Stock, Forex And Business

Suez Canal revenue drops

2009-03-24T03:57:00.005-07:00

Tuesday, March 24, 2009ISMAILIYA: Suez Canal revenue and traffic dropped almost 25 per cent in February as the world economic crisis continued to bite, a Canal Authority official said on Monday.Canal revenue fell to $302 million from $408 million in February 2008 and the number of boats dropped to 868 from 1,272, the official said. The volume of trade passing through the vital shipping route also took a hit, dropping to 53 million tonnes in February from 73 million tonnes in the same period last year.The Canal Authority decided at the start of the year not to increase tariffs due to uncertainty in the shipping industry in the light of the piracy problem in the Gulf of Aden and the worldwide credit crunch. Arms manufacturers in particular have rerouted their shipping round the Cape of Good Hope in recent months to avoid pirates preying on vessels en route between the Suez Canal and the Indian Ocean.The canal is Egypt’s third-largest source of revenue after tourism and remittances from expatriate workers. The government last year raised more than five billion dollars from ships passing through the canal.

Many skyscrapers on hold due to global recession

2009-03-24T03:57:00.003-07:00

Tuesday, March 24, 2009NEW YORK: The recession-hit construction industry has idled 2 million workers in the United States alone. The overhang of millions of unsold and foreclosed homes and a weak commercial real estate market may delay a rebound.Construction has been halted on 142, or 11 per cent, of 1,324 tall skyscraper residential and mixed-used projects around the world. By continent: 36 of 329 projects in North America, 84 of 766 in Asia (includes Middle East), 11 of 117 in Europe, six of 75 in South America, five of 37 in Australia.Chicago downtown condominium sales were down a net 253 units in the fourth quarter 2008, due to canceled contracts. Sales peaked at 8,162 units in 2005, and fell to 592 in 2008. There were 6,000 unsold units and 4,700 more condos to be added through 2009, though few additions seen in 2010 and 2011.US unemployment statistics for February showed 2,025,000 jobless construction workers, a rate of 21 per cent, the highest of any industry. Unemployment rates were 19 per cent in agriculture, 12 per cent in manufacturing, 11 per cent in leisure and hospitality, 11 per cent in professional and business services, and 3 per cent in government.

S Korea’s PEDCO signs coal mine deal with Pakistan

2009-03-24T03:57:00.001-07:00

Tuesday, March 24, 2009SEOUL: A South Korean energy development firm has signed an agreement with the Pakistan government for a stake in a coal mine in the Thar desert region, the firm said on Monday.South Korea’s Pan Energy Development Co (PEDCO), with UAE’s Bin Din Group, had secured the stake in coal blocks in the area, which has about 2.56 billion tonnes of estimated reserves, about 40 times the amount of coal used each year by local generators in South Korea.The Thar region is reported to have the world’s largest coal reserves of about 100 billion tonnes or more. PEDCO said that the Pakistan government is requesting two coal power plants with 500,000 kilowatts capacity and the firm is closely in talks with state-power monopoly Korea Electric Power Corp. PEDCO expects coal production of 2 million tonnes by 2011 from the blocks, and 10 million tonnes from 2015.

Tata rolls out world’s cheapest car

2009-03-24T03:56:00.001-07:00

Tuesday, March 24, 2009MUMBAI: India’s Tata Motors on Monday launched the world’s cheapest car, the Nano, hoping to revolutionise travel for millions and buck a slump in auto sales caused by the global economic crisis.Company boss Ratan Tata said the no-frills car, slated to cost just 100,000 rupees ($2,000) for the basic model, will get India’s middle-class urban population off motorcycles and into safer, affordable four-wheelers. “I think we are at the gates of offering a new form of transport to the people of India and later, I hope, other markets elsewhere in the world,” he said, describing the launch as a “milestone.” “The present economic situation makes it somewhat more attractive to the buying public,” he told reporters in Mumbai.Hundreds of people, including journalists and company officials, were gathering for the official unveiling ceremony at 7:30 pm (1400 GMT). Bookings for the tiny car, just over three metres (10 feet) long, start on April 9 and end on April 23, Tata Motors managing director Ravi Kant said.A ballot will then select 100,000 people to be the first to get the keys to the vehicle. Deliveries will start in early July 2009, he added. Even affluent Indians are eyeing up the Nano, which has a two-cylinder engine, four-speed manual transmission and a top speed of 105 kilometres (65 miles) per hour.It has no air conditioning, electric windows or power steering, but deluxe versions will be available. “This is a value-for-money car,” said Hasmukh Kakadia, 39, a Mumbai investment analyst. “There’s no safety in two-wheelers, especially with the whole family,” said New Delhi resident Ganesh Khand, 38, who now has a motorbike but wants a Nano to be able to transport his wife and two daughters safely.Shares of Tata Motors jumped as much as eight per cent early Monday to hit an intraday high of 173.85 before retracing on profit-taking to 165.40 rupees, still up 2.8 per cent, or 4.5 rupees. Dealers say they have been flooded with queries about the car, whose debut was delayed after violent protests over the acquisition of farmland to build the Nano plant, forcing Tata Motors to shift from West Bengal state to Gujarat.But the new plant in western India will not be ready until late this year or early 2010, Tata said. That means production must come from existing factories, reducing output and potentially increasing waiting times for deliveries. Kant admitted that some customers may have to wait more than year to take possession of their Nano.Tata, though, said not delaying the launch was the right decision. The launch comes at a tough time for India’s top vehicle maker, hit by the economic slowdown and credit crunch at home and abroad, at a time when it is trying to absorb the British luxury marques Jaguar and Land Rover, which it bought last year for $2.3 billion.Tata is hoping the Nano will also be a hit overseas in the long term. Earlier this month, the firm unveiled a European Nano sporting airbags and leather trim that will hit the market by 2011 but be costlier than in India due to the extra features.

Tourist arrivals plunge in Spain

2009-03-24T03:54:00.000-07:00

Tuesday, March 24, 2009MADRID: Tourist arrivals in Spain plunged 15.9 per cent in February, with Britons in particular shunning the world’s second largest holiday destination, the tourism ministry said Monday.It said a total of 2.8 million foreign tourists visited Spain last month, down 15.9 per cent over the same month last year. Britain again provided the largest number of visitors, 676,000. But the figure was 23.4 per cent less than in February, 2008.The weakening of the pound to near-parity with the euro has led many Britons to shun Spain’s beaches and bars in favour of sunshine destinations outside of the eurozone such as Turkey and Egypt, which have become much cheaper.

World mints report soaring demand for gold coins

2009-03-14T09:44:00.003-07:00

Saturday, March 14, 2009
LONDON: Mints around the world say demand for gold coins has risen sharply as interest in the precious metal soars on the back of financial instability and concerns over the inflation outlook.

The Royal Canadian Mint, which produces Maple Leaf bullion coins, said it quadrupled its production capacity late last year as demand for gold and silver bullion products leapt.

Gold was one of the few commodities to rise last year as turmoil in the financial sector sharpened investors’ appetite for assets seen as a safe store of value, such as bullion.

Spot gold rallied to an 11-month high of $1,005.40 on Feb 20 as a slide in equity markets increased interest in the precious metal. Demand for physical gold products such as coins and bars, has been particularly strong, traders say.

The United States Mint said sales of its one-ounce American Eagle gold bullion coins rocketed to 710,000 ounces in 2008, from 140,000 ounces a year before.

“The demand for gold and silver has been unprecedented,” a spokesman for the Mint told Reuters.

Switzerland, Luxembourg, Austria ready to ease bank secrecy

2009-03-14T09:44:00.001-07:00

Saturday, March 14, 2009
BERN: Switzerland, Luxembourg and Austria said on Friday they would relax key bank secrecy laws to meet growing international demands for change but only on a limited, case by case basis.

Their announcements followed similar moves on Thursday by Belgium, Liechtenstein and Andorra, the latter two on an OECD list of uncooperative tax havens, and come ahead of a Group of 20 meeting in London where the issue is a hot topic.

International pressure to clamp down on tax havens has been growing as the global financial crisis bites ever deeper, sparking calls for radical action to curb abuses held responsible for the debacle, among them tax evasion.

The Swiss government said on Friday it would accept standards laid down by the Organisation for Economic Cooperation and Development (OECD) to allow the exchange of information with other countries. This, however, would be done “case by case” and on the basis of “concrete and justified” requests, it said.

Switzerland was “maintaining banking secrecy and resolutely refused all automatic transmission of information.”

“The private sphere of clients is still protected from unjustified watching from abroad. Banking secrecy does not protect tax crimes,” it added. Luxembourg also said it would relax its strict banking secrecy laws and cooperate with foreign tax authorities in cases where fraud was suspected.

“Luxembourg is in favour of exchanging information on demand but only in precise cases and with clear proof” of suspicion of fraud, Treasury and Budget Minister Luc Frieden said.

Luxembourg would “align with OECD standards” on transparency and information exchange but “banking secrecy is not incompatible with OECD rules.

“Luxembourg would therefore maintain its banking secrecy as an instrument for protecting private life,” Frieden said.

WB chief says 2009 ‘very dangerous’ for economy

2009-03-14T09:43:00.003-07:00

Saturday, March 14, 2009
LONDON: World Bank President Robert Zoellick said on Friday that 2009 was turning into “a very dangerous year” for the economy but warned G20 members against protectionist policies to fight the downturn.

“2009 is shaping up to be a very dangerous year,” he told reporters ahead of Saturday’s G20 finance ministers meeting on how best to tackle the worst economic slowdown in decades. “I believe it will be a positive sign if the G20 supports extended IMF resources, condemns protectionism and supports practical solutions,” Zoellick said.

Finance ministers and central bank leaders from the United States and Europe go into Saturday’s meeting deeply divided on whether stimulus packages or tighter regulation of the finance sector should be the way forward. Saturday’s gathering in Horsham, near London, is expected to lay the groundwork for a G20 heads of state summit on April 2.

US trade gap at over six-year low

2009-03-14T09:43:00.001-07:00

Saturday, March 14, 2009
WASHINGTON: The US trade deficit narrowed sharply in January to its smallest in more than six years as imports plunged on weak domestic demand, swamping a big drop in exports, government data showed on Friday.

The monthly trade gap fell 9.7 per cent to $36.0 billion, compared to the $38 billion gap Wall Street expected, Commerce Department data showed. The deficit has now narrowed for a record six consecutive months, the longest previous run being from April through August 2007.

“The narrowing reflects the ongoing economic downturn. US consumers are pulling back and that’s resulting in fewer imports while exports are falling,” said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania. “It reflects how bad economic conditions are everywhere.”

US exports of goods and services fell 5.7 per cent from December to the lowest since September 2006 and imports tumbled 6.7 per cent to lowest since March 2005.

Meanwhile, a second report showed US import prices fell less than expected in February as imported petroleum prices rose for the first time since July. Import prices slipped 0.2 per cent, the smallest decrease since July, after falling by a revised 1.2 per cent in January, the Labour Department said.

Total world trade is expected to fall this year for the first time since 1982 as businesses and consumers cut back on spending in response to bleak economic news.

Earlier this week, China reported that its exports plunged 25.7 per cent in February from a year earlier while imports declined 24.1 per cent.

On a year-to-year basis, US exports were down 16.4 per cent in January while imports were 22.8 per cent lower, the Commerce report showed. The monthly trade deficit has narrowed 39.1 per cent over the same period.

In a sign of the bleak conditions facing the world’s automakers, both US imports and exports of autos and auto parts were the lowest since July 1998.

US exports of food, feeds and beverages were slightly higher in January, but other major categories such as consumer goods, capital goods and industrial supplies and material all showed declines.

On the import side, all major categories were lower with another drop in monthly oil prices to $39.81 per barrel cutting the value of US crude oil imports to $11.9 billion, the lowest since February 2005.

Oil higher before OPEC meet

2009-03-14T09:41:00.000-07:00

Saturday, March 14, 2009
LONDON: Oil prices rose on Friday after soaring a day earlier as the market eyed further possible cuts to OPEC’s output amid tumbling global demand for energy, traders said.

New York’s main futures contract, light sweet crude for delivery in April, climbed 41 cents to $47.44 a barrel ahead of a meeting of the Organisation of Petroleum Exporting Countries in Vienna on Sunday. In London, Brent North Sea crude for April climbed 70 cents to $45.79 a barrel, having risen almost $4 on Thursday.

OPEC on Friday expressed its fears about low oil prices, which have tumbled from record heights of above $147 a barrel last July as a vicious global economic downturn slams demand for energy.

Meanwhile global oil demand is falling on a surprisingly sharp drop in US and Russian consumption, the IEA said on Friday.

Oil rebounds above $43, looks to OPEC meeting

2009-03-13T09:38:00.001-07:00

LONDON: Oil rose more than $1 to above $43 a barrel on Thursday encouraged by strong loan data from China, which investors speculated could feed through into economic growth, and ahead of an OPEC meeting. US light crude rose $1.21 to $43.54 a barrel by 1540 GMT. London Brent crude gained 70 cents to $42.10. On Wednesday, oil fell more than 7 per cent as a bigger than expected increase in US crude oil inventories and a slump in Chinese oil imports triggered a wave of selling. Now traders have focused on news of higher than expected Chinese lending and the meeting of ministers of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna on Sunday. The producer group, the source of about a third of global crude oil supply, is widely expected to talk about compliance with its existing output cuts rather than further reductions.

Gold rises

2009-03-13T09:37:00.004-07:00

LONDON: Gold jumped more than 2 per cent on Thursday, boosted after the Swiss National Bank sold francs against the euro and raised the spectre of a race to devalue major currencies. Spot gold rallied to a high of $930.45 and was quoted at $923.45/924.95 an ounce at 1444 GMT from $906.65 late in New York on Wednesday.

Hotter Indian summer to boost cool drinks, sugar sale

2009-03-13T09:37:00.003-07:00

Friday, March 13, 2009
MUMBAI: Rising temperatures across the sub continent promises a hotter Indian summer than the last, boosting sales of beverages and ice-cream and making sugar costly.

Most parts of the country recorded temperature 2-4 degrees Celsius above normal in the last 1-ž months, and in certain places it exceeded 40 degrees C in February, weather data showed. And February is considered a winter month.

“We don’t give forecast for a long period. At present it (temperature) is going slightly above normal,” said A B Mazumdar, deputy director general meteorology, India Meteorological Department.

“Since mid-February we have been feeling the heat. This will increase demand from ice-cream and beverage makers,” said Ashwini Bansod, a senior analyst at MF Global Commodities India Ltd. “Besides, demand will rise from unorganised sector like lassi makers as well.” Lassi is sweetened yogurt served at street corners in Northern India in the summers.

Cold drink and ice-cream makers are big buyers of the sweetener and usually step up purchase in summer months.

“Soft drinks still have a strong seasonality curve in India, a warm climate should help our business further,” said a spokesman of Coca-Cola India. The Indian arm of the world’s largest soft drink maker, Coca-Cola Co, saw sales climb 28 per cent on year in the December quarter.

Both Coca-Cola and rival PepsiCo India, the Indian arm of PepsiCo Inc, have been aggressively expanding their base in rural areas along with urban pockets to drive sales.

A thriving 750 billion rupees beverage market boosted sugar consumption in India from about 16 million tonnes in 2000/01 to an estimated 23 million tonnes in 2008/09.

India’s farm minister said sugar output this year may be about 16.5 million tonnes, lower than earlier expectations of 18 million tonnes and much below last year’s estimated output of about 26.5 million tonnes. “Spot prices have to rise. They have to deal with situation of limited supplies. They may rise by 2-3 rupees per kg,” Bansod said.

“Demand from beverage makers has risen since last week. This year we are expecting higher offtake from cold drink companies,” Ashok kumar U Jain, a trader and president of the Bombay Sugar Merchants’ Association said.

Gates is world’s richest as recession shrinks billionaires

2009-03-13T09:37:00.001-07:00

Friday, March 13, 2009
NEW YORK: US tycoons are back on top with Microsoft founder Bill Gates again the world’s richest man in a year when even billionaires felt the heat of the global recession, Forbes magazine said on Wednesday.

The wealthy few did not escape big shocks this year, with net worth on the list of 793 billionaires, down from 1,125 billionaires in 2008, plummeting to $2.4 trillion from $4.4 trillion, Forbes said.

The annual rich list put Gates back on top with a net worth of $40 billion, although he saw his bank balance lose $18 billion over the last 12 months. In second came investor Warren Buffett with $37 billion, despite losing $25 billion this year in the value of his Berkshire Hathaway shares.

Also losing $25 billion, Mexican telecoms king Carlos Slim still managed to come in third with $35 billion. The US surge sent billionaires from India, Russia and Turkey into retreat.

US rich fill 10 of the 20 top spots and New York replaced Moscow as home to most billionaires, with 55 to 27. London comes in second with 28. Russia, where wealth is closely tied to commodity prices, lost two thirds of its billionaires, down to 32.

Two Indians appear in the top 20, but not one from Russia, which had four in the previous year’s list.

New York Mayor Michael Bloomberg was notable as the only top 20 member to see a net gain. That was not because of his salary, which is a symbolic dollar a year, but thanks to re-evaluation of Bloomberg financial news agency after the mayor bought a 20pc stake from Merrill Lynch last year for $4.5 billion.

Madoff behind bars after pleading guilty to fraud

2009-03-13T09:35:00.000-07:00

Friday, March 13, 2009
NEW YORK: Wall Street conman Bernard Madoff was led handcuffed to jail Thursday after pleading guilty to tricking thousands of people out of billions of dollars in one of history’s biggest financial scams.

Madoff, 70, told a packed New York court he was “deeply sorry and ashamed”

for the decades-long Ponzi scheme and the former financial titan and chairman of the Nasdaq stock market now looks likely to die behind bars.

He faces a maximum sentence on June 16 of 150 years after pleading guilty to all 11 counts of fraud, perjury and theft. Prosecutors also want to track down an astounding 177 billion dollars they say passed through Madoff’s hands.

Judge Denny Chin asked Madoff, wearing a grey suit, dark tie and white shirt, how he would plead.

“Guilty,” Madoff replied.

Defence lawyers said the silver-haired money manager should be allowed to remain free on bail in his seven-million-dollar Manhattan apartment until sentencing.

But Chin responded: “It is my intention to remand Mr Madoff,” triggering applause from victims who had gathered in the courtroom. Federal marshals then handcuffed Madoff behind his back and led him away.

