Sinha bites the bullet half-heartedly

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, or Diet.

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 house.

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 Institute.

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, he added.

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

Viatel—AT&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.

AOL—America Online: 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 provider.

Eclipsys—Medical Systems: 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.

Telekom—Callahan: 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 decision.

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 newspaper said.

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 Commission.

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 investors.

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 Deutsche Telekom.

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 technology sector.

Results

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 harsh criticism.

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 WTO?

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.