Macau Business Daily, January 15, 2013 by Business Daily

Casino smoking ban takes time: Chui

Page 3

CTM sale is news for telecom regulator Page 4

Year I Number 199 Tuesday January 15, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00 www.macaubusinessdaily.com

Tax benefits fuel ‘green’ car rush C

ar sales in the city increased by at least 15 percent year-on-year in the first 11 months of 2012, the Macau Motor Traders Association says. The growth was spurred by a deduction – introduced in March – of 50 percent in the tax levied on the sale of those new cars considered ‘environmentally friendly’, the association adds. Even though only 89 of the more than 1,000 models sold in Macau meet the green emission standards, those cars already account for over 30 percent of the total sales, dealers say. But other traders claim it was the booming economy and the residents’ higher spending power that triggered the sales boom. Growth has been good but sales might drop in 2013, especially if the government makes it more expensive to own a car, they warned. More on page 3 I SSN 2226-8294

Govt lost control of UM Hengqin campus budget: Audit Commission

Cotai could generate 51 pct of market EBITDAR in 2013 Cotai casino resorts’ earnings before taxation and other costs are likely to overtake those of downtown gaming venues for the first time ever during this year according to a Business Daily analysis of data gathered by Deutsche Bank. According to the bank’s estimates, Cotai property EBITDAR (earnings before insurance, taxation, depreciation, amortisation and rent) will rise to around 33.28 billion patacas in 2013 – 51 percent of the entire market’s likely 64.72 billion patacas property EBITDAR for the year. SJM Holdings Ltd feels “left behind more or less” in the race to develop a presence on Cotai, Angela Leong On Kei, an executive director of the company says. Page 6

In November 2011 the Secretary for Transport and Public Works Lau Si Io promised the Legislative Assembly that there would be no more overruns in the cost of the new campus of the University of Macau on Hengqin Island. But a Commission of Audit report shows the budget has already topped 10.2 billion patacas (US$1.28 billion). The Infrastructure Development Office did not include all the necessary works in the budget for the new campus and used unrealistic points of reference in estimating costs, the watchdog says.

Page 5

HANG SENG INDEX 23440

23405

23370

23335

23300

January 14

HSI - Movers Name

No end in sight for ‘fake’package tours targeting mainland Chinese Travel agencies in Shenzhen and Zhuhai continue fraudulently to offer ‘instant’ tour packages to Chinese tourists that are unable to obtain individual travel permits to come to Macau, agents warned. Only more supervision from the mainland authorities would be able to put an end to the problem, they say. And as the number of independent visitors declines, package tours have grown in importance. Driven mainly by tour parties from Guangdong, the package tour business had a record year in 2012.

Page 2

%Day

CHINA RES LAND

3.31

BOC HONG KONG HO

3.21

PING AN INSURA-H

2.91

CHINA LIFE INS-H

2.88

CHINA OVERSEAS

2.85

WANT WANT CHINA

-1.14

CHINA RES POWER

-1.21

SINO LAND CO

-1.31

CHINA RES ENTERP

-1.47

LI & FUNG LTD

-15.42

Source: Bloomberg

Brought to you by

2013-01-15

2013-01-16

2013-01-17

11˚ 18˚

12˚ 20˚

11˚ 18˚

2 |

business daily January 15 2013

macau

No end in sight for ‘fake’ Chinese tours Irregularities in mainland tour business destined for Hong Kong and Macau remain well and alive, agents says Stephanie Lai

sw.lai@macaubusinessdaily.com

ravel agencies in Shenzhen and Zhuhai continue to offer tour group services for mainland Chinese tourists that are unable to obtain individual travel permits to go to Hong Kong or Macau, agents say. After the tourists are brought across the border, they are no longer bound by the tour group and can travel on their own. The “border crossing fees” are only up to about 100 yuan (US$16) per tourist subscribing to the tour group service, according to the website of some Zhuhai travel agencies. “For a long time the travel agencies near the border in Zhuhai can quickly form a group of tourists [unable to gain individual travel permit], which usually gains easy and fast access across the border,” Chan Chi Kit, president of Association of Macao Tourist Agents, told Business Daily. “Some of these agencies can arrange a very low-cost tour group, claiming zero-charge but actually charging commissions from the tourists’ shopping expenses in designated stores in Macau and ‘entry fees’ of 150 – 200 patacas at casinos,” he explained. According to the existing policy, mainland tourists should apply for an entry permit to travel to Hong Kong or Macau, which can be either an individual travel permit or a tour travel permit.

The individual travel permit only applies to residents from the Guangdong province and 28 other cities in other regions. Visitors from other locations can only apply for a tour group permit.

Tricky supervision The difficulty of eradicating the zero-charge tour group business in China is a huge one, Mr Chan commented on the sidelines of the International Convention of World Federation of Tourist Guide Association. “In China, the travel agencies contract out tour group business to any individuals or even illegal agencies, which makes supervision particularly hard,” said Mr Chan. “Unless the mainland authorities are … doing stringent checks against the illegal travel agencies and undercover operations, the low-cost tour group problem has no way to be solved,” he added. Since January 7, the Shenzhen authorities require any tourists traveling to Hong Kong or Macau in tour groups to register at licensed travel agencies. The name list of the tour group members should be sent to the Shenzhen tourism bureau for approval at least 48 hours before the tourists’ departure for Hong Kong

More supervision is needed to stop zero-fee tours, Macau tourism agencies say

and Macau. The bureau also requires charges imposed on tourists joining a tour group to cover at least transportation and accommodation expenses. Lao Ngai Leong, inspector at

Gongbei Customs and a National People’s Congress delegate for Macau, said he is concerned over the irregularities of the cross-border tour group business and pledged to follow up on the issue with the mainland customs.

Package visitors buoy up industry Tour groups buck the general trend in visitor arrivals, led by tour parties from Guangdong Vítor Quintã

vitorquinta@macaubusinessdaily.com

Package tours have grown in importance as the number of independent visitors declines

he package tour business had a record year last year – even before December’s figures are added to the totals. In the first 11 months of last year more than 8.2 million visitors arrived in tour groups, more than any year previously, Statistics and Census Service data released yesterday show. The figure is 12.7 percent higher than the 7.3 million registered in 2011, the previous record year.

Tourist arrivals in general have been lower than a year before every month since May, so the importance of package tours to the tourism industry has increased. Package tourists accounted for almost one-third of all visitors in the first 11 months of last year. In November package tourists accounted for nearly 36 percent of all visitors. In that month almost 854,000 visitors arrived on package tours, 8.6

percent more than a year before and the most in any November yet. The head of the Macau Government Tourist Office, Helena de Senna Fernandes, has said her office wishes to tap new sources of tourists, such as India and Russia. But November’s growth in package tourists was due to more arrivals from Guangdong, which provided almost 238,500 visitors in tour groups, 76.9 percent more than a year before. The number of visitors from other parts of the mainland in November decreased by 10.6 percent to fewer than 404,500 tourists. The number from Hong Kong decreased by one-quarter to 27,622 people, the fewest in any month last year. In contrast, November was a record month for visitors from South Korea, which sent 43,825 package tourists, almost 60 percent more than a year before. The number of package tourists from Taiwan increased by 26.4 percent to more than 59,800 people.

59.6%

Annual increase in South Korean visitors on package tours in November

More rooms mean less The number of hotels and guesthouses in Macau had reached 100 for the first time by the end of November, Statistics and Census Service data show. With more rooms available, the number of guests rose to 8.6 million in the first 11 months of last year, 10.9 percent more than in the corresponding period of 2011. However, the hotel occupancy rate fell to 82.8 percent, 1.3 percentage points less than a year before. With only the figures for December left to be counted, the occupancy rate will probably turn out to be lower last year than 2011 – the first time in three years. The average length of a visitor’s stay fell to 1.4 nights in the first 11 months of last year. Unless December brought an unexpected boom in longer stays, then the average length of stay last year will turn out to be the lowest since 2007.

January 15, 2013 business daily | 3

MACAU

Green vehicle tax breaks boost sales, say dealers While incentives helped sales of green cars in 2012, it was not a good year for every dealer Tony Lai

tony.lai@macaubusinessdaily.com

ax breaks for green vehicles meant some car dealers saw sales rise by over 10 percent last year, but for others sales were flat. The president of the Macau Motor Traders Association, Patrick Tse Ka Ming, said sales of motor vehicles in the first 11 months of 2012 had been at least 15 percent higher than in the corresponding period the year before. Mr Tse’s association said over 8,400 motor vehicles had been sold in 2011. “The growth was spurred by the new tax break for environment-friendly cars, [introduced] on March 18, which encourages more people to change their cars,” he told Business Daily. Mr Tse is the general manager of Xin Kang Heng Holdings Ltd, which is the main Honda distributor. The buyer of a new vehicle pays up to 50 percent less tax on the purchase, the maximum reduction being 60,000 patacas (US$7,500), if the vehicle meets certain emission standards. “Only 89 out of over 1,000 models sold in Macau conform to the green emission standards, yet sales of these cars account for over 30 percent of total sales,” Mr Tse said. Sales by Xin Kang Heng, which imports Audis, rose by between 8 and 9 percent last year. However, the company’s assistant general manager, Wilson Mok, is sceptical about whether the tax breaks are much help to sales in general.

Car dealers sold a higher number of more expensive vehicles last year (Photo: Manuel Cardoso)

its executive director, Daniel Cheng Wing Yiu. “The growth was pretty good in the past few years but the increase has dwindled in the last one or two years,” Mr Cheng said. “The market in Macau is not

big, and the sales in 2013 may even go down slightly compared to last year,” he said. Mr Cheng thinks that any new measures taken by the government that increase the cost of running a car will dampen sales.

The Transport Bureau said on December 28 that it would consult the public in the first quarter of this year about measures to ease road traffic congestion, including taxing vehicles more heavily and increasing public parking charges.

Higher spending power “Green vehicles were selling well, accounting for 70 percent of our business, but sales of other types of cars plunged last year,” Mr Mok said. He thinks the tax breaks probably put buyers off vehicles that do not meet the emission standards. The rise in his company’s sales was due to “a booming economy and residents’ higher spending power”, he said. “Cars priced over 350,000 patacas took a larger cut of our total sales, accounting for 30 percent instead of 25 percent in the past,” Mr Mok said. Vehicles costing between 250,000 patacas and 350,000 patacas are the most sought-after among Xin Kang’s customers. Half of its sales are of vehicles in that price bracket. Vang Iek Group sells Jaguars, Land Rovers and Mazdas. “Sales of green vehicles did increase but I do not see much growth in the overall market,” said

12 %

Annual increase in car sales in the first 11 months of 2012

Chui asks for more time on casino smoking ban Despite govt pledges, labour groups reiterate calls for full-smoking ban to protect workers’ health Stephanie Lai

sw.lai@macaubusinessdaily.com

he authorities will continue to strictly enforce the partial smoking ban in casinos, Chief Executive Fernando Chui Sai On pledged yesterday, while asking the public for more time “to work through the rules”.