Madoff faces life in prison on 11 criminal charges

2009-03-12T09:08:00.002-07:00

Thursday, March 12, 2009
NEW YORK: Bernard Madoff, accused of an “unprecedented” $50 billion financial swindle, was charged on Tuesday with 11 criminal counts that could put him in prison for the rest of his life.

Madoff, 70, a former Nasdaq stock market chairman and money manager, is expected to plead guilty on Thursday, his lawyer said.

US prosecutors provided new details of the alleged fraud in court papers, saying Madoff’s crime spree lasted from “at least” the 1980s.

The government said in court documents it wants Madoff to forfeit all of the money and property that can be traced back to the alleged fraud, a sum it estimated at more than $170.8 billion. Prosecutors did not say how they arrived at that figure. They said the investigation is continuing. No one else has been charged since Madoff was arrested three months ago.

“The charges reflect an extraordinary array of crimes committed by Bernard Madoff for over 20 years,” Acting US Attorney Lev Dassin in Manhattan said. “While the alleged crimes are not novel, the size and scope of Madoff’s fraud are unprecedented.”

Madoff was charged with securities fraud, mail fraud, wire fraud, three counts of money laundering, making false statements and perjury among other charges, according to the court documents. He faces up to 150 years imprisonment, according to sentencing guidelines.

Iran says OPEC could accept Russia as member

2009-03-12T09:08:00.001-07:00

Thursday, March 12, 2009
TEHRAN: Iran’s oil minister suggested OPEC would accept Russia as a member if Moscow wanted to join the 12-member oil producers’ group, the semi-official Fars News Agency reported.

Gholamhossein Nozari, speaking a few days before the cartel is due to meet in Vienna on March 15, also reiterated a call for more cooperation between OPEC and non-OPEC countries. Iran is the world’s fourth-largest oil producer.

Oil prices have plunged about $100 a barrel since a peak of $147 in July as a global economic downturn hit fuel demand, despite a series of production cuts by the Organisation of the Petroleum Exporting Countries in the last six months.

Russia is the world’s second-largest oil exporter. “The ground is ready in OPEC to accept Russia as a new member, but, of course, countries request membership by evaluating and considering their own interests,” Fars quoted Nozari as saying late on Tuesday. He did not elaborate.

In December, Russian Deputy Prime Minister Igor Sechin said his country may choose to decide to become an OPEC member in the future as it seeks to broaden cooperation with the group.

“Our message is that non-OPEC (countries) should join OPEC (in helping the market) and we emphasise that a price lower than the current one does not have a justification at all and it stops development,” Nozari said, according to Fars.

“It is not logical that OPEC cuts its exports and non-OPEC (countries) pursue their interests,” he was quoted as saying during a visit to southwestern Iran.

This month Nozari said he did not expect a further OPEC reduction decision in Vienna after Iran had previously suggested OPEC could impose more curbs. He did, however, call for a mechanism to underpin prices.

The group has already agreed to cut production by 4.2 million barrels per day since September, and a Reuters’ survey found that members have met 81 per cent of their output reductions as of last month.

Deflation worries India as growth slows

2009-03-12T09:07:00.001-07:00

Thursday, March 12, 2009
NEW DELHI: It was less than a year ago that Indians watched inflation shoot to dizzying 13-year highs but now they are worried about deflation as growth slackens in Asia’s third-largest economy.

Deflation, in which falling prices prompt consumers to delay buying, deepening a downturn, has become a growing concern across the globe as demand for goods sinks.

India’s weakening inflation is the symptom “of a deeper malaise” with an “adverse environment” for jobs, salaries and business prompting a fall in prices, HDFC Bank Chief Economist Abheek Barua said. Inflation has tumbled from 12.91 per cent last August to 3.03 per cent, partly due to a precipitous slide in the global price of oil and other commodities. Now a slowing domestic economy is kicking in as the global financial crisis hammers exports.

Inflation will reach zero by the end of this fiscal year in March, according to Axis Bank economist Saugata Bhattacharya. Some economists forecast deflation could then set in and last until at least October. It would mark India’s first bout of deflation since March 1976, according to central bank records.

“Wholesale price levels are showing absolute declines unprecedented since the start of the (inflation data) series in 1988,” Goldman Sachs economist Tushar Poddar said. India uses the Wholesale Price Index to measure inflation because it has a broader basket of goods.

“We think deflation will be a much bigger risk for the economy in the rest of 2009, due to ongoing demand destruction and commodity price collapses,” Poddar said in a recent research note.

Gold slides 2pc

2009-03-10T01:02:00.003-07:00

LONDON: Gold fell nearly 2 per cent in Europe on Monday as United States equities opened higher, reversing losses seen in Europe and Asia and diverting investment from the precious metal.Spot gold slipped to a low of $922.15 an ounce, and was at $924.10/926.10 an ounce at 1423 GMT from $939.60 late in New York on Friday.

Oil rises above $47 on chance of OPEC cut

2009-03-10T01:02:00.001-07:00

Tuesday, March 10, 2009
LONDON: Oil rose above $47 on Monday after renewed buying on speculation OPEC may cut output again at its Sunday meeting. US crude for April delivery rose $1.62 to $47.14 by 1612 GMT. London Brent crude was up 2 cents at $44.87.

OPEC Secretary-General Abdullah al-Badri said the 12-member producer group would consider reducing output again at the meeting as it tries to counter downward pressure on oil prices from falling demand.

“All options are on the table,” he told reporters in Qatar when asked if OPEC, which pumps more than a third of the world’s oil, would announce another reduction in supply at its meeting in Vienna.

Saudi Arabia wants OPEC to discuss stricter compliance with existing supply curbs, a Saudi-owned newspaper reported on Monday, and cited sources as saying the group should not discuss another cut. OPEC has already promised to cut oil production by a total of 4.2 million bpd from the production levels seen in September.

Hotel occupancy rates drop in Dubai

2009-03-10T01:01:00.003-07:00

Tuesday, March 10, 2009
DUBAI: Hotel occupancy rates in Dubai dropped to 79 per cent in 2008, the lowest level since 2004, with a decline in demand from Europe due to the financial crisis, a consultancy firm said on Monday.

Hotel occupancy last year was five per cent lower than in 2007, which saw rates soar to 84 per cent, Jones Lang LaSalle (JLL) said in a report. “Over the period between July and December 2008, occupancy rates fell by approximately seven per cent,” JLL said.

“This came as a result of the new supply in the market, as well as the softening in demand from key European source markets brought about by the dollar appreciation and the financial crisis.”

Dubai has embarked on extensive construction projects, boasting three palm-shaped islands off its coast as well as what is tagged as the world’s tallest tower and the seven-star sail-shaped Burj Al-Arab hotel.

The emirate formerly said it plans to attract 15 million tourists by 2015 but the global economic downturn has forced many tourists around the world to scale back their travel plans. Several hospitality and leisure companies in Dubai, which has benefited from an oil-fuelled economic boom over the past six years, have put on hold or cancelled many mega projects.

Pharmaceutical giants announce $41bn merger

2009-03-10T01:01:00.001-07:00

Tuesday, March 10, 2009
WASHINGTON: US pharmaceutical giants Merck and Schering-Plough announced their merger early on Monday in a stock-and-cash transaction valued at $41.1 billion.

The combined company will bear the name Merck after the transaction is completed. The deal was unanimously approved by the boards of directors of both conglomerates, a joint statement said.

Under the terms of the agreement, Schering-Plough shareholders will receive 0.5767 shares and $10.50 in cash for each share of Schering-Plough. Each Merck share will automatically become a share of the combined company, which will be headed by Merck chairman Richard Clark.

When the transaction is complete, Merck shareholders are expected to own approximately 68 per cent of the combined company and Schering-Plough shareholders 32 per cent.Last year’s combined revenue of the two companies totaled $47 billion. The merged entity is expected to have a cash and investments balance of approximately eight billion dollars.

Merck expects to achieve cost savings of approximately $3.5 billion annually beyond 2011 as a result of the transaction.The merger will be financed with a combination of $9.8 billion from existing cash balances and a $8.5 billion loan by investment bank JP Morgan.

“We are creating a strong, global healthcare leader built for sustainable growth and success,” said Clark said in a statement. “The combined company will benefit from a formidable research and development pipeline, a significantly broader portfolio of medicines and an expanded presence in key international markets, particularly in high-growth emerging markets.”

He added that the merger will allow the new enterprise to invest in strategic opportunities and create “meaningful value” for shareholders.

Fred Hassan, chairman and CEO Schering-Plough, said the corporation was joining forces with Merck, its long-term partner in a cholesterol-fighting joint venture, to create a new leader in the pharmaceutical industry.

In India’s gloomy economy, diamond jobs are not forever

2009-03-10T00:59:00.001-07:00

Tuesday, March 10, 2009
SURAT: For Jaysukhbhai Patel, a job cutting diamonds in the western Indian city of Surat was the ticket to a better life for him and his family of four.

Last November, Patel’s ticket expired when the small factory he worked in was shut like hundreds of others in India’s diamond hub, as demand for the gems dipped in the United States and Western Europe, leaving more than 100,000 workers without jobs.

“I have worked in this industry for nearly 30 years, and I have seen many ups and downs,” said Patel, father of three children who now works in a local library for less than half his previous wage of about 4,000 rupees ($78) a month. “But I have never seen factories being shut like this.”

The woes of Surat reflect a wider downturn for India’s export sector, which accounts for a fifth of Asia’s third largest economy. Exports have fallen four months in a row and the latest data available shows a slide of 16 per cent in January.

The job losses in one of India’s biggest earners come weeks before a general election that is also a potential hot potato for the Congress-led government.

During the boom years, an estimated 800,000 workers, mostly from the Saurashtra region of western Gujarat state, spent 10-12 hours a day in thousands of factories and workshops, cutting and polishing tiny rough diamonds for export.

Now mostly silent and shuttered, the factories are victims of a global financial crisis that has hit demand for the gem that defined this city for decades.

India processes about seven in every 10 of the world’s diamonds, mostly cheaper stones less than a carat. Surat is the heart of the industry, built on the skills of its craftsmen, its cheap migrant labour and its legendary entrepreneurial spirit.

“People have worked hard to build this business for the last 30-40 years, but this downturn has made people risk-averse and afraid to trust their own people,” said Anoop Mehta, president of Bharat Diamond Bourse, the exchange in Mumbai.

Tighter liquidity and a weaker rupee, which lost 19 per cent against the dollar last year and has slipped more than 5 per cent this year already, are also weighing on the industry, he said.

“What they’d earned over several years has been lost in a flash. This business runs on trust, so when payments are delayed, when orders are cancelled, it shakes your confidence.”

At about $11 billion, India’s exports of cut and polished diamonds is down about 3 per cent so far this fiscal year from April, the Gem & Jewellery Export Promotion Council (GJEPC) said.

Several diamond units have abandoned their business entirely, installing textile machinery or taking on other work.

“Gujaratis are very entrepreneurial and street-smart; they will quickly adapt to any situation,” said Vasant Mehra, chairman of GJEPC, the main industry body. “But this is an extreme situation, and every industry has been affected. So I do not know how they will fare.” Gujarat’s Hindu-nationalist Chief Minister Narendra Modi has criticised the government for not doing enough to help workers. Leading Congress politician Rahul Gandhi, touted as a potential prime minister, has visited Surat in a sign of the growing political weight of job losses in the export sector ahead of the April-May general election.

It is hard to come by accurate data on the number of factories or workers employed in Surat, as most units are small and do not maintain employee records, paying workers per diamond. Estimates range from 500,000 to 800,000 workers in 6,000 to 10,000 factories and workshops. The industry estimates that about 30-40 per cent of factories have shut. More than 70 workers have committed suicide since the downturn, welfare organisations said.

Small traders, who do deals sitting on their parked motorbikes in the heart of the city’s business district, now have time on their hands to discuss cricket scores.

The industry has appealed to the state and the central bank for assistance, and has also put together an emergency package of about 5 million rupees for workers. But that has not been of much comfort to Patel.

“For so many years we’ve worked 12-14 hours every day for our factory owners. Now they are not helping us,” he said. “The assistance they are offering is too little. And how can I learn a new trade at this age?” Surat and its diamond workers are not alone. A Labour Ministry survey has estimated that India’s small-business sector, which accounts for more than 60 per cent of economic activity, lost about half a million jobs in the October-December quarter.

Japanese workers demand pay rise amid recession

2009-03-07T21:50:00.004-08:00

Sunday, March 08, 2009
TOKYO: Thousands of workers rallied at a Tokyo park on Saturday, demanding companies keep jobs and increase salaries to stimulate recovery from a deepening recession.

“Secure regular pay rises! Have serious talks with management about rises in consumer prices,” Tsuyoshi Takagi, President of the Japan Trade Union Confederation, said in an address to kick-start the rally. “If we accept their argument that there are no rises in prices, our work conditions will face big trouble ahead,” he said.

Labour unions have argued salaries should be increased in accordance with price rises, on top of seniority-based annual pay rises. Takagi said it was “nothing but outrageous” that some big companies were now considering skipping annual pay rises based on the length of service.

The confederation, better known as Rengo, is an umbrella organisation grouping trade unions across the nation with a membership of more than six million. The workers who got together at the park in central Tokyo then marched in the capital with banners reading “Pay rise is the strongest economic stimulus” and “Never let workers get fired!”

Pair accused of plotting to steal tyre secrets

2009-03-07T21:50:00.003-08:00

Sunday, March 08, 2009
WASHINGTON: Two engineers for a competing tire company with contracts with China were arrested Friday and charged with conspiring to steal trade secrets from Goodyear Tire & Rubber Co.

Clark Alan Roberts, 46, and Sean Edward Howley, 38, both engineers for Wyko Tire Technology Inc in Greenback, Tennessee, were arraigned Friday before a federal magistrate in Knoxville, Tennessee, after being named in a 12-count indictment issued Tuesday.

According to the indictment, Wyko got a contract in 2007 with Chinese tire manufacturer Haohau South China Guilin Rubber Co Ltd to supply equipment to make large off-road tires.

The indictment charges that Roberts and Howley visited a Goodyear plant in Topeka, Kansas, and while lying about the purpose of their visit, surreptitiously took cell phone photos of proprietary equipment used in making the large off-road tires.

Federal officials charged that the men e-mailed the photos to employees of a Wyko subsidiary located in England, who used them to complete a similar piece of machinery for the Chinese contract.

They were charged with conspiracy, theft of trade secrets, and wire fraud. Federal officials said each man could face a maximum of 150 years in prison and $2.75 million in fines if convicted of all charges. Wyko executives did not immediately respond to requests for comment.

Dominican bank president gets 10 years for fraud

2009-03-07T21:50:00.001-08:00

Sunday, March 08, 2009
SANTO DOMINGO, Dominican Republic: The former president of one of the largest banks in the Dominican Republic was sentenced Friday to 10 years in prison for fraud and ordered to pay damages.

Pedro Castillo, who presided over Banco del Progreso from 1999 until late 2005, was convicted last year. His attorney, Jorge Luis Polanco, said the sentencing was severe, but that it was unclear whether Castillo would file an appeal.

Board members at Banco de Progreso dismissed Castillo in 2005 after evidence of fraud began to surface. The bank was still operating in the early 2000s despite a series of multibillion-dollar fraud cases that led to the collapse of other major banks.

In early 2006, the board accused Castillo of using property and real estate in New York, Florida and Colorado to launder $295 million in funds taken from the bank, its parent group and other businesses. The board later injected $412 million into the bank to keep it afloat.

Fraud allegations against Castillo surfaced a couple of years after several executives with Banco Intercontinental, Banco Nacional de Credito and Banco Mercantil were accused of an estimated total $3 billion in fraud cases. Several of them have been found guilty and ordered to pay tens of thousands of dollars in damages.

The crisis caused high inflation, devalued the peso and plunged the country into economic turmoil. It also helped sweep President Leonel Fernandez into power in 2004 on promises of economic reform.

Global recession could last till end 2010 or longer: report

2009-03-07T21:49:00.004-08:00

Sunday, March 08, 2009
NEW DELHI: The US professor nicknamed “Dr Doom” for forecasting the financial crisis has said the global recession will last all of this year and probably next, India’s Mail Today reported Saturday.

New York University Professor Nouriel Roubini said that in the best-case scenario, the recession will continue through 2010 in advanced economies while job losses will persist for an additional year, the paper reported. He said world governments are falling behind the curve in tackling the crisis with “policymakers moving in the right direction, but (doing) too little too late.”

Speaking at a New Delhi conference, Roubini warned that the US, Europe and Japan must “get their act together” to avoid the global economy sinking further. “People were hoping it would be a V-shaped recession, a sharp fall, followed by an equally quick recovery,” he said. “But we are in the middle of an ugly U-shaped recession,” he said Friday.

Roubini said the bottom of the ‘U’, the length of time the world economy will continue to contract, would last a minimum of three years starting from December 2007.

But he said there was a “one-in-three chance” that recession would turn into an ‘L’, a prolonged period of stagnation or shrinking output, coupled with falling prices as demand dries up.

As early as 2005, Roubini said US home prices were riding a speculative wave that would soon sink the economy, but was dismissed as a doomsayer. In Delhi, he said the problems of the financial system and financial institutions were getting worse, but that the outlook could be improved by governments taking charge of insolvent banks, cleaning them up and then selling them to private investors.

“People say when the US sneezes, the rest of the world catches cold. In this case, the US is just not sneezing, it has a severe case of chronic pneumonia.” “We all sink or swim together,” he said, adding there is no way policy action in emerging economic giants India and China can pull the global economy out of the slump.

Fraudster in Britain jailed after life of luxury

2009-03-07T21:49:00.003-08:00

Sunday, March 08, 2009
LONDON: A British fraudster who enjoyed a lavish life of Ferrari cars and executive jets paid for with unsuspecting investors’ cash was jailed for four and half years on Friday.

Marc Duchesne, 47, from East Finchley in north London, “peddled” lies to his wealthy victims, posing as a hedge fund manager and reassuring them their money was completely safe while secretly squandering it, prosecutors said.

His trial at Southwark Crown Court in south London heard that by the time he was caught he had blown almost all of the 15 million pounds (16.5 million euros, $17 million) invested. Duchesne collected a string of Ferraris including a rare Enzo supercar, and also owned a chauffeur-driven Rolls-Royce Phantom, a Bentley Arnage, and several huge Hummers.

He also had several high-powered motorbikes, gave a friend a speedboat as a gift, spent 60,000 pounds on cosmetic dentistry and frittered away one million pounds on antiques. Duchesne, who pleaded guilty to one count of conspiracy to defraud, also spent substantial sums on executive jets to travel around the world.

