra 18,000 visitors a year to Macau, says Union Gaming Research Macau. “This assumes four flights per week, with a combined seat capacity for an [Airbus] A319 of 124 and a passenger load of 70 percent,” says the research house in a note to investors. In the first 11 months of 2012, 366,362 visitors came to Macau from

Liaoning province, representing 1.6 percent of total [mainland] Chinese visitation, states Union Gaming. “Around 147,689 travelled under the IVS [individual visitor scheme], accounting for 40 percent of the visitors from the province,” it adds. Air Macau launched last week a new route between the city and Shenyang, the capital of Liaoning province. Speaking on the sidelines of the route launch, Air Macau chairman Zheng Yan said the carrier would

launch two to three new routes to the mainland this year, depending on Beijing’s individual visitor policy. Meanwhile, Taiwan airline Eva Airways Corp and its subsidiary Uni Air began operating on Saturday seven flights per week between the west-central Taiwan city of Taichung and Macau. The launch was first scheduled for December 25 and no information was released on why it was pushed back. M.G./V.Q.

January 14, 2013 business daily | 5

MACAU Galaxy’s Lui among HK’s five richest The chairman of Macau-based gaming operator Galaxy Entertainment Group Ltd, Lui Che Woo, is now Hong Kong’s fifth richest man, up three spots, according to the latest annual Forbes list, released last week. The list says Mr Lui’s net worth more than doubled in one year, to US$9.5 billion (76 billion patacas), as Galaxy Entertainment’s share price soared to all-time highs. The chairperson of MGM China Holdings Ltd, Pansy Ho Chiu King, continues to be Hong Kong’s richest woman and saw her wealth grow by 18 percent.

Losing a little shine – Chow Tai Fook

Chow Tai Fook expects fall in same store sales, fiscal 2012 Jewellery retailer currently has around 100 outlets in Macau and Hong Kong Michael Grimes

michael.grimes@macaubusinessdaily.com

ame store sales growth fell six percent for Chow Tai Fook Jewellery Group Ltd in Hong Kong and Macau in its fiscal third quarter ending December 31, the company said in a stock market announcement. It didn’t give a breakdown of the unaudited quarterly results in the voluntary filing to the Hong Kong Stock Exchange. In November, Business Daily reported that while Macau’s total retail sales rose 13 percent year-onyear in the calendar third quarter, sales of jewellery and watches actually fell 14 percent in the JulySeptember period when judged quarter-on-quarter. Patrick Lo Chun Pong, a lecturer at the Institute for Tourism Studies, Macao, told us at the time the likely reason was a slowdown in the mainland economy. Since then the situation has improved. Purchasing manager data collected from Chinese factories and published early this month suggests there was an upturn in manufacturing activity in the calendar fourth quarter. But that might take some time to feed through to a pick up in retail sales.

That’s reflected in the fact Chow Tai Fook expects to report an overall decline in same-store sales for this fiscal year, according to comments by finance director Hamilton Cheng Ping Hei following the release of the fiscal third quarter results. But revenue from Hong Kong and Macau operations still grew by 11 percent year-on-year in the three months to December 31 said the firm, suggesting that sales from new outlets open under one year have been outperforming established sites.

Expanding network As of September 30 last year, the group had 99 retail outlets in Hong Kong and Macau. It opened four new ones between March 31 2012 and September 30 it said in an earlier filing on November 29. For the fiscal half year to September 30, the company saw retail sales in Hong Kong and Macau grow 7.3 percent to HK$11.16 billion (US$1.44 billion), Chow Tai Fook said in the earlier statement. But same store sales in that period were also down – on that occasion 6.3 percent, “mainly attributable to

weak consumer sentiment and the high base of comparison from the same period last year,” the firm said at the time. The company, controlled by Hong Kong billionaire Cheng Yu Tung, has recently been focusing on building its business in mainland China. “In order to tap the market potential of Tier III and lower tier cities in mainland China, the group has focused on a new store roll out plan in order to achieve faster and broader coverage in these expanding jewellery markets,” it said in November. The jeweller had a net increase of 70 outlets – mostly on the mainland – in the three months to December 31, bringing the total number of outlets to 1,802 at year-end. Hong Kong-based Oriental Patron Financial Group Ltd said in a Friday report that it expects a larger proportion of gift giving during the first quarter of 2013 to lead to an improvement in Chow Tai Fook’s sales. But the analysts warned that the company’s “aggressive store expansion along with weak gold sales in China remain a potential concern”. Chow Tai Fook fell 1.23 percent

Chow Tai Fook’s casino connection Chow Tai Fook Jewellery Group Ltd is a unit of privately held Chow Tai Fook Enterprises Ltd. The latter invested more than HK$4 billion (US$516 million) in the hotel and condominium portion of Casino L’Arc Macau on the Macau peninsula according to a report in our sister publication Macau Business magazine in 2009. The property opened in September that year. The casino uses a gaming licence from Sociedade de Jogos de Macau SA, a company founded by former gaming monopolist Stanley Ho Hung Sun. Chow Tai Fook Enterprises also controls New World Development Co. Ltd, a Hong Kong conglomerate focused on property. Chow Tai Fook’s chairman Cheng Yu Tung is listed as a non-executive director of SJM Holdings Ltd in the company’s 2011 annual report. The same document states he is also a non-executive director of Shun Tak Holdings Ltd, the shipping and property conglomerate run by Pansy Ho Chiu King that operates the TurboJet ferry service between Macau and Hong Kong. Mr Cheng is also listed in the same report as a 0.11 percent shareholder in SJM Holdings Ltd. The Chow Tai Fook jewellery business was founded by his father-in-law Chow Chi Yuen in Guangzhou in 1929, but moved to Macau in 1931 when the Japanese invaded the mainland. The first Hong Kong shop opened in 1946. M.G.

to close at HK$12.84 in Hong Kong trading on Friday. The stock fell 11 percent last year while the benchmark Hang Seng Index gained 23 percent. With Bloomberg News

6 |

business daily January 14, 2013

macau

Academic sees stable home prices

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Stable imports Macau’s depends for a significant share of the food it consumes on supplies from the mainland. A growing population needs ever increasing food imports, and Macau does not produce any amount of food that is worth counting. For fresh meat or fish, and vegetables and fruit, the mainland is naturally the closest and main supplier. The values for food and beverage imports in the first eleven months of 2012, comparing with the same period one year earlier, registered an increase of 29.3 percent. Rising above the average, drink imports that went up by 31.7 percent. The rises for basic foods – meat, fish, vegetables, live animals – were much more modest, varying from 2.6 percent for live animals to 14 percent for fish. Meat and vegetables imports rose by 10.5 percent and 9.8 percent, respectively. In these last categories combined growth was of just 8.4 percent, a value that seems plausible taking into account the growth of Macau’s population and the changes in inflation rate and exchange rates in China. And the total share of food in imports, drinks excluded, actually dropped from 2.55 percent to 2.42 percent.

700000 600000 500000 400000 300000 200000 100000 0

Certainly, the volume of imports rose for all major classes of food and drink. Again, with the exception of drinks, they saw their shares of total imports decline. Those decreases were not, however, very significant: they varied from minus 0.004 percentage points for fish and fish products, up to minus 0.065 percentage points for live animals. These figures suggest some stability in the composition of imports from China for these specific and essential supplies. J.I.D. The content of this column is the work of Business Daily’s journalists.

36.4 %

Share of drinks in F&B imports from China in the first 11 months of 2012

The dean of the faculty of business administration at the University of Macau, Jacky So Yuk-Chow, says that housing prices will stabilise as homes in public housing become available. However, Mr So told Business Daily in an interview that inflation would persist mainly because of external factors such as rises in the prices of food imported from mainland China. He said increases in labour costs might also contribute to inflation. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

Inflation remains high even though the government has been announcing measures such as an increase in the cash handout to tackle the issue. Are these measures effective? I would say yes, to some extent. We keep talking about Macau being so small and actually inflation is not home made. It is mostly created by the external environment. One of the major reasons is mainland China. When we talk about agricultural products, food items and electricity, all these are imported. China has this strong economy, the yuan keeps appreciating, and our currency – tied to the Hong Kong dollar and the United States dollar – keeps depreciating because of QE1, QE2 and QE3. The value of our currency is going down as the cost of imported food products is going up. The government is doing some things. For instance, they are adjusting the annual salary index of civil servants, to help people deal with inflation. With high inflation you need to spend more money, so if your salary goes up it will help. Another measure is a cash bonus – the policy address mentioned that this will be higher than last year. The good part is, unlike Hong Kong, Macau is able to afford the cash handout because of its tax revenue. Macau’s population is also much smaller than Hong Kong’s. Another thing is labour costs. The key is protecting local labour, but not overprotecting it. Macau is doing quite well in creating a very positive business environment, but because it is so small – land is a problem and the population is small – labour is an issue. If we have a shortage of labour, salaries may go up a lot, and when that happens inflation also goes up a lot. This is what we call cost-driven inflation. As for housing’s impact, it will be slightly lower because of the public housing projects that the

government is building. China just released its statistics, and the inflation rate is actually not too bad, but then I would say that it may go up, because they’re trying to stimulate the economy by building more medium-size infrastructure to help certain sectors. So inflation will go up in China and, indirectly, it will have some impact on Macau. In that sense, import prices may go up, and that means inflation for Macau will go up slightly, as well. Do you expect inflation to increase this year in Macau? This year it may not increase that much, if at all. Inflation usually means that the economy is doing

