Macau Business Daily, November 22, 2012 by Business Daily

Year I Number 168 Thursday November 22, 2012 MOP 6.00 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte

Bylaw to ban slot parlours in residential areas approved Five years after it was first proposed, slot parlours could shortly be out of residential areas. Gaming operators will have one year to adjust to the new rules. Slot parlours will only be allowed inside five-star hotels, in non-residential buildings located within 500 metres of a casino or inside resorts outside a “densely populated area”.

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Seeing double

‘Siamese’ gaming tables ‘way round’ table cap ‘S

iamese’ gaming tables – featuring one drop box for cash bets but double the number of player seats typically found at a baccarat table – are being used in Macau casinos as a potential way around the government’s table cap, Business Daily has been told. Three industry sources informed us separately the move is a creative attempt by the local industry to get round the government’s 5,500-table cap on the market that runs until the end of this year. They say it’s because DICJ – the Gaming Inspection and Coordination

Bureau – counts tables by the number of drop boxes, not the number of player places. Business Daily asked DICJ to confirm that it counted drop boxes to measure table numbers but no answer on that question was available at the time of going to press. But the regulator did say in an e-mailed statement: “The DICJ would monitor the number of gaming tables so as to ensure the table cap policy has been severely adhered [to].”

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Inflation falls for

Inflation dropped in October, for a second consecutive month, show government data released yesterday. A hike in the monthly electricity subsidy and a slowdown in the price increases of food and housing rents appear to be the main reasons for the fall. Macau’s Composite Consumer Price Index, the city’s main gauge for inflation, increased by 5.19 percent year-on-year, down from 5.6 percent in September, the Statistics and Census Service announced. It was the first time since the May 2011 in which inflation was below 5.6 percent. But a government task force set up in July to investigate potentially inflationary illicit practices such as irregular weights for consumer products, monopolies and price fixing was criticised yesterday by economist Albano Martins for working “far too slowly”.

2nd straight month

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November 21

HSI - Movers Name

%Day

CHINA CONST BA-H

3.36

BANK OF COMMUN-H

2.97

WANT WANT CHINA

2.82

SANDS CHINA LTD

2.76

CHINA OVERSEAS

2.66

HENGAN INTL

-0.51

ESPRIT HLDGS

-0.65

CHINA MERCHANT

-0.87

WHARF HLDG

-0.98

CHINA RES ENTERP

-2.10

Source: Bloomberg

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Future is bright for Future Bright

Macau investors’ ‘first option’ on Hengqin plot Page 4

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Fiscal reserve’s returns below inflation – again Page 7

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business daily November 22, 2012

macau

Power, food prices slow inflation Inflation falls for the second month in a row because food prices rise more slowly and a subsidy takes a bigger bite out of electricity bills Vítor Quintã

vitorquinta@macaubusinessdaily.com

n increase in the electricity subsidy and slower increases in food prices and housing rents ensured that inflation dropped last month for the second consecutive month. The annual rate of consumer price inflation was 5.19 percent in October, slowing from 5.6 percent in September, the Statistics and Census Service announced yesterday. The fall in inflation was bigger than expected. Economist Albano Martins now believes this year may finish with inflation below 6 percent. “Anywhere between 5.89 percent and 6.1 percent is possible, but it will be likelier closer to the lower end,” Mr Martins said. The economist told Business Daily that inflation had fallen here because inflation in mainland China, Macau’s biggest trading partner, had fallen to 1.7 percent. He believes that with no big economic stimulus expected from China’s new leadership, appointed this month, inflation here will continue dropping until the end of his year. Another main reason for the fall inflation in here was an increase in the government’s electricity subsidy, which cut power bills. The government increased the subsidy by 20 patacas (US$2.50) to 200 patacas per household per month. Chief Executive Fernando Chui Sai On announced the subsidy increase in the Policy Address for 2013, delivered last week. But the subsidy was actually

increased implemented last month, according to the website of power distributor Companhia de Electricidade de Macau SA – CEM.

month was due mainly to a slowdown in increases in the prices of food and eating out, which households spend almost a third of their money on. Theannualrateoffoodpriceinflation Free market myth was 4.6 percent, 0.7 percentage point less than the month before, and the This meant lowest in the last year and a half. the electricity The annual price index dropped to 66.9 rate of food points last month, price inflation last month 18.4 percent less contrasts than the month starkly with before. the rate of 14.3 Electricity percent last bills have been December. cut by almost The drop is one-third since the government Annual rate of food l i n k e d t o t h e began subsidising fall in food price price inflation in inflation in the power in 2008 October mainland, with a payout of Macau’s main 150 patacas per supplier of food, which has fallen household per month. “ W h e n a s k e d t o i n t r o d u c e to 1.8 percent from a peak of 11.7 measures to control inflation, the percent in July. government has often refused to intervene, stressing that Macau is a Comfort food free economy,” Mr Martins said. But he said falls in the price of “It’s a fact that the government electricity and in tuition fees were due has little control over food prices, but to government subsidies and examples that does not mean there is no room of government intervention. for intervention,” Mr Martins said. Tuition fees were 3.1 percent lower “Macau can do a better job in opening last month than a year before. up the supply chains monopoly.” “The administration is artificially The government said in July that strapping down inflation in some it had created a task force to try to sectors. But that is illusory because if curb rises in food prices by stopping these subsidies ever go away, inflation “potential illicit practices”, irregular weight standards, monopolies and will go up again,” Mr Martins said. The downturn in inflation last “unreasonable” price-fixing.

4.6 %

Mr Martins said the results had been underwhelming. “It has carried out its work far too slowly,” he said. The rise in the cost of eating out was the biggest single contributor to inflation last month, accounting for more than one-third of it. The annual rate of increase in the cost of eating out was 8.7 percent, 0.1 percentage point less than in September. The annual rate of increase in housing rents 11.8 percent, slowing by 0.4 percentage point. This month a group describing themselves as Macau residents got up an online petition seeking legal limits on rent increases. Eating out and housing rents together account for almost twothirds of inflation. “They are still propping up inflation,” said Mr Martins.

The administration is artificially strapping down inflation … If these subsidies ever go away inflation will go up again Albano Martins, economist

The electricity subsidy rose last month to 200 patacas per household per month

Legal task force to study price irregularities

government task force has been set up to consider the feasibility of regulations to control the way prices of daily products are adjusted. Raymond Tam Vai Man, president of the Civic and Municipal Affairs Bureau, said the government has already set up such legal team in a bid better to

protect consumers’ rights. Raymond Tam was replying to questions from Legislative Assembly members during discussion of the 2013 Policy Address yesterday. The aim is to prevent prices being pushed up jointly by some wholesale suppliers and retailers, he said. The taskforce includes the director of the Legal

Affairs Bureau, André Cheong Weng Chon, as well as representatives from the Economic Services Bureau, the Consumer Council and Raymond Tam’s bureau. Secretary for Administration and Justice Florinda Chan met again with legislators yesterday to discuss the policies for 2013 that

come under her portfolio. Legislators continued to express doubts over the expansion of public departments and the swelling in the number of civil servants. Assembly members also criticised the government’s consultation mechanism and the pace of the administration’s legal reform. Legislator Melinda Chan

Mei Yi said she did not see much improvement in the city’s public administration since Ms Chan took the post about 13 years ago. Ms Chan brushed off the criticism, saying such reform was a long-term task and the government had been constantly reviewing its policies to make them more efficient. T.L.

November 22, 2012 business daily | 3

MACAU

‘Siamese twin’ gaming tables ‘way round’ table cap But system also used in years of Stanley Ho monopoly: sources Michael Grimes

michael.grimes@macaubusinessdaily.com

Fire in the hole – a casino table ‘drop box’ for cash bets

o-called ‘Siamese’ gaming tables – featuring one drop box for cash bets but up to double the number of player seats typically found at a baccarat table – are being used in Macau casinos as a potential way around the government’s table cap, Business Daily has been told. Three industry sources have informed us separately that the move is a creative attempt by the local industry to get round the government’s 5,500-table cap on the market that runs until the end of this year. This is reportedly because DICJ, the Gaming Inspection and Coordination Bureau, defines the live table count by the number of drop boxes, not the number of player places say the sources. Single baccarat tables can typically seat up to 14 players although in Macau nine seats is common. The high levels of concentration needed by the dealers due to the heavy volume of bets – means it’s easier to focus on nine players than 14. And among Cantonese speakers, numbers containing a four are generally considered unlucky. That’s because of the similarity between the spoken number and the word for ‘death’. Thus a baccarat table in Macau marked as having ten stations will often have only nine – with the fourth station in the sequence relabelled as ‘five’. So a ‘Siamese’ table in Macau can generally seat up to 18 players.

tables that concessionaires applied to [sic] and approved by the DICJ for gaming activities. Even if the approved gaming tables have stopped operation and [were] still locate[d] in the gaming area, the DICJ would count the tables as active tables and would include them in the calculation of the variable portion of premium if the concessionaires have not applied to cancel the tables. The DICJ would monitor the number of gaming tables so as to ensure the table cap policy has been severely adhered [to].” A second industry source claimed the drop box tally was how DICJ managed the table count, but added: “Siamese tables aren’t necessarily the magic solution they appear to be, because you still need to find two dealers to staff each one. That’s not easy in the current labour market.” “’Siamese tables’, is a strategy that might help circumvent the table cap,” said Ben Lee of IGamix Management & Consulting Ltd, a company that advises on gaming industry investment in Asia. “The definition of table count is I’m told the number of drop boxes – the hole in the table where the cash is placed,” he added. “Like anything and everything in Macau, this might be a case of operators being streets ahead of the regulators, with the latter now in a position in which they have to make a decision.”

Industry view

When Business Daily asked one very senior gaming industry executive based locally about the issue, the person rubbished the suggestion it was a technique to circumvent the table cap. At another operator’s venue – The Venetian Macao – double tables with a single drop box were in use last week. Sheldon Adelson, chairman of The Venetian’s parent company Las Vegas Sands Corp., said in the latter’s second quarter earnings call in July that the company was having to move tables from its existing properties to help populate the Pacifica casino in phase two of Sands Cotai Central. “We’ll need to take tables from elsewhere to get up to 200 tables for SCC phase two,” he told analysts. “On September 20 we will not have all of those 400 [for the whole

One industry source with direct knowledge of the situation told us: “You can get twice as many players per ‘table’ because the DICJ counts tables by the number of drop boxes. Siamese tables are a creative way around the cap. But double tables aren’t new. STDM [the former gaming monopoly founded by Stanley Ho Hung Sun] used to have double-sided sic bo tables in the old days.” Business Daily asked the gaming regulator to confirm that it counted drop boxes as a way of measuring the number of tables each operator has, but no answer on that question was available at the time we went to press. But the regulator did say in an e-mailed statement its table counting was based on: “…the number of

Claims rejected

property], but we will be getting them throughout the rest of the year,” he added. Business Daily approached Sands China Ltd, the Hong Kong-listed entity that manages The Venetian Macao for clarification of its use of double tables.

It said in an e-mailed statement: “The company operates Big Baccarat Table in our properties with the aim of enhancing manpower and operational efficiency. The company has always complied with the established regulations and operates within the number of tables approved by DICJ.”