“By that conspicuous display of wealth you persuaded others, including investors, you were a highly successful hedge fund manager,” said Judge Michael Gledhill. “In fact you were quite simply a common fraudster.

17th US bank fails

2009-03-07T21:49:00.001-08:00

Sunday, March 08, 2009
WASHINGTON: US regulators closed Freedom Bank of Georgia bank on Friday, the 17th US bank to fail this year as the struggling economy and falling home prices take their toll on financial institutions.

The Federal Deposit Insurance Corp said Freedom Bank of Georgia had $173 million in assets and $161 million in deposits. The failure is expected to cost the FDIC deposit insurance fund an estimated $36.2 million.

Northeast Georgia Bank agreed to assume the deposits of Freedom Bank of Georgia, whose four branches will reopen on Monday as branches of Northeast Georgia Bank. Customers can access their money over the weekend by check, teller machine or debit card, the FDIC said.

In 2008, 25 US banks were seized by officials, up from only 3 in 2007.

The biggest US bank failure ever occurred in September with the demise of Seattle-based Washington Mutual.

Stanford receiver cuts 1,000 US jobs

2009-03-07T21:48:00.002-08:00

Sunday, March 08, 2009
HOUSTON: The court-appointed lawyer overseeing the assets and operations of Texas billionaire Allen Stanford’s companies on Friday told 1,000 US employees their jobs have been terminated and said most of the businesses’ operations will be discontinued.

The cuts represent about 85 per cent of Stanford Financial Group’s US employees, US receiver Ralph Janvey said in a statement.

The US Securities and Exchange Commission has charged Stanford, his two top aides and three of his companies with a long-running $8 billion Ponzi scheme involving high-yield certificates of deposit. A small number of US employees will be retained to help wind down Stanford Financial Group’s operations, Janvey said.

Stanford’s Houston buildings, where the company has about 500 employees, appeared empty on Friday, with parking garages empty and only security guards visible in the lobbies. Mark Groesbeck, a financial adviser with Stanford in Houston, said he had not heard from Janvey about the status of his job but there were rumours of an conference call for employees on Monday.

Fed officials find flaws in credit crisis response

2009-03-07T21:48:00.001-08:00

Sunday, March 08, 2009
WASHINGTON: Federal Reserve officials on Friday said authorities may have exacerbated the financial crisis by responding inconsistently and indecisively to events, and one suggested the government should be quicker to take over failing institutions.

Federal Reserve Bank President of the Kansas City, Thomas Hoenig criticised authorities for reacting too slowly to the problems plaguing financial institutions, while Head of the Philadelphia Fed Charles Plosser, said the Fed must be better prepared to handle the failure of some institutions.

In a harsh assessment of the government’s handling of the worsening upheaval among financial institutions, Hoenig said authorities had been quick to provide liquidity and public capital to buoy struggling firms, but have not formulated a clear plan to address specific problems, including insolvency.

“We understandably would prefer not to ‘nationalise’ these businesses, but reacting as we are, we nevertheless are drifting into a situation where institutions are being nationalised piecemeal with no resolution of the crisis,” Hoenig said in a speech in Omaha, Nebraska.

“We have been slow to face up to the fundamental problems in our financial system and reluctant to take decisive action with respect to failing institutions,” he said.

Plosser, meanwhile, said the government’s varied reactions to problems at major financial institutions have exacerbated market volatility. “The financial problems at Bear Stearns, AIG, and Lehman Brothers elicited different responses from government, which contributed to uncertainty. Arguably, this uncertainty in itself became a source of systemic risk,” Plosser said on Friday in New York at a conference sponsored by New York University’s Stern School of Business.

The central bank should develop a clearer procedure for determining what institutions are so big that their downfall threatens the entire financial system, and how to wind them down in an orderly manner in a crisis, he said. Plosser is not a voter on the Fed’s interest rate-setting committee this year. “Failures are an inevitable consequence of a dynamic financial system,” he said.

Financial authorities have come under increasing fire as hundreds of billions of dollars in loans and capital infusions into distressed institutions have failed to halt the steep economic downturn, which has accelerated in recent weeks.

The Obama administration in February announced a $350 billion bank rescue plan that includes stress tests for 19 large banks, but that plan has been criticised for lacking detail. The Fed and the Treasury this week launched a facility aimed at supporting consumer lending that officials say will help unlock frozen credit markets.

The announcements, however, have failed to instil confidence. US stock markets have slid to 12-year lows and the Labour Department on Friday said unemployment has spiked to 8.1 per cent, the highest rate since 1983. The government has in recent days been forced to provide tens of billions of dollars in additional emergency funding for insurer American International Group and Citigroup Inc.

Hoenig, who is not a voter on the Fed’s interest rate-setting panel this year but will be in 2010, echoed some of the frustrations that lawmakers and others have expressed about efforts to stem the financial crisis.

“Over the past year, the federal government and financial policy makers have enacted numerous programs and committed trillion of dollars of public funds to address the crisis,” he said. “And still the problems remain. We have yet to restore confidence and transparency to the financial markets.”

The New York Fed Head, William Dudley on Friday said the US central bank will do whatever is necessary to keep financial markets working, but warned of more shocks ahead, and said companies will continue to seek to remove debt from their balance sheets for a while. “I don’t want to give you the impression that all will be well soon, that seems unlikely,” Dudley said in a speech to the Council on Foreign Relations.

“It will take time for the deleveraging process to come to an end and, as the recent employment data have underscored, the economy has considerable momentum to the downside,” he said. “The Federal Reserve is prepared to do whatever it takes, within the bounds of its legal authority, to keep markets working and credit available and affordable,” said Dudley. The head of the New York Fed is a permanent voter on the policy-setting committee.

Dudley said there was no “magical number” at which the Fed’s balance sheet would become too large. But, he said, buying long-term Treasury securities might not be the best step for the central bank to take at this time. “Judging from the Fed’s action, the Fed has judged buying long-term Treasuries is not the most efficient means of easing financial market conditions,” he said.

The Fed is expected to keep interest rates low well into 2010 and possibly longer, a Reuters poll showed on Friday, even though the recession is seen as likely to end later this year. The Fed lowered benchmark rates to a range of between zero and 0.25 per cent in December.

Britain may get 77pc Lloyds stake

2009-03-07T21:47:00.000-08:00

Sunday, March 08, 2009
LONDON: Britain will get a stake of up to 77 per cent in Lloyds Banking Group after agreeing a deal to cap its losses at 260 billion pounds ($370 billion) of risky assets, the struggling bank said on Saturday.

Lloyds will pay a 15.6 billion pound fee to participate in the deal, and will take the “first loss” of up to 25 billion pounds on the assets. Thereafter, the government will assume 90 per cent of any losses on the value of the assets.

The deal will see the government’s stake in Lloyds rise to 65 per cent from 43 per cent if shareholders do not take up an offer to buy 4 billion pounds of shares. The government’s stake could rise to 77 per cent if ‘B’ shares are converted, but its voting stake will be capped at 75 per cent.

Lloyds is following Royal Bank of Scotland (RBS) in putting billions of pounds of assets into the scheme in return for handing the government a bigger stake, as policymakers give unprecedented support to the banks to try to get lending flowing again. The plan will limit the losses banks could suffer if the economy continues to deteriorate and loans sour.

It will slash the risk on assets Lloyds holds and boost its core tier 1 ratio to 14.5 per cent from 6.4 per cent. Eric Daniels, Lloyds chief executive, said the deal “substantially reduces” the bank’s risk profile.

S Korea, Indonesia seek cooperation on financial crisis

2009-03-07T21:46:00.000-08:00

Sunday, March 08, 2009
JAKARTA: South Korean President Lee Myung-bak called on Saturday for closer cooperation with Indonesia to help counter the impact of the global financial crisis on two of Asia’s biggest economies.

Both nations have been suffering from the crisis, with exports diving and the won and rupiah currencies the worst performers in the region this year, down about 20 per cent and 9 per cent on the dollar respectively.

“Cooperation between the two countries must be intensified during the global economic downturn as the two countries are members of the G20,” Lee told a gathering of business executives during a trip to Indonesia.

The two are due to attend next month’s G20 meeting in London. According to South Korea’s Yonhap News agency, Lee had earlier told South Korean business leaders in Indonesia that his government had ways to stabilise the won. “Fundamentally, I think the government has elements to stabilise (the currency),” Lee was quoted by Yonhap as saying.

South Korea and Indonesia are involved in plans to enlarge a regional currency swap pact among Southeast Asian nations, along with China and Japan, to $120 billion from $80 billion.

US private sector cuts 697,000 jobs

2009-03-05T08:11:00.002-08:00

Thursday, March 05, 2009
NEW YORK: US private sector job losses accelerated in February, according to a report by ADP Employer Services that suggests hefty employment declines are on the way in the government’s payrolls report due on Friday.

ADP said on Wednesday that private employers cut 697,000 jobs in February versus a revised 614,000 jobs lost in January. The January job cuts were originally reported at 522,000.

It was the biggest job loss since the report’s launch in 2001 and showed the misery of declining employment spreading broadly and evenly throughout the economy.

The service sector, which often resists the grip of recession longer than other areas, accounted for more than half of the total losses, reflecting the rapid deterioration of the economy in recent months.

“None really escaped the sword here,” Joel Prakken, chairman of Macroeconomic Advisers, whose firm jointly developed the ADP report, said about the service sector.

Economists had expected 610,000 private-sector job cuts in February, according to the median of 23 forecasts in a Reuters’ poll. The forecasts in the poll ranged widely from a drop of 730,000 to losses of 500,000.

Still, on Wall Street, stock futures held onto earlier gains. Government bonds, which generally benefit from weak economic data, extended their losses.

“I was actually expecting it to be a little worse. Every month we’ve had data come in worse than expected,” said Dan Faretta, senior market strategist at Lind-Waldock in Chicago.

“Until we get positive news about housing or industry or anything like that, the numbers will continue to get worse. The numbers keep weighing on all the markets.”

Economists expect Friday’s payrolls report, which gives a more comprehensive picture of the labour market, to show the economy shed 648,000 jobs in February.

Asian budget airlines launch price war

2009-03-05T08:11:00.001-08:00

Thursday, March 05, 2009
SINGAPORE: Asian low-cost airlines are offering dirt-cheap tickets to perk up travel during the summer holidays amid the global economic downturn.

Singapore-based Tiger Airways, which flies to destinations in Southeast Asia, Australia and China, announced on Tuesday it would launch summer fares starting at about US$16 US, including taxes.

The carrier, which is 49 per cent owned by Singapore Airlines, said in a statement it would offer its “biggest ever network of seats” and was adding new destinations for its summer schedule from March 29 to October 24.

“Tiger Airways is bucking the global aviation trend,” the airline said, referring to declining passenger numbers for full-service carriers worldwide. Rosalynn Tay, managing director for Tiger Airways Singapore, said the airline would “demonstrate that we will continue to grow our business even in these difficult trading conditions.”

Jetstar Asia, another Singapore-based budget airline, said it had extended until August 16 a promotion to beat the cheapest price offered by rivals.

Under the promotion, should a traveller find another published online fare cheaper than the lowest available on www.jetstar.com, the airline will beat the price by 10 per cent if the customer makes an instant reservation by phone.

“The current economy makes it a tough operating environment where competition will be intense and fares will be under pressure,” Jetstar Asia’s commercial head Leslie Ng said in a statement.

“People are going for cheaper fares as they become more cost conscious and want to get value for money deals.”

Malaysian budget airline AirAsia also has its “take me away” promotion.

Among its offers is a one-way flight from Singapore to Bangkok starting from $43, inclusive of taxes, for travel from March 23 to September 11, according to its website.

Comparatively, a return flight to Bangkok on Singapore Airlines costs $337, inclusive of taxes. AirAsia is also offering a number of tickets starting from 26 cents for travel within Malaysia.

Indonesia’s Lion Air is selling a one-way trip from Singapore to Bali for as low as $5.80 for travel from June 1 to September 30, according to its website.

Thailand’s Nok Air is offering one-way fares for as low as 25 cents, excluding taxes and fees, for domestic flights for those travelling from May 15 to September 30, its website showed.

China hunts for Europe takeovers as stocks jump

2009-03-05T08:10:00.002-08:00

Thursday, March 05, 2009
LONDON: Chinese businesses hunted for takeover targets in Europe and bargain hunters pushed up flagging stock markets on Wednesday, as the economic crisis dealt more heavy blows to western companies and nations.

Unemployment soared to more than 10 per cent in Ireland, a once-booming Celtic Tiger economy badly hit by the downturn, while Australia reported its first quarterly economic contraction in eight years.

Following mass protests over the crisis last month, Prime Minister Brian Cowen said Ireland would have to adopt austerity measures “however difficult they may be and in the knowledge that they will not be painless for anybody.”

And there was more turmoil in eastern European states, where central banks lashed out at international warnings on the region saying they put local economies at “high risk,” and Hungary’s forint currency plunged to record lows.

Chinese state media meanwhile reported that a high-level business delegation will visit Europe this weekend to look for companies to buy up after a visit last month netted more than $13 billion (10.4 billion euros) in deals.

“We will be exploring opportunities for financial participation in European companies,” said Commerce Minister Chen Deming, who headed the just-returned mission to Europe charged with buying high-technology equipment.

China’s growing appetite for international mergers and acquisitions makes sound business sense, according to Li Jian, a researcher with the Chinese Academy of International Trade and Economic Cooperation.

“The global economic crisis allows Chinese companies, with their ample cash reserves, (to enter into) strategic cross-border partnerships with cash-strapped international companies,” Li told the Oriental Morning Post. But for Western companies, Wednesday brought more dismal results.

French bank Credit Agricole, France Telecom and Swiss cement maker Holcim saw profits badly hit in 2008, while British broadcaster ITV reported a net loss of $3.59 billion (2.87 billion euros) last year and cut 600 jobs.

“Current conditions in the advertising market are the most challenging I have experienced in over 30 years in UK broadcasting,” ITV chairman Michael Grade said in a results statement.

German sports equipment and clothing maker Adidas posted a profit rise of 16 per cent in 2008 but warned that business would be tougher this year. “We cannot ignore the unprecedented economic crisis all global businesses are facing today,” Adidas chairman and chief executive Herbert Hainer said.

There was positive movement on the markets however, with London’s FTSE 100 index of leading shares rising 1.42 per cent in the afternoon, while the CAC 40 in Paris soared 1.63 per cent and the Frankfurt DAX shot up 2.29 per cent.

Asian markets also soared as bargain hunters emerged after sharp falls. Tokyo’s benchmark Nikkei-225 index gained 0.85 per cent, Singapore rose 1.04 per cent, Hong Kong closed up 2.50 per cent and Shanghai skyrocketed 6.12 per cent on hopes that China will spell out more economic rescue measures this week.

The euro hit a three-month low against the dollar in London trading at $1.2517 as investors fled risky currencies after a sharp contraction in the Australian economy sent shockwaves through the markets.

Australia is now on the brink of recession after new data showed the economy shrank by 0.5 per cent in the last quarter of 2008, the first contraction in eight years as a China-driven resources boom screeches to a halt.

Oil leaps above $45 after US crude stocks drop

2009-03-05T08:10:00.001-08:00

Thursday, March 05, 2009
LONDON: US crude oil futures extended their gains to above $45 on Wednesday after stocks of crude in the United States declined unexpectedly and demand for gasoline rose.

Prices were also supported by further supply disruption in Nigeria, as well as more positive economic news from China. US oil futures for April delivery rose to $45.02, up$3.37, by 1612 GMT. London Brent crude rose $2.57 to $46.27 a barrel.

“Overall the numbers are very bullish again, gasoline remains the one bright spot in the market that can really pull the complex higher,” Chris Jarvis of Caprock Risk Management said. “Couple that with the composite of economic news out of China overnight and this is really setting the stage for the energy complex to move higher if the equities market can maintain themselves.”

Weekly US inventory data showed stocks of crude oil in the world’s top consumer declined by 700,000 barrels versus expectations of a 1.2 million barrel build. Demand for gasoline over the past four weeks was up 2.2 per cent from a year ago.

An oil leak and a fire on a pipeline in central Russia have halted flows to the Black Sea port of Novorossiisk and exports were unlikely to resume in the next three-to-four days, a port official said. Russia, the world’s second-largest oil exporter after Saudi Arabia, sends more than a quarter of its oil exports via the Black Sea ports of Novorossiisk, Odessa and Yuzhny.

India central bank slashes key interest rates

2009-03-05T08:09:00.000-08:00

Thursday, March 05, 2009
MUMBAI: India's central bank cut key interest rates by half a percentage point in a surprise move Wednesday, citing deteriorating global economic conditions and growing signs of a slowdown at home.

The Reserve Bank of India said it was cutting the benchmark repurchase rate — the rate at which it makes short-term loans to commercial banks — from 5.5 percent to 5 percent, effective immediately.

It also cut the reverse repurchase rate — the rate it pays commercial banks on their deposits — from 4 percent to 3.5 percent.

"India's financial sector continues to be resilient in the face of global financial turmoil," the bank said in a statement. "India's growth trajectory has, however, been impacted both by the financial crisis and the follow-on of global economic downturn. This impact has turned out to be deeper and wider than anticipated earlier."

The cuts are intended to get commercial banks to lower interest rates on loans and mobilize their cash to fuel India's flagging economy.

India's economic growth skidded to 5.3 percent last quarter, after four years of near 9 percent growth. Exports have shrunk for four months running, business confidence is down, and industrial production declined 2 percent in December.

Overall export growth from April to January was 13.2 percent, compared with 24.2 percent during the same period last year, the bank said.

India's fiscal deficit means that, unlike China, it cannot spend its way out of the slump, and must rely heavily on monetary policy to stimulate the economy.

The Reserve Bank has been aggressive about cutting rates. In September, the repurchase rate stood at 9 percent and the reverse repurchase rate was 6 percent.

India also has trimmed taxes and promised to spend $4 billion since December. While those direct stimulus measures are meager by global standards, India has been spending heavily on loan waivers for poor farmers, fuel and fertilizer subsidizes, and increased pay for civil servants — all of which have quietly helped boost consumption.

Now, however, that spending is starting to take a toll on the budget. India's total deficit this fiscal year could hit 11.4 percent, up from 5.7 percent last year, according to ratings agency Standard & Poor's.

On Feb. 24, Standard & Poor's threatened to downgrade India's sovereign credit rating to junk, saying government spending in the run-up to national elections had made India's fiscal position "unsustainable."

