!logo.jpg (6328 bytes) . .


Trade opportunities
Investment opportunities
Capital market
Macro Economy



1999    1998    1997

Company's Annual
Report and Earnings 
Industry and Economy
Pak Development

Subscribe Now
Why Advertise
Guest Book
Feed Back
Contact Us 



bar.jpg (6247 bytes)

1_popup_home.gif (1391 bytes) news.gif (6529 bytes)


August 01, 1999

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade

Dollar gains as Fed keeps mart guessing

European stock markets closed mostly higher while the dollar gained as U.S. Federal Reserve Chairman Alan Greenspan gave few new clues on U.S. interest rate policy.

Initial remarks by the head of the U.S. central bank in the second part of his testimony before a U.S. Senate Banking Committee were little changed from his testimony last week, leaving little for traders to chew on.

Last week, before a U.S. House of Representatives panel, Greenspan warned that the Fed would act "promptly and forcefully by raising interest rates at the first sign of rising U.S. inflation.

The Dow Jones Industrials Average was up around 15 points at 3pm, as dealers waited for any further hints on interest rate policy during later questioning by the Senate panel.

The Fed next meets to discuss interest rates on August 24, and market participants are split on whether it will hold its monetary policy course.

Greenspan repeats inflation warning

Federal Reserve Chairman Alan Greenspan repeated his warning that the Fed would act "promptly and forcefully" if inflation appeared set to rise and held firm in his opposition to a large tax cut.

But the world's most powerful central banker had little opportunity to elaborate on his inflation warning, delivered last week for the first time and repeated in identical testimony to the Senate Banking Committee.

Lawmakers, speaking ahead of a crucial Senate debate on a massive package of tax cuts, repeatedly asked Greenspan for his views on the budget surplus and how to use it rather than for his views on monetary policy.

"We probably would be better off holding off on a tax cut immediately," Greenspan said, citing the need to prepare for strains on entitlement programmes such as Social Security.

Greenspan said the Fed was keeping a close eye on the tight labour market and other imbalances that might cause the economy to overheat.

Although he raised the threat of swift and aggressive rises in interest rates should price pressures build, he also emphasised the central bank was in no hurry to boost rates.

"If new data suggest it is likely that the pace of cost and price increases will be picking up, the Federal Reserve will have to act promptly and forcefully," he said.

But he tempered that statement by making clear that the Fed was not "committed in short order" to follow up on a small rate rises.

EU seeks to outlaw states' golden share

The European Commission went on the offensive against governments protecting their prized national companies through so-called golden shares.

The European Union executive said it was taking France to the European Court of Justice because of the way the French government held on to its special single share in oil giant Elf Aquitaine in order to prevent a hostile foreign takeover.

In a statement, the Commission said French law governing the special powers of golden shares was incompatible with EU legislation on the free movement of capital, part of the 15-nation bloc's single market policy.

In Paris, the finance ministry said the government's Elf share did not breach EU law and was designed to protect the national energy supply. It said it would fight the case.



DuPont: DuPont Co, the largest U.S. chemical company, said that second-quarter profits rose 6 per cent. DuPont said earnings from continuing operations rose to $886 million, or 78 cents a diluted share. In the same period last year, it posted earnings of $839 million, or 73 cents a diluted share.

Cadbury: British confectionery and soft drinks firm Cadbury Schweppes Plc said that pretax profits fell by 5.6 per cent in the first half of 1999 to 252 million.

Abbey: British bank Abbey National Plc posted a 17 per cent jump in first half profits. Pre-tax profit rose to 875 million ($1.4 billions) including 60 million from the sale of its stake in insurer Irish Permanent, from 748 million in the same 1998 period.

Akzo: Dutch chemicals and pharmaceuticals group Akzo Nobel posted second quarter profits down one per cent. Second-quarter earnings came in at 217 million euros ($230.8 million) — at the upper end of analysts' expectations.

