Jan. 24 (Bloomberg) -- South Korea’s President Lee Myung Bak is seeking Indian government support to clear the way for Posco’s planned $12 billion plant that’s been delayed for about three years, his office said.
Lee, to attend India’s Republic Day celebrations on Jan. 26, is seeking Prime Minister Manmohan Singh’s “continued interest and support” for the plant, he said in a written interview with the Times of India newspaper, according to a Korean-language transcript issued by Lee’s office today.
Posco’s mill in the eastern state of Orissa, potentially the biggest overseas investment in India, was announced in 2005 and is delayed, pending mining permits and land clearance. Plans by ArcelorMittal, the world’s largest steelmaker, to build a pair of $10 billion plants in Orissa and neighboring Jharkhand have also been stalled for land acquisition.
Orissa has received only about $1 billion of $44 billion in investment pledged in the last five years, data from the state’s industries department show.
Posco, Asia’s most profitable steelmaker, said this month it had secured India’s permission to acquire 88 percent of the land needed for the plant and said it was continuing talks with residents to purchase the rest.
‘New Turning Point’
Hoping the approval will lead to “a new turning point,” Lee told the Indian newspaper that the deal may become “a model case” for industrial cooperation between South Korea and India.
India, Asia’s third-biggest economy and South Korea, the region’s fourth-largest, signed a trade agreement in August aimed at cutting or eliminating tariffs, giving companies including Hyundai Motor Co. and LG Electronics Inc. better access to the world’s second-most populous nation.
Lee expects trade between the two countries and South Korean investments in India will expand because of the accord, the statement said. He also hopes the two nations will cooperate in fields including nuclear power generation and development of resources, it said.
Policy makers are working to remove remaining hurdles faced by Posco, India’s foreign ministry said on Jan. 22. Lee arrives today and will leave on Jan. 27.
“The government of India and the state government attach considerable importance to the project; it hasn’t evolved at the pace that we would’ve wanted,” Vishnu Prakash, spokesman for India’s foreign ministry, said in New Delhi. “Many of the issues have been sorted out. The remaining issues, hopefully, will be sorted out.”
Prime Minister’s Help
The nation’s steel ministry has also sought the prime minister’s help to secure permits to help get the project off the ground this year, Raja Awasthi, media adviser to Steel Minister Virbhadra Singh, said on Jan. 14.
Difficulties in acquiring land and iron-ore mines have stalled almost $80 billion of steel projects that would have more than doubled India’s 55 million-ton output, the steel minister said in an interview last month.
Posco Chairman Chung Joon Yang said on Jan. 14 the company wants to start construction of the Orissa project this year. He is scheduled to be part of a business delegation visiting India along with President Lee.
Separately, ArcelorMittal and Posco earlier this month announced plans for two new steel mills in the southern state of Karnataka in India.
Saturday, January 23, 2010
U.S. to Appeal Blackwater Case Dismissal, Biden Says
BAGHDAD — Vice President Joseph R. Biden Jr. promised Iraqi leaders on Saturday that the United States would appeal the dismissal of manslaughter charges against five Blackwater Worldwide security contractors involved in a deadly shooting here that has inflamed anti-American tensions.
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The Marines handed over security control of Anbar Province to the United States Army on Saturday in a ceremony at Camp Ramadi.
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Iraqi Government, via Reuters
Left, Vice President Joseph R. Biden Jr. met with Prime Minister Nuri Kamal al-Maliki in Baghdad on Saturday.
Mr. Biden, tasked by the Obama administration to oversee policy in Iraq, made the statement after a day of meetings with Iraqi leaders that dealt, in part, with a political crisis that has erupted over the March 7 parliamentary elections. American officials view the vote, a barometer of the durability of Iraq’s political system, as a crucial date in American plans to withdraw tens of thousands of combat troops from Iraq by the end of August.
The vice president expressed his “personal regret” for the Blackwater shooting in 2007, in which contractors guarding American diplomats opened fire in a crowded Baghdad traffic circle, killing 17 people, including women and children.
“A dismissal is not an acquittal,” he said after meeting President Jalal Talabani.
Investigators had concluded that the guards fired indiscriminately on unarmed civilians in an unprovoked and unjustified attack. The guards contended that they had been ambushed by insurgents and fired in self-defense.
In December, in a decision that was a blow to the Justice Department and unleashed anger and disbelief in Iraq, a federal judge threw out the five guards’ indictment on manslaughter charges, citing misuse of their statements that violated their constitutional rights. The judge’s scathing and detailed ruling was expected to make any appeal difficult.
“This is great news,” Abdel-Amir Jihan, who was wounded in the shooting, said after hearing of Mr. Biden’s announcement. “The court was not fair to us. We felt great injustice when we heard the verdict. It was not right to drop the charges against them.”
Mr. Biden was scheduled to leave Saturday evening after a 24-hour visit that involved meetings with most of the pivotal players in the election crisis. That dispute erupted this month after a government commission barred more than 500 candidates, accusing them of supporting Saddam Hussein’s Baath Party. While some leaders have insisted that the disqualifications adhered to Iraqi law, many Sunni Muslims have seen them as score-settling by religious Shiite parties who suffered under Baath Party rule, and American officials have worried that the move could impair the vote’s legitimacy.
American officials have warned Iraqi leaders to avoid a process that, in the words of Mr. Biden’s national security adviser, Antony J. Blinken, “lacks transparency and fairness and credibility.” But as expected, there was no breakthrough in the meetings, and Mr. Biden, who spent the day shuttling between meetings, stressed that the United States would not impose a solution.
“I want to make clear I am not here to resolve that issue,” he said. “I am confident that Iraq’s leaders are seized with this issue and are working for a final, just solution.”
Before his meeting with Prime Minister Nuri Kamal al-Maliki, though, Mr. Biden alluded to how frequently American mediation — especially his own, over the course of three trips here since he became vice president — has been necessary. He jokingly told Mr. Maliki: “I’ve come to apply for citizenship. I’ve been here enough.”
The crisis has proved intractable in part because of its very nature: a legal process with obvious and sweeping political effects, seized on by Iraqi leaders with competing interests.
In Mr. Biden’s meeting with Mr. Maliki, officials said, the prime minister insisted that the disqualifications were simply a legal issue. But Mr. Maliki’s critics have accused him of politicizing the issue as much as anyone, and in a speech on Friday, he took an especially hard line, saying that the barring of candidates in itself did not go far enough.
And while many of the most senior Iraqi officials have warned the United States against interference in Iraq’s affairs, others — especially many of the Sunni politicians who were barred from running — have sought American intervention.
American officials have said that, despite the current political crisis, they do not foresee any delay in this August’s withdrawal of the main body of American combat troops.
A notable step in that process happened Saturday when the Marine Corps handed over security duties in Anbar Province, once a cradle of the insurgency, to United States Army soldiers. The move formally ended the seven-year-long Marine presence in Iraq, in effect signaling the end of heavy combat operations.
As many as 25,000 Marines were once in the country, and the remaining few thousand are expected to leave within weeks.
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Adam Schreck/Associated Press
The Marines handed over security control of Anbar Province to the United States Army on Saturday in a ceremony at Camp Ramadi.
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Iraqi Government, via Reuters
Left, Vice President Joseph R. Biden Jr. met with Prime Minister Nuri Kamal al-Maliki in Baghdad on Saturday.
Mr. Biden, tasked by the Obama administration to oversee policy in Iraq, made the statement after a day of meetings with Iraqi leaders that dealt, in part, with a political crisis that has erupted over the March 7 parliamentary elections. American officials view the vote, a barometer of the durability of Iraq’s political system, as a crucial date in American plans to withdraw tens of thousands of combat troops from Iraq by the end of August.
The vice president expressed his “personal regret” for the Blackwater shooting in 2007, in which contractors guarding American diplomats opened fire in a crowded Baghdad traffic circle, killing 17 people, including women and children.
“A dismissal is not an acquittal,” he said after meeting President Jalal Talabani.
Investigators had concluded that the guards fired indiscriminately on unarmed civilians in an unprovoked and unjustified attack. The guards contended that they had been ambushed by insurgents and fired in self-defense.
In December, in a decision that was a blow to the Justice Department and unleashed anger and disbelief in Iraq, a federal judge threw out the five guards’ indictment on manslaughter charges, citing misuse of their statements that violated their constitutional rights. The judge’s scathing and detailed ruling was expected to make any appeal difficult.
“This is great news,” Abdel-Amir Jihan, who was wounded in the shooting, said after hearing of Mr. Biden’s announcement. “The court was not fair to us. We felt great injustice when we heard the verdict. It was not right to drop the charges against them.”
Mr. Biden was scheduled to leave Saturday evening after a 24-hour visit that involved meetings with most of the pivotal players in the election crisis. That dispute erupted this month after a government commission barred more than 500 candidates, accusing them of supporting Saddam Hussein’s Baath Party. While some leaders have insisted that the disqualifications adhered to Iraqi law, many Sunni Muslims have seen them as score-settling by religious Shiite parties who suffered under Baath Party rule, and American officials have worried that the move could impair the vote’s legitimacy.
American officials have warned Iraqi leaders to avoid a process that, in the words of Mr. Biden’s national security adviser, Antony J. Blinken, “lacks transparency and fairness and credibility.” But as expected, there was no breakthrough in the meetings, and Mr. Biden, who spent the day shuttling between meetings, stressed that the United States would not impose a solution.
“I want to make clear I am not here to resolve that issue,” he said. “I am confident that Iraq’s leaders are seized with this issue and are working for a final, just solution.”
Before his meeting with Prime Minister Nuri Kamal al-Maliki, though, Mr. Biden alluded to how frequently American mediation — especially his own, over the course of three trips here since he became vice president — has been necessary. He jokingly told Mr. Maliki: “I’ve come to apply for citizenship. I’ve been here enough.”
The crisis has proved intractable in part because of its very nature: a legal process with obvious and sweeping political effects, seized on by Iraqi leaders with competing interests.
In Mr. Biden’s meeting with Mr. Maliki, officials said, the prime minister insisted that the disqualifications were simply a legal issue. But Mr. Maliki’s critics have accused him of politicizing the issue as much as anyone, and in a speech on Friday, he took an especially hard line, saying that the barring of candidates in itself did not go far enough.
And while many of the most senior Iraqi officials have warned the United States against interference in Iraq’s affairs, others — especially many of the Sunni politicians who were barred from running — have sought American intervention.
American officials have said that, despite the current political crisis, they do not foresee any delay in this August’s withdrawal of the main body of American combat troops.
A notable step in that process happened Saturday when the Marine Corps handed over security duties in Anbar Province, once a cradle of the insurgency, to United States Army soldiers. The move formally ended the seven-year-long Marine presence in Iraq, in effect signaling the end of heavy combat operations.
As many as 25,000 Marines were once in the country, and the remaining few thousand are expected to leave within weeks.
UN Panel to Strengthen Climate Research Systems, Pachauri Says
The Nobel prize-winning United Nations climate panel said it will use more rigorous research systems after being forced to re-examine its estimate of how fast Himalayan glaciers are melting.
The panel, whose work set the benchmark for global climate negotiations, is investigating research that suggested that Himalayan glaciers may disappear by 2035 after a report in the London-based Times newspaper that flawed data may have been used.
“Our systems are very robust; all we have to ensure is better implementation,” Rajendra Pachauri, who heads the UN Intergovernmental Panel on Climate Change, told reporters in New Delhi today. “We will ensure greater consistency in the next assessment report.”
The group, mandated to create a climate research summary used by policy makers worldwide, said in a 2007 report that the likelihood of Himalayan glaciers vanishing within three decades is “very high” should the Earth keep warming at current rates. The glaciers supply water to hundreds of millions of Chinese and Indians.
Pachauri chairs the IPCC panel that shared the 2007 Nobel Peace Prize with former U.S. Vice President Al Gore. The IPCC’s practices were challenged late last year after e-mails stolen from computer servers at the University of East Anglia showed climate researchers discussed keeping some scientific papers out of the IPCC report.
The British university said the e-mails were taken out of context. The report has formed the basis for two years of global climate-treaty talks.
“The skeptics have money and support from vested interests,” said Pachauri, adding he doesn’t plan to resign. “They aren’t looking for something scientifically valid for their arguments. Finally, truth will prevail.”
The panel, whose work set the benchmark for global climate negotiations, is investigating research that suggested that Himalayan glaciers may disappear by 2035 after a report in the London-based Times newspaper that flawed data may have been used.
“Our systems are very robust; all we have to ensure is better implementation,” Rajendra Pachauri, who heads the UN Intergovernmental Panel on Climate Change, told reporters in New Delhi today. “We will ensure greater consistency in the next assessment report.”
The group, mandated to create a climate research summary used by policy makers worldwide, said in a 2007 report that the likelihood of Himalayan glaciers vanishing within three decades is “very high” should the Earth keep warming at current rates. The glaciers supply water to hundreds of millions of Chinese and Indians.
Pachauri chairs the IPCC panel that shared the 2007 Nobel Peace Prize with former U.S. Vice President Al Gore. The IPCC’s practices were challenged late last year after e-mails stolen from computer servers at the University of East Anglia showed climate researchers discussed keeping some scientific papers out of the IPCC report.
The British university said the e-mails were taken out of context. The report has formed the basis for two years of global climate-treaty talks.
“The skeptics have money and support from vested interests,” said Pachauri, adding he doesn’t plan to resign. “They aren’t looking for something scientifically valid for their arguments. Finally, truth will prevail.”
India secures China pledge on trade surplus
India has claimed Wen Jiabao, the Chinese premier, has given his personal commitment to rebalance a booming bilateral trading relationship skewed overwhelmingly in China’s favour by non-tariff barriers.
New Delhi asked Beijing to take “corrective steps” to address a growing trade imbalance between the world’s two fastest-growing large economies in high level meetings in the Chinese capital this week.
EDITOR’S CHOICE
In depth: Building Brics - Jan-20
Inflation threat to China and India - Jan-15
Huawei in $500m India outlay - Jan-10
Delhi warns of vulnerable textile exports - Jan-06
Among the corrective steps recommended by Anand Sharma, India’s commerce minister, was the abolition of restrictions on Indian exports to China of products including information technology, Bollywood films and fresh food.
In the first Joint Economic Group meeting between the two countries for four years, China undertook to buy more value-added goods from India, according to the Indian delegation. India’s commerce ministry also said it had extracted a commitment from Mr Wen “that both sides could work together to ensure more balanced trade”.
The concern over the difficulty of exporting to China is one of a number of grievances that have marked a deterioration in relations between New Delhi and Beijing over the past year. Amid the global economic slowdown, India restricted the import of a variety of Chinese products, including toys, chocolates and non-branded mobile phones. More recently, Manmohan Singh, India’s prime minister, expressed surprise over China’s growing “assertiveness” over its territorial claim to Arunachal Pradesh, a state in India’s far north-east.
China has recently dislodged the US as India’s largest trading partner. But New Delhi is irked by a rising trade deficit with China that has widened over the past decade to $16bn last year. Indian officials and industrialists are concerned that raw materials are shipped from India to China, whereas trade in the other direction is of manufactured goods that are undercutting India’s small and medium-sized business.
China’s exports to India were worth about $29.5bn last year in a total bilateral trade of $43.4bn.
Neighbourly tensions: the Indo-Pakistani conflict
India Pakistan
FT interactive graphic: Tensions between India and Pakistan since partition in 1947
China is increasingly concerned about a backlash over its exports from a number of developing economies. While the US and the European Union have long called for China to allow the renminbi to appreciate, China is facing growing criticism about the level of its currency from developing nations. They argue that Chinese exports have become even more competitive over the past year as the government has allowed its currency to follow the dollar lower.
According to Ha Jiming at China International Capital Corporation, the renminbi depreciated by 14 per cent against the main emerging markets currencies last year and along with Indonesia, Brazil and Mexico, India was one of the countries that saw the most rapid rise in Chinese exports, he says.
FT series: Building Brics
Building BRICs
FT In depth: As the world emerges from recession, will the centre of gravity in the global economy shift to Brazil, Russia, India and China?
Mr Sharma, during his visit to China, highlighted the need for China to remove restrictions on the import of power equipment, rice and Indian television content. He also complained about time-consuming bureaucratic procedures blocking India’s drugmakers.
