CE’s pledge on baby milk shortage
Year I Number 204 Tuesday January 22, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00 www.macaubusinessdaily.com
Chief Executive Fernando Chui Sai On says the government will try to ensure a steady supply of baby milk formula in Macau shops – and stop ‘irregular’ selling practices. He said four public bodies had been working together on easing the shortage. Last week the four best-selling brands were in short supply because of demand by mainland Chinese visitors. Mr Chui was speaking before departing to Beijing for a three-day visit. Getting approval for a new border crossing will be the main item on his agenda when he meets central government officials today.
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Inflation rises 4th year in row I
nflation rose in 2012 – the fourth consecutive year – thanks to costlier homes and food. Higher housing costs in December ensured inflation for the whole of last year stayed well above six percent. According to official data released by the Statistics and Census Service yesterday, the inflation rate for 2012 stood at 6.11 percent, well above the 5.81 percent recorded in 2011 and the 4.1 percent in neighbouring Hong Kong for 2012. Last year’s inflation was the highest since March 2008, when price hikes peaked at 9.49 percent, with an average of 8.61 percent for the whole of 2008. In 2012 home prices increased by almost a third year-on-year to an average of almost 59,500 patacas (US$7,450) per square metre in the JanuaryNovember period, official data show. More on page 3
Franco Dragone refutes tax ‘fraud’ allegations F
ranco Dragone – creator and director of The House of Dancing Water show at Melco Crown Entertainment Ltd’s City of Dreams on Cotai – has defended his use of companies in tax havens. A Belgian publication reported last week the authorities there are investigating Mr Dragone on suspicion of “serious and organised” international tax offences, money laundering, “undeclared work” and “subsidy fraud”. Mr Dragone’s office told Business Daily he denied any wrongdoing and that the claims resulted from a “total misunderstanding” by the authorities of his business arrangements. Page 6
Era of election spending sprees dawns for city
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HANG SENG INDEX
The addition of two directly elected seats at this year’s Legislative Assembly election will push candidates to put more resources into advertising and promotion, advertising insiders said. “With two further seats in this election, we expect the atmosphere [contest] will be tighter and the candidates have to find means to be more outstanding,” said Keyvin Bi Chi Kin, chairman of the Association of Advertising Agents of Macau. Page 5
23635
23620
23605
23590
23575
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January 21
HSI - Movers Name
PYE shareholders agree to Cotai casino project Hong Kong-listed Paul Y. Engineering Group Ltd confirmed in a regulatory filing last night more than 99 percent of its shareholders approved a deal allowing the company to hold land, raise share capital and sell bonds for a boutique Macau casino. PYE – a unit of separately listed ports and infrastructure business PYI Corporation Ltd – will help raise cash for the US$800 million (6.4 billion patacas) casino hotel scheme. Page 7
%Day
KUNLUN Energy CO
2.51
COSCO PAC LTD
2.28
BELLE INTERNATIO
2.05
CITIC PACIFIC
2.02
SANDS CHINA LTD
1.86
CHINA UNICOM HON
-0.75
CNOOC LTD
-1.09
CHINA OVERSEAS SINO LAND CO WANT WANT CHINA
-1.2 -1.66 -2.1
Source: Bloomberg
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business daily January 22, 2013
macau The new pedestrian crossing in Ilha Verde is planned for where the Nam Yuet market now stands (Photo: Manuel Cardoso)
Govt seeking speedy OK for new border crossing The chief executive lays out the priorities for his talks in Beijing Tony Lai
tony.lai@macaubusinessdaily.com
G
etting approval for a border crossing will be the main item on the agenda for talks that Chief Executive Fernando Chui Sai On will have during his threeday visit to Beijing, which began yesterday. But Mr Chui said he would have only preliminary discussions with central government officials about easing the restrictions on vehicles crossing the border – a proposal that has caused public concern here. He will meet officials of the Ministry of Public Security and the General Administration of Customs today. Secretary for Transport and Public Works Lau Si Io and Customs Service head Choi Lai Hang will be accompanying the chief executive in today’s meetings. “We are keen to see how this new checkpoint might divert the flow of travellers,” Mr Chui told reporters before leaving for Beijing. He said his talks would also cover how construction of the new crossing would help to rehabilitate the Canal dos Patos, which has long been plagued by sewage discharge from both Zhuhai and Macau. He said he would try to get approval from the central government for the new crossing “as soon as possible”.
The Macau government is proposing to put the new crossing, for pedestrians only, in Ilha Verde, where the Nam Yuet market now stands.
24-hour goal The new crossing was first proposed at the annual Guangdong-Macau Cooperation Joint Conference last May and it is planned for 200,000 to 250,000 people per day.
We are keen to see how this new crossing might divert the flow of travellers Chief Executive Chui Sai On
The border area will span 28,000 square metres, including a customs inspection building and a 450-metre
long enclosed walkway. The customs inspection building will also be connected to the terminus of the Guangzhou-Zhuhai Intercity Railway. It is unknown at the moment whether the new crossing would open 24-hours, even though the Macau authorities have long claimed that roundthe-clock border entry is the ultimate goal. The busiest ZhuhaiMacau border, Gongbei, handles a daily traffic of about 260,000 passengers and is open from 7 am to midnight. The Lotus Bridge crossing, in contrast, only handles about 20,000 to 30,000 passengers at peak hours. With lack of mature transportation support, hectic traffic is not a common sight for the border with Hengqin Island, even though it is designed to handle a daily volume of 70,000 passengers. Zhuhai and Macau authorities reached a consensus in October to keep the Lotus Bridge crossing open for two more hours, extending it from 8 am to 10 pm, but this measure has yet to be implemented. In addition, the two sides have yet to reach a consensus on ‘one-side’ inspection, which would allow each side to handle the customs checks
for its departing passengers and freights only.
Traffic fears Mr Chui said he would “only exchange opinions” with central government officials about easing the restrictions on private vehicles from Macau crossing into Guangdong and on private vehicles from Guangdong crossing into Macau. At present only vehicles with dual registration plates valid on both sides of the border can cross. The proposal to ease the restrictions has caused public concern, expressed on the Internet in particular, about vehicles from the mainland adding to traffic congestion here. “I have noted society’s concerns in the past two days but this matter is covered by the Guangdong-Macau
Cooperation Framework Arrangement,” Mr Chui said. “It is not as if we were seeking approval today and starting it at once.” He said the government would listen to the various opinions and consider all the pros and cons of the proposal before making its decision. He said the government would do its work “pragmatically”. He did not say when the proposal might be put into action. Mr Chui said he and his delegation would discuss in Beijing how to prevent the persistent flooding of old districts such as the Inner Harbour area. They would meet officials of the Ministry of Land and Resources and the State Oceanic Administration to look for a solution to the problem, he said. With Stephanie Lai
Stop irregular baby milk selling practices – Chui
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hief Executive Fernando Chui Sai On has said the government will endeavour to secure the supply of infant formula and stop any irregular selling practices. He said four public bodies – the Consumer Council, the Economic Services Bureau, the Health Bureau and the Civil and Municipal Affairs Bureau – had been working together on easing the shortage of baby milk powder. “I hope there will be more information in one or two days,” he told reporters before leaving for Beijing yesterday. Last week
the four best-selling brands of infant formula – Friso 1, Friso 2, Nestle Nan and Wyeth Gold – were in short supply because of demand by mainland Chinese visitors, and pharmacies have begun rationing tourists. Mr Chui said the government would look for long-term solutions to the problem. For instance, he said hospitals should refrain from relying only on the four best-selling foreignmade brands, so making life easier for parents that are loath to change brands after their new-borns are discharged from hospital. T.L.
January 22, 2013 business daily | 3
MACAU
Housing hike fuels December inflation Inflation rose for a fourth consecutive year thanks to costlier homes and food Vítor Quintã
vitorquinta@macaubusinessdaily.com
M
acau finished 2012 with prices rising again, as higher housing costs ensured that the inflation for the whole of last year stayed well above 6 percent. According to official data released by the Statistics and Census Service yesterday, the inflation rate for 2012 stood at 6.11 percent, well above the 5.81 percent recorded in 2011 and the 4.1 percent in neighbouring Hong Kong. Last year’s inflation was the highest since 2008, when price hikes reached an average of 8.61 percent – and a peak of 9.49 percent in March 2008. After reaching 5.19 percent in October – the lowest percentage increase year-on-year since May 2011 – inflation crept up again in the final two months. “These data are worrying,” economist José Sales Marques told Business Daily. He believes the late-year acceleration was linked to great demand caused by a high-season
for tourism. “The gambling data also point to that,” Mr Sales Marques added. Casino revenue rose by 19.6 percent year-on-year in December. “It might mean that we will continue to have a high inflation, perhaps even higher, during the first few months,” until at least Chinese New Year, the economist predicted. The December hike of 5.83 percent year-on-year was mostly fuelled by a 13.3 percent rise in housing costs, which is the second most significant expense in the Macau consumer price index. This factor includes mortgage instalments paid by homeowners, which have soared for loans approved recently. Home prices increased by almost a third year-on-year to an average of almost 59,500 patacas (US$7,450) per square metre in the JanuaryNovember period, official data show. “Housing prices are a structural issue and there are still doubts
over whether the increase has been driven by speculation or not,” Mr Sales Marques said.
High-priced food For the whole of 2012 a hike of 8.52 percent in food and non-alcoholic beverages was the biggest factor for why the inflation rate rose for a fourth consecutive year. The price of meals bought away from home soared by almost 9 percent and that alone accounted for one third of last year’s inflation rate. “The price increase for meals taken away from home quickly obviously reflects the inflationary pressure caused by the growing number of visitors,” Mr Sales Marques said. “Of course the price of food products and staff salary are factors, but it is mostly linked to increased demand, which fuels a hope to gain profits,” the economist said. In addition, the cost of fresh food products increased by 8.03
percent in 2012, mainly due to eye-popping hikes in the price of vegetables and beef. For instance, almost all of the vegetables on sale in the city had retail price rises of more than 21 percent last year. The cost of Chinese cabbage rose by 41.7 percent. Furthermore, fresh beef cost an average of 123.44 patacas (US$12.50) per kilogram in December, 29.4 percent more than in the same period a year earlier. The wholesale price of fresh beef rose several times in 2012, at an average rate of more than 100 patacas a month, something which suppliers blamed on transport problems. And the city’s main supplier of meat, Nam Yue Food Stuff and Aquatics Co Ltd, has stated that beef prices will probably rise by less than 30 percent this year. In contrast, reduced charges for communication services (down by 4.2 percent) and subsidised electricity charges reduced part of the increment.
Yellow taxi boss sure of staying in business Tony Lai
tony.lai@macaubusinessdaily.com
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ang Iek Radio Taxi Co, which runs 100 yellow taxis, is certain that the government will extend its concession, which expires next month, despite a prolonged dispute over renewal of its contract. “Our discussion with the government has gone well and the only difference is over its duration,” the company’s general manager, Mário Sin Ferreira, told Business Daily. “We are likely to get another extension for a certain period next month,” he said. He said his company had done a lot of preparatory work, such as work on the design of its cabs, in accordance
with government instructions. But Mr Ferreira declined to say how long the extension would be for or to give any other details of the terms. It would not the first extension of its concession that Vang Iek has negotiated. The Transport Bureau extended the company’s concession for 18 months in August 2011, after the government demanded assurances that it would improve its service in older districts of the city and its service to the disabled. Vang Iek argues that its present contract says its concession should be renewed for another 10 years. It took its case to court at the
end of 2011. Mr Ferreira said: “We asked the court is to find a third party to give its interpretation of the duration of the contract, as we have a totally opposite opinion from the government on this.” The Portuguese-language newspaper Ponto Final has reported that the Court of Second Instance dismissed Vang Iek’s suit on Friday. Mr Ferreira said he was unaware that the court had dismissed the suit, so could not immediately comment. But he said: “We will the follow the court’s judgement.” Mr Ferreira emphasised that he was confident his company would continue to operate.
