News That Matters

Bo Xilai
, the maverick Chinese politician who until recently was a frontrunner for promotion to the top decision-making body of the ruling Communist party, has been dismissed as party secretary of Chongqing municipality. Mr Bo has been replaced by Zhang Dejiang, a North Korean-trained economist and vice-premier, according to the official Xinhua news agency and sources close to the Chinese leadership.

Iran’s oil production has fallen to a 10-year low and could drop to levels last seen during the Iran-Iraq war in the 1980s as sanctions over its nuclear programme disrupt an industry already suffering from years of underinvestment.  The country’s crude production fell by 50,000 barrels a day to 3.38m b/d in February, according to the International Energy Agency. The last time it was that low was in late 2002, IEA statistics show.

President Barack Obama warned Iran on Wednesday that the window of opportunity for a diplomatic solution to the stand-off over its nuclear programme was “shrinking” and that Tehran should meet its “international obligations” to come clean over its activities. At a press conference with David Cameron, the UK prime minister, at the White House, Mr Obama said both the US and UK “are determined to prevent Iran from acquiring a nuclear weapon”.
Asian stock markets were mixed Thursday as concerns that China would retain property-market curbs this year unsettled investors, while the U.S. dollar continued to rise broadly and Japanese exporters’ shares extended recent gains boosted by a weaker yen. Japan’s Nikkei Stock Average was recently up 1%, around an eight-month high, and South Korea’s Kospi Composite was a bare 0.1% higher. But India’s Sensex was down 0.3%, Hong Kong’s Hang Seng Index was 0.2% lower and China’s Shanghai Composite Index was down 0.3%. Australia’s S&P/ASX 200 finished with a loss of 0.2%. Dow Jones Industrial Average futures were 15 points up in electronic trading.

South Korea and the U.S. on Thursday will eliminate duties on thousands of goods as they implement a free-trade agreement that took one year to negotiate and an additional four years of political battling to complete. The deal is the largest trade pact, by value of traded goods, the U.S. has completed since the North American Free Trade Agreement with Canada and Mexico in the mid-1990s. But it is likely to have a far larger effect on South Korea than on the U.S. Trade plays a greater role in the South Korean economy and import tariffs have been kept high to protect its rapid ascent from poverty in the 1960s to affluence today. About 80% of the existing tariffs between the two countries will be eliminated Thursday. The agreement calls for 95% of tariffs to be wiped out within five years.

India is poised to overtake Japan as Asia’s No. 2 vehicle market by 2016, and sales gains in China will remain strong this decade, according to new estimates. Despite recent concerns about slower economic growth, China is on track to hit sales of 30.68 million vehicles by 2020, up 74% from 17.66 million last year, according to IHS Automotive. China overtook the U.S. in 2009 to become the

The number of unemployed Britons rose again in the three months to January while average wages fell to their lowest level in 18 months adding pressure to already squeezed household incomes, official data showed Wednesday. The Office for National Statistics said its internationally comparable measure of unemployment rose by 28,000 in the three months to January to total 2.67 million. The unemployment rate remained at 8.4%the highest reading since 1995, while youth unemployment hit a 20-year high. Wednesday’s data showed that public sector employment fell by 37,000 in the fourth quarter of 2011, and by 270,000 on an annual basisthe second-largest decline since records began in 1999although the government will likely take some reassurance from a 45,000 increase in private-sector employment in the final quarter of 2011.

The euro-zone countries Wednesday signed off on Greece’s second bailout program, ending a protracted and dramatic negotiating process that started last July. Their hope is that the €130 billion (roughly $169 billion) packagefunded mostly by euro-zone countries and the International Monetary Fundwill be enough to keep Greece funded until 2014-15. But talk of a third Greek bailout has already begun, even as the ink is still drying on the second package. A report by European Union experts, seen Tuesday by The Wall Street Journal, highlighted the risks to structural-reform implementation and predicted stagnation, at best, for 2013. Greece is in its fifth consecutive year of recession.

The break that had long eluded the political career of 57-year-old French Socialist François Hollande finally surfaced with a text message in the wee hours of May 15 last year. His girlfriend, 47-year-old journalist Valérie Trierweiler, read it and nudged Mr. Hollande awake: Dominique Strauss-Kahnthen-chief of the International Monetary Fundhad been arrested by police in New York on suspicion of sexual assault. “François did not grill me for more details about the arrest,” Ms. Trierweiler said. “He was already thinking of his next move.”

