Exports await boost as west
crawls out of recession
Khawaza Main Uddin
The country’s economy may find stronger grounds for consolidating exports as a result of rising consumer demands in the west with the advanced economies crawling out of the recession.
In the coming months, economists anticipate positive implications of the recovery worldwide for Bangladesh, which remains largely insulated from the global financial meltdown.
They forecast that the national economy is most likely to escape the ‘tail effects’ of the recession as exports of both goods and manpower are expected to bounce back to normal trends cashing in on the latest economic growth in Europe and North America.
Demands for Bangladeshi garments in the west next summer and fall are high, say industry sources adding that exports of items such as frozen foods, jute and jute goods and leather products may also rebound, should the gains by mighty economies in terms of gross domestic product sustain.
However, the economists suggest that the government should now focus on long-term strategy for sustainable export earnings and remittances taking lessons from the country’s vulnerability to external shocks and also its resilience proven during the global recession spanning 2008 and 2009.
‘Demands for our products in the western markets are going to rise with the increasing consumer demands and if more employments are generated in the aftermath of the recession. Signs of an end to the financial crisis are there,’ said Ananya Raihan, executive director of research organisation D-Net.
Nazneen Ahmed, research fellow of the Bangladesh Institute of Development Studies, pointed out that the sales of goods and commodities in the run-up to the Christmas Day celebrations would ascertain whether the recession in Europe and America was over and the west could increase imports from countries such as Bangladesh.
Both the economists recommended that the government should always keep an eye on the latest developments in the global economy before taking any policy measures to support the exports and other sectors that might have impacts on taxpayers’ money.
A sub-committee of the officially-formed task force has recently advised the government to provide textiles and clothing units with partial interest waiver on bank loans and also cash incentive for exploring new markets, apart from floating a Tk 200 crore revolving fund to support the apparel sector. An amount of Tk 5,000 crore has been earmarked as stimulus package in the current budget.
In the past week, gross domestic products in the euro-zone area of 16 nations reportedly rose 0.4 per cent from the second quarter and joined the United States and Japan in returning to growth from the worst recession since the Second World War. Germany and France – two main destinations of Bangladeshi exports to the European Union – contributed more to compensating for households’ reluctance to spending.
The news of economic recovery in Europe in particular came in the wake of almost 12 per cent decline in Bangladesh exports in the first quarters.
When asked about the trends in export order receipts, Zafar Iqbal, director of a foreign company named Gooryong Dhaka Limited, mentioned that they had already witnessed approximately 40 per cent rise in the export orders targeting the next summer and fall.
‘Many factories especially larger ones are flooded with orders. However, the prices of garment items may vary and it depends on the capacity, including quality of products and bargaining power of individual entrepreneurs,’ he told New Age on Friday.
Nazneen Ahmed felt that Bangladesh was ‘perhaps’ going to avoid the ‘tail effects’ of the recession. ‘So, I believe, the government should maintain caution in paying direct stimulus with the taxpayers’ money,’ she said suggesting long-term measures to boost exports and remittances.
Ananya Raihan suggested trading with services instead of depending only on trade in goods and said Bangladesh had opportunities to export banking services to Africa, the Middle East and even South Asian countries.
He also recommended that the government could consider devaluation of Taka against dollar to give incentives to exports at a time when there was no pressure of higher import bills and foreign exchange reserves swelled to $10 billion mark.
Price of spices further
up before Eid
Staff Correspondent
The prices of rice, spices and onion increased in the city market while vegetables and eggs declined.
Prices of rice increased at retail market this week after rise in the wholesale market in the previous week.
Market sources said the paddy price increased on falling Boro supply from its last seasonal stock. They, however, said that the price would ease down on arrival of Aman crop soon.
Up by Tk 1 or Tk 2 per kilogram in a couple of weeks, different grades of coarse rice were retailed between Tk 22 and Tk 24 on Friday in the city market. Fine parboiled rice was retailed between Tk 30 and Tk 38 per kilogram, also up by Tk 2 in two weeks.
Following the continuous rise on their prices for the past few weeks, spices became costlier in the week with traders prepare for windfall profits during the pre-Eid days on occasional high demand.
Further increase on the supply of winter vegetables pushed the prices of perishables down, but price of onion, for which, market depends on imports, increased due to its increased demand before Eid.
Multi-celled imported garlic was retailed per kilogram at Tk 100 on Friday. It was sold for Tk 90 a week ago and Tk 70 a month back.
Garlic price has almost been tripled in three months as traders said crop loss in China and India pushed the import price up. Up by Tk 5 to Tk 10 per kilogram in a week, turmeric was retailed between Tk 150 and Tk 200 while ginger was sold between Tk 80 and Tk 100.
Shoppers, who started buying for Eid, found that price of the garam masala- cardamom, cinnamon; clove, cumin and black peeper rose unusually.
The New Market grocers on Friday sold Iranian or Syrian cumin per kilogram between Tk 280 and Tk 350 while cardamom in different of sizes sold between Tk 1200 and Tk 1800.