Orders from the top Table cap idea came from central govt liaison office, claim sources

acau’s cap on live dealer tables is a sensitive political issue that reverberates all the way up to the central government in Beijing, Business Daily has been told. Sources say the idea of controlling the growth of Macau’s gambling market via a table cap originally came from the Central People’s Government Liaison Office here – the body that represents China’s State Council in its relationship with the Macao Special Administrative Region. Anything therefore that – either coincidentally or by design – circumvents or otherwise relaxes such a table cap policy could be seen as a political challenge to central authority. In August, DICJ was forced to scrap a system whereby its inspectors counted 20 poker or mahjong tables as equivalent to one baccarat table for the purposes of the table cap – as long as they were all in a single room – after a Hong Kong newspaper published details of the policy. One source told us then that the negative reaction “came from the top down”, which was understood to be a reference not to the central government but to Macau’s Chief Executive Fernando Chui Sai On. The current 5,500-table cap policy is to be superseded in January by a ten year-long new scheme to control table numbers. It is supposed to limit table inventory expansion to an annual compound growth rate of three percent.

Government sources told Business Daily in July however that table expansion could be ‘front loaded’ into the first few years of the period to take account of a spate of new Cotai resort openings expected in 2015 and 2016. All six of the current concessionaires and sub-concessionaires are due to open new resorts there by the middle of the decade.

Cotai tables SJM Holdings Ltd confirmed at the weekend it would like to place 700 tables at its planned new 20 billion patacas (US$2.5 billion) Cotai scheme, which was granted a government land concession last month, although SJM is generally thought by commentators to have more flexibility than other operators to reassign its existing table inventory. That’s because of the large number of tables held by its so-called satellite casinos that rely on SJM’s gaming concession but are owned by other people. Those tables can under certain circumstances be ‘reclaimed’ by SJM for use in its core properties. That happened recently in the case of 40 tables taken back from Casino Greek Mythology at the New Century Hotel, Taipa. MGM China Holdings Ltd said in a Hong Kong regulatory filing on October 18 that it plans 500 tables at MGM Cotai, its HK$20 billion project for Cotai, the mass market focused former land reclamation zone. M.G.

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business daily November 22, 2012

macau Head of Financial Bureau gets new term Vitória Alice Maria da Conceição (pictured, right) will continue to head Macau’s Financial Services Bureau for a further two years. The announcement was published in yesterday’s Official Gazette. Ms Conceição’s appointment as the director of the bureau was extended until November 2014. She has been heading the Financial Services Bureau since February 2010, replacing Orieta Lau Ioc Ip in the post.

Future Bright seeks new growth areas The restaurant operator eyes catering for factories, universities and casino resorts Stephanie Lai

sw.lai@macaubusinessdaily.com

Photo: Jornal Tribuna de Macau

atering for factories will remain an important growth area in the years to come for Future Bright Holdings Ltd, Macau’s only food and beverage company listed in Hong Kong. But catering for hotels and construction sites are other areas Future Bright is eyeing, according to its managing and executive director, Chan Chak Mo. “Construction [of a casino] normally takes three to four years to complete, and therein lies demand for daily meals,” Mr Chan said. “Casino operators would like to have staff canteens to replace takeaways for more secure hygiene, so that is one area we would like to take over,” he said. Future Bright caters for the University of Macau’s Taipa campus, the Macau University of Science and Technology and the Kiang Wu Hospital. The company’s core business is its array of Chinese, Japanese and Portuguese restaurants. “We have a wide variety of restaurants because it is required by society,” Mr Chan said. “In a market as small and easily saturated as Macau’s, if you want to make a business big, you have to cater to many different tastes and ought not to be limited by locals’ consumption,” he said. The number of Future Bright restaurants here and in mainland

Casino operators would like to have staff canteens … so that is one area we would like to take over Chan Chak Mo, Future Bright Holdings Ltd executive director

China will reach 47 next year. The company expects much of its earnings to come from outlets in casino resorts here. “It’s lucky that we have an influx of over 20 million tourists into Macau, mostly for gambling purposes,” Mr Chan said. “These tourists, who are usually a not-so-price-sensitive crowd,

will not bother much to compare prices, no matter whether they win or lose,” he said. Future Bright regards the advent of more casino and entertainment complexes in 2015 and 2016 as an opportunity to open more food and beverage outlets to feed customers that have more money to spend. “We hope to get a spot in the

new casinos and hotels but, when it comes to Wynn and MGM’s resorts, the chances are not as good because they may not have an open tender for running food and beverage concessions,” Mr Chan said. Future Bright expects sales revenue of 800 million patacas (US$100 million) next year, and 720 million patacas this year.

Sai Van ‘right site’ for night mart, says Chan The president of the United Association of Food and Beverage Merchants says a night market is a tricky place for SMEs to operate Stephanie Lai

sw.lai@macaubusinessdaily.com

he president of the United Association of Food and Beverage Merchants, Chan Chak Mo, has said he believes the shore of Sai Van Lake is the “right site” for a night market. This is despite public concern that a night market would harm the environment there. “There were suggestions that the project should to go ahead on the vacant site near the Ferreira Amaral roundabout, but that would just make the transport hub more jammed,” said Mr Chan. “If they want to hold it on Coloane, it’s too far off the beaten track for visitors, and that site is unlikely to be good for business,” he said. Chief Executive Fernando Chui Sai

On announced the Sai Van integrated tourism project two years ago. The project is to build open-air cafés, a street of food and souvenir stalls, a Western restaurant with a ship theme and an open-air theatre there. Mr Chan welcomes the proposal to undertake the project beside Sai Van Lake, where it would have “better synergy” with the Macau Tower. “The important thing is that the government announce a rough estimate of its investment in the project,” he said. Apart from being the president of the United Association of Food and Beverage Merchants, Mr Chan is executive director of restaurant operator Future Bright Holdings Ltd, the organiser of the Macau

Food Festival and a member of the Legislative Assembly.

Right up my street Mr Chan told the Macau Management Forum yesterday of Future Bright’s interest in providing catering services in open-air venues. The government has expressed the hope that the night market will attract small and medium restaurant enterprises. But Mr Chan said such enterprises had “a bigger chance of failing” as they would struggle to gather the resources needed to operate in a night market. “Now it all depends on how the government and public achieve tourism diversification,” Mr Chan said.

“If, at the end of the day, the tranquillity of the site is not to be sacrificed, then we just give up on the plan,” he said. The Civic and Municipal Affairs Bureau, which is in charge of the Sai Van project, said it would hold another three months of public consultations to collect opinions on the night market plan. This follows criticism of the public consultations held in November last year. Secretary for Administration and Justice Florinda Chan admitted in the Legislative Assembly on Tuesday that there were flaws in last year’s consultations. She said the Civic and Municipal Affairs Bureau had failed to report on the consultations within 180 days, which is customary but not legally required.

November 22, 2012 business daily | 5

MACAU

One-year transition for slot parlour ban Five years after it was first announced, slot parlours could soon be out of residential areas Vítor Quintã

vitorquinta@macaubusinessdaily.com

aming operators will have one year to adjust to the new rules that ban slot machine parlours from residential districts, authorities revealed yesterday. According to the bylaw that the Executive Council has finished reviewing, the government “must introduce, within a year, the appropriate measures to address the slot machine parlours that … are located in buildings with different characteristics” to the ones allowed. The proposed regulation would only allow slot parlours to be established inside five-star hotels, in non-residential buildings located within a 500-metre range of a casino or within a resort “not integrated in a densely populated area”. The rules are expected to force the closing of SJM Yat Yuen Canidrome Slot Lounge in Fai Chi Kei. The potential closing would 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 on Saturday. In January the head of the Gaming

Inspection and Coordination Bureau, Manuel Joaquim das Neves, said the government would work with the gaming industry to set a schedule for all parlours operating in residential areas to be removed. The government first proposed banning slot-machine parlours from residential districts in 2007. The new rules must be published in the Official Gazette before they come into effect.

Standards regulated The bylaw also regulates local slot machine and electronic table games standards that were introduced to the Macau market for the first time this year. “From January 1, 2013 slot machine suppliers can only provide slot machines that have been approved according to the bylaw,” said the press release from the Executive Council. “Operators that at the date when the by-law comes into effect are operating slot machines, have to, in a period of six months starting from that date [January 1, 2013], take the necessary steps to comply with the bylaw now approved by the Executive

Gaming operators will have six months to have their existing slot machines approved

Council,” it added. Under the technical standards introduced this year, all games in the market must be available in Chinese language format both at the player interface and in the ‘back end’ programming. The bylaw also regulates a requirement in the standards that all slot machines must have a minimum return to player ratio between 80 and 98 percent. That means that, over a certain

period, all slot machines must give back at least 80 percent of the money players bet in that period. Gaming operators are also required to install electronic monitoring system for their slot machines. In addition, the government will have the power to hire “entities with internationally recognised knowhow” to install and perhaps operate a central monitoring system for slot machines says the regulating bylaw.

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business daily November 22, 2012

macau

Macau firms welcome Spotlight On... Hengqin land auction La Mode Desir Boutique

I hope more people will pay attention to Macau’s local fashion houses Kitty Ng Seong Im CEO La Mode Desir Boutique

What is your business? We provide tailor-made gowns for women. La Mode Desir products focus on luxury and elegance, so that our customers feel confident and glamorous at any social event. I have been involved in the fashion industry for more than 30 years. During that time I’ve produced clothing for government departments, casinos, other private corporations and schools, as well as special event performance costumes for the East Asian Games held in Macau in 2005.

What are the current opportunities? More and more events, ceremonies and cocktail parties are being held in Macau both for the public and private sectors. Evening gowns are in high demand and evening suits for men are also becoming more popular. What helps our business is that although there are now many international fashion brand outlets in Macau, the style and selections of clothing are very limited for Chinese tastes and for the body shape of Chinese women. So when local women choose from this limited ready-to-wear selection there

is a risk that when they go to an event they will be in an identical outfit to someone else. That’s embarrassing. The only way to avoid that is to have your own tailor-made gown. Our uniqueness is our opportunity. Customers always have their own ideas. We listen then provide our professional advice and services. Unique design and personalised service result in a high degree of customer satisfaction. Our repeat customers often recommend us to others due our unique products and quality of fitting.

What are your hopes for the sector? La Mode Desir Boutique’s existing customers come from not only Macau, but also from fashion-orientated cities such as Hong Kong and even Shanghai. I hope more and more people will pay attention to Macau’s local fashion houses rather than simply waiting for the new season’s collections from the international brands. I’m also giving something back to the community by working as a consultant on fashion education in our universities. I hope to see a growing number of fashion related courses and fashion students in Macau. We need our next generation to be more creative and devoted to the local community so as to raise awareness and recognition of our Macau local brands.

An auction of land on Hengqin could be a way for Macau enterprises to get in on the ground floor of the development of the island Tony Lai

tony.lai@macaubusinessdaily.com

he first auction of land on Hengqin Island for Macau enterprises only is a good way for them to enter the market there, property developers and other businesspeople say. But they also say they need more information about it. The Zhuhai Land and House Property Exchange Centre said on Tuesday it would put up for auction a 40-year lease on a plot of over 30,000 square metres. The reserve price is 4,200 yuan (5,250 patacas) per square metre or over 250 million yuan for the entire plot. The centre’s website says the auction will be open only to Macau companies or to subsidiaries in mainland China wholly owned by Macau companies. This conforms to the requirements of the Guangdong-Macau Cooperation Framework Agreement. Enterprises that wish to bid must have assets of at least 300 million yuan and put down a deposit of 80 million yuan. The plot lies to the east of the Hengqin Border Terminal. It is for commercial use only. Up to 61,000 square metres of floor space may be built on it, and the height limit for structures is 24 metres. The Chinese-language Macao Daily News quoted the director of the Administrative Committee

of Hengqin New Area, Niu Jing, as saying the auction would mark “the beginning of the Macau business sector’s participation in the development of Hengqin”. Property developers and other businesspeople told Business Daily that they welcomed the auction. The vice-chairman of the Macau Small and Medium Enterprises Association, Daniel Iong Ieng Chun, said it was “a good starting point” for Macau businesses seeking to enter the Hengqin market. “The authorities there just want to test the waters. They want to ascertain the willingness of Macau businesses to invest in Hengqin, and their financial strength,” he said.

