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CE’s pledge on baby milk shortage

Year I Number 204 Tuesday January 22, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00 www.macaubusinessdaily.com

Chief Executive Fernando Chui Sai On says the government will try to ensure a steady supply of baby milk formula in Macau shops – and stop ‘irregular’ selling practices. He said four public bodies had been working together on easing the shortage. Last week the four best-selling brands were in short supply because of demand by mainland Chinese visitors. Mr Chui was speaking before departing to Beijing for a three-day visit. Getting approval for a new border crossing will be the main item on his agenda when he meets central government officials today.

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Inflation rises 4th year in row I

nflation rose in 2012 – the fourth consecutive year – thanks to costlier homes and food. Higher housing costs in December ensured inflation for the whole of last year stayed well above six percent. According to official data released by the Statistics and Census Service yesterday, the inflation rate for 2012 stood at 6.11 percent, well above the 5.81 percent recorded in 2011 and the 4.1 percent in neighbouring Hong Kong for 2012. Last year’s inflation was the highest since March 2008, when price hikes peaked at 9.49 percent, with an average of 8.61 percent for the whole of 2008. In 2012 home prices increased by almost a third year-on-year to an average of almost 59,500 patacas (US$7,450) per square metre in the JanuaryNovember period, official data show. More on page 3

Franco Dragone refutes tax ‘fraud’ allegations F

ranco Dragone – creator and director of The House of Dancing Water show at Melco Crown Entertainment Ltd’s City of Dreams on Cotai – has defended his use of companies in tax havens. A Belgian publication reported last week the authorities there are investigating Mr Dragone on suspicion of “serious and organised” international tax offences, money laundering, “undeclared work” and “subsidy fraud”. Mr Dragone’s office told Business Daily he denied any wrongdoing and that the claims resulted from a “total misunderstanding” by the authorities of his business arrangements. Page 6

Era of election spending sprees dawns for city

I SSN 2226-8294

HANG SENG INDEX

The addition of two directly elected seats at this year’s Legislative Assembly election will push candidates to put more resources into advertising and promotion, advertising insiders said. “With two further seats in this election, we expect the atmosphere [contest] will be tighter and the candidates have to find means to be more outstanding,” said Keyvin Bi Chi Kin, chairman of the Association of Advertising Agents of Macau. Page 5

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January 21

HSI - Movers Name

PYE shareholders agree to Cotai casino project Hong Kong-listed Paul Y. Engineering Group Ltd confirmed in a regulatory filing last night more than 99 percent of its shareholders approved a deal allowing the company to hold land, raise share capital and sell bonds for a boutique Macau casino. PYE – a unit of separately listed ports and infrastructure business PYI Corporation Ltd – will help raise cash for the US$800 million (6.4 billion patacas) casino hotel scheme. Page 7

%Day

KUNLUN Energy CO

2.51

COSCO PAC LTD

2.28

BELLE INTERNATIO

2.05

CITIC PACIFIC

2.02

SANDS CHINA LTD

1.86

CHINA UNICOM HON

-0.75

CNOOC LTD

-1.09

CHINA OVERSEAS SINO LAND CO WANT WANT CHINA

-1.2 -1.66 -2.1

Source: Bloomberg

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business daily January 22, 2013

macau The new pedestrian crossing in Ilha Verde is planned for where the Nam Yuet market now stands (Photo: Manuel Cardoso)

Govt seeking speedy OK for new border crossing The chief executive lays out the priorities for his talks in Beijing Tony Lai

tony.lai@macaubusinessdaily.com

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etting approval for a border crossing will be the main item on the agenda for talks that Chief Executive Fernando Chui Sai On will have during his threeday visit to Beijing, which began yesterday. But Mr Chui said he would have only preliminary discussions with central government officials about easing the restrictions on vehicles crossing the border – a proposal that has caused public concern here. He will meet officials of the Ministry of Public Security and the General Administration of Customs today. Secretary for Transport and Public Works Lau Si Io and Customs Service head Choi Lai Hang will be accompanying the chief executive in today’s meetings. “We are keen to see how this new checkpoint might divert the flow of travellers,” Mr Chui told reporters before leaving for Beijing. He said his talks would also cover how construction of the new crossing would help to rehabilitate the Canal dos Patos, which has long been plagued by sewage discharge from both Zhuhai and Macau. He said he would try to get approval from the central government for the new crossing “as soon as possible”.

The Macau government is proposing to put the new crossing, for pedestrians only, in Ilha Verde, where the Nam Yuet market now stands.

24-hour goal The new crossing was first proposed at the annual Guangdong-Macau Cooperation Joint Conference last May and it is planned for 200,000 to 250,000 people per day.

We are keen to see how this new crossing might divert the flow of travellers Chief Executive Chui Sai On

The border area will span 28,000 square metres, including a customs inspection building and a 450-metre

long enclosed walkway. The customs inspection building will also be connected to the terminus of the Guangzhou-Zhuhai Intercity Railway. It is unknown at the moment whether the new crossing would open 24-hours, even though the Macau authorities have long claimed that roundthe-clock border entry is the ultimate goal. The busiest ZhuhaiMacau border, Gongbei, handles a daily traffic of about 260,000 passengers and is open from 7 am to midnight. The Lotus Bridge crossing, in contrast, only handles about 20,000 to 30,000 passengers at peak hours. With lack of mature transportation support, hectic traffic is not a common sight for the border with Hengqin Island, even though it is designed to handle a daily volume of 70,000 passengers. Zhuhai and Macau authorities reached a consensus in October to keep the Lotus Bridge crossing open for two more hours, extending it from 8 am to 10 pm, but this measure has yet to be implemented. In addition, the two sides have yet to reach a consensus on ‘one-side’ inspection, which would allow each side to handle the customs checks

for its departing passengers and freights only.

Traffic fears Mr Chui said he would “only exchange opinions” with central government officials about easing the restrictions on private vehicles from Macau crossing into Guangdong and on private vehicles from Guangdong crossing into Macau. At present only vehicles with dual registration plates valid on both sides of the border can cross. The proposal to ease the restrictions has caused public concern, expressed on the Internet in particular, about vehicles from the mainland adding to traffic congestion here. “I have noted society’s concerns in the past two days but this matter is covered by the Guangdong-Macau

Cooperation Framework Arrangement,” Mr Chui said. “It is not as if we were seeking approval today and starting it at once.” He said the government would listen to the various opinions and consider all the pros and cons of the proposal before making its decision. He said the government would do its work “pragmatically”. He did not say when the proposal might be put into action. Mr Chui said he and his delegation would discuss in Beijing how to prevent the persistent flooding of old districts such as the Inner Harbour area. They would meet officials of the Ministry of Land and Resources and the State Oceanic Administration to look for a solution to the problem, he said. With Stephanie Lai

Stop irregular baby milk selling practices – Chui

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hief Executive Fernando Chui Sai On has said the government will endeavour to secure the supply of infant formula and stop any irregular selling practices. He said four public bodies – the Consumer Council, the Economic Services Bureau, the Health Bureau and the Civil and Municipal Affairs Bureau – had been working together on easing the shortage of baby milk powder. “I hope there will be more information in one or two days,” he told reporters before leaving for Beijing yesterday. Last week

the four best-selling brands of infant formula – Friso 1, Friso 2, Nestle Nan and Wyeth Gold – were in short supply because of demand by mainland Chinese visitors, and pharmacies have begun rationing tourists. Mr Chui said the government would look for long-term solutions to the problem. For instance, he said hospitals should refrain from relying only on the four best-selling foreignmade brands, so making life easier for parents that are loath to change brands after their new-borns are discharged from hospital. T.L.


January 22, 2013 business daily | 3

MACAU

Housing hike fuels December inflation Inflation rose for a fourth consecutive year thanks to costlier homes and food Vítor Quintã

vitorquinta@macaubusinessdaily.com

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acau finished 2012 with prices rising again, as higher housing costs ensured that the inflation for the whole of last year stayed well above 6 percent. According to official data released by the Statistics and Census Service yesterday, the inflation rate for 2012 stood at 6.11 percent, well above the 5.81 percent recorded in 2011 and the 4.1 percent in neighbouring Hong Kong. Last year’s inflation was the highest since 2008, when price hikes reached an average of 8.61 percent – and a peak of 9.49 percent in March 2008. After reaching 5.19 percent in October – the lowest percentage increase year-on-year since May 2011 – inflation crept up again in the final two months. “These data are worrying,” economist José Sales Marques told Business Daily. He believes the late-year acceleration was linked to great demand caused by a high-season

for tourism. “The gambling data also point to that,” Mr Sales Marques added. Casino revenue rose by 19.6 percent year-on-year in December. “It might mean that we will continue to have a high inflation, perhaps even higher, during the first few months,” until at least Chinese New Year, the economist predicted. The December hike of 5.83 percent year-on-year was mostly fuelled by a 13.3 percent rise in housing costs, which is the second most significant expense in the Macau consumer price index. This factor includes mortgage instalments paid by homeowners, which have soared for loans approved recently. Home prices increased by almost a third year-on-year to an average of almost 59,500 patacas (US$7,450) per square metre in the JanuaryNovember period, official data show. “Housing prices are a structural issue and there are still doubts

over whether the increase has been driven by speculation or not,” Mr Sales Marques said.

High-priced food For the whole of 2012 a hike of 8.52 percent in food and non-alcoholic beverages was the biggest factor for why the inflation rate rose for a fourth consecutive year. The price of meals bought away from home soared by almost 9 percent and that alone accounted for one third of last year’s inflation rate. “The price increase for meals taken away from home quickly obviously reflects the inflationary pressure caused by the growing number of visitors,” Mr Sales Marques said. “Of course the price of food products and staff salary are factors, but it is mostly linked to increased demand, which fuels a hope to gain profits,” the economist said. In addition, the cost of fresh food products increased by 8.03

percent in 2012, mainly due to eye-popping hikes in the price of vegetables and beef. For instance, almost all of the vegetables on sale in the city had retail price rises of more than 21 percent last year. The cost of Chinese cabbage rose by 41.7 percent. Furthermore, fresh beef cost an average of 123.44 patacas (US$12.50) per kilogram in December, 29.4 percent more than in the same period a year earlier. The wholesale price of fresh beef rose several times in 2012, at an average rate of more than 100 patacas a month, something which suppliers blamed on transport problems. And the city’s main supplier of meat, Nam Yue Food Stuff and Aquatics Co Ltd, has stated that beef prices will probably rise by less than 30 percent this year. In contrast, reduced charges for communication services (down by 4.2 percent) and subsidised electricity charges reduced part of the increment.

Yellow taxi boss sure of staying in business Tony Lai

tony.lai@macaubusinessdaily.com

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ang Iek Radio Taxi Co, which runs 100 yellow taxis, is certain that the government will extend its concession, which expires next month, despite a prolonged dispute over renewal of its contract. “Our discussion with the government has gone well and the only difference is over its duration,” the company’s general manager, Mário Sin Ferreira, told Business Daily. “We are likely to get another extension for a certain period next month,” he said. He said his company had done a lot of preparatory work, such as work on the design of its cabs, in accordance

with government instructions. But Mr Ferreira declined to say how long the extension would be for or to give any other details of the terms. It would not the first extension of its concession that Vang Iek has negotiated. The Transport Bureau extended the company’s concession for 18 months in August 2011, after the government demanded assurances that it would improve its service in older districts of the city and its service to the disabled. Vang Iek argues that its present contract says its concession should be renewed for another 10 years. It took its case to court at the

end of 2011. Mr Ferreira said: “We asked the court is to find a third party to give its interpretation of the duration of the contract, as we have a totally opposite opinion from the government on this.” The Portuguese-language newspaper Ponto Final has reported that the Court of Second Instance dismissed Vang Iek’s suit on Friday. Mr Ferreira said he was unaware that the court had dismissed the suit, so could not immediately comment. But he said: “We will the follow the court’s judgement.” Mr Ferreira emphasised that he was confident his company would continue to operate.