“The government hopes that in the smoking control process [in casinos], the division between smoking and non-smoking areas will come out clear and that the air quality is supervised,” Mr Chui said on the sidelines of the International Convention of World Federation of Tourist Guide Association. “We hope that the public can give us and the sector more time to work through the smoking ban, so that we can better protect the health of residents and tourists,” he added. A review of the current smoking ban, including the partial smoking control inside casinos, will only be done in 2015. Until then, casinos are allowed to set up smoking areas on half of their floor space. However, for the associations of gaming workers that have persistently advocated for a gradual full smoking ban to be adopted inside casinos, the review will come “too late”. One of these associations, Forefront

of Macao Gaming, says it will meet the Health Bureau later this month to lobby for the number of gaming tables to become a factor in the setting up of smoking areas. “You could say that the overall air quality in the casinos is better since the ban came into force,” Ieong Man Teng, director of the association, told Business Daily. “And basically when it comes to the mass gaming tables, the strict division between smoking and non-smoking areas, a 50-50 proportion, has been successful,” he said. But in VIP gaming rooms the non-smoking areas usually have very few gaming tables, with Galaxy Entertainment Group Ltd the worst example, the activist said. “That means the dealers working in VIP areas do not get assigned to work in non-smoking tables a lot, not even after two weeks or even a month of shift rotation,” he said.

4 |

business daily January 15 2013

macau Govt wants recycled water on new casinos Gaming operators should install water-recycling equipment in their future casino resorts in Cotai, the head of the Maritime Administration, Susana Wong Soi Man, said on Sunday. Last year alone, the water consumption of all hotels and casinos in Macau reached around 17 million cubic metres but most of the existing venues have no water-recycling systems, Ms Wong told media on the sidelines of a public session. The government is currently collecting opinions on a 10-year plan for the use of recycled water in Macau.

Telecom regulator still in the dark over CTM deal CTM purchase sends Citic Telecom’s shares soaring in Hong Kong trading Tony Lai

tony.lai@macaubusinessdaily.com

itic Telecom International Holdings Ltd shot up the most in over two years in Hong Kong trading after agreeing to pay US$1.16 billion (9.28 billion patacas) to become the controlling shareholder of Macau’s largest telecommunication operator. The Hong Kong-listed company announced on Sunday it would buy 79-percent stakes in Companhia de Telecomunicações de Macau SARL (CTM) from British-based Cable & Wireless Communications Plc (CWC) and Portugal Telecom SGPS SA to boost its presence to 99 percent. The two transactions are subject to the approval from the governments of Macau and mainland China, as well as the shareholders of Citic Telecom and CWC. But the Macau Bureau of Telecommunications Regulation said the firm is yet to submit any documents related to the deals for approval. “As CTM had been an exclusive concessionaire [for landline services] until 2009, there are still some issues of a legal nature that require our acknowledgement and approval,” the bureau’s spokesperson told Business Daily.

Citic Telecom pledged to bring in new investment to CTM once it becomes the firm’s controlling shareholder (Photo: Manuel Cardoso)

But the authorities gave no indication on whether they would give the trades the green light. Citic Telecom pledged to bring in new investment to CTM once the two deals are completed, which is

expected for the second half of this year, to improve its infrastructure and performance with “innovative technologies”. “The two sides [Citic Telecom and CTM] have only had initial

discussions on the plan but nothing has been finalised or implemented,” a CTM spokesperson said. “We will explore the opportunities together,” she told Business Daily Both Citic Telecom and CTM made no further comment on the issue.

Roaming visitors But Citic Telecom’s chief financial officer David Chan told Bloomberg the deals will “significantly increase” the company’s size benefiting from the rising number of Chinese visitors using roaming services in Macau. These two deals form the largest acquisition in the city outside the gambling industry according to Bloomberg. And the market enjoyed the deals, as the company – a unit of China’s largest state-owned investment firm Citic Group – surged as much as 21.9 percent yesterday, the most gain since September 2010. The stock closed up by nearly 13 percent to HK$2.53 whereas the benchmark Hang Seng index closed with a 0.64-percent increase. “As long as the gambling business [in Macau] continues to grow, the telecommunication business will also prosper,” said Bill Fan, an analyst at Guosen Securities HK Financial Holdings. “The deal will enhance the profitability of Citic Telecom.” The transactions also sound good for CWC and Portugal Telecom. Zeinal Bava, chief executive of Portugal Telecom, said the sale would allow the group to focus investments in strategic areas – Portugal, Brazil and Africa – and “reinforce even more our financial flexibility”. Deutsche Bank said in a report that “CWC management is now more in control of its destiny having rid itself of onerous commitments left over from the CW Group demerger”. With Bloomberg News/Reuters

January 15, 2013 business daily | 5

MACAU

Govt bungled campus budget, auditors say The new campus of the University of Macau on Hengqin Island will cost 10.2 billion patacas, the Commission of Audit says Vítor Quintã

vitorquinta@macaubusinessdaily.com

The budget for the new campus of the University of Macau was set in patacas but the bills are paid in yuan

he price of the University of Macau campus on Hengqin Island rose above 10.2 billion patacas (US$1.3 billion) last March, despite assurances by the government that there would be no more cost overruns. In a report released yesterday, the Commission of Audit criticises the Infrastructure Development Office for not including all the necessary works in the budget for the new campus and for using unrealistic points of reference in estimating costs. The government’s initial estimate of the price of the campus, made in April 2010, was just 5.8 billion patacas. By November 2011 it had increased the estimate to 9.8 billion patacas. A month later Secretary for Transport and Public Works Lau

Si Io promised the Legislative Assembly that this estimate was final and would not rise. The initial estimate excluded 57 expenses that amounted to about 1.2 billion patacas. The second estimate corrected this omission, but only partially. The Commission of Audit’s report says the estimates were in patacas and based on Macau prices and standards, even though the campus is located in the mainland and its construction paid for in yuan. For instance, the Infrastructure Development Office used the cost of public housing and the Court of Final Appeal building here as references in calculating the cost of the campus buildings. The report says the court building

People feel city richer, more stable than ever The results of an opinion survey indicate that residents believe Macau has never been more prosperous or stable Tony Lai

tony.lai@macaubusinessdaily.com

he percentage of residents that regard Macau as prosperous and stable is higher than ever before, an opinion survey has found. Macau people interviewed last year for the University of Hong Kong Public Opinion Programme’s annual survey give the city a score of 7.65 out of 10 for prosperity, on average. In 2011, the respondents gave the city a score of 7.51 points for prosperity. The respondents in the latest survey gave the city scores of 7.61 for stability and 7.12 for freedom. “The ratings of three out of four core social indicators – namely, freedom, stability, prosperity and democracy – have gone up, with ‘prosperity’ and ‘stability’ reaching record highs,” the director of the programme, Robert Chung Ting Yiu, said last week. But the respondents gave the city a

score of only 5.97 for democracy, less than last year. They expressed greatest satisfaction with Macau’s relationships with the central government and its maintenance of economic prosperity, more than 60 percent of respondents saying they were “very satisfied” or “quite satisfied”. For last year’s survey researchers interviewed by telephone 519 adult residents between December 23 and 28. Nearly two-thirds said they trusted the government and more than 80 percent said they were confident about the city’s future. More than half said housing was the most urgent problem for the government to solve. Chief Executive Fernando Chui Sai On’s approval rating was 64.5 percent, the highest since he took office in 2009.

is different from university buildings and that the data on public housing costs were three years out of date. It says the Infrastructure Development Office failed to take into consideration factors that could influence the budget, such as the cost of the undersea tunnel connecting the campus to Macau. The budget for the tunnel had to be completely redone and it increased fourfold to 2 billion patacas. The report says that as work progressed, the government gathered

“revealing information” about the gap between the estimate and the actual cost of the project, but left the budget unchanged. “The budget was completely out of step with the real construction costs and ineffective in managing and controlling spending,” the report says. This made it even more difficult to assess whether the required changes in expenditure were reasonable and hampered the effective use of public resources, the Commission of Audit says.

6 |

business daily January 15 2013

macau

Cotai earnings likely to exceed peninsula’s for first time ‘Strip’ could account for an historic 51 pct of market’s property EBITDAR in 2013 Michael Grimes

michael.grimes@macaubusinessdaily.com

Cotai – shape of things to come?

otai casino resorts’ earnings before taxation and other costs are likely to overtake those of gaming venues on the Macau peninsula and Taipa for the first time ever during this year according to a Business Daily analysis of data gathered by Deutsche Bank. By 2011 Cotai’s share of Macauwide casino property EBITDAR (earnings before insurance, taxation, depreciation, amortisation and rent) had risen to 16.81 billion patacas (US$ 2.17 billion) – just under 37 percent of the 45.86 billion patacas total property EBITDAR that year – according to figures compiled by DB and examined by us. Gaming gross revenue – the most common performance indicator reported by the media – was 267.87 billion patacas in 2011. Last year, according to DB estimates, Cotai’s property EBITDAR share rose to 25.15 billion patacas – nearly 46 percent of the whole market’s 54.97 billion property EBITDAR. By the end of this year, according to the bank’s estimates,

Cotai property EBITDAR will have risen to around 33.28 billion patacas – 51 percent of the entire market’s 64.72 billion patacas property EBITDAR. “In our opinion, this milestone would be a testament to Sheldon Adelson’s vision of how Macau would grow as a destination market that appeals to people from all walks of life, not just affluent VIP customers,” Grant Govertsen of Union Gaming Research Macau told Business Daily. “In addition, faster growing cash flow on Cotai, relative to Macau peninsula, clearly benefits the existing Cotai operators the most – giving them a leg up on the competition for the next few years.” Factors in Cotai’s rise include increased supply of non-gaming facilities, suggests Deutsche Bank’s ‘Outlook 2013’ report “We believe Cotai-based operators, namely Galaxy, Melco Crown and Sands China, are likely to benefit from the strong visitor growth in 2013 as they have much larger hotel room inventories,” said the author Karen Tang. “As such,

we raise 2013-14 estimated EBITDA forecasts for these three operators the most (7-13 percent),” she added.

