Rupert Murdoch on Wednesday pushed the send button on The Daily, a news application designed for the iPad that he hopes will position his News Corporation front and center in the digital newsstand of the future.
“New times demand new journalism,” Mr. Murdoch said on stage at the Solomon R. Guggenheim Museum in New York before an audience of reporters, media executives, employees and advertising partners.
The Daily will be a first of its kind for tablet computers: a general interest publication that will refresh every morning and will bill customers’ credit cards each week for 99 cents or each year for $40.
In journalistic and marketing ambition and scope, The Daily recalls USA Today when it began in 1982: a publication of no city or region that aspires to be a first-read in the homes of millions of Americans despite having no brand recognition.
The Daily takes that same sensibility to the digital age by trying to enliven the printed word with photographs, video and interactive features that work seamlessly together.
“This is about as close as you’re going to get to the first big test of content on the iPad,” said Mike Vorhaus, the president of the media consulting firm Magid Advisors.
For Mr. Murdoch and the News Corporation, The Daily represents something far grander and more ambitious than a new business undertaking: it is an opportunity to try to reinvent the business model for news publishing.
“There’s a growing segment of the population here and around the world that is educated and sophisticated that does not read national print newspapers or watch television news,” said Mr. Murdoch, the owner of television stations and newspapers around the world. “We can and we must make the business of newsgathering and editing viable again.”
With vibrant photos, crisp black-on-white text and high-definition video, The Daily is pan-media — a news Web site, a glossy magazine and a network newscast. Its articles run the gamut from breaking global news to feature writing.
It has the sensibility of a tabloid. There is a separate section for gossip, which is listed as the second section, after news. “Only in The Daily” boasted a brightly colored bubble superimposed over one article in Wednesday’s edition. A headline accompanying an article about the crisis in Egypt blared in a large, boldface font: “Falling Pharaoh.”
Mr. Murdoch indicated that The Daily was intended for a generation of consumers who expect “content tailored to their specific interests to be available anytime, anywhere.”
But the generation of readers that has grown accustomed to curating the abundance of news content on the Internet rather than reading it in one daily or weekly publication has also grown accustomed to having it free.
The Daily’s price is deliberately low. Available only on iPads, it will be free to users for the first two weeks, courtesy of a sponsorship deal with Verizon. After that, it will cost 99 cents a week (or “14 cents a day,” as Mr. Murdoch put it), or $39.99 a year.
With roughly 15 million iPads already sold, the pool of potential customers is not yet large enough to yield the kinds of returns that the News Corporation would need to quickly recoup its initial investment in The Daily — roughly $30 million. Mr. Murdoch said the costs of producing The Daily would be around $500,000 a week, relatively low because it requires none of the machinery needed to produce and distribute a printed news product.
“Our ambitions are very big, but our costs are very low,” Mr. Murdoch said. Subscriptions will make up the bulk of The Daily’s revenue at first. Advertising will make up a smaller piece. So far HBO, Virgin Atlantic Airways and Range Rover are among those to have signed on.
The endeavor has the full weight of the News Corporation behind it, a fact underscored by Mr. Murdoch’s appearance at The Daily’s debut reception. Fox News, part of the News Corporation, broke into coverage of the civil unrest in Egypt to carry the event live. In response to viewer comments that Fox News was covering the news conference because the business was owned by the same boss, Neil Cavuto, the business anchor said, “that might have something to do with it.”
The News Corporation has cultivated a close relationship with Apple and its co-founder Steven P. Jobs, who agreed to allow recurring subscriptions of The Daily as part of an arrangement that stood to benefit fledgling projects at both companies, according to one person with direct knowledge of the discussions about The Daily’s development. This person spoke only on the condition of anonymity because the conversations were intended to be confidential.
Wednesday, February 2, 2011
Indian IT groups shift focus
Indian information technology companies intend to reduce their dependency on a US market they regard as “protectionist”, citing a decision to increase visa fees for skilled workers that will raise their personnel costs by up to $250m a year.
Tata Consultancy Services and Infosys, the two largest Indian outsourcing companies, told the Financial Times that while the US would remain an important market, they wanted to boost revenues in Europe and emerging markets.
The IT companies’ negative stance towards the US highlights the challenges Barack Obama’s administration faces to create jobs in the tech sector as part of its efforts to reduce high unemployment.
In his State of the Union speech last week, the president cited the IT industry as a key driver of job creation.
N. Chandrasekaran, chief executive of TCS, said that plans to scale up the company’s US operations had been slowed by a number of domestic hurdles, while its business in Latin America and Asia had grown at a much faster pace.
“Unemployment remains high so the protectionist measures they introduced last year are still there and this causes concern to us,” he said.
The US passed a law last year that increased the fee for H1B and L-1 visas – commonly used by India’s IT outsourcing companies to bring talent into the US – to $2,000, up from $320. Nasscom, India’s IT software outsourcing industry lobby, said that the measures would increase annual US visa costs for the Indian IT industry by $200m-$250m per year.