“The issue of non-tariff barriers is an issue that refers to the World Trade Organisation but it would be mutually favourable to sort this out at the bilateral level,” said Amit Mitra, the general secretary of the Federation of Indian Chambers of Commerce and Industry. “The problem is: how do we get market access?”
New Delhi asked Beijing to take “corrective steps” to address a growing trade imbalance between the world’s two fastest-growing large economies in high level meetings in the Chinese capital this week.
EDITOR’S CHOICE
In depth: Building Brics - Jan-20
Inflation threat to China and India - Jan-15
Huawei in $500m India outlay - Jan-10
Delhi warns of vulnerable textile exports - Jan-06
Among the corrective steps recommended by Anand Sharma, India’s commerce minister, was the abolition of restrictions on Indian exports to China of products including information technology, Bollywood films and fresh food.
In the first Joint Economic Group meeting between the two countries for four years, China undertook to buy more value-added goods from India, according to the Indian delegation. India’s commerce ministry also said it had extracted a commitment from Mr Wen “that both sides could work together to ensure more balanced trade”.
The concern over the difficulty of exporting to China is one of a number of grievances that have marked a deterioration in relations between New Delhi and Beijing over the past year. Amid the global economic slowdown, India restricted the import of a variety of Chinese products, including toys, chocolates and non-branded mobile phones. More recently, Manmohan Singh, India’s prime minister, expressed surprise over China’s growing “assertiveness” over its territorial claim to Arunachal Pradesh, a state in India’s far north-east.
China has recently dislodged the US as India’s largest trading partner. But New Delhi is irked by a rising trade deficit with China that has widened over the past decade to $16bn last year. Indian officials and industrialists are concerned that raw materials are shipped from India to China, whereas trade in the other direction is of manufactured goods that are undercutting India’s small and medium-sized business.
China’s exports to India were worth about $29.5bn last year in a total bilateral trade of $43.4bn.
Neighbourly tensions: the Indo-Pakistani conflict
India Pakistan
FT interactive graphic: Tensions between India and Pakistan since partition in 1947
China is increasingly concerned about a backlash over its exports from a number of developing economies. While the US and the European Union have long called for China to allow the renminbi to appreciate, China is facing growing criticism about the level of its currency from developing nations. They argue that Chinese exports have become even more competitive over the past year as the government has allowed its currency to follow the dollar lower.
According to Ha Jiming at China International Capital Corporation, the renminbi depreciated by 14 per cent against the main emerging markets currencies last year and along with Indonesia, Brazil and Mexico, India was one of the countries that saw the most rapid rise in Chinese exports, he says.
FT series: Building Brics
Building BRICs
FT In depth: As the world emerges from recession, will the centre of gravity in the global economy shift to Brazil, Russia, India and China?
Mr Sharma, during his visit to China, highlighted the need for China to remove restrictions on the import of power equipment, rice and Indian television content. He also complained about time-consuming bureaucratic procedures blocking India’s drugmakers.
“The issue of non-tariff barriers is an issue that refers to the World Trade Organisation but it would be mutually favourable to sort this out at the bilateral level,” said Amit Mitra, the general secretary of the Federation of Indian Chambers of Commerce and Industry. “The problem is: how do we get market access?”
Friday, January 22, 2010
Asian Equities Post Worst Week Since March on China Concerns
Jan. 23 (Bloomberg) -- Asian stocks fell, dragging the benchmark MSCI Asia Pacific Index to its biggest weekly drop since March, on concern the pace of economic growth will prompt central banks from China to India to curb price increases.
Aluminum Corp. of China Ltd., the country’s largest producer of the metal, sank 9.1 percent in Hong Kong. Rio Tinto Group, the world’s third-largest mining company, slid 7.2 percent in Sydney as metal prices fell. Nomura Holdings Inc., Japan’s biggest investment bank, lost 8.8 percent in Tokyo after Credit Suisse Group AG cut its rating. Nissan Motor Co., which gets about 35 percent of its sales from North America, retreated 6.4 percent as U.S. consumer confidence trailed estimates.
“It does look like we’re going through some sort of a correction,” said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors, which oversees about $90 billion globally. “There are some worries about the extent of tightening in China. I don’t think they’re seeking to crunch their economy, but obviously the market worries that that will be the case.”
The MSCI Asia Pacific Index fell 3.5 percent to 122.39 for the first weekly drop in five. The gauge has jumped 48 percent in the past 12 months as growth in China helped the global economy emerge from the worst slowdown since World War II. The U.S. Standard & Poor’s 500 Index gained 32 percent in that time, while Europe’s Dow Jones Stoxx 600 Index added 37 percent.
Japan’s Nikkei 225 Stock Average declined 3.6 percent this week, the steepest drop since the period ended Nov. 27. Hong Kong’s Hang Seng Index lost 4.3 percent. Australia’s S&P/ASX 200 Index fell 3 percent amid concern the nation may raise taxes on mining projects.
Reduced Risk
Asian equities also fell in the week as U.S. President Barack Obama proposed measures to reduce risk-taking at banks, raising concerns the plans will curb lenders’ profits and hurt the country’s economic recovery.
China’s Shanghai Composite Index dropped 3 percent as government reports on Jan. 21 showed the country’s fourth- quarter gross domestic product grew 10.7 percent, more than economists estimated, while inflation accelerated to a more- than-forecast 1.9 percent in December.
The People’s Bank of China on Jan. 12 unexpectedly raised lenders’ reserve requirements to curb liquidity. The central bank will raise interest rates by the end of June, as well as increasing banks’ reserve requirements, according to the median of 17 forecasts by economists in a Bloomberg News survey.
‘Heavy Lifting’
Aluminum Corp. of China sank 9.1 percent to HK$8.82 in Hong Kong after Goldman Sachs Group Inc. also lowered its rating to “sell” from “neutral.” China Shenhua Energy Co., the nation’s largest coal producer, retreated 8 percent to HK$34.95.
“China has done the heavy lifting in the recovery process, and now needs to cool its economy down a little bit,” said Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney. “Policy tightening measures will be forthcoming, but they need to be viewed in the context of how strong the economy has been.”
Metal prices fell amid speculation China will restrict lending and raise borrowing costs to prevent the economy overheating. The London Metal Exchange Index, a gauge of six metals including aluminum and copper, fell 2 percent this week, the first drop in six.
In Sydney, Rio Tinto lost 7.2 percent to A$72.94 and BHP Billiton Ltd., the world’s biggest mining company, sank 4.5 percent to A$41.70.
Mining Tax
The Sydney Morning Herald reported on Jan. 22 that a review of Australia’s tax system may recommend taxing mining projects in the same way as energy projects, a change that would have raised an extra A$14 billion ($12.7 billion) over the past three years, the newspaper cited Treasury estimates as saying.
Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, sank 6.9 percent to A$44.37, its lowest close since August 2009, after saying fourth-quarter revenue declined 23 percent from a year earlier on lower production.
Santos Ltd., Australia’s third-largest oil and gas producer, declined 1.5 percent to A$13.55 after saying its fourth-quarter sales dropped 7 percent on lower oil prices. Crude oil for February delivery declined 4.4 percent this week in New York.
Signs of a pick-up in economies around the region have driven the MSCI Asia Pacific up by almost 50 percent in the past year. Companies on the index are priced at an average 1.6 times book value, near the highest level since September 2008.
“The market remains overheated and there will be some more corrections,” said Mitsushige Akino, who oversees about $450 million at Ichiyoshi Investment Management Co. in Tokyo.
Financial Shares Drop
Nomura Holdings dropped 8.8 percent to 707 yen after being cut to “neutral” from “outperform” by Credit Suisse. Daiwa Securities Group Inc. dipped 3.7 percent to 492 yen after Credit Suisse lowered its rating on the Japanese brokerage sector to “market weight” from “overweight.”
HSBC Holdings Plc, which generates a fifth of its revenue in North America, slipped 5.5 percent to HK$85.70 in Hong Kong. JPMorgan Chase & Co., the largest U.S. bank by market value, reported fourth-quarter revenue that was less than analysts’ estimated. JPMorgan said it was “cautious” about the outlook for consumer loan defaults.
Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, sank 2.6 percent to 493 yen after Barclays Plc said declining sales at domestic-oriented companies will damp demand for corporate loans.
Cautious Outlook
Commonwealth Bank of Australia, the country’s biggest bank, retreated 4 percent to A$55.75 in Sydney.
“Growth is coming through from all the major banks but the rate of improvement that some investors are expecting may not be as strong as previously estimated,” said Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne.
Nissan fell 6.4 percent to 750 yen, while Honda Motor Co., which gets 42 percent of its sales from North America, dropped 5 percent to 3,230 yen, after a measure of U.S. consumer confidence trailed forecasts.
James Hardie Industries NV, the top seller of home siding in the U.S., sank 7 percent to A$7.97 in Sydney.
The Reuters/University of Michigan preliminary index of consumer sentiment increased to 72.8 in January, lagging behind the 74 projected by economists.
“Wages and the job market have yet to recover,” said Ichiyoshi Investment’s Akino. “With weak consumer spending, a full-scale recovery in the U.S. economy won’t happen soon. Instead, workers will face tougher situations as companies continue restructuring.”
Aluminum Corp. of China Ltd., the country’s largest producer of the metal, sank 9.1 percent in Hong Kong. Rio Tinto Group, the world’s third-largest mining company, slid 7.2 percent in Sydney as metal prices fell. Nomura Holdings Inc., Japan’s biggest investment bank, lost 8.8 percent in Tokyo after Credit Suisse Group AG cut its rating. Nissan Motor Co., which gets about 35 percent of its sales from North America, retreated 6.4 percent as U.S. consumer confidence trailed estimates.
“It does look like we’re going through some sort of a correction,” said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors, which oversees about $90 billion globally. “There are some worries about the extent of tightening in China. I don’t think they’re seeking to crunch their economy, but obviously the market worries that that will be the case.”
The MSCI Asia Pacific Index fell 3.5 percent to 122.39 for the first weekly drop in five. The gauge has jumped 48 percent in the past 12 months as growth in China helped the global economy emerge from the worst slowdown since World War II. The U.S. Standard & Poor’s 500 Index gained 32 percent in that time, while Europe’s Dow Jones Stoxx 600 Index added 37 percent.
Japan’s Nikkei 225 Stock Average declined 3.6 percent this week, the steepest drop since the period ended Nov. 27. Hong Kong’s Hang Seng Index lost 4.3 percent. Australia’s S&P/ASX 200 Index fell 3 percent amid concern the nation may raise taxes on mining projects.
Reduced Risk
Asian equities also fell in the week as U.S. President Barack Obama proposed measures to reduce risk-taking at banks, raising concerns the plans will curb lenders’ profits and hurt the country’s economic recovery.
China’s Shanghai Composite Index dropped 3 percent as government reports on Jan. 21 showed the country’s fourth- quarter gross domestic product grew 10.7 percent, more than economists estimated, while inflation accelerated to a more- than-forecast 1.9 percent in December.
The People’s Bank of China on Jan. 12 unexpectedly raised lenders’ reserve requirements to curb liquidity. The central bank will raise interest rates by the end of June, as well as increasing banks’ reserve requirements, according to the median of 17 forecasts by economists in a Bloomberg News survey.
‘Heavy Lifting’
Aluminum Corp. of China sank 9.1 percent to HK$8.82 in Hong Kong after Goldman Sachs Group Inc. also lowered its rating to “sell” from “neutral.” China Shenhua Energy Co., the nation’s largest coal producer, retreated 8 percent to HK$34.95.
“China has done the heavy lifting in the recovery process, and now needs to cool its economy down a little bit,” said Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney. “Policy tightening measures will be forthcoming, but they need to be viewed in the context of how strong the economy has been.”
Metal prices fell amid speculation China will restrict lending and raise borrowing costs to prevent the economy overheating. The London Metal Exchange Index, a gauge of six metals including aluminum and copper, fell 2 percent this week, the first drop in six.
In Sydney, Rio Tinto lost 7.2 percent to A$72.94 and BHP Billiton Ltd., the world’s biggest mining company, sank 4.5 percent to A$41.70.
Mining Tax
The Sydney Morning Herald reported on Jan. 22 that a review of Australia’s tax system may recommend taxing mining projects in the same way as energy projects, a change that would have raised an extra A$14 billion ($12.7 billion) over the past three years, the newspaper cited Treasury estimates as saying.
Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, sank 6.9 percent to A$44.37, its lowest close since August 2009, after saying fourth-quarter revenue declined 23 percent from a year earlier on lower production.
Santos Ltd., Australia’s third-largest oil and gas producer, declined 1.5 percent to A$13.55 after saying its fourth-quarter sales dropped 7 percent on lower oil prices. Crude oil for February delivery declined 4.4 percent this week in New York.
Signs of a pick-up in economies around the region have driven the MSCI Asia Pacific up by almost 50 percent in the past year. Companies on the index are priced at an average 1.6 times book value, near the highest level since September 2008.
“The market remains overheated and there will be some more corrections,” said Mitsushige Akino, who oversees about $450 million at Ichiyoshi Investment Management Co. in Tokyo.
Financial Shares Drop
Nomura Holdings dropped 8.8 percent to 707 yen after being cut to “neutral” from “outperform” by Credit Suisse. Daiwa Securities Group Inc. dipped 3.7 percent to 492 yen after Credit Suisse lowered its rating on the Japanese brokerage sector to “market weight” from “overweight.”
HSBC Holdings Plc, which generates a fifth of its revenue in North America, slipped 5.5 percent to HK$85.70 in Hong Kong. JPMorgan Chase & Co., the largest U.S. bank by market value, reported fourth-quarter revenue that was less than analysts’ estimated. JPMorgan said it was “cautious” about the outlook for consumer loan defaults.
Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, sank 2.6 percent to 493 yen after Barclays Plc said declining sales at domestic-oriented companies will damp demand for corporate loans.
Cautious Outlook
Commonwealth Bank of Australia, the country’s biggest bank, retreated 4 percent to A$55.75 in Sydney.
“Growth is coming through from all the major banks but the rate of improvement that some investors are expecting may not be as strong as previously estimated,” said Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne.
Nissan fell 6.4 percent to 750 yen, while Honda Motor Co., which gets 42 percent of its sales from North America, dropped 5 percent to 3,230 yen, after a measure of U.S. consumer confidence trailed forecasts.
James Hardie Industries NV, the top seller of home siding in the U.S., sank 7 percent to A$7.97 in Sydney.
The Reuters/University of Michigan preliminary index of consumer sentiment increased to 72.8 in January, lagging behind the 74 projected by economists.
“Wages and the job market have yet to recover,” said Ichiyoshi Investment’s Akino. “With weak consumer spending, a full-scale recovery in the U.S. economy won’t happen soon. Instead, workers will face tougher situations as companies continue restructuring.”
Japan’s Bond Futures Advance on Rising Yen, Declining Stocks
Jan. 23 (Bloomberg) -- Japan’s 10-year bond futures rose for a second week as the yen’s gain to a one-month high versus the dollar damped the outlook for exporter earnings, boosting demand for the safety of government debt.
Ten-year yields fell the most in a week yesterday after U.S. President Barack Obama on Jan. 21 proposed limiting risk-taking at banks to avoid a repetition of the global financial crisis. Bonds also advanced as Japanese stocks yesterday fell the most in two months, with the Nikkei 225 Stock Average erasing almost all of this year’s advance.
“Obama’s remarks will continue to weigh on stocks until details of his proposal become clear,” said Daisuke Uno, chief strategist in Tokyo at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-largest banking group. “External factors are positive for Japan’s bonds.”
Ten-year bond futures for March delivery gained 0.13 to 139.23 this week at the Tokyo Stock Exchange.
The yield on the 1.3 percent bond maturing in December 2019 rose half a basis point to 1.325 percent this week in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price fell 0.043 yen to 99.781 yen. The yield dropped 1.5 basis points yesterday, the sharpest decline since Jan. 15.
Five-year yields declined half a basis point to 0.505 percent this week.
The yen climbed to as high as 89.79 per dollar yesterday, the strongest since Dec. 18, after Obama on Jan. 21 called for limiting the size and trading activities of financial institutions to reduce risk taking. The Nikkei 225 yesterday fell 2.6 percent, the largest decline since Nov. 27.
