SANA, Yemen — Al Qaeda in the Arabian Peninsula has rapidly evolved into an expanding and ambitious regional terrorist network thanks in part to a weakened, impoverished and distracted Yemeni government.
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Internal Conflicts and the Growing Influence of Al QaedaGraphic
Internal Conflicts and the Growing Influence of Al Qaeda
Related
Obama Says Al Qaeda in Yemen Planned Bombing Plot, and He Vows Retribution (January 3, 2010)
After Failed Attack, Britain Turns Focus to Yemen (January 2, 2010)
While Yemen has chased two homegrown rebellions, over the last year the Qaeda cell here has begun sharing resources across borders and has been spurred on to more ambitious attacks by a leadership strengthened by released Qaeda detainees and returning fighters from Iraq.
The priorities of the Yemeni government have been fighting a war in the north and combating secessionists across the south. In the interim, Al Qaeda has flourished in the large, lawless and rugged tribal territories of Yemen, creating training camps, attacking Western targets and receiving increasing popular sympathy, Yemeni and American officials say.
Al Qaeda’s growing profile in Yemen became clear after a Nigerian man, Umar Farouk Abdulmutallab, 23, was able to overstay his visa here by several months, connect with Qaeda militants and leave this country with a bomb sewn into his underwear.
In his weekly address on Saturday, President Obama for the first time directly blamed Al Qaeda in the Arabian Peninsula for the bombing attempt and said that fighting the group would be a high priority. “In recent years, they have bombed Yemeni government facilities and Western hotels,” he said, adding, “So as president, I’ve made it a priority to strengthen our partnership with the Yemeni government.”
The core of the group here is still thought to be small, perhaps no more than 200 people. But the group has the important advantage of being part of a larger, regional structure, having merged a year ago with the Saudi branch of Al Qaeda to form Al Qaeda in the Arabian Peninsula. And it has been able to originate fairly sophisticated operations here, in Saudi Arabia and now on an airliner headed for Detroit.
Though Yemen played an early role in Al Qaeda’s history — it is Osama bin Laden’s ancestral homeland, and it was the staging ground for the 2000 attack on the American destroyer Cole — the key chapters in the story of Al Qaeda’s rise here have been written recently by leaders who were released from detention at Guantánamo Bay, Cuba, escaped from Yemeni prisons or were drawn to shelter here by common cause and ideology.
Those men have transformed and reoriented a weak local Qaeda cell that had made a kind of peace with the government after 2003. In the year since the Saudi and Yemeni branches merged, Al Qaeda has taken full advantage of the government’s preoccupation with the rebellions, building support from the tribal structures and traditions in Yemen’s poor and lawless territories.
One big moment came in February 2006, when 23 imprisoned men suspected of being members of Al Qaeda escaped from a high-security prison, reportedly with the aid of some Yemeni security forces. All but three or four of the men were eventually recaptured or killed by Yemeni security forces. But one prisoner, Nasser al-Wuhayshi, became leader of the Qaeda cell in Yemen and moved to reorganize it, focusing it on attacks against nearby Western targets. Another prisoner, Qassim al-Raimi, became the military commander.
The next year, Mr. Wuhayshi found a deputy and, perhaps, a rival for leadership, Said Ali al-Shihri, 36, a Saudi citizen. He was released from six years’ detention in Guantánamo Bay in December 2007 to a Saudi-run rehabilitation program. He disappeared from Saudi Arabia and emerged in Yemen, and he is considered by many to be the rising star of the local movement. Mr. Shihri had traveled to Afghanistan in 2001 and was apparently wounded there, and he was captured crossing back into Pakistan in December of that year.
Another Guantánamo detainee, also captured in Pakistan in 2001 and released to a Saudi rehabilitation program, is Ibrahim Suleiman al-Rubaysh, 30, a Saudi who also disappeared and is now described as the mufti, or theological guide, to Al Qaeda of the Arabian Peninsula.
Anwar al-Awlaki, an American-born, English-speaking Internet imam of Al Qaeda here, returned to Yemen, his family’s home, in 2004. He was arrested in 2006 on security charges and was released in December 2007 after 18 months in prison. He then went to Britain and is believed to have returned to Yemen last spring.
Saturday, January 2, 2010
U.S. Sees an Opportunity to Press Iran on Nuclear Fuel
WASHINGTON — As President Obama faces pressure to back up his year-end ultimatum for diplomatic progress with Iran, the administration says that domestic unrest and signs of unexpected trouble in Tehran’s nuclear program make its leaders particularly vulnerable to strong and immediate new sanctions.
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Glyn Davies, right, the United States ambassador to the International Atomic Energy Agency, with Mohamed ElBaradei, the agency's departing director, in November in Vienna.
Related
Iran Gives West One-Month ‘Ultimatum’ to Accept Nuclear Counterproposal (January 3, 2010)
More on Iran's Nuclear Program
The long-discussed sanctions would initiate the latest phase in a strategy to force Iran to comply with United Nations demands to halt production of nuclear fuel. It comes as the administration has completed a fresh review of Iran’s nuclear progress.
In interviews, Mr. Obama’s strategists said that while Iran’s top political and military leaders remained determined to develop nuclear weapons, they were distracted by turmoil in the streets and political infighting, and that the drive to produce nuclear fuel appeared to have faltered in recent months.
The White House wants to focus the new sanctions on the Islamic Revolutionary Guards Corps, the military force believed to run the nuclear weapons effort. That force has also played a crucial role in the repression of antigovernment demonstrators since the disputed presidential election in June.
