SEOUL - A LARGE number of struggling South Korean businesses have absconded from China in recent months, reports say.
There were 206 cases in 2003-2007, all in Shandong province, said Mr Hong Ji In of the Commerce Ministry’s trade cooperation bureau here.
During the same period, 55 South Korean companies followed proper procedures to close down, the Yonhap news agency quoted him as saying. This came after Yonhap’s report last week that some unscrupulous factory owners had taken advantage of the Chinese New Year holiday to abscond.
Officials in Seoul are discussing possible ways to penalise businesses that leave China without going through proper procedures - such as allowing Chinese workers to take legal action against former bosses in South Korean courts, said Mr Hong yesterday.
Policymakers at a joint meeting of government and economic umbrella groups said many Korean companies were doing well in China, but some smaller firms could not cope with changes in the business environment.
Beijing has been strengthening labour and environmental laws and reducing benefits for foreign investors. Rising wages are also pressuring labour-intensive operations.
As of last September, there were 19,529 Korean firms operating in China, with total investments of US$21 billion (S$30 billion). This accounts for 46.7 per cent of all foreign business investments by South Korean companies.
Mr Hong also said the Foreign Ministry will set up a help desk at its embassy in Beijing and its consulate in Qingdao to help South Korean investors.
SEOUL - A JOBLESS South Korean who was flat broke and hungry has been detained for cooking his landlady’s pet dog, police said yesterday.
The man was held for questioning on Monday after his neighbours spotted smoke rising from his tiny one-room residence in the Jongno district of central Seoul and called firefighters.
The bizarre case involved a Chihuahua, one of the world’s smallest breeds of dogs, Yonhap news agency said.
The man took the animal to his room while his landlady was in a bathroom and killed it, the agency said. He reportedly told investigators he did it because he was hungry.
Japanese firm gives staff leave to mend broken hearts
TOKYO - LOVELORN staff at a Japanese marketing company can take paid time off to nurse a broken heart after a bad break-up with a partner - thanks to ‘heartache leave’.
And the offer gets better as one gets older.
Tokyo-based Hime & Company - which also gives staff paid time off to hit the shops during the sales season - says heartache leave allows employees to cry their hearts out and return to work refreshed.
‘Not everyone needs to take maternity leave, but with heartbreak, everyone needs time off, just like when you get sick,’ said CEO Miki Hiradate, whose market research company of six women promotes products such as cosmetics and beverages targeted at women.
Staff aged 24 years or younger can take one day off per year, while those between 25 and 29 can take two days off and those older can take three days off, the company said.
‘Women in their 20s can find their next love quickly, but it is tougher for women in their 30s, and their break-ups tend to be more serious,’ Ms Hiradate, 37, said.
She swore that she herself will take her shitsuren kyuka or heartbreak leave if the need arises.
‘Of course, I will take three days off!’ she said.
Hime & Company staff can also take two mornings off twice a year as ‘sales shopping leave’, so they can race to stores to hunt for bargains.
‘Before, women could take half-days off to go to sales, but you’d have to hide your shopping bags in lockers by the train station,’ Ms Hiradate said.
‘But with paid leave, we don’t have to feel guilty about bringing our shopping bags to work, and we can enjoy the best part about sales shopping - talking about our purchases afterwards.’
Taiwanese firms feel pinch of rising costs in China
Some are returning home while others are moving to lower-cost countries like Vietnam
By Ong Hwee Hwee, Taiwan Correspondent
TAIPEI - CHEAP labour, readily available land and generous tax breaks made China the dream factory for Taiwanese businessmen who were among the first to set up shop in the mainland in the 1980s.
But two decades later, a small but growing number of Taiwanese companies - deterred by rising business costs in China - are heading home or casting their sight on new investment destinations such as Vietnam.
In the past 16 months, Taiwan’s Ministry of Economic Affairs (MOEA) received a record 102 investment applications from Taiwanese companies based overseas.
Of these cases, 60 were filed by mainland-based Taiwanese firms with a total estimated investment value of NT$8.5 billion (S$380 million). Some 50 applications were R&D related, said reports.
The phenomenon underscores the challenges faced by Taiwanese and foreign firms amid China’s changing business environment.
The mainland has put in place new measures which will hike up business costs - especially for labour-intensive and low-value-add industries.
The new Labour Contract Law, which took effect this year, mandated companies to give open-ended contracts to employees who have worked for 10 years or have completed two fixed-term contracts.
These contracts include terms such as higher company contributions to pension and severance pay.
Taiwanese economic officials estimated that the new regulation could push up labour costs by between 10 and 40 per cent - especially for Taiwanese firms in the low-cost manufacturing centre in the Pearl River Delta.
Some analysts predict that about 10 to 20 per cent of Taiwanese manufacturers in the delta could close down this year.
Dealing another blow to Taiwanese firms, China will from this year gradually phase out the preferential tax rates enjoyed by many foreign companies.
These firms, which previously paid 15 per cent in corporate tax, will now be taxed 25 per cent like their Chinese counterparts.
The changes were the last straw for some Taiwanese firms which were already struggling with rising wages, a stronger yuan, the scrapping of export tariff rebates and stricter pollution-control requirements.
But observers say a mass withdrawal of investments is unlikely for Taiwanese businessmen, who are among the largest investors in the mainland.
There are an estimated one million Taiwanese businessmen and their dependants in China.
Analysts point out that the capital repatriated to the island is only a trickle compared to the flood of Taiwanese investments bound for China.
In the past 17 years, Taiwanese firms have poured US$63 billion (S$89 billion) into the mainland - about 60 per cent of Taiwan’s outbound investments. In 2005, the ratio even hit a record high of 71.5 per cent.
‘It is more a case of Taiwanese firms diversifying their investments than pulling out completely from China. Some have termed it the ‘China-plus-one’ strategy,’ said Mr Hong Tsai-lung of the Taiwan Institute of Economic Research.
Despite rising business costs, China is still a magnet for investments because of its infrastructure, large base of suppliers and relatively skilled yet affordable labour, Mr Hong told The Straits Times. His views were echoed by others.
‘For labour-intensive businesses like the textile industry, moving back to Taiwan would not solve their problem because the labour cost is still higher compared to China,’ said Mr Andrew Yeh, chairman of the Taiwan Merchant Association in the southern Chinese city of Dongguan.
For firms like Unitech, a leading Taiwanese printing circuit board manufacturer, Taiwan’s technological know-how is a big pull factor. The company has invested in a new solar cell plant in Ilan county.
‘Our operations are fully automated, so labour cost is not a major concern,’ Unitech president C.H. Hsu told The Straits Times.
‘But the labour-intensive businesses like textile firms are unlikely to return to Taiwan. They left in the first place because they could not survive here.’
For Taiwanese firms sourcing for new investment targets, Vietnam has emerged as a popular choice. In fact, Taiwan is already the largest investor in the South-east Asian state.
But some mainland-based Taiwanese businessmen say it is still too early to pack their bags.
Said Mr Yeh: ‘I will give it six months to a year. I am running a factory, not some roadside stall which I can just fold up any time and leave.’
In 2007 China surpassed the USA to become the second biggest retail gold market in the world after India. Total consumer demand in China's mainland, Hong Kong and Taiwan reached 363.3 tons, an increase of 23.5 percent from 2006, the World Gold Council indicated in a research report.
To put that figure into perspective 363.3 tons, is equal to 10,596,250 troy ounces of gold, at today's gold price of approximately $900 US that is $9,536,625,000 US Dollars worth of gold.
Mainland China gold demand, including gold jewelry and retail gold investment, reached 326 tons, an increase of 26 percent from 2006. This is the first time it has surpassed the 300 ton level. The gold jewelry demand in mainland China reached 302 tons in 2007, a year on year growth of 23.5 percent. Gold Jewelry and other ornaments have always been a form of savings in China since time immemorial.
India which has the world's largest gold demand had a gold demand of 773.6 tons in 2007, while the US now in third place had a gold demand of 278.1 tons.
"Encouraging civilian reserves of gold has strategic significance and economic value," said a director of the Peoples Bank of China's (China's Central Bank) official news vehicle back in 1998 when gold was around $300US. Can you imagine the US Federal Reserve Bank giving such a recommendation and what it would do to the gold price?
The article went on to say "If there are problems with the U.S. dollar, there will be an international catastrophe." "Reducing reliance on the dollar, and maintaining greater diversification in foreign exchange reserves is the only way to reduce the risk," it said. "As a result, an increase in our country's gold reserves is necessary."
It looks like the Chinese people have been taking notice of the advice from their central bank to buy gold. China's mainland gold demand rose 18% percent from 2006 level to 94.3 tons during the 4th quarter. This was when the gold price rocketed from the breakout area of of around $730US to around $900US.
Consider this, the U.S. possesses 262 million ounces of gold for its nearly equal population. Were China to achieve the same financial gold backing, it would require 1.2 billion ounces of gold. The same amount of ounces of gold owned by all the world's central banks and more than ten years of global gold mining production. However, China is now the worlds largest gold producer, surpassing South Africa in 2007.
China's Gold demand is likely to continue to increase and put significant upward pressure on gold prices for many years to come, particularly if the US Dollar continues to decline in purchasing power as many analysts are predicting it will do.
Many investors stay on sidelines despite STI’s rebound from last month’s drop
By Goh Eng Yeow, Markets Correspondent
20 February 2008
THE stock market’s recovery after the nasty pre-Chinese New Year selldown was nothing short of spectacular, but the headline numbers tell only half the story.
While the Straits Times Index (STI) has shot up 5.7 per cent, or 166 points, in the last fortnight, daily traded volumes have barely been registering a pulse.
Daily volume has fallen to just 1.69 billion shares worth $1.8 billion so far this month from January’s 1.95 billion shares worth $2.26 billion.
The fall from the same period a year ago is even more dramatic.
At the start of last year, foreign funds poured billions into the region, sending average daily volumes in the first quarter to 2.3 billion shares worth $2 billion. The STI responded by rocketing 8 per cent to cross 3,000 points for the first time.
As the bull run accelerated in the second quarter, daily average volumes hit 3.5 billion shares worth $2.2 billion, while the STI jumped a further 10 per cent.
On July 18, the bulls were beside themselves, with the overall market volume hitting a staggering 9.22 billion shares worth $4.4 billion - an all-time daily record.
The slide began in August, when sub-prime worries in the United States spooked global markets and sent many investors scurrying to the safety of the sidelines.
Trading levels have been reflecting the growing sense of investor unease.
Average daily volume fell to 3.1 billion shares worth $2.6 billion in the third quarter, and further to 2.26 billion shares worth $2.4 billion in the fourth quarter, with the slide continuing this year.
Nowhere is the pain of anaemic trading volumes felt more strongly than at the Singapore Exchange (SGX), which relies on clearing trades for the bulk of its income.
Its shares over the past 12 months tell a similar story of a slowing market.
SGX’s share price climbed from $5.95 on Jan 3 last year to a record high of $16.40 on Oct 8, before falling to as low as $8.70 on Jan 22.
While trading on the broad market has fallen sharply, however, blue chips continue to be traded actively, with their share prices moving in tandem with other blue-chip stocks in the rest of Asia.
This suggests that hedge funds - which deploy sophisticated investment strategies - are actively trading in and out of their portfolios as they react to day-to-day developments in the US.
That gives most other global investors little reason to cheer, and the speed of the market’s deterioration is causing much concern, said Citigroup’s chief Asian equities strategist, Mr Markus Rosgen.
The problem is that while shell-shocked investors are no longer complacent, their stock portfolios might still be filled with counters, such as banks and real estate, which prosper only in a bull market.
‘This will prove the undoing of many an investor,’ said Mr Rosgen.
Still, one dealer noted that recent trading patterns indicate that retail investors are turning out to be a savvy bunch and have avoided taking fresh positions in penny stocks.
The UOB Catalist Index - which tracks penny stocks - has fallen by 28 per cent since last October. But daily traded volumes in its shares plunged even more steeply - from an average 402.9 million shares then to only 110 million shares now.
Some experts believe that the market may undergo another round of selling before reaching a ‘bottom’, presenting investors with a good buying opportunity.
‘Between now and then, patience is what is required, and the winner is the one who loses least,’ said Mr Rosgen.
So much for Credit Suisse’s (CS) savvy handling of the mortgage meltdown. The Swiss bank said Tuesday morning it will write down the value of some asset-backed structured credit trading positions by $2.85 billion, due to “significant adverse first quarter 2008 market developments.” Credit Suisse said it expects the writedown to shave $1 billion from its first-quarter earnings, though the bank says it believes it remains profitable for the period. Shares fell 4% in premarket trading in New York.
The announcement comes just a week after Credit Suisse posted a 72 percent decline in fourth quarter earnings that nonetheless made it look substantially sharper than rival UBS (UBS), which took some $14 billion in fourth-quarter writedowns tied to souring mortgage-backed securities. Credit Suisse said Tuesday that it continues to probe the problems in its asset-backed book, adding that the bank “has identified mismarkings and pricing errors by a small number of traders in certain positions in our Structured Credit Trading business.” Credit Suisse spokesman Marc Dosch said a “small number” of traders had been suspended, Bloomberg reported. Just another case of savvy risk management, no doubt.
Oil Jumps Back Above $100 on a Texas Refinery Outage and Possible OPEC Production Cut
NEW YORK (AP) -- Oil futures shot higher Tuesday, closing above $100 for the first time as investors bet that crude prices will keep climbing despite evidence of plentiful supplies and falling demand. At the pump, gas prices rose further above $3 a gallon.
There was no single driver behind oil's sharp price jump; investors seized on an explosion at a 67,000 barrel per day refinery in Texas, the falling dollar, the possibility that OPEC may cut production next month, the threat of new violence in Nigeria and continuing tensions between the U.S. and Venezuela.
The fact that there was no overriding reason for such a price spike could be a bad omen for consumers already bearing the burdens of high heating costs and falling real estate values. Many recent forecasts have said oil demand growth this year will be less than initially expected, yet prices continue to rise. That suggests they may continue rising as the weakening dollar attracts new investors to the futures market.
And rising oil prices mean higher gas prices.
"As the economy weakens, it's going to be met with $3.50 and $3.60 gasoline," said James Cordier, founder of OptionSellers.com, a Tampa, Fla., trading firm. "And that really spells trouble for the consumer."
Light, sweet crude for March delivery rose $4.51 to settle at a record $100.01 a barrel on the New York Mercantile Exchange after earlier rising to $100.10, a new trading record. It was the first time since Jan. 3 that oil had been above $100.
Oil prices are still within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.
Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
"I really think ... crude oil's going to soar through $100," Cordier said.
At the pump, meanwhile, gas prices jumped 1.8 cents to a national average price of $3.032 a gallon Tuesday, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, are following oil prices higher. The Energy Department and many analysts expect gas prices to peak this spring well above last May's record of $3.227 a gallon.
Gasoline and heating oil prices appeared to lead Tuesday's wide advance in energy prices due to the explosion Monday at Alon USA's Big Spring, Texas, refinery, which could be shuttered for two months.
"The refinery fire in Texas is making people a little concerned," said Michael Lynch, president of Strategic Energy & Economic Research Inc. in Amherst, Mass.
March gasoline jumped 10.93 cents to settle at a record $2.6031 a gallon, and March heating oil rose 11.45 cents to settle at $2.7614 a gallon, also a record.
A threat by a rebel group in Nigeria to escalate attacks on the nation's crude oil infrastructure helped boost oil prices. The rebels were acting in response to rumors that the government had killed a captured leader, whom authorities later said was safe and well. Militant attacks have cut about 20 percent of Nigeria's crude output in recent years.
For the moment, investors appear to have put aside concerns about the economy that have sent oil prices down into the mid-$80 range twice in the last month. Traders are instead focused on the Organization of Petroleum Exporting Countries, which will meet early next month to map out production plans, and Venezuela, where President Hugo Chavez made conflicting statements this weekend about the country's legal dispute with Exxon Mobil Corp.
