doubts over A
fter the rigging scandal that engulfed the London interbank offered rate, the way the Hong Kong lending benchmark is set will change. Hong Kong banks are keen to introduce a formal code of conduct for lending institutions, as well as to entrust administration of Hibor to a third party.
Year I Number 172 Thursday November 29, 2012 MOP 6.00 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte www.macaubusinessdaily.com
With fewer issued rates, there will be fewer data being compiled and the margin of error for the average figures will be greater, he explained. Interest rates for Macau home mortgages – most of which are based on Hibor – could suffer from higher volatility but the Monetary Authority of Macau believes the impact would be minimal.
The measures are welcomed by Macau banking experts. They stress the need for more transparency and accountability in the international financial system. But the decision to reduce from 15 to seven the number of Hibor rates that are published could prove to have a hidden negative impact, economist José Morgado warned.
More on page 3 I SSN 2226-8294
HANG SENG INDEX 21770
SMEs keen on yacht marina
Liaison Office outlines Beijing’s plans on casinos
Some members of the Macau Small and Medium Enterprises Association want to put 600 million patacas (US$75 million) into a yacht pier project to help diversify the city’s economy. Pearl Marina Macau Co, a joint venture formed by 10 small enterprises, applied to the government last month to develop a marina covering over 65,000 square metres at the waterside near the Macao Science Center.
Chinese government officials have spelled out to ‘friendly’ community and casino industry contacts the new central leadership’s expectations for Macau’s gaming industry, Business Daily has learned. The private meeting was held in Macau on Tuesday, and involved an official of the Central People’s Government Liaison Office here – the body that represents China’s State Council in its relationship with the Macau Special Administrative Region.
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business daily November 29, 2012
SMEs eager for yacht business A group of small enterprises is ready to invest 600 mln patacas in a marina project Tony Lai
over 120 yachts of various sizes, exhibition space, restaurants and a hotel with waterfront suites. Construction is scheduled to take about three to four years. The development is meant for yachtsmen and women, as well as passengers on yacht excursions from other places in the Pearl River Delta or further afield.
Enough of a market
A marina for over 120 yachts is planned for the waterfront near the Science Centre
ome members of the Macau Small and Medium Enterprises Association intend to put about 600 million patacas (US$75 million) into a marina to provide opportunities for smaller businesses and diversify the economy.
Pearl Marina Macau Co, a joint venture of 10 small enterprises, applied to the government last month to develop a marina covering over 65,000 square metres near the Macau Science Centre. Daniel Iong, a vice-chairman of
the SMEs association and a director of Pearl Marina Macau, told a press conference yesterday: “There is limited room for development if local SMEs continue to run their businesses alone in a traditional way, so we gathered the SMEs together to form a venture to … create more economic benefits.” One-third of the money invested will come from the company’s shareholders, one-third from bank loans and one-third from government loans. The marina will have berths for
Mr Iong said Pearl Marina Macau saw opportunities in a market that the government has tried to develop in recent years by encouraging visits by yachts from Hong Kong and Guangdong province. He said the city lacked yachting facilities. A shareholder in the company, Derek Szeto, said: “Pearl Marina’s project is well integrated with the 12th Five-Year Plan of China and its policies to turn Macau into a global leisure tourism centre.” Mr Szeto added: “It can also provide many opportunities for local SMEs.” Mr Iong said the venture would give priority to small companies belonging to the SMEs association in running businesses in the marina. Asked how confident Pearl Marina Macau is of getting official approval, Mr Iong remarked that the project did not clash with the government’s plans for land it is reclaiming from the sea. “The plan also does not involve the use of land resources, land grants or reclamation. It is about the use of water space,” he said. He declined to estimate how much time the government would take to make up its mind about the project. The company is not worried about competition from other places, such as Hong Kong. Mr Iong said: “There is no vicious competition if there is enough of a market.”
New USJ campus ready by 2014 Work at University of Saint Joseph’s long-halted new campus finally resumes Stephanie Lai
he contract for the construction of the University of Saint Joseph’s campus in Ilha Verde, a project on hold since 2005, was signed yesterday with Hong Kong-based Hsin Chong Construction Group Ltd. The project located at Estrada Marginal da Ilha Verde, the site of the former Saint Joseph Secondary School, will occupy an area of nearly 42,000 square metres. The construction cost will be of about 500 million patacas (US$62 million), Dom José Lai Hung Seng, Macau Catholic bishop, told media. But Peter Stilwell, the rector of University of Saint Joseph, says the investment could be even higher. “Originally the new campus project was supposed to be finished by 2011, with a projected budget of 300 million patacas.
The cost must have be twice as much by now,” he said, quoted by Portuguese news agency Lusa. The new campus, designed to accommodate 800 high school students from the new Saint Joseph Secondary School and 1,800 university students, will be ready by mid-2014. “There is the opportunity for secondary school students to be motivated by contacts [with higher education],” Mr Stilwell said, “and feel a greater aptitude or the challenge to continue their studies at the university.” The project had been on hold due to “problems with the construction plans”, Dom José Lai said. University of Saint Joseph is co-led by the Catholic University of Portugal and Roman Catholic Diocese of Macau.
November 29, 2012 business daily | 3
MACAU Petition over rent controls delivered today A group describing themselves as Macau residents will today deliver a petition to Chief Executive Fernando Chui Sai On, seeking legal limits on increases in rents for housing. The online petition signed by over 1,250 people calls for rent increases to be linked to the annual rate of inflation. The document claims “many families are starting to have difficulties in managing housing expenses” because of “rent increases of 60 percent or more when household incomes are not seeing a corresponding increase”.
Hibor reform could spell rate volatility Changes in the way Hong Kong’s interbank interest rates are set could reduce the amount of information available and so distort the market Vítor Quintã
roposed changes in the way Hong Kong sets interest rates could lead to more fluctuation in interest paid on home mortgages in Macau, an economist has warned. The Hong Kong Association of Banks (HKAB) said on Monday that it was considering reforming the Hong Kong interbank offered rate, or Hibor, by introducing a formal code of conduct for banks and reducing the number of Hibor rates it publishes. Hibor rates are set for loans with 15 different maturities, ranging from overnight loans to 12-month loans. The HKAB intends to cut the number of rates, keeping only the seven most commonly used as reference rates. “Any change will directly or indirectly influence interest rates in Macau,” José Morgado, an economist with considerable experience in the banking sector, told Business Daily. “Banks can either get money from the interbank market or from deposits, but the benchmark will always influence the rate paid to customers. As such, there will be an impact,” Mr Morgado said. But the real devil could be in the details, he warned. With fewer rates, “there will be less data being compiled and when that happens the margin of error widens”, he said. Mr Morgado said that if one bank, especially one of the bigger ones, gave rates that were much lower or higher than those given by other banks, its influence on the resulting Hibor would be greater than before. Hibor is the basis for the interest paid on various forms of deposits or loans in Hong Kong, such as credit card lending and mortgages.
Minimal impact In Macau, interest rates on loans in Hong Kong dollars – such as most home mortgages – are invariably based on Hibor. The Monetary Authority of Macau told Business Daily that it was aware of the proposed changes in the way Hibor is set. But the authority said it believed the effect of proposed changes on banks here would be minimal. “Most loans and advances are based on the prime rate instead of Hibor,” an spokesperson of the authority said. The chairman of the Delta Asia Financial Group, Stanley Au Chong Kit, also thinks the proposed changes would have no effect on the
[With a fewer number of maturities] there will be less data being compiled and when that happens the margin of error widens José Morgado, economist
financial system here. “Macau doesn’t have a developed interbank money market and basically you can say we don’t have an interbank offered rate,” Mr Au said. “The banking system in Macau is too small. If the banks here need to lend or borrow money in the interbank market, they will usually do it through their Hong Kong branches, but not here,” he said. Faith in the way benchmarks like Hibor are determined plummeted after Britain’s Barclays Bank Plc was fined 290 million pounds (3.7 billion patacas) by British and U.S. regulators in June for rigging the London interbank offered rate, or Libor. The rates are meant to be a measure of banks’ wholesale funding costs, however the Libor probe revealed some bank traders intentionally provided lower rates as “window dressing to improve their financial statements,” Anabela Sérgio, professor of Economics, Banking and Finance at the University of Saint Joseph, told Business Daily.
More transparency The HKAB said a review by Hong Kong’s Treasury Markets Association had found that the mechanism for setting Hibor “remains sound” and was less susceptible to manipulation than the Libor. “The problem in London is that some banks can manipulate the rate for profiteering as [Britain] has a large bond market,” Mr Au said. “But Hong Kong and Macau have no market on such a scale.