Although repeated rounds of sanctions over many years have not dissuaded Iran from pursuing nuclear technology, an administration official involved in the Iran policy said the hope was that the current troubles “give us a window to impose the first sanctions that may make the Iranians think the nuclear program isn’t worth the price tag.”
While outsiders have a limited view of Iran’s nuclear program, the Obama administration officials said they believed that the bomb-development effort was seriously derailed by the exposure three months ago of the country’s secret enrichment plant under construction near the holy city of Qum. Exposure of the site deprived Iran of its best chance of covertly producing the highly enriched uranium needed to make fuel for nuclear weapons.
In addition, international nuclear inspectors report that at Iran’s plant in Natanz, where thousands of centrifuges spin to enrich uranium for nuclear fuel, the number of the machines that are currently operating has dropped by 20 percent since the summer, a decline nuclear experts attribute to technical problems. Others, including some European officials, believe the problems may have been accentuated by a series of covert efforts by the West to undermine Iran’s program, including sabotage on its imported equipment and infrastructure.
These factors have led the administration’s policy makers to lengthen their estimate of how long it would take Iran to accomplish what nuclear experts call “covert breakout” — the ability to secretly produce a workable weapon.
“For now, the Iranians don’t have a credible breakout option, and we don’t think they will have one for at least 18 months, maybe two or three years,” said one senior administration official at the center of the White House Iran strategy. The administration has told allies that the longer time frame would allow the sanctions to have an effect before Iran could develop its nuclear ability.
Another administration official said that Israeli officials, while still publicly hinting that they might take military action against Iran’s nuclear facilities, “now feel that what’s happening in Iran makes the country vulnerable to real sanctions,” and might give Mr. Obama more time to persuade China and Russia to go along. A senior Israeli diplomat in Washington said that in back-channel conversations “Obama has convinced us that it’s worth trying the sanctions, at least for a few months.”
Sanctions will be a difficult balancing act for the administration, since it acknowledges that three previous rounds of sanctions have failed to deter Iran, and it also wants to avoid angering Iranians protesting in the streets by depriving them of Western goods. That is why the administration is focusing on the Revolutionary Guards, who are increasingly detested by the protesters, and who have built up billions of dollars of business interests in telecommunications, oil and construction.
The administration aims to get Arab and Asian nations to join Europe in cutting off financial transactions with front companies for the Revolutionary Guards.
China and Russia have been particularly reluctant and could seize on the Obama administration’s view of Iran’s nuclear troubles to resist Mr. Obama’s argument that new sanctions are needed now to punish Iran’s defiance of the United Nations Security Council mandate that it cease enriching uranium.
Iran’s insistence that its nuclear program is for civilian purposes only is roundly rejected by Western officials and, in internal reports, by international nuclear inspectors. Yet Washington’s assessments of how much progress Iran has made toward a weapon have varied greatly over the past two years, partly a reflection of how little is known about the inner workings of the country’s nuclear programs.
Mr. Obama’s top advisers say they no longer believe the key finding of a much disputed National Intelligence Estimate about Iran, published a year before President George W. Bush left office, which said that Iranian scientists ended all work on designing a nuclear warhead in late 2003.
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European Pressphoto Agency
Glyn Davies, right, the United States ambassador to the International Atomic Energy Agency, with Mohamed ElBaradei, the agency's departing director, in November in Vienna.
Related
Iran Gives West One-Month ‘Ultimatum’ to Accept Nuclear Counterproposal (January 3, 2010)
More on Iran's Nuclear Program
The long-discussed sanctions would initiate the latest phase in a strategy to force Iran to comply with United Nations demands to halt production of nuclear fuel. It comes as the administration has completed a fresh review of Iran’s nuclear progress.
In interviews, Mr. Obama’s strategists said that while Iran’s top political and military leaders remained determined to develop nuclear weapons, they were distracted by turmoil in the streets and political infighting, and that the drive to produce nuclear fuel appeared to have faltered in recent months.
The White House wants to focus the new sanctions on the Islamic Revolutionary Guards Corps, the military force believed to run the nuclear weapons effort. That force has also played a crucial role in the repression of antigovernment demonstrators since the disputed presidential election in June.
Although repeated rounds of sanctions over many years have not dissuaded Iran from pursuing nuclear technology, an administration official involved in the Iran policy said the hope was that the current troubles “give us a window to impose the first sanctions that may make the Iranians think the nuclear program isn’t worth the price tag.”
While outsiders have a limited view of Iran’s nuclear program, the Obama administration officials said they believed that the bomb-development effort was seriously derailed by the exposure three months ago of the country’s secret enrichment plant under construction near the holy city of Qum. Exposure of the site deprived Iran of its best chance of covertly producing the highly enriched uranium needed to make fuel for nuclear weapons.
In addition, international nuclear inspectors report that at Iran’s plant in Natanz, where thousands of centrifuges spin to enrich uranium for nuclear fuel, the number of the machines that are currently operating has dropped by 20 percent since the summer, a decline nuclear experts attribute to technical problems. Others, including some European officials, believe the problems may have been accentuated by a series of covert efforts by the West to undermine Iran’s program, including sabotage on its imported equipment and infrastructure.
These factors have led the administration’s policy makers to lengthen their estimate of how long it would take Iran to accomplish what nuclear experts call “covert breakout” — the ability to secretly produce a workable weapon.
“For now, the Iranians don’t have a credible breakout option, and we don’t think they will have one for at least 18 months, maybe two or three years,” said one senior administration official at the center of the White House Iran strategy. The administration has told allies that the longer time frame would allow the sanctions to have an effect before Iran could develop its nuclear ability.
