Macau Business Daily, November 28, 2012 by Business Daily

Year I Number 171 Wednesday November 28, 2012 MOP 6.00 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte

www.macaubusinessdaily.com

Mass-market way forward for Emperor

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Dividend no threat for Sands’ Cotai plans

Budget niche for SJM’s Cotai resort S

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I SSN 2226-8294

JM Holdings Ltd plans to build “affordable” hotel rooms on Cotai, the company’s chief executive Ambrose So Shu Fai said yesterday. So far Cotai has been conceived as a mass-market playground but with largely five-star international hotel brands. SJM – founded by tycoon Stanley Ho Hung Sun – says “80 percent to 90 percent” of its planned new Cotai resort will be non-gaming facilities.

The firm added however it is still reluctant to build any nongaming property in Hengqin Island and prefers to wait for more leisure-focused customers to start coming to Macau. In a separate development, two of the company’s slot parlours are due to close, according to new rules. But Mr So wants further clarification before deciding whether to move the machines in the parlours to the firm’s casinos. More on page 2

New leadership wants ‘responsibility’ from casinos

HANG SENG INDEX 22000

China’s new leadership wants ‘more responsibility’ from Macau casinos, a central government adviser on lottery gaming said at a conference yesterday. Su Guojing added that enforcement of Macau’s 21 years of age limit for casino entry also needs improvement. In another session of the Asian Gaming and Hospitality Congress, Luis Melo, former general counsel for Sands China Ltd, said U.S.-based operators had “raised the bar” in Macau for legal compliance.

21955

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November 27

Property bubble to burst: Stanley Au

HSI - Movers Name

%Day

CHINA RES ENTERP

2.78

WANT WANT CHINA

2.14

SANDS CHINA LTD

1.84

WHARF HLDG

1.66

AIA GROUP LTD

1.16

CHINA UNICOM HON

-1.63

CHINA PETROLEU-H

-1.69

COSCO PAC LTD

-1.95

ESPRIT HLDGS

-2.07

BELLE INTERNATIO

-2.22

Source: Bloomberg

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Stanley Au Chong Kit, chairman of Delta Asia Bank Ltd, is expecting the real estate bubble to burst within the next two years and for Macau to face slower economic growth or even a recession. A downturn would affect gaming but might help smaller companies, he said. But the businessman believes it would have little impact on residents, aside from cutting down inflation.

Jobless rate among world’s lowest The creation of 2,400 new jobs meant the unemployment rate dropped to 1.9 percent last month, the lowest ever, official data show. The jobless rate is the third lowest in the world, behind only Qatar and Thailand according to the International Labour Organization. The unemployment rate fell by 0.1 percentage point between August and October, the Statistics and Census Service announced yesterday.

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business daily November 28, 2012

macau Govt to impose tighter control on triads A database on triad activities, members and reported crimes will be created to tighten organised crime surveillance, Cheong Kuoc Va, Secretary for Security, said during the Policy Address 2013 debate yesterday. Authorities are keeping in touch with neighbouring jurisdictions on triad activities and would consider banning the entry to overseas triad members. With more Cotai resorts being built, authorities are assessing the environmental impact of a new integrated police station that would also oversee University of Macau’s Hengqin Island campus, he said.

SJM eyes low-cost hotels, Cotai performance venue Non-gaming facilities, including low-cost hotels, will characterise SJM’s development in Cotai Stephanie Lai

sw.lai@macaubusinessdaily.com

ow-cost hotels will be a part of SJM Holdings Ltd’s resort in Cotai, according to the company’s chief executive, Ambrose So Shu Fai. “Everyone is chasing the same dollar. All are building five-star hotels,” Mr So said yesterday. “It’s a good direction if we could have some more affordable accommodation in order to satisfy a wide spectrum of customers,” he told reporters at the University of Macau, where he delivered a lecture. But he said his company was still pondering the room rates for its “affordable” hotels, which would have about 2,000 rooms. Mr So said non-gaming facilities would occupy 80 percent to 90 percent of SJM’s Cotai development, which would cost 20 billion patacas (US$2.5 billion).

“We are quite sure we won’t have a venue specifically designed for one single type of performance,” Mr So said. “We’ll have a venue that can take on various cultural performance groups to come over, depending on customer demand.” SJM announced last month that the resort would have 700 gaming tables and 1,000 slot machines, assuming the government approved. Mr So said the project for SJM’s 70,500 square metre plot of land in Cotai was still in the planning stage, and that details would be announced later. Mr So said SJM had no plans for investments on Hengqin Island, but that this could change in the long run. “At present we don’t have the type of customers found in Las Vegas:

going for golf or to engage in other activities for a couple of days and go back to the city to gamble,” he said. “But in the long term, Hengqin may have some more leisure facilities to satisfy customers’ needs. How the investment is made will depend on changes to the customer base.” In his lecture, Mr So said Macau would have great difficulty in presenting itself as something more than just the “Monte Carlo or Las Vegas of Asia”, even though it had a rich cultural heritage. “To develop cultural tourism for the city you need the right professionals … and that is the area where we are lacking training,” he said. “People are always the priority concern.” He suggested that institutions of higher education develop more

vocational courses for workers in the tourism industry and attract more students from abroad.

We’ll have a venue that can take on various cultural performance groups Ambrose So Shu Fai, SJM Holdings chief executive

No fears over smoking, slot parlour rules SJM backs government policy on slot parlours, but calls for clearer instructions

urther clarification is needed regarding the new rules on slot parlour locations before SJM Holdings Ltd makes any move, Ambrose So Shu Fai, the gaming operator’s chief executive told media yesterday. As stated in a new bylaw that came into effect yesterday, slot parlours must be located in either a five-star hotel, a non-residential building located within 500 metres of a casino, or within a resort “not located in a densely populated area”. “There are certain issues that need clarification: first, how are those 500 metres measured? Secondly, what defines a commercial building or a tourist spot so that you are allowed to install slot machines there?” said Mr So.

SJM is aware that its Yat Yuen Canidrome Slot Lounge and Treasure Hunt Slot Lounge on Macau peninsula will be affected and it “is reviewing the necessary logistics, and rental commitments for the two locations,” he added. The company might close the slot parlours and relocate the slot machines to its casinos, the executive said. “In terms of our business, the new slot parlour rule will have only a minimal impact, because SJM’s business is still mainly relying on mass gaming tables,” said Mr So. Information on the possible impact on SJM seems harder to quantify, as the operator does not provide detailed revenue or earnings

before interest, taxation, depreciation and amortisation (EBITDA) results for its slot segment. “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,” Union Gaming Research Macau wrote in a note released on Monday.

Smoke woes Starting next year the indoor smoking ban will also affect casinos, which will still be able to create smoking areas, but Mr So believes a full ban would be a “feasible” option. “Eventually, after two or three

years, smoking ban will be enacted altogether in any case,” said Mr So, “So why not do it now? “Installing air curtain or partitions [inside casinos] will never be fully effective means anyways,” he bemoaned. SJM’s managing director and legislator Angela Leong On Kei reiterated at the Legislative Assembly yesterday her support for a full smoking ban in casinos. “SJM could take the lead,” she added. She also raised concerns on the difficulties the security polices are having in implementing the smoking control, which will be important to prevent conflicts between casino staff and customers. S.L.

November 28, 2012 business daily | 3

MACAU

New leadership wants ‘more responsibility’ from casinos Central govt adviser says enforcement of 21 age policy also needs boosting Michael Grimes

michael.grimes@macaubusinessdaily.com

some time adviser to the Chinese government yesterday said it was likely China’s new leaders would up pressure on the Macau casino industry to promote responsible gambling. “An issue that’s been talked about in Beijing is responsible gaming,” said Su Guojing, chairman of the Asian Responsible Gambling Alliance and founder of the China Lottery Industry Salon, an industry advocacy and research group. He made his comments on the first day of the Asian Gaming and Hospitality Congress organised by Beacon Events at Galaxy Macau. According to his conference biography, in July 2009 Mr Su – who also heads a lottery technology company in China – was hired by the Ministry of Civil Affairs of the People’s Republic of China as a lottery expert. Mr Su spoke in Mandarin, with his comments translated into English by his fellow panellist Tony Tong, a founder of PacificNet Ventures Ltd, a firm offering financial services on the mainland.

Gaming ‘costs’ “The cost of gaming is not only what happens in Macau. A lot of the impact is also affecting people in the mainland,” stated Mr Su.

Gaming operators in Macau “also have to be responsible for the cost – the negative impact – of gaming in mainland China. Because the new [national] leadership is a younger generation of people, I believe their enforcement of this will be accelerated,” he added. Mr Su also criticised the enforcement of Macau’s new 21 years age limit for casinos as “not very strong”. Under legislation published in the Official Gazette on August 29 and which came into force on November 1, anyone under 21 trying to enter a Macau casino faces a fine of between 1,000 patacas (US$125) to 10,000 patacas. Criminal penalties might also apply. Casino operators can be fined from 10,000 patacas up to 500,000 patacas if they allow under21s to enter casinos or work on the premises. The law does not however apply to the 11 slot gaming parlours in Macau that are away from casino premises. In those parlours 18 year olds can still gamble. “The age limit enforcement is not very strong as compared to Singapore,” suggested Mr Su. “In Singapore when you enter a casino you have to show your I.D. card or passport, and that will show your age. But here in Macau, we’re seeing that this is not checked. He added: “As far as the signage

is concerned, I’ve visited a number of [Macau] casinos on this trip, and I see that the signs with the age restriction limit is usually very hard to find and usually very small.”

Coordinating policy Duarte Chagas, legal adviser to Macau’s gaming regulator the Gaming Inspection and Coordination Bureau, told yesterday’s conference “there are no perfect systems” for enforcing casino entry rules. “The law doesn’t establish a minimum standard for the signs,” Mr Chagas conceded. “This is an issue because we have to see that there is a clear exhibition of this [signage] for prohibition. According to our law, ignorance of the law is not an exception [circumstance] for non-compliance,” he added. But he said it was important not to make a rushed judgement on the effectiveness of the new rules. “I think we must not react on what happens at the beginning. Before we do the evaluation of the quality of the law, we have to let time flow,” he added. “We have tried to publish this new law and legislation in the media. A difficulty is that most of the patrons come from outside – from Hong Kong, the mainland and Taiwan,” said Mr Chagas. “This makes the casinos more

Under scrutiny – Las Vegas Sands Corp and Wynn Resorts Ltd

U.S. operators ‘raised bar’ on compliance in Macau Ex Sands general counsel says ‘unlikely’ LVS, Wynn will face significant U.S. sanctions over Macau allegations

merican gaming companies with Macau operations might consider relocating corporate headquarters to Asia if they felt there was enough risk to their business posed

by regulatory probes back home. Several speakers including local lawyer Luis Mesquita de Melo, a former general counsel for Sands China Ltd, expressed the view at

the Asian Gaming and Hospitality Congress yesterday. Mr Melo stressed he was giving his personal views, not those of his former employer. “Even if there is some risk for the

Mainland view – Su Guojing

focused on identification. We see a differing approach from the casinos on this aspect, and we are keen to synchronise this as soon as possible.” Jorge Godinho, associate professor, Faculty of Law at the University of Macau, said locals were “fully aware” of the age issue because it generated a lot of debate. He added casino security guards had also been trained to ask young people for proof of identity and age. “It’s also a job of the travel industry to pass this message and information to prospective tourists that may come to Macau,” he stated.

U.S. operators, they might seriously consider moving their headquarters to Asia where the business is at the moment,” he stated. Las Vegas Sands Corp., the parent company of Sands China, and Wynn Resorts Ltd, the parent firm of Wynn Macau Ltd, are each currently facing regulatory probes from the Nevada Gaming Commission and the U.S. Securities and Exchange Commission. They relate to allegations by third parties of breaches of the U.S. Foreign Corrupt Practices Act in the conduct of their Macau operations. Wynn Resorts chairman Steve Wynn is on record saying he was considering moving his corporate base to Macau. Mr Melo said he didn’t think the current probes would “lead to pretty significant penalties or sanctions applied to the U.S. operators operating in Macau”. He also gave some defence in general terms of his former employer, saying: “I think most of the American gaming operators brought with them to Macau a culture of [legal] compliance that was non-existent before.” He added this had “raised the bar in terms of compliance”. Mr Melo added, however, there needed to be better enforcement of Macau’s current ten-year-old junket regulation framework and ideally reform of it, but he wasn’t sure “there was the political will to do so in the near future”. M.G.

