Macau Business Daily, November 27, 2012 by Business Daily

Year I Number 170 Tuesday November 27, 2012 Editor-in-chief Tiago Azevedo Deputy editor-in-chief José I. Duarte MOP $ 6.00

Local banks outgrow Macau

www.macaubusinessdaily.com

Legislator fears new wave of triad crimes The Legislative Assembly got a taste of democratic-style populism yesterday. A member of the pan-democrat New Macau Association raised the spectre of 1990s-style gang warfare breaking out in the city. Ng Kuok Cheong said he is worried about an increase in crimes by organised gangs due to a contraction in junket operators’ profits. Page 4

Broken Tooth associate held over murder ‘plot’ Artur Chiang Calderon, former right-hand man to the ex-14K gang boss Wan Kuok Koi, is in custody at Coloane prison with three other accomplices for an alleged murder plot. The Public Prosecutions Office completed an initial interrogation on Sunday. Mr Wan will walk free next Sunday, having served 14 years and seven months. Page 5

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Hong Kong to review Hibor rates

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Relocation, Relocation, Relocation F

ive slot parlours must be ‘relocated’ under the new slot machine bylaw published in the Official Gazette yesterday, Business Daily has learned. Two – Yat Yuen Canidrome Slot Lounge and Treasure Hunt Slot Lounge – on Macau peninsula are operated by SJM Holdings Ltd. The other three – Mocha Lan Kwai Fong and Mocha Marina Plaza (in the downtown area) and Mocha Hotel Taipa Best Western in Taipa – are operated by Mocha Clubs, a unit of Melco Crown Entertainment Ltd. The new bylaw comes into effect today. The government has however given operators a year to make the changes. The venues mentioned all fail a series of tests set by the new bylaw, which says slot parlours must be located in either a five-star hotel, a non-residential building located within a 500 metres radius range of a casino, or a resort that is “not situated in a densely populated area”. “It doesn’t necessarily mean that the operators have to go and replace five slot lounges. They can move their product to their other venues,” a person familiar with the situation told Business Daily. “I think the real problem the government is trying to address is the convenience of gaming.”

I SSN 2226-8294

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HANG SENG INDEX 21990

21950

21910

21870

More on page 3 21830

November 26

HSI - Movers Name

2,600 hotel posts still not filled Hotels hired 2,865 people in the third quarter of this year but still need to fill almost 2,600 other positions, a survey by the Statistics and Census Service has found. With the opening of two more hotels in Sands Cotai Central, the hotel industry employed 44,587 workers at the end of the third quarter. Page 6

FDI tumbles as investors reap profits Foreign direct investment (FDI) coming into Macau tumbled to a seven-year low, after reaching a new record high in 2010, thanks to higher profits paid to investors, official data show. After discounting the money flowing out, foreign direct investment amounted to 5.19 billion patacas (US$650 million) in 2011, down significantly by 77 percent from the previous year, the Statistics and Census Service announced yesterday. Investment flows into Macau were the smallest since 2004. Last year investment came mostly from the British Virgin Islands (8.43 billion patacas), a popular tax haven; with the United States some way behind (3.4 billion patacas) and mainland China in third spot (2.3 billion patacas).

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%Day

BELLE INTERNATIO

3.06

COSCO PAC LTD

2.92

ESPRIT HLDGS

2.78

CHINA RES ENTERP

2.67

TINGYI HLDG CO

2.29

PING AN INSURA-H

-1.09

NEW WORLD DEV

-1.13

CHINA PETROLEU-H

-1.19

BANK OF COMMUN-H

-1.24

TENCENT HOLDINGS

-1.56

Source: Bloomberg

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business daily November 27, 2012

macau

Profit-taking cuts FDI to lowest since 2004 The foreign direct investment figure tumbled last year as investors repatriated their profits Vítor Quintã

vitorquinta@macaubusinessdaily.com

oreign direct investment (FDI) in Macau fell to its lowest level in seven years last year, falling from its record peak in 2010, official data show. After subtracting the 4.5 billion patacas (US$560 million) returned to outside investors as profits, FDI amounted to 5.19 billion patacas last year, 77 percent less than in 2010, the Statistics and Census Service announced yesterday. The inward flow of investment was the weakest since 2004. The Statistics and Census Service said this was due to “increased dividend payouts to shareholders of enterprises that drove up outflow of funds”. Outsiders earned 46.7 billion patacas on their investments here last year, almost two-thirds more than in 2010. The gaming industry paid out 66.1 percent of those profits, or a record 30.90 billion patacas. Macau investors got a return of 1.3 billion patacas on their investments abroad. Most investment here was from the British Virgin Islands, the tax

haven being the source of 8.43 billion patacas worth. The next biggest outside investors were the United States, which put in 3.4 billion patacas, and mainland China, which put in 2.3 billion patacas. Hong Kong reduced its net direct investment here by 9.3 billion patacas. As usual, most FDI was in the cultural and recreational services sector, which includes the highly profitable gaming industry. The sector received 4.3 billion patacas in capital. Gaming revenue jumped by 42.2 percent to 188.3 billion patacas last year. Outsiders showed considerable interest in wholesaling and retailing last year, investing 3.2 billion patacas in the booming sector. Retail sales grew by 41.9 percent last year to 43.5 billion patacas. Since the Statistics and Census Service began collecting data in 2001, FDI has amounted to 118.9 billion patacas, 67.8 billion patacas of it meant for the gaming sector. The financial sector received 25.5 billion patacas worth over the past decade.

Most of the FDI came from the Cayman Islands and Hong Kong. The Cayman Islands, where some Hong Kong-listed casino operators are registered, were the source of 41.1 billion patacas worth and Hong Kong was the source of 31.1 billion

patacas worth. Macau investors have been less active, their direct investment abroad amounting to just 5.38 billion patacas in the past decade. They invested 4.5 billion patacas of it in Hong Kong.

Wholesaling and retailing got 3.2 billion patacas in inward investment last year

Local banks outgrow Macau Macau’s economy is not big enough for its banks, so many are seeking better returns elsewhere Tony Lai

tony.lai@macaubusinessdaily.com

he banking industry is investing in more sovereign debt, making more deposits abroad and lending more to enterprises elsewhere, Monetary Authority of Macau figures show. The authority announced last week that 80 percent of the industry’s assets and liabilities were outside Macau in the third quarter of this year. This may seem risky for the banking system, but the industry has said it can get deposits here at low rates of interest and get big returns by lending the money elsewhere. Macau’s assets abroad amounted to 642.8 billion patacas (US$80.5 billion) in the third quarter, 5.2 percent more than in the second quarter and 19.5 percent more than a year before. Banks invested in more debt paper in the third quarter, holding 34.4 billion patacas worth, 16 percent more than in the second quarter and 41.4 percent more than a year before. Combined lending and deposits abroad grew by 21.1 percent from a year before to 458.3 billion patacas.

The yuan and other outside currencies account for most of the business of Macau banks

Lending to outside, non-financial companies and deposits made abroad on their behalf rose by 44.4 percent to 213.3 billion patacas. The international liabilities of the banks rose by 22.8 percent to 616.4 billion patacas. Most of the banking industry’s assets and liabilities abroad are in external currencies, 39.1 percent of its assets and 50.1 percent of its liabilities being in Hong Kong dollars.

November 27, 2012 business daily | 3

MACAU

Wrong place at the wrong time Five slot parlours facing ‘relocation’ for failing new bylaw’s proximity tests Michael Grimes

michael.grimes@macaubusinessdaily.com

Earnings hit?

Yat Yuen Canidrome (Photo: Manuel Cardoso)

operators a year to make the changes. The venues mentioned all fail a series of tests set by the new bylaw, which says slot parlours must be located in either a five-star hotel, a non-residential building located within a 500 metres radius range of a casino, or a resort that is “not situated in a densely populated area”. The new bylaw is mainly involved with regulating Macau’s first ever local technical standards for slot and electronic table games, published earlier this year. But a section of the bylaw deals with where the 13 small local parlours that house some of Macau’s slot machines can be located.

The context of the policy move is the government’s desire to encourage responsible gambling generally and to prevent problem gambling among locals in particular. It had been thought by local commentators that only the Canidrome site and Mocha Marina Plaza were under threat.

No comment Referring to yesterday’s gazetting, Macau’s gaming regulator the Gaming Inspection and Coordination Bureau (DICJ) told Business Daily in an e-mailed statement in response to our inquiry: “Among the 13 slot lounges

Gaming industry taken by surprise New slot parlour location rules a shock for some of city’s best-connected business people

riday’s announcement that “nearly half” of Macau’s 11 slot parlours that are not already in casinos “will have to move away” from their current location came as a complete surprise to the local gaming industry and local legal experts, Business Daily can reveal. “A reference in the bylaw that slot lounges must be in ‘entirely uninhabited’ buildings rather than just commercial buildings was I believe inserted by the Executive Council at a late stage,” said one of two people spoken to by Business Daily that are familiar with the situation. “It probably accounts for why it now looks as though more than two lounges will have to close or relocate,” said the person. Angela Leong On Kei, a director of SJM Holdings Ltd and also a Macau legislator, said yesterday in comments on the sidelines of the Legislative Assembly: “I still need time

to understand the situation.” Mocha Clubs is a unit of Melco Crown Entertainment Ltd, whose cochairman is Lawrence Ho Yau Lung. Mocha runs 10 slot parlours – only two of them inside casinos. It said in an e-mailed statement: “…we have no comment about the issue at this time.” Macau’s Executive Council – said to be behind the late change to a policy that had been publicly trailed for many months – is a body largely made up of political appointees that advises the city’s chief executive. The first hint of the policy bombshell came last Thursday when Francis Tam Pak Yuen, Secretary for Economy and Finance, announced that the Executive Council had reviewed and approved the new slots bylaw – but did not hold the customary press conference to discuss it. Instead a press release was circulated in Portuguese and Chinese – Macau’s two official languages – that mentioned

in Macau, two are located inside the casinos. Thus, the 11 slot lounges that the Secretary of Economy and Finance is referring to are those that are located outside the casinos. “Following the enactment of the Administrative Regulation no. 26/2012, there are five slot lounges that required relocation.” The statement went on to list them. Union Gaming Research Macau had said in a note to investors issued before DICJ’s statement that five venues might face “closure”. “We estimate that up to three of MPEL’s 10 Mocha Clubs might face closure. It is important to note that any closures are unlikely to result in changes to 2013 consensus expectations as operators have one year to comply with the measures. For SJM Holdings, we estimate that two of the company’s three slot lounges might face closure,” added Union Gaming. The research house also gave some indication of the likely financial impact of the changes for Melco Crown. “Assuming a proportional EBITDA [earnings before interest, taxation, depreciation and amortisation] contribution from each of MPEL’s Mocha Clubs, we estimate the potential closure of up to three Mocha Clubs could result in the loss of US$12 million to US$15 million in EBITDA in 2014,” stated Union Gaming.

the “entirely uninhabited” ruling. That was confirmed the next day by Mr Tam at the Legislative Assembly, a body that confines itself to oversight of new or amended laws, not of bylaws. Asked yesterday whether a year is enough for the transition process under the new policy imposed by the bylaw, Ms Leong said: “We hope the government will give out a proposal that won’t impose sudden loss to the operators.” She was speaking before the precise impact of the changes had been made public. Ms Leong added: “We hope that the government can come up with a proposal that satisfies the three parties after deliberation with the gaming operators; that it won’t impose financial loss to the enterprises, the employees can keep their job and the government can continue to receive gaming taxation,” she said. M.G.