‘Only few importers dominate the supply of garam masala so they control prices before festival every year,’ said Abu Taher, a New Market grocer.
Up by Tk 6 in two weeks, imported Indian onions were retailed between Tk 38 and Tk 40 on Friday while local variety of onions sold between Tk 44 and Tk 48.
‘This price hike on onions has taken place this time due to Eid,’ said Nurul Islam, a trader at Mohakhali.
He said that the price would decline after Eid and further decline would tale place when the early harvested local variety of onions hit market by mid-December.
Other vegetables, however, became significantly cheaper in the week as supply of winter vegetables increased further.
On Friday at Nakhalpara bazar, bean per kilogram was retailed between Tk 16 and Tk 20, radish, Tk 12 and Tk 16, round aubergine, Tk 20 and Tk 24 while a pair of medium-sized cauliflower sold for Tk 30. The retail prices of vegetables have been halved within a couple of weeks.
Retailed per dozen between Tk 72 and Tk 78, egg price declined over the week as, traders said, cheaper vegetables curtailed demand of poultry items.
Among other commodities, bottled soya bean sold per litre between Tk 82 and Tk 86 and non-packed soya bean sold per kilogram between Tk 78 and Tk 80.
Packed coarse flour sold per kilogram between Tk 21 and Tk 23, red lentils, between Tk 90 and Tk 118 while sugar sold between Tk 52 and Tk 54.
Indian billionaires bounce back
Agence France-Presse . New Delhi
The number of billionaires in India almost doubled in the past 12 months to 52, mainly thanks to a recovery in global stock markets, a richlist from US magazine Forbes showed Thursday.
‘Happy days are definitely back again for India’s richest,’ said Naazneen Karmali, India editor for Forbes Asia, in a statement accompanying the India Richlist survey.
‘This year’s list shows yet again that when conditions in the financial markets and the economy are right, India has the scale and resources to produce billionaires faster than most of the countries on Earth.’
A rebound in the Mumbai stock exchange, which is up 76 per cent since the start of the year, and continuing economic growth helped enrich the mostly male list of company owners, whose accumulated net worth is equivalent to a quarter of India’s gross domestic product.
Last year, the number of billionaires halved to just 27, from 54 in 2007.
‘In terms of absolute fortune, we are not at the level we had,’ Karmali said: ‘We’re back to 52, but in terms of wealth we have not recovered yet.’
The head of India’s biggest company Reliance Industries, Mukesh Ambani, is once again the wealthiest person in India. His net worth is estimated at 32 billion dollars, an increase of 54 per cent from 2008.
In second place is steel magnate Lakshmi Mittal who is worth 30 billion dollars, up 46 per cent from a year earlier, Forbes said.
Mukesh Ambani?s estranged brother Anil is in third place with 17.5 billion dollars, 40 per cent higher than before.
The richest newcomers were two brothers from energy group Torrent Power — Sudhir and Samir Mehta — whose collective wealth was ranked 23rd at 2.02 billion dollars.
The magazine also underlined the higher concentration of wealth in India compared with China.
The 100 richest Chinese are worth 170 billion dollars, less than their Indian equivalents at 276 billion dollars.
Sony to launch online
download service for TVs
Agence France-Presse . Tokyo
Sony Corp. aims to launch next year a new online service that will allow people to download content such as music and movies to their televisions and other electronic gadgets, a top executive said Friday.
The move is part of chief executive Howard Stringer’s goal of converging Sony’s strengths in electronics, such as Bravia televisions and PlayStation game consoles, and content generated by its movie studio and music label.
‘This is something I’d like to get off the ground as quickly as possible,’ said Sony executive vice president Kazuo Hirai, who also heads the company’s game division.
The company aims to get the service up and
running in 2010 ‘and earlier in the year would be obviously a lot more preferable in my mind’, he said.
While the service is still under development, it may offer users features related to health and fitness or banking, as well as content downloads and the chance to share photos or home movies online.
‘One of the things we really need to get into is the whole concept of user-driven content,’ Hirai said in an interview.
‘There already are a lot of services out there but we want to try to bring something that is uniquely Sony to the experience.’
The company aims to introduce ‘evolving’ television that delivers new applications over the Internet to people’s TV sets.
While some services through the online service may be free-of-charge, users will have to pay for others, possibly paying a subscription for a bundle of premium content.
The service will build on Sony’s PlayStation Network system, which already has 33 million registered users and allows owners of the video game console to download games and link up with other gamers.
Hirai said Sony also has high hopes for three-dimensional video games that are expected to appear after Sony launches 3D televisions next year.
‘I’m a firm believer in 3D. It really does enhance the game playing experience. There’s no question about it. It just makes it more exciting,’ he said.
Pizza Inn steps into
Bangladesh market
Business Desk
Pizza Inn, USA-based global restaurant chain, will launch its first outlet in Bangladesh on Saturday, a press release has said.
