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Friday, 5 December 2008
China Shuts Down over 300 Phishing Websites
Spike in such sites seen since late Sep, as financial crisis has been rapidly growing, many criminals took the chance to illegally attack above-mentioned websites by using phishing ones.
Spike in such sites seen since late Sep, as financial crisis has been rapidly growing, many criminals took the chance to illegally attack above-mentioned websites by using phishing ones.
China Daily, ANN 4 December 2008
The mechanism for fast processing of anti-phishing, which is based on .CN domain name management system, had stopped domain name analysis of over 300 phishing websites by Oct 30 2008, said Anti-phishing Alliance of China (APAC).
The APAC, initiated by CNNIC, was established on July 18, 2008 in order to tackle phishing activities using .CN domain names and to protect online safety.
It takes the lead in striking the phishing websites in the field of e-commerce and online financial businesses, industry insiders said.
The international community is working on this anti-phishing issue as phishing websites have seriously jeopardized Internet security and prohibit the development of e-commerce & online financial businesses.
Enterprises such as Industrial & Commercial Bank of China, Agricultural Bank of China, Tencent.com, Taobao.com, Baidu.com and Google.com are now all members of the alliance.
Moreover, there are more and more newcomers from industries such as online financial business, securities, e-commerce and online-gaming, bring the alliance’s members to 42.
CNNIC was authorized to accept reporting about phishing sites, to organize a phishing site identification, and to stop its DNS resolution once a phishing-site using CN domain name is identified.
Sun Hanhui, lawyer of CNNIC and director of secretariat of the alliance, said that recent complaining cases, which were accepted by the alliance, mainly come from some domestic well-known e-commerce websites and commercial banks such as Tencent.com, Taobao.com, Baidu.com, Google.com and Industrial & Commercial Bank of China.
Especially since late Sep, as financial crisis has been rapidly growing, many criminals took the chance to illegally attack above-mentioned websites by using phishing ones.
“Phishing websites design webpage style, LOGO and pictures as exactly the same as the real Taobao.com to cheat users to get their account information.”
Ni Liang, Manager of Network Security Department of Taobao.com, said “In the past, we spent several or even more days to handle phishing websites but there were still users who would be cheated by them.
“The mechanism for fast processing established by the alliance can instantly stop the domain name analysis service as long as phishing websites are spotted. Therefore, fraud behaviors are stopped as soon as possible which can maximally decrease users’ losses.”
Taobao.com suffered ‘harassment’ of dozens of phishing websites such as tioban.cn and taoboai.cn within several months. Such cases were effectively solved within two hours by complaining to the alliance.
According to the cognizance and processing process of the alliance, authoritative technological appraisal organizations will instantly make judgments after receiving members’ complaining cases. Once the fact is recognized, domain name registry will stop the domain name analysis service of the phishing websites within two hours and stop the fraud behavior.
The biggest advantage of Internet is to make business transaction easier and faster, to lower the cost of transaction. Therefore, business opportunities will be increased. With the occurrence of phishing websites and online fraud traps, however, people dare not rely on Internet any longer.
Those commercial banks suffered by phishing websites maintained that frequent appearance of phishing websites seriously jeopardize the development of online financial service and e-commerce.
The alliance makes rapid solution of phishing websites under .CN domain name, which helps enhance the ‘security index’ of .CN domain name websites and effectively protect the interests of .CN owners to improve China’s Internet information security level and construct reliable network.
At present, the total amount of .CN domain name had reached to 12.91 million units, becoming the mainstream domain name worldwide.
Global all-industry index stages 11-year record fall
LONDON, Dec 3 (Reuters) - A key global services and manufacturing activity index staged a record fall in November with the chances of the international economy remaining in deep recession into 2009 increasing, JP Morgan said on Wednesday.
The Global All-Industry Index, which aggregates purchasing managers' indexes across manufacturing and services around the world staged in November its biggest one-month fall in the 11-year survey history to 35.4, a record low, from 43.1.
The Services Business Activity Index, also produced by JP Morgan with research and supply management organisations, plummeted to 36.1 in November from 44.2 as all national PMI indices reported lower output.
The 50.0 mark divides growth and contraction.
