Oct. 4 (Bloomberg) -- Service industries in the U.S., the largest share of the economy, probably stabilized in September after contracting for almost a year, economists said before a report this week.
The Institute for Supply Management’s index of non- manufacturing businesses, which reflects almost 90 percent of the economy, rose to 50, according to the median of 64 forecasts in a Bloomberg News survey ahead of figures tomorrow. Fifty is the dividing line between expansion and contraction.
The emerging recovery in manufacturing and housing spurred by government measures such as “cash-for-clunkers” and a tax credit for first-time homebuyers started spreading to the broader economy. Nonetheless, last week’s jobs report showing payroll cuts accelerated in September is a reminder that gains in sales may not be sustained as incentives expire.
“The economy is in a recovery but the recovery in the labor market has lost some steam,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “The service sector, while on a sustainable path of growth, is only improving very gradually.”
The projected reading for the Tempe, Arizona-based ISM’s services gauge would be the first break-even point since September 2008, when Lehman Brothers Holdings Inc. filed for bankruptcy. The measure was 48.4 in August.
ISM’s factory index on Oct. 1 showed manufacturing, which accounts for about 12 percent of the economy, expanded less than economists anticipated. The measure fell to 52.6 in September, the first drop this year, from 52.9 in August.
More Job Losses
Job losses accelerated last month and the unemployment rate climbed to the highest level since 1983, Labor Department data showed on Oct. 2. Payrolls fell by 263,000 following a 201,000 decline the prior month, while the jobless rate rose to 9.8 percent from 9.7 percent. The U.S. has lost 7.2 million jobs since the recession began in December 2007.
U.S. stocks fell on Oct. 2, capping the market’s first back-to-back weekly declines since July, as the bigger-than- estimated loss of jobs spurred concern the economy is struggling to recover. The Standard & Poor’s 500 Index retreated 0.5 percent to close at 1,025.21 in New York.
Economic growth next year probably won’t be strong enough to “substantially” bring down the jobless rate, which may remain above 9 percent at the end of 2010, Fed Chairman Ben S. Bernanke told lawmakers on Oct. 1.
Growth Rebound
Recent data signal the economy began growing in the third quarter. Consumer spending, about 70 percent of the economy, jumped in August by the most since October 2001, as the government’s $3 billion cash-for-clunkers incentive to trade in older, less fuel-efficient cars helped auto sales.
Homebuilding, which is included in ISM’s services index, may no longer be a drag on growth as rising sales help trim the glut of properties on the market. The number of contracts to buy previously owned homes rose in August for the seventh straight month, lifted by tax credits for first-time buyers, a report from the National Association of Realtors showed last week.
Service companies seeing a pickup include Carnival Corp., the biggest cruise-line operator. The Miami-based company raised its full-year profit forecast because of better-than- expected ticket bookings.
“Throughout the summer, booking volumes have continued to be quite strong which has enabled us to achieve higher last- minute prices,” Howard Frank, chief operating officer of Carnival, said on a Sept. 22 conference call.
Bigger Trade Gap
A report from the Commerce Department on Oct. 9 may show the trade deficit widened in August to $33 billion from $32 billion in July, the Bloomberg survey shows. Both imports and exports are likely to rise as demand worldwide picks up. Imports may have seen a bigger boost in August as American companies replenished depleted inventories, economists said.
The world economy will expand 3.1 percent next year, the International Monetary Fund said last week, exceeding its July forecast of 2.5 percent. The lender raised the outlook for China, and said developing Asia will grow at more than twice the pace of advanced economies including the U.S., Germany and Japan.
Among other data this week, a Fed report on Oct. 7 may show consumers are borrowing less. Credit fell by $10 billion in August following a record $21.6 billion drop the prior month, according to the Bloomberg survey median.
Bloomberg Survey
===============================================================
Release Period Prior Median
Indicator Date Value Forecast
===============================================================
ISM NonManu Index 10/5 Sept. 48.4 50.0
Federal Budget $ Blns 10/7 Sept. 45.7 -80.7
Cons. Credit $ Blns 10/7 Aug. -21.6 -10.0
Initial Claims ,000’s 10/8 26-Sep 551 540
Cont. Claims ,000’s 10/8 19-Sep 6090 6120
Whlsale Inv. MOM% 10/8 Aug. -1.4% -1.0%
ICSC Chain Store Sales 10/8 Sept. -2.0% -1.5%
Trade Balance $ Blns 10/9 Aug. -32.0 -33.0
===============================================================
Saturday, October 3, 2009
Australia’s Swan Says Jobless Will Continue to Rise
Oct. 4 (Bloomberg) -- Australia’s unemployment rate is expected to keep rising as the global recession dampens growth in the local economy, Treasurer Wayne Swan said.
The nation’s jobless rate will peak at 7 percent in 2010, lower than the 9.4 percent rate forecast for major advanced economies, Swan said today in his weekly economic note sent by e-mail, citing the International Monetary Fund.
That’s “still too many jobs lost as unemployment continues to rise,” Swan said. “Even with the IMF last week downgrading its forecast for peak unemployment in Australia, the unemployment rate is expected to continue to rise as the impacts of the global recession continue to wash though our economy.”
Australian employment fell in August by almost twice as much as economists estimated, the statistics bureau said on Sept. 10, while the unemployment rate was at 5.8 percent. The nation’s jobless rate would be as much as 1.9 percentage points higher in 2010 without government stimulus to consumers and infrastructure spending, the Organization for Economic Cooperation and Development said last month.
“The federal government still has its foot on the accelerator, but will the Reserve Bank of Australia hit the brakes at the same time?” Robert Olivier, from recruitment company the Olivier Group said in an e-mailed release today.
Australian labor force figures will be released this week and its central bank will make a decision on interest rates. The Reserve Bank of Australia will keep its overnight cash rate target unchanged at 3 percent on Oct. 6, according to 19 of 20 economists surveyed by Bloomberg News.
‘Significant Fall’
“The significant fall in the number of hours worked in Australia shows the sacrifice being made by many thousands of Australians to save those jobs,” Swan said in the note. “While Australia has outperformed every advanced economy throughout this global recession, now is not the time for victory laps or for ripping out the stimulus.”
Australia’s economy will grow 0.7 percent this year and 2 percent in 2010, the IMF said on Oct. 1, compared with its April forecast for a 1.4 percent contraction and 0.6 percent expansion respectively. The global economy is forecast to contract by 1.1 percent in 2009, versus a previous estimate of 1.4 percent, before expanding at 3.1 percent in 2010, up from 2.5 percent forecast previously, Swan said in his note, citing the IMF.
“Despite these improved forecasts the recovery in the global economy is far from assured,” Swan said.
The nation’s jobless rate will peak at 7 percent in 2010, lower than the 9.4 percent rate forecast for major advanced economies, Swan said today in his weekly economic note sent by e-mail, citing the International Monetary Fund.
That’s “still too many jobs lost as unemployment continues to rise,” Swan said. “Even with the IMF last week downgrading its forecast for peak unemployment in Australia, the unemployment rate is expected to continue to rise as the impacts of the global recession continue to wash though our economy.”
