Macau Business Daily, January 21, 2013

Year I Number 203 Monday January 21, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00 www.macaubusinessdaily.com

Coordination missing from urban planning Urban planning in Macau is hobbled by the lack of a government department to oversee development, architect and urban planner Francisco Vizeu Pinheiro tells Business Daily.

Mr Vizeu Pinheiro has published several papers on urban planning and ecological principles.

Pages 6 & 7

Banks move to electronic settlement T

he introduction of a real-time settlement system during the first quarter of this year will help improve cross-border supervision of banking risk, the Monetary Authority of Macau says.

The regulator is preparing for the launch of a pataca instant funds transfer system,

“which will be in operation in the first quarter of 2013,” a spokesperson told Business Daily.

All of the 27 banking institutions operating in the city have been participating in the entire project development and implementation process, including pilot tests and trial runs,

the authority said. The only exceptions are two offshore banks.

The development phase of the “seriously mooted” system began in 2011 as part of the regulator’s plan for enhancement of Macau’s financial infrastructure.

More on page 2

Baby milk shortages as visitors snap up supplies

I SSN 2226-8294

HANG SENG INDEX

Complaints from local consumers over the tight supply of infant milk powder, in particular the imported brand imports, have again reached the government. In a press release published last week, both the Health Bureau and the Consumer Council confirmed that popular milk formula brands Friso 1, Friso 2 and Nestle Nan are now in temporary shortage, and Wyeth Gold is also in very limited supply.

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EU mooting Euro commerce chamber

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January 18

The city could soon have a European Chamber of Commerce, Vincent Piket, the new head of the Office of the European Union to Hong Kong and Macau, revealed.

“We will try to set up a European Chamber of Commerce to help not only the firms already operating in the market but also newcomers in areas that are relevant for the region,” he told Business Daily.

HSI - Movers Name

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Premium-mass table gaming ‘not hurting margins’

%Day

CATHAY PAC AIR

3.35

BELLE INTERNATIO

3.30

ALUMINUM CORP-H

3.12

SINO LAND CO

2.91

CHINA RES LAND

2.66

CHEUNG KONG

-0.61

CHINA RES ENTERP

-0.73

WANT WANT CHINA

-0.76

AIA GROUP LTD

-0.83

TINGYI HLDG CO

-1.41

Source: Bloomberg

The growth of the premium mass market in Macau casino table games isn’t at the expense either of VIP play or of operator margins, suggests a new report from J.P. Morgan in Hong Kong. Distinctions between customer segments in the Macau table games business might seem arcane. But they’re important to investors as casinos’ profit margins on mass-market table games are better than on VIP ones.

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macau

Real-time settlements up and running by March Macau banks have been testing an instant funds transfer system Vítor Quintã

vitorquinta@macaubusinessdaily.com

Macau banks will soon face daily requirements on their pataca liquidity ratios

T

he introduction of a realtime settlement system during the first quarter of this year will help improve cross-border supervision of banking risk, the Monetary Authority of Macau said.

The regulator is preparing for the launch of a pataca instant funds transfer system, “which will be in operation in the first quarter of 2013,” a spokesperson told Business Daily.

All of the 27 banking institutions operating in the city have been participating in the entire project development and implementation process, including pilot tests and trial runs, the authority said.

The only exceptions are two offshore banks.

The development phase of the “seriously mooted” system began in 2011 as

part of the regulator’s plan for enhancement of Macau’s financial infrastructure.

Currently, the transfer of money or securities between banks are made in batches and settled manually at the end of the day, an economist who asked not to be to identified told Business Daily.

The process is “mostly paper-based,” the Hongkong and Shanghai Banking Corporation Ltd said in its latest Asia Market Intelligence on the Macau financial system.

The new system would allow for these transfers to be made individually and settled “on a real-time basis,” just like in Hong Kong and in mainland China, the Monetary Authority stressed.

After the introduction on January 28 of daily reserve rules, the system will also be

able to reject any transfer that would push any bank beyond the minimum requirements for capital reserve.

The settlement of interbank fund transfers among the Macau banks “facilitates enhancements in relevant risk controls and lays a foundation for future cross-border cooperation,” the authority said.

The introduction of a real-time settlement system will enhance the efficiency of pataca fund availability and settlement, the authority’s chairman Anselmo Teng Ling Seng said in March 2011.

An initial step was taken last week with the revision of 20-year-old rules on the amount of cash on hand and minimum liquidity requirements.

Liquidity ratios were previously based on the average weekly amount of

cash in hand held by a bank.

They will now be calculated based on the daily reserves.

The changes were made after consultation with the industry to “enhance the banks’ liquidity risk management,” the regulator said at the time.

The revision of the 1993 rules are not expected to have a substantial impact on the operations of local banks, José Morgado, chief executive of Banco Espírito Santo do Oriente, SA, told Business Daily last Thursday.

“We already covered this issue in our [internal] good practice guidelines,” he said refering to his bank. “These rules might be a greater challenge for bigger banks who were not able to update their technology as quickly because they [the rules] will require bigger capital reserves.”

[New system] facilitates enhancements in relevant risk controls and lays a foundation for future cross-border cooperation Monetary Authority of Macau

Big users to pay more for electricity M acau’s major enterprises,including big hotels and casino resorts, will pay more for their electricity starting next week, power distributor Companhia de Electricidade de Macau SA – CEM announced.

The company will increase the tariff clause adjustment, which reflects fluctuation in energy production cost, by 1 cent to 0.44 patacas (US$0.06) per kilowatt-hour for large enterprises.

The new tariff clause adjustment, which is fixed quarterly, will come into effect “around January 20

or 21,” a CEM spokesperson told Business Daily.

The spokesperson downplayed the impact that the measure will have on the customers, stressing they are mostly “very big companies” such as factories, hotels, and casinos that “are earning good business”.

A big part of CEM’s electricity generation comes from burning fuel oil, whose price has increased by 14.8 percent in the first three quarters of last year.

With costs increasing, the company preferred to keep the tariff of small users unchanged, which cover

about 99 percent of its users, the spokesperson said.

CEM will subsidise 8 cents per kilowatt-hour – up by 1 cent – for this group that includes all Macau homes but also small and medium enterprises such as shops and restaurants.

Households also benefit from the government’s electricity subsidy, which increased from 180 patacas to 200 patacas per month in October.

And the gap between small and big users could get even greater, as the government is proposingahigherelectricitytariff for large hotels and casino resorts.

V.Q.

Big hotels and casino resorts will have to pay more for their electricity

January 21, 2013 business daily | 3

MACAU editorial

Some pharmacies are rationing infant formula, setting a limit of two tins of formula for each customer (Photo: Manuel Cardoso)

A little enforcement goes a long way Michael Grimes

michael.grimes@macaubusinessdaily.com

‘T

Baby milk shortage results in rationing Demand for infant formula surges as mainland shoppers put their faith in Macau food safety standards Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he government is once again beset by complaints from consumers about the scarcity of infant formula, particularly foreign milk powder.

The Health Bureau and Consumer Council said last week that popular infant formula brands Friso 1, Friso 2 and Nestle Nan were in short supply.

There are even more limited supplies of another brand, Wyeth Gold.

The Consumer Council received 14 complaints about infant formula last year.

Most of the complaints were about quality, shortages and price increases.

A spokesman for the Luen Tai pharmacy told Business Daily that shortages of infant formula might appear particularly acute before the Lunar New Year holidays, when mainland Chinese visitors tended to purchase in bulk.

“The buyers from the mainland will not even hesitate before suggesting that they do not mind paying an extra 10 to 20 patacas (US$2.50) to take the milk powder,” said a sales representative. “They just want to get the product.”

Since melamine-tainted milk powder killed mainland consumers in 2008, Macau parents have complained continually about limited supplies of infant formula here.

They say mainland tourists are buying up the product in bulk on a daily basis.

“The pharmacies here basically have set a limit on the amount of milk powder you can purchase to ensure local consumers have a stable supply,” said a spokesman for the Macau Pharmacies Association, which represents about 100 pharmacies.

The Luen Tai and Tsan Heng pharmacies, both members of the association, ration all consumers, residents or visitors, to two cans of infant formula at a time.

But it is not uncommon to see people buying many more cans of formula from pharmacies in tourist areas such as San Ma Lou or Senado Square.

Safety concerns The cost of foreign infant formula has increased by between 5 percent and 6 percent in the past 12 months, which is in line with inflation, the Macau Pharmacies Association says.

It says intense demand for foreign milk powder has not been a factor in the price rises, and that none of its member-pharmacies is hoarding cans of formula for profit.

Despite increases in price, milk formula from overseas is still cheaper in Macau and less likely to be counterfeit than products bearing the same label and sold in the mainland.

“Take Mead Johnson, for instance.

The price of a can here is around 290 patacas, but in mainland China the price of the same brand is 300 yuan,” said a Luen Tai sales representative.

“But, more important, the consumers from the mainland are opting for the foreign milk powder in Hong Kong or Macau because they have more trust in the food safety inspection here,” the sales representative said.

The China Chamber of Commerce of Foodstuffs and Native Produce says that in the face of high demand in the mainland, the government there tried to push down the price of milk powder

last year, by lowering the import tax from 20 percent to 5 percent.

But mainland financial news media Hexun.com and Caixin reported that the price of foreign milk powder did not drop much because the distribution system is complex and promotion costly in the intensely competitive mainland market.

In Macau, the Health Bureau and the Consumer Council say competition between residents and visitors to buy infant formula is likely to persist, and that they will keep a close watch on the supply of imported milk powder.

Government officials inspected shops selling infant formula on Friday.

The Economic Services Bureau, Health Bureau and the Civic and Municipal Affairs Bureau later issued a written statement saying they had found no evidence of hoarding of infant formula.

Consumers from the mainland … have more trust in the food safety inspection here Sales representative, Luen Tai pharmacy

alking past each other’ is a phrase in English meaning two or more people talking about different subjects, when they believe they are talking about the same thing.

It’s a useful place to start when trying to understand how Macau sees itself and how it gets reported overseas – and how some overseas gaming regulators treat it.

One point to note is Macau’s use of the civil code system – inherited from the Portuguese administration – for its laws and regulations, versus the common law system used in the United States and most of the former colonies of the British Empire.

As I understand it, the civil code tradition starts from the ancient Roman – and latterly Napoleonic – position that the state is the arbiter of what is right and what constitutes the common good. That means things must specifically be legislated for or regulated before they are permitted. The common law system starts from the ancient Anglo-Saxon position that things are allowed unless a law or bylaw specifically prohibits them.

Currently Macau seems to have a ‘legislative deficit’, although that’s not necessarily because of its adherence to the civil code system. The city’s Executive Council and legislators are however constantly running simply to stand still – possibly because of a mismatch between the effort and resources put into developing Macau’s economic infrastructure versus those put into Macau’s legal infrastructure.

This isn’t however an argument for ever bigger government. It might be better to start by doing targeted enforcement of the rules we’ve got, rather than writing lots of new ones. Laws only have meaning if the majority of citizens feel there’s a likelihood they will be policed and enforced.

Enforcement does however require ‘boots on the ground’ in terms of officialdom – and political will. Hiring enough of the former at a reasonable cost is not easy in a community with only two percent unemployment. And the latter – the will to enforce – sometimes seems lacking.

It appears on occasions that the government and legislators want to bask in the warm glow of having done the right thing, without the hard part of actually making sure the right thing prevails.

It’s not impossible to achieve both.

The government has put a lot of highly visible effort into enforcing the curtailment or banning of smoking in public places. A total of 9,000 people have been fined since the first anti-public smoking rules came into effect in January 2012 according to a report we carried last week.

