India has aggressively raised benchmark interest rates as the central bank tacitly acknowledged that the incremental steps it had taken over the past year to tighten monetary policy had failed to tackle rampant inflation.
The Reserve Bank of India on Tuesday increased its two main monetary policy rates by 50 basis points – double most economist forecasts. The measure was taken as the bank warned inflation was higher than expected, threatening prospects for economic growth.
However, industry figures warned the move would hit investment and growth.
Headline inflation jumped to 8.9 per cent in March, compared with an official RBI target of 4-5 per cent.
“Elevated rates of inflation pose significant risks to future growth. Bringing them down ... even at the cost of some growth in the short run, should take precedence,” said Duvvuri Subbarao, RBI governor.
Tuesday’s move took the repo rate – the rate at which the central bank lends to commercial banks – to 7.25 per cent. The reverse repo – the rate at which the RBI absorbs money from the system – was raised to 6.25 per cent.
The rate rise was the ninth in just over a year and has raised questions over the effectiveness of RBI efforts to curb inflation. “The 50bp hike is a clear sign they are starting to get a little desperate,” said A. Prasanna, chief economist at ICICI Securities. “The RBI has few shots left to tackle inflation.”
India’s manufacturing sector has been hard hit by the persistent rate rises, which have sharply increased borrowing costs and hurt investment plans.
“Going after inflation the way the RBI is, is like chasing your own shadow,” said Shankar Raman, senior vice-president at Larsen & Toubro, the heavy engineering and construction group. “With these rates we are going to have more tough times ahead.”
He said that many of the country’s vital infrastructure projects, which were primarily financed with debt, would be hindered by the hawkish monetary policy.
Chandrajit Banerjee, director-general of the Confederation of Indian Industry, said the rate rise would have “an adverse impact” on growth and investment: “The continued monetary tightening without any movement on structural reforms to address supply side bottlenecks will have an added impact on capacity creation and expansion.”
Ashutosh Limaye, a director at Jones Lang LaSalle India, the property agent, said the rate rise would also hurt India’s real estate sector as companies struggle to raise funds amid high credit costs.
The RBI on Tuesday also approved a new regulatory framework that imposes a 24 per cent interest rate cap and a 10-12 per cent margin on microloans for the poor.
The industry has been in crisis since October, when the state of Andhra Pradesh ordered a halt to microlending in a backlash over interest rates and debt collection tactics. The move prompted banks to cut the flow of credit to microlenders amid uncertainty over the industry’s ability to operate across the country.
SKS Microfinance, India’s largest microlender, said the new rules brought “regulatory clarity”.
Tuesday, May 3, 2011
Monday, May 2, 2011
Infosys to Hire More People in U.S., China to Boost Profit, Curb Attrition
Infosys Technologies Ltd. (INFO), India’s second-largest software exporter, plans to step up hiring in the U.S., China and other overseas markets as it seeks to check rising employee turnover and boost profit.
“Our customers are global, so we want to create a global footprint,” S.D. Shibulal, chief operating officer, said in an interview on May 1. “We really need to get talent in the Philippines, in China, in the Czech Republic and Brazil,” said the 56-year-old executive, who was last week named to take over as the company’s chief executive officer from Aug. 21.
Infosys plans to hire as many as 1,500 workers in the U.S., its biggest market, in the year started in April and will more than double the workforce in China in 18 months by adding a new campus in Shanghai, Shibulal said. The Bangalore-based company is expanding overseas after earnings missed estimates for a third time in four quarters and employee attrition worsened.
“A lot of work is done from high-cost locations despite the cost because of the value that is being provided there,” said Hitesh Shah, vice president of research at IDFC Securities Ltd. in Mumbai. “It could be a type of work that needs to be delivered from close to the client’s premises. Having a local resource might be more valuable than somebody you send from India.”
Shanghai Campus
The software exporter plans to spend $130 million for the Shanghai campus where it will hire as many as 4,000 employees over 18 months. Infosys currently has 3,000 workers in China.
Infosys rose 0.6 percent to 2,922.55 rupees at the 3:30 p.m. close in Mumbai trading yesterday. The stock has slumped 15 percent this year, compared with a 7.4 percent drop in the Bombay Stock Exchange’s benchmark Sensitive Index. Larger rival Tata Consultancy Services Ltd. (TCS) has lost 0.6 percent in the period.
The company plans to add people also in Mexico, Shibulal said. Infosys boosted revenue 14-fold in the past 10 years, while increasing its workforce 13-fold to 130,820 employees.
“China is a very good place to have centers similar to India because they produce a similar number of engineering graduates,” he said. “Mexico is a very good place to have a near-shore center for the U.S.”
Employee attrition at Infosys accelerated to 17 percent in the year ended in March, its highest annual rate in at least 13 years. The company may give wage increases of 1 to 2 percent to its workers outside India in the current year, while offering staff within the country pay raises of as much as 12 percent, Shibulal said April 15.
“One of the challenges of the industry is to expand the value chain and increase high value work,” Shibulal said. “That is why it is also important to look at global talent to leverage.”
“Our customers are global, so we want to create a global footprint,” S.D. Shibulal, chief operating officer, said in an interview on May 1. “We really need to get talent in the Philippines, in China, in the Czech Republic and Brazil,” said the 56-year-old executive, who was last week named to take over as the company’s chief executive officer from Aug. 21.
Infosys plans to hire as many as 1,500 workers in the U.S., its biggest market, in the year started in April and will more than double the workforce in China in 18 months by adding a new campus in Shanghai, Shibulal said. The Bangalore-based company is expanding overseas after earnings missed estimates for a third time in four quarters and employee attrition worsened.
“A lot of work is done from high-cost locations despite the cost because of the value that is being provided there,” said Hitesh Shah, vice president of research at IDFC Securities Ltd. in Mumbai. “It could be a type of work that needs to be delivered from close to the client’s premises. Having a local resource might be more valuable than somebody you send from India.”
Shanghai Campus
The software exporter plans to spend $130 million for the Shanghai campus where it will hire as many as 4,000 employees over 18 months. Infosys currently has 3,000 workers in China.
Infosys rose 0.6 percent to 2,922.55 rupees at the 3:30 p.m. close in Mumbai trading yesterday. The stock has slumped 15 percent this year, compared with a 7.4 percent drop in the Bombay Stock Exchange’s benchmark Sensitive Index. Larger rival Tata Consultancy Services Ltd. (TCS) has lost 0.6 percent in the period.