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business daily November 28, 2012

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HOSPITALITY Reaching the limits? The latest official figures suggest growth in the number of visitors is slowing. The number of visitors in the first 10 months of this year was 0.8 percent higher than in the equivalent period last year. The number of day-trippers in the first 10 months fell by about 2.9 percent. The proportion of visitors that are day-trippers has declined lately, as the number of day-trippers is increasing more slowly than the number of visitors overall. The number of visitors was almost 21 percent greater in the third quarter of this year than in the first quarter of 2008, but the number of day-trippers was only 10.4 percent greater. In the third quarter the proportion of daytrippers was below 50 percent for the first time in the period under review. The peaks in the numbers of visitors were reached in the second half of last year. Since then the decline in the numbers of visitors has been proportionately greater among day-trippers. This suggests that the number visitors overall is growing more slowly because a smaller proportion of them are day-trippers.

The monthly figures for day-trippers since 2008 seem to confirm this idea. The chart shows 2009 was, indeed, a year of crisis, with fewer visitors arriving than in 2008. The recovery in numbers of day-trippers 2010 and last year seems to have stalled this year. At the beginning this year the number of day-trippers fell sharply. Although the numbers since then have followed a pattern similar to that in previous years, they have been lower than last year. This may be an early indication of some saturation of the market for day trips. J.I.D.

49.7 %

Proportion of Q3 visitors that were day-trippers

Grand Emperor doubles down on mass-market With VIP gaming still falling, Grand Emperor hotel-casino is moving more tables to the growing mass-market segment Vítor Quintã

vitorquinta@macaubusinessdaily.com

he operator of Macau’s Grand Emperor hotel-casino saw its profit increase by more than a quarter year-on-year in the six months ended September 30, mainly due to a boom in premium mass-market gaming. Emperor Entertainment Hotel Ltd said its profit grew by 26.5 percent to HK$231.8 million (US$29.9 million) in a filing to the Hong Kong Stock Exchange late Monday. Revenue grew far more slowly – by about 12.3 percent to HK$905.2 million – and 90.9 percent came from casino operations run under the gaming licence held by Sociedade de Jogos de Macau SA. “Despite the softened market gaming revenue growth (9.6 percent) during the period, the group outperformed the market,” the company led by Semon Luk Siu Man stressed. Mass-market gaming was the star performer, with revenue rising by 21.8 percent to HK$630.2 million. The average daily win across the half-year was about HK$97,500 a table, “a record high,” the company stressed. Revenue from VIP tables, however, fell 10.9 percent to HK$168.4 million.

With the demolition works completed, a new five-storey mall in downtown Macau is set to open in 2014 (Photo: Manuel Cardoso)

As a result commission paid to VIP gaming promoters, also known as junkets, went down 8.1 percent to HK$199.8 million and debts over six months old fell by more than half to HK$20.2 million. In order “to capitalise on the growing [mainland Chinese] middle class market with high disposable

income,” Emperor Entertainment decided to move a further two gaming tables from its VIP rooms to its mass-market concourse – after having transferred four tables in the year ended March 31. “As a result of the group’s continuous efforts on utilising gaming spaces and increasing operational efficiencies,” the company was able to pocket 47 percent of its revenue, up from 42 percent a year earlier. With 65 tables currently serving mass-market gaming, the company is bullish about the outlook for this segment and expects it to “be the key growth driver for the industry in the coming years”. Emperor Entertainment Hotel accounted for more than half (55.4 percent)oftherevenueofparentcompany Emperor International Holdings. In its stock exchange filing, Emperor International gave no further news on the work at a plot in the city centre where it plans to build a new five-storey “premium retail complex”, with an area of 30,000 square feet, in 2014. The price of Bauhaus stock closed 1.01 percent higher yesterday at HK$2.0 per share in Hong Kong trading.

Slow demand shrinks Bauhaus bottom line The fashion retailer says its first-half net profit declined by 31.3 percent

ong Kong retailer Bauhaus International Holdings Ltd’s net profit in its financial first half ended September fell to about HK$10.3 million (US$1.2 million) this year, 31.3 percent less than a year before. However, higher sales and corresponding profits at its outlets in Macau and Hong Kong prevented a worse profit slump for the fashion house. In its interim report, Bauhaus told the Hong Kong Stock Exchange on Monday that sales here and in Hong Kong had accounted for almost two-thirds of its first-half takings, growing by 7.3 percent to roughly HK$313.1 million. The number of shops Bauhaus has here and in Hong Kong increased to 82 from 79. The company’s brands include Bauhaus, Tough Jeansmith, Salad and 80/20. Sluggish growth in retailing worldwide and higher operating costs

squeezed the company’s global net profit margin to about 2.1 percent. Turnover increased by 3.4 percent to about HK$481 million, but gross profit dropped to HK$318.6 million. “Adversely affected by the global economic slowdown, European debt crisis and certain domestic policy issues, the retail performance in various markets within which the group operated was disappointing,” Bauhaus said. “Besides, operating costs, particularly the rental and labour costs, continued to surge at a high level.” The company said its sales outlook remained “uncertain”. It said it would be prudent about business development. “The group will, however, relocate certain sales points to more costeffective locations to achieve greater efficiency, and open additional sales outlets to reduce stocks of slowmoving inventories and improve cash flow,” it said.

Bauhaus sales in Macau and Hong Kong have countered the effect of sluggish demand elsewhere (Photo: Manuel Cardoso)

The price of Bauhaus stock lost 4.8 percent yesterday to close at HK$1.17 per share in Hong Kong trading.

news where it matters

T.A.

November 28, 2012 business daily | 5

MACAU

Cotai plans safe from Sands dividend impact Operator’s first special dividend comes before expected hike in U.S. dividend taxes Vítor Quintã

vitorquinta@macaubusinessdaily.com

Sands is expecting to invest US$2.5 billion in building The Parisian resort at Cotai (Photo: Manuel Cardoso)

espite voting a special dividend worth US$2.3 billion (18.3 billion patacas), Las Vegas Sands Corp., the casino company led by billionaire

Sheldon Adelson, will still have plenty of capital left to finish Sands Cotai Central and develop The Parisian. The Las Vegas-based company voted to pay

the US$2.75-a-share dividend, its first such distribution, on December 18 to investors of record on December 10, according to a statement yesterday.

This month, the company also increased its regular annual dividend by 40 percent to US$1.40 a share. The move will leave Las Vegas Sands with roughly US$1.5 billion in cash and with a debt equivalent to 2.1 times its operational profit for the last 12 months, “well below other gaming operators,” Union Gaming Research wrote. In addition, the note to investors adds, the casino operator will generate nearly US$2.4 billion in free cash flow with only US$98 million in debt coming due next year, “essentially a drop in the bucket”. “We have every intention of increasing the dividend in the years ahead as our business and cash flows continue to grow,” Mr Adelson said on a November 1 conference call. “I can only say one thing about that: ‘Go Dividend.’” Macau subsidiary Sands China Ltd is also likely to issue a special dividend soon, Grant Govertsen of Union Gaming Research Macau told Business Daily, of which 70 percent would go to the parent company. The analyst believes this is a pre-emptive move before an expected increase in dividend taxes in the United States from the current 15 percent. Companies are paying special dividends at four times the pace of last year as the United States Congress is poised to let the tax on

dividends rise next year. Sands rival Wynn Resorts Ltd declared a US$7.50-ashare payout and a doubling of its quarterly dividend to US$1 a share last month. With about 437 million shares of Las Vegas Sands, or around 52 percent of the stock, according to an April regulatory filing, Mr Adelson, 79, and his wife Miriam will collect US$1.2 billion from the special dividend and another US$611 million annually. Las Vegas Sands rose 4.7 percent to US$46.08 in extended trading after its announcement. Sands China gained 1.8 percent to HK$33.2 in Hong Kong trading yesterday, rebounding from a 1.1 percent drop on Monday. Mr Govertsen believes yesterday’s upward trend might be linked to more investors purchasing Sands China shares in advance of the dividend issue. With Bloomberg

US$2.3 bln Special dividend issued by Las Vegas Sands

‘Another great year’ Galaxy promotes for casinos in 2013, StarWorld Macau executives says HSBC Analyst expects strong growth from Macau’s mass-market gaming revenue next year Vítor Quintã

vitorquinta@macaubusinessdaily.com

ith economic growth picking up in mainland China and a changing business model, “2013 will be another great year” for Macau gaming, HSBC predicts in a note to investors released yesterday. Sean Monaghan, a gaming analyst at HSBC, expects “continued strong growth” of 25 percent in mass-market revenue next year, along with “a gradual recovery” in the VIP segment, with annual growth of 7 percent. “Macau casino business models are changing, shedding their historical dependence on the high risk and low margin VIP segment, and shifting to high growth, high margin and low risk mass gaming,” he wrote. The Singapore-based analyst believes slower revenue growth in the third quarter was a sign of the “resilience of Macau casinos, even during times of severe economic weakness”.

“In all our recent trips to Macau, we have found no inherent financial problems with the major junket operators,” namely no capital shortage, he stressed. The industry will benefit from the improvement in economic activity in mainland China, as well as the opening of Chimelong International Ocean Resort in Hengqin Island, the note adds. In fact, Mr Monaghan is expecting the city’s casino operators to announce “new non-gaming leisure developments” on the neighbouring island, which “could further enhance the growth potential of their Macau gaming resorts”. HSBC believes the government will announce changes to labour laws next year, making it easier for local companies to hire more staff, but also release Cotai sites 7 and 8 for public tender next year, “which could result in another large project”.

acau casino operator and developer Galaxy Entertainment Group Ltd has appointed Gabriel Hunterton as deputy chief operating officer of its Cotai resort Galaxy Macau. Mr Hunterton, a graduate of Yale University in the United States, is currently chief operating officer at StarWorld Macau, Galaxy’s first purpose-built Macau casino and the group’s flagship operation in the city’s traditional casino district on Macau peninsula. He is a 15-year veteran of the gaming industry in Las Vegas and Macau. At the same time Galaxy has promoted Charles So Chak Lam to take operational control at StarWorld, where he will have the

Gabriel Hunterton, left, and Charles So

title deputy chief operating officer, reporting to the group’s chief operating officer Michael Mecca. Mr So – who has been with Galaxy for seven years and has three decades of experience in hotel operations and food and beverage services – is currently vice president - hotel operations of StarWorld. The appointment of Mr Hunterton in an operational role at Galaxy Macau will allow Mr Mecca to focus on his strategic and development role, Business Daily understands. Francis Lui Yiu Tung, the group’s vice chairman, said the appointments would “ensure optimum execution of GEG’s overall objectives, plans and policies at our two properties”. M.G.

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business daily November 28, 2012

macau

Macau’s jobless rate world’s third-lowest

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Mixed signals The annual rate of consumer price inflation averaged 6.26 percent in the 12 months ended October. In that month it was 5.2 percent. This level of inflation causes some apprehension and deserves attention, especially if there is an underlying tendency for it to accelerate. But as long as the rate of inflation is steady, which it is, and slower than the rate of growth in incomes, it is no reason for too much anxiety. However, the upward pressure on food prices and housing costs are good reasons for anxiety. Together, rises in food prices and housing costs account for almost 70 percent of consumer price inflation. The average resident is rightly sensitive to such increases.

A surge in job creation in the retailing and construction industries has cut the unemployment rate to its lowest ever Vítor Quintã

vitorquinta@macaubusinessdaily.com

he creation of 2,400 new jobs meant the unemployment rate dropped to 1.9 percent last month, the lowest ever, official data show.

