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Year I Number 177 Thursday December 6, 2012 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP $ 6.00 www.macaubusinessdaily.com

Airport profits set for take off T

he Macau International Airport Company Ltd (CAM) is set to post its first annual profit of about 13 million patacas (US$1.63 million), an executive predicted. But the airport operator is only in the black thanks to an injection of 1.95 billion patacas from its two major shareholders – the government and gaming and tourism investor STDM. The share subscription was used to pay back a syndicated loan taken out in 1994 to fund the

airport’s construction whose interest payment had been weighting on CAM’s books. The improvement was also fuelled by higher turnover, with revenues expected to hit a new high at 3.4 billion patacas, mostly thanks to growth in duty-free sales and advertising revenues. CAM pledged to use at least part of the profits to expand the airport, one day after the Secretary for Transport and Public Works, Lau Si Io, said a plan to develop the airport up to 2030 was almost ready.

Workers pay more for social security The Social Security Fund wants the monthly contribution to the social security system, to be raised to 100 patacas – 60 patacas from employers and 40 patacas from workers. This adjustment also means the contribution ratio between employers and workers would be raised from the current 2:1. Workers are against the ratio change, while employers are more worried about the impact a higher contribution will have on smaller businesses. Page 5

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HANG SENG INDEX 22280

22160

22040

21920

21800

December 5

HSI - Movers Name

Fraud charges knock Nam Van hotel project

No rhyme or reason to maids’ hiring fees

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he developers of a five-star hotel planned for a plot in the Nam Van area say construction can finally begin, 14 years after the initial grant. The land development has been delayed by a case in which one of the shareholders was allegedly prosecuted for fraud, the concessionaire claims. There is no word on whether the developer has been fined for the construction delay.

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ervice charges paid to employment agencies for recruiting domestic servants are arbitrary and in some cases reach as much as a maid’s monthly wage, a Consumer Council survey shows. The Overseas Employment Agency Association agrees there is a need to standardise charges and to revise the regulations to ensure agencies sign written contracts.

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%Day

PING AN INSURA-H

4.94

CHINA RES POWER

4.76

WHARF HLDG

4.28

CHINA LIFE INS-H

4.22

CHINA RES ENTERP

4.18

CHINA OVERSEAS

1.12

CHEUNG KONG

1.11

SUN HUNG KAI PRO

0.97

POWER ASSETS HOL

0.67

MTR CORP

0.16

Source: Bloomberg

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Brought to you by

Time to face tourism challenges, says IFT president Page 3

Rent growth to outpace home sales hikes: agency Page 5

Reports of VIP gambling’s death exaggerated: analysts Page 6

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2012-12-8

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business daily December 6, 2012

macau

Fraud cases blamed for delays to luxury hotel Newspaper ad claims long-delayed five-star hotel is ready for commencement after closing fraud cases against key investors Vítor Quintã

vitorquinta@macaubusinessdaily.com

A 25-storey five-star hotel is set to rise next to the Finance & IT Centre tower (Photo: Manuel Cardoso)

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he developers of a five-star hotel planned for a long-vacant plot of land in the Nam Van area say construction can now begin after one of the shareholders was allegedly prosecuted for fraud. In an advertisement published in Macau newspapers yesterday, Jade Hotel Development Ltd said it “intends to restart the hotel development plan of the said lot A4 [located next to Finance & IT Centre tower] in the near future”. The developer “hopes to add a landmark, high-class hotel to Nam Van Lake in Macau very soon, to satisfy its investors and the general public”. Jade Hotel is a shareholder in land concessionaire Sociedade de Investimento Imobiliário Fong Keng Van SARL. The 4,563-square-metre plot was granted to Fong Keng Van in 1994

but its development has been delayed by a fraud case, the company claimed. “In 2005, as a result of the fraud of John Kevin ‘Balxxx’ and Robert Joe ‘Wesxxx’ over Fong Keng Van, it was caught in litigation for several years and delayed the best period for developing the said lot.” The two people named in the advertisement are most likely to be John Kevin Baldwin, chief executive of investment banking firm Bridge Capital (USVI), LLC, and Robert Joe Wessels, a Fong Keng Van director in 2007. Business Daily requested a comment from both businessman but had not received a response by press time. The advertisement says the Public Prosecutions Office has prosecuted the two men “for fraud and has issued warrants for their arrest”. Business Daily attempted to verify

the claim with the Public Prosecutions Office. It would not comment. The hotel’s advertisement makes no further information of the alleged fraud. The Court of First Instance handled a case in October 2009 involving the parties. Mr Baldwin’s Bridge Capital wanted the land title, claiming Fong Keng Van owed it money.

Lengthy delay The land was granted to Fong Keng Van in 1994 for the construction of a residential building, with some commercial space and car parking. In 2004, the developer asked to change the contract in order to build a 25-storey, five-star hotel covering an area of 52,505 square metres. The request was approved in May 2007 and two Fong Keng Van directors signed the revised

concession: Mr Wessels and Bosco Tso Hon Sai, a solicitor at Hong Kong law firm Tso Au Yim & Yeung. Mr Tso could not be reached for comment yesterday. The Secretary for Transport and Public Works Lau Si Io wrote in 2007 that the development deadline would be extended to 2008 because of “difficulties linked to infrastructure execution and the economic climate”. Fong Keng Van did not pay an additional land premium because, according to the 2007 dispatch, the premium for the original building was higher than for a five-star hotel. The company had until August 2008 to develop the land or face a fine of up to 900,000 patacas (US$112,750), says the revised contract. In addition, the concession could be terminated if the plot was not developed by the end of 2008. Last year, Mr Lau said the government could take back 48 undeveloped parcels whose concession was under review. Business Daily asked the Land, Public Works and Transport Bureau if Fong Keng Van had been fined or its concession reviewed but has, so far, not received a reply. The advertisement said construction was poised to begin, with the alleged fraud the “major obstacle to hinder to the hotel development plan … cleared”.

The major obstacle to hinder to the hotel development plan … has been cleared Jade Hotel Development Ltd ad


December 6, 2012 business daily | 3

MACAU

Airport operator to post first profit Milestone for Macau International Airport as loan from two biggest shareholders, the government and STDM, helps turn around business Tony Lai

tony.lai@macaubusinessdaily.com

Macau’s airport company is on track to report its first profit since it began operations in 1995

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he Macau International Airport Company Ltd is set to post its first annual profit of about 13 million patacas (US$1.63 million) after settling its debts with funds loaned by shareholders. Charles Lo Keng Chio, the president of the company’s general assembly told reporters yesterday he was “satisfied” the company would not dip into the red for the first time since operations started in 1995. Results published in the Official Gazette since 2003 record nothing but losses, with a 15.1 million pataca

shortfall last year. “The main reason [for expecting profits] is that shareholders were able to raise funds this year to pay back long-term debts,” he said after yesterday’s shareholders meeting. “Our burden is eased after settling the debts … At least we don’t have to pay [loan] interest worth 80 to 90 million patacas each year.” The company issued new nonvoting, redeemable preference shares in May to raise the funds to pay back a syndicated loan of 1.95 billion patacas taken out in 1994 to pay for

the airport’s construction. Last year’s loan was put up by the company’s two major shareholders. More than two-thirds came from the government and the remainder from gaming and tourism investor Sociedade de Turismo e Diversões de Macau SA.

Expansion forecast The decision was criticised by legislator José Pereira Coutinho earlier this week. During last month’s Policy

Address, he said the airport operator did not need the government’s cash to settle its debts. Mr Lo said paid off debt and increased operational revenues contributed to the airport’s first profit. This year’s revenues were expected to hit a new high at 3.4 billion patacas, up from 3 billion patacas last year. “We benefit from the rental income of the services in the airport and the increasing number of passengers,” Mr Lo said. The airport company said last month this year’s revenue was driven by growth in non-core activities, including duty-free sales and advertising revenues. Passenger volume is on target to reach 4.4 million people this year, a 10 percent increase from last year. “Having profits this year, we will definitely put resources into the expansion of the airport. We will not stand still,” Mr Lo said. Secretary for Transport and Public Works Lau Si Io told the Legislative Assembly on Tuesday that a plan to develop the airport up until 2030 was almost ready. Mr Lo did not elaborate on the plan or reveal any details on potential development at the airport yesterday. He also did not answer questions on the progress of awarding contracts to service providers at the airport, including ground handling services.

Tourism prospects still bright for Macau Drop in tourist arrivals may not last, but city must stay alert and gear up to meet challenges, says IFT president Stephanie Lai

sw.lai@macaubusinessdaily.com

Fanny Vong – tourist figures to ‘grow stable again’

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isitor arrivals have dropped six months in a row but Fanny Vong Chuk Kwan, president of the Institute for Tourism Studies (IFT), reckoned tourist figures may go up and stabilise again in the future as global economic uncertainty begins to clear up.

“The fall in visitor arrivals in Macau has to do with the global economy as well,” said Ms Vong. “Now we are seeing a change in the U.S. economy recovery and a slight easing in the European crisis. On the other hand mainland [China]’s economy is also becoming stable,”

she recalled. “Our tourist figures will grow stable again once all these uncertain economic factors are cleared,” the official predicted. According to official data, Macau welcomed a total of 23.2 million tourists in the first 10 months of this year, 0.8 percent more than in the same period of 2011. The number of visitors from the mainland, Macau’s most significant tourist source, fell by 1.4 percent year-on-year in October to 1.4 million. Meanwhile Taiwan and Japan saw a big drop of 10 percent and 21 percent, respectively in October. “Still, the overall tourist figure in Macau is a large one, and the fall in our visitor arrivals is remaining below 5 percent,” said Ms Vong. “As a tourism zone, we have already been performing steadily as we are not suffering a large impact from the global economy.” Nevertheless, the IFT head recognises that Macau needs to “dig deeper” in its cultural content to attract more visitors and extend the lengthof-stay, instead of merely introducing more “big shows” to the city.

“In the end it is the city’s cultural content and how many activities it can provide to people that attracts them,” she said. “Cultural heritage is the thing that fits Macau’s tourism resources, and there ought to be more storytelling about our sites, as well as historical studies.” The scholar believes 2013-14 will be a key “breathing period” for residents to train up their occupational skills and knowledge to meet the human resource challenge that will follow the casino expansion in 2015-16. “We are talking about thousands of rooms to be ready by 2015-16. According to international standards, you ought to have 1.5 people providing service per room,” said Ms Vong. “What we can do is to increase the quality of the workforce and make them more competitive.” The IFT president also noted that the Tertiary Education Services Office is currently preparing standard evaluation criteria and regulations for higher education units’ management and programme quality, which will be an important step to standardise and monitor schools.


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business daily December 6, 2012

macau Costa Antunes named full-time Grand Prix head The outgoing director of the Macau Government Tourist Office, João Manuel Costa Antunes, will become the full-time coordinator of the Macau Grand Prix Committee starting December 20, according to yesterday’s Official Gazette. The official, who has led the committee on a part-time basis since 1988, will remain in charge of the event for a further two years, including the 2013 60th edition. Tourist Office deputy director, Maria Helena de Senna Fernandes, will replace Mr Antunes as head of the tourism bureau on December 19.