But when someone in the United States says something like: ‘Macau should have a licensing system for casino staff’, what the government and legal professionals in Macau actually hear are several messages rolled into one. They include: ‘You need to draft, pass and enforce yet another piece of complex legislation in a legislative programme already jammed with proposals’, and; ‘You’re not doing it right’. And by ‘right’ they mean basically the U.S. or Anglo-Saxon way.

The Nevada Gaming Control Board Chairman A.G. Burnett said last week the relationship between Nevada regulators and Macau’s Gaming Inspection and Coordination Bureau ‘had not been very strong in recent years’.

That could be one of the understatements of the year – and we’re only 21 days in to 2013.

One way to improve relations might be to start from the position that lawmakers and officials in other places might not do everything perfectly, but they are rarely bad.

That’s the courtesy that parliamentarians in Europe and lawmakers in the United States still extend to each other, whatever their respective publics might think.

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business daily January 21, 2013

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HOSPITALITY Home and away One of the constants in Macau’s tourism industry is the small amount of time most tourists spend here. Day-trippers seldom spend even half a day in the city and most tourists that stay overnight do not hang around more than one night. There is a similar pattern with hotel guests. You might imagine that the increase in the supply of hotel rooms and, in particular, the growth in the number of top-quality hotels and facilities would lead to longer stays. That is not the case, however.

Visitors from Macau’s main sources of tourists – the mainland, Hong Kong and Taiwan – spend less time here than other visitors. Visitors from further afield generally stay longer but there are not enough of them to influence the general pattern noticeably.

The average length of stay decreased by about one-quarter of a day between the first quarter of 2011 and the third quarter of last year. The average lengths of stay of tourists from the mainland and Hong Kong followed similar downward trends that pulled down the overall average. Tourists from these markets hardly ever stay more than one night in a hotel. Tourists from Taiwan typically stay longer. At the end of 2011, tourists from Taiwan were staying almost half a day longer than the average. Their average length of stay subsequently dropped noticeably. Going against the trend were Macau residents.

Their average length of stay in hotels here increased to about two nights.

EU companies consider chamber of commerce The EU representative in Macau says a new version of a business-matching programme is on the way Vítor Quintã

vitorquinta@macaubusinessdaily.com

T

he city may soon have a European Chamber of Commerce, according to Vincent Piket, the head of the Office of the European Union to Hong Kong and Macau.

“We will try to set up a European Chamber of Commerce to help not only the firms already operating in the market but also newcomers in areas that are relevant for the region,” Mr Piket told Business Daily.

Hong Kong has a European Chamber of Commerce but there are few business organisations in Macau, including the British Business Association of Macao and the France Macau Business Association.

Mr Piket, a Dutchman, said he had a meeting with a number of European chambers in Macau on Friday and had talked about a single chamber.

“It was they who launched the discussion, which is still at an initial stage,” he said.

He also said there might be a successor to the European Union Business Information Programme (EUBIP), which began in 2009 and ended last year.

Mr Piket’s predecessor, Maria Castillo Fernández, told Business Daily in August that funding for the programme would not be renewed.

But in October the vice-chairman of the European Chamber of Commerce in Hong Kong, Jens-Erik Olsen, said there had been talks with the European Union about extending the programme for another year at no extra cost.

Mr Piket said: “We hope during the course of this year to launch another project, much in the spirit of EUBIP, to continue the work of strengthening business information and representation.”

He said the budget for the new programme would be “a little bit smaller”.

It was “important to see business representation as more than just a function of the availability of EU funds”, he said.

European outreach “My biggest challenge is to explain to potential partners that Macau is bigger than it seems because it has a

large outreach to mainland China,” said Mr Piket, who took over the EU office in September.

He said Macau offered a “very welcoming environment” for European companies, with solid support from the Trade and Investment Promotion Institute.

With Europe “coming out of the financial crisis”, economic recovery would depend on “European firms engaging in regions where there is strong growth, particularly Greater China,” he added.

He is confident they will succeed and said they would create “specialised industry and services based on high value-added and high knowledge”.

Mr Piket spoke at a seminar on the outlook for the European Union this year, sponsored by the EU-funded Jean Monnet Chair at the University of Macau.

He said people in Hong Kong and Macau understood that austerity measures had given Europe “a more stable framework to return to what it’s all about: growth and job creation”.

My biggest challenge is to explain to potential partners that Macau is bigger than it seems

J.I.D.

Vincent Piket, head of the Office of the European Union to Hong Kong and Macau

1.96 nights Average length of hotel stay by Macau residents, 2012 Q3

Vincent Piket has been head of the Office of the European Union to Hong Kong and Macau since September

January 21, 2013 business daily | 5

MACAU Galaxy offers share options to key staff Galaxy Entertainment Group Ltd has granted some of its employees a total of 16.6 million share options of ordinary shares of HK$0.10 each at an exercise price of HK$32.50 (US$4.19) per share. The recipients include four executive directors: the company’s founder and chairman Lui Che Woo; the vice chairman Francis Lui Yiu Tung; Paddy Tang Lui Wai Yu, and Joseph Chee Ying Keung who collectively get a grant of 3.38 million shares. The share option offer is valid for six years, from January 17 2013 to January 16 2019, said a company filing to the Hong Kong Stock Exchange.

High-end ‘mass’ gamblers not depressing casino margins ‘Operating leverage’ keeps premium mass tables as profitable as other main floor tables, some analysts say Michael Grimes

michael.grimes@macaubusinessdaily.com

Premium mass margins holding up – J.P. Morgan

CAM posts first profit ever The Macau International Airport Company Ltd – CAM generated a net annual profit of 14.4 million patacas (US$1.8 million) last year, chairman Ma Iao Hang announced on Thursday.

This is the first profit in the company’s history, since airport operations started in 1995. CAM was able to achieve a net profit last year after a capital increase backed by the government and Sociedade de Turismo e Diversões de Macau SA, its main shareholders. That allowed the company to fully repay the bank loans deriving from the financing needs for airport infrastructure development back in its early stage of construction.

LVS mulling sale of Pennsylvania casino Las Vegas Sands Corp is looking for a buyer for its casino in Bethlehem, Pennsylvania, in the United States.

The news was broken by Bloomberg, quoting people with knowledge of the situation, who asked not to be identified because the matter is private.

Las Vegas Sands, the parent of Macaubased gaming operator Sands China Ltd, is asking as much as US$1 billion (8 billion patacas) for the property, according to the report. A Las Vegas Sands spokesperson told Bloomberg the company doesn’t respond to market speculation. Sands Bethlehem achieved total casino revenue of US$438 million in 2012, according to data from the Pennsylvania Gaming Control Board.

Correction On Tuesday January 15 in a story headlined ‘Cotai earnings likely to exceed peninsula’s for first time’ we referred to EBITDAR as ‘earnings before insurance, taxation, depreciation, amortisation and rent’.

We should of course have said ‘interest’ rather than ‘insurance’ – a parentheses explanation we have accurately reported many times previously. We apologise for the error in this case.

T

he growth of the premium mass market in Macau casino table games isn’t at the expense either of VIP play or of operator margins, suggests a new report from J.P. Morgan in Hong Kong.

For those outside the gaming industry the distinctions between different customer segments in the Macau table games business might seem arcane.

But they’re of importance to investors because the casinos’ profit margins on all categories of massmarket table play are generally thought to be far superior to those of VIP junket play. With the latter, the operators have to share the revenue with more people – not just the near 40 percent that goes to the government in tax, and the operating overheads, but also with the layers of agents that scout for players, bring them to the casino, and issue gambling credit and

collect on player losses.

J.P. Morgan’s latest report ‘Macau Gaming: 2013 outlook’, by Kenneth Fong and Daisy Lu, says: “Customers’ priorities are very different in VIP versus premium mass. For premium mass, they are more concerned about the service and product being offered, whereas VIPs are more sensitive to cash rebates and the amount of credit extension available.”

The report adds: “While we do not rule out some overlap between the two segments, we believe that regular VIP customers who normally play on credit and receive cash rebates would be unwilling to go to the premium mass segment, where they need to bring their own cash to play up front.”

Marketing costs The review suggests that premium mass play – although requiring more

‘reinvestment’ in the players in the form of incentives or complimentary offers than the main mass market – actually manages to maintain margins in line with the rest of the mass market. That, it says, is because operating costs as a percentage of bet money staked are around one third of those in the main mass market.

This it argues, is a function of the much larger size of the minimum bets in the premium mass, where single wagers of HK$2,000 (US$258) are not unusual.

The report says: “While the reinvestment rate for premium mass (typically around 15 percent of mass revenue) is proportionally higher than for regular mass (five percent), this does not mean that premium mass customers have lower margins or are margin-dilutive to the overall mass gaming business.

The key reason lies in the existence of operating leverage.

“For regular mass tables, normally 15 percent of the revenue goes to operating costs and five percent to customer retention. This leaves an EBITDA margin of around 40 percent after a 40 percent government tax,” says J.P. Morgan.

“For premium mass, while its reinvestment rate is higher at 15 percent of mass revenue, the pertable yield is also on average three to four times higher. As a result, at the same absolute amount of operating cost spent per table, the percentage of operating cost per unit of mass revenue will decline to five percent as a result of operating leverage. This enables premium mass to generate similar margins to regular mass.”

‘Made in Macau’ era dawns for casino equipment A n association officially launched on Friday says it aims to develop further the local manufacturing of casino equipment and to promote the sector via annual exhibitions and training of localised talent.

Jay Chun, chairman of Paradise Entertainment Ltd, the parent of local casino equipment maker LT Game Ltd, is also the first chairman of the new body – the Macau Gaming Equipment Manufacturers Association.

It wants to establish a “Made in Macau” brand for casino equipment, as well as increasing the popularity and presence of the city’s own gaming manufacturers in overseas markets, stated Mr Chun at the event.

The association will hold a convention and exhibition annually to “set up a platform of technology

exchanges and trading for Macau casino equipment”, Mr Chun added.

He and his company were criticised at last year’s Global Gaming Expo Asia trade exhibition in Macau, organised by the American Gaming Association and Reed Exhibitions Ltd. The AGA’s chairman Frank Fahrenkopf accused LT Game of using local customs’ enforcement action during G2E Asia to ‘leverage’ some patent litigation it is pursuing against another company, Shuffle Master Asia Ltd. Mr Chun recently sold some electronic gaming equipment patents owned by him to a British Virgin Islands-registered unit of Paradise Entertainment for HK$740 million (US$95.5 million).

Mr Chun told Friday’s gathering the MGEMA also wants to start a testing and certification centre for

casino equipment in the city. Two major international companies – Gaming Laboratories International Inc. and BMM International LLC – currently have equipment testing centres in Macau.

Mr Chun added MGEMA would cultivate local talent in related disciplines such as gaming design, telecommunications and computer software. When Business Daily reported the setting up of the association last August, Mr Chun said the aim of the body was not to be a rival to the American Gaming Association or the Association of Gaming Equipment Manufacturers, but to educate young people.

Many of the firms currently supplying gaming equipment to Macau casinos are members of one or both of those two U.S.-based trade bodies.

T.L./M.G.

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business daily January 21, 2013

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Split definitive Macau’s economy has come a long way in a short time. Including what is expected to have been a slowdown last year – the annual figures are due to be released by the middle of March – gross domestic product at current prices has increased more than fivefold since 1999, the year of the handover. Exports, imports of services and investment have grown at impressive rates.

Trade in goods is small by comparison. But Macau produces little of what it needs and its imports of final and intermediate goods provide an interesting snapshot of the deep structural changes that have taken place.

