Finance Markets

May 22, 2006

Asian equities markets decline

Filed under: Equities, Economy, Asia, Australia, Japan, India, South Korea

Equities markets in Asia saw substantial declines on Monday as investors interested in avoiding risks exited emerging markets. Declines were widespread throughout the region.

In Mumbai, the market fell 10 percent during the day, causing trade to be suspended for an hour. Once trade resumed, the market recovered some but still closed 4.2 percent lower at 10,481.77. In other major Asian markets, Indonesia’s Composite Index lost 6 percent to 1,309.05 and the Straits Times in Singapore and the Hang Seng in Hong Kong each dropped 3.1 percent to 2,416.69 and 15,805.52 respectively.

The Kospi index in Seoul declined by 2.5 percent to 1,338.59. The biggest exception to the declines there was retailer Shinsegae, which added 6.6 percent on the day to won460,000 after it said it would buy Wal-Mart’s South Korean stores.

Meanwhile, in Australia, the S&P/ASX in Sydney dropped 1.4 percent to 5,030.8. Miners were a factor there, with BHP Billiton dropping 3 percent to A$27.89 and Rio Tinto falling 3.9 percent to A$75.22. Oil stocks were also lower in Sydney, with ARC Energy down 6.4 percent to A$1.54 and Hardman Resources declined by 6.7 percent to A$1.76.

In Tokyo, the Nikkei 225 closed at its lowest level in two months, dropping 1.8 percent to 15,857.87. The Topix index lost 1.4 percent to 1,615.86. Miners were down there, as well, with Nippon Mining losing 8 percent to ¥948 and Sumitomo Metal Mining down by 3.9 percent to ¥1,471.

Among Japanese semiconductor companies, Elpida Memory lost 5.2 percent to ¥4,890 on a restatement of last year’s earnings that showed an even wider net loss than had been previously reported. In the electronics sector, Sony added 0.8 percent to ¥5,120 on the announcement that mobile carrier KDDI has plans to launch a line of Walkman-type mobiles manufactured by Sony Ericsson. The news sent shares in KDDI up 1.4 percent to ¥737,000.

Seafood processing groups saw the biggest gains for the day in Tokyo, with Nippon Suisan adding 10.2 percent to ¥584 and Maruha gaining 3.3 percent to ¥282. The sector has been benefiting from foreign demand for their products.

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August 18, 2005

Qantas raises profits but to cut staff for big fuel bills

Filed under: Companies, Australia
Qantas raises profits but to cut staff for big fuel bills

Even though Qantas announced Thursday that it had an unexpectedly high 18 percent rise in profits in the first half of 2005, it also said that it will cut jobs and raise fuel levies on tickets next year to compensate for the rise in fuel prices.

There was no announcement of how many of its 38,000 workers mightlose their jobs, but it was estimated that fuel levies would rise by A$10 to A$20 per journey leg.

Qantas said that 30 percent of their operating costs next year would go to buying fuel, while last year that was only 19 percent of costs.

The airline reported an after-tax profit to June 30 of A$763.6 million, A$155.2 million higher than the same period last year, but it expects to pay A$1.2 billion for fuel alone next year.

Chief financial officer Peter Gregg justified the job cuts and higher fuel levies by saying that the airline couldn’t be expected to absorb the higher fuel prices.

Meanwhile, Virgin Blue announced Thursday that it was reducing its profit estimate for 2004-2005 to between A$90 million and A$100 million, down from A$159 million last year. It also blamed the reduction on climbing fuel prices, saying that its fuel bill next year will be A$150 million higher than it was this year.

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July 8, 2005

Australian economy creates jobs

Filed under: Economy, Australia
Australian economy creates jobs

Figures show that in the past 10 months a total of 362,500 jobs have been created in Australia, including 41,700 jobs in June.

The jobless rate fell to its lowest level since 1976, 5 percent. Employment growth is at 3.8 percent for the year.

Two-thirds of the jobs created since last August are higher-paying full time positions. 64.7 percent of the adult population of Australia are employed, an all-time high.

The amount of job growth in June came as a surprise in light of a decline in domestic demand and housing, as well as a collection of economic indicators that point to a general downturn in the economy.

While this is good news, it also brings risks of inflation as more people have more money to spend, as well as of another increase in interest rates in order to deal with inflation.

Some analysts, however, are skeptical that the job gains hold a high risk of inflation. Data shows consumer price inflation at an annual rate of 2.4 percent in the March quarter. This is well within the central bank’s target of 2.0 to 3.0 percent inflation.

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June 7, 2005

Australian crop figures revised

Filed under: Commodities, Australia
EIA predicts $50 barrel for next year

Global grain prices could feel the effect of a serious drought in parts of Australia.

The world’s second-biggest wheat exporter at about 15 percent of the global wheat trade, Australia has had to cut its crop forecast by 29 percent.

The reduction had been expected, but was greater than many thought it would be, and the ministry of agriculture has warned that even the revised figures could be too optimistic.

The Australian Bureau of Agricultural and Resource Economics (Abare) had forecast a wheat crop totaling 20.4 million tonnes in March but now only expects a crop of 16 million tonnes. It has also cut its estimate of the total winter crop, of which wheat is the most important component, to 26.1 million tonnes, 17 percent less than last year.

