Jun 19 - 25, 2000
UK enjoying steady economic expansion
Britain is still enjoying steady economic expansion but there is a risk
to growth before the year-end, a top research group said.
The Conference Board, which has been producing the U.S. Leading
Economic Indicators since the mid-1990s, issued its first set of indexes for Britain which
gave a snap-shot of the economy's current health.
The overall index, which brings together a range of economic variables
such as export orders and retail sales, showed an economy enjoying steady expansion but
undergoing a slowdown.
"There is a weakening trend in the UK," said Gail Foster,
Conference Board senior vice president and chief economist. "It is not in any way
The leading and coincident indexes are composite averages of between
five and eight indicators which are constructed to reveal common turning point patterns in
Coincident indicatorswhich are comprised of data from personal
disposable income, gross domestic product, industrial production, retail sales and the
jobless rate showed that Britain's economy grew by 0.2 per cent in April, though not
at the strong pace seen over the previous six months.
The Board said the coincident index now stands at 114.7 and that only
one variable, retail sales decreased in April.
But the Board said the leading index decreased 0.3 per cent in April.
Despite a peak in January leading indicators have declined steadily over the past three
Although the fall does not present any short-term threat to expansion
in Britain, it said the slowdown may signal economic weakness before the year end.
The Conference Board said the leading index now stands at 115.6, with
the most significant downward shifts in consumer confidence, stock prices, new orders for
engineering industries and housing starts.
Russian economy seen booming
Russia's economy is booming but the government needs to reinforce
growth by making it easier to do business, Prime Minister Mikhail Kasyanov said.
He told the St Petersburg Economic Forum gross domestic product had
risen seven per cent in the year to May, and the State Statistics Agency later said May
industrial output rose 10.6 per cent on a year ago, against a 5.5 per cent April rise.
"Now we must do everything so that economic growth is not
throttled by a lack of structural reform," he said. "We need an accurate,
systematic, daily effort to solve this very sensitive problem."
Kasyanov denied there was a split between the government and the
central bank on monetary policy, though he renewed a call against a strong rouble even as
traders said the bank was orchestrating an appreciation of the currency.
Kasyanov said the government recognised the danger of inaction and
would cut bureaucracy to make business easier, close tax loopholes so competitors faced
equal conditions and make natural monopolies more transparent.
The government is seen aiming to help bolster budget revenues with a
weaker rouble while the central bank has said foreign reserves are high enough to stop
speculation against the currency which should not be artificially lowered.
Kasyanov said money supply was growing, indicating businesses were
using more roubles and less barter in daily business and that the government would take
technical measures, which he did not outline, to restrain rouble strength.
Kasyanov said some changes should be introduced into credit and
monetary policy in the second half of this year to provide for sustained growth.
BoJ prepares marts for interest rate hike
The Bank of Japan (BoJ) continued to acclimatise the markets for an
eventual tightening of its ultra-easy monetary policy in a key report and news
"We are approaching a situation in which an end to deflation
concerns would be in sight," BoJ Governor Masaru Hayami told a regular news
conference, referring to the BoJ's stated condition for ending the zero-rate policy.
"But there remain points that we must closely watch a bit longer."
Earlier, the central bank reiterated in its monthly report that the
world's second-largest economy is clearly improving, although it is not yet on a
self-sustaining recovery path.
Tokyo puts off new rule for life insurers
A Japan Finance Ministry panel decided to postpone the introduction of
a mark-to-market accounting standard by Japan's ailing life insurers.
Analysts and industry sources had expected the advisory panel to the
Ministry of Finance (MoF) to at least set an introduction date for the new accounting
"We've found that it would be premature to introduce the
mark-to-market standard at this stage as an international accounting standard has yet to
be agreed," said Koichiro Kurasawa, chairman of the advisory panel of the MoF's
Japan for Asia's say in IMF
Japan will press its Group of Seven partners for Asia to be given a
bigger voice in International Monetary Fund decision-making, a top government official
said on Thursday.
The IMF, long dominated by the United States and Europe, had to take
account of Asia's growing role in the world economy, said vice finance minister for
international affairs Haruhiko Kuroda.
The IMF must reflect the reality of the world economy if it wants to
continue to perform its central role as a truly global institution in the international
financial system, he told the Foreign Correspondents' Club of Japan.
Despite the fact that many emerging economies, including in Asia, have
become important economic powers, their international trade has increased dramatically and
their weight in the international financial market is growing, the allocation of quota
shares, voting shares, and board representation of the Asian countries are limited, he
I believe that an immediate review of quota allocation, reflecting
changes in the world economy, is essential, Kuroda added.
Japan economy seen expanding further
Japan's economy looks set for further growth this quarter after
bouncing smartly back from recession in the first three months of 2000, Economic Planning
Minister Taichi Sakaiya said.
And to keep the world's second-biggest economy chugging, Prime Minister
Yoshiro Mori facing voters in less than two weeksvowed to push ahead with his
late predecessor's recovery-first policies.
Data showed the fledgling recovery remains dependent on exports to
booming overseas markets and the Bank of Japan (BoJ) remained cautious, deciding to keep
pushing interest rates virtually to zero, a policy that senior central bank officials are
growing impatient with.