If we have a shortage of labour, salaries might go up a lot, and when that happens inflation also goes up a lot

very well – employment, people spending – but the United States and Europe are still in trouble. China thought they would be in trouble, but the latest statistics show it is much stronger. In that sense, most of the main economies are not in good shape, except China. I would say that inflation will not rise until major economic engines such as the United States and Europe really grow. Then, with a strong economy in China, inflation would definitely be a problem. Countries are now resorting to

the easy-money approach – I call it competition in devaluation. When they increase the money supply, they want to decrease their currency value. The United States has good reason to do this, because it wants to jump-start its economy. When the dollar declines, that means it costs less. It will take two more years until the U.S. economy kind of picks up. Then, I think, the inflation rate will definitely become an issue. You said you expected housing prices to stabilise in Macau. Why? This will happen because the government are going to increase the supply by a significant amount. What I call the sandwich class, the middle-income people, got caught badly, because the government gives all kind of support to those with lower incomes. Public housing may help many of them. Some people believe there is a bubble in the real estate sector in Macau set to burst in a short period of time. Do you agree? I always said housing price increases are to some extent due to the low interest rate. Why would there be a bubble? It’s due to speculative activities. Based on their monthly income, people should be asking: “If the interest rate goes up from 3 percent to 5 percent” – and it could because when the economies in Europe, Japan and the United States recover, they are going to stop the easy-money approach – “will my monthly income still be good enough to pay my monthly necessities and the monthly mortgage?” If so, no problem. What I am afraid of is that they will look at this 3 percent interest rate, and then buy a 1 million pataca [US$125,236] house because they can afford it now. The danger is that the moment the interest rate rises to 5 percent, 80

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January 14, 2013 business daily | 7

MACAU down the road, the government will have to consider Hengqin Island. And there are other things. For instance, when the border is open around the clock, you can compare hotel prices here with those across from Gongbei. You need to have a whole integrated package here. Youngsters are not going to stay in a US$200 a night hotel in Macau. We have very limited options apart from five-star hotels so, again, developing Hengqin might solve the problem. Is it possible to negotiate with the Zhuhai authorities or with the Beijing government? Maybe you could enlarge the new University of Macau campus, to have more area under Macau law or something like that.

percent of their monthly income will go on the house and they will not be able to afford it any more. What can they do? Foreclosure. If many people start doing this at the same time, the bubble bursts. Macau people are quite conservative. Hong Kong can be very speculative and I don’t like it. There are people who do not have enough money to do it but are still engaged in speculation. These are people who will be burned when the interest rate rises. The bubble in Hong Kong is more likely to burst than in Macau, because many rich people in Macau are quite conservative. Here, the chances of a bubble bursting are small. Looking at the casino industry, there was a growth slowdown in the middle of the year, but the overall yearly revenue again set a record. What changed? Macau is different from Las Vegas. Most of the gaming revenue comes from VIP rooms. Only the very wealthy, mostly mainland Chinese, are taking part, and I don’t know where they get their money from. I would speculate that the money being used by a large section of these big gamblers may not actually be theirs. It may belong to senior government officials, so they are gambling with public money. In that sense, when people predict that VIP gaming revenue will decline, the only way this could happen would be if the Chinese government imposed some regulations to clamp down. My prediction is that after a certain period, when Macau diversifies into other businesses, growth in the gaming industry may kind of decrease. Then, don’t be surprised if the central government says: ”Maybe we need to have more restrictive regulations in letting people travel to Macau.” So, to answer your question, unless something very serious happens, the mainland Chinese will still

come. I don’t think the casino revenue will go down quickly. What were the reasons for the growth slowdown in China last year? Was it the leadership change? It is related to what we call expectations; you wait until the new administration is in power. Mainland gamblers probably sat tight, taking a defensive approach. Only after the leadership transition was settled could they act. You have mentioned the possibility of Macau, in the future, being a diversified economy. Are we now seeing some signs of it already? We’re still far from it. They’re talking about encouraging the creative industries and I have some reservations on this. Only a small number of people really want to go for it. This is a plus for the economy, but in terms of scale I don’t know how big an impact it is going to have. Macau would do well to get involved in these kind of activities, but don’t expect the creative industries to contribute 20 percent of Macau’s gross domestic product. This will only a form a tiny part of the economy. Another problem is that Macau doesn’t have land. Somewhere

The bubble in Hong Kong is more likely to burst than in Macau, because many rich people in Macau are quite conservative

Is it sustainable to maintain the economy through gaming-driven activities? Will Macau be forced to diversify? Can the gaming boom last? Gaming is more or less taboo. Although it generates a lot of revenue, it does have a lot of side-effects. Again, in the short term, as a means to jump-start the economy, it is acceptable, but I don’t think the majority of people, including the government, would like to see it last for much longer and then dominate forever. To try to contain it at a certain level is the consensus. So, whether we are forced to do it or not – I think Beijing would not want to use the term forced, but even departing Premier Wen Jiabao made a statement at the University of Macau saying he

wants the city to diversify into other areas – they advise us because they believe it would be good for Macau. On the other hand, policywise, Macau was defined as an international integrated-resort region. While this makes sense, integrated resorts usually imply large pieces of land. To some extent, you may also use Macau as a platform for Portuguese-speaking countries. You have China here, Brazil there, and it’s going to make a difference. In general, this is the way to diversify. The first plan, using the integrated resorts scheme, faces constraints such as land. Creating a platform for Portuguese-speaking countries makes a lot of sense, because we have comparative advantages in doing it, such as the language and culture.

My prediction is that after a certain period, when Macau diversifies into other businesses, growth in the gaming industry may kind of decrease

8 |

business daily January 14, 2013

GREATER CHINA HK airport marks record traffic Hong Kong International Airport set records in passenger volume and flight traffic last year, as local residents travelled more and air freight shipments to North America and China increased. The airport welcomed 56.5 million passengers and handled 352,000 aircraft movements last year, growth of about 5 percent for each, according to a press release yesterday. Freight shipments rose 2.2 percent to 4 million tons, it said. “Despite the challenging global economic environment, regional economic growth continued to drive traffic increases,” Stanley Hui Hon Chung, chief executive of the city’s Airport Authority, said in the release.

December exports jumped 14.1 percent from a year earlier

Export surge spurs data scepticism Official data raises concern among analysts

hina’s unexpected surge in exports last month renewed concern from analysts at Goldman Sachs Group Inc., UBS AG and Australia & New Zealand Banking Group Ltd that statistics from the nation can be unreliable. The 14.1 percent gain from a year earlier was the biggest positive surprise since March 2011,

according to data compiled by Bloomberg. The increase didn’t match goods movements through ports and imports by trading partners according to UBS, while Goldman Sachs and Mizuho Securities Asia Ltd cited a divergence from overseas orders in a manufacturing index. Smaller trade gains could signal a less robust recovery from a seven-

quarter slowdown just as Australian Treasurer Wayne Swan says the economic rebound is a sign of improving global demand. Accurate statistics from the world’s secondbiggest economy are increasingly important for domestic and foreign investors and for China’s government, ANZ’s Liu Li-Gang says. “China’s influence on the global

economy has become bigger, so not only Chinese policy makers but also business people and the rest of the world need better data,” said Mr Liu, Hong Kong-based chief Greater China economist, who formerly worked for the World Bank. “Unreliable data could have a negative impact on resource allocation and business planning.”

Inflation data snaps winning streaks for stocks May limit prospects for further policy easing Clement Tan

The consumer price index rose 2.5 percent in Decem

ainland Chinese shares suffered their worst day in nearly four months on Friday, dragging Hong Kong into the red, after December inflation data came in higher than expected, crimping hopes of fresh monetary easing to nurse China’s economic recovery. Chinese brokerages and growthsensitive sectors led losses after annual consumer inflation accelerated to a sevenmonth high of 2.5 percent in December on rising food prices, surpassing a 2.3 percent Reuters poll consensus. The Hang Seng Index shed 0.4 percent on Friday and 0.3 percent on the week. The China Enterprises Index of the top Chinese listings in Hong

Kong fell 0.7 percent on the day and 0.8 percent on the week. It was their first weekly loss in three. On the mainland, the CSI300 of the top Shanghai and Shenzhen A-shares closed down 1.9 percent on the day and 1.6 percent on the week, while the Shanghai Composite Index shed 1.8 percent on Friday and 1.5 percent last week. Losses on Friday were their worst since September 20 and snapped a five-week winning streak for mainland indexes as their relative strength index (RSI) readings dropped out of overbought levels for the first time since December 24. “It’s not the end of the world. We

have been trending in overbought territory for a while anyway, so this higher headline inflation is a trigger for some profit taking. We are in a consolidation phase,” said Hong Hao, Bank of Communication International’s chief equity strategist. “I won’t worry too much about the higher inflation data, since much of it is down to rising food prices and extreme winter weather. But today’s data hurt some expectations for a cut in interest rates or bank reserve requirements in the first half of the year,” Hong added. Before the inflation data was released on Friday, the official China Securities Journal reported that the central bank may cut benchmark interest rates once

and cut the required reserve ratio once or twice in the first half of 2013 in a bid to lower corporate finance costs. Shares of Aluminum Corporation of China (Chalco) in Hong Kong, which spiked 6.5 percent on Thursday after China’s trade data trumped expectations, dived 3 percent on Friday. Its Shanghai shares declined 2.7 percent. Poly Real Estate dived 4.5 percent in Shanghai, wiping out its strong start to 2013 after surging 69 percent in 2012, easily outperforming the 7.6 percent rise for the CSI300. In Hong Kong, smaller Chinese property developers saw the bigger percentage losses, with Country Garden

January 14, 2013 business daily | 9

GREATER CHINA CSR signs contracts worth US$1.6 bln China South Locomotive and Rolling Stock Corp Ltd (CSR), one of the country’s two leading train makers, has signed deals worth 10 billion yuan (US$1.6 billion) in China and other emerging markets, including Argentina and Nigeria. CSR, which has a market value of US$11.2 billion, signed the largest deal with Argentina’s Ministry of the Interior and Transport, with a value of about 3.4 billion yuan, the company said. The total value of the contracts accounted for about 12.4 percent of the operating revenue of the company in 2011, it said.

