Afghan President Hamid Karzai, under pressure from the U.S. to reduce official corruption, formed a new cabinet, keeping key ministers favored by Western governments and appointing two former anti-Soviet guerrilla commanders whom Afghan policy experts describe as corrupt.
Karzai submitted names of his cabinet nominees to the lower house of parliament today, more than a month after being sworn in for a second term following an election in August marred by allegations of fraud. The cabinet will be scrutinized as an early test of Karzai’s commitment to attack official corruption, as President Barack Obama has demanded that he do.
While officials gave slightly different lists of the new cabinet, both versions showed Karzai avoiding sweeping changes. He retained the finance, defense and interior ministers and has not yet selected a foreign minister, according to a list given to reporters by officials of the lower house of parliament.
“This cabinet brings no good message to the Afghan people” and is unlikely to bolster Karzai’s waning public support, said Haroun Mir, director of the Afghanistan Center for Research and Policy Studies in Kabul, the capital. It is dominated by “former and current ministers and does not offer solutions” to the inefficacy and corruption of the government in its previous five-year term, he said.
Mining Sector
The new cabinet excludes Mines Minister Ibrahim Adel, the top official most prominently accused of graft. While mining is one of few sectors of the Afghan economy to draw international interest in investment, Afghanistan is second only to Somalia as the most corrupt of 180 countries, according to the Corruption Perceptions Index published last month by the research and lobby group Transparency International.
The Washington Post and the Associated Press last month cited unidentified U.S. officials as accusing Adel of taking a bribe of at least $20 million from the Metallurgical Corp. of China for awarding it a contract to develop one of the world’s largest copper mines. Adel denies the allegation and Afghanistan’s attorney general said yesterday the government has no evidence for charges against him.
A list of 27 cabinet members, distributed to reporters by the lower house of parliament, included two ex-commanders from the 1980s guerrilla war against Soviet occupation who are criticized by Afghan-affairs specialists for alleged corruption and autocratic rule. A 23-name list, recited to reporters by Karzai’s parliamentary affairs minister, omitted the most controversial such ex-commander, Gul Agha Sherzai.
Fiefdom
Sherzai built a fiefdom in the southern city of Kandahar after being hired by U.S. forces to help oust the Taliban from there in 2001. His subsequent rule was unpopular, seen as “corrupt and inefficient,” according to a 2005 report by the Washington-based Center for Strategic and International Studies.
Sherzai and other ex-commanders are now regional power brokers who have pressed the president for government posts in exchange for supporting him, Mir said. Obama this month threatened to cut U.S. aid to parts of the Afghan government that fail to root out corrupt officials, saying graft undermines the U.S.-led fight against the Taliban and al-Qaeda.
Karzai and his attorney general, Mohammad Ishaq Aloko, have vowed to prosecute top officials for graft, and Aloko said yesterday those to be charged include two members of the outgoing cabinet.
Prosecutions of as many as 18 current or former ministers or provincial governors will begin “in the near future,” Aloko said in a telephone interview.
As U.S. pressure on corruption has increased in the past few months, both Karzai and his attorney general have promised prosecutions of dishonest officials. The police and court systems that will have to implement any crackdown are weak, said Lorenzo Delesgues, director of Integrity Watch Afghanistan, a Kabul-based non-profit group that researches corruption.
Saturday, December 19, 2009
Democrats Clinch Deal for Deciding Vote on Health Bill
WASHINGTON — Senate Democrats said Saturday that they had clinched an agreement on a far-reaching overhaul of the nation’s health care system and forged ahead with efforts to approve the legislation by Christmas over Republican opposition.
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Sen. Ben Nelson, right, agreed after hours of negotiation Friday to back the Senate Democrats’ legislation, making him the pivotal 60th vote.
As the Senate convened in a blizzard, Democratic leaders hailed a breakthrough that came when Senator Ben Nelson, Democrat of Nebraska, agreed to back the bill after 13 hours of negotiations on Friday, making him the pivotal 60th vote for a measure that President Obama has called his top domestic priority.
“Change is never easy, but change is what’s necessary in America,” Mr. Nelson said at a morning news conference. “And that’s why I intend to vote,” he said, “for health care reform.”
Mr. Obama, appearing on television from the White House, said: “Today is a major step forward for the American people. After nearly a century-long struggle, we are on the cusp of making health care reform a reality in the United States of America.”
The legislation, the most significant overhaul of the nation’s health care system in more than a generation, seeks to extend health benefits to more than 30 million uninsured Americans.
The blinding snow outside the Capitol added to what had already been a chaotic few weeks for the Senate, which has met every day since Nov. 30 and was working through its third consecutive weekend. The sergeant-at-arms had four-wheel-drive vehicles at the ready to bring lawmakers in for votes. And while senators wore the jackets and ties required on the Senate floor, dress shoes gave way to boots.
Mr. Nelson committed his vote after winning tighter restrictions on insurance coverage for abortions, as well as increased federal health care aid for his state.
With Senate leaders increasingly confident that they would pass the bill, Mr. Nelson pointedly warned that he would oppose the final version if negotiations with the House, which approved its bill last month, result in changes that he does not like.
But House liberals are expected to resist some concessions made in the Senate. To secure the votes of centrist holdouts, Senate leaders dropped a proposed government-run health insurance plan, or public option, and an alternate plan to let some people ages 55 to 65 buy coverage through Medicare, both favored by liberals.
Because the Democrats nominally control 60 seats in the Senate — the precise number needed to overcome a Republican filibuster — every senator in the Democratic caucus effectively has veto power over the bill. No Republican is willing to support it.
“The lines are drawn,” said Senator Richard M. Burr, Republican of North Carolina. “He has to get 60 votes. If he doesn’t get 60 votes, the American people win. If he does get them, America’s payback will come in the form of the 2010 elections.”
Not all Democrats have publicly said they will vote for the bill, but Senate leaders and senior White House officials believe they have agreement.
“All Senate Democrats stand shoulder to shoulder with President Obama and the American people, who know that inaction is not an option,” the majority leader, Senator Harry Reid of Nevada, said at a news conference.
Faced with Republican resistance that many Democrats saw as driven more by politics than policy disagreements, Senate Democrats in recent days gained new determination to bridge differences among themselves and prevail over the opposition.
Lawmakers who attended a private meeting between Mr. Obama and Senate Democrats at the White House on Tuesday pointed to remarks there by Senator Evan Bayh, Democrat of Indiana, as providing some new inspiration.
Mr. Bayh said that the health care measure was the kind of public policy he had come to Washington to work on, according to officials who attended the session, and that he did not want to see the satisfied looks on the faces of Republican leaders if they succeeded in blocking the measure.
The measure would extend health benefits by expanding Medicaid and providing subsidies to help moderate-income people buy private insurance. It would require nearly all Americans to obtain insurance or pay financial penalties for failing to do so.
By redrawing the health care sector, the legislation stands to reshape roughly one-sixth of the American economy.
The nonpartisan Congressional Budget Office said the legislation would cost $871 billion over 10 years, with the expense more than offset by revenues from new taxes and fees and by reductions in government spending, particularly on Medicare.
The budget office said the bill would reduce future deficits by $132 billion over that period.
Republicans have accused Democrats of using accounting tricks to hide the true cost of the measure, which they predicted would be huge, particularly if Congress did not follow through with the Medicare cuts.
In place of the public option, the Senate bill would create at least two national insurance plans modeled after those offered to federal workers, including members of Congress. The bill includes a new government-run long-term-care insurance program. And it imposes tight new regulations on the health insurance industry, barring insurers from denying coverage based on pre-existing medical conditions and limiting how much extra they can charge based on age.
Skip to next paragraph
Prescriptions Blog
A blog from The New York Times that tracks the health care debate as it unfolds.
* More Health Care Overhaul News
conversations
Health Care Conversations
Share your thoughts about the health care debate.
Top Discussions: The Public Option | Medicare and the Elderly | The Senate Bill
Living Story
Health Care Reform
Recent developments on the struggle over health care with background, analysis, timelines and earlier events from NYTimes.com and Google.
Related
Congressional Budget Office Score for the Health Bill
Enlarge This Image
Brendan Smialowski for The New York Times
Sen. Ben Nelson, right, agreed after hours of negotiation Friday to back the Senate Democrats’ legislation, making him the pivotal 60th vote.
As the Senate convened in a blizzard, Democratic leaders hailed a breakthrough that came when Senator Ben Nelson, Democrat of Nebraska, agreed to back the bill after 13 hours of negotiations on Friday, making him the pivotal 60th vote for a measure that President Obama has called his top domestic priority.
“Change is never easy, but change is what’s necessary in America,” Mr. Nelson said at a morning news conference. “And that’s why I intend to vote,” he said, “for health care reform.”
Mr. Obama, appearing on television from the White House, said: “Today is a major step forward for the American people. After nearly a century-long struggle, we are on the cusp of making health care reform a reality in the United States of America.”
The legislation, the most significant overhaul of the nation’s health care system in more than a generation, seeks to extend health benefits to more than 30 million uninsured Americans.
The blinding snow outside the Capitol added to what had already been a chaotic few weeks for the Senate, which has met every day since Nov. 30 and was working through its third consecutive weekend. The sergeant-at-arms had four-wheel-drive vehicles at the ready to bring lawmakers in for votes. And while senators wore the jackets and ties required on the Senate floor, dress shoes gave way to boots.
Mr. Nelson committed his vote after winning tighter restrictions on insurance coverage for abortions, as well as increased federal health care aid for his state.
With Senate leaders increasingly confident that they would pass the bill, Mr. Nelson pointedly warned that he would oppose the final version if negotiations with the House, which approved its bill last month, result in changes that he does not like.
But House liberals are expected to resist some concessions made in the Senate. To secure the votes of centrist holdouts, Senate leaders dropped a proposed government-run health insurance plan, or public option, and an alternate plan to let some people ages 55 to 65 buy coverage through Medicare, both favored by liberals.
Because the Democrats nominally control 60 seats in the Senate — the precise number needed to overcome a Republican filibuster — every senator in the Democratic caucus effectively has veto power over the bill. No Republican is willing to support it.
“The lines are drawn,” said Senator Richard M. Burr, Republican of North Carolina. “He has to get 60 votes. If he doesn’t get 60 votes, the American people win. If he does get them, America’s payback will come in the form of the 2010 elections.”
Not all Democrats have publicly said they will vote for the bill, but Senate leaders and senior White House officials believe they have agreement.
“All Senate Democrats stand shoulder to shoulder with President Obama and the American people, who know that inaction is not an option,” the majority leader, Senator Harry Reid of Nevada, said at a news conference.
Faced with Republican resistance that many Democrats saw as driven more by politics than policy disagreements, Senate Democrats in recent days gained new determination to bridge differences among themselves and prevail over the opposition.
Lawmakers who attended a private meeting between Mr. Obama and Senate Democrats at the White House on Tuesday pointed to remarks there by Senator Evan Bayh, Democrat of Indiana, as providing some new inspiration.
Mr. Bayh said that the health care measure was the kind of public policy he had come to Washington to work on, according to officials who attended the session, and that he did not want to see the satisfied looks on the faces of Republican leaders if they succeeded in blocking the measure.
The measure would extend health benefits by expanding Medicaid and providing subsidies to help moderate-income people buy private insurance. It would require nearly all Americans to obtain insurance or pay financial penalties for failing to do so.
By redrawing the health care sector, the legislation stands to reshape roughly one-sixth of the American economy.
The nonpartisan Congressional Budget Office said the legislation would cost $871 billion over 10 years, with the expense more than offset by revenues from new taxes and fees and by reductions in government spending, particularly on Medicare.
The budget office said the bill would reduce future deficits by $132 billion over that period.
Republicans have accused Democrats of using accounting tricks to hide the true cost of the measure, which they predicted would be huge, particularly if Congress did not follow through with the Medicare cuts.
In place of the public option, the Senate bill would create at least two national insurance plans modeled after those offered to federal workers, including members of Congress. The bill includes a new government-run long-term-care insurance program. And it imposes tight new regulations on the health insurance industry, barring insurers from denying coverage based on pre-existing medical conditions and limiting how much extra they can charge based on age.