“Our taxis will still be on the road. No-one has told me they will not,” he said.
The operator of Macau’s yellow taxis is arguing with the government about renewal of its concession
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business daily January 22, 2013
macau Visa-free entry for Mauritius nationals Passport holders from the Indian Ocean nation Mauritius are to be allowed visa-free access to Macau for a stay of up to 90 days. The Identification Services Bureau says Mauritian nationals are currently barred from visa-free or visa on arrival entry. The government said the liberalisation was a reciprocal gesture after Macau passport holders were granted visa-free passage in the opposite direction. So far 104 countries or territories have granted Macao SAR passport holders such rights. The Asian Poker Tour – which regularly holds a tournament in Macau – last year also held an event in Mauritius.
Local casino shares outperform Hang Seng Trend of 2012 is continuing into this year, says latest report from Morgan Stanley Michael Grimes
michael.grimes@macaubusinessdaily.com
M
acau gaming stocks outperformed the Hang Seng Index in Hong Kong by 32 percent in 2012, says the latest report on the sector from the Hong Kong office of Morgan Stanley, a bank. “…this trend has continued in 2013,” says the document, titled ‘Macau Gaming & Property 4Q12 Preview’ written by Praveen K Choudhary and Katherine Sun. Commenting on some of the factors driving the gaming firms’ respective share performances, the report states: “Growth has recovered lately thanks to a cyclical upturn in VIP business, driving multiples higher. Investors are now looking at the group [of Macau gaming operators] for its FCF [free cash flow] generation (and dividend payments)…” But the report says this is being achieved with “less remarkable growth”, than has been seen in earlier years. And the paper warns that given recent upward ‘re-rating’ of Macau gaming stocks by analysts – i.e. where the market has changed from a bearish to a more bullish view of the sector and changed calculations on the key indicator of price to earnings ratio – “leaves less upside for the industry – unless earnings improve significantly”. Price to earnings ratio (P/E ratio) is a valuation ratio of a company’s current share price compared to its per-share earnings. In general, a high P/E ratio suggests investors are expecting higher earnings growth in the future compared to companies with a lower P/E ratio.
Dividend outlook “Though growth has slowed down, ability to pay dividends has
gone up, and thus the multiples may not look stretched. However, if growth slows down to single digit, the current multiples may be difficult to justify,” suggests the paper. The Morgan Stanley report says two near-term concerns in relation to the Macau casino market are the partial smoking ban implemented on January 1, and the possibility macroeconomic conditions could deteriorate and that players’ liquidity – in the form of cash for mass-market play or for servicing of credit raised for junket room play – “dries up”. But it adds: “Risks of [the partial] smoking ban and
‘Macau Scam’ suspects arrested in Malaysia C
riminals from Taiwan and the People’s Republic of China are apparently using the mainland’s widely reported crackdown on corruption as cover for a fraud dubbed the ‘Macau Scam’. Malaysian media said 12 suspects from the two jurisdictions have been arrested after a raid on a luxury
bungalow on the eastern outskirts of the Malaysian capital Kuala Lumpur. Their alleged victims or intended victims were bank account holders from mainland China. Last month, police detained 51 members of the same suspected syndicate in a simultaneous raid at two different locations in Petaling Jaya to the
regulatory clampdowns have been lower than expected…” Morgan Stanley is predicting gross gaming revenue to grow by 13 percent in 2013, with VIP play expanding by 10 percent and the mass market by 20 percent. That’s a slower growth rate for the mass market than seen in 2012. Last year mass-market baccarat – the favourite casino game of non-junket players in Macau – produced revenue growth of 36 percent year-on-year, driven significantly by the expansion of the premium mass segment with its higher minimum bets. “We believe that mass growth
could continue to outpace VIP, driven by the addition of 200 tables at [Sands] Cotai Central in Q1 2013, and Cotai taking market share from the peninsula,” state the authors.
west of the capital. Commenting on the latest raid, assistant commissioner Chong Mun Phong of the State Commercial Crime Investigation Department told local media how the alleged scam worked. “The bungalow operated as a call centre where the suspects called victims posing as prosecution officers from China’s Financial Crimes Investigation Department,” stated Mr Chong. “Victims are told that their bank accounts have been used for money laundering and asked to transfer their funds to an account claimed to belong to the government to prove they are not linked to illegal activities,” he added. Mr Chong did not say whether the suspects specifically mentioned Macau in the scripted telephone calls
made to potential victims. Other media reports from Southeast Asia suggest the term ‘Macau Scam’ is a generic term for a variety of telephone based confidence tricks aimed often at ethnic Chinese where Macau is sometimes mentioned as ‘bait’. In one, victims are called by a Chinese speaker claiming to be from a hotel in Macau. They’re told they have won a big prize such as a car, but that if they can’t come to collect it, the prize can be converted to cash. But before the cheque is issued, ‘winners’ are asked to deposit some money to cover ‘administration costs’. Anyone incautious enough to send money should not expect to receive a winner’s cheque suggest media reports.
32%
Amount Macau casino stocks beat Hang Seng in 2012
M.G.
January 22, 2013 business daily | 5
MACAU
Agencies expect boom in political advertising Ad men want the ceiling on campaign spending by Legislative Assembly candidates raised Tony Lai
tony.lai@macaubusinessdaily.com
M
ore directly elected seats in the Legislative Assembly mean candidates in this year’s elections will spend more on advertising, people in advertising say. “With two further seats in these elections, we expect the competition to be tighter, and the candidates have to find the means to stand out,” the chairman of the Association of Advertising Agents of Macau, Keyvin Bi Chi Kin, said yesterday. Mr Bi told reporters on the sidelines of an advertising seminar that candidates in this year’s elections to
the Legislative Assembly would spend more on advertising than candidates in the last elections, in 2009. He gave no exact figure, but he said many advertising agencies here had been in contact with candidates. Political reforms last year increased the number of directly elected seats in the assembly to 14 from 12. The general manager of Elitepro Consultants Ltd in Hong Kong, Ben Cheung Shui Fung, said these elections might mean 20 million patacas (US$2.5 million) worth of business for advertising agencies.
In the 2009 elections each candidate spent about 1 million patacas on advertising, the advertising industry says (File photo)
Advertisers eye MICE, creative industries
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he meetings, incentives, conventions and exhibitions (MICE) sector and creative industries are two areas the Macau advertisers are to develop in the future but the labour shortage can be a hindrance. “This year the administration grants subsidies of up to 200,000 patacas [US$25,000] for the exhibition industry’s promotion costs,” said Keyvin Bi Chi Kin, chairman of the Association of Advertising Agents of Macau. “So this can provide more business for advertisers in the six months previous to the start of [MICE] events,” he told reporters yesterday. The administration announced last month this year’s allowance for event promotion and logistics costs is up to 100,000 patacas for conferences and
200,000 patacas for exhibitions. Mr Bi said that advertisers are also looking for closer cooperation with the creative industry firms to expand their business this year. He said big enterprises like Hong Kong-listed casino operators would opt for members of the American Association of Advertising Agencies to do their campaigns because they not only target the Macau market. But the chairman also warned: “The labour shortage, particularly in production, is the main problem the industry is facing right now.” “Though some firms have imported a few outside workers to ease the problem, they [the staff] do not have deep knowledge of the local culture and are not really suitable for design works,” he added. T.L.
Mr Cheung, who helped some candidates here in the last elections, said he expected about 20 candidates to compete for the 14 seats this year. “Last time, the maximum budget for each candidate was 8 million patacas … and about 1 million patacas was put into advertising, so you can see what kind of opportunities exist,” he said.
patacas per candidate, set for the last elections, to be raised because advertising and labour costs have risen. “If the candidates want to have the same impact as four years ago, they have to put in 50 to 100 percent more capital,” he said. He thinks candidates will advertise more in new media such as the Internet because it costs less. “In addition, young people, aged below 30, are in touch with the relevant information only via the Internet,” he said. Mr Bi said the government could allow more outdoor advertising. Mr Cheung thinks the political advertising market here has been maturing in recent years. But he said: “Only some associations in Macau realise the importance of political image and promotion, while all candidates in Hong Kong – not just a few – understand its importance.”
Bang for your buck Mr Cheung, speaking on the sidelines of the same seminar, said advertising agencies could arrange everything from banners to television advertisements, from on-line advertisements to souvenirs, and even image consultancy. He said the amount a candidate spent on advertising depended on the candidate in question. For instance, pro-establishment candidates would spend more as they had more money, he said. Mr Bi is calling for the cap on campaign spending of 8 million
MOP20 million
Forecast of revenue for advertising agencies from this year’s Legislative Assembly election campaigns
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business daily January 22, 2013
macau
‘House of Dancing Water’creator facing tax probe Belgian police are investigating the director of the show, Franco Dragone, on suspicion that he evaded tax and laundered money Vítor Quintã
vitorquinta@macaubusinessdaily.com
T
ax fraud suspect Franco Dragone, the creator and director of “The House of Dancing Water” show at the City of Dreams, has defended his use of companies in tax havens. A Belgian publication, Le Vif/ L’Express, reported last week that the Belgian authorities are investigating Mr Dragone on suspicion that he used “exotic” financial tools to evade taxation. They reportedly suspect him of “serious and organised” international tax offences, money laundering, “undeclared work” and “subsidy fraud”. The report does not mention whether they are investigating the profits that Mr Dragone’s company, Franco Dragone Entertainment Group, makes from “The House of Dancing Water”, its resident show at Melco Crown Entertainment Ltd’s City of Dreams casino in the Cotai strip. The show opened there in September 2010. Business Daily asked Melco Crown for details of Mr Dragone’s royalties but had received no reply
Show director Franco Dragone denies that he evaded paying taxes, saying he tried only to avoid double taxation
by the time we went to press. The two companies have reportedly agreed to replicate the show at a 50 billion yuan (64 billion patacas) entertainment complex near Beijing’s 798 Art Zone district.
In an e-mailed reply to Business Daily, Mr Dragone’s group protested his innocence, stressing neither he nor any member of the staff “were interviewed, questioned or charged by justice”. The suspicions “are based on a total misunderstanding of the Franco Dragone operating structure which is absolutely not illegal or
fraudulent,” the group said. Franco Dragone Entertainment said the network of companies the director controls outside Belgium was necessary for projects “for which the creation and the production actions take place worldwide, using the skills of many different nationalities from around the world,” the reply added. In a press conference held last week, Mr Dragone said his aim was to make sure he was taxed fairly, instead of being liable to double or even triple taxation. Macau and Belgium signed a double taxation agreement in 2006, but it came into effect only in 2011. Le Vif/L’Express said Mr Dragone’s group, based in his home town, La Louvière, had paid hardly any taxes as its royalties were channelled to companies in tax havens. Another Belgian publication, Le Soir, said Mr Dragone’s group had made a profit only twice in the past eight years. In October the police seized documents from the group’s headquarters, and from various premises belonging to the group’s chief executive, its chief financial officer, Mr Dragone himself and one of his former associates.