OPEC could move to cut production in the second quarter, typically a period of low demand, though many analysts feel that's unlikely. In Venezuela, Chavez said he was not serious about an earlier threat to cut oil sales to the U.S., but also threatened to sue Exxon Mobil. The world's largest oil company is fighting Venezuela's nationalization of an oil project, and recently convinced several courts to freeze $12 billion in Venezuelan oil assets.
Other energy futures also rose Tuesday. March natural gas jumped 31.7 cents to settle at $8.977 per 1,000 cubic feet. Analysts said prices were supported by forecasts for cooler weather, but that futures were also following oil prices higher.
In London, Brent crude for April delivery rose $3.65 to settle at $98.56 a barrel on the ICE Futures exchange.
Driven by fears of shortage, the price per bushel has shattered records
BY TOM WEBB February 16, 2008
Decades from now, farmers will still talk about this week - the moment when wheat in Minneapolis soared to nearly $20 a bushel.
Like a 100-year flood, spring wheat prices have risen relentlessly all winter, obliterating every record in sight. At the Minneapolis Grain Exchange, wheat fever pushed prices to $19.80 a bushel in trading Friday - nearly triple the record from 1996.
To grain experts, it's a warning of what happens when grain supplies don't keep up with rising demand. Fear of scarcity and shortage push markets far beyond any norm.
"This wheat market has given us a glimpse of the what-if - what if we don't deliver the goods on the production side, because the demand is here," warned Ed Usset, a grain marketing specialist at the University of Minnesota.
For the past month, the hottest market in the nation has been the Minneapolis Grain Exchange, the nation's center for trading spring wheat futures. The high-protein wheat that farmers grow in Minnesota and the Dakotas is prized for making bread, but poor crops worldwide have left wheat supplies at a 60-year low.
The impact of that shortage reaches far beyond the wheat trading pit in Minneapolis. Trading in Minneapolis has supercharged wheat markets in Chicago and Kansas City, Mo., as well. That has pushed corn and soybean prices to near-record levels - fueling a wave of uncertainty about everything from food price inflation to subsidies in the new farm bill to hunger in the developing world.
"Minneapolis, that's where this is all coming from, the shortage of the actual physical supply of spring wheat and durum," said Elaine Kub, a commodity market analyst at DTN. She suspects grain prices elsewhere will retreat, but there's little question about the clamor for spring wheat.
"People are desperate," Kub said. "You definitely heard stories from out in the country of elevators offering $20 a bushel and getting no sellers. ... You hear people tossing around the words 'wheat hoarding.' "
For decades, agriculture's great problem has been surplus, not scarcity. And ruinously low prices, not ruinously high ones. Farmers have complained bitterly about this, but consumers benefitted from the great abundance of grains and proteins. This week's action in Minneapolis previews a different sort of marketplace.
"It's telling us how close we are to that tipping point in all commodities," said Usset, a former grain trader. "Every commodity I know would like more acres: corn needs more, soybeans need more ... durum wheat, malt barley, sunflowers, they all want a little more production."
The Minneapolis Grain Exchange itself is scrambling to adjust to the explosive markets. On Friday, the maximum daily trading limit rose to $1.35 a bushel - compared with 30 cents last week - and soon, the maximum daily limit will vanish. Officials suggested they had little choice. Markets were so volatile that they locked up day after day, so nobody could trade wheat futures at all.
"Whenever you have set caps, even if they're for good intentions to help protect certain people from abnormal price swings, you're going to run into others who are affected because you have those price caps," said Layne Carlson, treasurer of the Minneapolis Grain Exchange.
On Friday, for the first time in 12 trading sessions, the March wheat contract did not close up the maximum daily trading limit. Because of the higher limits, it closed at $19.35 a bushel, up 82 cents. The return of regular trading to the wheat pit may signal an end to the greatest run-up in wheat history, with wheat prices rising fourfold in a single year.
For farmers, that puts the 2008 Minneapolis wheat market atop the list of legendary bull markets. There haven't been many: the 1970s boom fueled by Russian exports, the drought-stressed corn market of 1988, the grain spike of 1996 and the soybean market of 2004.
"Absolutely, this is one for the record books, make no mistake about it," Usset said. "This will be talked about."
Significant increase in world cereal production forecast for 2008, but prices remain high
13 February 2008
Rome -- Early prospects point to the possibility of a significant increase in world cereal production in 2008, but international prices of most cereals remain at record high levels and some are still on the increase, FAO said today.
The forecast increase in production follows expansion of winter grain plantings and good weather among major producers in Europe and in the United States, coupled with a generally satisfactory outlook elsewhere, according to FAO’s latest Crop Prospects and Food Situation report.
With dwindling stocks, continuing strong demand for cereals is keeping upward pressure on international prices, despite a record world harvest last season, the report said. International wheat prices in January 2008 were 83 percent up from a year earlier.
Although prices are high, total world trade in cereals is expected to peak in 2007/08, driven in great part by a sharp rise in demand for coarse grains, especially for feed use in the European Union, according the report.
Imports down, food bill up for poorest countries
Cereal imports for all Low-Income Food-Deficit countries in 2007/08 are forecast to decline by about 2 percent in volume, but as a result of soaring international cereal prices and freight rates, their cereal import bill is projected to rise by 35 percent for the second consecutive year. An even higher increase is anticipated for Africa. Prices of basic foods have also increased in many countries worldwide, affecting the vulnerable populations most, the report said.
In order to limit the impact of rising cereal prices on domestic food consumption, governments from both cereal importing and exporting countries have taken a range of policy measures, including lowering import tariffs, raising food subsidies, and banning or imposing duties on basic food exports.
New portal
“High food prices and market uncertainties have become major global concerns, and wide access to up-to-date information and analysis is becoming critical,” said Henri Josserand of FAO’s Global Information and Early Warning system. To address this need for information and facilitate analysis on current developments in world food markets, FAO today announced the launch of a new web portal bringing together relevant FAO studies and data on the world food situation.
2008 cereal prospects
In North Africa, early prospects for the 2008 winter cereal crops are mixed, but in Southern Africa the overall outlook is satisfactory, despite severe localized floods. In several countries of Eastern Africa, another bumper cereal crop was gathered in 2007, but poor secondary crops are expected in Kenya and Somalia, according to the report.
In Asia, early indications point to a 2008 aggregate wheat crop around last year’s record level.
Overall prospects for the 2008 maize crop are satisfactory in South America, although the outlook remains uncertain in Argentina.
Flooding in southern Africa and South America
Heavy rains have caused severe flooding in Mozambique, Zimbabwe, Zambia and Malawi. Farmers in affected areas are in urgent need of seeds and other inputs for replanting during what is left of the main cropping season, which runs from October to April, and to prepare for the next planting season.
FAO and its humanitarian partners yesterday launched an appeal for $87 million for emergency assistance to flood-affected populations in the four countries. Of this, over $9 million will support FAO’s agricultural relief activities aimed at improving food security in flood-hit regions.
In Bolivia, severe floods have adversely affected over 42 000 families, who are in need of emergency humanitarian assistance, with numbers on the increase. Large cropped areas have been partially or totally lost.
Extreme cold weather in central Asia
Exceptionally low temperatures in several central Asian countries, in particular China, Mongolia, Afghanistan and Tajikistan, have caused human casualties and resulted in crop and livestock losses.
Worldwide, 36 countries are currently facing food crises, according to the report.
Feb. 18 (Bloomberg) -- Stagflation has come to Singapore.
The entire focus of the government's annual budget, announced Feb. 15, was on dealing with the perils of slowing growth and accelerating inflation, a deadly combination as less fiscally robust governments than Singapore's may soon discover.
Of the two, the bigger threat is clearly the 4.4 percent rate at which consumer prices rose from a year earlier in December, the quickest pace in a quarter century.
It's quite natural then that the word ``inflation'' appears 43 times in this year's budget statement.
Last year, it wasn't even mentioned once.
To be sure, the authorities in the city-state are entering the combat zone from a position of strength, and not only because they have accumulated budget surpluses in most years for four decades now.
For two straight years, people in every income bracket have taken home bigger paychecks.
Not just that. If the consumer-price index is any reflection of the true cost of living in the city-state, then even the poorest 10 percent of non-retiree households -- with a per-capita income of just S$180 ($127) a month -- have had real gains in purchasing power.
However, the rich have fared much better. Starting in 2000, inequality has widened a little every year.
Singapore's Gini coefficient, a widely used measure of income concentration, overtook that of the U.S. in 2006 and rose further last year to 0.485, a very high level of disparity for a society with an educated workforce.
Recession Risk
And this inequity may now become a problem because the growth momentum has suddenly collapsed as the much-expected ``decoupling'' from the troubled U.S. economy has -- at least so far -- failed to materialize.
On an annualized basis, gross domestic product contracted almost 5 percent in the final three months of last year compared with the previous quarter.
If there's another fall in GDP in the current quarter, then Singapore would technically be in recession.
It's one thing to have an unequal society where the workforce is, for all practical purposes, at full employment and income growth is outpacing inflation for everyone, albeit more quickly for the rich than for the poor.
A somewhat lopsided income distribution is only to be expected in a city that wants more rich people to come here to live, work and play. It now takes just a week to register a hedge fund from scratch in Singapore, many times faster than in the rival financial center of Hong Kong.
A couple of casinos will open by 2010, and an annual Formula One night race starts this year.
Helping Hand
When it comes to helping the poor, the island-state generally eschews consumption subsidies, except in education, basic health care and for public housing, the biggest source of wealth creation for the average Singaporean.
However, Singapore has mechanisms in place for transferring the government's fiscal surpluses to the poor in bad years and ensuring that they can get by even on monthly wages that wouldn't buy a meal for two at My Humble House, a restaurant that isn't exactly what its name suggests.
What Singapore has resolutely shied away from is giving its citizens any handout that may dissuade them from seeking work. Unemployment insurance, an idea that was discussed following the 2001 recession, remains a no-no.
That may be a prudent strategy, especially in a fast-aging society that's trying hard to retain competitiveness as cheaper locations in China and India become more sophisticated producers of almost everything that Singapore makes.
Prudent Versus Popular
Nonetheless, a prudent course may not be a very popular one in an environment of stagflation. When people start losing their jobs while their electricity bills keep going up, there may be resentment against the rich, many of whom are foreigners.
Singapore is too pragmatic to want to use tax policies to fashion a more egalitarian society. Even this year's budget gave a bonus to the rich by scrapping estate duty.
The move is aimed at getting wealthy individuals around the world to shift their assets to Singapore, where there are no levies on capital gains and the top rate for personal income tax is 20 percent.
To make sure that the poor don't fall further behind, the emphasis of the government's budget this year is on returning S$5.4 billion worth of fiscal surplus to the people, especially low-income households and the elderly.
As a small, open economy of 4.6 million people, Singapore can't do much to escape stagflation. As a prosperous nation -- average household income from work last year was the equivalent of $50,000 a year -- it is going to be under increasing pressure to shield its vulnerable from economic forces over which the city's authorities have no control.
For now, the government has been proactive in responding to the challenge. If the economy slows more than the current official forecast of at least 4 percent expansion this year, or if the cost of living becomes more unbearable, the helping hand may have to extend its generosity further.
(Andy Mukherjee is a Bloomberg News columnist. The opinions expressed are his own.)
Commentary: More interest-rate hikes and further tightening look likely
By Craig Stephen Feb. 19, 2008
HONG KONG (MarketWatch) -- The one thing markets dislike most is uncertainty, so when China' banks began the year with a lending spree after promising tightening a month earlier, investors are feeling decidedly uneasy.
You can choose to disagree with the wisdom of Fed chairman Ben Bernanke's rate cuts, but at least it's pretty clear he's going lower. In Hong Kong this alone is justification to jump into property as buyers' factor in cheaper mortgages. Keep watching for perhaps the world's last property bull market.
But making investment bets on the stated policy of the People's Bank of China requires much more than just a leap of faith.
After being told to expect lending curbs as bank reserve ratios were hiked to 15%, instead loans grew at blistering 16.7% year-on-year in January, up from December's 16.1%. Put another way, China's commercial banks lent 803 billion yuan or two thirds of their lending quota for the first quarter in January.
This has left investors and analysts scrambling for answers. Has the tightening policy been ignored, abandoned or is plain not working? Have we gotten to the stage where policy by dictate is now a blunted instrument as China's newly commercialized banks chase profit?
Official word remains that there has been no policy shift and there is likely to have been some front loading of loans, but more answers are needed. The NPC meeting in March is expected to provide some more policy detail.
Policy challenges piling up
In the meantime, the fiscal, trade and lending policy challenges facing China's leaders are piling up whither growth, inflation, exchange rate?
On the one hand, Beijing is facing renewed calls to relax spending and trade policies. The construction, transport and agricultural sectors hit by the recent monster snow storm that caused $15.4 billion in damage need emergency funding. Meanwhile exporters are feeling the pain of a weaker U.S. market and rapidly appreciating yuan squeezing margins even though China racked up another strong trade surplus in January. On the front page of the South China Morning Post over the weekend was a story of factories fleeing the Pearl River Delta as new labor contract laws added to existing financial strains. One estimate said 10,000 processing factories could leave this year.
Meanwhile, the gorilla in the room for Beijing is still inflation. This week, January inflation data will be released and is expected to top 7%. Deutsche Bank in a new report expects CPI to reach 8% in the first quarter and warns of the "spiral impact" at these levels taking control when expectations drive inflation. In China's finance and insurance sectors, there already are anecdotal stories of across-the-board pay increases running at 19%-20%.
Whether you're sitting in Shanghai or Sydney, you'll have more than a passing interest in the outcome as China's higher prices keep popping up menacingly around the globe.
Rate-hikes ahead?
Despite these policy conundrums, there is no fence-sitting by Standard Chartered Bank economist Stephen Green, who say China will be tightening this year and to expect a series of four interest-rate hikes. This would take the one-year deposit rate from 4.14% to 5.12%.
To support this call, they highlight the money-supply figure in the January data which revealed that banks were still taking in more deposits than extending loans. This could store up problems for the banking system if real interest rates remain negative.
While M2 grew 18.9% year-on-year in January, Standard Chartered highlighted the cash element of M2 (which is cash, demand deposits and time deposits) which grew really quickly. But demand deposits, where the cash came from, fell.
They speculate one explanation for this could be that funds are returning from the mainland stock and property markets, which have been in retreat now since November.
Recent stock turnover is certainly down, at least half of levels seen last year in the Shanghai A-share market.
With few investment alternatives for mainlanders, bank deposits, even with negative rates may do for now. Watch out for money finding its way into precious metals after the Shanghai kicked off gold futures trading last month. The risk of course if prices keep rising, it may just get spent, fueling inflation further.
Standard Chartered highlighted another danger. If real deposit rates remain negative, funds will begin to flow out of the formal banking system as corporates lend to corporates and that will also have as stimulative economic impact.
And as existing quotas have already led to a rise in de-facto loan rates, one consequence is there will be a ready market for grey-channel lending.
This outlook also explains why defensive stock positioning looks prudent where companies needing cash carry greater risk than those with large retained earnings or cash flow. So, expect more tightening in China. But more importantly, be on the look out for the unexpected.
REGULAR BT readers and close observers of stock-market movements would know of the reliance traders place on rises and falls in the futures market for US benchmarks, most notably the Dow Jones Industrial Average or the Dow futures for short.
The idea here is that the Dow futures in theory captures the market's best guess of how Wall Street might perform when it opens about five hours after Singapore closes, so if the contract rises sharply, then chances are US stocks will be strong. Conversely, if the futures market is very weak, then caution might be the order of the day because it suggests a Wall Street fall.
However, because volume traded in the Dow futures during Asian trading hours is generally low - only a few hundred contracts are typically done between 9am-5pm local time - observers have pondered the possibility that speculative funds might regularly manipulate the Dow futures in order to influence sentiment in local stocks.
Adding to this notion is anecdotal evidence that the Dow futures tends to be a poor predictor of how Wall Street performs over the course of its own trading day - a jump in Asian trading does not necessarily translate every day into strong Wall Street closing.
