Economy Live

The Bank of Japan kept interest rates on hold in the face of market turmoil that has sent both stocks and the dollar sliding. Being a central bank BOJ, is an entity responsible for the monetary policy of Japan. Its primary responsibility is to maintain the stability of the national currency and money supply, but more active duties include controlling subsidized-loan interest rates and acting as a “bailout” lender of last resort to the banking sector during times of financial crisis (private banks often being integral to the national financial system). It also has supervisory powers to ensure that banks and other financial institutions do not behave recklessly or fraudulently.

The European Central Bank holds displeasure with the euro’s rushed rise against the dollar. The bank’s president, Jean-Claude Trichet said,

In the recent period I have observed moves that I would say were undoubtedly sharp and abrupt. And I said already that brutal moves were never welcome.

The European Central Bank is chiefly responsible for fighting inflation and has been caught off guard by a recent jump that might otherwise prompt it to increase interest rates to contain the trend.

Julian Callow, chief Europe economist at Barclays Capital in London said,

What will matter is future volatility. You can only appraise verbal intervention over months.

Coming at a time when the Federal Reserve is cutting rates to bolster a softer American economy, the European policy has probably increased the trend toward a weaker dollar. But Mr. Trichet emphasized that the bank’s primary mandate is to fight inflation. He said,

Each of us in our own environment did what was required by the situation.

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415 billionaires is what the US has. This is by the last count of Forbes magazine. Who’s No. 2 you may ask? China.
A year ago, there were 15 billionaires in China. Now, there are more than 100, according to the widely watched Hurun Report. Forbes has documented the number of Chinese billionaires as 66.
Unlike America’s rich, China’s are hardly famous. Bill Gates and Warren E. Buffett are known around the world. But Yang Huiyan and Robin Li?
Yet, who they are, and what they decide to do - or are allowed to do - with their money and newfound influence will have political and economic consequences in China and probably far beyond, analysts say.
‘They could start buying companies in the U.S.,’ Chang Chun, an economist at the China Europe International Business School in Shanghai, said. ‘They have so much influence.’
On Tuesday, Alibaba.com, one of China’s biggest Internet companies, had a blockbuster stock offering, raising nearly as much as Google and soaring 193 percent on its first day of trading.
That came after the debut on Monday of the state-owned energy company PetroChina on the Shanghai Stock Exchange. Its market valuation ran up to more than $1 trillion, topping that of any company in history.
On paper it has dethroned Exxon Mobil as the most valuable company in the world.
Similarly, China Mobile is the world’s most valuable telecommunications company. The state-owned Industrial and Commercial Bank of China, which was nearly insolvent a decade ago, is worth more than Citigroup.
‘A lot of people are surprised at how fast this has happened,’ said Jing Ulrich, an analyst at JPMorgan. ‘But this is the power of the capital markets. A lot of people’s wealth is based on newly listed companies.’
After a nearly decade-long bear market for Chinese stocks, investors here are in party mode. The Shanghai Stock Market is up nearly 400 percent in two years. The Hong Kong Stock Exchange is shattering records.

The emergence of the superwealthy is a dramatic turnaround in a country that once branded enemies of the state ‘capitalist roaders.’
Robin Li, the 38-year-old founder of Baidu, which is called China’s Google, is now worth about $2.4 billion, making him richer than Jerry Yang of Yahoo. Ma Huateng, 36, of Tencent, another Internet giant, is worth $1.9 billion. And Jason N. Jiang, the 34-year-old founder of Focus Media, is worth $1.1 billion.

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With oil futures nearing $97 a barrel, the price of home heating oil is rising this winter, following record gas prices. A fuel service made a residential delivery in Guilderland, N.Y.
But this year, high oil prices are upsetting that seasonal rhythm. Prices at the pump are climbing fast, bringing back memories of summertime gasoline bills.

The national average for regular gas surpassed $3 a gallon this week, and drivers could be paying record prices this holiday season, experts said. The timing of such an unusual jump could crimp consumer spending at a vital time for retailers.
‘Usually Americans have more money to spend each holiday season because gasoline prices tend to give up 25 percent of their value after summer,’ said Tom Kloza, an analyst with the Oil Price Information Service. ‘But this year there is a second coming of the gasoline rally that may be the Grinch that stole Christmas.’

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One of three operating units of Verizon Communications Inc, Verizon Business delivers advanced IP, data, voice and wireless solutions and is globally recognised as a telecom giant. With over 32,000 employees and 321 offices in 75 countries across six continents, Verizon has a Global IP footprint serving 2,700+ cities in 150 countries.
Verizon Business has established over 200 state-of-the-art data centers in 22 countries including India and operates in the financial services, retail, high-tech, healthcare, federal/state/local government, and education domains.

China has made inroads into the African economy with its biggest ever acquisition on foreign soil with the state controlled Industrial & Commercial Bank of China Ltd (ICBC) agreeing to buy 20% of the share of Standard Bank Group Ltd., Africa’s largest bank.

