Year I Number 206 Thursday January 24, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00 www.macaubusinessdaily.com
High hotel rates scare repeat tourists: scholar T
he cost of staying at one of the city’s hotels surged last year, particularly among the three-star variety. That might put off visitors from ever returning to Macau, an academic warns. Last year’s average room rate for three-,
four- and five-star hotels rose by nearly six percent from the previous year to 1,423.2 patacas (US$177.9), the Macau Hotel Association announced this week. Gao Yan, tourism professor from the City University of Macau, thinks hotel services did not improve in line with prices.
“The impact will not be obvious right now as many [tourists] are coming for the first time to Macau, which can offer novelty to them,” she told Business Daily. Occupancy rate of hotels in 2012 stayed at 88.3 percent, similar to the year before. More on page 6
I SSN 2226-8294
Mortgages slump as non-residents stay away
HANG SENG INDEX 23710
23676
T
heamountofnewmortgage lending by banks here fell in November for the second consecutive month, the Monetary Authority of Macau said. The combined value of new home loans fell to 3.6 billion patacas (US$447.1 million) in November, 15.7 percent down on October, data released yesterday show. October’s figure shrank 23.4 percent from September, which was the peak month for new mortgage lending this year. That was because homebuyers
23642
23608
23574
23540
January 23
HSI - MOVERS rushed to borrow before the government made it more difficult. New mortgage lending had been expected to fall after
Easing cross border car use is ‘not priority’ – Chui
the government introduced in October new measures to cool the overheating real estate market. Page 3
Productivity, job creation flagging: UN agency
Name
%Day
HANG SENG BK
2.09
BOC HONG KONG HO
1.91
AIA GROUP LTD
1.83
WANT WANT CHINA
1.33
CHINA RES POWER
1.01
CHINA OVERSEAS
-2.43
KUNLUN ENERGY CO
-2.45
HENDERSON LAND D
-2.61
BELLE INTERNATIO
-3.00
CHINA MERCHANT
-4.23
Source: Bloomberg
Relaxing restrictions on private vehicles crossing between Macau and Guangdong province is “not on this year’s agenda,” said Chief Executive Fernando Chui Sai On during his visit to Beijing. At present, only vehicles with dual registration plates valid on both sides can cross. Simplifying cross border private car travel between Guangdong and Hong Kong or Macau was part of the regional cooperation deals reached in 2009.
The number of new jobs created here fell by 3.7 percent in October – a one-year low and considerably behind Macau’s pre-crisis average jobs growth rate of 9.1 percent seen annually from 2004 to 2008. The fact of the city’s gross domestic product slowing to 5.1 percent growth in the third quarter of last year, will take a delayed toll on job creation, the International Labour Organization warned.
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business daily January 24, 2013
macau
DICJ boss invited to U.S. by Nevada regulator Part of move toward closer ties between oversight officials in the two gaming jurisdictions Tiago Azevedo
tiago.azevedo@macaubusinessdaily.com
M
anuel Joaquim das Neves, director of the Gaming Inspection and Coordination Bureau – also known as DICJ – has been invited to the United States as a follow up to last week’s meeting here with Nevada regulators. “I think these meetings will be beneficial to both regulators,” Mr Neves told Business Daily, adding that the next gathering may take place in Nevada. A closer working relationship between the Macau gaming regulator and its regulatory counterpart in Nevada would help in deepening cooperation between both jurisdictions, added Mr Neves. Nevada’s three Gaming Control Board members came here last week in an effort to re-establish ties with the Macau regulator. Nevada’s Control Board chairman A.G. Burnett, speaking to the Las Vegas Review-Journal after the trip, admitted that the relationship between the Nevada regulator and Macau’s DICJ had not been very strong in recent years. “The meeting went very well and it was very productive,” Mr Neves explained to Business Daily. It was the first time that all three members of the Gaming Control Board travelled together to Macau, he added.
“It was a very positive move from them [the Nevada regulators],” he said, adding that while Mr Burnett had visited Macau previously, it was the first time the other board members had travelled here. “There was always communication between both jurisdictions, but there are now more efforts being done to have closer ties,” said Macau’s top gaming regulator. “We’ve established a good rapport with the DICJ and will lead to a good era of cooperation and discussions amongst the two agencies,” Mr Burnett said in his comments to the Review-Journal. Nevada regulators also held meetings with other Macau government departments during their visit here, as well as with U.S. gaming operators that have a presence in the Macau market. The meetings came at a time when the U.S. Department of Justice has launched investigations into Wynn Resorts Ltd and Las Vegas Sands Corp., parent companies of Wynn Macau Ltd and Sands China Ltd, over possible violations of the United States Foreign Corrupt Practices Act. Mr Neves said the conversation did not focus on any subject in particular. “We gave them an introduction on how we regulate the gaming industry here,” he added.
Manuel Joaquim das Neves, DICJ director (Photo: Carmo Correia)
Casino investors eye dividends As Q4 earnings season nears for Macau operators, analysts also expect further stock re-ratings Michael Grimes
michael.grimes@macaubusinessdaily.com
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he fourth quarter 2012 results reporting season is near for Macau gaming operators. A likely hot topic for several of the quarter’s earnings conference calls – and a growing trend in recent years – is the payment of dividends. Not all of the six concessionaires and sub-concessionaires currently give them. But as existing Macau casino resorts mature and start to produce more free cash flow, increasingly operators’ listed entities are starting to reward their public stockholders by issuing them. A number of analysts point out dividend payment also tends to be a more tax-efficient way – for the U.S.domiciled operators in particular – of distributing profits, and doing so across international borders. Sands China Ltd is to discuss an interim dividend for shareholders at a board meeting tomorrow the firm told the Hong Kong Stock Exchange last week. Commenting in general on the sector, J.P. Morgan’s Kenneth Fong in Hong Kong said in an investor note: “Looking forward, we expect
the next round of [stock] re-rating to come in February when a strong 4Q result, special dividend payment and continued revenue trend improvement should trigger earnings upgrades and multiple expansion.”
January haul In the meantime, the modern trend for granular analysis of revenue data proves it can produce as many questions as answers. Daily gaming revenue fell 14 percent in the third
US$100 mln Annual revenue potential of Macau according to LVS’s Michael Leven
week of January compared to the week before, estimates J.P. Morgan. In the seven days to January 20 inclusive, the ‘daily run rate’ was 843 million patacas (US$105.6 million) for Macau’s casinos compared to a daily run rate of 978 million patacas in the seven days to January 13 inclusive, says the document from Kenneth Fong. The author points out however that some of the difference could be driven by variations in house hold rates on live dealer baccarat. “Note that the week-over-week fluctuation of gaming revenue could be driven by [the] luck factor. From our channel check, we estimate that the luck factor month-to-day is slightly above theoretical normal 2.85 percent [hold],” states Mr Fong. He also points out that for meaningful year-on-year comparisons between January 2012 and January 2013, it will be better to analyse the January and February periods of both years. That’s because Chinese New Year tends to flip between the two months thanks to its dependence on the lunar calendar.
City could become ‘US$100 bln’ market: Leven Michael Leven, president and chief operating officer of Las Vegas Sands Corp., said on Tuesday U.S. time Macau could grow to be a US$100 billion (US$799 billion) market annually by gaming revenue. He didn’t specify how long it would take to achieve. Year-on-year revenue expansion rates have slowed in the past few years partly as a result of a big base and partly due to global economics. “There’s no risk that they’re not going to have considerable growth in Macau,” he told CNBC television in Los Angeles. “After all, it’s a US$39 billion gaming market now [in 2012] – over six times Las Vegas [in size]. We think it can grow to US$100 million,” he added. He was asked about a Wells Fargo investors’ note last week suggesting as much as US$37 billion dollars in dividend could be returned to shareholders of Las Vegas Sands Corp. and its units over a 10-year period. “I think Sheldon Adelson [LVS chairman] has proved what he can do in Macau and Singapore and will continue to do that around the world. Basically our developments cost a lot of money. It takes four or five years to build [each of] them. In the meantime we generate an enormous amount of free cash and that free cash can be distributed to shareholders. So I think you’re going to see more of that going forward,” said Mr Leven. M.G.
January 24, 2013 business daily | 3
MACAU
57.5%
Monthly fall in new mortgages to nonresidents between October and November
Mortgages slump as non-residents shy away Banks’ reluctance to lend and enhanced special stamp duties deflate investor enthusiasm Vítor Quintã
vitorquinta@macaubusinessdaily.com
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ew mortgages signed by banks fell for the second consecutive month in November, the Monetary Authority of Macau said yesterday. The combined value of new home loans was 3.6 billion patacas (US$447.1 million) in November, 15.7 percent less than in October. Total home loans were down by 23.4 percent compared to September, which was the peak
month for new mortgage lending this year, as homebuyers rushed to sign loans before the government introduced enhanced moves to curb the property market. Lending for new mortgages had been expected to fall after the measures were introduced in October but Midland Realty (Macau) Ltd managing director Ronald Cheung Yat Fai said the decline was mostly due to the banks’ policies.
Fiscal reserve hits 100 bln patacas T he government’s fiscal reserve has for the first time topped 100 billion patacas (US$12.5 billion) by the end of November the Monetary Authority of Macau said yesterday. A summary published in the Official Gazette shows the reserve earned almost 1.27 billion patacas in its first nine and a half months of existence. The reserve was established in mid-February with an initial investment of about 98.86 billion patacas. In the last three months, the rate of return has almost doubled, from 0.65 percent to 1.28 percent. While the gain appears impressive, the rate is far below the inflation rate
in the same period of 4 percent. In real terms, the reserve is going backwards. In October, the Legislative Assembly’s first standing committee expressed concern about the low return on investment of the city’s reserves. Last month Anselmo Teng Lin Seng, chairman of the Monetary Authority of Macau, said the institution was considering putting more capital from the fiscal reserve into yuandenominated investment vehicles. The goal of placing more investment in both the mainland Chinese market and yuan offshore markets was to get a higher return rate than the reserve is currently achieving, he told legislators. V.Q.
“In November and December every year, banks are reluctant to release any loans. They effectively close their door because they have already reached their target,” he told Business Daily. The government’s most recent attempts to bring balance to the property market include tighter restrictions on mortgages and include restrictions on nonresident investors. Banks can lend non-resident investors just 40 percent of the value of a home worth more than 8 million patacas. Mortgages to non-residents fell most sharply in November. They dropped 57.5 percent to 152.1 million patacas.
People are hoarding homes as if they were water because they are afraid there won’t be any [supply] available in a year’s time Ronald Cheung Yat Fai, managing director, Midland Realty (Macau) Ltd
The figure is a far cry from the peak of 1.15 billion patacas in loans issued to non-residents in March 2009. Outstanding loans to nonresidents at the end of November also shrank, for the first time in seven months, by 5.9 percent to less than 6.8 billion patacas. Mr Cheung says the slowdown in mortgage lending has not necessarily translated into a healthy property market. “The market was still volatile in November and December,” he said. “Those buyers with available money continue to buy, especially those mainland Chinese who got a Macau residency card through an investment scheme.” Macau residents have also shied away from property investments, with new mortgage lending falling by 11.9 percent to 3.4 billion patacas.