“Our taxis will still be on the road. No-one has told me they will not,” he said.

The operator of Macau’s yellow taxis is arguing with the government about renewal of its concession


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business daily January 22, 2013

macau Visa-free entry for Mauritius nationals Passport holders from the Indian Ocean nation Mauritius are to be allowed visa-free access to Macau for a stay of up to 90 days. The Identification Services Bureau says Mauritian nationals are currently barred from visa-free or visa on arrival entry. The government said the liberalisation was a reciprocal gesture after Macau passport holders were granted visa-free passage in the opposite direction. So far 104 countries or territories have granted Macao SAR passport holders such rights. The Asian Poker Tour – which regularly holds a tournament in Macau – last year also held an event in Mauritius.

Local casino shares outperform Hang Seng Trend of 2012 is continuing into this year, says latest report from Morgan Stanley Michael Grimes

michael.grimes@macaubusinessdaily.com

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acau gaming stocks outperformed the Hang Seng Index in Hong Kong by 32 percent in 2012, says the latest report on the sector from the Hong Kong office of Morgan Stanley, a bank. “…this trend has continued in 2013,” says the document, titled ‘Macau Gaming & Property 4Q12 Preview’ written by Praveen K Choudhary and Katherine Sun. Commenting on some of the factors driving the gaming firms’ respective share performances, the report states: “Growth has recovered lately thanks to a cyclical upturn in VIP business, driving multiples higher. Investors are now looking at the group [of Macau gaming operators] for its FCF [free cash flow] generation (and dividend payments)…” But the report says this is being achieved with “less remarkable growth”, than has been seen in earlier years. And the paper warns that given recent upward ‘re-rating’ of Macau gaming stocks by analysts – i.e. where the market has changed from a bearish to a more bullish view of the sector and changed calculations on the key indicator of price to earnings ratio – “leaves less upside for the industry – unless earnings improve significantly”. Price to earnings ratio (P/E ratio) is a valuation ratio of a company’s current share price compared to its per-share earnings. In general, a high P/E ratio suggests investors are expecting higher earnings growth in the future compared to companies with a lower P/E ratio.

Dividend outlook “Though growth has slowed down, ability to pay dividends has

gone up, and thus the multiples may not look stretched. However, if growth slows down to single digit, the current multiples may be difficult to justify,” suggests the paper. The Morgan Stanley report says two near-term concerns in relation to the Macau casino market are the partial smoking ban implemented on January 1, and the possibility macroeconomic conditions could deteriorate and that players’ liquidity – in the form of cash for mass-market play or for servicing of credit raised for junket room play – “dries up”. But it adds: “Risks of [the partial] smoking ban and

‘Macau Scam’ suspects arrested in Malaysia C

riminals from Taiwan and the People’s Republic of China are apparently using the mainland’s widely reported crackdown on corruption as cover for a fraud dubbed the ‘Macau Scam’. Malaysian media said 12 suspects from the two jurisdictions have been arrested after a raid on a luxury

bungalow on the eastern outskirts of the Malaysian capital Kuala Lumpur. Their alleged victims or intended victims were bank account holders from mainland China. Last month, police detained 51 members of the same suspected syndicate in a simultaneous raid at two different locations in Petaling Jaya to the

regulatory clampdowns have been lower than expected…” Morgan Stanley is predicting gross gaming revenue to grow by 13 percent in 2013, with VIP play expanding by 10 percent and the mass market by 20 percent. That’s a slower growth rate for the mass market than seen in 2012. Last year mass-market baccarat – the favourite casino game of non-junket players in Macau – produced revenue growth of 36 percent year-on-year, driven significantly by the expansion of the premium mass segment with its higher minimum bets. “We believe that mass growth

could continue to outpace VIP, driven by the addition of 200 tables at [Sands] Cotai Central in Q1 2013, and Cotai taking market share from the peninsula,” state the authors.

west of the capital. Commenting on the latest raid, assistant commissioner Chong Mun Phong of the State Commercial Crime Investigation Department told local media how the alleged scam worked. “The bungalow operated as a call centre where the suspects called victims posing as prosecution officers from China’s Financial Crimes Investigation Department,” stated Mr Chong. “Victims are told that their bank accounts have been used for money laundering and asked to transfer their funds to an account claimed to belong to the government to prove they are not linked to illegal activities,” he added. Mr Chong did not say whether the suspects specifically mentioned Macau in the scripted telephone calls

made to potential victims. Other media reports from Southeast Asia suggest the term ‘Macau Scam’ is a generic term for a variety of telephone based confidence tricks aimed often at ethnic Chinese where Macau is sometimes mentioned as ‘bait’. In one, victims are called by a Chinese speaker claiming to be from a hotel in Macau. They’re told they have won a big prize such as a car, but that if they can’t come to collect it, the prize can be converted to cash. But before the cheque is issued, ‘winners’ are asked to deposit some money to cover ‘administration costs’. Anyone incautious enough to send money should not expect to receive a winner’s cheque suggest media reports.

32%

Amount Macau casino stocks beat Hang Seng in 2012

M.G.


January 22, 2013 business daily | 5

MACAU

Agencies expect boom in political advertising Ad men want the ceiling on campaign spending by Legislative Assembly candidates raised Tony Lai

tony.lai@macaubusinessdaily.com

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ore directly elected seats in the Legislative Assembly mean candidates in this year’s elections will spend more on advertising, people in advertising say. “With two further seats in these elections, we expect the competition to be tighter, and the candidates have to find the means to stand out,” the chairman of the Association of Advertising Agents of Macau, Keyvin Bi Chi Kin, said yesterday. Mr Bi told reporters on the sidelines of an advertising seminar that candidates in this year’s elections to

the Legislative Assembly would spend more on advertising than candidates in the last elections, in 2009. He gave no exact figure, but he said many advertising agencies here had been in contact with candidates. Political reforms last year increased the number of directly elected seats in the assembly to 14 from 12. The general manager of Elitepro Consultants Ltd in Hong Kong, Ben Cheung Shui Fung, said these elections might mean 20 million patacas (US$2.5 million) worth of business for advertising agencies.

In the 2009 elections each candidate spent about 1 million patacas on advertising, the advertising industry says (File photo)

Advertisers eye MICE, creative industries

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he meetings, incentives, conventions and exhibitions (MICE) sector and creative industries are two areas the Macau advertisers are to develop in the future but the labour shortage can be a hindrance. “This year the administration grants subsidies of up to 200,000 patacas [US$25,000] for the exhibition industry’s promotion costs,” said Keyvin Bi Chi Kin, chairman of the Association of Advertising Agents of Macau. “So this can provide more business for advertisers in the six months previous to the start of [MICE] events,” he told reporters yesterday. The administration announced last month this year’s allowance for event promotion and logistics costs is up to 100,000 patacas for conferences and

200,000 patacas for exhibitions. Mr Bi said that advertisers are also looking for closer cooperation with the creative industry firms to expand their business this year. He said big enterprises like Hong Kong-listed casino operators would opt for members of the American Association of Advertising Agencies to do their campaigns because they not only target the Macau market. But the chairman also warned: “The labour shortage, particularly in production, is the main problem the industry is facing right now.” “Though some firms have imported a few outside workers to ease the problem, they [the staff] do not have deep knowledge of the local culture and are not really suitable for design works,” he added. T.L.

Mr Cheung, who helped some candidates here in the last elections, said he expected about 20 candidates to compete for the 14 seats this year. “Last time, the maximum budget for each candidate was 8 million patacas … and about 1 million patacas was put into advertising, so you can see what kind of opportunities exist,” he said.

patacas per candidate, set for the last elections, to be raised because advertising and labour costs have risen. “If the candidates want to have the same impact as four years ago, they have to put in 50 to 100 percent more capital,” he said. He thinks candidates will advertise more in new media such as the Internet because it costs less. “In addition, young people, aged below 30, are in touch with the relevant information only via the Internet,” he said. Mr Bi said the government could allow more outdoor advertising. Mr Cheung thinks the political advertising market here has been maturing in recent years. But he said: “Only some associations in Macau realise the importance of political image and promotion, while all candidates in Hong Kong – not just a few – understand its importance.”

Bang for your buck Mr Cheung, speaking on the sidelines of the same seminar, said advertising agencies could arrange everything from banners to television advertisements, from on-line advertisements to souvenirs, and even image consultancy. He said the amount a candidate spent on advertising depended on the candidate in question. For instance, pro-establishment candidates would spend more as they had more money, he said. Mr Bi is calling for the cap on campaign spending of 8 million

MOP20 million

Forecast of revenue for advertising agencies from this year’s Legislative Assembly election campaigns


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business daily January 22, 2013

macau

‘House of Dancing Water’creator facing tax probe Belgian police are investigating the director of the show, Franco Dragone, on suspicion that he evaded tax and laundered money Vítor Quintã

vitorquinta@macaubusinessdaily.com

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ax fraud suspect Franco Dragone, the creator and director of “The House of Dancing Water” show at the City of Dreams, has defended his use of companies in tax havens. A Belgian publication, Le Vif/ L’Express, reported last week that the Belgian authorities are investigating Mr Dragone on suspicion that he used “exotic” financial tools to evade taxation. They reportedly suspect him of “serious and organised” international tax offences, money laundering, “undeclared work” and “subsidy fraud”. The report does not mention whether they are investigating the profits that Mr Dragone’s company, Franco Dragone Entertainment Group, makes from “The House of Dancing Water”, its resident show at Melco Crown Entertainment Ltd’s City of Dreams casino in the Cotai strip. The show opened there in September 2010. Business Daily asked Melco Crown for details of Mr Dragone’s royalties but had received no reply

Show director Franco Dragone denies that he evaded paying taxes, saying he tried only to avoid double taxation

by the time we went to press. The two companies have reportedly agreed to replicate the show at a 50 billion yuan (64 billion patacas) entertainment complex near Beijing’s 798 Art Zone district.

In an e-mailed reply to Business Daily, Mr Dragone’s group protested his innocence, stressing neither he nor any member of the staff “were interviewed, questioned or charged by justice”. The suspicions “are based on a total misunderstanding of the Franco Dragone operating structure which is absolutely not illegal or

fraudulent,” the group said. Franco Dragone Entertainment said the network of companies the director controls outside Belgium was necessary for projects “for which the creation and the production actions take place worldwide, using the skills of many different nationalities from around the world,” the reply added. In a press conference held last week, Mr Dragone said his aim was to make sure he was taxed fairly, instead of being liable to double or even triple taxation. Macau and Belgium signed a double taxation agreement in 2006, but it came into effect only in 2011. Le Vif/L’Express said Mr Dragone’s group, based in his home town, La Louvière, had paid hardly any taxes as its royalties were channelled to companies in tax havens. Another Belgian publication, Le Soir, said Mr Dragone’s group had made a profit only twice in the past eight years. In October the police seized documents from the group’s headquarters, and from various premises belonging to the group’s chief executive, its chief financial officer, Mr Dragone himself and one of his former associates.

