Macau Business Daily, November 19, 2012 by Business Daily

All change but no change

Year I Number 165 Monday November 19, 2012 MOP 6.00 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte

The leadership shuffle in Beijing will not greatly alter the local economy says Davis Fong Ka Chio, director of the Institute for the Study of Commercial Gaming at the University of Macau. In an interview with Business Daily, Prof. Fong said that Xi Jinping, China’s presidentin-waiting, had already stated the need for Macau’s economic diversification. Mr Fong thinks the best chance for that is Hengqin Island.

Pages 6 & 7

SJM gears up for Cotai O

n the eve of the 59th edition of the Macau Grand Prix, sponsored by SJM Holdings Ltd, the company has revealed more details of its spending plans for a Cotai casino resort. SJM chief executive Ambrose So says the firm will invest over 20 billion patacas (US$2.5 billion) in the new venue. It will be “different from other facilities in Cotai” said Mr So. He also confirmed the company aimed to have 700 tables – 40 percent more than the 500 tables mentioned

for rival new Cotai projects in regulatory filings. Yesterday SJM also announced SJM director Angela Leong On Kei is to lease Jai Alai Palace, one of Macau’s oldest casino and entertainment venues. The move is likely to lead to a transformation of the run down property. Legislative Assembly member Ms Leong said at the weekend a proposed government regulation on slot parlour locations would probably lead to the closing of SJM Yat Yuen Canidrome Slot Lounge in Fai Chi Kei.

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HANG SENG INDEX 21205

No cool down in housing prices

21170

21135

21100

November 16

HSI - Movers Name Measures by the government to slow down the overheated property market already appear to be losing their effectiveness as more money piles into the market. In the last quarter the number of homes transacted went down by almost 20 percent but the average price continued its relentless climb to more than 58,300 patacas per square metre, official data show.

The price hike was sharpest on Macau peninsula but homes became more expensive across the board. More worryingly, it was the smaller flats, with just 50 square metres or fewer, that fuelled the price increase. With more measures coming into effect this month, experts and estate insiders fear the number of sales will keep dropping but the price will remain stubbornly high.

Page 3

%Day

CHINA UNICOM HON

2.87

MTR CORP

2.24

COSCO PAC LTD

1.91

ALUMINUM CORP-H

1.85

BELLE INTERNATIO

1.53

SINO LAND CO

-0.91

HANG LUNG PROPER

-0.94

WANT WANT CHINA

-2.25

LI & FUNG LTD

-4.74

ESPRIT HLDGS

-6.17

Source: Bloomberg

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Dreams of luxury fuel yacht business

LRT route change still on the table Page 2

‘Bad apple’ approved Manila payments: Okada Page 2

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business daily November 19, 2012

macau

Fair wind drives yacht business in mainland As wealthy mainland Chinese seek leisure and luxury afloat, optimism in the yacht industry is running high Stephanie Lai

sw.lai@macaubusinessdaily.com

ncreasing affluence in mainland China is driving up demand for yachts, yacht builders have told Business Daily. However, yachting is still in its infancy as a pastime there, yacht sales representatives said during the three-day China (Macao) International Import and Export Yacht Fair at the Venetian Macao, which ended yesterday. “While the car market has become saturated and the threshold for private jet purchases is high, the leisure appeal and image of success associated with yachts has increased their appeal to Chinese consumers,” said Tao Hong, deputy general manager of the sales department of Winfair Marine (Zhuhai) Co Ltd, which is solely owned by British yacht builder Prout International. Mr Tao said the yachting market was maturing in coastal cities such as Shenzhen, Sanya, Qingdao and Dalian. He said there were more yacht clubs and a rise in investment by property developers in marinas. The mainland yachting market was worth about 5.1 billion yuan (6.5 billion patacas) last year, market researcher China Research and

Intelligence estimates. The revenue of the mainland’s 200 or so yacht clubs has reached over 1 billion yuan so far this year, it says.

On the ocean wave The State Council declared its support or the business of catering to yachtsmen in 2009, naming the as island of Hainan as an important centre for the business. The island now holds international sailing races and an annual yacht exhibition. A sales representative of Guangzhou’s Xiongda Yacht Development Corp Ltd, Lu Hongsheng, said the market still had plenty of room for expansion as potential yachtsmen slowly acquired the leisure habit and knowledge of the pastime. “Speedboats and smaller yachts are dominant in the mainland as a whole,” said Mr Lu. “But in the north, fishing boats are generally more popular than on the southern coast,” he said. Xiongda Yacht Development sells Yamaha and Brunswick yachts. Safety, comfort and a touch of luxury

The China (Macao) International Import and Export Yacht Fair ended yesterday (Photo: Manuel Cardoso)

are the main qualities buyers look for in a yacht, according to sales reps. “Clients pay attention to the luxury value and comfort level of the yacht,” said Mr Tao. “And some even request very individualised functions like karaoke installations and mahjong

rooms,” he said. Mr Tao said the price range for private yachts in the mainland was from 2 million yuan to 10 million yuan. He said the price range for yachts that companies use for business meetings and entertainment was from 15 million yuan to 30 million yuan.

Govt’s NAPE LRT study completed The government has finished its study of the proposals for LRT routes through NAPE, but has not made its findings public Tony Lai

tony.lai@macaubusinessdaily.com

he government has completed a study on the effect of different routes for the Light Rapid Transit (LRT) elevated railway on the NAPE area, the head of the Secretariat for Transport and Public Works, Francis Wong Chan Tong, has said. Speaking on the sidelines of an urban planning seminar on Friday, Mr Wong said the government had analysed reports on the LRT route published in July by the Commission against Corruption and the Commission of Audit. The graft buster said the Transportation Infrastructure Office’s decision to run the railway along Rua de Londres in the middle of NAPE was not based on scientific data. The corruption watchdog suggested that the government stick to its original plan to run the railway along the coast of the district, as this would better meet safety and technical standards. Mr Wong said the report, sent to Chief Executive Fernando Chui Sai On, covered the costs, construction schedules and difficulties entailed by

the different routes. He did not say which route the Secretariat for Transport and Public Works favoured. “Comprehensive consideration” of all factors was needed, he said. The first phase of the LRT, one line with 21 stations, is expected to open by 2015. Its cost has already swollen to over 11 billion patacas (US$1.37 billion), almost three times the original budget drawn up in 2009. The construction of the line on Taipa and in Cotai has begun, but work on the line on the peninsula has yet to start. Mr Wong said the Secretariat for Transport and Public Works had finished drafting the urban planning bill and that the Executive Council was now discussing the bill. The government hopes the Legislative Assembly will pass the urban planning bill and a bill amending the land law before the assembly is dissolved next August for elections.

November 19, 2012 business daily | 3

MACAU

House prices resist sales slump The number of homes sold dwindles, but prices continue to rise Stephanie Lai

sw.lai@macaubusinessdaily.com

he number of property deals dropped to 6,766 in the third quarter, 13.8 percent fewer than in the second, and together they were worth just 26.9 billion patacas (US$3.3 billion), official data show. The Statistics and Census Service said on Friday that the number of homes sold fell even faster, by 19.4 percent to 4,475. However, the average price of residential space climbed by 5.2 percent to 58,305 patacas per square metre. The data appear to justify concerns voiced by observers of the property market about the efficacy of government measures meant to cool the market. Macau residents made up 88.2 percent of homebuyers. But they spent only 83.2 percent of the money paid for housing.

This underlines how nonresidents are buying many of the more expensive homes. The price rises were sharpest on the peninsula, where the average cost per square metre of residential space rose by 8.9 percent to 51,662 patacas. On Taipa the average cost per square metre rose by 1.2 percent to 67,579 patacas. The most expensive homes were on Coloane, where the average cost per square metre rose by 4.8 percent to 81,928 patacas. Smaller homes were in demand, the average price of flats of less than 50 square metres rising by 8 percent to 45,862 patacas. The average price of larger homes, of 150 square metres or more, fell by 4.4 percent to 80,682 patacas. In the first nine months of this year 12,374 homes were sold, 17.5 percent

fewer than in the corresponding period of last year, and together they cost 51.45 billion patacas. In last week’s Policy Address for 2013, Chief Executive Fernando Chui Sai On said the government would speed up the process of approving private housing projects in an effort to increase supply. Office space also became more expensive in the third quarter, the average price per square metre of the 205 premises sold rising by 3.1 percent to 49,245 patacas. Office space in the NAPE and Nam Van districts was the most expensive, costing an average of 36,662 patacas per square metre. The average price per square metre of factory space rose to 18,844 patacas per square metre in the third quarter, 0.5 percent more than in the second.

Govt mulls ‘residents only’ housing Public consultations will begin next year on allowing only residents to buy certain kinds of homes, the head of the Secretariat for Transport and Public Works, Francis Wong Chan Tong, has said. Mr Wong told reporters on Friday that a property market committee led by Secretary for Transport and Public Works Lau Si Io had completed an initial report on the idea. The pan-democrats are pushing the idea, which they got from Hong Kong. But Mr Wong, speaking on the sidelines of an urban planning seminar, said the idea was only at the “slogan” stage. He said a “mainstream consensus” should be formed on details, such as defining who Macau residents are, and that a balance should be sought between safeguarding the rights of residents and allowing market forces free play. “I believe the relevant teams under the secretary for transport and public works will start consultation works on such issues next year,” he said. The chief executive said in last week’s Policy Address for 2013 that the government would consider banning non-residents from buying some kinds of property. T.L.

The price of flats of 50 square metres or less rose by 8 percent in the third quarter

editorial

A long wait

José I. Duarte

jid@macaubusinessdaily.com

he annual policy address is a major moment in our political calendar. In more demanding institutional settings than Macau’s, it would be a moment to clarify and weigh the real priorities of the government and to take stock of the results achieved in the year. But the institutional arrangements here ensure the chief executive is spared tough questions. A mostly compliant Legislative Assembly does not ask for more. Occasionally, sounds coming from what we might call civil society may force this or that subject onto the agenda. But a declaration of concern, a promise to look into the matter or

the expression of a commitment to carry out some kind of study are usually enough to close the subject. One of the major topics this year was, inevitably, housing. The issue is no more about the poor that cannot afford a decent home, which is a matter for a proper social policy. No, the problem is a middle class increasingly voicing their unhappiness with the present state of affairs. We got reassuring words: the government is looking into the matter; give us time to assess the effects of the few so-called cooling measures already taken – mainly credit restrictions and higher costs for short-term ownership; we will ponder future policies carefully because the issues at stake require a long-term view. Indeed they will. What was conspicuously absent was a diagnosis of the causes and an evaluation of how the measures taken or intended will eliminate those causes or correct their effects. In particular, no acknowledgment was made of the policy failures that led to the clearly insufficient supply of housing for a growing population.

The real problem A housing policy should, indeed, take a longterm view. That is as true today as it was five or 10 years ago. Anyone with basic arithmetic

could have foreseen six or seven years ago that the amount of investment planned would, if authorised, require significant increases in the population and that the housing supply would be not enough. What was absent from the policy address, therefore, was an explanation of why the government took so long to realise the obvious – that it needed a long-term strategy – and why we should be confident that this time it will be different, and that we can expect prompt and decisive action. As things stand we also need a short-term policy. The measures announced so far, failing to deal with the causes, are unlikely to solve the problem. The real problem is the scarcity of supply, which is pushing up prices to levels that residents cannot afford. The cure is not the hypothetical cooling, immediately proclaimed and celebrated if some sales figure declines – unless killing the patient also counts as a cure. To understand the short-term problem, let us assume that in a housing market that functions properly, median-income earners can afford median-price homes. How near to or far from that are we? The most recent data show median monthly pay was 11,000 patacas (US$1,377). Suppose a couple, both earning the median income, wish to buy a home. What kind of housing can they afford?

Our humble abode Let us presume that the conditions are generally favourable. The couple can set aside 40 percent of their combined monthly income to repay a loan, and the bank accepts this. They are in their late twenties, both have stable jobs and they have been working for, say, five years. They are able to obtain a loan with a repayment period of 35 years and they are offered an annual interest rate of 2.5 percent. They can afford a loan of some 2.45 million patacas. Add to that a minimum down payment of 10 percent, assuming that they have managed somehow to save more than 20 percent of their combined income in their first working years, and they can afford to spend roughly 2.7 million patacas on a home. At the average price here, that would allow them to buy a flat of 47 square metres. They would be paying for it almost until they were due for retirement. They would be bound to think twice about family visits or having children. A side effect of this state of affairs is that many are forced to rent when they would be willing to buy. When this happens at the same time as an inevitable and foreseeable influx of immigrants is arriving in the city, is the madness in the market for homes to rent any surprise? Do not worry too much, just think twice before buying now, we were advised. Really?