Unreliable data could have a negative impact on resource allocation and business planning Liu Li-Gang, Australia & New Zealand Banking Group

T he Beijing- based customs administration, which reported the December trade figures on Thursday, said it couldn’t immediately respond to a faxed request from Bloomberg News for comment on the banks’ scepticism. China’s economic growth may have recovered to 7.8 percent in the fourth quarter from a year earlier, after sliding to a three-year low of 7.4 percent in the previous period, according to the median estimate in a Bloomberg News survey ahead of the data release on Friday, January 18. Li Keqiang, who may succeed Wen Jiabao as premier in March, was quoted in 2007 as saying he watched data on power, rail cargo and loans because gross domestic product numbers were “manmade”. Mr Li’s remarks were in a U.S. diplomatic cable published by WikiLeaks in late 2010. After China’s statistics bureau reported third-quarter GDP in October, Standard Chartered Plc

analysts said the 7.4 percent increase was “too good to be true” when compared with the slowdown in electricity production and the readings of a manufacturing index, while London-based Capital Economics Ltd said its own analysis indicated expansion of about 6.5 percent.

Raise suspicions The median forecast for December exports in a Bloomberg survey of 40 economists was for a 5 percent gain, with the highest estimate at 9.2 percent, after November’s 2.9 percent growth. Gold m a n S a ch s , r a n k ed b y Bloomberg as the most accurate forecaster for the indicator, projected a 7 percent rise. The increase, which was the biggest since May, could indicate exporters’ rush to finish year-end orders and government pressure to report exports before the end of the year to reach the government’s 2012 target of 10 percent growth, Shen Jianguang, Mizuho’s Hong Kongbased chief Asia economist, said in a January 10 note. “It is possible that local governments may have tried to boost exports data by either making round trips in special trade zones” or by exporting “earlier than otherwise in an attempt to improve the annual exports data,” Goldman Sachs’ Beijing-based economists Yu Song and Yin Zhang wrote the same day. Rushed shipments and even faked exports to secure tax refunds may have contributed to the stronger growth data, according to Alistair Thornton and Ren Xianfang, Beijingbased analysts at IHS Inc. UBS economists led by Hong Kongbased Wang Tao pointed to a “quite obvious discrepancy” in the growth of China’s exports to Taiwan and South

Korea and those economies’ reported imports from China in recent months, even as historically they have tracked each other well. UBS and ANZ also highlighted a surge in shipments into and out of special trade zones within China that would be classified as imports and exports. “This anomaly has raised some suspicions as to whether some exports have been inflated to take advantage of tax rebates,” the UBS economists wrote on January 10. Some trading companies are turning to transportation providers like Shenzhen Global Express Logistics Ltd for help in shipping goods through so-called bonded zones to claim export tax rebates or charge higher import prices for goods without them physically leaving the country. Bloomberg News

It is possible that local governments may have tried to boost exports data by either making round trips in special trade zones [or by exporting] earlier than otherwise Yu Song and Yin Zhang, Goldman Sachs

China mulls trial programme for individuals investing overseas

hina has started preparations for a trial programme that would allow individuals to invest in overseas capital markets as the nation seeks a greater role for its currency in global finance. The People’s Bank of China will proactively prepare for the trial of its qualified domestic individual investor programme, it said in a statement on its website on Friday, without giving further details. The central bank lists the so-called QDII2 initiative as one of its major goals for 2013. China is seeking to reduce its reliance on the dollar after accumulating US$3.31 trillion of foreign-exchange reserves, the world’s largest stockpile. The country’s foreign-exchange regulator said in April that it will gradually open more channels for capital outflows and relax restrictions on residents’overseasinvestments,asitseeksto make the yuan a fully convertible currency. The government started the QDII programme in 2006, allowing Chinese individuals to buy securities in overseas markets through asset managers and funds. A total of US$85.6 billion in quotas were awarded to 107 institutions, including Bank of China Ltd and HSBC (Bank) China Co., as of December 31, according to the State Administration of Foreign Exchange. In August 2007, China unveiled a so-called “through- train” programme, in which citizens could invest directly in Hong Kong stocks, and helped push the benchmark Hang Seng Index to a record high that October. The State Administration of Foreign Exchange said in January 2010 it scrapped the plan and instead expanded the QDII system for investment overseas. Reuters

Beijing residents told to stay indoors As monitoring sites show ‘serious’ pollution levels

mber

sinking 4 percent. Hang Seng Index components, China Overseas Land and China Resources Land lost 1 percent and 0.9 percent, respectively. Home prices in China had risen in four of the last five months before December. December’s larger-thanexpected headline inflation stoked concerns that Beijing will enforce more stringently existing curbs on property developers to dampen home prices. December home prices data is expected on Friday, when monthly industrial output, urban investment, retails sales and fourth-quarter China GDP data will also be released. Reuters

eijing’s pollution levels hit a record high Saturday, prompting authorities to tell residents to stay indoors for a third day and warn that the hazardous air quality will persist until tomorrow. Many monitoring sites around the Chinese capital showed “serious” pollution levels, the worst classification of air quality, according to the local environmental protection bureau. Official readings of PM2.5, fine airborne particulates that pose the largest health risks, were more than 700 micrograms per cubic metre. A monitor at the U.S. Embassy, whose website described the pollution as “beyond index,” showed levels of more than 800. “This is the worst pollution on record since Beijing started a trial publication of the PM 2.5 air quality report at the beginning of last year,” Ma Jun, a Beijing-based environmentalist and founder of the Institute of Public and Environmental Affairs, a non-profit organisation that monitors corporate

environmental performance, said. China, which the World Bank estimates to be home to 16 of the world’s 20 most-polluted cities, is the world’s largest emitter of greenhouse gases. Beijing began to release real-time air quality data that measures pollutants of 2.5 micrometres in size in September, and 74 cities started publishing data including PM 2.5, sulfur dioxide and nitrogen dioxide starting January 1, the official Xinhua News Agency reported on December 28.

Avoid outdoors State media criticised the government’s previous plan to make the data available by 2016 for being too slow. “The seriously polluted air quality will remain for another three days,” the Beijing Municipal Environmental Monitoring Centre said yesterday on its official account on Sina Corp.’s

Weibo microblog service. “During this time, residents are suggested to avoid going outdoors or undertaking strenuous activities.” Data published by the U.S. Embassy in Beijing using a monitor in its compound in the east of the capital showed the Air Quality Index measurement peaked at 728 at 4pm on Saturday, exceeding its highest level of “hazardous” while the PM2.5 reading reached 845 micrograms per cubic meter. The China Daily newspaper said yesterday that central and northern parts of the country were also hit by pollution, with the provinces of Hebei and Henan among the worst affected. An air quality report from the Ministry of Environmental Protection ranked Handan, Baoding and Shijiazhuang in Hebei and Henan’s capital, Zhengzhou, as the top four most-polluted cities among 120 monitored nationwide, the paper reported. Bloomberg News

10 |

business daily January 14, 2013

ASIA

Abe: BOJ must set 2 pct medium-term inflation goal Japan’s PM says he’ll seek ‘bold leader’ to head central bank

The statement must say clearly that 2 percent is the target. That would lead to fundamental changes [in the way it guides policy] Shinzo Abe, Japan’s prime minister

rime Minister Shinzo Abe said the Bank of Japan (BOJ) must set a 2 percent inflation target and make it a medium-term, not long-term, goal to show markets it was determined to pursue bold monetary easing to end nearly two decades of deflation. The government is negotiating

with the BOJ to issue a joint statement this month to make the central bank accountable for achieving 2 percent inflation, double its current price goal. “The BOJ basically says it sees 1 percent inflation as a loose goal. That doesn’t show it’s responsible to achieve it and doesn’t show its strong determination,” Mr Abe said told

public broadcaster NHK yesterday. “The statement must say clearly that 2 percent is the target. That would lead to fundamental changes” in the way it guides policy, he said. The BOJ set its current 1 percent inflation target last February and eased monetary policy five times in 2012. Japan is stuck in its fourth

Singapore takes new steps to cool property market Govt raises stamp duty, imposes restrictions on mortgages

ingapore added more measures to curb speculation on residential and industrial properties after home prices climbed to a record and the value of logistics buildings doubled over the past three years. The stamp duty for homebuyers increased on Saturday by between 5 percentage points and 7 percentage points, the government said in an e-mailed statement. Permanent residents will have to pay the additional tax when they buy their first home, while Singaporeans will have the levy starting with their second purchase, according to the notice. This follows government efforts since 2009 to rein in residential property prices. Those steps have included barring interest-only loans for some housing projects and not allowing developers to absorb interest payments. The new rules

may limit gains for the stocks of Singapore’s developers, the best performers on the benchmark Straits Times Index last year. “We foresee a substantial impact on the industrial segment and expect residential to moderate further,” said Priyaranjan Kumar, the Singaporebased regional director of capital markets at Cushman & Wakefield, a property consulting company. “The additional measures are prudent to keep the property market aligned to macro fundamentals.” The government will also tighten the loan-to-value limits for buyers seeking a second mortgage, it said yesterday, referring to the amount they are allowed to borrow relative to the value of their properties. The cash down payment will also rise to 25 percent from 10 percent starting from the second loan, it said. Singapore will also cap bank loan

repayments for public housing to 30 percent of the buyer’s monthly income, and restrict permanent residents from subletting their entire units, it said. The size of executive condominiums will be limited to 160 square metres (1,720 square feet), the government said. These apartments are built by private developers and come with income limits and other restrictions. For industrial buildings, the government will introduce a stamp duty for sellers, starting at 15 percent if the property is sold within a year, it said. “The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market,” Tharman Shanmugaratnam, Singapore’s deputy prime minister, said in the statement. “We have to

recession since 2000 and its exportreliant economy is suffering from a strong yen. Mr Abe, who won a landslide election last December, has piled pressure on the BOJ for bolder efforts to beat deflation, threatening to revise a law guaranteeing its independence on monetary policy if his demands are not met. Under intense pressure, the central bank will consider easing monetary policy at its rate review on January 21-22 and respond to Mr Abe’s calls to double its inflation target, sources have told Reuters. In the joint statement likely to be released on January 22, the BOJ wants to describe the new target as a longterm goal without setting a specific deadline, to leave itself flexibility in guiding future monetary policy. Mr Abe, however, warned that making 2 percent inflation a “longterm goal” wasn’t good enough. “That’s too long. It should be a medium-term one. Otherwise markets won’t react,” he said. The Council on Economic and Fiscal Policy, the government’s top economic panel which the BOJ governor attends regularly, could call a meeting to focus on monetary policy and a timeframe, he added. Mr Abe also said he will meet with monetary policy experts tomorrow, including his special economic adviser Koichi Hamada, to seek views on who would be suitable as next BOJ governor. “Basically, I’d like to choose someone who can implement bold monetary policy and who shares our views,” he said. Mr Abe’s government has the power to nominate a successor to BOJ Governor Masaaki Shirakawa when his term expires in April, although the nomination needs approval by both houses of parliament. Mr Abe controls the lower house but the upper house. Japan last week approved a US$117 billion stimulus package, the biggest spending boost since the financial crisis, to try and boost the economy. Mr Abe is gambling that a shift to a more expansionary fiscal policy and more monetary easing from the central bank can end years of stop-start growth. Reuters