The chart above shows the main categories of imports in 2000. More than half of all imports were materials and semimanufactured products that fed domestic industry. Consumer goods made up less than one-third of imports, and fuel and capital goods combined amounted to less than 20 percent. In 2011 there was a markedly different picture, as shown in the chart below. Imports of materials dropped precipitously from 52 percent of the total to 10 percent. Imports of fuel and capital goods rose considerably.The most remarkable change was in imports of consumer goods. Their share of all imports jumped from 29 percent in 2000 to 62 percent in 2011. Imports have replaced many kinds of goods that used to be made in Macau – and even exported – not so long ago. There is nothing in the figures that are available for last year which suggest any deviation from these trends.

Top architect urges more care in urban planning Urban planning in Macau is hobbled by the lack of a government department to oversee development, says architect and urban planner Francisco Vizeu Pinheiro.

Mr Vizeu Pinheiro has published several papers on urban planning and ecological principles.

He told Business Daily it is difficult to coordinate an urban planning effort with many departments in charge of the city’s development. He is critical of what he calls “hasty decisions” made by the government, such as the decision to build a public housing complex on Coloane.

Mr Vizeu Pinheiro says the government should improve communication among its departments and with the private sector.

Luciana Leitão

leitao.luciana@macaubusinessdaily.com

Photo by Manuel Cardoso

J.I.D. The content of this column is the work of Business Daily’s journalists.

What is your assessment of what the government has done about urban planning and development?

If you are asking about the master plan now being hammered out, who should be in charge or which department should be in charge of the master plan, I would say none of them and all of them.

According to Macau legislation, each department is autonomous and there is a tendency toward fragmentation, and toward isolation of each department.

We have seen a lot of fragmentation

in the past. The Infrastructure Development Office was divided in two with the creation of the Transportation Infrastructure Office, mainly to oversee the construction of the light rapid transit [elevated railway].

We also saw the creation of the Transport Bureau, which used to be under the Land, Public Works and Transport Bureau.

There was also the creation of the Environmental Protection Bureau.

So there are many departments and, because of the nature of Macau’s

law, no department has to account for itself to any other department.

On the other side of the spectrum you have Singapore, the benchmark for the best cities in Asia. According to the Siemens report, they have what is called the Urban Redevelopment Authority where they have to coordinate all the departments in the government and interact with the private sector.

So, the URA implements the master plan for the city. They know where they want the city to be in 20 years.

Stay in the finest hotels in Macau and read Business Daily

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January 21, 2013 business daily | 7

MACAU A few years ago it was a garden city but now it is a city in a garden. The politicians follow the plan for the city. Not surprisingly, Singapore has changed a lot in the past 10 years and, from being a backward city with nothing of interest and very boring, it became one of the most thriving and energetic cities in Asia. They bet on quality design.

In Macau, many times we go for the low-budget option. There is a tender and we choose the cheapest.

This means that we are not choosing quality. It’s a question of vision and planning.

Have you seen any signs of improvement and changes recently?

I would say there have been changes but only sectoral. For example, they have put many more trees in the city and there are many more garden areas. Visitors coming here do comment about that. But in other areas, in which you require cooperation among different departments, we don’t see it happening.

One very clear problem in Macau is the worsening traffic, not only because it is to do with bridges and roads but also because it is to do with public spaces and residential areas. We cannot have cars on every road.

If we want to have historical places that are pleasant, we have to remove the cars from those areas to make room for more pedestrian and green areas. For this, you need to have different government departments defining those areas as no-car zones.

You also need to have these departments limiting construction heights and density. The city needs these departments not only to consult each other but also to plan together. If that does not happen, we will have one of the most handicapped systems in the world.

Should the city have one department coordinating all the others?

We should have a commission or another department that coordinates all the others. Also, we need a clear vision for the city.

What do we want for Macau in the next 20 years?

Otherwise, we run the risk of taking snap decisions to solve problems.

Those are the worst decisions to take, when you are in a hurry.

I’ll give you an example: the public housing on Coloane. Two years before, it was decided in the policy address that Coloane should be a green area, and suddenly they put thousands of low-quality homes there without proper planning.

Is the lack of coordination between departments the biggest problem with urban planning?

There are many solutions, but we need good management of the city. This can help solve problems not only among government departments but also between the government and the private sector.

I’ll give you an example. At Fisherman’s Wharf maybe more than 60 percent of the shops are closed. Everything could improve a lot if there was cooperation between the government and the various companies that operate public spaces, which are very important for Macau people and for tourists.

For example, from the jetfoil we could have a seaside walk with nice trees, a place to ride a bike, to go jogging, all the way from the jetfoil, passing in front of Fisherman’s Wharf, the Science Museum, the Kun Iam statue and then the lakes.

We have more examples. Another is the fireworks factory in Taipa. It

is a fantastic place. It could be the central park of Taipa. They have enough green trees to countrify the area and at the same time it is a heritage site. It could even lure people to Taipa village.

But is it just within the government or there is also a lack of communication with other private and public institutions?

Each department has many different secretaries, so they don’t need to account for themselves to other departments, and it is a pity because there is no coordination and cooperation among technicians. There is also very little input from the universities and this is an area that Hong Kong and Singapore benefit from.

Another thing Macau lacks is a channel of communication or an interface between the people and the ones doing the planning. There should be some kind of interface that people can use to voice their ideas. Many of these ideas could be introduced in the planning stage, so we would be able to say that planning is done for Macau by its people.

Many times we go for the low-budget option.

There is a tender and we choose the cheapest.

This means that we are not choosing quality

Macau is now discussing important legislation such as the urban planning bill and the heritage protection bill. What’s your take on these laws?

More than a master plan, we need a master for the plan. Unless we have a master for these plans, all the beautiful plans may be useless.

The planning in the British and U.S. systems is done pretty much by guidelines, simple guidelines and not a lot of norms. The more norms we have, the more restricted we are.

For example, the plans for the NAPE area and the lakes have more than 200 pages. Basically, the ones doing the planning, the architects, have very little freedom.

So, the guidelines should say what the principles are: sufficient trees or good ventilation. Keep it simple.

Usually, planning in Macau requires a lot of legislators making laws but has little input from other areas. People from the education sector or to do with construction are consulted afterwards but they don’t take part in the making.

Also, you need to know the environmental impact of projects.

Up to now, I don’t see any analysis of the environmental impact of the

LRT on Nam Van Lake.

Talking about the lake, we have a nautical centre that is managed by the Sport Development Board, but none of the rest of the lake is used, the shops are closed and they are closed because you have a wall between the shops and the water.

It’s useless to go to that place with the wall. They could correct some of these things and turn it into a more enjoyable area.

Traffic is now one of the major concerns among residents. Will the LRT solve this problem?

In 2007, we advocated a different model which was underground but people said it was not possible.

Then, we advocated a monorail, which has a smaller footprint, while the LRT will mean a huge viaduct going through the city.

In many places, they are demolishing LRTs, like Chicago and New York, but Macau is putting one up. For sure it will improve [traffic] and it will take many casino tour buses off the roads, because the LRT line is mostly for the casinos. But I don’t think the LRT will solve all the problems.

We could have, for example, a good public bus network served by electric buses to cut pollution.

They should have a bus rapid transit system, which means bus-only lanes. They should have some control over the number of cars, because one day we won’t have enough space to accommodate the number of cars that people are buying.

Macau is so small that it is very easy to have electric cars. You can

convert taxis to electricity. It is a question of will and then action.

Over the past few years the government has made some adjustments to the traffic system.

Were these any good?

There was a consultation but I have had no feedback from that consultation. I gave my opinion along with other academics. There were some small improvements but there were no big changes. It is better to start now than never.

There are many solutions that could be adopted. Something that could alleviate stress is, for example, flexible working hours.

Why must all public servants begin work at 9am? The ones in the front office, yes, but many others can arrive at 10am and leave later.

This would avert many traffic jams in the rush hours.

Macau is growing rapidly economically but people complain that the quality of life is deteriorating. Do you agree?

Completely. We have more pollution, the design quality of the flats is much worse now, because the space is smaller. A home is not just a place to sleep. It is also a place of edification and enjoyment.

Also, it is very important to coordinate with neighbouring regions. Otherwise, because of the development of Macau, we will start destroying heritage areas and gardens. It makes sense to build outward, such as on Hengqin Island. It is a question of negotiation, but in the long term I believe the quality of life will improve.

8 |

business daily January 21, 2013

GREATER CHINA Snow disrupts flights, blocks roads Snow in northern China has forced the cancellation of more than 100 flights and the closure of dozens of highways, authorities said yesterday. Beijing Capital International Airport’s official website said a total of 111 flights were cancelled at the facility, including 16 international ones. Another 68 flights were delayed. More than 40 highways in northern China were closed due to the snow, the government’s official weather website said. No accidents were reported. As of yesterday weather authorities recorded up to 8.6 centimetres of snow in a mountainous part of northwestern Beijing near the Great Wall of China.

Chinese ec

But posts slowest growth Kevin Yao and Aileen Wang

C

hina’s economy grew at its slowest pace in 13 years in 2012, though a year-end spurt supported by infrastructure spending and a jump in trade signalled the foundation for the stable growth path Beijing says is vital for economic reform may be in sight.

Evidence of a burgeoning recovery in exports, stronger than expected industrial output and retail sales, together with robust fixed asset investment, all indicated that Beijing’s pro-growth policy mix has gained sufficient traction to underpin a revival without yet igniting inflationary risks.

Year-on-year growth of 7.9 percent in the fourth quarter beat a consensus forecast of 7.8 percent in a Reuters poll and snapped a streak of seven consecutive quarters of slowdown.

The performance was at the upper end of the 7-8 percent rate economists reckon is needed to deliver on reforms essential to China’s longterm development after three decades of red-hot, double-digit growth.

Full year growth of 7.8 percent was also just ahead of the poll’s 7.7 percent call and, although the weakest since 1999, comfortably ahead of

Recovery seen tepid amid uncertain outlook for global economy

Shares rebound Caterpillar to take writ on GDP growth on subsidiary ‘miscond

H

ong Kong shares hit a 19-1/2-month high on Friday, while China posted a first gain in three days after better-than-expected data showed the world’s second-largest economy snapped seven-straight quarters of declining economic growth.

Gains picked up in the afternoon, but volumes were well short of the year’s highs, suggesting investors were looking beyond data that showed the China’s economy growing 7.9 percent in the fourth quarter and 7.8 percent in 2012 from a year earlier.

“I think today’s numbers were broadly in line with what people expected... and a trigger for strength in cyclical sectors,” said Wang Aochao, UOB-Kay Hian’s Shanghaibased head of China research.

The Hang Seng Index was up 1.1 percent at 23,601.8, its highest since June 1, 2011. Gains on Friday covered the gap on the chart that

Charge to reduce Q4 earnings by about 87 cen

opened between June 1 and 2, 2011, something the benchmark has struggled to do since the start of the year.

The China Enterprises Index of the top Chinese listings rose 2.1 percent. The CSI300 of the top Shanghai and Shenzhen listings climbed 1.7 percent, while the Shanghai Composite Index gained 1.4 percent.

All four indexes saw weekly gains after posting losses last week.

Onshore outperformed offshore markets for the first time in three weeks. The Hang Seng Index gained 1.5 percent, the China Enterprises 2.2 percent, while the CSI300 jumped 4.5 percent and the Shanghai Composite 3.3 percent.

“We have had a pretty dramatic rally over the last few weeks and most are now waiting to see how this economic recovery will translate into earnings recovery,” Mr Wang added.

