Year I Number 120 September 14, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00 www.macaubusinessdaily.com
New laws need better wording: Assembly boss L
egislative Assembly president Lau Cheok Va yesterday criticised the effort applied to drafting the city’s many new laws. The administration’s coordination on legislative works was “disappointing” and the quality of the bills submitted was “not high,” he said. The issue is important, because looselyor poorly-worded laws could be open to interpretations never anticipated by the government. That can cause problems if the laws are challenged in court. Mr Lau said there were eight bills for discussion in the new assembly session starting on October 15. They include a
land law and an urban planning law, as well as a bill on rejuvenation of the old district. The assembly president urged the government to strengthen its communication and cooperation mechanisms with the assembly and respond promptly to any opinions or law revisions raised by legislators. He did have some good news for fellow legislators. “Chief Executive [Fernando Chui Sai On] and I have an agreement that the government would first consult the assembly in the next session before submitting any new bills, to check the assembly’s working capacity,” he said. More on page 5
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Amax’s Share in Greek Mythology
Amax reduces stake in Greek Mythology
max Holdings Ltd, a Hong Kong-listed investor in Macau VIP gaming, has nearly halved its holding in the Greek Mythology casino in Taipa – leaving it with just 24.8 percent an Amax spokesman confirmed to Business Daily yesterday. It’s part of a deal to end a fight over who controls the casino and its hosting venue the New Century Hotel. One of the two people at the centre of that dispute – veteran junket room operator Ng Man Sun – was beaten by masked intruders as he dined with a female companion at the hotel in June. On Wednesday Mr Ng, Amax’s biggest single shareholder, was appointed an executive director and the chief executive of Amax at a closed doors special general meeting of the firm in Hong Kong. The shareholders collectively also voted to remove eight of its nine directors. The firm now has only one other executive director, also appointed on Wednesday. Ng Wai Yee, a 38-yearold businesswoman, is also a director of a Kong Kongbased company called Diamond Square Investment and Management. An Amax spokesman confirmed to Business Daily that Ms Ng is a daughter of Mr Ng. Page 2
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Aug public spend soars with housing, Hengqin Provisional data from the Financial Services Bureau show the government spent 1.3 billion patacas (US$162.7 million) in August, nearly seven times as much as in July. The bureau told Business Daily last month’s expenditure was mainly on “construction works related to Hengqin Island and Seac Pai Van public housing”. The Hengqin projects include the 1.2 billion yuan (1.5 billion pataca) industrial park for traditional Chinese medicine. Page 3
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SME investment zone for Hengqin Macau small businesses will be allowed to start ventures in a special zone of Hengqin Island for a capital investment of as little as 10,000 patacas (US$1,250). The Chinese-language newspaper Macao Daily News reported the administrative committee of Hengqin New Area has drawn up the rules. The SME zone is a 5,000-square-metre area in the first phase of the Chime Long International Ocean Resort. Page 3
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business daily September 14, 2012
macau Neptune expects soaring profits VIP gaming promoter Neptune Group Ltd is expecting to post a significant hike in profits for the year ended June 30, the company told the Hong Kong Stock Exchange yesterday. “Based on the preliminary unaudited consolidated management accounts,” the unaudited consolidated net profit of the junket investor “is expected to increase significantly” year-on-year. Neptune said the “substantial improvement” is “mainly attributable to the significant increase in gross profit during the period”. The company’s that controls over 10 VIP rooms will announce its annual results on September 18.
Amax dilutes holding in Greek Mythology Eight of nine directors also ousted in favour of beaten junket boss Ng Man Sun Associate Editor
max Holdings Ltd, a Hong Kong-listed investor in Macau VIP gaming, has diluted its holding in the Greek Mythology casino in Taipa from 49.9 percent to 24.8 percent an Amax spokesman confirmed yesterday. As previewed by Business Daily on Wednesday, it’s part of a deal to end a fight over who controls the casino and its hosting venue the New Century Hotel. One of the two people at the centre of that dispute – veteran junket room operator Ng Man Sun – was beaten by masked intruders as he dined with a female companion at the hotel in June. Mr Ng – also known as Ng Wai or Kai Sze Wai (‘Market’ Wai) from his early days working in Hong Kong wet markets – was left hospitalised as a result. From his sickbed he placed a newspaper advertisement that effectively accused the other party to the business dispute – his former girlfriend Chan Mei Fun, also known Chen Mei Huan – of being behind the attack. All this was bad news for Macau’s international image and for Sociedade de Jogos de Macau SA, the gaming licence provider for Greek Mythology. Mr Ng was also for three decades a junket business partner of SJM founder
New Century Hotel, Taipa – home of Greek Mythology casino (Photo: Manuel Cardoso)
Stanley Ho Hung Sun. As a result of the negative publicity, Business Daily understands SJM facilitated a peace deal between the two sides. Part of the deal involves Mr Ng being given formal control over Amax – as the single biggest shareholder in Amax – but at the same time relinquishing his claim over Greek Mythology; hence the dilution of Amax’s stake in the casino. Amax originally bought its 49.9 percent stake in an entity controlling
the Greek Mythology casino in March 2006 according to a filing with the Hong Kong Stock Exchange. What, if anything, Mr Ng is getting in return isn’t clear from regulatory filings. His room for manoeuvre was reduced after Macau’s Court of First Instance recently issued an injunction confirming the right of the companies controlling New Century and Greek Mythology to run the businesses without the involvement of Mr Ng,
Suspicious deals soar in first half Dubious financial transactions continue to skyrocket in 2012 and watchdog wants banks to improve supervision Vítor Quintã
he number of suspicious transactions reports soared in the first half of this year, the director of the Financial Intelligence Office, Deborah Ng Man Seong, said on Wednesday. Between January and June the watchdog received over 1,100 reports on deals that raised doubts over possible money laundering or other financial crises, a 30 percent year-on-year increase. The number of suspicious transactions has been increasing in the past few years. In 2011 the office got 1,563 suspicious transactions, a 28.1 percent rise over the previous year. Quoted by TDM News, Ms Ng attributed the increase in reports to the rapid growth in Macau’s economy. The city’s wealth creation rose 12.6 percent during the first half of this year. The official did not disclose in-
formation on the distribution of the reports by sector. But last year gaming operators filed more than two-thirds of the suspicious reports, Duarte Chagas, legal adviser at Macau’s Gaming Inspection and Coordination Bureau, said last May. In Macau, casinos have to file mandatory currency transaction reports with the gaming regulator for
any transaction above 500,000 patacas (US$62,600). Almost 555,900 such reports were filed last year. Still, Ms Ng called on banks to
said sources. Those companies are controlled by Ms Chan. Yesterday the Amax process played out when Mr Ng was appointed an executive director of Amax at a closed doors special general meeting of the firm in Hong Kong. Amax Holdings shareholders also voted to remove eight of its nine directors. The business is also seeking a new auditor – the third in as many years. The auditor for the 2012 annual report – Baker Tilly Hong Kong Ltd – declined to provide an audit opinion due to lack of: “…sufficient appropriate audit evidence”. One other executive director was appointed yesterday – Ng Wai Yee, a 38-year-old businesswoman. An Amax spokesman confirmed to Business Daily that Ms Ng is a daughter of Mr Ng, but declined to give information on Ms Ng’s mother. Mr Ng and Chan Mei Fun have two children together – a son and a daughter – but Mr Ng is also understood to have had a previous long-term relationship. Trading in Amax shares resumed in Hong Kong yesterday after being suspended since July 30. According to Reuters data there were no trades and no movement on the pre-suspension price of HK$0.06 per share.
“pay close attention to complex transaction patterns”. “There are many strange and suspicious behaviours they should be on the lookout for.” The Financial Intelligence Office will try to raise bank workers’ awareness of money laundering practices, she pledged. “We will enhance training and warn local banks of current trends. As a result we expect banks to strengthen and intensify their monitoring practices,” the official said. Ms Ng also added that banks should review their customers’ backgrounds more thoroughly.
Suspicious transactions reports in first half of 2012 Banks should review their customers’ backgrounds more thoroughly, the Financial Intelligence Office head said
September 14, 2012 business daily | 3
MACAU Judge to rule on disputed Jacobs evidence Clark County District Judge Elizabeth Gonzalez is to issue a written opinion early next week on whether Las Vegas Sands Corp. should face punishment for allegedly failing to disclose it had shipped to the United States evidence central to a high profile lawsuit. It concerns a Macau computer hard drive sought as evidence by former Sands China Ltd chief executive Steve Jacobs in his unlawful termination suit against LVS. The judge earlier indicated the disputed evidence would be allowed in the Las Vegas hearing but that LVS might face a fine.