"The extent of the downturn of the global economy so far in Q4 2008 is unprecedented in the 11-year history of the PMI surveys," said David Hensley a director at JP Morgan, adding it pointed to a 2 percent quarterly drop in GDP, seasonally adjusted annual rate. Dire data released earlier in the United States showed the services sector there, which represents about 80 percent of U.S. economic activity, slumped to a record low in November well below expectations.
The euro zone saw activity in its dominant service sector fall deeper into recession than initially thought, to the lowest in the survey's 10-year history, and while activity in the UK shrank at its fastest pace since the series began in 1996. The outlook for the global index was grim with new orders recording its lowest level in the survey history while staffing levels declined at a record rate.
"Indicators of demand and employment also sank to record lows, raising the chances of the global economy remaining in a deep recession through at least early 2009," Hensley said in a release.
Figures released on Monday showed global manufacturing activity contracted for the sixth consecutive month in November, falling to a record low.
However a fall in input price pressures will provide some relief to central banks which have been holding back from cutting interest rates to try and boost national economies as they face inflation significantly above targets.
Collapse in dry bulk shipping rates unprecedented in its severity
By Robert Wright December 01, 2008
The recent months' collapse in dry bulk shipping rates has been unprecedented in its severity, the head of the body that organises the key shipping market said yesterday, as a key market index hit its lowest level since January 1987.
Jeremy Penn, chief executive of the Baltic Exchange, said that the Baltic Dry Index was now close to its all-time low in 1986 and conditions were now more extreme.
However, he condemned companies who were trying to escape old contracts struck at the previous higher rates.
The index - which measures average rates in the short-term spot market to charter ships to carry iron ore, coal and other bulk commodities -reached 763 points on Sunday, 93.5 per cent down from the all-time record high of 11,793 points hit on May 20. Rates for the largest ships, known as Capesizes, are down 98.8 per cent from the record $233,988 per day set on June 5 to $2,773 on Sunday.
The collapse, resulting from the financial crisis, and a dispute between Chinese steel mills and Brazilian ore producers and slowing economic demand, has had widespread secondary effects, including bankruptcies among shipowners.
"The violence of the movement, the violence of the correction are unprecedented, particularly in the Capesize market," Penn said. "The sudden and extreme lack of demand for freight has left everybody stunned, I suppose is the best word to use."
The Baltic Exchange hosted an emergency summit last week, attended by 450 people, to address the problems created by the market collapse. The conference criticised some companies' refusal to honour long-term contracts struck at the old, higher level.
Penn said he had no proof of claims that some charterers, in order to escape contractual obligations, were claiming demand for their products had disappeared then chartering ships at the market's new, much lower, levels.
"I would certainly disapprove of anyone who failed to meet their obligations unless they were in dire financial straits," he said.
However, he confirmed the market was considering complaints about some companies that could lead to exchange members being warned about the dangers of dealing with them. He particularly criticised market participants who defaulted, knowing their countries' laws would make them hard to pursue. Many involved in the market believe some Korean and Chinese companies have been the most serious offenders.
"What we regard as unacceptable is simply reneging on contracts and relying on inaccessibility in terms of jurisdiction and geography to protect you," he said.
Global economic winter to last until 2011 the earliest, says Morgan Stanley
By Keith Wallis 6 November 2008
Dalian - THE GLOBAL economy may not start to recover from the financial tsunami for at least another two years a regional head of major investment house, Morgan Stanley, has warned.
Speaking at the World Shipping (China) summit on Thursday, Stephen Roach, Morgan Stanley Asia chairman, said that even if economic conditions start to improve in 2010 or 2011, “it is not going to be a strong recovery” but would instead be weak and fragile.
Consequently, the world was unlikely to return to the rate of economic activity seen last year until 2013 at the earliest. “I don’t see us getting back to the same levels seen in 2007 for at least five years.” Mr Roach added.
His grim forecasts have an obvious impact on international bulk and container shipping markets.
He warned that China’s economic growth, which fell to 9.9% in the first nine months of this year compared with 11.9% in 2007, is expected to fall further as the impact of recession in Europe and Japan took its toll. China’s economy has already been battered by the downturn in the US.
Mr Roach set the expected drop in exports to Europe and Japan would cause China’s GDP growth to fall to between 7% and 8% next year which is “slower than most senior officials in China would like”.
