The International Finance Corporation is investing in India’s first commercially viable solar power project, giving a vote of confidence to the country’s ambitions to develop the technology.
The IFC’s investment in Azure Power Private, India’s first “megawatt-scale” solar power developer, comes at a time when the country is keen to build its capability in this technology to compete with China. Beijing controls about 43 per cent of capacity in the solar power industry.
EDITOR’S CHOICE
India raises key rate to help fight inflation - Mar-19
India races to match China’s double digit - Mar-07
India forecasts growth of up to 8.75% - Feb-25
India balks at curb on nuclear liability - Mar-15
India’s tribes in land fight with business - Mar-09
New Delhi boost for women MPs - Mar-09
The $10m (€7.4m, £6.6m) investment comes as a decline in the industry’s raw-material prices is making the technology more commercially viable, particularly in emerging markets. Prices for polysilicon have fallen to about a quarter of their former peak.
“With the reduction in the pricing of solar panels, the break-even point has moved down dramatically,” Lars Thunell, the IFC’s Washington-based chief executive, said in an interview.
The push by the IFC, the World Bank’s private sector arm, into solar power comes as private sector funds are also targeting India’s generating companies, including those with significant portfolios of renewable energy.
A consortium of funds, including Morgan Stanley Infrastructure Partners, General Atlantic and Goldman Sachs Investment Management, invested $425m in Asian Genco, a Singapore-based company building power plants in India. That was one of India’s biggest private equity deals in the past two years and will include a large hydropower project in Sikkim state.
India is engaged in a vast expansion of power infrastructure to drive its rapidly growing economy and aid its 1.14bn population, more than half of whom do not have access to electricity. The country is seeking to increase its solar power generation capacity from near zero today to 20,000 megawatts by 2022.
The Azure project also provides a precedent in India for connecting solar plants to the national grid. This method could be used for future similar projects by other producers.
Founded by a young entrepreneur, Inderpreet Wadhwa, Azure is India’s first solar plant large enough at 2MW to be considered “utility scale”. When connected to the country’s electricity grid, the plant supplies power to 20,000 people in 32 villages in the Amritsar district of the Punjab.
“It’s small right now but the ambition is to grow very quickly and scale up,” said Anita George, IFC infrastructure director for Asia.
The IFC, meanwhile, has been rapidly increasing its investment in renewable energy, allocating $720m to the area last year compared with only $65m five years earlier.
Mr Thunell said the group was planning increases in its total investment in renewable energy and other climate-related areas, depending on the availability of capital from the IFC board.
“We want to double our investment in that area,” he said.
In a project in Senegal, the IFC has a 25-year electricity distribution concession to provide power to 20,000 households in nearly 300 villages. It will do this through grid-connections and individual solar kits, helped by a government subsidy for connection costs.
Sunday, March 21, 2010
Saturday, March 20, 2010
Merkel Says Aid to Greece Must Address Budget Woes at ‘Roots’
March 21 (Bloomberg) -- German Chancellor Angela Merkel signaled a demand for greater budget discipline was the price for her supporting European Union aid to Greece, denouncing what she called “superficial” solidarity and seeking to quell speculation of a split with her finance minister on the issue.
Merkel said she’s made no decision on whether to back EU aid or to seek International Monetary Fund assistance to help Greece contain Europe’s biggest budget deficit. A government spokesman confirmed her statement, which was reported by Deutsche Presse Agentur, citing an interview to be broadcast today by Deutschlandfunk.
Her comments underscored the struggle within Merkel’s government -- and among European leaders -- on how to react to the Greek budget crisis. Public opposition to a bailout for Greece has escalated in Germany, the main contributor to the EU budget, before an EU summit in Brussels March 25-26.
The German government sought to play down divisions between Merkel and Finance Minister Wolfgang Schaeuble, denying a report in Der Spiegel magazine that the finance chief told his staff not to communicate with chancellery aides without his consent.
“An intensive exchange occurs daily between the chancellor and the finance minister along with their ministries on Greece,” said a statement from the government press office yesterday.
Merkel’s government said March 19 it wouldn’t rule out a loan to Greece from the IMF. Schaeuble’s spokesman expressed “great reservation” about aid from the Washington-based lender.
CDU Rally
In an appearance before members of her Christian Democratic Union, Merkel lauded Greek Prime Minister George Papandreou’s efforts to cut his budget deficit to 8.7 percent of gross domestic product from 12.7 percent, calling his austerity measures “a real achievement.”
“There has to be solidarity that tackles the problem at its roots, not solidarity that’s superficial and in the end weakens everybody,” Merkel said at a political rally in the city of Muenster in the western state of North Rhine-Westphalia.
Merkel is open to different options on Greece, according to the Deutschlandfunk interview reported by DPA. The Greek government isn’t yet in need of financial assistance, German government spokesman Ulrich Wilhelm told reporters in Berlin.
