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May 29 - June 04, 2000

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

Mahathir renews attack on 'unfettered globalization'

Malaysian Prime Minister Mahathir Mohamad on Tuesday renewed his attack on unfettered globalization, saying the rich West was ganging up to dominate the developing world.

Opening a three-day Asia-Africa forum, Mahathir told developing nations that they risked being recolonised if they failed to cooperate to ward off the dangers of uncontrolled globalization.

The premier said "new capitalists" in the West were growing more powerful and less considerate.

Where once Western governments used to abhor monopolies, they are now encouraging the formation of cartels and oligopolies to dominate the world. Each one of their mega-entities is bigger in terms of capital than any of us developing countries, he said.

The rich countries of the north are ganging up ... We on the other hand, are greatly divided partly because we don't seem to know how to work together but mostly because the superpowers are actively preventing us from cooperating.

For example, Mahathir said his proposed East Asia Economic Community had failed to get off the ground due to United States' disapproval.

Now the US is even opposing the setting up of an Asian Monetary Fund for fear it might undermine the IMF and therefore US hegemony, he said.

We now have to prepare ourselves to face and deal with challenges and dangers arising from new ideas about the structure of the world's economy, trade and finance. Most of all, we have to deal with the self-declared right of some countries to interfere in the affairs of others.

The premier said the gap between rich and poor was unprecedentedly large.

Malaysia announces robust growth

Malaysia announced robust first-quarter growth of 11.7 per cent year-on-year and said overall national output was almost back to levels set before the Asian economic crisis.

The central bank said the rise in gross domestic product (GDP) compared to a revised 10.8 per cent year-on-year growth in October-December.

The manufacturing sector grew 27.3 per cent year-on-year in the first three months compared to a 24.2 per cent rise the previous quarter. The sector's output exceeded pre-crisis levels for the third consecutive quarter.

'Indonesia's economic reform will take time'

Indonesia's economic recovery and reform programme will take time, and the country may have to resign itself to a "creditless" growth rate of two-to-three per cent for the next couple of years, a leading economist predicted.

Perhaps we are in for a period —perhaps two or three years— in which not much will happen, unlike South Korea or Thailand, Mari Pangestu, the exective director of the Center for Strategic and International Studies, told an international seminar.


Thyssen: German steel and engineering firm ThyssenKrupp said its net income in the six months through March jumped 57 per cent to 170.7 million, or 0.33 per share from 0.21. Pretax profit virtually doubled to 366.5 million. Revenue rose 10 per cent to 17.4 billion.

Novell: Internet services software provider Novell Inc. the Provo, Utah-based company posted net income of $31 million, or 2 cents a share, compared with net income of $39 million, or 11 cents a share in the year-earlier period.

UBS: Swiss-based UBS reported a net profit of 2.2 billion Swiss francs ($1.28 billion), or 5.61 francs per diluted share, for the three months ended Mar. 31, ahead of the 1.9 billion franc consensus among analysts polled by Reuters.

Fortis: Dutch-Belgian financial-services company Fortis, Europe's largest combined banking and insurance company, posted net earnings of 851 million ($771 million) for the three months ended Mar. 31 compared with 457 million for the year-ago quarter.

DoCoMo: Japanese mobile-phone operator NTT DoCoMo, posted net earnings of 252.14 billion ($2.37 billion) for the year to Mar. 31.

House approves China trade pact

The House of Representatives approved a bill early Wednesday evening that grants the People's Republic of China a permanent trade agreement on par with many of the privileges enjoyed by America's closest allies.

The chamber's passage of the bill by a 237-197 margin shifts the issue to the Senate, which is expected to take up its own bill to offer China permanent normal trade relations (PNTR) in early June, soon after returning from its Memorial Day recess. The Senate is expected to approve the measure.

Wednesday's final passage brings an end to a long string of anxious days for both proponents and opponents of the bill. Both groups, aided by business and labor

interests respectively, engaged in frenzied bids to bring a large number of undecided House members over to their side as the clock ticked down to the time of the final vote.

A visibly relieved President Bill Clinton, speaking in the White House Rose Garden soon after the vote, thanked House members for their support, then immediately turned his attention to the Senate, indicating he would not let up on members of the upper chamber, even if its passage of the trade agreement seemed assured.

House Majority Whip Tom DeLay (R-Texas), speaking Wednesday evening, urged the Senate to pass the House version of the bill rather than the version approved earlier by the Senate Finance Committee.

To pass the 435-member House, the China trade bill needed to garner at least 218 "yes" votes.

With passage sewn up, 164 Republicans and 73 Democrats voted in favor of the trade agreement, while 57 Republicans and 138 Democrats voted against.

Japan heads south again?

Japan's stop-go economy could already be screeching to a halt once more after a quarter of runaway growth, Finance Minister Kiichi Miyazawa said on Sunday.

Speaking on a television talk show, Miyazawa confirmed widespread expectations of as much as two per cent growth between January and March but said the key to continued expansion was whether stagnant consumption can finally start to pick up.

"This (growth) will depend on how much private consumption can improve in the April-June period," the veteran finance minister said.

"GDP may grow slightly, but it may also show a contraction."

Trade deficit hits record

The U.S. trade deficit widened to a record in March as demand for imported goods such as cars and aircraft parts continued at a hearty clip and the cost of oil held near decade highs — even as exports jumped for a second month to a record, the government reported.

