Macau Business Daily, January 29, 2013 by Business Daily

High inflation, faster wage growth

Year I Number 209 Tuesday January 29, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00 www.macaubusinessdaily.com

Even though inflation remained high last year, the median wage of Macau workers increased almost three times as much, official data show. The jobless rate held at 1.9 percent and there were fewer residents unemployed last quarter. Imported labour increased to take up most of the new jobs created in December.

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I SSN 2226-8294

HANG SENG INDEX 23735

23712

23689

23666

23643

Gas price fixing ‘no problem’: govt

23620

January 28

he government admits the city’s liquefied petroleum gas dealers are adjusting retail prices “in a kind of uniformity”. The effect is to reduce competition and boost profits on a product essential for cooking and heating in most homes. But the authorities say there is nothing wrong and there are no laws to promote fair competition on commodities, even though legislator Chan Meng Kam accuses the industry of price fixing. The Economic Services Bureau has pledged however to end the practice by revising laws and regulations. The bureau also wants to improve transparency on the pricing process. The Macau Fuel Industry Association says the cost hikes are simply in response to price increases imposed by Hong Kong suppliers.

HSI - MOVERS Name

%Day

WANT WANT CHINA

2.50

HENGAN INTL

2.49

CHINA RES LAND

2.19

WHARF HLDG

1.60

BANK OF COMMUN-H

1.56

CITIC PACIFIC

-1.12

ALUMINUM CORP-H

-1.32

NEW WORLD DEV

-1.59

BELLE INTERNATIO

-2.31

SANDS CHINA LTD

-2.59

Source: Bloomberg

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Lamborghini thrives thanks to city slickers With the casino business creating a number of young and rich residents, the number of Lamborghini cars sold in Macau doubled last year, outshining growth in global sales. With 10 more people on the waiting list for the Italian sports cars, a parade of Lamborghinis will be held tomorrow with the ultimate goal of setting up an owners club. Page 2

Sands China ‘earnings boost’ via 200 new tables Sands China Ltd has received Macau government approval for 200 extra gaming tables for its casinos and will have some of them in operation before the busy Chinese New Year holiday. The firm’s chief executive Edward Tracy confirmed the news at a press conference prior to the opening of the third hotel tower at its US$4 billion-plus (32 billion patacas) Sands Cotai Central property on Cotai. Page 3

China tide swells Macau hotels The growth in outbound mainland Chinese tourists is proving a blessing for Macau hotels, much more than for hotels in Taiwan’s major cities, a report says. The territory’s proximity to the mainland, the attraction of casino resorts for Chinese tourists and the limited supply of hotel rooms are helping to push up occupancy and hotel revenue much faster than in Taiwan, data show. Page 6

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business daily January 29, 2013

macau

Lamborghini sales double in 2012 Young, rich city slickers, typically in the casino business, are a growing market here for the Italian marque Tony Lai

tony.lai@macaubusinessdaily.com

he appeal of Lamborghinis to the young and rich, particularly those in the gaming industry, is behind a surge in sales of the Italian sports cars. The general manager of Kam Bo Motors Ltd, Thomas Wong Chor Hon, says 20 Lamborghinis were sold here last year, twice as many as in 2011. “This figure is very good, considering that Macau has a population of only some 500,000 people,” Mr Wong told Business Daily. “Hong Kong, with a population of about 7 million, has an average figure of only some 40 units, so the sales ratio is high here,” he said. Kam Bo has been a Lamborghini dealer for over two years. A Lamborghini showroom opened here in 2011. Growth in sales in Macau has outshone growth in global sales. The maker, Automobili Lamborghini SpA, says it sold 2,083 cars around the world last year, 30 percent more than in 2011. The main cause of the surge in sales here was the release of a new model – the Aventador LP 700–4, costing

HK$4.88 million

Retail price of the Lamborghini Aventador LP 700–4

HK$4.88 million (US$629,320) – according to Mr Wong. Automobili Lamborghini says it sold 922 Aventador LP 700–4s around the world last year. “Besides the new model, there are also more Macau people with the financial resources and will to buy sports cars,” Mr Wong said, “so when the new model came out, the motoring market became heated.” He said the growth of the gaming industry also boosted sales of Lamborghinis. “As Macau’s casino industry has become prosperous in recent years, more people have a bigger income and think about purchasing luxury car brands,” he said.

Not so fast Mr Wong said the performance of the gaming sector also brought more mainland Chinese working in related businesses to the city. “This is a driving force in the sales, and cannot be ignored as many of these people have to buy a car to travel across the border,” he said. But he said rich, young residents were the major source of demand. Mr Wong said his company had more than 10 names on its waiting list for Lamborghinis. It took six to nine months to deliver a new Lamborghini to Macau, he said. Mr Wong estimates that the number of Lamborghinis sold here this year will be similar to the number sold last year. “First, Macau is a small city and the number of Lamborghinis has reached a certain level,” he said. He estimates that there are now

As Macau’s casino industry has become prosperous in recent years, more people have a bigger income and think about purchasing luxury car brands Thomas Wong Chor Hon, general manager, Kam Bo Motors Ltd

about 50 Lamborghinis in the city. “Also, Macau’s economic growth cannot maintain such an outstanding pace every year,” Mr Wong said. The Monetary Authority of Macau predicted last week that real gross domestic product will grow at only a “low single digit” rate this year. It estimates that the economy grew

by 9 percent last year. Mr Wong is confident that in the long run buying interest in the Lamborghini marque will be sustained. “But the growth will not be rapid and it will not become very prevalent because the Lamborghini is … an expensive sports car,” he said.

‘Bad boy’s cars’ to cruise city streets The organisers of a parade of Lamborghinis to be held tomorrow also aim to set up a Lamborghini owners club Tony Lai

tony.lai@macaubusinessdaily.com

Chester Kim, overseas manager of JRG Convention & Exhibition Services

cavalcade of Italian sports cars will wind its way through the city tomorrow in the first event of its kind for Lamborghini owners here, the organisers say. “Macau has never seen an automobile gathering on such a scale,” the overseas manager of JRG Convention & Exhibition Services Ltd, Chester Kim, told Business Daily. Mr Kim said 12 to 15 Lamborghinis would parade around the city. Later JRG and the other organiser, Kam Bo Motors Macau Ltd, which is a Lamborghini dealer, will hold a gathering for Lamborghini owners, managers of listed companies and Hong Kong celebrities at the Cubic nightclub.

“We have seen there is a lot of potential in the event market here,” Mr Kim said. “Macau welcomes many tourists of different nationalities and this is a city for leisure. I believe the outcome of holding such event here will be similar as in Hong Kong or the mainland,” he said. He said interest here in Lamborghinis, a make of sports car dubbed the “bad boy’s car”, was high. Last year 20 Lamborghinis were sold in Macau, double the number sold in 2011, according to Kam Bo’s general manager, Thomas Wong Chor Hon. “This event will bring Lamborghini owners in Macau together to [promote] better communication,” Mr Wong said.

“It also serves as a starting point because we hope to establish an owners club soon,” he said. He said the club could be inaugurated before the end of the year. Kam Bo estimates that about 50 people here drive Lamborghinis. Mr Wong said this year is the 50th anniversary of the advent of the Lamborghini marque. “With an owners club, it is easier for the manufacturer to bring the latest information about Lamborghini to the owners,” he said. The organisers have spent about 500,000 patacas (US$62,500) on tomorrow’s event. Mr Kim expects over 150 people to show up at the gathering after the parade.

January 29, 2013 business daily | 3

MACAU

Sands China gets 200 fresh tables Busy news day for casino op, also announcing likely second quarter build start for new resort The Parisian Michael Grimes

michael.grimes@macaubusinessdaily.com

ands China Ltd has received Macau government approval for 200 extra gaming tables for its casino operations there and will have some of them in operation before the busy Chinese New Year holiday. The news was given by the firm’s president and chief executive Edward Tracy yesterday at a press conference prior to the opening of the third hotel tower at its US$4 billion-plus (32 billion patacas) Sands Cotai Central property on Cotai. The hotel tower, known as the Earth Tower, is the second of two Sheraton Hotel towers and adds 2,067 rooms, bringing the total of Sheraton rooms to 3,896 and the total of rooms at the property to around 6,000. The Sands China boss also confirmed that a former Federal Bureau of Investigation agent had been working for the company in Macau “for about a month”, assisting with compliance work on anti-money laundering regulations, and that Sands China would give employees a pay rise this year. He didn’t say how much or precisely when the increases would be announced. The extra table allocation for Sands China will add 15 percent to the firm’s table inventory and is likely to boost gross revenue and earnings significantly said a note from Kenneth Fong of J.P. Morgan in Hong Kong last night. Sands China reported a 6.1 percent increase year-on-year in gross gaming revenue from its higher margin mass-market table segment at The Venetian in the third quarter last year. The property recorded a 9.7 percent increase in total adjusted property EBITDA (earnings before interest, taxation, depreciation and amortisation) in the same period.

Earnings upside “With additional gaming tables approved by the government now, Sands’ total number of gaming tables will increase by 15 percent from 1,335 to 1,535,” said Mr Fong. “We received a letter from the government last week,” said Mr Tracy during the press event,

confirming the table allocation. “We received the authorisation for those 200 tables; those tables will be distributed under the supervision of the DICJ [local gaming regulator],” he added, though he declined to say where precisely they would go. “We’re not in the business of disclosing every business decision that we make or every marketing decision that we make. We will distribute those tables as management sees fit, and some of them will be opening on or before Chinese New Year,” he stated. These are tables Sands China would have liked to get four months ago, when Pacifica – the second casino at Sands Cotai Central – opened its doors. It meant Sands China had to reshuffle its existing table inventory from its other properties to populate Pacifica.

15%

Increase in Sands China Tables “After moving the gaming tables away for SCC’s [Sands Cotai Central’s] opening in 2012, some of The Venetian’s floor space was replaced with slots, electronic tables, doubledealer tables or semi-mechanical tables which have relatively lower yield. Venetian Macao’s mass-market volume was negatively impacted somewhat since August 2012,” added Kenneth Fong of J.P. Morgan in his note following the news. “With 200 more tables, Sands China should be able to replace some lower yielding units with higher yielding table games at The Venetian casino. This should lead to mass market upside. On top of that, Venetian is gradually completing its new VIP facilities upgrades.” Sands China didn’t get the extra tables in September 2012 because the

government was publicly committed to a 5,500-table cap on live dealer gambling tables for the Macau market until the end of 2012. That constraint is now eased, because a new version of the table cap came into effect from January. This anticipates three percent annual compound growth in live table numbers until 2023. The news on the table allocation was confirmed just before Hong Kong trading hours ended. Sands China Ltd finished the day down 2.59 percent at HK$37.55.

Dividend talk Mr Tracy was asked during yesterday’s press conference whether the company – which on Friday announced it would pay an interim dividend of HK$0.67 per share to stockholders “on or about” February 28 – would in future increase the dividend payout ratio; the percentage of earnings paid to shareholders in dividends. Mr Tracy replied: “We paid a dividend again and increased it by 15 percent. It would be hard to forecast where it goes from here. But I think it’s clear the company believes there will be recurring dividend. And so long as business stays as strong as it has been I expect it will continue. It’s a good policy to return capital to the shareholders.” Kenneth Fong of J.P. Morgan added in his note: “Based on last year’s experience, we expect the final dividend to be the same as the interim. As such, this would translate into a full year dividend of HK$1.34 per share or 3.5 percent yield at the current level. Among the six operators, we believe Sands has higher dividend sustainability and predictability, judging from its earnings profile (80 percent of its earnings are from the stickier mass and non-gaming segment) and capex needs [expected] (to decline sharply as SCC finishes).” The total capital cost for Sands Cotai Central is expected to be US$5 billion said Sheldon Adelson, chairman of the parent company Las Vegas Sands Corp. last April.

