UPDATE-------------APRIL 24, 2010 SATURDAY
BANGLADESH
MARKET UPDATE
Prices of eggs, chicken, spices up
Prices of eggs, chicken and spices increased in the city in the past week while the prices of rice and sugar declined.
Market people said prices of poultry items could increase further over bird flu scare and prices of spices increased because of an increase in import cost. Arrival of new harvest has started pushing down rice prices, traders said.
Eggs were retailed between Tk 86 and Tk 90 a dozen, up by at least Tk 9 a dozen, on Friday.
‘Fear for culling of chickens amid a fresh outbreak of bird flu prompted farm owners to sell the poultry birds in some areas which would cause a decline in egg production,’ said a wholesaler at Tejgaon.
Live broiler sold for prices between Tk 140 and Tk 150 a kilogram, up by Tk 10 in the week, on Friday.
Many farmers did not go for new lots the week before amid bird flu scare which disrupted the supply of broiler and the prices went up, traders said.
Chicken prices increased to Tk 150 two months ago because of a short supply the prices declined to Tk 125–Tk 130 in the past two weeks.
Fish prices remained high because of a supply shortage typical of dry summer but meat prices remained unchanged in a couple of weeks.
Vegetables supply remained somewhat satisfactory in the week and the prices remained stable.
Potato sold for Tk 12 a kilogram at Hatirpool on Friday, snake gourd for Tk 24, aubergine for Tk 36, long beans for Tk 32, okra for Tk 32 and cucumber for Tk 22.
Spices became dearer in the week as their import cost increased, according to traders.
Turmeric was retailed between Tk 223 and Tk 270 a kilogram, up by Tk 10 in a week, ginger between Tk 80 and Tk 100 and garlic between Tk 90 and Tk 130.
‘Increase in prices of spices in China and India is pushing up the prices here,’ said Barkat Ali, a wholesaler at Shyambazar.
Rice prices on the retail market declined by Tk 1–Tk 2 a kilogram in the week as new harvest reached the wholesales market.
Coarse rice of different grades and varieties sold for prices between Tk 25 and Tk 30 a kilogram at Nakhalpara on Friday while fine grade rice sold between Tk 34 and Tk 40.
Sugar was retailed between Tk 39 and Tk 42 a kilogram on Friday, down by Tk 4 in two weeks and Tk 18 in two months.
Decline in sugar prices on the international market has pushed down the price of the commodity on the local market, traders said.
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NEWS IN FOCUS
Bangladesh exempts 18 Bhutanese products of duty
Dhaka on Friday handed over an official notification to Thimphu, exempting 18 major exportable goods from Bhutan of import duty in order to boost bilateral trade with the neighbouring country. The products include some industrial raw materials, fresh fruits and spices.
Foreign affairs secretary Mohammed Mijarul Quayes, who arrived in Thimphu on Friday morning to attend the standing committee meeting of the upcoming SAARC summit, handed over the notification to his Bhutanese counterpart, Daw Panjo, at the latter’s office.
The duty-free items include all kinds of vegetables (fresh or chilled), fresh fruits (oranges, pears, quinces), cardamom, ginger, jam, fruit jellies, marmalade, fruits or nut purees and pastes, fruit juice (tinned or bottled, except pineapple), grape and tomato juice, mineral waters, boulders, dolomite, gypsum, limestone, calcium carbonate, particle board, ferro-silicon, billets and semi-finished products of iron or non-alloy steel.
Many of Bangladesh’s products, including garments, ceramics, pharmaceuticals, processed food and toiletries, are enjoying duty-free access to Bhutan
Bangladesh imports products worth $14 million annually from Bhutan while it exports products worth only $1.3 million.
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EVENT
Sales pick up at Khulna trade fair
Sales picked up at the month long Khulna International Trade Fair set to end of May 1.
Shopkeepers said that although they were selling somewhat more than in the first week of the fair sales are much less than previous years.
They said that there were more visitors than buyers.
National, local, multinational as well as business establishments from Pakistan, India, Iran and China have put their goods on display at 162 stalls in the fair, jointly hosted by Khulna Chamber of Commerce and Industry and Dhrubo Enterprise, at the Circuit House ground in the southern port city.
KCCI president Shaharuzzaman Mortuza said that tight security is in place to ward off possible trouble.
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WORLD ECONOMY
Ash crisis costs European tourism $2.29b
The European tourism sector suffered losses of 1.72 billion euros ($2.29b) due to the volcanic ash cloud that paralysed air traffic across Europe, the World Tourism Organisation head said Friday.
Without even taking into account the cost to the industry outside Europe, daily losses were about $400 million, the organisation’s secretary general Taleb Rifai told a news conference.
An initial estimate from the International Air Transport Association that the sector had suffered losses of 200 million euros per day was correct, he added.
However, the airline umbrella group has since raised its estimate of losses to $400 million per day.
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BANGLADESH
EXCLUSIVE
Govt moves to revive jute sector
On the backdrop of increasing demands for jute and jute goods on the international market, the government has accelerated its measures to revive the glory of the jute sector, once known as the golden fibre of Bangladesh.
Among the initiatives, the jute ministry recently planned a Tk 300 crore fund for importing spare parts to renovate and modernise the existing jute mills.
Bangladesh Jute Mills Association and Bangladesh Jute Spinners Association also signed an agreement with a non-government organisation for skilled development in the jute industry by providing jute mills’ staff with necessary trainings.
Earlier, the jute ministry undertook a scheme to revive the jute sector through a refinancing project of Tk 1,300 crore.
Bangladesh Bank source said that the central bank would finalise the refinancing scheme by this month.
The jute mills authorities would get necessary fund under this refinancing scheme to pay back their outstanding loan, which was around Tk 639 crore.
Presently, there are 145 jute mills in the country, of which 27 are under the Bangladesh Jute Mills Corporation.
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Economic crisis slows down poverty cut in developing countries
The global economic crisis has slowed the pace of poverty reduction in developing countries and is hampering progress towards the other Millennium Development Goals, says a new report from the World Bank Group and the International Monetary Fund.
The crisis is having an impact in several key areas of the MDGs, including those related to hunger, child and maternal health, gender equality, access to clean water, and disease control and will continue to affect long-term development prospects well beyond 2015, says the Global Monitoring Report 2010: The MDGs after the Crisis, released on Friday.
As a result of the crisis, 53 million more people will remain in extreme poverty by 2015 when the number of extreme poor could total around 920 million, the report projects. The number, however, is significantly lower from the 1.8 billion extreme poor in 1990.
Both the 2008 food price crisis and the financial crisis that hit that year have played a role in exacerbating hunger in the developing world.
The critical MDG target of halving the proportion of people suffering from hunger from 1990 to 2015 appears very unlikely to be met as over a billion people struggle to meet basic food needs, the report says.
Malnutrition among children and pregnant women has a multiplier effect, accounting for more than one-third of the disease burden of children under age five and over 20 per cent of maternal mortality.
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WORLD ECONOMY
G24 nations call for steps to sustain global recovery
The Intergovernment Group of 24 developing countries on Thursday called for concerted and cooperative actions to sustain global economic recovery.
In a communiqué issued after the 83rd meeting in Washington, the G24 finance ministers and central bank governors said the prospects of the global economy had improved since they met last April.
‘It is encouraging that all developing regions have experienced a significant improvement in growth performance since the trough of last year, reflecting strong fundamentals,’ said the document.
However, they also noted that many challenges still remain, credit constraints continue to pose a risk to self sustained recovery, household and commercial sector indebtedness in advanced countries continues to pose risks, and sovereign balance sheets in several advanced countries are a new and significant threat to stability.
Moreover, the communiqué said, the crisis has left the fiscal positions of many advanced countries under strain, circumscribing their ability to deal forcefully with the legacy of job losses and high unemployment, and to face potential new shocks. Several emerging markets are faced with a surge of capital inflows with potential risks of rising inflationary pressures and asset price bubbles.
The G24 ministers and bank governors reaffirmed that the overarching mission of the World Bank must remain poverty reduction, adding that the World Bank had an important role to play in mitigating the after-effects of the crisis.
‘Ministers urged the Management of the World Bank to assess and meet the financial and technical assistance needs of all developing countries solely on the basis of economic and development merits,’ the communiqué said.
The G24 emphasised that the World Bank Group should be guided by complementarily rather than exclusivity and that selectivity and the division of labour among Multilateral Development Banks be ultimately driven by individual country demands.
The group also underscored the importance of enhancing World Bank Group support to south-south trade, investment and cooperation.