Federal regulators are cracking down on an obscure but booming market for trading shares in companies before they go public. The Securities and Exchange Commission brought charges against two money managers, alleging they misled and overcharged investors on funds formed to buy shares of Facebook Inc., Twitter Inc. and other social-media companies.  A so-called secondary market in these companies’ private shares has grown rapidly as more investors seek to buy into the companies before their initial public offerings, hoping to profit later from a “pop” in the stock price after the IPO.
Gold regained some strength on Thursday after a drop in the previous session attracted bargain hunters, but a strong dollar and fading expectations of more monetary easing in the United States made the metal vulnerable to more selling. Spot gold added $4.69 an ounce to $1,646.79 an ounce by 0339 GMT. Gold extended losses and fell more than 2 percent on Wednesday — a day after the Federal Reserve offered no clues on further easing. “Sentiment is of course very bad, I can say. After slipping below $1,650, it may go down further to $1,600,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding that a rebound will be capped at $1,675 to $1,680.

Fitch Ratings revised down its outlook on Britain’s AAA rating to negative on Wednesday, warning the nation could lose its top-notch status in the next couple of years if the government eases back on its debt cutting stance. The Fitch action, which comes just a week before British finance minister George Osborne presents his annual budget to parliament and follows a similar move by Moody’s just a month ago, is likely to dampen calls for the government to loosen its fiscal stance. “This is a salutary reminder as to why Britain needs to deal with the enormous debts and deficit that we inherited, why we have got to stick to those plans,” said British Treasury minister Danny Alexander.

President Barack Obama and British Prime Minister David Cameron discussed the possibility of releasing emergency oil reserves during a meeting on Wednesday, two sources familiar with the talks said, the first sign that Obama is starting to test global support for an effort to knock back near-record fuel prices. Obama raised the issue during a broad bilateral meeting at the White House, according to a UK official with knowledge of the discussion. Asked about the talks, a senior Obama administration official said: “No agreement was reached. We will continue to work together to address energy security and oil price issues.”
‘s central bank left interest rates unchanged for a third consecutive meeting after inflation accelerated and as it awaits steps to curb the fiscal deficit in the budget tomorrow. TheReserve Bank of India kept the repurchase rate at 8.5 percent, it said in a statement in Mumbai today. The outcome was predicted by 19 of 22 economists in a Bloo mberg News survey, with three forecasting a quarter-point reduction.  India joins nations from Indonesia to South Koreain holding borrowing costs this month, juggling price pressures with the need to prevent a deeper growth slowdown as investment falls and Europe‘s debt crisis hurts exports. The central bank has signaled rate cuts to counter the weakest expansion in almost three years depend on a sustained easing in inflation and moves to curb the largest budget gap among BRIC economies.

Apple Inc. (AAPL), getting a boost from anticipation of the new iPad, rose to a record today and may climb 19 percent to $700, according to analysts who raised their price targets for the stock.  At least four analysts, including Katy Huberty at Morgan Stanley in New York, have increased price targets to $700 or higher in the past two weeks. Apple, based in Cupertino, California, rose 3.8 percent to $589.58 at the close in New York and has gained 46 percent this year.

Singapore companies are accelerating their push to expand overseas as tighter curbs on housing and reduced dependence on foreign workers lower growth prospects for the economy.  Hiring sentiments have softened amid an uncertain economic outlook and layoffs rose last quarter, the city-state’s government said today. Singapore Airlines Ltd. (SIA) said it’s offering pilots unpaid leave to cut costs as profit fell for five straight quarters, while lender DBS Group Holdings Ltd. plans to boost its China workforce after earnings there doubled in 2011 and it seeks to reduce reliance on its home market.

