Archive | Archive – world business

Snapshot on world business, week to 21 January 2001

Latest: HK down, Taiwan up?, Shanghai grows at 10.8% and starts $US7.2b chemical industry park.

16 January 2001

Journalist-turned-politician Anson Chan has not just quite Hong Kong politics, she has moved to Taiwan. And so has publisher Jimmy Lai, whose controversial Apple Daily and other Hong Kong publications will continue while he sets up a new empire. The changes are manifestations of China’s reduction of Hong Kong to a less special place, no longer a colony with a dedicated government but, in due course, just part of a wider provincial gathering that will include Shenzhen and Guangzhou. With that, values will change.

Shanghai’s headline economic growth last year hit 10.8%, industrial output rose 13.5% and production from its IT sector grew 39%, foreign investment has recovered and earthworks have started for the ambitious 23.4km² Shanghai chemical industry park, where it’s estimated that $US7.2 billion will be poured into construction during the first five years. Projects earmarked for the park include a $US3.4 billion ethylene plant joint venture and a $US1 billion isocyanate project, whose foreign partners initially wanted to go to Nanjing.

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Snapshot on world business, week to 26 August 2001

Items on World Business this week:
Latest: IMF to Argentina’s rescue, US Fed cuts off another 25 points, US industrial production falls, European inflation falls, Dairy Farm expands in southern China, Singapore works on reinventing itself.

22 August 2001

The International Monetary Fund (IMF) announced on Wednesday it would give Argentina $US8 billion in emergency aid, eight months after handing over $US13.7 billion.

The US Federal Reserve Board cut the federal funds rate target by another 25 basis points to 3.5% on Tuesday, its seventh cut this year from a 6.5% starting point. The Fed’s next meeting is scheduled for 2 October.
US industrial production fell 0.1% in July, the 10th consecutive fall. It’s now 3.2% below the level at June 2000.
European inflation fell to a 2.8% annual rate in July, mostly because of falling energy prices. Core inflation fell from 2.1% in June to 2% in July. Consumer goods expansion eased the fall in the latest figure.

While Jardines subsidiary Dairy Farm International exits retailing in Australia, and probably in New Zealand, Dairy Farm Management Services is expanding strongly into southern China. A 65:35 joint venture with Sinogiant of China, Guangdong Saiyi Convenience Store, plans to open 300 new stores in the next four years, starting with a $US20 million programme for 50 in the next six months.

20 August 2001

Singapore Prime Minister Goh Chok Tong has outlined a five-point New Singapore plan to compete with a rising China, which he said would equal 10 Japans in economic potential. He said Singapore would have less government involvement (though that’s hard to see, especially as political constraint’s won’t be released), it will foster globally competitive businesses, boost training facilities and target every market within a seven-hour flight (which includes New Zealand), cut its dependence on electronics production and step up its campaign to attract petrochemical, pharmaceutical and biotech industries. Singaporeans will get New Singapore shares, paying a dividend for a fixed number of year, the elderly will get a new medical insurance scheme, the country will increase its output of graduates, and it will look at strategies to overcome the loss of jobs during the present slowdown and which might never return.

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Snapshot on world business, week to 28 September 2003

23 September 2003

The US is set to chop the number of H1-B visas for highly qualified foreign workers, mostly from India, by two-thirds – from 195,000 to 65,000/year – from 1 October, unless Congress steps in. The US has 8.9 million people registered as unemployed, 6.1% of the labour force.

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Snapshot on world business, September 2000

30 September 2000

Singapore Airlines will buy 10 Airbus A3XX jumbo jets, with an option to buy 15 more, turning away from Boeing in a $US15 billion deal.

Denmark voted not to join the 11-nation euro currency.

28 September 2000

A new stainless steel giant, second in the world to Germany’s ThyssenKrupp, will be created from the merger of Ango-Swedish Avesta Sheffield and the steel division of Finland’s Outokumpu. The new company, Avestapolarit, will be registered in Finland and listed in Stockholm.

The Indonesian struggle goes on: Tommy Suharto (Hutomo Mandala Putra), youngest son of deposed President Suharto, has been sentenced by the Supreme Court to 18 months in jail on graft charges relating to a 1995 land deal.

Defeating continuing pessimism: Oil prices are up in the US, too, not just for the summer gone but probably for winter heating, yet they’ve managed a consumer confidence rebound. An important factor was that fewer people found jobs hard to get. And they didn’t ask for their currency to be tied to the Australian dollar.

