Asian business news summary:
SINGAPORE: Currencies rebound but fears persist - Asian bourses end mixed: Asian currencies pulled sharply from lows reached earlier on Friday after markets were rattled again by fears that Indonesia was on the verge of adopting a controversial plan to fix the rupiah's value.
INDONESIAN RUPIAH: The thinly traded rupiah reached the highs of 10,100 to the dollar on market rumors the government planned to peg the rupiah's value through a currency board - which has been opposed by the IMF and the United States - at the weekend. The rupiah was earlier quoted at a low of 12,300 to the dollar on worries the IMF might delay its next disbursement of cash to Indonesia out of dissatisfaction with Jakarta's progress in implementing economic reforms.
MALAYSIAN RINGGIT: The ringgit bounced back above the 4.00 per dollar level following the rupiah's move.
PHILIPPINE PESO: The peso finished higher as a lack of corporate dollar demand cushioned its early falls, but dealers said its fate would continue to hinge on developments in the region.
TAIWAN DOLLAR: The Taiwan dollar was depressed by declines in Southeast Asian currencies and the yen as well as losses in regional stock markets after Wall Street's steep overnight drop.
Asia-Pacific stock markets ended mixed Friday as investor sentiment remained fragile amid renewed volatility in regional currencies. Indonesia's financial crisis deepened as revelations that a bank had run up massive foreign-exchange losses pushed the rupiah down to low of 12,000 during the day.
NIKKEI: Japanese share prices rebounded, with the key market barometer closing 1.7% higher on revived optimism about the government's new economic measures. The 225-issue Nikkei stock average rose 283.42 points to end the week at 17,131.97, while the broader Topix index of all first section issues gained 11.69 points to 1,287.95.
HANG SENG: Hong Kong share prices closed 1.1% recovering from an early drop triggered by concerns about the volatility of Asian currencies, dealers said.
LONDON: Euro stocks surge after US jobs data - Dollar gains ground: Stock markets piled on gains across Europe on Friday, spurred by a lively Dow after the US issued strong jobs data that were seen as underlining non-inflationary growth.
FTSE: London, Europe's biggest bourse, soared to close up 1.5% as markets heaved a sigh of relief following the US payrolls numbers. The UK market surged on the back of refreshed bid talks in the pharmaceuticals sector and a bounce among financial stocks that took a beating on Thursday. Glaxo closed up 2.10% and SmithKline rose 3.59% on the merger talk and dealers said huge spreads in the stocks in pre-market trading highlighted the uncertainty over possible bid and mergers in the sector.
CAC 40: French shares swept to a new closing record, surging on the bullish Dow and the firm dollar and with buyers piling back in after US payrolls data pointed to a low-inflation growth. Volume was hefty. BNP extended Thursday's 9.9% gain while Societe Generale and Paribas, among the many rumored merger pairs, were also up.
U.S. DOLLAR IN FOREX MARKETS: The dollar gained ground Friday on the London forex market after the release of US employment data, though the greenback eased back slightly late in the session on rumours of Bundesbank intervention. The dollar was up in late afternoon to 1.8359 marks against 1.8261 Thursday evening in London. It rose to 128.36 yen against 127.65.
TOKYO: Japan eyes $7.8bn fund for bourses: The Japanese government and ruling Liberal Democratic Party may invest more than one trillion yen ($7.8bn) of postal funds to shore up share prices, a daily said Friday. The government's "price keeping operations" with public funds is designed to bolster stock prices ahead of the March 31 closing of corporate account books.
Trust banks manage a portion of public money collected in the form of savings and "kampo" insurance at post offices nationwide, partially investing in the stock market. The government and the ruling party are considering raising the amount of such investment through trust banks. Prime minister Ryutaro Hashimoto approved the plan put forward by the party's top policy makers, and the Yomiuri Shimbun reported Friday that Hashimoto was likely to hold emergency talks Tuesday with the top representatives of the nation's four major business organisations to discuss measures to kick-start the economy.
MORE ON JAPAN:
Banks apply for over $16bn: A string of Japanese banks Thursday applied for more than two trillion yen ($16bn) in rescue funding under a government scheme to prop up their weak capital, officials said. But their demands fell far short of the total 13 trillion yen on offer, disappointing the stock market and analysts. The nation's nine commercial city banks led by the world's largest Bank of Tokyo-Mitsubishi Ltd, applied for 100 billion yen each, to be raised via preference share issues, subordinate bonds or loans.
Six of Japan's seven trust banks, the three long-term credit banks and three regional banks also applied for money. Banks were at first reluctant to ask for the funds until Tokyo-Mitsubishi's president, Satoru Kishi, encouraged them to think again.