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business daily November 19, 2012

macau HK democrat barred from Macau

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A Hong Kong district councillor and member of the NeoDemocrats was denied entry to Macau on Saturday, South China Morning Post reported. Francis Yam Kai Bong, 34, was taking a group of 110 Tai Po residents to see the House of Dancing Water show when he was stopped. “The officials kept telling me I should understand why I wasn’t allowed to go in. And then I was given a paper that said there was a possibility that I could jeopardise public order in Macau,” he said.

HOSPITALITY Occupancy trends The enormous expansion in the number of hotels and the number of hotels rooms has allowed the city to attract an increasing number of overnight visitors. Average spending by these visitors is considerably higher than spending by day trippers, with board and lodging costs obviously accounting for a lot of it. The number of hotel guests has risen in the past few years – by almost 22 percent in the year to last September. The opening of several hotels last year allows the city to accommodate a rising number of hotel guests. The hotel occupancy rate has been rising in the past few years, except in 2009. All kinds of accommodation have had increases in occupancy, from five-star hotels to hostels, but the increases have not been uniform. Four-star hotels tend to have the highest occupancy rates and hostels the lowest. Of special interest are five-star hotels as they contain more rooms than any other kind.

‘Bad apple’ defence by Okada over Philippines payments Cash channelled to confidante of ex-PAGCOR boss was ‘unauthorised’, says Universal

Kazuo Okada

The most evident feature of occupancy rates in the past four years is the extraordinary drop early in 2009. A rebound later in that year re-established the previous trend. But data for this year indicate stabilisation, and suggest the average occupancy rate for the year will be very close to the 85 percent achieved last year. J.I.D.

ormer Macau casino investor Kazuo Okada appears to be using a ‘bad apple’ defence to head off claims he knew about an unusual US$5 million (40 million patacas) payment in the Philippines – a place where he wants to develop a US$2 billion gaming resort. The Philippines is a source of potential riches for Mr Okada, but so far is more a source of actual trouble. In February Wynn Resorts Ltd cancelled his 20 percent stake in the Las Vegas- and Macau-based casino company amid claims that he had made “improper” payments to Philippines regulators in pursuit of a casino project there. In a United States regulatory filing Wynn Resorts said the Manila project was in in contravention of a noncompetition agreement and that the manner in which Mr Okada pursued it made him “unsuitable” to be an investor in Wynn. Mr Okada strongly denied the claims and in turn questioned a US$135 million payment made by Wynn Resorts to the University of Macau. Both sides are now embroiled in multiple lawsuits in Nevada. But an investigative report by Reuters appears to have raised the stakes. For the first time it publicly links an employee of Mr Okada with a payment to a person described as a “confidante” of Efraim Genuino.

At the time of the alleged transaction in May 2010, Mr Genuino was chairman of the PAGCOR, Philippine Amusement and Gaming Corporation – the regulator-cum-operator of casino gaming in the country that has an important say in any new casino projects there.

Graft charges This September the Philippines Department of Justice recommended the prosecution of Mr Genuino for 175 counts of malversation of public funds and 174 counts of violation of the Anti-Graft and Corrupt Practices Act. According to Reuters, a lawsuit filed by Mr Okada’s company Universal Entertainment Corp. on August 20 in Tokyo claims Mitsuo Hida – then president of Universal subsidiary Aruze USA Inc.’s Japan branch – made an “unauthorised” debit of US$5 million from the company’s Bank of Tokyo-Mitsubishi UFJ account in May 2010. Reuters states the money was transferred via Hong Kong-registered Future Fortune Ltd, where Mr Hida was a director, to a company called People’s Technology Holding Ltd. The latter firm – established in 2009 – is whollyowned by Rodolfo ‘Boysee’ Soriano, the reported confidante of Mr Genuino. A second lawsuit from Universal accuses three former Universal

employees, including Mr Hida, of acting without authorisation in sending US$10 million to another company called Subic Leisure and Management. That lawsuit has also been filed with a Tokyo court, but remains partly sealed. The fact that it is Mr Okada’s own company rather than Wynn Resorts’ lawyers that have revealed details of the payments, and that the lawsuits describe them as “unauthorised” appears to be a sign of Mr Okada pre-emptively distancing himself from any claims of wrongdoing in relation to his Philippines venture. The cash was part of US$40 million in transfers made by Universal’s U.S. affiliate Aruze USA that are now a focus for investigators says Reuters. The Nevada Gaming Control Board has been looking into payments by Okada-controlled companies to Mr Soriano adds the media organisation. Universal, a conglomerate that includes slot machine manufacturing in its portfolio, supplies equipment to the Nevada market and is therefore regulated by the Nevada Gaming Commission. At least two former Universal employees have discussed the payments to Mr Soriano with the Federal Bureau of Investigation in the U.S., people with knowledge of those talks told Reuters. Reuters/M.G.

November 19, 2012 business daily | 5

MACAU BESOR hires new director On December 3 Ricardo Pontes will become the new director of private banking at Banco Espírito Santo do Oriente SA (BESOR). Mr Pontes leaves Banco Nacional Ultramarino SA (BNU) after more than 17 years with the local financial institution, part of Portuguese state-controlled Caixa Geral de Depósitos SA. In Macau since April 1980, Mr Pontes, 39, who in the last five years was BNU’s branch manager at the Venetian Macao, fluently speaks Portuguese, English and Cantonese. Mr Pontes has a degree in Commerce from the Polytechnic Institute of Macau and a specialisation in Finance.

SJM’S Cotai project to cost MOP20 bln SJM says it will invest over 20 billion patacas in a new casino resort with plenty of non-gaming attractions Tony Lai

tony.lai@macaubusinessdaily.com

asino operator SJM Holdings Ltd will invest over 20 billion patacas (US$2.5 billion) in its casino resort on the Cotai Strip, and 70 percent of the development will be given over to non-gaming facilities, SJM chief executive Ambrose So Shu Fai has said. The company was now designing the hotel and casino, which would be “different from other facilities in Cotai”, the Chinese-language Shimin Daily Chinese-language newspaper Shimin Daily quoted Mr So as saying. The design and details of the project would be disclosed in due course, Mr So said. SJM announced last month that the company had been granted a plot of about 70,500 square metres on the Cotai Strip for a land premium of 2.15 billion patacas. The land grant has yet to be published in the Official Gazette. The company aims to have the five-star casino resort built by 2015. The resort will have a floor area of some 500,000 square metres, enough space for 700 gaming tables, 1,000 slot machines and 2,000 hotel rooms. Non-gaming attractions will make up about 70 percent of the

SJM expects its market share to rebound, chief executive Ambrose So says

development. Asked how many gaming tables he expected the government to allow the casino, Mr So said he had “an idea” based on the constraints the government had put on the number of tables it would permit the city to have. The government has set a limit of 3 percent on the annual growth in the number of gaming tables for the

next decade. “How many tables we get in the end depends on the allocation by the government, which will consider all factors,” Mr So said.

Returning the tables Secretary for Economy and Finance Francis Tam Pak Yuen said

last month that the distribution of gaming tables among the five new casino resort projects in Cotai would depend on the proportion of nongaming facilities each would have. SJM, Galaxy Entertainment Group Ltd, Wynn Resorts Ltd, Melco Crown Entertainment Ltd and MGM China Holdings Ltd are all vying for more tables for future resorts on the strip. Third-quarter results released by SJM last week show its gaming revenue declined by 0.9 year-onyear to HK$18.9 billion, though its net profit surged by 41 percent to HK$1.66 billion. Mr So said the reason for the mixed figures was a solid performance by the mass-market business offset by “a slight drop in the VIP sector”. He said disputes among shareholders about the Greek Mythology casino – a satellite casino that uses SJM’s gaming licence – had also reduced his company’s revenue and market share, which slipped to 26.1 percent from 28 percent. But Mr So is confident that SJM will recover lost ground by making good use of 40 tables moved from Greek Mythology to SJM’s flagship Grand Lisboa casino hotel in September.

Slot parlour Jai Alai faces revamp after Angela Leong lease ban to hit SJM business T

ngela Leong On Kei – fourth consort of former Macau gaming monopolist Stanley Ho Hung Sun – is to lease Jai Alai Palace, one of Macau’s oldest casino and entertainment venues. The move is likely to lead to a transformation of the run down property next door to a warren of sex trade businesses. Jai Alai is within walking distance of the Macau Maritime Ferry Terminal at the Outer Harbour.

According to a Hong Kong regulatory filing yesterday, Ms Leong – a director of Hong Kong-listed SJM Holdings Ltd and mother of Mr Ho’s youngest children – will lease Jai Alai for three years ending December 31, 2016 at a monthly rent of 10.3 million patacas (US$1.3 million). Efort Ltd, an indirect subsidiary of SJM, has signed a lease deal with a firm called Netlink Capital Ltd, a British Virgin Islands company,

owned by Jai Alai, which in its turn is 97.3 percent owned by Ms Leong, according to the filing. SJM stressed in the document it was not giving up operation of the casino – considered one of SJM’s core properties but recently absorbed for accounting purposes into the books of another core property – Casino Oceanus next door. The filing didn’t specify whether Ms Leong would be entitled to a share of gaming revenue from Jai Alai, as happens with so-called ‘satellite’ casinos – venues that rely on SJM’s gaming concession to operate casino games but are owned and often managed by outside parties. But SJM did say it intended to invite outsiders to provide “additional facilities including hotels, restaurants, department stores and others”. M.G.

he upcoming new rules on slot machine parlours will have an impact on the business of SJM Holdings Ltd but the gaming operator will coordinate with the administration to promote responsible gambling, said SJM executive director Angela Leong On Kei. The Policy Address for 2013 announced last week said authorities would continue to encourage responsible gambling. The policy will include a regulation to move slot machine parlours from residential districts. Ms Leong told media on Saturday on the sidelines of the Grand Prix that they were still deliberating with the government on the details of the rules. The proposed regulation would only allow slot parlours to be established within a 500-metre range of a casino and probably lead to the closing of SJM Yat Yuen Canidrome Slot Lounge in Fai Chi Kei. It would have “an impact which would not be small on SJM’s business”, Ms Leong said, quoted by Chinese-language newspaper Shimin Daily, and would require adjustment to SJM’s business strategies in the future. But she stressed they would cooperate with authorities after the introduction of the new rules. Ms Leong also said all SJM employees would get a salary rise next year, but the details were not yet decided. T.L.

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business daily November 19, 2012

macau

All change, no change

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Women in banking The Statistics and Census Service does biannual surveys of the workforce, vacancies and pay in most of the main sectors of the economy. In view of the growing importance of the financial sector, the Statistics and Census Service began doing autonomous surveys for the banking industry, the first covering the first quarter of last year. The most recent surveys of banking, done in March and September this year, found interesting patterns in the make-up of the workforce. When the economy booms, not surprisingly, the banks employ more people. Since the first quarter of last year the strength of the banking workforce has risen by 455 employees or 9.4 percent to 5,317.

One of the distinguishing features of the banking workforce is that it is predominantly female. Since the separate surveys began the ratio of women to men in the banking workforce has been relatively steady at more than 1.41 to one. By the third quarter of this year the ratio had risen to 1.45 to one, meaning women made up almost 60 percent of the workforce. In the first quarter of last year the ratio was 1.46 to one. The line on the chart represents the number of vacancies in the banking workforce. The number of vacancies reached a peak of 5.3 percent of the workforce in the first quarter of this year. It had fallen to 3.2 percent by the third quarter. J.I.D.