New South Wales is expected to be hardest hit, with a crop of around 4 million tonnes, down 55 percent. Queensland production will also be down, by around 27 percent.

Growing conditions are good in Western Australia, however, and their winter crop is
expected to grow by 16 percent this year.

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May 20, 2005

Telstra in A$30 billion sale

Filed under: Companies, Australia
Telstra in A$30 billion sale

The Australian government, in the last stage of privatizing Telstra, the former telecommunications monopoly, has said that it expects to realize around A$30 billion in the sale of its remaining 51.8 percent of shares in the company.

This estimate is based on a share price of A$5.25 each. However, that price is well ahead of prices at which shares in the company have been trading recently.

The government has denied, however, that it has set any price for the shares, which are scheduled to be sold next year. The government is also said to be thinking of raising the limit of allowed foreign ownership I Telstra from the current level of 35 percent to 49 percent.

Finance minister Nick Minchin has said that there is no real difference between the two levels, as both maintain majority Australian ownership in the company. However, analysts say that it might be difficult to create that much foreign interest in Telstra.

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May 19, 2005

Asian equities gain on weak oil prices

Filed under: Equities, Asia, Australia, Japan, South Korea
Asian equities gain on weak oil prices

Asian equities markets were up across the board on Thursday on Wall Street gains, weak oil prices, and news that US inflation is in check.

Tokyo markets had their best day since the beginning of the year as the Nikkei 225 rose 2.2 percent to 11,077.16 and the Topix index was up 2 percent to 1,131.42. Export-oriented stocks did especially well.

Hong Kong’s Hang Seng index rose 0.5 percent, to 13,698.93 as the mood was subdued by rises in domestic interest rates.

HSBC, Hong Kong’s largest bank, raised its prime interest rate 50 basis points and other banks soon followed suit. The S&P/ASX 200 index in Sydney hit a five-week high, going up 1.4 percent to 4,044.5.

Gains by importers took the composite index in Seoul up 2.3 percent to 952.09. In Taipei, technology stocks helped volume improve and took the weighted index up 1.4 percent to 5,970.71.

Technology stocks also were a factor in Singapore, where the Straits Times index had its first positive result in five days as it rose 0.6 percent to 2,167.27.

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May 11, 2005

Australia announces major tax cuts to boost economy

Filed under: Economy, Australia
Australia announces major tax cuts to boost economy

The centre-right coalition government of Australia announced tax cuts larger than what had been expected on Tuesday.

It is using a budget surplus to promise Australians A$21 billion ($16.8 billion) in personal income tax cuts over four years.

The cuts are an effort to halt a slowdown in the economy that will this year likely post its lowest growth rate in over a decade. The Treasury cut its prediction for growth in the fiscal year to end in June to 2 percent.

Six months ago it had predicted that growth would amount to 3 percent for the year.

It has also now forecast a growth rate of 3 percent for fiscal year 2005-06, well below the 4 percent and more growth per year in the 1990s. Another measure announced by the government to stem the slowdown was an outright abolishment of a pension contribution surcharge tax for earners in high brackets.

Big business was disappointed that it did not receive a larger share of the cuts. Corporate taxes are scheduled to fall by only A$1.8 billion.

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May 3, 2005

Australian dollar sees fall as interest rates expected to stay

Filed under: Forex, Australia
Australian dollar sees fall as interest rates expected to stay

The Australian dollar was down Tuesday morning in the European markets, mostly due to the suspicion that Australian interest rates will not be raised on Wednesday.

The Australian dollar fell 0.6c to $0.7742 in relation to the U.S. dollar, to A$2.4421 against sterling, and ¥0.5 to ¥81.35 in relation to the yen.

Opinion is that there will be no need for the Australian Reserve Bank to raise the interest rate beyond its present 5.5 percent after news that construction approval for homes fell 6.8 percent in March.

Good performance in the equity markets and high bond yields have been keeping the Australian dollar strong, but there is some opinion that these conditions will not necessarily continue unless productivity grows.

The U.S. dollar, meanwhile, fell slightly to $1.2865 as opposed to the euro and ¥105.10 against the yen as the Federal Reserve is expected to raise interest rates to 3 percent, up 25 basis points, on Tuesday. Sterling was also down slightly, to £0.6799 in relation to the euro.

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April 14, 2005

Markets down across Asia

Filed under: Markets, Asia, Australia, Japan
Markets down across Asia

In Asian markets Thursday, stocks were generally down.

Sydney’s markets hit their lowest point in almost three months when the S&P/ASX 200 fell 1.3 percent to 4082.3.

Taipei was down 0.4 percent due to technology sell-offs.

Seoul had its biggest one-day loss in nearly six months when its composite index fell 2.8 percent.

The Tokyo markets were still feeling the effects of recent tensions between Japan and China.

In addition, technology stocks were down due to alarm that weak retail sales figures from the U.S. would slow down consumer spending.

These losses included a 1.4 percent loss for Sony.

The banking sector was also down, and so was the retail sector - retailer Takashimaya was down 5.6 percent, for example.

One exception to retail losses was Lawson, Japan’s second-largest retail chain. It was up 2.2 percent following reports of record profits and predictions of more growth to come.

Additionally, Kanebo, the household goods manufacturer rocked by an accounting scandal, was down 15.5 percent on Thursday after a 13.4 percent loss on Wednesday.

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