NYSE Trading Surges to Record on Expiration, S&P 500 Changes
New York Stock Exchange trading surged to a record 3.15 billion shares as derivatives expiration and changes to the Standard & Poor’s 500 Index lifted volume to more than double this year’s average.
Yesterday was the last day of trading for December futures and options on U.S. indexes and stocks. The expiration, a quarterly event known as “quadruple witching,” boosts volume because investors and dealers must buy and sell stocks and derivatives to move positions into future months and make corresponding trades to hedge, or cancel out, their risk of loss. Visa Inc. was among five companies that joined the S&P 500 yesterday, forcing funds that track the index to buy shares.
U.S. trading has slowed as the S&P 500 rebounded from a 12- year low in March, with average monthly volume falling 36 percent. Fewer than 7.87 billion shares changed hands each day on U.S. exchanges during November, the lowest month average since August 2008, Bloomberg data show. Analysts including Mary Ann Bartels at Bank of America Corp. say the slowdown in volume was a bearish sign following the S&P 500’s 63 percent surge.
“There’s been a lot of inactivity on the part of the mutual fund investor and that’s translated into low volume,” said David Goerz, who oversees $17.5 billion as chief investment officer at Highmark Capital Management in San Francisco. “What they’re waiting for is some evidence that the economy is recovering, and that evidence is clear at this point.”
Lehman’s Collapse
Trading at the NYSE, the world’s biggest stock exchange, beat the previous record of almost 3 billion shares on Sept. 19, 2008, a quadruple witching day at the end of the week when New York-based Lehman Brothers Holdings Inc. filed for the biggest- ever bankruptcy. NYSE volume this year has averaged 1.39 billion shares a day.
Visa, Mead Johnson Nutrition Co., Ross Stores Inc., Cliffs Natural Resources Inc. and SAIC Inc. joined the S&P 500 yesterday. MBIA Corp., Ciena Corp., Dynegy Inc., KB Home Inc. and Convergys Corp. were removed.
The S&P 500 changes require investors that mimic the index to trade 1.02 percent of the value of their portfolios, compared with 0.3 percent to 0.4 percent in a normal rebalancing, said Charles Behette, a director in portfolio trading at New York- based Investment Technology Group Inc.
The value of shares being added to the index exceeds the value of shares being removed by about $6 billion, Behette said. The discrepancy may prompt selling of companies whose index weights aren’t changing and limit gains in those whose weights are increasing, he said.
Futures are agreements to buy or sell a specific amount of a commodity or security at a specific price and time. Options give the right though not the obligation to buy or sell a security at a set price and date. Investors use options to guard against fluctuations in the price of securities they own, speculate on share-price moves or bet that volatility, or stock swings, will increase or decrease.
Yesterday was the last day of trading for December futures and options on U.S. indexes and stocks. The expiration, a quarterly event known as “quadruple witching,” boosts volume because investors and dealers must buy and sell stocks and derivatives to move positions into future months and make corresponding trades to hedge, or cancel out, their risk of loss. Visa Inc. was among five companies that joined the S&P 500 yesterday, forcing funds that track the index to buy shares.
U.S. trading has slowed as the S&P 500 rebounded from a 12- year low in March, with average monthly volume falling 36 percent. Fewer than 7.87 billion shares changed hands each day on U.S. exchanges during November, the lowest month average since August 2008, Bloomberg data show. Analysts including Mary Ann Bartels at Bank of America Corp. say the slowdown in volume was a bearish sign following the S&P 500’s 63 percent surge.
“There’s been a lot of inactivity on the part of the mutual fund investor and that’s translated into low volume,” said David Goerz, who oversees $17.5 billion as chief investment officer at Highmark Capital Management in San Francisco. “What they’re waiting for is some evidence that the economy is recovering, and that evidence is clear at this point.”
Lehman’s Collapse
Trading at the NYSE, the world’s biggest stock exchange, beat the previous record of almost 3 billion shares on Sept. 19, 2008, a quadruple witching day at the end of the week when New York-based Lehman Brothers Holdings Inc. filed for the biggest- ever bankruptcy. NYSE volume this year has averaged 1.39 billion shares a day.
Visa, Mead Johnson Nutrition Co., Ross Stores Inc., Cliffs Natural Resources Inc. and SAIC Inc. joined the S&P 500 yesterday. MBIA Corp., Ciena Corp., Dynegy Inc., KB Home Inc. and Convergys Corp. were removed.
The S&P 500 changes require investors that mimic the index to trade 1.02 percent of the value of their portfolios, compared with 0.3 percent to 0.4 percent in a normal rebalancing, said Charles Behette, a director in portfolio trading at New York- based Investment Technology Group Inc.
The value of shares being added to the index exceeds the value of shares being removed by about $6 billion, Behette said. The discrepancy may prompt selling of companies whose index weights aren’t changing and limit gains in those whose weights are increasing, he said.
Futures are agreements to buy or sell a specific amount of a commodity or security at a specific price and time. Options give the right though not the obligation to buy or sell a security at a set price and date. Investors use options to guard against fluctuations in the price of securities they own, speculate on share-price moves or bet that volatility, or stock swings, will increase or decrease.
US TV groups fight for India’s airtime
Time Warner said on Thursday that next year would be critical in the war for supremacy in India’s prime time pay television market, as the country becomes a battleground for the largest US media groups.
Time Warner, which formally announced a $126.5m deal to take over Hindi general entertainment channel NDTV Imagine, expects the deal to boost its India revenue by 40 per cent as it takes on the market leaders, Viacom’s joint venture, Colours, and News Corp’s Star.
EDITOR’S CHOICE
Time Warner buys Indian entertainment network - Dec-17
Hopes remain as magazine sector loses gloss - Dec-07
US media companies raise outlook - Nov-04
Time Inc prepares for further job cuts - Oct-23
Magazine publishers plan digital store - Oct-02
Big media push for new tracking system - Sep-10
“With the fight for the nights that we’ve seen for the past year or two, the kind of hegemony that Star used to enjoy in the past decade is long gone,” said Sameer Nair, chief executive officer of NDTV Imagine, which broadcasts reality TV shows and soaps. “It’s an open battle and I think 2010 is going to be quite a defining year for everyone.”
India’s foreign ownership regime in the broadcast media sector is liberal compared with rivals such as China, making it an ideal target for US broadcasters seeking to tap Asia’s growth.
The second-largest pay-TV market in the world by subscribers after China, India has become the most important country for News Corp’s Asian regional business. It is also the biggest revenue earner for Turner, the Time Warner division which operates channels such as Cartoon Network, Warner Brothers and Pogo in India as well as CNN under a franchise agreement. The India operations generate 25 per cent of Turner’s Asia-Pacific revenues, a figure that is expected to rise to 35 per cent once NDTV Imagine’s sales are incorporated.
But India’s television market, particularly the general entertainment genre, is highly competitive following the launch of a swathe of channels over the past two to three years.
Turner’s initial foray into Indian general entertainment with Real, a joint venture with local company Miditech, has failed to get off the ground in terms of ratings, leading the two companies to “reassess” their partnership.
The partners are in negotiations on Real’s future that are expected to be completed by the first half of next year, Steve Marcopoto, president, Turner Broadcasting System Asia-Pacific said on Thursday.
Under the deal with NDTV, Turner will invest $50m into NDTV Imagine, which will continue to be run by Mr Nair.
The channel is ranked about fifth by television ratings – behind the top three, Colours, Star and local channel Zee – and is losing about $10m-$15m a quarter, according to analyst estimates.
“The question is: if you’re not in the top three, are you anywhere?” said Vivek Couto, executive director at Media Partners Asia. “Yes you can hold the fourth and fifth spots, but can you make money?”
Time Warner, which formally announced a $126.5m deal to take over Hindi general entertainment channel NDTV Imagine, expects the deal to boost its India revenue by 40 per cent as it takes on the market leaders, Viacom’s joint venture, Colours, and News Corp’s Star.
EDITOR’S CHOICE
Time Warner buys Indian entertainment network - Dec-17
Hopes remain as magazine sector loses gloss - Dec-07
US media companies raise outlook - Nov-04
Time Inc prepares for further job cuts - Oct-23
Magazine publishers plan digital store - Oct-02
Big media push for new tracking system - Sep-10
“With the fight for the nights that we’ve seen for the past year or two, the kind of hegemony that Star used to enjoy in the past decade is long gone,” said Sameer Nair, chief executive officer of NDTV Imagine, which broadcasts reality TV shows and soaps. “It’s an open battle and I think 2010 is going to be quite a defining year for everyone.”
India’s foreign ownership regime in the broadcast media sector is liberal compared with rivals such as China, making it an ideal target for US broadcasters seeking to tap Asia’s growth.
The second-largest pay-TV market in the world by subscribers after China, India has become the most important country for News Corp’s Asian regional business. It is also the biggest revenue earner for Turner, the Time Warner division which operates channels such as Cartoon Network, Warner Brothers and Pogo in India as well as CNN under a franchise agreement. The India operations generate 25 per cent of Turner’s Asia-Pacific revenues, a figure that is expected to rise to 35 per cent once NDTV Imagine’s sales are incorporated.
But India’s television market, particularly the general entertainment genre, is highly competitive following the launch of a swathe of channels over the past two to three years.
Turner’s initial foray into Indian general entertainment with Real, a joint venture with local company Miditech, has failed to get off the ground in terms of ratings, leading the two companies to “reassess” their partnership.
The partners are in negotiations on Real’s future that are expected to be completed by the first half of next year, Steve Marcopoto, president, Turner Broadcasting System Asia-Pacific said on Thursday.
Under the deal with NDTV, Turner will invest $50m into NDTV Imagine, which will continue to be run by Mr Nair.
The channel is ranked about fifth by television ratings – behind the top three, Colours, Star and local channel Zee – and is losing about $10m-$15m a quarter, according to analyst estimates.
“The question is: if you’re not in the top three, are you anywhere?” said Vivek Couto, executive director at Media Partners Asia. “Yes you can hold the fourth and fifth spots, but can you make money?”
Friday, December 18, 2009
Asian Currencies Decline This Week, Led By Won, on Credit Risk
Dec. 19 (Bloomberg) -- Asian currencies fell this week, led by South Korea’s won and the Philippine peso, as concern about the creditworthiness of nations including Greece and Mexico prompted investors to shun emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index dropped for a second week after Standard & Poor’s cut Greece’s debt rating to BBB+ from A- and signaled it may lower the level further. The company also downgraded Mexico’s ranking one level to BBB. The peso declined for a second week as the government said it may raise its budget deficit estimate for next year.
“There’s a flight to safety and it weighs on the emerging currencies,” said David Cohen, director of Asian forecasting at Action Economics in Singapore. “But there’s a recognition that the Asian financial situation is less vulnerable than some of these European countries.”
The Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, declined 0.5 percent this week. The won fell 1 percent 1,176 per dollar, according to data compiled by Bloomberg. The peso slipped 1.1 percent to 46.618 and the Taiwan dollar dropped 0.3 percent to NT$32.278.
Emerging-market equity fund inflows slowed in the week to Dec. 16, with 2010 poised to be a more “testing year” amid waning stimulus measures worldwide, EPFR Global said Dec. 17. Net inflows were $571 million, down from $2.3 billion the previous week. Overseas investors bought $15 million more Korean shares than they sold this week, following net purchases of $645 million in the previous five trading days.
Foreigners Sell
“Flows into Korean equities slowed, which probably adds to a little more downside pressure on the Korean won,” said Mitul Kotecha, head of global foreign-exchange strategy at Calyon in Hong Kong. “We remain bullish on Asian currencies. Next year we’ll see inflows into Asian equities return, and the economic picture will continue to show improvement over other regions.”
Sales at South Korea’s three largest department-store chains rose 6.4 percent from a year earlier in November, a ninth straight gain, and Singapore’s non-oil domestic exports climbed for the first time in 19 month, according to government data released this week. Jobless rates declined in Hong Kong and the Philippines, whose central bank kept its benchmark interest rate at a record-low 4 percent.
Deficit Woes
The peso yesterday touched a two-week low of 46.765 per dollar as foreigners trimmed their holdings of the nation’s shares for a second day.
The Philippine budget deficit in the first 10 months of 2009 was 250 billion pesos ($5.4 billion), headed for an annual record. Finance Secretary Gary Teves said yesterday that the government’s 233.4 billion peso estimate for next year may be raised to close to 300 billion pesos because of weak revenue and increased public spending.