Luxury sales to remain strong in Q1 Macau at your breakfast table. With Business Daily. Find us in the following newsstands Pacapio at San Ma Lo Opposite HKSB (Nam Van) Beside Luso Bank Building Wen Hang Bank at San Ma Lo In front of Portuguese Bookshop In front CTM at San Ma Lo In front Daiso shop at San Ma Lo Next to S. Lourenço Market Next to Human Resources Dpt Next BNU at Av. Sidonio Pais San Miu, Av. Horta e Costa Next to Metro Park Hotel

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uxury sales are expected to stay strong through the first quarter, largely due to the Chinese New Year celebrations in February and then the National People’s Congress in March, where government positions will be confirmed – and gifts bestowed. Just last week, customers toting paper bags bearing the logos of Louis Vuitton, Hermes, Gucci, Prada and other global luxury brands were out in force at malls in Hong Kong and Macau, two nearby destinations for wealthy mainland Chinese shoppers. Personal assistant Da Fei trailed b eh in d h i s bo ss , a r ea l e st a te businessman from Mongolia, carrying items from Hermes and Kenzo through the upscale One Central Macau shopping centre. “He likes to buy everything, particularly Hermes and Gucci,” Da Fei said as his boss, decked out in salmon pink trousers and a black and white shirt, browsed inside a Kenzo store. At the Gucci store in Macau’s Wynn casino, four men clustered around a glass counter examining leather wallets, while seven other men browsed items such as the 6,000 patacas (US$750) shoulder bags. Only two women were in the shop at the same time, while other customers queued up outside, waiting

for security guards to let them in. Retail sales here remained healthy in the third quarter of 2012. Retail sales were worth 12.5 billion patacas (US$1.6 billion) in the third quarter, according to the latest data from the Statistics and Census Service. Retailing turnover dropped slightly between July and September from the previous three months, but the third quarter was still the industry’s thirdbest quarter for 12 years. China’s fashion-forward men are snapping up Gucci and Burberry bags, driving a rebound in the luxury market months after a slowdown in spending by the world’s biggest luxury goods buyers spooked global investors. Men account for about 55 percent of China’s luxury goods market, well above the global average of 40 percent, according to research from brokerage CLSA Asia-Pacific Markets, partly because businessmen often buy expensive gifts to curry favour with government officials or potential associates. Data from Hong Kong, a popular shopping destination for wealthy mainland Chinese, shows retail sales are starting to perk up. They jumped 9.5 percent on the year in November, with jewellery, watches and other valuables up 13.7 percent after a 2.9 percent decline in October. T.A./Reuters


January 22, 2013 business daily | 7

MACAU

PYE shareholders approve boutique casino deal Unit of ports firm PYI Corp. will hold land and raise shares for US$800 mln Cotai scheme Michael Grimes

michael.grimes@macaubusinessdaily.com

January 2013,” said last night’s filing. Another regulatory filing from PYE in November confirmed Business Daily’s September story about plans to build a boutique-style casino hotel

on land adjacent to the One Oasis residential project on the CotaiColoane border. The project will not rely on a land concession from the Macau

Photo by Manuel Cardoso

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ong Kong-listed Paul Y. Engineering Group Ltd confirmed in a regulatory filing last night that more than 99 percent of its shareholders approved a deal allowing the company to hold land, raise share capital and sell bonds for a boutique Macau casino. PYE – a unit of separately-listed ports and infrastructure business PYI Corporation Ltd – plans to raise funds for the US$800 million (6.4 billion patacas) casino hotel scheme. It will do so by issuing shares on the Hong Kong Stock Exchange and by selling convertible bonds. The parent company PYI expects to make a profit of more than HK$164 million (US$21.2 million) from the land deal according to a PYI press statement on January 5. “The board of directors of PYE is pleased to announce that each of the ordinary resolutions as set out in the notice of the PYE SGM [special general meeting] was duly passed by way of poll at the PYE SGM held on 21

government. But a person with knowledge of the process told Business Daily in November that the government is yet to give out any permission for gaming facilities on the relevant site. Of the US$800 million capital cost of the new boutique project, US$550 million is for development and construction, and US$250 million is to buy the land from the consortium that built the One Oasis residential development, and for the gaming licence. None of the parties to the deal have so far commented on which of Macau’s gaming concessionaires and sub-concessionaires will provide the gaming licence.

Target customers The high-end casino property will have 236 rooms and around 66 tables. Fifty of the tables will be for so-called premium mass players – cash players betting as much as HK$10,000 per hand. The remaining 16 tables will be for traditional credit-based junket play, to be managed by one of the local junket investors, sources have told Business Daily. In late November PYE announced in a voluntary filing it had won a HK$10 billion contract to build part of the Studio City resort project on Cotai. The contract is in the name of PYE’s unit PY Construction (Macau) Ltd in a joint venture with Yau Lee Construction (Macau) Co. Ltd. The customer is Studio City Developments Ltd, a 60 percentowned indirect subsidiary of Macau casino developer and operator Melco Crown Entertainment Ltd.


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business daily January 22, 2013

GREATER CHINA Regulator to discuss cross-strait trading China’s Securities Regulatory Commission will visit Taiwan later this month for an unprecedented meeting with its Taiwanese counterpart to discuss further opening crossstraits securities markets, according to two sources familiar with the matter. Commission Chairman Guo Shuqing will lead the delegation, one source said, and any outcome from the meeting will be put under the Economic Cooperation Framework Agreement. Taiwan’s financial regulator said last month Taiwan and China would start discussions within three months, aiming to set a framework for Chinese companies to list on the Taipei bourse.

Shrinking pool of workers may limit recovery Decline in the working-age population of ‘great importance’ – Ma

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hina’s growth rebound will be capped by a labourforce squeeze and shrinking resources that leave the government satisfied with rates of expansion as low as half the peak during the past decade. A pace of 7 percent to 8 percent reflects economic forces, Ma Jiantang, head of the National Bureau of Statistics, said on Friday after reporting 7.9 percent expansion in the fourth quarter from a year earlier. He said a decline last year in the working-age population was of “great importance”. Mr Ma’s comments bolster the contention that China’s economy is permanently downshifting a gear as its one-child policy drives down the labour force. Slower growth presents challenges for incoming leaders Xi Jinping and Li Keqiang, and may limit the country’s potential as a market for everything from Australian iron ore to German machinery. “A declining labour force is just one of several economic headwinds looming on the horizon,” said David

Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department, now an Asia analyst in Los Angeles at TCW Group Inc. “As Xi and Li assemble their economic teams, we’ll find out whether necessity will again be the mother of reforms, as it has been in the past.” Fourth-quarter growth, while exceeding the median analyst estimate, brought 2012 expansion to 7.8 percent, the weakest pace since 1999. China stepped up infrastructure spending to reverse a seven-quarter slowdown, with fixed-asset investment excluding rural areas rising an inflationadjusted 19.3 percent in 2012 after 16.1 percent in 2011, according to JPMorgan Chase & Co. “In the past people always believed 8 percent or even 10 percent is necessary for China to maintain high employment and prevent mass unemployment, but demographic change is making the requirement for growth much lower,” said Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong. “Potential economic

growth in China will slow to around 6 percent by 2020.” China recorded average annual expansion of more than 10 percent over the last 20 years, peaking at 14.2 percent in 2007, according to previously released government data. Analysts forecast 8.1 percent this year and 8 percent in 2014, based on median estimates in a Bloomberg News survey last month.

Growth model Mr Ma said at a press briefing that a 7 percent to 8 percent pace “will facilitate change in the growth model and structural adjustment.” Ruralto-urban migration, urbanisation and industrialisation will keep driving expansion, said Mr Ma, who in November was named first in line to join the Communist Party’s 205-member central committee of leaders if a vacancy arises. At the same time, shifting supply and demand patterns in the labour market, increasingly tight natural resources and greater demands from

While we still have to stick to family planning as a national policy, it’s quite necessary to study proper demographic policy according to new changes in the situation Ma Jiantang, National Bureau of Statistics residents to improve their quality of life will help determine the rate of expansion, he added. Last year’s decline of 3.45 million in the labour force still leaves a

Huawei sees firmer revenue growth Company open to IPO after probably surpassing Ericsson in sales the communist nation could install malicious hardware or software in U.S. networks. “Perception is a major issue here,” said Mr Ferragu. “A listing would be a strong help, but I doubt the company is ready for this given the implications on the governance and management model.” It may take about a decade for Huawei to be perceived as “a normal company” worldwide, he said. The House Intelligence Committee also said U.S. companies should steer clear of another Chinese maker of telecommunications equipment, ZTE Corp. Huawei – bouncing back from a disappointing 2011

Profit Surge

public or not, we will always honour our commitment to openness and transparency. We will refer to the standards of listed companies to improve ourselves.” Huawei’s sales have climbed as it adds smartphones, tablets and cloudcomputing services, and benefits from investment in mobile-phone equipment in emerging markets, Ms Meng said. Ericsson, the world’s biggest maker of wireless network equipment by revenue, is predicted to report sales that are little changed from a year earlier because of its exit from a mobile-phone venture with Sony Corp. and a euro zone debt crisis that has damped spending in Europe. Reuters/Bloomberg News

H

uawei Technologies Co., China’s largest maker of telecommunications equipment, said it has an “open mind” about offering shares to the public after posting sales that probably surpassed Ericsson AB.’s. A decision to hold an initial public offering would depend on shareholders’ interests, as the company has no immediate need to raise funds, chief financial officer Cathy Meng Wanzhou said yesterday at a briefing in Beijing. The company

expects sales to rise as much as 12 percent this year following an 8 percent increase last year, she said. An IPO may help closely held Huawei expand overseas by boosting transparency and reducing security concerns, said Pierre Ferragu, a Sanford C. Bernstein & Co. analyst. The U.S. House Intelligence Committee in October recommended that companies there avoid equipment made by Huawei, whose founder served in the Chinese military, citing concerns

Huawei’s sales last year rose to 220 billion yuan (US$35.4 billion), helping boost net income 33 percent to 15.4 billion yuan, Ms Meng said. The equipment-maker had US$4.5 billion of working capital at the end of last year, on record cash flow of US$12 billion, she added. It also has credit lines totalling US$33 billion, 77 percent of which comes from banks outside of China. “As to whether or not we will go public, in Huawei we have kept an open mind toward this issue,” she said. “No matter whether we go

US$35.4 billion Value of Huawei’s sales last year


January 22, 2013 business daily | 9

GREATER CHINA ZTE’s shares drop after profit warning The Hong Kong-listed shares of ZTE Corp fell 5 percent early yesterday after China’s second-largest telecom equipment maker issued a profit warning for 2012, but the stock recovered as investors bet on a strong outlook for 2013. The stock fell as low as HK$14.02 (US$1.8), its lowest since January 8, before closing 1.36 percent down at HK$14.5. ZTE warned on Sunday of a net loss of up to 2.9 billion yuan (US$467 million) for 2012 due to project delays and the non-renewal of contracts. It said it expected to return to profitability in the first quarter of 2013.