While possible, the idea that the Dow futures is rigged to sway sentiment in Asia is highly improbable. For one thing, even though volume appears low, it still requires a fair amount of financial muscle to rig the Dow futures.
The contract is traded on the Chicago Board of Trade's electronic trading platform and is valued at US$10 per index point. An index value of 12,500 means that one contract is worth US$125,000. In yesterday's trades, some 650 contracts were done during the time the local stock market was open, which means the total value of trades done was around US$81.25 million - not a small amount by any means.
Second, futures traders have no way of knowing whether the US economic reports to be released later in the day will be good or bad, or if US companies are about to announce strong or weak earnings. The Dow futures is illiquid in Asian trading because traders have no primary underlying market to refer to in terms of newsflows, and this is why the contract might appear to be a poor predictor of future Wall Street performance.
Third and most important, the Dow futures plays only a supporting role to the main driver of Singapore stock prices - Hong Kong's Hang Seng Index. Close market watchers would know that it is gyrations in the Hang Seng that are much more influential in affecting sentiment and setting direction for local stocks than movements in the Dow futures.
There are many reasons for the heavy dependence on Hong Kong but all rest on the fact that the former British colony is by far the largest and most liquid market in this part of the world. An institutional dealer summarised the reliance on Hong Kong nicely when she said 'people tend to follow liquidity and you don't get more liquid than Hong Kong'.
Furthermore, Hong Kong is viewed as being a good proxy for future Wall Street movements, perhaps even better than the Dow futures itself.
Daily survival in an environment as volatile as the current one is all about trying to anticipate how the US might move later in the day, so institutions which expect Wall Street to move in a certain direction are much more likely to try and capitalise on this expectation via the liquid Hong Kong market than the relatively illiquid Dow futures.
Of course, in a globalised world where everything is connected to everything else, it isn't just Hong Kong that directs what happens in the Singapore market. Equally relevant in the early part of the day are movements in Australia and Japan, but especially the latter given its size and liquidity. Then there's China - traders will recall, for example, the turbulence here when China stocks suffered a mini-crash last year. And after Hong Kong closes at 4pm local time, movements in Europe become relevant during the final hour.
All trading, however, boils down to trying to guess how the US might perform in the future and oddly enough, it's worth noting that it is Hong Kong which plays the most important role in this respect - even more so than the Dow futures.
Stocks fall sharply after oil prices close above US$100 a barrel in New York
February 20, 2008
TOKYO (AP) -- Japanese stocks fell sharply Wednesday as rising crude oil prices fueled concerns about inflation in Asia.
The Nikkei 225 index closed down 447.54 points, or 3.25 percent, at 13,310.37 points on the Tokyo Stock Exchange.
Oil prices closed above US$100 a barrel for the first time in New York trading Tuesday as investors seized on a refinery explosion and the possibility that OPEC may cut its output. In electronic trading in Singapore Wednesday, the March contract was down fell 71 cents to US$99.30 a barrel.
Surging oil prices also stoked investor fears that higher commodity prices will weigh on the global economy and corporate earnings.
"The move upwards for oil prices driven by geopolitical fears may be slightly excessive but real concerns remain over the impact on corporate earnings," said Akio Yoshino, chief economist at Societe Generale Asset Management.
Shares in chemical companies and rubber makers, which rely on petrochemical compounds in their manufacturing, were among the hardest hit in Wednesday's selloff.
Shin-Etsu Chemical dropped 5.3 percent, and Sekisui Chemical slid 3.2 percent. Among rubber and tire makers, Yokohama Rubber shed 3.1 percent.
Selling also intensified following a Financial Times report that an affiliate of U.S. private equity group KKR Financial Holdings has delayed repayment of billions of dollars of commercial paper for the second time and began a new round of restructuring talks with creditors less than six months after rescue rights issue.
The Topix index of all shares on the exchange's first section fell 42.57 points, or 3.16 percent, to 1,302.72 points. It rose 0.92 percent the day before.
In currencies, the dollar bought 107.90 yen at midafternoon in Tokyo, up from 107.60 yen late Tuesday in New York. The euro slipped to US$1.4717 from US$1.4732.
Barclays ‘won’t flinch’ in plans for US assault as it contains writedowns
Christine Seib February 20, 2008
Barclays is planning an assault on the United States to capitalise on the vacuum left by damaged American investment banks as it revealed a sub-prime writedown that was smaller than expected yesterday.
Britain’s third-largest bank said that it had a £36 billion exposure to the credit markets, but took a charge of £1.6 billion for 2007, only £300 million higher than an earlier estimate.
Barclays’s results had been keenly awaited as a signal of the impact of the global liquidity crisis on British banks. Alliance & Leicester will report its 2007 figures today and Lloyds TSB on Friday.
Shares in Barclays closed up 3.7 per cent at 477p a share, despite the market getting a scare yesterday morning when Credit Suisse, another bank that had seemed to have escaped the credit crunch relatively unscathed, said that it would take a $1 billion (£510 million) hit in its first-quarter results.
With almost all American banks reporting multibillion-dollar writedowns and working through mass redundancies and new management teams, Bob Diamond, the Barclays president, described America as “the single biggest opportunity in investment banking”. Mr Diamond, who is also chief executive of Barclays Capital, the investment banking business, said: “Look at the players pulling back: what an opportunity for BarCap; what an opportunity for Barclays . . . I don’t want to look back in two or three years and say: ‘We had the opportunity to develop in the US and I flinched.’ And I won’t say that.”
Analysts praised the plan to enter the US in areas of business such as commodities, which BarCap specialised in. “It makes sense - you’re not going to get a chance like that often,” one analyst said.
Barclays reported pretax profits of £7 billion for the 12 months to December 31, down 1 per cent on last year. It raised its dividend by 10 per cent, from 31p to 34p.
BarCap’s writedown would have been higher but was offset by a £658 million fair value increase of the bank’s own credit notes. The bank took a total of £2.7 billion-worth of charges, up 30 per cent on the previous year, including the investment bank’s writedown and impairment charges on loans.
Barclays revealed for the first time a £4.9 billion exposure to Alt-A mortgages - American home loans that are less risky than sub-prime but normally are given to people without credit histories - as well as a £1.3 billion exposure to monoline insurers.
Despite the credit market charge, BarCap reported a 5 per cent increase on 2006’s record profits, with a pretax result of £2.3 billion.
The bank’s international retail and commercial banking business suffered a 23 per cent fall in profits to £935 millions. The division was also hit by a 12 per cent fall in the average value of the South African rand. Absa, the South African bank, is one of Barclay’s largest subsidiaries.
DUESSELDORF, Germany (Reuters) - Germany's state-backed regional landesbanks are in a crisis in the wake of the global credit market turmoil, one of the country's leading politicians said on Wednesday.
The landesbanks -- which are owned by local government and powerful community savings banks -- have been especially hard hit by the subprime crisis.
SachsenLB narrowly escaped collapse while BayernLB and WestLB have also been hurt by writedowns on a mountain of debt investments.
On Wednesday, the premier of Germany's most populous state, North-Rhine Westphalia, highlighted the difficulties facing the country's landesbanks and called on the central federal government to shake up the industry.
"The events in recent days show that we are talking about a national crisis in the savings bank and landesbank system," Juergen Ruettgers told the parliament in the state which is home to stricken lender WestLB.
"The regional government (of North-Rhine Westphalia) is calling again on the central federal government to play an active role in the restructuring of the bank and landesbank system."
The remarks made investors nervous and the euro subsequently hit a session low versus the dollar EUR, down 0.4 percent on the day.
The German state dominates the country's banking system. Traditionally, state-backed savings banks have relied on the landesbanks as their gateway to international capital markets.
The landesbanks provided them with often complex financial products for their corporate clients. They benefited from the backing of regional governments, which bumped up their credit ratings and cut the cost of borrowing.
However, a ban on state banking aid robbed the landesbanks of their patrons, putting them under pressure. The savings banks, meanwhile, started to push for consolidation of Germany's landesbanks.
This was resisted by the regional governments, who fear a loss of influence.
Europe's biggest economy has taken an especially hard beating from credit market turbulence.
UNCHARTED WATERS
Ratings analysts said that landesbanks needed to be considered individually rather than en masse.
"The difficulty or turbulence is focused on badly-managed banks. I think it's rather that group than being specific on landesbanks," said Thomas von Luepke, head of German bank ratings at Fitch Ratings. "Those banks who are well managed are able to stand the storm."
But Johannes Wassenberg, managing director at Moody's Investors Service, said there were some common structural problems, particularly a lack of depth in retail banking.
"The fundamental problem for many of these landesbanks is that their ... focus on wholesale banking brings along a higher risk profile," he said. "The big private banks obviously have more legs to stand on."
Struggling after the abolition of government guarantees, many landesbanks seized on the booming market in securitised debt to bolster profit only to run into trouble when credit markets seized up.
The credit crisis, which started when U.S. home owners were squeezed by falling property prices and rising interest rates, has rocked confidence in the global economy.
It battered SIVs (structured investment vehicles), which raise funding by issuing short-term debt to finance longer-term investments in bank debt and asset-backed securities.
The off-balance-sheet vehicles have been caught out as investors shunned complex debt instruments and refused to cough up short-term funding, forcing fast asset sales to repay debt even as the value of their investments has tumbled.
WestLB, which ran a series of investment vehicles including SIVs with a value of about 25 billion euros ($36.80 billion), is worth about 7 billion euros -- roughly the same as the value of its equity.
Dubai Intl to invest $5 billion in India, China & Japan
Nathan Layne Feb 19, 2008
TOKYO (Reuters) - Dubai International Capital, an investment fund owned by the ruler of Dubai, said it planned to invest about $5 billion in China, India and Japan over three years as a play on the rapid growth of emerging markets.
The fund's chief operating officer, Anand Krishnan, also told a news conference on Tuesday the fund could raise its stake in existing holdings like Sony Corp and was looking for potential investments in other Japanese shares.
Gulf investors spent $80 billion last year in foreign acquisitions, almost three times the amount they spent in 2006, according to data provider Dealogic.
Krishnan said Dubai International plans to raise its assets under management to $25-30 billion in the next three to four years from $13 billion now, estimating that India, China and Japan could make up one-fifth to one-sixth of the total.
"I would think the three countries in the next three years would take a share possibly of about $5 billion," he said.
Krishnan said the fund was searching for opportunities in Japan's auto industry and other sectors, such as entertainment, that have channels to growing demand in emerging economies.
"Clearly because of the growth in emerging markets, we believe companies having exposure to emerging markets will grow significantly as well," he said.
He added that the fund would be open to raising its stake in Sony as it would with other major holdings, such as HSBC Holdings and European aerospace company.
SONY STAKE
Dubai International said in November it had made a "substantial investment" in Sony but did not disclose the size of the stake.
"More stock in Sony? If it makes sense for us from a returns perspective and we can get it at the right pricing, absolutely. We would look at any one of the stocks that we have invested in," Krishnan said.
Dubai International Capital is the private equity arm of Dubai Holding, which is owned by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum.
Separately in Singapore, Rabih Khoury, chief executive of DIC emerging markets, told Reuters in an interview that Asia accounts for 30 percent of its $2-$3 billion emerging market portfolio, but that share is expected to rise "north of 50 percent" in three to five years.
"For DIC emerging markets, Asia is our focus in 2008," Khoury said on the sidelines of an investment conference in Singapore.
"We are already in India and we are focusing on investing in China", and other Asian companies, such as Singapore, Indonesia, Thailand, Philippines and Malaysia.
Khoury said the firm plans to establish single-country funds -- typically $200 million each -- to invest in Asian companies, such as infrastructure firms.
Artur Arushanov dreads shopping these days. A truck driver and father of three, he can't bear to watch how food prices in Latvia are climbing relentlessly, with inflation raging at almost 16 percent annually.
"I wanted to buy my daughter granola cereal, but I can't afford it anymore," said Arushanov, 41. "I now spend about 60 percent of my income just on food, so I really have to think about what I buy."
Not just in Latvia, but across Eastern Europe, inflation has descended like a nasty winter virus in the newest EU member countries, hurting household budgets and causing countries to see their long-term goal of joining the euro slip farther into the future as governments struggle to get prices under control.
Economies across the globe are grappling with inflation, thanks to costlier energy and food, but prices in Eastern Europe are soaring on a wave of economic growth as the former communist countries that joined the EU in 2004 and 2007 race to catch up with richer Western European nations.
Natalya Kiselyeva, 40, a Riga public-school chemistry teacher, moonlights at a private school to afford Latvia's food prices, which have soared 20% over the past 12 months.
"I don't even bother trying to save money," she said. "It's practically losing value by the week."
The average monthly wage in Latvia was 400 lats ($835) as of September, the latest figures available. And with a liter of milk costing 0.56 lat ($1.17), consumers are feeling the pinch. Last year, cheese prices jumped 44%, according to official statistics, and a recent survey found bread prices have soared 30% over the past three months.
Strong growth plays a role since increased economic activity means more demand for goods and raw materials. In 2006, Latvia's GDP grew 11.9% and Estonia's 11.4% - the two best results in the EU. So in 2007, the two countries' consumer price indexes jumped 14.1% and 11%, far beyond official forecasts.
Lithuania, Latvia and Estonia, EU members since 2004, got into what is called ERM-II, the union's official two-year waiting room for euro hopefuls - but have had to postpone the long-cherished dream because the inflation shows they do not have their economic houses in order.
Ministers now say 2012 will be the earliest that common currency will appear in the three Baltic countries. To get in, countries must meet strict standards for low deficits, debt and inflation; last year the "entry bar" on inflation was 3.4%.
Bulgaria's chance of reaching the waiting room soon "has decreased considerably," said analysts at RZB Group, and while targets of 2008-9 for ERM-II and 2011-12 for euro adoption "seemed too pessimistic a year ago, they appear somewhat optimistic at present." In Bulgaria, which along with Romania joined the EU in 2007, prices ended the year up 12.5%, even though some disgruntled Bulgarians believe the government is keeping the data artificially low to save face.
"I simply don't believe the official statistics. When I calculate my household's expenses for last year, I come up with an annual inflation of more than 20 percent," said Angel Kuzmanov, a 58-year-old technician.
In Cluj, 400 kilometers from the Romanian capital, Bucharest, teacher Dorina Pop, 55, said, "I cannot save anything, all my money goes on food, taxes and utilities. I will soon retire and I am horrified about what will happen to me."
The National Bank of Romania was forced on February 4 to raise the core interest rate to a painfully high 9% after 2007 inflation hit 6.6%. Higher rates are central bankers' chief tool against inflation.
But such textbook monetary policy works poorly in the new Eastern Europe, where consumers can take out loans in euros and US dollars, currencies that the national banks cannot so easily regulate. That swells the money supply - meaning more cash chasing the same amount of goods.
In Latvia, where inflation hit 15.8% in January - the highest in the 27-member EU - the situation was exacerbated by speculation in real estate, on which there was no capital gains tax before last summer.
The rest eerily resembles the US real estate boom and bust. Soaring property prices inspired optimism, and Latvians went out and shopped with abandon, buying Toyotas, trips to Paris and flat-screen televisions.
Meanwhile, Latvia's government ran deficits. Government spending piled on top of private sector demand, further overheating the economy. For years, the nation's central bank chief, Ilmars Rimsevics, badgered ministers to curb expenses, but the government ignored him.
"The good news is that the government is heeding expert advice on maintaining a fiscal surplus despite slower GDP growth," Rimsevics said. GDP stands for gross domestic product.
Wage growth is another destabilizing element of the inflationary equation. EU membership has allowed people to move to Britain and Ireland for better-paying jobs, leading to labor scarcity that drives up wages. Throughout Riga, Latvia's capital, there are signs inviting both young and old to come work - as bus drivers, cashiers and waiters. In neighboring Estonia, the opening of a major hotel last year was postponed for lack of staff.
In the third quarter last year, Latvia's average wages jumped at an annual rate of 33%. But without an equal increase in worker productivity, such wage hikes undermine a company's competitiveness.
Economists agree Latvia's prices will continue to grow in the short term as natural gas, electricity and heat are raised to Western European levels.