The company plans to add people also in Mexico, Shibulal said. Infosys boosted revenue 14-fold in the past 10 years, while increasing its workforce 13-fold to 130,820 employees.
“China is a very good place to have centers similar to India because they produce a similar number of engineering graduates,” he said. “Mexico is a very good place to have a near-shore center for the U.S.”
Employee attrition at Infosys accelerated to 17 percent in the year ended in March, its highest annual rate in at least 13 years. The company may give wage increases of 1 to 2 percent to its workers outside India in the current year, while offering staff within the country pay raises of as much as 12 percent, Shibulal said April 15.
“One of the challenges of the industry is to expand the value chain and increase high value work,” Shibulal said. “That is why it is also important to look at global talent to leverage.”
U.S. Business Has High Tax Rates but Pays Less
The United States may soon wind up with a distinction that makes business leaders cringe — the highest corporate tax rate in the world.
Topping out at 35 percent, America’s official corporate income tax rate trails that of only Japan, at 39.5 percent, which has said it plans to lower its rate. It is nearly triple Ireland’s and 10 percentage points higher than in Denmark, Austria or China. To help companies here stay competitive, many executives say, Congress should lower it.
But by taking advantage of myriad breaks and loopholes that other countries generally do not offer, United States corporations pay only slightly more on average than their counterparts in other industrial countries. And some American corporations use aggressive strategies to pay less — often far less — than their competitors abroad and at home. A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.
The paradox of the United States tax code — high rates with a bounty of subsidies, shelters and special breaks — has made American multinationals “world leaders in tax avoidance,” according to Edward D. Kleinbard, a professor at the University of Southern California who was head of the Congressional joint committee on taxes. This has profound implications for businesses, the economy and the federal budget.
As Congress wrestles with how to get the deficit under control, one big point of contention is whether spending cuts will need to be accompanied by an increase in taxes on some individuals or businesses. Facing a full-court press from business leaders who say the tax system is outdated and onerous, President Obama, Congress and business leaders have been warily negotiating various proposals, though mostly about whether to cut the top corporate rate and to tighten tax laws and not about whether to increase revenue.
The United States is virtually alone in trying to tax its multinational corporations on their foreign earnings, but it allows companies to avoid those taxes indefinitely by keeping profits overseas. That encourages companies to use accounting maneuvers to shift profits to low-tax countries and to invest profits offshore, says David S. Miller, a partner at Cadwalader, Wickersham & Taft in New York.
Honeywell International, the New Jersey company that makes things as diverse as aerospace components and First Alert smoke detectors, reported in regulatory filings that in the last five years, it paid cash income taxes in the United States and abroad equal to 15 percent of its profits. On Friday, a Honeywell spokeswoman pointed out that the company had since made a large pension contribution, which effectively cut its profits and made its tax rate closer to 22 percent.
A major domestic competitor, United Technologies, reported an average of 24 percent over that time. A German rival, Siemens, reported 29 percent of its total profit.
In addition to being complex and uneven, the United States corporate tax code is inefficient and has become a diminishing source of revenue. Corporate taxes accounted for about 9 percent of all federal revenue in 2010. At $191 billion, they were equal to 1.3 percent of the nation’s gross domestic product. Most industrial countries collect more from companies, about 2.5 percent of output. Only a portion of that disparity can be explained by the many types of businesses in the United States that elect to be taxed at an individual rate.
“Whether the test is fairness or efficiency, the U.S. system gets really low marks,” said Michelle Hanlon, an M.I.T. professor who says the country needs to completely revamp the way it taxes corporations.
Not all American companies are willing or able to reduce their taxes drastically. Taxes vary more by industry here than abroad, according to a study released in February by Kevin S. Markle of Dartmouth and Douglas A. Shackelford of the University of North Carolina. At the high end, American retailers paid 31 percent in total income taxes, construction 30 percent and manufacturers 26 percent. Financial services companies paid an average of 20 percent, real estate 19 percent and mining 6 percent.
(Measuring taxes paid by companies is imprecise because tax filings remain private. In many cases, the estimates reported in a company’s financial filings with regulators overstate taxes paid in a year because they include deferred taxes. Nonetheless, academics, economists and elected officials use the estimates for comparative purposes.)
Because some companies are so effective at minimizing taxes, the average works out to far less than the official rate. United States companies pay about a quarter of their profits in federal income taxes, a few percentage points higher than the rate paid by companies in most other major industrial countries, according to a number of studies and tax experts.
Assorted proposals being discussed in Washington call for the rate to be lowered officially to about 25 percent and some tax breaks to be eliminated so that revenue remains unchanged.
But some prominent business leaders, including the chief executive of Procter & Gamble, are pushing for the rate to be reduced without reining in tax shelters. That would make the United States virtually the only country to change corporate taxes in recent years in a way that ended up adding to its deficit.
“One fact we know is that in all of the countries that have lowered their corporate rates in recent years, they still collected the same amount in revenues or more,” said Reuven S. Avi-Yonah, an international tax lawyer who teaches at the University of Michigan. “This means that they were broadening the base of the profits that corporations were actually taxed on.”
Procter & Gamble, whose products include Tide detergent and Crest toothpaste, paid an average of 24 percent of its profits in worldwide income taxes over the last three years, according to regulatory filings. That is nearly the same rate reported by two big European rivals, Unilever and Henkel.
Yet Robert A. McDonald, P.& G.’s top executive, testified before a Congressional committee this year about the need to cut the United States tax rate without ending tax breaks and shelters. “We need a tax system that addresses today’s hypercompetitive global marketplace,” Mr. McDonald said, arguing that the playing field was tilted away from American businesses.
Many liberal groups counter that ending the breaks, subsidies and shelters in the corporate tax code could provide enough money to lower the rate several percentage points and still increase revenue.
Furthermore, some business owners complain that the American system unfairly rewards disingenuous bookkeeping rather than innovation. It forces companies to compete “based not on product quality and services, but on accounting gymnastics,” said Paul Egerman, former chairman and chief executive of eScription, a medical transcription service in Boston.
No one is certain how much creative accounting costs the federal government in lost revenue, but most estimates say it easily exceeds $50 billion a year. Targeted tax preferences, which Congress created to intentionally benefit specific companies or industries, cost an estimated $100 billion more a year.
Many tax analysts are skeptical that Congress, business leaders and the Obama administration will be able to reach a deal before the 2012 election.