The jobless rate is the third-lowest in the world. The unemployment rate fell by 0.1 percentage point between August and October, the Statistics and Census

The booming retailing industry hired more workers last month

The annual rate of consumer price inflation appears to have stabilised this year. The tendency for the inflation rate to accelerate was evident in 2010 and last year. With the crisis of 2009 barely over, prices jumped at the beginning of 2010. From then on, almost without respite, the inflation rate kept rising. The tendency to accelerate appears to have weakened recently. The annual rates of consumer price inflation in September and October this year even suggest deceleration. But while consumer price inflation overall appears to have stabilised, food price inflation and housing cost inflation prevent excessive optimism. The annual rate of food price inflation averaged 9.2 percent in the 12 months ended October and the annual rate of housing cost inflation averaged 6 percent. Housing price inflation is understated because the statisticians conflate housing costs with fuel costs, which have declined. Whatever the precise figure, food price inflation and housing cost inflation are running at above-average rates.

Service announced yesterday. This figure is the lowest since the service began collecting data on unemployment in 1992. Data compiled by the International Labour Organisation indicate that Macau and Singapore have the third-lowest unemployment rate in the world, above only Qatar’s 0.4 percent and Thailand’s 0.9 percent. The city has technically had full employment since January, according to the Monetary Authority of Macau. The drop in unemployment between August and October was due to the creation of 2,400 new jobs, mainly in retailing and construction. These took the number of people employed here to 346,600, the most ever. The number of jobless was 6,700 last month, the lowest in more than 14 years. But this was only 300 fewer than in August because 2,100 people joined the labour market, comprising 502 imported workers and nearly 1,600 residents. The growth in the size of the labour force was due mainly to more women being willing to go out to work. The rate of female participation in the labour force rose by 0.3 percentage point to 66.6 percent. The underemployment rate – the percentage of people working in jobs they are overqualified for, or who work only part-time and want full-time work – was unchanged at 0.8 percent.

Five more Hengqin plots up for auction The Hengqin Island administration is putting up for sale in one week as many plots of land as it has sold all year Tony Lai

tony.lai@macaubusinessdaily.com

J.I.D.

47.6 %

Contribution of food prices rise to overall inflation growth

heHengqinIslandadministration is putting five plots of land up for auction in one week, including for the first time one reserved exclusively for Macau enterprises. The Zhuhai Land and House Property Exchange Centre said on its website last week that the reserved plot covered 30,000 square metres, lay east of the border terminal, and was available on a 40-year lease. The other four plots range in size from 16,000 square metres to 62,000 square metres. The plots can be used for

commercial, office or hotel buildings. But the sale is beset with conditions. For instance, the bidders for one of the plots must be developers of high technology, the bidders for another must be cultural enterprises and the bidders for a third must have holdings in at least three publicly listed companies. The plots are in the northeast of the island or its Shizimen central business district. The reserve prices range between 2,200 yuan (2,820 patacas) and 3,350 yuan per square metre, except for the reserve price for the plot for Macau

enterprises, which is 4,200 yuan per square metre. The auctions of for all five plots are scheduled for next month. Joint bids will not be accepted. So far this year only five other parcels of land on Hengqin have been sold. One was bought by GuangdongMacau Traditional Chinese Medicine Technology Industrial Park Development Co Ltd in January. The prices ranged from 1,200 yuan to 14,700 yuan per square metre, according to data from the Zhuhai Land and House Property Exchange Centre.

November 28, 2012 business daily | 7

MACAU Future Bright to raise money Restaurant operator Future Bright Holdings Ltd is trying to raise HK$86.25 million (US$11.1 million) via a share placement for the development of the group’s central food processing centre in the Zhuhai-Macau Cross-Border Industrial Park, and for the opening of new restaurants. The company told the Hong Kong Stock Exchange on Monday it had agreed to place up to 75 million shares – 11.9 percent of its share capital – at HK$1.2 a piece, representing a discount of 11.1 percent from yesterday’s closing price of HK$1.35.

Property bubble willburst – Stanley Au The Delta Asia Financial Group chairman foresees slower growth or even contraction of the economy in the next few years Tony Lai

tony.lai@macaubusinessdaily.com

acau has a real estate bubble that will burst and its economy will grow more slowly and perhaps even go into recession, according to the chairman of Delta Asia Financial Group, Stanley Au Chong Kit. Mr Au believes real estate prices have risen too rapidly in the past three years. He lays the blame on a surge in Hong Kong property prices, the relaxation of monetary policy in the United States and elsewhere, and an influx of money from mainland China. “Another reason is real estate agencies, as they overstate the market [prospects] and push up the prices,” Mr Au told Business Daily. The average price per square metre of residential space was 62,552 patacas (US$7,819) in September, having been only 33,000 patacas in January 2010, official data show. The government announced last month new measures to cool the property market, including the expansion of the special stamp duty and the tightening of mortgage lending restrictions. “Real estate prices had risen to a level so high that the new cooling measures come too late, even though they will have certain impacts on the market,” Mr Au said. He does not recommend buying property at the moment.

“The bursting of the bubble is very likely to occur in the next one or two years, particularly due to the economic slowdown and anti-corruption measures in the mainland,” he said. He said mainland officials used Macau to launder money, and that the new Chinese leaders were is determined to stop “black money” flowing into to Macau. “The effort the mainland is taking against corruption among its officials will definitely affect Macau’s gaming industry revenue and the related sectors,” he said.

Limited recession Mr Au sees a gloomy outlook for the global, mainland and Macau economies. He believes economic growth here will slow in the next five years. “I would not be surprised if there was even negative GDP growth,” Mr Au said. “The economy right now is too overheated and almost everyone has a job, creating labour shortage issues,” he said. In the first half this year the economy expanded by 12.6 percent. Last year it grew by 20.7 percent. But Mr Au said that if the recession was managed well, there need be no big problems for residents, and that they might even

enjoy zero inflation or deflation. He is not worried that a downturn would reduce employment. “It will first hit imported labour in gaming operators,” he said. Mr Au said casino companies would probably take the biggest hit in a recession. “For small and medium companies, they might even be happier, as they could hire people more easily and enjoy lower rents,” he said. Mr Au is also chairman of the Macau Small and Medium Enterprises Association. “The economic downturn may even be good for my business,” he concluded.

Delta Asia still looking to break-even Delta Asia Financial Group is still striving to secure a strong balance sheet after the impacts of United States sanctions over alleged money laundering involving North Korea. “We’re still consolidating our business at the moment – as you know our bank was taken over by the government during 2005-2007. We’re still rebuilding the business,” said Stanley Au Chong Kit, the group’s chairman. He admitted the group would still post a loss this year but he believes “there is a chance for the group to break even next year”. The businessman declined to reveal any figures. The group’s Delta Asia Bank Ltd was accused and penalised by the United States for allegedly engaging in money laundering for the North Korean government in 2005. While the sanctions were in place, a government-appointed group replaced the board in running the bank during two years. Mr Au has always denied any wrongdoing. With businesses in both Macau and Hong Kong, the next step for the group is to explore the banking market in mainland China, said Mr Au, adding the plan was still being improved. T.L.

Stanley Au Chong Kit

Exporters get less for more The volume of exports is rising but their value is falling Vítor Quintã

vitorquinta@macaubusinessdaily.com

acau has exported more goods so far this year but has got less money for them, official data show. The reading of the unit value index for exports, which measures the price of each product exported, was 99.8 points in the third quarter of this year, according to the Statistics and Census Service. This was 1.8 points lower than in the first quarter, when the index reached 101.6 points, its highest level since 2008. The statistics service changed last year the base year it uses to calculate the index to 2011.

The index that tracks the value of goods and services produced here for export fell to 100.6 points in the third quarter, 1.9 points less than in the second. However, index that tracks the value of re-exports – goods shipped in only to be shipped out, with no value added to them here – rose by 0.7 point to 99.6 points. For the fifth consecutive quarter, the value of domestically produced exports exceeded that of re-exports. But the value of re-exports in the third quarter was half as much again what it was a year before, while the value of domestically produced

exports fell by 4.2 percent. The value of re-exports in the third quarter was the highest for five years. Of the goods and services for export in the first nine months of this year, 28.5 percent were produced here and the rest were re-exports. In the past four years the value and volume of exports has dropped by more than half. This is mainly because of the decline of the once-dominant textiles industry. The indexes of the value and volume of textiles exports have fallen by more than 87 percent. The indexes of the value and volume of imports have risen by more than 45

The value of consumer goods imported has more than doubled in the past four years

percent the past four years. The value of consumer goods imported has more than doubled, and the value of capital goods has increased by more than half.

8 |

business daily November 28, 2012

GREATER CHINA Mainland facing ‘grim’ smuggling situation China saw a 20 percent increase in the value of smuggled goods in the first nine months of 2012 as compared with a year earlier, the China Daily reported. The country is facing a “grim” smuggling situation, the newspaper cited Chen Jianxin, deputy director of the General Administration of Customs’ anti-smuggling bureau as saying. The volume and value of smuggling in China has increased 20 percent annually in each of the past three years, according to the report. Electronics, chemicals, frozen meat, luxury cars and car parts accounted for most of the products being seized by authorities.

IPO rules give power to sponsors, says watchdog But investment banks oppose tougher rules in Hong Kong Rachel Armstrong and Michael Flaherty

roposed new regulations for sponsors of initial public offerings in Hong Kong will give bankers greater authority to scrutinise their clients before they list, the chief executive of the city’s securities watchdog told Reuters yesterday, referring to a controversial plan that could make banks liable for listing documents. Ashley Alder, chief executive of the Securities and Futures Commission (SFC), told Reuters that responses to a consultation on IPO sponsor regulation would be released next month and include proposals to give sponsors more powers. “Fundamentally we will be saying a fair amount about how to establish greater authority for sponsors,” he said. Investment banks are opposed to rules that explicitly make sponsors of IPOs civilly and criminally liable for prospectuses, arguing competitive pressures and resistant clients can make it impossible for them to detect fraud. IPO sponsors, usually banks or corporate finance houses, prepare a company’s listing documents and perform due diligence to ensure they comply with Hong Kong’s listing rules. The consultation came after a number of companies that listed in Hong Kong ran into trouble shortly after going public.

In April this year the SFC revoked the licence and announced a record fine for the sponsor of the 2009 listing of Chinese textile maker Hontex International Holdings Co Ltd. Mr Alder said some of the industry had pushed back strongly against liability, fearful it would lead to bankers running the risk of going to prison. “Those who simply say ‘oh my god I’m going to go to jail’, you’ll only go to jail if you’ve done something seriously wrong,” he said in the interview on the sidelines of the third annual Thomson Reuters Pan-Asian Regulatory Summit. “This is not a question of doing a due diligence job a little bit shoddily and you’ll be marched off to jail. “The whole idea is to try to lower risk rather than increase it, so you lower risk for the sponsors because they can do their jobs properly, you lower risks for the markets because they have better gatekeepers and then you lower risks for investors.”

Turf war In a speech to summit delegates earlier, Mr Alder had urged Asian regulators to maintain high standards and come together to stop U.S. and European regulators imposing their rules on the region’s financial markets.

KEY POINTS IPO sponsors to get powers to ask questions Sponsor rules to come next month, regulator says Regulation could make banks liable for listing documents Asia should be involved in global regulatory agenda – Alder

He told the audience from the compliance industry that there was a danger a “one-size fits all” set of financial rules would be foisted on Asian banks and brokers by Western regulators unless the region’s watchdogs spoke up. “If Asia does not get properly involved in the global regulatory agenda, we will find that the U.S. and European rules will be extended to us whether we like it or not,” said Mr Alder. “The result could be an isolation

Ashley Alder, chief executive of the Securities and Fu

of Asian markets from international finance,” he added. Banks in Asia have become increasingly concerned by the overseas reach of new U.S financial regulations. One big area of contention is the new rules on derivatives trading under the Dodd-Frank Act. U.S. regulators want to ensure that the rules apply to cross-border trades between, say, a Wall Street and an Asian bank. Asian regulators are concerned that would mean banks in their countries would have to follow U.S. and domestic regulation, which may in some cases clash and drain liquidity from their markets.