The outlet located at Jashimuddin Avenue, Uttara will be formally launched by GM Quader, the minister for civil aviation and tourism.
Pizzan Inn Bangladesh is a joint venture project of Mohammad Foods and Allied Private Limited who hold the master franchise in Bangladesh for the global chain and has plans to pen several outlets across major cities by the end of 2010. The outlet of Pizza Inn Bangladesh is the first one in South East Asia.
Established in 1957, Pizza Inn has over 360 outlets and food shops all across the USA. It also has business franchise in several countries across the world. The company that is registered with New York Stock Exchange has an annual turnover of $150 million.
India’s Suzlon sells
Hansen’s stake
Agence France-Pressse . New Delhi
Suzlon Energy, India’s biggest maker of wind turbine generators, has sold a 35 per cent stake in Belgian wind gearbox maker Hansen, raising $370 million as it moves to cut debt, a statement said.
The sale, reducing troubled Suzlon’s holding in Hansen Transmissions International NV to 20 per cent, was announced late Thursday by the company.
It comes as Suzlon, buffeted by slowing orders as the global economic downturn has hit demand for clean energy projects, is seeking to reduce debt of around three billion dollars.
Suzlon, the world’s fifth-largest turbine maker which dominates the Indian wind-generation market, purchased Hansen in 2006 for $565 million in a deal it said had big synergies with its own wind turbine operations.
Hansen Transmissions is a leading global player in manufacturing wind gear boxes.
Sacrificial animal prices higher in north
Bangladesh Sangbad Sangstha . Rangpur
Prices of sacrificial animals are now comparatively higher than that of the last year in the market in northern region despite adequate supply a week ahead of the holy Eid-ul- Azha everywhere.
The cattle traders are found little happier for comparatively higher prices of the sacrificial animals in the major markets now though the selling is yet to get momentum within the next two- three days in the region.
The middle class and low-income group people are yet to decide purchasing sacrificial animals of their own choice because of the present higher prices that caused lower selling of the cattle heads.
However, prices of the bulls and all other sacrificial animals might fall in the coming days because of huge supply in the markets possible increased in imports soon, sources in the bigger sacrificial animal markets said.
At the same time, the cattle traders have already started sending huge cattle from the northern region to Dhaka and other bigger cattle markets throughout the country on the eve of the holy Eid-ul-Azha festivity and no road extortion is reported so far.
Sources in the bigger markets attributed the higher prices of the sacrificial animals to the less import so far through the corridors in the northern frontiers in comparison with the same in recent years.
They said that the number of imported buffaloes, calves, cows and camels was reduced this time but it has very little impacts in the northern markets because of huge supply of the locally reared sacrificial animals in the local markets.
According to market sources, a large bull is now being sold at Taka 40,000 to 50,000 against last year’s Taka 30,000 to 35,000, a middle sized one is Taka 30,000 to 35,000 against last year’s Taka 20,000 to 25,000 while a small one is Taka 15,000 to 20,000 against last year’s Taka 13,000 to 15,000.
A big goat is being sold at Taka 10,000 to 16,000 against last year’s Taka 7,000 to 12,000, a middle-sized one is Taka 6,000 to 8,000 against last year’s Taka 5,000 to 6,000 while a small one is Taka 3,500 to 5,500 against last year’s Taka 3,000 to 3,500, the sources said.
The buyers including the middle class and low- income group people were found purchasing little number of sacrificial animals today at bigger markets because of comparatively higher prices that caused less selling.
The number of imported buffaloes, calves and cows would mark significant rise in coming days though supply of the locally reared cattle, especially from the char areas in the river basins, have already flooded the local markets, market sources said.
They also said the local animal husbandry sector has been flourishing faster everywhere including the poverty-prone char areas as a result of the present state of social awareness,
ongoing poverty alleviation and social safety- net activities of the government.
‘The huge supply of locally reared healthy bulls has been caused by the flourishing animal husbandry sector that helps hundreds of poorer people including distressed women achieving self-reliance,’ said dozens of cattle traders in the bigger markets.
Cattle traders while talking to BSS today said that number of imported cattle through the corridors at Islampur, Jatrapur, Harinmari, Khanpur, Koria, Bholarhat, Kansat, Shyampur, Rajabari and Sultanganj points in northern frontiers will further increase soon.
BKB disburses Tk 9.65 crore
loans to Pirojpur farmers
United News of Bangladesh . Pirujpur
Bangladesh Krishi Bank disbursed agri-loans of Tk 9.65 lakh among the 55 farmers in the district on Wednesday on the occasion of Nabbanna [harvest] festival.
The loan was disbursed at a simple ceremony held at Tikikata Union Parishad office in Mathbaria upazila with UP Chairman Eskandar Ali Mridha in the chair.
Chief Regional Manager of Pirojpur BKB M Motahar Hossain was present as chief guest.
Pirojpur BKB district officer Delwar Hossain, Mathbaria Branch Manager Ramesh Chandra Baral, Loan Officer Azizur Rahman and cashier Amal Chandra were present on the occasion.