Reuters

C

aterpillar Inc. uncovered “deliberate, multi-year, coordinated accounting misconduct” at a subsidiary of a Chinese company it acquired last summer, leading it to write off most of the value of the deal and wiping out more than half its expected earnings for the fourth quarter of 2012.

Shares of Caterpillar fell 1.5 p er cen t i n a fter h o ur s t r a d i n g following news of the fraud, which was discovered after problems were found with the Chinese company’s inventory.

Caterpillar, the world’s largest maker of tractors and excavators, said on Friday it would take a noncash goodwill impairment charge of US$580 million, or 87 cents per share, in the quarter.

Caterpillar closed the purchase of ERA Mining Machinery Ltd and its subsidiary Siwei, China’s fourth-

largest maker of hydraulic roof supports, last June, paying HK$5.06 billion, or US$653.4 million. ERA had been publicly traded in Hong Kong, doing business through Siwei, which is known for making equipment to support roofs in mines.

A member of the Caterpillar board during the course of the Siwei deal told Reuters the board was distracted at the time by a larger transaction and paid relatively little attention to the Siwei acquisition.

“It came as a complete surprise to us,” the former board member said of the fraud, speaking on condition of anonymity because of the sensitivity of the situation. “It was presented to us as a pretty straightforward transaction. It’s a shame. It should have been investigated further.”

At the time of the Caterpillar purchase, ERA Mining was listed in the Growth Enterprise Market

January 21, 2013 business daily | 9

GREATER CHINA Beijing seeks to curb pollution The Beijing city government is inviting residents to comment on draft regulations aimed at controlling and preventing pollution in the capital after smog engulfed the capital this month. The public will be able to give feedback until February 8, the last working day before the weeklong Chinese New Year holiday starts, according to a statement posted yesterday on the website of the legal affairs office of the Beijing municipal government.

The official China News Agency said the draft rules include shuttering some factories temporarily and controlling vehicle movement when air pollution is severe.

conomy shows pick up signs

h since 1999

the government’s 7.5 percent target, which just months ago seemed to some economists to be in jeopardy.

“It’s kind of like a golden spot – stronger growth, but not strong enough to trigger a lot more inflationary concern. That’s perfect for equity markets,” said Dariusz Kowalczyk, Asia ex-Japan senior economist and strategist at Credit Agricole CIB in Hong Kong.

“What everybody wants is growth that’s strong enough to give us peace of mind that revenues will increase and there is no hard landing risk, but not excessive, not strong enough to trigger inflation. And this is what I think we are getting. I’m bullish on China still,” he added.

Market reaction was generally upbeat, with Asian shares advancing and platinum and palladium following suit, while oil traders took the opportunity of data confirming the recovery to book profits after two sessions of steep rises.

China’s new leaders must stabilise the economy this year to keep employment high while avoiding a surge in housing prices and inflation that could undermine reforms needed to overhaul the country’s export-

oriented growth model.

Without stability, incoming President Xi Jinping and Premier Li Keqiang, who are set to be confirmed in March, have no chance of delivering a slew of reforms they say are needed to tackle a host of financial, industrial and income imbalances that threaten China’s future.

Wealth gap China’s statistics chief, admitting the country’s wealth gap was “relatively large”, released a recalculated indicator of economic inequality on Friday, the first time in several years that officialdom has addressed the sensitive issue head-on.

China’s Gini coefficient stood at 0.474 in 2012, down from 0.477 in 2011 and from a peak of 0.491 in 2008, Ma Jiantang, the head of the National Bureau of Statistics, told reporters at a press conference on 2012 economic performance.

The index ranges from 0 to 1, with the 0.4 mark viewed by analysts as the point at which social dissatisfaction may come to a head.

China’s leaders say rebalancing the economy to consumption and

KEY POINTS China exits slowdown, quarterly growth tops forecasts Economy expands 7.8 pct for the full year 2012 was weakest full-year growth since 1999 Income gap narrows to level that still risks unrest

away from the investment and export model followed for the last 30 years holds the key to tackling inequality, but detailed data on Friday underlined the scale of that task.

While consumption made the biggest contribution to growth in 2012, with a 51.8 percent share, the fourth quarter marked the third

tedown duct’

Inflation woes Quarter-on-quarter growth of 2.0 percent was below the market’s expectation of a 2.3 percent rise, which was taken as a sign that the recovery’s momentum is not strong enough to worry the authorities into pre-emptive action to snuff out any whiff of inflation – China’s long term policy pre-occupation.

The People’s Bank of China, which cut interest rates twice in mid-2012 and cut banks’ reserve ratios (RRR) three times since late 2011, has since switched to short-term cash injections via open market operations to guide monetary policy, apparently wary of fanning price pressures or encouraging a property bubble.

“We need to keep vigilant against inflation,” NBS chief Ma Jiantang told a news conference.

Reuters

US$580 million

nts a share (GEM) of the Hong Kong stock exchange, which is “designed to accommodate companies to which a higher investment risk may be attached,” according to the offering circular filed by Caterpillar last year in Hong Kong.

The company was previously known as ERA Holdings Global Ltd and provided “corporate secretarial services” before being acquired by Siwei in September 2010 through a reverse takeover.

In a statement, Caterpillar said an ongoing investigation launched after the deal closed “determined several Siwei senior managers engaged in deliberate misconduct beginning several years prior to Caterpillar’s acquisition of Siwei”.

According to a question-andanswer dialog Caterpillar included in its statement, the company found discrepancies in November between

consecutive quarter of decline.

The fall has been driven by the government’s focus on using investment spending as the main expedient to underpin an economy still levered to external demand.

Exports generate about a third of economic activity and sinking demand from foreign customers in struggling European Union and United States economies dragged on growth in 2012. Net exports made a negative 2.2 percent contribution, data showed.

With China’s consumers still relatively poor – average annual urban disposable income was just 21,810 yuan (US$3,500) in 2011 – it remains too hard for the government to rely on them to help compensate for any shortfall from the export sector.

Writedown in the value of Chinese mining-equipment subsidiary

Shares fell 1.5 pct after hours

the inventory in Siwei’s books and its actual physical inventory, triggering the probe.

The company also said it had replaced several senior managers at Siwei, adding that their conduct

was “offensive and completely unacceptable”.

Representatives for Siwei didn’t r es p o n d to ca l l s a nd r e q u e s t s for comment on the Caterpillar announcement. The company

employs about 4,000 people in Zhengzhou and produces hydraulic roof supports used to prevent rocks from falling into a coal mine’s working area.

Reuters

10 |

business daily January 21, 2013

ASIA Myanmar introduced last year a market-oriented exchange rate

Myanmar aims to modernise Next wave of reforms outlined to aid donors Min Zayar Oo

M

yanmar’s government will unveil a slew of new reforms to donor countries and international organisations, aiming to consolidate achievements since the end of military rule in 2011 but also quickly improve the lives of its citizens.

In opening remarks to donors on Saturday, President Thein Sein said the government wanted “a modern, industrialised country” but also stressed the need to develop the agricultural sector and narrow development gaps between the regions.

He told the donors the government wanted their help to raise living standards and skills of its people.

“This will also help us undertake political reforms that are aimed at transforming the country into a modern, developed democracy,” he said.

A wide-ranging “Framework for Economic and Social Reforms” seen

by Reuters set out broad initiatives to achieve those goals by 2030 plus more immediate priorities for the

next three years.

Admitting Myanmar was “way behind neighbouring countries”, it touches upon the liberalisation of trade and investment, health and education, transparency and infrastructure.

Thein Sein, himself a former junta general, has already pushed through far-reaching reforms since taking office in March 2011 at the head of a quasi-civilian government.

He has introduced a marketoriented exchange rate, freed hundreds of political prisoners and agreed ceasefires with most of the ethnic rebel groups that have fought for decades for autonomy.

In his speech he said peace and stability went hand in hand with socio-economic development.

“We will start political dialogue with all 10 major ethnic armed groups that have concluded ceasefire agreements with the government in the near future,” he said.

Western governments have dropped or eased sanctions imposed on the former junta in recognition of Thein Sein’s reforms, and international firms are keen to move into a country with vast resources, located between China and India and part of a vibrant Southeast Asia heading for closer economic union in 2015.

Improving the environment for foreign investment is a central aim of the latest proposals.

The unification of exchange rates, already undertaken by the government, will be bolstered by further liberalisation efforts, such as removing all exchange and nontariff restrictions on imports “as a matter of urgency”.

The government says it will give priority to a new central bank law that will grant it operational autonomy.

A new foreign investment law was passed at the end of 2012 but left many questions open about how it would work.

“Feedback from the business community suggests that it is particularly important that the law and procedures are specific as to which sectors are restricted with respect to foreign investment and does not allow for discretion with respect to implementation,” the reform document said.

Further efforts at transparency will be made in the natural resources sector. The government will disclose the revenue it gets from oil, gas and mining assets and companies must publish what they pay to the state.

The tourism industry, which requires “immediate adjustments”, will receive a boost from looser visa rules, modelled on those of successful holiday destinations such as Thailand.

Fiscal proposals include raising the threshold for income tax and introducing a value-added tax, and the government will look at how it can make the national budget more transparent.

Reuters

Australia rejects spending cuts As weaker growth and strong currency curb tax receipts

A

ustralia’s government will refrain from implementing “savage” cuts to publicservice expenditure in order to fulfil its pledge to return the budget to surplus in this election year, Treasurer Wayne Swan said.

“One thing is certain – savage cuts would be the wrong thing for our economy,” Mr Swan told business leaders in New York on Saturday.

“It would not be responsible for any government to make deep spending cuts to try and fill a hole in tax revenue when that would put growth and jobs at risk.”

Mr Swan’s comments come a month after he said he’s unlikely to deliver a pledged budget surplus

this fiscal year as weaker growth and a strong local currency curb tax receipts.

Prime Minister Julia Gillard, trailing in polls ahead of this year’s election, last May staked her economic credibility on achieving a A$46 billion (US$48.3 billion) fiscal reversal, driven by the first overall cut to government spending in at least 42 years.

“Further turbulence in the global economy in the second half of last year has meant we’ve had to write down in just four months the revenue loss we expected over a full year,” Mr Swan said. “We are still delivering one of the biggest fiscal consolidations in our nation’s

history, and we’ll continue our fiscal discipline despite the big revenue write downs which have made a surplus unlikely this year.”

The government, in a midyear review released in October, forecast a budget surplus of A$1.08 billion in the 12 months ending June 30. It recorded a A$44 billion deficit last fiscal year.

“You can use every defence in your policy arsenal at home, but when it comes to the global economy some things are simply out of your hands,” Mr Swan said.

In August, Resource Minister Martin Ferguson told reporters that “the resources boom is over,” while Reserve Bank of Australia Governor

Treasurer Wayne Swan

Glenn Stevens told lawmakers “the peak of the resource investment boom as a share of gross domestic product, the highest such peak in at least a century, will occur within the next year or two.”

Bloomberg News

January 21, 2013 business daily | 11

ASIA

Japan govt, BOJ ‘closer’ on monetary policy statement Central bank to meet today as economic minister calls for common policy goals

J

apanese Economics Minister Akira Amari said yesterday that the government and the Bank of Japan were getting closer to an agreement on a joint statement on monetary policy expected to be issued this week.

The government has been pressuring the BOJ to adopt a 2 percent inflation target and make job creation part of its monetary policy mandate. “[A difference between] the government and the BOJ is narrowing about the contents of the joint statement, but I cannot disclose details,” Mr Amari told public broadcaster NHK. “It is obviously necessary to share common policy goals between the government and the BOJ and strengthen cooperation.”

