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Govt gives LVS co-op rights at Four Seasons

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Year II

Number 299

Thursday June 6, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013

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fter a four-and-a-half years wait, the Macau government has authorised Las Vegas Sands Corp – via a local unit – to sell usage rights to the firm’s Four Seasons Macao apartment tower through a share-issuing cooperative scheme. It could net the Macau subsidiary Sands China Ltd HK$6 billion (US$755 million) said a note from Union Gaming Research yesterday. Marketing is unlikely to start straight away. The building has lain empty since it was completed in 2008 and is undergoing refurbishment says a government official. Business Daily has also learned the apartment hotel contract LVS signed with the government requires the latter to approve each share issuance on each apartment. Nonetheless, Sheldon Adelson, chairman of LVS and of Sands China, said the news was “a major step forward” for the Cotai Strip.

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More on pages 2 & 3

SHFL entertainment Inc Q2 profit beats estimates, say analysts

Page 4

Returns from fiscal reserve inch closer to inflation rate

Page 6

No action taken yet over New Century’s unpaid wages

I SSN 2226-8294

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Shun Tak’s hotel business ‘not restricted’ to Macau

Hang Seng Index 22150

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Shun Tak Holdings Ltd won’t restrict its hotel management operations to Macau, managing director Pansy Ho Chiu King told media yesterday. The conglomerate would be happy to look outside the city as long as it could spot suitable locations, Ms Ho said on the sidelines of a Global Tourism Economy Forum press conference. Shun Tak hopes to launch “two to three hotels” on a Cotai plot.

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HSI - Movers Page 3

Citic Telecom reduces loan for CTM takeover Citic Telecom International Holdings Ltd needs a smaller syndicated loan than it first estimated to finance a takeover of Macau’s biggest telecom operator, CTM, Companhia de Telecomunicações de Macau, SARL. It requires US$630 million (five billion patacas), not the US$1.6 billion originally mentioned, Citic Telecom told the Hong Kong Stock Exchange yesterday. The difference was covered by a highly successful bonds issuance in March. Page 5

Bad loans have dropped to a five-year low: Fitch Local banks’ bad loans shrank to a fiveyear low in April, official data show, as Fitch Ratings warned that an increase was “inevitable”. The city’s banks had 513.6 million patacas (US$64.3 million) in non-performing loans at the end of April, the Monetary Authority of Macau announced yesterday. Overdue loans fell by more than onequarter in April, hitting their lowest level since February 2008. Page 6

Name

%Day

CHINA OVERSEAS

0.44

HENGAN INTL

0.44

CHINA MERCHANT

0.40

WANT WANT CHINA

0.36

CHINA LIFE INS-H

0.20

SWIRE PACIFIC-A

-2.65

CHEUNG KONG

-2.76

AIA GROUP LTD

-3.35

HENDERSON LAND D

-3.56

SANDS CHINA LTD

-3.73

Source: Bloomberg

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2013-06-06

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June 6, 2013

Macau

Govt approves co-op rights at Four Seasons Apartment tower could net LVS US$755 mln, suggests analyst Michael Grimes

michael.grimes@macaubusinesssdaily.com

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fter a four-and-a-half years wait, the Macau government has authorised Las Vegas Sands Corp – via a local unit – to sell usage rights to the firm’s Four Seasons Macao apartment tower through a share-issuing cooperative scheme. It could net the Macau subsidiary Sands China Ltd HK$6 billion (US$755 million), said a note from Union Gaming Research yesterday. Marketing is unlikely to start straight away. The building has lain empty since it was completed in 2008 and is undergoing refurbishment, says a government official. Business Daily has also learned there is a crucial clause in the apartment hotel contract LVS signed with the government that could make the process of share issuance slow and cumbersome.

KEY POINTS Govt approves co-op rights at Four Seasons apartments Could net LVS US$755 mln: Union Gaming Govt approval needed every time a share sale: source Sands China will retain majority of issued shares: Lau Si Io

“According to a clause in the contract, each sale of shares for each apartment unit is subject to government approval,” said a person with direct knowledge of the situation. “The apartment hotel must also be licensed by Macau Government Tourist Office. There’s no precedent for that,” added the source. “A third hurdle is that some of the apartment hotel units must be available to the public for walk-in guests. All these factors could prevent LVS from realising the full gross sales potential of the apartment hotel,” said the person. LVS was given the right to carve out the apartments as a legally separate entity from the rest of the Four Seasons Macao as long ago as October 2008 when the tower’s construction was completed, according to an LVS press release at the time. LVS refers in filings to this real estate as an “apart-hotel”. But until now the government had not given its blessing to selling on usage rights to other people. The roadblock has been described to Business Daily as more to do with

politics than with any sudden shift yesterday in LVS’s legal rights. Media in Hong Kong had reported in April that gazetting of a deal to allow LVS to sell usage rights was imminent. LVS denied the story and threatened legal action. Yesterday’s gazette said the government has authorised an entity called Cotai Strip Lote 2 Apart Hotel (Macau), SA – a Venetian Cotai SA subsidiary – to sell usage of the Four Seasons apartment tower through a cooperative scheme, in which buyers hold shares in a legal entity that controls the property.

Co-op system The arrangement is similar to an ownership system used in some New York City residential blocks. A premium of 89 million patacas (US$11.1 million) is payable to Venetian Cotai SA by Cotai Strip Lote 2 under the agreement. LVS said in a 2009 filing it expected “approximately [US]$360 million on costs to complete the Paiza mansions and Four Seasons Apartments”. The gazette said LVS stressed

the acceptance of the share issuance system “would not be for speculative purposes” because it would continue to hold the majority of the issued share capital. Before the 12.01pm announcement yesterday on the Hong Kong Stock Exchange by Sands China of the gazetting, Sands’ share price went down. Analysts said it might have been investors taking profits ahead of the announcement. Sands China’s stock closed yesterday down 3.73 percent at HK$40.05. Sheldon Adelson, chairman of LVS and of Sands China, said in a statement: “The addition of the Four Seasons-branded apartments will provide visitors from surrounding countries the opportunity to own a tourism product which will allow them to utilise the full facilities of the Cotai Strip more frequently and for longer periods of time.” Mr Adelson added: “The ongoing vision of developing the Cotai Strip into an internationally renowned destination for leisure and business travellers has taken a major step forward today.” Edward Tracy, president and chief executive of Sands China added: “Sands China is very thankful for the opportunity to continue investing in the future of Macau and we believe this is another positive step in that regard.” Union Gaming said in its note: “We believe the residential component of Four Seasons Macao might contain up to 300 individual units covering approximately 750,000 square feet. Importantly, these residential units would represent the only residential units in and around the Cotai Strip, which we think could ultimately result in SCL capturing at least the same price per square foot as comparable residential product (if not higher).” “We believe the natural buyers could be premium mass and VIP customers, which can be viewed as a notable driver of these segments for SCL on a longer-term basis (in fact we believe the Diaoyutai MGM Hospitality joint venture [in Beijing] has had similar success in selling residential units in mainland China to high net worth customers of MGM Macau),” the research house added.

Four Seasons Macao apartments – empty for four years (Photo: Manuel Cardoso)


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June 6, 2013

Macau

Towering ambitions Some background to the Four Seasons apartments story

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usiness Daily reported in June last year that permission for Las Vegas Sands Corp to ‘monetise’ usage of residential units in the Four Seasons was imminent in return for the company giving up an unrelated lawsuit against the government. The year’s subsequent delay is said by sources to relate to the political fall out from a story that ran in the Wall Street Journal on June 8 last year. It said that a 2009 e-mail written by Leonel Alves – an outside legal adviser to Sands China and a member of Macau’s Executive Council that advises Macau’s chief executive – mentioned that an unnamed person in Beijing had offered to resolve the Four Seasons issue in return for a US$300 million payment. A copy of the e-mail mentioning the payment offer was sent to Steve Jacobs – at that time chief executive of Sands China. Mr Jacobs has an ongoing wrongful termination suit in Nevada against LVS relating to his July 2010 dismissal from Sands China. Mr Alves neither confirmed nor denied having sent e-mails quoted by the WSJ in its story. LVS said then: “At no time has there ever been any suggestion that the company made any improper payments or received any improper benefits.” And Macau’s Chief Executive Fernando Chui Sai On said a few days later he had been given

It is very clear

an explanation by Mr Alves and “accepted” it. Sands China Ltd, a Hong Konglisted unit of LVS, said on June 1 last year that two of its subsidiaries had withdrawn a court appeal against the Macau government’s December 2010 decision to “not approve” LVS’s land concession for Parcels 7 and 8 on Cotai. Sources with knowledge of the situation told Business Daily at the time that in return for dropping the case, SCL was being given an extension on its completion timetable for Cotai Parcel 3 and the right to market apartments at Four Seasons Macao – something the company has coveted ever since the rest of the Four Seasons development was completed in October 2008.

Possible precedent One question raised by industry sources is whether yesterday’s gazetting of the Four Seasons permission would set a precedent for other apartment hotels to be built and marketed on Cotai. But one senior industry source told Business Daily yesterday: “What we need in the market is more hotel rooms, not apartment hotels. In our view the medium- to long-term revenue yield from more hotel rooms is likely to be superior to the up front monetisation of co-op use.” Melco Crown Entertainment Ltd had originally planned to build a four-star apartment tower at its City of Dreams property on Cotai. But the firm said in a filing on April 17 the government had given permission for it to amend its land grant contract and build a fifth hotel tower – for five-star accommodation – instead. “We are short of rooms at City of Dreams,” said MCE cochairman Lawrence Ho Yau Lung in the firm’s second quarter 2012 earnings call in August.

Shun Tak’s hotel business ‘not restricted’ to Macau Shun Tak Holdings is starting its own hotel brand to run projects in Cotai Stephanie Lai

sw.lai@macaubusinessdaily.com

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hun Tak Holdings Ltd will not restrict its hotel management operations to Macau, managing director Pansy Ho Chiu King told media yesterday. The conglomerate would be happy to look outside the city as long as it could spot other suitable locations, Ms Ho said on the sidelines of a Global Tourism Economy Forum press conference. Shun Tak intends to launch “two to three hotels” in a Cotai plot, a project which is now waiting for government approval, the executive confirmed. “This is a long-term project. For that project of course we hope that it will be run by our own hotel brand,” she said. “We are still in the process of application. So we would not know until we will get the land granted,” Ms Ho added. “We hope that we could talk about the project later, at a more mature stage.” Shun Tak plans to form its own

hotel management and operation company, which could be “up and running within a year”, she told travel trade magazine TTG Asia in April. Shun Tak Holdings controls 100 percent interest in the Cotai plot. The group is exploring “the possibility to build two or three hotels in that same complex” of Jumeirah hotel in Cotai, TTG Asia reported. Ms Ho declined to give further updates on the Jumeirah hotel project yesterday. The Jumeirah project, a partnership with the Dubai-based hotel chain Jumeirah Group, was originally scheduled to open in 2013. The project was described as an “ultra-luxurious” hotel that could encompass a hotel tower and a separate tower with servicedapartment hotel units. The project would have a combined gross floor area of about 2 million square feet (185,600 square metres). It would not include a casino.