“This represents just 110 basis points to 140 basis points of current consensus expectations for USD1.066 billion in EBITDA in 2014,” the note added. Union Gaming said information on the possible impact on SJM was harder to quantify. “SJM Holdings does not provide detailed revenue or EBITDA results for its slot parlour segment,” said the research firm. “However, we believe that the collective impact of up to two of the company’s three slot lounges would impact less than 100 basis points of the company’s 2014 consensus EBITDA of HK$9.415 billion.” A person familiar with the government’s approach to the issue pointed out to Business Daily that while some venues face closure, it was also possible the economic impact on the operators could be mitigated. “They can consolidate product [gaming machines] into the existing venues that are going to be preserved. It doesn’t necessarily mean that the operators have to go and replace five slot lounges.” “I think the real problem the government is trying to address is the convenience of gaming,” added the person. “It’s got to stage where there’s a slot lounge on nearly every street corner. A lot of these satellite lounges are inhabited really by locals.” With Tiago Azevedo

KEY POINTS Five slot lounges must ‘relocate’ Changes likely delayed until 2014 Mocha Clubs’ poss US$15 mln dent in EBITDA that year: Union Gaming SJM Holdings’ poss loss of 100 basis points in EBITDA

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business daily November 27, 2012

macau

Legislators fear new wave of triad crimes Assembly members worry changes in gaming might bring back gangster turf wars Tony Lai

tony.lai@macaubusinessdaily.com

Border crossing wait ‘too long’

Secretary Cheong Kuoc Va at the Legislative Assembly yesterday

egislators are concerned over whether the police would be ready to maintain the city’s security if heightened gaming competition were to lead VIP gaming promoters astray. Ng Kuok Cheong, a member of the Legislative Assembly, said he is worried about an increased in crimes by organised gangs due to a contraction in junket operators’ profits. “Before the handover there were fights between different triads and security was never at peace”, he said during yesterday’s discussion of Secretary for Security Cheong Kuoc Va’s Policy Address for 2013. “Right now, although the gaming development remains healthy, I sense something is different – the junket business is contracting this year amid the growth of the overall gaming revenue.”

Mr Ng claims he received reports of the closing down of some VIP gaming rooms due to losses incurred this year. “I’m worried some junket operator might choose an illegal path if its business does not go well,” he said. “If not handled properly, the worst scenario is it could cause conflicts among triads, affecting mass market revenue and even the tourism image of Macau,” the legislator continued. The New Macau Association member asked Mr Cheong whether he would review the regulation of junket operators and increase inspections to prevent crimes. Fellow legislator Ho Ion Sang also asked whether the administration had any plan to fight gaming-related crimes such as money laundering and organised crimes. “Our gaming industry is easily affected by the global economy… If

the distribution of interests among the interested parties does not work well during the down times, our security will face huge challenges,” he warned. But Mr Cheong will only address Mr Ng and Mr Ho’s concerns during today, as his policy address session continues. The secretary didn’t respond to media questions over the upcoming release of Wan Kuok Koi, a notorious 1990s gangster and junket operator. “No comment” was the only remark Mr Cheong made to reporters, through a spokesperson, on the release of Mr Wan and also on the arrest of Mr Wan’s former right-hand man Artur Chiang Calderon. Mr Wan, better known as “Broken Tooth Koi”, is due for release on December 2 after staying in prison for more than 14 years for organised crime and money laundering.

Macau’s image as a tourism city is being affected because travellers are being forced to wait for a long time for immigration clearance, legislators worry. Legislator Chan Meng Kam said at the Legislative Assembly yesterday different border terminals were thronged with tourists every day, waiting to make it past customs. “I’ve heard some tourists complaining over what kind of leisure tourism Macau is providing if they have to wait for one or two hours just to enter the city,” he said. Assembly member Au Kam San also slammed the administration, stressing that legislators have complained about this problem every year but “nothing has been improved”. He asked whether the government would have a complete planning to solve the issue and ensuring tourists would only have to wait for up to 15 minutes. But Secretary for Security Cheong Kuoc Va said: “The implementation of some measures in the past has had a positive outcome. Tourists spent fewer waiting time for immigration clearance.” The official pledges to continue to improve customs’ hardware, software and human resources. E-channels for immigration clearance in different border terminals would be increased from over 170 to 234 next year, he said. Mr Au and fellow legislator Ng Kuok Cheong were also concerned over the refusal of entry in Macau for Hong Kong citizens this month. Mr Cheong stressed authorities “followed the law” and that “Macau is like every other jurisdiction in the world [that] has the right to forbid the entry of some visitors”.

T.L.

Casino job losses slow labour import growth The increase in the amount of imported labour in October was the slowest in six months Vítor Quintã

vitorquinta@macaubusinessdaily.com

The construction industry employed more than 16,250 non-residents last month

espite the loss of almost 300 jobs for non-residents in the gaming and entertainment sector, the number of imported

workers rose to a new record for the fourth consecutive month in October. But the rate of growth in their number slowed.

Over 500 non-residents were hired last month, the least for six months, according to data released by the Human Resources Office on Monday. The slowdown was due to the number of non-residents employed in gaming or entertainment dropping to 11,247. Over 250 of the jobs lost were in casinos. The decrease was more than offset by the hiring of non-residents for construction, wholesaling or retailing, and domestic work. This hiring helped increase the number of non-resident workers to 109,541. The construction industry, on a high since the start of work on the second phase of the Galaxy Macau and the resumption of work on Studio City, took on 183 more nonresidents, taking the number on its books to 16,254.

The number of foreign housemaids rose by 178 to 17,698. Most are from Southeast Asia, notably the Philippines and Vietnam. Wholesaling and retailing – a sector that is severely short of staff –took on 174 more non-residents and now employs 11,227. Hotels and restaurants have the highest number of imported workers: 33,376 at the end of October, 86 more than in September. The population is ageing, so nonresidents are becoming ever more important to the economy, making up almost one-third of the labour force. The Legislative Assembly is discussing proposals for changes in the rules on importing labour. Social workers and associations of non-residents say the proposals unfairly discriminate against imported workers.

November 27, 2012 business daily | 5

MACAU

Broken Tooth’s former lieutenant in custody for alleged murder An ex-associate of former triad boss is held in custody for suspicion of murder Stephanie Lai

sw.lai@macaubusinessdaily.com

rtur Chiang Calderon, former right-hand man to the ex-14K gang boss Wan Kuok Koi, is being held in custody at the Coloane prison with three other accomplices for an alleged murder plot after the Public Prosecutions Office completed an initial interrogation on Sunday. Mr Calderon’s detention comes a week before the release of Mr Wan, alias ‘Broken Tooth Koi’, who headed the infamous 14K triad. Judiciary Police arrested Mr Calderon on Saturday on suspicion of plotting with four other men to arrange the murder of the unfaithful wife of a close friend of his, a VIP gaming promoter. The detention was approved because of “strong evidence” showing Mr Calderon and his accomplices were involved in attempted murder, organised crimes and using illegal weapons, the Public Prosecutions Office said late Sunday. Mr Calderon, a senior detective with the Judiciary Police before he retired, was arrested at his residence in Taipa. A stash of sharpened screwdrivers, knives, air guns, explosives, wiretappers and cash was found at the 66-year-old’s home. The other suspects include a killer-

Artur Chiang Calderon is being held in custody at the Coloane prison

for-hire from Guangdong. The police nabbed the hit man and an accomplice on Saturday afternoon, when they were about to follow the promoter’s wife into her residence on Taipa. The Judiciary Police “do not rule

out the possibility that there are other suspects on the run”, police spokesman Vong Chi Hong told Business Daily. Mr Calderon would be paid about 200,000 patacas (US$25,000) for the attempted murder plot, Judiciary

Gang boss’s era has passed but fearful memories linger Broken Tooth’s forthcoming release brings back memories of vicious gang violence before the handover

Wan Kuok Koi was arrested in May 1998 (File photo: AFP)

ew fear a new cycle of triad violence will stem from the release from prison next month of former triad boss Wan Kuok Koi, alias Broken Tooth Koi. Mr Wan will walk free on Sunday, having served 14 years and seven months for loan-sharking, money laundering and involvement in organised crime as the enforcer of the 14K triad, Macau’s largest organised

crime outfit in the mid-1990s. Mr Wan’s cronies may be planning a celebration of his release, so hotels and casinos have been asked to inform the police of any “significant bookings” for parties or gatherings of 100 or more people this year, Business Daily has been told. Mr Wan’s reappearance will rekindle memories of some of Macau’s darkest days, when his men fought a vicious

war in the street against their enemies from the Soi Fong gang, in the years before the 1999 handover. “The Portuguese administration was almost leaving and at the time public order – everything – went very bad. Triad activity was rampant,” said Liu Jianhong, a professor of criminology at the University of Macau. “Since the handover, everything has changed sharply,” Mr Liu said. “It is hard to proclaim that there is no triad activity in Macau now. But, overall, I think such activity, if it is there, is contained very well,” he said. The casino industry has been opened up, transforming the city into the world’s premier gaming resort destination. “Thingshavechangeddramatically.It is not possible for Macau to go back,” Mr Liu told the French news agency, AFP. He said the police were now better equipped and more closely coordinated with their counterparts in Hong Kong and mainland China.

Triad junket ties Most important, there was “much stronger political will to combat any crime, any disturbance” that threatened social order and Macau’s reputation as a

Police told media. Mr Calderon was arrested in 1998, along with Mr Wan, on suspicion of complicity in a failed bomb attack on the Judiciary Police chief at the time, António Marques Baptista. The 14K was involved in a string of car bomb attacks and bloody gang wars in the 1990s. Mr Calderon was convicted in 1999 of taking part in organised crime and possessing illegal weapons, and was sent to prison for 10 years and six months. After his release in October 2009, Mr Calderon became active in the business of promoting VIP gaming. Local media reported that Mr Calderon is in some manner associated with the Tongxi junket room at Melco Crown Entertainment Ltd’s City of Dreams. “We believe the room likely represents only a low single digit percentage of VIP volume at the property,” Union Gaming Research said in a note released yesterday. “In a worst-case scenario for the junket (i.e. it loses its licence and therefore its ability to operate), we believe another junket would step in to fill the void quickly with minimal impact to operations at CoD,” said the research house.

safe and above-board place for Chinese gamblers to have a flutter, Mr Liu said. “There must be some triad activity, certainly. But they are not expanding as people might imagine,” he said. Risk consultant Steve Vickers, the former head of the Hong Kong police criminal intelligence bureau, agrees that the old guard like Broken Tooth no longer pose much of a threat. But Mr Vickers is far less sanguine about triad activity in general, seeing its reach expanding in step with the boom in the casino industry. Indeed, he believes Macau is riddled to its core with organised crime. “The problems in Macau are very deep and go well beyond just a few lowend desperados,” he told AFP. “Wan Kuok Koi was a particularly violent gangster who exploited the weak government situation at the time. That time has gone, his time has gone. It’s a completely different security situation now. “The more difficult, pressing problem is the almost total control of junket operators by triad societies,” Mr Vickers said. Operating in what he calls a “legal void”, the junket operators have the task of collecting the debts of their clients in exchange for a cut of the takings of the casinos. They act, in effect, as an “informal financial system”, he said. “The Macau gaming business is underpinned by what is essentially illegal currency movement from the mainland,” Mr Vickers said. The law prohibits mainland Chinese from moving more than US$5,000 [39,900 patacas] per day into Macau. “The Macau junket model appears to guarantee criminal participation in the Macau gaming sector,” Mr Vickers said. V.Q./AFP

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business daily November 27, 2012

macau Air China announces further cash injection The controlling shareholder of Air China Ltd, China National Aviation Holding Co, has bought an additional 129.7 million shares – or 1.01 percent – in Asia’s second-biggest airline by market value in the last year via the Shanghai Stock Exchange, Air China announced on Friday. State-owned China National Aviation already controls more than half (52.47 percent) of the carrier – the controlling shareholder in Air Macau Co Ltd – but intends to increase its stake by a further 2 percent until the end of the year.

