Year I Number 200 Wednesday January 16, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00
Gaming growth drives takeover target CTM profits www.macaubusinessdaily.com
Taiwan cash probe director faces separate U.S. lawsuit A director of MCE International Ltd – a unit of casino operator Melco Crown Entertainment Ltd being investigated in Taiwan for alleged illegal transfer of gamblers’ cash between the island and Macau – is one of those named in unrelated ongoing litigation in the United States.
acau’s biggest telecom operator, Companhia de Telecomunicações de Macau SARL (CTM) – subject of a takeover bid on Sunday by mainland telecoms firm Citic Telecom International Holdings Ltd – will see its profit grow faster this year and in 2014, says DBS Vickers Group Research. CTM had a market share of about 50 percent of all Macau’s mobile phone subscribers in 2011; well ahead of competitors SmarTone
Mobile Communications Ltd and Hutchison Telephone (Macau) Co Ltd. Macau’s gaming revenue will grow by 10-15 percent this year and become “a growth driver” for CTM’s mobile business, DBS Vickers analyst Tam Tsz Wang wrote. DBS Vickers believes CTM’s profit grew by just two percent last year to 953 million patacas (US$119.3 million), a huge drop from the 14.7 percent increase registered in 2011. MORE ON PAGE 6
Casino shifts hurting productivity: association Local lottery’s 22-year monopoly extended Sociedade de Lotarias Wing Hing Lda will have its monopoly right to run a Chinese lottery in Macau extended until December 31, 2013 according to the Official Gazette. In June 2011 the Gazette listed SJM Holdings Ltd’s directors Angela Leong On Kei and Louis Ng Chi Sing as directors of Wing Hing.
The shift systems in casinos are detrimental not only to the family life of employees but also to their productivity, the Macau Gaming Management Association warns. It is researching how to improve the way casinos arrange shifts and annual leave. Association president Davis Fong Ka Chio told Business Daily: “If staff don’t sleep well, if they don’t get enough rest, productivity at work is obviously affected.” Mr Fong is also head of the Institute for the Study of Commercial Gaming at the University of Macau.
Non-resident labour rule ‘meets international law’
The value of mortgage loans handled by the Industrial and Commercial Bank of China (Macau) Ltd doubled last year with about 10 percent going for affordable housing, said chief executive Shen Xiaoqi. He added his bank was the largest lender in several public housing projects in the city selling units to residents.
A proposed change to the law on hiring non-resident labour is “not discriminatory”, says Cheang Chi Keong, the head of the Legislative Assembly’s third permanent committee. If it were approved, a nonresident worker would no longer be required to leave Macau for a six-month period if his contract was ended early. But this exemption would only be the case if both the employer and worker agreed to end the contract early, or if the employer unilaterally ended the contract early without due cause.
ICBC doubles mortgage business during 2012
I SSN 2226-8294
HANG SENG INDEX 23470
HSI - Movers NAME
NEW WORLD DEV
HONG KONG EXCHNG
CHINA RES ENTERP
HENDERSON LAND D
SANDS CHINA LTD
WANT WANT CHINA
CHINA UNICOM HON
BROUGHT TO YOU BY
business daily January 16, 2013
‘Messy’ casino shifts reduce productivity Gaming managers acknowledge that irregular shift patterns are bad for employees and employers alike Vítor Quintã
he shift systems in casinos are detrimental not only to the social and family lives of employees but also to their productivity, an association of gaming managers has warned. The Macau Gaming Management Association is preparing a research project on how to improve the way casinos arrange shifts and annual leave. Association president Davis Fong Ka Chio told Business Daily that irregular shift patterns were bad for workers and indirectly reduced their productivity. “If staff don’t sleep well, if they don’t get enough rest, productivity at work is obviously affected,” said Mr Fong, who is also head of the Institute for the Study of Commercial Gaming at the University of Macau. He said it made things worse if shift work prevented workers from spending quality time with their families, even leading to problems such as domestic quarrels and neglect of children. Shift workers have more family problems than other kinds of employee, according to the results of a survey in 2011 by the Sheng Kung Hui Gambling Counselling and Family Wellness Centre. Mr Fong said the idea of the research project had come from a forum held last month by a group representing casino workers, which had raised issues about shift arrangements in casinos. He said casinos here used more than 100 different kinds of shift schedule, changing from one to another in accordance with the numbers of gamblers they pulled in.
What a mess Mr Fong said the main problem was the irregularity of shift schedules, which time and again forced workers to adjust their lives and their habits. “Messy” is the word that the president of the Macau Gaming Industry Employees Association, João Bosco Cheong Hong Lok, uses to describe the shift arrangements. “There are shifts where you need to work six days per week but only eight hours per day, while you can also work five days a week but 10 hours a day,” Mr Cheong told Business Daily. “Right now, we have to change shifts every one or two weeks. It is like we have just adapted to a timetable but then have to change it the next day,” he said.
If staff don’t sleep well, if they don’t get enough rest, then productivity at work is obviously affected Davis Fong Ka Chio, Macau Gaming Management Association president
Many casino employees receive their work rosters only one week in advance, says the head of an association of gaming managers
“If you do not check your schedule constantly, you may go to work on the wrong shift,” he said. “We, of course, would hope that we might only change shifts once a month or even once every two months.” Mr Fong said workers understood that “someone must work at night” to keep casinos open 24 hours. But he said many staff received their work rosters only one week in advance. Mr Cheong said some staff found out only at the weekend what hours they would have to work in the following week. “We do not have much room to plan for our personal life. I think most working in this sector feel like they have little personal time,” he said.
De facto separation This feeling is greatest among employees with spouses and children. Mr Fong remarked: “Their family arrangements may face some difficulties.” He said that if a married couple worked for the same casino operator, they were usually given the same schedule. But he said such an arrangement
could not be made for couples that worked for different companies. Mr Cheong said: “These couples may never see each other if their shifts are completely opposite.” Mr Fong said casino staff were also unhappy about being allowed to take their annual leave only when their employers said they could. But Mr Cheong feels that it may be impractical to let workers choose when to take their annual leave. “If we are free to choose to holiday when we want, most will choose the Chinese New Year, and no one will work then,” he said. Mr Fong said the goal of the research project was to learn “the needs or wants of both the employees and the operators” so solutions to problems could be proposed. His association will begin by requesting information from all casino operators on their shift schedules and then analysing it. This, he said, should take at least two months. He believes that when the study is completed later this year gaming companies will be open to suggestions about how to improve their practices. With Tony Lai
Venetian fined for changing working hours A court punished casino operator Venetian Macau SA with at least three fines last year for changing the terms of employment of its staff, court judgements show. In August 2007 the company in effect added an extra hour to the working day of its employees. Previously, it had required staff to work 48 hours a week, including lunch breaks. But the company changed its terms of employment to exclude lunch breaks from the number of hours worked per week. The Court of Second Instance said this change had been made without the consent of the workers and was “negative to the interests of the employees, considering that the basic pay set in the contract remained unchanged”. In the past two months the court has rejected appeals by Venetian against three convictions for breaking the labour law which carried fines amounting to 54,500 patacas (US$6,800). The court also ordered the company to pay former employees compensation amounting to about 60,350 patacas.
January 16, 2013 business daily | 3
Job swap rules for non-residents not discriminatory: legislator Members of the Legislative Assembly agree with the government on tighter restrictions on imported workers changing jobs Stephanie Lai
roposed amendments to the law on hiring non-resident labour which include limits on changing jobs are not discriminatory, the chairman of the Legislative Assembly’s third standing committee, Cheang Chi Keong, has said. The amendments would not be at odds with the international labour convention that gives workers the freedom to choose the jobs they do, Mr Cheang told reporters yesterday after a meeting of his committee. The bill to amend the law would no longer require non-resident workers whose contracts end prematurely to leave Macau for at least six months. Such workers would be allowed to stay only if they were not justifiably dismissed. However, the amendments would require them to find within six months jobs in the same industry they were working in before. “The non-resident labour law will not be undergoing a large-scale revision. After some discussion we concluded that [the proposed changes] still comply with the Basic Law, with Macau’s own employment policy and with the international labour conventions,” Mr Cheang said.
“Once hired, non-resident workers are protected by labour rights stipulated by local laws,” he said. “But they should also be subject to our re-employment rules.”
Averting chaos When the amendment bill had its first reading, on November 7, Secretary for Economy and Finance Francis Tam Pak Yuen said its purpose was to stabilise the labour market. Mr Cheang said yesterday: “There have been cases in which non-resident workers made deliberate attempts to get laid off in order to switch to a different kind of job – for instance, a construction worker switching to work as a casino security guard.” He said this could not be allowed to continue. “This trend would make the market chaotic.” Mr Cheang said the third standing committee would listen to the opinions of government officials on the bill next Tuesday. The members will also discuss ways to solve a problem the amendment may cause. At present, the permits issued to non-resident workers allowing them
There were over 110,100 imported workers in Macau last November
to stay temporarily expire as soon as their employment contracts end. Groups representing migrant workers have said the amendment would allow non-resident workers to stay on for only 10 days after their contract ended. A lecturer in social work at the
Macao Polytechnic Institute, Cecilia Ho Wing Yin, told Business Daily in November that this would leave workers vulnerable to exploitation by recruitment agencies. Mr Cheang declined to predict whether the assembly would pass the amendments by the Lunar New Year.