Official Macau reaction to yesterday’s gazetting

that the government made sure that Venetian has to remain the majority shareholder in that development. We were clear when we told Venetian that it couldn’t change it to sell it as a property project. This is all specified in the contract. Lau Si Io, Secretary for Transport and Public Works

There won’t be any selling of apartments. They were just allowed to transfer the rights of the plot where the apart-hotel stands to a subsidiary. The transfer does not imply any change to the land use and the use of the property will have to follow the existent hospitality regulation, which means that they will have to get a licence from the Macau

This transmission

Government Tourist Office. The sale

is for a company directly linked to the

of any apartment hotel units is not

concessionaire. According to what we

allowed, as it is specified in the official

were told, the company promised the

notice. We will oversee how they are

government that these apartments

using this apart-hotel. They are still

will be open to the public. As long as

waiting for a final inspection as the

it follows these rules, it is acceptable.

company is still refurbishing

What is essential is that guests will not

the interior.

have the right of ownership of any unit. The government has to oversee its use. Kwan Tsui Hang, legislator

Pansy Ho’s Shun Tak is preparing its own hotel brand

Jaime Carion, director of the Land, Public Works and Transport Bureau

Forum on tourism economy returns in September T he second edition of the Global Tourism Economy Forum will be held in Macau from September 17-19, focusing on the tourism industry’s role in critical moments of global economic recovery, the organisers told media yesterday. In cooperation with the World Tourism Organisation, the upcoming edition will include a round table session, with tourism ministers from European and Asian countries speaking about “travel facilitation”, said Pansy Ho Chiu King, the forum’s secretary-general. The prime ministers of Cambodia,

Vietnam, Indonesia and Thailand will also consider attending the forum after being invited by former Macau chief executive Edmund Ho Hau Wah, Ms Ho mentioned. As a follow-up from the first edition of the forum, a business networking trip for Chinese entrepreneurs to Portugal and Spain was arranged in April. Organisers will pursue a similar initiative, Ms Ho said. The forum is hosted by the Secretary for Social Affairs and Culture Cheong U, and co-organised by the China Chamber of Tourism. S.L.


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June 6, 2013

Macau AERL reports 6pct chip sales rise in May Macau casino junket promoter Asia Entertainment & Resources Ltd says its unaudited rolling chip turnover for May rose six percent year-on-year to US$1.66 billion (13.27 billion patacas) from US$1.56 billion in the same period in 2012. In the first five months of the year, Nasdaq-listed AERL reported a 17 percent fall in VIP chip turnover, to US$7.21 billion (an average of US$1.44 billion per month) compared to US$8.70 billion (an average of US$1.74 billion per month) for the first five months of 2012. Macau gross gaming revenue increased 14 percent for the first five months of 2013.

SHFL entertainment Q2 profit beats estimates Net income jumps 22 pct on stronger sales in Asia and Australia Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

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HFL entertainment Inc., a maker of casino equipment, reported earnings that beat analysts’ estimates. SHFL said on Tuesday U.S. time its net profit climbed 22 percent in the fiscal

second quarter on stronger sales of electronic gaming machines. The company said its net income totalled US$11.8 million (94.3 million patacas) for the quarter ended April 30, up from US$9.7 million a

Gavin Isaacs, SHFL’s chief executive, sees demand growing (Photo: Carmo Correia)

Seven-storey building approved near Ponte 16

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seven-storey commercial and housing building is set to rise right in front of Inner Harbour casino resort Ponte 16, according to yesterday’s Official Gazette. Macau-based developer Seaside – Investimento Predial Ltda will pay a land premium of 8 million patacas (US$1.1 million) to revise the 2011 concession. Seaside will now have three years to complete a 20.5-metre-high building in the 722-square-metre vacant plot in Rua do Visconde Paço de Arcos and Rua Nova do Comércio. It will include 68 flats and 13 shops, according to the Land, Public Works and Transport Bureau website.

One of the directors of Seaside is Joseph Lam Tak Va, president of laundry firm Tim Bondi Enterprise Ltd and director of the Macau Association for Ecological Study. The company will bet on smallsized flats, as the building will have 40 one-bedroom units and 10 studios. Only one of the 68 flats will have three bedrooms. In fact the average size of the flats will be just 58.25 square metres. There is a tendency among developers to build small flats, for which there is high demand, Rose Lai Neng, a specialist in real estate at the University of Macau, told Business Daily a month ago. Seaside first applied to redevelop the plot in March 2011. The project received a preliminary approval just two months later but the concession revision was only clinched in June 2012. Chief Executive Fernando Chui Sai approved the deal in late-December. V.Q.

year earlier. Total revenue rose 17 percent, to US$77.4 million from US$66.1 million. Nevada-based SHFL, formerly Shuffle Master Inc., sells slot machines, card shufflers and other

gambling supplies. It also sells products here, through its local unit SHFL Entretenimento (Ásia) Lda. “Our record second quarter results reflect a continuation of the strong worldwide demand for our innovative products, particularly in Australia and Asia,” Gavin Isaacs, SHFL’s chief executive, said in a statement. “Our slot machine, shuffler, and specialty table games businesses continued to gain momentum, with each segment reporting record revenue in the quarter,” he added. The company said sales of electronic gaming machines rose 16 percent to US$25.7 million, and revenue from table games, proprietary games, and shufflers and other products all improved by smaller amounts. Revenue “was US$5.3 million above our estimate and US$5.6 million above the Street consensus,” Union Gaming Group said in a note by principal Bill Lerner. “Overall, SHFL reported a strong quarter,” said Mr Lerner. “The quarter benefitted from shuffler conversions to sales from lease, which accounted for a large portion of the top-line beat. On the slot side, sold seats during the quarter were up 14.2 percent to 1,192 units,” he added. The company sold roughly 100 units in Macau and recognised its first sales in the United States during the period, the note adds. According to Union Gaming, total revenue between SHFL’s two business segments was comprised of US$29.2 million from product leases and royalties and US$48.2 million from product sales and services. SHFL also announced a new relationship with Evolution Gaming, a Latvian company that offers videostreamed online games against live dealers. The company said Evolution Gaming will have the right to offer some of SHFL’s specialty table games in its online casinos. SHFL and Evolution did not disclose financial terms.

The Inner Harbour district received a new breath of life from the opening of Ponte 16 (Photo: Manuel Cardoso)


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June 6, 2013

Macau No ‘negative impact’ from visa changes The resumption of the dual visit system would not impose any “negative impact” on the city, Macau Government Tourist Office director Maria Helena de Senna Fernandes told media yesterday. Starting June 1, registered Guangdong residents are again allowed to make a single application under the Individual Travel Visit visa programme for trips to both Hong Kong and Macau. The change is aimed at “boosting the utility of the ‘one trip, multiple stops’ scheme for visitors, particularly from mainland China,” she said. Ms Fernandes added that a delegation of representatives from Shenzhen’s tourism sector would visit Macau soon to discuss how to diversify Macau’s travel routes.

Photo by Manuel Cardoso

Citic Telecom reduces loan for CTM takeover Bond issue secured in March allows company to reduce its debt load Vítor Quintã

vitorquinta@macaubusinessdaily.com

C

itic Telecom International Holdings Ltd has reduced a syndicated loan aimed at financing its takeover of Macau biggest telecom operator, CTM, Companhia de Telecomunicações de Macau, SARL. A group of 11 banks have backed a syndicated loan of US$630 million (5 billion patacas), Citic Telecom

told the Hong Kong Stock Exchange yesterday. The loan facility is much smaller than the original amount of US$1.16 billion thanks to a bond issue launched in March, a company spokesperson told Business Daily. Citic Telecom issued US$450 million of senior 12year bonds on March 5. The company will pay an annual

interest rate of 6.1 percent. In January, Citic Telecom chief financial officer David Chan Tin Wai told Business Daily that the syndicated loan would have left the company with too much debt. The amount aside, “there’s no change in the terms in the loan agreement,” Citic Telecom said. The package included five-year loans, with interest

Corporate Bank of China launches new credit cards Bank of China Ltd is introducing a number of new credit card products – and one online virtual card – to the Macau market. One of the ‘real’ cards is chip and pin protected. Great Wall International EMV Credit Card allows holders to enjoy 1.5 percent currency exchange fee exemption when used overseas. It also reduces the exchange rate cost of overseas transactions made with the card. Holders of the platinum and infinite versions can enjoy a five percent cash discount on any single transaction of over US$200 (1,600 patacas) and long-term double loyalty points return when purchasing in duty-free shops abroad. It also offers deposit with interest, text message reminders and 24-hour fraud monitoring. Virtual Credit Card is linked to an existing credit card account. The card number, expiration date and other information are applied to online and other remote transactions. Virtual Credit Card supports UnionPay, Master Card, VISA and other credit card services.

StarWorld wins ‘Best Service’ award StarWorld Hotel – operated by casino concessionaire Galaxy Entertainment Group Ltd – has been named ‘Best Service Hotel of the Year’ at the 2013 China Travel and Meetings Industry Awards held in Shanghai. It’s the first time a Macau hotel has been honoured in the category, according to the organisers. Previous winners include The Ritz-Carlton Guangzhou, Shangri-La Hotel Suzhou and Sheraton Shanghai Waigaoqiao Hotel. The awards are organised by the magazines Travel Weekly and Events and judged by a panel of experts from the travel industry. Charles So Chak Lam, deputy chief operating officer of StarWorld Hotel, said: “StarWorld Hotel has already received 40 industry awards since our establishment in 2006. This award is also the fifth award we have [had] in this year, marking an important recognition on StarWorld Hotel’s outstanding performance and service quality.” The property’s non-gaming facilities include the twice-awarded one-Michelin-star restaurant Jade Garden, specialising in contemporary Shanghainese food.

rates below 5 percent. The company will start paying back the loans after a year, it said in yesterday’s filing. Initially Citic Telecom, a subsidiary of China’s stateowned Citic Group Corp, had received the backing from seven banks but the group eventually expanded to 11. The telecommunications operator believes this is a sign of lenders’ confidence in the CTM deal. “The company is grateful to have gained the strong support from the

banks,” it said. Citic Telecom has agreed to pay a total of US$1.16 billion to buy out CTM’s major shareholders, Cable & Wireless Communications Plc and Portugal Telecom SGPS SA. The company now needs only the approval of the Macau government. In its annual report, released last month, Cable & Wireless said the deal should be completed “between July and October”.


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June 6, 2013 April 19, 2013

Macau Amax is to sell 9.6 million shares Amax Holdings Limited – a Hong Kong-listed investor in Macau VIP rooms – is offering to sell 9.6 million shares at 83 HK cents per share. The aggregate face value of the shares will be HK$1.92 million (US$247,500). The price is a discount of around 7.2 percent to the average closing price of approximately 89 HK cents in the five trading days prior to the agreement. The issue represents 4.62 percent of the firm’s current issued share capital and 4.42 percent as enlarged by the new allotment. The placing agent is Hong Kong-based SBI E2-Capital Financial Services Ltd.

Bad loans drop to five-year low Bank profits slowed in April but are setting a hot year-on-year pace Vítor Quintã

vitorquinta@macaubusinessdaily.com

The proportion of non-performing loans held by banks is ‘unsustainably low’, says Fitch Ratings

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ad loans shrank to a five-year low in April, official data show, as Fitch Ratings warned that an increase was “inevitable”. The city’s banks had 513.6 million patacas (US$64.3 million) in non-performing loans at the end of April, the Monetary Authority of Macau announced yesterday. Overdue loans fell by more than

one-quarter in April, hitting their lowest level since February 2008. They represented less than 0.11 percent of all outstanding loans in April. Just two weeks ago, Fitch Ratings said the proportion of nonperforming loans in Macau was “unsustainably low”. Its latest report on the banks said an increase in bad loans was

“inevitable” and a possible byproduct of growing exposure to mainland assets, loans to the gaming sector and mortgage lending. Macau’s banking system was “quite volatile” in comparison to Hong Kong’s, Fitch (Hong Kong) Ltd director Chikako Horiuchi told Business Daily. The rate of non-performing loans has recently reached as high as 22 percent here but Ms Horiuchi said the proportion had never exceeded 11 percent in Hong Kong. In May 2001, more than onequarter of all bank loans – or 12.68 billion patacas – were overdue for at least 90 days. The proportion of bad loans “will inevitably normalise and come up in 2013 and 2014,” Ms Horiuchi said. April was less profitable for banks than March, with operating results falling 10.3 percent to 578.7 million patacas. The most profitable category of loans, to non-residents, eased by 1.3 percent to 260.1 billion patacas. Deposits made by non-residents increased by 7.5 percent to 141 billion patacas. The banks pay lower interest rates on deposits – the six-month benchmark rate was below 0.54

percent at the end of February – and loan the money overseas at much higher rates, particularly to gaming-related businesses. In year-on-year terms, April’s operating results were up by one-third. For the first four months of this year, bank profits were also one-third higher compared to the same time last year, at 2.26 billion patacas. It is the first occasion since the financial regulator began publishing monthly data in 1990 that bank profits have topped 2 billion patacas in the first four months of the year.