Measuring success The gaming companies and analysts tend to use property EBITDA or one of its related measurements as a better indicator of progress than gaming revenue alone. Although betting still makes up the majority of the money passing through the hands of the concessionaires, what matters is what gets taken to the bank. In that context, the contribution of non-gaming to the business models of the operators is showing strong growth among those with exposure to Cotai. In 2011 while Sands China’s gross gaming revenues rose 15 percent year-on-year, its net revenues – including non-gaming components – rose 18 percent, according to data gathered by DB. Not all observers are convinced however that Cotai’s current business is markedly different from that of the VIP-focused downtown Macau. “The talk in the market is all about

how the new developments in the Cotai area are diversifying Macau’s tourism market by growing the mass market gaming segment much more quickly than the VIP segment, and that this in turn has a knock on effect for non-gaming revenues.” says Ben Lee of IGamiX, a Macau based gaming industry consultancy. “But if you were to take a closer look at the overall gaming trends right now, the growth has really come from a new class of mid-level quasi-VIP – the premium mass player. This customer supposedly rejects offers of [gambling] credit and would rather play with his or her own cash and for ‘complimentaries’ rather than cash rebates. On the contrary, I’m hearing reports of these players being incentivised and rebated almost as heavily as the VIP segment. The primary effect of this blurring of the VIP and the premium mass segments may be to make mass gaming revenue appear faster growing than it really is, without necessarily altering the underlying landscape, the new developments notwithstanding”.

Cotai or the peninsula? Industry debates what side of delta offers investors best deal

pinions on what benefit the Cotai investors have achieved for the money they’ve spent vary depending both on whom you talk to and whether they are taking a short- or longer-term view. The most passionate advocate of Cotai – Sheldon Adelson, chairman and chief executive of Sands China’s parent Las Vegas Sands Corp., argues he’s creating a new market. That means judging the peninsula against Cotai is not an apples with apples comparison. Grant Bowie, chief executive of MGM China Holdings Ltd told Business Daily last week: “…at the end of the

day, it’s what you take to the bank after you’ve paid all your bills that matters – not the revenue line by itself.” His company is still waiting for its first Cotai resort, although it passed an important milestone last week with the publication of the US$2.5 billion project in the Official Gazette. Mr Bowie also told us: “The Cotai properties are generating no doubt lots and lots of traffic. But I think what people realise regarding the peninsula properties is that they tend to be a little bit more segmented in terms of where they position themselves.” He added: “That positioning and that segmentation is obviously positive

for the peninsula. There are still a lot of people, particularly in certain premium sectors, that still prefer to be on the peninsula.” But not all the operators are quite so relaxed about having to wait for a Cotai presence. SJM Holdings Ltd feels “left behind more or less” in the race to develop a presence on Cotai, Angela Leong On Kei, an executive director of the company told reporters on the sidelines – appropriately enough – of a horse race meeting at the Macau Jockey Club on Sunday. Although SJM got its Cotai land

grant approved in late October only days after MGM’s, Ms Ho feels the company is being left at the back of the Cotai queue by the government. “We are feeling left behind more or less. But it doesn’t mean a disadvantage in the long-term development. As the last one to get the approval, we can look into the others’ progress and complement what Macau lacks”, she told local broadcaster TDM. She added SJM would be asking for more gaming tables from the government in the interim period. M.G.

January 15, 2013 business daily | 7

MACAU Melco Crown HK shares fall on Taiwan probe The Hong Kong shares of Macau casino operator and developer Melco Crown Entertainment Ltd fell 2.94 percent to close at HK$49.50 (US$6.38) in Monday trading. Business Daily reported yesterday that Taiwan offices of MCE International – a unit of MCE – were being investigated by public prosecutors on the island on suspicion of illegal transfer of US$179 million in 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. MCE says it is cooperating with the investigation.

Family fund ups stake in China Star Entertainment H eung Wah Keung Family Endowment Ltd is increasing its controlling stake in China Star Entertainment Group Ltd – a Hong Kong-listed producer of Cantonese-language films and that also has links to the Macau casino junket industry. Under a bonus issue of shares and bonus convertible bonds, the family body will increase its stake from 50.38 percent to 57.38 percent, according to a regulatory filing to the Hong Kong Stock Exchange. The Endowment is understood to be an investment vehicle for China Star Entertainment’s chairman and chief executive Charles Heung Wah Keung. China Star Entertainment announced in a filing on July 16 last year that it had paid Mr Heung HK$618 million (US$79.7 million) for his 49 percent stake in Hotel Lan Kwai Fong, a casino hotel in

Macau. The deal gave China Star full control over the property, which operates under a Sociedade de Jogos de Macau SA gaming licence. As well as a majority stake in Hotel Lan Kwai Fong – which according to its website has eight VIP gambling rooms on the 18th floor – China Star Entertainment also invests in “operations which receive profit streams from the gaming promotion business in one of the VIP gaming rooms at the Grand Lisboa Casino in Macau” according to another regulatory filing. In 1992 a United States Senate sub-committee inquiry into Asian organised crime identified Charles Heung as a leader of Sun Yee On, one of China’s triad societies linked to organised crime. Mr Heung has always strongly denied that and of being involved in such activity. M.G.

Hotel Lan Kwai Fong, Macau

8 |

business daily January 15 2013

GREATER CHINA Guangzhou Auto looks overseas Guangzhou Automobile Group Co, one of China’s big state-owned auto enterprises, will look overseas for growth, a senior company executive said. Xiangdong Huang, GAC Motor Group vice president, said the company plans to focus on exports, as part of a 2015 strategy. As GAC Motor’s passenger and commercial vehicle technology matures, and the onceexplosive growth of China’s domestic auto market slows, “it is logical that GAC emphasises overseas market expansion”, Mr Huang added. He said the company will look into emerging markets, including Southeast Asia, the Middle East, Latin America and Eastern Europe.

Property tax expansion may be delayed China may postpone expanding a trial property tax nationwide, a senior tax official said in remarks published yesterday. Wang Kang, the chief accountant of the State Administration of Taxation, said both the tax bureau and finance ministry were still working out which cities to include and the rate of tax to be levied in the pilot’s expansion, according to a report in the official Economic Information Daily. Beijing has been actively studying an expansion of its experimental property tax after it kicked off the pilot programme in Shanghai and Chongqing in 2011.

Regulator tries to diversify FX reserves Beijing has set up a new unit to help diversify its US$3.31 trillion holdings of official reserves, the country’s currency regulator said yesterday. The State Administration of Foreign Exchange (SAFE) said the SAFE CoFinancing office had been created to explore new investment options that preserve and increase the value of the world’s largest currency reserve stockpile. “In recent years, the central bank and SAFE have been creating new ways of using foreign exchange reserves to support the real economy and serve for the “venturing abroad” strategy,” SAFE said in a statement on its website.

Li & Fung’s shares dive 16 pct on

Global exporter reported operating income slumped 40 perce Donny Kwok

hares of Li & Fung Ltd fell 16 percent to a three-month low after the global supply chain manager warned of a steep drop in core operating profit, taking investors by surprise and triggering concern over its ability to reach a three-year earnings target. A global economic slowdown has weighed on consumer-related companies and Li & Fung, which sources and supplies goods from shoes to cosmetics to retailers such as Wal-Mart Stores Inc. and Target Corp, has reported shrinking margins in recent years. The Hong Kong-listed company warned on Friday of a 40 percent fall in full-year 2012 core operating profit, hit by restructuring costs and an additional provision tied to its U.S. business unit, LF USA, for which it appointed a new chief. “It was a surprise to the market in terms of timing. It booked in all the provisions from its U.S. operation, but it makes sense to me in a way to book in all one-off losses [in 2012] to pave the way for a turnaround in 2013,” said William Lo, an analyst at Ample Capital. “The U.S. market is picking up and the outlook for Li & Fung is not that bad,” he said. “It may need to revise down its three-year target in the current operating environment, but any weakness in the stock price appears to be a buying opportunity.” The warning comes part way through Li & Fung’s ambitious 3-year plan to grow core operating profit to US$1.5 billion by 2013. However, some investors have questioned whether its reliance on acquisitions to meet growth targets is working, and say its business model is at risk as companies look to save costs by cutting out the middleman

Li & Fung shares fall to three-month low May need to revise threeyear earnings target – analyst Analysts concerned about acquisition strategy

and sourcing goods directly. The latest profit warning means Li & Fung now expects core operating profit to fall to around US$500 million in 2012, well short of its three-year target ending in 2013. The downgrade also came just two months before the company is due to report its full-year results and two months after an analyst briefing, which would likely raise questions on management’s “guidance credibility”, Barclays analysts said in a note.

Rushing for the exit Shares of Li & Fung, whose global distribution centres make it a useful barometer of consumer sentiment, fell as much as 15.5 percent to close at HK$11.7. It was the stock’s biggest percentage loss since August last year. The plunge came amid heavy volume – more than six times the stock’s 30-day average – suggesting some large investors were rushing

Li & Fung – expecting steep drop in operating profit

for the exit. Nearly a third of Li & Fung shares that can be borrowed are out on loan, compared with an average of about 8.6 percent for Hang Seng index constituents, according to data from Markit Securities Finance, indicating some hedge funds are also anticipating a slump in the shares. Analysts at Credit Suisse noted that as well as the weakness in the company’s U.S. business, it appeared that some companies Li & Fung had acquired in the past few years had

Beijing orders official cars off roa As heavy smog blankets the city for a fourth consecutive day

eijing ordered government vehicles off the roads as part of an emergency response to ease air pollution that has smothered China’s capital for the past three days, while warning the smog will persist

National Biotec planning HK IPO China National Biotec Group, China’s largest biotechnology company, is planning an initial public offering to raise about US$1.5 billion in Hong Kong, said two people with knowledge of the matter. The unit of Sinopharm Group Co. may file an application to Hong Kong’s stock exchange by the end of March and start the offering as early as in the second quarter, said the people, who asked not to be identified because the information is private. National Biotec is the fourth-biggest vaccine maker in the world, according to its website.