Campus budget haste ledto waste, says engineer A top engineer says speed took precedence over thrift in the construction of the University of Macau’s campus on Hengqin Island Tony Lai
he government made an incomplete budget for the University of Macau’s new campus on Hengqin Island so it could wrap up the project within three years, according to a leading engineer. A Commission of Audit report released on Monday criticised the Infrastructure Development Office for not including all the work in the budget for the project and for using inappropriate or outdated points of
reference in estimating costs. “The government did not draw up the budget for the campus with a detailed plan, as they had to hurry the project,” the president of the Macau Institution of Engineers, Eddie Joe Wu Chou Kit, told Business Daily. The initial budget for the campus, made public in April 2010, was 5.8 billion patacas (US$725 million), but the budget had ballooned to 9.8 billion patacas by November 2011. The audit commission said that by last March the cost of the project had exceeded 10.2 billion patacas. Mr Wu said different construction methods and materials would have allowed the project to keep within its budget. But he believes the government chose options that were meant to keep construction on schedule. “In this case the government gave the impression that they prioritised the construction target over everything, which is something I would not recommend,” he said.
Valuable lesson The cost of the University of Macau’s new campus exceeds 10.2 billion patacas (Photo: Manuel Cardoso)
“This case makes people think we have a lot of public revenue so we can
be negligent about the costs, in order to catch up with time,” Mr Wu said. The Infrastructure Development Office issued on Monday a written statement saying it agreed with the criticisms made by the auditors. It said the initial budget had been “based on limited design information”, and that therefore it had made a conservative estimate of the costs. It acknowledged that it had had to “overcome a lot of difficulties” in its effort to have construction finished within a three-year period that ended last month and so comply with a cooperation agreement with Zhuhai. Secretary for Transport and Public Works Lau Si Io yesterday admitted the government “did not have enough information” when it drafted the initial budget. Mr Lau also said the administration had to carry out the design work and construction simultaneously due to the “tight schedule for construction”, which affected the accuracy of the original estimates. Mr Wu said the government should closely review budgets for future projects, paying special attention to the costs of materials and labour. “There is usually a time lapse of
one to two years between finalising the overall design and putting projects out to tender in Macau,” he said. He said the government could pass budgets for big projects to an independent body for review. He hopes the Infrastructure Development Office has learnt its lesson and that it will apply what it has learned in making the budget for the tunnel that will link the peninsula to Taipa.
This case makes people think we have a lot of public revenue so we can be negligent about the costs Eddie Joe Wu Chou Kit, president of the Macau Institution of Engineers
business daily January 16, 2013
MACAU Brought to you by
HOSPITALITY THE GREAT ESCAPE An indicator of increasing prosperity here is the rise in outbound tourism by Macau residents. In the first 11 months of last year travel agents arranged 32 percent more trips abroad than in the corresponding period of 2011. The growth was greatest in the number of trips they arranged to mainland China, which rose by 44.6 percent. However, a good deal of the growth may have been in short business trips rather than holiday travel. The figures may reflect greater integration of the Macau and mainland economies as much as growth in outbound tourism.
Greater economic integration is likely to have been a strong driver of the increase in the number of trips to Guangdong, which rose by 48.3 percent, and the number of trips to Hong Kong, which rose by 44.3 percent. Trips to Taiwan increased more slowly. The consequence seems to be that travel abroad by Macau residents is increasingly to places nearby. The mainland and Hong Kong combined were the destinations of almost threequarters of their trips. Greater China as a whole was the destination of over of 87 percent of their trips. The number of trips further afield fell. Trips to countries beyond Greater China made up 12.7 percent of all trips abroad by Macau residents in the first 11 months of last year, almost 5 percentage points fewer than in the corresponding period of 2011. J.I.D.
Taiwan cash probe firm director facing separate lawsuit in U.S. Alleged Clarence Chung and others ‘misled’ investors on slot machine revenue deal Michael Grimes
director of MCE International Ltd – a unit of casino operator Melco Crown Entertainment Ltd being investigated in Taiwan for alleged illegal transfer of gamblers’ cash between the island and Macau – is one of those named in unrelated ongoing litigation in the United States. Chung Yuk Man – also known as Clarence Chung, is listed in a Companies Registry document from Hong Kong dated March 30, 2012 as a director of MCE International. According to a filing with the U.S. Securities and Exchange Commission, dated December 31 2012, Mr Chung is also chief executive of Entertainment Gaming Asia Inc. In another SEC filing dated November 14, “Melco International Development Ltd”, is described as the parent of Entertainment Gaming Asia’s principal shareholder, EGT Entertainment Holding. A civil complaint filed on March 26 2010 with the U.S. District Court for the Southern District of New York, by several institutional shareholders of Entertainment Gaming Asia – including Prime Mover Capital Partners L.P., Strata Fund L.P., Strata Fund Q.P. L.P., and Strata Offshore Fund, Ltd – alleges “false and misleading statements” made
between June 13, 2007 and August 13, 2008 about a slot business operated by the company – then known as Elixir Gaming Technology. The plaintiffs claimed the firm had breached the U.S. Securities Exchange Act of 1934 by exaggerating the financial performance of slot machines placed on a revenue participation basis in Asian markets. The November 14 SEC filing states that on September 27 2012 the U.S. District Court dismissed all of the plaintiffs’ claims except two breachof-contract counts. All claims against the current and former officers and directors were dismissed, it added. But on October 25 2012 the plaintiffs filed
MONEY TRANSFERS BEING INVESTIGATED BY TAIPEI PROSECUTORS
a notice of appeal seeking review by the Second Circuit Court of Appeals of the trial court’s ruling. The Companies Registry document from Hong Kong lists two other MCE International directors. They are Rowen Craigie, chief executive officer and managing director of Crown Ltd, an Australian casino operator that is a joint venture partner in Melco Crown Entertainment, and Stephanie Cheung, executive vice president and chief legal officer of Melco Crown Entertainment. MCE International was named by public prosecutors in Taiwan last week as under investigation for allegedly breaching the jurisdiction’s Banking Law. “The company has worked with several casinos from Macau, and enabled Taiwanese gamblers’ money to be remitted to Macau through its underground exchange system,” said a statement from the Taipei District Prosecutor’s office. It added that transfers involving NTD5.2 billion (US$179 million) were under scrutiny. “None of Melco Crown Entertainment’s corporate entities has been charged at the current time. If required, we will cooperate with the authorities,” MCE said in a statement on Sunday.
Total visitor arrivals close to city’s capacity
isitor arrivals at Macau reached over 28 million people in 2012, up slightly by 0.3 percent year-on-year, figures from the Macau Government Tourist Office show. Greater China remained the top source of Macau’s visitors, with an annual increase of 0.4 percent to over 25 million visitors, office head Maria Helena de Senna Fernandes said yesterday. On the other hand, the number of visitors coming from the international market has dropped by 0.5 percent to 3 million people. However, in terms of tourists’ opting to sleep in Macau, the city did
“achieve some progress”, Ms Senna Fernandes noted. “Last year we had 13.5 million visitors choosing to stay overnight in Macau, which is an annual increase of 5 percent,” accounting for 48 percent of all visitors, she said. Last year’s visitors did not reach the maximum tourist capacity of 29 million, a reference figure suggested by a report from Institute for Tourism Studies carried out in 2011. To offload the pressure on the most popular spots, the bureau will boost promotion to divert tourists to northern Macau, Taipa, Coloane and other old neighbourhoods. The official pledged to focus on
Authorities yesterday launched a campaign to encourage residents to be friendlier to tourists
working with Guangdong to better tackle the zero-fee tour groups active across the Zhuhai-Macau border that often give rise to travel fees disputes. The office also listed regular raids on illegal inns and research on tourism staff demand on its 2013 agenda. The bureau’s budget includes an investment plan of 21 million patacas (US$2.6 million) and running expenses of 243 million patacas. S.L.
You talking to me? It’s amazing how you can survive in this region, being understood and understanding just a small part of the communication. That’s ok for you but not for your business.
+853 2833 1258 firstname.lastname@example.org www.goldfishmacau.com
At GOLDFISH | creative agency we know how to adjust your message for each audience or product and make it effective. Yes. We are talking to you. GOLDFISH.advertaholics
January 16, 2013 business daily | 5
No change to Chinese lottery concession Pa Ka Pio’s 22-year monopoly extended for another 12 months Vítor Quintã
ociedade de Lotarias Wing Hing Lda will have its monopoly right to run a Chinese lottery in Macau extended until December 31, 2013. There will no others changes to the contract, a spokesperson for Macau’s gaming regulator the Gaming Inspection and Coordination Bureau told Business Daily. But a notice in Monday’s Official Gazette stated there would be some “modifications” to the contract – without providing details. According to the Gazette, Secretary for Economy and Finance Francis Tam Pak Yuen will soon sign a new one-year deal with the company. A Bureau spokesperson told Business Daily “the terms and conditions in the concession of Wing Hing for the operation of Chinese lottery are similar to those of the previous year”. The premium that Wing Hing will pay to the government for the one-year extension will once again be 500,000 patacas (US$62,600). Wing Hing has been signing oneyear contracts consecutively since 2010. Its previous one expired at the end of last calendar year. But the company will be authorised to continue operating while the
The yearly revenue of the Chinese lottery, known locally as Pa Ka Pio (sometimes Westernised in lottery outlet signs as ‘Pacapio’), has remained stable at around six million patacas since 2007. The Official Gazette listed SJM Holdings’ directors Angela Leong On Kei and Louis Ng Chi Sing in June 2011 as directors of Wing Hing. The term ‘Pa Ka’ refers to pigeon races originating during the Qing Dynasty when Chinese would bet on one or more of 80 birds each with a numbered ring attached to it. In the modern lottery game players must choose 20 out of 80 drawn numbers to win the top prize.