Fees for recruiting domestic helpers arbitrary, survey finds Slack regulation of agencies that recruit domestic servants has led to inflated charges for employers Stephanie Lai

sw.lai@macaubusinessdaily.com

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ervice charges paid to employment agencies for recruiting domestic servants are arbitrary and not linked to costs such as the costs of insurance coverage and medical checks, the Consumer Council has said. A survey of 81 employment agencies, 10 of which recruit domestic servants, found there is no standard service charge for employers of domestic servants. Such charges can range from 500 patacas (US$62) to 2,800 patacas, the council says in its latest newsletter, published last week. “For one of them, service charges equal a one-month salary of a domestic helper,” the council says. In some cases the figure is even higher if the employer asks for work and health insurance for the employee. The president of the Macau Overseas Employment Agency Association, Ao Ieong Kuong Kao, admits that there is a need to standardise service charges. Mr Ao Ieong told Business Daily that the differences were due to varying costs of insurance, training in the employee’s home country and flights. “In Macau, generally the service charge agencies receive for hiring domestic helpers range from 1,000 to 1,500 patacas,” he said. “That covers an interview for the domestic helper, paperwork on the work permit at the Human Resources Office and Immigration Department, and a mediation service if disputes arise between the household and the domestic helper,” he added. “It’s not like Hong Kong, where only agencies are allowed to mediate the hiring of domestic helpers. There you have a uniform service charge of around HK$3,000,” Mr Ao Ieong said. “In Macau, there are more cases where employees are seeking a

Amendments were discussed by the Standing Committee for the Coordination of Social Affairs in March. The coordinator of the committee at the time, Shuen Ka Hung, said an amendment suggested employment agencies would set a uniform charge for the recruitment of domestic staff, whether resident or non-resident. The amendment says the service charge shall not exceed the salary that the employee is paid for the first month of employment, and can be paid in instalments. “The amendment would make a clearer stipulation on the transparency of service charges, but it has yet to be legislated,” Mr Ao Ieong said. Another amendment would oblige each agency to pay the government a guaranteed deposit of 500,000 patacas, to be forfeited in the event of the agency failing to pay any fine for breaking the rules.

Half of all agencies do not sign written contracts with employers of domestic servants (Photo: Manuel Cardoso)

position, as domestic helpers with a tourist visa can find employers on their own. From there they can obtain a work permit through the employer,” he said.

Tougher law needed The survey also found that not all agencies list all recruitment service details on the contract when making a deal with an employer, and that

not all give the employer a copy of the contract. Five of the 10 agencies strike only oral agreements with employers instead of signing written contracts. “The existing law regulating employment agencies is slack and does not have strong, binding requirements for them to state everything on paper,” said Mr Ao Ieong. The law regulating employment agencies was enacted in 1994.

The existing law regulating employment agencies is slack and does not have strong, binding requirements Ao Ieong Kuong Kao, Macau Overseas Employment Agency Association president

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December 6, 2012 business daily | 5

MACAU

Govt considers raising welfare input to MOP100 Social Security Fund has proposed a gradual increase in workers’ contributions across four years to match payments by management Tony Lai

tony.lai@macaubusinessdaily.com

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he Social Security Fund wants monthly contributions to more than double to 100 patacas (US$12.5) up from 45 patacas currently, fund president Ip Peng Kin told reporters yesterday. The proposal would see 60 patacas paid by employers and 40 patacas by workers. Employers are currently required to pay two-thirds of the contribution, while employees only need to pay 15 patacas. “We also suggest the ratio should start out at 1½ to 1, then 1.2 to 1, and finally become equal in four years’ time,” Mr Ip said. Mr Ip said the monthly contribution would also increase from 100 patacas to 270 patacas a month over four years with adjustments made for inflation. The fund was currently overly reliant on government funding and

he said it should “rely on the support from the three parties,” government, employers and workers. The government plans to inject 37 billion patacas into the Social Security Fund over the next four years. According to Mr Ip’s calculations, 100 patacas accounts for just 15 percent of the money required each month to sustain the 3,000 patacas a month payment to each of the city’s pensioners. Chief Executive Fernando Chui Sai On proposed in last month’s Policy Address an increase in the monthly pension from 2,000 patacas to 3,000 patacas from next year. The suggestion received the committee’s backing yesterday. Mr Ip also confirmed the social security office had suggested raising the percentage of gaming tax profits paid into the fund.

The government currently allocates 2.4 percent of annual gaming profits to social services. Mr Ip said 75 percent of that money, instead of the current 60 percent, should go to the fund.

No discussion Labour Affairs Bureau director and committee coordinator Wong Chi Hong said the proposal had just been introduced to the committee and it had not been discussed. He told reporters after the meeting that workers and employee representatives would submit their opinions on the proposal in February. Mr Wong said both parties had concerns, judging by initial feedback. “Employers think there should be an appropriate adjustment in the contribution amount while workers

are concerned about the ratio change,” Mr Wong said. Employers’ representative Vong Kok Seng said it was fair to change the ratio to equal contributions “as only employees enjoy the benefits” from the social security system. But he is concerned about the impact a higher contribution might have on small to medium-sized enterprises, and stressed he would need to further consult industry leaders. Mr Vong said a pension rise should not necessarily be linked to an increase to contributions. Ella Lei Cheng I, workers’ representative, declined to comment on the fund’s proposal yesterday. Her association, the Macau Federation of Trade Unions, has previously voiced its concerns over changes to contributions.

Rental returns forecast to outpace costs, fees Home rents are forecast to surge next year, even before Cotai expansion begins attracting non-resident workers Stephanie Lai

sw.lai@macaubusinessdaily.com

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he cost of renting a flat in Macau increased 3.5 percent in the third quarter and will surge next year in the face of consistently high demand, says Jones Lang LaSalle. The property brokerage released its Asia-Pacific review for the third quarter last week. The report, based on internal sales results, concluded that ongoing construction and infrastructure projects will provide a solid base for demand and support rents. “Residential rents will rise faster than housing transaction costs next year,” said Jeff Wong Chi Wai, the head of residential at Jones Lang LaSalle Ltd’s Macau branch. “In the coming two years, even before we see the actual Cotai casino-resorts coming into place, professionals like engineers and chartered surveyors, as well as construction workers, will be coming into the city and creating strong demand for housing.” Mr Wong would not make specific predictions on the size of increases in rents, instead emphasising there was “no foreseeable completion of brand-new, big housing projects” and demand would remain strong. “Rents will surge faster than transaction costs because investment demand has already been greatly weakened by the latest special stamp

duty measures,” he said. “The market will become more dominated by end-users.”

Big on small The special stamp duty levies an additional 20 percent on the sale price of residential units bought and sold within one year of their purchase. The levy falls to 10 percent if the property is resold within two years. The duty has now been extended to offices, parking spaces and shops. In its report, Jones Lang LaSalle said smaller flats have been the “primary driver for higher sales volumes”. Smaller flats were also popular in the secondary market. Mr Wong said smaller flats typically referred to homes of 500 square feet or less, which were especially desirable for newly-weds and families of two or three people. “Smaller units are more popular because they are the most affordable, costing usually up to 3 million patacas [US$375,800],” he said. “They are particularly sought after by first-time home buyers.” The government has reduced the amount a homebuyer can take as a loan as part of the cooling measures. A mortgage of up to 90 percent can be arranged for homes valued at less than 3.3 million patacas.

A government proposal would require workers to pay 40 patacas to the social security fund


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business daily December 6, 2012

macau

Reports of VIP industry’s ‘death’ exaggerated: analysts But doubts among political experts that Macau’s triad past is really laid to rest Michael Grimes

michael.grimes@macaubusinessdaily.com

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number of analysts suggested yesterday that reports of arrests of junket executives in Macau were unlikely to have a serious negative effect on the city’s VIP gambling market. David Bain of Sterne Agee in New York said in a note commenting on the reported arrests: “…this happened over a week ago and Macau GGR maintained its pace. The investigation is related to a person or entity in the mainland, not specifically to business practices in Macau. While there is risk associated with investigations of this manner, at this point, we do not see evidence of a fundamental shift from our Macau bull thesis.” Another Hong Kong-based analyst told Business Daily in response to reports the arrests were linked to laundering of money – possibly linked to disgraced former Politburo member Bo Xilai: “I think the money laundering issue might be overplayed. Paying a near thirty percent premium to ‘wash’ money in Macau is a pretty high price.” The analyst added that the house theoretical advantage on VIP baccarat was around three percent – in

other words the casino gets to keep three cents out of every dollar wagered. But the person added that when VIP chip ‘roll’ was taken into consideration – i.e. how many times non-negotiable VIP chips are played before the player can convert them to cashable chips – the house advantage was much higher; in fact producing close to the 30 percent gross margin the casinos enjoy on mass-market table gambling.

Not terminal Analyst Harry Curtis, from Japanese brokerage firm Nomura in New York, said that reports of the mainland tightening its supervision of Macau gaming were “not life threatening” for the industry. Mr Bain of Sterne Agee named the junket investors said to be involved in the arrests. “According to contacts, over one week ago, Neptune, Sun City and David Star were questioned by authorities in the mainland (not Macau police),” said Mr Bain. “We are told the questions related to an investigation of an individual or business outside of Macau. Our contact suggests that this is

not the first time authorities in mainland China have questioned junket operators as part of an investigation outside of Macau – it happens ‘from time to time’,” he added. “We do believe that some arrests were made within one junket operator group related to Internet wagering in mainland China – however, its VIP division has been unaffected to date.”

Polarised views Outside the banking industry, commentary on Macau tends to be polarised into two camps – those based outside Macau that think it is still a hotbed of triad activity – and those based in or around Macau who stress the growth of China’s underground banking network as a separate and distinct system from organised crime. But in May 1997 Wong Man Fong, a former deputy secretary-general for Xinhua, China’s news agency, claimed – during a forum at Hong Kong’s Baptist University – that in the early 1980s, at Beijing’s request, he had made contact with Hong Kong’s triad bosses. “I told them that, if they

VIP gambling – still going strong

did not disrupt Hong Kong’s stability, we would not stop them from making money,” Mr Wong was reported to have said as quoted by local media. According to Holly Porteous, a former associate editor with the Washington D.C.-based defence publication Inside the Pentagon, this was a contemporary example of the Communist Party of China’s historic ‘united front’ policy. “Temporary alliances of convenience

with non-Communist entities empowered a fledgling CPC to first establish and then maintain its hold on power in China,” wrote Ms Porteous in an article now archived on the Canadian Security Intelligence Service website. “Later, having established the Peoples’ Republic, the CPC continued to use the ‘united front’ to ensure that no potential opposition bloc could exist for long outside the Party-dominated system,” she added.

Hotel Lan Kwai Fong owner reshuffles shares – again Michael Grimes

michael.grimes@macaubusinessdaily.com

it had paid Mr Heung HK$618 million (US$79.7 million) for his 49 percent stake in Hotel Lan Kwai Fong, a casino hotel in Macau. The deal gave China Star full control over the property, which operates under a Sociedade de Jogos de Macau SA gaming licence.

U.S. investigation

Hotel Lan Kwai Fong (Photo: Manuel Cardoso)

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hina Star Entertainment Group Ltd – a Hong Konglisted producer of Cantoneselanguage films and that also has links to the Macau casino junket industry – has announced yet another reshuffle of its shareholders. The firm has made a total of 60 regulatory filings with the Hong Kong Stock Exchange since the end of May – many of them linked to a restructuring of its ownership.