Investment potential “If the first auction result is good, I believe there will be more projects like this,” Mr Iong said. He said only a few big enterprises would be eligible to bid and that smaller businesses would have to hope the buyer would be willing to sublet the land. The SME association said the government should release more information about the auction and land use restrictions. Business Daily asked the Administrative Committee of Hengqin New Area for

more information but it had not replied by the time we went to press. On its website, the committee says more information will be released later this month. The auction will be held in early in December but joint bids will not be accepted. The president of the Macau General Association of Real Estate, Chong Sio Kin, also wants more information about the auction and the plot. “The auction is restricted to Macau companies only, but does this mean all the shareholders of the bidder must be Macau residents or companies?” said Mr Chong. He also wants to know if the sale of stakes in the company that wins the bidding will be allowed, and if the land can be sold on. But Mr Chong thinks that overall there is investment potential there, in view of the probable price and the outlook for the development of Hengqin. “The auction reserve price is only about 5,000 patacas per square foot, which is just one-fourth of the cost of similar land plots in Macau,” he said. But he warned that the return on investment for the land in the short run – at least until 2020 – would be low as the island would not be sufficiently developed until then.

A plot on Hengqin Island is available to Macau companies for commercial use only (Photo: Manuel Cardoso)

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November 22, 2012 business daily | 7

MACAU

Kiang Wu rakes in more grants

Fiscal reserve returns slow

Kiang Wu Hospital – getting millions in subsidies

he Health Bureau granted 71.6 million patacas (US$8.9 million) to the Kiang Wu Hospital in the third quarter of this year, more than 83 percent of the 86.2 million patacas it dished out in subsidies to private institutions between July and September, according to yesterday’s Official Gazette. The grant brings the amount the Health Bureau gave the Kiang Wu Hospital and associated institutions in the first nine months to 239 million patacas. The bureau granted the hospital more than 100 million patacas in the second quarter. It gave out about 34 million

patacas to subsidise consultations with outpatients and the admission of inpatients, and 22 million patacas to subsidise unspecified investment and development. In the third quarter the bureau gave out almost 54 million to subsidise consultations with outpatients and the admission of inpatients, according to the Official Gazette. Some of the subsidies granted in the first nine months went to the Kiang Wu Charity Association or the Kiang Wu Nursing College. The hospital and its associated bodies also get subsidies from other public bodies, such as the Macau Foundation and the Social Welfare Bureau.

Corporate

Grand Hyatt Macau scoops ninth award of 2012 Grand Hyatt Macau was named ‘Best Business Hotel in Macau’ at the Business Traveller China Awards 2012 ceremony held in Shanghai. It is the second consecutive year that Grand Hyatt Macau has been honoured with the title, as voted by readers of the leading corporate travel publication. The property – at Melco Crown Entertainment Ltd’s City of Dreams casino resort on Cotai – has won nine awards this year. “Travellers and hospitality industry professionals alike continue to recognise Grand Hyatt Macau as one of the most impressive hotels in Macau and across Asia,” said the hotel in a statement welcoming the latest award. Grand Hyatt Macau is a two-tower property with 791 guest rooms and 15 function areas with a total of 8,000 square metres of space. That includes the 1,911-square-metre Grand Ballroom and Salão do Teatro, described by the hotel’s management as the first ballroom in Macau encompassing a theatre-style show kitchen.

CotaiExpo gets million visitors in 10 mths

The Venetian Macao says its CotaiExpo venue has welcomed one million visitors to trade shows and exhibitions up to the end of October this year – a record since the property opened in 2007. The venue adds it has six more such gatherings before the end of 2012 that will push its tally of visitors well over that figure. Notable events at The Venetian in this year included: the 17th Macao International Trade and Investment Fair and the Macao International Environment Cooperation Forum and Exhibition, both sponsored by the Macau government; the Macau International Education Expo; China International Auto Expo; the Global Gaming Expo Asia and the Ice World exhibition. “We take care of our clients from check-in until check-out with an unbelievable team of professionals that can handle all aspects of any type of event, even on the scale of several thousand delegates,” said Gunther Hatt, executive vice president of operations, Venetian Macau Ltd.

Our sister-publication, Macau Business magazine, has reported that more than one-third of the hospital’s revenue of 718 million patacas last year was in the form of government subsidies for medical treatment generally, and for specific services such as hospice and palliative care, radiotherapy, cardiovascular surgery and prenatal or obstetric care. The private hospital was established almost 140 years ago. It is a profit-making subsidiary of the Kiang Wu Charity Association, which was once managed by Fernando Chui Sai On, now the chief executive of Macau. T.A.

The government’s fiscal reserve had a return on investment of just 0.85 percent in its first seven and a half months of existence, the Monetary Authority of Macau said yesterday. A summary published in the Official Gazette shows the fiscal reserve earned 836.6 million patacas (US$104.8 million) since its establishment in mid-February until last September. The reserve was established with an initial investment of about 98.86 billion patacas, a figure that had grown to 99.7 billion patacas by the end of September. The 0.85 percent rate is higher than the 0.65-percent rate recorded just a month earlier but it remains far below the inflation rate in the same period: 3.41 percent. In real terms, the reserve is going backwards. The predecessor of the fiscal reserve, the city’s Reserve Fund, enjoyed a better performance, achieving an average annual return of 2.21 percent between 2001 and 2009. The average annual inflation rate in this period was 2.19 percent. The Monetary Authority also ran the MSAR Reserve Fund, but an advisory committee has been set up to suggest investment strategies for the new fund and a second committee formed to monitor its management. The two committees were created only four months after the reserve was set up. V.Q.

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business daily November 22, 2012

GREATER CHINA

Future Premier lays down first policy clues Li Keqiang urges deeper urbanisation to support growth

i Keqiang, set to become China’s premier in March, said the nation must deepen its rural-urban population shift to support growth while avoiding the economic stagnation associated with middle-income countries. Urbanisation is a “huge engine” of China’s future economic growth, Mr Li, currently vice premier, said today in a full-page article on economic development on page three of People’s Daily, the Communist Party’s mouthpiece. The article represents the first policy markers laid down by Mr Li, 57, since he was appointed last week to the No. 2 position

on the Politburo Standing Committee behind Xi Jinping as part of a once-a-decade power handover. China’s urban population of just above 50 percent is “much lower” than the 80 percent in developed nations, said Mr Li, whose championing of urbanisation has been a central theme of his career. “Urb anisati o n i s n o t about simply increasing the number of urban residents or expanding the area of cities,” he said in People’s Daily. “More importantly, it’s about a complete change from rural to urban style in terms of industry structure, employment, living environment and social security.”

Mr Li also reiterated points made this month by officials including President Hu Jintao, saying China will “steadily” push forward with making interest and exchange rates more market-based. He didn’t discuss the near-term outlook for the economy or provide specific forecasts, instead focusing on longerterm issues. Premier Wen Jiabao said on Tuesday at the East Asia Summit in Phnom Penh, Cambodia, that the Chinese economy is becoming more stable, will maintain “relatively fast growth” and “develop at a higher level,” according to the official Xinhua News Agency. China’s gross domestic

product is poised to expand 7.7 percent this year, the weakest pace since 1999, based on the median estimate of analysts surveyed by Bloomberg News this month. Growth may pick up to 8.1 percent in 2013, according to the median of 46 forecasts. Mr Li said China is facing the risk of falling into the socalled “middle-income trap” now that its per-capita GDP has reached such a level. “There are many countries in the world that when they reached the middle-income stage, they witnessed serious structural problems such as growth stagnation, a widening wealth gap and increasing social unrest,” he added. Bloomberg

PICC sets Hong Kong IPO terms Chinese ar Value revised to lower level on global economic conditions by family f Works worth million C Z

hinese state-owned insurer PICC Group Ltd has wound back expectations for its proposed HongKonglisting,offeringtosell shares at HK$3.43-HK$4.03 each to raise up to HK$3.6 billion (US$ 464.5 million) in what would still be Hong Kong’s biggest IPO in two years. The long-awaited offer is now set to be priced on November 30, but the underwriters have revised down the company valuation and IPO size, underscoring the tough environment for capital raising, Thomson Reuters publication IFR reported. People’s Insurance Company (Group) of China ( P I C C) , one of C h ina’s largest insurers, is tapping the Hong Kong equity market at a time when IPO volumes in the financial centre have tumbled more than 80 percent. PICC will be the biggest Hong Kong IPO since another insurer, AIA Group Ltd, raised HK$20.5 billion in 2010. The price range set for PICC values the company at 96 billion yuan (US$15.4 billion) to 113.2 billion yuan before the IPO, IFR said, citing four sources familiar with the matter. That is lower than the 130 billion yuan valuation initially sought, it added. The company is offering 6.9 billion primary shares, or 16.7 percent of its enlarged capital, aiming to raise 19.18 billion yuan to 22.6 billion yuan. Proceeds from the offer would be used to bolster its capital base, it said. PICC has secured cornerstone commitments

ao Wou-ki, the abstract painter who has been described as China’s greatest living artist, is at the centre of a bitter legal feud between his third wife and his son from a previous marriage. At the heart of a battle ripping the family apart lies the contested ownership of eight works worth millions of dollars. The son, Jia-Ling Zhao, also believes that Mr Zao, who is 91 and has suffered from Alzheimer’s disease

Biggest Hong Kong IPO in two years

for about 50 percent of the deal, sources previously told Reuters, which could make it easy for the underwriters to secure orders for the rest of the offer. The company has been in talks with U.S. insurer American International Group Inc, French reinsurer Scor, China Life and state utility State Grid Corp, about becoming cornerstone investors, IFR previously reported. A record 17 banks have been roped in to sell the offer, which is being marketed to

global institutions. PICC’s planned IPO comes at a time when issuance in Hong Kong has plunged, with volumes likely to shrink to their lowest since 2008 as investors shun new deals due to volatility caused by Europe’s debt troubles. Founded in 1949, PICC is China’s first nationwide insurer and has 2.42 million institutional insurance clients and about 130 million individual insurance customers, more than the entire population of Japan. The company is controlled

by China’s Ministry of Finance, which has an 88.7 percent stake, while the National Social Security Fund holds the remainder. China International Capital Corp (CICC), Credit Suisse Group AG, Goldman Sachs Group Inc. and HSBC Holdings Plc won mandates as sponsors of the deal. The list of banks also acting as bookrunners includes Morgan Stanley and UBS AG, as well Chinese firms such as ABC International and BOC International. Reuters

November 22, 2012 business daily | 9

GREATER CHINA analysis

Banks turn a blind eye as corporate debt piles up Kelvin Soh Gabriel Wildau

Pinning hopes on the urban consumer

rtist’s twilight clouded feud

ns at the centre of the dispute since at least 2005, was moved to Switzerland in 2011 against his will. The Beijing-born artist left China for Paris before the Communist Party took over the country and has been a French citizen since 1964. “Mr Zao had been in France since 1948, he is very attached to the country and never expressed any desire to leave it,” said his son’s lawyer, Jean-Philippe Hugot. His wife, Francoise

Marquet, a former curator of the Museum of Modern Art in Paris, stands to inherit a greater part of the artist’s estate than she would have done had they stayed in France. She asserts that Switzerland offers the best environment for his health and for preserving his assets, both financial and artistic. She has created a foundation in Switzerland to promote her husband’s work,