China’s industrial profit rebounds in October Power, food processing and IT sectors shine

Most large- and medium-sized Chinese steel mills reversed losses

hinese industrial companies’ profit gains surged in October and turned positive for the year as factory output accelerated and export growth picked up following a seven-quarter economic slowdown. Net income gained 20.5 percent from a year earlier to 500.1 billion yuan (US$80.4 billion), the National Bureau of Statistics said yesterday in Beijing. Profits in September rose 7.8 percent, the first gain in six months. Most large- and medium-sized Chinese steel mills reversed losses in October, the official Xinhua News Agency reported on November 25, citing Liu Zhenjiang, vice president of the China Iron & Steel Association. Baoshan Iron & Steel Co., the nation’s biggest publicly traded mill, said on November 12 that it would raise prices for most cold-rolled products for December delivery, the first

increase for three months. It said China’s industrial enterprises made 4 trillion yuan in profits in the first 10 months of 2012, with earnings at power generation, technology and food processing companies seeing double digit rises in October – putting them firmly back on the path of profit growth, following a 1.8 percent fall in profits in the first nine months of 2012 versus 2011. The data on the NBS website is the latest sign of a gathering rebound in activity in the world’s second biggest economy after seven successive quarters of slowing growth, that has left China on course for its weakest year of expansion since 1999. Profits in power and heating supply firms led the way higher, surging 57.5 percent in the first 10 months of the year versus the same

November 28, 2012 business daily | 9

GREATER CHINA Vietnam snubs new Chinese passport Vietnamese border guards said yesterday they were refusing to stamp entry visas into controversial new Chinese passports which feature a map of Beijing’s claim to almost all of the South China Sea. Vietnam has said the computer-chipped passports violate its sovereignty and has demanded Beijing withdraw the documents, which show the contested Paracel and Spratly Islands as Chinese territory. “We do not stamp the new Chinese passports,” said an official at Hanoi’s Noi Bai Airport, the country’s main international gateway. “We issue them a separate visa,” said the official, who did not want to be named.

Beijing eyes scrapping annual term coal contracts Hints at liberalisation of the thermal coal market Fayen Wong

utures Commission

In a rare unified move, regulators from Australia, Hong Kong and Singapore wrote a joint letter to the U.S.’s Commodities and Futures Trading Commission (CFTC) in August asking them to review the overseas reach of these new rules. “The fact that this letter came from multiple regulators had a real impact and it undoubtedly changed the debate,” said the head of the Hong Kong regulator. Mr Alder, who took up his post a year ago, said that it was vital that cross-border rules be internationally agreed, and that Asia had no interest in having laxer rules than the West.

period in 2011. Food processing firms saw the next strongest growth at 16.1 percent, followed by firms in the computing and telecommunications sector, which saw profits grow 10 percent, the NBS said. On the downside, profits of ferrous metal miners slumped 60.3 percent on the year, while those in chemical industries fell 14.3 percent. Petroleum refiners, coking and nuclear fuel processors swung into loss in the first 10 months, compared with gains in the same period of 2011, the NBS added.

US$80.4 bln Industrial companies’ profit in October

“There is no advantage of lowering our standards to attract business. This kind of regulatory arbitrage always ends badly,” he said. Mr Alder added that if Asian regulators did not push Western regulators to agree on a workable set of international rules, big banks could be forced out of the region’s markets. “The threat is that if we or Asian firms don’t play ball, international firms will find it hard to operate here, seriously harming liquidity in these markets. It could be a case of my way or the highway.” Reuters

The Chinese economy is expected to gather momentum in the fourth quarter after an uptick in key economic activity indicators in October, following encouraging signs in September, thanks to new pro-growth policies rolled out by the government over recent months. The HSBC flash purchasing managers index, the earliest indicator of China’s industrial activity, saw expansion accelerate in November for the first time in 13 months when the index was published last week. “The improved industrial profitability further confirms that the Chinese economy is stabilising and gaining growth momentum,” said Ding Shuang, senior economist for China at Citigroup Inc. in Hong Kong, who previously worked at the country’s central bank. “The profit number, together with other economic indicators, shows there is no need for the government to launch new easing policies.” Citigroup raised its 2013 GDP growth forecast for China to 7.8 percent from a previous estimate of 7.6 percent, according to a research report yesterday. Reuters/Bloomberg

hina’s top economic planning agency has submitted a plan to scrap an annual coal contract system requiring suppliers to sell certain quantities to power companies at preferential prices, industry sources said yesterday. The move heralds a big step towards liberalisation of the thermal coal market in China, the world’s biggest buyer of the fuel, and could trigger an increase in imports since domestic prices would no longer be kept artificially low. The move may also free up the electricity markets, where tariffs are set by the government. The National Development and Reform Commission (NDRC) has submitted the plan to the State Council, China’s cabinet, and approval is expected to come within weeks, said two trading sources who were briefed on the matter. “They will need to approve it before we start the annual contract conference, which is normally held in early December,” said a source at a trading firm under a stateowned coal group. “The main aim is to open up the coal market and it is now a good time to do so because spot prices have fallen sharply and are converging with term prices.” Australia’s Newcastle spot thermal

coal index has fallen as much as 30 percent since the start of 2012 to a year-low of US$81 a tonne, largely due to weaker consumption by China as its economy slows down. Currently, coal-price contracts are signed every year at an annual meeting organised by the China Coal Association and the NDRC, whereby coal suppliers agree to sell certain quantities to power companies at prices set far below the market rates. Term prices for 2012 were set at around 570 yuan (US$91.6) per tonne, while spot coal prices were capped at 800 yuan. The dual-price mechanism, which allows power companies to secure around half of their annual coal consumption at preferential rates, has caused headaches for suppliers and power stations alike in the past. When spot coal prices were much higher than term rates, coal miners would either fail to supply the agreed volumes under the annual contract or send out poorer quality coal. However, when spot prices tumbled this year and were briefly below the term rates, many power companies defaulted on their contracts, which caused miners to incur heavy losses as they also had take-or-pay contracts with the railway bureau for transport capacity. Reuters

Coal – new rules may trigger increase in imports

ASIA

India’s rating outlook stable, Moody’s says Growth slowing adds policy-overhaul pressure

KEY POINTS India’s rating constrained by credit challenges – Moody’s Nation ranked at the lowest investment-grade level Economy grew at the weakest pace in Q3 since 2009 – survey

Small shopkeepers worry they will be forced out of business

oody’s Investors Service said yesterday that the outlook on its Baa3 rating for India is stable, in part due to the country’s high savings and investment rates, as debate rages in Delhi over whether the country can avoid credit downgrades from other rating agencies. In its annual credit analysis on India, which Moody’s said does not constitute a rating action, the agency also cited the country’s large, diverse economy and strong gross domestic product growth as supportive of the rating. However, it warned: “The rating is constrained by the credit challenges posed by India’s poor social and physical infrastructure, high

government deficit and debt ratios, recurrent inflationary pressures and an uncertain operating environment.” Last month, Standard & Poor’s warned India still faced a one-in-three chance of a credit rating downgrade over the next 24 months, although it said a series of reform steps launched in September had slightly improved the country’s prospects. Fitch also has a negative outlook on India. Having faced a series of revenueraising setbacks, the Indian government is grappling with a widening fiscal deficit that threatens to undermine the country’s credit standing and possibly trigger a

downgrade to junk status. Finance Minister P. Chidambaram has an ambitious target of holding the government’s fiscal deficit for 2012/13 at 5.3 percent of gross domestic product, even as sceptical private economists forecast a deficit closer to 6 percent.

Policy overhaul India’s economy probably expanded at the weakest pace last quarter since the 2009 global recession as elevated inflation and subdued investment add pressure on Prime Minister Manmohan Singh to extend a recent policy overhaul.

Gross domestic product rose 5.2 percent in the three months to September 30 from a year earlier, the median of 26 estimates in a Bloomberg News survey shows ahead of a report due on Friday. That would be the least since 3.5 percent in January-to-March 2009. Mr Singh’s revamp to lure foreign investors has been hampered by trade and budget deficits that have hurt the rupee, whose 3.6 percent drop versus the dollar in the past month is the world’s worst. Opposition to his push to open industries such as retail, pensions and insurance to overseas companies risks gridlock in parliament, dimming the outlook for Asia’s No. 3 economy. “India needs to revive investment, but that will happen only when inflation and the fiscal deficit come down and reforms accelerate,” said Sonal Varma, an economist at Nomura Holdings Inc. in Mumbai. “Without all that, growth and the rupee may remain under pressure.”

S.Korea tightens forex regulations In bid to slow capital inflow; ministry warns of additional measures Se Young Lee and Lee Shin-hyung

outh Korea moved yesterday to cut ceilings on foreign currency derivatives holdings of banks and warned it could take additional measures to stem the flow of hot money into its markets that has pushed up the value of its won currency. The country’s finance ministry said ceilings on currency derivatives holdings would be cut to 30 percent of equity for local banks from the current 40 percent while the cap for foreign bank branches will be cut to 150 percent from 200 percent. The lowered caps will take effect on January 1, 2013. Flows into emerging markets have accelerated thanks to ultra-loose monetary policy in developed

markets and South Korea’s Finance Ministry said that its move was a “pre-emptive” measure to mitigate the risks posed by such capital movements. “We have agreed to continue studying policy measures to ensure that increased volatility in foreign capital flows do not lead to greater volatility for local financial markets and increase the country’s external vulnerabilities,” the ministry said in a statement. The move was widely expected as South Korean authorities have repeatedly voiced warnings that the won’s recent appreciation has been excessive. The won has gained about 9 percent against the dollar

over the past six months but saw its value soar a 14 percent against the yen over the same period due to the Japanese unit’s weakness globally. A finance ministry official told Reuters that the authorities could take additional steps if necessary, including raising the levy on banks’ offshore borrowings and further reduction of the currency derivatives cap on banks. The South Korean won strengthened against the dollar in domestic trade yesterday even after the new rules were announced. Dealers said markets had been expecting a move by the local authorities to restrict capital inflows, and instead

Dealers suspect that authorities intervened to curb won’s rise

focused on the Greece bailout deal which lifted sentiment. The won was quoted at 1,084.1 at the end of onshore trade, compared with 1,085.5 at the end of the Seoul session on Monday. “Impact from the adjustment is limited because even the scope of the

reduction in the ceilings had been expected,” a dealer said. The benchmark Korea Composite Stock Price Index ended up 0.9 percent at 1,952.20. Foreigners were net sellers of 69.4 billion won (US$63.94 million) worth of local shares yesterday. Reuters

November 27, 2012 business daily | 11

ASIA Mr Singh’s coalition changed course in mid-September to curb fuel subsidies and attract more foreign investment, losing its parliamentary majority in the process after lawmakers objected. The rupee has erased gains sparked by the revamp, partly on concern that the discord signals India may fail to return economic expansion to the five-year average of about 8 percent. Inflation has exceeded 7 percent for most of 2012, fanned by food costs, supply bottlenecks and rupee weakness.

Thai factory output surges in October Most economists see no monetary policy change

‘Tardy pace’ Price pressures in India, where more than two-thirds of people still live on less than US$2 per day, have limited its room to join emerging markets from Brazil to Thailand in further cutting interest rates as global growth falters. Parliament was adjourned yesterday as opposition lawmakers demanded a vote on the government’s September 14 decision to allow companies such as Wal-Mart Stores Inc. to set up supermarkets. They fear small shopkeepers will be forced out of business. The disruption casts a cloud over Mr Singh’s ability to push through bills that would enable overseas companies to invest in the pensions industry for the first time, and hold as much as 49 percent of insurance businesses. “The tardy pace of implementation of reform measures only goes to undermine investor confidence,” said Amol Agrawal, an economist at STCI Primary Dealer Ltd in Mumbai. Inflation measured by the wholesale-price index was 7.45 percent in October, the fastest in the BRIC group of largest emerging markets that also includes Brazil, Russia and China. India has the widest BRIC fiscal gap. The nation’s trade shortfall widened to a record US$20.96 billion last month. Industrial output shrank in September as capital-goods production, a gauge of investment in factories and machinery, slid for a seventh month.