In the latest filing yesterday, it issued nearly 41 million new shares. But on this occasion the control of the firm hasn’t changed significantly. Heung Wah Keung Family Endowment Ltd – a vehicle for China Star’s chairman and chief executive Charles Heung Wah Kueng – remains in majority control with 66 percent. China Star Entertainment announced in a filing on July 16 that

Just over a month later it was reported in the South China Morning Post and other media that a gambling credit transfer of US$100,000 on behalf of Mr Heung might be investigated by casino regulators in the United States because of his alleged links to Chinese organised crime gangs known as triads. The transfer was from Las Vegas Sands Corp’s Venetian Las Vegas to the Sands Macao in January 2009. Mr Heung’s father Heung Chin, a native of Chaozhou in mainland China, founded the Sun Yee On triad in 1919 but was deported to Taiwan in the early 1950s. Charles Heung has never denied his family’s past links to triads but has always strongly rejected any suggestion he was personally involved in such activity. But in 1992 a United States Senate sub-committee inquiry into Asian

organised crime did identify Mr Heung as one of the leaders of Sun Yee On. Yesterday’s filing for Hong Konglisted China Star Entertainment showed that only 15.32 percent of the firm is owned by public shareholders. Under the rules of the Hong Kong Exchange’s Listing Committee, public companies should normally have a minimum of 25 percent of total issued share capital publicly held. The Committee does have discretion however to accept a lower percentage – in the range of 15 percent to 25 percent “in the case of issuers with an expected market capitalisation at the time of listing of over HK$10 billion” according to Chapter 8.08 (1) (d) of the rules. China Star Entertainment’s film output includes releases starring Hong Kong to Hollywood crossover actors Jet Li and Andy Lam. As well as a majority stake in Hotel Lan Kwai Fong – which according to its website has eight VIP gambling rooms on the 18th floor – China Star Entertainment also invests in “operations which receive profit streams from the gaming promotion business in one of the VIP gaming rooms at the Grand Lisboa Casino in Macau,” according to another regulatory filing.


Corporate

MGM China director appointed president, MGM Resorts

Only 12 money exchange companies licensed in Macau

Lack of money changers aids laundering: Coutinho

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ith few money changers for so many tourists, other venues are filling the gap. That could make life easier for money launderers, legislator José Pereira Coutinho warned in a letter sent to the city’s authorities last week. There are currently 12 companies licensed to provide money exchange services, according to the Monetary Authority of Macau’s website. The six gaming operators are also authorised to set up exchange counters. The financial regulator’s guidelines state that, when reviewing an application, it must assess the adequacy of the proposed “internal control systems, including the systems to

comply with anti-money laundering”. But “the small number” of currency exchanges outside casinos is not enough to handle the “huge capital flows” brought into Macau by tourists, Mr Coutinho told Business Daily. In the end they are pushed to “unlicensed and non-supervised” venues such as restaurants and shops, he stressed. There are “inherent risks” to this trend, the Legislative Assembly member stressed, including opening a door for money laundering activities. “I do not know up to what point money laundering is carried out this way, but this is obviously a mechanism that eludes the financial

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regulator,” he said. On the other hand, Mr Coutinho added, the few licensed money changers “are able to obtain massive profits through mechanisms that have little or nothing to do with transparency”. Last year local licensed money changers registered a turnover of 29.5 billion patacas (US$3.7 billion), up by 10.5 percent from 2010, and profits of 72.8 million patacas, official data show. Casino exchange counters handled half as much, 14.2 billion patacas, up by 27.9 percent from the previous year, but had profits of 76.4 million patacas. V.Q.

GM Resorts International – a 51 percent investor in Macau casino operator MGM China Holdings Ltd – has promoted Bill Hornbuckle to the role of president and chief marketing officer. He had served in the latter role since 2010. In the newly created position Mr Hornbuckle will be responsible for gaming development. He will report to Jim Murren, chairman and chief executive of MGM Resorts. Mr Hornbuckle is also a director of MGM China Holdings – MGM’s biggest growth market – according to a separate filing this week with the Hong Kong Stock Exchange. Mr Murren said his new appointee had been responsible for creating and building the parent company’s ‘M life’ customer loyalty programme. MGM Resorts also announced expanded responsibilities for Corey Sanders, chief operating officer; Bobby Baldwin, president and CEO of the company’s 50 percent-owned CityCenter in Las Vegas; and Dan D’Arrigo, chief financial officer. Mr Sanders will have expanded oversight of operations including retail, corporate advertising and sales.


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business daily December 6, 2012

GREATER CHINA SAIC Motor plans Thai venture China’s biggest carmaker SAIC Motor Corp plans to start making cars in Thailand with local firm C.P. Group Co Ltd, as it tries to expand overseas. The Bangkok-based venture, to be 51 percent owned by SAIC and 49 percent by C.P. Group, will have an annual production capacity of 50,000 vehicles initially, SAIC said in a statement to the Shanghai Stock Exchange yesterday. The two parties will also form a sales venture in Thailand. The statement did not say how much SAIC would invest in the Thai ventures.

HSBC in US$9.4 bln Ping An stake sale U.K bank is exiting the Ping An investment after 10 years as it looks to sell non-core assets Stephanie Tong

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SBC Holdings Plc agreed to sell its stake in China’s Ping An Insurance (Group) Co. to Thai billionaire Dhanin Chearavanont for US$9.4 billion as Europe’s biggest bank by market value moves to revive profit and boost capital. Dhanin’s Charoen Pokphand Group Co. will buy the 15.6 percent stake in China’s second-largest insurer for about HK$59 a share, giving the U.K. bank a US$2.6 billion profit, London-based HSBC said in a statement yesterday. Shares in Ping An surged 4.94 percent to HK$60.50 (US$7.81) in Hong Kong, the most in almost three months, while HSBC ended 1.65 percent higher at HK$80.0. The sale marks the 37th divestment by HSBC chief executive Stuart Gulliver, who said the group remained committed to China through its investment in Bank of Communications Co. Dhanin’s Charoen, which claims to have been the first major foreign investor in China after Deng Xiaoping opened the economy in 1979, is gaining access to an insurance market that has expanded an average 19 percent a year in the past decade. “Slowly but surely, Stuart Gulliver is refocusing HSBC back to its core strength of commercial banking,” Adam Chan, a Hong Kong-based analyst at CCB International

US$ 2.6 bln

HSBC’s expected profit from the sale OF Ping An stake

Securities Ltd, said. The CEO is “making the tough choices necessary to execute on the strategy he laid out 18 months ago”. The per-share price represents a 1 percent discount on Ping An’s close on November 16, before news of the deal was first reported. The stock has gained 19 percent this year.

Asset sales Mr Gulliver, 53, is seeking to cut costs by as much as US$3.5 billion by 2013 and boost returns by selling assets to focus on growing economies in which the bank has the greatest market share. The lender is cutting

Ping An – the world’s third-largest insurer by market value

30,000 jobs and agreed in March to sell some of its general insurance units in Asia and Latin America for about US$914 million. The British lender valued its holding in Shenzhen-based Ping An at US$6.37 billion at the end of December, according to its annual report. It has spent US$1.6 billion since 2002 building up the stake, in part by making purchases from Goldman Sachs Group Inc. and the buyout unit of Morgan Stanley. HSBC’s holding shrank to about 16 percent after Ping An’s US$2.5 billion stock offering in 2011. “The stake sale comes at a good time for HSBC,” Sandy Mehta, the Hong Kong-based chief executive officer of Value Investment Principals Ltd, said. “Any moves in which banks are realising and cashing in on investment gains and augmenting their capital position is sound strategy, given global uncertainties and ongoing regulatory and capital pressures banks are facing.” Charoen Pokphand will buy the shares through three indirect wholly owned units, HSBC said. The transaction will take place in two phases, with the first to be completed by Friday. China Development Bank Corp., a policy lender, will finance part of the deal through its Hong Kong branch, according to the statement.

“This transaction represents further progress in the execution of the group’s strategy,” Mr Gulliver said in the statement. “China remains a key market for the group,” he said, adding that HSBC will build its strategic partnership with Bank of Communications. HSBC owns 19 percent of the Shanghai-based lender, the nation’s fifth-largest, and 8 percent of closely held Bank of Shanghai Co. Its Hong Kong unit, Hang Seng Bank Ltd, holds a 13 percent stake in China’s Industrial Bank Co.

1.3 percent in 2011 as regulators tightened rules on selling coverage over bank counters and insurers adjusted their product mix to improve profitability. “This insurance business doesn’t fit into HSBC’s ’five filters’ strategy,” said Dominic Chan, a Hong Kongbased analyst at BNP Paribas SA. “For the longer term, HSBC is probably thinking it would be very hard for them to get some kind of control over China’s second-largest life insurer.” Bloomberg News

Capital boost The latest transaction will bolster HSBC’s core Tier 1 capital ratio by about 50 basis points and its total capital ratio by 100 basis points, according to the bank’s statement. A basis point is 0.01 percentage point. Ping An chairman Peter Ma has overseen the expansion of the company into the world’s third-largest insurer by market value since he founded it in the southern Chinese city of Shenzhen 24 years ago. The group also has banking, securities and money management operations. China’s insurance market expanded an average 19 percent a year in the past decade while insurers’ assets jumped 10-fold, according to the China Insurance Regulatory Commission. Premium income slid

KEY POINTS Buyer CP Group linked to Thailand’s richest man Asia’s second-biggest deal this year Acquisition partly funded by Chinese state bank Ping An shares jumped the most in almost three months


December 6, 2012 business daily | 9

GREATER CHINA Haitong wins access amid record sales Haitong Securities Co. and Everbright Securities Co. are winning greater access to China’s biggest bond market just as a moderate economic recovery encourages record issuance. Debt sales rose 7 percent in November to an all-time high of 477.4 billion yuan (US$76.7 billion), 44 times the 10.8 billion yuan in equity offerings, according to Bloomberg. Haitong and Everbright Securities are among 10 brokerages that received authorisation last week to challenge banks in the interbank market. “The best environment for the bond market is a slow-growth economy,” said Zhang Zhiming, from HSBC Holdings Plc.