The artist’s works are fetching millions in auctions

prompting protests from the son that both he and his father are now excluded from the management of his collection. “Zao Wou-Ki is doing well, the move to Switzerland has been beneficial for him. He is much better physically,” Pierre GenonCatalot, the lawyer for Ms Marquet, insisted. Mr Zao’s son however is not convinced and he has pursued legal action on two fronts. A request to a Paris court for him to be granted power of attorney over his father’s affairs was rejected after the judge ruled that he could not rule on the decision since Mr Zao was now resident in Switzerland. The son is appealing that ruling and a decision is due on December 4. I n p a r a l l el wi th th a t request, Jia-Ling Zhao has since May been pursuing his mother-in-law for allegedly abusing a person weakened by illness and has secured the opening of a preliminary investigation by the French authorities. Ms Marquet, meanwhile, has, through the Swiss courts, secured joint power of attorney over her husband and his estate along with a Swiss national, Marc Bonnant. That decision, which has enabled Ms Marquet to sell some of her husband’s works, is being challenged by the son, who is seeking to be legally recognised as jointly responsible for his father. AFP

he problems at China’s Yingli Green Energy Holding Co Ltd, the world’s No.3 solar-panel maker, are going from bad to worse as the company struggles with mounting losses, collapsing product prices and a stock in free-fall. And yet, despite a government directive to rein in loans, Chinese banks keep extending credit to the New York-listed firm, and at below-market rates. Outstanding short-term borrowing has almost tripled to 8.2 billion yuan (US$1.3 billion) since 2009, according to Yingli’s 2011 annual report. “You sometimes have to wonder why a certain loan was made,” said Stanley Li, head of China bank research at Mirae Asset Management. “One problem with many Chinese banks is that we do not have much insight into their lending practices.” Yingli is one of many companies in China receiving life support from the country’s banks. That support – at a time when China’s economy and financial system are also under pressure – is raising fears that a spike in bad loans will push Chinese lenders into default. “Banks like lending to us,” said Yingli’s chief financial officer Bryan Li in an interview. “They feel that we are a potential winner if there is any consolidation in the industry.” That feeling may come back to haunt the banks. A Reuters News analysis on 40 of China’s most indebted companies – most of them from sectors already reeling with overcapacity such as wind-turbine maker Xinjiang Goldwind Science & Technology Co Ltd and COSCO Shipping Co Ltd – showed debt levels rising as profits decline across industries that Beijing has said it wants to promote. On average, operating profit at these companies dropped 15 percent in 2011 as their debt piles grew by the same percentage, according to company and Thomson Reuters data. China’s big banks deny they are extending fresh loans to struggling companies, with officials saying risks are under control. The country’s banking regulator also dismissed such concerns, saying asset quality was sound. “Right now, bank profitability is relatively strong,” said Shang Fulin, chairman of the China Banking Regulatory Commission. “They have the ability to raise their provisions for loan losses and write off some bad loans to prevent future risks.” Earnings announcements in late October by Chinese lenders suggest otherwise, with signs increasing that bad debts are on the rise and profit growth easing. The country’s biggest lenders are all expected to post their weakest earnings growth since their IPOs. Overall corporate debt levels will increase to 122 percent of gross domestic product by the year-end from 108 percent at end2011, according to Beijing-based consultancy GaveKal-Draganomics. That’s higher than most other large developing economies such

as Brazil and India, and surpasses the 90 percent that the OECD considers risky.

Storing up trouble China’s central bank says the country’s lenders have a nonperforming loan (NPL) ratio of just 0.9 percent. But that figure is the subject of heavy scepticism. Goldman Sachs & Co estimates in a research note that the NPL ratio is more than six times the official rate. That’s already less pessimistic than most investors, who expect NPL levels of at least 10 percent, according to the bank. Much of the pressure to lend to unprofitable firms comes from the government’s desire to prevent a total collapse in industries struggling in an economy that has slowed for the seventh consecutive quarter. “If you run a bank’s operations in a certain province and the governor tells you to roll over a loan, you are going to do it even if it doesn’t make commercial sense,” said Arthur Kwong, head of Asia Pacific equities at BNP Paribas Investment Partners. Beijing wants banks to continue lending out of fear that companies may be forced to start dumping inventory at below cost if credit is cut off, pushing commodity prices down further and threatening the solvency of strong players. “If lenders stopped rolling over debt, everyone would have trouble. Then, there would be a chain reaction and there will be a systemic risk,” said Zhang Zhiming, head of China research at HSBC.

Balance sheet woos At Xinjiang Goldwind, China’s No.2 wind-turbine maker, its operating income plunged 62 percent last year from 2010. At the same time, new bank loans more than tripled to over 11 billion yuan. The same story is repeated at many of China’s largest companies, many of them stateowned and in industries that Beijing says it wants to develop. China Shipping Development Co Ltd reported a one-third fall in operating income in 2011, but liabilities rose 55 percent. Aluminum Corporation of China Ltd (Chalco), the world’s No.3 aluminium producer, swung to an operating loss from a profit a year earlier. That didn’t stop the firm from getting new loans. Banks including China Construction Bank Corp (CCB) continued to lend merrily, extending 25 billion yuan in new loans to Chalco, according to the company’s annual report. CCB declined to comment on specific clients. “The major motivation here is not economic,” said Emil Wolter, head of Asian strategy at Macquarie. “With many of these companies basically unprofitable with no direct prospect of being profitable, as a bank, you should not be providing them with further capital to expand even more. It doesn’t make a lot of sense.” Reuters

10 |

business daily November 22, 2012

ASIA Thai export forecast trimmed Thailand’s economy is expected to grow 5.5 percent this year, at the low end of the 5.5-6.0 percent range seen in August, and could expand 4.5-5.5 percent in 2013, the state planning agency said on Monday. The agency cut its export growth estimate to 5.5 percent for this year from 7.3 percent previously, and forecast export growth of 12.2 percent in 2013. Last month, the Bank of Thailand stuck to its economic growth forecast of 5.7 percent for 2012, but lowered its projection for 2013 to 4.6 percent from 5 percent.

Asian economies aim for growth, economic stability Territory disputes set aside with focus on trade deal

hina, Japan and South Korea started talks on a free-trade agreement vital to an Asiawide deal in a move to forge closer economic ties even as they spar over disputed islands. The countries, representing three of Asia’s four biggest economies, will hold the first round of talks early next year, they said in a joint statement. Those negotiations are key to the Regional Comprehensive Economic Partnership, a 16-nation accord also announced yesterday that Southeast Asian countries called “the world’s biggest regional free trade deal.” “The missing piece of the jigsaw puzzle as far as Asia is concerned is the agreement among the three Northeast Asian countries,” said John Ravenhill, a professor at Canberrabased Australian National University. “The negotiations that were supposed to have started between those three countries have been put on hold because of the disputes over the South China Sea and other islands.” Competing visions for an AsiaPacific trade bloc reflect the struggle for dominance by economic powers

over a region that is increasingly a driver of global growth. U.S. President Barack Obama is seeking to expand trade ties with Asian nations and regain economic influence among countries that are growing more reliant on China in an area that contains sea-lanes vital to world commerce.

Clinton invitation Last week Secretary of State Hillary Clinton welcomed China and other Asian nations to join the 11-country Trans-Pacific Partnership that the U.S. aims to combine with other regional trade agreements to transform global commerce. Thailand and Japan are interested in joining the talks, Ben Rhodes, White House deputy national security adviser, said yesterday. “They’re committed to getting those negotiations concluded with an aim to doing so next year so that they can complete that trade agreement,” he said in Phnom Penh, Cambodia, after Mr Obama met with leaders from countries involved in the TPP talks. The discussions on trade

proceeded even as China’s territorial disputes surfaced at five days of meetings in Cambodia hosted by the Association of Southeast Asian Nations that ended yesterday. Mr Obama, who met with Japan’s Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao separately yesterday, called the U.S.-Japan military alliance the “cornerstone” of regional security.

Increasing severity “With the increasing severity of the security environment in East Asia, the importance of the Japan-U.S. alliance is increasing evermore,” Mr Noda, who faces re-election next month, said in a meeting with Mr Obama. “I would like to proceed with concrete cooperation to develop our alliance.” Mr Wen also downplayed the disputes and urged leaders to focus on maintaining the peace and stability that has underpinned Asia’s economic growth since World War II, according to Fu Ying, China’s vice foreign minister. China has been Asean’s largest trading partner since 2009.

Tripartite talks to ease trade relations

“We do not want to give overemphasis to the territorial disputes and the differences,” she told reporters. “We do not think it’s a good idea to spread the sense of tension in this region.”

China reliance Southeast Asia is growing more reliant on trade with China, which

Japan position pledges 2 pct inflation target LDP election platform focused on economic policy and security

he opposition Liberal Democratic Party (LDP), tipped to finish first in Japan’s parliamentary election, pledged yesterday to compile a large extra budget and push the central bank to ease its already loose monetary policy to rescue the economy from recession. The party also promised to boost spending on maritime defence, defend Japan’s territory and ease restraints on the military imposed by the pacifist constitution. Those positions could further inflame ties with Beijing, already frayed by a feud over tiny, uninhabited islands now controlled by Tokyo, known as the Senkaku in Japanese and Diaoyu in China. Monetary policy, along with diplomacy and security matters, has emerged as a focal point of the December 16 election - the first since Prime Minister Yoshihiko Noda’s Democratic Party of Japan (DPJ) surged to power in 2009.

Three years and three prime ministers later, opinion polls show disappointed voters are likely to give the LDP the biggest number of seats in parliament’s lower house. The LDP’s platform calls for setting a 2 percent inflation target under a accord between the government and the Bank of Japan (BOJ), as well as the possible revision of the BOJ law, which guarantees the central bank’s independence, to “strengthen cooperation” with the government on policies. The document also said an LDP government would consider creating a public-private sector fund to buy foreign bonds. But it made no mention of LDP leader and ex-premier Shinzo Abe’s proposal that the BOJ should directly underwrite bonds issued for public works projects. Mr Noda says that idea threatens the central bank’s independence. Reflecting the party’s generally pro-nuclear power stance more than

Shinzo Abe, Liberal Democratic Party leader

18 months after the Fukushima nuclear disaster, the LDP said it would decide within three years about whether to restart idled nuclear power plants. Public fears about safety have grown since the March 2011 disaster, sparking large demonstrations against restarts. The election is expected to usher in Japan’s seventh prime minister in six years, with the

long-dominant, conservative LDP likely to return to power after just three years in opposition. Many economists, however, doubt the election will immediately end a policy stalemate that has plagued a country struggling to cope with an ageing population, a declining manufacturing sector and the emerging power of China. Reuters

November 22, 2012 business daily | 11

ASIA S. Koreans ponder nuclear waste storage South Korea is to hold public consultations on where to store waste nuclear fuel as storage capacity at its reactors is reaching full capacity .The plan to set up an independent consultative body comes as South Korea grapples with its worst crisis after forged certificates were used by parts suppliers to the nuclear industry, causing stoppages at two reactors as the bitter Korean winter draws near. The government has been criticised for a lack of transparency over safety for its nuclear programme and for the dual supervisory and promotion roles of its regulators.