Australian employment fell in August by almost twice as much as economists estimated, the statistics bureau said on Sept. 10, while the unemployment rate was at 5.8 percent. The nation’s jobless rate would be as much as 1.9 percentage points higher in 2010 without government stimulus to consumers and infrastructure spending, the Organization for Economic Cooperation and Development said last month.
“The federal government still has its foot on the accelerator, but will the Reserve Bank of Australia hit the brakes at the same time?” Robert Olivier, from recruitment company the Olivier Group said in an e-mailed release today.
Australian labor force figures will be released this week and its central bank will make a decision on interest rates. The Reserve Bank of Australia will keep its overnight cash rate target unchanged at 3 percent on Oct. 6, according to 19 of 20 economists surveyed by Bloomberg News.
‘Significant Fall’
“The significant fall in the number of hours worked in Australia shows the sacrifice being made by many thousands of Australians to save those jobs,” Swan said in the note. “While Australia has outperformed every advanced economy throughout this global recession, now is not the time for victory laps or for ripping out the stimulus.”
Australia’s economy will grow 0.7 percent this year and 2 percent in 2010, the IMF said on Oct. 1, compared with its April forecast for a 1.4 percent contraction and 0.6 percent expansion respectively. The global economy is forecast to contract by 1.1 percent in 2009, versus a previous estimate of 1.4 percent, before expanding at 3.1 percent in 2010, up from 2.5 percent forecast previously, Swan said in his note, citing the IMF.
“Despite these improved forecasts the recovery in the global economy is far from assured,” Swan said.
Recession, You Look Familiar
AFTER the financial markets melted down last year, there was some great political theater in Washington. Alan Greenspan, the former Federal Reserve chairman, told the House Government Oversight and Reform Committee that he couldn’t believe what had happened. “We are in the once-in-a-century credit tsunami,” he said.
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Economix: Financial Ignorance and Arrogance (September 30, 2009)
Times Topics: Credit Crisis — The Essentials
Richard S. Fuld Jr., the last chief executive of the bankrupt Lehman Brothers, lamented that he, too, had been blindsided. No one, he assured the committee, “was prepared for this one.”
Such performances were gripping, in their way. But they may take on a level of absurdity after reading “This Time Is Different: Eight Centuries of Financial Folly” (Princeton University Press) by two economics professors, Carmen M. Reinhart of the University of Maryland and Kenneth S. Rogoff of Harvard.
The authors use copious amounts of data — well, actually, numbing amounts — to make the compelling case that any well-informed person should have seen the Great Recession coming. The essence of their book is that while financial crises come in different varieties, they are not mysteriously born of undersea earthquakes, but frequently occurring events that can be spotted and even controlled if politicians and regulators know what to look for.
“Our basis message is simple: We have been here before,” the authors write. “No matter how different the latest financial frenzy or crisis always appears, there are usually remarkable similarities with past experience from other countries and from history. Recognizing these analogies and precedents is an essential step toward improving our global financial system, both to reduce the risk of future crises and to better handle catastrophes when they happen.”
These academics have found the same disturbing patterns in economic data from more than 66 countries: A nation’s political leaders loosen regulations governing the financial system. Banks use the new freedom to borrow money and earn juicy returns. Soon, these sovereign states are awash with money from foreign investors. But beware these torrents of outside wealth. They are accompanied by bubbles in stocks, commodities and real estate.
Often, policy makers and business leaders step forward and say that nobody should be fearful. Yes, bubbles have burst before — but now, they say, investors are safe because the old dangers no longer lurk.
As the authors note, this was said about Latin America and Africa in the 1970s, Asia in the 1990s and, of course, the United States in the last decade.
Bubbles, however, inevitably go splat. And what happens next isn’t pretty. Countries like Mexico, Argentina, Brazil and Nigeria defaulted on debt in the 1980s. In the late ’90s, Ms. Reinhart and Mr. Rogoff note, “Korea, Indonesia and Thailand, among others, were forced to go to the International Monetary Fund for gigantic bailout packages, but even this was not enough to stave off deep recessions and huge currency depreciations.”
And, of course, we all know what happened in the United States. The authors point out that Mr. Greenspan and his successor, Ben S. Bernanke, “argued vigorously that the Federal Reserve should not pay excessive attention to housing prices, except to the extent that they might affect the central bank’s primary goals of growth and price stability.” Famous last words.
Some of the book’s findings are obvious. Bubbles are dangerous? Gee, you don’t say. But others are revelatory. Americans have every reason to be ashamed of the real estate boom. Many of us believed that we had earned the instant wealth we accrued as housing prices spiked. But people worldwide suffered when this easy money disappeared.
It turns out that the United States isn’t the only nation where a banking crisis was preceded or accompanied by a real estate bubble. The authors found that over the last 100 years, this has happened in tandem with 21 major banking crises. No wonder they suggest the International Monetary Fund keep a close eye on property values.
“This Time Is Different” seems unlikely to be a best seller. The authors have chosen to present their findings rather dryly, with numbers and tables, instead of enlivening them with colorful observations and anecdotes that might seduce non-academics into digesting such complex subject matter.
“We trust that our visual, quantitative history of financial crises is no less compelling than the earlier narrative approach,” the authors write.
They devote far too many pages to legalistic definitions and charts that are barely distinguishable from the ones of the page before. A little more color would have helped immensely.
Still, you have to admire them for being so dogged. They say up front that they hope to influence economy policy, and they may succeed. They make a predictable call for more oversight and advocate the creation of a new “international financial regulatory institution” to look for danger signs like rising property values so it can prod countries to dampen their overheated economies before they blow up.
That last proposal may be wishful thinking. But it is not too much to ask officials at existing regulatory agencies to do a better job. They, of all people, should read this book. It may be a bit too much for average readers, but everything they need to spot the next recession is in there.
Skip to next paragraph
Enlarge This Image
Related
Economix: Financial Ignorance and Arrogance (September 30, 2009)
Times Topics: Credit Crisis — The Essentials
Richard S. Fuld Jr., the last chief executive of the bankrupt Lehman Brothers, lamented that he, too, had been blindsided. No one, he assured the committee, “was prepared for this one.”
Such performances were gripping, in their way. But they may take on a level of absurdity after reading “This Time Is Different: Eight Centuries of Financial Folly” (Princeton University Press) by two economics professors, Carmen M. Reinhart of the University of Maryland and Kenneth S. Rogoff of Harvard.
The authors use copious amounts of data — well, actually, numbing amounts — to make the compelling case that any well-informed person should have seen the Great Recession coming. The essence of their book is that while financial crises come in different varieties, they are not mysteriously born of undersea earthquakes, but frequently occurring events that can be spotted and even controlled if politicians and regulators know what to look for.
“Our basis message is simple: We have been here before,” the authors write. “No matter how different the latest financial frenzy or crisis always appears, there are usually remarkable similarities with past experience from other countries and from history. Recognizing these analogies and precedents is an essential step toward improving our global financial system, both to reduce the risk of future crises and to better handle catastrophes when they happen.”