Obama administration officials say they are worried India may run afoul of a new U.S. law restricting payments for Iranian oil, forcing the White House to impose sanctions on one of its most important allies in Asia. So far this year, India is failing to cut back its purchases of Iranian oil, which may force President Barack Obama to impose penalties as early as June 28, according to several U.S. officials who spoke on condition of anonymity because of the sensitivity of the issue.
It’s no big surprise that most U.S. banks made it through the recent stress tests, according to analyst Meredith Whitney, who told CNBC the stocks are still oversold and better buys than their smaller competitors.  With the exception of a few large institutions with balance sheet and earnings problems, the founder of the Meredith Whitney Advisory Group said the banks should be trading around book value. Her comments came a day after the Federal Reserve announced that 15 of the top 19 American banks met capital levels that would allow them to survive a Depression-level economic crisis.
Oil prices hovered below $106 a barrel Thursday in Asia amid trader concerns that growing U.S. crude supplies reflect weak demand. Benchmark oil for April delivery was up 24 cents to $105.67 in electronic trading on the New York Mercantile Exchange. The contract fell $1.28 to settle at $105.43 per barrel in New York on Wednesday. Brent crude for April delivery was down 29 cents at $124.68 per barrel in London. The April contract expires later today.
The U.S. current account deficit, which includes the trade balance of goods, services and investment flows, widened at the end of 2011 to the largest quarterly gap in three years. Widened by a slight decline in exports and stronger demand for foreign goods, the current accout trade deficit increased 15.3% to $124.1 billion in the 2011?s final three months. For the year, the current account deficit rose 0.6% to $473.4 billion, the biggest imbalance since 2008. A bigger trade deficit hampers economic growth since it means more goods and services are being imported while U.S. companies are making fewer sales overseas. Economists expect the deficit to keep rising in 2012. Europe’s debt crisis is likely to drag on U.S. exports, as is slower growth in Asia. And stronger growth in the United States should boost imports.
Consumer prices in India rose more than expected in February, driven by a jump in fuel and power costs.  The wholesale price index (WPI), a key measure of consumer price inflation in the country, rose by 6.95% from a year earlier. Fuel prices have been rising globally amid fears over supply disruptions due to tensions in the Middle East. Analysts said fears of oil prices rising further may prompt the central bank to keep interest rates on hold.  “This figure is still a repressed number, because the complete pass-through of global oil prices has not happened,” said Rupa Rege Nitsure of Bank of Baroda. “If you take just the direct impact of global oil prices at current levels, then the headline inflation number could at least be 90-100 basis points higher.”

Zimbabwe’s government could “close” unless projected diamond revenues start to flow into the treasury, Finance Minister Tendai Biti has warned. He said the mines ministry had informed him that no diamond auctions had been held this year. Ministries in the unity government are split between President Robert Mugabe’s Zanu-PF and the MDC party.
Apple could account for more than 10pc of the America’s corporate cash pile by the end of the year, according to Moody’s, underlining the pressure the iPad maker is under to return money to shareholders. The Californian company is likely to see its cash reserve balloon to about $150bn (£96bn) this year unless it pays a dividend or embarks on a share buy-back programme, Moody’s predicted. Apple chief executive Tim Cook said last month that senior executives are in “active discussions” about what to do with its cash, which reached $97bn at the end of last year as consumers snapped up the latest iPhone and iPad.

More than 50 local authorities that held money with the failed Icelandic bank Glitnir are to be paid in full more than three years after the bank collapsed. The bank’s winding up committee announced it was to release €635m (£527.3m) to priority creditors on Friday. The cash will be paid into escrow accounts before being distributed to creditors – the majority of which are understood to be UK councils. When the Icelandic banks were nationalised in 2008, they held nearly £1bn on deposit for UK councils. Although some of the cash has been returned, this is the first time Glitnir has paid up. On Friday it is expected to take the first step towards paying 53 councils and public bodies €290m.
Greece’s Alpha Bank says it wants to scrap merger talks with Eurobank after last week’s huge sovereign debt write-down agreement between the government and private creditors. Shareholders would be asked at a general meeting to revoke a decision taken in November to approve the merger, Alpha said, adding that it had informed Eurobank of its decision. The decision came “following the conclusion of the exchange offer of bonds issued or guaranteed by the Hellenic Republic and its effects on the banking sector”, Alpha said.
A successful bond auction by Italy on Wednesday cut the risk premium the country pays compared to Germany to issue 10-year debt and the head of the Italian debt management office said it could fall by much more by the end of the year. Investors have looked more favourably on Italian sovereign debt in recent weeks, impressed by a reform push by Prime Minister Mario Monti, in contrast to increasing concern about Mediterranean neighbour Spain, which is struggling to meet deficit pledges.

Graduates scouring the recruitment pages amid Portugal’s worst recession in memory are increasingly opting for the chance of a better life in the former colonies of Angola and Brazil. Portugal flourished as a global power with explorers like Vasco da Gama and Pedro Alvares Cabral building an empire that lasted for 600 years. Now, a new wave of adventurers is once again seeking work, and fortune, elsewhere.