T K Kurien, chief executive of Wipro, India’s third-largest IT company, told the FT. “The west preached liberalisation for many years until they realised they were being hurt by liberalisation and life changed.”
“We are really trying to reduce our dependency on the US for several reasons,” said Kris Gopalakrishnan, Infosys chief executive.
“Europe spends as much as the US on IT and we want to make sure that our revenues mirror that IT spend.”
Tata Consultancy Services and Infosys, the two largest Indian outsourcing companies, told the Financial Times that while the US would remain an important market, they wanted to boost revenues in Europe and emerging markets.
The IT companies’ negative stance towards the US highlights the challenges Barack Obama’s administration faces to create jobs in the tech sector as part of its efforts to reduce high unemployment.
In his State of the Union speech last week, the president cited the IT industry as a key driver of job creation.
N. Chandrasekaran, chief executive of TCS, said that plans to scale up the company’s US operations had been slowed by a number of domestic hurdles, while its business in Latin America and Asia had grown at a much faster pace.
“Unemployment remains high so the protectionist measures they introduced last year are still there and this causes concern to us,” he said.
The US passed a law last year that increased the fee for H1B and L-1 visas – commonly used by India’s IT outsourcing companies to bring talent into the US – to $2,000, up from $320. Nasscom, India’s IT software outsourcing industry lobby, said that the measures would increase annual US visa costs for the Indian IT industry by $200m-$250m per year.
T K Kurien, chief executive of Wipro, India’s third-largest IT company, told the FT. “The west preached liberalisation for many years until they realised they were being hurt by liberalisation and life changed.”
“We are really trying to reduce our dependency on the US for several reasons,” said Kris Gopalakrishnan, Infosys chief executive.
“Europe spends as much as the US on IT and we want to make sure that our revenues mirror that IT spend.”
Scotia Sees More Brazil Oil Deals as Asia Fuels $30 Billion Asset Scramble
Scotia Waterous, the energy mergers and acquisitions unit of Canada’s third-largest bank, said it sees “sizeable” oil transactions in Brazil this year after advising on $16 billion of Latin American deals in 2010.
“There’s definitely potential to see transactions for several billion of dollars,” Randy Crath, managing director for Latin American business at the Bank of Nova Scotia unit, said in a telephone interview. “Brazil would continue to be very important for the next couple of years at least,” he said.
BP Plc, Europe’s second-biggest oil producer, and China Petrochemical Corp. are among companies interested in oil and gas assets in Brazil, site of the Western Hemisphere’s largest discovery in three decades. Crath, who worked on more than half of last year’s $30 billion of exploration and production deals in Latin America, said he expects companies to seek partners to help fund exploration or exit Brazil for strategic reasons.
“It has been a hot place, absolutely,” he said of Brazil, where he lived 4 years. “The pre-salt in general and all the excitement surrounding the discoveries and the development that is going on there it’s attracting a lot of interest worldwide.”
Scotia last year advised China Petrochemical, known as Sinopec, on its acquisition of a 40 percent stake in Repsol YPF SA’s Brazilian unit for $7.1 billion and also on its purchase of Occidental Petroleum Corp.’s Argentine subsidiary. Crath’s team of 10 bankers also advised SK Energy Co.’s on its sale of three oil blocks in Brazil to Maersk Oil for $2.4 billion.
Chinese Interest
Sinopec and Sinochem Group, which last year agreed to pay $3 billion to Statoil ASA for 40 percent of the Brazilian offshore Peregrino field, will likely be active in Latin America again during 2011, together with other Asian companies such as Cnooc Ltd., China’s largest offshore energy producer, and PTT Exploration & Production Pcl, Thailand’s only listed oil and gas explorer, he said. China National Petroleum Corp., known as CNPC, and Korea National Oil Corp. may also be involved in deals.
“The Chinese companies are actively looking at alternatives, they are looking globally and Latin America is an attractive place for them to invest,” said Crath, 48, who lived for almost 14 years in the region. “I would expect to see Asian transactions in Latin America during 2011,” he said from Houston.
OGX Petroleo & Gas Participacoes SA, the Brazilian oil company controlled by Eike Batista, plans to sell a minority stake in its Campos oil field. Batista said in September that Cnooc and Sinopec were among companies likely to bid for the assets. OGX, based in Rio de Janeiro, said Dec. 6 that it is continuing talks this year on the sale.
Royal Dutch Shell
Royal Dutch Shell Plc, Europe’s largest oil company, is seeking to sell stakes in four blocks offshore Brazil to raise cash for development, it said Aug. 19. The stakes range from 20 percent of the BM-S-8 block to 82.5 percent of BM-ES-28.