Winning number – Wing Hing lottery monopoly extended (Photo: Manuel Cardoso)
concession renewal is being prepared, the bureau confirmed. “The assessment on the renewal of the concession for Wing Hing has already been completed before the end of 2012,” the spokesperson wrote in an e-mailed reply to Business Daily. “The promulgation of the information may take a bit of time
Slot revenue helps Macau to 19 pct growth in early Jan Monthly GGR on track for nearly MOP30 bln says Sterne Agee
evenue from slot machines – a sometimes overlooked part of Macau casinos’ inventory because of the city’s massive dependence on live dealer baccarat – helped the city’s gross gaming revenue grow by 19 percent year-on-year in the first 13 days of January, suggests a note from Sterne Agee, a privately-owned brokerage in the United States. “The slot inclusive GGR run-rate puts January MOP [patacas revenue] at ~29.7 billion, or ~+19 percent year-on-year (+5 percent monthon-month) versus our +15 percent y-o-y (+2 percent m-o-m) estimate and [market] consensus below 10 percent,” says David Bain in the note. Caution is needed when assessing the contribution of slot revenue to the city’s gaming market. Several Macau operators have previously reported privately to investors that a small number of VIP players are providing a lot of their slot revenue. If slot revenue has helped ‘move the needle’ so far in January, it could actually be a function of a modest number of high rollers being added to a market with a relatively small base, rather than a sign of a big growth in the market base. Slot revenue accounted for only 4.4 percent of all revenue from casino
games in 2012 according to data from Macau’s Gaming Inspection and Coordination Bureau. But in cash terms it still amounted to 9.74 billion patacas (US$1.22 billion). It’s not yet clear what effect if any, the partial smoking ban introduced on Macau’s casino floors on January 1, will have on slot revenue. But given slots’ relatively modest contribution to Macau’s total gaming gross, anecdotal reports from casino labour associations suggest local operators have been designating a disproportionate amount of their slot floors as ‘no smoking’ zones and keeping their higher yield live table areas as smoking areas. “When the smoking ban was introduced in Australia, slot hall operators introduced a system where players wanting a cigarette or toilet break could reserve their machine,” one Macau slot machine supplier told Business Daily yesterday. “That made sure no one could come along while they were away, play the machine and win ‘their’ jackpot. There’s no such system in Macau casinos. And from my personal observation, the smoking ban is having some negative impact on the ‘grind’ [lower] end of the slot mass market,” said the person. M.G.
due to the administrative procedures required,” the person added. The Chinese lottery concession to Wing Hing, part of Stanley Ho Hung Sun’s business interests, has remained almost unchanged since 1990. Wing Hing pays the government 23 percent of its revenue, plus five per cent to the Macao Foundation.
PREMIUM PAID BY WING HING FOR CHINESE LOTTERY CONCESSION EXTENSION
business daily January 16, 2013
MACAU Pataca ends year on a low
Brought to you by
The pataca dropped to a 10-month low against the currencies of the city’s main trading partners in December, the Monetary Authority of Macau revealed yesterday. The pataca’s trade-weighted effective exchange rate index fell by 0.44 points from November to 96.85 points, making imports more expensive. The index reached 104.3 points in June 2010 but since then the pataca has depreciated, mostly because the yuan has strengthened. Macau’s foreign exchange reserves amounted to 132.5 billion patacas (US$16.6 billion) at the end of last year.
FOOD ON THE TABLE Macau is wholly dependent on imports for the food it needs to feed its growing population and its vast numbers of visitors. For supplies of some kinds of food we rely heavily on mainland China. But the picture is more complex than commonly supposed. Food, including livestock, made up just over 8 percent of all imports in the first 11 months of last year. Imports from the mainland made up less than one-third of food imports.
Faster profit growth for CTM: analyst Mobile business growth will continue to boost telecom’s profit, analysts say Vítor Quintã
Unsurprisingly, we depended on the mainland most for livestock for consumption. Almost 82 percent of our imports of livestock came from the mainland. But livestock made up just 0.6 percent of all imports and under 7.9 percent of food imports. Imports from the mainland made up under 40 percent of imports of all other kinds of food. Over one-third of the vegetables and over onethird of the meat we imported came from the mainland. Roughly one-quarter of the other kinds of food we imported came from the mainland. The United States was our second-largest source of vegetables and fruit after the mainland, sending us 22 percent of our supply. We imported more meat from the United States and Brazil combined than we imported from the mainland. Thailand was our second-largest source of cereals after the mainland. By sending us 23 percent of our supply in 2011 Thailand was actually our largest source of cereals In that year. However, we must view these figures with caution, for two reasons. First, the nature and source of about onequarter of our imports are protected by statistical confidentiality. Second, Hong Kong supplies us with a considerable amount of some kinds of food but may not be the original source.
acau’s biggest telecom operator, Companhia de Telecomunicações de Macau SARL (CTM), will see its profit grow faster this year and in 2014, even though revenue will increase more slowly. DBS Vickers Group Research made the forecast in a note to investors released on Monday, which classifies the CTM acquisition a positive move for Citic Telecom International Holdings Ltd. Macau’s gaming revenue will grow by 10-15 percent this year and become “a growth driver” for CTM’s mobile business, analyst Tam Tsz Wang wrote. CTM had a market share of about 50 percent of all mobile phone subscribers in 2011, towering above competitors SmarTone Mobile Communications Ltd and Hutchison Telephone (Macau) Co Ltd.
“Fixed-line and broadband revenues will be relatively stable but provide strong cash flow to the company,” the note adds. DBS Vickers believes CTM’s profit has grown by just 2 percent last year to 953 million patacas (US$119.3
MOP953 mln ESTIMATED CTM PROFIT FOR 2012
J.I.D. The content of this column is the work of Business Daily’s journalists.
FOOD AS A PROPORTION OF ALL IMPORTS IN FIRST 11 MONTHS OF 2012
CTM had a market share of about 50 percent of all mobile phone subscribers in 2011
million), a huge drop from the 14.7 percent increase registered in 2011. The main reason was a slowdown in revenue, which rose by 17.3 percent to 4.7 billion patacas – far from the 44.4 percent hike posted in the previous year. The company’s revenue growth will cool down even further to 8.6 percent this year and 9.1 percent in 2014, the report predicts. On the other hand, profit is expected to bounce back with an 8 percent increase in 2013 and a 6 percent hike next year. The DBS Vickers report comes after Citic Telecom agreed to pay a total of US$1.16 billion to buy a 79 percent stake from CTM’s two major shareholders. The market was surprised by Citic Telecom’s decision to buy out minority shareholder Portugal Telecom along with Cable & Wireless Communications Plc, Mr Tam wrote. But the analyst believes the valuation of CTM seems fair in comparison with its Hong Kong-listed competitors. Citic Telecom described the CTM purchase as a landmark deal for the telecom unit of Chinese state-owned conglomerate Citic Group. DBS Vickers expects the company’s earnings per share ratio to grow by over 50 percent once the deal the completed, which should take six to nine months. Standard Chartered Plc analyst Steven Liu is even more optimistic and believes Citic Telecom’s earnings per share ratio could jump by as much as 74 percent. In a note to investors also released on Monday, Mr Liu says the acquisition will raise the company annual profit by over 150 percent.
Stay in the finest hotels in Macau and read Business Daily
news where it matters
January 16, 2013 business daily | 7
MACAU The new housing curbs have been effective in tackling speculation, says ICBC Macau chief
ICBC mortgage loans doubled last year The bank is the largest Macau lender for several public housing projects, says CEO Tony Lai
he value of mortgage loans handled by the Industrial and Commercial Bank of China (Macau) Ltd doubled last year with about 10 percent going for affordable housing, said chief
executive Shen Xiaoqi. “There are several reasons for this increase. It reflects the prosperity in the Macau property market but it also proves ICBC Macau’s hard work in extending its business to
the community,” he said. Despite refusing to provide exact figures, he told reporters that Macau residents were the major target of the bank’s loans last year. Mr Shen was speaking after the launch of a
ON A NEWSSTAND NEAR YOU
new bankcard yesterday. The chief executive added his bank was the largest lender in several public housing projects for sale in the city. For instance, ICBC Macau lent money for over 70 percent of the households that bought the more than 800 flats in the affordable housing complex in Areia Preta. The bank has so far received over 1,600 loan applications for the TN27 project in Taipa, which will provide over 2,700 flats, said Mr Shen. The executive said the mortgage for affordable housing accounted for just 10 percent of all loans approved last year due to the small amount involved in each transaction. Mr Shen also thinks the new housing curbs introduced by the administration in October have been “very effective”. “It has obviously suppressed the speculators, affecting the transactions of the high-end flats,” he said. “The transactions for the personal-use houses, usually with lower prices, are normal.”
