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Year I Number 169 Friday November 23, 2012 MOP 6.00 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte

I SSN 2226-8294

www.macaubusinessdaily.com

Outlook for SMEs still cloudy: Tam A

legislator yesterday called for major reform of labour import rules – rather than minor adjustments – to save small businesses. But Francis Tam Pak Yuen, Secretary of Economy and Finance, told the Legislative Assembly after his 2013 policy address that the government had always tried to focus imported labour quotas on nongaming businesses rather than the casinos – and praised the progress of the local conventions industry. Mr Tam added the administration would eventually seek a fund manager for its fiscal reserve. Legislators are concerned its investments have so far produced below-inflation returns. He also indicated “nearly half “ of the city’s 11 slot parlours will have to “move away” from their current locations. More on page 3

HANG SENG INDEX 21760

21710

21660

HK$3 bln homes scheme next to Jockey Club

21610

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21560

November 22

HSI - Movers Name

HK firm wins HK$10 bln Studio City build deal Page 3

%Day

CHINA RES LAND

3.48

CHINA UNICOM HON

3.04

WANT WANT CHINA

2.56

CHINA SHENHUA-H

2.25

CHEUNG KONG

2.20

CLP HLDGS LTD

0.00

BANK OF CHINA-H

0.00

COSCO PAC LTD

0.00

CHINA RES ENTERP

-0.39

TINGYI HLDG CO

-1.81

Source: Bloomberg

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Economy, customs checks, hit Q3 retail sales: experts Page 5

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2012-11-24

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business daily November 23, 2012

Photo by Manuel Cardoso

macau

Banks confident over Taipa luxury homes Bright economic prospects are behind the decision by banks to finance a high-end housing project near the Jockey Club Stephanie Lai

sw.lai@macaubusinessdaily.com

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aw Capital Partners has decided to invest between HK$3 billion (US$387 million) and HK$4 billion in a high-end housing project adjacent to the Macau Jockey Club, according to Industrial and Commercial Bank of China (Macau) Ltd (ICBC). The Hong Kong property investment company aims to put a small, lowdensity residential development on the site, comprising detached and terraced houses and a clubhouse. ICBC and Gaw Capital, the sole investor in the residential project, signed on November 9 a syndicated loan agreement that will put HK$2.1 billion in the developer’s coffers. The syndicate comprises ICBC, HSBC, Tai Fung Bank Ltd, Wing Hang Bank Ltd, Dah Sing Bank Ltd and Citic

Bank International Ltd. ICBC said the members had faith in the project because of the “bright future prospects of the property market in Macau” and “the unique quality of the project due to its fantastic design and development plan”. This optimism was seen in “the overwhelming response to the participation in this syndicated loan, having achieved over 200 percent of the ticket size of the required loan amount,” ICBC said. The development, which is awaiting approval from the Land, Public Works and Transport Bureau, is expected to take two to three years to build. ICBC said Jockey Investment Co Ltd owned the project, but in name only, and that the real owner was

business as usual

Lost opportunities Paulo A. Azevedo pazevedo@macaubusinessdaily.com

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he policy address is supposed to be a summary of the government’s strategy, its plans that have yet to be put into action. But if that is the case, predictability was the salient feature of the Policy Address for 2013. We continue to travel at cruising speed, without any bursts of acceleration. Is there anyone that still believes that if, one day, the gaming manna stops falling from the heavens, Macau will not suffer for its failure to take advantage of the golden years to invest in its own future? Basically, we continue to accumulate billions of patacas and spend just enough of what the revenue from gaming provides to guarantee that our day-to-day needs are met. Macau is the grasshopper of Aesop’s Fables, despite holding only the trump cards of an ant. To satisfy a community without a mature ability to be critical, the keepers of the public coffers continue to dish out money and make do with low taxes. Should, one day, the gaming industry begin to dwindle and the government feel the need to put an end to the abundance that people have got used to, residents will be dealt a double blow: they will lose the benefits and realise that too many years were lost without any structural investment or planning that bore fruit. There is no investment in knowledge, in the creation of technological industries or in muchneeded talent. One wonders if our top officials wish to go down in history as those responsible for an era of lost opportunities.

ultimately a private equity fund managed by Gaw Capital. “The project company has no relationship with the Macau Jockey Club, nor has the Macau Jockey Club any interest in the project,” ICBC said. Gaw Capital is run by the Gaw family, which controls Hong Kong real estate and hotel investment firm

Pioneer Global Group Ltd. Between 2005 and 2008, Pioneer, Morgan Stanley Real Estate Funds and Wachovia Bank owned Macau’s 22-storey International Gateway building, now called the AIA Tower. Business Daily contacted Gaw Capital and the Macau Jockey Club but both companies declined to comment.


November 23, 2012 business daily | 3

MACAU Half of slot parlours to close or relocate “Nearly half of the 11 slot parlours will have to move away” from their current location, including the SJM Yat Yuen Canidrome Slot Lounge in Fai Chi Kei, the secretary for Economy and Finance said. The new bylaw that bans parlours in residential areas “further tightens the parlour regulation, it does not relax it, unlike some opinions have reckoned,” Francis Tam Pak Yuen said. In the past few years, there were no new slot parlours opening – apart from those in hotels – the secretary stressed at the Legislative Assembly.

Outlook for SMEs still cloudy: Tam Subsidies for small business to continue, but legislators doubt they’ll help Stephanie Lai

sw.lai@macaubusinessdaily.com

jobs which residents are not willing to take up. But he also called for more small businesses such as food and beverage firms or beauty parlours to be allowed to move into industrial buildings, to alleviate rising rental costs. Mr Tam stressed that the government had always aimed to allow proportionally more non-resident workers in non-gaming sectors than in the casinos. “In the second quarter this year, the proportion of non-resident employees in all gaming companies was 24 percent – a percentage lower than the percentage of non-resident employees over the total working population,” he told legislators.

MICE growth

Francis Tam yesterday

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conomic diversification will be hard to achieve in the coming year, Secretary of Economy and Finance Francis Tam Pak Yuen admitted at the Legislative Assembly yesterday. He said local small- and mediumsized enterprises (SMEs) continued to struggle with challenges – some facing “difficulty to remain in business”. The government’s policy address for 2013 promises to keep in place help and funding to enable small enterprises upgrade their staff training and equipment, as well as improving procedures for importing labour. But legislators are not satisfied that this is enough. They see the city’s

restrictive and drawn out approach to labour import procedures as the main problem. They suggest the system needs radical reform not simply some minor adjustments. “Employers have to contact the administration, including the Labour Affairs Bureau, to prove that no local employees would like to work for them before applying for imported labour,” said legislator Kou Hoi In. “This pre-employment arrangement is a burden to the SMEs, which should be simplified,” Mr Kou, director of the Macau Chamber of Commerce, said. He supports the government’s plan to relax the imported labour criteria for

Meetings, incentives, conferences, and exhibitions (MICE) business is the fastest growing sector in Macau alongside retail trade, Mr Tam noted. The secretary rejected accusations that it is “just stumping up money to aid a few big MICE events without seeing apparent effects”. “Registered local MICE companies have already exceeded 300,” he said. “What the government is glad to see is that the staff participating in MICE business has grown from a size of about 200 in 2001 to the over 2,000 at present.” Incentive schemes and training programs for MICE professionals will go on, while the government would like to see the sector achieving a multiplier effect of seven to 10 times its current business.

Stability, not high return, is fiscal reserve priority “High added-value” or “high returns” are not the priority concerns for the investment of Macau’s fiscal reserve, Secretary for Economy and Finance Francis Tam Pak Yuen told legislators. “When the special reserve reaches a certain level, we’ll seek a fund manager, and gradually seek more ways to allocate assets on a stable investment basis. For instance, investing in appropriate stock markets,” said Mr Tam. During the secretary’s policy address for 2013 at the Legislative Assembly yesterday, a number of members questioned the government’s ability to handle the investment of the fiscal reserve, with the rate of return shrinking in recent years. “I know the Singapore example of having state investment company Temasek Holdings [Pte Ltd] to handle the reserve is difficult to learn from,” said legislator Chan Meng Kam. “But the rate of return for Hong Kong’s mandatory provident fund is already 3.4 percent, and mainland [China] also got a five percent rate for its social security fund. What about Macau?” he concluded. S.L.

Paul Y. Engineering wins HK$10 bln Studio City deal Hong Kong firm also planning its own casino hotel on Cotai Michael Grimes

michael.grimes@macaubusinessdaily.com

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ong Kong-listed Paul Y. Engineering Group Ltd has won a HK$10 billion (US$1.29 billion) contract to build part of the Studio City resort project on Cotai, the construction firm said in a voluntary filing. 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. MCE was always due to provide

the gaming licence for Studio City. But in June last year it took on a 60 percent equity interest in the overall project after deadlock over funding between previous investors caused the original construction timetable to stall. Work recommenced on the site this summer, but without a regulatory announcement being made. MCE said in an October filing with the Nasdaq in New York that Studio City will cost US$2.9 billion to complete, inclusive of pre-opening expenses, working capital and land premiums. In a conference call with analysts earlier this month to discuss third quarter Macau earnings, MCE’s

co-chairman Lawrence Ho Yau Lung said the scheme was on course for a mid-2015 opening. That date was also mentioned in yesterday’s filing by PYE. On Tuesday Paul Y. Engineering also announced it was planning initially to raise HK$3.2 billion – by issuing shares in Hong Kong and by selling convertible bonds – toward the US$800 million cost of a boutique casino-hotel on land on the CotaiColoane border adjacent to the One Oasis residential development. The possible opening date is 2015 or early 2016. But Macau’s gaming regulator the Gaming Inspection and Coordination

Bureau told Business Daily in an e-mailed statement yesterday: “The Bureau has not received any application for gaming in the said boutique-style casino hotel”. Yesterday the South China Morning Post in Hong Kong reported that PYE – an engineering and property firm currently controlled by Charles Chan Kwok Keung – had been looking to diversify its business. The newspaper said PYE last year announced a joint venture with a Hollywood film company and Beijing’s Huayi Brothers Media Group but pulled back after it failed to raise enough money in a weak market.


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business daily November 23, 2012

macau IACM gets all food safety powers

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The food safety bill will give the Civic and Municipal Affairs Bureau all the powers to handle related issues, the Legislative Assembly’s second standing committee stressed yesterday. Chan Chak Mo, who chairs the committee, assured the media after a closed-door meeting there would be no overlap of competences with other public bodies like the Health Services Bureau. A grace period of six months will be given before it is mandatory for businesses to keep receipts for all imports and exports of food products.

HOSPITALITY Real slow Recent data indicate that spending by visitors is rising once again. Spending by visitors rose fast for most of last year. But in the first quarter of this year it rose more slowly and in the second quarter it fell. A second-quarter fall is not unusual, but the second-quarter fall this year – almost 10 percent sequentially – was steep. Spending by visitors in the third quarter was 28.6 percent higher than in the first quarter of 2010. But their thirdquarter spending was still slightly below what they spent in the first quarter of this year. Comparisons with any time before 2010 are difficult to the point of being impossible, because the way visitor spending is estimated changed in that year.

