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Hong Kong unveils major bank reforms

The Hong Kong Monetary Authority (HKMA) unveiled a series of liberalisation measures to make the territory's banking sector more competitive, including a phased-in deregulation of interest rates.

The moves were in response to a far-reaching Banking Consultancy Study commissioned by the authority in 1998.

HKMA Deputy Chief Executive David Carse said the study pointed to increases in competitive pressures globally.


Intel: Santa Clara, Calif-based Intel Corp said its fiscal second-quarter net income rose to $1.7 billion, or 51 cents per share, from $1.2 billion, or 33 cents, in the comparable period a year ago.

Ford: Ford Motor Co, the worid's No. 2 automaker, reported record operating profits of $2.48 billion for the second quarter up 4 per cent from a year earlier amid strong results in North America. Ford's fully diluted operating earnings rose to $2 per share from $1.91 in the 1998 second quarter.

Motorola: Wireless communications and semiconductor maker Motorola Inc has reported a larger than expected second quarter operating profit of $273 million. The maker of wireless phones, pagers and computer chips said it earned 44 cents a share before one-time items, well above last year's profit of $6 million, or one cent a share, which also excludes unusual items.

Joblessness hits fresh low in Britain

Unemployment in Britain fell for the fourth month in a row in June, taking the number of jobless to a fresh 19-year low of 1.28 million, while upward pressure on pay eased again, official data showed.

The Office for National Statistics said 5,200 fewer people were claiming unemployment benefit in June than in May and the jobless rate fell to 4.4 per cent, also a new, 19-year low.

Mergers & Acquisitions

DoubleClick—NetGravity: DoubleClick Inc. a leader in the emerging Internet advertising business said it would acquire its Silicon Valley rival NetGravity Inc in a merger that creates a one-stop shop for sending targeted ads to hundreds of the largest Web sites.

BOC: British industrial gases company BOC Group Plc agreed to a 7.2 billion ($11.2 billion) takeover by industry rivals France's Air Liquide and U.S.based Air Products and Chemicals. The Franco-U.S. deal pitched at 14.60 cash per share, signals the break-up of BOC, a company formed more than 100 years ago.

Buhrmann—Corporate Express: Dutch office products firm Buhrmann said it was buying U.S. Corporate Express in a $2.3 billion deal that will create the world's biggest distributor of offfice products.

Rhone—Hoechst: Rhone-Poulenc shareholders approved overwhelmingly plans to merge with Germany's Hoechst to form the world's largest life sciences company. The French pharmaceuticals and chemicals company said 99.5 per cent of its shareholders approved the deal that will create Aventis, a company that should have almost $20 billion in sales.

Accor—Red Roof Inns: French travel firm Accor said it had agreed to buy U.S. economy lodging chain Red Roof Inns for $613 million plus debt, in a deal that would make it the world's third-largest hotel company.

Microsoft—Rogers Communications Inc: Microsoft Corp said it would invest about $400 million in Rogers Communications Inc Canada's largest cable television company, as part of a series of deals that will accelerate interactive television services in millions of Canadian homes.

Clifford Chance—Rogers & Wells: British law firm Clifford Chance and U.S. counterpart Rogers & Wells have agreed to merge and set the stage for Germany's Puender, Volhard, Weber & Axster to join them to create the world's largest law firm.

Swisscom—Debitel: Swisscom AG said it was splashing out 2.56 billion Swiss francs ($1.63 billion) on a 58-per cent stake in Germany's debitel AG to become Europe's number eight mobile telecommunications group.

Japanese bankruptcy data

Japanese corporate bankruptcy data flashed conflicting signals from the first half of the year, although analysts considered the numbers on balance a positive sign for the nation's nascent economic recovery.

In the January-June period, bankruptcy debt rose to a postwar record while the number of bankruptcies fell, credit research firm Teikoku Databank said.

BoJ chief rules out rate rise

Japan's central bank chief Masaru Hayami all but ruled out any increase in the record low 0.5 per cent official discount rate because of the threat of deflation in the fragile economy.

Tokyo willing to lift economy

Japan signalled it was ready to spend more money if needed to bolster a nascent recovery, while the central bank promised to maintain its support with rock-bottom interest rates.

Speaking in parliament, Finance Minister Kiichi Miyazawa said he would be flexible in deciding whether to take any new fiscal measures to provide maximum support to the economy.

U.S. revenge in EU beef dispute by month-end (Box)

U.S. retaliation on $116.8 million of European Union goods in a long-running beef trade dispute should be in place by the end of July, a top U.S. trade official said.

Peter Scher, special U.S. ambassador for agricultural trade, said the United States would consider a suggestion by U.S. cattle producers to impose the heaviest punitive duties on France, Germany and Britain.

But in the end, the composition of the retaliation list will be determined by a number of factors, including a desire to minimise the impact on small U.S. businesses that depend on EU goods for much of their inventory, Scher said.

Blow to German recovery hopes

Hopes for a German economic recovery suffered another setback as figures showed retail sales and exports fell in May and a leading economic institute shaved its 1999 growth forecast for Europe's largest economy.

The data, which follows on the heels of Monday's weak German industrial output figures, helped send the euro to a life low of $1.0108 against the dollar.

Germany's Federal Statistics Office said May retail sales weakened 2.8 per cent year-on-year. It also reported a drop in exports, for so long the one bright spot in the economy.

