USA
Cautious on Syria, Obama moves to help rebels In his first year in office, US President Barack Obama sent a letter to Syrian President Bashar al-Assad seeking a new start to a long-strained relationship. In his third year, Obama demanded that Assad step down. Now, nearing the end of his first term, with a presidential election looming in November, Obama is moving cautiously toward greater support for Syrian rebels, as international diplomatic efforts that had been Obama’s first preference falter. Reuters has learned that the White House has crafted a presidential directive, called a ‘finding’, that would authorise greater covert assistance for the rebels, while still stopping short of arming them. It is not clear whether Obama has signed the document, and US officials declined to comment on the finding, which is a highly classified authorisation for covert activity.
Treasury Secretary urged to investigate ZTESeventeen US lawmakers have called on Treasury Secretary Timothy Geithner to investigate ZTE Corp, the Chinese telecommunications equipment maker, over allegations it sold a surveillance system and banned US computer equipment to Iran. In a letter sent to Geithner, the members of the House of Representatives — 16
Republicans and one Democrat — wrote, ‘We urge your department and other concerned agencies to examine the nexus between ZTE and Iran and, if warranted, take action to prevent companies that assist the repressive policies of the Iranian regime from expanding in the United States.’
WORLD
China struggles to present Bo case despite murder chargeChina’s leadership faced continued resistance in its efforts to hand down final judgment against deposed politician Bo Xilai, despite moving swiftly to wrap up a murder charge against his wife who now risks the death penalty. Bo Xilai, once a contender for the top rungs of power, and his wife have been disgraced in the nation’s biggest political scandal in two decades, which centres on the murder in China of a British businessman who had been a close family friend. Bo has not been implicated in the murder but has been accused of breaching internal party discipline, sometimes code for corruption.
Israel’s top court delays evacuation of settlementIsrael’s Supreme Court on Friday delayed by at least three weeks the scheduled evacuation of an unauthorised West Bank settlement outpost that has become a symbol of settler defiance. The court said it has scheduled another hearing for the state to argue its case against the evacuation on August 21, after previously ordering the Migron outpost be
dismantled by August 1. The Migron outpost, about 15 kilometres (10 miles) north of Jerusalem, was built on privately-owned Palestinian land, a practice the court outlawed decades ago. The state asked to delay the operation until the end of the Muslim holy
month of Ramadan, citing security concerns that an evacuation during this period could set off clashes between settlers and Palestinians. Migron settlers have resisted efforts to dismantle the enclave, challenging Palestinian claims of ownership and petitioning the court to remain in their homes.
AUSTRALIA
Telstra has announced a number of price increases tipped to hit landline bills and some mobile phone plans. In a post on the company’s blog, Telstra’s Executive Director of Customer Service, Peter Jamieson announced the price rises will come into effect on October 1. The biggest changes are to landline pricing and local calls, which will affect people that rely on their home phone. Three of Telstra’s HomeLine plans — Complete, Plus and Advanced — will see an increase of two cents per call. Access fees on half of the HomeLine plans will rise, and calls to 13 numbers from landlines will increase from 30 cents to 35 cents for all Telstra customers.
Troubled surfwear retailer Billabong says it will allow TPG to look at its financial accounts following the US private equity group’s USD 695 million takeover offer. TPG unveiled a second bid for Billabong, offering USD 1.45 a share. Billabong said its board and advisers had reviewed the proposal in detail. They had decided to allow TPG to carry out non-exclusive due diligence in order to reduce the conditions attached to the bid and improve its understanding and valuation of the retailer. However, Billabong said that the due diligence process, which is expected to last several weeks, would not necessarily lead to TPG proceeding with a takeover.
Coles has extended its winning streak over industry goliath Woolworths, chalking up stronger sales than its larger rival despite a further slide in grocery prices. And the smaller supermarket chain is likely to dominate sales growth for several more years despite the fact it is opening stores at a slower rate, industry experts say. Wesfarmers, the parent company of Coles, revealed that the supermarket chain chalked up USD 26.2 billion in food and liquor sales last financial year — up 4.6 per cent on the previous year. But it came in a mixed year for the group’s portfolio of retail businesses, with sales sliding at Target, while stalling at Kmart.