Chinese shares have best day in 3 months Hong Kong hits highest since August 2011 Clement Tan

C

hinese shares had their best day in three months yesterday, lifting Hong Kong to its highest since August 2011 after comments by the new head of the Communist Party about the government’s economic priorities boosted optimism. Chinese property and infrastructure stocks were among the top gainers after Xi Jinping listed tax reform, urbanisation and a bigger price-setting role for the market as key objectives. He was speaking ahead of the party’s central economic planning meeting this month. The Hang Seng Index closed up 2.2 percent at the day’s high at 22,270.9, surpassing the previous intra-day high set on Monday. The China Enterprises Index of the top Chinese listings in Hong Kong jumped 2.9 percent. In the mainland, the CSI300 of the top Shanghai and Shenzhen listings soared 3.6 percent. The Shanghai Composite Index climbed 2.9 percent to 2,031.9, returning above the 2,000-point mark for the first time

in more than a week. The day produced the strongest gains for both indexes since September 7 that helped claw back losses in the last two weeks that left them languishing at their lowest in almost four years. “Xi’ s co m m en ts s u g g es t h e thinks the slowdown in the Chinese economy has bottomed and inflation is not going to be a big problem,” said Hong Hao, chief equity strategist at Bank of Communications International Securities. Turnover in Hong Kong hit the highest since March 6, partly due to HSBC Holdings’ sale of its stake in Ping An Insurance. Excluding the Ping An deal, Hong Kong turnover totalled HK$79.6 billion, which roughly equalled Tuesday’s total turnover. Mr Xi’s comments on urbanisation helped Chinese property, railway and infrastructure-related stocks extend their strong gains this year. Reuters

Stocks – property, financials, infrastructure-related sectors soar

Outlook for coal-related companies not so rosy

Zhengzhou Coal tumbles in HK debut Shares tumble nearly 9 pct; slump could pressure PICC Group debut tomorrow

S

hares in Zhengzhou Coal Mining Machinery slid in their first day of Hong Kong trade after underwriters of the US$300 million offering were stuck in the rare position of holding unsold stock, underscoring poor demand that bodes ill for People’s Insurance Company (Group) of China’s (PICC) bigger debut tomorrow. Tumbling coal prices have made it a particularly inauspicious time for coal-related firms to come to market, but it has also been a bad season for many listings in the region, with investors spooked by China’s economic slowdown, Europe’s debt crisis and the underperformance of several IPOs last year. New stock offerings in Hong Kong have dwindled and volumes are down by about 63 percent so far this year, according to Thomson Reuters data, a shocking reversal for the city which had been world’s top IPO destination in 2009 and 2010. Shares in Zhengzhou Coal Mining

Machinery Group Co Ltd, which is also listed in Shanghai, dropped to HK$9.47, down almost 9 percent from their listing price of HK$10.38. That in turn had been the bottom of its indicative range of HK$10.38 to HK$12.28. The benchmark Hang Seng index climbed 1.5 percent. The US$37.2 million in unsold stock is not subject to any lock-up conditions and could hang over the company’s Hong Kong share price for some time. In Shanghai, the company’s stock gained 5.4 percent but is still down about 28 percent for the year to date, underperforming a 10 percent decline in the Shanghai Composite Index. Like Zhengzhou Coal, state-owned PICC Group priced its offering near the bottom of the indicative range. PICC’s underwriters also ended up revising down the company’s valuation and IPO size, raising a less-than-hoped-for US$3.1 billion. Reuters

Beijing drops limit on insurer investment in banks

C

hina has abolished a rule limiting insurance companies’ investments in commercial banks as the industry regulator gives insurers more freedom to manage risks. The China Insurance Regulatory Commission didn’t specify in a statement posted on its website on Tuesday which specific investment restrictions have been eliminated. Chinese insurers were limited to investing in a maximum of two

banks if their ownership exceeded 5 percent under rules published in 2006, when the regulator ended a 13-year ban barring insurance firms from expanding into banking and securities businesses. Insurers shouldn’t have more than 3 percent of their total assets invested in banks, according to the 2006 regulation. “The government is gradually opening the channel for universal banking,” said Xie Jiyong, a

Shanghai-based analyst at Capital Securities. “It should be positive news for insurers as the shareholdings can help them sell policies over bank counters and their investment returns may benefit going forward given the low valuations of banks.” The insurance regulator has been gradually widening the investment scope of insurers over the past few years to help them improve returns and bolster their ability to settle claims

and manage risks. “It would be good particularly for big insurers such as China Life that want to control a bank,” Olive Xia, a Shanghai-based analyst at Core Pacific Yamaichi International Ltd, said. “But it’s not easy to find a good target after Ping An’s acquisition of Shenzhen Development Bank, and insurers’ capital strength isn’t as strong as before.” AFP


10 |

business daily December 6, 2012

ASIA

Australia’s latest GDP figures show economic growth slowing

Australia’s growth rate slows on spending cuts Economy grew at the slowest pace in a year-and-a-half Michael Heath

A

ustralia’s economy slowed last quarter on the weakest consumer demand in two and a half years and tighter government spending, validating the central bank’s decision to cut interest rates. Third-quarter gross domestic product advanced 3.1 percent from a year earlier after a revised 3.8 percent expansion in the April-June period, a Bureau of Statistics report released in Sydney yesterday showed. Growth was 0.5 percent from the previous three months, when the quarterly gain was 0.6 percent. The report covers a period when companies including BHP Billiton Ltd scaled back mining projects in response to lower commodity prices. Reserve Bank of Australia Governor Glenn Stevens lowered rates four times this year to help support consumption and housing as an elevated currency extended a slump in manufacturing and services, and the government sought spending cuts to eliminate a budget deficit. The report “confirmed a loss

of momentum in the Australian economy,” said Bill Evans, chief economist at Westpac Banking Corp., the nation’s second-largest lender. “The growth pulse has slowed to a below-trend pace, consistent with the modest upward trend in the unemployment rate.” The yield on three-year government debt was 2.61 percent, down one basis point from yesterday. Australian stocks pared gains, with the S&P/ASX 200 Index 0.1 percent higher.

Consumer spending Household consumption rose 0.3 percent in the third quarter, adding 0.2 percentage point to GDP growth, after a 0.7 percent gain in the AprilJune period, yesterday’s report showed. That was the weakest since the first quarter of 2010, the data showed. Machinery and equipment advanced 6.2 percent last quarter, adding 0.4 point to the expansion, it showed. Among industries, mining grew 4.5 percent, making it the biggest

Philippine central bank says policy ‘appropriate’ As November CPI lowest in eight months

T

he Philippines had its slowest annual inflation rate in eight months in November, and the central bank said its monetary policy stance remains “appropriate” ahead of a rate-setting meeting next week. The consumer price index rose 2.8 percent in November, below analysts’ forecasts and easing from October’s pace of 3.1 percent year-on-year. Core inflation, which strips out some of the more volatile components including food, also slowed to an

eight-month low of 3.4 percent in November. In October, the on-year pace was 3.6 percent. November’s headline and core inflation levels were the lowest since March this year. Month-on-month inflation was 0.1 percent, compared with a contraction of 0.1 percent in October. “At this point in time, the stance of monetary policy is appropriate, although we also need to be mindful that there can be changes down the

KEY POINTS Economy grows 0.5 pct in Q3 from previous quarter Market expects more rate cuts to shore up future growth Mining investment boom cresting, need other growth sources Policy makers looking to stimulate consumption, housing

contributor to growth. Government spending fell 0.4 percent, subtracting 0.1 point, the report showed. “Investment outside of mining still hasn’t shown any signs of life yet,” said Kieran Davies, chief economist at

road and we have to react as maybe necessary,” Bangko Sentral ng Pilipinas Governor Amando Tetangco told reporters after the inflation data came out. Stable food prices, on the back of favourable weather conditions, plus a strong peso, helped sustain the slowdown in inflation, which is on track to fall near the bottom end of the central bank’s 3 to 5 percent target bank for the year. A favourable consumer price outlook has allowed the BSP to cut its key policy rate by a total 100 basis points this year to a record low of 3.5 percent to protect the economy from global headwinds and dampen the peso’s rise. Radhika Rao, economist at Forecast Pte. in Singapore, said the central bank “will maintain the current accommodative stance, though the rate cutting cycle has

Barclays Capital in Sydney. “The RBA will still just be more focused on making sure the rest of the economy picks up.” He said the central bank would be relieved that the report showed easing wage pr essure and improved productivity after faster-thanexpected inflation last quarter. The RBA on Tuesday cut its benchmark rate to 3 percent, matching the half-century low set during the 2009 global recession, as hiring falters and an elevated currency hurts industries such as manufacturing and tourism. The nation’s household savings rate fell to 10.6 percent in the three months through September from a revised 10.9 percent in the second quarter, yesterday’s report showed. Australian help-wanted notices dropped for an eighth straight month in November, sliding 2.9 percent, an Australia & New Zealand Banking Group Ltd report showed this week. Economists predict a government report today will show the unemployment rate rose to 5.5 percent last month. The Australia GDP report showed the terms of trade, a measure of export prices relative to import prices, fell 4 percent last quarter from the prior three months, and 13.7 percent from a year earlier. “The solid growth the Australian economy achieved in the quarter is impressive given significant global weakness and one of the sharpest falls in global prices for non-rural commodities since the global financial crisis,” Treasurer Wayne Swan said in a statement after the release. Bloomberg News

reached its end”. “Against the backdrop of strong third quarter GDP numbers and robust credit growth, we see little reason for the central bank to ease rates any further into 2013. Currency concerns will be addressed through non-rate tools,” she said. Reuters

The consumer price index rose 2.8 percent in November


December 6, 2012 business daily | 11

ASIA

BOJ’s Nishimura sees increasing economic risks Board to debate if easing enough for undershooting economy Leika Kihara

T

he Bank of Japan will debate whether further monetary stimulus is needed to support an economy seen as undershooting forecasts, its deputy governor said, offering the strongest signal to date that it may loosen policy again this month in the face of growing political pressure. Deput y Gove rnor Kiyoh iko Nishimura also suggested that while the BOJ’s current asset-buying programme remains its key policy easing tool, the central bank will not rule out new ideas to beat deflation, which has plagued Japan for more than a decade. “The BOJ has been and will always be open to any new possibilities in terms of monetary policy steps,” he told a news conference yesterday. The remarks by Mr Nishimura, one of the BOJ’s two deputy governors, echo the pessimistic views offered by board member Sayuri Shirai last week, a sign the central bank is leaning toward easing again this month despite boosting asset purchases for two straight months in October. “We took action in September and October because what we thought were risks back in the summer materialised. We must debate and consider whether that was enough, taking into account various data which came out since then,” he said. The BOJ has been under intense political pressure to take bolder action to beat deflation. Shinzo Abe, head of a main opposition party which looks set to win a December 16 general election, has called for “unlimited” easing to achieve 2 percent inflation as well as a possible revision to a law guaranteeing the BOJ’s independence. Many market players have thus

Kiyohiko Nishimura, BOJ Deputy Governor

expected the BOJ to ease again at its next policy meeting on December 19-20, to be held just days after the election, or in January. Mr Nishimura’s remarks suggest the BOJ likely will not wait until January if upcoming data, such as its closely-watched “tankan” business sentiment survey due on December 14, turn out to be weak.