Govt capital splurges in Coloane, Hengqin The government spent 1.3 billion patacas on housing and the Hengqin medicine park last month Vítor Quintã
onstruction of the Seac Pai Van public housing estate and projects on Hengqin Island were the main cause of a spurt in public investment last month. Provisional data released by the Financial Services Bureau on Tuesday show the government spent 1.3 billion patacas (US$162.7 million) in August, after having spent just 196.9 million patacas in July. Up to the end of August, the government had spent 22.6 percent of its 19.8 billion pataca capital budget for this year, compared with 15.9 percent at by the end of July. The Financial Services Bureau
told Business Daily that last month’s expenditure was mainly on “construction works related to Hengqin Island and Seac Pai Van public housing”. The Seac Pai Van complex, occupying 300,000 square metres on Coloane, will have almost 9,000 subsidised flats. The government has already begun allocating flats in one of the towers to prospective buyers. The projects on Hengqin that the government spent money on include the 1.2 billion yuan (1.5 billion pataca) traditional Chinese medicine park. The government has committed to paying for the park, which will
occupy 0.5 square km of Hengqin. The Macau government will own 51 percent of the joint venture and the Guangdong government the remainder. The government’s capital budget also includes money for the Light Rapid Transit elevated railway and for the reclamation of land from the sea to create an island for the western landing of the Hong Kong-ZhuhaiMacau Bridge. In June, public investment amounted to 1.5 billion patacas, more than in the first five months of this year put together. Most of the money spent in June was for the new campus of the
University of Macau on Hengqin Island, including the undersea tunnel that will connect it to Macau. The latest estimate of the cost of the new campus is 7.8 billion patacas, 30 percent more than the original budget. The cost of the tunnel alone has risen to 2 billion patacas from 500 million patacas. Legislative Assembly member Ng Kuok Cheong, a pan-democrat, criticised the government in June for having spent almost 4 billion patacas in the preceding two years on projects on Hengqin without proper planning or budgeting.
Tasty Hengqin carrots dangled before SMEs Macau SMEs are being offered a piece of the action at the Chimelong resort on Hengqin Tony Lai
he first phase of the Chimelong International Ocean Resort on Hengqin Island will have 5,000 square metres of space for small or medium enterprises from Macau, the Administrative Committee of Hengqin New Area has announced. Committee director Niu Jing said on Wednesday that the usual kinds of Macau businesses such as souvenir shops and restaurants would be invited to operate there. The Chinese-language Macao Daily News quoted Mr Niu as saying Macau SMEs would probably be required to invest more than 10,000 patacas (US$1,250) to set up shop there. The 10 billion yuan (12.5 billion pataca) first phase of the resort is expected to be completed this year and to open next year. Mr Niu said his committee was picking good, experienced Macau SMEs to operate in Hengqin’s SME industrial park, which would cover more than 30,000 square metres. Business would play an important
part in Hengqin’s development. The authorities on Hengqin and in Macau would both continue to offer incentives for businesses to open on the island. Mr Niu hopes to get Beijing’s approval for his committee’s list of industries allowed to operate on the island. Altogether, 60 enterprises from outside the mainland – including 18 based in Macau – with combined assets of more than 5.6 billion yuan have set up shop on Hengqin or are in the process of doing so. A delegation from Macau led by its former chief executive, Edmund Ho Hau Wah, met Hengqin officials on Wednesday. They discussed the island’s development, and visited Chimelong’s park and the University of Macau’s new campus. Mr Niu said the authorities would speed up big cooperative projects on the island such as the new campus and a traditional Chinese medicine industrial park.
The first phase of the Chimelong International Ocean Resort is due to open next year
The China News Service reported that a Singaporean had been appointed general manager of the company that will manage the traditional medicine park, and would begin work next month. The news agency said the management company would set
about designing and building the 0.5-square-km park. The Macau delegation and Hengqin officials also discussed the extension of the Guangzhou-Zhuhai Intercity Railway to a terminus on Hengqin, construction of which is due to start this year.
business daily September 14, 2012
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September 14, 2012 business daily | 5
Govt must knuckle down to ram bills through: Lau
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Legislative Assembly president says the current assembly should spend its final year more fruitfully, completing its legislative programme
Hiring booms and busts
year’s elections. Mr Lau urged the government to communicate better with the assembly and cooperate with it more closely, and to respond promptly to what members had to say about legislation.
Investment in building and then operating casinos has driven economic growth since the industry legal frame changed in 2002. That investment was mainly directed into the construction of hotels and other leisure facilities, and has since peaked but economic growth derived from exploiting casinos and their facilities is steadily increasing. Additional workers have been hired to achieve that growth and the division of labour in three leading sectors shadows production trends.
Call for advice
The government will consult the Legislative Assembly before introducing new bills, according to Lau Cheok Va (Photo: Manuel Cardoso)
egislative Assembly president Lau Cheok Va has criticised the government for the poor quality of the bills it submits to the assembly and the poor coordination of its legislative programme. “This problem has been talked about for long time … but it won’t be solved easily without huge changes,” Mr Lau told reporters yesterday. He called on the government to put all its effort behind getting important bills through the assembly before it dissolves for elections next year, so they do not have to go back to square one when the new assembly convenes. The legislative process must start from scratch if a bill fails to get through
the assembly before it is dissolved. Mr Lau said when this assembly began its final annual session on October 15 it would still have to deal with eight bills left over from the extended session that ended last month. The government should concentrate on passing important new bills on land and urban planning. “The chief executive and I have an agreement that the government would first consult the assembly in the next session before submitting any new bills, to check the assembly’s working capacity,” Mr Lau said. He said this assembly aimed to pass the land bill, the urban planning bill, a heritage bill and a draft law on rehabilitating old areas before next
“The slow response and stubborn attitude of the administration has stalled the progress of the drafting of laws,” he said. He said the assembly and the government had argued about the bill on real estate agents because they disagreed about which aspects of the business should be governed by statute and which should be governed by subsidiary legislation. He said legal advice was required to define the prerogatives of the government and of the assembly. The assembly would continue to make its own efforts to improve the quality of bills and make sure none goes against the Basic Law. The government should be required to give the legislature more background information on its bills, including the results of public consultations. Mr Lau also proposed that a simple majority be required to pass amendments to the electoral laws, instead of a two-thirds vote. Mr Lau became the first assembly president to break the custom of presidential neutrality last month when he voted in favour of political reforms proposed by the government to ensure their passage. But he expressed his disagreement with a proposal made earlier this year to increase from two to five the minimum number of members required to endorse a call for the assembly to hold a public hearing.
Starting in 2004, the first graph shows a full cycle of expansion and contraction in the construction sector. At the end of the cycle in 2010, the number of workers in the construction industry was still noticeably bigger than at the beginning. The industry is still hiring, suggesting there is still the potential for growth. The number of workers started picking up last year, and that trend has continued in the first half of this year. Currently, the number of workers in the sector is about 80 percent higher than in 2004. Worker numbers in the gambling industry quickly outstripped the size of the workforce in the hospitality sectors but both gambling, and hotels and restaurants have increased by 3.4 and 2.2 times. That is an average annual growth of 10.8 and 17.9 percent between 2004 and the middle of this year.
Vitor Cheung tops AL absentee list Chief executive-appointed legislator Vitor Cheung Lup Kwan had for the second consecutive year the worst performance of all 29 assembly members, taking part in 32 plenary meetings and two out of 29 committee meetings without filing any inquiry. Legislative Assembly president Lau Cheok Va told journalists yesterday that a mechanism to monitor legislators’ performance could be discussed during the revision of the
internal rules. The average attendance rate of legislators’ for assembly meetings was similar to other years at 94.5 percent but rose 2 percent year-on-year to 88.4 percent for committee meetings. The number of written inquiries rose by 3.1 percent to 466 while oral inquiries increased by 18.4 percent to 58 in this session. The assembly held 45 meetings and 104 committee meetings, approving 16 laws and eight resolutions.
Among the 25 laws discussed by the assembly in the previous session, eight were left on hold for the next session starting October 15 while one, the tax code draft law, was withdrawn by the government. The operation cost of the assembly was 55.99 million patacas (US$7 million), a year-on-year rise of 14.8 percent, but which accounted for less than half of the adjusted budget.
Such dramatic growth has had an impact on other sectors of the economy. The size of the workforce in non-gambling recreational and cultural activities have stagnated, after two bouts of growth in 2005 and 2008. Real estate and business activities, have also contracted as the peak of the casino investment boom has passed. Just one sector seems relatively immune to the economic ups and downs: domestic work. The number of people employed in the sector grew by three-and-a-half times and now there are more workers employed than in education or health, for example. J.I.D.
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business daily September 14, 2012
Hotels feel pressure to cut prices: industry
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Manufacturing meltdown The economy’s evolution has meant big changes in the structure of the labour market. Just look at the differences between the figures for 2004 and the second quarter of this year.
