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Nov 06 - 12, 2000


Mahathir slams IMF policies: Asian recovery

Malaysian Prime Minister Mahathir Mohamad on Saturday attacked the IMF for its one remedy approach to the Asian financial crisis and accused it of stunting regional recovery.

Mahathir slammed attempts by the International Monetary Fund (IMF) to "force down the throats of all the East Asian nations their single formula for recovery" from the 1997 crisis in an address to the New York-based Asia Society.

While there was "no conspiracy" behind the crisis, by "dangling the loan carrot and brandishing the big stick" the harsh demands of the IMF succeeded in putting to an end "practices which had contributed to the spectacular growth of Asian nations," he said. "Anything that could be imposed or done to prevent the quick recovery and regeneration of the Asian tigers was done, at times blatantly," said Mahathir, a regular critic of the West. "Asia today is in total disarray" as a result of these actions, he said.

The premier was particularly scathing on the IMF's insistence that "no government help be extended" and that instead corporations should be allowed to slide into bankruptcy and unemployed workers allowed to "starve, rot and kill."

Mahathir defended measures used to instigate Malaysia's economic recovery and called on other Asian nations to similarly resist attempts to impose Western values on them.

Asian nations should take pride in their "ways of managing their countries and their problems," he said, adding that "attempts by the West to force their values and ideologies on Asians must be resisted."

He blamed currency dealers for "destroying the (Malaysian) economy" and defended his introduction of a policy of locking in foreign investments for a 12-month period to stem fund outflow at the height of the financial crisis in September 1998. "They said it would collapse the economy but Malaysia is recovering very well," he said.

U.S. GDP slowed in 3Q

The U.S. economy cooled in the third quarter to the slowest pace since the spring of last year, the government reported Friday, as strong consumer spending couldn't overcome cutbacks by businesses and the government.

The gross domestic product, a measure for all goods and services produced in the United States that is the broadest indicator of the domestic economy, increased 2.7 per cent in the recently-completed quarter, well below Wall Street forecasts and less than half the growth rate posted in the second quarter.

Despite concerns about a slowing economy and pressure on corporate profitability and sales, the report and the inflation gauges included in it were hailed by economists as another sign that the Federal Reserve won't raise rates when it meets in less than three weeks.

"Clearly the Federal Reserve is getting what it wanted with six interest rate increases," Hugh Johnson, chief investment officer at First Albany Corp., told Reuters Friday.

Analysts surveyed by Briefing.com had forecast that gross domestic product (GDP) grew at a 3.5 per cent rate in the quarter, down from 5.6 per cent in the second quarter.

The move prompted investment bank Goldman Sachs to cut its forecast for 2001 U.S. economic growth to 3.3 per cent from 4 per cent. The bank cited concerns about sustained consumer spending and business investment.

It said investment fundamentals had deteriorated in recent months with corporate borrowing costs rising and concern over profit growth sending stock markets tumbling.

A decrease in investment by businesses and a downturn in government spending were among the key factors in the slower growth, the Commerce Department said in its report. Higher imports also helped reduce the growth rate.

Banks target dirty money

Eleven of the world's biggest banks joined forces Monday to battle money laundering, vowing to screen cash flows through offshore accounts and scrutinize political leaders and their family members who hope to stash illicit cash in the banks' vaults.

The guidelines, which come amid a backdrop of governmental ire against financial institutions that have allowed dictators to siphon off assets illegally, will require potential private-banking clients to document the origin of their wealth. Clients will be able open an account only once a screening is completed.

The Wolfsberg Anti-Money Laundering Principles, named for the Swiss city where the principles were comprised, pertain to well-heeled "private banking" clients of banks.

The 11 guidelines, which put the onus on private banking departments, call for banks to train employees to recognize money laundering and examine "suspicious activity" - such as large cash flows or money transfers that aren't used for the purposes for which the accounts were originally created.

Asian markets rise

Gains in banking, telecom and tech sectors in conjunction with a solid overnight boost from the U.S. Nasdaq served to propel Asian markets in midday trade Friday.

In Hong Kong, the Hang Seng Index was up 305 points at 15,596. In Japan, markets were closed in observance of the Culture Day national holiday.

The Hang Seng Index was up 305 points at 15,596 at 10.26 a.m. Turnover was robust at HK$2.544 billion after 33 minutes' trade.

In Singapore, the Straits Times index was up 0.81 per cent or 16.44 points at 2,056.87 in midday trade, off an early high of 2,064.67.

