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japan

Japan and Taiwan Exports Improve from May to June


Japan's exports fell in June at the slowest pace this year and orders for Taiwanese shipments declined the least in eight months, adding to evidence that Asia's economies are on the road to recovery. Japanese overseas sales dropped 35.7 percent from a year earlier, easing from a 40.9 percent decline in May, the Finance Ministry said in Tokyo. Orders for Taiwan exports, an indication of shipments in one to three months, fell 10.91 percent from a year earlier, easing from a 20.14 percent retreat in the previous month, the Ministry of Economic Affairs said in Taipei. Worldwide stimulus worth $2.2 trillion has stabilized demand and boosted shipments for exporters including Komatsu Ltd. and Taiwan Semiconductor Manufacturing Co. East Asia's rebound from the worst global recession since the Great Depression may be "V-shaped," the Asian Development Bank said today. "The slowdown in the exports decline is signaling a potential pick-up in the U.S. and Europe," said Tony Phoo, an economist at Standard Chartered Bank in Taipei. "China is driving the pickup in demand." The Nikkei 225 Stock Average rose 0.7 percent at the close in Tokyo, taking its gains to 39 percent since reaching a 26- year low on March 10. The yen weakened to 94.30 per dollar from 93.59 before the report as the improvement in exports encouraged investors to buy higher-yielding assets abroad. Taiwan's benchmark Taiex index is the world's ninth best performer this year, advancing 52 percent. Taiwan's dollar was little changed at NT$32.985 against the U.S. currency. Auto Parts, Chips Japan's trade slump eased in all of the country's main markets. Exports to China fell 23.7 percent from a year earlier, the smallest drop since October, led by improving demand for steel, auto parts and chips. Shipments to the U.S. declined 37.6 percent, the least since December, and sales to Europe slid 41.4 percent, also the best this year. "You have to search to find either a region or a product that isn't recovering," said Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo. "What's happening is going to be positive for consumer demand and positive for corporate investment." In Singapore, exports dropped the least in nine months in June, while South Korea's shipments fell at the slowest pace in eight months. The Bank of Japan last week raised its assessment of the economy for a third month, citing rebounds in trade and factory production as the reasons that "economic conditions have stopped worsening." Trade accounted for most of Japan's growth during the country's most recent expansion, a six-year stretch that ended in October 2007. China, Hong Kong The value of Taiwan's export orders rose to $27.94 billion last month from $25.17 billion in May, today's report showed. In the first half of the year, export orders fell 23.28 percent from a year earlier, compared with a 25.85 percent drop in the January-to-May period. Huang Ji-shih, chief statistician at the Ministry of Economic Affairs, expects export orders to start rising again in the fourth quarter. Export orders to China and Hong Kong from the island combined fell 10.49 percent last month, compared with a 17.65 percent drop in May. Analysts surveyed by Bloomberg predict the rebound in Japanese exports helped the world's second-largest economy expand an annualized 2.4 percent in the three months ended June 30. That would end four consecutive quarters of negative growth that shrunk gross domestic product down to its 2003 size. 'Driving Force' China's 4 trillion yuan ($586 billion) stimulus package is feeding demand for Japan's heavy equipment, autos and materials. The market this year surpassed the U.S. as Japan's biggest. "There's no doubt China has been a driving force for Japan's exports," said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. "Manufacturers will probably continue to increase production amid the improvement in exports, and that's good for the economic outlook." Komatsu's sales of construction machinery in China will probably jump about 40 percent this month, Chairman Masahiro Sakane said today at a business conference. Japan's biggest maker of earthmovers expects China to grow to about 15 percent of total sales this business year, from 10 percent in 2008. Taiwan Semiconductor, the world's biggest made-to-order chipmaker, said sales in June were 5.3 percent higher than in May. The company is a bellwether for the electronics industry because it makes chips for products ranging from mobile phones to games consoles.

