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					                                                                                                                                                                                                                                    ARAB TIMES, SUNDAY, APRIL 17, 2011
    BUSINESS                                                                                                                                                                                                                                                                         38

                                            Spain warns of record five million jobless                                                                                                         Medvedev seeks Hong Kong expertise

    The number of unemployed in Spain,           the crisis, the workforce has been very    20.33 percent at the end of 2010, the               Russian President Dmitry Medvedev            sphere of cooperation with Hong              suit.
    which has the highest jobless rate           erratic.”                                  highest in the industrialised world.                arrived in Hong Kong Saturday on the         Kong,” Medvedev’s foreign policy                “The deepening of financial coop-
    among developed countries, could                Spain’s booming construction             The government this month revised                first visit by a Kremlin chief to the ex-    adviser Sergei Prikhodko said ahead          eration is also useful for Russia with
    reach a record of more than five mil-        industry drew millions of unskilled        upwards its forecast for 2011 to 19.8               British colony, seeking to harness its       of the visit.                                an eye to plans to make Moscow an
    lion, the labour minister warned in an       immigrant workers and generated high       percent from 19.3 percent, but said the             financial expertise in modernising              A former British colony which was         international financial centre,” the
    interview published Saturday.                levels of economic growth in the           rate will ease to 18.5 percent in 2012.             Russia.                                      returned to China in 1997, Hong              Kremlin said, adding that it also want-
       “Whether or not we exceed five mil-       decade to 2008.                               The labour ministry said on April 4                 Medvedev, who is seeking to diver-        Kong has for years been ranked the           ed to boost trade and investment ties.
    lion unemployed will depend on the              But the collapse of the property bub-   that the number of Spaniards out of                 sify his country’s economy beyond oil        world’s freest place to do business.            Medvedev will seek to persuade
    active population,” Valeriano Gomez          ble, compounded by the global finan-       work rose for a third consecutive                   and gas, will on Sunday meet with               Last year United Company                  Hong Kong-based investors to take
    told the business daily Expansion,           cial crisis, left many people out of       month in March, up 0.8 percent from                 Hong Kong chief executive Donald             RUSAL, the world’s top aluminium             part in the development of a high-tech
    referring to a possible rise in the work-    work, especially immigrants and            February to 4.33 million for the highest            Tsang and visit the stock exchange in        producer, became the first Russian           hub outside Moscow which the
    ing-age population.                          youths.                                    level since records began in 1996.                  the southern Chinese territory.              company to list in Hong Kong, and            Kremlin chief sees as Russia’s
       “It must be said that in Spain during        The unemployment rate soared to         (AFP)                                                  “Finances are no doubt a priority         several others are seeking to follow         answer to Silicon Valley, it said. (AFP)

                                                                                            Beijing renews promises of ‘more flexible’ yuan

China sovereign fund seeks new Europe investments
BEIJING, April 16, (Agencies):                  ness and academia from Asia and other           Meanwhile, China’s central bank             reform in the financial department,             Chinese companies and cost jobs.                  On Friday the government reported
China’s $300-billion sovereign wealth           continents every year since 2001 to dis-     governor has renewed promises to ease          including currency reform, pushing                Analysts expect Beijing to allow the         China’s consumer price index rose 5.4
fund is looking for investment opportu-         cuss pressing issues in the region and       controversial exchange rate controls —         forward development of an ‘exchange-            yuan to rise to cool inflation, which          percent in March from the year-ago
nities in debt-hit Europe even though it        the rest of the world.                       but says change will be gradual.               able renminbi’ and making the renmin-           surged to a 32-month high of 5.4 per-          level — the highest annual rate since
is not very optimistic about the region’s          CIC was set up in 2007 to invest a           Zhou Xiaochuan said Friday that the         bi exchange mechanism more flexi-               cent in March. A stronger yuan would           July 2008 — and 5.0 percent in the first
prospects, a media report said                  chunk of China’s massive foreign-            exchange rate of China’s yuan will be          ble,” Zhou said at a conference in the          help to restrain prices by making oil          quarter of 2011.