Stronger commitment “Hard data for October were tilted less to the downside, but that does not mean downside risks have disappeared, so there is a good rationale for the BOJ to ease this month,” said Masamichi Adachi,

senior economist at JPMorgan Securities in Tokyo. “I don’t think the BOJ will take the more radical measures that some people are arguing for. They’re likely to go for a steady increase in asset purchases, maybe even beyond 2013.” The 10-year Japanese government bond futures contract hit a near-decade high on expectations of further BOJ easing. The BOJ set a 1 percent inflation target in February and eased four times this year in an effort to revive the economy and show its determination to beat deflation. But the economy shrank 0.9 percent in the September quarter and is expected to contract again

this quarter, meeting the popular definition of a recession, as the country deals with the global headwinds such as falling exports to China. Mr Nishimura, a former economics professor, said that while a surprise rebound in factory output in October was a positive sign, the economy may undershoot the central bank’s longterm forecasts made in October as weak global growth may delay a recovery in exports and hurt domestic demand. The BOJ will keep its asset-buying programme in place even after the end-2013 deadline for purchases if 1 percent inflation is not foreseen by then, Nishimura said, strengthening the bank’s commitment to ultra-easy policy. Reuters

Indonesia approves forest protection project Investors including Gazprom to earn carbon offsets

Approval marks end of four years of troubled negotiations

I

ndonesia yesterday approved a rainforest conservation project that sets aside an area roughly the size of Singapore and rewards investors with tradable carbon credits in the first of its kind to win formal backing in the country. Four years in the making, the Rimba Raya Biodiversity Reserve will protect nearly 80,000 hectares

(200,000 acres), much of it carbonrich peat swamp forest at risk of being felled for palm oil plantations. Russian energy giant Gazprom OAO and German insurance firm Allianz SE are backers of the project, the world’s first on deep peat. A senior Indonesian official announced the approval on the sidelines of U.N. climate talks in

Doha, Qatar. Forestry Minister Zulkifli Hasan signed a letter last week saying the project had passed all the key steps. “We hope projects like Rimba Raya will lead the way in proving that conservation can address the rural development needs of the communities and also preserve our forests for generations to come,” Mr

Hasan said in a statement. Indonesia has the world’s thirdlargest expanse of tropical forests but these are disappearing quickly in the rush to grow more food and exploit timber and mineral wealth. Forest clearance is a major source of greenhouse gases. By saving the forest and locking away planet-warming carbon, investors such as Gazprom will receive carbon credits they can sell for profit or use to cut their own emissions. Money from credit sales will also fund local livelihood projects. Rimba Raya is part of a U.N.-led scheme called reducing emissions from deforestation and degradation (REDD). The aim is to show forests can pay for themselves and compete with powerful palm oil, mining and timber interests. Over Rimba Raya’s 30-year life, the project will generate about 104 million credits, each representing a tonne of carbon. In total, that equates to 300 million to 500 million euros (US$390 million to US$650 million) based on current market rates for REDD carbon offsets. Reuters


