USA
Falling home prices drag new buyers under water
More than one million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration (FHA) loans that require only a tiny down payment are partly to blame.
That figure, provided to Reuters by tracking firm CoreLogic, re-
presents about one out of 10 home loans made during that period. It is a sobering indication the US housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.
US on guard ahead of bin Laden’s death anniversary
President Barack Obama has reviewed potential threats to the United States before next week’s anniversary of the killing of Osama bin Laden, but there is no concrete evidence al-Qaeda is plotting any revenge attacks, the White House said on Thursday. US Navy SEALs shot bin Laden last year in a raid on the al-Qaeda leader’s compound in Pakistan before dawn on May 2, which was May 1 in the United States. The killing is touted by the Obama administration as one of its top national security accomplishments. “At this time, we have no credible information that terrorist organisations, including al-Qaeda, are plotting attacks in the United States to coincide with the anniversary of bin Laden’s death,” White House Press Secretary Jay Carney said.
WORLD
Syria, rebels trade blame over fragile UN ceasefire
The Syrian government and rebels traded blame on
Thursday for a huge explosion which killed 16 people in the city
of Hama, as a two-week-old UN backed ceasefire looked
increasingly fragile. UN Secretary General Ban Ki-moon accused Damascus of breaking its pledge to withdraw heavy weapons and troops from towns, saying he was gravely alarmed by reports of continued violence and killing in Syria. Syria blamed ‘terrorist’ bomb-makers for Wednesday’s blast. Information Minister Adnan Mahmoud also accused rebel militiamen of repeated violations of the ceasefire and said Damascus was reserving the right to respond to any violation or attack, state news agency SANA reported.
Bin Laden’s family deported to Saudi Arabia
The family of al-Qaeda leader Osama bin Laden, killed
almost a year ago by American special forces in a military town in northwest Pakistan, left Pakistan for Saudi Arabia early on Friday morning, the family lawyer told Reuters. The move ends months of speculation about the fate of the three widows and 11 children, who were detained by Pakistani security forces after the May 2 raid. “Yes, they’re being deported to Saudi Arabia,” said Aamir Khalil, the family lawyer. “It is a special flight.” The jet took off at around 1:30 am for Saudi Arabia, according to local TV channels.
Its destination in the kingdom was not known. At the house in Islamabad, where the family was being held, a white minivan pulled up to take them to the airport.
AUSTRALIA
Fast-food chain KFC has been ordered to pay eight million Australian dollar in damages to the family of an Australian girl who was left severely brain damaged and in a wheelchair after being poisoned by a chicken meal. In 2005, Monika Samaan, then aged seven, her parents and her brother were hospitalised with salmonella poisoning after eating a ‘Twister’ chicken wrap at a KFC restaurant near Sydney. KFC, owned by Yum! Brands, said it was a tragic case but was ‘deeply disappointed and surprised by the decision’ and would appeal against it. Last week, a New South Wales Supreme Court judge ruled in favour of the family, saying KFC had breached its duty of care to the girl.Home entertainment retailer JB Hi-Fi expects its profit to fall in the current financial year as its margins are impacted by heavy discounting. The company said it expected to post a net profit of USD 100 million to USD 105 million in the year to June 30, which would be down from USD 109.7
million in the previous financial year. Sales improved progressively over the three months to March 31, and the company still expects to make USD 1.3 billion in sales for the full financial year. But market-wide discounting caused JB Hi-Fi’s gross margin to fall by two percentage points in the three months to March.
Macquarie Group has sacked more than 1,300 staff after revealing one of the bank’s worst profit performances since the GFC. The full-year result was down 24 per cent after its major businesses — the high profile securities trading and investment banking
divisions — were hit by the current global market slowdown. Macquarie’s net profit for the 12 months to March 31 was USD 730
million, down from USD 956 million, The Australian reports. The majority of the 1,300 jobs lost were from Australian-based operations, with only a small percentage coming from the international businesses.