Hotels still suffering acute staff shortage Despite a surge in hotel hiring, there are still plenty of positions to be filled Stephanie Lai

sw.lai@macaubusinessdaily.com

otels hired 2,865 people in the third quarter of this year but still need to fill almost 2,600 other positions, a survey by the Statistics and Census Service has found. With the opening of two more hotels in Sands Cotai Central, the hotel industry employed 44,587 workers at the end of the third quarter, 16.8 percent more than a year before, according to the results of the survey, released last week. A hiring spree seems to have slowed, the recruitment rate falling to 9.6 percent in the third quarter from 13.2 percent in the first. The hotel job vacancy rate fell by more than half from a year before, which indicates that some openings have been filled. But hotels are still looking for 2,559 staff, which means 5.5 percent of their positions were still vacant at the end of the third quarter. The restaurant vacancy rate fell to 10.1 percent in the third quarter from 15.4 percent in the first, but restaurants are still looking for 2,227 workers. Restaurants had a turnover rate of 6.8 percent in the third quarter, the third-highest of any industry after the low-paying clothing industry, with a turnover rate of 11 percent, and the highly competitive insurance industry, with a turnover rate of 7.1 percent. The restaurant turnover rate may be due to what the industry pays, which is

At the end of September hotels had almost 2,600 vacancies

less than the median salary of 11,700 patacas (US$1,470) per month. Restaurants employed 22,858 people at the end of the third quarter. The average salary in the industry was 7.6 percent higher than a year before at 7,890 patacas, but waiters and waitresses made just 6,710 patacas per month. The manufacturing sector continued its decline in the third quarter, its workforce dropping by 6.2

Gaming workers’ union wants ‘charity casino’ A special casino that would use community work as its currency has been proposed to help gambling addicts Vítor Quintã

vitorquinta@macaubusinessdaily.com

he Macau Gaming Staff Association has called for the creation of a “charity casino” to help fight gambling addiction. In an interview with the Portuguese news agency, Lusa, association president António Lei said: “Gambling is part of the Chinese culture.” So Mr Lei thinks a good way to tackle gambling addiction would be

a special casino where players would bet not money, but credit earned by doing community work. “A gambler loses, has no money and still he wants to gamble. So we give him the opportunity to work as a volunteer, sweeping the streets, helping the elderly, and to amass points for community work,” he said. “For 20 hours of work he or she

percent from a year before to 11,074. The decrease was sharpest in the textiles and clothing industries. The number of employees in the textiles industry dropped by one-third to 562 and the number in the clothing industry dropped by 17 percent to 3,760. The clothing industry’s already high turnover rate increased. The industry is the lowest-paying, the average salary being 5,330 patacas per month. Employment in food processing

remains more stable than in any other manufacturing industry. The turnover rate is 5.7 percent, the lowest in the manufacturing sector. Food processing is having its most productive year ever. Its workforce at the end of third quarter was 3,173, or 7.3 percent bigger than a year before. The clothing industry still needs another 457 employees, especially in sales.

would win 20 points, which would then serve as currency to enter this charity casino,” Mr Lei said. He said that addicts that amassed the most points would be eligible to take part in a final competition for a large prize such as a car. “The gambler will be happy and once again feel like he has won,” he said. And the gambler would be rewarded for being a good citizen, he added. The union has discussed the idea with other institutions. “It must be considered by the government and gaming associations,” Mr Lei said. “Anyone could enter. You win points and then you gamble. It could start with one room with 10 tables and different types of games,” he said. He said that in the long run the idea could even be used in Hong Kong and mainland China. “And then expand the idea to casinos in Vietnam, Thailand, perhaps even to the United States,” Mr Lei said. “Everyone could gamble online at the charity casino and we could

cooperate with charity associations in the different countries.” More than 2.1 percent of the people interviewed in a study by the Macau Polytechnic Institute last year showed the characteristics of future problem gamblers or pathological gamblers.

We give him the opportunity to work as a volunteer … to amass points for community work António Lei, Macau Gaming Staff Association president

November 27, 2012 business daily | 7

MACAU IT, and small businesses with fewer than 10 workers, only 40.6 percent of which used IT. “The limitation for small companies is that they have a comparatively tighter budget,” Ms Chan said. In addition, Mr Tang said, the expanding gaming sector has managed to attract many IT staff from small firms by paying higher wages.

Internet fears

The gaming industry is the only one in Macau that has fully adopted information technology, official data indicate

Local firms make poor IT progress Business costs are preventing smaller companies from investing on information technology Vítor Quintã

vitorquinta@macaubusinessdaily.com

acau companies used less information technology (IT) last year than the year before, official data released last week show. Experts believe rising operating costs are keeping firms busy elsewhere. Last year 46.9 percent of the more than 16,200 companies surveyed by the Statistics and Census Service used IT, 1.8 percentage points fewer than in 2010.

“It is important to understand that when investment in one area is higher, other areas would receive less efforts and resources,” Brenda Chan Wing Han, University of Macau business information professor told Business Daily. Tang Ze Sheng, the founder of Macau University of Science and Technology’s Faculty of Information

Technology, agrees. “In recent years, the cost for every thing in Macau has increased very much. Many companies face great pressure to survive. They have to cut off employees, reduce workspace and decrease costs,” he told Business Daily. There was a huge gap between large enterprises with 100 or more workers, 97.6 percent of which used

The restaurant industry uses IT the least, just 29.5 percent of restaurant businesses using it last year, 2.3 percentage points fewer than in 2010. “For restaurants, cost of business has increased greatly due to increase in rental, food, labour, etc. How can they afford for additional IT investment?” Ms Chan asked. In the end only 1.5 percent of enterprises not using computers said they would install them this year. But Ms Chan believes small enterprises are not uninterested in IT but prefer to stay away from any heavy investment. “They lack the support from the government,” she bemoaned. Only 17.9 percent of the companies surveyed used IT for design or production and just 21.5 percent used it for publicity and promotion. Most Macau companies in Macau work only on “purchase, sale, maintenance and service,” Mr Tang said, and leave design to Hong Kong firms. Among the companies those that had access to Internet, only 32.6 percent used it for online purchasing and just 27.3 percent used it for sales. Macau companies still have doubts over Internet security, Ms Chan said. “Other than having a trust-worthy platform – initiated by the government – that facilitates transactions, supporting laws and acts may also encourage companies to better utilise the Web for business,” she said.

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business daily November 27, 2012

GREATER CHINA

Wage increases slowing down

Overcapacity weighing down on companies performance Yuan climbs toward a 19-year high China’s yuan climbed toward a 19-year high on speculation global investors will boost holdings of local assets as the world’s secondlargest economy recovers from a seven-quarter slowdown. The People’s Bank of China raised the daily reference rate by 0.03 percent to 6.28840 per dollar. The yuan has tested the 1 percent upper limit of its trading band on most days this month. The exchange rate is tending toward equilibrium, PBOC Governor Zhou Xiaochuan was cited as saying in Caixin magazine. Remin University of China sees the economy growing eight percent this year and 9.3 percent in 2013, China Securities Journal reported yesterday, citing a report from the university’s research. “Businesses are becoming more confident on China’s economy in the future,” said Bruce Yam, a currency strategist at Sun Hung Kai Financial Ltd in Hong Kong. “More funds are coming to Chinese markets as they are deemed as a safer place. But the PBOC doesn’t want the yuan to either appreciate or depreciate too much.”

Five-year swap up on speculation growth is rebounding Mainland China’s five-year interest-rate swap climbed on speculation economic growth is rebounding. Gross domestic product will increase 8 percent next year after gaining an estimated 7.6 percent in 2012, as investment and credit expansion support a recovery, according to a research note from UBS AG released November 23. Asia’s largest economy grew 8.9 percent last year, official data show. The central bank gauged demand for seven-, 14- and 28-day reverse-repurchase contracts, according to a trader required to bid at the auctions. “The five-year interest-rate swap may rise more on the economic optimism,” said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. The central bank also asked lenders to submit orders for 28- and 91-day repurchase contracts this morning, according to the trader who declined to be identified because the information isn’t public. The seven-day repurchase rate, which measures interbank funding availability, was little changed at 2.84 percent, according to a weighted average rate compiled by the National Interbank Funding Centre.

Traders to boost Thai rubber imports Traders in China, the world’s biggest rubber consumer, are increasing imports of the natural variety from Thailand as expectations of stockpiling by the Chinese government push up domestic prices. “We’re buying shipments of Thai Ribbed Smoked Sheet, hoping to deliver against contracts on the Shanghai Futures Exchange,” Forrest Hu, managing director at trading company Tower Commodities Ltd, said on November 21. “I know other traders are doing the same, so such shipments may reach 50,000 tons by the end of January.” Thailand is the largest supplier of the commodity used in tires and bigger purchases by traders in China may help support Tokyo futures, the global benchmark. China will stockpile as much as 200,000 metric tons through 2013, the official China Securities Journal said on November 16, citing people it didn’t identify and without giving a reason. “Imports of Thai rubber can make a profit of up to 500 yuan” a ton even after adding value-added tax, import duty and fees, Mr Hu said from Shanghai.

Suppliers’ labour practices are under observation

hina’s wage gains have moderated on weaker corporate profits, capping consumer demand as the government seeks to sustain a rebound after a seven-quarter economic slowdown. Average urban salaries rose 12 percent in the first nine months from a year earlier without adjusting for inflation, slowing from 14.4 percent for all of 2011 and 13.3 percent in 2010, government data show. Restaurant operator Yum Brands! Inc. reports

smaller pay increases, and labour ministry data show the same for minimum wages. Deeper declines in wage growth would undermine efforts by China’s new leadership under Xi Jinping to boost consumer spending and shift the world’s second-biggest economy away from dependence on investment and exports. Overcapacity in manufacturing is weighing on profits, with the latest reading due tomorrow when the statistics bureau releases

industrial companies’ net income for this year through October. “Given the poor profit picture, wage growth is bound to slow down in the coming quarters and this is set to reduce the robustness of consumption,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Plc in Hong Kong, who formerly worked at the World Bank in Beijing. “The expected slowdown will impact the rebalancing in the sense that it will reduce the relative role of consumption in the

Samsung finds ‘inadequate’ practices in plants Review of all suppliers still on-going

amsung Electronics said yesterday that a probe of its suppliers in China had found no evidence of alleged child labour, but did uncover some “inadequate” employment practices that needed to be remedied. The South Korean technology giant inspected 105 Chinese partners in September following a report by China Labour Watch that at least one supplier was employing children under the age of 16. The U.S.-based watchdog said staff at some plants were forced to work up to five times the legal overtime limit and denied basic

labour rights. Samsung said its investigators had reviewed employment records at all 105 suppliers and conducted face-to-face ID checks, but “did not identify any instance of child labour”. However, they did find “several instances of inadequate practices” including excessive overtime and a system of fines imposed for lateness or absenteeism. “We have identified the need for initiatives to reduce employee overtime as a top priority, and we are researching and developing measures that will eliminate hours beyond legal

limits by the end of 2014,” Samsung said in a statement. Samsung said it would finish reviewing 144 additional suppliers by the end of this year. From 2013, working conditions at all 249 suppliers in China would be monitored by a third party audit programme, it added, vowing to terminate contracts with any found to be using child labour. All suppliers have been told to correct irregularities in labour contracts, and to provide adequate safety equipment and sufficient safety training, the statement said.

November 27, 2012 business daily | 9

GREATER CHINA

n on weaker profits

analysis

e show. That follows nine-month gains of 21.7 percent in 21 provinces last year and 24 percent in 30 provinces in 2010. China has targeted an annual average increase of 13 percent for 2011-15. Consumption, which includes government and household spending, fell to 49.1 percent of gross domestic product in 2011 from 59.6 percent in 2002, when Hu Jintao began his decade as Communist Party chief. Last year’s figure was close to the lowest contribution since China’s reform and opening up policy started in 1978, government data show. “Changing this model has become of paramount importance if China is to avoid a disruptive bust in investment in the next one to two years and lapse into a middle-income trap in the medium term,” George Magnus, senior economic adviser at UBS AG, wrote in a November 22 report, referring to growth slowdowns in developing nations after incomes rise.

