Monday June 22, 2009

Google made an initial investment of $3.9 million in 23andme some time ago. Considering that Google's in the business of search and advertising, and that 23andme tests people's spit for diseases (or more accurately, genetic predispositions to disease), this crossover raised a few eyebrows.

As per reports, the situation looked even iffier once people learned that "[t]he funds from Google's first investment in the biotech group were used in part to repay a loan of approximately $2.6 million that Brin had earlier provided to 23andMe."

But anyway, the SEC document makes Wojcicki's and Brin's relationship clear, and points out that Brin put in a lot more money - $10 million - this time around. The filing also states, "Google continues to hold a minority interest in 23andMe as a result of the Series B investment," so it seems that no under-the-table-takeover has occurred.

Google's investors appear to be perfectly okay with the move, as well, since the search giant's stock rose by 1.46 percent today.

Nothing was said about where the two companies might go from here.

Monday June 22, 2009

The Obama administration has unveiled a new regulatory reform plan aimed at bringing more stability to financial markets.

On Wednesday, the White House laid out a plan that includes a new Consumer Financial Protection Agency aimed at protecting consumer rights in credit, savings and payment markets.

With an eye on the increasingly complex financial transactions that helped bring about the recession, Obama also indicated that the Federal Reserve would receive more authority to regulate large financial institutions

"It is an indisputable fact that one of the most significant contributors to our economic downturn was a unraveling of major financial institutions and the lack of adequate regulatory structures to prevent abuse and excess," said the president.

Obama also acknowledged that his plan has drawn some early opposition, but he emphasized that the proposal had been developed with a broad range of input and that his plan would still encourage innovation in the financial industry.

In an Associated Press report, two key congressional chairmen, Rep. Barney Frank and Senator Chris Dodd, were quoted as saying that they would complete work on the proposed legislation this year.


(Nasdaq)

Monday June 22, 2009

France’s budget deficit will widen to more than 7 per cent of gross domestic product this year and next as tax receipts fall and unemployment rises, Budget Minister Eric Woerth said on Sunday.

Speaking on RTL radio, he said the deficit would come to between 7.0 and 7.5 per cent of GDP in 2009 and 2010, more than twice the 3 per cent ceiling laid down by European Union borrowing rules.


(Reuters)

Monday June 22, 2009

LONDON: European shares were up in early trade on Friday, with energy and mining shares rising on strong commodities prices, banks higher, and following U.S. gains after data pointed to economic recovery. At 0845 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.7 percent at 856.93 points, after gaining 0.6 percent on Thursday. The European benchmark index is up 33 percent from the lifetime low hit on March 9, as investors have become more confident on prospects for economic recovery.

U.S. shares rallied on Thursday, breaking a three-day losing streak, as data on the job market, regional manufacturing and an index of leading indicators revived hopes the recession-hit economy was stabilising.

"The Conference Board leading indicators flashed an end-of-recession signal," said Davy stockbrokers in a note. "It has never fired a false signal before and this time is unlikely to prove any different.


(Reuters)

Monday June 22, 2009

TOKYO: The yen rose on Monday, gaining in particular against the euro and Australian dollar in a climate of uncertainty ahead of the Federal Reserve meeting this week and stalling investor confidence in riskier assets.

The euro was also under pressure as the market awaited the European Central Bank's first ever one-year refinancing operation on Wednesday aimed at getting banks lending again and reducing the cost of borrowing for banks, firwms and consumers.

Traders said euro selling by funds which use computer trading models had kicked in, driving the single European currency lower against both the dollar and the yen.

This fed into already cautious sentiment among investors, who were also taking profits on trades in commodity-related currencies and other currencies which have rallied against the yen and dollar in the past three months along with shares.

"The markets overall are a bit whippy and the euro is under a bit of pressure as the market starts to focus on the long-term repo on Wednesday," said a senior trader at a European bank in Hong Kong.

The euro fell 0.7 percent to 133.32 yen, well down from its eight-month high above 139 set early in the month, and dropped 0.2 percent to $1.3912, well below a five-month peak of $1.4339 at the start of June.

Traders cited several factors as fuelling selling of the euro, including profit-taking ahead of the quarter end and an article in the Wall Street Journal about Germany's widening budget shortfall.

But uncertainty about the impact on the euro of the ECB's refinancing operation, how much liquidity it will generate and what it will do to money market rates seemed to be one of the main factors weighing on the single European currency..