Hoarding property Meanwhile, loans for unfinished housing almost tripled in November to 220.6 million patacas, as the Legislative Assembly deliberates a bill to regulate presales. “People are hoarding homes as if they were water because they are afraid there won’t be any [supply] available in a year’s time,” Mr Cheung said. He said buyers were confident that home prices would continue increasing, making real estate a safe investment and far more attractive than the low interest rates on offer for bank deposits. “The government must squeeze out some supply of private homes. Public housing is not enough,” he said. “Even in Singapore, where public housing accounts for 80 percent of the market, the government has had to step in to cool the private home prices.” After growing by nearly 300 percent in just two months, new mortgages for commercial property fell 7 percent to 4.7 billion patacas in November. The fall was accounted for by fewer mortgages to resident investors. Although they declined by 9.3 percent, investment by residents makes up 96.7 percent of all commercial property deals. On the contrary, new loans to non-residents more than doubled to 115.2 million patacas. November’s figure bounced back after October saw the lowest figure since the Monetary Authority began collecting commercial loan data in 2008. The special stamp duty regime on housing was extended to cover sales of commercial and office space, as well as parking spaces, in October. The government justified the change by saying the overheated market was “causing negative effects”. There is now a 20-percent levy on the sale price of commercial property resold within a year of its purchase and a 10-percent levy on property sold within two years of buying it.
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business daily January 24, 2013
macau
Macau restaurant best in Asia for Miele
The number of pawnshops in Macau more than tripled in the past 10 years
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rand Lisboa restaurant Robuchon au Dome took first place on Tuesday night in the Miele Guide list of the Top 20 restaurants in Asia, toppling Singapore’s Iggy’s, which has won a record three times. The 68-year-old French chef Joel Robuchon also took the third spot with L’Atelier de Joel Robuchon, in Hong Kong. “The man many herald as the world’s greatest chef and his lieutenants in Asia have done it again,” the guide’s editors said in an e-mailed release. Mr Robuchon has been a fixture in the list since the guide’s inception five years ago. Each of the 500 restaurants in the Miele Guide is selected after a voting process involving food-and-beverage industry professionals, food writers, restaurant critics and the public. Robuchon au Dome also retained its status as the only three Michelinstarred restaurant in Macau in the Michelin Hong Kong-Macau 2013 Guide, released last month.
Premium-mass growth could boost pawnshops Bustling pawnshops get the spoils from visitors’ thirst for gambling cash
V.Q./Bloomberg
W
Chef Joel Robuchon
ith premium-mass gambling gaining track in Macau, pawnshops are set for a business boom as mainland Chinese look for ways to get money out of the country, analysts say. “Unofficial funding channels, such as pawnshops, are likely to gain more importance as the casinos are keen to attract more premium-mass gamblers,” said Gabriel Chan, an analyst in Hong Kong for the Zurichbased Credit Suisse Group AG. Premium mass-market visitors typically spend as much as 500,000 yuan (642,046 patacas) a trip and place minimum bets of 2,000 yuan per hand, said Karen Tang, a Hong Kong-based analyst at Deutsche Bank AG. To skirt the cap on yuan they can take out of China, gamblers buy expensive goods from pawnshops using UnionPay cards and trade them in for cash at the same store, he said. Pawnshops usually take 5 percent to 10 percent of the cash refund as commission, a pawnshop salesman named Ah Keung said. The number of pawnshops in
RMB 500,000 Estimated spending of premium massmarket visitors per Macau trip
Macau more than tripled in the past 10 years to about 170, said Chou Chin Leong, president of the Macau General Chamber of Pawnbrokers. Macau pawnbrokers can have a retail business on the premises and there is no limit on how much they can loan in exchange for valuables, said Mr Chou. In a sign of pawnshops’ changing
role, the retail business has become the main earnings contributor, accounting for as much as 70 percent of profits, he said. There were no suspicious transactions reported by pawnshops for the past five years, according to Daniel Tang, a senior officer at the Financial Intelligence Office. Pawnbrokers are required to submit a monthly report to Macau police listing what has been pawned in the past 30 days and may have to produce customer records upon requests from the police, Mr Tang said in an e-mailed response to a Bloomberg News query. A gambler surnamed Huang from Guangzhou, who asked not to be further identified because he was skirting the law, said he once bought 150,000 yuan of watches from a pawnshop and had the purchase split into three transactions so he did not have to leave his contact details. In addition Mr Huang said in some restaurants, he adds the amount of cash he wants to take out and puts it on top of his bill. Bloomberg News
January 24, 2013 business daily | 5
MACAU
No rush easing car traffic at borders Any move easing limits on private motorists heading to Guangdong to be considered in traffic planning for Hong Kong-Zhuhai-Macau Bridge Stephanie Lai in Beijing
sw.lai@macaubusinessdaily.com
The ageing border facilities at Gongbei handle about 10,000 vehicles crossing between Macau and the mainland every day (Photo: Manuel Cardoso)
“It is normal that the Guangdong [authorities] have raised this suggestion of wanting their private vehicles to come to Macau,” Mr Chui said. He said Macau’s “limitations and road conditions” had to be considered before opening talks with neighbouring authorities. The Gongbei border crossing handles an average of about 10,000 vehicles every day. “Allowing private vehicles to travel across the border is not what we are applying for approval from the central government now,” said Mr Chui. “There is no agenda for private vehicles from mainland China to come to Macau, but the government will consider the public opinion and see what can be a practical approach.”
One-way traffic
E
asing restrictions on private vehicles moving between Macau and Guangdong is “not on this year’s agenda”, Chief Executive Fernando Chui Sai On said late on Tuesday as he returned from an official visit to Beijing. At present, only vehicles with dual registration plates are able to cross the border.
Helping smooth the way for more private vehicles to travel across Guangdong’s borders with Macau and Hong Kong was part of regional cooperation deals reached in 2009. However, the Macau government has not clarified how it will manage its part of the proposal to free up the movement of private vehicles, Mr Chui told a press conference.
Soccer club bought with casino owner’s backing facing oblivion Michael Grimes
michael.grimes@macaubusinessdaily.com
A
n English football club bought by a former Hong Kong hairdresser with money underwritten by a Macau casino owner now needs either to trade players or obtain “forward funding” of transfer money to keep operating until the end of the year. Birmingham City F.C. made the comments in its annual financial statement released by the London-based Companies House registry on Tuesday. Carson Yeung Ka Sing paid 81.5 million pounds (1.03 billion patacas) for Birmingham – then playing in the elite English Premier League – in October 2009. He is currently facing unrelated money laundering charges in Hong Kong. He had his original purchase of the soccer business underwritten by Kingston Securities Ltd – a unit of Hong Kong-listed Kingston Financial Group Ltd. The latter was previously called Golden Resorts Group Ltd. Kingston Financial Group bought Casa Real casino hotel in 2005. The property operates on a gaming licence from Sociedade de Jogos de Macau SA, a company founded by Stanley Ho Hung Sun. Pollyanna Chu Yuet Wah, chief
executive of Kingston Financial, was criticised by a Macau judge last month for having “calculated to mislead the court” in a legal battle with Casa Real’s previous owners, Macau businessman Ngan In Leng and four of his relatives. In 1997 Hong Kong’s Securities and Futures Commission fined Ms Chu HK$10,000 for acting as a commodities dealer’s representative for Kingston Futures – another unit of the Kingston group – without a licence. In 2003 Ms Chu surrendered her securities and commodity dealer’s representative’s licenses in response to allegations that she helped or overlooked manipulative warrant trades. In November Mr Yeung won a delay of his trial until April 29. Birmingham City’s directors said in Tuesday’s filing they have not received any information to suggest the club’s finance came from money-laundered funds or that his loans to the club are subject to an “actual restraint”. Business Daily makes no suggestion that Ms Chu, Kingston Financial, Kingston Securities or any of that group’s companies are in any way implicated in Mr Yeung’s money laundering case. With Vítor Quintã/Bloomberg News
Since last March, Guangdong and Hong Kong have operated a trial scheme designed to ease limitations on private vehicles travelling across its shared border. Drivers can apply for a permit that allows them to remain for up to seven days in Guangdong if their vehicles have fewer than five seats and are
licensed in Hong Kong. The Hong Kong government has set a daily quota of 50 drivers that are allowed to apply for the trial. Drivers coming from Guangdong to Hong Kong are out of luck. There is currently no decision on how the scheme should work for private vehicles headed into Hong Kong. When the trial was introduced last year, it caused public protests and drew criticism in Hong Kong. Opponents warned that unique driving habits in the mainland, including driving on the other side of the road, would lead to increased traffic congestion and accidents. In Macau, the government does not have a timeframe for introducing its part of the scheme to allow more private vehicles to cross into Guangdong. “After the Hong Kong-ZhuhaiMacau Bridge is completed in 2016, we will also be facing the traffic flow generated by the new infrastructure,” said Mr Chui. “For that, and for allowing private vehicles to go across the border, the Secretary of Transport and Public Works Lau Si Io will consider the problem as a whole.”
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business daily January 24, 2013
macau
Pricey hotels are smothering Tourism relies second visits, says academic on China Industry leaders say competition is preventing a bigger more than ever blowout in room rates at mid-range hotels Every three out of five visitors to Macau last year came from the mainland
Tony Lai
tony.lai@macaubusinessdaily.com
M
Hotel occupancy rates were static last year, despite higher prices for accommodation in the three-to-five-star range
H
igh-priced hotel accommodation may be holding back tourists from making repeat trips to Macau, an academic said yesterday, as the cost of mid-range hotel accommodation surged last year. City University of Macau tourism professor Gao Yan says hotel prices have grown out of step with the services they provide. “The impact will not be obvious right now as many [tourists] are coming for the first time to Macau, which can offer novelty to them,” she told Business Daily. “But after the first time, the tourists will know what to choose [for a destination] and the high accommodation costs may turn away some visitors from coming here for a second time.” The average room rate at a threeto five-star hotel rose by nearly 6 percent last year compared to 2011, to 1,423.2 patacas (US$177.9) a night, the Macau Hotel Association announced this week. The association said occupancy at its hotels was stable at 88.3 percent. The association gathered the statistics from its 42 members, of which 22 are graded five stars, 11 are considered four stars and nine
MOP 1,423.20
Average room rate for three- to fivestar hotels in Macau
are rated three-star hotels. Room rates grew most significantly at three-star hotels, whose average room rate shot up by 12.7 percent last year to 1,016.20 patacas a night. In December alone, rates at threestar hotels increased by 15.7 percent in year-on-year terms. The cost of a four-star hotel room increased by 9.6 percent to 867.70 patacas a night, while there was a 4.4-percent rise in five-star hotel prices to 1,675.20 patacas. “The room rate for three-star hotels was possibly quite low in the past comparing to those of four-star or five-star hotels, so its rate has a larger room for increase,” Ms Gao said. She said pent-up demand in the lower-end of the market may be pushing up prices at the three-star hotels. “The government can carry out more studies on the spending mode of tourists, for gambling or vacationing, to have a better grasp of the demand for different types of hotels,” she said. “I believe that even if the number of low-cost accommodation [rooms] were to double there would still be a strong market but I am not that confident the same situation would happen for the five-star hotels.”
