Macau Business Daily, November 30, 2012 by Business Daily

Year I Number 173 Friday November 30, 2012 Editor-in-chief Tiago Azevedo Deputy editor-in-chief José I. Duarte MOP $ 6.00

www.macaubusinessdaily.com

Secretary grilled over healthcare The government has been paying millions of patacas to Kiang Wu Hospital and other private clinics to provide medical coverage free to residents. But locals are still facing long waits for healthcare services, legislators complained yesterday during the Policy Address for 2013 of Secretary of Social Affairs and Culture, Cheong U. The additional emergency room at the MUST Cotai campus has not performed as expected, authorities admitted. They add that growing demand and a wider network are straining the system. Page 2

Ao Man Long slows Ponte 16 A

pproval of an extension to the Ponte 16 casino resort at Macau’s Inner Harbour has been delayed because corrupt former official Ao Man Long originally signed it off. The news was given to Business Daily by Hoffman Ma, deputy chairman of Hong Konglisted Success Universe Group – a joint venture partner in Ponte 16 with Macau casino operator Sociedade de Jogos de Macau, S.A. “The whole development [extension] was granted by Ao [Man Long]. Because of what happened to him and all his cases being brought up, all

the government people are very cautiously handling whatever he approved,” said Mr Ma. He emphasised there was no suggestion of any wrongdoing by Ponte 16’s management. Six years after Mr Ao – a former secretary of transport and public works – was first arrested, his corruption continues to cast a shadow over Macau. Joseph Lau Luen Hung – named by Forbes as Hong Kong’s fifth richest person – faces a January trial here over allegations of a corrupt land deal linked to the disgraced public servant. More on page 3

Air hub to ‘nowhere’ hurts MICE trade

I SSN 2226-8294

Macau airport’s lack of connectivity is holding back the city’s conventions industry suggests gaming consultant Warwick Bartlett. Professor Leonardo Dioko, of Macau’s Institute for Tourism Studies, says a lack of air service agreements with other jurisdictions is a handicap. Others point to Air Macau’s monopoly and first right of refusal on civil air services.

HANG SENG INDEX 22000

21950

21900

21850

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Hainan ties closer on tourism, aviation

21800

November 29

Macau and another of China’s sub-tropical playgrounds – Hainan – have pledged to work more closely in promoting multi-destination tourism. The Macau Government Tourist Office and the Hainan Provincial Tourism Development Commission signed a memorandum to that effect yesterday in Hainan’s capital Haikou. One result could be a resumption of direct flights between the holiday destinations.

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Petition urges inflation-tied cap on home rents An online campaign to have rent rises linked to inflation entered a new phase yesterday when a group of residents presented a petition to the government. The group handed the document – containing almost 1,300 signatures gathered during the course of one month – to Chief Executive Fernando Chui Sai On.

HSI - Movers Name

%Day

BELLE INTERNATIO

2.40

CHINA RES ENTERP

2.36

WANT WANT CHINA

2.14

WHARF HLDG

2.09

LI & FUNG LTD

1.94

COSCO PAC LTD

-0.18

ALUMINUM CORP-H

-0.31

ESPRIT HLDGS

-0.65

TINGYI HLDG CO

-0.66

CATHAY PAC AIR

-1.01

Source: Bloomberg

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business daily November 30, 2012

macau

Legislators unhappy with health care system Tough challenge ahead as demand for medical services grows, staff doesn’t Stephanie Lai

sw.lai@macaubusinessdaily.com

Investment of social security fund

Phase one of new Cotai public hospital ‘ready by 2017’

ong waiting lists for medical services at the two Macau hospitals, particularly for special departments like oncology, fuelled legislators’ criticism of the administration yesterday. The heated exchanges came during the Policy Address for 2013 of Secretary of Social Affairs and Culture, Cheong U. “According to the census estimate for 2021, Macau needs to have more than 300 doctors trained during the coming decade, 1,200 nurses and over 250 beds to meet the city’s needs,” legislator Ho Ion Sang stressed. “So what’s the concrete policy to deal with medical demand?” In response, Lei Chin Ion, director of the Health Bureau, pledged to continue strengthening the training of doctors through programmes organised jointly by the private Kiang Wu Hospital and Macau University of Science and Technology (MUST). The administration will also keep on paying Kiang Wu and private

clinics for treatments including blood dialysis, radioactive therapy, CT scans and nuclear magnetic resonance imaging. In 2011 the Health Bureau paid 1.6 million patacas (US$200,435) for medical services from private institutions, including Kiang Wu Hospital, Mr Lei said. The government has tried to divert pressure from the emergency room of public hospital Conde S. Januário via a new emergency clinic at the MUST Cotai campus. But the facilities, which have been in operation for a year, have not been very successful in meeting healthcare demand, the Health Bureau head admitted. “Overall, the number of people seeking emergency treatment has risen by 30 percent so far this year,” added Mr Lei, “which we found out is partially attributed to abuse of emergency services.” This was a reference to people seeking emergency medical treatment for

non-emergency conditions. The Health Bureau director added the government is facing the challenge of building more facilities in the new public housing neighbourhoods, while having to meet rising demand for free healthcare services. The government has been trying to shorten the waiting time for public healthcare services and expand the medical facilities network but, he said, it is still pondering how much more the system should grow. At the end of 2011 the Health Bureau employed over 900 nurses and next year the bureau is going to hire 112 more nurses. The government trained 79 hospital interns last year and will train a further 100 in the coming year, Mr Lei said. Mr Ho bemoaned the low ratio in Macau of hospital beds to inhabitants and of doctors to inhabitants – standing at 2.2 and 2.6 per 1,000 people respectively. The Health Bureau head explained the first phase of Macau’s

A bigger part of Macau’s social security fund capital was made available for global investment this year, Ip Peng Kun, the head of the fund, said at the Legislative Assembly. “Due to fluctuations in the [global] economy in 2011, the fund has adopted a more secure stance by making cash deposits take up 85 percent and the remaining 15 percent for global investment,” said Mr Ip. “That has deviated from the normal investment condition for our social security fund.” The investment proportion was adjusted later to 60 percent in cash deposits and 40 percent for global investment after discussions with financial consultants, Mr Ip added. “With increasing assets in the future, we’ll expect the odds of a negative yield rate will be less than five percent,” he said. In the coming four years, the Macau government will inject an extra 37 billion patacas (US$4.6 billion) into the social security fund. The monthly contribution to the social security fund is currently at just 45 patacas, with workers paying just one-third and employers the remaining, but authorities are seeking to double it to 90 patacas. Legislators yesterday criticised the fund’s reliance on public money injection as “risky”. S.L.

second public hospital would be ready by 2017, and the second phase two years later. The new hospital located in Cotai is expected to provide more than 600 beds. In the coming year, there will also be 96 beds added to the new emergency unit at Conde S. Januário. During yesterday’s session Mr Lei made no mention of any plans to increase the doctor-patient ratio.

Fewer than half of residents satisfied with policy address

easures announced last month by Chief Executive Fernando Chui Sai On in his Policy Address for 2013 satisfied only about 40 percent of residents interviewed in a Macau General Union of Neighbourhood Associations survey. Almost 47 percent of the 959 respondents believed Mr Chui’s proposals were lacklustre at best, union representatives told reporters on Wednesday.

Nearly 9 percent were unhappy with the proposals. Leong Pou Ieng, a vice-director of the union’s youth affairs committee, said residents had been unimpressed, as short-term measures such as the cash handout had raised expectations too high. The wealth-sharing scheme was the measure that respondents were most happy about. Under the wealth-sharing scheme, permanent residents will

get a cash handout of 8,000 patacas (US$1,000) next year, having received 5,000 patacas in 2008, when the scheme began. Non-permanent residents will get a payout of 4,800 patacas next year, in having received 3,000 patacas in 2008. Asked about Mr Chui’s social welfare policy as a whole, only 34 percent said they were satisfied or very satisfied with it. About 52 percent of those

interviewed found it unremarkable. The latest Macau Happiness Index, released last week by the Macau Polling Research Association, showed a drop. Melinda Chan Mei Yi, the head of the Sin Meng Charity Association, which commissioned the survey that the index is based on, said economic growth and government subsidies did not necessarily make Macau’s people happier. V.Q.

November 30, 2012 business daily | 3

MACAU

Ponte 16 extension delayed because approved by Ao Scheme due to start this year but govt assent slowed, over role of jailed official Michael Grimes

michael.grimes@macaubusinessdaily.com

pproval of a major extension to the Ponte 16 casino resort at Macau’s Inner Harbour has been delayed because corrupt former official Ao Man Long originally signed it off. The news was given to Business Daily by Hoffman Ma, deputy chairman of Hong Kong-listed Success Universe Group – a joint venture partner in Ponte 16 with Macau casino operator Sociedade de Jogos de Macau, SA. The resort also uses SJM’s gaming licence. “The whole development [extension] was granted by Ao [Man Long]. Because of what happened to him and all his cases being brought up, all the government people are very cautiously handling whatever he approved,” said Mr Ma. He emphasised there was no suggestion of any wrongdoing by Ponte 16’s management. Mr Ma was referring to Ponte 16’s phase three extension, announced in a regulatory filing in April as having a

likely construction start date in 2012, and completion in 2014. The filing said Ponte 16 was raising syndicated five-year loan facilities for HK$1.9 billion (US$245 million) and 400 million yuan “to refinance existing syndicated loan facilities, to repay shareholders’ loans and to fund the construction of the Phase 3 Project”.

Extra tables Mr Ma gave news about the delay on the sidelines of the Asian Gaming & Hospitality Congress organised by Beacon Events at Galaxy Macau. He added that the Ponte 16 extension would also need government approval for more table games quota. The market is currently capped at 5,500 live dealer tables until year-end, and then three percent annual compound growth for a further ten years. According to an earlier company announcement, phase three will include a shopping mall and

Because of what happened to him [Ao], the government is very cautiously handling whatever he approved Hoffman Ma, deputy chairman, Success Universe Group

restaurants as well as 20 extra gaming tables. “We want to apply for more tables for our property,” said Mr Ma. Six years after Ao Man Long – a former secretary for transport and public works – was first arrested, his

corruption continues to cast a shadow over urban planning in Macau. In May this year Mr Ao’s third and final trial produced not only a six month jail sentence to add to the 29 years he will spend behind bars for graft, but also set in motion events that led to the government seizing the land plot for the planned La Scala residential development. This was on suspicion that the granting of the land next door to Macau International Airport was the result of corrupt acts by Mr Ao. That in turn led to a Macau court trial being announced for Joseph Lau Luen Hung the chief executive of the would-be developer Chinese Estates Holdings Ltd – named by Forbes in January this year as Hong Kong’s fifth richest person with an estimated net worth equivalent to US$6.5 billion. Mr Lau had been due to appear in September at Macau’s Court of First Instance. Proceedings were put back to January 7 next year because of the reported illness of the trial judge.

The air hub to ‘nowhere’ Gaming industry expert frustrated at airport’s lack of connectivity

Macau International Airport (Photo: Manuel Cardoso)

acau International Airport’s lack of connectivity is holding back the city’s meetings and conventions industry suggested a speaker at the Asian Gaming & Hospitality Congress on Wednesday. “I wanted to get a flight to Singapore but I couldn’t get one. They’re all full. The ones that are available are at ridiculous times like 2am. You’ve got a new airport that doesn’t go anywhere. Why is that?” asked Warwick Bartlett, chief executive of Global Betting & Gaming Consultants, to laughter from delegates. Mr Bartlett’s firm has advised governments including Malta and the Isle of Man on gaming industry issues. The consultant added: “If you have a conference that lasts for

two or three days, and people are travelling from big distances, you need to be in, you need to be out, as quickly as possible. And if you have to fly to Hong Kong, [then] get on the ferry to get to here [Macau] it’s a real handicap,” he said. “If your airport is open with lots of flights all over Asia, then people from Europe or the United States can connect in Bangkok or Doha or the [Arab] Emirates,” Mr Bartlett added. “The airport’s got to be opened up if you want MICE [meetings, incentives, conventions and exhibitions] facilities here. Then it would work as you’ve got all the hotels.” Profes s o r L eo n a r d o Di o k o , director, International Tourism Research Centre at Macau’s Institute for Tourism Studies, suggested a lack

of air service agreements with other jurisdictions was one handicap. “There’s a low cost [carrier] emphasis of the Macau Civil Aviation Authority. They have been very emphatic in developing as a low-cost carrier hub, positioning themselves vis-à-vis Hong Kong International Airport. But we’re not seeing a rapid state of development. I think there’s a lot of [air service] agreements that have to be in place so that you have freedom of flight,” said Mr Dioko. Statistics and Census Service figures show 505 conventions and exhibitions were held in Macau in the first half of 2012, down by 32 events or 6.3 percent year-on-year. The total number of participants and attendees increased however by 17 percent to 291,797. M.G.