The data came a day before the central bank’s policy committee meets. Most economists believe the committee will leave the benchmark interest rate unchanged to see the impact of a surprise 25 basis point cut last month to 2.75 percent. “We maintain our view that no rate cut is necessary as domestic demand is very strong,” said Kampon Adireksombat, an economist with Tisco Securities. “The low base will pan out for a few months, but we also see a very strong expansion in vehicle manufacturing as many car buyers are waiting for their cars to be delivered,” he said. “Car makers should enjoy this extra demand until the first half of next year.”

Ticking up

hai factory output in October rose for the first time in five months, thanks to comparison with a low, flood-hit base a year earlier, and was robust enough to back expectations that the central bank will keep interest rates unchanged today. Output in October was 36.12 percent higher than a year earlier, the Industry Ministry said yesterday. In September, factory output contracted by a revised 15.9 percent. Economists in a Reuters poll had forecast an October increase of 29.8 percent. A big jump in the number – the first gain in factory output since May – was expected because October 2011 was when devastating floods started battering Thailand’s big industrial zones. October also brought the first month-on-month output rise since

May. On an unadjusted basis, it was up 0.28 percent compared with September, when it fell 0.51 percent, the ministry said.

We maintain our view that no rate cut is necessary as domestic demand is very strong Kampon Adireksombat, economist, Tisco Securities

Car sales are extra-buoyant at present, relative to a year earlier, thanks to the floods and to government tax breaks given after them for first-time buyers. The tax breaks will end on December 31. Thai car sales in October soared 233 percent from a year before. Auto production is expected to hit a record 2.2 million in 2012, up 51 percent from 2011, according to the Federation of Thai Industries. In October, annual output gains were led by cars, electronics, electrical appliances, beer and petroleum, the ministry said. The ministry has said it expects factory output to rise 5-6 percent this year and 3.5-4.5 percent in 2013 but global woes remain the key risk. Output dropped 9.3 percent in 2011 due to the floods. “We expect production to improve clearly in the second half of next year as the impact of Europe’s crisis should ease,” Hathai Uthai, deputy director general of the ministry’s Office of Industrial Economics, told a news conference. “Most flood-hit factories are back to normal but it will take time for some markers of hard disk drives to restart as some have relocated or sold business after the floods,” he said. Reuters

Reuters/Bloomberg

Japan opposition calls for restart of reactors Power rates expected to increase to keep economy running

apan must restart its nuclear power plants quickly after confirming they’re safe, a senior opposition official said, three weeks ahead of an election that polls indicate will return his party to power. “Looking at energy prices, we are clearly in a situation where we need to restart the nuclear reactors,” Hiroyuki Hosoda, the chairman of the Liberal Democratic Party’s general council said in an interview in Tokyo. All but two of Japan’s 50 reactors remain shut after last year’s Fukushima nuclear disaster that forced the evacuation of 160,000 people. Eight power utilities reported combined first-half losses of more than $8 billion, signalling rates will increase to keep the world’s thirdbiggest economy running. The future of nuclear power is an issue in next month’s election. The ruling Democratic Party of Japan has pledged to wean the country from atomic power by 2030, while the LDP calls for a decision on whether to restart all reactors within the next

three years. Polls show two-thirds of voters support neither major party, indicating the LDP may have to form a coalition with lawmakers who favour abolishing nuclear energy. “It’s difficult to make the argument that we should restart the reactors because of economic problems, given the disaster at Fukushima,” Mr Hosoda said. “But we believe we should restart them quickly when their safety has been confirmed.” The DPJ is set to renew its pledge to reduce Japan’s reliance on nuclear power to zero by the 2030s in an election platform to be revealed soon. Before the meltdown at the Fukushima Dai-Ichi plant, almost 30 percent of the country’s electricity came from atomic energy. Thousands of nuclear power opponents held weekly protests outside Prime Minister Yoshihiko Noda’s office earlier this year. A government-backed public forum found in August that 47 percent of participants favoured cutting nuclear power to zero.

Kansai Electric Power Co. and seven other power utilities posted a combined loss of 674 billion yen (US$8.2 billion) in the six months ended September 30, due to rising costs for running gas, oil and coal plants to make up for lost nuclear power generation. The companies face a bill of about 6.8 trillion yen for fuel this fiscal year, almost double that in the 12 months before the

Fukushima meltdown. Mr Hosoda also echoed LDP leader Shinzo Abe’s criticism of the Bank of Japan’s efforts to end more than a decade of deflation. The party has called for unlimited monetary easing to meet an inflation target of 2 percent and advocates more political influence over the central bank, drawing objections from Mr Noda. Bloomberg