‘Will Struggle’
“Ten-year yields will struggle to dip below 1.30 percent unless expectations re-emerge that the Bank of Japan will introduce additional monetary easing or new factors come up for Japan bonds,” Shinji Nomura, a Tokyo-based chief bond strategist at Nikko Cordial Securities Inc., wrote in a research note yesterday.
The Bank of Japan introduced a 10 trillion yen ($111 billion) credit program in December after the yen rose to a 14-year high against the dollar and Finance Minister Naoto Kan urged policy makers to ease monetary policy to arrest deflation when he was economy minister. There are “still various policy measures that could be taken” by the central bank and the government, Kan said Jan. 14.
Bank of Japan
“The yen’s latest advance is not big or rapid enough to put pressure on the BOJ,” said Eishi Yokoyama, a Tokyo-based fund manager at Daiwa SB Investments Ltd. “Investors have already taken deflation into account. Japan’s bonds will continue to be sensitive to U.S. factors for a while.”
The central bank will keep its key overnight rate at 0.1 percent on Jan. 26, according to all 17 economists surveyed by Bloomberg News. A separate survey indicates the central bank will leave the rate unchanged all year.
Consumer prices excluding fresh food fell 1.3 percent in December from a year earlier, according to the median estimate of economists in a Bloomberg News survey before the statistics bureau releases the data on Jan. 29 in Tokyo. That would be a 10th-straight decline. Deflation, a general drop in prices, enhances the value of the fixed payments from bonds.
The extra yield offered by 10-year Treasuries over similar-maturity Japanese bonds was 2.28 percentage points yesterday. The spread reached 2.54 percentage points on Dec. 31, the most in two years.
Ten-year yields fell the most in a week yesterday after U.S. President Barack Obama on Jan. 21 proposed limiting risk-taking at banks to avoid a repetition of the global financial crisis. Bonds also advanced as Japanese stocks yesterday fell the most in two months, with the Nikkei 225 Stock Average erasing almost all of this year’s advance.
“Obama’s remarks will continue to weigh on stocks until details of his proposal become clear,” said Daisuke Uno, chief strategist in Tokyo at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-largest banking group. “External factors are positive for Japan’s bonds.”
Ten-year bond futures for March delivery gained 0.13 to 139.23 this week at the Tokyo Stock Exchange.
The yield on the 1.3 percent bond maturing in December 2019 rose half a basis point to 1.325 percent this week in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price fell 0.043 yen to 99.781 yen. The yield dropped 1.5 basis points yesterday, the sharpest decline since Jan. 15.
Five-year yields declined half a basis point to 0.505 percent this week.
The yen climbed to as high as 89.79 per dollar yesterday, the strongest since Dec. 18, after Obama on Jan. 21 called for limiting the size and trading activities of financial institutions to reduce risk taking. The Nikkei 225 yesterday fell 2.6 percent, the largest decline since Nov. 27.
‘Will Struggle’
“Ten-year yields will struggle to dip below 1.30 percent unless expectations re-emerge that the Bank of Japan will introduce additional monetary easing or new factors come up for Japan bonds,” Shinji Nomura, a Tokyo-based chief bond strategist at Nikko Cordial Securities Inc., wrote in a research note yesterday.
The Bank of Japan introduced a 10 trillion yen ($111 billion) credit program in December after the yen rose to a 14-year high against the dollar and Finance Minister Naoto Kan urged policy makers to ease monetary policy to arrest deflation when he was economy minister. There are “still various policy measures that could be taken” by the central bank and the government, Kan said Jan. 14.
Bank of Japan
“The yen’s latest advance is not big or rapid enough to put pressure on the BOJ,” said Eishi Yokoyama, a Tokyo-based fund manager at Daiwa SB Investments Ltd. “Investors have already taken deflation into account. Japan’s bonds will continue to be sensitive to U.S. factors for a while.”
The central bank will keep its key overnight rate at 0.1 percent on Jan. 26, according to all 17 economists surveyed by Bloomberg News. A separate survey indicates the central bank will leave the rate unchanged all year.
Consumer prices excluding fresh food fell 1.3 percent in December from a year earlier, according to the median estimate of economists in a Bloomberg News survey before the statistics bureau releases the data on Jan. 29 in Tokyo. That would be a 10th-straight decline. Deflation, a general drop in prices, enhances the value of the fixed payments from bonds.
The extra yield offered by 10-year Treasuries over similar-maturity Japanese bonds was 2.28 percentage points yesterday. The spread reached 2.54 percentage points on Dec. 31, the most in two years.
Thursday, January 21, 2010
India May Start Trading of Renewable-Energy Credits in May
Jan. 22 (Bloomberg) -- India may let power companies start trading renewable-energy credits in May as part of a plan to create a multibillion-dollar market and encourage reductions in greenhouse-gas emissions.
“We’ll be moving toward completely market-driven renewable energy development with this,” Pramod Deo, chairman of the Central Electricity Regulatory Commission, the power regulator, told Bloomberg News in an interview in Mumbai yesterday.
India, the world´s fourth-largest emitter, aims to boost the development of solar, wind and other clean-energy projects by requiring power distributors such as billionaire Anil Ambani’sReliance Infrastructure Ltd, Tata Power Co. and their state counterparts to ensure a portion of the electricity they carry comes from renewable sources.
If their supply of green energy falls short, distributors must buy certificates from other producers with surpluses, an incentive for clean-energy production and a more stable market. Similar rules exist in some U.S. and Australian states, and in the U.K.
“By April or May, we should have the Renewable Energy Certificate mechanism in place,” Deo said.
Surplus renewable power generated in one state could be bought as a credit by a distributor and sold to a company elsewhere that’s unable to buy enough clean power locally.
“This will become one of the most progressive regimes as far as renewable energy is concerned,” said Vinod Kala, managing director of Emergent Ventures India, a New Delhi-based carbon-consulting company that estimates trade in renewable energy credits, or RECs, could increase to as much as $10 billion by 2020.
No Treaty
“Without a market-based mechanism, renewable energy would have required a large amount of subsidies. This way you can let the market bear the financial burden rather than government,” he said. “A proper forward trade of RECs will also let you better assess the financial feasibility of renewable energy projects.”
India has refused to accept binding targets on greenhouse gases, saying they might hamper industrial growth. Without a global climate treaty governing developing countries, it is moving ahead with efforts to combat climate change by setting up a domestic market for trading emissions credits.
The latest development follows plans to set up a parallel system for trading credits from energy-saving projects, which is expected to grow into a $16 billion market in five years, Ajay Mathur, director-general of India’s Bureau of Energy Efficiency, said last week.
Power Exchanges
The renewable and energy-savings credits will both trade on the country’s two power exchanges, creating a domestic market that may rival India’s $4 billion-$6 billion international trade in carbon credits under the government’s projections, said Pranav Nahar, managing director of Evolution Markets, a New Delhi-based carbon finance company.
India is the second-largest generator of carbon credits in the United Nations Clean Development Mechanism, the world’s second-biggest greenhouse-gas trading market. Certified Emissions Credits, or CERs, issued for pollution-cutting projects in India are sold to businesses in Europe and elsewhere seeking to meet either mandatory or voluntary limits.
“It will take at least one year for liquid trade to begin” in renewable energy and energy-saving credits, said Nahar. In time, they will likely be traded interchangeably with CERs, he said.
“We’ll be moving toward completely market-driven renewable energy development with this,” Pramod Deo, chairman of the Central Electricity Regulatory Commission, the power regulator, told Bloomberg News in an interview in Mumbai yesterday.
India, the world´s fourth-largest emitter, aims to boost the development of solar, wind and other clean-energy projects by requiring power distributors such as billionaire Anil Ambani’sReliance Infrastructure Ltd, Tata Power Co. and their state counterparts to ensure a portion of the electricity they carry comes from renewable sources.
If their supply of green energy falls short, distributors must buy certificates from other producers with surpluses, an incentive for clean-energy production and a more stable market. Similar rules exist in some U.S. and Australian states, and in the U.K.
“By April or May, we should have the Renewable Energy Certificate mechanism in place,” Deo said.
Surplus renewable power generated in one state could be bought as a credit by a distributor and sold to a company elsewhere that’s unable to buy enough clean power locally.
“This will become one of the most progressive regimes as far as renewable energy is concerned,” said Vinod Kala, managing director of Emergent Ventures India, a New Delhi-based carbon-consulting company that estimates trade in renewable energy credits, or RECs, could increase to as much as $10 billion by 2020.
No Treaty
“Without a market-based mechanism, renewable energy would have required a large amount of subsidies. This way you can let the market bear the financial burden rather than government,” he said. “A proper forward trade of RECs will also let you better assess the financial feasibility of renewable energy projects.”
India has refused to accept binding targets on greenhouse gases, saying they might hamper industrial growth. Without a global climate treaty governing developing countries, it is moving ahead with efforts to combat climate change by setting up a domestic market for trading emissions credits.
The latest development follows plans to set up a parallel system for trading credits from energy-saving projects, which is expected to grow into a $16 billion market in five years, Ajay Mathur, director-general of India’s Bureau of Energy Efficiency, said last week.
Power Exchanges
The renewable and energy-savings credits will both trade on the country’s two power exchanges, creating a domestic market that may rival India’s $4 billion-$6 billion international trade in carbon credits under the government’s projections, said Pranav Nahar, managing director of Evolution Markets, a New Delhi-based carbon finance company.
India is the second-largest generator of carbon credits in the United Nations Clean Development Mechanism, the world’s second-biggest greenhouse-gas trading market. Certified Emissions Credits, or CERs, issued for pollution-cutting projects in India are sold to businesses in Europe and elsewhere seeking to meet either mandatory or voluntary limits.
“It will take at least one year for liquid trade to begin” in renewable energy and energy-saving credits, said Nahar. In time, they will likely be traded interchangeably with CERs, he said.
New Zealand Skilled Vacancies Rise 5%, Report Shows
Jan. 22 (Bloomberg) -- A New Zealand gauge of demand for skilled workers climbed in December for a fifth month, adding to signs of an economic rebound.
Demand for skilled workers rose 5 percent in the three months ended Dec. 31, after gaining 1.5 percent in the three months through November, the Labour Department said. The index is based on vacancies posted on the nation’s three largest recruitment Web sites.
Rising demand for workers adds to signs the economy is recovering from a recession that prompted companies to close plants, cut hours and stop hiring last year. Manufacturing expanded for a fourth month in December, buoyed by new orders, and consumer confidence rose to a three-year high, reports showed yesterday.
“Firms will look to restore hours of existing staff before they take on new employees,” the department said in a statement. “We do not expect a substantial rise in the number of new vacancies until later in the year.”
The jobless rate will probably rise to 7 percent by mid- 2010 from 6.5 percent in the third quarter last year, the department said, reaffirming previous forecasts. Skill shortages are likely to emerge as the recovery gathers pace, it said.
The Jobs Online report, which began in November, replaces a previous survey of positions vacant in newspapers, reflecting modern recruitment practices, the department said. The three Web sites are Seek, Trade Me Jobs and the New Zealand Herald, it said.
Demand for skilled workers rose 5 percent in the three months ended Dec. 31, after gaining 1.5 percent in the three months through November, the Labour Department said. The index is based on vacancies posted on the nation’s three largest recruitment Web sites.
Rising demand for workers adds to signs the economy is recovering from a recession that prompted companies to close plants, cut hours and stop hiring last year. Manufacturing expanded for a fourth month in December, buoyed by new orders, and consumer confidence rose to a three-year high, reports showed yesterday.
“Firms will look to restore hours of existing staff before they take on new employees,” the department said in a statement. “We do not expect a substantial rise in the number of new vacancies until later in the year.”
The jobless rate will probably rise to 7 percent by mid- 2010 from 6.5 percent in the third quarter last year, the department said, reaffirming previous forecasts. Skill shortages are likely to emerge as the recovery gathers pace, it said.
The Jobs Online report, which began in November, replaces a previous survey of positions vacant in newspapers, reflecting modern recruitment practices, the department said. The three Web sites are Seek, Trade Me Jobs and the New Zealand Herald, it said.
Wednesday, January 20, 2010
Copper in London Rebounds as Much as 1.1% to $7,453 a Ton
Jan. 21 (Bloomberg) -- Copper on the London Metal Exchange rebounded as much as 1.1 percent to $7,453 a metric ton today. The contract for delivery in three months declined 2.3 percent yesterday.
Obama Weighs Shift in Health Plan, Seeking G.O.P. Backing
WASHINGTON — With Democrats reeling from the Republican victory in the Massachusetts special Senate election, President Obama on Wednesday signaled that he might be willing to set aside his goal of achieving near-universal health coverage for all Americans in favor of a stripped-down measure with bipartisan support.
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G.O.P. Senate Victory Stuns Democrats (January 20, 2010)
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“It is very important to look at the substance of this package and for the American people to understand that a lot of the fear-mongering around this bill isn’t true,” Mr. Obama said in an interview on ABC News. “I would advise that we try to move quickly to coalesce around those elements of the package that people agree on.”
He continued: “We know that we need insurance reform, that the health insurance companies are taking advantage of people. We know that we have to have some form of cost containment because if we don’t, then our budgets are going to blow up and we know that small businesses are going to need help so that they can provide health insurance to their families. Those are the core, some of the core elements of, to this bill.”
Mr. Obama’s remarks came as the White House and Democratic congressional leaders fumbled for a way forward with their major health care overhaul, and struggled to digest the reality that their top legislative priority had been derailed by the outcome in Massachusetts.
The White House insisted that Mr. Obama still preferred passage of a far-reaching health care measure, and Democratic leaders said they were weighing their options. But some lawmakers in both parties began calling for a scaled-back bill that could be adopted quickly with bipartisan support.
As the full Congress returned to Washington to start a new legislative year — on the first anniversary of Mr. Obama’s inauguration — their options were limited. House leaders signaled that they had effectively ruled out the idea of adopting the Senate bill, which would send it directly to the president for his signature.
The victory in Massachusetts on Tuesday, by the Republican candidate, Scott Brown, denies Democrats the 60th vote they need to surmount filibusters and advance a revised health measure. And Senate leaders said they would not risk antagonizing voters by trying to rush a bill through before Mr. Brown could be sworn in.
Democrats also grappled with the implications of losing their 60-vote majority for their wider legislative agenda, including efforts to tighten regulation of the financial system and to combat global warming, even as they sensed new urgency to turn their full attention to creating jobs and improving the economy.
At the White House and at the Capitol, high-level Democrats seemed stunned by the turn of events, though it had been clear for several days that they could lose in Massachusetts. “Bottom line,” said one Democrat who is close to the White House, “In the first 24 hours there is literally no good option.”
Democrats, from Mr. Obama on down, however, made a concerted effort to portray the results in Massachusetts as a reflection of long-simmering populist anger, and not a referendum on the health care legislation or on the year-old administration, which came into office facing steep challenges.
“Here’s my assessment of not just the vote in Massachusetts, but the mood around the country: the same thing that swept Scott Brown into office swept me into office,” Mr. Obama said in the interview on ABC. “People are angry, they are frustrated. Not just because of what’s happened in the last year or two years, but what’s happened over the last eight years.”
The Massachusetts race and the ensuing unease among Democrats also threatened to complicate any chance the White House had of winning passage this year of legislation to curb global warming through an emissions trading system.
But the outcome might put further impetus behind efforts to bring down the budget deficit, a topic the White House has become more visibly active in addressing in recent days. On Tuesday, the administration and Congressional Democrats agreed on a plan to create a commission to recommend ways of attacking the deficit and the national debt.
At a news conference at the Capitol, the Senate majority leader, Harry Reid of Nevada, made a concerted effort to minimize the health care issue in relation to other concerns among the American public, particularly about jobs and the economy. But he made clear that Democrats did not see a clear path forward.
“The election in Massachusetts changes the math in the Senate,” Mr. Reid said. “But it doesn’t change the fact that people are hurting.” Pressed about the health care legislation, Mr. Reid said, “The problems out there -- it’s certainly more than health care.” Pressed again, he said: “No decision has been made.”
Several senior Democrats said they did not know if the health care legislation could be salvaged.
Republicans showed no new signs of willingness to work with the Democrats. Asked what he would be willing to work on with majority, the Senate Republican leader, Mitch McConnell of Kentucky, offered meek praise for Mr. Obama’s strategy in Afghanistan but did not offer a single example on domestic policy.