KEY POINTS

Choked by another day of hazardous smog

until Wednesday. Hospitals were inundated with patients complaining of heart and respiratory ailments and the website of the capital’s environmental monitoring centre crashed. Hyundai

Motor Co.’s venture in Beijing suspended production for a day to help ease the pollution, the official Xinhua News Agency reported. Official measurements of PM2.5, fine airborne particulates that pose the largest health risks, rose as high as 993 micrograms per cubic metre in Beijing on Saturday, compared with World Health Organisation guidelines of no more than 25. It was as high as 500 early yesterday. Longterm exposure to fine particulates raises the risk of cardiovascular and respiratory diseases as well as lung cancer, according to the WHO. “Pollution levels this high are extreme even for Beijing,” Li Yan, Beijing-based head of Greenpeace East Asia’s climate and energy campaign, said in a telephone interview. “Although the government has announced efforts to cut pollution, the problem is regional and to fix Beijing’s problem, we also have to fix industrial pollution in neighbouring

January 15, 2013 business daily | 9

GREATER CHINA

HTC seeks Myanmar edge with new phone

n profit warning

ent in 2012

Smartphone maker opens first store in Yangon

eter Chou, chief executive of Taiwan smartphone company HTC Corp, launched yesterday what he hopes will be a major boost to both a backward tech sector in Myanmar, his country of birth, and to his company’s share of one of the few untapped mobile markets: a phone that locals can use out of the box. Until now, Mr Chou says, Myanmarese users of mobile phones and computers must install fonts in their own language, a process that is cumbersome, often invalidates the device’s warranty and has, he says, slowed innovation and the embrace of technology. HTC has instead teamed up with a local distributor and a software developer to customise Google’s Android operating system so its devices display local fonts and sport a dedicated and, Mr Chou says, intuitive, Myanmar language onscreen keyboard. “You don’t have to spend two months to learn how to type it,” Mr Chou said in an interview ahead of the launch and the opening of the company’s first store in Yangon. “You

failed to meet earnings targets. Li & Fung said on Friday it planned to further reduce brands for distribution in the United States, which analysts said pointed to the failure of some acquisitions. “Over the past few years, L&F’s consistent earnings disappointment and frequent fund raisings have proven our view that the company’s acquisition strategy to grow earnings is unsustainable, given the slow organic growth and the grim growth prospects of the newly-acquired companies,”

just type it. We want to give people here a computing device they don’t have to learn. They just try it, they just use it, they just get it.” Myanmar IT experts say that while the country’s alphabet is no more complex than some other Asian scripts, a failure to agree how to apply an international standard for language symbols called Unicode to existing versions of the computer font has made it difficult to bake the language into software. As a result, web pages and apps will often be unreadable. The issue of fonts may seem a basic one, but reflects the challenges Myanmar faces in catching up with its neighbours as it sheds decades of military control over politics and the economy. Myanmar has one of the lowest mobile penetration rates in the world, with only 3 percent of the population owning a phone in 2011, according to the World Bank. In neighbouring Bangladesh, 56 percent of people have a mobile phone. Reuters

UOB Kay Hian wrote in a research note. With around 60 percent of Li & Fung’s sales destined for U.S.-based retailers, sluggish growth in that market has been a big concern for investors as well as the company’s role as a middleman. “We are concerned about the sustainability of its role as the middleman. Its market share is shrinking as more retail groups and clients take up their own sourcing works,” Mr Hian added. Reuters

HTC – hoping to claw back some ground

regions like Hebei and Tianjin and even as far as Inner Mongolia.” Exposure to PM2.5 helped cause a combined 8,572 premature deaths in Beijing, Shanghai, Guangzhou and Xi’an in 2012, and led to economic losses of US$1.08 billion, according to estimates given in a study by Greenpeace and Peking University’s School of Public Health published on December 18. The burning of coal is the main source of pollution, accounting for 19 percent, while vehicle emissions contribute 6 percent, the report said.

Largest emitter “The number of people coming into our emergency room suffering heart attacks has roughly doubled since Friday when the air pollution became really severe,” Ding Rongjing, deputy head of cardiology at Peking University People’s Hospital said in a telephone interview on Sunday. China, which the World Bank estimates has 16 of the world’s 20 most-polluted cities, is the largest emitter of greenhouse gases. Beijing, home to more than 20 million people, began to release real-time air quality data measuring pollutants of 2.5 micrometres in size in September,

and 74 cities started publishing data including PM2.5, sulphur dioxide and nitrogen dioxide starting January 1. Readings for PM2.5 at some official monitoring sites in the city yesterday fell below 400 micrograms per cubic metre. The U.S. Embassy in Beijing, which uses a monitor in its compound in the east of the capital, showed PM2.5 readings dropping as low as 236 yesterday after reaching 886 on Saturday. While increased coal burning may partly explain the spike, weather conditions trapping the smog are probably more to blame for the high pollution levels, said David Vance Wagner, a San Francisco-based senior researcher at the International Council on Clean Transportation, a policy consultancy on vehicleemissions control policy. “If you have a few days in a row of weather patterns that aren’t conducive to air pollution dispersing then it can really start to pile up,” Mr Wagner, who writes a blog about Beijing’s air quality, said. “Let’s say Beijing’s pollution is five times or 10 times worse than it was last week. It’s not like there’s five or 10 times more pollution being emitted in the regions around.” Bloomberg News

Zoomlion says new products lift sales

oomlion Heavy Industry Science & Technology Co., seeking to boost investor confidence after an anonymous letter questioned its sales, said business surged last year after it offered new products and hired more people. “We achieved growth in 2012 because some of our products gained market share,” Zhan Chunxin, chairman of China’s second-biggest construction-equipment maker, told reporters in Guangzhou. “Zoomlion is a company with integrity.” GPS tracking devices are installed on every machine sold and employees meet each client to ensure there are no fabricated sales contracts, said Hong Xiaoming, a vice president. Zoomlion is trying to allay concerns over its accounts as Chinese companies’ finances draw increased scrutiny after short seller Carson Block’s Muddy Waters LLC uncovered irregularities

including those at now-bankrupt Sino-Forest Corp. Zoomlion didn’t offer customers “aggressive” financing to boost sales as the industry is highly competitive, company secretary Shen Ke said at the briefing. Leasing finance given to customers helped generate about 32 percent of sales in the first nine months of last year, said Ms Hong, who heads the finance department. As much as 27 percent of sales came from offering instalment options and 21 percent from mortgages, she said. Ming Pao Daily reported on January 8 it got the unsigned letter alleging Zoomlion’s sales are exaggerated, prompting the company to have its stock halted from trading. Copies of the note were also sent to Zoomlion and the Hong Kong Securities and Futures Commission, according to the report. Bloomberg News

10 |

business daily January 15 2013

ASIA Japan Airlines probes fuel leak Japan Airlines Co. is investigating a fuel leak on a Boeing Co. 787 Dreamliner, the model that experienced an onboard fire last week in Boston and is now the subject of a U.S. safety review. The leak occurred on Sunday during maintenance at Tokyo’s Narita airport, Japan Airlines said in a statement. The jet was the same one that had a leak at Boston’s Logan International Airport on January 8, the carrier said. “Fuel from a nozzle on the left wing used for discharging fuel leaked out,” Japan Airlines said in the statement.

Indian inflation slows to 11-month low Boosts expectations for an interest rate cut later this month

The Reserve Bank of India (RBI) can support growth only at the margin Suvodeep Rakshit, Kotak Securities Ltd

Inflation slowdown led by a moderation in the prices of fuel and manufactured goods

ndian inflation slowed to the lowest level in almost a year in December, boosting scope for a reduction in interest rates to revive the economy. The wholesale-price index rose 7.18 percent from a year earlier, after climbing 7.24 percent in November, the Commerce Ministry said in a statement in New Delhi yesterday. The median of 34 estimates in a Bloomberg News survey was 7.37 percent. India’s central bank signalled on December 18 that monetary policy should shift toward aiding growth,

predicting the fastest inflation in major emerging nations will cool in an economy expanding at the weakest pace in a decade. Finance Minister Palaniappan Chidambaram, due to unveil the budget next month, has called for cheaper credit to back efforts to spur investment. “The Reserve Bank of India (RBI) can support growth only at the margin,” Suvodeep Rakshit, an economist at Kotak Securities Ltd in Mumbai, said before the report. It will cut the repurchase rate at most by 25 basis points to 7.75 percent at

CapitaLand leads property stocks lower on curbs New measures to ‘significantly cool’ investment demand – analysts

apitaLand Ltd, Southeast Asia’s biggest developer, led declines in Singapore property stocks after the government rolled out more measures to curb speculation on residential and industrial properties. CapitaLand dropped as much as 7.2 percent before closing at S$3.69 (US$3.02) in Singapore. City Developments Ltd, the country’s

second-largest developer, sank 7.5 percent, while Wing Tai Holdings Ltd, the best performing property stock last year, slid 8.9 percent. Home prices in the island state h ave cl i m b ed to a r eco r d a n d the value of logistics buildings doubled over the past three years. Homebuyers must pay 5 percentage points to 7 percentage points more in stamp duties starting Saturday, the government said in a statement last Friday. It also added a levy for sellers of industrial buildings and imposed a tax of as much as 15 percent if the properties are sold within a year. The “severity of latest government measures will significantly cool investment demand, residential developers will see biggest price

the January 29 review, since it faces “a serious dilemma” of trying to help the economy while containing prices, Mr Rakshit said. “Based on this data, we expect the RBI to cut rates by 25 basis points,” said A. Prasanna, economist at ICICI Securities, Primary Dealership, in Mumbai. The Reserve Bank will lower borrowing costs 25 basis points in January, nine of 11 analysts said in a Bloomberg News survey last week. The rest expect a 50 basis-point cut. The Finance Ministry predicts gross

correction,” analysts Elaine Khoo and Gregory Lui at Deutsche Bank AG wrote in a note to clients yesterday. The brokerage cut its rating on City Developments to “sell” from “hold” and Wing Tai’s to “hold” from “buy”. The latest measures follow government efforts that started almost four years ago to rein in residential property prices. Those steps have included restricting interest-only loans for some housing projects and barring developers from absorbing interest payments.

Record prices To ease residential prices that climbed to a record in the fourth quarter, the government also imposed the added stamp duty for permanent residents when they buy their first home, while Singaporeans will have the levy starting with their second purchase, according to the statement. The government will also tighten the loan-to-value limits for buyers

domestic product will rise as little as 5.7 percent in the year to March 31, the slowest since 2002-2003. Inflation remains the fastest in the BRIC group of major emerging markets, stoked by bottlenecks and a 5.8 percent drop in the rupee in the past 12 months. BRIC includes Brazil, Russia, India and China. A separate report yesterday showed Indian consumer prices climbed 10.56 percent in December from a year earlier. That’s the highest since the government started giving the year-onyear data beginning in January 2012. The administration since midSeptember has opened industries such as retail to more overseas investment and pledged to contain the budget deficit, seeking to boost confidence in Asia’s No. 3 economy and avert a credit-rating downgrade. Local passenger car sales by companies such as Tata Motors Ltd. fell a second month in December amid subdued economic growth and cost increases, Society of Indian Automobile Manufacturers data show. Bloomberg News/Reuters

seeking a second mortgage, it said in the statement, 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. “I think these measures are likely to have a lot more teeth than anything we’ve seen so far,” Piyush Gupta, chief executive at DBS Group Holdings Ltd, Singapore’s biggest bank by assets, told reporters yesterday. “It is tough to call how much the slowdown will be, but my own sense is that we might see a 10 to 20 percent slowdown in the mortgage market.” The city’s residential values rose for four straight years, adding 2.8 percent in 2012, government data show. 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. Bloomberg News

January 15, 2013 business daily | 11

ASIA Vietnam may start buying bad debt Vietnam may start buying non-performing loans in the first quarter of this year, a staterun newspaper reported yesterday, as deteriorating asset quality threatens to further strain the economy. The government is likely to establish a national asset management company this month to deal with the debts, the Dau Tu newspaper quoted a National Financial Supervisory Commission official as saying. The government has asked the central bank to submit a plan on the firm’s establishment and will require the Ministry of Justice to amend regulations on dealing with mortgage-based assets.