Higher shop rents hit Oriental Watch profit Watch retailer saw profits shrink in last two quarters due to weak consumer appetite Vítor Quintã

vitorquinta@macaubusinessdaily.com

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The growth in spending per head, combined with a rise of 19.2 percent in the number of visitors in the period under review, meant total spending by visitors rose from 8.7 billion patacas (US$1.1 billion) to 13.3 billion patacas, growing at an average quarterly rate of 4.3 percent. But growth in real spending – that is, nominal spending adjusted to reflect the erosion of purchasing power due to tourist price inflation – is less impressive. Real spending per head by visitors rose by just over 5 percent. And the peak quarter for real spending per head was the fourth quarter of 2010 instead of the first quarter of this year. Real spending per head by visitors is still recovering slowly from the abrupt decrease at the beginning of last year, when it fell by almost 15 percent. J.I.D.

atch retailer Oriental Watch Holdings Ltd saw its profit drop sharply in the six months ended September 30, due to price hikes introduced by watch suppliers and rising rental expenses, the company said. “Escalating rental rates continued to be a major concern for Hong Kong and Macau retailers,” the company told the Hong Kong Stock Exchange yesterday. In comparison to the same period of last year, the group’s rental expense increased by about 23.1 percent. Oriental Watch opened a new Rolex boutique in Hong Kong but the rise “was mainly attributable to the lease renewal of three existing stores”. While “good portion of our retail stores in Hong Kong are self-owned properties,” the same does not happen to the company’s two shops here, located at Macau Square and Macau Tower. Last month Centaline (Macau) Property Agency Ltd sales director Noelle Cheung told Business Daily shop rents in the city had skyrocketed, increasing by up to 50 percent so far this year. Oriental Watch’s net profit was just HK$52.1 million (US$6.7 million), down by 17.3 percent from

Rise in spending by visitors, 2010 Q1 to 2012 Q3

the previous period. But if it wasn’t for a fair value impact of HK$94 million in relation to share options granted, the profit drop would have been closer to twothirds, the company admitted. “Consumer appetite for luxury watch items remained relatively weak,” Oriental Watch said. Sales turnover for the six-months period was HK$1.8 billion, down by 8.7 percent year-on-year. Slower consumption “was particularly evident amongst visiting mainland [Chinese] consumers, who have curbed their spending considerably amidst the prevailing global economic

uncertainty,” the company said. But Oriental Watch is encouraged by a sales recovery in the last few months. “Supported by the rising wealth of a growing middle class coupled with the central government’s forthcoming stimulus measures to promote domestic consumption, the board maintains a cautiously optimistic outlook on the luxury retail market in Greater China,” the retailer said. Oriental Watch’s board recommended a dividend of HK$0.02 per share. The company’s shares were down 3.23 percent to HK$2.4 in Hong Kong trading yesterday.

Li has no plans to sell ING Macau

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Oriental Watch’s net profit was down 17.3 percent year-on-year in the six months to September 30

ichard Li Tzar Kai, a son of Li Ka Shing, has no plans to sell the ING insurance assets in Hong Kong, Macau and Thailand he bought just last month, despite interest from a Thai billionaire. On Wednesday a spokesperson for Mr Li, quoted by South China Morning Post, criticised what he called “market speculation”. Earlier that day, Chotiphat Bijananda, the chairman of Southeast Insurance and Finance Group Co, said the firm was interested in the assets sold recently by ING Groep NV to Mr Li.

The company controlled by Thai billionaire Charoen Sirivadhanabhakdi proposed three options to a financial advisor of Mr Li’s Pacific Century Group a few weeks back. The alternatives would be acquisition of insurance units in Hong Kong, Macau, and Thailand, acquisition in some countries, or a joint venture, Mr Chotiphat, the son-in-law of Mr Charoen, told Dow Jones Newswires. But the spokesperson said Mr Li has “no intention to sell” the assets in Hong Kong, Macau and Thailand

and is actually keen to build a “panAsian insurance platform”. Mr Li bought the ING assets, which include ING Life Insurance Co (Macau) Ltd, for 1.64 billion euros (US$2.14 billion) last month. “What we really want to do is to expand the business regionally,” Mr Li, 45, told Reuters at the times. ING was forced to sell its entire insurance and investmentmanagement operations after getting 10 billion euros of Dutch state aid during the 2008-09 financial crisis.

news where it matters

V.Q.


November 23, 2012 business daily | 5

MACAU

Mainland slowdown crimps retail sales Political uncertainty and the economic slowdown in the mainland meant retail sales here declined in the third quarter Tony Lai

tony.lai@macaubusinessdaily.com

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he decline in retail sales in the third quarter of this year was caused mainly by the slowdown in the mainland Chinese economy, and the outlook for retailing remains healthy, observers of the industry say. Sales in the third quarter amounted to 12.5 billion patacas (US$1.6 billion), 3 percent less than in the second, falling for the second consecutive quarter, official data show. However, third-quarter sales were 13 percent higher than a year before. Sales in the first nine months of this year amounted to 38.5 billion patacas, one-quarter more than in the corresponding period last year. A management and marketing specialist expert at the University of Macau, Rico Lam Long Wai, said: “This drop is unusual as we normally expect sales in summer to be stronger than in spring.” The main causes appeared to be the economic slowdown in the mainland– the city’s biggest source of tourists – and saturation in the supply of luxury goods, Mr Lam told Business Daily. “Luxury goods are not like dayto-day clothing, which [mainland tourists] buy every time they visit. Tourists do not necessarily need to buy luxury goods in the summer,” he said. Sales of jewellery and watches, which accounted for one-quarter of all sales – plunged by 14 percent in the third quarter, but sales of most other kinds of goods increased – in particular, sales of cosmetics and pharmaceutical products.

Normal adjustment A lecturer at the Macau Institute for Tourism Studies, Patrick Lo Chun

Sales of jewellery and watches plunged by 14 percent in the third quarter (Photo by Manuel Cardoso)

Pong, agrees that the mainland’s economic woes are playing a big role in the retailing slowdown. “GDP in China now struggles to maintain growth of only 7.5 percent, well below the more commonly accepted level of 8 percent,” Mr Lo said in a written reply to Business Daily questions. He said this had led to “reluctance to spend, especially on high-end items”. But he is not worried that economic uncertainty and fewer visitor arrivals will cause sales to fall further. “The impact may not be big on the total sales amount, but the distribution among the different categories may be more affected, with personal day-to-day goods playing a

KEY POINTS Third-quarter retail sales drop ‘unusual’ Economic slowdown reducing tourist purchases More customs inspections at border crossings

more important role,” Mr Lo said. The president of the Macau Goldsmith’s Guild, Lei Chi Fong, said the slump in sales of jewellery was due to many things, ranging from political uncertainty caused by the transfer of power to the mainland’s new leaders to increased customs inspections at the border. The slump was “a normal adjustment”, Mr Fong said. “Though China’s economy has slowed, mainland tourists continue to maintain relatively high purchasing power and mainland officials pledged earlier to continue to support Macau and Hong Kong,” he said. “So I don’t see any problems in the sector in the future.” With Vitor Quintã

Homebuyers borrow to beat curbs The amount of new mortgage lending to residents surged in September, probably because they anticipated new regulations Tony Lai

tony.lai@macaubusinessdaily.com

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he amount of new mortgage lending to residents was higher in September than in any previous month this year, as homebuyers rushed to borrow before the government made it more difficult. The combined value of home loans to residents rose to over 4.1 billion patacas (US$512.5 million) in September, 6.1 percent more than the month before, the Monetary Authority of Macau announced yesterday. While this is the highest figure so far this year, it is less than half the 10.9 billion patacas lent in

February last year. In the third quarter of this year new mortgage lending to residents amounted to 11.6 billion patacas, the most in any quarter since the government introduced the special stamp duty in June last year. The special stamp duty is a levy of 20 percent on the sale of a home if it is sold within one year of being purchased. The levy is 10 percent if it is sold within two years of being purchased. New mortgage lending to nonresidents mounted to 516.2 million patacas in September. Loans for unfinished homes

accounted for 70.6 million patacas or 1.5 percent of all new mortgage lending in September, over twothirds less than the month before. Mortgage lending is set to fall after the government took new measures last month to cool the overheating real estate market. These measures include tighter restrictions on mortgage lending and expansion of the special stamp duty to cover sales of shops, offices and parking spaces as well as homes. The deputy general manager of Bank of China Ltd’s branch here, Ip Sio Kai, told reporters last week that applications for mortgages had

dropped by 30 percent in the month after the government’s new measures came into force. Newmortgagelendingforcommercial property rose by 78.1 percent in September to 3.1 billion patacas.


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business daily November 23, 2012

macau

Chan Meng Kam invests in troubled oil company

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Top heavier The main growth in the workforce of the banking sector in the past few years has been in the senior ranks. The senior ranks include the directors and managers, and the professionals and technicians. The other ranks are the clerks (including tellers) and less qualified personnel, denoted here as “others”. For convenience, we have combined two categories of bank employee that the statistics treat separately: what the statistics call the “professionals” and the “technicians and associate professionals”.

The owner of Golden Dragon pumps money into a petroleum company despite its woes in Brunei Vítor Quintã

vitorquinta@macaubusinessdaily.com

The decision was made because I’m confident about their development in the coming years Chan Meng Kam, businessman

Mr Chan, speaking on the sidelines of a Legislative Assembly meeting. Since the first quarter last year the banking industry’s workforce has grown by about 9.4 percent. The numbers of directors and managers and of professionals and technicians have grown faster than the numbers of other kinds of employees. Since early 2010 the number of directors and managers has grown by 15.6 percent and the number of professionals and technicians has grown by 14.9 percent. The senior ranks now make up more than half the people working in banking. The number of clerks has risen by 4.5 percent. The number of other employees, always only a small part of the total, has decreased by about 7 percent. Greater use of technology and regulatory demands are behind these changes. They call for a more detailed breakdown of the figures for the senior ranks. J.I.D.

Brunei dispute

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usinessman and legislator Chan Meng Kam has invested in a petroleum company that is embroiled in a dispute with Brunei’s national oil company over drilling in an oil exploration block. Mr Chan has subscribed to convertible bonds worth HK$16 million (US$2 million) issued by Polyard Petroleum International Group Ltd, the Macau-based company told the Hong Kong Stock Exchange last week. The deal became effective on Monday. The company said it would use the money for general working capital. Business Daily asked Polyard Petroleum International for details but received no reply. Mr Chan, the president of Golden Dragon Group Co Ltd, will get annual interest of 3 percent on his bonds, payable semi-annually. “The subscription is made in my own interest, and has nothing to do with Golden Dragon,” he told Business Daily yesterday. “The decision was made because I’m confident about their development in the coming years as I’ve listened to the introduction by their boss, who is a close friend of mine,” he said, referring to Polyard Petroleum International chairman of Kuai Wei. Polyard Petroleum International will have one year to redeem the bonds,

unless Mr Chan decides to convert part or all of them into shares, which he can do any time. The bonds are convertible at a price of HK$0.16 per share, a premium of almost 6.7 percent to yesterday’s closing price of HK$0.15 for Polyard Petroleum International stock, which is traded in Hong Kong’s Growth Enterprise Market. Conversion would give Mr Chan 100 million shares, or 5.19 percent of the company. “I will observe for one year more before making any decision on whether to change the bonds into shares,” said

HK$16 mln

Value of Chan Meng Kam’s convertible bonds

Polyard Petroleum International is now exploring three oil, gas and coal exploration blocks in the Philippines. Two years ago a consortium in which Polyard Petroleum International has a 21 percent participating interest began drilling in an oil and gas exploration block in Brunei. “Polyard Petroleum has projects not only in Brunei, but in the Philippines as well. I’m confident because they have large exports to China every year, which has promising prospects,” Mr Chan said. Buttheperiodfortheexplorationofthe Brunei block ended in August and Brunei National Petroleum Co Sdn Bhd rejected the consortium’s request to extend it. The consortium appealed to Brunei’s energy ministry. But on the same day Brunei National Petroleum struck back, demanding compensation of US$16.35 million for what the national oil company called Polyard Petroleum International’s failure to fulfil all its obligations in its drilling programme. Polyard Petroleum International said it would “seek legal advice on the appropriate action to be taken … including taking legal action and seeking compensation”. The company posted a loss of HK$24.2 million for the first nine months of this year, having made a profit of HK$302.3 million in the corresponding period of last year. With Stephanie Lai

Stay in the finest hotels in Macau and read Business Daily

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November 23, 2012 business daily | 7

MACAU

Malo to open three mainland clinics Malo Group’s founder says its clinic in Macau is the springboard for its plunge into the mainland market João Paulo Meneses In Portugal

newsdesk@macaubsuinessdaily.com

Malo Group’s investment in Macau is a success, Paulo Maló says

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he president and chief executive of Malo Group, Paulo Maló, says that not only does he not regret having invested in Macau, but feels “happy and proud” about what he did and plans to do here. Mr Maló, the founder of MaloClinic Health and Wellness, says its success in Macau is the reason for its opening next January two new clinics in mainland China, in Beijing and Guangzhou. Malo Group will have a Chinese partner in the Guangzhou clinic, and the group will invest its experience, name and management. A third mainland clinic, in Shanghai’s central business district, is planned to open in the second half of next year. There are also negotiations about “suitable locations with local partners in Hong Kong and Singapore”, Mr Maló told Business Daily. “The investment in Macau not only provided us with the opportunity to enter a country with one of the greatest growth potentials in the world, but also increased our visibility in all of Asia.” Mr Maló said last month that the group was looking for investors for its Macau clinic and medical spa. It recently settled a dispute here with one of its suppliers, which petitioned the courts to have the clinic declared bankrupt. “It would be impossible to materialise these projects using only our own resources, hence the need to have the Fudan University Hospital as our global partner, through its subsidiary Taivex Healthcare Management Co, which is one of China’s main health providers,” he said. This does not prevent the group from searching for and negotiating with other prospective partners, as the Guangzhou project shows. “These partners provide not only capital, but also local know-how”. Another example is the Macau project, which was possible only with the help of “reputed local partners”, which Mr Maló declined to identify. “The existing connection between Macau and Portugal facilitated the whole process,” he said.