The Parisian budget ‘US$2.8 bln’: Sands China boss Figure up from September estimate given by LVS president Michael Leven

he cost of The Parisian, the Frenchthemed casino resort planned for Cotai Parcel 3 is likely to be at least US$2.8 billion (22.4 billion patacas) said Edward Tracy president and chief executive of Sands China Ltd yesterday. “That’s an early estimate,” Mr Tracy told Business Daily. In September when the project was officially first announced, Michael Leven the president and chief operating officer of Sands China’s parent Las Vegas Sands Corp., mentioned a project budget of US$2.5 billion. Some analysts have recently suggested the Macau government’s requirements on capital spending for new casino schemes has been creeping up relative to the number of new tables issued to them – possibly as part of the authorities’ policy to diversify the tourism sector and general economy away from gambling. But Mr Tracy said the budget on The Parisian wasn’t subject to any external pressures. “That’s our budget. We haven’t had to get any guidance from anybody about building integrated resorts. We invented it [the IR concept] we delivered it. Look around. We built plenty of stuff that’s non-gaming. As we get through the design process, we want to add this, we want to add that… that’s a result of market research and design,” he pointed out. The Sands China boss added that construction on The Parisian was likely to start in the second quarter of this year, and would take about 36 months to “construct and complete”. “In relation to Parcel 3 we received the first permit, which allows us to do what’s called site preparation. That’s already occurring. We started that process about three weeks ago. We’re awaiting the second permit which allows us to begin pilings – concrete and steel – and then the overall plan approval. Again, we expect all that to come over a period of months. That’s the normal process,” said Mr Tracy, adding he expected the permit to start piling work “sooner than” the second quarter. M.G.

Happy day – a new hotel tower and 200 more gaming tables

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business daily January 29, 2013

macau Chui to meet new Guangdong party chief Chief Executive Fernando Chui Sai On is heading for a courtesy meeting with Hu Chunhua (pictured), an incumbent Politburo member and Communist Party Secretary for Guangdong province today. The 49-year-old Mr Hu replaced his fellow Politburo member Wang Yang as Guangdong party secretary in mid-December after spending most of his career in Tibet, Hebei and Inner Mongolia. Prior to meeting Mr Chui, Mr Hu met with the Hong Kong members of the Chinese People’s Political Consultative Conference and Taiwan trade associations last week over regional cooperation.

Dealers profiting from LPG price rises – govt Synchronised adjustments of the retail prices of LPG boost profits, but this is not wrong, say the government and the dealers Tony Lai

tony.lai@macaubusinessdaily.com

he way liquefied petroleum gas dealers synchronise adjustments in retail prices is permissible in a free market economy because the dealers are simply striving for higher returns, the Economic Services Bureau says. However, the bureau also says it will make the price-setting mechanism more open and have the law and regulations amended to improve official oversight of the setting of prices. The bureau said so in a reply this month to an enquiry by Legislative Assembly member Chan Meng Kam. In view of several rises in LPG prices last year, Mr Chan asked in November whether synchronised adjustments by dealers constituted price-fixing. The director of the Economic Services Bureau, Sou Tim Peng, said in the reply that his bureau had noted at first “a kind of uniformity” in changes in LPG prices. Mr Sou said dealers usually followed prices set in Hong Kong or by a quarterly review by the Macau Fuel Industry Association. But he said that not all dealers here were directly linked to Hong Kong suppliers, so independent dealers “should have more freedom in setting prices”. However, the consequences of exercising this freedom are reflected in government data on the import prices paid by eight dealers last year, and on the retail prices the dealers charged. Last February all eight dealers raised their retail prices by about 2 patacas (US$0.25) per kg to between 13.5 patacas and 16.6 patacas per kg, after the Macau Fuel Industry Association announced an increase of 2.05 patacas. But only four of the dealers had to pass on to consumers a

If you see others raise or cut prices, you surely have to follow to be competitive Lai Weng Wa, president of the Macau Fuel Industry Association

Dealers will cut retail prices of LPG by 0.98 pataca per kg today

commensurate increase in import prices, because they had already paid for sufficient supplies for the first three months of the year. The import prices paid by two of the dealers remained unchanged after the increase in retail prices, one paying about 9.20 patacas per kg and the other about 7.60 patacas.

Small market Mr Sou said the price adjustment mechanism “should be regarded as a way for the industry to strive for profits and higher returns under the

No date for airport expansion discussion

he Macau International Airport master plan has been changed to take into account a new hangar for private jets and the capital injection into the airport operator. But, in a written reply to Business Daily, the Civil Aviation Authority of

Macau said there is still no timeline for when the plan might be sent to the Executive Council. The Portuguese-language newspaper Tribuna de Macau first reported last week that the plan partially approved by the Secretary

free market mechanism”. His bureau implied that there is nothing wrong with the way dealers set retail prices, as no law here regulates how the prices of commodities are set. But Mr Sou said his bureau would seek greater influence over commodity prices by making pricesetting mechanisms more open and amending the law and regulations. He said the bureau had worked with other public bodies such as the Legal Affairs Bureau and the Consumer Council on ways to use the law to prevent price-fixing and

unfair competition. The president of the Macau Fuel Industry Association, Lai Weng Wa, defended the way LPG dealers adjusted retail prices, arguing that they only followed price changes in Hong Kong. “Macau is a small market. If you see the others raise or cut prices, you surely have to follow to be competitive,” Mr Lai told Business Daily. He declined to comment further on the bureau’s reply to Mr Chan. Mr Lai’s association announced that it would cut retail prices of LPG by 0.98 patacas per kg today.

for Transport and Public Works, Lau Si Io, had finally been completed. The changes made to the document were mainly done in response to the Macau International Airport Co Ltd’s decision to build a new hangar, the aviation regulator said. In August the operator called for bids to build a hangar exclusively for private jets as part of a plan to make the airport more profitable. Business jet traffic continued to grow in 2012, with private jet movements rising by a quarter from the previous year to 1,416, the authority said.

Another reason was “the improvement of their financial situation” thanks to an injection of capital made last year by the government and Sociedade de Turismo e Diversões de Macau SA. The document was awaiting a new financial report but “the other contents of the Master Plan were not changed,” the authority stressed. But the regulator declined to disclose any further details, stressing that the plan must be presented to the Executive Council before it can be published. T.A./V.Q.

January 29, 2013 business daily | 5

MACAU

Wage increases outpace inflation Salaries rose even faster than inflation in 2012 and fewer non-residents were jobless. Unemployment ended 2012 at 1.9 percent Vítor Quintã

vitorquinta@macaubusinessdaily.com

he purchasing power of Macau workers seems to have improved last year, as wages rose almost three times as much as inflation, official data show. The median monthly salary reached a new record of 12,000 patacas (US$1,500) in the October-December, up by 300 patacas quarter-to-quarter, the S ta tis t ics and Ce n sus Se rvic e announced yesterday. That figure is also up by 1,700 patacas or 16.5 percent from the same quarter of 2011 – a growth pace much stronger than inflation in the same period, which stood at 5.58 percent in the October-December period. Yearly inflation rose 6.11 percent in 2012. Meanwhile the earnings of resident workers remained unchanged at 13,000 patacas, which means it was non-residents who mostly felt last quarter’s wage increase. No data on the wages of imported labour are available, even though they made up almost one-third of the city’s workforce (31.6 percent) in December. In fact, non-resident workers took

The booming retail trade was one of the main sources of new jobs last month

up most of the over 400 new jobs created last month, which pushed total employment to about 350,000, a new record high. The booming retail trade and the slow-recovering manufacturing industry were the main hirers, while the construction sector lost workers in

December, including 582 outside staff. With more non-residents coming in, the labour force rose b y 5 0 0 to a n a l l - ti m e h i g h o f 356,700, of which 72.4 percent were employed, down by 0.1 percentage points from November. The number of jobless and

the unemployment rate remained unchanged at 6,600 and 1.9 percent respectively. Data compiled by the International Labour Organisation indicate that Macau has the thirdlowest unemployment rate in the world, above only Qatar’s 0.4 percent and Thailand’s 0.9 percent. And a significant percentage of the unemployed were young people and graduates looking for their first job: 16.1 percent, down by 0.6 percentage points from November. But there was one sign that the labour market became even tighter, with the jobless rate of Macau residents for the last quarter falling by 0.2 percentage points to 2.4 percent, the lowest since the Statistics and Census Service began collecting data in 2008. The overall unemployment rate will continue hovering at around 2 percent this year, while the number of non-resident workers “is expected to trend upwards at a gradual pace,” the Monetary Authority of Macau predicted in its latest Monetary and Financial Stability Review, released last week.

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business daily January 29, 2013

macau comment

Serve to lead in the new lunar year

Macau, Hong Kong regional hotel champs Taiwan venues finding tough to squeeze extra revenue from value-conscious package visitors Michael Grimes

michael.grimes@macaubusinessdaily.com

Zen Udani

Assistant Professor of Management, University of Macau

elebrating the feasts of both the Gregorian and Chinese calendars, people in Macau are afforded the opportunity to celebrate a new year twice. Such auspicious occasions are always good for renewing personal and collective resolutions to improve and develop. In a society where service to others is esteemed as a supreme value, leaders function properly only if they espouse and practice servant leadership. “The servant leader”, according to Robert Greenleaf, “is servant first. It begins with the natural feeling that one wants to serve. Then conscious choice brings one to aspire to lead.” Such a leader, whether in the realm of business, of education or of politics, sees leadership not as a tool to overpower or dominate others but as a means to serve them better. Thus, any leadership position is always others-centred and people-centred. Greenleaf has criteria to judge genuine servant leadership by. “The best test is: do those served grow as persons; do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants?” he says. Thus, a servant leader needs to keep in mind the growth and development of the whole person. While material necessities count, human beings have much more important non-material needs that have to be met as well. In June last year there were 24,280 civil servants in Macau. The number is growing. This signifies the government’s commitment to serve the populace. But to make this commitment fruitful and real, its leaders have to strive for both professional competence and character excellence. Civil servants, too, need to be empowered to perform their duties well. Their bosses should do this by giving them more-than-adequate opportunities for training and development, and by setting a good example. To be genuine servant leaders, managers have to be useful to others. Those that shun the idea of being useful, even to ordinary people, end up using others for selfish purposes. Thus, anyone who is supposed to serve must always earnestly ask himself this question: How can I be useful to people? Servant leadership is definitely not just for those in high positions. Anyone that influences other people positively and contributes to their total wellbeing exercises this brand of leadership. Hence, a household helper that brings joy and peace to a family or a security guard that enhances the climate of happiness in an office is a veritable servant leader. The Lunar New Year can, indeed, be a propitious moment to adopt servant leadership as a personal resolution and a suitable valueproposition. It requires our whole heart and mind to make it a living reality.

Anyone who is supposed to serve must always earnestly ask himself this question: How can I be useful to people?

Nothing to smile about – Taiwan hotels struggling to squeeze cash out of visitors

he opening up of the mainland China market to outbound tourism is benefiting Macau’s hotel revenue proportionately more than hotels in Taiwan’s major cities, suggest data collected by HVS, a consulting and services organisation focused on the hospitality, gaming and leisure sectors. A new quarterly report from HVS’s Hong Kong office – ‘Hong Kong, Macau, China and Taiwan Update’ – compares the revenue and occupancy performance of hotels in China’s two Special Administrative Regions with those of hotels in three of Taiwan’s major cities – Taipei, Kaoshiung and Taichung. Macau’s proximity – via a land border – to major feeder markets of the mainland’s Guangdong province, the enormous attraction of casino resorts for many Chinese tourists and the limited supply of land and therefore of hotel capacity in Macau gives it a clear advantage over the casino-less island of Taiwan. The latter is at least an hour away from southern China by air and tourism – sometimes driven by family connections – is often dispersed beyond the major urban centres. But the idea that a rising tide – in the form of ever more outbound mainland tourists – should carry all boats across Greater China markets when it comes to hotel revenue, hasn’t yet happened in practice according to the data. “Momentum for visitor arrivals growth to Taiwan continued in quarter three of 2012. The territory received more than 1.75 million visitors in the quarter three, reflecting a growth rate of 22.8 percent year-on-year,” says the HVS Hong Kong report by Cathy Luo and Daniel J Voellm. “Mainland China was the sole and key driving force, with visitor arrivals from the mainland growing by 60.7 percent year-on-year. A simplified visa application process and the growing popularity of Taiwan as a destination were the principal reasons for the increase,” it adds. But the data collected by HVS from Macau Government Tourist Office, Hong Kong Tourism Board and the Tourism Bureau, Ministry of Transportation and Communications,

in Taiwan, show that despite the near 61 percent rise year-on-year in the number of mainland tourists to Taiwan in the third quarter of 2012, occupancy rates of hotels in all three Taiwanese cities studied actually fell.