These academics have found the same disturbing patterns in economic data from more than 66 countries: A nation’s political leaders loosen regulations governing the financial system. Banks use the new freedom to borrow money and earn juicy returns. Soon, these sovereign states are awash with money from foreign investors. But beware these torrents of outside wealth. They are accompanied by bubbles in stocks, commodities and real estate.
Often, policy makers and business leaders step forward and say that nobody should be fearful. Yes, bubbles have burst before — but now, they say, investors are safe because the old dangers no longer lurk.
As the authors note, this was said about Latin America and Africa in the 1970s, Asia in the 1990s and, of course, the United States in the last decade.
Bubbles, however, inevitably go splat. And what happens next isn’t pretty. Countries like Mexico, Argentina, Brazil and Nigeria defaulted on debt in the 1980s. In the late ’90s, Ms. Reinhart and Mr. Rogoff note, “Korea, Indonesia and Thailand, among others, were forced to go to the International Monetary Fund for gigantic bailout packages, but even this was not enough to stave off deep recessions and huge currency depreciations.”
And, of course, we all know what happened in the United States. The authors point out that Mr. Greenspan and his successor, Ben S. Bernanke, “argued vigorously that the Federal Reserve should not pay excessive attention to housing prices, except to the extent that they might affect the central bank’s primary goals of growth and price stability.” Famous last words.
Some of the book’s findings are obvious. Bubbles are dangerous? Gee, you don’t say. But others are revelatory. Americans have every reason to be ashamed of the real estate boom. Many of us believed that we had earned the instant wealth we accrued as housing prices spiked. But people worldwide suffered when this easy money disappeared.
It turns out that the United States isn’t the only nation where a banking crisis was preceded or accompanied by a real estate bubble. The authors found that over the last 100 years, this has happened in tandem with 21 major banking crises. No wonder they suggest the International Monetary Fund keep a close eye on property values.
“This Time Is Different” seems unlikely to be a best seller. The authors have chosen to present their findings rather dryly, with numbers and tables, instead of enlivening them with colorful observations and anecdotes that might seduce non-academics into digesting such complex subject matter.
“We trust that our visual, quantitative history of financial crises is no less compelling than the earlier narrative approach,” the authors write.
They devote far too many pages to legalistic definitions and charts that are barely distinguishable from the ones of the page before. A little more color would have helped immensely.
Still, you have to admire them for being so dogged. They say up front that they hope to influence economy policy, and they may succeed. They make a predictable call for more oversight and advocate the creation of a new “international financial regulatory institution” to look for danger signs like rising property values so it can prod countries to dampen their overheated economies before they blow up.
That last proposal may be wishful thinking. But it is not too much to ask officials at existing regulatory agencies to do a better job. They, of all people, should read this book. It may be a bit too much for average readers, but everything they need to spot the next recession is in there.
Friday, October 2, 2009
Asian Stocks Slump the Most in Six Weeks on Recovery Concerns
Oct. 3 (Bloomberg) -- Asian stocks fell by the most in six weeks on concern a seven-month rally has outpaced the prospects for an economic recovery.
Mitsubishi UFJ Financial Group Inc., Japan’s largest listed bank, fell 9.7 percent after booking charges for an affiliate. Toyota Motor Corp., which gets 31 percent of sales from North America, sank 8.9 percent as it reported a decline in U.S. sales, and U.S. manufacturing and unemployment claims missed economists’ estimates. Glorious Property Holdings Ltd., a real- estate developer, sank 15 percent in its trading debut yesterday in Hong Kong, the fifth new listing in two weeks to plunge.
The MSCI Asia Pacific Index fell 2.8 percent to 114.46 this week, its biggest drop since the week ended Aug. 21. The gauge has climbed 62 percent from a five-year low on March 9 as stimulus measures worldwide dragged economies out of recession. It has dropped 3.7 percent from a one-year high on Sept. 17.
“There seems to be growing consensus that the pace of the recovery will slow,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $56 billion. “There is a question mark over a further rebound in consumption and production.”
Japan’s Nikkei 225 Stock Average slumped 5.2 percent to 9.731.87, its first weekly close below 10,000 since July 24. Japanese large enterprises plan to cut capital spending by 10.8 percent in the year ending next March, more than the 9.4 percent reduction foreseen three months ago, according to the Bank of Japan’s quarterly Tankan survey released on Oct 1. Economists estimated a 9 percent decrease.
China’s benchmark Shanghai Composite Index dropped 2.1 percent in a shortened trading week. The market was shut from Oct. 1 for the National Day holidays. Trading resumes Oct. 9.
IPO ‘Massacre’
Glorious Property dropped 15 percent to HK$3.76 yesterday, its first day of trading. The company had raised HK$9.9 billion ($1.28 billion) in the largest initial public offering in Hong Kong by a Chinese property company in two years.
The developer joins four other companies, including China South City Holdings Ltd., in falling on their first day of trading over the past two weeks. The declines have heightened investors’ concerns that the market’s appetite for offerings is waning. China South, which debuted on Sept. 30, dropped 25 percent since its IPO.
“It’s a massacre,” said Francis Lun, general manager at Hong Kong-based brokerage Fulbright Securities Ltd. “Right now investors have lost all confidence in new shares and I can’t see this changing in the near term.”
Hong Kong Exchanges & Clearing Ltd., the operator of Asia’s third-biggest stock market, declined 6.3 percent to HK$134.10 on speculation companies may be postponing listing plans due to the poor reception recent offerings have received.
Mitsubishi, Yen, Won
Wilmar International Ltd., the world’s biggest palm-oil trader, sank 9.5 percent to S$6.11 in Singapore after FinanceAsia reported on its Web site that Wilmar China Ltd.’s initial public offering in Hong Kong has been delayed.
Mitsubishi UFJ declined 9.7 percent to 445 yen. The company will book a 28 billion yen ($313 million) charge on its stake in Acom Co., whose shares plunged 50 percent in the six months through Sept. 30.
The stronger yen and won dragged down shares of Japanese and South Korean exporters. The yen strengthened to as much as 88.24 per dollar this week from 90.65 at the close of Tokyo trading last week. The won added as much as 1.8 percent. That reduces the value of overseas sales when converted into the companies’ domestic currencies.
U.S. Economy
Toyota, Japan’s biggest automaker, sank 8.9 percent to 3,380 yen. Canon Inc., the world’s biggest maker of office equipment, fell 6.5 percent to 3,430 yen. All but two of the 33 industry groups in Japan’s Topix index declined this week. Hyundai Motor Co., South Korea’s largest carmaker, tumbled 11 percent to 102,500 won.
Stocks also declined after U.S. data released on Oct. 1 showed manufacturing and claims for unemployment benefits missed economists’ estimates. Last week, reports showed orders for goods made to last several years unexpected dropped in August, while sales of new homes last month rose less than estimated.
Mitsui O.S.K. Lines Ltd., Japan’s No. 2 shipping company, fell 6.2 percent to 517 yen after widening its loss forecast.