12 |

business daily December 6, 2012

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

30.2

2.027027

24195033

CHINA UNICOM HON

ALUMINUM CORP-H

3.37

2.431611

26740381

CITIC PACIFIC

3.3

1.851852

483662457

5.75

3.417266

48698498

BANK OF CHINA-H BANK OF COMMUN-H BANK EAST ASIA

30.35

2.188552

7730187

BELLE INTERNATIO

16.48

3.387704

14675345

24.1

1.260504

9623660

BOC HONG KONG HO CATHAY PAC AIR CHEUNG KONG CHINA COAL ENE-H CHINA CONST BA-H

CLP HLDGS LTD CNOOC LTD

23080674

9.97

1.321138

8401420

SANDS CHINA LTD

67.7

1.195815

2603152

SINO LAND CO

16.74

1.701094

52855775

SUN HUNG KAI PRO

11.4

1.423488

8183671

4.27716

6946297

118.8

1.538462

1384666

WANT WANT CHINA

55.2

2.222222

2186815

WHARF HLDG

7.73

2.792553

39447416

HENGAN INTL

70.1

2.186589

1887901

HONG KG CHINA GS

21.45

1.900238

6322334

HONG KONG EXCHNG

126.8

2.922078

7751304 43277295

17468621

HUTCHISON WHAMPO

CHINA OVERSEAS

22.65

1.116071

25395691

IND & COMM BK-H

CHINA PETROLEU-H

8.38

1.8226

108933616

CHINA RES ENTERP

28.65

4.181818

4379782

20.7

2.475248

14781505

18.48

4.761905

9165191

PING AN INSURA-H

31.65

2.926829

18057083

HSBC HLDGS PLC

MOVERS

80

1.651842 2.226463

8323016

5.3

2.514507

419885681

12.68

1.116427

17741142

31.2

0.1605136

2134240

NEW WORLD DEV

12.34

1.647446

7794411

52W (H) 22274.03906

PETROCHINA CO-H

10.56

2.325581

104023078

(L) 17821.51953

60.5

4.943625

301636733

MTR CORP

49

0

0 22280

INDEX 22270.91

80.35

LI & FUNG LTD

1188334

60.95

HANG SENG BK

1.469757

4110046 5449021

HENDERSON LAND D

89.75

5274935

0.9743136

2511142

2684893

CHINA MOBILE

2.654867

114

1.342282

4247932

2376277

13.92

22.65

1.809955

1.492537

21474028

TINGYI HLDG CO

1.109215

23.8

3.030303

8598835

13.5

CHINA MERCHANT

2150286

32.3

1.735016

118.5

52239010

VOLUME

2.205882

2.816901

447493738

0.6661732

96.75

29.2

4.222222

DAY %

68

250.2

5527470 20821983

3.407155

PRICE

POWER ASSETS HOL

TENCENT HOLDINGS

2.957486 3.472222

HANG LUNG PROPER

NAME

SWIRE PACIFIC-A

11.14 11.92

6.07

CHINA SHENHUA-H

VOLUME

3.378378

COSCO PAC LTD

23.45

CHINA RES LAND

DAY %

12.24

ESPRIT HLDGS

CHINA LIFE INS-H

CHINA RES POWER

PRICE

HIGH

22270.91

LOW

21724.1 21720

3-December

5-December

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

CHINA PACIFIC-H

25.8

3.406814

16934440

14187780

CHINA PETROLEU-H

8.38

1.8226

108933616

2.431611

26740381

CHINA RAIL CN-H

8.97

4.78972

20269372

27.3

5

20503500

CHINA RAIL GR-H

4.55

2.017937

32289487

3.3

1.851852

483662457

CHINA SHENHUA-H

31.65

2.926829

18057083

BANK OF COMMUN-H

5.75

3.417266

48698498

CHINA TELECOM-H

4.34

2.358491

95738109

BYD CO LTD-H

20.2

3.483607

3386949

DONGFENG MOTOR-H

11.48

1.77305

24113271

CHINA CITIC BK-H

4.07

2.261307

50092809

GUANGZHOU AUTO-H

6.44

2.875399

11028360

CHINA COAL ENE-H

7.73

2.792553

39447416

HUANENG POWER-H

7.07

2.761628

24922701

CHINA COM CONS-H

7.28

3.556188

31382797

IND & COMM BK-H

5.3

2.514507

419885681

CHINA CONST BA-H

6.07

3.407155

447493738

JIANGXI COPPER-H

20.2

2.330294

8985467

CHINA COSCO HO-H

3.6

2.564103

28539156

PETROCHINA CO-H

10.56

2.325581

104023078

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.43

2.38806

279078890

AIR CHINA LTD-H

5.32

1.333333

ALUMINUM CORP-H

3.37

ANHUI CONCH-H BANK OF CHINA-H

NAME

23.45

4.222222

52239010

PICC PROPERTY &

10.2

3.134479

24368787

CHINA LONGYUAN-H

5.29

1.147228

10960000

PING AN INSURA-H

60.5

4.943625

301636733

CHINA MERCH BK-H

15.18

2.567568

39662112

SHANDONG WEIG-H

7.86

2.477184

15791000

CHINA LIFE INS-H

NAME

PRICE

DAY %

VOLUME

12.08

2.896082

34115265

3.04

-0.6535948

62449775

ZOOMLION HEAVY-H

10.18

4.410256

27938861

ZTE CORP-H

11.92

5.114638

17778618

YANZHOU COAL-H ZIJIN MINING-H

MOVERS

2

0 10830

INDEX 10830.04 HIGH

10830.04

LOW

10392.65

CHINA MINSHENG-H

7.99

5.131579

65517854

SINOPHARM-H

25.05

3.298969

3713104

52W (H) 11916.1

CHINA NATL BDG-H

10.54

3.536346

62490490

TSINGTAO BREW-H

43.1

-0.1158749

1436545

(L) 8987.76

15.5

1.439791

5520135

WEICHAI POWER-H

31

4.377104

5207105

CHINA OILFIELD-H

38

10390

3-December

5-December

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

CSR CORP LTD -A

5.05

4.338843

67807681

SANY HEAVY INDUS

8.6

9.974425

57645498

22286027

DAQIN RAILWAY -A

6.39

1.107595

57808498

SHANDONG GOLD-MI

35.9

2.571429

10252665

1.93133

25570118

DATANG INTL PO-A

3.88

3.191489

26382026

SHANG PHARM -A

10.42

4.2

16109394

2.631579

19122036

EVERBRIG SEC -A

10.79

5.577299

19109346

SHANG PUDONG-A

7.88

6.056528

227002022

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.62

1.550388

128807896

AIR CHINA LTD-A

4.91

5.364807

ALUMINUM CORP-A

4.75

ANGANG STEEL-A

3.51

ANHUI CONCH-A

NAME

NAME

17.42

4.87658

55211853

GD POWER DEVEL-A

2.36

3.056769

126446598

SHANGHAI ELECT-A

3.71

3.055556

4764284

BANK OF BEIJIN-A

7.5

4.022191

64938242

GEMDALE CORP-A

5.78

4.144144

140723578

SHANXI LU'AN -A

16.39

5.064103

14454656

BANK OF CHINA-A

2.77

1.094891

73323157

GF SECURITIES-A

12.21

9.115282

57487433

SHANXI XINGHUA-A

33.97

-0.176315

6826954

BANK OF COMMUN-A

4.34

2.843602

105591654

GREE ELECTRIC

23.77

3.437772

27297220

SHANXI XISHAN-A

11.29

6.409048

20881377

BAOSHAN IRON & S

4.69

1.295896

32946087

GUANGHUI ENERG-A

15.4

2.461743

33280717

SHENZEN OVERSE-A

6.09

3.747871

46311481

8.7

6.748466

145899300

SICHUAN KELUN-A

53.83

4.829601

1084752

28.11

4.420505

3418502

SUNING APPLIAN-A

6.19

4.737733

47086150 2908155

BBMG CORPORATI-A BYD CO LTD -A

6.31

9.930314

71286098

HAITONG SECURI-A

16.33

5.970149

7055879

HANGZHOU HIKVI-A

CHINA CITIC BK-A

3.76

2.73224

45325615

HEBEI IRON-A

2.41

2.991453

43914668

TASLY PHARMAC-A

50.89

2.168239

CHINA CNR CORP-A

4.47

4.439252

95000497

HENAN SHUAN-A

54.8

3.085026

2763083

TSINGTAO BREW-A

30.31

1.882353

3752947

CHINA COAL ENE-A

6.97

2.650957

11898242

HONG YUAN SEC-A

15.85

7.823129

25377555

WEICHAI POWER-A

23.79

2.543103

19730029

CHINA CONST BA-A

4.25

1.918465

45398936

HUATAI SECURIT-A

8.01

6.233422

33545987

WUHAN IRON & S-A

2.73

0.7380074

49457892

CHINA COSCO HO-A

4.27

0.4705882

54525787

HUAXIA BANK CO

8.57

5.02451

77216901

WULIANGYE YIBIN

25.04

1.540957

67881628

CHINA CSSC HOL-A

19.75

5.165069

7969045

IND & COMM BK-A

3.9

1.5625

83900189

YANGQUAN COAL -A

11.95

5.008787

15020603

CHINA EAST AIR-A

3.08

3.355705

26525393

INDUSTRIAL BAN-A

13.48

6.141732

190074830

YANTAI WANHUA-A

13.5

2.817974

11682428

CHINA EVERBRIG-A

2.64

2.723735

205408834

INNER MONG BAO-A

32.72

7.208388

63584405

YANZHOU COAL-A

16.25

4.636188

4321297

CHINA LIFE INS-A

18.53

2.602436

30611829

INNER MONG YIL-A

19.71

2.018634

11760094

YUNNAN BAIYAO-A

63.68

0.8233059

3059524

CHINA MERCH BK-A

10.41

4.308617

108218768

INNER MONGOLIA-A

4.81

4.565217

68562924

ZHONGJIN GOLD

15.02

3.159341

18228809

CHINA MERCHANT-A

8.89

6.085919

29409199

JIANGSU HENGRU-A

27.68

1.802133

5499434

ZIJIN MINING-A

3.62

2.549575

51388521

13404527

JIANGSU YANGHE-A

93.53

-0.01069061

3338627

ZOOMLION HEAVY-A

8.47

6.007509

86031909

JIANGXI COPPER-A

21.01

3.548546

12686535

ZTE CORP-A

8.14

4.358974

17103645

JINDUICHENG -A

10.58

5.483549

7425113

ZTE CORP-A

7.75

-0.8951407

7062265

CHINA MERCHANT-A

24.65

-0.6449012

CHINA MINSHENG-A

6.56

4.458599

272925135

CHINA NATIONAL-A

7.65

3.518268

58257841

CHINA OILFIELD-A

15.39

2.6

4084510

KANGMEI PHARMA-A

14.93

3.680556

14446079

CHINA PACIFIC-A

18.6

5.621806

46580311

KWEICHOW MOUTA-A

196.64

-0.1574004

11170381

31.35

0.7714561

17269952

1.95122

61344128

CHINA PETROLEU-A

6.29

2.94599

59999211

LUZHOU LAOJIAO-A

CHINA RAILWAY-A

5.79

3.763441

45450479

METALLURGICAL-A

2.09

CHINA RAILWAY-A

3

3.448276

71857294

NINGBO PORT CO-A

2.48

1.22449

32925130

3.33

6.389776

70768234

CHINA SHENHUA-A

22.08

2.364395

19664190

PANGANG GROUP -A

CHINA SHIPBUIL-A

4.14

3.5

50327169

PETROCHINA CO-A

8.69

1.282051

37194375

PING AN BANK-A

13.39

5.433071

MOVERS 292

3 2220

INDEX 2207.878

CHINA SOUTHERN-A

3.46

3.592814

35440158

40236393

HIGH

2214.37

CHINA STATE -A

3.31

1.846154

234264486

PING AN INSURA-A

38.92

4.092003

37833366

LOW

2104.57

CHINA UNITED-A

3.35

2.134146

88428146

POLY REAL ESTA-A

12.08

1.940928

56334255

CHINA VANKE CO-A

9.14

2.122905

117872283

QINGDAO HAIER-A

11.63

4.118174

29785227

CHINA YANGTZE-A

6.48

1.567398

28739138

QINGHAI SALT-A

23.55

4.0654

6812731

10.56

3.834808

195056299

SAIC MOTOR-A

14.54

1.536313

32113243

PRICE DAY %

Volume

PRICE DAY %

Volume

CITIC SECURITI-A

5

52W (H) 2717.825 (L) 2102.135

2100

3-December

5-December

FTSE TAIWAN 50 INDEX NAME

NAME

NAME

PRICE DAY %

ACER INC

26.15

0.965251

40620796

FORMOSA PLASTIC

75.2

0.8042895

7337091

TAIWAN MOBILE CO

ADVANCED SEMICON

24.65

2.282158

30294722

FOXCONN TECHNOLO

101 -0.9803922

6845936

TPK HOLDING CO L

ASIA CEMENT CORP

37.25

0.4043127

5288582

FUBON FINANCIAL

33.3

ASUSTEK COMPUTER

318

-0.625

3347959

HON HAI PRECISIO

AU OPTRONICS COR

13.1

-2.60223

170648381

HOTAI MOTOR CO

Volume

107

2.884615

496.5

1.637666

4854525 7120709 60542922

0.4524887

14929859

TSMC

96.9

0.310559

95 -0.3147954

34294465

UNI-PRESIDENT

52.2

1.359223

10584133

UNITED MICROELEC

11.6

4.504505

124871852

214.5

1.658768

659469

CATCHER TECH

151

0

11413942

HTC CORP

283

1.615799

24832329

WISTRON CORP

31.4 -0.7898894

CATHAY FINANCIAL

31.4

1.290323

24219978

HUA NAN FINANCIA

16.5

1.226994

9150558

YUANTA FINANCIAL

14.7

0

23339762

CHANG HWA BANK

15.9

1.273885

10106069

LARGAN PRECISION

800

1.651842

1444214

YULON MOTOR CO

53

1.145038

5912217

CHENG SHIN RUBBE

75.4

0.802139

4142747

LITE-ON TECHNOLO

39.6

0.7633588

5726443

CHIMEI INNOLUX C

14.45

0.3472222

163802758

CHINA DEVELOPMEN

7.21

0.8391608

94452847

MEGA FINANCIAL H

CHINA STEEL CORP

26.4

0.7633588

24445487

CHINATRUST FINAN

17.25

0.877193

34496060

94

0.3201708

6512561

QUANTA COMPUTER

20.45

-0.486618

31849601

108

0.4651163

2420288

FAR EASTERN NEW

33.75

-0.295421

12888574

FAR EASTONE TELE

72

0.6993007

5812282

FIRST FINANCIAL

17.9

1.416431

13129819

FORMOSA CHEM & F

68.5

1.331361

6323660

TAIWAN FERTILIZE

FORMOSA PETROCHE

87.3

0.4602992

1871451

TAIWAN GLASS IND

CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC

MEDIATEK INC

330 -0.6024096

7438212

22.85

0.660793

15035722

NAN YA PLASTICS

51

0

7772141

PRESIDENT CHAIN

153.5

0.6557377

932514

70.8

-0.979021

7718848

SILICONWARE PREC

31.6

0.1584786

8423540

SINOPAC FINANCIA

12.35

1.646091

35103678

SYNNEX TECH INTL

57.1 -0.1748252

10721624

TAIWAN CEMENT

38.2

1.32626

10650752

16.15

1.253918

9610063

74.9 -0.1333333

1891226

TAIWAN COOPERATI

27.35

2.052239

5681478

2419230

MOVERS

35

12

3 5375

INDEX 5373.46 HIGH

5372.45

LOW

5300.34

52W (H) 5621.53 (L) 4643.05

5310

3-December

5-December


December 6, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) gaLaXy eNTeRTaINMeNT

Max 28.15

average 27.889

MeLCo CRoWN eNTeRTaINMeNT

Min 27.05

Last 27.6

MgM CHINa HoLDINgS

29.0

39.0

28.5

38.5

28.0

38.0

27.5

37.5

27.0

SaNDS CHINa LTD

14.2

14.0

Max 39

average 37.685

Min 37

Last 37.55

37.0

SJM HoLDINgS LTD

13.8

Max 14.08

average 13.905

Min 13.74

Last 13.8

WyNN MaCaU LTD

33

32

17.4

21.2

17.3

21.0 20.8

17.2

20.6

31

average 32.072

Max 32.35

Min 30.5

Last 32.3

30

17.1

average 17.182

NAME

PRICE

WTI CRUDE FUTURE Jan13

88.91

0.463276836

-9.080683096

109.6699982

79.68000031

BRENT CRUDE FUTR Jan13

110.26

0.382374363

6.531400966

120.7699966

90.15999603

GASOLINE RBOB FUT Jan13

268.5

-0.148754184

8.555025471

293.3099985

218.4999943

940

0.293411576

4.881450488

1036.25

799.25

3.538

-0.02825657

-8.884882823

4.394999981

3.062000036

NATURAL GAS FUTR Jan13 HEATING OIL FUTR Jan13

DAY %

YTD %

(H) 52W

301.97

0.522636485

5.091529199

334.2199802

255.5699825

1705.97

0.0645

9.0139

1796.08

1522.75

Silver Spot $/Oz

33.1987

-0.2668

19.2696

37.4775

26.1513

Platinum Spot $/Oz

1593.1

-0.141

14.2417

1736

1339.25

Palladium Spot $/Oz

684.95

0.1389

4.8125

725.19

553.75

LME ALUMINUM 3MO ($)

2094

-1.226415094

3.663366337

2361.5

1827.25

LME COPPER 3MO ($)

8032

0.337289194

5.684210526

8765

7131

LME ZINC

2022

-0.930916218

9.593495935

2220

1745

17505

0.028571429

-6.4404062

22150

15236

15.5

0.58403634

0.944317812

16.60000038

14.60000038

754.25

0.299202128

25.65597668

846.25

511

WHEAT FUTURE(CBT) Mar13

855.75

-0.087565674

16.58719346

948.25

652

SOYBEAN FUTURE Jan13

1462.5

0.480934387

20.56883759

1781.5

1126.75

149

0.438153017

-37.3818029

249

147.0999908

SUGAR #11 (WORLD) Mar13

19.53

0.462962963

-16.39554795

25.12999916

COTTON NO.2 FUTR Mar13

73.15

0.329172953

-17.3539713

98.5

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan13 Mar13

COFFEE 'C' FUTURE Mar13

20.2 Max 21.1

average 20.693

Last 20.5

Min 20.25

PRICE MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

1.0475 1.611 0.9266 1.3116 82.24 7.9825 7.7501 6.2255 54.545 30.66 1.2183 29.086 40.866 9644 86.135 1.21533 0.81406 8.1673 10.4685 107.85 1.03

0.0669 -0.0496 -0.0108 0.3212 -0.2918 0 0 0.0016 0.2567 0.0652 -0.041 -0.0275 0.0343 -0.2074 -0.3495 -0.3201 -0.3562 -0.4028 -0.3009 -0.5934 0

YTD %

(H) 52W

2.6055 3.6479 1.2411 1.1959 -6.481 0.2142 0.2232 1.1164 -2.7134 2.9028 6.427 4.1016 7.2774 -5.9623 -8.9429 0.1201 2.3745 -0.4053 -1.1129 -7.5939 0.0097

(L) 52W

1.0857 1.6309 0.9972 1.3487 84.18 8.0198 7.7864 6.3964 57.3275 32 1.3138 30.396 44.35 9664 88.637 1.24438 0.86134 8.5568 10.775 111.44 1.0308

0.9582 1.5235 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 30.2 1.2152 28.914 40.795 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS (H) 52W