S. Korea ‘should ease’ immigration policies Central bank governor says the country needs to embrace more migrant workers

By doing so [easing immigration policies] we will be able to utilise these workers... in the right places of the economy and retain social vitality at the same time Kim Choong-Soo, Bank of Korea Governor

South Korea – low birth rate may halve the size of youth population by 2060

outh Korea’s central bank governor yesterday stressed the need to ease immigration policy and bring more foreign workers to a country whose rapidly ageing population poses a serious economic challenge. Speaking to foreign journalists in Seoul, Kim Choong-Soo said Asia’s fourth-largest economy needed to “embrace more migrant workers” in order to drive future growth. “For instance, the U.S. welcomes one million, even up to two million immigrants a year, which helps

its demographics remain so young and maintain economic vitality,” Mr Kim said. After years of promoting family planning in a crowded country of 50 million, South Korea has a chronically low birth rate that will halve the size of its youth population by 2060 and decimate its workforce. One obvious way out, Mr Kim said, was the adoption of “more future-oriented and open immigration policies”. “By doing so we will be able to utilise these workers... in the right

places of the economy and retain social vitality at the same time,” he said. By 2050, South Koreans aged 60 years or over will account for 39 percent of the population, up from 17 percent last year, according to the UN Department of Economic and Social Affairs. South Korea’s fertility rate – the average number of children born to a woman over her lifetime – stood at just 1.01 in 2011, compared to the Organisation for Economic Cooperation and Development

(OECD) average of 1.71. With South Koreans increasingly shunning low-paying manual jobs, Seoul in 2004 adopted legislation allowing companies to hire manual workers from 15 countries – mostly Southeast Asia. As of last year more than 500,000 registered migrant workers – mostly from mainland China and Southeast Asia – were working in the country. Once an economic juggernaut that grew nearly 7.0 percent a year on average since the end of the Korean War in 1953, South Korea has, in recent years, entered a phase of more measured growth. The economy is expected to grow 2.8 percent this year after expanding 2.0 percent in 2012, Mr Kim said. AFP

Flights cancelled, trains delayed as snow blankets east Japan

now delayed train services and disrupted flights in Japan as Tokyo was blanketed by the first snowfall of the season. The Japan Meteorological Agency issued a gale and snow advisory for central Tokyo, with seven centimetres (2.8 inches) of snow already fallen in the city, Kenji Okada, a forecaster for the agency, said yesterday. The snow came 11 days later than the average first fall and six days earlier than last year, according to the official. Delays of as long as 10 minutes are expected for bullet train services to and from Tokyo, Central Japan Railway Co. said on its website. Some of the train lines operated by East Japan Railway Co. have been halted, the company

said. Japan’s financial markets were closed yesterday for a national holiday. All Nippon Airways Co. cancelled 184 domestic flights as of 3pm Japan time, affecting about 40,000 passengers, it said in a faxed statement. Japan Airlines Co. said it cancelled 214 domestic flights, affecting more than 35,000 passengers, as of 3.30pm. One runway at Narita International Airport was closed temporarily for checks due to heavy snow, NHK said. As much as 50 centimetres of snow is expected in the Kanto and Koshin regions and up to 40 centimetres in the northeastern region of the nation by today, the weather agency said in a statement.

Thousands of passengers were affected by flight cancellations

Strong winds were also forecast in areas facing the Pacific Ocean across the country, the agency said. Most schools were closed for Coming-of-Age Day in Japan. KAIS

International School in Tokyo and Yokohama International School in Kanagawa prefecture sent pupils home early. Bloomberg