Another administration official said that Israeli officials, while still publicly hinting that they might take military action against Iran’s nuclear facilities, “now feel that what’s happening in Iran makes the country vulnerable to real sanctions,” and might give Mr. Obama more time to persuade China and Russia to go along. A senior Israeli diplomat in Washington said that in back-channel conversations “Obama has convinced us that it’s worth trying the sanctions, at least for a few months.”
Sanctions will be a difficult balancing act for the administration, since it acknowledges that three previous rounds of sanctions have failed to deter Iran, and it also wants to avoid angering Iranians protesting in the streets by depriving them of Western goods. That is why the administration is focusing on the Revolutionary Guards, who are increasingly detested by the protesters, and who have built up billions of dollars of business interests in telecommunications, oil and construction.
The administration aims to get Arab and Asian nations to join Europe in cutting off financial transactions with front companies for the Revolutionary Guards.
China and Russia have been particularly reluctant and could seize on the Obama administration’s view of Iran’s nuclear troubles to resist Mr. Obama’s argument that new sanctions are needed now to punish Iran’s defiance of the United Nations Security Council mandate that it cease enriching uranium.
Iran’s insistence that its nuclear program is for civilian purposes only is roundly rejected by Western officials and, in internal reports, by international nuclear inspectors. Yet Washington’s assessments of how much progress Iran has made toward a weapon have varied greatly over the past two years, partly a reflection of how little is known about the inner workings of the country’s nuclear programs.
Mr. Obama’s top advisers say they no longer believe the key finding of a much disputed National Intelligence Estimate about Iran, published a year before President George W. Bush left office, which said that Iranian scientists ended all work on designing a nuclear warhead in late 2003.
Harley-Davidson revs up to lure Indian fans
For most Indians, the term “chopped hog” would probably summon up visions of roast suckling pig in Goa, one of the country’s few pork-eating states.
But recently, bike fans in Mumbai’s gritty former textile mills district got a taste of what American author Hunter S. Thompson meant by the term in his book, Hell’s Angels.
Harley
Hell of a ride: Harley allowed Indian enthusiasts to test drive some of its ‘hogs’
EDITOR’S CHOICE
India delays mobile number portability - Dec-31
India mines riches as west’s back office - Dec-29
Two-wheelers make up ground on cars - Nov-25
In a publicity event before the formal opening of sales in India next year, US classic motorcycle maker Harley-Davidson turned over a collection of its “hogs” – the CVO, Touring, Softail, Dyna and Sportster models – to local enthusiasts for test rides.
“Maybe today a young Indian who sees a Harley can’t afford it,” Anoop Prakash, Harley-Davidson’s India director, says of the bike’s starting price of Rs700,000 ($15,000). “But if he falls in love with the bike now, he’ll buy it when he can.”
Harley-Davidson is the latest of the world’s motorcycle brands to target the Indian consumer. The country is the world’s second-largest two-wheeler market after China, with sales of 3.52m units in the first half of the fiscal year ending next March, up 15 per cent against a year earlier.
While Harley will appeal to the richest urban riders, the bulk of the Indian market – and the attraction for mainstream motorcycle companies – lies at the lower end of the consumer pyramid, particularly in the vast rural hinterlands.
Harley’s motorbikes serve every possible transport function, from commuter vehicle and family car to beast of burden and even a gift as part of a dowry.
The market leader is Hero Honda, 26 per cent owned by India’s Munjal business family and 26 per cent by Japan’s Honda.
The company, which began business in India in 1983 and today makes more than half the country’s motorcycles, has had a blockbuster start to the financial year in spite of the downturn, with sales up 21 per cent year-on-year between April and November to 3.04m units.
Its main competitor is homegrown motorcycle producer, Bajaj Auto, whose market share in November reached nearly 27 per cent, up from about 23 per cent earlier in the year, on the back of sales of new models. Bajaj sold 11 per cent more motorcycles between April and November against a year earlier.
Rural areas today account for about 40 per cent of Hero Honda’s sales, a number that is expected to rise steadily beyond 50 per cent in coming years as rural incomes increase, Pawan Munjal, the chief executive of Hero Honda, said.
With motorcycle penetration in rural India below 7 per cent of the market compared with about 25 per cent in urban areas, there is plenty of room for growth.
“The sales ratio between rural and urban sales is slowly inching up, and I do believe the bigger growth will keep coming from the rural market,” Mr Munjal told the Financial Times.
Some analysts believe a poor monsoon this year could curb rural spending, with farmers preferring to put on hold discretionary purchases such as motorcycles until the fate of their crops becomes clear.
“Farmers are indeed upgrading from bicycles to motorcycles. Even those who don’t need motorcycles are buying them. With the bad monsoon, they may put this on hold,” HSBC analyst Sachin Gupta said in a recent report.
But farmers still have extra money in their pockets after a $16bn government farm loan waiver.
The government has also increased its support prices for crops by 11 per cent, a move that should offset the loss of income from the monsoon, according to Jatin Chawla, an analyst at IIFL, a Mumbai-based brokerage.
The other much-touted threat to India’s motorcycle market is the emerging “ultra low-cost car” segment, led by the Tata Nano, with a starting price of about Rs100,000.
Tata Group chairman, Ratan Tata, says the Nano’s direct target market is motorcycle users. But analysts say motorcycles are still far cheaper to run. Not surprisingly, Hero Honda’s Mr Munjal is also a sceptic.
“The Nano is priced closer to premium end bikes, and the premium end bike user is not a Nano user,” says Mr Munjal.
Harley-Davidson’s Mr Prakash is not targeting Nano buyers. With other high-end motorcycles making inroads into India, such as Italy’s Ducati, he is keen to spread the religion.
Harley plans to open five dealerships in the country’s most prosperous cities and states next year.