You’ve got a new airport that doesn’t go anywhere. Why is that? Warwick Bartlett, Global Betting & Gaming Consultants

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business daily November 30, 2012

macau Chow Tai Fook profit slumps

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Chow Tai Fook Jewellery Group Ltd fell short of estimates with a 33 percent fall in six-month profit, hurt by slower economic growth in China, higher operating costs and losses on gold hedging. Chow Tai Fook, which also has shops in Macau and Hong Kong, said yesterday first-half net profit slid to HK$1.82 billion (US$234 million). Revenue grew 6.5 percent to HK$25.4 billion, of which mainland China accounted for more than half. Rival Luk Fook Holdings (International) Ltd, which also has shops here, posted a smallerthan-estimated 22 percent drop in first-half net profit to HK$558.2 million.

HOSPITALITY Big spenders The two kinds of tourist – overnight visitors and day-trippers – differ in how much money they spend and what they spend it on. Overnight visitors sleep in hotels or guesthouses and eat in restaurants, so they spend more than daytrippers. To be precise, overnight visitors spend 5.6 times more than day-trippers. But not all overnight visitors are the same, and not all daytrippers are the same. It depends on where they come from. In the case of mainland Chinese, it also depends on whether they are travelling independently or in tour groups. Mainland Chinese travelling independently are by far the biggest spenders.

Grand Waldo makes loss; no sale in sight Lower takings from VIP tables as it focused on the mass market mean the Cotai casino hotel’s revenue has tumbled Vítor Quintã

vitorquinta@macaubusinessdaily.com

T The mainland is the biggest source of visitors, and mainlanders spend more than visitors from elsewhere. Taiwan is the third-biggest source of visitors. Taiwan visitors spend a little more than the average. Hong Kong is the second-biggest source of visitors. Hong Kong visitors spend much less – less, even, than visitors from most other places in Asia. How much visitors spend, in particular on accommodation, depends on how far away they live and how easy it is to get here. Day-trippers from Hong Kong spend about 25 percent of the amount overnight visitors from Hong Kong spend. The exceptions to this rule are visitors from Taiwan. If they are on day trips, they spend just over 7 percent of what they would spend if they were staying overnight. This suggests most of them are really passengers in transit to or from the mainland. Day-trippers from other Asian countries such as Singapore, Japan, Thailand or Malaysia spend between 380 patacas (US$47.60) and 470 patacas per head. Overnight visitors from those countries spend something in the region of 2,500 patacas per head.

he Grand Waldo casino hotel in Cotai has posted another loss, but its main shareholder, Get Nice Holdings Ltd, has yet to make mention of any further attempt to sell it after one such attempt failed last month. The Grand Waldo’s loss in its financial first half ended September 30 was HK$59 million (US$7.6 million), 36.6 percent less than its first-half loss last year, Get Nice told the Hong Kong Stock Exchange on Wednesday. Much of the latest loss was due to depreciation charges and amortisation of advance lease payments, which reached HK$68 million, the company said. But revenue tumbled, falling by 43 percent to just HK$180 million. The decrease in turnover “was mainly attributed to less revenue contributed from the VIP tables games as the group had shifted its focus on the mass table games in response to changing market demand and industry

competition”, Get Nice said. The Grand Waldo is run under the gaming licence of Galaxy Casino SA, a unit of Hong Kong-based Galaxy Entertainment Group Ltd. It has 30,000 square feet of floor space, 11 tables for the VIP market and 27 tables for the mass market. The Grand Waldo is still underperforming even though it is being renovated to modernise the guest rooms. Grand Waldo’s average occupancy rate fell to 83 percent in its financial first half, 2 percentage points less than a year before. Its average room rate rose by 2.1 percent to HK$804 per night, far below the market average of 1,660 patacas.

Redevelopment potential The average number of customers of the casino hotel’s spa fell by 550 to 7,500 per month. Get Nice said its performance would

remain susceptible to “the competitive situation among the casino operators”. In the past two years two rival resorts have opened in Cotai: the Galaxy Macau and Sands Cotai Central. But Get Nice said it was “optimistic regarding its performance for the rest of the year”. Get Nice owns 65 percent of Grand Waldo through two subsidiaries and the casino hotel accounts for more than two-thirds of the company’s business. With casino turnover tumbling, Get Nice’s revenue fell by 39 percent to HK$260 million. Get Nice announced last month that it had failed to sell its controlling stake in the Grand Waldo to an “international group” which it did not identify, for US$500 million (4 billion patacas). At the time Get Nice hinted that it still wished to sell the casino hotel, but its interim report makes no mention of any sale in the offing. The Grand Waldo “has excellent redevelopment potential, given its long water frontage and location next to the marina site, down from the Macau Jockey Club and across the road from [the] Galaxy Macau,” HSBC analyst Sean Monaghan said in a note to investors on Monday.

43%

Drop in Grand Waldo’s H1 revenue

J.I.D.

MOP 4,411

Average spending by a mainlander visiting independently and staying overnight

An analyst says the Grand Waldo has excellent redevelopment potential, given its situation on the waterfront

Stay in the finest hotels in Macau and read Business Daily

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November 30, 2012 business daily | 5

MACAU

Junket investor Amax reports HK$14.97 mln loss Downturn in six months to Sept but firm reports new deal to supply VIPs Michael Grimes

michael.grimes@macaubusinessdaily.com

acau junket room investor Amax Holdings Ltd recorded a loss of HK$14.97 million (US$1.93 million) in the six months ending September 30 according to unaudited results filed with the Hong Kong Stock Exchange. In the equivalent period in 2011 the company reported a profit of HK$211.08 million. The interim filing gave no commentary on the reason for the firm’s 107 percent deterioration to its bottom line. But under the heading ‘share of profit of an associate’ – the usual way in which listed Macau junket investors indicate their share of the spoils from Macau junket room operations – the six months to this September 30 show no income. In the equivalent period a year earlier, Amax recorded a HK$220.06 million share in an associate’s profits. Amax’s business has been disrupted since at least June because of a dispute between one of the shareholders – Ng Man Sun, also known as Ng Wai or Kai Tze Wai – and his former girlfriend Chan Mei Fun, also known Chen Mei Huan. This was over control of the New Century Hotel in Taipa and the Casino Greek Mythology inside it, according to sources. Business Daily understands from industry sources that share of profit from junket operations at Greek

Mythology was an important source of income for Amax. But that month Mr Ng was attacked by masked men while in a private dining room at the New Century and – according to Business Daily sources – had the tendons cut in his arms and legs. This is said to be a traditional warning message used by Chinese criminal gangs – known as triads. Previous Amax filings mentioned HK$2.06 billion (US$265 million) in bad debts racked up by Amax. According to Amax’s annual report for the year ended March 31, 2012, the amount represents combined losses on loans made by an Amax subsidiary to another company, AMA International, an aggregator of junkets that used to be the main investor in VIP play at Melco Crown International Ltd’s Altira property in Taipa. The filing said AMA used the money to provide gambling credit to agents and casino players. In August gambling operator Sociedade de Jogos de Macau SA, which supplies the gaming licence for Greek Mythology, announced it was taking back 40 tables from the SJM satellite property. But by September it appeared Ms Chan and Mr Ng had reached some kind of truce in their dispute. And on September 12 Amax said in a filing that Mr Ng was taking over as chairman of the firm’s board.

Casino Greek Mythology (Photo: Manuel Cardoso)

In yet another filing published only minutes after the interim results for the six months to September 30, Amax said it had signed a new deal with a gaming promoter.

Amax didn’t name the promoter, but said it would supply it with VIP gamblers in return for an aggregated 1.23 percent commission on their rolling chip turnover.

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business daily November 30, 2012

macau

Hainan, Macau eye closer tourism ties

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Diverging trends The latest figures for inflation, for October, suggest the price pressure is easing. Whether that is a transitory feature, as some fear to be the case, or a sustained change of trend, as most would hope, the coming months will tell. But the consumer price index (CPI) is a composite measure. Which means that behind that single figure may hide, so to speak, diverse price trends associated with the various goods and services monitored. The chart below shows, for the various sub-indices, the latest inflation rate and the contribution of the sub-index rate to the overall CPI.

An interesting aspect is that there is an almost too neat difference between the sub-indices rising above average and those rising below the average. Of the existing 11 sub-indices, let us focus here on those with the biggest contribution to the overall inflation rate. Two sections come out with the strongest contributions to inflation: food and beverages, and housing and fuels. Alcohol and tobacco is a special case, as prices there depend heavily on the taxation regime and their contribution to the overall index is comparatively small. That aside, no wonder that people are concerned with prices rising, as the top goods in their shopping lists are the ones rising faster: food, housing, fuels. Those goods and services that have seen the prices rise well below the average or even decline are, curiously enough, those where the government has a bigger power to influence prices administratively – either because it is a major provider of those types of goods and services, or because they are produced under government concessions. J.I.D.

37.7 %

Alcohol and tobacco price rise, year to October

Closer cooperation on multi-destination tours may mean the resumption of direct flights Tony Lai

tony.lai@macaubusinessdaily.com

fficials from Macau and Hainan have said they will work together more closely on promoting multi-destination tourism in southern China. The Macau Government Tourist Office and the Hainan Provincial Tourism Development Commission signed yesterday an agreement to consult each other and develop tours that would take in both places. The signing took place during a meeting of between delegations headed by Macau’s Secretary for Economy and Finance Francis Tam Pak Yuen and Hainan’s Deputy Governor Tan Li. “It is the first time Macau and Hainan have signed a memorandum on tourism cooperation, which can facilitate closer ties between the two sides,” said Mr Tam. He said the Macau government would encourage the city’s travel industr y to o ffer m o r e m u l ti destination tours in southern China. In the first nine months of this year over 346,600 people visited Macau on package tours that also took them

Macau and Hainan are keen to promote multi-destination package tours

to places in mainland China, 21.5 percent more than a year before. Mr Tam said Hainan was like Macau in that it also aimed to put itself on the international tourist map. He said there would be more tourism exchanges between the two places. In a forum in the Hainan city of Haikou, representatives of tourism enterprises here and on Hainan have expressed interest in working together more closely. Six Macau enterprises signed on Wednesday agreements with four mainland companies.

The Portuguese-language newspaper Tribuna de Macau said one agreement was a letter of intent on “the development of airlines” signed by Macau travel agency Worldwide Travel Co Ltd and Hainan Airlines Co Ltd. This could lead to the resumption of direct flights between Macau and Hainan – which Chief Executive Fernando Chui Sai On called for two years ago. Air Macau began scheduled direct flights to the city of Sanya on Hainan in December 2005 but later abandoned the route. With Vítor Quintã

Local contracts to apply on UM Hengqin campus P rivate contracts made in Macau will be valid on the University of Macau’s new campus on Hengqin Island, the government has said. Members of one of the Legislative Assembly’s standing committees and government officials met behind closed doors yesterday to discuss to what extent Macau law will apply on the campus. Kwan Tsui Hang, who chairs the

committee, told reporters after the meeting that the government was sure the provisions of all private contracts in Macau would apply on the campus. For instance, Ms Kwan said university employees would be entitled to make insurance claims if any accidents befell them while they were working on the campus. Contracts would be invalid on the island only if they clearly said so, she said.