ICBC eyes first-half Hengqin launch
ON TIME, WHERE IT MATTERS!
ICBC Macau is “cautiously optimistic” of getting the approval to open a branch in Hengqin Island by the first half of this year, said its chief executive Shen Xiaoqi. “There will be news soon” about the bank’s application submitted last year to the China Banking Regulatory Commission, he told reporters yesterday. The latest supplement to the Closer Economic Partnership Agreement between Macau and mainland China lowers the minimum assets Macau banks must have to gain a foothold on the island to US$4 billion (32 billion patacas) from US$6 billion. ICBC Macau, very likely the city’s first bank on the island, would mainly provide services “to support the investments from Macau enterprises on Hengqin, as well as the residents’ life there,” said Mr Shen.
business daily January 16, 2013
CY Leung sets sights on housing HK chief executive to deliver his first policy address today Simon Lee
ong Kong Chief Executive Leung Chun Ying may address the city’s housing crunch when he gives his first policy address today, as he seeks to boost record-low popularity and move on from an opposition impeachment bid. With housing prices double what they were four years ago, the government must tackle the city’s crisis “without delay,” Mr Leung wrote in a blog post ahead of his first policy speech since he became chief executive in July. Mr Leung, who came to office on campaign promises to improve the lives of poor and middle-class citizens, may announce more measures to boost Hong Kong’s land supply. The city faces challenges that include property prices and pollution that have made it the most expensive and one of the smoggiest financial centres in the world. “He will focus on livelihood and economic issues including housing because that is the expectation of the people who supported him,” said Ma Ngok, a political scientist at the Chinese University of Hong Kong. The public will judge him on “whether he has what it takes to tackle livelihood and deep-rooted issues with effective measures,” Mr Ma said. Mr Leung must balance the demands of Hong Kong’s people and Chinese leaders including Communist Party
Leung Chun Ying is the least popular HK leader after six months in office
General Secretary Xi Jinping, who expressed his support for the chief executive last month. Mr Leung is the least popular Hong Kong leader after six months in office, according to survey data fromtheUniversityofHongKong’sPublic Opinion Programme. He has a support rating of 49.2 on a scale of 0 to 100.
Speaking to reporters before a meeting of his cabinet yesterday, Mr Leung said Hong Kong has a number of “deep-rooted” problems. He said the government is “determined to work with the people and address these problems that Hong Kong faces”. “A large part of C.Y.’s decision is
Beijing pollution lifting but still ‘unhealthy’
hina reported that pollution eased in Beijing after reaching record high levels in the past three days, as state media said the capital was becoming more famous for its smog than its culture or food. Official measures of PM2.5, fine airborne particulates that pose the largest health risk, fell in the morning after the government expanded efforts to fight the pollution and light wind that had blown the smog against mountains to Beijing’s north shifted south. The China Daily on Monday said the city was becoming better known
for “Beijing Cough” afflicting its residents than for Peking Duck or Peking Opera. With hospitals reporting more patients who complained of heart and respiratory ailments, the government shut dozens of factories and pulled government cars off the roads. The reaction reflects a growing awareness within the Communist Party that pollution is becoming a main instigator of social unrest, environmentalist Dai Qing said in an interview. “For so many years we all tried to do something and the authorities
gave us no reply,” Mr Dai said. “But once people have no water, no air, no land – something will happen. It’s very dangerous.” Levels of PM2.5 levels rose to as high as 993 micrograms per cubic metre in Beijing on Saturday, compared with World Health Organisation guidelines of no more than 25. The U.S. Embassy’s pollution monitor said overall pollution levels, including PM2.5 and larger particulates, was still at “unhealthy” levels. AFP
tied to his popularity,” said Alnwick Chan, a Hong Kong-based executive director at Knight Frank LLP, a property broker. “Curbing property prices is pretty much the only thing that can win him some applause.” Hong Kong’s benchmark Hang Seng Index has risen 20.4 percent
January 16, 2013 business daily | 9
GREATER CHINA since Mr Leung took office on July 1 last year. While he was selected by a 1,193-member panel comprised of billionaires, lawmakers and professionals, Mr Leung campaigned on a promise to ease a wealth gap that’s the worst since records started being kept in 1971. Housing is the most important issue for the government to tackle, according to a poll published on December 31 by the University of Hong Kong Public Opinion Programme. The survey of 1,019 people said 41 percent ranked housing as the top issue. Hong Kong’s economy is expected to grow 3.9 percent in 2013, according to a forecast by the Asian Development Bank published in October 2012. The city’s GDP increased 1.3 percent in the third quarter, according to government data. The city’s home prices have doubled over the past four years, surpassing their 1997 peak, and Hong Kong is now the most expensive place to buy an apartment, according to property broker Savills Plc. An 800-squarefoot apartment in the middle-class Taikoo Shing neighbourhood sold for HK$8.88 million (US$1.15 million) on January 10, according to data from the Centaline Property Agency. That’s more than six times the December U.S. median home price of US$180,600. Since Mr Leung took office, his government has introduced three sets of property measures, including a new tax for home buyers who are not permanent residents in the city. The chief executive has approved an increase of the minimum wage to HK$30 per hour, the first raise of the wage floor since it was implemented in 2011. The government also introduced a HK$6 billion subsidies programme for the elderly. Bloomberg News
CKI pays US$421 mln to buy New Zealand firm Li Ka Shing’s company keeps expanding overseas
illionaire Li Ka Shing’s Cheung Kong Infrastructure Holdings Ltd will buy New Zealand waste company EnviroWaste for NZ$501 million (US$421 million), the Hong Kongbased company’s third purchase in the past four months. Ironbridge Capital Pty Ltd will sell the company to Cheung Kong Infrastructure, known as CKI, subject to regulatory approvals, the Australian private equity firm said in a statement. Ironbridge paid NZ$259 million in 2007 for EnviroWaste, the second-largest waste services business in New Zealand, according to the buyout firm’s website. The acquisition adds to utilities and infrastructure purchases Mr Li has made in markets including Europe in the past three years. In July, he agreed to pay 645 million pounds (US$1 billion) for Wales & West Utilities Ltd in the U.K. and was involved in the acquisitions of Northumbrian Water Group Plc in 2011 and Electricite de France SA’s U.K. power networks the previous year. “Waste management provides good opportunity for future growth,” CKI Group Managing Director Kam Hing Lam said in a separate
statement. “It’s expected that New Zealand will experience long-term waste volume growth as the economy continues to expand.” CKI has about HK$5 billion (US$645 million) of cash and “will continue to explore acquisition opportunities,” Mr Kam said. It already owns New Zealand distributor Wellington Electricity Lines Ltd with Power Assets Holdings Ltd, a company also controlled by Mr Li.
Waste manager EnviroWaste serves about half a million customers in New Zealand, according to CKI. It owns and manages waste collection facilities, transfer stations and landfills, as well as ancillary services such as bulk waste haulage and landfill gas- toelectricity generation. The sale values EnviroWaste at 10 times earnings before interest, tax, depreciation and amortisation for the year through June 2012 and includes NZ$11 million of debt, according to the statement. Ironbridge has made 17 “bolton” acquisitions since its original investment in EnviroWaste, according to the release.
Li Ka Shing – investing in utilities and infrastructures
EnviroWaste is “well-placed” to “expand its operations under the ownership of CKI,” EnviroWaste chairman Kim Ellis said in the statement. Its management team will remain. Bloomberg News
business daily January 16, 2013
ASIA South Korea stands to gain
Expectations of further easing have nudged up Tokyo’s Nikkei share average to a 32-month high
Amari signals limits to campaign to weaken yen
Japan’s drive to weaken the yen poses a threat to big South Korean exporters such as Hyundai Motor Group, but the new government in Seoul may not want to do too much about it – a firming won could actually make the economy stronger. The yen tumbled against the dollar in the December quarter as the won was rising, depressing the shares of big Korean exporters, a swing in the exchange rate that traditionally set off alarm bells in Seoul over worries about the potential impact on sales to the rest of the world. However, Korean officials have signalled a new willingness to tolerate a higher won, partly to reflect a record current account surplus but also to help the economy shift away from a reliance on exports. President-elect Park Geun-hye, who takes office late next month, has said Korea’s export-led economic model was now outdated. Exporters no longer provide sufficient jobs, so she will focus on building up domestic industries.
Central bank warns economic outlook weak
apanese Economy Minister Akira Amari said the nation faces risks from any excessive decline in the yen, highlighting limits on Prime Minister Shinzo Abe’s campaign to drive down the currency. “If the yen excessively weakens, this would cause a spike in import prices,” Mr Amari told reporters in Tokyo yesterday. “It would be a benefit for exports, but would have harmful effects on people’s livelihoods.” Fiscal stimulus and the prospect of more central-bank easing drove a decline of about 10 percent in the yen against the dollar in two months, aiding Japanese exporters as the nation struggles to climb out of recession. Any strengthening of the currency could limit the stock rally that prompted Bank of America Corp. to upgrade its forecast for equities to a 39 percent gain through year-end. “Further depreciation of the yen is necessary to boost manufacturers’ profits and improve price competitiveness,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd and a former BOJ official. The Japanese currency gained 0.6 percent to 89.95 per dollar in Tokyo, its first gain in five days.