Deutsche Bank: Deutsche Bank AG fulfilled expectations with a nearly 20 per cent rise in first half operating profit but beat market forecasts by posting an 80 per cent jump in trading profit. Operating profit in the six months, which for the first time included U.S. subsidiary Bankers Trust, rose 19.2 per cent to 2.035 billion euros ($2.16 billion) and bullish financial markets boosted trading income to 2.283 billion euros.

Argentaria: Spain's third biggest bank Argentaria reported a 17.1 per cent increase in its first half profit to 270.46 million euros, fuelled by strong growth in its basic banking business.

Halifax: Britain's largest mortgage bank Halifax Plc reported a five per cent rise in underlying first half profits. The mortgage bank reported pre-tax and pre-exceptionals profits for the six months to June 30 of 885 million ($1.41 billion), up five per cent on the same half the previous year.


Donors offer $5.9b aid to Indonesia

Donor countries pledged $5.9 billion of assistance for Indonesia this year but stressed the need for continued economic reform, a smooth political transition and a stepped-up fight against corruption.

At the end of a two-day annual meeting of almost 30 donor countries and international organisations, organised by the World Bank here, the donors hailed "the significant progress," both economic and political, made by Indonesia in the past year.

But they stressed the need for Indonesia to stay in the course of economic reform, step up the fight against corruption and complete political transition.

The Indonesian government needs to "persevere and continue to make good decisions in politically difficult times," he added.

Indonesian Finance Minister Ginanjar Kartasasmita said the economy is on the road to recovery after its economic meltdown.

But, he added, "a return to the pre-crisis days of high growth and accelerated poverty reduction is still far from assured" and continued support from the international community was vital.

Ginanjar on Tuesday said he expected the economy to grow at 1.5 to 2.5 per cent this year, with inflation of five per cent by the end of the year.

Japan said it would give Indonesia $1.67 billion in loans and grants in 1999, part of the $5.9 billion pledged by international creditors. :

Most of the Japanese money has already been pledged — Japan announced a $2.4-billion assistance package in February under the Miyazawa plan to help crisis-hit Asian economies.

The package involved a $1.5 billion loan from the Export-Import Bank of Japan and $900 million in official development assistance (ODA) loans.

Eni to invest $5.5b to tap Libyan gas

Eni SpA, Europe's second-largest natural gas supplier, will spend $5.5 billion to develop two Libyan gas fields, the biggest foreign investment since the handover of suspects in the Lockerbie airliner bombing.

Under the contract, Eni also will build a 370-mile pipeline under the Mediterranean Sea from Libya's northern coast to Sicily to drain gas from the Wafa field in the Sahara desert and an offshore deposit. Talks on the plan began in 1996.

Korean banks to restructure Daewoo

Daewoo Group's major Korean creditors took control of the cashstrapped conglomerate's restructuring programme, reassuring markets nervous about the risk of a collapse.

Foreign banks holding 20 per cent of Daewoo's $50 billion debt had been on the verge of calling in their loans to the firm, South Korea's second-largest conglomerate, the local banks said.

UK's euro plans unchanged, Blair

Prime Minister Tony Blair denied he had cooled on his plan to make Britain part of a successful euro and pledged to lead a campaign to keep Britain at the heart of Europe.

"We want the single currency to succeed. We stay fully engaged and positive. We prepare," Blair said in an unashamedly pro-European speech at the London Business School.

"We will recommend Britain joining providing the economic conditions are right. We do not close the door. "


Mergers & Acquisitions

Reckitt & Colman—Benckiser: Dutch cleaning products company Benckiser and Britain's Reckitt & Colman unveiled plans to merge to form a world leader in household cleaning. The tie-up will give Reckitt & Colman shareholders 59.1 per cent of the new group and Benckiser 40.9 per cent. The top job has gone to the Dutch side, with Bart Becht to take the post of chief executive officer.

NTL—CWC: Nasdaq-listed NTL Inc bought the cable TV arm of Britain's market leader Cable and Wireless Communications Plc in an 8.2 billion ($13 billions) deal which might not be its last.

