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Chui gets last word on Citic’s CTM deal T

he central government has approved a deal that will allow the mainland’s Citic Telecom International Holdings Ltd to win control of Macau’s biggest telecommunications operator. Citic now just needs the blessing of the city’s Chief Executive Fernando Chui Sai On for the takeover of Companhia de Telecomunicações de Macau, SARL (CTM). CTM – as the incumbent and party to be sold – has already asked

for the government’s approval. But the authorities here have given no indication of when they will make a decision. Citic Telecom secured a US$1.16 billion (9.28 billion patacas) syndicated loan in January to buy CTM, but is hoping to reduce that debt burden with a rights issue on the Hong Kong stock market that could raise HK$1.85 billion.

www.macaubusinessdaily.com

Year II

Number 267

Tuesday April 23, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief Vitor Quintã

MOP 6.00

April 19, 2013

More on page 3

Inflation at two-year low Consumer inflation slowed year-onyear in March – the third month this year deceleration has been seen. The Statistics and Census Service said yesterday the composite consumer price index for March stood at 121.11 – an increase of 4.95 percent year-on-year, mostly due to higher costs of restaurant meals and higher home rents. March’s CPI rise is – in percentage terms – the lowest seen in the city since April 2011. Joey Lao Chi Ngai, chairman of the Macao Association of Economic Sciences, told Business Daily he expected whole year inflation to be about five percent, which he described as “still quite serious” for local standards of living.

Page 2

I SSN 2226-8294

Hang Seng Index 22110

22068

22026

21984

21942

21900

April 22

HSI - Movers Name

%Day

CHINA RES POWER

4.49

CHINA UNICOM HON

4.29

CHINA RES ENTERP

2.21

WANT WANT CHINA

2.06

MTR CORP

1.99

KUNLUN ENERGY CO

-1.20

CHINA RES LAND

-1.28

HANG LUNG PROPER

-1.49

CITIC PACIFIC

-1.89

CHINA LIFE INS-H

-1.93

Source: Bloomberg

Brought to you by

Gaming, investment, fuel wealth gap: study Page 2

Lift safety – new guidelines praised by industry Page 5

Packer wants Sri Lanka ‘integrated resort’: reports Page 6

2013-04-23

2013-04-24

2013-04-25

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April 23, 2013

Macau

Lowest consumer price inflation for two years March numbers show smallest year-on-year rise since April 2011 Michael Grimes

michael.grimes@macaubusinessdaily.com

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onsumer inflation slowed year-on-year in March – the third month this year deceleration has been seen. The Statistics and Census Service said yesterday the composite consumer price index for March stood at 121.11 – an increase of 4.95 percent yearon-year, mostly due to higher costs of restaurant meals and higher home rents. Other government data suggest that on average local households spend up to a quarter of their disposable monthly income on dining out. March’s CPI rise is – in percentage terms – the lowest seen in the city since April 2011, when the Composite CPI increased by 4.88 percent year-onyear. The Composite CPI for the first quarter of 2013 increased by 5.38 percent year-on-year according to the statistics bureau, compared to 5.87 percent inflation seen in the CPI-A in the first quarter 2012.

Macau’s Composite CPI uses prices from 20082009 as a base and covers a basket of consumer items. It’s divided into two parts. The ‘CPI-A’ applies to poorer households –about half of the total – with an average monthly expenditure of 6,000 to 18,999 patacas. The ‘CPI-B’ relates to more affluent households – about 30 percent of the total – with an average monthly expenditure of 19,000 to 34,999 patacas. As the effect of the Lunar New Year “faded out”, said the bureau, the Composite CPI for March 2013 decreased by 0.29 percent monthto-month. The traditional holiday period tends to have an inflationary effect not only in the month where the holiday falls, but for a week or two either side of it. In March this year the price index of items listed as ‘recreation & culture’ and ‘clothing & footwear’ fell by 6.23 percent and

Eating out an important expense for locals

2.90 percent respectively “due to reduced charges for package tours and seasonal sale of winter clothing,” said the bureau. The CPI-A and the CPI-B decreased

by 0.15 percent and 0.28 percent respectively monthto-month it added. In late March Joey Lao Chi Ngai, chairman of the Macao Association of Eco-

nomic Sciences, told Business Daily he expected whole year inflation to be about five percent, which he described as “still quite serious” for local standards of living.

Gaming, investment, fuel wealth gap: study City’s Gini coefficient creeping higher but not yet worrying, says economist Stephanie Lai

sw.lai@macaubusinessdaily.com

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acau’s Gini coefficient – a measure of the concentration of wealth in an economy – reached 0.4 in 2011, the highest level since 2006, says the Macao Association of Economic Sciences in a study released on Friday. The Gini coefficient measures the wealth gap on a scale of 0 to 1. The higher the Gini figure, the greater the inequality. A reading above 0.4 usually marks strong inequality. Joey Lao Chi Ngai, president of the association, says the major reason behind the widening wealth gap in Macau is the effect of rising wages in the gaming sector. “Overall, the income level of the gaming staff is higher than in other sectors,” Mr Lao told Business Daily. “And as there is great demand in the market for gaming staff the salary levels are kept up on [at] increasingly high levels,” he added. At the end of last year median monthly wages in the gaming industry reached 15,000 patacas

(US$1,876); 25 percent above the overall median of 12,000 patacas. “That in turns puts more pressure on the smaller enterprises, which have very limited capacity to raise the salary level for their workers,” stated Mr Lao. The wealth gap has been made wider by the fact that the rich have increased their rate of capital investment in recent years – in part as a hedge against inflation in the housing sector and in the regional economy generally, Mr Lao suggested.

Managed Growth His association calculated the Gini coefficient from the government’s survey on household income and expenditures here. The city’s Statistics and Census Service last published the official Gini coefficient in 2007-2008, when it was at 0.38, down from 0.44 in 2002-2003.

The coefficient is published every five years. The bureau is currently gathering data from a year-long household budget survey that will continue until September. The 2011 coefficient registered only a slight rise when compared with the previous years and its value of 0.4 should not yet be considered worrying, Mr Lao said. “We ought to take notice that though there is a slight rise in the Gini coefficient, the city has also undergone a very rapid economic growth at that time,” he said. The real-terms growth rates in gross domestic product during 2010 and 2011 were 27.5 percent and 21.9 percent respectively, official data show. “Throughout rapid economic growth, the government performed well through its welfare system and made some progress in the public housing policy, which has restricted the wealth gap,” Mr Lao added. The economist – a staff member

Casino industry is helping to widen inequality, economist says

at the University of Macau – stressed that the government should continue improving public housing policy to benefit the lower income groups. “I would think Macau’s coefficient still does not present a bad picture in terms of income distribution, as it is still much lower than Hong Kong’s 0.5 [in 2011] and mainland China’s 0.48 [in 2009],” he noted. The association’s projections were usually 0.02 to 0.03 points lower than the official Macau’s Gini coefficient in 2002-2003 and 2007-2008. The study claims that the income from the highest-earning 20 percent of households here was 9.3 times higher than the lowest-earning 20 percent in 2011, up from 8.17 times in 2008. In 2011 the highest-earners had an average income of 33,532 patacas while the average of the lowestearners was just 3,606 patacas.


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April 23, 2013

Macau

Beijing approves CTM deal Citic Telecom plans a rights issue to help pay the acquisition costs Vítor Quintã

vitorquinta@macaubusinessdaily.com

T

he central government has approved Citic Telecom International Holdings Ltd’s acquisition of Macau’s biggest telecommunications company, Companhia de Telecomunicações de Macau SARL (CTM). “The necessary consents/ approvals from the PRC [People’s Republic of China] government have already been obtained,” Citic Telecom told the Hong Kong Stock Exchange yesterday. Citic Telecom did not say when approval had been granted, but Business Daily has learned it had been late last week. Macau’s telecommunications regulator must now approve the deal. “We have already been in touch with the relevant government regulatory bodies in Macau and the approval procedures are in progress,” a Citic Telecom spokesman told Business Daily last week. The Bureau of Telecommunications Regulation said CTM had applied in early February for approval. CTM’s application was “according to the requirement stipulated in the mid-term review of concession agreement of the public telecommunications service”, a spokesperson for the bureau told Business Daily. “The authorisation procedure is currently in progress and the approval will be subject to the final decision of the MSAR Government,” the spokesperson said. The telecommunications regulator did not indicate if or when the acquisition might get the green light. Citic Telecom expects to have obtained all necessary approvals by July 13, but told the stock exchange last month that it could wait for a further 90 days for Macau government approval.

Share issue Macau Post owns 1 percent of CTM and has the right of first refusal of the other shares, but has said it will not exercise its right if the deal

The telecommunications regulator has been approached by CTM for approval of Citic Telecom’s takeover

is approved by Chief Executive Fernando Chui Sai On. Citic Telecom expects to close the deal in the third quarter of this year. The company hopes to raise as much as HK$1.85 billion (US$237.9 million) through a rights issue of three shares for every eight shares held at a price of at HK$2.02 per share. Citic Telecom intends to use the proceeds to reduce the money it will borrow to buy 79 percent of CTM from Cable & Wireless Communications Plc and Portugal Telecom SGPS SA. Citic Telecom secured in January a loan facility of US$1.16 billion with a syndicate of seven banks for the purchase. The facility comprises a oneyear loan of US$200 million and five five-year loans on which the company pays annual interest of

less than 5 percent. Citic Telecom chief financial officer David Chan Tin Wai told Business Daily in January that the loan could leave the company with too much debt. “A net gearing of over 200 percent is high. No one wants to get that much gearing,” Mr Chan said. “We will leave room to consider our refinancing later on.”

Bond issue Citic Telecom raised US$450 million in February by issuing of bonds with a coupon of 6.1 percent which are due to mature in 2025. A Citic Telecom spokesperson said at the time that the proceeds would be used to service the one-year portion of the syndicated loan. Citic Telecom told the stock exchange yesterday that the proceeds

from the bond and rights issues would be enough to ensure that the amount the company had to draw down from the loan facility would be less than the maximum of US$1.16 billion. The rights issue could increase Citic Telecom’s share capital by more than one-third. The rights shares are being offered at a discount of about 26.8 percent to Friday’s closing price for Citic Telecom stock of HK$2.76 per share. Shareholders have until May 30 to decide whether to take up the rights offer. The deal is underwritten by Standard Chartered Securities (Hong Kong) Ltd, DBS Asia Capital Ltd, Deutsche Bank AG, UBS AG and CITIC Securities Corporate Finance (HK) Ltd. Citic Securities and Citic Telecom are both units of state-owned conglomerate Citic Group.

Singapore ‘monitoring’ U.S. probes into LVS T he Casino Regulatory Authority of Singapore has renewed the casino licence of Las Vegas Sands Corp.’s Marina Bay Sands resort in the city “for another three years with effect from 26 April 2013,” it said in a statement. The CRA added however “that it is an ongoing requirement for its associates to remain suitable” and that it was “monitoring” U.S. regulatory proceedings. New York-listed LVS is currently under investigation by the U.S. Justice Department and the U.S. Securities and Exchange Commission in connection with

its business activities in Macau and mainland China. Between February 6 last year and February 13 this year, Marina Bay Sands was fined a total of S$917,500 (5.92 billion patacas) by the CRA for unrelated offences. It included S$475,000 in penalties for inadequacies in its video surveillance system, and S$92,000 for allowing some Singapore citizens and Singapore permanent residents to enter the casino without paying the statutory entry levy of either S$100 for 24-hour access, or S$2,000 for a year’s entry. M.G.