MOP513.6 million The banking sector had in non-performing loans by April

Returns from fiscal reserve inch closer to inflation rate If aggressive investment approach pays off, the reserve could triple last year’s returns Vítor Quintã

vitorquinta@macaubusinessdaily.com

T

he government’s fiscal reserve is drawing closer to at least matching the inflation rate after posting a record return on its investment in April. The reserve reached 165.68 billion patacas (US$20.73 billion), an increase of 856.3 million patacas from March, according to a summary published by the Monetary Authority of Macau in yesterday’s Official Gazette. That single month’s return on investment was the equivalent of just less than half of the return in the

reserve’s first 12 months of operation, 1.73 billion patacas. It was also the biggest monthly gain since the reserve’s establishment in February last year. The authority told Business Daily in April it would “adopt an investment strategy that aims to achieve a higher return in the long term”. January’s transfer of the 2011 fiscal surplus – almost 64 billion p atac a s – b o o s ted th e s p eci a l reserve, which is for investment, and allowed the authority to invest

in higher-risk vehicles. The reserve has made a stronger start to its second year, with the investment return reaching 0.8 percent in March and April. If that rate of growth was maintained, the government’s reserve would finish its second year with a return of 4.8 percent, almost three times as much as the 1.75 percent recorded in its first year. It would also be a much better performance than its predecessor, the MSAR Reserve Fund, which achieved an average annual return of 2.21

The Monetary Authority said it would aim ‘to achieve a higher return in the long term’ (Photo: Manuel Cardoso)

percent between 2001 and 2009. Even with the current returns, the rate is less than the rate of inflation, which stood at 5.24 percent in April.


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June 2013 April 6, 19, 2013

Macau

New Century escapes penalty in wages row Dozens of hotel-casino employees go unpaid as Labour Affairs continues inquiries Vítor Quintã

vitorquinta@macaubusinessdaily.com

T

he troubled New Century Hotel has so far escaped repercussions for failing to pay wages on time to 244 staff, the Labour Affairs Bureau said. The bureau told Business Daily they had opened 74 different cases involving 244 people linked to the Taipa property, spanning the period from the beginning of last year until the end of last month. Management has settled 53 of the cases involving 123 employees by paying overdue salaries, the bureau said. The casino-resort’s management is following up on the remaining 21 cases involving 121 employees. New Century “has always failed to comply with the period (within nine working

days) stated in the law to pay its current employees”, the bureau said in April. In its latest reply the bureau did not say how much money was involved. “In general, the hotel owes the employees the wage payments of the second half of April,” the bureau said. The bureau has pledged to follow-up and protect the legal rights of employees. New Century has escaped penalty so far. The bureau said “those cases have not reached the penalty phase yet”. The Portugueselanguage Jornal Tribuna de Macau reported in April that a banner was hung near the hotel. It asked the government for help to settle unpaid wages and debts from the hotel’s board of management. It did not

include the petitioner’s name. Meanwhile, the hotel operator has been fined 63,000 patacas (US$7,900) for making illegal deductions from the salaries of three non-resident workers. Empresa Hoteleira de Macau Lda paid compensation of 12,600 patacas to one of the workers. The casino-hotel’s board has been plagued by disputes involving veteran junket operator Ng Man Sun and his former girlfriend Chan Mei Fun, who also goes by the name Chan Mei Huen. Unidentified assailants attacked Mr Ng with hammers and sticks as he dined at a restaurant in the hotel in June last year. Mr Ng later took out a newspaper advertisement that blamed Ms Chan for

New Century Hotel has been plagued by internal disputes within its board of management (Photo: Manuel Cardoso)

the attack. Greek Mythology (Macau) Entertainment Group Corp Ltd runs Greek Mythology casino, the host venue for New Century.

NO

MIN

Hong Kong-listed VIP gaming promoter Amax Holdings Ltd holds a 24.8-percent stake in Greek Mythology. Mr Ng is the executive director of Amax.

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June 6, 2013 April 19, 2013

Greater China

Brussels offers China solar reprieve Punitive tariffs against Chinese companies eased for two months Robin Emmott and Ethan Bilby

The anti-dumping case is the biggest undertaken by the European Commission

T

he European Union is to impose duties on imports of Chinese solar panels from today, but announced a dramatically reduced initial rate after pressure from some large member states in the hope of reaching a negotiated settlement with Beijing. The EU says it has evidence that Chinese firms are selling their goods below cost – a practice known as dumping. But the initial duty of 11.8 percent announced late on Tuesday by European Trade Commissioner Karel De Gucht was far below the average 47 percent that had been planned. The shift reflects the desire to avoid a trade war, while also acknowledging opposition to duties from 18 of the EU’s 27 member states, led by Germany and Britain. Yingli Green Energy Holding Co., Wuxi Suntech Power Co. and Changzhou Trina Solar Energy Co. are among the more than 100 companies targeted. While the European Commission

has the final say on trade issues, it does not want to be seen to be acting against the interests of member states. “This is a one-time offer to the Chinese side, providing a very clear incentive to negotiate,” Mr De Gucht told a news conference. “It provides a clear window of opportunity for negotiations, but the ball is now in China’s court.” One Chinese source close to the talks said: “If we face a loaded gun to our heads, it is not a fair negotiation, but at least it creates room for both sides to find a solution.” China’s Commerce Ministry said the EU’s duties were imposed despite China making great efforts and showing enormous sincerity in trying to resolve the matter through talks. “The European side still obstinately imposed unfair duties on Chinese imports of solar panels,” the ministry said in a statement on its website. The case, one of several trade complaints that the EU has brought

80%

Chinese companies’ share of solar panel market

against China, is the largest trade investigation the European Commission has ever undertaken; imports from China in the sector amounted to 21 billion euros (US$27.5 billion) in 2011. Mr De Gucht said the 11.8 percent duty would apply until August 6. If no settlement is reached by then,

the provisional levies will range from 37.2 percent to 67.9 percent, depending on the Chinese company, according to the commission. It said those duties would average 47.6 percent – in effect blocking China’s market access. In December, that rate will be put in force for five years. Senior EU and Chinese officials called each other last weekend to try to take the heat out of the dispute between two of the world’s largest trading powers. China has warned of repercussions. Premier Li Keqiang told European Commission President José Manuel Barroso on Monday that the dispute touched on China’s “major economic interests”.

‘Applying the rules’ Mr De Gucht, a Belgian lawyer and advocate of free trade, defended the duties as an emergency measure to provide “life-saving oxygen”

Service sector growth remains weak: HSBC May services PMI index shows modest growth

A

ctivity in China’s services sector expanded in May but at a pace little changed from the month before, the latest sign that the world’s No. 2 economy is struggling to regain momentum. The HSBC Holdings Plc and Markit Purchasing Managers’ Index (PMI) for the services industry, released yesterday, inched up to 51.2 last month after seasonal adjustment, the second-lowest reading since August 2011. It had registered 51.1 in April. The services sector accounted for 46 percent of China’s gross domestic product in 2012, and the weak growth seen in the survey adds to concerns raised by earlier PMI surveys on the manufacturing sector over the the loss of momentum in China. “A soft patch in manufacturing

growth continues to weigh on this industry and adds more downside risks to China’s growth rate in 2Q,” said HSBC’s China chief economist, Qu Hongbin. “Service-sector activities stabilised in May at a relatively low level of growth,” he said, adding that “the improving property market and Beijing’s renewed effort on expanding [value-added tax] reform nationwide could lend some support for the service sector’s future development.” Earlier this week, China’s official services PMI slipped to 54.3 in May from 54.5 in April, and while the official manufacturing PMI ticked up to 50.8 in May from 50.6, the HSBC manufacturing PMI dropped to 49.2, the lowest level since October 2012 and down from 50.4 in April. A reading above 50 indicates expansion of business and one below implies contraction. Attention now turns to exports, industrial output and retail sales data for May due later this week, with expectations that these will also confirm the weakness in the economy.

Services PMI adds to worry over overall weak momentum

“We are not so optimistic on economic growth in the second quarter. We expect GDP growth will slow to 7.6 percent in Q2,” said Shen Lan, economist at Standard Chartered Plc in Shanghai. “China’s economy is facing pressures of destocking while it still takes time for the credit growth to feed into firms’

investment. We think the recovery will be more obvious in the second half of the year,” Mr Shen said. The HSBC services survey found the sub-index measuring new business orders fell to 51.4 in May, the lowest since August 2011, and down from 51.5 in April. Reuters


99

June 2013 April 6, 19, 2013

Greater China Beijing to probe EU wine China hit back yesterday at the European Union’s decision to impose duties on imports of Chinese solar panels, announcing that Beijing had begun an anti-dumping and anti-subsidy probe in European wine. “The Chinese government has already begun the process of an anti-dumping and anti-subsidy probe into EU wines,” China’s Commerce Ministry said, without providing details. “This is impacted upon our wine industry, and [they have] asked the Commerce Ministry to begin and antidumping and anti-subsidy probe,” the ministry said in a statement on its website. “We have noted the quick rise in wine imports from the EU in recent years, and we will handle the investigation in accordance with the law.” China imported 430 million litres of wine last year, of which more than two-thirds came from the EU, according to Chinese customs figures. Imports from France alone came to 170 million litres.

to a sector suffering from Chinese dumping: “This is not protectionism, rather it is about ensuring international trade rules [apply] to Chinese companies.” The case has tested whether EU governments can unite behind the European Commission on global trade issues and overcome worries about retaliation. Germany and Britain say their companies could be disadvantaged in China’s growing markets such as financial services and telecoms if Brussels hinders Chinese business in Europe. But France and Italy argue that Chinese firms are

Mexico, China seek to jump-start trade

C

hina and Mexico promised broad cooperation on issues ranging from energy to mining and infrastructure during a state visit by Chinese President Xi Jinping, but any free-trade pact between the emerging market powers is still some way off. Mexico’s government has voiced worry about its massive trade deficit with China, an imbalance Mexican President Enrique Pena Nieto wants to set right. Mexico wants “to find a greater equilibrium in our trade balance,” Mr Pena Nieto said during a joint address to the media with his Chinese counterpart. He said the two countries had also agreed to defuse a standoff over textiles that had resulted in litigation. The two governments signed agreements to cooperate on commercial defence, and agreed on access for Mexican tequila and Mexican pork to the Chinese market. State oil monopoly Pemex said Export-Import Bank of China would provide it with a US$1 billion credit line to buy ships and

unfairly benefiting from state subsidies that allow them to flood Europe with cheap goods and undercut local producers. “We are relieved that the European Commission finally introduced concrete measures,” EU ProSun, a group that represents European producers including Solarworld, said in a statement. “Dumping is fraud and harms the future of solar energy.” Chinese firms have captured more than 80 percent of the European solar panel market, from nearly zero a few years ago, and China’s solar panel production is 1.5 times the global demand, according to the European Commission. “The solar panel case should be seen in the context of Western attempts to discourage China from free riding on an open trading system,” said Simon Evenett, professor of international trade at St Gallen University in Switzerland. The United States levied sanctions on Chinese solar panels in 2012 although, unlike the EU duty, they did not apply to the wafers used to make solar cells. The Commission also has a related investigation into alleged subsidies for China’s solar industry, following a complaint by Germany’s SolarWorld AG, which is leading the European challenge to China.