Hu’s target

short term.” Li Keqiang, the second-highest ranked official in the new Communist Party leadership and set to take over from Wen Jiabao as premier in March, said last week that household spending is key to boosting domestic demand.

‘Disruptive bust’ Minimum wages rose by an average 19.4 percent in 18 provinces this year through September, government data

In his last major speech as Communist Party chief this month, Mr Hu vowed to double per capita income by 2020 from 2010, a target that HSBC Holdings Plc estimates would signal real growth of about 7 percent a year. China’s benchmark Shanghai Composite Index of stocks dropped about 18 percent from this year’s high on March 2 through November 23 on concern that slowing economic growth and higher costs are crimping profits. Industrial companies’ profits declined 1.8 percent in the first three quarters after a 27 percent rise for the same period in 2011, data from the statistics bureau showed In a November 19 report, JPMorgan Chase & Co. said it continues to be “underweight” on China equities and a “key concern is profits as capacity continues to grow faster than demand.” Overcapacity could lead companies to cut capital spending, which would hurt the employment market, analysts led by Hong Kong-based Adrian Mowat and Sunil Garg wrote, adding that “wage inflation would fall from the mid-teens, resulting in weaker consumption.” Bloomberg

Labour costs raise competitiveness concerns

Managers will receive additional training on sexual harassment and physical and verbal abuse, while hotlines are being established for

workers to report any inhumane treatment or labour violation, Samsung said. AFP

‘Caveat emptor’ as foreigners rush to ride China rebound Vikram Subhedar

oreign investors have started rebuilding their China equity portfolios, tempted by low valuations after two years of market underperformance and signs economic growth may be stabilising. They have pumped nearly US$4 billion into Chinese equity funds in the past two months alone, trying to get in early on what they hope will be a sustained rally. But sentiment looks to be running ahead of fundamentals. There are clear risk signals for the Chinese market – including sluggish earnings, rising corporate debt and retail investors looking for other opportunities – even if the broader economy gathers strength. “Valuations are attractive and fears of a major slowdown in China seem to be waning, while China still promises growth faster than the rest of the world,” says Paul Gillis, professor at Peking University’s Guanghua School of Management. “But most of the problems affecting Chinese stocks – accounting fraud, the variable interest entity and regulatory stand-offs between the U.S. and China – have not gone away and still need to be solved.” Illustrating that growth does not translate into equity gains, the MSCI China stock index has fallen more than 40 percent since its launch in 1992. Over the same period, China’s nominal GDP has increased by 15 times.

Rebalancing The shift in foreign investor attitudes is clear. Bank of America Merrill Lynch’s global survey of fund managers, covering 248 managers with US$695 billion of assets under management, found confidence in China’s economy was at a three-year high.

Stock market’s fundamentals are back in focus and they could make the recent enthusiasm seem premature

In October, Chinese shares listed in Hong Kong, known as H-shares and the main gateway for foreign investors into China, jumped 7.6 percent to easily outpace other regional benchmarks. “I think most fund managers are looking at the fundamental mismatch in their portfolio between their direct exposure to China and the role China plays in the global economy, often very little versus one hell of a lot,” said Michael McCormack, executive director at China-focused fund consulting firm Z-Ben Advisors. One attraction is valuations. The MSCI China index, the most popular benchmark for China funds, has consistently underperformed Asian markets over the past two years, following a stellar run where it nearly tripled in value between October 2008 and November 2010.

The index trades on a forward price-toearnings multiple of 9.2, cheaper than Brazil on 9.9 and India on 13.2, and a lure to investors hoping to get in early on another substantial upswing. The H shares are at price-to-book ratios around four times lower than in 2007, according to Thomson Reuters data. Those valuations and signs the economy is improving – Thursday’s flash PMI reading showed the first expansion in manufacturing in 13 months – have piqued interest, and it seems investors are worried about missing out on riding the recovery. “[The Chinese market] has bottomed out and found a new level, so people don’t want to be negative about China anymore,” said Stuart Rae, chief investment officer of Pacific Basin Value Equities at AllianceBernstein.

Pick carefully As Beijing’s new leadership settles in, the stock market’s fundamentals are back in focus and they could make the recent enthusiasm seem premature, said Simon Grose-Hodge, head of investment advisory for South Asia at private bank LGT. For one, there is unlikely to be a repeat of anything remotely like the 4 trillion yuan (US$640 billion) stimulus package that guided the Chinese economy through the 2008/09 global financial crisis. Instead, there may be smaller, more targeted spending plans that don’t make cheap credit available across the board. And longstanding issues for investors, such as transparency, reform of state-backed companies, corporate governance and regulator interference in the market, have yet to be properly addressed despite some positive noises from authorities. So while the H-shares in Hong Kong are showing signs of life, China’s domestic stock markets are languishing near three-year lows and on the nose with retail investors. Two-thirds of Chinese companies that have posted third-quarter earnings missed expectations, according to Citi Private Bank. Profits fell an annual 5.8 percent, and analysts, on average, are still cutting earnings expectations for next year. Leverage has soared above comfortable levels, with Beijing-based consultancy GaveKal-Draganomics expecting corporate debt to hit 122 percent of GDP by the end of the year, up from 108 percent at end-2011. Rising non-performing loans (NPLs) pose a risk for the banks, a hangover from cheap credit as part of the 2008/09 stimulus. Goldman Sachs & Co estimates the NPL ratio is more than six times the official reported rate of 0.97 percent. Further, China’s industrials were owed more than 8 trillion yuan in net receivables at the end of September, up 16.5 percent from a year earlier, according to the National Bureau of Statistics. HSBC says the annual pace of profit growth of non-financial companies in the CSI 300, which tracks the performance of China’s A-share market, has been falling for the last three quarters, while the quality of earnings – measured as the ratio of free cash flow to net profit – is in negative territory. The CSI300 is down 7 percent this year, following a 25 percent drop in 2011 and a 12.5 percent fall in 2010. “Five years back in 2007 the (Chinese) market was one of the most expensive and now it’s cheap on a par with Korea – it’s one of the cheapest markets in Asia,” said Pacific Basin’s Mr Rae. “There is lots of stuff that’s cheap – some has recovery potential but then some is cheap for a reason.” Reuters

10 |

business daily November 27, 2012

ASIA Philippines’ inflation to slow, says c.bank The Philippine central bank expects annual inflation in November to be at 2.7 to 3.6 percent, helped by favourable supply conditions and the peso’s strength, Governor Amando Tetangco said. The central bank’s November inflation forecast falls well within this year’s 3 to 5 percent target range. “From a monetary perspective, our current policy stance remains consistent with prevailing monetary and price conditions,” Tetangco told reporters in a mobile text message on Monday. Annual inflation slowed to 3.1 percent in October, bringing the average inflation rate in 2012’s first nine months to 3.2 percent.

Thai exports soar as demand improves Economy on track to grow 5.5 percent this year Suttinee Yuvejwattana

Auto exports jumped 53.4 percent in October

hai exports climbed at the fastest pace in more than a year in October, as the economy recovered from last year’s floods and global demand improved. Overseas sales rose 15.6 percent last month from a year earlier to US$19.5 billion after climbing a previously reported 0.2 percent in September, the Ministry of Commerce

said in a statement yesterday. The median estimate in a Bloomberg News survey of 14 economists was a 20 percent gain. The Bank of Thailand last month unexpectedly cut its policy interest rate to shield the economy as it recovered from the worst floods in almost 70 years. Economists surveyed by Bloomberg expect

the monetary authority to hold borrowing costs tomorrow as data signalling recovery in the U.S. and parts of Europe brighten the outlook for exports. “Fourth-quarter growth and exports are likely to be strong mostly because of the low base effect of last year,” said Enrico Tanuwidjaja, a Singapore-based economist at Royal Bank of Scotland Group Plc. “If exports really slow down toward the middle of next year, they will potentially review monetary policy. But the current policy rate is quite adequate and supportive for growth.” Expansion in most Asian economies will probably rebound in 2013, Asian Development Bank President Haruhiko Kuroda said earlier this month. The Thai economy is forecast to grow 5.5 percent this year and 4.5 percent to 5.5 percent in 2013, the government said last week. Auto exports jumped 53.4 percent in October from a year earlier, while electronics climbed 23 percent and rice gained 29.2 percent, yesterday’s data showed. Shipments to the U.S. rose 17 percent, while those to Europe advanced 9.6 percent. “The recovery of the industrial sector after the floods, and signs of recovery in the U.S. economy, as well as growing shipments to new

US$19.5 bln Value of Thai exports in October

markets helped boost exports,” said Srirat Rastapana, director-general for the ministry’s Department of International Trade Promotion. Exports may increase more than 10 percent in November and in December, she said, with growth this year reaching 4.5 percent to 5 percent. Imports rose 21.6 percent in October from a year earlier for a trade deficit of US$2.47 billion, compared with a surplus of US$1.15 billion reported earlier for September. Bloomberg

RBI urged to buy bonds As higher cost of money threatens to squeeze profit at Indian companies

he Reserve Bank of India is facing pressure to boost cash in the economy by resuming debt purchases after three-month borrowing costs for companies climbed from the lowest in more than two years. Commercial paper rates for topranked borrowers reached 8.99 percent last week, up 41 basis points from an October 11 level that was the least since May 2010, data compiled by Bloomberg show. Similar gauges are 0.29 percent in the U.S. and 4.26 percent in China. Cash is dropping at Indian banks as government bond sales are headed for a 67 percent jump this month to fund the widest budget deficit among the largest emerging markets. “There’s definitely a need for bond purchases by the RBI,” Aneesh Srivastava, who oversees US$470 million of assets as chief investment officer at IDBI Federal Life Insurance Co. in Mumbai, said. “Without that, it would be difficult to manage the government borrowing and corporate

borrowers would be crowded out.” Money-market rates are climbing even after RBI Governor Duvvuri Subbarao pumped more than 2.6 trillion rupees (US$47 billion) into the financial system in 2012 using steps including a reduction in lenders’ reserve requirements to a 36-year low. Funding costs probably won’t decline unless the central bank resumes openmarket debt purchases that were halted in June, according to IDBI Federal and Nomura Holdings Inc.

Profit woes The higher cost of money threatens to squeeze profit at Indian companies and delay an industrial recovery, according to CARE Ratings Ltd, a Mumbai-based risk assessor that covers 1,200 companies. Factory output contracted 0.4 percent in September from a year earlier, the latest government data show. “The surge in short-term

Without that [bond purchases], it would be difficult to manage the government borrowing and corporate borrowers would be crowded out Aneesh Srivastava, IDBI Federal Life Insurance Co. borrowing costs has scope to disrupt the profitability thrust in the corporate sector and derail the broad economic recovery that is

anticipated,” D. R. Dogra, managing director of CARE Ratings, said. “It is an inconvenient situation because this wasn’t expected after the efforts taken by policy makers.” Jindal Power Ltd, a unit of India’s second-biggest steelmaker by market value, sold two-month commercial paper at 9 percent in November, compared with 8.50 percent in October, according to data compiled by Bloomberg. Indian Oil Corp., the nation’s biggest refiner, issued three-month notes at 8.47 percent on

November 27, 2012 business daily | 11

ASIA Renesas rises on bailout report A Japanese government-backed fund is preparing to spend more than 180 billion yen (US$2.2 billion) for two-thirds of Renesas Electronics Corp. as shareholders in the ailing chipmaker consider the deal, a person with knowledge of the plan said. Renesas’s three biggest shareholders – Mitsubishi Electric Corp, NEC Corp and Hitachi Ltd – are close to agreeing on a stake sale to Innovation Network Corp. of Japan, the person said. Renesas shares surged 17 percent on the plan, reported earlier today by the Nikkei newspaper, which said the deal will be announced next month.