Philippines closer to tobacco, alcohol tax hike ‘Sin taxes’ may raise US$1 bln revenue per year

is a gateway for shipments to advanced economies, according to the Organisation for Economic Cooperation and Development. The RCEP includes China, Japan, India, South Korea, Australia and New Zealand, an area with more than 3 billion people representing about a quarter of the world economy, according to data compiled by Bloomberg. The 16 countries are targeting

to complete negotiations by 2015, Singapore Trade Minister Lim Hong Kiang told the Straits Times newspaper on November 17. TPP countries aim to complete the agreement by next October, Australian Prime Minister Julia Gillard told reporters yesterday. Her country is one of six involved in both sets of trade talks. Bloomberg

he Philippines has moved closer to raising tobacco and alcohol taxes, the government said yesterday after the Senate passed a bill aimed at weaning millions of smokers off the habit. The Senate late Tuesday passed a bill that would raise 40 billion pesos (US$1 billion) in “sin taxes” each year, Finance Secretary Cesar Purisima said in a statement. It “also provides moderate tax increases to protect the young and the poor from the ill effects of smoking and excessive drinking”, he added. Under the proposed law, cigarette excise taxes would be gradually raised to 26 pesos (63 US cents) per pack by 2016, close to the 60 percent tax level recommended by the World Health Organization and the World Bank, he added. The House of Representatives must pass its own version of the bill, now under deliberation, before a compromise measure integrating the Senate and House bills can be signed into law by President Benigno Aquino, himself a smoker.

Filipinos are among the heaviest smokers in Southeast Asia with nearly one in five of its citizens smoking an average of around 15 cigarettes per day, according to the department of health. A state briefing paper said this was partly due to the very low taxes on cigarettes, which sell at an average of 27.72 pesos a pack, the lowest in the 10-member Association of Southeast Asian Nations. Raising tobacco taxes by 10 percent would reduce the number of Filipino smokers by two million within four years and cut smokingrelated deaths, it added. The Senate bill would also bring Philippine taxation on distilled spirits into line with World Trade Organization rules, raising the excise tax on most distilled spirits by around 50 percent by 2015. Last year in a complaint filed by the United States, the WTO found the Philippines’ lower taxes on some domestically produced spirits had violated the General Agreement on Tariffs and Trade. AFP

South Korea won falls Singapore dissident on Finance Minister warning to run for office in 2016

Chee had been declared bankrupted following defamation lawsuits

ne of Singapore’s most outspoken opposition politicians said yesterday he plans to run for parliament again after settling defamation damages awarded to two former prime ministers. “I look forward to standing for elections in 2016,” Chee Soon Juan, 50, the Secretary-General of the Singapore Democratic Party (SDP), told AFP. Mr Chee was declared bankrupt in 2006 after failing to pay his debts to former prime ministers Lee Kuan Yew and Goh Chok Tong. Singaporean law bans people who are bankrupt from running for parliament. The government’s Insolvency and Public Trustee’s Office confirmed Wednesday that Mr Chee, a vocal critic of the ruling People’s Action Party (PAP) once led by Lee and Mr Goh, will have his bankruptcy formally annulled on Friday. Mr Chee became ineligible to run for office in 2006 after failing to pay Sg$500,000 (about US$400,000 at current rates) in damages awarded

to Mr Lee and Mr Goh over remarks he made in the 2001 general election. In July this year, Mr Chee offered to pay them Sg$30,000 to settle his debts, which Mr Lee and Mr Goh accepted. The PAP has dominated Singapore politics since 1959 and its leaders have in the past been accused by critics of using lawsuits to side-line opponents – something they said they needed to do to protect their reputations. Mr Chee, who raised the money to pay his debts through public donations and proceeds from a book, said his exit from bankruptcy “means that the party is further strengthened as far as the next elections are concerned”. His party failed to win a single seat in the 2011 election, which saw the PAP receive an all-time low of 60 percent of the vote but still win 81 seats in the 87-member parliament. The opposition took the remaining six seats, despite winning 40 percent of the vote, under a system critics see as stacked in favour of the PAP. AFP

he South Korean won fell yesterday as investors hesitated taking bets on the currency after Finance Minister Bahk Jae-wan warned of potential regulatory action to stem the swift appreciation of the won. Mr Bahk said at a weekly policy meeting in Seoul earlier yesterday that the government was closely scrutinising the won’s recent volatility and could take measures to curb foreign capital inflows if necessary. “Right now seeing as how the won has appreciated quickly against the dollar, it’s not the level the authorities are concerned about but rather the speed at which the won has firmed,” said Sun Yoo, an economist at Woori Investment and Securities in Seoul. “For now the government may turn to market smoothing operations but they could strengthen the capital controls [currently in place] in December or early next year.” Mr Bahk’s comments came just a day after his vice minister, Shin Jeyoon told reporters the government does not believe current market conditions warrant additional measure to control inflows, boosting the won to a 14-month intraday high on Tuesday. The won has gained more than 6

S. Korea’s Finance Minister Bahk Jae-wan

percentinvalueagainstthedollarsofarthis year, and currency dealers have suspected over the past several months authorities have executed market-smoothing operations to slow down its appreciation. The Bank of Korea and the Financial Supervisory Service completed a joint inspection of foreign exchange trading at banks operating in the country this week, which analysts said was also aimed at curbing the won’s movements. Reuters