Hong Kong halts new airline licences Government reviewing licensing criteria Joshua Fellman

Existing local airlines to benefit from further delay

Reuters

H KEY POINTS Initial duty of 11.8 pct to take effect today Commission says aim is negotiate a settlement with China Duties would rise to an average of 47.6 pct by Aug 6 EU trade chief says it wants to avoid trade war with China

offshore equipment. It also signed a memorandum of understanding with state-owned Xinxing Cathay International Group to explore ways to work together on pipelines. More than 15 percent of Mexico’s imports came from China in 2012 – an amount worth US$57 billion – while just 1.5 percent, or US$5.7 billion, of Mexican exports went to the Asian giant. Mr Xi said China planned to sign commercial contracts to buy an additional US$1 billion worth of Mexican goods, but did not specify what. Mexican Foreign Minister Jose Antonio Meade said it was too soon for a free-trade agreement between the two countries – something China is eager to pursue. “I think at this stage it is too early to talk about a free-trade agreement,” Mr Meade told local radio. “I think we are still at a stage at which we are becoming aware of opportunities, opening a space for business dialogue, so it does not seem to be the instrument or path which best serves us,” he added, saying it was an alternative to evaluate in the future. Mexico ran a slight surplus with its global trading partners last year, but posted a huge deficit with China, largely because of an influx of manufactured goods. Reuters

ong Kong won’t process any applications to start airlines in the city pending the completion of a review of its criteria for designating local carriers, the city’s Transport and Housing Bureau said. While airlines must be incorporated in the city and have their principle place of business in Hong Kong to be considered local under the law, and the government looks at shareholding structure, these aren’t the only determining factors, according to a statement on the government’s website yesterday. It didn’t say what additional elements would be considered. Jetstar Hong Kong, a low-cost carrier owned by Qantas Airways Ltd and China Eastern Airlines Corp, had secured a local investor and planned to start service at year-end, after waiting more than a year for a licence, the Hong Kong Economic Journal said on Tuesday, citing China Eastern chief economist Shan Chuanbo. A further delay would protect the interests of existing local airlines such as Cathay Pacific Airways Ltd. “I am disappointed, but not surprised, to see the government stalling on the licensing of new airlines,” David Webb, founder of

AIG casts doubt on ILFC sale

A

merican International Group Inc. chief executive Robert Benmosche raised doubt about whether the company will complete a sale of its plane-leasing unit to a Chinese investor group by a deadline this month. “June 14, we have to make a decision,” he said yesterday at a conference in New York, where the insurer is based. “Whether this deal will get done or not, we don’t know.” AIG said last week that it hadn’t received a deposit required in an agreement to sell International Lease Finance Corp to acquirers led by New China Trust Co. chairman Weng Xianding. That would allow AIG to cancel the accord, reached in December, to sell 80 percent of ILFC for about US$4.2 billion.

local governance watchdog Webbsite.com, said in an e-mail. “It follows on from years of foot-dragging over the issue of new terrestrial TV broadcast licenses.” The city has two over-the-air television broadcasters, one of which, Television Broadcasts Ltd, is dominant, Mr Webb said. The government is planning to issue “one or two” new TV licences, rather than the three originally expected, the Standard newspaper said last month, citing an unidentified person. “The government is trying to decide the ‘right’ number of licenses rather than let the market discover that,” Mr Webb said. “The government claims to be in favour of competition but its protectionist actions contradict this.” For airlines, the “government won’t provide any recommendations to an investor who is interested in setting up an airline in Hong Kong,” the Transport Bureau and Housing Bureau said in the statement. “It is an airline’s own commercial decisions to make investment or other arrangements and it is the airline’s own responsibility to bear the commercial and legal risks involved,” it said. Bloomberg News

The transaction is subject to approval from U.S. and Chinese regulators, including the Committee on Foreign Investment in the U.S. Mr Benmosche said yesterday that AIG has the option of cutting its stake in Los Angeles-based ILFC through a public offering if the deal falls apart. “Common sense would tell you that we would continue our dialogue” with the potential buyers, he said. There are “a lot of hurdles to go through. It’s very complicated, and we’re doing the best we can”. Steven Lipin at Brunswick Group, a spokesman for the Chinese buyers, declined to comment. The Chinese consortium is actively pushing forward the progress of the deal, China Business News reported on its website yesterday, citing Mr Weng. Mr Weng didn’t directly respond to questions about the issue of the deposit payment. Bloomberg News


10 10

June 6, 2013 April 19, 2013

Asia Malaysia tycoon mulls IPO of 7-Eleven stores Malaysian billionaire Vincent Tan is considering listing his 7-Eleven conveniencestore franchise as early as this year, state news agency Bernama reported. Mr Tan also said that an initial public offering was one of the options for Cardiff City football team. “We are looking at several options to raise money to pay the banks,” Tan, who owns 36.1 percent of the club, was quoted as saying by Bernama. “I have invested so much, so now I need to raise some money. Listing is one of the options,” he said, adding that a decision would be made in the next few months.

KEY POINTS GDP grows 0.6 pct in Q1, 2.5 pct year-on-year Trade and consumer spending up, offset by soft business investment Subpar pace underlines outlook for further cuts in rates

Australia’s central bank recently cut borrowing costs to boost growth

Australian growth slows as miners cut back Year-on-year growth falls to 2.5 pct in the first quarter of 2013

A

ustralia’s economy expanded at the slowest annual pace in almost two years as manufacturers and builders detracted from growth, prompting traders to increase bets on further interest rate cuts. The economy posted a second

straight quarter of moderate growth as a drop in business investment offset gains in trade and consumer spending at the start of 2013. The local dollar slipped after the Australian Bureau of Statistics reported gross domestic product rose 0.6 percent in the first quarter,

matching the previous quarter but short of forecasts of 0.8 percent and below par for a country that hasn’t suffered a recession for more than two decades. GDP expanded 2.5 percent in the first quarter from a year earlier, the weakest reading since the second quarter of 2011.

“Globally that is pretty good, but for Australia it’s not exactly shooting the lights out,” said Su-Lin Ong, a senior economist at RBC Capital Markets. “The theme of sub-trend growth looks like extending for the rest of the year and longer.” sector, while a lack of confidence haunts consumers and business alike. And it is far from clear how the economy will cope when a long boom in mining investment finally plateaus this year.

Rate cut “The transition from mining is the big question, and it’s just not clear what will step up to drive growth,” added Ms Ong. Which is why the Reserve Bank of Australia (RBA) cut interest rates to a record low of 2.75 percent in May and said this week it was ready to ease again if needed. Markets have priced in a cut to 2.5 percent by October. Yesterday’s report showed some of the nation’s most employmentintensive industries that the central bank has sought to stoke with recordlow interest rates remain subdued. “You’ve got a much lower reading coming out of what you might call the guts of the economy than you’ve got coming out of the total economy,” National Australia Bank Ltd chief economist Alan Oster said. “I still think they’ve got one more rate cut.” A stubbornly high currency is hammering the manufacturing The value of all goods and services produced was 2.5 percent higher than in the first quarter of 2012. That was also a little below forecasts, though the world’s 12th-largest economy did at least outpace its peers. Comparable growth in the United States was 1.8 percent. The U.K. eked out annual growth of 0.6 percent last quarter, while the EU economy

S. Korean power shortage signals fuel boost Imports seen rising to compensate nuclear shortfall

S

outh Korea’s worst potential power shortages are threatening to drive up the cost of Asian fuel oil as utilities step up purchases to compensate for stoppages at nuclear reactors. IHS Inc., JTD Energy Services Pte Ltd and KBC Energy Economics are among those predicting prices may get a boost. Cargoes for delivery to South Korea traded as low as US$2.34 a metric ton below benchmark prices this month, compared with an average premium of US$1.67 during the first half of the year, according to data compiled by Bloomberg. South Korea, the world’s fourthbiggest nuclear power producer in 2012, is struggling to meet its summer needs as the shutdown of two reactors last week and delays to

the start of a third cuts supplies at the same time as rising temperatures boost demand for air conditioning. Utilities are buying extra fuel to boost output even as Samsung Electronics Co Ltd and Hyundai Motor Co. join government efforts to cut power use. “This situation in Korea is certainly going to push prices of fuel oil higher,” said Ehsan Ul-Haq, an analyst at KBC Energy in Waltonon-Thames, England. “The nuclear plants have gone down at a time when summer demand is set to rise. Fuel-oil supplies will be sought after.”

Rising imports Korea East-West Power Co., a unit of state-held Korea Electric Power Corp, is planning to double

imports next month. The Seoulbased company will issue a tender to purchase 100,000 tons for July delivery, a company official said last week. Korea Western Power Co., another regional unit also based in Seoul, will boost July purchases by a third, importing 90,000 tons, compared with an originally planned 60,000 tons, an official said. Reported purchases averaged 50,000 tons in the first six months, data compiled by Bloomberg show. “The Korean generation companies are already coming into the market,” said John Driscoll, the managing director of JTD Energy Services, a Singapore-based energy adviser, and former trading manager at GS Caltex Oil Singapore Pte. “You will probably see the premium on

low-sulphur residual fuel oil start to ramp up.” South Korea, which depends on nuclear energy for more than 30 percent of its electricity needs, halted the reactors after discovering the facilities were using components whose quality certificates were faked. The country may face “unprecedented” power shortages during the summer, Vice Minister for Energy Han Jin-hyun said on May 28. Bloomberg News/Reuters


11 11

June 2013 April 6, 19, 2013

Asia Philippines sees room to adjust monetary policy The Philippine central bank has room to adjust monetary policy, if needed, to address potential price pressures, Governor Amando Tetangco said yesterday, even as the latest data showed this year’s inflation target will likely be achieved. Philippine annual inflation in May was 2.6 percent, steady against the previous month. That brought average inflation in the first five months of the year to 3.0 percent, at the bottom-end of the central bank’s 3 to 5 percent target band. “BSP has policy space to address inflation pressures from these impulses, and is ready to make policy adjustments as needed,” he said.

contracted by a full percentage point. Output for the 12 months to March was worth A$1.5 trillion in current dollars, or about A$64,800 (US$62,200) for each of Australia’s 23 million people. That compares with per capita GDP in the United States of US$50,700.

Abe targets income gains in growth strategy Special economic zones seen attracting foreign businesses

Manufacturing drag The main growth driver was trade as the country imported less while past spending on mining and liquefied natural gas projects lifted exports, a trend that has years to run. Net exports, or exports minus imports, added 1.0 percentage points to growth for the biggest contribution in four years. Consumers also chose to spend a bit more freely, which lifted household consumption 0.6 percent. But a more cautious attitude was evident in savings, which edged up to a high 10.6 percent of disposable income. Businesses also cut back spending on plant and machinery, while home building stayed frustratingly flat in the quarter. Manufacturing fell 0.8 percent amid the local currency’s longest stretch above parity with the U.S. dollar since it was freely floated in 1983, and construction dropped 2.1 percent in the first quarter from three months earlier. “We are involved in a transition from mining sources of growth to non-mining sources of growth and that’s why the monetary policy settings of the Reserve Bank are so important,” Treasurer Wayne Swan told reporters in Canberra after the release. “I thought the Australian dollar would start to come down when the U.S. economy started to grow more strongly and indeed that’s largely what has occurred in recent times.” Reuters/Bloomberg News

Faulty parts found in more nuclear plants South Korean nuclear inspectors have identified two more nuclear power plants that used parts with forged test certificates, YTN television reported yesterday, raising the prospect of more plant closures. YTN said the Nuclear Safety and Security Commission had identified cabling in two additional reactors that used forged test certificates. Seoul has warned of power shortages and rolling blackouts due to the closure of two reactors and the extended shutdown of a third to replace parts supplied using fake documents in a move that will crimp power supplies.