The so-called pre-salt area hosts fields lying two miles below the ocean surface and another two to four miles beneath the seabed. The region holds at least 123 billion barrels of oil, according to a study by Hernani Chaves, a professor at the Rio University who worked at Brazilian state-controlled oil producer Petroleo Brasileiro SA for 35 years.
The forecast, which the study puts at a 90 percent probability, compares with the 50 billion-barrel estimate that Brazil’s oil regulator uses in presentations. Saudi Arabia, holder of the world largest proved reserves, has 265 billion barrels according to BP Plc’s 2010 Statistical Review.
In March, BP agreed to buy $7 billion of assets from Devon Energy Corp. in the Gulf of Mexico, Brazil and Azerbaijan. Michael Daly, BP’s executive vice president for exploration, said Feb. 1 he expected the acquisition of offshore assets in Brazil from Devon in the first half of the year.
“There’s definitely potential to see transactions for several billion of dollars,” Randy Crath, managing director for Latin American business at the Bank of Nova Scotia unit, said in a telephone interview. “Brazil would continue to be very important for the next couple of years at least,” he said.
BP Plc, Europe’s second-biggest oil producer, and China Petrochemical Corp. are among companies interested in oil and gas assets in Brazil, site of the Western Hemisphere’s largest discovery in three decades. Crath, who worked on more than half of last year’s $30 billion of exploration and production deals in Latin America, said he expects companies to seek partners to help fund exploration or exit Brazil for strategic reasons.
“It has been a hot place, absolutely,” he said of Brazil, where he lived 4 years. “The pre-salt in general and all the excitement surrounding the discoveries and the development that is going on there it’s attracting a lot of interest worldwide.”
Scotia last year advised China Petrochemical, known as Sinopec, on its acquisition of a 40 percent stake in Repsol YPF SA’s Brazilian unit for $7.1 billion and also on its purchase of Occidental Petroleum Corp.’s Argentine subsidiary. Crath’s team of 10 bankers also advised SK Energy Co.’s on its sale of three oil blocks in Brazil to Maersk Oil for $2.4 billion.
Chinese Interest
Sinopec and Sinochem Group, which last year agreed to pay $3 billion to Statoil ASA for 40 percent of the Brazilian offshore Peregrino field, will likely be active in Latin America again during 2011, together with other Asian companies such as Cnooc Ltd., China’s largest offshore energy producer, and PTT Exploration & Production Pcl, Thailand’s only listed oil and gas explorer, he said. China National Petroleum Corp., known as CNPC, and Korea National Oil Corp. may also be involved in deals.
“The Chinese companies are actively looking at alternatives, they are looking globally and Latin America is an attractive place for them to invest,” said Crath, 48, who lived for almost 14 years in the region. “I would expect to see Asian transactions in Latin America during 2011,” he said from Houston.
OGX Petroleo & Gas Participacoes SA, the Brazilian oil company controlled by Eike Batista, plans to sell a minority stake in its Campos oil field. Batista said in September that Cnooc and Sinopec were among companies likely to bid for the assets. OGX, based in Rio de Janeiro, said Dec. 6 that it is continuing talks this year on the sale.
Royal Dutch Shell
Royal Dutch Shell Plc, Europe’s largest oil company, is seeking to sell stakes in four blocks offshore Brazil to raise cash for development, it said Aug. 19. The stakes range from 20 percent of the BM-S-8 block to 82.5 percent of BM-ES-28.
The so-called pre-salt area hosts fields lying two miles below the ocean surface and another two to four miles beneath the seabed. The region holds at least 123 billion barrels of oil, according to a study by Hernani Chaves, a professor at the Rio University who worked at Brazilian state-controlled oil producer Petroleo Brasileiro SA for 35 years.
The forecast, which the study puts at a 90 percent probability, compares with the 50 billion-barrel estimate that Brazil’s oil regulator uses in presentations. Saudi Arabia, holder of the world largest proved reserves, has 265 billion barrels according to BP Plc’s 2010 Statistical Review.
In March, BP agreed to buy $7 billion of assets from Devon Energy Corp. in the Gulf of Mexico, Brazil and Azerbaijan. Michael Daly, BP’s executive vice president for exploration, said Feb. 1 he expected the acquisition of offshore assets in Brazil from Devon in the first half of the year.
India Ex-Telecom Minister's Arrest May Fail to End Impasse Before Budget
The arrest of Indian Prime Minister Manmohan Singh’s former telecommunications minister in a $31- billion phone-license probe may fail to end a political gridlock as the government prepares its budget, analysts said.
The Central Bureau of Investigation yesterday arrested Andimuthu Raja, his personal secretary and the former top bureaucrat in the ministry after India’s chief auditor said in November second-generation airwaves were sold for an “unbelievably low” $2.7 billion when they may have been worth at least 10 times more. The CBI apprehended the three men for favoring certain companies and violating guidelines, it said in a statement yesterday.