4

April 23, 2013

Macau

Analysts more bullish on Wynn thanks to Macau pick up Michael Grimes

michael.grimes@macaubusinessdaily.com

A

nalysts are turning more bullish on Wynn Macau and its parent Wynn Resorts as it moves closer to its first quarter report. Last year around 70 percent of Wynn Resorts’ group EBITDA (earnings before interest, taxation, depreciation and amortisation) came from Macau according to a research note from Union Gaming Research in Las Vegas. But with only a single property on Macau peninsula, a falling share last year of the city’s market wide gaming revenue, and no Cotai presence until late 2015 at the earliest – as well as some overhang from U.S. regulatory and now U.S. criminal inquiries into Wynn’s US$135 million (1.1 billion patacas) donation to the University of Macau – some analysts had expressed concerns about the group’s 2013 performance. But recently analysts have liked the fact the 2012 interim results for the Macau unit – published in midApril – showed profits attributable to shareholders rising 8.8 percent on casino revenues that actually fell 3.8 percent year-on-year. They also liked the news of the final dividend

Wynn Macau – Cotai project pending

of HK$1.24 (US$0.16) per share for 2012 that Wynn Macau Ltd is scheduled to declare at the annual general meeting in the city on May 16. Commenting on Wynn Macau’s

first quarter performance, Kenneth Fong of J.P. Morgan said: “By our estimates, Wynn Macau saw the strongest EBITDA (14 percent) quarter on quarter growth on the back

of the market share improvement in all segments and a better [house] luck factor (1Q13 at 3.16 percent versus 4Q12 at 2.96 percent).” The latter is a reference to hold rates on live dealer baccarat – the game of choice for most Macau gamblers. Deutsche Bank last week – in a research note issued to investors – reiterated its buy rating on shares of Wynn Resorts. Analysts at JPMorgan Chase in New York raised their price target on shares of Wynn Resorts from US$148.00 to US$149.00 in a research note to investors on April 10. They now have an overweight rating on the stock. Separately, analysts at RBC Capital Markets in a March 26 research note reiterated an outperform rating on shares of Wynn Resorts. Wynn Resorts’ chairman Steve Wynn spoke briefly about his Macau investments on the CBS This Morning television programme in the United States last week. Asked about his dealings with “the Chinese government” by show cohost Norah O’Donnell, Mr Wynn described the Chinese side as “very steadfast and predictable”.

Corporate

Nike Golf tees up for Special Olympics Masters The teams joining Level 1 and 2 competition at this year’s Special Olympics Golf Masters will receive brand new Nike Slingshot golf club sets that they can use both during the tournament and back home for training purposes. “We’d like more people to be able to play golf, and we’ll do everything we can to increase access to the game,” said Scott Hull, Nike Golf’s Greater China general manager. “Nike is very involved in the grass-roots market, where we do very well. And it’s also something we think can help make a difference with here to help grow the golf market,” he added. Level 1 and 2 teams from East Asia and the larger Asia Pacific region remain the bedrock of the tournament, which is focused on promoting and developing the game of golf. Special Olympics Golf competition involves five formats, with Level 5 being the highest. The introduction this year of the Level 5 format is one of the highlights. Other companies have also decided to sponsor the second edition of the tournament, including gaming operator MGM China Holdings Ltd. The Special Olympics Golf Masters is “an event which encourages passion and determination from the participating athletes and team members on the golf course,” said Grant Bowie, MGM China chief executive officer and executive director. The tournament “is a very positive way of expressing our commitment to the wider Macau community,” he added. The event began yesterday at the Caesars Golf Macau course and will continue until Saturday. A total of 14 teams from 12 countries will bring 47 athletes and 27 coaches to city. The entry list includes Thomas Lugg, three times Special Olympics World Games gold medallist from South Africa and considered to be the world’s best golfer with a mental disability.


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April 23, 2013

Macau

Lift maintainers say safety guidelines a step forward Voluntary standards for safety inspections of lifts come into effect next month

to ensure that they have been inspected thoroughly. “If we find out that the lift was not examined properly, we will inform the owner of this situation, and announce on our website that this maintenance company has a problem,” the head of the bureau’s urban construction department, Chan Weng Hei, told reporters. The guidelines are voluntary. But Mr Chan said information on inspections of lifts and escalators published on the bureau’s website would help keep lift safety on the right path. The chairman of the Macao Elevator and Escalator Engineering Professional Association, Raymond Tam In Wo, told Business Daily that the guidelines would ensure maintenance companies stuck to the safety standards for lifts and escalators. “I believe at least 70 to 80 percent of the lift maintenance companies here will register with the bureau,” Mr Tam said. “Linking the inspection status and the licence renewal for hotels and restaurants is also wise, putting pressure on the operators to keep a close check on their lift safety levels,” he said. The director of the Macao Elevator and Escalator Employees Association, Chan Weng Seng, said the guidelines could help improve lift maintenance. “But what is lacking is still a full qualification and training system for lift safety inspection engineers. We hope that the government will put more resources into developing this in the future,” said Mr Chan.

Stephanie Lai

sw.lai@macaubusinessdaily.com

The Land, Public Works and Transport Bureau will check 5 percent of Macau’s lifts every year

G

uidelines for safety inspections of lifts and escalators announced by the government are a step in the right

direction, people in the business of maintaining lifts and escalators say. The Land, Public Works and Transport Bureau announced on

Friday that the guidelines would come into effect by May 19. The government is asking all companies that maintain and repair lifts or escalators to register with the bureau. The guidelines say maintenance companies should check at least once a year each lift or escalator they are meant to take care of, and post a sticker showing the result of the inspection right next to the installation. They say maintenance companies should keep the bureau informed about their programmes of inspection. The guidelines say restaurants, hotels, casinos and industrial buildings that wish to renew their business licences must have safety certificates, renewable annually, for their lifts and escalators. Every year the bureau will do spot checks on 5 percent of the more than 5,000 lifts in Macau,

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April 23, 19, 2013

Macau More residents seeking a job The number of Macau residents searching for a job through the Labour Affairs Bureau bounced back in the first quarter of this year. Between January and March, 1,955 candidates signed up at the bureau’s employment department, 153 more than in the previous quarter. Worryingly, almost two-thirds of all job seekers (63 percent) were at least 45 or older and one third of the candidates had no qualifications besides having completed primary education. Most of the applicants were looking for a position in the construction industry, building security or administrative staff.

Packer wants ‘integrated resort’ in Sri Lanka: govt Made three trips to holiday island state since late Feb according to local media Michael Grimes

michael.grimes@macaubusinessdaily.com

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acau casino investor James Packer has visited Sri Lanka for the third time since late February with a view to possible investment there reports Fairfax Media in Australia quoting local media. According to the Sri Lankan reports, Mr Packer’s Australia-listed Crown Ltd has agreed to spend $US350 million (2.8 billion patacas) to build a casino resort called Crown Colombo, due open for business in

2016. Business Daily asked Crown to comment on those reports but the company declined to do so. The Sydney Morning Herald yesterday quoted Lakshman Yapa Abeywardena, Sri Lanka’s Minister of Investment Promotion, saying after Mr Packer’s latest visit: “They have not finalised the area and the amount they are going to invest. The government has asked them to come up with a proposal.” He added: “The government

proposed [for] them to invest in a large city hotel in Colombo and go to [the eastern city of] Trincomalee to look into possible investment opportunities.” Treasury Secretary P. B. Jayasundera added Mr Packer had expressed an interest in “integrated tourism” – usually code in the industry for a casino with multiple hotels, a shopping mall and theatre entertainment. Sri Lanka passed a Casino Regulatory Bill in November 2010 following the conclusion in May 2009 of the country’s 26-year civil war with ethnic Tamil militants that were seeking a separate homeland in the north of the island. The aim of the casino bill, according to reports at the time, was to regulate small-scale gambling halls that were already operating illegally, and to create a reliable legal framework that would enable foreign investors to develop world-class properties in the market capable of bringing in more foreign visitors. Sri Lanka’s government said at that time it wanted to generate US$2 billion annually in tourism

receipts and attract 2.5 million tourists per year by 2016. In 2010 the country earned US$1.04 billion from tourism, according to a World Bank report published last year. That was a near threefold increase from the US$350 million tourism earnings in 2009. Before the war ended, most of the country’s foreign visitors were confined to the non-militarised southern portion of the island. Mr Packer – a joint venture player in the gaming markets in Macau and the Philippines via Melco Crown Entertainment Ltd – has been steadily developing the business portfolio inherited from his father Kerry. In the past few years he has focused it on higher growth casino gaming – a sector that in many markets has limited competition because it depends on government-issued licences – and away from lower growth, high competition media. In August last year he accepted a US$2.1bln bid for his a majority stake in Australian pay-tv holding company Consolidated Media Holdings to communications rival News Corp., owned by Rupert Murdoch. Crown also has plans for a A$1 billion (8.37 billion patacas) real estate scheme including gaming at Barangaroo in Sydney. There Mr Packer faces opposition from Echo Entertainment Group Ltd, operator of The Star – the only casino currently in Sydney. Echo wants to extend The Star’s exclusivity deal with the New South Wales government beyond the expiry date of 2019. An e-mail to Bloomberg News from New South Wales state premier Barry O’Farrell’s office earlier this month said NSW would only give permission to one of the two projects.

P. B. Jayasundera (top) Sri Lanka’s Treasury Secretary says James Packer (bottom) interested in integrated resort in Colombo


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April 23, 19, 2013

Macau Government donates for Sichuan quake relief The Macau government announced yesterday it would release 100 million patacas (US$12.5 million) as a donation for the victims of the earthquake that occurred on Saturday in Sichuan province. The Macau Red Cross has received donations of 9.09 million patacas and the charity also offered 1 million yuan (1.3 million patacas). The Macau branch of Bank of China Ltd has donated 1 million patacas. The Central People’s Government Liaison Office in Macau said it received over 12 million patacas from associations, the state-owned Nam Kwong Group, and Chinese People’s Political Consultative Conference members.

Govt’s Q1 green subsidies triple The government approves three-fifths of bids in the first quarter for environmental protection grants Vítor Quintã

vitorquinta@macaubusinessdaily.com

T

he government’s Environmental Protection and Energy Conservation Fund granted three times more subsidies in the first quarter of this year than a year earlier, approving three-fifths of all applications for such subsidies. The government announced last week in the Official Gazette that the fund had granted almost 9.5 million patacas (US$1.2 million) in subsidies in the first quarter. The fund granted 2.95 million patacas a year before. The Environmental Protection Bureau, which runs the fund, told Business Daily it had received about 500 applications for such subsidies and had approved about 300. The 200 million patacas in the fund is for subsidising the acquisition by companies and associations of environment-friendly technology, equipment and other products. The fund pays up to 80 percent of the cost of acquisition, up to a limit

The government has given bus operator TCM almost 308,000 patacas to buy green technology

of 500,000 patacas per grant. It does not pay any of the cost of installation or of associated construction or refurbishment.

The Environmental Protection Bureau said most of the subsidies granted in the first quarter were for energy-saving lighting and air

conditioning, kitchen extractor hoods and air purifying equipment. The fund granted two companies the maximum subsidy of 500,000 patacas. One is Companhia de South Bay Centro Ltda, the owner of the Macau Square office building in the city centre, and the other is ticketing agency Kong Seng Paging Ltd. The fund granted bus operator Sociedade de Transportes Colectivos de Macau, SARL (TCM) 307,824 patacas. It granted the Macau Civil Servants Association 132,338 patacas. The fund has put back the deadline for applying for subsidies to December 31. The Environmental Protection Bureau said in an email that it would “constantly improve on the application procedures”. It said it would supervise the companies and associations subsidised “to ensure that the fund is well spent”.