StarHub Ltd., Singapore’s biggest pay-television operator, slipped 7.4 percent to S$2. DBS Group Holdings Ltd. and Citigroup Inc. cut their investment ratings for the stock after the company lost its rights to broadcast sports channels.
Mitsubishi UFJ Financial Group Inc., Japan’s largest listed bank, fell 9.7 percent after booking charges for an affiliate. Toyota Motor Corp., which gets 31 percent of sales from North America, sank 8.9 percent as it reported a decline in U.S. sales, and U.S. manufacturing and unemployment claims missed economists’ estimates. Glorious Property Holdings Ltd., a real- estate developer, sank 15 percent in its trading debut yesterday in Hong Kong, the fifth new listing in two weeks to plunge.
The MSCI Asia Pacific Index fell 2.8 percent to 114.46 this week, its biggest drop since the week ended Aug. 21. The gauge has climbed 62 percent from a five-year low on March 9 as stimulus measures worldwide dragged economies out of recession. It has dropped 3.7 percent from a one-year high on Sept. 17.
“There seems to be growing consensus that the pace of the recovery will slow,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $56 billion. “There is a question mark over a further rebound in consumption and production.”
Japan’s Nikkei 225 Stock Average slumped 5.2 percent to 9.731.87, its first weekly close below 10,000 since July 24. Japanese large enterprises plan to cut capital spending by 10.8 percent in the year ending next March, more than the 9.4 percent reduction foreseen three months ago, according to the Bank of Japan’s quarterly Tankan survey released on Oct 1. Economists estimated a 9 percent decrease.
China’s benchmark Shanghai Composite Index dropped 2.1 percent in a shortened trading week. The market was shut from Oct. 1 for the National Day holidays. Trading resumes Oct. 9.
IPO ‘Massacre’
Glorious Property dropped 15 percent to HK$3.76 yesterday, its first day of trading. The company had raised HK$9.9 billion ($1.28 billion) in the largest initial public offering in Hong Kong by a Chinese property company in two years.
The developer joins four other companies, including China South City Holdings Ltd., in falling on their first day of trading over the past two weeks. The declines have heightened investors’ concerns that the market’s appetite for offerings is waning. China South, which debuted on Sept. 30, dropped 25 percent since its IPO.
“It’s a massacre,” said Francis Lun, general manager at Hong Kong-based brokerage Fulbright Securities Ltd. “Right now investors have lost all confidence in new shares and I can’t see this changing in the near term.”
Hong Kong Exchanges & Clearing Ltd., the operator of Asia’s third-biggest stock market, declined 6.3 percent to HK$134.10 on speculation companies may be postponing listing plans due to the poor reception recent offerings have received.
Mitsubishi, Yen, Won
Wilmar International Ltd., the world’s biggest palm-oil trader, sank 9.5 percent to S$6.11 in Singapore after FinanceAsia reported on its Web site that Wilmar China Ltd.’s initial public offering in Hong Kong has been delayed.
Mitsubishi UFJ declined 9.7 percent to 445 yen. The company will book a 28 billion yen ($313 million) charge on its stake in Acom Co., whose shares plunged 50 percent in the six months through Sept. 30.
The stronger yen and won dragged down shares of Japanese and South Korean exporters. The yen strengthened to as much as 88.24 per dollar this week from 90.65 at the close of Tokyo trading last week. The won added as much as 1.8 percent. That reduces the value of overseas sales when converted into the companies’ domestic currencies.
U.S. Economy
Toyota, Japan’s biggest automaker, sank 8.9 percent to 3,380 yen. Canon Inc., the world’s biggest maker of office equipment, fell 6.5 percent to 3,430 yen. All but two of the 33 industry groups in Japan’s Topix index declined this week. Hyundai Motor Co., South Korea’s largest carmaker, tumbled 11 percent to 102,500 won.
Stocks also declined after U.S. data released on Oct. 1 showed manufacturing and claims for unemployment benefits missed economists’ estimates. Last week, reports showed orders for goods made to last several years unexpected dropped in August, while sales of new homes last month rose less than estimated.
Mitsui O.S.K. Lines Ltd., Japan’s No. 2 shipping company, fell 6.2 percent to 517 yen after widening its loss forecast.
StarHub Ltd., Singapore’s biggest pay-television operator, slipped 7.4 percent to S$2. DBS Group Holdings Ltd. and Citigroup Inc. cut their investment ratings for the stock after the company lost its rights to broadcast sports channels.
Asia Economies May Escape From ‘Almost Unprecedented’ Disasters
Oct. 3 (Bloomberg) -- Asia-Pacific countries may escape major economic damage from an “almost unprecedented” series of natural disasters that struck the region in the past week.
“There will be minimal economic impact because the regions affected are not major sources of growth,” said Song Seng-Wun, an economist at CIMB-GK Securities Pte in Singapore. “For now, this is a human rather than economic story. In fact, there could be a mild boost from reconstruction works.”
Typhoons in the Philippines, Vietnam and Cambodia, an earthquake in Indonesia and a tsunami in the South Pacific highlighted the region’s position as the world’s “disaster hot spot,” according to the United Nations. Asia is leading the global economy from its deepest recession since the 1930s after policy makers slashed interest rates and governments announced more than $950 billion of stimulus measures.
“I don’t think these idiosyncratic shocks will throw the Asian recovery story off course,” said Wai Ho Leong, Barclays Capital’s senior regional economist in Singapore. “We have seen the experience of Sichuan and more recently in Taiwan. Over an extended time period, there was no discernible impact on gross domestic product on a net basis.”
At least 1,100 people were killed by a 7.6-magnitude earthquake that struck off Indonesia’s Sumatra island on Sept. 30, according to the UN. The toll will probably rise as rescuers reach damaged areas, John Holmes, the agency’s humanitarian chief, said Oct. 1.
‘Disaster Hot Spot’
Tropical Storm Ketsana devastated Manila and other parts of the Philippine island of Luzon on Sept. 26, leaving 293 people dead and as many as 676,235 in evacuation centers. In the South Pacific, a recovery operation is under way after a tsunami killed more than 150 in the Samoan islands.
“It is almost unprecedented for any region to experience so many disasters over such a short period of time,” UN Under- Secretary-General Noeleen Heyzer said in a statement. “The disasters of the past week remind us that Asia-Pacific is the world’s disaster hot spot.”
China’s southwest Sichuan province is spending more than 3 trillion yuan ($440 billion) to rebuild houses, highways and railways destroyed by a 7.9-magnitude earthquake that struck in May 2008, according to Vice Provincial Governor Wei Hong. The World Bank estimated direct economic losses from the temblor that killed at least 87,000 people at 844 billion yuan.
Reconstruction spending after Taiwan’s deadliest typhoon in 50 years in early August may improve the island’s economic performance, the statistics bureau said Aug. 20. Planned outlays on typhoon-hit areas would result in the economy contracting 3.75 percent this year instead of 4.04 percent, the agency said.