“We assume that Greece is in a position to solve its problems itself with its consolidation program,” Wilhelm said.
Merkel said she’s made no decision on whether to back EU aid or to seek International Monetary Fund assistance to help Greece contain Europe’s biggest budget deficit. A government spokesman confirmed her statement, which was reported by Deutsche Presse Agentur, citing an interview to be broadcast today by Deutschlandfunk.
Her comments underscored the struggle within Merkel’s government -- and among European leaders -- on how to react to the Greek budget crisis. Public opposition to a bailout for Greece has escalated in Germany, the main contributor to the EU budget, before an EU summit in Brussels March 25-26.
The German government sought to play down divisions between Merkel and Finance Minister Wolfgang Schaeuble, denying a report in Der Spiegel magazine that the finance chief told his staff not to communicate with chancellery aides without his consent.
“An intensive exchange occurs daily between the chancellor and the finance minister along with their ministries on Greece,” said a statement from the government press office yesterday.
Merkel’s government said March 19 it wouldn’t rule out a loan to Greece from the IMF. Schaeuble’s spokesman expressed “great reservation” about aid from the Washington-based lender.
CDU Rally
In an appearance before members of her Christian Democratic Union, Merkel lauded Greek Prime Minister George Papandreou’s efforts to cut his budget deficit to 8.7 percent of gross domestic product from 12.7 percent, calling his austerity measures “a real achievement.”
“There has to be solidarity that tackles the problem at its roots, not solidarity that’s superficial and in the end weakens everybody,” Merkel said at a political rally in the city of Muenster in the western state of North Rhine-Westphalia.
Merkel is open to different options on Greece, according to the Deutschlandfunk interview reported by DPA. The Greek government isn’t yet in need of financial assistance, German government spokesman Ulrich Wilhelm told reporters in Berlin.
“We assume that Greece is in a position to solve its problems itself with its consolidation program,” Wilhelm said.
Bharti Board Said to Approve $9 Billion Zain Africa Unit Offer
March 21 (Bloomberg) -- Bharti Airtel Ltd., the Indian phone company planning a $9 billion purchase of Zain’s African wireless assets, intends to make a formal offer this week, after Bharti’s board yesterday approved the bid, according to two people with knowledge of the negotiations.
Zain, Kuwait’s biggest phone company, may be asked to provide legal protection from a dispute in Nigeria, one of the people said, declining to be identified because the discussions aren’t public. The board didn’t specifically ask for this protection, and was satisfied with the proposals that Bharti management made with regards to Nigeria, the second person said.
Bharti and Zain are in exclusive talks until March 25 to complete a transaction that would give India’s largest wireless carrier 42 million new subscribers in 15 African countries. Bharti has sought overseas businesses as competition at home has reduced call rates for many of its 122 million Indian subscribers to as little as half a U.S. cent a minute. This is Bharti’s third attempt to enter Africa, after being thwarted twice in efforts to merge with South Africa’s MTN Group Ltd.
“I don’t expect Bharti to materially lose value on this deal,” G.V. Giri, an analyst at IIFL Capital Ltd. in Mumbai, said by phone. “They may have at most overpaid by $1 billion to $1.5 billion, but through cost cutting they should be able to recover that sort of value.” Giri maintained his “buy” rating on the stock.
“This was an offer made as per guidelines set by the board, so the approval doesn’t surprise us,” Giri said.
Nigeria Dispute
Senjam Raj Sekhar, a spokesman for New Delhi-based Bharti declined to comment.
Bharti added 3.9 percent on March 19 to close at 311.90 rupees in Mumbai trading, posting its biggest gain since Nov. 30. The stock was the best performer on the benchmark Sensitive Index, which advanced 0.3 percent.
Econet Wireless Holdings Ltd., based in a suburb of Johannesburg, is disputing control of Zain’s unit in Nigeria.
The Nigerian operations are the single-largest revenue producer for Mobile Telecommunications Co., known as Zain, and have been described by Bharti chairman Sunil Mittal as the most important piece of its planned purchase. Econet Chief Executive Officer Strive Masiyiwa said March 18 that there has been no agreement or settlement in the dispute over the Nigerian unit.
India’s largest wireless company’s plan can’t include the purchase of Zain’s Celtel Nigeria BV unit, Econet has said.
Econet
Econet is seeking to overturn a 2006 deal in which Celtel bought a 65 percent stake in Nigerian mobile operator Vmobile, since renamed Zain Nigeria. Econet, with 5 percent of Zain Nigeria, says it should have had the right of first refusal on those shares.
Econet’s Masiyiwa has said that the case is still in arbitration and that until that process has been completed the unit in Nigeria cannot be sold.
Zain bought Celtel International for $3.4 billion in 2005 to expand into 13 African countries, including Kenya and Nigeria.