The dollar lost 0.3 percent to 95.85 yen as the Japanese currency's strength elsewhere helped it higher.

The Fed's Open Market Committee meets on Tuesday and Wednesday and the market is waiting to see what it says about the economic outlook and a rise in Treasury debt yields, and if it makes any move to expand or extend its debt buyback programme.

"The Fed needs to find a balance between not killing the recovery through rate hike hopes, while at the same time not over-committing on keeping rates low," UBS analysts wrote in a research note.

Markets have drifted in the past few days as investors are still trying to decide if a three-month rally in riskier assets, including shares, has outrun the pace at which the global economy is healing.

Shares were firmer but not blasting higher, with the Nikkei average 0.4 percent up and the Australian market rising 0.4 percent.

One trader said news that rating agency Moody's had warned California it faced a "multi-notch" downgrade in its credit rating if it failed to act quickly to produce a budget had also fueled investor unwillingness to hold riskier positions.



(Reuters)

Monday June 22, 2009

MUMBAI: Indian banks are likely to resist mounting government pressure to sharply cut rates as they grapple with expensive deposits raised at the height of the credit crisis and rising bond yields.

India's newly elected government wants its banks to lend more and cheaply to boost economic growth, following other Asian economies such as China, which lifted limits on bank lending to grease the wheels of its economy.

The pressure is adding to the risks for shares of state-run banks, which have underperformed the bank index and privately held banks this year.

"Profitability and margins could be under pressure particularly if specific Indian banks pursue a very aggressive growth strategy and decrease the spread earned on banking products," said Brayan Lai, a credit analyst at Calyon in Hong Kong.

"From a top down perspective, I prefer Indian state-run banks due to their quasi-sovereign backing and recapitalisation plans but, from a bottom-up approach, I'd be worried as some dubious lending may take place," he said.

Shares of the country's biggest lender State Bank of India have gained 32 percent so far this year, lagging a 46 percent gain in the bank index and a 57 percent jump in shares of privately held ICICI Bank. SBI and its associates control a quarter of all loans, and state-run banks as a sector corner 55 percent of all assets.

SBI cut its deposit rate by 25 basis points, its fourth cut in 2009, but has yet to reduce its lending rate. Chairman O.P. Bhatt said the economic recovery was yet to reflect on banks' asset growth and passing on rate cuts to customers will take time.

With bank loan growth slowing sharply, policymakers worry that by not passing on to customers the deep cuts in official rates these banks may threaten an economic revival. While the central bank has cut its main lending rate by 425 basis points since October, state-run banks have cut their lending rates by 150-200 bps.

Loan growth has slowed from around 27 percent in November to around 15 percent in early June and halved from rates of around 30 percent seen in the financial year to March 2008.


(Reuters)


Monday June 22, 2009

HONG KONG: Asian currencies ended the week mainly weaker against the US dollar as the greenback strengthened on positive US economic news. However, the yen made big gains as a poor week for stock markets saw dealers become less risk averse and move into the Japanese unit.

JAPANESE YEN: The yen gained ground this week as declines in Asian stocks spurred demand for the safe-haven Japanese currency, dealers said. The Japanese currency stood at 96.31 against the dollar in New York late Friday, compared with 98.40 a week earlier.

On the Tokyo Stock Exchange, the benchmark Nikkei-225 index lost 349.56 points, or 3.45 percent, to 9,786.26 over the week to June 19. The yen's rise was also backed by selling pressure on the dollar after weak US inflation data trimmed market expectations for the Federal Reserve to raise interest rates later this year.

The May reading for the consumer price index (CPI), which inched up just 0.1 percent from April, was below analyst forecasts of a 0.3 percent rise. The lower inflation data indicating prices are flat and demand low dampened recent optimism for a year-end recovery, dealers said. Also weighing on the dollar was news that Russia and China have agreed to boost the use of their domestic currencies in bilateral trade to reduce dependence on the US unit, analysts said.

Both countries have called for a revamp of the global financial system in the wake of the economic crisis, saying there is a need for a new supranational currency besides the dollar.

AUSTRALIAN DOLLAR: The Australian dollar ended the week lower against the US unit as jitters over the pace of economic recovery strengthened the greenback and weakened commodity prices. The commodities-based Aussie closed Friday at 80.45 US cents, down from 81.52 a week earlier.

"The return of worries about the economic recovery helped boost the US dollar and this weighed on commodity prices and the Australian dollar," said Shane Oliver, chief economist of AMP Capital Investors.