Maija Krumina, who lives in a village near Valmiera in northern Latvia, said rural residents have switched to survival mode. Many have stopped going to stores and instead are relying on their own milk, eggs and pork. What they don't consume, they sell to one another.
"It wasn't like this a year ago," said Krumina, 56. "Prices just don't make sense anymore, especially when Latvian bread is more expensive than German bread."
If you want to stretch your dollar without shrinking your appetite, you're in luck.
Fast food companies, looking for a way to attract budget-conscious customers and keep them spending, are increasingly offering more food for less money.
Jeffrey Davis, president of restaurant research firm Sandelman & Associates, said adding bigger, higher-quality sandwiches to dollar menus allows fast food restaurants to give people the premium sandwiches they want at a price they can afford.
But with commodity prices rising, lowering the prices of fast food sandwiches could squeeze margins, especially if it doesn't lead to better traffic and sales. The chains say the drawbacks don't outweigh the benefit of offering more value to customers dealing with rising prices and a weak economy.
Perhaps the most noticeable example of the more-food-for-less strategy is the appearance on more dollar menus of the double cheeseburger, long a staple of the regular menu and combination meals.
Unlike the value- and dollar-menu regulars, like a small order of fries or "junior" version of a larger burger, the double cheeseburger is a more marquee - and more expensive - choice at most fast food chains.
McDonald's Corp., ahead of the curve on the value menu front, is the exception. Its double cheeseburger has been on the dollar menu since its introduction in 2003 and is one of the chain's biggest sellers. McDonald's touted the "everyday appeal" of the dollar menu in its most recent sales report.
Now a version of the double cheeseburger is appearing on value and dollar menus at the chain's biggest competitors - Burger King Corp. and Wendy's International Inc.
"People are looking for premium items but there's also a push for value," Davis said. "They're giving you a little bit more for what you pay."
That's good news for diners like Shekia Scott, a Boston resident who was visiting New York recently. While lunching with friends at a Burger King near Penn Station in Manhattan, Scott said higher prices for food and gas were hurting her budget. But, she added, "the dollar menu's been a help."
Teenagers - big eaters long loyal to fast food - could also benefit from an expanded value menu, said Deutsche Bank economist Joe Lavorgna.
"Teenagers are very sensitive to changes in gasoline prices," he said. "Typically what they have left over to spend, they will spend on fast food."
Burger King is now studying whether its new dollar double cheeseburger can bring that leftover change into the coffers. The chain is testing the sandwich in a few undisclosed markets. It usually sells for more than $2.
The chains contend they aren't interested in a low-price battle similar to the one waged in the 1990s. But current ad campaigns and promotions suggest the competition for cash-strapped customers will be heated.
"We wanted to better understand the power competitive advertising would mean to us in terms of traffic generation," said Russ Klein, president of global marketing, strategy and innovation at Burger King.
Klein said McDonald's success with its dollar double cheeseburger is a reason Burger King put one on its dollar menu. He noted, however, that the Burger King double cheeseburger is 30 percent bigger than the one at McDonald's. The comparison has been a central theme of the company's marketing campaign so far.
"We know we have a superiority claim," he said.
Wendy's International Inc. introduced a 99-cent double cheeseburger last month called the Stack Attack, coinciding with a national advertising campaign.
The push toward offering more quantity for less money is extending beyond the burger chains. Yum Brands Inc.'s Mexican-style restaurant chain Taco Bell is promoting its Gordita Supreme product - one of the largest menu items - for 99 cents this month. It usually sells for more than $1.50.
And the privately held Quiznos sandwich chain launched a line of $2 small flatbread sandwiches called Sammies in November. The chain also offers a combo meal that comes with two Sammies, a medium drink and either chips, a side salad or a bowl of soup for $6.
Steve Provost, Quiznos's chief marketing officer, said the company was originally planning to launch the Sammies line this spring, but decided instead to debut them in November.
"We accelerated it primarily because of what we saw coming ahead with the economy," he said.
The Sammies are one of the few value choices that are lower calorie - all are under 300 calories. Although the other chains have introduced healthier menu items in the past few years, those rarely are part of the value or dollar menu.
CKE Restaurants Inc., which operates Carl's Jr. and Hardee's, isn't offering any 99-cent products. The company takes the opposite strategy with its pricing, counting on its big, premium sandwiches for "young hungry guys" to expand sales.
Chief executive Andrew Puzder said value menus can result in a lowering of quality - something he's not willing to sacrifice.
"What can you sell for 99 cents? The bun?" he said.
Certainly, quality can suffer when prices drop. The last burger price cuts led to lower sales and quality and the chains say they learned their lesson. But with commodity costs rising, making lower-priced sandwiches without affecting quality isn't easy.
"The double cheeseburger for us is 4.4 ounces of beef," said Burger King's Klein, adding the Whopper Jr. - a mainstay of the chain's current value menu - has half that amount of meat. "So from a sheer cost of goods basis, it's pretty evident it would have a less attractive cost-to-goods proposition."
Hong Kong journalist contemplated suicide in China jail: report
21 February 2008
SINGAPORE (AFP) - - Hong Kong journalist Ching Cheong, who was freed from a Chinese prison this month, contemplated suicide during the darkest days of his detention, he told the Singapore newspaper he works for Thursday.
He survived through reading classic Chinese philosophical texts and self-help books that his family had brought him, the Straits Times reported.
Ching, 58, said his most difficult moments in jail came in the early months after his arrest in April 2005 when he had no contact with his family or his employers.
Ching was held on suspicion of spying for Taiwan and was sentenced to five years in jail last year during a one-day trial.
"My body clock was turned upside down and (the investigators) applied mental stress so you voluntarily succumbed to them," he said in his first interview since his unexpected release from prison on February 5.
"I began to lose confidence, lose hope, and had low self-esteem. When you are in such a situation, the downward spiral begins to kick in and the end result is to commit suicide," said Ching, the chief China correspondent for the Straits Times.
Asked if he came close to suicide, Ching replied: "Yes, when you have to dismiss everything you've long held precious to you."
He said he pulled through by reading Chinese philosophical texts which impressed on him that the things he did were "good for the people and good for the country."
Ching also said his family kept the death of his 82-year-old father in 2006 a secret from him.
On learning of his father's death after his release he said: "I just couldn't accept this story. I cried, I kneeled down and it was really a hard time for me."
Ching, who was due to speak at a press conference later Thursday in Hong Kong, said he planned to write a book on his 1,000-day prison ordeal.
HONG KONG, Feb 20 (Reuters) - China Mobile Ltd signed up a record number of users in a single month in January, as the world's top cellular carrier built on its dominance in the world's largest wireless market.
But its shares slid 2.3 percent on Wednesday as investors -- who had piled into telecoms operators such as China Telecom close to deciding on a long-awaited reshuffle of the industry -- cashed in their gains amid a broad market sell-off.
China Mobile, which has steadily devoured market share from its sole, smaller rival, China Unicom, for years, signed up 7.044 million subscribers last month, outpacing Unicom's relatively paltry 1 million-plus.
JP Morgan said on Wednesday that China Mobile could potentially exceed the U.S. investment bank's own prediction of about 6 million in average monthly subscriber additions for the firm in 2008, given a sterling January performance.
China Mobile now serves 376.38 million users -- more than the population of the United States.
"The strongest-ever monthly growth, suggesting its enlarging monopoly in China's mobile telecom market," DBS Vickers wrote in a research note on Wednesday.
"Such an impressive figure was mainly attributed to continual fixed-to-mobile migration and was also partly a seasonal effect from the Lunar New Year festival."
Unicom stock slid 3.6 percent, while fixed-line carrier China Telecom fell 3.6 percent.
Unicom's aggregate, post-paid GSM cellular service subscriptions level increased to 121.69 million in January, versus 120.56 million in December. Aggregated CDMA cellular service subscriptions rose to 42.23 million from 41.93 million in December.
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Struggling Korean companies abscond from China
SEOUL - A LARGE number of struggling South Korean businesses have absconded from China in recent months, reports say.
There were 206 cases in 2003-2007, all in Shandong province, said Mr Hong Ji In of the Commerce Ministry’s trade cooperation bureau here.
During the same period, 55 South Korean companies followed proper procedures to close down, the Yonhap news agency quoted him as saying. This came after Yonhap’s report last week that some unscrupulous factory owners had taken advantage of the Chinese New Year holiday to abscond.
Officials in Seoul are discussing possible ways to penalise businesses that leave China without going through proper procedures - such as allowing Chinese workers to take legal action against former bosses in South Korean courts, said Mr Hong yesterday.
Policymakers at a joint meeting of government and economic umbrella groups said many Korean companies were doing well in China, but some smaller firms could not cope with changes in the business environment.
Beijing has been strengthening labour and environmental laws and reducing benefits for foreign investors. Rising wages are also pressuring labour-intensive operations.
As of last September, there were 19,529 Korean firms operating in China, with total investments of US$21 billion (S$30 billion). This accounts for 46.7 per cent of all foreign business investments by South Korean companies.
Mr Hong also said the Foreign Ministry will set up a help desk at its embassy in Beijing and its consulate in Qingdao to help South Korean investors.
AGENCE FRANCE-PRESSE
Hungry man cooked landlady’s pet dog
SEOUL - A JOBLESS South Korean who was flat broke and hungry has been detained for cooking his landlady’s pet dog, police said yesterday.
The man was held for questioning on Monday after his neighbours spotted smoke rising from his tiny one-room residence in the Jongno district of central Seoul and called firefighters.
The bizarre case involved a Chihuahua, one of the world’s smallest breeds of dogs, Yonhap news agency said.
The man took the animal to his room while his landlady was in a bathroom and killed it, the agency said. He reportedly told investigators he did it because he was hungry.
AGENCE FRANCE-PRESSE
Japanese firm gives staff leave to mend broken hearts
TOKYO - LOVELORN staff at a Japanese marketing company can take paid time off to nurse a broken heart after a bad break-up with a partner - thanks to ‘heartache leave’.
And the offer gets better as one gets older.
Tokyo-based Hime & Company - which also gives staff paid time off to hit the shops during the sales season - says heartache leave allows employees to cry their hearts out and return to work refreshed.
‘Not everyone needs to take maternity leave, but with heartbreak, everyone needs time off, just like when you get sick,’ said CEO Miki Hiradate, whose market research company of six women promotes products such as cosmetics and beverages targeted at women.
Staff aged 24 years or younger can take one day off per year, while those between 25 and 29 can take two days off and those older can take three days off, the company said.
‘Women in their 20s can find their next love quickly, but it is tougher for women in their 30s, and their break-ups tend to be more serious,’ Ms Hiradate, 37, said.
She swore that she herself will take her shitsuren kyuka or heartbreak leave if the need arises.
‘Of course, I will take three days off!’ she said.
Hime & Company staff can also take two mornings off twice a year as ‘sales shopping leave’, so they can race to stores to hunt for bargains.
‘Before, women could take half-days off to go to sales, but you’d have to hide your shopping bags in lockers by the train station,’ Ms Hiradate said.
‘But with paid leave, we don’t have to feel guilty about bringing our shopping bags to work, and we can enjoy the best part about sales shopping - talking about our purchases afterwards.’
REUTERS
Taiwanese firms feel pinch of rising costs in China
Some are returning home while others are moving to lower-cost countries like Vietnam
By Ong Hwee Hwee, Taiwan Correspondent
TAIPEI - CHEAP labour, readily available land and generous tax breaks made China the dream factory for Taiwanese businessmen who were among the first to set up shop in the mainland in the 1980s.
But two decades later, a small but growing number of Taiwanese companies - deterred by rising business costs in China - are heading home or casting their sight on new investment destinations such as Vietnam.
In the past 16 months, Taiwan’s Ministry of Economic Affairs (MOEA) received a record 102 investment applications from Taiwanese companies based overseas.
Of these cases, 60 were filed by mainland-based Taiwanese firms with a total estimated investment value of NT$8.5 billion (S$380 million). Some 50 applications were R&D related, said reports.
The phenomenon underscores the challenges faced by Taiwanese and foreign firms amid China’s changing business environment.
The mainland has put in place new measures which will hike up business costs - especially for labour-intensive and low-value-add industries.
The new Labour Contract Law, which took effect this year, mandated companies to give open-ended contracts to employees who have worked for 10 years or have completed two fixed-term contracts.
These contracts include terms such as higher company contributions to pension and severance pay.
Taiwanese economic officials estimated that the new regulation could push up labour costs by between 10 and 40 per cent - especially for Taiwanese firms in the low-cost manufacturing centre in the Pearl River Delta.
Some analysts predict that about 10 to 20 per cent of Taiwanese manufacturers in the delta could close down this year.
Dealing another blow to Taiwanese firms, China will from this year gradually phase out the preferential tax rates enjoyed by many foreign companies.
These firms, which previously paid 15 per cent in corporate tax, will now be taxed 25 per cent like their Chinese counterparts.
The changes were the last straw for some Taiwanese firms which were already struggling with rising wages, a stronger yuan, the scrapping of export tariff rebates and stricter pollution-control requirements.
But observers say a mass withdrawal of investments is unlikely for Taiwanese businessmen, who are among the largest investors in the mainland.
There are an estimated one million Taiwanese businessmen and their dependants in China.
Analysts point out that the capital repatriated to the island is only a trickle compared to the flood of Taiwanese investments bound for China.
In the past 17 years, Taiwanese firms have poured US$63 billion (S$89 billion) into the mainland - about 60 per cent of Taiwan’s outbound investments. In 2005, the ratio even hit a record high of 71.5 per cent.
‘It is more a case of Taiwanese firms diversifying their investments than pulling out completely from China. Some have termed it the ‘China-plus-one’ strategy,’ said Mr Hong Tsai-lung of the Taiwan Institute of Economic Research.
Despite rising business costs, China is still a magnet for investments because of its infrastructure, large base of suppliers and relatively skilled yet affordable labour, Mr Hong told The Straits Times. His views were echoed by others.
‘For labour-intensive businesses like the textile industry, moving back to Taiwan would not solve their problem because the labour cost is still higher compared to China,’ said Mr Andrew Yeh, chairman of the Taiwan Merchant Association in the southern Chinese city of Dongguan.
For firms like Unitech, a leading Taiwanese printing circuit board manufacturer, Taiwan’s technological know-how is a big pull factor. The company has invested in a new solar cell plant in Ilan county.
‘Our operations are fully automated, so labour cost is not a major concern,’ Unitech president C.H. Hsu told The Straits Times.
‘But the labour-intensive businesses like textile firms are unlikely to return to Taiwan. They left in the first place because they could not survive here.’
For Taiwanese firms sourcing for new investment targets, Vietnam has emerged as a popular choice. In fact, Taiwan is already the largest investor in the South-east Asian state.
But some mainland-based Taiwanese businessmen say it is still too early to pack their bags.
Said Mr Yeh: ‘I will give it six months to a year. I am running a factory, not some roadside stall which I can just fold up any time and leave.’
China Gold Demand Now Second Largest in the World
February 18, 2008
In 2007 China surpassed the USA to become the second biggest retail gold market in the world after India. Total consumer demand in China's mainland, Hong Kong and Taiwan reached 363.3 tons, an increase of 23.5 percent from 2006, the World Gold Council indicated in a research report.
To put that figure into perspective 363.3 tons, is equal to 10,596,250 troy ounces of gold, at today's gold price of approximately $900 US that is $9,536,625,000 US Dollars worth of gold.
Mainland China gold demand, including gold jewelry and retail gold investment, reached 326 tons, an increase of 26 percent from 2006. This is the first time it has surpassed the 300 ton level. The gold jewelry demand in mainland China reached 302 tons in 2007, a year on year growth of 23.5 percent. Gold Jewelry and other ornaments have always been a form of savings in China since time immemorial.
India which has the world's largest gold demand had a gold demand of 773.6 tons in 2007, while the US now in third place had a gold demand of 278.1 tons.
"Encouraging civilian reserves of gold has strategic significance and economic value," said a director of the Peoples Bank of China's (China's Central Bank) official news vehicle back in 1998 when gold was around $300US. Can you imagine the US Federal Reserve Bank giving such a recommendation and what it would do to the gold price?