The necessary legal arrangements would be in place when the Macau government assumed jurisdiction over the campus, she said. But Ms Kwan said the government would allow any contract signed before it assumed jurisdiction – including a waste management concession contract – to be changed. She said the government would treat the campus as part of Taipa. T.L.

November 30, 2012 business daily | 7

MACAU A petition calling for legal limits on rent increases has gathered almost 1,300 signatures

comment

The social impact of casino development

Zen Udani

Assistant Professor of Management, University of Macau

Call for inflation cap on home rent surge Sick of increases in housing rents, an online group have petitioned the government to do something about it Tony Lai

tony.lai@macaubusinessdaily.com

n online campaign to have rent rises linked to inflation entered a new phase yesterday when a group of residents presented a petition to the government. The group handed the petition, containing almost 1,300 signatures gathered during the course of one month, to Chief Executive Fernando Chui Sai On. The petitioners are also seeking better legal protection for tenants. The group describe themselves as “Macau residents with no financial resources to buy a home of our own”. They also say they are ineligible to buy subsidised housing. One of the organisers of their campaign, a woman who identified herself only as Ms Lai, told reporters that the government should pay

attention to the rent problems that one-quarter of the city’s households were facing. Last year’s census found that 24.5 percent of households rented their homes. A decade before 19 percent did so. The median monthly rent paid last year was 5,390 patacas (US$675), almost twice as much as in 2001. Ms Lai said the rise in rents had been steepest in the past two years, when rents had increased by over 60 percent. “We really hope that the government takes measures to tackle this problem as it really puts a lot of pressure on people’s quality of life,” she said. Another of the organisers of the campaign, Pat Lam, said: “The government should set a legal limit to cap rent increases – at most, at the

annual inflation rate … to protect the rights of tenants as well as landlords.” The annual rate of inflation was 6.26 percent in October. Ms Lai, asked whether rent controls would sully Macau’s reputation as a free market, replied: “Rent controls have been applied in many states in America, too.” She added: “Currently, Macau legislation does little to protect the rights of tenants.” The group think the law should give tenants greater protection. Ms Lai said the legal ban on leases of less than two years should be strictly enforced. The government has been considering amending the law, which has not been changed since 1999, but so far done nothing about it.

Gaming sucks up energy as electricity records tumble M

acau’s quarterly use of electricity was the highest ever in the three months to September 30, mostly thanks to the gaming industry. It prolonged an 11-year upward trend in energy consumption, official data show. In the third quarter of 2012 electricity usage reached 1.26 billion kilowatt-hours (kWh), up by 5.2 percent from the previous record of 1.2 billion kWh set in the same period of last year, the Statistics and Census Service announced yesterday. The growth of the gaming industry explained most of the increase. It used 467 million kWh in the first quarter, 11.6 percent more than a year before. Casinos alone have used more electricity than all other businesses combined, for a fourth consecutive quarter. Non-gaming companies have seen their third quarter energy

Macau more dependent than ever on mainland electricity

consumption rise by just 1.3 percent year-on-year to 461 million kWh. Households used 273 million kWh, up by 1.6 percent year-on-year. Big hotels and casino resorts could

soon pay more for their electricity, according to a new government proposal. The administration wants to create a new category of users, comprising large hotels and casino resorts that consume at least 3,001 kWh per month. It plans to charge them 0.963 patacas per kWh. Meanwhile the amount of electricity produced by the local utility Companhia de Electricidade de Macau – CEM, SA tumbled by 40.4 percent quarter-on-quarter to just 128 million kWh. With the supply of natural gas – which is normally used for local electricity generation – suspended due to roadwork blasts in Hengqin island, imported electricity from mainland China rose by 22.5 percent quarter-onquarter and made up for a whopping 91.2 percent of power consumption. V.Q.

hen asked about Macau, I often tell people that there are two worlds here: the world inside the casinos and the rest that lies outside. Unfortunately, people know very little about the region. Quite often they think Macau is synonymous with gambling and all the vices that radiate from shady operations. This perception is explained by the fact that international mass media churn out scant news about a region that is too small to make it onto their radar screens. It is probably just gaming-related matters that make interesting fodder for newsfeeds. The economic gains brought by the phenomenal growth of the gaming industry cannot be denied. Part of the huge revenue earned from mostly mainland Chinese VIP players is used to pay the government and the casino workforce. But we cannot hide the social costs of casino development. Two recent studies indicate that the social costs have so far outstripped the benefits gained from casino development. One study cited negative impacts such as an increase in problem or pathological gambling, a rise in the incidence of crime, greater demand for counselling and health services and a significant school dropout rate. There is also unconstrained urban development, traffic congestion, a decline in public green spaces and a tougher growth environment for small businesses.

Giving more While the government and big business have contributed to the socio-economic development of the region, the existence of social ills should be a clarion call for better and more effective intervention to eradicate them. Gaming companies should rev up their programmes for corporate social responsibility, giving to society much more than what they give now. Their contribution in the fields of public education and training are a matter to consider. They can also play a pivotal role in the solution of problems experienced by their employees. For instance, a serious effort could be initiated in gaming companies to ensure a balance of work and family life for their workers. Increasing educational scholarships for children of casino employees would definitely be a big help to the families. Moreover, effective training programmes for employees will be useful for their personal and professional growth. The government should ensure the speedy delivery of social and other services to the people. While more physical development has been achieved in the past decade, better infrastructure could still be provided. Besides, human services need to be continually improved to enhance the quality of life of the people, especially the poor and the elderly. Ultimately, a better region boils down to having happy people in the two worlds of Macau. Hopefully we can count more on the support and commitment of big business and the government in achieving this.

Ultimately, a better region boils down to having happy people in the two worlds of Macau

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business daily November 30, 2012

GREATER CHINA

Beijing hastening reforms as offshore yuan languishes Authorities seen encouraging currency outflows Michelle Chen

hina is stepping up efforts to further liberalise its capital account by introducing a slew of measures to facilitate two-way cross-border fund flows, amid concerns that progress in internationalising the yuan may have stalled. Analysts said more proactive policies to promote wider use of the yuan are likely to follow next year, especially in the form of encouraging yuan outflows, given that a once-adecade handover of power in China is almost completed. The grand plan of making the “redback” fully convertible in the foreseeable future seems to have hit a roadblock recently, as offshore yuan liquidity keeps shrinking. Moreover, global payments in yuan have fallen for two months in a row, as observed by SWIFT, a global transaction services organisation. Yuan usage declined again in October, making it the 16th most used currency in the world currency payments table, two positions lower than the previous month, SWIFT said this week. Yuan payments decreased 10 percent while other countries increased by 9.3 percent compared to September, it added.

In a bid to inject more life into the market, authorities have taken several steps in the last few weeks. Beijing plans a nearly three-fold jump in the quota for the Renminbi Qualified Foreign Investor (RQFII) scheme, which permits qualified investors to channel offshore yuan funds into mainland stock and bond markets. The quota will be raised by 200 billion yuan (US$32.1 billion), regulators said in mid-November. It also approved two cases of cross-border lending in yuan between companies within a week, which market players said marks a milestone in the yuan globalisation process and opens a new channel for the accumulation of yuan offshore.

Taking more steps “The opening up of the capital account will be the main direction to further internationalise the yuan in future, since trade-related fund flows no longer have any restrictions,” said Ngan Kim Man, head of the RMB business strategy and planning department at Hang Seng Bank. Standard Chartered Bank (China) said on Monday it had secured approval for a 3.3 billion yuan loan

quota on behalf of an American multi-national company, following the 150 million yuan quota that China Construction Bank’s Shanghai branch secured for General Electric (China). “You can see the significant increase of quota in Standard Chartered’s case, which shows the

The opening up of the capital account will be the main direction to further internationalise the yuan in future, since trade-related fund flows no longer have any restrictions Ngan Kim Man, Hang Seng Bank

Reuters

Spring Air mulls Hong Kong hub Approval for Shanghai IPO expected early next year, chairman says

A road for expanding overseas starting from Hong Kong will be the shortest one for us Wang Zhenghua, Spring Airlines chairman

pring Airlines Co., China’s biggest privately-owned carrier, is considering a venture in Hong Kong as it joins operators trying to break Cathay Pacific Airways Ltd’s grip on the city’s aviation market. The carrier has drawn up a plan as part of an overseas push that may also include operations in Japan, South Korea and Taiwan, chairman Wang Zhenghua said in an interview yesterday in Hong Kong. He didn’t give a timeframe for when a Hong

Kong carrier may start flying. “We want to go out and tap international markets,” Mr Wang said in an interview at a conference organised by CAPA - Centre for Aviation. “A road for expanding overseas starting from Hong Kong will be the shortest one for us.” Spring Air, based in Shanghai, will add four new routes to Hong Kong from mainland China next month, as Hong Kong Airlines expands and budget carrier Jetstar prepares to open a hub in the city next year.

regulators are feeling comfortable to let the yuan flow out through this channel,” said Mr Ngan. Analysts expect more yuan outflows under the capital account to be encouraged via cross-border lending and other schemes in the future, noting that policies this year which mainly focused on yuan repatriation caused some tightening in offshore liquidity. Hong Kong’s yuan deposits dropped for the second straight month in September to 545.7 billion yuan, 13 percent lower than the peak seen last November. The Hong Kong Monetary Authority will release October deposits data today. In addition to the RQFII quota, some insurance companies were given approvals this year to enter the onshore interbank bond market to pursue higher returns with the offshore yuan they hold. The Chinese government remains steadfast in supporting the development of the offshore yuan market, as evidenced by the latest key policy statements from the freshly completed 18th Communist Party Congress, said Bank of China International in a recent report.

Cathay, which accounts for about half of seats in Hong Kong, is adding premium-economy cabins and boosting services to China to safeguard its hold on business travellers. “The marketplace can accommodate more airlines with different business models,” said Nawal Taneja, professor emeritus at Ohio State University, who has advised airlines and written seven books on the industry. New carriers may also boost travel rather than just luring passengers from Cathay and

its Hong Kong Dragon Airlines Ltd unit, he said.

New routes Spring Air’s new Hong Kong routes linking Chongqing, Hangzhou, Nanjing and Xiamen will add to its thrice-daily service from Shanghai. The expansion means the carrier will serve four of the 10 busiest routes between Hong Kong and the mainland, according to CAPA, a research company. All four of the new destinations are popular tourist markets, it said. The airline, which has moved away from its traditional low-cost operations by adding some business-class seats, was also working on plans for a venture in Japan. This has been delayed amid a territorial dispute between the two countries, Mr Wang said. Spring Air will have to meet regulatory requirements to set up operations in Hong Kong, including local-ownership rules, as well as contending with a looming shortage of slots at the city’s airport. “Everybody would like to have a base everywhere he could, but it doesn’t really work that way,” said Cathay chief executive John Slosar. “Maybe it will in the future, but it doesn’t yet. Spring Air, which flies 33 Airbus SAS A320s, is also working on holding a Shanghai initial public offering that may raise more than 1 billion yuan (US$160 million) to help fund expansion. The airline has filed its listing application with the securities regulator and may win approval for it early next year, Mr Wang said. The company has been predicting an IPO date since at least 2011. Bloomberg

November 30, 2012 business daily | 9

GREATER CHINA

Toyota leads carmakers in deepening output cuts

Companies in talks to buy power grid in Spain Ahead of a likely wave of privatisations to raise public revenue in debt-laden Spain, China’s State Grid Corp. has been linked with a share purchase in Red Electrica Corporacion SA (REE). The latter runs Spain’s power grid. The Chinese have requested from consulting firm A.T. Kearney Inc. several studies related to the European energy market. China bought a 25 percent stake in Portugal’s REN - Redes Energéticas Nacionais, SGPS, SA earlier this year. Several newspapers in Europe think that move – by China State Grid and stateowned power generator China Three Gorges Corp. – will be followed by further European acquisitions. There’s some consensus that China wants to start with a utilities asset base in Iberia and North Africa before expanding its regional interests. Analysts are now considering the possibility of China State Grid getting a position as a preference shareholder in REE. That would allow the Chinese to propose a union between both countries’ power grids. The main hurdle however, is whether the Spanish authorities will allow foreign investors to be shareholders in REE. Even if the Chinese get permission, analysts think they will not be given as much commercial freedom as in Portugal. There they were allowed to manage the power grid and the country’s high-tension electrical distribution network. Spain might only allow them to manage power distribution, according to analysts.

