Saturday, March 21, 2009

HK inflation eases


HK inflation eases
21-03-2009

The latest government figures show that inflation slowed to 0.8 percent last month - as a deepening economic downturn and the timing of the Lunar New year holiday cooled consumer spending. The figure for January - when the holiday fell - was 3.1 percent. A government spokesman said the lower inflation reflected the flexibility of local costs and prices to adjust in response to the economic downturn. And he predicted that inflationary pressure would recede further. The government is predicting that full year inflation will be 1.6 percent.

Surge in HK bankruptcies


Surge in HK bankruptcies
21-03-2009

There's been a surge in the number of bankruptcies. Latest government figures show that just over 1,600 firms filed for bankruptcy last month. It's the biggest monthly figure since 2004, and is more than double the figure for January. The Official Receiver's Office also issued 31 winding-up orders last month.

Friday, March 20, 2009

Wall Street rally stalls


Wall Street rally stalls
2009-03-20 HKT 07:32

US stocks fell on Thursday on concerns that the Federal Reserve's latest efforts to stem the US recession are too costly and untested, prompting investors to book profits on bank shares after the recent sharp rally. Analaysts say investors were unsettled by the implications of the Fed's action to pump another US$1 trillion into the financial system and a plan to expand its consumer and small business lending programme, fearing the moves could stir up inflation in the long term. The Dow Jones industrial average fell 85.78 points, or 1.15 percent, to 7,400. The Standard & Poor's 500 Index lost 10.31 points, or 1.30 percent, to 784. The Nasdaq Composite Index shed 7.74 points, or 0.52 percent, to 1,483. Oil prices rose. New York's main futures contract, for delivery in April, ended $3.47 higher from Wednesday's close at $51.61 per barrel. The dollar extended its decline.

US lawmakers vote for 90% bonus tax


US lawmakers vote for 90% bonus tax
20-03-2009

The United States House of Representatives has voted to impose a 90 percent tax on bonuses awarded by companies that have been bailed out with government funds. The move follows outrage over the decision by the insurance company, AIG, to award its employees millions of dollars in bonuses after taking $170 billion in aid from the government. The vote was 328-93 in favour of the legislation. "We want our money back and we want our money back now for the taxpayers," said House Speaker Nancy Pelosi, a California Democrat. Bonuses, totaling $165 million, were paid to employees of AIG, including to traders in the unit that nearly brought about the company's collapse. In all, 243 Democrats and 85 Republicans voted "yes" on the bill. It was opposed by six Democrats and 87 Republicans. The margin of victory came despite sharp Republican attacks calling the legislation a legally questionable ploy to paper over Obama administration missteps.

World economy 'to shrink in 2009' - IMF


World economy 'to shrink in 2009' - IMF
20-03-2009

The International Monetary Fund has warned that the global economy will shrink for the first time in 60 years this year. "Global economic activity is falling - with advanced economies registering their sharpest declines in the post-war era - notwithstanding forceful policy efforts," the IMF said in a report. It cut its forecasts to a global contraction of 0.5-1.0 percent, sharply lower than the 0.5 percent growth given only on January 28. The revision "reflects unrelenting financial turmoil, negative incoming data, sinking confidence, and the limited effect to date of policy responses with respect to the restoration of financial system health," it said. Advanced economies are expected to suffer "deep recessions" in 2009, shrinking between 3.0 and 3.5 percent, while growth will slow sharply in developing countries.

Shareholders approve HSBC rights issue


Shareholders approve HSBC rights issue
20-03-2009

Shareholders in Europe's biggest bank HSBC have approved a plan to boost its capital by 12.5 billion pounds (US$18.06 billion) to withstand the financial crisis. The proposal was backed by a 99.1-percent majority. HSBC outlined its plan for a record British rights issue earlier this month when it reported a 70-percent plunge in annual net profits. London-based HSBC has been regarded as one of the more robust global banks as the crisis devastated many top lenders around the world and has refused British government financial assistance in contrast to some of its rivals.

Yam warns of volatility after US move


Yam warns of volatility after US move
20-03-2009

The Chief Executive of the Hong Kong Monetary Authority, Joseph Yam, has warned investors that the US debt market will be volatile. He was speaking following the Federal Reserve's announcement that it will inject nearly US$1.2-trillion into the American economy. The Fed will spend US300-billion buying government bonds, and another US$750-billion acquiring mortgage-backed securities. Mr Yam said "printing money" to stimulate the economy was not a sustainable approach. He warned there would be implications for the financial markets when the US halted this policy. But he said he expected it to maintain such an approach until the economy recovered.