Lagging revenue While this could be in part a function of fresh hotel supply coming into the market precisely in response to more mainland tourists, in the case of Taipei hotels, the average room rate and the revenue per available room (RevPar) fell quarter-onquarter. A quarter-on-quarter fall in RevPar also happened in Taichung hotels between the fourth quarter of 2011 and the end of the second quarter 2012, although that indicator did show a 7.3 percent quarter-onquarter rise in the third quarter. HVS Hong Kong suggests a key reason for the relative underperformance of Taiwan hotels in key cities could be that many of its visitors are package tourists keenly seeking value and with lower discretionary spending than those

travelling to Macau and Hong Kong. “Much of the demand from mainland China is still driven by tour groups at the moment, despite the launch and expansion of an individual travel scheme,” says HVS. “While Taiwan hotels have benefited from the volume of mainland Chinese tourists, hoteliers are finding it challenging to increase per capita spending from this segment, and this has had an impact on average rate performance,” says the report. “However, with a growing middle class and related spending power, and as mainland Chinese visitors get familiar with Taiwan as a destination, the traveller profile is likely to shift from value-oriented tour groups to upscale individual travellers in the mediumto-long term,” it adds. HVS Hong Kong’s clients include New World Development Co. Ltd, a property firm controlled by Chow Tai Fook Enterprises Ltd which invested more than HK$4 billion in Casino L’Arc Macau and whose chairman Cheng Yu Tung is a 0.11 percent shareholder in Macau casino developer SJM Holdings Ltd.

Hotel performance, Macau, Hong Kong and Taiwan Market Hong Kong

Macau

Taipei

4Q11 Occupancy (%)

3Q12 88.1

89.9

Average Room Rate (HK$)

1,558

1,483

1,415

1,414

RevPar (HK$)

1,432

1,295

1,246

1,270

RevPar YoY Change (%)

14.9

13.3

10.5

10.7

Occupancy (%)

90.8

87.3

85.7

89.6

Average Room Rate (HK$)

1,516

1,472

1,376

1,372

RevPar (HK$)

1,377

1,285

1,179

1,229

RevPar YoY Change (%)

23.6

15.7

4.5

3.5

Occupancy (%)

83.3

75.5

79.2

73.8

Average Room Rate (HK$)

3,964

3,975

4,182

3,930

RevPar (HK$)

3,304

3,003

3,314

2,901

8.6

7.5

18.6

10.9

74.7

61.3

68.6

66.7

Average Room Rate (HK$)

2,328

2,721

2,302

2,387

RevPar (HK$)

1,738

1,669

1,579

1,593

Occupancy (%)

RevPar YoY Change (%) Taichung

2Q12 87.3

RevPar YoY Change (%) Kaoshiung

1Q12 91.9

6.1

9.8

4.2

*-1.0

80.7

71.9

78.9

74.5

Average Room Rate (HK$)

2,406

2,603

2,272

2,440

RevPar (HK$)

1,942

1,871

1,792

1,818

8.5

14.6

9.2

16.9

Occupancy (%)

RevPar YoY Change (%) Source: HVS Hong Kong, MGTO, HKTB, MoT Taiwan

January 29, 2013 business daily | 7

MACAU

Investment in Guangdong surging: vice-governor Macau investment in neighbouring province growing faster than Hong Kong’s Tony Lai

tony.lai@macaubusinessdaily.com

nvestment from Macau companies in the neighbouring Guangdong province underwent a rapid growth last year, increasing by nearly half, said Guangdong’s

vice-governor Zhao Yufang. The Macau investment value officially approved but not yet implemented soared by 47.7 percent year-on-year, Ms Zhao said on Sunday

quoted by the Chinese-language newspaper Macao Daily News. That growth is even more impressive considering that the overall Macau and Hong Kong

invested in the province only rose up by 4.5 percent. The vice-governor did not elaborate further on the investment in a meeting with Hong Kong and Macau members of the Guangdong Provincial Committee of the Chinese People’s Political Consultative Conference. She only revealed that the province attracted capital totalling US$65.7 billion (525.6 billion patacas) from the two regions in the past five years. The latest data from the Statistics Bureau of Guangdong shows Macau and Hong Kong accounted for 72.8 percent – or US$17 billion – of the external investment officially approved in the first nine months of last year. Ms Zhao also said the value of imports and exports between Guangdong and the two cities went up by 17.8 percent from a year before to US$229 billion in 2012. That growth was much faster than the increase in Guangdong’s total trade last year, which expanded by 7.7 percent year-on-year to US$983.8 billion, she added. Including the re-exports – goods shipped in only to be shipped out, with no value added to them here – from Macau and Hong Kong, the two cities accounted for over 60 percent (more than US$590 billion) of all trade. Ms Zhao pledged Guangdong would quicken the steps to “basically materialise” the liberalisation of trade services between the three regions this year. Meanwhile, Guangdong continued to be the powerhouse for mainland China last year, accounting for onefourth of all trade in the entire country.

8 |

business daily January 29, 2013

GREATER CHINA HK journalists publish press freedom petition Hong Kong journalists ran a petition in newspapers yesterday urging the city’s Beijing-backed leader to withdraw a proposed law which they said would infringe press freedom. Local and foreign journalists have slammed a government plan to restrict access to information about company directors, after such details were used in a series of investigative reports to expose the wealth of Chinese officials. The petition, which took the form of a full-page advertisement headlined “Secrecy breeds corruption”, was published in five Hong Kong dailies and signed by nearly 1,800 reporters, journalism professors and students.

COSCO eyes turnaround options The world’s largest bulk shipper, China COSCO Holdings Co Ltd, faces the risk of delisting for its Shanghai shares if it fails to turn around in 2013, after having warned of a second straight year of losses. China COSCO, which posted a net loss of 10.4 billion yuan (US$1.7 billion) for 2011, ranks as the world’s sixth largest container ship operator, but has been battling the impact of a supply glut and weak demand that have becalmed the industry. State-controlled COSCO and the Chinese government are reviewing ways to restructure the company’s business and help make it profitable again, analysts said.

Fonterra CEO seeks to reassure China Fonterra Cooperative Group Ltd, the world’s largest dairy exporter, assured its biggest customer China that traces of an agricultural chemical found in some milk products posed no health risk, chief executive Theo Spierings said. China and Taiwan are conducting tests after the Auckland, New Zealandbased company said last week that minimal levels of the fertilizer additive dicyandiamide, known as DCD, were present in some samples, Mr Spierings said. Fonterra, the farmer-owned group that accounts for about 40 percent of the global dairy trade and sends about 20 percent of its exports to China, hasn’t had any customer complaints and no goods had been recalled or blocked, he said.

ERA ex-chairman ‘dismayed’ The former chairman of a Chinese mining equipment firm bought by Caterpillar Inc. said yesterday he was dismayed by allegations of accounting misconduct at a subsidiary that prompted the U.S. firm to take a US$580 million writedown. Emory Williams Jr. said Caterpillar had conducted extensive due diligence before its takeover of Hong Kong-listed ERA Mining Machinery Ltd last June. “We were shocked and dismayed to learn, from press reports, about the very significant goodwill impairment that Caterpillar is taking in relation to the acquisition of ERA’s subsidiary Siwei,” Mr Williams said in a statement.

China kicks off cross-border yuan loans Qianhai loan scheme starts with 2 billion yuan

hina kicked off its crossborder yuan loan scheme in Qianhai yesterday with Hong Kong-based banks signing some 2 billion yuan (US$321.5 million) in lending to mainland Chinese firms for 26 projects, a banker with knowledge of the matter told Reuters. The agreements are a step towards opening China’s capital account and internationalising its currency. China had announced it would let firms in Qianhai, a US$45 billion special economic zone in Shenzhen near Hong Kong, take out yuan loans from banks in Hong Kong, with tenors and interest rates to be set independently, also a major step towards liberalising the country’s interest rate mechanisms. Fifteen banks agreed to provide a total of 2 billion yuan in loans for 26

projects in Qianhai, the banker who attended the signing ceremony said. “Cross-border loans in Qianhai will further accelerate the two-way flows of yuan,” Steve Wang, Hong Kong-based head of fixed income at BOCI Securities Ltd, a subsidiary of China’s fourth-biggest bank, said before the announcement. “China’s target is to make Qianhai a new financial hub similar to Hong Kong, which is free and vibrant.” The Bank of China Hong Kong Group said yesterday that Bank of China (Hong Kong) Ltd and Nanyang Commercial Bank Ltd signed agreements with five enterprises registered in Qianhai, to provide them directly with crossborder yuan loans. “The new policy offers banks in Hong Kong a new channel to deploy

their RMB funds and promotes RMB circulation between the two places, facilitating the development of crossborder RMB business,” said Gao Yingxin, deputy chief executive of Bank of China Hong Kong, in a statement. Standard Chartered Bank Hong Kong also said it had entered into a cross-border yuan lending framework agreement without elaborating. China set up the Qianhai business zone offering freer currency movements and Hong Kong professional standards last June. The government released rules in December for companies that incorporate in the area to borrow yuan loans from Hong Kong banks with interest rates and tenors to be fixed independently. Analysts say the offshore yuan loan

Tripling in debt drags on economy Borrowing almost tripled to US$1.7 trillion since 2007

hinese companies are spending more than ever to service debt after their borrowing almost tripled over five years, prompting strategists to warn of rising default risk and a threat to economic growth. Total short- and long-term borrowing by 3,895 publicly traded non-financial companies rose to almost US$1.7 trillion in their latest filings, from US$604 billion at the end of 2007, data compiled by Bloomberg show. Financing costs, including interest, on all forms of debt climbed to the highest level as a percentage of gross domestic product last year, according to Sanford C. Bernstein & Co. Bernstein says that means less cash for investment to fuel the world’s second-largest economy, while Royal Bank of Scotland Group Plc says the threat of defaults will hold back interest-rate liberalisation. The average 10-year yield for top-rated company bonds is near a 13-month high at 5.27 percent, compared

with the 2.6 percent yield in a Bank of America Merrill Lynch global corporate index. “There’s just a lot more debt in China today than there was really ever in the past, relative to nominal GDP,” said Mike Werner, a Hong Kong-based analyst at Bernstein. “More and more of the country’s resources have to be put to just financing outstanding debt, and that itself is a headwind for economic growth.” While the nation exited a sevenquarter slowdown in OctoberDecember as the government eased monetary policy, incoming Premier Li Keqiang may need to confront the fading effects of government support, a likely pickup in inflation and rising risks from shadow banking. Price growth accelerated to a seven-month high in December, driving up benchmark bond yields. GDP grew 7.8 percent in 2012, the slowest in 13 years. Chinese banks doled out 8.2 trillion

yuan (US$1.3 trillion) of new loans in 2012, 10 percent up from a year earlier and the second-highest level on record, central bank data show. The

There’s just a lot more debt in China today than there was really ever in the past, relative to nominal GDP Mike Werner, Sanford C. Bernstein & Co

January 29, 2013 business daily | 9

GREATER CHINA Yuan deposits in Hong Kong increased to 603 billion yuan in December

China Merchants soars on land report China Merchants Holdings International Co., a port operator whose parent owns land in Shenzhen’s Qianhai district, jumped the most in three years after a report on talks between officials and property owners there. China Merchants Holdings gained 8.8 percent, the most since June 1, 2009, to close at HK$28.40 in Hong Kong trading yesterday. It was the biggest percentage gainer in the city’s benchmark Hang Seng Index, which rose 0.29 percent to 23,659. Shenzhen officials may soon review land policies for Qianhai, the Hong Kong Economic Times reported yesterday. About 27.5 percent of the land in Qianhai is owned by shipping box maker China International Marine Containers Group Co. and logistics service provider Shenzhen International Holdings Ltd and China Merchants Group Ltd, parent of China Merchants Holdings, the newspaper said, citing its own calculation. China International Marine gained 18 percent to HK$16.46 in Hong Kong trading. Shenzhen International soared 21 percent, the most since April 2000, to close at HK$1.09.

market still carries a lower interest rate than the onshore market, which makes the offshore yuan loan market attractive to Chinese enterprises. The new loan business will also offer Hong Kong banks more options to diversify their yuan investments, in addition to existing channels such as interbank lending and dim sum bond investments. Banks involved include HSBC Holdings Plc, Hang Seng Bank, Bank of East Asia Ltd and Hong Kong branches of several Chinese banks, such as the Industrial and Commercial Bank of China Ltd, China Construction Bank Corp, and Agricultural Bank of China Ltd. The outstanding yuan loans in Hong Kong stood at around 70 billion yuan by November 2012, more than double the amount at the end of

2011, according to the Hong Kong Monetary Authority. Yuan deposits in Hong Kong increased to 603 billion yuan in December, up 5.6 percent from a month earlier, the Monetary Authority added. China has been steadily expanding the role Hong Kong plays in internationalising the yuan, which it hopes one day will be a global currency like the dollar, and in building up China’s financial markets. Yi Gang, vice governor of China’s central bank, said the Chinese government’s promotion of the internationalisation of the yuan was proceeding. He added that China was removing discrimination against the yuan and letting it act as other reserve currencies do.