The Australian currency and the country's stock market are both in the midst of a correction on worries that markets have run ahead of fundamentals, he added. The Aussie, which had surged to a high of 82.63 US cents in early June, dropped as low as 79.85 US cents last week before recovering a little before Friday's close. Traders said the unit would remain vulnerable due to the severe global recession and to growing uncertainty surrounding the outlook for the crisis.

But in the longer term, the Australian currency is likely to remain firmer on the back of generally strengthening commodity prices and a resurgence in carry trades.

NEW ZEALAND DOLLAR: The New Zealand dollar finished local trading Friday at 63.85 US cents, down from 64.25 the previous week. Reserve Bank of New Zealand governor Alan Bollard this week warned that buyers of the NZ dollar expecting a strong economic recovery may end up being disappointed. Some economists are arguing that the central bank may have to cut its official cash rate further if rises in the currency and wholesale interest rates continue to hamper the economy's recovery.

The local currency has been hostage to moves in the US dollar but attention is turning to New Zealand gross domestic product data for the March quarter due Friday, which is expected to show the economy was in recession for a fifth straight quarter.

CHINESE YUAN: The yuan closed at 6.8362 to the dollar Friday, compared with Thursday's close of 6.8347 and a closing price of 6.8338 to the dollar the week before. The central bank had set the yuan central parity rate at 6.8338 to the dollar Friday, compared with 6.8321 on Thursday. The People's Bank of China allows a trading band of 0.5 percent on either side of the midpoint.

HONG KONG DOLLAR: The US-pegged Hong Kong unit ended the week unchanged at 7.751.

INDONESIAN RUPIAH: The rupiah ended at 10,390 to the dollar, down from 10,090 the week before.

PHILIPPINE PESO: The Philippine peso weakened to 48.40 to the dollar on Friday from 47.87 on June 12.

SINGAPORE DOLLAR: bbeThe dollar was at 1.4565 Singapore dollars Friday from 1.4495 the previous week.

SOUTH KOREAN WON: The South Korean currency weakened to 1,268.40 won per dollar Friday, compared with 1,253.90 won a week earlier, as the greenback firmed against regional currencies.

Dealers said the won was likely to weaken further because of a lack of momentum in the stock market and uncertainties over North Korea's pursuit of nuclear and missile programmes. The dollar may trade between 1,264 and 1,272 won when the market reopens on Monday, they said.

TAIWAN DOLLAR: The Taiwan dollar fell 0.24 percent in the week to June 19 to close at 32.878 against the US dollar. The local currency closed at 32.800 a week earlier.

THAI BAHT: The Thai baht was stable against the greenback over the past week with trading lacklustre throughout, dealers said. The Thai unit closed Friday at 34.13-15 baht to one dollar compared to previous week's close of 34.10-13.


(AFP)


Monday June 22, 2009

KARACHI: Investment under Continuous Funding System (CFS) at Karachi share market declined by 85 percent on Friday to a nominal level of Rs 10 million. The CFS rate also decreased by 20pps, falling to 30 percent on the end of the week from 50 percent recorded on the same day a week earlier.

The top 5 scrips by CFS investment were NBP, Lucky, MCB, POL and BAFL contributing 69 percent of total investment.


(BRecorder)

Monday June 22, 2009

The World Bank said the global recession this year will be deeper than it predicted in March and warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed.

The world economy is forecast to contract 2.9 percent this year, compared with a prior estimate of a 1.7 percent decline, the Washington-based lender said in a report released today. Global growth will return next year with a 2 percent expansion, the bank said, cutting its forecast from a 2.3 percent prediction about three months ago.

The bank, formed after World War II to fund health and development projects in poor countries, said that while a global recovery may begin later this year, impoverished economies will lag rich nations in seeing any benefits. The lender called for “bold” policy actions to hasten a rebound and said prospects for rounding up aid for the poorest countries was “bleak.”

“While the global economy is projected to begin expanding once again in the second half of 2009, the recovery is expected to be much more subdued than might normally be the case,” the report said. “Unemployment is on the rise, and poverty is set to increase in developing economies, bringing with it a substantial deterioration in conditions for the world’s poor.”

The World Bank’s report raised concern about the shrinking amount of capital flowing into developing countries. After a peak of $1.2 trillion in 2007, capital flows this year are expected to fall to $363 billion, the report said.