EU seeks to stop euro rot as parity looms

European Union finance ministers agreed a common line on the euro in a last-ditch bid to stop the sickly single currency from sliding to parity with the dollar.

"The exchange rate reflects largely, differences in economic development and temporary factors such as Kosovo," Finnish Finance Minister Sauli Niinisto said at the end of a meeting.

"The euro has potential for appreciation, firmly based on internal price stability. As the European economy is now clearly recovering, this is likely to be reflected in the exchange rate in due course," Niinisto, who chaired the EU meeting, said.

The ailing euro—faced with the prospect of a barrage of data this week showing the strength of the U.S. economy—plumbed a new low of $1.0114 before recovering slightly to around $1.0150.

The euro has now shed roughly 15 per cent of its value against the dollar since hitting a high just above $1.19 hours after its debut on January 4.

Analysts have critised European policy makers for sending conflicting signals about how they view the euro bloc's economy and their currency's slide. They say the divergent views have contributed to the euro's weakness.

Niinisto and other ministers present said they hoped the rot would now stop.

"The euro is a currency for which 11 countries speak and this may have created confusion on the markets," said Italian Treasury Minister Giuliano Amato, tacitly admitting past mistakes.

"What we agreed is that the president of the Euro-11 area speaks for everybody. If anybody has to say something which has been agreed," Amato added.

The newly agreed common line echoed almost word for word statements made by European Central Bank governors since their last meeting on July 1.

SocGen says no to BNP's fresh offer

French bank Societe Generate rejected an increased takeover bid from rival BNP, throwing the outcome of the three-way battle in France's banking sector into the hands of investors.

In a brief statement, SocGen sought to woo shareholders to support its friendly bid for Paribas by estimating that its profit would double in the first half of 1999 compared to the same period in 1998.

Fiat pinning hopes on Punto relaunch

Italy's Fiat said it was investing 700 million euros ($708.6 million) in a new version of its best-selling Punto model aiming to manufacture 600,000 to 700,000 units a year and sell half of those outside Italy.

The first Punto was Europe's best-selling car in 1997 and Fiat is pinning its hopes on the redesign to bring its auto unit into the black after piling up losses since the third quarter.

Japanese shares soar to 21-month high

Tokyo shares closed at a 21-month high, but most other Asian stock markets ran out of steam after a strong start in the morning.

Hong Kong and Taiwan closed down more than one per cent and Seoul lost more than two per cent. Australian stocks rose just 0.3 per cent and Singapore 0.8 per cent.

The Nikkei 225 average finished up 1.9 per cent at 18,275 as foreigners bought heavily into high-technology and blue-chip shares.

Hong Kong's Hang Seng Index closed down 1.1 per cent at 14,062, after an early surge ran into profit-taking on concerns that more blue chips planned share placements.

Australia's All Ordinaries index ended 0.3 per cent higher at 3,050.2.

The Dow closed Friday up 0.6 per cent at a record closing high of 11,193.70, spurring Asian markets higher in early trade on Monday.

In Seoul, the Korea Composite Stock Price Index closed down 2.3 per cent at 1,004.3 after hitting 1,053 as investors felt the recent rally might have peaked.

Singapore's Straits Times Index ended up 0.8 per cent at 2,198.8 largely due to gains in a few heavyweights like SingTel Singapore Press Holdings and some banking stocks.

Taiwan stocks closed down one per cent at 8,463.9 after heavy technical resistance and active selling by local mutual funds took the wind of out of an early Wall Street-led rally.

Mumbai shares leapt over five per cent, and Karachi shares also rose five per cent after guerrillas in Kashmir began to withdraw in line with an agreement between India and Pakistan.

Thailand's key index ended up 0.5 per cent at 511.87 while New Zealand shares ended at 2,197.2, down 0.6 per cent.

Malaysia's Composite Index ended flat at 851.49, while Philippine shares closed 0.4 per cent higher at 2,606.2.

Moderate earnings seen for Canadian companies

Other than some gushing gains in the oil-and-gas sector, the upcoming round of second quarter earnings reports in corporate Canada will show only moderate improvements over last year, analysts say.

An almost doubling in the price of crude oil since early 1998 will show strongly in Canadian oil-and-gas company earnings.

Volvo admits price fixing

Volvo Motor Corp suffered a serious dent to its image when it admitted supporting secret agreements to fix car prices in Britain, keeping them higher than in mainland Europe.

British trade practices watchdog, the Office of Fair Trading (OFT), said Volvo Car UK, the company's British arm, had given written assurances that it would not repeat the offence. Further violations would expose it to punishment including stiff fines.

Japan exporters ease pressure on dollar

Japanese exporters, with a helping hand from the Bank of Japan (BoJ), have completed much of their currency hedging for the July-September quarter, easing downward pressure on the dollar for now.

But they are poised to start selling dollars for the second half of this fiscal year to next March if the spot rate rebounds above 123 yen, dealers and corporate sources say.

Asia faces tough choices

Asian financial regulators face tough choices in reforming their insurance markets.

Open up to foreign competition now and put at risk domestic insurers pushed to the edge of insolvency by Asia's economic crisis, or hold back and block the capital and expertise needed to strengthen indigenous industries long term.

The problem is that insurers are generally so weak either option is likely to see a number of failures.

Asia has about 850 insurers vying for a slice of the region's fast-growing $620 billion a year market. The bulk of premiums though are concentrated in just two markets—Japan, the world's biggest at $490 billion and South Korea, worth $57 billion.