12 |

business daily November 22, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

30.25

1.680672

18122675

CHINA UNICOM HON

3.3

2.167183

12586430

CITIC PACIFIC

BANK OF CHINA-H

3.18

1.597444

299497703

BANK OF COMMUN-H

5.54

2.973978

27956151

29.05

0.6932409

919172

14.9

1.915185

20577342

AIA GROUP LTD ALUMINUM CORP-H

BANK EAST ASIA BELLE INTERNATIO

CLP HLDGS LTD CNOOC LTD

VOLUME

1.196581

14913961

POWER ASSETS HOL

67.65 -0.07385524

1366063

9.55

0.5263158

12135181

SANDS CHINA LTD

31.65

5831233

66.7

0.3007519

1631449

16.28

0.3699137

31148830

COSCO PAC LTD

10.66

1.13852

7829555

12.14

-0.6546645

14115681

BOC HONG KONG HO

23.65

0.4246285

5733488

HANG LUNG PROPER

13.86

1.315789

2669051

HANG SENG BK

CHEUNG KONG

113.7

0.4416961

2425623

HENDERSON LAND D

7.63

2.416107

17872927

CHINA CONST BA-H

DAY %

11.84

ESPRIT HLDGS

CATHAY PAC AIR CHINA COAL ENE-H

PRICE

HENGAN INTL

26.6

0.1883239

4727000

115.6

1.137358

991291

52.9

0.4748338

2272124

68.95

-0.5050505

2266100

20.3

0.2469136

2262061

125.7

2.278275

2822749 11329074

5.84

3.362832

308345882

CHINA LIFE INS-H

22.35

1.360544

20510666

CHINA MERCHANT

22.8

-0.8695652

4741122

1.265823

CHINA MOBILE

86.8

2.298173

15489350

HUTCHISON WHAMPO

78.1

0.5148005

3536045

21.25

2.657005

24135501

IND & COMM BK-H

5.15

1.778656

197372921

CHINA PETROLEU-H

8.13

2.135678

61245157

LI & FUNG LTD

12.08

-1.948052

32236645

CHINA RES ENTERP

25.7

-2.095238

9005000

MTR CORP

30.05

-0.166113

1297273

CHINA OVERSEAS

HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC

NAME

PRICE

13.32

-0.149925

4240155

SUN HUNG KAI PRO

111.7

0.6306306

3202317

SWIRE PACIFIC-A

93.65

1.133909

958408

258

2.54372

4306511

TENCENT HOLDINGS TINGYI HLDG CO

22.1

11578000

WANT WANT CHINA

10.94

2.819549

7460300

WHARF HLDG

54.45

0.4612546

1990679

MOVERS

HIGH

21524.36

LOW

21152.99

18.98

2.043011

3766035

NEW WORLD DEV

12.26

1.322314

9933481

52W (H) 22149.69922

16.94

0.7134364

5355438

PETROCHINA CO-H

10.18

0.1968504

76354846

(L) 17613.19922

PING AN INSURA-H

58.2

0.7792208

16164055

PRICE

DAY %

VOLUME

24.55

2.079002

12599800

YANZHOU COAL-H

CHINA PETROLEU-H

8.13

2.135678

61245157

1.636661

11359458

1 21525

INDEX 21524.36

CHINA RES LAND

31.05

2.75974

VOLUME

SINO LAND CO

CHINA RES POWER CHINA SHENHUA-H

DAY %

21150

19-November

21-November

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.35

1.823708

93174457

AIR CHINA LTD-H

5.14

0.5870841

4548000

3.3

2.167183

12586430

CHINA RAIL CN-H

8.17

-2.272727

ANHUI CONCH-H

25.35

1.807229

7751000

CHINA RAIL GR-H

4.27

BANK OF CHINA-H

3.18

1.597444

299497703

CHINA SHENHUA-H CHINA TELECOM-H

ALUMINUM CORP-H

CHINA PACIFIC-H

PRICE

DAY %

VOLUME

11.42

1.601423

19981944

ZIJIN MINING-H

3.15

0.9615385

25143228

17773000

ZOOMLION HEAVY-H

9.58

3.344121

9309043

1.425178

19360455

ZTE CORP-H

11.38

2.154399

3225406

31.05

1.636661

11359458

5.54

2.973978

27956151

4.25

1.918465

35579968

19.68

2.92887

5595021

DONGFENG MOTOR-H

10.14

4.536082

26378192

CHINA CITIC BK-H

3.93

1.813472

32021423

GUANGZHOU AUTO-H

5.47

2.052239

6156544

CHINA COAL ENE-H

7.63

2.416107

17872927

HUANENG POWER-H

6.47

0.9360374

13571400

CHINA COM CONS-H

6.81

1.339286

14752010

IND & COMM BK-H

5.15

1.778656

197372921

CHINA CONST BA-H

5.84

3.362832

308345882

JIANGXI COPPER-H

19.48

1.037344

5226410

CHINA COSCO HO-H

3.65

3.988604

23248654

PETROCHINA CO-H

10.18

0.1968504

76354846

BANK OF COMMUN-H BYD CO LTD-H

22.35

1.360544

20510666

PICC PROPERTY &

9.87

1.230769

10877045

CHINA LONGYUAN-H

4.82

0.4166667

5339760

PING AN INSURA-H

58.2

0.7792208

16164055

CHINA MERCH BK-H

14.14

1.58046

12287415

SHANDONG WEIG-H

8.07

0.2484472

14324000

CHINA LIFE INS-H

NAME

MOVERS

1 10400

INDEX 10397.73 HIGH

10398.28

LOW

10212.38

CHINA MINSHENG-H

7.32

1.104972

32658200

SINOPHARM-H

24.45

0.204918

1390000

52W (H) 11916.1

CHINA NATL BDG-H

9.65

2.33298

24717640

TSINGTAO BREW-H

41.7

1012000

(L) 8987.76

14.76

-0.9395973

7905805

WEICHAI POWER-H

29.05

1.219512

1528905

CHINA OILFIELD-H

10210

19-November

21-November

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

CSR CORP LTD -A

4.61

1.54185

21982836

SHANDONG DONG-A

38.27

-0.3644884

3202351

7551716

DAQIN RAILWAY -A

6.17

15574579

SHANDONG GOLD-MI

36.66

0.5761317

5049678

2.547771

12250679

DATANG INTL PO-A

4.08

0.7407407

2400446

SHANG PHARM -A

10.68

7052795

3.323263

12167933

EVERBRIG SEC -A

11.57

3.766816

10918657

SHANG PUDONG-A

7.47

1.632653

28957627

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.58

0.3891051

38529844

AIR CHINA LTD-A

4.63

1.758242

ALUMINUM CORP-A

4.83

ANGANG STEEL-A

3.42

NAME

ANHUI CONCH-A

16.29

1.621959

9331892

2.35

0.4273504

14490469

SHANGHAI ELECT-A

3.95

1.804124

2208021

BANK OF BEIJIN-A

7.24

3.281027

31955998

GF SECURITIES-A

12.53

3.382838

28589617

SHANXI LU'AN -A

16.87

2.678028

8990177

BANK OF CHINA-A

2.75

-1.079137

28562682

GREE ELECTRIC

23.07

0.0867679

7669683

SHANXI XINGHUA-A

36.47

-0.626703

4086452

BANK OF COMMUN-A

4.21

1.201923

20284455

GUANGHUI ENERG-A

15.73

2.810458

19400800

SHANXI XISHAN-A

1.608806

7153952

BANK OF NINGBO-A

9.07

2.024747

5442526

HAITONG SECURI-A

8.6

3.614458

44847394

SHENZEN OVERSE-A

5.89

2.61324

22492662

BAOSHAN IRON & S

HANGZHOU HIKVI-A

28.32

0.9985735

1904401

SICHUAN KELUN-A

-1.027077

726470

HENAN SHUAN-A

58.64

1.103448

752742

SUNING APPLIAN-A

6.21

0.6482982

25710266

11691754

HONG YUAN SEC-A

17.57

5.083732

19009295

TASLY PHARMAC-A

51.78

-0.1542615

979921

19360829

HUATAI SECURIT-A

8.3

2.722772

19870856

TSINGTAO BREW-A

30.2

0.03312355

1442357

4.61

0.4357298

11019160

16.23

3.113088

4385615

CHINA CITIC BK-A

3.64

1.675978

CHINA CNR CORP-A

4.11

1.732673

BYD CO LTD -A

GD POWER DEVEL-A

NAME

CHINA COAL ENE-A

6.94

0.872093

5353244

HUAXIA BANK CO

8.48

1.80072

13979785

WEICHAI POWER-A

21.8

3.809524

10768912

CHINA CONST BA-A

4.17

0.2403846

30257203

IND & COMM BK-A

3.84

0.2610966

17936603

WULIANGYE YIBIN

28.8

-0.6553984

37682171

CHINA COSCO HO-A

4.26

7.575758

27520861

INDUSTRIAL BAN-A

12.5

1.626016

31847204

YANGQUAN COAL -A

13.17

2.410575

5761925

CHINA CSSC HOL-A

19.7

5.291288

5322730

INNER MONG BAO-A

33.94

0.473653

34376219

YANTAI CHANGYU-A

41.37

1.099707

856280

CHINA EAST AIR-A

3.17

1.92926

17319281

INNER MONG YIL-A

20.32

1.24564

4944094

YANTAI WANHUA-A

13.05

0.9280742

4680256

CHINA EVERBRIG-A

2.59

0.7782101

41203651

INNER MONGOLIA-A

5.24

1.550388

38806480

YANZHOU COAL-A

16.92

2.297461

2215512

CHINA LIFE INS-A

17.3

1.288056

5074023

JIANGSU HENGRU-A

28.68

0.4201681

1121999

YUNNAN BAIYAO-A

65.2

0.8039579

1758615

CHINA MERCH BK-A

9.93

1.017294

22234439

JIANGSU YANGHE-A

99.42

-1.192606

1533589

ZHONGJIN GOLD

15.23

0.1973684

9403547

CHINA MERCHANT-A

8.92

2.764977

14621030

JIANGXI COPPER-A

20.7

1.272016

4645352

ZIJIN MINING-A

3.74

0.5376344

21943190

CHINA MERCHANT-A

22.6

3.432494

11691636

JINDUICHENG -A

11.13

1.551095

3167674

ZOOMLION HEAVY-A

8.24

1.477833

17569900

10.91

2.537594

10572372

ZTE CORP-A

8.13

1.119403

7000831

-0.3207184

9751791 3333464

CHINA MINSHENG-A

6.11

0.6589786

63276307

JIZHONG ENERGY-A

CHINA NATIONAL-A

6.86

1.329394

19099032

KANGMEI PHARMA-A

15.54

KWEICHOW MOUTA-A

CHINA OILFIELD-A

15.85

1.92926

2379761

218.65

1.245601

CHINA PACIFIC-A

16.79

1.881068

12157596

LUZHOU LAOJIAO-A

33.13

0.5462822

8206900

2.04

1.492537

15708920

0.8163265

12187448

CHINA PETROLEU-A

6.11

1.495017

10657703

METALLURGICAL-A

CHINA RAILWAY-A

5.28

0.9560229

12272800

NINGBO PORT CO-A

2.47

CHINA RAILWAY-A

2.8

1.449275

21065632

PANGANG GROUP -A

3.46

2.366864

33769913

8.59

0.5854801

9566784

CHINA SHENHUA-A

21.68

1.450632

5358938

PETROCHINA CO-A

CHINA SHIPBUIL-A

4.21

35132270

PING AN BANK-A

13.26

1.376147

10792687

36.44

3.141806

MOVERS

272

CHINA SOUTHERN-A

3.38

1.807229

17652419

17475636

HIGH

2194.9

CHINA STATE -A

3.06

0.990099

26166002

POLY REAL ESTA-A

11.45

2.232143

35563043

LOW

2150.11

CHINA UNITED-A

3.24

1.25

51590525

QINGDAO HAIER-A

10.99

0.4570384

8168813

CHINA VANKE CO-A

8.37

1.454545

30273757

QINGHAI SALT-A

24.2

1.340034

2504463

CHINA YANGTZE-A

6.36

0.792393

9799999

SAIC MOTOR-A

13.37

1.595745

10672508

10.74

2.873563

48992814

9.04

1.345291

12103115

PRICE DAY %

Volume

PRICE DAY %

Volume

SANY HEAVY INDUS

7 2195

INDEX 2194.896

PING AN INSURA-A

CITIC SECURITI-A

52W (H) 2717.825 (L) 2149.538

2150

19-November

21-November

FTSE TAIWAN 50 INDEX NAME

NAME

PRICE DAY %

Volume

22.85

-2.972399

19696830

FORMOSA PLASTIC

71.6

-1.783265

9933996

TAIWAN MOBILE CO

105 -0.4739336

3065064

22.6

-1.310044

16434163

FOXCONN TECHNOLO

94.6 -0.9424084

8791690

TPK HOLDING CO L

416

1.960784

3481036

ASIA CEMENT CORP

2659026

FUBON FINANCIAL

0.1106195

30082482

ASUSTEK COMPUTER

310

0.6493506

2531947

AU OPTRONICS COR

-2.222222

70424403

140.5

ACER INC ADVANCED SEMICON

CATCHER TECH

30.65

NAME

-1.605136

11020157

TSMC

90.5

HON HAI PRECISIO

89.1 -0.8898776

25093004

UNI-PRESIDENT

51.2 -0.5825243

HOTAI MOTOR CO

188

UNITED MICROELEC

10.1

-1.827676

318400

1.079137

15037729

HTC CORP

241.5

2.330508

24278873

CATHAY FINANCIAL

28.7 -0.8635579

11677778

HUA NAN FINANCIA

15.15

-1.302932

5251925

YUANTA FINANCIAL

CHANG HWA BANK

14.6

-1.016949

6163388

LARGAN PRECISION

697

1.603499

940185

YULON MOTOR CO

CHENG SHIN RUBBE

0.1430615

3340377

LITE-ON TECHNOLO

37.5 -0.1331558

5159066

10.95

-1.351351

45124954

MEDIATEK INC

0.8116883

6002976

6.34

-1.705426

23664616

MEGA FINANCIAL H

21.2 -0.9345794

16553435

24.85 -0.4008016

16815101

NAN YA PLASTICS

46.3

-3.138075

7660663

26237269

PRESIDENT CHAIN

151

-0.330033

1004992

CHIMEI INNOLUX C CHINA DEVELOPMEN CHINA STEEL CORP CHINATRUST FINAN

15.6

CHUNGHWA TELECOM

92.6 -0.1078749

4922656

QUANTA COMPUTER

68.5

-2.560455

6382826

COMPAL ELECTRON

17.8

-1.385042

12132499

SILICONWARE PREC

-2.439024

7338653

102

DELTA ELECT INC

0.3215434

310.5

0.4926108

3866680

SINOPAC FINANCIA

11.35

-1.731602

9954251

FAR EASTERN NEW

31.75 -0.1572327

6491717

SYNNEX TECH INTL

55.5

2431759

FAR EASTONE TELE

69.8 -0.8522727

7012531

TAIWAN CEMENT

36.8

4975232

FIRST FINANCIAL

16.4

-1.204819

7518695

TAIWAN COOPERATI

15.1

-1.30719

6703992

FORMOSA CHEM & F

62.6

-1.572327

6448773

TAIWAN FERTILIZE

69.1

-3.221289

5334052

FORMOSA PETROCHE

79.2

-2.342787

3092834

TAIWAN GLASS IND

24.15

-2.620968

1741748

WISTRON CORP

MOVERS

-1.941748

5862902 50456718

28.4

4505710

13.15

-1.865672

14825247

49 -0.8097166

2933279

4 5045

INDEX 4992.8 HIGH

5045.52

LOW

4967.13

52W (H) 5621.53 4965

(L) 4643.05 19-November

21-November

November 22, 2012 business daily | 13

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

Max 28.1

Average 27.766

MElCo CroWN ENtErtAINMENt

Min 27.55

28.2

37.6

28.0

37.3

27.8

37.0

27.6

36.7

27.4

last 28.1

SANDS CHINA ltD

Average 30.995

Max 31.7

Max 37.4

Average 37.047

Min 30.8

last 31.65

Average 13.199

Min 13.14

last 13.2

13.1

WyNN MACAU ltD 21.7

31.5

18.1

21.6

31.2

18.0

21.5

30.9

17.9

21.4

30.6

17.8 Max 18.06

Average 18.00083

WTI CRUDE FUTURE Jan13

87.24

0.564841499

-10.78842417

109.6699982

79.68000031

BRENT CRUDE FUTR Jan13

110.22

0.355094237

6.492753623

120.7699966

90.15999603

GASOLINE RBOB FUT Dec12

272.55

0.479262673

9.837188684

295.8800077

217.2600031

949.5

0.237529691

5.941422594

1036.25

799.25

3.81

-0.574112735

1.410700027

4.350000381

2.90899992

NATURAL GAS FUTR Dec12 HEATING OIL FUTR Dec12 Gold Spot $/Oz Silver Spot $/Oz Platinum Spot $/Oz

DAY %

YTD %

(H) 52W

Min 17.94

last 18

21.3 Max 21.65

Average 21.537

305.63

0.562648065

6.439367556

335.1700068

254.2500019

-0.4245

10.3297

1796.08

1522.75

33.095

-0.2225

18.8971

37.4775

26.1513

1572.68

-0.3043

12.7773

1736

1339.25

638

-0.7004

-2.3718

725.19

553.75

LME ALUMINUM 3MO ($)

1964

-0.657561963

-2.772277228

2361.5

1827.25

LME COPPER 3MO ($)

7783

-0.269092773

2.407894737

8765

7100.25

LME ZINC

1940

-0.282703675

5.149051491

2220

1745

3MO ($)

LME NICKEL 3MO ($)

16605

0.789074355

-11.25066809

22150

15236

14.835

-0.603015075

-3.386519049

16.60000038

14.60000038

746.75

-0.066912011

24.40649729

846.25

511

WHEAT FUTURE(CBT) Mar13

857.25

-0.377687391

16.79155313

948.25

652

SOYBEAN FUTURE Jan13

1407.75

-0.35391966

16.05523495

1781.5

1126.75

153

0.360774024

-35.70077747

249

SUGAR #11 (WORLD) Mar13

19.79

-0.552763819

-15.28253425

COTTON NO.2 FUTR Mar13

72.25

-0.331080149

-18.37080556

AGRICULTURE ROUGH RICE (CBOT) Jan13 Mar13

COFFEE 'C' FUTURE Mar13

last 21.35

Min 21.35

PRICE

DOW JONES INDUS. AVG

NASDAQ COMPOSITE INDEX

FTSE 100 INDEX

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 %

1.0375 1.5927 0.9416 1.279 82.21 7.9833 7.7509 6.2304 55.115 30.71 1.2249 29.152 41.135 9654 85.266 1.20434 0.80298 7.9559 10.2099 105.14 1.03