He said gross domestic product could grow as fast as a five per cent
annual rate in the quarter, off the blistering 10 per cent annual pace of the first
quarter but still respectable for an economy scraping out of its worst downturn in half a
The January-March growth, although a touch below economists' forecasts,
was the best quarter in four years and allowed GDP to eke out 0.5 per cent growth for the
fiscal year to March, breaking a two-year slide.
Banks hit Tokyo stocks
Japan's blue-chip equity index slumped Thursday as the collapse of a
three-way tie to create the world's third-largest bank hit financial stocks on an
otherwise upbeat day for Asian equities.
Asahi Bank torpedoed its planned merger with Sanwa Bank and Tokai Bank,
with media reports citing its concern over loss of control, after its partners decided to
drop the original plan for a gradual move to joint operations, in favour of an all-out
Tokyo's benchmark Nikkei 225 closed down 315.7 points, or 1.9 per cent,
In Hong Kong, the Hang Seng posted firm gains for a second straight
session, rising 1.8 per cent to 16,144. Singapore's Straits Times index was 0.25 per cent
higher at 2,041.20. In Seoul, the Kospi index remained volatile, crumbling 5.9 per cent to
end at 770.95.
Among smaller markets, Sydney's S&P/ASX200 index ended 0.7 per cent
ahead at 3,140.8. Taiwan's Weighted index shed 1 per cent to close at 8,844.97. Manila's
PHS Composite adding 2.7 per cent to close at 1,565.69. The Set 50 in Bangkok was 1 per
cent higher and the JSX index in Jakarta added 1.6 per cent. Kuala Lumpur's KLSE Composite
fell 0.4 per cent.
Mergers & Acquisitions
Thomson Corp: Media company Thomson Corp. said Tuesday it is
selling six more of its U.S. daily newspapers, in line with the company's plan to
concentrate on electronic publishing. The deal will boost Thomson's already bulging
coffers by more than $237 million. The company sold 87 dailies and non-dailies last week
for $1.58 billion.
Internet auctioneer eBay Inc. agreed Tuesday
to buy Half.com, a privately held online seller of used books and music, for more than
$300 million in stock.
Online pet supplies store Pets.com
Inc. agreed Tuesday to acquire Petstore.com, also an online pet supply store.
Nestle SA is interested in selected Nabisco
businesses that may be up for sale if the U.S. food company is broken up, industry sources
Gold firms: Toronto-based Franco-Nevada Mining announced plans
Tuesday to create the world's third-largest gold producer by merging with South African
rival Gold Fields, forming a company worth some $3.7 billion
Telenor, Norway's state-owned telecom
company, agreed Tuesday to buy a majority stake in Danish mobile-phone operator Sonofon
for 13.65 billion Danish crowns ($1.75 billion) to boost its presence in the Scandinavian
European regulators will carry out a full
investigation of the proposed $20 billion combination of EMI and Time Warner's music
business, fearing the deal might reduce competition in the market for recorded music and
music over the Internet.
AEPCSR: The Securities and Exchange Commission on
Wednesday approved American Electric Power's acquisition of Central and South West Corp.,
the final regulatory hurdle in a $4.37 billion merger that will create one of the nation's
NortelEPiCON: Nortel Networks culminated a busy day
Wednesday by agreeing to acquire EPiCON for $275 million in stock, furthering its push
into the application service provider market, and signing a deal to deploy one of the most
advanced telecommunications networks in Latin America.
Challenge to Tokyo bourse
Next week's start of Nasdaq Japan in Osaka poses a strong challenge to
the dominance of the Tokyo Stock Exchange (TSE), but officials of Japan's largest bourse
insist they are not flinching at the threat of an upstart.
"We have our own plans for growth and expansion which we'll be
sticking to, rather than worrying about Nasdaq Japan," said Hiroyasu Shirahashi,
manager of the Listing Department at the TSE which oversees the Mothers market, Nasdaq
China vows to keep yuan stable
China's central bank governor Dai Xianglong said on Thursday that
Beijing's monetary policy would be aimed at maintaining the stability of the yuan
(renminbi) as the country enters into the World Trade Organization.
Sound monetary policy will continue to maintain the value of the
Chinese yuan, and hence promote economic growth, Dai told a forum on China and
Feds nab 120 for fraud
In what authorities are calling the largest securities-fraud bust in
U.S. history, 120 defendants including members of all five New York City Mafia
crime families and the treasurer of New York City's police-detectives pension fund
were indicted Wednesday for allegedly participating in a securities-fraud scheme involving
racketeering and physical violence and costing investors $50 million.
Import prices climb
Prices for imported goods rose in May after tapering off a month before
as costs for oil products and imported cars increased, the U.S. government reported
Thursday. Excluding oil, import prices declined for the first time in almost a year while
export prices gained 0.2 per cent. Prices of imported goods rose 0.6 per cent in May after
posting a revised 1.5 per cent decline in April, the Labor Department said. Analysts
polled by Reuters had expected import prices to rise 0.4 per cent. Excluding petroleum,
import prices fell 0.2 per cent last month after rising 0.1 per cent in April. May's
decrease was the first since a 0.1 per cent decline in July.
Deutsche Telekom plans $8b bonds
Deutsche Telekom confirmed plans to sell $8 billion of bonds to fill
what analysts said was a warchest to fund third-generation mobile phone licences and a
Europe's second-largest telecoms company by market capitalisation said
it planned to issue bonds in dollars, euros, sterling and yen in the near future, while
issuing conditions remain favourable. Such a deal would be among the largest corporate
transactions ever sold.