Marc Billimoria, a banker and one of the test riders, said: “We’ve never had something like this in India ... it’s a dream come true.”
But recently, bike fans in Mumbai’s gritty former textile mills district got a taste of what American author Hunter S. Thompson meant by the term in his book, Hell’s Angels.
Harley
Hell of a ride: Harley allowed Indian enthusiasts to test drive some of its ‘hogs’
EDITOR’S CHOICE
India delays mobile number portability - Dec-31
India mines riches as west’s back office - Dec-29
Two-wheelers make up ground on cars - Nov-25
In a publicity event before the formal opening of sales in India next year, US classic motorcycle maker Harley-Davidson turned over a collection of its “hogs” – the CVO, Touring, Softail, Dyna and Sportster models – to local enthusiasts for test rides.
“Maybe today a young Indian who sees a Harley can’t afford it,” Anoop Prakash, Harley-Davidson’s India director, says of the bike’s starting price of Rs700,000 ($15,000). “But if he falls in love with the bike now, he’ll buy it when he can.”
Harley-Davidson is the latest of the world’s motorcycle brands to target the Indian consumer. The country is the world’s second-largest two-wheeler market after China, with sales of 3.52m units in the first half of the fiscal year ending next March, up 15 per cent against a year earlier.
While Harley will appeal to the richest urban riders, the bulk of the Indian market – and the attraction for mainstream motorcycle companies – lies at the lower end of the consumer pyramid, particularly in the vast rural hinterlands.
Harley’s motorbikes serve every possible transport function, from commuter vehicle and family car to beast of burden and even a gift as part of a dowry.
The market leader is Hero Honda, 26 per cent owned by India’s Munjal business family and 26 per cent by Japan’s Honda.
The company, which began business in India in 1983 and today makes more than half the country’s motorcycles, has had a blockbuster start to the financial year in spite of the downturn, with sales up 21 per cent year-on-year between April and November to 3.04m units.
Its main competitor is homegrown motorcycle producer, Bajaj Auto, whose market share in November reached nearly 27 per cent, up from about 23 per cent earlier in the year, on the back of sales of new models. Bajaj sold 11 per cent more motorcycles between April and November against a year earlier.
Rural areas today account for about 40 per cent of Hero Honda’s sales, a number that is expected to rise steadily beyond 50 per cent in coming years as rural incomes increase, Pawan Munjal, the chief executive of Hero Honda, said.
With motorcycle penetration in rural India below 7 per cent of the market compared with about 25 per cent in urban areas, there is plenty of room for growth.
“The sales ratio between rural and urban sales is slowly inching up, and I do believe the bigger growth will keep coming from the rural market,” Mr Munjal told the Financial Times.
Some analysts believe a poor monsoon this year could curb rural spending, with farmers preferring to put on hold discretionary purchases such as motorcycles until the fate of their crops becomes clear.
“Farmers are indeed upgrading from bicycles to motorcycles. Even those who don’t need motorcycles are buying them. With the bad monsoon, they may put this on hold,” HSBC analyst Sachin Gupta said in a recent report.
But farmers still have extra money in their pockets after a $16bn government farm loan waiver.
The government has also increased its support prices for crops by 11 per cent, a move that should offset the loss of income from the monsoon, according to Jatin Chawla, an analyst at IIFL, a Mumbai-based brokerage.
The other much-touted threat to India’s motorcycle market is the emerging “ultra low-cost car” segment, led by the Tata Nano, with a starting price of about Rs100,000.
Tata Group chairman, Ratan Tata, says the Nano’s direct target market is motorcycle users. But analysts say motorcycles are still far cheaper to run. Not surprisingly, Hero Honda’s Mr Munjal is also a sceptic.
“The Nano is priced closer to premium end bikes, and the premium end bike user is not a Nano user,” says Mr Munjal.
Harley-Davidson’s Mr Prakash is not targeting Nano buyers. With other high-end motorcycles making inroads into India, such as Italy’s Ducati, he is keen to spread the religion.
Harley plans to open five dealerships in the country’s most prosperous cities and states next year.
Marc Billimoria, a banker and one of the test riders, said: “We’ve never had something like this in India ... it’s a dream come true.”
Friday, January 1, 2010
Asia Stocks Rise Second Week for Biggest Annual Gain Since 1993
Jan. 2 (Bloomberg) -- Asian stocks rose for the second week, capping the MSCI Asia Pacific Index’s biggest annual gain since 2003, after China raised its economic growth figures and Japan said industrial production increased. Hitachi Ltd., Japan’s fourth-largest company by sales, added 4 percent. Suning Appliance Co., China’s biggest home- appliance retailer by market value, climbed 5.9 percent. Korea Electric Power Corp. jumped 4.1 percent in Seoul after leading a group that won the United Arab Emirates’ first order for a nuclear-power plant.
“The global economy is just about bottoming out,” said Masaru Hamasaki, chief strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “I don’t expect huge economic growth, but I do see things recovering.”
The MSCI Asia Pacific Index rose 0.7 percent to 120.45 in a holiday-shortened week. The gauge climbed 34 percent in 2009, its biggest annual gain since 2003, on signs government spending and lower interest rates are bolstering economies.
Japan’s Nikkei 225 Stock Average rose 0.5 percent in the country’s three-day trading week, after factory output increased in November from October and the government said on Dec. 25 that gross domestic product will probably expand 1.4 percent in the year starting April 1.
The Nikkei 225 has plunged 73 percent since it climbed to an intraday record of 38,957.44 on the final business day of 1989, the world’s worst performer in the period. Japan’s broader Topix index rose 5.6 percent this year, the lowest return among benchmark equity gauges for the world’s 10 largest markets.