BANGLADESH
The central bank of Bangladesh is going to start a scrutiny of interest rate spread in the country’s banking sector following its increase slightly in February this year, officials said. “The central bank will examine the interest rate spread situation sector-wise to know the actual level of this spread in the banking sector,” a senior official of the Bangladesh Bank, the country’s central bank told BBN in Dhaka, without elaborating. The weighted average spread between lending and deposit rates offered by the commercial banks rose to 5.68 per cent in February from 5.63 per cent in the previous month, according to the central bank statistics. The weighted average rate on lending operations stood at 13.63 per cent in the month of February when such average rate on deposits was 7.95 per cent.
The country’s top business leaders have urged the political parties to refrain from calling strike, generally known as ‘hartal’, and look for alternative to ensure the overall economic growth. “Hartal affects import and export activities. We’re concerned about our investment and thinking whether we will invest in future or not,” President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) A K Azad told a press conference on Tuesday. “You can’t measure losses in terms of amounts of money all the time. We’re getting affected and we’re in a state of suffocation,” he noted.
CHINA
Apple Inc is likely to see its sales growth nearly double in greater China this year, but the pace will probably taper thereafter as competitors hit back with new products in the biggest global mobile phone market. To get a bigger slice of the China market, it will also have to come up with an iPhone that supports the biggest Chinese mobile carrier’s proprietary technology, settle an iPad trademark dispute and create more official sales outlets. Apple’s sales in mainland China, Hong Kong and Taiwan, expanded three-fold to USD 7.9 billion in the first quarter, making up a fifth of the total figure. “We may not see a repeat of this year’s stellar pace of growth in coming years unless Apple comes up with great products to keep up with consumers’ demand and tastes,” said Candice Wang, an analyst with research firm Analysys International.
China vowed on Thursday to double its trade with Central and Eastern European countries to USD 100 billion by 2015, as
Premier Wen Jiabao reassured leaders in the region that Beijing would deepen relations with these countries with the greatest sincerity. Polish officials, experts and investors welcomed Beijing’s commitments, saying Poland will serve as an ideal gateway between China and the rest of Europe to boost trade and investment and help stabilise the European and global economy. Beijing will offer USD 10 billion in loans to support partner projects in infrastructure, high-tech and the green economy for countries in the region, Wen said at the second annual China-Central and Eastern European Countries Economic Forum.
EUROPE
Starbucks Corp reported better-than-expected quarterly profit but global sales at established coffee shops fell short of analysts’ estimates due to weakness in Europe, sending its shares down five per cent in after-hours trade on Thursday. Sales from cafés open at least 13 months fell one per cent in the Europe, the Middle East and Africa (EMEA) region during the latest quarter.
Analysts polled by Consensus Metrix had expected a 2.2 per cent rise in EMEA same-store sales. Executives attributed the drop to weakness in Europe, which suffered its first decline in same-store sales since 2009.
The ratings agency Standard & Poor’s has cut Spain’s credit rating and warned of risks to come. S&P cut Spain two notches to BBB+, warning that the country could have to take on more debt to support its banking
sector. It has also placed Spain on negative outlook, meaning there is a risk of further downgrades to come. S&P predicts the
Spanish economy will shrink by 1.5 per cent this year, having previously forecast 0.3 per cent growth. In 2013, it expects the economy to contract 0.5 per cent, having previously predicted one per cent growth.
The two candidates in France’s presidential run-off have appeared on television, 10 days before the vote. Incumbent Nicolas Sarkozy and Socialist Challenger Francois Hollande took turns answering reporters’ questions, many of which focused on
economic issues. Hollande, who won most votes in last Sunday’s first round, polling more than 28 per cent, said France needed ‘growth’, not more austerity. Sarkozy — who scored 27 per cent — stressed the need to restore public finances. He promised to bring France’s large budget deficit down of three per cent of
GDP by next year, and to eliminate it by 2016. Hollande, for his part, called for ‘Eurobonds’ backed by all Euro Zone members to help
indebted countries.
INDIA
EBay Inc is stepping up investment in India to boost its share of a market dominated by domestic players such as Flipkart and
fend off encroachment from arch-rival Amazon.com. The e-commerce company dipped a toe into the Indian market seven years ago and stuck with a cautious approach, even as local upstarts made splashy grabs for business in a tiny but growing market. “Most of the new business models are just waiting to implode. We have chosen the cautious route, unlike a lot of Indian businesses who are blindly investing money without having
an eye on sustainability or profitability,” Muralikrishnan B, country manager for Silicon Valley-based eBay told Reuters in an
interview in Mumbai.