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April 23, 2013

Greater China TPG to sell UniTrust U.S. private equity firm TPG Capital is putting China’s UniTrust Finance & Leasing Corp up for sale, seeking US$800 million, and has hired Morgan Stanley and UBS to handle the deal, people with knowledge of the matter told Reuters. Bank and non-bank financial institutions from Europe, Japan and Australia are expected to bid for Shanghai-based UniTrust, which provides equipment leasing finance for small and medium-sized companies in the construction, medical, education and technology industries, the sources said. Suitors are likely to be attracted by the ability to lend to China’s SMEs, which struggle to get loans from China’s big banks. China’s 4.3 million SMEs account for 60 percent of China’s GDP and 75 percent of new jobs created in the country. TPG acquired a controlling stake in the business as part of a US$275 million investment in Japan’s Nissin Leasing in 2008. A successful exit from UniTrust would boost TPG’s fund raising efforts in Asia. The buyout fund has raised less than US$2 billion of its US$5 billion target since its launch in late 2011, while rival KKR & Co has raised US$6 billion since its launch in January 2012. UniTrust’s main competitors include KKRbacked Far East Horizon. Far East, which has a market value of US$2.2 billion, trades at a 12-month forward price-to-earnings multiple of 7.2, according to Thomson Reuters data. Morgan Stanley and UBS are expected to kick off a formal sale in the next two weeks. UniTrust earlier this year took out a 3 billion yuan loan (US$486 million) from Chinese banks to refinance outstanding debt, according to Basis Point, a Thomson Reuters publication.

Automakers turn to hybr As companies hope for Beijing backing Fang Yan and Norihiko Shirouzu

Subsidies could help kick-start ‘new-energy’ car policy

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hina is warming to gasolineelectric hybrid cars as it tackles an addiction to fossil fuels, and local car makers are finally heeding the call and entering a niche ‘green’ market dominated by Japanese rivals such as Toyota Motor Corp. Some automakers like state-owned SAIC Motor Corp and Brilliance Auto are developing the fuel-saving technology pioneered by Toyota on its

Brokerages in debt selling rush to boost leverage Chinese brokerages have borrowed nearly US$13 billion so far this year by issuing debt to fund expansion after authorities opened doors to lucrative but riskier businesses, a move which could double returns to shareholders over the next three years. Brokerages are looking to expand into proprietary trading and various lending activities, including to margin traders and short-sellers, industry executives say. They will also begin lending to enterprises, though unlike banks they will require collateral, such as shares. Many securities firms are already involved in shadow-banking, whose off-balance sheet lending has raised anxiety over the health of financial sector. But these new activities will be all on-balance sheet, limiting the scope of any downside risks. Last May, China Securities Regulatory Commission (CSRC) lifted a ban on brokerages issuing short-term bills and earlier this year allowed them to sell corporate bonds for the first time. The watchdog has also drafted rules that would effectively triple the ceiling on brokerages’ leverage ratio, enabling them to borrow more money to fund new businesses at a time when their traditional business areas are dwindling. “Unlike Western banks, Chinese brokerages have long been plagued by a low leverage ratio, which has seriously curbed returns to shareholders,” Li Chuqian, chief financial officer at China’s second biggest brokerage Haitong Securities Co Ltd, told Reuters. “It’s imperative for us to increase mid- and longterm borrowing.” So far this year, 13 brokerages, including industry leader CITIC Securities Co. Ltd, China Merchant Securities and GF Securities, have raised more than 80 billion yuan (US$12.93 billion) from the debt market, according to Reuters calculation. More brokerages are following suit. Haitong last month unveiled plans to issue both shortterm bills and long-term bonds, while bigger rival CITIC said it aims to raise an additional 40 billion yuan through bond sales. Reuters

Prius model two decades ago. BYD Co Ltd, a Chinese battery and automaker part-owned by a Warren Buffett company, unveiled a “self-developed” gasoline-electric car technology at the Shanghai auto show, the premier industry event in the world’s biggest market, on Saturday. Throwing more subsidies at conventional hybrids could help kickstart China’s so-called ‘new-energy’

car policy, which has failed to gain traction. The policy aims to put half a million new-energy vehicles – defined as all-electric battery vehicles and heavily electrified “near all-electric” plug-in hybrids – on the road by 2015 and 5 million by 2020. Last year, just 12,791 such vehicles were sold, according to the China Association of Automobile Manufacturers data, and industry

HK port workers take strike to tycoon Li Union calls for rally outside Cheung Kong Centre on Friday industries and cause irreparable damage to Hong Kong,” according to its advertisement in the South China Morning Post. The workers ran an advertisement in the Chineselanguage Ming Pao Daily with a headline questioning whether Mr Li really understands their situation. The escalating protests come after some port workers were told they will lose their jobs as Global Stevedoring Services Co., one of the contractors which employs them, decided last Friday to wind up operations because it wasn’t able to meet the workers’ salary demand.

Following suit

Strike extends to almost four weeks

L

i Ka Shing’s Hong Kong port operator and striking workers published advertisements yesterday in an attempt to win public support as a strike over wages extends to almost four weeks.

Hongkong International Terminals Ltd, one of the operators at the world’s third-biggest container port, said the 20 percent raise contract workers are demanding will “create an impact across other

Contract workers of Hongkong International Terminals were offered a 7 percent raise by their employers, the company said in an e-mail on April 17. The workers had asked for a 23 percent increase. The port operator also said it couldn’t meet lawmaker Lee Cheuk Yan and the union’s request to have direct negotiations with workers


9

April 23, 2013

Greater China

rids

KEY POINTS Carmakers developing fuelsaving technology Policy aims to put half a million new-energy vehicles on the road Handouts for hybrid cars expected to be higher

experts reckon China has little hope of hitting those objectives unless the government redefines new-energy cars and embraces conventional hybrids and other alternative energy technologies. “After all these years, people now realise that all-electric battery cars are unlikely to become mainstream over the next 10 years,” said Peter Huang, associate director at IHS Automotive.

Expanding subsidies Looking to wean China off fossil fuels and clean up its polluted air, Beijing has offered generous purchase incentives on new-energy cars in a 3-year programme that ended last year. As it comes to renew the programme, which industry insiders expect in the coming weeks, the

because the company doesn’t employ them. “They are targeting the union and the strikers because they don’t want a union victory after the strike, which may cause other workers to follow suit,” Mr Lee, who is also general secretary of the Hong Kong Confederation of Trade Unions, said yesterday. Workers are asking for the pay increase to catch up with inflation over the past 18 years, according to the advertisement ran by the Union of Hong Kong Dockers. Workers are paid less than what they earned in 1995, it said. “This is not a mere fight by hundreds or thousands of port workers,” the union’s advertisement said. “It is also all Hong Kong workers’ fight for their dignity.” The union called for another rally outside Mr Li’s Cheung Kong Centre headquarters on April 26. Dozens of workers pitched tents around the 70-story Cheung Kong Centre in the business district after a protest march on April 17 as government mediators struggled to narrow the differences. The strike prompted shipping lines to divert vessels to Shenzhen, China, from Hong Kong’s harbour, and is the biggest revolt against Mr Li, Asia’s richest man. Bloomberg News

government is thought likely to increase subsidies for hybrids. Handouts for those buying hybrid cars “will likely be significantly higher” than they are now, a senior executive at a major state-owned automaker told Reuters. In the previous programme, Beijing offered a 3,000 yuan (US$490) rebate to drivers buying a new gaselectric hybrid car, way below the 60,000 yuan handouts on all-electric battery cars. “The government has to change the policy. What has happened is they can’t spend the money budgeted for all-electric cars because few people are buying them. People are not motivated to buy hybrids either as the subsidies are far from enough,” said the stateowned auto company executive, who didn’t want to be named because of the sensitive nature of the matter. Jochem Heizmann, CEO of Volkswagen Group China, said “There’s a discrepancy between the [Chinese] government’s goals and actions. Over the next 10 years, plugin hybrids have much better prospects to achieve a certain volume than [purely] electric cars. “The problem is that special infrastructure has to be organised in some public areas. For private individuals it’s really difficult to use the electric car. It will take a long time to get to a certain volume [with battery-powered cars],” he told reporters. Chinese media have reported that Miao Wei, head of the Ministry of Industry and Information Technology, told delegates at last month’s National People’s Congress that the new-energy car rebate programme would likely include 16 categories based on a vehicle’s fuel efficiency – raising industry hopes that the government is ready to boost subsidies for conventional hybrids. The city of Guangzhou, a key industrial hub in southern China with a population of 12.7 million, decided last year to offer a 10,000 yuan rebate to anyone buying a gaselectric hybrid car. Reuters

HK home prices to decline as much as 25 pct: Bernstein

H

ong Kong home prices will fall as much as 25 percent after the government stepped up measures to curb an asset bubble and as banks raised mortgage rates, according to Sanford C. Bernstein H.K. Ltd. The number of new apartment sales will “remain largely subdued” with developers shifting their focus to cheaper and smaller units to boost sales, analysts led by Kenneth Tsang wrote in a report yesterday. An index tracking home prices dropped the most in almost three years in the week ended April 14 after the government introduced its toughest yet measures to cool prices on February 22. Prices could fall as much as 20 percent over the next two years, Deutsche Bank AG said in a report last month. Cheung Kong Holdings Ltd, which last month lowered prices by almost 10 percent at a project in response to the government curbs, may introduce more price cuts to boost sales, said the Bernstein analysts. The builder is controlled by Li Ka Shing, the city’s richest man. The analysts assigned an underweight rating to Hong Kong developers and are advising investors to sell Henderson Land Development Co. because of its “strong competition with Cheung Kong,” and Sino Land Co., which has “large exposure in larger units within its own portfolio”. The Hang Seng Property Index, which tracks the shares of nine of the city’s biggest developers, rose 0.2 percent and is up 1.3 percent this year, compared with a 2.8 percent drop in the benchmark Hang Seng

Index in 2013. Home prices fell 1.41 percent in the week ended April 14, the fourthstraight weekly decline, according to an index compiled by Centaline Property Agency Ltd, Hong Kong’s biggest closely held realtor. It was the biggest drop since May 2010. Before February’s measures, a housing shortage, low mortgage costs and buying by mainland Chinese helped prices more than double since the start of 2009 even as policy makers attempted to rein in gains amid an outcry over affordability. The government on February 22 doubled the stamp duty on all property transactions higher than HK$2 million (US$257,612), while the Hong Kong Monetary Authority told banks to maintain the risk weighting for new home loans at a minimum of 15 percent to help protect them against a drop in home values. Bloomberg News

Iron ore importers to be locked into trading platform Govt aiming to wrestle pricing power away from global miners