Luxury sales to remain strong in Q1 Macau at your breakfast table. With Business Daily. Find us in the following newsstands Pacapio at San Ma Lo Opposite HKSB (Nam Van) Beside Luso Bank Building Wen Hang Bank at San Ma Lo In front of Portuguese Bookshop In front CTM at San Ma Lo In front Daiso shop at San Ma Lo Next to S. Lourenço Market Next to Human Resources Dpt Next BNU at Av. Sidonio Pais San Miu, Av. Horta e Costa Next to Metro Park Hotel
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uxury sales are expected to stay strong through the first quarter, largely due to the Chinese New Year celebrations in February and then the National People’s Congress in March, where government positions will be confirmed – and gifts bestowed. Just last week, customers toting paper bags bearing the logos of Louis Vuitton, Hermes, Gucci, Prada and other global luxury brands were out in force at malls in Hong Kong and Macau, two nearby destinations for wealthy mainland Chinese shoppers. Personal assistant Da Fei trailed b eh in d h i s bo ss , a r ea l e st a te businessman from Mongolia, carrying items from Hermes and Kenzo through the upscale One Central Macau shopping centre. “He likes to buy everything, particularly Hermes and Gucci,” Da Fei said as his boss, decked out in salmon pink trousers and a black and white shirt, browsed inside a Kenzo store. At the Gucci store in Macau’s Wynn casino, four men clustered around a glass counter examining leather wallets, while seven other men browsed items such as the 6,000 patacas (US$750) shoulder bags. Only two women were in the shop at the same time, while other customers queued up outside, waiting
for security guards to let them in. Retail sales here remained healthy in the third quarter of 2012. Retail sales were worth 12.5 billion patacas (US$1.6 billion) in the third quarter, according to the latest data from the Statistics and Census Service. Retailing turnover dropped slightly between July and September from the previous three months, but the third quarter was still the industry’s thirdbest quarter for 12 years. China’s fashion-forward men are snapping up Gucci and Burberry bags, driving a rebound in the luxury market months after a slowdown in spending by the world’s biggest luxury goods buyers spooked global investors. Men account for about 55 percent of China’s luxury goods market, well above the global average of 40 percent, according to research from brokerage CLSA Asia-Pacific Markets, partly because businessmen often buy expensive gifts to curry favour with government officials or potential associates. Data from Hong Kong, a popular shopping destination for wealthy mainland Chinese, shows retail sales are starting to perk up. They jumped 9.5 percent on the year in November, with jewellery, watches and other valuables up 13.7 percent after a 2.9 percent decline in October. T.A./Reuters
January 22, 2013 business daily | 7
MACAU
PYE shareholders approve boutique casino deal Unit of ports firm PYI Corp. will hold land and raise shares for US$800 mln Cotai scheme Michael Grimes
michael.grimes@macaubusinessdaily.com
January 2013,” said last night’s filing. Another regulatory filing from PYE in November confirmed Business Daily’s September story about plans to build a boutique-style casino hotel
on land adjacent to the One Oasis residential project on the CotaiColoane border. The project will not rely on a land concession from the Macau
Photo by Manuel Cardoso
H
ong Kong-listed Paul Y. Engineering Group Ltd confirmed in a regulatory filing last night that more than 99 percent of its shareholders approved a deal allowing the company to hold land, raise share capital and sell bonds for a boutique Macau casino. PYE – a unit of separately-listed ports and infrastructure business PYI Corporation Ltd – plans to raise funds for the US$800 million (6.4 billion patacas) casino hotel scheme. It will do so by issuing shares on the Hong Kong Stock Exchange and by selling convertible bonds. The parent company PYI expects to make a profit of more than HK$164 million (US$21.2 million) from the land deal according to a PYI press statement on January 5. “The board of directors of PYE is pleased to announce that each of the ordinary resolutions as set out in the notice of the PYE SGM [special general meeting] was duly passed by way of poll at the PYE SGM held on 21
government. But a person with knowledge of the process told Business Daily in November that the government is yet to give out any permission for gaming facilities on the relevant site. Of the US$800 million capital cost of the new boutique project, US$550 million is for development and construction, and US$250 million is to buy the land from the consortium that built the One Oasis residential development, and for the gaming licence. None of the parties to the deal have so far commented on which of Macau’s gaming concessionaires and sub-concessionaires will provide the gaming licence.
Target customers The high-end casino property 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, sources have told Business Daily. In late November PYE announced in a voluntary filing it had won a HK$10 billion contract to build part of the Studio City resort project on Cotai. The contract is in the name of PYE’s unit PY Construction (Macau) Ltd in a joint venture with Yau Lee Construction (Macau) Co. Ltd. The customer is Studio City Developments Ltd, a 60 percentowned indirect subsidiary of Macau casino developer and operator Melco Crown Entertainment Ltd.
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business daily January 22, 2013
GREATER CHINA Regulator to discuss cross-strait trading China’s Securities Regulatory Commission will visit Taiwan later this month for an unprecedented meeting with its Taiwanese counterpart to discuss further opening crossstraits securities markets, according to two sources familiar with the matter. Commission Chairman Guo Shuqing will lead the delegation, one source said, and any outcome from the meeting will be put under the Economic Cooperation Framework Agreement. Taiwan’s financial regulator said last month Taiwan and China would start discussions within three months, aiming to set a framework for Chinese companies to list on the Taipei bourse.
Shrinking pool of workers may limit recovery Decline in the working-age population of ‘great importance’ – Ma
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hina’s growth rebound will be capped by a labourforce squeeze and shrinking resources that leave the government satisfied with rates of expansion as low as half the peak during the past decade. A pace of 7 percent to 8 percent reflects economic forces, Ma Jiantang, head of the National Bureau of Statistics, said on Friday after reporting 7.9 percent expansion in the fourth quarter from a year earlier. He said a decline last year in the working-age population was of “great importance”. Mr Ma’s comments bolster the contention that China’s economy is permanently downshifting a gear as its one-child policy drives down the labour force. Slower growth presents challenges for incoming leaders Xi Jinping and Li Keqiang, and may limit the country’s potential as a market for everything from Australian iron ore to German machinery. “A declining labour force is just one of several economic headwinds looming on the horizon,” said David
Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department, now an Asia analyst in Los Angeles at TCW Group Inc. “As Xi and Li assemble their economic teams, we’ll find out whether necessity will again be the mother of reforms, as it has been in the past.” Fourth-quarter growth, while exceeding the median analyst estimate, brought 2012 expansion to 7.8 percent, the weakest pace since 1999. China stepped up infrastructure spending to reverse a seven-quarter slowdown, with fixed-asset investment excluding rural areas rising an inflationadjusted 19.3 percent in 2012 after 16.1 percent in 2011, according to JPMorgan Chase & Co. “In the past people always believed 8 percent or even 10 percent is necessary for China to maintain high employment and prevent mass unemployment, but demographic change is making the requirement for growth much lower,” said Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong. “Potential economic
growth in China will slow to around 6 percent by 2020.” China recorded average annual expansion of more than 10 percent over the last 20 years, peaking at 14.2 percent in 2007, according to previously released government data. Analysts forecast 8.1 percent this year and 8 percent in 2014, based on median estimates in a Bloomberg News survey last month.
Growth model Mr Ma said at a press briefing that a 7 percent to 8 percent pace “will facilitate change in the growth model and structural adjustment.” Ruralto-urban migration, urbanisation and industrialisation will keep driving expansion, said Mr Ma, who in November was named first in line to join the Communist Party’s 205-member central committee of leaders if a vacancy arises. At the same time, shifting supply and demand patterns in the labour market, increasingly tight natural resources and greater demands from
While we still have to stick to family planning as a national policy, it’s quite necessary to study proper demographic policy according to new changes in the situation Ma Jiantang, National Bureau of Statistics residents to improve their quality of life will help determine the rate of expansion, he added. Last year’s decline of 3.45 million in the labour force still leaves a
Huawei sees firmer revenue growth Company open to IPO after probably surpassing Ericsson in sales the communist nation could install malicious hardware or software in U.S. networks. “Perception is a major issue here,” said Mr Ferragu. “A listing would be a strong help, but I doubt the company is ready for this given the implications on the governance and management model.” It may take about a decade for Huawei to be perceived as “a normal company” worldwide, he said. The House Intelligence Committee also said U.S. companies should steer clear of another Chinese maker of telecommunications equipment, ZTE Corp. Huawei – bouncing back from a disappointing 2011
Profit Surge
public or not, we will always honour our commitment to openness and transparency. We will refer to the standards of listed companies to improve ourselves.” Huawei’s sales have climbed as it adds smartphones, tablets and cloudcomputing services, and benefits from investment in mobile-phone equipment in emerging markets, Ms Meng said. Ericsson, the world’s biggest maker of wireless network equipment by revenue, is predicted to report sales that are little changed from a year earlier because of its exit from a mobile-phone venture with Sony Corp. and a euro zone debt crisis that has damped spending in Europe. Reuters/Bloomberg News
H
uawei Technologies Co., China’s largest maker of telecommunications equipment, said it has an “open mind” about offering shares to the public after posting sales that probably surpassed Ericsson AB.’s. A decision to hold an initial public offering would depend on shareholders’ interests, as the company has no immediate need to raise funds, chief financial officer Cathy Meng Wanzhou said yesterday at a briefing in Beijing. The company
expects sales to rise as much as 12 percent this year following an 8 percent increase last year, she said. An IPO may help closely held Huawei expand overseas by boosting transparency and reducing security concerns, said Pierre Ferragu, a Sanford C. Bernstein & Co. analyst. The U.S. House Intelligence Committee in October recommended that companies there avoid equipment made by Huawei, whose founder served in the Chinese military, citing concerns
Huawei’s sales last year rose to 220 billion yuan (US$35.4 billion), helping boost net income 33 percent to 15.4 billion yuan, Ms Meng said. The equipment-maker had US$4.5 billion of working capital at the end of last year, on record cash flow of US$12 billion, she added. It also has credit lines totalling US$33 billion, 77 percent of which comes from banks outside of China. “As to whether or not we will go public, in Huawei we have kept an open mind toward this issue,” she said. “No matter whether we go
US$35.4 billion Value of Huawei’s sales last year
January 22, 2013 business daily | 9
GREATER CHINA ZTE’s shares drop after profit warning The Hong Kong-listed shares of ZTE Corp fell 5 percent early yesterday after China’s second-largest telecom equipment maker issued a profit warning for 2012, but the stock recovered as investors bet on a strong outlook for 2013. The stock fell as low as HK$14.02 (US$1.8), its lowest since January 8, before closing 1.36 percent down at HK$14.5. ZTE warned on Sunday of a net loss of up to 2.9 billion yuan (US$467 million) for 2012 due to project delays and the non-renewal of contracts. It said it expected to return to profitability in the first quarter of 2013.