Saturday.                                       exchange reserves — the world’s              made “more flexible” but in a “step by         southern Chinese city of Bo’ao,                 and other imported goods cheaper in               The data added to fears that China
   China Investment Corp (CIC)                  largest at $3.0447 trillion at the end of    step” way, the official Xinhua News            according to Xinhua.                            Chinese currency terms.                        was having trouble getting control of
already has a big exposure to Europe            March — partly to gain better returns.       Agency reported.                                  “This is what we want to do, and we                            Also:                        inflation as food, fuel and other com-
and its investment return from the con-            The stockpile has been rising as             Washington and other governments            should do it step by step,” Zhou said.                                                         modity prices were soaring around the
tinent is not bad, its chairman Lou             Beijing buys foreign currencies used to      complain China keeps the yuan under-              Beijing’s controls require it to buy         WASHINGTON:           Chinese inflation
                                                                                                                                                                                            should fall to just above four percent by      world.
Jiwei told a forum on the southern              pay for the country’s exports in order to    valued, distorting trade and hampering         dollars and other foreign currency to                                                             But the IMF said the government
Chinese island of Hainan, Dow Jones             control the value of the yuan.               a global recovery. Officials of the            restrain the yuan’s rise. China’s foreign       the end of this year on the back of
Newswires reported.                                The reserves are mainly parked in         Group of 20 major economies meeting            reserves soared above $3 trillion in            Beijing’s tough tightening policies, the       had made fighting inflation its top pri-
   “From the investment perspective,            safe but low-yielding instruments such       Friday in Washington agreed to look            March, a sign the central bank is still         International Monetary Fund said               ority and that its policies were having
(we’re) not very optimistic about               as US Treasury bonds, but amid the           at “currency misalignments,” a                 intervening in currency markets despite         Saturday.                                      an impact in slowing price rises.
Europe,” Lou said at the Boao Forum.            global crisis CIC has tried to diversify     response to frequent complaints about          the June promise.                                  “We are seeing credit growth in the            “Our current prediction is that infla-
   “But it doesn’t mean we wouldn’t             its investments and be more aggressive       the yuan.                                         In a report this week, the                   first quarter come down,” said Nigel           tion in China should peak shortly and
like to invest (in Europe). There are           to improve returns.                             Beijing promised more flexibility in        International Monetary Fund cited               Chalk, the IMF mission chief for               will come down later in this year,” said
still opportunities in Europe, such as             According to the latest financial         June, but the US Treasury Department           Beijing’s currency controls as one fac-         China, at a news briefing in                   Anoop Singh, IMF director for Asia
infrastructure sectors ... we’re looking        reports available, CIC had total assets      says the 4.5 percent increase in the           tor that might weaken a global eco-             Washington.                                    and the Pacific.
for some investment opportunities               of $332 billion at the end of 2009, and      yuan, also known as the renminbi,              nomic recovery.                                    “Should they continue with that tra-           “We can be sure that the measures
there.”                                         the European region accounted for 20.5       against the dollar since then has been            Officials including Premier Wen              jectory, inflation will come down. We          that they have taken so far, these will
   The gathering in Boao has brought            percent of CIC’s diversified equity          too slow.                                      Jiabao have ruled out a fast apprecia-          forecast for a little bit over four percent    be increased until they are certain that
together leaders in government, busi-           investments.                                    “China will continue to carry out           tion of the yuan, saying that might hurt        by the end of the year.”                       inflation is coming down.”

                Investors fault ABN Amro role                                                G-20 countries reach agreement
    Warhol dream fund                                                                        to monitor economic imbalances
    turns to nightmare                                                                                                                 World finance chiefs chastise US on deficit
    PARIS, April 16, (RTRS): As the             was suspended. Moccia says this
    financial crisis loomed in late             has been partly repaid, leaving
    2007, Federico Moccia was in an             around $40 million in liabilities.           WASHINGTON, April 16, (Agencies): The world’s major                                              The hope is that the monitoring process will highlight problems before they
    upbeat mood.                                   It remains unclear how long it            nations have put together a new monitoring process that they                                   become so big that they pose a threat to global growth. But the deal announced
       The 40-year-old ex-JPMorgan              will take to refund the bank, now                                                                                                           Friday by the G-20 left many questions unanswered about just how effective the
    banker with a penchant for works            being criticized by some investors
                                                                                             hope will halt the types of destabilizing economic imbalances                                  new procedures will be.