Commenting on the global economic outlook in 2009, Mr Roach added: “It’s going to be tough; most likely it is going to be very tough.”
He believed the Chinese economy would suffer because it was heavily dependent on export performance and not by domestic consumption.
Mr Roach said that while governments around the world had taken steps to stablise the financial markets and there were “tentative signs the medicine was slowly beginning to work”, the “American consumer is toast – finished”.
He said the 14-year US consumer boom generated average consumption growth of 4% a year which, rather than supported by employment or income growth, was credit or debt financed. The resulting “multi-year adjustment will slow the US economy over the next several years by a significant margin”.
Mr Roach thought the US would be lucky to achieve economic growth of 1.5% over the next three years.
As a result he believed it was important for Barack Obama, the US president-elect, to turn the political rhetoric of the US presidential campaign into positive action to revive the flagging US economy and America’s standing in the world as soon as possible.
As part of this, Mr Roach thought Mr Obama needed to reaffirm an US commitment to globalisation. “He needs to stand up as a defender of free trade and its strategic relationship with China and other allies and partners,” Mr Roach said.
SembCorp Marine and Posco 'set to ride out crisis'
Keith Wallis 1 December 2008
Hong Kong - SINGAPORE rig builder SembCorp Marine and South Korean steel giant Posco are among the top 28 Asian “survivor and thriver” stock picks chosen by investment bank BNP Paribas, despite the slump in ship and rig building.
The firms, along with Taiwan’s China Steel, China Shenhua Energy and Hong Kong’s Swire Pacific, which owns Swire Pacific Offshore and Cathay Pacific Airways, are included in a list of companies that will best ride out the global financial turmoil, the bank said today.
BNP Paribas Securities (Asia) managing director Jonathan Harris said the listing had been compiled to give institutional investors guidance on what companies are likely to survive and grow.
“Clients are tired of hearing about downgrades, they need to be invested somewhere,” he said.
Pointing to SembCorp Marine, the bank said total orders stand at more than S$9bn ($5.9bn) and stretch into 2012 while the “ship repair business is highly cash generative, leading to balance sheet strength”.
“Even if offshore exploration were to taper off (unlikely) production demand should rise following the recent increase in oil discoveries. In the last 60 days there are least 50 cases of oil fields being found globally,” the bank said in a research report accompanying its stock picks.
The bank said Posco was in a “strong position to weather the storm” due to its dominance in the market and competitive advantages in its pricing and costs.
“Even in the past down cycles, it did not see more than 8% decline in sales,” the bank said.
Mr Harris agreed that both companies were susceptible to the poor economic conditions, with a downturn in shipbuilding, construction and vehicle production affecting Posco and cancelled orders affecting SembCorp Marine.
He said extensive research was done on both companies and the bank excluded a slice of SembCorp Marine’s current orders, but even taking into that account both companies looked set to survive and thrive in the current downturn.
Mr Harris declined to gave a time scale of when potential investors should consider investing but pointed out the all 28 stocks were long-term plays.
BNP Paribas Securities (Asia) product manager John Hetherington said that using the examples of previous downturns including the 1997 Asian finance crisis, the dotcom bubble and health scares both companies have grabbed market share on the way back up.
On the wider economic front, Mr Harris said thought the end of the liquidity crisis that had paralysed the banking system with banks refusing to lend to each other could be seen.
“We are closer to the end than the beginning,” he said.
Europe’s Central Banks Lower Rates to Fight Recession
By Ben Sills
Dec. 4 (Bloomberg) -- Europe’s central banks cut interest rates as policy makers stepped up their response to the credit crisis that has pushed the region into a recession.
The European Central Bank delivered a 75 basis-point reduction in its main refinancing rate, the most in its 10-year history, while the Bank of England cut its benchmark rate to 2 percent, the lowest level since 1951. The Swedish and Danish central banks also lowered their key rates.
Central banks are battling to contain the economic damage as the 17-month credit drought weighs on companies and consumers around the world. The biggest advanced economies are already set for their first simultaneous recession since the Second World War, the International Monetary Fund forecasts.
“Policy makers are moving toward historically low levels of interest rates and they probably won’t stop there,” said Paul Dales, an economist at Capital Economics Ltd. in London. “We are going to see all central banks bring rates down as close to zero as they can get.”