JPMorgan embraces offshore yuan as trading doubles Dim Sum bonds rallying for a record six consecutive weeks
S
China’s population aged 15 to 59 might drop about 24 million from 2015 to 2025, the United Nations forecasted
base of 937 million, which “will remain as China’s biggest resource advantage,” Mr Ma said. The United Nations has forecast a drop of about 24 million in the population aged 15 to 59 from 2015 to 2025, while
people aged 65 and over will increase by about 66 million. “The demographic situation and labour demand-supply pattern in our country are changing after decades of family planning,” Mr Ma
Vanke surges on share plan for Hong Kong Company’s A and B shares hit 10 pct limit up
S
hares in China Vanke Co Ltd shot up by their daily limit yesterday after the nation’s major property developer said its foreign-currency B-shares would move to Hong Kong, the second firm to have left the mainland’s moribund B-share market in Shenzhen. Vanke’s B-shares, which are denominated in Hong Kong dollars, opened up 10 percent – the maximum intradaygainmainlandsharesareallowed to post – at HK$13.75 (US$1.77) per share from HK$12.50 at last close. Its yuan-denominated A-shares also opened at the top of the trading limit, at 11.13 yuan (US$1.81) per share, up from 10.21 yuan. Shares in its Hong Kong-listed subsidiary Vanke Properties Overseas Ltd, formerly known as Winsor Properties, rose by 12.75 percent, changing hands at over HK$16.9 per share, their highest level since September 2012. Vanke Overseas shares have been climbing steadily on expectations that its business would be reorganised if Vanke B shares move to Hong Kong, where exchange rules require issuers with two or more listed companies
to guarantee they will not compete directly with each other. The plan would widen Vanke’s access to global investors, giving the company entry to an exchange where the daily trading value is more than 100 times higher than in the B-share markets. “The move will help Vanke access more resources in the long run,” Jinsong Du, a Hong Kong-based
Property developer seeking more resources
said. “While we still have to stick to family planning as a national policy, it’s quite necessary to study proper demographic policy according to new changes in the situation.” Bloomberg News
property analyst at Credit Suisse Group AG, said yesterday. “The developer will have two platforms to raise funds in the international market if the conversion is approved.” Trading in Vanke shares has been suspended since December 25 when the company suspended trading pending an announcement. It announced the plan to shift the shares to Hong Kong on Friday. The positive response to Vanke’s announcement follows the successful migration of China International Marine Containers’ (CIMC) B shares to Hong Kong in December. CIMC’s new Hong Kong shares have gained over 26 percent since their first day trading in Hong Kong on December 19, compared to a 6.5 percent rise in the China Enterprises Index of the top Chinese listings in Hong Kong over the same time period. Reuters
tandard Chartered Plc estimates offshore trading of yuan has doubled to at least US$6 billion a day, giving investors more confidence to invest in the currency using options, forwards and Dim Sum bonds. Average daily transactions in Hong Kong surged from US$3 billion in the past year, said Charles Feng, Standard Chartered’s regional head for fixed-income trading in the city. Trading in offshore options in the currency swelled to between US$300 million and US$500 million per day, according to J.P. Morgan Private Bank, which is buying the contracts for its clients. HSBC Holdings Plc says combined yuan deposits and certificates of deposits in the city will rise 43 percent this year to 1 trillion yuan (US$161 billion). Dim Sum bonds have been rallying for a record six consecutive weeks as the central bank announced plans to accelerate the opening up of capital markets to foreigners and allow cross-border yuan loans. The average yield on the securities fell five basis points last week to 3.5 percent, the lowest since October 2011, a Deutsche Bank AG index showed. That compares with an average 2.62 percent for global corporate debt, according to Bank of America Merrill Lynch data. “Offshore yuan liquidity is unambiguously improving,” said Cliff Tan, East Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong. “In particular, there is more official sector activity in the first days of the year. This flow is very promising for central banks to get more involved.” “We have been utilising high carry and low volatility for our clients in the offshore renminbi via its burgeoning options market,” said Erik Wytenus, Hong Kongbased head of foreign exchange and commodities at J.P. Morgan Private Bank in Asia. “This allows for a beneficially asymmetric risk profile for these strategic positions.” Hong Kong’s Dim Sum bond market is increasingly offering attractive yields as long as buyers are selective, said Adam K. Tejpaul, managing director for the investment business of JPMorgan Chase & Co.’s private bank unit in Asia. Bloomberg News
10 |
business daily January 22, 2013
ASIA Smaller hedge funds made their investors richer in a year when several Asian stock markets rallied
Smaller hedge funds outperform in Asia Investors shifting money from larger to smaller funds Nishant Kumar
F
or those investing into Asia’s hedge funds last year, smaller was better. The region’s largest hedge funds – those managing more than US$500 million – delivered weaker returns on average than nimbler, small to medium-sized funds, according to fund research and people with knowledge of the individual funds. In a year when several Asian stock markets rallied, many bigger hedge funds failed to beat benchmark returns. Blue chip funds such as Ortus Capital Management Ltd and Senrigan Capital Group Ltd lost money, while high-profile launches Azentus Capital Management Ltd
and Dymon Asia ended the year barely in the black, said people familiar with their returns. Smaller hedge funds such as Factorial Management Ltd and the Splendid Asia macro hedge fund, however, made their investors richer. “The industry’s dirty little secret is that institutions’ need for scale leads them to invest in organisations and funds that are actually too big to be safe,” said Peter Douglas, founder of Singapore-based hedge fund consultancy GFIA Pte Ltd. The numbers for last year will feed a cynical view that hedge fund managers who raise a lot of money get rich from the management fee, regardless of performance. Most
hedge and private equity funds keep a fifth of their profits and charge a 2 percent fee on the money they raise – so the more capital coming in from investors, the bigger the fee. But managers of the smaller funds in Asia realise that if the bigger funds stumble, the entire industry will be affected. While some money meant for large funds will be diverted to smaller, better-return funds in the region, others will opt instead to send their money to the United States and Europe.
Below benchmark Asia hedge funds returned an average 9.8 percent in 2012 as
measured by the Eurekahedge Asian index – little more than half the 18.6 percent gain on the MSCI’s broadest index of Asia-Pacific shares outside Japan. JP Morgan’s EMBI Global index, which constitutes dollar bonds issued by emerging market sovereigns, gained 15 percent. Most home-grown Asia hedge funds managing more than US$500 million each fared worse than that, underscoring GFIA research’s premise that good performance becomes less likely when a fund exceeds US$500 million. Ortus Capital, which manages US$2.5 billion, saw its hedge fund lose 17.3 percent in 2012, its worst annual return since launching a
Malaysian stocks slump most in 16 months As upcoming election sparked selling across the board Gan Yen Kuan
M
alaysian stocks tumbled the most since September 2011 on speculation the government will call for an early election that will result in a weaker grip on power. The FTSE Bursa Malaysia KLCI Index sank 2.4 percent to 1,635.63 at the close in Kuala Lumpur, after earlier plunging as much as 2.7 percent. I t w a s t h e w o r s t performer among benchmark gauges in Asia yesterday. The measure’s trading volumes were 89 percent above the 30-day average, according to data compiled by Bloomberg. Axiata Group Bhd., the country’s biggest mobile-phone operator, slid 5.1 percent, leading declines in the index.
Speculation that the government will call for national elections as early as March helped trigger the selloff, according to Samsung Asset Management Co.’s Alan Richardson. Prime Minister Najib Razak must dissolve the nation’s parliament by April 28. Mr Najib’s approval rating fell to the lowest level in 16 months, the Merdeka Centre for Opinion Research said in a statement on January 10. Mr Najib is overseas and couldn’t comment on the election timing, a government spokesperson said yesterday. “There is always the overhang of political risk before the election,” Mr Richardson, a Singapore-based fund manager who helps oversee
about US$82 billion for Samsung Asset Management, said by phone. “There is uncertainty whether the ruling coalition would be able to at least maintain the existing majority they have.” The prime minister said last month elections may come soon as his ruling Barisan Nasional, or National Front, coalition attempts to regain a two-thirds parliamentary majority it lost in 2008. The KLCI slumped 39 percent that year, the most since 1997, on concern a stronger opposition would stymie government investment plans. The KLCI index trades at 14.6 times estimated earnings, a 2.1 percent premium versus the Asia Pacific gauge, even after yesterday’s
plunge, according to data compiled by Bloomberg. The KLCI is “in overbought and bearish divergent territory,” Lee Cheng Hooi, head of retail research for equity markets at Maybank Investment Bank Bhd., wrote in a report yesterday. “As Malaysia prepares for the 13th general election over February to June 2013, political uncertainty could cause investors to adopt a risk-off approach.” The KLCI is “fairly valued,” Mr Richardson said. “It’s not appealing particularly at this point in time but it’s not expensive either. Given the earnings momentum in the market, it’s probably not strong enough to sustain this kind of valuation.” Bloomberg News
January 22, 2013 business daily | 11
ASIA Most of the alpha is found in mid-cap managers, which in Asia is US$50 million to US$250 million and where we invest most of our capital Max Gottschalk, Gottex Fund Management
decade ago. It fell more than 6 percent in December when the yen weakened as the Bank of Japan increased its asset purchase program. “The dramatic move produced our biggest loss contributing nearly 80 percent of the losses for the month,” Ortus, one of Asia’s biggest hedge funds, wrote to clients. Senrigan Capital, an Asia-focused fund backed by Blackstone Group, lost 11.5 percent last year, while Azentus Capital, a hedge fund set up by former Goldman Sachs trader Morgan Sze and which once managed US$2 billion, gained just about 1 percent, an improvement on the 6.8 percent loss it had in 2011. The US$2.5 billion Dymon Asia Macro Fund, run by former Citadel fund manager Danny Yong, also gained about 1 percent, said people with direct knowledge of the fund’s return, down from a 20 percent gain in 2011. For comparison, an investment just in 1-year U.S. treasuries would have earned 1.3 percent last year.