“The deficit still can’t be pinned down and that’s a negative,” said Marcelo Ayes, senior vice president at Rizal Commercial Banking Corp. in Manila.
Elsewhere, the Singapore dollar fell 0.9 percent in the week to S$1.4009 versus the greenback and the Indian rupee declined 0.5 percent to 46.7712. China’s yuan was little changed at 6.8280.
The Bloomberg-JPMorgan Asia Dollar Index dropped for a second week after Standard & Poor’s cut Greece’s debt rating to BBB+ from A- and signaled it may lower the level further. The company also downgraded Mexico’s ranking one level to BBB. The peso declined for a second week as the government said it may raise its budget deficit estimate for next year.
“There’s a flight to safety and it weighs on the emerging currencies,” said David Cohen, director of Asian forecasting at Action Economics in Singapore. “But there’s a recognition that the Asian financial situation is less vulnerable than some of these European countries.”
The Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, declined 0.5 percent this week. The won fell 1 percent 1,176 per dollar, according to data compiled by Bloomberg. The peso slipped 1.1 percent to 46.618 and the Taiwan dollar dropped 0.3 percent to NT$32.278.
Emerging-market equity fund inflows slowed in the week to Dec. 16, with 2010 poised to be a more “testing year” amid waning stimulus measures worldwide, EPFR Global said Dec. 17. Net inflows were $571 million, down from $2.3 billion the previous week. Overseas investors bought $15 million more Korean shares than they sold this week, following net purchases of $645 million in the previous five trading days.
Foreigners Sell
“Flows into Korean equities slowed, which probably adds to a little more downside pressure on the Korean won,” said Mitul Kotecha, head of global foreign-exchange strategy at Calyon in Hong Kong. “We remain bullish on Asian currencies. Next year we’ll see inflows into Asian equities return, and the economic picture will continue to show improvement over other regions.”
Sales at South Korea’s three largest department-store chains rose 6.4 percent from a year earlier in November, a ninth straight gain, and Singapore’s non-oil domestic exports climbed for the first time in 19 month, according to government data released this week. Jobless rates declined in Hong Kong and the Philippines, whose central bank kept its benchmark interest rate at a record-low 4 percent.
Deficit Woes
The peso yesterday touched a two-week low of 46.765 per dollar as foreigners trimmed their holdings of the nation’s shares for a second day.
The Philippine budget deficit in the first 10 months of 2009 was 250 billion pesos ($5.4 billion), headed for an annual record. Finance Secretary Gary Teves said yesterday that the government’s 233.4 billion peso estimate for next year may be raised to close to 300 billion pesos because of weak revenue and increased public spending.
“The deficit still can’t be pinned down and that’s a negative,” said Marcelo Ayes, senior vice president at Rizal Commercial Banking Corp. in Manila.
Elsewhere, the Singapore dollar fell 0.9 percent in the week to S$1.4009 versus the greenback and the Indian rupee declined 0.5 percent to 46.7712. China’s yuan was little changed at 6.8280.
China Resolves WTO Case by Ending Subsidies of ‘Famous Brands’
Dec. 19 (Bloomberg) -- China resolved a trade dispute with the U.S. by agreeing to end dozens of subsidies that promote its exports, the Obama administration said.
The agreement settles a year-old U.S. complaint at the World Trade Organization accusing China of violating global trade rules by providing cash grants, loans and research funding to makers of so-called famous brands products including apparel, agriculture goods and electronics.
“We have signed an agreement with China confirming full elimination of the numerous subsidies we identified as prohibited under WTO rules,” U.S. Trade Representative Ron Kirk said yesterday in an e-mailed statement.
The WTO case was filed by the Bush administration, which said it uncovered 70 different subsidies that are prohibited by global trade rules because they are aimed at boosting exports. That total rose to 90 counting provincial subsidies, the U.S. trade office said yesterday.
The Obama administration also has challenged China’s trade policies, imposing tariffs of 35 percent on tire imports from China in September and filing a WTO complaint against China’s use of export curbs on raw materials used in steel production and manufacturing.
U.S. trade officials have said the amount of subsidies for famous brands is difficult to calculate because China’s system isn’t transparent. Aid to textile and apparel firms alone totaled hundreds of millions of dollars, according to the National Council of Textile Organizations.
The U.S. was joined by Mexico and Guatemala in its WTO complaint, which said the subsidies were improperly used to promote exports.
Wang Baodong, a spokesman for the Chinese Embassy in Washington, said that China “has been standing for settling disputes with the U.S. on the basis of mutual respect and mutual accommodation of each other’s concerns, and by following international trade rules.”
The agreement settles a year-old U.S. complaint at the World Trade Organization accusing China of violating global trade rules by providing cash grants, loans and research funding to makers of so-called famous brands products including apparel, agriculture goods and electronics.
“We have signed an agreement with China confirming full elimination of the numerous subsidies we identified as prohibited under WTO rules,” U.S. Trade Representative Ron Kirk said yesterday in an e-mailed statement.
The WTO case was filed by the Bush administration, which said it uncovered 70 different subsidies that are prohibited by global trade rules because they are aimed at boosting exports. That total rose to 90 counting provincial subsidies, the U.S. trade office said yesterday.
The Obama administration also has challenged China’s trade policies, imposing tariffs of 35 percent on tire imports from China in September and filing a WTO complaint against China’s use of export curbs on raw materials used in steel production and manufacturing.
U.S. trade officials have said the amount of subsidies for famous brands is difficult to calculate because China’s system isn’t transparent. Aid to textile and apparel firms alone totaled hundreds of millions of dollars, according to the National Council of Textile Organizations.
The U.S. was joined by Mexico and Guatemala in its WTO complaint, which said the subsidies were improperly used to promote exports.
Wang Baodong, a spokesman for the Chinese Embassy in Washington, said that China “has been standing for settling disputes with the U.S. on the basis of mutual respect and mutual accommodation of each other’s concerns, and by following international trade rules.”
Thursday, December 17, 2009
Euro Declines to Three-Week Low Against Yen on Risk Aversion
Dec. 18 (Bloomberg) -- The euro fell to a three-week low against the yen as investors shunned riskier assets amid concern the region’s economic rebound will stall.
The yen rose for the first time in four days against the dollar as Asian stocks tumbled and Japanese exporters brought home earnings before the end of the year. The dollar headed for a third weekly advance against the euro before a report next week forecast to show German consumer confidence declined, adding to signs a recovery in the biggest economy of the euro- zone may be slow.
“Prospects for the euro-zone economy are growing murky, given sovereign debt woes and banking sector issues,” said Keiji Matsumoto, currency strategist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest banking group. “The euro may stretch its decline both against the dollar and the yen.”
The euro fell to 127.79 yen as of 9:44 a.m. in Tokyo from 129 yen yesterday in New York, after touching 127.54, the weakest since Nov. 27. The yen gained to 89.22 per dollar from 89.96. The euro was at $1.4343 from $1.4338.
Nuremberg-based GfK will say Dec. 22 its sentiment index, based on a survey of about 2,000 people, fell to 3.5 in January from 3.7 in the previous month, according to the median estimate of economists surveyed by Bloomberg.
Sovereign Concern
Standard & Poor’s this week cut Greece’s credit rating to BBB+ from A- and signaled it may lower the level further. Fitch Ratings downgraded Greece to BBB+ on Dec. 8, raising concern among investors that the worst global recession since World War II is still weighing on some economies.
S&P yesterday cut long-term credit ratings for Greek banks EFG Eurobank Ergasias and Alpha Bank AE by one level to BBB, and put those ratings on “creditwatch negative,” signaling S&P may reduce them further.
The Greek government, which came to power in October promising higher spending and wages, is trying to persuade investors it can cut its deficit from 12.7 percent of output to below the European Union’s 3 percent limit by 2013. Greece’s Prime Minister George Papandreou said yesterday he’s determined to turn around the country’s economy and that a default is “simply out of the question.”
Austria said on Dec. 14 that it was nationalizing Hypo Alpe-Adria Bank and injecting as much as 450 million euros ($649 million) into the lender.
Dollar Index
The yen and dollar rose as investors retreated from higher- yielding assets. Ten-year Treasuries jumped the most since October yesterday and the Standard & Poor’s 500 Index tumbled 1.2 percent. The MSCI Asia Pacific Index of regional shares dropped 0.2 percent.
The ICE futures exchange’s Dollar Index rose the most in two weeks yesterday, advancing as much as 1.2 percent to 77.94, the highest since Sept. 8. It was the biggest one-day gain since Dec. 4, when the Labor Department reported fewer-than-expected job losses.
The Dollar Index gained 13 percent during the six months beginning in September 2008 as investors bought dollars while seeking a refuge from the collapse of global financial markets. The dollar slid 17 percent from the beginning of March through Dec. 3 as investors dumped the U.S. currency in favor of higher- yielding assets while the Fed kept its target rate near zero.
In the past two weeks, the index rebounded 4 percent on signs of economic recovery, prompting traders to speculate that U.S. policy makers could raise rates sooner than expected.
The yen rose for the first time in four days against the dollar as Asian stocks tumbled and Japanese exporters brought home earnings before the end of the year. The dollar headed for a third weekly advance against the euro before a report next week forecast to show German consumer confidence declined, adding to signs a recovery in the biggest economy of the euro- zone may be slow.
“Prospects for the euro-zone economy are growing murky, given sovereign debt woes and banking sector issues,” said Keiji Matsumoto, currency strategist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest banking group. “The euro may stretch its decline both against the dollar and the yen.”
The euro fell to 127.79 yen as of 9:44 a.m. in Tokyo from 129 yen yesterday in New York, after touching 127.54, the weakest since Nov. 27. The yen gained to 89.22 per dollar from 89.96. The euro was at $1.4343 from $1.4338.
Nuremberg-based GfK will say Dec. 22 its sentiment index, based on a survey of about 2,000 people, fell to 3.5 in January from 3.7 in the previous month, according to the median estimate of economists surveyed by Bloomberg.
Sovereign Concern
Standard & Poor’s this week cut Greece’s credit rating to BBB+ from A- and signaled it may lower the level further. Fitch Ratings downgraded Greece to BBB+ on Dec. 8, raising concern among investors that the worst global recession since World War II is still weighing on some economies.
S&P yesterday cut long-term credit ratings for Greek banks EFG Eurobank Ergasias and Alpha Bank AE by one level to BBB, and put those ratings on “creditwatch negative,” signaling S&P may reduce them further.
The Greek government, which came to power in October promising higher spending and wages, is trying to persuade investors it can cut its deficit from 12.7 percent of output to below the European Union’s 3 percent limit by 2013. Greece’s Prime Minister George Papandreou said yesterday he’s determined to turn around the country’s economy and that a default is “simply out of the question.”
Austria said on Dec. 14 that it was nationalizing Hypo Alpe-Adria Bank and injecting as much as 450 million euros ($649 million) into the lender.
Dollar Index
The yen and dollar rose as investors retreated from higher- yielding assets. Ten-year Treasuries jumped the most since October yesterday and the Standard & Poor’s 500 Index tumbled 1.2 percent. The MSCI Asia Pacific Index of regional shares dropped 0.2 percent.
The ICE futures exchange’s Dollar Index rose the most in two weeks yesterday, advancing as much as 1.2 percent to 77.94, the highest since Sept. 8. It was the biggest one-day gain since Dec. 4, when the Labor Department reported fewer-than-expected job losses.
The Dollar Index gained 13 percent during the six months beginning in September 2008 as investors bought dollars while seeking a refuge from the collapse of global financial markets. The dollar slid 17 percent from the beginning of March through Dec. 3 as investors dumped the U.S. currency in favor of higher- yielding assets while the Fed kept its target rate near zero.
In the past two weeks, the index rebounded 4 percent on signs of economic recovery, prompting traders to speculate that U.S. policy makers could raise rates sooner than expected.
Asian Stocks Fall on U.S. Jobs, Tighter Rules on Banks’ Capital
Dec. 18 (Bloomberg) -- Asian stocks fell after claims for unemployment benefits in the U.S. unexpectedly increased, FedEx Corp. forecast lower-than-estimated profit and international regulators said banks must hold more capital.