12 |

business daily November 28, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

CHINA UNICOM HON

12.1

-1.626016

19949000

CITIC PACIFIC

9.88

0.1013171

4742630

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.4

1.164725

33480789

ALUMINUM CORP-H

3.31

0.3030303

9442210

BANK OF CHINA-H

3.22

-0.3095975

290093162

BANK OF COMMUN-H

5.57

21663656

BANK EAST ASIA

29.45

-0.6745363

2222125

BELLE INTERNATIO

15.82

-2.224969

28425653

ESPRIT HLDGS

-0.8264463

8334906

HANG LUNG PROPER

CATHAY PAC AIR

13.86

0.7267442

1886743

HANG SENG BK

CHEUNG KONG

117.5

0.2559727

2609430

7.78

-0.6385696

15791060

BOC HONG KONG HO

CHINA COAL ENE-H CHINA CONST BA-H

CLP HLDGS LTD

67.2

2522016

CNOOC LTD

16.42

-0.4848485

32692263

COSCO PAC LTD

11.06

-1.950355

5424495

12.32

-2.066773

29979746

27.85

-0.3577818

5704006

117.4

0.2561913

674025

HENDERSON LAND D HENGAN INTL

55.3

0.6369427

2773752

70.35

-0.212766

2135501

0.2386635

4766493

125.6

-1.180173

3331775 11422642

5.9

-0.3378378

186298858

CHINA LIFE INS-H

22.7

-0.6564551

20378693

CHINA MERCHANT

23.6

0.2123142

3771846

HSBC HLDGS PLC

77.2

0.1297017

CHINA MOBILE

87.45

-0.1142204

10832409

HUTCHISON WHAMPO

78.9

-0.1897533

6566999

CHINA OVERSEAS

22.65

0.2212389

20420081

IND & COMM BK-H

5.22

148078867

CHINA PETROLEU-H

8.14

-1.690821

70507796

LI & FUNG LTD

12.4

-0.6410256

17710128

CHINA RES ENTERP

27.7

2.782931

5716283

MTR CORP

30.5

2897420

CHINA RES LAND CHINA RES POWER CHINA SHENHUA-H

HONG KG CHINA GS HONG KONG EXCHNG

NAME

PRICE

68.1 -0.07336757

SANDS CHINA LTD

33.2

12388763 6486668

13.54

-1.167883

113.2

-0.4397537

5628272

SWIRE PACIFIC-A

95.15

-0.3664921

1021087

TENCENT HOLDINGS

251.6

-0.3169572

3348386

22.4

0.2237136

4152671

WANT WANT CHINA

11.44

2.142857

9649238

WHARF HLDG

58.05

1.663748

4220806

TINGYI HLDG CO

MOVERS

4 22000

INDEX 21844.03 HIGH

21997.93

LOW

21729.72

-1.246883

8283370

NEW WORLD DEV

12.1

-1.143791

14297763

52W (H) 22149.69922

0.3496503

6423400

PETROCHINA CO-H

10.28

0.9823183

76339911

(L) 17613.19922

PING AN INSURA-H

58.5

-0.4255319

7213607

PRICE

DAY %

VOLUME

25.05

-0.9881423

6590200

9977390

2340451

1.840491

SINO LAND CO

19.8

-0.621118

VOLUME

SUN HUNG KAI PRO

17.22 32

DAY %

POWER ASSETS HOL

21720

23-November

27-November

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.4

0.591716

71869482

AIR CHINA LTD-H

5.15

-0.7707129

6333640

CHINA PETROLEU-H

8.14

-1.690821

70507796

ALUMINUM CORP-H

3.31

0.3030303

9442210

CHINA RAIL CN-H

8.02

-0.124533

ANHUI CONCH-H

25.1

-0.7905138

5844167

CHINA RAIL GR-H

4.26

BANK OF CHINA-H

3.22

-0.3095975

290093162

CHINA SHENHUA-H CHINA TELECOM-H

CHINA PACIFIC-H

PRICE

DAY %

VOLUME

11.88

-0.6688963

17140874

ZIJIN MINING-H

3.11

-0.6389776

25665540

13567100

ZOOMLION HEAVY-H

9.57

-2.247191

12337574

-1.388889

21702657

ZTE CORP-H

11.58

0.5208333

4125612

-0.621118

9977390

5.57

21663656

4.21

-2.320186

66571184

19.48

0.4123711

2098942

DONGFENG MOTOR-H

11.12

-2.797203

31388893

CHINA CITIC BK-H

3.98

23162204

GUANGZHOU AUTO-H

-0.3322259

8577997

CHINA COAL ENE-H

7.78

-0.6385696

15791060

HUANENG POWER-H

6.2

-1.898734

24641751

CHINA COM CONS-H

6.96

0.2881844

16374058

IND & COMM BK-H

5.22

148078867

CHINA CONST BA-H

5.9

-0.3378378

186298858

JIANGXI COPPER-H

19.4

-1.322482

5630662

CHINA COSCO HO-H

3.56

-2.997275

16126944

PETROCHINA CO-H

10.28

0.9823183

76339911

CHINA LIFE INS-H

22.7

-0.6564551

20378693

PICC PROPERTY &

9.99

-1.673228

11636057

CHINA LONGYUAN-H

4.83

-0.8213552

3741920

PING AN INSURA-H

58.5

-0.4255319

7213607

CHINA MERCH BK-H

14.52

0.4149378

17137648

SHANDONG WEIG-H

8.35

1.581509

10894990

BANK OF COMMUN-H BYD CO LTD-H

NAME YANZHOU COAL-H

MOVERS

4 10670

INDEX 10527.84 HIGH

10660.46

LOW

10484.04

CHINA MINSHENG-H

7.48

1.355014

36064752

SINOPHARM-H

24.85

-1.388889

2080462

52W (H) 11916.1

CHINA NATL BDG-H

9.61

-1.029866

28998527

TSINGTAO BREW-H

43.05

1.413428

2495045

(L) 8987.76

14.94

-1.059603

3310814

WEICHAI POWER-H

28.2

-2.083333

3211343

CHINA OILFIELD-H

10480

23-November

27-November

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

CSR CORP LTD -A

4.68

-1.473684

33796583

SANY HEAVY INDUS

8.33

-3.139535

18550138

6858720

DAQIN RAILWAY -A

6.24

-1.10935

27062404

SHANDONG GOLD-MI

37.42

-0.319659

7556752

-1.476793

10758633

DATANG INTL PO-A

4.01

-0.4962779

4900214

SHANG PHARM -A

10.2

-2.671756

5888819

3.39

-0.2941176

10611190

EVERBRIG SEC -A

10.94

-1.35257

7921607

SHANG PUDONG-A

7.46

-0.1338688

40827533

ANHUI CONCH-A

15.59

-1.578283

10273987

GD POWER DEVEL-A

2.32

0.4329004

32227273

SHANGHAI ELECT-A

3.78

-3.076923

3035444

BANK OF BEIJIN-A

7.26

0.137931

23055694

GF SECURITIES-A

11.91

-2.136401

16346338

SHANXI LU'AN -A

16.14

-0.9815951

4797827

BANK OF CHINA-A

2.75

0.3649635

32769369

GREE ELECTRIC

22.53

-0.2656042

6768622

SHANXI XINGHUA-A

36.72

-0.3527815

2027892

BANK OF COMMUN-A

4.18

0.2398082

29045943

GUANGHUI ENERG-A

14.93

-3.552972

20500478

SHANXI XISHAN-A

11.56

-2.364865

6199859

BANK OF NINGBO-A

8.86

-1.22631

6103199

HAITONG SECURI-A

8.39

-1.410106

19944593

SHENZEN OVERSE-A

5.86

-0.6779661

12003716

HANGZHOU HIKVI-A

26.39

1.891892

3948149

SUNING APPLIAN-A

6.06

-1.463415

22397086

2.31

-0.8583691

33958262

TASLY PHARMAC-A

49.41

-2.505919

2418781

56.78

-1.849611

992994

TSINGTAO BREW-A

30.27

-0.4603749

678800

16.5

-1.138406

8593597

WEICHAI POWER-A

-2.506964

6430508

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.61

54074587

AIR CHINA LTD-A

4.54

-1.731602

ALUMINUM CORP-A

4.67

ANGANG STEEL-A

BAOSHAN IRON & S BYD CO LTD -A CHINA CITIC BK-A CHINA CNR CORP-A

NAME

4.65

0.4319654

18829564

15.52

-2.143758

2957920

HEBEI IRON-A

3.6

-0.8264463

7906069

HENAN SHUAN-A

4.26

0.2352941

53645599

HONG YUAN SEC-A

NAME

CHINA COAL ENE-A

6.83

-0.1461988

6386754

HUATAI SECURIT-A

-1.960784

10826164

WUHAN IRON & S-A

2.56

5.349794

75849432

CHINA CONST BA-A

4.18

0.4807692

26133133

HUAXIA BANK CO

8.55

22728132

WULIANGYE YIBIN

27.35

0.9970458

24295693

CHINA COSCO HO-A

4.12

-2.137767

12764409

IND & COMM BK-A

3.86

0.2597403

47665603

YANGQUAN COAL -A

12.46

-2.883866

7665115

CHINA CSSC HOL-A

19.32

-3.448276

3531566

INDUSTRIAL BAN-A

12.58

0.1592357

42544828

YANTAI CHANGYU-A

42.17

-0.5424528

1311393

CHINA EAST AIR-A

3.02

-2.265372

15832275

INNER MONG BAO-A

31.99

-4.535959

28584508

YANTAI WANHUA-A

12.78

-1.843318

4696719

CHINA EVERBRIG-A

2.59

40227827

INNER MONG YIL-A

20.1

-0.7407407

5162870

YANZHOU COAL-A

16.06

-3.947368

1993712

YUNNAN BAIYAO-A

63.07

-0.441989

1728760

15.6

0.1926782

20089794

17.51

-1.240835

2674846

INNER MONGOLIA-A

5.08

-2.868069

36443587

CHINA MERCH BK-A

9.97

-0.2002002

31331198

JIANGSU HENGRU-A

28.71

-1

1172760

CHINA MERCHANT-A

8.62

-1.372998

7386651

JIANGSU YANGHE-A

96.52

1.696344

2374904

ZIJIN MINING-A

3.7

-1.069519

24101847

6234305

JIANGXI COPPER-A

20.03

-2.719767

4762640

ZOOMLION HEAVY-A

7.94

-0.9975062

21600581

JINDUICHENG -A

10.52

-4.014599

3302748

ZTE CORP-A

7.78

-2.992519

9135612

JIZHONG ENERGY-A

10.71

-1.833181

8221849 15534080

CHINA LIFE INS-A

CHINA MERCHANT-A CHINA MINSHENG-A

23.19

-0.129199

6.22

1.302932

117924628

-0.2849003

36563787

CHINA OILFIELD-A

15.04

-3.465982

2927168

KANGMEI PHARMA-A

14.69

-1.541555

CHINA PACIFIC-A

16.78

-1.928697

9399941

KWEICHOW MOUTA-A

219.76

1.24856

2045885

32.96

-0.2119285

4908645

-0.990099

15665646

CHINA NATIONAL-A

CHINA PETROLEU-A

6.03

-0.8223684

22363593

LUZHOU LAOJIAO-A

CHINA RAILWAY-A

5.08

-3.422053

15841113

METALLURGICAL-A

CHINA RAILWAY-A

2.79

-1.760563

22134966

NINGBO PORT CO-A

2.45

-0.4065041

10270916

PANGANG GROUP -A

3.26

-3.550296

35426537 12589249

CHINA SHENHUA-A

21.62

0.04627487

7461750

CHINA SHIPBUIL-A

4.07

-1.452785

18869213

PETROCHINA CO-A

8.56

0.5875441

13.18

0.3808073

ZHONGJIN GOLD

MOVERS

9 2200

INDEX 2150.638

CHINA SOUTHERN-A

3.31

-1.780415

16522536

PING AN BANK-A

8875244

HIGH

2198.71

CHINA STATE -A

3.08

-0.3236246

27438768

PING AN INSURA-A

36.23

-2.081081

13345263

LOW

2150.58

CHINA UNITED-A

3.23

0.623053

50593798

POLY REAL ESTA-A

11.41

-0.1749781

19055048

CHINA VANKE CO-A

8.46

0.4750594

30320075

QINGDAO HAIER-A

10.73

-0.6481481

4516634

CHINA YANGTZE-A

6.41

-0.4658385

9506362

QINGHAI SALT-A

23.01

-2.001704

2715448

10.39

-1.888574

40028881

SAIC MOTOR-A

13.47

-1.318681

12649980

PRICE DAY %

Volume

PRICE DAY %

Volume

CITIC SECURITI-A

261

52W (H) 2717.825 (L) 2149.538

2150

23-November

27-November

FTSE TAIWAN 50 INDEX NAME

NAME

PRICE DAY %

Volume

ACER INC

24.55

-1.207243

16720905

FORMOSA PLASTIC

73.5

0.6849315

6800625

TAIWAN MOBILE CO

105

ADVANCED SEMICON

23.75 -0.4192872

18453115

FOXCONN TECHNOLO

98.8 -0.7035176

9413356

TPK HOLDING CO L

430

-1.489118

4524300

ASIA CEMENT CORP

36.15

3273358

FUBON FINANCIAL

32.3 -0.1545595

10864202

TSMC

96.3

1.049318

48925485

ASUSTEK COMPUTER

312.5

-1.419558

4115902

HON HAI PRECISIO

92.8

31119911

UNI-PRESIDENT

50.8

-0.78125

13213469

AU OPTRONICS COR

11.85

-1.659751

134075949

HOTAI MOTOR CO

204.5

-1.207729

503941

UNITED MICROELEC

11.2

0.9009009

49164963

140

-3.114187

17027189

HTC CORP

248.5 -0.9960159

17433888

WISTRON CORP

30.45

2.525253

11765780

CATHAY FINANCIAL

30.45 -0.1639344

14425879

HUA NAN FINANCIA

16.1

0.625

7453704

YUANTA FINANCIAL

14.55

2.105263

35967295

CHANG HWA BANK

15.45

8624331

LARGAN PRECISION

751

-0.397878

1928099

YULON MOTOR CO

51.9

0.3868472

4516358

CHENG SHIN RUBBE

73.4

3814436

LITE-ON TECHNOLO

38.3

0.7894737

4990628

CHIMEI INNOLUX C

11.9

0.8474576

93314133

CHINA DEVELOPMEN

7.27

5.515239

135515204

MEGA FINANCIAL H

CHINA STEEL CORP

25.85

0.3883495

14591510

CHINATRUST FINAN

16.55

1.533742

39960929

CHUNGHWA TELECOM

93.5

0.5376344

COMPAL ELECTRON

18.6 -0.2680965 0.9389671

3116359

SINOPAC FINANCIA

33.5 -0.5934718

10125259

SYNNEX TECH INTL

CATCHER TECH

DELTA ELECT INC FAR EASTERN NEW FAR EASTONE TELE FIRST FINANCIAL

107.5

MEDIATEK INC

324.5 -0.1538462

4841999

22.4

18675087

NAN YA PLASTICS

6328363

PRESIDENT CHAIN

151

1.342282

1203997

7952396

QUANTA COMPUTER

70.8

-2.209945

8384132

17273628

SILICONWARE PREC

30.1

-1.472995

9457086

15066241

53.8

1.509434

16285961

36.4

-1.086957

9152473

15.85

0.955414

10879256

2481232

26.7

-1.111111

1506206

0.5747126

7625888

TAIWAN CEMENT

17.45

0.2873563

9381625

TAIWAN COOPERATI

FORMOSA CHEM & F

0.7407407

5646763

TAIWAN FERTILIZE

FORMOSA PETROCHE

85.3

0.8274232

1299269

TAIWAN GLASS IND

4508486

MOVERS

9 5245

INDEX 5241.01 HIGH

5241.01

LOW

5054.63

52W (H) 5621.53 5050

(L) 4643.05 23-November

27-November

November 28, 2012 business daily | 13

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

MELCo CroWN ENTErTAINMENT

MGM CHINA HoLDINGS

29.8

39.0

14.2

29.7

38.9

14.1

29.6

38.8

29.5

38.7

14.0 13.9

Max 29.7

Average 29.562

Min 29.4

Last 29.7

29.4

Max 38.9

SANDS CHINA LTD

Average 38.870

Min 38.65

Last 38.65

38.6

SJM HoLDINGS LTD

13.8 Max 14.14

Average 14.026

Min 13.76

Last 14.14

WyNN MACAU LTD 18.2

33.8

23.00

33.6

22.75

18.1

33.4

22.50

33.2

18.0

22.25

33.0 Average 33.202

Max 33.65

Min 32.9

Last 33.2

32.8

17.9 Max 18.18

Average 18.125

Commodities PRICE

DAY %

YTD %

(H) 52W

88.1

0.410303168

-9.908988649

109.6699982

79.68000031

BRENT CRUDE FUTR Jan13

111.12

0.180310133

7.362318841

120.7699966

90.15999603

GASOLINE RBOB FUT Dec12

273.33

0.256758244

10.15152736

295.8800077

217.2600031

GAS OIL FUT (ICE) Jan13

953.75

0.341925302

6.415620642

1036.25

799.25

3.735

0.134048257

-0.585573596

4.350000381

2.90899992

HEATING OIL FUTR Dec12 Gold Spot $/Oz Silver Spot $/Oz

305.4

0.246184146

6.359267256

335.1700068

254.2500019

1748.44

0.0607

11.7278

1796.08

1522.75

34.125

0.3824

22.5974

37.4775

26.1513

Platinum Spot $/Oz

1618.65

0.6198

16.0739

1736

1339.25

Palladium Spot $/Oz

670.75

1.4981

2.6396

725.19

553.75

LME ALUMINUM 3MO ($)

2000

0.857286939

-0.99009901

2361.5

1827.25

LME COPPER 3MO ($)

7780

0.038575286

2.368421053

8765

7131

LME ZINC

1982

1.070882203

7.425474255

2220

1745

16455

-0.992779783

-12.05237841

22150

15236

15.03

0.737265416

-2.116574406

16.60000038

14.60000038

755.5

0.565723794

25.86422324

846.25

511

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan13 CORN FUTURE

Mar13

WHEAT FUTURE(CBT) Mar13

22.00 Max 22.9

Average 22.602

Last 22.65

Min 22.2

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

DAY %

1.0485 1.6035 0.9293 1.2962 82.15 7.9826 7.75 6.2223 55.54 30.69 1.222 29.096 40.84 9639 86.125 1.20454 0.80838 8.0722 10.3474 106.48 1.03

0.3157 0.0874 -0.043 -0.0308 -0.1217 0.0013 0.0026 0.0514 0.3331 0 0.0327 0.0241 0.3991 -0.4046 -0.4284 0 0.1175 0.0434 0.0309 -0.0845 0