(L) 52W

3.28

2.5

49.09091

3.32

2.16

1430597

CROWN LTD

10.13

-0.7835455

25.21631

10.34

7.92

2634507

18.65999985

AMAX HOLDINGS LT

0.066

0

-24.13793

0.119

0.055

1321500

66.84999847

BOC HONG KONG HO

24.1

1.260504

30.97826

25

17.46

9623660

CENTURY LEGEND

0.29

7.407407

26.08695

0.335

0.204

513000

CHEUK NANG HLDGS

4.38

3.058824

56.42857

4.4

2.5

233216

CHINA OVERSEAS

22.65

1.116071

74.69576

23.3

12.066

25395691

CHINESE ESTATES

11.86

3.130435

-5.12

13.26

8.3

37000

CHOW TAI FOOK JE

11.24

0.8976661

-19.25287

15.16

8.4

7573800

EMPEROR ENTERTAI

1.77

-1.117318

59.45946

1.82

0.99

2100000

FUTURE BRIGHT

1.26

-1.5625

200

1.43

0.38

3444000

GALAXY ENTERTAIN

27.6

0.1814882

93.82023

29.85

13.28

28918125 1384666

World Stock MarketS - Indices NAME

Last 17.08

(L) 52W

Gold Spot $/Oz

CORN FUTURE

Min 17.06

CURRENCY EXCHANGE RATES

GAS OIL FUT (ICE) Jan13

METALS

20.4

17.0 Max 17.38

Commodities ENERGY

NAME ARISTOCRAT LEISU

PRICE

DAY % YTD %

VOLUME CRNCY

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

US

12951.78

-0.1065897

6.009553

13661.87

11735.19

NASDAQ COMPOSITE INDEX

US

2996.685

-0.1836321

15.02928

3196.932

2518.01

HANG SENG BK

118.8

1.538462

28.92024

120

91.15

FTSE 100 INDEX

GB

5898.1

0.4951406

5.847164

5989.07

5229.76

HOPEWELL HLDGS

30.85

1.983471

57.38063

31.091

19.049

987100

DAX INDEX

GE

7469.2

0.4583652

26.63203

7487.89

5637.53

HSBC HLDGS PLC

80

1.651842

35.59322

80

57.05

43277295

NIKKEI 225

JN

9468.84

0.3856894

11.98638

10255.15

8238.96

HUTCHISON TELE H

3.39

-0.877193

13.37793

3.88

2.83

8797000

HANG SENG INDEX

HK

22270.91

2.160278

20.81175

22274.03906

17821.51953

LUK FOOK HLDGS I

23.25

1.086957

-14.20664

34.3

14.7

1575755

MELCO INTL DEVEL

8.05

1.257862

39.51473

8.35

5.12

11408000

CSI 300 INDEX

CH

2207.878

3.58461

-5.877203

2717.825

2102.135

MGM CHINA HOLDIN

13.8

-0.7194245

43.86759

14.76

9.432

4019604

TAIWAN TAIEX INDEX

TA

7649.05

0.6324185

8.158417

8170.72

6609.11

MIDLAND HOLDINGS

3.57

1.709402

-9.712757

5.217

3.249

3082000

NEPTUNE GROUP

0.156

0

40.54054

0.222

0.084

3200000

NEW WORLD DEV

12.34

1.647446

97.12459

13.2

6.13

7794411

SANDS CHINA LTD

32.3

3.030303

47.15261

33.95

20.35

21474028

KOSPI INDEX S&P/ASX 200 INDEX JAKARTA COMPOSITE INDEX

13.6

SK

1947.04

0.6128629

6.643884

2057.28

1750.6

AU

4520.399

0.3735699

11.43428

4581.8

3985

ID

4277.414

0.1817947

11.91583

4381.746094

3635.283

SHUN HO RESOURCE

1.3

2.362205

30

1.37

0.97

4000

FTSE Bursa Malaysia KLCI

MA

1613.58

0.3713587

5.412448

1679.37

1448.54

SHUN TAK HOLDING

3.81

-0.5221932

48.87882

3.88

2.418

11923626

NZX ALL INDEX

NZ

868.431

-0.1077794

18.99571

878.077

712.548

SJM HOLDINGS LTD

17.08

-0.9280742

36.57951

18.36

11.973

15769028

SMARTONE TELECOM

14.3

-0.1396648

6.398813

17.5

12.96

2758214

WYNN MACAU LTD

20.5

-0.4854369

5.128205

25.5

14.62

9678713

ASIA ENTERTAINME

3

-10.97923

-48.97959

7.24

2.4

413805

BALLY TECHNOLOGI

43.96

-1.72144

11.12234

51.16

35.79

913607 36932

PHILIPPINES ALL SHARE IX

PH

3669.71

-0.185501

20.51434

3677.42

2965.32

HSBC Dragon 300 Index Singapor

SI

603.9

-0.05

21.67

NA

NA

STOCK EXCH OF THAI INDEX

TH

1330.06

-0.2145665

29.72147

1335.19

1006.16

HO CHI MINH STOCK INDEX

VN

385.69

0.9395446

9.711284

492.44

332.28

BOC HONG KONG HO

3.09

0

28.90106

3.3

2.24

Laos Composite Index

LO

1196.44

0

33.01758

1249.34

876.33

GALAXY ENTERTAIN

3.61

-4.497354

93.04813

3.87

1.75

100

INTL GAME TECH

14.28

-0.2793296

-16.97675

18.1

10.92

7589647

JONES LANG LASAL

81.33

-0.2453085

32.762

87.52

56.51

195272

LAS VEGAS SANDS

45.46

-2.759358

6.388955

62.09

34.72

11731551

MELCO CROWN-ADR

14.185

-7.709824

47.45322

16.02

8.32

13851451

MGM CHINA HOLDIN

1.82

0

52.72387

1.96

1.1917

1200

MGM RESORTS INTE

9.92

-2.45821

-4.889744

14.9401

8.83

12382317

SHFL ENTERTAINME

13.84

1.391941

18.08873

18.77

10.61

180831

SJM HOLDINGS LTD

2.25

-3.433476

39.96256

2.36

1.5484

10057

110.12

-2.891217

6.291896

129.6589

84.4902

2986384

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

WYNN RESORTS LTD

AUD HKD

USD


14 |

business daily December 6, 2012

Opinion Why China and the U.S. can be capitalist comrades Clive Crook

C

Bloomberg View columnist

hina’s growth has slowed a bit this year, but the surge in vivid predictions about the country’s future continues to amaze observers. This observer, at any rate. Experts foresee imminent financial collapse or an uninterrupted rise to economic pre-eminence. The ruling Communist Party will either loosen or tighten its grip. The consequences for the U.S. and the rest of the world will be either benign or disastrous. Perhaps bewildered by my first visit to Beijing and Shanghai in more than 10 years, not to mention the jet lag, I find these contending inevitabilities unconvincing. Little in life is certain, and that probably goes double for China. Nobody could have predicted the country’s economic performance since Deng Xiaoping began his economic reforms in 1979: 30 years of growth at 10 percent a year. In the past 10 years alone, gross domestic product per person has increased twoand-a-half times, in inflationadjusted terms. Consumption has grown more slowly than output, admittedly, because investment has increased its share of the total, but still. It’s astonishing, and it most likely understates the pace of economic progress in places like Beijing and Shanghai. Knowing the numbers and understanding that these new world cities aren’t representative of the whole country doesn’t prepare you for their vibrancy and prosperity. And what I recalled from my

previous visits didn’t prepare me for the eagerness to engage and the openness of the businesspeople and scholars I’ve been meeting.

Optimistic outlook The same questions preoccupy Chinese and American thinkers alike: How long, if at all, can growth at anything like this rate continue, and, if it does, will it drive China and the U.S. toward confrontation? With all due timidity, and despite some dangers in the economic outlook, I lean to optimism on the economic question. I will go into the reasons next week. On the geopolitics, for reasons I will go into now, I lean to optimism as well. In judging the likelihood that China and the U.S. will come to blows, it’s important to remember that they now share a common religion: capitalism. A great deal is made of the supposedly fundamental differences between China’s economic model and the one that prevails in the West. It flatters everybody to think in these terms. You can’t have the superior model if everybody’s model is essentially the same. China talks about “socialism with Chinese characteristics,” Western analysts about “state capitalism”. Market-based economies do come in different versions, of course. American capitalism is different from French capitalism, which is different from South Korean capitalism, which is different from Singaporean capitalism, the

The U.S. will grow, but China will grow faster. By mere weight of population its economy will soon be bigger. Nothing in America’s history has prepared it for this

version that first impressed Deng. But they are family. China is another sibling. You just have to discount the age difference. Various branches of government still play a big role in the Chinese economy, to be sure. State-owned enterprises still account for between 25 and 30 percent of industrial output, down from more than 80 percent in the late 1970s. Some of these SOEs are huge and celebrated as national champions, an idea not unheard of in Europe. But they continue to dwindle in aggregate, and they are increasingly exposed in varying degrees to market forces. This isn’t a blend of socialism and communism kitted out with optional extras. It isn’t market-

Leninism. Thirty years on, China is a capitalist country. Therefore, the contest between China and the U.S., if it happens, won’t be about which of two bitterly opposed ideologies survives. Both might wish to deny it, but they find themselves on the same side in that particular struggle.

Greater transparency In the political as opposed to economic realm, of course, that isn’t true. Chinese politics is no longer totalitarian, but it’s authoritarian. Dissent of certain kinds is repressed, though critics who respect the bounds get a hearing. The Chinese want greater transparency, accountability and a crackdown on corruption, but they aren’t clamouring for the vote. America’s contempt for this system, and China’s resentment of U.S. contempt, give them something to fight over if they choose to. In matters of war and peace, interests usually matter more than values. China is acutely sensitive to the risks posed by its extended land borders. It sees its modern history, with good reason, as a series of depredations by hostile neighbours. As it gets richer it will do what most rising powers have done – attend to its security by increasing its military capabilities. The U.S. understands this and sees its own interests at risk. It’s already happening. China’s gathering strength and recent new assertiveness

in foreign policy are stirring concern in the region and beyond. When the Obama administration announced its “pivot to Asia,” it was affirming its commitment to the prevailing regional order, the rise of China notwithstanding. The danger is plain, especially because the U.S. has sensitivities of its own. Even as its economy resumes a healthy rate of expansion, America will have to cope with relative decline. The U.S. will grow, but China will grow faster. By mere weight of population its economy will soon be bigger – and eventually, much bigger. Nothing in America’s history has prepared it for this. Take it from a Brit: It may take some getting used to. Yet the great capitalist convergence, if it continues, will in crucial respects push the other way and promote peace. Cross-border capitalism – globalisation, if you prefer – creates mutual dependence. Countries bound together by flows of goods, services, capital and people, as China and the U.S. increasingly are, gradually come to see that they succeed or fail together. The dangerous fallacy that trade is a zero-sum game is tenacious, but as economic interdependence increases, the mutual benefits become more obvious. Also, with rising prosperity, people have more to lose. Fear of conflict – not war by remote- control, but one that would put everything at risk – will surely rise. Interaction at every level should be the order of the day. Familiarity will breed friendship, I’m convinced, as Chinese and U.S. attitudes are often comically similar. Prickliness over sovereignty and an exaggerated belief in national exceptionalism are the most salient examples. Neither country willingly cedes control to outsiders. Neither can abide being bossed around. Both are entirely convinced of the rightness of their ideas. If America wants to understand China, it could start by better understanding itself – and vice versa. Then, if China can moderate its sense of grievance over past injuries, and the U.S. can curb its desire to tell everybody else how to live, a genuine partnership between the two superpowers is achievable. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associated editor Michael Grimes Newsdesk Alex Lee, Stephanie Lai, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, José I. Duarte, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | 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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December 6, 2012 business daily | 15

OPINION Business

wires

Innovation crisis or financial crisis?