BANGLADESH
Bangladesh’s overall import orders entered into a negative territory in the fiscal year (FY) 2011-12, mainly due to lower import of food grains and luxury items, officials said. Opening of letters of credit (LCs) against imports, generally known as import orders, registered a negative growth by 4.29 per cent in the FY ’12 against 34.04 per cent growth in FY ’11, according to the central bank statistics. “The declining trend may continue in the coming months as the central bank wants to curb inflation through discouraging credit flow to the unproductive sectors,” a senior official of the Bangladesh Bank (BB) told BBN. The latest statistics of the BB showed that the import LCs worth USD 36.93 billion were opened in the FY ’12 against USD 38.58 billion a year ago.
The readymade garment owners have agreed to clear salaries, festival bonus and other financial benefits of the workers
before the upcoming Eid-ul Fitr to avoid any unrest of labours. The assurance came from a meeting held at the Home Ministry in Dhaka with Home Minister Shahara Khatun in the chair. “We’ve agreed to clear all payments, including wage and festival bonus before the Eid,” President of the Bangladesh Garment Manufacturers and Exporters Association, Shafiul Islam (Mohiuddin) told the reporters after the meeting. Mohiuddin also sought intervention of the minister to keep the commercial banks open on the holidays as well as a day before the Eid festival to facilitate the country’s highest foreign currency earning sector.
CHINA
China’s solar firms warned of a trade war on Thursday, calling on the Chinese government to strike back against an anti-dumping complaint filed by rivals in Europe, but the Europeans said they would not be put off by retaliation threats. Companies led by Germany’s SolarWorld have asked the European Union (EU) to investigate claims that Chinese rivals had been selling their products below market value in Europe. The European Commission, which has declined to comment on the issue, has 45 days to decide if it will start an investigation. SolarWorld confirmed the submission by the so-called EU ProSun group, which comprises 25 members in Germany, Spain, Italy, and other EU countries.
The government of Changsha, the capital of central China’s Hunan province, has launched an 829 billion yuan (USD 130 billion) investment stimulus programme to bolster the local economy, state media has reported. The money would be spent on 195 projects,
including airport, subway and urban infrastructure facilities, as well as developing energy efficient industries, said a report by the official China News Service. The government of Changsha, a city known for its machine-making and non-ferrous metal industries, would also speed up financial reform and innovations, said the report, which provided no details about how the programme would be financed.
EUROPE
European plane maker Airbus delayed the introduction of its newest passenger jet, the carbon-composite A350, as parent EADS unveiled better-than-expected second-quarter earnings lifted by resilient demand for its existing range of jetliners. The three-month delay follows a glitch in wing production and pushes first delivery of the all-new A350 — Europe’s answer to the Boeing 787 Dreamliner — into the second half of 2014. Delivering his first results since stepping up from the Airbus unit to become head of Europe’s largest aerospace company in June, EADS Chief Executive Tom Enders said improving profits by delivering on major projects would be a top priority. “Another focus of our efforts is to further integrate and globalise EADS,” he said.
Investors are pushing some of the world’s biggest hedge funds to show that their traders played no part in the interest rate
rigging scandal plaguing major banks. These hedge funds have responded with in-depth internal probes which they hope will assure investors that they did not collude with the banks, are completely clean and will not become embroiled in the affair, people
familiar with the funds said. Regulators across the globe are investigating whether banks tried to rig the London inter-bank
offered rate, a benchmark used to set the price of trillions of dollars of financial products. None has publicly confirmed they are looking into the activity of hedge funds or alleged any wrongdoing by them.
British bank Barclays Plc pledged to repair the damage to its reputation caused by its part in the interest-rate rigging scandal that has rocked the banking industry, after beating forecasts with a four billion pound (USD 6.3 billion) profit. “We are sorry for the issues
that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders,” Chairman
Marcus Agius said on Friday. “I am confident we can, and will, repair the reputational damage done to our business in their eyes and those of all our stakeholders,” Agius said, reaffirming a commitment to deliver a return on equity of 13 per cent.
INDIA
ITC Ltd posted 20 per cent jump in its net profit for the first quarter that ended on June 30, 2012 at IRs 16.02 billion, even though net sales grew tad lower at 15 per cent to IRs 66.52 billion due to lower sales growth of the cigarettes business on back of recent increase in taxes and flat sales of the hotel business on back of the weak economic environment. However, the non-cigarette FMCG business comprising of branded packaged food, personal care, education and stationery performed exceptionally well by halving its losses and 23 per cent jump in revenue growth at IRs 14.73 billion. ITC said the branded packaged food enhanced its market standing across categories and posted significant growth in revenues during the quarter.