The article went on to say "If there are problems with the U.S. dollar, there will be an international catastrophe." "Reducing reliance on the dollar, and maintaining greater diversification in foreign exchange reserves is the only way to reduce the risk," it said. "As a result, an increase in our country's gold reserves is necessary."
It looks like the Chinese people have been taking notice of the advice from their central bank to buy gold. China's mainland gold demand rose 18% percent from 2006 level to 94.3 tons during the 4th quarter. This was when the gold price rocketed from the breakout area of of around $730US to around $900US.
Consider this, the U.S. possesses 262 million ounces of gold for its nearly equal population. Were China to achieve the same financial gold backing, it would require 1.2 billion ounces of gold. The same amount of ounces of gold owned by all the world's central banks and more than ten years of global gold mining production. However, China is now the worlds largest gold producer, surpassing South Africa in 2007.
China's Gold demand is likely to continue to increase and put significant upward pressure on gold prices for many years to come, particularly if the US Dollar continues to decline in purchasing power as many analysts are predicting it will do.
Falling stock volumes reflect bearish market
Many investors stay on sidelines despite STI’s rebound from last month’s drop
By Goh Eng Yeow, Markets Correspondent
20 February 2008
THE stock market’s recovery after the nasty pre-Chinese New Year selldown was nothing short of spectacular, but the headline numbers tell only half the story.
While the Straits Times Index (STI) has shot up 5.7 per cent, or 166 points, in the last fortnight, daily traded volumes have barely been registering a pulse.
Daily volume has fallen to just 1.69 billion shares worth $1.8 billion so far this month from January’s 1.95 billion shares worth $2.26 billion.
The fall from the same period a year ago is even more dramatic.
At the start of last year, foreign funds poured billions into the region, sending average daily volumes in the first quarter to 2.3 billion shares worth $2 billion. The STI responded by rocketing 8 per cent to cross 3,000 points for the first time.
As the bull run accelerated in the second quarter, daily average volumes hit 3.5 billion shares worth $2.2 billion, while the STI jumped a further 10 per cent.
On July 18, the bulls were beside themselves, with the overall market volume hitting a staggering 9.22 billion shares worth $4.4 billion - an all-time daily record.
The slide began in August, when sub-prime worries in the United States spooked global markets and sent many investors scurrying to the safety of the sidelines.
Trading levels have been reflecting the growing sense of investor unease.
Average daily volume fell to 3.1 billion shares worth $2.6 billion in the third quarter, and further to 2.26 billion shares worth $2.4 billion in the fourth quarter, with the slide continuing this year.
Nowhere is the pain of anaemic trading volumes felt more strongly than at the Singapore Exchange (SGX), which relies on clearing trades for the bulk of its income.
Its shares over the past 12 months tell a similar story of a slowing market.
SGX’s share price climbed from $5.95 on Jan 3 last year to a record high of $16.40 on Oct 8, before falling to as low as $8.70 on Jan 22.
While trading on the broad market has fallen sharply, however, blue chips continue to be traded actively, with their share prices moving in tandem with other blue-chip stocks in the rest of Asia.
This suggests that hedge funds - which deploy sophisticated investment strategies - are actively trading in and out of their portfolios as they react to day-to-day developments in the US.
That gives most other global investors little reason to cheer, and the speed of the market’s deterioration is causing much concern, said Citigroup’s chief Asian equities strategist, Mr Markus Rosgen.
The problem is that while shell-shocked investors are no longer complacent, their stock portfolios might still be filled with counters, such as banks and real estate, which prosper only in a bull market.
‘This will prove the undoing of many an investor,’ said Mr Rosgen.
Still, one dealer noted that recent trading patterns indicate that retail investors are turning out to be a savvy bunch and have avoided taking fresh positions in penny stocks.
The UOB Catalist Index - which tracks penny stocks - has fallen by 28 per cent since last October. But daily traded volumes in its shares plunged even more steeply - from an average 402.9 million shares then to only 110 million shares now.
Some experts believe that the market may undergo another round of selling before reaching a ‘bottom’, presenting investors with a good buying opportunity.
‘Between now and then, patience is what is required, and the winner is the one who loses least,’ said Mr Rosgen.
Egg on Credit Suisse’s face
By Colin Barr
February 19, 2008
So much for Credit Suisse’s (CS) savvy handling of the mortgage meltdown. The Swiss bank said Tuesday morning it will write down the value of some asset-backed structured credit trading positions by $2.85 billion, due to “significant adverse first quarter 2008 market developments.” Credit Suisse said it expects the writedown to shave $1 billion from its first-quarter earnings, though the bank says it believes it remains profitable for the period. Shares fell 4% in premarket trading in New York.
The announcement comes just a week after Credit Suisse posted a 72 percent decline in fourth quarter earnings that nonetheless made it look substantially sharper than rival UBS (UBS), which took some $14 billion in fourth-quarter writedowns tied to souring mortgage-backed securities. Credit Suisse said Tuesday that it continues to probe the problems in its asset-backed book, adding that the bank “has identified mismarkings and pricing errors by a small number of traders in certain positions in our Structured Credit Trading business.” Credit Suisse spokesman Marc Dosch said a “small number” of traders had been suspended, Bloomberg reported. Just another case of savvy risk management, no doubt.
Oil Jumps Above $100 on Refinery Outage
By John Wilen
February 19, 2008
Oil Jumps Back Above $100 on a Texas Refinery Outage and Possible OPEC Production Cut
NEW YORK (AP) -- Oil futures shot higher Tuesday, closing above $100 for the first time as investors bet that crude prices will keep climbing despite evidence of plentiful supplies and falling demand. At the pump, gas prices rose further above $3 a gallon.
There was no single driver behind oil's sharp price jump; investors seized on an explosion at a 67,000 barrel per day refinery in Texas, the falling dollar, the possibility that OPEC may cut production next month, the threat of new violence in Nigeria and continuing tensions between the U.S. and Venezuela.
The fact that there was no overriding reason for such a price spike could be a bad omen for consumers already bearing the burdens of high heating costs and falling real estate values. Many recent forecasts have said oil demand growth this year will be less than initially expected, yet prices continue to rise. That suggests they may continue rising as the weakening dollar attracts new investors to the futures market.
And rising oil prices mean higher gas prices.
"As the economy weakens, it's going to be met with $3.50 and $3.60 gasoline," said James Cordier, founder of OptionSellers.com, a Tampa, Fla., trading firm. "And that really spells trouble for the consumer."
Light, sweet crude for March delivery rose $4.51 to settle at a record $100.01 a barrel on the New York Mercantile Exchange after earlier rising to $100.10, a new trading record. It was the first time since Jan. 3 that oil had been above $100.
Oil prices are still within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.
Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
"I really think ... crude oil's going to soar through $100," Cordier said.
At the pump, meanwhile, gas prices jumped 1.8 cents to a national average price of $3.032 a gallon Tuesday, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, are following oil prices higher. The Energy Department and many analysts expect gas prices to peak this spring well above last May's record of $3.227 a gallon.
Gasoline and heating oil prices appeared to lead Tuesday's wide advance in energy prices due to the explosion Monday at Alon USA's Big Spring, Texas, refinery, which could be shuttered for two months.
"The refinery fire in Texas is making people a little concerned," said Michael Lynch, president of Strategic Energy & Economic Research Inc. in Amherst, Mass.
March gasoline jumped 10.93 cents to settle at a record $2.6031 a gallon, and March heating oil rose 11.45 cents to settle at $2.7614 a gallon, also a record.
A threat by a rebel group in Nigeria to escalate attacks on the nation's crude oil infrastructure helped boost oil prices. The rebels were acting in response to rumors that the government had killed a captured leader, whom authorities later said was safe and well. Militant attacks have cut about 20 percent of Nigeria's crude output in recent years.
For the moment, investors appear to have put aside concerns about the economy that have sent oil prices down into the mid-$80 range twice in the last month. Traders are instead focused on the Organization of Petroleum Exporting Countries, which will meet early next month to map out production plans, and Venezuela, where President Hugo Chavez made conflicting statements this weekend about the country's legal dispute with Exxon Mobil Corp.
OPEC could move to cut production in the second quarter, typically a period of low demand, though many analysts feel that's unlikely. In Venezuela, Chavez said he was not serious about an earlier threat to cut oil sales to the U.S., but also threatened to sue Exxon Mobil. The world's largest oil company is fighting Venezuela's nationalization of an oil project, and recently convinced several courts to freeze $12 billion in Venezuelan oil assets.
Other energy futures also rose Tuesday. March natural gas jumped 31.7 cents to settle at $8.977 per 1,000 cubic feet. Analysts said prices were supported by forecasts for cooler weather, but that futures were also following oil prices higher.
In London, Brent crude for April delivery rose $3.65 to settle at $98.56 a barrel on the ICE Futures exchange.
Wheat market gone wild
Driven by fears of shortage, the price per bushel has shattered records
BY TOM WEBB
February 16, 2008
Decades from now, farmers will still talk about this week - the moment when wheat in Minneapolis soared to nearly $20 a bushel.
Like a 100-year flood, spring wheat prices have risen relentlessly all winter, obliterating every record in sight. At the Minneapolis Grain Exchange, wheat fever pushed prices to $19.80 a bushel in trading Friday - nearly triple the record from 1996.
To grain experts, it's a warning of what happens when grain supplies don't keep up with rising demand. Fear of scarcity and shortage push markets far beyond any norm.
"This wheat market has given us a glimpse of the what-if - what if we don't deliver the goods on the production side, because the demand is here," warned Ed Usset, a grain marketing specialist at the University of Minnesota.
For the past month, the hottest market in the nation has been the Minneapolis Grain Exchange, the nation's center for trading spring wheat futures. The high-protein wheat that farmers grow in Minnesota and the Dakotas is prized for making bread, but poor crops worldwide have left wheat supplies at a 60-year low.
The impact of that shortage reaches far beyond the wheat trading pit in Minneapolis. Trading in Minneapolis has supercharged wheat markets in Chicago and Kansas City, Mo., as well. That has pushed corn and soybean prices to near-record levels - fueling a wave of uncertainty about everything from food price inflation to subsidies in the new farm bill to hunger in the developing world.
"Minneapolis, that's where this is all coming from, the shortage of the actual physical supply of spring wheat and durum," said Elaine Kub, a commodity market analyst at DTN. She suspects grain prices elsewhere will retreat, but there's little question about the clamor for spring wheat.
"People are desperate," Kub said. "You definitely heard stories from out in the country of elevators offering $20 a bushel and getting no sellers. ... You hear people tossing around the words 'wheat hoarding.' "
For decades, agriculture's great problem has been surplus, not scarcity. And ruinously low prices, not ruinously high ones. Farmers have complained bitterly about this, but consumers benefitted from the great abundance of grains and proteins. This week's action in Minneapolis previews a different sort of marketplace.
"It's telling us how close we are to that tipping point in all commodities," said Usset, a former grain trader. "Every commodity I know would like more acres: corn needs more, soybeans need more ... durum wheat, malt barley, sunflowers, they all want a little more production."
The Minneapolis Grain Exchange itself is scrambling to adjust to the explosive markets. On Friday, the maximum daily trading limit rose to $1.35 a bushel - compared with 30 cents last week - and soon, the maximum daily limit will vanish. Officials suggested they had little choice. Markets were so volatile that they locked up day after day, so nobody could trade wheat futures at all.
"Whenever you have set caps, even if they're for good intentions to help protect certain people from abnormal price swings, you're going to run into others who are affected because you have those price caps," said Layne Carlson, treasurer of the Minneapolis Grain Exchange.
On Friday, for the first time in 12 trading sessions, the March wheat contract did not close up the maximum daily trading limit. Because of the higher limits, it closed at $19.35 a bushel, up 82 cents. The return of regular trading to the wheat pit may signal an end to the greatest run-up in wheat history, with wheat prices rising fourfold in a single year.
For farmers, that puts the 2008 Minneapolis wheat market atop the list of legendary bull markets. There haven't been many: the 1970s boom fueled by Russian exports, the drought-stressed corn market of 1988, the grain spike of 1996 and the soybean market of 2004.
"Absolutely, this is one for the record books, make no mistake about it," Usset said. "This will be talked about."
Significant increase in world cereal production forecast for 2008, but prices remain high
13 February 2008
Rome -- Early prospects point to the possibility of a significant increase in world cereal production in 2008, but international prices of most cereals remain at record high levels and some are still on the increase, FAO said today.
The forecast increase in production follows expansion of winter grain plantings and good weather among major producers in Europe and in the United States, coupled with a generally satisfactory outlook elsewhere, according to FAO’s latest Crop Prospects and Food Situation report.
With dwindling stocks, continuing strong demand for cereals is keeping upward pressure on international prices, despite a record world harvest last season, the report said. International wheat prices in January 2008 were 83 percent up from a year earlier.
Although prices are high, total world trade in cereals is expected to peak in 2007/08, driven in great part by a sharp rise in demand for coarse grains, especially for feed use in the European Union, according the report.
Imports down, food bill up for poorest countries
Cereal imports for all Low-Income Food-Deficit countries in 2007/08 are forecast to decline by about 2 percent in volume, but as a result of soaring international cereal prices and freight rates, their cereal import bill is projected to rise by 35 percent for the second consecutive year. An even higher increase is anticipated for Africa. Prices of basic foods have also increased in many countries worldwide, affecting the vulnerable populations most, the report said.
In order to limit the impact of rising cereal prices on domestic food consumption, governments from both cereal importing and exporting countries have taken a range of policy measures, including lowering import tariffs, raising food subsidies, and banning or imposing duties on basic food exports.
New portal
“High food prices and market uncertainties have become major global concerns, and wide access to up-to-date information and analysis is becoming critical,” said Henri Josserand of FAO’s Global Information and Early Warning system. To address this need for information and facilitate analysis on current developments in world food markets, FAO today announced the launch of a new web portal bringing together relevant FAO studies and data on the world food situation.
2008 cereal prospects
In North Africa, early prospects for the 2008 winter cereal crops are mixed, but in Southern Africa the overall outlook is satisfactory, despite severe localized floods. In several countries of Eastern Africa, another bumper cereal crop was gathered in 2007, but poor secondary crops are expected in Kenya and Somalia, according to the report.
In Asia, early indications point to a 2008 aggregate wheat crop around last year’s record level.
Overall prospects for the 2008 maize crop are satisfactory in South America, although the outlook remains uncertain in Argentina.
Flooding in southern Africa and South America
Heavy rains have caused severe flooding in Mozambique, Zimbabwe, Zambia and Malawi. Farmers in affected areas are in urgent need of seeds and other inputs for replanting during what is left of the main cropping season, which runs from October to April, and to prepare for the next planting season.
FAO and its humanitarian partners yesterday launched an appeal for $87 million for emergency assistance to flood-affected populations in the four countries. Of this, over $9 million will support FAO’s agricultural relief activities aimed at improving food security in flood-hit regions.
In Bolivia, severe floods have adversely affected over 42 000 families, who are in need of emergency humanitarian assistance, with numbers on the increase. Large cropped areas have been partially or totally lost.
Extreme cold weather in central Asia
Exceptionally low temperatures in several central Asian countries, in particular China, Mongolia, Afghanistan and Tajikistan, have caused human casualties and resulted in crop and livestock losses.
Worldwide, 36 countries are currently facing food crises, according to the report.
Stagflation Hits Singapore as Inequity Grows
Commentary by Andy Mukherjee
Feb. 18 (Bloomberg) -- Stagflation has come to Singapore.
The entire focus of the government's annual budget, announced Feb. 15, was on dealing with the perils of slowing growth and accelerating inflation, a deadly combination as less fiscally robust governments than Singapore's may soon discover.
Of the two, the bigger threat is clearly the 4.4 percent rate at which consumer prices rose from a year earlier in December, the quickest pace in a quarter century.
It's quite natural then that the word ``inflation'' appears 43 times in this year's budget statement.
Last year, it wasn't even mentioned once.