The opposition, led by the Bharatiya Janata Party has stalled parliament calling for a joint probe into the auction, which Singh has refused. The stalemate disrupted the entire session that ended in December, making it the least productive in at least 25 years. The houses are scheduled to meet from Feb. 21 to pass the government’s budget.
Raja’s arrest strengthens the opposition’s case, said N. Bhaskara Rao, chairman of the Centre for Media Studies in New Delhi. “They will stick to their demand for a joint parliamentary committee probe,” he said. The arrests “bring out the gravity of the situation with regard to corruption in the country and the need for urgent action to check that.”
Raja’s Resignation
Raja resigned from Singh’s cabinet on Nov. 14, two days before the Comptroller & Auditor General of India unveiled its report on the 2008 sale of airwaves. Telenor ASA and Emirates Telecommunications Corp. were among operators that purchased stakes in Indian companies the auditor said weren’t qualified for the licenses.
The Bharatiya Janata Party said Raja’s arrest is “belated” and has strengthened the demand for a cross-party probe into the spectrum allocation irregularities.
“I wish the prime minister had acted three years ago so that this huge loss to the public exchequer had not taken place,” BJP leader Arun Jaitley said in New Delhi yesterday.
The ruling Congress Party said the development will not affect Singh’s credibility.
“Those who doubted the sincerity and commitment to take action as per law should be silenced,” said party spokesman Abhishek Singhvi.
Raja has denied wrongdoing. His lawyer T.R. Andhyarujina declined to comment when reached on his mobile phone yesterday. Raja is a member of the Dravida Munnetra Kazhagam party, a key member of Singh’s ruling coalition.
‘Transparency in Policy’
“What happens to Raja is important for the future of how policy gets made and the transparency with which these decisions are taken,” said Kunal Bajaj, head of telecommunications consultant Analysys Mason India Pvt.
Raja was questioned by the CBI in December and January. Investigators said on Dec. 8 that they had found “incriminating” documents at his residences.
Singh told his party workers on Dec. 20 that he would punish anyone found guilty of corruption.
In November, federal agents arrested eight executives at the nation’s biggest life insurer, a brokerage and three state- run banks in a housing-loan probe and detained organizers of the Commonwealth Games for misuse of public funds. Last month, the government fired Suresh Kalmadi as the chairman of the games’ Organizing Committee.
The Central Bureau of Investigation yesterday arrested Andimuthu Raja, his personal secretary and the former top bureaucrat in the ministry after India’s chief auditor said in November second-generation airwaves were sold for an “unbelievably low” $2.7 billion when they may have been worth at least 10 times more. The CBI apprehended the three men for favoring certain companies and violating guidelines, it said in a statement yesterday.
The opposition, led by the Bharatiya Janata Party has stalled parliament calling for a joint probe into the auction, which Singh has refused. The stalemate disrupted the entire session that ended in December, making it the least productive in at least 25 years. The houses are scheduled to meet from Feb. 21 to pass the government’s budget.
Raja’s arrest strengthens the opposition’s case, said N. Bhaskara Rao, chairman of the Centre for Media Studies in New Delhi. “They will stick to their demand for a joint parliamentary committee probe,” he said. The arrests “bring out the gravity of the situation with regard to corruption in the country and the need for urgent action to check that.”
Raja’s Resignation
Raja resigned from Singh’s cabinet on Nov. 14, two days before the Comptroller & Auditor General of India unveiled its report on the 2008 sale of airwaves. Telenor ASA and Emirates Telecommunications Corp. were among operators that purchased stakes in Indian companies the auditor said weren’t qualified for the licenses.
The Bharatiya Janata Party said Raja’s arrest is “belated” and has strengthened the demand for a cross-party probe into the spectrum allocation irregularities.
“I wish the prime minister had acted three years ago so that this huge loss to the public exchequer had not taken place,” BJP leader Arun Jaitley said in New Delhi yesterday.
The ruling Congress Party said the development will not affect Singh’s credibility.
“Those who doubted the sincerity and commitment to take action as per law should be silenced,” said party spokesman Abhishek Singhvi.
Raja has denied wrongdoing. His lawyer T.R. Andhyarujina declined to comment when reached on his mobile phone yesterday. Raja is a member of the Dravida Munnetra Kazhagam party, a key member of Singh’s ruling coalition.
‘Transparency in Policy’
“What happens to Raja is important for the future of how policy gets made and the transparency with which these decisions are taken,” said Kunal Bajaj, head of telecommunications consultant Analysys Mason India Pvt.
Raja was questioned by the CBI in December and January. Investigators said on Dec. 8 that they had found “incriminating” documents at his residences.
Singh told his party workers on Dec. 20 that he would punish anyone found guilty of corruption.
In November, federal agents arrested eight executives at the nation’s biggest life insurer, a brokerage and three state- run banks in a housing-loan probe and detained organizers of the Commonwealth Games for misuse of public funds. Last month, the government fired Suresh Kalmadi as the chairman of the games’ Organizing Committee.