Risk, return The returns from top funds are feeding a perception among investors
that Asian hedge funds don’t provide the results to match the risk that investors associate with the region. As the numbers come under scrutiny, Asian names producing single digit returns may face the axe as investors can achieve similar or better returns in developed capital markets where there is relatively less risk and far more consistent liquidity. The bigger hedge funds in Asia find it tougher in less liquid markets to make big enough bets to have a significant impact on the portfolio. The search for returns can often lead to trades outside a fund’s core competency or deals pushed by investment banks – increasing the risk of losses. But for prime brokers and service providers, the funds earn tens of millions of dollars in fees. Those in charge of allocating money at large pensions and endowments tend to send money to larger funds because their size implies reliability. “Most of the alpha is found in mid-cap managers, which in Asia is US$50 million to US$250 million and where we invest most of our capital,” said Gottex Fund Management cofounder Max Gottschalk, whose Asian fund of hedge funds returned 18.4 percent in 2012. Former Credit Suisse trader Charlie Chan’s US$105 million Splendid Asia macro hedge fund lived up to its name, gaining 63 percent last year betting on real estate investment trusts, bonds and currencies. And Factorial Master Fund, launched by ex-DKR Oasis bookrunner Barun Agarwal in January last year, advanced 23 percent, according to a person with direct knowledge of the fund. The fund, which made money each month, manages less than US$50 million. Fortress Asia Macro Fund, which increased its assets to US$500 million by the year-end, gained 21 percent, said a spokesman for the global money manager. There are signs that some investors are starting to switch. Titan Advisors, which manages about US$3 billion for pension funds and wealthy individuals, has shifted some money it invests with around two dozen hedge funds from larger funds to smaller funds. Reuters
Dreamliner battery maker in probe U.S. and Japanese authorities begin joint investigation into GS Yuasa
J
apan’s transport ministry is to investigate the company that makes batteries for Boeing Co’s grounded 787 Dreamliner passenger jet. The probe will be run jointly with the U.S. Federal Aviation Administration (FAA), a ministry official said yesterday. Authorities around the world last week grounded the new lightweight aircraft, and Boeing halted deliveries after a problem with a lithium-ion battery prompted an All Nippon Airways 787 to make an emergency landing at Takamatsu airport during a domestic flight. Earlier this month, a similar battery caught fire in a Japan Airlines’ 787 parked at Boston Logan International Airport. U.S. safety investigators on Sunday ruled out excess voltage as the cause of the Boston battery fire on January 7, and said they were expanding their probe to look at the battery’s charger and the jet’s auxiliary power unit. “Results have shown the battery was abnormal in both the Boston and Takamatsu [incidents]. They were the most damaged,” Shigeru Takano, a senior safety official at Japan’s Civil Aviation Bureau, told reporters. “We will look into if the work that took
Reuters
Singapore unveils package to increase population City’s workforce expected to begin shrinking in 2020
S
Axiata Group led declines in the KLCI index
place, from design to manufacturing, was appropriate.” He did not name the battery maker. A spokesperson for Kyoto-based GS Yuasa Corp, which makes batteries for the Dreamliner, declined to comment. Shares in the firm, valued at close to US$1.5 billion, slipped 1 percent yesterday, and have dropped 11 percent since the Boston fire. The benchmark Nikkei was down 0.9 percent. The grounding of the Dreamliner, an advanced carbon-composite plane with a list price of US$207 million, has forced ANA to cancel 141 flights between tomorrow and Sunday, affecting more than 18,000 passengers, the carrier said yesterday. Those cancellations added to the 72 flights scheduled between January 19 and 22 that ANA called off last week. Japan Airlines said yesterday it will cancel four flights on its Tokyo-San Diego route for January 27-28, adding to the 8 flights originally scheduled for January 19-25 on the same route it called off last week. Japan is the biggest market to date for the Dreamliner, with JAL and ANA flying 24 of the 50 passenger jets that Boeing has delivered.
ingapore will increase spending on population-growth measures by 25 percent, rolling out incentives ranging from government-paid time off for adoption and paternity leave to funding for fertility treatments. An annual budget of S$2 billion (US$1.6 billion) will be set aside for measures including state-funded childcare leave, healthcare costs and financial support for housing to married couples, the government said in a statement yesterday. That’s an increase from S$1.6 billion in the last package in 2008, it said. “The enhanced package aims to provide more comprehensive support for Singaporeans in getting married and starting their families,” the government said in the statement. “Addressing our falling birth rate requires a concerted effort beyond government initiatives.” Declining birth rates could undermine Singapore’s ability to sustain growth levels achieved by embracing free trade, fostering higher-value manufacturing and nurturing services industries such as gambling and health care. Prime Minister Lee Hsien Loong said in November that he plans to unveil a package of measures aimed at boosting the fertility rate from about 1.2 per woman. The government said it will pay 75 percent of the cost of reproduction technology treatments for couples, or
as much as S$6,300 per cycle. Those with more than one child will also be eligible for the funding, it said. Newborns will be granted S$3,000 in their medical accounts to help parents in health-care planning, the government said. It will also provide S$6,000 for the first two births and S$8,000 each for the third and fourth. Singapore will also provide four weeks of government-paid leave for working mothers of adopted children in the first year, it said. The government also introduced a week of paternity leave for fathers. Singapore’s citizen workforce will begin shrinking in 2020 for the first time in its history while land and labour limits will “increasingly constrain” its economic growth, Defence Minister Ng Eng Hen said on January 14 in Parliament. Singapore’s fertility rate rose to between 1.28 and 1.3 in 2012 from 1.2 the year earlier, Channel NewsAsia reported. AFP
S$2 bln Budget to boost Singapore’s low fertility rate
12 |
business daily January 22, 2013
MARKETS Hang SENG INDEX NAME
NAME
PRICE
DAY %
VOLUME
29.55
-0.5050505
50631463
CHINA UNICOM HON
ALUMINUM CORP-H
3.96
-0.2518892
13468000
CITIC PACIFIC
BANK OF CHINA-H
3.75
-0.530504
241733274
BANK OF COMMUN-H
6.36
0.4739336
21818688
31.35
-0.1592357
1556787
17.9
2.052452
12553303
AIA GROUP LTD
BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO
26
0.1926782
13403062
CATHAY PAC AIR
15.48
0.3891051
2261062
CHEUNG KONG
129.9
-0.5359877
3494568
8.72
0.6928406
13128923
CHINA COAL ENE-H CHINA CONST BA-H
CLP HLDGS LTD CNOOC LTD COSCO PAC LTD ESPRIT HLDGS
PRICE
DAY %
Volume
13.08
-0.7587253
30001549
POWER ASSETS HOL
13.1
2.024922
10930659
SANDS CHINA LTD
15.32
-1.668806
6632229
SUN HUNG KAI PRO
129.4
1.172791
6064876
12.56
2.28013
10423069
SWIRE PACIFIC-A
99.15
0.4050633
616202
11.1
0
5292553
TENCENT HOLDINGS
268.4
-0.739645
4064225
TINGYI HLDG CO
21.15
0.7142857
2420800
WANT WANT CHINA
10.22
-2.10728
13611530
65.9
1.619121
3123842
914171
HENDERSON LAND D
59.3
-0.084246
2196792
HENGAN INTL
74.9
1.216216
3823682
CHINA MERCHANT
26.1
0
3442087
CHINA MOBILE
87.3
-0.3993155
15603563
HUTCHISON WHAMPO
CHINA OVERSEAS
24.7
-1.2
16025829
IND & COMM BK-H
CHINA PETROLEU-H
9.25
0.6528836
67322687
HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC
5435683
SINO LAND CO
5959064
14116291
1471101
1.866667
2257677
0.4966887
118436735
0.4576659
38.2
79175796
0.1675042
0.1872659
65.85
0
30.35
-0.1508296
Volume
-1.098901
119.6
6.62
DAY %
16.2
HANG LUNG PROPER
26.75
PRICE
64.95
HANG SENG BK
CHINA LIFE INS-H
NAME
21.2
-0.4694836
3266057
149.2
0
3279996
85.3
0
12130422
85.85
0.8220787
8401669
5.9
-0.6734007
151334535
LI & FUNG LTD
11.88
-0.5025126
26965190
-0.1597444
1047990
CHINA RES ENTERP
27.4
1.107011
1340600
MTR CORP
31.25
CHINA RES LAND
23.2
0.2159827
3532304
NEW WORLD DEV
14.54
1.253482
15989026
CHINA RES POWER
19.92
-0.4
2168000
PETROCHINA CO-H
11.12
-0.1795332
32373319
CHINA SHENHUA-H
33.15
1.531394
9910296
PING AN INSURA-H
69.75 -0.07163324
6041129
WHARF HLDG
MOVERS
24
21
5 23635
INDEX 23590.91 HIGH
23631.85
LOW
23244.26
52W (H) 23639.63 23240
(L) 18056.4 17-January
21-January
Hang SENG CHINA ENTErPRISE INDEX NAME
NAME
PRICE
DAY %
Volume
CHINA PACIFIC-H
31.9
-1.23839
7975224
CHINA PETROLEU-H
9.25
0.6528836
CHINA RAIL CN-H
8.8
CHINA RAIL GR-H
PRICE
DAY %
VOLUME
AGRICULTURAL-H
4.06
1.246883
184849444
AIR CHINA LTD-H
7.39
0.1355014
7969360
ALUMINUM CORP-H
3.96
-0.2518892
13468000
ANHUI CONCH-H
29.2
2.097902
15278855
BANK OF CHINA-H
3.75
-0.530504
241733274
CHINA SHENHUA-H
BANK OF COMMUN-H
6.36
0.4739336
21818688
CHINA TELECOM-H
BYD CO LTD-H
26.8
0
1778835
DONGFENG MOTOR-H
CHINA CITIC BK-H
5.22
0.967118
50207593
GUANGZHOU AUTO-H
CHINA COAL ENE-H
8.72
0.6928406
13128923
HUANENG POWER-H
CHINA COM CONS-H
8.35
4.505632
52551962
CHINA CONST BA-H
6.62
-0.1508296
118436735
CHINA COSCO HO-H CHINA LIFE INS-H CHINA LONGYUAN-H CHINA MERCH BK-H
PRICE
DAY %
Volume
YANZHOU COAL-H
13.8
2.071006
17264656
67322687
ZIJIN MINING-H
3.16
-0.6289308
27054344
-2.869757
36142902
ZOOMLION HEAVY-H
11.06
-0.1805054
13643742
4.54
-1.518438
43093136
ZTE CORP-H
14.56
-1.355014
22091382
33.15
1.531394
9910296
4.35
-1.136364
43400413
12.58
2.276423
29314537
7.2
-0.6896552
5036530
7.08
0.4255319
8843556
IND & COMM BK-H
5.9