Budget squeeze The government says there are 1,500 budget hotel rooms in the city. At the Legislative Assembly last month, the Macau Government Tourist Office said that number could double if approvals were granted to all projects currently at the review stage. “More budget hotels would be nice, as the rooms priced below 600 patacas are popular among tour groups and some tourists,” said Chan Chi Kit, president of the Macau Hoteliers and Innkeepers Association
The supply of hotel rooms grew much faster than the visitor arrivals Chan Chi Kit, president, Macau Hoteliers and Innkeepers Association
that represents budget hotels. Mr Chan said room rates among his association were stable last year because competition prevented the hotels from raising rates. “Since the opening of hotels in Sands Cotai sites 5 and 6 last year, there has been more competition … and some five-star hotels even lowered the rate to close to the threestar ones for promotion,” he said. “The supply of hotel rooms grew much faster than the visitor arrivals.” Mr Chan told Business Daily that business was “quieter” in off-peak days last year. The number of hotel rooms grew by about 17 percent year-on-year, to more than 26,000 rooms by the end of November but tourist arrivals increased by just 0.3 percent last year. He said the planned addition of about 2,000 new rooms at the midrange Sheraton Towers in Sands Cotai Central this quarter would add more pressure to room rates at hotels. He said accommodation costs across the city were likely to remain high “as long as the economy remains sound”.
ainland Chinese tourists have become more dominant as they accounted for over 60 percent of the total visitors to Macau last year – the highest ever since official data become available in 1998. A decade ago, before the Individual Visit Scheme was implemented in 2003, only 36 percent of the visitors came from the mainland. Mainland tourists were also the main driving force for a 0.3-percent growth to over 28 million visitors last year, official data suggest. Macau welcomed over 16.9 million mainland Chinese in 2012, up by 4.6 percent from a year earlier. But tourists from the two most important markets – Guangdong and Fujian provinces – went down by 3.3 percent and 13 percent to about 7.9 million and 811,200 respectively. On the other hand, “visitation growth exceeded 20 percent for eight more-distant provinces, which we would interpret as a positive sign as to Macau’s mass appeal,” Union Gaming Research Macau stressed. “As infrastructure continues to be developed and as wealth grows, we expect the non-Guangdong provinces to contribute a significantly higher mix of visitation,” the research house wrote in a note to investors. In December nearly 2.5 million travellers came to Macau, down by 2 percent year-on-year and continuing an eight-month losing streak since May. The Taiwan market bounced back by 3.6 percent last month but suffered an 11.8-percent decline to 1 million visitors for the whole year. Hong Kong tourists dropped for the first time since 2009, by 6.6 percent to less than 7.1 million last year. The number of Japanese continued to decline amid heightened tensions between Japan and China. In fact, Japan was replaced by South Korea as the city’s fourth major market. Macau welcomed over 444,000 South Koreans last year, up by 11.5 percent. T.L./V.Q.
January 24, 2013 business daily | 7
MACAU
Labour productivity still lagging behind Slower economic growth will take a toll on job creation, UN agency warns
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ith economic activity slowing, labour markets across East Asia in 2012 were consequently sluggish and Macau was no exception, a report released on Tuesday shows. The International Labour Organization says the goal for the region should be to boost productivity levels, which remain far behind those of developed countries. The number of new jobs created here fell by 3.7 percent in October – a one-year low and considerably behind Macau’s pre-crisis average jobs growth rate of 9.1 percent seen annually from 2004 to 2008. And with the city’s gross domestic product slowing to a growth rate of just 5.1 percent in the third quarter of last year, that will also take a delayed toll on job creation, the United Nations agency warned. Just like for other East Asian economies, the major challenges ahead include “raising the overall quality of employment, particularly for its most vulnerable and informal workers,” the report adds. According to official data, 13.8 percent of the Macau employed population has only completed primary education and a further 3.4 percent have had no schooling. In addition, 16.1 percent of all workers made fewer than 6,000 patacas (US$750) a month.
To boost labour productivity levels could lead to sustainable increases in wages and working conditions International Labour Organization’s ‘Global Employment Trends 2013’
One key element for raising job quality in East Asia is “to boost labour productivity levels, which could lead to sustainable increases in wages and working conditions”, the ILO said. Labour productivity growth in East Asia was a robust 6.1 per cent in 2012 and is projected to increase to 6.8 per cent in 2013, the report shows. There is no available data on
Macau’s labour productivity. While East Asia’s productivity growth is the highest in the world, it still lags behind the region’s pre-crisis trend of 8.5 per cent on average annually from 2002 to 2007, the agency said. Moreover, despite steady increases in productivity in recent decades, the labour productivity level in the region remained only one-fifth of
that in the European Union and other developed economies. The report indicates that, five years after the global financial crisis hit, a record 202 million people worldwide could officially be jobless this year. That number is expected to rise by another three million in 2014 and should hit 210.6 million by 2017, the labour body said.
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business daily January 24, 2013
GREATER CHINA
New an
HK govt under fire over corporate data protection law Changes to corporate laws criticised by investors and media Grace Li
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ong Kong has come under fire for a plan to restrict public access to corporate data, with investors and media groups worried it will block early warning of accounting scandals like the one that cost Caterpillar Inc. US$580 million. Hong Kong is proposing changes to corporate laws that would block residential addresses and full identity card numbers of company directors from public view at the Companies Registry
website, citing the need to maintain privacy of individuals. Critics say it would hinder due diligence of companies by prospective investors and hurt the city’s reputation as an open and transparent business centre. As a major investment hub for mainland China, Hong Kong has become a popular place for Chinese to set up companies and conduct business, in some cases to obscure their assets
through a complex web of shell companies and directorships. “For people doing due diligence for investment, including people like Caterpillar, as potential buyers if they want to double-check things looking at company filings, they are going to find it harder in future,” said David Webb, a Hong Kong-based shareholder activist. “Obviously the more the government interferes ... it
will make it harder to do business here.” Caterpillar, the world’s largest maker of tractors and excavators, took a US$580 million charge last week as a result of “accounting misconduct” at a unit of a Chinese mining equipment company it bought last year. Caterpillar purchased ERA Mining Machinery Ltd and its subsidiary Zhengzhou Siwei Mechanical & Electrical Manufacturing Co. last June. ERA had been publicly traded
in Hong Kong, doing business through Siwei, which is known for making equipment to support roofs in mines. The U.S. multinational said an ongoing investigation launched after the deal closed “determined several Siwei senior managers engaged in deliberate misconduct beginning several years prior to Caterpillar’s acquisition of Siwei”. Siwei has not commented. The Hong Kong Journalists Association has launched
Payments in yuan ease off in the U.S. Flat year for growth of the Chinese currency in the world’s largest economy
Y
uan transactions in the United States slid 38 percent in December from November, making 2012 a flat year for growth of the Chinese currency in the U.S. market, global transaction services organisation SWIFT said yesterday. “We expect that most U.S. flows we currently see in RMB are non-trade related and are subject to more variability than countries with strong underlying trade flows like Europe, so this is not unexpected,” Lisa O’Connor, RMB director for the organisation, said in its latest report. As a currency for payments, the yuan, also known as the renminbi, needs to overcome a number of challenges including inertia and systems set up to invoice only in U.S. dollar, she added. Beijing has been stepping
up its efforts to promote wider use of its currency globally through bilateral currency swaps and trade settlement deals, aiming for the yuan to match China’s rising clout as the world’s second-largest economy. But analysts say it may prove difficult for the United States to widely adopt the “redback”, since broader use of the yuan as well as the enhanced economic status of China will pose a threat to the world’s No.1 country and its currency. “I don’t think the U.S. has the incentive to help promote the internationalisation of the yuan, since they worry China will become a threat if the yuan can be used more widely,” said Chi Lo, BNP Paribas’ senior strategist in Greater China. As for U.S. corporates, some may also be reluctant to use the yuan if they do not expect rapid development and adoption of
the Chinese currency by other companies and countries in the coming years. The United States represented 4.1 percent of yuan payments by value in December, compared with 6.6 percent in November (excluding China and Hong Kong), SWIFT data showed. While dollar payments still dominated transactions between the United States and China/Hong Kong, comprising 95.5 percent of transaction in December, followed by the Hong Kong dollar at 2.7 percent, Malaysian ringgit 0.9 percent, Japanese yen 0.4 percent and Chinese yuan at 0.3 percent. In December, overall yuan payments fell 4.2 percent from November, compared with an average 5.7 percent decline across all currencies. However, the yuan remains the world’s 14th most widely used currency
Broader use of the yuan seen as a threat to the US dollar, analysts say
with a market share of 0.57 percent, SWIFT said. China will steadily push forward market-based liberalisation of interest rate and improve the yuan exchange rate formation
mechanism, while expanding the international use of the yuan to gradually realise capital account convertibility of the currency, Premier Wen Jiabao said on Monday. Reuters
January 24, 2013 business daily | 9
GREATER CHINA
w law may hurt HK’s reputation as an open nd transparent business centre, critics say
It’s actually going to hurt the honest businessman who has nothing to hide, and who is very prepared to allow potential business partners to carry out due diligence Violet Ho, Kroll Advisory Solutions
a petition opposing the government proposal to block access to corporate data, scheduled to take effect early next year, saying it will be hampered from exposing “illegal or immoral activities”. The Hong Kong Association of Banks has also expressed concern over the move. Chan Ka Keung, head of the Financial Services and the Treasury Bureau, which proposed the changes, said yesterday the bureau would
continue to discuss the rules with the city’s privacy commissioner to eliminate public concern. The bureau has said a public consultation was conducted between late 2009 and early 2010 and most respondents preferred protecting personal data. “Where necessary, law enforcement agencies can access the protected information through the Companies Registry. There will be no implications to our enforcement work on this front,” the bureau said in an e-mail to Reuters, addressing concerns that antimoney laundering work might be affected. Angelina Kwan, a former director of enforcement at Hong Kong’s Securities and Futures Commission,
shrugged off concerns saying the move was good from a privacy point of view. Critics, however, say the fact that some Chinese use aliases makes it difficult to trace the true identity of people, providing a case for maintaining access to personal details. “It’s actually going to hurt the honest businessman who has nothing to hide, and who is very prepared to allow potential business partners to carry out due diligence,” said Violet Ho of risk consultant Kroll Advisory Solutions, adding there was a risk of fraud going undetected if the changes went ahead. “Now you will be in a situation where you can’t immediately exclude any of the say 2,000 companies associated with the Chinese equivalent of a John Smith, and you have to do a lot of manual work that is basically unnecessary.” Ms Ho said the proposed law would impact any investor – private equity companies, M&A investors and even banks. Nearly 3.5 million searches of records were conducted through the registry’s electronic search services in 2012, up nearly 8 percent from 2011. The registry has more than a million local companies, many of which are connected to Chinese businesses or investors. “Chinese mainland investors and large corporations in Hong Kong are among the supporters of the amendment to withhold the information. Why? Because those so-called big bosses don’t like their residential addresses to be shown to the public nor their true identity,” said Democratic lawmaker James To. Reuters
BHP digging deeper to feed Chinese steel mills China’s iron ore imports expected to grow this year
B
HP Billiton Ltd, the world’s biggest mining company, boosted its iron ore output by 3 percent in the December quarter, as it races to supply more of the raw material to Chinese steelmakers despite signs of a softening market. The increase was slightly below analysts’ forecasts, but the shortfall is unlikely to dent the ever-rising tonnages of Australian iron ore bound for the world’s top buyer China, where demand growth is expected to slow this year. The risk, say analysts, is that miners may flood the notoriously fickle market for seaborne-traded iron ore, where prices can rise or fall by as much as 50 percent in a matter of months. The price of iron ore hit a 15-month high of US$158.50 a tonne this month after China announced new spending plans for roads and sewers. China’s iron ore imports are expected to grow only by 25-50 million tonnes this year, according to the China Metallurgical Mining Enterprises Association, a slower pace than previous years. Moreover, China’s own mines already supply about half the mills’ needs, with
China Railway plans dollar debut Developers dominate dollar bond sales Rachel Evans
C
hina Railway Group Ltd plans to sell its first U.S. dollardenominated bonds and Fosun International Ltd has begun marketing debt after Hengdeli Holdings Ltd offered investors their first Chinese alternative to property companies this year. China Railway, the nation’s biggest construction company by total assets, has hired six banks to arrange investor meetings starting today, according to a statement to the Hong Kong Stock Exchange yesterday. Fosun is marketing sevenyear securities at a yield of about 7.25 percent, a person familiar with the matter said. Hengdeli, the Chinese partner of Swatch Group AG, raised US$350 million from a sale of five-year debt
on Tuesday, data compiled by Bloomberg show. Real-estate companies have dominated dollar bond sales by Chinese corporate issuers this year, accounting for 94 percent of the US$6.1 billion in note offerings since December 31, the data show. The cost of insuring corporate and sovereign bonds in the Asia-Pacific region from non-payment has fallen this year and was little changed yesterday, according to credit-default swap traders. “We’re seeing more diversification in the pipeline now simply for the fact that so many of the developers have already tapped the window,” said Owen Gallimore, head credit analyst at Australia & New Zealand Banking Group Ltd in Singapore. “There
China Railway – bond issue to fund operations and repay loans
will however continue to be a steady flow of Chinese property issues.”