Sunday, January 30, 2011
Inflation in China May Limit U.S. Trade Deficit
HONG KONG — Inflation is starting to slow China’s mighty export machine, as buyers from Western multinational companies balk at higher prices and have cut back their planned spring shipments across the Pacific.
Markups of 20 to 50 percent on products like leather shoes and polo shirts have sent Western buyers scrambling for alternate suppliers. But from Vietnam to India, few low-wage developing countries can match China’s manufacturing might — and no country offers refuge from high global commodity prices.
Already, the slowdown in American orders has forced some container shipping lines to cancel up to a quarter of their trips to the United States this spring from Hong Kong and other Chinese ports.
The trend, if continued, could ease tensions by beginning to limit America’s huge trade deficit with China. Those tensions were an undercurrent during Chinese President Hu Jintao’s recent Washington talks with President Obama.
Manufacturers and distributors across a range of industries say the likely result of the export slowdown is higher prices for American shoppers in the coming months, and possibly brief shortages of some products if Western retailers delay purchases too long while haggling over prices.
China exports more than $4 of goods to the United States for each $1 it imports from America, creating a trade surplus of about $275 billion. The higher Chinese prices will tend to show up mainly in products like inexpensive clothing and other commodity goods in which labor and raw materials represent a bigger part of the final value — rather than in sophisticated electronics like Apple iPads, in which Chinese assembly is only a small fraction of the cost.
Of course, the slowdown in the volume of imports could also prove temporary, if American consumers accept higher prices and Western corporate buyers end up renewing contracts at much higher cost. In the meantime, if the average price for each imported product rises faster than the volume of shipments falls, China’s surplus with the United States could continue increasing temporarily.
But whatever the eventual impact on trade, Chinese inflation might also reduce Washington’s pressure on Beijing over its currency, the renminbi. For more than a year, the Obama administration has been pushing China to let the renminbi rise in value against the dollar.
China’s intervention in the currency market has kept its currency artificially low. But that flood of money has also driven inflation, giving Beijing an incentive to let the renminbi move higher. Indeed, the renminbi has increased 3.6 percent against the dollar since last June.
The Obama administration is starting to suggest that the currency problem could gradually solve itself if Chinese prices rise so fast that American goods become more competitive.
The first signs of a potential slowdown in Chinese exports have shown up in shipping. As factories closed on Friday across much of China in preparation for weeklong Chinese New Year celebrations, ports in Hong Kong and elsewhere along the coast were working long hours to meet last-minute shipments.
But the annual pre-New Year rush has been nothing like that of recent years, causing shipping lines to reverse rate increases and cancel sailings they introduced last summer as the American economy improved. This winter, the scurrying started only two weeks before the holidays, instead of the usual four weeks, according to shipping executives. That is because many Chinese factories simply cut back production this month as their Western customers began resisting steep price increases.
China’s inflation is running 5 percent at the consumer level, according to official measures. But Chinese and Western economists describe these measures as based on flawed, outdated techniques and say the real figure may be up to twice as high.
In contrast, the annual inflation rate in the United States is low by historical standards — about 1.5 percent currently.
China imposed price controls on food in mid-November to limit inflation. But Chinese state media began warning the public on Wednesday that those controls might be ineffective, as a drought in northern China has damaged the winter wheat crop and frost has spoiled part of the vegetable harvest in the south.
China’s $6 trillion economy used to be heavily dependent on exports for growth. Exports still account for about one-fifth of the economy, after excluding goods that are merely imported to China for final assembly and then re-exported. But China’s economy has grown powerfully for the last two years mainly on the strength of investment-led domestic demand. That demand, partly fed by low-interest lending by state-owned banks, is another factor in China’s inflation.
Markups of 20 to 50 percent on products like leather shoes and polo shirts have sent Western buyers scrambling for alternate suppliers. But from Vietnam to India, few low-wage developing countries can match China’s manufacturing might — and no country offers refuge from high global commodity prices.
Already, the slowdown in American orders has forced some container shipping lines to cancel up to a quarter of their trips to the United States this spring from Hong Kong and other Chinese ports.
The trend, if continued, could ease tensions by beginning to limit America’s huge trade deficit with China. Those tensions were an undercurrent during Chinese President Hu Jintao’s recent Washington talks with President Obama.
Manufacturers and distributors across a range of industries say the likely result of the export slowdown is higher prices for American shoppers in the coming months, and possibly brief shortages of some products if Western retailers delay purchases too long while haggling over prices.
China exports more than $4 of goods to the United States for each $1 it imports from America, creating a trade surplus of about $275 billion. The higher Chinese prices will tend to show up mainly in products like inexpensive clothing and other commodity goods in which labor and raw materials represent a bigger part of the final value — rather than in sophisticated electronics like Apple iPads, in which Chinese assembly is only a small fraction of the cost.