The Hibor is the basis for the interest paid on various forms of deposits or loans not only in Hong Kong, but also in Macau
So I don’t see there would be any problems here or in Hong Kong,” he said. The HKAB will consider instituting a code of conduct for the 20 banks that provide the rates used to calculate Hibor, which would include “clear rate submission guidance” and “sound practices on systems of control that reference banks should put in place”. The HKAB is also considering entrusting administration of the Hibor to a third party “so as to enhance independence of the ratefixing process”. Ms Sérgio welcomes the measures and says the public will benefit from “more transparency
in fixing and releasing Hibor” but also from “higher impartiality and independence” in running the benchmark. The interbank benchmark reform, launched initially in the United Kingdom but already being followed in Singapore, is still part of a wider regulation movement that began after the September 2001 terrorist attacks, Mr Morgado believes. Ms Sérgio agrees: “This is linked to ‘accountability’, one of three main pillars of the attempt to restructure and ‘revive’ the international financial system, along with ‘disclosure’ and ‘independence’”. With Reuters
business daily November 29, 2012
macau Taipa Central Park opens next month Taipa’s Central Park, originally set to be opened last July, will have most of its facilities opened to the public by the end of December, the Land, Public Works and Transport Bureau announced yesterday. The delay was mainly caused by slow construction progress due to lack of human resources, a failure to reach the required standards for some of the park’s facilities and damage to the park’s trees from typhoon Vicente, in July. The Civic and Municipal Affairs Bureau will take over the management of the new park.
Low-cost hotels spurn reservations website Insufficient rooms and aversion to technology mean few low-cost hotels have signed up for the government’s online reservations system Tony Lai
he government and the Macau Hoteliers and Innkeepers Association have set up a website where tourists can reserve low-cost accommodation, but some hotels are just not interested. These hotels say they have too few rooms to offer and do not want their operations to become too complicated. The Macau Budget Hotels website can “help boost local budget hotels’ competitiveness and capability of operation as well as fostering the diversified development of tourist markets”, the Macau Government Tourist Office said on Tuesday. The website was commissioned and is run by the Macau Hoteliers and Innkeepers Association, with assistance from the tourist office. Only eight low-cost hotels with a combined total of over 500 rooms have joined the scheme. The government says that the city’s 46 low-cost hotels have 1,500 rooms altogether. The secretary-general of the association, Cheung Kin Chung, said the website was not much different from any other hotel booking website. “The only difference is hotels and customers do not need to pay additional charges, as it is a non-profit platform,” Mr Cheung told Business Daily. Mr Cheung said the operating expenses of the website were paid by the government and his association. He admitted that the eight hotels that have joined the scheme are unlikely to make all of their rooms available for booking online. “Those hotels, of course, will not put up all their rooms for booking on the website,” he said.
Affordable hotels – too few rooms to offer
“The number of rooms they put up and the room rate are decided by them, so I can’t say how many rooms the hotels offer every day online.”
Technical difficulties The Hong Thai Hotel, which has joined the scheme, told Business Daily it held only two of its 20 rooms for online booking each day. The Hong Thai Hotel’s manager said it did not need the website as the hotel was always fully booked. “My boss just wants more people to
know about our hotel besides regular clients, and that is why we joined this scheme,” she said. Other low-cost hotels are even less enthusiastic. The Cheng Cheng Guesthouse’s owner asked: “What’s the point of joining this online scheme when my guesthouse only has nine rooms?” He said: “It’s difficult to guess how many rooms I should put on hold for online booking. I already get enough customers as it is.” The owner of the 51-room Vo Peng guesthouse, Lee Choi Peng, is also
uninterested in being part of the scheme. “I’m just running old-style accommodation and I don’t know anything about computers,” she said. She said she preferred to keep her operation as simple as possible. Mr Cheung said he understood the difficultiesfacedbyhotelsandguesthouses. He said his association was studying ways to help some hotels run their operations electronically to increase their enthusiasm for the scheme. The website had had “a good start” but it would be constantly under review, he said.
November 29, 2012 business daily | 5
Liaison Office spells out new govt priorities for casinos Private meeting stresses responsible gaming, fighting corruption Michael Grimes
hinese government officials have spelled out to ‘friendly’ community and casino industry contacts the new central leadership’s expectations for Macau’s gaming industry, Business Daily has learned. The private meeting was held in Macau on Tuesday, and involved an official of the Central People’s
Government Liaison Office here – the body that represents China’s State Council in its relationship with the Macau Special Administrative Region. “The Liaison Office official said during the meeting the new government wants to focus on and fight corruption, and to encourage responsible gaming,” said a person with direct knowledge
of the situation. “Self exclusion from casinos and the smoking issue were also discussed,” said the person. Thenewleadersaresaidtobeconcerned abouttheso-called‘undergroundbanking’ system that operates in many walks of life in China in parallel with the official stateowned banks. With the unofficial system, Chinese
VIP players re-label themselves ‘premium mass’ Want to stay off mainland’s radar, hears casino industry conference
casino industry conference yesterday heard that some of Macau’s VIP gamblers might have been reclassified as “premium mass” players. If that’s the case, it might also have the happy side effect of appearing to depress VIP revenue figures while boosting the mass market, suggested Ben Lee of IGamix Management & Consulting Ltd during a panel discussion on Macau casino junkets at the Asian Gaming & Hospitality Congress organised by Beacon Events. Movement from mainly VIP gambling supplying 70 percent of annual gaming revenue to a more mass market and less gambling focused economy is precisely in line with the central government’s aspiration of diversifying Macau’s economy. “Are there some quiet moves perhaps by certain elements in the Macau government to try and massage the information being released to show that we are no longer getting so much VIP [play]? We’re getting more and a more mass market,” said Mr Lee, who also chaired the panel. Reclassification of data is a
journal of proceedings in the U.K.’s Parliament, although later debates suggested many of the ‘trainees’ received little or no actual training.
technique used by governments around the world when they want to arrive at a politically palatable outcome. An example from the United Kingdom was during an economic recession in 1983. The second administration of Margaret Thatcher reclassified 16- and 17-year-old jobless school leavers as ‘Youth Training Scheme’ participants. At a stroke it removed 230,000 people from the unemployment figures by October that year according to Hansard, an official
Mr Lee suggested reclassification of some VIP players might have happened in Macau’s gaming market. “What I’ve heard from a couple of SJM satellite casinos, is that around May or June, the DICJ [Macau’s gaming regulator the Gaming Inspection and Coordination Bureau] may have reclassified some of the low end [VIP] rolling revenue [done] in the form of promotional chips – play that used to take place on the main hall tables – into mass [market],” said Mr Lee. “From around June, VIP [revenue] went from nine or ten percent year-onyear growth, and all of a sudden went into negative territory,” he added. No comment on the issue was available from DICJ at the time Business Daily went to press. But Hoffman Ma, deputy chairman of Success Universe Group, which runs the Ponte 16 casino resort in a
money can be transferred across borders, including for gambling in Macau. The difficulty is the unofficial system is also thought to be helping a significant part of the ‘official’ economy, by creating credit lines for private entrepreneurs who might not have the political connections to get loan quota via the official system.
joint venture with SJM Holdings Ltd, told the conference panel that in effect it was players that had ‘reclassified’ themselves as premium mass market players – a type of customer that normally plays not with credit but with cash – in order to stay “under the radar” of the mainland authorities. The conference heard however that such players might still technically be junket customers. “The Chinese government has asked Hong Kong to strengthen the governance of money transfer. And I would expect the same was asked to the Macau government,” said Mr Ma. “With the expectation of this tightening, a lot of the ‘sensitive’ people have transferred themselves into the [premium] mass market, meaning there’s a lot less registration information issues [for players],” he added. “These are people betting around HK$100,000 to HK$1 million per chip. In that case bringing the money in [physically] is not that possible. But not being registered is I think their main concern. That’s why the premium mass segment has grown quite substantially,” stated Mr Ma. Later on the sidelines of the conference, Mr Ma said: “Recently some accounts suspected of being involved in underground banking were frozen in China. It was just to alert people that ‘okay, you thought you were under the radar, but now you’re on our radar so behave’. They don’t want to stop everything happening. “If China stopped this entirely, the impact might be ruining other things, like manufacturing.”
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business daily November 29, 2012
HK developer eyes small Senado mall Booming retail sales attract more mall developers Vítor Quintã
three-storey shopping centre is set to rise in the historical Senado area, in what will be Hong Kong developer Henry Ng Chun For’s first project in Macau. Yesterday’s Official Gazette says the government has given Maxon International Holdings Ltd permission to construct a commercial building on a plot in Travessa da Sé. One of the directors of Maxon International is Mr Ng, who is also the founder of Henry Jewellery Manufacturer Co Ltd and the executive director of Hong Kong-listed developer Henry Group Holdings Ltd.