BHP Billiton Ltd., the world’s biggest mining company, dropped 1.8 percent in Sydney after metal prices declined. Mizuho Financial Group Inc., Japan’s No. 3 bank by market value, and Seoul-based Woori Finance Holdings Co. lost at least 2 percent. Telstra Corp., Australia’s largest telephone company, retreated 2.8 percent after cutting annual sales forecast.
“Concerns that the global economy is going to slow will increase as people recognize the fragility of U.S. employment,” said Juichi Wako, a senior strategist at Nomura Holdings Inc., Japan’s biggest brokerage. “Money is moving away from risk assets.”
More than three stocks retreated for each that rose on the MSCI Asia Pacific Index, which fell 0.2 percent to 118.15 as of 9:38 a.m. in Tokyo. The gauge has declined 1.3 percent in the past five days, set for a second week of slumps, on concern China will take steps to curb property speculation and that the U.S. Federal Reserve will raise interest rates.
Japan’s Nikkei 225 Stock Average slid 0.8 percent, and the S&P/ASX 200 Index fell 1.2 percent in Sydney. The Kospi Index dropped 0.4 percent in Seoul.
U.S. Stocks
Futures on the Standard & Poor’s 500 Index fell 0.3 percent. The benchmark index sank 1.2 percent in New York yesterday, the most in three weeks, after FedEx, the second-largest U.S. package-shipping company, said earnings for the three months ending in February will be in a range of 50 cents to 70 cents a share, compared with the 84 cents estimated by analysts.
Initial claims for joblessness benefits rose to 480,000 in the week ended Dec. 12, a report from the U.S. Labor Department showed, while economists had projected a decline to 465,000.
The MSCI Asia Pacific Index has rallied 32 percent this year, outpacing gains of 21 percent by the S&P 500 and 25 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the benchmark are valued at 22 times estimated earnings, compared with 18 times for the S&P and 15 times for the Stoxx.
The London Metal Exchange Index of six metals including copper and zinc tumbled 2.2 percent yesterday, the most since Oct. 30. Gold futures for February delivery sank 2.5 percent.
Banks should increase the quality of the capital they hold by the end of 2012 to cope with losses, the Basel Committee on Banking Supervision said in a report yesterday. Banks’ core capital should exclude stock or instruments that may require lenders to make payments to third parties, as these could reduce reserves needed for meeting losses, the committee said.
BHP Billiton Ltd., the world’s biggest mining company, dropped 1.8 percent in Sydney after metal prices declined. Mizuho Financial Group Inc., Japan’s No. 3 bank by market value, and Seoul-based Woori Finance Holdings Co. lost at least 2 percent. Telstra Corp., Australia’s largest telephone company, retreated 2.8 percent after cutting annual sales forecast.
“Concerns that the global economy is going to slow will increase as people recognize the fragility of U.S. employment,” said Juichi Wako, a senior strategist at Nomura Holdings Inc., Japan’s biggest brokerage. “Money is moving away from risk assets.”
More than three stocks retreated for each that rose on the MSCI Asia Pacific Index, which fell 0.2 percent to 118.15 as of 9:38 a.m. in Tokyo. The gauge has declined 1.3 percent in the past five days, set for a second week of slumps, on concern China will take steps to curb property speculation and that the U.S. Federal Reserve will raise interest rates.
Japan’s Nikkei 225 Stock Average slid 0.8 percent, and the S&P/ASX 200 Index fell 1.2 percent in Sydney. The Kospi Index dropped 0.4 percent in Seoul.
U.S. Stocks
Futures on the Standard & Poor’s 500 Index fell 0.3 percent. The benchmark index sank 1.2 percent in New York yesterday, the most in three weeks, after FedEx, the second-largest U.S. package-shipping company, said earnings for the three months ending in February will be in a range of 50 cents to 70 cents a share, compared with the 84 cents estimated by analysts.
Initial claims for joblessness benefits rose to 480,000 in the week ended Dec. 12, a report from the U.S. Labor Department showed, while economists had projected a decline to 465,000.
The MSCI Asia Pacific Index has rallied 32 percent this year, outpacing gains of 21 percent by the S&P 500 and 25 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the benchmark are valued at 22 times estimated earnings, compared with 18 times for the S&P and 15 times for the Stoxx.
The London Metal Exchange Index of six metals including copper and zinc tumbled 2.2 percent yesterday, the most since Oct. 30. Gold futures for February delivery sank 2.5 percent.
Banks should increase the quality of the capital they hold by the end of 2012 to cope with losses, the Basel Committee on Banking Supervision said in a report yesterday. Banks’ core capital should exclude stock or instruments that may require lenders to make payments to third parties, as these could reduce reserves needed for meeting losses, the committee said.
Wednesday, December 16, 2009
American Air May Sweeten Bid to Keep ‘Critical’ JAL
Dec. 17 (Bloomberg) -- AMR Corp.’s American Airlines may increase the $1.1 billion it’s offered to invest with private- equity firm TPG in Japan Airlines Corp. to persuade the Asian carrier to stay in the Oneworld alliance.
No new proposal has been made, American Chief Executive Officer Gerard Arpey told reporters in Tokyo yesterday after meeting with Japan Transport Minister Seiji Maehara. He didn’t say how much more Fort Worth, Texas-based American might bid.
A possible sweetening of the deal underscores Arpey’s aim of keeping Japan Air from defecting to the SkyTeam group of carriers led by Delta Air Lines Inc. Losing Japan Air would leave American without a partner in the world’s second-largest economy and bolster Delta’s leading position in Tokyo.
“American can’t afford to lose, and they will do whatever it takes to win,” said Jeff Straebler, an analyst at RBS Securities Inc. in Stamford, Connecticut, who doesn’t rate AMR or Delta shares. “This is critical for them.”
American, the world’s second-largest carrier, is vying with Delta to invest in Japan Air as the money-losing Asian carrier restructures. Both U.S. carriers want to seek government approval to coordinate trans-Pacific flights and fares with Japan Air, also known as JAL.
“There could be a bigger investment made by the Oneworld- TPG-American group, depending on the circumstances that have to be worked out with the government and JAL,” said Arpey, who met for the first time with Maehara to discuss the Japan Air offer. “The situation today is very fluid, and that’s a big part of the conversation that’s ongoing.”
Delta’s Offer
Delta, the world’s biggest airline, and its SkyTeam partners have offered to invest $500 million in Tokyo-based JAL as part of a $1 billion package, including debt financing. JAL also is seeking a financial bailout from Japan’s government.
Japan Air, not the government, will decide which U.S. partner it pursues, Maehara told Arpey, reiterating a statement made Dec. 9. Arpey and Chief Financial Officer Tom Horton also met with JAL executives and plan sessions with other government officials through today.
Owen Blicksilver, a spokesman for Fort Worth-based TPG, declined to comment.
JAL dropped 1 percent to 102 yen at 11 a.m. in Tokyo trading. AMR rose 27 cents, or 3.6 percent, to $7.86 yesterday in New York Stock Exchange composite trading, while Atlanta- based Delta climbed 70 cents, or 6.4 percent, to $11.65.
‘Open Skies’
Last week’s agreement between the U.S. and Japan on an “Open Skies” accord will allow U.S. carriers to seek antitrust exemptions for closer ties with Japanese partners on flights and pricing, reducing costs and boosting revenue. UAL Corp.’s United Airlines, Continental Airlines Inc. and All Nippon Airways Co. have said they plan to apply for immunity.
Oneworld, SkyTeam and the Star Alliance that includes United and Continental each have about one-third of U.S.-Japan traffic. A JAL switch would give SkyTeam carriers 62 percent of that business, while Oneworld’s share would tumble to 6 percent, according to American.
A Delta-JAL alliance “would make a mockery of Open Skies,” Arpey said. “It would turn Open Skies and immunity into a farce. I don’t believe that’s the objective.”
Delta has predicted it would be able to win antitrust approval with JAL and said it could deliver about 3.2 million passengers a year to the Tokyo-based airline.
Delta’s Response
“A partnership with SkyTeam provides the best long-term option for Japan Airlines to thrive, with revenue opportunities that greatly exceed those of its current alliance,” said Trebor Banstetter, a Delta spokesman.
Should JAL choose Delta, the damage to American would extend to the Oneworld alliance it leads alongside British Airways Plc. Oneworld is the smallest of the three global alliances based on traffic, and the loss of JAL’s Asian network would create a gap in the group’s route system and endanger travel contracts with business customers.
“It would be catastrophic,” said Robert Mann, owner of consultant R.W. Mann & Co. in Port Washington, New York. “It would eliminate Oneworld from real contention in terms of a global travel network and corporate travel contracts.”
Neither American nor Delta has said how much revenue it has at stake in a JAL move to stay in Oneworld or shift to SkyTeam.
SkyTeam is the only alliance without a Japanese partner. Delta acquired a Japanese route system and hub at Tokyo’s Narita airport when it bought Northwest Airlines Corp. in October 2008, and a desire to protect those assets helped trigger interest in teaming with JAL.
“They can taste this,” Mann said of Delta’s pursuit of JAL. “If they were to pull this off, they would absolutely secure the No. 1 spot and eradicate a three-alliance problem. There can only be two winners because there are only two Japanese carriers of note.”
No new proposal has been made, American Chief Executive Officer Gerard Arpey told reporters in Tokyo yesterday after meeting with Japan Transport Minister Seiji Maehara. He didn’t say how much more Fort Worth, Texas-based American might bid.
A possible sweetening of the deal underscores Arpey’s aim of keeping Japan Air from defecting to the SkyTeam group of carriers led by Delta Air Lines Inc. Losing Japan Air would leave American without a partner in the world’s second-largest economy and bolster Delta’s leading position in Tokyo.
“American can’t afford to lose, and they will do whatever it takes to win,” said Jeff Straebler, an analyst at RBS Securities Inc. in Stamford, Connecticut, who doesn’t rate AMR or Delta shares. “This is critical for them.”
American, the world’s second-largest carrier, is vying with Delta to invest in Japan Air as the money-losing Asian carrier restructures. Both U.S. carriers want to seek government approval to coordinate trans-Pacific flights and fares with Japan Air, also known as JAL.
“There could be a bigger investment made by the Oneworld- TPG-American group, depending on the circumstances that have to be worked out with the government and JAL,” said Arpey, who met for the first time with Maehara to discuss the Japan Air offer. “The situation today is very fluid, and that’s a big part of the conversation that’s ongoing.”
Delta’s Offer
Delta, the world’s biggest airline, and its SkyTeam partners have offered to invest $500 million in Tokyo-based JAL as part of a $1 billion package, including debt financing. JAL also is seeking a financial bailout from Japan’s government.
Japan Air, not the government, will decide which U.S. partner it pursues, Maehara told Arpey, reiterating a statement made Dec. 9. Arpey and Chief Financial Officer Tom Horton also met with JAL executives and plan sessions with other government officials through today.
Owen Blicksilver, a spokesman for Fort Worth-based TPG, declined to comment.
JAL dropped 1 percent to 102 yen at 11 a.m. in Tokyo trading. AMR rose 27 cents, or 3.6 percent, to $7.86 yesterday in New York Stock Exchange composite trading, while Atlanta- based Delta climbed 70 cents, or 6.4 percent, to $11.65.
‘Open Skies’
Last week’s agreement between the U.S. and Japan on an “Open Skies” accord will allow U.S. carriers to seek antitrust exemptions for closer ties with Japanese partners on flights and pricing, reducing costs and boosting revenue. UAL Corp.’s United Airlines, Continental Airlines Inc. and All Nippon Airways Co. have said they plan to apply for immunity.
Oneworld, SkyTeam and the Star Alliance that includes United and Continental each have about one-third of U.S.-Japan traffic. A JAL switch would give SkyTeam carriers 62 percent of that business, while Oneworld’s share would tumble to 6 percent, according to American.
A Delta-JAL alliance “would make a mockery of Open Skies,” Arpey said. “It would turn Open Skies and immunity into a farce. I don’t believe that’s the objective.”
Delta has predicted it would be able to win antitrust approval with JAL and said it could deliver about 3.2 million passengers a year to the Tokyo-based airline.
Delta’s Response
“A partnership with SkyTeam provides the best long-term option for Japan Airlines to thrive, with revenue opportunities that greatly exceed those of its current alliance,” said Trebor Banstetter, a Delta spokesman.