Stocks rise to 7-month high on industrial profits gain

hina’s stocks rose, driving the benchmark index to the highest level in seven months, after industrial profits climbed for a fourth month in December. Sany Heavy Industry Co. led a rally for heavy machinery stocks after a report showed industrial companies’ net income increased 17.3 percent last month. Citic Securities Co. advanced to the highest level since April 2011 after regulators expanded the number of stocks allowed for margin trading and short selling. The Shanghai Composite Index rose 2.4 percent to 2,346.51, the highest close since June 1 last year. The CSI 300 Index climbed 3.1 percent to 2,651.86. The Shanghai index has risen 19.7 percent since approaching a near four-year low on December 3 amid signs of an economic recovery. The CSI 300 rallied 26 percent. “Industrial company profits are fuelling gains for the index,” Huang Cendong, an analyst at Tebon Securities Co., said. “In the longer term, we expect Chinese stocks to rally as company earnings in general will be better this year.” Hong Kong stocks also advanced, with the city’s benchmark index gaining for the first time in four days and closing at its highest level since May 2011, after profits at China’s industrial companies climbed for a fourth month. Anhui Conch Cement Co., China’s biggest maker of the building material, rose 3.5 percent. Dongfeng Motor Group Co. gained 3.6 percent after Volvo AB agreed to buy a minority stake in the commercial vehicle unit of the Chinese automaker.

The Hang Seng Index gained 0.4 percent to close at 23,671.88 in Hong Kong, with about two shares rising for each that fell. The gauge is heading for a fifth monthly advance, the longest streak of such gains since July 2009, amid optimism China’s economy will continue to recover. “Improving economic data has been a major driver for the equity market rally,” said Castor Pang, head of research at Core-Pacific Yamaichi International Ltd in Hong Kong. “We’re still seeing some upside momentum. Investors are probably waiting for company earnings to come out before committing fresh funds into the market.” The Hang Seng China Enterprises Index of mainland companies added 0.8 percent to 12,100.08. Profits at Chinese industrial companies increased 17 percent to 895 billion yuan (US$144 billion) in December, the fourth month of advance, the National Bureau of Statistics said on Sunday. Bloomberg News

RMB895 billion Profits at Chinese industrial companies in December

Reuters

Beijing reviewing game consoles ban Sony, Nintendo rise as investors welcome media report

S Chinese companies becoming ‘credit junkies’, analysts say

government quota for new lending may be set at 9 trillion yuan this year, Caixin reported last week. A 17.6 trillion-yuan binge of stimulus lending in 2009-2010 stoked inflation, weakened banks’ financial buffers and lead to an increase in non-performing loans. Since then, China’s economy has become a “credit junkie, requiring increasing amounts of debt to generate the same unit of growth,” analysts Edward Chancellor and

Mike Connelly at investment firm GMO LLC wrote in a research note this month. Total credit in the economy, including items off bank balance sheets, climbed to about 190 percent of GDP by the end of 2012, up from 124 percent in 2008, Fitch estimated this month. The burden may need government resources to resolve, harming China’s credit outlook, the ratings company said. Bloomberg News

ony Corp. and Nintendo Co., Japan’s biggest makers of gaming devices, rose after China Daily said the world’s most-populous country may end a 12-year ban on the sale of video-game consoles. Sony, the maker of PlayStation machines, jumped 9.1 percent in Tokyo trading to 1,407 yen (US$15.5), highest since April 2012. Nintendo, the creator of Super Mario, added 3.4 percent to 9,630 yen, the highest since December 7, in Osaka. China banned the consoles in 2000 because of concerns about the potential harm to the physical and mental development of young people. The Ministry of Culture is now holding discussions with other departments about potentially ending the ban, the state-run China Daily newspaper reported yesterday, citing a person it didn’t identify. “Investors are welcoming the report,” said Mitsuo Shimizu, a Tokyobased analyst at Iwai Cosmo Holdings

Inc. “It would open up a new and huge market for the video-game makers.” The Chinese console ban was introduced by seven ministries in 2000, and all of them would need to agree to end it, China Daily said. A spokeswoman in the Ministry of Culture’s press office said it couldn’t immediately comment. “Sony has always regarded China as a promising market for the game operation and has been studying and preparing for possible business opportunities,” Satoshi Fukuoka, a spokesman for Sony’s game unit, said yesterday. Sony has been in “constructive discussions” with regulators in China, he said, declining to elaborate. Yasuhiro Minagawa, a spokesman for Nintendo, declined to comment. The Osaka-based company makes the Wii and Wii U consoles. Game consoles are available through black-market retailers. Bloomberg News

10 |

business daily January 29, 2013

ASIA Vietnam’s trade surplus narrowed Vietnam recorded a smaller trade surplus in January as demand for imports increased in an economy that is forecast to rebound from the slowest growth since 1999. Exports exceeded imports by US$200 million in January, after a revised US$498 million in December, according to preliminary figures released yesterday by the General Statistics Office in Hanoi. Exports fell to US$10.1 billion in January from a revised $10.36 billion in December. Shipments climbed 43.2 percent from a year ago, according to the Statistics Office. Imports rose to US$9.9 billion in January from a revised US$9.86 billion in December, it said.

Myanmar gets US$952 mln in fresh loans Government gets total debt relief of US$6 billion as aid flows set to rise

yanmar has cleared its arrears to the World Bank and Asian Development Bank and secured a huge debt writeoff by creditor countries grouped in the Paris Club, clearing the way for aid donors to step up work to support the government’s reforms. Since taking office at the head of a quasi-civilian government in 2011, Myanmar President Thein Sein has freed political prisoners, unmuzzled the media and begun to reform the economy with a new foreign investment law and an exchange rate determined more by market forces. In response, Western countries have eased sanctions imposed on the previous military regime. International financial institutions have offered technical help but have been prevented from doing more by debt arrears accumulated under the military, which, under their rules, stopped them offering new loans. However, yesterday, the Asian Development Bank (ADB) said the arrears owed to it had been cleared with the help of Japan, so it could resume operations in Myanmar. It offered a US$512 million loan for

social and economic projects. The World Bank said Myanmar had also paid the money owed to it, again with the help of Japan, and it had responded with a US$440 million credit. The government said in a statement it had met creditors grouped in the Paris Club last Friday and they had agreed to cancel half of the arrears Myanmar owed them in two stages, rescheduling the rest

KEY POINTS Government says Paris Club deal worth US$6 bln Japan helps it clear arrears to World Bank, ADB Development banks now able to resume full lending IMF also helping to craft economic policies

over 15 years, with seven years’ grace. On top of that, Norway had cancelled all the US$534 million owed to it, while Japan was cancelling more than US$3 billion, it said. “These agreements result in total debt relief of around US$6 billion, that is, more than 60 percent of total debt,” the government said. Finance Minister Win Shein said in the statement this marked “an era of new relationships in which Myanmar is committed to fully cooperate with all members of the Paris Club”. He promised that resources freed up by the debt relief would be used for development projects and poverty reduction.

Japanese backing The Manila-based ADB said bridge financing provided to Myanmar by the Japan Bank for International Cooperation (JBIC) this month allowed the government to pay off arrears to the ADB of about US$500 million. The World Bank, in its statement from Washington dated January 27, said its new loan would be used in

part to “help the government meet its foreign exchange needs”, which included repaying a JBIC bridge loan used to clear arrears. The World Bank arrears had been put at about US$400 million. Japan, whose government and companies have been particularly active in the former Burma since it opened up, had said it would help with the arrears.

Abe predicts bump in revenue Toyota recla As Japan emerges from years of recession

apanese Prime Minister Shinzo Abe’s government predicts that tax revenue will exceed cash raised from bond sales for the first time in four years as the nation’s economy emerges from last year’s recession. The government forecasts 43.1 trillion yen (US$474 billion) of tax revenue for the coming fiscal year, which starts April 1, compared with 42.85 trillion yen from issuing bonds, Finance Minister Taro Aso said in Tokyo yesterday. Total spending is forecast at 92.6 trillion yen. A rosier outlook for tax receipts may help Mr Abe as he applies short-term fiscal stimulus and prepares for an overhaul of levies designed gradually to rein in a debt burden that’s more than twice the size of the economy. He’s relying on improvements in corporate profits even as the shutdown of most of the nation’s nuclear plants and weakness in the yen drive up energy costs for manufacturers. “We can’t say that fiscal discipline is fully ensured by this budget,” said

Junko Nishioka, chief economist at RBS Securities Japan Ltd. and a former Bank of Japan official. “Actual tax revenue could fall short of the government’s forecast.” The government yesterday raised its economic growth forecast for the next fiscal year to 2.5 percent from an August estimate of 1.7 percent after declines in the yen and the unveiling of a stimulus package this month. Nominal growth is seen at 2.7 percent, from an earlier forecast of 1.9 percent, the cabinet office said. In a policy speech to the opening session of the Diet yesterday, Mr Abe laid out his agenda as he seeks support for coming Bank of Japan personnel appointments and his tax overhaul. The prime minister has the chance to replace Governor Masaaki Shirakawa in April and two deputies in March with policy makers who support monetary stimulus to revive growth. “We won’t be able to escape deflation and the strong yen by continuing with policies of the past,” Mr Abe said in his speech. “That’s

why I am suggesting a bold policy package on a different scale.” Consumer price growth is seen at 0.5 percent in next fiscal year, according to the forecasts released yesterday. The economy shrank in the second and third quarters of last year. The government’s initial forecast for tax revenue in the 2012 fiscal year was 42.3 trillion yen. Bloomberg News

¥43.1 trillion Tax revenue forecast for the coming fiscal year

oyota Motor Corp regained the crown as the world’s top selling automaker in 2012, posting record-high sales and beating rivals General Motors Co. and Volkswagen AG. Toyota said yesterday it sold 9.75 million vehicles group-wide around the world last year, a record for the 75-year-old Japanese automaker and up 22.6 percent from a year ago. The result was in line with the company’s December forecast, and put it back in the No. 1 spot, which it lost in 2011 when it was hit by a wave of negative publicity after a recall crisis in the United States, and a disrupted supply chain following an earthquake in Japan and floods in Thailand. Toyota held the global sales crown from 2008 through 2010, but fell to third place in 2011 behind GM and Volkswagen. GM sold 9.28 million vehicles in 2012, up 2.9 percent from a year ago, while Volkswagen sold 9.07 million vehicles, up 11.2 percent. Toyota aims to sell 9.91 million vehicles group-wide globally in 2013, up 1.6 percent from 2012. The Toyota group also includes

January 29, 2013 business daily | 11

ASIA Thai factory output up in December Thai factory output in December grew less than forecast from a year earlier, suggesting global problems continue to hurt exports and drag down production. On a year-on-year basis, industrial output rose 23.4 percent in December from the low base a year earlier when severe flooding devastated the country’s industry. On a monthly basis, unadjusted output fell 6.31 percent in December after a revised 8.25 percent expansion in November. For all of 2012, output rose only 2.51 percent. The Industry Ministry has said the flood-hit, important electronics sector has been slow to recover.