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pakistan

Pakintan's Oil Company To Invest $800 million


Oil & Gas Development Co. plans to drill in Baluchistan for the first time in six years as the government increases security against attacks from insurgents, tapping a region that holds half of Pakistan's gas reserves. Oil & Gas, Pakistan's biggest explorer, will drill at least nine of 51 planned wells in the western province that borders Iran and Afghanistan, Chief Executive Zahid Hussain said. "In Baluchistan we have entered areas that for about six years were high security zones," Hussain said in an interview in Islamabad yesterday. "The government and local people are supporting us." "The company is aggressive in exploration and investment" compared with its rivals Pakistan Petroleum Ltd. and Pakistan Oilfields Ltd., said Farhan Mahmood, an oil analyst at Karachi- based JS Global Capital Ltd., who has a "buy" recommendation on the stock. The company usually meets 85 percent of its targets and its success in finding fuels is also high, he said. Pakistan's government is targeting $15 billion investment over five years to develop its oil and natural gas industry in order to reduce dependence on imports and meet local demand, which it expects will double by 2020. Overseas Exploration Oil and Gas Development also plans to search for fuels overseas in a joint venture, Hussain said. Oil & Gas Development teams have been looking for exploration opportunities in Africa and the Middle East, he said. Oil and Gas shares, which account for 18 percent of the benchmark Karachi 100 Index, have gained 89 percent this year, outpacing the 37 percent rise in the key index. They rose 1.8 percent to 89.71 rupees at the 3:30 p.m. local time close in Karachi. The company produces about 1 billion cubic feet of gas a day, or a quarter of the country's total output. Its oil production is 60 percent of the country's total of 62,000 barrels a day. Pakistan imports 85 percent of the oil it uses. Pakistan needs to boost oil and gas production as the government battles extremist violence and its worst economic crisis in a decade. The government's bid to revive the economy has been hurt by Taliban militancy in the northwest. Share of Revenue Baluch nationalists want political autonomy and a share of the gas in the province, where Pakistan's largest gas fields, including Sui, are located. "We have to be close to the local people," Hussain, a former diplomat, said. Under the government's new petroleum policy announced this year, companies are bound to spend $25,000, up from $10,000, on the welfare of local people besides employing them on priority, he said. Gas supply to the Pirkoh purification plant from the Sui field in Baluchistan was suspended yesterday after unidentified men blew up the pipeline, the state-run Associated Press of Pakistan reported today, citing police. Nawab Akbar Bugti, a Baluch tribal chief, was killed in August 2006 in a military operation ordered by the country's former military ruler, Pervez Musharraf. Interior Minister Rehman Malik said in April Brahamdagh Bugti, Akbar's grandson, is now leading the rebellion.

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china

China's Largest Housing Contractor will raise $7.3 Billion in IPO


"The market won't have any problem holding up the State Construction sale," Yu Yang, a Guangzhou-based strategist at Guotai Junan Securities Co., said before the filing. "There's so much money around after the relatively loose monetary policy." State Construction's profit fell 44 percent in 2008 to 4.92 billion yuan because of the slowing property market, rising raw material prices and higher tax payments. The company and its advisers are predicting a recovery this year, as the government's 4 trillion yuan stimulus package begins to revive the economy. Nationwide property sales jumped 53 percent last month from a year earlier by value, and investment in real estate development increased 9.9 percent, the statistics bureau said July 10. Economic growth is therefore picking up pace.

