To the thread: Asian business news summary -
1. Europe's shares, bonds scale new peaks on low rate hopes - Oil tumbles as hopes rise for Iraq diplomacy:
Europe's major share markets touched record peaks on Tuesday as Wall Street and global bond markets jumped on hopes that US interest rates will not have to rise soon and may eventually start to drop.
Europe's stocks took their cue from Wall Street, which was up 40 points by the close of European business, with London's FTSE 100 leaping 1.6% to a new intraday and closing high of 5709.5 surpassing its previous best of 5675.1. London's performance would probably have been better had it not been for disappointing results from one of the FTSE's heavyweight banking stocks, Barclays Plc, which slumped over 6%.
Glutted world oil markets got sold lower on Tuesday as hopes were raised that an eleventh-hour solution might be found to the Iraqi weapons crisis. April futures for bellwither Brent blend crude in London slipped to a new 46-month low of $14.37 a barrel, recovering only marginally to close at $14.43. Dealers said news from Moscow that Iraq was ready to meet UN demands on weapons inspections pushed prices lower, wiping out Tuesday's small gains.
2. Currencies stabilise amid stalemate over Indonesian plan - Asian stocks recover some losses:
Asian markets opted for caution in foreign exchange trade Tuesday amid lingering anxiety about the stalemate between Jakarta and IMF officials over Indonesia's plan to impose a currency board system. Asian currencies except the South Korean won and Taiwan dollar were slightly higher against the US dollar at the close of Asian trade.
The Sing dollar closed firmer at 1.6600 against the US dollar from 1.6790 at Monday's close, the Malaysian ringgit was up at 3.8400 from 3.9000, the Thai baht was stronger at 45.60 from 47.20 and the Philippine peso rose to 40.55 from 40.80. The Indonesian rupiah, which fell to 10,100 to the US dollar in early trade, recovered to close at 9,500 up from 9,800 on Monday, as uncertainty over the currency board debate sidelined market players. The South Korean won succumbed to its own domestic concerns, ending Asian trade at 1,690 to the dollar off its lows of around 1,720 against the dollar, but still lower from Monday's close of 1,659 amid fears it would be unable to meet short-term foreign debt repayments.
Asian stocks closed generally higher Tuesday, reversing the previous day's losses and surprising some brokers. Singapore's benchmark stock index ended 1.0% firmer but off its highs on bargain hunting and stable regional currencies. The key Straits Times Industrials index of the Stock Exchange of Singapore climbed 15.35 points to end at 1,496.90 while the broader All-Singapore index rose 10.16 points to 401.52. Bangkok was up 3.8%, Kuala Lumpur firming 3.4% and Jakarta gaining 3.2%, with Manila up 1.6%, Sydney 1.4%, and Hong Kong 1.1%. Taipei firmed 0.8%, seemingly unperturbed by the death of Central Bank governor Sheu Yuan-dong overnight in an air crash. Tokyo was largely unmoved by comments of financial officials, investors worried about the upcoming G7 meeting and further pressure on Japan to reform its economy. The Nikkei stock average on the Tokyo Stock exchange rose 15.19 points to end at 16,790.71 as a late rally in futures pushed the key index into a positive territory near the close. Stock indices weakened further in Seoul, down 1.1% on continued worries about the plight of the domestic economy. The key Hang Seng index gained 108.00 points, as market's sentiment had been pushed up by softening interbank rates as well as the recent stabilizing of the Indonesian rupiah, to close at 10,232.03, after losing 150.57 points.
3. KPC targets investment in Pakistan - Tarar seeks foreign investors :
State-owned Kuwait Petroleum Corporation said on Tuesday it was keen to invest in setting up an oil refinery and a pipeline for refined oil in Pakistan after Islamabad announced an attractive new policy last year. Hani A. Hussain, KPC managing director was referring to the oil policy announced in October that replaced a guaranteed rate of return on investments in refineries by a market-related price mechanism linked to mean petroleum prices in Singapore. Talks between the KPC and the state-run Pakistan State Oil for a joint venture to set up a 120,000-barrel per day oil refinery in Pakistan started in 1994 but there was not much progress. President Muhammad Rafiq Tarar opened a two-day oil and gas conference here Tuesday and invited foreign investors to pour funds into Pakistan.
4. Suharto sacks banker over policy - Indonesia defies calls to drop `peg plan' :
President Suharto fired Indonesia's central bank governor on Tuesday over what banking sources said were policy differences in the face of a standoff with the IMF. Diplomatic and banking sources said Soedradjad Djiwandono was understood to have opposed government plans to create a fixed echange rate system for the rupiah through a currency board. Djiwandono was replaced by US-trained economist Sjahril Sabirin, who served as a Bank Indonesia director from 987 to 1992 and then worked with the World Bank in Washington before returning to the Indonesian bank last December.
Meanwhile, a US economist and special adviser to President Suharto, Professor Steve Hanke, gave his plan to fix the rate of Indonesia's ailing currency the hard sell but provided little detail. Under his plans, the rupiah would be fixed to a foreign currency and backed by foreign exchange reserves which fully match funds in circulation.
