Sinha bites the bullet
The Indian budget for 2000-2001, presented by Finance Minister Yashwant
Sinha in the Lok Sabha, hiked the defence budget by a massive Rsl30 billion, gave
substantial concessions to information technology, communications and entertainment
sectors, but left exporters unhappy by phasing out tax concessions.
He left a whopping fiscal deficit of Rsl,112.75 billion, or 5.1 per
cent of gross domestic product (GDP), by not taking harsher measures.
The personal income tax was left untouched and by and large would not
affect the common man one way or the other. But the income-tax payer will no longer be
eligible to purchase sugar from the public distribution system.
Cellular phones, computers and its parts, optical fibres,
cinematographic cameras and films are some of the items that have become cheaper. However,
cigarettes will become dearer and urea will cost 15 per cent more. The rate of concession
for decontrolled fertiliser has also been reduced.
The phasing out of concessions on export earnings had an adverse impact
instantly and the stock market plunged in post-budget trading.
Surprisingly, the first budget of the new millennium completely ignored
non-resident Indians. While Sinha had offered a number of key incentives and concessions
to NRIs in his previous budget, no such major facilities or schemes were announced this
year to further encourage NRIs or foreign investors.
Nevertheless, Sinha claimed, India was determined to strengthen its
role in the world economy by modernising its traditional industries, boosting exports,
foreign investment and through prudent external debt management.
Japan passes record $ 773 billion budget
Japan's powerful lower house of parliament on Tuesday passed a record
$773 billion budget to help revive the world's second-biggest economy.
Bills "related to the national budget have been approved" for
the financial year starting April 1, lower house speaker Soichiro Ito told the parliament,
In a secret ballot, 346 members voted in favour of the budget and 133
against, he announced.
Under the Japanese constitution, budget legislation is automatically
enacted 30 days after passing the lower house, even if it is not endorsed by the upper
The new budget, aimed at spurring growth, will see Japan's national
gross debt rise to a whopping 132.9 per cent of gross domestic product (GDP) and the
budget deficit stand at 9.4 per cent of GDP, the finance ministry says.
The deficit would be the highest for any member nation of the
Organization of Economic Cooperation and Development.
The budget, with considerable fiscal measures, will certainly help
boost the Japanese economy, said Kazuhiko Yano, senior economist at Fuji Research
But while the economy had been facing the risk of a further dip in the
first half of this year, the focus is now shifting to the issue of growing national debt,
Japan will not collapse immediately, but it is necessary to start
cutting the swelling debt as quickly as possible.
Japanese government bond issues are expected to grow to 116,000 billion
yen in the financial year to March 2004 up from 85,900 billion yen in the coming year
according to a finance ministry report.
Japan may need to approve yet more spending to help the economy, warned
Yano, urging that the size of any further expenditure be limited.
Mergers & Acquisitions
ViatelAT&T UK unit:
Telecommunications provider Viatel
announced that it had purchased AT&T's British subsidiary, AT&T Communications
Ltd. Media reports said New York-based Viatel paid $125 million in cash for the unit.
News Corp.Seagram Co.:
Shares of Rupert Murdoch's News
Corp. Ltd. rose following reports that the media giant had held talks about a possible
purchase of Seagram Co. Ltd., the Canadian distiller, movie and music company.
Bertelsmann, Europe's biggest media
company, said it is close to a deal with America Online that could lead to the flotation
of their 50:50 joint venture AOL Europe, the region's second-largest Internet access
Eclipsys Corp., a leading
provider of software for healthcare companies, unveiled Thursday an unsolicited offer to
buy much larger rival Shared Medical Systems Corp. for about $2 billion.
Deutsche Telekom, Europe's biggest
telephone company, is in exclusive talks with U.S. investment group Callahan Associates
International about the sale of a stake in a regional cable communication network in
Baden-Wuerttemberg, southern Germany, the company said Thursday.
Aetna: Aetna Inc. stock jumped after the No. 1 U.S. health
insurer said it received a $10 billion-plus takeover bid by two competitors.
US West Qwest Communications Inc: Shares of Baby Bell U S
West Inc. sank Thursday following news reports that Germany's Deutsche Telekom AG has won
key backing for a buyout offer of Qwest Communications Inc., which could disrupt Qwest's
$36 billion purchase of US West.
House seeks action on oil
With crude-oil prices hitting new nine-year highs, Energy Secretary
Bill Richardson faced tough questioning on Capitol Hill, as the Clinton administration
ponders releasing part of its oil stockpiles in the wake of OPEC production cuts.
Richardson, facing criticism that the administration hasn't done enough
to ease the oil-price pinch, told a House panel that his recent week-long trip to top
oil-producing nations led him to believe that the OPEC oil cartel will adopt a
"substantial" increase in production when the group meets later this month.
Pepsi, Coke bottlers fined
Venezuela's antitrust body Procompetencia fined the local bottlers of
Coca-Cola and Pepsi-Cola for fixing prices to retailers. Coke (KO: Research, Estimates)
bottler Panamco de Venezuela S.A. and Pepsi (PEP: Research, Estimates) bottler Sopresa
colluded on discount and credit terms given to supermarkets, Procompetencia said.