C

hina will refuse to grant new licences to iron ore importers unless they participate in a domestic trading platform, in a fresh move by the world’s biggest iron ore consumer to wrestle pricing power away from global miners. China, which buys around twothirds of the world’s 1-billion-tonne plus sea-borne iron ore, has been attempting to regain the upper hand in pricing the steel making raw material since grudgingly accepting an industry-wide shift to spot pricing after four decades of a yearly-set price ending in 2010. Under new rules, traders and steel mills seeking a new licence to import will now have to trade at least 500,000 tonnes of iron ore on the platform set up by the China Beijing International Mining Exchange (CBMX), a document on the regulations obtained by Reuters showed. Only Chinese firms are eligible for import licences. China’s first physical iron ore trading platform competes with the globalORE platform in Singapore, but the new rules, in a country with

tens of thousands of iron ore traders, could give CBMX more business and boost liquidity. Global miners BHP Billiton Ltd, Vale SA and Rio Tinto Plc and Chinese steelmakers including Baoshan Iron and Steel Co. Ltd are members of both platforms. China has long suspected that iron ore pricing is manipulated by some miners and traders and wanted a platform that it deems more transparent, although miners may be wary of Beijing gaining control if more business flows to the exchange, particularly after Chinese pressure over ore price levels. Last month, China’s top economic planning agency accused the world’s top three miners and some traders of manipulating the market to push up prices that soared more than 80 percent to near US$160 a tonne in February from three-year lows in September. “Some traders have already been verbally informed of this new rule and they are keen to increase trade on the platform to get the import

qualification,” said an industry source familiar with the matter. CBMX launched the physical trading platform, together with its own iron ore pricing index, on May 8, 2012, hoping to boost its price-setting influence in its biggest commodity import by volume. The new requirements were drawn up by the China Iron and Steel Association and the China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters, a unit that helps regulate iron ore trade on behalf of the Ministry of Commerce of China, industry sources said. Reuters


10

April 23, 2013

Asia MISC slides as Petronas pulls bid MISC Bhd., the world’s second-largest shipper of liquefied natural gas, tumbled the most in 14 years in Kuala Lumpur stock trading after Petroliam Nasional Bhd. withdrew its 9.16 billion ringgit (US$3 billion) buyout offer. The stock fell 12 percent to 4.69 ringgit before closing at 4.67 ringgit, its steepest drop since January 27, 1999. That’s 15 percent below Petronas’s failed final offer of 5.50 ringgit per share. Petronas pulled its bid after failing to win enough minority shareholder support to take the company private, MISC said in a statement.

Indonesia finance minister pick rattles market Dual position, limited term add to uncertainty, analyst says Berni Moestafa and Novrida Manurung

P

Mr Rajasa will also remain coordinating minister for the economy

resident Susilo Bambang Yudhoyono’s decision to opt for an acting finance minister to replace Agus Martowardojo threatens to cloud the policy outlook as Indonesia struggles to revamp its fuel-subsidy programme, step up infrastructure investment and damp price pressures. Hatta Rajasa will replace Mr Martowardojo, who is set to become the next Bank Indonesia chief, the government said on April 19. Mr Rajasa is chairman of the National Mandate Party, a member of Mr Yudhoyono’s Democrat Party coalition, and will also remain coordinating minister for the economy. The Jakarta Composite index, which has gained about 16 percent this year and reached a record last week, fell after the announcement that came an hour before the close of trade on April 19. Mr Rajasa assumes the role as a government plan to curb fuel subsidies threatens to boost inflation that reached a 22-month high in March, adding to the burdens of an economy facing falling prices for its commodity exports including palm oil. “The decision is quite strange – it will have a negative impact on the stock market and the rupiah,” said David Sumual, an economist at PT Bank Central Asia in Jakarta. “Indonesia needs a finance minister

with a background in macroeconomic and fiscal policy, as there are so many problems in the economy.” Indonesia’s benchmark index, which was little changed at the time of the announcement, closed 0.3 percent lower, posting its first drop in four days. Ten-year government bonds gained, pushing the yield down by two basis points, according to prices from the Inter Dealer Market Association. The rupiah weakened 0.1 percent to 9.715 per dollar, prices from local banks compiled by Bloomberg show. The currency has slipped more than 5 percent in the past 12 months, the biggest decline after the yen among 11 Asian currencies tracked by Bloomberg.

Limited tenure Mr Rajasa’s tenure will end before Mr Yudhoyono completes his five-year term in 2014, Julian Aldrin Pasha, a presidential spokesman, said. Mr Yudhoyono’s choice of Mr Martowardojo earlier to replace Governor Darmin Nasution when his term ends May 23, also received mixed reactions from analysts. Mr Rajasa, whose daughter is married to the president’s son, has been chief economic minister since October 2009 and was previously state secretary. “The dual position can lead to the perception that the government is not serious about the finance ministry,” said Lana Soelistianingsih, an economist at PT Samuel Sekuritas in Jakarta. The limited term “adds to the uncertainty”. Mr Yudhoyono has sought to cut fuel subsidies and allocate more funds to infrastructure to spur economic growth. The government limited the use of partially subsidised diesel in January, after protests derailed plans to raise prices in 2012. A move to raise gasoline and diesel prices or restrict the use of subsidised fuel would add to

Softbank has scope for sweetened Sprint bid Carrier currently not planning to raise its offer

S

oftbank Corp. has the scope to raise its US$20 billion bid for control of Sprint Nextel Corp. by about US$5 billion and top a competing offer from Dish Network Corp. without diminishing its creditworthiness, say firms from Daiwa Securities Group Inc. to BNP Paribas SA. While Moody’s Investors Service said it may cut Softbank’s debt rating to speculative-grade, the price to insure the Tokyo-based company’s bonds with credit-default swaps fell to 145 basis points from 150 after the offer was unveiled on April 15. Relative yields on its debentures due in 2017 have also shrunk in a sign of investor confidence in its finances. “The company can raise funds at home and overseas, and its

creditworthiness is unlikely to take much of a hit,” said Toshihiro Uomoto, a Tokyo-based chief credit strategist at Nomura Securities Co. “Having to pay more is a negative, but the potential benefits to Softbank from Sprint’s operations can more than make up for it.” Billionaire Masayoshi Son, the founder of Softbank, sees Sprint as key to his goal of creating the world’s largest mobile-services provider by revenue. His offer for a 70 percent stake compares with the US$25.5 billion proposed by Dish and its billionaire chairman, Charlie Ergen, for all of the company. Mr Ergen figures he can transform the communications industry by giving customers cheap mobile-phone service and the ability

to watch television wherever they want. While Dish currently doesn’t have any mobile customers, the company has been snapping up wireless spectrum in preparation for a move into the market.

‘Better partner’ Softbank can increase its bid by about 500 billion yen (US$5 billion) without weakening its balance sheet, Daiwa’s credit analyst Masahiro Ishibashi wrote in a report. The company already raised 370 billion yen in the domestic bond market in February and US$3.3 billion of dollar- and euro-denominated debt last week to pay for the acquisition. The extra yield investors demand to own Softbank’s 300 billion yen of

Mr Son founded Softbank in 1981

1.47 percent notes due 2017 rather than government debt dropped 6 basis points to 129.5 April 16 after Dish’s counterbid, according to JS


11

April 23, 2013

Asia CP All eyes Thailand’s Siam Makro CP All Pcl, the world’s third-biggest operator of 7-Eleven convenience stores, is preparing a takeover offer for Thai retailer Siam Makro Pcl, said people with knowledge of the matter. A deal may be announced as soon as this week, two people said. Siam Makro, with market value of 163.7 billion baht (US$5.7 billion), was suspended from trading yesterday, after the company said it is “in the process of disclosing significant information,” according to a regulatory filing. CP All last year said it may open 7-Eleven stores in southern China and Vietnam.

inflation, increasing pressure on the central bank to raise interest rates. Price gains quickened to 5.9 percent last month from a year earlier. Bank Indonesia has held borrowing costs for 14 meetings and lowered its 2013 economic growth forecast to between 6.2 percent and 6.6 percent from a previous estimate of 6.3 percent to 6.8 percent. While gross domestic product has risen above 6 percent for the past nine quarters, the economy expanded in the three months through December at the slowest pace in more than two years as exports fell amid a decline in commodity prices. Indonesia spent 211.9 trillion rupiah (US$22 billion) on fuel subsidies last year, spurring demand for energy products that contributed to a record trade deficit in October. Containing the subsidy bill will be a key challenge for the finance minister. Delay of structural reforms, especially rationalisation of the energy subsidy regime, is a constraint in Indonesia’s sovereign-credit quality, Standard & Poor’s said in a report this month.

Airlines start replacing Nikkei soars Dreamliner batteries to highest close ANA to finish 787 battery repairs next month

in nearly 5 years

T

Bloomberg News

Airlines still wait permission from Japan’s ministry

The dual position can lead to the perception that the government is not serious about the finance ministry Lana Soelistianingsih, PT Samuel Sekuritas

Price data. The spread was 130 basis points on April 18. The carrier isn’t currently planning to raise its offer, according to a Softbank executive, who asked not to be identified because the discussions are private. The company hasn’t ruled out future action, the executive said. Softbank expects to complete the Sprint transaction by July 1 without increasing its offer, according to a statement on its website. “The agreed terms of our transaction with Sprint offer Sprint shareholders superior short- and long-term benefits to Dish’s highly conditional preliminary proposal,” it said in the release. Takeaki Nukii, a spokesman for Softbank, declined to comment on the company’s plans beyond the statement. “Softbank can probably prevail without having to raise its offer,” Mana Nakazora, the chief credit analyst at BNP Paribas in Tokyo, said. “They are in the position to convince Sprint that they’re the better partner.” Reuters

A

NA Holdings Inc., the biggest operator of Boeing Co.’s grounded 787 Dreamliners, expects to complete repairs next month to get the jet airborne for the first time since battery flaws halted flights in January. The carrier started the repairs this morning at four airports around Japan, Ryosei Nomura, a spokesman said. Japan Airlines Co. has also started fixing the batteries, according to a person familiar with plan, who declined to be identified as the information isn’t public. The global fleet of 49 Dreamliners was grounded worldwide on January 16 after lithium-ion batteries on two separate planes overheated and melted, causing flights to be cancelled and cutting revenue at the operators. ANA and JAL still need approval from the U.S. Federal Aviation Administration and Japan’s Civil Aviation Bureau before they can restart flights. “Pilots will be able to fly the planes soon after studying the changes to the manual,” said Toshikazu Nagasawa, a director at the Air Line Pilots’ Association of Japan, which has about 4,500 members. “The biggest problem will be getting passengers to fly on the planes.” The airlines received service bulletins on repairs from Boeing after it last week won approval from the FAA for the 787’s redesigned battery system. The FAA said it will issue a directive this week to let flights resume once the battery fixes are made. Both airlines still need permission from Japan’s Ministry of Land, Infrastructure, Transport and Tourism before they can fly the planes. The ministry’s Civil Aviation Bureau is in its final stages of the Dreamliner probe, Shigeru Takano, the agency’s director in charge of air transport safety, said last week in Tokyo. ANA, whose All Nippon Airways unit is the biggest operator of

Dreamliners, said in January the grounding of the fleet cut sales by 1.4 billion yen (US$14 million) that month. The Tokyo-based carrier has canceled 3,601 flights through the end of May, affecting 167,820 passengers.