If the yen excessively weakens, this would cause a spike in import prices Akira Amari, Japanese Economy Minister
Mr Amari said yesterday that the currency is “correcting” to a level in line with economic fundamentals, while declining to comment on an appropriate value.
‘Powerful’ easing Bank of Japan Governor Masaaki Shirakawa said yesterday that the nation’s economy remains weak ahead of a Jan 21-22 meeting where the central bank will decide whether to add to stimulus for the fourth time in five months. “Exports and production are
decreasing as the global slowdown continues,” Mr Shirakawa said at a gathering of BOJ branch managers in Tokyo, adding that the bank will pursue “powerful monetary easing”. Goldman Sachs Group Inc., Bank of America and Nomura Holdings Inc. are predicting Japanese stocks will extend their longest streak of gains in 23 years. The Topix rose for nine straight weeks through January 11, the longest stretch since December 1989, when it hit a record 2,886.5. Goldman Sachs boosted its estimate to 1,000 on January 7 from 930, while Bank of America increased its 12-month estimate to 1,250 from 1,050, according to a January 11 note.
Fiscal stimulus Mr Abe announced 10.3 trillion yen (US$116 billion) in additional stimulus on Friday and is pressuring the Bank of Japan to double its inflation target to 2 percent after the third recession in five years. Goldman Sachs is buying shares of exporters, financial firms and utilities, Hiroyuki Ito, Tokyo-based head of equity investment at Goldman Sachs Asset Management Co., said last month.
Exports and production are decreasing as the global slowdown continues Masaaki Shirakawa, Bank of Japan Governor
International Monetary Fund official Zhu Min said yesterday that Japan’s debt burden is becoming “more serious” as the government takes extra steps to stimulate growth in the world’s third-biggest economy. Mr Zhu, a deputy managing director at the IMF, spoke in an interview in Hong Kong, where he’s attending the Asian Financial Forum. The risk is that the nation’s debt burden, estimated by the IMF at 237 percent of gross domestic product last year, will lead to a surge in government bond yields. Bloomberg News/Reuters
Morgan Stanley to pare investment bank jobs
organ Stanley plans to trim about 15 percent of its investment banking positions in Asia as it starts a round of job cuts this week, two people with knowledge of the matter said. Asian managing directors Saul Raccah and Leon Guo are among the investment bankers who will leave New York-based Morgan Stanley, the people said, asking not to be identified because the matter is confidential. Xu Li, a Beijing-based spokeswoman, declined to comment. The job cuts in Asia investment banking will be deeper than the 6 percent reduction to be made across the broader institutional securities group, which
includes fixed-income and equity sales and trading, research and investment banking, one of the people said. Mr Raccah, based in Hong Kong, is Asia-Pacific head of oil and gas on the investment-banking team, while Mr Guo is managing director for real estate, focusing on China. Another managing director, Zhang Jianyong, 48, who primarily advised power and utility clients in China, has already left, the people said. The 15 percent cuts will mainly affect country bankers and staff in the mergers and acquisitions and global capital market units in the Asia-Pacific region excluding Japan, one of the people said.
Globally, Morgan Stanley is eliminating about 1,600 jobs from its investment bank and support staff in coming weeks, with half the reductions in the U.S., a person with
direct knowledge of the matter said last week. The cuts will total about 6 percent of the global institutional securities group, the person said. Bloomberg News
January 16, 2013 business daily | 11
Indian stocks may jump 14 percent in 2013
Singapore’s home sales jump in Dec Singapore’s private home sales jumped nearly 30 percent in December from the previous month, a surge that came just before the government took new measures to dampen demand in the residential market. Developers sold 1,410 housing units last month excluding executive condominiums, up from 1,087 units in November, according to data from the Urban Redevelopment Authority. On Friday, Singapore’s government unveiled sweeping measures to cool the housing market, such as raising stamp duties for buyers and limiting the amount of loans they can take.
If government and central bank sustain policies to boost economic growth, says Deutsche Bank Rajhkumar K Shaaw
ndia’s benchmark stock index may advance a further 14 percent this year if the Indian government and central bank sustain policy measures to boost economic growth, Deutsche Bank AG wrote in a report released yesterday. The BSE India Sensitive Index, or Sensex, may rise to 22,500, led by financial, energy, industrial, material and information technology stocks, according to the report by Deutsche Bank strategists Abhay Laijawala and Abhishek Saraf. The gauge climbed to more than 20,000 for the first time since January 2011 yesterday. Stocks jumped on Monday after data showed the benchmark inflation rate slowed to a three-year low in December, widening the Reserve Bank of India’s scope to reduce borrowing costs to revive the economy. The central bank signalled last month that monetary policy must shift toward aiding economic growth, predicting inflation will moderate in an economy expanding at the weakest pace in a decade. The authority meets for its next policy review on January 29. “The onus of transition from vicious to virtuous will initially lie with New Delhi and the Reserve Bank of India during the first half of 2013 before the baton is taken up by the private sector in the second half of the year,” according to the report. The Sensex had its biggest annual
Perodua plans US$770 mln investment India – trying to revive the economy
rally last year since 2009 as Prime Minister Manmohan Singh took measures to attract foreign investment to boost growth and to avert a creditrating downgrade. Overseas funds bought US$24.5 billion of local shares in 2012, the most among 10 Asian markets tracked by Bloomberg. Cyclical and rate-sensitive stocks will lead the rally in Indian shares this year, according to the report. Lenders Axis Bank Ltd., Bank of Baroda and Punjab National Bank are among Deutsche Bank’s top picks for 2013, along with Bharat Heavy Electricals Ltd., India’s
biggest power-equipment maker, and Larsen & Toubro Ltd., India’s largest engineering company. The bank also recommended Maruti Suzuki India Ltd, the biggest carmaker, Reliance Industries Ltd, owner of the world’s largest refining complex, Tata Steel Ltd, the nation’s biggest producer of the alloy, Tata Consultancy Services Ltd, India’s largest software services exporter, and cement maker Ultratech Cement Ltd. The report rated consumer staple, health-care and utility stocks underweight, the equivalent of sell. Bloomberg News
RBA seen turning from rate cuts As China rebounds and metals rally
ustralia’s central bank is at a turning point after the world’s steepest interest-rate cuts, swap markets show, as China’s economy rebounds. Contracts based on overnight borrowing costs indicate a 47 percent chance Governor Glenn Stevens and his board will keep the cash rate at a half century-low of 3 percent for the rest of this quarter, up from a 10 percent likelihood three months earlier. The yield on two-year government debt has climbed 14 basis points this year, the most among developed markets after Denmark, Sweden and Germany. UBS AG, Commonwealth Bank of Australia and Barclays Plc forecast the
Reserve Bank of Australia won’t cut benchmark borrowing costs this year, after a surge in the price of iron ore, the nation’s biggest export. The local dollar is the best performing Group of 10 currency against the greenback in 2013 as investors bet Australia will benefit from a rebound in China, its biggest trading partner. “I think it’s a turning point,” said Paul Bloxham, chief economist for HSBC Holdings Plc in Sydney and a former RBA official. “The RBA is going to say that the global environment has turned and the Asia story is picking up, commodity prices are rising and they’re going to look for more signals that you saw a reasonable turnaround
in the economy at Christmas.” Iron ore has jumped 32 percent since the RBA’s quarter percentage point cut on December 4, bringing to 1.75 percentage points the reductions in 14 months, the steepest in the developed world. Mr Stevens, who is aiming to rebalance Australia’s two-speed economy, where mining regions in the north and west thrive and manufacturers, retailers and builders in the south and east struggle, has been trying to avoid a gap in growth as policy makers predict mining investment will plateau this year. National Australia Bank Ltd predicts the central bank will lower rates by 75 basis points to a record 2.25 percent in the third quarter, forecasting slower economic growth that will push up the jobless rate to 5.75 percent by late this year, which would be the highest level since August 2009. “With the economy continuing to weaken and unemployment set to rise noticeably through 2013 the RBA will need to cut significantly further than previously expected,” NAB chief economist Alan Oster said, predicting 2013 growth will slow to 2 percent from a previous estimate of 2.5 percent. Reuters
Malaysia’s No. 2 national carmaker Perusahaan Otomobil Kedua Sdn Bhd (Perodua) plans to invest some US$770 million over four years to increase manufacturing efficiency, build more showrooms and aftersales service centres.The maker of low priced compact cars which commands nearly a third of the domestic market is seeking to increase productivity and cuts costs ahead of moves by the government to abolish or reduce duties on foreign imports of cars in the coming years. The 2.32 billion ringgit investment plan includes 790 million ringgit announced last month for a second manufacturing plant to boost production by 50 percent.
S. Korea limits giant retailers South Korea’s government approved yesterday a national law restricting the operating hours of large retailers in a bid to protect small stores who say they are being pushed out of business. The law, which will start to come into effect after three months, requires warehouse-style chains to shut stores on two Sundays a month and to limit their operating hours to 10am to midnight. The Sunday closure rule has already been adopted by many city councils, including the capital Seoul, although several top retailers have fought it in the courts, claiming discrimination.