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australia

Costco to Invest $ 22 Million in Australia


Costco Wholesale Corp., the largest U.S. warehouse club chain, expects to lower Australian grocery prices with its first outlet in the country, providing new competition for Woolworths Ltd. and Wesfarmers Ltd. Costco, which will charge as much A$60 ($49) in annual membership fees to Australian customers, will open its Melbourne outlet Aug. 17 with a 14,000 square meter (151,000 square foot) store, almost three times the size of typical supermarkets. The store on the fringe of Melbourne's central business district will be followed by an outlet in Sydney's western suburbs before Costco looks at more openings in the nation of almost 22 million, Australian Managing Director Patrick Noone said in an interview. The Issaquah, Washington-based retailer enters a market where Woolworths and Wesfarmers' Coles unit control almost three quarters of supermarket sales. "We'll have to see a competitive response from Coles and Woolworths," said Saxon Nicholls, who manages the equivalent of $439 million at Herschel Asset Management Ltd. in Melbourne. "The Australian retailers already have substantial scale in the market and it will depend on Costco getting its own scale in Australia." Jim Cooper, a Melbourne-based spokesman for Coles, said the retailer would consider Costco's impact once the first store is open, declining to comment further. Benedict Brook, a spokesman for Woolworths, declined to comment. Low Profit Margins "We operate with low margins and with our membership fees, we can sustain low margins," Costco's Noone said. "Lower prices are important because people shop with us to get value." The Australian outlets will carry about 3,800 product lines, compared with 27,000 in some Coles outlets, with some variation for local tastes, Noone said. Instead of bulk packages of peanut butter popular in the U.S., Costco may stock items such as large sizes of Vegemite, the salty Australian spread. Costco's impact on Coles and Woolworths may extend beyond any market share it wins, as the company's practice of pricing goods as much as 15 percent below rivals is likely to influence perceptions of value, said analysts at Macquarie Group Ltd. "Membership fees allow Costco to operate at low margins and are a fundamental difference in the business model," Macquarie said in a July 7 note to clients. "All other retailers of like products could be forced to price within these bounds, depending on consumer response to Costco." Unemployment Rising The company enters a market where unemployment is increasing. Australia's June jobless rate rose to the highest in almost six years as the global recession reduced demand for commodity exports and mining companies fired workers. The nation avoided falling into recession this year after the government distributed more than A$12 billion in cash handouts to individuals and families. Noone, an Australian who has worked for Costco for two decades, said the size of the Australian network will depend on the success of the first two outlets, with the company typically targeting a ratio of one store per 500,000 people. "It all depends on how well we do what we say we are going to in Australia," Noone said. "When I was in Canada we started building warehouses to that ratio but when I left our brand name was such that we could build to 200,000 or 300,000 people and have a successful store." Coles and Woolworths are trialing hardwood floors, redesigned fresh produce sections and new shelving in their supermarkets. Costco is sticking with its warehouse design that uses concrete floors, exposed light fittings and inventory stacked on wooden pallets. The Australian unit has no plans to sell coffins, as some of its U.S. outlets do, Noone said. He expects the product range to evolve as Costco gains acceptance from consumers. "If we can get good volume we will stock it and sell it," Noone said. "We look at areas we can show great value and that is why we sell diamonds and liquor and candy and all the other things."

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china

PBOC Begins Tightening Monetary Policy


The idea is to "soak up excess cash in the financial system after…almost eight months" and avoid inflation. It also absorbs funds through bill buy-back arrangements with commercial lenders. "The central bank is using the gradual increase in yields to alert the market to prepare for a tighter policy in the future," said Liu Jianyan, a fixed-income analyst at First Capital Securities Co. in Shenzhen. "But there won't be a drastic reversal of previous loose monetary policy." The yield rose from 1.60 last week to 1.65. Liu predicts that yield on the one-year bill will climb to 2 percent by the end of 2009. The hike in yields will be restricted because China's central bank will avoid raising its 5.31 percent benchmark one-year lending rate for a year as the government hopes to maintain "mini-bubbles" to help the world's third- largest economy recover, said James Yuan, who manages 36 billion yuan as chief investment officer at the joint venture of Prudential Financial Inc.

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allcountries

Gold Increased for Second Day


Gold gained for a second day in Asia as higher oil prices and a weaker dollar prompted investors to seek the precious metal as a store of value. Oil rose for a fourth day as equities advanced and a weaker dollar encouraged investment in commodities. The dollar traded near a two-week low versus the euro on speculation European and U.S. reports this week will show the global recession is easing, sapping demand for the U.S. currency as a refuge. "A downturn in the dollar is helping to stimulate demand for gold," said Han Sung Min, a Seoul-based manager with the international market division of Korea Exchange Bank Futures Co. "Gains in oil prices, optimism for corporate earnings and an economic rebound are also lending psychological support."