Economic and political reforms resulting in various sanctions being lift

The ADB, which reopened an office in Yangon, Myanmar’s commercial capital, in April 2012, said the clearing of arrears allowed it to provide its first loan to the country in more than 30 years. Thein Sein’s government has had to start practically from scratch in developing a modern economy. Reflecting that, the ADB said it would focus on “the building blocks for

stability and sustainability”. Among other things, it would look at improving public finances and developing the finance sector. The loan would be used to “finalise arrears clearance and sustain government efforts to revamp the national budget process and modernise tax administration”, the ADB said. “In rural areas, where development has been hindered by lack of infrastructure, restrictions on land usage, poorly developed support services and limited access to financial services for farmers, ADB funding will help develop a strategy to make banking services more widely available,” it said. The World Bank said its credit would support reforms to strengthen macroeconomic stability and to improve public financial management and the investment climate. It said that, over the past year, it had opened an office in Yangon and brought in technical experts to help the government develop a broad development programme. The government outlined a detailed programme at a big aid donors’ conference in the capital, Naypyitaw, on January 19-20. The World Bank said it had already provided an US$80 million grant for improvements to rural infrastructure, including schools, health clinics, roads and irrigation schemes in about 640 villages across Myanmar over six years. The International Monetary Fund said on January 17 the government had asked for its help to pursue reforms and craft economic policies so that Myanmar could become part of the global economy. Reuters

ims number one title sales at Daihatsu Motor Co and Hino Motors Ltd. Toyota-only sales hit a record-high 8.72 million vehicles, up 22.8 percent on a year ago. Toyota’s domestic rival Nissan Motor Co said yesterday it sold a record 4.94 million vehicles globally in 2012, while Honda Motor Co sold 3.82 million vehicles, up 19 percent. Twelve analysts covering Toyota Motor Corp. have raised their earnings estimates for next fiscal year

as the yen dropped against all major currencies in the past month. “Automakers are the ones that can fully benefit from a weaker yen, and the results this time may spur expectations for a better period next fiscal year,” said Makoto Kikuchi, chief executive at Myojo Asset Management Japan Co., a Tokyobased hedge fund advisory firm. “A weaker yen will be a tailwind.” Reuters

9.75 million

Number of vehicles Toyota sold group-wide in 2012

Singapore’s S.Korea boosts ruling party warnings about loses by-election QE spillover

Prime Minister Lee Hsien Loong

ingapore’s ruling People’s Action Party lost a by-election with the widest margin in almost three decades, signalling Prime Minister Lee Hsien Loong may struggle to claw back support as the cost of living climbs. The Workers’ Party’s Lee Li Lian, a 34-year-old sales trainer, won 54.5 percent of votes in the four-way race in the northeastern Punggol East district over the weekend, a 10.8 percentage point lead over the ruling party’s candidate. That’s the most for a district held by the PAP since the 1984 general elections, according to data from the Elections Department. Record-high housing and transport costs, public discontent over an influx of foreigners and infrastructure strains are weakening approval for the only party that has ruled Singapore since independence in 1965. Its policies are now being questioned by voters, many of whom are looking for a government that is less authoritative and more consultative. “The scope of the loss indicates that it is national and there is something fundamentally wrong with the way the PAP is operating,” said Bridget Welsh, a political science professor at the Singapore Management University. “The voters are saying they really want a rethink of some of the government’s policies.” The results extended the loss in the 2011 general elections, when a record six opposition members, all from the Workers’ Party, were elected into the 87-seat Parliament. The prime minister said after the Saturday poll that by-elections tend to be tougher for the ruling party, and he will continue to focus on policies for the longer term that may take more time to yield results. Last year, his administration cut ministerial pay, sped up construction of homes and made permanent a programme to provide cash and medical funds for the elderly and low-income households. This month, it said it will give priority housing to families with children and provide greater childcare subsidies. Bloomberg News

he South Korean central bank’s policy board ramped up its warnings yesterday against a possible surge in capital inflows as a result of the ultraloose monetary policy led by the advanced economies. “An atmosphere of protectionism is spreading and South Korea needs to take a much more serious view about this,” Ha Sung-keun, a member of the Bank of Korea’s 7-member monetary policy committee, told reporters on behalf of the committee. Speaking at a scheduled luncheon with reporters, Mr Ha was referring to the quantitative easing policy measures taken by the advanced economies, most recently by Japan. The comments, which were the strongest rhetoric against unconventional easing methods so far in recent months, came just two days after the central bank’s governor Kim Choong-soo said Japan’s monetary easing had “created problems”. “What they did created a couple of problems,” Mr Kim said in an interview at the World Economic Forum in Davos on Saturday. “One is that the level [of the currency] is affected, and the pace of change is also a problem. They did it too hastily.” Talk about a currency war has dominated discussions at the forum in Davos, with many central bankers and business executives questioning the wisdom of continuing an easy money policy. The South Korean won plunged to its lowest in 13 weeks against the dollar yesterday and marked its biggest one-day decline since September 2011, as offshore players and local importers snapped up the U.S. currency. It was the fourth straight day of losses and marked the won’s lowest level since October 30 last year. Reuters