Japanese automakers still hurt by islands dispute Anna Mukai and Yuki Hagiwara

Automakers may suffer production cuts into 2014

oyota Motor Corp. production fell by the most in at least a decade, leading a slump for Japanese automakers, after a sovereignty dispute over uninhabited islets triggered demonstrations and deterred buyers. Japan’s biggest carmaker said yesterday China output in October tumbled 61 percent to 30,591 units in October. Nissan Motor Co. reported production fell 44 percent last month, the biggest decline based on company data stretching back to 2009, and Honda Motor Co. said output tumbled 54 percent – also a record. “This is worse than we had expected and it shows how serious the backlash from Chinese consumers was,” Lin Huaibin, a Shanghai-based

automotive analyst at Global Insight Inc., said by phone. “Sales have started to pick up in November and with some carmakers such as Honda introducing new models, the worst may be over for the moment.” The cuts highlight the widening costs of a territorial dispute that in September led rioters to vandalise Japanesebranded dealerships and vehicles in the world’s largest car market. Japanese automakers’ share of the China’s sales has fallen to 14 percent from about 23 percent before September, according to Xu Changming, a director at China’s State Information Centre. Production won’t start recovering until next year, according to Akiko Itoga, a spokeswoman for Tokyobased Honda.

Stockpiles ‘reduced’

61 % Toyota’s China output tumbled in October

Retail sales at Toyota’s Chinese joint venture, GAC Toyota Motor Co., have rebounded close to levels before the wave of anti-Japan sentiment, Feng Xingya, executive vice president of the venture, said at a November 21 briefing in Guangzhou. The automaker cut production to ease pressure on the dealerships and stockpiles have “reduced

dramatically” in the past two months, he said. Mazda Motor Corp.’s China output declined 28 percent in October, the Hiroshima, Japan-based automaker said yesterday in a statement. The company shipped no cars to the country last month, compared with 441 units a year earlier, as production of its main export model the CX-7 is being shifted to China, according to spokesman Makoto Watanabe. Fuji Heavy Industries Ltd, maker of Subaru cars, said October exports to China fell 76 percent to 1,734 units and sales fell 72 percent to 1,468 units. The carmaker doesn’t make vehicles in China. The slump is making cars cheaper. Chinese dealer Pang Da Automobile Trade Co. bought Subaru vehicles at a discount of about 10,000 yuan (US$1,600) each, Pang Qinghua, chairman of the company, said in an interview at a dealership conference in Suzhou, China, yesterday. Japanese car sales have plunged after tensions escalated over ownership of a group of uninhabited islands – known as Senkaku in Japan and Diaoyu in China – prompting Honda and Nissan to cut their fullyear profit forecasts by a fifth.

Portuguese bank sells houses to Chinese investors Portugal’s Banco Espírito Santo SA (BES), which has a branch in Macau, has been selling houses it repossessed in Portugal after borrowers defaulted on their mortgage payments. Most of the homes are being sold to Chinese, Russian and Brazilian investors. Ricardo Salgado, BES president, said during the presentation of the bank’s third quarter results that the institution managed to raise more income from the sale of repossessed houses in the first three quarters of this year than it had done in the whole of 2011. The property market in Portugal has been stagnant due to the country’s recession. According to Portuguese media, the bank sold 1,280 properties last year for 191 million euros (US$247 million). In the first nine months of this year 1,269 properties were sold for 240 million euros. Business Daily asked BES for more details regarding the business with Chinese investors but the bank preferred not to give further information.

Bloomberg

BHP sees modest growth in China

GM venture plans new auto plant

.S. auto giant General Motors Co. has said one of its Chinese joint ventures will invest 6.6 billion yuan (US$1 billion) in a new plant to meet growing demand for commercial vehicles. The venture between GM and Chinese partners SAIC Motor Corp. Ltd and Wuling Motors aims to open the 400,000-vehicle-a-year plant in the southwestern metropolis of Chongqing in 2015, according to a GM statement released late on Wednesday. The plant would be the venture’s

third in China, after others in the eastern city of Qingdao and Liuzhou in the south, it said. The three partners set up their joint venture in 2002 to produce mini-trucks and mini-vans, but the Liuzhou plant started producing a passenger car under the local Baojun brand earlier this month, GM has said. In the first 10 months of this year, the venture sold just under 1.2 million units in China, up 13.9 percent year-on-year, helping propel GM’s overall Chinese sales to around

2.3 million vehicles in the period, up 10.5 percent. Japanese brands have suffered in the Chinese market in recent months due to a territorial dispute between the two countries, allowing other foreign companies to grab more market share. China’s nationwide auto sales growth slowed last year from 2010 but some foreign car makers have bucked the downward trend with better brand recognition and perceptions of better quality among consumers. AFP

Global mining giant BHP Billiton Plc said yesterday it expected Chinese growth to remain muted in coming years and saw little improvement in coal and iron ore prices. But the world’s largest miner said it was well positioned to reap the benefits of China’s longer-term economic growth, with copper, energy products and potash fertiliser all expected to boom as the Asian giant modernised. BHP chief executive Marius Kloppers said the mining firm expected China’s growth to remain in the range between “seven and eight percent in the coming years... lower than the double digit growth rates seen over the past decade”. Given that, Mr Kloppers said BHP did not expect “any material pricing upside in the near term” for iron ore and coal, key ingredients in steelmaking which have seen a “sharp decrease” in value due to slowing demand. However, the chief executive said BHP saw great opportunities in China in the longer term due to its “unique and substantial industrialisation and urbanisation”.

10 |

business daily November 30, 2012

ASIA

BOJ’s Shirai warns Japan may miss price forecast As faltering global recovery threatens to hamper economy Leika Kihara

ank of Japan board member Sayuri Shirai warned of looming risks to the economic outlook that could keep price growth lower than the central bank’s forecasts, keeping alive market expectations of further monetary loosening as early as next month. Ms Shirai, a former IMF economist, repeated the BOJ’s view that consumer inflation will steadily approach the central bank’s target of 1 percent in the year ending in March 2015. But she said the risk balance for price growth was “tilted to the downside,” warning that the widening pain from Europe’s debt woes, slowing Chinese growth and the looming U.S. fiscal cliff may delay Japan’s progress in overcoming deflation. “While both upside and downside risks to the economy exist, I personally see the downside risks as greater,” Ms

Shirai told business leaders in Kumamoto, southern Japan, yesterday. Ms Shirai’s remarks come after a report showed that Japan’s retail sales fell the most in 11 months, underscoring the risk of further contraction in the world’s third-largest economy. The risks have not heightened beyond what

the BOJ projected in its twice-yearly outlook report issued last month, although vigilance was needed on whether they could materialise and further hurt the world’s third-largest economy, she said. “Capital expenditure and private consumption are among key risks I’d like to look out for,” she told a news conference after the meeting, pointing to signs that some companies were starting to delay investment due to weakening sales Shirai warns of greater overseas. downside risks to economy Aside from overseas risks, Adds expected sales tax hike Japan’s economic may hurt consumption outlook is also clouded by an BOJ independence ‘must be expected sales tax respected’ hike in 2014 that could dampen Markets expect more easing consumer spending, next month Ms Shirai said.

KEY POINTS

Japan’s economy shrank 0.9 percent in the quarter to September and analysts expect another contraction in the final three months of this year, a sign that weak exports and output were nudging the economy into recession. The BOJ eased policy for two straight months in October to ease the pain from weakening global demand, and many market players expect it to expand stimulus again as early as its next policy-setting meeting on December 19-20 in the face of heightening political pressure for bolder action to beat deflation.

More easing Main opposition party leader Shinzo Abe, seen as the likely next premier after a general election on December 16 that polls suggest his party will win, has called for bolder BOJ

Indian govt bows to pressure Agrees to vote on supermarket reform Nigam Prusty

Manmohan Singh – vote puts policy at stake

he Indian government bowed to intense opposition pressure and agreed yesterday to a vote on its decision to let foreign supermarkets set up shop in India, taking a major step towards ending a deadlock that has paralysed

parliament for days. In finally conceding to a symbolic vote on its flagship economic reform, Prime Minister Manmohan Singh’s fragile coalition appears to have calculated that it has the numbers to overcome opposition demands for the

measure to be rolled back. A lot is at stake for Mr Singh’s minority government. If it loses the vote it would be more than just an embarrassing setback. It would likely face intensified pressure to reverse its executive decision in

September to allow foreign direct investment (FDI) of up to 51 percent in domestic supermarkets. “It is most crucial for government and the country at this stage that the vote on FDI musters a majority otherwise it will be a symbolic

action such as “unlimited” easing and a possible revision to a law guaranteeing its independence to give the government more say in monetary policy. Ms Shirai said that while the central bank shared the view held by some politicians that Japan’s economy is in a severe state, its independence must be respected.

blow for the government,” said Paresh Nayar, head of fixed income and forex trading at First Rand Bank. “India is a deficit country and needs all foreign flows to manage the rupee, to cut deficits and to push GDP,” he said. India’s economy is set to grow at its slowest pace in a decade this fiscal year. Manufacturing is contracting and exports are falling. October trade deficit of nearly US$21 billion was its worst on record. Wal-Mart, the world’s biggest retailer, plans to open its first supermarket in India in 12 to 18 months. Meira Kumar, speaker of the lower house of parliament, announced the vote would take place but did not say when. While the government could muster a majority there, a vote in the upper house would be harder to win. The speaker of that chamber has not made a ruling on a vote. The main opposition party, the right-wing Hindu nationalist Bharatiya Janata Party (BJP), and leftist parties have disrupted parliament for nearly a week with demands for a vote on the supermarket reform, which they strongly oppose. The government had resisted such a move and called instead for a debate. The deadlock had threatened to derail the government’s efforts to drive forward its stuttering economic reform agenda with new measures to allow greater foreign investment in the insurance and pension sectors. Reuters

November 30, 2012 business daily | 11

ASIA analysis Capital expenditure and private consumption are among key risks I’d like to look out for

Australia resources – why to relax and why to worry

Sayuri Shirai, Bank of Japan board member

Clyde Russell Reuters market analyst

T She also dismissed the need to strengthen the BOJ’s language pledging to keep ultra-easy policy in place until 1 percent inflation comes into sight, an idea proposed last month by board member Takehiko Sato but turned down by a 2-7 vote. “What’s important is that the BOJ will continue its

powerful monetary easing as long as achieving 1 percent inflation in 2014 cannot be foreseen,” she said. “We made that commitment and there’s no change to it.” In its latest forecasts issued on October 30, the central bank expects core consumer prices to fall 0.1 percent in the year ending in March 2013, but rise 0.4

percent in the next year and 0.8 percent in the year to March 2015. The BOJ set a 1 percent inflation target in February and has eased monetary policy four times so far this year to beat deflation and revive an export-reliant economy hurt by a strong yen and weakening global demand. Reuters

HSBC to close S.Korean retail business Bank may close or sell branches after a 14-year quest