Jet Airways, SpiceJet in stake sale talks Etihad, AirAsia could be first foreign carriers tapping Indian market Anurag Kotoky

oss-making Indian carriers Jet Airways (India) Ltd and SpiceJet Ltd are in talks with Abu Dhabi’s Etihad Airways and Malaysia’s AirAsia Bhd, respectively, to sell minority stakes, an Indian government source said. Any deal would be the first since India changed its rules in September to allow foreign carriers to buy stakes of up to 49 percent in local airlines, which have been battered by fierce competition and high operating costs. Jet Airways jumped as much as 18 percent to 598.80 rupees (US$10.8) before closing at 555.5 rupees in Mumbai trading. It surged 16 percent on the previous trading day. The carrier has more than tripled this year. SpiceJet soared 12.9 percent. The fiercely competitive Indian aviation industry lost a combined US$2 billion in the last fiscal year. All but unlisted IndiGo lost money, hurt by high state taxes on jet fuel, expensive airports and regulatory uncertainty. Talks between Jet and Etihad have been the subject of media reports citing unnamed sources. “The talks are on. This is more or less final. It may take around a month and half,” the government source told reporters, referring to the Jet-Etihad negotiations. “This deal is not just about investment but also

Indian banks – cash dropping as bond sales head for a 67 pct jump

November 22, compared with 8.40 percent a month earlier.

Spending slowdown Banks are borrowing more from the RBI to meet shortages. Overnight loans via repurchase agreements rose to an average 905 billion rupees this month from 671 billion rupees in October and 482 billion rupees in September, official figures show. The three-month interbank lending rate has climbed nine basis points from a two-year low of 8.62 percent on

Etihad – examining opportunities for investment

technology and partnership in many other ways,” said the source, who declined to be identified. Etihad has “identified equity investments in other airlines as an important evolution of its successful partnership strategy,” the company said in an e-mail reply. “The Indian aviation industry offers tremendous potential, with significant passenger movement on domestic and international sectors,” it added. A Jet official could not immediately

November 7, according to data from the National Stock Exchange of India Ltd. Funds at Indian banks declined because of slower government spending and a surge in customer withdrawals during this month’s festival season, according to Fullerton India Credit Co., which is owned by a unit of Temasek Holdings Pte and Nomura Holdings. The Indian government had a cash balance of more than 700 billion rupees as of November 22, two finance ministry officials with direct knowledge of the matter said. That indicates the government scaled back spending, according to Vivek Rajpal, a fixedincome strategist in Mumbai at Nomura. The RBI may announce a further reduction in the amount of cash banks need to set aside as reserves, last cut by a quarter of a percentage point to 4.25 percent on October 30, or schedule debt purchases in the coming weeks, according to Fullerton. “Festival-related outflows and a lack of government spending have caused a sustained liquidity deficit,” Arvind Sampath, Mumbai-based head of treasury at Fullerton, said last week. “The effect has been felt in the money market where short-term rates have moved up. The market expects a liquidity-easing measure from the RBI, which may either be a reserve-ratio cut or a bond-buying programme.” Bloomberg

be reached for comment. Jet Airways executives, including chief commercial officer Sudheer Raghavan, are in Abu Dhabi for talks on the stake sale, Economic Times reported, citing people it didn’t identify. A deal will help the Indian company tap the Gulf carrier’s global network, while Etihad can benefit from rising travel demand in India, said Binit Somaia at CAPA Centre for Aviation. “Potentially it can be a win-win

situation,” Mr Somaia, a Sydneybased director at the consulting company, said in a phone interview. “India is one of the fastest-growing markets in the world, which Etihad can’t ignore. And for an Indian carrier, a partnership with Etihad is like plugging into a growing network in Europe, African and North America.” SpiceJet declined immediate comment, while officials from AirAsia, Asia’s largest budget carrier, could not be reached for comment. Jet Airways shares had gained 50.6 percent in November through Friday while SpiceJet was up 17 percent on speculation of potential stake sales. “Reports of stake sale have driven stocks higher but its absurd given so much government interference in this sector,” said Vivek Mahajan, head of research at brokerage Aditya Birla Money. Heavy competition is driven in part by government-subsidised losses at state-owned Air India. However, competition has eased somewhat and airfares have risen due to the decline in cash-and-debt strapped Kingfisher Airlines Ltd, the former No. 2 operator which has not flown since the start of October. Reuters

Singapore’s industrial output falls on electronics slump

ingapore’s industrial output fell for a third month in October as manufacturers produced fewer electronics and pharmaceuticals, weakening the economic outlook. Manufacturing declined 2.1 percent from a year earlier after a revised 2.8 percent drop in September, the Economic Development Board said in a report yesterday. The Southeast Asian nation’s policy makers said this month growth in 2012 will be at the lower end of its previous forecast as faltering demand for its goods weighs on the economy. At the same time, a government push to reduce the city state’s reliance on cheap imported labour has led to an emerging shortage of workers at some companies and increased business costs. “We’re still looking at pretty sluggish growth for the full year,” Chua Hak Bin, a Singapore-based economist at Bank of America Corp., said before the report. “Because of the foreign labour worker restrictions, Singapore may not be in the best position to capitalise on an upswing in demand” that’s signalled by

improving economic data from countries such as China and the U.S., he said. Output rose a seasonally adjusted 3.3 percent from the previous month, when it slid a revised 2.3 percent. Electronics production declined 6 percent from a year earlier in October, while pharmaceutical output decreased 15.3 percent. Chemicals rose 13.7 percent, the report showed. AFP

Manufacturers producing fewer electronics items

12 |

business daily November 27, 2012

MARKETS Hang SENG INDEX NAME AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H BANK OF COMMUN-H