“Investors’ flight from perceived danger contributed to the sharp drop in capital flows to the developing countries, a trend that is very likely to persist through the end of 2009,” the report said.


(Bloomberg)

Monday June 22, 2009

Asian stocks rose, led by financial companies and utilities, as a government report showed confidence among Japanese manufacturers improved this quarter and on speculation Chinese banks will boost lending.

Nissan Motor Co. climbed 3.7 percent in Tokyo after Nikkei English News reported the company will invest in a U.S. electric car plant. Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, gained 2.3 percent in Hong Kong as the Shanghai Securities News reported new loans in June will exceed lending in May. Kansai Electric Power Co. gained 2.6 percent in Tokyo on speculation fuel expenses will decline after oil prices fell the most in more than two weeks.

The MSCI Asia Pacific Index gained 0.7 percent to 102.15 as of 12:27 p.m. in Tokyo, with five stocks advancing for every four that declined. The gauge has rallied 44 percent from a more than five-year low on March 9 on optimism the global economy is recovering.

“Judging by the quality of this rally so far, and how broad-based it’s been, I don’t see this as a bear-market rally. It’s a cyclical bull market,” said Nader Naeimi, a strategist at AMP Capital Investors in Sydney, which manages about $95 billion. “Obviously, it won’t be a straight line and you’ll get corrections along the way. You’ve had a lot of false dawns over the past 18 months.”

Japan’s Nikkei 225 Stock Average added 0.1 percent, while South Korea’s Kospi Index gained 0.1 percent. Australia’s S&P/ASX 200 Index gained 0.2 percent as National Australia Bank Ltd. rose to a two-week high after agreeing to buy Aviva Plc’s Australian wealth management and life insurance business.


(Bloomberg)


Monday June 22, 2009

According to a report of App, out of the over 80 million mobile users, about 50 million are young people between the age of 10 and 25 years; 40 million of them use SMS and most of them consist of youth. Many of those who could not afford to expand their businesses relied on SMS to access a wider clientele. Zaheer, a plumber who runs a mobile plumbing business, says he saved up for months to purchase a cellphone so that he could text message with his clients. ‘It worked very well for me. I would be at my client’s place as soon as I got a text message.’ Now Zaheer is skeptical whether his business will have such a smooth flow.’ I was saving a lot of money but I don’t know how it is going to be anymore,’ he said looking slightly frustrated.

Text messaging has played the role of personal integration as well as public mobilisation. During mass protests such as the long march that led to the restoration of judiciary, we saw that galvanizing of the youth was made possible through networking platforms such as the internet and cellphones. It has been a recent global phenomenon that has changed the face of political games as seen during Obama’s election campaign, and most recently during Iran’s elections. It is probably why these avenues are the first to be blocked by the state during an event of possible ‘rebellion.’ Abeer Hamid, 22, in Lahore is the main information dispenser of Student Action Committee and sends a long list of subscribers’ latest updates on the youth initiatives during protests, rallies and gatherings. Abeer terms the imposition of the 20 paisa tax on SMS a hindrance to communication.

‘This will definitely affect us — I mean it is going to affect me.’ But Shaukat Tarin, the adviser on finance, callously said at a press conference that ‘if they have so much money to spend on texting then they can spend a little more on this.’ An illogical and baseless justification for the tax imposition. In Pakistan where there are layers within layers of socio-economic classes, the largest bulge of our population, namely the youth, has had to suffer the consequences of poor governance. As the competition in the global market becomes cut throat, the marginalised youth can hardly keep up in the local arena. Independent of other obvious reasons such as the lack of investment in the education sector, the digital divide is a worrying aspect as well. Texting although a stem of digital technology, is nonetheless a very important way of accessing information and communicating with around 500 million SMS traffic on a daily basis across the country. It seems the government has identified a couple of industries as preys for extracting money from, namely the telecom industry and the petroleum sector which is the usual scapegoat.

The state should realise the massive investment of the telecom industry and should protect such industries instead of exploiting them. The telecom industry is concerned about this tax and worries that their youth targeted phone packages will be ‘killed.’ But despite the possible imposition of a tax which is an increase of 300 per cent on each SMS, some feel it will not make a difference to their lives at all, and that although a nuisance they will nonetheless continue to text message at the same rate. ‘I think the only thing is that the Zardari jokes will finish,’ chuckles Samad Khurram. However, a more concerning aspect is the accountability of the tax. ‘I just want to know where our tax money is going to go,’ says Maham Ali, a student in Islamabad.