Reconstruction Projects
“Rebuilding has an accelerating effect on GDP,” said Barclays’ Leong. “Typically, it more than makes up for such shocks. The overall impact on the economy might even be positive, if we factor in rebuilding programs.”
Indonesia has 100 billion rupiah ($10.4 million) ready to be spent on relief efforts after this week’s quake on Sumatra and has set aside an additional 150 billion rupiah as backup funds, Finance Minister Sri Mulyani Indrawati said Oct. 1.
“The quake has implications for the economy due to the damage on infrastructure. West Sumatra is a region with an important economic role,” Sri Mulyani said. “The government is serious in dealing with this infrastructure problem.”
Indonesia’s economy may not suffer too much from the temblor as the three western provinces affected -- West Sumatra, Bengkulu and Jambi -- contribute less than 3 percent of the country’s GDP, said Helmi Arman, an economist at PT Bank Danamon Indonesia in Jakarta.
Philippine Evacuations
“From a national perspective, the disaster in Sumatra will not significantly impact Indonesia’s economy,” Arman said.
The Philippines yesterday started evacuations as a second typhoon headed for Luzon. The government has declared a “state of calamity” for the Manila metropolitan region and other parts of Luzon island as well as Mindoro island to the south.
“It is too early to assess the impact on the Philippines economy,” said Dennis Botman, the International Monetary Fund’s country representative in the Philippines. “But early indications suggest that the economic costs pale in comparison to the human suffering caused by this calamity.”
The damage caused by Tropical Storm Ketsana may reduce Philippine economic growth by at least 0.043 percentage points, Economic Planning Secretary Augusto Santos said Sept. 29. Growth may slow to a range of 0.7 percent to 1.7 percent compared with a target of 0.8 percent to 1.8 percent, he said.
‘Miniscule’ Effect
The “surprisingly miniscule” impact from the storm was “because the calamity spared much of the country’s agricultural and manufacturing heartlands,” said Anton Periquet, an analyst at Deutsche Bank AG in Manila. “Banks, brokers, call centers, shops and even the entertainment industry -- a large part of the metro Manila economy that was hit by the typhoon -- can function as long as the telephones work.”
The heaviest rains in Manila and surrounding provinces in more than four decades may still reduce the nation’s rice production in the October-December harvest by about 3 percent, the Department of Agriculture said Oct. 1.
“The Philippines is no stranger to natural disaster,” said Deutsche’s Periquet. “The country has always bounced back.”
“There will be minimal economic impact because the regions affected are not major sources of growth,” said Song Seng-Wun, an economist at CIMB-GK Securities Pte in Singapore. “For now, this is a human rather than economic story. In fact, there could be a mild boost from reconstruction works.”
Typhoons in the Philippines, Vietnam and Cambodia, an earthquake in Indonesia and a tsunami in the South Pacific highlighted the region’s position as the world’s “disaster hot spot,” according to the United Nations. Asia is leading the global economy from its deepest recession since the 1930s after policy makers slashed interest rates and governments announced more than $950 billion of stimulus measures.
“I don’t think these idiosyncratic shocks will throw the Asian recovery story off course,” said Wai Ho Leong, Barclays Capital’s senior regional economist in Singapore. “We have seen the experience of Sichuan and more recently in Taiwan. Over an extended time period, there was no discernible impact on gross domestic product on a net basis.”
At least 1,100 people were killed by a 7.6-magnitude earthquake that struck off Indonesia’s Sumatra island on Sept. 30, according to the UN. The toll will probably rise as rescuers reach damaged areas, John Holmes, the agency’s humanitarian chief, said Oct. 1.
‘Disaster Hot Spot’
Tropical Storm Ketsana devastated Manila and other parts of the Philippine island of Luzon on Sept. 26, leaving 293 people dead and as many as 676,235 in evacuation centers. In the South Pacific, a recovery operation is under way after a tsunami killed more than 150 in the Samoan islands.
“It is almost unprecedented for any region to experience so many disasters over such a short period of time,” UN Under- Secretary-General Noeleen Heyzer said in a statement. “The disasters of the past week remind us that Asia-Pacific is the world’s disaster hot spot.”
China’s southwest Sichuan province is spending more than 3 trillion yuan ($440 billion) to rebuild houses, highways and railways destroyed by a 7.9-magnitude earthquake that struck in May 2008, according to Vice Provincial Governor Wei Hong. The World Bank estimated direct economic losses from the temblor that killed at least 87,000 people at 844 billion yuan.
Reconstruction spending after Taiwan’s deadliest typhoon in 50 years in early August may improve the island’s economic performance, the statistics bureau said Aug. 20. Planned outlays on typhoon-hit areas would result in the economy contracting 3.75 percent this year instead of 4.04 percent, the agency said.
Reconstruction Projects
“Rebuilding has an accelerating effect on GDP,” said Barclays’ Leong. “Typically, it more than makes up for such shocks. The overall impact on the economy might even be positive, if we factor in rebuilding programs.”
Indonesia has 100 billion rupiah ($10.4 million) ready to be spent on relief efforts after this week’s quake on Sumatra and has set aside an additional 150 billion rupiah as backup funds, Finance Minister Sri Mulyani Indrawati said Oct. 1.
“The quake has implications for the economy due to the damage on infrastructure. West Sumatra is a region with an important economic role,” Sri Mulyani said. “The government is serious in dealing with this infrastructure problem.”
Indonesia’s economy may not suffer too much from the temblor as the three western provinces affected -- West Sumatra, Bengkulu and Jambi -- contribute less than 3 percent of the country’s GDP, said Helmi Arman, an economist at PT Bank Danamon Indonesia in Jakarta.
Philippine Evacuations
“From a national perspective, the disaster in Sumatra will not significantly impact Indonesia’s economy,” Arman said.
The Philippines yesterday started evacuations as a second typhoon headed for Luzon. The government has declared a “state of calamity” for the Manila metropolitan region and other parts of Luzon island as well as Mindoro island to the south.
“It is too early to assess the impact on the Philippines economy,” said Dennis Botman, the International Monetary Fund’s country representative in the Philippines. “But early indications suggest that the economic costs pale in comparison to the human suffering caused by this calamity.”
The damage caused by Tropical Storm Ketsana may reduce Philippine economic growth by at least 0.043 percentage points, Economic Planning Secretary Augusto Santos said Sept. 29. Growth may slow to a range of 0.7 percent to 1.7 percent compared with a target of 0.8 percent to 1.8 percent, he said.
‘Miniscule’ Effect
The “surprisingly miniscule” impact from the storm was “because the calamity spared much of the country’s agricultural and manufacturing heartlands,” said Anton Periquet, an analyst at Deutsche Bank AG in Manila. “Banks, brokers, call centers, shops and even the entertainment industry -- a large part of the metro Manila economy that was hit by the typhoon -- can function as long as the telephones work.”
The heaviest rains in Manila and surrounding provinces in more than four decades may still reduce the nation’s rice production in the October-December harvest by about 3 percent, the Department of Agriculture said Oct. 1.
“The Philippines is no stranger to natural disaster,” said Deutsche’s Periquet. “The country has always bounced back.”