PRICE

DAY %

VOLUME

30.05

-0.9884679

15525973

3.3

-0.9009009

7220189

3.23

252921653

5.57

-1.241135

21665547

BANK EAST ASIA

29.65

0.3384095

827425

BELLE INTERNATIO

16.18

3.057325

32941539

BOC HONG KONG HO

NAME

PRICE

DAY %

VOLUME

CHINA UNICOM HON

12.3

-0.4854369

17147951

CITIC PACIFIC

9.87

0.2030457

3673487

CLP HLDGS LTD

67.2

0.2237136

1386075

-0.1457726

3746594

113.7 -0.08787346

2972516

SWIRE PACIFIC-A

ESPRIT HLDGS

12.58

2.777778

41606303

HANG LUNG PROPER

27.95

1.268116

7136473

117.1

-0.3404255

981645

CHEUNG KONG

117.2 -0.08525149

4997706

HENDERSON LAND D

54.95

0.3652968

1696371

70.5

1.220388

3386360

HONG KG CHINA GS

20.95

0.4796163

5069347

HONG KONG EXCHNG

127.1

-0.703125

2769079 10517988

HENGAN INTL

5.92

-0.3367003

141294620

CHINA LIFE INS-H

22.85

19746895

CHINA MERCHANT

23.55

-0.6329114

2146720

CHINA MOBILE

87.55

-0.4548039

13039676

HUTCHISON WHAMPO

CHINA OVERSEAS

22.6

1.118568

38040572

IND & COMM BK-H

CHINA PETROLEU-H

8.28

-1.193317

52819930

LI & FUNG LTD

CHINA RES ENTERP

26.95

2.666667

4450666

CHINA RES LAND

20.05

-0.2487562

8074576

NEW WORLD DEV

CHINA RES POWER

17.16

0.2336449

3355131

PETROCHINA CO-H PING AN INSURA-H

10477812

13.7

SUN HUNG KAI PRO

HANG SENG BK

-0.3095975

8027402

SINO LAND CO

12777452

2880288

32.2

-1.062215

19565944

5759132

CHINA SHENHUA-H

32.6

2.919708

0.4149378

CHINA CONST BA-H

1836312

SANDS CHINA LTD

-0.241838

-0.8645533

11444941

VOLUME

-0.2196193

16.5

24.2

-0.5082592

DAY %

68.15

11.28

13.76 7.83

PRICE

POWER ASSETS HOL

COSCO PAC LTD

CNOOC LTD

CATHAY PAC AIR CHINA COAL ENE-H

NAME

HSBC HLDGS PLC

MTR CORP

95.5

0.2624672

1059013

TENCENT HOLDINGS

252.4

-1.560062

3366661

TINGYI HLDG CO

22.35

2.28833

4327195

WANT WANT CHINA

11.2

-0.7092199

7622397

WHARF HLDG

57.1

-0.8680556

3620983

MOVERS

2 22000

INDEX 21861.81

77.1

-0.1295337

79.05

0.1266624

5414698

5.22

-0.3816794

153616605

12.48

0.6451613

15352436

30.5

0.8264463

1852416

12.24

-1.130856

10613870

52W (H) 22149.69922

10.18

-0.9727626

64342679

(L) 17613.19922

58.75

-1.094276

9193625

HIGH

21986.36

LOW

21560.81 21550

22-November

26-November

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

CHINA PACIFIC-H

25.3

0.1980198

10669748

YANZHOU COAL-H

7050604

CHINA PETROLEU-H

8.28

-1.193317

52819930

-0.9009009

7220189

CHINA RAIL CN-H

8.03

-2.666667

25.3

-1.364522

9541199

CHINA RAIL GR-H

4.32

BANK OF CHINA-H

3.23

252921653

CHINA SHENHUA-H

BANK OF COMMUN-H

5.57

-1.241135

21665547

CHINA TELECOM-H

BYD CO LTD-H

19.4

-0.716479

2574400

DONGFENG MOTOR-H

CHINA CITIC BK-H

3.98

-0.7481297

15934300

GUANGZHOU AUTO-H

CHINA COAL ENE-H

7.83

-0.5082592

11444941

CHINA COM CONS-H

6.94

-0.1438849

CHINA CONST BA-H

5.92

CHINA COSCO HO-H

3.67

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.38

-0.2949853

57219212

AIR CHINA LTD-H

5.19

0.5813953

3.3

ANHUI CONCH-H

ALUMINUM CORP-H

NAME

PRICE

DAY %

VOLUME

11.96

0.3355705

33223893

ZIJIN MINING-H

3.13

33663735

16218190

ZOOMLION HEAVY-H

9.79

-1.706827

10936856

-0.6896552

12402500

ZTE CORP-H

11.52

-1.873935

5616879

32.2

-0.3095975

10477812

4.31

-1.822323

48716291

11.44

8.333333

64962940

6.02

2.555366

10918002

HUANENG POWER-H

6.32

-0.9404389

16599542

9474159

IND & COMM BK-H

5.22

-0.3816794

153616605

-0.3367003

141294620

JIANGXI COPPER-H

19.66

-0.101626

4875648

-0.8108108

12782000

PETROCHINA CO-H

10.18

-0.9727626

64342679

22.85

19746895

PICC PROPERTY &

10.16

0.5940594

19308975

CHINA LONGYUAN-H

4.87

0.4123711

3749000

PING AN INSURA-H

58.75

-1.094276

9193625

CHINA MERCH BK-H

14.46

-0.1381215

9928794

SHANDONG WEIG-H

8.22

-2.026222

14467500

CHINA LIFE INS-H

NAME

MOVERS

3 10670

INDEX 10568.41 HIGH

10660.46

LOW

10401.8

CHINA MINSHENG-H

7.38

-0.8064516

18778606

SINOPHARM-H

25.2

1.612903

1789899

52W (H) 11916.1

CHINA NATL BDG-H

9.71

-1.521298

31818000

TSINGTAO BREW-H

42.45

1.071429

1154700

(L) 8987.76

CHINA OILFIELD-H

15.1

0.2656042

2563181

WEICHAI POWER-H

28.8

-0.6896552

2391537

10380

22-November

26-November

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

CSR CORP LTD -A

4.75

0.6355932

31411942

SANY HEAVY INDUS

8.6

-3.262092

22350626

5907913

DAQIN RAILWAY -A

6.31

0.798722

20854138

SHANDONG DONG-A

38.31

-1.007752

1014690

-1.455301

7058904

DATANG INTL PO-A

4.03

-0.7389163

2313725

SHANDONG GOLD-MI

37.54

1.900109

9008313

3860013

EVERBRIG SEC -A

11.09

-2.974628

5605249

SHANG PHARM -A

10.48

-1.038716

4837555

GD POWER DEVEL-A

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.61

1.162791

49269456

AIR CHINA LTD-A

4.62

-0.6451613

ALUMINUM CORP-A

4.74 3.4

ANGANG STEEL-A

NAME

ANHUI CONCH-A

15.84

-1.675978

7049937

2.31

-0.4310345

13470736

SHANG PUDONG-A

7.47

-0.5326232

28167480

BANK OF BEIJIN-A

7.25

-0.4120879

13628623

GF SECURITIES-A

12.17

-1.933924

10064917

SHANGHAI ELECT-A

3.9

-0.5102041

2088320

BANK OF CHINA-A

2.74

-0.7246377

14826025

GREE ELECTRIC

22.59

-1.782609

8807031

16.3

-2.160864

6098494

BANK OF COMMUN-A

4.17

-1.184834

25034525

GUANGHUI ENERG-A

15.48

-1.212508

10926054

SHANXI XINGHUA-A

36.85

-2.693425

2586692

BANK OF NINGBO-A

8.97

-1.102536

3711907

HAITONG SECURI-A

8.51

-1.16144

16640315

SHANXI XISHAN-A

11.84

-1.003344

4836691

8630997

HANGZHOU HIKVI-A

25.9

-4.568902

7397958

SHENZEN OVERSE-A

5.9

-1.172529

19207770

BAOSHAN IRON & S

4.63

SHANXI LU'AN -A

15.86

-3.762136

2566073

HEBEI IRON-A

2.33

15715229

SUNING APPLIAN-A

6.15

-0.8064516

13186790

CHINA CITIC BK-A

3.63

-0.8196721

6602426

HENAN SHUAN-A

57.85

-0.6013746

555694

TASLY PHARMAC-A

50.68

-0.9962883

871788

CHINA CNR CORP-A

4.25

1.674641

57951798

HONG YUAN SEC-A

16.69

-3.358425

8149108

TSINGTAO BREW-A

30.41

-0.5884276

560132

CHINA COAL ENE-A

6.84

-0.8695652

3853587

HUATAI SECURIT-A

8.16

-1.805054

7161537

WEICHAI POWER-A

21.54

-2.090909

5978313

CHINA CONST BA-A

4.16

0.2409639

16076314

HUAXIA BANK CO

8.55

-0.5813953

10326566

WULIANGYE YIBIN

27.08

-2.273547

27702929

CHINA COSCO HO-A

4.21

-0.9411765

7092867

IND & COMM BK-A

3.85

20849739

YANGQUAN COAL -A

12.83

-1.459293

4505260

CHINA CSSC HOL-A

20.01

2.668035

6859093

INDUSTRIAL BAN-A

12.56

24316030

YANTAI CHANGYU-A

42.4

-1.142457

940770

CHINA EAST AIR-A

3.09

-0.9615385

10513001

INNER MONG BAO-A

33.51

-0.4752005

23149581

YANTAI WANHUA-A

13.02

-1.06383

5709817 1276405

BYD CO LTD -A

2.59

-0.3846154

23225093

INNER MONG YIL-A

20.25

0.4962779

3160981

YANZHOU COAL-A

16.72

0.0598444

17.73

0.1129305

5274818

INNER MONGOLIA-A

5.23

0.3838772

33158732

YUNNAN BAIYAO-A

63.35

-2.207471

1524159

CHINA MERCH BK-A

9.99

-0.3988036

18615218

JIANGSU HENGRU-A

0.7644197

810144

ZHONGJIN GOLD

15.57

2.56917

21962361

CHINA MERCHANT-A

8.74

-1.019253

5600154

JIANGSU YANGHE-A

94.91

-3.123405

2221289

ZIJIN MINING-A

3.74

0.8086253

27528633

7247814

JIANGXI COPPER-A

20.59

-0.09704027

3382351

ZOOMLION HEAVY-A

8.02

-1.835985

34353023

10.96

-0.7246377

1672514

ZTE CORP-A

8.02

-1.109741

7216147

10.91

-0.8181818

9288218

CHINA EVERBRIG-A CHINA LIFE INS-A

CHINA MERCHANT-A

23.22

0.6501951

CHINA MINSHENG-A

6.14

0.6557377

50162949

JINDUICHENG -A

CHINA NATIONAL-A

7.02

0.2857143

58464035

JIZHONG ENERGY-A

CHINA OILFIELD-A

15.58

-1.454775

2389947

KANGMEI PHARMA-A

14.92

-1.777485

14662372

CHINA PACIFIC-A

17.11

-0.1750292

7651412

KWEICHOW MOUTA-A

217.05

-2.330918

2195475

33.03

-0.8108108

4475196

-0.4926108

8722534

CHINA PETROLEU-A

6.08

0.330033

11725040

LUZHOU LAOJIAO-A

CHINA RAILWAY-A

5.26

0.1904762

9782241

METALLURGICAL-A

2.02

CHINA RAILWAY-A

2.84

-0.3508772

17307617

NINGBO PORT CO-A

2.46

6090865

PANGANG GROUP -A

3.38

-0.5882353

18879651 6744399

CHINA SHENHUA-A

21.61

-0.5522319

5043362

CHINA SHIPBUIL-A

4.13

-0.9592326

23420910

PETROCHINA CO-A

8.51

-0.1173709

PING AN BANK-A

13.13

-0.9803922

MOVERS

17 2200

INDEX 2175.599

CHINA SOUTHERN-A

3.37

-0.295858

9436864

5737293

HIGH

2198.71

CHINA STATE -A

3.09

33516727

PING AN INSURA-A

-0.3232759

9098975

LOW

2172.68

CHINA UNITED-A

3.21

-1.230769

27173026

POLY REAL ESTA-A

11.43

-0.5221932

18191019

CHINA VANKE CO-A

8.42

-0.3550296

30318655

QINGDAO HAIER-A

10.8

-1.728844

5933739

CHINA YANGTZE-A

6.44

0.155521

7671431

QINGHAI SALT-A

23.48

-1.962422

2200442

10.59

-1.028037

26226675

SAIC MOTOR-A

13.65

0.6637168

31036978

PRICE DAY %

Volume

PRICE DAY %

Volume

CITIC SECURITI-A

237

52W (H) 2717.825 (L) 2149.538

2170

22-November

26-November

FTSE TAIWAN 50 INDEX NAME

NAME

ACER INC

24.85

5.073996

30204213

FORMOSA PLASTIC

ADVANCED SEMICON

23.85

1.489362

36032697

FOXCONN TECHNOLO

ASIA CEMENT CORP

36.15

0.1385042

4336111

ASUSTEK COMPUTER

0.8287293

7811142

TAIWAN MOBILE CO

99.5

1.427115

11406761

TPK HOLDING CO L

FUBON FINANCIAL

32.35

1.410658

18242806

PRICE DAY %

Volume

105 -0.9433962

4398898

436.5

3.191489

6090148

TSMC

95.3 -0.2094241

34432016

UNI-PRESIDENT

51.2

0.589391

10310444

UNITED MICROELEC

11.1

2.777778

75223665

WISTRON CORP

29.7

1.712329

8145937

2962239

HON HAI PRECISIO

92.8

0.8695652

43390756

AU OPTRONICS COR

12.05

1.687764

123030087

HOTAI MOTOR CO

207

3.5

673865

CATCHER TECH

144.5

1.048951

17658962

HTC CORP

251

4.583333

26329121

CATHAY FINANCIAL

30.5

2.006689

33705294

HUA NAN FINANCIA

0.9463722

5705472

YUANTA FINANCIAL

14.25

2.888087

30623279

CHANG HWA BANK

15.45

0.9803922

7912018

LARGAN PRECISION

754

5.160391

2734620

YULON MOTOR CO

51.7

1.174168

4566654

CHENG SHIN RUBBE

73.4

2.80112

8634693

LITE-ON TECHNOLO

2913988

CHIMEI INNOLUX C

11.8

3.964758

168522262

MEDIATEK INC

325

1.5625

7788690

CHINA DEVELOPMEN

6.89

2.225519

43598513

MEGA FINANCIAL H

22.4

2.283105

36336330

CHINA STEEL CORP

25.75

0.7827789

14058196

NAN YA PLASTICS

1.7294

8290428

CHINATRUST FINAN

16.3

37955100

PRESIDENT CHAIN

149

1069887

CHUNGHWA TELECOM

317 -0.3144654

NAME

0.1076426

6177431

QUANTA COMPUTER

72.4

2.115656

8795821

COMPAL ELECTRON

18.65

2.754821

17438119

SILICONWARE PREC

30.55

1.495017

9036480

DELTA ELECT INC

106.5

0.9478673

3168423

SINOPAC FINANCIA

1.694915

19133234

FAR EASTERN NEW

33.7

2.900763

22669854

SYNNEX TECH INTL

-1.851852

7827408

FAR EASTONE TELE

69.6 -0.5714286

6115783

TAIWAN CEMENT

36.8

9035182

FIRST FINANCIAL

17.4

0.8695652

12815819

TAIWAN COOPERATI

15.7

0.6410256

6517897

FORMOSA CHEM & F

67.5

3.369066

9755851

TAIWAN FERTILIZE

1.838755

4818345

FORMOSA PETROCHE

84.6

0.1183432

1459384

TAIWAN GLASS IND

5.46875

2646144

MOVERS

4 5230

INDEX 5222.86 HIGH

5222.86

LOW

4995.48

52W (H) 5621.53 4990

(L) 4643.05 22-November

26-November

November 27, 2012 business daily | 13

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

MELCo CroWN ENTErTAINMENT

MGM CHINA HoLDINGS

29.2

39.0

29.0

38.8

28.8

38.6

13.8 13.7 13.6

Max 29.1

Average 28.935

Min 28.65

13.5

28.6

Last 29

Max 38.95

SANDS CHINA LTD

Average 38.825

Min 38.5

Last 38.85

38.4

SJM HoLDINGS LTD

Max 13.72

Average 13.612

Min 13.56

Last 13.68

13.4

WyNN MACAU LTD

33.2

18.1

22.4

18.0

22.2

17.9

22.0

33.0 32.8 32.6 32.4 Average 32.641

Max 33

Min 32.4

Last 32.66

32.2

17.8 Max 18.02

Average 17.934

Commodities PRICE

DAY %

YTD %

(H) 52W

87.8

-0.543724513

-10.21576848

109.6699982

79.68000031

BRENT CRUDE FUTR Jan13

110.85

-0.475848447

7.101449275

120.7699966

90.15999603

GASOLINE RBOB FUT Dec12

274.06

-0.120266774

10.44571613

295.8800077

217.2600031

GAS OIL FUT (ICE) Jan13

954.5

6.49930265

1036.25

799.25

NATURAL GAS FUTR Dec12

3.839

-1.589336068

2.182592494

4.350000381

2.90899992

306.8

-0.295732995

6.846834297

335.1700068

254.2500019

Gold Spot $/Oz

1748.85

-0.2367

11.754

1796.08

1522.75

Silver Spot $/Oz

33.9913

-0.2895

22.1171

37.4775

26.1513

Platinum Spot $/Oz

1606.8

-0.8852

15.2241

1736

1339.25

Palladium Spot $/Oz

663.5

-0.6662

1.5302

725.19

553.75

LME ALUMINUM 3MO ($)

1983

1.97994343

-1.831683168

2361.5

1827.25

LME COPPER 3MO ($)

7777

0.803629294

2.328947368

8765

7131

LME ZINC

1961

1.923076923

6.287262873

2220

1745

3MO ($)