Asian markets lower on
fresh recovery fears
Agence France-Presse . Hong Kong
Asian markets fell on Friday as investors followed a Wall Street tumble on renewed concerns about the global economic recovery while Japan declared it was in a state of deflation.
Tokyo lost 0.54 per cent, Hong Kong 0.83 per cent, Sydney 1.34 per cent and Taipei one per cent.
It was also dragged by an Organisation for Economic Cooperation and Development report forecasting a ‘modest’ rebound from the global economic slump.
On Friday Japan held its rates at super-low levels before saying the country ‘is in a mild deflationary situation’, the first such announcement in more than three years.
The cabinet office also said a tough employment situation will continue for the time being. Japan’s unemployment rate stood at 5.3 per cent in September.
Shanghai was pulled 0.37 per cent lower on liquidity fears after the Shanghai Securities News reported Beijing might raise the minimum reserves lenders must deposit with the central bank.
Tokyo: Down 0.54 per cent. The Nikkei-225 lost 51.79 points to 9,497.68.
The fall represents the fourth straight day of losses.
Hong Kong: Down 0.83 per cent. The Hang Seng Index fell 187.32 points to 22,455.84.
Property developers and mainland lenders led the decline, the fourth in a row.
Taipei: Down 0.99 per cent. The index fell 77.01 points to 7,682.97.
The market opened lower and the losses extended until the end of the session as falling US hi-tech shares put pressure on their local counterparts, dealers said.
Taiwan Semiconductor Manufacturing Co fell 1.91 per cent to $61.70.
Personal computer maker Acer dropped 2.29 per cent to 81.10 and Quanta Computer fell 2.56 per cent to 64.60.
Smartphone firm HTC lost 2.13 per cent to 368.00.
Singapore: Up 0.10 per cent. The Straits Times Index added 2.75 points to 2,761.54.
DBS was up 26 cents to 14.86 and Oversea-Chinese Banking Corp added two cents to 8.48.
Singapore Airlines declined 20 cents to 13.92 and Singapore Telecom dropped three cents to 2.92. CapitaLand dipped one cent to 4.09.
Bangkok: Down 0.74 per cent. The Stock Exchange of Thailand fell 5.17 points to 695.25.
The government is battling domestic difficulties and a diplomatic crisis with Cambodia over a visit by former Thai premier Thaksin Shinawatra there last week.
Thailand has also appealed a court decision to suspend 76 industrial projects worth billions of dollars over local residents’ health fears.
Coal producer Banpu jumped 8.00 baht to close at 492 baht, but PTT Plc dropped 2 baht to 231baht.
Bangkok Bank was unchanged at 113.50.
Kuala Lumpur: Down 0.18 per cent. The Kuala Lumpur Composite Index fell 2.29 points to 1,274.36.
Plantation giant Sime Darby slid 0.6 per cent to 8.95 ringgit while rubber glove maker Supermax rose 2.3 per cent to 4.01 ringgit.
Jakarta: Up 0.75 per cent. The Jakarta Composite Index rose 18.57 points to 2,487.36.
Bumi Resources gained 7.6 per cent to 2,825 after it sold $300 million in convertible bonds to finance acquisition plans. Rival Bukit Asam rose 3.8 per cent to 15,550 rupiah.
Manila: Down 0.47 per cent. The index lost 14.57 points to 3,068.73.
‘Looking at market valuations, investors are trying to realise their gains as early as possible as we’re also nearing the year-end,’ Ron Rodrigo of DBP-Daiwa Securities Philippines said.
Philippine Long Distance Telephone dropped 0.20 per cent to 2,545 pesos and Manila Electric Co added 1.78 per cent to 228 pesos.
Wellington: Down 0.88 per cent. The NZX-50 fell 27.55 points to 3,113.63.
The top 50 were mostly lower, with only eight stocks registering gains.
Fletcher Building was 18 cents off at $7.67 and Contact Energy was down 14 cents to 5.91.
Casino operator Sky City fell three cents to $3.37 and New Zealand Refining Co fell four cents to $5.02.
Mumbai: Up 1.41 per cent. The 30-share Sensex rose 236.2 points to 17,021.85.
Euro extends slide in Asia
on economic jitters
Agence France-Presse . Tokyo
The euro continued its slide in Asian trade on Friday as investors shunned assets viewed as risky following falls on world stock markets triggered by fresh worries about the economic outlook.
The euro fell to $1.4902 in Tokyo morning trade from 1.4922 in New York late Thursday, and to 132.60 yen from 132.78. The dollar softened to 88.94 yen from 88.99.
‘Over the past few days, patches of weakness in economic data have seen fears over the strength and durability of the economic recovery return,’ said NAB Capital strategist John Kyriakopoulos.
‘As a result, ‘commodity currencies’ like the Australian dollar were shunned in favour of ‘safe-haven’ currencies like the US dollar and the yen,’ he added.