-0.2596 0.0126 -0.1062 -0.1639 -1.1556 0.0125 0.0077 0.0401 -0.0363 -0.0651 -0.1061 -0.1406 0.0875 -0.145 -0.8831 0.0498 0.1781 0.3281 0.1753 -0.9796 0

YTD %

(H) 52W

1.626 2.4706 -0.3717 -1.3193 -6.4469 0.2042 0.2129 1.0369 -3.7195 2.7353 5.8535 3.8659 6.5759 -6.0597 -8.0149 1.0338 3.7871 2.2411 1.3918 -5.2121 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 9664 88.637 1.24438 0.86648 8.5888 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

2.69

3.461538

22.27272

3.25

2.16

2387524

149.4499969

CROWN LTD

9.97

-0.6972112

23.23856

10.2

7.92

1677271

25.12999916

18.65999985

AMAX HOLDINGS LT

0.064

3.225806

-26.43678

0.119

0.055

8863000

98.5

66.84999847

BOC HONG KONG HO

23.65

0.4246285

28.53261

16.24

5733488

CENTURY LEGEND

0.25

8.69565

0.335

0.204

CHEUK NANG HLDGS

4.15

48.21429

4.36

2.5

CHINA OVERSEAS

21.25

2.657005

63.89779

21.95

11.507

24135501

CHINESE ESTATES

11.84

1.718213

-5.28

13.26

8.3

18500

CHOW TAI FOOK JE

10.06

0.1992032

-27.72989

15.16

8.4

8369800

EMPEROR ENTERTAI

1.63

46.84684

1.65

0.99

135000

FUTURE BRIGHT

1.26

200

1.36

0.37

1572000

World Stock MarketS - Indices COUNTRY

PRICE

(L) 52W

1726.56

Palladium Spot $/Oz

NAME

DAY %

YTD %

(H) 52W

(L) 52W

12788.51

-0.0582215

4.673193

13661.87

11231.56

2916.684

0.02105574

11.9584

3196.932

2441.48

HANG SENG BK

5752.02

0.06819645

3.225614

5989.07

5075.22

DAX INDEX

7191.35

0.2559602

21.92138

7478.53

5366.5

NIKKEI 225

9222.52

0.8737083

9.07319

10255.15

8135.79

HANG SENG INDEX

21524.36

1.394743

16.76198

22149.69922

17613.19922

CSI 300 INDEX

2194.896

1.38645

-6.430628

2717.825

TAIWAN TAIEX INDEX

7088.49

-0.8015931

0.2320414

8170.72

GALAXY ENTERTAIN

PRICE

DAY % YTD %

VOLUME CRNCY

28.1

1.99637

97.33146

29.45

13.2

15626000

115.6

1.137358

25.44764

120

91.05

991291

HOPEWELL HLDGS

0.3460208

47.9429

31.091

18.319

892900

HSBC HLDGS PLC

1.265823

28.81356

11329074

HUTCHISON TELE H

3.32

-2.064897

11.03679

3.88

2.81

3583000

LUK FOOK HLDGS I

20.95

0.7211538

-22.69373

34.3

14.7

2304000

MELCO INTL DEVEL

7.98

2.835052

38.30156

8.28

5.12

6245100

2149.538

MGM CHINA HOLDIN

13.2

-0.4524887

37.61248

14.76

9.347

1496000

6609.11

MIDLAND HOLDINGS

3.44

3.303303

-13.00053

5.217

3.249

2792000

NEPTUNE GROUP

0.153

37.83784

0.222

0.08

1810000

NEW WORLD DEV

12.26

1.322314

95.84664

13.2

6.13

9933481

SANDS CHINA LTD

31.65

2.75974

44.19134

33.05

19.96

5831233

SHUN HO RESOURCE

1.24

1.639344

1.37

0.95

10000

SHUN TAK HOLDING

3.2

-1.234568

25.04258

3.51

2.418

3041000

KOSPI INDEX

1884.04

-0.3248368

3.193228

2057.28

1750.6

S&P/ASX 200 INDEX

4369.499

-0.3689053

7.71438

4581.8

3973.8

4317.277

0.1138818

12.95882

4366.856

3618.969

FTSE Bursa Malaysia KLCI

1622.97

-0.07572959

6.025882

1679.37

1424.19

NZX ALL INDEX

864.28

-0.123534

18.42692

874.107

712.548

JAKARTA COMPOSITE INDEX

Max 13.28

18.2

PRICE

NAME

36.4

13.2

31.8

NAME

CORN FUTURE

last 37.4

13.3

CURRENCY EXCHANGE RATES

GAS OIL FUT (ICE) Jan13

METALS

Min 36.7

SJM HolDINGS ltD

Commodities ENERGY

MGM CHINA HolDINGS

43.93625

18.18

11.519

5799134

SMARTONE TELECOM

SJM HOLDINGS LTD

14.76

-1.072386

9.821432

17.5

11.72

1436500

WYNN MACAU LTD

21.35

-0.6976744

9.487179

25.5

14.62

6119200

ASIA ENTERTAINME

3.41

-0.5830904

-42.0068

7.24

2.4

129219

45.05

-0.04437542

13.87765

51.16

35.79

439750 2300

PHILIPPINES ALL SHARE IX

3615.66

0.1626133

18.73932

3624.28

2952.17

HSBC Dragon 300 Index Singapor

577.52

0.75

16.36

STOCK EXCH OF THAI INDEX

1273.84

-0.201346

24.23829

1314.64

965.07

BALLY TECHNOLOGI

HO CHI MINH STOCK INDEX

383.87

-0.3193976

9.193574

492.44

332.28

BOC HONG KONG HO

-4.761905

25.14666

3.3

Laos Composite Index

1233.05

37.08781

1249.34

876.33

GALAXY ENTERTAIN

3.471

85.61497

3.73

1.68

961

INTL GAME TECH

13.27

1.998463

-22.84884

18.1

10.92

5123099

JONES LANG LASAL

76.77

0.2350176

25.31832

87.52

55.88

148263

LAS VEGAS SANDS

43.6

0.3914345

2.036041

62.09

34.72

4820054

MELCO CROWN-ADR

14.68

1.253949

52.59875

16.02

8.18

2829257

MGM CHINA HOLDIN

1.76

47.68902

1.96

1.1917

2000

MGM RESORTS INTE

9.64

0.4166667

-7.574308

14.9401

8.83

7401574

SHFL ENTERTAINME

14.14

3.211679

20.64846

18.77

10.22

285084

SJM HOLDINGS LTD

2.34

45.56106

2.34

1.4695

1000

106.87

1.02089

3.154876

129.6589

84.4902

956603

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

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily November 22, 2012

Opinion Wall Street’s great scapegoat hunt

William D. Cohan

Bloomberg View columnist

all Street has increasingly taken up its old habit of blaming junior bankers and traders for what goes wrong. This is particularly troubling because Wall Street is similar to the military: there is no upside for anyone working in finance to do anything but to follow the orders given by the bosses. The idea of a “rogue trader” is really a myth. The goal at every firm is always to make more money in any way that is legally defensible – by selling more mortgagebacked securities, by doing bigger and bigger mergersand-acquisition deals or by making a larger and larger bet on the direction of an obscure debt index. When things go well – the firm lands a big underwriting or a high-profile merger or executes a profitable trade – there is no shortage of people around to claim credit. Of course, when something goes terribly wrong – see “Whale, London” or “Synthetic CDO, Abacus” – the senior executives disappear from the scene faster than cockroaches when the light is turned on. In return, employees get paid more working on Wall Street – without putting any personal capital at risk – than they can at almost any other job on the planet. This is not a subject open to debate on Wall Street. This is the way it is. If you don’t like that bargain, you leave. (Sorry, Greg Smith.)

Botched CDO And yet, we are now supposed to believe that many things that went wrong leading up to the financial crisis were caused by a handful of junior bankers and traders supposedly acting on their own. Goldman Sachs Group Inc. and the Securities and Exchange Commission continue to blame Fabrice Tourre, a former Goldman Sachs vice president, for the botched manufacturing and selling of the Abacus 2007AC1 synthetic collateralised debt obligation. The firm paid the US$550 million – one of the largest fines in Wall Street history – to avoid an SEC civil suit. Tourre, meanwhile, faces a civil trial set for July. While Goldman Sachs pays his legal bills, he is studying for a doctorate at the University of Chicago and

doing humanitarian work in Rwanda. (Anyone want a Free Fab! T-shirt?) This month, the Commodity Futures Trading Commission zapped Matthew Marshall Taylor, another former Goldman Sachs vice president, for allegedly concealing an US$8.3 billion trading position in 2007 that cost the company US$119 million (the losses were hard to see in a year when Goldman Sachs made US$17 billion in pre-tax profit). The CFTC alleged that Taylor fabricated trades and then obstructed Goldman Sachs’s “discovery of his scheme” by providing “false, misleading or deceptive information and reports.” No so fast, says Taylor’s attorney, Ross Intelisano. His client “strenuously denies all of the allegations”; he never “intentionally entered ‘fabricated trades’”; and it was Taylor who brought the losses to Goldman Sachs’s attention, not the other way around, Intelisano said in a statement. Is what we have here a failure to supervise? Then there is Kweku Adoboli, the former “rogue” trader at UBS AG (UBSN),

who is on trial in London for supposedly losing the bank US$2.3 billion without any of his superiors knowing. If found guilty, he could spend 10 years in prison. His lawyer, Charles Sherrard, used metaphor to

We are now supposed to believe that many things that went wrong leading up to the financial crisis were caused by a handful of junior bankers and traders supposedly acting on their own

make an insightful point about Wall Street culture. In closing remarks, Sherrard compared his client to Spartacus, the slave-turned-gladiator played by Kirk Douglas in the 1960 movie. Remember the scene in which Spartacus steps up to take the blame for the slave rebellion, but in his defence his fellow gladiators also claim to be Spartacus so that no one can be blamed individually. Well, things turn out differently on Wall Street: three of Adoboli’s co-workers saw fit to testify against him. “Mr Adoboli stands up and says ‘I am Spartacus’ and the other three stand up and said ‘Yes, that’s him!’” Sherrard told the jury. “Mr Adoboli believes more in community than the self.” He then quoted from Adoboli’s e-mails: “We are a team, we work together. One fails, we all fail. One succeeds, we all succeed.”

Whale suit A similar script was written against Jerome Kerviel, the former trader at Societe Generale SA convicted in a 2008 trading scandal, and will probably be written for

Javier Martin-Artajo, who supervised Bruno Iksil when he lost JPMorgan Chase & Co. more than US$6 billion. Last month, without providing details of its claims, JPMorgan filed suit against Martin-Artajo in London. Does the bank really expect us to believe MartinArtajo acted alone without the knowledge of the top brass in New York? Meanwhile, the Federal Bureau of Investigation and other agencies are also looking to snare small fish, investigating whether foot soldiers at JPMorgan’s chief investment office in London intentionally masked losses by mispricing the positions. This isn’t to say all these bankers are necessarily innocent or shouldn’t be held accountable if they committed illegalities. Rather, it’s that to pretend they acted in a vacuum defies the way the industry works. The message being sent from the corner offices on Wall Street (and in Washington) is clear and chilling: as long as times are good and you do what you are told, you will get paid; but when there is trouble and we need a sacrificial lamb, it may well be you that we serve up. 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 Grimes 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 22, 2012 business daily | 15

OPINION Business

wires

The year of betting conservatively

Leading reports from Asia’s best business newspapers

Nouriel Roubini

Jakarta Post

Indonesia’s Finance Ministry is considering several hedging mechanisms to protect the state budget from fluctuations in global oil prices and their consequent impact on government subsidies. “The first option is called the call option scheme. Under this scheme, the government will purchase insurance on the basis of global oil price rates. This is a very simple mechanism, but as of now, we do not have a legal basis that allows the government to purchase insurance,” he said. The second option, he said, was oil-linked securities.