JPMorgan embraces offshore yuan as trading doubles Dim Sum bonds rallying for a record six consecutive weeks

S

China’s population aged 15 to 59 might drop about 24 million from 2015 to 2025, the United Nations forecasted

base of 937 million, which “will remain as China’s biggest resource advantage,” Mr Ma said. The United Nations has forecast a drop of about 24 million in the population aged 15 to 59 from 2015 to 2025, while

people aged 65 and over will increase by about 66 million. “The demographic situation and labour demand-supply pattern in our country are changing after decades of family planning,” Mr Ma

Vanke surges on share plan for Hong Kong Company’s A and B shares hit 10 pct limit up

S

hares in China Vanke Co Ltd shot up by their daily limit yesterday after the nation’s major property developer said its foreign-currency B-shares would move to Hong Kong, the second firm to have left the mainland’s moribund B-share market in Shenzhen. Vanke’s B-shares, which are denominated in Hong Kong dollars, opened up 10 percent – the maximum intradaygainmainlandsharesareallowed to post – at HK$13.75 (US$1.77) per share from HK$12.50 at last close. Its yuan-denominated A-shares also opened at the top of the trading limit, at 11.13 yuan (US$1.81) per share, up from 10.21 yuan. Shares in its Hong Kong-listed subsidiary Vanke Properties Overseas Ltd, formerly known as Winsor Properties, rose by 12.75 percent, changing hands at over HK$16.9 per share, their highest level since September 2012. Vanke Overseas shares have been climbing steadily on expectations that its business would be reorganised if Vanke B shares move to Hong Kong, where exchange rules require issuers with two or more listed companies

to guarantee they will not compete directly with each other. The plan would widen Vanke’s access to global investors, giving the company entry to an exchange where the daily trading value is more than 100 times higher than in the B-share markets. “The move will help Vanke access more resources in the long run,” Jinsong Du, a Hong Kong-based

Property developer seeking more resources

said. “While we still have to stick to family planning as a national policy, it’s quite necessary to study proper demographic policy according to new changes in the situation.” Bloomberg News

property analyst at Credit Suisse Group AG, said yesterday. “The developer will have two platforms to raise funds in the international market if the conversion is approved.” Trading in Vanke shares has been suspended since December 25 when the company suspended trading pending an announcement. It announced the plan to shift the shares to Hong Kong on Friday. The positive response to Vanke’s announcement follows the successful migration of China International Marine Containers’ (CIMC) B shares to Hong Kong in December. CIMC’s new Hong Kong shares have gained over 26 percent since their first day trading in Hong Kong on December 19, compared to a 6.5 percent rise in the China Enterprises Index of the top Chinese listings in Hong Kong over the same time period. Reuters

tandard Chartered Plc estimates offshore trading of yuan has doubled to at least US$6 billion a day, giving investors more confidence to invest in the currency using options, forwards and Dim Sum bonds. Average daily transactions in Hong Kong surged from US$3 billion in the past year, said Charles Feng, Standard Chartered’s regional head for fixed-income trading in the city. Trading in offshore options in the currency swelled to between US$300 million and US$500 million per day, according to J.P. Morgan Private Bank, which is buying the contracts for its clients. HSBC Holdings Plc says combined yuan deposits and certificates of deposits in the city will rise 43 percent this year to 1 trillion yuan (US$161 billion). Dim Sum bonds have been rallying for a record six consecutive weeks as the central bank announced plans to accelerate the opening up of capital markets to foreigners and allow cross-border yuan loans. The average yield on the securities fell five basis points last week to 3.5 percent, the lowest since October 2011, a Deutsche Bank AG index showed. That compares with an average 2.62 percent for global corporate debt, according to Bank of America Merrill Lynch data. “Offshore yuan liquidity is unambiguously improving,” said Cliff Tan, East Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong. “In particular, there is more official sector activity in the first days of the year. This flow is very promising for central banks to get more involved.” “We have been utilising high carry and low volatility for our clients in the offshore renminbi via its burgeoning options market,” said Erik Wytenus, Hong Kongbased head of foreign exchange and commodities at J.P. Morgan Private Bank in Asia. “This allows for a beneficially asymmetric risk profile for these strategic positions.” Hong Kong’s Dim Sum bond market is increasingly offering attractive yields as long as buyers are selective, said Adam K. Tejpaul, managing director for the investment business of JPMorgan Chase & Co.’s private bank unit in Asia. Bloomberg News


10 |

business daily January 22, 2013

ASIA Smaller hedge funds made their investors richer in a year when several Asian stock markets rallied

Smaller hedge funds outperform in Asia Investors shifting money from larger to smaller funds Nishant Kumar

F

or those investing into Asia’s hedge funds last year, smaller was better. The region’s largest hedge funds – those managing more than US$500 million – delivered weaker returns on average than nimbler, small to medium-sized funds, according to fund research and people with knowledge of the individual funds. In a year when several Asian stock markets rallied, many bigger hedge funds failed to beat benchmark returns. Blue chip funds such as Ortus Capital Management Ltd and Senrigan Capital Group Ltd lost money, while high-profile launches Azentus Capital Management Ltd

and Dymon Asia ended the year barely in the black, said people familiar with their returns. Smaller hedge funds such as Factorial Management Ltd and the Splendid Asia macro hedge fund, however, made their investors richer. “The industry’s dirty little secret is that institutions’ need for scale leads them to invest in organisations and funds that are actually too big to be safe,” said Peter Douglas, founder of Singapore-based hedge fund consultancy GFIA Pte Ltd. The numbers for last year will feed a cynical view that hedge fund managers who raise a lot of money get rich from the management fee, regardless of performance. Most

hedge and private equity funds keep a fifth of their profits and charge a 2 percent fee on the money they raise – so the more capital coming in from investors, the bigger the fee. But managers of the smaller funds in Asia realise that if the bigger funds stumble, the entire industry will be affected. While some money meant for large funds will be diverted to smaller, better-return funds in the region, others will opt instead to send their money to the United States and Europe.

Below benchmark Asia hedge funds returned an average 9.8 percent in 2012 as

measured by the Eurekahedge Asian index – little more than half the 18.6 percent gain on the MSCI’s broadest index of Asia-Pacific shares outside Japan. JP Morgan’s EMBI Global index, which constitutes dollar bonds issued by emerging market sovereigns, gained 15 percent. Most home-grown Asia hedge funds managing more than US$500 million each fared worse than that, underscoring GFIA research’s premise that good performance becomes less likely when a fund exceeds US$500 million. Ortus Capital, which manages US$2.5 billion, saw its hedge fund lose 17.3 percent in 2012, its worst annual return since launching a

Malaysian stocks slump most in 16 months As upcoming election sparked selling across the board Gan Yen Kuan

M

alaysian stocks tumbled the most since September 2011 on speculation the government will call for an early election that will result in a weaker grip on power. The FTSE Bursa Malaysia KLCI Index sank 2.4 percent to 1,635.63 at the close in Kuala Lumpur, after earlier plunging as much as 2.7 percent. I t w a s t h e w o r s t performer among benchmark gauges in Asia yesterday. The measure’s trading volumes were 89 percent above the 30-day average, according to data compiled by Bloomberg. Axiata Group Bhd., the country’s biggest mobile-phone operator, slid 5.1 percent, leading declines in the index.

Speculation that the government will call for national elections as early as March helped trigger the selloff, according to Samsung Asset Management Co.’s Alan Richardson. Prime Minister Najib Razak must dissolve the nation’s parliament by April 28. Mr Najib’s approval rating fell to the lowest level in 16 months, the Merdeka Centre for Opinion Research said in a statement on January 10. Mr Najib is overseas and couldn’t comment on the election timing, a government spokesperson said yesterday. “There is always the overhang of political risk before the election,” Mr Richardson, a Singapore-based fund manager who helps oversee

about US$82 billion for Samsung Asset Management, said by phone. “There is uncertainty whether the ruling coalition would be able to at least maintain the existing majority they have.” The prime minister said last month elections may come soon as his ruling Barisan Nasional, or National Front, coalition attempts to regain a two-thirds parliamentary majority it lost in 2008. The KLCI slumped 39 percent that year, the most since 1997, on concern a stronger opposition would stymie government investment plans. The KLCI index trades at 14.6 times estimated earnings, a 2.1 percent premium versus the Asia Pacific gauge, even after yesterday’s

plunge, according to data compiled by Bloomberg. The KLCI is “in overbought and bearish divergent territory,” Lee Cheng Hooi, head of retail research for equity markets at Maybank Investment Bank Bhd., wrote in a report yesterday. “As Malaysia prepares for the 13th general election over February to June 2013, political uncertainty could cause investors to adopt a risk-off approach.” The KLCI is “fairly valued,” Mr Richardson said. “It’s not appealing particularly at this point in time but it’s not expensive either. Given the earnings momentum in the market, it’s probably not strong enough to sustain this kind of valuation.” Bloomberg News


January 22, 2013 business daily | 11

ASIA Most of the alpha is found in mid-cap managers, which in Asia is US$50 million to US$250 million and where we invest most of our capital Max Gottschalk, Gottex Fund Management

decade ago. It fell more than 6 percent in December when the yen weakened as the Bank of Japan increased its asset purchase program. “The dramatic move produced our biggest loss contributing nearly 80 percent of the losses for the month,” Ortus, one of Asia’s biggest hedge funds, wrote to clients. Senrigan Capital, an Asia-focused fund backed by Blackstone Group, lost 11.5 percent last year, while Azentus Capital, a hedge fund set up by former Goldman Sachs trader Morgan Sze and which once managed US$2 billion, gained just about 1 percent, an improvement on the 6.8 percent loss it had in 2011. The US$2.5 billion Dymon Asia Macro Fund, run by former Citadel fund manager Danny Yong, also gained about 1 percent, said people with direct knowledge of the fund’s return, down from a 20 percent gain in 2011. For comparison, an investment just in 1-year U.S. treasuries would have earned 1.3 percent last year.

Risk, return The returns from top funds are feeding a perception among investors

that Asian hedge funds don’t provide the results to match the risk that investors associate with the region. As the numbers come under scrutiny, Asian names producing single digit returns may face the axe as investors can achieve similar or better returns in developed capital markets where there is relatively less risk and far more consistent liquidity. The bigger hedge funds in Asia find it tougher in less liquid markets to make big enough bets to have a significant impact on the portfolio. The search for returns can often lead to trades outside a fund’s core competency or deals pushed by investment banks – increasing the risk of losses. But for prime brokers and service providers, the funds earn tens of millions of dollars in fees. Those in charge of allocating money at large pensions and endowments tend to send money to larger funds because their size implies reliability. “Most of the alpha is found in mid-cap managers, which in Asia is US$50 million to US$250 million and where we invest most of our capital,” said Gottex Fund Management cofounder Max Gottschalk, whose Asian fund of hedge funds returned 18.4 percent in 2012. Former Credit Suisse trader Charlie Chan’s US$105 million Splendid Asia macro hedge fund lived up to its name, gaining 63 percent last year betting on real estate investment trusts, bonds and currencies. And Factorial Master Fund, launched by ex-DKR Oasis bookrunner Barun Agarwal in January last year, advanced 23 percent, according to a person with direct knowledge of the fund. The fund, which made money each month, manages less than US$50 million. Fortress Asia Macro Fund, which increased its assets to US$500 million by the year-end, gained 21 percent, said a spokesman for the global money manager. There are signs that some investors are starting to switch. Titan Advisors, which manages about US$3 billion for pension funds and wealthy individuals, has shifted some money it invests with around two dozen hedge funds from larger funds to smaller funds. Reuters

Dreamliner battery maker in probe U.S. and Japanese authorities begin joint investigation into GS Yuasa

J

apan’s transport ministry is to investigate the company that makes batteries for Boeing Co’s grounded 787 Dreamliner passenger jet. The probe will be run jointly with the U.S. Federal Aviation Administration (FAA), a ministry official said yesterday. Authorities around the world last week grounded the new lightweight aircraft, and Boeing halted deliveries after a problem with a lithium-ion battery prompted an All Nippon Airways 787 to make an emergency landing at Takamatsu airport during a domestic flight. Earlier this month, a similar battery caught fire in a Japan Airlines’ 787 parked at Boston Logan International Airport. U.S. safety investigators on Sunday ruled out excess voltage as the cause of the Boston battery fire on January 7, and said they were expanding their probe to look at the battery’s charger and the jet’s auxiliary power unit. “Results have shown the battery was abnormal in both the Boston and Takamatsu [incidents]. They were the most damaged,” Shigeru Takano, a senior safety official at Japan’s Civil Aviation Bureau, told reporters. “We will look into if the work that took