Mr Amari said it was important to try to beat deflation by setting up inflation goals.

Sources familiar with he BOJ’s thinking told Reuters that the government and the BOJ had agreed to set 2 percent inflation as a new target at its next rate review that starts today, when the central bank will also consider making an openended commitment to buy assets until

Economics Minister Akira Amari

the target is in sight.

Mr Amari also said the joint statement would likely not include the phrase “long-term” to describe the timeline for achieving the inflation target.

Thai tycoon trumps OUE’s bid for F&N Endgame near for biggest corporate battle in Southeast Asia

T

hailand’s third richest man has raised his takeover offer for Singapore’s Fraser and Neave Ltd, valuing the property and drinks conglomerate at nearly US$11.3 billion, a move to fend off a rival bid from a group run by Indonesian tycoon Stephen Riady.

Thailand’sTCCAssetsLtd,headedby billionaire Charoen Sirivadhanabhakdi, increased his offer to S$9.55 (US$7.78) a share, above the S$9.08 made by a consortium led by Riady’s Singaporelisted property company Overseas Union Enterprise Ltd. A formal auction will begin today if neither bidder declares a final offer, according to rules set by Singapore’s securities regulator, the Securities Industry Council (SIC). The regulator stepped in this month to try to end the takeover battle that was sparked in July when Mr Charoen bought a 22 percent stake in F&N from Singapore’s OCBC group.

“It is unprecedented to go down the road of an auction of this format in Singapore,” said David Smith, head of corporate governance at Aberdeen Asset Management Asia Ltd. Mr Charoen acquired an additional 90.8 million shares, or a 6.3 percent stake in F&N, at S$9.55 each on Friday. The move raised his total stake in F&N – held through TCC Assets Ltd and Thai Beverage Plc – to 40.45 percent, including acceptance from shareholders. Mr Charoen’s previous

offer was S$8.88 per share.

The Thai gambit puts the pressure on the Overseas Union-led consortium to respond by either declaring a final offer or withdrawing from Southeast Asia’s largest ever corporate acquisition.

If it comes to an auction, both sides must revise their offers in cash and without conditions, until a final winning offer is accepted or until the securities watchdog steps in.

At stake is a 130-year-old group with property assets worth more than S$8 billion as well as soft drinks, dairy and publishing businesses.

Members of the Overseas Union-led consortium, including U.S. hedge fund Farallon Capital Management Llc, spent Friday night discussing their next move, according to a source with direct knowledge of the matter.

Reuters

KEY POINTS Charoen increases offer price to S$9.55 from S$8.88 TCC Assets, ThaiBev now own 40.45 pct of F&N Overseas Union-led group had bid S$9.08/share

The BOJ, however, might face a challenge if the yen weakens too far and the trend needs to be stopped, said Koichi Hamada, who’s advising Prime Minister Shinzo Abe on choosing a new central bank chief.

“It won’t be easy,” Mr Hamada told reporters in Tokyo yesterday, referring to decisions that the central bank would need to make on slowing monetary easing. He spoke after appearing with Mr Amari on an NHK television show.

Investors are gauging how far the government may let the Japanese currency slide after Mr Abe’s pledges of aggressive fiscal and monetary action triggered a 10 percent decline against the dollar from mid-November. They got mixed signals last week, when Mr Amari highlighted harmful effects of an excessive decline and then said he had been misinterpreted, while Mr Hamada said 110 per dollar would be “too weak”.

The yen slipped 0.2 percent to 90.10 per dollar last week in New York and touched 90.21, the weakest since June 2010.

Policy makers are working “hard to raise prices and influence the yen,” Mr Hamada said. “If it goes too far, it should be stopped.”

“I mean monetary easing should be slowed. At that time, the BOJ will have to consider the timing and speed,” he added.