Tuesday, September 29, 2009
Bank of Japan Said to Consider Ending Debt-Purchase Programs
Sept. 30 (Bloomberg) -- The Bank of Japan may decide as soon as next month to let its emergency corporate-debt buying programs expire as businesses regain access to private funding, people with direct knowledge of the discussions said.
Officials are concerned that maintaining their purchases of corporate bonds and commercial paper beyond the scheduled end in December would distort capital markets, according to the people, who spoke on condition of anonymity because the deliberations are private.
The decision would echo steps by central banks around the world to pare back unprecedented measures to unfreeze credit as the financial industry stabilizes. At the same time, because Japan’s economic recovery is threatened by rising unemployment and deflation, policy makers are likely to keep the benchmark interest rate target near zero into next year, analysts said.
“There is no doubt that the central bank is heading toward unwinding the credit-easing steps,” said Eiji Hirano, who worked at the central bank for 33 years until 2006 and served as an executive director. “BOJ policy makers are now signaling their intention to end them and they seem to be having a sort of dialogue with markets to test their reaction,” said Hirano, who is now a Tokyo-based director at Toyota Financial Services Corp.
Deputy Governor Hirohide Yamaguchi said on Sept. 18 that the central bank needs to “be mindful that keeping the temporary measures for a long time may hurt an autonomous recovery of market functions and invite the distortion of the allocation of resources.” Earlier in the month, Miyako Suda, a Bank of Japan board member, said the need for the measures is “diminishing.”
Usage Wanes
The central bank found no lenders offering to sell it commercial paper on Sept. 18; as of the end of August, it had 100 billion yen ($1.1 billion) of the securities on its balance sheet, about 3 percent of the 3 trillion yen the bank allowed itself to hold. The Bank of Japan held 200 billion yen of corporate bonds, only one-fifth of the limit set by officials.
Borrowing costs have tumbled in the market for commercial paper, the short-term securities that companies typically use to pay for day-to-day items such as payrolls and rent. The yield on three-month commercial paper issued by top-rated companies was as low as 0.12 percent today -- lower than before Lehman Brothers Holdings Inc. collapsed in September 2008 -- from a high of 1.25 percent in October.
A rally in Japanese corporate bonds left them with their best back-to-back quarterly performance since 2001, index data compiled by Merrill Lynch & Co. show.
Bank-Loan Program
Policy makers may keep their third extraordinary credit program beyond December, while changing its size or the loan repayment period, one of the people familiar with the matter said. That measure offers banks unlimited loans backed by collateral, and has been tapped by lenders more than the corporate debt programs. The central bank had lent 7.3 trillion yen under the facility as of Aug. 31.
Bank of Japan board member Atsushi Mizuno said in August that the bank-loan program had helped keep yields on short-term securities low. Ending it prematurely “may increase the volatility of financial markets,” he said.
The strategy is to withdraw the facilities “in stages,” Hirano, the 59-year-old former central banker, said. Markets “still face fragility, but on the other hand the bank can’t allow speculation that the programs will stay in place for one or two more years,” added Hirano.
Central bankers around the world are examining when to withdraw stimulus efforts as the global economy emerges from its deepest recession since the 1930s.
Fed, ECB
The Federal Reserve this month said it would shrink its programs that auction loans to commercial banks and Treasuries to bond dealers, citing “continued improvements” in financial markets. The European Central Bank said Sept. 24 it will discontinue its longer-dated dollar liquidity operations because of “limited demand and the improved conditions” in markets.
Bank of Japan Governor Masaaki Shirakawa and his colleagues will get an update tomorrow on business sentiment and firms’ ability to raise cash, with the central bank’s Tankan survey for the third quarter. The median forecast of economists surveyed by Bloomberg News is for the report to show that pessimism among large manufacturers diminished for a second straight quarter.
The central bank will hold two meetings next month -- on Oct. 13-14 and Oct. 30. Officials will publish their twice- yearly forecasts for the economy and inflation at the second gathering.
‘Signs of Improvement’
The Bank of Japan raised its economic assessment in September for the fourth time in five months and said it saw “signs of improvement” in corporate financing. It dropped funding concerns from its list of risks for the economy.
After lowering the key rate to 0.1 percent in December, the Bank of Japan started buying commercial paper and corporate bonds from lenders and offering them unlimited loans backed by collateral to channel funds to companies. The policy board extended all three plans until Dec. 31 when it met in July.
Economists anticipate the bank will keep its main rate unchanged through the end of 2010 after Japan’s unemployment rate reached 5.7 percent in July, the highest level on record. Fourteen of the 16 analysts in a Bloomberg News survey this month anticipated a 0.1 percent rate target through next year.
Officials are concerned that maintaining their purchases of corporate bonds and commercial paper beyond the scheduled end in December would distort capital markets, according to the people, who spoke on condition of anonymity because the deliberations are private.
The decision would echo steps by central banks around the world to pare back unprecedented measures to unfreeze credit as the financial industry stabilizes. At the same time, because Japan’s economic recovery is threatened by rising unemployment and deflation, policy makers are likely to keep the benchmark interest rate target near zero into next year, analysts said.
“There is no doubt that the central bank is heading toward unwinding the credit-easing steps,” said Eiji Hirano, who worked at the central bank for 33 years until 2006 and served as an executive director. “BOJ policy makers are now signaling their intention to end them and they seem to be having a sort of dialogue with markets to test their reaction,” said Hirano, who is now a Tokyo-based director at Toyota Financial Services Corp.
Deputy Governor Hirohide Yamaguchi said on Sept. 18 that the central bank needs to “be mindful that keeping the temporary measures for a long time may hurt an autonomous recovery of market functions and invite the distortion of the allocation of resources.” Earlier in the month, Miyako Suda, a Bank of Japan board member, said the need for the measures is “diminishing.”
Usage Wanes
The central bank found no lenders offering to sell it commercial paper on Sept. 18; as of the end of August, it had 100 billion yen ($1.1 billion) of the securities on its balance sheet, about 3 percent of the 3 trillion yen the bank allowed itself to hold. The Bank of Japan held 200 billion yen of corporate bonds, only one-fifth of the limit set by officials.
Borrowing costs have tumbled in the market for commercial paper, the short-term securities that companies typically use to pay for day-to-day items such as payrolls and rent. The yield on three-month commercial paper issued by top-rated companies was as low as 0.12 percent today -- lower than before Lehman Brothers Holdings Inc. collapsed in September 2008 -- from a high of 1.25 percent in October.
A rally in Japanese corporate bonds left them with their best back-to-back quarterly performance since 2001, index data compiled by Merrill Lynch & Co. show.
Bank-Loan Program
Policy makers may keep their third extraordinary credit program beyond December, while changing its size or the loan repayment period, one of the people familiar with the matter said. That measure offers banks unlimited loans backed by collateral, and has been tapped by lenders more than the corporate debt programs. The central bank had lent 7.3 trillion yen under the facility as of Aug. 31.