The Organisation for Economic Cooperation and Development said Thursday the pace of recovery in the global economy would be ‘modest,’ and forecast interest rates in the United States and Europe to remain ‘close to zero’ until late 2010.
The Bank of Japan was due to wrap up a monetary policy meeting Friday, with markets anticipating its key lending rate would be kept at 0.1 per cent to fight stubborn deflation.
‘Given that official concerns about deflation are intensifying, interest rates are unlikely to go up for a long while,’ said Calyon analyst Mitul Kotecha.
‘We only look for the first rate hike to take place in the second quarter of 2011.’
At its previous meeting last month, the BoJ announced it would halt some of its emergency measures to tackle the financial crisis at the end of the year.
But it is under pressure from the government not to tighten its highly stimulative monetary policy too soon.
Japanese finance minister Hirohisa Fujii expressed concern Friday about deflation, describing it as ‘worrisome.’
The government has limited scope for further pump-priming measures given Japan’s soaring public debt.
In its economic outlook report, the OECD urged Japan to turn off the stimulus spending taps and work on repairing the public coffers now that its worst post-war recession is over.
European stock markets
halt heavy losses
Agence France-Presse . London
Europe’s main stock markets steadied on Friday one day after equities slumped on jitters regarding the economic outlook, traders said.
London’s benchmark FTSE 100 index edged up 0.05 per cent to 5,270.13 points in late morning trade. Frankfurt’s DAX 30 rose 0.10 per cent to 5,707.43 points and in Paris the CAC 40 gained 0.05 per cent to 3,761.95 approaching the half-way stage.
The DJ Euro Stoxx 50 index of top eurozone shares dipped 0.03 per cent to 2,859.36 points.
‘The economic data this week has been mixed and while the markets look to be in a state of flux it would seem that economists are becoming more and more unsure about how the recovery will pan out,’ said Capital Spreads analyst Simon Denham.
US stocks slumped on Thursday on renewed jitters about the pace of economic recovery and following a downgrade of key American firms in the technology sector, traders said.
The Dow Jones Industrial Average slipped 0.90 per cent and the tech-heavy Nasdaq tumbled 1.66 per cent.
Asian markets meanwhile closed lower on Friday as investors followed the Wall Street tumble and as Japan declared it was in a state of deflation, or falling prices.
Tokyo lost 0.54 per cent, Hong Kong 0.83 per cent, Sydney 1.34 per cent and Taipei shed one per cent.
In Europe on Friday, the share price of Nokia was trading down 1.54 per cent at 8.96 euros after the world’s biggest mobile phone maker said it would shed about 330 jobs in Finland and Denmark as part of a streamlining of its research and development operations.
‘The planned changes are expected to affect up to 230 employees at Nokia’s Oulu site in Finland and approximately 100 employees at Nokia’s Copenhagen site,’ the firm said in a statement,
It added it currently had some 17,000 employees in research and development, of which more than 2,000 were in Oulu and more than 1,000 in the Danish capital.
European stock markets had begun the week strongly, with London hitting a 2009 peak, as the heavyweight mining sector was boosted by rising metals prices.
Volkswagen board approves
Porsche takeover
Agence France-Presse . Berlin
Volkswagen, Europe’s biggest carmaker, said on Friday that its supervisory board had cleared the way for its planned takeover of sportscar maker Porsche.
The German giant said in a statement that its supervisory board had approved on Thursday contracts determining details of the two firm’s complex tie-up. Porsche’s board was expected to follow suit on Friday.
The approvals are expected to draw a line under a fierce power struggle between the two automakers in recent years that counts Porsche’s former boss Wendelin Wiedeking and its finance chief as casualties.
Porsche initially tried to acquire its much bigger German peer, but it ran out of funding as the financial crisis seized up credit markets. VW is now driving the deal, which is expected to be completed in 2011.
Porsche’s core sports car operations are set to be integrated into VW as its 10th brand. As a first step, VW will acquire a 49.9-percent stake for 3.9 billion euros (5.8 billion dollars) by the end of this year.
VW’s chief executive Martin Winterkorn was expected to make his first public appearance in his additional role as Porsche CEO at Porsche’s earnings presentation next Wednesday.
Several of VW’s institutional investors in recent weeks have criticised the poor visibility on Porsche’s financial situation and pledged to resist the deal.
A capital increase using ordinary shares would have endangered the Geman state of Lower Saxony’s voting stake, which gives it a blocking minority on important company decisions.
On completion of the merger, the state is set to remain the second-biggest shareholder, with a stake of 20.1 percent, and keep wide-ranging veto rights.
The Porsche and Piech families, which control Porsche, are expected to emerge as the largest shareholder of a combined company.
Dollar rallies as traders
avoid risky deals
Agence France-Presse . London
The dollar rallied on Friday as investors shunned assets viewed as risky, such as the euro, amid fresh concerns about the strength of global economic recovery, analysts said.
In late morning trading here, the euro sank to 1.4876 dollars from 1.4922 late in New York on Thursday.
Against the Japanese currency, the dollar fell to 88.84 yen from 88.99 yen late on Thursday.
