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Nov 15, 1999

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

Malaysia's industrial output rises

Malaysia's industrial output surged by a stronger than expected 19.3 per cent in September on a year earlier in a clear signal the economy's rebound gathered pace in the third quarter.

The Department of Statistics said on Tuesday the index of industrial production, spurred by a buoyant manufacturing sector, expanded in the third quarter by 13.6 per cent on a year earlier and by 5.9 per cent over the first nine months of the year.

Manufacturing output leapt 25.2 per cent in September compared with the same month last year.

"September figures are very strong amd bode well for the economy," said Eddie Lee, regional economist at Vickers Ballas in Singapore.

Economists said the strong growth in industrial output, which accounts for nearly 40 per cent of the gross domestic product (GDP), underpinned an accelerated recovery in the third quarter.



Alcatel: French telecommmunications equipment group Alcatel posted a third-quarter operating profit of 296 million euros ($308.1 million) and said it was on track to hit full-year 1999 and 2000 forecasts.

C&W: British-based Cable and Wireless Plc unveiled a sharp 39 per cent drop in half-year pre-tax profits. The telecoms group, said pretax profits fell to 539 million— topping market forecasts — although revenues jumped by 25 per cent to 4.51 billion.

CGU: Britain's largest composite insurer, CGU Plc, reported a slight fall in nine-month profits. Operating profits before merger integration costs fell 2.4 per cent to 603 million in the nine months to September 30 from 618 million a year ago.

Commerzbank: Commerzbank AG said its net profit fell 4.6 per cent in the first nine months of 1999.

Continental: The German tyre manufacturer Continental announced it increased pre-tax profit in the first nine months by 22 per cent from the corresponding figure last year to 277 million euros ($290 million). Net profit rose by 18 per cent to 176 million euros.

Honda: Honda Motor Co said consolidated net profit slid to 136.38 billion yen ($1.3 billion) in April-September compared with 158.28 billion yen in the same period last year.

BA: British Airways said it pre-tax profit in the quarter to end September fell 83.3 per cent to 40 million ($65 million), including 14 million of disposal income, BA said in a statement. Operating profits for the first six months fell 51.5 per cent to 211 million.

Dresdner: Dresdner Bank AG, Germany's third-largest bank in asset terms reported trading profit of 118 million euros in the third quarter, down from an average of 375 million in each of the previous two quarters.


Microsoft vows to keep fighting

Microsoft Corp vowed to continue battling antitrust charges and expressed confidence it would prevail in the landmark case despite a judicial finding that rejected many of its key arguments.

At the same time top executives of the software company left open the possibility that the judge's finding of fact would spark a resumption of settlement negotiations between the two sides, which so far have proved fruitless.

"From the very beginning, we've said we would like nothing better than to settle this case," Microsoft chairman Bill Gates said at a news conference.

Still, he said any settlement would have to preserve the right of the company and others in its industry to innovate and improve their products.

Indonesian economy seen expanding next year

Indonesia's economy should expand two per cent next year after languishing in recession for two years, according to IMF and government calculations, a top Indonesian minister said.

Indonesian coordinating minister for the economy and finance Kwik Kian Gie also said that details for the resumption of frozen International Monetary Fund (IMF) aid to Indonesia would be finalised by mid-December.

Kwik was speaking at a business leaders' forum here where Indonesian President Abdurrahman Wahid explained his new administration's economic policies to bring Indonesia out of a financial and economic mess.

Japan unveils big economic stimulus plan

Japan announced its ninth hefty economic stimulus package of the decade aimed at ensuring a sprouting economic recovery gains strength in the run-up to a general election due in less than a year.

Prime Minister Keizo Obuchi said his "measures for an economic rebirth" were worth 18 trillion yen ($171 billion), including traditional public works spending, credit guarantees for small firms and a controversial nursing care scheme.

But economists said that the headline figure was inflated to impress voters, and the volume of direct outlays was actually lower than markets had expected.

The yen eased as market participants saw no real surprise in the package, while Tokyo stock prices weakened after setting a t midyear high on high-tech share buying.

Despite the large headline figure, direct fiscal spending included in the package was at the bottom of expectations at 6.5 trillion yen ($62 billion). Of that, 900 billion yen will pay for a delay in collecting levies for a planned nursing care scheme.

Economic Planning Agency (EPA) chief Taichi Sakaiya said he expected the package would expand gross domestic product by 2.5 per cent over the next 12 months. The election for parliament's Lower House must be held by next October.

Among the main pillars of the package will be spending to improve telecommunication networks, steps to ease joblessness, money for housing loans, measures to promote venture startups and accelerate deregulation. It also urged the Bank of Japan to adopt a flexible monetary policy.

The EPA nudged up its projection for the current 1999-2000 year to 0.6 per cent from the original estimate of 0.5 per cent, compared with an average prediction of 0.9 per cent growth predicted by 18 economists last week.

Telecom stocks lead European rally

Telecom and technology shares led a surge on European markets, reinforced by modest gains on Wall Street, while oil slipped from a 34-month high but remained fundamentally strong.