The won plunged to its lowest in 13 weeks against the dollar yesterday

12 |

business daily January 29, 2013

MARKETS Hang SENG INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

Volume

AIA GROUP LTD

30.7

-0.4862237

26178319

CHINA UNICOM HON

12.18

-0.4901961

30258440

ALUMINUM CORP-H

3.73

-1.322751

24683500

CITIC PACIFIC

12.38

-1.118211

8554411

BANK OF CHINA-H

3.79

0.7978723

331408674

CLP HLDGS LTD

65.5

0.3062787

4101292

BANK OF COMMUN-H

6.49

1.564945

48478530

SINO LAND CO

CNOOC LTD

15.9

0.505689

56153602

BANK EAST ASIA

32.2

1.257862

3008361

SUN HUNG KAI PRO

COSCO PAC LTD

12.12

-0.9803922

10777245

BELLE INTERNATIO

16.9

-2.312139

15057635

SWIRE PACIFIC-A

98.8

0.3045685

1352413

ESPRIT HLDGS

10.92

-0.3649635

3280834

TENCENT HOLDINGS

267.8

0.2245509

3004994

NAME

BOC HONG KONG HO

26.65

0.7561437

17036951

CATHAY PAC AIR

15.56

0.3870968

2334225

CHEUNG KONG

NAME

HANG LUNG PROPER

POWER ASSETS HOL SANDS CHINA LTD

PRICE

DAY %

Volume

66.6

0.3012048

1727563

37.55

-2.594034

15038402

15.22

0.2635046

6055231

129.3

-0.4618938

2790438

29.5

1.027397

6338391

TINGYI HLDG CO

21.7

0.2309469

5547300

HANG SENG BK

125.9

1.124498

4493553

WANT WANT CHINA

10.68

2.495202

17900486

HENDERSON LAND D

58.45 -0.08547009

3289045

WHARF HLDG

69.75

1.602331

5239215

HENGAN INTL

78.25

2.48854

4994250

128.8

-0.693909

2922396

CHINA COAL ENE-H

8.62

1.173709

14474275

CHINA CONST BA-H

6.71

0.5997001

216978465

CHINA LIFE INS-H

25.9

0.9746589

26727026

CHINA MERCHANT

26.75

-0.3724395

3423700

CHINA MOBILE

84.15

0.1785714

31342765

HUTCHISON WHAMPO

CHINA OVERSEAS

24.45

1.033058

18172473

IND & COMM BK-H

9.37

-0.7415254

71687934

CHINA PETROLEU-H

NAME

HONG KG CHINA GS

21.55

9246992

HONG KONG EXCHNG

146.7

-0.2040816

3303438

87.3

0.9248555

21106132

HSBC HLDGS PLC

87.05

5797049

5.95

0.676819

204625370

LI & FUNG LTD

11.56

0.3472222

23084315

2077012

CHINA RES ENTERP

27.5

0.7326007

4109537

MTR CORP

31.35

CHINA RES LAND

23.3

2.192982

7209150

NEW WORLD DEV

14.82

-1.593625

12577961

CHINA RES POWER

20.6

0.9803922

6774242

PETROCHINA CO-H

11.06

0.1811594

59740702

CHINA SHENHUA-H

32.6

0.7727975

10098765

PING AN INSURA-H

69.2

0.8011653

8050938

PRICE

DAY %

Volume

30.65

-0.1628664

9094300

MOVERS

0 23735

INDEX 23671.88 HIGH

23731.43

LOW

23488.14

52W (H) 23736.01953 23480

(L) 18056.4 24-January

28-January

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

4.21

-0.2369668

121548940

PRICE

DAY %

Volume

13.08

-0.6079027

AIR CHINA LTD-H

6.79

1.951952

21265800

CHINA PETROLEU-H

9.37

-0.7415254

71687934

16549711

ZIJIN MINING-H

3.01

ALUMINUM CORP-H

3.73

-1.322751

24683500

CHINA RAIL CN-H

8.25

1.102941

52212680

19936173

ZOOMLION HEAVY-H

10.4

0.3861004

ANHUI CONCH-H

29.75

3.478261

23518712

CHINA RAIL GR-H

4.37

9864460

1.157407

21122750

ZTE CORP-H

14.68

2.228412

10852313

BANK OF CHINA-H

3.79

0.7978723

331408674

CHINA SHENHUA-H

BANK OF COMMUN-H

6.49

1.564945

48478530

CHINA TELECOM-H

32.6

0.7727975

10098765

4.24

1.193317

BYD CO LTD-H

25.9

-0.1926782

1942250

82742831

DONGFENG MOTOR-H

12.66

3.600655

CHINA CITIC BK-H

5.36

2.48566

24446380

56756815

GUANGZHOU AUTO-H

6.42

0.6269592

CHINA COAL ENE-H

8.62

22187262

1.173709

14474275

HUANENG POWER-H

7.35

1.100413

21452832

CHINA COM CONS-H

7.97

1.918159

18830885

IND & COMM BK-H

5.95

0.676819

204625370

CHINA CONST BA-H

6.71

0.5997001

216978465

JIANGXI COPPER-H

20.5

0.7371007

4928223

CHINA COSCO HO-H

4.08

-5.116279

48846001

PETROCHINA CO-H

11.06

0.1811594

59740702

CHINA LIFE INS-H

25.9

0.9746589

26727026

PICC PROPERTY &

11.66

1.391304

10131281

CHINA LONGYUAN-H

6.33

-0.7836991

4206900

PING AN INSURA-H

69.2

0.8011653

8050938

CHINA MERCH BK-H

18.58

0.7592191

10285819

SHANDONG WEIG-H

7.45

2.054795

10228900

CHINA PACIFIC-H

CHINA MINSHENG-H

11.2

3.130755

49283128

SINOPHARM-H

24.2

-1.22449

2498972

CHINA NATL BDG-H

12.06

2.55102

35389200

TSINGTAO BREW-H

45.75

0.1094092

1050143

CHINA OILFIELD-H

16.72

1.456311

8782980

WEICHAI POWER-H

32.2

3.04

2954294

NAME YANZHOU COAL-H

MOVERS

1 12230

INDEX 12100.08 HIGH

12225.17

LOW

11932.08

52W (H) 12244.15 11930

(L) 8987.76 24-January

28-January

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.91

3.191489

390946991

AIR CHINA LTD-A

6.12

3.204047

33613916

NAME

PRICE

DAY %

Volume

PRICE

DAY %

8.31

8.769634

54812819

QINGHAI SALT-A

26.82

2.015976

5382167

CITIC SECURITI-A

14.34

5.908419

200977437

SAIC MOTOR-A

17.53

5.158968

37445884 77978001

CHONGQING CHAN-A

NAME

Volume

5.16

0.5847953

19201754

CSR CORP LTD -A

4.84

2.760085

58861555

SANY HEAVY INDUS

11.15

5.188679

ANHUI CONCH-A

20.45

6.454971

74743534

DAQIN RAILWAY -A

7.26

3.566334

71945317

SHANDONG DONG-A

48.18

0.375

7071023

BANK OF BEIJIN-A

10.27

4.582485

111695591

DATANG INTL PO-A

4.13

1.474201

15900097

SHANDONG GOLD-MI

36.92

0.6268738

14038895

BANK OF CHINA-A

3.02

2.027027

73459812

BANK OF COMMUN-A

5.24

2.946955

135334444

BANK OF NINGBO-A

12.5

5.932203

46326049

ALUMINUM CORP-A

BAOSHAN IRON & S

EVERBRIG SEC -A

14.47

7.026627

40148205

SHANG PHARM -A

12.28

2.163062

13300245

2.76

0.3636364

100085122

SHANG PUDONG-A

11.18

4.878049

263089195

GEMDALE CORP-A

7.15

3.924419

71569038

SHANGHAI ELECT-A

4.1

1.234568

6819670

14.94

4.548635

60803475

SHANXI LU'AN -A

21.88

4.389313

16639019

GD POWER DEVEL-A

5.02

0.8032129

27767863

GF SECURITIES-A GREE ELECTRIC

7.9

6.040268

34068488

29.1

2.863203

17821931

SHANXI XISHAN-A

13.8

3.370787

19854472

23.04

2.582369

5281270

GUANGHUI ENERG-A

17.98

3.27398

25449441

SHENZEN OVERSE-A

6.95

4.041916

60621860

CHINA CITIC BK-A

5.03

3.71134

51766918

HAITONG SECURI-A

11.01

8.153242

164324432

SICHUAN KELUN-A

67.49

4.070933

2190739

CHINA CNR CORP-A

4.62

3.587444

51707478

HANGZHOU HIKVI-A

30.4

-1.872176

9025838

SUNING APPLIAN-A

7.37

1.655172

75987195

BBMG CORPORATI-A BYD CO LTD -A

CHINA COAL ENE-A

7.9

1.673102

12835684

HENAN SHUAN-A

CHINA CONST BA-A

4.79

2.132196

83265921

HONG YUAN SEC-A

68.25

2.848101

3370084

TSINGTAO BREW-A

33.25

-0.5086774

3484068

20.7

6.536284

36440600

WEICHAI POWER-A

24.07

4.244262

11925908

CHINA COSCO HO-A

4.34

0.462963

32565582

CHINA CSSC HOL-A

23.5

4.351687

17531720

HUATAI SECURIT-A

9.64

6.401766

65935071

WULIANGYE YIBIN

24.49

-2.507962

67436716

HUAXIA BANK CO

11.47

3.894928

65020986

YANGQUAN COAL -A

15.15

2.991162

CHINA EAST AIR-A

3.65

3.107345

18306114

26765811

IND & COMM BK-A

4.29

1.41844

104345990

YANTAI WANHUA-A

16.34

3.026482

CHINA EVERBRIG-A

3.48

14327837

3.880597

296710428

INDUSTRIAL BAN-A

19.73

7.637752

157971308

YANZHOU COAL-A

17.98

1.985252

CHINA INTL MAR-A

4960660

14.22

2.008608

12775743

INNER MONG BAO-A

35.56

2.596653

36681732

YUNNAN BAIYAO-A

77.2

0.7175473

3411675

CHINA LIFE INS-A

20.24

1.657459

32729083

INNER MONG YIL-A

26.45

3.118908

14397488

ZHONGJIN GOLD

16.08

0.9416196

22355278

CHINA MERCH BK-A

14.18

5.270973

151705864

INNER MONGOLIA-A

5.37

2.285714

49956733

ZIJIN MINING-A

82030171

JIANGSU HENGRU-A

33.25

1.650871

8088833

JIANGSU YANGHE-A

80.39

-6.54499

10162724

JIANGXI COPPER-A

24.23

2.322635

12617312

CHINA MERCHANT-A

11.18

10.03937

CHINA MERCHANT-A

29.29

4.495184

13521637

CHINA MINSHENG-A

7.181136

315832381

CHINA NATIONAL-A

7.51

0.8053691

33464150

JINDUICHENG -A

12.63

1.690821

12867033

CHINA OILFIELD-A

17.6

4.699584

14014869

JIZHONG ENERGY-A

16.17

8.088235

24143367

15.31

4.362645

37902533

21.46

0.7511737

68235246

KANGMEI PHARMA-A

CHINA PETROLEU-A

2.189781

43832997

KWEICHOW MOUTA-A

178.5

-5.580534

15829058

CHINA RAILWAY-A

5.9

1.200686

43547891

LUZHOU LAOJIAO-A

30.11

-4.895768

33226470

METALLURGICAL-A

2.21

1.376147

24936454

CHINA PACIFIC-A

CHINA RAILWAY-A

3.16

1.935484

34447523

CHINA SHENHUA-A

24.19

1.340595

16047934

NINGBO PORT CO-A

2.6

0.7751938

27123078

3.96

2.325581

3.8

0.795756

62751360

ZOOMLION HEAVY-A

9.24

3.703704

102002400

ZTE CORP-A

10.7

4.59433

33376229

MOVERS 283

3 2665

INDEX 2651.863

CHINA SHIPBUIL-A

4.97

1.635992

56985148

PANGANG GROUP -A

48583264

HIGH

2663.19

CHINA SOUTHERN-A

4.09

3.02267

34536315

PETROCHINA CO-A

9.07

0.7777778

32832561

LOW

2571.04

CHINA STATE -A

3.73

1.912568

145331661

PING AN BANK-A

21.07

10.02611

116399524

CHINA UNITED-A

3.5

1.156069

75709757

PING AN INSURA-A

46.66

2.347006

47375908

CHINA VANKE CO-A

12.06

3.076923

138997964

POLY REAL ESTA-A

13.55

4.230769

77626807

CHINA YANGTZE-A

7.38

0.8196721

17828465

QINGDAO HAIER-A

14.08

4.065041

17157932

PRICE DAY %

Volume

52W (H) 2717.825 (L) 2102.135

2570

24-January

28-January

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

PRICE DAY %

Volume

FORMOSA PLASTIC

78.5 -0.3807107

3153760

TAIWAN MOBILE CO

105

FOXCONN TECHNOLO

85.6

2.147971

7787534

TPK HOLDING CO L

490 -0.5076142

3565194

FUBON FINANCIAL

36.8

1.098901

15560962

TSMC

99.3

0.3030303

UNI-PRESIDENT

51.7

0.1937984

5360299

11.35

0.8888889

15135766

24.05

0.2083333

6183690

24.7

2.489627

18733921

36.75

0.8230453

NAME

PRICE DAY % -1.869159

Volume 2328381 1615867 29190978

339

0.4444444

1620490

HON HAI PRECISIO

83.6

0.2398082

16705943

11.75

-2.083333

63140506

HOTAI MOTOR CO

229.5

1.101322

224332

CATCHER TECH

128

0.7874016

3563758

HTC CORP

280.5

-1.232394

10121437

2.710414

24048426

CATHAY FINANCIAL

32.5

1.5625

26955457

HUA NAN FINANCIA

16.75

1.823708

4408502

YUANTA FINANCIAL

15.1

-0.330033

27335779

CHANG HWA BANK

15.95

1.592357

6686696

LARGAN PRECISION

745

0.4043127

2229790

YULON MOTOR CO

52.3 -0.7590133

5111222

CHENG SHIN RUBBE

74.7

0.9459459

3730159

LITE-ON TECHNOLO

40.35

0.3731343

4200358

CHIMEI INNOLUX C

14.9

1.706485

151711099

MEDIATEK INC

325

0.931677

6492020

CHINA DEVELOPMEN

7.76

0.7792208

39106881

MEGA FINANCIAL H

23.6

1.724138

27157692

CHINA STEEL CORP

27.3 -0.3649635

7066624

NAN YA PLASTICS

-0.172117

2616903

CHINATRUST FINAN

16.7

0.6024096

37285132

PRESIDENT CHAIN

162

1.567398

975850

CHUNGHWA TELECOM

94.5

0.1059322

4725161

QUANTA COMPUTER

66.5

4.559748

22895908

COMPAL ELECTRON

21.1

1.932367

13753562

SILICONWARE PREC

30.7

0.9868421

7543652

AU OPTRONICS COR

DELTA ELECT INC

106

1148797

SINOPAC FINANCIA

12.65

0.7968127

24893262

FAR EASTERN NEW

33.55

1.359517

2914644

SYNNEX TECH INTL

-0.172117

3444697

FAR EASTONE TELE

-1.351351

4672321

TAIWAN CEMENT

39.25

0.3836317

7214023

TAIWAN COOPERATI

16.35

0.6153846

5624599

72.2

1.690141

2514635

28.25

1.25448

815591

FIRST FINANCIAL

17.7

1.142857

10045080

FORMOSA CHEM & F

77.8

0.5167959

2543727

FORMOSA PETROCHE

1.840491

986852

TAIWAN FERTILIZE TAIWAN GLASS IND

UNITED MICROELEC WISTRON CORP

MOVERS

1 5390

INDEX 5388.39 HIGH

5388.39

LOW

5331.08

52W (H) 5621.53 5330

(L) 4719.96 24-January

28-January

January 29, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 52.6

35.0

17.4

34.6

17.2 52.25

34.2

Max 34.85

average 34.25

Max 38.5

average 37.756

Min 33.85

last 33.85

Min 37.45

last 37.55

33.8

17.0

Max 52.45

average 52.225

20.6

38.3

20.5

38.0

20.4

37.7

20.3

37.4

Max 20.5

average 20.35

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Mar13

95.83

-0.052148519

3.858242116

108.9899979

80.48000336

BRENT CRUDE FUTR Mar13

112.92

-0.31779661

2.757302757

118.7999954

90.58999634

GASOLINE RBOB FUT Feb13

286.65

-0.309522153

3.794764095

292.9699898

220.3500032

GAS OIL FUT (ICE) Mar13

959.5

-0.233948531

3.813903165

1026.25

800.5

NATURAL GAS FUTR Feb13

3.371

-2.119628339

0.596836765

4.090000153

3.049999952

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

305.01

-0.21918346

0.60360077

333.4599972

255.6599855

1657.35

-0.0784

-0.4272

1796.08

1527.21

31.075

-0.3885

3.2049

37.4775

26.1513

1689.15

-0.3304

11.293

1736

1379.05

741

-0.0674

5.9086

744.25

553.75

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

2046

-1.445086705

-1.302460203

2361.5

1827.25

LME COPPER 3MO ($)

8030

-0.809091471

1.248266297

8765

7219.5

LME ZINC

2080

-0.430828147

2187.25

1745

3MO ($)

LME NICKEL 3MO ($)

17380

-0.057504313

1.875732708

22150

15236

15.495

0.096899225

2.108731466

16.84000015

14.89999962

725.5

0.659035727

3.902613677

846.25

511

WHEAT FUTURE(CBT) Mar13

780.25

0.482936252

0.289203085

948.25

652

SOYBEAN FUTURE Mar13

1448.25

0.503122831

2.749201845

1728.25

1207.75

148.6

0.20229265

3.337969402

237.5

141.25

SUGAR #11 (WORLD) Mar13

18.51

0.707290533

-5.125576627

25.12999916

COTTON NO.2 FUTR Mar13

80.33

-0.23596622

6.907106734

98.5

AGRICULTURE ROUGH RICE (CBOT) Mar13 CORN FUTURE

Min 20.2

Mar13

COFFEE 'C' FUTURE 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

NAME

16.8

21.6

21.4

Max 21.75

average 21.554

Min 21.3

last 21.4

PRICE

21.2

1.0857 1.6381 0.9972 1.3487 91.26 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 95.098 1.25692 0.85544 8.4894 10.7712 122.91 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 8878 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