Hong Kong’s Hang Seng Index and Australia’s S&P/ASX 200 Index both climbed 1.7 percent this week.
Growth Estimate
The Shanghai Composite Index advanced 4.3 percent this week as China raised its 2008 growth estimate to 9.6 percent from 9 percent on Dec. 25, and said 2009’s quarterly figures will also increase.
Japan’s Cabinet Office said Dec. 25 that the economy will expand for the first time in three years, while the Trade Ministry said on Dec. 28 factory output increased 2.6 percent in November from October. The median estimate of 24 economists surveyed by Bloomberg News was for a 2.5 percent gain.
Hitachi climbed 4 percent to 284 yen. The maker of washing machines and nuclear reactors will sign a contract valued at as much as 1 trillion yen ($11 billion) early in 2010 for a high- speed train project in the U.K., the Sankei newspaper reported, without citing anyone.
Consumer Stocks
Suning Appliance Co., China’s biggest home appliance retailer by market value, added 5.6 percent to 20.78 yuan. GD Midea Holding Co., the nation’s second-biggest publicly traded appliance maker, gained 2.4 percent to 23.30 yuan.
“Consumer stocks are good bets as they will receive most of the government support next year,” Wei Wei, an analyst at West China Securities Co. in Shanghai, said Dec. 28. Central bank Governor Zhou Xiaochuan said on Dec. 31 the People’s Bank of China will maintain a “moderately loose” monetary policy.
The Shanghai Composite Index rallied 80 percent in 2009 as government spending and a credit boom helped the nation’s economy recover from its steepest slump in more than a decade.
Korea Electric jumped 4.1 percent to 34,100 won in Seoul. Its partners in the nuclear-power bid also gained, with Doosan Heavy Industries & Construction Co. soaring 9.7 percent to 81,100 won and Hyundai Engineering & Construction Co. climbing 4.3 percent to 70,900 won.
“We will probably start to see more business deals like this one, bit by bit,” said Toyota Asset Management’s Hamasaki.
The MSCI Asia Pacific Index’s 2009 advance has outpaced gains of 23 percent by the S&P 500 in the U.S. and 28 percent for the Dow Jones Stoxx 600 Index in Europe. Stocks in the MSCI gauge trade at an average of 23 times estimated earnings, compared with 18 times for the Standard and Poor’s 500 Index in the U.S. and 16 times for the Dow Jones Stoxx 600 Index in Europe.
Global Rally
The 2009 gain in Asian stocks is part of a global rally that has boosted the MSCI World Index by 27 percent, the steepest increase since 2003. The gauge plunged 42 percent in 2008, the most since inception 40 years ago, as mounting losses from the collapse of the U.S. subprime mortgage market and the bankruptcy of Lehman Brothers Holdings Inc. led investors to exit equities.
In October, the International Monetary Fund estimated global growth of 3.1 percent in 2010, compared with an estimated 1.1 percent contraction in 2009.
“Investors are generally a lot more relaxed right now,” Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney, said Dec. 31. “The sixty-four- million dollar question is: what happens next year where we could have a much stronger economic backdrop but tighter liquidity conditions? Markets may well end up consolidating gains in 2010 rather than making another big move upwards.”
Among stocks that fell in the week were Japan Airlines Corp. and Asiana Airlines Inc., both of which plunged on debt concerns.
Japan Airlines, Asia’s biggest carrier by sales, tumbled 31 percent to 67 yen, the lowest close since the stock began trading in 2002, on speculation it will file for bankruptcy. Asiana Airlines lost 13 percent to 3,645 won in Seoul after the carrier’s parent said it may restructure debt at affiliates.
“The global economy is just about bottoming out,” said Masaru Hamasaki, chief strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “I don’t expect huge economic growth, but I do see things recovering.”
The MSCI Asia Pacific Index rose 0.7 percent to 120.45 in a holiday-shortened week. The gauge climbed 34 percent in 2009, its biggest annual gain since 2003, on signs government spending and lower interest rates are bolstering economies.
Japan’s Nikkei 225 Stock Average rose 0.5 percent in the country’s three-day trading week, after factory output increased in November from October and the government said on Dec. 25 that gross domestic product will probably expand 1.4 percent in the year starting April 1.
The Nikkei 225 has plunged 73 percent since it climbed to an intraday record of 38,957.44 on the final business day of 1989, the world’s worst performer in the period. Japan’s broader Topix index rose 5.6 percent this year, the lowest return among benchmark equity gauges for the world’s 10 largest markets.
Hong Kong’s Hang Seng Index and Australia’s S&P/ASX 200 Index both climbed 1.7 percent this week.
Growth Estimate
The Shanghai Composite Index advanced 4.3 percent this week as China raised its 2008 growth estimate to 9.6 percent from 9 percent on Dec. 25, and said 2009’s quarterly figures will also increase.
Japan’s Cabinet Office said Dec. 25 that the economy will expand for the first time in three years, while the Trade Ministry said on Dec. 28 factory output increased 2.6 percent in November from October. The median estimate of 24 economists surveyed by Bloomberg News was for a 2.5 percent gain.
Hitachi climbed 4 percent to 284 yen. The maker of washing machines and nuclear reactors will sign a contract valued at as much as 1 trillion yen ($11 billion) early in 2010 for a high- speed train project in the U.K., the Sankei newspaper reported, without citing anyone.
Consumer Stocks
Suning Appliance Co., China’s biggest home appliance retailer by market value, added 5.6 percent to 20.78 yuan. GD Midea Holding Co., the nation’s second-biggest publicly traded appliance maker, gained 2.4 percent to 23.30 yuan.