26 September 2000

Germany’s biggest utilities company, RWE, has bought Britain’s biggest water company, Thames Water, for £6 billion, including £1.8 billion of debt. RWE’s main European rivals in the multi-utility growth market are both French, Vivendi Environnement and Suez Lyonnaise des Eaux.

19 September 2000

Malaysia is to renew its bumiputra policy, an affirmative action scheme to help indigenous Malays raise their economic presence, for another 10 years.

16 September 2000

Tommy Suharto, youngest son of toppled President Suharto of Indonesia, has been arrested, accused of complicity in the car bmomb that killed 15 in Jakarta’s stock exchange last Wednesday.

While New Zealand politicians work on how to handle the Treaty of Waitangi in a closer economic agreement with Singapore, the Singaporeans are pursuing a closer economic tie with the US state of Pennsylvania, based on their mutual IT and life sciences interests.

14 September 2000

The US has replaced one dodgy tax subsidy for its exporters with another, averting a trade war with Europe, for the moment. The tax subsidy saved rich American corporations $US4 billion on export taxes last year. The World Trade Organisation ruled the US subsidy illegal, but allowed the Americans until 1 October to replace it. What they’ve done is introduce a bill which provides the same level of tax breaks, which went through the House of Representatives on Wednesday and should go through Congress before the WTO deadline.

Germany’s post and logistics company, Deutsche Post, is expected to swallow up the rest of DHLthe second biggest parcel company in the US. Deutsche Post already owns 25%, as does German airline Lufthansa, Japan Air Lines owns 29% and the remaining 21% is in the hands of management and the founding families.

12 September 2000

New Zealanders who believe Chicken-licken is falling only on their heads may be relieved to know the European currency, the euro, has also been having a lot of bad-hair days, down from its starting figure of $US1.17 to a low point on Monday just below 86c. It dragged the British pound down to a seven-year low against the greenback.

8 September 2000

Associates First Capital Corp, formed in 1918 to help finance development of Henry Ford’s Model T car and part of Ford Motor until 1998, will become part of Citigroup in a $US31 billion scrip deal.

DaimlerChrysler AG is looking at taking 40% of Mitsubishi for the same price it was to have got 34%, following Mitsubishi’s defects coverup. But Volvo may counter that growing influence by taking a larger stake in Mitsubishi’s bus and truck division, where it’s already due to raise its interest from 5% to 19.9%.

The man who was instrumental in creating the 11-nation Euro currency, Nobel economics laureate Professor Robert Mundell, has proposed monetary union between the US, Euro and Japan, with a single global currency and an end to currency speculation then in sight.

Nippon Credit Bank, which was central to Japan’s rebuilding after the Second World War but collapsed in 1998 under the weight of bad loans, will be reborn in January as Aozora, or Blue Sky Bank. Now controlled by internet investor Softbank Corp, Aozora will focus on small business and startup loans and expand into internet banking.

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Snapshot on world business, week to 20 May 2001

Latest: RM Williams warns of loss, BHP Billiton merger done, Brandes fails to move Jardine hierarchy, HIH Insurance loss could reach $A8 billion, US insurers merge.

20 May 2001

Specialty retailer RM Williams Holdings Ltd, of Adelaide, said it would make a small loss for the year to June, provided it trades solidly in the last six weeks.

Billiton plc shareholders voted in London on Tuesday and BHP shareholders in Melbourne on Friday in favour of an $A58 million merger into BHP Billiton. The Australian vote needed 75% support and got 88%.

Brandes Investment Partners of San Diego failed to sway Jardine Matheson Holdings and Jardine Strategic Investments’ boards on the merits of privatising Jardine Strategic, relisting Jardine Matheson in Hong Kong and changing the group’s corporate governance. Chairman Henry Keswick and fellow directors stayed united against the Brandes attack at the annual meeting, held in Bermuda.

HIH Insurance liquidator KPMG will issue an interim report next week, with the size of the collapse now said to be at least $A4 billion, and possibly $A8 billion. Receivers took control at HIH in March after it said it expected to report an $A800 million loss for the December half.

US insurer American International Group took on British insurer Prudential’s bid for American General at the start of April and has emerged five weeks later as the winner, in a $US23 billion merger.

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Snapshot on world business, week to 10 March 2002

10 March 2002

President Bush announced tariffs of up to 30% on steel imports to the US on Wednesday. On Thursday, National Steel Corp, 53% owned by NKK Corp of Japan, filed for chapter 11 bankruptcy protection. Nearly 30 US steelmakers have folded since 1997. Steel imports peaked in 1998.