‘Over the past few days, patches of weakness in economic data have seen fears over the strength and durability of the economic recovery return,’ said NAB Capital strategist John Kyriakopoulos.
The Organisation for Economic Cooperation and Development on Thursday said the pace of recovery in the global economy would be ‘modest,’ and forecast interest rates in the United States and Europe to remain ‘close to zero’ until late 2010.
The Bank of Japan meanwhile wrapped up a monetary policy meeting Friday, leaving its key lending rate at 0.1 per cent to fight stubborn deflation.
‘Given that official concerns about deflation are intensifying, interest rates are unlikely to go up for a long while,’ said Calyon analyst Mitul Kotecha.
‘We only look for the first rate hike to take place in the second quarter of 2011.’
Everything happening in the currency market ‘can be explained by stock moves today,’ added Koji Takeuchi, a senior economist at Mizuho Research Institute.
‘Players were unwinding euro-holdings that they had accumulated in past weeks as falls in regional shares dented players’ risk-tolerance.’ Tokyo’s benchmark Nikkei-225 index closed down 0.54 per cent on Friday.
At its previous meeting last month, the BoJ announced it would halt some of its emergency measures to tackle the financial crisis at the end of the year.
But it is under pressure from the government not to tighten its highly stimulative monetary policy too soon.
Japanese Finance Minister Hirohisa Fujii expressed concern Friday about deflation, describing it as ‘worrisome.’
In London on Friday, the euro was changing hands at 1.4876 dollars against 1.4922 dollars late on Thursday, at 132.17 yen (132.78), 0.8988 pounds (0.8953) and 1.5125 Swiss francs (1.5116).
The dollar stood at 88.84 yen (88.99) and 1.0168 Swiss francs (1.0127).
The pound was at 1.6550 dollars (1.6661).
On the London Bullion Market, the price of gold advanced to 1,142.10 dollars an ounce from 1,135.50 dollars an ounce late on Thursday.
Oil prices mixed as
inventories stay high
Agence France-Presse . London
Oil prices traded mixed on Friday and were likely to stay under $80 amid high energy inventories in the United States, the world’s biggest energy-consuming nation, analysts said.
New York’s main contract, light sweet crude for December delivery, dipped nine cents to $77.37 a barrel after slumping by more than two dollars on Thursday.
Brent North Sea crude for January delivery rose 23 cents to $77.87 in early London trading on Friday.
Prices diverged within a tight range ‘with relatively swollen US stockpiles still weighing on prices,’ said VTB Capital commodities analyst Andrey Kryuchenkov in London.
New York crude prices on Wednesday breached $80 a barrel after government data showed crude reserves in the United States fell 9,00,000 barrels in the week ending November 13.
However levels remain relatively high with demand struggling to recover following the financial crisis.
Oil prices slumped on Thursday as the dollar rose and owing to renewed doubts about a sustainable global economic recovery, traders said.
An array of largely unimpressive US economic data caused a fall on Wall Street as investors sought safety in the dollar, a traditional safe haven currency in times of distress.
A stronger greenback makes dollar-denominated commodities -like crude oil and gold -more expensive for buyers using other currencies. That tends to reduce demand for such raw materials, eventually weighing on prices.
Oil under $78 a barrel was ‘a buying opportunity,’ said analyst Victor Shum at the Purvin and Gertz energy consultancy in Singapore.
‘The oil market has shown resistance against breaking through the 80-dollar level simply because the sustainability of economic recovery.’
They were also struggling to find support owing to strong supplies and weak demand, he added.
Nokia to cut 330 jobs
Agence France-Presse . Helsinki
Nokia, the world’s biggest mobile phone maker, said on Friday it would shed about 330 jobs in Finland and Denmark as part of a streamlining of its research and development operations.
‘The planned changes are expected to affect up to 230 employees at Nokia’s Oulu site in Finland and approximately 100 employees at Nokia’s Copenhagen site,’ the firm said in a statement,
It added it currently had some 17,000 employees in research and development, of which more than 2,000 in Oulu and more than 1,000 in the Danish capital.
The mobile phone giant launched a cost-cutting programme last January, after its earnings fell as consumers cut back on buying handsets amid the global financial crisis.
The programme aims to generate more than 700 million euros (1.0 billion dollars) in annual savings.
Before Friday, Nokia had announced about 3,700 job reductions since January, including around 1,300 voluntary redundancy packages.
Last month Nokia posted a surprise swing into red when it reported a third-quarter net loss of 559 million euros amid rising competition in the smartphone market and problems with its Nokia Siemens Networks joint venture.
Asia airlines stem decline
Agence France-Presse . Singapore
Asia’s airline industry is pulling out of a slump sparked by the global recession with signs passenger numbers are rising, a regional body said Friday, but there were warnings a rebound will be slow.
‘Hopefully, we are at least through the worst of the downturn,’ Andrew Herdman, director-general of the Association of Asia Pacific Airlines, said at an industry forum in Singapore.