Bank of England Governor Mervyn King discussed the possibility of lowering the U.K. rate to zero for the first time on Nov. 25 and said the biggest challenge he faces is renewing the flow of credit in the economy.
The U.K. economy may contract by 1.1 percent next year, the most since 1991, the Organization for Economic Cooperation and Development said Nov. 25. Gross domestic product fell by 0.5 percent in the third quarter, the first drop in 16 years.
Global Pattern
Today’s moves in Europe are part of a global pattern. The U.S. Federal Reserve cut its key rate to 1 percent last month. New Zealand’s central bank cut its rate by a record 1.5 percentage points to 5 percent, and Bank Indonesia reduced its rate to 9.25 percent from 9.5 percent.
The Polish zloty dropped to a five-week low against the euro today, falling more than any other currency worldwide, after central-bank Governor Slawomir Skrzypek said policy makers may lower his country’s rates this month.
The ECB’s decision to accelerate the pace of rate cuts signals the governing council may be prepared to breach the 2 percent level it last reached in 2005, said Erik Nielsen, chief European economist at Goldman Sachs Inc. in London. The ECB lowered borrowing costs by 50 basis points in October and November.
“This probably undermines this idea that they have given us that 2 percent would be a longer-run floor,” Nielsen said in a Bloomberg Television interview. “By early next year, they might go through 2 percent.”
First Recession
Europe’s economy fell into its first recession in 15 years in the third quarter after the U.S. subprime mortgage crisis led to bankruptcies on Wall Street and pushed up lending costs worldwide, eroding the confidence of investors and consumers.
With oil prices collapsing, the euro-area inflation rate fell the most in almost 20 years, to 2.1 percent from 3.2 percent, giving policy makers more room to act on interest rates.
A bolder move from the ECB was “sorely needed,” said Holger Schmieding, chief European economist at Bank of America in London. The global economic downturn has caused an “unprecedented collapse in sentiment,” he added
Sweden’s Riksbank lowered its key rate by 1.75 percentage points, the biggest reduction in 16 years. The Danish central bank matched the ECB, cutting by 75 basis points.
Winston Churchill
The U.K. interest rate now matches the lowest in the central bank’s history. It was last at 2 percent when Winston Churchill’s victory in a general election made him prime minister for the second time.
“If this goes wrong we are just going to go sideways for the next decade,” Graeme Leach, chief economist at the Institute of Directors in London, said in a television interview.
Once interest rates reach zero, central bankers have to resort to other measures to stimulate the economy. Such steps may include expanding money supply and using it to finance government deficits or buying securities such as bonds or stocks, former policy maker Willem Buiter said this week.
Dec. 4 (Bloomberg) -- Citadel Investment Group LLC, the Chicago-based hedge-fund firm run by Kenneth Griffin, lost 13 percent in November, bringing the decline for the year to 47 percent, according to two people familiar with the matter.
Losses at the Citadel’s two biggest funds came from investments in convertible bonds, high-yield bonds and bank loans, and investment-grade bonds, which were hedged with credit default swaps that protect the buyer in the event of a default. These same wagers started the funds’ tumble in mid-September.
“Digging out of this hole may be tough for them,” given the lack of trading in the credit markets, said Michael Rosen, principal at Santa Monica, California-based Angeles Investment Advisors LLC, which advises clients on hedge-fund investments.
The Kensington and Wellington funds, which together manage $10 billion in assets, have received requests from investors who want to withdraw about $1 billion by the end of the year, said the people, who asked not to be identified because the information is private.
Griffin, 40, had posted just one losing year since starting the firm in 1990, dropping 4 percent in 1994. Katie Spring, a spokeswoman for Citadel, declined to comment on the returns, which were reported earlier today by the Wall Street Journal on its Web site.
The hedge-fund industry has posted its worst performance on record this year, with average losses of about 22 percent this year through November, according to data compiled by Chicago- based Hedge Fund Research Inc.
The Citadel funds have made money in stocks and on so-called macro trades -- wagers on stock indexes, bonds, commodities and currencies based on macroeconomic trends.
Three other Citadel funds, whose returns are tied to the firm’s market-making business, have climbed about 40 percent this year. Those funds manage about $3 billion.
Even with Citadel’s drop in assets, the firm has not breached the terms of its contracts with lenders, one of the people said.