Hengdeli, Longfor The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was
little changed at 107.5 basis points in Singapore, Royal Bank of Scotland Group Plc prices show. The benchmark has ranged from 102.8 basis points to 110.1 basis points this year, according to data provider CMA. Hengdeli’s notes, which
some 200 million tonnes of additional capacity capable of being reactivated on short notice. “There’s enough demand in China as long as the Chinese don’t restart too many of their own mines, which they will do if they believe [iron ore] prices need to come down,” said David Lennox, a mining analyst for Fat Prophets in Sydney. BHP’s iron ore production rose to 42.2 million tonnes in the three months ended December 31 from 41.1 million in the same period a year ago, it said, highlighting record tonnages from its Australian mines. BHP plans to boost output an overall 5 percent, or 9 million tonnes to 183 million tonnes in the year to June 2013. At the same time Rio Tinto and Fortescue Metals Group will add nearly 40 million tonnes each this year. Reuters
priced at par, were trading at 100.6 cents on the dollar in Hong Kong, Credit Agricole SA prices quoted on Bloomberg show. Longfor Properties Co. raised US$500 million via 6.75 percent 2023 bonds yesterday, the fourth Chinese developer to sell notes in the U.S. currency this week, Bloomberg data show. The Markit iTraxx Japan index stood at 140 basis points in Tokyo, according to Deutsche Bank AG prices. The measure dropped to 137.9 basis points earlier this week, its lowest since March, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market. Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite. The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements. Bloomberg News
10 |
business daily January 24, 2013
ASIA Thai minister urges baht stability Thailand’s finance minister said he had asked the central bank to “take care” of the baht’s strength and said he expected the currency to weaken over time because of government infrastructure investment. “A strong baht is good for imports, such as energy, but we don’t want it to be too strong as that will affect exporters and tourism,” Kittirat Na Ranong said yesterday. “Stability is important and in the short term the government has asked the central bank to take care of volatility. We will leave this to the central bank, without political intervention,” he said.
Indian jet repossession row could scare off funds: ILFC Disposable incomes to drive investment in new aircraft in Asia, says chief executive Tim Hepher and Conor Humphries
O
ne of the world’s largest leasing firms has warned India the failure of troubled carriers like Kingfisher Airlines Ltd to return airplanes when they cannot pay their bills could put the country’s aviation growth at risk by scaring away new funding. International Lease Finance Corp., which owns over 900 aircraft and rents them out to airlines for several years at a time, is the latest industry player to clash with the Indian carrier, whose financial difficulties have left its aircraft grounded since October. “I am not happy with the way things are working out in India right now,” ILFC chief executive Henri Courpron told Reuters. “There is not a clear path to exiting fleets out of India when necessary. There are too many cooks in the kitchen and too many authorities involved in what should be a clear process.” ILFC has six Airbus jets with Kingfisher of which four have been taken off the country’s register. The
Los Angeles-based lessor has sent a team to repossess the jets for unpaid bills. But they remain stranded by administrative hurdles and problems getting the planes ready to fly, Mr Courpron said. ILFC is not the only firm citing problems getting planes back from Indian liquor baron Vijay Mallya’s airline, which is estimated to owe US$2.5 billion to banks, staff and suppliers. Germany’s DVB Bank SE said in December it had sued India’s aviation regulator and Kingfisher to have two planes it financed for the troubled carrier de-registered, a possible first step towards recouping its funds.
Enforcing rules Mr Courpron said the Kingfisher saga was not merely a problem for those directly involved. Indian authorities could suffer a setback in aviation generally if they did not provide the “safe harbour” needed when lessors decide where
to risk their assets. “If they want to grow their industry, if they want support from the financing community in financing their aircraft generally … then they need to enforce the rules that allow the financiers to get access to their assets when it is warranted.” Indian airlines will need 1,043 new passenger and freighter aircraft valued at US$145 billion by 2030 to satisfy surging annual demand, Airbus said last year. ILFC’s warning came as India’s civil aviation minister said Kingfisher needed at least 10 billion rupees (US$185.65 million) to restart its grounded operations and must also demonstrate an ability to sustain itself for at least 6 months. A senior government source said India was willing to support a rescue plan from Kingfisher if it could settle months of salary owed to frustrated employees. ILFC has itself rebounded since its seeing funds squeezed by the credit crisis, and is in the midst of
Japan raises economic forecast New stimulus steps to put the economy on a recovery path – govt
Japan has been caught in almost two decades of on-and-off deflation
J
apan’s government raised its view of the economy for the first time in eight months yesterday as private consumption is holding firm and business sentiment shows signs
of improvement due to a falling yen and rising share prices. Improvement in exports and recently compiled economic stimulus steps will likely put the economy back
on a recovery path, but a slowdown in overseas economies remains a risk factor, the government said in its monthly economic report. The government also said it
There are too many cooks in the kitchen and too many authorities involved in what should be a clear process Henri Courpron, ILFC chief executive
being sold to a Chinese consortium. The lessor said it had broadened funding sources and reduced their cost in 2012, and had US$2.9 billion in unrestricted cash. Mr Courpron said he expected the sale of a majority of ILFC by its owner, U.S. insurer AIG, to go ahead as planned in the second quarter.
expects the Bank of Japan to take bold steps to meet a 2 percent inflation goal that the government agreed with the central bank on Tuesday as part of a bold push to escape nagging deflation and to revive the economy. “The economy is weak, but signs of bottoming out can be seen in some areas,” the report said. That marked an upgrade from last month, when the government said the outlook was weakening due to a slowdown in overseas economies. Prime Minister Shinzo Abe, who led his Liberal Democratic Party to a landslide election victory in December, has called for aggressive monetary easing by the Bank of Japan and heavy fiscal spending to beat persistent deflation, helping to drive down the yen and giving a boost to the stock market. Mr Abe’s cabinet approved a 10.3 trillion yen (US$116.3 billion) stimulus package this month, while the Bank of Japan, under intense pressure from Mr Abe, on Tuesday decided to switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent. “[The government] expects the Bank of Japan to promote bold monetary easing so that the price stability target will be achieved as soon as possible,” the monthly report said.
January 24, 2013 business daily | 11
ASIA ‘Gangnam Style’ earns US$8 mln for YouTube Google Inc. said on Tuesday that the YouTube page showcasing the “Gangnam Style” video by South Korean rapper Psy has reaped more than US$8 million in ad revenue. Google chief business officer Nikesh Arora revealed the figure while discussing the money-making potential of YouTube during a quarterly earnings call with financial analysts. In December, “Gangnam Style” became the first video to break a billion views on YouTube, marking a historic milestone on the Internet. “Gangnam” is estimated to have earned the rapper millions more from digital downloads, advertising deals and on-demand services.
Thailand’s richest gets richer chasing US$11 bln F&N deal Takeover boosts value of Charoen’s other stock
T
AIG has deemed the unit non-core. Despite woes in India, where many private airlines complain of high taxes and subsidies to state carrier Air India, Mr Courpron said growing the rise of disposable incomes, especially China, would continue to drive investment in new aircraft in Asia. Reuters
hailand’s richest man just got richer. Billionaire Charoen Sirivadhanabhakdi is poised to win a S$13.8 billion (US$11.2 billion) bid for Fraser & Neave Ltd’s property and drinks empire. The takeover battle has boosted the value of his other stock holdings by more than US$2 billion. Charoen’s Bangkok-based companies have surged as investors bet his expanding influence and deal making will give his whole empire a boost. Beer maker Thai Beverage Pcl closed at a record on Tuesday in Singapore and his consumer goods distributor Berli Jucker Pcl has jumped 45 percent in about four months in Bangkok. “At the moment, Charoen plays a very active role in Thailand,” said Kowit Pongwinyoo, Bangkokbased analyst at UOB Kay Hian. “That’s why people are speculating on Charoen related merger and acquisition fever.” Charoen’s efforts to gain control of F&N were boosted this week after rival bidder Overseas Union Enterprise Ltd pulled out. Buying F&N gives the tycoon a 130-yearold conglomerate with about S$3.6 billion in annual revenue and businesses from serviced apartments to beverages across Southeast Asia. Charoen first invested in F&N in
July and battled OUE for two months. He announced a bid of S$9.55 at close to midnight Singapore time last Friday to top the rival group’s offer. His holdings in the company rose to 42.5 percent, Charoen’s TCC Assets Ltd said yesterday in a filing to the Singapore Exchange. “He is a savvy businessman and a street-smart negotiator,” said Goh Han Peng, an analyst at DMG & Partners Securities Pte. “In this takeover tussle, he kept his cards to his chest. Patient and decisive, that’s how I would describe him.” Buying F&N would cap a lengthy career during which Charoen, 68, expanded from running a distilling operation into beer, alcohol, sugar, and packaging businesses. His ThaiBev has “massive distribution capacity” and will be able to ramp up sales of F&N brands in Thailand, analysts in Religare Institutional Research said in a note. Having F&N’s property business will also expand his reach in the region, Mr Goh said. TCC Assets also has a real estate arm. The value of Charoen’s holdings in Thai Beverage and Berli Jucker have risen by at least US$2.35 billion since when he made his September F&N bid, based on the latest disclosures of his holdings and calculations by Bloomberg from the stock prices.