Skip to next paragraph
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.
* Go to the Prescriptions Blog »
* Times Topics: Health Care Reform
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A History of Overhauling Health CareInteractive Feature
A History of Overhauling Health Care
Back Story With The Times's David M. Herszenhorn
The Democrats’ Day After
Room for DebateWhy are the Democrats always in disarray even when they control the White House, the Senate and the House?
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Related
G.O.P. Senate Victory Stuns Democrats (January 20, 2010)
News Analysis: A Year Later, Voters Send a Different Message (January 20, 2010)
“It is very important to look at the substance of this package and for the American people to understand that a lot of the fear-mongering around this bill isn’t true,” Mr. Obama said in an interview on ABC News. “I would advise that we try to move quickly to coalesce around those elements of the package that people agree on.”
He continued: “We know that we need insurance reform, that the health insurance companies are taking advantage of people. We know that we have to have some form of cost containment because if we don’t, then our budgets are going to blow up and we know that small businesses are going to need help so that they can provide health insurance to their families. Those are the core, some of the core elements of, to this bill.”
Mr. Obama’s remarks came as the White House and Democratic congressional leaders fumbled for a way forward with their major health care overhaul, and struggled to digest the reality that their top legislative priority had been derailed by the outcome in Massachusetts.
The White House insisted that Mr. Obama still preferred passage of a far-reaching health care measure, and Democratic leaders said they were weighing their options. But some lawmakers in both parties began calling for a scaled-back bill that could be adopted quickly with bipartisan support.
As the full Congress returned to Washington to start a new legislative year — on the first anniversary of Mr. Obama’s inauguration — their options were limited. House leaders signaled that they had effectively ruled out the idea of adopting the Senate bill, which would send it directly to the president for his signature.
The victory in Massachusetts on Tuesday, by the Republican candidate, Scott Brown, denies Democrats the 60th vote they need to surmount filibusters and advance a revised health measure. And Senate leaders said they would not risk antagonizing voters by trying to rush a bill through before Mr. Brown could be sworn in.
Democrats also grappled with the implications of losing their 60-vote majority for their wider legislative agenda, including efforts to tighten regulation of the financial system and to combat global warming, even as they sensed new urgency to turn their full attention to creating jobs and improving the economy.
At the White House and at the Capitol, high-level Democrats seemed stunned by the turn of events, though it had been clear for several days that they could lose in Massachusetts. “Bottom line,” said one Democrat who is close to the White House, “In the first 24 hours there is literally no good option.”
Democrats, from Mr. Obama on down, however, made a concerted effort to portray the results in Massachusetts as a reflection of long-simmering populist anger, and not a referendum on the health care legislation or on the year-old administration, which came into office facing steep challenges.
“Here’s my assessment of not just the vote in Massachusetts, but the mood around the country: the same thing that swept Scott Brown into office swept me into office,” Mr. Obama said in the interview on ABC. “People are angry, they are frustrated. Not just because of what’s happened in the last year or two years, but what’s happened over the last eight years.”
The Massachusetts race and the ensuing unease among Democrats also threatened to complicate any chance the White House had of winning passage this year of legislation to curb global warming through an emissions trading system.
But the outcome might put further impetus behind efforts to bring down the budget deficit, a topic the White House has become more visibly active in addressing in recent days. On Tuesday, the administration and Congressional Democrats agreed on a plan to create a commission to recommend ways of attacking the deficit and the national debt.
At a news conference at the Capitol, the Senate majority leader, Harry Reid of Nevada, made a concerted effort to minimize the health care issue in relation to other concerns among the American public, particularly about jobs and the economy. But he made clear that Democrats did not see a clear path forward.
“The election in Massachusetts changes the math in the Senate,” Mr. Reid said. “But it doesn’t change the fact that people are hurting.” Pressed about the health care legislation, Mr. Reid said, “The problems out there -- it’s certainly more than health care.” Pressed again, he said: “No decision has been made.”
Several senior Democrats said they did not know if the health care legislation could be salvaged.
Republicans showed no new signs of willingness to work with the Democrats. Asked what he would be willing to work on with majority, the Senate Republican leader, Mitch McConnell of Kentucky, offered meek praise for Mr. Obama’s strategy in Afghanistan but did not offer a single example on domestic policy.
China Losing to U.S. Among Investments of Choice in Global Poll
Jan. 21 (Bloomberg) -- Investors have turned bullish on the U.S. while tempering their enthusiasm for China as they worry about a market bubble there, according to a Bloomberg survey.
An overwhelming majority also see a government debt default on the horizon this year, according to a quarterly poll of investors and analysts who are Bloomberg subscribers. Greece is considered the riskiest government, followed by Argentina, Russia, Ireland, Portugal, Italy, Spain and Mexico.
Sentiment toward the U.S. investment climate has flipped in just three months. Almost six of 10 respondents are now optimistic about the U.S. while a majority held a pessimistic outlook in an October poll. A nine-month rally in U.S. stocks has pushed up the Standard & Poor’s 500 Index 68 percent through yesterday’s close.
“There appears to be a surge in interest in the U.S., and it’s in marked contrast to tepid attitudes only three months ago,” said Ann Selzer, the president of Selzer & Co., a Des Moines, Iowa-based polling firm that conducted the survey.
“American consumers are regaining confidence, and with that alone, there should be no impediments for current business to resume the growth of the past decade,” said poll respondent Drew Beatty, a commodity derivatives sales analyst with Wells Fargo & Co. in Dallas.
The number of U.S. investors who see their economy improving has steadily marched upward over the past two quarterly polls, more than doubling since July.
Tie With Brazil
China, the world’s fastest-growing major economy, is viewed as a bubble by 62 percent. About one-third of respondents said China offered the best investment opportunities over the coming year, almost tied for first place with the U.S. and Brazil, though down sharply from October, when 44 percent ranked China best.
This time, almost three out of 10 investors said China posed the greatest downside risk, ranking it the second-riskiest market behind the European Union.
“We think that China is producing and is building up inventories at a rate that no other country or region can follow at the moment,” said poll respondent Alcibiades Angelakis, head of marketing and research at EPIC Investments in Athens. “This cannot continue for a long time, and we fear that in the second half of this year things will slow down.”
Concerns over a potential bubble in China have been mounting. Hedge fund-investor James Chanos, president and founder of New York-based Kynikos Associates Ltd., one of the first investors to foresee the 2001 collapse of Houston-based energy company Enron Corp., has said China looks like “Dubai times 1,000 -- or worse.”
China Lending Limits
After new bank lending in China last year surged to a record 9.59 trillion yuan, banking regulator Liu Mingkang said in an interview yesterday that he has told some banks to limit lending and restrict overall credit growth to 7.5 trillion yuan.
China’s benchmark Shanghai Composite Index dropped 95.02 points, or 2.9 percent on concerns the nation’s central bank may raise interest rates. The index has lost 3.8 percent this year, making China the worst performer among the world’s 10 largest stock markets.
The fourth-quarter estimate of China’s gross domestic product scheduled for release today is projected to show an annual growth rate of 10.5 percent, according to the median forecast of economists surveyed by Bloomberg.
The quarterly Bloomberg Global Poll of investors, traders and analysts in six continents was conducted Jan. 19. It is based on interviews with a random sample of 873 Bloomberg subscribers, representing decision makers in markets, finance and economics. The poll has a margin of error of plus or minus 3.3 percentage points.
Global Optimism
Overall, market professionals in the poll are increasingly confident in the global economy, with a 43 percent plurality now viewing the international economic outlook as improving, up from 37 percent in October. The optimism cuts across all regions, with respondents in Asia, Europe and the U.S. alike saying the global situation is getting better.
The prospect of a strengthening global economy is reflected in poll respondents’ market analyses. Stocks are considered the most promising asset class over the coming year, followed closely by commodities. Bonds are judged likely to have the worst returns over the same period. Over the next six months, oil, copper, corn and soybean prices all are expected to rise.
Poll respondents said they expect monetary authorities to remain accommodating in the near future. Almost two-thirds of investors believe central banks in their country will hold their benchmark interest rates stable over the next six months and more than half expect overall short-term interest rates to vary little. Six of 10 predict long-term rates will rise.
U.S. Confidence
The rising confidence is most pronounced when it comes to the world’s largest economy. Investors, asked the one or two markets that offer the best opportunities this year, rate the U.S. in a statistical dead heat with some emerging markets: 30 percent chose the U.S., just behind China, 33 percent, and Brazil, 32 percent. Three months ago, the U.S. was a distant fourth, chosen by only 18 percent.
Poll respondents expect to see U.S. stocks continue to go up in the near term, with 42 percent forecasting a rise in the S&P 500 in the next six months, compared with 31 percent who expect a decline. A quarter of respondents expect the index to vary little.
‘Double-Digit Gains’
“Although the growth in the economy is likely to be relatively moderate in 2010, we think it will be accompanied by double-digit gains in corporate profits through 2011,” said poll respondent John Ryding, chief economist at RDQ Economics in New York.
Asked to assess potential perils to the U.S. economy during the next two years, seven of 10 rated persistently high unemployment and chronic budget deficits a big risk. Four of 10 rated higher taxes a major risk. No more than a quarter considered higher inflation, a plunge in the dollar or trade tensions with China to be big risks.
Respondents were evenly split on whether it is more important to stimulate job growth or reduce the deficit, with 48 percent choosing each option.
Investors expect declines in benchmark stock indexes for the European Union, Britain and Japan.
Sovereign Default
The risks this year in Europe are related to the potential of a sovereign default debt in the region “that could fully blow into a crisis that can impact the currency, equity and fixed-income markets,” said poll respondent Sivanesan Muthusamy, a senior vice president in funding and investments at Alliance Bank in Kuala Lumpur.
More than three-quarters of respondents believe a government debt default is likely this year, with 30 percent saying it is very likely.
Six of 10 rate Greece’s sovereign bonds highly risky. Behind Greece, Argentina’s government bonds were rated highly risky by 42 percent, followed by Russia, 34 percent; Ireland, 32 percent; Portugal, 28 percent; Italy, 21 percent; Spain, 20 percent; and Mexico, 19 percent. Only 3 percent rated U.S. Treasury bonds highly risky.
Greece’s deteriorating finances prompted Fitch Ratings, Moody’s Investors Service and Standard & Poor’s to cut the nation’s sovereign debt ratings last month, spurring a sell-off in its bonds. The country faces pressure from other European Union governments to tackle the crisis caused by a budget deficit more than four times the EU limit of 3 percent of gross domestic product.
‘Serious Problem’
International Monetary Fund Director Dominique Strauss-Kahn called Greece’s fiscal situation “a serious problem” in an interview with Bloomberg Television in Hong Kong yesterday, though he said he believes the euro zone will withstand the turmoil caused by Greece’s credit downgrade.
Greek bonds tumbled yesterday, pushing the two-year yield up by the most since before the country adopted the euro, on concern the government will struggle to sell the debt it needs to fund the European Union’s biggest deficit.
The two-year note yield jumped 56 basis points to 4.23 percent as of 6 p.m. in London. It earlier rose 89 basis points to 4.66 percent, the biggest gain since 1998. The 10-year bond yield climbed 25 basis points to 6.17 percent, with the premium investors demand to hold the debt instead of benchmark German bunds at 295 basis points, the most since March 13.
To see methodology and exact question wording, click on the attachment tab at the top of the story.
An overwhelming majority also see a government debt default on the horizon this year, according to a quarterly poll of investors and analysts who are Bloomberg subscribers. Greece is considered the riskiest government, followed by Argentina, Russia, Ireland, Portugal, Italy, Spain and Mexico.
Sentiment toward the U.S. investment climate has flipped in just three months. Almost six of 10 respondents are now optimistic about the U.S. while a majority held a pessimistic outlook in an October poll. A nine-month rally in U.S. stocks has pushed up the Standard & Poor’s 500 Index 68 percent through yesterday’s close.
“There appears to be a surge in interest in the U.S., and it’s in marked contrast to tepid attitudes only three months ago,” said Ann Selzer, the president of Selzer & Co., a Des Moines, Iowa-based polling firm that conducted the survey.
“American consumers are regaining confidence, and with that alone, there should be no impediments for current business to resume the growth of the past decade,” said poll respondent Drew Beatty, a commodity derivatives sales analyst with Wells Fargo & Co. in Dallas.
The number of U.S. investors who see their economy improving has steadily marched upward over the past two quarterly polls, more than doubling since July.
Tie With Brazil
China, the world’s fastest-growing major economy, is viewed as a bubble by 62 percent. About one-third of respondents said China offered the best investment opportunities over the coming year, almost tied for first place with the U.S. and Brazil, though down sharply from October, when 44 percent ranked China best.
This time, almost three out of 10 investors said China posed the greatest downside risk, ranking it the second-riskiest market behind the European Union.
“We think that China is producing and is building up inventories at a rate that no other country or region can follow at the moment,” said poll respondent Alcibiades Angelakis, head of marketing and research at EPIC Investments in Athens. “This cannot continue for a long time, and we fear that in the second half of this year things will slow down.”
Concerns over a potential bubble in China have been mounting. Hedge fund-investor James Chanos, president and founder of New York-based Kynikos Associates Ltd., one of the first investors to foresee the 2001 collapse of Houston-based energy company Enron Corp., has said China looks like “Dubai times 1,000 -- or worse.”
China Lending Limits
After new bank lending in China last year surged to a record 9.59 trillion yuan, banking regulator Liu Mingkang said in an interview yesterday that he has told some banks to limit lending and restrict overall credit growth to 7.5 trillion yuan.
China’s benchmark Shanghai Composite Index dropped 95.02 points, or 2.9 percent on concerns the nation’s central bank may raise interest rates. The index has lost 3.8 percent this year, making China the worst performer among the world’s 10 largest stock markets.
The fourth-quarter estimate of China’s gross domestic product scheduled for release today is projected to show an annual growth rate of 10.5 percent, according to the median forecast of economists surveyed by Bloomberg.
The quarterly Bloomberg Global Poll of investors, traders and analysts in six continents was conducted Jan. 19. It is based on interviews with a random sample of 873 Bloomberg subscribers, representing decision makers in markets, finance and economics. The poll has a margin of error of plus or minus 3.3 percentage points.
Global Optimism
Overall, market professionals in the poll are increasingly confident in the global economy, with a 43 percent plurality now viewing the international economic outlook as improving, up from 37 percent in October. The optimism cuts across all regions, with respondents in Asia, Europe and the U.S. alike saying the global situation is getting better.
The prospect of a strengthening global economy is reflected in poll respondents’ market analyses. Stocks are considered the most promising asset class over the coming year, followed closely by commodities. Bonds are judged likely to have the worst returns over the same period. Over the next six months, oil, copper, corn and soybean prices all are expected to rise.
Poll respondents said they expect monetary authorities to remain accommodating in the near future. Almost two-thirds of investors believe central banks in their country will hold their benchmark interest rates stable over the next six months and more than half expect overall short-term interest rates to vary little. Six of 10 predict long-term rates will rise.
U.S. Confidence
The rising confidence is most pronounced when it comes to the world’s largest economy. Investors, asked the one or two markets that offer the best opportunities this year, rate the U.S. in a statistical dead heat with some emerging markets: 30 percent chose the U.S., just behind China, 33 percent, and Brazil, 32 percent. Three months ago, the U.S. was a distant fourth, chosen by only 18 percent.
Poll respondents expect to see U.S. stocks continue to go up in the near term, with 42 percent forecasting a rise in the S&P 500 in the next six months, compared with 31 percent who expect a decline. A quarter of respondents expect the index to vary little.
‘Double-Digit Gains’
“Although the growth in the economy is likely to be relatively moderate in 2010, we think it will be accompanied by double-digit gains in corporate profits through 2011,” said poll respondent John Ryding, chief economist at RDQ Economics in New York.
Asked to assess potential perils to the U.S. economy during the next two years, seven of 10 rated persistently high unemployment and chronic budget deficits a big risk. Four of 10 rated higher taxes a major risk. No more than a quarter considered higher inflation, a plunge in the dollar or trade tensions with China to be big risks.
Respondents were evenly split on whether it is more important to stimulate job growth or reduce the deficit, with 48 percent choosing each option.
Investors expect declines in benchmark stock indexes for the European Union, Britain and Japan.