The continuing flight of foreign investors and uncertainty about national elections in April and May have also battered Indian stocks, with the benchmark Sensex index down 15 percent this year.

That, in turn, has punished the rupee, which was worth less than $0.02 Wednesday.

Standard Chartered profits jump

2009-03-04T05:12:00.003-08:00

Wednesday, March 04, 2009
LONDON: Standard Chartered, the emerging markets bank, said on Tuesday that its net profit jumped a fifth to $3.41 billion (2.69 billion euros) in 2008, leaving it well-placed to tackle a slowdown in Asia.

Despite the lift in profits after tax, Standard Chartered was not immune to rising bad debts linked to the credit crisis, as it wrote off $1.79 billion in 2008, more than double the $818 million it wrote off in 2007.

The second-biggest British banking group by market value said it cut directors’ bonuses for 2008 by 10-25 per cent and imposed salary freezes on all senior managers.

“To deliver record results in this exceptional environment is a great achievement,” the bank’s Acting Chairman John Peace said in the group’s earnings statement.

Chief executive Peter Sands said the best way to continue delivering shareholder value was through Standard Chartered’s “rigorous focus on Asia, Africa and the Middle East” in addition to a “prudent approach to liquidity and capital” and “continued discipline in cost and risk management.”

Standard Chartered profits jump

2009-03-04T05:12:00.001-08:00

Toyota seeks govt-backed loan for finance arm

2009-03-04T05:11:00.002-08:00

Wednesday, March 04, 2009
TOKYO: Toyota Motor Corp has applied for a loan backed by the Japanese government to help its finance arm cut funding costs as the global crisis tightens access to credit, a company official said on Tuesday.

Toyota, facing an operating loss of $4.6 billion this business year, was seeking a loan of about $2.1 billion through its wholly owned car-loan financing firm Toyota Financial Services, public broadcaster NHK TV reported earlier.

Chronic fear of default is making low-cost funds harder to come by, especially in the United States, even for cash-rich companies such as Toyota.

“Toyota is not in danger. It’s out to get the lowest price for funding that the strength of its credit can get,” said Yasuaki Iwamoto, an analyst at Okasan Securities. “On the balance sheet, it doesn’t matter if the funds are private or public.”

The cost of debt at the world’s top automaker has gone up in the past year, with a five-year bond sold by Toyota Finance in December offering a subscriber’s yield of 1.248 per cent, up from 1.106 per cent for debt in the same maturity sold in April 2008.

Mio Sugito, an official at Toyota’s business management group, said Toyota Financial Services is in talks with the state-backed Japan Bank for International Cooperation for a loan to help cover rising credit costs. No decision has been made on the size of the loan, the timing or the currency denomination, she said.

Toyota is also considering applying for public support from other countries, she said, without elaborating.

With credit markets worldwide in turmoil, Toyota’s move may make it easier for other Japanese companies to follow suit and turn to state-backed loans prior to the closing of books for the business year at the end of March.

Japan said on Tuesday it plans to use some of its foreign exchange reserves to help Japanese companies exposed to the global credit squeeze.

Downturn to be considerably deeper than IMF forecast: OECD

2009-03-04T05:11:00.001-08:00

Wednesday, March 04, 2009
PARIS: The global economic downturn will be considerably deeper than even the International Monetary Fund forecast a month ago, the Organisation for Economic Co-operation and Development’s chief economist Klaus Schmidt-Hebbel told Reuters.

Further substantial cuts in interest rates by the European Central Bank and Bank of England are totally justified, he said in an interview. These were to be expected in response to the worst spell the economy has suffered since 1946, when military spending plunged after World War Two.

“The recession will deepen, there’s no doubt,” he said. “I think this quarter will be the worst quarter of all.”

On January 28, the IMF cut its forecast for global growth to 0.5 per cent in 2009 from an earlier prediction of 2.2 per cent. It also forecast a 2.0 per cent slide in economic output from the world’s most advanced economies as a whole, an equally large downgrading of forecasts it had made in November 2008.

Even those drastic revisions failed to reflect the extent of the downturn at this stage, said Schmidt-Hebbel.

He is preparing new forecasts for publication at the end of March by the Paris-based OECD, which will be cutting its own predictions from those it made last November.

“The shape of it will be a significantly deeper recession than what was forecast by the IMF in January, at all levels,” said Schmidt-Hebbel. “(It will be) significantly deeper and more protracted, meaning longer than what is embodied in the IMF forecasts of late January.”

Last November, the OECD predicted a 0.4 per cent decrease in aggregate economic output this year from its 30 member countries. These include all of the wealthy industrialised countries and a handful of less mature economies such as South Korea, Mexico and Turkey.

“The OECD economies will do significantly worse than the world economy because in emerging economy countries like India, China and some others, growth will still be slightly positive in 2009,” he said. Schmidt-Hebbel said the current quarter would probably prove to be the worst one in the international downturn, after an already very bad final quarter of 2008 where US output fell faster than in any quarter for 26 years.

The US Federal Reserve has pushed official interest rates close to zero and Japan’s central bank is already at that point, though other central banks still have more leeway.

“We are expecting, and forecasting formally, significant further interest rate cuts by the Bank of England, the ECB and a number of other OECD countries with independent central banks, toward very low rates, which I think is absolutely justified by the outlook on inflation and activity for the next one or two years,” Schmidt-Hebbel said.

This would be what the OECD would say on rates when it published its new official forecasts at the end of March, he said.

Reuters’ polls show economists expect the ECB to cut its main euro zone rate by 50 basis points from the current 2.0 per cent on Thursday and that the Bank of England too will lower its rate the same day from a current level of 1.0 per cent

Schmidt-Hebbel said interest rate cuts had a limited power to support economic growth. That increased the need to consider less conventional moves, such as direct asset purchases, or “quantitative easing” of credit conditions along the lines being deployed in the US and now Britain, he said.

Shaheen Air plans used, new Boeing purchases

2009-03-04T05:10:00.002-08:00

Wednesday, March 04, 2009
ABU DHABI: Shaheen Air plans to buy seven used and two new Boeing aircraft and start flights to India and Iran, its executive director said on Tuesday.

“We have almost completed the process of acquiring seven Boeing 737-200 aircraft from an airline in South Africa,” Khalid Bashir Anjum told Reuters on the sidelines of an aviation conference in the United Arab Emirates. He did not give details. “We will also be acquiring two new Boeing 737-900 ERs by end-2010. The new aircraft will enable Shaheen to start new routes to Mumbai and Mashhad in Iran,” he said, adding that Shaheen would also increase flights to Dubai, Abu Dhabi, Kuwait and Muscat.

The airline, which has a fleet of seven Boeing 737s, flies to six destinations in the United Arab Emirates, Oman, Qatar and Kuwait.

Shaheen stopped flights to Leeds in Britain last year after fuel prices peaked, he said. “But we are thinking about resuming flights to the UK, to some secondary airport, and to Canada provided fuel prices remain stable and not too high” said Anjum, adding that the airline may lease a few Boeing 777 ERs for the flights.

KSE bounce back, as index surges by 200 points

2009-03-04T05:10:00.001-08:00

Wednesday, March 04, 2009
KARACHI: Karachi Stock Exchange (KSE) at the onset of trading today showing its inherent resilience bounced back from the yesterday’s jolt, following Sri Lanka team attack in Lahore and traded briskly this morning, much to the relief of the stakeholders in the market.

Investors finding the low prices of stocks profitable went on buying spree unleashing upbeat in the market, which saw the index shooting up by 203 points to 5800 marks, until the filing of this report.

Market pundits hoped that the investors’ optimism was likely to continue at least for the rest of the day’s trading.

HSBC to raise £12 bn through share sale

2009-02-28T23:03:00.000-08:00

Sunday, March 01, 2009
LONDON: HSBC, Europe’s largest bank, will tomorrow announce the closure of its troubled US mortgage lending operation to new business alongside plans to cut its dividend and raise more than £12bn in a deeply-discounted rights issue.

The developments will underline the depth of the international financial crisis and, in the context of HSBC’s substantial operations in Asia, raise questions about the deteriorating health of the global economy.

HSBC, led by Stephen Green, its executive chairman, will say that it is drawing a line under the continuing problems of HFC, the consumer finance operation in the US which has racked up billions of pounds in losses since it was acquired six years ago, by putting it into run-off.

The bank plans to announce a two-for-five rights issue, underwritten by Goldman Sachs and JP Morgan Cazenove, which will be priced at about 300p, a discount of more than 40pc to Friday’s closing price of 491.25p.

It will also cut its dividend by at least a third, according to people close to the bank.

The precise size and terms of the fundraising had not been decided last night, and people close to HSBC said it could reach as high as £13bn. That sum would make it the largest-ever rights issue by a British company, following Royal Bank of Scotland’s £12bn rights issue last year.

The fundraising will be announced alongside HSBC’s annual results tomorrow.

Mr Green and Michael Geoghegan, HSBC’s chief executive, are expected to say that the injection of new capital will increase its core tier one capital ratio, a key measure of its financial health, to about 9.5pc, which would make it one of the world’s best-capitalised banks.

However, the rights issue will add fuel to a campaign by the fund manager Knight Vinke, which has been calling for HSBC to allow Household to go bankrupt.

Last night, Eric Knight, chief executive of Knight Vinke, said that the rights issue provided a further vindication of the fund manager’s campaign of activism, which began in 2007.

“We have been saying for almost two years that Household’s performance is significantly worse than the board and management of HSBC have been willing to admit,” he said.

“The failure to deal with Household means that a rights issue has become inevitable, as we have also been saying for some time now.

“Unless HSBC takes steps to separate Household from the rest of HSBC, it is unavoidable that it will have to take further write-offs, and this will inevitably affect the stock price.”

HSBC’s major Middle Eastern investors, Dubai International Capital and Saad, the Saudi group, are expected to take up their rights as part of the fundraising.

Berkshire net sinks, Buffett says economy in shambles

2009-02-28T23:01:00.002-08:00

Sunday, March 01, 2009
NEW YORK: Berkshire Hathaway Inc, Warren Buffett’s insurance and investment company, barely broke even in the fourth quarter because of losses on derivatives contracts tied to the stock market, which caused its net worth to tumble $10.9 billion.

Buffett also offered a gloomy outlook for the economy, saying in his annual letter to Berkshire shareholders, “The economy will be in shambles throughout 2009, and for that matter, probably well beyond.” Quarterly net income for Omaha, Nebraska-based Berkshire sank 96 per cent to $117 million, or $76 per Class A share, from $2.95 billion, or $1,904, a year earlier, based on company filings. Revenue fell 12 per cent to $24.59 billion.

Results were battered by $4.61 billion of pre-tax losses on about 251 derivative contracts largely tied to the longer-term performance of four stock market indexes and the credit-worthiness of higher-risk “junk” bonds. The losses were twice what Berkshire suffered in the prior nine months.

A deteriorating economy and tight credit led to steep declines in stock prices and an increase in junk bond defaults, resulting in losses for Berkshire. While the losses exist on paper, accounting rules require Berkshire to report them with earnings. Berkshire’s net worth fell to $109.27 billion at year end from $120.16 billion at the end of September, and $120.73 billion at the end of 2007. For all of 2008, profit at Berkshire fell 62 per cent to $4.99 billion, or $3,224 per share, from $13.21 billion, or $8,548.

India to spend Rs100bn on elections

2009-02-28T23:01:00.001-08:00

Sunday, March 01, 2009
NEW DELHI: India will see a staggering Rs10,000 crore (Rs100 billion), equivalent to the foreign direct investment it received in 1995-96, being spent on the Lok Sabha polls this summer, with a fourth of the amount expected to be splurged on voters, the Press Trust of India reported on Friday.

The fiscal deficit of the country is already over 5.3 per cent of the GDP, leaving precious little room for the government to spend money without hurting the economy. Some economists believe that the fiscal deficit could well go past 10 per cent of the GDP, if the establishment’s spending spree continues.

In such harsh times, spend on the elections, although necessary, could well hurt the economy further. The official spending is likely to be about 20 per cent of the total expenses, including about Rs1,300 crore (Rs13 billion) by the Election Commission, and the rest by political parties in campaigning, says a survey by Centre for Media Studies (CMS).

Global rating agency Standard and Poor’s has already warned that it would cut India’s rating to junk unless it gets its spending under control. The Indian economy grew by 5.3 per cent in the third quarter, the slowest quarterly growth this fiscal.

An amount of Rs2,000-2,500 crore (Rs20-25 billion) would be spent in form of “unofficial money” or cash paid to the voters. Andhra Pradesh and Karnataka may top the list of states trying to purchase votes, with nearly half of voters there likely to be paid “cash for vote” about 24 hours before the polling day, said the election expenditure survey by CMS.

The Election Commission is likely to spend Rs1,300 crore (Rs13 billion), while state governments and other government agencies, for purposes like photo identity cards, EVMs and polling booth, are expected to spend about Rs700 crore (Rs7 billion).

Various political parties are expected to spend about Rs1,650 crore (Rs16.50 billion) from their party funds, in addition to the direct and indirect spending by the individual candidates.

Candidates of the national parties are estimated to incur a bill of Rs4,350 crore (Rs43.50 billion), while those from the regional parties are expected to spend another Rs1,000 crore (Rs10 billion).

Guyana pension fund loses $5.5m in Stanford deal

2009-02-28T23:00:00.001-08:00

Sunday, March 01, 2009
GEORGETOWN: A Guyanese pension-fund lost $5.5 million deposited in Stanford International Bank (SIB), President Bharrat Jagdeo said the other day.

Jagdeo told a press conference that the Hand-in-Hand Trust Company had invested four million dollars in Certificates of Deposits on which SIB was ostensibly offering lucrative interest-rates, and 1.5 million in pension funds.

Jagdeo said that the $5.5 million amounted to nine per cent of Hand-in-Hand Trust Company’s assets, adding that Stanford Financials customers would be unable to sell securities until the Houston, Texas-based company’s assets are accounted for.

Stanford Financials receiver, securities Lawyer Ralph Janvey, said customers would be unable to make payments or transfers because the accounts have been frozen for the foreseeable future.

Stanford, a wealthy cricket impresario who lives most of the year in the Caribbean, was charged last week by the US Securities and Exchange Commission of lying to investors about the safety and real returns of eight billion dollars in “certificates of deposits” and $1.2 billion in mutual funds.

US, Citi seal conversion deal, raising govt stake

2009-02-28T01:55:00.001-08:00

Saturday, February 28, 2009
WASHINGTON: The US government committed to holding up to 36 per cent of Citigroup’s common shares in a deal to bolster the fallen financial giant’s capital base, and gave most of the bank’s board their marching orders.

The US Treasury agreed to convert up to $25 billion in government-held preferred shares in the bank to common equity, provided private investors contribute an identical sum, in the third major aid package for Citigroup since mid-October.

The transaction, which will not increase the government’s investment in the bank, sent Citigroup’s share price sharply lower in pre-market trade on Friday and sent US index futures to session lows.

Citigroup said that, based on full conversion, the government would hold around 36 per cent of its common shares.

Major investors including Government Investment Corp of Singapore had agreed to participate in the exchange, the bank said, adding that it would take a fourth quarter goodwill writedown of $9.6 billion.

Oil rises

2009-02-27T08:04:00.001-08:00

LONDON: Oil rose above $44 a barrel on Thursday after the United Arab Emirates announced deeper cuts in crude supply to Asia for April in a possible signal that OPEC will cut output further at its next meeting in March. Abu Dhabi National Oil Co said it will sell customers less of its flagship Murban crude oil.

JP Morgan donates $50,000 to TCF

2009-02-27T08:03:00.006-08:00

Friday, February 27, 2009
By our correspondent

KARACHI: JP Morgan Chase Foundation recently donated $50,000 to The Citizens Foundation (TCF) for bankrolling three TCF primary schools in Karachi, two in Mauripur and one in Shahnawaz Colony.

At a ceremony held at the TCF school in Mauripur, JP Morgan Senior Country Officer and Head of Investment Banking Reza-ur-Rahim handed over the donation of $50,000 to TCF CEO Asaad Ayub.

The donation is part of JP Morgan’s commitment to the development of primary and secondary education through programmes in all continents.

The firm is supporting development projects in 15 Asian countries through donations from the New York-based foundation and retains long-term plans to considerably increase its involvement in philanthropy throughout the region.

TCF is a non-profit organisation of Pakistan. Since its establishment in 1995, it has expanded to lead the operation of 530 schools.

JP Morgan donates $50,000 to TCF

2009-02-27T08:03:00.005-08:00

JP Morgan donates $50,000 to TCF

2009-02-27T08:03:00.003-08:00

GM posts whopping $9.6bn Q4 loss

2009-02-27T08:03:00.001-08:00

Friday, February 27, 2009
CHICAGO: General Motors on Thursday warned of a “challenging” year ahead as it posted a whopping $9.6 billion loss in the fourth quarter which pushed its 2008 loss to $30.9 billion.

The 2008 results were nonetheless an improvement upon 2007, when GM posted a $43.3 loss, even as annual revenues fell to $149 billion from $180 billion in 2007.

The struggling automaker, which last week asked the US government for billions more in emergency loans, said its dismal results reflected the global economic crisis and industry-wide collapse in vehicle demand.

“2008 was an extremely difficult year for the US and global auto markets, especially the second half,” GM chairman and CEO Rick Wagoner said in a statement. “These conditions created a very challenging environment for GM and other automakers, and led us to take further aggressive and difficult measures to restructure our business,” Wagoner said.

“We expect these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions.”

General Motors said last week it could need up to another $22.6 billion in government loans in order to survive the current economic downturn and announced plans to slash 47,000 jobs worldwide amid a massive restructuring plan.

The automaker asked the US Treasury for an additional $16.6 billion on top of the $13.4 billion received in recent weeks and said it is also asking for funding support from the governments of Canada, Germany, the United Kingdom, Sweden, and Thailand.

“GM requires this funding in 2009 to continue operations until global automotive sales recover and its restructuring actions generate benefits, resulting in the company being able to fund its own operating requirements,” the automaker said on Thursday.

Obama forecasts $1.75tr deficit this year

2009-02-27T08:02:00.001-08:00

Friday, February 27, 2009
WASHINGTON: President Barack Obama will forecast the biggest US deficit since World War Two in a budget that urges a costly overhaul of the healthcare system and would spend billions to arrest the economy’s freefall.

An eye-popping $1.75 trillion deficit for the 2009 fiscal year is projected in Obama’s first budget, according to US officials who briefed reporters on the numbers.