The Nigerian unit is a key asset for Zain. In 2008 Zain generated about 21 percent of its total earnings before interest, tax, depreciation and amortization in Nigeria and about 22 percent of its total sales.
It was now up to Zain to agree to Bharti’s terms in the offer to conclude a deal, one of the people said.
Zain, Kuwait’s biggest phone company, may be asked to provide legal protection from a dispute in Nigeria, one of the people said, declining to be identified because the discussions aren’t public. The board didn’t specifically ask for this protection, and was satisfied with the proposals that Bharti management made with regards to Nigeria, the second person said.
Bharti and Zain are in exclusive talks until March 25 to complete a transaction that would give India’s largest wireless carrier 42 million new subscribers in 15 African countries. Bharti has sought overseas businesses as competition at home has reduced call rates for many of its 122 million Indian subscribers to as little as half a U.S. cent a minute. This is Bharti’s third attempt to enter Africa, after being thwarted twice in efforts to merge with South Africa’s MTN Group Ltd.
“I don’t expect Bharti to materially lose value on this deal,” G.V. Giri, an analyst at IIFL Capital Ltd. in Mumbai, said by phone. “They may have at most overpaid by $1 billion to $1.5 billion, but through cost cutting they should be able to recover that sort of value.” Giri maintained his “buy” rating on the stock.
“This was an offer made as per guidelines set by the board, so the approval doesn’t surprise us,” Giri said.
Nigeria Dispute
Senjam Raj Sekhar, a spokesman for New Delhi-based Bharti declined to comment.
Bharti added 3.9 percent on March 19 to close at 311.90 rupees in Mumbai trading, posting its biggest gain since Nov. 30. The stock was the best performer on the benchmark Sensitive Index, which advanced 0.3 percent.
Econet Wireless Holdings Ltd., based in a suburb of Johannesburg, is disputing control of Zain’s unit in Nigeria.
The Nigerian operations are the single-largest revenue producer for Mobile Telecommunications Co., known as Zain, and have been described by Bharti chairman Sunil Mittal as the most important piece of its planned purchase. Econet Chief Executive Officer Strive Masiyiwa said March 18 that there has been no agreement or settlement in the dispute over the Nigerian unit.
India’s largest wireless company’s plan can’t include the purchase of Zain’s Celtel Nigeria BV unit, Econet has said.
Econet
Econet is seeking to overturn a 2006 deal in which Celtel bought a 65 percent stake in Nigerian mobile operator Vmobile, since renamed Zain Nigeria. Econet, with 5 percent of Zain Nigeria, says it should have had the right of first refusal on those shares.
Econet’s Masiyiwa has said that the case is still in arbitration and that until that process has been completed the unit in Nigeria cannot be sold.
Zain bought Celtel International for $3.4 billion in 2005 to expand into 13 African countries, including Kenya and Nigeria.
The Nigerian unit is a key asset for Zain. In 2008 Zain generated about 21 percent of its total earnings before interest, tax, depreciation and amortization in Nigeria and about 22 percent of its total sales.
It was now up to Zain to agree to Bharti’s terms in the offer to conclude a deal, one of the people said.
Friday, March 19, 2010
Japan’s Bonds Complete Third Weekly Loss as Recovery Signs Grow
March 20 (Bloomberg) -- Japan’s bonds fell for a third week as signs the world’s second-largest economy is recovering damped demand for the safety of government debt.
Benchmarkyields climbed to the highest level since the start of February before a government report next week that economists said will show exports surged more than 40 percent last month from a year earlier. Bonds also dropped this week as sentiment among Japanese manufacturers climbed and demand for services increased, signs the rebound is gathering momentum.
“Economic prospects are turning out be much brighter than expected,” said Shinji Nomura, chief debt strategist in Tokyo at Nikko Cordial Securities Inc., part of Japan’s third-largest banking group. “Upward pressure on bond yields will increase.”
The yield on the 10-year bond rose two basis points this week to 1.36 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The 1.4 percent security due March 2020 fell 0.177 yen to 100.351 yen. The yield climbed as high as 1.37 percent yesterday, matching the most since Feb. 5.
Ten-year bond futures for June delivery slid 0.22 this week to 138.63 on the Tokyo Stock Exchange.
Japan’s exports jumped 45.7 percent in February, after rising 40.8 percent the previous month, according to a Bloomberg News survey before the March 24 report. Sentiment among large manufacturers was positive for a third quarter, a government survey showed March 18. Demand for services rose 2.9 percent in January, the Trade Ministry said March 17.
The Nikkei 225 Stock Average advanced 0.8 percent yesterday to 10,824.72, completing a sixth week of gains.
‘Encourage Investors’
“A recovery in risk appetite will encourage investors to buy more higher-yielding assets such as commodity currencies and stocks,” said Kazumasa Yamaoka, a senior analyst in Tokyo at GCI Capital Co., which advises on foreign currency, overseas investments and hedge funds.