Sovereign Default
The risks this year in Europe are related to the potential of a sovereign default debt in the region “that could fully blow into a crisis that can impact the currency, equity and fixed-income markets,” said poll respondent Sivanesan Muthusamy, a senior vice president in funding and investments at Alliance Bank in Kuala Lumpur.
More than three-quarters of respondents believe a government debt default is likely this year, with 30 percent saying it is very likely.
Six of 10 rate Greece’s sovereign bonds highly risky. Behind Greece, Argentina’s government bonds were rated highly risky by 42 percent, followed by Russia, 34 percent; Ireland, 32 percent; Portugal, 28 percent; Italy, 21 percent; Spain, 20 percent; and Mexico, 19 percent. Only 3 percent rated U.S. Treasury bonds highly risky.
Greece’s deteriorating finances prompted Fitch Ratings, Moody’s Investors Service and Standard & Poor’s to cut the nation’s sovereign debt ratings last month, spurring a sell-off in its bonds. The country faces pressure from other European Union governments to tackle the crisis caused by a budget deficit more than four times the EU limit of 3 percent of gross domestic product.
‘Serious Problem’
International Monetary Fund Director Dominique Strauss-Kahn called Greece’s fiscal situation “a serious problem” in an interview with Bloomberg Television in Hong Kong yesterday, though he said he believes the euro zone will withstand the turmoil caused by Greece’s credit downgrade.
Greek bonds tumbled yesterday, pushing the two-year yield up by the most since before the country adopted the euro, on concern the government will struggle to sell the debt it needs to fund the European Union’s biggest deficit.
The two-year note yield jumped 56 basis points to 4.23 percent as of 6 p.m. in London. It earlier rose 89 basis points to 4.66 percent, the biggest gain since 1998. The 10-year bond yield climbed 25 basis points to 6.17 percent, with the premium investors demand to hold the debt instead of benchmark German bunds at 295 basis points, the most since March 13.
To see methodology and exact question wording, click on the attachment tab at the top of the story.
Indian market holds multinationals at bay
In India, Marks and Spencer has learned that small and easily overlooked details can determine whether sales are made. Take, for example, men’s shirts. In the UK, only a third of M&S shirts have pockets. But in sweltering India, where jackets are required only on formal occasions, most men want a pocket on their shirt for handy storage.
For its first eight years in India, M&S, the mainstay of the British high street, paid little heed to this. Operating through an Indian franchisee, Planet Retail, M&S stocked its 16 Indian stores with apparel reflecting UK consumer tastes.
EDITOR’S CHOICE
Brazil gives growth hopes to carmakers - Jan-20
Shanghai tie-up drives profits for GM - Jan-20
FT series: Building Brics - Jan-20
Foreign carmakers make inroads into Russia - Jan-20
Join the debate: Brics consumers - Jan-19
Economists’ Forum: Should Russia be in Brics? - Jan-17
That is changing, along with the retailer’s business model for the country. M&S ended its franchise deal in 2008 and took 51 per cent of a joint venture company which it set up with Reliance Retail, part of one of India’s largest conglomerates. It has started tailoring its local offerings for Indian tastes – from more brightly coloured men’s polo shirts to higher necklines and lower sleeves for women’s garments.
“Until you put people on the ground in a country, you are never going to understand it,” says Mark Ashman, chief executive of Marks & Spencer Reliance India. “And when you start putting your money in, you start making different decisions. It brings a different clarity, and clout.”
Most international retailers would follow that advice – if only they could. India severely restricts foreign investment in retail businesses, frustrating global companies that see vast potential in a market where modern retailing is still in its infancy.
Only about 8 per cent of urban Indian retail spending takes place in the “organised” sector, while in rural areas it’s almost none, according to New Delhi-based Technopak Advisors. But spending in modern retail stores has grown 20 per cent a year over the past four years, a pace expected to accelerate.
So far, though, global retailers like Tesco, Walmart and Carrefour have been relegated to the sidelines. India prohibits any foreign direct investment in multibrand retailing, which is the preserve of Indian players including 12m mom-and-pop shops, retail chains such as Pantaloon’s and Shoppers Stop, and conglomerates like Reliance, Bharti Enterprises and Tata, with the Reliance Fresh, Easy Day and Star Bazaar stores respectively.
Walmart and Tesco have found a way into the market with wholesale businesses, which can be up to 100 per cent foreign-owned, to supply both mom-and-pop stores and Indian corporate partners while awaiting what they hope will be further opening.
“People who see India as a good market are coming in with the expectation that regulation will change,” says Raghav Gupta, president of Technopak.
New Delhi permits foreign ownership of single-brand retailing, where all goods sold in a store belong to a single brand. Even then, foreign equity is capped at 51 per cent. That restriction irked Ikea, which last year abandoned efforts to set up shop in India, saying New Delhi had backtracked on pledges to allow 100 per cent foreign ownership.
But M&S, through its joint venture, is aiming for 1m sq ft of retail space across 50 stores in India within the next five years. It is also making fundamental changes to its business.
Most goods sold at M&S in India have been imported, as the retailer usually sources globally. But with Indian duties on imported apparel averaging 40 per cent, Indians complained that they could buy M&S products more cheaply in the UK than at home. That pushed M&S to find more local goods for its Indian stores. “Local sourcing is a critical part of our strategy to lower prices,” says Mr Ashman.
This year, 39 per cent of goods sold at M&S in India were made in India, up from 20 per cent during the franchise days, and the target is 70 per cent.
While lowering prices, the shift has also facilitated the modification of western apparel for local tastes.
“If you’ve got a market you think is going to be really big, it’s worth thinking about what the consumer in that market really wants within the parameters of the brand,” says Mr Ashman.
But M&S does face constraints. At its Indian stores, food – which accounts for half its global sales – is conspicuously absent. Even if the goods are all of a single brand, New Delhi is not ready to let foreigners sell groceries directly to its citizens.
For its first eight years in India, M&S, the mainstay of the British high street, paid little heed to this. Operating through an Indian franchisee, Planet Retail, M&S stocked its 16 Indian stores with apparel reflecting UK consumer tastes.
EDITOR’S CHOICE
Brazil gives growth hopes to carmakers - Jan-20
Shanghai tie-up drives profits for GM - Jan-20
FT series: Building Brics - Jan-20
Foreign carmakers make inroads into Russia - Jan-20
Join the debate: Brics consumers - Jan-19
Economists’ Forum: Should Russia be in Brics? - Jan-17
That is changing, along with the retailer’s business model for the country. M&S ended its franchise deal in 2008 and took 51 per cent of a joint venture company which it set up with Reliance Retail, part of one of India’s largest conglomerates. It has started tailoring its local offerings for Indian tastes – from more brightly coloured men’s polo shirts to higher necklines and lower sleeves for women’s garments.
“Until you put people on the ground in a country, you are never going to understand it,” says Mark Ashman, chief executive of Marks & Spencer Reliance India. “And when you start putting your money in, you start making different decisions. It brings a different clarity, and clout.”
Most international retailers would follow that advice – if only they could. India severely restricts foreign investment in retail businesses, frustrating global companies that see vast potential in a market where modern retailing is still in its infancy.
Only about 8 per cent of urban Indian retail spending takes place in the “organised” sector, while in rural areas it’s almost none, according to New Delhi-based Technopak Advisors. But spending in modern retail stores has grown 20 per cent a year over the past four years, a pace expected to accelerate.
So far, though, global retailers like Tesco, Walmart and Carrefour have been relegated to the sidelines. India prohibits any foreign direct investment in multibrand retailing, which is the preserve of Indian players including 12m mom-and-pop shops, retail chains such as Pantaloon’s and Shoppers Stop, and conglomerates like Reliance, Bharti Enterprises and Tata, with the Reliance Fresh, Easy Day and Star Bazaar stores respectively.
Walmart and Tesco have found a way into the market with wholesale businesses, which can be up to 100 per cent foreign-owned, to supply both mom-and-pop stores and Indian corporate partners while awaiting what they hope will be further opening.
“People who see India as a good market are coming in with the expectation that regulation will change,” says Raghav Gupta, president of Technopak.
New Delhi permits foreign ownership of single-brand retailing, where all goods sold in a store belong to a single brand. Even then, foreign equity is capped at 51 per cent. That restriction irked Ikea, which last year abandoned efforts to set up shop in India, saying New Delhi had backtracked on pledges to allow 100 per cent foreign ownership.
But M&S, through its joint venture, is aiming for 1m sq ft of retail space across 50 stores in India within the next five years. It is also making fundamental changes to its business.
Most goods sold at M&S in India have been imported, as the retailer usually sources globally. But with Indian duties on imported apparel averaging 40 per cent, Indians complained that they could buy M&S products more cheaply in the UK than at home. That pushed M&S to find more local goods for its Indian stores. “Local sourcing is a critical part of our strategy to lower prices,” says Mr Ashman.
This year, 39 per cent of goods sold at M&S in India were made in India, up from 20 per cent during the franchise days, and the target is 70 per cent.
While lowering prices, the shift has also facilitated the modification of western apparel for local tastes.
“If you’ve got a market you think is going to be really big, it’s worth thinking about what the consumer in that market really wants within the parameters of the brand,” says Mr Ashman.
But M&S does face constraints. At its Indian stores, food – which accounts for half its global sales – is conspicuously absent. Even if the goods are all of a single brand, New Delhi is not ready to let foreigners sell groceries directly to its citizens.
Tuesday, January 19, 2010
Asian Stocks Fluctuate as Financial Shares Drop; Toyota Gains
Jan. 20 (Bloomberg) -- Asian stocks fluctuated as declines among financial companies overshadowed gains by mining companies and Japanese exporters.
China Construction Bank Corp. sank 2 percent in Hong Kong after Chinese regulators asked some banks to limit lending. Nomura Holdings Inc. fell 2.8 percent in Tokyo after Credit Suisse Group lowered its rating on the brokerage sector. BHP Billiton Ltd. added 0.5 percent in Sydney after saying second- quarter iron-ore production rose to a record. Toyota Motor Corp., which gets 31 percent of revenue from North America, rose 0.9 percent in Tokyo after the yen weakened against the dollar.
The MSCI Asia Pacific Index lost 0.2 percent to 125.08 at 11:23 a.m. in Tokyo, after rising 0.5 percent earlier. The measure has advanced 50 percent in the past 12 months as growth in China helped the global economy emerge from the worst slowdown since World War II.
“China is a critical factor in the recovery process,” said Stephen Halmarick, Sydney-based head of investment-markets research at Colonial First State Global Asset Management, which holds about $135 billion. “China’s tightening policy is telling us that growth is quite strong. If they can get more balance in their growth, that’s a positive thing.”
Japan’s Nikkei 225 Stock Average gained 0.5 percent. Toyota Tsusho Corp., an affiliate of Toyota’s, surged 8 percent after agreeing on a venture with mineral explorer Orocobre Ltd. Australia’s S&P/ASX 200 Index rose 0.3 percent.
Hong Kong’s Hang Seng Index lost 1.1 percent. Shanghai’s government said a Caijing magazine report that the city may allow individuals to invest abroad is “pure fabrication.” The report drove the Hang Seng Index up by 1 percent yesterday.
China Construction Bank Corp. sank 2 percent in Hong Kong after Chinese regulators asked some banks to limit lending. Nomura Holdings Inc. fell 2.8 percent in Tokyo after Credit Suisse Group lowered its rating on the brokerage sector. BHP Billiton Ltd. added 0.5 percent in Sydney after saying second- quarter iron-ore production rose to a record. Toyota Motor Corp., which gets 31 percent of revenue from North America, rose 0.9 percent in Tokyo after the yen weakened against the dollar.
The MSCI Asia Pacific Index lost 0.2 percent to 125.08 at 11:23 a.m. in Tokyo, after rising 0.5 percent earlier. The measure has advanced 50 percent in the past 12 months as growth in China helped the global economy emerge from the worst slowdown since World War II.
“China is a critical factor in the recovery process,” said Stephen Halmarick, Sydney-based head of investment-markets research at Colonial First State Global Asset Management, which holds about $135 billion. “China’s tightening policy is telling us that growth is quite strong. If they can get more balance in their growth, that’s a positive thing.”
Japan’s Nikkei 225 Stock Average gained 0.5 percent. Toyota Tsusho Corp., an affiliate of Toyota’s, surged 8 percent after agreeing on a venture with mineral explorer Orocobre Ltd. Australia’s S&P/ASX 200 Index rose 0.3 percent.
Hong Kong’s Hang Seng Index lost 1.1 percent. Shanghai’s government said a Caijing magazine report that the city may allow individuals to invest abroad is “pure fabrication.” The report drove the Hang Seng Index up by 1 percent yesterday.
G.O.P. Takes Massachusetts Senate Seat
BOSTON — Scott Brown, a little-known Republican state senator, rode an old pickup truck and a growing sense of unease among independent voters to an extraordinary upset Tuesday night when he was elected to fill the Senate seat that was long held by Edward M. Kennedy in the overwhelmingly Democratic state of Massachusetts.
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Supporters in Boston celebrated the victory of Massachusetts State Senator Scott Brown in his bid for U.S. Senate. More Photos »
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Mr. Brown spoke to reporters after voting in the special election on Tuesday in Wrentham, Mass. More Photos >
By a decisive margin, Mr. Brown defeated Martha Coakley, the state’s attorney general, who had been considered a prohibitive favorite to win just over a month ago after she easily won the Democratic primary.
With 93 percent of the vote counted, Mr. Brown had 52 percent of the vote to Ms. Coakley’s 47 percent.
In her concession speech before cheering supporters, Ms. Coakley acknowledged that voters were angry and said she had hoped to deal with the concerns.
“Our mission continues, and our work goes on,” she said, echoing well-known remarks by Mr. Kennedy. “I am heartbroken at the result, as I know you are, and I know we will get up together tomorrow and continue this fight, even with this result tonight.”
The election left Democrats in Congress scrambling to salvage a bill overhauling the nation’s health care system, which the late Mr. Kennedy had called “the cause of my life.” Mr. Brown has vowed to oppose the bill, and once he takes office the Democrats will lose their filibuster-proof majority of 60 votes in the Senate.
Beyond the bill, the election of a man supported by the Tea Party movement also represented an unexpected reproach by many voters to President Obama after his first year in office, and struck fear into the hearts of Democratic lawmakers, who are already worried about their prospects later this year in the midterm elections.
Mr. Brown was able to appeal to independents who were anxious about the economy and concerned about the direction taken by Democrats, now that they control all the branches of government, both on Beacon Hill and in Washington. He rallied his supporters when he said, at the last debate, that he was not running for Mr. Kennedy’s seat but for “the people’s seat.”
That seat, held for nearly half a century by Mr. Kennedy, the liberal lion of the Senate, will now be held by a Republican who has said he supports waterboarding as an interrogation technique for terrorism suspects; opposes a federal cap-and-trade program to reduce carbon emissions; and opposes a path to citizenship for illegal immigrants unless they leave the country. It was a sharp swing of the pendulum, but even Democratic voters said they wanted the Obama administration to change direction.
“I’m hoping that it gives a message to the country,” said Marlene Connolly, 73, of North Andover, a lifelong Democrat who said she cast her first vote for a Republican on Tuesday. “I think if Massachusetts puts Brown in, it’s a message of ‘that’s enough.’ Let’s stop the giveaways and let’s get jobs going.”
Mr. Brown ran strongest in the suburbs of Boston, where the independent voters who make up a majority in Massachusetts turned out in large numbers. Ms. Coakley did best in urban areas, overwhelmingly winning in Boston and running ahead in Springfield, Worcester, Fall River and New Bedford, but her margins were not large enough to carry her to victory.
Ms. Coakley’s defeat, in a state that Mr. Obama won in 2008 with 62 percent of the vote, led to a round of finger-pointing among Democrats. Some criticized her tendency for gaffes — in a radio interview she offended Red Sox fans when she incorrectly suggested that Curt Schilling, a beloved former Red Sox pitcher, was a Yankee fan — while others criticized a lackluster, low-key campaign.
Mr. Brown presented himself as a Massachusetts Everyman, featuring the pickup truck he drives around the state in his speeches and one of his television ads, calling in to talk radio shows, and campaigning with popular local sports figures.