Rotten teeth The Macau clinic is in the Venetian Macao casino resort. Mr Maló told the Portuguese news

agency Lusa last month that Sands China Ltd, the owner of the Venetian Macao, might be a suitable investor in his group’s expansion. “In China, the business outlook is better than in any other market”, Mr Maló said. “The group’s strategic planning for China includes opening more clinics, aiming at launching an integrated network of high-quality dental care services in a country where a high deficit in terms of dental treatments persists,” he said. The plans to expand in this part of the world are complemented by the group’s presence in Australia, where it has a clinic in Melbourne and is undertaking a project in Sydney with Australian partners. Mr Maló would not say if all the MaloClinic Macau’s problems with creditors were solved. “We have problems that are common to any business of this magnitude, especially in its developing stages,” Mr Maló said. He said there were no unpaid salaries at the clinic and spa here. “In the first half of 2012, MaloClinic Macau enjoyed a 55 percent increase in its activity in the fields of dental care and medical care when compared to the same period of

Global reach Paulo Maló, president and chief executive of Malo Group, forecasts modest growth in Portugal as result of restructuring measures that will guarantee greater efficiency in allocating resources. “It’s a part of our growth model,” he said. Mr Maló said that, globally, “we expect growth to surpass 200 percent, with some units reaching breakeven point”. The group has clinics in Portugal

2011,” he said. The group’s main concern is still financing, since all its projects are recent or still in the development stage. In Portugal, there is no financing available at “reasonable” interest rates. “The local partners add value to the projects by providing the necessary investment,” Mr Maló said. “The only possible way to move forward with all the projects is to capitalise on the MaloClinic name, which in the last few years has become a global brand, uniquely positioned in the dental care area and one of the few in the medical field,” he said. “We enjoy the advantage of our credibility, technical competence and international reputation”.

On a drip Mr Maló denies that the group was having cash flow problems in Portugal due to a drop in the number of patients and the debts the group has incurred. He said the group still had its core business in Portugal. “Everyone knows about the macro-economic issues the country is facing”, he said. “But fortunately for us, we have been able to maintain a stable activity level in Portugal, in total contrast with

(Lisbon, Porto, Coimbra, Almada, Portimão and Funchal), Spain (La Coruna), Britain (London), Poland (Warsaw), Israel (Tel Aviv and Ramat Hasharon), the United States (New Jersey), Japan (Tokyo), China (Macau) and Australia (Melbourne). Clinics are planned or under construction in Madrid, Milan, Frankfurt, Paris, Moscow, Casablanca, Luanda, Shanghai, Beijing, Hong Kong, Sydney, Bogota, Mexico City, Toronto and New Delhi, among other cities.

current trends,” he said. “We still expect to open four new clinics in Portugal this year.” Mr Maló said a new business model meant more efficient management. This model and “synergies between the several clinics have allowed us to increase profitability, with better net results than last year”, he said. Mr Maló played down the notion that some Portuguese banks are worried, especially some of the group’s biggest lenders like Banco Espírito Santo SA (BES). “BES is one of the banks that has been with us since the beginning, 18 years ago,” he said. He acknowledged that in some places some business models did not work out. Brazil was such a place. “The model we implemented, similar to others we have worldwide – large-dimension clinics with many rooms, surgery blocks with general anaesthesia, sophisticated equipment and a large number of professionals – did not work and the strategy needed to be changed,” he said. “We did not choose the right partner there and, faced with the additional need for resources to finance the operation, we decided to incorporate the losses and terminate the Brazil operations.”

Paulo Maló


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business daily November 23, 2012

GREATER CHINA Japan appoints new ambassador Tokyo yesterday appointed a new ambassador to China, months after the last nominee died before he could take up his post and as tensions simmer between Tokyo and Beijing over disputed territory. Career diplomat Masato Kitera’s appointment will be effective on Monday, the foreign ministry said, while local media reported that the 60-year-old will be dispatched to Beijing next month to formally succeed Uichiro Niwa. Mr Kitera is set to become Tokyo’s point man in the ongoing dispute over an island chain in the East China Sea.

Manufacturing shows rebound gathering pace November PMI marks first expansion in 13 months Lucy Hornby

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hina’s vast manufacturing sector saw expansion accelerate in November for the first time in 13 months, preliminary results from a factory survey showed, a sign that the pace of economic growth has revived after seven consecutive quarters of slowdown. The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) rose to a 13-month high of 50.4 in November, the latest indicator of recovery in the real economy after data showing solid credit growth, firmer exports and rising industrial output in the previous month. A sub-index measuring output rose to 51.3, also the highest since October 2011. “This reflects that conditions for smaller firms, especially exporters, are looking up,” said Li Wei, a Shanghaibased economist for Standard Chartered. “The consensus in the market is already for a small, gradual improvement.” An uptick in key economic activity indicators in October, following encouraging signs in September, cemented the view of many analysts and investors that a rebound in the world’s second largest economy gathered momentum as it entered the fourth quarter, thanks to a raft of pro-growth policies rolled out by

the government over recent months. China is currently shuffling its senior officials after the seven top leaders of the ruling Communist Party were selected at a congress last week. The new appointments should end months of uncertainty in the highest ranks, although economic policy is not expected to change abruptly in the near-term. Even before the congress, the

KEY POINTS November PMI at 13-month high of 50.4 First headline reading above 50 since October 2011 Output sub-index also at 13-month peak of 51.3 Economic rebound gains momentum – analyst

central bank had moved to ease liquidity by pumping short-term cash into money markets rather than resorting to the interest rate cuts or reduction in banks’ required reserve ratios that many investors had expected.

Turning point This month’s PMI reading above 50 is likely to be seen as a turning point by the market, particularly if it is born out by the final reading due on December 1 and by official indicators. Asian shares extended gains slightly after the data to stand up nearly 1 percent on the day and the Australian dollar, sensitive to demand from the biggest customer for Australia’s resources, rose as far as US$1.04. “This confirms that the economic recovery continues to gain momentum towards the year-end,” Qu Hongbin, chief China economist at index sponsor HSBC, said in a statement accompanying the data. “However, it is still the early stage of recovery and global economic growth remains fragile. This calls for a continuation of policy easing to strengthen the recovery.” With a one-month exception in October 2011, the HSBC PMI

China’s manufacturing sector has been hurt by slow

– which largely reflects the private manufacturing sector – has remained stubbornly below the 50-point level separating accelerating from slowing growth since June 2011.

Feeling the pinch Unlike the patchy results seen in previous months, in November almost all the sub-indices in the HSBC survey concurred in showing an improving economy. The one exception was a fall in the sub-index measuring output prices, demonstrating that manufacturers are still struggling with overcapacity and relatively weak domestic demand.

Moody’s warns on local Says Beijing must speed up financial reform Without more marketbased price signals driving the efficient allocation of capital and improving the competitive delivery of services, China’s trend growth rate will likely slow more rapidly than otherwise Moody’s Investor Services

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hina must accelerate the pace of financial reform in coming months to sustain economic growth, ratings agency Moody’s Investor Services said, forecasting the world’s No. 2 economy will grow 7.5 percent each year from 2012 to 2014. Expectations of steady expansion means China is unlikely to suffer any economic “hard landing,” or abrupt slowdown, Moody’s said, but warned that the days of easy growth for the world’s fastest-growing major economy are over. Difficult financial reforms that make space for a more marketdriven system must be made to cut inefficiencies, it said. At the same time, China no longer enjoys the wide berth it had before to bolster growth in unforeseen downturns. “Without more market-based price signals driving the efficient allocation of capital and improving the competitive delivery of services,

China’s trend growth rate will likely slow more rapidly than otherwise,” Moody’s said in a report. Crucial areas of reform include increasing market-based competition, improving regulation to allow greater certainty and transparency on future rules and decisions, and making China’s hulking state firms more efficient, Moody’s said. While these changes should uncover new engines of growth, the road will not be smooth sailing. The 4 trillion yuan stimulus from Beijing four years ago that led to explosive growth in China’s local government debt and rapid expansion of its banks means the country can no longer indulge in a credit binge if the economy swoons, Moody’s said. Banks were especially imperilled by China’s previous credit extravagance, it said, noting China’s total bank assets doubled in the past four years, leaving them exposed to industries now mired


November 23, 2012 business daily | 9

GREATER CHINA GM China chief sees lift in sales General Motors Co., which counts China as its biggest market by volume, said its sales in the world’s largest auto market may see a lift next year from gains in commercial vehicle deliveries and demand for passenger cars. “We recognise that there’s some formidable competition out there, but next year should be a pretty good year,” GM China President Bob Socia said. “What we want to do is continue to outstrip the growth in the industry and try to grab share along the way, as we’ve done this year.”