Five-star hotels seen lowering room rates
Note the absolute collapse of employment in manufacturing. This sector was the city’s biggest employer in 2004, with 36,100 workers, but by the second quarter of this year it employed just 10,100 people. Manufacturing has shed more than 70 percent of its workers. It is the only sector of the economy that employs fewer people now than it did then. The greatest increases in employment have been in the hotel and restaurant industry, which has 116 percent more employees, and the gaming industry, which has 243 percent more. The number of people working in construction has contracted slightly since 2010 but the industry still employs plenty more people than it did in 2004. Two other main sectors in this graph include a number of smaller industries. The “other businesses” sector includes activities such as the real estate business, finance, utilities and transport. The “socially oriented activities” sector includes education, health, and culture and recreation except gaming. Employment has increased in each of the component sub-sectors. But by far the fastest growth in employment has been in domestic service. The city had 5,000 domestic servants in 2004 and has 17,500 now.
new price war among hotels may start when newcomer Sheraton Macao Hotel opens at Sands Cotai Central later this month, with the first phase providing more than 1,800 rooms, the industry said. Macau Hoteliers and Innkeepers Association president Chan Chi Kit said September is a “traditional lowperiod” for hotels, with the occupancy rate about 50 percent to 70 percent in the first 10 days of this month. Chinese-language newspaper Macao Daily News quoted Mr Chan as saying that some new five-star
hotels are also providing different discounts putting their charges similar to those offered by three-and four-star hotels. These factors together with the opening of Sheraton Macao next week would “impact” the industry, said Mr Chan, who is worried the industry may start cutting their room rates to attract customers. When Sheraton’s second tower opens in early 2013 the hotel should have almost 3,800 rooms. According to data released by Macau Hotel Association earlier this month, the
occupancy rate remained at 87 percent in the first seven months of this year. The average daily room rates of three-star and four-star hotels were 964 patacas (US$120.5) and 840 patacas respectively until July this year while the five-star hotels were priced at 1,670 patacas, data from the association show. Although more room are coming onto the market, Macau is still lacking entertainment facilities for families, such as theme parks, to expand the tourism market, Mr Chan said. T.L.
China Eastern Fans‘ double dose profits drops of ‘The Voice China’
The city’s five biggest employers, apart from the government, are: manufacturing, construction, hotels and restaurants, trading and gaming. Together, these industries employed about 61 percent of the workforce, both at the beginning of the period under review and at the end. But there have been big changes in the share that each industry has of the employed workforce. Together, the gaming industry and hotel and restaurant industry now employ 37 percent of the workforce, 16 percentage points more than in 2004. Trading, encompassing wholesaling and retailing, employs more people but its share of the employed workforce has fallen to 12 percent from 16 percent. The government employs one-third more people now, but its share of the workforce has fallen to 6.9 percent from 8.1 percent..
ainland carrier China Eastern Airlines Corp. saw its profit take a nosedive in the first half this year, as the heavily-indebted company waits on a capital injection from state-owned parent company. The airline, which flies between Shanghai and Macau, told the Hong Kong Stock Exchange late on Wednesday that its net profit dropped by 70.5 percent to just 693 million yuan (874 million patacas). China Eastern also revealed that its accumulated losses reached 7.57 billion yuan and that its debts exceed its assets by a staggering 32.89 billion yuan. The mainland’s second-largest carrier by passenger numbers is planning to raise US$570 million (4.55 billion patacas) selling shares to its state-owned parent company to pare debts. The airline expects to raise 2.29 billion yuan (US$361 million) from a Shanghai stock sale and HK$1.62 billion (US$209 million) in a Hong Kong offering.
he mainland’s biggest reality television show, ‘The Voice China’, will have two shows at the Venetian Macao’s CotaiArena. The September 21 concert sold out in just two hours and Sands China Ltd announced that it has strike a deal with the producers, Star China Media Ltd, to put on an additional show to cope with demand. The 28 contestants from the mainland TV show will perform an extra show on September 22. As Business Daily reported on September 10, the show on September 21 will also have performances from the four celebrity mentors: Liu Huan, who sang the Beijing Olympics theme song “You and Me” with Sarah Brightman, pop diva Na Ying,
mainland singer Yang Kun and Harlem Yu, a singer from Taiwan. “The Voice of China has been a runaway hit in the mainland, and The Venetian Macao is thrilled to bring it to Macao, thriving our continuous commitment to develop the city into a world centre of tourism and leisure,” said Edward Tracy, president and chief executive of Sands China. The September 21 event will be broadcast to over 500 million Asian viewers on Zhejiang Television – one of the channels offered by Macau Cable TV, Star TV and major Internet portals on September 28 – two days before the show’s finale on September 30, according to a press release from Sands China. T.A.
September 14, 2012 business daily | 7
MACAU Ka Ho land repossessing mission turns violent A Land, Public Works, and Transport Bureau operation to take back a plot allegedly occupied illegally in Ka Ho, Coloane, sparked intensive protests and scuffles between residents and the police yesterday, with five people hospitalised and 12 protesters detained. About 70 people tried to stop over 100 police officers from taking back the plot where a house has been built, according to public broadcaster TDM. Bureau director Jaime Carion said he did not expect such protests but stressed he did everything in accordance with the law.
Prosecutors appeal sentencing of Ao Man Long ‘accomplice’ T
he Public Prosecutors’ Office has appealed against a lower court judgement on 13 defendants jointly tried as a result of former government secretary Ao Man Long’s corruption. Six of the defendants were found guilty and seven were acquitted. The prosecutors’ office wants those cleared to be resentenced. Lawyers are now using a procedural loophole to try and stop that happening. The loophole is that two of those that were actually found guilty were never informed of the lower court’s decision. That’s because they ran away from Macau before the case came to trial. Yesterday lawyers for Mr Ao’s alleged accomplice
Pedro Chiang and engineer Chan Lin Ian asked the Court of Second Instance to throw out the appeal. They stressed that both defendants were never officially informed of the lower court’s decision. Mr Chiang fled Macau in 2007 and was last seen living in Portugal. There is no extradition treaty between Portugal and Macau. In March 2011 the lower court gave suspended jail terms to four of the six found guilty. They included Miguel Wu Ka I and the three contractors in charge of the Macau Stadium expansion. The Public Prosecutors’ Office was unhappy with that judgement and appealed. Mr Chiang was sentenced in his absence to six years
Defendants that are not notified of a sentence cannot be the target of a Public Prosecutors’ Office appeal Joana Teixeira, Pedro Chiang’s lawyer
and 10 months in jail for active corruption and money laundering last March. But authorities are asking for a nine-year jail term and a fine of 393 million patacas (US$49.2 million). But Mr Chiang’s lawyer, Joana Teixeira, said in court yesterday: “Defendants that are not notified of a sentence cannot be the target of a Public Prosecutors’ Office appeal.” The defence of engineer Chan Lin Ian, who was found guilty of passive corruption but also remains at large, used the same argument. The Court of Second Instance will now decide whether or not to accept the appeal from the Public Prosecutors’ Office.
V.Q./ with Ponto Final
La Scala plots back Nansha special area to reserve officially launched G
he plots where corruptionlinked La Scala residential project was being built will be kept as part of the government’s land reserve, authorities pledged. Portuguese-language newspaper Ponto Final reported quoted the Land, Public Works and Transport Bureau as saying that the five plots with an area of 78,700 square metres would not be returned to the airport. The government has decided the take back the land granted in 2006 to developer Chinese Estates Holdings Ltd, as well as extra land allocated last year, after the Court of Final Appeal found earlier this year that the concession was involved in corruption. The judgement says then-secretary for Transport and Public Works Ao
Man Long received HK$20 million (US$2.6 million) from Chinese Estates boss Joseph Lau Luen Hung and BMA Investment chairman Steven Lo Kit Sing to ensure they would get the land. However, two weeks ago the Hong Kong developer has asked Chief Executive Fernando Chui Sai On to review its decision to take back the land and warned that, unless it gets its way, the next step will be to take the case to court. Meanwhile the government has also launched the legal procedures to take back the extra land granted last year, with Chinese Estates saying it “intends to make a submission strongly opposing the decision”. V.Q.
uangzhou’s Nansha New Area, which will be jointly developed by Macau and Guangdong authorities, has been officially designated by the central government, newspaper Shanghai Securities News reported on Wednesday. Two commissions will run the Nansha area’s 570 square kilometres, which will benefit from several preferential policies and experimental administrative reforms. Last month the deputy head of Nansha’s management committee, Raymond Sun Lei, said the district’s development plan had “been handed to the State Council and good news should come very soon”. The area will focus on highend technology manufacturing, healthcare and leisure industry and shipping logistics services, thanks to
its deepwater port. The plan also calls for advanced financial services but the reports make no mention of a commodities futures exchange, even though Nansha has applied to set up mainland China’s fourth exchange. In April the China Securities Regulatory Commission said it was unlikely the State Council would approve a new exchange any time soon. In July 2011 the Macau government announced the joint construction projects of the Guangzhou-Macau Cultural Creativity Industrial Park and a cruise port in Nansha. The area had for the first time a booth at last year’s edition of the Macau International Trade and Investment Fair. V.Q.
business daily September 14, 2012
Beijing warns Japan of damage to economic ties Japanese government’s ‘purchase’ totally illegal – Chinese Vice Minister Ben Blanchard and Xiaoyi Shao
hina warned yesterday that trade with Japan could be hurt by the sudden flare-up in tension over a small group of disputed islands that is threatening relations between Asia’s two biggest economies. The United States earlier this week urged both sides to tone down their increasingly impassioned exchanges over an issue that has been simmering for years. The latest volley of warnings from China follows Japan’s announcement on Tuesday that it had bought the disputed islands in the East China Sea from a private Japanese owner, an act that Beijing called a violation of its sovereignty. “With Japan’s so-called purchase of the islands, it will be hard to avoid negative consequences for SinoJapanese economic and trade ties,” Chinese Vice Minister of Commerce Jiang Zengwei told a news briefing. The Japanese government’s “purchase” of disputed islands is totally illegal and invalid, Mr Jiang said. The islands were at the centre of a chill between the two in 2010 after Japan arrested a Chinese trawler captain whose boat collided with Japanese Coast Guard vessels near the disputed islands. China is Japan’s largest trading partner. In 2011, their bilateral trade grew 14.3 percent in value to a record US$345 billion.