Reuters

Singapore unveils package to increase population City’s workforce expected to begin shrinking in 2020

S

Axiata Group led declines in the KLCI index

place, from design to manufacturing, was appropriate.” He did not name the battery maker. A spokesperson for Kyoto-based GS Yuasa Corp, which makes batteries for the Dreamliner, declined to comment. Shares in the firm, valued at close to US$1.5 billion, slipped 1 percent yesterday, and have dropped 11 percent since the Boston fire. The benchmark Nikkei was down 0.9 percent. The grounding of the Dreamliner, an advanced carbon-composite plane with a list price of US$207 million, has forced ANA to cancel 141 flights between tomorrow and Sunday, affecting more than 18,000 passengers, the carrier said yesterday. Those cancellations added to the 72 flights scheduled between January 19 and 22 that ANA called off last week. Japan Airlines said yesterday it will cancel four flights on its Tokyo-San Diego route for January 27-28, adding to the 8 flights originally scheduled for January 19-25 on the same route it called off last week. Japan is the biggest market to date for the Dreamliner, with JAL and ANA flying 24 of the 50 passenger jets that Boeing has delivered.

ingapore will increase spending on population-growth measures by 25 percent, rolling out incentives ranging from government-paid time off for adoption and paternity leave to funding for fertility treatments. An annual budget of S$2 billion (US$1.6 billion) will be set aside for measures including state-funded childcare leave, healthcare costs and financial support for housing to married couples, the government said in a statement yesterday. That’s an increase from S$1.6 billion in the last package in 2008, it said. “The enhanced package aims to provide more comprehensive support for Singaporeans in getting married and starting their families,” the government said in the statement. “Addressing our falling birth rate requires a concerted effort beyond government initiatives.” Declining birth rates could undermine Singapore’s ability to sustain growth levels achieved by embracing free trade, fostering higher-value manufacturing and nurturing services industries such as gambling and health care. Prime Minister Lee Hsien Loong said in November that he plans to unveil a package of measures aimed at boosting the fertility rate from about 1.2 per woman. The government said it will pay 75 percent of the cost of reproduction technology treatments for couples, or

as much as S$6,300 per cycle. Those with more than one child will also be eligible for the funding, it said. Newborns will be granted S$3,000 in their medical accounts to help parents in health-care planning, the government said. It will also provide S$6,000 for the first two births and S$8,000 each for the third and fourth. Singapore will also provide four weeks of government-paid leave for working mothers of adopted children in the first year, it said. The government also introduced a week of paternity leave for fathers. Singapore’s citizen workforce will begin shrinking in 2020 for the first time in its history while land and labour limits will “increasingly constrain” its economic growth, Defence Minister Ng Eng Hen said on January 14 in Parliament. Singapore’s fertility rate rose to between 1.28 and 1.3 in 2012 from 1.2 the year earlier, Channel NewsAsia reported. AFP