2.27

3566330

CROWN LTD

11.71

-1.01437

9.746953

12.04

8.06

2499305

18.05999947

AMAX HOLDINGS LT

0.078

-2.5

11.42857

0.119

0.055

6406000

66.84999847

BOC HONG KONG HO

26.65

0.7561437

10.58091

26.75

20.25

17036951

CENTURY LEGEND

0.285

7.547176

0.34

0.215

6.1

-0.8130081

1.836398

6.25

2.8

27000

CHINA OVERSEAS

24.45

1.033058

5.844154

25.6

14.124

18172473

CHINESE ESTATES

13.06

2.672956

-0.1529046

13.26

8.3

656781

CHOW TAI FOOK JE

12.32

-1.910828

-0.9646269

15.04

8.4

3313150

EMPEROR ENTERTAI

2.06

2.487562

8.99471

2.09

0.99

1660000

FUTURE BRIGHT

1.67

36.88524

1.75

0.465

2556000

GALAXY ENTERTAIN

33.85

-1.598837

11.53212

35.35

16.62

10954489

125.9

1.124498

6.065715

126.4

99.2

4493553

-1.538462

-3.759398

34.4

19.049

1244497

0.9248555

7.38007

87.65

59.8

21106132

DOW JONES INDUS. AVG

13895.98

0.5110185

6.042677

13895.98047

12035.08984

NASDAQ COMPOSITE INDEX

3149.712

0.6174644

4.311894

3196.932

2726.68

HANG SENG BK

FTSE 100 INDEX

6280.28

-0.06635426

6.484945

6289.83

5229.76

HOPEWELL HLDGS

DAX INDEX

7853.15

-0.061339

3.162735

7865.160156

5914.43

HSBC HLDGS PLC

87.3

NIKKEI 225

10824.31

-0.9366091

4.128162

11002.86

8238.96

HANG SENG INDEX

23671.88

0.3878216

4.479695

23736.01953

18056.4

CSI 300 INDEX

2651.863

3.118163

5.109536

2717.825

2102.135

MGM CHINA HOLDIN

TAIWAN TAIEX INDEX

7714.67

0.5485769

0.1970248

8170.72

6857.35

MIDLAND HOLDINGS

2057.28

0.1927 -2.7201 -1.379 1.8044 -4.9774 -0.0776 -0.0799 0.0948 2.041 1.9333 -1.5159 -1.703 0.0976 -0.3967 -5.1912 -3.121 -4.4448 -1.6893 -1.8529 -6.6574 -0.0097

(L) 52W

-2.871239

(H) 52W

3.56

(H) 52W

-0.3585573

-0.2494 -0.3988 -0.1832 -0.2674 0.3311 -0.0363 -0.0335 -0.0369 -0.3896 -0.2 -0.4435 -1.3069 -0.7567 -1.8206 0.5731 0.0465 -0.1676 -0.1759 -0.0979 0.5342 0

YTD %

(H) 52W

YTD %

1939.71

DAY %

11.42857

DAY %

PRICE

ARISTOCRAT LEISU

PRICE

S&P/ASX 200 INDEX

last 17.3

21.8

1.0398 1.5736 0.9282 1.3428 90.61 7.9894 7.7568 6.2247 53.895 30 1.2402 29.536 40.965 9832 94.218 1.24638 0.85335 8.3587 10.7292 121.67 1.03

COUNTRY

1758.99

4835.174

0.5186869

4.005714

4835.2

3985

4416.937

-0.4655897

2.322383

4472.108

3635.283

FTSE Bursa Malaysia KLCI

1637.13

0.1149671

-3.068175

1699.68

NZX ALL INDEX

912.367

0.0963259

3.436758

PHILIPPINES ALL SHARE IX

3902.18

0.4347166

5.493405

JAKARTA COMPOSITE INDEX

Min 16.94

3.51

World Stock MarketS - Indices

KOSPI INDEX

average 17.225

MACAU RELATED STOCKS

CHEUK NANG HLDGS

NAME

20.2

last 20.3

Max 17.3

CURRENCY EXCHANGE RATES

NAME

METALS

51.9

last 52.1

38.6

Commodities ENERGY

Min 52

DAY % YTD %

VOLUME CRNCY

HUTCHISON TELE H

3.42

1.183432

-3.932583

3.88

2.98

5498619

LUK FOOK HLDGS I

27.5

0.7326007

12.70492

30.05

14.7

1968000

MELCO INTL DEVEL

12.28

36.293

12.6

5.12

4020500

17.3

0.1157407

23.39515

17.7

10.04

2693614

3.87

-1.023018

4.594593

5.217

3.249

3235000

NEPTUNE GROUP

0.204

34.21053

0.226

0.084

NEW WORLD DEV

14.82

-1.593625

23.2945

15.12

7.95

12577961

SANDS CHINA LTD

15038402

37.55

-2.594034

10.60383

39.35

20.65

SHUN HO RESOURCE

1.46

4.285716

1.59

1.03

1509.49

SHUN TAK HOLDING

4.12

-0.4830918

-1.670646

4.65

2.56

7097091

913.567

737.172

SJM HOLDINGS LTD

3902.18

3132.34

SMARTONE TELECOM

20.3

0.4950495

12.77778

21.9

12.34

3043873

13.52

0.1481481

-3.977272

17.5

13.1

1094888

WYNN MACAU LTD

21.4

2.63789

2.147968

25.5

14.62

5170580

ASIA ENTERTAINME

4.17

2.457002

36.27451

7.24

2.4

227827

BALLY TECHNOLOGI

46.28

-0.8781324

3.511521

51.16

41.34

415255

HSBC Dragon 300 Index Singapor

635.93

0.3

2.39

STOCK EXCH OF THAI INDEX

1470.32

0.6096852

5.631741

1473.67

1070.25

HO CHI MINH STOCK INDEX

479.6

2.458929

15.92101

492.44

372.39

BOC HONG KONG HO

3.45

12.37785

3.45

2.56

8300

Laos Composite Index

1443.61

0.6385723

18.83813

1455.82

880.65

GALAXY ENTERTAIN

4.53

14.10579

4.53

2.18

14050

INTL GAME TECH

15.12

-0.2638522

6.704304

17.37

10.92

3156013

JONES LANG LASAL

91.79

3.192805

9.351915

91.83

61.39

438894

LAS VEGAS SANDS

52.71

14.18978

58.3216

32.6127

5510481

MELCO CROWN-ADR

20.39

0.1473477

21.08076

20.59

9.13

2234394

MGM CHINA HOLDIN

2.2

-2.654867

18.91892

2.3

1.3525

2000

MGM RESORTS INTE

0.231303

11.68385

14.9401

8.83

10625113

SHFL ENTERTAINME

14.85

-0.933956

2.413793

18.77

11.75

285761

SJM HOLDINGS LTD

2.63

-1.865672

13.85282

2.85

1.65

2500

123.93

1.018911

10.16979

129.6589

84.4902

930875

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

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily January 29, 2013

Opinion

Wrong way to admit you blew millions of dollars

Caterpillar didn’t say how the goodwill grew before the writedown. Dugan, the Caterpillar spokesman, said the company will provide more information when it files its annual report in the coming weeks.

Sketchy pedigree Jonathan Weil

Bloomberg View columnist

omewhere in the vast interior of China last year, almost a half-billion dollars of cash belonging to Caterpillar Inc. vanished. So how did the company soften the blow when it broke the news to investors? Easy. Caterpillar said the loss was “non-cash”. See? Accounting tricks don’t have to be complex after all. This sort of abuse of the English language is routine in corporate disclosures and has long been a pet peeve of mine. Here’s the drill: First a company like Caterpillar makes a big acquisition. It pays cash. Then the company it bought turns out to be a wreck, maybe even a fraud. The rules say Caterpillar must write down the value of what it bought – or, more precisely, what it mistakenly believed it had bought, because the assets it paid for never existed in the first place. Calling the loss non-cash makes it seem like Caterpillar didn’t lose any real money. It’s like reverse alchemy, turning gold into straw, at least for public-relations purposes. Last June, Caterpillar paid US$690 million – US$475

million of which was cash – for a Hong Kong-based company called ERA Mining Machinery Ltd, which makes coalmining equipment through a subsidiary in China called Zhengzhou Siwei Mechanical & Electrical Manufacturing Co. Caterpillar last week said it found “deliberate, multiyear, coordinated accounting misconduct” at Siwei. It said the tip-off came in November when it did a physical inventory count at Siwei and found it didn’t match what the books showed. Caterpillar said it will record a “non-cash goodwill impairment charge” of $580 million for the fourth quarter, wiping out all but 16 percent of the purchase price.

Blown cash Why did Caterpillar call it non-cash? “We characterise it as a non-cash item in the fourth quarter because it does not impact cash flow in the fourth quarter,” said Jim Dugan, a spokesman for the Peoria, Illinois-based maker of engines and machinery. That’s technically accurate. It also ignores that the company blew US$475 million of cash

on the purchase during the second quarter. There ought to be a rule that says companies aren’t allowed to call writedowns “non-cash” if they paid cash to buy the assets they’re writing down. The label might not be false. However, it is misleading. Rio Tinto Group, the world’s second-biggest mining company, last week said it will

There ought to be a rule that says companies aren’t allowed to call writedowns ‘non-cash’ if they paid cash to buy the assets they’re writing down

record a US$14 billion “noncash impairment charge” for the fourth quarter. Like Caterpillar, it paid cash for the acquisitions it’s writing down. Last month, ArcelorMittal, the world’s biggest steelmaker, reported a US$4.3 billion “non-cash” writedown at its European businesses, which it had bought with cash. Hewlett-Packard Co. used the same label when it wrote down its 2011 cash acquisition of the software maker Autonomy Corp. by US$8.8 billion. HP, much like Caterpillar, blamed most of the loss on accounting improprieties at the company it bought. Back to Caterpillar, recall that the company said it was writing down goodwill by US$580 million because of its findings at Siwei. That’s odd, because Caterpillar in its most recent quarterly report said it allocated only US$476 million of the company’s purchase price to goodwill. (Goodwill is a plug number representing the difference between the purchase price and the fair market value of the acquired company’s net assets.)

Then there’s the question of why Caterpillar bought this piece of junk. ERA Mining was formed through a reverse takeover in 2010, which let Siwei obtain a Hong Kong stock listing without an initial public offering. That sketchy pedigree should have been a warning flag, especially after the dozens of Chinese reversemerger stocks over the past few years that turned out to be frauds. ERA Mining’s 2011 annual report noted that the structure of the deal meant “the assets and liabilities of the Siwei Group are recognised and measured at their pre-combination carrying amounts,” which turned out to be false. ERA and Siwei were barely profitable, even using the numbers that Caterpillar now says were phony. The company, which was audited by RSM Nelson Wheeler of Hong Kong, showed lifetime retained earnings of about US$33 million as of December 31, 2011. Tangible shareholder equity, which excludes goodwill and other intangible assets, was about US$98 million. Caterpillar paid about seven times that much. How much of the US$580 million writedown was attributable to misconduct? And how much was due to the simple fact that Caterpillar overpaid? Dugan declined to answer. The markets shrugged off the news of Caterpillar’s China troubles as a one-off hit, which is understandable. (The stock price went up slightly on January 22, the first day of trading after Caterpillar’s disclosure.) Caterpillar is one of America’s most-admired companies. It has a US$63 billion market value, about US$90 billion of assets, and it has reported more than US$1 billion of earnings for seven consecutive quarters. This scandalette should be a minor blow. The bad news is it shows Caterpillar did a horrible job of due diligence. And its board – which includes Jon Huntsman, a former U.S. ambassador to China – may be more of a rubber stamp than investors realised. Caterpillar’s leaders have more explaining to do. Banning looking-glass language from their vocabulary would be a good start. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes Newsdesk Alex Lee, Luciana Leitão, 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 29, 2013 business daily | 15

OPINION

A peace agenda wires for global development Business

Leading reports from Asia’s best business newspapers

Bangkok Post The Bank of Thailand (BoT) should consider cutting the repurchase rate to curb the foreign direct investment inflow, Pongsak Assakul, chairman of the Thai Chamber of Commerce, was quoted as saying on Sunday. Mr Pongsak said the persistent baht appreciation was caused by investment inflow to make shortterm profit by foreign investors, not long-term investment. The central bank should come up with necessary measures to block such short-term investment inflow, he added. One measure is to cut its key policy rate to prevent the baht currency from becomingtoostrongandlowering the trade competitiveness of Thai exporters, he said.