We foresee a substantial impact on the industrial segment and expect residential to moderate further Priyaranjan Kumar, Cushman & Wakefield

take this further round of measures now to check recent market trends and avoid a more serious correction in prices further down the road.” Earlier steps taken by Singapore to ease the property market included imposing additional taxes on foreigners and companies buying properties, and moving to curb the trend of so-called shoebox apartments. In October, it restricted home-loan maturities to 35 years and required tighter loan-to-value limits for loans exceeding 30 years. In September, Singapore said

January 14, 2013 business daily | 11

ASIA

India’s industrial output contracts

Vietnam may have cut policy rates too quickly: IMF

But trade gap narrows in potential rupee boost

ndia’s industrial output unexpectedly shrank in November, and while the data was badly distorted by the Diwali holiday it was still seen backing the case for an interest rate cut to boost an economy that appears set to post its slowest growth in a decade. The index of industrial production fell 0.1 percent annually in November, data released by the Central Statistics Office showed on Friday, compared with revised growth of 8.3 percent in October. Output has grown in just three of the last eight months. The outturn was even worse than the 0.7 percent growth a Reuters’ poll of analysts had predicted for November. Output was depressed by the Diwali holiday, which was in November last year, whereas in 2011 it fell in October. Diwali is one the biggest Hindu festivals in India, with many factories shutting for several days. “The correction in the November headline [industrial production] was largely priced in on passage of festive demand and manufacturers’ possibly drawing down on inventories rather than stepping up production towards end-2012,” said Radhika Rao, economist at Forecast Pte, Singapore. Still, Friday’s data underscores the challenge Prime Minister Manmohan Singh faces turning the wheel on the economy. GDP growth that once looked set to hit double-digits has been stuck below 6 percent for the past three quarters. The slowdown is worrying for the government as it prepares for a series of state elections and a general election due in 2014. The government, however, could take some heart from the trade data for December, which showed the pace of contraction was slowing down in the

V The central bank is expected to lower borrowing costs this month

exports sector, which accounts for onefifth of India’s gross domestic product. “All [export] sectors have slightly improved, except textiles,” Trade Secretary S.R. Rao told reporters. Merchandise exports fell to US$24.88 billion in December, down 1.9 percent from a year earlier. Imports, however, rose 6.3 percent to US$42.5 billion. The trade deficit narrowed to US$17.7 billion in December from US$19.3 billion in November. That brought the deficit for the first nine months of the fiscal year to US$147.2 billion, widening from US$137.3 billion at the same point in the previous year. Politicians and business folk have been calling for the central bank to slash interest rates that are among the highest of the major economies. The Reserve Bank of India (RBI) has left its policy repo rate unchanged at 8.0 percent since April 2011, citing stubbornly high inflation, but after signalling it could cut in the January-March quarter eyes are now on an upcoming policy review on January 29. Reuters

ietnam still faces inflationary pressures, according to the International Monetary Fund, which said it would have preferred a slower pace of interest-rate cuts last year by the country’s central bank. The State Bank of Vietnam reduced borrowing costs for a sixth time last year on December 24, two weeks after the IMF said the central bank should maintain its policy rate. The refinancing rate was cut to 9 percent from 15 percent at the beginning of the year, while the discount rate and the cap on dong deposits were also lowered. Gross domestic product grew at the slowest pace in 13 years in 2012 as a slump in bank lending damped domestic demand, even as the inflation rate slowed to 6.81 percent in December from 18.13 percent at the end of 2011. Monetary policy must focus on ensuring that economic stability gained in 2012 can be maintained this year, said Sanjay Kalra, IMF’s resident representative for Vietnam. “Going forward, there is still a case for being a little bit more careful,” Mr Kalra said at a conference in Ho Chi Minh City yesterday. “In terms of the balance of risks, it is perhaps advisable to be a little bit late in terms of reducing policy rates than being a little bit too early,” he said. Vietnam’s economy may expand about 5.5 percent in 2013, the government said last month. Moody’s cut the nation’s credit rating in September, citing “more pronounced weaknesses in the banking system,” while the World Bank has said the country is susceptible to a “premature loosening of policies” that could lead to a resurgence of inflation. AFP

Genting Malaysia tumbles on NY plan Genting Malaysia Bhd., owner of Resorts World Casino New York City, fell the most in three months in Kuala Lumpur trading after Citigroup Inc. said plans by New York to expand casino gambling in the state is “negative” for the Southeast Asian company. The stock sank 3.7 percent to close at 3.61 ringgit, its steepest decline since October 10. Genting Malaysia, based in Kuala Lumpur, was the biggest decliner on the FTSE Bursa Malaysia KLCI Index on Friday, which fell 0.1 percent. Its parent Genting Bhd. slipped 2.4 percent, the most since November 14. New York Governor Andrew Cuomo proposed to build up to three casinos in upstate New York to help revitalise the economy and boost tourism in the upstate, according to his third State of the State address in Albany on January 9. “We believe the three casinos will be full-fledged with table games but Resorts World New York will probably remain a slot-only racino,” Citigroup analysts led by George Choi wrote in a report. “Allowing table games at Resorts World New York would likely cannibalise the three casinos in upstate New York, which would work against the government’s attempt to help the economy in upstate.”

S.Korea c.bank holds rates South Korea’s central bank held interest rates steady for a third consecutive month on Friday, as expected, but lowered growth and inflation expectations, leading analysts to predict another rate cut in the first half of this year.The Bank of Korea left the base rate unchanged at 2.75 percent in a split vote after two 25 basis point reductions last year, citing improving external conditions. But the central bank also slashed its 2013 growth forecast to 2.8 percent from the 3.2 percent set in October, marking the third downgrade in a year, and warned that downside risks to growth outweigh upside risks. Price pressures will abate as well, amid weaker than expected economic activity, with annual inflation forecast for this year at 2.5 percent from an earlier estimate of 2.7 percent. “I want to say that we are always open to the possibility [of a rate change]. We do not have a rigid monetary policy,” BOK Governor Kim Choongsoo (pictured) said at a press conference following the rate decision. Following the rate decision, 10 of 15 analysts surveyed by Reuters said they expect at least one more 25 basispoint rate cut in the first quarter of this year.

China is cause for optimism: Swan

Low interest rates fuel Singapore’s property market

it would cap the number of homes that can be developed in suburban projects to curb the increasing trend of building shoebox apartments, or units smaller than 50 square metres. The island city-state in December

2011 imposed an additional 10 percent stamp duty on foreigners and corporate entities. The levy is 3 percent for permanent residents purchasing a second home and for citizens buying their third residence.

The government earlier required a 1 percent duty on the first S$180,000 (US$147,000) of the price, 2 percent on the next S$180,000 and 3 percent for the remainder. Bloomberg News

China’s economic recovery is a sign that global demand will improve this year, Australian Treasurer Wayne Swan said. “I’m optimistic that 2013 will be a better year for the global economy,” Mr Swan said in his weekly economic note yesterday, before a visit to Hong Kong where he will address the Asian Financial Forum today. “One cause of optimism is recent evidence that China’s economy appears to be stabilising after economic conditions moderated in 2012.” China’s exports rose more than forecast in December and a broad measure of credit surged 28 percent, adding to signs that the recovery in the world’s second-largest economy is gaining traction. The nation’s new leaders are seeking to sustain a pickup in growth after a seven-quarter slowdown. “The global economy remains hostage to two familiar downside risks, the fiscal situation in the U.S. and the ongoing sovereign debt crisis in Europe,” Mr Swan said in the e-mailed statement. Still “both sides of the Atlantic have recently made encouraging progress in dealing with these challenges.” Australia is looking for a global recovery to sustain exports and extend 21 recession-free years as a resource investment boom is predicted to peak.