P

rime Minister Shinzo Abe pledged to boost incomes by 3 percent annually and set up special economic zones to attract foreign businesses in the latest tranche of measures aimed at boosting growth in the world’s thirdbiggest economy. Rising incomes are vital to the success of Mr Abe’s ambitious goals to end years of entrenched deflation and decades of economic stagnation during which China sped past Japan in the world’s economic rankings. The Bank of Japan’s sweeping monetary expansion, announced in April, aims to achieve 2 percent inflation in less than 2 years. Analysts say wages will need to rise faster to put consumer prices and growth on a sustainable upward track. Mr Abe is also wary of appearing to benefit corporations over consumers ahead of a July upper house election. “I think the most important target to achieve is per capita gross national income,” Mr Abe said in a speech yesterday. “That’s because the aim of our growth strategy is nothing other than to create jobs for enthusiastic people and raise take-home pay for those who are working hard,” he said. The growth strategy is the “Third Arrow” in his “Abenomics” prescription to spur sustainable growth. The first two “arrows” are hyper-easy monetary policy and big government spending. The popular premier said he would target annual gains of 3 percent or more

Apple loses patent case with Samsung Older models of iPads, iPhones could be banned from sale in the U.S.

S

amsung Electronics Co Ltd scored a victory over rival A p p l e I n c. i n th ei r l o n g running dispute over mobile device patents after a U.S. trade agency issued an order banning older but still-popular Apple products from the U.S. market.

in gross national income per capita. That would be an increase of 1.5 million yen (US$15,000) over 10 years from around 3.84 million yen in 2012.

Deregulation steps Financial market investors have not given up hope that Mr Abe’s policies will end the country’s prolonged economic stagnation, but a note of caution has crept in since Tokyo share prices began to slide on May 23 after months of heady gains. Japan’s Nikkei share average sagged 3.8 percent to a two-month low yesterday as Mr Abe’s speech failed to enthuse investors. Mr Abe added another set of targets to those he has already announced, aiming to boost powerrelated investment one and a half times to 30 trillion yen over the next decade and double the balance of inward foreign direct investment to 35 trillion yen by 2020.

The U.S. International Trade Commission (ITC) ruled on Tuesday U.S. time that the Silicon Valley giant had infringed on a patent owned by Samsung that involves the ability of devices to transmit multiple services simultaneously and correctly through 3G wireless technology. The independent federal agency slapped a ban on the import or sale of the iPhone 4, iPhone 3GS, iPad 3G and iPad 2 3G distributed by AT&T Inc., the biggest seller of Apple devices in the United States when Samsung filed its complaint in 2011. U.S. President Barack Obama has 60 days to review the ruling. If he does not veto the order, it will go into effect. It is not immediately clear what the impact could be on Apple or AT&T, since the decision remains subject to a potentially prolonged appeals process. While the products targeted are more than a year old, some models such as the iPhone 4 remain solid sellers.

But critics question if these goals are achievable. “The government has come up with rosy numerical targets but I doubt any of these could be met or that such a targeting policy could work out as planned,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute. “After all, the government cannot control every economic activity just like the central bank cannot control long-term interest rates.” The special economic zones, to be created in Tokyo and other big cities, are expected to be allowed to introduce corporate tax cuts and ease regulations to attract businesses. Mr Abe has said deregulation is the top priority for boosting growth but the final package of steps – to be approved by the cabinet on June 14 along with macro-economic guidelines – is unlikely to include bold reforms in areas such as labour mobility and nationwide corporate taxes. Reuters

The most recent version covered by the ITC’s decision – the iPhone 4 – is now given away with a contract offered by carriers including Verizon Wireless, which is not affected by the ruling. The iPhone 4 could be phased out within a year should Apple stick to schedule and release a new version of the iPhone 5 in the fall as many in the industry expect. Still, if the import ban goes into effect, U.S. customs agencies enforcing the ban could well end up delaying other Apple products, said Susan Kohn Ross, a partner in the Los Angeles office of Mitchell Silberberg & Knupp. “This is going to create a huge distortion for Apple,” she said. “Customs has a very difficult job now. They have to look at every shipment.” “We are disappointed that the commission has overturned an earlier ruling and we plan to appeal,” Apple spokeswoman Kristin Huguet said in a statement. Reuters