Germany's DAX coasted through July peaks to close up one per cent and the Paris CAC40 rose 1.6 per cent to hit its tenth consecutive closing high, while storming gains by heavyweight telecom shares pushed London's FTSE 100 up 1.6 per cent.

The gains in London came amid strong volume with a stunning 1.76 billion shares trading by the end of official trading—easily eclipsing any totals touched this year.

The Dow Jones average was around 10 points higher when the curtain came down on a hectic day's dealing in London.

The pan-European Eurotop 300 rose 1.43 per cent to chalk up its third straight record close, while the Euro STOXX 50 ended up 1.56 per cent at 4,140.58 points, its sixth straight record close.

London's FTSE 100 rose over 100 points to post its seventh consecutive closing gain and analysts said the index was building a launchpad for an assault on its lifetime high of 6663.8 set on May 4.

The telecom sector contributed heavily to London's FTSE rise, with Cable & Wireless jumping nearly 17 per cent after Goldman Sachs upgraded the stock to a "trading buy". British Telecom rose more than nine per cent after stunning investors with forecast topping second-quarter results.

Germany's Deutsche Telekom rose 3.50 per cent, while Dutch telecom company KON KPN was up 5.53 per cent, Spaink Telefonica gained 4.10 per cent, and France Telecom 3.31 per cent.

French telecommunication equipment group Alcatel which ended the previous session with a gain of eight per cent, rose 5.5 per cent as several analysts upped their price targets on the stock.

Oil shares were strong, although also of their highs, with BP Amoco and Shell in London rising 1.7 and 2.3 per cent respectively after Brent prices hit a new 34-month high on Wednesday underpinned by low inventories and Opec's plans to extend output cuts.


Mergers & Acquisitions

Lufthansa—British Midland: British Midland said that Germany's Lufthansa had agreed to buy a 20 per cent stake in the airline for 91.4 million ($148.3 million).

Sierra Pacific—Enron: The power company Sierra Pacific Resources said it had agreed to acquire the Oregon-based utility Portland General Electric from Enron Corp in a deal worth $3.1 billion.

Arch—PageNet: The two largest U.S. paging companies, Paging Network Inc and Arch Communications Group Inc. agreed to merge in a last-ditch bid to survive in a business pressured by intense competition and outmoded technology.

Anglo American—Tarmac: Mining giant Anglo American Plc agreed to buy British building materials firm Tarmac Plc for 1.2 billion ($1.97 billion) in cash.


Nissan, IBJ, Fujito sell mutual shareholdings

Nissan Motor and its two main banks, the Industrial Bank of Japan and Fuji Bank, are to sell their large holdings of shares in each other, in a landmark example of the trend to unwind long-term corporate relationships in Japan.

The move is part of Nissan's 1000 billion yen ($9.4 billion) restructuring plan designed by Carlos Ghosn, the chief operating officer seconded from the troubled carmaker's alliance partner Renault.

It comes as Japan's banks are looking to reduce their shareholdings in companies amid a rapid consolidation of the financial sector. IBJ and Fuji recently agreed an alliance with Dai-lchi Kangyo Bank to create the world's largest financial group.

Nasdaq to set up European bourse in UK

Nasdaq, the U.S. stock market that houses high-tech stars like Microsoft said it would launch operations in Europe next year, opening the way for 24-hour global trading of top technology stocks.

"Nasdaq-Europe is an important step in creating an electronic global stock market," said Frank Zarb, head of the bourse's owners, the National Association of Securities Dealers.

The new Nasdaq electronic exchange will be based in London and open in the fourth quarter of 2000, as part of a plan to offer 24hour trading in leading Asian, European and U.S. tech stocks.

In June, the exchange said it was also setting up a sibling market in Japan in 2001, giving a global New York-London-Tokyo axis of linked exchanges.

British chancellor of the exchequer Gordon Brown hailed the move as a boost for Europe's economy and for businesses seeking to raise capital.

NYSE plans electronic order book

The New York Stock Exchange said it would build an Internet-based electronic stock trading system, one in a series of changes the world's No. 1 stock market is pursuing to maintain its edge in the fast-changing securities industry.

The tradition-bound, 207-year-old institution said its Internet-based electronic order book would be designed to handle only orders of less than 1,000 shares.

The Big Board also said it would use its Internet-based platform to extend its trading hours next year. The NYSE shuts down at 4pm EST (2000 GMT), but it is expected to extend its trading session into the evening, beginning next year.

BoJ to buy long-term bonds from ministry

The Bank of Japan has agreed to temporarily buy long-term Japanese government bonds (JGBs) owned by the Ministry of Finance's Trust Fund Bureau in a reverse repo agreement to stabilise financial markets, the MoF said.

The move appears to signal that the central bank has given in to calls by the ministry to take such steps.

"It's another step of compromise by the BoJ at this time. It still gives speculation that the BoJ in the future will compromise more," Naka Matsuzawa, chief investment strategist at Nomura Securities, told Reuters Television.

The agreement was aimed at ensuring the liquidity of funds held by the Trust Fund Bureau at a time when one of its key pillars of funding—the Yucho postal savings system—is dwindling, but it could be interpreted as a step towards monetisation of public debt.