The Tokyo Stock Exchange Nikkei stock average closed down 1.4% at 16,848.55 in part reaction to the applications, dealers said.
Meanwhile, despite a recent string of scandals which has rocked the backbone of its bureaucracy, Japan looks set to take fresh economic stimulus steps backed by the strong determination of ruling party politicians.
Also, Japan's Fuji Bank Ltd said Thursday it would cut 850 jobs in a bid to qualify for using public funds to prop up its weak capital. Fuji Bank, one of Japan's top nine city banks, said it would cut down its personnel cost by 11 billion yen ($88 million) as well as operating costs by 10% over the next three years. The bank said it planned to freeze salary increases and to cut bonuses as well as directors' remuneration by 10% during the next fiscal year from April.
Japan's top steel maker, Nippon Steel Corp., slashed its group pre-tax profit forecast by 20% to 80 billion yen ($630 million) for the year to March. Its net profit was now seen at five billion yen down from 15 billion expected earlier, due to additional retirement payouts. The company said it would reduce staff to 32,1100 by the end of March from 34,000 last year. Nippon Steel said revenue forecast was left unchanged at 3,100 billion yen.
JAKARTA: Indonesia `warns' of regional instability if IMF aid delayed - Suharto said committed to IMF reforms: Indonesian Finance Minister Mar'ie Muhamad warned Friday that any withholding of desperately needed funds from an IMF rescue package for Indonesia would affect stability in Southeast Asia. He said in a statement that delay in releasing funds under a 40-billion-dollar bailout package led by the IMF would erode confidence in Indonesia and "have a negative impact on efforts to strengthen and to stabilize currencies in Southeast Asia."
The IMF is scheduled to release the second disbursement of three billion dollars on March 15 as part of the global aid package put together to rescue Indonesia's crippled economy resulting from the rupiah crash. Reports have suggested the funds would only be released if Jakarta adopted the stringent reforms proposed by the IMF, including abolition of tax breaks for the Timor "national car" project, an end to the clove trade monopoly and banking sector changes.
MANILA: Manila to float peso in line with IMF plan: The Philippine government is committed to lifting a volatility band to float the local currency freely against the dollar in line with an IMF programme, a government report said Friday. The memorandum of economic and financial policies (MEFP), mapped out by the government and the IMF, said that they intend to eliminate the volatility band entirely by the term of the second review to improve the function of the interbank foreign exchange market.
KUALA LUMPUR: 4 firms failed financial test: Malaysia C. Bank: Malaysia's dputy central bank governor Fong Wen Phak said in an interview published Friday that only four financial institutions require fresh capital to offset losses from bad loans.
The central bank announced this week that Malaysia's sixth-largest bank, Sime Bank Bhd, suffered a first-half loss of 1.57 billion ringgit ($436 million) and required at least 1.2 billion ringgit in fresh capital.
Bank Negara Malaysia also announced that Bank Bumiputra Bhd, the second-largest bank needed about 750 million ringgit in new capital while a couple of finance companies required a combined 33 million ringgit.
The newspaper said the tests covered both domestic and foreign operations of Malaysian financial institutions including subsidiaries as well as operations at the country's offshore banking centre in Labuan. Areas covered were non-performing loans, provisions for losses and the value of collateral. While bad debts may result in other Malaysian banks incurring losses, the newspaper said the tests showed that their capital bases would not be eroded to the extent of requiring fresh injections of shareholders funds.
Fong reiterated that Sime Bank was not insolvent and that the proposed capital injetion was aimed at restoring its capital adequacy ratio under guidelines imposed by the Bank of International Settlements (BIS).
Business briefs:
BANGKOK: The United States has pledged between three and five billion dollars in additional IMF funding for Thailand if it is needed to help the country's economic restructuring drive, a report said Friday. The report came after top US officials on Wednesday praised Thailand's efforts to implement reforms sought by the IMF and said Washington would also back - if necessary - additional IMF funding to contribute up to five billion more dollars to Bangkok's $17.2 billion bailout.
MADRID: The board of banco Central Hispano (BCH) approved an increase of capital of 163.82 billion pesetas ($1.09 billion) on Friday to finance development in Spain and abroad. The bank, which is the third-biggest in Spain, also upgraded its profit forecast sharply. The increase must be approved by shareholders on 15 March. The new capital would be raised by means of an issue of 41 million shares at a price of 4,000 pesetas per share. The price of BCH late on Thursday was 4,475 pesetas.