The ministers and governors called on the International Monetary Fund to take an ‘ambitious’ realignment in quota shares toward emerging market and developing countries.
‘Ministers stressed that there should be an ambitious realignment in quota shares toward emerging market and developing countries, since the IMF’s legitimacy, relevance, and effectiveness depend centrally on redressing the imbalance in voice and representation,’ said the communiqué.
The G24 reiterated its call for a shift of 7 per cent in quota shares from developed to developing countries.
‘While such a shift should primarily benefit dynamic EMDCs, it must not come at the expense of other developing countries. The voting power of low-income countries, in particular, should be protected,’ said the communiqué.
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BANGLADESH
NEWS
Customs earn Tk 619.85cr in revenue in north-west
The Commissionerate of Customs, Excise and Value Added Tax earned revenue worth around Tk 619.85 crore from the country’s northwestern region during the first nine months of the current 2009- 2010 fiscal.
According to the officials’ concerned, the collection from the internal sources was Tk 339.48 crore against the target of
Tk 365.88 crore till March last while the earning from the import sources was Tk 280.25 crore against the target of Tk 370.62 crore.
The sources said, the revenue target fixed by the National Board of Revenue for the commissionerate for earning from its internal sources like excise duty, supplementary duty and VAT and import sources like import tax, regulatory duty, auction and fine was Tk 736.50 crore till March last.
The earning from the internal sources was Tk 33.35 crore higher than that of the corresponding period of the previous
2008-09 fiscal showing a growth of 10.90 per cent.
But, in average in the internal and import sources, the total collection is remained behind by 2.81 per cent to reach the target during the same period.
Talking to the news agency, customs commissioner Lutfor Rahman hoped that the total target of Tk 1010 crore fixed for the current fiscal could be attained by the next two months as various effective measures were adopted.
‘We are committed to stop any sort of revenue evading tendency by the parties concerned,’ he said adding that step has been taken to bring simplicity in the revenue collection rules and regulations.
Apart from this, he said automation system is gradually being promoted in the revenue-collection process. He said the revenue from the import sources mainly came from the region’s four main land ports- Sonamasjid, Hilli, Burimari and Banglabandha and 11 cattle corridors.
In this context, he said the revenue earning from the cattle corridors has been reduced to a greater extent due to sharp fall of cattle import.
Besides, in spite of first three-day charge-free in every week in the Benapol, he mentioned that the northern ports are being deprived of the facilities.
On the other hand, Lutfor Rahman stated that revenue of Tk 320.23 crore remained outstanding from various business institutions and individuals due to pending of VAT and customs related 222 cases with different lower and higher courts.
For the sake of revenue collection, he recommended speedy disposal of the cases.
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JAICAF interested to facilitate technology-based agricultural info in Bangladesh
Japan Association for International Collaboration of Agriculture and Forestry has expressed its interest to help the government in disseminating technology-based agricultural information services to the rural farmers in the country.
They showed the interest when a two-member JAICAF delegation, led by its technical advisor Kichiji Yajima, on Wednesday met with Agric-ulture Information Service director M Nazrul Nazrul Islam at the latter’s office.
During the meeting, the delegation also showed interest in setting up rural community radio, agriculture information and communication centre to reach IT-based agriculture services at the farmers’ doorsteps.
Talking to UNB, the AIS director said that the Japanese delegation lauded the AIS initiative on farmers TV and AIS website featuring agriculture related information.
He said the Japanese team agreed to cooperate with the government in empowering the farmers through their introduction with the agriculture related information as well as to help the government’s vision in building digital Bangladesh.
The AIS director said the more the farmers will have access to information like marketing information, the chance of incurring financial loss will reduce.
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Geebee to invest in Karnaphuli EPZ
Geebee (Bangladesh) Limited, an Indian company, will set up a garments manufacturing industry in the Karnaphuli Export Processing Zone.
The foreign-owned company will invest $9.513 million in setting up its unit and will produce shirt, T-shirt, blouse, jackets, trousers/shorts. The company will also create employment opportunity for 2,278 persons including 22 foreign nationals, said a news release.
An agreement to this effect was signed between the Bangladesh Export Processing Zones Authority and Geebee (Bangladesh) Limited at BEPZA Complex in Dhaka recently.
BEPZA member (investment promotion) Md Moyjuddin Ahmed, and Geebee (Bangladesh) Limited general manager Shankaranarayanan Guruswami signed the agreement on behalf of their respective sides.
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WORLD ECONOMY
Brazilian state bans Toyota Corolla sales on safety concerns
One of Brazil’s biggest states, Minas Gerais, on Thursday ordered a ban on the sales of Toyota Corollas, saying the best-selling car presented a safety threat because of an acceleration problem.
‘Some vehicles present problems of continual acceleration, putting in danger the lives of occupants,’ the state’s public ministry said in a statement.
The Minas Gerais ministry said nine Toyota Corollas in the state had shown accelerator problems that the Japanese auto giant said were caused by badly-installed floor mats on the driver’s side.
‘Sales of the model will only be authorized once the manufacturer has taken measures to change the original factory mat in all vehicles in circulation,’ it said, in effect demanding Toyota recall all Corollas.
The ban compounded Toyota’s worldwide problems.
On Thursday, the ratings agency Moody’s downgraded the company’s credit rating, citing uncertainty over ‘product quality’ following mass recalls of several models.
Toyota has recalled around 10 million vehicles internationally due to accelerator and brake defects.
US authorities in February opened an investigation into problems with the Corolla, based on complaints that the car could accelerate suddenly. At least 34 deaths in the United States have been blamed on the problem.
Toyota faces at least 97 US lawsuits seeking damages for injury or death linked to sudden acceleration and 138 class action lawsuits from American customers suing to recoup losses in the resale value of Toyota vehicles.
The Corolla is one of the top-selling cars in the world, with more than 30 million sold since it first rolled out of Toyota’s factories in the 1960s.
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Greek woes hit Asia stocks Euro at one year low
Greece’s debt crisis weighed on sentiment Friday, with Asian markets mostly lower and the euro hitting a one-year low after the European Union raised its estimate for the country’s deficit.
A weak lead from Wall Street was unable to provide any impetus for dealers after US unemployment data showed people were still struggling to get back on the jobs ladder.
Europe’s statistics agency said Greece’s 2009 public deficit stood at 13.6 per cent of output instead of the previously forecast 12.9 per cent, and added that this could rise due to poor data reporting from Athens.
The problem was stoked further when risk evaluator Moody’s Investors Service downgraded its rating on Greece’s debt.
The rates demanded by Greece’s lenders later jumped above 8.5 per cent.
The developments hammered the euro, which fell to 1.3202 dollars at 8:02 am (2302GMT Thursday) in Tokyo, its lowest since April 30, 2009 before trimming losses to 1.3235 in the afternoon. It had traded at 1.3289 dollars in New York late Thursday.
Against the yen, the euro fell to 123.63 from 124.23 in New York. The dollar traded at 93.43 yen, slightly lower than 93.46 in New York.
The revision came as Athens tried to broker the terms of a bailout from the European Union and International Monetary Fund to avert a possible debt payment default caused by the soaring interest rates.
‘Markets have become more nervous about the negotiations between Greek, IMF and EU officials and the potential for contagion if these negotiations fall through,’ Barclays Capital said in a note to clients.
‘EU and IMF officials are not likely going to agree to a bailout package without Greece agreeing to significant fiscal restructuring,’ the investment bank said. ‘This becomes more likely as financial conditions worsen in Greece.’
The deepening crisis has upped pressure on other eurozone members such as Ireland, Spain and Portugal, who all face similar problems and whose dangers were highlighted by the IMF Wednesday.
Asian stocks were lower as dealers became more risk-averse.
Tokyo closed 0.32 per cent, or 34.63 points, lower at 10,914.46 as exporters were hurt by the strengthening yen.
Sydney gave up 0.53 per cent, or 25.9 points, to close at 4,881.5.
Hong Kong fell 0.77 per cent by the break and Singapore lost 0.26 per cent.
Shanghai lost 0.60 per cent as investors remained worried over recent policy measures taken to curb speculation in the real estate market, dealers said.
‘Property and bank stocks will likely remain sluggish with the overhang of policy tightening concerns,’ Guosen Securities analyst Wang Junqing told Dow Jones Newswires.
Shares in New York were flat after the Labour Department on Thursday reported new claims for unemployment insurance benefits fell five per cent last week after a fortnight of increases.
‘The actual level of claims is still quite high, and although the trend in claims could support the notion that the labour market has stabilised, it does not support the notion that there has been a strong pickup in hiring activity,’ said Patrick O’Hare at Briefing.com.