-0.6734007
151334535
JIANGXI COPPER-H
21.65
0.9324009
7402133
4.59
1.548673
27543075
PETROCHINA CO-H
11.12
-0.1795332
32373319
26.75
0.1872659
14116291
PICC PROPERTY &
11.94
-0.3338898
6336391
6.4
-0.9287926
5911500
PING AN INSURA-H
69.75
-0.07163324
6041129
18.46
-0.2162162
11704656
SHANDONG WEIG-H
7.5
-0.530504
16253900
CHINA MINSHENG-H
10.44
-0.3816794
32305384
SINOPHARM-H
24.85
-1.388889
5623334
CHINA NATL BDG-H
12.14
1.675042
22690432
TSINGTAO BREW-H
45.5
0.4415011
1769800
16.4
2.756892
11074046
WEICHAI POWER-H
33.4
-1.329394
4748537
CHINA OILFIELD-H
NAME
MOVERS
19
21
0 12145
INDEX 12125.89 HIGH
12142.31
LOW
11774.17
52W (H) 12148.51 (L) 8987.76
11770
17-January
21-January
Shanghai Shenzhen CSI 300 NAME
PRICE
DAY %
Volume
CHONGQING CHAN-A
7.32
6.395349
48647802
49407959
CITIC SECURITI-A
13.8
2.222222
134660944
SANY HEAVY INDUS
-0.5703422
25876928
CSR CORP LTD -A
5.02
0.1996008
61574500
SHANDONG DONG-A
48.1
1.199243
9037758
2.240437
41710782
DAQIN RAILWAY -A
7.08
0.4255319
46782434
SHANDONG GOLD-MI
38.42
-0.3372244
13257355
4.23
-0.9367681
17836215
SHANG PHARM -A
12.3
0.8196721
10420839
13.87
-0.07204611
17651889
SHANG PUDONG-A
10.4
2.362205
178154882
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.78
-0.7142857
149396644
AIR CHINA LTD-A
6.05
2.542373
5.23 18.71
ALUMINUM CORP-A ANHUI CONCH-A
NAME
BANK OF BEIJIN-A
9.24
0.7633588
61519900
DATANG INTL PO-A
BANK OF CHINA-A
2.96
-0.3367003
36148491
EVERBRIG SEC -A
NAME SAIC MOTOR-A
PRICE
DAY %
16.99
-0.5851375
Volume 30716021
10.7
5.004907
108214351
4.99
0.4024145
88553663
GD POWER DEVEL-A
2.82
0.3558719
116314802
SHANGHAI ELECT-A
4.23
0.2369668
8194544
BANK OF NINGBO-A
10.81
2.367424
22727794
GF SECURITIES-A
15.03
-0.06648936
33175753
SHANXI LU'AN -A
23.1
1.986755
24896811
BAOSHAN IRON & S
4.99
-0.3992016
22098081
GREE ELECTRIC
28.71
1.448763
21691965
SHANXI XINGHUA-A
40.11
-3.558548
4171549
34562339
GUANGHUI ENERG-A
17.81
-0.2240896
36549861
SHANXI XISHAN-A
14.76
3.144654
58714582 53037846
BANK OF COMMUN-A
BBMG CORPORATI-A
7.87
2.875817
23.97
0.04173623
6231366
HAITONG SECURI-A
10.28
1.081613
74378170
SHENZEN OVERSE-A
7.18
-1.508916
CHINA CITIC BK-A
4.54
2.714932
51334884
HANGZHOU HIKVI-A
31.79
-4.64907
11619292
SICHUAN KELUN-A
64.5
-4.231626
1963578
CHINA CNR CORP-A
4.79
1.483051
83643780
HENAN SHUAN-A
64.42
-2.379148
3640962
SUNING APPLIAN-A
7.48
-0.2666667
52945718
CHINA COAL ENE-A
7.92
0
20180571
HONG YUAN SEC-A
18.82
0.803428
17602961
TSINGTAO BREW-A
33.93
-0.9053738
1870427
CHINA CONST BA-A
4.62
-0.6451613
56817372
HUATAI SECURIT-A
9.35
-0.5319149
25748119
WEICHAI POWER-A
24.84
2.475248
15139944
CHINA COSCO HO-A
4.6
2.908277
50133466
HUAXIA BANK CO
10.78
2.180095
60097653
WULIANGYE YIBIN
26.82
-2.75562
59812335
CHINA CSSC HOL-A
23.68
1.067008
10936100
IND & COMM BK-A
4.2
-0.4739336
65157834
YANGQUAN COAL -A
15.28
6.927922
72349619
CHINA EAST AIR-A
3.69
2.5
49532098
INDUSTRIAL BAN-A
18.04
4.217215
134810006
YANTAI WANHUA-A
16.06
0.879397
8124023
CHINA EVERBRIG-A
3.07
0.9868421
212430695
INNER MONG BAO-A
35.73
-0.6119611
31770945
YANZHOU COAL-A
18.86
3.455842
18976614
CHINA INTL MAR-A
13.11
1.157407
12362315
INNER MONG YIL-A
25.59
-3.869271
19891028
YUNNAN BAIYAO-A
72.87
-0.2327492
1971536
CHINA LIFE INS-A
20.43
-0.3900536
20861783
INNER MONGOLIA-A
5.52
-0.7194245
68988257
ZHONGJIN GOLD
16.72
-0.4169148
26940975
CHINA MERCH BK-A
13.57
1.495886
114885955
JIANGSU HENGRU-A
31.21
-1.265422
6835036
ZIJIN MINING-A
3.86
-0.2583979
60983194
21896067
JIANGSU YANGHE-A
94.39
-3.50644
6027889
ZOOMLION HEAVY-A
9.31
2.759382
118394468
10.34
1.671583
71366798
BYD CO LTD -A
CHINA MERCHANT-A
30.01
-2.911679
CHINA MERCHANT-A
10.4
0
18300490
CHINA MINSHENG-A
9.01
2.61959
205867882
CHINA NATIONAL-A
7.72
-0.1293661
33932840
CHINA OILFIELD-A
16.7
0.9673519
9877763
JIANGXI COPPER-A
24.68
-0.6441224
13628672
JINDUICHENG -A
12.61
-1.484375
25255080
JIZHONG ENERGY-A
16.55
4.813173
32191093
KANGMEI PHARMA-A
14.91
-0.7984032
26759959
197.31
-3.165489
7477928
-3.325622
19957201
21.52
-2.536232
34326807
KWEICHOW MOUTA-A
CHINA PETROLEU-A
6.88
0.2915452
35742516
LUZHOU LAOJIAO-A
33.43
CHINA RAILWAY-A
6.06
-1.302932
47325196
METALLURGICAL-A
2.25
0
34654571
2.57
0.390625
35921622
CHINA PACIFIC-A
ZTE CORP-A
MOVERS
147
135
18 2615
INDEX 2610.898
CHINA RAILWAY-A
3.26
-0.3058104
58944442
NINGBO PORT CO-A
CHINA SHENHUA-A
24.83
0.4856333
20672814
PANGANG GROUP -A
3.99
-0.7462687
52564299
9.11
1.222222
47783723
HIGH
2610.9
19.7
7.474086
78213642
LOW
2540.43
CHINA SHIPBUIL-A
4.99
-0.7952286
57705447
PETROCHINA CO-A
CHINA SOUTHERN-A
4.18
1.456311
52006915
PING AN BANK-A
CHINA STATE -A
3.82
0.5263158
163979857
PING AN INSURA-A
45.77
-1.46394
23426222
CHINA UNITED-A
3.56
-0.8356546
108725911
POLY REAL ESTA-A
13.97
-2.239328
89498040
CHINA VANKE CO-A
11.13
9.980237
23430893
QINGDAO HAIER-A
14.15
-0.07062147
11884596
CHINA YANGTZE-A
7.42
0.405954
59434707
QINGHAI SALT-A
27.55
-0.5055977
6842087
PRICE DAY %
Volume
PRICE DAY %
Volume
79.9 -0.3740648
2835544
TAIWAN MOBILE CO TPK HOLDING CO L
52W (H) 2717.825 (L) 2102.135
2535
17-January
21-January
FTSE TAIWAN 50 INDEX NAME ACER INC
NAME
24.85
2.053388
14708720
FORMOSA PLASTIC
ADVANCED SEMICON
24.3
-2.016129
15334154
FOXCONN TECHNOLO
ASIA CEMENT CORP
36.3 -0.6839945
4119878
-1.506373
5582525
FUBON FINANCIAL
36.4
0.2754821
13977742
TSMC
17547753
UNI-PRESIDENT
335
1.515152
2539699
HON HAI PRECISIO
84.6 -0.9367681
AU OPTRONICS COR
11.7
1.73913
78508167
HOTAI MOTOR CO
236
HTC CORP
1.871102
3618633 7005564
100.5 -0.9852217
17310236
51.8 -0.9560229
4929498
11.45 -0.4347826
19466956
7852413
WISTRON CORP
16.8 -0.2967359
2261600
YUANTA FINANCIAL
15.15
0.6644518
22186014
YULON MOTOR CO
54.7
0.7366483
1802021
5602343 14987143
HUA NAN FINANCIA
CHANG HWA BANK
15.85 -0.6269592
3243560
LARGAN PRECISION
734
1.241379
2050383
CHENG SHIN RUBBE
73.3 -0.6775068
3349457
LITE-ON TECHNOLO
39.85
1.013942
3230929
CHIMEI INNOLUX C
13.9
0
87907684
MEDIATEK INC
316.5
2.427184
7687518
CHINA DEVELOPMEN
7.68 -0.5181347
34601755
MEGA FINANCIAL H
23
-0.862069
7245198
CHINA STEEL CORP
27.35
-2.321429
17687039
NAN YA PLASTICS
58.8
-1.010101
3175023
CHINATRUST FINAN
16.8
0.9009009
24383162
PRESIDENT CHAIN
162
0.621118
388481
CHUNGHWA TELECOM
94.6 -0.1055966
COMPAL ELECTRON
21.4
6200927
QUANTA COMPUTER
64 -0.9287926
7426952
2.884615
40297784
SILICONWARE PREC
30.5 -0.4893964
4755489
105
-1.869159
1203561
SINOPAC FINANCIA
12.6
0
10155519
33.25
0.9104704
4805106
SYNNEX TECH INTL
59.7
0.1677852
5834148
FAR EASTONE TELE
72.6 -0.4115226
4237899
TAIWAN CEMENT
38.85
0.2580645
5561944
FIRST FINANCIAL
FAR EASTERN NEW
490
286.5 -0.5208333
1.162791 0.3134796
DELTA ELECT INC
0.9389671
445780
32
17.6
0.2849003
5029884
TAIWAN COOPERATI
16.4
0.3058104
2433267
FORMOSA CHEM & F
80
1.265823
5750749
TAIWAN FERTILIZE
73.5
0.9615385
1629657
FORMOSA PETROCHE
84.1
-1.175088
773016
TAIWAN GLASS IND
29.5
0
818609
UNITED MICROELEC
Volume
107.5
3.964758
130.5
CATHAY FINANCIAL
PRICE DAY %
85
ASUSTEK COMPUTER CATCHER TECH
NAME
MOVERS
33.5 -0.5934718
24
24
9793652
2 5425
INDEX 5400 HIGH
5421.13
LOW
5323.94
52W (H) 5621.53 5320
(L) 4719.96 17-January
21-January
January 22, 2013 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 34.6 34.3 34.0
PRICE
17.4
51.0
17.0
33.4
50.8
16.8
38.4
21.6
22.8
38.0
21.4
22.6
37.6
21.2
37.2
21.0
36.8
20.8
22.4 22.2
DAY %
YTD %
(H) 52W
(L) 52W
-0.355797405
3.702896972
109.4300003
80.05999756
BRENT CRUDE FUTR Mar13
111.76
-0.116185539
1.701701702
118.7999954
90.58999634
GASOLINE RBOB FUT Feb13
279.32
-0.128718535
1.140601803
292.9699898
220.3500032
GAS OIL FUT (ICE) Mar13
954.25
0.579710145
3.245875034
1026.25
800.5
3.592
0.729108245
7.19188302
4.090000153
3.049999952
NATURAL GAS FUTR Feb13
304.95
-0.098280098
0.583810547
333.4599972
255.6599855
Gold Spot $/Oz
HEATING OIL FUTR Feb13
1690.02
0.3426
1.5356
1796.08
1527.21
Silver Spot $/Oz
31.9262
0.1921
6.0319
37.4775
26.1513
Platinum Spot $/Oz
1675.3
0.3624
10.3805
1736
1379.05
Palladium Spot $/Oz
718.78
-0.1694
2.7328
732.9
553.75
LME ALUMINUM 3MO ($)
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 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
22.0 21.8
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
DAY %
1.0518 1.5884 0.9325 1.3313 89.48 7.9857 7.7531 6.2217 53.8269 29.72 1.2299 28.966 40.73 9618 94.12 1.24151 0.83815 8.2878 10.6318 119.13 1.03
0.0761 0.0882 0.1823 -0.0601 0.6929 -0.0088 -0.0077 -0.0579 -0.2242 0.1346 -0.1789 -0.0621 -0.3658 2.1834 0.6003 0.2271 0.1384 0.3318 0.3725 0.7135 0
YTD %
(H) 52W
1.349 -1.8051 -1.8338 0.9325 -3.7774 -0.0313 -0.0322 0.143 2.1701 2.8937 -0.6911 0.2313 0.6752 1.8195 -5.0924 -2.741 -2.7119 -0.8482 -0.9537 -4.6672 -0.0097
(L) 52W
1.0857 1.6381 0.9972 1.3487 90.25 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
0.9582 1.5269 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 29.63 1.2152 28.913 40.54 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029
MACAU RELATED STOCKS (H) 52W
(L) 52W
8.253965
3.44
2.27
856066
CROWN LTD
11.92
1.016949
11.71509
12.04
8.04
1362688
18.30999947
AMAX HOLDINGS LT
0.083
2.469136
18.57143
0.119
0.055
27561000
66.84999847
BOC HONG KONG HO
26
0.1926782
7.883816
26.15
20.25
13403062
1.28
1.703084833
948.25
652
1429.25
-0.069917847
1.401206101
1728.25
1200
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
COTTON NO.2 FUTR Mar13
78.55
0.989971715
4.538195369
98.5
World Stock MarketS - Indices PRICE
MAJOR
PRICE
2.095808
791.25
SOYBEAN FUTURE Mar13
COUNTRY
COUNTRY
3.41
WHEAT FUTURE(CBT) Mar13
DAY %
YTD %
(H) 52W
(L) 52W
NAME ARISTOCRAT LEISU
PRICE
DAY % YTD %
VOLUME CRNCY
CENTURY LEGEND
0.29
0
9.433968
0.34
0.215
68000
CHEUK NANG HLDGS
6.16
0
2.838067
6.25
2.8
201000 16025829
CHINA OVERSEAS
24.7
-1.2
6.926405
25.6
14.124
CHINESE ESTATES
12.74
-0.312989
-2.599388
13.26
8.3
5500
CHOW TAI FOOK JE
13.26
1.221374
6.591643
15.16
8.4
4629182
EMPEROR ENTERTAI
1.98
-1
4.761906
2.08
0.99
565000
FUTURE BRIGHT
1.67
1.829268
36.88524
1.69
0.44
7178000
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
HANG SENG BK
FTSE 100 INDEX
GB
6170.26
0.2575389
4.619506
6180.27
5229.76