S$2 bln Budget to boost Singapore’s low fertility rate


12 |

business daily January 22, 2013

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

29.55

-0.5050505

50631463

CHINA UNICOM HON

ALUMINUM CORP-H

3.96

-0.2518892

13468000

CITIC PACIFIC

BANK OF CHINA-H

3.75

-0.530504

241733274

BANK OF COMMUN-H

6.36

0.4739336

21818688

31.35

-0.1592357

1556787

17.9

2.052452

12553303

AIA GROUP LTD

BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO

26

0.1926782

13403062

CATHAY PAC AIR

15.48

0.3891051

2261062

CHEUNG KONG

129.9

-0.5359877

3494568

8.72

0.6928406

13128923

CHINA COAL ENE-H CHINA CONST BA-H

CLP HLDGS LTD CNOOC LTD COSCO PAC LTD ESPRIT HLDGS

PRICE

DAY %

Volume

13.08

-0.7587253

30001549

POWER ASSETS HOL

13.1

2.024922

10930659

SANDS CHINA LTD

15.32

-1.668806

6632229

SUN HUNG KAI PRO

129.4

1.172791

6064876

12.56

2.28013

10423069

SWIRE PACIFIC-A

99.15

0.4050633

616202

11.1

0

5292553

TENCENT HOLDINGS

268.4

-0.739645

4064225

TINGYI HLDG CO

21.15

0.7142857

2420800

WANT WANT CHINA

10.22

-2.10728

13611530

65.9

1.619121

3123842

914171

HENDERSON LAND D

59.3

-0.084246

2196792

HENGAN INTL

74.9

1.216216

3823682

CHINA MERCHANT

26.1

0

3442087

CHINA MOBILE

87.3

-0.3993155

15603563

HUTCHISON WHAMPO

CHINA OVERSEAS

24.7

-1.2

16025829

IND & COMM BK-H

CHINA PETROLEU-H

9.25

0.6528836

67322687

HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC

5435683

SINO LAND CO

5959064

14116291

1471101

1.866667

2257677

0.4966887

118436735

0.4576659

38.2

79175796

0.1675042

0.1872659

65.85

0

30.35

-0.1508296

Volume

-1.098901

119.6

6.62

DAY %

16.2

HANG LUNG PROPER

26.75

PRICE

64.95

HANG SENG BK

CHINA LIFE INS-H

NAME

21.2

-0.4694836

3266057

149.2

0

3279996

85.3

0

12130422

85.85

0.8220787

8401669

5.9

-0.6734007

151334535

LI & FUNG LTD

11.88

-0.5025126

26965190

-0.1597444

1047990

CHINA RES ENTERP

27.4

1.107011

1340600

MTR CORP

31.25

CHINA RES LAND

23.2

0.2159827

3532304

NEW WORLD DEV

14.54

1.253482

15989026

CHINA RES POWER

19.92

-0.4

2168000

PETROCHINA CO-H

11.12

-0.1795332

32373319

CHINA SHENHUA-H

33.15

1.531394

9910296

PING AN INSURA-H

69.75 -0.07163324

6041129

WHARF HLDG

MOVERS

24

21

5 23635

INDEX 23590.91 HIGH

23631.85

LOW

23244.26

52W (H) 23639.63 23240

(L) 18056.4 17-January

21-January

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

Volume

CHINA PACIFIC-H

31.9

-1.23839

7975224

CHINA PETROLEU-H

9.25

0.6528836

CHINA RAIL CN-H

8.8

CHINA RAIL GR-H

PRICE

DAY %

VOLUME

AGRICULTURAL-H

4.06

1.246883

184849444

AIR CHINA LTD-H

7.39

0.1355014

7969360

ALUMINUM CORP-H

3.96

-0.2518892

13468000

ANHUI CONCH-H

29.2

2.097902

15278855

BANK OF CHINA-H

3.75

-0.530504

241733274

CHINA SHENHUA-H

BANK OF COMMUN-H

6.36

0.4739336

21818688

CHINA TELECOM-H

BYD CO LTD-H

26.8

0

1778835

DONGFENG MOTOR-H

CHINA CITIC BK-H

5.22

0.967118

50207593

GUANGZHOU AUTO-H

CHINA COAL ENE-H

8.72

0.6928406

13128923

HUANENG POWER-H

CHINA COM CONS-H

8.35

4.505632

52551962

CHINA CONST BA-H

6.62

-0.1508296

118436735

CHINA COSCO HO-H CHINA LIFE INS-H CHINA LONGYUAN-H CHINA MERCH BK-H

PRICE

DAY %

Volume

YANZHOU COAL-H

13.8

2.071006

17264656

67322687

ZIJIN MINING-H

3.16

-0.6289308

27054344

-2.869757

36142902

ZOOMLION HEAVY-H

11.06

-0.1805054

13643742

4.54

-1.518438

43093136

ZTE CORP-H

14.56

-1.355014

22091382

33.15

1.531394

9910296

4.35

-1.136364

43400413

12.58

2.276423

29314537

7.2

-0.6896552

5036530

7.08

0.4255319

8843556

IND & COMM BK-H

5.9

-0.6734007

151334535

JIANGXI COPPER-H

21.65

0.9324009

7402133

4.59

1.548673

27543075

PETROCHINA CO-H

11.12

-0.1795332

32373319

26.75

0.1872659

14116291

PICC PROPERTY &

11.94

-0.3338898

6336391

6.4

-0.9287926

5911500

PING AN INSURA-H

69.75

-0.07163324

6041129

18.46

-0.2162162

11704656

SHANDONG WEIG-H

7.5

-0.530504

16253900

CHINA MINSHENG-H

10.44

-0.3816794

32305384

SINOPHARM-H

24.85

-1.388889

5623334

CHINA NATL BDG-H

12.14

1.675042

22690432

TSINGTAO BREW-H

45.5

0.4415011

1769800

16.4

2.756892

11074046

WEICHAI POWER-H

33.4

-1.329394

4748537

CHINA OILFIELD-H

NAME

MOVERS

19

21

0 12145

INDEX 12125.89 HIGH

12142.31

LOW

11774.17

52W (H) 12148.51 (L) 8987.76

11770

17-January

21-January

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

Volume

CHONGQING CHAN-A

7.32

6.395349

48647802

49407959

CITIC SECURITI-A

13.8

2.222222

134660944

SANY HEAVY INDUS

-0.5703422

25876928

CSR CORP LTD -A

5.02

0.1996008

61574500

SHANDONG DONG-A

48.1

1.199243

9037758

2.240437

41710782

DAQIN RAILWAY -A

7.08

0.4255319

46782434

SHANDONG GOLD-MI

38.42

-0.3372244

13257355

4.23

-0.9367681

17836215

SHANG PHARM -A

12.3

0.8196721

10420839

13.87

-0.07204611

17651889

SHANG PUDONG-A

10.4

2.362205

178154882

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.78

-0.7142857

149396644

AIR CHINA LTD-A

6.05

2.542373

5.23 18.71

ALUMINUM CORP-A ANHUI CONCH-A

NAME

BANK OF BEIJIN-A

9.24

0.7633588

61519900

DATANG INTL PO-A

BANK OF CHINA-A

2.96

-0.3367003

36148491

EVERBRIG SEC -A

NAME SAIC MOTOR-A

PRICE

DAY %

16.99

-0.5851375

Volume 30716021

10.7

5.004907

108214351

4.99

0.4024145

88553663

GD POWER DEVEL-A

2.82

0.3558719

116314802

SHANGHAI ELECT-A

4.23

0.2369668

8194544

BANK OF NINGBO-A

10.81

2.367424

22727794

GF SECURITIES-A

15.03

-0.06648936

33175753

SHANXI LU'AN -A

23.1

1.986755

24896811

BAOSHAN IRON & S

4.99

-0.3992016

22098081

GREE ELECTRIC

28.71

1.448763

21691965

SHANXI XINGHUA-A

40.11

-3.558548

4171549

34562339

GUANGHUI ENERG-A

17.81

-0.2240896

36549861

SHANXI XISHAN-A

14.76

3.144654

58714582 53037846

BANK OF COMMUN-A

BBMG CORPORATI-A

7.87

2.875817

23.97

0.04173623

6231366

HAITONG SECURI-A

10.28

1.081613

74378170

SHENZEN OVERSE-A

7.18

-1.508916

CHINA CITIC BK-A

4.54

2.714932

51334884

HANGZHOU HIKVI-A

31.79

-4.64907

11619292

SICHUAN KELUN-A

64.5

-4.231626

1963578

CHINA CNR CORP-A

4.79

1.483051

83643780

HENAN SHUAN-A

64.42

-2.379148

3640962

SUNING APPLIAN-A

7.48

-0.2666667

52945718

CHINA COAL ENE-A

7.92

0

20180571

HONG YUAN SEC-A

18.82

0.803428

17602961

TSINGTAO BREW-A

33.93

-0.9053738

1870427

CHINA CONST BA-A

4.62

-0.6451613

56817372

HUATAI SECURIT-A

9.35

-0.5319149

25748119

WEICHAI POWER-A

24.84

2.475248

15139944

CHINA COSCO HO-A

4.6

2.908277

50133466

HUAXIA BANK CO

10.78

2.180095

60097653

WULIANGYE YIBIN

26.82

-2.75562

59812335

CHINA CSSC HOL-A

23.68

1.067008

10936100

IND & COMM BK-A

4.2

-0.4739336

65157834

YANGQUAN COAL -A

15.28

6.927922

72349619

CHINA EAST AIR-A

3.69

2.5

49532098

INDUSTRIAL BAN-A

18.04

4.217215

134810006

YANTAI WANHUA-A

16.06

0.879397

8124023

CHINA EVERBRIG-A

3.07

0.9868421

212430695

INNER MONG BAO-A

35.73

-0.6119611

31770945

YANZHOU COAL-A

18.86

3.455842

18976614

CHINA INTL MAR-A

13.11

1.157407

12362315

INNER MONG YIL-A

25.59

-3.869271

19891028

YUNNAN BAIYAO-A

72.87

-0.2327492

1971536

CHINA LIFE INS-A

20.43

-0.3900536

20861783

INNER MONGOLIA-A

5.52

-0.7194245

68988257

ZHONGJIN GOLD

16.72

-0.4169148

26940975

CHINA MERCH BK-A

13.57

1.495886

114885955

JIANGSU HENGRU-A

31.21

-1.265422

6835036

ZIJIN MINING-A

3.86

-0.2583979

60983194

21896067

JIANGSU YANGHE-A

94.39

-3.50644

6027889

ZOOMLION HEAVY-A

9.31

2.759382

118394468

10.34

1.671583

71366798

BYD CO LTD -A

CHINA MERCHANT-A

30.01

-2.911679

CHINA MERCHANT-A

10.4

0

18300490

CHINA MINSHENG-A

9.01

2.61959

205867882

CHINA NATIONAL-A

7.72

-0.1293661

33932840

CHINA OILFIELD-A

16.7

0.9673519

9877763

JIANGXI COPPER-A

24.68

-0.6441224

13628672

JINDUICHENG -A

12.61

-1.484375

25255080

JIZHONG ENERGY-A

16.55

4.813173

32191093

KANGMEI PHARMA-A

14.91

-0.7984032

26759959

197.31

-3.165489

7477928

-3.325622

19957201

21.52

-2.536232

34326807

KWEICHOW MOUTA-A

CHINA PETROLEU-A

6.88

0.2915452

35742516

LUZHOU LAOJIAO-A

33.43

CHINA RAILWAY-A

6.06

-1.302932

47325196

METALLURGICAL-A

2.25

0

34654571

2.57

0.390625

35921622

CHINA PACIFIC-A

ZTE CORP-A

MOVERS

147

135

18 2615

INDEX 2610.898

CHINA RAILWAY-A

3.26

-0.3058104

58944442

NINGBO PORT CO-A

CHINA SHENHUA-A

24.83

0.4856333

20672814

PANGANG GROUP -A

3.99

-0.7462687

52564299

9.11

1.222222

47783723

HIGH

2610.9

19.7

7.474086

78213642

LOW

2540.43

CHINA SHIPBUIL-A

4.99

-0.7952286

57705447

PETROCHINA CO-A

CHINA SOUTHERN-A

4.18

1.456311

52006915

PING AN BANK-A

CHINA STATE -A

3.82

0.5263158

163979857

PING AN INSURA-A

45.77

-1.46394

23426222

CHINA UNITED-A

3.56

-0.8356546

108725911

POLY REAL ESTA-A

13.97

-2.239328

89498040

CHINA VANKE CO-A

11.13

9.980237

23430893

QINGDAO HAIER-A

14.15

-0.07062147

11884596

CHINA YANGTZE-A

7.42

0.405954

59434707

QINGHAI SALT-A

27.55

-0.5055977

6842087

PRICE DAY %

Volume

PRICE DAY %

Volume

79.9 -0.3740648

2835544

TAIWAN MOBILE CO TPK HOLDING CO L

52W (H) 2717.825 (L) 2102.135

2535

17-January

21-January

FTSE TAIWAN 50 INDEX NAME ACER INC

NAME

24.85

2.053388

14708720

FORMOSA PLASTIC

ADVANCED SEMICON

24.3

-2.016129

15334154

FOXCONN TECHNOLO

ASIA CEMENT CORP

36.3 -0.6839945

4119878

-1.506373

5582525

FUBON FINANCIAL

36.4

0.2754821

13977742

TSMC

17547753

UNI-PRESIDENT

335

1.515152

2539699

HON HAI PRECISIO

84.6 -0.9367681

AU OPTRONICS COR

11.7

1.73913

78508167

HOTAI MOTOR CO

236

HTC CORP

1.871102

3618633 7005564

100.5 -0.9852217

17310236

51.8 -0.9560229

4929498

11.45 -0.4347826

19466956

7852413

WISTRON CORP

16.8 -0.2967359

2261600

YUANTA FINANCIAL

15.15

0.6644518

22186014

YULON MOTOR CO

54.7

0.7366483

1802021

5602343 14987143

HUA NAN FINANCIA

CHANG HWA BANK

15.85 -0.6269592

3243560

LARGAN PRECISION

734

1.241379

2050383

CHENG SHIN RUBBE

73.3 -0.6775068

3349457

LITE-ON TECHNOLO

39.85

1.013942

3230929

CHIMEI INNOLUX C

13.9

0

87907684

MEDIATEK INC

316.5

2.427184

7687518

CHINA DEVELOPMEN

7.68 -0.5181347

34601755

MEGA FINANCIAL H

23

-0.862069

7245198

CHINA STEEL CORP

27.35

-2.321429

17687039

NAN YA PLASTICS

58.8

-1.010101

3175023

CHINATRUST FINAN

16.8

0.9009009

24383162

PRESIDENT CHAIN

162

0.621118

388481

CHUNGHWA TELECOM

94.6 -0.1055966

COMPAL ELECTRON

21.4

6200927

QUANTA COMPUTER

64 -0.9287926

7426952

2.884615

40297784

SILICONWARE PREC

30.5 -0.4893964

4755489

105

-1.869159

1203561

SINOPAC FINANCIA

12.6

0

10155519

33.25

0.9104704

4805106

SYNNEX TECH INTL

59.7

0.1677852

5834148

FAR EASTONE TELE

72.6 -0.4115226

4237899

TAIWAN CEMENT

38.85

0.2580645

5561944

FIRST FINANCIAL

FAR EASTERN NEW

490

286.5 -0.5208333

1.162791 0.3134796

DELTA ELECT INC

0.9389671

445780

32

17.6

0.2849003

5029884

TAIWAN COOPERATI

16.4

0.3058104

2433267

FORMOSA CHEM & F

80

1.265823

5750749

TAIWAN FERTILIZE

73.5

0.9615385

1629657

FORMOSA PETROCHE

84.1

-1.175088

773016

TAIWAN GLASS IND

29.5

0

818609

UNITED MICROELEC

Volume

107.5

3.964758

130.5

CATHAY FINANCIAL

PRICE DAY %

85

ASUSTEK COMPUTER CATCHER TECH

NAME

MOVERS

33.5 -0.5934718

24

24

9793652

2 5425

INDEX 5400 HIGH

5421.13

LOW

5323.94

52W (H) 5621.53 5320

(L) 4719.96 17-January

21-January


January 22, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 34.6 34.3 34.0

PRICE

17.4

51.0

17.0

33.4

50.8

16.8

38.4

21.6

22.8

38.0

21.4

22.6

37.6

21.2

37.2

21.0

36.8

20.8

22.4 22.2

DAY %

YTD %

(H) 52W

(L) 52W

-0.355797405

3.702896972

109.4300003

80.05999756

BRENT CRUDE FUTR Mar13

111.76

-0.116185539

1.701701702

118.7999954

90.58999634

GASOLINE RBOB FUT Feb13

279.32

-0.128718535

1.140601803

292.9699898

220.3500032

GAS OIL FUT (ICE) Mar13

954.25

0.579710145

3.245875034

1026.25

800.5

3.592

0.729108245

7.19188302

4.090000153

3.049999952

NATURAL GAS FUTR Feb13

304.95

-0.098280098

0.583810547

333.4599972

255.6599855

Gold Spot $/Oz

HEATING OIL FUTR Feb13

1690.02

0.3426

1.5356

1796.08

1527.21

Silver Spot $/Oz

31.9262

0.1921

6.0319

37.4775

26.1513

Platinum Spot $/Oz

1675.3

0.3624

10.3805

1736

1379.05

Palladium Spot $/Oz

718.78

-0.1694

2.7328

732.9

553.75

LME ALUMINUM 3MO ($)

2042

-0.317305345

-1.49541727

2361.5

1827.25

LME COPPER 3MO ($)

8061

0.086913335

1.639137561

8765

7219.5

LME ZINC

2034

1.194029851

-2.211538462

2220

1745

3MO ($)

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

17550

-0.284090909

2.872215709

22150

15236

15.16

-0.524934383

-0.098846787

16.84000015

14.89999962

727.5

0.414078675

4.189044039

846.25

511

22.0 21.8

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 %

1.0518 1.5884 0.9325 1.3313 89.48 7.9857 7.7531 6.2217 53.8269 29.72 1.2299 28.966 40.73 9618 94.12 1.24151 0.83815 8.2878 10.6318 119.13 1.03

0.0761 0.0882 0.1823 -0.0601 0.6929 -0.0088 -0.0077 -0.0579 -0.2242 0.1346 -0.1789 -0.0621 -0.3658 2.1834 0.6003 0.2271 0.1384 0.3318 0.3725 0.7135 0

YTD %

(H) 52W

1.349 -1.8051 -1.8338 0.9325 -3.7774 -0.0313 -0.0322 0.143 2.1701 2.8937 -0.6911 0.2313 0.6752 1.8195 -5.0924 -2.741 -2.7119 -0.8482 -0.9537 -4.6672 -0.0097

(L) 52W

1.0857 1.6381 0.9972 1.3487 90.25 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 95.028 1.25692 0.8506 8.4894 10.7712 120.71 1.0314

0.9582 1.5269 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 29.63 1.2152 28.913 40.54 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS (H) 52W