That is equal to 12.3 per cent of US gross domestic product, the largest share since 1945 when the country ran a shortfall of 21.5 per cent of GDP.

Obama will unveil the budget at 11 am EST (1600 GMT). It provides the broad outlines of a more detailed document to be released in April.

The soaring deficit figure sent US Treasury bond prices lower and yields up to three week highs on Thursday.

Gold prices slid to their lowest level in more than a week, after testing all time highs over $1,000 an ounce earlier this month. Spot gold fell to $941.20 an ounce, the lowest since February 17. Stock futures rose.

The budget, for the fiscal year that begins on October 1, 2009, requires passage by Congress to take effect.

While Obama, a Democrat, has broad support with both chambers in Congress controlled by his party, he could face a fight as the sticker shock of huge deficits lead to wariness about more spending for goals such as the healthcare overhaul.

Federal spending is skyrocketing as officials try to jolt the recession-hit economy with public-works spending and tax cuts and bail out the troubled financial industry.

The deficit number reinforced concerns the government will need to sell record amounts of debt to pay for programmes aimed at pulling the economy out of a deep recession.

“The budget issue is definitely one for Treasuries because it means greater funding going forward, it means that there is going to be a lot of supply that has to be taken on board by the market,” said Orlando Green, fixed income strategist at Calyon in London.

Obama, who took office on January 20, has pledged to slash the deficit he inherited from former Republican President George W Bush in coming years, bringing it down to $533 billion, or 3 per cent of GDP by 2013.

Higher taxes on wealthier Americans and a planned drawdown of US troops from Iraq are expected to help rein in the shortfall.

Obama’s budget proposal lays out spending cuts in agriculture subsidies and other areas to meet the deficit-reduction goal. But spending would increase to meet key objectives.

The budget sets aside $250 billion as a “placeholder” if Obama decides to ask Congress for more money to help the ailing US financial system. No such decision has been made yet, officials said.

The officials said that if the government were to spend $250 billion to inject money into the banking system; that would finance about $750 billion in asset purchases.

The plan also includes a 10-year, $634 billion reserve fund to help pay for the president’s proposed healthcare reforms.

The budget includes billions of dollars in revenues, starting in 2012 and going over many years, from a greenhouse gas emissions trading system, one of Obama’s key proposals to fight global warming.

Obama’s $1.75 trillion budget deficit forecast for this year reflects shortfalls accumulated under Bush as well as new spending proposals under the $787 billion economic stimulus package that the Democratic president signed earlier this month. His stimulus package and other efforts to revitalize the economy have done little to cheer Wall Street. US stocks prices hit 12-year lows this week.

The United States has experienced 14 months of recession triggered by a financial crisis that has spread across the world.

RBS up for sale in Pakistan

2009-02-27T08:01:00.000-08:00

Friday, February 27, 2009
By Saad Hasan

KARACHI: As the Royal Bank of Scotland (RBS) on Thursday announced the worst financial loss in British history its office here disclosed the operations in Pakistan are being sold.

In a statement released to the Karachi Stock Exchange (KSE), the bank said there are potential buyers who have expressed interest in its business, which includes the retail and commercial banking segments.

“Current capital constraints on the RBS Group and the need for RBS to reduce the size of its balance sheet means it is unable to provide the investment the business in Pakistan requires to achieve its growth potential,” it said.

The bank neither divulged any details pertaining to potential buyers nor did it say anything about the fate of its employees here.

The RBS exit comes at a time when it was in the process of reorganising the business of ABN AMRO, which it bought at peak of the global financial crisis in 2007.

There were doubts when it started re-branding the 80 branches of ABN AMRO in Pakistan amid deteriorating economic and political situation, industry people say.

“It is only logical for RBS to give up operations in Pakistan,” said an official of another multinational bank. “They came because this country was part of the deal. RBS decision is caused by global reasons but the situation here will make head office of any multinational bank sceptical.”

Economic decline will further pull down profit growth of the banking industry this year and next, as people borrow and deposit less in banks, a banking analyst said.

“Banks are parking their funds in treasury bills as they fear rise in non-performing loans and cut back on lending,” said Farhan Rizvi, an analyst with JS Research. “Industry is in a consolidation phase and there will be mergers and takeovers this year.”

But, he said, it is unlikely that a new foreign bank will come forward to buy RBS in Pakistan at a time when there is financial turmoil in international markets.

And, he said any consortium formed locally to take over RBS would have to be very strong financially. “We are talking about 80-plus branches and over Rs112 billion in assets.”

The chances of RBS being purchased by any foreign bank, which is already operating in Pakistan, are also slim, said A B. Shahid, a banker and commentator.

“With the prevailing political instability and security concerns, it is very unlikely,” he said. “It is unfortunate the turmoil continues and our politicians aren’t able to see the severity of the situation.”

While their role as financial intermediaries is limited, industry people say, foreign banks have brought modern banking practices and products to Pakistan.

—unveils £24bn loss

2009-02-27T08:00:00.000-08:00

Friday, February 27, 2009
LONDON: Royal Bank of Scotland on Thursday reported a loss of 24.1 billion pounds ($34.3 billion) for 2008, the biggest in UK corporate history, and said it planned to place 325 billion pounds of assets in a state insurance scheme.

The bank said the record deficit reflected a 16.2 billion pound writedown against acquisitions, including its takeover of parts of Dutch rival ABN Amro in 2007, plus a further 7.9 billion pounds in operating losses.

RBS also announced plans to raise a further 13 billion pounds from the government through the issuance of B shares, and unveiled a cost-cutting programme aimed at reducing expenses by 2.5 billion pounds.

“We have moved purposefully to take major decisions that are necessary to restructure the group,” RBS chief executive Stephen Hester said in a statement.

“We are charting a path to standalone strength and with it the goal of justifying the support of the UK government and all our shareholders.”

The plan came as Britain launched a scheme that could end up insuring more than 500 billion pounds worth of toxic assets in a bid to get lending in the recession-hit economy. Under the government-backed insurance scheme designed to support ailing banks, RBS will be responsible for the first 19.5bn pounds of losses — or 6pc of the asset value.

Lenovo to slash 450 China jobs

2009-02-26T07:46:00.002-08:00

Thursday, February 26, 2009
SHANGHAI: Computer giant Lenovo said Wednesday it would cut nearly 450 jobs in China, in addition to 2,500 previously announced layoffs, amid falling demand due to the global economic crisis.

Lenovo did not specify which areas the 450 jobs would be cut from, only saying in a statement that they were roles that supported operations worldwide. “While our business in China remains very strong, many of our global support functions have employees based in China,” chief executive Yang Yuanqing said in the statement.

“Although difficult, these reductions are a necessary part of our response to the global economic downturn.” A spokeswoman said the China layoffs were on top of the 2,500 job cuts worldwide announced last month aimed at cutting $300 million in costs for the coming fiscal year.

Lenovo recorded a net loss of $97 million for the third quarter ending December, as global demand slumped. Worldwide demand for the company’s personal computer shipments declined five per cent year-on-year over the third quarter ending December.

Tata Steel sees big profit fall

2009-02-26T07:46:00.001-08:00

Thursday, February 26, 2009
MUMBAI: Tata Steel has seen profits at its Indian operations slump 56 per cent after it was hit by both the falling price of steel and higher raw material costs, the BBC reported on its website on Wednesday.

India’s biggest steel producer said its domestic net profit declined to 4.7 billion rupees ($95m; £66m) for the last three months of 2008. This compares with 10.7 billion rupees for the same quarter a year earlier.

Tata Steel owns Corus in Europe, but no Corus data was included in the update. Corus is now cutting 3,500 job cuts. Tata Steel’s latest quarterly profit for its Indian operations was less than half market expectations of more than 11 billion rupees.

Sales during the quarter were down 4 per cent to 47.4 billion rupees. Like all steelmakers, Tata Steel has been hit by the drop in global steel prices as the worldwide economic downturn as gathered pace.

The firm bought Corus back in 2007 and is part of the wider Tata Group, whose other business interests include car making and tea production. Tata Steel said figures for Corus’ final quarter of 2008 would be released next month.

Japan’s recession worsens as exports collapse

2009-02-26T07:45:00.002-08:00

Thursday, February 26, 2009
TOKYO: Japan’s recession woes deepened as a record plunge in exports added to fears Wednesday that Asia’s largest economy is becoming one of the biggest victims of the global crisis.

Japan’s reliance on foreign markets to drive its recovery from a decade-long slump has left it particularly exposed to the global economic downturn, which has crushed demand for its cars, televisions and high-tech goods. The trade deficit ballooned to 952.6 billion yen ($9.9 billion) in January as exports plunged 45.7 per cent from a year earlier, the finance ministry reported.

It was the biggest deficit since comparable records began in 1979, marking a dramatic shift in fortunes for Japan’s economy, which used to enjoy large trade surpluses.

“Japan is particularly vulnerable to this downturn because trade is so central to the economy,” World Trade Organisation chief Pascal Lamy told reporters on a visit to Tokyo.

Analysts expect Japan to report Friday a record 10 per cent drop in factory output in January from the previous month. Unemployment is also forecast to rise as corporate icons such as Sony and Toyota slash thousands of jobs. Once seen as relatively immune to the global downturn, Japan has seen a much faster economic contraction than Europe and the United States, exposing the fragility of its export-led rebound after the 1990s recession.

“Because of the shrinking global economy, Japan’s business model of being dependent on exports is not working at all,” said Barclays Capital chief Japan economist Kyohei Morita. But with the population declining and the government reluctant to admit foreign workers, Japan has no choice but to rely on overseas markets, said Morita, who sees exports falling until the third quarter of this year.

Demand for Japanese exports has been crushed by a slump in worldwide consumer spending, pushing the world’s second largest economy into its worst recession in decades. A surging yen has added to exporters’ troubles, making it harder for them to remain competitive.

Japanese exports to the US, the European Union and even the once-resilient Chinese economy roughly halved in January. Car exports plunged more than two-thirds as automakers idled plants in response to slumping sales. Few analysts are optimistic about the chances of a significant rebound in Japanese shipments any time soon.

“In my view the global economy is heading into a depression. So the prospect of recovery in demand for Japan’s goods in the near-to mid-term are very low,” said Kirby Daley, senior strategist at Newedge Group in Hong Kong. Japan’s top automakers said Wednesday they had sharply reduced their production in January in response to a slump in sales.

Toyota Motor, the world number one, said its global output had fallen 42.6 per cent in January from a year earlier, while Nissan Motor reported a 54 per cent plunge and Honda logged a 33.5 per cent drop. The government said last week that Japan’s economy was in the deepest crisis since World War II, after contracting at an annualised pace of 12.7 per cent in the last quarter of 2008, the worst performance in almost 35 years.

“With the export sector extremely weak and the domestic economy weakening, there is a growing risk that you could get a significant rise in Japanese unemployment,” said Christopher Wood, an equity strategist at the CLSA bank. Japan’s jobless rate, which hit a near three-year high of 4.4 per cent in December, may even head towards 10 per cent, he warned.

In the latest layoffs, Japanese chip equipment maker Advantest Corp. said that it was slashing 1,200 jobs, or more than a quarter of its workforce.

Oil firms to $40

2009-02-26T07:45:00.001-08:00

Thursday, February 26, 2009
LONDON: Oil edged up near to $40 a barrel on Wednesday as a US government report showing gasoline inventories fell more than expected was balanced by losses in European and US equities.

Gasoline supplies declined by 3.4 million barrels, more than the expected drop of 100,000 barrels, the US Energy Information Administration said in its latest weekly report.

“The big draw is in gasoline. Demand is up and refinery runs are lower than expected. Demand is coming back,” said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York. US crude was up 9 cents to $40.05 by 1558 GMT and off an earlier high of $41.5. Brent, trading at an atypical premium to US crude, was down 39 cents to $42.11.

Crude oil stocks in the United States rose by 700,000 barrels, less than the 1.4 million-barrel increase predicted.

High US inventories have been weighing on the US benchmark, contributing to its discount to Brent.

American Petroleum Institute data on Tuesday showed crude stocks rose 341,000 barrels last week. Oil traders consider the EIA data gives a fuller picture because energy firms are required to respond to its weekly survey. Losses on equity markets limited oil’s gain.

T-bill cut-off yield at 12.9828pc

2009-02-26T07:44:00.000-08:00

Thursday, February 26, 2009
KARACHI: The cut-off yield on benchmark 6-month Treasury bills fell to 12.9828 per cent at an auction on Wednesday, the central bank said.

The weighted average yield on the 6-month paper fell to 12.9600 per cent compared with 13.7357 per cent in the previous auction on Feb 11, the State Bank of Pakistan said.

The cut-off yield on 3-month paper fell to 12.6091 per cent compared with 13.6237 per cent in the previous auction, while the weighted average yield fell to 12.5629 per cent, compared with 13.4553 per cent.

The cut-off yield on the 12-month paper was 13.0044 per cent and the weighted average yield was 12.9881 per cent.

Dealers said a fall in the cut-off yields indicated that bankers were anticipating a cut in the discount rate after a quarterly monetary policy meeting in April. The SBP said it sold 5.86bn rupees of the 3-month paper, 30.53bn rupees of the 6-month paper, and 88.5bn rupees of the 12-month paper after receiving total bids of 328bn rupees.

Interest rate could be lowered if inflation drops: IMF

2009-02-25T08:33:00.000-08:00

Wednesday, February 25, 2009
WASHINGTON: Pakistan's monetary policy is appropriate but there would be room to lower interest rates if inflation declined, the International Monetary Fund said on Wednesday.

In a statement following a 12-day staff mission to review a $7.6 billion stand-by lending program, the IMF said it was "impressed" by Pakistan's resolve to sustain prudent policies, strengthen the social safety net and pursue reform.

But it also said the global economic turmoil was taking a toll on Pakistan's economy, hurting demand for exports and curbing remittances from workers abroad, so economic policies needed to be recalibrated.

The IMF said Pakistan's current monetary policy stance was "appropriate and will continue to promote domestic and external stability."

"Looking ahead if both headline and core inflation decline, there should be scope for lower rates," the IMF said.

Global slowdown seen hitting BD remittances

2009-02-25T08:32:00.002-08:00

Wednesday, February 25, 2009
DHAKA: The global economic crisis is likely to halve Bangladeshi expatriate remittances and the number leaving to work abroad this year, a top recruiter said on Monday.

“Due to the global slowdown, recruitment (for overseas jobs) and (expatriate) remittances will fall at least by 50 per cent,” Golam Mostafa, president of the Bangladesh Association of International Recruiting Agencies (BIRA) told a news conference.

State-managed BIRA is the principal agent in the country recruiting Bangladeshi workers for foreign employment.

Nearly 875,000 Bangladeshis went abroad officially in 2008 against 832,000 in the previous year.

The total remittances sent by five million expatriate workers were $9 billion in the year against $7 billion in the 2007

Crisis puts brakes on loans to world’s poor

2009-02-25T08:32:00.001-08:00

Wednesday, February 25, 2009
JOHANNESBURG: The global micro-credit industry has been hurt by the financial crisis but loan defaults by the world’s poor remain low and private equity money will still fuel growth, a micro-finance group said.

The industry, which provides small loans to entrepreneurs who lack access to mainstream banking, has expanded rapidly since Bangladeshi economist Muhammad Yunus and his Grameen Bank shared the Nobel Peace Prize in 2006.

But Women’s World Banking, billed as the world’s biggest network of micro-finance institutions, said micro-financiers were struggling to raise funds to loan to the poor because of soaring borrowing costs and predicted growth would slow sharply.

“Rates have gone through the roof,” New York-based WWB Chief Executive Mary Ellen Iskenderian told Reuters in an interview, adding many banks would now only loan dollars or euros, meaning micro-financiers also had to bear the foreign exchange risk.

Micro-finance institutions (MFIs) boast repayment rates most commercial banks can only dream of at around 98 per cent. This is mainly because poor borrowers are not highly indebted and are less vulnerable to market swings.

Although risky debts had edged up slightly, Iskenderian said the problem was largely late payments rather than defaults.

Nevertheless, MFIs have been forced to tighten lending criteria to the poor due to the higher cost of raising their own funds, and several groups in the WWB network stopped extending new loans altogether in the final quarter of 2008.

She said WWB, which provides advice and training to 54 MFIs and banks in 30 countries, had scaled back 2009 growth forecasts for its clients’ combined loan book to less than 20 per cent from a current $2 billion, compared to 30 per cent a few months ago.

But Iskenderian said the financial crisis, which has felled Wall Street giants and sent developed economies reeling, would not necessarily spell disaster for poor-nation entrepreneurs.

Many MFIs have transformed in recent years from tiny grassroots non-profit organisations to profitable, sustainable businesses which take saving deposits and behave like commercial banks, and the crisis is spurring that trend.

“It’s really hastening the development of these institutions into formal, regulated, deposit-taking institutions, so they can use savings as a source of funding and not be as reliant on external borrowing,” Iskenderian said.

While debt may be hard to raise, Iskenderian said social investment-focused private equity funds still had cash to pump into MFIs, especially now the crisis had trimmed valuations.

She predicted consolidation in the sector and said that once investor appetite recovers, more initial public offerings of MFIs would be in the pipeline.

About 150 million people worldwide borrow funds from micro-finance institutions, a fraction of the roughly 2 billion working poor who would qualify for such loans.

Micro-finance has taken off more quickly in south Asia than in Africa and Iskenderian said she hoped the burgeoning mobile banking industry, whereby customers transfer cash using cell phones, would help spur micro-finance growth on the poorest continent, where fewer than 1 in 10 people have bank accounts.

Global stock markets down

2009-02-25T08:31:00.000-08:00

Wednesday, February 25, 2009
LONDON: Global stock markets were reeling on Tuesday, extending heavy losses as the latest US bank rescue plan offered little comfort the underlying problems driving the global downturn will be quickly resolved.

Record low business confidence in Germany, Europe’s biggest economy, a fall in French consumer spending, a spike in Polish unemployment and more job losses were all part of a relentless litany of bad news.

In Asia, Tokyo slid to near 26-year lows after an overnight rout on Wall Street when a new US plan offered relief to banks but stopped short of the outright nationalisation that some argue is the only option left.

A joint statement on Monday from the US Treasury, Federal Reserve and banking regulators said the plan could lead to bigger government stakes but was based on a “strong presumption” that banks “remain in private hands.”

Analysts said this was the first step in a so-called “stress test” announced by the administration of President Barack Obama to determine the health of banks hammered by the US housing meltdown and global credit crisis.