    by pop artist Andy Warhol had cre-          for collecting interest and debt             that contributed to the worst global downturn since World                                       Global financial reform will continue to be the focus of meetings Saturday of the pol-
    ated a $600 million hedge fund and          repayments — even as they have               War II.                                                                                      icy-setting committees of the 187-nation International Monetary Fund and the World
    was preparing to move to Asia to            no access to their money.                                                                                                                 Bank. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben
                                                                                                Finance officials in the United States and other members of the Group of 20 Bernanke were representing the United States at the talks.
    woo the region’s deep-pocketed                 In a letter to ABN Amro’s Chief           major economies said the new program will closely follow key measurements
    investors.                                  Executive Gerrit Zalm in February,                                                                                                           Geithner also had a round of one-on-one meetings scheduled Saturday with finance
       After making a big impression            Brussels-based lawyer Robert                 of economic health such as government budget and trade deficits, personal officials from Portugal and Greece, two nations facing serious debt troubles, and offi-
    on the Singapore art scene with his         Wtterwulghe accused the bank of              savings levels and investment flows between nations.                                         cials from the European Union and Germany who have been involved in the efforts to
    recent Warhol exhibition, Moccia            putting its own interest before its                                                                                                                                                      deal with Europe’s debt problems.
    was confident the brewing US sub-           fiduciary duty to investors as cus-                                                                                                                                                         Geithner was also scheduled to meet
    prime mortgage meltdown could               todian and called for the appoint-                                                                                                                                                       with Egyptian Finance Minister Samir
    not dent his plan to stoke returns          ment of an independent liquidator.                                                                                                                                                       Radwan for talks likely to focus on the
    from his “Cannonball” fund with                “The financing granted to the                                                                                                                                                         types of financial support that Egypt
    art and real estate investments.            Cannonball funds by your institu-                                                                                                                                                        needs during its governmental transition.
       “I had received a working permit         tion places you in a conflict of                                                                                                                                                            After the daylong G-20 talks ended,
    from the Singapore authorities,”            interests,” wrote Wtterwulghe,                                                                                                                                                           French Finance Minister Christine
    recalls Italian-born Moccia, speak-         who represents 169 investors who                                                                                                                                                         Lagarde told reporters Friday that the
    ing from his London office. “The            have paid around $9 million into                                                                                                                                                         monitoring agreement was a significant
    future was bright.”                         the funds.                                                                                                                                                                               achievement in efforts to restore confi-
       Moccia never got there.                     “The unjustified non-liquidation                                                                                                                                                      dence and prevent future financial crises.
                                                of these funds serves your and the                                                                                                                                                          “We have made huge progress in rela-
                  Exposed                                                                                                                                                                                                                tion to the framework for growth,” she
       His sprawling portfolio —                other parties’ interest in the first                                                                                                                                                     said. “This is a major step in the right
    including holdings in everything            place, with little consideration for                                                                                                                                                     direction.”
    from leveraged hedge funds, pop-            the interest of the investors.                                                                                                                                                              Lagarde said that all G-20 nations will
    art prints of Superman and bou-                Responding to the accusations,                                                                                                                                                        take part in the monitoring process but in
    tique hotels in Bali — was sus-             an ABN Amro spokesman said:                                                                                                                                                              the beginning the focus would be on
    pended in October 2008 when the             “The bank has a contractual rela-                                                                                                                                                        seven of the world’s largest economies.
    financial crisis peaked. Moccia’s           tionship with Cannonball Funds                                                                                                                                                           She declined to name all of those coun-
    diversification only left him more          Limited and, based on that rela-                                                                                                                                                         tries but the group is expected to include
    exposed.                                    tionship, the bank has obligations                                                                                                                                                       the United States, China, Japan,
       Cannonball’s biggest money-              to the fund and not to the investors.                                                                                                                                                    Germany, France, Britain and India.
    spinners were the funds that invest-                    Obligation                                                                                                                                                                      Much about the monitoring process,
    ed in other hedge funds, a strategy            “And as far as there might be                                                                                                                                                         however, is still to be determined includ-
                                                                                                                                                                                                                                         ing whether countries found to have dan-
    that blew up when credit markets            any obligation to the investors                                                                                                                                                          gerous imbalances will be identified pub-
    froze. Some of them were also               ABN Amro is of the opinion that                                                                                                                                                          licly. China in the past has blocked public
    found to have put money into vehi-          these obligations have been ful-                                                                                                                                                         release of criticism it has received from
    cles linked to Minnesota business-          filled and we do not see any basis                                                                                                                                                       the International Monetary Fund.