“strongly believes that the group has the market niche to develop Ginza-style buildings for rental business … [in] other rapidly developing metropolises such as Macau”. But a public relations agency working for Henry Group told Business Daily that the Macau mall was a personal project of Mr Ng was not linked to Henry Group. Maxon International will pay the government a premium of 458,000 patacas (US$57,400) for 42 square metres of land close to the Catholic cathedral, and pay an annual rent of 101 patacas. The company will have two and a half years to construct a threestorey commercial building with a floor area of 139 square metres. Mr Ng is not the only developer interested in opening Annual rent for shopping malls in the Maxon International’s city centre to get a piece of the booming Travessa da Sé plot retailing business. Last year a Henry Group is known s u b s i d i a r y o f E m p e r o r in Hong Kong for operating International Holdings Ltd, Ginza-style malls, which are the operator of the Grand open around the clock and Emperor Hotel, got government in which several businesses permission to build a five-storey share the same space. commercial building there. Henry Group told the Emperor International Hong Kong Stock Exchange said on Monday that the in September 2007 that it “premium retail complex”
Three shopping malls are planned for the city centre to tap its crowds of tourists
with a floor area of 30,000 square feet would open in 2014 on the corner of Avenida da Praia Grande and Avenida do Infante D. Henrique. London-listed Macau Property Opportunities Fund is awaiting approval
for a shopping centre with 70,000 square feet (6,503 square metre) of space next to Senado Square. The fund, managed by Sniper Capital Ltd, said this month that it expected construction to begin by the
end of next year and to finish by the end of 2015. In the first nine months of this year retail sales were 24 percent higher than a year before at almost 38.5 billion patacas, extending an 11-year-old upward trend.
November 29, 2012 business daily | 7
MACAU Carson Yeung trial postponed Carson Yeung Ka Sing, a Hong Kong resident with Macau business interests, will have four more months to prepare his defence against money laundering charges, a judge decided. The trial of the owner of Birmingham City Football Club was due to start yesterday but Mr Yeung stressed he had only recently secured the funds to pay his legal fees because his assets has been frozen. A District Court judge granted the adjournment, rejecting the prosecution’s claims that Mr Yeung was simply using delaying tactics.
Electricity bills – Big hotels and casino resorts might have to pay more
Big users may get higher power bills The government wants a higher electricity tariff for large hotels and casino resorts Stephanie Lai
he government is proposing that large industrial and commercial enterprises, including big hotels and casino resorts, should pay more for their electricity. The government wants to create a new category of users, comprising large hotels and casino resorts that consume at least 3,001 kilowatt-hours per month, and charge them 0.963 pataca per kilowatt-hour. “We’ve considered the tolerance of casino resorts and big hotels. The additional charges suggested in the new scheme would have a very small impact on their total expenses,” the head of the Office for the Development of the Energy Sector, Arnaldo Santos, told reporters yesterday. The government is also proposing a
rise of about 8 percent in the average power charges for consumers in tariff groups B and C, which would add between 2,000 patacas (US$250) and 5,000 patacas to their bills each month. The deputy director of the Office for the Development of the Energy Sector, Samio Lou Sam Cheong, said: “The new scheme will have only a slight impact on smaller hotels – generally in tariff group B – as this scheme will translate into an average rise of about 7 percent in their power charges.” Mr Lou Sam said electricity should account for only about 6 percent of their total spending. The government came up with its proposals for electricity tariffs after soliciting opinions from the public last year.
On December 9 it will begin another two months of consultations.
Use less, save more The government is proposing to raise the consumption thresholds for promotion to the next highest tariff group by about 20 percent. But Mr Santos said: “The new, suggested scheme is, in short, to encourage the concept of ‘use less, save more’.” The changes are meant to ease the burden of power costs on around 220,000 households and small and medium enterprises, which together make up 99 percent of consumers. “Now, most users consume less than 300kWh of power per month,
and with the new scheme they could save at least 20 percent a year on their energy costs,” Mr Santos said. “For those using less than 500kWh of power monthly, the charge is hence cut by 15 percent, and for the ones using more than 1,300kWh, they could pay 5 percent less in power charges.” He said the changes proposed would not affect the revenue of Companhia de Electricidade de Macau – CEM, SA, the sole electricity distributor. The government intends to make the changes next year, after the period of public consultation ends on February 8. But the Office for the Development of the Energy Sector has yet to announce a schedule for their introduction.
Piped natural gas to reach UM, Seac Pai Van in 2013 The government says the city will have enough energy to meet its needs Stephanie Lai
he natural gas distributor has nearly finished laying the gas pipes that will serve Coloane’s Seac Pai Van public housing complex and the University of Macau’s Hengqin island campus, and will begin supplying them next year, the Office for the Development of the Energy Sector says. The government has awarded state-owned Companhia de Gás Natural Nam Kwong Ltd a 25-year concession to distribute natural gas, and they signed the concession contract in July. Piped natural gas will be sold to households for about 10 patacas (US$1.25) per cubic metre, about 3 patacas less than the price of bottled gas. The price of 10 patacas includes an estimated supply
Piped natural gas will be sold to households for about 10 patacas per cubic metre
price of about 3 patacas. However, the head of the Office for the Development of the Energy Sector, Arnaldo Santos, told reporters
yesterday that the distribution costs had not been decided. Nam Kwong is investing 1 billion patacas in its natural gas pipe
network, which will be fed mainly from mainland China by Sinosky Energy Holdings Co Ltd, a join venture between Macau Natural Gas Co Ltd and China Petroleum and Chemical Corporation, also known as Sinopec. Mr Santos said the pipe network on Taipa and Coloane should be finished within three years and network on the peninsula two years later. “We see no need to expand our fuel storage for the coming decade,” he said. “The energy supply shall be sufficient for the city’s needs, including the Cotai casino-resort expansions to come in 2015 and 2016.” But Mr Santos admitted that Macau needed more ways to get energy from Guangdong to ensure a secure supply.
business daily November 29, 2012
China ‘certain’ to hit 7.5 pct grow Even as growth rate slowed for seven consecutive quarters
Banks rush to sell sub-debt Chinese banks including Agricultural Bank of China Ltd and China Construction Bank Corp are rushing to sell up to 150 billion yuan (US$24 billion) of subordinated debt by the year-end ahead of tougher issuance rules, bank disclosures show. Under the new rules, the funds raised by banks through subordinated bonds won’t be counted as part of their capital base, unless investors are willing to write down the value of the debt entirely or allow the bonds to be converted into shares, according to regulatory and banking sources.
Lai sells Taiwan units for US$601m Next Media Ltd, controlled by billionaire Jimmy Lai, agreed to sell its Taiwan print and television businesses to two consortia for NT$17.5 billion (US$601 million), spokesman Mark Simon said. Next Media agreed to sell its Taiwan print assets to four investors including Want Want Chinatimes Group president Tsai Shao Chung, William Wong of the Formosa Plastics Group, Chinatrust Charity Foundation chairman Jeffrey Koo Jr. and Lung Yen Life Service Corp. chairman Lee Shih Tsung. Mr Lai is exiting most of his Taiwan businesses after battling regulators for licences and distribution rights.
Tablet market grows 63 pct in Q3 China’s tablet PC market grew 62.5 percent in the third quarter from the previous year, dominated by Apple Inc.’s iPad, an industry report said yesterday. For the quarter, 2.6 million tablet PCs were sold in China, up from 1.6 million a year ago, said technology research firm Analysys International. Apple had 71.4 percent of the market ahead of Lenovo Group Ltd with 10.5 percent. Chinese firm Ereneben Information Technology Co was third with 3.6 percent, edging out Samsung Electronics Co Ltd on 3.5 percent.
Family planning rules to be eased Beijing is mulling changes to its onechild policy, a former family planning official said, with government advisory bodies drafting proposals in the face of a rapidly ageing society. Proposed changes would allow for urban couples to have a second child, even if one of the parents is themselves not an only child, the China Daily cited Zhang Weiqing, the former head of the National Population and Family Planning Commission, as saying. Under current rules, urban couples are permitted a second child if both parents do not have siblings.
hina is certain to hit the government’s economic growth target of 7.5 percent for 2012 and could even exceed it, Commerce Minister Chen Deming said yesterday. Mr Chen made the comment at a conference, adding that China would likely spend more than US$70 billion this year on non-financial outbound direct investment. “In the first three quarters, China’s economy has grown 7.7 percent from a year ago, therefore, it is for certain that we can achieve the annual GDP target of 7.5 percent or above,” Mr Chen said in a speech. The minister’s remarks on growth echo those made by an official from the National Bureau of Statistics in October when economic data for the third quarter revealed annual growth had dipped to 7.4 percent. China’s growth rate has slowed for seven successive quarters and is
on course for its weakest full year of expansion since 1999, albeit at a pace that far outstrips the rest of the world’s major economies. Analysts polled by Reuters expect China, the world’s second biggest economy, to grow by 7.7 percent in 2012. Beijing has followed a programme of fine-tuning of economic policies – cutting interest rates, freeing more cash for lending and approving a raft of infrastructure projects – for the last 12 months in an effort to underpin an economy currently caught in its slackest period of activity since the 2008-09 global financial crisis.
US$58.2 bln Outbound direct investment from non-financial firms until October
Outbound investment China’s exposure to the global trade cycle has seen growth crimped by a slow recovery in the United States and a lingering financial crisis in the European Union – the two biggest markets for goods from the country’s factories.
The country’s US$1.9 trillion of exports were worth about 31 percent of GDP in 2011, according to World Bank data and about 200 million Chinese jobs are estimated to be supported by the external sector.