Yomiuri Shimbun PrimeMinisterShinzoAbevowed to honour the independence of the Bank of Japan in conducting monetary policy in a video message shown at the World Economic Forum in Davos on Saturday. “The Bank of Japan will implement policy measures independently. My belief in [the importance of] maintaining the central bank’s independence remains firm and has not been shaken at all,” he said. Mr Abe apparently aimed to dispel concerns over his government’s pressure on the central bank to play a greater role in efforts to defeat persistent deflation.

Korea Herald To boost the stagnant global economy and reinstate the multilateral trade framework, it’s crucial for South Korea to play the role of an international arbitrator, said Trade Minister Bark Tae-ho, who in late December joined the race for the secretarygeneral position of the World Trade Organisation. “Despite the general consensus on lifting trade barriers and opening markets, the talks on multilateral trade have seen little progress over the past 10 years,” Mr Bark said in an interview. “I see this challenge as a task assigned to me by the Korean government, rather than my personal career development,” he said.

The Star Malaysia’s consumer price index is expected to increase by between 2 percent and 2.5 percent this year, mainly because of the implementation of minimum wage policy and subsidyrationalisationprogramme in the second half. “Resilient domestic demand could possibly facilitate partial transfer of higher cost to consumers particularly by industries that are heavily reliant on foreign labour,” said Hong Leong Research, a unit of Malaysia-based Hong Leong Bank. It forecast the first half of 2013 would have a mild inflation trend at about 1.6 percent yearon-year and rising to 2.4 percent in the second half.

Graça Machel

Member of the Africa Progress Panel, President of the Foundation for Community Development, and the founder of New Faces, New Voices

his week, the 27 members of the High-level Panel of Eminent Persons on the Post-2015 Development Agenda gather in Monrovia, Liberia, to advise United Nations Secretary-General Ban Ki-moon. At the meeting, the Panel will establish a “bold yet practical” vision for joint action on sustainable development. While these discussions – hosted by Liberian President and Nobel Peace Prize laureate Ellen Johnson Sirleaf, Indonesian President Susilo Bambang Yudhoyono, and British Prime Minister David Cameron – take place, the nearby Sahel and the Great Lakes region continue to be plagued by violence and conflict. Indeed, large-scale displacement of people and unspeakable human suffering are occurring in many African countries (not to mention in Syria and elsewhere), threatening to reverse the continent’s unprecedented economic progress during the last decade. The Panel (of which I am a member) must seize the opportunity presented by the Monrovia meeting to contribute to a global development agenda that addresses the vicious cycle of conflict and poverty that hampers economic activity and undermines human well-being. For more than a decade, the Millennium Development Goals, which expire in two years, have provided the framework for international development cooperation, with a focus on combating poverty worldwide.

The post2015 global development agenda must take a comprehensive approach, combining poverty-reduction measures with peace-building initiatives and strategies for economic transformation

In developing a new, comprehensive follow-up agenda, global leaders should recognise that, although the MDGs have enabled millions of people worldwide to escape illiteracy, disease, and hunger, their overall impact has been inadequate, particularly in fragile, conflictridden countries. World Bank statistics show that no conflictaffected low-income country has achieved a single MDG, reflecting the framework’s failure to address problems caused by organised violence and insecurity effectively. That is why the post-2015 agenda should be centred on peace, security, and freedom from fear. It should aim to make justice and prosperity a reality for everyone. And it should reflect the understanding that development is impossible without peace, just as peace is impossible without development – and that lasting peace and sustainable development are impossible without respect for human rights and the rule of law.

Far-reaching Furthermore, as the Monrovia meeting’s theme, “National Building Blocks for Sustained Prosperity,” suggests, post-2015 global development initiatives should emphasise support for national efforts to achieve strong, stable, long-term prosperity. Strategies that would help countries to overcome domestic insecurity and conflict, transform their economies, and, ultimately, meet their potential include strengthening governance institutions and the rule of law, ensuring multi-stakeholder participation, and guaranteeing that all citizens have equal access to justice. International support for such efforts would mean giving African leaders and stakeholders the opportunity – and the responsibility – to eliminate underdevelopment and boost prosperity.

Moreover, while poverty eradication will remain a paramount concern after 2015, the focus must shift from national averages to local disparities. Measures must move beyond overall social needs to bolster progress in productive job-creating and incomegenerating sectors. And strong efforts must be made in conflictaffected countries to promote reconciliation and prevent the revival of violence. Given Liberia’s recent success in post-conflict reconstruction and human development, following a 14year civil war, it is a fitting setting for the Panel’s deliberations. Since 2003, domestic vision and commitment, together with international support, have enabled Liberia to hold democratic elections, reintroduce some essential public services, re-establish a public-finance management system, and make progress in addressing endemic corruption, rebuilding public institutions, and reconstructing national infrastructure. The Panel should view Liberia’s ongoing efforts to secure peace, maintain stability, and initiate economic and social transformation as a blueprint for successful post-conflict transition. Other inspiring

models can be found in Rwanda, Mozambique, and Sierra Leone. The Panel is committed to creating an ambitious, coherent, and practical proposal for a sustainable global development agenda. The process will be open, inclusive, and transparent, and will be informed by the opinions and experiences of experts and stakeholders representing young people, women, the elderly, and the disabled, as well as legislative, academic, and inter-governmental actors. The Panel will also take advantage of extensive online and offline efforts to engage with people worldwide and gain insight into the future that they envision. Their perspectives will enrich efforts to develop an agenda that addresses their priorities. In a world roiled by conflict, development efforts will always fall short. The post-2015 global development agenda must take a comprehensive approach, combining poverty-reduction measures with peace-building initiatives and strategies for economic transformation. In this way, global leaders can begin to lay the foundations for prosperity, justice, and sustainable development worldwide. Future generations are counting on it. © Project Syndicate

16 |

business daily January 29, 2013

CLOSING Dreamliner battery ‘not faulty’

Goldman Sachs selling ICBC stake

Airline safety inspectors have found no faults with the battery used on Boeing’s 787 Dreamliner, Japan’s transport ministry said. The battery was initially considered the likely source of problems on 787s owned by two Japanese airlines. The world’s entire fleet of 50 787s has been grounded while inspections are carried out. Attention has now shifted to the electrical system that monitors battery voltage, charging and temperature. “We have found no major quality or technical problem” with the lithium-ion batteries, Transport ministry official Shigeru Takano said. Shares in GS Yuasa Corp., which makes the batteries, jumped 5 percent on the news.

Goldman Sachs Group Inc. is seeking to raise about US$1 billion selling Hong Kong-traded shares of Industrial & Commercial Bank of China Ltd, according to a term sheet obtained by Bloomberg News. The shares are being offered at HK$5.77 each, 3 percent lower than the Chinese lender’s HK$5.95 closing price in Hong Kong yesterday, the document shows. The term sheet doesn’t indicate the specific number of shares offered. The firm is reaping profits from an investment first made in January 2006 when Goldman Sachs and client funds managed by the bank agreed to invest US$2.58 billion in ICBC.

Monti pledges raft of tax cuts Italian PM pledges to revamp unpopular property tax Alessandra Migliaccio

talian Prime Minister Mario Monti pledged to cut taxes by 30 billion euros (US$27 billion) in five years as he campaigns for a second term after a year spent raising levies to fend off the sovereign debt crisis. Mr Monti proposed 11.5 billion euros in cuts to the IRAP regional corporate tax over five years starting in 2014, 15.5 billion in lower income taxes and 2.5 billion euros in breaks for first-home owners and families with children. Speaking on La7 television, he also pledged to revamp an unpopular property tax his government imposed to make it “more progressive and fair”. The government can make up for the lower tax revenue through reducing spending, fighting tax evasion and keeping bond yields down, Mr Monti said. He defended his 14-month term in office, during which he overhauled pension and labour laws and raised taxes, saying the measures were needed to keep Italy afloat amid the European sovereign debt crisis. “I find it consistent to have at first been very tough and to say now that in the next five years we can afford a different approach,” he said.

The yield premium investors demand to buy Italy’s 10-year bonds over comparable German bonds is at 250 basis points, less than half the level when Mr Monti came to power. Still, austerity measures have deepened Italy’s recession, increasing pledges by candidates to cut taxes to stimulate growth. That spread reached a euro-era high of 575 basis points the week before he came to power in Nov. 2011.

Debt ‘nightmare’ “Every month it was a nightmare to see how much debt had to be issued,” Mr Monti said, referring to the high bond yields he faced when he became prime minister. “We need to loosen ties gradually,” he said, adding that a shift from current policies too quickly after the February 24-25 vote could hurt the country’s finances. Mr Monti’s government served with the support of the Democratic Party and former Prime Minister Silvio Belusconi’s People of Liberty, which represent the left and right respectively of Italy’s political spectrum. Now he is campaigning

Icelandic victory on Icesave cash

celand was found to have acted within its rights in its 2008 refusal to cover U.K. and Dutch depositors in a failed Icelandic bank, escaping damages as high as 20 percent of its economic output. The European Free Trade Association Court in Luxembourg yesterday dismissed a case brought the EFTA Surveillance Authority, which claimed the island had breached European Economic Area law. A loss would have allowed the Netherlands and the U.K. to seek damages of much as 335 billion kronur (US$2.6 billion), according to International Monetary Fund estimates. All three “pleas” were dismissed, in part because the laws governing

against the two political blocs. Mr Berlusconi, running second in opinion polls, is pushing for the abolition on primary residences of Mr Monti’s property tax known as IMU, while front-runner Pier Luigi Bersani, from the Democratic Party, has proposed cutting income tax rates on low and middle incomes and raising rates on high earners. While Bersani leads in national polls, numbers show he may not have enough support to win a majority in both houses of parliament, which may force him to seek an alliance with Mr Monti’s coalition. Mr Bersani, a former communist, draws support from labor unions, while Monti, an ex-Goldman Sachs Group Inc. adviser and European competition commissioner, yesterday defended voting for Mr Berlusconi’s centre-right party in 1994, saying it was the best option at the time. Mr Monti has criticised both parties, saying neither has guaranteed that economic reforms will continue. “I won’t participate in any government that isn’t sufficiently reformist,” he said. Bloomberg News

Egypt’s Mursi declares emergency

Iceland’s membership didn’t “envisage” a “systemic crisis of the magnitude experienced in Iceland,” the court said in a statement. “How to proceed in a case where the guarantee scheme was unable to cope with its payment obligations remained largely unanswered by the directive.” Iceland in 2008 declined to cover US$5.4 billion in guarantees to 350,000 U.K. and Dutch citizens who had opened Icesave accounts at Landsbanki Islands hf, one of three major banks to fail during the island’s financial meltdown. The British and Dutch governments covered the guarantees and Iceland was then taken to court by the EFTA Surveillance Authority. AFP

gyptian President Mohamed Mursi declared a month-long state of emergency in three cities on the Suez Canal, where dozens of people have been killed in protests that have swept the nation and deepened a political crisis facing the Islamist leader. Hundreds of demonstrators in Port Said, Suez and Ismailia turned out against the decision within moments of Mr Mursi’s announcement late on Sunday, which came after the death toll from protests and violence that erupted last week hit 49. Mr Mursi also called for a national dialogue with his rivals, but the early response from members of the main opposition coalition suggested they saw little point, saying the

president only seemed to listen to his allies. They later rejected his call for dialogue as ‘empty of content’. Most deaths have been in Port Said, where 40 were killed in just two days. Riots were sparked on Saturday when a court sentenced to death several people from the city on charges related to deadly rioting at a soccer match last year. Violence in Egypt’s cities has extended to a fifth day. Police fired volleys of teargas at dozens of youths hurling stones yesterday near Cairo’s Tahrir Square, where opponents have camped for weeks to protest against Mr Mursi, who they say betrayed the revolution that ousted Hosni Mubarak two years ago. Reuters