SBC Holdings Plc Co., China’s second-largest may end a 14-year insurer. quest to build retail “It must be tough for HSBC banking operations in South to be competitive in retail Korea by closing or selling banking in Korea with its branches in Asia’s fourth- small scale,” said Sung Byung largest economy. Soo, a Seoul-based analyst Europe’s biggest lender at Tongyang Securities by market value is reviewing Inc. “With the government options for the local retail unit, seeking to address a rising Hyonjin Suh, a Seoul-based household debt burden, spokeswoman, said in an e-mail growth prospects in retail yesterday. Londonbased HSBC is considering shuttering the operations, the Yonhap news agency reported, citing officials and regulators it didn’t identify. HSBC is at a crossroads in Korea after KDB Financial Group Inc. abandoned plans to take over the HSBC is targeting business in July. in cost cuts Chief executive Stuart Gulliver, who is seeking to revive profitability banking seem slim for local and save as much as US$3.5 and foreign banks.” billion in costs, this year South Koreans’ borrowing decided to exit consumer and credit purchases swelled banking in Japan. The lender to a record 937.5 trillion said last week it’s also in talks won (US$864 billion) in the to divest its US$9 billion stake third quarter, central bank in Ping An Insurance (Group) data show. The government

US$3.5 bln

announced measures such as requiring banks to boost fixedrate loans and setting limits on credit-card lending last year to curb household debt. HSBC has failed in at least three attempts to build up its Korean retail banking business since it began the operations in 1998. In 1999, the U.K. lender walked away from talks with the Korean government to buy SeoulBank. In 2005, it lost a bid for Korea First Bank to Standard Chartered Plc. HSBC also abandoned a US$6 billion bid to acquire Korea Exchange Bank in 2008 after authorities left the transaction in limbo for more than a year. “Korea remains an important market for HSBC; we continue to invest in developing our Korean global banking and markets” units, Gareth Hewett, a Hong Kong-based spokesman for HSBC, said in an e-mailed statement. “Until we have taken a decision, we will continue to concentrate on delivering a high level of service to our customers.” Bloomberg

he reasons why Australia’s resources boom are far from over, and the reasons why there are concerns about its long-term sustainability, were both on display in the latest official update. First, the good news: The Bureau of Resource and Energy Economics said the investment committed to projects in Australia rose to a record A$268.4 billion (US$281 billion) by the end of October, up from A$260.8 billion six months earlier. That figure alone should be enough to dispel any concern that the commodities boom that has helped Australia post 21 years of consecutive growth and carried the nation through both the 2008 global recession and the 2001 tech crash is over. Now for the not-so-good news: The investment is heavily skewed toward liquefied natural gas plants, which are suffering massive cost escalations and a threat to profitability as buyers try to break the nexus between LNG and oil prices, which would lower LNG prices. LNG plants represent A$194.9 billion of the total of committed projects, next up being iron ore at A$26.2 billion, infrastructure at A$24.6 and coal at a relatively paltry A$14.3 billion. Both iron ore and coal are facing slightly less certain outlooks, given the easing of growth rates in major buyer China, which is trying to rotate its economy to be more consumer demand-driven and less dependent on exports and fixedasset investment. While this doesn’t affect projects already committed, it does make it more likely that those ventures still to get final approval will be delayed or shelved. The bureau identifies A$291.8 billion of projects at what it terms the feasibility stage, in which initial studies have been completed and deemed supportive of further development work. In other words, these are projects companies would like to undertake, assuming the economics of market demand, capital expenditure and financing can be made to stack up.

coal projects tend to lie in the upper half, and even the top quartile, given high labour costs and the need to build lengthy railways and ports. This is especially the case for the Galilee coal basin, where several major projects are planned, including the China First venture, led by maverick billionaire Clive Palmer’s Waratah Coal, and Adani’s Carmichael mine. While it’s too early to say these projects will be shelved, the risks are rising and coal industry executives and contractors, speaking off the record, express increasing scepticism over the ambitious timetables outlined by the companies involved. Even the LNG projects may not make it from the feasibility stage to the committed phase, with the A$24-billion Arrow LNG, a joint venture between Royal Dutch Shell and PetroChina, believed to be most at risk. The bureau’s third category is for projects at the publicly announced stage, meaning companies have said this is what they plan to do, but have not started serious development work as yet. These projects may be worth between A$91 billion and A$133 billion, according to the Bureau, but at the moment many can be discounted, at least until they move into the feasibility stage. And many may not get there, given the sharp escalation in exploration costs, with the Bureau showing the average cost per metre drilled at a greenfield site has jumped from A$151 in 200304 to A$345 in 2011-12. What the bureau’s report shows is that while Australia’s resource boom is locked in for another few years, beyond that things get less certain and will largely depend on whether the outlook for coal improves, coupled with the maintenance of the more solid prospects for LNG and iron ore.

Concern over coal And here lie the problems lie for the future of the commodity boom. While LNG, gas and other petroleum projects still command the lion’s share at A$104.5 billion, a substantial second place is coal at A$75.7 billion, with iron ore and infrastructure levelpegging at A$44.9 billion and A$44.7 billion, respectively. Since much of the infrastructure spending is on rail and ports for the export of coal, it’s clear this sector is the potential driver of resource investment once the current boom in LNG spending is completed. Coal is problematic as this is probably the area most vulnerable to project cancellations, scaling back or delays. This is because China’s appetite for coal may not be as all-consuming as had been hoped, and there are plenty of other suppliers lining up for a piece of the action. On the global cost curve, Australian

Coal is problematic as this is probably the area most vulnerable to project cancellations, scaling back or delays

12 |

business daily November 30, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.5