Beijing ‘not currency manipulato
Yuan ‘remains undervalued’, needs to rise further, U.S. Treas Anna Yukhananov
he Obama administration said on Tuesday that China’s currency remained “significantly undervalued,” but stopped short of labelling the world’s second-biggest economy a currency manipulator. Although Beijing controls the pace at which the yuan can rise, the U.S. Treasury Department said in a congressionally mandated semiannual report that China did not meet the legal requirements to be deemed a currency manipulator. The label is largely symbolic, but would require Washington to open discussions with Beijing on adjusting the yuan’s value. It has been 18 years since the U.S. Treasury has designated any country a manipulator. China was labelled a manipulator between 1992 and 1994. The latest report reflected both the administration’s desire to maintain good relations with its top creditor and an attempt to keep up pressure for changes in China that could benefit the U.S. economy and mollify domestic critics. The report noted that the yuan, also known as the renminbi, had risen 12.6 percent against the U.S. dollar in inflation-adjusted terms since June 2010. An official said it was up 9.7 percent on a nominal basis through Tuesday, when it closed at a record high. The Treasury also said China had “substantially” reduced its intervention in foreign exchange markets since the third quarter of 2011 and had loosened capital controls. “In light of these developments, Treasury has concluded that the standards ... have not been met with respect to China,” it said. “Nonetheless, the available evidence suggests the renminbi remains significantly undervalued,” the report added, echoing the Treasury’s last assessment in May. Chinese Foreign Ministry spokesman Hong Lei denied the
Yuan – testing its top-end limit for fifth straight session
currency was undervalued. “In recent years, the ratio between China’s GDP and the current account surplus has decreased on a daily basis. The renminbi’s exchange rate is in equilibrium. There is no so-called problem that the exchange rate is undervalued,” he told reporters in Beijing yesterday. “We hope that the U.S. side can appropriately deal with trade and economic issues, including the renminbi exchange rate,” Mr Hong added. Ted Truman, a Treasury official under former President Bill Clinton, said it was important to keep a watchful eye on China’s currency policy. “We have the aftermath of 10 years of misbehaviour,” said Mr Truman, who is now with the Peterson Institute
for International Economics. “It would probably be unwise and too soon to declare victory.”
Record high Signs of a recovery in the Chinese economy and a new round of quantitative easing by the U.S. Federal Reserve have led traders to push the yuan higher. The currency hit its top-end limit for fifth straight session yesterday. But China’s central bank has kept a lid on the move. The central bank allows the yuan to rise or fall by only 1 percent from whatever rate it sets each day. Charles Schumer, the No. 3 Democrat in the U.S. Senate and
November 29, 2012 business daily | 9
wth: Chen Being levered to external demand makes Beijing particularly sensitive to the risk of protectionism – even more so as the government seeks to broaden the structure of the economy and put more of its huge US$3.2 trillion stockpile of foreign reserves to work through outbound direct investment. Mr Chen said the trend for China to increase its outbound investment would continue for years to come. “As you know, China has more than US$3 trillion of foreign exchange reserves, which has provided [favourable] conditions for our outbound investment,” he told the conference. “I think the non-financial outbound investment this year will be larger than last year and likely top US$70 billion.” China’s outbound direct investment from non-financial firms in the first 10 months totalled US$58.2 billion, up 25.8 percent year-on-year, Ministry of Commerce data shows.
China has more than US$3 trillion of foreign exchange reserves, which has provided [favourable] conditions for our outbound investment Chen Deming, China’s Commerce Minister
Outbound direct investment rose 8.5 percent to US$74.7 billion in 2011, extending a decade-long expansion streak. The government is targeting a total of US$560 billion in
outbound foreign direct investment in the five years to 2015. The head of China’s US$482 billion sovereign wealth fund told Reuters in an interview earlier this
month that he detected a rise in protectionism in Western economies and that the fund would not invest where it was not welcome. Reuters
Cnooc, Nexen reapply for U.S. deal approval
Companies pull, resubmit ‘joint voluntary notice’
KEY POINTS Yuan up 12.6 pct in real terms vs. dollar since June 2010 U.S. still sees significant undervaluation Beijing denies currency undervalued China last labelled currency manipulator 18 years ago
a longtime critic of China’s yuan policy, said the Treasury passed up an opportunity to level the trade playing field. “It’s time for the Obama administration to rip off the band-aid, and force China to play by the same rules as all other countries,” the New York senator said in a statement. But the U.S.-China Business Council, which represents U.S. companies that do business with China, applauded the decision. “The exchange rate has little to do with the U.S. trade balance or employment,” council President John Frisbie said. “We need to move on to more important issues with China, such as removing market access barriers and improving intellectual property protection.” The Treasury said further appreciation of the yuan would help China balance its economy toward consumption by giving households greater purchasing power. It called on Beijing to reduce its “exceptionally high” foreign exchange reserves and publish data about its intervention in currency markets. Reuters
hina’s state-owned Cnooc Ltd and its Canadian takeover target Nexen Inc. have withdrawn and resubmitted an application for U.S. approval of their US$15.1 billion deal, as Canada gets close to its decision on whether to approve the transaction. The energy companies said on Tuesday that discussions with the Committee on Foreign Investment in the United States (CFIUS) were still in progress, “with a view to completing the CFIUS review process as expeditiously as possible”. In a brief statement, they did not provide a reason for, or the timing of, the unexpected move. It was not immediately clear whether the announcement meant the process had hit a snag or signalled a delay in closing the deal, which has become a topic of heated debate in Canada. The companies filed for approval by CFIUS, an eight-member panel chaired by Treasury Secretary Timothy Geithner, because Nexen
Cnooc – waiting for approval as deadline looms
has extensive operations in the U.S. Gulf of Mexico. The review takes 75 days and appeared to be close to conclusion. A source familiar with the proposed transaction described the refilling as
“routine” and pointed out that other transactions have gone through a similar process. The panel has the power to negotiate or impose conditions, including divestitures and securitycontrol agreements to mitigate any national security threats. In rare cases, a final decision on whether to allow a deal goes to the president. Canada’s Conservative government has set a deadline of December 10 for deciding if Cnooc’s takeover of Nexen would bring a net benefit to the country. By law, it must decide whether to approve the deal on that basis, though the term “net benefit” remains imprecise. Ottawa is trying to balance the need for foreign investment to develop resources such as the Alberta oil sands with concern that China and other countries could snap up a big chunk of the energy sector and that stateowned companies might not play by free-market rules. AFP
Cathay to cut passenger capacity
athay Pacific Airways Ltd will cut passenger capacity 1.6 percent next year, the first reduction since 2009, as it contends with slowing international travel demand and a need to train pilots for new aircraft. The cut, which mainly affects long-haul routes, is “a slight surprise,” Bank of Communications Co. analyst Geoffrey Cheng said in a note yesterday, following a briefing by the company on Tuesday. UOB-Kay Hian Holdings Pte. gave the same numbers in a note. The carrier is boosting its focus on short-haul routes and premium-
economy cabins as the global economic slowdown saps demand for premium-class long-haul flights to cities including New York. The airline also last week told staff it was stepping up cost-cutting measures because of the inter-continental slowdown, a cargo slump and higher fuel prices. The long-haul capacity reduction “implies a lack of confidence as well as a repositioning of the company’s strategy,” UOB-Kay Hian’s K. Ajith and Eugene Ng said. “The focus towards short-haul is fraught with risk, especially given that various low-cost
carriers have expanded in the region.” UOB-Kay Hian’s researchers cut their 2012 earnings estimate to a HK$425 million (US$55 million) loss from a HK$329 million profit. The airline lost HK$935 million in the first half. The analysts also cut their target price to HK$12.60 from HK$12.80, while keeping a sell rating. Bank of Communications lowered its earnings forecast and price target, while maintaining a neutral rating. The airline rose 0.06 percent to close at HK$13.92 in Hong Kong trading. Bloomberg
business daily November 29, 2012
ASIA Thai PM survives no-confidence vote Thai Prime Minister Yingluck Shinawatra yesterday easily survived a no-confidence vote orchestrated by her opponents in parliament who accused her of failing to crack down on graft. Ms Shinawatra, Thailand’s first female premier, won 308 of the 467 votes, securing support even from outside her six-party coalition which commands about three-fifths of the seats in the lower house. The former businesswoman took office in August 2011 after a decisive election victory by her Puea Thai party which has close links to her brother, ousted former premier Thaksin Shinawatra.
Philippines surprises with robust Q3 growth Boosted by consumer, govt spending and a recovery in exports Karen Lema
infrastructure budget of over 400 billion Philippine pesos (US$9.89 billion) next year as it pursues major upgrades of roads, ports, bridges, and airports to speed up growth and boost private investment. Philippine Finance Secretary Cesar Purisima said the latest growth data was higher than the country’s trend growth of 4.7 percent in the last decade. Growth in the first nine months was 6.5 percent from the same period a year earlier, exceeding the government’s full-year target. The Philippines is the only economy in the world which the International Monetary Fund believes will grow faster than earlier anticipated this year. The IMF earlier this month raised its 2012 growth outlook for the country to more than 5 percent from its October forecast of 4.8 percent, citing its sound fiscal and monetary policies. “The Philippines is the diamond of the region this year,” said Enrico Tanuwidjaja, economist for Southeast Asia at RBS in Singapore.