(Dawn)


Monday June 22, 2009

ISLAMABAD: The government has decided to bail out the energy sector, suffering from a massive circular debt, by floating paper guarantees worth Rs24 billion, it has been learnt.

Informed sources told Dawn that the finance ministry had agreed to inject Rs24 billion into the sector in an effort to reduce its debt burden.

The funds would first be injected into Pepco, followed by other concerns down the supply chain.

‘Pepco will pay to the producers of electricity, who will keep their cuts and then pay money to suppliers of furnace oil. At the end of the chain are oil and gas producers,’ said a senior finance ministry official.

Sources said the state guarantees were expected to be launched early next week, and the whole process of payments down the supply chain would be completed within the week.

The ministry estimates that the total accumulated impact of injection of funds in this manner would be Rs79 billion in terms of debt reduction.

The main beneficiary of the exercise would be the state-owned oil marketing company --- the Pakistan State Oil --- which had recently sent an SOS to the government that it might default on its LCs due to liquidity problem.

‘The government plans to inject some cash into the system in the first quarter of the next fiscal to improve the financial health of the power sector and the PSO,’ the official said, adding that various measures, including reduction of subsidies on electricity from July, were likely to provide much-needed liquidity.


(Dawn)

Monday June 22, 2009

ISLAMABAD: Pakistan will face a serious balance of payment problem next year, partly because the United States has not reimbursed over $1.2 billion the country spent on the war on terror.

A source in the finance ministry told Dawn on Sunday that the government had received $447 million since September 2008, leaving a balance of over $1 billion (Rs80 billion).
Justify Full
Under the Coalition Support Fund, the US reimburses Pakistan for terrorism-related operations, particularly those undertaken by the army and air force.

Analysts estimate the operational cost of war-related expenditures, including sustainability of logistics and garrison in Fata, was over $1 billion per year.

This cost related only to combats in South and North Waziristan and adjoining areas.

The cost of war increased manifold when a major military offensive was launched in lower and upper Dir and Buner.

The government launched an operation in Swat in November 2007, followed by major operations in Bajaur and Kurrum agencies.

Pakistan has deployed more than 100,000 troops in troubled areas.

The government has projected a budget deficit of 4.9 per cent for 2009-10 as against the IMF target of 4.6 per cent owing to rising expenditures on account of debt servicing, huge allocations for defence and law and order.

To overcome the deficit, the government expects to receive more than $4 billion assistance from friendly countries and multilateral donors during 2009-10.

The government has also sought an additional $4 billion as insurance from the IMF in case assistance from friendly countries was delayed.

The source said that the phasing out of subsidies on electricity and other revenue measures, including the levy of carbon surcharge, were attempts to reduce fiscal deficit.

The source said that the amount of reimbursement had been calculated on the basis of six-monthly reports.

He said all the bills related to expenditure were first audited by a team of Pakistan military officers in cooperation with the US embassy in Islamabad.

He said the bills were then sent to the US government’s Accountability Office and Pentagon for further scrutiny.

After clearance from the departments it finally goes to the State Department for release of funds.

‘There was no delay in payment till March 2008. However, the process has been made cumbersome seeking minute details about expenditures.’


(Dawn)

Monday June 22, 2009

WASHINGTON: Iran spent nearly twice as much on US imports during President Barack Obama's first months in office as it did during the same period in 2008, showing that despite trade penalties and tense relations, the two countries are still doing business.

The US exported $96 million in goods to Iran from January through April, according to an Associated Press analysis of US government trade data compiled by the World Institute for Strategic Economic Research in Holyoke, Massachusetts. US exports to Iran totalled $51 million during the same period in 2008 and $27 million over those months in 2007.

Soyabeans, wheat and medical supplies - all considered humanitarian items exempt from US trade sanctions - are among the top exports this year.

The latest trade figures reflect an increase in Iran's agricultural imports over the past year due to poor harvests there, said Bill Reinsch, president of the National Foreign Trade Council, a business group in Washington.

"I wouldn't read too much into it as far as trends are concerned," Reinsch said. Reinsch said he is hearing from more businesses interested in Iran. But beyond an effort by the Obama administration to encourage talks with Iran, he hasn't seen any policy changes that would lead to more opportunities for US businesses.