Broad picture Mr Jiang hinted that his government saw nothing wrong with peaceful boycotts of Japanese goods. China is a major market for Japanese cars and electronics, and China’s National Business Daily newspaper said that travel agents have reported cancelled bookings for tours to Japan. “I still haven’t seen any actions by Chinese consumers in response to the Japanese violation of Chinese territorial sovereignty, but if we do see them expressing their stance and
views in a reasonable way, I think that would be their right,” Mr Jiang said. Speaking in Tokyo, Japanese Foreign Minister Koichiro Gemba called for both sides to keep the broader picture of their relationship in mind when dealing with the spat. “It is important that both Japan and China respond calmly with a broad picture in mind. I believe stable progress in Sino-Japanese relations should not be hindered by this development, and would like to ask China to take calm and appropriate steps,” he told reporters following Mr Jiang’s comments. A Nissan Motor Co Ltd executive said last week that the tensions are affecting business with China. The row is the latest episode in troubled relations between the two neighbours. Their long-running territorial dispute erupted again last month when Japan detained a group of Chinese activists, including one from Macau, who had landed on the disputed islands, known as Senkaku in Japanese and Diaoyu in Chinese.
Domestic politics The row has been compounded by domestic political concerns on both sides, with China’s ruling Communist Party preoccupied with a looming leadership handover, while Japan’s ruling Democrats struggle with poor poll figures ahead of elections expected late this year. Those political complications could make it even harder for the two governments to find a quiet way to back down. “The Diaoyu islands dispute is pushing China and Japan towards confrontation, and Japan has chosen the wrong opponent at the wrong time and in the wrong place,” said a commentary in the Global Times, a popular Chinese tabloid. “The Diaoyu islands conflict is a new turning point in the deterioration of Sino-Japanese relations.”
Protesters gathered at the Japanese embassy in Beijing
Protesters yesterday gathered at the Japanese embassy in Beijing, waving banners and the Chinese national flag while singing the country’s anthem and shouting slogans. Police allowed them to pass by the embassy in groups of 40 or so, who sang the Chinese national anthem and shouted slogans. “Down with Japanese imperialism! Get the hell out of the Diaoyu islands! Boycott Japanese goods,” some of them shouted. In 2005, an earlier surge of antiJapanese resentment spilled over into sometimes violent protests in Chinese cities, and demonstrators trashed Japanese-owned shops. Reuters
With Japan’s so-called purchase of the islands, it will be hard to avoid negative consequences for SinoJapanese economic and trade ties Jiang Zengwei, Chinese Vice Minister of Commerce
PBOC uses 28-day repo for first time in a decade Longest reverse repo tenor ever issued during open market operations
hina’s central bank issued 28-day reverse-repurchase contracts for the first time in a decade, extending the duration of its fund injections into the banking system and damping speculation reserve requirements will be cut. The People’s Bank of China offered 20 billion yuan (US$3.2 billion) of 28-day reverse repos, according to a statement on its website. That was the first time the contract was used since December 2002, according to China Citi Bank Corp.’s data. The monetary authority also conducted 35 billion yuan of seven-day reverse repos. “The extension of the tenor of reverse repos suggests that policy Alexander Molyneux was fired after makers are continuing to favour Chalco withdrew bid temporary measures over cutting the
required reserve ratio, which would be a permanent solution,” Dariusz Kowalczyk, a senior strategist at Credit Agricole CIB in Hong Kong, wrote in a report yesterday. “It is possible that the reserve-requirement ratio will not be cut any time soon. This means that interbank liquidity will likely remain relatively tight.” The overnight repurchase rate, which measures interbank funding availability, rose eight basis points to 2.69 percent as of 4:30pm in Shanghai, the highest level since September 5, according to a weighted average rate compiled by the National Interbank Funding Centre. The 28-day reverse repos were issued at a 3.6 percent yield and the seven-day was offered at 3.35 percent, unchanged from the last
auction on September 11, yesterday’s statement said. The contracts involve short-term asset purchases by the central bank that adds funds to the financial system. The People’s Bank of China withdrew a net 8 billion yuan of capital from the financial market this week, according to data compiled by Bloomberg. It lowered lenders’ reserve-requirement ratios by half a percentage point in May, the third cut in six months. The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, gained two basis points to 3.15 percent in Shanghai, according to data compiled by Bloomberg. The yield on the 2.95 percent government bond due August
People’s Bank of China offer of 28-day reverse repos
2017 rose two basis points to 3.27 percent, according to the Interbank Funding Centre. A basis point is 0.01 percentage point. Bloomberg
September 14, 2012 business daily | 9
greater china Sun Hung Kai posts slower profit growth Sun Hung Kai Properties Ltd, the Hong Kong developer whose co-chairmen face briberyrelated charges, reported a slowdown in full-year profit growth after higher down payments and concerns over tougher government measures curbed apartment sales. Profit excluding property revaluations rose to HK$21.7 billion (US$2.8 billion) for the 12 months ended June 30, compared with HK$21.5 billion a year earlier, the company said in a statement yesterday. For the full financial year, the company sold HK$38.2 billion worth of homes, compared with HK$39.1 billion a year earlier, according to the statement.
Big stimulus could hurt long-term growth, Xinhua says Commercial banks told to lend more to infrastructure projects
I believe stable progress in SinoJapanese relations should not be hindered by this development, and would like to ask China to take calm and appropriate steps Koichiro Gemba, Japanese Foreign Minister
assive stimulus measures would hurt China’s longterm growth and the government’s hesitation in making “bold moves” to support the economy is pragmatic, the official Xinhua News Agency wrote in a commentary. “Many have expected the government to announce an aggressive plan, similar to the 4-trillion-yuan (US$632 billion) stimulus package issued in 2008, to keep the economy from stalling for a second time,” Xinhua writer Liu Jie wrote in the commentary published yesterday. “However, a massive stimulus plan is not only unlikely, but would be detrimental to the country’s sustainable growth.” China’s policymakers have refrained from easing monetary policy since cutting interest rates in July and fiscal support has been limited to tax cuts, encouraging loans to some industries and small companies and accelerating infrastructure project approvals. Premier Wen Jiabao said this week the country has “full confidence” it will meet this year’s economic targets. The State Council on Wednesday approved measures to support exporters amid a slump in sales to Europe, including speeding up the process for paying export tax rebates, expanding trade financing and boosting export-related insurance. The policies were issued after China’s export growth fell to below 3 percent for the second month in August after gains of more than 20 percent in the same period last year. The official China Securities Journal reported yesterday that regulators have told banks to increase lending for infrastructure projects such as railways and roads to support the nation’s growth.
Extension of the tenor of reverse repos shows policymakers favouring temporary measures
Beijing approved new measures to support exporters
“All they do now is just to boost confidence,” as they are “sanguine” about growth, Joy Yang, Hong Kongbased chief economist for Greater China at Mirae Asset Securities Co., wrote in a note yesterday after meeting government officials from bodies including the top economic planning agency in Beijing last week. “Concrete plans, actions may have to wait until the new government takes over.”
The slew of infrastructure project approvals announced by the National Development and Reform Commission last week are already included in the nation’s current five-year plan and were aimed at increasing confidence rather than introducing any new stimulus, said Mr Yang, who previously worked at the International Monetary Fund. Bloomberg
business daily September 14, 2012
ASIA AirAsia ready to take on rival AirAsia Bhd. boss Tony Fernandes has vowed to give Indonesian rival Lion Air “a real run for their money”. Indonesia’s PT Lion Mentari Airlines and a Malaysian partner said on Tuesday their Malindo Airways would launch flights around the region from Kuala Lumpur in May, a direct assault on AirAsia’s home turf. AirAsia recently opened a regional headquarters in Jakarta. “We are thrilled that they are coming here as this means taking away capacity from Indonesia. We can give them a real run for their money in Indonesia,” Mr Fernandes was quoted by Malaysia’s The Edge Financial Daily as saying.