“It’s human nature that people are going to fight harder to preserve a benefit they already have than to get some new benefit,” said Clint Stretch, a principal at Deloitte Tax and a former counsel to the Congressional Joint Committee on Taxation. “The only way tax reform makes everyone happy is if everyone wins. And with the federal budget where it is today, that’s not possible.”
Topping out at 35 percent, America’s official corporate income tax rate trails that of only Japan, at 39.5 percent, which has said it plans to lower its rate. It is nearly triple Ireland’s and 10 percentage points higher than in Denmark, Austria or China. To help companies here stay competitive, many executives say, Congress should lower it.
But by taking advantage of myriad breaks and loopholes that other countries generally do not offer, United States corporations pay only slightly more on average than their counterparts in other industrial countries. And some American corporations use aggressive strategies to pay less — often far less — than their competitors abroad and at home. A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.
The paradox of the United States tax code — high rates with a bounty of subsidies, shelters and special breaks — has made American multinationals “world leaders in tax avoidance,” according to Edward D. Kleinbard, a professor at the University of Southern California who was head of the Congressional joint committee on taxes. This has profound implications for businesses, the economy and the federal budget.
As Congress wrestles with how to get the deficit under control, one big point of contention is whether spending cuts will need to be accompanied by an increase in taxes on some individuals or businesses. Facing a full-court press from business leaders who say the tax system is outdated and onerous, President Obama, Congress and business leaders have been warily negotiating various proposals, though mostly about whether to cut the top corporate rate and to tighten tax laws and not about whether to increase revenue.
The United States is virtually alone in trying to tax its multinational corporations on their foreign earnings, but it allows companies to avoid those taxes indefinitely by keeping profits overseas. That encourages companies to use accounting maneuvers to shift profits to low-tax countries and to invest profits offshore, says David S. Miller, a partner at Cadwalader, Wickersham & Taft in New York.
Honeywell International, the New Jersey company that makes things as diverse as aerospace components and First Alert smoke detectors, reported in regulatory filings that in the last five years, it paid cash income taxes in the United States and abroad equal to 15 percent of its profits. On Friday, a Honeywell spokeswoman pointed out that the company had since made a large pension contribution, which effectively cut its profits and made its tax rate closer to 22 percent.
A major domestic competitor, United Technologies, reported an average of 24 percent over that time. A German rival, Siemens, reported 29 percent of its total profit.
In addition to being complex and uneven, the United States corporate tax code is inefficient and has become a diminishing source of revenue. Corporate taxes accounted for about 9 percent of all federal revenue in 2010. At $191 billion, they were equal to 1.3 percent of the nation’s gross domestic product. Most industrial countries collect more from companies, about 2.5 percent of output. Only a portion of that disparity can be explained by the many types of businesses in the United States that elect to be taxed at an individual rate.
“Whether the test is fairness or efficiency, the U.S. system gets really low marks,” said Michelle Hanlon, an M.I.T. professor who says the country needs to completely revamp the way it taxes corporations.
Not all American companies are willing or able to reduce their taxes drastically. Taxes vary more by industry here than abroad, according to a study released in February by Kevin S. Markle of Dartmouth and Douglas A. Shackelford of the University of North Carolina. At the high end, American retailers paid 31 percent in total income taxes, construction 30 percent and manufacturers 26 percent. Financial services companies paid an average of 20 percent, real estate 19 percent and mining 6 percent.
(Measuring taxes paid by companies is imprecise because tax filings remain private. In many cases, the estimates reported in a company’s financial filings with regulators overstate taxes paid in a year because they include deferred taxes. Nonetheless, academics, economists and elected officials use the estimates for comparative purposes.)
Because some companies are so effective at minimizing taxes, the average works out to far less than the official rate. United States companies pay about a quarter of their profits in federal income taxes, a few percentage points higher than the rate paid by companies in most other major industrial countries, according to a number of studies and tax experts.
Assorted proposals being discussed in Washington call for the rate to be lowered officially to about 25 percent and some tax breaks to be eliminated so that revenue remains unchanged.
But some prominent business leaders, including the chief executive of Procter & Gamble, are pushing for the rate to be reduced without reining in tax shelters. That would make the United States virtually the only country to change corporate taxes in recent years in a way that ended up adding to its deficit.
“One fact we know is that in all of the countries that have lowered their corporate rates in recent years, they still collected the same amount in revenues or more,” said Reuven S. Avi-Yonah, an international tax lawyer who teaches at the University of Michigan. “This means that they were broadening the base of the profits that corporations were actually taxed on.”
Procter & Gamble, whose products include Tide detergent and Crest toothpaste, paid an average of 24 percent of its profits in worldwide income taxes over the last three years, according to regulatory filings. That is nearly the same rate reported by two big European rivals, Unilever and Henkel.
Yet Robert A. McDonald, P.& G.’s top executive, testified before a Congressional committee this year about the need to cut the United States tax rate without ending tax breaks and shelters. “We need a tax system that addresses today’s hypercompetitive global marketplace,” Mr. McDonald said, arguing that the playing field was tilted away from American businesses.
Many liberal groups counter that ending the breaks, subsidies and shelters in the corporate tax code could provide enough money to lower the rate several percentage points and still increase revenue.
Furthermore, some business owners complain that the American system unfairly rewards disingenuous bookkeeping rather than innovation. It forces companies to compete “based not on product quality and services, but on accounting gymnastics,” said Paul Egerman, former chairman and chief executive of eScription, a medical transcription service in Boston.
No one is certain how much creative accounting costs the federal government in lost revenue, but most estimates say it easily exceeds $50 billion a year. Targeted tax preferences, which Congress created to intentionally benefit specific companies or industries, cost an estimated $100 billion more a year.
Many tax analysts are skeptical that Congress, business leaders and the Obama administration will be able to reach a deal before the 2012 election.
“It’s human nature that people are going to fight harder to preserve a benefit they already have than to get some new benefit,” said Clint Stretch, a principal at Deloitte Tax and a former counsel to the Congressional Joint Committee on Taxation. “The only way tax reform makes everyone happy is if everyone wins. And with the federal budget where it is today, that’s not possible.”
India Central Bank Signals Higher Rates on Growing Price Risks
India’s inflation risks have “amplified” because of higher commodity prices and “policy interventions” are needed, the central bank said, signaling the possibility of increasing borrowing costs today.