US$116.3 billion Stimulus package approved by the government
In the report, the government raised its view on private consumption for the second month in a row, saying consumer spending is holding firm. “Auto sales bottomed in October and were on the rise in November and December. Car production is recovering as well. Private consumption is showing signs of bottoming out,” a Cabinet Office official in charge of compiling the report said. “Corporate leaders’ views on business conditions are recovering against the backdrop of a recent correction to the yen’s appreciation and gains in share prices,” he said. Reuters
Charoen Sirivadhanabhakdi, right, will add legions of assets to his drinks and real estate empire
Bloomberg News
Singapore inflation accelerates in Dec Singapore’s inflation rate rose to the highest in three months in December, reducing the central bank’s scope to ease monetary policy to boost growth. The consumer price index rose 4.3 percent from a year earlier, after climbing 3.6 percent in November, the Department of Statistics said in a statement yesterday. Price gains averaged 4.6 percent in 2012, the government said. Inflation has remained elevated even after the Monetary Authority of Singapore tightened monetary policy last year by allowing its currency to appreciate, as private property prices reached a record and the cost of owning a vehicle surged. The central bank forecasts price gains will be in a 3.5 percent-to- 4.5 percent range in 2013. “Domestic inflationary pressure is still exceptionally high,” Irvin Seah, a Singaporebased economist at DBS Group Holdings Ltd, said before the report. “For 2013, inflation will run sideways, hovering around the 4 percent mark throughout the year. Those factors that have been keeping inflation at such higher than normal level, will continue to fuel the pressures.” The central bank and Trade Ministry said yesterday accommodation and private transportation costs will account for around 60 percent of consumer price gains this year. “Given continued weakness in the global economy, imported inflation will be generally benign,” the central bank and Trade Ministry said in a statement. “Meanwhile, the persistent tightness in the labor market will support wage increases in 2013, some of which will continue to pass through to consumer prices.”
Australia consumer prices flat in Q4 Australian consumer price inflation was unexpectedly benign last quarter thanks to falls in food, electronics and drugs, suggesting there was still plenty of scope for further rate cuts even if there was no urgency for a move as early as next month. The local dollar dipped after the Australian Bureau of Statistics reported yesterday the consumer price index (CPI) rose 0.2 percent in the fourth quarter, a big improvement from an outsized 1.4 percent increase the previous quarter. Annual inflation ran at 2.2 percent, again under forecasts and in the lower half of the Reserve Bank of Australia’s (RBA) long-term target of 2 to 3 percent. “Certainly it makes it easier for the RBA to cut rates and it suggests they will be revising down some of their inflation forecasts,” said Brian Redican, a senior economist at Macquarie Group Ltd. “There’s probably a 35 to 40 percent chance of a February rate cut, so not enough to get it over the line, but certainly we think the prospects of a March move are very real.” The central bank cut rates by 125 basis points last year as a slowdown in world growth and falling export prices darkened the economic outlook. Yet the world background has brightened in recent weeks, with the Chinese economy seemingly turning a corner and even Japan taking bolder steps to beat deflation. As a result, markets are pricing in only around a one-in-three chance of an easing at the RBA’s next policy meeting on February 5, but still see rates bottoming around 2.5 percent sometime this year. Reuters
12 |
business daily January 24, 2013
MARKETS Hang SENG INDEX PRICE
DAY %
VOLUME
PRICE
DAY %
Volume
30.55
1.833333
57993172
CHINA UNICOM HON
13.06
0.7716049
22824489
ALUMINUM CORP-H
3.98
-0.5
19876191
CITIC PACIFIC
12.94
-1.221374
6743861
BANK OF CHINA-H
3.78
0.5319149
360665664
CLP HLDGS LTD
65.15
0.2307692
3723194
BANK OF COMMUN-H
6.38
-0.3125
32586918
CNOOC LTD
16.08
-0.4950495
57301862
SUN HUNG KAI PRO
BANK EAST ASIA
31.4
0.8025682
1220100
COSCO PAC LTD
12.54
-0.7911392
14146211
SWIRE PACIFIC-A
BELLE INTERNATIO
17.46
-3
9771499
ESPRIT HLDGS
11.12
-1.766784
11343870
TENCENT HOLDINGS
BOC HONG KONG HO
26.65
1.912046
19955382
30
-0.6622517
4943893
TINGYI HLDG CO
NAME AIA GROUP LTD
NAME
HANG LUNG PROPER
NAME
PRICE
DAY %
Volume
65.65
-0.4548901
2146024
SANDS CHINA LTD
38.4
0.5235602
5626693
SINO LAND CO
15.4
-0.2590674
6099245
128.5
-0.8487654
5611750
97.5
-1.515152
1909905
269
0
3270036
21.65
0.9324009
5810943
POWER ASSETS HOL
CATHAY PAC AIR
15.54
0.2580645
4476816
HANG SENG BK
122.3
2.086811
4731355
WANT WANT CHINA
10.66
1.330798
22116747
CHEUNG KONG
128.2
-0.7739938
4903456
HENDERSON LAND D
57.75
-2.613828
6419574
WHARF HLDG
66.45
0.3776435
4180055
8.73
0
18471419
75.1
-0.5298013
4472870
CHINA COAL ENE-H CHINA CONST BA-H
HENGAN INTL
6.68
0.149925
233424943
21.4
0.7058824
5101071
CHINA LIFE INS-H
26.75
-0.1865672
21469570
HONG KONG EXCHNG
147.8
-0.4713805
4394257
CHINA MERCHANT
27.2
-4.225352
15713822
HSBC HLDGS PLC
84.95
-0.2934272
9876563
CHINA MOBILE
86.95
0.2883506
18577605
HUTCHISON WHAMPO
86.65
0.697269
9023565
CHINA OVERSEAS
24.05
-2.434077
19660204
IND & COMM BK-H
5.94
-0.5025126
217562105
9.23
-0.8592911
64361102
LI & FUNG LTD
11.9
0.3372681
32124234
MTR CORP
31.3
0
2158387
CHINA PETROLEU-H
HONG KG CHINA GS
MOVERS
18
29
3 23705
INDEX 23635.1 HIGH
23700.45
LOW
23519.19
CHINA RES ENTERP
27.15
-0.9124088
2530031
CHINA RES LAND
22.95
-1.923077
4314572
NEW WORLD DEV
14.66
0.9641873
24973396
CHINA RES POWER
20.1
1.005025
11585992
PETROCHINA CO-H
11.14
-0.1792115
66828657
CHINA SHENHUA-H
33.05
0
13473276
PING AN INSURA-H
70.05
-0.7790368
8238825
PRICE
DAY %
Volume
31.45
-1.100629
9591518
CHINA PETROLEU-H
9.23
-0.8592911
64361102
ZIJIN MINING-H
52W (H) 23710.87 23510
(L) 18056.4 21-January
23-January
Hang SENG CHINA ENTErPRISE INDEX NAME
NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
4.16
0.7263923
211306247
AIR CHINA LTD-H
7.36
0.1360544
6301394
ALUMINUM CORP-H
3.98
-0.5
19876191
CHINA RAIL CN-H
8.26
-3.051643
54048108
ANHUI CONCH-H
29.35
0
9536633
CHINA RAIL GR-H
4.35
-1.58371
68492577
BANK OF CHINA-H
3.78
0.5319149
360665664
CHINA SHENHUA-H
33.05
0
13473276
CHINA PACIFIC-H
6.38
-0.3125
32586918
CHINA TELECOM-H
4.35
-0.4576659
62481564
26.45
-0.3766478
2160622
DONGFENG MOTOR-H
12.3
0
28312808
CHINA CITIC BK-H
5.45
0.5535055
73451947
GUANGZHOU AUTO-H
6.66
-4.584527
25332377
CHINA COAL ENE-H
8.73
0
18471419
HUANENG POWER-H
7.2
-0.8264463
22685864
CHINA COM CONS-H
8.38
-0.3567182
44358409
IND & COMM BK-H
5.94
-0.5025126
217562105
CHINA CONST BA-H
6.68
0.149925
233424943
JIANGXI COPPER-H
20.95
-2.102804
15025866
CHINA COSCO HO-H
4.52
-1.525054
14340366
PETROCHINA CO-H
11.14
-0.1792115
66828657
26.75
-0.1865672
21469570
PICC PROPERTY &
11.86
-2.145215
13955919
CHINA LONGYUAN-H
6.34
0
9444128
PING AN INSURA-H
70.05
-0.7790368
8238825
CHINA MERCH BK-H
18.76
-0.4246285
22628313
SHANDONG WEIG-H
7.48
0.4026846
16528042
BANK OF COMMUN-H BYD CO LTD-H
CHINA LIFE INS-H
CHINA MINSHENG-H CHINA NATL BDG-H CHINA OILFIELD-H
10.9
3.024575
41485268
SINOPHARM-H
25
0.4016064
3169558
12
-1.639344
25087784
TSINGTAO BREW-H
46.25
1.203501
1595413
16.58
0.241838
13626914
WEICHAI POWER-H
32.15
-2.870091
6672991
NAME
PRICE
DAY %
Volume
13.64
0.4418262
20976778
3.15
-0.9433962
34994980
ZOOMLION HEAVY-H
10.62
-2.925046
27996220
ZTE CORP-H
15.04
-1.570681
11092877
YANZHOU COAL-H
MOVERS
11
24
5 12245
INDEX 12166.7 HIGH
12240.7
LOW
12071.86
52W (H) 12244.15 12070
(L) 8987.76 21-January
23-January
Shanghai Shenzhen CSI 300 NAME
NAME
PRICE
DAY %
Volume
PRICE
DAY %
7.33
-0.2721088
18752396
QINGHAI SALT-A
26.86
-0.6656805
4393053
7.4
5.865522
53999485
SAIC MOTOR-A
16.61
-0.5389222
21584786
0.5809731
88779439
SANY HEAVY INDUS
10.45
-1.600753
39089259
-0.4065041
30913606
SHANDONG GOLD-MI
37.57
-0.6347527
8793816
-0.5673759
28776012
SHANG PHARM -A
12.12
-0.6557377
10531070
4.1
-0.9661836
16266738
SHANG PUDONG-A
10.6
1.145038
155968498
13.8
-0.4329004
13385137
SHANGHAI ELECT-A
4.11
-0.7246377
4777775
2.76
-1.075269
54708234
SHANXI LU'AN -A
22.15
-2.034498
21226127
GF SECURITIES-A
14.76
-0.8064516
36311709
SHANXI XINGHUA-A
40.88
1.288404
4607303
38306785
GREE ELECTRIC
28.34
0.8540925
11940227
SHANXI XISHAN-A
13.84
-2.535211
31371836
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.83
0.7117438
231953813
AIR CHINA LTD-A
6.04
0.8347245
21970490
CHONGQING CHAN-A
ALUMINUM CORP-A
5.14
0.1949318
15792465
CITIC SECURITI-A
13.85
ANGANG STEEL-A
4.13
1.22549
32353751
CSR CORP LTD -A
4.9
ANHUI CONCH-A
18.83
-0.8425487
23891772
DAQIN RAILWAY -A
7.01
BANK OF BEIJIN-A
9.79
3.597884
126142831
BANK OF CHINA-A
2.97
-0.3355705
60097441
EVERBRIG SEC -A
BANK OF COMMUN-A
5.09
0.7920792
87563044
GD POWER DEVEL-A
11.49
0.08710801
37223032
1.408451
BANK OF NINGBO-A BAOSHAN IRON & S
5.04
CHINA YANGTZE-A
DATANG INTL PO-A
NAME
Volume