Korea Times South Korea’s top central banker called for local companies to expand investment and create more jobs in a bid to help the economy recover from a prolonged slowdown. Bank of Korea Governor Kim Choong-soo said in a meeting with six heads of large firms that companies should play a key role in helping the Korean economy pull out of the longstanding slowdown. “It may be difficult for companies to make investments under such circumstances, but there are no other alternatives.”

Bangkok Post Jeju Air, the South Korean lowcost carrier, is eyeing expansion of its Thai operations by forming an alliance with a local budget airline and launching a third Thailand-South Korea route. The plan reflects the airline’s more intention to cash in on the growing passenger traffic between the countries after it topped 1.3 million last year. Jeju is in talks with Bangkokbased budget airlines to form a code-share style partnership whereby they would feed passengers to each other.

Chairman of Roubini Global Economics, Professor at New York University’s Stern School of Business

he upswing in global equity markets that started in July is now running out of steam, which comes as no surprise: with no significant improvement in growth prospects in either the advanced or major emerging economies, the rally always seemed to lack legs. If anything, the correction might have come sooner, given disappointing macroeconomic data in recent months. Starting with the advanced countries, the eurozone recession has spread from the periphery to the core, with France entering recession and Germany facing a double whammy of slowing growth in one major export market (China/Asia) and outright contraction in others (southern Europe). Economic growth in the United States has remained anaemic, at 1.5-2 percent for most of the year, and Japan is lapsing into a new recession. The United Kingdom, like the eurozone, has already endured a doubledip recession, and now even strong commodity exporters – Canada, the Nordic countries, and Australia – are slowing in the face of headwinds from the U.S., Europe, and China.

As consumers, firms, and investors become more cautious and risk-averse, the equity-market rally of the second half of 2012 has crested

Viet Nam News Government policies should offer more support to enterprises to license and transfer technology in order to increase their competitiveness, according to a report entitled “FirmLevel Competitiveness and Technology in Viet Nam”, issued yesterday by the Royal Embassy of Denmark. There was a lot of room for improvement and support schemes needed to be made more transparent and easier for enterprises to apply. A large gap remained between policy and practice and the proportion of firms integrating new technology continued to be small.

Meanwhile, emergingmarket economies – including all of the BRICs (Brazil, Russia, India, and China) and other major players like Argentina, Turkey, and South Africa – also slowed in 2012. China’s slowdown may be stabilised for a few quarters, given the government’s latest fiscal, monetary, and credit injection; but this stimulus will only perpetuate the country’s unsustainable growth model, one based on too much fixed investment and savings and too little private consumption. In 2013, downside risks to global growth will be exacerbated by the spread of fiscal austerity to most advanced economies. Until now, the recessionary fiscal drag has been concentrated in

the eurozone periphery and the U.K. But now it is permeating the eurozone’s core. And in the U.S., even if President Barack Obama and the Republicans in Congress agree on a budget plan that avoids the looming “fiscal cliff,” spending cuts and tax increases will invariably lead to some drag on growth in 2013 – at least 1 percent of GDP. In Japan, the fiscal stimulus from post-earthquake reconstruction will be phased out, while a new consumption tax will be phased in by 2014. The International Monetary Fund is thus absolutely right in arguing that excessively frontloaded and synchronised fiscal austerity in most advanced economies will dim global growth prospects in 2013. So, what explains the recent rally in U.S. and global asset markets?

Poor growth prospects The answer is simple: central banks have turned on their liquidity hoses again, providing a boost to risky assets. The U.S. Federal Reserve has embraced aggressive, openended quantitative easing (QE). The European Central Bank’s announcement of its “outright market transactions” program has reduced the risk of a sovereign-debt crisis in the eurozone periphery and a breakup of the monetary union. The Bank of England has moved from QE to CE (credit easing), and the Bank of Japan has repeatedly increased the size of its QE operations. Monetary authorities in many other advanced and emerging-market economies have cut their policy rates as well. And, with slow growth, subdued inflation, near-zero short-term interest rates, and more QE, longer-term interest rates in most advanced economies remain low (with the exception of the eurozone periphery, where sovereign risk remains relatively high). It is small wonder, then, that investors desperately searching for yield have rushed into equities, commodities,

credit instruments, and emerging-market currencies. But now a global market correction seems underway, owing, first and foremost, to the poor growth outlook. At the same time, the eurozone crisis remains unresolved, despite the ECB’s bold actions and talk of a banking, fiscal, economic, and political union. Specifically, Greece, Portugal, Spain, and Italy are still at risk, while bailout fatigue pervades the eurozone core.

Persistent uncertainties Moreover, political and policy uncertainties – on the fiscal, debt, taxation, and regulatory fronts – abound. In the U.S., the fiscal worries are threefold: the risk of a “cliff” in 2013, as tax increases and massive spending cuts kick in automatically if no political agreement is reached; renewed partisan combat over the debt ceiling; and a new fight over medium-term fiscal austerity. In many other countries or regions – for example, China, Korea, Japan, Israel, Germany, Italy, and Catalonia – upcoming elections or political transitions have similarly increased policy uncertainty. Yet another reason for the correction is that valuations in stock markets are stretched: price/earnings ratios are now

high, while growth in earnings per share is slackening, and will be subject to further negative surprises as growth and inflation remain low. With uncertainty, volatility, and tail risks on the rise again, the correction could accelerate quickly. Indeed, there are now greater geopolitical uncertainties as well: the risk of an Iran-Israel military confrontation remains high as negotiations and sanctions may not deter Iran from developing nuclearweapons capacity; a new war between Israel and Hamas in Gaza is likely; the Arab Spring is turning into a grim winter of economic, social, and political instability; and territorial disputes in Asia between China, Korea, Japan, Taiwan, the Philippines, and Vietnam are inflaming nationalist forces. As consumers, firms, and investors become more cautious and risk-averse, the equity-market rally of the second half of 2012 has crested. And, given the seriousness of the downside risks to growth in advanced and emerging economies alike, the correction could be a bellwether of worse to come for the global economy and financial markets in 2013. © Project Syndicate

16 |

business daily November 22, 2012

CLOSING Fitch to review France’s rating

Oil up on Tel Aviv explosion

Credit rating agency Fitch will review its triple-A rating on France next year, its chairman said yesterday, two days after rival Moody’s stripped the country of its top-notch rating. French-owned Fitch is the only ratings agency to retain a triple-A rating on the euro zone’s No.2 economy. Moody’s cut followed a downgrade by Standard & Poor’s in January. Moody’s downgraded France’s rating to Aa1 with a negative outlook, citing a sustained loss of competitiveness and a failure to tackle structural problems which was eroding growth potential.

Brent crude oil rose more than US$1 a barrel yesterday after an explosion on a Tel Aviv bus intensified concerns the clashes between Gaza and Israel could lead to a wider regional conflict that would disrupt oil flows. An explosion hit a bus in the heart of Tel Aviv yesterday, wounding at least 10 people in what officials said was a terrorist attack. This dented mounting hopes that a ceasefire may be brokered in coming days. Increased volatility in the market is expected with the rising economic uncertainty.

Bernanke’s comments break stocks rally

Treasuries rise as EU fails to agree on Greece Uncertainty in Europe feeds demand for safer assets

reasuries advanced for the first time in three days after European finance ministers failed to agree on a Greek debtreduction package, spurring demand for the safest assets. U.S. government securities due in 10 years and longer returned 2.2 percent in the past month, the most among securities in 144 indexes tracked by Bloomberg and the European Federation of Financial Analysts Societies. Euro-area finance ministers plan another meeting next week after more than 11 hours of inconclusive talks. Volatility on Treasuries declined to the lowest level since 2007. “We’ve got a bit of support from this stalemate, which has put the focus back on the risk around what’s happening in the euro zone and Treasuries have at least stopped falling,” said John Wraith, a fixedincome strategist at Bank of America Merrill Lynch in London. “The market is going to err on the side of safety

first until we get a proper resolution and a feeling we are on more stable ground.” European finance ministers meeting in Brussels failed to agree on how to steer an extra 32.6 billion euros (US$41.7 billion) to Greece through 2016 while finding a way to contain the resulting increase in the nation’s debt. A further meeting has been arranged for November 26.

‘Financing gap’ “W e h ave a s er i es o f options on the table on how to close the financing gap,” German Finance Minister Wolfgang Schaeuble told reporters in the Belgian capital. “We discussed the issue very intensively, but since the questions are so complicated we didn’t come to a final agreement.” “Yields are going to go up by the end of this year,” said Kim Youngsung, head of fixed income in Seoul at Samsung Asset Management Co., South

Korea’s largest private bond investor with the equivalent of US$104.4 billion in assets. “The U.S. economy is recovering with a moderate growth rate. I’m confident President Obama will solve the fiscal-cliff problem.” The fiscal cliff refers to US$607 billion of tax increases and spending cuts that will automatically come into force at the beginning of 2013 unless lawmakers act. President Barack Obama wants to impose higher taxes on the wealthy and reduce spending while Republican lawmakers oppose raising taxes. Treasury 10-year yields may rise as high as 1.90 percent by December 31, a level that may lead Samsung Asset to buy, Mr Kim said. A Bloomberg survey of banks and securities companies with the most recent projections given the heaviest weightings projects the rate will rise to 1.74 percent at year-end. Bloomberg

all Street halted its two-day rally on Tuesday, after Federal Reserve chairman Ben Bernanke said the central bank lacks tools to cushion the U.S. economy from the impact of the “fiscal cliff”. The day’s biggest disappointment was HewlettPackard Co shares, which sank to a 10-year low after the computer and printer maker swung to a fourth-quarter loss and announced a US$5 billion charge related to “accounting improprieties.” Mr Bernanke, in comments before the Economic Club of New York, said the Fed does not have the ability to offset the damage that would result if politicians fail to strike a deal to prevent a series of mandatory tax increases and spending cuts scheduled to go into effect early next year. The statement caused a downdraft in the market, though the equity market cut most of its losses before the end of the day. “This is a more realistic and pragmatic picture of where we are, compared to what we’ve been hearing for the past couple of days from politicians that are mostly PR stunts,” said James Dailey, portfolio manager at TEAM

Asset Strategy Fund in Harrisburg, Pennsylvania. Stocks had rallied for the last two sessions after Washington politicians sounded an encouraging note that a deal to avoid the U.S. fiscal cliff could be reached. The gains followed two weeks of sharp losses that pushed the S&P 500 down through the 200-day moving average, a key benchmark of the market’s long-term trend. Another factor weighing on stocks was Moody’s Investors Service’s reduction of France’s sovereign rating by one notch to Aa1 after the market’s close on Monday. Moody’s cited an uncertain fiscal outlook as a result of the weakening economy. “This brings forward a whole new set of problems to the euro-zone issue. When the lifeguards, in this case, Germany and France, are in trouble, when they need to save people like Greece and Spain, that could be a big concern,” Mr Dailey said. Data also showed U.S. housing starts rose to their highest rate in more than four years in October, suggesting the housing market recovery was picking up momentum, even though permits for future construction fell. Reuters

Ben Bernanke, Federal Reserve chairman