Chinese shares fall as liquor makers tumble Authorities find excessive plasticiser levels in JiuGuiJiu liquor

M

wing global demand

That could also reflect the weight in the survey of exporting firms, which have less ability to raise sales prices, said Standard Chartered’s Mr Li. China’s exporters are increasingly squeezed by rising domestic costs and competition from new international suppliers, Zhou Haijiang, head of Chinese textile exporter Hodo Group, told reporters this month. “Not only Western countries manufacture industrial goods, but also a lot of developing countries including former socialist countries who now have market economies are all exporting, thus creating a global surplus that cannot be changed,” Mr Zhou said.

l debt in excess production capacity. Total assets in China’s banking system are now worth 240 percent of the country’s gross domestic product at 113.3 trillion yuan (US$18.2 trillion), substantially higher than any other major emerging economy, Moody’s said. As a result, the agency judged Chinese bank asset quality to be “negative” for the next 12-18 months, even though it assessed the banking system to have a “stable” outlook in the period. China’s stabilising economic growth has arrested the uptick in its banks’ bad loan ratio, Moody’s said, and there are no indications that asset quality will worsen materially in coming months. China’s four biggest state-owned banks which control about half of the country’s total bank assets all have non-performing loan ratios of below 1.5 percent, drawing criticisms from

“Because of this it is hard to raise sales prices, everyone is selling and it is hard for manufactured goods prices to rise. In some cases prices have even fallen.” Analysts expect no further cuts to interest rates this year or next after back-to-back cuts in June and July, and only one more 50 basis point cut to banks’ required reserve ratios in 2012 after three since late 2011 that have freed an estimated 1.2 trillion yuan for new lending. Although analysts expect fourth quarter GDP growth to outpace the 7.4 percent seen in the third quarter, full-year expansion for 2012 is expected to be the slowest in 13 years. Reuters

analysts who say the numbers are too low and not to be trusted. Christine Kuo, vice president of Moody’s Financial Institutions Group, said while the agency too has its concerns about China’s bad loan data, it cannot prove that the numbers are false. “We have our concerns, but we have no evidence,” Ms Kuo said. For state-owned enterprises, the economic slowdown will impact different sectors differently, said Kai Hu, vice president for corporate finance at Moody’s. Strategic sectors such as oil and natural gas production and the power grid will hang onto their monopolies, but consolidation measures recently announced by the government will be a blow to the dominance of state-owned enterprises (SOE) in other sectors. Overcapacity remains a key obstacle, particularly in cyclical industries, Moody’s said in its report, pointing out that capacity utilisation in China had fallen to 60 percent in 2011 from 90 percent in 2000. “We think the economic slowdown will be a challenge for SOE adaptability,” Mr Hu said. Reuters

ainland Chinese markets fell yesterday as liquor makers tumbled further after governmenttestssubstantiatedlocalpress reports about toxic substances in products of one of the firms, JiuGuiJiu Co Ltd. Samples of liquor made by China’s JiuGuiJiu contained excessive levels of plasticiser, Xinhua News Agency said, citing the nation’s quality watchdog. JiuGuiJiu’s Shenzhen shares stayed suspended, as they have been since Monday, but major players in the Chinese white spirits, or baijiu sector, deepened a downward spiral on the month. Wuliangye Yibin Co Ltd, the country’s biggest liquor maker by revenue, posted a sixth-straight loss, diving 4.7 percent to its lowest since July 2010. It has now slumped 18.3 percent in November, set for its worst monthly showing in more than four years. Bigger rival, Kweichow Moutai Co Ltd, the world’s second-largest by market value, shed 0.6 percent but finished off the day’s lows for the fourth time this week, with yesterday’s intra-day low its lowest since April 11. Moutai was up as much as 28 percent on the year at the end of October, losses of 12.1 percent this month have seen this year’s gains cut to just 12.4 percent.

Baijiu makers – shares on the backfoot

Inspections showed as much as 1.04 milligrams per kilogram of dibutyl phthalate, or DBP, Xinhua said, citing the General Administration of Quality Supervision, Inspection and Quarantine. The health ministry had set a limit of 0.3 milligram per kilogram, the official news agency said. Plasticisers are additives that increase the fluidity of a material, but are also toxic chemicals that can cause damage to men’s reproductive health and cause early female puberty when consumed over a long period. “It’s a blow to consumer confidence; the whole sector will be under pressure in the short-term,” said Liu Hui, a Shanghai-based analyst at CSC Securities HK Ltd. “What makes things worse is the inventory problem in the industry and the downward price trend, liquor makers are going to face a cold winter.” The CSI300 Index of the top Shanghai and Shenzhen fell 0.8 percent off a one-week high set on Wednesday. The Shanghai Composite Index shed 0.7 percent as bourse volume dropped some 13 percent from Wednesday. Reuters/Bloomberg

AIG, PICC ink life insurance venture

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merican International Group (AIG) has signed an accord with Chinese state-owned insurer PICC Group to sell life insurance in the world’s second-largest economy, as the U.S insurer increases its bets in an underdeveloped market. The non-binding agreement announced yesterday brings AIG closer to its roots in China, where the company’s predecessor was founded more than 90 years ago, and is part of AIG’s plan to invest US$500 million in PICC’s planned Hong Kong initial public offering. People’sInsuranceCompany(Group) of China (PICC) is seeking to raise up to US$3.6 billion through the IPO, with AIG and other investors agreeing to buy nearly 50 percent of the shares. To demonstrate its commitment, AIG agreed not to sell more than 25 percent of its stake in PICC for a period of five years after the IPO. But it may offload the entire stake if final legal documentation for the proposed venture with PICC

isn’t completed by May 2013, the U.S. company said in a statement. AIG plans to step up in presence in China, by setting up a joint venture with PICC Life, a unit of the Chinese insurer, to distribute life insurance and other products primarily in large cities. AIG’s current Aian exposure includes a 13.7 percent stake in its former Asian unit AIA Group Ltd and a 9.9 percent stake in PICC Property and Casualty Co Ltd, a unit of PICC Group. AIG was forced to spin off twothirds of AIA in 2010 as part of a package of asset sales to help repay US$182 billion in bailout funds it received from the U.S. government during the 2008 global financial crisis. China had the fifth largest life insurance market in the world in 2011 with US$134.5 billion in total written premium, PICC said in its preliminary IPO prospectus, citing figures from the Sigma Report compiled by Swiss Re. Reuters


10 |

business daily November 23, 2012

ASIA

East Asia bonds face risk of capital exit In an event of a new financial crisis, says ADB Lilian Karunungan

Volatile debt market may deter bond issuers and investors

E

ast Asian bond markets, which are outperforming developed nations, face the risk of a capital exit should an event such as the U.S. fiscal deficit trigger a recession, according to the Asian Development Bank. Regional policy makers need to increase efforts to shield their economies from another crisis even after doubling the pool of combined foreign-currency reserves to US$240 billion as of May, Iwan Azis, head of the ADB’s economic integration office, said before the release of the Asian Bond Monitor yesterday. The U.S. budget issue threatens a recovery and an agreement in Congress that doesn’t address the long-run sustainability of the deficit may not be welcomed, the Manilabased lender said in the report. A volatile debt market and swings in yields may deter both bond issuers and international investors, who raised holdings of fixed-income securities in the region last quarter, Mr Azis said

in an interview yesterday. Asian local-currency notes have returned 8.2 percent this year, compared with 2.1 percent in the U.S. and 7.1 percent among European countries, according to indexes compiled by HSBC Holdings Plc and Bank of America Merrill Lynch. “Capital flows continue to grow

US$240 bln Current amount in the pool of combined foreigncurrency reserves

in Asia but at the same time they are getting more and more volatile,” Mr Azis said. “The bond market is now the most important source of financing for many Asian countries.”

Asia ‘vulnerable’ Overseas holdings of local-currency debt in some East Asia markets, which the ADB terms as China, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam, rose last quarter, the multilateral lender’s bond report showed. Ownership in Indonesia increased to 29.7 percent of the nation’s total as of the end of September from 28.4 percent in June, while in Thailand the proportion climbed to 15 percent from 13.2 percent and to 28.5 percent from 27.1 percent in Malaysia, according to the ADB. During the height of the European debt crisis in 2011, funds based abroad cut holdings of Indonesian government

Asia seen paying less for LNG Amid signs that pricing structure linked to oil may change Osamu Tsukimori

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sia should benefit from the convergence of global liquefied natural gas markets amid signs of change for its pricing structure linked to oil, the head of the West’s energy watchdog told Reuters yesterday. Gas has historically been pegged to the oil market through longterm contracts, because both fuels used to be produced by the same exporters and were often used in the same industries. But a rising disconnect between gas and oil suppliers and new twoway contracts between exporters and customers based on regional gas exchanges means gas is more likely to take its cue from specific regional

prices rather than global benchmarks, such as oil’s Brent crude. “We can see that the gas market will be converging and also it goes for prices,” Maria van der Hoeven, executive director of the International Energy Agency, told Reuters on the sidelines of a news conference, when asked about Asia’s efforts to link LNG prices with the U.S. Henry Hub gas benchmark. Removing the link between gas prices and oil and moving to socalled hub pricing would drastically cut the cost of natural gas imports, but producer countries such as Qatar have long opposed such moves, saying they need oil-indexed prices to finance the huge expense

of building LNG projects. “For Henry Hub prices, you have to take into account the transport costs, the marginal cost and so on, but the price will be definitely lower than you are paying now,” Ms Van der Hoeven said. LNG is expensive in Asia, fed partly by Japan’s need for fuel to run power stations after most of its nuclear plants were shut following last year’s massive earthquake. It is nearly four times the cost of natural gas in the United States, where a boom in shale oil and gas has driven down prices. Ms Van der Hoeven’s comments come amid signs that Asia’s energyhungry nations may finally be making

bonds by an unprecedented 29 trillion rupiah (US$3 billion) in September of that year, finance ministry data show. “Some Asian bond markets are relatively small still and if you have a small market but ownership is mostly foreign investors, then you’ll be vulnerable to any shock like what happened during the euro-zone crisis in 2011,” Mr Azis said. Asian policy makers will have to be vigilant by adopting so-called macroprudential measures in terms of managing foreign reserves, inflation, current accounts and fiscal balances as they will have to defend themselves from any global crisis, he added. Outstanding debt in East Asia climbed 11 percent in the third quarter from a year earlier to US$6.2 trillion, the ADB report showed. The corporate bond segment increased 17.6 percent to US$2.1 trillion, while government securities rose 7.8 percent to US$4.1 trillion. Bloomberg

You have to take into account the transport costs, the marginal cost and so on, but the price will be definitely lower than you are paying now Maria van der Hoeven, executive director, IEA headway in their push to scrap oillinked pricing of natural gas. Cheniere Energy has struck longterm deals to supply South Korea and India from the Sabine Pass project at Henry Hub-linked prices. Kansai Electric also secured BP’s non-U.S. LNG supplies at Henry Hub-linked prices, likely to be the first time for a Japanese firm. Reuters


November 23, 2012 business daily | 11

ASIA

AirAsia may add one more regional hub Tony Fernandes plans to focus on key markets Chong Pooi Koon and Susan Li

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irAsia Bhd., the region’s biggest discount carrier, said it may add only one more major hub for expansion as it focuses on boosting profits from Malaysia, Thailand and Indonesia in the next three years. AirAsia aims to increase annual profit from its three main markets to one billion ringgit (US$327 million) each, group chief executive Tony Fernandes said in an interview in Kuala Lumpur yesterday. Taiwan, South Korea, Vietnam and India are among the potential markets for a new base, he said. “We have three gold mines in Malaysia, Thailand and Indonesia and I really want to capitalise on those three first,” Mr Fernandes said. “I’m beginning to feel that I’d rather focus on these. On top of that I still have energy for another biggie, and maybe a few small ones in Laos, Cambodia and Myanmar.” Negotiations with Airbus SAS for ordering 100 more A320s may be completed by the end of next month, he said, as the carrier expands operations to fend off rising competition. Malindo Airways, a venture backed by Indonesia’s PT Lion Mentari

Airlines, is set to start low-cost flights in Malaysia next year as the region’s economic growth spurs travel demand.