7.73
-1.528662
15505434
GUANGHUI ENERG-A
17.88
-0.7218212
24727567
SHENZEN OVERSE-A
7.09
0.7102273
34037107
23.14
-0.2586207
4220512
HAITONG SECURI-A
10.28
1.081613
71618949
SUNING APPLIAN-A
7.51
1.486486
69608659
4.8
2.564103
67161770
HANGZHOU HIKVI-A
31.81
1.434949
5456329
TSINGTAO BREW-A
33.45
-0.2385923
1301585
CHINA CNR CORP-A
4.71
0.212766
32633616
HENAN SHUAN-A
65.61
2.196262
1703809
WEICHAI POWER-A
24.16
-0.8210181
7757924
CHINA COAL ENE-A
7.81
-0.1278772
8837150
HONG YUAN SEC-A
19.19
0.3661088
21788177
WULIANGYE YIBIN
26.3
-0.2276176
39985155
CHINA CONST BA-A
4.69
0.8602151
46718961
HUATAI SECURIT-A
9.15
-1.081081
31760514
YANGQUAN COAL -A
15.03
-0.4635762
27348747
CHINA COSCO HO-A
4.47
-0.4454343
14731880
HUAXIA BANK CO
11.2
0.5385996
54969842
YANTAI CHANGYU-A
47.28
5.890258
5669033
CHINA CSSC HOL-A
23.41
2.271734
13200913
IND & COMM BK-A
4.19
-1.411765
128924538
YANTAI WANHUA-A
15.78
-0.3787879
9939159 6667722
BBMG CORPORATI-A BYD CO LTD -A CHINA CITIC BK-A
CHINA EAST AIR-A
3.63
0
16379353
INDUSTRIAL BAN-A
18.35
1.493363
61294806
YANZHOU COAL-A
18.19
-0.8719346
CHINA EVERBRIG-A
3.32
3.10559
458705560
INNER MONG BAO-A
35.87
2.077405
36975328
YUNNAN BAIYAO-A
73.8
4.090268
2315592
CHINA INTL MAR-A
14.26
3.633721
45810714
INNER MONG YIL-A
25.72
0.46875
10460212
ZHONGJIN GOLD
16.38
-0.3043214
16682217
CHINA LIFE INS-A
20.78
0.922778
13958369
INNER MONGOLIA-A
5.4
0.7462687
44890617
ZIJIN MINING-A
3.81
0
44447384
89490096
JIANGSU HENGRU-A
31.35
2.21715
4142550
ZOOMLION HEAVY-A
8.9
-1.548673
57800993
91.83
-0.6168831
3414072
ZTE CORP-A
10.58
2.618817
43629641
-0.9775967
10277478
CHINA MERCH BK-A
14
0
CHINA MERCHANT-A
30
0.8742434
16022910
JIANGSU YANGHE-A
CHINA MERCHANT-A
10.31
-0.3864734
18702979
JIANGXI COPPER-A
24.31
CHINA MINSHENG-A
9.2
3.603604
203363307
JINDUICHENG -A
12.42
0.729927
12864731
CHINA NATIONAL-A
7.47
-3.737113
64598055
JIZHONG ENERGY-A
16.44
-0.3032141
26006996
14.71
0.6844627
21816515
198.98
0.07544133
5101393
CHINA OILFIELD-A
17.02
3.214069
20235488
KANGMEI PHARMA-A
CHINA PACIFIC-A
21.68
0.3239241
18420003
KWEICHOW MOUTA-A
6.89
1.026393
35482504
LUZHOU LAOJIAO-A
33.25
1.433801
17985245
2.23
0.9049774
32214906
CHINA PETROLEU-A CHINA RAILWAY-A
5.81
-2.352941
78553590
METALLURGICAL-A
CHINA RAILWAY-A
3.17
-0.9375
56021333
NINGBO PORT CO-A
2.58
0.78125
27609660
3.93
1.28866
MOVERS 139
18 2620
INDEX 2607.456
CHINA SHENHUA-A
24.12
-1.107011
15612255
PANGANG GROUP -A
44053278
HIGH
2617.45
CHINA SHIPBUIL-A
4.94
2.702703
66425582
PETROCHINA CO-A
9.04
0.3329634
23857447
LOW
2579.73
CHINA SOUTHERN-A
4.07
0.2463054
14708633
PING AN BANK-A
20.05
-2.099609
63569846
CHINA STATE -A
3.68
-1.075269
116940385
PING AN INSURA-A
46.44
0.4759844
23513514
CHINA UNITED-A
3.5
0
58131425
POLY REAL ESTA-A
13.65
-0.2192982
51454142
11.69
-0.5952381
129945195
QINGDAO HAIER-A
13.82
-0.2886003
9167373
NAME
PRICE DAY %
Volume
PRICE DAY %
Volume
ACER INC
24.55 -0.6072874
23446929
FORMOSA PLASTIC
79.8
-0.25
2343221
TAIWAN MOBILE CO
ADVANCED SEMICON
24.1 -0.8230453
12531777
FOXCONN TECHNOLO
85.1
-1.276102
7343061
TPK HOLDING CO L
ASIA CEMENT CORP
36.4 -0.2739726
6308611
FUBON FINANCIAL
36.8
-0.405954
13532614
TSMC
85 -0.4683841
28727965
UNI-PRESIDENT
CHINA VANKE CO-A
143
52W (H) 2717.825 (L) 2102.135
2575
21-January
23-January
FTSE TAIWAN 50 INDEX NAME
ASUSTEK COMPUTER
332.5
-1.335312
1209711
HON HAI PRECISIO
AU OPTRONICS COR
11.8
1.287554
122882571
HOTAI MOTOR CO
CATCHER TECH
128.5
-1.532567
5638601
CATHAY FINANCIAL
32.05
-0.620155
14257973
CHANG HWA BANK
15.85 -0.3144654
CHENG SHIN RUBBE CHIMEI INNOLUX C
230
-1.918977
299485
283.5
-2.072539
19875832
HUA NAN FINANCIA
16.9
0
3792700
LARGAN PRECISION
735
LITE-ON TECHNOLO
40.1
74
0.8174387
4184848
HTC CORP
3054174
0.25
9039979 6069829 6323620
CHINA STEEL CORP
27.2
0.7407407
10558065
NAN YA PLASTICS
59.3
0.5084746
3226973
CHINATRUST FINAN
16.7 -0.5952381
23800219
PRESIDENT CHAIN
163.5
0.6153846
1739279
63
-1.5625
7122543
30.5
-0.974026
4926541
12.55 -0.3968254
24815360
2499682
SINOPAC FINANCIA
33.25 -0.1501502
5716454
SYNNEX TECH INTL
1.229508
6838222
TAIWAN CEMENT
17.55 -0.5665722
FAR EASTONE TELE FIRST FINANCIAL FORMOSA CHEM & F FORMOSA PETROCHE
74.1
59
0
3151462
38.95 -0.1282051
3720603
6043168
TAIWAN COOPERATI
16.4
0
4348345
-1.25
3610950
TAIWAN FERTILIZE
71.6
-2.185792
5880571
84.4 -0.2364066
941010
TAIWAN GLASS IND
28.7
-2.047782
1516707
79
31268625 16977132
0
106.5 -0.4672897
13619031
53.9 -0.3696858
23.25
FAR EASTERN NEW
-1.897533
YULON MOTOR CO
317.5 -0.3139717
DELTA ELECT INC
51.7
11.45 -0.4347826
2591542
MEGA FINANCIAL H
QUANTA COMPUTER
23236432
0.1362398
MEDIATEK INC
SILICONWARE PREC
0
17797444
55134887
5789569
4550430
101
15.2 -0.3278689
96577858
14901664
UNITED MICROELEC
4166065
YUANTA FINANCIAL
0
0.1053741
487.5 -0.8138352
Volume
2491294
2.95203
95
0
0.297619
7.75
20.85 -0.7142857
108
33.7
13.95
COMPAL ELECTRON
PRICE DAY %
WISTRON CORP
CHINA DEVELOPMEN
CHUNGHWA TELECOM
NAME
MOVERS
12
31
7 5435
INDEX 5410.29 HIGH
5430.68
LOW
5368.59
52W (H) 5621.53 5365
(L) 4719.96 21-January
23-January
January 24, 2013 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 52.0
35.00 34.75
17.6 17.5
51.8
34.50
17.4 51.6
34.25
17.3
34.00
51.4
17.2
38.6
21.8
21.8
21.5
21.6
21.2
21.4
20.9
21.2
20.6
21.0
38.4
38.2
38.0
Commodities
CURRENCY EXCHANGE RATES
NAME ENERGY
PRICE
YTD %
(H) 52W
(L) 52W
WTI CRUDE FUTURE Mar13
96.49
-0.196524617
4.573534193
108.9899979
80.48000336
BRENT CRUDE FUTR Mar13
112.09
-0.293542074
2.002002002
118.7999954
90.58999634
GASOLINE RBOB FUT Feb13
282.99
0
2.469493428
292.9699898
220.3500032
GAS OIL FUT (ICE) Mar13
958.25
-0.260213375
3.678658372
1026.25
800.5
3.587
0.815064643
7.042673829
4.090000153
3.049999952
NATURAL GAS FUTR Feb13 HEATING OIL FUTR Feb13 METALS
DAY %
305.86
-0.312887035
0.883962269
333.4599972
255.6599855
Gold Spot $/Oz
1692.46
-0.0077
1.6822
1796.08
1527.21
Silver Spot $/Oz
32.1975
0.6644
6.9329
37.4775
26.1513
Platinum Spot $/Oz
1692.95
0.5195
11.5434
1736
1379.05
725.2
1.014
3.6503
732.9
553.75
Palladium Spot $/Oz
2075.5
1.715265866
0.120598167
2361.5
1827.25
LME COPPER 3MO ($)
LME ALUMINUM 3MO ($)
8133
0.968342644
2.546967596
8765
7219.5
LME ZINC
2055
1.131889764
-1.201923077
2220
1745
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar13 CORN FUTURE
17375
-0.143678161
1.846424385
22150
15236
15.39
-0.064935065
1.416803954
16.84000015
14.89999962
729
0.06863418
4.40386681
846.25
511
Mar13
COUNTRY MAJOR
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
DAY %
1.0565 1.5856 0.9295 1.3322 88.3 7.9858 7.7534 6.2185 53.745 29.8 1.2265 28.998 40.63 9625 93.294 1.23817 0.84014 8.2653 10.6381 117.64 1.03
-0.0473 0.0568 -0.1399 -0.2097 0.487 0.0013 -0.0013 0.0338 0.1141 -0.1678 -0.0163 -0.0069 -0.0615 -0.0519 0.5295 0.0743 0.269 0.4585 0.219 0.6885 0
YTD %
(H) 52W
1.8019 -1.9782 -1.5169 1.0008 -2.4915 -0.0326 -0.0361 0.1946 2.3258 2.6174 -0.4158 0.1207 0.923 1.7455 -4.2521 -2.4787 -2.9424 -0.5783 -1.0124 -3.4597 -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
3.33
0.9090909
5.714283
3.44
2.27
1681512
CROWN LTD
11.87
-0.4194631
11.24648
12.04
8.04
2060326
18.05999947
AMAX HOLDINGS LT
0.082
0
17.14286
0.119
0.055
15234500
66.84999847
BOC HONG KONG HO
26.65
1.912046
10.58091
26.7
20.25
19955382
CENTURY LEGEND
0.285
-1.724138
7.547176
0.34
0.215
1005500
6.19
0.9787928
3.338902
6.25
2.8
234356
CHINA OVERSEAS
24.05
-2.434077
4.112552
25.6
14.124
19660204
CHINESE ESTATES
12.74
0.7911392
-2.599388
13.26
8.3
122500
CHOW TAI FOOK JE
12.9
-1.975684
3.697753
15.16
8.4
3662600
EMPEROR ENTERTAI
1.97
0
4.232805
2.08
0.99
940000
FUTURE BRIGHT
1.73
1.169591
41.80328
1.75
0.44
7174800
WHEAT FUTURE(CBT) Mar13
779.25
0
0.16066838
948.25
652
SOYBEAN FUTURE Mar13
1455.5
0.258308937
3.263568641
1728.25
1207.75
COFFEE 'C' FUTURE Mar13
149.4
0.538358008
3.894297636
237.5
141.25
SUGAR #11 (WORLD) Mar13
18.1
-0.110375276
-7.227063045
25.12999916
COTTON NO.2 FUTR Mar13
79.91
-0.025021894
6.34815012
98.5
NAME ARISTOCRAT LEISU
CHEUK NANG HLDGS
World Stock MarketS - Indices NAME
PRICE
PRICE
DAY % YTD %
VOLUME CRNCY
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
13712.21
0.4579588
4.640292
13712.21
12035.08984
GALAXY ENTERTAIN
34.45
-0.1449275
13.50906
34.95
16.62
9491517
NASDAQ COMPOSITE INDEX
US
3143.177
0.2702647
4.095472
3196.932
2726.68
HANG SENG BK
122.3
2.086811
3.032859
122.5
99.2
4731355
FTSE 100 INDEX
GB
6186.38
0.1166823
4.89283
6199.589844
5229.76
HOPEWELL HLDGS
32.8
-0.6060606
-1.353383
34.4
19.049
1067856
DAX INDEX
GE
7693.85
-0.03066444
1.070097
7789.94
5914.43
HSBC HLDGS PLC
84.95
-0.2934272
4.489541
85.75
59.8
9876563
HUTCHISON TELE H
3.36
0.9009009
-5.617976
3.88
2.98
3923000
LUK FOOK HLDGS I
28.1
-3.931624
15.16394
30.2
14.7
4204000
MELCO INTL DEVEL
12.44
2.134647
38.06881
12.48
5.12
16904000 7921361
NIKKEI 225
JN
10486.99
-2.08162
0.8832031
10952.31
8238.96
HANG SENG INDEX
HK
23635.1
-0.1009764
4.317355
23710.87
18056.4
CSI 300 INDEX
CH
2607.456
0.406562
3.349416
2717.825
2102.135
MGM CHINA HOLDIN
17.4
-0.3436426
24.10841
17.7
10.04
TAIWAN TAIEX INDEX
TA
7744.18
-0.1922903
0.5802997
8170.72
6857.35
MIDLAND HOLDINGS
3.99
-2.444988
7.837836
5.217
3.249
6358000
NEPTUNE GROUP
0.215
3.864734
41.44737
0.226
0.084
27665000