In South Korea, the KOSPI was up 0.63 per cent or 3.50 points to 561.60 in midday trade.

Australian shares moved higher on Friday morning. The S&P/ASX 200 index rose 18.7 points or 0.6 per cent to 3,308.0.

Euro rises from sickbed

Europe's currency, the euro, isn't used to this. After rising for five times in as many days, the euro stands at its highest level in three weeks.

And a full five trading sessions have passed without a new a record low. For a 22-month old currency that once lost more than 30 per cent of its value, gains come as something new. But hold the optimism, say analysts.

"It's is still pre-mature to conclude that the euro has bottomed," said Alex Beuzelin, senior market analyst at Ruesch International.

The recent rise of the euro, which comes on evidence of a slowing U.S economy, doesn't inspire much confidence in the trillion-dollar currency market, a market highly uncertain about the state of the world's growth.

Europe ends mixed

Sharp declines in telecom heavyweights drove London's leading market index into the red Thursday, with other markets across Europe ending mixed.

In London, the benchmark FTSE 100 index fell 65.6 points, or 1 per cent, to close at 6,392.0, with mobile phone operator Vodafone (VOD) dropping 8.6 per cent.

The blue-chip CAC 40 index in Paris slipped 8.74 points, or 0.1 per cent, to 6,400.31 as carmaker Renault (PRNO) shed 5.7 per cent.

Frankfurt's electronically traded Xetra Dax gained 29.57 points, or 0.4 per cent, to 7,088.64, with electronic component maker Epcos (FEPC) and sportswear maker Adidas Salomon (FADS) topping the gainers.

The AEX index in Amsterdam was up 0.2 per cent while the SMI index in Zurich rose 1.2 per cent. Milan's MIB30 index fell 0.2 per cent

The broader FTSE Eurotop 300 index, composed of a basket of Europe's largest companies, slipped 0.3 per cent.


Qualcomm: Mobile phone equipment maker Qualcomm Inc., said that its fourth-quarter net income rose to $200.8 million, or 25 cents per share, from $182.9 million, or 24 cents, in the same period last year.

Shell: Royal Dutch/Shell Group said Thursday third-quarter profit rocketed 80 per cent. The company said net income, excluding one-time items, rose to $3.25 billion from $1.81 billion in the year earlier period.

Alcatel: French telecom equipment maker Alcatel SA, said third-quarter net income increased to 297 million ($250 million), or 0.25 a share, from 83 million, or 0.09 a share, a year ago. Revenue jumped 50 per cent to 7.9 billion.

Hitachi: Hitachi Ltd. posted a near 13-fold jump in profit Tuesday. It said consolidated net profit for the six months through Sept. 30 surged to 61.68 billion yen ($567.6 million) from the 4.78 billion yen in the year-earlier period.

SmithKline: British drugs company SmithKline Beecham PLC, said its net income for the three months to Sept. 30 rose to £429 million ($621.4 million), or 7.3 pence a share, from £339 million, or 5.5 pence a share, a year ago. Revenue climbed 14 per cent to £2.2 billion.

KLM: KLM Royal Dutch Airlines NV said Monday profit jumped 71 per cent in the second quarter. Net income in the three months through September rose to 118 million ($99 million), or 2.52 a share, from 69 million, or 1.47 per share, a year ago.

Mergers & Acquisitions

Quaker—Pepsi: PepsiCo Inc.'s attempt to obtain the popular Gatorade brand by acquiring Quaker Oats Co. for about $14 billion in stock was rejected Thursday night and talks were aborted as the two sides failed to reach an agreement on price, according to a published report.

UPS—Boeing: United Parcel Service Inc., the world's largest package delivery company, said on Thursday it would acquire at least 13 pre-owned MD-11 planes from U.S. aircraft manufacturer Boeing Co. in a deal that could be worth more than $2 billion.

Allianz—U.S.: German insurer Allianz AG is preparing to buy its way into the top tier of the U.S. insurance market, the chairman of Europe's largest insurer said Thursday, a day before its stock starts trading on the New York Stock Exchange.

Cendant—Fairfield: Cendant Corp., the world's largest hotel franchiser, agreed Thursday to purchase vacation resort operator Fairfield Communities Inc. for at least $634.5 million, significantly improving the company's ability to market and sell its worldwide timeshare properties.