DAX INDEX
GE
7734.18
0.4148149
1.599892
7789.94
5914.43
NIKKEI 225
JN
10747.74
-1.517048
3.391577
10952.31
8238.96
HANG SENG INDEX
HK
23590.91
-0.04605585
4.122318
23639.63
18056.4
CSI 300 INDEX
CH
2610.898
0.5956218
3.485839
2717.825
2102.135
TAIWAN TAIEX INDEX
TA
7724.92
-0.1028079
0.3301503
8170.72
6857.35
GALAXY ENTERTAIN
34.3
2.083333
13.01483
34.4
16.62
11739250
119.6
0.1675042
0.7582166
120
99.2
914171
HOPEWELL HLDGS
32.9
-0.1517451
-1.052632
34.4
19.049
418500
HSBC HLDGS PLC
85.3
0
4.920045
85.65
59.8
12130422
HUTCHISON TELE H
3.45
0
-3.089886
3.88
2.98
3422000
LUK FOOK HLDGS I
29.7
1.192504
21.72131
30.2
14.7
1989800
MELCO INTL DEVEL
12.14
2.881356
34.73918
12.2
5.12
11906000
MGM CHINA HOLDIN
17.58
4.270463
25.39229
17.7
10.04
13591800
MIDLAND HOLDINGS
4.18
-0.2386635
12.97297
5.217
3.249
3685000
NEPTUNE GROUP
0.213
1.428571
40.13158
0.226
0.084
42573000
NEW WORLD DEV
14.54
1.253482
20.96505
14.64
7.95
15989026
SANDS CHINA LTD
38.2
1.866667
12.51841
38.25
20.65
5435683
SHUN HO RESOURCE
1.48
-0.6711409
5.714288
1.5
1.03
110000
4.5
0.896861
7.398567
4.65
2.56
5897034
KOSPI INDEX
SK
1986.86
-0.04980255
-0.5102558
2057.28
1758.99
S&P/ASX 200 INDEX
AU
4777.497
0.1314337
2.765073
4787.2
3985
ID
4435.463
-0.6722899
2.751552
4472.108
3635.283
FTSE Bursa Malaysia KLCI
MA
1635.37
-2.449834
-3.172383
1699.68
1509.49
SHUN TAK HOLDING
JAKARTA COMPOSITE INDEX
51.4
17.2
95.22
NAME
17.6
51.2
WTI CRUDE FUTURE Feb13
CORN FUTURE
51.6
CURRENCY EXCHANGE RATES
NAME
METALS
17.8
33.7
Commodities ENERGY
51.8
NZX ALL INDEX
NZ
908.995
0.5353064
3.054467
913.386
732.335
SJM HOLDINGS LTD
21.4
3.13253
18.88889
21.5
12.34
3967600
PHILIPPINES ALL SHARE IX
PH
3877.24
0.3839572
4.819167
3885.39
3125.49
SMARTONE TELECOM
13.6
-0.8746356
-3.40909
17.5
13.1
2437949
HSBC Dragon 300 Index Singapor
SI
627.02
0.2
0.95
NA
NA
STOCK EXCH OF THAI INDEX
TH
1442.45
0.5584061
3.629486
1443.98
1054.84
HO CHI MINH STOCK INDEX
VN
447.79
-1.402589
8.232422
492.44
Laos Composite Index
LO
1446.66
2.745009
19.08921
1446.66
WYNN MACAU LTD
22.15
0
5.72792
25.5
14.62
7685510
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.
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
1.65
200
124.06
0.4859874
10.28536
129.6589
84.4902
1352546
WYNN RESORTS LTD
AUD HKD
USD
14 |
business daily January 22, 2013
Opinion
Handicapping the contenders to replace Bernanke Simon Johnson
O
Professor at the MIT Sloan School of Management
ver the past four years, the Federal Reserve has become the most important branch of government. It has acquired unprecedented powers over almost all aspects of American life. It has also become much more politicised than at any time in living memory. Expect further attacks on its independence and integrity at election time. The spirit of Andrew Jackson lives on. And now we see clear signals that the Fed is likely to have a new chairman soon. Who will run the central bank and what does the choice of top leadership mean for the country? The recent expansion of the Fed’s powers is ironic, because the decade before 2008 was hardly the organisation’s most glorious. Monetary policy was arguably too loose for too long after the dot-com bust and the September 11 attacks. The Fed’s light-touch approach to financial regulation failed completely. And the regulator drank the Kool-Aid of the Basel II international banking rules – believing in the “advanced approaches” that let banks design their own model-based capital levels, which turned out to be woefully inadequate.
The Fed also failed to protect consumers and homeowners from rapacious practices in parts of the financial sector. And it spectacularly neglected to consider systemic risk and the ways a real-estate price boom could lead to overborrowing that would bring down the macroeconomy.
Credit boom In fact, it is hard to find an aspect of the Fed’s activities that went well during the credit boom. Yet the central bank is now more powerful than ever. How did this happen? The explanation lies partly in the extraordinary measures taken by chairman Ben Bernanke and his colleagues – both as the crisis manifested itself in the fall of 2008 and as the economy staggered along beginning in 2009. Harvey Rosenblum and Richard Fisher of the Dallas Fed write about the “blob that ate monetary policy,” by which they mean that undercapitalised megabanks became so badly broken that the ordinary transmission mechanisms of monetary policy no longer worked. It wasn’t enough to cut short-term interest rates; if the Fed wanted to help the economy, it needed to take
more-dramatic steps. Fast-forward to early 2013: Through its current and expected asset purchases, the Fed controls almost the entire yield curve, meaning the benchmark “risk-free” interest rates paid on Treasury debt of all maturities (certainly up to the 10-year bond and arguably beyond). But the change in Fed operating doctrine is much more profound. In principle, as a result of the HumphreyHawkins legislation in the 1970s, the Fed cared about unemployment as well as inflation. In practice, the Fed was much more focused on inflation. Now, however, we have an explicit unemployment target for the first time. And the Fed has also assumed greater powers visa-vis the financial system. It’s true that the Dodd-Frank reform legislation also empowered the Federal Deposit Insurance Corporation to handle the failure of financial institutions. And now there is a Financial Stability Oversight Council, headed by the Treasury secretary.
‘Living wills’ In reality, though, the Fed controls key parameters regarding the safety of big
banks – including how much equity funding they have and the structure of their debt. It is also in charge of determining whether banks have viable “living wills” that would allow any potential failure to be handled through bankruptcy. And the Fed is very much involved in deciding whether any nonbank financial institutions should be regarded as “systemic” and thus subject to tighter regulation. Don’t hold your breath for serious progress on any of these missions. The Fed is powerful today for two reasons. On the macro side, there is no alternative. Fiscal policy is off the table as an instrument for stimulating the economy: You might be for or against, but nothing is going to happen. You might think monetary policy is too loose or too tight, but there is no denying that these decisions are currently of paramount importance. On the regulatory side, all the other regulators have problems. The Office of Thrift Supervision was abolished, thankfully, by Dodd-Frank. The Office of the Comptroller of the Currency may be improving under new leadership but it has a tawdry history of being captured by big banks. And the Securities and
It is hard to find an aspect of the Fed’s activities that went well during the credit boom
Fed chairman Ben Bernanke
Exchange Commission has become a sad shadow of its former self. The FDIC did have a relatively good crisis, but it remains focused on deposit insurance – and has been handed the difficult, messy business of potentially “resolving” failing megabanks. Politicians on both left and right feel increasingly uncomfortable about decision making at the Federal Reserve – calling now for an audit of the interest-ratesetting process in the Federal Open Market Committee. The Fed is full of smart people with a great deal of integrity. But some parts of the system have become too close to powerful interests on Wall Street, undermining the political legitimacy of the more independent parts. Bernanke will probably step down when his term as chairman of the Board of Governors expires in early 2014. He could stay, but the main lesson from the cult of former chairman Alan Greenspan is that more than two terms isn’t healthy for the organisation or the country. Future chairmen should be limited to eight years in office.
Leading candidates There are three plausible candidates to take over. Janet Yellen, the current vice chairman, must be considered the front-runner. Support her if you like the current trajectory of the Fed with expansionary macro policy and a go-slow approach to regulation. Yellen is a very accomplished economist. But should the Fed continue to disregard the risks of inflation and understate the danger of too-big-to-fail banks? Most of the history of central banking – including the first 100 years of Fed experience – suggests that this can become a toxic combination of mistakes. Timothy Geithner, who is stepping down as Treasury secretary, wants the job of Fed chairman. Yet he was head of the New York Fed during the disastrous boom phase and remains closely associated with the Robert Rubin-Citigroup wing of the Democratic Party. His doctrine of “overwhelming force” over the past four years can be translated into plain English as “unconditional bailouts for big banks”. This is unlikely to fly on Capitol Hill. Fisher of the Dallas Fed represents a different view, more concerned about the potential resurgence of inflation and pressing for tougher action on the dangerous megabanks. Fisher warrants serious consideration for the position of chairman of the world’s most powerful central bank. Bloomberg View
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January 22, 2013 business daily | 15
OPINION Business
wires
Europe’s narrative struggle
Leading reports from Asia’s best business newspapers
Jakarta Post
Ana Palacio
Former Spanish foreign minister and former Senior Vice President of the World Bank
State-ownedtelecommunications company, PT Telekomunikasi Indonesia (Telkom) expects to control up to 60 percent of the mobile phone market in Timor Leste in five years through its newly established subsidiary, Telekomunikasi Indonesia International (Telin). Telin’s operation in the former Indonesian province was officially inaugurated in Dili last week with the presence of PT Telkom’s president director Arief Yahya and State-Owned Enterprises Minister, Dahlan Iskan. Telin will spend up to US$50 million to build the relevant infrastructure, Mr Arief said.