Huiyuan criticises Coke deal's rejection


Huiyuan criticises Coke deal's rejection
20-03-2009

China's Huiyuan Juice Group says a merger with Coca-Cola could have encouraged competition and benefited consumers. The comments follow Beijing's decision to block the US$2.4-billion deal. The Ministry of Commerce said that it would have had "a negative influence on competition" and forced consumers to "accept higher prices and a smaller choice of products." However, Huiyuan insisted the merger, which would have been the biggest foreign takeover of a Chinese firm, could have brought benefits to the market and China's agriculture and beverage sectors. "An expanding industry will definitely attract more market participants and result in higher sales revenue," said a company statement."All these in turn help promote healthy competition in the market, and ultimately customers will benefit from more choices." A foreign ministry spokesman in Beijing denied that protectionism was a factor in the decision. "The Chinese government's rejection of Coca-Cola buying Huiyuan is an objective judgement based on the anti-monopoly law. It's not trade protectionism," he said. "The decision was to maintain fair competition in the Chinese market."

Thursday, March 19, 2009

Obama seeks more financial oversight


Obama seeks more financial oversight
19-03-2009

President Barack Obama says he wants Congress to pass legislation giving the US government greater regulatory authority over financial institutions like the insurance giant AIG. Speaking to reporters on the White House lawn as he prepared to go to California, Mr Obama again criticised the company for its business practices and the executive bonuses that it had authorized. Mr Obama said, "The buck stops with me." And he disclosed that he and members of his economic council have commenced discussions with leading congressional players on legislation that would create another regulatory entity - along the lines of the Federal Deposit Insurance Corporation - to give the government more authority over financial institutions like AIG. Executives at AIG awarded themselves multi million dollar bonuses - despite the fact the company had to be rescued with American taxpayers money to prevent its collapse.

AIG chief asks for bonuses back


AIG chief asks for bonuses back
19-03-2009

AIG chief executive Edward Liddy has told the US Congress that he has asked recipients of politically toxic bonuses to "do the right thing" and return half the money. "We've heard the American people loudly and clearly these last few days," he said at a combative hearing in the House of Representatives. "Accordingly this morning I've asked the employees of AIG Financial Products to step up and do the right thing," he said, calling on employees earning bonuses of more than US$100,000 "to return at least half of those payments." "Some have stepped up already and offered to return all of those payments," he said without offering details. Pressed on why the $165 million in bonuses were ever necessary in the first place, Mr Liddy stressed that the financial products unit was still sitting on $1.6 trillion of risky investments that needed expertise to unwind. "I'm trying desperately to prevent an uncontrolled collapse of that business," he said.

UK unemployment passes two million


UK unemployment passes two million
19-03-2009

Unemployment in Britain has risen above two million for the first time since 1997, official figures show. The Office for National Statistics said that during the three months to January, the number of people unemployed totalled 2.03 million, up by 165,000. For February, the number of people getting jobseeker's allowance added a record 138,400 to reach 1.39 million. Analysts say the job market is only going to get weaker as credit-starved companies lay off workers as they struggle to stay afloat in the worst global downturn in decades. "Going forward we expect unemployment to rise well in excess of three million through next year," said Amit Kara, UK economist at UBS. Banks have fired thousands of employees since the credit crunch bit, while the pre-Christmas collapse of retailer Woolworths resulted in 27,000 people losing their jobs.

Fed pumps cash into US economy


Fed pumps cash into US economy
19-03-2009

The US central bank, the Federal Reserve, has announced plans to pump an additional trillion dollars into the financial system in an effort to lift the US economy out of its worst slump since the 1930s. The Fed, at the conclusion of a policy meeting, said it would buy up to US$300 billion in long-term US Treasury bonds over the next six months "to help improve conditions in private credit markets." The central bank also said it was boosting its purchases of mortgage securities by $750 billion, bringing its total to $1.25 trillion this year as part of a wide-ranging effort to revive the sagging US economy. The announcement was made at the end of a two-day meeting by the Federal Open Market Committee, which kept its base lending rate in a range of zero to 0.25 percent. The Fed, which had been expected to keep its federal funds rate unchanged, said it "anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." The panel said that since its last meeting in January, data "indicates that the economy continues to contract" amid a deep recession that is gripping the entire world.

Wednesday, March 18, 2009

World Bank cuts China's growth forecast


World Bank cuts China's growth forecast
18-03-2009

The World Bank has cut its forecast of China's 2009 growth from 7.5 percent to 6.5 percent, but expressed confidence in Beijing's ability to keep the economy expanding amid the global turmoil. The recent plunge in the mainland's trade will hurt investment and job creation, the bank said in its quarterly report. However, it added that China still should grow faster than other major countries due to its huge stimulus package and strong banks, which were unhurt by the global crisis. "China's exports have been hit badly, affecting market-based investment and sentiment, notably in the manufacturing sector," the report said. That would lead to "weaker market-based investment, less job growth" and downward pressure on prices, it said, forcing companies to cut wages and investment. Premier Wen Jiabao said last week China should meet its official eight percent growth target, despite a 25.7 percent drop in exports in February. Growth forecasts by private sector economists range from eight percent to as low as five percent - the strongest of any major country - but a sharp drop from a stunning 13 percent expansion in 2007. Beijing still has "plenty of space to implement forceful stimulus measures," with more spending and interest rate cuts, the report said.