Shire—Roberts: Shares in Britain's Shire Pharmaceuticals Group Plc rose, after the company confirmed it was merging with U.S. peer Roberts Pharmaceutical Corp. Under an all share deal, Roberts will exchange each of its shares for 1.1374 Shire American Depository Receipts in a transaction valuing each Roberts share at $30.71 and the whole of the U.S. company at around $1.0 billion.

Hicks Muse—CEI Citicorp: Private equity group Hicks, Muse, Tate & Furst took control over one of Argentina's largest media groups, CEI Citicorp Holdings, after agreeing to pay over $124 million for an increased stake.


Japan's domestic vehicle output hits 20-year low

Japan's domestic vehicle output shrank more than three per cent in the first half of this year from a year earlier, falling under the five million mark for the first time in 20 years, an industry body said.

From January to June, domestic vehicle output fell 3.3 per cent year-on-year to 4.93 million units, the Japan Automobile Manufacturers' Association said.

The last time Japan's car industry produced less than five million units in the first half of a calendar year was in 1979, when output totalled 4.63 million vehicles.

Australia lauded as star economy of developed world

Australia has been lauded as the star economy of the developed world in a U.S. investment bank report that forecasts sharp gains for the Aussie dollar.

The Goldman Sachs report — "Australia. Never had it so good!" — predicts significantly better performances for Australian markets, including a "relatively cheap" stock market.

Philips, LG tie up to form flat-panel display giant

European giant Royal Philips Electronics tied up with South Korea's LG Electronics Inc to form one of the world's largest suppliers of flat-panel displays.

The $1.6 billion deal marked the first major foreign investment in South Korea's electronics market since late 1997, when the country suffered a foreign exchange crisis.

Under the deal, Philips Flat Display Systems (FDS), a unit of the Dutch electronics firm will buy a 50 per cent stake held by LG Electronics in its LCD business, the two firms said in a joint statement.

BoJ to maintain policy

Japanese economic activity rose in May, helped by an improvement in the service sector, but the central bank said it would stay with its ultra-easy credit policy until more convincing signs of economic recovery emerged.

"The Bank of Japan will maintain monetary policy until the threat of deflation is gone," BoJ Governor Masaru Hayami said in remarks prepared for delivery to a regular meeting of central bank branch managers.

U.S., Vietnam strike major trade pact

Former enemies Vietnam and the United States struck a landmark trade pact moving closer to full commercial ties and signalling Hanoi's intent to integrate with the world economy.

U.S. Deputy Trade Representative Richard Fisher and Vietnam's Trade Minister Truong Dinh Tuyen reached "agreement in principle on the deal after several days of marathon talks between negotiators, including a 17-hour session on Saturday.

Fisher said he hoped the agreement could be enacted by year-end after some technical issues had been finalised and the U.S. Congress and Vietnam's National Assembly had approved the pact.

Ireland plans to invest $50.7b

Ireland announced it planned to invest 38 billion punts ($50.7 billion) by 2006.

Finance Minister Charlie McCreevy told a news conference that the government would approve the plan in September but that it had already agreed a rough figure of 38 billion punts to be spent over the next seven years.

EU imposes duties on India steel wires

The EU said it had imposed definitive antidumping and anti-subsidy duties on imports of some steel ropes and cables from India.

The bloc imposed a definitive anti-subsidy duty ranging from 13.2 to 48.8 per cent on Indian producers of stainless steel wires with a diameter of one millimetre or more, the EU's Official format said.

It also hit Indian producers of the same product with definitive anti-dumping duties of between 2.4 and 55.6 per cent and imposed anti-subsidy duties of between 8.5 and 44.4 per cent.

Coke and its bottlers may get record fines from EU

Coca-Cola and three of its bottlers could be hit by record fines if the European Commission finds fault with their sales practices, but lawyers and analysts struggled to quantify potential damage.

"Fines could become very high. The maximum is 10 per cent of turnover," European Competition Commissioner Karel Van Miert, whose agents raided Coke offices earlier this week and seized internal files as part of a probe into suspected abuses of the firm's dominant market position, said.