59.2 % Bank staff that are women

The leadership shuffle at the top of the central government in Beijing will not greatly alter the local economy says Davis Fong Ka Chio, director of the Institute for the Study of Commercial Gaming at the University of Macau. In an interview with Business Daily, Prof. Fong said that Xi Jinping, the new national president-in-waiting, had already stated the need for Macau’s economic diversification. The best chance for that is via the new economic area on Hengqin Island, thinks Prof. Fong. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

What will be the impact for Macau’s economy of the leadership change in the People’s Republic of China? The new leader [Xi Jinping] used to take care of Macau and Hong Kong issues. Everybody has expectations about what he is going to do. Some of the operators – not just the gaming operators, but also the junkets – have prepared for this already. If you look at 2012 [gaming revenues], most of the junkets just kept VIP operations very stable and at a very moderate growth rate. The new leaders want us to diversify our economy and not to rely so heavily on VIP [gaming revenues]. This is the basic concept. Because of this you can see the reaction of the market, as well as the action taken by the junkets. It seems to me everybody prepared for this already, so I don’t think the new leadership will have a significant impact. For the longer-term, we need some facts. Society expects the industry to be focusing on non-gaming components, rather than gaming components. Even the current leaders of Macau are saying we should diversify the economy and we should add more nongaming components in the gaming industry. It’s fairly obvious that those new projects just approved will have more and more nongaming components.

But this is not a new topic. Even before 1999 everybody was talking about the new economic area. It’s almost 12 years since the handover, and it seems to be very difficult to develop a new economic area within Macau. So in the near future, if my forecast is correct, the new economic sector will happen in Hengqin Island, rather than in the territory [of Macau]. In 2002/2003, the government had a plan for a cross border industrial zone and I was a panel member to evaluate all the projects. Unfortunately, based on my experience in the past decade, I think new industry can only happen outside Macau. Our core structure for industry, compared with Zhuhai, Shenzhen, Hong Kong or even the Greater Pearl River Delta, doesn’t have competitive advantages in terms of human capital and real money capital. So we need new initiatives, land, human capital and a new economic setting. Hengqin can help us to decrease costs, especially labour and other costs such as manufacturing, as it enjoys a very privileged status. For many service industries, that’s important as it [Hengqin] allows a very special tax structure. Looking at the production factors; human resources, raw materials and capital, it is quite flexible and it is a good setting to attract new industries.

Xi Jinping will do something to clean up underground finance in China

Has the local government been using the right strategy to achieve economic diversification? Now I can see the government is making use of a certain strategy. The Chinese medicine [field] is one of the projects already announced. I’m quite optimistic about the future of Chinese medicine, but not in the short run. As for the cultural and creative industries, we are going in the right direction but we can fine-

tune the strategy. We need to combine cultural and creative industries together with the rapid development of the tourism industry. We’re no longer looking [merely] at half a million population, but also 30 million tourists. If the government can combine these two things, there must be some strategic synergy. For example, in the shopping area of casino resorts they could actually reserve some space for the local cultural and creative industries so they can sell their products. And of course the government can provide some incentives. A lot of tourists visit the casino areas, so the exposure will be bigger. If the government can motivate the casino operators to develop a [theatre] show together with local and foreign artists, that’s a good way to do it. Local artists need platforms, but if we just rely on them, it’s very costly. But casinos and integrated resorts have developed a channel already. It’s a very good way to promote cultural and creative industries, instead of starting from zero. Macau’s economy is closely tied to China’s. Do you expect a crisis in China’s credit system? I think he [Xi Jinping] will do something to clean up some underground financial houses in China, but for the long run it will have no impact. Measures have not been taken starting yesterday, but for the past decade already. Since 2007, every one or two years, there have been some measures coming out to crackdown the underground [finance] and the loan shark activities as well as the money laundering issues. China is very big and it’s difficult to change the whole financial setting overnight. China needs to rely on some flexible arrangements in the financial sector.

We run fast and forward... just like them.

November 19, 2012 business daily | 7

MACAU It seems to be very difficult to develop a new economic area within Macau

Considering the possible future changes to China’s financial system, will the junkets, that are at the core of the credit system, be affected? The development of the junkets has gone through different phases. Before 1999, most of the junkets used cash and after the handover, especially after 2003 with the individual visa scheme, lots of people gambling here in Macau come from China. Before they were coming from Hong Kong and they used cash. The mainland VIPs – because of the restrictions of money flow between Macau and China – needed to find a new way to do it. Looking at the trend now, some junkets actually have become listed companies in Hong Kong, so this is a new development. It is now a very low risk business for a big junket to collect, since they can request the money from the financial market and then issue shares/bonds or even ask for a significant large amount of credit line from banks, and it’s not like individual junkets back to 1999 anymore. So, even though there will be some changes in China, with the crackdown of underground financial institutions, the risk [to the casino industry] is low now. If listing on the stock exchange reduces risk in junket business, is that the trend for the future development of junkets in Macau? Now, in Macau around five to six junkets dominate more than 60 percent of the market share. Each of them has a very big company, and it is a balanced number, because we have six casino operators. Because of this I can’t anticipate a big change of this current model, but maybe an improved one, particularly in the way they collect money. This year has seen mass-market gaming revenue growth speed up and the VIP sector slow down. Is this trend likely to be sustained? Yes, I think so. Not just this year, but also next year and the years to come. I’m quite optimistic about the mass-market development rather than the VIP. It’s because of the leaders showing their expectations about Macau, so everybody is preparing for this. As for Cotai’s future developments, do you expect to see them more focused on the mass-market segment? The mass market as well as the premium mass market will outperform [the VIP market]. How can we attract the premium mass market? It’s a group of people looking for the gambling environment but also the nongaming components. Some casino operators just focus on casinos, but the marginal effect of pure gambling hub/casino now is diminishing. If the new projects just focus on casino, I don’t think they will be successful and most of the casino operators understands this.

Not only is the economy heavily dependent on gaming, but also it is very dependent on mainland tourists. Will we be able to attract different visitors? Yes. The government already did something in the last few years. It put a lot of resources in to development of the India market. Looking at this, we need to think more broadly about how we can attract more visitors from far away. Most of the people are coming from Guangdong and are taking buses, private cars or trains because it’s low cost. If we would like to have more international sources of customers we need to develop the airport. It’s difficult to rely on Hong Kong [airport]. Those are the main barriers. But developing an airport is not an easy task. That’s why we need to do it selectively, it means we are not targeting the whole world, but we should pick some markets, such as India. Macau has to become more international so it attracts people to come, especially after the new [Cotai casino] projects [open]. For now, we only have one [permanent stage] show and some individual events, and that is not good.

Casino resorts could reserve shop space for local creative industries to sell their products

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business daily November 19, 2012

GREATER CHINA

Currency convertibility the way forward: Zhou Aims to promote freer movement of capital, central bank governor says

he People’s Bank of China’s next step in overhauling the exchange-rate system will focus on convertibility, Governor Zhou Xiaochuan said, as his omission from a top Communist Party committee indicated he will retire. “For the central bank, I think the next movement related to the yuan is going to be reform of convertibility,” Mr Zhou told the annual meeting of International Financial Forum, an advisory organisation, in Beijing yesterday. “We are going to realise it, we are moving in this direction, we need to go further, we will have some deregulation.” The governor’s comments underscore pledges made by the ruling Communist Party during a once-a-decade power transition last week to promote freer movement of capital in and out of the country for investment purposes and to make the exchange rate more market based. China is seeking to boost the use of the yuan in international trade and finance to reduce the U.S. dollar’s global dominance and curb its own reliance on the currency of the world’s biggest economy. Mr Zhou, who has headed China’s central bank for the past decade, wasn’t named to the new central committee of the Communist Party last Wednesday, suggesting he will probably leave his job. At a November 11 press briefing, Mr Zhou didn’t directly answer a question on retirement. Possible replacements include Shang Fulin, head of China’s banking regulator; Guo Shuqing, chief securities regulator; Industrial & Commercial Bank of China Ltd chairman Jiang Jianqing; and Bank of China Ltd chairman Xiao Gang, according to David Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department and

now an Asia analyst in Los Angeles at TCW Group Inc.

Yuan revaluation During Mr Zhou’s tenure, the country started to overhaul its exchange-rate system and financial markets. Changes included revaluing the yuan and ending its peg to the U.S. dollar in 2005, allowing the currency to become convertible for trade purposes, giving banks more freedom to set interest rates and allowing some foreign institutional investors access to the country’s stock and bond markets. The yuan has appreciated about 33 percent against the dollar since the revaluation. The currency had its biggest weekly gain in a month, closing at 6.2356 per dollar in Shanghai on Friday. HSBC Holdings Plc analysts led by Qu Hongbin, the chief economist for China, said in a report this month that the new leadership may liberalise interest rates and push to make the yuan fully convertible within five years as part of an overhaul that will “revolutionise the country’s financial system.” Premier Wen Jiabao’s government in March picked Wenzhou, a city in eastern China dominated by smaller, non-state enterprises, for a trial programme designed to boost capital for private companies that bore the brunt of an economic slowdown that started in 2010. Mr Zhou said the pilot was hindered partly by the euro area debt crisis as the local economy was heavily reliant on exports to European markets. China has designated areas including Shanghai, Tianjin and the Pearl River Delta to trial reforms in the financial services industry, he said. This will allow the country to accumulate experience and test for

what could go wrong, he added. The new government will continue to value changes initiated at local level by governments and companies to protect their enthusiasm and innovation, Mr Zhou stated. At the same time, it will also still attach great importance to overall planning, he added.

Overheating risks In a separate speech at Caixin Media’s annual conference in Beijing yesterday, Zhou said China’s central bank needs to

We are going to realise it, we are moving in this direction, we need to go further, we will have some deregulation Zhou Xiaochuan, Governor of the People’s Bank of China

be especially alert to the threat of inflation as the country transitions from a planned to a market economy. The central bank is often pressured by interest groups to relax monetary policy and to support growth, he said. Monetary policy needs to be prudent most of the time because “the risks of overheating are always bigger than the risks of an economic

downturn,” he said. China’s 4 trillion yuan (US$586 billion at the time) stimulus, unveiled at the end of 2008 to cushion the economy from the impact of the global financial crisis, was effective in spurring growth, Mr Zhou said. “But every medicine has side effects.” The two-year package, accompanied by an unprecedented

Xi may unveil plan for change late 2013 CICC head expects less government intervention in the economy

Xi Jinping is expected to unveil economic reforms next year

hina’s new leadership, headed by Xi Jinping, will probably unveil new market-oriented changes in late 2013, according to Li Jiange, head of the country’s biggest investment bank. Mr Li, chairman of China International Capital Corp. and a vice chairman of state-owned Central Huijin Investment Co., which holds stakes in the nation’s biggest lenders, said the focus will probably be on reducing government intervention

in the economy and breaking up state monopolies. He was speaking at Caixin Media’s annual conference in Beijing on Saturday. China last week completed the most important phase of a once-adecade power transition with Mr Xi taking over as head of the ruling Communist Party and Li Keqiang, set to become premier in March, made No. 2 in the party hierarchy. They inherit an economy burdened by slower growth, an ageing population,

widening income disparity and environmental degradation that’s fuelling social unrest. “Expectations are high” for the new leadership to make changes as government intervention, ranging from excessive regulation to rigid price controls, has become “unbearable” over the last couple of years, said Mr Li, who previously worked for the Development Research Centre, an organisation that advises the State Council, China’s cabinet. “When inflation was high, many Chinese stores, merchants and even producers received phone calls from regulators telling them not to increase prices,” he said. “But how can a supermarket not change the price of pork if hog prices are rising,” he said. At a separate conference in Beijing, central bank Governor Zhou Xiaochuan said it was “hard to reach consensus” on detailed reforms as China is a big and unbalanced country. The new government will continue

to value changes initiated at local level although it will also still attach great importance to overall planning, he said. China must allow trial reforms so that it can test what could go wrong, he said.

Fingers burned Mr Xi, set to succeed Hu as president in March, may face economic growth of 7 percent in 2013, the slowest in 23 years, according to Pacific Investment Management Co., which runs the world’s largest bond fund. Standard Chartered Plc sees a risk of annual expansion slumping to between 3 percent and 4 percent within 10 to 15 years without marketdriven change to introduce more competition for state enterprises. Li Jiange added his voice to calls by economist Wu Jinglian, billionaire entrepreneur Liang Wengen and liberals including the son of late party chief Hu Yaobang for the government to allow a bigger role for market forces, roll back the dominance of

November 19, 2012 business daily | 9

GREATER CHINA Jaguar Land Rover starts Chinese plant Tata Motors Ltd’s Jaguar Land Rover unit and Chery Automobile Co. will invest 10.9 billion yuan (US$1.75 billion) to build a manufacturing plant in eastern China and create a new brand to cater to the nation’s consumers. The 50:50 venture will also set up a research and development centre and construct an engine plant as part of the investment, according to a statement by Jaguar Land Rover. The company didn’t say in its release which models will be built at the new factory, targeted for completion in 2014.