Eyes were also on the United States, where president Barack Obama slammed Wall Street for greed but called for help from the ‘titans of industry’ in overhauling the financial system to avoid another financial crisis.
‘We will not always see eye to eye. We will not always agree. But that does not mean we have to choose between two extremes,’ he said, calling for new, ‘common sense’ rules to quell abuses but retaining the ‘power of the free market.’
Markets are also awaiting weekend G20 talks in the United States, where a global ‘Tobin tax’ on financial transactions and the Chinese yuan’s peg to the dollar will likely be discussed.
Oil was lower, with New York’s main contract, light sweet crude for delivery in June, off 26 cents at $83.44 a barrel. Brent North Sea crude for June dropped 37 cents to $85.30.
Gold opened at $1,139.00-1,140 an ounce in Hong Kong, down from Thursday’s close of $1,148.50-1,149.50.
In other markets:
Seoul closed 0.14 per cent, or 2.49 points, lower at 1,737.03.
Taipei closed up 0.33 per cent, or 26.20 points, at 8,004.89.
Hon Hai rose 1.41 per cent to 144.5 Taiwan dollars and Taiwan Semiconductor Manufacturing Co was up 0.17 per cent to 61.7.
Manila closed 0.21 per cent, or 6.88 points, higher at 3,244.45.
Dealers said trade was cautious ahead of presidential elections on May 10.
Philippine Long Distance Telephone Co. was steady at 2,445 pesos while A and B shares of San Miguel Corp. were also unchanged at 73.50 pesos and 74 pesos, respectively.
Wellington rose 0.43 per cent, or 14.20 points, to 3,301.66.
Telecom added 0.5 per cent to 2.19 New Zealand dollars, while Contact Energy added 0.7 per cent to 6.22.
Fletcher Building edged up 0.1 per cent to 8.44.
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Lenovo emerges as leading candidate for Palm
Lenovo, the world’s No 4 PC brand, has emerged as the leading candidate to buy struggling smart phone maker Palm, after the US firm was rebuffed by other potential Asian buyers, sources said.
Shares of Hong Kong-listed Lenovo rose as much as 5.9 per cent to a 23-month high on Friday, helped by expectations of strong growth in the sector and speculation that it could bid for the US company once considered a pioneer in the smart phone space.
‘A most suitable candidate will be a mainland Chinese company,’ said Lu Chialin, an analyst at Macquarie Securities in Taipei. ‘They’ve got a lot more free cash and don’t have the brand presence in the United States, so that will all give them that boost they need.’
Investment banking sources said they had heard that Lenovo is looking into a possible bid for Palm, but did not have any further details.
HTC, the world’s No 5 smart phone brand and one name associated with a possible offer, was approached about making a bid but decided to pass after reviewing Palm’s books, a source with direct knowledge of the situation said.
‘There just weren’t enough synergies to take the deal forward,’ said the source, who declined to be identified because the talks were private.
Huawei, the world’s No 2 wireless telecoms equipment maker, also declined to put in a bid, a company source said earlier this month. Smaller rival ZTE, also mentioned in earlier reports as a possible bidder, was not approached on the deal, its chairman told Reuters.
Representatives from HTC and Lenovo both declined to comment, and Palm officials were not immediately available outside regularUSbusiness hours.
Earlier this week, Lenovo’s chief executive Yang Yuanqing also declined to comment about a possible Palm buy. Shares in the company closed up 2.7 per cent at HK$6.09 in a Hong Kong markets down one per cent.
Industry observers said Palm would fit well into cash-rich Lenovo’s current strategy that focuses on growth through acquisitions and movement into the wireless space.
Lenovo had over $2.4 billion in net cash reserves at the end of 2009, it said on its website, and has previously said that it remains open to merger opportunities.
Based on recent deals in the technology sector, a Palm sale could potentially fetch $1.3 billion, given its current $1 billion market capitalization and the 30 per cent premium recently paid in tech deals.
The company’s advisers had previously been seeking about $1.2 billion for the company — a valuation considered too rich by many suitors, one investment banking source said, speaking on the condition of anonymity.
Another investment banking source, who also spoke on condition of anonymity, said he was unsure on how aggressively Lenovo was going to be in bidding for Palm.
‘What are you buying - a good operating system?’ he said. ‘It’s a wounded brand.’
Palm has struggled to generate interest from buyers in its Pre and Pixi smart phones, with customers turning to more popular buys such as Apple’s iPhone and Research in Motion’s Blackberry. It sold about 408,000 units in the quarter ending February 26, lower than the 600,000 units or more many analysts were expecting.
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Ericsson misses profit estimates
Ericsson reported a worse than expected 30 per cent slump in net profit in the first quarter as the Swedish telecoms equipment giant suffered from weak sales.
Ericsson, which also was hit by big restructuring charges, said that weak conditions seen last year carried over into the first three months of this year.
‘The market conditions we saw in the second half of 2009 prevailed also in this quarter with mixed operator investment behaviour across regions and markets,’ chief executive Hans Vestberg said in a statement.
‘Operators in a number of developing markets were still cautious with their investments,’ he added.
The group posted a 30 per cent drop in net profit to 1.26 billion Swedish kroner ($173m) for the first three months of the year, down from 1.72 billion for the same period of last year.
The result fell short of analysts’ estimates for 1.79 billion kroner, as polled by Dow Jones Newswires.
Meanwhile, sales fell nine per cent over the period to 45.1 billion kroner from 49.6 billion. Financial analysts had forecast sales fell three per cent to 47.8 billion kroner.
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ASIA
Oil mixed in Asia
Oil prices were mixed in Asian trade Friday as sagging demand in the United States, the world’s largest energy consuming nation, limited the market’s gains, analysts said.
New York’s main
contract, light sweet
crude for delivery in June, was up five cents to $83.75 a barrel.
Brent North Sea crude for June fell two cents to $85.65.
The market was weighed down by a report Wednesday from the US Department of Energy which showed an unexpected increase in crude and product stocks, analysts said.
The rise indicates weaker demand as the world’s biggest economy struggles to recover from its worst economic downturn since the 1930s.
‘It does put some doubt into the fact that the market won’t move back into balance,’ Ben Westmore, minerals and energy economist for the National Australia Bank in Melbourne, told the AFP.
‘It’s arguable whether (oil above 80 dollars a barrel) is really justified given the very weak fundamentals,’ he added.
The DoE announced on Wednesday that US crude reserves increased 1.9 million barrels in the week ending April 16. This was against market expectations for a drop of 2,00,000 barrels.
Gasoline or petrol stockpiles also soared 3.6 million barrels, exceeding forecasts of a small gain of 3,00,000 barrels.
Distillates, which include diesel and heating fuel, rose 2.1 million barrels whereas analysts had expected an increase of 9,00,000 barrels.
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WORLD NEWS
China central bank strikes bullish note on economy
The Chinese economy has made a good start to 2010 and the outlook for exports and imports in the second quarter is bright, the central bank said on Friday.
In a bullish economic update, the People’s Bank of China said gross domestic product growth accelerated to a seasonally adjusted annual rate of 12.2 per cent last quarter from 11.3 per cent in the fourth quarter of 2009.
After adjusting for seasonal factors, exports have basically recovered to the pre-crisis level and imports have hit record highs, the report said.
‘Consumer prices are basically stable, money and credit controls have shown initial results and the trend of economic recovery has been further solidified,’ the central bank said.
Moreover, it added, statistics indicate that ‘in the future the economy will continue in a good direction’.
The report made no mention of the yuan.
‘In 2010, the Chinese economy had a healthy start. The revival in external trade accelerated, domestic industrial production growth sped up, consumption growth was quite fast and growth in fixed asset investment came down,’ the PBOC said.
The National Bureau of Statistics, which does not publish quarter-on-quarter data, reported last week that the economy grew 11.9 per cent in the first quarter from a year earlier, beating expectations.
China has raised reserve requirements twice this year and reduced loan growth. But it has kept interest rates and the yuan unchanged.
Li Daokui, a newly appointed adviser to the PBOC’s monetary policy committee, said the central bank should be prepared to raise interest rates if inflation-adjusted bank deposit rates languished for long in negative territory.
Consumer prices rose 2.4 per cent in the year to March, outstripping the 2.25 per cent rate on one-year certificates of deposit.
‘If the actual interest rate was in negative territory for three, four, five, six months or even a year, my view, as I have always argued on different occasions, is that nominal interest rates should be adjusted,’ Li told a forum organised by the portal sohu.com.