Humanitarian shipments are an example of the tricky line the United States has walked in dealing with Iran - even more so during Iran's election protests. In allowing exports of necessities such as grain and medical supplies, the US has tried to send a message to the Iranian people that it is a friend to them and has no interest in punishing them for their government's policies. At the same time, by helping Iran feed and provide medical care to its population, Washington can't help but provide an unintentional benefit to the Tehran government.

US penalties seek to undermine that government far more than aid it, by withholding technology, equipment and money that would allow it to build its military and industrial base, particularly the oil industry. There is a long-running debate in Congress and among trade experts over the degree to which sanctions work.


(AP)

Monday June 22, 2009

BEIJING: China's Commerce Ministry has submitted a proposal to the state council pleading for top authorities to take measures to stop foreign investment from sliding further, local media reported on Saturday. Foreign direct investment (FDI) has seen sharp falls for the eight months since October as investors tightened purse strings in the face of the global economic crisis.

Worrying about a further slump in FDI, which is an important source for jobs, investments and taxes, the Commerce Ministry recently drew up a plan to relax rules on foreign investment, the Beijing-based China Times said, citing a source from the ministry.

The plan, listing 42 rules covering tax, foreign exchange, other regulatory supervision, was submitted to the state council, or the cabinet, for approval, the paper said. In the plan, the Commerce Ministry suggests giving foreign investors access to China's high-tech industry and to further relax checks on individual foreign investment, the paper said. It also recommended loosening regulations on foreign investment in the property sector.

In June 2007 the ministry issued new rules making it harder for foreigners to invest in property, partly by making them obtain land use rights before developing projects. It also banned foreign investors in Chinese real estate from borrowing offshore.

China's cabinet in 2006 approved rules restricting purchases of property by foreigners in a move to prevent foreign speculators from cashing in on China's red hot property market. China drew $34.05 billion in FDI in the first five months of the year, 20.4 percent less than in the same period in 2008.

In May alone, China attracted $6.38 billion in FDI, down 17.8 percent from a year earlier. This marked the eighth straight month that FDI inflows have fallen from their year-earlier levels, but the drop was less steep than in April, when inflows fell 22.5 percent from a year earlier. Inflows surged in the years after the country joined the World Trade Organisation in 2001, and peaked in 2008 when China attracted a record $92.4 billion in non-financial FDI, an increase of 23.6 percent from 2007.


(Reuters)


Monday June 22, 2009

BEIJING: European aviation giant Airbus will deliver the first A320 airplane assembled at its factory in China on Tuesday, in a symbolic event further marking the nation's global rise. The first plane to be made at plant in northern Tianjin, the only Airbus factory outside Europe, will be delivered to Dragon Aviation Leasing and will be flown by Sichuan Airlines, a regional Chinese air carrier.

A grand ceremony is expected to be held for the roll out, but so far Airbus has remained discreet about who has been invited to the event which will take place with no minister-level officials from Germany or France, sources said. The plane took its first test flight last month with the first Chinese test engineer trained by Airbus.

Ten middle-distance A319/320 aircraft will be delivered by the end of the year, before the factory starts to churn out up to four planes a month before the end of 2011. The Tianjin plant, modelled on Airbus' factory in Hamburg, Germany, has an investment of nearly 10 billion yuan (1.47 billion dollar) and went into operation in September in the presence of Prime Minister Wen Jiabao. The joint venture factory, about 120 kilometres (72 miles) south-east of Beijing, is 51 percent owned by Airbus, subsidiary of the European group EADS, and 49 percent by a Chinese aviation consortium.

Unions raised concerns when the deal was struck, but the aviation giant insisted orders would not fall at its European plants and that it had worked to minimise technology transfers to China.

The venture has also revealed the extent that Airbus has gone to get a foot hold in one of the world's most dynamic markets. At the inauguration Airbus chief-executive-officer Thomas Enders said the company's "new house" would become "the jump off point for the future development of Airbus in China and in the region."

China's air market, the second biggest in the world, makes up 15 percent of sales at Airbus, which sold its first plane here - an A310 - in 1985.

The decision to build the China plant was based on strong growth estimates that expect the nation to buy up to 2,800 passenger and transport planes over the next 20 years.

These planes, of which 190 are expected to be jumbo jets, are valued at about 329 billion dollars. In the next two decades, passenger travel is also expected to increase five-fold, according to industry estimates.

Airbus' goal is to gain half of the China market from now until 2012, compared with a 39 percent market share in mid-2008 and up from a seven percent share in 1995. Its main rival is current global market leader Boeing.