7 comments:
China Shuts Down over 300 Phishing Websites
Spike in such sites seen since late Sep, as financial crisis has been rapidly growing, many criminals took the chance to illegally attack above-mentioned websites by using phishing ones.
China Daily, ANN
4 December 2008
The mechanism for fast processing of anti-phishing, which is based on .CN domain name management system, had stopped domain name analysis of over 300 phishing websites by Oct 30 2008, said Anti-phishing Alliance of China (APAC).
The APAC, initiated by CNNIC, was established on July 18, 2008 in order to tackle phishing activities using .CN domain names and to protect online safety.
It takes the lead in striking the phishing websites in the field of e-commerce and online financial businesses, industry insiders said.
The international community is working on this anti-phishing issue as phishing websites have seriously jeopardized Internet security and prohibit the development of e-commerce & online financial businesses.
Enterprises such as Industrial & Commercial Bank of China, Agricultural Bank of China, Tencent.com, Taobao.com, Baidu.com and Google.com are now all members of the alliance.
Moreover, there are more and more newcomers from industries such as online financial business, securities, e-commerce and online-gaming, bring the alliance’s members to 42.
CNNIC was authorized to accept reporting about phishing sites, to organize a phishing site identification, and to stop its DNS resolution once a phishing-site using CN domain name is identified.
Sun Hanhui, lawyer of CNNIC and director of secretariat of the alliance, said that recent complaining cases, which were accepted by the alliance, mainly come from some domestic well-known e-commerce websites and commercial banks such as Tencent.com, Taobao.com, Baidu.com, Google.com and Industrial & Commercial Bank of China.
Especially since late Sep, as financial crisis has been rapidly growing, many criminals took the chance to illegally attack above-mentioned websites by using phishing ones.
“Phishing websites design webpage style, LOGO and pictures as exactly the same as the real Taobao.com to cheat users to get their account information.”
Ni Liang, Manager of Network Security Department of Taobao.com, said “In the past, we spent several or even more days to handle phishing websites but there were still users who would be cheated by them.
“The mechanism for fast processing established by the alliance can instantly stop the domain name analysis service as long as phishing websites are spotted. Therefore, fraud behaviors are stopped as soon as possible which can maximally decrease users’ losses.”
Taobao.com suffered ‘harassment’ of dozens of phishing websites such as tioban.cn and taoboai.cn within several months. Such cases were effectively solved within two hours by complaining to the alliance.
According to the cognizance and processing process of the alliance, authoritative technological appraisal organizations will instantly make judgments after receiving members’ complaining cases. Once the fact is recognized, domain name registry will stop the domain name analysis service of the phishing websites within two hours and stop the fraud behavior.
The biggest advantage of Internet is to make business transaction easier and faster, to lower the cost of transaction. Therefore, business opportunities will be increased. With the occurrence of phishing websites and online fraud traps, however, people dare not rely on Internet any longer.
Those commercial banks suffered by phishing websites maintained that frequent appearance of phishing websites seriously jeopardize the development of online financial service and e-commerce.
The alliance makes rapid solution of phishing websites under .CN domain name, which helps enhance the ‘security index’ of .CN domain name websites and effectively protect the interests of .CN owners to improve China’s Internet information security level and construct reliable network.
At present, the total amount of .CN domain name had reached to 12.91 million units, becoming the mainstream domain name worldwide.
Global all-industry index stages 11-year record fall
LONDON, Dec 3 (Reuters) - A key global services and manufacturing activity index staged a record fall in November with the chances of the international economy remaining in deep recession into 2009 increasing, JP Morgan said on Wednesday.
The Global All-Industry Index, which aggregates purchasing managers' indexes across manufacturing and services around the world staged in November its biggest one-month fall in the 11-year survey history to 35.4, a record low, from 43.1.
The Services Business Activity Index, also produced by JP Morgan with research and supply management organisations, plummeted to 36.1 in November from 44.2 as all national PMI indices reported lower output.
The 50.0 mark divides growth and contraction.
"The extent of the downturn of the global economy so far in Q4 2008 is unprecedented in the 11-year history of the PMI surveys," said David Hensley a director at JP Morgan, adding it pointed to a 2 percent quarterly drop in GDP, seasonally adjusted annual rate. Dire data released earlier in the United States showed the services sector there, which represents about 80 percent of U.S. economic activity, slumped to a record low in November well below expectations.