Trading in PCCW suspended


Trading in PCCW suspended
18-03-2009

Trading in PCCW shares has been suspended. No reason has been given, but it follows reports that regulators have widened their investigation into alleged rigging of a vote on PCCW's privatisation. The High Court is due to decide on April 1 whether the company's proposed HK$15.9-billion privatisation plan should go ahead. However, it's been suggested that the latest developments may delay the decision.

MTRC signs Shenzhen metro deal


MTRC signs Shenzhen metro deal
18-03-2009

The MTR corporation has signed a concession agreement with the Shenzhen authorities to operate a metro line in the city for 30 years. The MTRC will take over the part of Metro Line 4 that is already in service, and will be responsible for building the rest of the line. Construction of the 20-kilometer line is expected to be completed in 2011. It's the first cross-border infrastructure project carried out under CEPA agreements. The line will be connected to the future Guangzhou-Shenzhen-Hong Kong express railway.

China rejects Coke's bid for juice maker


China rejects Coke's bid for juice maker
18-03-2009

Coca Cola's bid for mainland company fails. Photo: Reuters.
China has rejected Coca-Cola's US$2.5-billion bid to buy a major mainland juice producer. The purchase of the Huiyuan Juice Group would have been the biggest foreign acquisition of a Chinese company. The Commerce Ministry said the proposed deal was rejected on anti-monopoly grounds. Huiyuan's share price tumbled 19 percent in Hong Kong before trading was suspended. Coca-Cola's bid last September prompted an outcry by nationalists who urged the government to bar foreigners from acquiring one of the country's most successful homegrown brands. Rival juice producers warned that the acquisition would give Coca-Cola too dominant a position in China's beverage market.

Doubts over deal hit Rio Tinto shares


Doubts over deal hit Rio Tinto shares
18-03-2009

Fears that a US$19.5-billion deal with a major mainland company could fail has sent debt-troubled Rio Tinto's share price tumbling almost nine percent. Australian regulators earlier this week deferred making a decision on whether the Aluminum Corporation of China, or Chinalco, should be able to double its stake in the Anglo-Australian miner. This prompted some minority lawmakers to publicly oppose the deal, saying it was selling off assets that should stay Australian. The Foreign Investment Review Board said it would investigate the plan for another 90 days before making a recommendation to Treasurer Wayne Swan. He has consistently said he will only approve the deal if it is in the national interest. The plan also needs shareholder approval.

European markets lower


European markets lower
18-03-2009

Britain's leading share index ended 0.18 percent lower as mining shares retreated after recent gains but banks ended higher, led by HSBC. The FTSE 100 index was 6 points lower at 3,857, snapping a run of six gains in seven sessions. In Frankfurt, the DAX index ended at 3,987, down 56 points, or 1.4 percent. In Paris, the CAC-40 index closed at 2,767, down 24 points, or 0.87 percent.

US markets surge on housing news


US markets surge on housing news
18-03-2009

US stocks surged as an unexpected leap in housing starts pushed Home Depot and other retailers higher. A rise of nearly 4 percent in US crude oil futures boosted energy shares. The Dow Jones industrial average gained 178 points, or 2.48 percent, to 7,395. The Standard & Poor's 500 Index rose 24 points, or 3.21 percent, to 778. The Nasdaq Composite Index jumped 58 points, or 4.14 percent, to 1,462.

New home building rate in US gives hope


New home building rate in US gives hope
18-03-2009

The rate of new home building in the United States rebounded in February from record lows, rising for the first time in 10 months, according to data that gave a glimmer of hope for the recession-hit economy. The Commerce Department said housing starts jumped 22.2 percent to an annual rate of 583,000 units last month from 477,000 units in January. It was the biggest percentage rise since January 1990 and the first gain since April.

Towngas profit falls 54%


Towngas profit falls 54%
18-03-2009

Towngas has posted a 54-percent fall in profit for last year - because it failed to book any one-off gains from property sales and acquisitions. Earnings came in at HK$4.3 billion. Gas sales went up 2 percent during the year, mainly attributable to a rise in residential and restaurant consumption. The company expects commercial and industrial gas sales to slow down slightly this year because of the economic downturn.