“Persistence of inflation warrants continuation of anti- inflationary monetary policy stance for sustaining growth,” the Reserve Bank of India said in a report yesterday. The rate decision is scheduled to be unveiled at 11 a.m. in Mumbai.
Governor Duvvuri Subbarao may boost the central bank’s benchmark repurchase rate to 7 percent from 6.75 percent, according to 18 of 25 economists in a Bloomberg News survey. The remaining seven including HSBC Group Plc predict a half percentage-point move to contain India’s inflation, which is the highest among the so-called BRICS nations after Russia.
“The hawkish comments indicate more monetary tightening today is a given,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai, and who expects a quarter-point increase. “Inflation will remain elevated in the near future.”
The Bombay Stock Exchange’s Sensitive Index declined 0.7 percent at the close of trading in Mumbai yesterday, while the yield on the 7.8 percent bond due April 2021 gained one basis point to 8.14 percent. The rupee fell 0.3 percent to 44.33 per dollar.
India’s benchmark wholesale-price inflation quickened to 8.98 percent in March, more than the central bank’s 8 percent estimate, prompting Goldman Sachs Group Inc. (GS), Standard Chartered Plc and Barclays Plc to raise their forecast for rate increases this year.
BRICS Inflation
By comparison, consumer prices rose 5.4 percent in March, 9.5 percent in Russia, 6.3 percent in Brazil and 4.1 percent in South Africa.
Goldman Sachs April 21 estimated India’s central bank will probably increase rates by another 1.25 percentage points in 2011, more than the half-point increase predicted earlier. Standard Chartered forecast on April 18 the repurchase rate will rise by 1 percentage point in six months, while Barclays predicted a 75-basis point increase, compared with original calls of 50 basis points.
Inflation may average 7.5 percent in the year ending March 31, according to a survey compiled by the central bank of forecasts from agencies including the International Monetary Fund and the Asian Development Bank, yesterday’s report showed. The survey in January projected inflation of 6.6 percent.
India’s economy may expand 8.2 percent in the current financial year, the survey said, scaling down its previous estimate of 8.5 percent.
Growth Risks
“Given the risk that high and persistent inflation in itself could jeopardize the growth momentum and inclusive growth, the policy has to focus on anchoring inflationary expectations as well as limiting the second-round impact of supply shocks,” according to the report.
Risks to inflation have increased because of the “uncertain outlook” on global commodity prices and as local costs haven’t aligned to those prevailing abroad, central bank said.
Prime Minister Manmohan Singh, facing state elections in five provinces, has sought to appease voters with price caps on diesel, kerosene and cooking gas after inflation triggered nationwide protests earlier this year.
Goldman Sachs said in a report April 27 that the government may start allowing Indian Oil Corp. and others to charge more for the fuels once elections in the four states and one union territory conclude on May 10.
Fuel Prices
Indian Oil hasn’t increased diesel prices since June 26 and gasoline since Jan. 16, according to the company’s website.
Oil has climbed 31 percent in London and 23 percent in New York this year as revolts that overthrew the governments in Tunisia and Egypt raised concern that supplies from the Middle East would be disrupted as protests spread.
A report yesterday showed that India’s manufacturing grew in April at the fastest pace in five months, a sign that consumer demand remains strong even after Subbarao raised borrowing costs by 200 basis points since mid-March 2010.
The Purchasing Managers’ Index rose to 58 from 57.9 in March, HSBC Holdings Plc (HSBA) and Markit Economics said in the report. A number above 50 indicates expansion.
“Persistence of inflation warrants continuation of anti- inflationary monetary policy stance for sustaining growth,” the Reserve Bank of India said in a report yesterday. The rate decision is scheduled to be unveiled at 11 a.m. in Mumbai.
Governor Duvvuri Subbarao may boost the central bank’s benchmark repurchase rate to 7 percent from 6.75 percent, according to 18 of 25 economists in a Bloomberg News survey. The remaining seven including HSBC Group Plc predict a half percentage-point move to contain India’s inflation, which is the highest among the so-called BRICS nations after Russia.
“The hawkish comments indicate more monetary tightening today is a given,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai, and who expects a quarter-point increase. “Inflation will remain elevated in the near future.”
The Bombay Stock Exchange’s Sensitive Index declined 0.7 percent at the close of trading in Mumbai yesterday, while the yield on the 7.8 percent bond due April 2021 gained one basis point to 8.14 percent. The rupee fell 0.3 percent to 44.33 per dollar.
India’s benchmark wholesale-price inflation quickened to 8.98 percent in March, more than the central bank’s 8 percent estimate, prompting Goldman Sachs Group Inc. (GS), Standard Chartered Plc and Barclays Plc to raise their forecast for rate increases this year.
BRICS Inflation
By comparison, consumer prices rose 5.4 percent in March, 9.5 percent in Russia, 6.3 percent in Brazil and 4.1 percent in South Africa.
Goldman Sachs April 21 estimated India’s central bank will probably increase rates by another 1.25 percentage points in 2011, more than the half-point increase predicted earlier. Standard Chartered forecast on April 18 the repurchase rate will rise by 1 percentage point in six months, while Barclays predicted a 75-basis point increase, compared with original calls of 50 basis points.
Inflation may average 7.5 percent in the year ending March 31, according to a survey compiled by the central bank of forecasts from agencies including the International Monetary Fund and the Asian Development Bank, yesterday’s report showed. The survey in January projected inflation of 6.6 percent.
India’s economy may expand 8.2 percent in the current financial year, the survey said, scaling down its previous estimate of 8.5 percent.
Growth Risks
“Given the risk that high and persistent inflation in itself could jeopardize the growth momentum and inclusive growth, the policy has to focus on anchoring inflationary expectations as well as limiting the second-round impact of supply shocks,” according to the report.
Risks to inflation have increased because of the “uncertain outlook” on global commodity prices and as local costs haven’t aligned to those prevailing abroad, central bank said.
Prime Minister Manmohan Singh, facing state elections in five provinces, has sought to appease voters with price caps on diesel, kerosene and cooking gas after inflation triggered nationwide protests earlier this year.
Goldman Sachs said in a report April 27 that the government may start allowing Indian Oil Corp. and others to charge more for the fuels once elections in the four states and one union territory conclude on May 10.
Fuel Prices
Indian Oil hasn’t increased diesel prices since June 26 and gasoline since Jan. 16, according to the company’s website.