Ten-year yields may advance to 1.75 percent and the Nikkei 225 may rise above 12,000, said Tatsushi Shikano, senior economist in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan’s largest banking group.
“A robust recovery in overseas demand will shore up corporate profits and help improve corporate confidence notably at the Bank of Japan’s next Tankan survey,” Shikano said. “As the continued economic recovery forms the basis for sustained rise in stocks.”
The Tankan index of sentiment among large manufacturers, due to be released April 1, climbed to minus 10 in the first quarter, from minus 24 in December, Shikano predicted.
Yields Attract
This week’s drop in bonds was tempered on speculation yields at a six-week high will lure institutional investors amid signs some parts of the economy are still struggling to recover.
“Ten-year yields above 1.40 percent look attractive given stubborn deflationary pressure,” said Shinji Hiramatsu, who helps oversee the equivalent of $15.7 billion in assets at Sompo Japan Asset Management Ltd. in Tokyo.
Japanese commercial land prices fell to the lowest in at least 36 years, the Ministry of Land, Infrastructure, Transport and Tourism said on March 18. Prices declined 6.1 percent in 2009, more than the 4.7 percent drop a year earlier.
Japanese bonds handed investors a loss of 0.1 percent so far this month in local-currency terms, according to indexes from Bank of America Corp.’s Merrill Lynch unit.
Benchmarkyields climbed to the highest level since the start of February before a government report next week that economists said will show exports surged more than 40 percent last month from a year earlier. Bonds also dropped this week as sentiment among Japanese manufacturers climbed and demand for services increased, signs the rebound is gathering momentum.
“Economic prospects are turning out be much brighter than expected,” said Shinji Nomura, chief debt strategist in Tokyo at Nikko Cordial Securities Inc., part of Japan’s third-largest banking group. “Upward pressure on bond yields will increase.”
The yield on the 10-year bond rose two basis points this week to 1.36 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The 1.4 percent security due March 2020 fell 0.177 yen to 100.351 yen. The yield climbed as high as 1.37 percent yesterday, matching the most since Feb. 5.
Ten-year bond futures for June delivery slid 0.22 this week to 138.63 on the Tokyo Stock Exchange.
Japan’s exports jumped 45.7 percent in February, after rising 40.8 percent the previous month, according to a Bloomberg News survey before the March 24 report. Sentiment among large manufacturers was positive for a third quarter, a government survey showed March 18. Demand for services rose 2.9 percent in January, the Trade Ministry said March 17.
The Nikkei 225 Stock Average advanced 0.8 percent yesterday to 10,824.72, completing a sixth week of gains.
‘Encourage Investors’
“A recovery in risk appetite will encourage investors to buy more higher-yielding assets such as commodity currencies and stocks,” said Kazumasa Yamaoka, a senior analyst in Tokyo at GCI Capital Co., which advises on foreign currency, overseas investments and hedge funds.
Ten-year yields may advance to 1.75 percent and the Nikkei 225 may rise above 12,000, said Tatsushi Shikano, senior economist in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan’s largest banking group.
“A robust recovery in overseas demand will shore up corporate profits and help improve corporate confidence notably at the Bank of Japan’s next Tankan survey,” Shikano said. “As the continued economic recovery forms the basis for sustained rise in stocks.”
The Tankan index of sentiment among large manufacturers, due to be released April 1, climbed to minus 10 in the first quarter, from minus 24 in December, Shikano predicted.
Yields Attract
This week’s drop in bonds was tempered on speculation yields at a six-week high will lure institutional investors amid signs some parts of the economy are still struggling to recover.
“Ten-year yields above 1.40 percent look attractive given stubborn deflationary pressure,” said Shinji Hiramatsu, who helps oversee the equivalent of $15.7 billion in assets at Sompo Japan Asset Management Ltd. in Tokyo.
Japanese commercial land prices fell to the lowest in at least 36 years, the Ministry of Land, Infrastructure, Transport and Tourism said on March 18. Prices declined 6.1 percent in 2009, more than the 4.7 percent drop a year earlier.
Japanese bonds handed investors a loss of 0.1 percent so far this month in local-currency terms, according to indexes from Bank of America Corp.’s Merrill Lynch unit.
India’s Unexpected Interest Rate Rise ‘Sign of Things to Come’
March 20 (Bloomberg) -- India’s central bank will probably raise interest rates again next month as the first increase in two years is only the initial step in the battle against inflation, BNP Paribas SA and Standard Chartered Plc said.
The Reserve Bank of India yesterday increased the benchmark reverse repurchase rate to 3.5 percent from a record-low 3.25 percent and the repurchase rate to 5 percent from 4.75 percent, saying containing inflation has become “imperative.”
Governor Duvvuri Subbarao’s move comes after Australia and Malaysia increased rates this month, while Norway and Israel did so at the end of last year as the global economy’s recovery from the worst recession since World War II gathers pace. The World Bank indicated this week that China should also act to help contain the risk of a property bubble.