‘Strong branding’ “The accelerated roll out of aircraft in Malaysia to dominate routes ahead of the start up of Malindo Airways in March 2013 is a good defensive measure,” Annuar Aziz, an analyst at Credit Suisse Group AG, wrote in a report yesterday. “Coupled with its strong branding, we expect AirAsia to withstand the challenge.” AirAsia, which also operates ventures in the Philippines and Japan, was stable in Kuala Lumpur trading, after on Wednesday posting its third-straight increase in quarterly profit. The stock has fallen 23 percent this year, compared with a 5.5 percent advance in the benchmark FTSE Bursa Malaysia KLCI Index. Net income increased 3.6 percent to 157.8 million ringgit in the three months ended September from 152.3 million ringgit a year earlier, the Sepang, Malaysia-based carrier said in a statement. Revenue rose 15 percent

We have three gold mines in Malaysia, Thailand and Indonesia and I really want to capitalise on those three first Tony Fernandes, chief executive of AirAsia Bhd

to 1.24 billion ringgit. Thai AirAsia posted a profit of 199 million baht (US$6.5 million) in the quarter while the Indonesian venture had net income of 74.5 billion rupiah (US$7.7 million), the company said in the statement. AirAsia’s main Malaysian unit

carried 9 percent more passengers and expanded capacity 10 percent. The group, which currently has a fleet of 112 A320s, plans to take delivery of 266 more planes by 2026. It will add 11 more A320s this quarter, according to the statement. Bloomberg

Fitch gives Sony, Panasonic junk ratings Gives further blow to embattled Japanese tech giants

Fitch downgrades Sony by 3 notches, cuts Panasonic by 2

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ony Corp. and Panasonic Corp., the Japanese electronics makers reeling from record losses, had their long-term credit ratings downgraded to junk by Fitch Ratings, citing a weak recovery in the television market. Sony’s rating was cut by three levels to BB-, three steps below investment grade, with a negative outlook, Fitch said in a statement

yesterday. Panasonic’s was lowered two levels to BB, also with a negative outlook, the ratings company said in a separate statement. Both companies had their short-term ratings reduced to B from F3. The companies will struggle amid a strong yen and weakened economic conditions in Japan and overseas, Fitch said.

Japan’s two largest TV makers and smaller rival Sharp Corp. are suffering from weakening demand and increasing competition with Samsung Electronics Co. and Apple Inc. “Meaningful recovery will be slow given the company’s loss of technology leadership in key products,” Fitch said of Sony. Panasonic’s downgrade reflects reduced competitiveness and weak cash generation, the ratings company said. Yuki Shima, a spokeswoman at Tokyo-based Sony, and Chieko Gyobu, a spokeswoman at Osakabased Panasonic, said their companies don’t comment on ratings changes. Shares of Sony, Panasonic and Sharp all sank to their lowest levels in more than 30 years in Tokyo this year as investors remain unconvinced the companies can rebound from mounting losses. Borrowing costs in the corporate bond market have climbed for the three as record losses and widening deficit forecasts sapped investor confidence. Sony was downgraded to the lowest investment grade on November 9 by Moody’s Investors Service, which

cited falling demand for its TVs and cameras. Moody’s cut Panasonic to the same level on Nov. 20. Sony posted a net loss of 15.5 billion yen (US$188 million) for the quarter ended September 30. The company retained its forecast for a full-year net income of 20 billion yen. Sony has posted losses in each of the past four years. Panasonic, the maker of Viera televisions and Lumix cameras, forecasts a 765 billion yen net loss for the year ending March 31. That would be the second-biggest loss in company history after the 772 billion yen net loss in the previous year. Sony rose 1.8 percent to close at 834 yen in Tokyo trading before the downgrade was announced. The stock has declined 40 percent this year while Japan’s benchmark Nikkei 225 Stock Average has advanced 11 percent. Panasonic rose 0.7 percent to close at 407 yen, trimming its loss this year to 38 percent. Sharp, the Osaka-based maker of Aquos TVs, was downgraded to junk by Fitch earlier this month. Reuters/Bloomberg

Seoul may curb derivatives as won rallies

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outh Korea warned yesterday it was ready to take action, such as lowering the ceilings on banks’ foreign exchange derivatives positions as early as next week, to stem the won’s strength that it said was “excessive”. The won wiped out early gains against the dollar after Deputy Finance Minister Choi Jong-ku made the strongest set of warnings in months at an unscheduled media briefing. “We are close to the stage in which specific

steps need to be taken,” Mr Choi told the briefing, adding there were “excessive expectations” for the won’s strengthening. Mr Choi said lowering currency derivatives ceilings at banks was the government’s first option, and the finance ministry would try to finally decide by next week whether to impose the measure. The Bank of Korea and the Financial Supervisory Service earlier this month began a joint inspection of foreign-currency trading by banks operating in

the country. Lowering the caps on banks’ currency trading positions would reduce the amount of speculation on the local currency. The won has gained more than 6 percent against the dollar so far this year, with the pace of that appreciation accelerating since September. Its value against the Japanese yen, however, has risen more than twice as fast by more than 14 percent due to the weakening of the yen against the U.S. dollar. Reuters