But crucially there were no details on capital injections for individual banks despite reports the government might take over some large lenders, including Citigroup, once the largest of them all, on the brink of insolvency.

“The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth,” the statement said.

Getting the banks, especially the US banks, lending again is essential to avoid a 1930s style Great Depression but despite hundreds of billions of dollars spent to shore them up, there is little sign of progress.

Meanwhile, signs of the economic damage were evident everywhere. Tokyo lost 1.46 percent on Tuesday but managed to just recover from lows last seen in 1982 while Hong Kong shed 2.9 per cent and Sydney fell 0.6 per cent.

Chinese shares, which bounced by a third over the past month or so on hopes that China’s size and relatively rapid rate of growth would stand it in good stead, plunged 4.56 per cent. In midday European trade, London’s FTSE 100 index of leading shares was down 1.23 per cent, in Paris the CAC 40 sank 1.27 per cent and Frankfurt’s DAX 30 was off 1.97pc.

Swiss banks deposits plummet in 2008

2009-02-24T07:55:00.001-08:00

Tuesday, February 24, 2009
GENEVA: The amount of money deposited in Swiss banks shrank by more than a quarter last year as the global financial crisis hit asset values and customers withdrew large sums amid concerns about probes into the offshore banking industry.

Figures released by the Swiss National Bank showed total deposits fell 27 per cent, or 1.41 trillion Swiss francs, to 3.82 trillion francs, their lowest since August 2005.

Deposits from foreign customers shrank by 882 billion francs, while Swiss customers had 531 billion francs deposited in their country's banks, according to the SNB's monthly statistical bulletin.

Foreign private customers saw the highest proportional drop in assets, 36 per cent or 371 billion francs, leaving only 671 billion francs worth of deposits in Swiss vaults.

That is the lowest deposit amount from foreign private customers since the end of 1998.

Deposits by foreign institutional customers dropped 23 per cent to 1,386 billion francs.

Domestic private customers had 417 billion francs deposited by the end of the year, 28 per cent less than in 2007.

Cheap rice for Bangladesh garment workers

2009-02-24T07:54:00.001-08:00

Tuesday, February 24, 2009
DHAKA: Bangladesh will sell rice at 40 per cent below market price to millions of garment workers hit by the global economic crisis, an official said on Monday.

Food ministry spokesman Golam Kibria said the workers, who earn as little as $25 a month, would be able to buy rice from government outlets at 18 taka a kilogram, instead of the market rate of 25 taka. “The government will sell subsidised rice to garment workers and tea garden labourers from March. Garment workers earn very poor salaries and have been affected by high food prices and the global crisis,” Kibria said. BD’s 3m garment workers are mostly women who leave their villages to work in factories near the capital Dhaka and the port city of Chittagong. The majority of Bangladeshi households spend 70pc of their income on food.

Lender in Japan’s biggest bankruptcy this year

2009-02-24T07:53:00.001-08:00

Tuesday, February 24, 2009
TOKYO: In Japan’s biggest bankruptcy so far this year, a Tokyo-based money-lender said on Monday that it had filed for protection from creditors with debts of more than $3.6 billion.

The collapse of SFCG Co jolted the Tokyo stock market, with the Nikkei sliding to the lowest level in almost four months. The firm, which lent mainly to small companies, said it had filed for bankruptcy protection from the Tokyo District Court with liabilities of 338.0 billion yen as of the end of October.

The collapse of the money-lender, whose creditors reportedly include Citigroup, is Japan’s largest corporate bankruptcy this year, according to private research firm Teikoku Databank.SFCG blamed its problems on “extremely severe financial conditions” that caused mounting bad debts and a slump in new loans.

Even before the global credit crunch erupted, Japan’s consumer lenders were reeling from a tightening of industry regulations in 2006. The collapse added to uncertainty over prospects for Japanese non-bank lenders, SMBC Friend Securities strategist Hideaki Higashi said. “It could further worsen the credit crunch gripping medium and small companies,” he said.

SFCG, established in 1978, grew quickly during the recession of the 1990s by extending high-interest loans to small and medium sized businesses that used real estate assets as collateral. Formerly known as Shoko Fund, it renamed itself after a series of lawsuits were filed against it for its high interest rates and collection methods.

Japan is seeing a rising number of bankruptcies as a result of the global credit crunch and economic downturn. Corporate bankruptcies in Japan jumped 15.7 per cent in 2008, when 12,681 companies went under with combined debts of 11.91 trillion yen, according to Teikoku Databank.

While major Japanese banks are in better shape than many of their US and European peers, smaller lenders in particular are being squeezed by volatile markets and the country’s first recession in seven years. Japan’s benchmark Nikkei-225 index fell 40.22 points, or 0.54 per cent, to 7,376.16, the lowest closing level since October 27 on worries about the SFCG bankruptcy filing and the woes of Japanese banks. Shinsei Bank tumbled 7.6 per cent to 85 yen. The Japanese lender issued a statement saying that it did not have any direct exposure to SFCG, although one of its units holds securitised loans of SFCG in a trust account for investors.

US may take big stake in Citi as crisis rages

2009-02-24T07:52:00.004-08:00

Tuesday, February 24, 2009
PARIS/NEW YORK: Citigroup Inc is in talks that could see the US government boost its stake to 40 per cent, according to media reports, as governments and financial firms in Japan, France and elsewhere announced fresh capital raising on Monday.

The Wall Street Journal said Citigroup and US officials are discussing a plan under which the government could convert a big chunk of the $45 billion of preferred shares it bought last year.

The British government last month said it would convert preferred shares it took in Royal Bank of Scotland, which is expected to announce a restructuring plan this week. The US plan could see the government end up owning as much as 40 per cent of its common equity, though Citi executives hope to limit the stake to closer to 25 per cent, the newspaper reported. The preferred shares now amount to a stake of less than 8 per cent.

“This gives you the sense that authorities’ worries have intensified, that problems relating to the US economy may potentially spill over to the rest of the world,” said Sailesh Jha, senior regional economist at Barclays Capital in Singapore.

The Financial Times said Citi’s aim was to keep the government’s stake to no more than 40 per cent, or at least below the 50 per cent mark that would spell nationalization, which is anathema to many US politicians, executives and voters.

The US Treasury declined to comment on Citigroup but said it would consider converting preferred shares it owns in banks into common equity to strengthen their capital structure. “We are open to considering a request to do so if the institution and its regulator believe it would promote the long-term stability of that institution, and if we believe it’s in the best interest of long-term stability of our economy and financial system,” spokesman Isaac Baker said.

European Central Bank President Jean-Claude Trichet said on Monday that the euro zone’s financial system is under severe strain and that net credit flows have started to fall in recent weeks.

“What has become increasingly clear since the intensification of the crisis mid-September last year is that the strains in the financial sector are spilling over to the real economy,” Trichet told a conference on regulation. “This situation is more difficult to combat than if the problems had remained largely confined to the financial sector,” he said.

European Union leaders at a weekend summit in Berlin backed a doubling of funds for the International Monetary Fund, which has spent billions of dollars in recent months shoring up economies in eastern Europe and elsewhere.

Latvia’s government collapsed on Friday and the currencies of countries such as Poland, the Czech Republic and Hungary have come under severe pressure, hitting millions of citizens across the region who have borrowed in foreign currencies such as the euro.

“We’re dealing with an extraordinary international crisis the likes of which we have not seen for decades, both as regards financial markets and the global economy,” German Chancellor Angela Merkel said.

There was no respite for Western European banks and brokerages either, as French Economy Minister Christine Lagarde on Monday pledged to extend up to 5 billion euros ($6.3 billion) in additional aid to Banque Populaire and Groupe Caisse d’Epargne, two mutual banks which are merging.

A source close to the deal told Reuters on Sunday that the French state could take a stake of up to 20 per cent in the merged company, which will be France’s second-biggest retail bank behind Credit Agricole.

China steel producers see profits plunge

2009-02-24T07:52:00.003-08:00

Tuesday, February 24, 2009
BEIJING: China’s top steel producers saw their profits plunge by nearly one half last year despite growing sales as prices for their product nosedived, state media reported on Monday.

The nation’s 71 main steel makers reported net profits last year of 84.6 billion yuan (12.4 billion dollars), down 43 per cent from 2007, Xinhua news agency said, citing the state-controlled China Iron and Steel Association. The decline in profits came amid a 24.7 per cent increase in sales to 2.57 trillion yuan, according to the agency.

At the end of last year some 160 million metric tons of capacity were left idle in the industry, the world’s largest, Xinhua said. “Clearly there exists excessive capacity,” Luo Bingsheng, the association’s executive deputy director, said according to Xinhua.

Office-bearers of UKPCCI elected

2009-02-24T07:52:00.001-08:00

Tuesday, February 24, 2009
LONDON: Punjab Assembly member Dr Ashraf Chohan was elected as the new president of UK-Pakistan Chamber of Commerce and Industry at the annual general meeting of the body held here on Sunday evening.

Dr Chohan, who represents a Gujranwala constituency in the Provincial Assembly and belongs to PML-N, is a practicing orthopedic surgeon doctor at the city’s famous Harley Street. The UKPCCI is a body of some 300 members consisting entirely of Pakistani expatriates engaged in trading and commerce business in Britain.

The new office-bearers are: Chairman, Barrister Zahoor Butt; President, Dr Ashraf Chohan; Secretary-General, Ikram Khan; Vice-President, Chaudhry Yousaf; Joint Secretary, Muhammad Saeed; Treasurer, Haji Chaudhry Muhammad Siddique.

The Board of Directors includes Sami ullah, Syed Qamar Raza, Tariq Chaudhry, Razi Khan, Naheed Randhawa, Akhtar Hussein, Muhammad Majeed Shaheen, Arsla Khan Hoti. Both the chairman and the president expressed their gratitude to the members for expressing their confidence in electing the new office-bearers unanimously.

Barrister Butt said UKPCCI would endeavour to further strengthen trade and commercial ties with Pakistan that has plenty of business opportunities for the UK-based Pakistani business community. Dr Chohan said that during his one-year presidency he will focus on providing new venues for investment in Pakistan by the UK entrepreneurs.

Oil slips below $40 as US stocks retreat

2009-02-24T07:51:00.003-08:00

Tuesday, February 24, 2009
LONDON: Oil slipped below $40 a barrel on Monday as the US stock market retreated despite a report that the US government was in talks on increasing its stake in Citigroup.

US front-month crude fell 20 cents to $39.83 by 1540 GMT, off a session low of $39.53. The contract ended 15 cents lower at $40.03 on Friday. London Brent crude gained 30 cents to $42.19.

Oil had risen in early trade on Monday after a report in the Wall Street Journal that the US government could end up owning as much as 40 per cent of Citigroup. A source familiar with the situation told Reuters talks were ongoing between Citigroup and regulators.

Equities traders had expected a full-scale nationalisation and the report helped to boost shares in Asia and Europe. But the US stock market turned negative later and dealers said the Citigroup story refocused attention on the US banking crisis and the deepening slump in the wider economy.

“The banking crisis is still at the core of the broad recession,” said Mike Wittner, analyst at Societe Generale. More evidence emerged on Monday that the Organisation of the Petroleum Exporting Countries is strictly enforcing output cuts.

As the financial crisis has thrown major economies into recession, global energy consumption has shrunk, prompting oil prices to fall by more than $100 since last July’s peak of nearly $150. In response, OPEC has already agreed on cuts totaling 4.2 million barrels per day (bpd) since last September and evidence has mounted of a high level of compliance with the lower production targets.

In February, OPEC oil supply was expected to drop sharply, Petrologistics told Reuters on Monday. OPEC’s 11 members with output targets were expected to pump 25.32 million bpd in February, down 980,000 bpd from January levels and giving a compliance rate of 89 per cent, according to Reuters’ calculations, which would be one of the highest rates yet.

“It’s provisional because we’re still in February,” said Wittner. “But that’s mighty constructive.” The producer group is also very likely to decide on a new production cut at its next meeting scheduled in March, Algerian Energy and Mines Minister Chakib Khelil said at the weekend.

Financial markets will be keeping an eye on Federal Reserve Chairman Ben Bernanke’s policy report to the US Congress on Tuesday and Wednesday. sHe is expected to offer assurances help is on the way for the US economy and may offer clues on additional steps that could halt the economy’s downward spiral. Gold, a safe-haven investment, eased on Monday, after topping $1,000 an ounce last week.

39,000 lose jobs in Philippines in 4 months

2009-02-24T07:51:00.001-08:00

Tuesday, February 24, 2009
MANILA: At least 39,000 Filipinos have lost their jobs since October as factories and companies lay off workers amid the deepening global financial crisis, an official said on Monday.

The 39,000 included more than 5,400 overseas-based Filipinos who had lost their jobs in the Middle East and Taiwan, which accounted for the bulk of the returning expatriates, Labour Secretary Marianito Roque said. Roque said the figure was based on official reports by industry leaders as well as trade groups.

He said the government had allotted seven billion pesos ($149 million) to create 180,000 “emergency jobs” this year as a stop-gap measure to prevent unemployment from ballooning. “As of last Friday we have about 39,000 fall outs. These are workers who have lost their jobs mainly in the electronics and manufacturing sector,” Roque told the Foreign Correspondents Association of the Philippines.

He said the government had enough resources to create temporary employment opportunities in the next two years, but would be hard pressed if the crisis extended beyond that. Roque noted that many Filipinos lost their jobs in the real estate and services sector in Dubai, but had managed to find employment elsewhere in the United Arab Emirates.

Financial crisis claimed at least 325,000 jobs: ILO

2009-02-24T07:50:00.000-08:00

Tuesday, February 24, 2009
GENEVA: At least 325,000 jobs have been lost in the financial sector since August 2007, the International Labour Organisation said on Monday, warning that even more jobs could go in the coming months.

“As the global economy sinks further into recession, and financial institutions’ assets experience even greater impairment, the industry’s job losses can be expected to rise even faster,” said Elizabeth Tinoco, who heads the ILO’s sectoral activities division, in a statement. Close to 130,000 jobs, or 40 per cent of the cuts, were announced between October 2008 and February 12, 2009, according to an ILO report released on Monday on the impact of the financial crisis on finance sector workers. That trend indicated “a rapid acceleration in financial services job cuts over recent months,” it said.

The report is set to be the basis of a discussion on Tuesday and Wednesday bringing together 100 senior representatives of governments and workers and employer organizations on the impact of the crisis in the financial sector.

The ILO estimates that more than 20 million people are employed in the financial services industry worldwide. It details cuts announced in major banks, insurers and funds between August 2007 and February 12, 2009, including 45,500 job losses at the Bank of America and 75,000 at Citigroup. It noted however, that only announcements for reductions numbering over 1,000 were taken into account, and that the overall figures “substantially under-represent actual job losses.” Financial centres such as New York and London would bear the brunt of the cuts, said the ILO, which advocated that the financial sector adopt pay incentives.

Wobbly banks in Europe, Wall Street worry markets

2009-02-24T07:49:00.000-08:00

Tuesday, February 24, 2009
BERLIN: A World Bank warning that banks in east Europe are at risk from the economic crisis and signs that the US government will prop up Citigroup bank pushed the dollar down and European stocks up on Monday.

A meeting of top European leaders was strong on promises to tighten global regulation in financial markets, but the session on Sunday also showed deep differences over the crisis during preparations for a G20 meeting in April.

The dollar fell on concern about some top names in US banking, but a report in the Wall Street Journal newspaper that US authorities might acquire 25-40 percent of mammoth Citigroup bank helped a rebound in European stocks.

“Markets are unsettled by two fears right now: the nationalisation of US banks and the financial crisis hitting Eastern Europe,” said Ryohei Muramatsu, manager of Commerzbank’s Group Treasury Asia in Tokyo.

US economics Nobel prize winner Paul Krugman said: “Banks must be rescued. The collapse of Lehman Brothers (investment bank in September) almost destroyed the world financial system.”

He wrote in the New York Times: “We can’t risk letting much bigger institutions like Citigroup or Bank of America implode.” The price of gold, a barometer of distress and risk aversion, held close to 1,000 dollars an ounce, a level breached briefly on Friday.

The main factor to show on Monday was talk of state involvement in banking, but in varied forms. The president of the World Bank, Robert Zoellick, warned in remarks to the Suddeutsche Zeitung newspaper on Monday that many banks in eastern Europe were undercapitalised and needed help of 120 billion euros (154 billion dollars) from the West.

“I think it would be an immense tragedy if Europe were once again divided in two” because of the crisis, he said. Attention in the United States is focused on top names in high street banking.

The WSJ, citing unnamed sources, reported that Citigroup had approached regulators suggesting that federal authorities should take a stake, which could turn out to be 24-40 percent. But the administration of US President Barack Obama had not signalled if it supported the idea, the report said. The head of the Senate banking committee, Senator Christopher Dodd, said the administration wanted to avoid nationalising banks but did not rule out a short-term takeover.

Half a million jobs lost in India

2009-02-22T03:38:00.003-08:00

Sunday, February 22, 2009
NEW DELHI: Half a million jobs were lost in India from September to December last year in the sectors of textiles, automobiles and information technology, the private Indo-Asian News Service reported on Friday quoting government official sources, according to Xinhua on Saturday.

A study by the Labor Ministry said total employment in the sectors of mines, metals, gems, jewelry, textiles, automobiles, transport and IT-outsourcing fell from 16.2 million in September to 15.7 million in December, due to the economic meltdown, said the report.

Labor Minister Oscar Fernandes said earlier that the average earnings of Indians also declined by 3.45 per cent during the same period of time. Indian left-wing parties and labor unions put the number of jobs lost since September last year at 2 million.

India’s External Affairs Minister Pranab Mukherjee, who also holds the portfolio of finance minister, said on Friday Indians have to share the pain of economic crisis, while promising to protect Indian jobs even through lowering salaries.

“Jobs must be protected even if it means some reduction in compensation,” said the minister.

Indian Prime Minister Manmohan Singh, who holds the portfolio of finance minister, is recovering after a heart surgery

UBS client details sent to US

2009-02-22T03:38:00.001-08:00

Sunday, February 22, 2009
GENEVA: Banking details of eight American clients of Switzerland’s largest bank have been sent to US authorities, despite a Swiss court order blocking the move, a newspaper said on Saturday.

The court’s ruling Friday apparently came too late, with the information on the eight having been sent along with the names of more than 240 other American clients of UBS, the Tribune de Geneve daily reported. “The information has already arrived in Washington,” Alain Bischel, spokesman for Swiss bank regulator FINMA, told the newspaper.

