International
Friday, November 18, 2011
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BUSINESS Asian stocks waver as Europe crisis fears weigh Associated Press
NG K NG Asian stocks wavered on Thursday, looking for direction after a credit ratings agency warning that U.S. banks could be hit hard if urope’s debt crisis spreads beyond ¿QDQFLDOO\ WURXEOHG FRXQWULHV OLNH *UHHFH Oil prices hovered above 102 per barrel, while the dollar rose against the yen and the euro. H o n g K o n g ’s H a n g S e n g dropped 0.9 percent to 18,793.28 w h i l e S o u t h K o r e a ’s K o s p i climbed 0.6 percent to 1,867.56. Japan’s Nikkei 225 index was up 0.1 percent at 8,475 while mainland China’s benchmark Shanghai Composite Index was flat at 2,467.67. Benchmarks in Singapore, Indonesia, New Zealand and India fell. Australia’s S P AS 200 edged up 0.3 percent to 4,258.20. Europe’s sovereign debt crisis is “the big overhang on the market at the moment,” said Andrew Sullivan, principal sales trader at Piper Jaffray Asia Securities Ltd. in Hong Kong. “Until (investors) see Greece default and then everyone stares at the fallout and realizes that the world isn’t ending, or the eurozone comes up with a solid plan that is financed properly until one of those two options come out we’re not really going to see that overhang move away.” Asian markets were held back as fears in Europe heightened following a rise in the interest rate or yield on 10-year Italian government bonds to near 7 percent. That’s the level that eventually forced Greece, Ireland and Portugal to seek bailouts. It was a particular concern because Italy is considered to big to bail out. That was followed by a warning from Fitch Ratings, one of the big three credit rating agencies, that U.S. banks could be “greatly affected” if Europe’s debt crisis spreads beyond the affected countries. The developments on Wednesday drove up fears about the
global financial economy. “Contagion from the eurozone debt crisis is spreading quickly, threatening to turn a regional crisis into a global crisis,” strategists at Credit Agricole CIB said in a research note. Asian investors were also fretting about the financial health of property developers sparked by concerns about sliding prices in China’s once-buoyant real estate market, Sullivan said. Shares of South Korea’s Hynix Semiconductor Inc. rose 2.9 percent after a California jury determined it didn’t conspire with a rival chip-maker to fix prices to keep Rambus Inc. out of the market. Scandal-hit Japanese camera and medical equipment maker Olympus Corp. rose 3.2 percent even after its top shareholder, Nippon Life Insurance, said it was cutting its stake to 5 percent from 8 percent. The stock has lost four-fifths of its value since a scandal erupted over the concealment of huge losses. In New York on Wednesday, the Dow Jones industrial average closed at 11,905.59, a loss of 1.6 percent, with most of the losses coming after the Fitch report was released. The Standard Poor’s 500 index fell 1.7 percent to 1,236.92. The Nasdaq composite lost 1.7 percent to 2,639.61. Benchmark crude for December delivery was down 48 cents at 102.12 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 3.22 to settle at 102.59 in New York on Wednesday. In currencies, the euro weakened to 1.3491 from 1.3512 late Wednesday in New York. The dollar strengthened to 77.02 yen from 76.94 yen.
Gold industry upbeat despite consumer slump Agence France-Presse
Global economic uncertainty will fuel the current surge in investment demand for gold, even as record prices force a slump in the jewellery market, the World Gold Council (WGC) said Thursday. Global demand for gold was 1,054 tonnes in the three months to September, up 6.0 percent yearon-year -- equal to a record high of 57.7 billion in value terms, the WGC said in a report. The increase was driven by a 33 percent rise in investment demand, with gold offering a safe haven after a US sovereign debt downgrade, plunging global equity markets and the escalating eurozone crisis. The investment surge offset a 10 percent drop in jewellery demand during the quarter as gold prices hit a record 1,920 per ounce in September. “Investors across the globe sought to protect their wealth, diversify their risk and benefit from gold’s strong returns,” the WGC said in a report. “Given gold’s proven risk mitigation properties, it is likely
that investors will continue to seek protection from economic uncertainty, which shows no signs of abating,” Marcus Grubb, WGC’s investment managing director said. “Gold’s long-term fundamentals remain strong with a diverse and growing demand base, coupled with constrained supply-side activity,” Grubb added. The yellow metal, whose key drivers are investment and jewellery, is widely seen as a safe haven for cash in times of uncertain economic conditions and high inflation. September’s record price followed frenzied buying by investors, large funds and central banks around the world. But the high costs and near double-digit inflation saw demand in India -- the world’s largest gold consumer and importer -- fall 23 percent to 203.3 tonnes in the quarter to September, from 263.9 tonnes a year earlier. “Consumer confidence has been knocked by high domestic inflation, of near 10 percent,” WGC analysts Louise Street and Johan Palmberg, said in the report.
“This adversely affected jewellery demand, impacted disposable income levels and overall consumer sentiment.” High and volatile prices during India’s festive season, which peaks with the Hindu festival of Diwali in October, deterred customers, they added. China, where there is rising demand among an ever richer middle class for luxury goods, dominated growth in the quarter, with a 17 percent increase to 200.7 tonnes. Other Asian economies such as Vietnam, Hong Kong and Taiwan also posted strong growth. The council expects India’s demand for gold to increase during its main wedding season, which runs from December to January. India’s successful monsoon this year is also likely to yield good crops and boost rural income, while easing high food inflation, the report said. “We look forward to periods of increased price stability which will result in Indian consumers being able to build gold purchases into their household budgets,” said Ajay Mitra, WGC’s managing director for Middle East and India.
Millionaires ask Congress: “Raise our taxes” Reuters
WAS INGT N - Nearly 140 millionaires asked a divided U.S. Congress on Wednesday to increase their taxes for the sake of the nation. “Please do the right thing,” the entrepreneurs and business leaders wrote President Barack Obama and congressional leaders, noting that they benefited from a sound economy and now want others to do so. “Raise our taxes.” The letter was signed by 138 members of “Patriotic Millionaires for Fiscal Strength.” The group was created a year ago during a failed bid to persuade Congress to end tax cuts for millionaires enacted under Republican former President George W. Bush. The group is now making the same request of a 12-member congressional “super commit-
tee,” which is struggling to reach a bipartisan deal to cut the deficit by at least 1.2 trillion over the next decade in order to help put the nation on sound financial footing. Obama and his fellow Democrats have been pushing for increased taxes to help do it. But Republicans, who control the House of Representatives, have said no, arguing that tax rises on the wealthy would kill jobs. “Patriotic Millionaires” reject such thinking. Eric Schoenberg, chairman of CampusWorks, Inc, a higher education technology company, said if Congress ended Bushera tax cuts it would affect him and his fellow millionaires in the group “about as much as a dead fly interrupts a picnic.” Schoenberg declined to estimate how many other millionaires agree with him, but told reporters, “There is a substan-
tial number of people who feel like we do.” Phil Villers, founder of Computervision Corp, said “Those of us who can afford it should step up. That is our message to the super committee. We hope they listen.” Schoenberg and Villers were among a group of about two dozen millionaires who held a news conference after attending a hearing on job creation chaired by Democratic Representative Raul Grijalva, head of the Congressional Progressive Caucus. The millionaires planned a busy day, with hopes to visit a number of lawmakers, including those on the super committee. “God bless them,” Grijalva said after the millionaires appeared before his caucus. “They are successful and they are wise.”