LME NICKEL 3MO ($)

16620

0.392630625

-11.17049706

22150

15236

15.065

0.19953442

-1.888635624

16.60000038

14.60000038

755.5

0.766922307

25.86422324

846.25

511

WHEAT FUTURE(CBT) Mar13

865.75

0.493325595

17.94959128

948.25

652

SOYBEAN FUTURE Jan13

1426.5

0.546255507

17.60098928

1781.5

1126.75

COFFEE 'C' FUTURE Mar13

150.25

-0.364721485

-36.85648245

249

149.4499969

SUGAR #11 (WORLD) Mar13

19.21

0.365726228

-17.76541096

25.12999916

COTTON NO.2 FUTR Mar13

71.85

0.58798824

-18.82273189

98.5

AGRICULTURE ROUGH RICE (CBOT) Jan13 CORN FUTURE

Average 22.102

Mar13

PRICE 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

Last 22.2

Min 21.85

DAY %

1.0448 1.6006 0.93 1.2948 81.99 7.9827 7.7503 6.2255 55.7925 30.69 1.223 29.103 41.003 9600 85.671 1.20413 0.80892 8.0757 10.3365 106.16 1.03

-0.1243 -0.1373 -0.1935 -0.2158 0.5001 0.0013 0.0013 0.045 -0.4974 0.0326 -0.0164 0.0996 0.1146 0.5104 0.6105 0.0008 0.0309 -0.5882 -0.4354 0.7347 0

YTD %

(H) 52W

2.3411 2.9788 0.871 -0.1003 -6.1959 0.2117 0.2206 1.1164 -4.8886 2.8022 6.018 4.0408 6.919 -5.5313 -8.4498 1.0514 3.025 0.7244 0.15 -6.1228 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.3548 84.18 8.03 7.7969 6.3964 57.3275 32 1.3138 30.444 44.35 9664 88.637 1.24438 0.86187 8.5805 10.8355 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 40.985 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS NAME

(H) 52W

(L) 52W

2.76

-0.7194245

25.45454

3.25

2.16

1093119

CROWN LTD

10.07

0.09940358

24.47466

10.25

7.92

608302

18.65999985

AMAX HOLDINGS LT

0.067

-6.944444

-22.9885

0.119

0.055

23496500

66.84999847

BOC HONG KONG HO

24.2

0.4149378

31.52174

16.7

5759132 220000

ARISTOCRAT LEISU

CENTURY LEGEND

World Stock MarketS - Indices NAME

21.8 Max 22.35

(L) 52W

WTI CRUDE FUTURE Jan13

HEATING OIL FUTR Dec12 METALS

Last 18

CURRENCY EXCHANGE RATES

NAME ENERGY

Min 17.86

PRICE

DAY % YTD %

VOLUME CRNCY

0.248

-6.415094

7.826085

0.335

0.204

CHEUK NANG HLDGS

4.16

48.57143

4.36

2.5

40000

CHINA OVERSEAS

22.6

1.118568

74.31012

23.15

12.066

38040572

CHINESE ESTATES

11.96

1.355932

-4.32

13.26

8.3

1000

CHOW TAI FOOK JE

10.52

0.3816794

-24.42529

15.16

8.4

3301500 1625000

EMPEROR ENTERTAI

1.7

1.796407

53.15315

1.72

0.99

1.35

-2.173913

221.4286

1.43

0.38

1842000

0.8695652

103.6517

29.45

13.28

10347853

117.1

-0.3404255

27.07542

120

91.15

981645

29.9

0.6734007

52.53423

31.091

18.753

1340600

HSBC HLDGS PLC

77.1

-0.1295337

30.67797

56.95

10517988

HUTCHISON TELE H

3.38

-0.2949853

13.04348

3.88

2.83

4806000

LUK FOOK HLDGS I

20.55

-2.142857

-24.16974

34.3

14.7

2288000

MELCO INTL DEVEL

8.09

-0.8578431

40.20797

8.28

5.12

1292000

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13009.68

1.346043

6.483457

13661.87

11231.56

NASDAQ COMPOSITE INDEX

2966.854

1.377046

13.8842

3196.932

2441.48

HANG SENG BK

FTSE 100 INDEX

5807.42

-0.2014043

4.219819

5989.07

5075.22

HOPEWELL HLDGS

DAX INDEX

7302

-0.09754923

23.79733

7478.53

5366.5

FUTURE BRIGHT GALAXY ENTERTAIN

NIKKEI 225

9388.94

0.2363 667

11.04142

10255.15

8135.79

HANG SENG INDEX

21861.81

-0.2380672

18.59253

22149.69922

17613.19922

CSI 300 INDEX

2175.599

-0.77882

-7.253263

2717.825

2149.538

MGM CHINA HOLDIN

13.68

-0.2915452

42.61657

14.76

9.432

1326680

TAIWAN TAIEX INDEX

7407.37

1.110564

4.741038

8170.72

6609.11

MIDLAND HOLDINGS

3.58

-0.8310249

-9.459851

5.217

3.249

1386000

NEPTUNE GROUP

0.155

39.63964

0.222

0.081

6450000

NEW WORLD DEV

12.24

-1.130856

95.52715

13.2

6.13

10613870

SANDS CHINA LTD

32.6

-1.062215

48.51936

33.05

20.1

8027402

SHUN HO RESOURCE

1.24

1.37

0.95

20000

3.31

0.6079027

29.34092

3.51

2.418

3044375

KOSPI INDEX

1908.51

-0.1475412

4.533505

2057.28

1750.6

S&P/ASX 200 INDEX

4424.189

0.253251

9.062565

4581.8

3973.8

4375.169

0.6061661

14.47353

4377.519

3618.969

FTSE Bursa Malaysia KLCI

1607.88

-0.3989296

5.040081

1679.37

1430.61

SHUN TAK HOLDING

NZX ALL INDEX

873.031

0.1181191

19.62601

874.988

712.548

SJM HOLDINGS LTD

JAKARTA COMPOSITE INDEX

-0.2217295

43.93625

18.18

11.795

2564619

SMARTONE TELECOM

14.3

-1.650619

6.398813

17.5

12.04

4883581

WYNN MACAU LTD

22.2

2.068966

13.84615

25.5

14.62

5681674

ASIA ENTERTAINME

3.42

1.48368

-41.83674

7.24

2.4

74228

BALLY TECHNOLOGI

45.38

0.3538257

14.71183

51.16

35.79

125471

PHILIPPINES ALL SHARE IX

3617.66

0.2327347

18.805

3627.39

2952.17

HSBC Dragon 300 Index Singapor

584.55

0.37

17.77

STOCK EXCH OF THAI INDEX

1289.52

0.6101272

25.76757

1314.64

966.2

HO CHI MINH STOCK INDEX

377.9

-0.9981399

7.495379

492.44

332.28

BOC HONG KONG HO

3.01

25.56381

3.3

2.24

300

Laos Composite Index

1233.05

37.08781

1249.34

876.33

GALAXY ENTERTAIN

3.66

0.2739726

95.72192

3.73

1.7

8000

INTL GAME TECH

13.13

-0.4548901

-23.66279

18.1

10.92

1246599

JONES LANG LASAL

78.24

1.755755

27.71793

87.52

56.51

53340

LAS VEGAS SANDS

44.18

1.05215

3.393402

62.09

34.72

1983346

MELCO CROWN-ADR

15.29

1.797603

58.93971

16.02

8.32

2210939

MGM CHINA HOLDIN

1.76

47.68902

1.96

1.1917

2000

MGM RESORTS INTE

9.99

1.011122

-4.218603

14.9401

8.83

4916047

SHFL ENTERTAINME

14.3

0.2805049

22.01365

18.77

10.61

68040

SJM HOLDINGS LTD

2.3

-0.5405405

43.07284

2.34

1.5484

1700

109.33

1.203369

5.529359

129.6589

84.4902

554732

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 27, 2012

Opinion Cuban time travel Jeffrey Frankel

Professor of Capital Formation and Growth at Harvard University

or a United States citizen, the short trip to Havana requires navigating an obstacle course, owing to the trade and travel embargo that the U.S. maintains against Cuba. It also turns out to be a trip to the past – specifically, to 1959. Signs of this time warp are instantly apparent: the American automotive behemoths of the 1950’s stand out among the few cars on the streets in Havana. Most, obviously maintained with loving care, run well and look magnificent. Unfortunately, the rest of Cuba’s economy and infrastructure does not show the same concern. Cuba has one of the world’s longestlasting dual-exchange-rate systems: the dollar’s market value is 25 times the official rate of nominal parity (one peso equals one dollar). This means that those hotel or restaurant workers who can retain dollar earnings have incomes that are 25 times higher than those who cannot. Cuba long ago developed skilled services such as medicine and education. But doctors and professors earn far less than those who join the fledgling private economy. The latter includes 178 approved job types; by design, none – the choices include waiter, bathroom attendant, taxi driver, auto battery repairman, mule driver, and wheelbarrow operator – makes use of an educated person’s skills. And most people are still employed by the state. Perhaps Western-style consumer societies offer too many choices, but Cuba provides far too few. Most

ordinary goods – from shoe leather to software – are rationed, which means that they are available only by waiting in line or going to the black market. Many goods are not available at all. So how can such a system have survived for so long? Repression and fear alone do not explain it. In fact, free-market behaviour, whatever its benefits, is not hard-wired into human brains, especially not when it seems allied with selfishness and corruption in undermining noble ideals like cooperation, fairness, and equality.

Reluctantly for markets When the Soviet Union was collapsing, Robert Shiller, Maxim Boycko, and Vladimir Korobov surveyed residents of Moscow and New York regarding their attitudes toward free markets. Not surprisingly, many Russians’ responses would strike an economist as failing to appreciate the market’s virtues as a mechanism to bring supply and demand into equilibrium. For example, 66 percent of the respondents thought it unfair of flowersellers to charge higher prices on holidays, when demand is much stronger and supplies may give out. (The surprising finding was that an equally high percentage of Americans thought the same thing!) People in Eastern Europe eventually figured out that communism does not work, and that the market system does. If the U.S. did not exist, or if the embargo did not exist, Cubans could do

likewise: infer that something is fundamentally wrong with an economic system that involves so much time wasted and so many simple desires frustrated.

Soon one of the world’s two remaining museums of communism will become a rapidly growing, serviceexporting marketbased economy

But, for many Cubans, the embargo has placed an alternative explanation at hand: absent the embargo, many goods would be imported from the U.S., or produced at home with U.S. inputs. Therefore, it must be the U.S. and its embargo that is to blame for Cuba’s dysfunctional economy. The lesson is clear: the U.S. should end its obsolete embargo. Harvard’s Jorge Dominguez likens Cuba’s current dozy reform path to the expansion and contraction of an accordion’s bellows. Liberalisation took hold out of

economic desperation – the “special period” that followed the collapse in 1991 of the Soviet Union, Cuba’s longtime benefactor. The reform process then slowed – or even stopped altogether – from 1996 to 2005, partly because Venezuelan support made it less necessary.

