To the thread: Asian business news summary -
1. Asian currencies firm, Indonesia doubts persist - Stock markets rise: Indonesia's currency board dilemma dominated trade in Asian foreign exchange markets again on Wednesday, but traders appeared to be losing interest as the issue dragged on with no sign of a clear resolution. Most Asian currencies firmed in thin, technically-driven trade as players became increasingly reluctant to commit themselves against a backdrop of uncertainty in Indonesia.
The rupiah remained comfortably above the 10,000 per dollar level, but its gains were expected to be capped due to persistent anxiety about Indonesia's political and economic outlook. Other Southeast Asian currencies benefited from the rupiah's improvement and dealers said market sentiment and technical factors suggested more near-term gains.
The Sing dollar surged to a high of 1.6420 to the US dollar as US funds sold dollars from the 1.6740 level triggering stop-loss sales at 1.66 in a relatively thin market. The Malaysian ringgit firmed through the 3.80 per dollar level, helped by stock market gains and buying of the ringgit/Singapore dollar cross. The Thai Baht and Philippine peso were also stronger but doubts about Indonesia discouraged trade.
Asia-Pacific stock markets ended higher Wednesday hitching a ride on the back of stronger regional currencies. Hong Kong stocks rose 4.3%, Singapore 2.8%, Malaysia 2.0%, Bangkok 2.3%, Manila 2.1% and Seoul 3.4% as investors hunted for bargains. Tokyo edged down 1.1% lower but Sydney gained 0.2%. The rises in the regional markets led some investors to believe now was the time to buy to get in close to the bottom, analysts said. Uncertainty still shrouded the Indonesian proposal for a currency peg but stability in regional currencies shored up stock market sentiment. Good news included a Standard and Poor's upgrade of South Korean currency ratings and the announcement that Seoul and the IMF had reached agreement on economic targets.
2. Euro stocks mixed, UK, NY higher - G7 finance ministers looking for ways to prevent new economic storm, says Brown - World oil prices stage strong recovery: European stocks see-sawed on Wednesday, buffeted by profit-taking and buoyed by a strong dollar and late morning strength on Wall Street. Bonds fell sharply after strong gains a day earlier. London's FTSE 100 closed at its second consecutive record high propelled higher by the buoyant banks sector and a firm Wall Street. Gainers and losers in the FTSE 100 were evenly matched, but the heavyweight banking sector was squeezed higher on a lack of selling interest and hopes of a bid or merger. The pound rallied, setting two-week highs against the mark before weakening slightly as talk of higher UK interest rates was fanned by a report showing retail sales rose at more than twice the expected pace in January.
World oil prices staged a strong recovery on Wednesday after Saudi Arabia said it was ready to consider an emergency Opec meeting to boost oil prices but only if quota busting by fellow Opec members was reduced. April futures for Brent rose 40 cents a barrel on conditional offer by Saudi Arabia but then slipped back slightly as traders digested the news. The contract was up 21 cents at $14.60 at 1654 GMT but remains not too far from the fresh 46-month lows of $14.22 a barrel hit earlier on Wednesday
3. HK budget attempts some pain relief to ward off fallout - Dollar peg to stay, says financial secretary: Hong Kong's first budget under Chinese rule Wednesday combined economic painkillers with continued high fiscal reserves to ward off fallout from Asia's financial turmoil, and gained high markets from the corporate world and the markets. Financial secretary Donald Tsang, delivering the budget for the year starting April, cut corporate tax and rates by half a per cent, increased personal tax allowance by 8% and cut a total of 8 billion dollars off tax on salaries. Spending on housing goes up by 52% and mortgage tax relief was introduced among other measures. Tsang's options were increased by a 1997-98 budget surplus of 77 billion Hong Kong dollars (US$10 billion), 45.3 billion dollars higher than expected thanks to good land sales. He estimated a 10.7 billion dollar surplus for the coming fiscal year.
Tsang's delivery had an immediate reaction on the Hong Kong stock market putting on a 4.3% on the day including a 2% rise while Tsang was on his feet. A free floating exchange rate would be no panacea for Hong Kong amid Asia's economic turmoil, and the local currency's fixed link to the US dollar should stay, Tsang said Wednesday. Higher interest rates, led by overnight rates that hit 300% at one point in October, was a necessary consequence of maintaining a fixed exchange rate regime, rather than cutting the currency free from the peg of 7.8 to the US dollar maintained for the past 14 years.
4. Confusion reigns over `peg plan' - Jakarta currency board: Confusion reigned on Wednesday over whether Indonesia would adopt a currency board in the near future, with most analysts saying if the plan did go ahead there would have to be a significant delay. President Suharto's dismissal of Central Bank Governor Sudradjad Djiwandono, who was understood to oppose a currency board, was taken a strong indication the president was committed to carrying through the plan in the near-term regardless of IMF protests. The fact Djiwandono only had about four weeks of his tenure left led some to believe that a move to a currency board was imminent. In Singapore, the Business Times newspaper quoted a senior Indonesian government official as saying Indonesia had decided to discreetly jettison the plan.
5. Ministers and central bankers mull ways to stop financial meltdown - US Treasury Secretary, Robert Rubin urges Indonesia to stick with IMF reforms.