The implications of the election drew nationwide attention, and millions of dollars of outside spending, to the race. It transformed what many had expected to be a sleepy, low-turnout special election on a snowy day in January into a high-profile contest that appeared to draw more voters than expected to the polls. There were reports of traffic jams outside suburban polling stations, while other polling stations had to call for extra ballots.
The late surge by Mr. Brown appeared to catch Democrats by surprise, causing them to scramble in the last week and a half of the campaign and hastily schedule an appearance by Mr. Obama with Ms. Coakley on Sunday afternoon.
“Understand what’s at stake here, Massachusetts,” Mr. Obama said in his speech that day, repeatedly invoking Mr. Kennedy’s legacy. “It’s whether we’re going forwards or backwards.” He all but pleaded with voters to support Ms. Coakley, to preserve his agenda.
As voters went to the polls, Robert Gibbs, the White House press secretary, made it clear that the president was “not pleased” with the situation Ms. Coakley found herself in. “He was both surprised and frustrated,” Mr. Gibbs said.
Although the race has riveted the attention of the nation largely because it was seen as contributing to the success or defeat of the health care bill, the potency of the issue for voters here was difficult to gauge. That is because Massachusetts already has near-universal health coverage, thanks to a law passed when Mitt Romney, a Republican, was governor.
Thus Massachusetts is one of the few states where the benefits promised by the national bill were expected to have little effect on how many of its citizens got coverage, making it an unlikely place for a referendum on the health care bill.
Although Mr. Brown vowed to scuttle the current bill, he voted for the Massachusetts health care bill, which was a model for it. He argued that the national bill would be costly and result in Medicare cuts for the elderly — in effect that some residents of Massachusetts stood to lose more than they would gain.
The closeness of the race drew both opponents and supporters of health care to the polls.
“I don’t like that the health care bill is being ramrodded through, and I am incensed that a senator was able to have his state exempted from the cost,” said Robert Rivard, 67, a retired mechanical engineer in Leicester who is an independent. “As much as I support Brown, it is also a statement about what I don’t want.”
But Michael Barry, a 23-year-old Democrat from Hopkinton, said that he came to the polls to try to save the health care bill. “I voted for Coakley because I didn’t want to disrupt the 60-40 vote for health care,” said Mr. Barry, a software engineer. “I thought it was a shoo-in a few weeks ago and might not have come out today.”
On Capitol Hill, the fate of the health care legislation was highly uncertain as Democratic leaders quickly gathered to plot strategy in the wake of the Republican victory.
Sentiment about how to proceed was mixed, with several House lawmakers expressing wariness about accepting a Senate-passed plan due to their deep reservations about it. But top officials said that approach may be the party’s best alternative and most House members said they still believed it was crucial that Democrats pass a plan.
“It is important for us to pass legislation,” said Representative Baron Hill, a conservative Democrat from Indiana.
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Voices From the Senate RaceInteractive Feature
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The latest on President Obama, his administration and other news from Washington and around the nation. Join the discussion.
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Bryce Vickmark for The New York Times
Supporters in Boston celebrated the victory of Massachusetts State Senator Scott Brown in his bid for U.S. Senate. More Photos »
Enlarge This Image
Robert F. Bukaty/Associated Press
Mr. Brown spoke to reporters after voting in the special election on Tuesday in Wrentham, Mass. More Photos >
By a decisive margin, Mr. Brown defeated Martha Coakley, the state’s attorney general, who had been considered a prohibitive favorite to win just over a month ago after she easily won the Democratic primary.
With 93 percent of the vote counted, Mr. Brown had 52 percent of the vote to Ms. Coakley’s 47 percent.
In her concession speech before cheering supporters, Ms. Coakley acknowledged that voters were angry and said she had hoped to deal with the concerns.
“Our mission continues, and our work goes on,” she said, echoing well-known remarks by Mr. Kennedy. “I am heartbroken at the result, as I know you are, and I know we will get up together tomorrow and continue this fight, even with this result tonight.”
The election left Democrats in Congress scrambling to salvage a bill overhauling the nation’s health care system, which the late Mr. Kennedy had called “the cause of my life.” Mr. Brown has vowed to oppose the bill, and once he takes office the Democrats will lose their filibuster-proof majority of 60 votes in the Senate.
Beyond the bill, the election of a man supported by the Tea Party movement also represented an unexpected reproach by many voters to President Obama after his first year in office, and struck fear into the hearts of Democratic lawmakers, who are already worried about their prospects later this year in the midterm elections.
Mr. Brown was able to appeal to independents who were anxious about the economy and concerned about the direction taken by Democrats, now that they control all the branches of government, both on Beacon Hill and in Washington. He rallied his supporters when he said, at the last debate, that he was not running for Mr. Kennedy’s seat but for “the people’s seat.”
That seat, held for nearly half a century by Mr. Kennedy, the liberal lion of the Senate, will now be held by a Republican who has said he supports waterboarding as an interrogation technique for terrorism suspects; opposes a federal cap-and-trade program to reduce carbon emissions; and opposes a path to citizenship for illegal immigrants unless they leave the country. It was a sharp swing of the pendulum, but even Democratic voters said they wanted the Obama administration to change direction.
“I’m hoping that it gives a message to the country,” said Marlene Connolly, 73, of North Andover, a lifelong Democrat who said she cast her first vote for a Republican on Tuesday. “I think if Massachusetts puts Brown in, it’s a message of ‘that’s enough.’ Let’s stop the giveaways and let’s get jobs going.”
Mr. Brown ran strongest in the suburbs of Boston, where the independent voters who make up a majority in Massachusetts turned out in large numbers. Ms. Coakley did best in urban areas, overwhelmingly winning in Boston and running ahead in Springfield, Worcester, Fall River and New Bedford, but her margins were not large enough to carry her to victory.
Ms. Coakley’s defeat, in a state that Mr. Obama won in 2008 with 62 percent of the vote, led to a round of finger-pointing among Democrats. Some criticized her tendency for gaffes — in a radio interview she offended Red Sox fans when she incorrectly suggested that Curt Schilling, a beloved former Red Sox pitcher, was a Yankee fan — while others criticized a lackluster, low-key campaign.
Mr. Brown presented himself as a Massachusetts Everyman, featuring the pickup truck he drives around the state in his speeches and one of his television ads, calling in to talk radio shows, and campaigning with popular local sports figures.
The implications of the election drew nationwide attention, and millions of dollars of outside spending, to the race. It transformed what many had expected to be a sleepy, low-turnout special election on a snowy day in January into a high-profile contest that appeared to draw more voters than expected to the polls. There were reports of traffic jams outside suburban polling stations, while other polling stations had to call for extra ballots.
The late surge by Mr. Brown appeared to catch Democrats by surprise, causing them to scramble in the last week and a half of the campaign and hastily schedule an appearance by Mr. Obama with Ms. Coakley on Sunday afternoon.
“Understand what’s at stake here, Massachusetts,” Mr. Obama said in his speech that day, repeatedly invoking Mr. Kennedy’s legacy. “It’s whether we’re going forwards or backwards.” He all but pleaded with voters to support Ms. Coakley, to preserve his agenda.
As voters went to the polls, Robert Gibbs, the White House press secretary, made it clear that the president was “not pleased” with the situation Ms. Coakley found herself in. “He was both surprised and frustrated,” Mr. Gibbs said.
Although the race has riveted the attention of the nation largely because it was seen as contributing to the success or defeat of the health care bill, the potency of the issue for voters here was difficult to gauge. That is because Massachusetts already has near-universal health coverage, thanks to a law passed when Mitt Romney, a Republican, was governor.
Thus Massachusetts is one of the few states where the benefits promised by the national bill were expected to have little effect on how many of its citizens got coverage, making it an unlikely place for a referendum on the health care bill.
Although Mr. Brown vowed to scuttle the current bill, he voted for the Massachusetts health care bill, which was a model for it. He argued that the national bill would be costly and result in Medicare cuts for the elderly — in effect that some residents of Massachusetts stood to lose more than they would gain.
The closeness of the race drew both opponents and supporters of health care to the polls.
“I don’t like that the health care bill is being ramrodded through, and I am incensed that a senator was able to have his state exempted from the cost,” said Robert Rivard, 67, a retired mechanical engineer in Leicester who is an independent. “As much as I support Brown, it is also a statement about what I don’t want.”
But Michael Barry, a 23-year-old Democrat from Hopkinton, said that he came to the polls to try to save the health care bill. “I voted for Coakley because I didn’t want to disrupt the 60-40 vote for health care,” said Mr. Barry, a software engineer. “I thought it was a shoo-in a few weeks ago and might not have come out today.”
On Capitol Hill, the fate of the health care legislation was highly uncertain as Democratic leaders quickly gathered to plot strategy in the wake of the Republican victory.
Sentiment about how to proceed was mixed, with several House lawmakers expressing wariness about accepting a Senate-passed plan due to their deep reservations about it. But top officials said that approach may be the party’s best alternative and most House members said they still believed it was crucial that Democrats pass a plan.
“It is important for us to pass legislation,” said Representative Baron Hill, a conservative Democrat from Indiana.
Orbit May Sell Shares to Build $11 Million Apartments in Mumbai
Jan. 20 (Bloomberg) -- Orbit Corp., India’s best-performing real estate stock, plans to raise funds from institutions and a buyout firm to build apartments costing as much as $11 million in a nation with Asia’s second-largest number of billionaires.
Orbit may sell as much as 3.5 billion rupees ($76.3 million) of stock to institutions in the first half of the year, Managing Director Pujit Aggarwal said in an interview. The Mumbai-based developer is close to getting 1.75 billion rupees from a private- equity fund to build 200 acres of luxury villas at Mandwa, 33 kilometers (21 miles) from Mumbai along the Arabian Sea, he said.
Demand for luxury apartments is rising as the biggest rally in stocks in 18 years, doubling of copper, sugar and lead prices, and record rice harvests boost the ranks of the affluent in the second-fastest growing economy among the Group of 20 nations. The South Asian nation has 84,000 millionaires, according to the 2009 World Wealth Report by Cap Gemini SA and Merrill Lynch Wealth Management.
“Mumbai is the deepest market, the demand is phenomenal and any money that comes in will be used for further growth,” Aggarwal, 37, said in an interview. “If we can manage funds from internal resources then we may defer such a share sale.”
Orbit’s shares have surged sevenfold in the past 12 months, making it the best-performing stock in the Bombay Stock Exchange Realty Index. They rose 2.1 percent to 331.5 rupees in Mumbai yesterday.
India’s benchmark stock index, the Sensex, gained 81 percent in 2009, while the S&P GSCI Index of 24 raw materials rose 50 percent, the most since at least 1971.
Home to Billionaires
About 40 percent of India’s 52 billionaires live in Mumbai, according to Forbes magazine. The city is home to India’s two main stock exchanges, its biggest trading centre for diamond, bonds, currency, gold and other commodities. It is also the main centre for the world’s most prolific movie-making industry. Two- thirds of Orbit’s properties are in central and south Mumbai.
“Areas such as south Mumbai and south Delhi always command a certain premium,” said Vivek Dahiya, the chief executive of New Delhi-based GenReal property advisory firm. “One always finds buyers here irrespective of the cycles.”
The number of millionaires in India and China are expected to triple between 2008 and 2018, according to the Merrill Lynch and Cap Gemini wealth report.
About half of the 16 million residents of Mumbai, the commercial capital of the world’s second-most populous nation, live in slums. That’s more than the population of Switzerland.
Orbit, which has built 500,000 square feet of space, mainly by tearing down old and dilapidated buildings, is building 3.2 million square feet, Aggarwal said. Orbit will start developing another 3 million square feet over the next four quarters, he said.
“Through the re-development route one can get land for a fraction of the price,” Aggarwal said. “Fresh land in south Mumbai is anyway not available.”
Mumbai has almost 20,000 buildings that are old and crumbling, he said. Developers such as Orbit buy out the residents or offer them alternative homes as per the municipality rules to get the necessary land for luxury homes.
Orbit may sell as much as 3.5 billion rupees ($76.3 million) of stock to institutions in the first half of the year, Managing Director Pujit Aggarwal said in an interview. The Mumbai-based developer is close to getting 1.75 billion rupees from a private- equity fund to build 200 acres of luxury villas at Mandwa, 33 kilometers (21 miles) from Mumbai along the Arabian Sea, he said.
Demand for luxury apartments is rising as the biggest rally in stocks in 18 years, doubling of copper, sugar and lead prices, and record rice harvests boost the ranks of the affluent in the second-fastest growing economy among the Group of 20 nations. The South Asian nation has 84,000 millionaires, according to the 2009 World Wealth Report by Cap Gemini SA and Merrill Lynch Wealth Management.
“Mumbai is the deepest market, the demand is phenomenal and any money that comes in will be used for further growth,” Aggarwal, 37, said in an interview. “If we can manage funds from internal resources then we may defer such a share sale.”
Orbit’s shares have surged sevenfold in the past 12 months, making it the best-performing stock in the Bombay Stock Exchange Realty Index. They rose 2.1 percent to 331.5 rupees in Mumbai yesterday.
India’s benchmark stock index, the Sensex, gained 81 percent in 2009, while the S&P GSCI Index of 24 raw materials rose 50 percent, the most since at least 1971.
Home to Billionaires
About 40 percent of India’s 52 billionaires live in Mumbai, according to Forbes magazine. The city is home to India’s two main stock exchanges, its biggest trading centre for diamond, bonds, currency, gold and other commodities. It is also the main centre for the world’s most prolific movie-making industry. Two- thirds of Orbit’s properties are in central and south Mumbai.
“Areas such as south Mumbai and south Delhi always command a certain premium,” said Vivek Dahiya, the chief executive of New Delhi-based GenReal property advisory firm. “One always finds buyers here irrespective of the cycles.”
The number of millionaires in India and China are expected to triple between 2008 and 2018, according to the Merrill Lynch and Cap Gemini wealth report.
About half of the 16 million residents of Mumbai, the commercial capital of the world’s second-most populous nation, live in slums. That’s more than the population of Switzerland.
Orbit, which has built 500,000 square feet of space, mainly by tearing down old and dilapidated buildings, is building 3.2 million square feet, Aggarwal said. Orbit will start developing another 3 million square feet over the next four quarters, he said.
“Through the re-development route one can get land for a fraction of the price,” Aggarwal said. “Fresh land in south Mumbai is anyway not available.”
Mumbai has almost 20,000 buildings that are old and crumbling, he said. Developers such as Orbit buy out the residents or offer them alternative homes as per the municipality rules to get the necessary land for luxury homes.
Mobile phones transform life of India’s poor
Before he got a mobile phone seven years ago, Vijay Navle, a small Mumbai fish trader, spent much of his time and scant income travelling on buses and trains.
Every day, he would make the five-hour round trip to visit fishermen living on the Arabian Sea on the north of the city to see if they had caught any of the prawns and large fish that he sells to exporters at south Mumbai’s Sassoon Dock.
Indian on his mobile phone
Tech trend: a growing number of Indians have mobile phones
EDITOR’S CHOICE
China’s hinterland picks up baton - Jan-18
FT series: Building Brics - Jan-18
Video: Stephen Green on Asia’s rise - Jan-18
Join the debate: Brics consumers - Jan-19
Russian appetite for bling put to the test - Jan-18
James Kynge: China turns inward for future growth - Jan-18
Today, like a growing number of Indians, rich and poor, Mr Navle and the fishermen have mobile phones. Fishermen call him when they catch something and he arranges the pick-up and delivery to customers by phone.
“I can immediately inform my customers that there’s a big catch coming in fresh and we get a better price for it,” says Mr Navle.
For hundreds of millions of people across India such as Mr Navle, the rise of mobile telephony has led to changes in their lives as profound as the advent of the fixed-line home telephone was for rich consumers in the west.
Aside from television, the mobile handset is the first contact for many Indians with the world of sophisticated consumer electronics and their first connection with the organized modern economy. And with third-generation cellular services on the horizon, the next phase of this consumer revolution is poised to begin with the spread of the mobile internet to India’s masses.
“The mobile phone is the first piece of technology that so many people in India will have owned, it’s their first communications device and it’s their first [mobile] entertainment device,” says Kunal Bajaj, managing director with consultancy BDA in New Delhi.
The latent demand for modern communications, coupled with low tariffs of less than one US cent per minute, has turned India into the world’s fastest growing large mobile market by user numbers.