Oil has climbed 31 percent in London and 23 percent in New York this year as revolts that overthrew the governments in Tunisia and Egypt raised concern that supplies from the Middle East would be disrupted as protests spread.
A report yesterday showed that India’s manufacturing grew in April at the fastest pace in five months, a sign that consumer demand remains strong even after Subbarao raised borrowing costs by 200 basis points since mid-March 2010.
The Purchasing Managers’ Index rose to 58 from 57.9 in March, HSBC Holdings Plc (HSBA) and Markit Economics said in the report. A number above 50 indicates expansion.
Indian economic growth adds to inflation woes
India’s manufacturing sector expanded strongly in April, adding fresh pressure to inflation, but the pace of growth cooled slightly in the big industrial centres of east Asia, according to the latest monthly data.
Purchasing Managers’ Index data for India, published on Monday by HSBC, confirmed that growth remained robust in spite of eight increases in interest rates by the Reserve Bank of India over the past year in an attempt to conquer inflation, currently 9 per cent.
The April PMI index showed a rise to 58.0, compared with 57.9 in March, indicating that the pace of growth in manufacturing activity strengthened slightly from its high level in March. PMI figures of more than 50 indicate expansion, with numbers below that level indicating contraction.
Detailed figures for sub-indices showed that input prices continued to rise rapidly, suggesting that upward pressure on inflation was likely to continue. However, the pace of growth in input prices moderated slightly, with the index falling for the first month since mid-2010, from 68.7 to 66.3.
Leif Eskesen, HSBC’s chief economist for India, said the strong PMI numbers were likely to “keep the RBI hawkish”, with a further increase in interest rates possible as soon as Tuesday.
In contrast to the rising pace of expansion in India, manufacturing PMI data for South Korea, also released on Monday, showed a slight easing in the pace of growth, as did official and unofficial PMI reports for China, released at the weekend.
China’s Federation of Logistics and Purchasing said its PMI measure fell to 52.9 in April from 53.4 in the previous month, indicating continuing growth but at a slightly slower pace.
Zhang Liqun, an analyst at the federation, said the official data suggested that growth was slowing in line with demand, according to state media. If sustained, the easing of the pace of growth would help to slow the economy and reduce inflationary pressures.
HSBC’s unofficial China PMI index was flat at 51.8, reflecting “relatively soft market demand”. China has increased interest rates four times since October, but inflation jumped to 5.4 per cent in March, mainly because of rising food prices.
South Korea’s PMI slipped to 51.7 from 52.8 in March, signalling a moderation in growth that economists said might reflect a slowdown in export orders caused by the March 11 earthquake and tsunami in Japan.
Japan’s PMI, released on Thursday by the Japan Materials Management Association and Markit, the economics consultancy, showed a further decline caused by the continuing impact of the earthquake.
The index hit a two-year low of 45.7, down from 46.4 in March, indicating a significant contraction of activity. The level of incoming new business fell sharply, with the rate of decline the fastest since March 2009, said JMMA/Markit.
Purchasing Managers’ Index data for India, published on Monday by HSBC, confirmed that growth remained robust in spite of eight increases in interest rates by the Reserve Bank of India over the past year in an attempt to conquer inflation, currently 9 per cent.
The April PMI index showed a rise to 58.0, compared with 57.9 in March, indicating that the pace of growth in manufacturing activity strengthened slightly from its high level in March. PMI figures of more than 50 indicate expansion, with numbers below that level indicating contraction.
Detailed figures for sub-indices showed that input prices continued to rise rapidly, suggesting that upward pressure on inflation was likely to continue. However, the pace of growth in input prices moderated slightly, with the index falling for the first month since mid-2010, from 68.7 to 66.3.
Leif Eskesen, HSBC’s chief economist for India, said the strong PMI numbers were likely to “keep the RBI hawkish”, with a further increase in interest rates possible as soon as Tuesday.
In contrast to the rising pace of expansion in India, manufacturing PMI data for South Korea, also released on Monday, showed a slight easing in the pace of growth, as did official and unofficial PMI reports for China, released at the weekend.
China’s Federation of Logistics and Purchasing said its PMI measure fell to 52.9 in April from 53.4 in the previous month, indicating continuing growth but at a slightly slower pace.
Zhang Liqun, an analyst at the federation, said the official data suggested that growth was slowing in line with demand, according to state media. If sustained, the easing of the pace of growth would help to slow the economy and reduce inflationary pressures.
HSBC’s unofficial China PMI index was flat at 51.8, reflecting “relatively soft market demand”. China has increased interest rates four times since October, but inflation jumped to 5.4 per cent in March, mainly because of rising food prices.
South Korea’s PMI slipped to 51.7 from 52.8 in March, signalling a moderation in growth that economists said might reflect a slowdown in export orders caused by the March 11 earthquake and tsunami in Japan.
Japan’s PMI, released on Thursday by the Japan Materials Management Association and Markit, the economics consultancy, showed a further decline caused by the continuing impact of the earthquake.
The index hit a two-year low of 45.7, down from 46.4 in March, indicating a significant contraction of activity. The level of incoming new business fell sharply, with the rate of decline the fastest since March 2009, said JMMA/Markit.
Sunday, May 1, 2011
Shell Tries to Calm Fears on Drilling in Alaska
SAVOONGA, Alaska — Shell Oil will present an ambitious proposal to the federal government this week, seeking permission to drill up to 10 exploratory oil wells beneath Alaska’s frigid Arctic waters.
The forbidding ice-clogged region is believed to hold vast reserves of oil, potentially enough to fuel 25 million cars for 35 years. And with production in Alaska’s North Slope in steep decline, the oil industry is eager to tap new offshore wells.
Shell has led the way, working for five years to convince regulators, environmentalists, Native Alaskans and several courts that it could manage the process safely, protect polar bears and other wildlife, safeguard air quality for residents and respond quickly to any spill in the region. But BP’s Deepwater Horizon disaster a year ago put a chill on new offshore drilling.
Shell’s renewed application will pose a test for President Obama, who promised to put safety first after the BP spill. But he has also reiterated his support for offshore drilling amid voter worries about rising gasoline prices.
Environmental groups say a spill in the Arctic’s inaccessible waters could be even more catastrophic than the Gulf of Mexico accident. Republicans, meanwhile, are threatening to excoriate the president for turning his back on energy security if he says no to Shell.