6. Turkmenistan, Russia ink gas deal: After months of disagreement Turkmenistan and Russia have struck a deal on the transit of gas across Russia to Ashgabat's principal customer Ukraine, a Turkmen official said Wednesday. Under an accord signed in January, Turkmenistan is to deliver 20 billion cubic meters of gas to Ukraine up to 2005 but Moscow and Ashgabat had so far failed to agree the transhipment tariff. Turkmenistan bridled at the high rate demanded by Russia - a demand which soured relations between the two former Soviet republics. The Turkmen official, on conditions of anonymity, said Moscow would charge $1.75 per 1,000 cubic metres for every 100 kilometres of its pipelines used. The outline agreement between Russia's giant Gazprom Corporation and Turkmenistan's Gazprex is due to be incorporated into a formal accord shortly.
7. Turk ministry opposes new fuel tax plan: A Turkish government plan to impose a new pricing system for petroleum products that will also change their taxation will cut tax revenues in the key 1998 budget, Finance Minister Zekeriya Temizel said on Wednesday. Temizel told reporters the new fixed tax system proposed under the automatic pricing system (OFM) instead of the current proportional taxation would require a new law and was actually not needed for the OFM to take effect. The government decided on Monday to revive a plan to impose the OFM in an effort to partially liberalise the petroleum pricing system by scrapping several taxes on petroleum prices and imposing a fixed tax on them. The OFM, also recommended by the World Bank to cut Tupras' losses, will readjust the extent to which the government subsidises prices by means of two tools - a new taxing system and use of the benchmark Mediterranean prices instead of the current almost periodic state of price fixings.
8. Russia budget suffers `delay': Russia's long overdue 1998 budget ran into a new delay when the opposition-led parliament dropped a fourth and final reading of the bill from Wednesday's agenda to allow time to review new government amendments. Prime Minister Viktor Chernomyrdin, who was warned on Tuesday by President Yeltsin that his government's future was on the line if it failed to come up with a workable budget, told reporters the debate was being provisionally scheduled for Friday. With the Duma not sitting next week, some lawmakers say a final vote paving the way for approval of the budget by the upper house and Yeltsin could be delayed now until next month.
9. Ford to invest in Manila: US auto-maker Ford Motor Co has formally applied to set up a 6.18 billion peso ($154 million) integrated facility in the Philippines. Lilia de Lima, director general of the Philippine Economic Zone Authority (Peza) said the Peza board will discuss Wednesday a request for incentives by the US's second-largest automaker. She said 4.18 billion pesos in investments will be used to build an assembly plant, while 2 billion pesos would finance a facility for various automotive parts.
10. Singapore adopts sweeping reforms - Trade to pick up again: Singapore adopted sweeping financial reforms Wednesday, including allowing more of its huge surplus funds to be placed in private hands in a bid to reposition itself ahead of the region's recovery from financial turmoil. The reforms would also free up all stock brokerage rates within three years, deregulate the fledgling unit trust industry, and speed up approval procedures for share offerings. Among the radical measures was a move to encourage government-linked corporations and statutory boards to borrow from Singapore's debt market, where there are no long-dated bonds at present.
Business briefs:
1. Washington: US software giant Microsoft has begun a pilot project with 12 broadcasters and cable television programmers to "broadcast" Internet news tickers to US home computers, company officials said. The broadcasters will be able to send data - such as tickers with national news, sports, stocks and news headlines - to computer users tuned to their channel. The technique will use the portion of the television signal known as the vertical blanking interval (VBI) to "broadcast" data in the form of Web pages that can be stored on a computer hard drive and viewed later.
2. Tokyo: Finance Minister Hikaru Matsunaga said Wednesday Japan hoped to present an additional economic assistance scheme for Indonesia at a G7 financial meeting this weekend.
3. Wiesbaden, Germany: Germany increased its trade surplus last year by 23.5% to a record 121.7 billion marks (US$67.6 billion). This was the highest figure since the 1990 reunification of Germany. In 1996 the surplus amounted to 98.5 billion marks.
4. Oslo: Norwegian oil group Saga Petroleum posted a 49% drop in pre-tax profits in 1997, to 1.88 billion kroner ($251 billion) owing to lower production tan expected and poor results in Britain. In 1996, Saga reported a profit of 3.68 billion kroner. The company said the reduction in earnings was mainly a result of an operating loss in Britain after write-downs on the Durward and Dauntless fields of 354 million kroner.
5. Moscow: Chinese Premier Li Peng called for stronger economic links with Russia here Wednesday but voiced concern about Beijing's $2 billion annual trade deficit with Moscow. Li said Sino-Russian trade had the potential to match the volume of Sino-US trade, which totalled more than $15 billion in 1997. But Li urged Russia to boost imports of Chinese goods to correct the imbalance in trade between the two former communist rivals.
6. Tehran: Iranian President Mohammad Khatami urged Iranians on Wednesday to be more efficient in their consumption of fuel. He said in remarks that Iran's fuel consumption is equal to that of China while his population is one-twentieth of theirs.
7. Tokyo: Japan's Sanwa Bank Ltd said Wednesday it would pump more money into its overseas derivatives operations in preparation for Tokyo's "Big Bang" deregulation starting in April. Sanwa, one of the highest-ranking Japanese banks, said it would invest 70 million pounds ($112 million) in its wholly-owned derivatives subsidiary Sanwa Financial Products (UK) Ltd in London. Another 20 billion yen ($160 million) would be invested in its wholly-owned Japan-based investment banking subsidiary Sanwa Securities Co Ltd.
8. Sao Paulo: The Mercosur customs union, South America's most dynamic trade bloc, will study a proposal for a single currency. Fabio Giambiagi, macro-economics manager for the National Economic and Social Development Bank (BNDES) said that in the course of the decade spanning from 2010 to 2020 Mercosur could have a single currency.
Samira |