“This is just a sign of things to come,” said Manoj Rane, treasurer at BNP Paribas in Mumbai. “A 25 basis-point increase doesn’t get you there but it sets the course” to contain inflation.
Lagging behind India are central banks in the Group of Seven economies with the Federal Reserve and European Central Bank among those waiting for evidence of a more concrete recovery before they unwind record low borrowing costs. Canada may be the first G-7 central bank to shift after data showed its core inflation rate unexpectedly accelerated last month.
Stocks Declined
Stocks in the U.S. declined after the decision, a month before the bank’s scheduled monetary policy meeting. Subbarao moved after India’s industrial production gained 16.7 percent in January following a 17.6 percent increase in December from a year earlier, the fastest pace since at least 1994, according to Bloomberg data. The wholesale-price inflation rate touched 9.89 percent in February, according to the commerce ministry.
“We see this as the first of several policy rate increases as the Reserve Bank of India realigns policy rates to high inflation,” said Sanjeev Prasad, executive director at Kotak Securities Ltd. Prasad, India’s top-ranked analyst in the past four years according to Asia Money polls, expects the central bank to raise interest rates by 2 percentage points in the fiscal year starting April 1.
As inflation accelerated, the difference between the overnight money-market rate and the one-year swap rate, a measure of expectations for changes in borrowing costs, surged almost six-fold this fiscal year. The spread averaged 1.59 percentage points this month, compared with 27 basis points in April 2009, when the fiscal year began. A basis point is 0.01 of a percentage point.
Doubled Holdings
Foreigners more than doubled holdings of Indian debt this fiscal year, raising total ownership to an all-time high $11.2 billion on March 18, to benefit from the rising yields on the nation’s assets. Outstanding overseas investment in stocks also climbed to a record $76 billion on the same day.
“It’s a positive step for all financial markets because it shows policy makers’ resolve to tackle the inflation problem in a timely manner,” said Arvind Sampath, the Mumbai-based head of interest-rate trading at Standard Chartered. “The measures will help subdue inflationary expectations, which is good for the economy as a whole.”
Benchmark 10-year bond yields have added 24 basis points this year, after rising by a record 2.3 percentage points in 2009 as investors braced for faster inflation and higher policy rates. India’s benchmark share index has rallied 95 percent and the rupee has gained 10 percent in the past year.
Currency option prices signal investors are the most optimistic in 21 months that rising asset yields and quickening economic growth will bolster the rupee. One-month implied volatility, a measure of expectations for rupee price movements, touched 7.4 percent, the lowest level since June 2008, on March 18, data compiled by Bloomberg show. The gauge of expected currency swings is quoted by traders as part of options prices.
Inflationary Pressures
The central bank yesterday said inflationary pressures have “accentuated” and have been “spilling over to the wider inflationary process” and pointed to the latest industrial production data to show “revival of private demand.”
India’s passenger car sales gained in February to a record amid rising incomes in the world’s second-most populous nation. The demand is encouraging Ford Motor Co. and Volkswagen AG to build plants and unveil new models in the South Asian nation.
India’s $1.2 trillion economy, Asia’s biggest after Japan and China, may expand 8.2 percent in the next fiscal year, compared with 7.2 percent in the year to March 31, the Finance Ministry said in February.
Inflation has returned to Asia as growth accelerates amid the global economic recovery. Consumer prices in China rose to a 16-month high of 2.7 percent in February from a year earlier as industrial production grew 20.7 percent in the first two months of 2010, the most in more than five years. Factory output in Malaysia rose 12.7 percent in January.
Inflation is politically sensitive in a country such as India, where the World Bank estimates three-quarters of the nation’s 1.2 billion people live on less than $2 a day. Opposition parties led by the Bharatiya Janata Party repeatedly stalled proceedings in parliament this month, accusing Prime Minister Manmohan Singh’s government of being anti-poor and failing to curb prices.
The Reserve Bank of India yesterday increased the benchmark reverse repurchase rate to 3.5 percent from a record-low 3.25 percent and the repurchase rate to 5 percent from 4.75 percent, saying containing inflation has become “imperative.”
Governor Duvvuri Subbarao’s move comes after Australia and Malaysia increased rates this month, while Norway and Israel did so at the end of last year as the global economy’s recovery from the worst recession since World War II gathers pace. The World Bank indicated this week that China should also act to help contain the risk of a property bubble.
“This is just a sign of things to come,” said Manoj Rane, treasurer at BNP Paribas in Mumbai. “A 25 basis-point increase doesn’t get you there but it sets the course” to contain inflation.
Lagging behind India are central banks in the Group of Seven economies with the Federal Reserve and European Central Bank among those waiting for evidence of a more concrete recovery before they unwind record low borrowing costs. Canada may be the first G-7 central bank to shift after data showed its core inflation rate unexpectedly accelerated last month.