Other business headlines:
1. Matsunaga welcomes proposals to boost Japan economic growth - Finance minister rejects calls for extra spending: Japan's finance minister, Hikaru Matsunaga, Tuesday rejected calls for extra spending to kick-start the stagnant economy, quashing hopes for a major new package ahead of a G7 finance meeting in London. He said he would welcome proposals to bolster economic growth - but only if they do not involve more government spending. The ruling Liberal Democratic Party (LDP) is drawing up eagerly-awaited proposals to spur domestic demand, which are expected to be released on Friday. Matsunaga told a news conference he expected the government's measures so far, including a one-off two trillion yen ($15 billion) tax cut and a supplementary budget for this fiscal year to March, would boost the economy. The LDP package would likely include measures to allow financial institutions to re-evaluate their land thus boosting their capital adequacy ratios and encouraging them to lend. It would probably also include plans to make share buy-backs easier, thus increasing demand on stock market, analysts said.
2. Turmoil forces Asia to cut health budget - Health care costs rise 30 to 50%: Health care costs in Asia, a large importer of pharmaceuticals and medical equipment, should rise by up to 50% this year following a sharp erosion in the value of regional currencies against the US dollar, experts said Tuesday. They also said the regional economic turmoil caused by the currency crisis would force governments to slash health budgets, put pressure on public health care systems and lead to a shakeout of private hospitals. Peter Cunningham, principal consultant with Coopers and Lybrand March J. Consultants, said health care cost was expected to shoot up to 50% primarily due to increase in cost of overseas-manufactured medicine.
3. Taiwan crash adds woes to Asian aviation industry - CAL grounds Airbuses as outlook dims for future.
4. Seoul: The IMF Tuesday approved the dispersal of a further $2 billion in bailout funds for South Korea, the finance ministry said. The $2 billion dispersal was the fifth tranche of 21 billion dollars in IMF loans pledged as the core of a $57 billion bailout arranged in December.
5. Tokyo: Japan's international trade and industry ministry said Tuesday it would extend a loan program to help large firms struggling to secure bank credit.
6. Manila: British banks have voluntarily agreed to roll over most of the Philippines's maturing short-term debt to help Manila cope with the Asian financial crisis, Britain's ambassador to Manila Adrian Thorpe said.
7. Dubai: Most Gulf investors shrug off military build-up - Saudis see oil prices set to fall: Experienced investors in Gulf Arab states are unlikely to be deterred by a US-led military strike on Iraq, but newcomers to a region increasingly looking for private finance may be unnerved, bankers and economists say. Saudi Arabia expects oil prices to be weak this year following OPEC's agreement to increase its production ceiling and a resumption of Iraqi crude supplies, experts said Tuesday. The world's dominant oil power projected its crude price to range between 14.5 to 15 dollars when it released its 1998 budget. The level is lower than the price of more than 16 dollars forecast in the previous two years. Saudi Arabia which controls more than a quarter of the world's oil wealth pushed for a higher output ceiling for the 11-nation OPEC at its conference in Jakarta in November. The agreement was one of the main factors that depressed the price of Opec's basket of seven crudes to around 15 dollars, nearly four dollars below its October level and nine dollars lower than prices in January last year. Experts attributed the current weakening in crude prices to the 10% hike in Opec's production ceiling to 27.5 million bpd, excess supplies by some cartel members, the return of sanctions-hit Iraq to the market, a mild winter in the northern hemisphere and an increase in western oil inventories. Henry Azzam, chief economist and assistant manager of the Saudi National Commercial Bank, predicted ooil prices to average around 15.8 dollars in 1998 compared with 18.6 dollars in 1997 and 20.2 dollars in 1996.
8. Yeltsin calls for budget changes, higher economic growth, tax code - Russian president brings new resolve to old reform battle - Cabinet, Duma come under pressure: Russian President Boris Yeltsin put pressure on both his government and the opposition-dominated lower house of parliament on Tuesday demanding sustainable economic growth and a realistically amended budget. By calling for amendments to the 1998 budget draft to reflect the impact on Russia of the world financial crisis, the President applied equal pressure to the Duma - just as IMF chief Michel Camdessus was arriving in Moscow to review reforms. The IMF and Russia's government consider a realistic budget and simplified tax code, both awaiting Duma clearance, to be vital for Russia's long march from a planned to market economy. The IMF is mulling paying out further installments of a $9.2 billion loan. It briefly halted credits late last year over concerns the government was failing badly on tax collection. Yeltsin said he wanted this IMF loan to be the last.
9. Beijing: China leader vows to slash WTO tariff - EU calls for market access: China on Tuesday promised to submit to the World Trade Organization an offer of detailed tariff cuts in a move cheered by analysts as a step forward in its bid to join the free trade club. EU Trade Commissioner Leon Brittan on Tuesday said he had won the pledge for sweeping tariff cuts in his meetings with Chinese officials including Foreign Trade Minister Wu Yi. Chinese President Jiang Zemin has pledged that China would cut tariffs to an average 15% by 2000.
Samira |