    man Tom Petters’ $3.65 billion              for any accusation or claim as sug-                                                                                                                                                         The initial monitoring effort will be
    Ponzi scheme.                               gested in the letter by                                                                                                                                                                  reviewed at an October meeting of the G-
       “I couldn’t honour the redemp-           Wtterwulghe.”                                                                                                                                                                            20 finance officials who will report on
    tions. There was this thing, this              The Cannonball Fund prospec-                                                                                                                                                          how the process is working to G-20 lead-
    crazy fraud,” said Moccia.                  tus forewarns investors that Fortis,                                                                                                                                                     ers who are scheduled to meet in Cannes,
       To make matters worse,                   “if required”, would provide the                                                                                                                                                         France, in November. Since there is no
    Moccia’s much-vaunted art fund              fund with credit facilities.                                                                                                                                                             enforcement mechanism, it was unclear
    was also frozen after he fell victim        Investors also received an advisory                                                                                                                                                      what pressure can be brought to bear on
    to one of the oldest and riskiest           that the funds’ activities might                                                                                                                                                         countries found with dangerous imbal-
                                                                                                    In a picture taken on April 1, 2011, a South Korean cashier swipes credit card at a restaurant in Seoul. (AFP)                       ances.
    strategies — putting all his eggs in        involve “a high degree of lever-
                                                                                                                                                                                                                                            However, officials sought to portray
    one basket.
       Moccia had stockpiled work by
                                                   Moccia contends that appointing                                        Card transactions worth $475 bln in 2010                                                                       the agreement as a major step forward in
    “Pope of Pop” after he saw the              an independent liquidator would                                                                                                                                                          addressing the types of problems that
                                                                                                                                                                                                                                         were uncovered by the financial crisis
    value of a Marilyn Monroe print
    shoot from $1,000 to $200,000 in
    the space of a generation.
       But his decision to buy into just
                                                kick off a fire-sale that would be
                                                against investors’ interests, adding
                                                that he is best positioned to unwind
                                                the complex positions he helped
                                                                                             ‘Plastic’ trumps cash in S. Korea                                                                                                           that erupted in the United States in the
                                                                                                                                                                                                                                         fall of 2008 and contributed to pushing
                                                                                                                                                                                                                                         the global economy into the worst down-
                                                                                             SEOUL, April 16, (AFP): “Do you have              Card transactions were worth 517.4 tril-      “I use a credit card or debit card instead  turn since the Great Depression of the
    one artist - even a “blue-chip” one         invent.                                      any of the credit cards listed here? You can   lion won ($475 billion) last year, a 6.6 per- of cash because using a card raises my         1930s.
    like Warhol - perplexed some                   Technically the funds are still           get up to 20 percent discount,” a restaurant   cent rise on 2009, according to the           credit status and allows me to pay large          Meanwhile, World finance leaders on
    experts.                                    alive, able to collect fees and not          cashier asks a diner settling her bill, indi-  Financial Supervisory Service.                sums in instalments,” said businessman         Saturday chastised the United States for
       “Andy Warhol prints? That’s an           bound to be dissolved. They are              cating a wall chart.                              South Koreans’ usage of credit cards as    Kim Chang-Hwan, 28.                            not doing enough to shrink its massive
    area we would never touch,” said            registered and recognised in the                Kim Lee-Soo, 22, shuffles quickly           a percentage of total consumption reached        There are also the tax breaks. The gov-     budget deficit and warned that fiscal
    Constanze Kubern, who manages               British Virgin Islands, where the            through a stack of cards in her bulging wal-   54.9 percent in the first half of 2010 com-   ernment recently caused a stir when it         strains in rich nations threaten the global
    Castlestone Management’s art                regulator says Globefin is also still        let. After passing on five or six of them, she pared to 34.6 percent in the US and 43.9      announced it was considering dropping          recovery.