Stocks Declined
Stocks in the U.S. declined after the decision, a month before the bank’s scheduled monetary policy meeting. Subbarao moved after India’s industrial production gained 16.7 percent in January following a 17.6 percent increase in December from a year earlier, the fastest pace since at least 1994, according to Bloomberg data. The wholesale-price inflation rate touched 9.89 percent in February, according to the commerce ministry.
“We see this as the first of several policy rate increases as the Reserve Bank of India realigns policy rates to high inflation,” said Sanjeev Prasad, executive director at Kotak Securities Ltd. Prasad, India’s top-ranked analyst in the past four years according to Asia Money polls, expects the central bank to raise interest rates by 2 percentage points in the fiscal year starting April 1.
As inflation accelerated, the difference between the overnight money-market rate and the one-year swap rate, a measure of expectations for changes in borrowing costs, surged almost six-fold this fiscal year. The spread averaged 1.59 percentage points this month, compared with 27 basis points in April 2009, when the fiscal year began. A basis point is 0.01 of a percentage point.
Doubled Holdings
Foreigners more than doubled holdings of Indian debt this fiscal year, raising total ownership to an all-time high $11.2 billion on March 18, to benefit from the rising yields on the nation’s assets. Outstanding overseas investment in stocks also climbed to a record $76 billion on the same day.
“It’s a positive step for all financial markets because it shows policy makers’ resolve to tackle the inflation problem in a timely manner,” said Arvind Sampath, the Mumbai-based head of interest-rate trading at Standard Chartered. “The measures will help subdue inflationary expectations, which is good for the economy as a whole.”
Benchmark 10-year bond yields have added 24 basis points this year, after rising by a record 2.3 percentage points in 2009 as investors braced for faster inflation and higher policy rates. India’s benchmark share index has rallied 95 percent and the rupee has gained 10 percent in the past year.
Currency option prices signal investors are the most optimistic in 21 months that rising asset yields and quickening economic growth will bolster the rupee. One-month implied volatility, a measure of expectations for rupee price movements, touched 7.4 percent, the lowest level since June 2008, on March 18, data compiled by Bloomberg show. The gauge of expected currency swings is quoted by traders as part of options prices.
Inflationary Pressures
The central bank yesterday said inflationary pressures have “accentuated” and have been “spilling over to the wider inflationary process” and pointed to the latest industrial production data to show “revival of private demand.”
India’s passenger car sales gained in February to a record amid rising incomes in the world’s second-most populous nation. The demand is encouraging Ford Motor Co. and Volkswagen AG to build plants and unveil new models in the South Asian nation.
India’s $1.2 trillion economy, Asia’s biggest after Japan and China, may expand 8.2 percent in the next fiscal year, compared with 7.2 percent in the year to March 31, the Finance Ministry said in February.
Inflation has returned to Asia as growth accelerates amid the global economic recovery. Consumer prices in China rose to a 16-month high of 2.7 percent in February from a year earlier as industrial production grew 20.7 percent in the first two months of 2010, the most in more than five years. Factory output in Malaysia rose 12.7 percent in January.
Inflation is politically sensitive in a country such as India, where the World Bank estimates three-quarters of the nation’s 1.2 billion people live on less than $2 a day. Opposition parties led by the Bharatiya Janata Party repeatedly stalled proceedings in parliament this month, accusing Prime Minister Manmohan Singh’s government of being anti-poor and failing to curb prices.
Thursday, March 18, 2010
Google May Shut Down China Unit in April, CBN Says
March 19 (Bloomberg) -- Google Inc. may pull out of China on April 10, China Business News reported today, citing an unidentified Chinese sales agent for the company.
The search engine may announce its exit on March 22, the Shanghai-based newspaper reported, citing an unidentified Google China employee. It may also reveal plans for its China staff on the same day, according to the report.
Google hasn’t confirmed the April 10 date for its pullout, the newspaper cited the sales agent as saying. Tokyo-based spokeswoman for the company, Jessica Powell, declined to comment on the report.
Google challenged the government of the world’s most- populous country in January by threatening to allow all search results to be shown on its Chinese-language Web, including references to Tibet and the 1989 Tiananmen Square crackdown. The two sides have since been in talks to resolve the issue.
The Mountain View, California-based company said it decided to stop censoring content after discovering its computers had been hacked from within China. Google said its systems had been targeted by highly sophisticated attacks aimed at obtaining proprietary information, as well as personal data belonging to Chinese human rights activists who use the company’s Gmail e- mail service.
The attacks Google reported employed skills that were “much greater than most enterprises are equipped to deal with,” according to security research firm ISEC Partners Inc. At least 20 other international companies in technology, finance and chemicals were similarly targeted, Google said at the time.
Speculation
Speculation that negotiations had faltered intensified after the government said last week the plan to stop filtering at its Google.cn site was irresponsible. Some of Google’s advertisers in China have been advised to switch to rivals including Baidu Inc.
