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.
Thursday, January 21, 2010
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
Multimedia
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?
Post a Comment »
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.
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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.
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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.
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