12 |

business daily January 15 2013

MARKETS Hang SENG INDEX NAME AIA GROUP LTD

DAY %

VOLUME

30.25

1.001669

36552335

CHINA UNICOM HON

1.265823

27219223

CITIC PACIFIC

ALUMINUM CORP-H BANK OF CHINA-H

3.7

1.369863

255442063

BANK OF COMMUN-H

6.25

2.459016

47639667

BANK EAST ASIA

30.9

-0.1615509

1077577

BELLE INTERNATIO

17.28

2.12766

BOC HONG KONG HO

25.75 14.8

CATHAY PAC AIR CHEUNG KONG CHINA COAL ENE-H CHINA CONST BA-H

NAME

PRICE

DAY %

16028277

POWER ASSETS HOL

65.5

1776351

13.2

-0.1512859

17759335

SANDS CHINA LTD

36.6

-0.5434783

10719520

64.95

-0.1537279

3800411

16.34

0.7398274

52524401

COSCO PAC LTD

11.88

0.6779661

16245882

ESPRIT HLDGS

11.24

3.206413

28592227

HANG LUNG PROPER

-0.1349528

2430510

HANG SENG BK

127.4

1.191422

4172140

8.85

1.490826

23691987

HENDERSON LAND D HENGAN INTL

6.52

0.9287926

193556282

2.884615

45969457

CHINA MERCHANT

26.1

-0.5714286

2362496

90.15

0.3338898

25.3

2.845528

9.2

-0.1085776

46162004

LI & FUNG LTD

CHINA PETROLEU-H

VOLUME

1.689708

CLP HLDGS LTD

26.75

CHINA MOBILE

DAY %

13.24

CNOOC LTD

CHINA LIFE INS-H

CHINA OVERSEAS

PRICE

NAME

VOLUME

SINO LAND CO

15.06

-1.310616

6452479

SUN HUNG KAI PRO

123.3

0.08116883

2742992

3626967

SWIRE PACIFIC-A

97.85

-0.1530612

475732

-0.1776199

4626370

TENCENT HOLDINGS

254.8

-0.1567398

4234517

30.8

-0.1620746

4489704

TINGYI HLDG CO

21.15

0.4750594

6050503

119

-0.3350084

1257995

WANT WANT CHINA

10.38

-1.142857

15455592

57.85

-0.1725626

2973522

WHARF HLDG

64.05

0.7867821

2584445

0.9421265

1975285

HONG KG CHINA GS

21.25

0.4728132

2667494

HONG KONG EXCHNG

146.9

2.013889

6111433

HSBC HLDGS PLC

84.65

0.9540847

17052040

12433580

HUTCHISON WHAMPO

84.35

0.1781473

4338893

17672148

IND & COMM BK-H

5.81

0.8680556

186595404

11.74

-15.41787

255310868

31.3

0.3205128

1763907

MOVERS

1 23480

INDEX 23413.26 HIGH

23478.81

LOW

23218.82

CHINA RES ENTERP

26.9

-1.465201

5105115

MTR CORP

CHINA RES LAND

23.4

3.311258

8327323

NEW WORLD DEV

13.86

1.167883

35086150

52W (H) 23486.6

CHINA RES POWER

19.64

-1.207243

4916007

PETROCHINA CO-H

1.102941

49237385

(L) 18056.4

CHINA SHENHUA-H

33.2

-0.1503759

27684944

PING AN INSURA-H

68.9

2.912621

11161429

PRICE

DAY %

VOLUME

31.45

1.125402

11344410

YANZHOU COAL-H

9.2

-0.1085776

46162004

ZIJIN MINING-H

23210

10-January

14-January

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

4.02

1.259446

112539547

AIR CHINA LTD-H

7.21

1.692525

14842500

CHINA PETROLEU-H

1.265823

27219223

CHINA RAIL CN-H

9.41

2.282609

12046370

ZOOMLION HEAVY-H

ANHUI CONCH-H

-1.234568

10867390

CHINA RAIL GR-H

4.88

1.035197

20428134

ZTE CORP-H

BANK OF CHINA-H

3.7

1.369863

255442063

CHINA SHENHUA-H

33.2

-0.1503759

27684944

BANK OF COMMUN-H

6.25

2.459016

47639667

CHINA TELECOM-H

4.4

1.851852

72505996

BYD CO LTD-H

26.5

2.514507

3133020

DONGFENG MOTOR-H

12.72

-1.242236

21482200

CHINA CITIC BK-H

5.05

2.020202

54264109

GUANGZHOU AUTO-H

7.81

2.359109

12655578

CHINA COAL ENE-H

8.85

1.490826

23691987

HUANENG POWER-H

6.95

-0.7142857

18368174

CHINA COM CONS-H

7.82

1.426719

14726432

IND & COMM BK-H

5.81

0.8680556

186595404

CHINA CONST BA-H

6.52

0.9287926

193556282

JIANGXI COPPER-H

21.35

1.666667

8622066

CHINA COSCO HO-H

4.56

40842800

PETROCHINA CO-H

1.102941

49237385

ALUMINUM CORP-H

CHINA PACIFIC-H

26.75

2.884615

45969457

PICC PROPERTY &

12.12

1.337793

17295593

CHINA LONGYUAN-H

6.37

-0.312989

17552300

PING AN INSURA-H

68.9

2.912621

11161429

CHINA MERCH BK-H

18.06

2.84738

19253714

SHANDONG WEIG-H

7.64

2.412869

9438500

CHINA LIFE INS-H

CHINA MINSHENG-H

9.86

4.118268

52571224

SINOPHARM-H

25.45

-0.3913894

2728706

CHINA NATL BDG-H

11.88

-0.3355705

22899554

TSINGTAO BREW-H

46.75

0.6458558

962210

CHINA OILFIELD-H

15.82

2.064516

8113982

WEICHAI POWER-H

35.4

-1.25523

3425570

NAME

MOVERS

PRICE

DAY %

VOLUME

14.02

1.154401

23363037

3.09

31613210

10.86

1.30597

18812679

15.2

3.401361

9786244

1 12020

INDEX 12003.75 HIGH

12017.73

LOW

11813.37

52W (H) 12027.98047 11810

(L) 8987.76 10-January

14-January

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

2.189781

48881751

QINGHAI SALT-A

26.52

3.271028

7059248

13.59

6.923682

164308727

SAIC MOTOR-A

17.41

4.251497

36822016

5.1

3.238866

49982314

SANY HEAVY INDUS

10.06

4.140787

51932565

6.96

2.052786

28115382

SHANDONG GOLD-MI

37.08

1.784244

21223325

4.07

1.75

23638730

SHANG PHARM -A

11.97

4.907975

26249956

13.72

5.619707

29074067

SHANG PUDONG-A

10.35

5.397149

228634872

GD POWER DEVEL-A

2.62

3.557312

104790428

SHANGHAI ELECT-A

4.2

2.189781

8276789

GEMDALE CORP-A

7.08

3.964758

106471535

SHANXI LU'AN -A

22.35

5.623819

27330809

21551026

GF SECURITIES-A

15.36

5.931034

72758416

SHANXI XINGHUA-A

42.28

0.8587786

6702838

27.01

3.884615

19311481

SHANXI XISHAN-A

13.81

2.448071

22134319 59667762

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.84

1.792115

201038834

AIR CHINA LTD-A

5.79

2.116402

23653994

ALUMINUM CORP-A

5.19

1.565558

33904074

CSR CORP LTD -A

ANGANG STEEL-A

4.15

2.977667

28895541

DAQIN RAILWAY -A

ANHUI CONCH-A

18.32

2.690583

37502826

DATANG INTL PO-A

BANK OF BEIJIN-A

9.35

6.25

78983830

EVERBRIG SEC -A

BANK OF CHINA-A

2.98

1.706485

41775001

BANK OF COMMUN-A

5.04

3.917526

103044015

10.55

4.766634

BANK OF NINGBO-A BAOSHAN IRON & S

CHINA YANGTZE-A CITIC SECURITI-A

5.09

1.8

39805160

GREE ELECTRIC

NAME

VOLUME

7.61

3.961749

24143564

GUANGHUI ENERG-A

16.92

3.045067

44303678

SHENZEN OVERSE-A

7.33

3.531073

22.49

4.265183

5468236

HAITONG SECURI-A

10.26

6.986444

131823112

SICHUAN KELUN-A

64.4

7.512521

2649664

CHINA CITIC BK-A

4.27

4.400978

30640844

HANGZHOU HIKVI-A

30.38

3.087886

6787465

SUNING APPLIAN-A

7.15

3.623188

67928941

CHINA CNR CORP-A

4.63

2.888889

42617702

HENAN SHUAN-A

CHINA COAL ENE-A

7.82

2.088773

19569383

HONG YUAN SEC-A

CHINA CONST BA-A

4.75

2.591793

57522936

CHINA COSCO HO-A

4.48

2.050114

31505554

CHINA CSSC HOL-A

24.68

5.831904

CHINA EAST AIR-A

3.46

CHINA EVERBRIG-A

BBMG CORPORATI-A BYD CO LTD -A

64.4

4.698423

3791721

TSINGTAO BREW-A

33.9

1.832382

1640738

18.95

6.162465

30839897

WEICHAI POWER-A

24.7

3.34728

14447081

HUATAI SECURIT-A

9.51

4.04814

39079850

WULIANGYE YIBIN

28.71

-0.2432245

62462704

HUAXIA BANK CO

10.46

5.02008

59575128

YANGQUAN COAL -A

14.1

-3.556772

68731747

35872815

IND & COMM BK-A

4.29

2.142857

112680174

YANTAI WANHUA-A

16.23

4.440154

12578920

2.064897

42793808

INDUSTRIAL BAN-A

17.27

6.081081

148221179

YANZHOU COAL-A

17.91

2.109464

6690446

3.07

4.067797

289794258

INNER MONG BAO-A

36.12

2.178218

55424694

YUNNAN BAIYAO-A

68.08

1.916168

2153462

13.2

3.855232

17629468

INNER MONG YIL-A

24.91

6.045126

22047306

ZHONGJIN GOLD

16.27

2.134338

35181942

CHINA LIFE INS-A

21.82

5.004812

16676759

INNER MONGOLIA-A

5.4

2.079395

74824051

ZIJIN MINING-A

3.84

1.587302

88888227

CHINA MERCH BK-A

13.84

4.216867

157865880

JIANGSU HENGRU-A

30.15

2.62083

9249607

ZOOMLION HEAVY-A

8.98

3.935185

69087530

101.68

1.234568

5426139

ZTE CORP-A

10.32

4.347826

41623131

25.04

4.116424

19120146

11.5

3.139013

13642055

6.458481

36093703

14.19

3.275109

46602088

209.42

-0.8709647

6818358

CHINA INTL MAR-A

CHINA MERCHANT-A

30.1

3.757325

23342858

JIANGSU YANGHE-A

CHINA MERCHANT-A

10.33

4.766734

24936303

JIANGXI COPPER-A

CHINA MINSHENG-A

8.55

6.741573

250216183

CHINA NATIONAL-A

7.89

4.08971

48686932

JINDUICHENG -A JIZHONG ENERGY-A

CHINA OILFIELD-A

16.28

2.005013

9539567

KANGMEI PHARMA-A

CHINA PACIFIC-A

22.61

4.241586

25639879

KWEICHOW MOUTA-A

7.11

2.449568

54188922

LUZHOU LAOJIAO-A

36.34

-0.1922549

24039834

2.24

1.818182

58829128

CHINA PETROLEU-A CHINA RAILWAY-A

6.39

3.398058

40727070

METALLURGICAL-A

CHINA RAILWAY-A

3.35

4.361371

64938705

NINGBO PORT CO-A

2.54

1.6

31470442

PANGANG GROUP -A

4.12

3.258145

MOVERS 293

3 2580

INDEX 2577.725

CHINA SHENHUA-A

24.94

2.465078

22094817

90804725

HIGH

2579.93

CHINA SHIPBUIL-A

4.99

5.720339

130517368

PETROCHINA CO-A

9.03

1.346801

28312396

LOW

2474.18

CHINA SOUTHERN-A

3.96

2.857143

64734103

PING AN BANK-A

17.09

9.97426

93989590

CHINA STATE -A

3.81

3.532609

167551480

PING AN INSURA-A

46.87

5.491785

38876230

CHINA UNITED-A

3.53

1.729107

106103195

POLY REAL ESTA-A

14.1

4.21286

77534723

10.12

166448824

QINGDAO HAIER-A

14.05

5.639098

17460355

PRICE DAY %

Volume

PRICE DAY %

Volume

CHINA VANKE CO-A

52W (H) 2717.825 (L) 2102.135

2470

10-January

14-January

FTSE TAIWAN 50 INDEX NAME

NAME

PRICE DAY %

ACER INC

24.9

0.8097166

14787466

FORMOSA PLASTIC

79.8

-1.481481

4504430

TAIWAN MOBILE CO

ADVANCED SEMICON

25.5

0.591716

15492616

FOXCONN TECHNOLO

88.6 -0.8948546

7585124

ASIA CEMENT CORP

37.6

2566793

FUBON FINANCIAL

36.8

ASUSTEK COMPUTER

333 -0.5970149

AU OPTRONICS COR

12.6

CATCHER TECH

Volume

105.5

0.4761905

TPK HOLDING CO L

477

-2.453988

4696838 5536828

0.990099

23575867

0.2724796

17049487

TSMC

102

UNI-PRESIDENT

54.5 -0.1831502

5055776

UNITED MICROELEC

11.8 -0.4219409

37858051

1932141

HON HAI PRECISIO

87.2

-1.580135

51641645

1.204819

91443562

HOTAI MOTOR CO

234.5

-0.212766

163111

133

-4.659498

24578503

HTC CORP

291

5.054152

16134084

31.35

2.45098

11826898

CATHAY FINANCIAL

31.95

0.3139717

13790660

HUA NAN FINANCIA

4669150

YUANTA FINANCIAL

15.5

11250139

CHANG HWA BANK

16.05 -0.9259259

7323568

LARGAN PRECISION

723

-3.342246

2512023

YULON MOTOR CO

56.3 -0.3539823

2285679

CHENG SHIN RUBBE

75.1 -0.9234828

5140345

LITE-ON TECHNOLO

39.5

1.282051

2590477

CHIMEI INNOLUX C

15.5

2.990033

83761183

MEDIATEK INC

312

-0.16

4955501

CHINA DEVELOPMEN

7.59

22347673

MEGA FINANCIAL H

23.5

0.6423983

23309889

CHINA STEEL CORP

28.25

0.5338078

19313716

NAN YA PLASTICS

59.4

0.1686341

5060950

CHINATRUST FINAN

16.8

1.510574

45597238

PRESIDENT CHAIN

161

590856

CHUNGHWA TELECOM

94.4

0.2123142

4916538

QUANTA COMPUTER

63.2 -0.4724409

8183150

20.35

1.243781

15676185

SILICONWARE PREC

30.7

0.6557377

4754420

102

-1.449275

5574303

SINOPAC FINANCIA

12.95

0.7782101

9828045

34.45

0.1453488

8861959

SYNNEX TECH INTL

58.7

2.982456

12663387

72.6 -0.4115226

6359455

TAIWAN CEMENT

39.5 -0.3783102

11525113

17.65 -0.8426966

16.5

3428286

2642385

30.7 -0.9677419

511981

COMPAL ELECTRON DELTA ELECT INC FAR EASTERN NEW FAR EASTONE TELE FIRST FINANCIAL

7368826

TAIWAN COOPERATI

FORMOSA CHEM & F

77.5

-1.399491

4223487

TAIWAN FERTILIZE

FORMOSA PETROCHE

86.2

-1.146789

1524260

TAIWAN GLASS IND

WISTRON CORP

MOVERS

7 5470

INDEX 5460.91 HIGH

5469.07

LOW

5394

52W (H) 5621.53 5390

(L) 4719.96 10-January

14-January

January 15, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 32.6

16.3

32.4

16.2

32.2

16.1

32.0

16.0

31.8

15.9

36.8

20.8

23.00

36.5

20.6

22.85

36.2

20.4

22.70

35.9

20.2

22.55

35.6

20.0

22.40

Commodities

CURRENCY EXCHANGE RATES

NAME ENERGY

PRICE

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Feb13

93.85

0.309961522

2.21084731

109.4300003

80.05999756

BRENT CRUDE FUTR Feb13

111

0.32537961

-0.09900099

119.2999954

90.38999939

GASOLINE RBOB FUT Feb13

274.02

0.025552108

-0.778505993

292.9699898

220.3500032

949

0.984304336

2.373247033

1031.5

800.25

3.353

0.781484821

0.059683677

4.090000153

3.049999952

GAS OIL FUT (ICE) Feb13 NATURAL GAS FUTR Feb13 HEATING OIL FUTR Feb13 METALS

DAY %

Gold Spot $/Oz Silver Spot $/Oz Platinum Spot $/Oz Palladium Spot $/Oz LME ALUMINUM 3MO ($) LME COPPER 3MO ($) LME ZINC

3MO ($)

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

302.66

0.601628719

-0.171516314

333.4599972

255.6599855

1669.99

0.4215

0.3322

1796.08

1527.21

30.785

1.0504

2.2418

37.4775

26.1513

1636.25

0.3065

7.8076

1736

1379.05

701.4

0.0571

0.2487

725.19

553.75

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

15.255

0.229960578

0.527182867

16.84000015

14.89999962

723

2.010582011

3.544575725

846.25

511

Mar13

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

PRICE

DAY %

0.3702 -0.0062 -0.2185 0.1574 -0.2349 -0.01 -0.0116 -0.0723 0.415 0.033 -0.106 -0.0138 -0.1967 2.3975 -0.5925 -0.3637 -0.1545 -0.7451 -0.7365 -0.3767 0.0097