12

June 6, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

33.2

-3.347889

44296857

CHINA UNICOM HON

10.6

0

11223767

ALUMINUM CORP-H

2.95

-0.6734007

11697000

CITIC PACIFIC

8.89

-0.5592841

BANK OF CHINA-H

3.67

-0.5420054

362375971

BANK OF COMMUN-H

5.89

-0.1694915

16964575

BANK EAST ASIA

29.35

-2.166667

3597253

BELLE INTERNATIO

11.76

-1.836394

17714000

BOC HONG KONG HO

25.2

-1.176471

14136476

CATHAY PAC AIR

14.72

-1.604278

5427000

CHEUNG KONG

NAME

PRICE

DAY %

POWER ASSETS HOL

67.65

-1.814224

5562280

7959530

SANDS CHINA LTD

40.05

-2.173913

11864997

SINO LAND CO

11.52

-0.3460208

10210376

SUN HUNG KAI PRO

100.2

-1.280788

10775720

CLP HLDGS LTD

64.45

-1.603053

6750988

13.76

-0.1451379

39716398

COSCO PAC LTD

11.16

0

5844000

SWIRE PACIFIC-A

93.85

-2.645228

3766674

ESPRIT HLDGS

11.84

-0.5042017

5621232

TENCENT HOLDINGS

300.4

-0.9887937

2462172

HANG LUNG PROPER

27.45

-0.1818182

9948706

TINGYI HLDG CO

HANG SENG BK

122.5

-1.289283

2483311

WANT WANT CHINA WHARF HLDG

105.8

-2.757353

11540075

HENDERSON LAND D

48

-2.240272

7216157

5.03

-0.5928854

21921846

HENGAN INTL

80.7

0.4355943

2951607

CHINA CONST BA-H

6.22

-0.6389776

217079516

HONG KG CHINA GS

21.9

-1.573034

13743401

CHINA LIFE INS-H

19.98

0.2006018

28009543

CHINA MERCHANT

25.15

0.3992016

3137758

80.3

-0.3103662

10695866

HUTCHISON WHAMPO

22.85

0.4395604

14394820

IND & COMM BK-H LI & FUNG LTD

CHINA OVERSEAS

VOLUME

CNOOC LTD

CHINA COAL ENE-H

CHINA MOBILE

NAME

HONG KONG EXCHNG HSBC HLDGS PLC

129.2

-0.1545595

2583427

86

-0.5780347

10719357

81.45

-2.103365

9284482

5.36

-0.3717472

214142023

11.04

-0.5405405

23121737

29.9

-1.967213

4420279

MOVERS

5

20.2

-1.222494

2323401

11.18

0.3590664

24151885

70.2

-1.126761

7274182

43

2 22530

INDEX 22069.24 HIGH

22523.76

LOW

21956.02

CHINA PETROLEU-H

7.89

-1.12782

93922590

CHINA RES ENTERP

25.5

-0.390625

3577823

MTR CORP

CHINA RES LAND

23.7

-0.6289308

7821478

NEW WORLD DEV

11.98

-2.124183

26385305

52W (H) 23944.74

CHINA RES POWER

19.54

-1.213347

9072200

PETROCHINA CO-H

9

-0.7717751

75537493

(L) 18223.13

CHINA SHENHUA-H

25.75

-0.1937984

8991394

PING AN INSURA-H

57.7

-0.4314064

7001369

PRICE

DAY %

VOLUME

26.05

0.7736944

6704734

21950

3-June

5-June

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.59

-0.5540166

90518981

CHINA PACIFIC-H

AIR CHINA LTD-H

6.3

-4.109589

12826000

CHINA PETROLEU-H

7.89

-1.12782

93922590

ALUMINUM CORP-H

2.95

-0.6734007

11697000

CHINA RAIL CN-H

7.42

-0.669344

4592669

ANHUI CONCH-H

24.6

-1.796407

12152040

CHINA RAIL GR-H

3.87

-1.27551

12144174

BANK OF CHINA-H

3.67

-0.5420054

362375971

CHINA SHENHUA-H

25.75

-0.1937984

8991394

BANK OF COMMUN-H

5.89

-0.1694915

16964575

CHINA TELECOM-H

3.7

-0.5376344

37410739

BYD CO LTD-H

32.7

-1.208459

2571710

DONGFENG MOTOR-H

12.1

-1.465798

8503326

4.1

-1.204819

31385774

GUANGZHOU AUTO-H

8.1

-2.291918

16057505

CHINA COAL ENE-H

5.03

-0.5928854

21921846

HUANENG POWER-H

8.04

-0.8631319

13850000

CHINA COM CONS-H

7.21

0.5578801

13392378

IND & COMM BK-H

5.36

-0.3717472

214142023

CHINA CONST BA-H

6.22

-0.6389776

217079516

JIANGXI COPPER-H

15.64

1.426719

9545209

CHINA COSCO HO-H

3.32

0.9118541

5462648

PETROCHINA CO-H

9

-0.7717751

75537493

CHINA CITIC BK-H

NAME

19.98

0.2006018

28009543

PICC PROPERTY &

9.15

1.216814

22748930

CHINA LONGYUAN-H

8.18

3.939009

21918231

PING AN INSURA-H

57.7

-0.4314064

7001369

CHINA MERCH BK-H

14.7

-0.4065041

19569230

SHANDONG WEIG-H

10.22

-1.730769

15316393

CHINA MINSHENG-H

9.32

-3.118503

48147304

SINOPHARM-H

CHINA NATL BDG-H

8.1

2.92249

53475039

TSINGTAO BREW-H

16.5

-0.7220217

4236060

WEICHAI POWER-H

CHINA LIFE INS-H

CHINA OILFIELD-H

21

0.7194245

2816057

54.4

0.1841621

890050

27.45

-3.34507

NAME

PRICE

DAY %

VOLUME

YANZHOU COAL-H

7.73

-0.7702182

22896336

ZIJIN MINING-H

2.11

-1.401869

32690115

ZOOMLION HEAVY-H

6.72

-2.608696

34783193

12.56

1.127214

4140882

ZTE CORP-H

MOVERS

9

31

0 10640

INDEX 10473.18 HIGH

10635.84

LOW

10382.45

52W (H) 12354.22 10380

(L) 8987.76 3-June

1927254

5-June

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.74

0.3663004

96319277

CHONGQING CHAN-A

10.37

1.567091

24378966

PING AN INSURA-A

39.09

-0.1277466

13036943

AIR CHINA LTD-A

5.27

-0.7532957

4681637

CHONGQING WATE-A

6.64

-1.043219

10569259

POLY REAL ESTA-A

12.15

-0.2463054

31231239

ALUMINUM CORP-A

4.05

0

6840663

CITIC SECURITI-A

12.88

1.098901

64703305

QINGDAO HAIER-A

12.38

-0.8807046

9150059

ANHUI CONCH-A

16.45

-0.9632751

19766696

CSR CORP LTD -A

4.29

0.2336449

16872459

QINGHAI SALT-A

22.43

-0.3111111

4354237

AVIC AIRCRAFT-A

11.62

-2.680067

25799484

DAQIN RAILWAY -A

6.63

0.4545455

25164520

SAIC MOTOR-A

15.43

0.8496732

19833105 29284499

NAME

NAME

NAME

BANK OF BEIJIN-A

8.87

-1.444444

24110888

DATANG INTL PO-A

4.65

0.867679

5932070

9.06

-1.091703

BANK OF CHINA-A

2.95

0

17018451

EVERBRIG SEC -A

13.78

1.100514

14846606

SHANG PHARM -A

12.28

-0.6472492

7086986

BANK OF COMMUN-A

4.67

-0.4264392

41254214

GD MIDEA HOLDI-A

13.95

-0.7823613

16442697

SHANG PUDONG-A

9.65

-0.9240246

56405768

SANY HEAVY INDUS

BANK OF NINGBO-A

10.38

-0.9541985

7975522

GD POWER DEVEL-A

2.67

0.3759398

45888456

SHANGHAI ELECT-A

4.06

6.56168

24527626

BAOSHAN IRON & S

4.76

-0.2096436

8183772

GEMDALE CORP-A

7.69

0.3916449

32139164

SHANXI LU'AN -A

16.08

-0.618047

9181806

BEIJING TONGRE-A

23.34

-0.4266212

3255161

GF SECURITIES-A

13.82

0.9495982

19445823

SHANXI XISHAN-A

10.29

0

6932996

BYD CO LTD -A

33.23

-2.293443

10061191

26

-0.1536098

11350947

SHENZEN OVERSE-A

6.38

0

21833866

SUNING COMMERC-A

GREE ELECTRIC

CHINA AVIC ELE-A

24.9

-2.391219

4778481

20.56

-0.7722008

9663290

6.17

0.6525285

37382406

CHINA CITIC BK-A

4.28

-0.6960557

10950296

HAINAN AIRLINE-A

GUANGHUI ENERG-A

5.06

-1.937984

22354161

TASLY PHARMAC-A

39.84

0.07535795

4054911

CHINA CNR CORP-A

4.46

0

26309170

HAITONG SECURI-A

11.8

0.8547009

85577063

TSINGTAO BREW-A

38.84

0.3099174

1179414

CHINA COAL ENE-A

6.44

-0.4636785

6067295

HANGZHOU HIKVI-A

37.63

3.806897

7181526

WANHUA CHEMIC-A

17.33

2.001177

11294811

HENAN SHUAN-A

CHINA CONST BA-A

4.78

-0.2087683

12755923

41.29

-0.2174964

5591841

WEICHAI POWER-A

22.5

-0.08880995

4566585

CHINA COSCO HO-A

3.34

-0.5952381

5141337

HONG YUAN SEC-A

24.8

1.639344

21959832

WULIANGYE YIBIN

23.71

1.065644

14549012

CHINA EAST AIR-A

3.03

-0.6557377

6230940

HUATAI SECURIT-A

10.24

0.9861933

24198739

YANZHOU COAL-A

14.15

0.07072136

2455706

10.59

-1.028037

18508786

YUNNAN BAIYAO-A

86.6

-0.8926528

1654502

-0.2369668

58602060

ZHONGJIN GOLD

11.86

-1.331115

17284128

3.1

-0.6410256

42028153

HUAXIA BANK CO

CHINA LIFE INS-A

16.41

0.1220256

6306441

IND & COMM BK-A

4.21

CHINA MERCH BK-A

13.36

-2.836364

61817060

INDUSTRIAL BAN-A

17.88

-2.614379

91285928

ZIJIN MINING-A

3.06

0

27696167

CHINA MERCHANT-A

12.95

0.3098373

13098895

INNER MONG BAO-A

27.26

0.8509064

13668813

ZOOMLION HEAVY-A

6.88

-1.291248

46531744

CHINA MERCHANT-A

29.05

1.502446

8810192

INNER MONG YIL-A

28.59

0.1751927

6552155

12.67

3.00813

26351004

CHINA MINSHENG-A

10.1

-1.750973

117771217

INNER MONGOLIA-A

4.77

0.845666

20019410

CHINA NATIONAL-A

10.95

-1.351351

27651067

JIANGSU HENGRU-A

31.14

1.631854

4762371

CHINA OILFIELD-A

16.25

0.308642

2039672

JIANGSU YANGHE-A

63.65

-0.09417674

4031533

CHINA PACIFIC-A

18.43

-0.3244997

12030480

JIANGXI COPPER-A

20.9

0.6259027

5049215

10.44

0.2881844

3789947

CHINA EVERBRIG-A

CHINA PETROLEU-A

6.71

-0.2971768

16055323

JINDUICHENG -A

CHINA RAILWAY-A

4.99

-0.3992016

12629968

KANGMEI PHARMA-A

18.76

-0.1064963

24893284

CHINA RAILWAY-A

2.8

-0.7092199

13290218

KWEICHOW MOUTA-A

201.17

-0.2627665

2372442

CHINA SHENHUA-A

20.36

0.4440059

5054304

LUZHOU LAOJIAO-A

26.08

0.7727975

7695624

59982923

METALLURGICAL-A

2

-0.4975124

34556650

22.69

2.484192

14243784

CHINA SHIPBUIL-A

4.52

0

CHINA SOUTHERN-A

3.43

-0.2906977

9102483

NARI TECHNOLOG-A

CHINA STATE -A

3.74

0.2680965

43282007

NINGBO PORT CO-A

2.43

0.4132231

5576088

ZTE CORP-A

MOVERS 137

141

22 2630

INDEX 2560.539 HIGH

2622.65

LOW

2548.72

52W (H) 2791.303

3.69

0

61469331

OFFSHORE OIL-A

7.82

0.2564103

21388540

CHINA VANKE CO-A

11.83

-0.2529511

47892830

PETROCHINA CO-A

8.51

0.1176471

7287613

CHINA YANGTZE-A

7.57

-0.2635046

12037958

PING AN BANK-A

20.81

-1.514434

30574507

NAME

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

ACER INC

24.05 -0.6198347

6154783

69.6 -0.4291845

5534644

TAIWAN MOBILE CO

108

0.4651163

ADVANCED SEMICON

25.15 -0.7889546

14545233

80 -0.8674102

4208475

TPK HOLDING CO L

596

1.360544

5202671

109.5

0.4587156

23376235

CHINA UNITED-A

(L) 2102.135

2540

3-June

5-June

FTSE Taiwan 50 Index

ASIA CEMENT CORP

37.2

0.5405405

FORMOSA PLASTIC FOXCONN TECHNOLO

NAME

PRICE DAY %

Volume 7741381

2403499

FUBON FINANCIAL

39.7

0.6337136

21593247

TSMC

34050273

UNI-PRESIDENT

57.5

0.7005254

8544772

UNITED MICROELEC

13.7

-1.438849

61111242

ASUSTEK COMPUTER

325.5 -0.3062787

1862583

HON HAI PRECISIO

75.8 -0.5249344

AU OPTRONICS COR

12.65

-4.166667

126428537

HOTAI MOTOR CO

344

0.8797654

703750

CATCHER TECH

158

-2.167183

11565892

HTC CORP

285 -0.8695652

13754718

30.65

0.4918033

7724373

CATHAY FINANCIAL

39.3

2.745098

31463098

HUA NAN FINANCIA

17.1 -0.8695652

4751588

YUANTA FINANCIAL

15.7

-1.257862

15332434

CHANG HWA BANK

16.9

0.5952381

5485489

LARGAN PRECISION

991

0.1010101

851873

YULON MOTOR CO

50.1 -0.9881423

1753632

CHENG SHIN RUBBE

89.7

-1.536773

6760158

LITE-ON TECHNOLO

49 -0.4065041

6868626

19

CHIMEI INNOLUX C CHINA DEVELOPMEN CHINA STEEL CORP CHINATRUST FINAN CHUNGHWA TELECOM

-3.797468

98806529

MEDIATEK INC

-1.219512

4787218

8.59 -0.1162791

33749609

MEGA FINANCIAL H

23.2 -0.8547009

22030623

25.15 -0.1984127

15696496

NAN YA PLASTICS

59.5

-1.3267

7920996

-0.8

33014372

PRESIDENT CHAIN

185

1.092896

661638

18.6

364.5

94.5 -0.4214963

7891636

QUANTA COMPUTER

63.5

-2.307692

7488217

COMPAL ELECTRON

18.35 -0.2717391

7656829

SILICONWARE PREC

34.9

0.2873563

3645263

DELTA ELECT INC

139.5

-2.105263

3516673

SINOPAC FINANCIA

14.5

-1.360544

13520705

FAR EASTERN NEW

31.4

-1.412873

2843885

SYNNEX TECH INTL

43.9

3.051643

20068370

FAR EASTONE TELE

71.4

0

6794419

TAIWAN CEMENT

37.6

-1.312336

10855417

17.15

FIRST FINANCIAL

17.9

0.280112

9751045

TAIWAN COOPERATI

0.5865103

6218215

FORMOSA CHEM & F

70.7 -0.1412429

3742122

TAIWAN FERTILIZE

76.9 -0.7741935

2140767

FORMOSA PETROCHE

77.8

1597274

TAIWAN GLASS IND

29.6

0.1287001

0.8517888

755978

WISTRON CORP

MOVERS

18

31

1 5700

INDEX 5651.46 HIGH

5690.79

LOW

5638.05

52W (H) 5896.71 5630

(L) 4719.96 3-June

5-June


13

June 6, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 41.7

61.0

41.5

60.95 20.2

41.3

60.90

41.1

average 41.15

Max 40.4

average 40.079

Min 40.75

Last 41.05

Min 39.8

40.

Max 60.9

average 60.9

40.25

20.6

40.10

20.4

39.95

20.2

Max 20.8

average 20.337

PRICE

DAY %

YTD %

(H) 52W

93.71

0.428678598

0.010672359

100.4000015

81.5

BRENT CRUDE FUTR Jul13

103.57

0.319643549

-3.575086119

115.9300003

96.04000092

GASOLINE RBOB FUT Jul13

282.53

0.251933858

0.053119909

318.0399895

235.0999832

865

0.933488915

-4.971161769

987.5

814

NATURAL GAS FUTR Jul13

GAS OIL FUT (ICE) Jul13

4.008

0.250125063

12.52105559

4.499000072

3.256000042

NY Harb ULSD Fut Jul13

287.1

0.212921917

-4.354199287

322.0499992

259.5000029

Gold Spot $/Oz

1400.65

0.0857

-15.8496

1796.08

1322.06

Silver Spot $/Oz

22.564

0.1642

-25.0614

35.365

20.3395

Platinum Spot $/Oz

1496.8

0.4766

-1.3803

1742.8

1374.55

Palladium Spot $/Oz

754.6

0.2351

7.8524

786.5

553.75

LME ALUMINUM 3MO ($)

1946

1.090909091

-6.126386879

2200.199951

1809

LME COPPER 3MO ($)

7455

1.566757493

-6.001765225

8422

6762.25

LME ZINC

1962

0.563813429

-5.673076923

2230

1745

15300

0.757326309

-10.31652989

18920

14561 14.79500103

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul13 Dec13

WHEAT FUTURE(CBT) Jul13

20.0

average 20.073

Min 19.94

Last 20.25

COFFEE 'C' FUTURE Jul13 SUGAR #11 (WORLD) Jul13

22.8

22.5

Max 22.9

average 22.577

Min 22.2

Last 22.25

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

22.2

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9576 1.5357 0.9479 1.3073 99.9 7.993 7.7606 6.1275 56.525 30.58 1.2487 29.791 41.993 9800 95.662 1.2392 0.85123 8.0123 10.4505 130.61 1.03

-1.013 0.4185 -0.0949 -0.1146 0.1201 0.0375 0.0103 0.0196 -0.1283 -0.5559 0.2723 0.3692 -0.0905 0.7653 1.1478 0.0153 0.5322 0.0686 0.1282 0.222 0.0291

-7.7279 -5.0631 -3.4286 -0.887 -13.8138 -0.1226 -0.1289 1.6826 -2.7068 0 -2.1863 -2.5444 -2.3528 -0.0714 -6.6223 -2.5597 -4.2069 2.5611 0.7646 -13.0465 -0.0097

1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 57.3275 32 1.29 30.203 43.4 9982 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.9528 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9329 75.956 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