The euro zone saw activity in its dominant service sector fall deeper into recession than initially thought, to the lowest in the survey's 10-year history, and while activity in the UK shrank at its fastest pace since the series began in 1996. The outlook for the global index was grim with new orders recording its lowest level in the survey history while staffing levels declined at a record rate.
"Indicators of demand and employment also sank to record lows, raising the chances of the global economy remaining in a deep recession through at least early 2009," Hensley said in a release.
Figures released on Monday showed global manufacturing activity contracted for the sixth consecutive month in November, falling to a record low.
However a fall in input price pressures will provide some relief to central banks which have been holding back from cutting interest rates to try and boost national economies as they face inflation significantly above targets.
Collapse in dry bulk shipping rates unprecedented in its severity
By Robert Wright
December 01, 2008
The recent months' collapse in dry bulk shipping rates has been unprecedented in its severity, the head of the body that organises the key shipping market said yesterday, as a key market index hit its lowest level since January 1987.
Jeremy Penn, chief executive of the Baltic Exchange, said that the Baltic Dry Index was now close to its all-time low in 1986 and conditions were now more extreme.
However, he condemned companies who were trying to escape old contracts struck at the previous higher rates.
The index - which measures average rates in the short-term spot market to charter ships to carry iron ore, coal and other bulk commodities -reached 763 points on Sunday, 93.5 per cent down from the all-time record high of 11,793 points hit on May 20. Rates for the largest ships, known as Capesizes, are down 98.8 per cent from the record $233,988 per day set on June 5 to $2,773 on Sunday.
The collapse, resulting from the financial crisis, and a dispute between Chinese steel mills and Brazilian ore producers and slowing economic demand, has had widespread secondary effects, including bankruptcies among shipowners.
"The violence of the movement, the violence of the correction are unprecedented, particularly in the Capesize market," Penn said. "The sudden and extreme lack of demand for freight has left everybody stunned, I suppose is the best word to use."
The Baltic Exchange hosted an emergency summit last week, attended by 450 people, to address the problems created by the market collapse. The conference criticised some companies' refusal to honour long-term contracts struck at the old, higher level.
Penn said he had no proof of claims that some charterers, in order to escape contractual obligations, were claiming demand for their products had disappeared then chartering ships at the market's new, much lower, levels.
"I would certainly disapprove of anyone who failed to meet their obligations unless they were in dire financial straits," he said.
However, he confirmed the market was considering complaints about some companies that could lead to exchange members being warned about the dangers of dealing with them. He particularly criticised market participants who defaulted, knowing their countries' laws would make them hard to pursue. Many involved in the market believe some Korean and Chinese companies have been the most serious offenders.
"What we regard as unacceptable is simply reneging on contracts and relying on inaccessibility in terms of jurisdiction and geography to protect you," he said.
Global economic winter to last until 2011 the earliest, says Morgan Stanley
By Keith Wallis
6 November 2008
Dalian - THE GLOBAL economy may not start to recover from the financial tsunami for at least another two years a regional head of major investment house, Morgan Stanley, has warned.
Speaking at the World Shipping (China) summit on Thursday, Stephen Roach, Morgan Stanley Asia chairman, said that even if economic conditions start to improve in 2010 or 2011, “it is not going to be a strong recovery” but would instead be weak and fragile.
Consequently, the world was unlikely to return to the rate of economic activity seen last year until 2013 at the earliest. “I don’t see us getting back to the same levels seen in 2007 for at least five years.” Mr Roach added.
His grim forecasts have an obvious impact on international bulk and container shipping markets.
He warned that China’s economic growth, which fell to 9.9% in the first nine months of this year compared with 11.9% in 2007, is expected to fall further as the impact of recession in Europe and Japan took its toll. China’s economy has already been battered by the downturn in the US.
Mr Roach set the expected drop in exports to Europe and Japan would cause China’s GDP growth to fall to between 7% and 8% next year which is “slower than most senior officials in China would like”.
Commenting on the global economic outlook in 2009, Mr Roach added: “It’s going to be tough; most likely it is going to be very tough.”