(L) 52W

8.253965

3.44

2.27

856066

CROWN LTD

11.92

1.016949

11.71509

12.04

8.04

1362688

18.30999947

AMAX HOLDINGS LT

0.083

2.469136

18.57143

0.119

0.055

27561000

66.84999847

BOC HONG KONG HO

26

0.1926782

7.883816

26.15

20.25

13403062

1.28

1.703084833

948.25

652

1429.25

-0.069917847

1.401206101

1728.25

1200

COFFEE 'C' FUTURE Mar13

156.3

0.514469453

8.692628651

240.3499908

141.25

SUGAR #11 (WORLD) Mar13

18.37

-0.271444083

-5.843157355

25.12999916

COTTON NO.2 FUTR Mar13

78.55

0.989971715

4.538195369

98.5

World Stock MarketS - Indices PRICE

MAJOR

PRICE

2.095808

791.25

SOYBEAN FUTURE Mar13

COUNTRY

COUNTRY

3.41

WHEAT FUTURE(CBT) Mar13

DAY %

YTD %

(H) 52W

(L) 52W

NAME ARISTOCRAT LEISU

PRICE

DAY % YTD %

VOLUME CRNCY

CENTURY LEGEND

0.29

0

9.433968

0.34

0.215

68000

CHEUK NANG HLDGS

6.16

0

2.838067

6.25

2.8

201000 16025829

CHINA OVERSEAS

24.7

-1.2

6.926405

25.6

14.124

CHINESE ESTATES

12.74

-0.312989

-2.599388

13.26

8.3

5500

CHOW TAI FOOK JE

13.26

1.221374

6.591643

15.16

8.4

4629182

EMPEROR ENTERTAI

1.98

-1

4.761906

2.08

0.99

565000

FUTURE BRIGHT

1.67

1.829268

36.88524

1.69

0.44

7178000

DOW JONES INDUS. AVG

US

13649.7

0.3948214

4.163269

13661.87

12035.08984

NASDAQ COMPOSITE INDEX

US

3134.705

-0.04135839

3.814899

3196.932

2726.68

HANG SENG BK

FTSE 100 INDEX

GB

6170.26

0.2575389

4.619506

6180.27

5229.76

DAX INDEX

GE

7734.18

0.4148149

1.599892

7789.94

5914.43

NIKKEI 225

JN

10747.74

-1.517048

3.391577

10952.31

8238.96

HANG SENG INDEX

HK

23590.91

-0.04605585

4.122318

23639.63

18056.4

CSI 300 INDEX

CH

2610.898

0.5956218

3.485839

2717.825

2102.135

TAIWAN TAIEX INDEX

TA

7724.92

-0.1028079

0.3301503

8170.72

6857.35

GALAXY ENTERTAIN

34.3

2.083333

13.01483

34.4

16.62

11739250

119.6

0.1675042

0.7582166

120

99.2

914171

HOPEWELL HLDGS

32.9

-0.1517451

-1.052632

34.4

19.049

418500

HSBC HLDGS PLC

85.3

0

4.920045

85.65

59.8

12130422

HUTCHISON TELE H

3.45

0

-3.089886

3.88

2.98

3422000

LUK FOOK HLDGS I

29.7

1.192504

21.72131

30.2

14.7

1989800

MELCO INTL DEVEL

12.14

2.881356

34.73918

12.2

5.12

11906000

MGM CHINA HOLDIN

17.58

4.270463

25.39229

17.7

10.04

13591800

MIDLAND HOLDINGS

4.18

-0.2386635

12.97297

5.217

3.249

3685000

NEPTUNE GROUP

0.213

1.428571

40.13158

0.226

0.084

42573000

NEW WORLD DEV

14.54

1.253482

20.96505

14.64

7.95

15989026

SANDS CHINA LTD

38.2

1.866667

12.51841

38.25

20.65

5435683

SHUN HO RESOURCE

1.48

-0.6711409

5.714288

1.5

1.03

110000

4.5

0.896861

7.398567

4.65

2.56

5897034

KOSPI INDEX

SK

1986.86

-0.04980255

-0.5102558

2057.28

1758.99

S&P/ASX 200 INDEX

AU

4777.497

0.1314337

2.765073

4787.2

3985

ID

4435.463

-0.6722899

2.751552

4472.108

3635.283

FTSE Bursa Malaysia KLCI

MA

1635.37

-2.449834

-3.172383

1699.68

1509.49

SHUN TAK HOLDING

JAKARTA COMPOSITE INDEX

51.4

17.2

95.22

NAME

17.6

51.2

WTI CRUDE FUTURE Feb13

CORN FUTURE

51.6

CURRENCY EXCHANGE RATES

NAME

METALS

17.8

33.7

Commodities ENERGY

51.8

NZX ALL INDEX

NZ

908.995

0.5353064

3.054467

913.386

732.335

SJM HOLDINGS LTD

21.4

3.13253

18.88889

21.5

12.34

3967600

PHILIPPINES ALL SHARE IX

PH

3877.24

0.3839572

4.819167

3885.39

3125.49

SMARTONE TELECOM

13.6

-0.8746356

-3.40909

17.5

13.1

2437949

HSBC Dragon 300 Index Singapor

SI

627.02

0.2

0.95

NA

NA

STOCK EXCH OF THAI INDEX

TH

1442.45

0.5584061

3.629486

1443.98

1054.84

HO CHI MINH STOCK INDEX

VN

447.79

-1.402589

8.232422

492.44

Laos Composite Index

LO

1446.66

2.745009

19.08921

1446.66

WYNN MACAU LTD

22.15

0

5.72792

25.5

14.62

7685510

ASIA ENTERTAINME

3.86

-3.015075

26.14379

7.24

2.4

201872

BALLY TECHNOLOGI

46.84

-0.8887008

4.764037

51.16

40.78

425499

372.39

BOC HONG KONG HO

3.26

0

6.188927

3.36

2.56

11984

880.65

GALAXY ENTERTAIN

4.37

2.58216

10.07557

4.38

2.1

6450

15.01

-1.18499

5.928016

17.37

10.92

2828789

INTL GAME TECH JONES LANG LASAL

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

88

0.2163763

4.836785

88.2

61.39

183534

LAS VEGAS SANDS

52.22

0.6553585

13.12825

58.3216

32.6127

6016321

MELCO CROWN-ADR

19.74

-0.9036145

17.2209

20.06

9.13

2547797

MGM CHINA HOLDIN

2.03

0

9.729728

2.09

1.3525

955

MGM RESORTS INTE

12.89

-0.5401235

10.73883

14.9401

8.83

6358699

SHFL ENTERTAINME

14.26

-1.040944

-1.655172

18.77

11.75

191499

SJM HOLDINGS LTD

2.7

1.123596

16.88312

2.7

1.65

200

124.06

0.4859874

10.28536

129.6589

84.4902

1352546

WYNN RESORTS LTD

AUD HKD

USD


14 |

business daily January 22, 2013

Opinion

Handicapping the contenders to replace Bernanke Simon Johnson

O

Professor at the MIT Sloan School of Management

ver the past four years, the Federal Reserve has become the most important branch of government. It has acquired unprecedented powers over almost all aspects of American life. It has also become much more politicised than at any time in living memory. Expect further attacks on its independence and integrity at election time. The spirit of Andrew Jackson lives on. And now we see clear signals that the Fed is likely to have a new chairman soon. Who will run the central bank and what does the choice of top leadership mean for the country? The recent expansion of the Fed’s powers is ironic, because the decade before 2008 was hardly the organisation’s most glorious. Monetary policy was arguably too loose for too long after the dot-com bust and the September 11 attacks. The Fed’s light-touch approach to financial regulation failed completely. And the regulator drank the Kool-Aid of the Basel II international banking rules – believing in the “advanced approaches” that let banks design their own model-based capital levels, which turned out to be woefully inadequate.

The Fed also failed to protect consumers and homeowners from rapacious practices in parts of the financial sector. And it spectacularly neglected to consider systemic risk and the ways a real-estate price boom could lead to overborrowing that would bring down the macroeconomy.

Credit boom In fact, it is hard to find an aspect of the Fed’s activities that went well during the credit boom. Yet the central bank is now more powerful than ever. How did this happen? The explanation lies partly in the extraordinary measures taken by chairman Ben Bernanke and his colleagues – both as the crisis manifested itself in the fall of 2008 and as the economy staggered along beginning in 2009. Harvey Rosenblum and Richard Fisher of the Dallas Fed write about the “blob that ate monetary policy,” by which they mean that undercapitalised megabanks became so badly broken that the ordinary transmission mechanisms of monetary policy no longer worked. It wasn’t enough to cut short-term interest rates; if the Fed wanted to help the economy, it needed to take

more-dramatic steps. Fast-forward to early 2013: Through its current and expected asset purchases, the Fed controls almost the entire yield curve, meaning the benchmark “risk-free” interest rates paid on Treasury debt of all maturities (certainly up to the 10-year bond and arguably beyond). But the change in Fed operating doctrine is much more profound. In principle, as a result of the HumphreyHawkins legislation in the 1970s, the Fed cared about unemployment as well as inflation. In practice, the Fed was much more focused on inflation. Now, however, we have an explicit unemployment target for the first time. And the Fed has also assumed greater powers visa-vis the financial system. It’s true that the Dodd-Frank reform legislation also empowered the Federal Deposit Insurance Corporation to handle the failure of financial institutions. And now there is a Financial Stability Oversight Council, headed by the Treasury secretary.

‘Living wills’ In reality, though, the Fed controls key parameters regarding the safety of big

banks – including how much equity funding they have and the structure of their debt. It is also in charge of determining whether banks have viable “living wills” that would allow any potential failure to be handled through bankruptcy. And the Fed is very much involved in deciding whether any nonbank financial institutions should be regarded as “systemic” and thus subject to tighter regulation. Don’t hold your breath for serious progress on any of these missions. The Fed is powerful today for two reasons. On the macro side, there is no alternative. Fiscal policy is off the table as an instrument for stimulating the economy: You might be for or against, but nothing is going to happen. You might think monetary policy is too loose or too tight, but there is no denying that these decisions are currently of paramount importance. On the regulatory side, all the other regulators have problems. The Office of Thrift Supervision was abolished, thankfully, by Dodd-Frank. The Office of the Comptroller of the Currency may be improving under new leadership but it has a tawdry history of being captured by big banks. And the Securities and

It is hard to find an aspect of the Fed’s activities that went well during the credit boom

Fed chairman Ben Bernanke

Exchange Commission has become a sad shadow of its former self. The FDIC did have a relatively good crisis, but it remains focused on deposit insurance – and has been handed the difficult, messy business of potentially “resolving” failing megabanks. Politicians on both left and right feel increasingly uncomfortable about decision making at the Federal Reserve – calling now for an audit of the interest-ratesetting process in the Federal Open Market Committee. The Fed is full of smart people with a great deal of integrity. But some parts of the system have become too close to powerful interests on Wall Street, undermining the political legitimacy of the more independent parts. Bernanke will probably step down when his term as chairman of the Board of Governors expires in early 2014. He could stay, but the main lesson from the cult of former chairman Alan Greenspan is that more than two terms isn’t healthy for the organisation or the country. Future chairmen should be limited to eight years in office.

Leading candidates There are three plausible candidates to take over. Janet Yellen, the current vice chairman, must be considered the front-runner. Support her if you like the current trajectory of the Fed with expansionary macro policy and a go-slow approach to regulation. Yellen is a very accomplished economist. But should the Fed continue to disregard the risks of inflation and understate the danger of too-big-to-fail banks? Most of the history of central banking – including the first 100 years of Fed experience – suggests that this can become a toxic combination of mistakes. Timothy Geithner, who is stepping down as Treasury secretary, wants the job of Fed chairman. Yet he was head of the New York Fed during the disastrous boom phase and remains closely associated with the Robert Rubin-Citigroup wing of the Democratic Party. His doctrine of “overwhelming force” over the past four years can be translated into plain English as “unconditional bailouts for big banks”. This is unlikely to fly on Capitol Hill. Fisher of the Dallas Fed represents a different view, more concerned about the potential resurgence of inflation and pressing for tougher action on the dangerous megabanks. Fisher warrants serious consideration for the position of chairman of the world’s most powerful central bank. 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 Associate editor Michael Grimes Newsdesk Alex Lee, Stephanie Lai, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, José I. Duarte, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | 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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January 22, 2013 business daily | 15

OPINION Business

wires

Europe’s narrative struggle

Leading reports from Asia’s best business newspapers

Jakarta Post

Ana Palacio

Former Spanish foreign minister and former Senior Vice President of the World Bank

State-ownedtelecommunications company, PT Telekomunikasi Indonesia (Telkom) expects to control up to 60 percent of the mobile phone market in Timor Leste in five years through its newly established subsidiary, Telekomunikasi Indonesia International (Telin). Telin’s operation in the former Indonesian province was officially inaugurated in Dili last week with the presence of PT Telkom’s president director Arief Yahya and State-Owned Enterprises Minister, Dahlan Iskan. Telin will spend up to US$50 million to build the relevant infrastructure, Mr Arief said.