1.8886 -0.2782 -0.0109 1.3192 -3.6805 -0.0263 -0.0271 0.1656 0.8413 1.0575 -0.3996 0.2625 0.7989 1.6399 -5.4901 -1.3045 -1.5788 -1.0786 -1.3241 -4.9305 -0.0097

YTD %

(H) 52W

1.0857 1.6381 0.9972 1.3487 89.67 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.98 9904 94.648 1.22375 0.8506 8.4894 10.7712 120.13 1.0314

(L) 52W

0.9582 1.5269 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 30.14 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

WHEAT FUTURE(CBT) Mar13

769.5

1.9542895

-1.092544987

948.25

652

(H) 52W

(L) 52W

SOYBEAN FUTURE Mar13

1393.5

1.474604042

-1.13515431

1728.25

1194.5

ARISTOCRAT LEISU

NAME

3.35

1.208459

6.349203

3.44

2.27

677170

COFFEE 'C' FUTURE Mar13

154.25

0.586892729

7.267037552

240.3499908

141.25

CROWN LTD

11.7

1.5625

9.653233

11.72

7.97

1888159

SUGAR #11 (WORLD) Mar13

19.08

-0.469483568

-2.20399795

25.12999916

18.30999947

AMAX HOLDINGS LT

0.079

12.85714

0.119

0.055

12426000

COTTON NO.2 FUTR Mar13

75.69

0.092568104

0.731966995

98.5

66.84999847

BOC HONG KONG HO

25.75

3.206413

6.846471

25.8

19.48

28592227

CENTURY LEGEND

0.295

-3.278689

11.32076

0.34

0.215

836000

5.78

-3.505839

6.25

2.76

1572664

CHINA OVERSEAS

25.3

2.845528

9.523808

25.6

13.385

17672148

CHINESE ESTATES

12.46

1.465798

-4.740061

13.26

8.3

169259

CHOW TAI FOOK JE

12.74

-0.7788162

2.411579

15.16

8.4

5394800

EMPEROR ENTERTAI

2.02

6.878308

2.08

0.99

970000

FUTURE BRIGHT

1.49

-2.614379

22.13114

1.58

0.41

3492000 11189247

CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

PRICE

DAY % YTD %

VOLUME CRNCY

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13488.43

0.1277538

2.932585

13661.87

12035.08984

32.05

5.601317

33.8

15.1

NASDAQ COMPOSITE INDEX

3125.635

0.1241608

3.514518

3196.932

2689.58

HANG SENG BK

119

-0.3350084

0.2527406

120

93.25

1257995

FTSE 100 INDEX

6122.2

0.0101281

3.804635

6131.97

5229.76

HOPEWELL HLDGS

33.2

-0.5988024

-0.1503759

34.4

19.049

2026300

DAX INDEX

7743.44

0.3617379

1.721533

7789.94

5914.43

HSBC HLDGS PLC

GALAXY ENTERTAIN

84.65

0.9540847

4.120537

84.75

59.5

17052040

HUTCHISON TELE H

3.45

0.2906977

-3.089886

3.88

2.98

5265001

LUK FOOK HLDGS I

28.2

-1.225919

15.57377

33.2

14.7

1812164

MELCO INTL DEVEL

10.92

1.486989

21.19867

11.84

5.12

7516121 5699800

NIKKEI 225

10801.57

1.398057

3.909414

10830.42969

8238.96

HANG SENG INDEX

23413.26

0.6412893

3.338229

23486.6

18056.4

CSI 300 INDEX

2577.725

3.805326

2.170996

2717.825

2102.135

MGM CHINA HOLDIN

16.06

0.5006258

14.55064

16.26

9.913

TAIWAN TAIEX INDEX

7823.97

0.06164353

1.616601

8170.72

6857.35

MIDLAND HOLDINGS

3.98

1.015228

7.567566

5.217

3.249

2827000

NEPTUNE GROUP

0.182

8.333333

19.73685

0.222

0.084

29460000

NEW WORLD DEV

13.86

1.167883

15.30782

13.98

7.1

35086150

SANDS CHINA LTD

36.6

-0.5434783

7.805594

37.8

20.65

10719520

SHUN HO RESOURCE

1.49

6.428573

1.5

1.03

5.251142

10.02386

4.62

2.559

28434572 4603000

KOSPI INDEX

2007.04

0.5193647

0.5002373

2057.28

1758.99

S&P/ASX 200 INDEX

4719.707

0.2170301

1.521996

4750.7

3985

4382.498

1.778624

1.524573

4427.652

3635.283

FTSE Bursa Malaysia KLCI

1684.63

0.1146966

-0.255777

1699.68

1509.06

SHUN TAK HOLDING

4.61

NZX ALL INDEX

901.813

0.4994812

2.240229

902.351

718.56

SJM HOLDINGS LTD

20.55

1.481481

14.16667

20.75

12.34

PHILIPPINES ALL SHARE IX

3837.14

0.5263227

3.735081

3844.74

3114.87

SMARTONE TELECOM

14.26

0.1404494

1.27841

17.5

12.96

841000

22.6

-1.525054

7.875891

25.5

14.62

5044874

JAKARTA COMPOSITE INDEX

HSBC Dragon 300 Index Singapor

629.03

-0.41

1.28

STOCK EXCH OF THAI INDEX

1425.23

0.9326799

2.392356

1429.21

1035

HO CHI MINH STOCK INDEX

458.97

-0.803994

10.93466

492.44

Laos Composite Index

1289.02

2.17748

6.112268

1289.02

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

WYNN MACAU LTD ASIA ENTERTAINME

3.86

1.846966

26.14379

7.24

2.4

161958

BALLY TECHNOLOGI

46.91

-0.233943

4.920602

51.16

40.78

288718

349.31

BOC HONG KONG HO

3.25

5.863192

5.863194

3.3

2.56

12685

880.65

GALAXY ENTERTAIN

4.19

-1.758499

5.541561

4.37

1.97

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

1.6273

200

122.99

0.07323027

9.334165

129.6589

84.4902

889429

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily January 15 2013

Opinion A metaphor for Obama

Robert J. Shiller

Professor of Economics at Yale University

We have not reached the pinnacle of economic inclusion. There are hundreds of other possibilities…

s U.S. President Barack Obama begins his second term, he needs a simple way to express his vision and policies for the economy – a metaphor around which support for his policies might crystallise, thereby boosting his administration’s political effectiveness. So, what makes a successful metaphor work? The 2008 Obama campaign used the slogan “Change we can believe in.” But “change” is not a metaphor for a new government: it does not stand for any policies. Nor does “Hope” or “Yes we can!” The 2012 Obama campaign used the one-word slogan “Forward!” Once again, it signifies nothing about policies or their underlying philosophy. Every politician, whether liberal or conservative, wants to move forward, not backward. Obama’s slogans are examples of “dead metaphors”: they are not part of an overall conceptual scheme. By contrast, in the 1930’s, President Franklin Roosevelt used a metaphor that remains very much alive today. The idea of a “new deal” was conceived during his first presidential

election campaign in 1932, though at the time he was still very vague about what the term stood for. Apparently, Roosevelt, or his speechwriters, borrowed it from A New Deal, a book by Stuart Chase that was published in 1932 and adapted the same year into a cover story for the magazine The New Republic. Chase described his new deal in general terms as “the drastic and progressive revision of the economic structure, avoiding an utter break with the past.” And, while the book’s specific policy proposals bear little resemblance to Roosevelt’s subsequent actions, the title had an intrinsic appeal that he must have recognised. The New Deal created an image of a commercial transaction, like the buyout of a company or an incentive package for executives – something that contracting parties bargain over and agree to. It is not imposed. By calling it a “deal,” Roosevelt made clear that the plan was not anti-business: it sounded like an offer to work, to participate, to seize

an opportunity. And, because deals can be good or bad, fair or exploitative, the word “new” provided metaphoric depth, suggesting that Roosevelt’s deal was better, fairer, and more attractive. T h e m e t a p h o r , overwhelmingly endorsed by voters, stood for Roosevelt’s mandate to fix the ailing economy along lines that were innovative but still essentially capitalist. Some of his administration’s initiatives, such as the creation of the Securities and Exchange Commission, seemed antibusiness to some at the time, but have long since been accepted as a boon to competition and dynamism by hemming in unfair or manipulative behaviour. Metaphors, it turns out, are not just words. Modern neuroscience is revealing that metaphors are intrinsic to creativity, for their use activates diverse regions of the brain associated with their multiple meanings. Good metaphors are those that set off the right intuitive connections in our brains. For example, much progress in understanding sound and

light resulted when scientists imagined them in terms of sea waves.

Inclusive economy Formulating a good metaphor for Obama’s second term is itself a task for intuitive creative thought that entails rethinking what he will propose in his second term. A good metaphor might embody the idea of an “inclusive economy.” The word “inclusive” resonates strongly: Americans do not want more government per se; rather, they want the government to get more people involved in the market economy. Opinion polls show that, above all, what Americans want are jobs – the beginning of inclusion. The parallel to Chase’s book today is the 2012 bestseller Why Nations Fail by the economist Daron Acemoglu and the political scientist James Robinson. Acemoglu and Robinson argue that in the broad sweep of history, political orders that include everyone in the economic process are more likely to

succeed in the long term. The time seems ripe for that idea, and it fits with the triumph of inclusiveness symbolised by Obama himself. But another step in metaphor-building is needed to encapsulate the idea of economic inclusion. The biggest successes of Obama’s first term concerned economic inclusion. The Affordable Care Act (“Obamacare”) is providing more people with access to health care – and bringing more people to privatelyissued insurance – than ever before in the United States. The Dodd-Frank financial reforms created the Consumer Financial Protection Bureau, so that privately issued financial products would serve the public better, and created incentives for derivatives to be traded on public markets. And he signed the JOBS Act, proposed by his Republican opponents, which aims to create crowdfunding Web sites that allow small investors to participate in start-up ventures. We have not reached the pinnacle of economic inclusion. There are hundreds of other possibilities, including improved investor education and financial advice, more flexible mortgages, better kinds of securitisation, more insurance for a broader array of life’s risks, and better management of career risks. Much more progress toward comprehensive public futures and derivatives markets would help, as would policies to encourage the emerging world to participate more in the U.S. economy. (Indeed, the inclusion metaphor is essentially global in spirit; had Obama used it in the past, his economic policies might have been less protectionist.) The right metaphor would spin some of these ideas, or others like them, into a vision for America’s future that, like the New Deal, would gain coherence as it is transformed into reality. On January 29, Obama will give the first State of the Union address of his new term. He should be thinking about how to express – vividly and compellingly – the principles that have guided his choices so far, and that set a path for America’s future. © Project Syndicate

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.