“Americans are reeling from staggering prices at the pump,” said Representative Cory Gardner, a Colorado Republican on the House Energy and Commerce Committee. “So the president has to justify to the American people why we are not replacing Saudi Arabian oil imports with U.S.-produced oil.”
Whatever the administration decides, it will anger somebody. “If the Obama administration approves drilling in the Arctic, it will demonstrate that they have learned nothing from the gulf spill,” said Brendan Cummings, senior counsel at the Center for Biological Diversity, which is suing to stop Shell.
Administration officials say only that they will thoroughly review Shell’s new proposal. “We need to continue to take a cautious approach in the Arctic that is guided by science and the voices of North Slope communities,” said Kendra Barkoff, a spokeswoman for the Interior Department, which oversees most of the process.
The politics extend as far as Alaska’s remotest villages, where support from Native Alaskans, or at least their acquiescence, is essential to win several permits. With that in mind, Pete Slaiby, Shell’s top executive in Alaska, was glad-handing last week in Savoonga, a village on an island in the Bering Sea. He passed out raffle tickets, bought a trinket and congratulated the Yupik hunters for harpooning two bowhead whales.
One hunter waved a copy of the movie “An Inconvenient Truth,” and launched into an attack on oil as a cause for the warming temperatures that are melting the Arctic ice. Other hunters pressed Mr. Slaiby on concerns that the migrating walruses they depend on for food would suffer from the noise if drilling operations began north of here.
Mr. Slaiby said Shell was concerned about climate change too, and promised that the company would take painstaking precautions to protect wildlife. “We won’t be successful here if we deprive people of their subsistence,” he said. “If the oil companies are doing well and the people living around them are not, it’s a recipe for disaster.”
Shell has already spent $3.7 billion on the 10-year offshore leases and preparations for exploration, although the company has yet to drill a single hole. Shell will formally present its new proposal — to drill up to 10 wells over the next two years in remote waters north of Alaska, in the Chukchi and Beaufort seas — in the next few days. If the plan is approved within nine months or so, exploration could begin next year.
Just as in the past, executives realize they need to fight the battle on multiple regulatory and legal fronts. “It’s like holding a bunch of pins in your hand, and trying to make sure not one drops,” said Brian Malnak, Shell’s vice president of government affairs.
Perhaps the toughest hurdle this year will be convincing the government that Shell could protect the Arctic from a devastating spill. An Interior Department agency recently estimated that a “hypothetical” blowout of an oil well in the Chukchi Sea could release 1.4 million barrels of crude over a 39-day period before a relief well could be drilled. A leak of that magnitude would severely test the capacity of the boats, barges, skimmers and a spill containment tanker that Shell plans to deploy around its rigs, although the company promises to add whatever equipment regulators find necessary.
Shell is proposing to use two drill ships, each capable of drilling a relief well for the other in case of the kind of blowout that destroyed the Deepwater Horizon rig. The company is also promising to add more testing and an extra set of shears to its blowout preventers and to keep emergency capping systems near drilling sites to capture any potential leaks.
Alaska once accounted for a third of the nation’s oil production, but its fields are now in steep decline. The decrease in production threatens the continued safe use of the Trans-Alaska Pipeline System, also known as TAPS, which requires a steady flow of oil to avert corrosion and spills.
The Alaskan Arctic potentially holds 27 billion barrels of oil. “If we could open the Arctic to oil exploration,” said Alaska’s governor, Sean Parnell, “we can fill that TAPS line in a way to preserve it for another 50 to 100 years.” Major production from the Arctic would probably be a decade away, however.
Environmentalists contend that the risks of drilling are too great. They warn that hurricane-force winds, high seas, and frigid cold and ice would make cleaning up a spill far more difficult than in the gulf, and they say that oil operations could disturb migration and reproduction of marine mammals.
“We believe there need to be more spill drills, more testing, more inspections of the drill rig and blowout preventer before they begin,” said Marilyn Heiman, director of the United States Arctic Program of the Pew Environment Group.
In his presentation in Savoonga, Mr. Slaiby said Shell and other companies had safely drilled in Alaska’s Arctic waters in the 1980s and 1990s, without a spill or major damage to wildlife. And he noted that the wells Shell intended to drill here were far shallower than BP’s ill-fated Macondo well, making the possibility of a blowout more remote.
“We’ve never told people that what we do doesn’t entail risk,” Mr. Slaiby said, “but the risks are different from the Gulf of Mexico.”
The forbidding ice-clogged region is believed to hold vast reserves of oil, potentially enough to fuel 25 million cars for 35 years. And with production in Alaska’s North Slope in steep decline, the oil industry is eager to tap new offshore wells.
Shell has led the way, working for five years to convince regulators, environmentalists, Native Alaskans and several courts that it could manage the process safely, protect polar bears and other wildlife, safeguard air quality for residents and respond quickly to any spill in the region. But BP’s Deepwater Horizon disaster a year ago put a chill on new offshore drilling.
Shell’s renewed application will pose a test for President Obama, who promised to put safety first after the BP spill. But he has also reiterated his support for offshore drilling amid voter worries about rising gasoline prices.
Environmental groups say a spill in the Arctic’s inaccessible waters could be even more catastrophic than the Gulf of Mexico accident. Republicans, meanwhile, are threatening to excoriate the president for turning his back on energy security if he says no to Shell.
“Americans are reeling from staggering prices at the pump,” said Representative Cory Gardner, a Colorado Republican on the House Energy and Commerce Committee. “So the president has to justify to the American people why we are not replacing Saudi Arabian oil imports with U.S.-produced oil.”
Whatever the administration decides, it will anger somebody. “If the Obama administration approves drilling in the Arctic, it will demonstrate that they have learned nothing from the gulf spill,” said Brendan Cummings, senior counsel at the Center for Biological Diversity, which is suing to stop Shell.
Administration officials say only that they will thoroughly review Shell’s new proposal. “We need to continue to take a cautious approach in the Arctic that is guided by science and the voices of North Slope communities,” said Kendra Barkoff, a spokeswoman for the Interior Department, which oversees most of the process.
The politics extend as far as Alaska’s remotest villages, where support from Native Alaskans, or at least their acquiescence, is essential to win several permits. With that in mind, Pete Slaiby, Shell’s top executive in Alaska, was glad-handing last week in Savoonga, a village on an island in the Bering Sea. He passed out raffle tickets, bought a trinket and congratulated the Yupik hunters for harpooning two bowhead whales.