He believed the Chinese economy would suffer because it was heavily dependent on export performance and not by domestic consumption.
Mr Roach said that while governments around the world had taken steps to stablise the financial markets and there were “tentative signs the medicine was slowly beginning to work”, the “American consumer is toast – finished”.
He said the 14-year US consumer boom generated average consumption growth of 4% a year which, rather than supported by employment or income growth, was credit or debt financed. The resulting “multi-year adjustment will slow the US economy over the next several years by a significant margin”.
Mr Roach thought the US would be lucky to achieve economic growth of 1.5% over the next three years.
As a result he believed it was important for Barack Obama, the US president-elect, to turn the political rhetoric of the US presidential campaign into positive action to revive the flagging US economy and America’s standing in the world as soon as possible.
As part of this, Mr Roach thought Mr Obama needed to reaffirm an US commitment to globalisation. “He needs to stand up as a defender of free trade and its strategic relationship with China and other allies and partners,” Mr Roach said.
SembCorp Marine and Posco 'set to ride out crisis'
Keith Wallis
1 December 2008
Hong Kong - SINGAPORE rig builder SembCorp Marine and South Korean steel giant Posco are among the top 28 Asian “survivor and thriver” stock picks chosen by investment bank BNP Paribas, despite the slump in ship and rig building.
The firms, along with Taiwan’s China Steel, China Shenhua Energy and Hong Kong’s Swire Pacific, which owns Swire Pacific Offshore and Cathay Pacific Airways, are included in a list of companies that will best ride out the global financial turmoil, the bank said today.
BNP Paribas Securities (Asia) managing director Jonathan Harris said the listing had been compiled to give institutional investors guidance on what companies are likely to survive and grow.
“Clients are tired of hearing about downgrades, they need to be invested somewhere,” he said.
Pointing to SembCorp Marine, the bank said total orders stand at more than S$9bn ($5.9bn) and stretch into 2012 while the “ship repair business is highly cash generative, leading to balance sheet strength”.
“Even if offshore exploration were to taper off (unlikely) production demand should rise following the recent increase in oil discoveries. In the last 60 days there are least 50 cases of oil fields being found globally,” the bank said in a research report accompanying its stock picks.
The bank said Posco was in a “strong position to weather the storm” due to its dominance in the market and competitive advantages in its pricing and costs.
“Even in the past down cycles, it did not see more than 8% decline in sales,” the bank said.
Mr Harris agreed that both companies were susceptible to the poor economic conditions, with a downturn in shipbuilding, construction and vehicle production affecting Posco and cancelled orders affecting SembCorp Marine.
He said extensive research was done on both companies and the bank excluded a slice of SembCorp Marine’s current orders, but even taking into that account both companies looked set to survive and thrive in the current downturn.
Mr Harris declined to gave a time scale of when potential investors should consider investing but pointed out the all 28 stocks were long-term plays.
BNP Paribas Securities (Asia) product manager John Hetherington said that using the examples of previous downturns including the 1997 Asian finance crisis, the dotcom bubble and health scares both companies have grabbed market share on the way back up.
On the wider economic front, Mr Harris said thought the end of the liquidity crisis that had paralysed the banking system with banks refusing to lend to each other could be seen.
“We are closer to the end than the beginning,” he said.
Europe’s Central Banks Lower Rates to Fight Recession
By Ben Sills
Dec. 4 (Bloomberg) -- Europe’s central banks cut interest rates as policy makers stepped up their response to the credit crisis that has pushed the region into a recession.
The European Central Bank delivered a 75 basis-point reduction in its main refinancing rate, the most in its 10-year history, while the Bank of England cut its benchmark rate to 2 percent, the lowest level since 1951. The Swedish and Danish central banks also lowered their key rates.
Central banks are battling to contain the economic damage as the 17-month credit drought weighs on companies and consumers around the world. The biggest advanced economies are already set for their first simultaneous recession since the Second World War, the International Monetary Fund forecasts.
“Policy makers are moving toward historically low levels of interest rates and they probably won’t stop there,” said Paul Dales, an economist at Capital Economics Ltd. in London. “We are going to see all central banks bring rates down as close to zero as they can get.”
Bank of England Governor Mervyn King discussed the possibility of lowering the U.K. rate to zero for the first time on Nov. 25 and said the biggest challenge he faces is renewing the flow of credit in the economy.