“Consumer stocks are good bets as they will receive most of the government support next year,” Wei Wei, an analyst at West China Securities Co. in Shanghai, said Dec. 28. Central bank Governor Zhou Xiaochuan said on Dec. 31 the People’s Bank of China will maintain a “moderately loose” monetary policy.
The Shanghai Composite Index rallied 80 percent in 2009 as government spending and a credit boom helped the nation’s economy recover from its steepest slump in more than a decade.
Korea Electric jumped 4.1 percent to 34,100 won in Seoul. Its partners in the nuclear-power bid also gained, with Doosan Heavy Industries & Construction Co. soaring 9.7 percent to 81,100 won and Hyundai Engineering & Construction Co. climbing 4.3 percent to 70,900 won.
“We will probably start to see more business deals like this one, bit by bit,” said Toyota Asset Management’s Hamasaki.
The MSCI Asia Pacific Index’s 2009 advance has outpaced gains of 23 percent by the S&P 500 in the U.S. and 28 percent for the Dow Jones Stoxx 600 Index in Europe. Stocks in the MSCI gauge trade at an average of 23 times estimated earnings, compared with 18 times for the Standard and Poor’s 500 Index in the U.S. and 16 times for the Dow Jones Stoxx 600 Index in Europe.
Global Rally
The 2009 gain in Asian stocks is part of a global rally that has boosted the MSCI World Index by 27 percent, the steepest increase since 2003. The gauge plunged 42 percent in 2008, the most since inception 40 years ago, as mounting losses from the collapse of the U.S. subprime mortgage market and the bankruptcy of Lehman Brothers Holdings Inc. led investors to exit equities.
In October, the International Monetary Fund estimated global growth of 3.1 percent in 2010, compared with an estimated 1.1 percent contraction in 2009.
“Investors are generally a lot more relaxed right now,” Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney, said Dec. 31. “The sixty-four- million dollar question is: what happens next year where we could have a much stronger economic backdrop but tighter liquidity conditions? Markets may well end up consolidating gains in 2010 rather than making another big move upwards.”
Among stocks that fell in the week were Japan Airlines Corp. and Asiana Airlines Inc., both of which plunged on debt concerns.
Japan Airlines, Asia’s biggest carrier by sales, tumbled 31 percent to 67 yen, the lowest close since the stock began trading in 2002, on speculation it will file for bankruptcy. Asiana Airlines lost 13 percent to 3,645 won in Seoul after the carrier’s parent said it may restructure debt at affiliates.
Thursday, December 31, 2009
Brown Says U.K., U.S. Exploring New Airport Security Measures
Jan. 1 (Bloomberg) -- Prime Minister Gordon Brown said the U.K. government is working with President Barack Obama on tightening airport security and rooting out potential terrorists after a Nigerian man tried to blow up a trans-Atlantic aircraft.
“The threat can only be met through enhanced cooperation,” Brown said in a statement posted on a government Web site in London today. “It has been another wake-up call for the ongoing battles we must wage.”
Brown said Britain and the U.S. are examining advanced x- ray technology, equipment that detects a trace of explosives on passengers and full-body scanners that penetrate clothes.
The comments are aimed at answering concerns that Britain is harboring communities of extremists planning to attack Western nations. Umar Farouk Abdulmutallab, who was arrested on Dec. 25 after a bomb hidden in his trousers fizzled, lived in the U.K. before boarding a plane from Amsterdam to Detroit.
Brown said he ordered a review of U.K. airport security on Dec. 28 and that he will receive preliminary findings in the next few days. Obama has ordered similar measures.
U.K. has barred 180 people from entering the country on national security grounds, Brown said. Britain has deported eight people citing security concerns since July 2005, when bombs exploded in a London bus and subway trains. Eight more have left voluntarily.
“We have to take on extremists wherever they are based, in Afghanistan, Pakistan and all around the world, including here in Britain,” Brown wrote in the message. “We nevertheless need to remain vigilant against people being radicalized here as well as abroad.”
For Related News and Information:
To contact the reporter on this story: Reed Landberg in London at landberg@bloomberg.net.
Last Updated: December 31, 2009 19:01 EST
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* Yahoo! Buzz Jan. 1 (Bloomberg) -- Prime Minister Gordon Brown said the U.K. government is working with President Barack Obama on tightening airport security and rooting out potential terrorists after a Nigerian man tried to blow up a trans-Atlantic aircraft.
“The threat can only be met through enhanced cooperation,” Brown said in a statement posted on a government Web site in London today. “It has been another wake-up call for the ongoing battles we must wage.”
Brown said Britain and the U.S. are examining advanced x- ray technology, equipment that detects a trace of explosives on passengers and full-body scanners that penetrate clothes.
The comments are aimed at answering concerns that Britain is harboring communities of extremists planning to attack Western nations. Umar Farouk Abdulmutallab, who was arrested on Dec. 25 after a bomb hidden in his trousers fizzled, lived in the U.K. before boarding a plane from Amsterdam to Detroit.
Brown said he ordered a review of U.K. airport security on Dec. 28 and that he will receive preliminary findings in the next few days. Obama has ordered similar measures.
U.K. has barred 180 people from entering the country on national security grounds, Brown said. Britain has deported eight people citing security concerns since July 2005, when bombs exploded in a London bus and subway trains. Eight more have left voluntarily.
“We have to take on extremists wherever they are based, in Afghanistan, Pakistan and all around the world, including here in Britain,” Brown wrote in the message. “We nevertheless need to remain vigilant against people being radicalized here as well as abroad.”