NEW WORLD DEV
14.66
0.9641873
21.96339
14.7
7.95
24973396
SANDS CHINA LTD
38.4
0.5235602
13.10751
38.45
20.65
5626693
SHUN HO RESOURCE
1.52
0
8.57143
1.59
1.03
0
4.35
-2.027027
3.818614
4.65
2.56
23314037
KOSPI INDEX
SK
1980.41
-0.806904
-0.8332297
2057.28
1758.99
S&P/ASX 200 INDEX
AU
4787.827
0.1830688
2.987276
4802.2
3985
ID
4418.727
0.04933717
2.363851
4472.108
3635.283
FTSE Bursa Malaysia KLCI
MA
1635.25
0.4046271
-3.179488
1699.68
1509.49
SHUN TAK HOLDING
JAKARTA COMPOSITE INDEX
NZX ALL INDEX
NZ
909.225
-0.04727067
3.08054
913.386
732.518
SJM HOLDINGS LTD
PHILIPPINES ALL SHARE IX
PH
3850.26
-0.02362918
4.089777
3885.39
3125.49
SMARTONE TELECOM
HSBC Dragon 300 Index Singapor
SI
628.99
0.07
1.27
NA
NA
STOCK EXCH OF THAI INDEX
TH
1433.53
-0.03904915
2.988654
1451.06
1054.84
HO CHI MINH STOCK INDEX
VN
443.37
0.1174212
7.164089
492.44
Laos Composite Index
LO
1437.51
0.6405948
18.33598
1455.82
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
21
-3.669725
16.66667
21.9
12.34
7904410
13.26
0.3025719
-5.823863
17.5
13.1
10632395
WYNN MACAU LTD
21.2
-1.395349
1.193314
25.5
14.62
12788782
ASIA ENTERTAINME
3.99
3.367876
30.39216
7.24
2.4
325535
BALLY TECHNOLOGI
47.7
1.836038
6.687544
51.16
40.78
801711
372.39
BOC HONG KONG HO
3.34
2.453988
8.794791
3.36
2.56
8240
880.65
GALAXY ENTERTAIN
4.49
2.745995
13.09824
4.49
2.1
20246 6913392
INTL GAME TECH
15.22
1.399067
7.410021
17.37
10.92
JONES LANG LASAL
88.05
0.05681818
4.896351
88.24
61.39
158905
LAS VEGAS SANDS
53.56
2.566067
16.0312
58.3216
32.6127
6979703
MELCO CROWN-ADR
20.19
2.279635
19.89311
20.29
9.13
4304792
MGM CHINA HOLDIN
2.03
0
9.729728
2.09
1.3525
955
MGM RESORTS INTE
13.06
1.318852
12.19931
14.9401
8.83
9676338
SHFL ENTERTAINME
14.39
0.911641
-0.7586207
18.77
11.75
147141
SJM HOLDINGS LTD
2.8
3.703704
21.21212
2.85
1.65
7005
124.32
0.209576
10.51649
129.6589
84.4902
750971
WYNN RESORTS LTD
AUD HKD
USD
14 |
business daily January 24, 2013
Opinion
The miracle of China’s disappearing dividend
Peter Thal Larsen
Reuters columnist
S
hortly after China unveiled its new leadership last November, the country’s main stock market delivered a downbeat verdict on the world’s second-largest economy. For a few days, the Shanghai Composite index dipped below the psychologically important 2,000 markwhere it was 12 years earlier. The drop was puzzling to many. How could an economy that more than quadrupled in size in a decade, bringing prosperity to many of China’s citizens in the process, have produced such poor returns for investors? Resolving this paradox is central to explaining the country’s extraordinary economic development-and to understanding whether it can continue. On one level, the poor stock market returns can be explained quite easily: Share prices reflect expectations of future growth, and these projections are often wrong, so the performance of markets does not necessarily track the underlying economy. This is particularly true of the Shanghai index, which is dominated by domestic investors. Over the past 12 years, it has slumped as low as 1,000 and peaked at 6,000 before reaching its current, relatively subdued level. But a different benchmark and a different timespan tell a very different story. Take the MSCI China index, a more broad-based measure that includes Chinese companies listed in Hong Kong and the United States: An investor who bought the stocks in the index on the day Hu Jintao was announced as China’s new leader in November 2002 and sold on the day Xi Jinping took the stage a decade later would have earned a return of 392 percent – a reasonable reflection of China’s economic expansion over that period. Stock market returns are a poor way to measure China’s economic performance. Even after two decades of reform and liberalisation, the portion of the economy financed by equity investors remains small.
Social financing According to figures published by the People’s Bank of China, equities accounted for less than 2 percent of China’s “total social financing” in the first nine months of 2012.
The main source of financing was bank loans, which still account for 57 percent of the total. China’s still-fledgling bond market contributed 13 percent. China’s economic growth, it seems, depends mostly on debt. Other evidence points to a bigger concern about growth. Take the performance of China’s state-owned enterprises (SOEs), which still dominate the economic landscape. A recent report by the State-owned Assets Supervision and Administration Commission, which oversees China’s largest SOEs, suggests their returns remain poor. The report, presented at last November’s Communist Party Congress, trumpeted the increase in profitability in the Hu era: Between 2003 and 2011, the combined net profit of SOEs increased by roughly four-anda-half times, to 914 billion yuan (US$147 billion). But this is less impressive when considering that the same companies had more than three times as many assets at the end of that period as they did at the beginning. In other words, most of the expansion in the earnings of those SOEs came from expanding their balance sheets; the combined return on assets improved only slightly, to 3.26 percent. That’s less than half the average for a member of the
S&P 500 index, and even these mediocre figures are puffed up-compared to private-sector rivals, most state-owned companies get preferential pricing for raw materials, energy and credit. In this sense, China’s SOEs are a proxy for the country’s investment-heavy growth in recent years, particularly after the 2008 financial crisis dulled global demand for Chinese exports. By most estimates, gross fixed capital formation
China’s economic model brings substantial risks: rising inequality, rampant corruption and capital flight are all threats to popular support for the Party
accounted for around 45 percent of China’s economic GDP between 2008 and 2011much higher than in other developing nations.
Cheating depositors In a nutshell, China has been investing ever-increasing amounts to generate additional economic growth, and the returns on this investment have been poor. This analysis has prompted many to predict an imminent end to China’s economic miracle. As returns dwindle, flows of new capital dry up, and growth stalls. Yet this logic assumes a market-based system of capital allocation that is largely absent from China’s financial system. In fact, much capital is distributed by the country’s state-owned banks and guided by the Party’s political priorities. The banks, meanwhile, are financed with deposits that pay an interest rate capped at levels that for much of the past decade were below the rate of inflation. In other words, Chinese banks are cheating their millions of depositors so that they can make too-cheap loans to SOEs. There is no chance this state of affairs will change in the next few years. Consumers have tried to move their money elsewhere, buying up
property and, most recently, pouring their cash into wealth management products that are held off a bank’s balance sheet and promise a better return. But as long as the system is essentially underwritten by state-owned banks – and by the government – China is a long way from a market-based system of allocating credit. But before you dismiss the Chinese economy, recall that unsustainable investment booms are not necessarily all bad. In both the American railway boom in the 1800s and the telecom bubble in the late 1990s most investors lost their shirts, yet helped finance valuable infrastructure that fuelled monumental economic growth. China may yet prove to be a similar case, but the country’s economic model brings substantial risks: rising inequality, rampant corruption and capital flight are all threats to popular support for the Party. And shifting from investment- and export-led growth toward domestic consumption and private enterprise will have to go handin-hand with a more efficient way of doling out capital. Until that happens, the Shanghai index will not be a reliable gauge of China’s economic progress. Reuters Breakingviews
editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes Newsdesk Alex Lee, Stephanie Lai, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, José I. Duarte, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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January 24, 2013 business daily | 15
OPINION Business
wires
The global economy’s new path
Leading reports from Asia’s best business newspapers
Business Inquirer
Zhu Min
Deputy Managing Director of the IMF and a former deputy governor of the Peoples’ Bank of China
The merger of Philippine National Bank (PNB) and Allied Banking Corp. will finally push through on February 9, nearly four years after plans were first made public. In a disclosure on Tuesday, PNB said its board had approved the effective date of the merger with its smaller sister bank on “February 9 in accordance with Article 1.2 of the Amended Plan of Merger.” Allied Bank’s own board has yet to approve the date of merger. Both banks, led by tycoon Lucio Tan, had already secured the remaining foreign and local regulatory approvals required for the transaction to push through.