YTD %

(H) 52W

2.7035 3.1654 0.9469 0.0077 -6.3786 0.213 0.2245 1.1684 -4.4562 2.8022 6.1047 4.0659 7.3457 -5.9135 -8.9324 1.017 3.0938 0.7681 0.0445 -6.405 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.3548 84.18 8.0293 7.7959 6.3964 57.3275 32 1.3138 30.44 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 6.2174 48.6088 30.2 1.2152 28.914 40.834 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

2.86

3.623188

3.25

2.16

3312031

147.5999908

CROWN LTD

10.3

2.284012

27.31767

10.32

7.92

3226150

25.12999916

18.65999985

AMAX HOLDINGS LT

0.067

-22.9885

0.119

0.055

4817000

98.5

66.84999847

BOC HONG KONG HO

-0.8264463

30.43479

16.7

8334906

CENTURY LEGEND

0.25

0.8064516

8.69565

0.335

0.204

448000

CHEUK NANG HLDGS

4.22

1.442308

50.71429

4.36

2.5

43070

CHINA OVERSEAS

22.65

0.2212389

74.69576

23.15

12.066

20420081

CHINESE ESTATES

11.88

-0.6688963

-4.96

13.26

8.3

20500

CHOW TAI FOOK JE

10.44

-0.7604563

-25

15.16

8.4

2249500

EMPEROR ENTERTAI

1.68

-1.176471

51.35135

1.74

0.99

7077000

FUTURE BRIGHT

1.29

-4.444444

207.1429

1.43

0.38

82626000 14333335

869.75

0.694645441

18.49455041

948.25

652

SOYBEAN FUTURE Jan13

1437

0.859799965

18.46661171

1781.5

1126.75

COFFEE 'C' FUTURE Mar13

149

0.067159167

-37.3818029

249

SUGAR #11 (WORLD) Mar13

19.28

0.678851175

-17.46575342

COTTON NO.2 FUTR Mar13

72.64

0.027540622

-17.93017738

World Stock MarketS - Indices NAME

Last 18.12

(L) 52W

WTI CRUDE FUTURE Jan13

NATURAL GAS FUTR Dec12

METALS

Min 18

CURRENCY EXCHANGE RATES

NAME ENERGY

NAME

PRICE

DAY % YTD %

VOLUME CRNCY

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12967.37

-0.3252194

6.137155

13661.87

11231.56

29.7

2.413793

108.5674

29.8

13.28

NASDAQ COMPOSITE INDEX

2976.783

0.3346643

14.26532

3196.932

2441.48

HANG SENG BK

117.4

0.2561913

27.40097

120

91.15

674025

FTSE 100 INDEX

5817.6

0.5336356

4.402513

5989.07

5075.22

HOPEWELL HLDGS

30.45

1.839465

55.34004

31.091

18.753

2692700

DAX INDEX

7341.33

0.6760806

24.46413

7478.53

5366.5

HSBC HLDGS PLC

77.2

0.1297017

30.84746

56.95

11422642

HUTCHISON TELE H

3.35

-0.887574

12.04013

3.88

2.83

4474650

LUK FOOK HLDGS I

20.6

0.243309

-23.98524

34.3

14.7

1841581

MELCO INTL DEVEL

8.14

0.618047

41.07452

8.28

5.12

1309000

GALAXY ENTERTAIN

NIKKEI 225

9423.3

0.3659625

11.44778

10255.15

8135.79

HANG SENG INDEX

21844.03

-0.08132904

18.49607

22149.69922

17613.19922

CSI 300 INDEX

2150.638

-1.147316

-8.317369

2717.825

2149.538

MGM CHINA HOLDIN

14.14

3.362573

47.41215

14.76

9.432

7407652

TAIWAN TAIEX INDEX

7430.2

0.3082066

5.063858

8170.72

6609.11

MIDLAND HOLDINGS

3.52

-1.675978

-10.97728

5.217

3.249

2022000

NEPTUNE GROUP

0.154

-0.6451613

38.73874

0.222

0.081

2920000

NEW WORLD DEV

12.1

-1.143791

93.29073

13.2

6.13

14297763

SANDS CHINA LTD

33.2

1.840491

51.25284

33.9

20.1

12388763

SHUN HO RESOURCE

1.24

1.37

0.95

3.69

11.48036

44.18972

3.69

2.418

38902234

KOSPI INDEX

1925.2

0.8745042

5.447652

2057.28

1750.6

S&P/ASX 200 INDEX

4456.827

0.7377171

9.867142

4581.8

3973.8

4337.509

-0.8607667

13.48817

4381.746094

3618.969

FTSE Bursa Malaysia KLCI

1598.17

-0.6039008

4.405745

1679.37

1430.61

SHUN TAK HOLDING

NZX ALL INDEX

871.585

-0.1656299

19.42788

874.988

712.548

SJM HOLDINGS LTD

18.12

0.6666667

44.89583

18.18

11.795

3486953

SMARTONE TELECOM

14.46

1.118881

7.589289

17.5

12.04

2361000

WYNN MACAU LTD

22.65

2.027027

16.15385

25.5

14.62

6065552

ASIA ENTERTAINME

3.49

2.046784

-40.64626

7.24

2.4

114017

BALLY TECHNOLOGI

44.89

-1.079771

13.4732

51.16

35.79

412781 8812

JAKARTA COMPOSITE INDEX

13.7

PHILIPPINES ALL SHARE IX

3620.58

0.08071516

18.9009

3631.04

2952.17

HSBC Dragon 300 Index Singapor

588.08

0.6

18.49

STOCK EXCH OF THAI INDEX

1297.03

0.4787543

26.50003

1314.64

966.2

HO CHI MINH STOCK INDEX

376.89

-0.2672665

7.208086

492.44

332.28

BOC HONG KONG HO

3.15

4.651163

31.40399

3.3

2.24

Laos Composite Index

1233.05

37.08781

1249.34

876.33

GALAXY ENTERTAIN

3.7

1.092896

97.86096

3.73

1.7

600

INTL GAME TECH

12.98

-1.142422

-24.53489

18.1

10.92

3209540

JONES LANG LASAL

78.29

0.06390593

27.79955

87.52

56.51

120150

LAS VEGAS SANDS

44.03

-0.3395201

3.04236

62.09

34.72

3652655

MELCO CROWN-ADR

15.17

-0.7848267

57.69231

16.02

8.32

1866060

MGM CHINA HOLDIN

1.76

47.68902

1.96

1.1917

2000

MGM RESORTS INTE

9.82

-1.701702

-5.848517

14.9401

8.83

7701046

SHFL ENTERTAINME

13.99

-2.167832

19.3686

18.77

10.61

207710

SJM HOLDINGS LTD

2.302

0.08695652

43.19725

2.34

1.5484

13500

WYNN RESORTS LTD

107.57

-1.609805

3.830542

129.6589

84.4902

1192597

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

AUD HKD

USD

14 |

business daily November 28, 2012

Opinion Fed’s Dudley signals a shift toward bank reform Simon Johnson

Professor at the MIT Sloan School of Management and senior fellow at the Peterson Institute for International Economics

his is now the standard line from Wall Street lobbyists: Don’t worry about “too big to fail” financial institutions because the DoddFrank Act fixed the problem. The implication is that Congress should relax and not push any additional changes, such as capping the size of our largest banks in a meaningful way or forcing them to simplify their legal structures. If regulators lack support on Capitol Hill, they won’t try as hard. On November 15, resistance to this industry view came from a surprising place: a speech by William Dudley, the president of the Federal Reserve Bank of New York. That institution isn’t usually associated with strong pro-reform positions, yet Dudley was unexpectedly forceful on three points. First, he made clear that too big to fail remains with us. Some very large financial institutions receive implicit government subsidies in the form of downside protection (or at least the market’s perception that such protection exists). This insurance is free of charge and allows them to borrow more cheaply, and presumably encourages them to become even larger. Now, whenever someone questions the existence of these dangerous subsidies, I will cite Dudley’s speech.

Living wills Second, I was struck by Dudley’s admission that the recently completed first round of living wills – potential liquidation plans drawn up by major financial institutions – has been far from satisfactory. I encounter industry lawyers who assert that living wills provide a clear road map for winding down systemically important financial institutions. I will also refer these people to Dudley’s speech, in which he confirms that living wills have accomplished no such thing. “We are a long way from the desired situation in which large complex firms could be allowed to go bankrupt without major disruptions to the financial system and large costs to society,” Dudley said. Still, the New York Fed president says that living wills are an “iterative process” that will take some time to work. My view is that they are a sham, meaningless

William Dudley, president of the Federal Reserve Bank of New York

boilerplate and box checking. Third, Dudley is also perceptive on the difficulty of applying to global banks the “orderly liquidation authority” of Dodd-Frank’s Title II. The general idea is simple: Allow the Federal Deposit Insurance Corporation to manage the “resolution” of large financial institutions in the same way it has handled the failure of banks with insured deposits since the 1930s. The insurmountable obstacle – as critics have pointed out for at least three years – is that there is no crossborder framework or process for handling the failure of big financial institutions. Different countries have different rules, and powerful people in those countries – U.K. bankers or French civil servants – like it that way. Here’s the heart of the matter with regard to over-thecounter derivatives, as stated by Dudley in the nuanced language of a central banker. “Certain Title II measures including the one-day stay provision with respect to OTC derivatives and other qualified financial contracts may not apply through the force of law outside the United States, making orderly resolution difficult.” In plain English: When a global financial behemoth is on the ropes, the legal mechanisms for an FDICmanaged resolution won’t

work outside U.S. borders. JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and perhaps some others are literally too global to fail in an orderly manner. I also have three serious reservations about Dudley’s comments.

Clear language First, he says that banks “hold” capital. This is the wrong verb to use because it encourages relatively uninformed readers to think of capital as an asset, rather than what it really is, a liability, or shareholder equity. The words of an influential official such as Dudley matter because they pervade popular commentary and can lead to great linguistic and conceptual confusion, for example on Capitol Hill. They also encourage the illusion that higher (equity) capital requirements will somehow hurt the ability of banks to provide credit; in fact, more equity makes any financial system safer and more resilient over the cycle. We should expect our central bankers to speak clearly and explain issues in terms that people can understand. Dudley is calling for more equity, relative to debt, in the financial system. He should use plain English to make this essential point.

Second, the logic of Dudley’s speech draws the reader to the idea that megabanks should greatly simplify their legal structures, which would make any kind of liquidation easier. At the largest financial institutions, the relationship between business units and legal entities has become hopelessly complicated, creating a major difficulty in any insolvency or resolution process.

The onus should be on those who, after a devastating financial crisis, continue to tinker at the margins of the failed regulatory framework

Disappointingly, while Dudley flags the general issue, his language is opaque

and he doesn’t press for immediate action – despite the industry having no good reason for maintaining this degree of complexity. Finally, Dudley calls on proponents of breaking up our largest banks – so they become small enough and simple enough to fail – to explain in more detail how this could be done and what the precise implications would be. There is great irony here. During the debate over the Dodd-Frank Act in spring 2010, genuine reformers such as Senator Ted Kaufman of Delaware pressed the administration on the likely inadequacy of their “living wills” and “orderly liquidation authority” approach. Did the New York Fed or any other officials think creatively with Kaufman and his allies about complementary approaches, including a binding cap on size and leverage? The answer is no. Led by the Treasury Department, they slammed the door on all alternatives. As Kaufman said at the time in a speech on the Senate floor, why is the burden of proof on those who want to return to the proven statutory and regulatory approaches of the past? The onus should be on those who, after a devastating financial crisis, continue to tinker at the margins of the failed regulatory framework. Bloomberg View

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November 28, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

Business Inquirer Global investment bank JP Morgan has picked the Philippines as one of its three most-favoured stock markets for 2013, marking the fourth straight year that the local bourse is expected to outperform most of its regional peers. “We are still very bullish for 2013,” JP Morgan Securities Philippines Inc. executive director and head of equity research Gilbert Lopez said in a press briefing on Monday. The two other Asian markets seen by JP Morgan as top market picks for next year are Thailand and India, citing favourable demographics as a common denominator with the Philippines.