Bank of Japan board member Atsushi Mizuno said in August that the bank-loan program had helped keep yields on short-term securities low. Ending it prematurely “may increase the volatility of financial markets,” he said.
The strategy is to withdraw the facilities “in stages,” Hirano, the 59-year-old former central banker, said. Markets “still face fragility, but on the other hand the bank can’t allow speculation that the programs will stay in place for one or two more years,” added Hirano.
Central bankers around the world are examining when to withdraw stimulus efforts as the global economy emerges from its deepest recession since the 1930s.
Fed, ECB
The Federal Reserve this month said it would shrink its programs that auction loans to commercial banks and Treasuries to bond dealers, citing “continued improvements” in financial markets. The European Central Bank said Sept. 24 it will discontinue its longer-dated dollar liquidity operations because of “limited demand and the improved conditions” in markets.
Bank of Japan Governor Masaaki Shirakawa and his colleagues will get an update tomorrow on business sentiment and firms’ ability to raise cash, with the central bank’s Tankan survey for the third quarter. The median forecast of economists surveyed by Bloomberg News is for the report to show that pessimism among large manufacturers diminished for a second straight quarter.
The central bank will hold two meetings next month -- on Oct. 13-14 and Oct. 30. Officials will publish their twice- yearly forecasts for the economy and inflation at the second gathering.
‘Signs of Improvement’
The Bank of Japan raised its economic assessment in September for the fourth time in five months and said it saw “signs of improvement” in corporate financing. It dropped funding concerns from its list of risks for the economy.
After lowering the key rate to 0.1 percent in December, the Bank of Japan started buying commercial paper and corporate bonds from lenders and offering them unlimited loans backed by collateral to channel funds to companies. The policy board extended all three plans until Dec. 31 when it met in July.
Economists anticipate the bank will keep its main rate unchanged through the end of 2010 after Japan’s unemployment rate reached 5.7 percent in July, the highest level on record. Fourteen of the 16 analysts in a Bloomberg News survey this month anticipated a 0.1 percent rate target through next year.
Treasury 10-Year Yield May Decline to 3%: Technical Analysis
Sept. 30 (Bloomberg) -- Treasury benchmark 10-year yields are poised to fall to a four-month low of 3 percent, National Australia Bank Ltd. said, citing trading patterns.
Ten-year rates declined below 3.3 percent this week, which National Australia identified as a “barrier” after they reached that level in July and again this month, failing to push lower each time, based on closing levels.
“Yields are starting to slide,” Gordon Manning, a technical analyst for the Sydney-based bank, the nation’s largest lender, wrote in a report yesterday. “U.S. 10 years are about to fall below the 3.30 percent support level which should bring about immediate downside to the 3.00 area.”
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said he’s been buying longer maturity Treasuries as protection against deflation. Demand for the relative safety of government debt helped Treasuries return 2.1 percent since the end of June, heading for their first quarterly gain this year, based on Merrill Lynch & Co. data.
The yield on the 10-year note rose one basis point to 3.31 percent as of 11 a.m. in Tokyo, according to BGCantor Market Data. The 3.625 percent security maturing in August 2019 fell 3/32, or 94 cents per $1,000 face amount, to 102 21/32. The yield was as low as 3.27 percent yesterday.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
Curve Flattening
The difference between two- and 10-year Treasury yields narrowed to 2.30 percentage points from this year’s high of 2.82 points on June 5. It was 2.27 percentage points yesterday, the least since May 14. The so-called flattening of the yield curve indicates investors are cutting bets that inflation will pick up.
“There has been significant flattening on the long end of the curve,” Gross said yesterday in an interview from Newport Beach, California, with Bloomberg Radio. “This reflects the re- emergence of deflationary fears. The U.S. is at the center of de-levering as opposed to accelerating growth.”
Deflation is a general drop in prices, which can occur as part of an economic slowdown, making bonds more attractive because it enhances the value of their fixed payments.
Ten-year rates declined below 3.3 percent this week, which National Australia identified as a “barrier” after they reached that level in July and again this month, failing to push lower each time, based on closing levels.
“Yields are starting to slide,” Gordon Manning, a technical analyst for the Sydney-based bank, the nation’s largest lender, wrote in a report yesterday. “U.S. 10 years are about to fall below the 3.30 percent support level which should bring about immediate downside to the 3.00 area.”
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said he’s been buying longer maturity Treasuries as protection against deflation. Demand for the relative safety of government debt helped Treasuries return 2.1 percent since the end of June, heading for their first quarterly gain this year, based on Merrill Lynch & Co. data.
The yield on the 10-year note rose one basis point to 3.31 percent as of 11 a.m. in Tokyo, according to BGCantor Market Data. The 3.625 percent security maturing in August 2019 fell 3/32, or 94 cents per $1,000 face amount, to 102 21/32. The yield was as low as 3.27 percent yesterday.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
Curve Flattening
The difference between two- and 10-year Treasury yields narrowed to 2.30 percentage points from this year’s high of 2.82 points on June 5. It was 2.27 percentage points yesterday, the least since May 14. The so-called flattening of the yield curve indicates investors are cutting bets that inflation will pick up.
“There has been significant flattening on the long end of the curve,” Gross said yesterday in an interview from Newport Beach, California, with Bloomberg Radio. “This reflects the re- emergence of deflationary fears. The U.S. is at the center of de-levering as opposed to accelerating growth.”
Deflation is a general drop in prices, which can occur as part of an economic slowdown, making bonds more attractive because it enhances the value of their fixed payments.
Monday, September 28, 2009
Australia CEOs More Likely to Get Bonus Amid 2008 Global Crisis
Sept. 29 (Bloomberg) -- Australia’s top chief executive officers were more likely to receive a bonus in 2008, when the stock market dropped by a record as the global financial crisis hit, the Australian Council of Superannuation Investors said.
A study of the pay received by 70 heads of S&P/ASX 100 Index companies in 2008 found that 93 percent got bonuses, up from 88 percent of those surveyed the year before, the group said. The average bonus fell to A$1.95 million ($1.7 million) from a record high A$2.18 million in 2007. Average total remuneration was A$5.15 million.
“The fact that more than 90 percent of CEOs received a bonus in 2008 begs the question just how boards decide whether or not to pay bonuses,” said Ann Byrne, chief executive officer of the Australian Council of Superannuation Investors. “It appears easier for a CEO to get fired than to receive no bonus.”
President Barack Obama and his Group of 20 counterparts have promised to “raise standards together” to ensure banks restrain pay on concern excessive executive remuneration helped create the first global recession in more than 70 years. U.K Chancellor of the Exchequer Alistair Darling yesterday called for an end to “automatic bank bonuses” after the collapse of the U.S. subprime market prompted banks to record $1.6 trillion in losses and writedowns.
The broader S&P/ASX 200 Index tumbled 41 percent in 2008, the biggest annual decline since the benchmark was set up in 1992. The S&P/ASX 100 slid 40 percent last year.
Former Macquarie Group Ltd. Chief Executive Officer Allan Moss received the biggest cash bonus in 2008 according to the ACSI’s study. Moss’s A$27.2 million bonus was more than three times larger than the second biggest bonus of A$7.6 million, received by Leighton Holdings Ltd.’s Wal King.