June target The carrier, with 17 Dreamliners and about 200 pilots qualified to fly them, is targeting June to restart commercial flights with Boeing’s most advanced jet, president Shinichiro Ito said this month. JAL, the second-biggest operator with seven planes, said last month that flight cancellations would cut sales for the Tokyo-based company by 1.1 billion yen through the end of March. A spokesman declined to comment on the repairs. United Continental Holdings Inc., the only U.S. carrier with Dreamliners, called the FAA’s move a “good step forward”. “We are mapping out a returnto-service plan, and we look forward to getting our 787s back in the air,” Christen David, a spokeswoman for the Chicago-based carrier, said last week. Boeing’s reworked battery includes more protection around the cells to contain overheating, a steel case to prevent any fire from spreading and a tube that vents fumes outside the fuselage. The redesign means that even another failure would be “no longer a safety concern at all,” Boeing vice president Mike Sinnett told reporters on a conference call. FAA Administrator Michael Huerta said in an e-mailed statement that the agency spent weeks “reviewing detailed analysis” of the new design. The Dreamliner’s grounding is the longest on a large commercial aircraft by U.S. regulators since jets were introduced in the 1950s. Bloomberg News

he Nikkei average climbed 1.9 percent to its highest close in nearly five years yesterday, led by exporters as the yen weakened after the Group of 20 leading economies stopped short of criticising Japan’s monetary expansionary policies. The Nikkei ended up 251.89 points at 13,568.37, its highest closing level since July 2008. The broader Topix index advanced 1.7 percent to 1,145.60. “Although the yen hasn’t seen 100 against the dollar yet, the market’s expectation for further depreciation is high, and thus the stocks are performing so well,” said Hiroyuki Fukunaga, the chief executive of Investrust. Major exporters charged higher as the dollar firmed against the yen to within a whisker of 100 after the G20 refrained from singling out Tokyo’s reflationary policies as some in the markets had feared. The yen last traded at 99.79 to the dollar. A weaker yen inflates exporters’ overseas earnings when repatriated. Toyota Motor Corp rose 2.2 percent and was the third mosttraded on the main board by turnover, while rival Mazda Motor Corp soared 6.3 percent. Canon Inc., TDK Corp and Olympus Corp were up between 2.4 and 5 percent. In a communique after a twoday meeting, the G20 simply said it would be “mindful” of possible side effects from extended periods of monetary stimulus. “I worried that the G20 countries would criticise Japan’s easing monetary policies,” said Ryota Sakagami, chief strategist at SMBC Nikko Securities. “The market uptrend will continue … I think sooner or later the Nikkei will reach 14,000. For the moment, the one concern is still the weak global economy, especially the weak U.S. macro economic indicators.” Mr Sakagami said domesticfocused companies were likely to outperform exporters in the next few months, although the yen’s weakness has lifted the appeal of export-driven firms yesterday. Reuters


12

April 23, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

33.15

-0.4504505

22314084

2.88

1.052632

7533802

3.5

-0.5681818

328014939

5.83

-0.8503401

22017209

30

-0.4975124

1296941

BELLE INTERNATIO

12.64

-0.4724409

25442000

AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H BANK OF COMMUN-H BANK EAST ASIA