12 |

business daily November 23, 2012

MARKETS Hang SENG INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

30.45

0.661157

21642272

CHINA UNICOM HON

12.2

3.040541

39971609

ALUMINUM CORP-H

3.31

0.3030303

11587483

CITIC PACIFIC

9.69

1.465969

5026396

BANK OF CHINA-H

3.18

0

312186056

CLP HLDGS LTD

66.7

0

2473141

NAME AIA GROUP LTD

BANK OF COMMUN-H

NAME

5.58

0.7220217

35720876

BANK EAST ASIA

29.35

1.032702

1388951

BELLE INTERNATIO

15.14

1.610738

19968100

23.9

1.057082

8297642

HANG LUNG PROPER

CATHAY PAC AIR

13.96

0.7215007

4599500

HANG SENG BK

CHEUNG KONG

116.2

2.198769

4831619

HENDERSON LAND D

CHINA COAL ENE-H

7.71

1.048493

25964750

CHINA CONST BA-H

5.88

0.6849315

261203943

CHINA LIFE INS-H

22.5

0.6711409

20396728

CHINA MERCHANT

23.25

1.973684

3497362

CHINA MOBILE

88.2

1.612903

19604477

CHINA OVERSEAS

21.7

2.117647

27456398

IND & COMM BK-H

CHINA PETROLEU-H

8.26

1.599016

58802604

CHINA RES ENTERP

25.6

-0.3891051

5638720

CHINA RES LAND

19.64

3.477345

CHINA RES POWER

17.28

2.007084

BOC HONG KONG HO

CHINA SHENHUA-H

31.75

2.254428

NAME

PRICE

DAY %

VOLUME

68.7

1.552106

1981480

SANDS CHINA LTD

32.25

1.895735

8045128

SINO LAND CO

13.58

1.951952

5301608

SUN HUNG KAI PRO

112.8

0.9847807

3056264

94.5

0.9076348

1471616

POWER ASSETS HOL

CNOOC LTD

16.36

0.4914005

29350869

COSCO PAC LTD

10.66

0

2198473

SWIRE PACIFIC-A

ESPRIT HLDGS

12.24

0.8237232

7562995

TENCENT HOLDINGS

27

1.503759

6121200

TINGYI HLDG CO

116.8

1.038062

1502003

WANT WANT CHINA

54

2.079395

2797546

WHARF HLDG

HENGAN INTL

69.9

1.37781

1617800

HONG KG CHINA GS

20.6

1.477833

5920862

HONG KONG EXCHNG

127.3

1.272872

3186322

HSBC HLDGS PLC

76.55

0.7236842

13044214

HUTCHISON WHAMPO

78.15

0.06402049

3779437

5.2

0.9708738

277939270

LI & FUNG LTD

12.18

0.8278146

16214972

MTR CORP

30.15

0.3327787

2106229

11151569

NEW WORLD DEV

12.52

2.120718

13304807

52W (H) 22149.69922

8952096

PETROCHINA CO-H

10.28

0.9823183

73448319

(L) 17613.19922

PING AN INSURA-H

58.8

1.030928

12096388

PRICE

DAY %

VOLUME

24.75

0.814664

24934318

YANZHOU COAL-H

CHINA PETROLEU-H

8.26

1.599016

58802604

15251249

MOVERS

44

259.6

0.620155

2908530

21.7

-1.809955

10122000

11.22

2.559415

15076600

55.6

2.112029

3710081

2

3 21760

INDEX 21743.2 HIGH

21753.47

LOW

21228.28 21220

20-November

22-November

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.35

0

99128666

AIR CHINA LTD-H

5.13

-0.1945525

6198000

ALUMINUM CORP-H

3.31

0.3030303

11587483

CHINA RAIL CN-H

8.31

1.713586

ANHUI CONCH-H

25.4

0.1972387

9495036

CHINA RAIL GR-H

4.35

BANK OF CHINA-H

3.18

0

312186056

CHINA SHENHUA-H CHINA TELECOM-H

CHINA PACIFIC-H

PRICE

DAY %

VOLUME

11.54

1.050788

16835219

ZIJIN MINING-H

3.14

-0.3174603

25327633

11450200

ZOOMLION HEAVY-H

9.89

3.235908

18641483

1.873536

23550540

ZTE CORP-H

11.5

1.054482

4390115

31.75

2.254428

15251249

5.58

0.7220217

35720876

4.33

1.882353

68046798

19.58

-0.5081301

3385870

DONGFENG MOTOR-H

10.58

4.33925

42046962

CHINA CITIC BK-H

3.97

1.017812

22652647

GUANGZHOU AUTO-H

5.72

4.570384

13161389

CHINA COAL ENE-H

7.71

1.048493

25964750

HUANENG POWER-H

6.52

0.7727975

9793700

CHINA COM CONS-H

6.92

1.615272

15498575

IND & COMM BK-H

5.2

0.9708738

277939270

CHINA CONST BA-H

5.88

0.6849315

261203943

JIANGXI COPPER-H

19.4

-0.4106776

6992000

CHINA COSCO HO-H

3.66

0.2739726

15572783

PETROCHINA CO-H

10.28

0.9823183

73448319

CHINA LIFE INS-H

22.5

0.6711409

20396728

PICC PROPERTY &

9.93

0.6079027

14878539

CHINA LONGYUAN-H

4.81

-0.2074689

6187000

PING AN INSURA-H

58.8

1.030928

12096388

CHINA MERCH BK-H

14.18

0.2828854

12053584

SHANDONG WEIG-H

8.15

0.9913259

10440000

BANK OF COMMUN-H BYD CO LTD-H

NAME

MOVERS

6

2 10510

INDEX 10492.09 HIGH

10507.2

LOW

10227.24

CHINA MINSHENG-H

7.38

0.8196721

17494461

SINOPHARM-H

24.7

1.022495

2095000

52W (H) 11916.1

CHINA NATL BDG-H

9.61

-0.4145078

25871800

TSINGTAO BREW-H

42

0.7194245

874000

(L) 8987.76

14.84

0.5420054

3958142

WEICHAI POWER-H

29.5

1.549053

1176079

CHINA OILFIELD-H

32

10220

20-November

22-November

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.58

0

26906430

CITIC SECURITI-A

10.68

-0.5586592

42379387

SANY HEAVY INDUS

8.89

-1.659292

8663145

AIR CHINA LTD-A

4.62

-0.2159827

4570845

CSR CORP LTD -A

4.63

0.4338395

25546787

SHANDONG DONG-A

38.42

0.3919519

2073548

ALUMINUM CORP-A

4.78

-1.035197

5825532

DAQIN RAILWAY -A

6.17

0

9572295

SHANDONG GOLD-MI

36.58

-0.2182215

3915626

3.4

-0.5847953

6330227

DATANG INTL PO-A

4.06

-0.4901961

1650131

SHANG PHARM -A

10.5

-1.685393

4220371

NAME

ANGANG STEEL-A

NAME

NAME

16.08

-1.289134

5342962

EVERBRIG SEC -A

11.5

-0.605013

8640042

SHANG PUDONG-A

7.44

-0.4016064

22784842

BANK OF BEIJIN-A

7.2

-0.5524862

14303541

GD POWER DEVEL-A

2.32

-1.276596

22878095

SHANGHAI ELECT-A

3.9

-1.265823

1393267

BANK OF CHINA-A

2.76

0.3636364

25141583

GF SECURITIES-A

12.4

-1.03751

14012209

SHANXI LU'AN -A

16.55

-1.896858

5070259

4.2

-0.2375297

14449775

GREE ELECTRIC

22.69

-1.647161

7970826

SHANXI XINGHUA-A

36.76

0.7951741

5015454

9.01

-0.6615215

4585898

GUANGHUI ENERG-A

15.47

-1.652893

10595151

SHANXI XISHAN-A

11.88

-1

4934400

12633128

HAITONG SECURI-A

8.56

-0.4651163

27164418

SHENZEN OVERSE-A

5.93

0.6791171

18999526 15550969

ANHUI CONCH-A

BANK OF COMMUN-A BANK OF NINGBO-A BAOSHAN IRON & S

4.61

0

16.27

0.2464572

2997229

HANGZHOU HIKVI-A

27.79

-1.871469

1766823

SUNING APPLIAN-A

6.14

-1.127214

CHINA CITIC BK-A

3.63

-0.2747253

4926988

HENAN SHUAN-A

57.76

-1.500682

777200

TASLY PHARMAC-A

50.51

-2.452684

1165082

CHINA CNR CORP-A

4.11

0

16587920

HONG YUAN SEC-A

17.37

-1.138304

10797139

TSINGTAO BREW-A

30

-0.6622517

1274314

BYD CO LTD -A

CHINA COAL ENE-A

6.9

-0.5763689

2625189

HUATAI SECURIT-A

8.26

-0.4819277

11591371

WEICHAI POWER-A

21.59

-0.9633028

7579144

CHINA CONST BA-A

4.15

-0.4796163

10664139

HUAXIA BANK CO

8.42

-0.7075472

10290290

WULIANGYE YIBIN

27.46

-4.652778

42334696 4681592

CHINA COSCO HO-A

4.17

-2.112676

9665341

IND & COMM BK-A

3.84

0

19569055

YANGQUAN COAL -A

12.99

-1.366743

CHINA CSSC HOL-A

19.45

-1.269036

3247782

INDUSTRIAL BAN-A

12.4

-0.8

20426358

YANTAI CHANGYU-A

41.29

-0.1933768

784213

CHINA EAST AIR-A

3.11

-1.892744

15159507

INNER MONG BAO-A

33.22

-2.121391

23619884

YANTAI WANHUA-A

12.99

-0.4597701

3991503

CHINA EVERBRIG-A CHINA LIFE INS-A

2.58

-0.3861004

23999894

INNER MONG YIL-A

19.96

-1.771654

5883046

YANZHOU COAL-A

16.5

-2.48227

2071802

17.28

-0.1156069

3182287

INNER MONGOLIA-A

5.15

-1.717557

21046391

YUNNAN BAIYAO-A

65.05

-0.2300613

1444891

CHINA MERCH BK-A

9.9

-0.3021148

15471082

JIANGSU HENGRU-A

28.53

-0.5230126

2304828

ZHONGJIN GOLD

15.18

-0.3282994

6176089

CHINA MERCHANT-A

8.79

-1.457399

9368648

JIANGSU YANGHE-A

96

-3.439952

2045762

ZIJIN MINING-A

3.7

-1.069519

13255387

CHINA MERCHANT-A

22.7

0.4424779

5975998

JIANGXI COPPER-A

20.37

-1.594203

2881365

ZOOMLION HEAVY-A

8.15

-1.092233

17687241

10.98

-1.347709

1961361

ZTE CORP-A

8.04

-1.107011

5903650

10.72

-1.741522

6393858 6164613

CHINA MINSHENG-A

6.13

0.3273322

45378358

JINDUICHENG -A

CHINA NATIONAL-A

6.73

-1.895044

12133782

JIZHONG ENERGY-A

CHINA OILFIELD-A

15.7

-0.9463722

1105358

KANGMEI PHARMA-A

15.39

-0.965251

CHINA PACIFIC-A

16.69

-0.5955926

7968881

KWEICHOW MOUTA-A

217.29

-0.6219986

5152080

32.18

-2.867492

8997782 8492294

CHINA PETROLEU-A

6.04

-1.145663

16055727

LUZHOU LAOJIAO-A

CHINA RAILWAY-A

5.32

0.7575758

12710303

METALLURGICAL-A

2.02

-0.9803922

CHINA RAILWAY-A

2.83

1.071429

24974060

NINGBO PORT CO-A

2.46

-0.4048583

6434183

PANGANG GROUP -A

3.4

-1.734104

24624894 8671324

CHINA SHENHUA-A

21.51

-0.7841328

5192426

CHINA SHIPBUIL-A

4.15

-1.425178

15805748

PETROCHINA CO-A

8.51

-0.9313155

13.15

-0.8295626

MOVERS

44

242

14 2200

INDEX 2177.546

CHINA SOUTHERN-A

3.35

-0.887574

13899290

PING AN BANK-A

4858906

HIGH

2194.9

CHINA STATE -A

3.06

0

28706570

PING AN INSURA-A

36.5

0.1646542

11062312

LOW

2153.64

CHINA UNITED-A

3.25

0.308642

35956238

POLY REAL ESTA-A

11.46

0.08733624

27146988

CHINA VANKE CO-A

8.38

0.1194743

30010069

QINGDAO HAIER-A

10.92

-0.6369427

3519144

CHINA YANGTZE-A

6.38

0.3144654

8243804

QINGHAI SALT-A

24.04

-0.661157

1946108

CHONGQING WATE-A

5.15

-0.3868472

1825863

SAIC MOTOR-A

13.17

-1.495886

11873284

PRICE DAY %

Volume

PRICE DAY %

Volume

52W (H) 2717.825 (L) 2149.538

2150

20-November

22-November

FTSE TAIWAN 50 INDEX NAME ACER INC

NAME

PRICE DAY %

Volume

FORMOSA PLASTIC

70.5

-1.536313

8702539

TAIWAN MOBILE CO

104.5 -0.4761905

4147737

FOXCONN TECHNOLO

93.6

-1.057082

6475324

TPK HOLDING CO L

413.5 -0.6009615

30.85

0.6525285

10627859

TSMC

91.3

0.8839779

20798294

89 -0.1122334

16370439

UNI-PRESIDENT

49.5

-3.320313

12674033

UNITED MICROELEC

10.1

0

41561331

WISTRON CORP

28.4

0

2083429

22.9

0.2188184

7968094

ADVANCED SEMICON

22.95

1.548673

16319553

ASIA CEMENT CORP

35.95 -0.1388889

913949

FUBON FINANCIAL

ASUSTEK COMPUTER

314

1.290323

2173140

HON HAI PRECISIO

AU OPTRONICS COR

11.45

4.090909

54481431

HOTAI MOTOR CO

CATCHER TECH

139.5 -0.7117438

10396688

HTC CORP

CATHAY FINANCIAL

29.15

1.567944

19631265

CHANG HWA BANK

14.9

2.054795

CHENG SHIN RUBBE

69.9 -0.1428571

CHIMEI INNOLUX C

1.06383

174300

236.5

-2.070393

17421786

HUA NAN FINANCIA

15.4

1.650165

3662045

YUANTA FINANCIAL

13.25

0.7604563

6804169

6553532

LARGAN PRECISION

692 -0.7173601

917475

YULON MOTOR CO

49.5

1.020408

1883171

3339644

LITE-ON TECHNOLO

37.5

0.913242

45521949

MEDIATEK INC

6.4

0.9463722

16617334

MEGA FINANCIAL H

CHINA STEEL CORP

24.95

0.4024145

8090347

CHINATRUST FINAN

15.9

1.923077

24594191

CHUNGHWA TELECOM

92.7

0.1079914

3172800

QUANTA COMPUTER

COMPAL ELECTRON

17.4

-2.247191

19417893

SILICONWARE PREC

DELTA ELECT INC

104

1.960784

4236389

SINOPAC FINANCIA

FAR EASTERN NEW

31.5 -0.7874016

6316678

SYNNEX TECH INTL

-1.146132

5354150

FAR EASTONE TELE

69

3324596

190

11.05

CHINA DEVELOPMEN

NAME

0

2155696

313

0.805153

3544068

21.35

0.7075472

17002338

NAN YA PLASTICS

46.2 -0.2159827

4806819

PRESIDENT CHAIN

148

-1.986755

1264482

69.5

1.459854

3758239

28.25

0.8928571

4659800

11.4

0.4405286

17912296

53

-4.504505

4157820

TAIWAN CEMENT

36.15

-1.766304

7487216

15.25

0.9933775

3897334

67.6

-2.170767

10407320

24.55

1.656315

1350484

FIRST FINANCIAL

16.7

1.829268

8881479

TAIWAN COOPERATI

FORMOSA CHEM & F

61.6

-1.597444

4821246

TAIWAN FERTILIZE

FORMOSA PETROCHE

79.7

0.6313131

1426335

TAIWAN GLASS IND

MOVERS

27

20

3 5050

INDEX 5003.12 HIGH

5045.52

LOW

4967.13

52W (H) 5621.53 4960

(L) 4643.05 20-November

22-November


November 23, 2012 business daily | 13

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

MeLCo CroWN eNTerTaINMeNT

MgM CHINa HoLDINgS 38.2

28.9

13.4

28.7

13.3 37.7

28.5

13.2

28.3

Max 28.85

average 28.631

Min 28.15

Last 28.85

28.1

SaNDS CHINa LTD

Max 38.1

average 37.958

Min 37.4

37.2

Last 38.1

SJM HoLDINgS LTD

Max 13.4

average 13.303

Min 13.16

Last 13.4

13.1

WyNN MaCaU LTD

32.5

18.0

32.1

17.9

21.8 21.6 21.4

17.8

31.6

average 32.087

Max 32.4

Min 31.6

Last 32.25

31.3

17.7 Max 17.98

average 17.888

Commodities ENERGY

NAME

PRICE

WTI CRUDE FUTURE Jan13

87.51

0.148775463

-10.51232232

109.6699982

79.68000031

BRENT CRUDE FUTR Jan13

110.62

-0.216489266

6.879227053

120.7699966

90.15999603

GASOLINE RBOB FUT Dec12

273.5

-0.527368612

10.22003708

295.8800077

217.2600031

GAS OIL FUT (ICE) Jan13

952.5

-0.131061599

6.276150628

1036.25

799.25

NATURAL GAS FUTR Dec12

3.894

-0.230591852

3.646526484

4.350000381

2.90899992

DAY %

YTD %

(H) 52W

306.31

-0.296204674

6.676185833

335.1700068

254.2500019

1729.84

0.1778

10.5393

1796.08

1522.75

Silver Spot $/Oz

33.3488

0.8431

19.8089

37.4775

26.1513

Platinum Spot $/Oz

1584.33

0.8241

13.6128

1736

1339.25

Palladium Spot $/Oz

651.63

2.1684

-0.2862

725.19

553.75

LME ALUMINUM 3MO ($)

1931

-1.680244399

-4.405940594

2361.5

1827.25

LME COPPER 3MO ($)

7692

-1.169214956

1.210526316

8765

7100.25

LME ZINC

1917

-1.18556701

3.902439024

2220

1745

3MO ($)

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

16695

0.54200542

-10.7696419

22150

15236

14.83

-0.636515913

-3.419081732

16.60000038

14.60000038

745.25

-0.267648043

24.15660142

846.25

511

21.0 Max 21.7

average 21.422

Last 21.55

Min 21.2

2289748

10.16

1.905717

25.58714

10.25

7.92

1277267

18.65999985

AMAX HOLDINGS LT

0.066

3.125

-24.13793

0.119

0.055

15192000

66.84999847

BOC HONG KONG HO

23.9

1.057082

29.89131

25

16.26

8297642

153.45

0.655952771

-35.51166211

249

149.4499969

SUGAR #11 (WORLD) Mar13

19.64

-1.306532663

-15.92465753

25.12999916

COTTON NO.2 FUTR Mar13

72.66

0.234515106

-17.90758106

98.5

World Stock MarketS - Indices 12836.89 2926.554

FTSE 100 INDEX

GB

DAX INDEX

GE

MACAU RELATED STOCKS CROWN LTD

COFFEE 'C' FUTURE Mar13

US

0.9582 1.5235 0.8931 1.2043 76.03 7.9823 7.7498 6.2202 48.6088 30.2 1.2152 28.914 40.996 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