Should JAL choose Delta, the damage to American would extend to the Oneworld alliance it leads alongside British Airways Plc. Oneworld is the smallest of the three global alliances based on traffic, and the loss of JAL’s Asian network would create a gap in the group’s route system and endanger travel contracts with business customers.
“It would be catastrophic,” said Robert Mann, owner of consultant R.W. Mann & Co. in Port Washington, New York. “It would eliminate Oneworld from real contention in terms of a global travel network and corporate travel contracts.”
Neither American nor Delta has said how much revenue it has at stake in a JAL move to stay in Oneworld or shift to SkyTeam.
SkyTeam is the only alliance without a Japanese partner. Delta acquired a Japanese route system and hub at Tokyo’s Narita airport when it bought Northwest Airlines Corp. in October 2008, and a desire to protect those assets helped trigger interest in teaming with JAL.
“They can taste this,” Mann said of Delta’s pursuit of JAL. “If they were to pull this off, they would absolutely secure the No. 1 spot and eradicate a three-alliance problem. There can only be two winners because there are only two Japanese carriers of note.”
Bombay Exchange Extends Trading Twice to Regain Market Share
Dec. 17 (Bloomberg) -- Bombay Stock Exchange, Asia’s oldest bourse, extended its trading hours for the second time in as many days to regain its market share as India’s two largest exchanges compete to boost trading volumes.
The Bombay bourse will open at 9 a.m. from Dec. 18, matching the National Stock Exchange’s new timing announced yesterday. The BSE, which began trading futures contacts in 2000, announced on Dec. 15 it would add 10 minutes to its trading day to expand its derivatives business and compete with the National Stock Exchange, the world’s largest single stock futures market.
The 17-year-old National exchange, partly owned by the NYSE Group Inc. and Goldman Sachs Group Inc., has been winning market share from the older rival, which is backed by Deutsche Boerse AG and Singapore Exchange Ltd. Average share trading value on the exchange founded in 1875 declined 14 percent this year, while it increased 6 percent on the national bourse, according to Bloomberg data.
Without the new trading hours, “all the business will go to the NSE, which we couldn’t let happen,” Sayee Srinivasan, head of product strategy at the BSE, said in an interview to Bloomberg-UTV yesterday. Starting at “9 a.m. is a completely different story. We will just have to live with it.”
India’s market regulator on Oct. 23 allowed stock exchanges to extend trading from 9 a.m. to 5 p.m., adding 2 hours 25 minutes to the day. Bourses won’t extend until there’s a consensus on timing and most market participants oppose the change, Ravi Narain, chief executive officer at the National Stock Exchange of India Ltd. said last month.
‘A Bit Early’
The National exchange, which licensed its benchmark S&P CNX Nifty Index to Singapore’s bourse, proposed the extension to narrow the gap between share trading in India and overseas. The plan isn’t linked to the Singapore Exchange’s license, the bourse said in March.
“It is a bit early for the market participants,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kochi. “But it will benefit small traders who did not have access to trading of the Nifty futures on the Singapore exchange.”
The two exchanges trade for five hours, 35 minutes a day. That compares with four hours on the Shanghai. Developed markets already trade longer hours. The Deutsche Boerse is open for 8 1/2 hours while the New York Stock Exchange trades for 6 1/2 hours.
Abandoned Plans
“The surprise is that the stock exchanges gave investors so little time to adjust to the new timing,” Vikas Pershad, chief executive officer at hedge fund Veda Investments LLC, said over telephone from Chicago. Still “the move is likely to benefit investors in the long term. Over time, we may see a migration toward continuous trading.”
The Bombay exchange’s investor Deutsche Boerse, operator of the Frankfurt Stock Exchange, and Turquoise, an equity dealing system, abandoned plans for an earlier start last year after pressure from customers to leave trading hours unchanged.
The extension may mean “we will have to work in two shifts,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., a publicly traded equities research provider in Mumbai.
The Bombay exchange began working on becoming more competitive after the younger rival started trading shares in 1994. Within a year after the National Stock Exchange initiated on-line trading, the Mumbai stock exchange moved from the open outcry system to computers. The exchange also became the first to trade in index futures contracts on June 9, 2000.
The Bombay bourse will open at 9 a.m. from Dec. 18, matching the National Stock Exchange’s new timing announced yesterday. The BSE, which began trading futures contacts in 2000, announced on Dec. 15 it would add 10 minutes to its trading day to expand its derivatives business and compete with the National Stock Exchange, the world’s largest single stock futures market.
The 17-year-old National exchange, partly owned by the NYSE Group Inc. and Goldman Sachs Group Inc., has been winning market share from the older rival, which is backed by Deutsche Boerse AG and Singapore Exchange Ltd. Average share trading value on the exchange founded in 1875 declined 14 percent this year, while it increased 6 percent on the national bourse, according to Bloomberg data.
Without the new trading hours, “all the business will go to the NSE, which we couldn’t let happen,” Sayee Srinivasan, head of product strategy at the BSE, said in an interview to Bloomberg-UTV yesterday. Starting at “9 a.m. is a completely different story. We will just have to live with it.”
India’s market regulator on Oct. 23 allowed stock exchanges to extend trading from 9 a.m. to 5 p.m., adding 2 hours 25 minutes to the day. Bourses won’t extend until there’s a consensus on timing and most market participants oppose the change, Ravi Narain, chief executive officer at the National Stock Exchange of India Ltd. said last month.
‘A Bit Early’
The National exchange, which licensed its benchmark S&P CNX Nifty Index to Singapore’s bourse, proposed the extension to narrow the gap between share trading in India and overseas. The plan isn’t linked to the Singapore Exchange’s license, the bourse said in March.
“It is a bit early for the market participants,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kochi. “But it will benefit small traders who did not have access to trading of the Nifty futures on the Singapore exchange.”
The two exchanges trade for five hours, 35 minutes a day. That compares with four hours on the Shanghai. Developed markets already trade longer hours. The Deutsche Boerse is open for 8 1/2 hours while the New York Stock Exchange trades for 6 1/2 hours.
Abandoned Plans
“The surprise is that the stock exchanges gave investors so little time to adjust to the new timing,” Vikas Pershad, chief executive officer at hedge fund Veda Investments LLC, said over telephone from Chicago. Still “the move is likely to benefit investors in the long term. Over time, we may see a migration toward continuous trading.”
The Bombay exchange’s investor Deutsche Boerse, operator of the Frankfurt Stock Exchange, and Turquoise, an equity dealing system, abandoned plans for an earlier start last year after pressure from customers to leave trading hours unchanged.
The extension may mean “we will have to work in two shifts,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., a publicly traded equities research provider in Mumbai.
The Bombay exchange began working on becoming more competitive after the younger rival started trading shares in 1994. Within a year after the National Stock Exchange initiated on-line trading, the Mumbai stock exchange moved from the open outcry system to computers. The exchange also became the first to trade in index futures contracts on June 9, 2000.
Tuesday, December 15, 2009
N.Z. Should Improve Access to Capital, Taskforce Says
Dec. 16 (Bloomberg) -- New Zealand should increase companies’ access to funding to help them reach the scale needed to compete internationally, according to a government taskforce charged with reviewing the nation’s capital markets.
“Access to domestic capital is important,” the Capital Market Development Taskforce said in a report released in Wellington today. “The evidence is, local markets matter for economic growth.”
The taskforce, chaired by Rob Cameron, was formed last year to develop a blueprint on how to improve the nation’s capital markets in order to encourage firms to raise more funds locally. The group recommended creation of a single regulator, and suggested the nation needs a Minister for Capital Markets to be responsible for policy development.
“The government will consider the report as a matter of priority,” Commerce Minister Simon Power said today. “There are plenty of things to look at.”
Prime Minister John Key will lead the response and the government expects to report back in February, Power told reporters in Wellington. Aspects of the recommendations will be included in a review of the Securities Act, which will be published early next year, he said.
“The notion of regulation occurring in one place as opposed to several different regulators operating in this space is a notion I am very interested in,” Power said.
Single Agency
The taskforce recommends a single regulator to replace a “plethora” of agencies which includes the Companies Office, the stock exchange and the Ministry of Economic Developments, Cameron said in a presentation today.
A problem for the economy is that many companies get to a stage where they have to grow either by acquisition or overseas expansion and find they are unable to access risk capital, Cameron said.
The so-called private capital markets aren’t working, and there should be scope for an agency such as NZX Ltd., which runs the stock exchange, to get involved, he said.
The report makes 60 recommendations designed to create a “healthy environment for investors” and to get markets “to act as an engine for growth,” he said.
Only about a third of New Zealand’s 200 companies are publicly traded compared with two thirds in Australia, Cameron said. Agriculture companies, financial institutions and utilities are underrepresented.
Agricultural Cooperatives
Accordingly, the government should consider ways in which state-owned companies may offer shares to the public, he said. The stock exchange should make itself more attractive to agricultural cooperatives such as Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter.
New Zealand could become an “agricultural capital markets hub,” using its knowledge in industries such as dairy and meat, to be a base for global trading of commodities and related derivatives, Cameron said.
Members of the taskforce include Mark Weldon, NZX chief executive officer, and Jonathan Ling, chief executive officer at Fletcher Building Ltd., the nation’s largest building products company.
“Access to domestic capital is important,” the Capital Market Development Taskforce said in a report released in Wellington today. “The evidence is, local markets matter for economic growth.”
The taskforce, chaired by Rob Cameron, was formed last year to develop a blueprint on how to improve the nation’s capital markets in order to encourage firms to raise more funds locally. The group recommended creation of a single regulator, and suggested the nation needs a Minister for Capital Markets to be responsible for policy development.
“The government will consider the report as a matter of priority,” Commerce Minister Simon Power said today. “There are plenty of things to look at.”
Prime Minister John Key will lead the response and the government expects to report back in February, Power told reporters in Wellington. Aspects of the recommendations will be included in a review of the Securities Act, which will be published early next year, he said.
“The notion of regulation occurring in one place as opposed to several different regulators operating in this space is a notion I am very interested in,” Power said.
Single Agency
The taskforce recommends a single regulator to replace a “plethora” of agencies which includes the Companies Office, the stock exchange and the Ministry of Economic Developments, Cameron said in a presentation today.
A problem for the economy is that many companies get to a stage where they have to grow either by acquisition or overseas expansion and find they are unable to access risk capital, Cameron said.
The so-called private capital markets aren’t working, and there should be scope for an agency such as NZX Ltd., which runs the stock exchange, to get involved, he said.
The report makes 60 recommendations designed to create a “healthy environment for investors” and to get markets “to act as an engine for growth,” he said.
Only about a third of New Zealand’s 200 companies are publicly traded compared with two thirds in Australia, Cameron said. Agriculture companies, financial institutions and utilities are underrepresented.
Agricultural Cooperatives
Accordingly, the government should consider ways in which state-owned companies may offer shares to the public, he said. The stock exchange should make itself more attractive to agricultural cooperatives such as Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter.
New Zealand could become an “agricultural capital markets hub,” using its knowledge in industries such as dairy and meat, to be a base for global trading of commodities and related derivatives, Cameron said.
Members of the taskforce include Mark Weldon, NZX chief executive officer, and Jonathan Ling, chief executive officer at Fletcher Building Ltd., the nation’s largest building products company.
Australian Economy Grew 0.2% on Government Spending
Dec. 16 (Bloomberg) -- Australia’s economy expanded in the three months through September for a third straight quarter, boosted by government spending on roads, ports and schools.
Gross domestic product gained 0.2 percent from the second quarter, when it rose 0.6 percent, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg News survey of 17 economists was for a 0.4 percent rise.
Growth in Australia, one of the few economies to skirt the global recession, will accelerate in 2010 as demand rises for exports such as iron ore and Prime Minister Kevin Rudd spends A$22 billion ($20 billion) on infrastructure including schools, the central bank said yesterday. Faster growth adds to pressure on Governor Glenn Stevens to raise borrowing costs in February after this month becoming the only policy maker in the world to increase interest rates three times this year.
“The government’s huge schools program is starting to show up in the numbers,” Kieran Davies, chief economist at RBS Group Australia Ltd. in Sydney, said ahead of today’s report. The central bank “is on track to hike again at its February meeting.”