The tribunal’s order forbade Swiss bank regulator FINMA from giving the plaintiffs’ “banking documents to third parties, particularly US authorities,” or risk legal proceedings. The tribunal’s decision came amid US Justice Department efforts to break through Switzerland’s banking secrecy to go after tax cheats hiding their money in the European country.

UBS, Switzerland’s biggest bank, reached a settlement with US authorities on Wednesday in which it admitted to US tax fraud and agreed to pay $780 million.

The bank was also ordered to hand over details of 250 to 300 US clients. But Wednesday, eight of the clients filed a complaint against having their banking information sent to Washington on grounds it might prejudice possible legal proceedings against them, the newspaper said.

UBS rejected a new US government lawsuit filed Thursday asking that the bank disclose the identities of some 52,000 US customers who allegedly evaded taxes.

Small US bank becomes 14th bank to fail in ’09

2009-02-22T03:37:00.000-08:00

Sunday, February 22, 2009
NEW YORK: Regulators on Friday closed Silver Falls Bank in Silverton, Oregon, the 14th federally insured institution to fail this year, and the second based in Oregon.

Silver Falls Bank, a community bank that opened in May 2000, had $131.4 million in assets and $116.3 million in deposits as of Feb 9. The last Oregon-based bank to close was Beaverton-based Pinnacle Bank last week. Citizens Bank of Corvallis, Oregon, is assuming Silver Falls Bank’s deposits. It also is taking over its three branches and buying about $13 million in assets, including cash, securities and overdraft loans. The Federal Deposit Insurance Corp, appointed receiver of Silver Falls Bank, will retain the bank’s remaining assets.

The FDIC estimated that the cost of Silver Falls Bank’s failure to the federal deposit insurance fund will be $50 million. Regular deposit accounts are insured up to $250,000. The bank failure wave began last year, when 25 US banks were seized by regulators, more than in the previous five years combined.

As home prices plunge and layoffs escalate, banks have seen loan defaults soar. And the trend has only been worsening as the recession deepens.

Thousands of jobs reportedly set to go at RBS

2009-02-22T03:35:00.000-08:00

Sunday, February 22, 2009
LONDON: Royal Bank of Scotland Plc is set to unveil up to 20,000 job losses next week as part of tough cost-cutting targets, the Financial Times reported on Saturday.

Without citing a source, the newspaper said between 10,000 and 20,000 jobs out of a total workforce of about 215,000 could go. It also said RBS was in talks with Treasury officials about the possibility of offering quasi-equity instruments worth billions of pounds as a fee under the government’s planned insurance scheme designed to ring-fence potentially toxic assets.

Again without citing a source, the paper said talks were ongoing and the exact scale of the assets remained unclear. The announcements are expected to coincide with RBS reporting its full-year results on February 26, the FT added.

Neither the Treasury nor RBS would comment on the report of jobs losses or the planned insurance scheme. RBS is on course to reveal a loss of up to 28 billion pounds next week for 2008, the largest in British corporate history. Its attempts to raise cash following its ill-fated purchase of ABN Amro has forced RBS to hire Morgan Stanley to explore the potential sale of its Asian banking units, sources earlier told Reuters.

Stanford’s Antigua units seized

2009-02-22T03:34:00.000-08:00

Sunday, February 22, 2009
FREDERICKSBURG, Virginia/ST JOHN’S, Antigua: Regulators seized Texas billionaire Allen Stanford’s banks and companies in Antigua and Barbuda, the Caribbean state at the center of fraud charges against him, as the financier surrendered his passport to US authorities. Antigua’s government, which in 2006 gave Stanford a knighthood, and the Eastern Caribbean Central Bank announced the takeovers on Friday, after a rush by depositors this week to withdraw their funds from Stanford banking affiliates.

Stanford, 58, was charged by the US Securities and Exchange Commission (SEC) on Tuesday with fraudulently selling $8 billion in certificates of deposit with improbably high interest rates from his Stanford International Bank Ltd (SIB), headquartered in Antigua.

SEC spokesman Kevin Callahan said that Stanford and his two co-defendants, James Davis, SIB’s chief financial officer, and Laura Pendergest-Holt, chief investment officer of a Stanford affiliate, had surrendered their passports in keeping with a judge’s order. On Thursday the FBI tracked Stanford down in Fredericksburg, about 50 miles (80km) south of Washington, to serve him with court papers, but a day later Stanford was nowhere to be seen in the historic Virginia town.

Meanwhile, the court-appointed receiver overseeing the assets of Stanford’s customers, Dallas lawyer Ralph Janvey, said in a statement the customer accounts were frozen until legal claims could be sorted out.

China, taking advantage of

2009-02-22T03:33:00.001-08:00

global recession, goes on buying spree

Sunday, February 22, 2009
BEIJING: General Motors is doing it. The world’s second-largest mining group is doing it. Russia, Brazil and Venezuela are doing it. And China is loving it. Squeezed between falling profits and the credit crunch, a growing number of troubled corporations and countries are turning to cash-rich China for a bailout.

And with foreign assets cheaper than they have been for years, Beijing is going on an international spending spree, The Christian Science Monitor reported on Saturday. “The international financial crisis ... is equally a challenge and an opportunity,” China’s energy czar, Zhang Guobao, wrote recently in the official newspaper People’s Daily.

“The slowdown ... has reduced the price of international energy resources and assets and favors our search for overseas resources.” So far, the government has concentrated on natural-resource deals, securing supplies of oil and minerals in return for large amounts of cash. But private Chinese firms are also taking advantage of the crisis in other sectors: Diesel-engine giant Weichai Power is expected to buy a French plant that GM is selling off in its struggle to survive.

Though the Chinese economy has also been hit by the crisis, cutting growth by almost half, “what sets China apart is that Chinese banks have not been so badly hurt, and the policy banks still seem ready to lend” in support of key government objectives, says Erika Downs, a China energy specialist at the Brookings Institution in Washington.

The China Development Bank, for example, is financing China’s biggest-ever foreign investment, a $19.5 billion bid by the mostly state-owned Aluminum Corp of China for an 18 per cent slice of Rio Tinto.

The Australian mining company desperately needs the cash in order to pay off $19 billion in debt over the next two years. That deal, still to be approved by Australian regulators, is seen here as a pathfinder. “It illustrates Chinese state business’s strong capacity ... and gathered experience for state-owned firms to operate abroad in the future,” explained an article published earlier this month in People’s Daily. Other recent multibillion-dollar deals include the purchase by China Petrochemical Corp, the country’s second-largest oil producer, of Canada’s Tanganyika Oil, which works in Syria, and the bid that China Minmetals has made for OZ Minerals, an Australian zinc producer on the verge of bankruptcy.

“The amount of money coming out of Beijing suggests they are confident that we are at the bottom of the market,” says Paul Cavey, an analyst with Macquarie Bank. And with China’s trade surplus still wide, since imports have fallen even faster than exports, “they still have a lot of money to play with,” he adds.

Last week the Chinese government sank $39 billion of that money in three separate deals to secure future oil supplies from Russia, Brazil, and Venezuela. A $25 billion loan to Russia, whose economy is reeling from plummeting oil prices, won a promise to supply 290,000 barrels per day for the next quarter-century and to build a pipeline into China. “The slowdown in the Russian economy, declining crude prices, and production and the credit crunch have lent the Chinese far better bargaining power,” wrote Gordon Kwan, head of China energy research at CLSA brokerage, in a research note last week.

A $10 billion loan to Brazil, announced during a visit to the country by Chinese Vice President Xi Jinping, secured a similar pledge to provide up to 160,000 barrels of crude a day, while Xi also signed a deal with Venezuela for up to 1 million barrels per day by 2015 in return for another $4 billion from China to top up an existing development fund.

“More than anything else, China always wants security of resources going into the future,” says Cavey. The crisis, and falling asset prices, “open up a significant part of the world,” he adds. “China will think of investing pretty much anywhere there are resources, not just the places that other countries don’t want to go.” Few expect Beijing to invest in the troubled financial sector, however, despite the hopes some foreign banks have harbored of attracting Chinese money. “Natural resources are so strategic for a country, they can justify investments there, but they can’t justify another financial sector deal,” says Andy Xie, an independent economist.

China’s sovereign wealth fund has lost between half and two-thirds of investments it made over the past two years in Morgan Stanley, Blackstone, and Barclays, Xie points out. As China begins to move again on the international scene, taking advantage of low prices, it remains to be seen how much political resistance its bids will provoke. In 2005, political pressure in Washington forced China National Offshore Oil Corp (CNOOC) to withdraw its bid for the US oil firm Unocal, even though the Chinese firm offered more money than its rival, Chevron.

“The situation is so bad that there is desperation now to get money,” says Cavey. “But it will still be a difficult political balance to strike” for the state-owned firms that are expected to be most active abroad. Especially touchy will be the question of state assistance for Chinese firms, potentially giving them an advantage over Western competitors.

The China National Petroleum Corp’s website last week carried a report on the government’s yet-unpublished oil and gas development plan, which suggested such assistance is foreseen. “China will encourage enterprises to develop the exploration and acquisition of overseas resources and will offer low-interest loans and preferential lending rates for major overseas energy investment projects,” the report said.

“With low oil prices, we may see Chinese banks playing a bigger role” in funding acquisitions, says Dr Downs at Brookings. “And if it is known that Chinese companies are getting money from state banks at low interest rates, we will see concern that this support creates a playing field that is not level.”

China, taking advantage of

2009-02-22T03:33:00.000-08:00

Gold futures rise over $1,000

2009-02-21T01:43:00.001-08:00

NEW YORK/LONDON: Gold futures rose above $1,000 an ounce on Friday as jittery investors turned to the yellow metal to preserve wealth amid a tumbling stock market. Long-term inflation worries fanned by the massive US economic stimulus package signed into law by President Barack Obama this week has driven investors into gold, which is perceived as the most likely asset to hold its value if the dollar starts weakening. US gold reached its highest level of the past seven months. Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $17.70 to $994.20 an ounce at 10:32 am EST (1532 GMT).

Anglo American to axe 19,000 jobs after profits slide

2009-02-21T01:42:00.004-08:00

Saturday, February 21, 2009
LONDON: British mining giant Anglo American said on Friday it would cut 19,000 jobs this year after posting a 29 per cent fall in 2008 net earnings to $5.2 billion (4.1 billion euros) because of the downturn.

The group said in an annual results statement that it was reacting to sharp falls in commodity prices brought on by a contraction in the global economy.

“As we begin 2009, the economic outlook remains weak, with limited visibility and we are continuing to experience volatility and downward pressure on commodity prices,” said Chief Executive Cynthia Carroll in the release.

“Against this backdrop, we have acted decisively to position the group through the downturn, including pulling back planned production growth, reducing the size of our workforce by 19,000 by the end of 2009 in line with our revised production and growth plans and further cost cutting.”

The cuts, amounting to 10 per cent of the company’s global workforce, are part of a drive to save $2.0 billion a year between now and 2011. The job cuts include the 10,000 announced last week by Anglo Platinum, the world’s biggest platinum producer which is 77 per cent owned by Anglo American.

Anglo American’s revenues fell 7.6 per cent to $32.964 billion last year, while the group added that it had suspended shareholder dividend payments and will not give a dividend for 2008.

In reaction, Anglo American shares slumped 13.59 per cent to 1,068 pence on a London market that was down 2.53 per cent at the half-way stage.

“The dividend cut is a big disappointment and removes a key leg of the investment case,” warned Jonathan Jackson, head of equities at stockbrokers Killik & Co. “However, the statement provides reassurance the group does not, at present, need to return to shareholders for further capital.”

Lost jobs make ripples, not waves, in China

2009-02-21T01:42:00.003-08:00

Saturday, February 21, 2009
ZHENGZHOU, China: Whatever the uncertainties as jobs vanish for China’s migrant workers, two things seem clear: they will become neither rebels nor farmers.

Officials estimate that 20 million rural migrants are already out of work, fuelling fears that idle, frustrated young men will turn to protest and sow instability that could throw China’s economy badly off course.

The global financial crisis has sent Chinese growth tumbling to below 8 per cent, a level widely regarded as a minimum for China to create enough jobs for those entering the workforce.

A key plank of the government’s strategy to mitigate the threats posed by job losses has been to encourage the unemployed to return to the countryside, where incomes are low but most have a piece of land to call their own and keep themselves fed.

A few weeks into peak job-hunting season after Chinese New Year, the back-to-the-farm plan has come up short. But Beijing’s protest nightmare is not becoming a reality.

In Henan, a central province that is the country’s biggest source of migrants, local authorities reckon that up to 80 per cent of labourers are once again on city streets looking for work.

Apart from sporadic bursts of anger, the vast majority of migrants are instead resigning themselves to a much more prosaic fate of lower wages and fewer work hours.

“Finding a job is not a problem. It’s finding a satisfactory one that’s tough,” Gao Lei, 24, a ruddy-faced man shopping around his skills as a truck driver at a job fair in Henan’s provincial capital, Zhengzhou.

Young crowds swarmed the municipal office where toy makers, plastic factories, real estate developers and construction companies set up tables, some offering glossy pamphlets, many just displaying hand-painted signs.

“There definitely are jobs out there but not as many as last year and pay is lower,” Gao said. “But rural conditions are worse, so it’s still better to be here.”

To be fair, the government’s intention was not simply to get migrants tilling the soil again, but rather to encourage them to create their own businesses in rural areas.

Henan has pledged 30 million yuan ($4.4 million) to train would-be entrepreneurs and a further 30 million yuan in low-interest loans for start-ups. Other provinces that produce large numbers of migrants, such as Sichuan and Anhui, have also promised similar assistance.

“The best case scenario is that migrants who have skills and know-how learnt in factories can bring the knowledge back to their villages,” said Linda Yueh, an economist at Oxford University.

But she added: “When you have a more marketised economy, the government cannot just enact policy by dictate, tell people to start firms and tell firms to produce and employ people.”

The limits of the government’s power to spark rural enterprise are evident in the villages of low brick homes and stamp-sized farms just outside Zhengzhou.

A few restaurants and building-material shops are dotted along the dusty roads, but the villages are shorn of the 20 and 30-year-olds who could drive consumption and start businesses.

In a self-perpetuating cycle, they leave the countryside because of a lack of opportunity, and their departure strips the countryside of its best hope.

Yan Li, 22, is a rare exception. She runs a car repair shop that she and her husband took over from his parents.

“During the harvest it can be a constant rush,” she said, watching as her husband worked on a neighbour’s three-wheel tractor. “But even then, there are days when there’s absolutely nothing. And we’re completely closed through the winter.”

Workers protested against low pay late last year outside a series of factories in China’s export hub of Guangdong, portending a year of disputes and rancour.

Top Chinese leaders followed with unusually blunt warnings about the potential for more instability, the government’s biggest worry, as the economy slowed further.

But what has been striking about 2009 so far has been the relative quiet on city streets. An important part of the explanation lies in the nature of the migrant workforce.

Compared with the overhaul of state-owned firms a decade ago that saw thousands of protests by laid-off workers, the current economic downturn is less of a shock.

Indian food policy failing, millions hungry: UN

2009-02-21T01:42:00.001-08:00

Saturday, February 21, 2009
NEW DELHI: A flagship government food subsidy scheme is failing and millions in India remain hungry despite years of economic boom, a UN report showed on Friday.

The Targeted Public Distribution System (TPDS), meant to sell food essentials to India’s poorest people at subsidized prices, has excluded large numbers because of poor data and lack of adequate definitions of hunger, the report said.

About 20 per cent of the world’s 1 billion hungry poor live in India. Though numbers fell until 2003, the report said since then “the number of undernourished in India reportedly (is) increasing substantially”. India ranks 94th in the Global Hunger Index of 119 countries, the report said, adding nearly half of Indian children are underweight.

Food subsidies were almost universally available until 1997, the report said, but criticisms of their inefficiency led to a policy change.

In theory, cut price food essentials would be sold only to those who really needed help, but in practice the TPDS excluded large numbers of people and reclassified others as better of than they actually were.

“Apart from failing to serve the intended goal of reduction of food subsidies, the TPDS also led to greater food insecurity for large sections of the poor and the near-poor,” the report, written by the UN World Food Programme and a think-tank, said. “These targeting errors arise, due to imperfect information, inexact measurement of household characteristics, corruption and inefficiency.”

The report cited one survey which said anted 18 per cent of households below the poverty line did not have ration cards needed to claim benefits. The document questioned the government’s definitions of hunger and poverty.

“The fact that calorie deprivation is increasing during a period when the proportion of the rural population below the poverty line, is claimed to be declining rapidly, highlights the increasing disconnect between official poverty estimates and calorie deprivation,” it said.

The report also blamed a fall in food grain production, higher unemployment and a decrease of the poor’s purchasing power for India’s high malnutrition levels at a time when the economy has grown at about 9 per cent in recent years.

Food insecurity in rural areas has dropped in several states, but has risen in others, the report said, using a range of indices such as calorie intake, energy deficiency and anaemia.

Large sums of government subsidies are lost because of rampant corruption at local level, said a lawmaker from one of India’s poorest states, Jharkhand.

Oil falls below $38

2009-02-21T01:41:00.000-08:00

Saturday, February 21, 2009
LONDON: Oil fell more than $2 a barrel to below $38 on Friday, retreating as the global economic outlook deteriorated, dragging stock markets down across the world. Oil prices rallied strongly on Thursday, jumping 14 per cent after data showing an unexpected draw in US crude stocks. But worries over the health of oil demand have resurfaced, with sentiment dented by sharp falls in equity markets.

European shares tumbled to a six-year low as investors fretted about capital increases and bank nationalisation on the back of a deepening economic downturn.

US crude futures for March delivery, which expire on Friday, were down $1.68 at $37.80 a barrel by 1505 GMT, after posting the biggest settlement gain since Dec 31 in the previous session. April delivery fell $1.75 to $38.42, while Brent for April delivery dropped $1.35 to $40.64 a barrel.

Gold surges to Rs25,000

2009-02-21T01:40:00.000-08:00

Saturday, February 21, 2009
By Faryal Najeeb

KARACHI: Gold crashed through the Rs25,000 barrier, the highest level, on Friday as it rose by another Rs429 in line with international bullion rate which continued its momentum and rose above $1,000 an ounce.

In the local market, gold stood at Rs25,114 per 10 grams and Rs29,300 per tola on Friday. A month ago, the yellow metal had fluctuated in the range of Rs21,000 to Rs22,000 per 10 grams as an extremely volatile global market had set the base for gold to climb further.