Billabong surges after rival takeover bid Shares in struggling Australian surf and sportswear company Billabong International Ltd jumped 16 percent yesterday after it received a competing US$556 million takeover bid from U.S. clothing giant VF Corporation. The joint bid with San Francisco-based Altamont Capital Partners matches a previous bid by private equity firm Sycamore Partners and Billabong’s former U.S. head Paul Naude. “The board of Billabong announces that it has received an indicative, non-binding and conditional proposal from the Altamont/VF consortium to acquire all of the shares in the company for Aus$1.10 cash per share,” it told the Australian stock exchange after close of trade on Monday.
business daily January 16, 2013
MARKETS HANG SENG INDEX PRICE
CHINA UNICOM HON
POWER ASSETS HOL
BANK OF CHINA-H
SANDS CHINA LTD
CLP HLDGS LTD
BANK OF COMMUN-H
BANK EAST ASIA
HANG LUNG PROPER
TINGYI HLDG CO
HANG SENG BK
WANT WANT CHINA
NAME AIA GROUP LTD
BELLE INTERNATIO BOC HONG KONG HO
CATHAY PAC AIR
CHINA COAL ENE-H CHINA CONST BA-H
CNOOC LTD COSCO PAC LTD
HENDERSON LAND D HENGAN INTL
CHINA LIFE INS-H
IND & COMM BK-H
LI & FUNG LTD
CHINA MOBILE CHINA OVERSEAS CHINA PETROLEU-H
HONG KG CHINA GS
HONG KONG EXCHNG
HSBC HLDGS PLC
SINO LAND CO
SUN HUNG KAI PRO
SWIRE PACIFIC-A TENCENT HOLDINGS
INDEX 23381.51 HIGH
CHINA RES ENTERP
CHINA RES LAND
NEW WORLD DEV
CHINA RES POWER
PING AN INSURA-H
52W (H) 23515.85938 23210
(L) 18056.4 11-January
HANG SENG CHINA ENTERPRISE INDEX NAME
AIR CHINA LTD-H
CHINA RAIL CN-H
CHINA RAIL GR-H
BANK OF CHINA-H
BANK OF COMMUN-H
BYD CO LTD-H
CHINA CITIC BK-H
CHINA COAL ENE-H
CHINA COM CONS-H
CHINA CONST BA-H
CHINA COSCO HO-H
IND & COMM BK-H
PICC PROPERTY &
PING AN INSURA-H
CHINA MERCH BK-H
CHINA LIFE INS-H
CHINA NATL BDG-H
INDEX 12006.82 HIGH
52W (H) 12094.16016 11810
(L) 8987.76 11-January
SHANGHAI SHENZHEN CSI 300 PRICE
CSR CORP LTD -A
SANY HEAVY INDUS
DAQIN RAILWAY -A
DATANG INTL PO-A
SHANG PHARM -A
BANK OF BEIJIN-A
EVERBRIG SEC -A
BANK OF CHINA-A
GD POWER DEVEL-A
BANK OF COMMUN-A
SHANXI LU'AN -A
BANK OF NINGBO-A
BAOSHAN IRON & S
AIR CHINA LTD-A
NAME CHINA YANGTZE-A
CHINA CITIC BK-A
CHINA CNR CORP-A
HONG YUAN SEC-A
BBMG CORPORATI-A BYD CO LTD -A
CHINA COAL ENE-A
CHINA CONST BA-A
CHINA COSCO HO-A
HUAXIA BANK CO
YANGQUAN COAL -A
CHINA CSSC HOL-A
IND & COMM BK-A
CHINA EAST AIR-A
INNER MONG BAO-A
CHINA INTL MAR-A
INNER MONG YIL-A
CHINA MERCH BK-A
CHINA LIFE INS-A
NINGBO PORT CO-A
PANGANG GROUP -A
CHINA PACIFIC-A CHINA PETROLEU-A
PING AN BANK-A
CHINA STATE -A
PING AN INSURA-A
POLY REAL ESTA-A
PRICE DAY %
PRICE DAY %
CHINA VANKE CO-A
INDEX 2595.856 HIGH
52W (H) 2717.825 (L) 2102.135
FTSE TAIWAN 50 INDEX NAME
PRICE DAY %
TAIWAN MOBILE CO
TPK HOLDING CO L
ASIA CEMENT CORP
HON HAI PRECISIO
AU OPTRONICS COR
HOTAI MOTOR CO
UNI-PRESIDENT UNITED MICROELEC
HUA NAN FINANCIA
CHANG HWA BANK
YULON MOTOR CO
CHENG SHIN RUBBE
CHIMEI INNOLUX C
MEGA FINANCIAL H
NAN YA PLASTICS
CHINA STEEL CORP CHINATRUST FINAN CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC
FAR EASTERN NEW
SYNNEX TECH INTL
FAR EASTONE TELE
FORMOSA CHEM & F
TAIWAN GLASS IND
52W (H) 5621.53 5380
(L) 4719.96 11-January
January 16, 2013 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 33.0
32.6 32.4 32.2
36.75 36.50 36.25 36.00
CURRENCY EXCHANGE RATES
WTI CRUDE FUTURE Feb13
BRENT CRUDE FUTR Feb13
GASOLINE RBOB FUT Feb13
GAS OIL FUT (ICE) Mar13
Gold Spot $/Oz
Silver Spot $/Oz
Platinum Spot $/Oz
Palladium Spot $/Oz
NATURAL GAS FUTR Feb13 HEATING OIL FUTR Feb13 METALS
LME ALUMINUM 3MO ($)
LME COPPER 3MO ($)
LME NICKEL 3MO ($)
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
WHEAT FUTURE(CBT) Mar13
SOYBEAN FUTURE Mar13
COFFEE 'C' FUTURE Mar13
SUGAR #11 (WORLD) Mar13
AMAX HOLDINGS LT
COTTON NO.2 FUTR Mar13
BOC HONG KONG HO
AGRICULTURE ROUGH RICE (CBOT) Mar13 CORN FUTURE
WORLD STOCK MARKETS - Indices NAME
1.0567 1.6093 0.9225 1.3373 88.79 7.9854 7.7534 6.2157 54.4862 30.06 1.2248 28.959 40.585 9868 93.819 1.23365 0.831 8.3107 10.6794 118.73 1.0299
-0.0567 -0.1117 -0.542 0.0599 0.5406 -0.0013 -0.0129 0.074 0.0253 0.5655 0.0163 -0.0069 0.2341 -2.3612 0.6044 -0.6023 -0.1745 -0.0433 -0.074 0.4885 0.0097
1.8212 -0.5131 -0.7696 1.3874 -3.0296 -0.0276 -0.0361 0.2397 0.9338 1.7299 -0.2776 0.2555 1.0349 -0.76 -4.7879 -2.1213 -1.8748 -1.1214 -1.3952 -4.346 0
1.0857 1.6381 0.9972 1.3487 89.67 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 94.659 1.2385 0.8506 8.4894 10.7712 120.13 1.0314
0.9582 1.5269 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 30.05 1.2152 28.913 40.54 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029
MACAU RELATED STOCKS NAME
CHEUK NANG HLDGS
CHOW TAI FOOK JE
DAY % YTD %
HUTCHISON TELE H
LUK FOOK HLDGS I
MELCO INTL DEVEL
MGM CHINA HOLDIN
NEW WORLD DEV
SANDS CHINA LTD
SHUN HO RESOURCE
DOW JONES INDUS. AVG
NASDAQ COMPOSITE INDEX
HANG SENG BK
FTSE 100 INDEX
HSBC HLDGS PLC
HANG SENG INDEX
CSI 300 INDEX
TAIWAN TAIEX INDEX
FUTURE BRIGHT GALAXY ENTERTAIN
S&P/ASX 200 INDEX
FTSE Bursa Malaysia KLCI
SHUN TAK HOLDING
NZX ALL INDEX
SJM HOLDINGS LTD
PHILIPPINES ALL SHARE IX
WYNN MACAU LTD
JAKARTA COMPOSITE INDEX
HSBC Dragon 300 Index Singapor
STOCK EXCH OF THAI INDEX
HO CHI MINH STOCK INDEX
LAOS COMPOSITE INDEX
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
BOC HONG KONG HO
INTL GAME TECH
JONES LANG LASAL
LAS VEGAS SANDS
MGM CHINA HOLDIN
MGM RESORTS INTE
SJM HOLDINGS LTD
WYNN RESORTS LTD
business daily January 16, 2013
India’s empty democracy can’t protect its people Pankaj Mishra
Bloomberg View columnist
lections make for responsive and accountable governments, or so goes the truism. But can they also achieve the opposite – that is, encourage complacency, even callousness, among elected representatives? Last month’s headlines from India and China present a disquieting contrast between elected and unelected governments for anyone committed to democratic politics. In Beijing, China’s new Communist Party general secretary, Xi Jinping, has begun a huge crackdown on corruption, official pomp and ceremony, and “empty talk” – substanceless speeches. According to the estimable China-watcher Melinda Liu, “If the changes take hold, they could have far-reaching implications both at home and abroad. Many Chinese seem heartened, even inspired, by Xi’s down-to-earth style.” Many Indians, on the other hand, are incensed with their sequestered governing class. Confronted last month with public outrage over the horrific assault on a young woman in New Delhi, it alternated abysmally between paralysis and insensitivity. Having initially failed to respond, Prime Minister Manmohan Singh muttered some perfunctory expressions of governmental resolve in his characteristically faint tone; then, turning to his handlers while the television cameras were still rolling, he asked, “Theek hai?” Hindi for “Is that all right?” India’s Home Minister Sushil Kumar Shinde said he was not obliged to meet student protesters braving the police’s water cannons and truncheons near the Indian parliament in New Delhi. After all, as he put it, “Tomorrow Maoists will come here to demonstrate with weapons.”