Testing guidelines Reforms have been renewed in recent years – now under the heading of “los lineamientos,” or the “guidelines.” For example, the government announced in 2011 that it would allow people to buy and sell houses. Similarly, farmers can now sell directly to the market, including hotels and restaurants, rather than just to the government. One reason for the recent reforms is that the more pragmatic Raúl Castro took over after his brother Fidel became ill in 2006. Another reason, however, is that Venezuelan financing has lately begun to level off, and its future appears uncertain. In 1995, Cuba’s minister for heavy industry, referring to the country’s heavy economic dependence on the U.S. until the 1959 revolution and heavy dependence on the Soviet Union until the 1989 fall of the Berlin Wall, vowed, “We will never let this happen to us a third time.” Yet that is precisely what is now happening with respect to Venezuela. For now, Cuba is casting about for a new model. The example of Sweden shows that a strong social safety

net can be combined with a thriving private economy. But what Cuba seeks is a model of transition from communism. China, beginning with Deng Xiaoping’s reforms, is the obvious choice – that is, if soaring income inequality is not as important as maintaining Communist Party control and ensuring that Cuba’s leaders never have to admit that their official ideology has expired. (After all, their slogan has long been “Socialism or death!”) Cubans are proud people who are mindful of their history of subjugation by larger powers. In this respect, they resemble the Chinese, who have energetically converted to capitalism while leaving the giant portrait of Chairman Mao in Tiananmen Square. Four developments will soon occur, probably at approximately the same time: the aging Cuban émigrés who have dictated U.S. policy regarding their homeland will give way to the next generation; the Castros will pass from the scene; U.S.-Cuban relations will be normalised; and one of the world’s two remaining museums of communism will become a rapidly growing, service-exporting marketbased economy. At that point, lineamientos and models will no longer seem necessary. That said, I hope that Cuba’s government undertakes an entirely appropriate intervention before the flood of American money and tourists arrives: a zoning law in some designated part of Old Havana that bans cars built after 1959. © Project Syndicate

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 27, 2012 business daily | 15

OPINION Who’s standing in the way wires of change? You are Business

Leading reports from Asia’s best business newspapers Michael Kinsley

Business Line

Bloomberg View columnist

Indian stock markets have remain attractive for overseas investors, as foreign entities have pumped in over US$19 billion so far – the second highest mark in a year. Foreign Institutional Investors (FIIs) buying and selling of equities translated into a net inflow of Rs 99,406 crore (US$19.08 billion). This is the second highest net inflow by FIIs in a single calendar year since their entry into Indian capital markets in 1992. In 2010, overseas investors had made net investments of about US$29 billion.

Japan Times All Nippon Airways Co. plans to take stakes in other Asian carriers to expand its network in the region. “We will consider investing in airline companies in Asia and related firms if they create potential synergies with our operations”, President Shinichiro Ito said. ANA will use part of the 170 billion yen (US$2.07 billion) it raised through a new share offering in July to expand its network in Asia. After resuming flights to Myanmar in October, the airline will boost services linking Vietnam, India and Malaysia.

Korea Herald Korea will see the protracted economic slowdown continue next year amid tardy recovery in the global economy, a statecontrolled research institute predicted Sunday. In its report, the Korea Development Institute revised its projection on the nation’s gross domestic product growth for 2013 down to 3 percent, from its earlier estimate of 3.4 percent. The think tank also forecast that the 2012 GDP growth would stay at 2.2 percent, compared with its earlier estimate of 2.5 percent.

Business Times Malaysia Airports Holdings Bhd, the country’s biggest airport operator, is believed to be making a bid to gain control of U.K.’s Stansted Airport. Stansted Airport is the fourth busiest airport in the U.K., and is a hub for a number of major European low-cost carriers. It is also the core hub for Ryanair, the Irish low-cost carrier, which flies to over 100 destinations from the airport. The deal to take over Stansted Airport could cost as much as RM5 billion (US$1.6 billion).

ill Clinton became U.S. president on a platform of “change.” Not change in any particular way – just change in the abstract. Like characters in a Chekhov play, Americans found daily life unbearable in some usually unspecified way and dreamed of escape. But they didn’t have the energy to achieve escape velocity. Then along came this fast-talking charmer, and suddenly we’ve left Chekhov behind and are in “The Music Man.” Modifying Clinton’s formula only slightly, Barack Obama’s campaign mantra in 2008 was “change you can believe in.” This year, a major part of Republican nominee Mitt Romney’s challenge to President Obama was throwing this formula back in his face. Where was the change Obama had talked about? This strategy failed, but not because the voters decided that, on reflection, maybe they didn’t want change. It was because Romney is unconvincing in the role of change agent. He has it pretty good. Why would he want things to change? Americans certainly have change in our blood. Our semi-official national myth – celebrated this week, on Thanksgiving – is of ancestors who uprooted themselves and crossed the ocean to start a new life. Americans with this basic story in their past are still a majority of the citizenry, though just barely. Nevertheless, it’s hard to take seriously any poll showing that we all share a desire for change. Imagine that your phone rings and it’s some guy from the Gallup Organization or the Pew Research Center wanting to know whether you favour everything being fresh

and new, or everything staying exactly the way it is. Are you really going to admit that you’re a stick-in-the-mud who is more or less content with things the way they are? Change in the abstract is now a fundamental American value, like liberty or fried chicken. Everyone is for it, in the abstract. Change in particular is a different story. Apart from a totally nonspecific call for major change, Obama beat Romney in part by accusing him of wanting to change something specific: Medicare. Romney spent most of his energy on this issue, trying with increasing desperation to convince people that he came to rescue Medicare, not to change it. He said, first, that his proposed changes (basically, turning Medicare into a voucher system) would reduce the risk of major change by making the Medicare trust fund fiscally sound. Second,

Everyone is for [change], in the abstract. Change in particular is a different story. The big problem with ‘change’ as a political slogan is that most people don’t really want change

he said his proposed changes weren’t really his: they were the brainstorm of his running mate, Paul Ryan, and he (Romney), not Ryan, would be in charge. And third, he said that anyone older than 55 would be allowed to opt out of his proposed reforms, no matter how wonderful they might be.

Valuing change The big problem with “change” as a political slogan is that most people don’t really want change. They just say (and possibly even believe) that they do. In fighting for the Affordable Care Act, the administration emphasised that you could keep your current doctors. (The failure to convince people that this would be true is one of the big reasons that “Hillarycare,” the Clinton administration’s health-care-reform effort, went down.) Premature nostalgia for the present is a big factor in opposition to immigration reform. All this isn’t just a problem

of what Kevin Phillips once devastatingly labelled “reactionary liberalism”: a tendency among liberals to circle the wagons around any government programme once it has been established. Republicans do it, too: exaggerating the perils of some programme such as Social Security, then proposing a solution (almost always a tax cut for wealthy people) that won’t solve the problem and will make our bigger fiscal problem worse. But it’s not the quarrelling politicians in Washington who stand in the way of change. It’s the citizenry ourselves. The change we want is a suspension of the laws of mathematics. We debate tax increases for the rich to finance middle-class entitlement programmes, versus tax cuts for the rich and “reform” of entitlement programmes. In the end, we will have to raise taxes on everybody and cut entitlements as well. And that, unfortunately, is change you really can believe in. Bloomberg View

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business daily November 27, 2012

CLOSING ECB waiting for Spain

Sands falls after CEO sells shares

The European Central Bank expects Spain to ask Europe’s bailout fund for aid and thereby trigger ECB bond purchases, vice president Vítor Constâncio said. “Of course we expect that something will happen and that we will have to activate the Outright Monetary Transactions (OMT) [scheme] after a country makes a request,” he told reporters in Berlin yesterday. “So that’s still our expectation and we are operationally ready for that.” Mr Constâncio added that “it is up to the countries in the end of course” to decide on an aid request.

Sands China Ltd, a Macau casino operator, lost 1.1 percent to HK$32.6 (US$4.2) after chief executive Edward Tracy sold 100,000 shares at an average price of HK$30.75 each on November 21. Mr Tracy has sold a total of 400,000 shares this month, according to filings to the Hong Kong Stock Exchange last week. Also yesterday, Amax Holdings Ltd, a VIP gaming promoter, sank 6.9 percent after forecasting a first-half loss because “the financial information of an associate, which has significant impact on the financial statements of the group… is still unavailable”.

HK looks to reform interbank rates The number of maturities used to set Hibor rates might be cut to seven

ong Kong is looking to change the way it sets benchmark lending rates, following a review sparked by the Libor scandal that rocked the financial industry earlier this year. The Hong Kong Association of Banks (HKAB) said yesterday that it is considering a series of reforms to the Hong Kong Interbank Offered Rate (Hibor), including bringing in a formal code of conduct and reducing the number of rates it publishes. Faith in the way benchmarks like Hibor are d e ter mined plumme te d after Barclays was fined 290 million pounds (US$464 million) by U.K. and U.S. regulators in June for rigging Libor. Other banks are still under investigation for possible manipulation. The rates are meant to be a measure of banks’ wholesale funding costs, however the Libor probe revealed some bank traders tried to manipulate them so

they could profit from bets on interest rate derivatives. The HKAB said a review carried out by the city’s Treasury Markets Association found the current Hibor fixing mechanism meant it was less likely to be manipulated than Libor, although there were areas that could be improved. “The Hibor fixing mechanism remains sound,” said Henry Cheng of the Treasury Markets Association who carried out the review. “The key point of these proposals are to make sure the mechanism can be sustained.” Some banks in Macau are using Hibor “as a base for setting their lending rates,” the Monetary Authority of Macau told Business Daily in July.

Code of conduct The U.K.’s Financial Services Authority announced reforms to the Libor system in September that included cutting the

Hibor is used to price a range of financial products in Hong Kong, but also in Macau

number of rates calculated from 150 to just 20 and tighter auditing of banks that contribute the data. The HKAB is the first banking association in Asia to publish similar reforms. Currently, Hibor rates are set across 15 different maturities, ranging from overnight to 12 months. The HKAB is looking to cut the number of maturities to

seven, focusing on those that are most commonly used as reference rates. It will also look at formalising a code of conduct for the 20 banks that provide the rates Hibor is calculated from. Hibor is used to price a range of financial products in Hong Kong like credit card rates and mortgages. A similar review of benchmark rates is also

underway in Singapore, where the central bank has ordered lenders to review the way rates are set for interbank lending and non-deliverable foreign exchange contracts. The HKAB is now going to consult with the industry on these recommendations and will provide a report to the Hong Kong Monetary Authority by the end of the year. Reuters

UBS fined US$47.6 mln over rogue trader scandal Swiss regulator blocks the company from making acquisitions

ritain’s financial regulator said yesterday it had fined Swiss bank UBS 29.7 million pounds (US$47.6 million) for failings that allowed Kweku Adoboli to commit the country’s biggest fraud. Mr Adoboli, 32, was jailed last week for seven years after gambling away US$2.3 billion of the lender’s money. “The FSA has fined UBS AG 29.7 million pounds for systems and controls failings that allowed an employee to cause substantial losses totalling US$2.3 billion as a result of unauthorised trading,” the watchdog said in a statement. It added: “The systems and controls failings revealed serious weaknesses in the firm’s procedures, management systems and

internal controls.” Last Tuesday, a jury in London found the Ghanaianborn banker guilty of two counts of fraud, though it cleared him of four charges of false accounting. UBS became aware in September 2011 that unauthorised trades had taken place on the Swiss bank’s Exchange Traded Funds Desk on its Global Synthetic Equities (GSE) division in London. “UBS’s systems and controls were seriously defective,” said Tracey McDermott, director of enforcement and financial crime at Britain’s Financial Services Authority (FSA) watchdog, in a statement. “UBS failed to question the increasing revenue of the

UBS said to have deficient risk management controls

desk and failed to ensure that there was a corresponding increase in the controls in place over the desk. “As a result Mr Adoboli, a relatively junior trader, was allowed to take vast and risky market positions, and UBS

failed to manage the risks around that properly. “We know from past experience that failures to manage risk properly can cause firms to fail and cause systemic harm.” The FSA, which carried

out a probe with the Swiss Financial Market Supervisory Authority (FINMA), said in yesterday’s statement it uncovered several “particularly serious” failings. The regulators said that the computerised system operated by UBS to assist in risk management was not effective, while its trade capture and processing system had “significant deficiencies”. Swiss regulators moved fast yesterday to punish Swiss bank UBS. The regulator blocked UBS from making takeovers, in addition to a fine imposed by regulators in London. “UBS’s investment bank is prohibited from making new acquisitions,” the Swiss Financial Market Supervisory Ben Bernanke, Federal Authority said in a statement. Reserve chairman AFP