To be sure, the authorities in the city-state are entering the combat zone from a position of strength, and not only because they have accumulated budget surpluses in most years for four decades now.
For two straight years, people in every income bracket have taken home bigger paychecks.
Not just that. If the consumer-price index is any reflection of the true cost of living in the city-state, then even the poorest 10 percent of non-retiree households -- with a per-capita income of just S$180 ($127) a month -- have had real gains in purchasing power.
However, the rich have fared much better. Starting in 2000, inequality has widened a little every year.
Singapore's Gini coefficient, a widely used measure of income concentration, overtook that of the U.S. in 2006 and rose further last year to 0.485, a very high level of disparity for a society with an educated workforce.
Recession Risk
And this inequity may now become a problem because the growth momentum has suddenly collapsed as the much-expected ``decoupling'' from the troubled U.S. economy has -- at least so far -- failed to materialize.
On an annualized basis, gross domestic product contracted almost 5 percent in the final three months of last year compared with the previous quarter.
If there's another fall in GDP in the current quarter, then Singapore would technically be in recession.
It's one thing to have an unequal society where the workforce is, for all practical purposes, at full employment and income growth is outpacing inflation for everyone, albeit more quickly for the rich than for the poor.
A somewhat lopsided income distribution is only to be expected in a city that wants more rich people to come here to live, work and play. It now takes just a week to register a hedge fund from scratch in Singapore, many times faster than in the rival financial center of Hong Kong.
A couple of casinos will open by 2010, and an annual Formula One night race starts this year.
Helping Hand
When it comes to helping the poor, the island-state generally eschews consumption subsidies, except in education, basic health care and for public housing, the biggest source of wealth creation for the average Singaporean.
However, Singapore has mechanisms in place for transferring the government's fiscal surpluses to the poor in bad years and ensuring that they can get by even on monthly wages that wouldn't buy a meal for two at My Humble House, a restaurant that isn't exactly what its name suggests.
What Singapore has resolutely shied away from is giving its citizens any handout that may dissuade them from seeking work. Unemployment insurance, an idea that was discussed following the 2001 recession, remains a no-no.
That may be a prudent strategy, especially in a fast-aging society that's trying hard to retain competitiveness as cheaper locations in China and India become more sophisticated producers of almost everything that Singapore makes.
Prudent Versus Popular
Nonetheless, a prudent course may not be a very popular one in an environment of stagflation. When people start losing their jobs while their electricity bills keep going up, there may be resentment against the rich, many of whom are foreigners.
Singapore is too pragmatic to want to use tax policies to fashion a more egalitarian society. Even this year's budget gave a bonus to the rich by scrapping estate duty.
The move is aimed at getting wealthy individuals around the world to shift their assets to Singapore, where there are no levies on capital gains and the top rate for personal income tax is 20 percent.
To make sure that the poor don't fall further behind, the emphasis of the government's budget this year is on returning S$5.4 billion worth of fiscal surplus to the people, especially low-income households and the elderly.
As a small, open economy of 4.6 million people, Singapore can't do much to escape stagflation. As a prosperous nation -- average household income from work last year was the equivalent of $50,000 a year -- it is going to be under increasing pressure to shield its vulnerable from economic forces over which the city's authorities have no control.
For now, the government has been proactive in responding to the challenge. If the economy slows more than the current official forecast of at least 4 percent expansion this year, or if the cost of living becomes more unbearable, the helping hand may have to extend its generosity further.
(Andy Mukherjee is a Bloomberg News columnist. The opinions expressed are his own.)
Policy challenges mounting for China
Commentary: More interest-rate hikes and further tightening look likely
By Craig Stephen
Feb. 19, 2008
HONG KONG (MarketWatch) -- The one thing markets dislike most is uncertainty, so when China' banks began the year with a lending spree after promising tightening a month earlier, investors are feeling decidedly uneasy.
You can choose to disagree with the wisdom of Fed chairman Ben Bernanke's rate cuts, but at least it's pretty clear he's going lower. In Hong Kong this alone is justification to jump into property as buyers' factor in cheaper mortgages. Keep watching for perhaps the world's last property bull market.
But making investment bets on the stated policy of the People's Bank of China requires much more than just a leap of faith.
After being told to expect lending curbs as bank reserve ratios were hiked to 15%, instead loans grew at blistering 16.7% year-on-year in January, up from December's 16.1%. Put another way, China's commercial banks lent 803 billion yuan or two thirds of their lending quota for the first quarter in January.
This has left investors and analysts scrambling for answers. Has the tightening policy been ignored, abandoned or is plain not working? Have we gotten to the stage where policy by dictate is now a blunted instrument as China's newly commercialized banks chase profit?
Official word remains that there has been no policy shift and there is likely to have been some front loading of loans, but more answers are needed. The NPC meeting in March is expected to provide some more policy detail.
Policy challenges piling up
In the meantime, the fiscal, trade and lending policy challenges facing China's leaders are piling up whither growth, inflation, exchange rate?
On the one hand, Beijing is facing renewed calls to relax spending and trade policies. The construction, transport and agricultural sectors hit by the recent monster snow storm that caused $15.4 billion in damage need emergency funding. Meanwhile exporters are feeling the pain of a weaker U.S. market and rapidly appreciating yuan squeezing margins even though China racked up another strong trade surplus in January. On the front page of the South China Morning Post over the weekend was a story of factories fleeing the Pearl River Delta as new labor contract laws added to existing financial strains. One estimate said 10,000 processing factories could leave this year.
Meanwhile, the gorilla in the room for Beijing is still inflation. This week, January inflation data will be released and is expected to top 7%. Deutsche Bank in a new report expects CPI to reach 8% in the first quarter and warns of the "spiral impact" at these levels taking control when expectations drive inflation. In China's finance and insurance sectors, there already are anecdotal stories of across-the-board pay increases running at 19%-20%.
Whether you're sitting in Shanghai or Sydney, you'll have more than a passing interest in the outcome as China's higher prices keep popping up menacingly around the globe.
Rate-hikes ahead?
Despite these policy conundrums, there is no fence-sitting by Standard Chartered Bank economist Stephen Green, who say China will be tightening this year and to expect a series of four interest-rate hikes. This would take the one-year deposit rate from 4.14% to 5.12%.
To support this call, they highlight the money-supply figure in the January data which revealed that banks were still taking in more deposits than extending loans. This could store up problems for the banking system if real interest rates remain negative.
While M2 grew 18.9% year-on-year in January, Standard Chartered highlighted the cash element of M2 (which is cash, demand deposits and time deposits) which grew really quickly. But demand deposits, where the cash came from, fell.
They speculate one explanation for this could be that funds are returning from the mainland stock and property markets, which have been in retreat now since November.
Recent stock turnover is certainly down, at least half of levels seen last year in the Shanghai A-share market.
With few investment alternatives for mainlanders, bank deposits, even with negative rates may do for now. Watch out for money finding its way into precious metals after the Shanghai kicked off gold futures trading last month. The risk of course if prices keep rising, it may just get spent, fueling inflation further.
Standard Chartered highlighted another danger. If real deposit rates remain negative, funds will begin to flow out of the formal banking system as corporates lend to corporates and that will also have as stimulative economic impact.
And as existing quotas have already led to a rise in de-facto loan rates, one consequence is there will be a ready market for grey-channel lending.
This outlook also explains why defensive stock positioning looks prudent where companies needing cash carry greater risk than those with large retained earnings or cash flow. So, expect more tightening in China. But more importantly, be on the look out for the unexpected.
佛说：五百次的回眸才能换来今生的擦肩而过。可以一秒钟遇到一个人，一分钟认识一个人，一个小时喜欢上一个人，一天时间爱上一个人，但是却要用一辈子去忘记一个人。
歌曲：当爱已成往事
歌手：林忆莲
往事不要再提 人生已多风雨
纵然记忆抹不去 爱与恨都还在心里
真的要断了过去 让明天好好继续
你就不要再苦苦追问我的消息
爱情它是个难题 让人目弦神迷
忘了痛或许可以 忘了你却太不容易
你不曾真的离去 你始终在我心里
我对你仍有爱意 我对自己无能为力
因为我仍有梦 依然将你放在我心中
总是容易被往事打动 总是为了你心痛
别流连岁月中 我无意的柔情万种
不要问我是否再相逢 不要管我是否言不由衷
为何你不懂
只要有爱就有痛
有一天你会知道
人生没有我并不会不同
人生已经太匆匆
我好害怕总是泪眼朦胧
忘了我就没有痛
将往事留在风中
“有你我就有感情，有感情就有烦恼，有烦恼就有是非，有是非就有痛苦。因情受苦，忘情更难。”
因为爱过，所以不会成敌人；因为伤过，所以不会做朋友。如果，前世的五百次回眸才换来今生的擦肩而过，那想来已经很幸福了——其实，擦肩而过，也是一种很深的缘分。
佛说：五百次的回眸才能换来今生的擦肩而过。可以一秒钟遇到一个人，一分钟认识一个人，一个小时喜欢上一个人，一天时间爱上一个人，但是却要用一辈子去忘记一个人。
当他不爱你的时候，无论过去他是否爱过还是后来忘了，又或者是从未爱过，当你无法再成为他心里的那个人的时候，他的心便不会记得你。请不要在你不开心时去打搅他，他那儿绝对不是你此刻应该的去处。请不要与他讲你的琐事，他无暇更是没有兴趣去了解你、你的生活。即使讲了，他也很快会忘记的。没有爱，你注定挤不进他的生命。请不要在他的面前流眼泪，他无法给予你照顾和关心，至多只是一点同情。只有爱你的人，才会真正的去珍惜你，而不是，旁观的同情和怜悯。
当他不爱你的时候，你的爱便是他的负担。请不要去计算自己的付出，不要希望有什么回报。你用心，他无心，爱着不爱自己的人，本身便是没有回报的。不要计较对与错，这样会快乐些。请不要失去自信，因为爱一个人，并非他的优秀，而只是一种感觉。他让你有这样的感觉，于是你爱他。同样，他不爱你，也并非你不优秀。优秀，不是爱的理由。还有那么多爱自己的人，淡淡地微笑一下，也是异样甜美的。
当他不爱你的时候，也一定要祝福他。有了爱，便不该有恨，因为曾经有爱，有爱的日子里是快乐的，有缘在一起也是快乐，有过快乐有过爱，就不会再有恨。他失去的是一个爱他的人，而你失去了一个不爱你的人，却得到了一个重新生活、重新去爱的机会。请你深深呼吸，一生的路上，铺满了爱的花蕾，总有那么一朵属于你，花儿虽多，却没有重复的一朵，这是生生世世早已经注定的。
当他不爱你的时候，就是你从他生活中消失的时候，第一时间离开他，骄傲地过属于自己的生活。同时，你也希望他能幸福快乐，找到属于他的未来。轻轻拥抱一下回忆里的温暖，轻柔地凝视凋谢的温柔。无论结果怎样都会破坏了曾经的美感。干干净净地离开，也许若干年后的某个午后，阳光下的他眯起双眼会记起某个美好的瞬间，会心一笑。种种怀念，值了。
爱过才知情重，醉过方知酒浓。爱自己爱的人本身就是幸福的，你可以记住过去的美好，但不要把它幻想到现在，因为一切都是一去不复返的。去走以前一起走过的小路，吃一起吃过的冰糖葫芦，回想那句：说好了要永远一起的，然而，再多的爱也只变成了一种关怀。如果一切曾经像烟花一样灿烂过，或许现在就不会停留在原地不动。那曾经拥有过的那份爱当成世界在你们心中打下的一个烙印。
爱不一定要永远。曾经拥有的也许会是你一生最美好的回忆。因为爱过，所以不会成敌人；因为伤过，所以不会做朋友；只能是最熟悉的陌生人。爱过知情重，醉过知酒浓。关于爱的记忆，应该好好收藏，只是今后的幸福，要各自去寻找。爱是一种感觉，不爱也是一种感觉，而往往难以抉择的是心中的感觉到底是爱还是不爱。
原来握在手里的，不一定就是你们真正拥有的；你们所拥有的，也不一定就是你们真正铭刻在心的。人生很多时候需要自觉的放弃，因为拥有的时候，你们也许正在失去，而放弃的时候，你们也许又在重新获得。明白的人懂得放弃，真情的人懂得牺牲，幸福的人懂得超脱。
对不爱自己的人，最需要的是理解、放弃和祝福。过多的自作多情是在乞求对方的施舍。爱与被爱，都是让人幸福的事情。不要让这些变成痛苦。既然你们已经经历了，多年以后，偶尔想起，希望都是美好的回忆。活的自信些，开心些，把最美的微笑留给伤你最深的人，聪明的人知道自己要快乐。珍惜你爱的人和爱你的人。
Hang Seng outdrives Dow futures
By R SIVANITHY
February 20, 2008
REGULAR BT readers and close observers of stock-market movements would know of the reliance traders place on rises and falls in the futures market for US benchmarks, most notably the Dow Jones Industrial Average or the Dow futures for short.
The idea here is that the Dow futures in theory captures the market's best guess of how Wall Street might perform when it opens about five hours after Singapore closes, so if the contract rises sharply, then chances are US stocks will be strong. Conversely, if the futures market is very weak, then caution might be the order of the day because it suggests a Wall Street fall.
However, because volume traded in the Dow futures during Asian trading hours is generally low - only a few hundred contracts are typically done between 9am-5pm local time - observers have pondered the possibility that speculative funds might regularly manipulate the Dow futures in order to influence sentiment in local stocks.
Adding to this notion is anecdotal evidence that the Dow futures tends to be a poor predictor of how Wall Street performs over the course of its own trading day - a jump in Asian trading does not necessarily translate every day into strong Wall Street closing.
While possible, the idea that the Dow futures is rigged to sway sentiment in Asia is highly improbable. For one thing, even though volume appears low, it still requires a fair amount of financial muscle to rig the Dow futures.
The contract is traded on the Chicago Board of Trade's electronic trading platform and is valued at US$10 per index point. An index value of 12,500 means that one contract is worth US$125,000. In yesterday's trades, some 650 contracts were done during the time the local stock market was open, which means the total value of trades done was around US$81.25 million - not a small amount by any means.
Second, futures traders have no way of knowing whether the US economic reports to be released later in the day will be good or bad, or if US companies are about to announce strong or weak earnings. The Dow futures is illiquid in Asian trading because traders have no primary underlying market to refer to in terms of newsflows, and this is why the contract might appear to be a poor predictor of future Wall Street performance.
Third and most important, the Dow futures plays only a supporting role to the main driver of Singapore stock prices - Hong Kong's Hang Seng Index. Close market watchers would know that it is gyrations in the Hang Seng that are much more influential in affecting sentiment and setting direction for local stocks than movements in the Dow futures.
There are many reasons for the heavy dependence on Hong Kong but all rest on the fact that the former British colony is by far the largest and most liquid market in this part of the world. An institutional dealer summarised the reliance on Hong Kong nicely when she said 'people tend to follow liquidity and you don't get more liquid than Hong Kong'.
Furthermore, Hong Kong is viewed as being a good proxy for future Wall Street movements, perhaps even better than the Dow futures itself.
Daily survival in an environment as volatile as the current one is all about trying to anticipate how the US might move later in the day, so institutions which expect Wall Street to move in a certain direction are much more likely to try and capitalise on this expectation via the liquid Hong Kong market than the relatively illiquid Dow futures.
Of course, in a globalised world where everything is connected to everything else, it isn't just Hong Kong that directs what happens in the Singapore market. Equally relevant in the early part of the day are movements in Australia and Japan, but especially the latter given its size and liquidity. Then there's China - traders will recall, for example, the turbulence here when China stocks suffered a mini-crash last year. And after Hong Kong closes at 4pm local time, movements in Europe become relevant during the final hour.
All trading, however, boils down to trying to guess how the US might perform in the future and oddly enough, it's worth noting that it is Hong Kong which plays the most important role in this respect - even more so than the Dow futures.