One hunter waved a copy of the movie “An Inconvenient Truth,” and launched into an attack on oil as a cause for the warming temperatures that are melting the Arctic ice. Other hunters pressed Mr. Slaiby on concerns that the migrating walruses they depend on for food would suffer from the noise if drilling operations began north of here.
Mr. Slaiby said Shell was concerned about climate change too, and promised that the company would take painstaking precautions to protect wildlife. “We won’t be successful here if we deprive people of their subsistence,” he said. “If the oil companies are doing well and the people living around them are not, it’s a recipe for disaster.”
Shell has already spent $3.7 billion on the 10-year offshore leases and preparations for exploration, although the company has yet to drill a single hole. Shell will formally present its new proposal — to drill up to 10 wells over the next two years in remote waters north of Alaska, in the Chukchi and Beaufort seas — in the next few days. If the plan is approved within nine months or so, exploration could begin next year.
Just as in the past, executives realize they need to fight the battle on multiple regulatory and legal fronts. “It’s like holding a bunch of pins in your hand, and trying to make sure not one drops,” said Brian Malnak, Shell’s vice president of government affairs.
Perhaps the toughest hurdle this year will be convincing the government that Shell could protect the Arctic from a devastating spill. An Interior Department agency recently estimated that a “hypothetical” blowout of an oil well in the Chukchi Sea could release 1.4 million barrels of crude over a 39-day period before a relief well could be drilled. A leak of that magnitude would severely test the capacity of the boats, barges, skimmers and a spill containment tanker that Shell plans to deploy around its rigs, although the company promises to add whatever equipment regulators find necessary.
Shell is proposing to use two drill ships, each capable of drilling a relief well for the other in case of the kind of blowout that destroyed the Deepwater Horizon rig. The company is also promising to add more testing and an extra set of shears to its blowout preventers and to keep emergency capping systems near drilling sites to capture any potential leaks.
Alaska once accounted for a third of the nation’s oil production, but its fields are now in steep decline. The decrease in production threatens the continued safe use of the Trans-Alaska Pipeline System, also known as TAPS, which requires a steady flow of oil to avert corrosion and spills.
The Alaskan Arctic potentially holds 27 billion barrels of oil. “If we could open the Arctic to oil exploration,” said Alaska’s governor, Sean Parnell, “we can fill that TAPS line in a way to preserve it for another 50 to 100 years.” Major production from the Arctic would probably be a decade away, however.
Environmentalists contend that the risks of drilling are too great. They warn that hurricane-force winds, high seas, and frigid cold and ice would make cleaning up a spill far more difficult than in the gulf, and they say that oil operations could disturb migration and reproduction of marine mammals.
“We believe there need to be more spill drills, more testing, more inspections of the drill rig and blowout preventer before they begin,” said Marilyn Heiman, director of the United States Arctic Program of the Pew Environment Group.
In his presentation in Savoonga, Mr. Slaiby said Shell and other companies had safely drilled in Alaska’s Arctic waters in the 1980s and 1990s, without a spill or major damage to wildlife. And he noted that the wells Shell intended to drill here were far shallower than BP’s ill-fated Macondo well, making the possibility of a blowout more remote.
“We’ve never told people that what we do doesn’t entail risk,” Mr. Slaiby said, “but the risks are different from the Gulf of Mexico.”
Asian Stocks Rise as U.S. Earnings Top Estimates, Oil Advances
Asian stocks rose, driving the regional benchmark index to the highest level in almost four months, after U.S. companies reported earnings that topped analysts’ estimates, easing concerns that global economic growth may slow.
Komatsu Ltd., the world’s No. 2 maker of construction equipment, advanced 1.8 percent after Caterpillar Inc. posted earnings that beat estimates. Seiko Epson Corp., a Japanese printer maker, rose 5 percent after forecasting net income will jump 66 percent this fiscal year. GS Engineering & Construction Corp., a South Korea builder, jumped 2.7 percent in Seoul after the government announced policy measures to aid troubled builders and boost the property market. BHP Billiton Ltd., the world’s biggest mining company, slumped 0.6 percent in Sydney.
The MSCI Asia Pacific Index increased 0.4 percent to 140.09 at 11:17 a.m. in Tokyo, the highest level since Jan. 19. Almost three stocks rose for each that fell on the gauge. The measure climbed 0.5 percent last week after the Federal Reserve renewed its pledge to stimulate growth in the U.S., the world’s biggest economy, with low interest rates, boosting the outlook for exporters.
“In addition to U.S. companies having good earnings, Japanese companies’ earnings were not so bad. That’s improving investors’ sentiment in the market,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. “Excessive worries about the future of the economy and companies’ earnings are receding.”
Nikkei, Kospi
Japan’s Nikkei 225 Stock Average rose 1 percent to the highest level since the March 11 earthquake and tsunami. South Korea’s Kospi Index added 1.3 percent. New Zealand’s NZX 50 Index slipped 0.5 percent.
Australia’s S&P/ASX 200 Index lost 0.7 percent, reversing an earlier gain of 0.3 percent, after the nation’s currency rose above $1.10 for the first time since foreign-exchange controls were scrapped in 1983. Australia’s manufacturing contracted in April for the seventh time in eight months as a record-high currency and consumer caution hurt textile and other producers, a report showed today.
BHP dropped 0.6 percent, the second-biggest drag on the MSCI Asia Pacific Index. Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer, declined 1.7 percent. Westpac Banking Corp. slid 1.1 percent.
Consumer Spending
Futures on the Standard & Poor’s 500 Index was little changed today. In New York, the index rose 0.2 percent to 1,363.61 on April 29.
Caterpillar, the world’s largest maker of construction equipment, posted first-quarter profit that topped analysts’ estimates and raised its full-year earnings forecast as sales surged in developing countries.
Goodyear Tire & Rubber Co., the largest U.S. tiremaker, reported first-quarter adjusted earnings of 51 cents a share, more than quadrupling the 11-cent average estimate of analysts.
Also, a government report showed consumer spending in the U.S. climbed in March as Americans spent more on food and fuel. Purchases rose 0.6 percent after a revised 0.9 percent gain in February that was higher than previously estimated, Commerce Department figures showed on April 29.
Komatsu advanced 1.8 percent to 2,891 yen in Tokyo. Canon Inc., the world’s biggest manufacturer of cameras, climbed 2 percent to 3,875 yen. Toyota Motor Corp., the world’s No. 1 carmaker, increased 1.6 percent to 3,280 yen. Hyundai Heavy Industries Co., the world’s largest shipyard, which receives 89 percent of its revenue abroad, increased 0.8 percent to 539,000 won in Seoul.