The Star Ranhill Energy and Resources Bhd, a Malaysian energy and water company, is expected to list on the Bursa Malaysia Stock Exchange by the second quarter of this year in a deal that will likely raise more than 1 billion ringgit (US$332 million), two sources close to the deal said. The initial public offering could be among the first after a general election that Malaysian Prime Minister Najib Razak must call by the end of April. The IPO pipeline in the Southeast Asian country has slowed ahead of the election because of concerns about market volatility, analysts and investment bankers have said.
Wall Street Journal A debate is brewing in India about a possible increase in taxes for the country’s superrich. Earlier this month, C. Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, suggested that the government could consider such a tax increase in the upcoming financial budget, which will be placed before Parliament next month. Mr Rangarajan said they could try to raise more taxes possibly by adding a new tax on income above a certain level. He didn’t elaborate but said this needed further discussion.
Myanmar Times Myanmar’s Ministry of Energy has announced the second bidding round for onshore oil and gas blocks. The government said that bids would be accepted for 18 onshore blocks. Bids must be delivered no later than March 17 to the director general of the Energy Planning Department in Nay Pyi Taw. “The petroleum operation shall be conducted on production sharing basis and/or improved petroleum recovery basis,” the statement said. The state owned Myanma Oil and Gas Enterprise will serve as a partner along with at least one Myanmar national owned company.
T
he start of any year invariably prompts stocktaking, and 2012 certainly offers much to consider: the dramatic events in the Middle East, leadership change in China, and the brinkmanship of America’s budget debate. All were high in importance, if not always in popular interest. That seems especially true of the painful and excruciatingly prolonged – indeed, still ongoing – process of saving the euro. The euro’s survival in 2012 – if only by the skin of its teeth – confounded sceptics who forecast Greece’s exit from the euro zone and the single currency’s collapse by the end of the summer. Indeed, the European Union’s future still seems acutely uncertain, owing mainly to a mismatch between rhetoric and reality. In the realm of reality, the latest of many “grand” summits in Brussels has left a yawning gap between Europe and a fiscal union, as heads of state stripped much of the substance from the blueprint proposed by Herman Van Rompuy, the president of the European Council, and developed by the European Commission. Nonetheless, concrete and positive steps toward institutional consolidation – though far from achieving the ambitions of some – have been taken. The creation of the European Stability Mechanism, the European Central Bank’s new supervisory role, and the ECB’s purchases of sovereign bonds over the course of the last year have provided muchneeded relief to Europe’s beleaguered peripheral economies. Moreover, Europe is one step closer to a fullfledged banking union. The main impediment to further progress is that two competing narratives have emerged to explain Europe’s economic travails and lay out a path forward. One centres on the euro zone’s structural flaws and aims at strengthening the
No degree of austerity on its own will enable Europe’s southern economies to get back on their feet
institutional framework, whereas the other highlights faulty domestic policies and focuses on austerity. Alarmingly, the resulting political debate has degenerated into a shrill cacophony of moral righteousness, fingerpointing, scapegoating, and stereotyping. In fact, though often portrayed as irreconcilable opposites, the two approaches to resolving the euro’s problems are complementary – indeed, essential – components of any realistic approach to ensuring the euro zone’s future. Likewise, neither narrative alone can provide a vision for the EU; the gap between them can be filled only by trust. Greece, Italy, Spain, Portugal, and even France need to control their deficits and streamline debt. But no degree of austerity on its own will enable Europe’s southern economies to get back on their feet.
Consider Greece Anticipating desertion by Europe and convinced that painful budget cuts and repayment will benefit only its creditors, Greece has ringfenced itself, and has been sapped of all motivation to undertake the reforms dictated by Brussels. Meanwhile, Germans regard economic transfers
to the South as a moralhazard problem that no European political agreement could resolve. Seeing only one side of the equation, public opinion has become polarised between northern and southern Europe, perpetuating a vicious cycle of mistrust. It would be equally wrong to imagine that institutional changes alone will fix Europe’s problems. While an integrated financial framework for Europe is taking shape, daunting decisions regarding the design of a European resolution mechanism need to be worked out. A banking union will undoubtedly entail significant encroachments on sovereignty (for example, decisions to close banks, distribute losses, or cut workforces at the national level), which, unless accompanied by progress toward a political union, will generate a crisis of legitimacy. Thus, addressing Europe’s serious economic issues requires wading into the deep waters of the political imagination. So far, however, policies aimed at shoring up the euro have been narrowly technical, in an effort to isolate Europe’s financial travails from popular discontent over its direction.
That debate has been left to fester, serving as a dangerously dysfunctional pressure valve for turbulent and frustrated citizens across Europe. Confronted with the reality of disgruntled electorates, pundits are quick to bemoan the “democratic deficit” of the Union’s institutions. Lately, they have been pleading for the direct election of the European Commission president, the transformation of the Council of Ministers into a form of second legislative chamber, or for the establishment of Europe-wide political parties to contest elections to the European Parliament. None of these initiatives would work, however, owing to a simple, inconvenient truth: to this day, Europeans view each other in “us versus them” terms. Europe’s common institutions – both old and newly created – can survive in the long run only if a common European identity materialises to underpin them. The emergence of such an identity depends on politicians’ ability to communicate to their fellow citizens the Union’s real advantages and the bleak prospects of nation-states that try to go it alone. In a “post-European world,” Europe is globally relevant only when united. The single market is the paramount example at one extreme, with defence – plagued by duplication and lacunae between EU countries – at the other. Although politicians and voters are equally unwilling to admit it, the EU has reached a fork in the road. One route leads to further integration, while the other implies a return to national sovereignty; navigating the former will require great effort, whereas the latter is a relatively straight downward path. Ultimately, the EU’s future – if it has any future at all – depends on constructing a coherent narrative that articulates that choice explicitly. © Project Syndicate
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business daily January 22, 2013
CLOSING Sony to introduce Xperia tablet
Jakarta to start building metro this year
Sony Corp., the electronics maker struggling after four straight annual losses, will sell a new tablet computer in Japan this year as it tries to lure customers away from Apple Inc. and Samsung Electronics Co. The Xperia Tablet Z will be 6.9 millimetres thick, weigh 495 grams and have a 10.1-inch display, Sony’s mobile unit said in a statement yesterday. The waterproof device may debut in Japan as soon as March before appearing elsewhere, Noriko Shoji, a Tokyo-based spokeswoman for Sony, said. The price hasn’t been determined, she said.
The Indonesian capital Jakarta will soon start construction of a metro system to try to unravel its infamous traffic jams, 26 years after the idea was first mooted, officials said yesterday. The city administration and the central government finally agreed last week on how to split the cost, with 49 percent to be paid by the central government. Construction would start this year, pending an announcement of the winner of the tender, said Eko Hariyadi, a Jakarta administration spokesman. Two consortia of Japanese and Indonesian construction firms are competing for the work.
between 34 percent to 42 percent in the final three months of 2009 to 2011. Retailers in Hong Kong and mainland China became more “cautious,” and it’s unclear how revenue in the region will evolve, Richemont said. “There are little clouds on the horizon, and there’s going to be a period where the data are fragile,” said Jon Cox, head of Swiss research at Kepler Capital Markets in Zurich.
Gift slowdown
Richemont declines as sales miss estimates Cartier jewellery maker points to China slowdown Revenue from the watch division gained 9 percent
C
ie. Financiere Richemont SA, the maker of Cartier jewellery, fell the most in more than a year in Zurich trading after reporting third-quarter revenue that missed analysts’ estimates as Asia Pacific sales stopped growing. The shares fell as much as 7.3 percent, the biggest intraday decline since September 2011.
Richemont’s Asia Pacific sales didn’t rise in the October-December period for the first time in four years. Total revenue rose 9.3 percent to 2.86 billion euros (US$3.8 billion) in the three months through December, the Geneva-based maker of IWC watches said yesterday in a statement. That missed the 2.91 billion-euro average of seven analyst
Abu Dhabi property firms merge to counter slowdown Government, related entities to own 37 percent of new firm
A
bu Dhabi’s two biggest property firms have agreed a state-backed, all-share merger to create a business with US$13 billion of assets which the government hopes can stabilise a market hit by oversupply and falling prices. The tie-up between Aldar Properties PJSC, which has been bailed out by the Abu Dhabi government over the past two years with around US$10 billion in funding, and Sorouh Real Estate Co. creates the second-largest listed property firm in the United Arab Emirates and one of the biggest in the Middle East.
The deal, announced yesterday, comes as Abu Dhabi’s property market struggles with a huge supply of high-end homes that entered the market last year and as the emirate conducts a review of its state-owned entities. The government owns nearly 50 percent of Aldar through statelinked businesses. Property prices in Abu Dhabi have tumbled about 50 percent since the global financial crisis hit a few years ago, analysts estimate. Combining Aldar and Sorouh, the No. 1 and 2 developers respectively and which rely heavily on government contracts,
estimates compiled by Bloomberg. Decelerating growth in China is a concern for luxury companies. Chinese buyers account for 25 percent of global luxury spending, according to a September HSBC Global Research report. Thirdquarter revenue growth slid to a halt in Asia Pacific, excluding currency swings, compared with growth rates
will ensure better coordination of new property developments. It will also generate cost savings, the two firms said. “It is very important for the combined entity to be aligned with the overall strategy of Abu Dhabi,” Abubaker Seddiq al-Khouri, Sorouh’s managing director and proposed chairman of the new business, said on a conference call. “We will be building a company that helps in the overall development of real estate in the emirate but also doing that in a cost efficient way.” With the support of the government, management of Aldar and Sorouh had held talks for nearly a year on asset valuations, financial terms and the new management structure. The new entity will need no further assistance from the government, Mr al-Khouri said, adding projected cash flows of 15 billion dirhams (US$4.1 billion) from government contracts will be used to cut down on 13.4 billion dirhams debt of the combined entity in the coming three years. “The focus of the new firm will
China’s economy expanded 7.8 percent last year, the slowest pace since 1999. Chinese consumers often buy watches in Hong Kong or Europe to avoid mainland China’s taxes. Hong Kong watch and jewellery retail sales fell for the first month in three years in August. Watches are often given as business gifts in China, and purchases may be delayed ahead of the transition in the country’s leadership, which began in November and will be completed in March, Mr Cox said. The timing of the Chinese New Year, which is in February this year and was in January in 2012, may have also delayed some sales, he said. Richemont’s Baume & Mercier brand agreed to form a joint venture in mainland China with Chow Tai Fook Jewellery Group Ltd to distribute the Swiss brand’s watches, the Chinese jeweller said on Sunday. Chow Tai Fook is the world’s largest jewellery chain by market value. Revenue from Richemont’s watch division gained 9 percent excluding currency shifts. Watchmakers including Jaeger-LeCoultre and Lange & Soehne timepieces generated about a quarter of Richemont’s sales in the three months through December. Bloomberg News
Property prices have tumbled about 50 percent since 2008
be on deleveraging,” al-Khouri said on the call. The Abu Dhabi government will own a 37-percent stake in the new firm. As part of the transaction, Sorouh shareholders will get 1.288 Aldar shares for every share they own. Sorouh will be dissolved and delisted once the merger, which is subject to shareholder approval, is completed. Reuters