Stocks fall sharply after oil prices close above US$100 a barrel in New York
February 20, 2008
TOKYO (AP) -- Japanese stocks fell sharply Wednesday as rising crude oil prices fueled concerns about inflation in Asia.
The Nikkei 225 index closed down 447.54 points, or 3.25 percent, at 13,310.37 points on the Tokyo Stock Exchange.
Oil prices closed above US$100 a barrel for the first time in New York trading Tuesday as investors seized on a refinery explosion and the possibility that OPEC may cut its output. In electronic trading in Singapore Wednesday, the March contract was down fell 71 cents to US$99.30 a barrel.
Surging oil prices also stoked investor fears that higher commodity prices will weigh on the global economy and corporate earnings.
"The move upwards for oil prices driven by geopolitical fears may be slightly excessive but real concerns remain over the impact on corporate earnings," said Akio Yoshino, chief economist at Societe Generale Asset Management.
Shares in chemical companies and rubber makers, which rely on petrochemical compounds in their manufacturing, were among the hardest hit in Wednesday's selloff.
Shin-Etsu Chemical dropped 5.3 percent, and Sekisui Chemical slid 3.2 percent. Among rubber and tire makers, Yokohama Rubber shed 3.1 percent.
Selling also intensified following a Financial Times report that an affiliate of U.S. private equity group KKR Financial Holdings has delayed repayment of billions of dollars of commercial paper for the second time and began a new round of restructuring talks with creditors less than six months after rescue rights issue.
The Topix index of all shares on the exchange's first section fell 42.57 points, or 3.16 percent, to 1,302.72 points. It rose 0.92 percent the day before.
In currencies, the dollar bought 107.90 yen at midafternoon in Tokyo, up from 107.60 yen late Tuesday in New York. The euro slipped to US$1.4717 from US$1.4732.
Barclays ‘won’t flinch’ in plans for US assault as it contains writedowns
Christine Seib
February 20, 2008
Barclays is planning an assault on the United States to capitalise on the vacuum left by damaged American investment banks as it revealed a sub-prime writedown that was smaller than expected yesterday.
Britain’s third-largest bank said that it had a £36 billion exposure to the credit markets, but took a charge of £1.6 billion for 2007, only £300 million higher than an earlier estimate.
Barclays’s results had been keenly awaited as a signal of the impact of the global liquidity crisis on British banks. Alliance & Leicester will report its 2007 figures today and Lloyds TSB on Friday.
Shares in Barclays closed up 3.7 per cent at 477p a share, despite the market getting a scare yesterday morning when Credit Suisse, another bank that had seemed to have escaped the credit crunch relatively unscathed, said that it would take a $1 billion (£510 million) hit in its first-quarter results.
With almost all American banks reporting multibillion-dollar writedowns and working through mass redundancies and new management teams, Bob Diamond, the Barclays president, described America as “the single biggest opportunity in investment banking”. Mr Diamond, who is also chief executive of Barclays Capital, the investment banking business, said: “Look at the players pulling back: what an opportunity for BarCap; what an opportunity for Barclays . . . I don’t want to look back in two or three years and say: ‘We had the opportunity to develop in the US and I flinched.’ And I won’t say that.”
Analysts praised the plan to enter the US in areas of business such as commodities, which BarCap specialised in. “It makes sense - you’re not going to get a chance like that often,” one analyst said.
Barclays reported pretax profits of £7 billion for the 12 months to December 31, down 1 per cent on last year. It raised its dividend by 10 per cent, from 31p to 34p.
BarCap’s writedown would have been higher but was offset by a £658 million fair value increase of the bank’s own credit notes. The bank took a total of £2.7 billion-worth of charges, up 30 per cent on the previous year, including the investment bank’s writedown and impairment charges on loans.
Barclays revealed for the first time a £4.9 billion exposure to Alt-A mortgages - American home loans that are less risky than sub-prime but normally are given to people without credit histories - as well as a £1.3 billion exposure to monoline insurers.
Despite the credit market charge, BarCap reported a 5 per cent increase on 2006’s record profits, with a pretax result of £2.3 billion.
The bank’s international retail and commercial banking business suffered a 23 per cent fall in profits to £935 millions. The division was also hit by a 12 per cent fall in the average value of the South African rand. Absa, the South African bank, is one of Barclay’s largest subsidiaries.
Top German Politician Says Landesbanks in Crisis
By Matthias Inverardi
Feb 20, 2008
DUESSELDORF, Germany (Reuters) - Germany's state-backed regional landesbanks are in a crisis in the wake of the global credit market turmoil, one of the country's leading politicians said on Wednesday.
The landesbanks -- which are owned by local government and powerful community savings banks -- have been especially hard hit by the subprime crisis.
SachsenLB narrowly escaped collapse while BayernLB and WestLB have also been hurt by writedowns on a mountain of debt investments.
On Wednesday, the premier of Germany's most populous state, North-Rhine Westphalia, highlighted the difficulties facing the country's landesbanks and called on the central federal government to shake up the industry.
"The events in recent days show that we are talking about a national crisis in the savings bank and landesbank system," Juergen Ruettgers told the parliament in the state which is home to stricken lender WestLB.
"The regional government (of North-Rhine Westphalia) is calling again on the central federal government to play an active role in the restructuring of the bank and landesbank system."
The remarks made investors nervous and the euro subsequently hit a session low versus the dollar EUR, down 0.4 percent on the day.
The German state dominates the country's banking system. Traditionally, state-backed savings banks have relied on the landesbanks as their gateway to international capital markets.
The landesbanks provided them with often complex financial products for their corporate clients. They benefited from the backing of regional governments, which bumped up their credit ratings and cut the cost of borrowing.
However, a ban on state banking aid robbed the landesbanks of their patrons, putting them under pressure. The savings banks, meanwhile, started to push for consolidation of Germany's landesbanks.
This was resisted by the regional governments, who fear a loss of influence.
Europe's biggest economy has taken an especially hard beating from credit market turbulence.
UNCHARTED WATERS
Ratings analysts said that landesbanks needed to be considered individually rather than en masse.
"The difficulty or turbulence is focused on badly-managed banks. I think it's rather that group than being specific on landesbanks," said Thomas von Luepke, head of German bank ratings at Fitch Ratings. "Those banks who are well managed are able to stand the storm."
But Johannes Wassenberg, managing director at Moody's Investors Service, said there were some common structural problems, particularly a lack of depth in retail banking.
"The fundamental problem for many of these landesbanks is that their ... focus on wholesale banking brings along a higher risk profile," he said. "The big private banks obviously have more legs to stand on."
Struggling after the abolition of government guarantees, many landesbanks seized on the booming market in securitised debt to bolster profit only to run into trouble when credit markets seized up.
The credit crisis, which started when U.S. home owners were squeezed by falling property prices and rising interest rates, has rocked confidence in the global economy.
It battered SIVs (structured investment vehicles), which raise funding by issuing short-term debt to finance longer-term investments in bank debt and asset-backed securities.
The off-balance-sheet vehicles have been caught out as investors shunned complex debt instruments and refused to cough up short-term funding, forcing fast asset sales to repay debt even as the value of their investments has tumbled.
WestLB, which ran a series of investment vehicles including SIVs with a value of about 25 billion euros ($36.80 billion), is worth about 7 billion euros -- roughly the same as the value of its equity.
Dubai Intl to invest $5 billion in India, China & Japan
Nathan Layne
Feb 19, 2008
TOKYO (Reuters) - Dubai International Capital, an investment fund owned by the ruler of Dubai, said it planned to invest about $5 billion in China, India and Japan over three years as a play on the rapid growth of emerging markets.
The fund's chief operating officer, Anand Krishnan, also told a news conference on Tuesday the fund could raise its stake in existing holdings like Sony Corp and was looking for potential investments in other Japanese shares.
Gulf investors spent $80 billion last year in foreign acquisitions, almost three times the amount they spent in 2006, according to data provider Dealogic.
Krishnan said Dubai International plans to raise its assets under management to $25-30 billion in the next three to four years from $13 billion now, estimating that India, China and Japan could make up one-fifth to one-sixth of the total.
"I would think the three countries in the next three years would take a share possibly of about $5 billion," he said.
Krishnan said the fund was searching for opportunities in Japan's auto industry and other sectors, such as entertainment, that have channels to growing demand in emerging economies.
"Clearly because of the growth in emerging markets, we believe companies having exposure to emerging markets will grow significantly as well," he said.
He added that the fund would be open to raising its stake in Sony as it would with other major holdings, such as HSBC Holdings and European aerospace company.
SONY STAKE
Dubai International said in November it had made a "substantial investment" in Sony but did not disclose the size of the stake.
"More stock in Sony? If it makes sense for us from a returns perspective and we can get it at the right pricing, absolutely. We would look at any one of the stocks that we have invested in," Krishnan said.
Dubai International Capital is the private equity arm of Dubai Holding, which is owned by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum.
Separately in Singapore, Rabih Khoury, chief executive of DIC emerging markets, told Reuters in an interview that Asia accounts for 30 percent of its $2-$3 billion emerging market portfolio, but that share is expected to rise "north of 50 percent" in three to five years.
"For DIC emerging markets, Asia is our focus in 2008," Khoury said on the sidelines of an investment conference in Singapore.
"We are already in India and we are focusing on investing in China", and other Asian companies, such as Singapore, Indonesia, Thailand, Philippines and Malaysia.
Khoury said the firm plans to establish single-country funds -- typically $200 million each -- to invest in Asian companies, such as infrastructure firms.
Eastern Europe becomes victim of economic success
By ASSOCIATED PRESS
RIGA, Latvia
Feb 20, 2008
Artur Arushanov dreads shopping these days. A truck driver and father of three, he can't bear to watch how food prices in Latvia are climbing relentlessly, with inflation raging at almost 16 percent annually.
"I wanted to buy my daughter granola cereal, but I can't afford it anymore," said Arushanov, 41. "I now spend about 60 percent of my income just on food, so I really have to think about what I buy."
Not just in Latvia, but across Eastern Europe, inflation has descended like a nasty winter virus in the newest EU member countries, hurting household budgets and causing countries to see their long-term goal of joining the euro slip farther into the future as governments struggle to get prices under control.
Economies across the globe are grappling with inflation, thanks to costlier energy and food, but prices in Eastern Europe are soaring on a wave of economic growth as the former communist countries that joined the EU in 2004 and 2007 race to catch up with richer Western European nations.
Natalya Kiselyeva, 40, a Riga public-school chemistry teacher, moonlights at a private school to afford Latvia's food prices, which have soared 20% over the past 12 months.
"I don't even bother trying to save money," she said. "It's practically losing value by the week."
The average monthly wage in Latvia was 400 lats ($835) as of September, the latest figures available. And with a liter of milk costing 0.56 lat ($1.17), consumers are feeling the pinch. Last year, cheese prices jumped 44%, according to official statistics, and a recent survey found bread prices have soared 30% over the past three months.
Strong growth plays a role since increased economic activity means more demand for goods and raw materials. In 2006, Latvia's GDP grew 11.9% and Estonia's 11.4% - the two best results in the EU. So in 2007, the two countries' consumer price indexes jumped 14.1% and 11%, far beyond official forecasts.
Lithuania, Latvia and Estonia, EU members since 2004, got into what is called ERM-II, the union's official two-year waiting room for euro hopefuls - but have had to postpone the long-cherished dream because the inflation shows they do not have their economic houses in order.
Ministers now say 2012 will be the earliest that common currency will appear in the three Baltic countries. To get in, countries must meet strict standards for low deficits, debt and inflation; last year the "entry bar" on inflation was 3.4%.
Bulgaria's chance of reaching the waiting room soon "has decreased considerably," said analysts at RZB Group, and while targets of 2008-9 for ERM-II and 2011-12 for euro adoption "seemed too pessimistic a year ago, they appear somewhat optimistic at present." In Bulgaria, which along with Romania joined the EU in 2007, prices ended the year up 12.5%, even though some disgruntled Bulgarians believe the government is keeping the data artificially low to save face.
"I simply don't believe the official statistics. When I calculate my household's expenses for last year, I come up with an annual inflation of more than 20 percent," said Angel Kuzmanov, a 58-year-old technician.
In Cluj, 400 kilometers from the Romanian capital, Bucharest, teacher Dorina Pop, 55, said, "I cannot save anything, all my money goes on food, taxes and utilities. I will soon retire and I am horrified about what will happen to me."
The National Bank of Romania was forced on February 4 to raise the core interest rate to a painfully high 9% after 2007 inflation hit 6.6%. Higher rates are central bankers' chief tool against inflation.
But such textbook monetary policy works poorly in the new Eastern Europe, where consumers can take out loans in euros and US dollars, currencies that the national banks cannot so easily regulate. That swells the money supply - meaning more cash chasing the same amount of goods.
In Latvia, where inflation hit 15.8% in January - the highest in the 27-member EU - the situation was exacerbated by speculation in real estate, on which there was no capital gains tax before last summer.
The rest eerily resembles the US real estate boom and bust. Soaring property prices inspired optimism, and Latvians went out and shopped with abandon, buying Toyotas, trips to Paris and flat-screen televisions.
Meanwhile, Latvia's government ran deficits. Government spending piled on top of private sector demand, further overheating the economy. For years, the nation's central bank chief, Ilmars Rimsevics, badgered ministers to curb expenses, but the government ignored him.
"The good news is that the government is heeding expert advice on maintaining a fiscal surplus despite slower GDP growth," Rimsevics said. GDP stands for gross domestic product.
Wage growth is another destabilizing element of the inflationary equation. EU membership has allowed people to move to Britain and Ireland for better-paying jobs, leading to labor scarcity that drives up wages. Throughout Riga, Latvia's capital, there are signs inviting both young and old to come work - as bus drivers, cashiers and waiters. In neighboring Estonia, the opening of a major hotel last year was postponed for lack of staff.
In the third quarter last year, Latvia's average wages jumped at an annual rate of 33%. But without an equal increase in worker productivity, such wage hikes undermine a company's competitiveness.
Economists agree Latvia's prices will continue to grow in the short term as natural gas, electricity and heat are raised to Western European levels.
Maija Krumina, who lives in a village near Valmiera in northern Latvia, said rural residents have switched to survival mode. Many have stopped going to stores and instead are relying on their own milk, eggs and pork. What they don't consume, they sell to one another.
"It wasn't like this a year ago," said Krumina, 56. "Prices just don't make sense anymore, especially when Latvian bread is more expensive than German bread."
Recession's fast food: 99-cent specials
By ASSOCIATED PRESS
Feb 20, 2008
If you want to stretch your dollar without shrinking your appetite, you're in luck.
Fast food companies, looking for a way to attract budget-conscious customers and keep them spending, are increasingly offering more food for less money.
Jeffrey Davis, president of restaurant research firm Sandelman & Associates, said adding bigger, higher-quality sandwiches to dollar menus allows fast food restaurants to give people the premium sandwiches they want at a price they can afford.
But with commodity prices rising, lowering the prices of fast food sandwiches could squeeze margins, especially if it doesn't lead to better traffic and sales. The chains say the drawbacks don't outweigh the benefit of offering more value to customers dealing with rising prices and a weak economy.
Perhaps the most noticeable example of the more-food-for-less strategy is the appearance on more dollar menus of the double cheeseburger, long a staple of the regular menu and combination meals.
Unlike the value- and dollar-menu regulars, like a small order of fries or "junior" version of a larger burger, the double cheeseburger is a more marquee - and more expensive - choice at most fast food chains.
McDonald's Corp., ahead of the curve on the value menu front, is the exception. Its double cheeseburger has been on the dollar menu since its introduction in 2003 and is one of the chain's biggest sellers. McDonald's touted the "everyday appeal" of the dollar menu in its most recent sales report.
Now a version of the double cheeseburger is appearing on value and dollar menus at the chain's biggest competitors - Burger King Corp. and Wendy's International Inc.
"People are looking for premium items but there's also a push for value," Davis said. "They're giving you a little bit more for what you pay."
That's good news for diners like Shekia Scott, a Boston resident who was visiting New York recently. While lunching with friends at a Burger King near Penn Station in Manhattan, Scott said higher prices for food and gas were hurting her budget. But, she added, "the dollar menu's been a help."