Tiger bid may stop Heineken plan Offer comes two weeks before shareholder vote on APB sale
hai billionaire Charoen Sirivadhanabhakdi made a S$9 billion (US$7.3 billion) bid for the 70 percent of Fraser & Neave Ltd he does not control, potentially blocking Heineken NV from buying the company’s beer business. TCC Assets Ltd, linked to Mr Charoen’s Thai Beverage Pcl, offered S$8.88 a share for F&N, TCC said in a filing yesterday. The bid is 4.3 percent more than F&N’s closing price on Wednesday and values the company at US$10.3 billion. Mr Charoen, 68, set off a scramble for F&N and its assets when he agreed to buy a stake in the company in July. Heineken countered with a bid for F&N’s 40 percent stake in Tiger beer maker Asia Pacific Breweries Ltd which the Dutch brewer already partially owns. Mr Charoen’s latest bid is ahead of a September 28 meeting where F&N shareholders will vote on Heineken’s proposal. “The fact that they are making an offer at this stage seems to suggest that they want a bigger say in the
vote,” said Goh Han Peng, analyst at DMG & Partners Research Pte in Singapore. “They could scuttle the deal if they want to hold on to APB.” Fraser & Neave shares were halted for trading in Singapore. ThaiBev, which took a bridge loan to finance its earlier F&N stake purchase, said it would not incur any more debt for the offer.
“We hold F&N in high regard and we believe its long-established track record and success in its core businesses will be beneficial to our group,” the company said. “We believe the offer represents an opportunity for F&N shareholders to realise the value of their investment in cash and to make a complete exit,” Thapana Sirivadhanabhakdi, Mr Charoen’s son and ThaiBev’s president and chief executive officer, said in a statement yesterday.
Thai bid for 70 percent of Fraser & Neave Ltd
Mr Charoen’s bid is the largest announced by a Thai company in at least 10 years, according to data compiled by Bloomberg. Purchasing F&N would widen his influence in Asia. His brewer, which is F&N’s largest shareholder with a 29 percent stake, got almost all its revenue from Thailand in 2011, according to data compiled by Bloomberg. Mr Charoen could also want to break up the 129-year-old
conglomerate, which has soft-drink and real-estate businesses, according to Justin Harper, Singapore-based market strategist at IG Markets. “We still think Thai Bev is more interested in the alcoholic business of F&N of which APB is the jewel in the crown,” he said in an e-mail. “It would hate to see Heineken gain control of this.” Japan’s Kirin Holdings Co., which has a 15 percent stake in F&N, has said it is interested in its soft-drink and food businesses. Coca-Cola Co. has explored a bid for the drinks operations, people with knowledge of the matter have said. Kirin spokesman Jun Sato and Coca-Cola spokeswoman Joanna Price declined to comment yesterday. Fraser & Neave got 30 percent of its 2011 revenue of S$6.3 billion from property, 12 percent from soft drinks and 17 percent from dairies, according to data compiled by Bloomberg. Mr Charoen’s unlisted business TCC Group has a realestate unit.
European brewer Heineken in August raised its offer for APB to S$53 a share from S$50. The higher US$4.4 billion bid followed an offer from a company controlled by Mr Charoen’s son-inlaw to buy a 7.3 percent stake in the Tiger beer maker for S$55 a share. Fraser & Neave’s board didn’t accept the Charoen-linked offer and instead recommended Heineken’s bid. It would have to pay a S$56 million fee to break up the agreement with the Dutch brewer. Kindest Place Groups Ltd, controlled by Mr Charoen’s son-in-law, has an 8.6 percent stake in APB. The Dutch company, which owns at least 42 percent of APB, has sought full control to protect its hold over a key emerging-markets business. APB has rights to brew Bintang beer in Indonesia, Anchor in China, Southeast Asia and Sri Lanka, and Heineken from China to New Zealand. “One drastic alternative if Heineken doesn’t want to work with Thai Bev is to make a counter offer for F&N either by themselves or with a partner,” said Mr Goh. The world’s third-biggest brewer will review Thai Beverage’s statement and comment when appropriate, Heineken spokesman John Clarke said in an e-mail. Bloomberg/Reuters
SouthGobi fires CEO
outhGobi Resources Ltd, which mines steelmaking coal in Mongolia, fired chief executive Alexander Molyneux, effective immediately, eight days after Aluminum Corp. of China Ltd dropped its C$925 million (US$949 million) takeover bid. Mr Molyneux will be replaced by Ross Tromans, the Vancouverbased company said in a statement yesterday. Mr Tromans formerly managed coal marketing at Rio Tinto
Group, the London-based mining company that controls SouthGobi through its ownership of Vancouver’s Turquoise Hill Resources Ltd. Aluminum Corp. of China, known as Chalco, dropped its offer to buy a 60 percent stake in SouthGobi at C$8.48 a share, according to a statement on September 3. The deal stalled in May when Mongolia passed a law restricting foreign state-owned companies from controlling key
assets. SouthGobi halted all mining in Mongolia as of June 30, according to a statement on August 13. SouthGobi’s second-quarter profit slumped more than 99 percent as customers cut orders. Net income fell to US$237,000 from US$67.3 million a year earlier as revenue fell 82 percent to US$8.4 million. Sales and earnings plunged due to the “uncertainty” created by Chalco’s bid, the company said. Bloomberg
September 14, 2012 business daily | 11
Itochu, Dole in talks D
Fresh stimulus for South Korea
ole Food Company Inc. said it is in advanced talks with Itochu Corp. to sell its packaged foods and Asian fresh fruit and vegetable businesses to the Japanese trading house. The world’s largest fruit and vegetable company has struggled with volatile demand and low prices for bananas, its biggest-selling product. In contrast, thanks to a strong yen and flush reserves of cash, Japanese trading houses have been active in overseas acquisitions, particularly non-resources firms, as they look to diversify their profit streams. Shares of Dole, which went public in October 2009, rose almost 10 percent to US$14.07 on the New
Central Bank announces plan to help small business owners
York Stock Exchange on Wednesday. No definitive terms have been signed with Itochu and Dole remains in discussions with other parties about selling these and other assets, Dole said in a statement. Itochu could pay around US$1.7 billion for the Dole businesses, a person familiar with the matter said, asking not to be named because details of the negotiations are not public. Itochu will set up a new company to acquire the two Dole business segments, Itochu said in a statement yesterday. The new company is slated to be established in November with capital investment to be determined. Reuters
Bank of Korea to provide US$1.33 bln for banks to help small businesses
outh Korea’s central bank unexpectedly held interest rates steady yesterday in order to give it time to assess whether a eurozone bond-buying programme will help allay Europe’s financial crisis, although analysts said it still had room to cut interest rates this year. Instead the Bank of Korea said it would provide 1.5 trillion won (US$1.33 billion) to local banks for five years from next month, based on which low-income, small business owners could get loans at low interest rates. The Bank of Korea’s monetary policy committee held its base rate steady at 3 percent, a media official said without elaborating. “It is a very disappointing decision,” Frances Cheung, a senior strategist at Credit Agricole CIB in Hong Kong, said yesterday of the BOK’s stance. “I don’t see any strong reason for staying put, with both domestic and external demand weak while inflation has been tame.” Bond futures fell while the won pared early losses against the dollar but the impact on markets as a whole was limited as traders awaited more details on the decision and the future policy from a news conference. “We are very flexible in how we consider monetary policy responses. We will consider the domestic and external economic conditions and tailor monetary policy appropriately,” Bank of Korea Governor Kim Choong-soo told a press conference after the decision was announced. South Korea’s finance ministry announced 5.9 trillion won (US$5.2 billion) of spending and tax relief this week while also emphasising it intended to work within the budget and preserve fiscal firepower. “Growth momentum, as reflected in domestic economic activity, appears to be slackening, on the sluggishness of both exports and domestic demand stemming from the mounting uncertainties in external conditions,” the BOK said yesterday in a statement. The government’s expanded spending is “thought likely to contribute in some part to preventing any deepening of the economic downturn,” the BOK said. Most analysts had expected the central bank to cut the rate once again and then stay on hold at least for the rest of the year while watching developments in Europe
and the effect of policy measures around the world.
‘Policy power’ Recently, most central banks have left their policy untouched in recent weeks to assess developments in the eurozone and the economic performance elsewhere, with the exception of the Swedish and Brazilians who cut their rates. “The Bank of Korea needs to preserve its policy power because Europe’s fiscal crisis is a long-term fight,” said Kwon Young Sun, a Hong Kong-based economist at Nomura International Ltd. “It also has to manage expectations for the rest of the year and an interval of three months is more appropriate than two months after a cut in July.”
