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Tuesday, March 20, 2012
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Business digest

 

Asia’s nations to double currency swap deal

 

TOKYO: Japan and 12 other Asian countries will likely agree to double the amount of funds available under a regional currency swap pact amid uncertainty over the European debt crisis, a report said Sunday.

 

Japan, China, South Korea and the 10 members of the Association of Southeast Asian Nations (ASEAN) are to agree to double the fund from the current $120 billion this month, Japan’s Nikkei daily reported, citing unnamed sources.

 

The currency swap deal, known as the Chiang Mai Initiative, is designed to prevent a financial crisis in countries with relatively small foreign exchange reserves by giving them a safety net against future liquidity shortages.

 

Currently, up to 20 percent of the $120 billion in available funds can be used without linkage to loans by the International Monetary Fund.

 

The so-called ASEAN+3 countries are also expected to agree to raise this percentage significantly to prevent the European debt crisis from causing major damage in Asia, the Nikkei said.

 

The countries are expected to reach a broad agreement on strengthening the functions of the Chiang Mai Initiative at a meeting of senior finance officials in Cambodia at the end of this month, it said.

 

China home prices largely down in February

 

BEIJING: Home prices in nearly two thirds of China’s major cities fell in February from the previous month, the government said, as moves to cool the red-hot property market continue to bite.

 

Of the 70 large and mid-sized cities tracked by the government, 45 saw new home prices fall month-on-month, the National Bureau of Statistics (NBS) said in a statement, down from 48 in January.

 

Prices in a further 21 cities were stable and just four cities experienced price rises, it added.

 

Beijing has introduced a range of measures aimed at curbing runaway property prices over the past year, such as bans on buying second homes, hiking minimum down-payments and introducing property taxes in select cities.

 

But analysts now worry that slumping home prices could hurt growth in the world’s second-largest economy, which is already forecast to slow this year from 9.2 percent growth in 2011.

 

The government, however, has said it has no plans so far to relax policy restrictions aimed at cooling the market.

 

“China’s property prices will likely continue their downward trend, likely going into the second half of 2012 and until policies are altered,” property analysts EC Harris said in a research note.

 

Dollar weak on murky US economic data

 

TOKYO: The dollar traded narrowly against the yen and euro in Asia on Monday amid a mixed bag of US data that failed to give a clear picture of the health of the world’s biggest economy.

 

The dollar fetched 83.42 yen in Tokyo afternoon trade, almost unchanged from late Friday in New York.

 

The euro bought $1.3168, down from $1.3175 in New York. Against the Japanese unit, the euro briefly topped 110 yen for the first time since October before easing slightly to 109.86 yen, against 109.82 yen in New York.

 

On Friday, the dollar slipped against a string of major currencies on the mixed data.

 

The drop “will likely herald a cautious start to the week and intense interest on speeches” from Federal Reserve Bank of New York President William Dudley and Fed chief Ben Bernanke later in the week, National Australia Bank said in a note Monday.

 

Market players are also waiting for a string of US housing data later in the week after a batch of figures last week dampened hopes that the US economic recovery was gaining strength.

 

The dollar was likely to find firm support around the 82.00-83.00 yen mark and could test 85 yen this week if the data show better-than-expected results, said Masafumi Yamamoto, chief forex strategist at Barclays Capital.

 

“Such a case will reinforce the scenario of decreasing downside risks in the US economy,” Yamamoto told Dow Jones Newswires.

 

Rusal reports 92pc drop in net income

 

MOSCOW: The world’s biggest aluminum producer Rusal on Monday reported a 91.7 percent drop in net profit for 2011 as it wrestles with a management dispute among its Russian shareholders.

 

The Moscow-based firm attributed the drop in profit to $237 million (189 million euros) to a write-down of its holding in the Norilsk Nickel miner and a steep drop in aluminum prices last year.

 

The company posted a net loss of $974 million for the fourth quarter of 2011 compared with a net profit of US$1.45 billion the previous year.

 

“In spite of the deterioration of the global economy during the second half of 2011, on-going cost pressures across the whole commodities sector and a particularly challenging fourth quarter in 2011, UC RUSAL delivered a solid financial performance during the year,” said chief executive Oleg Deripaska.

 

“While the current global economic volatility, in conjunction with excessive stock levels, will continue to put pressure on aluminium prices in the near term, global aluminium demand remains well above 2009 recession levels and we anticipate that the rising influence of developing countries will ensure demand remains robust throughout 2012.”

 

The disappointing results were largely expected and the company’s shares were up nearly four percent in late Hong Kong trading after dropping nearly 14 percent the previous week.

 

The firm was rocked by last week’s sudden resignation of its board chairman Viktor Vekselberg and his subsequent threat to sue Rusal for alleging that he failed to perform his assigned duties on the board.

 

Vekselberg warned in his resignation statement that Rusal was facing a “deep crisis” and subsequently criticised the company’s decision to appoint Hong Kong Mercantile Exchange head Barry Cheung as his replacement.

 

He had earlier been pushing Deripaska to sell the Norilsk holding to help cover a Rusal debt that was estimated at $11 billion at the end of last year.

 

British PM wants green light for road privatisation

 

LONDON: Sovereign wealth funds, pension funds and private investors could take control of Britain’s main roads under plans to be announced by Prime Minister David Cameron in his pre-budget speech on Monday.

 

Tolling could also be introduced to help fund new roads as the government seeks to repair an infrastructure which Cameron will claim is “falling behind our competitors,” his Downing Street office said.

 

The leader has already asked the Department for Transport and the Treasury to carry out a feasibility study on the proposed changes to road financing, results of which will be announced at the end of the year.

 

“We need to look urgently at the options for getting large-scale private investment into the national roads network,” Cameron will say. “Road tolling is one option - but we are only considering this for new, not existing, capacity.”

 

The Conservative Party leader will point out that much of Britain’s infrastructure is already funded by the private sector, and will question why Britain’s roads still rely on public finances. —FP

 

Brent crude below $126

 

SINGAPORE: Brent crude was steady below $126 a barrel on Monday, holding onto most of the previous session’s gains made on continued concerns over potential supply disruptions from Iran, with the risk of major supply squeeze still being factored in. The new sanctions, due to take effect from July 1, have helped boost Brent prices by nearly 17 percent so far this year and on Monday, Brent crude was trading at $125.64 a barrel by 0714 GMT, down just 17 cents after settling up more than $3 in the previous session.