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

CHINA UNICOM HON

10.7

4.288499

81125120

NAME POWER ASSETS HOL

73.65

0.8213552

1321210

CITIC PACIFIC

9.35

-1.888772

10484097

SANDS CHINA LTD

39.75

0.8883249

3914079

CLP HLDGS LTD

67.5

0.6711409

1854733

SINO LAND CO

12.88

0.9404389

4190201

CNOOC LTD

13.86

0.4347826

61902404

113

1.893598

7672789

COSCO PAC LTD

10.72

1.323251

5854809

SWIRE PACIFIC-A

96.45

0.46875

1257607

ESPRIT HLDGS

10.14

0.3960396

3187104

TENCENT HOLDINGS

255

0.7905138

3079419

20.05

-0.4962779

4282600

11.9

2.058319

8478000

68.75

0.658858

3335166

SUN HUNG KAI PRO

BOC HONG KONG HO

25.65

0

6963813

HANG LUNG PROPER

29.8

0.4043127

2588593

TINGYI HLDG CO

CATHAY PAC AIR

13.34

1.987768

5093466

HANG SENG BK

125

0.1602564

1052781

WANT WANT CHINA

CHEUNG KONG

116.8

0.2575107

2186947

HENDERSON LAND D

56.8

1.338091

3606453

WHARF HLDG

2034000

CHINA COAL ENE-H

6.35

0.4746835

11931592

CHINA CONST BA-H

6.22

-0.3205128

166801967

HENGAN INTL

78.35

1.22739

HONG KG CHINA GS

23.35

1.301518

4743022

HONG KONG EXCHNG

128.3 -0.07788162

2615138

CHINA LIFE INS-H

20.3

-1.932367

28816861

CHINA MERCHANT

24.9

0.2012072

2764276

CHINA MOBILE

82.6

0.5477785

13032043

CHINA OVERSEAS

23.5

-1.052632

25004476

CHINA PETROLEU-H

8.48

-0.2352941

50458377

LI & FUNG LTD

CHINA RES ENTERP

25.45

2.208835

2580140

MTR CORP

30.7

1.993355

3820626

CHINA RES LAND

23.05

-1.284797

5701734

NEW WORLD DEV

13.34

1.367781

12799094

CHINA RES POWER

24.45

4.487179

7603376

PETROCHINA CO-H

9.52

0.5279831

47909948

CHINA SHENHUA-H

26.15

0.1915709

16675310

PING AN INSURA-H

59.6

-0.8319468

7470564

PRICE

DAY %

VOLUME

27.15

-2.338129

6197490

8.48

-0.2352941

50458377

HSBC HLDGS PLC

81

-0.1233046

7269966

HUTCHISON WHAMPO

80.6

-0.2475248

3281434

IND & COMM BK-H

5.25

-0.1901141

147588395

10.08

0.1988072

14362034

MOVERS

29

20

1 22110

INDEX 22044.37 HIGH

22100.19

LOW

21440.33

52W (H) 23944.74 (L) 18056.4

21430

18-April

22-April

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.53

0

103587664

AIR CHINA LTD-H

6.11

-1.926164

15746330

ALUMINUM CORP-H

2.88

1.052632

7533802

CHINA RAIL CN-H

7.3

0

28.95

0.5208333

10817739

CHINA RAIL GR-H

3.8

3.5

-0.5681818

328014939

CHINA SHENHUA-H

BANK OF COMMUN-H

5.83

-0.8503401

22017209

CHINA TELECOM-H

BYD CO LTD-H

25.8

6.61157

6556200

DONGFENG MOTOR-H

CHINA CITIC BK-H

4.07

-0.973236

30189754

GUANGZHOU AUTO-H

CHINA COAL ENE-H

6.35

0.4746835

11931592

CHINA COM CONS-H

7.48

0.1338688

CHINA CONST BA-H

6.22

CHINA COSCO HO-H

3.43

CHINA LIFE INS-H

PRICE

DAY %

VOLUME

YANZHOU COAL-H

8.81

-0.3393665

20443247

ZIJIN MINING-H

2.27

-0.8733624

38903380

6100428

ZOOMLION HEAVY-H

8.14

0.4938272

20717814

-0.2624672

9369086

ZTE CORP-H

12.3

4.414261

6759000

26.15

0.1915709

16675310

3.81

1.061008

123557319

11.72

4.642857

28424737

6.3

5.527638

16383154

HUANENG POWER-H

8.37

4.104478

21838420

13816410

IND & COMM BK-H

5.25

-0.1901141

147588395

-0.3205128

166801967

JIANGXI COPPER-H

15.18

-1.30039

14824528

-1.719198

8393800

PETROCHINA CO-H

9.52

0.5279831

47909948

20.3

-1.932367

28816861

PICC PROPERTY &

9.51

-2.261048

22895970

CHINA LONGYUAN-H

7.27

-0.8185539

5160900

PING AN INSURA-H

59.6

-0.8319468

7470564

CHINA MERCH BK-H

15.38

0.3916449

20937196

SHANDONG WEIG-H

6.61

-0.1510574

8805000

CHINA MINSHENG-H

9.34

-0.4264392

50800165

SINOPHARM-H

24.65

0.407332

4966800

CHINA NATL BDG-H

10.06

1.513623

55795654

TSINGTAO BREW-H

52.95

2.616279

1281189

CHINA OILFIELD-H

14.96

0

8329000

WEICHAI POWER-H

ANHUI CONCH-H BANK OF CHINA-H

NAME CHINA PACIFIC-H CHINA PETROLEU-H

28.6

5.925926

NAME

MOVERS

17

21

2 10620

INDEX 10590.75 HIGH

10617.47

LOW

10191.56

52W (H) 12354.22 10180

(L) 8987.76 18-April

4028090

22-April

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

AGRICULTURAL-A

2.73

-0.3649635

70838481

CHONGQING CHAN-A

11.16

1.546861

29005616

QINGHAI SALT-A

26.59

-3.238719

9805516

AIR CHINA LTD-A

5.47

-0.7259528

13726851

CHONGQING WATE-A

6.59

0.610687

12313462

SAIC MOTOR-A

15.72

-0.8201893

24047985 52776431

ALUMINUM CORP-A

NAME

NAME

VOLUME

4.14

-0.2409639

11773882

CITIC SECURITI-A

12.79

-0.2340094

82111108

SANY HEAVY INDUS

10.43

2.35525

ANHUI CONCH-A

19.23

-0.1557632

49119329

CSR CORP LTD -A

4.08

-0.9708738

29994500

SHANDONG GOLD-MI

32.13

0

4503942

BANK OF BEIJIN-A

8.75

-0.2280502

25237767

DAQIN RAILWAY -A

7.26

0.6934813

23085423

SHANG PHARM -A

12.65

0.636436

15097209 123343744

BANK OF CHINA-A

2.91

-0.3424658

27674741

DATANG INTL PO-A

4.42

-0.2257336

4910287

SHANG PUDONG-A

10.22

0.7889546

BANK OF COMMUN-A

4.72

-0.2114165

44219594

EVERBRIG SEC -A

14.1

-0.8438819

16574565

SHANGHAI ELECT-A

3.9

0

2395304

10.66

-0.6523765

10033708

GD MIDEA HOLDI-A

14.2

0.1410437

21687551

SHANXI LU'AN -A

16.91

-0.9953162

12986057

BAOSHAN IRON & S

4.82

0.2079002

14733274

GD POWER DEVEL-A

2.8

-0.7092199

37458461

SHANXI XISHAN-A

10.93

-1.353791

12954950

BEIJING TONGRE-A

22.98

0.4809794

10814071

GEMDALE CORP-A

7.35

-2.649007

62043653

SHENZEN OVERSE-A

6

-1.800327

39802290

BYD CO LTD -A

23.91

5.562914

8223219

GF SECURITIES-A

13.72

-0.07283321

24078695

SICHUAN KELUN-A

63.78

0.615239

1859230

CHINA AVIC AVI-A

23.14

1.535761

3286901

GREE ELECTRIC

26.54

-4.049168

31993277

SUNING COMMERC-A

6.23

-0.7961783

26359082 1529407

BANK OF NINGBO-A

CHINA CITIC BK-A

4.41

-1.342282

42969712

GUANGHUI ENERG-A

19.41

-0.9693878

18059028

TASLY PHARMAC-A

69.31

0.1734355

CHINA CNR CORP-A

4.15

-0.4796163

23239604

HAITONG SECURI-A

10.89

-0.1833181

91049537

TSINGTAO BREW-A

38.76

0.6753247

1556613

CHINA COAL ENE-A

7

-0.2849003

4994397

HANGZHOU HIKVI-A

38.7

1.415094

7291364

WEICHAI POWER-A

24.02

3.090129

10598256

CHINA CONST BA-A

4.69

0.2136752

32919145

HENAN SHUAN-A

81.58

0.7160494

1620298

WULIANGYE YIBIN

22.12

-2.29682

26883880

CHINA COSCO HO-A

3.51

-0.5665722

15414047

HONG YUAN SEC-A

20.9

0.9661836

37140873

YANGQUAN COAL -A

13.24

0.2271007

6404628

CHINA EAST AIR-A

3.2

0.3134796

15148139

HUATAI SECURIT-A

10.05

-0.3964321

29228741

YANTAI WANHUA-A

19.46

0.2575992

10923004

CHINA EVERBRIG-A

3.11

0

76657275

HUAXIA BANK CO

10.6

-0.09425071

25703109

YANZHOU COAL-A

16.15

-0.9202454

4078547

4.1

-0.243309

52167033

YUNNAN BAIYAO-A

85.54

0.1053248

2214334

CHINA INTL MAR-A

12.44

2.47117

9628992

IND & COMM BK-A

CHINA LIFE INS-A

17.22

-2.546689

23770815

INDUSTRIAL BAN-A

18.57

2.08906

98478381

ZHONGJIN GOLD

12.62

-0.1582278

17185997

CHINA MERCH BK-A

12.59

-0.2377179

59032937

INNER MONG BAO-A

28.19

-1.018258

19070766

ZIJIN MINING-A

3.18

-0.3134796

36733481

CHINA MERCHANT-A

12.53

0.3202562

27563998

INNER MONG YIL-A

30.89

-1.624204

11811803

ZOOMLION HEAVY-A

7.88

2.872063

65373556

CHINA MERCHANT-A

27

-3.295129

12895480

INNER MONGOLIA-A

4.92

0.203666

35120713

ZTE CORP-A

11.53

2.762923

29530777

CHINA MINSHENG-A

10.24

1.285856

248925496

JIANGSU HENGRU-A

31.3

2.82523

9189245

JIANGSU YANGHE-A

61.07

-1.2132

4891593

JIANGXI COPPER-A

20.82

0.1924928

7713920

CHINA NATIONAL-A

9.5

2.37069

34610868

CHINA OILFIELD-A

15.63

0.1923077

4076058

CHINA PACIFIC-A

19.71

-2.329039

29166790

JINDUICHENG -A

10.43

-0.7611798

6403341

17.74

0.6239365

19422891

173.71

-3.079842

4274596 10956276

CHINA PETROLEU-A

6.9

-0.5763689

31594230

KANGMEI PHARMA-A

CHINA RAILWAY-A

5.16

0.1941748

22937705

KWEICHOW MOUTA-A

CHINA RAILWAY-A

2.87

1.056338

43276795

LUZHOU LAOJIAO-A

25.3

-2.879079

CHINA SHENHUA-A

21.25

-0.3283302

7998847

METALLURGICAL-A

2.06

0.9803922

22948795

CHINA SHIPBUIL-A

4.59

0.6578947

21589354

NINGBO PORT CO-A

2.5

-0.3984064

10016956

8.57

0.1168224

13237322

CHINA SOUTHERN-A

3.64

0.2754821

28194116

PETROCHINA CO-A

CHINA STATE -A

3.56

-0.5586592

108564061

PING AN BANK-A

20.23

-0.04940711

69291441

3.59

1.699717

124196264

PING AN INSURA-A

41.95

-2.214452

31786381

CHINA VANKE CO-A

11.69

-1.847187

96935830

POLY REAL ESTA-A

12.33

-2.606635

61486218

CHINA YANGTZE-A

7.13

-0.5578801

11448813

QINGDAO HAIER-A

13.38

-0.5943536

8711068

NAME

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

ACER INC

23.5 -0.8438819

7357711

CHINA UNITED-A

MOVERS 137

148

15 2550

INDEX 2530.67 HIGH

2540.22

LOW

2440.71

52W (H) 2791.303 (L) 2102.135

2430

18-April

22-April

FTSE Taiwan 50 Index

ADVANCED SEMICON ASIA CEMENT CORP ASUSTEK COMPUTER

FORMOSA PLASTIC

NAME

PRICE DAY %

0.877193

5058826

TAIWAN MOBILE CO

104

0

FOXCONN TECHNOLO

77.7

-1.145038

3631396

TPK HOLDING CO L

618

-2.21519

3570883

41.8

1.456311

17621914

TSMC

108.5

1.877934

72502228

UNI-PRESIDENT

58.5

0.1712329

7153412

UNITED MICROELEC

11.2

-1.321586

25456885

28.5

-1.893287

17998706

14.65

0

9856997

50.5 -0.7858546

2990165

26

0.1926782

28899938

37.1

1.36612

8905116

FUBON FINANCIAL

330

0.456621

2773425

HON HAI PRECISIO

76.9 -0.9020619

23582827

AU OPTRONICS COR

12.95

-1.520913

48642100

HOTAI MOTOR CO

254.5 -0.5859375

199739

CATCHER TECH

146.5

-2.006689

11728262

HTC CORP

277 -0.8944544

7434483

WISTRON CORP

CATHAY FINANCIAL

38.85

0.9090909

20101679

HUA NAN FINANCIA

16.9

0

3806095

YUANTA FINANCIAL

CHANG HWA BANK

16.9

0.2967359

5662433

LARGAN PRECISION

708

-1.117318

2230706

YULON MOTOR CO

CHENG SHIN RUBBE

100.5

0.7014028

7152877

LITE-ON TECHNOLO

51.1

1.388889

4741568

CHIMEI INNOLUX C

17.3

-1.704545

35656272

363

1.396648

14606930

CHINA DEVELOPMEN

8.49

4.814815

110432037

MEGA FINANCIAL H

23.25

0.6493506

15382923

CHINA STEEL CORP

25.85

1.972387

23557281

NAN YA PLASTICS

54.8

2.238806

6216109

CHINATRUST FINAN

17.7

0.2832861

37867343

PRESIDENT CHAIN

179 -0.5555556

CHUNGHWA TELECOM

93.8

0.2136752

3906699

QUANTA COMPUTER

56.8

-0.525394

8455458

COMPAL ELECTRON

18.55 -0.2688172

21961833

SILICONWARE PREC

33.9

2.727273

42552827

DELTA ELECT INC

135.5

0.3703704

3773163

SINOPAC FINANCIA

14.55

1.041667

15728251

FAR EASTERN NEW

31.85

0.4731861

6884941

SYNNEX TECH INTL

49.65

-2.455796

5594653

FAR EASTONE TELE

71.8

0.9845288

1871719

TAIWAN CEMENT

39.35

2.473958

11089205

16.8

0.5988024

4031888

70 -0.8498584

1439300

10278839

Volume

69

MEDIATEK INC

FIRST FINANCIAL

17.7 -0.5617978

FORMOSA CHEM & F

67.8

0.5934718

1919342

TAIWAN FERTILIZE

FORMOSA PETROCHE

76.3

-2.179487

1228421

TAIWAN GLASS IND

TAIWAN COOPERATI

27.7

0

971020

658670

MOVERS

27

20

3 5590

INDEX 5560.18 HIGH

5574.9

LOW

5378.09

2367745

52W (H) 5639.93 (L) 4719.96

5360

18-April

22-April


13

April 23, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 58.3

32.20 31.95

17.20 17.05

58.0

31.70

16.90 57.8

31.45

Max 32.05

average 31.760

Max 39.85

average 39.687

Min 31.3

Last 31.85

Min 39.55

Last 39.75

31.20

16.75 Max 58.2

average 58.114

PRICE

WTI CRUDE FUTURE May13

19.20

39.8

19.05

39.7

18.90

39.6

18.75

39.5

Max 19.06

average 18.862

88.65

DAY %

YTD %

(H) 52W

Min 18.64

Last 19.06

(L) 52W

0.727201537

-4.841133534

106.0899963

81

BRENT CRUDE FUTR Jun13

100.4

0.75263422

-6.985362238

116.6699982

90.91999817

GASOLINE RBOB FUT May13

279.33

0.753859472

-3.479612992

330.369997

237.7199888

GAS OIL FUT (ICE) Jun13

843.25

0.806933652

-7.538377193

992.75

799.25

4.337

-1.610707804

25.60092673

4.429000378

3.072000027

281.17

0.864542976

-7.014352801

327.1399975

258.5000038

Gold Spot $/Oz

1433.15

2.0915

-13.897

1796.08

1322.06

Silver Spot $/Oz

23.624

1.6086

-21.541

35.365

22.0713

NATURAL GAS FUTR May13 HEATING OIL FUTR May13

Platinum Spot $/Oz

1441.5

0.9913

-5.0239

1742.8

1374.55

Palladium Spot $/Oz

682.58

0.8242

-2.4412

786.5

553.75

1887

-1.28171593

-8.972503618

2200.199951

1818

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

ASIA PACIFIC

CROSSES

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

6990

-1.38261851

-11.86483419

8496.75

6800

-0.105904157

-9.302884615

2230

1745

15170

-2.443729904

-11.07854631

18920

15160

15.14

-0.590938936

-2.227962544

16.95000076

14.5

625

-1.263823065

-10.36213697

824

527

WHEAT FUTURE(CBT) Jul13

704.25

-1.018973999

-11.27559055

900

664.75

SOYBEAN FUTURE Jul13

1372.5

-0.723327306

-1.630532163

1605.75

1217.75

COFFEE 'C' FUTURE Jul13

143.1

-0.069832402

-4.312938816

202.1999969

133.5500031

NAME

17.43000031

ARISTOCRAT LEISU

69.94999695

CROWN LTD

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) May13 CORN FUTURE

Jul13

SUGAR #11 (WORLD) Jul13

17.62

COTTON NO.2 FUTR Jul13

86.06

-1.454138702 0.820056232

-10.73961499 11.95524912

23.05999947 94.19999695

World Stock Markets - Indices NAME

18.60

COUNTRY MAJOR

1886.5

LME ZINC

57.6

Max 17.2

average 17.065

Min 16.72

Last 17.12

21.8

21.6

21.4

Max 21.75

average 21.6

Min 21.3

Last 21.65

21.2

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

1.027 1.5236 0.9341 1.3047 99.78 7.9971 7.7643 6.1818 54.125 28.69 1.2401 29.829 41.275 9716 102.475 1.21875 0.85634 8.0606 10.4336 130.18 1.03

-0.0681 0.0328 -0.0749 -0.0383 -0.2606 -0.0063 -0.0013 -0.0663 -0.2818 -0.0697 -0.2419 -0.0536 -0.4119 -0.1132 -0.1903 -0.0082 0.0596 0.1898 0.299 -0.2305 0

-1.0407 -5.8111 -2.0019 -1.0842 -13.7102 -0.1738 -0.1764 0.7894 1.6074 6.5877 -1.5079 -2.6685 -0.6541 0.7925 -12.8304 -0.9247 -4.7785 1.9465 0.9278 -12.7593 -0.0097

1.0625 1.6381 0.9972 1.3711 99.95 8.0111 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 105.433 1.25692 0.88151 8.4957 10.9254 131.12 1.032

0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1699 51.3863 28.56 1.2152 28.913 40.54 9175 74.482 1.20051 0.77553 7.7018 9.6245 94.12 1.029