The government will consider reducing the quantity of sugar that mills need to contribute for supply through ration shops
in 2012-13 after assessing the production situation, a top Food Ministry official said. “There is n question of reducing levy sugar quota for the 2011-12 marketing year (October through September). We will take a view on this issue for next year after taking into
account the production situation,” Food Secretary Sudhir Kumar told reporters. At present, sugar mills are required to provide
10 per cent of their total production as levy sugar, which is meant for public distribution system (PDS), at subsidised rates. The sugar industry has been demanding levy sugar quota to be reduced to five per cent in 2011-12 marketing year to save their inventory costs. The government needs 2.8 million tonnes of sugar for PDS supply in a year.
JAPAN
Nomura Holdings Inc CEO Kenichi
Watanabe resigned on Thursday over a widening insider trading scandal and will be replaced by company veteran Koji Nagai, as Japan’s top investment bank warned additional cases could come to light. The management shake-up was confirmed in a news conference at the end of a dramatic day in Tokyo that also saw Watanabe’s top lieutenant, Takumi Shibata, resign over leaks of insider inform-ation to clients of its securities unit in 2010. Watanabe is the second global bank boss to resign this month — Barclays Chief Bob Diamond stood down over the Libor rate-rigging scandal on July 3 — as the industry finds itself under huge political and regulatory pressure.
Japan’s core consumer prices unexpectedly fell in June from the same period a year earlier as energy prices weakened, and mild deflation is likely to persist given companies are reluctant to raise wages due to uncertainty about the global economy. The data
suggest that the Bank of Japan will remain under pressure to ease monetary policy to ensure prices start rising and to shield the economy from any damage from a strong yen. The 0.2 per cent annual decline in core consumer prices in June compared with the median estimate for a flat reading and a 0.1 per cent decline in the year to May. In a more troubling sign, the so-called core-core
inflation index, which excludes food and energy prices and is similar to the core index used in the United States, fell in June.
Japan’s Terumo Corp announced a proposal to invest 50 billion yen (USD 640 million) in capital-starved Olympus Corp intensifying a race to join hands with the scandal-hit maker of cameras and endoscopes. By taking the rare step of going public with its proposal, medical device maker Terumo appeared to be appealing to shareholders to steer Olympus away from a capital deal with Sony Corp. But analysts are unsure if the strategy will work. Olympus is in final talks with Sony to get a roughly 50 billion yen capital injection in
return for a stake, according to Japanese media reports. Terumo, as well as Fujifilm Holdings Corp, have already publicly said they are keen on an Olympus tie-up.
MALAYSIA
Tycoon T Ananda Krishnan is selling up to 375 million shares worth around 2.35 billion ringgit in the country’s largest mobile phone operator Maxis, according to a source familiar with the deal. The shares were being priced at a range between 6.21 ringgit and 6.34 ringgit per share, the source said, representing a three per cent to five per cent discount to the closing price of 6.54 ringgit. Officials at Maxis were not immediately available for comment. Ananda, Malaysia’s second-richest man, has been selling some of his assets. The deal follows a USD 2.8 billion sale of his power assets, a proposal to hive off a stake in his satellite operator Measat Global in March and the sale of a minor stake in offshore oilfield services firm Bumi Armada in April.
Plantation company, Kim Loong Resources, has allocated about 10 million ringgit for research and development to drive its
downstream business forward. Its Executive Chairman, Gooi Seong Lim, said considering the high land prices, the group would not
be actively looking to expand its land bank. Nevertheless, he said, the company has set aside fund for land acquisition if the
opportunity arose. “We aim to make this business sustainable by shifting our focus on the downstream sector to make something useful from the palm oil waste, such as developing our biogas power generator and other uses of biomass,” he said after the AGM.
PAKISTAN
Prime Minister Raja Pervaiz Ashraf said that despite fresh bailout package, turning around the loss-making Pakistan Steel Mills (PSM) remained a daunting task for the new management due to highly competitive market. The premier’s comments came 48 hours after the Economic Coordination Committee of the Cabinet approved new injection of 8.6 billion Pakistani rupees to the mills. The PSM, which was in profit till 2008, has so far accumulated 71.3 billion Pakistani rupees in losses. While chairing a high level meeting to review the new business plan of PSM, the prime minister expressed his confidence in the new management, as its CEO Muhammad Javed was heading the PSM when it was earning profits a few years ago.