Reuters/Bloomberg News

12 |

business daily January 21, 2013

MARKETS Hang SENG INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

29.7

-0.8347245

53624261

CHINA UNICOM HON

13.18

2.012384

33688759

POWER ASSETS HOL

ALUMINUM CORP-H

3.97

3.116883

22099157

CITIC PACIFIC

12.84

-0.155521

13952356

SANDS CHINA LTD

BANK OF CHINA-H

3.77

2.445652

478693724

CLP HLDGS LTD

64.95

-0.1537279

3879565

BANK OF COMMUN-H

6.33

2.096774

32561646

CNOOC LTD

16.38

2.247191

69483849

BANK EAST ASIA

31.4

0.8025682

1585657

COSCO PAC LTD

12.28

1.655629

BELLE INTERNATIO

17.54

3.297998

17395800

11.1

2.022059

BOC HONG KONG HO

25.95

1.764706

15110662

30.2

CATHAY PAC AIR

15.42

3.351206

7748275

HANG SENG BK

119.4

CHEUNG KONG

HENDERSON LAND D

59.35 74

NAME

NAME

ESPRIT HLDGS HANG LUNG PROPER

130.6

-0.608828

3795053

CHINA COAL ENE-H

8.66

1.168224

24980714

CHINA CONST BA-H

6.63

1.531394

376809041

CHINA LIFE INS-H

26.7

2.495202

31535903

CHINA MERCHANT

26.1

0.3846154

2838671

87.65

1.154068

17372462

HUTCHISON WHAMPO

25

0.8064516

13895952

IND & COMM BK-H

9.19

2.33853

85481254

LI & FUNG LTD

CHINA MOBILE CHINA OVERSEAS CHINA PETROLEU-H CHINA RES ENTERP

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

PRICE

DAY %

65.55

0.3828484

1330853

37.5

2.459016

10676421

SINO LAND CO

15.58

2.906209

11573522

SUN HUNG KAI PRO

127.9

1.507937

6459901

6194985

SWIRE PACIFIC-A

98.75

0.5089059

1069148

8581621

TENCENT HOLDINGS

270.4

1.121915

4994136

1.683502

6070935

TINGYI HLDG CO

21

-1.408451

3924100

0.3361345

1469100

WANT WANT CHINA

10.44

-0.7604563

16269900

0.3381234

3721167

WHARF HLDG

64.85

0.6987578

3656646

0.06761325

2462920

21.3

0.2352941

4808030

149.2

0.1342282

4226012

85.3

0.4120071

16174493

85.15

1.610979

7696020

5.94

1.712329

283302942

11.94

0.6745363

36559638

31.3

0.3205128

1989650

NAME

MOVERS

0 23610

HIGH

23601.78

LOW

23213.76

27.1

-0.7326007

3411857

2.660754

13168000

NEW WORLD DEV

14.36

1.699717

23204617

52W (H) 23606.5

CHINA RES POWER

20

2.249489

8016852

PETROCHINA CO-H

11.14

2.014652

88920248

(L) 18056.4

CHINA SHENHUA-H

32.65

1.083591

21830012

PING AN INSURA-H

69.8

1.89781

11797939

MTR CORP

7

INDEX 23601.78

23.15

CHINA RES LAND

43

VOLUME

23210

16-January

18-January

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

CHINA PACIFIC-H

32.3

3.525641

16756918

YANZHOU COAL-H

14021360

CHINA PETROLEU-H

9.19

2.33853

85481254

ZIJIN MINING-H

3.116883

22099157

CHINA RAIL CN-H

9.06

-2.159827

19061212

28.6

2.877698

9431452

CHINA RAIL GR-H

4.61

-2.123142

50902622

BANK OF CHINA-H

3.77

2.445652

478693724

CHINA SHENHUA-H

32.65

1.083591

21830012

BANK OF COMMUN-H

6.33

2.096774

32561646

CHINA TELECOM-H

4.4

0.456621

91862878

BYD CO LTD-H

26.8

4.280156

3945059

DONGFENG MOTOR-H

12.3

-0.6462036

22057036

CHINA CITIC BK-H

5.17

2.7833

77932331

GUANGZHOU AUTO-H

7.25

0.9749304

9764409

CHINA COAL ENE-H

8.66

1.168224

24980714

HUANENG POWER-H

7.05

1.878613

19132585

CHINA COM CONS-H

7.99

3.363519

35251900

IND & COMM BK-H

5.94

1.712329

283302942

CHINA CONST BA-H

6.63

1.531394

376809041

JIANGXI COPPER-H

21.45

1.658768

11084863

CHINA COSCO HO-H

4.52

3.432494

21814250

PETROCHINA CO-H

11.14

2.014652

88920248

CHINA LIFE INS-H

26.7

2.495202

31535903

PICC PROPERTY &

11.98

1.870748

14181090

CHINA LONGYUAN-H

6.46

4.700162

23574357

PING AN INSURA-H

69.8

1.89781

11797939

CHINA MERCH BK-H

18.5

2.892102

25051483

SHANDONG WEIG-H

7.54

-0.6587615

13189000

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

4.01

2.295918

224382748

AIR CHINA LTD-H

7.38

3.216783

ALUMINUM CORP-H

3.97

ANHUI CONCH-H

NAME

CHINA MINSHENG-H

10.48

5.01002

45642095

SINOPHARM-H

25.2

1.204819

4909081

CHINA NATL BDG-H

11.94

1.358234

28526528

TSINGTAO BREW-H

45.3

0.2212389

2583000

CHINA OILFIELD-H

15.96

2.570694

12883387

WEICHAI POWER-H

33.85

0.147929

5341974

NAME

PRICE

DAY %

VOLUME

13.52

2.424242

24640630

3.18

1.273885

61540148

ZOOMLION HEAVY-H

11.08

3.551402

21571185

ZTE CORP-H

14.76

0.9575923

10775927

MOVERS

37

3

0 12120

INDEX 12105.71 HIGH

12112

LOW

11774.17

52W (H) 12112 11770

(L) 8987.76 16-January

18-January

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.8

1.083032

93251278

CITIC SECURITI-A

13.5

1.351351

115184737

AIR CHINA LTD-A

5.9

4.056437

29272547

CSR CORP LTD -A

5.01

1.622718

ALUMINUM CORP-A

5.26

1.740812

29890700

DAQIN RAILWAY -A

7.05

ANHUI CONCH-A

18.3

0.8264463

25775781

DATANG INTL PO-A

BANK OF BEIJIN-A

9.17

1.550388

38591268

EVERBRIG SEC -A

BANK OF CHINA-A

2.97

0.6779661

30687006

GD POWER DEVEL-A

NAME

NAME

NAME

PRICE

DAY %

VOLUME

SAIC MOTOR-A

17.09

4.654011

35612040

65235361

SANY HEAVY INDUS

10.19

0.4930966

37045934

0.5706134

28176628

SHANDONG DONG-A

47.53

1.451441

9157713

4.27

0.9456265

28266380

SHANDONG GOLD-MI

38.55

1.688209

18975707

13.88

2.967359

35132838

SHANG PHARM -A

12.2

0.660066

11206842

2.81

4.850746

239054018

SHANG PUDONG-A

10.16

1.296112

129872645

4.97

1.635992

59569190

GEMDALE CORP-A

7.01

2.936858

94181995

SHANGHAI ELECT-A

BANK OF NINGBO-A

10.56

2.12766

17334606

GF SECURITIES-A

15.04

0.4676019

46664147

SHANXI LU'AN -A

BAOSHAN IRON & S

5.01

1.008065

21320038

GREE ELECTRIC

28.3

6.390977

31520576

17637983

GUANGHUI ENERG-A

17.85

0.7336343

38149071

BANK OF COMMUN-A

BBMG CORPORATI-A

7.65

0.9234828

4.22

1.199041

7422148

22.65

3.566529

16347301

SHANXI XINGHUA-A

41.59

0.6534366

4795863

SHANXI XISHAN-A

14.31

4.072727

42832311 51239434

23.96

7.492149

9799289

HAITONG SECURI-A

10.17

1.497006

65961639

SHENZEN OVERSE-A

7.29

3.404255

CHINA CITIC BK-A

4.42

4.245283

60114021

HANGZHOU HIKVI-A

33.34

-1.79676

6305317

SICHUAN KELUN-A

67.35

1.767906

1829335

CHINA CNR CORP-A

4.72

3.508772

108018738

HENAN SHUAN-A

65.99

-1.034793

3317899

SUNING APPLIAN-A

7.5

1.626016

51464691

CHINA COAL ENE-A

7.92

1.799486

14812321

HONG YUAN SEC-A

18.67

0.5926724

19550350

TSINGTAO BREW-A

34.24

2.147971

3019570

CHINA CONST BA-A

4.65

0.867679

29933985

HUATAI SECURIT-A

9.4

0

44631420

WEICHAI POWER-A

24.24

0.8319468

9128080

BYD CO LTD -A

CHINA COSCO HO-A

4.47

0.6756757

15909332

HUAXIA BANK CO

10.55

1.833977

38960749

WULIANGYE YIBIN

27.58

-1.850534

55228659

CHINA CSSC HOL-A

23.43

-0.3402807

15274476

IND & COMM BK-A

4.22

0.7159905

58612565

YANGQUAN COAL -A

14.29

1.419446

21214445

CHINA EAST AIR-A

3.6

2.564103

33110399

INDUSTRIAL BAN-A

17.31

1.584507

112496066

YANTAI WANHUA-A

15.92

0.6321113

9352401

CHINA EVERBRIG-A

3.04

1.672241

120598800

INNER MONG BAO-A

35.95

0.6157291

29053179

YANZHOU COAL-A

18.23

1.390434

7241764

CHINA INTL MAR-A

12.96

2.208202

12197022

INNER MONG YIL-A

26.62

2.899111

14957196

YUNNAN BAIYAO-A

73.04

0.05479452

1665306

CHINA LIFE INS-A

20.51

-0.04873294

32005517

INNER MONGOLIA-A

5.56

0.1801802

72116971

ZHONGJIN GOLD

16.79

1.572898

30633772

CHINA MERCH BK-A

13.37

1.134644

110808831

JIANGSU HENGRU-A

31.61

1.184379

5413698

ZIJIN MINING-A

3.87

0.78125

63869692

20163338

JIANGSU YANGHE-A

97.82

-0.3666735

3471810

ZOOMLION HEAVY-A

9.06

1.116071

39784801

JIANGXI COPPER-A

24.84

1.181263

12732653

10.17

0.1970443

24484479

12.8

-0.07806401

28469554

CHINA MERCHANT-A

30.91

5.856164

CHINA MERCHANT-A

10.4

1.661779

23248284

CHINA MINSHENG-A

8.78

3.905325

173534881

7.73

2.113606

38400129

JIZHONG ENERGY-A

15.79

3.608924

25490279

16.54

2.351485

9571574

KANGMEI PHARMA-A

15.03

0

34146128

203.76

-0.6678692

5531807

CHINA NATIONAL-A CHINA OILFIELD-A

JINDUICHENG -A

22.08

1.330886

25421208

KWEICHOW MOUTA-A

CHINA PETROLEU-A

6.86

1.47929

37819809

LUZHOU LAOJIAO-A

34.58

-2.09513

17658373

CHINA RAILWAY-A

6.14

0.4909984

30526205

METALLURGICAL-A

2.25

0.896861

51256644

2.56

1.185771

22838177

4.02

1.005025

59041890

9

1.010101

CHINA PACIFIC-A

CHINA RAILWAY-A

3.27

1.23839

55606982

NINGBO PORT CO-A

CHINA SHENHUA-A

24.71

1.729107

14268963

PANGANG GROUP -A

ZTE CORP-A

MOVERS

268

26

6 2610

INDEX 2595.439

CHINA SHIPBUIL-A

5.03

0.6

50270486

PETROCHINA CO-A

19568114

HIGH

2600.44

CHINA SOUTHERN-A

4.12

1.728395

44279831

PING AN BANK-A

18.33

3.325817

66536765

LOW

2540.43

CHINA STATE -A

3.8

1.333333

138641960

PING AN INSURA-A

46.45

3.039042

25987554

CHINA UNITED-A

3.59

1.412429

107275749

POLY REAL ESTA-A

14.29

5.461255

81385832

CHINA VANKE CO-A

10.12

0

166448824

QINGDAO HAIER-A

14.16

3.206997

13775120

CHINA YANGTZE-A

7.39

2.354571

65855240

QINGHAI SALT-A

27.69

3.514019

9385848

PRICE DAY %

Volume

PRICE DAY %

VOLUME

52W (H) 2717.825 (L) 2102.135

2540

16-January

18-January

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

24.35

1.670146

6976839

24.8

2.057613

36.55

0.9668508

NAME

NAME

PRICE DAY %

FORMOSA PLASTIC

80.2

1.77665

3528738

TAIWAN MOBILE CO

14138412

FOXCONN TECHNOLO

86.3

1.529412

6475096

TPK HOLDING CO L

18766450

FUBON FINANCIAL

36.3

3.125

22283570

TSMC

VOLUME

106.5

1.428571

481

6.181015

3144977 5839397

101.5

2.215509

49874215

UNI-PRESIDENT

52.3

0.965251

10877939

UNITED MICROELEC

11.5

2.678571

48558324

WISTRON CORP

33.7

0.5970149

27838816

ASUSTEK COMPUTER

330

2.009274

3111481

HON HAI PRECISIO

85.4

1.787843

34719928

AU OPTRONICS COR

11.5

-1.287554

189210640

HOTAI MOTOR CO

227

0.8888889

385307

CATCHER TECH

129

2.380952

4845740

HTC CORP

288

3.041145

13213082

CATHAY FINANCIAL

31.9

1.592357

12127867

HUA NAN FINANCIA

16.85

1.201201

3098104

YUANTA FINANCIAL

15.05

1.006711

9764318

CHANG HWA BANK

15.95

1.269841

5336676

LARGAN PRECISION

725

0.8344924

1689409

YULON MOTOR CO

54.3

0

3092022

CHENG SHIN RUBBE

73.8

0.5449591

3869251

LITE-ON TECHNOLO

39.45

0

3275766

CHIMEI INNOLUX C

13.9

-1.766784

264134309

MEDIATEK INC

309

0.6514658

5509089

CHINA DEVELOPMEN

7.72 -0.1293661

65321251

MEGA FINANCIAL H

23.2

1.754386

13133557

CHINA STEEL CORP

28

1.818182

15929027

NAN YA PLASTICS

59.4

1.020408

4063870

16.65

1.215805

24554445

PRESIDENT CHAIN

161 -0.3095975

589997

CHUNGHWA TELECOM

94.7

0.8519702

7642382

QUANTA COMPUTER

64.6

1.412873

10833029

COMPAL ELECTRON

20.8

2.716049

25417762

SILICONWARE PREC

30.65

0.9884679

6887839

CHINATRUST FINAN

DELTA ELECT INC

107

0.4694836

3849100

SINOPAC FINANCIA

12.6

0

22791740

FAR EASTERN NEW

32.95

0

9239406

SYNNEX TECH INTL

59.6

0.5059022

9283197

FAR EASTONE TELE

72.9

1.10957

4536929

TAIWAN CEMENT

38.75

2.513228

16762108

TAIWAN COOPERATI

17.55

0.5730659

14630137

16.35

0

7122652

FORMOSA CHEM & F

FIRST FINANCIAL

79

1.282051

4318469

TAIWAN FERTILIZE

72.8

0.5524862

3966434

FORMOSA PETROCHE

85.1

2.160864

1094830

TAIWAN GLASS IND

29.5 -0.8403361

2489975

MOVERS

40

5

5 5435

INDEX 5414.48 HIGH

5421.13

LOW

5323.94

52W (H) 5621.53 5320

(L) 4719.96 16-January

18-January

January 21, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 51.90

33.8

17.00 16.85

33.4 50.95

16.70

33.0

16.55

32.6

50.00

16.40

37.8

21.2

22.4

37.6

21.0

37.4

20.8

37.2

20.6

37.0

20.4

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Feb13

95.56

0.073306105

4.07318667

109.4300003

80.05999756

BRENT CRUDE FUTR Mar13

111.89

0.711071107

1.82000182

118.7999954

90.58999634

GASOLINE RBOB FUT Feb13

279.68

1.025863315

1.270956295

292.9699898

220.3500032

GAS OIL FUT (ICE) Mar13

948.75

0.317208565

2.650797944

1026.25

800.5

3.566

2.060675444

6.415995225

4.090000153

3.049999952

NATURAL GAS FUTR Feb13 HEATING OIL FUTR Feb13 METALS

Gold Spot $/Oz Silver Spot $/Oz Platinum Spot $/Oz

305.25

1.036012181

0.682761664

333.4599972

255.6599855

1684.25

0.035

1.189

1796.08

1527.21

31.865

1.1828

5.8286

37.4775

26.1513

1669.25

-1.184

9.9819

1736

1379.05

720

-0.7786

2.9071

732.9

553.75

Palladium Spot $/Oz LME ALUMINUM 3MO ($)

2042

-0.317305345

-1.49541727

2361.5

1827.25

LME COPPER 3MO ($)

8061

0.086913335

1.639137561

8765

7219.5

LME ZINC

2034

1.194029851

-2.211538462

2220

1745

3MO ($)