‘There are some encouraging signs that air traffic is starting to recover.’
Figures released Thursday by the 17-member AAPA showed its airlines carried 11.1 million passengers in October, a slight improvement over the previous month.
However, the figures were still below levels seen a year ago and despite signs of a recovery, the regional airline industry is still expected to turn in a collective loss for 2009, Herdman said.
He did not give a figure for the losses expected this year but said the industry lost 4.8 billion US dollars in 2008.
The International Air Transport Association has estimated that the global airline industry will lose 11 billion US dollars this year.
‘In recent months, most airlines have seen load factors recover but low yields mean continuing losses for the industry and rising oil prices are certainly not helping,’ said Herdman.
‘Asia Pacific airlines are expected to report heavy losses this year.’
Given the severity of the global recession, the worst since the 1930s, it will likely take some time for the industry’s health to return to pre-crisis levels, he said.
Airlines ‘continue to face an extremely challenging operating environment’ and ‘it will take time to nurse battered balance sheets back to full health,’ Herdman added.
Chew Choon Seng, chief executive of Singapore Airlines (SIA), an AAPA member, pointed to a recovery, saying: ‘The evidence, thankfully, is that we have passed the bottom of the downturn and that we are into a gradual recovery, month-on-month if not yet year-on-year.’
But he said risks remained, including the sustainability of the global economic recovery and worries the A(H1N1) flu virus will disrupt travel plans during the northern hemisphere winter season.
SIA narrowed its losses to 158.8 million Singapore dollars (114.5 million US) in the September quarter, from 307 million Singapore dollars the previous three months.
One of the key questions is whether demand for business- and first-class air travel, generally known as premium traffic, will return strongly, delegates at the forum were told.
‘Premium traffic has stopped flying because businesses have stopped, that’s what the recession is all about,’ said Tony Tyler, chief executive of Hong Kong carrier Cathay Pacific Airways.
‘The question is will they come back in sufficient numbers, in sufficient strength for us to get our yields up.’
Cathay Pacific, along with SIA, relies considerably on premium traffic, which has suffered after business executives cut down on air travel to reduce costs.
SIA, which draws 40 per cent of its revenues from premium traffic, said it was already seeing some improvement in bookings for business- and first-class seats.
For the long term, the Asia-Pacific looks set to become the biggest market for the world’s aircraft makers, said Randy Tinseth, Boeing vice president for marketing, commercial planes.
He said regional airlines are forecast to buy almost 9,000 airplanes worth 1.1 trillion US dollars over the next 20 years.
The expected boom in orders will be fuelled by a need to meet rising air travel demand as the region’s economic growth outpaces that of the rest of the world, he said.
‘What this means is that the Asia-Pacific market both in terms of units as well as in terms of investments will be the world’s largest marketplace,’ he told a media briefing on the sidelines of the aviation forum.
Japan maintains super-low
interest rates
Agence France-Presse . Tokyo
Japan’s central bank left its super-low interest rates unchanged on Friday as the government declared for the first time in more than three years that Asia’s biggest economy is in a phase of deflation.
Concerns are mounting that a long bout of falling consumer prices could threaten Japan’s recovery from its worst recession in decades, eating into corporate profits and prompting consumers to put off purchases.
‘The recent price falls are not right and worrisome. This is one of the major policy issues right now,’ finance minister Hirohisa Fujii told a news conference.
The government declared in a monthly report Friday that Japan is ‘in a mild deflationary situation.’
The world’s number two economy posted its strongest growth in more than two years during the third quarter of 2009, expanding 1.2 per cent from the previous three-month period.
But there are concerns the recovery could lose steam as the boost from the government’s pump-priming efforts fades.
‘Japan’s economy is picking up mainly due to various policy measures taken at home and abroad, although the momentum of self-sustaining recovery in domestic private demand remains weak,’ the Bank of Japan said in a statement.
The central bank, which has predicted three straight years of falling consumer prices, left its benchmark interest rate unchanged at 0.1 per cent at a two-day meeting that wrapped up on Friday.
‘The Bank of Japan intends to firmly help our economy get back to a sustainable recovery by maintaining the current extremely easy monetary measures for now,’ BoJ governor Masaaki Shirakawa told reporters.
The Bank of Japan announced last month it would halt some of its emergency measures to tackle the financial crisis at the end of the year, despite pressure from the government not to withdraw its stimulus steps too soon.
But Shirakawa denied there was a rift between the bank and the government over monetary policy, saying the BoJ shares its concern about deflation.
‘The government position ... does not differ from the views the Bank of Japan has shown before,’ he said.
Japan was stuck in a deflationary spiral for years after its asset price bubble burst in the early 1990s, hitting corporate earnings and prompting consumers to put off purchases in the hope of further price drops.
The current global economic downturn and a slump in commodity costs pushed Asia’s biggest economy back into the deflationary doldrums. Core consumer prices have now fallen year-on-year for seven months in a row.
Japan’s deputy prime minister said the government would convey its worries about falling prices to the central bank.