0.8264463

21184484

CHINA UNICOM HON

ALUMINUM CORP-H

3.25

-0.3067485

14941382

CITIC PACIFIC

BANK OF CHINA-H

3.24

1.25

211385817

BANK OF COMMUN-H

5.57

1.828154

27306932

BANK EAST ASIA

29.55

0.8532423

1428524

BELLE INTERNATIO

16.24

2.395965

17155631

BOC HONG KONG HO

24.05

1.476793

14032337

CATHAY PAC AIR

13.78

-1.005747

20617008

HANG SENG BK

CHEUNG KONG

118.4

0.9377664

3505369

7.73

0.6510417

15153596

CHINA COAL ENE-H CHINA CONST BA-H

PRICE

DAY %

VOLUME

12.02

1.52027

16267190

NAME

9.81

0.5122951

3721038

SANDS CHINA LTD SINO LAND CO SUN HUNG KAI PRO SWIRE PACIFIC-A

95.25

POWER ASSETS HOL

CLP HLDGS LTD

67.55

0.6706408

3365124

CNOOC LTD

16.38

1.486989

39037228

COSCO PAC LTD

10.98

-0.1818182

3241980

ESPRIT HLDGS

12.16

-0.6535948

19683724

TENCENT HOLDINGS

HANG LUNG PROPER

28.15

1.808318

10148587

TINGYI HLDG CO

118.1

1.026518

1046654

WANT WANT CHINA WHARF HLDG

HENDERSON LAND D

55.3

1.282051

2852517

71.55

0.845666

2541301

21.3

1.913876

8102735

HONG KONG EXCHNG

124.8

0.4022526

5452963 13078052

HENGAN INTL

MOVERS

5.91

1.896552

281599374

CHINA LIFE INS-H

22.65

1.116071

25753993

CHINA MERCHANT

23.7

1.066098

1889657

HSBC HLDGS PLC

77.65

0.5829016

88.35

0.9714286

15853148

HUTCHISON WHAMPO

79.25

0.3164557

4834773

CHINA OVERSEAS

22.5

1.123596

21497414

IND & COMM BK-H

5.19

0.776699

202707020

CHINA PETROLEU-H

8.12

0.8695652

55166442

LI & FUNG LTD

12.58

1.944895

20202159

CHINA RES ENTERP

28.15

2.363636

3684031

MTR CORP

30.85

1.480263

2582608

1.419878

16614951

NEW WORLD DEV

12.26

1.827243

22571092

52W (H) 22149.69922

17.2

0.2331002

3804260

PETROCHINA CO-H

10.2

0.1964637

52768495

(L) 17821.51953

PING AN INSURA-H

57.9

0.6956522

7944836

PRICE

DAY %

VOLUME

24.85

2.263374

15215864

YANZHOU COAL-H

CHINA PETROLEU-H

8.12

0.8695652

55166442

CHINA MOBILE

CHINA RES LAND CHINA RES POWER CHINA SHENHUA-H

31.4

0.1594896

12550791

HONG KG CHINA GS

PRICE

DAY %

68.5

0.9579956

2192050

33.55

0.4491018

9940716

13.82

1.767305

5697070

114.1

1.062888

6144714

0.1050972

1420941

255.4

0.7097792

2992252

22.5

-0.6622517

2590929

11.46

2.139037

9030434

58.7

2.086957

4754119

VOLUME

0 22000

INDEX 21922.89 HIGH

21997.93

LOW

21632.41 21590

27-November

29-November

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.37

0.5970149

91591696

AIR CHINA LTD-H

5.08

-0.5870841

6435695

ALUMINUM CORP-H

3.25

-0.3067485

14941382

CHINA RAIL CN-H

8.34

1.95599

-1.768173

12179920

CHINA RAIL GR-H

4.27

3.24

1.25

211385817

CHINA SHENHUA-H CHINA TELECOM-H

ANHUI CONCH-H BANK OF CHINA-H

CHINA PACIFIC-H

PRICE

DAY %

VOLUME

11.82

0.8532423

16318144

ZIJIN MINING-H

3.08

-0.6451613

32876613

13947667

ZOOMLION HEAVY-H

9.73

2.637131

8648561

1.425178

15297081

ZTE CORP-H

11.68

1.74216

4127946

31.4

0.1594896

12550791

5.57

1.828154

27306932

4.19

-0.2380952

50154531

19.22

1.908802

1845427

DONGFENG MOTOR-H

10.92

1.865672

30621551

CHINA CITIC BK-H

3.95

0.5089059

24065585

GUANGZHOU AUTO-H

6.21

6.884682

9680308

CHINA COAL ENE-H

7.73

0.6510417

15153596

HUANENG POWER-H

6.39

1.751592

9227011

CHINA COM CONS-H

6.83

-0.2919708

11691238

IND & COMM BK-H

5.19

0.776699

202707020

CHINA CONST BA-H

5.91

1.896552

281599374

JIANGXI COPPER-H

19.42

0.6217617

6444101

CHINA COSCO HO-H

3.62

1.117318

9015704

PETROCHINA CO-H

10.2

0.1964637

52768495

BANK OF COMMUN-H BYD CO LTD-H

22.65

1.116071

25753993

PICC PROPERTY &

9.84

0.5107252

13148434

CHINA LONGYUAN-H

5.11

-1.541426

12306539

PING AN INSURA-H

57.9

0.6956522

7944836

CHINA MERCH BK-H

14.64

1.385042

18408958

SHANDONG WEIG-H

-1.112485

7210536

CHINA LIFE INS-H

NAME

MOVERS

0 10660

INDEX 10488.1 HIGH

10647.4

LOW

10346.02

CHINA MINSHENG-H

7.49

1.216216

20063649

SINOPHARM-H

24.15

-1.829268

2492399

52W (H) 11916.1

CHINA NATL BDG-H

9.78

-0.407332

28318112

TSINGTAO BREW-H

43.2

1.527615

1317987

(L) 8987.76

14.78

0.9562842

3256139

WEICHAI POWER-H

27.95

1.084991

3866302

CHINA OILFIELD-H

10340

27-November

29-November

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.64

66760891

CSR CORP LTD -A

4.64

1.089325

30923150

SANY HEAVY INDUS

8.16

-0.4878049

17610071

AIR CHINA LTD-A

4.69

3.076923

11058630

DAQIN RAILWAY -A

6.19

17779272

SHANDONG DONG-A

37.53

0.2939604

1688054

ALUMINUM CORP-A

4.57

5722868

DATANG INTL PO-A

3.96

0.2531646

2365615

SHANDONG GOLD-MI

36.47

-0.8698016

5673490

ANGANG STEEL-A

3.35

1.208459

5443589

EVERBRIG SEC -A

10.13

-6.635945

11330072

SHANG PHARM -A

10.08

1.002004

10170054

NAME

ANHUI CONCH-A

15.71

0.1913265

5492555

GD POWER DEVEL-A

2.28

-0.4366812

32824579

SHANG PUDONG-A

7.41

-0.4032258

39279397

BANK OF BEIJIN-A

7.18

-0.4160888

13272778

GF SECURITIES-A

11.1

-7.422852

28188237

SHANGHAI ELECT-A

3.65

-1.084011

2807945

BANK OF CHINA-A

2.76

0.3636364

35540208

GREE ELECTRIC

22.65

0.5326232

9730928

SHANXI LU'AN -A

15.85

-1.796778

4622643

BANK OF COMMUN-A

4.23

0.4750594

40400278

GUANGHUI ENERG-A

14.35

-0.7607192

19123002

SHANXI XINGHUA-A

37.36

0.8094981

1705009

BANK OF NINGBO-A

8.78

-0.5662514

4930161

HAITONG SECURI-A

7.77

-5.932203

71466252

SHANXI XISHAN-A

11.23

-1.491228

5599995

BAOSHAN IRON & S

4.66

0.2150538

14877668

HANGZHOU HIKVI-A

27.08

1.766253

1243214

SHENZEN OVERSE-A

5.62

-1.056338

19716437 14628940

14.87

-1.130319

1849590

HEBEI IRON-A

2.32

1.754386

22636381

SUNING APPLIAN-A

5.89

-1.008403

CHINA CITIC BK-A

3.59

7155930

HENAN SHUAN-A

54.61

-0.7090909

1813311

TASLY PHARMAC-A

47.85

0.5040958

2066309

CHINA CNR CORP-A

4.12

0.4878049

31365022

HONG YUAN SEC-A

14.87

-9.051988

18153294

TSINGTAO BREW-A

29.43

0.4779788

1435887

BYD CO LTD -A

CHINA COAL ENE-A

6.74

-0.4431315

6983556

HUATAI SECURIT-A

7.32

-6.632653

30505964

WEICHAI POWER-A

21.43

2.340019

6008493

CHINA CONST BA-A

4.16

-0.7159905

19096590

HUAXIA BANK CO

8.42

-0.5903188

16249245

WUHAN IRON & S-A

2.56

4.065041

46733554

CHINA COSCO HO-A

4.11

-0.9638554

6203639

IND & COMM BK-A

3.88

0.2583979

53407665

WULIANGYE YIBIN

27.21

0.1472212

22266300

CHINA CSSC HOL-A

19.26

-0.2589332

2983619

INDUSTRIAL BAN-A

12.56

-0.1589825

27299901

YANGQUAN COAL -A

12.23

-0.9716599

4683173

CHINA EAST AIR-A

0.6711409

10910260

INNER MONG BAO-A

30.06

-0.6937562

24793435

YANTAI CHANGYU-A

42.14

-0.2131186

852223

CHINA EVERBRIG-A

2.58

-0.3861004

37828647

INNER MONG YIL-A

3423283

YANTAI WANHUA-A

12.81

-0.3888025

3487371 1466571

17.23

-1.147447

5923105

INNER MONGOLIA-A

4.77

-0.209205

39215414

YANZHOU COAL-A

16.02

-0.6203474

CHINA MERCH BK-A

9.98

0.1003009

18213096

JIANGSU HENGRU-A

27.85

-0.5712246

1641409

YUNNAN BAIYAO-A

62.81

1.224819

1088908

CHINA MERCHANT-A

8.22

-4.195804

16525385

JIANGSU YANGHE-A

0.9890682

1502578

ZHONGJIN GOLD

14.64

-2.917772

14530729

CHINA MERCHANT-A

22.54

1.531532

7672748

JIANGXI COPPER-A

19.92

-0.1003009

3593986

ZIJIN MINING-A

3.58

-1.104972

27056709

10.15

-1.456311

2280248

ZOOMLION HEAVY-A

7.9

19604958

ZTE CORP-A

7.82

0.2564103

6352171

CHINA LIFE INS-A

CHINA MINSHENG-A

6.26

-0.1594896

89909864

JINDUICHENG -A

CHINA NATIONAL-A

6.73

0.4477612

31247301

JIZHONG ENERGY-A

10.42

-1.698113

9738307

CHINA OILFIELD-A

14.85

-1

1860225

KANGMEI PHARMA-A

14.37

-0.8281573

10627072

CHINA PACIFIC-A

16.56

-1.604278

10865560

KWEICHOW MOUTA-A

219.28

0.4075278

1567574

33.7

1.812689

5981062

1.99

11039896

CHINA PETROLEU-A

5.97

-1.322314

16903947

LUZHOU LAOJIAO-A

CHINA RAILWAY-A

4.99

0.6048387

9546367

METALLURGICAL-A

CHINA RAILWAY-A

2.72

-1.090909

18846732

NINGBO PORT CO-A

2.45

9832926

PANGANG GROUP -A

3.12

0.3215434

30256156

MOVERS

CHINA SHENHUA-A

21.69

-0.2299908

6059087

4.01

0.7537688

15783416

PETROCHINA CO-A

8.5

-0.2347418

6651276

12.74

-2.673797

20497422

HIGH

2172.61

LOW

2115.68

CHINA SOUTHERN-A

3.32

0.6060606

23464238

CHINA STATE -A

3.04

-0.9771987

39746580

PING AN INSURA-A

35.68

-0.3908431

11271531

CHINA UNITED-A

3.16

-0.3154574

38666346

POLY REAL ESTA-A

11.1

0.8174387

21947373

CHINA VANKE CO-A

8.43

1.079137

35909052

QINGDAO HAIER-A

10.86

0.6487488

5004983

CHINA YANGTZE-A

6.31

-0.9419152

12635752

QINGHAI SALT-A

22.61

0.04424779

2122472

9.8

-4.390244

75990659

SAIC MOTOR-A

13.47

1.050263

13935827

PRICE DAY %

Volume

PRICE DAY %

Volume

CITIC SECURITI-A

22 2180

INDEX 2115.676

CHINA SHIPBUIL-A

PING AN BANK-A

185

52W (H) 2717.825 (L) 2114.477

2110

27-November

29-November

FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON

NAME

24.8

-0.998004

17919715

FORMOSA PLASTIC

23.65

0.6382979

29518240

FOXCONN TECHNOLO

TAIWAN MOBILE CO

104.5

1.456311

9340556

100

0.2004008

12453099

TPK HOLDING CO L

458.5

5.645161

11617479

32.35

0.1547988

20833252

TSMC

96.5

0.6256517

48816236

93 -0.3215434

58324490

UNI-PRESIDENT

51.7

0.9765625

12811608

UNITED MICROELEC

11.1 -0.8928571

61511291

36.85

1.936376

6653543

FUBON FINANCIAL

315.5

0.96

3783186

HON HAI PRECISIO

AU OPTRONICS COR

11.95

-2.04918

165376043

HOTAI MOTOR CO

147

2.083333

33534633

HTC CORP

CATHAY FINANCIAL

30.55

23633478

HUA NAN FINANCIA

CHANG HWA BANK

15.55

12063549

LARGAN PRECISION

CHENG SHIN RUBBE

73.9

0.6811989

5300311

LITE-ON TECHNOLO

CHIMEI INNOLUX C

12.45

-1.968504

252655314

MEDIATEK INC

327.5

1.080247

8273444

7.18

66448921

MEGA FINANCIAL H

22.55

0.6696429

29418023

CHINA STEEL CORP

26.25

1.351351

27605485

NAN YA PLASTICS

51.3

0.5882353

9979332

CHINATRUST FINAN

16.55 -0.8982036

45512559

PRESIDENT CHAIN

152

1.333333

1626159

209.5

3.712871

1082589

259

1.171875

25723984

16.15

8156493

761

0.794702

1197225

38.3

0.2617801

5774573

CHUNGHWA TELECOM

93.8

0.3208556

12825944

QUANTA COMPUTER

1.123596

10238220

COMPAL ELECTRON

18.4

0.2724796

21617822

SILICONWARE PREC

5.084746

14392164

DELTA ELECT INC

107

2.884615

5082842

SINOPAC FINANCIA

12.05

28550814

FAR EASTERN NEW

33.65

1.508296

19485794

SYNNEX TECH INTL

55.5

5.113636

17702287

FAR EASTONE TELE

1.408451

9465702

TAIWAN CEMENT

37.3

3.611111

17915900

FIRST FINANCIAL

17.55 -0.2840909

Volume

13235361

ASIA CEMENT CORP

CHINA DEVELOPMEN

PRICE DAY %

3.683492

ASUSTEK COMPUTER CATCHER TECH

NAME

12890244

TAIWAN COOPERATI

15.9

0.3154574

10367186

FORMOSA CHEM & F

1.769912

10849670

TAIWAN FERTILIZE

73.9

2.213001

6718470

FORMOSA PETROCHE

2.325581

3821479

TAIWAN GLASS IND

27.1

2.264151

2987826

WISTRON CORP

30.65

0.9884679

6664194

YUANTA FINANCIAL

14.8

0.6802721

30152430

YULON MOTOR CO

52.6

0.3816794

5195244

MOVERS

0 5310

INDEX 5289.59 HIGH

5303.22

LOW

5210.2

52W (H) 5621.53 5200

(L) 4643.05 27-November

29-November

November 30, 2012 business daily | 13

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

MELCo CroWN ENTErTAINMENT

MGM CHINA HoLDINGS

29.9

29.7

29.5

Max 29.85

Average 29.687

Min 29.45

Last 29.75

29.3

Max 39.5

SANDS CHINA LTD

Average 39.254

Min 39

Last 39.4

33.5

Min 33.3

Last 33.55

33.3

Average 18.175

NAME

PRICE

WTI CRUDE FUTURE Jan13

87.08

0.682159787

-10.95204009

109.6699982

79.68000031

BRENT CRUDE FUTR Jan13

110.09

0.529631997

6.367149758

120.7699966

90.15999603

GASOLINE RBOB FUT Dec12

273.91

0.19020447

10.38526638

295.8800077

217.2600031

942

0.802568218

5.10460251

1036.25

799.25

3.775

-0.684030518

-2.781354623

4.468000412

3.062000036

NATURAL GAS FUTR Jan13 HEATING OIL FUTR Dec12 Gold Spot $/Oz Silver Spot $/Oz

DAY %

YTD %

(H) 52W

301.87

0.355718085

5.12990179

335.1700068

254.2500019

1723.68

-0.9499

10.1456

1796.08

1522.75

33.745

-0.5159

21.2323

37.4775

26.1513

1613.82

0.6656

15.7275

1736

1339.25

Palladium Spot $/Oz

677.35

2.4038

3.6496

725.19

553.75

LME ALUMINUM 3MO ($) LME COPPER 3MO ($) 3MO ($)

LME NICKEL 3MO ($)

2000

-0.447984072

-0.99009901

2361.5

1827.25

7767.5

-0.505956193

2.203947368

8765

7131

1987

-0.301053688

7.696476965

2220

1745

16980

0.17699115

-9.246392304

22150

15236

15.255

0.427913101

-0.651253663

16.60000038

14.60000038

766

0.261780105

27.61349438

846.25

511

WHEAT FUTURE(CBT) Mar13

892.25

0.112201964

21.5599455

948.25

652

SOYBEAN FUTURE Jan13

1453.75

0.518582541

19.84748557

1781.5

1126.75

COFFEE 'C' FUTURE Mar13

153.75

-0.710364869

-35.38558521

249

147.0999908

SUGAR #11 (WORLD) Mar13

19.35

0.991649269

-17.16609589

25.12999916

COTTON NO.2 FUTR Mar13

72.91

0.385515627

-17.6251271

98.5

AGRICULTURE ROUGH RICE (CBOT) Jan13 CORN FUTURE

Mar13

39.0

14.25

38.8

Max 14.36

Average 14.31

Min 14.28

18.4

22.80

18.3

22.65

18.2

22.50

18.1

22.35

Min 18.1

Last 18.12

22.20 Max 22.8

Average 22.545

Last 22.5

Min 22.35

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 %

1.0471 1.6025 0.9271 1.2988 82.13 7.9825 7.7501 6.2235 54.815 30.71 1.2205 29.114 40.822 9634 86.002 1.20403 0.8105 8.0459 10.3663 106.67 1.03