The U.K. economy may contract by 1.1 percent next year, the most since 1991, the Organization for Economic Cooperation and Development said Nov. 25. Gross domestic product fell by 0.5 percent in the third quarter, the first drop in 16 years.
Global Pattern
Today’s moves in Europe are part of a global pattern. The U.S. Federal Reserve cut its key rate to 1 percent last month. New Zealand’s central bank cut its rate by a record 1.5 percentage points to 5 percent, and Bank Indonesia reduced its rate to 9.25 percent from 9.5 percent.
The Polish zloty dropped to a five-week low against the euro today, falling more than any other currency worldwide, after central-bank Governor Slawomir Skrzypek said policy makers may lower his country’s rates this month.
The ECB’s decision to accelerate the pace of rate cuts signals the governing council may be prepared to breach the 2 percent level it last reached in 2005, said Erik Nielsen, chief European economist at Goldman Sachs Inc. in London. The ECB lowered borrowing costs by 50 basis points in October and November.
“This probably undermines this idea that they have given us that 2 percent would be a longer-run floor,” Nielsen said in a Bloomberg Television interview. “By early next year, they might go through 2 percent.”
First Recession
Europe’s economy fell into its first recession in 15 years in the third quarter after the U.S. subprime mortgage crisis led to bankruptcies on Wall Street and pushed up lending costs worldwide, eroding the confidence of investors and consumers.
With oil prices collapsing, the euro-area inflation rate fell the most in almost 20 years, to 2.1 percent from 3.2 percent, giving policy makers more room to act on interest rates.
A bolder move from the ECB was “sorely needed,” said Holger Schmieding, chief European economist at Bank of America in London. The global economic downturn has caused an “unprecedented collapse in sentiment,” he added
Sweden’s Riksbank lowered its key rate by 1.75 percentage points, the biggest reduction in 16 years. The Danish central bank matched the ECB, cutting by 75 basis points.
Winston Churchill
The U.K. interest rate now matches the lowest in the central bank’s history. It was last at 2 percent when Winston Churchill’s victory in a general election made him prime minister for the second time.
“If this goes wrong we are just going to go sideways for the next decade,” Graeme Leach, chief economist at the Institute of Directors in London, said in a television interview.
Once interest rates reach zero, central bankers have to resort to other measures to stimulate the economy. Such steps may include expanding money supply and using it to finance government deficits or buying securities such as bonds or stocks, former policy maker Willem Buiter said this week.
Citadel Funds Lose 13% in November, 47% This Year
By Saijel Kishan and Katherine Burton
Dec. 4 (Bloomberg) -- Citadel Investment Group LLC, the Chicago-based hedge-fund firm run by Kenneth Griffin, lost 13 percent in November, bringing the decline for the year to 47 percent, according to two people familiar with the matter.
Losses at the Citadel’s two biggest funds came from investments in convertible bonds, high-yield bonds and bank loans, and investment-grade bonds, which were hedged with credit default swaps that protect the buyer in the event of a default. These same wagers started the funds’ tumble in mid-September.
“Digging out of this hole may be tough for them,” given the lack of trading in the credit markets, said Michael Rosen, principal at Santa Monica, California-based Angeles Investment Advisors LLC, which advises clients on hedge-fund investments.
The Kensington and Wellington funds, which together manage $10 billion in assets, have received requests from investors who want to withdraw about $1 billion by the end of the year, said the people, who asked not to be identified because the information is private.
Griffin, 40, had posted just one losing year since starting the firm in 1990, dropping 4 percent in 1994. Katie Spring, a spokeswoman for Citadel, declined to comment on the returns, which were reported earlier today by the Wall Street Journal on its Web site.
The hedge-fund industry has posted its worst performance on record this year, with average losses of about 22 percent this year through November, according to data compiled by Chicago- based Hedge Fund Research Inc.
The Citadel funds have made money in stocks and on so-called macro trades -- wagers on stock indexes, bonds, commodities and currencies based on macroeconomic trends.
Three other Citadel funds, whose returns are tied to the firm’s market-making business, have climbed about 40 percent this year. Those funds manage about $3 billion.
Even with Citadel’s drop in assets, the firm has not breached the terms of its contracts with lenders, one of the people said.
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