12 |

business daily January 14, 2013

MARKETS Hang SENG INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

29.95

-0.8278146

40704306

CHINA UNICOM HON

13.02

-2.398801

33323515

POWER ASSETS HOL

65.5

-0.152439

1706536

ALUMINUM CORP-H

3.95

-2.948403

46558537

CITIC PACIFIC

13.22

-3.644315

19768271

SANDS CHINA LTD

36.8

-1.472557

14183854

BANK OF CHINA-H

3.65

280686444

CLP HLDGS LTD

65.05

-0.4590666

3203828

6.1

-0.1636661

24577689

CNOOC LTD

16.22

-1.934704

112066488

BANK EAST ASIA

30.95

1469142

11.8

-0.8403361

9640869

SWIRE PACIFIC-A

BELLE INTERNATIO

16.92

0.7142857

10860178

ESPRIT HLDGS

11.26

-0.3539823

6984528

BOC HONG KONG HO

24.95

14320491

HANG LUNG PROPER

30.85

-1.28

NAME AIA GROUP LTD

BANK OF COMMUN-H

NAME

COSCO PAC LTD

NAME

SINO LAND CO

15.26

1.328021

12842292

SUN HUNG KAI PRO

123.2

-1.044177

5083369

-0.1019368

1141379

TENCENT HOLDINGS

255.2

0.7103394

3077127

7526987

TINGYI HLDG CO

21.05

-0.7075472

8796500

10.5

-0.7561437

17408024

63.55

-0.5477308

3670813

CATHAY PAC AIR

14.82

0.5427408

4175931

HANG SENG BK

119.4

0.3361345

2041272

WANT WANT CHINA

CHEUNG KONG

125.9

-0.9441385

3777359

HENDERSON LAND D

57.95

-1.361702

2984233

WHARF HLDG

CHINA COAL ENE-H

8.72

-1.912261

19210002

74.3

0.3376097

2772802

CHINA CONST BA-H

6.46

-0.7680492

188848586

21.15

0.2369668

4222507

-1.328273

31846528

144

-2.306649

7650324

CHINA MERCHANT

26.25

4290839

83.85

0.8418521

17898689

CHINA MOBILE

CHINA LIFE INS-H

HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC

89.85

11913484

HUTCHISON WHAMPO

84.2

-0.4139562

8141025

CHINA OVERSEAS

24.6

-1.006036

24769093

IND & COMM BK-H

5.76

0.173913

227783279

CHINA PETROLEU-H

9.21

0.5458515

69690028

LI & FUNG LTD

13.88

-1.699717

23097855

31.2

0.6451613

2338986

CHINA RES ENTERP

MOVERS

5 23480

INDEX 23264.07 HIGH

23478.81

LOW

23149.07

27.3

-0.907441

5510797

CHINA RES LAND

22.65

-0.8752735

13473673

NEW WORLD DEV

13.7

0.4398827

49567783

52W (H) 23486.6

CHINA RES POWER

19.88

-0.3009027

12630348

PETROCHINA CO-H

10.88

-0.5484461

48293952

(L) 18056.4

CHINA SHENHUA-H

33.25

-3.762663

28009613

PING AN INSURA-H

66.95

-1.253687

15374785

MTR CORP

VOLUME

23140

9-January

11-January

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.97

-0.5012531

95780772

CHINA PACIFIC-H

31.1

-0.955414

15277348

YANZHOU COAL-H

AIR CHINA LTD-H

7.09

-0.281294

18718537

CHINA PETROLEU-H

9.21

0.5458515

69690028

ZIJIN MINING-H

ALUMINUM CORP-H

3.95

-2.948403

46558537

CHINA RAIL CN-H

9.2

-0.4329004

7934842

ANHUI CONCH-H

28.35

-1.5625

9956184

CHINA RAIL GR-H

4.83

-1.428571

18031666

BANK OF CHINA-H

3.65

280686444

CHINA SHENHUA-H

33.25

-3.762663

28009613

CHINA TELECOM-H

NAME

6.1

-0.1636661

24577689

4.32

-0.4608295

48672483

25.85

1.972387

4535950

DONGFENG MOTOR-H

12.88

-0.617284

47050504

CHINA CITIC BK-H

4.95

-0.6024096

52222164

GUANGZHOU AUTO-H

7.63

-2.554278

13168457

CHINA COAL ENE-H

8.72

-1.912261

19210002

HUANENG POWER-H

-2.097902

18668446

CHINA COM CONS-H

7.71

-0.3875969

11144019

IND & COMM BK-H

5.76

0.173913

227783279

CHINA CONST BA-H

6.46

-0.7680492

188848586

JIANGXI COPPER-H

-2.097902

8381504

CHINA COSCO HO-H

4.56

-3.59408

43431466

PETROCHINA CO-H

10.88

-0.5484461

48293952

BANK OF COMMUN-H BYD CO LTD-H

-1.328273

31846528

PICC PROPERTY &

11.96

1.013514

28007812

CHINA LONGYUAN-H

6.39

1.913876

44366187

PING AN INSURA-H

66.95

-1.253687

15374785

CHINA MERCH BK-H

17.56

-0.9029345

23510661

SHANDONG WEIG-H

7.46

-3.116883

44430312

CHINA LIFE INS-H

NAME ZOOMLION HEAVY-H ZTE CORP-H

MOVERS

DAY %

VOLUME

13.86

-1.282051

32585350

3.09

0.3246753

36855637

10.72

-2.898551

31453396

14.7

-1.737968

17480671

1 12010

INDEX 11842.59 HIGH

12006.28

LOW

11765.58

CHINA MINSHENG-H

9.47

-1.661475

20623034

SINOPHARM-H

25.55

-0.9689922

1657450

52W (H) 12023.7

CHINA NATL BDG-H

11.92

-2.614379

29417802

TSINGTAO BREW-H

46.45

0.2157497

1075355

(L) 8987.76

15.5

-0.5134788

7714160

WEICHAI POWER-H

35.85

0.1396648

4185166

CHINA OILFIELD-H

PRICE

11760

9-January

11-January

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

6.85

-0.4360465

38383405

QINGHAI SALT-A

25.68

-3.603604

7165888

12.71

-3.857791

117673366

SAIC MOTOR-A

16.7

0.3003003

27343736

CSR CORP LTD -A

4.94

-1.593625

28686758

SANY HEAVY INDUS

9.66

-4.451039

57303415

DAQIN RAILWAY -A

6.82

-1.015965

26931949

SHANDONG GOLD-MI

36.43

-1.540541

14264629

34062530

DATANG INTL PO-A

-2.676399

24212249

SHANG PHARM -A

11.41

-1.468048

12472418

-3.296703

44066237

EVERBRIG SEC -A

12.99

-4.132841

31017381

SHANG PUDONG-A

9.82

-2.191235

171547464

2.93

-0.3401361

29859191

GD POWER DEVEL-A

2.53

-1.55642

51613009

SHANGHAI ELECT-A

4.11

-3.294118

11108507

4.85

-1.020408

61746300

GEMDALE CORP-A

6.81

-4.084507

58491068

SHANXI LU'AN -A

21.16

-3.334856

19604871

10.07

-2.23301

14112082

GF SECURITIES-A

14.5

-4.100529

44634414

SHANXI XINGHUA-A

41.92

-1.132075

3912600

-0.5964215

34735387

GREE ELECTRIC

0.4636785

16844566

SHANXI XISHAN-A

13.48

-2.741703

17208410

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.79

-1.06383

98337578

CHINA YANGTZE-A

AIR CHINA LTD-A

5.67

-1.903114

21295167

CITIC SECURITI-A

ALUMINUM CORP-A

5.11

-2.666667

32519683

ANGANG STEEL-A

4.03

-2.421308

18490300

ANHUI CONCH-A

17.84

-3.982777

8.8

BANK OF CHINA-A BANK OF COMMUN-A BANK OF NINGBO-A BAOSHAN IRON & S

BANK OF BEIJIN-A

NAME

VOLUME

7.32

-4.563233

24763274

GUANGHUI ENERG-A

16.42

-2.08706

49306777

SHENZEN OVERSE-A

7.08

-3.146375

52760156

21.57

-1.191022

6776716

HAITONG SECURI-A

9.59

-3.033367

78590096

SUNING APPLIAN-A

6.9

-2.953586

63456865

4.09

-3.309693

36691290

HANGZHOU HIKVI-A

29.47

-0.4055424

3403988

TSINGTAO BREW-A

33.29

-0.03003003

1150432

CHINA CNR CORP-A

4.5

-2.597403

42890065

HENAN SHUAN-A

61.51

-0.1461039

2228286

WEICHAI POWER-A

23.9

-4.780876

14337695

CHINA COAL ENE-A

7.66

-1.28866

19608166

HONG YUAN SEC-A

17.85

-4.135338

22274589

WULIANGYE YIBIN

28.78

0.840925

51735326

CHINA CONST BA-A

4.63

0.2164502

48944236

HUATAI SECURIT-A

9.14

-2.454642

28869052

YANGQUAN COAL -A

14.62

41211290

CHINA COSCO HO-A

4.39

-4.148472

30981787

HUAXIA BANK CO

9.96

-1.678184

27125736

YANTAI CHANGYU-A

46.46

-4.127115

2448820

CHINA CSSC HOL-A

23.32

0.8650519

24125954

IND & COMM BK-A

4.2

-0.7092199

57032798

YANTAI WANHUA-A

15.54

-1.145038

12375143

CHINA EAST AIR-A