Gold dealers in the country said they were rather worried now as buying had ceased yet again as gold spiraled beyond the common man’s purchasing power and even investors were cautious about investing into the precious yellow metal for fear that prices may decline soon.

However, President All-Pakistan Supreme Council of Jewellers Association, Alhaj Haroon Rashid Chand had a different opinion. He predicted that gold would touch the Rs30,000 per tola barrier before the weekend or by early next week.

He voiced that the excitement that hiking gold prices had created had died down a little as the yellow metal became costlier. In the international bullion market, gold was evaluated above $1,000 an ounce on Friday.

Asian stock markets fall after Wall Street tumbles

2009-02-20T11:12:00.001-08:00

Friday, February 20, 2009
HONG KONG: Asian stocks market dropped Friday, with benchmarks in Japan and Hong Kong sliding about 2 percent or more, after gnawing economic fears sent Wall Street tumbling to its lowest close in more than six years.

Investors found few reasons to wade into the market after the Dow Jones breached the levels it touched in November when the financial crisis sent global equities into a tailspin. The Dow's miserable finish _ its worst since Oct. 9, 2002, when the last bear market hit bottom _ spurred fears the markets' downturn is far from over. It also provided a clear sign that investors don't see a quick end to the worst global slowdown in decades despite the unprecedented economic measures taken by governments around the world.

Japan's Nikkei 225 stock average lost 141.27 points, or 1.9 percent, to 7,416.38, and Hong Kong's Hang Seng dropped 324.59, or 2.5 percent, to 12,698.77. South Korea's Kospi shed 3.7 percent to 1,065.80 as the country's currency, the won, continued to lose ground against the dollar. In mainland China, Shanghai's benchmark gained 1.5 percent after the government said it would aid light industry and petrochemical suppliers in its latest stimulus measures. That came as the governor of the central bank of Australia, its own economy heavily reliant on Chinese demand for commodities, said China's economy has already bottomed.

Overnight in New York, investors unloaded financial heavy weights Bank of America and Citigroup amid concerns that banks will need even more capital to restore their health. The Dow lost 89.68, or 1.2 percent, to end at 7,465.95, with broader indices slipping as well. The Standard & Poor's 500 index ended down 9.48, or 1.2 percent, to 778.94. The index finished above its Nov. 20 close of 752.44,which was its worst finish since April 1997. With U.S. futures lower, Wall Street was poised to drop further. Dow futures fell 58, or 0.8 percent, to 7,404 and S&P500 futures were down 7.3, or 0.9 percent, to 772.10.

Gold recovers

2009-02-20T11:10:00.004-08:00

LONDON: Gold lifted from lows on Thursday as safe-haven demand boosted interest in gold and bullion-backed exchange-traded funds, but remained depressed by profit taking amid fears the metal’s recent sharp rally had been overdone. Spot gold was at $977.00/979.00 an ounce at 1536 GMT from $984.50 late in New York on Wednesday.

Pakistan may export flour on surplus wheat

2009-02-20T11:10:00.003-08:00

Friday, February 20, 2009
SINGAPORE: Pakistan will likely produce more wheat from its bumper crop than a government target of 25 million tonnes this year, paving the way for more exports from South Asia which could further dent world prices.

“There is no fear of any shortfall. It should meet our requirement, we should have some surplus,” Muhammad Saeed, chairman of the Trading Corp of Pakistan, told Reuters.

“We are looking into exports. We will do value addition and send wheat flour to Afghanistan. Depending on the market conditions, we may export to the Middle East.”

Pakistan joins India in producing a record crop which may allow wheat exports from South Asia, adding pressure to the already depressed global wheat prices.

India, the world’s second-biggest wheat producer, is expected to export the grain for the first time in six years after a near record harvest of 77.8 million tonnes that is likely to boost stocks.

Wheat prices have dropped 62 per cent to $5.12-ž per bushel since peaking on the global benchmark Chicago Board of Trade in February 2008, pressured by rising global supplies amid an economic slump.

Traders in Pakistan said the country was expected to sell up to 2 million tonnes of wheat flour. “There will be no need for imports from the new year in April,” said a trader from Lahore. “We will export wheat products. We should be able to sell 2 million if the crop is as good as it looks.”

Pakistan produced 21.8 million tonnes of wheat in 2007/08 after the area under cultivation fell 2.6 per cent against a target area of 21 million acres (8.49 million hectares), and the government had to import wheat to cover the shortfall.

Pakistan consumes about 22 million tonnes of wheat a year while nearly 1 million tonnes finds its way into neighbouring Afghanistan and Iran, traders say.

Saeed said the country had sufficient wheat stocks and the government had yet to decide on a tender of around 250,000 tonnes of US wheat, which according to international traders received only one bid earlier this month.

“We have sent our proposal to the government and it will take a decision,” he said by phone from Karachi. “Wheat stocks are quite normal, 60,000 tonnes is lying at the ports and about 200,000 tonnes is scheduled to arrive by the end of this month or in the first week of March.”

Nestle posts jump in net profits to 18bn francs

2009-02-20T11:10:00.001-08:00

Friday, February 20, 2009
GENEVA: The world’s biggest food company Nestle on Thursday posted a surge in net profits to 18 billion Swiss francs in 2008 and said it would be among the industry’s fastest-growing firms this year despite slower consumer demand.

The profits equivalent to 12 billion euros or $15 billion were up 69.4 per cent from 2007’s 10.6 billion francs.

The earnings were significantly boosted by the sale of a quarter of its stake in eye-care company Alcon to Novartis, leading to a profit of $9.2 billion on the disposal.

Sales reached 109.9 billion francs last year, up 2.2 per cent compared to 2007, as the strength of the Swiss franc against most other local currencies dented the results reported in francs.

But the group warned that the global economic downturn “could further impact consumer demand.”

Stanford goes missing as worried investors pull funds

2009-02-20T11:09:00.002-08:00

Friday, February 20, 2009
WASHINGTON: Authorities were trying to track down Texas billionaire financier Allen Stanford on Thursday as fraud charges against the cricket promoter prompted panicked investors to withdraw cash from his banks.

Two days after the US Securities and Exchange Commission accused Stanford, 58, of perpetrating “a fraud of shocking magnitude,” SEC officials were still in the dark about his whereabouts, as too were close members of his family.

Authorities in the Caribbean island of Antigua and in parts of South America meanwhile sought to quell fears among depositors as big queues formed outside branches of his bank.

In an interview with the Houston Chronicle newspaper, Stanford’s 81-year-old father James said that he had no idea of his whereabouts.

“I’d spoken to him a week or so ago, he’d called, about problems with the business climate in general, but nothing of this magnitude,” he said. “I cannot imagine, I cannot believe, I will not believe what is being alleged actually happened.” The elder Stanford said he understands that authorities were trying to track down his son, but insisted he didn’t know where he was. “I cannot believe that my son would run,” he added.

Investors were meanwhile growing fearful about the status of their investments in Stanford’s offshore bank and his Houston-based brokerage. “We’re just sick about it. It’s visceral,” Sandra Walsh, a retired school librarian in Houston, told the daily. Walsh said she and her husband kept their life savings in an account at Stanford Financial Group.

A substantial portion of Stanford’s clients are in South America, where the Venezuelan government issued a request for more information from US authorities.

“They are wondering what will be done with Stanford Bank in Venezuela,” Finance Minister Ali Rodriguez said on Wednesday. “At the moment we are investigating what repercussions may have occurred with the institution abroad, while at the same time we are asking US authorities about the real situation.”

Elderly New Yorkers angry as crisis hits poorest

2009-02-20T11:09:00.001-08:00

Friday, February 20, 2009
NEW YORK: From housebound grandmothers who relay on charity meal deliveries, to ailing retirees who cannot pay rising costs for medications, older Americans feeling the pinch of the financial crisis are getting angry and forming groups with names like “Senior Outrage.”

In New York, with city and state tax revenues tumbling, benefits and services to the elderly are being cut, and many older residents are furiously drawing comparisons to the billions of dollars spent to bail out banks, and pay Wall Street bonuses.

Dolores Green, 68, retired as a home help worker and lives on a government Social Security check of $740 a month. She pays $719 a month in rent, leaving just $21 for everything else.

To eat, she relies on the federal food stamp assistance programme, and worries that her cost for some medication she needs for her diabetes has gone up to $8 from $3. To get by, she said: “I run errands for seniors. They may hand me $2 or $3 or something.”

Green says she sees more people seeking government assistance, such as her daughter, who lost her job after 25 years.

“She’s just applied for food stamps, she’s got two kids,” Green told Reuters at a community center where some 25 elderly New Yorkers were eating a lunch of sandwiches, a gelatin dessert, milk and tomato juice. “That’s why she can’t help me, because she’s got to help her children.”

“Maybe I’ll move in with you,” she jokes to her friend Alice Jordan, 80, a retired teacher who suffers from osteoporosis and high blood pressure. Jordan said her food stamp allocation had gradually eroded to $54 a month from $180.

When she reads about the well-heeled victims of financier Bernard Madoff’s suspected $50 billion Ponzi scheme, she says she wishes they would spare a thought for those who never had such wealth.

“Just like this guy Madoff ripped them off, how did they feel when they lost their money and had to change their style of living? Think of us. How do you think we feel?” she asked.

New York City’s Department for the Aging, which runs more than 300 community centers for aging residents and provides services such as food delivery to the homebound, affordable housing and heating subsidies, has cut its 2009 budget by $4 million to $285 million and faces another proposed cut, of $9.5 million, in 2010.

The cuts are part of Mayor Michael Bloomberg’s bid to close a $4 billion city budget gap caused by the collapse of corporate tax revenues, especially from Wall Street, which normally pumps a fortune into local coffers.

New York state, which typically gets 20 per cent of its revenues from Wall Street taxes, also is proposing cuts in health care and services for the elderly as part of a drive to close a $13 billion 2009 budget gap.

Among the proposals is a cut in the state contribution to the Federal Supplemental Security Income, or SSI, for elderly, blind or disabled people with little or no other income. Parvati Devi, 62, says that would cut her SSI check by $24. “I can’t afford to have anything cut,” she said. “We collect cans on the street, we do anything to survive.”

A couple of hundred retirees attended a forum with New York city and state officials this month to express their anger at cuts they say are hitting the most vulnerable people hardest.

“We are outraged that the government, which has spent hundreds of billions of dollars to bail out financial institutions, and they in turn have given $18 billion as bonuses to their top executives, has no funds to support vital services for their senior citizens,” said Muriel Beach, New York City head of the State Wide Senior Action Council.

State Wide and other groups formed the “Senior Outrage Coalition” this month to mobilise protest among the city’s 1.3 million citizens aged 65 and over.

“We are of a generation that fought in the sixties,” she said. “We’re out there doing it again.”

City figures show that in 2006, one-fifth of New Yorkers age 65 and older lived in poverty, twice the national average. Advocacy groups say by now it is closer to one-third, and New York is second only to Detroit among major US cities in its rate of poverty among the elderly.

Moreover, the federal poverty guidelines for 2008, $10,400 for a single person and $14,000 for a couple, are so low that many who are in need do not qualify for most public benefits. Minorities tend to fare worst, with 30 per cent of Hispanic, 29 per cent of Asian and 20 per cent of elderly blacks in poverty compared with 13 per cent of elderly whites in New York City.

A formidable crowd despite walkers, canes and wheelchairs, many at the forum vented rage at lavish bonuses being paid on Wall Street.

Richard Gottfried, a state assemblyman, said while they might have been pleased to hear that six top executives at investment bank Goldman Sachs gave up their bonuses last year, the tax on their bonuses alone put $12 million into the state budget in 2007. “I, like many of you, could do a lot with $12m,” Gottfried said.

Oil above $37 after US crude data

2009-02-20T11:08:00.000-08:00

Friday, February 20, 2009
LONDON: Oil rose more than $2 to above $37 on Thursday after United States government crude inventory data showed an unexpected fall in US crude stocks.

Data from the US Energy Information Administration (EIA) showed US weekly crude stockpiles were off 200,000 barrels at 350.6 million barrels, against a forecast rise of 3 million barrels.

A day ahead of expiry, US crude futures delivery rose $2.68 cents to $37.30 a barrel by 1616 GMT.

April delivery contracts rose $1.85 cents to $39.26. London Brent for April delivery rose $1.88 cents to $41.43.

“Crude stocks made a surprise fall here as imports were down and refinery activity was up. We’ll have to see if the import decline is the start of a trend as OPEC is really doing a lot to carry out output cuts,” said Amanda Kurzendoerfer, commodity analyst at Summit Energy.

Oil stocks in the US have risen by 20 per cent since September as the downturn has crushed consumption, and helped pull crude prices more than $110 off their last summer peaks.

EC accuses cricket magnate in $9.2 billion fraud

2009-02-19T05:48:00.000-08:00

Thursday, February 19, 2009
WASHINGTON: US regulators on Tuesday accused Texas magnate and top cricket promoter Allen Stanford of fraud in selling $9.2 billion in securities by promising “improbable and unsubstantiated” returns.”

A US district judge froze Stanford’s assets after the Securities and Exchange Commission (SEC) said he was involved in global “fraud of shocking magnitude that has spread its tentacles throughout the world.”

Stanford’s wealth management and financial services group has offices across North America, Latin America, Europe and the Caribbean.

The SEC filed civil charges against Stanford and other officials of his financial group in a federal court in Dallas. It is the most high profile alleged fraud scheme since the SEC charged Wall Street financier Bernard Madoff with carrying out a $50 billion Ponzi scheme December.

A major cricket enterpreneur, the 58-year old Stanford faces civil fraud charges for “promising improbable and unsubstantiated high interest rates,” the SEC said.

It charged him and three of his companies with “orchestrating a fraudulent, multi-billion dollar investment scheme centering on an eight billion CD (certificate of deposit) programme,” a statement said.

Stanford’s companies include Antiguan-based Stanford International Bank (SIB), Houston, Texas-based broker-dealer and investment adviser Stanford Group Company (SGC), and investment adviser Stanford Capital Management.

The SEC also linked Stanford to an additional scheme relating to $1.2 billion in sales by SGC advisers of a mutual fund programme, called Stanford Allocation Strategy (SAS), by using “materially false” data.

SIB chief financial officer James Davis as well as Laura Pendergest-Holt, chief investment officer of Stanford Financial Group (SFG), were included with Stanford in the SEC enforcement action.

Following the commission’s action, US District Judge Reed O’Connor had entered a temporary restraining order, froze Stanford’s assets, and appointed a receiver to marshal those assets.

7.2 million more Asians to be jobless in 2009

2009-02-19T05:47:00.000-08:00

Thursday, February 19, 2009
MANILA: Asia is likely to have 7.2 million more jobless people in 2009 than last year due to fallout from the global economic crisis, the International Labour Organisation said on Wednesday.

It forecast the ranks of unemployed workers would likely balloon to 97 million in 2009 in Asia, the world economy’s star performer in recent years but where a third of the population still live on a little over $1 a day. That would raise the region’s jobless rate to 5.1 per cent from 4.8 per cent last year.

In the most pessimistic scenario, the number of unemployed could swell to 113 million, or 22.3 million more than last year, the ILO said in a report on the crisis’ fallout in Asia.

An estimated 51 million new jobs will be needed this year and the next to absorb Asia’s growing labour force, with most jobs needed in the region’s giant economies, 20.3 million in India, 10.9 million in China and 3.6 million in Indonesia.

Countries with the highest rates of expected labour force growth through 2010 include Pakistan at 6.1 per cent, Cambodia at 4.9 per cent, and the Philippines at 4.9 per cent.

“There is very little chance that a sufficient number of new jobs will be created in the region this year to keep up with the expected labour force growth,” the report added.

As fewer jobs are created at home, remittances from the region’s army of migrant workers began to slow in the third quarter of 2008.

The Geneva-based ILO said the World Bank now forecasts an overall drop in remittances in 2009, partly due to the deep recession in the US, which accounts for 44 per cent of the workers’ money sent to East Asia and the Pacific, and 28 per cent to South Asia.

“As global demand for workers contracts, the flow of migrant workers from developing Asia will moderate in 2009,” the report said. “For labour-sending countries, this will exacerbate the challenge of mitigating job losses and generating new employment domestically.”

Remittances comprise a third of gross domestic product in Tonga, 17 per cent in Nepal, 11 per cent in the Philippines, 9.7 per cent in Bangladesh and 8.3 per cent in Sri Lanka.

Speaking to reporters in Manila, ILO officials warned governments against closing their borders to foreign workers.

Microsoft expands access to affordable PCs

2009-02-19T05:45:00.002-08:00

Thursday, February 19, 2009
By our correspondent

KARACHI: Microsoft has initiated the country’s first Registered Refurbishing programme with the support of 20 partner computer refurbishers to expand the affordable and safe channels through which local businesses, households and schools can obtain high-quality used PCs in Pakistan.

Under this initiative, Microsoft’s registered partners will be able to sell refurbished PCs with genuine Microsoft software pre-installed at a price starting from Rs8900.

“Microsoft Registered Refurbisher programme creates economic opportunities for both our partners and our customers,” said Ali Hoballah, Middle East and Africa regional general manager of the Microsoft Unlimited Potential Group.

Microsoft Registered Refurbishers provide refurbished PCs starting from Rs9000 with genuine Microsoft software, access to future Microsoft software updates and downloads and the peace of mind that comes with after-sales support from authorised partners and a six-month warranty.

In addition, the program will aim to cut down on environmental impact of e-waste by providing customers with the option to recycle the PCs when they reach the end of their useful life.

Oil slides below $35

2009-02-19T05:45:00.001-08:00

Thursday, February 19, 2009
LONDON: US oil prices fell below $35 a barrel on Wednesday, continuing Tuesday’s nearly 7 per cent slide on renewed economy concerns, slumping demand and bloated inventories.

US crude for March delivery fell 4 cents to $34.89 a barrel by 1553 GMT, while London Brent crude for April delivery was down 92 cents to $40.11 a barrel.

“The crude market is still hanging on to the low end of its range,” said Tom Bentz, an analyst at BNP Paribas Commodity Futures Inc in New York. “The market is waiting for inventory reports over the next couple of days and positioning ahead of Friday’s March crude expiration,” Bentz said.

With the March US crude contract due to expire on Friday, April contract’s premium narrowed to around $3.60 on Wednesday versus nearly $8 last week, a sign traders believe swollen inventories in Cushing, Oklahoma may persist.