Itochu may pay around US$1.7 billion for the Dole businesses
We will consider the domestic and external economic conditions and tailor monetary policy appropriately Kim Choong-soo, Governor of Bank of Korea
South Korea’s export-reliant economy, the fourth-largest in Asia, slowed to quarterly growth of 0.3 percent in the April-June period from 0.9 percent in the previous three months as capital investment collapsed. The slump was deepening in the current quarter as combined exports in July and August fell by 7.6 percent from a year earlier and sales at top department and discount stores shrank simultaneously year-on-year for the last three months in a row. South Korea’s annual inflation slowed to a fresh 12-year low of 1.2 percent in August, providing further evidence of cooling domestic demand and allowing the central bank to cut interest rates when it needs to spur domestic spending. Reuters/Bloomberg
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business daily September 14, 2012
MARKETS Hang SENG INDEX NAME
CHINA UNICOM HON
AIA GROUP LTD
BANK OF CHINA-H
BANK OF COMMUN-H
BANK EAST ASIA
HANG LUNG PROPER
CATHAY PAC AIR
HANG SENG BK
BELLE INTERNATIO BOC HONG KONG HO
CHINA COAL ENE-H
CHINA CONST BA-H
CHINA RES ENTERP
CHINA LIFE INS-H CHINA MERCHANT
CLP HLDGS LTD
POWER ASSETS HOL
SANDS CHINA LTD
SINO LAND CO
COSCO PAC LTD
TINGYI HLDG CO
WANT WANT CHINA
HENDERSON LAND D
HONG KG CHINA GS
HONG KONG EXCHNG
HSBC HLDGS PLC
IND & COMM BK-H
LI & FUNG LTD
CHINA RES LAND
NEW WORLD DEV
CHINA RES POWER
PING AN INSURA-H
SUN HUNG KAI PRO
INDEX 20047.63 HIGH
52W (H) 21760.33984 (L) 16170.35
Hang SENG CHINA ENTErPRISE INDEX NAME
AIR CHINA LTD-H
CHINA RAIL CN-H
CHINA RAIL GR-H
BANK OF CHINA-H
CHINA PACIFIC-H CHINA PETROLEU-H
CHINA CITIC BK-H
CHINA COAL ENE-H
CHINA COM CONS-H
IND & COMM BK-H
CHINA CONST BA-H
CHINA COSCO HO-H
PICC PROPERTY &
PING AN INSURA-H
CHINA MERCH BK-H
BANK OF COMMUN-H BYD CO LTD-H
CHINA LIFE INS-H
NAME YANZHOU COAL-H
INDEX 9480.27 HIGH
52W (H) 11916.1
CHINA NATL BDG-H
Shanghai Shenzhen CSI 300 PRICE
DAQIN RAILWAY -A
AIR CHINA LTD-A
DATANG INTL PO-A
EVERBRIG SEC -A
BANK OF BEIJIN-A
GD MIDEA HOLDING
BANK OF CHINA-A
GD POWER DEVEL-A
BANK OF COMMUN-A
BANK OF NINGBO-A
BAOSHAN IRON & S
SANY HEAVY INDUS
SHANG PHARM -A
SHANXI LU'AN -A
CHINA CITIC BK-A
CHINA CNR CORP-A
CHINA COAL ENE-A
CHINA CONST BA-A
HONG YUAN SEC-A
BYD CO LTD -A
CHINA COSCO HO-A
CHINA CSSC HOL-A
HUAXIA BANK CO
YANGQUAN COAL -A
CHINA EAST AIR-A
IND & COMM BK-A
INNER MONG BAO-A
CHINA MERCH BK-A
INNER MONG YIL-A
CHINA LIFE INS-A
CHINA MINSHENG-A CHINA NATIONAL-A
CHINA PETROLEU-A CHINA RAILWAY-A
CHINA SHIPBUIL-A CHINA SOUTHERN-A
NINGBO PORT CO-A
PANGANG GROUP -A
CHINA STATE -A
PING AN BANK-A
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PING AN INSURA-A
POLY REAL ESTA-A
CSR CORP LTD -A
PRICE DAY %
52W (H) 2781.99 (L) 2186.962
FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP
PRICE DAY %
PRICE DAY %
TAIWAN MOBILE CO
TPK HOLDING CO L
HON HAI PRECISIO
AU OPTRONICS COR
HOTAI MOTOR CO
HUA NAN FINANCIA
CHANG HWA BANK
CHENG SHIN RUBBE
CHIMEI INNOLUX C
MEGA FINANCIAL H
NAN YA PLASTICS
DELTA ELECT INC
FAR EASTERN NEW
SYNNEX TECH INTL
FAR EASTONE TELE
CHINA DEVELOPMEN CHINA STEEL CORP
UNI-PRESIDENT UNITED MICROELEC WISTRON CORP
YULON MOTOR CO
FORMOSA CHEM & F
TAIWAN GLASS IND
INDEX 5227.39 HIGH
52W (H) 5621.53 (L) 4643.05
September 14, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT
MELCo CroWN ENTErTAINMENT
MGM CHINA HoLDINGS 32.5
23.2 Max 23.95
SANDS CHINA LTD
SJM HoLDINGS LTD
WyNN MACAU LTD 16.5
BRENT CRUDE FUTR Oct12
GASOLINE RBOB FUT Oct12
GAS OIL FUT (ICE) Oct12
NATURAL GAS FUTR Oct12
Gold Spot $/Oz
HEATING OIL FUTR Oct12
Silver Spot $/Oz
Platinum Spot $/Oz
Palladium Spot $/Oz LME ALUMINUM 3MO ($)
LME COPPER 3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Nov12
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
1.0444 1.6118 0.9373 1.2925 77.66 7.9878 7.7551 6.33 55.43 31.02 1.2295 29.655 41.735 9587 81.099 1.21145 0.80194 8.1813 10.3239 100.37 1.03
-0.41 0.0248 -0.1707 0.0464 0.1674 -0.0013 0.0026 -0.049 -0.363 -0.2901 -0.1464 -0.1619 -0.369 -0.1043 0.5931 -0.2196 -0.0287 -0.3496 -0.0552 0.1295 0
2.3019 3.6994 0.0854 -0.2778 -0.9657 0.1477 0.1586 -0.5529 -4.2666 1.7086 5.4575 2.1042 5.0437 -5.4032 -3.2886 0.4408 3.9217 -0.5757 0.2722 -0.7074 0.0097
1.0857 1.6302 0.9972 1.4247 84.18 8.0391 7.8055 6.4029 57.3275 32 1.3199 30.716 44.35 9662 88.637 1.24736 0.88308 9.0277 11.4015 111.6 1.0311
0.9388 1.5235 0.8568 1.2043 75.35 7.9823 7.7526 6.2769 47.225 30.2 1.2269 29.084 41.41 8738 72.057 1.19995 0.77553 7.7018 9.6245 94.12 1.0288
MACAU RELATED STOCKS (H) 52W
AMAX HOLDINGS LT
BOC HONG KONG HO
CHOW TAI FOOK JE
HANG SENG BK
WHEAT FUTURE(CBT) Dec12
SOYBEAN FUTURE Nov12
COFFEE 'C' FUTURE Dec12
SUGAR #11 (WORLD) Mar13
COTTON NO.2 FUTR Dec12
CENTURY LEGEND CHEUK NANG HLDGS
World Stock MarketS - Indices NAME
18.7 Max 19.04
WTI CRUDE FUTURE Oct12
CURRENCY EXCHANGE RATES
16.2 Max 16.5
DOW JONES INDUS. AVG
NASDAQ COMPOSITE INDEX
FTSE 100 INDEX
DAY % YTD %
HSBC HLDGS PLC
HUTCHISON TELE H
LUK FOOK HLDGS I
MELCO INTL DEVEL
HANG SENG INDEX
CSI 300 INDEX
MGM CHINA HOLDIN
TAIWAN TAIEX INDEX
NEW WORLD DEV
SANDS CHINA LTD
SHUN HO RESOURCE
SHUN TAK HOLDING
S&P/ASX 200 INDEX
FTSE Bursa Malaysia KLCI
NZX ALL INDEX
JAKARTA COMPOSITE INDEX
SJM HOLDINGS LTD
WYNN MACAU LTD
PHILIPPINES ALL SHARE IX
HSBC Dragon 300 Index Singapor
STOCK EXCH OF THAI INDEX
HO CHI MINH STOCK INDEX
BOC HONG KONG HO
Laos Composite Index
INTL GAME TECH
JONES LANG LASAL
LAS VEGAS SANDS
MGM CHINA HOLDIN
MGM RESORTS INTE
SJM HOLDINGS LTD
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
WYNN RESORTS LTD
business daily September 14, 2012
Opinion For Chinese students, bring-your-desk-to-school day Adam Minter
Shanghai correspondent for the World View blog
ere’s a back-to-school math problem: if your school district has 5,000 students, but only 2,000 desks, how do you find places for the other 3,000 students to sit? The obvious solution is to buy 3,000 additional desks. But if, as in the case of Shunhe township in central China’s impoverished Macheng county, there isn’t money to buy 3,000 desks, then what do you do? On September 3, the Changjiang Daily, a major Communist Party-supervised newspaper in Wuhan published an article and photos showing parents and grandparents in Shunhe carrying beat-up desks and tables from their homes to local government-run schools, as they have done every September for at least the last three decades, according to a teacher interviewed by Xinhua, the state news agency. That three-decade mark is important: It spans the length of China’s economic revival – a revival that apparently hasn’t touched Shunhe township. The story quickly migrated onto China’s microblogs and within 48 hours was the populist outrage du jour, at or near the top of trending topic lists for the last week. The account especially infuriated microbloggers already upset at increasing Chinese inequality and at those perceived to be responsible. Zhang Wen, an editor and editorial board member of China Newsweek, posted this angry tweet to Sina Weibo, China’s leading microblog: “China has become the world’s second largest economy, it throws its money to African countries to pay for the construction of their school buildings and school buses. In Macheng, more than three thousand pupils have to bring their own desks to school for class. It brings shame on the image of the Chinese government.” The Macheng debacle isn’t the only school-funding controversy that’s engaged Chinese netizens over the last few weeks. In Guangdong province, considerable media and microblogging attention has been paid to one school so short of funds that it held a lottery to allocate snacks and limited staff time for breaks.