The Star Ranhill Energy and Resources Bhd, a Malaysian energy and water company, is expected to list on the Bursa Malaysia Stock Exchange by the second quarter of this year in a deal that will likely raise more than 1 billion ringgit (US$332 million), two sources close to the deal said. The initial public offering could be among the first after a general election that Malaysian Prime Minister Najib Razak must call by the end of April. The IPO pipeline in the Southeast Asian country has slowed ahead of the election because of concerns about market volatility, analysts and investment bankers have said.

Wall Street Journal A debate is brewing in India about a possible increase in taxes for the country’s superrich. Earlier this month, C. Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, suggested that the government could consider such a tax increase in the upcoming financial budget, which will be placed before Parliament next month. Mr Rangarajan said they could try to raise more taxes possibly by adding a new tax on income above a certain level. He didn’t elaborate but said this needed further discussion.

Myanmar Times Myanmar’s Ministry of Energy has announced the second bidding round for onshore oil and gas blocks. The government said that bids would be accepted for 18 onshore blocks. Bids must be delivered no later than March 17 to the director general of the Energy Planning Department in Nay Pyi Taw. “The petroleum operation shall be conducted on production sharing basis and/or improved petroleum recovery basis,” the statement said. The state owned Myanma Oil and Gas Enterprise will serve as a partner along with at least one Myanmar national owned company.

T

he start of any year invariably prompts stocktaking, and 2012 certainly offers much to consider: the dramatic events in the Middle East, leadership change in China, and the brinkmanship of America’s budget debate. All were high in importance, if not always in popular interest. That seems especially true of the painful and excruciatingly prolonged – indeed, still ongoing – process of saving the euro. The euro’s survival in 2012 – if only by the skin of its teeth – confounded sceptics who forecast Greece’s exit from the euro zone and the single currency’s collapse by the end of the summer. Indeed, the European Union’s future still seems acutely uncertain, owing mainly to a mismatch between rhetoric and reality. In the realm of reality, the latest of many “grand” summits in Brussels has left a yawning gap between Europe and a fiscal union, as heads of state stripped much of the substance from the blueprint proposed by Herman Van Rompuy, the president of the European Council, and developed by the European Commission. Nonetheless, concrete and positive steps toward institutional consolidation – though far from achieving the ambitions of some – have been taken. The creation of the European Stability Mechanism, the European Central Bank’s new supervisory role, and the ECB’s purchases of sovereign bonds over the course of the last year have provided muchneeded relief to Europe’s beleaguered peripheral economies. Moreover, Europe is one step closer to a fullfledged banking union. The main impediment to further progress is that two competing narratives have emerged to explain Europe’s economic travails and lay out a path forward. One centres on the euro zone’s structural flaws and aims at strengthening the

No degree of austerity on its own will enable Europe’s southern economies to get back on their feet

institutional framework, whereas the other highlights faulty domestic policies and focuses on austerity. Alarmingly, the resulting political debate has degenerated into a shrill cacophony of moral righteousness, fingerpointing, scapegoating, and stereotyping. In fact, though often portrayed as irreconcilable opposites, the two approaches to resolving the euro’s problems are complementary – indeed, essential – components of any realistic approach to ensuring the euro zone’s future. Likewise, neither narrative alone can provide a vision for the EU; the gap between them can be filled only by trust. Greece, Italy, Spain, Portugal, and even France need to control their deficits and streamline debt. But no degree of austerity on its own will enable Europe’s southern economies to get back on their feet.

Consider Greece Anticipating desertion by Europe and convinced that painful budget cuts and repayment will benefit only its creditors, Greece has ringfenced itself, and has been sapped of all motivation to undertake the reforms dictated by Brussels. Meanwhile, Germans regard economic transfers

to the South as a moralhazard problem that no European political agreement could resolve. Seeing only one side of the equation, public opinion has become polarised between northern and southern Europe, perpetuating a vicious cycle of mistrust. It would be equally wrong to imagine that institutional changes alone will fix Europe’s problems. While an integrated financial framework for Europe is taking shape, daunting decisions regarding the design of a European resolution mechanism need to be worked out. A banking union will undoubtedly entail significant encroachments on sovereignty (for example, decisions to close banks, distribute losses, or cut workforces at the national level), which, unless accompanied by progress toward a political union, will generate a crisis of legitimacy. Thus, addressing Europe’s serious economic issues requires wading into the deep waters of the political imagination. So far, however, policies aimed at shoring up the euro have been narrowly technical, in an effort to isolate Europe’s financial travails from popular discontent over its direction.

That debate has been left to fester, serving as a dangerously dysfunctional pressure valve for turbulent and frustrated citizens across Europe. Confronted with the reality of disgruntled electorates, pundits are quick to bemoan the “democratic deficit” of the Union’s institutions. Lately, they have been pleading for the direct election of the European Commission president, the transformation of the Council of Ministers into a form of second legislative chamber, or for the establishment of Europe-wide political parties to contest elections to the European Parliament. None of these initiatives would work, however, owing to a simple, inconvenient truth: to this day, Europeans view each other in “us versus them” terms. Europe’s common institutions – both old and newly created – can survive in the long run only if a common European identity materialises to underpin them. The emergence of such an identity depends on politicians’ ability to communicate to their fellow citizens the Union’s real advantages and the bleak prospects of nation-states that try to go it alone. In a “post-European world,” Europe is globally relevant only when united. The single market is the paramount example at one extreme, with defence – plagued by duplication and lacunae between EU countries – at the other. Although politicians and voters are equally unwilling to admit it, the EU has reached a fork in the road. One route leads to further integration, while the other implies a return to national sovereignty; navigating the former will require great effort, whereas the latter is a relatively straight downward path. Ultimately, the EU’s future – if it has any future at all – depends on constructing a coherent narrative that articulates that choice explicitly. © Project Syndicate


16 |

business daily January 22, 2013

CLOSING Sony to introduce Xperia tablet

Jakarta to start building metro this year

Sony Corp., the electronics maker struggling after four straight annual losses, will sell a new tablet computer in Japan this year as it tries to lure customers away from Apple Inc. and Samsung Electronics Co. The Xperia Tablet Z will be 6.9 millimetres thick, weigh 495 grams and have a 10.1-inch display, Sony’s mobile unit said in a statement yesterday. The waterproof device may debut in Japan as soon as March before appearing elsewhere, Noriko Shoji, a Tokyo-based spokeswoman for Sony, said. The price hasn’t been determined, she said.

The Indonesian capital Jakarta will soon start construction of a metro system to try to unravel its infamous traffic jams, 26 years after the idea was first mooted, officials said yesterday. The city administration and the central government finally agreed last week on how to split the cost, with 49 percent to be paid by the central government. Construction would start this year, pending an announcement of the winner of the tender, said Eko Hariyadi, a Jakarta administration spokesman. Two consortia of Japanese and Indonesian construction firms are competing for the work.

between 34 percent to 42 percent in the final three months of 2009 to 2011. Retailers in Hong Kong and mainland China became more “cautious,” and it’s unclear how revenue in the region will evolve, Richemont said. “There are little clouds on the horizon, and there’s going to be a period where the data are fragile,” said Jon Cox, head of Swiss research at Kepler Capital Markets in Zurich.

Gift slowdown

Richemont declines as sales miss estimates Cartier jewellery maker points to China slowdown Revenue from the watch division gained 9 percent

C

ie. Financiere Richemont SA, the maker of Cartier jewellery, fell the most in more than a year in Zurich trading after reporting third-quarter revenue that missed analysts’ estimates as Asia Pacific sales stopped growing. The shares fell as much as 7.3 percent, the biggest intraday decline since September 2011.

Richemont’s Asia Pacific sales didn’t rise in the October-December period for the first time in four years. Total revenue rose 9.3 percent to 2.86 billion euros (US$3.8 billion) in the three months through December, the Geneva-based maker of IWC watches said yesterday in a statement. That missed the 2.91 billion-euro average of seven analyst

Abu Dhabi property firms merge to counter slowdown Government, related entities to own 37 percent of new firm

A

bu Dhabi’s two biggest property firms have agreed a state-backed, all-share merger to create a business with US$13 billion of assets which the government hopes can stabilise a market hit by oversupply and falling prices. The tie-up between Aldar Properties PJSC, which has been bailed out by the Abu Dhabi government over the past two years with around US$10 billion in funding, and Sorouh Real Estate Co. creates the second-largest listed property firm in the United Arab Emirates and one of the biggest in the Middle East.

The deal, announced yesterday, comes as Abu Dhabi’s property market struggles with a huge supply of high-end homes that entered the market last year and as the emirate conducts a review of its state-owned entities. The government owns nearly 50 percent of Aldar through statelinked businesses. Property prices in Abu Dhabi have tumbled about 50 percent since the global financial crisis hit a few years ago, analysts estimate. Combining Aldar and Sorouh, the No. 1 and 2 developers respectively and which rely heavily on government contracts,

estimates compiled by Bloomberg. Decelerating growth in China is a concern for luxury companies. Chinese buyers account for 25 percent of global luxury spending, according to a September HSBC Global Research report. Thirdquarter revenue growth slid to a halt in Asia Pacific, excluding currency swings, compared with growth rates

will ensure better coordination of new property developments. It will also generate cost savings, the two firms said. “It is very important for the combined entity to be aligned with the overall strategy of Abu Dhabi,” Abubaker Seddiq al-Khouri, Sorouh’s managing director and proposed chairman of the new business, said on a conference call. “We will be building a company that helps in the overall development of real estate in the emirate but also doing that in a cost efficient way.” With the support of the government, management of Aldar and Sorouh had held talks for nearly a year on asset valuations, financial terms and the new management structure. The new entity will need no further assistance from the government, Mr al-Khouri said, adding projected cash flows of 15 billion dirhams (US$4.1 billion) from government contracts will be used to cut down on 13.4 billion dirhams debt of the combined entity in the coming three years. “The focus of the new firm will

China’s economy expanded 7.8 percent last year, the slowest pace since 1999. Chinese consumers often buy watches in Hong Kong or Europe to avoid mainland China’s taxes. Hong Kong watch and jewellery retail sales fell for the first month in three years in August. Watches are often given as business gifts in China, and purchases may be delayed ahead of the transition in the country’s leadership, which began in November and will be completed in March, Mr Cox said. The timing of the Chinese New Year, which is in February this year and was in January in 2012, may have also delayed some sales, he said. Richemont’s Baume & Mercier brand agreed to form a joint venture in mainland China with Chow Tai Fook Jewellery Group Ltd to distribute the Swiss brand’s watches, the Chinese jeweller said on Sunday. Chow Tai Fook is the world’s largest jewellery chain by market value. Revenue from Richemont’s watch division gained 9 percent excluding currency shifts. Watchmakers including Jaeger-LeCoultre and Lange & Soehne timepieces generated about a quarter of Richemont’s sales in the three months through December. Bloomberg News

Property prices have tumbled about 50 percent since 2008

be on deleveraging,” al-Khouri said on the call. The Abu Dhabi government will own a 37-percent stake in the new firm. As part of the transaction, Sorouh shareholders will get 1.288 Aldar shares for every share they own. Sorouh will be dissolved and delisted once the merger, which is subject to shareholder approval, is completed. Reuters

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