This would be China’s largest foreign investment and this will make ICBC the largest bank in the world by market value at $330 billion, ahead of the Citigroup with its market value worth $208 billion.

The Chinese President Hu Jintao is encouraging expansions in Africa to gain supply of commodities including oil. With an economy, growing at a rate of 11.5% in the third quarter of this year the Chinese President is seeking to line up natural resources to feed the fastest growing economy in the world.

ICBC will pay on average 120.29-rand cash per common share, making total investment worth 36.7 billion rand or $5.6 billion.

The Standard Bank has offices in 18African Countries and 21 other nations. It is expanding beyond South Africa where it earns most of its profits to tap increased trade in commodities and fees from investment banking.

Ever since negotiations were on regarding ICBC’s acquisition of 20% of Standard Bank’s stake, the value of the South African rand has been rising. The Chinese investment is expected to herald further foreign investments for the country.

Source:globeandmail
Picture:dkimage

Michael Crichton, the author of such best-selling science fiction extravaganzas like the Jurassic Park has a quieter, less known book which bristles over with a rabid fear of all things Japanese. In the Sun Rising, Crichton talks of the Japanese taking over the US economy. The book is US xenophobia at its best. Replace Japan with China and we have harsh reality in the US. MSNBC reports that more than three quarters of the American population wants to boycott Chinese products, everything from seafood to electrical goods to exotic herbs for spicing food. And of course, toys for millions were recalled from the markets due to fears of lead and nickel poisoning. One does agree with recalling poisonous toys but the other arguments being posited for such recalls will need to be closely studied.

Only the refusal to buy Chinese will force the reprehensible sweatshops from shutting down, rants one section of the newly and suddenly conscious US media. Another group of self-declared Southeast Asia pundits point out how the Chinese protect their own and care hoots for others. They are referring to the hanging of Chinese officials found guilty of food and medicine adulteration. Yet ironically this sudden US turnaround from off shoring is definitely not what it seems. It is a concerted effort by the hands-in-gloves media and politicians to drum up racial prejudices before the Presidential elections. Also did not the US citizenry know about the sweatshops from before? Why then they did not boycott everything Southeast Asian? The political conservatives in the US are very well aware that this sort of mass hysteria against the non-white countries in Asia will win those votes. The ordinary American will be hopeful that the era of off-shoring of US jobs is going to be over and all will be fine if only they stop buying all things Chinese. America is after all WASP (White-Anglo Saxon-Protestant) country and all political leaders there have to be in the good books of the WASPs and what better way to blame other nations for one’s own problems.

For IMF head, there are two candidates to replace Mr Rodrigo Rato who has resigned for personal reasons, France’s former Economy minister Dominique Strauss-Khan and the former president of the Czech Central Bank Josef Tosovsky.

After NASDAQ vows to sell 31% stake in LSE, a number of seekers have emerged to cash the opportunity. In this league Singapore-based Temasek Holdings has approached NASDAQ for its $1.58bn worth stake in LSE.

Temasek have made the approach in recent days. The Singapore authorities, which recently acquired a stake in Barclays alongside the Chinese government’s sovereign investment fund, are believed to cash the strategic position of the LSE in their ambition to make Singapore grow as a centre for financial services.

NASDAQ buys a substantial stake in the exchange to strengthen its abortive bid for the LSE, which lapsed in February. But, after failed to buy it, America-based stock exchange is eying at OMX of Sweden. To accumulate the fund for it, NASDAQ plan to sell its influential stake and hired UBS and JPMorgan to help sell its holding.

However, while making its decision public, NASDAQ also makes sure that exchange would not sell its LSE’s holding to single buyer. If it do so than LSE can again on the buyout radar, which can badly affect the investors. But NASDAQ authority didn’t make any comment on the Temasek’s proposal, which arose doubts over its previous stance.

NASDAQ will have no shortage of alternative buyers for LSE, which is one of the biggest stock exchanges; however, Deutsche Borse is also in the line. On the other hand, any lucrative offer can lure it to sell its stake to single buyer. Recently, LSE’s shareholders have approved Milan-based Borsa Italiana’s £1.1bn merger proposal, and is expected to complete in October. From February to till now NASDAQ’s share value has inflated by 22% and if regulator approves the merger deal than it will water down over its expected extra income, which at least NASDAQ won’t lose it.

On NASDAQ silence over the Temasek proposal, many prominent figures such as the deputy governor of the Bank of England, the German Chancellor and the IMF have expressed concerns and warned that such type of buyout can mar the growth of these large, powerful institutions.

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Via: Market-Watch

It’s not only America and Europe, who are battling with the subprime woes, but Asian markets are also affected by it.

It’s so obvious that even single news also affects other markets dearly. Subprime dragon has already eaten up many markets and all the major and budding markets felt the heat. To end the volatility, major central banks injected money into the market. To some extent, markets feel easy, but now recession is hoping round the corner.