To be fair, Macheng is not nearly as poor as the towns and villages in which Liu and his peers were educated. For one thing, China is wealthier as a whole, and some of that wealth is redistributed to local areas – like Macheng – that are officially designated as national-level poverty-stricken counties (there are 592 nationwide). This status entitled Macheng to a piece of US$4.32 billion the central government allotted in 2011 for poverty reduction programmes, including education of impoverished students. According to Xinhua, the state news agency, Macheng spent 720 million yuan (US$110 million) in 2011 on education, with a portion of that money provided from poverty alleviation funds (Xinhua did not reveal how much). That’s a lot of money for an impoverished area – certainly enough to acquire basic classroom necessities – and China’s netizens are wondering where all those funds went, if not to buy desks and chairs?
supposed to have
of local bureaucrats. Sure enough, Chinese netizens found pictures of Macheng’s new city hall and other gleaming government buildings. By the standards of over-the-top Chinese government buildings, Macheng’s buildings are very modest. However, when those photos are placed beside pictures of grandmothers hauling school desks through the countryside – as many microbloggers have done – they tend to inspire outrage. Yu Ping, a commentator at Beijing News, the influential paper controlled by the city’s Propaganda Bureau, has written two scathing editorials in the last week on the desk controversy. The first, published last week, contained this biting passage: “They have money to build government buildings but no money to buy desks for students. Why does poverty persist in Macheng? The answer is self-evident.” The other answer, of course, is that the money disappeared straight into the pockets of government officials. Alas, Macheng’s public records – like public records across China – are closed to public review, thus leaving China’s online amateur detectives to speculate and investigate. In this case, and others like it, netizens have zeroed in on Yang Yao, the local Macheng Party Secretary – and whether he wears a wristwatch with a value that exceeds what should be affordable to a low-level bureaucrat in a small Chinese city. If, for example, he wears a US$50,000 Breitling, according to netizen logic, he must be corrupt. After all, it is the rare local government official who earns more than US$1,000 per month.
One possible answer – unverified but with a vast and angry constituency behind it – is that the money was used to build ostentatious government buildings meant to enhance the images
This is not a new approach. Dating back to at least 2009, savvy netizens have carefully examined photos of public officials to see if their leaders are wearing expensive watches. In August, for example, a minor official in Xi’an ran afoul of public opinion
The images of villagers lugging desks to school suggest a poverty-stricken past that China’s economic renaissance was
Fund searching But the school desk controversy resonates particularly strongly in the blogosphere because the images of villagers lugging desks to school suggest a poverty-stricken past that China’s economic renaissance was supposed to have surmounted. Liu Chun, a middle-aged vice-president at Sohu.com, a major Chinese internet portal, offered a poignant expression of this sentiment when on Saturday he sent this tweet to his over a million followers on Sina Weibo: “Thanks to the government and Education Bureau of Macheng for helping me relive my childhood memories. In those years, we carried desks on our backs.”
after a photo emerged of him smiling at a fatal traffic accident. Chinese netizens, enraged by his arrogant demeanour, began searching the Internet for additional photos of him and soon found several in which he was clearly wearing expensive watches – specifically, models manufactured by Rolex, Omega, Vacheron Constantin and Rado, some worth, according to netizens, in excess of US$16,000. Macheng’s Yang Yao, clearly sensing trouble in the online outrage over the schools under his jurisdiction and the jewellery on his wrist, took the unusual step of opening a Sina Weibo account and responding to his critics in an essay that he embedded as an image in a tweet. In the essay, he thanks the nation’s netizens for their concern, defends his record on education funding and then, in a last paragraph as remarkable as it is weird, reveals that his watch isn’t one of those expensive, hand-tooled luxury watches that other officials wear. Rather, it’s a battery-driven, mass-market Longines – a brand with little cachet in China: “Some netizens have called into question the fact that I am wearing a name-brand watch, it is a quartz Longines watch that I purchased six years ago, netizens can check its value. If there are any other questions, you can contact the Macheng municipal committee bureau and myself directly. My email address is email@example.com. Despite the rare and humble act of revealing his email address, online discussion as to whether Yang Yao is the owner of anything more glitzy than a ho-hum Longines continues to rage. Still, Yang has managed to keep his job and to find the money to buy 3,000 chairs and desks for the poor students (and their sore-backed guardians) of Shunhe township. For China’s microbloggers, this is a small victory, but a potent one that proves the corrosive power of social networking against a government that increasingly lacks legitimacy in the eyes of the governed. Xu Shaolin, a freelance writer and popular Sina Weibo user in Beijing, summarized the sentiment in a Saturday tweet: What effect can Weibo have? China was born more than 60 years ago, yet the students in Macheng still bring their desks to school. Meanwhile, tall government buildings rise out of the ground and nobody thinks anything is wrong. But in the Internet Age, a short piece on Weibo can arouse a storm in a teacup. Even though the result came late, it came. Macheng will end the long history of students bringing desks to school in two months. Thanks to Weibo for this! Yang Yao and other Chinese government officials may not be so grateful. Journalists who covered Shunhe’s desk shortage have reportedly been threatened by local officials. Bloomberg View
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September 14, 2012 business daily | 15
OPINION Evolutionary theory’s wires welcome crisis Business
Leading reports from Asia’s best business newspapers John Dupré
The Malaysian Investment Development Authority (Mida) has approved 35 aerospace industry-related projects with investments worth RM2.8 billion (US$909 million). Its deputy CEO Azman Mahmud said of the total, 17 projects are in the maintenance, 20 in the manufacturing, and two in R&D designs. Speaking to reporters at the signing of a priority resources agreement between Strand Aerospace Malaysia and France’s AKKA Technologies, he said the global market for aerospace services is expected to double over the next decade to US$1 trillion.
Asahi Shimbun Japan’s subsidies for renewable power suppliers have sparked more than US$2 billion of investment since they were launched two months ago, as companies and homeowners try to profit from an anti-nuclear energy policy after last year’s Fukushima crisis. That money, the government believes, is only a tiny fraction of what could be a US$640 billion spending boom by 2030 as Japan tries to phase out nuclear energy. Renewables will be called upon to make up part of that shortfall.
Business World A US$71.6 million loan has been signed between the Philippines and the Republic of Korea for the development of the Puerto Princesa Airport in Palawan. The official development assistance (ODA) will fund the rehabilitation and improvement of the gateway airport of the province. Under the project a new passenger terminal and an access road will be constructed. The runway will also be improved, while navigational aid and equipment will be provided to help accommodate the increase in domestic and international flights.
Business Times Singapore-based IMC Resources Holdings has offered a 39 percent premium to buy out Australia’s Linq Resources Fund for A$106 million (US$111 million), in a sign that Asian investors have faith in a rebound in Australia’s faded mining boom. IMC Resources, part of a family-owned business mostly involved in shipping, is already Linq’s biggest shareholder with a 17.5 percent. While that is a big premium to Linq’s last trade, it is 26 percent below Linq’s net tangible asset value as of June 30.