Of course, the slowdown in the volume of imports could also prove temporary, if American consumers accept higher prices and Western corporate buyers end up renewing contracts at much higher cost. In the meantime, if the average price for each imported product rises faster than the volume of shipments falls, China’s surplus with the United States could continue increasing temporarily.
But whatever the eventual impact on trade, Chinese inflation might also reduce Washington’s pressure on Beijing over its currency, the renminbi. For more than a year, the Obama administration has been pushing China to let the renminbi rise in value against the dollar.
China’s intervention in the currency market has kept its currency artificially low. But that flood of money has also driven inflation, giving Beijing an incentive to let the renminbi move higher. Indeed, the renminbi has increased 3.6 percent against the dollar since last June.
The Obama administration is starting to suggest that the currency problem could gradually solve itself if Chinese prices rise so fast that American goods become more competitive.
The first signs of a potential slowdown in Chinese exports have shown up in shipping. As factories closed on Friday across much of China in preparation for weeklong Chinese New Year celebrations, ports in Hong Kong and elsewhere along the coast were working long hours to meet last-minute shipments.
But the annual pre-New Year rush has been nothing like that of recent years, causing shipping lines to reverse rate increases and cancel sailings they introduced last summer as the American economy improved. This winter, the scurrying started only two weeks before the holidays, instead of the usual four weeks, according to shipping executives. That is because many Chinese factories simply cut back production this month as their Western customers began resisting steep price increases.
China’s inflation is running 5 percent at the consumer level, according to official measures. But Chinese and Western economists describe these measures as based on flawed, outdated techniques and say the real figure may be up to twice as high.
In contrast, the annual inflation rate in the United States is low by historical standards — about 1.5 percent currently.
China imposed price controls on food in mid-November to limit inflation. But Chinese state media began warning the public on Wednesday that those controls might be ineffective, as a drought in northern China has damaged the winter wheat crop and frost has spoiled part of the vegetable harvest in the south.
China’s $6 trillion economy used to be heavily dependent on exports for growth. Exports still account for about one-fifth of the economy, after excluding goods that are merely imported to China for final assembly and then re-exported. But China’s economy has grown powerfully for the last two years mainly on the strength of investment-led domestic demand. That demand, partly fed by low-interest lending by state-owned banks, is another factor in China’s inflation.
Asian Stocks, U.S. Futures Fall as Dollar, Yen Gain on Egypt
Asian stocks fell, extending the biggest global share slump in two months, and U.S. index futures declined while the yen and dollar gained on speculation Egypt’s crisis will slow the global recovery. Oil prices jumped.
The MSCI Asia Pacific Index sank 0.9 percent as of 9:07 a.m. in Tokyo, with Japan’s Nikkei 225 Stock Average posting the biggest loss among markets open for trading. Standard & Poor’s 500 Index futures dropped 0.4 percent after the gauge posted on Jan. 28 its biggest slump since August. The dollar, yen and Swiss franc gained against higher-yielding currencies while oil traded above $90 a barrel in New York on concern the unrest will spread to crude-producing parts of the Middle East.
Shares worldwide plunged on Jan. 28 by the most since November, wiping out more than $500 billion from global market values, as the escalating tensions in Egypt overshadowed U.S. data showing gross domestic product accelerated in the fourth quarter. Egyptian President Hosni Mubarak yesterday met with top military commanders as tens of thousands of protesters defied a curfew and gathered in central Cairo.
“The concerns are that we’re going to see contagion from Egypt to other parts of the Middle East,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “As long as these concerns about Egyptian political tensions persist, flight-to-safety flows are likely to favor the dollar, yen and Swiss franc.”
The MSCI World Index slipped 0.3 percent, extending the 1.4 percent drop on Jan. 28. The Nikkei 225 dropped 1.4 percent while Australia’s S&P/ASX 200 Index retreated 0.8 percent. The drop in S&P 500 futures indicate the gauge may extend its 1.8 percent loss on Jan. 28.
Egypt’s Crisis
Dubai’s DFM General Index tumbled 4.3 percent yesterday, the most since May 25. Egypt’s banks and markets stayed shut after clashes in the most populous Arab country left as many as 150 people dead.
Protestors demonstrated for a sixth day, demanding the resignation of Mubarak. The unrest was a sign that Mubarak’s appointment of the first vice president since his rise to power in 1981 and his naming of a new premier may not placate protesters.
The dollar rose to $1.3589 per euro from $1.3611 in New York last week. The yen gained to 111.63 per euro from 111.77 after earlier touching 111.28, the most since Jan. 20. The Swiss franc advanced to 1.2791 per euro from 1.2821 after rising 1.3 percent against Europe’s common currency on Jan. 28. The greenback was at 82.16 yen from 82.12.
Oil for March delivery rose 1.4 percent to $90.60 a barrel in electronic trading on the New York Mercantile Exchange. The contract surged $3.70, or 4.3 percent, to $89.34 on Jan. 28.