Exports saw a sharp recovery in September helping boost growth
he Philippine economy picked up more than expected in the third quarter as strong domestic demand kept it relatively insulated from the global downturn, reducing the odds of an interest rate cut in December. A sharp jump in third-quarter farm output and a late rebound in exports also contributed to the economy’s 1.3 percent growth rate in the JulySeptember quarter from April-June, which was three times as fast as
economists had predicted. Like many of its Southeast Asian neighbours, robust domestic consumption and higher government spending have helped cushion the Philippine economy from the worst of the global slowdown, while manageable inflation has allowed Philippine authorities to keep interest rates accommodative for growth. The Philippines, once known as “the sick man of Asia”, posted the second strongest annual economic
growth in Asia in the third quarter, lagging only China. “We are well on our way to surpassing our growth target of 5 to 6 percent this year,” Arsenio Balisacan, economic planning secretary, told reporters yesterday. The government’s plan to raise spending further and forecasts that inflation will remain manageable will ensure the economy retains much of its momentum into 2013, he added. Manila has set a record
The government had targeted a faster growth rate of 5 to 6 percent this year compared with 3.9 percent in 2011, banking on domestic demand and higher state spending to offset weak global demand for the country’s exports. Economists polled by Reuters had forecast the economy would grow 0.4 percent in July-September from the previous quarter on a seasonally adjusted basis, picking up from 0.2 percent originally reported in April-June. But revised data yesterday showed first- and second-quarter growth were far stronger at 2.5 percent and 1.2 percent, respectively, indicating the economy carried much more momentum into the summer than first thought. Manila earlier reported first-quarter growth of 0.9 percent from the previous three months. From a year earlier, the economy grew 7.1 percent in the third quarter, not far behind China’s 7.4 percent and
Australia resource boom set to slow Number of committed projects falls as costs rise James Regan
ustralia’s massive pipeline of liquefied natural gas (LNG), coal and other resource projects faces increasing pressure from rising costs and falling prices, threatening a sector that has so far shielded Australia from the global economic downturn. Investment committed to Australian resource projects at the end of October rose to a record US$280.5 billion, partly reflecting higher project costs and masking a fall in the number of committed projects, data from Australia’s Bureau of Resources and Energy Economics (BREE) released
yesterday showed. “Even with such a pipeline of investment there is no doubt that we are entering a challenging phase,” Australia’s minister for mines, Martin Ferguson, said after the report’s release. “In the face of lower commodity prices, the delivery of this pipeline of projects is contingent on keeping production costs down, providing access to skilled labour and increasing our productivity and efficiency.” Australia has experienced a boom in LNG over the last few years, but development costs have also
ballooned due to soaring labour costs and the strong local dollar. Three of seven LNG projects in early stages of construction have already announced cost hikes averaging more than 20 percent, just as U.S. gas suppliers are making headway into Asian markets. A fourth, Chevron’s US$37 billion Gorgon LNG project in northwestern Australia, is currently under cost and schedule review, with some reports that costs could swell to A$60 billion. Overall, committed investment in major resources and energy projects rose about 3 percent to A$268.4
billion (US$280.5 billion) at October 31 versus April, while the number of projects fell to 87 from 98. The decline takes into account projects that are up and running and no longer need development funding. Much of the investment pipeline, A$195 billion, is for LNG, gas and petroleum projects, according to BREE. Still, the number of projects replacing those completed is slowing, with those announced or at feasibility phases falling to 277, the lowest in three years, the BREE data showed. Reuters
November 29, 2012 business daily | 11
ASIA Mori plans US$1.2 bln property investments Japanese billionaire Akira Mori plans to buy as much as 100 billion yen (US$1.2 billion) in properties in Tokyo, New York and London, as local real estate values recover and the yen strengthens. The owner of Mori Trust Co. wants to buy assets such as office towers and may focus on developing so-called smart buildings, he said. “This is the perfect timing to invest,” Mr Mori said. “We have continued to construct new buildings, but for the acquisition of buildings, our plan would be the first since Lehman went bankrupt.”
the fastest in Southeast Asia. Indonesia, Southeast Asia’s largest economy, expanded 6.2 percent in the third quarter, while Malaysia grew 5.2 percent and Thailand 3.0 percent. Domestic consumption remained firm, supported by remittances from Filipinos abroad. Private spending has been on a steady ascent this year, climbing an annual 6.2 percent in the third quarter, the fastest growth in three quarters. Among industries, construction posted its highest growth in at least six quarters, jumping 24.3 percent from a year earlier as Manila enjoys the best property boom in two decades. Public consumption expanded an annual 12 percent in the third quarter, almost double the rate in the second quarter. To cushion the economy from the global downdraft, the central bank has cut its key policy rate by a total of 100 basis points so far this year to a record low of 3.5 percent. Policymakers meet for the last time this year on December 13 and analysts expect the policy rate to be kept steady well into 2013. “We have probably already seen the bottom of the rate-cut cycle. Our call is still neutral until probably June 2013,” RBS’ Mr Taniwudjaja said. Reuters
KEY POINTS GDP up 7.1 pct in the three months to September Domestic consumption firm, supported by remittances Philippines to grow faster than anticipated – IMF Growth surprise may herald end of rate cuts
South Korea exports seen up in November As confidence among large companies plunges to a near 4-year low
ovember exports by trade powerhouse South Korea will post their first back-to-back growth in a year, a Reuters survey has found, but the gains are likely to be modest – underscoring a still-hesitant recovery in global demand. Exports in November will probably grow 2.6 percent from a year earlier, the median forecast from the survey of 16 analysts found, accelerating from a 1.1 percent rise in October and the first two consecutive monthly gains seen this year. Overseas sales by South Korea, Asia’s fourth-largest economy and home to global suppliers such as Samsung Electronics Co Ltd and Hyundai Motor Co, suffered annual losses in seven out of the past 10 months. “Overall, strengthening economic rebound in the U.S., reduced euro zone risks and signs of a pick-up in China likely helped [exports by] South Korea,” said Na Jung-hyeok, economist at IBK Securities. Both private-sector experts and government officials have said global demand would recover only gradually as most of the major economies including those in Europe have yet to recover from the shocks of the euro zone fiscal crisis. South Korea sends more than a combined 40 percent of its total exports to China, the United States and the European Union, and saw overseas sales drop by about 1 percent for the past 10 months over a year earlier. Confidence among South Korea’s large, mostly export-reliant companies
Singapore flags risks from corporate debt Interest rates will probably remain low, central bank says
ingapore banks could see loan quality fall sharply should interest rates rise or if the economy worsens as corporate debt levels are high by historical standards, the city-state’s central bank warned yesterday. “Corporates are more leveraged today than they were a year ago as low borrowing costs may have prompted some corporates to borrow more than they would have otherwise,” the Monetary Authority of Singapore (MAS) said in its annual Financial Stability Review. Large firms have issued twice the
amount of debt in the first nine months of this year compared with the same period last year, while loans to small- and medium-sizedenterpriseshavecontinued to expand robustly, MAS added. “If economic conditions worsen or interest rates rise from current low levels, bank loan quality could deteriorate substantially,” the central bank said, although it added companies in the city-state appear well-positioned to cover their interest expenses. Singapore interest rates are hovering near all-time lows amid a surge in inflows resulting from quantitative
November exports expected to grow 2.6 percent
plunged to a near 4-year low on fears the rising won would cut their profits on overseas sales, a big business lobby group said yesterday. The Federation of Korean Industries (FKI) said in a statement that its business outlook index for December fell to a seasonally adjusted 86.4, the lowest since April 2009, from a revised 92.7 for November. A reading below 100 means respondent companies expecting business conditions to deteriorate in the coming month outnumbered those predicting improvement. The index has remained below 100 since December last year. The won’s sharp rise against the dollar at a time when the yen is weakening globally has emerged as a serious threat to South Korean exporters, which compete fiercely with Japanese rivals in export markets.
Qantas cuts tourism board ties Qantas Airways Ltd cut off funding for Australia’s top tourism body, saying its chairman Geoff Dixon, the carrier’s former chief executive officer, is part of a group trying to change a planned alliance with Emirates. Mr Dixon “is very much out there briefing against the company” and pushing for a change of direction for Qantas, his successor Alan Joyce (pictured) said at an event in Sydney yesterday. That’s a “clear conflict” with his role as head of Tourism Australia, a government-backed travel promotion agency, Mr Joyce said. Australia’s largest carrier has been dogged by takeover speculation this year as the stock sank to a record low in June, when the CEO said Qantas would post its first annual loss since listing in 1995. Mr Dixon and venture capitalist Mark Carnegie are part of an investment group that’s targeted Qantas and backs a change of direction, Peter Gregg, a former chief financial officer of the carrier, said last week. “Why should Qantas be supporting an organization where its primary officer” is seeking a change to the carrier’s strategy, Neil Hansford, chairman of consultants Strategic Aviation Solutions Pty., said. The carrier’s financial support to Tourism Australia is worth about A$50 million (US$52 million) over three years, Qantas said in a statement.