The total subscriber base reached 506m users by the end of November, with 17.7m additions in that month alone, the Telecom Regulatory Authority of India reported.
These numbers have drawn the interest of the world’s largest companies, battling to wrest market share from domestic leaders, Bharti Airtel and Reliance Communications.
The fierce competition has led operators to introduce a myriad of low-cost data services for consumers and “micro-businessmen”.
Vodafone has introduced a service allowing urban consumers to make purchases such as film tickets, using voice and the keypads of their phones.
Reuters operates a short messaging service, Reuters Market Light, that provides farmers with instant crop price and weather updates. Others provide music-on-demand, ringtones and music video downloads that work even on low-bandwidth second-generation networks. These services lack the sophistication of those designed for smartphones in rich countries but can be ingenious in their simplicity.
“In states like Bihar and Uttar Pradesh you are finding huge amounts of activity around these types of [video] entertainment applications,” Mr Bajaj says, referring to two of India’s poorest states.
As these applications become commoditised, the industry is looking to 3G for growth. The government is expected to launch its long-delayed auction of spectrum for 3G this year.
With fixed-line internet penetration in India estimated at well under 10 per cent, 3G could provide the first contact with the world wide web for many Indians. For it to be successful, however, it will have to overcome many hurdles, such as the need for cheaper smartphones. Those such as the iPhone are unaffordable to the Indian masses.
Tom Levine, head of telecoms practice at Allen & Overy, the law firm, likens the situation to India’s car market, in which the Tata group has launched the world’s cheapest car, the Nano. “The Nano, as we all know, is what India’s really all about, not Mercedes Benzes,” he says.
To aid the spread of 3G, operators will also have to come up with more commercially useful applications for lower-income people, many of whom are illiterate. Examples include enabling online money transfers or crop pricing and trading for farmers. “The question is going to be how, using the greater data speeds available with 3G, you can make something that is useful for people who can’t read,” Mr Levine says.
While mobiles can change lives for the better, advances in technology can also be a double-edged sword, as fish trader Mr Navle is discovering.
The mobile initially gave him an edge. But recently, his income has declined as customers have begun calling around to get a better price. “Earlier, they would deal only with me. I would have dedicated customers. Now they are calling other traders as well,” he says.
Every day, he would make the five-hour round trip to visit fishermen living on the Arabian Sea on the north of the city to see if they had caught any of the prawns and large fish that he sells to exporters at south Mumbai’s Sassoon Dock.
Indian on his mobile phone
Tech trend: a growing number of Indians have mobile phones
EDITOR’S CHOICE
China’s hinterland picks up baton - Jan-18
FT series: Building Brics - Jan-18
Video: Stephen Green on Asia’s rise - Jan-18
Join the debate: Brics consumers - Jan-19
Russian appetite for bling put to the test - Jan-18
James Kynge: China turns inward for future growth - Jan-18
Today, like a growing number of Indians, rich and poor, Mr Navle and the fishermen have mobile phones. Fishermen call him when they catch something and he arranges the pick-up and delivery to customers by phone.
“I can immediately inform my customers that there’s a big catch coming in fresh and we get a better price for it,” says Mr Navle.
For hundreds of millions of people across India such as Mr Navle, the rise of mobile telephony has led to changes in their lives as profound as the advent of the fixed-line home telephone was for rich consumers in the west.
Aside from television, the mobile handset is the first contact for many Indians with the world of sophisticated consumer electronics and their first connection with the organized modern economy. And with third-generation cellular services on the horizon, the next phase of this consumer revolution is poised to begin with the spread of the mobile internet to India’s masses.
“The mobile phone is the first piece of technology that so many people in India will have owned, it’s their first communications device and it’s their first [mobile] entertainment device,” says Kunal Bajaj, managing director with consultancy BDA in New Delhi.
The latent demand for modern communications, coupled with low tariffs of less than one US cent per minute, has turned India into the world’s fastest growing large mobile market by user numbers.
The total subscriber base reached 506m users by the end of November, with 17.7m additions in that month alone, the Telecom Regulatory Authority of India reported.
These numbers have drawn the interest of the world’s largest companies, battling to wrest market share from domestic leaders, Bharti Airtel and Reliance Communications.
The fierce competition has led operators to introduce a myriad of low-cost data services for consumers and “micro-businessmen”.
Vodafone has introduced a service allowing urban consumers to make purchases such as film tickets, using voice and the keypads of their phones.
Reuters operates a short messaging service, Reuters Market Light, that provides farmers with instant crop price and weather updates. Others provide music-on-demand, ringtones and music video downloads that work even on low-bandwidth second-generation networks. These services lack the sophistication of those designed for smartphones in rich countries but can be ingenious in their simplicity.
“In states like Bihar and Uttar Pradesh you are finding huge amounts of activity around these types of [video] entertainment applications,” Mr Bajaj says, referring to two of India’s poorest states.
As these applications become commoditised, the industry is looking to 3G for growth. The government is expected to launch its long-delayed auction of spectrum for 3G this year.
With fixed-line internet penetration in India estimated at well under 10 per cent, 3G could provide the first contact with the world wide web for many Indians. For it to be successful, however, it will have to overcome many hurdles, such as the need for cheaper smartphones. Those such as the iPhone are unaffordable to the Indian masses.
Tom Levine, head of telecoms practice at Allen & Overy, the law firm, likens the situation to India’s car market, in which the Tata group has launched the world’s cheapest car, the Nano. “The Nano, as we all know, is what India’s really all about, not Mercedes Benzes,” he says.
To aid the spread of 3G, operators will also have to come up with more commercially useful applications for lower-income people, many of whom are illiterate. Examples include enabling online money transfers or crop pricing and trading for farmers. “The question is going to be how, using the greater data speeds available with 3G, you can make something that is useful for people who can’t read,” Mr Levine says.
While mobiles can change lives for the better, advances in technology can also be a double-edged sword, as fish trader Mr Navle is discovering.
The mobile initially gave him an edge. But recently, his income has declined as customers have begun calling around to get a better price. “Earlier, they would deal only with me. I would have dedicated customers. Now they are calling other traders as well,” he says.
Sunday, January 17, 2010
L&T to Borrow $4.4 Billion for Power Plants; May Buy Coalmines
Jan. 18 (Bloomberg) -- Larsen & Toubro Ltd., India’s biggest engineering company, may borrow as much as $4.4 billion to build a power-generation business over five years to ease shortages in the world’s second-fastest growing major economy.
Larsen’s new utility arm may borrow 80 percent of the 250 billion rupees ($5.5 billion) needed to build 5,000-megawatt of thermal power capacity, Ravi Uppal, Managing Director and Chief Executive Officer, L&T Power, said in a telephone interview from Mumbai on Jan. 15, without disclosing details of the funding plan.
“We want to support India’s power industry,” said the 57- year-old former head of global markets at ABB Ltd., the world’s largest builder of power networks. “Our engineering and construction capability can get going a major power scheme.” The plan “is part of a changing profile of L&T,” he said.
Power generation companies in India plan to almost double capacity in the five years to March 2012. Prime Minister Manmohan Singh’s government has pledged 569.6 billion rupees to build plants and transmission lines to cut expected peak-hour shortages as high as 12.6 percent this year, according to the Central Electricity Authority.
Larsen is also looking to buy coalmines in Indonesia and Australia, apart from fields in India, to fuel the mostly coal- fired capacity, Uppal said without giving details.
Manufacturing Experience
The parent company, which builds power plants on contract is looking to diversify into generation after it acquired the expertise to manufacture large boilers and turbines through a joint venture with Japan’s Mitsubishi Heavy Industries Ltd., Uppal said. The venture at Surat in western India is scheduled to begin producing boilers by April and turbines in June.
“With our joint venture with Mitsubishi we will become a mega manufacturing unit for boilers and turbines,” Uppal said. The unit, which will compete with Korean and Chinese suppliers, can produce 4,000 megawatts a year, he said.
L&T Power plans to use so-called supercritical technology to build its projects to cut sulfur and nitrogen oxide emissions, he said.
Larsen may consider listing its power unit on Indian exchanges to help raise funds in the future, according to Uppal. The parent’s shares have more than doubled since last year compared with a 94 percent rise in India’s benchmark 30-share Sensitive Index.
The company has begun work on a 1,320-megawatt coal-fired plant at Rajapura in the state of Punjab. The company may complete raising loans for the project “very shortly,” Uppal said without giving details.
The project’s first phase of 660 megawatts will begin generation by the end of 2013, he said. The company is scouting for locations to build more projects and will bid to build large power projects capable of producing as much as 4,000 megawatts being auctioned by the Indian government, Uppal said.
The government plans to auction a total of nine ultra mega power projects, each of which can meet the electricity needs of 1 million middle-income Indian homes.
Larsen’s new utility arm may borrow 80 percent of the 250 billion rupees ($5.5 billion) needed to build 5,000-megawatt of thermal power capacity, Ravi Uppal, Managing Director and Chief Executive Officer, L&T Power, said in a telephone interview from Mumbai on Jan. 15, without disclosing details of the funding plan.
“We want to support India’s power industry,” said the 57- year-old former head of global markets at ABB Ltd., the world’s largest builder of power networks. “Our engineering and construction capability can get going a major power scheme.” The plan “is part of a changing profile of L&T,” he said.
Power generation companies in India plan to almost double capacity in the five years to March 2012. Prime Minister Manmohan Singh’s government has pledged 569.6 billion rupees to build plants and transmission lines to cut expected peak-hour shortages as high as 12.6 percent this year, according to the Central Electricity Authority.
Larsen is also looking to buy coalmines in Indonesia and Australia, apart from fields in India, to fuel the mostly coal- fired capacity, Uppal said without giving details.
Manufacturing Experience
The parent company, which builds power plants on contract is looking to diversify into generation after it acquired the expertise to manufacture large boilers and turbines through a joint venture with Japan’s Mitsubishi Heavy Industries Ltd., Uppal said. The venture at Surat in western India is scheduled to begin producing boilers by April and turbines in June.
“With our joint venture with Mitsubishi we will become a mega manufacturing unit for boilers and turbines,” Uppal said. The unit, which will compete with Korean and Chinese suppliers, can produce 4,000 megawatts a year, he said.
L&T Power plans to use so-called supercritical technology to build its projects to cut sulfur and nitrogen oxide emissions, he said.
Larsen may consider listing its power unit on Indian exchanges to help raise funds in the future, according to Uppal. The parent’s shares have more than doubled since last year compared with a 94 percent rise in India’s benchmark 30-share Sensitive Index.
The company has begun work on a 1,320-megawatt coal-fired plant at Rajapura in the state of Punjab. The company may complete raising loans for the project “very shortly,” Uppal said without giving details.
The project’s first phase of 660 megawatts will begin generation by the end of 2013, he said. The company is scouting for locations to build more projects and will bid to build large power projects capable of producing as much as 4,000 megawatts being auctioned by the Indian government, Uppal said.
The government plans to auction a total of nine ultra mega power projects, each of which can meet the electricity needs of 1 million middle-income Indian homes.
China Inflation May Quicken, Hurting Banks, Utilities, BNP Says
Jan. 18 (Bloomberg) -- China’s inflation rate may accelerate to as high as 8 percent this year, hurting banking, utility and phone stocks, according to BNP Paribas.
“Investors want to be involved in anything that benefits” as inflation quickens, Erwin Sanft, head of China and Hong Kong research at BNP Paribas, said in a Bloomberg Television in Hong Kong today. “There’re only three sectors that don’t benefit, which are banks, telecoms and utilities.”
China’s central bank last week unexpectedly raised the proportion of deposits that banks must set aside as a credit boom threatens to stoke inflation and create asset bubbles.
The nation’s consumer price index will rise 1.4 percent in December, according to economists surveyed by Bloomberg, following a 0.6 percent increase in November. The statistics bureau is scheduled to release monthly data on Jan. 21. China’s CPI will likely rise 3 to 3.5 percent this year, according to State Council Development Research Center researcher Ba Shusong, the Shanghai Securities News reported Dec. 14.
Inflation will likely accelerate to more than 5 percent before the middle of the year and may reach 8 percent in the second half, Sanft said.
China’s foreign-currency reserves rose 23 percent to $2.4 trillion, the world’s largest, the central bank said Jan. 15. Banks extended 379.8 billion yuan ($55.6 billion) of new loans in December, the central bank reported, more than the 310 billion yuan median estimate in a Bloomberg News survey. Banks lent an unprecedented 9.59 trillion yuan last year.
The benchmark Shanghai Composite Index, which rose 80 percent in 2009, has declined 1.6 percent this year, making China the worst-performing stock market in Asia.
“Investors want to be involved in anything that benefits” as inflation quickens, Erwin Sanft, head of China and Hong Kong research at BNP Paribas, said in a Bloomberg Television in Hong Kong today. “There’re only three sectors that don’t benefit, which are banks, telecoms and utilities.”
China’s central bank last week unexpectedly raised the proportion of deposits that banks must set aside as a credit boom threatens to stoke inflation and create asset bubbles.
The nation’s consumer price index will rise 1.4 percent in December, according to economists surveyed by Bloomberg, following a 0.6 percent increase in November. The statistics bureau is scheduled to release monthly data on Jan. 21. China’s CPI will likely rise 3 to 3.5 percent this year, according to State Council Development Research Center researcher Ba Shusong, the Shanghai Securities News reported Dec. 14.
Inflation will likely accelerate to more than 5 percent before the middle of the year and may reach 8 percent in the second half, Sanft said.
China’s foreign-currency reserves rose 23 percent to $2.4 trillion, the world’s largest, the central bank said Jan. 15. Banks extended 379.8 billion yuan ($55.6 billion) of new loans in December, the central bank reported, more than the 310 billion yuan median estimate in a Bloomberg News survey. Banks lent an unprecedented 9.59 trillion yuan last year.
The benchmark Shanghai Composite Index, which rose 80 percent in 2009, has declined 1.6 percent this year, making China the worst-performing stock market in Asia.
Leading Index Probably Rose in December: U.S. Economy Preview
Jan. 17 (Bloomberg) -- The index of leading indicators probably rose in December for a ninth month, while home construction was little changed, indicating housing’s role in the U.S. expansion is waning, economists said before reports this week.
The Conference Board’s measure of the outlook for the next three to six months probably climbed 0.7 percent last month, according to the median forecast of 41 economists surveyed by Bloomberg News before the research group’s report Jan 21. The Commerce Department may report builders broke ground on 575,000 houses at an annual pace, up from 574,000 in November.
“The economy will stay on its recovery track, but it’s not going to be an easy or painless process,” said Julia Coronado, a senior economist at BNP Paribas in New York. “Demand for new construction is very limited.”
Fewer firings, rising stock prices and Federal Reserve efforts to keep short-term interest rates low propelled the advance in the leading index and make it more likely consumers will keep spending. Housing starts, which jumped 24 percent from April to July as builders rushed to satisfy buyers taking advantage of a government credit, will probably cool in coming months until demand reemerges.
The Standard & Poor’s 500 Index rose 1.8 percent last month, capping a 65 percent gain from a 12-year low on March 9 through December. The index is up 1.9 percent so far this month.
The rebound is helping repair the damage from the record $17.5 trillion plunge in household net worth since the recession started at the end of 2007 through last year’s first quarter.
Fewer Firings
Job losses are slowing. First-time claims for unemployment benefits averaged 460,000 a week in December, down from 481,000 the previous month. Claims peaked at 674,000 in late March 2009. The economy lost 85,000 jobs last month after adding 4,000 in November, according to Labor Department data.
Some companies are beginning to hire again. Starwood Hotels & Resorts Worldwide Inc., based in White Plains, New York, said Jan. 12 it plans to add about 6,000 jobs in the U.S. this year.
“After a year of hunkering down and cutting costs, companies are driving their top line again,” Frits van Paasschen, Starwood’s president and chief executive officer, said in a statement.
Americans will spend more in 2010 than previously estimated, economists surveyed this month by Bloomberg said. Purchases will grow 2 percent this year, the first gain since 2007 and up from a December estimate of 1.8 percent, according to the median forecast of 60 economists polled. The U.S. economy, the world’s largest, will expand 2.7 percent, the best performance in four years, the survey showed.