Jakarta Globe Apple Inc. will invest some US$3 million in Indonesia in plans that could see the country become just the third in Asia to host an official Apple retail store, according to the head of the country’s Investment Coordinating Board (BKPM). “There are many leading global companies that will invest in Indonesia, including among them Apple Inc.,” Chatib Basri told a press conference on Tuesday. He said Apple is planning to start by opening its official online store in Indonesia and will later open an official dealership for its products in Jakarta.
Myanmar Times Huawei Electronics Co. Ltd is poised to become a major player in Myanmar’s emerging communications market, its managing director was quoted as saying. Mr Geng said: “I think Myanmar is a very important market for Huawei, so we’re paying a lot of attention.” However, Huawei sees itself as a provider of telecoms solutions in the Myanmar market rather than as an operator, he said. “The SEA Games will be very important as Myanmar opens up to world, and we have rich experience in supporting those kinds of events,” he said.
Yomiuri Shimbun A document from the early 17th century shows that China did not control the Senkaku Islands, also know as Diaoyu, contradicting Beijing’s more recent claims, according to a Japanese researcher. During China’s Ming dynasty, a provincial governor told a Japanese envoy that the ocean area under the dynasty’s control ended with the Matsu Islands, now under Taiwan’s administration, said Nozomu Ishii, an associate professor of Nagasaki Junshin Catholic University. “This historical material proves that Japan’s claim over Senkaku Islands is historically correct,” he was quoted as saying.
W
hether we like it or not, the world around us is in a state of constant change. But recent economic trends suggest that this change may be shifting its direction in a fundamental way. Consider the advanced economies. During the last two decades, economic growth in these countries was led by consumption – so much so that economic activity in these economies swung from investment to consumption by a total of 10 percentage points of GDP. As a result, in 2010 the share of consumption in their GDP had reached 81.6 percent.
financial engineering and wealth effects from strong asset prices. Neither of these factors currently is at play to push consumption’s share of GDP higher. But can the advanced economies’ consumption even be sustained at the current level? Perhaps not. Current levels of consumption are associated with over-extended governments and households, whose debt levels remain high, implying that more savings are required. Banks also need to raise capital. In general, many economic agents need an extended period of deleveraging.
1990 2010 (In percent of GDP) Advanced economies Consumption 76.4 81.6 Investment 23.7 18.4 Emerging and developing economies Consumption 73.4 67.1 Investment 26.0 30.8
Meanwhile, emerging markets and developing economies provided almost a mirror image of this trend, raising their investment and boosting the supply of goods to the rest of the world at the cost of consumption in their own economies. By 2010, the share of consumption in their GDP had declined, from 73.4 percent to 67.1 percent. Looking forward, it is unlikely that the consumption share of GDP can increase further in advanced economies. The main drivers of this increase were primarily
However, current policies in the major advanced economies are aimed at maintaining current consumption levels in order to support growth and employment. I f t h e consumption share of GDP nonetheless declines, simple arithmetic tells us that investment and exports need to be higher to maintain total demand.
Spillover effects Should we expect emerging markets and developing economies to pick
up the slack? To sustain strong growth in these economies as external demand weakens, domestic demand needs to become the major engine of growth. This means stronger domestic consumption and appropriate levels of investment to support such consumption growth. In economies where investment levels are leading to excess capacity, resources could shift from investment to consumption, provided that these countries’ external accounts remain sustainable. These are major tectonic shifts in the structure of the global economy, and are fraught with potential dangers. The pace of change will vary between sectors and across economies, leading to mismatches of demand and supply worldwide. Moreover, with globalisation, an economic problem in one part of the world can be transmitted to the rest of the world
more strongly, substantially complicating policy responses in both advanced and developing economies. A study of such spillover effects by the International Monetary Fund suggests that, before the global financial crisis, external factors explained 36 percent of change in output in the five systemically important economies (the euro zone, the United States, China, Japan, and the United Kingdom); after the crisis, however, this share reached close to 60 percent. In the rest of the world, including emerging markets, the share of external factors in output change increased from about 43 percent to more than 60 percent. In this environment, we must diligently pursue policy coordination at the global level. To achieve an orderly realignment of consumption and investment worldwide, policies that boost investment in one part of the world should match policies that boost consumption in other parts. In particular, advanced economies should implement fundamental productivityenhancing reforms, the euro zone should strengthen the currency union, and emerging market and developing economies should boost their domestic sources of growth. And these policies should be consistent with fiscal and external stability. Moreover, financialsector policies and regulatory frameworks should be coordinated at the global level, in order to design and implement consensus-based rules – thereby addressing the problems posed by very large, global institutions that are considered too big or too complex to fail. Only with such global coordination can we reduce, and possibly eliminate, economic instability and disorderly adjustments both at home and abroad, even as we seek to maximise the benefits of the inevitable changes in the global economy. © Project Syndicate
16 |
business daily January 24, 2013
CLOSING UK PM pledges referendum on EU
Libor may need ‘to be replaced’
Prime Minister David Cameron promised yesterday to give Britons a straight referendum choice on whether to stay in the European Union or leave, provided he wins an election in 2015. Mr Cameron announced the plan for a vote sometime between 2015 and the end of 2017. His Conservative party would campaign for the 2015 election promising to renegotiate Britain’s EU membership. “When we have negotiated that new settlement, we will give the British people a referendum with a very simple in or out choice to stay in the European Union on these new terms; or come out altogether,” Mr Cameron said.
The head of German financial watchdog BaFin questioned yesterday whether a corrupted system of setting key benchmark interbank lending rates could be reformed. “It has been shown that benchmarks, which are based on estimates submitted by market participants, are susceptible to manipulation,” Elke Koenig said, adding that the alternative of basing the benchmark rate on actual transactions was equally difficult given that in times of stress, there are phases when hardly any transactions take place. “In my view, we need to work not on a reform of the existing system, but on a replacement for it,” she said.
Yellow taxis could lose concession Tony Lai
tony.lai@macaubusinessdaily.com
T
he Transport Bureau said it would grant a “short-term” extension to Vang Iek Radio Taxi Co. – the operator of 100 yellow taxis in Macau – when its contract officially ends on February 6. In a statement released yesterday, the authorities welcomed the Court of Second Instance’s decision to reject an appeal from Vang Iek for a longer renewal, and said they would “study the possibility of increasing the special taxi licences and operators”. Vang Iek filed a lawsuit with the courts in late 2011 after the bureau only extended its contract for 18 months in August 2011. The yellow taxi company argued its concession should be renewed for 10 years. The statement said Vang Iek must introduce a number of improvements including increasing taxis for the disabled and
Authorities want operator to improve service quality before long-term renewal
strengthening its services in the old neighbourhood districts. The bureau stressed the concession would not be renewed if
Vang Iek “did not reach the relevant requirements from the government” after this extension. Vang Iek’s general manager
Mário Sin Ferreira told Business Daily he was yet to be notified of this latest arrangement. But, he added, “our company has always improved our services and raised our standards”. The operator’s previous discussions with the administration had gone well, Mr Sin Ferreira said. He did not comment, however, on whether he was confident of meeting the government’s requirements, saying “it depends on what the administration has exactly asked for”. The businessman added they welcomed any new company to join this industry. As for the court’s decision, he said they had to study the judgment before making any comment but hinted Vang Iek was unlikely to appeal. “There is no big problem – just different interpretations of the duration of contracts,” he said.
Taiwan to ask China for more investment quotas Chinese securities regulator set to visit Taipei for first time Faith Hung
T
aiwan will ask for additional quotas to invest in China when the Chinese securities regulator travels to Taipei next month for the first time, Taiwan’s financial regulator said yesterday, as cross-strait banking ties pick up pace. The establishment of a clearing system for Chinese yuan transactions in Taiwan has raised hopes that Taiwan will play a key role in the internationalisation of the yuan, boding well for higher quotas as well as for Taiwan to join Hong Kong in becoming an offshore yuan centre. Chairman Guo Shuqing of the China Securities Regulatory Commission is set to visit around February, with the higher quotas on the agenda for talks between the two sides, said Lee Jih-chu, vice chairwoman of Taiwan’s Financial Supervisory Commission. Chinese quotas for Renminbi
Taiwan to talk with HK, U.K. on offshore yuan market tie-up, says Lee Jih-chu
Qualified Foreign Institutional Investment (RQFII) and QFII allow foreign investors to use offshore yuan to buy mainland securities. “We’re making an all-out effort to get as much QFII and RQFII quotas as possible. After all, it’s very difficult to apply, as so many foreign investors are already waiting in line,” Ms Lee told Reuters in an interview yesterday. “A global financial group has been awarded a QFII quota of only US$1 billion,” she said, without elaborating further. Fubon Financial Holding Co Ltd, one of the island’s top five financial holding firms, is among a few Taiwanese companies that have been granted a QFII quota, of US$400 million. Taiwan, whose banking sector has generated lower returns on equity than most Asian peers, is hoping to take advantage as China
plans to make the yuan basically convertible as early as 2015.
Economic integration Earlier this month, Mr Guo said in Hong Kong that China could increase by 10 times the current level of investment quotas for RQFII and QFII. China introduced the RQFII scheme at the end of 2011 with an initial quota of 20 billion yuan (US$3.2 billion) and raised that to 70 billion yuan last year. China and Taiwan inked the clearing agreement in September, marking the beginning of the final stage of an economic integration that has drawn Taiwan closer to its one-time political foe and lifted trade to more than US$160 billion annually. The system paves the way for Taiwan to develop an offshore yuan centre, attracting Hong Kong and
London to work together to make their yuan centres’ sizes bigger, Ms Lee said. “I and HKMA chief executive Norman Chan have reached a consensus to work together to increase the size of our offshore RMB markets,” Ms Lee said. “The UK’s representative in Taiwan also has approached me for similar topics.” “Many people say Taiwan will compete with Hong Kong in the offshore yuan market. I don’t see it that way ... There are so many opportunities,” she said, adding that details have not yet been worked out. Taiwan will begin talks with Hong Kong and the UK on an offshore yuan centre in the first quarter, Ms Lee added. Bank of China Ltd has been appointed as the clearing bank for yuan transactions in Taiwan. Reuters