Leading reports from Asia’s best business newspapers

Kenneth Rogoff

Yonhap News

A

South Korea’s top central banker yesterday expressed hopes that the move by Korea and China to boost the use of their currencies for trade settlement would dispel talks over whether to extend the existing currency swap line. Korea and China have agreed to use their bilateral currency swap line valued at 360 billion yuan (US$59 billion) to bolster the use of both currencies. “What’s important is that the issue over whether the currency line would be extended or not would be dispelled due to the move,” Bank of Korea Governor Kim Choong-soo said.

The Star Malaysia’s economic growth is expected to be less robust next year amid a weak external economicenvironment,according to the Institute of Chartered Accountants in England and Wales (ICAEW). The Europebased professional accountancy body has predicted Malaysia’s gross domestic product for next year to grow at 3.8 percent in 2013 compared with an estimated growth of at least 5 percent this year. Malaysia’s economy will remain supported by strong domestic demand amid comparatively weak export performance and lower commodity prices next year, ICAEW said.

Times of India India’s corporate affairs ministry on Tuesday said it would pitch for tax exemptions for companies that spend 2 percent of their net profit on corporate social responsibility activities as proposed in the new Companies Bill, even as it refused to make the spending mandatory. Minister Sachin Pilot said the government has no intention of being a “watchdog” over the implementation of the measure but rather make it voluntary. “We do not want an inspector raj, but rather have a system which is self regulating and self compliant,” Mr Pilot said.

WSJ Asia Maldives Airport Co. expects to take over the island nation’s main airport on Saturday, as a deadline given by the government to an IndianMalaysian consortium to hand over the facility expires on Friday, the managing director of the state-run company said. “We are applying for an aerodrome licence with the civil-aviation authority sometime today,” Mohamed Ibrahim told the newspaper on Tuesday. “And, we are definitely going to run the airport, as we had done for 40 years before the consortium took over two years back.”

Professor of Economics and Public Policy at Harvard University and former chief economist of the IMF

s one year of sluggish growth spills into the next, there is growing debate about what to expect over the coming decades. Was the global financial crisis a harsh but transitory setback to advanced-country growth, or did it expose a deeper longterm malaise? Recently, a few writers, including internet entrepreneur Peter Thiel and political activist and former world chess champion Garry Kasparov, have espoused a fairly radical interpretation of the slowdown. In a forthcoming book, they argue that the collapse of advanced-country growth is not merely a result of the financial crisis; at its root, they argue, these countries’ weakness reflects secular stagnation in technology and innovation. As such, they are unlikely to see any sustained pickup in productivity growth without radical changes in innovation policy. Economist Robert Gordon takes this idea even further. He argues that the period of rapid technological progress that followed the Industrial Revolution may prove to be a 250-year exception to the rule of stagnation in human history. Indeed, he suggests that today’s technological innovations pale in significance compared to earlier advances like electricity, running water, the internal combustion engine, and other breakthroughs that are now more than a century old. I recently debated the technological stagnation thesis with Thiel and Kasparov at Oxford University, joined by encryption pioneer Mark Shuttleworth. Kasparov pointedly asked what products such as the iPhone 5 really add to our capabilities, and argued that most of the science underlying modern computing was settled by the seventies. Thiel maintained that efforts to combat the recession through loose monetary policy and hyper-aggressive fiscal stimulus treat the wrong disease, and therefore are potentially very harmful.

Running dry? These are very interesting ideas, but the evidence still seems overwhelming that the drag on the global economy mainly reflects the aftermath of a deep systemic financial crisis, not a long-term secular innovation crisis. There are certainly those who believe that the wellsprings of science are running dry, and that, when one looks closely, the latest gadgets and ideas driving global commerce are essentially derivative. But the vast majority of my scientist colleagues at top universities seem awfully excited about their

projects in nanotechnology, neuroscience, and energy, among other cutting-edge fields. They think they are changing the world at a pace as rapid as we have ever seen. Frankly, when I think of stagnating innovation as an economist, I worry about how overweening monopolies stifle ideas, and how recent changes extending the validity of patents have exacerbated this problem. No, the main cause of the recent recession is surely a global credit boom and its subsequent meltdown. The profound resemblance of the current malaise to the aftermath of past deep systemic financial crises around the world is not merely qualitative. The footprints of crisis are evident in indicators ranging from unemployment to housing prices to debt accumulation. It is no accident that the current era looks so much like what followed dozens of deep financial crises in the past. Granted, the credit boom itself may be rooted in excessive optimism surrounding the economicgrowth potential implied by globalisation and new technologies. As Carmen Reinhart and I emphasize in our book This Time is Different, such fugues of optimism often accompany credit run-ups, and this is hardly the first time that globalisation and technological innovation have played a central role.

Long-term costs Attributing the ongoing slowdown to the financial crisis does not imply the absence of long-term secular effects, some of which are rooted in the crisis itself. Credit contractions almost invariably hit small businesses and start-ups the hardest. Since many of the best ideas and innovations come from small companies rather than large, established firms, the ongoing credit contraction will inevitably

have long-term growth costs. At the same time, unemployed and underemployed workers’ skill sets are deteriorating. Many recent college graduates are losing as well, because they are less easily able to find jobs that best enhance their skills and thereby add to their long-term productivity and earnings. With cash-strapped governments deferring urgently needed public infrastructure projects, medium-term growth also will suffer.

Surely the economic trauma of the last few years reflects, first and foremost, a financial meltdown…

And, regardless of technological trends, other secular trends, such as ageing populations in most advanced countries, are taking a toll on growth prospects as well. Even absent the crisis, countries would have had to make politically painful adjustments to pension and health-care programmes. Taken together, these factors make it easy to imagine trend GDP growth being one percentage point below normal for another decade, possibly even longer. If the Kasparov-Thiel-Gordon hypothesis is right, the outlook is even darker – and the need for reform is far more urgent. After all, most plans for emerging from the financial crisis assume that technological progress will provide a strong foundation of productivity growth that will eventually underpin sustained recovery. The options are far more painful if the pie has ceased growing quickly. So, is the main cause of the recent slowdown an innovation crisis or a financial crisis? Perhaps some of both, but surely the economic trauma of the last few years reflects, first and foremost, a financial meltdown, even if the way forward must simultaneously treat other obstacles to longterm growth. © Project Syndicate


16 |

business daily December 6, 2012

CLOSING U.K. services barely grow in November

Samsung Electronics Co. promoted Lee Jae Yong to vice chairman, putting him a step closer to succeeding his father as leader of the world’s biggest maker of televisions and mobile phones. The elevation from president and chief operating officer rewards Mr Lee for helping oversee Samsung’s “unprecedented growth” in those businesses, the company said in an e-mailed statement yesterday announcing its annual leadership shuffle. Samsung shares rose 1.8 percent to a record 1,455,000 won at the close of trading in Seoul, extending their gains this year to 38 percent.

U.K. services growth unexpectedly slowed in November as demand fell for the first time in two years, increasing the chance the economy will shrink again this quarter. A gauge fell to 50.2, the lowest in 23 months, from 50.6 in October, Markit Economics and the Chartered Institute of Purchasing and Supply said in London yesterday. The reading is barely above the 50 line that divides contraction and expansion. The U.K. economy is struggling to shake off a double-dip recession with the Bank of England forecasting a “zig-zag” pattern for economic output and predicting a contraction this quarter.

(Photo: Manuel Cardoso)

Samsung promotes chairman’s son

Bank profits overtake 2011’s before year-end More profitable outside loans continue to grow in importance to Macau banks Tony Lai

tony.lai@macaubusinessdaily.com

I

n the first 10 months of this year local banks have already recorded profits of 5.1 billion patacas (US$637.5 million), surpassing last year’s total results of 5.05 billion patacas, the Monetary

Authority of Macau said. The latest data released yesterday show that the sector’s profits reached 810.7 million patacas in October alone, an 89 percent increase from the previous

month and up by half year-on-year. October’s result also marks Macau banks’ best monthly performance in seven years, since they recorded record profits of 821.6 million patacas in September 2006.

The solid performance in October was likely sustained by the growing importance of loans granted to outsiders, mostly using the money local residents deposit. José Morgado, chief executive of Banco Espírito Santo do Oriente SA, told Business Daily earlier this year it was more lucrative for banks to obtain deposits at low rates here and lend the capital abroad, especially for casino-related operations. Loans to non-residents suffered a minor drop of 0.6 percent to 212 billion patacas in October while their deposits slipped by 0.2 percent to 124 billion patacas from the previous month. The loans to residents, however, declined much faster, by 1 percent to 189.4 billion patacas, while domestic deposits went up by 3.5 percent to 352.7 billion patacas. Outsiders could acquire loans worth 1.7 times the capital they put into Macau banks whereas residents only had loans worth half as much as their deposits. Meanwhile, total loans granted by Macau banks in October reached 401.4 billion patacas in October, representing 77.4 percent of all deposits, which were worth 518.9 billion patacas. The rate was down by 2.5 percentage points from the previous month and 4 points from the highest rate this year – 81.4 percent in July –, as deposits continue to outgrow loans.

EU imposes US$1.9 bln fine on screen producers Biggest ever cartel fine levied by European Commission

Philips fined US$409.6 mln, LG Electronics US$386.2 mln

R

oyal Philips Electronics NV and LG Electronics Inc. are among companies fined a record 1.47 billion euros (US$1.9 billion) by European Union antitrust regulators over price-fixing agreements of nowobsolete cathode-ray tubes used in televisions and computer monitors.

Philips was fined 313.4 million euros wh i l e L G fa ces a 2 9 5 . 6 million-euro penalty, the European Commission said in a statement yesterday. Philips and LG also share a fine of 391.9 million euros for a unit they jointly owned. Panasonic Corp. was fined

157.5 million euros and shares an 86.7 million-euro punishment with Toshiba Corp. and MTPD, a Panasonic unit. Panasonic and MTPD also share a 7.9 million-euro fine. “Cathode-ray tubes were a very important component in the making of television and computer screens. They accounted for 50 to 70 percent of the price of a screen,” said EU Competition Commissioner Joaquin Almunia in the statement. Sales of cathode-ray tubes used in televisions and computer monitors fell after customers switched to slimmer liquid-crystal and plasma display sets. The Commission’s sanctions followed a total fine of 128.74 million euros levied last year against four producers of the glass used in cathode-ray tubes. Philips and Technicolor, previously known as Thomson SA, received objections in the EU probe in 2009. Antitrust watchdogs in the EU, Japan and South Korea raided companies in 2007 over concerns they colluded to fix prices. Joost Akkermans, a spokesman

for Amsterdam-based Philips, said the fine was “disproportionate and unjustified” and related to a unit it divested in 2001. Philips will appeal the EU decision, he said in a telephone interview. Samsung SDI Co. Ltd, an affiliate of Samsung Electronics Co. Ltd, was also told to pay 150.8 million euros. Toshiba was separately fined 28 million euros and Technicolor SA was fined 38.6 million euros. Chunghwa Picture Tubes Ltd wasn’t punished because it was the first to inform regulators of the cartel. Top management meetings between the companies to fix prices were often followed by a golf game, the EU said in statement. The firms fixed prices, shared markets, allocated customers between them and restricted their own output in two worldwide cartels between 1996 and 2006. Samsung SDI, Philips and Technicolor received reductions to their fines for cooperating with the investigation, the EU said. Bloomberg News/Reuters

Macau Business Daily, December 6, 2012  

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