Warning that the economy was showing signs of overheating and that inflationary pressures would remain severe, Li said: ‘At least monetary policy should show people that it is orientated towards positive real interest rates.’
With the global economy recovering, export orders and other indicators point to export growth of more than 20 per cent in the second quarter, while imports will remain at a high level due to price rises and domestic demand, the PBOC said.
It said an improvement in the gamut of Chinese goods had promoted a sustained revival in exports. Electrical machinery and high-tech products had sold particularly well.
On the import side, China had bought vastly more natural resources and bulk commodities.
Against this background, the central bank said its task was to continue to manage liquidity, maintain appropriate growth in money and credit and strive for overall price stability.
It also had to maintain steady and relatively fast economic growth, while managing inflationary expectations.
Despite the bright outlook for exports, the PBOC cautioned that the foundation of global economic recovery was not solid and trade protectionism was on the rise.
The country’s surplus would fall again this year after shrinking by a third in 2009 to $196 billion, it added.
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Microsoft profit soars with Windows 7 sales
US software giant Microsoft has said that revenues surged to a record high in the recent quarter as Windows 7 operating system succeeded where its predecessor failed.
Microsoft reported that its net profit in the quarter ending March 31 climbed 35 per cent to $4.01 billion.
The firm’s revenue hit a record $14.50 billion in the quarter, up six per cent over the same period a year ago.
‘Windows 7 continues to be a growth engine, but we also saw strong growth in other areas like Bing search, Xbox Live and our emerging cloud services,’ said Microsoft chief financial officer Peter Klein on Thursday.
Microsoft said revenue from its Windows computer operating system was up 28 per cent over a year ago, driven by strong demand for the latest version, Windows 7.
‘Business customers are beginning to refresh their desktops and the momentum of Windows 7 continues to be strong,’ chief operating officer Kevin Turner said.
Strong profit due to droves flocking to Microsoft’s new operating system is a strong sign of the pent-up demand created when people shunned its predecessor Vista.
Microsoft released Windows 7 to the world in October as it tried to regain its stride after an embarrassing stumble with Vista.
While computer users may not give much thought to operating systems that serve as the brains of their machines, the programs are at the heart of Microsoft’s global software empire.
Microsoft operating systems run more than 90 per cent of the world’s computers.
The failure of Vista to catch on hurt Microsoft competitively, giving Apple the opportunity to woo PC users to Mac.
Apple reported stellar quarterly earnings this week, citing factors that included lots of people buying Macintosh machines for the first time.
Microsoft apparently learned a lesson from Vista and worked closely with computer makers, users and software developers while crafting Windows 7.
Some say consumers snatching up Windows 7 or machines pre-loaded with the software is a sign that the economy is on the mend.
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Greece appeals for debt rescue in grim turn for EU
Greece went cap in hand to the EU and IMF on Friday, appealing for up to 45 billion euros of urgent aid at low rates this year in a grim turn for the eurozone now threatened by Greek contagion.
Prime minister George Papandreou made a dramatic televised statement on the ‘national need’, admitting defeat in his attempts to stand against huge debt and deficits, onslaughts on financial markets, and hoping that German reticence can be overcome.
The EU said immediately that it would give ‘rapid’ and ‘efficient’ treatment to the request, and did not expect any ‘obstacles’, and International Monetary Fund head Dominique Strauss-Kahn said the fund would ‘move expeditiously.’
Strauss-Kahn was to meet Greek finance minister George Papaconstantinou in Washington on Saturday where G20 finance ministers meet over the weekend.
For the European Union and the eurozone, the entire Greek crisis is an enormous blow in terms of immediate stability and prestige, but also clears away some of the damaging uncertainty.
It has caused splits in the eurozone. And it also raises questions about the stature of the euro in the long term as a vehicle for the ambitions of Europe between the United States and the new might of China and India.
‘The activation of the (EU-IMF aid) mechanism is a national need,’ Papandreou said.
‘Our partners will do what is necessary to offer us a safe port to allow our boat to float again,’ he said. This would send a message to the markets that the European Union ‘is protecting the euro,’ he said, railing against the previous conservative government and speculators.
‘Today the situation in the markets risks ... squandering not only the sacrifices made by Greeks but also the normal functioning of the economy due to the high interest rates,’ he said.
The interest rate on Greek debt dropped sharply in the first few minutes after the announcement but soon moved back up to 8.55 per cent against a background of uncertainties about Greek data and procedures for a rescue to be enacted.
The socialist prime minister, elected in October, accused the previous government of making ‘criminal choices.’
His address also had the stature of an appeal to the nation which faces unprecedented austerity, just the day after the latest in a series of strikes against massive reforms under way.
But Greece is in a desperate dilemma, and its credibility has been fatally undermined by a series of statements showing that it has misreported key data for the eurozone ever since it gained access as an early member.
The country has overall public debt of about 300 billion euros ($399 billion) — or twice the debt of Britain, a far bigger economy.
The latest, fatal shocks came on Thursday when the EU said it now estimated the public deficit last year at 13.6 per cent instead of 12.9 per cent, with more to come if data turned out to be wrong.
Moody’s credit rating agency downgraded Greek debt and warned it might downgrade further, and the rate Greece must offer to borrow jumped above 8.8 per cent.
It all added up to a ‘hellish week’ in the words of one analyst. Some compare the situation to a debt disaster in Argentina in 2001, and suggest that Greece will end up restructuring its debt.
‘A terrible situation just got worse,’ said Fortis Bank economist Nick Kounis before the appeal for help. At Lloyds Banking Group, Kenneth Broux said: ‘Events in Greece are close to spiralling out of control.’
On Wednesday, the IMF warned that the Greek situation could spread to other weak countries in the eurozone, where Portuguese debt yields shot up on Friday, and that this could lead to a ‘full-blown sovereign debt crisis’.
The crisis is a grave blow to the credibility of the EU and eurozone and has undermined the stature of the European Central Bank.
Germany is furious that Greece was able to borrow for years at rates close to German rates by virtue of being in the eurozone, but on misstated data which EU authorities let pass.
Germany remains central to the rescue, since it is reluctant to allow Greece steeply concessionary rates, of around five per cent. Chancellor Angela Merkel is under pressure from hostile public opinion and a risk of action before the constitutional court.
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G20 plots post-crisis path
World finance leaders gather in Washington on Friday hoping to plot a course beyond the financial crisis, but Greece’s worsening debt woes served as a stark reminder the global economy remains vulnerable.
The Group of 20 rich and emerging countries, whose crisis-forged unity helped to end the global recession, must find common ground on controversial matters including regulating banks, rebalancing global growth and giving fast-growing emerging economies more clout.
They were also likely to focus on Greece’s debt crisis after the euro zone state asked to activate a rescue plan drawn up by the International Monetary Fund and the European Union.
The G20 has essentially supplanted the smaller G7 club of advanced economies, an acknowledgement the global financial crisis emanated from the rich world which now needs help from fast-growing emerging powerhouses to solve global problems.
Their united front may be fracturing, though, and International Monetary Fund chief Dominique Strauss-Kahn urged them to stick together on regulatory reform so policies mesh.
The sharpest divisions were over bank taxes, with Canada strongly opposed and Britain pushing for support. Finance ministers are expected to discuss two bank tax ideas proposed by the IMF. The Fund will present a report to G20 heads of state who are meeting in Toronto in June.
Shin Hyun Song, a senior economic adviser to South Korean President Lee Myung-bak, said bank levies would be the ‘big theme’ of Friday’s meeting.
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Volcano could cost Africa dearly in lost trade: WB
Air travel disruptions from the Icelandic volcano could cost African countries $65 million in lost trade, World Bank president Robert Zoellick said Thursday.
‘African countries may lose some $65 million
as a result of the complete shutdown of EU (European Union) airspace for
five days,’ Zoellick told a press briefing in Washington.
‘Who would have thought that this would hurt countries like Kenya, Uganda, Ethiopia and Senegal, whose perishable exports plummeted when they could no longer fly produce to Europe,’ he remarked.
Air travel has begun returning to normal after an eruption of Iceland’s Eyjafjjoell volcano paralyzed skies over Europe for nearly a week, at an estimated cost of $1.7 billion to the airline industry.
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Greece must improve tax collection: IMF
The IMF has told Greece it must address structural weaknesses in tax compliance and punish big tax dodgers, the Greek Finance Ministry said in a statement on Friday.
‘Among the immediate priorities is... a programme of controls including rigorous penalties and persecution in large cases of non-compliance,’ the ministry said, citing recommendations by the IMF.
Greece started this week talks to hammer out details of a potential European and International Monetary Fund aid deal on Wednesday.