Malaysian Air slumps on rights issue Shares in Malaysian Airline System Bhd (MAS) tumbled more than 20 percent to an all-time low yesterday as the national carrier’s 3.1 billion ringgit (US$1 billion) rights issue plan triggered fears of share dilution and uncertainty over the move. Ahmad Jauhari, chief executive of Malaysia’s national carrier, said in a statement to the stock exchange late on Tuesday that the rights issue was aimed at paying capital and debt expenses, without specifying the number of shares or the price for the issuance. The share plunge came despite the carrier swinging to a profit of 37.1 million ringgit in the third quarter, reversing a loss of 477.6 million ringgit in the same quarter a year earlier. The struggling carrier posted a small operating profit of 4 million ringgit, ending six quarters of losses. “The dilution on the company from the issue will be immense, there will be supreme volatility in the stock until there is more clarity on the exercise,” an analyst from Maybank IB Research, who did not want to be identified, told Reuters. Shares dropped 16.8 percent yesterday to close at 0.84 ringgit (US$0.3).
easing by Western central banks. The yield on the 10-year government bond is around 1.36 percent while bank deposits earn as little as 0.1 percent per annum, well below inflation that has averaged 4.7 percent so far this year. MAS had a more benign view on household debt levels, noting Singapore’s household net wealth stood at four times gross domestic product, an increase of 7.3 percent from a year ago. Total cash and deposits belonging to households have also continued to exceed aggregate debt, it added. MAS said government measures since 2009 to pre-empt the formation of a bubble in Singapore’s residential market has led to a “noticeable slowdown in the pace of housing loan growth”. Property-related loans, at 46 percent of outstanding Singapore dollar loans to non-bank customers, is below the average of 48 percent in the past eight years, it added. AFP
India may consider vote on retail India’s government signalled it may agree to opposition demands for a vote on its decision allowing foreign companies such as Wal-Mart Stores Inc. to set up supermarkets, as it bids to end protests disrupting parliament. The government isn’t averse to a vote and many members of the ruling Congress Party’s coalition are in favour, the Press Trust of India reported yesterday, citing Parliamentary Affairs Minister Kamal Nath. Opposition groups led by the Bharatiya Janata Party have repeatedly forced parliament to stop working since its latest session began on November 22. The opposition accuses the government of reneging on its promise to win the support of the legislature before moving ahead with the retail policy. A ‘Yes’ vote on the policy isn’t assured. After announcing the policy in September, the Congress party’s biggest ally left the government. Now it will be forced to rely on two regional parties who support Prime Minister Manmohan Singh’s alliance.
business daily November 29, 2012
MARKETS Hang SENG INDEX NAME AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H BANK OF COMMUN-H BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO
CHINA UNICOM HON
CLP HLDGS LTD CNOOC LTD COSCO PAC LTD
SANDS CHINA LTD
SINO LAND CO
SUN HUNG KAI PRO
HANG LUNG PROPER
HANG SENG BK
HENDERSON LAND D
CHINA LIFE INS-H
IND & COMM BK-H
LI & FUNG LTD
CHINA RES ENTERP
CATHAY PAC AIR
CHINA CONST BA-H
CHEUNG KONG CHINA COAL ENE-H
HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC
NAME POWER ASSETS HOL
TINGYI HLDG CO
WANT WANT CHINA
INDEX 21708.98 HIGH
NEW WORLD DEV
52W (H) 22149.69922
PING AN INSURA-H
CHINA RES LAND
CHINA RES POWER CHINA SHENHUA-H
Hang SENG CHINA ENTErPRISE INDEX NAME
CHINA RAIL CN-H
CHINA RAIL GR-H
AIR CHINA LTD-H
ANHUI CONCH-H BANK OF CHINA-H
CHINA CITIC BK-H
CHINA COAL ENE-H
CHINA COM CONS-H
IND & COMM BK-H
BANK OF COMMUN-H BYD CO LTD-H
CHINA CONST BA-H
CHINA COSCO HO-H
CHINA LIFE INS-H
PICC PROPERTY &
PING AN INSURA-H
CHINA MERCH BK-H
INDEX 10399.16 HIGH
52W (H) 11916.1
CHINA NATL BDG-H
Shanghai Shenzhen CSI 300 NAME
CSR CORP LTD -A
DAQIN RAILWAY -A
DATANG INTL PO-A
SHANG PHARM -A
EVERBRIG SEC -A
GD POWER DEVEL-A
AIR CHINA LTD-A
BANK OF BEIJIN-A
SHANXI LU'AN -A
BANK OF CHINA-A
BANK OF COMMUN-A
BANK OF NINGBO-A
BAOSHAN IRON & S BYD CO LTD -A CHINA CITIC BK-A CHINA CNR CORP-A
HONG YUAN SEC-A
WUHAN IRON & S-A
CHINA COAL ENE-A
HUAXIA BANK CO
CHINA CONST BA-A
IND & COMM BK-A
CHINA COSCO HO-A
YANGQUAN COAL -A
CHINA CSSC HOL-A
INNER MONG BAO-A
CHINA EAST AIR-A
INNER MONG YIL-A
CHINA MERCH BK-A
CHINA EVERBRIG-A CHINA LIFE INS-A
CHINA OILFIELD-A CHINA PACIFIC-A CHINA PETROLEU-A
NINGBO PORT CO-A
PANGANG GROUP -A
PING AN BANK-A
CHINA STATE -A
POLY REAL ESTA-A
CHINA VANKE CO-A
PRICE DAY %
SANY HEAVY INDUS
PETROCHINA CO-A PING AN INSURA-A
52W (H) 2717.825 (L) 2126.03
FTSE TAIWAN 50 INDEX PRICE DAY %
TAIWAN MOBILE CO
TPK HOLDING CO L
ASIA CEMENT CORP
HON HAI PRECISIO
AU OPTRONICS COR
HOTAI MOTOR CO
NAME ACER INC ADVANCED SEMICON
HUA NAN FINANCIA
CHANG HWA BANK
CHENG SHIN RUBBE
CHIMEI INNOLUX C
MEGA FINANCIAL H
CHINA STEEL CORP
NAN YA PLASTICS
CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC
YULON MOTOR CO
SYNNEX TECH INTL
FAR EASTONE TELE
FORMOSA CHEM & F
TAIWAN GLASS IND
PRICE DAY %
FAR EASTERN NEW
INDEX 5242.57 HIGH
52W (H) 5621.53 5200
(L) 4643.05 26-November
November 29, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT
MELCo CroWN ENTErTAINMENT
MGM CHINA HoLDINGS
SANDS CHINA LTD
WTI CRUDE FUTURE Jan13
BRENT CRUDE FUTR Jan13
GASOLINE RBOB FUT Dec12
GAS OIL FUT (ICE) Jan13
HEATING OIL FUTR Dec12 Gold Spot $/Oz Silver Spot $/Oz Platinum Spot $/Oz Palladium Spot $/Oz
LME ALUMINUM 3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan13 Mar13
WHEAT FUTURE(CBT) Mar13
SOYBEAN FUTURE Jan13 COFFEE 'C' FUTURE Mar13
22.2 Max 22.6
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
1.0456 1.6013 0.9311 1.2929 81.81 7.9827 7.7503 6.224 55.455 30.71 1.2229 29.141 40.88 9644 85.545 1.20377 0.8074 8.0456 10.3208 105.78 1.03
-0.1719 -0.0811 -0.0967 -0.1236 0.3667 -0.0025 -0.0039 -0.0273 0.4869 -0.0651 -0.0491 -0.1544 -0.0978 -0.0518 0.5331 0.0324 0.0458 0.3306 0.1298 0.4821 0
2.4194 3.0239 0.7518 -0.2469 -5.9895 0.2117 0.2206 1.1407 -4.3098 2.7353 6.0267 3.9052 7.2407 -5.9623 -8.3149 1.0816 3.219 1.1012 0.3023 -5.7856 0.0097
1.0857 1.6309 0.9972 1.3548 84.18 8.027 7.7935 6.3964 57.3275 32 1.3138 30.396 44.35 9664 88.637 1.24438 0.86187 8.5805 10.8355 111.44 1.0311
0.9582 1.5235 0.8931 1.2043 76.03 7.9823 7.7498 6.2174 48.6088 30.2 1.2152 28.914 40.834 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029
MACAU RELATED STOCKS NAME
DAY % YTD %
SUGAR #11 (WORLD) Mar13
AMAX HOLDINGS LT
COTTON NO.2 FUTR Mar13
BOC HONG KONG HO
CHOW TAI FOOK JE
CENTURY LEGEND CHEUK NANG HLDGS
World Stock MarketS - Indices NAME
HANG SENG BK
DOW JONES INDUS. AVG
NASDAQ COMPOSITE INDEX
FTSE 100 INDEX
EMPEROR ENTERTAI FUTURE BRIGHT
HSBC HLDGS PLC
HUTCHISON TELE H
LUK FOOK HLDGS I
MELCO INTL DEVEL
HANG SENG INDEX
CSI 300 INDEX
MGM CHINA HOLDIN
TAIWAN TAIEX INDEX
NEW WORLD DEV
S&P/ASX 200 INDEX
SANDS CHINA LTD
SHUN HO RESOURCE
FTSE Bursa Malaysia KLCI
SHUN TAK HOLDING
NZX ALL INDEX
JAKARTA COMPOSITE INDEX
LME COPPER 3MO ($)
CURRENCY EXCHANGE RATES
NATURAL GAS FUTR Dec12
18.2 Max 18.34
WyNN MACAU LTD
SJM HoLDINGS LTD 33.6
29.5 Max 29.85
SJM HOLDINGS LTD
WYNN MACAU LTD
PHILIPPINES ALL SHARE IX
HSBC Dragon 300 Index Singapor
STOCK EXCH OF THAI INDEX
HO CHI MINH STOCK INDEX
BOC HONG KONG HO
Laos Composite Index
INTL GAME TECH
JONES LANG LASAL
LAS VEGAS SANDS
MGM CHINA HOLDIN
MGM RESORTS INTE
SJM HOLDINGS LTD
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
WYNN RESORTS LTD
business daily November 29, 2012
Opinion U.K. may find breaking up with the EU is hard to do Clive Crook
Bloomberg View columnist
ritain has always had mixed feelings about the European project. From the start of the drive to “ever closer union,” the U.K. feared being left out, yet never quite wanted to get with the programme. In some ways, it signed up mainly to slow the whole thing down. Lately its doubts have grown. According to a new opinion poll, a clear majority of the British want to quit the European Union altogether. Increasingly the feeling is mutual. A partnership can tolerate only so much reluctance. In a television interview this week, Italian Prime Minister Mario Monti (more tolerant of British ambivalence than many other European leaders) said he found that “the English manage to be quite exasperating when they ask, as a condition for remaining aboard this great European ship, particular exceptions, particular dispensations, that could amount to making holes in the ship and making it sail less well, if not sink altogether.” Those dispensations never end. At the creation of the euro, the U.K. recused itself (a good move, it now thinks, despite an economic slowdown of impressive dimensions all its own). It wants nothing to do with parts of the EU’s planned response to the economic crisis, including proposals for a banking union and closer fiscal integration. London is unwilling, as always, to make EU budgetary contributions according to the same formula as other member states: Protecting Britain’s socalled rebate is ever the main goal of its policy on Europe.