Teenagers - big eaters long loyal to fast food - could also benefit from an expanded value menu, said Deutsche Bank economist Joe Lavorgna.
"Teenagers are very sensitive to changes in gasoline prices," he said. "Typically what they have left over to spend, they will spend on fast food."
Burger King is now studying whether its new dollar double cheeseburger can bring that leftover change into the coffers. The chain is testing the sandwich in a few undisclosed markets. It usually sells for more than $2.
The chains contend they aren't interested in a low-price battle similar to the one waged in the 1990s. But current ad campaigns and promotions suggest the competition for cash-strapped customers will be heated.
"We wanted to better understand the power competitive advertising would mean to us in terms of traffic generation," said Russ Klein, president of global marketing, strategy and innovation at Burger King.
Klein said McDonald's success with its dollar double cheeseburger is a reason Burger King put one on its dollar menu. He noted, however, that the Burger King double cheeseburger is 30 percent bigger than the one at McDonald's. The comparison has been a central theme of the company's marketing campaign so far.
"We know we have a superiority claim," he said.
Wendy's International Inc. introduced a 99-cent double cheeseburger last month called the Stack Attack, coinciding with a national advertising campaign.
The push toward offering more quantity for less money is extending beyond the burger chains. Yum Brands Inc.'s Mexican-style restaurant chain Taco Bell is promoting its Gordita Supreme product - one of the largest menu items - for 99 cents this month. It usually sells for more than $1.50.
And the privately held Quiznos sandwich chain launched a line of $2 small flatbread sandwiches called Sammies in November. The chain also offers a combo meal that comes with two Sammies, a medium drink and either chips, a side salad or a bowl of soup for $6.
Steve Provost, Quiznos's chief marketing officer, said the company was originally planning to launch the Sammies line this spring, but decided instead to debut them in November.
"We accelerated it primarily because of what we saw coming ahead with the economy," he said.
The Sammies are one of the few value choices that are lower calorie - all are under 300 calories. Although the other chains have introduced healthier menu items in the past few years, those rarely are part of the value or dollar menu.
CKE Restaurants Inc., which operates Carl's Jr. and Hardee's, isn't offering any 99-cent products. The company takes the opposite strategy with its pricing, counting on its big, premium sandwiches for "young hungry guys" to expand sales.
Chief executive Andrew Puzder said value menus can result in a lowering of quality - something he's not willing to sacrifice.
"What can you sell for 99 cents? The bun?" he said.
Certainly, quality can suffer when prices drop. The last burger price cuts led to lower sales and quality and the chains say they learned their lesson. But with commodity costs rising, making lower-priced sandwiches without affecting quality isn't easy.
"The double cheeseburger for us is 4.4 ounces of beef," said Burger King's Klein, adding the Whopper Jr. - a mainstay of the chain's current value menu - has half that amount of meat. "So from a sheer cost of goods basis, it's pretty evident it would have a less attractive cost-to-goods proposition."
Hong Kong journalist contemplated suicide in China jail: report
21 February 2008
SINGAPORE (AFP) - - Hong Kong journalist Ching Cheong, who was freed from a Chinese prison this month, contemplated suicide during the darkest days of his detention, he told the Singapore newspaper he works for Thursday.
He survived through reading classic Chinese philosophical texts and self-help books that his family had brought him, the Straits Times reported.
Ching, 58, said his most difficult moments in jail came in the early months after his arrest in April 2005 when he had no contact with his family or his employers.
Ching was held on suspicion of spying for Taiwan and was sentenced to five years in jail last year during a one-day trial.
"My body clock was turned upside down and (the investigators) applied mental stress so you voluntarily succumbed to them," he said in his first interview since his unexpected release from prison on February 5.
"I began to lose confidence, lose hope, and had low self-esteem. When you are in such a situation, the downward spiral begins to kick in and the end result is to commit suicide," said Ching, the chief China correspondent for the Straits Times.
Asked if he came close to suicide, Ching replied: "Yes, when you have to dismiss everything you've long held precious to you."
He said he pulled through by reading Chinese philosophical texts which impressed on him that the things he did were "good for the people and good for the country."
Ching also said his family kept the death of his 82-year-old father in 2006 a secret from him.
On learning of his father's death after his release he said: "I just couldn't accept this story. I cried, I kneeled down and it was really a hard time for me."
Ching, who was due to speak at a press conference later Thursday in Hong Kong, said he planned to write a book on his 1,000-day prison ordeal.
林行止： 管制价格津贴用户扭曲供求遗害愈甚
2008年02月20日
一、 物价尤其是食品价格上涨，是普世现象，其理由过去本栏已多有阐述。对付这种趋势的办法，先进国家在「价格市场决定」的前提下，政府只会看情况辅以货币或财政政策，在发展中国家，则大部分政府采取较直接即以行政手段干预市场，其办法不外是津贴生产商（不准产品加价）、补助消费者（提高种种福利甚至现金津贴）或规限价格升幅；这种情况不仅内地为然，墨西哥且亲由总统下令不准玉米饼（tortillas，如白饭、馒头及面条等主食）加价，俄罗斯则为牛奶及面包价设上限，至于阿根廷、埃及、厄瓜多尔、泰国和委内瑞拉，亦有种种压低民生用品价格的措施，向来靠出口食米赚取外汇的越南和印度，本月初相继宣布暂停食米出口，沙地阿拉伯、科威特及也门，为保持面粉价格，去周先后公布每吨进口面粉津贴六十五美元，马来西亚和巴基斯坦政府去年十月开始囤积主食物……。
政府设法维持物价稳定令人民生活「无忧」，目的在平息民众因生活费上升引发的怨气和骚乱，可说是营造太平景象的手段，这样做在短期内确可生效，可是，简单的经济学常识告诉我们，物价处于低水平会刺激需求，人人负担得起，很少人会在节约及减少消耗上动脑筋，结果是潜伏性通胀压力愈大；令经济学家忧虑最深的是，生产商如农场主人会因此不愿在基建如灌溉系统上投资，在足以提高生产力的新科技上投资当然更不消提，这等于说有关商品产量在政府微调下，最乐观的估计是原地踏步，应付不断增加的要求因而唯有求诸进口一途，而消费国在国际市场「抢」购令价格进一步扬升，奉行市场经济的出口国消费者因此得支付更高的价格，其消费者物价指数无可避免上升。非常明显，上述这种物价「循环」，便是通货膨胀必然变本加厉的根本因素。
对于发达国家的消费者来说，供应青果蔬菜的大都是「超市」而非「街市」，那意味他们消耗的不是鲜果和鲜菜而是冷冻物品，而这些「冻品」可能在一年前已被收购、处理、冷藏，然后运往各地（超市遍布全国的市场），罐头蔬果的「入货期」更可能长达三、四年。急冻及入罐期不论短长，只要在「有效期限」之内，均不致对食用者带来健康问题，值得注意的是，它们的「入货期」价格尚未上升，换句话说，「超市」供应的急冻蔬果及罐头价格，稍后亦会因为原材料价格增加而上扬。
二、 所有以行政手段控制物价的方法，俱可收短期成效但有预期以外的效果（所谓unintended consequences），中国政府去年初限制汽油价格升幅，在原油价格上升之下，油公司不愿扩充炼油设施，结果是柴油供应短缺，这便是十月间大家在电视上看见货车在加油站前大排长龙、不少油站甚且没有供应的底因。价格管制是为了使通胀率不致因物价腾贵而上升，但产量因此停滞以至下跌令潜在通胀比前更甚；在无法限制原油进口价的情形下限制汽油价格还会吃掉公司利润，虽然作为大股东的国家毫不在乎，但对上市公司的小股东并不公平，因为这样做等于要他们和政府一样津贴消费者，这是投资者不必亦不应承担的义务与责任。
国家统计局昨天公布今年一月份的消费物价指数较去年同期升百分之七点一（十二月为百分之六点五），为一九九七年以来新高；内地专家把之归因于突如其来的雪雨令「大面积农地减产」有以致之，这应是事实，但只是部分事实，雪雨对一月的打击只有数天，且其影响不会那么快便全面反映在价格上，二月以至三月的通胀率相信还再进一步；笔者认为内地粮食价格上涨的根本原因是国际价格升个不停，因此雪雨过后内地格价难望明显下跌。国际价格上升的理由，简单地看，是环球存粮降至三十年来新低、肥料及油价不断上升及生化能源（乙醇）消耗大量（今年美国用于提炼乙醇的玉米约三千万吨）玉米；玉米有价农夫纷纷加种，结果是其它农产品产量减少价格上升……。
政府津贴、补助，不但并非治本之计，而且是政府的重大财政负担，中国政府为此付出多少代价，大概是国家机密，不提也罢；唯人口四千万的阿根廷，为了管制电力价格，在二○○三至○七年一共由财政部直接拨款四十亿美元；阿根廷的电费比邻国巴西和智利低约百分之八十，但由于电力公司无利可图（津贴仅堪支付不断上升的发电原材料石油和煤价），不思扩充及改善发电设备，其停电时间则比邻国频仍。
中国管制物价，希望只是短期措施，不然后果很严重！
China Mobile posts record monthly user gain
Feb 20, 2008
HONG KONG, Feb 20 (Reuters) - China Mobile Ltd signed up a record number of users in a single month in January, as the world's top cellular carrier built on its dominance in the world's largest wireless market.
But its shares slid 2.3 percent on Wednesday as investors -- who had piled into telecoms operators such as China Telecom close to deciding on a long-awaited reshuffle of the industry -- cashed in their gains amid a broad market sell-off.
China Mobile, which has steadily devoured market share from its sole, smaller rival, China Unicom, for years, signed up 7.044 million subscribers last month, outpacing Unicom's relatively paltry 1 million-plus.
JP Morgan said on Wednesday that China Mobile could potentially exceed the U.S. investment bank's own prediction of about 6 million in average monthly subscriber additions for the firm in 2008, given a sterling January performance.
China Mobile now serves 376.38 million users -- more than the population of the United States.
"The strongest-ever monthly growth, suggesting its enlarging monopoly in China's mobile telecom market," DBS Vickers wrote in a research note on Wednesday.
"Such an impressive figure was mainly attributed to continual fixed-to-mobile migration and was also partly a seasonal effect from the Lunar New Year festival."
Unicom stock slid 3.6 percent, while fixed-line carrier China Telecom fell 3.6 percent.
Unicom's aggregate, post-paid GSM cellular service subscriptions level increased to 121.69 million in January, versus 120.56 million in December. Aggregated CDMA cellular service subscriptions rose to 42.23 million from 41.93 million in December.
麥 嘉 華： 美 股 快 現 出 貨 良 機
2008-2-18
我 在 過 去 數 月 不 斷 提 出 ， 美 國 經 濟 其 實 早 已 陷 入 衰 退 ， 只 不 過 是 華 府 一 派 胡 言 ， 兼 且 扭 曲 經 濟 數 據 作 掩 飾 罷 了 。 而 且 在 今 次 衰 退 中 ， 經 濟 將 會 較 2001 年 那 一 次 跌 得 更 重 。
回 想 當 年 ， 許 多 家 庭 尚 能 夠 透 過 借 貸 ， 去 維 持 衰 退 前 的 生 活 質 素 ； 在 消 費 力 的 支 撐 下 ， 衰 退 歷 時 短 短 不 足 一 年 。 如 今 情 況 有 別 ， 信 貸 條 件 收 緊 的 同 時 ， 不 少 家 庭 早 就 負 債 纍 纍 ， 根 本 再 難 依 靠 借 貸 去 支 持 額 外 的 消 費 。
更 甚 的 是 ， 面 對 房 屋 和 股 票 價 格 下 跌 ， 許 多 家 庭 的 資 產 蒸 發 了 一 大 截 。 我 相 信 美 國 人 將 開 始 明 白 到 要 積 穀 防 飢 ， 到 頭 來 消 費 市 道 以 至 國 內 生 產 總 值 （ GDP ） 都 難 免 會 下 跌 。
家 庭 開 支 和 住 宅 建 築 開 支 佔 GDP 比 率 於 1982 年 降 至 64% ， 自 此 見 底 反 彈 ， 於 1987 至 2000 年 之 間 徘 徊 在 72% 左 右 ； 其 後 更 一 度 升 上 78% ， 明 顯 高 於 長 期 趨 勢 水 平 。 這 個 「 繁 華 假 象 」 其 實 全 賴 舉 債 來 支 撐 ， 最 後 導 致 美 國 經 常 賬 赤 字 擴 大 ， 以 及 國 際 現 金 流 過 剩 。
中 印 市 場 將 受 衝 擊
然 而 ， 目 前 美 國 經 常 賬 赤 字 收 窄 ， 國 際 儲 備 的 增 長 速 度 亦 見 減 慢 ， 而 國 際 現 金 流 為 此 而 相 對 變 得 較 緊 張 。 這 種 局 面 不 利 資 本 市 場 ， 但 會 惠 及 美 元 。 我 要 特 別 重 申 一 點 ，中 國 和 印 度 等 新 興 市 場 以 及 石 油 等 商 品 ， 在 這 樣 的 環 境 下 尤 其 易 受 到 衝 擊 。
我 必 須 指 出 ， 波 羅 的 海 貨 指 數 (BDI) 與 中 國 內 地 股 市 走 勢 息 息 相 關 。 事 實 上 ， 商 品 價 格 、 新 興 股 市 和 波 羅 的 海 貨 指 數 很 多 時 候 是 共 同 進 退 。 波 羅 的 海 貨 指 數 最 近 曾 下 挫 四 成 ， 這 一 點 絕 不 容 忽 視 。
熊 市 往 往 在 強 勢 行 業 調 換 位 置 時 出 現 。 在 2005 年 6 月 ， 建 築 業 率 先 走 下 坡 ， 次 按 貸 款 機 構 在 06 年 7 月 步 其 後 塵 。 到 去 年 ， 金 融 股 也 開 始 衰 落 。
動 力 股 少 沾 手 為 妙
與 此 同 時 ， 新 興 市 場 股 票 、 商 品 股 ， 以 及 蘋 果 （ Apple ） 、Google 和 Research in Motion 等 動 力 股 持 續 堅 挺 。 我 個 人 認 為 ， 這 幾 類 股 票 如 今 最 不 穩 陣 ， 大 家 應 少 沾 手 為 妙 。
一 些 市 場 觀 察 家 最 近 指 出 ， 熊 市 情 緒 正 在 蔓 延 ， 奉 行 「 相 反 理 論 」的 擁 躉 視 之 為 利 好 股 市 的 訊 號 。 實 際 情 況 未 必 如 此 ， 根 據 Investment News 的 調 查， 當 股 市 在 1 月 滑 落 時 ， 65.1% 投 資 顧 問 仍 建 議 客 戶 以 不 變 應 萬 變 ， 而 只 有 16.9% 顧 問 認 為 要 減 持 。
投 資 者 如 今 感 到 悲 觀 ， 因 為 他 們 未 能 及 早 沽 出 股 票 套 現 離 場 ， 部 份 人 就 是 誤 信 了 一 些 過 份 樂 觀 的 預 測 ， 而 蒙 受 很 大 損 失 。
若 果 我 們 真 的 處 於 長 期 熊 市 ， 一 眾 投 資 顧 問 和 客 戶 再 不 能 坐 以 待 斃 ， 即 是 要 下 定 決 心 出 貨 。
先 前 我 一 直 看 淡 美 股 ， 但 是 我 認 為 美 股 在 未 來 數 月 會 跑 贏 外 圍 市 場 ， 因 為 其 他 地 方 的 股 市 需 要 作 出 較 大 的 調 整 。
在 1 月 底 的 時 候 ， 股 市 明 顯 地 超 賣 ， 所 以 美 股 標 準 普 爾 500 指 數 料 有 力 反 彈 至 1450 點 ， 到 時 將 會 是 減 持 股 票 的 大 好 良 機 。 港 股 方 面 ， 生 指 數 若 回 升 見 28000 點 ， 就 是 天 賜 的 出 貨 機 會 。
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