Home prices inch up on month On improved access to mortgage credit

bank- lending spree, pushed up consumer and asset prices. Inflation accelerated to 6.5 percent in July 2011, a three-year high, forcing the central bank to tighten monetary policy through raising interest rates and increasing the amount of deposits banks must set aside as reserves to rein in credit growth. Bloomberg

state-owned enterprises and give equal treatment to private companies. Mr Li, a member of the Chinese People’s Political Consultative Committee, an advisory body to the nation’s legislature, said the organisation met recently with managers of Chinese private businesses. “They told us they don’t have the willingness or the guts to compete against state players in certain sectors because they have repeatedly had their fingers burned,” Li said. “We must give private business equal treatment.”

hina’s new home prices rose in October in more cities than the previous month, indicating the government will refrain from relaxing curbs on the property market. Prices climbed in 35 of the 70 cities the government tracks, compared with 31 in September, according to data released by the statistics bureau yesterday. Prices fell in 17 cities, the data showed. “With prices rising or unchanged in the majority of the cities, the downward trend in China’s home prices has been restrained,” said Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. “Buyers are now holding a wait-and-see position for the policy direction after the new generation of leadership came out.” The government is unlikely to relax property curbs introduced over two years to rein in surging prices that raised concerns about affordability, after the Communist Party unveiled the new generation of leaders last week. The measures have had a “relatively good” effect and the government will “steadfastly” enforce property controls, Housing Minister Jiang Weixin said at a press conference in Beijing last week. The northwestern city of Urumqi led gains in October, with a 0.5 percent increase from September, according

Steady increases may renew concerns about property inflation

to yesterday’s data. Beijing prices rose 0.2 percent, while those in Shanghai and 17 other cities were unchanged. The government wants to maintain the curbs because steady sales and mild price growth are the “exact situation” it wants to see, while further tightening will damp a tentative recovery in the Chinese economy, Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd, said before the data. China’s gross domestic product slowed to 7.4 percent in the third

Hong Kong growth trails estimates

Reuters

HK’s full-year growth slashed to 1.2 percent

KEY POINTS Xi Jinping set to succeed Hu Jintao as president in March Govt intervention becoming ‘unbearable’ – Li Jiange State-owned enterprises seen as too influential Equal treatment to private companies urged

ong Kong’s economy expanded less than estimated in the third quarter as export gains stalled and retail sales rose at a slower pace. The government also cut its forecast for full year growth. Gross domestic product rose 1.3 percent from a year earlier in the third quarter, the government said on Friday. That compared with the 1.7 percent median forecast in a Bloomberg News survey of 16 analysts and 1.2 percent in the three months through June. The economy grew 0.6

percent from the previous quarter on a seasonally adjusted basis. Hong Kong’s economy is set for its weakest annual expansion since the global financial crisis, adding to challenges for Hong Kong’s new Chief Executive Leung Chun Ying as he grapples with capital inflows that are stoking property prices and testing the local currency’s peg to the U.S. dollar. Financial Secretary John Tsang said last week that the trade-reliant economy may enter recession if its

quarter from a year earlier, the weakest in three years, while gauges of manufacturing and retail sales have pointed to a recovery. “The direction of China’s property policies will not have big changes; it is unlikely for the government to relax property policies in 2013,” Mr Jin said. Home prices rose in 12 cities from a year earlier, the same as in September. With the economy bottoming, home prices won’t have a “bad performance” next year, Mr Liu said. Reuters

major partners show a loss of growth momentum or signs of contraction. “The biggest drag on Hong Kong’s economy is external trade,” said Lily Lo, a Hong Kong-based economist at DBS Group Holdings Ltd. “There is as yet no clear data or evidence pointing to a sharp rebound in key western export markets.” Ms Lo said she is maintaining her full-year forecast for the city’s expansion at 1.5 percent. “The risk of recession is muted as fourth-quarter growth is expected to pick up modestly on the back of a rebound in China’s growth.” The government lowered its estimate for full-year growth to 1.2 percent from an August projection of a range of 1 percent to 2 percent. That would be the slowest pace since 2009 when the economy contracted 2.6 percent. GDP increased 5 percent last year and 7.1 percent in 2010. The new growth estimate “is a prudent forecast,” Helen Chan, the government’s economist, said at a briefing on Friday. “We are confident we can achieve that.” At the same time, she said that after four quarters of “subdued growth, the pressure on the labour market has begun to emerge.” The administration also raised its forecast for the city’s full-year inflation rate to 3.9 percent from 3.7 percent, citing higher global food prices, the impact of quantitative easing in advanced economies and a renewed pickup in housing rental costs. Bloomberg

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business daily November 19, 2012

ASIA

U.S. eases import ban on Myanmar As president Obama starts his visit to Asia president has visited the country, where a military junta ceded power to a semicivilian government last year. The new government has launched rapid reforms, including an overhaul of the economy, an easing of censorship, the legalisation of trade unions and protests, and the freeing of political prisoners. “We urge the Burmese government to continue this progress,” the U.S. statement said. While human rights groups urge Mr Obama to press Myanmar’s military to cede more authority in the country, the president’s aides have said his visit could help lock in political reforms and encourage more.

Setting examples

Barack Obama is the first sitting U.S. president to visit Myanmar

he United States said it will allow imports from Myanmar for the first time in nearly a decade, a move that could boost the struggling economy in the former pariah state. The announcement came before President Barack Obama departed on a

trip to Asia that will include a historic stop in the resource-rich country. The easing of trade restrictions marks another step in the improvement of relations between the two countries and could give a political boost to the former general now leading changes in Myanmar, also known as Burma.

“Today’s joint actions ... are intended to support the Burmese government’s ongoing reform efforts and to encourage further change,” the U.S. government said in a statement on Friday. Mr Obama is expected in Myanmar today. It will be the first time a U.S.

They say the trip could serve as an example to countries such as North Korea that the United States would engage with former foes if they reform. On Friday, the U.S. government issued a waiver and general licence to ease the ban on the import of most goods from Myanmar, although it will not cover jadeite and ruby imports. U.S. officials said the Myanmar government had asked for looser restrictions in order to help their country integrate into the global economy. Ending the U.S. import ban would provide a badly needed economic boost in Myanmar, where the unemployment rate is about 25 percent. The United States imported US$356.4 million of clothing and other goods from Myanmar in 2002, the last full year before the import ban was imposed. Imports fell to US$275.7

Abe hits Noda’s economic record Promises to ‘win back Japan’ as election gets under way Isabel Reynolds and Takashi Hirokawa

he head of Japan’s biggest opposition party said he will make Prime Minister Yoshihiko Noda’s management of the world’s thirdlargest economy a key issue in seeking to unseat him in next month’s election. “This election will be a fight to win back Japan,” Shinzo Abe told reporters at Liberal Democratic Party headquarters in Tokyo after parliament was dissolved for the December 16 vote. “I will do all I can to end the political chaos and stalled economy.” Public support for Mr Noda plummeted as he pushed through a bill doubling the five percent sales tax in a bid to rein in the world’s largest public debt and restarted some nuclear reactors following last year’s Fukushima disaster. Opinion polls show his Democratic Party of Japan is set to lose power, making way for the country’s seventh leader in six years. In a nationally televised press conference, Mr Noda said he decided to call the election after reaching deals to pass a deficit financing bill and electoral revisions. Polls show four-fifths of voters support neither main party, signalling that the next prime minister may have to form a coalition government. Mr Abe advocates increased monetary easing to reverse more than a decade of falling prices and said he would consider revising a law guaranteeing the independence of the

I will do all I can to end the political chaos and stalled economy Shinzo Abe, leader of Japan’s Liberal Democratic Party

Bank of Japan. In an economic policy plan issued yesterday, the LDP said it would pursue policies to attain 3 percent nominal growth. The party governed Japan for more than half a century until ousted by the DPJ in 2009. “We will take on deflation with policies in a different dimension from those the LDP implemented in the past,” Mr Abe said. Mr Noda said the election “is about whether we can go forward or return

to the old politics of the past,” and called for maintaining the central bank’s independence. Mr Abe has taken a harder line than Mr Noda on ties with China that have frayed over rival claims to an island chain in the East China Sea. The LDP leader favours building on the islands, known as Senkaku in Japan and Diaoyu in China, and this week sparked a complaint from China when he met the Dalai Lama and called for

democracy in Tibet. “Healthy nationalism is necessary,” Mr Noda said. “But if we go to extremes, it become xenophobia. We need to pursue diplomatic and security policy more calmly and realistically.” While calling for rebuilding trust with the U.S., Abe says he opposes promising to end all tariffs as a condition to joining U.S.-led TransPacific Partnership trade talks. Bloomberg

November 19, 2012 business daily | 11

ASIA million in 2003 and have been zero in most years since then. U.S. companies are allowed to export to Myanmar and last year shipments increased about fivefold to US$48 million. By comparison, to two-way U.S. trade with Myanmar’s neighbour Thailand was nearly US$36 billion in 2011.

Domestic demand shields Malaysian economy Growth exceeds 5 percent for fifth quarter

Trade talks Mr Obama’s trip to Asia underscores the region’s importance to U.S. growth as his administration seeks to harness economic opportunities abroad. Secretary of State Hillary Clinton reached out to China and touted Asia’s growth prospects in a speech on Saturday that mapped out a foreign policy focused more on economic strength than military might. Mr Obama’s trip signals the U.S.’s increased focus on Asia with the conflict in Iraq over and the war in Afghanistan winding down, Mrs Clinton said in Singapore. Mr Obama arrived in Thailand and met with Prime Minister Yingluck Shinawatra, whose government announced last week it would consider becoming the 12th country to join the Trans-Pacific Partnership (TPP), the U.S. president’s top trade priority and one that includes four other members of the Association of Southeast Asian Nations. On Saturday, Mrs Clinton encouraged China and other Asian countries to join the TPP, which she said the U.S. would combine with other regional trade agreements to reshape global commerce. “We continue to consult with Japan, and we are offering to assist with capacity building so that every country in Asean can eventually join,” she said. “We welcome the interest of any nation willing to meet the 21st century standards of the TPP – including China.” Reuters/Bloomberg

alaysia’s growth exceeded 5 percent for at least a fifth quarter as domestic demand countered an export slowdown, reducing the need for monetary stimulus. Gross domestic product rose 5.2 percent in the three months through September from a year earlier, after expanding a revised 5.6 percent in the previous quarter, Bank Negara Malaysia said in a statement in Kuala Lumpur last Friday. Malaysia’s central bank has refrained from joining other Asian nations in lowering interest rates this year as Prime Minister Najib Razak boosts spending ahead of a general election that must be held by early 2013. The economy is also benefiting from a government drive to lure investment as Mr Najib announced the liberalisation of more services industries and unveiled 6.7 billion ringgit (US$2.2 billion) of projects planned by companies including MMC Corp.’s Johor Port Bhd. “Malaysia’s domestic engine should continue to keep the overall economy afloat,” Irvin Seah, a Singapore-based

economist at DBS Group Holdings Ltd, said before the report. “Consumption growth has remained fairly healthy. The healthy slew of government developmental projects arising” from the so-called economic transformation programme will spur investment growth, he said. Growth in Southeast Asia’s thirdlargest economy will be at least 5 percent or better this year, central bank Governor Zeti Akhtar Aziz told reporters at a press briefing. GDP was earlier projected by the government to expand as much as 5 percent in 2012. “We will of course be affected by external developments, we are not insulated,” Ms Aziz said. “But the anchor to our growth is from domestic demand, and we expect this to continue to be strong.” Services rose 7 percent in the Julyto-September period from a year earlier after climbing 6.6 percent in the second quarter of 2012. Construction rose 18.3 percent last quarter, easing from a 22.2 percent pace the previous period. Exports of goods and services fell 3 percent in the third quarter from a year earlier, after rising 2.1 percent in the second quarter in 2012, according to the report. “The fourth quarter is likely to continue very much as third quarter, although what was uncertain is the export sector because that reflects the developmentsintheglobalenvironment,” Ms Aziz said. “It will continue to remain weak because of the developments taking place in the developed world.” Reuters