Consumer spending advanced 0.7 percent in the quarter, adding 0.4 percentage point to GDP, today’s report said. Exports decreased 2.3 percent. Government spending rose 0.7 percent.
The Australian currency fell for a second day, trading at 90.35 U.S. cents as of 11:32 a.m. in Sydney, from 90.67 cents before the release of the GDP report.
Global Rebound
The economy grew 0.5 percent from a year earlier, the report showed. Economists forecast a 0.7 percent expansion.
“The Australian economy has weathered the global financial crisis well,” Ted Evans, chairman of Westpac Banking Corp., said in a speech at the company’s annual general meeting in Melbourne today. “To a significant extent, that reflects the prompt stimulatory action by the Australian government.”
Today’s report adds to global evidence of an economic rebound. Europe’s economy emerged from its worst slump in more than six decades in the third quarter, expanding 0.4 percent from the previous three months, a report showed on Dec. 3. The U.S. economy grew at a 2.8 percent annual pace.
Australia’s economy is expanding faster and generating more jobs than the government and central bank forecast at the start of the year as China’s demand for raw materials including iron ore, coal and gas prompts mining and energy companies such as BHP Billiton Ltd., Woodside Petroleum Ltd. and Santos Ltd. to increase investment and hire workers.
Jobs Surge
The nation’s benchmark S&P/ASX 200 index has climbed 26 percent this year, outpacing the Standard & Poor’s 500 index, which has gained 23 percent.
Treasurer Wayne Swan last month forecast GDP will rise 1.5 percent in the 12 months through June 30, 2010, compared with a May prediction of a 0.5 percent contraction. The central bank says the economy will grow 2.25 percent this fiscal year and 3.25 percent in 2010-11.
Employers added 99,500 workers between the start of September and Nov. 30, the biggest three-month hiring surge in three years, a report showed last week. The jobless rate fell to 5.7 percent from 5.8 percent.
Chevron Corp. said this month it has signed a deal with Japan’s Tokyo Electric Power Co. to supply liquefied natural gas from its Wheatstone venture in Western Australia. The project, estimated to be worth $82 billion, is forecast to generate 6,500 jobs during construction.
It is in addition to the $39 billion Chevron-led Gorgon gas venture, also in Western Australia, which is forecast to create 10,000 jobs when construction starts early next year.
‘Cusp of Boom’
Favorable domestic conditions and overseas demand for Australian resources mean the country may be on the cusp of an economic boom, Gerry Harvey, chairman of Australia’s biggest electronics retailer Harvey Norman Holdings Ltd., said in an interview with Bloomberg television on Dec. 2.
“We’ve had very good sales figures in October and November and I can’t think of any reason why that won’t follow into December,” he said. “I think we’ll have a record Christmas.”
Stronger economic and jobs growth will increase Governor Stevens’s scope to raise borrowing costs next year. He boosted the overnight cash rate target by a quarter percentage point on Dec. 1 to 3.75 percent, adding to similar moves in October and November. By contrast, rates are close to zero in the U.S. and Japan.
“Members agreed that, if developments unfolded as currently expected, monetary policy would need to be adjusted further over time to lessen the degree of stimulus,” central bank officials said in minutes of their Dec. 1 meeting released yesterday.
The Australian dollar has gained 29 percent this year against the U.S. currency as investors seek higher-yielding assets in a so-called carry trade that Reserve Bank Assistant Governor Guy Debelle said last week is “back in vogue.”
Rate Outlook
Policy makers weighed “the high level of the exchange rate” when making their decision to raise interest rates this month, according to yesterday’s minutes.
Investors are betting there is a 58 percent chance of a quarter-point increase in the benchmark lending rate to 4 percent at the central bank’s next meeting on Feb. 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 7:26 a.m.
The statistics bureau, which normally publishes third- quarter GDP figures in the first week of December, delayed publication of the report this year by two weeks as officials adopt new accounting standards.
The chain price index, a measure of retail prices, rose 0.4 percent from the second quarter and fell 3.1 percent from a year earlier, today’s report showed.
Gross domestic product gained 0.2 percent from the second quarter, when it rose 0.6 percent, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg News survey of 17 economists was for a 0.4 percent rise.
Growth in Australia, one of the few economies to skirt the global recession, will accelerate in 2010 as demand rises for exports such as iron ore and Prime Minister Kevin Rudd spends A$22 billion ($20 billion) on infrastructure including schools, the central bank said yesterday. Faster growth adds to pressure on Governor Glenn Stevens to raise borrowing costs in February after this month becoming the only policy maker in the world to increase interest rates three times this year.
“The government’s huge schools program is starting to show up in the numbers,” Kieran Davies, chief economist at RBS Group Australia Ltd. in Sydney, said ahead of today’s report. The central bank “is on track to hike again at its February meeting.”
Consumer spending advanced 0.7 percent in the quarter, adding 0.4 percentage point to GDP, today’s report said. Exports decreased 2.3 percent. Government spending rose 0.7 percent.
The Australian currency fell for a second day, trading at 90.35 U.S. cents as of 11:32 a.m. in Sydney, from 90.67 cents before the release of the GDP report.
Global Rebound
The economy grew 0.5 percent from a year earlier, the report showed. Economists forecast a 0.7 percent expansion.
“The Australian economy has weathered the global financial crisis well,” Ted Evans, chairman of Westpac Banking Corp., said in a speech at the company’s annual general meeting in Melbourne today. “To a significant extent, that reflects the prompt stimulatory action by the Australian government.”
Today’s report adds to global evidence of an economic rebound. Europe’s economy emerged from its worst slump in more than six decades in the third quarter, expanding 0.4 percent from the previous three months, a report showed on Dec. 3. The U.S. economy grew at a 2.8 percent annual pace.
Australia’s economy is expanding faster and generating more jobs than the government and central bank forecast at the start of the year as China’s demand for raw materials including iron ore, coal and gas prompts mining and energy companies such as BHP Billiton Ltd., Woodside Petroleum Ltd. and Santos Ltd. to increase investment and hire workers.
Jobs Surge
The nation’s benchmark S&P/ASX 200 index has climbed 26 percent this year, outpacing the Standard & Poor’s 500 index, which has gained 23 percent.
Treasurer Wayne Swan last month forecast GDP will rise 1.5 percent in the 12 months through June 30, 2010, compared with a May prediction of a 0.5 percent contraction. The central bank says the economy will grow 2.25 percent this fiscal year and 3.25 percent in 2010-11.
Employers added 99,500 workers between the start of September and Nov. 30, the biggest three-month hiring surge in three years, a report showed last week. The jobless rate fell to 5.7 percent from 5.8 percent.
Chevron Corp. said this month it has signed a deal with Japan’s Tokyo Electric Power Co. to supply liquefied natural gas from its Wheatstone venture in Western Australia. The project, estimated to be worth $82 billion, is forecast to generate 6,500 jobs during construction.
It is in addition to the $39 billion Chevron-led Gorgon gas venture, also in Western Australia, which is forecast to create 10,000 jobs when construction starts early next year.
‘Cusp of Boom’
Favorable domestic conditions and overseas demand for Australian resources mean the country may be on the cusp of an economic boom, Gerry Harvey, chairman of Australia’s biggest electronics retailer Harvey Norman Holdings Ltd., said in an interview with Bloomberg television on Dec. 2.
“We’ve had very good sales figures in October and November and I can’t think of any reason why that won’t follow into December,” he said. “I think we’ll have a record Christmas.”
Stronger economic and jobs growth will increase Governor Stevens’s scope to raise borrowing costs next year. He boosted the overnight cash rate target by a quarter percentage point on Dec. 1 to 3.75 percent, adding to similar moves in October and November. By contrast, rates are close to zero in the U.S. and Japan.
“Members agreed that, if developments unfolded as currently expected, monetary policy would need to be adjusted further over time to lessen the degree of stimulus,” central bank officials said in minutes of their Dec. 1 meeting released yesterday.
The Australian dollar has gained 29 percent this year against the U.S. currency as investors seek higher-yielding assets in a so-called carry trade that Reserve Bank Assistant Governor Guy Debelle said last week is “back in vogue.”
Rate Outlook
Policy makers weighed “the high level of the exchange rate” when making their decision to raise interest rates this month, according to yesterday’s minutes.
Investors are betting there is a 58 percent chance of a quarter-point increase in the benchmark lending rate to 4 percent at the central bank’s next meeting on Feb. 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 7:26 a.m.
The statistics bureau, which normally publishes third- quarter GDP figures in the first week of December, delayed publication of the report this year by two weeks as officials adopt new accounting standards.
The chain price index, a measure of retail prices, rose 0.4 percent from the second quarter and fell 3.1 percent from a year earlier, today’s report showed.
Monday, December 14, 2009
East Asia Growth May Accelerate Next Year, ADB Division Says
Dec. 15 (Bloomberg) -- China, South Korea and other emerging economies in East Asia may grow at the fastest pace in three years in 2010 as the global recovery spurs demand for the region’s goods, a division of the Asian Development Bank said.
China, South Korea, Taiwan, Hong Kong and 10 Southeast Asia economies may expand 6.8 percent in 2010 from 4.2 percent this year, according to a report released today by the ADB’s Office for Regional Economic Integration in Manila.
Asia is leading the world’s emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates, averting a spiral into another Great Depression. Growth could falter as the effect of stimulus measures fade and governments exit expansionary policies, the ADB division said.
“With the global recovery tentative, monetary policy should remain accommodative where feasible, with a watchful eye on inflation and asset prices,” the division said. “The recovery could falter if policy makers tighten too early, but tightening too late may lead to higher inflation and unsustainable fiscal deficits in the coming years.”
Confidence in the world economy dipped last month as central banks’ actions to withdraw some emergency measures sparked concern about the strength of the recovery, a Bloomberg survey of users on six continents showed.
Policy makers in Asia have started raising borrowing costs to contain accelerating inflation. The Reserve Bank of Australia increased borrowing costs a total of 75 basis points at its last three meetings and Vietnam raised its benchmark rate by one percentage point to 8 percent in November.
Subdued Inflation
“Inflationary pressures appear to be well under control for the moment,” the ADB’s regional integration office said. “While recently showing slight increases, inflation is still expected to remain subdued as economies operate with excess capacity.”
Recovery in East Asia also hinges on the revival of growth in Europe and in the U.S., as this will affect the region’s export-dependent economies, the office said.
“The deleveraging cycle is still in its early years, and if households in developed countries, particularly the U.S., save more-than-expected to repair their balance sheets, then weaker consumer demand will delay recovery in these economies,” the ADB division said.
Emerging East Asia groups China, the Southeast Asian nations of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand and Vietnam, and the newly industrialized economies of Hong Kong, Singapore, South Korea and Taiwan.
Developing Asia, which includes economies such as India and Pakistan and excludes Japan, will probably expand 6.6 percent next year after growing 4.5 percent in 2009, the ADB said in a separate note today.
To contact the reporters on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net.
Last Updated: December 14, 2009 21:30 EST
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* Yahoo! Buzz Dec. 15 (Bloomberg) -- China, South Korea and other emerging economies in East Asia may grow at the fastest pace in three years in 2010 as the global recovery spurs demand for the region’s goods, a division of the Asian Development Bank said.
China, South Korea, Taiwan, Hong Kong and 10 Southeast Asia economies may expand 6.8 percent in 2010 from 4.2 percent this year, according to a report released today by the ADB’s Office for Regional Economic Integration in Manila.
Asia is leading the world’s emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates, averting a spiral into another Great Depression. Growth could falter as the effect of stimulus measures fade and governments exit expansionary policies, the ADB division said.
“With the global recovery tentative, monetary policy should remain accommodative where feasible, with a watchful eye on inflation and asset prices,” the division said. “The recovery could falter if policy makers tighten too early, but tightening too late may lead to higher inflation and unsustainable fiscal deficits in the coming years.”
Confidence in the world economy dipped last month as central banks’ actions to withdraw some emergency measures sparked concern about the strength of the recovery, a Bloomberg survey of users on six continents showed.
Policy makers in Asia have started raising borrowing costs to contain accelerating inflation. The Reserve Bank of Australia increased borrowing costs a total of 75 basis points at its last three meetings and Vietnam raised its benchmark rate by one percentage point to 8 percent in November.