Force demonstrated In fact, the government responded to the spontaneous protesters as though they were militant insurgents from central India: It flooded Delhi’s streets with armed police and shut down roads and railways, revealing a formidable security apparatus
that, many argued, could be put to better use ensuring the safety of ordinary citizens. It wasn’t just the government that acted ham-handedly. Figures from all political parties seemed to vie with one another in their crass responses to an atrocious crime, and to the cultures of violence and cruelty it issued from. Not surprisingly, India these days brims with a free-floating rage against an obscenely venal and cossetted political class that zealously guards its privileges and perks.
Securing support Middle-class anger has periodically erupted in recent months, and it even appeared to solidify briefly into mass political movements. First, Baba Ramdev, a yoga practitioner, enlisted tens of thousands to his anticorruption crusade. He was followed by Anna Hazare, a quasi-Gandhian activist, who managed to attract a motley crowd of industrialists, film stars, students on Facebook and urban professionals. More recently, one of Hazare’s former lieutenants, an ex-civil servant named Arvind Kejriwal, has run a name-and-shame campaign against some of India’s most powerful politicians and businessmen. Each of these events, including last month’s protests over the gang rape, has been widely greeted as the harbinger of a politically awakened and empowered middle class. The government, however, has calculated otherwise. It unleashed the police on Ramdev, evicting him and his followers from their rally grounds in New Delhi. It was similarly ruthless with Hazare, counting successfully on the inability of the educated and the salaried to sustain mass protests or follow them up with a political programme. The government will probably have little to fear from Kejriwal, whose new political party will struggle to get many votes outside pockets of the urban middle class. And, though startled by public anger over the gang rape, the government will no doubt try to defuse it with
some hasty legislation and emollient words. With elections due in 2014, the government is trying to secure its two main sources of support: big-business men and the vast majority of poor Indians who vote. Recent economic policies, which allow greater foreign investment in multibrand retail, have somewhat mollified the corporate class, inspiring its representatives in the news media to again hail the lameduck prime minister as a reformer. An ambitious plan of cash transfers to the poorest Indians – a definite vote-getter – was also recently inaugurated. The government’s election strategy seems clear: It desperately wants to be seen as redistributing the spoils of economic growth through greater subsidies, even as it facilitates greater access for India’s networks of crony capitalism. Insomerespects,thegambit resembles that of Thailand’s populist authoritarian Thaksin Shinawatra, who cannily used his support among the rural poor to cement his status as chief crony capitalist. As events in Thailand showed, the intolerably squeezed urban middle class, the supposed avant-garde
The government … desperately wants to be seen as redistributing the spoils of economic growth through greater subsidies, even as it facilitates greater access for India’s networks of crony capitalism
Prime Minister Manmohan Singh
of democracy, can do little except turn, unhelpfully, to even more authoritarian figures in the military and the old conservative elite. In India, too, many among the relatively privileged – those, for instance, demanding public hangings and castrations of rapists – are contemptuous of democratic and legal processes and generally indifferent to the routine killings and rapes in Kashmir and the Northeastern states by security forces. With their narrow conception of civil rights, they are always vulnerable to self-proclaimed vendors of instant justice and efficiency. In fact, middle-class support has helped the rise of authoritarian figures such as Narendra Modi, the chief minister of Gujarat, who was re-elected last month despite accusations he was complicit in hundreds of deaths and rapes during an anti-Muslim pogrom in his state in 2002. Modi now hopes that the growing appeal among middleclass Indians of his apparently successful technocracy will help him unseat Singh’s government in Delhi. Modi may not succeed. Still, his ascension through a devastated moral landscape points to the radical shrinking of political choices in India.
Self-interested This lamentable situation, where elected representatives act as yet another aggressively self-interested elite, is at least partly to be blamed on the fact that the formal and proceduralist features of democracy – elections – have superseded their substantive aspects: strong, accountable and fair-minded institutions
and officials. Certainly, the importance of the latter is not lost on China’s unelected rulers. Buffeted by a series of scandals, they know that strong measures against corruption are essential to maintaining the communist regime’s legitimacy and ensuring its survival against a rising tide of discontent. Recent protests, such as the one at Southern Weekend newspaper in Guangdong, test the credibility of Xi and his commitment to reform. India’s own entrenched political class derives its legitimacy from routine elections and well-timed sops to the poor majority. These chosen people don’t have much incentive to engage with middleclass protesters on the streets of Indian cities and don’t have to think hard before dispelling them with brute force. Indeed, it is now the turn of metropolitan Indians, after political dissenters in Kashmir, the northeast, and central India, to feel the heavy hand of the state. The discontented urban middle class is a growing demographic. But it is deceptively overrepresented for now by India’s many, perennially hysterical television anchors. Politically fragmented and unorganised, the urban middle class has little to look forward to in the short term, apart from the periodic rise and fall of ineffectual demagogues such as Hazare and Ramdev. Its electoral insignificance in the world’s largest democracy has been carefully quantified by the people to be chosen in 2014. As the prime minister might put it, “Theek to hai na – that’s all right, then!” Bloomberg View
EDITORIAL COUNCIL Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça FOUNDER & PUBLISHER Paulo A. Azevedo | email@example.com EDITOR-IN-CHIEF Tiago Azevedo DEPUTY EDITOR-IN-CHIEF Vitor Quintã ASSOCIATE EDITOR Michael Grimes NEWSDESK Alex Lee, Stephanie Lai, Tony Lai CREATIVE DIRECTOR José Manuel Cardoso DESIGNER Janne Louhikari CONTRIBUTORS Frederico Rato, José I. Duarte, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani PHOTOGRAPHY Carmo Correia, John Si, Manuel Cardoso ASSISTANT TO THE PUBLISHER Laurentina da Silva | firstname.lastname@example.org OFFICE MANAGER Elsa Vong | email@example.com AGENCIES Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate PRINTED in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects ADDRESS Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau TEL. (853) 2833 1258 / 2870 5909 FAX (853) 2833 1487 EMAIL firstname.lastname@example.org ADVERTISING email@example.com SUBSCRIPTIONS firstname.lastname@example.org
January 16, 2013 business daily | 15
Ethics and agriculture
Leading reports from Asia’s best business newspapers
Professor of bioethics at Princeton University and Laureate Professor at the University of Melbourne
KOREA HERALD South Korean exporters will likely continue to face growing protectionism this year as major economies struggle to create jobs and shield their local industries from a prolonged economic slowdown, a report said on Monday. According to the report compiled by the Korea Trade-Investment Promotion Agency (KOTRA), China, South Korea’s top trading partner, is imposing anti-dumping tariffs on 16 South Korean products. “South Korea becomes a target of protectionism by major trading countries as its exports post a steady growth in the face of the global economic downturn,” said an official at the KOTRA.
STRAITS TIMES The government will continue building executive condominiums (ECs) and has moved to fix loopholes in the EC policy, Singapore’s Minister for National Development Khaw Boon Wan said on Monday in Parliament. He noted that the government has capped EC unit sizes to 160 square metres to keep prices affordable and has also required dual-key units to be sold only to multi-generational families to prevent buyers from taking advantage of such units for immediate rental yield. The new measures to curb home priceswereannouncedlastFriday.
YOMIURI SHIMBUN Japan’s transport ministry plans to ease regulations on code-sharing flights to and from Tokyo’s Haneda Airport when the number of take-off and landing slots for domestic flights at the airport is boosted in March. For flights operated jointly by major and new carriers, the proportion of tickets the major carriers can sell will be raised to 50 percent from the current 25 percent, informed sources said. Haneda’s take-off and landing slots will be raised by about 20,000 a year on March 31. The proportion of tickets for seats on code-sharing flights has been kept low for major airlines to foster new carriers.