Coinciding with Tuesday's roll out, China Eastern Airlines, the nation's third largest air carrier, signed an order last week at the Le Bourget Air Show in France for 20 Airbus A320s to be delivered between 2011 and 2013. The order is part of a deal for 160 jets - 110 A320s and 50 A330s - that China said it would buy in 2007 during a visit to Beijing by French President Nicolas Sarkozy. In September, Chinese air carriers had signed agreements and memoranda for the purchase of a total of 280 planes, Airbus said.

Tuesday's delivery and the China Eastern order will be a boost for Airbus as it tries to weather the recent fatal accident of the Air France jet over the Atlantic, as well as a market still reeling from the global financial downturn.


(AFP)

Monday June 22, 2009

BERLIN: Germany appears to be close to the bottom of its economic downturn but it can't expect an instant recovery, Chancellor Angela Merkel said Saturday. Germany, Europe's biggest economy, went into recession last year as the global crisis sapped demand for its exports.

While surveys of business and investor confidence have turned upward recently, forecasts remain gloomy. The country's central bank predicted this month that the economy will shrink by 6.2 percent this year and stagnate in 2010. "The drop in economic output is probably now near the bottom," Merkel said in a speech in Berlin.

However, in a reference to charts of economic performance, she added that "the crisis unfortunately will not be V-shaped," with the low point followed by an immediate recovery. Some expect charts of Germany's output to have "the shape of a bathtub," with the economy stagnating before it starts improving, Merkel added.

"I hope it is a children's bathtub and not a bathtub for people with particularly long legs," she said. Merkel, whose government has put together economic stimulus packages worth some ¤73 billion ($102 billion), faces elections in September. She said her conservative bloc's central aim would be sustainable growth and fair distribution of prosperity. "We will have to run up dramatic debts in the coming years," she said.


(AP)

Monday June 22, 2009

ISLAMABAD: The government has decided to bailout budgetary imbalances of the oil and power sector due to circular debt by floating Rs 24 billion paper guarantees by the Finance Ministry next week, it is reliably learnt on Saturday. The Finance Ministry has calculated that the total accumulated impact of this paper injection would be Rs 79 billion in terms of circular debt reduction.

The Finance Ministry revealed that main advantage of the exercise is that cash transfers were not involved and only book adjustments would be made in the accounts, said the sources. The sources said that the main beneficiary of the process would be state-owned oil marketing company Pakistan State Oil (PSO), which fearing that its LCs might default due to liquidity problem had recently sought the SOS from the government.

The sources in the Finance Ministry revealed to Business Recorder that the process would start from Pakistan Electric Power Company (Pepco) that would pay to electricity producers after keeping their margins. In return, the electricity producers would pay to the furnace oil suppliers and the last end of the chain would be oil and gas producers.

The sources said in the end, state owned exploration companies, OGDCL and PPL would transfer the equivalent amount of their dividends to the government. They said the Finance Ministry had agreed to inject Rs 24 billion in the balance sheet of power sector to be initiated from the Pepco and the process would continue to reduce circular debt.

The sources further said that the state guarantees were expected to be launched early next week, and the process was expected to be completed within the week, as the companies would be deciding dividends at the end of fiscal year.

"The government plans to inject some cash in the system in the first quarter of the next fiscal to improve the financial health of power sector and the PSO, and the sources hoped that reduction of subsidies on electricity from July were likely to bring liquidity in the power sector.

The Finance Ministry decided to carry out the exercise as the PSO had requested the government to make immediate release of Rs 50 billion to ease its financial situation for continuing fuel supply in the country, said the sources. Earlier, the PSO management requested the Petroleum and other concerned ministries for immediate release of Rs 30 billion that was not entertained due to reluctance of the Finance Ministry.

The PSO dues against different clients have piled up to Rs 83.6 billion, putting heavy burden on the state-run marketing company. The PSO is the major supplier of furnace oil to power sector that is to recover Rs 20.823 billion from Water and Power Development Authority (Wapda); Rs 33.252 billion from Hubco; Rs 21.203 billion from Kapco; and Rs 2.736 billion from PIA.

The PSO is to recover Rs 5.092 price differential claims (PDCs) on petroleum products from the government. Owing to non-payment of dues from the power sector, the PSO has defaulted to oil refineries and it is getting problems to get fuel supply from them. The PSO is to pay Rs 62.126 billion to the oil refineries - Rs 30.221 billion to Parco; Rs 9.612 billion to PRL; Rs 9.187 billion to ARL; Rs 8.059 billion to NRL; and Rs 5.047 billion to Bosicor.