Sweden wants to think “outside the European box” after its heavy reliance on trade with the region was blamed for a sharp economic slowdown in the fourth quarter. Swedish trade minister Ewa Bjorling hopes to double exports by 2015 through measures that include pursuing export markets beyond the troubled European Union, such as Iraq, Africa and the BRIC countries (Brazil, Russia, India and China). “We can see that during the financial crisis and immediately after, those companies that have spread their eggs in different markets outside Europe managed to handle the crisis much better,” Dr. Bjorling said in an interview. “We believe we need to have other markets in combination with Europe.”
Premier Wen Jiabao said Wednesday that the 7.5 percent GDP growth target for 2012 is a result of the government’s proactive macro-control and can not be viewed as low. China’s GDP has reached 47 trillion yuan (7.46 trillion U.S. dollars). On this basis, the growth rate of 7.5 percent can not be counted as low, not to mention the economy would keep expanding at this pace, Wen told a press conference after the conclusion of the annual parliamentary session. Indeed, the Chinese economy faces slowing trend due to impacts from the European debt crisis and contracting overseas demands, Wen noted.

Premier Wen Jiabao said Wednesday that the country would not slacken its efforts in regulating housing prices, which he considered still “far from a reasonable level.” “If we develop the housing market blindly, a bubble will emerge in the housing sector. When the bubble bursts, not only the housing market will be affected, it will weigh on the entire Chinese economy,” said Wen at a press conference after the conclusion of China’s annual parliamentary session. The reasonable housing prices should match the people’s income, the construction cost, and the profit should be reasonable too, added Wen, calling for long-term, steady and sound development of China’s property market. The people’s housing demand is rigid and durative as China is a big country will 1.3 billion people, and in the stage of rapid industrialization and urbanization, according to Wen.

China will change three members of the central bank’s monetary policy committee, according to a circular released Wednesday by the State Council, or the Cabinet. The circular said the State Council has approved the appointment of Qian Yingyi, Chen Yulu and Song Guoqing as new members of the monetary policy committee of the People’s Bank of China. Qian is currently the dean of Tsinghua University’s School of Economics and Management. Chen is the president of the Renmin University of China, and Song is a professor of the National School of Development of Peking University.
Meanwhile, Zhou Qiren, Xia Bin and Li Daokui will no longer be members of the committee, the circular said.
Union Minister for Civil Aviation Ajit Singh has ruled out bailing out crisis-ridden Kingfisher Airlines and asserted that the Directorate-General of Civil Aviation (DGCA) would not make any compromise on passenger safety. Addressing a press conference after inaugurating India Aviation Show -2012 here on Wednesday, he said the DGCA, which was looking into the problems such as cancellation of flights and absenteeism by pilots, would submit its report in a day or two and the government would act based on the recommendations.
India continued to hold on to its position among the world’s top 10 manufacturers even as a slowdown has hit the sector during the second half of the ongoing fiscal. The latest United Nations Industrial Development Organisation ( UNIDO) report on Industrial Statistics shows that India along with otherBRICS (Brazil, India, China and South Africa) contributed around one fifth to the global manufacturing value added (MVA) during the quarter ended December 2011. India stood 9th in the overall rankings with a modest manufacturing growth rate of 4.1% during the quarter. Among other emerging economies, China’s manufacturing sector expanded at the highest pace at 13.1% while that of Brazil contracted by 1.9% during the quarter.
Long-term foreign residents accounted for 1.97 percent of South Korea’s population in 2011, rising nearly 20 times from two decades earlier, a government report showed Thursday. The 2011 social index report compiled by Statistics Korea showed there were 982,461 foreigners who have been legally registered as long-term residents, compared with just 49,507 people tallied in 1990. Of the total, 231,000 were in the country on non-professional employment visas, with 68,000 enrolled in South Korean schools. Others were in the country after having acquired permanent residence status.
Gazprom is struggling to get a foothold in the Asian markets leading global economic growth. The company’s plan to supply liquefied natural gas to India from 2016, the year the United States is set to start gas exports, is faltering after buyers said they’re looking for cheaper fuel from North America. Last year, decade-long talks to supply pipeline gas to China foundered over price disagreements. “Gazprom has a major problem of having a fixed view on what the price of gas should be, irrespective of market conditions,” Jonathan Stern, chairman and senior research fellow at the Oxford Institute for Energy Studies, said by e-mail. “If this continues, it will create increasing problems for Russian gas exports.”

Investing in Indonesia’s mining sector has never been for the faint-hearted, but government proposals that could potentially disrupt Asia’s coal markets have raised the blood pressure of foreign investors. The government has outlined three policies which play well to its domestic audience but which have set alarm bells ringing, particularly in India, which hopes to meet much of its need for imported power-station coal from Indonesia. The proposed measures include introducing a benchmark price, which would determine spot and long-term contracts, as well as taxation and export duties.  Another policy calls for all miners in Indonesia to set aside a certain amount of output for the domestic market and there is a also a mooted requirement for foreign investors to divest 20 percent of their project to locals within five years of initial production and 51 percent within 10 years.