Subdued Inflation
“Inflationary pressures appear to be well under control for the moment,” the ADB’s regional integration office said. “While recently showing slight increases, inflation is still expected to remain subdued as economies operate with excess capacity.”
Recovery in East Asia also hinges on the revival of growth in Europe and in the U.S., as this will affect the region’s export-dependent economies, the office said.
“The deleveraging cycle is still in its early years, and if households in developed countries, particularly the U.S., save more-than-expected to repair their balance sheets, then weaker consumer demand will delay recovery in these economies,” the ADB division said.
Emerging East Asia groups China, the Southeast Asian nations of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand and Vietnam, and the newly industrialized economies of Hong Kong, Singapore, South Korea and Taiwan.
Developing Asia, which includes economies such as India and Pakistan and excludes Japan, will probably expand 6.6 percent next year after growing 4.5 percent in 2009, the ADB said in a separate note today.
China, South Korea, Taiwan, Hong Kong and 10 Southeast Asia economies may expand 6.8 percent in 2010 from 4.2 percent this year, according to a report released today by the ADB’s Office for Regional Economic Integration in Manila.
Asia is leading the world’s emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates, averting a spiral into another Great Depression. Growth could falter as the effect of stimulus measures fade and governments exit expansionary policies, the ADB division said.
“With the global recovery tentative, monetary policy should remain accommodative where feasible, with a watchful eye on inflation and asset prices,” the division said. “The recovery could falter if policy makers tighten too early, but tightening too late may lead to higher inflation and unsustainable fiscal deficits in the coming years.”
Confidence in the world economy dipped last month as central banks’ actions to withdraw some emergency measures sparked concern about the strength of the recovery, a Bloomberg survey of users on six continents showed.
Policy makers in Asia have started raising borrowing costs to contain accelerating inflation. The Reserve Bank of Australia increased borrowing costs a total of 75 basis points at its last three meetings and Vietnam raised its benchmark rate by one percentage point to 8 percent in November.
Subdued Inflation
“Inflationary pressures appear to be well under control for the moment,” the ADB’s regional integration office said. “While recently showing slight increases, inflation is still expected to remain subdued as economies operate with excess capacity.”
Recovery in East Asia also hinges on the revival of growth in Europe and in the U.S., as this will affect the region’s export-dependent economies, the office said.
“The deleveraging cycle is still in its early years, and if households in developed countries, particularly the U.S., save more-than-expected to repair their balance sheets, then weaker consumer demand will delay recovery in these economies,” the ADB division said.
Emerging East Asia groups China, the Southeast Asian nations of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand and Vietnam, and the newly industrialized economies of Hong Kong, Singapore, South Korea and Taiwan.
Developing Asia, which includes economies such as India and Pakistan and excludes Japan, will probably expand 6.6 percent next year after growing 4.5 percent in 2009, the ADB said in a separate note today.
To contact the reporters on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net.
Last Updated: December 14, 2009 21:30 EST
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* Yahoo! Buzz Dec. 15 (Bloomberg) -- China, South Korea and other emerging economies in East Asia may grow at the fastest pace in three years in 2010 as the global recovery spurs demand for the region’s goods, a division of the Asian Development Bank said.
China, South Korea, Taiwan, Hong Kong and 10 Southeast Asia economies may expand 6.8 percent in 2010 from 4.2 percent this year, according to a report released today by the ADB’s Office for Regional Economic Integration in Manila.
Asia is leading the world’s emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates, averting a spiral into another Great Depression. Growth could falter as the effect of stimulus measures fade and governments exit expansionary policies, the ADB division said.
“With the global recovery tentative, monetary policy should remain accommodative where feasible, with a watchful eye on inflation and asset prices,” the division said. “The recovery could falter if policy makers tighten too early, but tightening too late may lead to higher inflation and unsustainable fiscal deficits in the coming years.”
Confidence in the world economy dipped last month as central banks’ actions to withdraw some emergency measures sparked concern about the strength of the recovery, a Bloomberg survey of users on six continents showed.
Policy makers in Asia have started raising borrowing costs to contain accelerating inflation. The Reserve Bank of Australia increased borrowing costs a total of 75 basis points at its last three meetings and Vietnam raised its benchmark rate by one percentage point to 8 percent in November.
Subdued Inflation
“Inflationary pressures appear to be well under control for the moment,” the ADB’s regional integration office said. “While recently showing slight increases, inflation is still expected to remain subdued as economies operate with excess capacity.”
Recovery in East Asia also hinges on the revival of growth in Europe and in the U.S., as this will affect the region’s export-dependent economies, the office said.
“The deleveraging cycle is still in its early years, and if households in developed countries, particularly the U.S., save more-than-expected to repair their balance sheets, then weaker consumer demand will delay recovery in these economies,” the ADB division said.
Emerging East Asia groups China, the Southeast Asian nations of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand and Vietnam, and the newly industrialized economies of Hong Kong, Singapore, South Korea and Taiwan.
Developing Asia, which includes economies such as India and Pakistan and excludes Japan, will probably expand 6.6 percent next year after growing 4.5 percent in 2009, the ADB said in a separate note today.
Asian Stocks Fluctuate; China Developers Fall, Miners Advance
Dec. 15 (Bloomberg) -- Asian stocks fluctuated, as Chinese developers fell on speculation China’s government will take more steps to curb property speculation. Mining stocks rose as JPMorgan Chase & Co. upgraded BHP Billiton Ltd.
China Vanke Co., the nation’s biggest listed developers, slid 2.5 percent after the Xinhua News Agency said the government will target “excessive” property prices in some cities. Mitsui O.S.K. Lines Ltd., Japan’s No. 2 shipping line, fell 1.3 percent after cargo rates dropped. BHP, the world’s largest mining company, climbed 0.9 percent as copper advanced.
The MSCI Asia Pacific Index lost 0.1 percent to 120.26 as of 12:06 p.m. in Tokyo. It swung between gains and losses at least six times. The gauge has climbed 34 percent this year, set for its biggest annual gain since 2003, on signs government spending packages and lower interest rates are reviving the global economy.
“Asia does not offer much value in a valuation perspective, which is why we’re a bit cautious going into the new year,” said Christopher Wong, a fund manager at Aberdeen Asset Management Ltd. in Singapore, which oversees about $25 billion of Asian assets, told Bloomberg Television today. “We haven’t taken money off the table. We just need to wait for fundamentals to catch up.”
Japan’s Nikkei 225 Stock Average lost 0.2 percent. Hong Kong’s Hang Seng Index dropped 0.9 percent, while the Shanghai Composite Index sank 0.4 percent in China. Australia’s S&P/ASX 200 Index rose 0.4 percent. Platinum Australia Ltd. surged 4.6 percent after prices of the metal climbed.
Dubai Support
Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 0.7 percent to the highest since October 2008, as Abu Dhabi agreed to provide financing to Dubai’s financial support fund, allowing Dubai World to repay $4.1 billion of Islamic bonds that were due yesterday.
The MSCI Asia Pacific Index has climbed 71 percent from a more than five-year low on March 9, outpacing gains of 65 percent by the S&P 500 and 56 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the benchmark are valued at 22 times estimated earnings, compared with 18 times for the S&P and 16 times for the Stoxx.
BHP Billiton rose 0.9 percent to A$41.02. Rio Tinto added 0.5 percent to A$70.83. JPMorgan boosted their ratings after the broker increased its iron ore, coal and metal price forecasts. BHP was raised to “neutral” from “underweight” and Rio to “overweight” from “neutral,” JPMorgan analysts said yesterday in a report.
Metals Demand
Earnings per share next year at Rio, the second-biggest producer of iron ore, may be 30 percent higher than forecast because of higher metal prices, the JPMorgan report said. The earnings per share forecast for BHP this fiscal year was increased by 16 percent for next year.
Raw-material producers are the best performing of the MSCI Asia Pacific Index’s 10 industry groups this year on optimism global growth will fuel metals demand. Copper prices have more than doubled this year. Active futures on the metal rose 0.3 percent in New York after-hours trading, taking a three-day advance to 1.9 percent.
Platinum Australia, which owns mines in the country and South Africa, climbed 5.7 percent to 93 Australian cents after the metal rose the most in almost two weeks in New York yesterday. Aquarius Platinum Ltd., the world’s fourth-biggest producer of the metal, surged 5.4 percent to A$6.69.
China Vanke slid 2.5 percent to 11.50 yuan after Xinhua reported the Chinese government plans to “speed the construction of low-cost housing” and strengthen supervision of the real- estate market.
Policy Risk
Poly Real Estate Group Co. lost 3.2 percent to 23.80 yuan. China Overseas Land & Investment Ltd., a developer controlled by China’s construction ministry, sank 2.8 percent to HK$17.82 in Hong Kong.
“Government policy is a big risk to property stocks,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai.
China’s property prices climbed last month at the fastest pace since July 2008, adding to concern that record lending may fuel unsustainable asset-price increases. The State Council said last week the government will re-impose a sales tax on homes sold within five years, after cutting the period to two years in January.
Asset bubbles are the No. 1 threat to financial stability in Asia, posing a bigger danger than inflation, Norman Chan, the head of Hong Kong’s de facto central bank said yesterday.
In Tokyo, Mitsui O.S.K. lost 1.3 percent to 459 yen, while in Seoul, STX Pan Ocean Co., South Korea’s biggest bulk carrier, fell 1.7 percent to 11,900 won.
Shipping stocks fell after the Baltic Dry Index, a measure of shipping costs for commodities, posted a sixth straight drop as the market for hiring capesize vessels for transporting iron ore and coal weakened. The index slid 1.4 percent yesterday to a five-week low.
“There’s just a general feeling that we are winding down for New Year and the bulk of the buying has been done this year,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “We’re just lacking the catalyst to really attract buyers at present. Traders are more happy to trade individual news stories.”
China Vanke Co., the nation’s biggest listed developers, slid 2.5 percent after the Xinhua News Agency said the government will target “excessive” property prices in some cities. Mitsui O.S.K. Lines Ltd., Japan’s No. 2 shipping line, fell 1.3 percent after cargo rates dropped. BHP, the world’s largest mining company, climbed 0.9 percent as copper advanced.
The MSCI Asia Pacific Index lost 0.1 percent to 120.26 as of 12:06 p.m. in Tokyo. It swung between gains and losses at least six times. The gauge has climbed 34 percent this year, set for its biggest annual gain since 2003, on signs government spending packages and lower interest rates are reviving the global economy.
“Asia does not offer much value in a valuation perspective, which is why we’re a bit cautious going into the new year,” said Christopher Wong, a fund manager at Aberdeen Asset Management Ltd. in Singapore, which oversees about $25 billion of Asian assets, told Bloomberg Television today. “We haven’t taken money off the table. We just need to wait for fundamentals to catch up.”
Japan’s Nikkei 225 Stock Average lost 0.2 percent. Hong Kong’s Hang Seng Index dropped 0.9 percent, while the Shanghai Composite Index sank 0.4 percent in China. Australia’s S&P/ASX 200 Index rose 0.4 percent. Platinum Australia Ltd. surged 4.6 percent after prices of the metal climbed.
Dubai Support
Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 0.7 percent to the highest since October 2008, as Abu Dhabi agreed to provide financing to Dubai’s financial support fund, allowing Dubai World to repay $4.1 billion of Islamic bonds that were due yesterday.
The MSCI Asia Pacific Index has climbed 71 percent from a more than five-year low on March 9, outpacing gains of 65 percent by the S&P 500 and 56 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the benchmark are valued at 22 times estimated earnings, compared with 18 times for the S&P and 16 times for the Stoxx.
BHP Billiton rose 0.9 percent to A$41.02. Rio Tinto added 0.5 percent to A$70.83. JPMorgan boosted their ratings after the broker increased its iron ore, coal and metal price forecasts. BHP was raised to “neutral” from “underweight” and Rio to “overweight” from “neutral,” JPMorgan analysts said yesterday in a report.
Metals Demand
Earnings per share next year at Rio, the second-biggest producer of iron ore, may be 30 percent higher than forecast because of higher metal prices, the JPMorgan report said. The earnings per share forecast for BHP this fiscal year was increased by 16 percent for next year.