Australia must curb costs to lure projects: minister

Costs on Chevron Corp.’s Gorgon liquefied natural gas project off the nation’s northwestern coast may be A$20 billion (US$20.7 billion) more than projected because of a high currency, labour union demands and low productivity, the Australian Financial Review reported last week. “This is not good in terms of attracting further investment,” Mr Ferguson said of the Gorgon announcement. Nations such as Japan, China, South Korea are “monitoring our project costs, delivery and time lines and I think it’s better that we’re forewarned by what’s happening at the moment rather than taking it for granted that these projects will just willy nilly come our way,” he said. BHP last week won a four-year extension to develop its Olympic Dam copper and aluminum mine in South Australia because it faced unforeseen economic circumstances preventing it from moving forward as planned, the state government said. High-cost coal mine projects have been delayed as the price of coking and thermal coal falls in world markets, the minister added. Producers such as Indonesia are increasing output, putting more pressure on Australian

India’s fragile government heads into what promises to be a stormy new parliament session this week, fighting to keep its reform agenda on track while dodging attempts to force fresh elections. The government’s decision in September to raise fuel prices and allow foreign direct investment in the retail sector ended months of policy drift but provoked fierce protests from allies, opposition parties and trade unions. Amid the outcry, the coalition led by Prime Minister Manmohan Singh lost its majority when the regional Trinamool Congress walked out, leaving it dependent on outside parties whose backing in parliament is not guaranteed. The push for pro-market reforms comes as the government faces a slowing economy, a ballooning fiscal deficit and stubbornly high inflation which have piled pressure on the leftleaning Congress party-dominated alliance. India’s gross domestic product expanded at its slowest pace in three years in the second quarter of the year and data for the JulySeptember period expected at the end of the month will underline the extent of the downturn. “This government is facing a serious crisis of credibility at the moment, especially as inflation and unemployment remain high,” Zoya Hasan, professor of political science at Delhi’s Jawaharlal Nehru University, said. “There is some uncertainty about this government’s fate. If the opposition decides to call for a [noconfidence] vote over retail FDI, the government is in a very vulnerable position.” A host of political parties, including the Communist Party (Marxist) and Trinamool led by former ally Mamata Banerjee, have indicated they will move a no-confidence vote against the government after parliament opens on Thursday.

Manila concludes bond buy back

Better managing needed ‘to continue the pipeline of investment’, says Ferguson ustralia needs to reduce project development costs in the resources industry to keep attracting investment as the cushion provided by high commodity prices diminishes, Resources and Energy Minister Martin Ferguson said. “When you’ve got very high iron ore or coal prices, well you can afford to have a bit of fat in the system, have a few over-runs, but the world’s completely changed,” Mr Ferguson told the Australian Broadcasting Corp.’s Inside Business programme yesterday. “All of us have to be conscious about better managing these projects so as to continue the pipeline of investment.” Australia’s economy in the first half grew about 4 percent from the previous year on the strength of resource industry investment and consumer spending. Estimates of a A$230 billion (US$238 billion) pipeline of future projects are being reviewed as plunging iron ore prices prompted mining companies, including BHP Billiton Ltd and Fortescue Metals Group Ltd, to put off projects. Iron ore fell 37 percent between December 30 and September 6 to its lowest price in almost three years. Prices have since rebounded.

India’s govt to face parliament

miners, he said. The government is working on reducing regulations that impede projects, Mr Ferguson added. Companies need to better manage projects and labour unions must also be involved. “We’ve all got to accept we’ve got to pull our weight,” he said. “Look, we’re fortunate. There’s good jobs and investment at the moment but that window through to 2025 is there to be grabbed.” Bloomberg

Future projects are being reviewed as plunging iron ore prices prompted mining companies to put off projects

The Philippines paid around US$1.5 billion to retire U.S. dollar- and euro-denominated global bonds in a tender offer this week as it sought to lower its debt costs by issuing more local-currency bonds, the government said on Saturday. The Philippines, one of the most prolific global bond issuers among emerging economies, will use funds held by the Bureau of the Treasury and proceeds from an offer earlier this month of 30.8 billion pesos (US$750 million) worth of 10year peso-denominated global bonds to finance the debt buyback, including interest. About US$3.8 billion worth of notes, comprised of 15 series of global bonds, were offered by investors during the 6-day tender offer that ended last week. “The exercise will also reduce interest costs for the Republic, avoid bunching up of maturities, and extend the duration profile of the Republic’s outstanding debt portfolio,” National Treasurer Rosalia De Leon said in a statement. The Philippines has aggressively pursued debt management schemes, including becoming the sole issuer of local currency-denominated global bonds in Asia, to narrow its public debt as a percentage of gross domestic product. Those moves have been commended by credit rating agencies. All three of the major credit rating firms rate Philippine sovereign debt at one notch below investment grade. Before this month’s peso global notes, the Philippines public debt to GDP stood at 42 percent, down sharply from 68 percent nearly a decade ago. Its interest payments now account for around a fifth of state spending from close to a third in 2005. Manila is also selling US$500 million in dollar bonds to the local market via a state auction on November 28 to help create dollar demand and dampen the rapid rise in the peso, currently hovering near 5-year highs to become Asia’s best performing currency this year. AFP

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business daily November 19, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.1