Seiko, Cosmo
In Tokyo, Seiko Epson jumped 5 percent to 1,482 yen, headed for its highest close since Jan. 21. The company forecast net income will jump 66 percent to 17 billion yen this fiscal year. Cosmo Oil Co., a refiner, advanced 3.4 percent to 274 yen. The company had 28 billion yen in net income for the year ended March 31, up 56 percent from its forecast, according to a preliminary earnings statement.
Electric Power Development Co., Japan’s biggest power wholesaler, leapt 4.7 percent to 2,225 yen. The company projected full-year net income will increase 33 percent to 26 billion yen.
The MSCI Asia Pacific Index increased 1.3 percent this year through April 29, compared with gains of 8.4 percent by the Standard and Poor’s 500 Index and 2.9 percent by the Stoxx Europe 600 Index.
Stocks in the Asian benchmark were valued at 13.5 times estimated earnings on average, compared with 13.8 times for the S&P 500 and 11.5 times for the Stoxx 600.
Aid for Builders
In Seoul, GS Engineering and other South Korean builders advanced in Seoul trading after the government announced policy measures to aid troubled builders and boost the property market.
GS Engineering rose 2.7 percent to 132,500 won. Daewoo Engineering & Construction Co. added 3.1 percent to 11,750 won. Daelim Industrial Co. climbed 3.3 percent to 125,000 won.
South Korea’s government announced policy measures to aid troubled builders and the property market, including tax incentives for real-estate investment trusts that buy unsold housing. South Korea will establish a bank to purchase soured loans owed by builders and developers, the financial regulator said.
Komatsu Ltd., the world’s No. 2 maker of construction equipment, advanced 1.8 percent after Caterpillar Inc. posted earnings that beat estimates. Seiko Epson Corp., a Japanese printer maker, rose 5 percent after forecasting net income will jump 66 percent this fiscal year. GS Engineering & Construction Corp., a South Korea builder, jumped 2.7 percent in Seoul after the government announced policy measures to aid troubled builders and boost the property market. BHP Billiton Ltd., the world’s biggest mining company, slumped 0.6 percent in Sydney.
The MSCI Asia Pacific Index increased 0.4 percent to 140.09 at 11:17 a.m. in Tokyo, the highest level since Jan. 19. Almost three stocks rose for each that fell on the gauge. The measure climbed 0.5 percent last week after the Federal Reserve renewed its pledge to stimulate growth in the U.S., the world’s biggest economy, with low interest rates, boosting the outlook for exporters.
“In addition to U.S. companies having good earnings, Japanese companies’ earnings were not so bad. That’s improving investors’ sentiment in the market,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. “Excessive worries about the future of the economy and companies’ earnings are receding.”
Nikkei, Kospi
Japan’s Nikkei 225 Stock Average rose 1 percent to the highest level since the March 11 earthquake and tsunami. South Korea’s Kospi Index added 1.3 percent. New Zealand’s NZX 50 Index slipped 0.5 percent.
Australia’s S&P/ASX 200 Index lost 0.7 percent, reversing an earlier gain of 0.3 percent, after the nation’s currency rose above $1.10 for the first time since foreign-exchange controls were scrapped in 1983. Australia’s manufacturing contracted in April for the seventh time in eight months as a record-high currency and consumer caution hurt textile and other producers, a report showed today.
BHP dropped 0.6 percent, the second-biggest drag on the MSCI Asia Pacific Index. Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer, declined 1.7 percent. Westpac Banking Corp. slid 1.1 percent.
Consumer Spending
Futures on the Standard & Poor’s 500 Index was little changed today. In New York, the index rose 0.2 percent to 1,363.61 on April 29.
Caterpillar, the world’s largest maker of construction equipment, posted first-quarter profit that topped analysts’ estimates and raised its full-year earnings forecast as sales surged in developing countries.
Goodyear Tire & Rubber Co., the largest U.S. tiremaker, reported first-quarter adjusted earnings of 51 cents a share, more than quadrupling the 11-cent average estimate of analysts.
Also, a government report showed consumer spending in the U.S. climbed in March as Americans spent more on food and fuel. Purchases rose 0.6 percent after a revised 0.9 percent gain in February that was higher than previously estimated, Commerce Department figures showed on April 29.
Komatsu advanced 1.8 percent to 2,891 yen in Tokyo. Canon Inc., the world’s biggest manufacturer of cameras, climbed 2 percent to 3,875 yen. Toyota Motor Corp., the world’s No. 1 carmaker, increased 1.6 percent to 3,280 yen. Hyundai Heavy Industries Co., the world’s largest shipyard, which receives 89 percent of its revenue abroad, increased 0.8 percent to 539,000 won in Seoul.
Seiko, Cosmo
In Tokyo, Seiko Epson jumped 5 percent to 1,482 yen, headed for its highest close since Jan. 21. The company forecast net income will jump 66 percent to 17 billion yen this fiscal year. Cosmo Oil Co., a refiner, advanced 3.4 percent to 274 yen. The company had 28 billion yen in net income for the year ended March 31, up 56 percent from its forecast, according to a preliminary earnings statement.
Electric Power Development Co., Japan’s biggest power wholesaler, leapt 4.7 percent to 2,225 yen. The company projected full-year net income will increase 33 percent to 26 billion yen.
The MSCI Asia Pacific Index increased 1.3 percent this year through April 29, compared with gains of 8.4 percent by the Standard and Poor’s 500 Index and 2.9 percent by the Stoxx Europe 600 Index.
Stocks in the Asian benchmark were valued at 13.5 times estimated earnings on average, compared with 13.8 times for the S&P 500 and 11.5 times for the Stoxx 600.
Aid for Builders
In Seoul, GS Engineering and other South Korean builders advanced in Seoul trading after the government announced policy measures to aid troubled builders and boost the property market.
GS Engineering rose 2.7 percent to 132,500 won. Daewoo Engineering & Construction Co. added 3.1 percent to 11,750 won. Daelim Industrial Co. climbed 3.3 percent to 125,000 won.
South Korea’s government announced policy measures to aid troubled builders and the property market, including tax incentives for real-estate investment trusts that buy unsold housing. South Korea will establish a bank to purchase soured loans owed by builders and developers, the financial regulator said.
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