A day after Finance Minister Pranab Mukherjee spoke of speeding up reforms; the Union Cabinet approved a watered down Banking Bill, strengthening the perception that the government had diminished appetite for liberalisation. The cabinet approved the Bill with the provision that the voting right cap for foreign investors in private banks will be raised from 10 per cent to 26 per cent, Information and Broadcasting Minister Ambika Soni told reporters. The proposal approved by the cabinet is, however, a climb down from the position taken by the UPA for several years since it had promised investors that it would push for lifting the cap on voting rights to enable overseas players to have a say, which was in line with their shareholding.
JAPAN
The Bank of Japan (BOJ), facing mounting government pressure, eased monetary policy further on Friday by boosting asset
purchases by 10 trillion yen and pledging to buy longer-term government bonds in a show of resolve to pull the economy out of deflation. But in what might serve to cool expectations of further aggressive easing, the central bank said consumer inflation may approach its one per cent target as early as in 2014 as the world’s third-largest economy shifts towards a recovery. The central bank surprised
markets by boosting government bond
purchases under its asset-buying scheme by 10 trillion yen, double the usual amount, and increasing buying of riskier assets: exchange-traded funds and real-estate linked funds.
Influential Japanese Politician Ichiro Ozawa has been found not guilty in a funding
scandal. Ozawa, dubbed Japan’s ‘shadow shogun’ because of the backroom power he wields, had been accused of violating political fundraising laws. But he had argued it was a technical mistake of which he had been
unaware. Ozawa leads the largest faction in the ruling Democratic Party and is considered one of the most powerful men in Japanese
politics. The verdict, handed down by the Tokyo District Court, was keenly watched in Japan, with television networks breaking
into their coverage.
MALAYSIA
Palm oil, poised for the sixth monthly advance in seven, declined on speculation that costlier prices may reduce export demand from Malaysia, the second- largest producer after Indonesia. The July-delivery contract fell as much as 0.3 per cent to 3,488 ringgit per metric tonne on the Malaysia
Derivatives Exchange and traded at 3,493 ringgit in Kuala Lumpur. Prices, poised for a 1.7 per cent gain this month, have rallied 20 per cent since the end of September. Malaysian exports fell 2.9 per cent to 1.04 million tonnes in the first 25 days of April compared with the same period in March, Intertek said on April 25. Shipments lost 1.9 per cent to 1.03 million tonnes in the period, according to Societe Generale de Surveillance.
Ekuiti Nasional Bhd (Ekuinas), the government-linked private equity fund management company, will continue to seek opportunities in high potential companies in various sectors, according to Chairman Tan Sri Arshad Raja Tun Uda. “We are looking at the fast-moving consumer goods, oil and gas, education, retail, food and beverage, services and healthcare,” he said at a briefing after the announcement of Ekuinas 2011 results. Chief Executive Officer Datuk Abdul Rahman Ahmad said Ekuinas received an additional fund of 600 million ringgit from the government last year but 300 million ringgit had been allocated for outsource funds, so it now had a balance of 300 million ringgit for direct investments.
PAKISTAN
The World Bank’s (WB’S) board of directors approved two projects worth USD 550 million, aimed at supporting Pakistan’s efforts to strengthen the education and natural gas sectors, which are critical to Pakistan’s growth and development. According to WB press statement issued on Friday, the USD 350 million Second Punjab Education Sector Project will support the government of Punjab’s education sector reform programme designed to increase child school participation and student achievement. While, the USD 200 million Natural Gas Efficiency Project aims to enhance the supply of natural gas in Pakistan by reducing the physical and commercial losses in the gas pipeline system.
Pakistan’s foreign exchange reserves fell to USD 16.42 billion in the week ending April 20, from USD 16.6 billion the previous week, the State Bank of Pakistan (SBP) said on Thursday. Reserves held by the SBP fell to USD 11.92 billion from USD 11.97 billion a week
earlier, while those held by commercial banks fell to USD 4.50 billion from USD 4.63 billion. Foreign exchange reserves hit a record USD 18.31 billion in July last year, boosted by inflows of USD 411 million, including a USD 191.9 million loan from the World Bank and a USD 196.8 million loan from the Asian Development Bank. Higher exports and record remittances have also supported Pakistan’s reserves.