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BANGLADESH
MARKET UPDATE
Prices of eggs, chicken, spices up
Prices of eggs, chicken and spices increased in the city in the past week while the prices of rice and sugar declined.
Market people said prices of poultry items could increase further over bird flu scare and prices of spices increased because of an increase in import cost. Arrival of new harvest has started pushing down rice prices, traders said.
Eggs were retailed between Tk 86 and Tk 90 a dozen, up by at least Tk 9 a dozen, on Friday.
‘Fear for culling of chickens amid a fresh outbreak of bird flu prompted farm owners to sell the poultry birds in some areas which would cause a decline in egg production,’ said a wholesaler at Tejgaon.
Live broiler sold for prices between Tk 140 and Tk 150 a kilogram, up by Tk 10 in the week, on Friday.
Many farmers did not go for new lots the week before amid bird flu scare which disrupted the supply of broiler and the prices went up, traders said.
Chicken prices increased to Tk 150 two months ago because of a short supply the prices declined to Tk 125–Tk 130 in the past two weeks.
Fish prices remained high because of a supply shortage typical of dry summer but meat prices remained unchanged in a couple of weeks.
Vegetables supply remained somewhat satisfactory in the week and the prices remained stable.
Potato sold for Tk 12 a kilogram at Hatirpool on Friday, snake gourd for Tk 24, aubergine for Tk 36, long beans for Tk 32, okra for Tk 32 and cucumber for Tk 22.
Spices became dearer in the week as their import cost increased, according to traders.
Turmeric was retailed between Tk 223 and Tk 270 a kilogram, up by Tk 10 in a week, ginger between Tk 80 and Tk 100 and garlic between Tk 90 and Tk 130.
‘Increase in prices of spices in China and India is pushing up the prices here,’ said Barkat Ali, a wholesaler at Shyambazar.
Rice prices on the retail market declined by Tk 1–Tk 2 a kilogram in the week as new harvest reached the wholesales market.
Coarse rice of different grades and varieties sold for prices between Tk 25 and Tk 30 a kilogram at Nakhalpara on Friday while fine grade rice sold between Tk 34 and Tk 40.
Sugar was retailed between Tk 39 and Tk 42 a kilogram on Friday, down by Tk 4 in two weeks and Tk 18 in two months.
Decline in sugar prices on the international market has pushed down the price of the commodity on the local market, traders said.
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NEWS IN FOCUS
Bangladesh exempts 18 Bhutanese products of duty
Dhaka on Friday handed over an official notification to Thimphu, exempting 18 major exportable goods from Bhutan of import duty in order to boost bilateral trade with the neighbouring country. The products include some industrial raw materials, fresh fruits and spices.
Foreign affairs secretary Mohammed Mijarul Quayes, who arrived in Thimphu on Friday morning to attend the standing committee meeting of the upcoming SAARC summit, handed over the notification to his Bhutanese counterpart, Daw Panjo, at the latter’s office.
The duty-free items include all kinds of vegetables (fresh or chilled), fresh fruits (oranges, pears, quinces), cardamom, ginger, jam, fruit jellies, marmalade, fruits or nut purees and pastes, fruit juice (tinned or bottled, except pineapple), grape and tomato juice, mineral waters, boulders, dolomite, gypsum, limestone, calcium carbonate, particle board, ferro-silicon, billets and semi-finished products of iron or non-alloy steel.
Many of Bangladesh’s products, including garments, ceramics, pharmaceuticals, processed food and toiletries, are enjoying duty-free access to Bhutan
Bangladesh imports products worth $14 million annually from Bhutan while it exports products worth only $1.3 million.
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EVENT
Sales pick up at Khulna trade fair
Sales picked up at the month long Khulna International Trade Fair set to end of May 1.
Shopkeepers said that although they were selling somewhat more than in the first week of the fair sales are much less than previous years.
They said that there were more visitors than buyers.
National, local, multinational as well as business establishments from Pakistan, India, Iran and China have put their goods on display at 162 stalls in the fair, jointly hosted by Khulna Chamber of Commerce and Industry and Dhrubo Enterprise, at the Circuit House ground in the southern port city.
KCCI president Shaharuzzaman Mortuza said that tight security is in place to ward off possible trouble.
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WORLD ECONOMY
Ash crisis costs European tourism $2.29b
The European tourism sector suffered losses of 1.72 billion euros ($2.29b) due to the volcanic ash cloud that paralysed air traffic across Europe, the World Tourism Organisation head said Friday.
Without even taking into account the cost to the industry outside Europe, daily losses were about $400 million, the organisation’s secretary general Taleb Rifai told a news conference.
An initial estimate from the International Air Transport Association that the sector had suffered losses of 200 million euros per day was correct, he added.
However, the airline umbrella group has since raised its estimate of losses to $400 million per day.
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BANGLADESH
EXCLUSIVE
Govt moves to revive jute sector
On the backdrop of increasing demands for jute and jute goods on the international market, the government has accelerated its measures to revive the glory of the jute sector, once known as the golden fibre of Bangladesh.
Among the initiatives, the jute ministry recently planned a Tk 300 crore fund for importing spare parts to renovate and modernise the existing jute mills.
Bangladesh Jute Mills Association and Bangladesh Jute Spinners Association also signed an agreement with a non-government organisation for skilled development in the jute industry by providing jute mills’ staff with necessary trainings.
Earlier, the jute ministry undertook a scheme to revive the jute sector through a refinancing project of Tk 1,300 crore.
Bangladesh Bank source said that the central bank would finalise the refinancing scheme by this month.
The jute mills authorities would get necessary fund under this refinancing scheme to pay back their outstanding loan, which was around Tk 639 crore.
Presently, there are 145 jute mills in the country, of which 27 are under the Bangladesh Jute Mills Corporation.
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Economic crisis slows down poverty cut in developing countries
The global economic crisis has slowed the pace of poverty reduction in developing countries and is hampering progress towards the other Millennium Development Goals, says a new report from the World Bank Group and the International Monetary Fund.
The crisis is having an impact in several key areas of the MDGs, including those related to hunger, child and maternal health, gender equality, access to clean water, and disease control and will continue to affect long-term development prospects well beyond 2015, says the Global Monitoring Report 2010: The MDGs after the Crisis, released on Friday.
As a result of the crisis, 53 million more people will remain in extreme poverty by 2015 when the number of extreme poor could total around 920 million, the report projects. The number, however, is significantly lower from the 1.8 billion extreme poor in 1990.
Both the 2008 food price crisis and the financial crisis that hit that year have played a role in exacerbating hunger in the developing world.
The critical MDG target of halving the proportion of people suffering from hunger from 1990 to 2015 appears very unlikely to be met as over a billion people struggle to meet basic food needs, the report says.
Malnutrition among children and pregnant women has a multiplier effect, accounting for more than one-third of the disease burden of children under age five and over 20 per cent of maternal mortality.
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WORLD ECONOMY
G24 nations call for steps to sustain global recovery
The Intergovernment Group of 24 developing countries on Thursday called for concerted and cooperative actions to sustain global economic recovery.
In a communiqué issued after the 83rd meeting in Washington, the G24 finance ministers and central bank governors said the prospects of the global economy had improved since they met last April.
‘It is encouraging that all developing regions have experienced a significant improvement in growth performance since the trough of last year, reflecting strong fundamentals,’ said the document.
However, they also noted that many challenges still remain, credit constraints continue to pose a risk to self sustained recovery, household and commercial sector indebtedness in advanced countries continues to pose risks, and sovereign balance sheets in several advanced countries are a new and significant threat to stability.
Moreover, the communiqué said, the crisis has left the fiscal positions of many advanced countries under strain, circumscribing their ability to deal forcefully with the legacy of job losses and high unemployment, and to face potential new shocks. Several emerging markets are faced with a surge of capital inflows with potential risks of rising inflationary pressures and asset price bubbles.
The G24 ministers and bank governors reaffirmed that the overarching mission of the World Bank must remain poverty reduction, adding that the World Bank had an important role to play in mitigating the after-effects of the crisis.
‘Ministers urged the Management of the World Bank to assess and meet the financial and technical assistance needs of all developing countries solely on the basis of economic and development merits,’ the communiqué said.
The G24 emphasised that the World Bank Group should be guided by complementarily rather than exclusivity and that selectivity and the division of labour among Multilateral Development Banks be ultimately driven by individual country demands.
The group also underscored the importance of enhancing World Bank Group support to south-south trade, investment and cooperation.
The ministers and governors called on the International Monetary Fund to take an ‘ambitious’ realignment in quota shares toward emerging market and developing countries.