3.39

-3.418803

43435305

INDUSTRIAL BAN-A

16.28

-2.689779

114170383

YANZHOU COAL-A

17.54

-3.040354

8140447

CHINA EVERBRIG-A

2.95

-2.640264

146333267

INNER MONG BAO-A

35.35

-3.362493

49985996

YUNNAN BAIYAO-A

66.8

0.6782216

2565580

CHINA INTL MAR-A

12.71

-0.07861635

25861034

INNER MONG YIL-A

23.49

0.1278772

10641194

ZHONGJIN GOLD

15.93

-2.925046

33282886

CHINA LIFE INS-A

20.78

-1.376364

12088508

INNER MONGOLIA-A

5.29

-3.467153

97921129

ZIJIN MINING-A

3.78

-1.305483

61564004

92040123

JIANGSU HENGRU-A

29.38

3782294

ZOOMLION HEAVY-A

8.64

-2.921348

62129703

100.44

-1.866146

4329631

ZTE CORP-A

9.89

-2.848723

46090822

BBMG CORPORATI-A BYD CO LTD -A CHINA CITIC BK-A

CHINA MERCH BK-A

13.28

-1.920236

CHINA MERCHANT-A

29.01

-3.940397

20660073

JIANGSU YANGHE-A

CHINA MERCHANT-A

9.86

-2.56917

19805761

JIANGXI COPPER-A

24.05

-3.141361

17845107

CHINA MINSHENG-A

8.01

-1.476015

174120775

JINDUICHENG -A

11.15

-2.959095

12253810

CHINA NATIONAL-A

7.58

-1.940492

39631942

JIZHONG ENERGY-A

14.09

-3.953647

21585297

13.74

-3.239437

45056567

211.26

-1.51049

3700999

CHINA OILFIELD-A

15.96

-2.623551

10692088

KANGMEI PHARMA-A

CHINA PACIFIC-A

21.69

-0.1840773

15497139

KWEICHOW MOUTA-A

6.94

-1.420455

57294519

LUZHOU LAOJIAO-A

36.41

-1.806904

8279529

2.2

-2.222222

40366235

CHINA PETROLEU-A CHINA RAILWAY-A

6.18

0.1620746

24576456

METALLURGICAL-A

CHINA RAILWAY-A

3.21

-2.134146

41036932

NINGBO PORT CO-A

2.5

-1.185771

28772676

PANGANG GROUP -A

3.99

-2.682927

MOVERS

2 2560

INDEX 2483.23

CHINA SHENHUA-A

24.34

-2.170418

17112539

69352881

HIGH

2552.11

CHINA SHIPBUIL-A

4.72

0.4255319

111412829

PETROCHINA CO-A

8.91

-1

20338531

LOW

2477.27

CHINA SOUTHERN-A

3.85

-1.785714

66251222

PING AN BANK-A

15.54

-2.079395

25126855

CHINA STATE -A

3.68

-2.902375

210519927

PING AN INSURA-A

44.43

-1.244721

22861665

CHINA UNITED-A

3.47

-2.253521

111233376

POLY REAL ESTA-A

13.53

-4.516584

63437293

10.12

166448824

QINGDAO HAIER-A

13.3

-0.07513148

10929312

PRICE DAY %

Volume

PRICE DAY %

Volume

CHINA VANKE CO-A

263

52W (H) 2717.825 (L) 2102.135

2470

9-January

11-January

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

NAME

24.7

0.8163265

21434246

FORMOSA PLASTIC

-1.098901

4007035

25.35

-1.361868

18916643

FOXCONN TECHNOLO

89.4

2.87687

37.6

-0.265252

5346376

FUBON FINANCIAL

36.7

NAME

PRICE DAY %

TAIWAN MOBILE CO

105

15326345

TPK HOLDING CO L

489 -0.2040816

-1.344086

31553383

TSMC

101

UNI-PRESIDENT

335

0.6006006

5431995

HON HAI PRECISIO

88.6

32874619

AU OPTRONICS COR

12.45

-1.968504

140200167

HOTAI MOTOR CO

235

0.6423983

275209

UNITED MICROELEC

-1.408451 0

Volume 4205826 3345241 22993850

54.6

4753155

11.85

0.4237288

31247653

CATCHER TECH

139.5

0.7220217

16202103

HTC CORP

277

0.7272727

9437678

WISTRON CORP

30.6

0.1636661

3746801

CATHAY FINANCIAL

31.85

-0.312989

23554858

HUA NAN FINANCIA

0.591716

10497462

YUANTA FINANCIAL

15.5

29076228

CHANG HWA BANK

16.2

1.25

17569402

LARGAN PRECISION

748

2.465753

1512115

YULON MOTOR CO

56.5

2340917

CHENG SHIN RUBBE

75.8 -0.2631579

4966621

LITE-ON TECHNOLO

1.298701

4361096

15.05

-3.833866

130406508

MEDIATEK INC

312.5

-0.477707

4438615

CHINA DEVELOPMEN

CHIMEI INNOLUX C

7.59

0.3968254

29024442

MEGA FINANCIAL H

23.35 -0.2136752

31052567

CHINA STEEL CORP

28.1 -0.3546099

11928265

NAN YA PLASTICS

59.3

0.6791171

3998904

101025635

PRESIDENT CHAIN

161

678021

CHINATRUST FINAN

16.55

-1.19403

CHUNGHWA TELECOM

94.2 -0.3174603

COMPAL ELECTRON

20.1

DELTA ELECT INC

0.5

103.5 -0.4807692

4915516

QUANTA COMPUTER

63.5 -0.1572327

8003168

17402146

SILICONWARE PREC

30.5

-1.612903

4604937

3330754

SINOPAC FINANCIA

12.85

17780480

FAR EASTERN NEW

34.4

0.4379562

11798607

SYNNEX TECH INTL

2.333932

7751191

FAR EASTONE TELE

72.9

0.2751032

5380550

TAIWAN CEMENT

39.65

7716292

FIRST FINANCIAL

17.8

11573780

16.5

5770278

FORMOSA CHEM & F

78.6

1.028278

2977808

TAIWAN FERTILIZE

1.182654

6952601

FORMOSA PETROCHE

87.2

1.395349

1922919

TAIWAN GLASS IND

1174038

TAIWAN COOPERATI

MOVERS

10 5470

INDEX 5457.3 HIGH

5469.07

LOW

5393.53

52W (H) 5621.53 5390

(L) 4719.96 9-January

11-January

January 14, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 52.2

33.2

16.2

32.9

16.0 51.1

32.6

15.8

32.3 32.0

50.0

15.6

37.2

20.4

23.4

36.9

20.2

23.2

36.6

20.0

36.3

19.8

36.0

19.6

22.8

Commodities ENERGY

NAME

PRICE

WTI CRUDE FUTURE Feb13

93.56

-0.277126412

1.89501198

109.4300003

80.05999756

BRENT CRUDE FUTR Feb13

110.64

-1.117168648

-0.42300423

119.2999954

90.38999939

GASOLINE RBOB FUT Feb13

273.95

-1.926037304

-0.803852699

292.9699898

220.3500032

GAS OIL FUT (ICE) Feb13

939.75

-2.032838155

1.375404531

1031.5

800.25

3.327

4.196680238

-0.716204118

4.090000153

3.049999952

HEATING OIL FUTR Feb13 Gold Spot $/Oz Silver Spot $/Oz Platinum Spot $/Oz

LME ALUMINUM 3MO ($) LME COPPER 3MO ($) 3MO ($)

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

Mar13

DAY %

YTD %

(H) 52W

22.4

PRICE

(L) 52W

300.85

-1.499525259

-0.768521387

333.4599972

255.6599855

1662.98

0.0716

-0.0889

1796.08

1527.21

30.465

-0.0043

1.179

37.4775

26.1513

1631.25

1.2381

7.4782

1736

1379.05

701

0.1429

0.1915

725.19

553.75

Palladium Spot $/Oz

LME ZINC

22.6

CURRENCY EXCHANGE RATES

NATURAL GAS FUTR Feb13

METALS

23.0

2097.5

-0.757038088

1.181862036

2361.5

1827.25

8045

-0.862600123

1.437397554

8765

7219.5

2014.5

-1.201569397

-3.149038462

2220

1745

17585

1.034185579

3.077373974

22150

15236

15.22

0.727994705

0.296540362

16.84000015

14.89999962

708.75

1.431127013

1.503759398

846.25

511

AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP

1.0535 1.6132 0.9135 1.3343 89.18 7.9845 7.7518 6.2158 54.7625 30.27 1.225 28.953 40.6 9866 93.956 1.21899 0.82722 8.2452 10.5931 119.01 1.0301

DAY %

-0.3783 0.5234 1.029 1.8627 -1.211 -0.0013 -0.0039 0.14 -0.3424 0.033 0.0245 0.0829 0.1847 0.0101 -0.8493 -0.8179 -1.3261 -1.385 -1.2584 -3.0334 -0.0097

1.5128 -0.272 0.208 1.16 -3.4537 -0.0163 -0.0155 0.2381 0.4246 1.0241 -0.2939 0.2763 0.9975 -0.7399 -4.9268 -0.9442 -1.4265 -0.336 -0.5919 -4.571 -0.0194

YTD %

(H) 52W

1.0857 1.6381 0.9972 1.3487 89.45 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.98 9904 94.528 1.22011 0.8506 8.4894 10.7712 119.35 1.0314

(L) 52W

0.9582 1.5269 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 30.2 1.2152 28.913 40.551 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