“The threat can only be met through enhanced cooperation,” Brown said in a statement posted on a government Web site in London today. “It has been another wake-up call for the ongoing battles we must wage.”
Brown said Britain and the U.S. are examining advanced x- ray technology, equipment that detects a trace of explosives on passengers and full-body scanners that penetrate clothes.
The comments are aimed at answering concerns that Britain is harboring communities of extremists planning to attack Western nations. Umar Farouk Abdulmutallab, who was arrested on Dec. 25 after a bomb hidden in his trousers fizzled, lived in the U.K. before boarding a plane from Amsterdam to Detroit.
Brown said he ordered a review of U.K. airport security on Dec. 28 and that he will receive preliminary findings in the next few days. Obama has ordered similar measures.
U.K. has barred 180 people from entering the country on national security grounds, Brown said. Britain has deported eight people citing security concerns since July 2005, when bombs exploded in a London bus and subway trains. Eight more have left voluntarily.
“We have to take on extremists wherever they are based, in Afghanistan, Pakistan and all around the world, including here in Britain,” Brown wrote in the message. “We nevertheless need to remain vigilant against people being radicalized here as well as abroad.”
For Related News and Information:
To contact the reporter on this story: Reed Landberg in London at landberg@bloomberg.net.
Last Updated: December 31, 2009 19:01 EST
* Business Exchange
* Delicious
* Digg
* Newsvine
* Propeller
* Yahoo! Buzz Jan. 1 (Bloomberg) -- Prime Minister Gordon Brown said the U.K. government is working with President Barack Obama on tightening airport security and rooting out potential terrorists after a Nigerian man tried to blow up a trans-Atlantic aircraft.
“The threat can only be met through enhanced cooperation,” Brown said in a statement posted on a government Web site in London today. “It has been another wake-up call for the ongoing battles we must wage.”
Brown said Britain and the U.S. are examining advanced x- ray technology, equipment that detects a trace of explosives on passengers and full-body scanners that penetrate clothes.
The comments are aimed at answering concerns that Britain is harboring communities of extremists planning to attack Western nations. Umar Farouk Abdulmutallab, who was arrested on Dec. 25 after a bomb hidden in his trousers fizzled, lived in the U.K. before boarding a plane from Amsterdam to Detroit.
Brown said he ordered a review of U.K. airport security on Dec. 28 and that he will receive preliminary findings in the next few days. Obama has ordered similar measures.
U.K. has barred 180 people from entering the country on national security grounds, Brown said. Britain has deported eight people citing security concerns since July 2005, when bombs exploded in a London bus and subway trains. Eight more have left voluntarily.
“We have to take on extremists wherever they are based, in Afghanistan, Pakistan and all around the world, including here in Britain,” Brown wrote in the message. “We nevertheless need to remain vigilant against people being radicalized here as well as abroad.”
Lambert Says U.K. Delay in Deficit Curbs May Hurt the Pound
Jan. 1 (Bloomberg) -- Richard Lambert, a former Bank of England policy maker now leading the Confederation of British Industry, said any delay in curbing the government’s budget deficit may lift interest rates and depress the pound.
“The government has not yet established a credible path back to fiscal stability,” Lambert said in a statement released in London today. “The longer this is delayed, the greater the threat to long-term interest rates and sterling.”
Chancellor Alistair Darling last month set out a plan to cut in half Britain’s budget deficit over the next four years, saying a quicker reduction may hurt the nation’s recovery from the worst recession on record. The deficit will peak next year at 13.2 percent of gross domestic product, the most in the Group of 20 nations, according to the International Monetary Fund.
Lambert also said the international banking crisis “is far from resolved.” While conditions at U.K. banks have improved, “there could be more aftershocks,” he said, adding that lending to companies is declining and that policy makers have yet to reform banking regulations.
“While another setback cannot be ruled out, the more likely outcome is that the economy will bump along the bottom for a little while before starting a fragile recovery driven by higher exports, investment in working capital, and a slightly stronger pattern of domestic consumption,” Lambert said.
“The government has not yet established a credible path back to fiscal stability,” Lambert said in a statement released in London today. “The longer this is delayed, the greater the threat to long-term interest rates and sterling.”
Chancellor Alistair Darling last month set out a plan to cut in half Britain’s budget deficit over the next four years, saying a quicker reduction may hurt the nation’s recovery from the worst recession on record. The deficit will peak next year at 13.2 percent of gross domestic product, the most in the Group of 20 nations, according to the International Monetary Fund.
Lambert also said the international banking crisis “is far from resolved.” While conditions at U.K. banks have improved, “there could be more aftershocks,” he said, adding that lending to companies is declining and that policy makers have yet to reform banking regulations.
“While another setback cannot be ruled out, the more likely outcome is that the economy will bump along the bottom for a little while before starting a fragile recovery driven by higher exports, investment in working capital, and a slightly stronger pattern of domestic consumption,” Lambert said.
Wednesday, December 30, 2009
Asian Consumer Spending Spurs Retailers’ Bonds to Best Returns
Dec. 31 (Bloomberg) -- Parkson Retail Group Ltd. and Shinsegae Co. led Asian retailers whose dollar bonds delivered the best returns of any industry group in the region this year as consumer spending rose.
Asia consumer company bonds returned 56 percent on average, according to an index compiled by JPMorgan Chase & Co., beating those of financial companies at 36 percent, industrial companies at 32 percent and utilities at 22 percent. The extra yield spread investors demand to own the retailers’ dollar notes instead of U.S. Treasuries narrowed 19.02 percentage points to 4.76 percentage points since Jan. 2, JPMorgan data show.