‘Ministers stressed that there should be an ambitious realignment in quota shares toward emerging market and developing countries, since the IMF’s legitimacy, relevance, and effectiveness depend centrally on redressing the imbalance in voice and representation,’ said the communiqué.
The G24 reiterated its call for a shift of 7 per cent in quota shares from developed to developing countries.
‘While such a shift should primarily benefit dynamic EMDCs, it must not come at the expense of other developing countries. The voting power of low-income countries, in particular, should be protected,’ said the communiqué.
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BANGLADESH
NEWS
Customs earn Tk 619.85cr in revenue in north-west
The Commissionerate of Customs, Excise and Value Added Tax earned revenue worth around Tk 619.85 crore from the country’s northwestern region during the first nine months of the current 2009- 2010 fiscal.
According to the officials’ concerned, the collection from the internal sources was Tk 339.48 crore against the target of
Tk 365.88 crore till March last while the earning from the import sources was Tk 280.25 crore against the target of Tk 370.62 crore.
The sources said, the revenue target fixed by the National Board of Revenue for the commissionerate for earning from its internal sources like excise duty, supplementary duty and VAT and import sources like import tax, regulatory duty, auction and fine was Tk 736.50 crore till March last.
The earning from the internal sources was Tk 33.35 crore higher than that of the corresponding period of the previous
2008-09 fiscal showing a growth of 10.90 per cent.
But, in average in the internal and import sources, the total collection is remained behind by 2.81 per cent to reach the target during the same period.
Talking to the news agency, customs commissioner Lutfor Rahman hoped that the total target of Tk 1010 crore fixed for the current fiscal could be attained by the next two months as various effective measures were adopted.
‘We are committed to stop any sort of revenue evading tendency by the parties concerned,’ he said adding that step has been taken to bring simplicity in the revenue collection rules and regulations.
Apart from this, he said automation system is gradually being promoted in the revenue-collection process. He said the revenue from the import sources mainly came from the region’s four main land ports- Sonamasjid, Hilli, Burimari and Banglabandha and 11 cattle corridors.
In this context, he said the revenue earning from the cattle corridors has been reduced to a greater extent due to sharp fall of cattle import.
Besides, in spite of first three-day charge-free in every week in the Benapol, he mentioned that the northern ports are being deprived of the facilities.
On the other hand, Lutfor Rahman stated that revenue of Tk 320.23 crore remained outstanding from various business institutions and individuals due to pending of VAT and customs related 222 cases with different lower and higher courts.
For the sake of revenue collection, he recommended speedy disposal of the cases.
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JAICAF interested to facilitate technology-based agricultural info in Bangladesh
Japan Association for International Collaboration of Agriculture and Forestry has expressed its interest to help the government in disseminating technology-based agricultural information services to the rural farmers in the country.
They showed the interest when a two-member JAICAF delegation, led by its technical advisor Kichiji Yajima, on Wednesday met with Agric-ulture Information Service director M Nazrul Nazrul Islam at the latter’s office.
During the meeting, the delegation also showed interest in setting up rural community radio, agriculture information and communication centre to reach IT-based agriculture services at the farmers’ doorsteps.
Talking to UNB, the AIS director said that the Japanese delegation lauded the AIS initiative on farmers TV and AIS website featuring agriculture related information.
He said the Japanese team agreed to cooperate with the government in empowering the farmers through their introduction with the agriculture related information as well as to help the government’s vision in building digital Bangladesh.
The AIS director said the more the farmers will have access to information like marketing information, the chance of incurring financial loss will reduce.
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Geebee to invest in Karnaphuli EPZ
Geebee (Bangladesh) Limited, an Indian company, will set up a garments manufacturing industry in the Karnaphuli Export Processing Zone.
The foreign-owned company will invest $9.513 million in setting up its unit and will produce shirt, T-shirt, blouse, jackets, trousers/shorts. The company will also create employment opportunity for 2,278 persons including 22 foreign nationals, said a news release.
An agreement to this effect was signed between the Bangladesh Export Processing Zones Authority and Geebee (Bangladesh) Limited at BEPZA Complex in Dhaka recently.
BEPZA member (investment promotion) Md Moyjuddin Ahmed, and Geebee (Bangladesh) Limited general manager Shankaranarayanan Guruswami signed the agreement on behalf of their respective sides.
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WORLD ECONOMY
Brazilian state bans Toyota Corolla sales on safety concerns
One of Brazil’s biggest states, Minas Gerais, on Thursday ordered a ban on the sales of Toyota Corollas, saying the best-selling car presented a safety threat because of an acceleration problem.
‘Some vehicles present problems of continual acceleration, putting in danger the lives of occupants,’ the state’s public ministry said in a statement.
The Minas Gerais ministry said nine Toyota Corollas in the state had shown accelerator problems that the Japanese auto giant said were caused by badly-installed floor mats on the driver’s side.
‘Sales of the model will only be authorized once the manufacturer has taken measures to change the original factory mat in all vehicles in circulation,’ it said, in effect demanding Toyota recall all Corollas.
The ban compounded Toyota’s worldwide problems.
On Thursday, the ratings agency Moody’s downgraded the company’s credit rating, citing uncertainty over ‘product quality’ following mass recalls of several models.
Toyota has recalled around 10 million vehicles internationally due to accelerator and brake defects.
US authorities in February opened an investigation into problems with the Corolla, based on complaints that the car could accelerate suddenly. At least 34 deaths in the United States have been blamed on the problem.
Toyota faces at least 97 US lawsuits seeking damages for injury or death linked to sudden acceleration and 138 class action lawsuits from American customers suing to recoup losses in the resale value of Toyota vehicles.
The Corolla is one of the top-selling cars in the world, with more than 30 million sold since it first rolled out of Toyota’s factories in the 1960s.
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Greek woes hit Asia stocks Euro at one year low
Greece’s debt crisis weighed on sentiment Friday, with Asian markets mostly lower and the euro hitting a one-year low after the European Union raised its estimate for the country’s deficit.
A weak lead from Wall Street was unable to provide any impetus for dealers after US unemployment data showed people were still struggling to get back on the jobs ladder.
Europe’s statistics agency said Greece’s 2009 public deficit stood at 13.6 per cent of output instead of the previously forecast 12.9 per cent, and added that this could rise due to poor data reporting from Athens.
The problem was stoked further when risk evaluator Moody’s Investors Service downgraded its rating on Greece’s debt.
The rates demanded by Greece’s lenders later jumped above 8.5 per cent.
The developments hammered the euro, which fell to 1.3202 dollars at 8:02 am (2302GMT Thursday) in Tokyo, its lowest since April 30, 2009 before trimming losses to 1.3235 in the afternoon. It had traded at 1.3289 dollars in New York late Thursday.
Against the yen, the euro fell to 123.63 from 124.23 in New York. The dollar traded at 93.43 yen, slightly lower than 93.46 in New York.
The revision came as Athens tried to broker the terms of a bailout from the European Union and International Monetary Fund to avert a possible debt payment default caused by the soaring interest rates.
‘Markets have become more nervous about the negotiations between Greek, IMF and EU officials and the potential for contagion if these negotiations fall through,’ Barclays Capital said in a note to clients.
‘EU and IMF officials are not likely going to agree to a bailout package without Greece agreeing to significant fiscal restructuring,’ the investment bank said. ‘This becomes more likely as financial conditions worsen in Greece.’
The deepening crisis has upped pressure on other eurozone members such as Ireland, Spain and Portugal, who all face similar problems and whose dangers were highlighted by the IMF Wednesday.
Asian stocks were lower as dealers became more risk-averse.
Tokyo closed 0.32 per cent, or 34.63 points, lower at 10,914.46 as exporters were hurt by the strengthening yen.
Sydney gave up 0.53 per cent, or 25.9 points, to close at 4,881.5.
Hong Kong fell 0.77 per cent by the break and Singapore lost 0.26 per cent.
Shanghai lost 0.60 per cent as investors remained worried over recent policy measures taken to curb speculation in the real estate market, dealers said.
‘Property and bank stocks will likely remain sluggish with the overhang of policy tightening concerns,’ Guosen Securities analyst Wang Junqing told Dow Jones Newswires.
Shares in New York were flat after the Labour Department on Thursday reported new claims for unemployment insurance benefits fell five per cent last week after a fortnight of increases.
‘The actual level of claims is still quite high, and although the trend in claims could support the notion that the labour market has stabilised, it does not support the notion that there has been a strong pickup in hiring activity,’ said Patrick O’Hare at Briefing.com.