Switzerland, two of Europe’s richest countries, have freetrade agreements with the EU without being members of the union. True enough, but one shouldn’t read too much into this. As a member of the European Economic Area, Norway is obliged, in effect, to accept EU obligations as a matter of course. Switzerland, as a member of the European Free Trade Association but not the EEA, is freer to negotiate its terms – but the value of this privilege is questionable, because the negotiation is hardly between equals. In working out their deals, both outsiders have had to accept EU norms on product standards and other trading rules without being able to influence their design. Leaving the EU doesn’t mean winning independence from it. In addition, the U.K. couldn’t take for granted membership in the EEA and/or EFTA. Both would have to be negotiated with the existing members ��� meaning the EU plus Norway, Liechtenstein and Iceland in the case of the EEA; and Norway, Switzerland, Liechtenstein and Iceland in the case of the EFTA. The U.K.’s arrival would
transform these peripheral trade pacts. The existing members might think twice before letting that happen. At best, the new arrangements needed for Britain to thrive as part of the European economy (though not of the EU) wouldn’t fall instantly into place just because it quit the union. Granted, there would also be benefits. The U.K.’s budgetary contribution to its European partners would fall. The obligation to support the EU’s stupid farm policies certainly wouldn’t be missed. And as a member of the EFTA, Britain would be free to negotiate freetrade agreements with other countries – possibly including the U.S., again if prospective partners were willing.
Shrinking Britain The main thing, though, is that the U.K. would stand aside from the EU’s larger political and geopolitical ambitions. For the most trenchant eurosceptics, this is really the point: Britain’s power of self-government and its weight in the world, they say, are surrendered when it pools sovereignty with its EU partners. The other side argues exactly the opposite: For a
medium-sized country alone on the edge of an integrating Europe, pooling sovereignty is the only way to protect those assets. Without that, selfgovernment and international clout are mere delusions. The choice is more finely balanced than either admits. In or out of the EU, steadily rising living standards are possible but not guaranteed. In or out, Britain’s global weight will diminish, a function of the country’s continuing and
In or out, Britain’s global weight will diminish, a function of the country’s continuing and inevitable relative economic decline
inevitable relative economic decline. The right answer – and this goes not just for the U.K. – isn’t fixed one way or the other. It depends on the kind of union the EU strives to be. In the worldview of many a British eurosceptic, there are equal measures of chauvinism and fantasy. But there’s a good measure of justified frustration, as well, over the EU’s persistent constitutional deficits. The union has the accoutrements of democracy but little real democratic accountability. The single currency was one result: overreach on a calamitous scale. A pattern has been set. For decades, political integration was pushed much faster than the solidarity needed to sustain it. The economic crisis is widening this gap still more, and to a dangerous point, as Europe’s leaders strive to meet surging protests over EU governance with a forced march to closer political union. Tiresome as the U.K.’s perpetual grievances may be, they aren’t groundless. The EU needs to be less ambitious, not more. If it continues to presume a solidarity that doesn’t yet exist, it will end up failing everybody – with or without its most reluctant member. Bloomberg View
Separation agreement At some point, enough is enough. Maybe a separation on friendly terms would be better for all involved. Well, it might come to that, and it’s wrong to dismiss a British decision to leave as “unthinkable.” Equally, though, since moving the country to a better location would be difficult, Britain ought to think hard about what divorcing Europe would mean. Continued access on freetrade terms to the EU’s single market would be crucial for the U.K.’s prosperity. British eurosceptics like to point out that Norway and
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November 29, 2012 business daily | 15
wires Leading reports from Asia’s best business newspapers
Asahi Shimbun Honda Motor Co. is planning to develop small-sized vehicles based on its N minicar series, a popular line in Japan, to target emerging markets. Honda Motor President Takanobu Ito said in an interview that a competitive small car using technology and parts from the N series will be the key to increasing sales in emerging markets, where the automaker is lagging in the four-wheel field. “Japan excels at achieving high performance in a limited size,” Mr Ito was quoted as saying. “We have sharpened such technology to a level other regions can hardly imitate.”
Jakarta Post A lack of bureaucratic capacity, funding and outdated information and technology among regional administrations are preventing the government from fully optimising the potential of property taxation. The authority to collect property tax will be transferred from the central government to regional administrations by the end of 2013. Finance Minister Agus Martowardojo said that the idea to transfer the collection authority was based on the consideration that regional administrations would carry out more effective taxation on properties than the central government.
Bangkok Post The future of Thailand’s biggest private sector organisation, the Federation of Thai Industries (FTI), is in limbo as the federation now has two chairmen, and both sides claim legitimacy in their position. FTI chairman Payungsak Chartsutthipol insisted on Tuesday that he remains in charge, despite a vote by members to replace him at a meeting a day before. They cited his failure to insist the government delay the scheduled minimum daily wage hike to 300 baht (US$9.7) nationwide on January 1. The members in attendancechoseformerchairman Santi Vilassakdanont to return to the post of FTI chairman.
Korea Herald South Korea presidential candidates Park Geun-hye and Moon Jae-in hit the trails in the key battlegrounds of Daejeon and Busan, respectively, on Tuesday at the start of their 22day official campaign. The two leading candidates slammed each other hard as unfit to lead the nation as they vied for the swing votes that hold the key to the December 19 election. Polls released this week showed Saenuri Party Park maintains a narrow lead against the Democratic United Party with 44.7 percent against Mr Moon’s 40.8 percent, according to the Chosun Ilbo survey.
The world according to Xi Zhu Feng
Deputy Director of the Centre for International & Strategic Studies at Peking University
n November 15 Xi Jinping became General Secretary of the Chinese Communist Party and Chairman of the CCP’s Central Military Commission, giving him supreme authority over China’s armed forces. Next March, he will become President of China as well. How does China’s new leader see the world, and how will he handle the country’s foreign policy? Do his style and preferences differ significantly from those of his predecessor, Hu Jintao? The answers will determine China’s relations with the world, and vice versa, for the next decade. China’s leaders approach power in a very different way than do political leaders in, say, the United States. American politicians must sell their ideas and values to voters; China’s leaders do not need to inform the press and the public directly about anything, including their foreign-policy positions. Indeed, with the notable exceptions of Mao Zedong and Deng Xiaoping, China’s leaders have seldom imposed their own personalities upon Chinese diplomacy. In this sense, Xi’s leadership style will most likely continue in the tradition of his predecessors. Nevertheless, Xi’s outlook and worldview are surely different from Hu’s. For starters, Xi is part of a generation raised and educated mostly in China’s reform era, which has been a decisive influence in their lives. China opened itself to the world in 1978, when Xi and his contemporaries were young men eager to understand the world outside China. They are a generation inspired by Deng’s realistic approach to shattering the walls that radical leftists had built around China, and one that believes that knowledge can change the destiny of the country and its people.