15.64

0.773195876

-0.666878374

17.07500076

-0.678119349

-8.420175073

665

512

710.25

0.176304654

-10.51968504

900

664.75

1530

0.081766149

9.657767425

1605.75

1243.5

128.25

0.470035253

-14.24272818

202.1999969

125.0499954

NAME

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

16.31999969

ARISTOCRAT LEISU

4.09

-1.207729

29.84127

4.49

2.29

1462696

69.94999695

CROWN LTD

12.3

-2.303415

15.27648

13.75

8.12

2266128

16.42

COTTON NO.2 FUTR Jul13

84.35

0.244200244 -0.248344371

-16.81864235 9.730714193

23.05999947 94.19999695

World Stock Markets - Indices

Macau Related Stocks

AMAX HOLDINGS LT

0.86

1.176471

-38.57143

1.72

0.75

1926900

25.2

-1.176471

4.564314

28

21.05

14136476

CENTURY LEGEND

0.31

0

16.98114

0.42

0.215

0

CHEUK NANG HLDGS

5.73

-1.206897

-4.340564

6.74

2.8

69749

CHINA OVERSEAS

22.85

0.4395604

-1.082253

25.6

15.223

14394820

CHINESE ESTATES

13.4

-1.470588

10.47521

14.12

7.975

240502

CHOW TAI FOOK JE

9.33

0

-25

13.4

8.4

5432800

EMPEROR ENTERTAI

2.82

2.545455

49.20635

2.88

1.12

1921000

FUTURE BRIGHT

2.55

4.081633

110.3915

2.76

0.765

5628000

GALAXY ENTERTAIN

41.05

-1.322115

35.25535

41.8

16.98

9301927

122.5

-1.289283

3.201351

132.8

99.4

2483311

26.7

-4.129264

-19.69925

35.3

19.188

2633002

86

-0.5780347

5.781054

90.7

60

10719357 1408000

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

US

15177.54

-0.5014413

15.82248

15542.4

12072.17

NASDAQ COMPOSITE INDEX

US

3445.259

-0.5802847

14.0998

3532.038

2749.34

FTSE 100 INDEX

GB

6514.48

-0.6724016

10.45591

6875.62

5229.76

HANG SENG BK

DAX INDEX

GE

8262.82

-0.3994716

8.544362

8557.86

5914.43

HOPEWELL HLDGS

NIKKEI 225

JN

13014.87

-3.834042

25.20101

15942.6

8306.929688

HANG SENG INDEX

HK

22069.24

-0.9704956

-2.59382

23944.74

18223.13

CSI 300 INDEX

CH

2560.539

-0.1998312

1.489809

2791.303

2102.135

VOLUME CRNCY

BOC HONG KONG HO

DOW JONES INDUS. AVG

HSBC HLDGS PLC HUTCHISON TELE H

4.16

-0.4784689

16.85393

4.66

2.98

LUK FOOK HLDGS I

18.94

-0.3157895

-22.37705

30.05

14.7

1472738

MELCO INTL DEVEL

16.5

-2.019002

83.12985

18.18

5.12

9274510 5062330

TAIWAN TAIEX INDEX

TA

8181.91

-0.1136583

6.265474

8439.15

6922.73

MGM CHINA HOLDIN

20.25

-1.219512

52.5047

20.9

9.509

KOSPI INDEX

SK

1959.19

-1.523993

-1.895802

2042.48

1758.99

MIDLAND HOLDINGS

3.18

-3.343465

-14.05406

5

3.16

3116000

S&P/ASX 200 INDEX

AU

4835.206

-1.338596

4.006407

5249.6

3985

NEPTUNE GROUP

0.206

-7.207207

35.52632

0.23

0.084

276895000

ID

4984.43

-0.7404395

15.46888

5251.296

3696.969

NEW WORLD DEV

11.98

-2.124183

-0.3327825

15.12

8.12

26385305

FTSE Bursa Malaysia KLCI

MA

1773.37

-0.1896732

4.998374

1826.22

1554.51

SANDS CHINA LTD

40.05

-2.173913

17.9676

43.7

20.65

11864997

SHUN HO RESOURCE

1.52

0

8.57143

1.67

1.03

0

NZX ALL INDEX

NZ

953.65

-0.3939747

8.117092

998.487

755.149

SHUN TAK HOLDING

4.14

-0.4807692

-1.193319

4.65

2.56

4873010

PHILIPPINES ALL SHARE IX

PH

4067.24

-1.474525

9.955718

4571.4

3285.84

SJM HOLDINGS LTD

20.2

-4.038005

13.81784

22.382

12.522

12569113

SMARTONE TELECOM

13.2

-0.7518797

-6.249999

17.38

12.5

941500

22.25

-2.412281

6.205247

26.5

14.62

4277500

JAKARTA COMPOSITE INDEX

19.8

23.1

549.25

SOYBEAN FUTURE Jul13

NAME

Last 20.2

(L) 52W

WTI CRUDE FUTURE Jul13

CORN FUTURE

Min 20.05

Max 20.35

Currency Exchange Rates

NAME

METALS

60.80

Last 60.9

20.8

Commodities ENERGY

Min 60.9

40.40

39.80

Last 40.05

20.0

60.85

40.9 Max 41.6

20.4

HSBC Dragon 300 Index Singapor

SI

633.09

0.01

1.93

NA

NA

STOCK EXCH OF THAI INDEX

TH

1542.59

-0.8369707

10.82381

1649.77

1099.15

HO CHI MINH STOCK INDEX

VN

514.64

0.7734634

24.3903

526.58

372.39

ASIA ENTERTAINME

4.26

1.428571

39.21569

5.18

2.4

113101

BALLY TECHNOLOGI

57.15

0.2104156

27.82376

57.49

41.74

533306

Laos Composite Index

LO

1338.82

-0.6787985

10.2118

1455.82

980.83

BOC HONG KONG HO

3.32

0.9118541

8.143325

3.6

2.7

11170

GALAXY ENTERTAIN

5.4

1.465614

36.02015

5.4

2.25

5100

INTL GAME TECH

17.51

0.2863688

23.57092

18.81

10.92

3113517

JONES LANG LASAL

90.57

-0.2642881

7.898496

101.46

61.39

362267

LAS VEGAS SANDS

58.46

0.9148973

26.64645

60.54

32.6127

3959752

MELCO CROWN-ADR

23.59

0.6828852

40.08313

25.15

9.13

2083197

MGM CHINA HOLDIN

2.71

0

46.48648

2.71

1.36

600

MGM RESORTS INTE

15.01

-1.18499

28.95189

15.95

8.83

7936541

SHFL ENTERTAINME

17.37

-0.5724098

19.7931

17.74

11.75

708073

SJM HOLDINGS LTD

2.68

-5.300353

17.66689

2.9481

1.6269

8000

136.84

-0.9123823

21.64637

144.99

84.4902

1057794

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

WYNN MACAU LTD

WYNN RESORTS LTD

AUD HKD

USD


14

June 6, 2013

Opinion

China crisis is good for the global economy

debt may have reached US$3.3 trillion. That’s a bad omen for China’s credit rating. Better householdregistration policies would help workers moving to cities to get social benefits and education – critical if China is to transition from an economy dominated by manufacturing to services. Xi also must act fast if the country is to avoid choking on its own development. Of the 20 dirtiest cities, 16 are in China. Pollution is rapidly replacing corruption as the main cause of social unrest.

William Pesek

Bloomberg View columnist

Promises, promises

T

he world should stop panicking over China’s economic slowdown. It’s actually a good thing. This advice won’t go down well in Australia, which has made a big leveraged bet that China will keep growing 10 percent forever. It won’t comfort exporters in Japan, Singapore, South Korea or Taiwan. Traders won’t be happy to see prices of oil, gold and steel plunge as demand from the mainland shrinks. Asia, as a whole, will shudder if China weakens the yuan. Europe might have to find a new benefactor for its debt markets. Yet if China is to avoid a major crash, a minor setback right now may be just what the country needs. Everyone agrees the country’s old growth model is unsustainable. Its economy is perilously addicted to exports and inflated property prices. Massive investments in smokestack industries have led to overcapacity and blackened China’s skies. A tight labour market is driving up wages, just as global demand for Chinese products is dwindling. Local governments are piling up dangerous levels of debt.

Chinese leaders have said for years that they needed to move the economy toward a growth model led by services and household spending, not exports. So why did the country make so little progress during former President Hu Jintao’s 10-year term? Zero political will. Rather than challenging vested interests or risk sparking public anger, Hu anesthetised his 1.3 billion people with easy credit and history’s biggest building boom. A humming export engine deadened the urgency for change.

Fear’s benefits Fear could now be cathartic. Chinese Premier Li Keqiang expects growth to slow to 7 percent this decade. Even that may prove optimistic – and in any case, anything less than 8 percent growth could prove disastrous if handled poorly. That changes the calculus for China’s much-vaunted economic managers: It may be more dangerous to avoid painful economic reforms than to institute them. Historically, like their

counterparts from Washington to Tokyo, Chinese leaders have responded best in a crisis. The horrors of Mao Zedong’s Cultural Revolution drove Deng Xiaoping to build a market economy. Recession and soul searching after the Tiananmen Square massacre led to Deng’s 1992 “southern tour” to bolster restructuring efforts. The 1998 Asian financial crisis empowered Premier Zhu Rongji to shake up state-owned enterprises.

Debt disaster President Xi Jinping now has a chance to change China’s course just as dramatically as his predecessors. How? First, China must ensure that capital is priced realistically. That means banks must stop shovelling loans to deadbeat state enterprises and unnecessary real-estate projects. Fitch Ratings says financial lending totalled 198 percent of gross domestic product last year, compared with 125 percent four years earlier. Banks can’t grow their way out of that kind of debt. Xi must rein in local governments, too. A glut of

Xi will face great pressure to paper over China’s daunting to-do list by offering fresh fiscal stimulants, a few new dam and airport projects and nationalistic rants to deflect attention

borrowing, much of it offbalance sheet, has raised the spectre of a Japan-like bad-debt disaster. Recently, former Finance Minister Xiang Huaicheng let slip that local

Massive investment in wind turbines and solar panels is a good start, but China must think bigger. It should learn from Japan’s post-war environmental example, and enact laws to reduce emissions, demand greater energy efficiency across industries and consider a carbon tax. On each of these measures, Xi will run into resistance from Communist Party bigwigs who have gotten fat off the status quo. True reforms will also depress GDP growth, perhaps to as low as 5 percent or 6 percent. Xi will face great pressure to paper over China’s daunting to-do list by offering fresh fiscal stimulants, a few new dam and airport projects and nationalistic rants to deflect attention. “ T h e p r e v i o u s administration basically promised the same reforms,” says Jim Chanos, the president of New York-based Kynikos Associates Ltd and a prominent China bear investor. “The entire Chinese political system is tilted to the current model. Truly changing it will bring on a serious economic contraction. It remains to be seen if Xi/Li have the political will to risk that outcome as a by-product of reform.”

The hangover Fair enough. The weaker the current outlook grows, though, the less of a risk that seems. “There are still bulls talking about how China can reverse the slowdown by stepping firmly on the credit accelerator again, but this is like saying that you can prevent a hangover by drinking even more,” says Michael Pettis, a finance professor at Peking University. “We may get a small pop in growth now and then, but the overall trajectory is for growth to continue slowing.” That’s a bleak prospect – for the world as well as China. But by bringing home the stakes for Chinese leaders and bolstering the case for reform, it may also turn out to be a bright one. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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15

June 6, 2013

Opinion Business

Austerity and demoralisation

Leading reports from Asia’s best business newspapers

wires

Wall Street Journal China’s wealthy are travelling less overseas but spending more while abroad, according to a new study. The findings were based on a survey of 100 Chinese individuals worth at least 10 million yuan (US$1.6 million), conducted by Hurun Report and the International Luxury Travel Market. The study found that the respondents’ top overseas travel destination, France, remained unchanged from last year, as did their preferred hotel brand, Shangri-La. However, they went on just 2.8 trips overseas last year, down from 3.2 in 2011.