Eyes were also on the United States, where president Barack Obama slammed Wall Street for greed but called for help from the ‘titans of industry’ in overhauling the financial system to avoid another financial crisis.
‘We will not always see eye to eye. We will not always agree. But that does not mean we have to choose between two extremes,’ he said, calling for new, ‘common sense’ rules to quell abuses but retaining the ‘power of the free market.’
Markets are also awaiting weekend G20 talks in the United States, where a global ‘Tobin tax’ on financial transactions and the Chinese yuan’s peg to the dollar will likely be discussed.
Oil was lower, with New York’s main contract, light sweet crude for delivery in June, off 26 cents at $83.44 a barrel. Brent North Sea crude for June dropped 37 cents to $85.30.
Gold opened at $1,139.00-1,140 an ounce in Hong Kong, down from Thursday’s close of $1,148.50-1,149.50.
In other markets:
Seoul closed 0.14 per cent, or 2.49 points, lower at 1,737.03.
Taipei closed up 0.33 per cent, or 26.20 points, at 8,004.89.
Hon Hai rose 1.41 per cent to 144.5 Taiwan dollars and Taiwan Semiconductor Manufacturing Co was up 0.17 per cent to 61.7.
Manila closed 0.21 per cent, or 6.88 points, higher at 3,244.45.
Dealers said trade was cautious ahead of presidential elections on May 10.
Philippine Long Distance Telephone Co. was steady at 2,445 pesos while A and B shares of San Miguel Corp. were also unchanged at 73.50 pesos and 74 pesos, respectively.
Wellington rose 0.43 per cent, or 14.20 points, to 3,301.66.
Telecom added 0.5 per cent to 2.19 New Zealand dollars, while Contact Energy added 0.7 per cent to 6.22.
Fletcher Building edged up 0.1 per cent to 8.44.
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Lenovo emerges as leading candidate for Palm
Lenovo, the world’s No 4 PC brand, has emerged as the leading candidate to buy struggling smart phone maker Palm, after the US firm was rebuffed by other potential Asian buyers, sources said.
Shares of Hong Kong-listed Lenovo rose as much as 5.9 per cent to a 23-month high on Friday, helped by expectations of strong growth in the sector and speculation that it could bid for the US company once considered a pioneer in the smart phone space.
‘A most suitable candidate will be a mainland Chinese company,’ said Lu Chialin, an analyst at Macquarie Securities in Taipei. ‘They’ve got a lot more free cash and don’t have the brand presence in the United States, so that will all give them that boost they need.’
Investment banking sources said they had heard that Lenovo is looking into a possible bid for Palm, but did not have any further details.
HTC, the world’s No 5 smart phone brand and one name associated with a possible offer, was approached about making a bid but decided to pass after reviewing Palm’s books, a source with direct knowledge of the situation said.
‘There just weren’t enough synergies to take the deal forward,’ said the source, who declined to be identified because the talks were private.
Huawei, the world’s No 2 wireless telecoms equipment maker, also declined to put in a bid, a company source said earlier this month. Smaller rival ZTE, also mentioned in earlier reports as a possible bidder, was not approached on the deal, its chairman told Reuters.
Representatives from HTC and Lenovo both declined to comment, and Palm officials were not immediately available outside regularUSbusiness hours.
Earlier this week, Lenovo’s chief executive Yang Yuanqing also declined to comment about a possible Palm buy. Shares in the company closed up 2.7 per cent at HK$6.09 in a Hong Kong markets down one per cent.
Industry observers said Palm would fit well into cash-rich Lenovo’s current strategy that focuses on growth through acquisitions and movement into the wireless space.
Lenovo had over $2.4 billion in net cash reserves at the end of 2009, it said on its website, and has previously said that it remains open to merger opportunities.
Based on recent deals in the technology sector, a Palm sale could potentially fetch $1.3 billion, given its current $1 billion market capitalization and the 30 per cent premium recently paid in tech deals.
The company’s advisers had previously been seeking about $1.2 billion for the company — a valuation considered too rich by many suitors, one investment banking source said, speaking on the condition of anonymity.
Another investment banking source, who also spoke on condition of anonymity, said he was unsure on how aggressively Lenovo was going to be in bidding for Palm.
‘What are you buying - a good operating system?’ he said. ‘It’s a wounded brand.’
Palm has struggled to generate interest from buyers in its Pre and Pixi smart phones, with customers turning to more popular buys such as Apple’s iPhone and Research in Motion’s Blackberry. It sold about 408,000 units in the quarter ending February 26, lower than the 600,000 units or more many analysts were expecting.
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Ericsson misses profit estimates
Ericsson reported a worse than expected 30 per cent slump in net profit in the first quarter as the Swedish telecoms equipment giant suffered from weak sales.
Ericsson, which also was hit by big restructuring charges, said that weak conditions seen last year carried over into the first three months of this year.
‘The market conditions we saw in the second half of 2009 prevailed also in this quarter with mixed operator investment behaviour across regions and markets,’ chief executive Hans Vestberg said in a statement.
‘Operators in a number of developing markets were still cautious with their investments,’ he added.
The group posted a 30 per cent drop in net profit to 1.26 billion Swedish kroner ($173m) for the first three months of the year, down from 1.72 billion for the same period of last year.
The result fell short of analysts’ estimates for 1.79 billion kroner, as polled by Dow Jones Newswires.
Meanwhile, sales fell nine per cent over the period to 45.1 billion kroner from 49.6 billion. Financial analysts had forecast sales fell three per cent to 47.8 billion kroner.
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ASIA
Oil mixed in Asia
Oil prices were mixed in Asian trade Friday as sagging demand in the United States, the world’s largest energy consuming nation, limited the market’s gains, analysts said.
New York’s main
contract, light sweet
crude for delivery in June, was up five cents to $83.75 a barrel.
Brent North Sea crude for June fell two cents to $85.65.
The market was weighed down by a report Wednesday from the US Department of Energy which showed an unexpected increase in crude and product stocks, analysts said.
The rise indicates weaker demand as the world’s biggest economy struggles to recover from its worst economic downturn since the 1930s.
‘It does put some doubt into the fact that the market won’t move back into balance,’ Ben Westmore, minerals and energy economist for the National Australia Bank in Melbourne, told the AFP.
‘It’s arguable whether (oil above 80 dollars a barrel) is really justified given the very weak fundamentals,’ he added.
The DoE announced on Wednesday that US crude reserves increased 1.9 million barrels in the week ending April 16. This was against market expectations for a drop of 2,00,000 barrels.
Gasoline or petrol stockpiles also soared 3.6 million barrels, exceeding forecasts of a small gain of 3,00,000 barrels.
Distillates, which include diesel and heating fuel, rose 2.1 million barrels whereas analysts had expected an increase of 9,00,000 barrels.
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WORLD NEWS
China central bank strikes bullish note on economy
The Chinese economy has made a good start to 2010 and the outlook for exports and imports in the second quarter is bright, the central bank said on Friday.
In a bullish economic update, the People’s Bank of China said gross domestic product growth accelerated to a seasonally adjusted annual rate of 12.2 per cent last quarter from 11.3 per cent in the fourth quarter of 2009.
After adjusting for seasonal factors, exports have basically recovered to the pre-crisis level and imports have hit record highs, the report said.
‘Consumer prices are basically stable, money and credit controls have shown initial results and the trend of economic recovery has been further solidified,’ the central bank said.
Moreover, it added, statistics indicate that ‘in the future the economy will continue in a good direction’.
The report made no mention of the yuan.
‘In 2010, the Chinese economy had a healthy start. The revival in external trade accelerated, domestic industrial production growth sped up, consumption growth was quite fast and growth in fixed asset investment came down,’ the PBOC said.
The National Bureau of Statistics, which does not publish quarter-on-quarter data, reported last week that the economy grew 11.9 per cent in the first quarter from a year earlier, beating expectations.
China has raised reserve requirements twice this year and reduced loan growth. But it has kept interest rates and the yuan unchanged.
Li Daokui, a newly appointed adviser to the PBOC’s monetary policy committee, said the central bank should be prepared to raise interest rates if inflation-adjusted bank deposit rates languished for long in negative territory.
Consumer prices rose 2.4 per cent in the year to March, outstripping the 2.25 per cent rate on one-year certificates of deposit.
‘If the actual interest rate was in negative territory for three, four, five, six months or even a year, my view, as I have always argued on different occasions, is that nominal interest rates should be adjusted,’ Li told a forum organised by the portal sohu.com.