14477229

CHINA UNICOM HON

ALUMINUM CORP-H

3.31

1.846154

16378000

CITIC PACIFIC

BANK OF CHINA-H

3.14

0.9646302

230413132

BANK OF COMMUN-H

5.34

0.1876173

24323527

BANK EAST ASIA

28.55

-0.1748252

654483

BELLE INTERNATIO

14.58

1.532033

8407500

BOC HONG KONG HO

ESPRIT HLDGS

12.16

-6.17284

23735082

TENCENT HOLDINGS

2434633

HENDERSON LAND D

84.85

0.8917955

17591570

CHINA OVERSEAS

SINO LAND CO SWIRE PACIFIC-A

15477000

CHINA MOBILE

8858628

13399833

-0.1351351

5327190

0.8143322

1.909548

-0.1776199

0.6493506

30.95

10.14

7.39

23.25

SANDS CHINA LTD

COSCO PAC LTD

112.4

CHINA MERCHANT

1637298

3031275

SUN HUNG KAI PRO

CHEUNG KONG

33166075

0.5065856

1734025

HANG SENG BK

184549497

33843827

4038139

0.1760563

DAY %

66.85

0.30326

13150330

-0.4494382

PRICE

POWER ASSETS HOL

1.524778

0.295858

5.69

9.92

NAME

15.98

-0.6369427

22.15

33258451

66.15

23.4

CHINA LIFE INS-H

VOLUME

2.867384

CNOOC LTD

13.56

CHINA CONST BA-H

DAY %

11.48

CLP HLDGS LTD

CATHAY PAC AIR CHINA COAL ENE-H

PRICE

HANG LUNG PROPER

26.4

-0.9380863

6455295

TINGYI HLDG CO

114.9

0.349345

1031913

WANT WANT CHINA

WHARF HLDG

0.3787879

2225153

HENGAN INTL

70.1 -0.07127584

2562600

HONG KG CHINA GS

20.2

1.507538

6404918

HONG KONG EXCHNG

123

0.7371007

2469520

HSBC HLDGS PLC

73.95

5472437

HUTCHISON WHAMPO

76.35

-0.4563233

4002398

20.75

0.4842615

8168213

CHINA PETROLEU-H

7.85

62980986

CHINA RES ENTERP

25.85

0.3883495

1334132

MTR CORP

IND & COMM BK-H LI & FUNG LTD

5.02

0.1996008

159503908

12.06

-4.739336

49896208

29.7

2.237522

2423510

MOVERS

HIGH

21442.98

LOW

21108.35

18.66

0.2148228

4223000

NEW WORLD DEV

11.86

10529553

52W (H) 22149.69922

16.86

0.8373206

10292060

PETROCHINA CO-H

10.14

0.3960396

60600930

(L) 17613.19922

PING AN INSURA-H

59.6

0.1680672

7449943

PRICE

DAY %

VOLUME

23.85

2.141328

13433600

YANZHOU COAL-H

CHINA PETROLEU-H

7.85

62980986

0.9852217

12728744

-0.9077156

2977571

1.332149

5063783

92.8

1039138

248.2

-0.4012841

8850305

23.3

-0.4273504

5008003

10.42

-2.251407

10930277

53.6

0.9416196

1813964

6 21445

CHINA RES LAND

30.75

13.1 114.1

INDEX 21159.01

CHINA RES POWER CHINA SHENHUA-H

VOLUME

21100

14-November

16-November

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.3

0.3039514

68924552

AIR CHINA LTD-H

5.06

0.1980198

7848000

ALUMINUM CORP-H

3.31

1.846154

16378000

CHINA RAIL CN-H

8.32

1.711491

9808710

ANHUI CONCH-H

24.6

-1.204819

8575000

CHINA RAIL GR-H

4.21

1.445783

22617000

BANK OF CHINA-H

3.14

0.9646302

230413132

CHINA SHENHUA-H

30.75

0.9852217

12728744

CHINA PACIFIC-H

5.34

0.1876173

24323527

CHINA TELECOM-H

4.15

4.010025

154484693

19.36

-2.320888

5668704

DONGFENG MOTOR-H

9.71

1.462905

19259514

CHINA CITIC BK-H

3.86

0.5208333

25496200

GUANGZHOU AUTO-H

5.29

4.133858

9371181

CHINA COAL ENE-H

7.39

-0.1351351

15477000

HUANENG POWER-H

6.28

-0.6329114

14548000

CHINA COM CONS-H

6.84

0.736377

16372500

IND & COMM BK-H

5.02

0.1996008

159503908

CHINA CONST BA-H

5.69

0.1760563

184549497

JIANGXI COPPER-H

19.04

-0.41841

9483287

CHINA COSCO HO-H

3.49

9636000

PETROCHINA CO-H

10.14

0.3960396

60600930

BANK OF COMMUN-H BYD CO LTD-H

22.15

-0.4494382

33166075

PICC PROPERTY &

9.79

0.6166495

8231795

CHINA LONGYUAN-H

4.82

0.4166667

5848000

PING AN INSURA-H

59.6

0.1680672

7449943

CHINA MERCH BK-H

13.84

10104613

SHANDONG WEIG-H

9.9

-1

2824270

CHINA LIFE INS-H

NAME

PRICE

DAY %

VOLUME

11.26

0.1779359

18494320

ZIJIN MINING-H

3.09

-1.277955

21606950

ZOOMLION HEAVY-H

9.45

1.831897

25454000

ZTE CORP-H

11.1

-2.288732

5604955

MOVERS

123

2 10410

INDEX 10242.7 HIGH

10405.76

LOW

10199.6

CHINA MINSHENG-H

7.11

0.2820874

18617613

SINOPHARM-H

24.85

1.01626

1169200

52W (H) 11916.1

CHINA NATL BDG-H

9.52

0.6342495

25174000

TSINGTAO BREW-H

40.95

-1.086957

1743500

(L) 8987.76

CHINA OILFIELD-H

14.5

2.2567

9083290

WEICHAI POWER-H

27.65

3.171642

1747642

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

4.6

1.098901

65881130

SHANDONG DONG-A

39.15

-2.247191

4653049

SHANDONG GOLD-MI

36.01

-2.146739

7001217

10190

14-November

16-November

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.58

76516212

CSR CORP LTD -A

AIR CHINA LTD-A

4.62

-1.492537

11879222

DAQIN RAILWAY -A

6.07

0.1650165

23660139

ALUMINUM CORP-A

4.78

-0.8298755

10857788

DATANG INTL PO-A

4.06

-0.7334963

2865604

SHANG PHARM -A

10.65

-1.297498

5365357

15.58

0.516129

7261191

10.94

0.3669725

4614837

SHANG PUDONG-A

7.36

-0.8086253

33266319

ANHUI CONCH-A

EVERBRIG SEC -A

NAME

BANK OF BEIJIN-A

7.03

-0.4249292

17816165

GD POWER DEVEL-A

2.32

-0.4291845

21617615

SHANGHAI ELECT-A

3.87

-1.023018

3420700

BANK OF CHINA-A

2.75

-2.135231

20829989

GF SECURITIES-A

12.15

0.5794702

15029085

SHANXI LU'AN -A

16.47

-1.258993

7705980

BANK OF COMMUN-A

4.17

-0.2392344

26776542

GREE ELECTRIC

22.75

-0.6550218

8962182

SHANXI XINGHUA-A

37.67

-8.099536

8463558

BANK OF NINGBO-A

8.85

0.2265006

4740923

GUANGHUI ENERG-A

15.24

-1.423027

11988073

SHANXI XISHAN-A

11.72

-1.677852

9896142

BAOSHAN IRON & S

4.62

-0.2159827

20257874

HAITONG SECURI-A

8.27

-0.3614458

29445305

SHENZEN OVERSE-A

5.67

-0.3514938

12879295

16.23

1.4375

3952773

HANGZHOU HIKVI-A

28.18

0.4992867

1699349

SICHUAN KELUN-A

52.3

-2.297777

684119

CHINA CITIC BK-A

3.55

-0.5602241

12329908

HENAN SHUAN-A

59.75

0.5046257

1272825

SUNING APPLIAN-A

6.3

-0.1584786

22013932

BYD CO LTD -A CHINA CNR CORP-A

4.08

0.7407407

38619015

HONG YUAN SEC-A

16.51

1.412776

6511695

TASLY PHARMAC-A

51.87

2.773925

4657507

CHINA COAL ENE-A

6.9

-0.1447178

6183806

HUATAI SECURIT-A

8.25

-0.241838

7778584

TSINGTAO BREW-A

30.4

-0.4909984

1281132

CHINA CONST BA-A

4.2

0.4784689

28951383

HUAXIA BANK CO

8.3

-0.5988024

13682499

WEICHAI POWER-A

20.36

-0.5373718

3803329

CHINA COSCO HO-A

-0.4975124

5234172

IND & COMM BK-A

3.83

-0.2604167

55659859

WULIANGYE YIBIN

30.91

-3.707165

32824379 10692542

CHINA CSSC HOL-A

18.81

-3.538462

3580680

INDUSTRIAL BAN-A

12.33

-0.9638554

24894513

YANGQUAN COAL -A

12.95

-2.631579

CHINA EAST AIR-A

3.14

-1.567398

14834758

INNER MONG BAO-A

32.72

-0.2134797

39118306

YANTAI CHANGYU-A

40.59

-1.956522

1327345

CHINA EVERBRIG-A

2.56

-0.3891051

33599851

INNER MONG YIL-A

21.21

-0.3757633

6050366

YANTAI WANHUA-A

1.483216

6691239

CHINA INTERNAT-A

28.47

0.5651713

2180515

INNER MONGOLIA-A

5.15

-0.1937984

30514570

YANZHOU COAL-A

16.48

-2.944641

3635881

CHINA LIFE INS-A

17.37

-3.5

14131501

JIANGSU HENGRU-A

28.97

-0.1034483

1726889

YUNNAN BAIYAO-A

64.4

-1.529052

1873145

CHINA MERCH BK-A

9.96

-0.5988024

21561266

JIANGSU YANGHE-A

107.65

-0.9750713

864055

ZHONGJIN GOLD

15.13

-2.638353

17344634

CHINA MERCHANT-A

8.61

-1.487414

16816280

JIANGXI COPPER-A

20.32

-1.167315

4781601

ZIJIN MINING-A

3.69

-1.072386

31122352

JINDUICHENG -A

10.87

-1.181818

2801525

ZOOMLION HEAVY-A

8.13

0.1231527

22410736

10.8

-2.439024

12130662

ZTE CORP-A

7.99

-3.151515

18381557

15.83

-1.493466

7243831 1967713

CHINA MERCHANT-A

21.82

1.205937

3222267

CHINA MINSHENG-A

6.09

-0.6525285

73902880

JIZHONG ENERGY-A

CHINA NATIONAL-A

6.74

0.5970149

23878674

KANGMEI PHARMA-A

CHINA OILFIELD-A

15.54

0.4524887

2923729

KWEICHOW MOUTA-A

224.4

-1.254125

CHINA PACIFIC-A

16.7

-3.356481

20364058

LUZHOU LAOJIAO-A

35.26

-2.245633

9902985

2.01

-0.4950495

14513063

-0.8064516

11767173

CHINA PETROLEU-A

6.04

-1.948052

20790625

METALLURGICAL-A

CHINA RAILWAY-A

5.21

0.5791506

18293160

NINGBO PORT CO-A

2.46

CHINA RAILWAY-A

2.77

0.3623188

42004417

PANGANG GROUP -A

3.44

-3.098592

45871799

PETROCHINA CO-A

8.57

-0.4645761

12517279

CHINA SHENHUA-A

21.72

-1.763908

5506716

CHINA SHIPBUIL-A

4.27

0.7075472

18868004

PING AN BANK-A

13.1

-0.3802281

14755857

37.09

-1.800371

MOVERS

13 2225

INDEX 2177.24

CHINA SOUTHERN-A

3.35

-1.179941

20365014

PING AN INSURA-A

16040754

HIGH

2224.21

CHINA STATE -A

3.05

22547704

POLY REAL ESTA-A

11.16

0.2695418

29759113

LOW

2164.6

CHINA UNITED-A

3.29

-1.497006

64682607

QINGDAO HAIER-A

11.12

-1.067616

6614537

CHINA VANKE CO-A

8.22

-0.3636364

38587583

QINGHAI SALT-A

23.68

1.587302

3214171

CHINA YANGTZE-A

6.28

-0.6329114

10520191

SAIC MOTOR-A

13.07

6989395

10.51

37805807

SANY HEAVY INDUS

8.96

0.5611672

12345295

PRICE DAY %

Volume

PRICE DAY %

Volume

CITIC SECURITI-A

209

52W (H) 2717.825 (L) 2162.976

2160

14-November

16-November

FTSE TAIWAN 50 INDEX NAME

NAME

ACER INC

23.9

2.35546

20839863

FORMOSA PLASTIC

ADVANCED SEMICON

22.3

10922417

FOXCONN TECHNOLO

ASIA CEMENT CORP

36.15 -0.2758621

2161334

FUBON FINANCIAL

30.6

ASUSTEK COMPUTER

308.5 -0.8038585

3120030

HON HAI PRECISIO

89.7 -0.4439512

AU OPTRONICS COR

11.25

-2.173913

54650431

HOTAI MOTOR CO

187

2.465753

694323

CATCHER TECH

138.5

2.973978

33054584

HTC CORP

248.5

CATHAY FINANCIAL

28.75 -0.1736111

12771956

HUA NAN FINANCIA

CHANG HWA BANK

14.6

4556472

LARGAN PRECISION

CHENG SHIN RUBBE

5311397

LITE-ON TECHNOLO

CHIMEI INNOLUX C

68.6

1.329394

29034330

97 -0.5128205

4891788

0.4784689

TPK HOLDING CO L

416

-2.347418

5357844

12977938

TSMC

90.2

33802911

30927835

UNI-PRESIDENT

51.3

4767880

UNITED MICROELEC

10.55 -0.4716981

17510432

4.631579

39850013

WISTRON CORP

28.25

0.3552398

5275758

4195937

YUANTA FINANCIAL

13.25 -0.7490637

11944643

675

-2.173913

1422157

YULON MOTOR CO

37.25 -0.4010695

4790514

46386944

MEDIATEK INC

315 -0.9433962

14676791

MEGA FINANCIAL H

20.8

1.463415

12509052

CHINA STEEL CORP

24.8

-0.8

13076660

NAN YA PLASTICS

47.3

0.8528785

11330101

CHINATRUST FINAN

15.5 -0.3215434

33627292

PRESIDENT CHAIN

149

1.360544

1292109

49.8

0.1005025

3625213

5756312

4822027

QUANTA COMPUTER

68.2

0.1468429

7040251

18.35 -0.8108108

16977801

SILICONWARE PREC

28.45

0.8865248

5949462

DELTA ELECT INC

101

-3.809524

8722291

SINOPAC FINANCIA

11.3 -0.4405286

7893605

FAR EASTERN NEW

30.8

0.8183306

3758180

SYNNEX TECH INTL

55.5

-1.420959

3848959

FAR EASTONE TELE

69.5 -0.7142857

7708836

TAIWAN CEMENT

36.4

0.1375516

3968163

FIRST FINANCIAL

16.3 -0.6097561

10997523

FORMOSA CHEM & F

61.2

FORMOSA PETROCHE

4910033

15.2 -0.3278689

11 -0.9009009

92.6

Volume

105

6.46 -0.1545595

COMPAL ELECTRON

PRICE DAY %

TAIWAN MOBILE CO

CHINA DEVELOPMEN

CHUNGHWA TELECOM

NAME

TAIWAN COOPERATI

15.2

-1.298701

5036490

2.684564

9728084

TAIWAN FERTILIZE

69.8

0.4316547

3102417

80 -0.1248439

2074063

TAIWAN GLASS IND

24.3

-5.447471

4566218

MOVERS

7 5020

INDEX 4991.75 HIGH

5019.33

LOW

4946.26

52W (H) 5621.53 4940

(L) 4643.05 14-November

16-November

November 19, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 37.00

28.0

13.20

27.8

13.15 36.75

27.6

13.10

27.4

13.05

27.2

36.50

13.00

31.2

18.2

21.60

31.1

21.45 18.1

31.0

21.30

30.9

21.15 18.0

30.8

Commodities ENERGY

CURRENCY EXCHANGE RATES

NAME

PRICE

WTI CRUDE FUTURE Jan13

86.92

1.222778619

-11.115656

109.6699982

79.68000031

BRENT CRUDE FUTR Jan13

108.95

0.870289788

5.265700483

120.7699966

90.15999603

GASOLINE RBOB FUT Dec12

271.01

0.51554039

9.21657129

295.8800077

217.2600031

GAS OIL FUT (ICE) Jan13

922.75

-1.098606645

2.956764296

1036.25

799.25

3.79

2.349446395

0.878360394

4.350000381

2.90899992

NATURAL GAS FUTR Dec12 HEATING OIL FUTR Dec12 METALS

DAY %

YTD %

(H) 52W

298.68

0.447284345

4.018945462

335.1700068

254.2500019

1713.73

-0.6118

9.5098

1796.08

1522.75

Silver Spot $/Oz

32.3275

-1.0181

16.1398

37.4775

26.1513

Platinum Spot $/Oz

1558.48

-0.8714

11.7591

1736

1339.25

626.7

-0.6815

-4.101

725.19

553.75

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

1951

-0.66191446

-3.415841584

2361.5

1827.25

LME COPPER 3MO ($)

7605

-0.451600236

0.065789474

8765

7100.25

LME ZINC

1920

-1.79028133

4.06504065

2220

1745

3MO ($)

LME NICKEL 3MO ($)

15960

0.314267756

-14.69802245

22150

15236

14.845

-0.134544231

-3.321393683

16.60000038

14.60000038

731

0.827586207

21.78259059

846.25

511

WHEAT FUTURE(CBT) Mar13

853.75

-0.870827286

16.3147139

948.25

652

SOYBEAN FUTURE Jan13

1383.25

-1.337375178

14.0354493

1781.5

1126.75

COFFEE 'C' FUTURE Mar13

152.5

-0.974025974

-35.91090565

249

SUGAR #11 (WORLD) Mar13

19.15

0.577731092

-18.02226027

COTTON NO.2 FUTR Mar13

72.64

0.553709856

-17.93017738

AGRICULTURE ROUGH RICE (CBOT) Jan13 Mar13

PRICE

(L) 52W

Gold Spot $/Oz

CORN FUTURE

MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

1.0339 1.5883 0.9455 1.2743 81.32 7.9846 7.7525 6.2355 55.175 30.74 1.2272 29.203 41.333 9629 84.073 1.20475 0.80224 7.9496 10.1664 103.6 1.03

-0.0097 0.1956 -0.201 -0.1332 -0.1107 -0.0088 -0.0155 -0.0257 -0.8881 -0.0976 -0.2037 -0.4143 -0.2008 0 -0.0952 -0.0573 0.344 -0.0403 0.2095 0.0483 0

YTD %

(H) 52W

1.2734 2.1875 -0.7827 -1.682 -5.423 0.1879 0.1922 0.9542 -3.8242 2.635 5.6551 3.6846 6.0654 -5.8158 -6.7096 0.9994 3.8829 2.3221 1.8256 -3.8031 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.3569 84.18 8.0308 7.7979 6.3964 57.3275 32 1.315 30.5 44.35 9662 88.637 1.24438 0.86648 8.613 10.887 111.44 1.0311