TAIPEI TIMES Taiwan’s Control Yuan on Monday impeached a former executive of the state-owned oil utility CPC Corp for negligence in handling procurement and bidding projects. Members of the Control Yuan voted 8-to-5 to impeach Yang Ching-hsi, a former deputy general manager of CPC. They referred the case to the Judicial Yuan’s Functionary Disciplinary Sanction Commission for discipline and forwarded their report to prosecutors for reference. An investigation found that Mr Yang should bear responsibility for a number of suspected irregularities related to procurement and bidding cases because he was in charge of these matters.
hould rich countries – or investors based there – be buying agricultural land in developing countries? That question is raised in Transnational Land Deals for Agriculture in the Global South, a report issued last year by the Land Matrix Partnership, a consortium of European research institutes and non-governmental organisations. The report shows that since 2000, investors or state bodies in rich or emerging countries have bought more than 83 million hectares (more than 200 million acres) of agricultural land in poorer developing countries. This amounts to 1.7 percent of the world’s agricultural land. Most of these purchases have been made in Africa, with two-thirds taking place in countries where hunger is widespread and institutions for establishing formal land ownership are often weak. The purchases in Africa alone amount to an area of agricultural land the size of Kenya. It has been claimed that foreign investors are purchasing land that has been left idle; thus, by bringing it into production, the purchases are increasing the availability of food overall. But the Land Matrix Partnership report found that this is not the case: roughly 45 percent of the purchases involved existing croplands, and almost a third of the purchased land was forested, indicating that its development may pose risks for biodiversity. The investments are both private and public (for example, by state-owned entities) and come from three different groups of countries: emerging economies like China, India, Brazil, South Africa, Malaysia, and South Korea; oil-rich Gulf states; and wealthy developed economies like the United States and several European countries. On average, per capita income in the countries that are the source of these investments is four times higher than in the target countries.
‘Land grabs’ Most of the investments are aimed at producing food or other crops for export from the countries in which the land is acquired, for the obvious reason that richer countries can pay more for the output. More than 40 percent of such projects aim to export food to the source country – suggesting that food security is a major reason for buying the land. Oxfam International calls some of these deals “land grabs.” Its own report, Our Land, Our Lives, indicates that, since 2008, communities affected by World Bank projects have brought 21 formal complaints alleging violations of their land rights.
Oxfam, drawing attention to large-scale land acquisitions that have entailed direct rights violations, has called on the Bank to freeze investments in land purchases until it can set standards ensuring that local communities are informed of them in advance, with the option of refusing them. Oxfam also wants the Bank to ensure that these land deals do not undermine either local or national food security. In response, the World Bank agreed that there are instances of abuse in land acquisition, particularly in developing countries in which governance is weak, and said that it supported more transparent and inclusive participation. At the same time, it pointed to the need to increase food production to feed the extra two billion people expected to be alive in 2050, and suggested that more investment in agriculture in developing countries is required to improve productivity. The Bank rejected the idea of a moratorium on its own work with investors in agriculture, arguing that this would target precisely those who are most likely to do the right thing.
Informed choice One may ask whether transparency and the requirement that local landholders consent to a sale is enough to protect people living in poverty. Supporters of free markets will argue that if local landowners wish to sell their land, that is their choice to make. But, given the pressures of poverty and the lure of cash, what does it take for people to be able to make a genuinely free and informed choice about selling something as significant as a right to land? After all, we do not allow poor people to sell their kidneys to the highest bidder. Of course, hardline supporters of free markets will say that we should. But, at the very least, it needs to be
explained why people should be prohibited from selling kidneys, but not from selling the land that grows their food. Most people can live without one kidney. No one can live without food. Why does the purchase of body parts give rise to international condemnation, while the purchase of agricultural land does not – even when it involves evicting local landholders and
One may ask whether transparency and the requirement that local landholders consent to a sale is enough to protect people living in poverty
producing food for export to rich countries instead of for local consumption? The World Bank may indeed be more concerned about local landholders’ rights than other foreign investors are. If so, the 21 complaints made against Bank projects are most likely the visible tip of a vast iceberg of violations of land rights by foreign investors in agricultural projects in developing countries – with the others remaining invisible because victims have no access to any complaint procedure. One such case belatedly came to the attention of the United Nations Human Rights Committee. In November, the Committee concluded that Germany had failed to police the Neumann Kaffee Gruppe regarding its complicity in the forced eviction of several villages in Uganda to make way for a large coffee plantation. But the evictions took place in 2001, and the villagers are still living in extreme poverty. They found no remedy, in either Uganda or Germany, for the violation of rights that, according to the Committee, they possess under the International Covenant on Civil and Political Rights, to which Germany is a signatory. Are we to believe that landholders fare better with Chinese or Saudi investors? © Project Syndicate
business daily January 16, 2013
CLOSING Germany’s economy slows sharply
Pakistan court orders PM arrest
The German economy contracted by a larger-than-expected 0.5 percent in the final quarter of 2012, a preliminary estimate from the Federal Statistics office showed yesterday, as the euro zone crisis weighed on exports and corporate investment. The weak fourth quarter pushed overall growth for the year down to 0.7 percent, a sharp slowdown from the 3.0 percent registered in 2011 and a post-reunification record of 4.2 percent in 2010. German exports and imports slid in November and industry orders fell more than expected, compounding expectations that the euro zone debt crisis is hitting the German economy with full force.
Pakistan’s Supreme Court has ordered the arrest of Prime Minister Raja Pervez Ashraf and 15 others over corruption allegations. Mr Ashraf denies accepting bribes when approving power generation projects as minister for water and power in 2010. Analysts say that the move is unlikely to lead to his immediate removal. It comes as populist cleric Tahirul Qadri led thousands of protesters in Islamabad, demanding the resignation of the government. Mr Ashraf’s predecessor, Yousuf Raza Gilani, was forced out as prime minister last June after a court convicted him of contempt for failing to pursue another corruption case against the president.
HKEx to launch Asian trading on LME Offerings to be expanded by lowering barriers to trading, says chief executive
HKEx paid US$2.2 billion for the LME last year
ong Kong Exchanges and Clearing said yesterday it will introduce Asian time-zone price discovery and clearing on the London Metal Exchange (LME), in a move that could hold off competition from its Shanghai rival. The initiative was unveiled by chief executive Charles Li in the exchange’s 201315 strategic plan in Hong Kong, along with plans to establish an LME-licensed warehouse network in China
and potential to extend the LME’s production suite into the Hong Kong market. Introducing a third, earlier, round of trading sessions is the biggest shift in the way the 135-year old LME operates since the launch of its electronic platform over a decade ago, and runs counter to the global industry trend toward shutting down trading pits in favour of faster, cheaper electronic platforms. An Asian session is the most concrete effort yet to
increase business from Asian investors since the LME extended electronic Select trading hours in 2006 and introduced Asian reference prices in 2011. The LME has seen its share of the global copper futures market eroded by both the Shanghai Futures Exchange, where Chinese speculators are active, and CME Group, whose active electronic platform and familiar futures structure has attracted highfrequency traders.
Mr Li said HKEx would expand the LME’s offerings by lowering barriers to trading from Asia, extending the LME’s warehouse network in the region, particularly mainland China and developing Asian time zone clearing and possibly Asian time zone price benchmarks and developing renminbi clearing. “When China begins exporting capital, that’s when they’ll want to talk on their terms,” Mr Li told a
presentation in Hong Kong. “That’s why we need to be ahead of that by allowing for Asian trade of commodities, in an Asian time zone.” HKEx will also use the LME’s status as the world’s biggest metals marketplace to extend HKEx’s commodity platform into ferrous metals, such as iron ore, coking coal and energy, Mr Li said. “We need to extract the value that LME can bring to us,” he added. “As a metaphor, we need to extract US$10 from every US$1 we put into LME.” HKEx, the world’s No.2 exchange operator by market value, paid US$2.2 billion for the LME last year, as it seeks to expand beyond its traditional business in equities trading. Mr Li has hailed the acquisition as “transformational”, giving the Hong Kong bourse operator access to the LME, but has come under pressure to justify the high price tag. HKEx’s share price has risen almost 30 percent since mid-October last year, compared with a 10 percent rise in the Hang Seng Index. Reuters
Japan approves extra budget Finance minister says not bound by previous govt fiscal target
apan’s cabinet approved yesterday a 13.1 trillion yen (US$146.8 billion) extra budget, which includes 10.3 trillion yen in economic stimulus spending announced last week, as the government tries to boost a flagging economy. The extra budget, which also contains 2.6 trillion yen to offset a shortfall in the pensions system, takes government spending for the fiscal year ending in March to 100.5 trillion yen, a statement from the finance minister showed. Compared with previous fiscal years when the government has compiled extra budgets, government spending reached the third-highest
on record, a finance minister official told reporters at a briefing. The government will sell an additional 5.2 trillion yen in government bonds, which would raise bond issuance in fiscal 2012/2013 to 49.5 trillion yen, according to the statement. For the current fiscal year, the government will rely on bond income to fund 49.2 percent of spending, which is the second-highest ratio on record, the official said. The highest ratio of 52.1 percent was se t wh en th e go ve rn me nt compiled an extra budget in fiscal 2009/2010 due to the financial crisis. Japan’s cabinet approved an
economic stimulus package on Friday in the biggest spending boost since the financial crisis, as Prime Minister Shinzo Abe pursues an ambitious agenda to spur growth and end nagging deflation. Japanese Finance Minister Taro Aso said yesterday that he does not feel bound by the previous government’s fiscal discipline targets and that it is more important to escape an economic lull than to limit bond issuance. Mr Aso, speaking to reporters after the cabinet meeting, said fiscal discipline is important in compiling next fiscal year’s budget and the current government led by the Liberal Democratic Party could compile new fiscal discipline targets by
Japanese Finance Minister Taro Aso
the middle of the year. The previous government led by the Democratic Party had agreed to limit new bond issuance to 44 trillion yen (US$493 billion) each fiscal year. Reuters