Warning that the economy was showing signs of overheating and that inflationary pressures would remain severe, Li said: ‘At least monetary policy should show people that it is orientated towards positive real interest rates.’
With the global economy recovering, export orders and other indicators point to export growth of more than 20 per cent in the second quarter, while imports will remain at a high level due to price rises and domestic demand, the PBOC said.
It said an improvement in the gamut of Chinese goods had promoted a sustained revival in exports. Electrical machinery and high-tech products had sold particularly well.
On the import side, China had bought vastly more natural resources and bulk commodities.
Against this background, the central bank said its task was to continue to manage liquidity, maintain appropriate growth in money and credit and strive for overall price stability.
It also had to maintain steady and relatively fast economic growth, while managing inflationary expectations.
Despite the bright outlook for exports, the PBOC cautioned that the foundation of global economic recovery was not solid and trade protectionism was on the rise.
The country’s surplus would fall again this year after shrinking by a third in 2009 to $196 billion, it added.
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Microsoft profit soars with Windows 7 sales
US software giant Microsoft has said that revenues surged to a record high in the recent quarter as Windows 7 operating system succeeded where its predecessor failed.
Microsoft reported that its net profit in the quarter ending March 31 climbed 35 per cent to $4.01 billion.
The firm’s revenue hit a record $14.50 billion in the quarter, up six per cent over the same period a year ago.
‘Windows 7 continues to be a growth engine, but we also saw strong growth in other areas like Bing search, Xbox Live and our emerging cloud services,’ said Microsoft chief financial officer Peter Klein on Thursday.
Microsoft said revenue from its Windows computer operating system was up 28 per cent over a year ago, driven by strong demand for the latest version, Windows 7.
‘Business customers are beginning to refresh their desktops and the momentum of Windows 7 continues to be strong,’ chief operating officer Kevin Turner said.
Strong profit due to droves flocking to Microsoft’s new operating system is a strong sign of the pent-up demand created when people shunned its predecessor Vista.
Microsoft released Windows 7 to the world in October as it tried to regain its stride after an embarrassing stumble with Vista.
While computer users may not give much thought to operating systems that serve as the brains of their machines, the programs are at the heart of Microsoft’s global software empire.
Microsoft operating systems run more than 90 per cent of the world’s computers.
The failure of Vista to catch on hurt Microsoft competitively, giving Apple the opportunity to woo PC users to Mac.
Apple reported stellar quarterly earnings this week, citing factors that included lots of people buying Macintosh machines for the first time.
Microsoft apparently learned a lesson from Vista and worked closely with computer makers, users and software developers while crafting Windows 7.
Some say consumers snatching up Windows 7 or machines pre-loaded with the software is a sign that the economy is on the mend.
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Greece appeals for debt rescue in grim turn for EU
Greece went cap in hand to the EU and IMF on Friday, appealing for up to 45 billion euros of urgent aid at low rates this year in a grim turn for the eurozone now threatened by Greek contagion.
Prime minister George Papandreou made a dramatic televised statement on the ‘national need’, admitting defeat in his attempts to stand against huge debt and deficits, onslaughts on financial markets, and hoping that German reticence can be overcome.
The EU said immediately that it would give ‘rapid’ and ‘efficient’ treatment to the request, and did not expect any ‘obstacles’, and International Monetary Fund head Dominique Strauss-Kahn said the fund would ‘move expeditiously.’
Strauss-Kahn was to meet Greek finance minister George Papaconstantinou in Washington on Saturday where G20 finance ministers meet over the weekend.
For the European Union and the eurozone, the entire Greek crisis is an enormous blow in terms of immediate stability and prestige, but also clears away some of the damaging uncertainty.
It has caused splits in the eurozone. And it also raises questions about the stature of the euro in the long term as a vehicle for the ambitions of Europe between the United States and the new might of China and India.
‘The activation of the (EU-IMF aid) mechanism is a national need,’ Papandreou said.
‘Our partners will do what is necessary to offer us a safe port to allow our boat to float again,’ he said. This would send a message to the markets that the European Union ‘is protecting the euro,’ he said, railing against the previous conservative government and speculators.
‘Today the situation in the markets risks ... squandering not only the sacrifices made by Greeks but also the normal functioning of the economy due to the high interest rates,’ he said.
The interest rate on Greek debt dropped sharply in the first few minutes after the announcement but soon moved back up to 8.55 per cent against a background of uncertainties about Greek data and procedures for a rescue to be enacted.
The socialist prime minister, elected in October, accused the previous government of making ‘criminal choices.’
His address also had the stature of an appeal to the nation which faces unprecedented austerity, just the day after the latest in a series of strikes against massive reforms under way.
But Greece is in a desperate dilemma, and its credibility has been fatally undermined by a series of statements showing that it has misreported key data for the eurozone ever since it gained access as an early member.
The country has overall public debt of about 300 billion euros ($399 billion) — or twice the debt of Britain, a far bigger economy.
The latest, fatal shocks came on Thursday when the EU said it now estimated the public deficit last year at 13.6 per cent instead of 12.9 per cent, with more to come if data turned out to be wrong.
Moody’s credit rating agency downgraded Greek debt and warned it might downgrade further, and the rate Greece must offer to borrow jumped above 8.8 per cent.
It all added up to a ‘hellish week’ in the words of one analyst. Some compare the situation to a debt disaster in Argentina in 2001, and suggest that Greece will end up restructuring its debt.
‘A terrible situation just got worse,’ said Fortis Bank economist Nick Kounis before the appeal for help. At Lloyds Banking Group, Kenneth Broux said: ‘Events in Greece are close to spiralling out of control.’
On Wednesday, the IMF warned that the Greek situation could spread to other weak countries in the eurozone, where Portuguese debt yields shot up on Friday, and that this could lead to a ‘full-blown sovereign debt crisis’.
The crisis is a grave blow to the credibility of the EU and eurozone and has undermined the stature of the European Central Bank.
Germany is furious that Greece was able to borrow for years at rates close to German rates by virtue of being in the eurozone, but on misstated data which EU authorities let pass.
Germany remains central to the rescue, since it is reluctant to allow Greece steeply concessionary rates, of around five per cent. Chancellor Angela Merkel is under pressure from hostile public opinion and a risk of action before the constitutional court.
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G20 plots post-crisis path
World finance leaders gather in Washington on Friday hoping to plot a course beyond the financial crisis, but Greece’s worsening debt woes served as a stark reminder the global economy remains vulnerable.
The Group of 20 rich and emerging countries, whose crisis-forged unity helped to end the global recession, must find common ground on controversial matters including regulating banks, rebalancing global growth and giving fast-growing emerging economies more clout.
They were also likely to focus on Greece’s debt crisis after the euro zone state asked to activate a rescue plan drawn up by the International Monetary Fund and the European Union.
The G20 has essentially supplanted the smaller G7 club of advanced economies, an acknowledgement the global financial crisis emanated from the rich world which now needs help from fast-growing emerging powerhouses to solve global problems.
Their united front may be fracturing, though, and International Monetary Fund chief Dominique Strauss-Kahn urged them to stick together on regulatory reform so policies mesh.
The sharpest divisions were over bank taxes, with Canada strongly opposed and Britain pushing for support. Finance ministers are expected to discuss two bank tax ideas proposed by the IMF. The Fund will present a report to G20 heads of state who are meeting in Toronto in June.
Shin Hyun Song, a senior economic adviser to South Korean President Lee Myung-bak, said bank levies would be the ‘big theme’ of Friday’s meeting.
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Volcano could cost Africa dearly in lost trade: WB
Air travel disruptions from the Icelandic volcano could cost African countries $65 million in lost trade, World Bank president Robert Zoellick said Thursday.
‘African countries may lose some $65 million
as a result of the complete shutdown of EU (European Union) airspace for
five days,’ Zoellick told a press briefing in Washington.
‘Who would have thought that this would hurt countries like Kenya, Uganda, Ethiopia and Senegal, whose perishable exports plummeted when they could no longer fly produce to Europe,’ he remarked.
Air travel has begun returning to normal after an eruption of Iceland’s Eyjafjjoell volcano paralyzed skies over Europe for nearly a week, at an estimated cost of $1.7 billion to the airline industry.
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Greece must improve tax collection: IMF
The IMF has told Greece it must address structural weaknesses in tax compliance and punish big tax dodgers, the Greek Finance Ministry said in a statement on Friday.
‘Among the immediate priorities is... a programme of controls including rigorous penalties and persecution in large cases of non-compliance,’ the ministry said, citing recommendations by the IMF.
Greece started this week talks to hammer out details of a potential European and International Monetary Fund aid deal on Wednesday.
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