0.9582 1.5235 0.8931 1.2043 76.03 7.9823 7.7498 6.2202 48.6088 30.2 1.2152 28.914 40.996 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

NAME

2.64

1.149425

3.25

2.16

1038575

149.4499969

CROWN LTD

9.89

0.6103764

22.24969

10.2

7.92

2390820

25.12999916

18.65999985

AMAX HOLDINGS LT

0.062

-10.14493

-28.73563

0.119

0.055

28855000

98.5

66.84999847

BOC HONG KONG HO

23.4

-0.6369427

27.17392

16.24

13150330

CENTURY LEGEND CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

21.00

PRICE

DAY % YTD %

VOLUME CRNCY

0.255

10.86956

0.335

0.204

4.16

-0.4784689

48.57143

4.36

2.5

51070 8168213

CHINA OVERSEAS

20.75

0.4842615

60.04137

21.95

11.507

CHINESE ESTATES

11.28

-9.76

13.26

8.3

14000

CHOW TAI FOOK JE

10.04

1.414141

-27.87356

15.16

8.4

2167800

EMPEROR ENTERTAI

1.62

5.194805

45.94594

1.63

0.99

3005000

FUTURE BRIGHT

1.24

-1.587302

195.2381

1.36

0.37

138000

GALAXY ENTERTAIN

27.25

-1.268116

91.36236

29.45

13.2

11936423

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12588.31

0.3661984

3.034567

13661.87

11231.56

NASDAQ COMPOSITE INDEX

2853.131

0.5708624

9.518884

3196.932

2441.48

HANG SENG BK

114.9

0.349345

24.68801

120

91.05

1031913

FTSE 100 INDEX

5605.59

-1.270926

0.5977815

5989.07

5075.22

HOPEWELL HLDGS

28.95

-2.360877

47.68782

31.091

18.319

2141500

DAX INDEX

6950.53

-1.31882

17.83854

7478.53

5366.5

HSBC HLDGS PLC

73.95

25.33898

5472437

HUTCHISON TELE H

3.21

1.904762

7.357859

3.88

2.81

3262000

LUK FOOK HLDGS I

20.15

0.75

-25.64576

34.3

14.7

1023000

MELCO INTL DEVEL

7.62

0.131406

32.06239

8.28

5.12

4504000

NIKKEI 225

9024.16

2.202108

6.727227

10255.15

8135.79

HANG SENG INDEX

21159.01

0.2372456

14.78009

22149.69922

17613.19922

CSI 300 INDEX

2177.24

-0.7468467

-7.183312

2717.825

2162.976

MGM CHINA HOLDIN

13.14

-0.4545455

36.98696

14.76

9.347

1395600

TAIWAN TAIEX INDEX

7130.07

-0.1927535

0.8199815

8170.72

6609.11

MIDLAND HOLDINGS

3.55

-0.2808989

-10.21857

5.217

3.249

2174000

NEPTUNE GROUP

0.155

39.63964

0.222

0.08

95000

NEW WORLD DEV

11.86

89.45686

13.2

6.13

10529553

SANDS CHINA LTD

8858628

KOSPI INDEX

1860.83

-0.5286735

1.921958

2057.28

1750.6

S&P/ASX 200 INDEX

4336.848

-0.2851526

6.909489

4581.8

3973.8

4351.284

0.4432047

13.8486

4366.856

3618.969

FTSE Bursa Malaysia KLCI

1629.28

-0.1470877

6.438108

1679.37

1424.19

NZX ALL INDEX

860.386

0.0444184

17.89334

874.107

712.548

JAKARTA COMPOSITE INDEX

30.95

0.8143322

41.00227

33.05

19.96

SHUN HO RESOURCE

1.21

0.8333333

1.37

0.95

36000

SHUN TAK HOLDING

3.19

1.269841

24.65182

3.51

2.418

3406659

SJM HOLDINGS LTD

18.12

0.7786429

44.89583

18.18

11.519

7663865

SMARTONE TELECOM

14.4

-1.098901

7.14286

17.5

11.72

2270077

WYNN MACAU LTD

21.1

-2.314815

8.205128

25.5

14.62

6046778

ASIA ENTERTAINME

3.61

8.083832

-38.60544

7.24

2.4

217151

BALLY TECHNOLOGI

44.47

1.413911

12.41152

51.16

35.45

979132 2000

PHILIPPINES ALL SHARE IX

3578.16

0.2659254

17.50781

3607.89

2952.17

HSBC Dragon 300 Index Singapor

575.61

-1.38

15.97

STOCK EXCH OF THAI INDEX

1280.13

0.4795843

24.85176

1314.64

965.07

HO CHI MINH STOCK INDEX

385.71

-0.3101496

9.716969

492.44

332.28

BOC HONG KONG HO

3.15

31.40399

3.3

Laos Composite Index

1233.05

3.059911

37.08781

1241.19

876.33

GALAXY ENTERTAIN

3.48

-0.8547009

86.09626

3.73

1.68

4100

INTL GAME TECH

12.73

1.272872

-25.98838

18.1

10.92

7219524

JONES LANG LASAL

74.99

1.985584

22.41267

87.52

55.88

230991

LAS VEGAS SANDS

42.27

4.215976

-1.076526

62.09

34.72

10968295

MELCO CROWN-ADR

13.83

2.067927

43.763

16.02

8.18

3591946

MGM CHINA HOLDIN

1.76

47.68902

1.96

1.1917

2000

MGM RESORTS INTE

9.64

2.881537

-7.574308

14.9401

8.83

24654909

12.93

2.132701

10.32423

18.77

10.22

264576

2.32

3.111111

44.31695

2.32

1.4695

1200

104.33

-0.2104256

0.7031737

129.6589

84.4902

2014254

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

SHUFFLE MASTER SJM HOLDINGS LTD WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily November 19, 2012

Opinion China’s State Council says ‘no comment’ to social media Adam Minter

Shanghai correspondent for the World View blog

s it possible to understand public opinion without actually having to listen to it? In the corridors of Chinese power, the answer is yes. Take the curious case of China’s State Council, the country’s highest governmental body, and its recent move to join China’s social-networking craze. For much of its history, the 35-member State Council, which administers the laws and policies of the Communist Party, has communicated its work via the “Gazette of the State Council,” a compendium of rules and regulations issued every 10 days to a wide variety of Communist Party and governmentaffiliated outlets, including public libraries. Readership, presumably, has been narrow, and certainly not as wide as that enjoyed by the policies of local governments that have developed followings - if not popularity - by delving into China’s expanding socialmedia ecosystem. According to Chinese state media, there were about 51,000 governmentoperated micro blogging accounts in China as of late September, the vast majority of them focused on local government policies. The city of Shanghai’s official account on Sina Weibo, China’s most popular Twitter-like micro blog, enjoys more than 2.4 million followers of its steady stream of municipal news, announcements and self-promoting propaganda, making it among the most popular of government-run micro blogs in China. Other, more practical micro blogs, such as those connected to law enforcement, also are well-known. For example, the account belonging to Nanjing’s Public Security Bureau enjoys 1.5 million followers, who receive winter driving tips and other safetyminded directives.

which doesn’t allow users to leave comments on tweets, Sina Weibo and other Chinese micro blogging services provide space for robust comment threads - nearly identical to the comment sections on traditional blogs and news stories. Typically, these embedded comment sections are subject to much less censorship than tweets themselves and are far more popular (a fact not unknown to the authorities, who temporarily shut them down in reprisal for rumour-mongering last spring). The comment sections also allow dissent to be concentrated in one place. So, if a Sina Weibo user has an issue with Nanjing’s winter driving tips, the user has an open forum to make that known, right below the tweet, along with potentially thousands of other users. In the modern history of how the Chinese Communist Party interacts with the Chinese people, this is a big step forward. In a limited sense, information flow is no longer one-way, from the rulers to the ruled. Instead, it moves in one direction (toward those who can afford a computer, smartphone or other technology necessary for a micro blogging account), and then occasionally gets thrown back in the rulers’ faces. Of course, talking back isn’t a habit that the top leadership of the Chinese Communist Party is accustomed to cultivating in its subjects, especially on sensitive issues. Still, modern times require modern ways - or, at least, modern propaganda. The ability to spoon-feed carefully crafted “official” information to the more than 300 million Chinese people who hold Sina Weibo accounts (according to the company) is enticing. So, unable to resist, the Gazette of the State Council announced it had established a Sina Weibo account.

Robust commentary

Information vacuum

What makes these local government accounts so compelling isn’t that the Chinese people can follow their favourite bureaucrats, but rather that they can talk back to them. Unlike Twitter,

The timing was appropriate. In Beijing, the country’s rulers were in midst of the 18th National Congress of the Communist Party of China, an event shrouded in secrecy, rumours and outright

paranoia. Ostensibly, the purpose of the event was to elect China’s top leadership – in particular Politburo Standing Committee, which will oversee the Chinese Communist Party for the next 10 years. But for anyone keen to learn who the candidates might be, what they represent or how they would be selected, there was a total vacuum of information available in the Chinese media. Instead, the state-owned media has been limited to hagiographic websites, special sections and long-winded stories about speeches and the last decade of (indisputable) economic progress. Meanwhile, China’s micro bloggers, collectively the closest thing that China has to an alternative press,

Transparency, even of a limited variety, is a valued commodity in contemporary China

good discussion of Sparta and the Spartans couldn’t find it on Sina Weibo last week: In Chinese, “Spartans,” sounds a lot like “Big 18,” a common shorthand for the 18th congress, and thus it’s banned. (“Big feces cake,” another “Big 18” sound alike, was also banned). The opaque atmosphere surrounding the congress surely contributed to the enthusiasm that greeted the State Council’s new Sina Weibo account. Transparency, even of a limited variety, is a valued commodity in contemporary China. According to Xinhua, the state newswire, 218,000 people had followed the new account by 8pm on the first day. As of past Monday, the account’s first tweet - the one announcing the account - had been forwarded – or retweeted – more than 42,000 times, and the account had more than 290,000 followers. (However, a brief scan of those followers reveals that many are probably so-called “zombie” or fake followers.) The account has tweeted 13 additional times – all within a 21-minute period early Saturday morning – on arcane policies such as a domestic waterways transportation management ordinance and a month-old list of appointments to the State Council.

Propagating propaganda were all but prohibited from tweeting about the proceedings in Beijing. Sina Weibo has blocked searches for the congress and words and phrases that play on it. Chinese students of ancient Greek history looking for a

Had this underwhelming content been posted to the Sina Weibo account belonging to the city of Nanjing, netizens surely would have taken advantage of the service’s comment function to register their feelings. But the State Council’s Sina Weibo account

is all but unique among Sina Weibo accounts in China – and not just government ones – in outright prohibiting comments of any kind. Rather, users have one way to interact directly with the State Council’s content: re-tweet it. In other words, they can be agents of state propaganda, or they can keep their comments and opinions to themselves. News of the account, and its painfully telling comment policy, trended on Sina Weibo over the weekend. But despite a very tight media environment surrounding the congress, critical remarks directed at the policy - and the Communist Party that devised it – have proliferated and persisted on Chinese micro blogs. Late Monday morning, Chengdu Business Daily, a newspaper in Sichuan province, tweeted news of the State Council account via its Sina Weibo account, noting the suspended comment function. It also linked to a Xinhua story claiming that the account would provide a “window to understand the people.” An hour later, an anonymous Sina Weibo user in Sichuan posted the following, very representative sentiment, in the comment section of the Chengdu Business Daily’s tweet: “If you want to understand the people, then why don’t you let the people comment? It seems that they fear public opinion!” Some Sina Weibo users didn’t confine themselves to the comment sections of other users’ tweets to broadcast their displeasure with the State Council’s “no comment” policy. In Shanghai, a Sina Weibo user who uses the handle “Mild Nationalist” offered an even more cutting assessment on his own account: “The State Council Gazette is online but adheres to the fine traditions of our Party: the people are not allowed to comment.” Perhaps as China’s politically sensitive leadership-transition process winds to its end, the State Council will be open to revising tradition and allowing comments on its tweets. After all, it’s one thing to allow comments; it’s quite another to listen to them. 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 José I. Duarte Associated editor Michael Grimms Newsdesk Vitor Quintã (Chief Reporter), Alex Lee, Stephanie Lai, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, 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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November 19, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

Obama 2.0

Christopher R. Hill

Dean of the Korbel School of International Studies, University of Denver and former U.S. Assistant Secretary of State for East Asia

Asahi Shimbun The estimated number of foreigners who visited Japan decreased from pre-quake levels for the fourth consecutive month in October, the Japan National Tourism Organisation said on Friday. The figure for October, which includes sightseeing and business trips, stood at 706,100, down 2.9 percent from the same month in 2010, which was five months before the Great East Japan Earthquake. The decrease in the number of visitors from China (excluding Macau and Hong Kong) was especially conspicuous, at 33.2 percent, it said.

the Arab world’s lonely, Shia-led black sheep – at its root?