HK jobless rate hits 5%


HK jobless rate hits 5%
18-03-2009

Hong Kong's unemployment rate has risen to five percent - the highest level since June 2006. The previous figure was 4.6 percent. Job losses were reported in construction, transport, the import and export trade, manufacturing and restaurants. The Labour Secretary, Matthew Cheung, said the worsening job market was noticeable and he expects unemployment to rise further.

HK firms freezing wages - survey


HK firms freezing wages - survey
18-03-2009

A survey has found that many companies in Hong Kong are freezing the pay of their staff - after four years of moderate salary increases. The Hong Kong Institute of Human Resource Management said the number of firms freezing salaries had increased to nearly 70 percent - the highest level since 2002. The co-chairman of the institute's remuneration committee, Lai Kam-tong, urged employers and staff to work together to get through the current difficult times.

HK Electric profit rises 7.8%


HK Electric profit rises 7.8%
18-03-2009

Hong Kong Electric has posted a 7.8-percent increase in profit for last year to HK$8-billion. The increased earnings were attributed to higher sales revenue and lower depreciation cost. The company will give a final dividend of HK$1-49 per share - higher than for the previous year.

Tuesday, March 17, 2009

Record slowdown at US factories


Record slowdown at US factories
17-03-2009

Industrial output in the United States fell for the fourth consecutive month in February, and the factory operating rate dropped to its lowest level in more than 50 years. Output was down by 1.4 percent last month, slightly worse than the 1.2 percent that economists had expected. At the same time the operating rate at America's factories fell to 67.4 percent of capacity, the lowest level on records that go back to 1948.

Monday, March 16, 2009

Foreign investment in China falls


Foreign investment in China falls
16-03-2009

Foreign direct investment on the mainland fell nearly 16 percent in February, from a year earlier. The number of newly-established companies dropped by 13 percent. The Commerce Ministry said investments by foreign businesses, not including financial institutions, were worth nearly US$6-billion.

Mainland may have lost US$80bn


Mainland may have lost US$80bn
16-03-2009

The mainland may have lost more than US$80-billion of its foreign exchange reserves after buying into equities just before world markets collapsed last year. The Financial Times reported that the investments were carried out by the State Administration of Foreign Exchange, which manages the nation's nearly US$2-trillion of reserves. The report comes after Premier Wen Jiabao expressed concern last week over the safety of the country's huge investments in the United States.

Bernanke predicts end of US recession


Bernanke predicts end of US recession
16-03-2009

The chairman of the United States Federal Reserve, Ben Bernanke, has said he expects the recession in his country to end this year. Mr Bernanke said the danger of another Great Depression, such as in the 1930s, had been averted. He said he expected recovery to begin next year. He said the world had come very close to financial meltdown last September before governments stepped in. He warned that the biggest risk to recovery would be a lack of political will to solve the problems besetting the economy.

Asian markets open higher


Asian markets open higher
16-03-2009

Asian stock markets have opened higher. Hong Kong shares were up 1.3 percent, with the benchmark Hang Seng Index gaining 168.06 points at 12,693 in the first minutes of trading. In Tokyo, the Nikkei was up 2.4 percent.

OPEC oil production to remain unchanged


OPEC oil production to remain unchanged
16-03-2009

Oil ministers from the twelve OPEC countries have agreed they won't reduce the amount of oil they're currently producing. However they will strictly enforce cuts they'd announced earlier of more than four million barrels a day. The ministers, meeting in the Austrian capital, Vienna, were trying to establish how to respond to the recent big falls in the price of oil: it's now trading at about a third of the price it reached last year.

Lehman investors stage new protest


Lehman investors stage new protest
16-03-2009

Protesters demonstrate. Photo: Reuters.
Hundreds of investors in Lehman Brothers minibonds have staged another protest march, accusing the government of failing to help them recoup losses from the failure of the US bank last year. The protesters, waving banners and shouting slogans, gathered in Causeway Bay before marching to the Monetary Authority offices in Central. The organisers said more than 1,000 protesters took part. The group accused the government of being irresponsible for failing to push through a buy-back plan. They say banks cheated customers by using misleading sales tactics.

Foreign investment in China falls


Foreign investment in China falls
16-03-2009

Foreign direct investment on the mainland fell nearly 16 percent in February, from a year earlier. The number of newly-established companies dropped by 13 percent. The Commerce Ministry said investments by foreign businesses, not including financial institutions, were worth nearly US$6-billion.

HSI closes 450 higher


HSI closes 450 higher
16-03-2009

The Hang Seng Index ended the day at 12,976 - that's 450 up on the previous close. In currencies, the American dollar's trading at 98.21 yen. The euro is standing at US$1-29. And the pound is worth HK$10-96.

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