Jiji Press The Defence Ministry has sued Toshiba Corp. over a project to develop new surveillance aircraft for the Air Self-Defence Force, according to information released on Monday. The ministry is demanding that Toshiba pay a penalty of 1.2 billion yen (US$14.6 million) for allegedly breaching a contract related to the project, informed sources said. The lawsuit was filed with the Tokyo District Court last month.

Jakarta Globe The revision of Indonesia’s 2001 Oil and Gas Law is expected to be completed in mid-2013, with government and lawmakers pledging will work fast to minimise uncertainties in oil and gas investment in the country. Rudi Rubiandini, the deputy energy and mineral resources minister, told reporters that revising the Oil and Gas Law was necessary following the Constitutional Court ruling that dismantled the legal basis for upstream oil and gas regulatory agency BPMigas.

Yonhap News South Korea’s brand value reached US$1.6 trillion this year, ranking ninth among 39 countries surveyed, a think tank said yesterday. Asia’s fourth-largest economy has received good marks in the corporate field, thanks mainly to its strong exports and market share growth around the world, according to the state-run Institute of Industrial Policy Studies (IPS). Brand value covers both corporate and country-level recognition and products made in the country.

Kowtow or cooperation in Asia? Yuriko Koike

Japan’s former Minister of Defence and National Security Adviser and a former chairwoman of the Liberal Democrat Party

hen an American president’s first overseas trip following his re-election is to Asia, one can be sure that something big is afoot in the region. Indeed, Barack Obama’s decision to go first to impoverished and long-isolated Myanmar (Burma) attests to the potency of the changes underway in that country – and to U.S. awareness of China’s efforts to shape an Asia that kowtows to its economic and foreign-policy interests. Events at the ASEAN and East Asian leadership summits in Phnom Penh, the other key stop on Obama’s tour, confirmed this. At the ASEAN summit’s conclusion, Cambodian Prime Minister Hun Sen, a former Khmer Rouge commander who has ruled his country with an iron fist for three decades, closed the meeting by proclaiming that all of the leaders had agreed not to “internationalise” sovereignty disputes over islands in the South China Sea. Chinese Prime Minister Wen Jiabao, present at the summit to sign new multimillion-dollar aid agreements with Cambodia, smiled and nodded in agreement at this apparent acceptance of Chinese wishes. Not so fast, said Filipino President Benigno S. Aquino III. No such agreement had been made. Hun Sen had mischaracterised the discussions among ASEAN’s leaders. Japanese Prime Minister Yoshihiko Noda, who was also present in Phnom Penh, agreed with Aquino. At the summit’s end, Vietnam, Malaysia, Indonesia, Brunei and Singapore joined with Aquino in demanding that Hun Sen’s statement be amended. All six of these states have been pushing China to negotiate with ASEAN a multilateral process to resolve the South China Sea territorial disputes. China, dwarfing all of them, prefers bilateral talks. As Hun Sen’s behaviour demonstrates, countries that are overly dependent on Chinese aid and diplomatic backing will harmonise their policies accordingly. For two decades, Myanmar behaved likewise, until Chinese overreach, particularly the now-abandoned Myitsone dam project, revealed in full the subservient relationship that China envisioned. Indeed, China’s arrogance – 100 percent of the power from the proposed dam was to be exported to China – was probably the key factor in precipitating Myanmar’s democratic political transition and new openness to the world.

Integration path But Asians must not misconstrue Obama’s visit.

But fear of provoking China should not stop Asia’s leaders from seeking a regional security consensus, such as the proposed code of conduct for disputes in the South China Sea

Although the U.S. is certainly undertaking a strategic “pivot” to Asia, America alone cannot construct a viable security structure for the region. From India to Japan, every Asian country must play its part. There is no alternative to this approach, because China’s rise has been accompanied by massive social and economic changes – in some instances dislocation – across the entire region. Asia’s economies have, of course, become much more integrated in recent decades, particularly through production for global supply chains. But economic integration has not been matched diplomatically. Even two of the region’s great democracies, Japan and South Korea, which have nearly identical strategic interests, have allowed an old territorial dispute – itself reflecting older unresolved animosities – to block closer cooperation. China’s prolonged – and apparently contentious – leadership transition, punctuated by the purge of Bo Xilai, suggests that its leaders’ ability to continue to manage the country’s emergence as a great power is not entirely certain. That makes the absence of a widely accepted regional structure of peace all the more dangerous. International orders emerge either by consensus or through force. The great task for Obama, incoming Chinese President, Xi Jinping, Indian Prime Minister Manmohan Singh, the new Japanese and South Korean leaders who will come to power following elections in December, and all ASEAN members is to ensure that consensus prevails in Asia without stoking China’s greatest strategic fear – encirclement. As everyone in Asia should recognise, whenever communist China has deemed that it faced such a threat, it has resorted to war – in Korea in 1950, India in 1962, the Soviet

Union in 1969, and Vietnam in 1979. But fear of provoking China should not stop Asia’s leaders from seeking a regional security consensus, such as the proposed code of conduct for disputes in the South China Sea. Only the weakest of Asian states will submit willingly to Chinese hegemony – or, for that matter, to a Cold War-style U.S.-led containment strategy.

Defusing disputes Indeed, the idea that Asian countries must choose between a Chinese or American future is false. But can Asia’s fear of hegemony and China’s fear of military encirclement be reconciled? Only a shared sense of common purpose can prevent regional militarisation. Some early steps in the right direction are visible. The United States has joined several other countries in embracing a Trans-Pacific Partnership, a free-trade pact linking the Americas with Asia. Japan’s ruling party and leading opposition party are coming around to support the idea, and Obama’s invitation to China to join suggests that the U.S. is trying to forge regional consensus where it can.

For now, however, China has other ideas. It has pressed ASEAN to establish a trade zone that would include China but exclude the U.S. and Japan. In any case, trade agreements, however beneficial, can do little to defuse Asia’s sovereignty disputes, and it is here – the greatest current source of regional tensions – that a shared common enterprise is not only possible, but also necessary if peace is to be preserved. After all, no government in the region – whether a democracy like Japan, South Korea, Taiwan, and the Philippines, a one-party state like China and Vietnam, or a tiny monarchy like Brunei – can acquiesce on such issues and hope to survive. Such diplomatic realism need not lead to zero-sum outcomes, as the example of European integration demonstrates. Just as the European Coal and Steel Community preceded today’s European Union, all of Asia would benefit from embracing shared development (without any renunciation of sovereignty claims) of the rich maritime resources that, in several cases, are fuelling the sovereignty disputes. © Project Syndicate

16 |

business daily November 28, 2012

CLOSING Eurozone deal on Greece bailout

Carney named as Bank of England chief

Euro zone finance ministers and the International Monetary Fund clinched agreement on reducing Greece’s debt in a breakthrough to release urgently needed loans to keep the near-bankrupt economy afloat. After 12 hours of talks at their third meeting in as many weeks, Greece’s international lenders agreed on a package of measures to reduce Greek debt by 40 billion euros (US$51.8 billion), cutting it to 124 percent of gross domestic product by 2020. In a significant new pledge, ministers committed themselves to take further steps to lower Greece’s debt to “significantly below 110 percent” in 2022.

Mark Carney has been named as the new governor of the Bank of England by Chancellor George Osborne. Mr Carney, the governor of the Canadian central bank, will serve for five years and will hold new regulatory powers over banks. Current governor Sir Mervyn King steps down from the post next June. The Bank of England’s new governor faces a “slow and protracted recovery” that may require the bank to make further purchases of government bonds, Mr King said yesterday. Mr Osborne told Parliament that Mr Carney, 47, would bring the “strong leadership and external experience the Bank needs”.

Global recovery ‘under threat’ OECD urges ECB, China easing as it cuts global growth forecasts

The euro zone debt crisis is threatening the global economic recovery, the OECD says

he Organisation for Economic Cooperation and Development cut its growth forecasts, warned of the risk of a “major” global recession and urged the European Central Bank and the People’s Bank of China to ease monetary policy. “After five years of crisis, the global economy is weakening again,” OECD Chief Economist Pier Carlo Padoan said yesterday in the organisation’s semiannual Economic Outlook. “The risk of a major contraction cannot be ruled out.”

U.S. gross domestic product will rise 2.2 percent this year and 2 percent next, down from predictions of 2.4 percent and 2.6 percent in May, according to the report. The euro area will shrink 0.4 percent and 0.1 percent in those years, compared with a 0.1 percent 2012 contraction and 0.9 percent 2013 growth expected in May. The Paris-based OECD, which advises its 34 member governments on economic policy, highlighted the risks posed to global growth at a time when

U.S. lawmakers are trying to avoid the so-called fiscal cliff of about US$607 billion in automatic tax increases and spending cuts and euro nations are saddled with a recession and a debt crisis that is now in its fourth year.

Budget cuts The euro zone should ease up on deep government spending cuts but stick to the path of reform, the OECD said, adding its voice to those calling

for a softening of cost-cutting they see as choking economies. Budget cuts are at the centre of the euro zone’s strategy to overcome a three-year public debt crisis, but since the bloc sank back into recession this year, policy makers are beginning to question the wisdom of such aggressive deficit reduction. Against a backdrop of record unemployment and strikes across Europe this month, the OECD said in a report that simultaneous spending cuts in almost all euro zone countries had worsened the crisis. It now urged those countries that could afford to, such as Germany, to be prepared to increase spending to help growth. The 34-member OECD countries combined will grow 1.4 percent this year and next, less than the 1.6 percent and 2.2 percent predicted in June. The group will grow 2.3 percent in 2014, with expansions of 2.8 percent in the U.S. and 1.3 percent in the euro region, the OECD said in its first forecast for that year. Achieving that longer-term forecast depends on heading off a global recession now, according to the report. “Additional easing is required in the euro area, Japan and some emerging market economies, including China and India,” Mr Padoan said. “If serious downside risks were to materialise, further policy support would be essential,” including additional quantitative easing and temporary fiscal stimulus by countries “with robust fiscal positions, including Germany and China,” the OECD said. Bloomberg

Chinese shares head towards 2009 lows Shanghai gloom weighs on Hong Kong

nshore Chinese shares fell for a third-straight day, reversing midday gains in Hong Kong after the Shanghai share index closed below 2,000 points for the first time in nearly four years on concern that stricter capital rules for banks may hurt lending. The state-run China Securities Journal newspaper reported that Basel III requirements could raise the capital adequacy ratio at the country’s six biggest banks by up to 50 basis points, potentially limiting their capacity to lend and support growth in the world’s No.2 economy. The Hang Seng Index ended down 0.1 percent, while the China Enterprises Index of the top Chinese listings in Hong Kong shed 0.4 percent, both reversing midday gains. In the mainland, the CSI300 Index of the top Shanghai and

Shenzhen listings shed 1.2 percent. The Shanghai Composite Index ended down 1.3 percent at 1,991.2, the first time it closed below 2,000 points since January 2009. Over the month, the Shanghai Composite has lost 3.8 percent, while the CSI300 is down 4.6 percent, compared with the China Enterprises Index’s 0.5 percent loss. “This divergence between A and H share performance will continue at least until the year’s end. There is a long list of A-share IPOs waiting for approval and that’s not going to impress investors,” said Larry Jiang, chief strategist at Guotai Junan International Securities. The Hang Seng Index A/H premium index opened at 95.8, its lowest intra-day level since June last year, but ended at 96.5. It has closed below 100 on all but two sessions

since mid-October, suggesting the premium that onshore shares once traded over their offshore peers has been wiped out. Turnover in Shanghai jumped 24 percent from Monday, while Hong Kong improved only slightly, still some 7 percent below its average in the past month. Speculation in the market that the amount of lockups expiring in December could double from November weighed on the A-share market, according to Hong Kong-based traders at a major American brokerage. They added that steep losses in small-cap names listed in the mainland worsened on fears that prospective listings could suffer from profit declines after failing to impress in pre-listing marketing. The CSI500 Index dived 3.6 percent. Reuters

Shanghai – down below 2,000 points, first time since January 2009