Raw-material producers are the best performing of the MSCI Asia Pacific Index’s 10 industry groups this year on optimism global growth will fuel metals demand. Copper prices have more than doubled this year. Active futures on the metal rose 0.3 percent in New York after-hours trading, taking a three-day advance to 1.9 percent.
Platinum Australia, which owns mines in the country and South Africa, climbed 5.7 percent to 93 Australian cents after the metal rose the most in almost two weeks in New York yesterday. Aquarius Platinum Ltd., the world’s fourth-biggest producer of the metal, surged 5.4 percent to A$6.69.
China Vanke slid 2.5 percent to 11.50 yuan after Xinhua reported the Chinese government plans to “speed the construction of low-cost housing” and strengthen supervision of the real- estate market.
Policy Risk
Poly Real Estate Group Co. lost 3.2 percent to 23.80 yuan. China Overseas Land & Investment Ltd., a developer controlled by China’s construction ministry, sank 2.8 percent to HK$17.82 in Hong Kong.
“Government policy is a big risk to property stocks,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai.
China’s property prices climbed last month at the fastest pace since July 2008, adding to concern that record lending may fuel unsustainable asset-price increases. The State Council said last week the government will re-impose a sales tax on homes sold within five years, after cutting the period to two years in January.
Asset bubbles are the No. 1 threat to financial stability in Asia, posing a bigger danger than inflation, Norman Chan, the head of Hong Kong’s de facto central bank said yesterday.
In Tokyo, Mitsui O.S.K. lost 1.3 percent to 459 yen, while in Seoul, STX Pan Ocean Co., South Korea’s biggest bulk carrier, fell 1.7 percent to 11,900 won.
Shipping stocks fell after the Baltic Dry Index, a measure of shipping costs for commodities, posted a sixth straight drop as the market for hiring capesize vessels for transporting iron ore and coal weakened. The index slid 1.4 percent yesterday to a five-week low.
“There’s just a general feeling that we are winding down for New Year and the bulk of the buying has been done this year,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “We’re just lacking the catalyst to really attract buyers at present. Traders are more happy to trade individual news stories.”
ICICI arm accused of mistreating whistleblower
By Joe Leahy in Mumbai
Published: December 14 2009 21:33 | Last updated: December 14 2009 21:33
The UK subsidiary of India’s ICICI Bank has been accused by the Employment Tribunals in London of mistreating a whistleblower.
The tribunal ruling is likely to reignite fierce debate over better protection for the rights of whistleblowers.
India’s largest private sector bank tried immediately to repatriate the dealer, S. Kapoor, to India against his wishes after it was confirmed he had informed the UK Financial Services Authority about alleged irregularities.
“It is our conclusion ... the respondent [ICICI] subjected him to a detriment, and that it did so because of the protected disclosures that he made internally and, more importantly, to the FSA,” the judge wrote in a ruling last month.
ICICI said the matter was subjudice but it rejected the allegation that Mr Kapoor’s repatriation was linked to his disclosures, saying it was instead due to the closure of his division, the proprietary trading group.
“We insist that there is no connection between the whistleblowing incident and the decision to close the PTG,” ICICI said on Monday.
Mr Kapoor is claiming damages from ICICI for “being subjected to a detriment” after making a “protected disclosure”.
He started work on ICICI’s proprietary trading group desk in London in November last year, which trades foreign exchange and interest rate futures.
In January, he and a colleague noticed that their superior on the three-man team was allegedly altering records to cover up his trading losses, which reached more than $1m in 2008, the tribunal ruling said. The pair reported the issue to management, prompting an internal investigation.
But Mr Kapoor was frustrated with the pace of the investigation and concerned his superior had not been suspended, so that the desk was continuing to file inaccurate accounts. He secretly reported the matter to the FSA, the ruling said.
On April 8, the day Mr Kapoor’s senior managers confirmed it was he who had informed the FSA, they told him he would be repatriated to India in less than two weeks.
It fired the desk head accused of wrongdoing and made his colleague redundant. This person was the only ICICI UK employee to be made redundant during the financial crisis starting in September last year, the ruling said.
ICICI said the closure of the trading group was because of “market conditions” and added Mr Kapoor was offered “alternative employment” in India.
Published: December 14 2009 21:33 | Last updated: December 14 2009 21:33
The UK subsidiary of India’s ICICI Bank has been accused by the Employment Tribunals in London of mistreating a whistleblower.
The tribunal ruling is likely to reignite fierce debate over better protection for the rights of whistleblowers.
India’s largest private sector bank tried immediately to repatriate the dealer, S. Kapoor, to India against his wishes after it was confirmed he had informed the UK Financial Services Authority about alleged irregularities.
“It is our conclusion ... the respondent [ICICI] subjected him to a detriment, and that it did so because of the protected disclosures that he made internally and, more importantly, to the FSA,” the judge wrote in a ruling last month.
ICICI said the matter was subjudice but it rejected the allegation that Mr Kapoor’s repatriation was linked to his disclosures, saying it was instead due to the closure of his division, the proprietary trading group.
“We insist that there is no connection between the whistleblowing incident and the decision to close the PTG,” ICICI said on Monday.
Mr Kapoor is claiming damages from ICICI for “being subjected to a detriment” after making a “protected disclosure”.
He started work on ICICI’s proprietary trading group desk in London in November last year, which trades foreign exchange and interest rate futures.
In January, he and a colleague noticed that their superior on the three-man team was allegedly altering records to cover up his trading losses, which reached more than $1m in 2008, the tribunal ruling said. The pair reported the issue to management, prompting an internal investigation.
But Mr Kapoor was frustrated with the pace of the investigation and concerned his superior had not been suspended, so that the desk was continuing to file inaccurate accounts. He secretly reported the matter to the FSA, the ruling said.
On April 8, the day Mr Kapoor’s senior managers confirmed it was he who had informed the FSA, they told him he would be repatriated to India in less than two weeks.
It fired the desk head accused of wrongdoing and made his colleague redundant. This person was the only ICICI UK employee to be made redundant during the financial crisis starting in September last year, the ruling said.
ICICI said the closure of the trading group was because of “market conditions” and added Mr Kapoor was offered “alternative employment” in India.
Sunday, December 13, 2009
Google Says Employees Are Testing Android Phone Internally
Dec. 13 (Bloomberg) -- Google Inc., seeking to push further into the market for mobile phones and advertising, said employees are testing a device that uses its Android operating system.
The phone is based on hardware manufactured by a partner and it will allow the company to experiment with new features, Google said yesterday in a blog post. Employees worldwide are testing the device, the company said.
Separately, the Wall Street Journal reported that Google will sell the device directly to consumers next year.
Google, owner of the most-popular Internet search engine, is expanding its products for mobile phones as demand increases for devices that can surf the Web, take pictures and play music. Google’s Android software was first offered on phones last year, and Verizon Wireless released a device called Droid in November that uses the program.
Offering its own device would put Google into direct competition with Apple Inc., maker of the iPhone, and Research In Motion Ltd.’s BlackBerry. It would also create new rivalries with manufacturers such as Motorola Inc., which already make Android devices.
Google said its employees are “dogfooding” its new device, a term that refers to companies using their own products, or “eating your own dog food.”
Google and T-Mobile USA Inc. introduced the first Android phone in September 2008, a bid to lure consumers away from the iPhone and BlackBerry. The Journal, citing people familiar with the matter, said the new phone will be called Nexus One and is being made by HTC Corp.
Katie Watson, a spokeswoman for Mountain View, California- based Google, declined to comment beyond the company’s blog posting.
Google fell 99 cents to $590.51 in Nasdaq Stock Market trading on Dec. 11. The shares have almost doubled this year.
The phone is based on hardware manufactured by a partner and it will allow the company to experiment with new features, Google said yesterday in a blog post. Employees worldwide are testing the device, the company said.
Separately, the Wall Street Journal reported that Google will sell the device directly to consumers next year.
Google, owner of the most-popular Internet search engine, is expanding its products for mobile phones as demand increases for devices that can surf the Web, take pictures and play music. Google’s Android software was first offered on phones last year, and Verizon Wireless released a device called Droid in November that uses the program.
Offering its own device would put Google into direct competition with Apple Inc., maker of the iPhone, and Research In Motion Ltd.’s BlackBerry. It would also create new rivalries with manufacturers such as Motorola Inc., which already make Android devices.
Google said its employees are “dogfooding” its new device, a term that refers to companies using their own products, or “eating your own dog food.”
Google and T-Mobile USA Inc. introduced the first Android phone in September 2008, a bid to lure consumers away from the iPhone and BlackBerry. The Journal, citing people familiar with the matter, said the new phone will be called Nexus One and is being made by HTC Corp.
Katie Watson, a spokeswoman for Mountain View, California- based Google, declined to comment beyond the company’s blog posting.
Google fell 99 cents to $590.51 in Nasdaq Stock Market trading on Dec. 11. The shares have almost doubled this year.
SAIC May Buy Saab Brand at ‘Low Price,’ Economic Observer Says
Dec. 13 (Bloomberg) -- SAIC Motor Corp. may buy Saab Autmobile AB’s assets at a “low price” from General Motors Co., the Beijing-based Economic Observer reported, citing sources close to SAIC it didn’t identify.
The Shanghai-based automaker, China’s largest, may wait until Saab completes bankruptcy and then buy “core assets” including the brand and platforms, the newspaper said. GM narrowed its options for the Swedish unit to at most three bidders, people familiar with the matter said Dec. 2. It’s reviewing proposals by Spyker Cars NV and Renco Group Inc., with Renco less likely to win, they said.
The Detroit automaker is still weighing a sale of certain Saab assets to Beijing Automotive Industrial Holding Co., those people said. The Beijing-based company also aims to wait until Saab’s bankruptcy in order to buy some production lines and engine technology at lower prices, today’s report said.
“Chinese automakers are seeking to acquire advanced technology and platforms to enhance their competitiveness,” said Yale Zhang, a Shanghai-based director at auto consulting company CSM Asia.
Beijing Auto plans to “move fast” on Saab and seeks to improve its technology, President Wang Dazong said Nov. 30. China’s passenger-car sales surged 98 percent last month, the most in at least five years, as government incentives spurred demand in an auto market poised to surpass the U.S. this year as the world’s biggest.
Saab will probably win European Commission approval for a 400 million-euro ($590 million) loan regarded as vital to any sale, a Swedish official said on Dec. 10.
Signs appear positive the commission will rule that a Swedish guarantee for the European Investment Bank financing isn’t improper, said Johnny Kjellstroem, a deputy director at the Ministry of Enterprise, Energy and Communication, who is negotiating the case with the European Union’s regulatory arm.
GM said last week it will review bids for Saab and decide the unit’s fate by the end of the month. Calls made today to SAIC spokeswoman Zhu Xiangjun weren’t answered.
The Shanghai-based automaker, China’s largest, may wait until Saab completes bankruptcy and then buy “core assets” including the brand and platforms, the newspaper said. GM narrowed its options for the Swedish unit to at most three bidders, people familiar with the matter said Dec. 2. It’s reviewing proposals by Spyker Cars NV and Renco Group Inc., with Renco less likely to win, they said.
The Detroit automaker is still weighing a sale of certain Saab assets to Beijing Automotive Industrial Holding Co., those people said. The Beijing-based company also aims to wait until Saab’s bankruptcy in order to buy some production lines and engine technology at lower prices, today’s report said.
“Chinese automakers are seeking to acquire advanced technology and platforms to enhance their competitiveness,” said Yale Zhang, a Shanghai-based director at auto consulting company CSM Asia.
Beijing Auto plans to “move fast” on Saab and seeks to improve its technology, President Wang Dazong said Nov. 30. China’s passenger-car sales surged 98 percent last month, the most in at least five years, as government incentives spurred demand in an auto market poised to surpass the U.S. this year as the world’s biggest.
Saab will probably win European Commission approval for a 400 million-euro ($590 million) loan regarded as vital to any sale, a Swedish official said on Dec. 10.
Signs appear positive the commission will rule that a Swedish guarantee for the European Investment Bank financing isn’t improper, said Johnny Kjellstroem, a deputy director at the Ministry of Enterprise, Energy and Communication, who is negotiating the case with the European Union’s regulatory arm.
GM said last week it will review bids for Saab and decide the unit’s fate by the end of the month. Calls made today to SAIC spokeswoman Zhu Xiangjun weren’t answered.
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