MOSCOW: Ukraine could hand over part of its gas export pipelines or key storage facilities to Gazprom to help pay off its $1.2 billion debt to the Russian gas giant, company sources said Friday. Russian Prime Minister Viktor Chernomyrdin and his Ukrainian counterpart Valery Pustovoitenko were to discuss the issue and the two sides were expected to sign a deal Friday.
BASEL, SWITZERLAND: Swiss pharmaceutical group, Roche announced Friday it had finalized a $1.02 billion take over of Corange Ltd which owns Boehringer Mannheim and US-based DePuy. With the purchase, Roche becomes the world's leader in diagnostics products. Roche said the acquisition will produce synergies of around one billion Swiss francs ($666 million) mainly from rising sales, production streamlining and cost cuts, chiefly from staff reductions. Roche originally said the deal would cost $11 billion.
HONG KONG: A court here has allowed Banque Nationale de Paris' purchase of the Hong Kong and China Operations of failed investment bank Peregrine Investments Holdings Ltd for $40 million. But the court was highly critical of the way the provisional liquidator and the French bank went about the deal. Justice Anthony Rogers "reluctantly" gave the green light for the deal late Thursday, but criticized provisional liquidator David Hague of chartered accountants Price Waterhouse for misleading him about the size of the debt borne by Peregrine, which collapsed January 13. The cost for BNP was considerably higher than the US$26 million market sources had estimated.
LONDON: Rolls Royce, the British engineering group, reported on Thursday it boosted pre-tax profits last year by 17% to 276 million pounds ($455 million) and survived the Asian crisis unscathed. The board raised annual dividend to 5.9 pence from 5.3 pence. Orders taken rose by $1 billion to 8 billion pounds ($13.2bn). Net turnover rose by 11% to 4,334 million pounds.
FRANKFURT: Adidas, the sports clothing group, increased net profits last year by 4% to 465 million marks ($255.5 million). The group, the world's second-biggest of its kind since purchasing French ski and sport equipment manufacturer Salomon, said the results referred only to Adidas activities because Salomon had been integrated only from January 1. The board recommended an increase of dividend for 1997 to 1.65 marks from 1.10 marks in 1996.
Also, Daimler-Benz, Germany's biggest industrial group, increased operating profits by 78% last year to 4.3 billion marks ($2.36bn), provisional company data showed on Thursday. Pre-tax profits rose to 4.2 billion marks from 2.0 billion in 1996. Net profits exceeded pre-tax profits owing to exceptional tax conditions. Sales on a comparable asset base rose by 19% to about 124 billion marks.
DETROIT: The Big Three US automakers this week reported mixed February sales results, with General Motors signalling a 7% decline while Ford reported a flat performance and Chrysler a 3% increase. GM total car and truck sales fell 7% to 331,140 units compared with February 1997, with car sales - down 14.1% - hurt by incentive-driven competition.
CHICAGO: United Airlines on Wednesday announced it had placed firm orders for 30 narrow-bodied aircraft from the European consortium Airbus Industrie. United chairman Gerald Greenwald said the planes would be delivered in 2000 and 2001, bringing the total number of Airbus narrow-bodied jets to 111. A company statement made no mention of a dollar figure for the deal. United wants to increase its passenger fleet by 68 planes to 639 by the end of 2001. Capacity over the next four years is expected to expand an average of 3% a year, according to Greenwald.
WASHINGTON: Intel Corp is facing serious problems that have led to a projected decline in sales, but the semi conductor giant is likely to recover later this year, analysts say. The Silicon Valley company stunned the market Wednesday when it said it expects first-quarter revenues to be about 10% below the fourth-quarter total of $6.5 billion. That revised an earlier prediction that first-quarter revenues would be flat. In the high-flying technology sector, the prediction of a slowdown came as a shock, particularly for a company that supplies the microprocessor, or grains, of some 80% of personal computers.
Intel shares plunged some 12% on Wall Street as trading opened Thursday, dragging down the entire technology sector, before stabilizing.
KUWAIT: Kuwait's estimated foreign reserves stood at US dollars 70 billion, representing 250% of the Gross Domestic Production, according to a specialised financial report out here on Friday. The government is attempting to increase local investment opportunities through privatization projects, the report said, noting that this has so far proved successful, as can be seen from the level of activity on the market since 1995, although the Kuwaitis still have considerable capital invested abroad, estimated to be in excess of US dollar 150 billion.
Oil and gas are the most important natural resources in Kuwait, therefore remain linked to oil prices and thus world-wide economic growth, the report said. The oil sector, both directly and indirectly through downstream industries, is responsible for more than 55% of GDP, which is higher than for other GCC countries.
The report added that real GDP growth is expected to slow down in 1998 due to weak oil prices and the economic situation in Asia, which imports more than 50% of Kuwait's oil.
Samira |