Efforts for normalisation of trade between Pakistan have been dealt a serious blow, partly due to New Delhi’s reluctance in
reciprocating moves made by Pakistan to ease trade restrictions. The Pakistani Foreign Office has now curbed efforts, which
envisioned bringing the embattled neighbours closer through stronger trade ties, saying that slow progress in dialogues on other disputed issues necessitates toning down rapprochement efforts. “Prospects to abolish the negative list by December this year have
considerably dimmed,” sources in the Ministry of Commerce told The Express Tribune.
RUSSIA
The number of Russian regions declaring drought-linked states of emergency crept upward, making the official forecast for the size of this year’s harvests appear increasingly optimistic. The Altai republic became the country’s 17th region to announce that emergency regimes were in place in some of its administrative districts because of scorching heat, following the Orenburg region the day before. The temperature in the Altai republic, which borders Kazakhstan, has not dropped below 30 degrees Celsius this month,
said Governor Alexander Karlin, Itar-Tass reported. Last year, the region was the fifth-largest grain producer in the country.
Russian President Vladimir Putin made his third visit in less than a month to an area hit by devastating floods on Wednesday, and promised the government would rebuild homes as the Kremlin sought to minimise the political damage from the disaster. Putin talked to a group of pregnant women from the worst-affected town and again accused local officials of not doing enough to warn people about the rising waters. Flash floods in the early hours of July 7 killed 171 people and damaged more than 4,000 homes, mainly in Krymsk, a mountain town on the edge of the Caucasus mountains of southern Russia.
THAILAND
Thailand’s surging upper middle-income consumer base has developed an appetite for high-quality, international foods that are safe and sustainable, increasing demand in the country for beef and seafood from New Zealand. New Zealand meat exports to
Thailand have grown by 65 per cent over the last five years, driven mainly by 160 per cent growth in exports of beef, mutton and
lamb. The South Pacific nation is poised to capitalise on Thai consumers now having more baht in their pockets and their increased appreciation for well-sourced and high-quality ingredients, Karen Campbell, the trade commissioner to Thailand, said in an
interview with the Bangkok Post.
The tax incentive for long-term equity funds (LTFs) will likely be extended to encourage long-term saving. The incentive allows an LTF buyer to deduct the amount from his taxable income at the rate of up to 15 per cent of his total income but not more than 500,000
baht. “Since the incentive expired early this year with no concrete plan to extend it, few new LTF equity funds have been set up.
The value of the funds and number of unit holders has, therefore, shrunk compared with fixed-income funds, the major asset
class,” said Sathapana Leoprapai, chief executive of the Association of Investment Management Companies.
USA
The economy probably grew at its slowest pace in a year in the second quarter as consumers spent less, possibly pushing the Federal Reserve closer to pumping more
money into the economy. Gross domestic product likely expanded at a 1.5 per cent annual rate between April and June, according to a Reuters poll, after rising 1.9 per cent in the first three months of the year. That would mark the weakest pace of growth since the second quarter of 2011. “The economy is struggling to maintain altitude,” said Robert Dye, chief economist at Comerica in Dallas. The ailing economy could cost President Barack Obama a second term in office when Americans vote in November.
Facebook Inc reported a drastic slowdown in revenue growth and offered no financial forecasts to ease worries over the prospects for boosting advertising in its first earnings report as a public company, sending its shares to a record low. Facebook executives pointed to early signs of success in new advertising services, but the lack of a detailed financial outlook went over poorly with investors
hoping for evidence that the company could soon reverse the continuing slowdown in
its business. “The question is, do you get a re-acceleration in the business at some point?” said Oppenheimer & Co Analyst Jason Helfstein. “Because they didn’t give you guidance, you’re going to have to wait to find out what happens.”
Amazon.com Inc reported quarterly results that showed the growth of new businesses is boosting the profit margins of the world’s largest internet retailer. The company’s product revenue, which includes its traditional online retail business, grew 25 per cent to USD 10.79 billion. Services revenue, which includes its online marketplace for third-party merchants and its cloud computing business Amazon Web Services, surged 57 per cent to USD 2.04 billion. These newer businesses are more profitable than Amazon’s retail operations, so as they become a larger part of the company, overall profit margins grow. Amazon’s gross profit margin was 26.1 per cent in the second quarter, up from 24.1
per cent a year earlier, according to Scott Tilghman, an analyst at Caris & Co.