International cooperation

Bangkok Post The Bank of Thailand should retain the right to implement measures that manoeuvre foreign capital inflows in any negotiation of the Trans-Pacific Strategic Economic Partnership Agreement, governor Prasarn Trairatvorakul was quoted as saying. He said the economy has recorded a fairer balance between capital inflows and outflows this year, and along with declining trade gains these have reduced the pressure on the baht’s appreciation. U.S. President Barack Obama is expected to push for Thailand to enter negotiations during his visit this week.

Jakarta Globe The Jakarta government is set to increase the monthly minimum wage by 44 percent in the nation’s capital. The Jakarta Wage Council chose to raise the monthly minimum wage to Rp 2.22 million (US$230), which is higher than business leaders’ proposal of Rp 1.98 million but less than workers’ demand of Rp 2.79 million. Higher wages are typically meant to be in line with higher consumer prices, which have been rising on average around 5 percent in the past three years across the country. Inflation last month hit 4.61 percent.

Economic Times India’s government is considering giving greater autonomy and empowerment to central public sector enterprises (CPSEs), a top official was quoted as saying. “More reforms are under consideration pursuant of CEOs of CPSEs meeting with Prime Minister Manmohan Singh,” secretary in the Department of Public Enterprises, O P Rawat said. Mr Rawat said several reforms such as Memorandum of Understanding exercise, quarterly performance review and empowerment of the board of companies, have been introduced for CPSEs but much more is still needed.

t’s over. After a year-long campaign costing US$2.56 billion (estimates vary widely), President Barack Obama has won a second four-year term, with 49 states reporting their results on election night (Florida, for the second time in four presidential elections, did not). Obama now has a chance to define the United States’ role in the international system for years to come. Second terms can often be productive times for U.S. foreign policy, largely because presidents cannot seek a third. George W. Bush, for example, used his second four years in office to fix mistakes made during his first (his second-term team was busy). Presidents in their second terms often apply old-fashioned American pragmatism to tough issues, which they often cannot do during their first terms, when re-election is their first priority. Obama’s infamous open-mike remark to Russian Prime Minister Dimitri Medvedev that he would have more flexibility after the election may have shocked some, but, for most foreign-policy experts, he was stating the obvious. The president’s challenge is to use his new freedom of action quickly, before the perception sets in (as it inevitably does) that he is a lame duck. Obama’s first foreign excursion after the election will be to Laos to attend the East Asian summit, a trip that is perceived as part of his administration’s “pivot” to Asia. He will also visit Myanmar (Burma) in an effort to lend support to that struggling country’s extraordinary changes and encourage further progress. But the real challenge for Obama is to do more to explain what the “pivot” means, because already his bold side trip to the unfinished project in Myanmar is being perceived as yet another effort to contain or, worse, encircle China. What

began as a strategic shift to an area of the world replete with long-term U.S. interests has become – even to many anxious Americans – an exercise in picking new fights with a country of 1.3 billion people undergoing painful internal transformations of its own.

Steady commitment U.S. policy in Asia requires a steady hand, and, in Obama, the U.S. has just that. But it also needs effective communication that makes clear to the American people that the relationship with China truly is too big to fail and thus requires a long-term process of thoughtful engagement. Such messages must be issued more often by the president himself, and not only by officials several bureaucratic layers below. American policy in Asia in general, and toward China in particular, has enjoyed consistent bipartisan support. When a U.S. president has bipartisan support on any issue, he should flaunt it. There is no question that dealing with China, which is in an anxious mood of its own, has become increasingly difficult. But the way to address China’s internal tensions and emerging nationalism, and the resulting strains in its relationships with its neighbours, is not to put the region’s countries in the position of having to choose between China and the U.S. The right approach is to be constant, to stress long-term commitments, and to speak in a calm and measured way, understanding that good China policy is about relationships, not transactions. No one does that better than this president. Another aspect of the pivot involves moving away from the Middle East. But no amount of fancy footwork, whether pivoting or pirouetting, can diminish that region’s importance. The Middle East

will remain a central pillar of world energy for decades to come. Whether it ultimately can export more energy than instability is the key question. Unlike East Asia, the Middle East remains a region in turmoil, the complexity of which defies analytical consensus. Do the region’s crises stem from the lack of peace with Israel? Or is some combination of other factors – boiling frustration with the regional economic order, for example, or a U.S. intervention that turned Sunni-led Iraq into

American policy in Asia in general, and toward China in particular, has enjoyed consistent bipartisan support

The Obama administration needs to do a far better job in its second term when it comes to defining the issues and setting the scope of a reenergised U.S. diplomatic effort in the region. In Obama’s first term, mediators were dispatched to the region within days of his inauguration. Perhaps this time, there should be a greater effort at developing coherent polices first. I suggest starting with Syria. In the absence of international leadership in forging a political end-state, Syria’s conflict has tragically become a sectarian civil war – one that is rapidly metastasising, with far-reaching consequences for U.S. interests in the region and for prior U.S. political investments in projects like Iraq. We need to put aside crowd-pleasing calls for President Bashar al-Assad’s removal (though obviously he must go) and work harder with international partners, including Russia and China – both of which should, quite frankly, rank higher than Syria in terms of their importance to U.S. foreign policy. Finally, the U.S. needs reliable partners. And among the most reliable is Europe. But Europe is preoccupied with its own economic problems, which have pressed European leadership to the breaking point. Europe will be back (the sooner the better). In the meantime, the U.S. needs to do all that it can, including showing some uncharacteristic patience, to help Europe emerge from its crisis. It also needs to continue to engage with Europe on international projects, including negotiations with Iran over its nuclear programme – an issue of fundamental significance to international security. No president in recent decades has had a better temperament and a clearer vision for facing the world’s challenges than the one that Americans have just re-elected. Obama now has an opportunity to put that talent to work in ways that he could not in his first term. Project Syndicate

16 |

business daily November 19, 2012

CLOSING Studio City notes priced at 8.5 pct

Huff crowned FIA WTCC champion

Melco Crown Gaming (Macau) Ltd, a Macau gaming operator and resort developer, announced yesterday the pricing for senior notes issued by its subsidiary, Studio City Finance Ltd. In a filing to the Hong Kong Stock Exchange, Melco Crown said the offering was for US$825 million maturing in 2020 at 8.5 percent interest. Last week Bloomberg News reported Melco Crown had started marketing the equivalent amount in United States dollar-denominated bonds at a likely rate of 8.25 percent – 25 basis points lower than mentioned yesterday. The money is toward the US$2.9 billion cost of the Studio City casino project on Cotai – a scheme 60 percent owned by Melco Crown.

António Félix Da Costa won the Formula 3 Macau Grand Prix yesterday, leading almost from start to finish. Mucke Motorsport’s Felix Rosenqvist came in second as debutant Alex Lynn finished with third place. In the FIA World Touring Car Championship, Alain Menu won the battle here, but Rob Huff (pictured) won the war as he clinched his first FIA WTCC title. Britain’s Michael Rutter has claimed his eighth victory in the motorbike race. He won by almost 5 seconds clear of Martin Jessopp, with Simon Andrews taking third place. The government is considering extending next year’s Grand Prix – the event’s 60th anniversary – over the course of two weeks.

Southeast Asia to be less export dependent

investments in roads and airports, while Malaysian Prime Minister Najib Razak is also boosting outlays.

Foreign investment

Growth prospects attracting foreign investment, says OECD Shamim Adam

Indonesia’s growth is set to outperform its neighbours

outheast Asia’s growth will remain resilient over the next five years as stronger investment and private consumption reduce dependence on exports for expansion, the Organisation for Economic Cooperation and Development said. Europe’s sovereign debt crisis and a

slowdown in advanced economies have had a “limited” impact on Southeast Asian nations with most of the effect experienced through trade, the Parisbased OECD said in a report released in Phnom Penh yesterday. The region, along with China, may face risks stemming from volatility of capital

inflows in the medium term, it said. The prospects for developing Asian nations contrast with the fiscal and demographic challenges faced by more advanced economies, as higher public spending and younger populations support domestic demand and lure investment even as global expansion weakens. Increased government expenditure on social safety nets and health will encourage household spending and reduce the need for precautionary savings in emerging Asia, according to the report. “A combination of cyclical factors, government policies, and longer-term shifts in economic structure that have supported consumption growth over the past several years are likely to continue to underpin its growth over the medium term in Southeast Asia, China and India,” the OECD said in its 2013 outlook for the region. Governments in Southeast Asia have loosened fiscal policies to spur growth. Philippine President Benigno Aquino is increasing spending to a record and seeking more than US$16 billion of

The region’s growth prospects are helping attract overseas companies, with Japan’s foreign direct investment in Southeast Asia surpassing that in China, according to Japan External Trade Organisation’s figures using finance ministry data. Japan’s investment in the Association of Southeast Asian Nations more than doubled to US$19.6 billion in 2011 from the previous year, while that in China was US$12.6 billion, according to the organisation. Fiscal deficits in most Southeast Asian nations will narrow through 2017, leading to an improvement in public debt levels as a percentage of gross domestic product, the OECD said. Indonesia’s growth will outperform its neighbours, with a 6.4 percent annual rate of expansion from 2013 to 2017, the OECD estimated, equal to that recorded in the two decades before the 1997 Asian financial crisis, added the report. “This favourable outlook for Indonesia reflects the significant improvement in the country’s standing with international investors and the ambitious infrastructure investment and economic reforms specified in Indonesia’s medium- term development plan,” the OECD said. The Philippines will expand about 5.5 percent a year from 2013 to 2017, while Malaysia and Thailand will see annual expansion of about 5.1 percent, the OECD predicted. Singapore’s economy may grow 3.1 percent a year. Bloomberg

Greek programme should be ‘rooted in reality’ Lagarde urges leaders to avoid prolonged uncertainty

n agreement among Greece’s creditors on how to reduce its large debt pile should be “rooted in reality and not in wishful thinking,” the head of the International Monetary Fund said as she heads into a tense meeting with European leaders. Christine Lagarde, the IMF’s managing director, cancelled the last leg of her visit to Asia, skipping a Southeast Asian summit in Cambodia, to return to Brussels for a meeting tomorrow of the Eurogroup on Greece. As she left the Philippines, Ms Lagarde told Reuters she would push for a permanent solution to Greece’s debts to avoid prolonged uncertainty and further damage to the Greek economy. To Ms Lagarde, that means countries in the euro zone should send a strong signal they remain committed

to Greece by agreeing to reduce the debt Athens owes them. “I am always trying to be constructive but I am driven by two objectives,” she said in an interview, “to build and approve a programme for Greece that is solid, that is convincing today, that will be sustainable tomorrow, that is rooted in reality and not in wishful thinking. “The second objective is to maintain the integrity, credibility and quality of advice that we are giving, not for the Fund itself, which obviously is a concern of mine, but to lend that to the Europeans because that is what they are interested in,” she said late on Saturday. In an unusually public airing of disagreement that flared during a news conference in Brussels last week, Jean-Claude Juncker, who chairs the

Eurogroup of finance ministers, said the target of reducing Greece’s debt to 120 percent of gross domestic product by 2020 should be moved by two years to 2022. Appearing surprised by Mr Juncker’s statement, Ms Lagarde disagreed, insisting the target of 2020 should remain. The stand-off threatens to further delay the next 31.5 billion euro tranche of Greece’s bailout, pushing the country close to bankruptcy. Greece’s successive bailouts have already suffered setbacks from elections and resistance to reforms. “They might resent me ... but that is in their interest,” Ms Lagarde said of the European creditors. “The two objectives are critical for me, both of them.” Reuters

Christine Lagarde is to meet the Eurogroup tomorrow