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

January 15, 2013 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

All Arab dictators will fall Moncef Marzouki

President of the Republic of Tunisia and was a dissident under the regime of former dictator Zine El Abidine Ben Ali

Yonhap News South Korea’s Ministry of Strategy and Finance on Sunday suggested downsizing government expenditures in an effort to secure welfare resources for the incoming Park Geun-hye administration. In its report to the presidential transition committee, the ministry offered to reassess several of the government’s ongoing tax-spending projects, sources said. President-elect Park earlier pledged to secure 135 trillion won (US$127 billion) to realise her welfare plans for the next five years by bringing the “underground economy” to light.

Once freed from dictatorship, Arab societies will go through a phase of instability that may be more or less violent and will last for many years

Economic Times Influential voices in India, notably the Chairman of the Prime Minister’s Economic Advisory Council, C Rangarajan, have been contemplating imposing a higher rate of tax on those with substantially higher incomes. But taxing the super rich may suddenly be in vogue but is not particularly effective as money is fungible and finds its way to the lowest tax domicile, as there is incentive to evade high marginal rates, according to Aswath Damodaran, a professor of finance at the Stern School of Business, who is renowned for his work on equity valuation.

The Star Foreigners remained firm net buyers of Malaysian equities, purchasing more than net RM700.8 million (US$231.9 million) in the open market in the week ended January 11. MIDF Equities Research said the purchase of Malaysian equities was the highest in 24 weeks as foreigners bought every trading day last week. “The buying streak has now extended to 13 consecutive days,” said the research house. MIDF Research said foreign volume was also increasing. It added the rate of participation (average daily gross purchase and sale) rose to RM847 million.

Bangkok Post Coca International, operator of the sukiyaki restaurants, will take its Mango Tree Thairestaurant chain to the U.S. in 2014. Chief executive Pitaya Phanphensophon was quoted as saying the U.S. economic downturn has lowered the investment cost. Coca will form a joint venture with a local partner to operate Mango Tree restaurants there, he said. The first Mango Tree in the U.S. will open in Washington DC covering 500 square metres and at a cost of 60 million baht (US$1.9 million).

he U.S. futurist Alvin Toffler used to say that when a society reaches a certain degree of development, democracy becomes a technical necessity, not simply an ethical one. This rule didn’t seem to apply to the Arab world. Industrialisation failed, “modernity” arrived late due to colonisation, and when the democratic wave destroyed dictatorships in Latin America and Eastern Europe, it seemed without effect in North Africa and the Middle East. Racists pointed to the wrong cause for this phenomenon, citing cultural specificity. The blockage was instead mainly due to external influences, above all Israel’s conflict with the Palestinians and the support that Western powers gave to dictators. In return, these regimes were mandated to defend the West’s interests in terms of security and access to oil. Despite these obstacles, Arab societies have grown ever more complex during the past 50 years, and the technical necessity that Toffler spoke of eventually broke down all obstacles in the way of democracy – even the Western support for dictatorships.

Different speeds Today, democratisation progresses in different forms and at different speeds throughout the Arab world. In Syria, it is coming at a terrible human cost and in the context of a global and regional struggle for power; in Tunisia and Egypt,

with a very limited degree of outside help; in Libya, with direct intervention. However different the mechanisms and paths, all Arab dictators will fall, probably within the next 10 years. Once freed from dictatorship, Arab societies will go through a phase of instability that may be more or less violent and will last for many years. Some countries may very well fall into chaos and go back to another form of authoritarian regime. Others will become advanced democracies. To succeed, they must overcome two types of challenges. The first is the political requirement for reconciliation and compromise among the two components of Arab societies today. These are the conservatives, focused on identity and represented by Islamists, and the secular – largely Westernised – modernists, represented by parties that are broadly categorised as democratic. The latter are an assemblage of liberals, former socialists, former nationalists and panArab nationalists. The second challenge is social and economic. This one is essentially based on a relentless battle against corruption and the establishment of an economy that must be oriented toward solidarity, departing from the ultra-free-market liberal model that would benefit only the Westernised elites. Tunisia is presently the bestplaced Arab Spring country to win this double challenge. Despite the initial jolts

inherent in any transition period, Tunisians have established a government, led by a coalition of moderate secularists and moderate Islamists. The constitution that is being prepared will result from a wide consensus that will guarantee the valuable durability for the document. The social and economic challenge is more difficult for Tunisia to resolve because the level of expectation among the least-advantaged parts of the population is very high, and resources are scarce.

Tunisia’s assets That said, as soon as the constitution has been voted into law and presidential and parliamentary elections have taken place – all before the end of this year – Tunisia will be able to tackle this second

challenge, too, thanks to its numerous assets. Tunisia has an educated population, human resources (in terms of the qualifications and availability of the labour force), numerous local entrepreneurs who are ready to invest, plus the help and friendship of the U.S., Europe and the Gulf countries. It also enjoys the absence of external enemies and of any real spread of Salafism, which for now threatens the country’s image more than its stability. Tunisia is a real laboratory of democracy. The success of the Tunisian experiment will have a very positive impact on the entire Arab world. Today, the motto of Tunisians is the following: We have only two options, to succeed or to succeed. Bloomberg View

16 |

business daily January 15 2013

CLOSING Hollande wins French labour accord

VW hits global sales record

French business leaders and three unions reached an accord that economists say marks the beginning of President Francois Hollande’s effort to revamp the jobs market while falling short of a labour revolution. The agreement gives companies the right to reduce working time and salaries when demand slows while also extending medical and unemployment benefits and increasing taxes on short-term contracts. Labour Minister Michel Sapin hailed the result as “historic,” even as two national unions refused to back it. Mr Hollande called for the talks in an effort to stem a 19-month-long increase in jobless claims.

Volkswagen AG posted recordbreaking global sales in 2012, up 11 percent at 9.07 million, but the ambitious German automaker continues to trail Japanese rival Toyota Motor Corp. VW, which aspires to be the world’s biggest automaker by 2018, has a fair way to go to surpass the current champion, as Toyota has forecast that 2012 sales will jump 22 percent to 9.7 million vehicles. VW chief Martin Winterkorn expressed confidence for the future. “This industry remains a growth industry worldwide and in this country,” Mr Winterkorn said. “We want to outpace the industry,” he added.

India defers tax-avoidance clampdown Deferral in line with government stated objectives – analyst The Shanghai Composite Index rose 3.1 percent yesterday

China stocks jump on market access for foreigners Regulator may raise the level of quotas for investment programmes

hina’s stocks rose the most in a month after the head of the securities regulator said the nation can increase by 10 times the size of two investment programmes that allow foreign investors to buy securities. China can raise quotas to allow foreigners as well as offshore yuan holders in Hong Kong to buy stocks and bonds in the mainland, said Guo Shuqing, chairman of the China Securities Regulatory Commission. Citic Securities Co. led a rally for brokerages on the prospect that increased demand for equities would boost profit. Hebei Sailhero Environmental Protection High-tech Co. jumped 10 percent and Tasly Pharmaceutical Group Co. surged to a record high as worsening pollution in Beijing may spur demand for health care and environmental protection. The Shanghai Composite Index rose 3.1 percent to 2,311.74 at the close, the biggest advance since December 14. The CSI 300 Index jumped 3.8 percent to 2,577.73, as gauges of financial, technology and health-care companies jumped

more than 4 percent. The Hang Seng China Enterprises Index added 1.3 percent. “Guo’s comments are very significant as it shows the government is trying to get bullish on stocks and it’s a policy signal as well,” Hao Hong, Hong Kong-based managing director of research at Bank of Communications Co., said in a phone interview. China is trying to improve the quality of its economic growth and investing in environmental technology and health care fit into this plan, he said. The Shanghai measure has risen 18 percent from an almost four-year low on December 3, while the CSI 300 climbed 22 percent on signs economic growth is picking up.

Financials rally A gauge of brokerages, banks and developers in the CSI 300 jumped 4.8 percent, the most among 10 industry groups and the steepest gain since December 14. Citic Securities, the biggest brokerage, climbed 6.9 percent to 13.59 yuan (US$2.18). Haitong Securities Co., the second largest, added 7 percent to

10.26 yuan. China can raise the level of quotas for the Renminbi Qualified Foreign Institutional Investors and the Qualified Foreign Institutional Investors programs, Mr Guo said at a conference in Hong Kong yesterday. RQFII allows offshore yuan in Hong Kong to be invested in mainland’s securities while QFII permits foreigners to buy yuandenominated stocks and bonds. Regulators have since 2003 approved a combined QFII quota of US$36.04 billion as of November 30, the State Administration of Foreign Exchange said on December 11. The government scrapped a ceiling on investments by overseas sovereign wealth funds and central banks in its capital markets last month, part of government efforts to encourage long-term foreign ownership and shore up slumping equities. China has also 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. Bloomberg News

ndia will delay by two years implementation of controversial rules on tax avoidance to 2016, Finance Minister P. Chidambaram said yesterday, a decision which earned a positive market reaction and is likely to help attract more capital inflows. The general antiavoidance rules (GAAR), aimed at companies and investors routing money through tax havens such as Mauritius, had been scheduled to be implemented from April 2014. They will now come into effect from April 1, 2016. India’s benchmark BSE index rose as much as 1 percent after the news of the delay and after a slowerthan-expect rise in inflation cemented hopes for an interest rate cut this month. “The indication from the government seems to suggest attracting capital flows is imperative for the economy and to fund the current account deficit,” said Dhananjay Sinha, co-head of institutional research at brokerage Emkay Global. Mr Sinha added that the deferral was in line with India’s stated objectives and recent policy measures like opening up its supermarket and aviation sectors,

which were also aimed at attracting increased foreign capital inflows. The current account deficit hit an all-time high of 5.4 percent of gross domestic product in the JulySeptember quarter, putting the rupee under pressure and increasing the reliance on volatile capital flows to fund the shortfall. This reliance on foreign capital inflows to bridge the gap is regarded as a serious fault line in the economy, haunted by memories of a 1991 balance of payments crisis when the central bank sent 47 tonnes of gold to Europe as collateral for a loan to avert a sovereign default. Mr Chidambaram said the anti-avoidance rules would not apply to foreign funds that were not taking tax benefits from India’s various tax treaties with other nations. The rules would also not apply to non-resident Indians running foreign funds, he told a news conference. According to the proposed rules, investments made before August 30, 2010, would not attract tax provisions under the rules. However, they would apply to investors who route through tax-havens such as Mauritius for getting tax benefits. Reuters

Finance Minister P. Chidambaram