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

Mar13

17550

-0.284090909

2.872215709

22150

15236

15.16

-0.524934383

-0.098846787

16.84000015

14.89999962

727.5

0.414078675

4.189044039

846.25

511

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

NAME

(L) 52W

3.44

2.27

919657

CROWN LTD

11.8

-1.25523

10.59044

12.04

8.04

3141719

0.081

1.25

15.71429

0.119

0.055

13142500

25.95

1.764706

7.676347

26.15

20.25

15110662 900000

COFFEE 'C' FUTURE Mar13

156.3

0.514469453

8.692628651

240.3499908

141.25

SUGAR #11 (WORLD) Mar13

18.37

-0.271444083

-5.843157355

25.12999916

18.30999947

AMAX HOLDINGS LT

COTTON NO.2 FUTR Mar13

78.55

0.989971715

4.538195369

98.5

66.84999847

BOC HONG KONG HO

0.29

0

9.433968

0.34

0.215

-0.1620746

2.838067

6.25

2.8

588421

CHINA OVERSEAS

25

0.8064516

8.225106

25.6

14.124

13895952

CHINESE ESTATES

12.78

0.6299213

-2.293577

13.26

8.3

64043

CHOW TAI FOOK JE

13.1

0.7692308

5.30547

15.16

8.4

4141704 1540000

EMPEROR ENTERTAI

2

-0.4975124

5.820107

2.08

0.99

FUTURE BRIGHT

1.64

3.144654

34.42623

1.64

0.415

6468000

GALAXY ENTERTAIN

33.6

3.384615

10.7084

33.8

16.46

16104334

HANG SENG BK

119.4

0.3361345

0.5897246

120

98.1

1469100

HOPEWELL HLDGS

32.95

0.1519757

-0.9022556

34.4

19.049

830469

HSBC HLDGS PLC

85.3

0.4120071

4.920045

85.65

59.8

16174493 8280381

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

US

13649.7

0.3948214

4.163269

13661.87

12035.08984

NASDAQ COMPOSITE INDEX

US

3134.705

-0.04135839

3.814899

3196.932

2726.68

FTSE 100 INDEX

GB

6154.41

0.3595679

4.350769

6172.49

5229.76

DAX INDEX

GE

7702.23

-0.4295801

1.180179

7789.94

5914.43

NIKKEI 225

JN

10913.3

2.862114

4.984234

10952.31

8238.96

HANG SENG INDEX

HK

23601.78

1.122634

4.17029

23606.5

18056.4

CSI 300 INDEX

CH

2595.439

1.671956

2.873105

2717.825

2102.135

MGM CHINA HOLDIN

TAIWAN TAIEX INDEX

TA

7732.87

1.526001

0.4334063

8170.72

6857.35

MIDLAND HOLDINGS

0.6878492

-0.4606831

2057.28

1758.99

2.630183

4787.2

3985

ID

4465.484

1.525583

3.447016

4465.484

3635.283

FTSE Bursa Malaysia KLCI

MA

1676.44

-0.2766062

-0.7406974

1699.68

NZX ALL INDEX

NZ

904.155

-0.7917742

2.505751

PHILIPPINES ALL SHARE IX

PH

3862.41

0.8601713

4.418243

HUTCHISON TELE H

3.45

-1.146132

-3.089886

3.88

2.98

LUK FOOK HLDGS I

29.35

1.733102

20.28689

30.2

14.7

3199000

MELCO INTL DEVEL

11.8

1.724138

30.96559

11.86

5.12

13354000

16.86

3.435583

20.25677

16.9

10.04

9396776

4.19

0.9638554

13.24324

5.217

3.249

4814000

NEPTUNE GROUP

0.21

6.598985

38.1579

0.222

0.084

39939000

NEW WORLD DEV

14.36

1.699717

19.46755

14.4

7.86

23204617

SANDS CHINA LTD

37.5

2.459016

10.45655

37.8

20.65

10676421

SHUN HO RESOURCE

1.49

0.6756757

6.428573

1.5

1.03

30000

1509.49

SHUN TAK HOLDING

4.46

-0.4464286

6.443913

4.65

2.559

20270011

913.386

732.335

SJM HOLDINGS LTD

20.75

1.466993

15.27778

21.15

12.34

3664555

3862.41

3125.49

SMARTONE TELECOM

13.72

-0.5797101

-2.556818

17.5

13.1

2933563

WYNN MACAU LTD

22.15

1.372998

5.72792

25.5

14.62

10306051

HSBC Dragon 300 Index Singapor

SI

625.77

-0.41

0.75

NA

NA

STOCK EXCH OF THAI INDEX

TH

1434.44

0.9493649

3.054025

1437.02

1054.84

HO CHI MINH STOCK INDEX

VN

454.16

-0.5692267

9.772071

492.44

Laos Composite Index

LO

1408.01

3.437358

15.90754

1408.01

ASIA ENTERTAINME

3.86

-3.015075

26.14379

7.24

2.4

201872

BALLY TECHNOLOGI

46.84

-0.8887008

4.764037

51.16

40.78

425499

372.39

BOC HONG KONG HO

3.26

0

6.188927

3.36

2.56

11984

880.65

GALAXY ENTERTAIN

4.37

2.58216

10.07557

4.38

2.1

6450

15.01

-1.18499

5.928016

17.37

10.92

2828789

INTL GAME TECH JONES LANG LASAL

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

VOLUME CRNCY

6.16

DAY %

0.3069403

DAY % YTD %

CENTURY LEGEND

PRICE

1987.85

PRICE

CHEUK NANG HLDGS

COUNTRY

4771.226

0.9582 1.5269 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 29.71 1.2152 28.913 40.54 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

(H) 52W

652 1200

SK

1.0857 1.6381 0.9972 1.3487 90.21 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 95.028 1.25692 0.8506 8.4894 10.7712 120.71 1.0314

6.031743

948.25 1728.25

AU

1.2719 -1.8917 -2.0124 0.9932 -4.4395 -0.0225 -0.0245 0.201 2.3997 2.7554 -0.5132 0.2936 1.0448 -0.3561 -5.6588 -2.9614 -2.8464 -1.1761 -1.3213 -5.3426 -0.0097

(L) 52W

0.6024096

1.703084833 1.401206101

S&P/ASX 200 INDEX

-0.0761 -0.9363 -0.3104 -0.3367 -0.8546 0.0025 -0.0026 -0.045 1.2732 0 -0.3258 0.076 0.1035 -1.8112 -0.7668 0.0378 -0.5969 -0.5207 0.0141 -0.4834 0

(H) 52W

3.34

1.28 -0.069917847

KOSPI INDEX

1.051 1.587 0.9342 1.3321 90.1 7.985 7.7525 6.2181 53.7062 29.76 1.2277 28.948 40.581 9828 94.685 1.24433 0.83931 8.3153 10.6714 119.98 1.03

YTD %

ARISTOCRAT LEISU

791.25 1429.25

World Stock MarketS - Indices

DAY %

MACAU RELATED STOCKS

SOYBEAN FUTURE Mar13

JAKARTA COMPOSITE INDEX

21.8

PRICE

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

WHEAT FUTURE(CBT) Mar13

NAME

22.0

CURRENCY EXCHANGE RATES

NAME ENERGY

22.2

88

0.2163763

4.836785

88.2

61.39

183534

LAS VEGAS SANDS

52.22

0.6553585

13.12825

58.3216

32.6127

6016321

MELCO CROWN-ADR

19.74

-0.9036145

17.2209

20.06

9.13

2547797

MGM CHINA HOLDIN

2.03

0

9.729728

2.09

1.3525

955

MGM RESORTS INTE

12.89

-0.5401235

10.73883

14.9401

8.83

6358699

SHFL ENTERTAINME

14.26

-1.040944

-1.655172

18.77

11.75

191499

SJM HOLDINGS LTD

2.7

1.123596

16.88312

2.7

1.647

200

124.06

0.4859874

10.28536

129.6589

84.4902

1352546

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily January 21, 2013

Opinion

Boeing should heed Comet’s cautionary tale

O

Sam Howe Verhovek

Author of ‘Jet Age: The Comet, the 707, and the Race to Shrink the World’

ver the past week or so, I’ve had a surprising number of e-mails and calls asking roughly the same question: Is the 787 another Comet?

The short answer is no.

The Dreamliner, as Boeing Co. calls its cutting-edge, now-grounded 787, isn’t the de Havilland Comet.

The Comet, about which I wrote a book a few years ago, was the world’s first jetliner, a spectacularly conceived and tragically doomed technological leap into the future.

The U.K.- made Comet amazed the world when it started carrying passengers in 1952, flying almost twice as fast and twice as high as any propeller-driven airliner. But not long after it entered service, and in a span of less than a year, three Comets blew apart in the sky, killing everyone aboard.

The Dreamliner, which is an advanced though hardly revolutionary new airplane, has a serious flaw, and one that needs to be fixed. At least two of the Japanesemade lithium-ion batteries that supply electrical power have malfunctioned.

One of the batteries caught fire in a parked Japan Airlines Co. Dreamliner at Boston’s Logan Airport last week; another set off a smoke alarm on an All Nippon Airways Co. 787 over southwestern Japan. That Dreamliner made an emergency landing. The offending battery – about the size of a breadbox,

as it happens – turned up swollen, charred and leaking flammable chemicals.

‘Overall integrity’ No passenger should be allowed aboard a Dreamliner until this problem is solved, which it will be.

Whether Boeing has handled the controversy well is debatable: I’m not sure they hit the right mark when executives said of the 787 that “We stand behind its overall integrity.”

People can have “overall integrity” along with a range of human flaws; airliners can’t have “overall integrity” if their batteries can leak, smoke, catch fire or even explode.

But talk of the Dreamliner as a debacle – a “Nightmareliner,” as some headlines put it – is far more overheated than the plane’s bum batteries.

So far, the 50 787s delivered have experienced problems, including one fuel-line leak, a crack in a cockpit window and a minor wiring flaw along with the battery issue, that are hardly unprecedented for a major new airliner.

Airlines that go first with a new model, whether for the prestige or to leverage technological advances such as fuel savings, often pay a price for the novelty as problems crop up requiring a fix that takes the plane out of service, usually for only a week or two.

In 2007, shortly after Boeing’s main competitor, Airbus SAS, introduced the

mammoth double-decker A380 into passenger service, the fleet was beset with minor problems, including wing cracks and improper cabin wiring. An engine blew apart on a Qantas Airways Ltd A380 shortly after takeoff; no one was injured, and Airbus made modifications.

In 1997, after Cathay Pacific Ltd launched a new version of the smaller Airbus A330, a gearbox malfunction started causing engines to shut down in flight; the airline’s entire fleet was grounded for almost two weeks.

The point is, problems with a new airliner are a matter of degree and, of course, of redundancy and safeguards. A battery fire aboard a Dreamliner is unacceptable. But that does not mean an incident would be catastrophic: The Dreamliner is designed to survive such a fire, by containing it to a specific area and venting the smoke outside while the cabin air-pressure system protects passengers and crew.

By this measure, the Dreamliner’s woes are within reason. Regulators have done the right thing by grounding the fleet. Boeing and its battery supplier need to take steps to assure the public that these batteries are safe.

Probable success

Regulators have done the right thing by grounding the fleet. Boeing and its battery supplier need to take steps to assure the public that these batteries are safe

The Dreamliner project could still turn into a fiasco or, God forbid, a disaster, if more problems crop up or compound.

But the strong odds remain that the jetliner will be what Boeing intends it to be: a triumph, a next-generation, fuel-efficient, ultracomfortable airliner that passengers will seek out, not seek to avoid.

With the tragic Comet, hubris prevented a more rational investigation of its deadly flaw. U.K. aviation authorities variously pointed to freak weather, sabotage and pilot error as possible reasons for Comet crashes; anything to spare blaming the plane itself.

It wasn’t until the third catastrophic mid-air explosion

that the first-generation Comets were taken out of service for good and an industrial detective job of epic scope revealed the true culprit: metal fatigue.

In the early 1950s, a plane like the Comet could be allowed to fly again even after the cause of its first crash remained officially undetermined. That wouldn’t happen today.

Nor is it imaginable that any aircraft builder now would be as bold or as brazen as John Moore-Brabazon, who led the development of Britain’s postwar aviation industry, was in defending the Comet before a U.K. board of inquiry.

“Of course we gave hostages to fate,” MooreBrabazon said. “But I cannot believe that this Court, or our country, will censure us because we have ventured.

You would not have the aeronautical people in this country trail behind the world in craven fear lest they be censured in such a Court as this for trying to lead the world. Everything within the realm of human knowledge and wisdom was put into this machine.”

The recklessly beautiful and futuristic Comet never ruled the skies. Instead, a U.S. manufacturer, previously an also-ran in the civilian airliner field with less than 1 percent of the market share in 1950, found an opening – and Boeing’s 707 “Jet Stratoliner” became the iconic airliner of the new Jet Age. Bloomberg View

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

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January 21, 2013 business daily | 15

OPINION

Will Europe’s fiscal wires compact work?

Business

Leading reports from Asia’s best business newspapers

Taipei Times Thousands of people from workers’unionsandlabourgroups took to the streets in Taipei on Saturday, demanding that the government protect workers’ rights.Taiwan’sNationalFederation of Independent Trade Unions said government policies should not be achieved by sacrificing the working conditions, such as reforming labour insurance by cutting the basic payments for retired workers, or cooperating with the business sector to turn students into cheap labour for companies. The unions said the march aimed to make it clear to President Ma Ying-jeou that workers will not accept reforms that only benefit corporations.