Remittances from Pakistanis overseas rose 21.45 per cent to USD 9.73 billion in the first nine months of the 2011-12, compared with USD 8.02 billion in the same period last year.
RUSSIA
Prime Minister Vladimir Putin agreed to consider allowing Russian railways to recoup its investments through higher cargo rates on Thursday. He made the statement at a railways meeting at Moscow’s Rizhsky Station after Russian Railways Chief Vladimir Yakunin complained about lack of funds. The government should think about ensuring reasonable profitability for the state company’s investments, he said. The tariffs would be based on the so-called regulatory asset base. The system would help attract long-term investment from domestic and foreign investors such as pension and insurance funds, he said.
The Economic Development Ministry expects the country’s economy to grow 3.4 per cent this year before expanding 4.7 per cent in 2015, according to an updated version of the forecast that was approved at the presidium meeting chaired by Prime Minister Vladimir Putin on Thursday. But it remained unclear whether the new government to be formed after Putin moves to the Kremlin next month will choose to proceed with developing innovations or continue to rely on the burgeoning energy sector. “There’s no final decision yet,” Deputy Economic Development Minister Andrei Klepach told journalists after the meeting.
THAILAND
A new set of agricultural strategies for the 2012-16 period were approved by the Thai cabinet at a meeting in mid-March, with
much of the focus placed on improving food sustainability, promoting the cultivation of high-quality produce and enhancing international competitiveness. The agriculture sector accounted for more than 11 per cent of GDP in 2009, the last year for which statistics were available. Thailand is a major exporter of a number of food products; it was the world’s top exporter of rice in 2009 and was set to reach a record sugar yield in 2010-11, with production predicted to climb as high as 9.47 million tonnes between November 2010 and November 2011.
The head of Thailand’s Department of Intellectual Property said the United States is likely to announce that Thailand, among other countries, will remain on its priority watch list for another year by the end of this month. Director General Patchima Thanasanti said although Thailand has continuously campaigned and acted against the infringement of intellectual property, the United States views that the problem has not declined in the past five years and that Thailand has no serious law to protect intellectual property. Her department is trying to legalise the copyrights and trademarks law as soon as possible, while the government is trying to push such law into enforcement.
USA
US economic growth likely cooled modestly in the first quarter as replenishing of inventories by businesses slowed, though stronger demand for automobiles and a lift to homebuilding from warm weather blunted the blow. Gross domestic product is expected to have expanded at a 2.5 per cent annual rate, according to the median of a Reuters poll. That would be a moderation from the fourth quarter’s 3.0 per cent pace, but decidedly stronger than economists’ predictions early in the quarter for growth below the 1.5 per cent level. In some ways, Friday’s report on GDP should stack up well when compared with data for the fourth quarter. In the final three months of last year, inventory building accounted for nearly two-thirds of the economy’s growth.
Amazon.com Inc’s quarterly results beat Wall Street’s most bullish expectations as heavy spending by the world’s largest internet retailer began to pay off through sales of more digital products on its new Kindle Fire tablet. Amazon shares surged almost 15 per cent,
increasing the company’s market value by more than USD 10 billion and boosting the stake of Chief Executive Jeff Bezos by almost USD 2.5 billion. Analysts cheered first-quarter earnings and revenue which comfortably exceeded their forecasts. “It’s been a couple of years since Amazon beat expectations on both the top and the bottom line,” said Colin Sebastian, an analyst at Robert W Baird & Co. “That’s reminiscent of the Amazon from three or four years ago.”
Richmond Federal Reserve Bank President Jeffrey Lacker said on Friday he believes the US central bank will have to raise interest rates in mid-2013, not late 2014 as suggested in this week’s policy decision. For a third meeting running, Lacker was the lone dissenter against the Fed’s calendar-linked interest rates guidance. “I dissented because I don’t believe economic conditions are likely to warrant an exceptionally low federal funds rate for this length of time,” Lacker said. “My current assessment is that an increase in interest rates is likely to be necessary by mid-2013 in order to prevent the emergence of inflationary pressures,” he added.