“One of the big stories of 2009 has been the rebalancing of growth towards domestic demand in Asia,” Sebastien Barbe, head of emerging-market research for Calyon, said in a phone interview from Hong Kong. “Consumer demand, particularly in India, China and Indonesia, has been more resilient than people expected at the beginning of the year. That’s contributed to the narrowing of spreads.”
Chinese retail sales may rise by more than 15 percent to exceed 12.5 trillion yuan ($1.83 trillion) this year, Trade Minister Chen Deming said on Dec. 24, as government stimulus measures and record bank lending spurred the fastest-growing major economy. Sales at South Korea’s major department stores rose for a ninth month in November, the Ministry of Knowledge Economy said Dec. 18. Spending at the three biggest chains climbed 6.4 percent from a year earlier.
Credit Recovery
PT Matahari Putra Prima, Indonesia’s second-biggest retailer by market value, and Shinsegae, which runs Korea’s biggest discount-store chain, sold dollar bonds this year as credit markets recovered from the worst global recession since the Great Depression and the 2008 collapse of Lehman Brothers Holdings Inc.
Shinsegae, based in Seoul, sold $200 million of three-year, 6.125 percent bonds in June 2008 that yielded 3 percent yesterday, according to Royal Bank of Scotland Group Plc. They were yielding 10.6 percent on Jan. 1, the Edinburgh-based lender’s prices show.
Beijing-based Parkson Retail, which owns department stores in 29 cities in China according to its Web site, sold $125 million of 7.125 percent notes due 2012 in May 2007 that yielded 6.099 percent yesterday, according to Nomura Holdings Inc. The notes yielded 20.8 percent on Jan. 9, Nomura prices show.
Rare Bonds
“If Parkson came out with another bond people would snap it up because retail dollar bonds are rare in Asia and there’s always a lot of interest from investors in this sector,” said Anthony Shum, a Hong Kong-based director of Asia-Pacific debt capital markets for Barclays Capital. “Parkson, with its stores in China, has been influenced by the government stimulus and Chinese New Year should also have a positive effect.”
Asian retail dollar bonds last outperformed their peers in 2006, when they delivered a 13 percent return compared with 6 percent for financials, utilities and industrials, JPMorgan data show. The notes handed investors a loss of 29 percent last year, almost double the 15 percent loss on bonds of the region’s financial companies.
“Employment in many east Asian economies has shown surprising resilience while real estate prices in a number of key markets have held up well, or even risen, despite large declines in the U.S. and parts of Europe,” said Tan Kim Eng, a Singapore-based credit analyst at Standard & Poor’s. “These factors have supported consumption, and with an expected recovery next year they must have led many to expect companies in the consumer sector will do well.”
Asia consumer company bonds returned 56 percent on average, according to an index compiled by JPMorgan Chase & Co., beating those of financial companies at 36 percent, industrial companies at 32 percent and utilities at 22 percent. The extra yield spread investors demand to own the retailers’ dollar notes instead of U.S. Treasuries narrowed 19.02 percentage points to 4.76 percentage points since Jan. 2, JPMorgan data show.
“One of the big stories of 2009 has been the rebalancing of growth towards domestic demand in Asia,” Sebastien Barbe, head of emerging-market research for Calyon, said in a phone interview from Hong Kong. “Consumer demand, particularly in India, China and Indonesia, has been more resilient than people expected at the beginning of the year. That’s contributed to the narrowing of spreads.”
Chinese retail sales may rise by more than 15 percent to exceed 12.5 trillion yuan ($1.83 trillion) this year, Trade Minister Chen Deming said on Dec. 24, as government stimulus measures and record bank lending spurred the fastest-growing major economy. Sales at South Korea’s major department stores rose for a ninth month in November, the Ministry of Knowledge Economy said Dec. 18. Spending at the three biggest chains climbed 6.4 percent from a year earlier.
Credit Recovery
PT Matahari Putra Prima, Indonesia’s second-biggest retailer by market value, and Shinsegae, which runs Korea’s biggest discount-store chain, sold dollar bonds this year as credit markets recovered from the worst global recession since the Great Depression and the 2008 collapse of Lehman Brothers Holdings Inc.
Shinsegae, based in Seoul, sold $200 million of three-year, 6.125 percent bonds in June 2008 that yielded 3 percent yesterday, according to Royal Bank of Scotland Group Plc. They were yielding 10.6 percent on Jan. 1, the Edinburgh-based lender’s prices show.
Beijing-based Parkson Retail, which owns department stores in 29 cities in China according to its Web site, sold $125 million of 7.125 percent notes due 2012 in May 2007 that yielded 6.099 percent yesterday, according to Nomura Holdings Inc. The notes yielded 20.8 percent on Jan. 9, Nomura prices show.
Rare Bonds
“If Parkson came out with another bond people would snap it up because retail dollar bonds are rare in Asia and there’s always a lot of interest from investors in this sector,” said Anthony Shum, a Hong Kong-based director of Asia-Pacific debt capital markets for Barclays Capital. “Parkson, with its stores in China, has been influenced by the government stimulus and Chinese New Year should also have a positive effect.”
Asian retail dollar bonds last outperformed their peers in 2006, when they delivered a 13 percent return compared with 6 percent for financials, utilities and industrials, JPMorgan data show. The notes handed investors a loss of 29 percent last year, almost double the 15 percent loss on bonds of the region’s financial companies.
“Employment in many east Asian economies has shown surprising resilience while real estate prices in a number of key markets have held up well, or even risen, despite large declines in the U.S. and parts of Europe,” said Tan Kim Eng, a Singapore-based credit analyst at Standard & Poor’s. “These factors have supported consumption, and with an expected recovery next year they must have led many to expect companies in the consumer sector will do well.”
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