Jeffrey Frankel

Professor of Capital Formation and Growth at Harvard University

A

South Korea’s top central banker said that the country should brace for the possibility that major central banks may end their march toward credit easing. “It does not seem that the financial crisis will further worsen. There is a chance that major central banks may unwind their drives for quantitative easing,” Bank of Korea (BOK) Governor Kim Choong-soo was quoted as saying in a monthly meeting with local bank heads. Following the BOK chief’s remarks, bond futures declined as market players interpreted them as an indication that he has a betterthan-expected assessment of the U.S. economy.

t the start of 2013, the euro zone’s “fiscal compact” entered into force, owing to its ratification on December 21 by a 12th country, Finland, a year after German Chancellor Angela Merkel prodded euro zone leaders into agreement.

The compact – technically called the Treaty on Stability, Coordination, and Governance in the Economic and Monetary Union – requires member countries to introduce laws limiting their structural government budget deficits to less than 0.5 percent of GDP (or less than 1 percent of GDP if their debt/GDP ratio is “significantly below 60 percent”). So, will this new approach work?

A limit on the “structural deficit” means that a country can run a deficit above the limit to the extent – and only to the extent – that the gap between revenue and spending is cyclical (that is, its economy is operating below potential due to temporary negative shocks). In other words, the target is cyclically adjusted.

The budget-balance rule must be adopted in each country – preferably enshrined in their national constitutions – by the end of 2013.

The aim is to fix Europe’s long-term fiscal problem, which has been exacerbated by three factors: the failure, since the euro’s inception, of the euro zone-wide Stability and Growth Pact (SGP) to enforce deficit and debt limits; the crisis that erupted in Greece and other countries on the euro zone periphery in 2010; and the various bailouts that have followed.

There is no reason to doubt that the member states will follow through and adopt national rules by the end of the year. The problem is what comes after that: the risk that the fiscal compact will founder on precisely the same shoals as the SGP.

Asahi Shimbun

Biased forecasts

Jakarta Globe Indonesia’s flag carrier, Garuda Indonesia, is planning to issue new shares under a non-preemptive rights issue scheme this year as it seeks funds to finance its capital expenditure, said Handrito Hardjono, the airline’s finance director. “A non-pre-emptive rights issue will be executed in either the first or second quarter this year,” Mr Handrito was quoted as saying. The finance director noted the new share offering would be equivalent to 10 percent of the total enlarged capital. The airline also plans to issue dollar-denominated and rupiah-denominated obligations this year, each amounting to US$100 million, he said.

Korea Herald

Secretary of State Hillary Clinton assured Japan of U.S. support in Tokyo’s dispute with Beijing over a string of islands and invited new Japanese Prime Minister Shinzo Abe to Washington in late February for a meeting with President Barack Obama. Mrs Clinton held a working lunch with Japanese Foreign Minister Fumio Kishida, and both emerged pledging that U.S.-Japan security and economic ties would remain strong. “Although the United States does not take a position on the ultimate sovereignty of the islands, we acknowledge they are under the administration of Japan,” Mrs Clinton said, repeating the long-standing U.S. position on the dispute.

Ever since the euro zone was established, its members have issued official fiscal forecasts that are systematically biased in the optimistic direction. Other countries do this, too, but the bias among euro zone countries is, if anything, even worse than it is elsewhere.

During an economic expansion, such as in the 20022007 period, governments are tempted to forecast that the boom will continue indefinitely. Forecasts for tax revenue and budget surpluses are correspondingly optimistic and so hide the need for fiscal adjustment.

During a recession, such as in 2008-2012, governments are tempted to forecast that

their economies and budgets will soon rebound. Since forecasting is subject to so much genuine uncertainty, no one can prove that the forecasts are biased when they are made.

But, if forecasts are biased, fiscal rules will not constrain budget deficits. In any given year, governments can forecast that their growth rates, tax revenues, and budget balances will improve in subsequent years, and then argue the following year that the shortfalls were unexpected.

Indeed, in a new paper, co-authored with Jesse Schreger, we show that euro zone members’ bias in official forecasts can be neatly characterised as responding to the SGP’s 3 percent-ofGDP limit on budget deficits in 1999-2011: each time governments exceeded the limit, over-optimistic forecasts followed. In other words, governments adjust their forecasts, not their policies.

Framing the budget rules in cyclical terms, while highly desirable in terms of its macroeconomic impact, does not help to solve the problem of forecast bias. In fact, it can make the problem worse. In a year when a forecast for the structural budget deficit turns out to have been overoptimistic, the government can still claim that its own calculations show the shortfall to have been cyclical rather than structural.

After all, estimation of potential output – and hence the cyclical versus structural decomposition of the fiscal position – is notoriously difficult, even after the fact.

Perhaps it will help that, under the fiscal compact, the rules are to be adopted at the national level, as opposed to the SGP, which operated on the supranational level. A look at the various rules and institutions that European countries have already tried shows that some work and others do not.

Creating an independent

fiscal institution that provides its own budget forecasts works, insofar as it reduces the bias in deficit projections. When forecasting while in violation of the euro zone’s Excessive Deficit Procedure, euro zone members with an independent budget-forecasting institution have a mean bias that is 2.7 percent of GDP smaller at the one-year horizon than members without such an institution.

It would be better still if governments were legally bound to use these

Creating an independent fiscal institution that provides its own budget forecasts works, insofar as it reduces the bias in deficit projections

independent forecasts in their budget plans (borrowing an innovation from Chile).

But, regardless of how well designed the rules are, clever and determined politicians can find ways around them.

One trick is privatisation of government enterprises, which reduces the budget deficit in a given year on a one-time basis, but might increase the deficit in the long run if the enterprise had been profitable.

Another trick is to legislate tax cuts that are “temporary,” in order to make future revenues look larger, despite the intention to make the cuts permanent before they expire.

Other things being equal, the right institutions can curb pro-cyclical fiscal policies – tax cuts and spending hikes during booms and austerity during downturns – in the short run, while helping to deliver debt sustainability in the long run.

These institutions include independent fiscal-forecasting agencies, combined with the cyclically adjusted budget targets that the euro zone’s fiscal compact mandates.

Much can go wrong even if such mechanisms are in place; but, as the history of the SGP illustrates, the risk is higher if they are not. © Project Syndicate

16 |

business daily January 21, 2013

CLOSING Nevada regulators in bridge building visit

Portugal bailout seen successful

Nevada’s three Gaming Control Board members visited Macau last week.

The visit was for “fact-finding and to understand how the region regulates the gaming industry,” the Las Vegas Review-Journal said quoting the board’s chairman A.G. Burnett. The trip included a private meeting between Mr Burnett and Manuel Joaquim das Neves, director of the Gaming Inspection and Coordination Bureau (DICJ). It comes at a time when the United States Department of Justice has launched separate investigations into Wynn Resorts Ltd and Las Vegas Sands Corp. over possible violations of the U.S. Foreign Corrupt Practices Act in Macau.

Portugal’s fiscal adjustment under its European Union and International Monetary Fund bailout has “reasonably strong” prospects of success despite significant risks and Lisbon’s strategy for returning to bond markets is viable, the IMF said. “Regaining market access within the period that Fund resources are outstanding is feasible, though risks of delays remain,” the IMF said in a staff report following a sixth quarterly evaluation of Portugal’s bailout. The bailout covers Portugal’s financing needs until September and investors are increasingly confident Lisbon will be able to tap the medium-term bond market before then.

PYI confident over boutique casino approval Subsidiary’s shareholders to vote today on land deal for Cotai project Tony Lai

tony.lai@macaubusinessdaily.com

High-end casino property planned for next door to One Oasis (Photo: Manuel Cardoso)

H

ong Kong-listed port and infrastructure group PYI Corp. Ltd reiterated on Friday it is confident of getting 66 gaming tables for its boutique casino planned for a plot of land on the CotaiColoane border.

Paul Y. Engineering Group Ltd,

a unit of PYI Corp., plans to raise funds for the US$800 million (6.4 billion patacas) casino hotel scheme by issuing shares on the Hong Kong Stock Exchange and by selling convertible bonds.

Tom Lau Ko Yuen, PYI’s chairman and managing director, said that more

than 99 percent of the company’s shareholders approved its subsidiary’s plan for the Macau project. He was speaking in a press conference after a special general meeting on Friday.

PYE is to get the land by acquiring a co m p a n y ca l l ed F a l l o n c r o f t Investments Ltd, which owns a

Boeing halts Dreamliner deliveries Japanese battery maker helping in investigation

U

.S. and Japanese aviation safety officials finished an initial investigation of a badly damaged battery from a Boeing Co 787 Dreamliner jet as Boeing said it was halting deliveries until the battery concerns were resolved.

Boeing said it would continue building the carbon-composite 787, but deliveries were on hold until the U.S. Federal Aviation Administration approved and implemented a plan to ensure the safety of potentially

flammable lithium-ion batteries that prompted a widespread grounding of the new airplane this week.

In Washington, the top U.S. transportation official, Ray LaHood, said the 787 would not fly until regulators were “1,000 percent sure” it was safe. A week earlier, LaHood said he would not hesitate to travel on a Dreamliner.

Officials from the Federal Aviation Administration (FAA), U.S. National Transportation Safety Board

(NTSB) and Boeing joined Japanese authorities looking into what caused warning lights to go off this week on an All Nippon Airways Co domestic flight, prompting the aircraft to make an emergency landing at Takamatsu airport in western Japan.

The incident prompted regulators in the United States and around the world to ground the 50 Dreamliners in service.

The jet has been flying safely for 15 months, carrying more than 1

65,000-square-feet plot on Cotai.

PYE will pay HK$2 billion (US$258 million) to complete the deal.

In a November filing to the stock exchange, PYE said it plans “to construct and operate a fivestar hotel with ancillary retail and entertainment facilities (including but not limited to gaming)”.

Mr Lau was quoted by Hong Kong media as saying the project would be “majorly targeted at the VIP market”.

The high-end casino property planned for next door to One Oasis will have 236 rooms and around 66 tables.

Fifty of the tables will be for so-called premium mass players – cash players betting as much as HK$10,000 per hand. The remaining 16 tables will be for traditional credit-based junket play, to be managed by one of the local junket investors.

PYI chairman said he is confident in getting the approval for the boutique casino, adding that the relevant risk was “at an acceptable level”.

But Mr Lau declined to comment on the progress of the application and on Hong Kong media reports that Melco Crown Entertainment Ltd’s Macau gaming licence will be utilised to operate the casino.

A person with knowledge of the process told Business Daily in November the government is yet to give out any permission for gaming facilities on the relevant site.

Mr Lau also said PYI’s stake in its subsidiary would decrease from 61.92 percent to between 21 percent and 3.45 percent depending on the result of PYE’s shareholders’ meeting today.

PYE would cease to be a subsidiary company to become an investment vehicle, he added.

The firm’s shareholders will vote today upon the acquisition of Falloncroft and the casino plan via placing or issuing shares in Hong Kong worth up to HK$4.8 billion.

million passengers, but it has run into problems in recent weeks, including problems with fuel leaks.

The biggest safety concerns centred on its lithium-ion batteries, which are lighter than conventional batteries, pack more energy and are faster to recharge, but are also potentially flammable.

GS Yuasa Corp, the Japanese firm that makes batteries for the Dreamliner, said it sent three engineers to Takamatsu to help the investigation.

At a news conference, the Japan Transport Safety Board (JTSB) said the charred battery and the systems around it would be sent to Tokyo for more checks. It said there were similarities with an earlier battery fire on a Japan Airlines Co 787 parked at Boston’s Logan International Airport.

Mr LaHood, the U.S. transportation secretary, said he could not predict when the 787 would resume flight.

Reuters