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india

Indian Shares Rise 1.6% with Signs of Economic Recovery


Several factors, including strong global and local liquidity, a recovery in earnings growth and strong corporate balance sheets, will spur the market over the next 12 months, Morgan Stanley analyst Ridham Desai said. He added, "Indian equities are in a sweet spot. We would continue to buy the dips in the market". A few of the biggest companies in India, Reliance Industries, Tata Consultancy Services Ltd and Infosys Technologies rose, gained 3.1 percent, 11.9 percent and 4.5 percent, respectively. Signs of economic recovery are whetting investor's appetite for riskier assets, with "record low global interest rates and trillions of dollars of stimulus spending helping the world recover" from the deep recession.

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philippines

Philippines to raise $750 million Bonds


The Philippines returned to the Asian bond market on Monday to raise another $750 million towards its gaping budget shortfall, and as expected, investors rallied around and allowed it to price tight. The offering was supported by a significant rally in US equities during the final hours of marketing, which gave investors the confidence to buy despite a sharp contraction in credit spreads over the past few months. It also helped that the sovereign set clearly defined terms which it stuck to throughout the marketing. During the final few hours of the bookbuilding investors even had a fixed yield as a reference point for their investment decisions. "It went out with a finite size and well-defined terms and it didn't move the goal posts. But the tight pricing was also possible because of the deep domestic investor base," said a source close to the offering, who noted that it was primarily the local investors who were driving up the price in the secondary market yesterday too.

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japan

Japan's Economic Forecast Downgraded but Remains Positive


This is a tremendous improvement from the contraction of 12.7 percent during the October to December 2008 period. The central bank affirms that "Japan's economic conditions have stopped worsening". The Japanese economy, whose growth heavily relies on exports of automobiles and electronics, has suffered in the past year. The falling global demand for the products has caused the economy to weaken. However, second quarter reports show that both exports and industrial production, which increased by 5.7 percent in this past May, have started to improve. They expect a recovery in the third and fourth quarter of 2009. Analysts agree with the expectation of the country's recovery: "They are definitely correct when they say the economy overall has stopped worsening," said Nikhilesh Bhattacharyya of Moody's Economy.

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thailand

Thailand Kept Interest Rate Unchanged


Thailand's central bank kept its benchmark interest rate unchanged at a second straight meeting amid signs government spending has helped moderate the pace of the nation's economic contraction. The Bank of Thailand held the one-day bond repurchase rate at 1.25 percent, it said in a statement today. That's the lowest level since July 2004. Seventeen of 18 economists surveyed by Bloomberg News expected the decision. One economist predicted a 25 basis-point cut. The decision "indicates confidence that the economy has bottomed out and may rebound without further monetary policy easing," said Rapee Sucharitakul, executive chairman of Kasikorn Asset Management Co., Thailand's biggest mutual-fund company with 470 billion baht ($13.8 billion) of assets. "Higher government spending will be a key driver for growth from now on."

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china

China Eastern Airlines and Shanghai Airlines Integrate


Since the announcement, each share of Shanghai Airlines will be exchanged for 1.3 China Eastern Sales. China Eastern is going to raise the 7 billion yuan by issuing shares. After the deal is sealed, China Eastern will control over 50 percent of flights from its base in Shanghai and improve the airline's business. Both companies suffered losses in 2008, and the integration of the airlines will allow them to compete against Air China and China Southern Airlines, its domestic rivals. Shanghai Airlines will keep its brand name. Combined, the two companies will operate about 306 airplanes.

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newzealand

New Zealand: 70% Small Businesses Grew Last Year


New Zealand businesses are showing self-reliance in the face of the economic downturn. This is a key theme emerging from the 2009 Mood of the Boardroom survey, says Business NZ. Mood of the Boardroom, run jointly by Business NZ and the NZ Herald, surveys around 300 company directors and chief executives from a range of New Zealand enterprises on key business issues. Business NZ Chief Executive Phil O'Reilly says this year's survey shows businesses determined to grow productivity and help themselves through the downturn, rather than seeking government help.

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