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

3.6

0

14.28571

3.94

2.29

VOLUME CRNCY 716247

12.39

-0.4819277

16.11996

12.95

8.06

2432671

AMAX HOLDINGS LT

0.85

2.409639

-39.28571

1.9

0.75

67350

BOC HONG KONG HO

25.65

0

6.431534

27.1

20.85

6963813

CENTURY LEGEND

234000

0.305

-1.612903

15.09435

0.42

0.215

CHEUK NANG HLDGS

6.22

1.800327

3.839737

6.74

2.8

65000

CHINA OVERSEAS

23.5

-1.052632

1.7316

25.6

14.624

25004476

CHINESE ESTATES

13.6

0.591716

12.12409

13.8

7.697

1315844

CHOW TAI FOOK JE

10.2

0.990099

-18.00643

13.4

8.4

3835200

EMPEROR ENTERTAI

2.3

2.222222

21.69312

2.49

1.1

780000

FUTURE BRIGHT

2.1

0.9615385

72.13114

2.75

0.77

2628000

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

US

14547.51

0.07133453

11.01461

14887.51

12035.08984

NASDAQ COMPOSITE INDEX

US

3206.056

1.253615

6.17789

3306.95

2726.68

31.85

2.247191

4.942338

35.7

16.94

11247280

FTSE 100 INDEX

GB

6338.19

0.8207947

7.466837

6533.99

5229.76

HANG SENG BK

125

0.1602564

5.307501

131.5

99.2

1052781

DAX INDEX

GE

7510.01

0.6709151

-1.344918

8074.47

5914.43

HOPEWELL HLDGS

29.9

1.873935

-10.07519

35.3

19.049

1365261

HSBC HLDGS PLC

81

-0.1233046

-0.3690074

88.45

59.8

7269966

HUTCHISON TELE H

3.7

-1.333333

3.932586

4.05

2.98

1556425

LUK FOOK HLDGS I

21.25

1.431981

-12.90983

30.05

14.7

2851973

MELCO INTL DEVEL

13.74

3.463855

52.49722

13.96

5.12

4226400

GALAXY ENTERTAIN

NIKKEI 225

JN

13568.37

1.891566

30.52559

13611.58

8238.96

HANG SENG INDEX

HK

22044.37

0.1399137

-2.703593

23944.74

18056.4

CSI 300 INDEX

CH

2530.67

-0.1245941

0.3059122

2791.303

2102.135

TAIWAN TAIEX INDEX

TA

7970.38

0.4990669

3.518149

8089.21

6857.35

MGM CHINA HOLDIN

17.12

2.761104

28.93237

18.449

9.509

7721412

KOSPI INDEX

SK

1926.31

1.025829

-3.542224

2042.48

1758.99

MIDLAND HOLDINGS

3.44

-0.2898551

-7.027028

5

3.249

1546300

S&P/ASX 200 INDEX

AU

4966.551

0.7023647

6.831662

5163.5

3985

JAKARTA COMPOSITE INDEX

16.60

Currency Exchange Rates

NAME

METALS

Last 58.2

39.9

Commodities ENERGY

Min 57.75

ID

4996.923

-0.03076947

15.75828

5026.919

3635.283

FTSE Bursa Malaysia KLCI

MA

1706.68

0.02344281

1.049771

1716.47

1526.6

NZX ALL INDEX

NZ

957.292

0.8954507

8.529988

957.292

PHILIPPINES ALL SHARE IX

PH

4422.22

1.691322

19.55242

4422.22

0.139

0

-8.552629

0.226

0.084

1190000

NEW WORLD DEV

13.34

1.367781

10.98169

15.12

7.95

12799094

SANDS CHINA LTD

3914079

39.75

0.8883249

17.08394

41.05

20.65

SHUN HO RESOURCE

1.48

0

5.714288

1.67

1.03

0

755.149

SHUN TAK HOLDING

4.01

0.5012531

-4.295944

4.65

2.56

2019200

3238.77

SJM HOLDINGS LTD

19.06

2.693966

5.888889

22.15

12.34

6320500

13.1

0.1529052

-6.960227

17.38

12.5

1288500 7173543

HSBC Dragon 300 Index Singapor

SI

641.68

-0.03

3.32

NA

NA

STOCK EXCH OF THAI INDEX

TH

1559.1

0.8825851

12.00994

1601.34

1099.15

HO CHI MINH STOCK INDEX

VN

468.43

-1.010122

13.22118

518.46

Laos Composite Index

LO

1338.82

0.534655

10.2118

1455.82

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

NEPTUNE GROUP

SMARTONE TELECOM WYNN MACAU LTD

21.65

1.882353

3.341285

25.5

14.62

372.39

ASIA ENTERTAINME

4.68

-2.296451

52.94118

6

2.4

155233

BALLY TECHNOLOGI

47.9

1.20431

7.134871

52.7

41.74

496881

980.83

BOC HONG KONG HO

3.22

0

4.885996

3.59

2.7

33795

GALAXY ENTERTAIN

4.086

0.6403941

2.921914

4.93

2.25

10002

INTL GAME TECH

16.07

0.8788449

13.40861

17.49

10.92

2932933

JONES LANG LASAL

92.54

1.893856

10.24541

100.91

61.39

189979

LAS VEGAS SANDS

53.06

2.117013

14.94801

56.83

32.6127

4490737

MELCO CROWN-ADR

22.58

3.199269

34.08551

23.69

9.13

4918797

MGM CHINA HOLDIN

2.1

0

13.51351

2.44

1.36

10000

MGM RESORTS INTE

12.23

1.409619

5.068725

13.89

8.83

4486301

SHFL ENTERTAINME

14.77

1.09514

1.862069

18.37

11.75

171307

SJM HOLDINGS LTD

2.402

2.212766

3.982687

2.85

1.65

2200

WYNN RESORTS LTD

127.56

2.920768

13.39675

129.6589

84.4902

1293740

AUD HKD

USD


14

April 23, 2013

Opinion

Slovenia bailout would be Spanish-Cypriot Mongrel Megan Greene

Bloomberg View columnist and chief economist at Maverick Intelligence

T

he ink on the provisional bailout agreement for Cyprus was hardly dry last month before bond markets shifted their attention to Slovenia, another small euro-area country with a banking problem. The Slovenian government’s borrowing costs subsequently shot up. The fear that Slovenia might be the next Cyprus, with international creditors again forcing losses onto bank bondholders and uninsured depositors, is only partly justified. Slovenia isn’t Cyprus, and its rescue programme, when it comes, will probably look like a hybrid between the Spanish-style bailout and the Cyprus-style bail-in. First, the similarities: Like Cyprus, Slovenia has wrestled with a banking crisis for years and the big banks in both countries have made bad lending decisions. In Cyprus, that involved loading up on Greek government bonds that later had to be significantly written down. By the end of 2012, almost 27 percent of bank loans in Cyprus were non-performing. Unfortunately, this was only slightly higher than in Slovenia, where non-performing loans for the country’s three largest banks also rose quickly and surpassed 20 percent last year. Slovenia’s bad loans were caused by a double-dip recession, a burst property bubble and poor corporate governance. The country’s three largest banks are all state-owned and the cosy relationship between politicians, banks and corporations resulted in many loans going to individuals and companies that were well-connected rather than well-qualified.

services for growth as Cyprus was. In Cyprus’s case, financial services, and the business services connected to them, accounted for between onethird and half of GDP in 2012. The same industries accounted for about 10.5 percent of GDP in Slovenia. Fears that Europe’s troika of international creditors – the European Commission, the European Central Bank and the International Monetary Fund – might force Slovenia to drastically shrink its banking sector overnight, and destroying the economy as occurred in Cyprus, are overdone. Finally, the sums needed to stabilise the banking sectors in Cyprus and Slovenia differ significantly, as do the potential sources of financing. According to the latest European Commission document, Cyprus must pay for the entirety of its bank recapitalisations. The price for this could be as much as 10.6 billion euros (US$13.9 billion), including the cost of resolving

Cyprus Popular Bank Pcl (better known as Laiki Bank). The Cypriot banks relied heavily on deposits for funding, with very little equity or debt. To generate 10.6 billion euros in savings, hefty “haircuts” had to be imposed not just on equity and bondholders but also on uninsured depositors. The cost of recapitalising Slovenia’s three major banks

Slovenia may have to seek official assistance for its banking sector as a way to retain market access

is only about 1 billion euros, according to an IMF estimate. A recent study by the central bank of Slovenia says the country’s banking sector has roughly 2 billion euros in debt securities and 4 billion euros in equity and loan provisions. So, if Slovenian banks are forced to pay for their own recapitalisation, imposing a loss on equity and bondholders would probably yield sufficient savings without the need to hit depositors. This raises an obvious question: If Slovenia can fund its own bank rescue by bailing in creditors, why is everyone talking about a bailout for this small alpine country? There are two reasons.

Recapitalisation needs First, estimates of the recapitalisation needs for Slovenia’s three biggest banks will probably grow. The corporate sector is hugely overleveraged, with an average debt-to-equity ratio of 200 percent last year. That

Crucial differences Yet there are crucial differences between the Cypriot and Slovenian cases. Cyprus’s banking sector was huge, accounting for more than 700 percent of the country’s gross domestic product by the end of 2012. By contrast, Slovenia’s banking sector is only 143 percent of GDP – much less than the 347 percent euro-area average. Slovenia also isn’t as dependent on financial

compares with 70 percent for the euro area at its 2009 peak. The banks made more than half of their loans to corporates, of which about a third are nonperforming. With so many loans going bad, the banks’ balance sheets have been hit, constraining their ability to lend. As a result, companies have defaulted on more of their loans, driving the banks’ portfolio of non-performing loans ever higher. Second, a bailout may be necessary to prevent the banking crisis from dragging down the state. Slovenia’s fiscal situation is healthier than most of the euro area’s peripheral countries, with a budget deficit of 4.4 percent of GDP and total public debt at about 54 percent of GDP, according to European Commission figures. Yet those relatively sound numbers didn’t stop Slovenia’s borrowing costs from shooting up after the Cypriot bailout, partly because the government’s debt-redemption profile is unfavourable, with particularly high debt rollovers in 2013 and 2014. In June, the government will have to refinance about 900 million euros’ worth of debt, half of the year’s total. When the government attempted to issue 100 million euros in Treasury bills on April 9, it managed to sell only 56.1 million euros worth. Then, an auction on April 17 raised double the government’s targeted amount, but that success may be misleading because state-owned banks were the main buyers, probably under pressure from the government to participate. Slovenia may have to seek official assistance for its banking sector as a way to retain market access. We saw the same with Spain in mid2012 when the government in Madrid asked international creditors to bail out Spanish banks directly so that the state could continue to fund itself. The difference between Spain and Slovenia is the bailin precedent that was set by Cyprus in the meantime. Slovenian banks will probably be expected to contribute to their rescue package by bailing in investors; only in this case, depositors are unlikely to be hit. Whatever the composition of its rescue, Slovenia will likely share one crucial similarity with Cyprus: the need for financial help in a German election year. The closer the German elections, the more the euro area’s main paymaster will extract in exchange for assistance. If Slovenia doesn’t believe it will be able to make it past Germany’s September poll without help, it should waste no time in asking for support. Bloomberg View

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15

April 23, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Empirical economics isn’t yet as smart as dentistry

Korea Herald The amount of debt owed by public companies as of last year approached almost 400 trillion won (US$357 billion), leading to concerns that the nation’s fiscal soundness may be at risk. The combined debts to be paid by the 28 state-owned firms as of December last year were 393 billion won, up 8.7 percent from the previous year. The figure also took a large part of the government’s total debt, which was some 445 trillion won. The land and housing developer LH had the largest amount of debt, totalling 138 trillion won, and electricity distributor KEPCO and Korea Gas followed with 95 trillion won and 32 trillion won, respectively.