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 NAME

(H) 52W

(L) 52W

3.31

-1.488095

5.079362

3.44

2.27

1276725

CROWN LTD

11.52

1.319261

7.96626

11.54

7.97

2307640

WHEAT FUTURE(CBT) Mar13

754.75

1.376762928

-2.988431877

948.25

652

SOYBEAN FUTURE Mar13

1373.25

-0.471099837

-2.571833984

1728.25

1194.5

ARISTOCRAT LEISU

COFFEE 'C' FUTURE Mar13

153.35

2.472435683

6.641168289

249

141.25

PRICE

DAY % YTD %

VOLUME CRNCY

SUGAR #11 (WORLD) Mar13

19.17

1.107594937

-1.742696053

25.12999916

18.30999947

AMAX HOLDINGS LT

0.079

-1.25

12.85714

0.119

0.055

16937000

COTTON NO.2 FUTR Mar13

75.62

0.558510638

0.638807559

98.5

66.84999847

BOC HONG KONG HO

24.95

3.526969

25.2

19.48

14320491

CENTURY LEGEND

678000

World Stock MarketS - Indices NAME

0.305

15.09435

0.34

0.215

CHEUK NANG HLDGS

5.78

-0.3448276

-3.505839

6.25

2.76

422594

CHINA OVERSEAS

24.6

-1.006036

6.493505

25.6

13.385

24769093

CHINESE ESTATES

12.28

0.3267974

-6.116207

13.26

8.3

43500

CHOW TAI FOOK JE

12.84

-1.230769

3.215438

15.16

8.4

8882886 2570000

1.522843

5.820107

2.08

0.99

1.53

1.324503

25.40983

1.58

0.41

3894000

GALAXY ENTERTAIN

32.05

-2.286585

5.601317

33.8

14.9

13479010

2689.58

HANG SENG BK

119.4

0.3361345

0.5897246

120

93.05

2041272

6121.58

5229.76

HOPEWELL HLDGS

33.4

-2.339181

0.4511278

34.4

19.049

1727600

7789.94

5914.43

HSBC HLDGS PLC

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13488.43

0.1277538

2.932585

13661.87

12035.08984

NASDAQ COMPOSITE INDEX

3125.635

0.1241608

3.514518

3196.932

FTSE 100 INDEX

6121.58

0.328935

3.794121

DAX INDEX

7715.53

0.09158757

1.354892

EMPEROR ENTERTAI FUTURE BRIGHT

83.85

0.8418521

3.136527

84.25

59.5

17898689

HUTCHISON TELE H

3.44

-0.2898551

-3.370785

3.88

2.98

2729001

LUK FOOK HLDGS I

28.55

-1.211073

17.0082

33.2

14.7

2519800

MELCO INTL DEVEL

10.76

-4.440497

19.42286

11.84

5.12

12969000

NIKKEI 225

10801.57

1.398057

3.909414

10830.42969

8238.96

HANG SENG INDEX

23264.07

-0.3863955

2.679757

23486.6

18056.4

CSI 300 INDEX

2483.23

-1.870686

-1.574423

2717.825

2102.135

MGM CHINA HOLDIN

15.98

0.250941

13.98002

16.2

9.913

7422817

TAIWAN TAIEX INDEX

7819.15

0.09613858

1.553996

8170.72

6857.35

MIDLAND HOLDINGS

3.94

-1.99005

6.486485

5.217

3.249

4032000

NEPTUNE GROUP

0.168

-1.754386

10.52632

0.222

0.084

8300000

NEW WORLD DEV

13.7

0.4398827

13.9767

13.92

7.1

49567783

SANDS CHINA LTD

36.8

-1.472557

8.394696

37.8

20.65

14183854

SHUN HO RESOURCE

1.49

6.428573

1.5

1.03

10000

4.534605

4.57

2.559

15526771

KOSPI INDEX

S&P/ASX 200 INDEX

1996.67

-0.5047837

-0.01902831

2057.28

1758.99

4709.486

-0.2852239

1.302136

4750.7

3985

4305.912

-0.2652775

-0.2496105

4427.652

3635.283

FTSE Bursa Malaysia KLCI

1682.7

-0.1110076

-0.3700524

1699.68

1509.06

SHUN TAK HOLDING

4.38

-0.9049774

NZX ALL INDEX

897.331

0.289133

1.732097

897.451

718.56

SJM HOLDINGS LTD

20.25

-0.7352941

12.5

20.75

12.34

5960316

PHILIPPINES ALL SHARE IX

3817.05

0.4854407

3.191963

3838.23

3114.87

SMARTONE TELECOM

14.24

-0.1402525

1.136364

17.5

12.96

2115499

WYNN MACAU LTD

22.95

-1.713062

9.546535

25.5

14.62

8017975

ASIA ENTERTAINME

3.86

1.846966

26.14379

7.24

2.4

161958

BALLY TECHNOLOGI

46.91

-0.233943

4.920602

51.16

40.32

288718 12685

JAKARTA COMPOSITE INDEX

HSBC Dragon 300 Index Singapor

631.62

0.44

1.7

STOCK EXCH OF THAI INDEX

1412.06

0.4317243

1.446194

1429.21

1035

HO CHI MINH STOCK INDEX

462.69

0.5585499

11.8338

492.44

349.31

BOC HONG KONG HO

3.25

5.863192

5.863194

3.3

2.56

Laos Composite Index

1261.55

3.850937

1261.55

880.65

GALAXY ENTERTAIN

4.19

-1.758499

5.541561

4.37

1.91

3284

INTL GAME TECH

14.98

0.06680027

5.716301

17.67

10.92

1888791

JONES LANG LASAL

86.24

-0.1273885

2.740049

87.62

61.39

264042

LAS VEGAS SANDS

52.52

0.1525553

13.77816

58.3216

32.6127

5881488

MELCO CROWN-ADR

18.69

-1.941238

10.98575

19.49

9.13

5723736

MGM CHINA HOLDIN

2.03

-2.870813

9.729728

2.09

1.2863

955

MGM RESORTS INTE

12.8

1.026046

9.965632

14.9401

8.83

12463959

SHFL ENTERTAINME

14.4

-0.6896552

18.77

11.75

199247

SJM HOLDINGS LTD

2.58

-3.007519

11.68831

2.66

1.6174

200

122.99

0.07323027

9.334165

129.6589

84.4902

889429

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 January 14, 2013

Opinion Big China short shows downside of kleptocracy Jonathan Weil

Bloomberg View columnist

ven by the wacky standards of Chinese accounting scandals, this week’s events at China’s second-biggest maker of construction equipment, Zoomlion Heavy Industry Science & Technology Co., were awfully strange. It all started when a Hong Kong-based news outlet, Ming Pao Daily, published an article about an anonymously written letter it had received that accused Changsha-based Zoomlion of falsely inflating its sales. At most news organisations, an unsigned letter accusing people of fraud wouldn’t spawn a major news article. But this one did on January 8. Ming Pao said the letter was sent to Hong Kong securities regulators, too, although it isn’t clear whether they plan to do anything. Then, as if the company was deliberately trying to draw more attention to the accusations, Zoomlion told the Hong Kong and Shenzhen stock exchanges to halt trading in its shares for a day, so it could respond to the Ming Pao article. Zoomlion issued a statement denying it had recognised phony revenue, saying the allegations “as reported in the press article are false, groundless and misleading.” It also said its midyear results were reviewed

by the Big Four audit firm KPMG, as if that is of any comfort to investors after all the Chinese frauds overlooked by large accounting firms in the past few years.

Big drag Trading continued in the U.S., even as it was suspended elsewhere. Zoomlion’s American depositary receipts fell as much as 7 percent the day after the article was published. Yields on the company’s bonds soared. By the time the day was over, Zoomlion, which has an US$11 billion market value, had managed to drag down lots of other large Chinese companies’ stocks with it. When trading resumed in Hong Kong on January 9, the shares fell 6 percent. “This isn’t good news for Chinese equities,” Erik Lam, the director of Asian equity sales at Auerbach Grayson & Co. in New York, told Bloomberg News. “In the past, all the accounting scandals revolved around Chinese names listed in the U.S., but this is a major Hong Kong-listed company.” It doesn’t take much to cast doubt on a Chinese company’s financial reports these days. The country is a kleptocracy run by – and for the benefit of – the Communist Party elite, who have allowed securities

fraud to flourish. In addition to tolerating frauds by Chinese companies with U.S. or Canadian stock listings, China’s government routinely obstructs overseas regulators’ investigations. Muddy Waters, a tiny research firm led by an American short seller named Carson Block, has done more to expose Chinese stock scams, including Sino-Forest Corp., than all of the world’s governments combined. It is only prudent for investors to start with the assumption that the books of every publicly traded Chinese company are cooked. (To be fair, the same also may be true of the world’s biggest banks.) Capital markets work best when the information that companies report is credible. When it isn’t, and when laws don’t exist or aren’t enforced, investor confidence is easily shaken. Even an obscure news report about an anonymous letter can have the ring of truth and send a big manufacturer’s stock careening. According to the Financial Times, which said it reviewed a copy of the anonymous missive about Zoomlion, the letter was accompanied by about 90 pages of documents that purportedly were internal records from Zoomlion’s eastern China regional sales. The FT said the letter claimed these documents

showed Zoomlion used three categories of sales, two of which weren’t true sales. Zoomlion, in its statement to the Hong Kong exchange, said it hadn’t seen the documents referred to in the article and that it “firmly denies the existence” of any such records.

Vendor financing The FT also noted it had reported last June that Zoomlion was “the most shorted stock in Hong Kong because of fears that it was keeping its sales high

Chinese stocks may not make for trustworthy investments, but they sure can be entertaining to watch from a distance

through heavy use of vendor financing”. Vendor financing is the practice of lending money to customers to fund their purchases. That’s fine, except when the customers can’t pay their loans, in which case the seller-financier must record big write-offs. So what do Zoomlion’s financial statements look like? They show the sort of rapid, debt-fuelled growth that attracts short sellers, or investors who profit when a company’s stock declines. Earnings rose 17 percent to about 7 billion yuan (US$1.1 billion) during the first nine months of 2012. Accounts receivable, or money owed by customers, increased 69 percent to 19.7 billion yuan. Yet little net cash was coming in: Cash flow from operating activities was a mere 179.1 million yuan, down 84 percent from a year earlier. The company’s third-quarter report said this was “due to the increase of business needs as a result of the increase in sales,” which isn’t much of an explanation. Maybe the customers’ payments will materialise, justifying the revenue growth that Zoomlion has recorded. We will see. Chinese stocks may not make for trustworthy investments, but they sure can be entertaining to watch from a distance. Bloomberg View

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

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January 14, 2013 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

India’s outrage Jaswant Singh

Business Inquirer The Philippine Stock Exchange has drafted the listing rules for exchange traded funds (ETFs), taking another step closer to the introduction of the new asset class to the local market early this year. The PSE board recently approved the release of the proposed ETF rules for public comments on or before January 18. “The introduction of ETFs is timely given the current bullish trend in the market and is in line with the PSE’s vision to expand the market’s product offerings,” PSE president Hans Sicat was quoted as saying in a press statement.

Asahi Shimbun Japan’s Supreme Court on Friday struck down a health ministry ordinance banning the online sale of most overthe-counter drugs, saying it exceeded the authority of the Pharmaceutical Affairs Law. The Supreme Court’s Second Petty Bench rejected a government appeal of the case and finalised a Tokyo High Court ruling of April 2012 that approved the right of two business operators to sell drugs online. The ruling virtually scrapped any ban on online drug retailing as long as the operator has pharmacists on hand to provide information to customers.

Korea Herald South Korea’s Ministry of Strategy and Finance is reportedly pushing for a revised income taxation law that allows the government to collect taxes from religious groups. It plans to reintroduce the ordinance this month that has been controversial since 2006 when the National Tax Service suggested the religious tax to the Finance Ministry. Clergy and monks had been granted tax exemptions, and the ministry had been seriously contemplating whether to introduce the tax system faced with opposition and resistance.