Gold rose 0.6 percent, adding to a 1.7 percent gain on Jan. 28, amid demand for a haven.
The MSCI Asia Pacific Index sank 0.9 percent as of 9:07 a.m. in Tokyo, with Japan’s Nikkei 225 Stock Average posting the biggest loss among markets open for trading. Standard & Poor’s 500 Index futures dropped 0.4 percent after the gauge posted on Jan. 28 its biggest slump since August. The dollar, yen and Swiss franc gained against higher-yielding currencies while oil traded above $90 a barrel in New York on concern the unrest will spread to crude-producing parts of the Middle East.
Shares worldwide plunged on Jan. 28 by the most since November, wiping out more than $500 billion from global market values, as the escalating tensions in Egypt overshadowed U.S. data showing gross domestic product accelerated in the fourth quarter. Egyptian President Hosni Mubarak yesterday met with top military commanders as tens of thousands of protesters defied a curfew and gathered in central Cairo.
“The concerns are that we’re going to see contagion from Egypt to other parts of the Middle East,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “As long as these concerns about Egyptian political tensions persist, flight-to-safety flows are likely to favor the dollar, yen and Swiss franc.”
The MSCI World Index slipped 0.3 percent, extending the 1.4 percent drop on Jan. 28. The Nikkei 225 dropped 1.4 percent while Australia’s S&P/ASX 200 Index retreated 0.8 percent. The drop in S&P 500 futures indicate the gauge may extend its 1.8 percent loss on Jan. 28.
Egypt’s Crisis
Dubai’s DFM General Index tumbled 4.3 percent yesterday, the most since May 25. Egypt’s banks and markets stayed shut after clashes in the most populous Arab country left as many as 150 people dead.
Protestors demonstrated for a sixth day, demanding the resignation of Mubarak. The unrest was a sign that Mubarak’s appointment of the first vice president since his rise to power in 1981 and his naming of a new premier may not placate protesters.
The dollar rose to $1.3589 per euro from $1.3611 in New York last week. The yen gained to 111.63 per euro from 111.77 after earlier touching 111.28, the most since Jan. 20. The Swiss franc advanced to 1.2791 per euro from 1.2821 after rising 1.3 percent against Europe’s common currency on Jan. 28. The greenback was at 82.16 yen from 82.12.
Oil for March delivery rose 1.4 percent to $90.60 a barrel in electronic trading on the New York Mercantile Exchange. The contract surged $3.70, or 4.3 percent, to $89.34 on Jan. 28.
Gold rose 0.6 percent, adding to a 1.7 percent gain on Jan. 28, amid demand for a haven.
ONGC’s Record Profit May Send Shares Higher, Boost Stake Sale
Oil & Natural Gas Corp. posted a record profit in the third quarter that may drive gains in the stock and increase investor confidence before a share sale likely to raise 121.2 billion rupees ($2.6 billion).
ONGC rose 1.7 percent to 1,132.90 rupees in Mumbai before the earnings announcement on Jan. 28, giving the company a market value of $53 billion. The stock dropped 12 percent this month compared with the benchmark Sensitive Index’s 10 percent decline.
“Investors will probably be positive after ONGC’s results,” said K.K. Mital, a New Delhi-based fund manager with Globe Capital Market Ltd. “Sentiment on the ONGC stock should get a boost, especially after it has dropped so much recently.”
The government plans to sell a 5 percent stake in the state-run explorer in March as Prime Minister Manmohan Singh raises funds to build roads, ports and power stations. ONGC proposes to recover royalties paid on behalf of partner Cairn India Ltd. for oil sales from India’s biggest onland oil deposit in Rajasthan in a bid to increase profit.
ONGC’s net income in the three months ended Dec. 31 more than doubled to 70.8 billion rupees, according to a statement to the Bombay Stock Exchange. Profit beat the mean estimate of 54.1 billion rupees in a Bloomberg survey of 19 analysts. Profit was helped by higher crude oil and natural gas prices and a one-time 19 billion rupee payment of dues from gas sales.
Cairn Royalty
The state-run explorer will ask the oil ministry to include royalty payments on crude oil produced from the Rajasthan block in the project cost, which can then be recovered from the sale of oil, Chairman R.S. Sharma told reporters in New Delhi yesterday. The ministry is reviewing Vedanta Resources Plc’s bid to buy a majority stake in Cairn India.
ONGC owns 30 percent in the Rajasthan block and pays royalties on the entire output, an incentive offered to attract overseas explorers to India before the government started auctioning fields in 1999.
Cairn and Vedanta need to get ONGC’s approval for the planned $9.6 billion transaction, Sharma said. ONGC decided at a board meeting Jan. 29 not to make a counterbid for Cairn India.
The ONGC stake may be sold in March, Disinvestment Secretary Sumit Bose said Jan. 21. The sale would raise $2.6 billion for the government, based on the current share price.