American culture, just as Deng did in 1979. He ate chocolate and watched NBA games. Most important, instead of spending countless hours drearily discussing political and strategic topics, he spoke directly and vigorously about the current state of Sino-U.S. relations. “The Pacific Ocean is wide enough to accommodate the two major countries of China and the U.S.,” he declared. Unhappy with America’s “pivot” to Asia, Xi remained calm, but emphasised that “one cannot rely too much on military power regarding AsiaPacific diplomacy.” Similarly, Xi tried to avoid major arguments on human rights, saying simply, “There’s no best, only better.” In essence, he sought to demonstrate that however many questions, arguments, and even potential conflicts exist between China and the U.S., both countries’ leaders should address them with an attitude of cooperation and sincerity. Leaders should not become entangled in details that fuel suspicion of their counterparts’ motives, lest they lose sight of the bigger picture.
Diplomatic muscle Xi’s confidence extends to China’s domestic politics. His generation is more certain of reform than previous leadership cohorts were, owing less to official ideology than to the country’s enormous achievements in the last three decades. In practice, Xi may well prove to be a nationalist; certainly, his generation, like the founding fathers of the People’s Republic, dreams of turning China into a stronger, more prosperous country. The country’s new leaders want the world’s applause, but they are more eager for
More realism When this generation assumes the mantle of leadership, its members will turn their passion and curiosity about knowledge and innovation into real work. They are surely willing to learn from the wider world as they seek to promote China’s national interests abroad and encourage gradual change at home. Xi may address Chinese diplomacy’s thorniest issues – particularly Sino-U.S. relations – with more realism and flexibility than in recent years. His visit to the U.S. in February 2012 was widely regarded as a sequel to Deng’s visit in January 1979. Xi talked to President Barack Obama and visited the Pentagon. He gave a luncheon speech and saw old friends from his brief stay in Iowa as a young man. He showed interest in
Xi may address Chinese diplomacy’s thorniest issues – particularly SinoU.S. relations – with more realism and flexibility than in recent years
domestic ovations. Like previous Chinese leaders, Xi firmly believes that the world should respect China’s authority to manage its own affairs. Thus, he is willing to show diplomatic muscle if China is challenged on a core area of concern. His speech in Mexico in 2009 demonstrated this. “Some foreigners with full bellies and nothing better to do engage in finger-pointing at us,” he said. “First, China does not export revolution; second, it does not export famine and poverty; and, third, it does not mess around with you. So what else is there to say?”
Xi understands that the world expects not only a better China, but also a China that is committed to constructing a better world. He will be a tough and strong-minded leader, but one who understands the world in a pragmatic way and knows how to work well with his foreign counterparts. Indeed, his 2012 visit to the U.S. left two impressions. First, he is a leader at ease both in front of and away from the television cameras. Second, he is not afraid to have a little fun. With those simple touches of humanity, Xi could bring a revolution to China’s diplomacy. © Project Syndicate
business daily November 29, 2012
CLOSING Cliff talks may drag on: Buffett
EU Parliament urges free trade with U.S.
Billionaire investor Warren Buffett believes the U.S. fiscal cliff may be solved by January rather than December. Congress has until 31 December to cut a deal to stop existing economic stimulus measures terminating and huge automatic spending cuts coming into effect. While Mr Buffett said politicians may miss the deadline, he thought a deal would follow shortly after. Mr Buffett has advocated raising taxes on the most wealthy Americans such as himself. Speaking to the Marketplace programme on American Public Media, Mr Buffett said that the fiscal cliff presented an opportunity to achieve this goal.
European Parliament president Martin Schulz called for a free trade deal between the EU and the United States. “The European Parliament supports a free trade zone between the U.S. and the EU to be set up by 2015,” Mr Schulz said at an event in Washington, promising such a pact would be a “major boost for economic growth”. But he acknowledged that efforts made little headway so far, admitting that it had run into “some reluctance,” especially on the European side. “Still, if we succeed it would be to the huge benefit for 800 million people.”
Major overhaul for Spanish banks Bankia among lenders winning EU approval for rescue
FA-Bankia SA and three other Spanish nationalised lenders won European Union approval for government bailouts, paving the way for them to receive recapitalisations next month. Bankia, Novagalicia Banco and Catalunya Banc will reduce balance sheets by more than 60 percent by 2017 compared with 2010, exit realestate lending and limit their wholesale businesses, the European Commission said in a statement yesterday. The restructuring plans agreed with EU regulators will create a healthier financial system and “a solvent base to play an active role in the growth of Spain from now on,” EU Competition Commissioner Joaquin Almunia said in the statement. The EU decision will allow Spain’s rescue fund, the FROB, to receive as much as 100 billion euros (US$130 billion) of aid from the EU to help stabilise its banking system in the first half of December, the Bank of Spain said yesterday. The FROB will recapitalise the banks “once the necessary corporate operations have been completed,” it said in an e-mailed statement. Spain has pledged to sell Novagalicia Banco and Catalunya Banc within five years or wind them
Bankia is the largest of the four being restructured
down. Banco de Valencia was bought by CaixaBank SA for 1 euro yesterday.
Impaired assets The restructuring plans foresee “subordinated liability exercises” and the transfer of impaired assets to Spain’s bad bank, a process that will reduce the Bankia group’s capital needs to 17.96 billion euros and those of Novagalicia Banco to 5.43 billion euros and 9.08
billion euros for Catalunya Banc, the commission said. Banco de Valencia’s capital needs are 4.5 billion euros. Some 45 billion euros in assets will be transferred to the Spanish bad bank, Sareb, Mr Almunia told reporters in Brussels yesterday. Bankia, Novagalicia Banco and Catalunya Banc will sell units to help fund the restructuring, he added. Their preferred shareholders and other subordinated debt holders will
absorb losses and pay some of the costs of the restructuring, reducing Spanish government support by about 10 billion euros, the EU said in the statement. The banks will be banned from making acquisitions or coupon payments and from using state aid for commercially aggressive practices. Mr Almunia said he plans to decide on restructuring plans for Liberbank SA, Banco Mare Nostrum SA, Banco Caja 3 and Ceiss on December 20. Bankia, a nationalised lender that in May requested 19 billion euros from the government to clean up bad loans, is planning to announce a new strategic plan through 2015. Chairman Jose Ignacio Goirigolzarri told shareholders in June the bank would seek to reduce its 60 billion euros of non-yielding assets by more than half over three years. Mr Almunia said the sale of Banco de Valencia to CaixaBank SA, Spain’s thirdlargest lender, was cheaper than winding down the bank which he said was no longer viable without state support. FROB will provide Banco de Valencia a 4.5 billion-euro capital injection, the fund and CaixaBank said in separate statements. FROB will then transfer its stake, which will be at least 90.9 percent, for 1 euro, CaixaBank said. Reuters
ECB lays out timetable for bank supervision EU treaty allows it to be bank supervisor
he European Central Bank said it expects to assume full supervision of all euro-area banks by the start of 2014 and that there is no need to change the law to accommodate its new role. In a legal opinion on the proposed single supervision mechanism published yesterday, the Frankfurtbased ECB set out a timetable and stressed the need for governments to reach agreement on the plan by the end of the year. It batted away the concerns of Germany’s Bundesbank about the legality of the new supervisor, saying the current European Union treaty provides “the appropriate legal basis for rapidly and effectively conferring
specific supervisory tasks upon the ECB.” European leaders in June agreed to hand the ECB powers to oversee all 6,000 euro-area banks from January 1, 2013, as part of a so-called banking union that would unlock joint recapitalisation funds for the region’s ailing lenders. The ECB said yesterday that while the necessary regulation should enter into force on that date, operational implementation would occur gradually over the course of 2013 with “full implementation by January 1, 2014.” The ECB “stresses the importance” of reach i n g a g r eem en t o n th e supervision proposals by the end
ECB supervision – full implementation in January 2014
of 2012 to “maintain the envisaged timetable,” it said. The ECB called for the creation of a single resolution mechanism to complement the single supervisor and “achieve a well-functioning financial market union.” A resolution authority “should be established – or at least there should be clear deadlines for its establishment – when the ECB assumes its supervisory responsibility in full,” it said. There are concerns that the new role may present a conflict of interest for the ECB and compromise its ability
to contain inflation. The Bundesbank this month questioned the legality of the ECB assuming bank supervision responsibilities, saying it’s not clear the treaty allows for “such a broad transfer of duties” and that granting decision-making rights to a new body within the ECB may breach the law. “There should be a strict separation between the ECB’s new tasks concerning supervision and its monetary policy tasks assigned by the treaty,” the ECB said in the legal opinion. Bloomberg