‘The country is in a deflationary state. We are going to tell our economic views to the Bank of Japan,’ Naoto Kan told reporters Friday.
From blood to oil, the curse
of a Sudanese village
Agence France-Presse . Rier, Sudan
Visitors to Rier, in southern Sudan, are welcomed by a large rectangular tank and a freshly-painted sign trumpeting the White Nile Petroleum Operating Company’s initiative to supply drinking water.
But the inhabitants of this festering clutter of tumbledown straw huts and rubbish now complain that the promise of peace and progress has not been realised and that oil exploitation only poisoned their lives.
‘When we were forced to move here, the oil company made many promises: building a school, building a hospital and providing drinking water,’ says local administration chief William Malual.
The small town of 2,000 was entirely moved in 2006 from an area a few miles away in Unity state that was requisitioned by WNPOC, a subsidiary of Malaysian oil giant Petronas, for building a central processing facility.
‘Now people are falling sick and we don’t know why. The livestock is dying abruptly because of all these chemicals in the water,’ says Malual, wearing threadbare black clothes and carrying a Kalashnikov.
‘We are very suspicious of the water quality in the region,’ says Unity state’s representative from the health ministry, Peter Majuoy.
Refilling by oil company trucks of the proud steel tank donated by WNPOC is erratic at best and new findings by the German NGO Sign of Hope shows alarming water contamination by salts and heavy metals.
In the filthy alleys of ‘New Rier’, six-foot-tall women with jet-black skin from the local Nuer tribe spend much of their days carving their way through cesspools and waste with jerrycans balanced on their heads to retrieve every drop of WNPOC’s chlorine-treated water.
Nobody uses the water from the old wells and boreholes, which Sign of Hope says is packed with cyanides, lead, nickel, cadmium and arsenic and even the local oil company representative admits is unfit for consumption.
‘This pump, we never use it,’ says Martha Nyaluk, pursing her lips in disgust as she points to a rusty fountain near her family shack, over which a cloud of mosquitoes blackens the air.
‘Everybody is suffering because of this contaminated water. We no longer use it, not for cooking, not for laundry, not even to wash,’ says Malual.
Rier is a stretch of grimy stalls made of logs, corrugated iron and recycled tarp marked ‘potassium chloride’.
A gutted mini-bus lies on its side, a zombie-like prisoner roasts inside a container-cum-prison cell and children play boisterously around old WNPOC-stamped barrels despite the stench of human excrement.
In the background, the ominous red and white striped chimneys of the Thar Jath oil processing facility dominate the flat landscape of the Sudd wetlands, a UN-protected site of swamps and flood plains covering 11,000 square miles.
Rier has not had it easy in recent decades. Its name still conjures up some of the most violent chapters of the civil conflict that tore Africa’s largest country apart for 22 years.
The interminable ribbon of laterite soil leading to the village used to be known as the ‘blood road’ for the thousands of pro-Khartoum forces that came scudding down it before rampaging through nearby villages.
The civil war killed an estimated 1.5 million people and officially ended in 2005 with the signing of the Comprehensive Peace Agreement, which hinges largely on an oil revenue sharing agreement.
Now along the ‘blood road’ runs a pipeline which pumps crude to the north for refining and exporting.
But the inhabitants of Rier see nothing heading back to them of the riches they feel their soil is affording to the northern regime.
‘We read a lot about the sharing of oil wealth but we see nothing coming... Life was much better before,’ says Malual.
Reverend Roko Taban Mousa—an influential cleric in the oil-producing regions of Unity, Upper Nile and Jonglei—agrees that the benefits generated by Sudan’s booming oil industry are not trickling down to the producing areas.
‘I see nothing coming out of the oil,’ he says. ‘The region where the oil is produced is still the poorest in the country.’
EBay completes Skype sale
Agence France-Presse . Washington
Online auction giant eBay announced Thursday it had completed its sale of Skype to an investment group that includes the two founders of the Web communications company.
The previously announced sale of a 70 per cent stake in Skype for some two billion dollars had been held up by lawsuits filed by Skype founders Niklas Zennstrom and Janus Friis.
Zennstrom, a Swede, and Friis, a Dane, settled the suits this month and will hold a 14 per cent stake in Skype through their new company, Joltid Ltd.
Fifty-six per cent will be held by an investor group led by private equity firm Silver Lake Partners, the Canada Pension Plan Investment Board, venture capital firm Andreessen Horowitz and others.
EBay will retain a 30 per cent equity investment in Skype.
EBay received $1.9 billion in cash and a note for $125 million for the 70 per cent stake in Skype.
The deal values Skype at $2.75 billion.
EBay purchased Skype from Zennstrom and Friis in 2005 for a price tag that eventually exceeded $3.1 billion.
Skype, which has its headquarters in Luxembourg, bypasses the standard telephone network by channeling voice and video calls over the Internet.
It allows users to call others free of charge and provides the ability to connect with land lines or mobile devices at low rates.
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