Australian Prime Minister Kevin Rudd said world leaders at the G-20 meeting he attended had agreed on a new approach to managing the world economy. The summit that ended on Sept. 25 represented a new chapter in the response to the global recession and “an unprecedented new experiment in global macroeconomic coordination,” Rudd said after the meeting in Pittsburgh.
A study of the pay received by 70 heads of S&P/ASX 100 Index companies in 2008 found that 93 percent got bonuses, up from 88 percent of those surveyed the year before, the group said. The average bonus fell to A$1.95 million ($1.7 million) from a record high A$2.18 million in 2007. Average total remuneration was A$5.15 million.
“The fact that more than 90 percent of CEOs received a bonus in 2008 begs the question just how boards decide whether or not to pay bonuses,” said Ann Byrne, chief executive officer of the Australian Council of Superannuation Investors. “It appears easier for a CEO to get fired than to receive no bonus.”
President Barack Obama and his Group of 20 counterparts have promised to “raise standards together” to ensure banks restrain pay on concern excessive executive remuneration helped create the first global recession in more than 70 years. U.K Chancellor of the Exchequer Alistair Darling yesterday called for an end to “automatic bank bonuses” after the collapse of the U.S. subprime market prompted banks to record $1.6 trillion in losses and writedowns.
The broader S&P/ASX 200 Index tumbled 41 percent in 2008, the biggest annual decline since the benchmark was set up in 1992. The S&P/ASX 100 slid 40 percent last year.
Former Macquarie Group Ltd. Chief Executive Officer Allan Moss received the biggest cash bonus in 2008 according to the ACSI’s study. Moss’s A$27.2 million bonus was more than three times larger than the second biggest bonus of A$7.6 million, received by Leighton Holdings Ltd.’s Wal King.
Australian Prime Minister Kevin Rudd said world leaders at the G-20 meeting he attended had agreed on a new approach to managing the world economy. The summit that ended on Sept. 25 represented a new chapter in the response to the global recession and “an unprecedented new experiment in global macroeconomic coordination,” Rudd said after the meeting in Pittsburgh.
Australia Has A$27.1 Billion 2008-09 Budget Deficit
Sept. 29 (Bloomberg) -- Australia’s budget deficit for the year ending June 30, 2009, was A$27.1 billion ($23.7 billion) Treasurer Wayne Swan said. This compares with a A$32.1 billion forecast he made in May.
“This stronger-than-expected outcome is the result of a combination of various one-off factors and the effects of the government’s economic stimulus,” Swan said today in Canberra.
Interest rates at a half-century low, government spending on roads and schools, plus handouts to consumers helped the economy expand 1 percent in the first half of this year, boosting earnings at retailers such as Woolworth’s Ltd. Australia’s net debt was A$16.1 billion, which was A$11.5 billion less than forecast in May and equivalent to 1.3 percent gross domestic product.
“Our fiscal situation here is in a lot better shape than in most other Western economies,” said Sally Auld, an interest- rate strategist at JPMorgan Securities Ltd. in Sydney. “Fundamentally, it’s a good thing.”
Australia’s debt level contrasts with major advanced economies that reported debt equal to 59 percent of GDP in 2008, Swan said.
The Australian dollar traded at 87.25 U.S. cents at 11:17 a.m. in Sydney from 87.26 cents just before the figures were published. The two-year government bond yield was unchanged at 4.30 percent.
Stimulus Defended
The government has this month been forced to defend the size and timing of it’s A$42 billion stimulus package against claims by the opposition Liberal party that it’s too large.
“The truth is that stimulus has kept customers coming through the doors of businesses,” Swan told reporters in Canberra. “That’s meant more Australians in jobs and less collecting unemployment benefits that would otherwise have been the case.”
Total tax receipts were A$3.3 billion higher than estimated in May, helped by extra revenue from company earnings, Swan said.
Today’s report “doesn’t substantially diminish the fiscal challenge facing the country, or alter in any way the government’s determination to stick to the fiscal strategy,” he said.
The deficit for the year ending June 30, 2010, will be A$57.6 billion and a further A$129.8 billion of deficits are projected for the three fiscal years after that, Swan said in May. Those figures were not updated today
“This stronger-than-expected outcome is the result of a combination of various one-off factors and the effects of the government’s economic stimulus,” Swan said today in Canberra.
Interest rates at a half-century low, government spending on roads and schools, plus handouts to consumers helped the economy expand 1 percent in the first half of this year, boosting earnings at retailers such as Woolworth’s Ltd. Australia’s net debt was A$16.1 billion, which was A$11.5 billion less than forecast in May and equivalent to 1.3 percent gross domestic product.
“Our fiscal situation here is in a lot better shape than in most other Western economies,” said Sally Auld, an interest- rate strategist at JPMorgan Securities Ltd. in Sydney. “Fundamentally, it’s a good thing.”
Australia’s debt level contrasts with major advanced economies that reported debt equal to 59 percent of GDP in 2008, Swan said.
The Australian dollar traded at 87.25 U.S. cents at 11:17 a.m. in Sydney from 87.26 cents just before the figures were published. The two-year government bond yield was unchanged at 4.30 percent.
Stimulus Defended
The government has this month been forced to defend the size and timing of it’s A$42 billion stimulus package against claims by the opposition Liberal party that it’s too large.
“The truth is that stimulus has kept customers coming through the doors of businesses,” Swan told reporters in Canberra. “That’s meant more Australians in jobs and less collecting unemployment benefits that would otherwise have been the case.”
Total tax receipts were A$3.3 billion higher than estimated in May, helped by extra revenue from company earnings, Swan said.
Today’s report “doesn’t substantially diminish the fiscal challenge facing the country, or alter in any way the government’s determination to stick to the fiscal strategy,” he said.
The deficit for the year ending June 30, 2010, will be A$57.6 billion and a further A$129.8 billion of deficits are projected for the three fiscal years after that, Swan said in May. Those figures were not updated today
Air India Flights Disrupted; Government Steps In, Times Says
Sept. 29 (Bloomberg) -- India’s civil aviation ministry last night stepped in to avert a possible suspension of flights by Air India after the national carrier failed to end a strike called by its pilots, the Economic Times reported without saying where it got the information.
Air India yesterday decided not to accept fresh booking for the next 15 days, the paper quoted an official it didn’t identify as saying.
The Mumbai-based company is facing a strike over incentive- linked pay. Air India yesterday said that it planned to save as much as 13 billion rupees ($271 million) in the six months to March, including 4 billion rupees as it is “hopeful of rationalizing its manpower costs.”
Air India yesterday decided not to accept fresh booking for the next 15 days, the paper quoted an official it didn’t identify as saying.
The Mumbai-based company is facing a strike over incentive- linked pay. Air India yesterday said that it planned to save as much as 13 billion rupees ($271 million) in the six months to March, including 4 billion rupees as it is “hopeful of rationalizing its manpower costs.”
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