China censors online content it deems critical of the government by shutting down Web sites based in the nation and blocking access to overseas sites including those of Facebook Inc., Twitter Inc. and Google’s YouTube. Authorities also censor media through state ownership of all newspapers, television and radio stations.
The Chinese service started by Google in 2006 limits search results to comply with government restrictions, such as blocking access to sites that discuss Taiwan or Tibetan independence, the outlawed Falun Gong and the Tiananmen Square military crackdown on pro-democracy protesters.
The prospect of a Google pullout sent ripples through the market, with Baidu’s shares climbing 46 percent since the Jan. 12 announcement. Google has lost 4.1 percent in the same period.
China Sales
Google earned sales of 2.27 billion yuan ($333 million), from China in 2009, according to Analysys International
China has 384 million Internet users, according to government data. That’s more than the total U.S. population, and EMarketer Inc. in New York said the number may grow to 840 million, or 61 percent of the population, by 2013.
Baidu, China’s biggest Internet search engine, will pick up “the lion’s share” of Google’s search business should the U.S. company leave, Nomura Holdings Inc. analyst Jin Yoon wrote in a Jan. 13 report. Tencent Holdings Ltd., operator of China’s biggest online chat service, and Sohu.com Inc. also will gain, Yoon said.
U.S. Secretary of State Hillary Clinton said Jan. 21 that U.S. technology companies should resist censorship of the Internet, and the perpetrators of cyber attacks such as those against Google must face the consequences.
China said it opposed Clinton’s comments, which caused damage to Sino-U.S. relations, Foreign Ministry Spokesman Ma Zhaoxu said on Jan. 22. The Chinese government has said it doesn’t engage in cyber attacks and is itself a victim of breaches of Internet security.
The search engine may announce its exit on March 22, the Shanghai-based newspaper reported, citing an unidentified Google China employee. It may also reveal plans for its China staff on the same day, according to the report.
Google hasn’t confirmed the April 10 date for its pullout, the newspaper cited the sales agent as saying. Tokyo-based spokeswoman for the company, Jessica Powell, declined to comment on the report.
Google challenged the government of the world’s most- populous country in January by threatening to allow all search results to be shown on its Chinese-language Web, including references to Tibet and the 1989 Tiananmen Square crackdown. The two sides have since been in talks to resolve the issue.
The Mountain View, California-based company said it decided to stop censoring content after discovering its computers had been hacked from within China. Google said its systems had been targeted by highly sophisticated attacks aimed at obtaining proprietary information, as well as personal data belonging to Chinese human rights activists who use the company’s Gmail e- mail service.
The attacks Google reported employed skills that were “much greater than most enterprises are equipped to deal with,” according to security research firm ISEC Partners Inc. At least 20 other international companies in technology, finance and chemicals were similarly targeted, Google said at the time.
Speculation
Speculation that negotiations had faltered intensified after the government said last week the plan to stop filtering at its Google.cn site was irresponsible. Some of Google’s advertisers in China have been advised to switch to rivals including Baidu Inc.
China censors online content it deems critical of the government by shutting down Web sites based in the nation and blocking access to overseas sites including those of Facebook Inc., Twitter Inc. and Google’s YouTube. Authorities also censor media through state ownership of all newspapers, television and radio stations.
The Chinese service started by Google in 2006 limits search results to comply with government restrictions, such as blocking access to sites that discuss Taiwan or Tibetan independence, the outlawed Falun Gong and the Tiananmen Square military crackdown on pro-democracy protesters.
The prospect of a Google pullout sent ripples through the market, with Baidu’s shares climbing 46 percent since the Jan. 12 announcement. Google has lost 4.1 percent in the same period.
China Sales
Google earned sales of 2.27 billion yuan ($333 million), from China in 2009, according to Analysys International
China has 384 million Internet users, according to government data. That’s more than the total U.S. population, and EMarketer Inc. in New York said the number may grow to 840 million, or 61 percent of the population, by 2013.
Baidu, China’s biggest Internet search engine, will pick up “the lion’s share” of Google’s search business should the U.S. company leave, Nomura Holdings Inc. analyst Jin Yoon wrote in a Jan. 13 report. Tencent Holdings Ltd., operator of China’s biggest online chat service, and Sohu.com Inc. also will gain, Yoon said.
U.S. Secretary of State Hillary Clinton said Jan. 21 that U.S. technology companies should resist censorship of the Internet, and the perpetrators of cyber attacks such as those against Google must face the consequences.
China said it opposed Clinton’s comments, which caused damage to Sino-U.S. relations, Foreign Ministry Spokesman Ma Zhaoxu said on Jan. 22. The Chinese government has said it doesn’t engage in cyber attacks and is itself a victim of breaches of Internet security.