0.2201 0.1187 0.4746 0.5185 -0.3166 0.0025 0 0.008 1.1676 0.0326 0.213 0.0927 0.1421 0.1038 -0.543 -0.0332 -0.3985 -0.0037 -0.4978 -0.8343 0

YTD %

(H) 52W

2.5664 3.1011 1.1865 0.2083 -6.3558 0.2142 0.2232 1.1489 -3.1926 2.7353 6.2351 4.0015 7.3931 -5.8646 -8.8021 1.0598 2.8242 1.0975 -0.1379 -6.5717 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.3548 84.18 8.0198 7.7864 6.3964 57.3275 32 1.3138 30.396 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 6.214 48.6088 30.2 1.2152 28.914 40.822 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS NAME

(H) 52W

(L) 52W

6.557377

47.72727

3.28

2.16

12719975

CROWN LTD

10.24

-0.4859086

26.57602

10.34

7.92

1759837

18.65999985

AMAX HOLDINGS LT

0.067

-22.9885

0.119

0.055

2972502

66.84999847

BOC HONG KONG HO

24.05

1.476793

30.70652

16.76

14032337

CENTURY LEGEND

1740250

ARISTOCRAT LEISU

PRICE

DAY % YTD %

VOLUME CRNCY

0.275

10.8871

19.56522

0.335

0.204

CHEUK NANG HLDGS

4.21

1.445783

50.35715

4.36

2.5

110850

CHINA OVERSEAS

22.5

1.123596

73.53883

23.15

12.066

21497414

CHINESE ESTATES

11.88

-4.96

13.26

8.3

51500

CHOW TAI FOOK JE

10.86

5.436893

-21.98276

15.16

8.4

10488000

EMPEROR ENTERTAI

1.73

1.764706

55.85585

1.76

0.99

2095000

FUTURE BRIGHT

1.34

4.6875

219.0476

1.43

0.38

3282000

GALAXY ENTERTAIN

29.75

108.9185

29.85

13.28

12152231 1046654

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12985.11

0.8307107

6.282358

13661.87

11517.04

NASDAQ COMPOSITE INDEX

2991.779

0.808244

14.84096

3196.932

2508.27

HANG SENG BK

118.1

1.026518

28.16061

120

91.15

FTSE 100 INDEX

5847.33

0.7590535

4.936046

5989.07

5229.76

HOPEWELL HLDGS

30.35

1.166667

54.82989

31.091

19.049

974004

DAX INDEX

7396.19

0.7187397

25.39422

7478.53

5637.53

HSBC HLDGS PLC

77.65

0.5829016

31.61017

57.05

13078052

NIKKEI 225

9400.88

0.9940537

11.18263

10255.15

8238.96

HUTCHISON TELE H

3.38

0.8955224

13.04348

3.88

2.83

930030

HANG SENG INDEX

21922.89

0.9853526

18.92387

22149.69922

17821.51953

LUK FOOK HLDGS I

23.15

10.2381

-14.57565

34.3

14.7

18117134

MELCO INTL DEVEL

8.29

1.097561

43.67418

8.3

5.12

3928000

CSI 300 INDEX

2115.676

-0.6333481

-9.80781

2717.825

2114.477

MGM CHINA HOLDIN

14.3

0.5625879

49.08018

14.76

9.432

2384408

TAIWAN TAIEX INDEX

7503.55

0.9229408

6.10103

8170.72

6609.11

MIDLAND HOLDINGS

3.59

2.279202

-9.206946

5.217

3.249

1341000

NEPTUNE GROUP

0.156

1.298701

40.54054

0.222

0.084

5910000

NEW WORLD DEV

12.26

1.827243

95.84664

13.2

6.13

22571092

SANDS CHINA LTD

9940716

KOSPI INDEX

1934.85

1.153818

5.976206

2057.28

1750.6

S&P/ASX 200 INDEX

4477.731

0.6840767

10.38245

4581.8

3985

4319.086

0.331326

13.00615

4381.746094

3635.283

FTSE Bursa Malaysia KLCI

1607.32

0.04979708

5.003493

1679.37

1437.21

NZX ALL INDEX

870.323

-0.08265952

19.25495

874.988

712.548

JAKARTA COMPOSITE INDEX

14.20

Last 14.3

3.25

World Stock MarketS - Indices NAME

14.30

(L) 52W

Platinum Spot $/Oz

LME ZINC

39.2

CURRENCY EXCHANGE RATES

GAS OIL FUT (ICE) Jan13

METALS

14.35

18.0 Max 18.36

Commodities ENERGY

39.4

WyNN MACAU LTD

33.7

Average 33.702

14.40

SJM HoLDINGS LTD 33.9

Max 33.85

39.6

33.55

0.4491018

52.84738

33.95

20.1

SHUN HO RESOURCE

1.25

0.8064516

1.37

0.95

60000

SHUN TAK HOLDING

3.71

-0.802139

44.97124

3.77

2.418

12190926

SJM HOLDINGS LTD

18.12

-1.091703

44.89583

18.36

11.973

5720443

SMARTONE TELECOM

14.4

-0.1386963

7.14286

17.5

12.38

1732244

WYNN MACAU LTD

22.5

-0.2217295

15.38462

25.5

14.62

4398000

ASIA ENTERTAINME

3.47

-1.139601

-40.9864

7.24

2.4

161947

BALLY TECHNOLOGI

45.82

1.237296

15.82406

51.16

35.79

523129 3500

PHILIPPINES ALL SHARE IX

3639.42

-0.06782193

19.51961

3653.51

2952.17

HSBC Dragon 300 Index Singapor

591.25

0.1

19.12

STOCK EXCH OF THAI INDEX

1308.81

0.6823392

27.64894

1314.64

981.49

HO CHI MINH STOCK INDEX

378.2

0.6413156

7.580721

492.44

332.28

BOC HONG KONG HO

-3.225806

25.14666

3.3

2.24

Laos Composite Index

1196.44

33.01758

1249.34

876.33

GALAXY ENTERTAIN

3.81

1.061008

103.7433

3.81

1.75

5000

INTL GAME TECH

13.74

2.844311

-20.11628

18.1

10.92

4747213

JONES LANG LASAL

79.68

1.684533

30.06856

87.52

56.51

264626

LAS VEGAS SANDS

46.96

1.294219

9.899369

62.09

34.72

10459927

MELCO CROWN-ADR

15.39

0.7198953

59.97921

16.02

8.32

2522300

MGM CHINA HOLDIN

1.76

47.68902

1.96

1.1917

2000

MGM RESORTS INTE

9.99

1.318458

-4.218603

14.9401

8.83

7506756

SHFL ENTERTAINME

13.65

-0.4376368

16.46757

18.77

10.61

328623

SJM HOLDINGS LTD

2.36

1.724138

46.80517

2.36

1.5484

47300

111.69

3.168299

7.807318

129.6589

84.4902

2747164

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

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily November 30, 2012

Opinion Why holiday gifts get more ‘ughs’ than ‘oohs’

Cass R. Sunstein

Bloomberg View columnist and Felix Frankfurter professor of law at Harvard University

ehavioural economists study human errors. People don’t always make the best choices for themselves, so there’s good reason to doubt whether they will always make the best choices for others. If you’ve ever received a useless gadget, a horrendous tie or some kind of bowl, you’ll know that when people buy Christmas presents, they can blunder badly. Chances are pretty good that whatever you end up getting people this year, and however hard you try, some of your friends and family members aren’t going to think that the gift is worth what you paid for it. University of Minnesota economist Joel Waldfogel, author of “Scroogenomics,” finds that Americans spend about US$65 billion on winter holiday presents every year – and that many of those billions are simply wasted, because a lot of people don’t much like what they get. Typically the value of a gift, to the recipient, is about 20 percent lower than its cost. He describes the holiday season as “an orgy of value destruction”. Mis-giving is a big problem for givers as well as recipients. In a large survey, the

average respondent was found to give 23 presents every holiday season. Gift-giving can also take an economic toll. Personal debts tend to jump after December. That isn’t ideal, especially in hard economic times and if recipients aren’t thrilled with what they get.

Egocentric bias Here are some tips for gift-givers, building on six behavioural findings that bear directly on holiday-season mis-giving. They might help you get through December a little better. Egocentric bias: If you are like most people, you have an exaggerated sense of how much other people are like you. You probably think their tastes and values are closer to yours than they actually are. Suppose you covet that new “Star Wars” limited-edition watch, or think your life would be immeasurably better with a fishing rod. Even if so, your spouse or your best friend might not much want those things. Beware of thinking that other people will like what you like. Focusing illusion: When people focus on a product or an activity, or on a single feature of a situation, they tend to think

that it matters a lot more than it does. For example, people in both California and Iowa have been found to think that people in California are happier than those in Iowa (which isn’t so). The reason for the mistake is that people focus on the most salient difference between California and Iowa, which is the weather, even though a warmer climate doesn’t much affect people’s happiness. The same can be said about holiday gifts. People have a tendency to focus on an eyecatching object that produces an immediate “wow!” when it is given, but that goes promptly into the desk or the closet, never to emerge again. The solution? Give serious consideration to gifts that people will actually put to daily or at least weekly use. Projection bias: When people are hungry, they tend to order a ton of food, even if they are not going to eat all or even most of it. People know, of course, that their tastes will change over time, but they project their current emotional state into the future and thus underestimate the magnitude of the change. On frigid days, people buy clothing that is needed in cold weather, such as parkas and winter coats. That’s fine as far as it goes, but they sometimes

buy more than they need. The return rate is unusually high for cold-weather products bought in low temperatures. For giftgivers, the lesson is clear: Don’t be unduly influenced by how you feel on the day that you happen to be shopping.

Unrealistic view Optimistic bias: Human beings tend to be unrealistically optimistic. Most people think they are better than the average driver and less likely to be involved in a serious accident. When people give presents, unrealistic optimism goes off the charts. We are often amazed that people don’t love what we’ve selected. Please don’t be. (And please consider avoiding the optimistic exclamation, “You’re going to love it!”) Cumulative-cost neglect: People often borrow too much because they neglect the cumulative costs of individual expenditures. If you use your credit card to purchase 20 sensible gifts, you might be alarmed by the total expense. When gift-givers don’t keep at least a rough running tab, they may find that they have spent a lot more than they expected, or even can easily afford. Spotlight effect: If you are

like most people, you think that people are watching you far more carefully than they actually are. In one experiment, students were asked to go into a classroom wearing a shirt with a picture of Barry Manilow on it (which is pretty embarrassing). Those who wore the shirt greatly exaggerated the number of people who actually noticed the picture. Most people didn’t. For the holiday season, many of us focus too intensely on how other people will react to what we get them, when it may be the mere existence of the present, rather than exactly what it is, that most matters. Unless you are dealing with someone who really cares about what you get them, you should worry a lot less (and maybe spend less, too). A few years ago, my sister declared a family moratorium on Christmas presents for anyone over 15 years old. We all celebrated. Other people, including Waldfogel himself, have suggested a different solution. Instead of giving people more gadgets, ties or bowls, tell them that this year, you’re going to make a donation in their name to a charity of their choice. Can you think of a better way to show the spirit of the season? Bloomberg View

Gift-giving can also take an economic toll. Personal debts tend to jump after December. That isn’t ideal, especially in hard economic times and if recipients aren’t thrilled with what they get

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Associated editor Michael Grimes Newsdesk Vitor Quintã (Chief Reporter), Alex Lee, Stephanie Lai, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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November 30, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

China’s Dream Team Stephen S. Roach

Faculty member at Yale University and former Chairman of Morgan Stanley Asia

Economic Times The Reserve Bank of India has turned down banks’ demand for restructuring stressed real estate loans without providing for potential losses, a move that could mount pressure on builders to lower prices as banks push to recover loans. The central bank believes that if banks are permitted to restructure the loans without providing for losses, they will lose the urge to insist on prompt payments from builders, who in turn would continue to hold onto prices even if sales are slack, two bankers familiar with the discussions were quoted as saying.