Housing Slows
Housing may be one area where Americans will be more circumspect. Sales of new houses dropped 11 percent in November, the month the government’s $8,000 tax credit for first-time buyers was due to expire.
President Barack Obama on Nov. 6 extended the incentive and expanded it to include current homeowners in a bid to boost demand. The extension allows closings to occur by the end of June as long as contracts are signed by the end of April. Still, the measure may have pulled sales forward and could result in fewer purchases in coming months.
Building permits, a sign of future activity, may have dropped 1.5 percent to a 580,000 annual pace in December, the Commerce Department’s Jan. 20 report on housing starts may show, according to the survey median.
Slump from Record
At a 574,000 pace in November, housing starts were down 75 percent from the record 2.27 million reached in January 2006.
A report on Jan. 19 may show builders were less pessimistic this month. The National Association of Home Builders/Wells Fargo confidence index probably climbed to 17 from a six-month low of 16 in December, economists surveyed said. It would be the first gain in four months. Readings less than 50 signal that most respondents view conditions as poor.
A measure of wholesale prices will show the economy is improving without igniting inflation. Producer prices in December were unchanged after a 1.8 percent gain the prior month, according to the survey median before a Jan. 20 report from the Labor Department. Excluding food and energy, prices rose 0.1 percent, economists forecast.
Finally, a Fed survey may show manufacturing in the Philadelphia region grew at a slower pace in January after expanding by the most in more than four years the prior month, economists estimated before that Jan. 21 release.
The Conference Board’s measure of the outlook for the next three to six months probably climbed 0.7 percent last month, according to the median forecast of 41 economists surveyed by Bloomberg News before the research group’s report Jan 21. The Commerce Department may report builders broke ground on 575,000 houses at an annual pace, up from 574,000 in November.
“The economy will stay on its recovery track, but it’s not going to be an easy or painless process,” said Julia Coronado, a senior economist at BNP Paribas in New York. “Demand for new construction is very limited.”
Fewer firings, rising stock prices and Federal Reserve efforts to keep short-term interest rates low propelled the advance in the leading index and make it more likely consumers will keep spending. Housing starts, which jumped 24 percent from April to July as builders rushed to satisfy buyers taking advantage of a government credit, will probably cool in coming months until demand reemerges.
The Standard & Poor’s 500 Index rose 1.8 percent last month, capping a 65 percent gain from a 12-year low on March 9 through December. The index is up 1.9 percent so far this month.
The rebound is helping repair the damage from the record $17.5 trillion plunge in household net worth since the recession started at the end of 2007 through last year’s first quarter.
Fewer Firings
Job losses are slowing. First-time claims for unemployment benefits averaged 460,000 a week in December, down from 481,000 the previous month. Claims peaked at 674,000 in late March 2009. The economy lost 85,000 jobs last month after adding 4,000 in November, according to Labor Department data.
Some companies are beginning to hire again. Starwood Hotels & Resorts Worldwide Inc., based in White Plains, New York, said Jan. 12 it plans to add about 6,000 jobs in the U.S. this year.
“After a year of hunkering down and cutting costs, companies are driving their top line again,” Frits van Paasschen, Starwood’s president and chief executive officer, said in a statement.
Americans will spend more in 2010 than previously estimated, economists surveyed this month by Bloomberg said. Purchases will grow 2 percent this year, the first gain since 2007 and up from a December estimate of 1.8 percent, according to the median forecast of 60 economists polled. The U.S. economy, the world’s largest, will expand 2.7 percent, the best performance in four years, the survey showed.
Housing Slows
Housing may be one area where Americans will be more circumspect. Sales of new houses dropped 11 percent in November, the month the government’s $8,000 tax credit for first-time buyers was due to expire.
President Barack Obama on Nov. 6 extended the incentive and expanded it to include current homeowners in a bid to boost demand. The extension allows closings to occur by the end of June as long as contracts are signed by the end of April. Still, the measure may have pulled sales forward and could result in fewer purchases in coming months.
Building permits, a sign of future activity, may have dropped 1.5 percent to a 580,000 annual pace in December, the Commerce Department’s Jan. 20 report on housing starts may show, according to the survey median.
Slump from Record
At a 574,000 pace in November, housing starts were down 75 percent from the record 2.27 million reached in January 2006.
A report on Jan. 19 may show builders were less pessimistic this month. The National Association of Home Builders/Wells Fargo confidence index probably climbed to 17 from a six-month low of 16 in December, economists surveyed said. It would be the first gain in four months. Readings less than 50 signal that most respondents view conditions as poor.
A measure of wholesale prices will show the economy is improving without igniting inflation. Producer prices in December were unchanged after a 1.8 percent gain the prior month, according to the survey median before a Jan. 20 report from the Labor Department. Excluding food and energy, prices rose 0.1 percent, economists forecast.
Finally, a Fed survey may show manufacturing in the Philadelphia region grew at a slower pace in January after expanding by the most in more than four years the prior month, economists estimated before that Jan. 21 release.
In Senate Race, Massachusetts Bucks a Political Stereotype
MARLBOROUGH, Mass. — Angela Grenham, 50, was raised a Massachusetts Democrat — “We had the crucifix and the J.F.K. sign,” she recalled — and voted for a Democrat for president as recently as 2000, when she supported Al Gore.
But this weekend she stood on a street corner here in the heart of Boston’s politically unpredictable western suburbs holding up a sign for the Republican running to fill the seat long held by Senator Edward M. Kennedy, Scott Brown, who has vowed to stop the Democratic health care bill in its tracks.
Cars and pickup trucks honked their approval as they sped by. Ms. Grenham proudly announced that a group of rivals holding up signs for the Democratic candidate in Tuesday’s special election, Martha Coakley, had given up and left the other corners of the intersection.
“The response was not great for them,” said Ms. Grenham, who changed her registration to independent several years ago after she grew more conservative.
Voters like Ms. Grenham have helped make this crucial race too close to call, endangering the Democrats’ 60-vote majority in the Senate and President Obama’s health care overhaul. President Obama came to Boston on Sunday in hopes of rescuing Ms. Coakley’s faltering candidacy. “Understand what’s at stake here, Massachusetts,” Mr. Obama said.
Marlborough is the kind of place where many Massachusetts elections are won and lost these days. Democrats outnumber Republicans by three to one in the state, but independent voters now outnumber them both: a majority of the state’s voters are no longer members of either party. And the independent vote is particularly strong in places like Marlborough, a small city in the crescent-shaped swath of suburbs surrounding Boston, whose swing voters have tipped the balance one way of the other in several recent statewide elections. Those voters could prove crucial again on Tuesday.
The lingering economic downturn and unease about the Democrats’ muscular return to government power have left many voters here in a sour mood.
“It’s just tax, tax, tax, and I think the people are just getting sick of it,” said Richard Gasparoni, 57, an independent who was holding up a Brown sign at another intersection here along Main Street.
Mr. Gasparoni, who has lived here all his life and works as a tax manager for a medical device company, said that he had never campaigned for anyone before, but that he was moved to act because he was upset about the state’s decision to raise its sales tax, leery of the health bill in Congress, and fed up with the scandals that have involved several Democratic state lawmakers.
“I think people have had enough,” Mr. Gasparoni said.
States do not get much more Democratic than Massachusetts. Democrats hold every statewide office and control both houses of the legislature with lopsided majorities. The state’s entire Congressional delegation is Democratic.
But Massachusetts does not always live up to its national stereotype as a bastion of liberalism. Yes, it was the only state to vote for George McGovern for president in 1972, but it also voted twice for Ronald Reagan. Democratic enrollment has fallen from 48 percent of the electorate in 1984 to 37 percent last year. And thanks largely to votes from independent voters in the suburbs, Massachusetts was led by Republican governors for 16 straight years, until Gov. Deval Patrick, a Democrat, broke the streak with his 2006 landslide election. Now Mr. Patrick is dealing with slipping approval ratings as he seeks re-election.
In tough times like these, the political hegemony of the Democrats has its risks.
“The Democrats are controlling both Washington and Beacon Hill,” said Joseph Malone, a Republican who served as the state treasurer during the 1990s. “So if I’m angry as hell about what’s going on with our government, who am I going to throw out? Who am I going to vote against? That’s a big part of this race.”
Several political analysts said that it was still possible — some said it was even likely — that Ms. Coakley, the state’s attorney general, would win on Tuesday, particularly if President Obama’s visit helps turn out the Democratic faithful in strongholds like Boston and if Ms. Coakley is able to hold down Mr. Brown’s margins among independents.
But independent, suburban voters in several other parts of the Northeast voted Republican in November after trending Democratic for years, ousting Gov. Jon Corzine of New Jersey, a Democrat, and unexpectedly returning Nassau County, on Long Island, to Republican rule.
The possibility of a voter revolt in Massachusetts took many Democrats by surprise: local officials were overwhelmingly re-elected last year. Some worry now that they were too complacent in this race. Special elections like this one turnouts, but the January blizzard of campaign commercials — it is not unusual to see three or four in a row during local newscasts — has whipped up interest in the race.
Many of the ads are negative — the successive spots sometimes sound like a tit-for-tat argument — and a sizable portion of them are being paid for by interest groups trying to either pass or block the health care bill.
Randy Scott, one of the owners of the Main Street Café, said that there had not been this much politics discussed at his counters in years. “There’s a lot more buzz,” he said.
Several independent voters said that they wanted to elect Mr. Brown to block the health care bill, which they derided as full of deals for special interests — though several said that they thought Massachusetts’ law extending near-universal coverage, one of the models for the national bill, had been largely a success.
“It’s not perfect, but why should we have to pay again when we have health care?” said Ms. Grenham, who works as a physical therapist.
Massachusetts was not hit quite as hard as other parts of the country during the recession — its unemployment rate in November was 8.8 percent, below the national rate of 10 percent — but there has been no shortage of pain and economic anxiety. Voters have grown restive: a poll released last week by the Suffolk University Political Research Center found that 55 percent of respondents said that the state was on the wrong track, up from 44 percent in April 2007.
Sitting over his coffee at the counter of the Main Street Café, Michael Corbett, 64, an independent, said that he was supporting Mr. Brown based largely on national security issues. Mr. Corbett, a veteran, was already upset by the Obama administration’s plans to try some suspected terrorists in civilian courts; he said he was appalled when Ms. Coakley suggested in a debate last week that the terrorists were gone from Afghanistan.
At his wife’s beauty parlor in Framingham, he said, a clientele that had largely supported President Obama last year was now uneasy. And he said that as he drove through towns where Obama-Biden lawn signs sprouted just over a year ago, he now sees signs supporting Brown.
“That doesn’t mean that they’re going to get out and vote,” said Mr. Corbett, who has a business selling industrial maintenance and repair supplies. “But the signs are out there. It’s certainly a difference. The Obama-Biden signs are gone, and I just think the people are sick of this.”
But this weekend she stood on a street corner here in the heart of Boston’s politically unpredictable western suburbs holding up a sign for the Republican running to fill the seat long held by Senator Edward M. Kennedy, Scott Brown, who has vowed to stop the Democratic health care bill in its tracks.
Cars and pickup trucks honked their approval as they sped by. Ms. Grenham proudly announced that a group of rivals holding up signs for the Democratic candidate in Tuesday’s special election, Martha Coakley, had given up and left the other corners of the intersection.
“The response was not great for them,” said Ms. Grenham, who changed her registration to independent several years ago after she grew more conservative.
Voters like Ms. Grenham have helped make this crucial race too close to call, endangering the Democrats’ 60-vote majority in the Senate and President Obama’s health care overhaul. President Obama came to Boston on Sunday in hopes of rescuing Ms. Coakley’s faltering candidacy. “Understand what’s at stake here, Massachusetts,” Mr. Obama said.
Marlborough is the kind of place where many Massachusetts elections are won and lost these days. Democrats outnumber Republicans by three to one in the state, but independent voters now outnumber them both: a majority of the state’s voters are no longer members of either party. And the independent vote is particularly strong in places like Marlborough, a small city in the crescent-shaped swath of suburbs surrounding Boston, whose swing voters have tipped the balance one way of the other in several recent statewide elections. Those voters could prove crucial again on Tuesday.
The lingering economic downturn and unease about the Democrats’ muscular return to government power have left many voters here in a sour mood.
“It’s just tax, tax, tax, and I think the people are just getting sick of it,” said Richard Gasparoni, 57, an independent who was holding up a Brown sign at another intersection here along Main Street.
Mr. Gasparoni, who has lived here all his life and works as a tax manager for a medical device company, said that he had never campaigned for anyone before, but that he was moved to act because he was upset about the state’s decision to raise its sales tax, leery of the health bill in Congress, and fed up with the scandals that have involved several Democratic state lawmakers.
“I think people have had enough,” Mr. Gasparoni said.
States do not get much more Democratic than Massachusetts. Democrats hold every statewide office and control both houses of the legislature with lopsided majorities. The state’s entire Congressional delegation is Democratic.
But Massachusetts does not always live up to its national stereotype as a bastion of liberalism. Yes, it was the only state to vote for George McGovern for president in 1972, but it also voted twice for Ronald Reagan. Democratic enrollment has fallen from 48 percent of the electorate in 1984 to 37 percent last year. And thanks largely to votes from independent voters in the suburbs, Massachusetts was led by Republican governors for 16 straight years, until Gov. Deval Patrick, a Democrat, broke the streak with his 2006 landslide election. Now Mr. Patrick is dealing with slipping approval ratings as he seeks re-election.
In tough times like these, the political hegemony of the Democrats has its risks.
“The Democrats are controlling both Washington and Beacon Hill,” said Joseph Malone, a Republican who served as the state treasurer during the 1990s. “So if I’m angry as hell about what’s going on with our government, who am I going to throw out? Who am I going to vote against? That’s a big part of this race.”
Several political analysts said that it was still possible — some said it was even likely — that Ms. Coakley, the state’s attorney general, would win on Tuesday, particularly if President Obama’s visit helps turn out the Democratic faithful in strongholds like Boston and if Ms. Coakley is able to hold down Mr. Brown’s margins among independents.
But independent, suburban voters in several other parts of the Northeast voted Republican in November after trending Democratic for years, ousting Gov. Jon Corzine of New Jersey, a Democrat, and unexpectedly returning Nassau County, on Long Island, to Republican rule.
The possibility of a voter revolt in Massachusetts took many Democrats by surprise: local officials were overwhelmingly re-elected last year. Some worry now that they were too complacent in this race. Special elections like this one turnouts, but the January blizzard of campaign commercials — it is not unusual to see three or four in a row during local newscasts — has whipped up interest in the race.
Many of the ads are negative — the successive spots sometimes sound like a tit-for-tat argument — and a sizable portion of them are being paid for by interest groups trying to either pass or block the health care bill.
Randy Scott, one of the owners of the Main Street Café, said that there had not been this much politics discussed at his counters in years. “There’s a lot more buzz,” he said.
Several independent voters said that they wanted to elect Mr. Brown to block the health care bill, which they derided as full of deals for special interests — though several said that they thought Massachusetts’ law extending near-universal coverage, one of the models for the national bill, had been largely a success.
“It’s not perfect, but why should we have to pay again when we have health care?” said Ms. Grenham, who works as a physical therapist.
Massachusetts was not hit quite as hard as other parts of the country during the recession — its unemployment rate in November was 8.8 percent, below the national rate of 10 percent — but there has been no shortage of pain and economic anxiety. Voters have grown restive: a poll released last week by the Suffolk University Political Research Center found that 55 percent of respondents said that the state was on the wrong track, up from 44 percent in April 2007.
Sitting over his coffee at the counter of the Main Street Café, Michael Corbett, 64, an independent, said that he was supporting Mr. Brown based largely on national security issues. Mr. Corbett, a veteran, was already upset by the Obama administration’s plans to try some suspected terrorists in civilian courts; he said he was appalled when Ms. Coakley suggested in a debate last week that the terrorists were gone from Afghanistan.
At his wife’s beauty parlor in Framingham, he said, a clientele that had largely supported President Obama last year was now uneasy. And he said that as he drove through towns where Obama-Biden lawn signs sprouted just over a year ago, he now sees signs supporting Brown.
“That doesn’t mean that they’re going to get out and vote,” said Mr. Corbett, who has a business selling industrial maintenance and repair supplies. “But the signs are out there. It’s certainly a difference. The Obama-Biden signs are gone, and I just think the people are sick of this.”
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