Asian Stocks Rise After U.S. Jobless Report Bolsters Confidence
March 19 (Bloomberg) -- Asian stocks rose, driving the MSCI Asia Pacific Index toward a fourth weekly advance, after U.S. jobs and manufacturing reports boosted confidence in a global economic recovery.
Sony Corp., which makes Bravia televisions and the PlayStation 3 video-game system, climbed 2.2 percent in Tokyo. Honda Motor Co., a Japanese carmaker that gets 44 percent of its sales in North America, rose 1.4 percent. Advantech Co., an industrial-computer maker that gets a third of its sales in North America, jumped 7 percent in Taipei. Kia Motors Corp., South Korea’s second-largest automaker, gained 3.7 percent in Seoul after saying it will boost production capacity in Europe.
The MSCI Asia Pacific Index gained 0.2 percent to 124.58 as of 10:21 a.m. in Tokyo, with about twice as many stocks advancing as declining. Equities have rallied in the past six weeks as concerns over monetary tightening and Greece’s debt receded, and as companies from Woolworths Ltd. to Nissan Motor Co. reported better-than-expected earnings.
“The U.S. economy is improving day by day, and so is the global economy,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo. “People are beginning to expect better corporate earnings.”
Japan’s Nikkei 225 Stock Average rose 0.4 percent, the biggest increase among Asia-Pacific equity benchmarks. Australia’s S&P/ASX 200 Index gained 0.1 percent. South Korea’s Kospi index was little changed.
U.S. Reports
Futures on the Standard & Poor’s 500 Index slipped 0.1 percent after the gauge closed little changed yesterday. A Labor Department report showed first-time jobless applications dropped in the week ended March 13, while the Federal Reserve Bank of Philadelphia’s general economic index rose in March to the highest level this year.
Sony, which gets about a quarter of its revenue from the U.S., climbed 2.2 percent to 3,505 yen. Honda, Japan’s second- largest carmaker, rose 1.4 percent to 3,245 yen. Advantech surged 7 percent to NT$70.5 in Taipei.
Kia Motors gained 3.7 percent to 23,650 won in Seoul. The company will add a 100 million-euro ($137 million) engine unit to its factory in Slovakia to boost production capacity in Europe, Kia’s Slovak affiliate said yesterday.
The MSCI Asia Pacific Index has gained 9.1 percent from its lowest level in more than two months on Feb. 8, as better-than- estimated U.S. employment data and a pledge of support from French President Nicolas Sarkozy for debt-stricken Greece bolstered confidence in the global recovery.
The average price of stocks in the index has risen to 18.9 times estimated earnings on average from 18 at February’s low.
Sony Corp., which makes Bravia televisions and the PlayStation 3 video-game system, climbed 2.2 percent in Tokyo. Honda Motor Co., a Japanese carmaker that gets 44 percent of its sales in North America, rose 1.4 percent. Advantech Co., an industrial-computer maker that gets a third of its sales in North America, jumped 7 percent in Taipei. Kia Motors Corp., South Korea’s second-largest automaker, gained 3.7 percent in Seoul after saying it will boost production capacity in Europe.
The MSCI Asia Pacific Index gained 0.2 percent to 124.58 as of 10:21 a.m. in Tokyo, with about twice as many stocks advancing as declining. Equities have rallied in the past six weeks as concerns over monetary tightening and Greece’s debt receded, and as companies from Woolworths Ltd. to Nissan Motor Co. reported better-than-expected earnings.
“The U.S. economy is improving day by day, and so is the global economy,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo. “People are beginning to expect better corporate earnings.”
Japan’s Nikkei 225 Stock Average rose 0.4 percent, the biggest increase among Asia-Pacific equity benchmarks. Australia’s S&P/ASX 200 Index gained 0.1 percent. South Korea’s Kospi index was little changed.
U.S. Reports
Futures on the Standard & Poor’s 500 Index slipped 0.1 percent after the gauge closed little changed yesterday. A Labor Department report showed first-time jobless applications dropped in the week ended March 13, while the Federal Reserve Bank of Philadelphia’s general economic index rose in March to the highest level this year.
Sony, which gets about a quarter of its revenue from the U.S., climbed 2.2 percent to 3,505 yen. Honda, Japan’s second- largest carmaker, rose 1.4 percent to 3,245 yen. Advantech surged 7 percent to NT$70.5 in Taipei.
Kia Motors gained 3.7 percent to 23,650 won in Seoul. The company will add a 100 million-euro ($137 million) engine unit to its factory in Slovakia to boost production capacity in Europe, Kia’s Slovak affiliate said yesterday.
The MSCI Asia Pacific Index has gained 9.1 percent from its lowest level in more than two months on Feb. 8, as better-than- estimated U.S. employment data and a pledge of support from French President Nicolas Sarkozy for debt-stricken Greece bolstered confidence in the global recovery.
The average price of stocks in the index has risen to 18.9 times estimated earnings on average from 18 at February’s low.
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