2.16

1126.75

US

(L) 52W

1.0857 1.6309 0.9972 1.3548 84.18 8.0308 7.7979 6.3964 57.3275 32 1.315 30.5 44.35 9664 88.637 1.24438 0.86197 8.5805 10.8355 111.44 1.0311

(L) 52W

652

1781.5

NASDAQ COMPOSITE INDEX

(H) 52W

1.6554 2.7601 0.1495 -0.7715 -7.0799 0.2029 0.2116 1.1944 -3.7806 2.7353 5.8017 3.9087 6.7056 -5.9623 -8.6768 1.0061 3.501 1.815 0.8112 -6.3786 0.0097

3.25

948.25

16.09645507

DOW JONES INDUS. AVG

CROSSES

YTD %

(H) 52W

17.13215259

-0.318527694

DAY %

ASIA PACIFIC

0.1254 0.4149 0.5018 0.5551 -0.5678 0 -0.0052 0.1559 -0.0453 0 0.0163 0.0412 0.1217 0.1037 -0.6998 -0.0515 -0.1403 -0.4168 -0.5619 -1.1179 0

25.90909

-0.087158629

PRICE

MAJORS

DAY %

1.0378 1.5972 0.9367 1.2861 82.77 7.9834 7.751 6.2207 55.15 30.71 1.2255 29.14 41.085 9644 85.884 1.20467 0.8052 7.9892 10.2687 106.45 1.03

2.973978

859.75 1408.25

COUNTRY

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

2.77

WHEAT FUTURE(CBT) Mar13 SOYBEAN FUTURE Jan13

NAME

Last 17.82

(L) 52W

Gold Spot $/Oz

CORN FUTURE

Min 17.78

CURRENCY EXCHANGE RATES

HEATING OIL FUTR Dec12 METALS

21.2

NAME ARISTOCRAT LEISU

PRICE

DAY % YTD %

VOLUME CRNCY

CENTURY LEGEND

0.25

0

8.69565

0.335

0.204

0

CHEUK NANG HLDGS

4.16

0.2409639

48.57143

4.36

2.5

30000

CHINA OVERSEAS

21.7

2.117647

67.36856

21.95

11.507

27456398

CHINESE ESTATES

11.8

-0.3378378

-5.6

13.26

8.3

25000

CHOW TAI FOOK JE

10.46

3.976143

-24.85632

15.16

8.4

4676200

EMPEROR ENTERTAI

1.64

0.6134969

47.74775

1.65

0.99

675000

FUTURE BRIGHT

1.29

2.380952

207.1429

1.36

0.38

1416000 23256650

YTD %

(H) 52W

(L) 52W

0.3783083

5.06918

13661.87

11231.56

GALAXY ENTERTAIN

28.85

2.669039

102.5983

29.45

13.2

0.338398

12.33726

3196.932

2441.48

HANG SENG BK

116.8

1.038062

26.74986

120

91.15

1502003

5778.04

0.4521882

3.692569

5989.07

5075.22

HOPEWELL HLDGS

29.65

2.241379

51.25886

31.091

18.319

1605564

7237.62

0.736425

22.70584

7478.53

5366.5

HSBC HLDGS PLC

76.55

0.7236842

29.74576

78

56

13044214

HUTCHISON TELE H

3.37

1.506024

12.70903

3.88

2.81

2482220

LUK FOOK HLDGS I

21.3

1.670644

-21.40222

34.3

14.7

3330000

MELCO INTL DEVEL

8

0.2506266

38.64818

8.28

5.12

3578336

NIKKEI 225

JN

9366.8

1.564431

10.77957

10255.15

8135.79

HANG SENG INDEX

HK

21743.2

1.016709

17.94911

22149.69922

17613.19922

CSI 300 INDEX

CH

2177.546

-0.7904703

-7.17027

2717.825

2149.538

MGM CHINA HOLDIN

13.4

1.515152

39.69751

14.76

9.347

1767461

TAIWAN TAIEX INDEX

TA

7105.76

0.2436344

0.4762346

8170.72

6609.11

MIDLAND HOLDINGS

3.6

4.651163

-8.95404

5.217

3.249

6480000

NEPTUNE GROUP

0.153

0

37.83784

0.222

0.081

1450000

NEW WORLD DEV

12.52

2.120718

99.99999

13.2

6.13

13304807

SANDS CHINA LTD

8045128

KOSPI INDEX

SK

1899.5

0.8205771

4.040006

2057.28

1750.6

S&P/ASX 200 INDEX

AU

4413.072

0.9972081

8.788509

4581.8

3973.8

ID

4335.927

0.4319853

13.44678

4366.856

3618.969

FTSE Bursa Malaysia KLCI

MA

1618.55

-0.2723402

5.737137

1679.37

1424.19

NZX ALL INDEX

NZ

869.138

0.5620864

19.09258

874.107

712.548

JAKARTA COMPOSITE INDEX

32.25

1.895735

46.92482

33.05

20

SHUN HO RESOURCE

1.24

0

24

1.37

0.95

0

SHUN TAK HOLDING

3.25

1.5625

26.99637

3.51

2.418

8961904

SJM HOLDINGS LTD

17.82

-1

42.49689

18.18

11.519

5779090

SMARTONE TELECOM

14.68

-0.5420054

9.226194

17.5

11.72

2566000

WYNN MACAU LTD

21.55

0.9367681

10.51282

25.5

14.62

5672200

ASIA ENTERTAINME

3.37

-1.173021

-42.68708

7.24

2.4

184622

51.16

35.79

403383

PHILIPPINES ALL SHARE IX

PH

3591.07

-0.6800971

17.93179

3627.39

2952.17

HSBC Dragon 300 Index Singapor

SI

577.07

-0.08

16.27

NA

NA

STOCK EXCH OF THAI INDEX

TH

1280.14

0.2937974

24.85274

1314.64

965.23

BALLY TECHNOLOGI

45.22

0.3773585

14.30738

HO CHI MINH STOCK INDEX

VN

383.22

-0.1693282

9.00868

492.44

332.28

BOC HONG KONG HO

3.01

0.3333333

25.56381

3.3

2.175

300

Laos Composite Index

LO

1223.9

-0.7420624

36.07053

1249.34

876.33

GALAXY ENTERTAIN

3.65

5.157015

95.18717

3.73

1.68

43800

INTL GAME TECH

13.19

-0.6028636

-23.31396

18.1

10.92

2457278

JONES LANG LASAL

76.89

0.1563111

25.51421

87.52

56.51

111231

LAS VEGAS SANDS

43.72

0.2752294

2.316874

62.09

34.72

3160858

MELCO CROWN-ADR

15.02

2.316076

56.13306

16.02

8.32

4808876

MGM CHINA HOLDIN

1.76

0

47.68902

1.96

1.1917

2000

MGM RESORTS INTE

9.89

2.593361

-5.177376

14.9401

8.83

9756532

SHFL ENTERTAINME

14.26

0.8486563

21.67235

18.77

10.22

142989

SJM HOLDINGS LTD

2.3125

-1.175214

43.85041

2.34

1.5188

1000

WYNN RESORTS LTD

108.03

1.085431

4.274551

129.6589

84.4902

1000600

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

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business daily November 23, 2012

Opinion Exit Afghanistan? Jaswant Singh

Former Indian finance minister, foreign minister and defence minister

the overblown and sometimes clearly dishonest claims about the war are an obscenity.

War aftermath

I

n his victory speech to a rapturous crowd in Chicago following his re-election, President Barack Obama affirmed that America’s “decade-long conflict” in Afghanistan will now end. The line was greeted with prolonged applause – and understandably so. In fact, this ill-advised war – launched on the basis of a United Nations Security Council resolution – has been grinding on for 11 years, making it the longest in American history. At the beginning, the war was aimed at eliminating Al Qaeda, vanquishing the Taliban, and transforming Afghanistan into something resembling a Western-style nation-state. With none of these goals fully achieved, America’s intervention – like every other intervention in Afghanistan’s history – is ending unsatisfactorily. As the curtain drops, two developments will greatly influence the withdrawal process and the ultimate outcome. The first is the management of the transition to Afghan control, which depends on an orderly withdrawal of American and NATO forces by 2014. The second is the election, also to be held in 2014, of a new

Afghan president – a process that needs to permit the United States and its NATO allies to claim plausibly that they are handing the country over to a legitimate government. For Afghanistan, ravaged by war without respite since the “Saur Revolution” of 1978, the endgame will be even more nerve-wracking. As the U.S. military leaves, it will enter another period of political and strategic uncertainty, after almost a half-century of disorder and civil war.

Afghanistan will remain what it was: a violent and ungovernable tribal melange

Uncertainty waves A previous period of such uncertainty was the spur to Pakistan’s creation of the Taliban, which proceeded to disrupt Afghanistan’s (and Pakistan’s) already-fragile social order. Today, almost three generations of Afghans have lived from birth to adulthood without having known stability and peace. And, as a visiting American scholar/diplomat recently told me in a confidential conversation: “In the U.S., too, at least a generation of our children, from birth till the age of 15, have seen their country almost continuously at war.” That is an arresting thought. It is against this bitter backdrop

that a new Afghan president will be elected and the withdrawal of forces carried out. Will these two developments bring about a stable peace, or will Afghanistan succumb to instability once more? And what consequences are in store for the U.S. following this war without victory or defeat? Last May, Obama declared that the U.S. had “turned the tide of war” in Afghanistan, an eerie echo of Richard Nixon’s rhetoric as he withdrew U.S. forces from Vietnam. And, like Vietnam, will the U.S. – exhausted and nearly bankrupted by the effort – see all of its supposed gains evaporate soon after it leaves? After all, Al Qaeda,

albeit weakened, remains capable of regenerating inside Afghanistan, where the Taliban remain dominant in the country’s east and south, as well as in neighbouring North Waziristan in Pakistan. Just how weakened America is in the region matters. As the U.S. strategist Daniel Twining has observed: “Over the coming four years, U.S. leadership… will be essential” for “the consolidation of a wideranging strategic partnership with India,” as well as for efforts “to prevent Pakistan’s many pathologies…from spilling over in ways that undermine fundamental U.S. (and Indian) interests.” So where does this leave Afghanistan’s neighbours? Deeply concerned. Our primary aim is the restoration of peace and, if not stability, an acceptable political equilibrium. Even if we did not incur the same costs as the U.S. over the past decade – the hundreds of billions of dollars spent, and the many young people killed or injured – we have paid the price that regional uncertainty always imposes: lost trade, lost growth, refugees, and violence. In the face of these costs,

This strategically myopic and militarily ill-conceived war was unwinnable from the beginning. As a result, Afghanistan will remain what it was: a violent and ungovernable tribal melange. Indeed, across the region, apprehension is growing that when foreign troops leave, Afghanistan will again descend into civil war, ultimately bringing the Taliban back to power. That is why “bringing the troops home early” has become the prime objective of Western politicians who are engaged in the region. The West needs to get out before the bloodletting starts again in earnest. My fear is that we have not seen the last of Al Qaeda or the Taliban. As a neighbouring country, India would face disturbing consequences if they returned to power in Afghanistan, as would Iran, which would not sit idly by if sectarian strife intensified and the Shia became targets of a resurgent Taliban. Other neighbours would also pay a price should the Taliban’s seemingly invariable return turn bloody, however immune they believe they are. China, which has invested billions of dollars in developing Afghanistan’s natural resources – investments protected, ironically, by the U.S. – would be certain to experience greater unrest in Xinjiang Province, home to millions of disaffected Muslims. But the country that will be most affected is Pakistan, which faces challenges to its territorial and political integrity. The territorial challenge is, no doubt, a mushrooming anxiety; an innocuous remark by an American envoy about the Durand Line, which marks the Afghanistan-Pakistan border, drew sharp retorts from both countries. Afghanistan’s history of occupation by foreign troops and their eventual withdrawal has been repeated so many times that one wearies of repeating the tale. Yet this history is the litmus test. With the U.S. withdrawal, turmoil is bound to re-emerge, and the entire region will again bear the consequences. © Project Syndicate

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 José I. Duarte Associated editor Michael Grimes Newsdesk Vitor Quintã (Chief Reporter), Alex Lee, Stephanie Lai, Tony Lai Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, 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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November 23, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

Economic Times

Greece needs growth, not austerity Costas Meghir

Dimitri Vayanos Nikos Vettas

Leading Indian mobile phone companies including BhartiAirtel, Idea Cellular, Vodafone, Tata Teleservices and Aircel have begun a new round of reducing freebies and slashing talk time on pre-paid discount vouchers, continuing with the trend that kicked off about a year ago, as the industry attempts bold steps to increase sales and margins in the fiercely competitive sector. Prepaid customers constitute over 96 percent of the country’s 906 million plus cell phone connections. Special tariff vouchers are used by a majority of prepaid subscribers.