Both companies denied the charges and said they would appeal the
Japan probes Deutsche
Signs of a new scandal possibly involving foreign banks in Japan
emerged with reports the top financial watchdog may be ready to act against as many as
five divisions of Germany's Deutsche Bank.
The Financial Supervisory Agency (FSA), which oversees Japan's banking
industry, plans to order the five affiliates operating in the country to improve their
operations, the influential Nihon Keizai Shimbun financial daily said.
The FSA believed the firms had sold financial derivatives to hide
clients' financial losses and that their internal controls on operations were too lax, the
Deutsche Bank and the FSA both refused to comment on the report.
European jobless steady
Unemployment in the 11-country euro-currency zone remained steady in
January at 9.6 percent, according to official data released.
Eurostat, the European Union's statistical arm, said the jobless rate
in the broader 15-nation EU was also unchanged from December at 8.8 per cent.
China bids for trade deal
China plans to buy $6 million worth of U.S. wheat, its first purchase
of American agricultural products under concessions it made last year in a bid to win
improved trade relations.
It is considered a trial-size shipment, but Clinton administration said
it is evidence of China's intention to follow through with an agreement reached last
November. In exchange for lowering its barriers to U.S. farm products, China wants U.S.
backing for its entry into the World Trade Organization and an end to the annual
congressional reviews of its U.S. trade status.
EU mulls new Net taxes
European regulators are working on plans to introduce value-added tax
(VAT) on a range of Web-delivered products, raising the specter of higher prices for
online sales of software, music and video, according to a report published Wednesday.
The plans are part of a broader push to harmonize tax rates within the
15 members of the European Union by its executive arm, the Brussels-based European
The Commission is looking to levy VAT on so-called "virtual
goods" delivered over the Net, based on the type and location of the end user,
according to a report in the Wall Street Journal.
Dow rises; Nasdaq falls
The Nasdaq composite index fell Thursday, breaking a two-day winning
streak after results of the closely watched Palm initial public offering disappointed some
The Dow Jones industrial average, meanwhile, ended little changed,
giving up its earlier gains as fears spread that a strong February employment report will
prompt the Federal Reserve to raise interest rates aggressively.
The Nasdaq composite index fell 29.56 points, or 0.62 per cent, to
4,754.52, a day after posting its 13th record closing of the year.
The Dow Jones industrial average, meanwhile, rose 26.99 points, or 0.27
percent, to 10,164.92. The broader S&P 500 rose 2.57 points to 1,381.76.
European markets hit records
London's benchmark FTSE 100 ended up 67 points, or 1.06 per cent, at
6,432.10 after spending most of the session in the red. Mining and retail stocks led the
advance, while oil heavyweight BP Amoco showed a 2.7 per cent rise.
The Xetra Dax in Frankfurt closed up 2.8 per cent at a record 7,945.77
after struggling for most of the session, but was lifted by an 8.1 per cent advance by
The pan-European FTSE Eurotop 300, a broader gauge of the region's
larger stocks, ended up 1.6 per cent at 1,619.50.
Among smaller markets, a 14 per cent jump in Swisscom shares pushed the
SMI in Zurich up 1.34 per cent. The AEX in Amsterdam was 0.6 per cent ahead, Milan's
Mib-30 added 1.8 percent and the Ibex 35 in Madrid was up 1.36 per cent, buoyed by a 25
per cent rise in fast-food operator TelePizza.
Murdoch to meet PCCW
Rupert Murdoch will meet Pacific Century CyberWorks chairman Richard Li
next week to discuss the future of a Cable & Wireless HKT-Star TV joint venture, the
South China Morning Post said on Friday.
Records for Mexico, Toronto
Mexico's market activity reached an all-time high, fuelled partly on
banking issues. The Toronto 300 index also closed at a record high, thanks to the booming
Sotheby: Sotheby's Holdings Inc. on Thursday posted a
fourth-quarter profit drop of more than 10 per cent and warned that its future earnings
could be hurt by the price-fixing scandal that is rocking the world's top auction houses.
Fidelity: Fidelity Investments, the world's largest mutual fund
company, said it earned a 1999 net income of $1,007.6 million, more than double its $445.7
million profit in 1998.
Mobile: French media and construction company Bouygues posted a
sharp drop in earnings and disclosed plans for a 1.5 billion euro ($1.45 billion) capital
increase to fund its expanding Internet and cellular business.
Psion: British palmtop-computer maker Psion posted a
larger-than-expected 80 per cent fall in full-year profit Thursday, but raised more cash
to fund the investment spending that drained earnings over the past 12 months.
Money laundering targeted
The Clinton administration said Thursday it is seeking tough new
legislation to help combat money laundering overseas, singling out Russia for unusually
ECB leaves rates at 3.25%
The European Central Bank left its key interest rate unchanged at 3.25
per cent, sending the euro lower, but offered a strong hint that it will raise rates at
the end of the month.
German GDP rises
German gross domestic product grew 0.7 per cent in the final quarter of
1999 from the previous three-month period on strong growth in exports, the Federal
Statistics Office announced Thursday.
Taiwan to join
Taiwan will not face any obstacles from China in its bid for entry into
the World Trade Organization provided China is allowed entry into the WTO first, U.S.
Trade Representative Charlene Barshefsky said Tuesday.