Yomiuri Shimbun The government plans to extend the operation of the Enterprise Turnaround Initiative Corporation of Japan (ETIC), a business rehabilitation organisation jointly funded by the government and the private sector, sources were quoted as saying. With fears of an economic slowdown growing, the government hopes the turnaround body will assume an important role in supporting the rehabilitation of small and midsize enterprises. The government aims to submit a bill to revise the law concerning the establishment of the ETIC to the next ordinary Diet session to be convened next year, the sources said.

Xinhua China, already India’s largest trading partner, is looking to increase its Indian direct investment, taking a page from the playbook of other East Asian nations such as Japan and South Korea. Zhang Ping, chairman of China’s National Development Reforms Commission, was in the Indian capital this week to hold a China-India strategic economic dialog, focused on increasing investments in each other’s countries. China would “push forward cooperation in infrastructure including railway, power, telecommunications” with India, Mr Ping was quoted as saying.

Jakarta Globe Indonesia, the world’s biggest producer of palm oil, is set to surpass India as the largest user next year as economic growth boosts demand. Consumption may climb 13 percent to 8.5 million tonnes from 7.5 million tonnes this year, Indonesia’s Deputy Trade Minister Bayu Krisnamurthi was quoted as saying. That exceeds U.S. government estimates of 7.95 million tonnes for India and 7.87 million tonnes for Indonesia in the 2012-2013 year. The rising demand for palm oil, however, may curb exports that rose 2.9 percent in October from a month earlier.

hina’s recent leadership transition was widely depicted as a triumph for conservative hard-liners and a setback for the cause of reform – a characterisation that has deepened the gloominess that pervades Western perceptions of China. In fact, nothing could be further from the truth. Xi Jinping and Li Keqiang – the top two officials in China’s new governing council (the Standing Committee of the Politburo) – are both well educated, well travelled, and sophisticated thinkers who bring a wealth of experience to the many challenges that China faces. As so-called Fifth Generation leaders, they continue the steady progress in competence that has marked each of China’s leadership transitions since the emergence of Deng Xiaoping in the late 1970’s. While it is entirely premature to judge the style and direction that China’s new leaders will take, three early hints are worth noting. First, Xi’s assumption of power is more complete than was the case in earlier transitions. By immediately taking the reins of both the Chinese Communist Party (CCP) and the Central Military Commission, he has a greater opportunity to put his personal stamp on policy than his predecessors had at the start of their administrations. Yes, China governs by a consensus of the Standing Committee. But Xi is well positioned to drive the thinking of a now-leaner decisionmaking body (downsized from nine members to seven). Moreover, he has long favoured a market-friendly, scientific approach to economic development, which will be vital to China’s future.

that China must embrace. His promotion could be a major step up from Wen, who emphasised rhetoric and strategy more than implementation. Third, and contrary to prevailing wisdom in the West, Wang Qishan, one of China’s savviest and most experienced senior officials, has not been relegated to obscurity in his new position overseeing “discipline” on the Standing Committee. Yes, Wang has invaluable experience in the financial sector, and it would have been logical for him to assume similar responsibilities on the new leadership team. But, as one of the top seven in the CCP hierarchy, he will still be able to weigh in on all important economic and financial matters, while assuming responsibility for tackling one of China’s toughest problems – corruption. Having known Wang for more than 15 years, my sense is that he is very well suited to this vital task.

Emerging economy The other members of the new Standing Committee bring a broad array of experience and skills. That is especially true of Yu Zhengsheng and the two

Incoming surprise Second, Li Keqiang – the presumptive incoming premier – could be the big surprise in the new leadership team. Unlike the current premier, Wen Jiabao, who was third in the chain of command for the past ten years, Li has been elevated to number two, which suggests a greater potential for power-sharing between the CCP and the government at the top of China’s new team. With a Ph.D. in economics, Li, who, as Executive Vice Premier, headed the all-important “Central Committee Finance and Economy Leading Small Group,” is especially well equipped to deal with the long-awaited structural transformation of China’s economy. Indeed, having overseen China 2030 – an extraordinary joint report recently produced by the World Bank and China’s own highlevel think tank, the Development Research Centre – he has a deep understanding of the roadmap

The new generation of leaders has the right skills and experience for the task. Western biases notwithstanding, we will know soon enough if they can translate strategy into action

Zhangs, Dejiang and Gaoli, who come from senior roles in three of China’s most powerful and dynamic urban centres – Shanghai, Chongqing, and Tianjin. Their deep knowledge of the key role played by urbanization in driving economic development will be critical to broadening the structural transformation that China now faces. The West is not only overlooking the new Chinese leaders’ enhanced skill set, but is also misjudging the current state of the country’s economy, which, while far from perfect, is not crisis-torn and in desperate need of a quick fix. In fact, China is emerging in reasonably good shape from yet another global slump. This gives its new leaders leeway between now and the National People’s Congress in March 2013 to focus on the development of implementation tactics for their strategic agenda. None of this is to minimise China’s enormous challenges. But strategy is not the problem; the pro-consumption 12th Five-Year Plan lays that out with great clarity. The new leadership must now shift the focus to commitment and implementation of that strategy – namely, through enactment of a new set of bold reforms, especially those related to the services sector, the social safety net, and stateowned enterprises. Xi’s emphasis on the “toplevel design” of reforms lends

itself particularly well to this agenda, as does Li’s intimate familiarity with the detailed blueprint provided by China 2030. Western observers, focusing on recent public statements by Xi and Li, highlight a dearth of comments in favour of economic or political reforms. But the same could have been said of the early utterances of Deng, modern China’s greatest reformer. As Ezra Vogel notes in Deng Xiaoping and the Transformation of China, Deng’s first public statement after his political rehabilitation in 1976 was, “MarxismLeninism and Mao Zedong Thought constitute the guiding ideology of the party.” Those were not exactly enlightened words – especially in view of what was shortly to come. Yet Deng seized the moment at a critical juncture that is strikingly reminiscent of the one now faced by Xi and Li. As is the case in any country’s leadership transition, no one knows for certain whether China’s incoming administration is up to the multiplicity of challenges that they face. Since the days of Deng, China has had an uncanny ability to rise to the occasion and meet its challenges head on. The new generation of leaders has the right skills and experience for the task. Western biases notwithstanding, we will know soon enough if they can translate strategy into action. © Project Syndicate

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business daily November 30, 2012

CLOSING HKEx launches US$800 mln stock offering Rio Tinto targets US$5 bln cost cuts Hong Kong Exchanges and Clearing Ltd launched yesterday an up to US$800 million stock offering, tapping equity markets within minutes after receiving approval from Britain’s Financial Services Authority for its proposed US$2.2 billion acquisition of the London Metal Exchange. The company is offering new shares in a range of HK$116.1-HK$119 each, IFR, a Thomson Reuters publication, reported, citing a term sheet of the deal. The price is equivalent to a discount of up to 7 percent to yesterday’s close of HK$124.80. Deutsche Bank AG and UBS AG were hired to manage the share sale, IFR added.

Rio Tinto Group, the world’s secondlargest mining company, said it’s targeting savings of US$5 billion by the end of 2014, while simultaneously boosting production at its iron ore, copper and alumina units. “We are taking further tough action to roll back the unsustainable cost increases of the past few years,” Tom Albanese, chief executive of the company, said yesterday in a statement. “Our two most challenged businesses are aluminium and coal, and in particular Australian coal,” he said. Rio Tinto joins other mining companies in seeking cost savings as well as curbing investment on new projects as metal demand wanes.

Euro zone economic mode cheers up a little Business surveys point to slight improvement in November

spread through the bloc continue to reverberate around the globe and hold back a lasting recovery. The Commission sees 0.1 percent growth in the euro zone economy next year, but the OECD and many international economists see the recession continuing in 2013. “We expect the euro area to remain in recession in 2013,” Citigroup said in a research note this week, predicting more interest rate cuts by the European Central Bank to try to stimulate the economy, which generates a fifth of global output.

Shaky confidence

conomic morale in the euro zone improved for the first time in almost a year in November, but industry’s reluctance to invest next year bodes poorly for a quick recovery from recession. Sentiment towards the bloc’s economy rose 1.4 points to 85.7 beating forecasts and ending an eightmonth run of falls, the European Commission’s monthly business and consumer survey showed yesterday,

with Germany and France gaining strongly. The Commission’s survey of industry found expectations of a 1 percent fall in real investment in 2013 compared to this year, however, casting doubt on European policy makers’ predictions that growth will return next year. “The economic outlook for the euro zone remains pretty dreadful,” said Jonathan Loynes, chief European

economist at Capital Economics in London. The euro zone fell into a recession in July-September, its second since 2009, as French resilience failed to make up for a slump across Europe and the three-year-old debt crisis dragged on Germany, Europe’s economic engine. The debt problems that emerged in Greece in late 2009 following the global financial crisis and have since

Consumer confidence also fell in the euro zone in November, the survey showed, which is bad news because the bloc relies on shoppers to drive around half of its economic output. Economic sentiment in November was still better than the decline expected by economists polled by Reuters, and the Commission said confidence in industry increased significantly by the first time since February, helped by orders. That may be a sign that the euro zone, while struggling at home with the debt crisis, may be benefiting abroad as the U.S. and Chinese economies regain some strength. Separately, the Commission’s business climate indicator, which points to the phase of the economic cycle, increased by 0.42 points to -1.19, and showed an improved mood across much of the economy, including order books and output expectations. Reuters

BP banned from new U.S. contracts The United States accounts for about a fifth of the company’s global oil production

he U.S. government banned BP Plc on Wednesday from new federal contracts over its “lack of business integrity” in the 2010 Deepwater Horizon oil spill, possibly imperilling the company’s role as a top U.S. offshore oil and gas producer and the No. 1 military fuel supplier. The suspension, announced by the Environmental Protection Agency, comes on the heels of BP’s November 15 agreement with the U.S. government to plead guilty to criminal misconduct in the Gulf of Mexico disaster, the worst offshore oil spill in U.S. history. The British energy giant agreed to pay US$4.5 billion in penalties, including a record US$1.25 billion criminal fine. BP and its affiliates are barred from new federal contracts until they demonstrate they can meet federal

business standards, the EPA said. The suspension is “standard practice” and BP’s existing U.S. government contracts are not affected, it said. The EPA acted hours before a government auction of offshore tracts in the Gulf of Mexico, a region where BP is the largest investor and leaseholder of deep-water tracts and hopes for further growth. BP is also the top fuel supplier to the U.S. military, the largest single buyer of oil in the world. Suspension of contracts could give the government leverage to pressure BP to settle federal and state civil litigation that could top US$20 billion if a court finds BP was grossly negligent in the Deepwater Horizon disaster. An EPA official said governmentwide suspensions generally do not exceed 18 months, but can continue longer if there are ongoing legal cases.

Suspension could threaten offshore leases

In a statement, BP said it has been in “regular dialogue” with the EPA, and that the agency has informed BP that it is preparing an agreement that “would effectively resolve and lift this temporary suspension.” The EPA has notified BP that the draft agreement

will be available soon, BP said. U.S. operations accounted for more than 30 percent of BP’s pre-tax profits in the third quarter, and the United States accounts for about a fifth of BP’s global oil production. Reuters