Korea Herald Korea welcomed the 10 millionth visitor of the year on Wednesday – a landmark figure for Korea’s tourism industry. According to the Korea Tourism Organisation, the total number of foreign visitors to the country is expected to reach 11.3 million by the end of the year, up about 15 percent from the previous year. The number of inbound travellers has grown an average of 15 percent since 1978, higher than other major tourist destinations such as the U.S. and China.

Bangkok Post Voice TV, the satellite TV business owned by the Shinawatra family, will focus on news and online media next year to attract younger viewers, while it will launch event hall rentals to accommodate the entry of Paethongtarn, the youngest daughter of ousted premier Thaksin, to the company. Previously she ran a nail shop with elder sister Pinthongtha. Called Voice Space, the event hall covers 1,250 square metres at the headquarters of Voice TV and can cater to 1,000 guests.

Jakarta Post National flag carrier Garuda Indonesia has secured a US$120 million loan from a syndicate of domestic and international lenders to aid its business expansion plans next year. President director Emirsyah Satar signed the syndicated commitment in Jakarta on Wednesday with representatives from the banks concerned: Citi Indonesia, Bank ICBC Indonesia, Bank Panin, First Gulf Bank PJSC, Korea Development Bank, Standard Chartered Bank and the Bank of China. The loan would be used to help Garuda finance the purchase of 24 new aircraft in 2013.

Professor of economics at Yale University

Professor of finance at the London School of Economics

Professor of economics at the Athens University of Economics and Business

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reece’s economy and society are imploding. Gross domestic product has declined more than 20 percent since 2008. The unemployment rate has tripled, and now stands at 25 percent, with joblessness among youth at twice that level. Crime is on the rise, as are racist incidents, and ideologies of the extreme right and left are gaining significant support. Worse, current policies aren’t stemming the economic decline. The new three-party government elected in June has focused its energies on negotiating a new package of austerity measures to meet the conditions set by the so-called troika (the European Central Bank, the European Commission and the International Monetary Fund) for the disbursement of the next tranche of the bailout loan. The reforms that are the only pathways to growth, such as building a well-functioning public administration and liberalising markets, are resisted by Greek politicians and vested interests. They are also greatly underemphasised by the troika’s push for austerity. Unless there is a change of course, Greece is headed for disaster: further declines in GDP, a possible chaotic default on its debt, extremist political parties in power, and isolation from Europe. The European Union also stands to lose because a Greek meltdown would reverse the decadeslong process of integration and undermine the credibility of the single currency. And Greece’s creditors won’t get any of their money back.

debt-to-GDP ratio even larger. This will make it impossible for Greece to ever repay its debt in full. Its European partners should recognise this state of affairs and write off a significant fraction of the debt. This would allow Greece to grow and repay the rest. Writing off Greece’s debt can be done in a way that preserves, and even promotes, incentives for reform. A portion of the officially held debt – 50 percent or more – should be set aside to be written off gradually over the next five years or so, on the condition that Greece completes a set of institutional and market changes. The steps include making the public administration more efficient, speeding judicial proceedings, reducing corruption and liberalising markets. Achievement of these

Debt reduction To avoid such an outcome, which could occur soon, Greece’s European partners should devise a long-term strategy with two mutually reinforcing objectives: a drastic reduction of Greece’s debt and a thorough overhaul of the country’s dysfunctional economy. Greece’s debt is projected to rise to 189 percent of GDP next year, from 129 percent in 2009. This is despite the restructuring of privately held debt and severe austerity measures that have almost wiped out the government’s primary deficit. Most of the increase in the debt-to-GDP ratio can be attributed to the large decline in GDP. Further austerity measures, designed to generate the large primary surplus necessary to begin reducing the debt, will cause GDP to fall further, making the

Unless there is a change of course, Greece is headed for disaster: further declines in GDP, a possible chaotic default on its debt, extremist political parties in power, and isolation from Europe

milestones could be monitored using existing indexes designed by institutions such as the World Bank and the IMF. Such a system would not only promote reform, but would put Greece’s debt, which cannot be repaid in full in any case, to good use. More generally, the troika should emphasise structural changes rather than the rapid accumulation of a primary surplus. The initial emphasis on reducing the deficit was appropriate given the unsustainably large budget shortfall.

Retaining talent However, continued austerity will be counterproductive because it undermines reform. For example, deep salary cuts in the public administration are causing talented personnel to leave, thus impairing an already weak system and worsening the core problem of low public-sector productivity. The agencies in charge of essential tasks such as tackling tax evasion, supervising financial markets and prosecuting white-collar criminals, are often short of funds, equipment and

the ability to attract talent. The troika should ensure that those funding needs are met, regardless of the effect on the deficit. And it is hard to imagine how the Greek politicians and vested interests who have successfully resisted reform could continue to block institutional changes that are the condition for writing off a large part of the debt and averting disaster. An emphasis on transformation and debt reduction would be welcomed by the Greek population, whose support is necessary for these efforts to succeed. Giving voters the chance to back debt relief in exchange for reforms will dim the appeal of the extremist parties. The only way forward is to overhaul the Greek economy. For the population, that means recognising that resisting structural reforms would be suicidal. For its part, the troika should acknowledge that further budget cuts would be catastrophic, and could only lead to a continuing deterioration of the economy and to the severing of Greece’s links with Europe. Bloomberg View


16 |

business daily November 23, 2012

CLOSING HK de-flags five Iranian ships

Barclays ends floor trading on LME

Hong Kong has deregistered five Iranian cargo ships and a further 14 are likely to follow after their classification society quit Iran due to sanctions imposed by the European Union and the United States over its nuclear programme. Hong Kong’s marine department has asked the owners of 19 dry bulk carriers, managed by an Iranian firm, to register their ships elsewhere after the Korean Register of Shipping said earlier this year it would not provide the ships safety auditing. “Five of the 19 ships have deregistered under the request of their owners,” said Wong Sai Fat, general manager of the department’s shipping register.

Barclays Plc withdrew yesterday from floor trading on the London Metal Exchange, the world’s biggest metals bourse, as the bank reviews its businesses to cut costs. The London-based bank became a Category 2 member of the exchange with immediate effect, meaning it will continue to trade electronically and by telephone, the LME said in a notice to members yesterday. Barclays remains “deeply committed” to the metals market, it said in a statement. Barclays’ withdrawal leaves 11 companies still in the LME’s 6-meter-wide (20-foot) ring, London’s last venue for open-outcry trading. The 135-year-old LME handles more than 80 percent of world trade in industrial-metals futures.

Eurozone output contracts again Business activity continued to shrink in November, a survey suggests

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he euro zone economy is on course for its weakest quarter since the dark days of early 2009, according to business surveys that showed companies toiling against shrinking order books in November. Service sector firms like banks and hotels that comprise the bulk of the economy fared particularly badly this month, and laid off staff at a faster pace. While the monthly rate of decline that manufacturers

reported eased far more than economists anticipated, Markit’s latest Purchasing Managers’ Indexes (PMIs) pointed to little change overall for a recession-hit euro zone this month. The flash service sector PMI fell to 45.7 this month, its worst reading since July 2009, the survey showed yesterday, failing to meet the expectations of economists who thought it would hold at October’s 46.0. It has been rooted below

the 50 mark that divides growth and contraction for 10 months now, and survey compiler Markit said it was too soon to say if this marked the nadir. With more austerity on the way, and a reminder of the festering sovereign debt crisis in this week’s failure of lenders to agree more aid for Greece, prospects for next year look ominous. “The concern about the outlook is getting worse as we move towards the end of the

year,” said Chris Williamson, chief economist from Markit. He added that German companies especially have become more pessimistic about the year ahead.

German concern “If the domestic economy of Germany, the largest euro zone nation, is weakening, then that bodes ill for the rest of the region, especially as there’s little trade picking up outside the region.”

Overall, the PMIs were consistent with the economy shrinking around 0.5 percent in this quarter, Markit said. That would be the sharpest contraction since the first quarter of 2009. While they also suggested the economy shrank by a similar amount in the third quarter, instead of 0.1 percent shown in last week’s official data, Mr Williamson said it was very likely the fourth quarter would see a larger downturn. “The factors that were helping to prop up the official data in the third quarter won’t be apparent in the final quarter of the year. So you are going to see a deterioration in those official numbers.” Economists pointed to stronger industrial production data early in July and August as a reason why the euro zone economy did not contract as badly as many feared in the third quarter. The manufacturing PMI edged up to 46.2, its best showing since March, from 45.4 in October. That was better than even the most optimistic forecast for 46.0, from 40 economists polled by Reuters. Similarly, the factory output and new orders indexes crept higher, but still signalled steep rates of decline. The composite PMI, which groups together the services and manufacturing survey, pointed to an almost unchanged rate of decline for the economy in November, rising to 45.8 from 45.7 in October. Reuters

Glencore wins EU antitrust approval for Xstrata deal Still waiting for authorisations from other regulators

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lencore International Plc won European Union approval for its US$32 billion takeover of Xstrata Plc after offering to end a zinc-purchase agreement with Nyrstar NV and to sell its stake in the company. Glencore’s offer to scrap an accord to sell Nyrstar zinc output in Europe and divest its stake of about 7.8 percent eliminated EU antitrust concerns that the combination with Xstrata would have been able to raise prices for zinc metal, the European

Commission said in an e-mailed statement yesterday. It will avoid buying Nyrstar’s European zinc for 10 years. Glencore, which got shareholder backing for its Xstrata offer on Wednesday, previously had an agreement to sell all of Balen, Belgiumbased Nyrstar’s so-called commodity-grade zinc. Nyrstar, the largest zinc smelter, produced about 1.1 million tonnes of the metal last year. Zinc accounted for 18 percent of Glencore’s 2011 operating profit, and 10

percent at Zug, Switzerlandbased Xstrata. “The proposed remedy ensures that competition in the European zinc metal market is preserved, so that European customers such as steel galvanisers and carmakers can continue to produce valuable consumer goods at low prices and good quality,” EU Competition Commissioner Joaquin Almunia said in the statement. Nyrstar dropped as much as 1.8 percent after the EU announced

Glencore’s offer to end the zinc-purchase pact and sell its stake in the company. Glencore said in a statement that it noted the EU’s approval and was still waiting for authorisations from Chinese and South African regulators before it could close the transaction. The company’s chief executive Ivan Glasenberg is creating the world’s fourthlargest mining company by adding Xstrata’s coal, nickel, zinc and copper operations to his cotton-to-crude-oil

commodities empire. Glencore will gain through the takeover the right to sell all of Xstrata’s production of zinc, used to harden steel for construction and automobiles, compared with a third now. Glencore Xstrata Plc, the new name for the company, will have interests in about 35 coal mines in Colombia, Africa and Australia, and account for about 10 percent of global Benseaborne Bernanke, exports Federal of the fuel. Reserve chairman Bloomberg

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