Taipei Times Last month’s manufacturing purchasing managers index (PMI) posted its second consecutive decline to 55.3 from the 56.8 recorded in April, indicating weak momentum for economic recovery, a report by the Chung-Hua Institution for Economic Research showed. “The local economy is still heading toward recovery, albeit at a slower pace, as last month’s 55.3 was higher than the 50-point threshold,” president Wu Chung-shu said. Last month’s results showed all five sub-indices expanded, but all except the sub-index for inventories and supplier deliveries dropped from a month earlier.

Inquirer Business The Philippine government borrowed significantly less from foreign and local creditors in the first four months of the year. Data from the Department of Finance showed that in January to April, the government borrowed 176.3 billion pesos (US$4.2 billion) to help fund state projects and programmes and to pay maturing obligations. Although still significant, the amount represented a nearly 50-percent drop from 347.59 billion pesos in borrowings registered in the same period last year.

Jakarta Post Indonesia’s Deputy Finance Minister Mahendra Siregar says that the state’s financial condition will be severely damaged if the plan to raise subsidised fuel prices falls through. “The plan to raise subsidised fuel prices is expected to materialise in the third week of June. If we can’t do this, more trouble will lie ahead,” Mr Mahendra said. Indonesia had a trade deficit of US$1.62 billion in April. The deficit was the secondlargest in history after the US$1.88 billion recorded in October last year.

Robert J. Shiller

Professor of Economics at Yale University

T

he high unemployment that we have today in Europe, the United States, and elsewhere is a tragedy, not just because of the aggregate output loss that it entails, but also because of the personal and emotional cost to the unemployed of not being a part of working society. Austerity, according to some of its promoters, is supposed to improve morale. British Prime Minister David Cameron, an austerity advocate, says he believes that his programme reduces “welfare dependency,” restores “rigour,” and encourages the “the doers, the creators, the life-affirmers”. Likewise, U.S. Congressman Paul Ryan says that his programme is part of a plan to promote “creativity and entrepreneurial spirit”. Some kinds of austerity programmes may indeed boost morale. Monks find their life’s meaning in a most austere environment, and military boot camps are thought to build character. But the kind of fiscal austerity that is being practiced now has the immediate effect of rendering people jobless and filling their lives with nothing but a sense of rejection and exclusion. One could imagine that a spell of unemployment might be a time of reflection, reestablishment of personal connections, and getting back to fundamental values. Some economists even thought long ago that we would be enjoying much more leisure by this point. John Maynard Keynes, in his 1930 essay “Economic Possibilities for Our Grandchildren,” speculated that, within a hundred years, that is, by 2030, higher incomes would reduce the average workday to a mere three hours, for a total workweek of only 15 hours. While there are still 17 years to go, it appears that Keynes was way off the mark. So was Robert Theobald, who, in his 1963 book Free Men and Free Markets questioned the public’s repugnance toward high unemployment. He asserted that “we can have meaningful leisure rather than destructive unemployment,” and that we do not need “a whirling-dervish economy dependent on compulsive consumption”.

Work-sharing But finding something satisfying to do with our time seems inevitably to entail doing some sort of work: “meaningful leisure” wears thin after a while. People seem to want to work more than three hours a day, even if it is assembly-line work. And the opportunity to work should be a basic freedom. Unemployment is a product

of capitalism: people who are no longer needed are simply made redundant. On the traditional family farm, there was no unemployment. Austerity exposes the modern economy’s lack of interpersonal connectedness and the morale costs that this implies. Work-sharing might keep more people marginally attached to their jobs in an economic slump, thereby preserving their self-esteem. Instead of laying off 25 percent of its workforce in a recession, a company could temporarily reduce workers’ hours from, say, eight per day to six. Everyone would remain employed, and all would come a little closer to Keynes’s ideal. Some countries, notably Germany, have encouraged this approach. But work-sharing raises technical problems if increased suddenly to deal with an economic crisis like the one we are now experiencing. These problems preclude the sudden movement toward the ideal of greater leisure that thinkers like Keynes and Theobald proclaimed. One problem is that workers have fixed costs, such as transportation to work or a

For morale, we need a social compact that finds a purpose for everyone, a way to show oneself to be part of society by being a worker of some sort

health plan, that do not decline when hours (and thus pay) are cut. Their debts and obligations are similarly fixed. They could have bought a smaller house had they known that their hours would be reduced, but now it is difficult to downsize the one that they did buy. Another problem is that it may be difficult to reduce everyone’s job by the same amount, because some jobs scale up and down with production, while others do not.

Morale builder In his book Why Wages Don’t Fall During a Recession, Truman Bewley of Yale University reported on an extensive set of interviews with business managers involved with wage-setting and layoffs. He found that they believed that a serious morale problem would result from reducing everyone’s hours and pay during a recession. Then all employees would begin to feel as if they did not have a real job. In his interviews with managers, he was told that it is best (at least from a manager’s point of view) if the pain of reduced employment is concentrated on a few people, whose grumbling is not heard by the remaining employees.

Employers worry about workplace morale, not about the morale of the employees they lay off. Their damaged morale certainly affects others as a sort of externality, which matters very much; but it does not matter to the firm that has laid them off. We could perhaps all be happy working fewer hours if the decline reflected gradual social progress. But we are not happy with unemployment that results from a sudden fiscal crisis. That is why sudden austerity cannot be a morale builder. For morale, we need a social compact that finds a purpose for everyone, a way to show oneself to be part of society by being a worker of some sort. And for that we need fiscal stimulus – ideally, the debt-friendly stimulus that raises taxes and expenditures equally. The increased tax burden for all who are employed is analogous to the reduced hours in work-sharing. But, if tax increases are not politically expedient, policymakers should proceed with old-fashioned deficit spending. The important thing is to achieve any fiscal stimulus that boosts job creation and puts the unemployed back to work. © Project Syndicate


16

June 6, 2013

Closing High roller loses casino lawsuit bid

Beijing mulls deposit insurance system

An Australian businessman has lost a court bid to sue a casino over his gambling losses. Harry Kakavas accused Melbourne’s Crown Casino, of James Packer’s Crown Ltd, of taking advantage of his pathological gambling problem. He turned over almost A$1.5 billion at the venue between June 2005 and August 2006, leading to losses of A$20 million. However, Australia’s top court dismissed his bid and said that casino had not behaved unconscionably. Mr Kakavas said Crown Casino had enticed him with incentives and use of the casino’s private jet, despite knowing that he had a gambling addiction – claims the casino denied.

Conditions are mature for China to launch a long-awaited deposit insurance system after a consensus reached within the government, according to the central bank’s financial stability report, sources with knowledge of the report’s contents said yesterday. “We are ready in various aspects to set up a deposit insurance system. After numerous research and debates, all sides have reached consensus and we will kick off the scheme at a proper time,” the report said. A deposit insurance policy is a measure to protect depositors from losses caused by a bank’s inability to pay back deposits when they come due.

Latvia to join euro zone New member to become 18th member next year

F

ive countries on emergency aid, six consecutive quarters of economic contraction and 19 million people out of work haven’t dimmed the euro’s allure for small states that, like Latvia, have nowhere else to turn. Latvia yesterday was put on the path to becoming the 18th country to use the euro at the start of 2014, binding it deeper into the western European economy and providing an extra layer of insulation against Russia, its former imperial overlord. “Latvia doesn’t have another choice,” Roberts Zile, a former Latvian finance minister who is now in the European Parliament, said. “It’s a signal that we are going to the West. It’s also important for the euro zone to say, look, small countries which are coming out of the crisis are going to join the euro, even if the euro is in trouble.” Latvia’s entry into the currency bloc will come after debtencumbered Greece dodged leaving it and a newly elected government in Iceland decided that joining would be a bad idea. In making its endorsement, the European Commission said Latvia is already “well integrated” with the broader European economy. European finance ministers, who have never overturned a commission recommendation on euro eligibility, will make the final decision on Latvia on July 9.

Bank said yesterday that it will be “challenging” for the country to maintain its track record in keeping inflation down. Latvian cost-of-living increases averaged 1.3 percent in the 12 months to April, below a 2.7 percent target. Latvia will follow its northern neighbour, Estonia, as the only countries to move into the euro’s orbit since the Greece-sparked debt crisis exposed the flaws in the currency’s management and fuelled speculation that it might break up. Both countries and southern neighbour Lithuania, once barred from the euro and now set to reapply

Deepest recession The 2 million Latvians are veterans of the boom-bust cycle, replete with a European Union and International Monetary Fund bailout, that besets countries along Europe’s southern rim. Latvia rebounded from Europe’s deepest recession, with the economy shrinking 17.7 percent in 2009, to notch its fastest growth, 5.6 percent, last year. The underside is an unemployment rate of 12.4 percent in March, with 21.9 percent of young Latvians looking for work and many emigrating to find it. Around 40 percent of Latvians risk “poverty or social exclusion” in the country’s downsized welfare state, the commission said last week. Social tensions are part of the price Latvia paid for wrestling its budget deficit down to 1.2 percent of gross domestic product in 2012, below the euro’s 3 percent limit. Latvia also passed tests for inflation, debt, currency stability and long-term interest rates. While raising no objections to Latvia, the European Central

Euro bid shows allure of crisis-hit currency

to join in 2015, form a Baltic bloc that spent a half century as fiefs of the Soviet Union until becoming independent after communism collapsed in eastern Europe. “All three Baltic states are inside or are well on their way to the economic and political core of Europe, and that’s indeed great,” EU Economic and Monetary Commissioner Olli Rehn told reporters in Brussels. He called the currency’s expansion “further evidence that those who predicted a disintegration of the euro were indeed behind the curve and simply wrong”. Bloomberg News

U.K. services growth quickens New business increasing at fastest rate in three years

U

.K. services growth accelerated more than economists forecast last month as signs mount that the recovery may strengthen, adding to the case for Bank of England policy makers to refrain from further stimulus. A gauge of activity rose to 54.9, the highest in 14 months, from 52.9 in April, Markit Economics and the Chartered Institute of Purchasing and Supply said yesterday in London. Readings above 50 indicate expansion. Britain’s economy may be gaining traction after Markit’s reports this week on manufacturing and construction both showed growth. Bank of England officials start their two-day policy meeting yesterday, and economists predict that they will probably keep their quantitativeeasing target on hold. The meeting is the last for Governor Mervyn King before he retires and is succeeded by Mark Carney of the Bank of Canada. The industry surveys “bode well for economic activity in the months ahead,” said James Knightley, an economist at ING Bank in London. “As such, there is little prospect of any BOE action tomorrow and it diminishes the likelihood of any shift in policy under Mark Carney in the next few months.” New business growth at services companies rose at the fastest pace since February 2010, while payrolls also increased, according to yesterday’s report. Markit said its three industry indexes indicate economic growth may accelerate to 0.5 percent this quarter from 0.3 percent in the first three months of the year. That would match a forecast published by the BOE last month. “The U.K. economy has moved up a gear with all cylinders now firing,” said Chris Williamson, chief economist at Markit in London. “The increasingly buoyant picture and improved outlook painted by the PMIs effectively kills off any chance of the Bank of England’s Monetary Policy Committee voting for more stimulus such as asset purchases for the foreseeable future.” The U.K. data contrast with the picture in the euro area, where efforts by authorities to calm the currency bloc’s debt crisis have yet to translate into an economic recovery. Markit said its index of euroregion services activity rose to 47.2 last month from 47 in April, below an initial estimate of 47.5 published on May 23. Retail sales dropped 0.5 percent in April from March, the European Union statistics office said. Bloomberg News

Macau Business Daily, June 6, 2013  

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