    fund.                                       licensed to provide management               finally finds one that matches the list and    percent in Britain, Seoul’s Credit Finance    these this year. It later agreed to extend the    Although global tensions over the pos-
       Such popular prints were among           services.                                    claims the full discount.                      Association says.                             policy for an unspecified period.              sibility of currency wars and Europe’s
    the worst hit when the crisis swept            Keeping the funds suspended                  It’s a typical scene in South Korea,           The bubble burst in 2003, with 3.7 mil-       The tax breaks from card usage were         growing debt crisis continue to simmer,
    through the art market as they              does at least give Moccia some               where people use plastic to pay for every-     lion defaulters on loans and the govern-      worth 13 trillion won for 5.6 million peo-     finance ministers in Washington for semi-
    lacked the one-of-a-kind appeal of          prospect of making money and                 thing from a highway toll to a single cup of   ment forced to step in to bail out card com-  ple in 2009, according to tax service fig-     annual talks also took sharp aim at the
    a single canvas. Warhol repeated            thus, amends.                                coffee — earning a variety of discounts        panies. The firms tightened measures when     ures.                                          United States’ $14 trillion debt.
    silkscreen prints of the same                  The Cannonball Art Fund, for              and even income tax rebates in the process.    issuing cards but spending continued to          But Lee Jae-Youn said even the expira-         While most of the criticism came from
    celebrity in a series of garish             example, charges no management                  “I use credit cards most of the time and    increase.                                     tion of the tax concession would not hit       emerging market economies, some rich
                                                                                             the small amount of cash I carry is only for      Lavish rewards for cardholders are the     card usage excessively.                        nations also joined the chorus.
    colours.                                    fee but instead takes a 30 percent           emergency use,” said businesswoman Lee         main reason, according to Lee Jae-Youn, a        “Rewards by the credit card companies          “The fiscal situation in the advanced
       As if rollercoaster markets and          commission on the sale of any art-           Chae-Hwan, 38.                                 senior research fellow at the Korea           and convenience have accustomed people         economies gives us great concern, and it
    exposure to fraud were not enough,          work. Moccia said he was consid-                Office worker Moon Seon-Young, 42,          Institute of Finance.                         to use cards instead of cash, and this is not  is in this area that we see the major risks
    Moccia’s queasy investors have              ering waiving the fee.                       uses cash only in places like traditional         “In Korea, users don’t have to pay a       expected to change much even with the          to the global economy,” Russian Finance
    also had to swallow demands from               Moccia says if he can negotiate           markets.                                       membership fee, and rewards for using         expiration,” he said.                          Minister Alexei Kudrin told the
    Moccia’s primary creditor Fortis            asset sales and unwind positions he             The process began in 1999 as part of a      credit cards such as discounts in shops are      The Credit Finance Association expects      International Monetary Fund’s advisory
    Bank — now part of Dutch state-             will be in a better position to              government drive to fight corruption and       incomparably large compared to those in       usage to expand further, but there is a        panel.
    owned lender ABN Amro after suf-            refund investors - and, hopefully,           tax evasion centred on the underground         other countries,” Lee told AFP.               downside. All those discounts must be paid        The IMF this week noted that the U.S.
    fering its own collapse during the          to forget his own brief “15 minutes          “black” economy. It gave tax breaks to            Card companies also give holders “point    for somehow — sometimes in the form of         budget deficit was on course to hit 10.8
    crisis.                                     of fame.”                                    encourage consumers to use credit cards        cash”, a small percentage of each settle-     higher overall prices.                         percent of nation’s economic output this
       Moccia’s holding company                    “I want to give back the money            and threatened tax audits for businesses       ment, which is saved in the cardholder’s         The cost of discounts for using credit      year, tying Ireland for the highest deficit-
    Globefin has pledged first to fully         to all the investors, close the fund,        which refused to accept them.                  account and can be spent like cash.           cards is passed on to consumers in ways        to-GDP ratio          among       advanced
    repay the $165 million lent by              and end this story,” Moccia said.               Now the country of around 49 million           Good infrastructure for electronic trans-  such as an increase in overall price levels,   economies.
    ABN when the Cannonball fund                “I’m fed up.”                                people has 117 million credit cards, almost    actions in one of the world’s most wired      Lee said. “And consumers may use credit           It urged Washington to move quickly
                                                                                             five for each economically active person,      societies, and the convenience factor, also   cards too recklessly, possibly causing over-   to put a credible plan in place to tighten
                                                                                             the central bank says.                         swell usage.                                  consumption.”                                  its belt.

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