The company approved a special midyear dividend, a stock split and free shares for investors in December in preparation for the stake sale.
Fuel Subsidy
Citigroup Inc., Nomura Holdings Inc., Bank of America Corp., HSBC Holdings Plc, JM Financial Services Ltd. and Morgan Stanley, may manage ONGC’s share sale, two people with knowledge of the matter said Jan. 16.
New Delhi-based ONGC sold crude oil at $64.79 a barrel, an increase of 12 percent from a year earlier, according to the statement. The company supplies oil to state refiners at a discount to partially compensate them for selling fuels below cost.
The discount given in the third quarter rose 21 percent from a year earlier to 42.2 billion rupees, ONGC said.
“Investors want more clarity on how ONGC will share the subsidy burden, especially ahead of the planned follow-on offering,” said Jagdish Meghnani, an oil and gas analyst at Alchemy Share & Stock Brokers Ltd. in Mumbai. “The government has to be specific about how much subsidy ONGC will bear exactly when oil prices are trading at a particular price range.”
India more than doubled the price of natural gas produced from fields awarded to state explorers. The price was increased to 6,818 rupees per thousand cubic meters from 3,200 rupees, the first revision since 2005.
Crude oil in New York climbed 12 percent to an average of $85.24 a barrel in the three months ended Dec. 31 from a year earlier, according to data compiled by Bloomberg. Prices rose 15 percent in 2010 as demand increased from China and India.
ONGC rose 1.7 percent to 1,132.90 rupees in Mumbai before the earnings announcement on Jan. 28, giving the company a market value of $53 billion. The stock dropped 12 percent this month compared with the benchmark Sensitive Index’s 10 percent decline.
“Investors will probably be positive after ONGC’s results,” said K.K. Mital, a New Delhi-based fund manager with Globe Capital Market Ltd. “Sentiment on the ONGC stock should get a boost, especially after it has dropped so much recently.”
The government plans to sell a 5 percent stake in the state-run explorer in March as Prime Minister Manmohan Singh raises funds to build roads, ports and power stations. ONGC proposes to recover royalties paid on behalf of partner Cairn India Ltd. for oil sales from India’s biggest onland oil deposit in Rajasthan in a bid to increase profit.
ONGC’s net income in the three months ended Dec. 31 more than doubled to 70.8 billion rupees, according to a statement to the Bombay Stock Exchange. Profit beat the mean estimate of 54.1 billion rupees in a Bloomberg survey of 19 analysts. Profit was helped by higher crude oil and natural gas prices and a one-time 19 billion rupee payment of dues from gas sales.
Cairn Royalty
The state-run explorer will ask the oil ministry to include royalty payments on crude oil produced from the Rajasthan block in the project cost, which can then be recovered from the sale of oil, Chairman R.S. Sharma told reporters in New Delhi yesterday. The ministry is reviewing Vedanta Resources Plc’s bid to buy a majority stake in Cairn India.
ONGC owns 30 percent in the Rajasthan block and pays royalties on the entire output, an incentive offered to attract overseas explorers to India before the government started auctioning fields in 1999.
Cairn and Vedanta need to get ONGC’s approval for the planned $9.6 billion transaction, Sharma said. ONGC decided at a board meeting Jan. 29 not to make a counterbid for Cairn India.
The ONGC stake may be sold in March, Disinvestment Secretary Sumit Bose said Jan. 21. The sale would raise $2.6 billion for the government, based on the current share price.
The company approved a special midyear dividend, a stock split and free shares for investors in December in preparation for the stake sale.
Fuel Subsidy
Citigroup Inc., Nomura Holdings Inc., Bank of America Corp., HSBC Holdings Plc, JM Financial Services Ltd. and Morgan Stanley, may manage ONGC’s share sale, two people with knowledge of the matter said Jan. 16.
New Delhi-based ONGC sold crude oil at $64.79 a barrel, an increase of 12 percent from a year earlier, according to the statement. The company supplies oil to state refiners at a discount to partially compensate them for selling fuels below cost.
The discount given in the third quarter rose 21 percent from a year earlier to 42.2 billion rupees, ONGC said.
“Investors want more clarity on how ONGC will share the subsidy burden, especially ahead of the planned follow-on offering,” said Jagdish Meghnani, an oil and gas analyst at Alchemy Share & Stock Brokers Ltd. in Mumbai. “The government has to be specific about how much subsidy ONGC will bear exactly when oil prices are trading at a particular price range.”
India more than doubled the price of natural gas produced from fields awarded to state explorers. The price was increased to 6,818 rupees per thousand cubic meters from 3,200 rupees, the first revision since 2005.
Crude oil in New York climbed 12 percent to an average of $85.24 a barrel in the three months ended Dec. 31 from a year earlier, according to data compiled by Bloomberg. Prices rose 15 percent in 2010 as demand increased from China and India.
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