(BRecorder)


Monday June 22, 2009

Lahore: The former central chairman of Pakistan Hardware Merchants Association (PHMA) Haji Muhammad Asif has welcomed withdrawal of sales tax on diesel engines and spare parts as it would benefit the textile and sugar industries.

Addressing a meeting of PHMA Asif said that only 7 out of 200 spare parts of diesel engine were manufactured in Pakistan and the remaining spare parts were being imported from China.

He said if the diesel engines and their spare parts were available on cheaper rates, then it would benefit the small farmers. "It will reduce the cost on crops and farmer will be more well to do and by which country shall progress further", he added.

He said the government should pay more attention to the needs of agriculture sector as it was backbone of country's economic and social stability. Asif said that industries were being shut down due to shortage of electricity as there was hardly any work for the industries to carry out. He said the elimination of electricity load shedding and progress of industries should be ensured.


(BRecorder)


Monday June 22, 2009

KARACHI: The rupee resisted sharp fall against dollar on the currency market during the week ended on June 20, 2009, amid rising trend in remittances and foreign exchange reserves. On the interbank market, the rupee lost 40 paisa in relation to US currency for buying and selling at 81.35 and 81.40, respectively.

On the open market, the rupee shed 10 paisa versus dollar for buying at 81.10 and 5 paisa for selling at 81.15, while it gained 30 paisa versus euro for buying at Rs 112.70 and 20 paisa for selling at 113.80.

More declines are expected before the end of the outgoing financial year, but it is also likely that the rupee may halt steep losses versus the greenback. Next week, the rupee may trade in the range of 81.50-81.60.

The rupee moved cautiously versus the dollar as it tried to resist sharp losses despite the fact that demand for dollars was up by importers. However, rising trend in home remittances and foreign exchange reserves assisted the rupee in halting fall versus the US currency.

The weak economic scenario has faded the demand by the exporting countries and it seems that the high cost of production may hurt exports. If exporters get expected incentives in the trade policy, which is likely in July next, then the country's exports might show improvement in the coming days. This factor will help in increasing foreign exchange earnings. Many importing countries of Pakistani items were not able to buy these products due to high cost as compared with other markets.

In fact, Pakistan's exporters were facing tough competition in the world market as their competitors, such as India, China and Bangladesh, were exporting to many states due to cheap rates and better quality factor. According to the State Bank of Pakistan (SBP) weekly statement, the foreign exchange reserves rose to 11.64 billion dollars.

The government said it expected the gross domestic product (GDP) to grow by 3.3 percent in 2009-10, compared with 2 percent in the fiscal year ending June 30, 2009. But many analysts say the target seems ambitious.

Despite the nominal growth rate, Pakistan is in virtual recession as its 170 million population is growing by more than 2 percent annually, and more than a third of the people are living in poverty.


(BRecorder)

Monday June 22, 2009

SINGAPORE: Oil prices stayed below 70 dollars a barrel in Asian trade Monday as traders took profits following a recent surge, analysts said.

New York's main futures contract, light sweet crude for delivery in July, was down 39 cents to 69.16 dollars a barrel. The contract expires later Monday.

Brent North Sea crude for August delivery eased 24 cents to 68.95 dollars.

Victor Shum, an analyst with energy consultancy Purvin and Getz in Singapore, said New York crude came under pressure as traders locked in profits on the final day of trade, while a stabilising US dollar also supported lower prices.

Oil prices were due for a correction after breaching the 72-dollar mark last week amid concerns they were rising far ahead of a recovery in the ailing global economy, analysts said.

"A price correction in oil is long overdue and the US dollar stabilisation would continue to put pressure on oil," said Shum.

A stronger US currency makes dollar-priced oil more expensive for buyers holding weaker currencies, which in turn tends to dampen demand and pull the market lower.

Shum also said concerns over the pace and strength of a global economic recovery helped crimp the oil market.

"The rally in the global equities market is possibly also stalling a bit, and if the rally in equities markets is running out of steam, it will also put pressure on oil," he added.

Oil prices had plunged from record peaks of more than 147 dollars a barrel in July 2008 to around 32 dollars in December as the economic slowdown crushed demand for energy, but they have slowly clawed their way back.


(AFP)