China Daily Lenovo Group Ltd, the world’s second-largestpersonalcomputer manufacturer, said it is in “preliminary negotiations” about an acquisition following reportsthattheChinesecompany may purchase International Business Machines Corp’s server unit to beef up its enterprise hardware sector. The Beijing-based company is in talks with IBM to acquire the x86 server business. IBM is seeking US$5 billion to US$6 billion for its x86 server business, it said, citing an anonymous source familiar with the matter. Acquiring IBM’s server unit will increase Lenovo’s R&D capabilities.

Jakarta Globe Indonesia can do more to promote the services sector, which in turn can help propel growth in the nation’s economy, a government official said. Chatib Basri, chairman of Indonesia’s Investment Coordinating Board (BKPM), said there is big potential in the services sectors, such as hospitality, restaurant and telecommunications. In 2012, total foreign and domestic investment in Indonesia rose 25 percent to 313.2 trillion rupiah (US$33 billion). However, the services sector’s contribution was less than 5 percent of total investment, according to Mr Chatib.

Myanmar Times Singapore’s trade promotion agency, International Enterprise Singapore, opened an office in Yangon to boost economic ties betweenSingaporeandMyanmar. As Myanmar develops there will be many opportunities for companies from both nations to work together, said Teo Eng Cheong, IE Singapore’s chief executive. “The opening of IE Singapore’s Overseas Centre in Yangon underscores the interest Singaporean companies have in Myanmar,” he said. The volume of trade between Myanmar and Singapore ranks third after China and Thailand.

Clive Crook

Bloomberg View columnist

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n macroeconomics, ideas are more powerful than facts. That’s a shame, but it isn’t a criticism. Even with the best will in the world (a condition, admittedly, that’s rarely satisfied) economists who debate fiscal and monetary policy couldn’t settle their disagreements by appealing to facts. Their discipline is too difficult, or too far from being a proper science, for that to happen. Ideas trump data time and again. The thought is prompted by two burning topics that were discussed last week by the world’s top economic officials who were gathered in Washington to attend the semi-annual meetings of the International Monetary Fund and the World Bank. The first is a paper trashing a study by Carmen Reinhart and Kenneth Rogoff on the relationship between public debt and economic growth. The other is new work from the IMF on the relationship between inflation and unemployment. The Reinhart-Rogoff paper looked at historical data and found that when the ratio of public debt to gross domestic product exceeds a “threshold” (their word) of about 90 percent, economic growth drops sharply. These are two of the world’s most distinguished researchers – Rogoff is a former chief economist of the IMF – so their findings were taken seriously. Now three economists from the University of Massachusetts at Amherst contend the paper is “riddled with faults” and its headline finding is wrong.

Bungled coding The critique raised a storm of gleeful outrage mainly because it caught Reinhart and Rogoff in one (and only one) cringemaking error. As they admitted, they bungled the coding on a spreadsheet and excluded several countries’ data from an important calculation. The critics also accuse them of incorrectly weighting observations and of “selective exclusion” of data – but the first, as Reinhart and Rogoff have said, is a matter of opinion and the second, with its implication of deliberate falsification, is wrong (the missing data became available too late for inclusion). Quantitatively, it’s the difference of opinion on weightings, not the spreadsheet error, that matters. Qualitatively, though, it’s the embarrassment over the error that leaves Reinhart and Rogoff defenceless. They can point out until they’re blue in the face that the critics ultimately agreed with them that high debts are

associated with (somewhat) slower growth. It won’t stop the smirking. You could draw several lessons from this episode, but here’s the one I’m interested in. The Reinhart-Rogoff finding, everyone agrees, was influential – and now it turns out to have been marred by an error. Does that mean the professors are to blame for misguided fiscal policy all over the world? Many seem to think so. But did the Reinhart-Rogoff paper change anybody’s mind? I wonder. Conservatives embraced it for supporting a view they already held (high levels of public debt are dangerous). Progressives rejected it for opposing a view they already held (fiscal stimulus is necessary). Progressives, to be sure, had a solid rationale for their position, because the ReinhartRogoff numbers didn’t address causation – does high debt cause slow growth or vice versa? Trouble is, that question is hard to settle. Even harder to say is whether some general finding of that kind would apply to any case in particular – such as, should the U.S. budget deficit be bigger or smaller next year? Good empirical analysis can hope to inform such discussions. Don’t expect it to settle them.

Reading inflation The IMF’s new study on inflation and unemployment is another instance of the limits of the discipline. The fund’s economists show that since 1995 inflation has been less sensitive to unemployment than in earlier years. Previously, lower unemployment tended to mean higher inflation. Lately, inflation has stayed put regardless of whether unemployment is high or low. The researchers attribute this to the firmer anchoring of inflation expectations that comes from having independent central banks dedicated to managing those expectations with a policy regime called

“flexible inflation targeting”. It won’t be long before we’re calling this study influential – because it has something for everyone. It can support either of the two main prescriptions in contention. Supporters of aggressive fiscal or monetary stimulus can say: “With inflation so well anchored, we can push more decisively for higher employment. Central banks should be bolder.” Those who take the opposite view can say: “The anchoring of expectations has helped us to avoid deflation and an even worse recession. Don’t put that in jeopardy with aggressive stimulus that works the anchor loose. Central banks should be more cautious.” This argument would be

Choosing a policy still involves a lot of ignorance and a complex balance of risks

moot if we knew how much of today’s unemployment is cyclical as opposed to structural. But, again, we don’t. If it’s cyclical, and there’s spare capacity, higher demand would increase employment without creating inflation. If it’s structural, perhaps because of a skills mismatch or other impediment, higher demand would be inflationary. In the U.S., the Federal Reserve seems convinced that cyclical unemployment is still high, leaving room for continued stimulus. But the evidence isn’t conclusive, and the new IMF findings don’t shed much light on this one way or the other. In short, choosing a policy still involves a lot of ignorance and a complex balance of risks. Empirical work can push macroeconomics forward inch by inch. It’s a noble endeavour, and I salute the practitioners – especially when they code their spreadsheets properly. But let’s not delude ourselves that policy in 2013 is founded on it, or even should be founded on it. Ideas, good and bad, still prevail over facts. John Maynard Keynes famously said he hoped that economists would one day be as humble and competent as dentists. Brilliant as many of them undoubtedly are, they haven’t yet advanced to that point. Bloomberg View


16

April 23, 2013

Closing France misses deficit target

Assembly backs civil servants’ salary hike

France and Spain fell short of their budget deficit goals last year, EU data showed yesterday. France’s 2012 budget deficit was 4.8 percent of economic output, statistics office Eurostat said in the final reading of all 27 countries’ public accounts. It compared with a target of 4.5 percent. Spain’s budget shortfall was 7.1 percent, excluding bank recapitalisation – higher than the government’s 6.98 percent official year-end reading, and well above Madrid’s original target of 6.3 percent. Overall, the 17-nation euro zone fiscal deficit was 3.7 percent of GDP, compared with 4.2 percent in 2011 and 6.5 percent in 2010.

The Legislative Assembly yesterday approved a 6.06 percent hike in the standardised civil service pay index, which is raised to 70 patacas (US$8.75) from 66 patacas. The salary hike should come into effect next month after being published on the Official Gazette. Secretary for Administration and Justice Florinda Chan reiterated at the assembly that the evaluation committee for civil servants’ salaries was only an advisory body with no decisionmaking powers. But she said there would “soon” be an adjustment in the committee’s structure and composition.

CTM business Internet suffers 15-min blackout Latest in a long list of failures from the former monopoly telecoms operator Michael Grimes

michael.grimes@macaubusinessdaily.com

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round 500 corporate customers of local telecoms provider CTM’s fixed-line Internet service suffered a 15-minute blackout at 3pm yesterday. A spokesman for CTM – Companhia de Telecomunicações de Macau, SARL – told Business Daily the reason was a fault with “firewall hardware”. “A problem was identified with a component in the firewall hardware and it was replaced. The service interruption was at 3pm and lasted for about 15 minutes. It affected 500 business customers of our fixed line Internet service,” said Eliza Chan, CTM’s general manager, corporate communications. Asked why there was no back up system to prevent the system going offline, she said: “We are currently investing more money to ensure there is redundancy in the

system.” CTM has been the dominant telecoms provider in the city since October 1999 when the departing Portuguese administration awarded what was at the time a 10-year monopoly licence extending until December 31st 2011. As we report elsewhere in this edition, the central government has just approved a deal that will allow mainland operator Citic Telecom International Holdings Ltd to take over CTM in a US$1.16 billion (9.3 billion patacas) deal. On Friday, CTM – which suffered three serious service interruptions of mobile telephony services last year – said about 100 users of fixed-line telephone services in Areia Preta district experienced “intermittent interruption” on voice calls. It blamed the problem on a “hardware malfunction” but said normal service had been restored within an hour.

Lufthansa flights hit by strike D

eutsche Lufthansa AG suspended almost its entire service for a full day as a strike by workers demanding more pay crippled operations at Europe’s second-largest airline. The airline grounded a total of 1,755 flights yesterday, with only about 20 of 1,650 planned European flights and 12 of 70 planned longhaul services taking off, the carrier said. Lufthansa cannot yet quantify the financial fallout because the airline must first establish how many passengers will rebook flights, cancel them, and have to be looked after when stranded. The protest comes as Lufthansa tries to push through its most ambitious efficiency programme ever

Lufthansa is offering free alternative bookings

to generate the money necessary to rejuvenate its ageing fleet. The strike is the biggest disruption of air travel in Germany since April 2010, when the eruption of Iceland’s Eyjafjallajökull volcano grounded 100,000 flights in six days throughout Europe. “It demonstrates the power of the unions,” said Jochen Rothenbacher, an analyst at Equinet in Frankfurt. “Motivation to strike seems to be high, allowing the union to flex their muscles.” Mr Rothenbacher predicts the strike may cause about 20 million euros (US$26.1 million) in operating losses for the company and may complicate efforts to push through savings.

Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt, said investors may be buying the stock now that the strike is happening. Lufthansa may also benefit from better bookings and a falling oil price that will help with fuel costs, he said. The airline is seeking to lower costs and increase sales to lift operating profit to a record 2.3 billion euros (US$3 billion) by 2015, a plan that includes eliminating 3,500 jobs. The Ver.di union, which represents about 33,000 Lufthansa employees including catering, freight and maintenance personnel, is demanding a 5.2 percent wage increase. The union is also pressing

for an agreement to exclude firings. In September last year, a strike by cabin crew caused the airline to cancel more than 50 percent of service on its worst day, or more than 1,000 flights. On February 22, 2010 a strike by pilots wiped out two-thirds of all connections. The airline said the strike, the second in two months, was uncalled for. “It’s completely out of proportion,” a Lufthansa spokesman said. “Especially given that four further dates for pay talks had already been agreed upon.” A fourth round of talks is scheduled for April 29 and 30, and a fifth for the beginning of June. If the negotiations fail, Ver.di will hold a vote on unlimited strikes. “T h e y w i l l l i k e l y s e t t l e f o r between 3.5 percent and 4 percent higher pay, and Lufthansa has realised already that any job cuts will have to be on a voluntary basis,” Mr Pieper said. Because of the strike, the airline had cancelled 46 flights on Sunday and nine for today, according to its website. In a statement on its website, Lufthansa said passengers should expect “massive” flight cancellations and delays. The airline said it was offering free alternative bookings. Bloomberg News/Reuters


Macau Business Daily, April 23, 2013