The trade deficit, which measures the amount of money spent on imports coming into the United States versus the amount taken in from exports leaving the country, widened in March to $30.2 billion, the Commerce Department said. That figure, which is the highest ever recorded for the deficit, was well above February's revised $28.7 billion deficit and above economists' estimates of a $29.7 billion deficit.

Mergers & Acquisitions

Philips—MedQuist: Philips Electronics of the Netherlands made a $1.1 billion takeover bid for U.S. medical electronics firm MedQuist, offering $51 per share cash for approximately 60 per cent of MedQuist's stock.

Chase—Beacon Group: Chase Manhattan Corp., the No. 2 U.S. commercial bank ranked by assets, agreed to pay between $450 million and $500 million in cash for Beacon, according to analysts.

AT&T—MediaOne: The Department of Justice on Thursday conditionally approved AT&T's proposed $62 billion acquisition of cable television firm MediaOne, clearing one of the last hurdles in a mammoth deal that would make AT&T the nation's largest cable company.

Watson—Schein: Watson Pharmaceuticals Inc. agreed Thursday to buy struggling rival Schein Pharmaceutical Inc. for roughly $673.3 million in cash and stock.

HKT—Hong Kong Internet: The board of telecom operator Cable & Wireless HKT finally approved an offer from Hong Kong Internet investor Pacific Century CyberWorks on Thursday. The value of the deal has fallen to $26.25 billion, compared with $35.9 billion on Feb. 29.

United—US Airways: United Airlines is buying struggling US Airways for $4.3 billion in cash, a move that roiled airline stocks and raised objections from United's powerful pilots' union.

Fujitsu—AMD: Japan's Fujitsu Ltd. moved to grab a larger slice of the booming world chip market Tuesday, saying it will build a 140 billion yen ($1.3 billion) flash memory plant with U.S. chipmaker Advanced Micro Devices Inc.

WebMethods—Active Software: Software developer webMethods Inc. announced plans Monday to buy Active Software Inc. in a $1.3 billion all-stock deal.

Dow hit by financials

The Dow Jones industrial average tumbled more than 200 points Thursday, hit by a plunge in financial stocks and by concerns over Microsoft, which fell to its lowest level in a year.

Higher for most of the session, the Nasdaq composite index also lost value by day's end, as investors in the last minutes of trading bailed out of Intel, Cisco Systems and Sun Microsystems.

The losses disappointed analysts hoping the two major indexes would eke out two straight higher closes for the first time in a week.

Dow financials J.P. Morgan and Citigroup tumbled after Merrill Lynch slashed its earnings estimates for Goldman Sachs. The index of 30-blue chip stocks fell 211.43 points, or 2 per cent, to 10,323.92.

Microsoft dragged heavily on the Dow after a federal judge signalled that the government's proposal to break up the company may not go far enough.

The Nasdaq, meanwhile, fell 65.26, or 2 per cent, to 3,205.35, dropping for the sixth time in seven sessions.

The S&P 500 dipped 17.53 to 1,381.52.

GDP remains robust

The pace of the U.S. economy remained robust during the first three months of the year, though not as frenetic as in the fourth quarter, as consumers continued to spend and businesses racked up profits without trigging excessive increases in prices.

A separate, private industry report showed that existing home sales declined at a swifter-than-expected pace last month.

Gross domestic product, the broadest measure of goods and services produced, advanced at a 5.4 per cent pace in the first quarter, the Commerce Department said, which is the same pace as initially tallied a month ago and slightly above analysts' forecasts of a revision to a 5.2 per cent gain. The GDP price deflator, a key inflation gauge, rose at a 2.7 per cent annual rate, the same rate initially recorded a month ago and in line with economists' forecasts.

Jobless claims rise

The number of Americans filing new claims for unemployment benefits rose to 284,000 in the week ended May 20 from a revised 278,000 the prior week, the U.S. Department of Labor said Thursday.

The four-week moving average of claims, which generally provides a more accurate picture of jobless trends, rose to 291,000 for the May 20 week from 290,500 the week before.

ECB holds rates at 3.75%

The European Central Bank (ECB) left its key interest rate unchanged at 3.75 per cent at its latest biweekly meeting on Thursday amid signs of a recovery in the euro and a narrowing gap in relative growth rates with the United States.

Tokyo stocks up, HK slips

Asian stock markets posted a mixed performance on Thursday, with Tokyo's blue-chip index breaking six sessions of declines in the wake of a rebound in U.S. markets while Hong Kong succumbed to a late selloff in technology shares.

The approval by the U.S. House of Representatives of a landmark trade deal with China also boosted the region's economic outlook, though continuing tensions between China and Taiwan hit the latter's equity market.

Tokyo's benchmark Nikkei 225 added 203 points to close at 16,247.38, lifted by its heavyweight telecom and technology shares.

In Hong Kong, the Hang Seng index ended down 13 points, or 0.1 per cent, at 13,921.06 having earlier climbed as high as 14,250.

Singapore's Straits Times also reversed course in the afternoon session, closing down for the sixth straight session at 1,850.24, a loss of 1.16 per cent.

In Seoul, the Kospi index was the region's best performer, jumping 3.64 per cent to close at 699.53 and break a three-session decline, with financial stocks the strongest performers.

French 1Q GDP rises 0.7%

France's economy grew 0.7 per cent in the first quarter of 2000, below a forecast 1 per cent, but economists said the euro zone's second-largest economy was still on track to meet a target of at least 3.4 per cent growth this year.