Listen.com—Scour: Internet music site Listen.com has offered to buy the technology assets of Scour Inc., the troubled developer of song-sharing software, for $5 million cash and more than 500,000 shares of stock.

Deutsche—Allianz: Deutsche Bank AG, Europe's biggest bank by assets, said Wednesday it was no longer in talks with insurer Allianz AG about selling part of its retail business, Deutsche Bank 24.

Comerica—Imperial: Comerica Inc. agreed Wednesday to acquire Imperial Bancorp Wednesday for $1.3 billion in stock, creating the fourth-largest bank in California based on assets.

Primedia—About.com: Primedia Inc., publisher of Seventeen magazine, agreed Monday to acquire Web media company About.com Inc., in a $690 million stock deal that combines a content-rich "old media" fixture with a popular Internet information destination.

U.S. Treasurys flat

U.S. Treasurys pared early gains to trade flat Thursday after a report showed unit labour costs grew at an unexpectedly strong pace in the third quarter, stoking inflation fears despite a strong rise in productivity.

Benchmark 10-year Treasury notes were unchanged at 100-2/32 and yielding 5.74 per cent. The 30-year bond dropped 4/32 to 106-16/32 as its yield, which moves inversely to its price, rose to 5.79 per cent. Two-year Treasury notes rose 1/32 to 99-26/32, yielding 5.85 per cent. And five-year notes rose 2/32 to 103-28/32, yielding 5.77 per cent.

The U.S. Labor Department said unit labor costs rose by 2.5 per cent during the July to September period compared with a 1.5-percent consensus forecast gain and an upwardly revised 0.2 per cent fall in the second quarter.

Mortgage rates edge up

U.S. Mortgage rates inched higher but still managed to remain below 8 per cent for the 12th consecutive week as financial markets held steady, according to a survey released by Freddie Mac.

The benchmark 30-year fixed-rate mortgage (FRM) averaged 7.73 per cent for the week ending Nov. 3, up slightly from last week's average of 7.68 per cent.

The average this week for a 15-year fixed-rate mortgage was 7.41 per cent, up from last week's average of 7.22 per cent.

One-year adjustable-rate mortgages (ARMs) this week averaged 7.12 per cent, edging down from last week's average of 7.22 per cent.

ECB leaves rates alone

The European Central Bank opted Thursday to leave short-term interest rates unchanged, as expected, but economists say one more modest rate rise should be in the offing by the end of the year to quell the inflationary effect of high oil prices and a weak euro.

The ECB, which sets monetary policy for the 11-nation euro zone, held its minimum bid rate at 4.75 per cent at its regular fortnightly meeting Thursday. Last month the ECB raised rates, its sixth hike this year. Higher rates make it more expensive for consumers and companies to borrow money, which tends to ease inflationary pressures by curbing consumption and output.

Jobless claims level

The number of Americans filing new claims for unemployment benefits was unchanged at 308,000 for the week ended Oct. 28, the government reported Thursday.

Economists polled by Briefing.com had forecast U.S. jobless claims of 305,000 for the period.

Ford recalls pickups

Ford Motor Company is recalling hundreds of thousands of 1997 F-series light duty pickups that could have fuel leaks that may start a fire.

The No. 2 automaker also has issued a fourth recall on its Escape, a small sport utility vehicle that went on sale last summer, according to a government list of recall agreements reached in August and announced Wednesday.

MSFT, UK firms teaming?

U.S. software giant Microsoft Corp. is in talks with several wireless companies in Britain about developing new Internet services for mobile phones, the Guardian newspaper reported on Thursday.

It said the U.S. group was understood to have held talks with UK mobile market leader Vodafone Group Plc and British Telecommunications, whose Cellnet unit occupies the number two slot.

Norway to float Telenor

Norway plans to sell 25 per cent of the country's dominant phone company, Telenor AS, to private and institutional investors and list the company on the Oslo stock exchange next month.

Analysts estimate the phone operator is worth about 112 billion to 160 billion crowns ($12.1 billion to $17.3 billion), down from expectations in May of up to 200 billion crowns.

Banks, IBM team up

Financial powerhouses Bank of America and Chase Manhattan Bank are teaming up with computer maker IBM to create a digital archive for checks, in a move the firms expect to reduce industry check processing costs by as much as 30 per cent.

AT&T seeks $25B credit line

AT&T Corp. is seeking a $25 billion commitment from a handful of big financial institutions to create what would be one of the biggest credit facilities of its type ever arranged, according to a published report.