Professor of Philosophy of Science and Director, ESRC Center for Genomics in Society, University of Exeter
hose who believe that a supernatural being created the universe have never posed an intellectual challenge to evolutionary theory. But creationists, whether biblical fundamentalists or believers in “intelligent design,” do pose a threat to scientific thinking. Indeed, creationism’s insidious genius lies in its ability to reinvent evolution in its own image as a dogmatic belief system – and thus the antithesis of science. The creationists are right about one thing: contrary to the impression given by much popular writing on the subject, the theory of evolution is in crisis. But this is a positive development, because it reflects the non-linear progress of scientific knowledge, characterised by what Thomas Kuhn described in his influential book The Structure of Scientific Revolutions as “paradigm shifts”. For the last 70 years, the dominant paradigm in evolutionary science has been the so-called “new synthesis.” Widely publicised in recent years by Oxford evolutionary biologist Richard Dawkins, the new synthesis unites Darwin’s theory of natural selection with Mendelian genetics, which explains heredity. The current crisis in evolutionary science does not imply complete rejection of this paradigm. Rather, it entails a major, progressive reorganisation of existing knowledge, without undermining the fundamental tenets of evolutionary theory: organisms alive today developed from significantly different organisms in the distant past; dissimilar organisms may share common ancestors; and natural selection has played a crucial role in this process.
Theory crisis Other assumptions, however, are under threat. For example, in the traditional “tree of life” representation of evolution, the branches always move apart, never merging, implying that species’ ancestry follows a linear path, and that all evolutionary changes along this path occur within the lineage
being traced. But examination of genomes – particularly microbes – has shown that genes moving between distantly related organisms are an important catalyst of evolutionary change. Moreover, the new synthesis assumes that the main drivers of evolution are small mutations generated by chance within a species. But recent evidence suggests that large changes, caused by the absorption of a chunk of alien genetic material, may be just as significant. Indeed, the absorption of entire organisms – such as the two bacteria that formed the first eukaryotic cell (the more complex cell type found in multicellular animals) – can generate large and crucial evolutionary change. Further destabilising evolutionary theory is the growing realisation that many factors, not just the genome, determine an individual organism’s development. Ironically, as the discovery of DNA’s structure – initially lauded as the final act in the triumph of the new synthesis – led to a better understanding of genomes’ functioning, it ended up weakening belief in their unique role in directing biological development. Those who long deplored the omission of development from evolutionary models – a decades-old critique made under the scientific banner of evolutionary developmental biology (“evo-devo”) – together with the insistence that organisms’ development draws on a wide variety of resources, have been vindicated.
Re-thinking evolution Recent developments in molecular biology have put the final nail in the coffin of traditional genetic determinism. For example, epigenetics – the study of heritable modifications of the genome that do not involve alterations to the genetic code – is on the rise. And the many kinds of small RNA molecules are increasingly recognised as forming a regulatory layer above the genome. Beyond undermining the gene-centred theories of evolution that have dominated public consciousness for
In fact, disagreement – and the deeper insights that result from it – enables new approaches to scientific understanding. For science, unlike for dogmatic belief systems, disagreement is to be encouraged
several decades, these developments call for new philosophical frameworks. Traditional reductionist views of science, with their focus on “bottom-up” mechanisms, do not suffice in the quest to understand top-down and circular causality and a world of nested processes. This brings us back to where we started. Radically rethinking evolutionary theory invariably attracts the attention of creationists, who gleefully announce that if professional advocates of Darwinism cannot agree, the concept must be in retreat. And, evolutionists, confronted with this response, tend to circle the wagons and insist that everyone is in agreement. But nothing more clearly
demonstrates that science and creationism are polar opposites than the latter’s assumption that disagreement signals failure. In fact, disagreement – and the deeper insights that result from it – enables new approaches to scientific understanding. For science, unlike for dogmatic belief systems, disagreement is to be encouraged. Evolutionary theory’s current contretemps – and our inability to predict where the field will be in 50 years – are a cause for celebration. We should leave the creationists to their hollow convictions and happily embrace the uncertainties inherent in a truly empirical approach to understanding the world. © Project Syndicate
business daily September 14, 2012
CLOSING Soros sees Rajoy seeking limited aid
EU clears aid for Cyprus bank
Billionaire investor George Soros said he expects Spain to request a “very limited” bailout from the European Union, with Prime Minister Mariano Rajoy seeking to avoid damaging political fallout at home. “I think Spain will ask for a very limited contract which does not require Spain to submit itself to the constant supervision of the troika”, Mr Soros said in an interview with Bloomberg Television. “Because that would be a sacrifice of sovereignty that politically would be fatal.” Mr Rajoy said this week the country may not need a second bailout because the ECB’s pledge already cut borrowing costs.
The European Commission said yesterday it had cleared, on a temporary basis, a bailout worth 1.8 billion euros (US$2.30 billion) for Cyprus Popular Bank, the second largest in the country. It said the state aid decision was taken in the interest of financial stability, with the clearance lasting six months, during which time the Cyprus government is expected to prepare a full restructuring plan. “Cyprus Popular Bank is the second largest banking institution in Cyprus and a default or technical insolvency would create a serious disturbance to the economy of Cyprus,” a statement said.
Swiss parliament backs tax hike As opposition to favourable treatment for tax exiles grows
Switzerland has attracted more than 5,000 wealthy foreigners to settle in the country
witzerland will keep its special low-tax deals for wealthy foreigners such as music and sports celebrities but increase the amount of tax they pay following a vote by parliament which faced pressure to scrap the system.
The lower house of parliament voted late on Wednesday to reject a proposal by the centre-left Social Democrats (SP) to scrap the tax breaks but adopted a government plan to raise the tax most rich foreigners have to pay.
“With this reform, we want to improve and strengthen the acceptance of the flat-rate tax,” Swiss Finance Minister Eveline WidmerSchlumpf told parliament, adding it would mean that 80 percent of those involved would pay more tax after the changes. Switzerland has attracted more than 5,000 wealthy foreigners to settle in the country with tax deals based on the rental value of their property rather than their actual income or wealth, on the condition that they do not work in the country. Among those to take advantage of the scheme are Formula One driver Michael Schumacher and pop stars Phil Collins and Tina Turner as well as Switzerland’s richest man, furniture store Ikea founder Ingvar Kamprad, who moved to the country from Sweden in 1976. Opposition to favourable treatment for tax exiles has been growing in Switzerland, with the cantons of Zurich, Schaffhausen and Appenzell scrapping the policy in recent years after popular
referendums on the issue. The canton of Bern is set to vote on the issue on September 23. It includes the Alpine resort of Gstaad, which has a reputation as a playground for the rich and famous including French rocker Johnny Hallyday and Formula One supremo Bernie Ecclestone. “The population has had enough of this special regime,” SP parliamentarian Susanne Leutenegger Oberholzer told parliament as she sought support for a national end to the policy. “It is an arbitrary regime, a regime that cannot be verified, a regime that means that only a part of the actual income and wealth of the affected people has to be taxed,” she said, noting that opposition from abroad was also on the rise. Many of the tax exiles come from neighbouring France and the number could rise due to a 75 percent supertax on income above 1 million euros (US$1.29 million) proposed by Socialist President Francois Hollande. Reuters
Philippine C.Bank raises inflation forecast Overnight borrowing rate unchanged at record low
he Philippine central bank kept its key policy rate steady yesterday, citing potential upside risks to inflation and flagging weak global economic conditions that analysts said signalled the door for further easing remains open. The benchmark interest rate was left unchanged at a record low of 3.75 percent, in line with expectations it will hold fire before it cuts rates at least one more time by the end of the year. Ten of 12 economists polled by Reuters last week had expected no change in rates, but one of the two dissenters later joined the majority after data on Tuesday showed exports performed better-than-expected in July. The central bank said it raised its average inflation forecast to 3.4 percent from 3.1 percent for 2012 and to 4.1 percent from 3.2 percent for 2013 following recent increases in oil and non-oil commodity prices globally. But it reiterated slow global demand would temper international commodity prices, and sustained strength in the peso would dampen domestic inflation. Policymakers are betting on strong domestic demand to keep the country’s economy steaming ahead despite the
weak outlook for exports, as global demand remained sluggish amid lingering fiscal problems in the United States and Europe. “The Monetary Board’s decision was based on its assessment that the inflation environment remains benign, with the risks to the inflation outlook appearing to be broadly balanced,” said Amando Tetangco, governor of the Bangko Sentral ng Pilipinas (BSP). “The board remains mindful of potential upside risks to the inflation outlook including pending electricity rate adjustments and expectations of higher foreign prices for some grains due to adverse weather conditions abroad.” He added that underlying demandside pressures remain firm, supported by ample domestic liquidity and brisk credit activity. Most economists believe the central bank will consider easing monetary policy further if capital inflows strengthen further on easier monetary policy in developed economies. “We expect part of the bank’s inflationary concerns to have stemmed from likelihood of stimulus measures
The average inflation forecast was raised to 3.4 percent
in the advanced countries, which could stoke global commodity prices and reignite capital inflows into the region,” said Radhika Rao, economist at Forecast PTE in Singapore. “We have pencilled in a 25 bps rate cut by end-
year and the move we reckon will be driven yet again by the need to contain peso appreciation pressures and curtail speculative inflows, especially if QE3 is announced in the interim,” she said. Reuters