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Snapshot on world business, week to 9 June 2002

7 June 2002

The Enron/Andersen debacles/excesses are already having numerous major impacts on business accountability in the US, and many of the changes will flow through to New Zealand in the form of accounting practice standards or stock exchange requirements. A notable one from Nasdaq is a proposal to have a majority of independent directors on corporate boards. Same call was made here 15 years ago, maybe this time it’ll happen. The proposed Nasdaq rule changes are generally designed for bigger outfits than the standard NZ company, but include recommendations that compensation committees be composed entirely of independent directors, that there be a cooling-off period before former auditors of the company can serve on corporate audit committees, the scope of audit committee authority be expanded, continuing education for directors be strengthened, compliance methods be introduced to support corporate codes of conduct, and a requirement that non-US companies disclose if they’ve received waivers of corporate governance standards.

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Snapshot on world business, week to 14 October 2001

14 October 2001

A Standard & Poor’s report says the global junk bond default rate should hit 10% this year. In the first three quarters 121 companies defaulted on $US74.3 billion of debt, compared to 108 defaults in the whole of last year for a total $US34.3 billion.

Singapore’s economy shrank 5.6% in the third quarter and the Ministry of Trade & Industry has revised its annual forecast for the third time, now saying gross domestic product will contract by 3%.

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Snapshot on world business, week to 27 April 2003

24 April 2003

Agora’s Daily Reckoning newsletter notes that residential real estate has jumped from 23% to 31% of US household assets in 3 years, helped by the sharemarket fall, but that unsold home inventories are at their highest level since 1996. The median time a home is on the market has risen from 3.8 to 4.8 months in 6 months. In Denver, apartment vacancy rates are above 10%.

1 of the Daily Reckoning’s frequent correspondents, Calgary oil buff John Myers (son of a goldbug), editor of Outstanding Investments, reckons the oil price has to rise, and the US position in Iraq won’t change that. He says Saudi Arabia was happy with $US20/barrel in 1988; that equates to $US31 now, but conservative pricing is less likely. Non-Opec discoveries & reserves are dwindling; since the 1st well was drilled in 1861 900 barrels of oil have been burned, about half the amount discovered; consumption has reached 26 billion barrels/year and is rising.

Reports from New York & London suggest Deutsche Asset Management is about to take a position that institutions have long abdicated: it will take large stakes in prominent European companies and demand a place on the board to make executives manage in the interests of shareholders.

The board that writes US accounting rules has agreed companies should treat stock options for executives & employees as expenses, which has been strongly opposed by high-tech industries.

British building materials supplier Wolseley plc is talking to Pinault Printemps Redoute of France about buying its domestic construction supplies unit, Pinault Bois Materiaux, worth about €570 million.
Websites: Wolseley plc
Pinault Printemps Redoute

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Snapshot on world business, week to 4 March 2001

Latest: DaimlerChrysler slash and burn, Motorola slides, Sunbeam files Chapter 11, Case New Holland scores another loss, Euro steelmakers merge.

27 February 2001

DaimlerChrysler will cut its workforce by 35,000, or 20%, including 9500 (or 14%) at Mitsubishi, expects its revenue to fall 13% this year and said its operating profit could fall as much as 75%.

26 February 2001

The slide by US electronics company Motorola towards a first-quarter loss carries a warning for the property industry, though not so much in New Zealand because we’ve missed out on so much of the IT revolution. The boom-bust behaviour of internet stocks carries through to property — Motorola, looking to set up a Southern Hemisphere base, was courted only months ago in Christchurch and Auckland before settling on a new Australian development.

US household appliances maker Sunbeam has filed for chapter 11 bankruptcy protection, hoping to emerge in 6-9 months minus its overwhelming $US1.7 billion of bank debt and $US863 million of bondholder debt. Bank of America, First Union and Morgan Stanley will convert their loans to equity, term and convertible debt, and take charge of the company for the restructure.

Farm and construction equipment maker CNH (the entity resulting from the merger of Case in the US and New Holland in Europe, owned by Fiat of Italy) reported a $US102 million fourth-quarter net loss on $US2.2 billion revenue, down from a pro forma $US142 million loss on $US2.5 billion revenue a year earlier. Its loss for the year was $US269 million and it expects a loss about $US100 million better than that in 2001.

Three European steelmakers have agreed to form the world’s biggest steel group — Aceralia of Spain with 20.1%, Arbed of Luxembourg 23.4% and Usinor of France 56.5%. The all-share deal would see Usinor acquire the other two for 3.4 billion euros ($NZ7.2 billion) to form a group with 46 million tonne annual output and 30 billion euro sales.

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