Jakarta Post Giant retailer Carrefour Indonesia said it will expand its private label products as it has seen a 5 percent to 10 percent growth in their demand every year. Carrefour, fully owned by tycoon Chairul Tanjung, currently has around 2,988 stock keeping units (SKUs) of private label products in its portfolio, according to a company’s spokesman. “The figure is still very small compared to the total SKU number in Carrefour, but the demand continues to grow every year. So, we are trying to launch new products every three months,” the spokesman said on Friday.

Former Indian finance minister, foreign minister and defence minister

ast year ended for India on a note of public outrage that has burdened the country with anger, frustration, and pessimism. The cause, as all the world knows, was the fatally brutal rape of a young woman on a moving bus, after which she and her male companion – himself beaten nearly to death – were thrown, naked, into the street on a freezing night. The savagery and wanton cruelty of the attack shocked the country to its core. But there is more behind the spontaneous protests that have choked the great central vistas of Delhi (to such an extent that the government was forced to change the venue for meetings with visiting Russian President Vladimir Putin). The anger that has poured onto the streets of Delhi and many other Indian cities was fuelled by a great accumulated discontent – at the bestial rape and murder of that stillunnamed woman, yes, but also at pervasive public and private corruption, the absence of governance and accountability, and much more. Years of pentup rage are now flowing out. Of course, the government deserves – and has received – no quarter. The government failed to prevent the crime, then failed again when its unresponsive, inefficient, and crooked police force was unable to respond appropriately. A wholly moribund and sclerotic administration simply did not know where its duty lay. When protests erupted, the government, in a fit of blind idiocy, set the police upon peaceful protesters, men and women, with long batons, water cannon, and tear gas. This heavyhandedness of course resolved nothing. Citizens’ fury deepened into grim resolve; the government’s repressive impulse was challenged and defeated. Since then, tokenism has replaced leadership. Not one government official had the courage, skill, or decency to rise to the occasion. The opposition, too, floundered, doing no more than simply faulting the ruling establishment. After an unconscionably long delay of seven days, Prime Minister Manmohan Singh finally broke his incomprehensible silence about the rape. But his public statement offered no answers and no balm – indeed, nothing but platitudes. Then, humiliatingly, Singh inquired, sotto voce, of those surrounding him: “Was it all right?” A torrent of electronic wrath burst forth. Protest placards could be seen all over the country: “No! Prime Minister, it is not all right.”

Clearly, Machiavelli was correct: for a political leader, the people’s contempt is worse than their hatred.

Lost confidence Then, in another mindless act, the victim, struggling for life, was flown to a hospital in Singapore. No one would or could say why. It was there that she died – some say that she arrived already brain-dead. Her body was then hurriedly flown back to India, where it was quietly, almost surreptitiously, cremated. If the government feared her alive, it was petrified of her dead. All of India was shamed by this callous and inhuman folly. As a result, India’s Congress-led government has irretrievably lost the public’s confidence; the establishment’s authority has evaporated. A blunt question is now being asked frequently and openly: “Is this India’s Tahrir Square?” Even if it is not, how can an internally roiled India respond adequately to its many external

Can outrage turn to catharsis? Clearly, the current government is unable to bring about any of the necessary changes

tests, the severity of which was underscored recently by Pakistani troops’ killing of two Indian soldiers along the Line of Control in Kashmir. Meanwhile, as India flounders, Northeast Asia has been astir choosing new leaders, who have now been installed in China, Japan, and North and South Korea. With an assertive China, ongoing regime change in Myanmar, a troubled Bangladesh, a constitutionally stymied Nepal, and continuing ethnic tensions in Sri Lanka, India’s eastern challenges are many and mighty. But they are even more severe to India’s west, with Pakistan heading into elections (one hopes) in the spring of 2013, and NATO troops withdrawing from Afghanistan. Indian diplomacy faces a time of trial in both countries. Farther west, too, India’s statecraft is in question. Where does India, which remains dependent on Middle Eastern energy, stand on that region’s many crises? How will it address the nuclear issue in

Iran – a country with which it has close historical, cultural, and economic ties – or the civil war in Syria, the rise of Salafism in Egypt, and the Israel-Palestine standoff? Moreover, India no longer appears to be the vigorous economic dynamo that was the darling of global investors only five years ago. Already some say that the “I” in BRICS (Brazil, Russia, India, China, and South Africa) should now stand for Indonesia. India is running high currentaccount and fiscal deficits; food-price inflation is in the double digits; and the rupee has weakened. As for trade with China, The Economist points out that “for every dollar’s worth of exports to China [principally raw materials], India imports three.” Can outrage turn to catharsis? Clearly, the current government is unable to bring about any of the necessary changes. A possible answer lies in an early election: a new mandate for an India that is in desperate need of renewal. © Project Syndicate

16 |

business daily January 14, 2013

CLOSING Thousands protest against Taiwan govt

Opel losses to last until 2014

Taiwan’s opposition rallied tens of thousands of people yesterday to protest the administration of President Ma Ying-jeou, whose popularity has plummeted to the lowest since he won office. “We demand that Premier Sean Chen be held accountable for the island’s weak economy,” Jason Lin, spokesman of the Democratic Progressive Party, said by phone. More than 54,000 protesters joined the rally, according to Liao Heng-yu, public order division chief at Taipei City Police Department, while Sanlih TV reported 150,000 demonstrators took to the street.

The head of General Motors Co. in Europe said yesterday that losses at its struggling German arm Opel AG would continue for at least two more years. “We will be in the red in 2013 and 2014,” Steve Girsky told Focus magazine. “In 2014, hopefully a bit less. Balanced books will only be achieved in 2015 or 2016, depending on the market situation,” he added. GM’s European operations have run up billions of dollars in losses over the past 10 years. It had planned to sell Opel but pulled back when it could not find a suitable buyer.

Citic Telecom clinches CTM deal State-owned unit pledges investment to improve performance of troubled Macau telco Vítor Quintã

vitorquinta@macaubusinessdaily.com

itic Telecom International Holdings Ltd has pledged to invest in Macau’s biggest telecom operator, CTM, Companhia de Telecomunicações de Macau SARL, after becoming its controlling shareholder. Citic Telecom agreed yesterday to pay a total of US$1.16 billion (9.3 billion patacas) to buy out CTM’s two major shareholders, Cable & Wireless Communications Plc (CWC) and Portugal Telecom (PT), CTM and Citic Telecom confirmed yesterday. The phone and internet operator has the right to provide local and international switched fixed voice and data services in Macau until December 31, 2016, according to the release. As of Nov. 30, its unaudited net asset value was about 1.7 billion patacas. Citic Telecom will fund the purchases with existing cash

US$1.16 bln Cost of Citic Telecom’s purchase of a 79 percent stake in CTM

resources and new bank loans, according to the statement. Xin Yue Jiang, chairman of Citic Telecom, said in a statement the deals would be “beneficial” to the troubled operator, which was hit by three service blackouts last year. Citic Telecom pledged to “increase its investment in CTM to strengthen its infrastructure and building of support system,” as well as introducing “innovative technologies”. For instance, the group wants CTM “to expand cloud computing applications” and to “develop a 4G network”. The deals “facilitates our long term business expansion, generates solid synergies with our business integration and enables us to realise higher business growth,” Mr Xin added. Cable & Wireless will sell its 51 percent stake for US$749.7 million, and Portugal Telecom will sell its 28 percent stake for US$411.6 million. CWC praised the “strong growth” of CTM’s business but said the sale of its shares was part of the company’s strategy to re-focus its portfolio in the Caribbean and Latin America. Citic Telecom already owns a stake of 20 percent in CTM but once the transactions are completed it will own 99 percent of the shares and have control of the business. “Citic Telecom is a longstanding

CTM should have a new controlling shareholder by the second half of 2013 (Photo: Manuel Cardoso)

shareholder of CTM, so it understands CTM’s business well. The change of ownership will not affect our focus,” said CTM chief executive Vandy Poon. Macau Post will continue to hold the remaining 1 percent of CTM. The transactions should only be completed “within 6-9 months” because the CWC and Citic Telecom’s shareholders must approve them,

as well by the Macau and Beijing governments, said CTM. Citic Telecom’s shareholders will meet to vote on the deals “by end of March,” the telecom unit of Chinese state-owned conglomerate Citic Group told the Hong Kong Stock Exchange. “The CWC and PT transactions are also conditional on the completion of each other,” CTM added.

Greece ‘past danger’ but risks remain: PM Govt to introduce new round of legislative reform

reece has overcome the danger of an ignominious euro exit, but it must stay the course of tough reforms to avoid a “relapse”, Prime Minister Antonis Samaras said yesterday. “I believe the great danger [of a euro exit] has passed,” Mr Samaras said in an interview with the To Vima weekly. “Drachmaphobia seems to have receded completely.” But the prime minister, whose three-party government faces another reform hurdle in parliament next week, warned the nation: “There can be no let-up in our effort, because there is the risk of a relapse.” The government last week pushed through parliament a tax

Greek Prime Minister Antonis Samaras

bill introducing new annual income thresholds for salaried taxpayers and scrapping tax breaks for the self-

employed, a category blamed for a large part of the tax evasion that has plagued state finances for decades. Today it will seek approval for another round of reform legislation tied to Greece’s next slice of EU loans. The opposition has condemned the measures as a new attack on the embattled middle class which is bearing the brunt of a fourth straight year of austerity. Mr Samaras’ administration has been hit with several defections in the past few weeks in opposition to the continued austerity wave. The coalition government has lost 16 deputies since coming to power in June, but still retains a nominal majority of 163 in the

300-seat parliament. The latest umbrella bill introduces closer state budget monitoring and gives greater flexibility to banks to raise fresh capital. It also regulates civil service pay cuts and layoffs and finalises a state debt buyback. European Union leaders last month agreed to hand out 49.1 billion euros (US$65 billion) in aid in return for more austerity measures. Athens has already received 34.3 billion euros of this package and is poised to get another 9.2 billion euros at the end of this month if key fiscal reforms are carried out, followed by two more slices of 2.8 billion euros in February and March. AFP